DCIT-4(2)(1), AAYAKAR BHAVAN vs. GEMSONS PRECISION ENGINEERING PVT LTD, MUMBAI

Briefly stated the facts of the case are that during the course of scrutiny assessment proceeding on the basis of information received from Sales Tax Department through the Directorate General of Income Tax (Investigation). The AO came to know that the assessee was the beneficiary of bogus purchases amounting to Rs. 84,03,781/-.

The assessee was asked to furnish all the details relating to the impugned purchases. On receiving no plausible reply, the AO made the addition of Rs. 84,03,781/-.

The assessee agitated the material before the CIT(A) and vehemently contended that though the purchases have been treated as bogus but the corresponding sales has been accepted by the AO. After considering the facts and submissions, the CIT(A) was of the opinion that only the profit element embedded in such alleged bogus purchases should be added and accordingly restricted the addition to 12.5% thereby confirmed the addition of Rs. 10,50,472/-.

Before us, the ld. DR strongly supported the findings of the AO. The Counsel drew our attention to the decision of the Co-ordinate Bench in the case of the assessee in ITA No. 791/Mum/2024 and pointed out that on identical set of facts, the Co-ordinate Bench has confirmed the addition @ Gemsons Precision Engineering Pvt. Ltd 12.5% on account of alleged bogus purchases. The Counsel further stated that even in AY 2010-11 the CIT(A) has restricted the addition to 12.5% of the total purchases and the revenue is not in appeal in AY 2010-11. 7. We have carefully perused the order of the authorities below. It is true that in AY 2010-11, the FAA has restricted the disallowance to 12.5% of the alleged bogus purchases. The Co-ordinate Bench in AY 2011-12 in ITA No. 791/Mum/2024 has also taken similar view.

After considering the issue of the assessee, we do not find any reason to interfere with the findings of the CIT(A).

In the result, appeal of the Revenue is accordingly dismissed.