M/S GUPTA ENTERPRISES,HOWRAH vs. I.T.O.,WARD-47(1), KOLKATA

order

: December 09, 2021 Hearing through Video Conferencing ORDER

Per Sanjay Garg, Judicial Member:

2. That in spite of showing all the necessary documents, the Ld. A.O. made disallowance of the entire purchase on the basis of a statement taken from Third Party and the Appellate Authority's subsequent action of disallowing the purchase to the extent of G.P. Ratio relying on the same statement obtained from Third Party are absolutely illegal and baseless.

3. For that the Third Party's statement relying on which the Ld. A.O. and the Ld. Appellate Authority made disallowance of purchase are not credible enough as the statement made by the same Third Party against other assesses were ultimately found to be untrue.

4. Other grounds, if any, will be placed before your honour on or before the hearing of the appeal petition.”

Assessment Year: 2011-12 M/s Gupta Enterprises

reveals that the only grievance of the assessee in this appeal is regarding the action of Ld. CIT(A) in making addition @10.10% of one alleged bogus purchases.

3. The brief facts of the case is that the Assessing Officer had got some information that the assessee had procured some bogus bills in respect of its purchases for some party. He added the total amount of purchases from that party as unaccounted income of the assessee.

4. In appeal, the Ld. CIT(A) observed that the assessee had shown gross profit @10.10% on the entire sales which included the sales pertaining to purchases which has been treated as bogus by the Assessing Officer. He observed that since the Assessing Officer had admittedly accepted the sales, therefore, this was not a case of unaccounted purchases rather it was a case of showing less profits as the assessee might have procured these items from market at lesser rate. He accordingly restricted the addition in respect of bogus purchases to 10.10% i.e. equal to the GP rate shown by the assessee on sales. Aggrieved by the action of the Ld. CIT(A), the assessee has come in appeal before us.

5. We have heard the rival contentions and gone through the records. The Ld. AR of the assessee has submitted that the assessee had already shown profit @10.10% in respect of alleged bogus purchases and that another addition @10.10% on such purchases would be highly excessive. The Ld. DR, on the other hand, has relied upon the findings of the CIT(A).

6. We find force in the contention of the Ld. AR in this case that the assessee had already shown gross profit @10.10%. The only allegation in the appellate order is that the assessee might have purchased the alleged items at some lesser rate whereas shown the purchases at a higher rate. If it is to be so assumed, then in our view, the approximate difference between the actual sale price and as shown by the assessee through bills should be added. The addition @10.10% i.e. equal to gross profit shown by the assessee is highly excessive. The assessee in this case has already shown gross profits on the alleged bogus purchases @10.10%. In our view, the interest of justice will be well-served if addition is restricted to 2% against 10.10% made by CIT(A) in respect of alleged 2

Assessment Year: 2011-12 M/s Gupta Enterprises bogus purchases. In view of this, the addition is restricted to 2% as against @10.10% made by the CIT(A). 7. In the result, the appeal of the assessee is treated as partly allowed. Kolkata, the 9th December, 2021. Sd/- Sd/- [Rajesh Kumar] [Sanjay Garg] Accountant Member Judicial Member Dated: 09.12.2021. RS Copy of the order forwarded to: 1. M/s Gupta Enterprises 2. ITO, Ward-47(1), Kolkata 3. CIT(A)- 4. CIT- , 5. CIT(DR),