WINTEK INFOTECH PRIVATE LIMITED,PUNE vs. DEPUTY COMMISSIONER OF INCOME-TAX, CIRCLE - 1 (2), PUNE

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ITA 1590/PUN/2019Status: DisposedITAT Pune30 August 2022AY 2010-113 pages
AI SummaryPartly Allowed

What did the Tribunal hold?

The Tribunal held that while the entire sum of bogus purchases could not be disallowed, it should be disallowed to the extent of the gross profit element embedded therein. This estimation was based on the principle that such purchases cannot be allowed in their entirety.

What were the facts?

The assessee's appeal challenges the disallowance of bogus purchases amounting to Rs. 53,84,216/-. The disallowance was based on information that the suppliers provided accommodation entries and the assessee failed to produce supporting documents like purchase orders and vouchers.

What were the issues?

The primary issue was whether the entire amount of alleged bogus purchases should be disallowed or only the profit element embedded within them, given the assessee's failure to provide supporting documentation.

Which sections of the Income-tax Act were involved?

Section 143(3),Section 147

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Income Tax Appellate Tribunal, “B”

Before: SHRI S.S.GODARA & SHRI G.D.PADMASHALI

For Appellant: Shri Kishor Phadke – AR
For Respondent: Shri Arvind Desai – DR
Hearing: 18/08/2022Pronounced: 30/08/2022

आदेश/ ORDER

Per S.S.Godara, JM:

1.

This assessee’s appeal for Assessment Year 2010-11 is directed against the Commissioner of Income Tax(Appeals), Pune- 8’s order dated 05.08.2019 passed in case no.PN/CIT(A)-8/DCITC Cir-1(2)/202/18-19/188, in proceedings u/s.143(3) r.w.s. 147 of the Income Tax Act, 1961 [in short “the Act”].

Heard both the parties. Case file perused.

2.

It emerges at the outset that the assessee’s sole substantive ground raised herein challenges correctness of both the lower authorities action disallowing bogus purchases of Rs.53,84,216/- involving twin suppliers M/s.Siddhi Enterprises and Aradhana

A.Y. 2010-11 Wintek Infotech Private Limited (A)

Corporation involving Rs.4316366/- and Rs.1067850/-; respectively on the ground that the department’s Investigation Wing had received information from the Maharashtra Sales Tax Department about the foregoing suppliers having indulged in providing such accommodation entries.

3.

Mr.Phadke could hardly dispute both the learned lower authorities’ respective discussion(s) that the assessee could not even file on record the set twin suppliers ledger accounts, purchase orders, vouchers, transportation bills, octroi receipts, weighing bills, receipt notes, payments and confirmations; as the case may be. Faced with this situation, we find merit in Revenue’s arguments supporting the impugned disallowance in principle.

4.

Next comes equally important aspect of quantification of the impugned bogus purchases disallowance. Learned DR vehemently argued that we must disallow the entire sum on account of the assessee’s failure in filing all the foregoing details. The fact however remains that the Revenue has itself accepted the corresponding increase in stock items as well as sales recorded against the very purchases. Hon’ble jurisdictional high court’s decisions in PCIT Vs. Mohammed Haji Adam Khan and Company [2019] 103 taxmann.com 459 (Bom) holds that such bogus purchases could not be allowed in entirety. Faced with this situation, we deem it

A.Y. 2010-11 Wintek Infotech Private Limited (A) appropriate that the impugned bogus purchases of Rs.53,84,216/- deserved to be disallowed only to the extent of the gross profit element embedded therein @ 10% on estimation basis subject to the rider that the same shall not be treated as a precedent. Ordered accordingly. Necessary computation shall follow as per law.

5.

This assessee’s appeal is partly allowed in above terms.

Order pronounced in the open Court on 30th August, 2022.

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