Loading judgment…
Facts
The assessee appealed against the order of the Ld. Commissioner who affirmed an addition of 12.5% on bogus purchases. The assessee is in the business of ferrous articles and argued for a lower addition based on jurisdictional tribunal judgments.
Held
The Tribunal held that considering the peculiar facts and similar judgments, it would be appropriate to restrict the gross profit addition on bogus purchases to 5% instead of 12.5%. The AO is directed to verify if the purchases were already subjected to profit and loss account and re-compute income accordingly.
Key Issues
Whether the addition of 12.5% on alleged bogus purchases is justified, or should it be restricted to 5% based on similar trade judgments?
Sections Cited
250 of the Income Tax Act, 1961
AI-generated summary — verify with the full judgment below
Income Tax Appellate Tribunal, MUMBAI BENCH SMC”, MUMBAI
Before: SHRI NARENDER KUMAR CHOUDHRY
Per : Narender Kumar Choudhry, Judicial Member:
This appeal has been preferred by the Assessee against the order dated 07.05.2024, impugned herein, passed by the National Faceless Appeal Center (NFAC)/Ld. Commissioner of Income Tax (Appeals) (in short Ld. Commissioner) under section 250 of the Income Tax Act, 1961 (in short ‘the Act’) for the A.Y. 2009-10.
Considering the peculiar facts and circumstances specifically to the effect that the Ld. Commissioner has affirmed the addition @ 12.5% of the bogus purchases and the Assessee is engaged in the business of ferrous articles and there are various judgments by the Jurisdictional Tribunal, wherein the addition @5% in the identical trade has been upheld, therefore, in the considered opinion of this Court, it would be appropriate to restrict the addition being the gross profit @ 5% of the alleged bogus purchases instead of 12.5% as made by the Assessing Officer (AO) and affirmed by the Ld. Commissioner.
Thus, the AO is directed to verify “whether the purchases made by the Assessee as alleged bogus purchases, have already been subjected to profit & loss account” and on finding answer “Yes” then to re-compute the income of the Assessee by considering the GP @ 5% in lieu of 12.5%, over and above the GP already shown by the Assessee. Otherwise, the addition as affirmed by the Ld. Commissioner would sustain.
In the result, the appeal filed by the Assessee is partly allowed. Order pronounced in the open court on 12.12.2024.