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Facts
The assessee, a private limited company, declared an income of Rs. 2,41,690. The AO received information that the assessee was involved in bogus purchases amounting to Rs. 560,23,286. The AO estimated a profit of 12.5% on these purchases and made an addition of Rs. 7,002,910.
Held
The CIT(A) restricted the addition on account of bogus purchases to 2.5%. The Tribunal, following the decision of a coordinate bench in similar cases, found no reason to contradict the CIT(A)'s findings.
Key Issues
Whether the CIT(A) erred in restricting the addition on account of bogus purchases to 2.5% instead of 12.5%.
Sections Cited
Section 12(1)(1)
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Income Tax Appellate Tribunal, “(SMC
Before: SHRI NARENDRA KUMAR BILLAIYA, HON’BLE & SHRI SUNIL KUMAR SINGH, HON’BLE
O R D E R PERNARENDRA KUMAR BILLAIYA, AM This appeal by the revenue is preferred against the order dated 29.01.2024 of ld. NFAC, Delhi pertaining to Assessment Year 2016-17.
The sum and substance of the grievance of the revenue is that the ld. CIT(A) erred in restricting the addition on account of bogus purchase to the extent of 2.5% of such purchases as against 12.5 % made by the AO.
Briefly stated the facts of the case are that the assessee is a private limited company filed its return of income on 30.09.2015 declaring income of Rs. 2,41,690/-. The AO was in a possession of an information that the assessee is engaged in bogus purchases with One World Creation Pvt. Ltd Arudha Traders Pvt Ltd 2 and One World Sourcing. The assessee was asked to explain the genuineness of the purchase totalling to Rs. ,560,23,286/-. On receiving no plausible reply, the AO estimated the profit @12.5% and made addition of Rs. 7,002,910/-. The assessee carried the matter before the ld. CIT(A) and the ld. CIT(A) by way of a consolidated order dated 29.01.2024 has restricted the addition to 2.5%. The coordinate bench in AY 2017-18 and 2018-19 in & 1433/Mum/2024 has considered similar issue in the case of the assessee and held as under:-
7. We have given thoughtful considerations to the peculiar facts and circumstances of the case. We observe from the assessment order that the AO consciously recorded that malpractice of bogus purchases is mainly to save 10% of sales tax etc. and the profit margin in the industry in which the Assessee is working/dealing is 2.5% only, whereas the Ld. Commissioner has also consciously recorded the fact that Sales Tax/VAT is not applicable in the products dealt with by the Assessee and therefore deleted the addition of 10% of the purchases under consideration. We even otherwise do not find any material and/or reason to contradict the findings arrived and taking the decision by the Ld. Commissioner for restricting the addition to the extent of 2.5% of the alleged bogus purchases. Hence on the aforesaid analyzations, impugned addition as restricted by the Ld. Commissioner is affirmed. Thus, the appeal under consideration i.e. is dismissed.
On finding parity of facts respectfully following the decision the of coordinate bench we decline to interfere with the findings of the ld. CIT(A).
Appeal of the revenue is dismissed.