K L TAMBI AND CO,JAIPUR vs. DEPUTY COMMISSIONER OF INCOME-TAX, CENTRAL CIRCLE-2,, JAIPUR

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ITA 104/JPR/2024Status: DisposedITAT Jaipur01 August 2024AY 2005-06Bench: SHRI RATHOD KAMLESH JAYANTBHAI (Accountant Member), SHRI NARINDER KUMAR (Judicial Member)1 pages
AI SummaryPartly Allowed

What did the Tribunal hold?

The Tribunal found that the assessee failed to discharge the onus of proving the genuineness of the purchases. While the AO's 25% disallowance was upheld by the CIT(A), the Tribunal decided to apply a Gross Profit rate of 20% on the bogus purchases instead of the 25% addition.

What were the facts?

The Assessing Officer disallowed 25% of bogus purchases, adding Rs. 15,13,844/- to the assessee's income. The CIT(A) upheld this disallowance, stating that invoices were from bogus parties and goods were procured from unknown sources. This was the second round of litigation for the assessment year 2005-06.

What were the issues?

Whether the disallowance of 25% of bogus purchases was justified and what is the appropriate method for estimating income when books of accounts are rejected due to unverified purchases.

Which sections of the Income-tax Act were involved?

Section 145(3),Section 271(1)(c)

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Income Tax Appellate Tribunal, JAIPUR BENCHES,”A” JAIPUR

Before: SHRI RATHOD KAMLESH JAYANTBHAI, AM & SHRI NARINDER KUMAR, JM vk;dj vihy la-@ITA No. 104/JP/2024

For Appellant: CA &, CA jktLo dh vksj ls@
Hearing: 31/07/2024Pronounced: 01/08/2024

Result

27.

As a result, the appeal is partly allowed, and addition of 20% of bogus or purchases from unverifiable persons or entities is upheld as regards AY 2005-06.

28.

Assessing Officer to do the needful to give effect to this decision accordingly.

29.

It may be mentioned here that while making calculations, the Assessing Officer shall also take into consideration the amount of tax already deposited by the assessee, so as to avoid double taxation on the same cause of action.

Order pronounced in the open court on 01/08/2024.

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