PREM TUBE CO. PVT LTD.,DELHI vs. ITO WARD 20(1), DELHI

Heard both the parties at length. Case files perused.

It transpires during the course of hearing that the assessee pleads it’s identical twin substantive ground in both these cases that the learned lower authorities have erred in law and on facts in treating it’s varying purchases sourced from M/s GS Industries as unexplained cash credits u/s 68, in the

It is in this factual backdrop that the assessee’s first and foremost argument raised is that it had filed all the relevant documentary evidence before the learned lower authorities to support the impugned purchases. The fact however remains going by the relevant case records, the assessee could neither get the impugned purchases verified nor reconciled both during assessment as well as in the lower appellate proceedings. This tribunal therefore finds merit in the Revenue’s vehement contentions in principle that the impugned purchases have rightly been treated as bogus.

Next comes equally important aspect of quantification of the impugned bogus purchases disallowance wherein the learned lower authorities have disallowed the assessee’s entire purchases in both these assessment years. The tribunal is of the considered view that given the fact that the assessee’s corresponding sales have not been rejected going by the book results, the necessary inference which would arise is that it had sourced the impugned purchases from outside the books and availed accommodation entries from M/s GS Industries. That being the case, it is deemed appropriate in the larger interest of justice that the impugned disallowance deserves to be & 6005/Del/2025 Prem Tube Co. Pvt. Ltd. restricted to that @8% only in both the these assessment years subject to a rider that the same shall not be treated as a precedent. Necessary computation shall follow as per law.

Learned counsel lastly argues that both the lower authorities have erred in law and on facts in adding the impugned bogus purchases claimed as unexplained cash credits. The Revenue could hardly dispute that this is an expenditure claim rather than credit entries in the assessee’s books of account forming subject matter of adjudication. The assessee’s impugned bogus purchases are accordingly directed to be treated as business expenditure disallowance u/s 37 of the Act followed by the consequential computation under normal provisions only. Ordered accordingly.