Allegation Bogus Purchase: ITAT confirms Gross profit at 12 .5% as Sales are not Disputed [Read Order]

The Mumbai bench of the Income Tax Appellate Tribunal( ITAT) confirmed the addition made by Income Tax Authorities on the gross profit margin @ 12.5% on the alleged bogus purchase by the assessee. The Tribunal observed that the assessee has failed to rebut the statement of Rajesh Doshi by any documentary evidence before the lower authorities or before the Tribunal.

Shri Nilesh Shantilal Tank, the assessee company is engaged in the construction and development of property. Under a search and seizure action in the case of Bharat Shah Group and Tank Group, a notice under section 153A was issued to the assessee. The Assessing Officer(AO) observed that the assessee was one of the beneficiaries of accommodation entries by way of bogus purchases availed from the concerns. The AO then passed the assessment order under section 153A r.w.s 143(3) determining the total income at Rs.13,97,10,580/- after making an addition on bogus purchases and towards on-money received by the assessee.

On appeal, the FAA restricted the bogus purchases to 12.5% on the gross profit margin and deleted the addition towards on-money received by the assessee on the ground that the Settlement Commission had in the assessee’s related concerns disregarded the seized material, documents and the statements recorded which are also the basis in the assessee’s case.

It was noted by the Tribunal that the AO failed to consider the assessee’s contention on the premise and made an addition on the entire bogus purchase of Rs.8,00,67,017/- on the ground that the assessee has failed to furnish the details by way of documentary evidence to contradict the seized material, and the CIT(A), on the other hand, had restricted the impugned addition to 12.5% on the gross profit margin of the impugned bogus purchases on the ground that the AO has not disputed the sales made by the assessee.

The two member Bench of  Amarjit Singh (Accountant Member) and Kavitha Rajagopal (Judicial Member) observed that the assessee has failed to rebut the  statement of Rajesh Doshi by any documentary evidence neither before the lower authorities nor before the Tribunal.

In the absence of infirmity in the order of the CIT(A) in making an addition to the gross profit margin @ 12.5% on the alleged bogus purchase where the sales are not in dispute, the court dismissed the appeal of the assessee.

Support our journalism by subscribing to Taxscan premium. Follow us on Telegram for quick updates