ITAT Upholds Addition made by AO to Business Income of Bogus Purchase due to Non Submission of Necessary Documents [Read Order]

The Mumbai bench of the Income Tax Appellate Tribunal ( ITAT) upheld the addition made by the assessing officer to the business income of invalid purchases on the ground of the nonsubmission of necessary documents during assessment proceedings. 

Bhavesh Punmaji Devasi, the appellant assessee was an individual running a proprietary concern in the name and style of Bhavik Metal, engaged in the business of trading in ferrous and non-ferrous metals. The assessee appealed against the order passed by the Commissioner of Income Tax (Appeals) for confirming the addition made by the assessing officer to the bogus purchase. 

S.D. Pathak, the counsel for the assessee contended that the impugned order had been passed by the Commissioner at his back without providing any opportunity of being heard and was also denied the opportunity to withdraw his appeal. 

It was further contended that in case of bogus purchases when the sale was not disputed and the addition was to be made based on gross profit earned by the assessee in the genuine purchases and are liable to be deleted. 

Chetan M. Kacha, the counsel for the revenue contended that the total amount of the bogus purchases needs to be added to the income of the assessee and file the genuine return of income for the assessment proceedings.

It was also submitted that the assessee was not submitted the necessary documents during the assessment proceedings and thus relied on the decisions made by the lower authorities. 

The bench observed that when the sales had been accepted as being genuine the entire purchase cannot be treated as non genuine to make an addition of the entire bogus purchases amount. 

The two-member panel comprising Kuldip Singh (Judicial) and Gagan Goyal (Accountant) held that the addition made by the assessing officer of bogus purchase was as per the law and sustainable while dismissing the appeal filed by the assessee. 

To Read the full text of the Order CLICK HERE

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