An addition on account of Gross profit under the Income Tax Act, 1961 is not permissible in the absence of the evidence of suppression of gross profit by obtaining bogus purchase, the Delhi High Court, while upholding an order of ITAT in favour of Pilot Industries Limited observed.
The appellant revenue challenged the ITAT in upholding the order of the CIT(A) and deleting the additions made on account of gross profit ignoring the fact that the said income tax additions have been made after rejecting the books of account which did not reflect the true and correct state of affairs of the Assessee Company.
Further contended that the ITAT has erred in not appreciating that the statements of Mr Vishesh Gupta recorded under Section 132(4) of the Income Tax Act 1961 (‘the Act’) during the course of search proceedings, in the absence of any other material, would in itself constitute ‘incriminating material’.
It was observed that both CIT(A) and ITAT have given concurrent findings of fact that no incriminating material or corroborative material with respect to the statement of Mr Vishesh Gupta was brought on record by the Department and that no assessment for the years under consideration was pending in the case of the assessee.
It was observed that no incriminating documents or materials had been found and seized at the time of the search, and no addition could be made under Section 153A of the Income Tax Act as the cases of the respondents were of non-abated assessment.
Justice Manmohan and Justice Manmeet Pritam Singh Arora held that as there was no evidence available with respect to suppression of the gross profit by obtaining bogus purchase bills by the assessee and deletion of the addition on account of suppressed gross profit was upheld. The petition filed by revenue was dismissed due to the lack of substantial questions.
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