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II. Direct Taxes Case Law:
1. PCIT Vs. Rishabhdev Tachnocable Ltd., I.T.A. No. 1330 of 2017, Date of order: 10.2.2020, Bombay High Court
Issue:
Whether ITAT was justified in making addition to the tune of profit element in respect of bogus purchase?
Held: Yes
Fact:
Assessee
being a manufacturer of power controlling instrument cables and related
items, filed its return of income for AY 2010-11. The case of assessee
was selected for scrutiny. During the scrutiny proceedings Ld. AO
received some information regarding bogus hawala entries and bogus
purchase. Ld. AO noticed that assessee was one of the beneficiaries who
received bogus purchase bills. Therefore Ld. AO considered the purchases
made by assessee as bogus and disallow the entire purchases while
completing the assessment u/s 144 of the Act. The assessee preferred an
appeal before CIT(A) against the order of Ld. AO. CIT(A) held that AO
has accepted the sales and GP declared in ROI, then the entire
corresponding purchase could not be disallowed only the profit element
embedded in the purchases would be subject to tax.
HELD:
The
hon’ble High Court placed reliance on the judgement of CIT Vs. Bholanath
Polyfab Limited (355 ITR 290) and held that “that whether the purchases
were bogus or whether the parties from whom such purchases were
allegedly made were bogus was essentially a question of fact. When the
Tribunal had concluded that the assessee did make the purchase, as a
natural corollary not the entire amount covered by such purchase but the
profit element embedded therein would be subject to tax.”
Appeal of revenue is dismissed
(Please click here for judgment)
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