Tribunal Partially Allows Appeal on Unverifiable Purchases in Tax Assessment

The Tribunal partially allowed the appeal against a trading addition related to unverifiable purchases in the assessment year 2007-08. The Tribunal held that while rejection of books of account is justified for unverifiable purchases, making additions solely on this basis is not justified. Considering past history and current events, an addition of Rs. 1 lac was deemed sufficient to address any revenue leakage, leading to the partial allowance of the appeal on 15.3.2012.

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Issues involved: Appeal against trading addition related to unverifiable purchases in assessment year 2007-08.

Summary:
The appellant contested the trading addition of Rs. 17,74,349/- due to disallowance of 25% on unverifiable purchases amounting to Rs. 70,97,395/-. The Assessing Officer (AO) rejected the contention of the assessee, suspecting involvement in receiving bogus purchase bills. The ld. CIT (A) upheld the AO's decision. The Tribunal considered the written submissions and held that while rejection of books of account is justified for unverifiable purchases, making additions solely on this basis is not justified. Referring to legal precedents, it was noted that additions should consider past history and current events. Given the significant increase in GP rate from the previous year, an addition of Rs. 1 lac was deemed sufficient to address any revenue leakage. Consequently, the appeal was partially allowed, with the judgment pronounced on 15.3.2012.

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