Assessee fails to rebut bogus purchase admission, 12.5% gross profit margin addition upheld

ITAT Mumbai upheld CIT(A)'s addition of 12.5% gross profit margin on bogus purchases after assessee failed to rebut statement of Shri Rajesh Doshi regarding modus operandi of availing bogus purchase bills. No documentary evidence was provided to counter the admission. Regarding on-money from flat sales, matter was remanded to CIT(A) for proper adjudication as assessment order lacked details of seized material, remand report was not furnished, and retracted statements were not on record. Revenue's ground allowed for statistical purposes only.

---

---

Issues involved: Cross appeals filed by the assessee and the Revenue regarding the Assessment Year (A.Ys.) 2013-14 and 2014-15 challenging the order of the learned Commissioner of Income Tax (Appeals) under section 250 of the Income Tax Act, 1961.

Issue 1: Alleged bogus purchases
The assessee and Revenue appealed against the addition made on bogus purchases and the restriction of the addition to 12.5% on the gross profit margin. The assessment stemmed from a search and seizure action, where the assessee was observed to have benefited from accommodation entries through bogus purchases. The assessee contested the reliance on seized material, highlighting criminal cases against involved parties. The CIT(A) restricted the addition to 12.5% based on undisputed sales. The Tribunal upheld the CIT(A)'s decision, noting the lack of contradictory evidence by the assessee.

Issue 2: On-money received
The Revenue challenged the deletion of the addition on on-money received by the assessee. The AO made the addition due to lack of substantiation by the assessee. The CIT(A) relied on the Settlement Commission's order in a related case to delete the addition. The Tribunal observed a lack of specifics in the assessment order regarding seized material and remand report. As a result, the issue was remanded back to the CIT(A) for proper adjudication. The Revenue's appeal on this ground was allowed for statistical purposes.

In conclusion, the Tribunal dismissed the appeals filed by the assessee and partly allowed the appeals filed by the Revenue for statistical purposes. The decision was pronounced on 18.03.2024.

---