2020 (1) TMI 700

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....e facts and in the circumstances of the case and in law, the Hon'ble Tribunal is justified in allowing unsubstantiated purchases of Rs. 1,69,48,368/- and upholding the order of CIT(A) in applying net profit of 5.76% on total Contract amount ?" 4. The Respondent-Assessee carried on business as a Civil Contractor. The Respondent-Assessee filed return of income for the Assessment Year 2009-10 on 29 September, 2009 declaring total income of Rs. 48,65,060/-. The assessment was completed under Section 143(3) of the Income Tax Act on 7 December, 2011. Thereafter the assessment was reopened under Section 147 of the Income Tax Act. Information was received from the Sales Tax Department that Respondent-Assessee had taken bogus purchase entries of Rs....

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....ue had questioned only purchases to the tune of Rs. 1,69,48,368/- and that business could have been carried out by the other purchases which has not been questioned. 7. Mr. Hakani, the learned counsel for the Respondent placed reliance on the decisions of this Court in the case of The Principal Commissioner of Income Tax-17 vs. M/s. Mohommad Haji Adam & Co. in Income Tax Appeal No.1004/16 and Principal Commissioner of Income Tax, Central-4 vs. M/s. Paramshakti Distributors Pvt. Ltd. in Income Tax Appeal No.413/17. He submitted that even if the purchases made from the parties in question are to be treated as bogus, it does not necessarily mean that entire amount should be disallowed and that no benefit should be given to the Respondent-Asse....

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.... were bogus. This being a finding of fact, we have proceeded on such basis. Despite this, the question arises whether the Revenue is correct in contending that the entire purchase amount should be added by way of assessee's additional income or the assessee is correct in contending that such logic cannot be applied. The finding of the CIT(A) and the Tribunal would suggest that the department had not disputed the assessee's sales. There was no discrepancy between the purchases shown by the assessee and the sales declared. That being the position, the Tribunal was correct in coming to the conclusion that the purchases cannot be rejected without disturbing the sales in case of a trader. The Tribunal, therefore, correctly restricted t....