2024 (6) TMI 65

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....account of disallowance of 100% alleged bogus purchases. 3. The brief facts are that assessee is a wholesale trader in coal merchant, running a proprietary concern in the name and style of Jalaram Trading Company. Earlier assessee had filed return of income for A.Y. 2011-12 on 30/07/2011 declaring total income from business at Rs. 8,38,714/-. Later on, an information was received from Maharashtra Sales department providing the details of persons who have provided accommodation entries / bills towards bogus purchases. As per the information, assessee is also one of the beneficiary of bogus purchase bills of Rs. 3,71,19,489/-. Based on this information assessee's case was reopened u/s. 147 and accordingly, notice u/s. 148 was issued on 28/....

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....r viii) Cash Book ix) Item wise sale and Purchase x) Current address of the parties as per the list enclosed from which purchases were made during the year under consideration." 5. Accordingly, AO added the entire purchases of Rs. 7,60,43,860/-. The ld. CIT(A) too has confirmed the said addition on account of entire bogus purchases. 6. Before us ld. Counsel submitted that assessee is a wholesale trader in coal and has been doing business since last several years. Assessee used to purchase the bulk quantity of coal and supply directly to traders. He submitted that if the entire purchase is added without disturbing the corresponding sales, then gross profit would be around 60% and net profit would come to Rs. ....

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....he profit and loss account amounting to Rs. 13,27,74,037/-. The basis for the addition of entire purchases is that, during the investigation it was found that these parties did not exist on the address mentioned at Nagpur. Further, assessee has not maintained certain documents as highlighted by him to substantiate the purchases in light of inquiry. However, nowhere ld. AO has disturbed the trading result or disputed the corresponding quantity of sales recorded in the books of accounts. If the sources of purchase are from the books and there is no dispute regarding the quantity of stock / purchases and corresponding quantity of sales made and the closing stock, then there cannot be disallowance of entire purchases as it will lead to absurd r....