TaxTMI 
TaxTMI 
2025 (11) TMI 1982
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....e Act") against the order dated 06.05.2024 passed by the Income Tax Appellate Tribunal, Surat (For Short "the Tribunal") in ITA No. 750/SRT/2023 for the Assessment Year 2010-11 raising the following substantial questions of law:- "(A) Whether on the facts and circumstances of the case and in law, the Hon'ble ITAT is justified in dismissing the appeal of the Revenue against the decision of the learned CIT (A) in restricting the addition made by the AO at the rate of 100% of bogus purchases amounting to Rs. 10,73,43,555/- to 6% of the bogus purchases, ignoring the fact that these purchases are sham transactions fabricated through bogus paper concerns of Bhanwarlal Jain Group Companies which were engaged in providing accommodation ent....
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....blished that expenditure was unexplained/bogus, entire amount of bogus expenditure was to be added to income of assessee? * the ratio of judgment of Hon'ble Apex Court on the issue of unexplained expenditure (bogus purchase) in the case of N.K. Proteins v. Dy. CIT [2017] 84 taxmann.com 195/250 Taxman 22 (SC) wherein, the SLP filed by the assessee has been dismissed by the Hon'ble Apex Court? (e) Whether on the facts and circumstances of the case and in law, the Hon'ble ITAT is justified in dismissing the appeal of the revenue wherein the AO has made 100% addition of bogus purchases amounting to Rs. 10,73,43,555/- made by the assessee with the entry provider not appreciating the non-genuineness of the expenditure booked was....
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....r dated 06.05.2024 dismissed the appeal of the revenue and upheld the view of CIT (Appeals) restricting the addition to 6% of the bogus purchases. The Tribunal has relied on its decision rendered in the case of Pankaj K. Chaudhary in ITA 1379/Ahd/2017 for Assessment Year 2007-08. 4. This Court finds that in several matters arising out of transactions with the said Bhanwarlal Jain Group, the Tax Appeals of the Department have been dismissed where the learned ITAT has assessed the disallowance at 6%, as has been done in the present case. This Court in the case of PCIT v. Keshri Exports [2024] 168 Taxmann.com 528 (Gujarat) after considering the decision inf the case of Pr. CIT v. Pankaj J. Chaudhary rendered in Tax Appeal No. 617 of 2022 da....
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....ute question. In the appellant's case, it is seen that GP rate shown is 0.78%". 5.1 The final view was expressed in para 10.10, "Following the above judicial pronouncements and views taken by Ld. CIT(A) & AOS in a few identical cases. In a couple of identical cases, where the GP shown by the appellants is more than 5%, I have confirmed the disallowance of the impugned purchases to the extent of 5% of the impugned purchases. However in the instant case the appellant is showing measly G.P. of only 0.78% on turnover. In view of this I am of the considered opinion that disallowance of 12.5% of the impugned purchases would be reasonable and would meet the ends of justice. Hence, the disallowance is restricted to 12.5% of the impugned pu....
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....hat the ratio of decision of Hon'ble Gujarat High Court in Mayank Diamond Private Limited (supra) is directly applicable on the facts of the present case. We find that in Mayank Diamonds the Hon'ble High Court restricted the additions to 5% of GP. We have seen that in Mayank Diamonds P Ltd (supra), the assessee had declared GP @ 1.03% on turnover of Rs 1.86 Crore. The disputed transaction in the said case was Rs. 1.68 Crore. However, in the present case the assessee has declared the GP @ 0.78%. It is settled law that under Income-tax, the tax authorities are not entitled to tax the entire transaction, but only the income component of the disputed transaction, to prevent the possibility of revenue leakage. Therefore, conside....
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....Mayank Diamonds P Ltd (supra), the assessee had declared GP @ 1.03% on turnover of Rs 1.86 Crore. The disputed transaction in the said case was Rs. 1.68 Crore. However, in the present case the assessee has declared the GP @ 0.78%. It is settled law that under Income-tax, the tax authorities are not entitled to tax the entire transaction, but only the income component of the disputed transaction, to prevent the possibility of revenue leakage. Therefore, considering overall facts and circumstances of the present case, we are of the view that disallowances @ 6% of impugned purchases / disputed purchases would be sufficient to meet the possibility of revenue leakage. In the result the ground No. 2 of appeal raised by the assessee is pa....