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G. S. KULKARNI, SOMASEKHAR SUNDARESAN
Pr. Commissioner of Income Tax – Appellant
Versus
SVD Resins & Plastics Pvt. Ltd. – Respondent
JUDGMENT :
G.S. KULKARNI, J.
1. These are two appeals filed by the revenue assailing a common order dated 3 August 2017 passed by the Income Tax Appellate Tribunal (for short “the Tribunal”) whereby the appeals filed by the revenue stand partially allowed and the appeals filed by the assessee, were dismissed.
2. The revenue has raised the following questions of law:
(B) Whether on the facts & in the circumstances of the case and in law, the Hon’ble ITAT was justified in relying upon the decision of the Hon’ble Bombay High Court in the case of CIT vs. Hariram Bhambhani (ITXA No. 313 of 2013), when the issue of addition u/s. 69C as to the Bogus Sales was not involved in the present case?”
3. The assessment years in question are assessment years 2009-2010 and 2010-2011. Briefly, the facts are the assessee is stated to be engaged in the business of trading in resins and chemicals on wholesale basis. On information received
The court established that the Assessing Officer must substantiate claims of bogus purchases with specific evidence rather than general information.
The failure of the respondent-assessee to prove the genuineness of bogus purchases justifies the addition of the entire amount as income under Section 69C of the Income Tax Act.
The court established that acceptance of a percentage of unproven purchases necessitates full disallowance under Section 69C, emphasizing the burden of proof lies with the assessee.
The court established that in cases of bogus purchases, only a reasonable percentage of the disputed amount should be added to income, reflecting industry practices.
The court ruled that when purchases are deemed bogus, the entire amount should be disallowed, rejecting the Tribunal's speculative estimation of profit margin.
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