No addition towards Bogus Purchase if assessee has opted for presumptive taxation scheme under Section 44AD
Recently, Bangalore ITAT has held that no addition towards Bogus Purchase can be made if assessee has opted for presumptive taxation scheme under Section 44AD
Let us have a Short Overview of the case:
Lakshmanram Bheemaji Purohit, engaged in trading waste home products, filed his return under Section 44AD of the Income-tax Act, 1961 (presumptive taxation). The Assessing Officer (AO) received information from the GST Department alleging that the assessee had availed bogus purchase bills and added Rs.16.06 lakhs to his income. This addition was upheld by the CIT(A).
Tribunal’s Decision:
The ITAT Bangalore held in favour of the assessee, observing:
– Since the assessee opted for presumptive taxation under Section 44AD, he was not required to maintain books of accounts or explain individual purchases, unless the entries had a nexus with gross receipts. The gross receipts declared by the assessee were undisputed and within limits specified under Section 44AD.
– The AO made additions solely based on GST Department’s information without conducting an independent inquiry.
The copy of the order is as under:
