Only profit element of bogus purchases are to be added to income, in case, sales are genuine: Bombay HC
Ashwin Purshotam Bajaj (ITA No. 576 of 2018)
Facts:
- During the course of reassessment proceedings, the Assessing Officer, after considering the depositions and affidavits filed before the Sales Tax Authority, came to a conclusion that the entities from whom the assessee had made purchases were only indulged in bogus accommodation entries without supply of goods.
- Accordingly, the purchases amounting to Rs.90,33,191/- was treated as bogus and the same was added to the returned income of the assessee.
Hon. Bombay HC held as under:
- The Assessing Officer did not doubt the sales made by the assessee against the purchases and himself had held that purchases were made from someone else while bogus bills were organized by Hawala Traders.
- Also the assessee had reconciled the quantitative details of stock as per sales invoices.
- Since the sales were not doubted and quantitative details of stock was reconciled, only the profit element in these accommodation entries are to be added to the income and not the entire purchase amount.
