Bogus Purchases – ITAT reduces addition to 2% of bogus purchases

IN THE INCOME TAX APPELLATE TRIBUNAL

The Relevant Text of the Order as follows :

14. We had carefully gone through the order of the authorities below as well as the order of the Tribunal in assessee’s own case for the A.Y.2010-11 wherein under similar facts and circumstances and after considering all the judicial pronouncements, the addition was upheld to the extent of 2% of the bogus purchases. We had also deliberated on various judicial pronouncements referred by the lower authorities in their respective orders as well as cited by the ld AR of the assessee during the course of hearing before us in the context of factual matrix of the case.

From the record we found that during these assessment years, the assessee had also paid sales tax amounting to Rs.36,04,306/- and Rs.53,05,061/- alongwith interest thereon. Thus, there is no saving on account of sales tax liability which was alleged to be evaded by having entered into such alleged bogus purchases.

Keeping in view the fact that the assessee has maintained quantitative details of goods purchased and sold and had also furnished quantitative reconciliation of goods so purchased and sold, the correctness of which was not doubted by the lower authorities. Under these facts and circumstances and respectfully following the order of the Tribunal in assessee’s own case, wherein the facts and circumstances are same, we direct the AO to restrict addition to the extent of 2% of bogus purchases.