Wherever assessee had purchased the materials by way of E-way bill such purchases cannot be treated as bogus or non genuine – ITAT
In a recent judgment, ITAT Delhi has held that wherever the assessee had purchased the materials by way of E-way bill such purchases cannot be treated as bogus or non genuine and purchases made other than under E-way bill can be considered as unproved purchases and certain percentage of profit element.
ABCAUS Case Law Citation:
4881 (2025) (11) abcaus.in ITAT
In the instant case, the assessee had challenged the order passed by the CIT(A) in n sustaining the addition made by the Assessing Officer in respect of purchases made by the assessee as non genuine and bogus.
The assessee has also filed additional grounds of appeal challenging the assumption of jurisdiction u/s 153C of the Act by the AO as arbitrary, unjust and invalid as there was no incriminating material qua the assessee found during the course of search.
There was a search in the cases of Business Group and certain books of account and ledgers on the computer were found. During the course of search statement of key person was also recorded wherein he had stated that he was operating various companies wherein not only the actual business is conducted but also certain accommodation entries have been provided to various entities through intermediaries.Â
Based on the statements and the materials found in the course of search, assessment in the case of the assessee was completed u/s 143(3) r.w.s. 153C of the Act by recording satisfaction note u/s 153C and accordingly an addition was made disallowing certain purchases treating them as bogus purchases.Â
The Tribunal, in the course of hearing made a query to the counsel of the assessee as to whether the assessee was agreeable for estimation of certain purchases of profit element on the alleged entry to which the assessee agreed and submitted that the gross profit rate in the case of the assessee could be estimated around 4%. However, the Revenue stated that if certain percentage of profit element was to be estimated on the turnover of the assessee the reasonable percentage of profit element of 8% may be considered as reasonable.
With respect to the purchases of material made by assessee by way of E-way bill, the Tribunal opined that if the assessee had made purchases on E-way Bill the movement of goods cannot be doubted and thus the purchases to that extent cannot be treated as non genuine.
The Tribunal opined that wherever the assessee had procured the materials by way of Eway bill such materials cannot be treated as non genuine and the materials procured other than E-way bill can be considered as unproved purchases and certain percentage of profit element should be considered for the purpose of the addition since there was no dispute that the sales were already considered for taxation.  Â
Accordingly, the Tribunal directed the Assessing Officer to estimate the profit element from the purchases other than those made by way of E-way bill @6% subject to verification.
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