JCIT (OSD), Circle-1, Raipur (C.G.) Vs. Balajee Loha Private Limited

Parties Involved

Facts Summary

The assessee company M/s. Balajee Loha Private Limited made a bogus purchase of Rs.44,92,645/- from M/s Mideast Integrated Steels Limited. An order under section 148A(d) was passed, and a notice under section 148 of the Income Tax Act, 1961 was issued to the assessee. The assessee filed its return of income in response to the notice. Various notices under section 142(1) were issued requiring explanation on the transaction, to which the assessee made partial compliance. The assessee did not provide invoices, proof of receipt of goods, or details of transportation. The genuineness of the transaction could not be established, and the purchases were treated as non-genuine. The profit element embedded in the non-genuine purchases was estimated at 25% of the non-genuine purchase and accordingly 25% of the total non-genuine purchases was disallowed. The amount of disallowance was calculated at 25% of Rs.4492645/- = 11,23,160/-. The assessment was completed under section 147 r.w.s. 144B of the Act on 23.03.2023 determining total income at Rs.7,30,63,330/- after making addition/disallowance of Rs.11,23,160/- being 25% of profit on purchases made of Rs.44,92,645/- treating the same as bogus.…

Legal Issues

• 1. Whether the disallowance of 25% of the non-genuine purchase is justified?
• 2. What is the fair estimation of profit embedded in such purchases?

Judgment Outcome

Decided in favour of Partly Assessee / Partly Revenue.

Precedents Relied Upon

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