Bogus purchases of certain amount added to income and Tribunal having found that assessee’s GP for year was 7 per cent adopted GP rate of 8 per cent on purchase , Tribunal was justified [ Gujrat High Court in Jagdish H Patel]

1. The assessee was engaged in the business of refining and selling edible oils.
2. The Assessing Officer having found that during the year the assessee had made bogus purchases worth of Rs. 5.66 crores from five different agencies added the said amount to the income of the assessee. He further having found that during survey operation carried out on the assessee, the latter in his statement had disclosed a sum of Rs. 61.05 lakhs on account of bogus
3. Held that Adding the entire amount of bogus purchases would give a completely distorted figure and the gross profit would be higher than the total turnover. Such bogus purchases were for off-setting the purchases from producers and agriculturists directly who would not have the billing facility purchases also added said amount to the income of the assessee.
4. In the business of crushing the oil seeds, sometimes purchases of the agricultural raw material was made directly from producers and agriculturists from whom purchase bills were not available. The entire lot of purchases could not be treated as bogus.

Jagdish H Patel 2017] 84 taxmann.com 259 (Gujarat) AUGUST  1, 2017