Bogus Purchases of ₹2.5 Crore: ITAT applies 4% GP Rate citing Taxpayer’s Declared Profit

The ITAT (Income Tax Appellate Tribunal) applied a 4% Gross Profit (GP) rate on bogus purchases of ₹2.5 crore, citing the taxpayer's declared profit rate. The tribunal adopted a pragmatic approach by estimating the profit embedded in the unexplained purchases based on the assessee's own declared profitability, rather than making a higher disallowance, acknowledging the difficulty in precisely determining the actual profit margin on fictitious transactions.