2015 (9) TMI 912 - HC - Income Tax

Additions made on account of bogus purchases - ITAT confirming the order passed by CIT(A) restricting the additions - Held that - Perused the orders passed by the CIT (Appeals) as the the ITAT and the ratio laid down by the division bench of this Court in case of Vijay Proteins Ltd. V. Commissioner of Income-tax (2015 (1) TMI 828 - GUJARAT HIGH COURT) to held that the assessee would be liable to pay the income tax only to the ratio of 20% of the amount of purchase value and not on the entire so called bogus purchase and considering the above, we are of the opinion that the present appeal is meritless and accordingly is dismissed. - Decided against revenue.

Summary

Issues Involved:
Challenge to orders of Commissioner of Income Tax (Appeals) and Income Tax Appellate Tribunal regarding disputed purchases in the assessment year.

Analysis:
1. The appeal was filed by the revenue under Section 260A of the Income-tax Act, 1961, against the orders of the Commissioner of Income Tax (Appeals) and the Income Tax Appellate Tribunal. The dispute arose from the assessment year 1995-96 where the Assessing Officer found certain purchases shown by the assessee to be doubtful due to the sellers not being genuine. The assessee contended that payments were made through cheques, denying any false entries in the books. The CIT (Appeals) relied on a precedent and held the assessee liable to pay tax on only 20% of the purchase value, not the entire amount. This decision was upheld by the ITAT, leading to the current appeal.

2. The substantial question of law framed was whether the Appellate Tribunal was correct in confirming the order restricting additions made on account of bogus purchases from a higher amount to a lower one. The advocate for the appellant acknowledged the decision in a relevant case supporting the respondent's position. Conversely, the advocate for the respondent argued that the respondent's case aligned with the referenced decision, indicating a strong legal ground.

3. After hearing arguments from both sides and examining the orders of the CIT (Appeals) and the ITAT, as well as considering the precedent set by the High Court in a similar case, the High Court judges concluded that the present appeal lacked merit. Consequently, the appeal was dismissed, affirming the decision of the lower authorities regarding the disputed purchases in the assessment year.