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2021 (3) TMI 1454 - AT - Income TaxEstimation of income - bogus purchases - CIT(A) restricting the disallowance of purchases to 12.5% - HELD THAT - On a perusal of the order of the CIT(A), we find that the CIT(A) considered this aspect of the matter elaborately with reference to the submissions of the assessee and the averments in the Assessment Order and following various judicial pronouncements restricted the disallowance to 12.5% of the non-genuine purchases. No infirmity in the order passed by the CIT(A) in restricting the addition/disallowance to the extent of 12.5% of the purchases. Grounds raised by the revenue are dismissed.
Issues involved: Appeal by Revenue against order of Ld. CIT(A) restricting disallowance of purchases to 12.5% as non-genuine/bogus by Assessing Officer for A.Y. 2009-10.
Summary: 1. The Revenue appealed against the Ld. CIT(A)'s decision to limit the disallowance of purchases to 12.5% instead of the entire amount treated as non-genuine by the Assessing Officer. 2. The assessee, engaged in trading, filed income tax return for A.Y. 2009-10. Assessing Officer reopened assessment u/s. 147 based on information about accommodation entries. Assessee claimed purchases were genuine, made through account payee cheques, but Assessing Officer considered them non-genuine due to lack of documentary evidence. 3. Assessing Officer treated entire purchases as non-genuine, adding them to assessee's income. Ld. CIT(A) on appeal restricted disallowance to 12.5% of non-genuine purchases after considering evidence and submissions. 4. Assessee's counsel supported Ld. CIT(A)'s order, while the Department's representative backed the Assessing Officer's decision. 5. After hearing submissions, ITAT Mumbai upheld Ld. CIT(A)'s decision, citing various judicial pronouncements and concluding that 12.5% disallowance was reasonable for purchases made from unknown parties in the grey market. 6. The ITAT found no infirmity in Ld. CIT(A)'s order and dismissed the Revenue's appeal, directing computation of profit at 12.5% of the bogus hawala purchase, resulting in a reduced addition to the assessee's income. 7. The appeal of the Revenue was dismissed, and the order was pronounced on 10.03.2021 as per ITAT Rules.
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