2018 (12) TMI 1393 - HC - Income Tax

Rejection of books of accounts - bogus purchases - N.P. determination - Held that - It was the case of the respondent that all purchases were made by payment through Banks an opportunity to cross-examine sought by the respondent ought to have been given. This opportunity of cross-examination was not given only because the AO was running short of time to complete the account. It further holds that the net profit rate of 11 % the entire purchases made during the year was applied by the CIT (A) to determine the addition. Thus, the Tribunal restricted to only 11% out of the purchases of ₹ 3.09 crores made from the seven parties. This in view of the fact that consumption of goods is not denied/ disputed. We find the impugned order of the Tribunal has taken a view on facts which is possible view. It cannot be said to be perverse.

Summary

Issues:
Challenge to order of the Income Tax Appellate Tribunal regarding substitution of best judgment of CIT (A) without specific reasons.

Analysis:
The appeal under Section 260A of the Income Tax Act, 1961, challenges the order passed by the Income Tax Appellate Tribunal for Assessment Year 2010-11. The respondent, a Civil Contractor, initially declared income of &8377;36.34 lakhs, but the assessment determined the income at &8377;3.45 crores due to non-genuine purchases from seven parties. The books of account were rejected, and the purchases worth &8377;3.09 crores were disregarded. The CIT (A) reduced the addition to &8377;1.23 crores based on previous profit percentages. The respondent then appealed to the Tribunal, arguing for cross-examination and asserting that all purchases were bank-paid. The Tribunal limited the addition to 11% of the purchases, considering the uncontested consumption of goods.

The Tribunal's decision was based on reasonable facts and cannot be considered perverse. The proposed question of law was deemed unsubstantial in light of the circumstances. Therefore, the appeal was dismissed without costs.