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2020 (11) TMI 255 - AT - Income TaxEstimation of expenses - bogus purchases - computing the profit for the purpose of section 28 of the I.T. Act, 1961 taking in to consideration the bogus bills against which no goods have been received - CIT(A) erred in restricting the addition to @6.5% of total bogus purchases - HELD THAT - On a perusal of the order of the Ld.CIT(A), we find that the Ld.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 restricted the disallowance to 6.5% of the non-genuine purchases - No infirmity in the order passed by the Ld.CIT(A) in restricting the addition/disallowance to the extent of 6.5% of the purchases. Grounds raised by the revenue are dismissed.
Issues Involved:
Appeal by Revenue against CIT(A) order for AY 2009-10 - Addition to non-genuine purchases - Estimation of profit - Compliance with IT Act - Consideration of Supreme Court order - Grounds raised by Revenue. Analysis: The appeal pertains to the Revenue challenging the CIT(A) order for the Assessment Year 2009-10. The primary issue raised by the Revenue was the restriction of addition to 6.5% of total bogus purchases for computing profit under Section 28 of the Income Tax Act, 1961. The Revenue contended that the CIT(A) erred in presuming purchases were made from unknown parties when bills were received from hawala dealers. Additionally, the Revenue argued that the CIT(A) did not consider the applicability of Section 69 of the IT Act. The Revenue also raised concerns regarding the CIT(A) not considering a Supreme Court order on a similar issue that was already the law of the land at the time of pronouncement of the CIT(A) order. The facts of the case revealed that the assessee, engaged in trading of metals, declared income for AY 2009-10. The Assessing Officer reopened the assessment based on information regarding accommodation entries provided by certain dealers, including the assessee. The AO treated purchases made from specific parties as non-genuine, leading to a disallowance. The CIT(A) later restricted the disallowance to 6.5% of the non-genuine purchases after considering evidence and submissions by the assessee. During the proceedings, the assessee argued that the purchases were genuine and duly accounted for, while the Revenue supported the AO's decision. The CIT(A) extensively considered the matter and the submissions, ultimately restricting the disallowance to 6.5% of the non-genuine purchases. The CIT(A) emphasized the need for the assessee to substantiate claims with supporting documents and considered the percentage of profit in the line of business. The CIT(A) referred to a previous decision in the assessee's case for AY 2011-12, where a similar issue was addressed. Upon review, the Tribunal found no infirmity in the CIT(A) order restricting the addition to 6.5% of the purchases. The Tribunal dismissed the grounds raised by the Revenue, ultimately upholding the CIT(A) decision. The appeal by the Revenue was consequently dismissed. Additionally, the delay in pronouncement due to the COVID-19 pandemic was noted, in compliance with relevant rules and court decisions. In conclusion, the Tribunal upheld the CIT(A) decision regarding the restriction of addition to non-genuine purchases at 6.5%, emphasizing the importance of substantiating claims and considering the percentage of profit in the relevant business line. The Tribunal's dismissal of the Revenue's appeal affirmed the CIT(A) order for the AY 2009-10.
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