2023 (10) TMI 211 - HC - Income Tax

Estimation of income - Bogus purchases - CIT(A) partly allowed the appeal restricting the disallowance to 5% of the impugned purchases - as per ITAT considering overall facts and circumstances of the present case, disallowances @ 6% of impugned purchases / disputed purchases would be sufficient to meet the possibility of revenue leakage - HELD THAT - The entire issue was decided based on appreciation of facts where it was found that the assesses had obtained the bill from M/s. Rajan Gems and M/s. Rajat Diamond Pvt. Ltd. which were Shri Gautam Jain and group concerns without actually getting the material. This was nothing but an accommodation entry. The finding of the Tribunal essentially are findings of facts. No substantial question of law is involved.

Summary

Issues Involved:
1. Legitimacy of the addition of 5% of alleged bogus purchases.
2. Application of section 69C regarding bogus purchases.
3. Consideration of documentary evidence supporting transactions.
4. Validity of the Tribunal's order based on appreciation of facts and evidence.

Comprehensive Summary:

Issue 1: Legitimacy of the Addition of 5% of Alleged Bogus Purchases
The appellant challenged the Tribunal's decision confirming the addition of 5% of alleged bogus purchases without any base, arguing that the book results for the year under consideration and previous years were ignored. The Tribunal, referencing the case of Pankaj K. Chaudhary, sustained the addition at 6% of bogus purchases, citing similar judgments where such additions were upheld to prevent revenue leakage.

Issue 2: Application of Section 69C Regarding Bogus Purchases
The appellant contended that the Tribunal erred in confirming the addition u/s 69C of the Act. The Tribunal, however, relied on findings from the Investigation Wing that the appellant was a beneficiary of accommodation entries provided by the Gautam Jain group, which were utilized to suppress profits by inflating purchase expenses.

Issue 3: Consideration of Documentary Evidence Supporting Transactions
The appellant argued that all documentary evidence, including purchase invoices, bank statements, and stock registers, were provided, demonstrating the genuineness of the transactions. Despite this, the Assessing Officer and subsequent authorities found the purchases unverifiable, concluding they were bogus as no actual goods were delivered, only bills were issued.

Issue 4: Validity of the Tribunal's Order Based on Appreciation of Facts and Evidence
The appellant claimed the Tribunal's order was perverse for not appreciating the facts and documentary evidence. The Tribunal, however, found that the appellant had obtained accommodation entries from entities without actual material transactions, a finding supported by the Investigation Wing's report and consistent with similar cases adjudicated by the courts.

Conclusion:
The appeals were dismissed as the Tribunal's findings were based on substantial evidence and consistent legal precedents, concluding no substantial question of law was involved.