2024 (3) TMI 91 - AT - Income Tax

Estimation of income - Bogus purchases - CIT(A) restricted the addition to the gross profit ratio of the genuine purchases - HELD THAT - We find that while deciding similar issue in assessee s own case in Smaru Gems 2019 (6) TMI 1718 - ITAT MUMBAI following the aforesaid decision Mohommad Haji Adam 2019 (2) TMI 1632 - BOMBAY HIGH COURT , directed the AO to restrict the addition as regards the bogus purchases by bringing the gross profit rate on such bogus purchases at the same rate as that of the other genuine purchases. Thus, no infirmity in the impugned order passed by the learned CIT(A) granting partial relief to the assessee - Decided against revenue.

Summary

Issues Involved:
The judgment involves the challenge by the Revenue against the order passed under section 250 of the Income Tax Act, 1961 for the assessment year 2012-13.

Grounds Raised by Revenue:
1. Whether the CIT(A) erred in restricting the addition made by the Assessing Officer without appreciating the Supreme Court decision on purchases from bogus suppliers.
2. Whether the CIT(A) erred in not confirming the addition made on account of bogus purchase.
3. Whether the CIT(A) failed to appreciate the assessee's failure to provide confirmation of transactions.
4. Whether the CIT(A) erred in restricting the addition despite acknowledging suspicious cash purchases.
5. Amendment to alter or add new grounds.

Facts of the Case:
The assessee filed its return of income declaring a total income. Subsequently, it was found that the assessee benefited from accommodation entries through bogus purchases. The Assessing Officer added the entire amount of such purchases to the total income. The CIT(A) granted partial relief to the assessee based on the gross profit ratio of genuine purchases.

Judgment Details:
The AO and CIT(A) both concluded that the purchases were bogus. The CIT(A) restricted the addition to the gross profit ratio of genuine purchases, following a High Court decision. The Tribunal upheld the CIT(A)'s decision based on a similar case precedent. The Tribunal found no issue with the CIT(A)'s order and dismissed the Revenue's appeal.

Result:
The appeal by the Revenue was dismissed, and the order was pronounced in open court on 27/02/2024.