2024 (4) TMI 1117 - AT - Income Tax

Estimation of income - bogus purchases - receipt of the information that the assessee is a beneficiary of accommodation entries of bogus purchases from entities controlled by an accommodation entry provider - HELD THAT - As we find that in assessee's own case for assessment year 2012-13 2024 (3) TMI 1012 - ITAT MUMBAI coordinate bench has restricted the addition to the extent of 5%, therefore, unless there is an application for recall of that order, we are duty-bound to state that 5% of the bogus purchases are already determined as income of the assessee. Decided against revenue

Summary

Issues involved:
The appeal filed by the Dy. Commissioner of Income Tax - 19 (1), Mumbai against the appellate order passed by the learned CIT - A for A.Y. 2012-13, challenging the reduction of gross profit on account of bogus purchases.

Grounds raised by the learned AO:
1. Whether the CIT(A) erred in reducing gross profit without considering evidence of accommodation entries.
2. Whether the CIT(A) erred in reducing gross profit without appreciating the statement recorded u/s 132(4) of the Act.
3. Whether the CIT(A) erred in reducing gross profit without considering absence of stock during the search operation.
4. Whether the CIT(A) erred in reducing gross profit without proving genuineness of purchase transaction.
5. Whether the CIT(A) erred in not considering the Supreme Court order on similar issue.
6. Whether the CIT(A) erred in reducing gross profit without considering precedents confirming disallowance of bogus purchases.

Detailed Judgment:
The assessee initially declared a total income, but scrutiny revealed possible bogus purchases linked to an accommodation entry provider. The assessing officer disallowed the entire amount of alleged bogus purchases. The CIT - A, however, directed a reduction of 12.5% instead of 100% of the purchases. The appellate tribunal further restricted the addition to 5% of the total purchases in the assessee's appeal.

The issue arose when the appeal filed by the AO was not considered simultaneously with the assessee's appeal, rendering the AO's appeal infructuous due to the previous determination of 5% as income. The tribunal upheld the previous decision, dismissing the AO's appeal.

In conclusion, the tribunal dismissed the appeal of the learned AO based on the previous determination of 5% as income in the assessee's case for the same assessment year. The decision was pronounced in open court on 26.04.2024.