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2024 (6) TMI 1364 - AT - Income TaxEstimation of income - bogus purchases - CIT(A) restricted Addition to 12.5% - HELD THAT - CIT(A) has considered the detailed submissions of the parties in very meticulous manner and has returned a well-reasoned and legally sustainable finding. The reason given by the Ld. CIT(A) are cogent and also appeals to the conscience of this Tribunal. Moreover, the Ld. DR on behalf of revenue has failed to produce any contrary material which may lead us to consider the material on record differently from the considering of it by the Ld. CIT(A). Nothing is brought before us as to why the present A.Y. should be dealt with separately from the two previous A.Y. 2009-10 and 2010-11, wherein the concerned Ld. CIT(A) as discussed in earlier part of this order, has restricted the additions to the extent of 12.5% on account of alleged bogus purchases. There is no illegality and perversity in the impugned order of the Ld. CIT(A) and we find no merit in the appeal and accordingly decides the grounds of appeal against the appellant by dismissing the same.
Issues:
1. Disallowance of expenses on bogus purchases 2. Addition restriction on bogus purchases 3. Application of legal precedent in disallowance decision Issue 1: Disallowance of expenses on bogus purchases The appeal was filed by the revenue against the order of the Commissioner of Income Tax (Appeals) for the assessment year 2011-12. The dispute revolved around the disallowance of Rs. 1,34,21,728/- on the grounds of bogus/unsubstantiated purchases. The Assessing Officer had made an addition of 100% on these purchases, while the Commissioner restricted it to 12.5%. The department challenged the deletion of disallowance and the restriction of addition by the Commissioner. Issue 2: Addition restriction on bogus purchases The department contested the Commissioner's decision to restrict the addition on bogus purchases to 12.5% where the Assessing Officer had initially made an addition of 100%. The Commissioner justified the restriction based on previous decisions and legal precedents. The department argued against this restriction, claiming that the Commissioner's findings were not in line with established law. Issue 3: Application of legal precedent in disallowance decision The Commissioner's order was based on a detailed analysis of the facts and legal arguments presented by both parties. The Commissioner distinguished the case from a Supreme Court decision and relied on a Gujarat High Court ruling to support the restriction of the addition on bogus purchases. The Commissioner's decision was upheld by the Appellate Tribunal, emphasizing the lack of contrary evidence from the revenue to challenge the Commissioner's findings. The Tribunal found the Commissioner's order to be legally sound and dismissed the appeal by the revenue. In conclusion, the Appellate Tribunal upheld the Commissioner's decision to delete the disallowance and restrict the addition on bogus purchases to 12.5%. The Tribunal found no merit in the revenue's appeal and dismissed it, affirming the legality and reasoning behind the Commissioner's order.
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