2015 (9) TMI 911 - HC - Income Tax

Additions made on account of bogus purchases - ITAT confirming the order passed by CIT(A) restricting the additions - Held that - Perused the orders passed by the CIT (Appeals) as the the ITAT and the ratio laid down by the division bench of this Court in case of Vijay Proteins Ltd. V. Commissioner of Income-tax (2015 (1) TMI 828 - GUJARAT HIGH COURT) to held that the assessee would be liable to pay the income tax only to the ratio of 25% of the amount of purchase value and not on the entire so called bogus purchase and considering the above, we are of the opinion that the present appeal is meritless and accordingly is dismissed. - Decided against revenue.

Summary

Issues:
Challenge to orders passed by Commissioner of Income Tax (Appeals) and Income Tax Appellate Tribunal regarding tax liability on alleged bogus purchases.

Analysis:
1. The appellant challenged the order of the Commissioner of Income Tax (Appeals) and the Income Tax Appellate Tribunal regarding the tax liability on certain purchases declared as doubtful. The Assessing Officer concluded that the purchases were questionable due to the authenticity of the sellers, leading to potential tax liability for the assessee.

2. The assessee contended that the payments for the purchases were made via cheques, refuting the possibility of false entries in the books of account. Citing the decision in the case of Vijay Proteins Ltd. V. Commissioner of Income Tax, the assessee argued for a reduced tax liability based on the purchase value ratio of 25% instead of the entire amount of the alleged bogus purchases.

3. The substantial question of law framed for consideration was whether the Appellate Tribunal was correct in confirming the order restricting the additions made on account of the alleged bogus purchases from a higher amount to a lower sum, as challenged by the revenue.

4. The appellant's counsel acknowledged that the decision in Vijay Proteins Ltd. V. Commissioner of Income Tax, which supported the assessee's position, had been upheld by the High Court, indicating a legal precedent favoring the assessee.

5. Conversely, the respondent's counsel argued that the case of the assessee aligned with the aforementioned decision, implying that the assessee's position was supported by established legal principles.

6. After hearing arguments from both sides and examining the orders of the Commissioner of Income Tax (Appeals) and the Income Tax Appellate Tribunal, along with the legal precedent set by the High Court in Vijay Proteins Ltd. V. Commissioner of Income Tax, the High Court concluded that the appeal lacked merit and subsequently dismissed it.