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2020 (11) TMI 697 - AT - Income TaxEstimation of income - bogus purchases - CIT-A restricting the disallowance to 12.5% - HELD THAT - As relying on SIMIT P SHETH 2013 (10) TMI 1028 - GUJARAT HIGH COURT no infirmity in the order passed by the Ld.CIT(A) in restricting the addition/disallowance to the extent of 12.5% of the purchases. Grounds raised by the revenue are dismissed.
Issues:
Appeal by revenue against orders of Ld.CIT(A) restricting disallowance to 12.5% of purchases as non-genuine. Analysis: The assessee, engaged in trading industrial tools, filed returns for A.Ys 2009-10, 2010-11, and 2011-12. Assessing Officer reopened assessments based on information about accommodation entries. Assessee failed to prove genuineness of purchases, leading to disallowance of entire purchases as non-genuine. Ld.CIT(A) restricted disallowance to 12.5% of non-genuine purchases. The Assessing Officer's decision was based on lack of proof of material purchase and unserved notices to parties. The Ld.CIT(A) considered submissions, referencing the decision of the Hon'ble Gujarat High Court, and restricted disallowance to 12.5% of non-genuine purchases for A.Y. 2011-12. The Ld.CIT(A) found the appellant's submissions insufficient to prove the genuineness of purchases. The lack of production of parties, delivery challans, or transportation details weakened the appellant's case. The documentary evidence presented was deemed orchestrated, not conclusively proving genuineness. The court held that payment by cheque alone does not establish authenticity when circumstances are suspect. The onward sales were not doubted, indicating purchases from undisclosed parties at lower rates to suppress profits. Following the Gujarat High Court's decision in CIT vs. Simit P. Sheth, the addition was restricted to 12.5% of the bogus purchases for A.Y. 2011-12. The ITAT upheld Ld.CIT(A)'s decision, finding no faults in restricting the disallowance to 12.5% of purchases. The revenue's grounds were dismissed, and the appeals were consequently rejected. The order was pronounced on 23.10.2020 in accordance with ITAT Rules.
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