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2024 (10) TMI 105 - HC - Income TaxEstimation of income - Bogus purchases - purchases are sham transactions fabricated through bogus paper concerns engaged in providing accommodation entries - ITAT partly allowing the appeal of the Revenue wherein it was held that in respect of bogus purchases, the addition at the rate of 6% of bogus purchases is fair and reasonable. HELD THAT - The view taken and the conclusion arrived at by the appellant Tribunal are based on material before it and after analysing the facts and figure available before it. When the Tribunal has thought it fit to reduce the disallowance at 6% from 12.5%, the Tribunal had before it the facts which were duly analysed by it. No interference is called for in the said conclusion and findings of the Tribunal in the present appeal by this court. See PANKAJ K. CHOUDHARY 2021 (10) TMI 653 - ITAT SURAT - No substantial questions of law can be said to have arisen.
Issues:
1. Dismissal of appeal against decision on restricting addition of bogus purchases 2. Justification of dismissing appeal based on previous judgments 3. Consideration of hawala dealers' payments as profit suppression 4. Failure to consider relevant judgments in restricting addition of purchases 5. Dismissal of appeal despite non-genuineness of expenditure established Analysis: Issue 1: The Tax Appeal under Section 260A of the Income Tax Act raised substantial questions of law regarding the dismissal of the Revenue's appeal against the decision to restrict the addition of bogus purchases. The Tribunal had limited the addition made by the Assessing Officer from 100% to 6% of the bogus purchases, leading to the primary contention in this case. Issue 2: The Tribunal's justification for dismissing the Revenue's appeal was based on previous judgments, including the decision in the case of Pankaj J Chaudhary and the judgment of the Hon'ble ITAT in N.K. Industries Ltd. vs. DCIT. The Tribunal also referenced the Calcutta High Court decision in PCIT vs. Premlata Tekriwal and the Supreme Court's ruling in N.K. Proteins v. Dy. CIT to support their decision. Issue 3: The consideration of payments to hawala dealers as profit suppression was also a crucial aspect of the case. The Tribunal had to determine whether the amount claimed as payment to hawala dealers constituted suppression of profits by obtaining bogus purchase bills, which would be liable to be added to the Assessee's income. Issue 4: One of the contentions raised was the failure of the Tribunal to consider relevant judgments, including the Gujarat High Court's decision in N.K. Industries Ltd. vs. DCIT and the Calcutta High Court's ruling in PCIT vs. Premlata Tekriwal. The appellant argued that these judgments supported the addition of 100% of purchases from bogus parties, contrary to the Tribunal's decision to restrict the addition to 6%. Issue 5: Despite the establishment of the non-genuineness of the expenditure, the Tribunal dismissed the appeal of the Revenue. The appellant contended that the non-genuineness of the expenditure was proven by information received from DIT(Inv)-IL, Mumbai, and the Assessee's failure to discharge the onus of establishing the genuineness of the transaction before the AO and the CIT(A). This comprehensive analysis of the judgment highlights the key issues, legal arguments, and the Tribunal's reasoning behind dismissing the appeal.
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