2024 (11) TMI 1266 - HC - Income Tax

Estimation of income - Bogus purchases - Tribunal partly allowed the appeal of the Revenue and restricted the disallowance at 6% of the amount of the unexplained purchases - HELD THAT - As decided in PANKAJ K CHOUDHARY 2023 (3) TMI 1402 - GUJARAT HIGH COURT 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. No substantial questions of law.

Summary

Issues:
1. Justification of restricting the addition made by the AO from 100% to 6% of the bogus purchase.
2. Consideration of the genuineness of the transaction with concerns identified as bogus entities.
3. Compliance with the judgment of Gujarat High Court and Calcutta High Court regarding additions on purchases from bogus parties.
4. Deletion of the addition made by the AO on account of bogus purchase despite precedents like Mayank Diamonds Pvt Ltd.
5. Validity of reassessment and justification of the reopening of the case.

Analysis:

Issue 1:
The Tax Appeal involved questions regarding the justification of restricting the addition made by the Assessing Officer (AO) from 100% to 6% of the bogus purchase. The appellant challenged the decision of the Income Tax Appellate Tribunal (ITAT) in restricting the addition without appreciating the lack of proof of genuineness in the transactions.

Issue 2:
The case revolved around the genuineness of the transactions with concerns identified as bogus entities, particularly those associated with Shri Bhanwarlal Jain. The Tribunal's decision to restrict the addition without considering the lack of genuineness in the transactions was a key point of contention.

Issue 3:
The judgment referenced precedents set by the Gujarat High Court and the Calcutta High Court regarding additions on purchases from bogus parties. The Tribunal's decision to restrict the addition to 6% without considering these judgments was a significant aspect of the appeal.

Issue 4:
The deletion of the addition made by the AO on account of bogus purchase despite precedents like Mayank Diamonds Pvt Ltd. raised questions about the consistency in applying precedents and the rationale behind such decisions.

Issue 5:
The validity of the reassessment and the justification for reopening the case were also challenged in the appeal. The appellant sought clarity on the legal basis for the reassessment and the subsequent decisions made by the authorities.

The detailed analysis of each issue highlighted the legal arguments, precedents, and the Tribunal's reasoning behind the decision to restrict the additions on bogus purchases. The judgment also referenced relevant case laws and judgments to support the conclusions reached by the Tribunal.