Tribunal limits addition for 'bogus purchases' to 12.50% citing High Court precedents. Appellant partly successful.

The Tribunal partially allowed the appeal by directing the Assessing Officer to restrict the addition on account of 'bogus purchases' to 12.50% of the total amount, citing precedents from the Bombay High Court and the Gujarat High Court. The appellant's grounds were partially accepted, resulting in a partial allowance of the appeal.

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Issues:
- Appellant challenging CIT (A) order regarding addition on account of 'bogus purchases' for the assessment year 2009-2010.

Analysis:
1. The appellant raised seven grounds in the appeal, with the main issue being the correctness of the addition on account of 'bogus purchases' totaling Rs. 1,930. Both the Assessing Officer (AO) and the CIT (A) treated the entire amount of Rs. 1,930 as an addition under section 69C of the Act.

2. During the Tribunal proceedings, the counsel for the assessee proposed restricting the disallowance to a GP rate of 12.50% of the amount. It was argued that similar additions were made in subsequent years without such restrictions.

3. The Tribunal, after hearing both parties, concluded that treating the entire amount of 'bogus purchases' as an addition under section 69C was no longer legally sustainable. The Tribunal referred to judgments from the Bombay High Court and the Gujarat High Court, specifically the case of Nikunj Eximp Enterprises P Ltd and CIT vs. Simit P Sheth, respectively. These judgments supported restricting the addition to the GP rate of 12.50%.

4. Consequently, the Tribunal directed the Assessing Officer to limit the disallowance to 12.50% of the Rs. 1,930 'bogus purchases'. The grounds raised by the assessee were partially allowed, and the appeal was partly allowed as a result.

5. The order was pronounced in the open court on 26th April 2017.

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