ITAT upholds partial disallowance of alleged bogus purchases, CIT(A)'s decision affirmed.

The Income Tax Appellate Tribunal (ITAT) upheld the CIT(A)'s decision to disallow 3.34% of the total alleged amount attributed to bogus purchases by the appellant. Despite evidence indicating the purchases were bogus and lacked proof of actual goods movement, the CIT(A) chose a partial disallowance. The ITAT, considering precedents and the appellant's benefit from the CIT(A), dismissed the appeal, affirming the CIT(A)'s order. The decision was pronounced on July 6th, 2017.

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Issues involved:
- Disallowance on account of bogus purchase
- Confirmation of disallowance by CIT(A)
- Appeal before ITAT

Analysis:
1. Disallowance on account of bogus purchase:
The appellant, engaged in trading various goods, was found to have entered into bogus purchase transactions with 22 parties totaling to a significant amount. The Assessing Officer (AO) reopened the assessment based on information received and issued notices to the appellant for producing details and supporting evidence of these purchases. Despite the notices, the appellant failed to produce the parties or substantial evidence to verify the genuineness of the transactions. The AO assumed that the purchases were bogus and added a substantial amount to the appellant's income. The CIT(A) confirmed the AO's findings but disallowed only 3.34% of the bogus purchases, resulting in a confirmed disallowance of a specific amount against the total addition made by the AO.

2. Confirmation of disallowance by CIT(A):
The CIT(A) upheld the AO's findings regarding the bogus purchases but restricted the disallowance to 3.34% of the total alleged amount. Despite the overwhelming evidence presented by the authorities below indicating the bogus nature of the purchases and the absence of evidence of actual movement of goods, the CIT(A) chose to confirm only a partial disallowance. The CIT(A)'s decision was based on the assessment of the facts and evidence presented during the proceedings.

3. Appeal before ITAT:
The appellant, dissatisfied with the CIT(A)'s decision, filed an appeal before the Income Tax Appellate Tribunal (ITAT). During the hearing, both counsels were heard, and the records were examined. The ITAT considered the precedents cited, including a decision of the Hon'ble Gujarat High Court, which held that 100% of bogus purchases should be added to the assessee's income. However, noting that the appeal was not by the Revenue and the appellant had been granted a benefit by the CIT(A), the ITAT upheld the CIT(A)'s order, thereby dismissing the appeal by the assessee.

In conclusion, the ITAT affirmed the CIT(A)'s decision regarding the disallowance on account of bogus purchases, considering the evidence presented and the precedents cited during the proceedings. The appellant's appeal was dismissed, and the order was pronounced on July 6th, 2017.

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