Tribunal Reduces Income Addition to 2% for Alleged Bogus Purchases, Citing Precedent for Consistent Judicial Decisions.

The ITAT modified the CIT(A)'s order concerning the assessee's income tax assessment for AY 2011-12. The AO initially added Rs. 25.50 lakhs based on a 12.50% profit estimation from alleged bogus purchases. However, the Tribunal, referencing a similar case from AY 2009-10, directed the AO to limit the addition to 2% of the purchase value. This decision aligned with the precedent and provided partial relief to the assessee by significantly reducing the addition amount. The appeal was partly allowed, emphasizing consistency in judicial decisions.

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Issues: Alleged bogus purchases leading to addition in income tax assessment for AY 2011-12.

Analysis:
1. The appeal was filed by the assessee challenging the addition made by the Assessing Officer (AO) in relation to alleged bogus purchases in the assessment year 2011-12, based on information from the Sales tax department regarding purchases made from hawala dealers. The AO estimated a profit element of 12.50% on the value of purchases, resulting in an addition of Rs. 25.50 lakhs to the total income of the assessee.

2. The Commissioner of Income Tax (Appeals) [CIT(A)] upheld the 12.50% profit estimation but directed the AO to reduce the Gross Profit (GP) already declared by the assessee on the impugned purchases. Dissatisfied with this decision, the assessee appealed the order.

3. During the hearing, the assessee's Authorized Representative (A.R) pointed out a similar addition made in AY 2009-10, where the ITAT had restricted the addition to 2% of the value of alleged bogus purchases in the assessee's own case. Considering the identical facts, the present Appellate Tribunal decided to modify the CIT(A)'s order and directed the AO to limit the addition to 2% of the value of alleged bogus purchases.

4. The Tribunal's decision to restrict the addition to 2% aligns with the precedent set in the assessee's case for AY 2009-10 by the ITAT. Therefore, the appeal filed by the assessee was partly allowed, providing relief by reducing the addition amount in line with the earlier judgment.

5. The order was pronounced on 12.9.2017, with the Appellate Tribunal emphasizing consistency in decisions and applying a lower percentage for the addition, resulting in a partial success for the assessee in challenging the addition related to alleged bogus purchases.

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