Tribunal Reduces Disallowance Rate for Alleged Bogus Purchases by Metal Trader from 12.5% to 7.5% Due to Insufficient Evidence. The ITAT partially allowed the appeals for assessment years 2010-11 and 2011-12 concerning alleged bogus purchases by the appellant, a metal trader. For ...
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Tribunal Reduces Disallowance Rate for Alleged Bogus Purchases by Metal Trader from 12.5% to 7.5% Due to Insufficient Evidence.
The ITAT partially allowed the appeals for assessment years 2010-11 and 2011-12 concerning alleged bogus purchases by the appellant, a metal trader. For both years, the tribunal reduced the disallowance from 12.5% to 7.5% of the unproved purchases, citing insufficient evidence from the appellant and aligning with industry standards.
Issues involved: Assessment years 2010-11 and 2011-12 - Alleged bogus purchases leading to addition in income tax assessment.
Assessment Year 2010-11: The appellant, engaged in trading of metals, faced a reassessment due to alleged bogus purchases from hawala operators. Despite failing to provide evidence, the Assessing Officer estimated a 25% suppression of profits, adding Rs. 63,82,398 to the income. The CIT(A) reduced the addition to 12.5% of the alleged bogus purchases. The appellant argued for a further reduction, suggesting a 2-3% disallowance. The Department contended that the appellant did not prove the genuineness of purchases and had obtained accommodation entries from hawala operators. The tribunal found the appellant's lack of evidence and non-appearance before authorities significant. Considering industry standards, the addition was restricted to 7.5% of unproved purchases, leading to a partial allowance of the appeal.
Assessment Year 2011-12: Similar to the previous year, the appellant faced disallowance of 12.5% of alleged bogus purchases. The Department highlighted the appellant's failure to prove the purchases' genuineness. The tribunal noted the similarities with the previous assessment year and applied the same reasoning, restricting the disallowance to 7.5% for parity. Consequently, the appeal for both assessment years was partially allowed.
In conclusion, the tribunal partially allowed the appeals for assessment years 2010-11 and 2011-12, reducing the additions related to alleged bogus purchases based on the appellant's failure to provide sufficient evidence.
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