Tribunal allows partial appeal, disallowing 12.5% of claimed amount for bogus purchases. Lack of evidence led to decision.

The Tribunal partially allowed the appeal, directing a 12.5% disallowance of the claimed amount for bogus purchases made from non-existent parties. The decision was based on the lack of evidence provided by the assessee to prove the genuineness of the transactions, with confirmation of the parties' dubious nature by the Sales Tax Department. The Tribunal considered a 100% disallowance inappropriate due to no doubts on sales but deemed a 12.5% disallowance appropriate for tax evasion through grey market purchases.

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Issues:
1. Disallowance of 10% of bogus purchase amounting to Rs. 4,99,55,341.

Analysis:
The Assessing Officer made an addition for bogus purchases based on information received from the Sales Tax Department and his own inquiry. The parties from whom the assessee claimed purchases were found to be only providing accommodation entries without actual business transactions. The assessee failed to provide evidence to establish the genuineness of the transactions, including details of brokers/agents and monthly cash flow statements. Notices issued to the parties returned unserved, confirming their dubious nature. The onus was on the assessee to prove the genuineness of the claimed expenditure. The Assessing Officer made a 10% addition for the bogus purchase amount.

The assessee appealed to the CIT(A), challenging both the reopening and the merits of the addition. The CIT(A) dismissed the appeal, citing credible information received by the Assessing Officer about the bogus suppliers. The assessment was reopened based on this information. The CIT(A) relied on relevant case laws to justify the reopening. The assessee failed to provide confirmations from the parties or produce any evidence of transportation of goods. The Sales Tax Department's inquiry confirmed the parties' involvement in providing bogus accommodation entries. The revenue authorities could not accept the purchase bills from non-existent parties as genuine.

The Tribunal noted precedents where 100% disallowance was upheld for bogus purchases. However, in this case, since the sales were not doubted, a 100% disallowance was deemed inappropriate. The Tribunal considered the assessee's purchases from the grey market as a means of tax evasion. A 12.5% disallowance out of the bogus purchases was deemed appropriate in the circumstances. Therefore, the appeal was partly allowed, directing the disallowance of 12.5% of the bogus purchases.

In conclusion, the Tribunal found the assessee's purchases from non-existent parties to be bogus and upheld a 12.5% disallowance of the claimed amount. The decision was based on the lack of evidence provided by the assessee and the confirmation of the parties' dubious nature by the Sales Tax Department.

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