2018 (1) TMI 234 - AT - Income Tax

Tribunal allows appeal, limits bogus purchase disallowance, stresses factual basis in decision-making

The Tribunal partly allowed the assessee's appeal by condoning the delay in filing the appeal, restricting the disallowance of bogus purchases to 12.50% ... Addition of bogus purchases - Held that:- The co-ordinate bench has already taken a view on identical additions made in the assessee’s own case in the other years, wherein the addition was confirmed to the extent of 12.50% of the value of purchases. Since there is no change in facts, we are inclined to follow the same. Accordingly we set aside the order passed by Ld CIT(A) and direct the AO to restrict the addition to 12.50% of the value of bogus purchases. Appeal of the assessee is partly allowed. Issues involved:1. Delay in filing the appeal and condonation of delay.2. Disallowance of bogus purchases amounting to Rs. 15.52 lakhs.3. Application of previous judgments on similar cases.4. Determination of the percentage of disallowance for bogus purchases.Analysis:Issue 1: Delay in filing the appeal and condonation of delayThe appeal filed by the assessee was initially barred by a 120-day limitation. The assessee requested the bench to condone the delay, citing reasons beyond their control. The Department objected to the plea, referencing a decision by a co-ordinate bench in another case. However, after hearing both parties, the Tribunal analyzed the reasons for the delay and found that the assessee had sufficient cause for the delay. Consequently, the Tribunal condoned the delay and admitted the appeal for hearing.Issue 2: Disallowance of bogus purchasesThe assessee, an infrastructure developer, had purchased goods amounting to Rs. 15.52 lakhs from a dealer suspected of providing accommodation bills without actual supply of materials. The Assessing Officer (AO) disallowed these purchases, a decision upheld by the Ld CIT(A). The assessee contested this disallowance in the appeal. The Tribunal considered the submissions and previous judgments related to similar cases. Ultimately, the Tribunal found that the revenue failed to establish the parity of facts between the instant case and the case cited by the Department. Relying on a previous decision on identical additions in the assessee's case, the Tribunal directed the AO to restrict the addition to 12.50% of the value of bogus purchases, thereby partly allowing the assessee's appeal.Issue 3: Application of previous judgmentsThe Ld A.R argued for following a previous Tribunal order that restricted the addition to 12.50% of the value of bogus purchases in the assessee's case for other years. In contrast, the Ld D.R cited a Supreme Court decision confirming 100% addition of bogus purchases in a different case. The Tribunal distinguished the facts of the Supreme Court case from the present case and emphasized the need for decisions to be based on the specific facts of each case. Ultimately, the Tribunal decided to follow the previous Tribunal order and restricted the addition accordingly.Issue 4: Determination of the percentage of disallowanceAfter considering the arguments and precedents, the Tribunal set aside the Ld CIT(A)'s order and directed the AO to limit the disallowance to 12.50% of the value of the bogus purchases. This decision was based on the consistency of facts with previous cases and the lack of factual parity with the case cited by the Department.In conclusion, the Tribunal partly allowed the assessee's appeal by condoning the delay, restricting the disallowance to 12.50% of the value of bogus purchases, and emphasizing the importance of decisions being based on the specific facts of each case.