Restriction on Disallowance of Bogus Purchases Upheld by ITAT for Three Years

The ITAT upheld the decision of the CIT(A) to restrict the disallowance to 12.5% of bogus purchases made by the assessee for three consecutive assessment years. The ITAT emphasized the lack of genuine evidence for the purchases, citing legal precedents and highlighting the non-existence of suppliers. The ITAT dismissed the appeal, stating that the relief granted by the lower authorities should not be reconsidered as it was not an appeal by the Revenue.

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Issues:
- Disallowance of 12.5% of bogus purchase amount for multiple assessment years.

Analysis:
The case involved an appeal against the disallowance of 12.5% of bogus purchases made by the assessee for three consecutive assessment years. The Assessing Officer (AO) had received information that the appellant had obtained accommodation bills of purchases from bogus Hawala Dealers. Despite the assessee providing details and claiming payments were made through banking channels, the AO's attempts to verify the purchases were unsuccessful. The AO, relying on case laws, concluded that the purchases were not genuine and disallowed 25% of the amount. The Commissioner of Income Tax (Appeals) restricted the disallowance to 12.5%. The ITAT upheld the decision of the CIT(A) based on overwhelming evidence that the suppliers were non-existent and the purchases were bogus. The ITAT emphasized that the documents provided by the assessee could not override the evidence of non-existent suppliers.

The ITAT referred to various legal precedents, including the Supreme Court decision in Sumati Dayal vs. CIT and CIT vs. Durga Prasad More, to support its conclusion that purchases from non-existent parties cannot be considered genuine. The ITAT also noted a jurisdictional High Court decision where 100% allowance for bogus purchases was upheld, but clarified that the facts of that case were different. Additionally, the ITAT cited a Gujarat High Court decision where 100% disallowance of bogus purchases was deemed necessary. The ITAT highlighted a Rajasthan High Court case that emphasized adherence to the principles established by the Supreme Court in similar matters.

Ultimately, the ITAT dismissed the appeal filed by the assessee, affirming the decision of the CIT(A) to restrict the disallowance to 12.5% of the bogus purchases. The ITAT concluded that it was inappropriate to reconsider the relief already granted by the lower authorities to the assessee, as it was not an appeal by the Revenue.

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