Appeals partly allowed in dispute over alleged bogus purchases, reductions made in estimated additions

The appeals by separate assessees challenging disallowance of alleged bogus purchases and estimation of additions against suspicious purchases were partly allowed. The estimated additions against the alleged bogus purchases were reduced to 7% from the initial 14.84%, modifying the first appellate authority's orders. The ITAT considered the nature of the assessee's business and past orders, leading to a reduction in the additions.

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Issues:
- Disallowance of alleged bogus purchases
- Estimation of additions against suspicious purchases

Issue 1: Disallowance of alleged bogus purchases
The appeals by separate assessees contest separate orders of the first appellate authority, but due to similar facts and belonging to the same group, they are disposed of by a common order. The concerned assessee for Assessment Year 2011-12 challenges the order of the Commissioner of Income-Tax (Appeals) directing the retention of disallowance of alleged bogus purchases to the extent of 14.84%. The assessee, a resident firm engaged in infrastructure projects, was part of a group that obtained accommodation purchase bills from hawala dealers, leading to inflated expenses. Key persons admitted discrepancies in purchase transactions, although one retracted the statement. The AO estimated additions against these purchases at 18%, resulting in an addition of Rs. 26,20,522. The CIT(A) reduced the estimated addition to 14.84% based on judicial pronouncements, which the assessee further appealed.

Issue 2: Estimation of additions against suspicious purchases
The assessee reflected purchases from suspicious dealers, but notices to suppliers were returned unserved, and spot verifications revealed non-existent parties. The assessee defended the purchases by stating material utilization and backed by invoices and banking payments. However, the AO estimated additions at 22% against these purchases, amounting to Rs. 32,02,860. The CIT(A) further reduced the estimated additions to 14.84%, considering the nature of the assessee's business and past orders applying a 7% rate. The ITAT modified the order, reducing the estimated additions to 7% of alleged bogus purchases, partly allowing the assessee's appeal.

Conclusion
Both appeals were partly allowed by reducing the estimated additions to 7% of the alleged bogus purchases, modifying the orders of the first appellate authority.

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