12.5% disallowance under s.69C for bogus purchases upheld; no substantial question of law found after failure to seek rectification

HC upheld the Tribunal's disallowance of 12.5% of purchases as additions under s.69C, finding no merit in the assessee's claim that the Tribunal ignored submissions or documents. The court noted the assessee failed to seek rectification when its submissions purportedly went unrecorded and had not challenged the primary finding of bogus purchases before the Tribunal. Given these facts, the HC held the disallowance did not raise any substantial question of law.

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Issues:
Challenging the disallowance of bogus purchases under the Income Tax Act, 1961 for Assessment Years 2010-2011 and 2011-2012.

Analysis:
The Appeals under Section 260A of the Income Tax Act challenge the order of the Income Tax Appellate Tribunal partly allowing the Appeals filed by the Revenue regarding the disallowance of purchases. The Respondent was found to have made bogus purchases from Hawala parties, leading to the disallowance of a significant amount by the Assessing Officer. The Commissioner of Income Tax (Appeals) sustained a portion of the disallowance, and the Tribunal further enhanced it to 12.5% of the bogus purchases, emphasizing the need to estimate the profit element. The Tribunal criticized the CIT (A) for blindly applying the gross profit ratio without considering the factual aspect of hawala transactions. The Appellant argued that the Tribunal did not consider evidence and relied on third-party information without allowing cross-examination. However, the Court noted that all authorities found the purchases to be bogus, and the Appellant did not challenge the CIT (A) order before the Tribunal, precluding the raised grievances. Consequently, the Court found no substantial question of law in the extent of disallowance and dismissed the Appeals.

The Court emphasized that the finding of bogus purchases was based on a thorough evaluation of evidence by the authorities, and the Appellant's failure to challenge the CIT (A) order limited the scope of raising new issues before the Tribunal. The Appellant's contention of lack of consideration of evidence and denial of cross-examination was deemed irrelevant due to the Appellant's acceptance of the CIT (A) findings. The Court concluded that the Tribunal's decision was reasonable and did not warrant interference, as the proposed questions did not raise substantial legal issues. Consequently, both Appeals were dismissed, and related Motions seeking a stay of the Tribunal's order were disposed of accordingly.

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