Tribunal Upholds Decision on Disallowance Percentage, Appeals Dismissed for Assessment Years

The Tribunal condoned the delay in filing Cross Objections by the assessee and upheld the Ld. CIT(A)'s decision to restrict the disallowance of alleged bogus purchases to 12.5%. The Revenue's appeal against this decision was dismissed as the Tribunal found no inconsistency in the Ld. CIT(A)'s well-reasoned finding. The Tribunal also dismissed the assessee's Cross Objections, affirming the 12.5% disallowance. Both appeals were dismissed for Assessment Years 2009-10 and 2010-11, with the order pronounced on 16.07.2019.

---

---

Issues Involved:

1. Condonation of delay in filing Cross Objections by the assessee.
2. Disallowance of bogus purchases by the Revenue.
3. Justification of the Ld. CIT(A)'s decision to restrict the disallowance to 12.5% of the alleged bogus purchases.
4. Revenue’s appeal against the Ld. CIT(A)'s decision.
5. Assessee's Cross Objections challenging the disallowance sustained by Ld. CIT(A).

Detailed Analysis:

1. Condonation of Delay in Filing Cross Objections:

The Tribunal condoned the delay of 280 days in filing the Cross Objections by the assessee, considering it occurred due to a reasonable cause. This decision was made in the interest of justice, allowing the Cross Objections to be adjudicated on merits.

2. Disallowance of Bogus Purchases by the Revenue:

The Revenue challenged the Ld. CIT(A)'s decision to restrict the disallowance of bogus purchases to Rs. 5,49,177/- for the Assessment Year 2009-10 and Rs. 4,12,550/- for the Assessment Year 2010-11. The original additions made by the Assessing Officer (A.O) were Rs. 62,50,997/- and Rs. 38,61,472/- respectively. The A.O had treated purchases from certain suppliers as bogus, adding the entire amount to the assessee's income.

3. Justification of the Ld. CIT(A)'s Decision:

The Ld. CIT(A) restricted the disallowance to 12.5% of the alleged bogus purchases, considering it as the estimated profit embedded in the disputed transactions. This decision was based on the judgment of the Hon'ble Gujarat High Court in CIT vs. Simit P. Sheth. The Ld. CIT(A) observed that the A.O neither rejected the books of accounts nor challenged the sales. The purchases were supported by proper invoices, payments were made through banking channels, and the quantitative details were maintained.

4. Revenue’s Appeal Against the Ld. CIT(A)'s Decision:

The Revenue's appeal contested the Ld. CIT(A)'s decision to restrict the disallowance. The Departmental Representative argued that the alleged purchases were from concerns providing tax-paid bills without actual delivery of goods. The Tribunal, however, upheld the Ld. CIT(A)'s decision, noting that the books of accounts were audited, sales were not disputed, and the assessee maintained quantitative records. The Tribunal found no inconsistency in the Ld. CIT(A)'s well-reasoned finding and dismissed the Revenue's appeal for both Assessment Years 2009-10 and 2010-11.

5. Assessee's Cross Objections:

The assessee filed Cross Objections challenging the disallowance sustained by the Ld. CIT(A) at 12.5% of the alleged bogus purchases. The Tribunal dismissed these Cross Objections, reaffirming its decision to uphold the Ld. CIT(A)'s finding. The Tribunal concluded that the disallowance at 12.5% was appropriate, considering the facts and circumstances of the case.

Conclusion:

The Tribunal dismissed both the appeals of the Revenue and the Cross Objections of the assessee for Assessment Years 2009-10 and 2010-11. The order was pronounced in the open Court on 16.07.2019.

---