Bogus purchase additions: Tribunal upheld 5% profit estimation and rejected a higher disallowance on similar facts.

Disputed purchases were treated as bogus on the basis of accommodation-entry information, non-service of notices, and non-production of the supplier, but the matter was assessed as estimation of the profit element embedded in such purchases. Following the assessee's own earlier and later year decisions on the same issue, the appellate authority restricted the addition to 5% of the purchase value. The Tribunal found no infirmity in that approach and upheld the 5% estimate, rejecting the Revenue's attempt to apply a 12.5% disallowance.

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Issues: Whether the addition on account of alleged bogus purchases was rightly restricted to 5% of the purchase value instead of disallowing 12.5% as made by the Assessing Officer.

Analysis: The assessee's purchases were doubted on the basis of information regarding accommodation entries, non-service of notices, and non-production of the supplier. The appellate authority, however, followed the assessee's own earlier and later year decisions on the same issue and treated the matter as one of estimation of the profit element embedded in disputed purchases. The Tribunal found no infirmity in that approach and held that, on similar facts, restricting the addition to 5% of the purchase value was justified.

Conclusion: The restriction of the addition to 5% was upheld and the higher disallowance proposed by the Revenue was rejected.

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