ITAT affirms CIT(A) decision on alleged bogus purchases, upholds 12.5% addition for Assessment Year 2009-10

The ITAT upheld the decision of the Ld. CIT(A) and dismissed the revenue's appeal regarding alleged bogus purchases for the Assessment Year 2009-10. The Ld. CIT(A) accepted a portion of the purchases, estimating an addition for the remaining amount based on a Gujarat High Court decision. The ITAT found the estimation reasonable, considering the available primary purchase documents, banking channel payments, and the nature of the assessee's business. The appeal outcome favored the assessee, confirming the fair and reasonable 12.5% addition and rejecting the revenue's challenge.

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Issues:
Appeal by revenue contesting order of CIT(A) providing relief on alleged bogus purchases for AY 2009-10.

Analysis:
The appeal pertains to the Assessment Year 2009-10 where the revenue challenges the order of the Ld. Commissioner of Income Tax (Appeals)-12, Mumbai, dated 17/07/2019, which granted relief to the assessee concerning alleged bogus purchases. The assessee, a resident corporate dealer of chemicals, was assessed under section 143(3) r.w.s. 147. Suspicious purchases amounting to Rs. 102.83 Lacs from three entities flagged by Sales Tax Authorities were identified. The case was reopened, and the assessee was asked to provide details to substantiate the purchases. Despite submitting ledger extracts, payment details, and invoices, transportation details were lacking. Notices issued under section 133(6) did not yield satisfactory responses. The Assessing Officer (AO) concluded that the assessee failed to prove the genuineness of the purchases, resulting in the addition of Rs. 317.70 Lacs to the income.

During further appeal, the assessee submitted additional evidence under rule 46A, leading to remand proceedings. The Ld. CIT(A) accepted purchases worth Rs. 198.62 Lacs out of Rs. 214.87 Lacs. For the remaining Rs. 119.07 Lacs, an addition of 12.5% was estimated based on a decision of the Hon'ble Gujarat High Court. The revenue challenged this decision, while the assessee seemingly accepted it. The ITAT, after reviewing the facts, concurred with the Ld. CIT(A)'s findings. The Sales Turnover was confirmed, primary purchase documents were available, payments were made through banking channels, and the nature of the assessee's business indicated the necessity of actual purchases for sales to occur. The ITAT deemed the 12.5% estimation by the Ld. CIT(A) fair and reasonable, leading to the dismissal of the revenue's appeal.

In conclusion, the ITAT upheld the decision of the Ld. CIT(A) and dismissed the revenue's appeal concerning the alleged bogus purchases for the Assessment Year 2009-10.

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