Tribunal modifies additions in appeal, upholds decision on Corporate Guarantee commission, deletes cash component addition.

The Tribunal partly allowed the appeal, modifying the addition for alleged bogus purchases to 2%, upholding the Ld CIT(A)'s decision on Corporate Guarantee commission, and deleting the addition towards the alleged cash component in the purchase of agricultural lands.

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Issues Involved:
1. Partial confirmation of addition relating to alleged bogus purchases.
2. Partial confirmation of addition relating to Corporate Guarantee commission.
3. Addition towards alleged cash component in purchase of agricultural lands.

Summary:

1. Partial Confirmation of Addition Relating to Alleged Bogus Purchases:
The first issue pertains to the addition made on account of alleged bogus purchases. During the search proceedings, it was found that the assessee purchased goods from various entities that were suspected of providing accommodation bills without supplying materials. The AO disallowed the entire purchase amount of Rs. 15,30,36,741/-, but the Ld CIT(A) restricted the addition to 6% of the purchase value. The Tribunal noted that the assessee provided documentary evidence to prove the genuineness of the purchases and that the manufacturing loss declared was within the prescribed limit of Standard Input Output Norms (SION). The Tribunal also considered the gross profit rate, which was higher than the industry average. Consequently, the Tribunal directed the AO to restrict the addition to 2% of the value of alleged bogus purchases, modifying the order of the Ld CIT(A).

2. Partial Confirmation of Addition Relating to Corporate Guarantee Commission:
The second issue involves the transfer pricing adjustment concerning the commission on Corporate Guarantee provided by the assessee to its Associated Enterprises. The TPO made an adjustment at 1.50% of the guarantee amount, but the Ld CIT(A) restricted it to 0.50% based on the Tribunal's decision in the assessee's own case for AY 2010-11 and the Bombay High Court's decision in Everest Canto Cylinders Ltd. The Tribunal upheld the Ld CIT(A)'s decision, finding no reason to interfere as it was consistent with the jurisdictional High Court and Tribunal's decisions.

3. Addition Towards Alleged Cash Component in Purchase of Agricultural Lands:
The third issue relates to the addition of Rs. 1,23,19,000/- towards the alleged cash component in the purchase of agricultural land. The AO based the addition on an unsigned draft sale agreement found in a laptop, which mentioned a cash payment component. The assessee contended that the draft agreement was prepared during negotiations and was never executed. The Tribunal noted several discrepancies in the draft agreement and found that the AO did not conduct proper inquiries to corroborate the draft agreement's veracity. Citing the Delhi High Court's decision in CIT vs. AKME Projects Ltd, the Tribunal concluded that the addition could not be sustained and directed the AO to delete the addition.

Conclusion:
The appeal of the assessee was partly allowed, with the Tribunal modifying the addition for bogus purchases to 2%, upholding the Ld CIT(A)'s decision on the Corporate Guarantee commission, and deleting the addition towards the alleged cash component in the purchase of agricultural lands.

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