Tribunal Upholds Reduced Disallowance Rate of 4.5% on Alleged Bogus Purchases for Assessment Year 2010-11

The Tribunal upheld the decision of the Ld. CIT(A) concerning the disallowance percentage on alleged bogus purchases for the Assessment Year 2010-11. The Ld. CIT(A) reduced the disallowance rate from 12.5% to 4.5% of the purchases amounting to Rs. 32,77,579, which the Tribunal found to be well-reasoned and supported by precedent cases. Consequently, the appeal filed by the Assessee was dismissed, maintaining the revised disallowance rate. The decision was announced in open court on 27th October 2023.

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Issues Involved:
The appeal against the order passed by the Learned Commissioner of Income Tax (Appeals)-2, Jodhpur for Assessment Year 2010-11 concerning the issue of bogus purchases.

Details of the Judgment:

1. The Assessee filed a return of income declaring total income of Rs. 4,85,600, while the Assessing Officer determined the total income at Rs. 8,95,297, considering profit at 12.5% on purchases made of Rs. 32,77,579. The Ld. CIT(A) determined a disallowance at 4.5% of the alleged purchase instead of 12.5% as determined by the Assessing Officer. The order of the Ld. CIT(A) was found cogent, based on facts, and relied on various judgments such as Hon'ble ITAT Ahmedabad Bench in the case of Vijay Protein Ltd. vs. ACIT, Hon'ble Gujrat High Court in the case of CIT vs. Presdient Industries, Hon'ble Madhya Pradesh High Court in the case of CIT vs. Balchand Ajit Kumar, and others. The Tribunal declined to interfere with the order of the Ld. CIT(A).

2. The appeal of the Assessee was dismissed, and the order was pronounced in the open Court on 27th October, 2023.

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