2023 (11) TMI 32 - AT - Income Tax

Tribunal dismisses appeal on bogus purchases addition after confirming 5% rate below established 6% benchmark

M/s. Raiyani Brothers Versus Income Tax Officer, Ward-3 (3) (4), Surat

The ITAT Surat dismissed the assessee's appeal regarding bogus purchases addition. The CIT(A) had confirmed addition at 5% of bogus purchases, which the ... Estimation of income - bogus purchases - CIT(A) confirmed the addition at the rate of 5% - HELD THAT:- ITAT Surat in more 100 appeals, wherein the similar assessees were beneficiaries of similar bogus purchases, this combination has restricted the similar addition to the extent of 6% of bogus purchases, shown in Rajendra Jain / Bhanwer Lal Jain cases groups vide judgment, in the case of Pankaj K. Choudhary [2021 (10) TMI 653 - ITAT SURAT] wherein the Tribunal sustained the addition at the rate of 6% of bogus purchases. We find that CIT(A) has sustained the addition at the rate of 5% of bogus purchases. Tribunal does not have power to enhance the addition. Hence we note that assessee got sufficient relief at the first appellate stage and therefore does not deserve further relief, hence we dismiss the appeal of the assessee. Condonation of delay - delay of 547 days - out of total delay 223 days delay is attributable to Covid-19 Pandemic - HELD THAT:- For balance delay of 324 days, (547 - 223) has occurred mainly because the assessee was feeling severe problem of kidney and doctors have given medical treatment of kidney failure and the kidney was made transplant, and after that the assessee was living in a separate room with supervision of Doctor for more than twelve months, therefore assessee could not take decision to file the appeal before Tribunal. Thus the reasons given in the affidavit for condonation of delay were convincing and accpetable. Issues Involved:1. Delay in filing the appeal by the assessee for Assessment Year 2012-13.2. Merits of the case regarding addition on account of bogus purchases.For the first issue, the appeal filed by the assessee was directed against the order passed by the Commissioner of Income Tax (Appeals) for AY 2012-13, with a delay of 547 days. The counsel explained that 223 days of the delay were due to the Covid-19 pandemic, and the remaining 324 days were due to the accountant's kidney problems and subsequent transplant. The Tribunal condoned the delay, considering the medical circumstances and evidence provided by the counsel.Moving on to the second issue regarding the merits of the case, the Assessing Officer had made a 100% addition on account of bogus purchases. The Commissioner (Appeals) confirmed the addition at the rate of 5% of bogus purchases, citing the nature of the transactions and lack of evidence of genuine purchases. The counsel argued for the deletion of the entire addition based on submitted documents and banking transactions, while the Revenue contended that the addition should be sustained due to inflated purchase expenses.After hearing both parties, the Tribunal noted previous judgments where similar additions were restricted to 6% of bogus purchases. In this case, the Commissioner (Appeals) had sustained the addition at 5%, and since the Tribunal cannot enhance the addition, the assessee was deemed to have received sufficient relief at the first appellate stage. Consequently, the appeal of the assessee was dismissed.In conclusion, the Tribunal addressed the issues of delay in filing the appeal and the merits of the case regarding bogus purchases, ultimately dismissing the appeal filed by the assessee for AY 2012-13.