Tax Tribunal Confirms 5% Addition on Alleged Bogus Purchases for 2012-13, Dismissing Appeal as Infructuous.

The ITAT dismissed the appeal by the Dy. Commissioner of Income Tax, affirming the CIT(A)'s decision to reduce the disallowance of alleged bogus purchases to 5% of the total purchases for A.Y. 2012-13. The AO's appeal was deemed infructuous as the tribunal had already determined the 5% addition as final, thereby upholding the CIT(A)'s reduction.

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Issues involved:
The appeal filed by the Dy. Commissioner of Income Tax - 19 (1), Mumbai against the appellate order passed by the learned CIT - A for A.Y. 2012-13, challenging the reduction of gross profit on account of bogus purchases.

Grounds raised by the learned AO:
1. Whether the CIT(A) erred in reducing gross profit without considering evidence of accommodation entries.
2. Whether the CIT(A) erred in reducing gross profit without appreciating the statement recorded u/s 132(4) of the Act.
3. Whether the CIT(A) erred in reducing gross profit without considering absence of stock during the search operation.
4. Whether the CIT(A) erred in reducing gross profit without proving genuineness of purchase transaction.
5. Whether the CIT(A) erred in not considering the Supreme Court order on similar issue.
6. Whether the CIT(A) erred in reducing gross profit without considering precedents confirming disallowance of bogus purchases.

Detailed Judgment:
The assessee initially declared a total income, but scrutiny revealed possible bogus purchases linked to an accommodation entry provider. The assessing officer disallowed the entire amount of alleged bogus purchases. The CIT - A, however, directed a reduction of 12.5% instead of 100% of the purchases. The appellate tribunal further restricted the addition to 5% of the total purchases in the assessee's appeal.

The issue arose when the appeal filed by the AO was not considered simultaneously with the assessee's appeal, rendering the AO's appeal infructuous due to the previous determination of 5% as income. The tribunal upheld the previous decision, dismissing the AO's appeal.

In conclusion, the tribunal dismissed the appeal of the learned AO based on the previous determination of 5% as income in the assessee's case for the same assessment year. The decision was pronounced in open court on 26.04.2024.

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