Tribunal Partially Allows Appeals, Reduces Disallowance on Purchases from Non-Genuine Parties from 12.5% to 5.

The Tribunal condoned a 1939-day delay in filing appeals due to the assessee's CA's illness and demise. For AY 2010-11 and 2011-12, the AO's disallowance of 12.5% of purchases from non-genuine parties was reduced to 5% by the Tribunal. The appeals were partly allowed, favoring the assessee.

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Issues:
1. Delay in filing appeals
2. Disallowance of purchases on account of non-genuine parties for AY 2010-11
3. Disallowance of purchases on account of non-genuine parties for AY 2011-12

Issue 1: Delay in Filing Appeals
The appeals were filed with a delay of 1939 days. The assessee sought condonation of delay due to unforeseen circumstances, including the previous CA's illness and subsequent demise, which led to the delay in filing the appeal. The new CA appointed by the assessee discovered the lapse in filing the appeal despite the fee being paid earlier. The Tribunal, considering the circumstances, condoned the delay in filing the appeals and proceeded to decide on the merits of the case.

Issue 2: Disallowance of Purchases for AY 2010-11
The AO disallowed purchases to the extent of 12.5% due to transactions with non-genuine parties based on information received regarding a scam unearthed by the Sales Tax Department. The case was reopened under section 147 of the Income-tax Act, and the AO concluded that the assessee engaged in non-genuine transactions to suppress profits. The CIT(A) upheld the AO's decision. The Tribunal, after considering submissions and judicial precedents, reduced the estimated profit element from 12.5% to 5% of the non-genuine purchases, resulting in a sustained addition of Rs. 5,21,721. The appeal for AY 2010-11 was partly allowed.

Issue 3: Disallowance of Purchases for AY 2011-12
Similar to AY 2010-11, the AO disallowed purchases at 12.5% due to transactions with non-genuine parties. The Tribunal upheld the decision to reduce the estimated profit element to 5% of non-genuine purchases, resulting in a sustained addition of Rs. 6,15,222. Consequently, the appeal for AY 2011-12 was also partly allowed.

In conclusion, the Tribunal addressed the delay in filing the appeals and proceeded to decide on the disallowance of purchases from non-genuine parties for both AY 2010-11 and AY 2011-12. The Tribunal reduced the estimated profit element from 12.5% to 5% for both years, resulting in partly allowing the appeals in favor of the assessee for both assessment years.

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