Estimation of income from alleged bogus purchases: Tribunal cut disallowance to 6%, High Court refuses interference.

Estimation of income centred on alleged bogus purchases fabricated through paper concerns; ITAT reduced a departmental addition from 12.5% to 6% after analysing the factual matrix. The Tribunal treated the transactions as sham but quantified the disallowance at 6% on the facts before it, and the High Court refused to interfere with that factual conclusion and reduction. Consequence: the Tribunal's fact-based quantification of the disallowance stands and the High Court sustained the reduced addition in the departmental assessment.

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Issues: Whether the Revenue's appeal under Section 260A of the Income-tax Act, 1961 challenging the Tribunal's reduction of disallowance (in connection with alleged bogus purchases/accommodation entries) and dismissal of the Revenue's grounds raises any substantial question of law requiring interference.

Analysis: The appeal concerns alleged bogus purchase transactions and the quantum of disallowance applied by revenue authorities vis-a -vis the income component assessable. The Tribunal applied precedent of coordinate benches and considered factual material including gross profit margins and evidence filed by the assessee, concluding that taxing only the income component (by applying a percentage disallowance) was appropriate. The earlier decision on a related assessment year by this High Court, relying on identical facts and binding precedents, dismissed the Revenue's appeal. Having regard to the Tribunal's factual appraisal, the comparable gross profit figures, and the binding coordinate-bench and High Court rulings, no new substantial question of law arises for interference.

Conclusion: The Revenue's appeal is dismissed and the decision is in favour of the assessee.

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