TaxTMI 
TaxTMI 
2026 (5) TMI 938
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....d in law, the Ld CIT(A) is justified in reducing the quantum of profit attributable to total bogus purchases of Rs. 27,50,34,816/- from 1.23 percent to 0.2 percent of the purchases which works out to Rs. 5,50,070/-. 2. Whether on facts and circumstances of the case the Ld CIT(A) erred in granting relief to the assessee on the profit element embedded in bogus purchases from 1.23 percent to 0.2 percent of Rs. 28,32,858/- without considering the fact that the addition is made for accommodation entry is covered by exception mentioned in para 3.1(h) of Circular No. 5/2024 dated 15/03/2024. 3. The appellant prays that the order of the CIT(A) on the grounds be set aside and that of the Assessing Officer be restored 2. Briefly ....
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....s of sales and purchases are not disputed and the books of accounts are not rejected, the addition should be restricted to the "profit element" embedded in such purchases, quantified at 0.2%. Following the principle of consistency and noting that the Revenue's challenge to those orders was dismissed by the Hon'ble High Court of Bombay, the Ld. CIT(A) restricted the addition to Rs.5,50,070/- (0.2% of the disputed purchases). The relevant finding of the Ld. CIT(A) is reproduced as under: "7.3 During the appeal proceeding, the appellant has submitted that the issue under appeal has been decided in the favour of appellant by Hon'ble jurisdictional ITAT, Mumbai Bench for the AY 2011-12 and A.Y. 2008-09 where in Hon'ble Tribunal ....
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....3(3) r.w.s 147 dated 30.03.2016. In the present case, the Ld. Assessing Officer has added Rs. 3,53,418/- on the basis of bogus purchase i.e. 1.31% of the purchase value of Rs. 2,69,78,490/- During the appeal proceeding, the appellant has submitted the order of ITAT, Mumbai Bench for the AY 2011-12 in which Hon'ble Tribunal has held that the addition on account of alleged bogus purchases should be restricted to the extent of 0.2% of total such purchases. Revenue went in appeal against the ITAT order before the High Court of Bombay, where the Hon'ble Court dismissed the appeal filed by the revenue. Due to similarity in grounds of appeal involved in both the years, the appellant has requested for disposing off the instant pending appea....
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....er u/s 250 and filed further appeal before the Hon'ble ITAT, Mumbai. In its order dated 31.07.2018 and subsequent corrigendum issued on 06.08.2018, Hon'ble ITAT distinguished the facts and circumstances of the present case from those of the case of Simit P Seth and observed that AO has not rejected the books of account. In addition, GP corresponding to genuine purchases is quite less than the GP attributable to non-genuine purchases. Hon'ble ITAT also held that quantitative statement of purchases and sales was not under dispute and therefore, it directed to quantify taxable profit @ 0.2% of total bogus purchases. The appellant has affirmed that the order of the ITAT has attained finality because Hon'ble Bombay High Court has....
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....d that against the said order of AddI/Jt.CIT(Appeal)- 2, Siliguri dated 20.01.2025, revenue filed further appeal before ITAT Mumbai and the appeal of the revenue was dismissed by Hon'ble ITAT Mumbai vide order dated 21.04.2025 in ITA No.1756/Mum/2024 (Assessment year: 200809). Since, the issue has been decided in favour of appellant, respectfully following the decision of jurisdiction ITAT, Mumbai, it is held that total profit embedded in such bogus purchases may be computed @ 0.2% of such purchases. Since, the issue has attained finality; applying the ratio of the same judgment would serve the interest of justice in the instant case because facts and circumstances of both the years are almost identical. Even otherwise, if the quantum o....
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.... 5.2 Considering the nature of the information received from the Investigation Wing regarding accommodation entries, we find merit in the Revenue's contention that the matter falls within the specified exception. Accordingly, the appeal is admitted for adjudication on merits. The ground No. 2 of the appeal of the Revenue is accordingly allowed. 5.2 Turning to the quantum of addition, the core controversy lies in the estimation of the profit rate. We observe that the Ld. CIT(A) has relied upon the settled position in the assessee's own case for preceding and succeeding years. In the present case, the Coordinate Bench has consistently held that a profit rate of 0.2% is reasonable to neutralize any tax benefit derived from such transactions....