PCIT Vs Late Shri Ravindra Bhaskar Deshmukh (Bombay High Court)
The Bombay High Court heard an appeal filed by the Revenue against an order of the Income Tax Appellate Tribunal concerning addition on account of alleged bogus purchases. Although the tax effect involved was ₹8,55,130, the Revenue submitted that the appeal was covered by exceptions under CBDT circulars. Without deciding that issue, the Court heard the appeal on merits.
The Revenue contended that the Assessing Officer had originally made a 100% addition towards bogus purchases, which was subsequently reduced to 12.5% by the ITAT, and therefore substantial questions of law arose. The Court noted that while it ordinarily admits appeals where a 100% addition made by the Assessing Officer is reduced by appellate authorities, the present case stood on a different footing.
Here, the Commissioner of Income Tax (Appeals) had already reduced the addition from 100% to 25%, and this reduction was never challenged by the Revenue. Only the assessee had further appealed seeking greater relief. In this context, the Court held that once the Revenue had accepted the 25% estimation, the further reduction to 12.5% by the ITAT merely involved an issue of estimation.
The Court concluded that such estimation did not give rise to any question of law, much less a substantial question of law. Accordingly, the appeal was dismissed without any order as to costs.
