Gujarat HC Rejects Challenge to 6% Bogus Purchase Addition as Issue Was Settled

Ravjibhai Becharbhai Dhameliya Vs ACIT (Gujarat High Court)

The Gujarat High Court heard appeals filed by the assessees under Section 260A of the Income-tax Act, 1961 challenging the Income Tax Appellate Tribunal’s order dated 06.01.2022 for Assessment Year 2013-14. The appeals questioned the Tribunal’s findings partly confirming additions relating to alleged bogus purchases, its conclusion that the purchases were bogus, enhancement of the addition to 6% of the disputed purchases from 5% sustained by the Commissioner of Income Tax (Appeals), and the Tribunal’s appreciation of the evidence on record.

At the outset, the Revenue submitted that Tax Appeal No. 109 of 2024 arising from the same Tribunal order had already been dismissed by the High Court on 27.02.2024. In that appeal, the Revenue had challenged the Tribunal’s decision restricting the addition from 100% of the alleged bogus purchases to 6% of such purchases. The Revenue submitted that the present appeals, arising from the same Tribunal order and involving the same issue, should also be dismissed. It relied on the High Court’s decision in Principal Commissioner of Income Tax vs. Pankaj K. Chaudhary.

The High Court examined its judgment dated 27.02.2024 in Tax Appeal No. 109 of 2024. It noted that, in that appeal, the Revenue had questioned the Tribunal’s restriction of the addition to 6% of the purchases instead of sustaining the Assessing Officer’s disallowance of 100% and had also challenged the Tribunal’s reliance on Mayank Diamonds Pvt. Ltd.