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The Revenue contended that the Assessing Officer had originally made a 100% addition towards bogus purchases, which was subsequently reduced to 12.5% by the ITAT, and therefore substantial questions of law arose.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.
FULL TEXT OF THE JUDGMENT/ORDER OF BOMBAY HIGH COURT
1. Heard Mr. Akhileshwar Sharma, the learned counsel for the Appellant.
2. Though the tax effect in this Appeal is only Rs.8,55,130/-. Mr. Sharma submits that the Appeal would be covered by the exceptions carved out under the CBDT circulars.
3. Without going into the issue now raised by Mr. Sharma, we have heard Mr. Sharma on the merits of the Appeal.
4. Mr. Sharma submits that in this case the Assessing Officer made an addition of 100% on account of bogus purchases. He submits that the ITAT has now reduced the same to 12.5%. Therefore, Mr. Sharma submitted that this Appeal should be admitted on the substantial questions of law formulated in the Appeal Memo.
5. Ordinarily, where the Assessing Officer has made an addition of 100% but the same is reduced by the Appellate Authority or the ITAT, we have admitted the Appeals. However, in this case, the addition of 100% made by the Assessing Office was reduced to 25% by the Commissioner of Income Tax (Appeals). This order of reduction was however never challenged by the Revenue before the ITA in this matter. It is only the Assessee who challenged the Commissioner (Appeal)’s order urging that the reduction should have been even greater.
6. In these circumstances, we do not think that the principle applied by us in admitting other Appeals would apply to the present Appeal.
7. If the Revenue was satisfied with the reduction up to 25% made by the Commissioner (Appeals), then, further the reduction up to 12.5% by the ITAT only gives rise to an issue of estimation. This cannot be regarded as a question of law much less a substantial question of law. In such circumstances, in fact, we have declined to admit the Appeals.
8. Accordingly, we dismiss this Appeal without any costs order as involving no substantial questions of law.
