Tribunal quashes reassessment, deletes addition due to lack of evidence.

The Tribunal allowed the appeal, quashing the reassessment and deleting the addition sustained by the CIT(A) due to lack of compelling evidence to deviate from a previous decision. The reassessment was based on alleged bogus purchases and accommodation entries, but as a similar reassessment in another case was quashed, the Tribunal ruled in favor of the assessee. The 20% addition was also deleted as the purchases were deemed genuine, emphasizing the need for a specific profit rate based on trade nature. The judgment was pronounced on 30/11/2015.

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Issues involved:
Validity of reassessment and sustenance of addition to the extent of 20%

Validity of reassessment:
The appeal was against the CIT(A)'s order upholding the reassessment under section 147 of the Income-tax Act, 1961, where the addition was reduced to Rs. 94,771 from Rs. 47,73,855 made by the AO. The reassessment was based on alleged bogus purchases from M/s Shree Bankey Bihari Trading Company. The AO reopened the assessment based on information received from the Chief Commissioner of Income Tax, Delhi, regarding accommodation entries provided by certain individuals, leading to the belief that income had escaped assessment. The Tribunal noted that a similar reassessment in another case was quashed, as the reasons recorded were identical. Consequently, the reassessment in the present case was also quashed.

Sustenance of addition at 20%:
Regarding the sustenance of the addition at 20% by the CIT(A), the Tribunal referenced a previous decision where a similar addition was deleted. The Tribunal emphasized that since the purchases were not bogus, the addition could not be sustained. It was noted that estimating profit at 20% without considering the specific circumstances of the case was inappropriate. The Tribunal highlighted that the CIT(A) should have applied a profit rate based on the nature of the trade rather than a blanket percentage. The Tribunal, after considering the arguments, deleted the addition sustained by the CIT(A) amounting to Rs. 94,771. The decision was based on the lack of compelling evidence to deviate from the previous Tribunal decision.

In conclusion, the Tribunal allowed the appeal filed by the assessee, quashing the reassessment and deleting the addition sustained by the CIT(A). The judgment was pronounced on 30/11/2015.

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