Tax appeal dismissed due to falling below CBDT limit. Ground against assessment re-opening not pressed. Profit estimation upheld.

The department's appeal was dismissed due to the tax effect falling below the limit set by CBDT. The AR did not press the ground against the validity of re-opening the assessment, resulting in its dismissal. The addition under section 69C of the Act was sustained at 3% of alleged bogus purchases as the assessee failed to prove purchases from certain parties. The Tribunal upheld the profit estimation at 3% due to the failure to prove purchases from declared sources, indicating suppression of actual profits. The appeals were ultimately dismissed by the Appellate Tribunal ITAT Mumbai on November 30, 2018.

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Issues:
1. Tax effect below monetary limit as per Circular No.3/2018
2. Validity of re-opening of assessment u/s. 147
3. Sustaining addition u/s. 69C of the Act to 3% of alleged bogus purchases

Analysis:
1. The first issue pertains to the tax effect below the monetary limit as per Circular No.3/2018. The department's appeal was dismissed as the tax effect on the disputed amount was below the limit set by CBDT. The department was given the liberty to seek restoration if falling under exceptions in the circular.

2. The second issue involves the validity of re-opening of assessment u/s. 147. The assessee raised a ground against the re-opening, but the AR expressed not to press this ground, resulting in its dismissal.

3. The third issue concerns the addition u/s. 69C of the Act to 3% of alleged bogus purchases. The assessee, engaged in diamond trading, failed to prove purchases from certain parties, leading to an addition by the Assessing Officer. The CIT(A) sustained the addition at 3% of alleged bogus purchases after considering submissions and material on record.

4. The Assessing Officer had specific information indicating accommodation entries for purchases from unknown sources. The AR argued for profit estimation based on previous years' gross profit, but the Tribunal found the AR's submission unacceptable. The Tribunal upheld the CIT(A)'s decision to estimate profit at 3% due to the failure to prove purchases from declared sources, indicating suppression of actual profits.

5. The Tribunal concluded that the CIT(A) was reasonable in estimating profit at 3% on alleged bogus purchases, considering the circumstances. Therefore, the grounds raised were dismissed, and the appeals were ultimately dismissed.

6. In summary, both appeals were dismissed based on the specific issues discussed and analyzed in the judgment delivered on November 30, 2018, by the Appellate Tribunal ITAT Mumbai.

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