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<h1>Tribunal Limits Addition to 5% of Bogus Purchases in Tax Assessment Appeal</h1> The tribunal set aside the CIT(A) decision and restricted the addition to 5% of bogus purchases, including the 4.38% profit already declared by the ... Estimation of income - Bogus purchases - CIT(A) has restricted the addition on the basis of the decision of the earlier year for the A.Y.2009-10 in which the addition was restricted to the extent of 5% of the bogus purchases - HELD THAT:- In the instant case, the assessee has already declared 4.38% profit on the purchase. The total addition comes to the extent of 9.38% which seems high. Since the addition has been restricted to the extent of 3% of the bogus purchase, therefore, the earlier profit to the extent of 4.38% is liable to be set off. Accordingly, we set aside the finding of the CIT(A) on the issue and restrict the addition to the extent of 5% of the bogus purchase only which includes 4.38% profit upon the bogus purchase declared by the assessee. Accordingly, we restricted the addition to the extent of 5% of the total bogus purchase and decide these issues in favour of the assessee against the revenue. Issues:1. Addition of 15,61,217 by estimating additional gross profit.2. Validity of reopening assessment.3. Completing assessment under section 144.4. Confirming addition of 15,61,217 based on purchases and VAT.Issue 1: The assessee challenged the addition of 15,61,217 by estimating additional gross profit at 5% of turnover, as opposed to the 4.38% already offered. The CIT(A) restricted the addition to 5% of bogus purchases, citing the need for proper evidence and not concluding purchases were not made due to nonappearance. The tribunal set aside the CIT(A) decision, restricting the addition to 5% of bogus purchases, including the 4.38% profit already declared by the assessee.Issue 2: The assessment was reopened based on information regarding bogus purchases. The assessee argued against the reopening, stating it was ex-parte and improper notice was served. However, the tribunal focused on the validity of the addition and restricted it to 5% of the bogus purchases, setting aside the CIT(A) decision.Issue 3: The completion of assessment under section 144 was challenged due to improper service of statutory notices. The tribunal considered the evidence provided by the assessee and restricted the addition to 5% of the bogus purchases, overturning the CIT(A) decision.Issue 4: The addition of 15,61,217 was confirmed by the CIT(A) based on purchases and VAT considerations. The tribunal analyzed the evidence and set aside the CIT(A) decision, restricting the addition to 5% of the total bogus purchase, including the profit already declared by the assessee. The appeal was partly allowed in favor of the assessee against the revenue.
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