Tribunal reduces profit estimation for non-genuine purchases, dismissing Revenue's appeals.

The Tribunal dismissed Revenue's appeals and partly allowed the assessee's appeals, emphasizing a reduced profit estimation percentage for non-genuine purchases. The decision was pronounced on 30th August 2019.

---

---

Issues:
Cross appeals arising from two separate orders dated 21st April 2015 by the Commissioner of Income Tax (Appeals)-37, Mumbai, for assessment years 2008-09 and 2009-10.

Analysis:
1. Validity of Re-opening Assessment under Section 147:
The Assessing Officer re-opened the assessments based on information from the DGIT (Inv.), Mumbai, and Sales Tax Department, Government of Maharashtra, suggesting the assessee benefited from accommodation entries through bogus purchase bills. The Tribunal found tangible material supporting the re-opening, validating it under section 147 of the Income Tax Act, 1961.

2. Genuineness of Purchases and Additions Made:
The assessee failed to prove the genuineness of purchases, with un-served notices under section 133(6) and lack of evidence of actual delivery of goods. Despite undisputed sales, the source of purchases remained questionable. The Tribunal agreed with the Commissioner (Appeals) in estimating profit on non-genuine purchases for addition purposes.

3. Estimation of Profit Percentage:
Considering the business nature, gross profit margin, and overall facts, the Tribunal deemed a 6% profit estimation on non-genuine purchases reasonable, contrary to the 12.5% upheld by the Commissioner (Appeals). The Tribunal directed the Assessing Officer to limit the addition in both assessment years to 6% of non-genuine purchases.

4. Outcome:
The Tribunal dismissed Revenue's appeals and partly allowed the assessee's appeals, emphasizing a reduced profit estimation percentage for non-genuine purchases. The decision was pronounced on 30th August 2019.

---