Tribunal allows partial addition of GP rate on bogus purchases based on hawala transactions

The Tribunal upheld the reopening of assessment under section 147 of the Income-tax Act based on information received regarding hawala transactions. The addition of GP rate on alleged bogus purchases was partially allowed, with the Tribunal directing the application of a 10% GP rate on goods purchased from hawala dealers. The Tribunal found similarities in all appeals and partly allowed the appeals, with the order pronounced on June 2, 2017.

---

---

Issues:
1. Reopening of assessment under section 147 of the Income-tax Act.
2. Addition of GP rate on alleged bogus purchases.

Analysis:

Issue 1: Reopening of assessment under section 147 of the Income-tax Act
The Appellate Tribunal considered the first issue of reopening the assessment under section 147 of the Income-tax Act. The Assessing Officer had received information regarding hawala transactions made by the assessee, leading to the reopening of the assessment. The assessee contended that the original return of income should be treated as filed in response to the notice under section 148. However, as the Assessing Officer had valid reasons for reopening the assessment based on received information, the Tribunal upheld the action following the precedent set by the Hon'ble Supreme Court. The ground of appeal raised by the assessee against the reopening was dismissed.

Issue 2: Addition of GP rate on alleged bogus purchases
The second issue revolved around the addition of GP rate on alleged bogus purchases made by the assessee. The Assessing Officer had added 20% of total purchases from the alleged parties due to lack of stock register maintenance and inability to produce suppliers during assessment proceedings. The CIT(A) upheld this addition, emphasizing the lack of traceability of the dealer and absence of stock register. However, the Tribunal considered the evidence presented by the assessee, showing the trail of goods and VAT payment. The Tribunal directed the Assessing Officer to apply a GP rate of 10% on goods purchased from hawala dealers, in addition to the declared GP rate by the assessee. The ground of appeal related to this issue was partly allowed.

In conclusion, the Tribunal found the facts and issues in all appeals to be similar, and the decision in the main appeal applied to the others. Consequently, all the appeals of the assessee were partly allowed, with the order pronounced on June 2, 2017.

---