Tribunal upholds assessment reopening & limits bogus purchase addition. Revenue's appeal dismissed.

The Tribunal upheld the validity of reopening the assessment based on tangible material received from the Investigation wing, dismissing the assessee's challenge. Regarding the disallowance of purchase amount as bogus purchases, the Tribunal upheld the CIT(A)'s decision to restrict the addition to 12.5% of total bogus purchases, citing relevant case laws. The revenue's appeal challenging the addition for bogus purchases was dismissed in line with the Tribunal's decision on the assessee's appeal. Both appeals were ultimately dismissed by the Tribunal on 19th Sept., 2017.

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Issues Involved:
1. Validity of reopening of assessment
2. Disallowance of purchase amount as bogus purchases

Validity of Reopening of Assessment:
The Appeals were filed against the order of Commissioner of Income Tax (Appeals) for A.Y. 2010-11. The issues raised in the two appeals were identical, so they were clubbed together. The first appeal by the assessee challenged the reopening of assessment. The AO had received information from the Sales Tax Department about bogus purchase entries, leading to the disallowance of purchases amounting to Rs. 1,54,45,712. The AO's decision to reopen the assessment was based on tangible material received from the Investigation wing, making the reopening valid. The Tribunal upheld the decision, dismissing the assessee's challenge.

Disallowance of Purchase Amount as Bogus Purchases:
The second issue revolved around the disallowance of the purchase amount as bogus purchases. The assessee contended that the disallowance was unjustified as all payments were made through banking channels and supported by various documents. The CIT(A) partly allowed the appeal and restricted the addition to 12.5% of the total bogus purchases. The Tribunal examined the grounds raised by the assessee, including the argument for adopting the concept of real income. The Tribunal referred to various case laws cited by the assessee and upheld the CIT(A)'s decision based on the judgment of the Gujarat High Court. The Tribunal found no new facts or contrary judgments to overturn the CIT(A)'s findings, leading to the dismissal of the grounds raised by the assessee.

Revenue's Appeal:
The revenue also filed an appeal challenging the addition of Rs. 19,30,714 on an estimate basis for the bogus purchases. However, based on the decision in the assessee's appeal, where the Tribunal upheld the CIT(A)'s order, the revenue's appeal was dismissed. In conclusion, both the appeals by the assessee and revenue were dismissed by the Tribunal on 19th Sept., 2017.

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