Tribunal Validates Reassessment, Adjusts Profit Estimation and Purchase Additions

M/s. Deluxe Tube Traders and Scrap Centre Versus DCIT, Circle-1 And ITO, Ward-1 (5), Nashik

M/s. Deluxe Tube Traders and Scrap Centre Versus DCIT, Circle-1 And ITO, Ward-1 (5), Nashik - TMI Issues involved:
1. Validity of reassessment proceedings u/s.147
2. Estimation of Gross Profit on alleged bogus purchases
3. Addition of alleged bogus purchases

Issue 1: Validity of reassessment proceedings u/s.147

The judgment involves five appeals concerning assessment years 2009-10 to 2011-12. The first issue revolves around the validity of reassessment proceedings initiated under section 147/148 of the Income Tax Act. The assessee challenged the initiation of reassessment proceedings, arguing the absence of material linking the reason to believe that income had escaped assessment. The CIT(A) upheld the validity of reassessment proceedings, relying on the judgment in ACIT Vs. Rajesh Jhaveri Stock Brokers Pvt. Ltd. The Tribunal dismissed the arguments against reassessment, citing similar decisions and upholding the initiation of reassessment proceedings.

Issue 2: Estimation of Gross Profit on alleged bogus purchases

The second issue pertains to the estimation of Gross Profit on alleged bogus purchases. The CIT(A) restricted the addition to 25% of the purchases, considering it a case of inflated purchases rather than entirely bogus. The assessee appealed, seeking a reduction to 10% based on a Tribunal decision in another case. The Tribunal examined the applicability of previous judgments and directed the Assessing Officer to apply a Gross Profit rate of 10% on the alleged bogus purchases. Consequently, the Tribunal partly allowed the assessee's appeal on this issue.

Issue 3: Addition of alleged bogus purchases

The final issue involves the addition of alleged bogus purchases made by the assessee. The Revenue challenged the deletion of additions made for the assessment years 2010-11 and 2011-12. The CIT(A) had deleted a portion of the additions and restricted them to 25% of the purchases. The Tribunal, following its decision in the appeal for A.Y. 2009-10, reduced the addition further to 10% of the purchases. Consequently, the Tribunal dismissed the Revenue's appeals and partly allowed the Cross Objections filed by the assessee for both assessment years.

In conclusion, the Tribunal's judgment addressed the validity of reassessment proceedings, the estimation of Gross Profit on alleged bogus purchases, and the addition of alleged bogus purchases for the assessment years 2009-10 to 2011-12. The Tribunal upheld the initiation of reassessment proceedings, reduced the estimation of Gross Profit to 10%, and limited the additions to 10% of the purchases, partly allowing the appeals of the assessee and dismissing those of the Revenue.