Revenue appeal dismissed for low tax effect, assessment reopened under section 147, sustained addition for bogus purchases.

The Revenue's appeal was dismissed due to low tax effect below the prescribed limit. The validity of reopening assessment under section 147 was upheld based on credible new information. The addition for bogus purchases was sustained at 6% following precedent, reducing the initial amount. The Tribunal's decision was pronounced on 20/09/2022.

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Issues Involved:
1. Dismissal of Revenue's appeal due to low tax effect.
2. Validity of reopening assessment under section 147 of the Income Tax Act, 1961.
3. Addition on account of bogus purchases.

Detailed Analysis:

1. Dismissal of Revenue's Appeal Due to Low Tax Effect:
The Revenue's appeal in ITA No. 121/SRT/2019 for AY 2008-09 was dismissed due to the tax effect being below the monetary limit prescribed by CBDT Circular No. 17/2019 dated 08.08.2019. The Circular specifies that appeals before the Appellate Tribunal should have a tax effect of Rs. 50,00,000/- or more. The tax effect in this case was less than Rs. 50,00,000/-, and thus, the appeal was dismissed. It was noted that the Circulars issued by CBDT are binding on the Revenue, as confirmed by the Apex Court in Commissioner of Customs vs. Indian Oil Corporation Ltd. (267 ITR 272).

2. Validity of Reopening Assessment Under Section 147:
The assessee challenged the reopening of the assessment under section 147, arguing that it was done after four years without any failure on their part to disclose fully and truly all necessary facts. The AO had received information from the DIT (Inv.), Mumbai, indicating that the assessee was a beneficiary of bogus purchase bills. The AO recorded reasons for reopening the assessment, which included information from a search and seizure action revealing that the group concerns were paper companies with no real business activities, providing accommodation entries. The Tribunal held that the AO had credible new information and had applied his mind, thus satisfying the conditions for reopening under section 147. The reopening was justified and legal, dismissing the assessee's ground.

3. Addition on Account of Bogus Purchases:
The AO made an addition of Rs. 85,45,283/- for bogus purchases, which was reduced by the CIT(A) to 5% of the bogus purchases, amounting to Rs. 4,27,264/-. The assessee appealed for the deletion of this addition. The Tribunal referred to the case of Pankaj K. Chaudhary, where a similar issue was adjudicated, and the addition was sustained at 6% of the bogus purchases. The Tribunal noted that the AO had not conducted an independent investigation and relied solely on the report of the Investigation Wing. It was observed that the books of accounts were not rejected, and no sales were disputed. Following the precedent, the Tribunal directed the AO to sustain the addition at the rate of 6% of the bogus purchases, thereby partly allowing the assessee's appeal.

Conclusion:
The Revenue's appeal was dismissed due to low tax effect, the reopening of assessment under section 147 was upheld as valid, and the addition on account of bogus purchases was sustained at 6%, following the precedent set in similar cases. The Tribunal's decision was pronounced on 20/09/2022.

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