Tribunal validates assessment reopening on credible info; directs 6% addition for bogus purchases. Revenue appeal dismissed.

The Tribunal upheld the validity of the reopening of assessment based on credible information from the Investigation Wing regarding accommodation entries. Regarding the addition on account of bogus purchases, the Tribunal directed the Assessing Officer to make an addition of 6% of the bogus purchases, following precedents in similar cases. The revenue's appeal was dismissed, and the assessee's appeal was partly allowed.

---

---

Issues Involved:
1. Reopening of Assessment
2. Addition on Account of Bogus Purchases

Summary:

Reopening of Assessment:
The assessee challenged the reopening of assessment on the grounds that the necessary conditions for a valid reopening were not satisfied and that the reopening was based on the opinion of DDIT and a retracted statement. The Tribunal noted that the assessee did not argue or press this ground, and hence, it was dismissed as not pressed/not argued. The Tribunal referred to the Hon'ble Gujarat High Court's decision in Peass Industrial Engineers (P) Ltd Vs DCIT and Pushpak Bullion (P) Ltd Vs DCIT, which justified reopening based on credible information from the Investigation Wing about accommodation entries provided by known entry operators. Thus, the Tribunal upheld the validity of the reopening of the assessment.

Addition on Account of Bogus Purchases:
The assessee contested the addition of Rs. 23,93,599/- on account of bogus purchases, arguing that the purchases were genuine and supported by bills, vouchers, and other documents. The CIT(A) had restricted the addition to 25% of the total purchases, following the Gujarat High Court's decision in Vijay Proteins Ltd. The Tribunal, however, noted that in similar cases involving the Rajendra Jain Group, the Surat ITAT Bench consistently sustained additions at the rate of 6% of bogus purchases. The Tribunal cited the decision in Pankaj K. Chaudhary's case, where it was held that an addition of 6% of bogus purchases is fair and reasonable. Consequently, the Tribunal directed the Assessing Officer to make an addition at the rate of 6% of the bogus purchases.

Conclusion:
The appeal of the revenue was dismissed, and the appeal of the assessee was partly allowed, with the Tribunal directing that an addition of 6% of the bogus purchases be made. The order was pronounced on 05/09/2023 in the open court.

---