Reassessment under Section 147 invalid for bogus purchases already examined in regular assessment under Section 143(3)

ITAT Mumbai held that reassessment u/s 147 for bogus purchases was not tenable as the issue was already considered in regular assessment u/s 143(3). The tribunal found reassessment constituted mere change of opinion. Following precedent from assessee's own case for AY 2009-10 and applying Mohammed Haji Adam Co ratio, ITAT directed addition of 4% gross profit on turnover for alleged bogus purchases instead of peak credit-based addition u/s 69C, considering purchases were recorded in books with corresponding sales.

---

---

Issues:
1. Addition under section 69C of the Act towards purchases made based on peak credit.
2. Reopening of assessment under section 147 for the same purchases already considered under section 143(3).
3. Disallowance of peak credit of cumulative purchases under section 69C for assessment year 2010-11.

Detailed Analysis:
1. The judgment deals with appeals against the addition made under section 69C of the Income Tax Act towards purchases based on peak credit for assessment years 2009-10 and 2010-11. The assessee, a partnership firm trading in iron and steel, faced scrutiny where the Assessing Officer disallowed purchases amounting to Rs. 3,47,99,999/- for AY 2009-10 and Rs. 1,33,49,985/- for AY 2010-11. The CIT(A) confirmed the additions, leading to appeals before the Tribunal.

2. In the case of AY 2009-10, the Assessing Officer reopened the assessment under section 147, claiming the purchases were bogus based on a survey. The Tribunal noted that the issue of bogus purchases had been considered in the regular assessment under section 143(3). The Tribunal held that the reassessment was a mere change of opinion, deleting the addition under section 69C as it was already considered during the initial assessment.

3. For AY 2010-11, the Assessing Officer disallowed peak purchases of Rs. 1,33,49,985/- under section 69C. The Tribunal, referring to a High Court judgment, held that the gross profit ratio for alleged non-genuine purchases should be restricted to the rate of genuine purchases. The Tribunal applied a 4% GP ratio, similar to the AY 2009-10 decision, directing the Assessing Officer accordingly. The appeal for AY 2009-10 was allowed, and the appeal for AY 2010-11 was partly allowed.

In conclusion, the Tribunal ruled in favor of the assessee, deleting the additions made under section 69C for both assessment years based on the principles of gross profit ratio and the inadmissibility of reassessment for the same issues already addressed in the initial assessment.

---