Reassessment on accommodation-entry information and 6% profit estimation for bogus purchases were both upheld.

Reassessment based on Investigation Wing information about accommodation entries was valid because the reopening rested on credible material linking the assessee to bogus entry providers, and the challenge to section 147 reopening failed. For bogus purchases, only the profit element embedded in the disputed purchases could be brought to tax, not the full purchase value; applying the factual matrix and precedent, the Tribunal's restriction of the addition to 6% was upheld and the Revenue's challenge failed.

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Issues: (i) Whether reassessment initiated on the basis of investigation-wing information regarding accommodation entries was valid. (ii) Whether the addition in respect of bogus purchases could be restricted to 6% of the disputed purchases instead of sustaining 100% disallowance.

Issue (i): Whether reassessment initiated on the basis of investigation-wing information regarding accommodation entries was valid.

Analysis: The reopening was founded on information received from the Investigation Wing that the assessee was a beneficiary of accommodation entries from entry-providing concerns. The order notes that similar reopening had already been upheld in comparable cases where the jurisdictional link was traced to credible investigation material showing bogus entries given to beneficiaries.

Conclusion: The reassessment under section 147 was held to be valid and the challenge to reopening was rejected.

Issue (ii): Whether the addition in respect of bogus purchases could be restricted to 6% of the disputed purchases instead of sustaining 100% disallowance.

Analysis: The assessee had shown low gross profit and the disputed purchases were found to be accommodation entries. The Tribunal relied on the earlier coordinate-bench view and the jurisdictional precedent that only the income element embedded in such purchases can be taxed. Considering the factual matrix and the need to estimate the possible profit element, 6% of the disputed purchases was treated as sufficient.

Conclusion: The restriction of addition to 6% of the bogus purchases was upheld and the Revenue's challenge failed.

Final Conclusion: The appeal did not disclose any merit, and the relief granted by the Tribunal was sustained in full.

Ratio Decidendi: In cases involving bogus purchases supported by accommodation-entry material, reassessment based on credible investigation information is valid, and the taxable addition is confined to a reasonable estimate of the profit element embedded in the disputed purchases rather than the entire purchase value.

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