TaxTMI 
TaxTMI 
2020 (8) TMI 354
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....law the Hon'ble CIT(A) erred in upholding the Assessing Officer's action of reopening of the completed assessment under section 147 of the IT Act 1961 and the reason assigned for doing so are wrong and contrary to the provision of Income Tax Act and rules made there under. 2. On the facts and in the circumstances of the case and in law the Hon'ble CIT(A) wrongly erred in sustaining GP @12.5% of the alleged bogus purchase as unexplained income and the reasons assigned for doing so are wrong and contrary to the provision of Income Tax ......" 3. The brief facts of the case are that the assessee is an individual and engaged in the business of trading in Industrial Electronic Components, filed his return of income for AY 2010-11 on ....
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....g relevant submission of the assessee and also, by following the decision of Hon'ble Gujarat High Court, in the case of CIT vs. Simith P. Sheth (356 ITR 451), sustained the addition made by the AO towards alleged bogus purchases to 12.50% gross profit on total purchases from those parties. The relevant findings of the Ld.CIT(A) are as under: "5. I have given my careful consideration to the material on record and duly considered the factual matrix of the case as also the applicable legal position for arriving the following decision. 6. It is seen from the assessment order that even after giving sufficient opportunity by Assessing Officer, the assessee could not substantiate his claim of genuine purchases from 10 parties fro....
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....apement of income. At the stage of issue of notice, the only question is whether there was relevant material on which a reasonable person could have formed a requisition belief that income has escaped assessment. In the present case, it is evident from the reasons recorded that the DGIT (Inv.), Mumbai, has communicated to the Assessing Officer the information received by it, from the Sales Tax Department, that the assessee is involved in taking entries of non genuine purchase from four parties amounting to Rs. 1,03,51,101/- during the financial year relevant to Assessment Year 2010-11. Based on this precise information, the Assessing Officer issued notice under section 148 of the Act as he had prima-facie reasons to believe that income char....
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....s bills without supplying any goods. The Sales Tax Department has conducted independent enquiries in each of the hawala parties and conclusively proved that these parties are engaged in the business of providing accommodation entries only. Therefore, the Assessing Officer considering the purchase are recorded in the books of account, profit element embedded in such purchases are recorded in the books of account, profit element embedded in such purchases is taken as the profit earned from purchases shown to have been made from the 10 parties and estimated the profit @ 12.5% of the total non genuine purchase of Rs. 1,03,51,101/-, added to the total income of the appellant. To arrive at the conclusion, Assessing Officer placed his reliance on ....
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.... addition towards alleged bogus purchases, we find that the Ld. AO has made 12.5% addition towards alleged bogus purchases on the ground that the assessee is one of the beneficiary of accommodation entries of bogus purchase bills issued by Hawala dealers. According to the Ld. AO, although assessee has filed certain basic evidences, but failed to file further evidence in the backdrop of clear finding by the Sales Tax Department, Maharashtra that those parties are involved in providing accommodation entries without actual delivery of goods. The Ld. AO had also taken support from the investigation conducted during the course of assessment proceedings, as per which notice issued u/s 133(6) to the parties were returned un-served by the postal au....
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....edded in those purchases needs to be taxed, but not total purchase from those parties. The Hon'ble Gujarat High Court, in the case of CIT vs Simith P.Sheth 356 ITR 451 had considered a similar issue and held that at the time of estimation of profit from alleged bogus purchases no uniform yardsticks could be adopted, but it depends upon facts of each case. The ITAT, Mumbai, in number of cases had considered an identical issue and depending upon facts of each case, directed the Ld. AO to estimate gross profit of 10% to 15% on total alleged bogus purchases. In this case, considering the nature of business of the assessee the Ld. AO has made 12.50% additions, which has been affirmed by the ld. CIT(A) on total alleged bogus purchase. Although, b....