TaxTMI 
TaxTMI 
2026 (5) TMI 557
X X X X Extracts X X X X
X X X X Extracts X X X X
...."], for the assessment year 2011-12. 2. In this appeal, the assessee has raised the following grounds: - "1. On the facts and circumstances of the case and in law, The Ld. CIT(A) erred in confirming the addition made by the Ld. AO of Rs. 1,28,144/- on account of purchase made by the assessee from DDIT Investigation, Bhavnagar treating them as bogus non-genuine expenditure under section 69C of Income Tax Act. 2. On the facts and circumstances of the case and in law, The Ld. CIT(A) erred in confirming the addition made by the Ld. AO of Rs. 1,28,144/- being 87.5 percent of alleged bogus purchases, ignoring the fact that the appellant had already declared 12.5 percent of the transaction while filing the return under section....
X X X X Extracts X X X X
X X X X Extracts X X X X
.... verification. b. Reassessment proceeding cannot be initiate merely on the information received from investigation wing. c. Reassessment proceeding cannot be initiated when the Ld. AO have reason to suspect and not reason to believe. 8. On the facts and in the circumstances of the case and in law, The Ld. CIT(A) erred in confirming the charging of Penalty proceeding under 271(1)(c) of the Income Tax Act 1961." 3. Grounds No. 1-6, raised in assessee's appeal, pertain to the addition made by treating the purchases as bogus and non-genuine. 4. The brief facts of the case pertaining to this issue, as emanating from the record, are: The assessee is an individual and is running a proprietorship concern in the name....
X X X X Extracts X X X X
X X X X Extracts X X X X
....of the Act, held that the assessee did not try to substantiate the genuineness of the purchases in question from M/s Shiv Sales and no plausible explanation regarding the transaction was provided. The AO held that merely disclosing an additional income at the rate of 12.5% on the purchases found to be bogus doesn't prove the genuineness of the transaction. Accordingly, the AO treated the books of accounts maintained by the assessee to be unreliable and accordingly rejected the same. Further, the entire amount of the purchase transaction, i.e. INR 1,46,450, from M/s Shiv Sales, was treated as bogus, and the differential amount of INR 1,28,144, over and above the amount already declared by the assessee, was added to the total income of the as....
X X X X Extracts X X X X
X X X X Extracts X X X X
....at pages 42 and 45 of the paper book. The learned AR further submitted that the assessee has already voluntarily added 12.5% of the alleged bogus purchases from M/s Shiv Sales, despite the fact that its gross profit from the other purchases was only 6.41%. 8. On the other hand, the learned Departmental Representative ("learned DR"), by vehemently relying upon the order passed by the lower authorities, submitted that there is no documentary evidence of transfer of goods by M/s Shiv Sales to the assessee. Thus, the learned DR submitted that the entire purchase transaction from M/s Shiv Sales is bogus. 9. We have considered the submissions of both sides and perused the material available on record. In the present case, based on informati....
X X X X Extracts X X X X
X X X X Extracts X X X X
..... Thus, we are of the considered view that a reasonable disallowance of the purchases would mitigate the possibility of revenue leakage. We find that the assessee has suo motu made an addition of 12.5% of the alleged bogus purchases from M/s Shiv Sales while filing its return in response to the notice issued under section 148 of the Act. We further find that in an earlier round of proceedings before the Tribunal for the year under consideration, the Coordinate Bench in the assessee's own case vide order dated 31/05/2022, passed in ITA No. 2034/Mum/2021, directed the AO to compute the gross profit of the assessee at 6.41% of the alleged bogus purchases from some other entities. Therefore, we are of the considered view that even though the as....