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2020 (8) TMI 354 - ITAT MUMBAIReopening of assessment u/s 147 - Information received from Sales Tax Department - Estimation of income - bogus purchases - CIT- A sustained the addition made by the AO towards alleged bogus purchases to 12.50% gross profit on total purchases from those parties - HELD THAT:- For Reopening of assessment AO has formed reasonable belief of escapement of income on the basis of report of Investigation Wing, which is further supported by the report of Sales Tax Department, Govt. of Maharashtra. Further, in our considered view, information relied upon by the ld. AO constitutes a fresh tangible material which is sufficient to reopen the assessment. We, therefore, are of the opinion that there is no merit in grounds taken by the assessee challenging reopening of assessment and hence, we reject grounds raised by the assessee, challenging of reopening assessment. Bogus purchases - 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. Both authorities have taken uniform rate of profit for estimation of income from alleged bogus purchase, but no one could support said rate of gross profit with necessary evidences or any comparable cases. Rate of profit adopted by the AO is appears to be on higher side when compared to nature of business of the assessee. Therefore rate profit adopted @ 12.50% on alleged bogus purchases is on higher side going by the nature of business of the assessee and hence, we order the Assessing Officer to restrict the addition at the rate of 5% on alleged bogus purchases. Appeal of the assessee is partly allowed.
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