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2018 (7) TMI 1843 - AT - Income TaxReopening of assessment - bogus purchases - Proof of new material - reason to believe - basis of information received from external agencies like sales-tax department and DGIT (Inv) - Held that:- Admittedly, the AO has reopened assessment on the basis of information received from DGIT(Inv) which was further supported by information received from sales-tax department as per which, the list prepared by MVAT department contained certain parties who were involved in providing accommodation entries. AO has reopened assessment on the basis of said information received from the external agencies which constitutes fresh material for the purpose of formation of reasonable belief of escapement of income. Therefore there is no merit in the argument of the assessee that the assessment has been reopened without there being any new material which amounts to change of opinion. Accordingly, we reject ground taken by the assessee challenging validity of reopening of assessment. Addition towards estimation of net profit on alleged bogus purchases it is an admitted fact that the assessee has made purchases from certain parties, who were appearing in the list of suspicious dealers / hawala operators prepared by sales-tax department. It is also an admitted fact that notices issued u/s 133(6() to such parties returned unserved with the remark “left or not known”. At the same time, the assessee also filed certain basic evidences like purchase bills and bank details for having made payment by account payee cheques. Under these circumstances, it is very difficult to accept that purchases from the above parties are genuine in nature and supported by proper evidence. Having said so, let us examine the profit estimated by the AO. The co-ordinate benches of Tribunal in a number of cases has taken a consistent view and held that 12.5% profit estimation on alleged bogus purchases is fair and reasonable - thus we are of the considered view that the AO was right in estimating 12.5% profit on alleged bogus purchases. - Decided against assessee.
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