2019 (1) TMI 1952 - AT - Income Tax

GP estimation on bogus purchases - HELD THAT - We found that assessee has already disclosed GP of 23% 20% in the A.Y.2010-11 and 2011-12 under consideration. Assessee had also filed quantitative details of purchases and sales before the lower authorities. Considering the various judicial pronouncements placed on record vis- -vis GP rate declared by the assessee we direct the AO to restrict the disallowance to the extent of 5% of alleged bogus purchases.

Summary

Issues:
1. Reopening of assessment
2. Merit of the addition upheld in respect of bogus purchases

Analysis:
1. Reopening of assessment:
The appeals were filed by the assessee against the order of CIT(A)-2 Thane for the A.Y.2010-11 and 2011-12 regarding the reopening of assessment under section 143(3) r.w.s.147 of the IT Act. The assessee was aggrieved by the reopening of the assessment. The Tribunal noted that the ground raised regarding reopening was not pressed by the Ld. AR, and therefore, it was dismissed in limini.

2. Merit of the addition upheld in respect of bogus purchases:
The assessee, a proprietor of a trading company, had declared GP/NP during the relevant years. The reassessment orders were completed after disallowances on account of bogus purchases under Sec 69C of the Act. The CIT(A) restricted the addition in A.Y.2010-11 and 2011-12 based on estimated GP percentages. The assessee appealed against this order. The Tribunal considered the contentions and found that the assessee had disclosed GP rates and provided quantitative details of purchases and sales. After considering judicial pronouncements and the GP rate declared by the assessee, the Tribunal directed the AO to restrict the disallowance to 5% of the alleged bogus purchases. As a result, the appeals were allowed in part.

This judgment addresses the issues of reopening of assessment and the merit of the addition upheld in respect of bogus purchases, providing a detailed analysis of the facts, contentions, and the Tribunal's decision in each aspect.