2018 (7) TMI 2108 - AT - Income Tax

Estimation of income - bogus purchases - AO estimated undisclosed profit @ 15% on the alleged aggregate bogus purchases - As per CIT-A against this GP margin of 15% the AO is directed to allow a set off of the GP margin already disclosed by Erse assessee in the books in respect of the alleged bogus purchases from two parties - HELD THAT - As found from record that bogus purchases so made by the assessee were established and the AO has also made detailed enquiry. After considering the assessee s contention regarding corresponding sales, the CIT(A) has also given further relief by directing the AO to reduce GP earned on such bogus purchases from the estimated profit of 15% on the alleged bogus purchases. The detailed finding so recorded by CIT(A) after considering various judicial pronouncements are as per material on record and do not require any further interference on our part. - Decided against assessee.

Summary

Issues:
1. Addition made on account of alleged bogus purchases.
2. Reopening of assessment under section 147.

Analysis:
1. Alleged Bogus Purchases:
The appeal was filed against the order of CIT(A)-51 confirming the addition made on account of alleged bogus purchases. The assessee, part of Sur Gems Group, availed accommodation entries from concerns controlled by Bhanwarilal Jain. The AO added undisclosed profit at 15% on the alleged bogus purchases. CIT(A) considered the GP margin shown by the assessee in previous years and directed a set off of the disclosed GP margin in respect of the alleged bogus purchases. The Tribunal found the bogus purchases were established, and after considering the corresponding sales, upheld the CIT(A)'s decision to reduce the estimated profit of 15% on the alleged bogus purchases. The appeal was dismissed based on the detailed findings and judicial pronouncements.

2. Reopening of Assessment:
The CIT(A) confirmed the reopening under section 147, despite the original assessment being done under section 143(3). The AO completed the assessment post a search action on Sur Gems Group, revealing accommodation entries availed by the assessee. The Tribunal noted the detailed enquiry conducted by the AO and upheld the CIT(A)'s decision to allow a reduction in the estimated profit on the alleged bogus purchases. The Tribunal found the CIT(A)'s findings based on judicial pronouncements and material on record did not warrant any further interference. Consequently, the appeal was dismissed, and the order was pronounced in open court on 12/07/2018.