2019 (3) TMI 2 - AT - Income Tax

Addition of bogus purchases - ex parte order - Assessment u/s 147 based on investigation report - profit rate determination - assessee was able to co-relate the purchase of material with the allocation of raw materials and sales of finished products. - HELD THAT - Neither before the AO nor before the Commissioner (Appeals) the assessee has produced any supporting evidence either to prove delivery of goods or the fact that the goods were actually sold by the concerned parties. Assessee even could not establish the existence of the concerned parties, considering the fact that the notices issued under section 133(6) returned back unserved. Claim of the assessee that the purchases made are genuine cannot be accepted. AO has accepted the fact that the assessee has purchased goods from some other source and for that reason alone he has estimated the profit at the rate of 12.5% which has been sustained by Commissioner (Appeals). The assessee has neither appeared before us nor brought any material on record to controvert the aforesaid factual finding of the departmental authorities and has also failed to demonstrate that the profit rate adopted at 12.5% is unreasonable. - Decided against assessee.

Summary

Issues:
- Addition made on account of bogus purchases

Analysis:
The appeal pertains to the assessment year 2009-10, where the dispute revolves around the addition made on account of bogus purchases. The assessee, engaged in trading, filed his return of income initially processed under section 143(1) of the Income Tax Act, 1961. Subsequently, the assessing officer reopened the assessment under section 147 based on information indicating that purchases claimed by the assessee were not genuine. The assessing officer issued notices under section 133(6) to parties supposedly selling goods to the assessee, which were returned unserved. Despite providing purchase bills and bank statements, the assessee failed to conclusively prove the genuineness of the purchases. The assessing officer concluded that the purchases were not genuine and estimated the profit element at 12.5% of the non-genuine purchases, amounting to ?15,33,870. The assessee challenged this addition in appeal, but the Commissioner (Appeals) upheld the assessing officer's decision.

During the appeal hearing, neither the assessee nor a representative appeared, leading to an ex parte disposal of the appeal. The Tribunal upheld the validity of the assessment reopening under section 147, noting the lack of supporting evidence from the assessee to prove the genuineness of the purchases. The Tribunal emphasized that the assessee failed to establish the delivery or sale of goods by the concerned parties, especially considering the unserved notices under section 133(6). The assessing officer's estimation of profit at 12.5% was deemed reasonable, as the assessee did not provide any material to challenge this factual finding. Consequently, the Tribunal dismissed the grounds raised by the assessee and upheld the decision of the Commissioner (Appeals) regarding the disputed issue of bogus purchases.

In conclusion, the Tribunal dismissed the assessee's appeal, affirming the addition made on account of bogus purchases for the assessment year 2009-10.