2020 (11) TMI 932 - AT - Income Tax

Bogus purchases u/s 69C - CIT-A restricted the addition to 25% of the alleged bogus purchases - HELD THAT - As relying on own case 2018 (2) TMI 346 - ITAT MUMBAI we direct the ld. AO to adopt the profit percentage @12.5% minus gross profit already declared by the assessee with regard to the disputed purchases. No arguments by way of any contrary decisions were submitted by the ld. DR before us with regard to the impugned issue. Accordingly, the grounds raised by the assessee as well as by the revenue on merits are disposed off in the aforesaid manner.

Summary

Issues Involved:
Validity of reopening of assessment, opportunity of cross-examination, addition on account of bogus purchases u/s.69C of the Income Tax Act.

Validity of Reopening of Assessment:
The grounds challenging the validity of reopening of assessment and non-granting of opportunity of cross-examination were not pressed by the Assessee's representative during the hearing. As a result, those grounds were dismissed as not pressed. This decision was based on the statement made by the representative at the Bar, indicating a waiver of those grounds.

Addition on Account of Bogus Purchases u/s.69C:
The main issue in these appeals revolved around the addition made on account of bogus purchases u/s.69C of the Income Tax Act. The Assessee, engaged in trading of ferrous and non-ferrous metals, faced scrutiny due to purchases made from tainted parties listed as hawala dealers. The Assessing Officer (AO) required the Assessee to prove the genuineness of these purchases but received no satisfactory replies. Consequently, the AO treated the purchases as unexplained expenditure u/s.69C, amounting to a significant sum. The AO noted that the Assessee failed to produce the concerned parties or provide adequate evidence to substantiate the purchases' legitimacy.

Judicial Precedent and Decision:
The appellate tribunal considered a previous decision related to a similar issue in the Assessee's case for a different assessment year. In that instance, the tribunal directed the AO to adopt a profit percentage of 12.5% and reduce the gross profit already declared by the Assessee to determine the disallowance on account of alleged bogus purchases. Following this precedent, the tribunal directed the AO in the current case to apply the same approach. The tribunal noted that no contrary decisions were presented by the parties during the proceedings.

Final Decision:
After considering the submissions and evidence, the tribunal partly allowed both the Assessee's and Revenue's appeals. The tribunal directed the AO to adopt a profit percentage of 12.5% and adjust it by the gross profit already declared by the Assessee concerning the disputed purchases. The tribunal's decision was in line with the previous ruling on a similar issue in the Assessee's case for a different assessment year. The grounds raised by both parties on merits were disposed of accordingly.

This detailed analysis of the judgment provides insights into the issues addressed, the legal arguments presented, and the tribunal's decision-making process.