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TMI Blog2023 (9) TMI 1604X X X X Extracts X X X X X X X X Extracts X X X X ..... of the order of the coordinate bench it is clear that the issue of bogus purchases have already been considered under regular assessment. Accordingly in our view, there is merit in the contention of the AR that the initiation of reassessment is merely a change of opinion and that no addition can be made in the reassessment for the same purchases. Considering the fact that the impugned purchases have already been considered during the assessment u/s 143(3) and that the SMC bench of the Tribunal has held 4% to be the GP rate that is to be applied on gross turnover for addition towards bogus purchases, we hold that the addition based on peak credit of purchases under section 69C in the assessment u/s 147 is not tenable. Gross profit ratio in ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... o.1421/Mum/2023 (A.Y. 2009-10) 3. The assessee filed the return of income for the assessment year 2009-10 on 28/09/2009 declaring total income at Nil. The assessee s case was selected for scrutiny and the assessment under section 143(3) was completed on 23/12/2011 wherein the profit of the assessee was estimated at 5%. The assessee preferred appeal against the assessment order under section 143(3) before the CIT(A) who confirmed the addition. The assessee preferred further appeal before the Tribunal and the SMC bench vide order dated 28.07.2023 has held that 4% gross profit (GP) ratio be applied on the gross turnover as addition towards bogus purchase. In the meanwhile, there was a survey conducted on 22/01/2013 pursuant to information rece ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ection 69C of the Act. On further appeal, the CIT(A) confirmed the addition made by the Assessing Officer. Aggrieved, the assessee is in appeal before the Tribunal. 4. With regard to the addition made for AY 2009-10, the Ld.AR for the assessee submitted that the assessment made under section 143(3) was completed by estimating the gross profit of the assessee at 5% and the re-assessment on the same purchases are done by making an addition under section 69C based on the credit which is a change of opinion by the Assessing Officer. The ld AR further submitted that in the appeal against the order under section 143(3), the SMC bench of the Tribunal has held that 4% of the gross turnover as an addition towards the bogus purchases by applying the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ts return of income on 26/09/2010 declaring total income at NIL. In this year, the Assessing Officer on same grounds as in AY 2009-10, disallowed the peak of cumulative purchases to the tune of Rs. 1,33,49,985/- and added the same to the income as unexplained expenditure under section 69C of the Act. The CIT(A) confirmed the addition and the assessee is in appeal before us against the order of CIT(A). 8. The Ld.AR for AY 2010-11 submitted that the peak credit addition made by the Assessing Officer on the total purchases debited by the assessee in the P L Account is not correct. The Ld.AR also submitted that the addition has been made based on non response to notice under section 133(6) by few of the vendors ignoring the fact that the assess ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ncome or the assessee is correct in contending that such logic cannot be applied. The finding of the CIT(A) and the Tribunal would suggest that the department had not disputed the assessee's sales. There was no discrepancy between the purchases shown by the assessee and the sales declared. That being the position, the Tribunal was correct in coming to the conclusion that the purchases cannot be rejected without disturbing the sales in case of a trader. The Tribunal, therefore, correctly restricted the additions limited to the extent of bringing the G.P. rate on purchases at the same rate of other genuine purchases. 11. Going by the ratio of above judgment of the Hon ble High Court, we are of the opinion that gross profit ratio in the al ..... X X X X Extracts X X X X X X X X Extracts X X X X
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