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2017 (11) TMI 2051 - ITAT MUMBAIReopening of assessment - Estimation of income - bogus purchases - CIT(A) confirmed addition being 17.5% of the total bogus purchases - HELD THAT:- We find that the reopening has been done on the basis of information from the Sales Tax Department, GOM that the assessee has availed hawala entries for purchase of goods from the hawala operators - In our opinion, the said information was not available before the AO at the time of framing of the assessment and therefore was constituted valid reason for reopening the assessment u/s 148 of the Act. We are in agreement with the conclusion drawn by the CIT(A) on the issue of reopening of the assessment and accordingly the cross objection raised against re-opening is dismissed. Addition at the rate of 17.5% of bogus purchases - We find that the assessee failed to prove the genuineness of purchases by producing the relevant documentary and circumstances evidences before the lower authorities as desired by them whereas the consumption of the materials is not disputed. Therefore, reasonable addition should be made to cover the various types of savings which the assessee might have made by purchasing the goods from the gray market. Accordingly, we feel reasonable if the addition is sustained to the tune of 5% of the amount of bogus purchases. Accordingly, the CO of the assessee is partly allowed and appeal of the revenue is dismissed. As the addition made by the ld. CIT(A) at the rate of 17.5% of the bogus purchase is on higher side, it should be made on reasonable account which brings the tax and savings which the assessee might have made. Resultantly, the appeal of the revenue stands dismissed.
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