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2021 (12) TMI 402 - AT - Income TaxReopening of assessment u/s 147 - receipt of information from Sales Tax Department, Maharashtra which had conducted inquiries in cases of several dealers located on across Maharashtra and had unearthed of a racket involving more than 1935 Hawala Dealers and more than 33,700 beneficiaries including the present assessee - HELD THAT - We incline to hold that initiation of reassessment proceedings, u/s.148 of the Act and issued notice to the assessee was based on valid reason on the strength of new tangible material which was not before the AO during the original assessment proceedings. Therefore, we are unable to see any ambiguity, perversity or invalidity in the action of the AO in initiating reassessment proceedings, issuing notice u/s.148 of the Act and framing reassessment order u/s.143(3) r.w.s.147 of the Act. Therefore, we are of the opinion that the findings recorded by the First Appellate Authority is quite reasonable and justified and thus, the same does not call for any interference. Consequently, the findings of the Ld. CIT(Appeals) is upheld and Ground No.1 raised in appeal by the assessee is dismissed. Estimation of income - bogus purchases - Disallowance of 25% of total impugned bogus purchases - HELD THAT - As per case M/S. PARAMSHAKTI DISTRIBUTORS PVT. LTD. 2019 (7) TMI 838 - BOMBAY HIGH COURT we are of the considered view that it would be reasonable to sustain addition @ 10% of the amount of bogus purchases, being profit element involved therein.
Issues:
1. Validity of reopening u/s.148 and consequential reassessment order. 2. Disallowance of 25% of purchases from M/s. Oriental Enterprises. 3. Justification of disallowance and reduction of disallowance percentage. 4. General ground for appeal. Issue 1: Validity of Reopening u/s.148 and Consequential Reassessment Order: The appeal challenged the Ld. CIT(Appeals) order confirming the validity of reopening u/s.148 of the Income Tax Act, 1961, and the subsequent assessment order under section 143(3) r.w.s.147. The Assessing Officer initiated reassessment proceedings based on new material from the Sales Tax Department, Maharashtra, involving hawala transactions. The ITAT Pune upheld the validity of the reassessment, stating that the new material justified reopening and the income had escaped assessment due to bogus purchases claimed by the assessee. The tribunal dismissed the appeal on this ground. Issue 2: Disallowance of 25% of Purchases from M/s. Oriental Enterprises: The assessee contested the disallowance of 25% of purchases made from M/s. Oriental Enterprises, claiming the purchases were genuine. The ITAT Pune noted that the Ld. CIT(Appeals) confirmed the disallowance based on precedents and directed the Assessing Officer to restrict the addition to 25% of alleged bogus purchases. The tribunal referred to judicial precedents where a 10% addition on bogus purchases was deemed reasonable. Consequently, the ITAT Pune partly allowed the appeal on this ground, reducing the disallowance percentage to 10%. Issue 3: Justification of Disallowance and Reduction of Disallowance Percentage: The ITAT Pune analyzed the facts, noting that the assessee consumed the alleged bogus purchases made through hawala dealers. Referring to relevant judicial decisions, the tribunal found a 10% addition on such purchases to be reasonable. Citing a recent Pune Bench Tribunal decision, the ITAT Pune upheld the 10% addition on the amount of bogus purchases, aligning with judicial precedents. Consequently, the tribunal partly allowed the appeal on this ground, reducing the disallowance percentage from 25% to 10%. Issue 4: General Ground for Appeal: The fifth ground raised in the appeal was deemed general in nature, requiring no specific adjudication. The ITAT Pune pronounced the order on November 10, 2021, partly allowing the appeal based on the analysis and conclusions drawn on the specific issues raised. This comprehensive analysis of the judgment from the Appellate Tribunal ITAT Pune highlights the key issues, arguments presented, and the tribunal's findings and decisions on each issue, maintaining the legal terminology and significant details from the original text.
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