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TMI Blog2017 (12) TMI 1122X X X X Extracts X X X X X X X X Extracts X X X X ..... to take a contrary view that there was no approval of JCIT for reopening the assessment. Thus, we do not find any force in the submission of ld. AR of the assessee; hence, the Ground No.1 of the appeal is dismissed. Addition on account of bogus purchases - Held that:- Under Income-tax Act, the only real income can be taxed by the Revenue, even if the transaction is not verifiable due to any reason, the only taxable is the taxable income component and not aggregate of the transaction. After considering the fact and nature of business of assessee, we are of the opinion that in order to fulfil the gap of revenue leakage, the disallowance of reasonable percentage of impugned purchases would meet the end of justice. The Hon'ble Bombay High Court in CIT v. Hariram Bhambhani [2015 (2) TMI 907 - BOMBAY HIGH COURT] held that revenue is not entitled to bring the entire sales consideration to tax, but only the profit attributable on the total unrecorded sales consideration alone can be subject to income tax. We have noted that the ld CIT(A) after relying on various decisions restricted the disallowance at 12.5% of the tainted/ bogus purchase. Thus, we do not find any illegality or infirmi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... bills of ₹ 42,95,62,364/-from entity the listed in Sales Tax Website and declared as Hawala dealers by the Sale Tax Department, Mumbai thereby inflating its expenses and suppressing the profit for AY 2009-10. Information received from the DGIT (Inv.) Mumbai that M/s Shree Sai Steel Industries Private Ltd has obtained bogus bills from the following parties; Sr. No. Name of the Pur. Parties Amt. (in Rs.) 1. I S K TRADING COMPANY PVT. LTD. 16,81,58,700 2. K R C TRADING CO. PVT. LTD. 20,75,00,990 3. S B. METAL CORPN 2,03,20,320 4. HANUMAN STEEL 3,55,82,354 Total 42,95,62,364 Thus assessee s case clearly false within the provisions of Explanation 2 (c) (i) of section 147 as the income chargeable to tax has been assessed. In view of the above, I have reason to believe that the income to the extent of ₹ 42,95,62,364/- charg ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... t was argued that re-opening of the assessment can be made only with the approval of Joint Commissioner of Income-tax(JCIT). In absence of prior approval of JCIT of Income-tax, the re-opening is invalid. In the alternative submission, the ld. AR of the assessee argued that the assessment was re-opened without application of mind as no approval of reassessment was obtained. During the assessment, the assessee requested the AO to allow the inspection on record. The assessee was not allowed the inspection of record. In support of his submission, the ld. AR of the assessee relied upon the decision of Hon ble Bombay High Court in CIT vs. Trend Electronics (2015) 379 ITR 056 (Bom), Gujarat High Court in Vershaben Shantilal Patel vs. ITO (2016) 282 CTR 0075 (Guj.) and Delhi High Court in Sabh Infrastructure Ltd. Vs ACIT W.P.(C)1357/2015. On the other hand, the ld. DR for the Revenue supported the orders of authorities below. It was argued that the AO has received credible information from the DGIT (Inv.). No enquiry is required before reopening. The AO has no jurisdiction to make any enquiry unless the assessment is re-opened. The assessment was re-opened with the approval of higher autho ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... at the initial stage what is required is reason to believe but, not established fact of escapement of income. Therefore, at this stage only question whether there was relevant material to form a reasonable belief is to be seen and in the background of present facts, there is a specific information received during the investigation by the authority and it has been prima facie found that assessee is also the beneficiary of the said parties, the re-reopening of assessment is valid. The decision relied by ld. AR of the assessee are not applicable on the facts of the present case. In CIT vs Trend Electronics (supra) the assessment under section 143(3) rws 147 was completed without supplying the reasons recorded. In Varshaben Shantilal Patel Vs ITO (supra) the AO made reliance on the material from external source, the said aspect is not reflected in the reasons recorded. And in Sabh Infrastructure Ltd. (supra) the notice under section 148 for re-opening the assessment was issued after four year from the end of relevant assessment year and the AO has not specified as to what material facts and information the assessee has failed to disclose. However, all these leaches are not available ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rchases and to furnish the documents related to the purchases and to produce the parties for verification. The assessee failed to produce the parties for verification and the relevant documents to prove the genuineness of the purchases. The AO on his observation that that the assessee failed to produce the genuineness of transaction disallowed the entire purchases from four parties. The AO has not issued any notice under section 133(6) or summons under section 131 of the Act. The AO disallowed the purchases of ₹ 42,95,62,363/-. On appeal before the ld. CIT(A) restricted the disallowance @12.5% of the purchases disallowed by AO. Before us as well as ld CIT(A), the ld AR of the assessee contended that he has filed affidavit of the two supplier which was not considered by AO. The ld CIT(A) while considering the contention of ld AR observe that the affidavit were sworn on 27.02.2015 and the assessment order was also passed on the same day. The ld CIT(A) treated the copy of the affidavit as additional evidence and the same was not considered. Even before us the ld AR has not prayed for taking additional evidence on record. Though, the copy of the said affidavit is placed on record ..... X X X X Extracts X X X X X X X X Extracts X X X X
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