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TMI Blog2019 (6) TMI 596X X X X Extracts X X X X X X X X Extracts X X X X ..... original assessment. Therefore, the reassessment proceeding in the instant case in our opinion is valid. Therefore, the order of the CIT(A) treating the reopening of the assessment u/s 147 as ab-nitio void is not correct. We accordingly set aside the order of the CIT(A) on this issue and allow the ground No.1 filed by the revenue. Bogus purchases - We find during the course of assessment proceedings the AO had specifically asked the assessee to produce the above parties for his examination. Assessee stated that it is not possible for it to produce the suppliers since they are not the regular suppliers of the assessee company and further the project at Mumbai had already been completed. Further the assessee could not furnish evidence of supply of these materials i.e. transportation bilty or any evidence to prove the movement of goods. Therefore deletion of the entire amount of the bogus purchases so made by the AO is not proper. Since in the instant case the AO has not disturbed the sales and has not rejected the books of accounts, therefore, the entire amount of bogus purchases as alleged cannot be added to the total income of the assessee and the addition has to be rest ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... AN FY Amount 27650394720V 27090707756V Mahavir Sales Corporation AMMPM3778R 2009-10 1212598 27650394720V 27440688212V Tulsiani Rading Private Limited AADCT0405G 2009-10 4076273 27650394720V 27560694451V Samarth Enterprises APBPS3000G 2009-10 1628294 27650394720V 27600648257V Niddhish Impex Pvt AACCN6984H 2009-10 4630071 27650394720V 27750595164V Deep ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ing channel by account payee cheques only. It was argued that no project of similar nature can be completed without material. The assessee also filed the copies of purchase bills issued by the above suppliers alongwith delivery challan, material receipt note and copy of purchase order etc. The copies of the bank statement highlighting the payments were also filed. 5. However, the Assessing Officer was not satisfied with the above submissions and asked the assessee to prove the genuiness of the transactions with the impugned parties and to produce evidence of supply of material i.e. transport bills/ bilty etc and also to produce the parties in person to verify the authenticity of the of the transactions. It was submitted that it is not possible for the assesee to produce the suppliers since they are not the regular suppliers of the assessee company and furthermore project at Mumbai has already been completed in the year 2011. It was requested to call all the suppliers for their cross examination, since the assessee is not able to produce the same. The assessee also requested the Assessing Officer to provide the relevant material and opportunity to cross ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... that third party information cannot be accepted as an evidence without giving opportunity of cross-examination to the assessee. He noted that the assessee has purchased certain items which was used for manufacturing the Central Air Conditioning plant in the hotel. If the allegations of the Assessing Officer that assessee has not purchased the material is correct, than it is not possible on the part of the assessee to complete the Central Air Conditioning system in the hotel. Further the Assessing Officer has not rejected the books of account of the assessee. Relying on various decisions the Ld. CIT(A) deleted the addition made by the Assessing on merit also. 9. Aggrieved with such order of the CIT(A), the revenue is in appeal before the Tribunal by raising the following grounds of appeal :- 1. The Ld. CIT(A) has erred in law and on facts in treating the reopening of the assessment proceedings u/s. 147 of the Income Tax Act 1961 as ab initio void. 2. The Ld. CIT(A) has erred in law and on facts in deleting the addition of ₹ 1,58,47,973/- made by the AO on account of bogus purchases based on information received fr ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s from the alleged five parties (as mentioned earlier at para No.2 of this order) amounting to ₹ 1,58,47,973/-. The Assessing Officer, after perusal of the assessment record and on the basis of details furnished by the assessee, reopened the assessment u/s 147/148 of the IT Act. Since the assessee could not produce the details as asked by the Assessing Officer to substantiate the genuiness of the purchases and also failed to produce the five parties from whom it had made the alleged bogus purchases, the Assessing Officer made addition of ₹ 1,58,47,973/- to the total income of the assessee treating the purchases as bogus. We find the Ld. CIT(A) quashed the reassessment proceedings and also deleted the addition on merit. 13. So far as the order of the CIT(A) in quashing the reassessment proceedings are concerned, we find the same is not proper under the facts and circumstances of the case. The Assessing Officer has acted on the basis of information supplied by the investigation wing of the department who in turn have received information from MVAT department that the assessee M/s. Sanvik Engineers Pvt. Ltd. has availed bogus bills from afores ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... if the purchases are held as bogus, the entire purchase amount cannot be added when the department has not disputed the assessee s sales and the Assessing officer has not rejected the books of accounts and has not granted opportunities of cross examination. In such case only gross profit element embedded in such bogus purchases can be added. For the above proposition, we find support from decision of Hon ble Bombay High Court in the case of PCIT Vs. Mohd. Hazi Adam vide ITA No. 1004/M/2016 and other connected appeals vide consolidated order dated 21.02.2019 where the Hon ble High Court has observed as under :- 8. In the present case, as noted above, the assessee was a trader of fabrics. The A. O found three entities who were indulging in bogus billing activities. A. O. found that the purchases made by the assessee from these entities were bogus. This being a finding of fact, we have proceeded on such basis. Despite this, the question arise whether the Revenue is correct in contending that the entire purchase amount should be added by way of assessee s additional income or the assessee is correct in contending that such logic cannot be applied. The finding of the C ..... X X X X Extracts X X X X X X X X Extracts X X X X
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