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TMI Blog2021 (9) TMI 1161X X X X Extracts X X X X X X X X Extracts X X X X ..... e from the hawala parties, therefore, he had a reason to believe that on account of claim of excessive expenses on account of purchases claimed by the assessee to have been made from the said hawala dealers, its income for the year under consideration had been under assessed. We are unable to persuade ourselves to subscribe to the claim of the ld. A.R that the concluded assessment of the assessee had been reopened on the basis of a borrowed satisfaction. As observed by us hereinabove, the A.O in the backdrop of the information that was received by him from the Investigation wing, Mumbai had after due application of mind validly reopened the case of the assessee. Accordingly, finding no infirmity in the validity of the reopening of the assessee s case u/s 147 - Decided against assessee. - ITA No.5383/MUM/2019 C.O. No.80/Mum/2020 - - - Dated:- 26-8-2021 - Shri S. Rifaur Rahman (Accountant Member) And Shri Ravish Sood (Judicial Member) For the Assessee : Shri Himanshu Gandhi, A.R For the Revenue : Ms. Usha Gaikwad, D.R ORDER PER RAVISH SOOD, J.M: The present appeal filed by the revenue is directed against the order passed by the CIT(A)-10, ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... oorva Shah on 13/14.12.2011; assessment u/s 143(3) r.w.s 153C, dated 27.03.2014 for the year under consideration was framed in the case of the assessee. Subsequently, on the basis of information received by the A.O from the DGIT(Inv.), Mumbai that the assessee as a beneficiary had obtained bogus purchase bills, its case was reopened u/s 147 of the Act. 3. During the course of the reassessment proceedings it was observed by the A.O that the assessee had claimed to have made purchases of ₹ 93,93,627/- from the following two tainted parties: Sr. No. Name of Concerns F.Y. Amount (Rs.) 1. Daksh Diamond 2009-10 55,95,826/- 2. Mayur Exports 2009-10 37,97,801/- Total 93,93,627/- In order to verify the authenticity of the aforesaid purchases the A.O issued notices u/s 133(6) to the aforementioned concerns. Although, one of the concern viz. M/s Mayur Export ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ition of ₹ 11,74,203/- i.e @12.5% of the impugned purchases of ₹ 93,93,627/-. As such, the A.O vide his order passed u/s 143(3) r.w.s 147, dated 14.12.2017 assessed the income of the assessee under the normal provisions at ₹ 29,69,580/-. 4. Aggrieved, the assessee carried the matter in appeal before the CIT(A). It was observed by the CIT(A) that his predecessor in the assessee s own case for A.Y.2013-14 had directed the A.O to restrict the addition to 3% of the value of the bogus purchases. However, it was observed by the CIT(A) that on further appeal filed by the revenue the Tribunal had vide its order passed in ITA No. 47/Mum/2017 and ITA No. 167/Mum/2017, dated 13.12.2017 had enhanced the aforesaid addition to 6% of the value of the impugned purchases. Accordingly, the CIT(A) taking cognizance of the view taken by the Tribunal in the assessee s own case for A.Y. 2013-14 restricted the addition to 6% of the value of the impugned bogus/unverified purchases amounting to ₹ 93,93,627/-. 5. As observed by us hereinabove, both the revenue and the assessee have assailed the order of the CIT(A) by filing their respective appeal and cross-objection before ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ee 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 arises 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 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 sale 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 trade. 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. The decision of the Gujarat High Court in the case of N.K. Industries Ltd. (supra) cannot be applied without reference to the facts. In fact in paragraph 8 of the same Judgment the Court held and observed ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the hands of the assessee. Although, as observed by us hereinabove, we are of a strong conviction that the addition insofar the bogus/unproved purchases aggregating to ₹ 93,93,627/- claimed by the assessee to have been made from the aforementioned parties is liable to be restricted only to the extent that the G.P rate of such purchases are brought in conformity with that of the other genuine purchases, however, we are not inclined to accept the claim of the ld. A.R that no addition as regards the impugned purchases claimed by the assessee to have been made from M/s Mayur Exports was called for in its hands. In our considered view, the addition in respect of the purchases made by the assessee from the open/grey market is backed by the reason that the goods in question would have been procured at a discounted value as against that accounted for on the basis of bogus purchase bills in the books of accounts. We, thus, in terms of our aforesaid deliberations herein direct the A.O to restrict the addition insofar the bogus/unproved purchases aggregating to ₹ 93,93,627/- in the case before us are concerned by bringing the G.P. rate on the amount of such bogus purchases at the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... act that the authenticity of the purchases made by the assessee had already subjected to a test check in the course of the aforesaid original assessment proceedings, therefore, merely on the basis of unsubstantiated material the concluded assessment of the assessee could not have been disturbed and therein reopened. 8. Per contra, the ld. D.R vehemently submitted that the A.O had validly recorded his satisfaction for reopening the assessment of the assessee. It was submitted by the ld. D.R that at the time of reopening of a case what is required is a bonafide belief on the part of the A.O that the income of the assessee chargeable to tax had escaped assessment. It was submitted by the ld. D.R that neither the A.O at the time of reopening of an assessment is required to conclusively establish that the income of the assessee chargeable to tax had escaped assessment, nor the sufficiency of the reasons recorded by the A.O can be allowed to form a basis for assailing the validity of the reopening of the case. In support of our aforesaid contention, the ld. A.R had relied on the judgment of the Hon ble Supreme Court in the case of Raymond Woolen Mills Ltd. Vs. ITO Ors. (1999) 236 ..... X X X X Extracts X X X X X X X X Extracts X X X X
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