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TMI Blog2024 (9) TMI 645X X X X Extracts X X X X X X X X Extracts X X X X ..... aised the following grounds: - 1. "That on fact and circumstances of the case and in law the Id. CIT (Appeal) has erred in upholding the validity of reassessment proceeding initiated under section 147 of the Income Tax Act, 1961 by the Id. Assessing Officer to reopen the already concluded assessment earlier u/s. 143(3) of the Act merely on change of opinion and borrowed satisfaction. In view of the same appellant prays that impugned reassessment proceeding initiated by issue of notice u/s. 148 and consequent reassessment order passed u/s. 143(3) r.w.s.147 being bad in law and without jurisdiction therefore may be quashed. 2. That on facts of the case and in law the ld. CIT (Appeal) has erred in sustaining the made by ld. Assessing Offic ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... genuine purchases to the tune of Rs. 2,86,92,372, and accordingly, notice under section 148 of the Act was issued and served on the assessee. In response to the above notice, the assessee filed a letter stating that the original return of income filed on 30/09/2009 declaring a total income of Rs. 68,44,124 be construed as the return filed in response to the notice issued under section 148 of the Act. Subsequently, statutory notices under section 143(2) as well as section 142(1) of the Act were issued and served on the assessee. During the assessment proceedings, notice under section 133(6) of the Act was also issued to the parties from whom the assessee alleged to have made bogus purchases. However, these notices were returned by the postal ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e Sales Tax Authorities. Accordingly, by applying the peak credit theory, the AO made an addition of Rs. 1,36,47,218. 7. The learned CIT(A), vide impugned order, following the decision of the Hon'ble Gujarat High Court in CIT v/s Smith P Sheth, 356 ITR 451, upheld the addition on account of bogus purchases to the extent of 12.5% of the impugned purchases being the gross profit margin embedded in such purchases. Accordingly, the learned CIT(A) upheld the addition amounting to Rs. 25,86,547, being 12.5% of Rs. 2,86,92,372. Being aggrieved, the assessee is in appeal before us. 8. We have considered the submissions of both sides and perused the material available on record. In the present case, on the basis of the information received from th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 023. We find from the perusal of the aforesaid decision that while deciding a similar issue in the case of a taxpayer who was engaged in a similar business, the coordinate bench restricted the addition to 5% of the non-genuine purchases. Therefore, in view of the peculiar facts of the present case and respectfully following the decision of the coordinate bench cited supra, we deem it appropriate to restrict the disallowance to 5% of the disputed purchases. We find that the same is also in line with the judgment of the Hon'ble jurisdictional High Court in PCIT vs Paramshakti Distributors Ltd. in ITA No. 413 of 2017 decided on 15/07/2019. Accordingly, ground no.2 raised in assessee's appeal is partly allowed. 9. In the result, the appeal by ..... X X X X Extracts X X X X X X X X Extracts X X X X
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