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2018 (4) TMI 439 - ITAT MUMBAIValidity of reopening of assessment - reasons to believe - purchases from grey market - addition @ 12.50% of alleged bogus purchases - Held that:- There was cause or justification for the AO to invoke provisions of sec. 147 and issue notice u/s. 148. As already mentioned, at the initiation stage, what is required to be seen is there are prima-facie 'reasons to believe1 but not the established fact of escapement of income. The AO also recorded proper reasons for formation of the belief that income has escaped assessment. It is also important to note that the information relating to Hawala operators was also made available in public domain i.e. in the official website of the Maharashtra Sales Tax Department and therefore the reasons for reopening the assessment are not based on mere suspicion. Thus, all the conditions necessary for reopening of the assessment under the provisions of sec. 147 and for issue of notice u/s. 148 are satisfied in the case of the appellant for the year under appeal. Hence the reopening the assessment u/s 148 of the Act was absolutely valid. For the addition for bogus purchases as seen assessee has engaged into dealings in the grey market. Dealings in the grey market give the assessee various savings at the expense of the Exchequer. Hence, on the overall consideration of facts and circumstances and following the decision of Hon’ble Gujarat High Court in the case of CIT vs Simit P. Sheth [2013 (10) TMI 1028 - GUJARAT HIGH COURT) hold that a disallowance of 12.5% of the bogus purchase would meet the end of justice. Hence, I affirm the order of the authorities below. - Decided against assessee
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