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2012 (11) TMI 808 - AT - Income TaxReopening of assessment u/s 147 - bogus purchases - Held that:- The contention of the appellant that the AO had no definite material or information before invoking provisions of section 147 is not tenable - It is an admitted fact that the original return of the appellant was processed u/s 143(1)(a) only at ministerial staff level and no finding had been or even can be recorded, by the AO during such processing, about the genuineness of purchase constituting the reasons for issue of notice u/s 148. The AO was therefore, fully justified in invoking provisions of section 147 considering the case of ACIT v Rajesh Jhaveri Stock Brokers P Ltd.(2007 (5) TMI 197 - SUPREME COURT) mentioning that failure to take steps under section 143(3) will not render the Assessing Officer powerless to initiate reassessment proceedings even when intimation under section 143(1) - against assessee. Estimation of profit at 6% of purchase price - Held that:- As decided in System India Castings Versus Commissioner Of Income-Tax [1996 (9) TMI 37 - MADHYA PRADESH HIGH COURT] that if the transaction of purchase was found to be sham the AO would be justified in disallowing not only the purchase price but also related transaction charges and it was held that such was a finding of fact and no question of law arose against such. Accordingly AO's action making disallowance of 6% of purchase price at Rs.14,49,190/- being justified and reasonable is hereby confirmed - against assessee. Addition made for unexplained peak investment - set off allowed by the CIT(A) in respect of 6 % of addition of profit out of peak credit - Held that:- Addition on account of disallowance of 6 % on purchases made from Kothari Group which was allowed as set off by CIT(A) against the addition of peak investment made in respect of alternative purchases made by the assessee, it is found that the AO has disallowed 6% of total purchases made during the entire year from Kothari group, whereas addition has been made with respect to peak unexplained investment worked out as on a particular date in respect of alternative purchases made by the assessee, and not in respect of entire alternate purchases made by assessee - Under these facts and circumstances & agreeing with the contention of DR that the order of CIT(A) is not correct to the extent of allowing setting off entire 6% of profit which was added in respect of entire purchases made from Kothari Group against peak unexplained investment worked out on a particular date, therefore the order of the CIT(A) is needed to be modified and direct the AO to recompute the addition made on account of purchases up till the date of working out unexplained investment on such purchases - partly in favour of revenue.
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