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2017 (3) TMI 1731 - AT - Income TaxReopening of assessment - unexplained purchases - Held that:- AO was not having information about the statements of RKG. After receiving the information about the survey action carried out at the business premises of RKG concerns he came to know about the new facts. Therefore, in our opinion, he was justified in issuing the notice under section 148 of the Act. Confirming the order of the FAA, in that regard, we decide the 1st ground of appeal against the assessee. Addition with regard to non-genuine purchase - FAA has held that there was no doubt about the sales made by the assessee, that the assessee was not given a chance to cross-examine RKG, that the quantity details of the sales and closing stock of not challenged, that no meaningful investigation was done after the survey proceedings at the business premises of RKG, that 10% of the total purchases should be added to the income of the assessee. In our opinion, there was no justification for upholding the addition of 10% of the purchases also. Once the sales and closing stock details were found to be genuine, then without bringing some positive material on record to prove the unaccounted purchases, no addition should have been made - the supplier i.e. RKG has retracted his statements. Considering the peculiar facts and circumstances of the case, we are of the opinion that the order of the FAA cannot be endorsed. So, reversing the same, we decided second ground of appeal in favour of the assessee.
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