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2019 (6) TMI 1462 - ITAT MUMBAIReopening of assessment u/s 147 - Bogus purchases - parties were not responded in respect of 133(6) notices - HELD THAT:- On perusal of facts available on record, the assessee is engaged in the business of manufacturing of steel products. Considering the nature of business carried out by the assessee and also taken support from the judicial precedence, where it was held that only profit element embedded in bogus purchases needs to be taxed, we are of the considered view that the AO is incorrect in making additions towards 100% alleged bogus purchases from the so called Hawala/suspicious dealers. Although, the ld. CIT(A) has accepted the fact that only profit element embedded in bogus purchases, needs to be taxed but yet adopted 25% profit without bringing on record any comparable cases of similar nature. Therefore, considering the nature of business carried out by the assessee and also consistent with view taken by the Co-ordinate Bench of ITAT Mumbai, in number of cases, we deem it appropriate to scale down additions made by the AO towards alleged bogus purchases to the extent of 12.5% of such purchases. Accordingly, we direct the AO to estimate 12.5% profit on alleged bogus purchases. Validity of reopening of assessee - We find that although the assessee has challenged validity of reopening of assessment, we find that the AO has reopened the assessment on the basis of information received from DGIT(Inv.) which was further supported by report of M-Vat, Govt. of Maharashtra which suggest escapement of income within the meaning of section 147 of the Act. Therefore, there is no merit in the argument of the assessee is that the assessment has been reopened without their being any tangible material, accordingly, reject the ground taken by the assessee challenging the reopening of assessment.
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