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2016 (8) TMI 1519 - AT - Income TaxReopening of assessment - Bogus purchases - information received from the office of the DDIT (Inv) Unit II-1, that the assessee had shown bogus/suspicious purchases from various vendors, who were listed in the web site of sales tax department as hawala dealers - CIT-A upheld the addition of 6% of alleged bogus purchases - HELD THAT:- We found that on the basis of information by the sales tax department regarding bogus suppliers and also keeping in view the reasons recorded by AO for reopening, we do not find any infirmity in the action of AO for reopening of the completed assessment. Assessee being a trading concern merely sells purchased items at a small mark up to it’s purchases without any further processing. AO has not questioned sales made by the assessee. Most of the sales were made to a government entity. AO has not doubted sales undertaken by the assessee nor rejected books of accounts. However, no comparative chart was placed on record by assessee to substantiate the contention that assessee had earned same margin of profit out of sales of goods purchased from hawala dealers vis-a-vis other regular dealers. Keeping in view the GP rate and net profit rate shown by the assessee in earlier years vis-a-vis profit rate generally shown by other assessee engaged in similar trade, and also keeping in view the advantage obtained by assessee through purchases from hawala dealer we modify the orders passed by lower authorities and restrict the addition to the extent of 3% of the alleged bogus purchases in place of 10% upheld by AO and 6% upheld by the CIT(A). - Decided partly in favour of assessee.
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