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2018 (9) TMI 2066 - ITAT MUMBAIValidity of reopening of assessment u/s 147 - Bogus purchases - HELD THAT:- Though, it is a fact that assessment in case of the assessee was originally completed u/s. 143(3) of the Act, however, it is evident from the facts on record that specific information came to the possession of the Assessing Officer after completion of the original assessment revealing that certain purchases made by the assessee was not genuine. Therefore, it cannot be said that there was no tangible material in the possession of the AO after completion of the original assessment. At the time of reopening of assessment u/s.147 AO has to form a prima facie belief that income has escaped assessment. The belief to be formed by the AO must have a rational nexus with the information available on record. In the present case, the AO had in his possession specific information/material indicating escapement of income which came to his possession after completion of the original assessment. That being the case, in our considered opinion, there is no deficiency in the proceedings initiated u/s. 147 of the Act. Accordingly, we dismiss the ground raised by the assessee. Bogus purchases - Since, the assessee failed to conclusively prove the fact that purchases made from the concerned party was genuine coupled with the fact that there was specific information from DGIT (Inv) as well as Sales Tax Department that the concerned party is a hawala operator, it has to be believed that the purchases claimed to have been made from the concerned party is not genuine. However, it is a fact on record that the AO has not disputed or disturbed the sales effected by the assessee - there is a possibility that the assessee has purchased goods from sources other than the declared source to avoid payment of VAT/other taxes. In view of the aforesaid, it will be appropriate to tax the profit element embedded in such bogus purchases. On considering the overall facts and circumstances of the case and the prevalent VAT rate, we are of the view that the addition on account of bogus purchases should be restricted to 12.5% - The assessee gets relief to that extent. This ground is partly allowed. Violation of rules of natural justice - There is no specific argument by the learned AR on this issue. Even otherwise also, on analysing the factual matrix of the case, we are of the view that full opportunity was given to the assessee to prove the genuineness of purchases made, both by the Assessing Officer as well as by the CIT(A). That being the case, the plea of the assessee that it was not provided proper opportunity is unacceptable. Fact remains that it is the assessee who has shown purchases from a party, identified as hawala operator. Therefore, the onus is entirely on the assessee to prove the genuineness of the purchases by either producing the concerned party or obtaining confirmations from him. The assessee has failed to do any such thing. Moreover, notices/summons issued by the AO to the concerned party in the given address have returned unserved. In these circumstances, the assessee cannot come forward with a plea that principle of natural justice is violated. Therefore, there being no merit in this ground, it is dismissed.
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