2019 (3) TMI 1982 - AT - Income Tax

Reopening of assessment u/s 147 - bogus purchases - information received from sales tax department about hawala transactions of purchases made by the assessee - HELD THAT:- AO does not treats the purchases as non-genuine / bogus but makes addition by treating the purchases as “URD purchases”. The addition is made only of the Gross profit on such alleged “URD purchases”.

We find in the case of Jet Airways (2010 (4) TMI 431 - HIGH COURT OF BOMBAY] has held that if after issuing notice u/s 148 of the Act, AO holds that the income which he has initially formed a reason to believe had escaped assessment has not escaped assessment, then it is not open to him to independently assess some other income.

In the present case when seen in the light of the aforesaid decision of Hon’ble Bombay High Court (supra) the reasons for reopening was on account of bogus/non genuine purchases but no addition has been made on that count but addition has been made for the reason that the purchases are “URD purchases”. As during the course of reassessment proceedings assessee had furnished the details called for to prove his contention that the purchases are genuine except for the confirmation of the parties from whom the purchases were made. Before me, no fault has been pointed out in those details submitted by the assessee - Decided in favour of assessee.