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2017 (1) TMI 1329 - AT - Income TaxReopening of assessment - addition to the total income on account of non-genuine purchases - GP addition - AO made a specific addition on account of unverified purchases u/s 68 - Held that:- It is quite clear that at the level of the Assessing Officer, the purchases have been held to be unverifiable primarily for the reason that the notices issued by the Assessing Officer under section133(6) of the Act were either not served or if they were served, the same were not responded to by the respective parties. In contrast, the CIT(A) has recorded a categorical finding in para 6.29 to 6.30 of her order and has observed that the purchases were liable to be held as genuine and not bogus. In the context of assessment year 2010-11, we find that the said findings of the CIT(A) have not been assailed by the Revenue and cannot be said to be based on irrelevant material. Even before us, the Ld. Departmental Representative has merely reiterated the stand of the Assessing Officer, which in our opinion cannot be sustained in the face of the findings of the CIT(A). The CIT(A) has observed that the payments made are supported by confirmation of the parties, copies of invoices, bank statements and further that none of the parties have named the assessee in their statements. Considering these circumstances, we hereby affirm the order of the CIT(A) in principle that the purchases cannot be treated as bogus. On conclusion of the CIT(A) is that even if, some of the purchases were not verifiable, the addition, if any, could be made only for the embedded profit. In this context, for assessment year 2010-11, the CIT(A) has examined the G.P rate declared by the assessee @11.67% and not that considering the nature of asessee’s business, the G.P rate of 10% is quite acceptable. Since the declared profit of 11.67% was more than the rate of 10%, the CIT(A) has chosen to delete the entire addition. In the absence of any infirmity in the action of the CIT(A), the same is affirmed.
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