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2017 (9) TMI 302 - AT - Income TaxReopening of assessment u/s 148 - receipt of information from the DGIT(Inv) Mumbai regarding issuing of bogus invoices of purchases - Held that:-Reopening of assessment is done on the receipt of information from the DGIT(Inv) Mumbai and as per the information from the Sales Tax Department, that the assessee has availed some entries of bogus purchases from the hawala dealers. Though assessee submitted various details in regard to above but in absence of nay response from suppliers against notice u/s 133(6) served upon them the ld.CIT(A) therefore is correct that the case of the assessee was rightly reopened. Accordingly, ground taken by the assessee on the issue of reopening of the assessment stands dismissed. Disallowance on account of bogus purchases - Held that:- We find that the assessee could not produce any documentary evidences to prove the genuineness of the purchases and even the notice sent u/s 133(6) of the Act were returned unserved but simultaneously, we find that the AO has not doubted the sales out of materials purchased by the assessee from these hawala operators which means that the assessee purchased the material from the grey market thereby making savings of taxes like VAT octroi etc. These purchases and sales were duly recorded in the books of accounts of the assessee. The co-ordinate benches of the Tribunal in similar cases have been taking a consistent view in such cases by upholding the disallowance @ 12.5% of such unverified purchases towards various savings and leakages of revenue. Accordingly, we set aside the order of ld.CIT(A)and AO is directed accordingly - Decided partly in favor of assessee. Addition on account of unexplained expenditure u/s 69C - evidences to prove the genuineness of purchase - Held that:- We find that the purchases from M/s Shree Sundha Steel Pvt Ltd amounting to ₹ 25,96,500/- were rightly deleted by the CIT(A) as the said party was not hawala dealer and the AO has not recorded any findings against M/s Shree Sundha Steel Pvt Ltd being hawala dealer when the assessee specifically submitted in that context during re-assessment proceedings by way of written submissions. However,in respect of the remaining parties, a reasonable disallowance at the rate of 12.5% of the total purchase should be made towards various savings of taxes and other levies which the assessee may have made by making the purchases from the gray market. Therefore, we direct the AO to apply 12.5% of the bogus purchases from remaining five parties who were declared hawala dealers from whom the assessee have purchased material to the tune of ₹ 12,57,357/-. The AO is directed to make addition @12.5% of ₹ 12,57,357/-. Accordingly, this ground is partly allowed.
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