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2017 (12) TMI 747 - AT - Income TaxReopening of assessment - addition of bogus purchases - Held that:- AO reached at a fair conclusion that assessee has obtained accommodation entries from these two parties and then notice u/s 148 of the Act was issued. It shows that Assessing Officer has applied his mind to the information received from third party (in the case from the CIT, Central-2, New Delhi). Hence, no fault can be found in the reopening proceedings initiated by the ld AO. Assessee has already recorded the sales of the goods allegedly purchased from these bogus parties. Further, the ld CIT(A) has categorically stated at page No. 39 of his order under the heading “actual transaction” that goods have actually been purchased from grey market by cash payment from the cash generated outside the books of account and on quantitative details shown by the assessee, it has to be reasonably presumed that assessee purchased material from market in cash and bills were obtained from the above two bogus concerns of the accommodation entry provider. Therefore, it is apparent that the addition of whole of the amount cannot be made. Therefore we direct the ld Assessing Officer to restrict the addition @25% of the total purchases of ₹ 5247565/- from these tainted parties. Accordingly, the addition is restricted to ₹ 1311891/- and balance addition of ₹ 3935673/- is deleted. Enhancement made on account of commission paid for the alleged bogus purchases - Held that:- As the purchases made by the assessee from the above two parties is conclusively proved to be bogus, naturally assessee has paid commission to them for arranging the purchase bills. The estimate made by the ld CIT(A) is also reasonable and therefore, confirmed. Hence, ground No. 8 of the appeal is dismissed. Addition of 20% being additional GP earned by the assessee - Held that:- As perused the reasons for making such enhancement by the ld CIT(A), however, as no evidence is available with respect to earning of such higher income by the assessee and further, the profit arising on the sale of the goods has already been offered for taxation by the assessee, there is no justification in making further addition on this count.
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