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2017 (12) TMI 1122 - AT - Income TaxValidity of reopening of assessment - whether there was relevant material to form a reasonable belief is to be seen? - bogus purchases - Held that:- There is a specific information received during the investigation by the authority and it has been prima facie found that assessee is also the beneficiary of the said parties, the re-reopening of assessment is valid. Notice under section 148 for re-opening the assessment was issued after four year from the end of relevant assessment year and the AO has not specified as to what material facts and information the assessee has failed to disclose. However, all these leaches are not available in the present case. The other submissions of the assessee that no prior permission or approval of JCIT was obtained has no force. The ld AR for the assessee is his written submissions dated 04.10.2017 has specifically contended that “From the documents relating to the approval of JCIT was with the LAO and therefore he has to prove that the approval was with the application of mind”. No other material was brought to our notice to take a contrary view that there was no approval of JCIT for reopening the assessment. Thus, we do not find any force in the submission of ld. AR of the assessee; hence, the Ground No.1 of the appeal is dismissed. Addition on account of bogus purchases - Held that:- Under Income-tax Act, the only real income can be taxed by the Revenue, even if the transaction is not verifiable due to any reason, the only taxable is the taxable income component and not aggregate of the transaction. After considering the fact and nature of business of assessee, we are of the opinion that in order to fulfil the gap of revenue leakage, the disallowance of reasonable percentage of impugned purchases would meet the end of justice. The Hon'ble Bombay High Court in CIT v. Hariram Bhambhani [2015 (2) TMI 907 - BOMBAY HIGH COURT] held that revenue is not entitled to bring the entire sales consideration to tax, but only the profit attributable on the total unrecorded sales consideration alone can be subject to income tax. We have noted that the ld CIT(A) after relying on various decisions restricted the disallowance at 12.5% of the tainted/ bogus purchase. Thus, we do not find any illegality or infirmity in the order passed by ld CIT(A), which we sustained. - Decided against assessee.
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