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2019 (6) TMI 596 - AT - Income TaxReopening of assessment u/s 147 - bogus purchases - HELD THAT:- After obtaining the information AO perused the assessment record and also has also gone through the various details filed by the Assessee during the course of original assessment proceedings. When the investigation wing has received specific information from another government department that assessee has indulged in hawala transaction by availing bogus purchases bills to inflate its purchases, therefore, it cannot be said that the AO had no information or that there was no fresh material before the Assessing Officer for reopening of the assessment. So far as the observation of the CIT(A) that the AO in the original assessment has considered these parties as genuine is concerned, the same is incorrect, in view of the extensive enquiries conducted by the MVAT and passing of the information to DGIT (Investigation) who in turn has passed the information to the AO. Therefore, these things came to light only after such enquiries were conducted after the completion of the original assessment. Therefore, the reassessment proceeding in the instant case in our opinion is valid. Therefore, the order of the CIT(A) treating the reopening of the assessment u/s 147 as ab-nitio void is not correct. We accordingly set aside the order of the CIT(A) on this issue and allow the ground No.1 filed by the revenue. Bogus purchases - We find during the course of assessment proceedings the AO had specifically asked the assessee to produce the above parties for his examination. Assessee stated that it is not possible for it to produce the suppliers since they are not the regular suppliers of the assessee company and further the project at Mumbai had already been completed. Further the assessee could not furnish evidence of supply of these materials i.e. transportation bilty or any evidence to prove the movement of goods. Therefore deletion of the entire amount of the bogus purchases so made by the AO is not proper. Since in the instant case the AO has not disturbed the sales and has not rejected the books of accounts, therefore, the entire amount of bogus purchases as alleged cannot be added to the total income of the assessee and the addition has to be restricted to the extent of the G. P. Rate on purchases at the same rate of other genuine purchases. The assessee in the paper book has given the calculations of such GP rate at 9.96%. We, therefore, set aside the order of the CIT(A) and direct the AO to restrict the addition to the extent the G. P. rate on purchases at the same rate of other genuine purchases. AO is accordingly directed to restrict the addition to 9.96% of alleged bogus purchases as against ₹ 1,58,47,973 added by him subject to verification of the GP so computed by the assessee in the paper book. The appeal filed by the revenue is accordingly partly allowed.
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