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2020 (10) TMI 1008 - AT - Income TaxReopening of assessment u/s 147 - validity of reasons recorded for issuing notice u/s 148 - Additions on the basis of fishing and roving enquiry - bogus purchases - whether AO made fishing enquiries about matters not related to the reasons recorded for issuing notice u/s 148 - HELD THAT:- Since, the Ld. CIT (A) has held in principle that the AO has made fishing enquiry in the course of reassessment proceedings and allowed the legal ground raised by the assessee for statistical purposes and since the department has not challenged the findings of the Ld. CIT (A), in our considered view, the addition made by the AO except the addition made on account of bogus purchases which was the subject matter of reassessment, are not sustainable. Once, it is established that the AO has made fishing and roving enquiry, the additions made as a result of such enquiry cannot be confirmed. Hence, we allow the legal ground raised by the assessee and delete all the additions sustained by the Ld. CIT (A) except the addition made on account of bogus purchases. Bogus purchases - assessee had purchased the material from grey market and evaded the applicable taxes. Therefore, addition to the extent of profit earned from such transaction and the applicable taxes evaded by the assessee is required to be made. In CIT vs. Simit P. Seth [2013 (10) TMI 1028 - GUJARAT HIGH COURT] has upheld the decision of the Tribunal and sustained the addition 12.5% of the total bogus purchases shown by the assessee holding that only profit element embedded in such purchases can be added to income of the assessee. - Decided partly in favour of assessee.
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