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2021 (7) TMI 764 - AT - Income TaxReopening of assessment u/s 147 - AR has assailed the reassessment proceedings on the ground that original return was scrutinized u/s 143(3) and the case was reopened beyond four years - Bogus purchases - HELD THAT:- There is no allegation by Ld. AO in the recorded reasons to the fact that there was any failure on the part of the assessee during scrutiny assessment. We do not concur with the same since assessment was framed u/s 143(3) on 18/12/2009 whereas search action on tainted group took place on 03/10/2013 which is a subsequent event. The Ld. AO was clinched with tangible material arising out of a subsequent event. This material established possible escapement of income in the hands of the assessee. Therefore, nothing more was required at this stage to reopen the case of the assessee. Ground No.1 stands dismissed. Bogus purchases - Purchases made by the assessee was to undergo strict rules & regulations as well as verification by customs authorities. Not only this, the utilization of the same while exporting the goods was also to be demonstrated by the assessee. There is complete one-to-one corelation of the purchases vis-à-vis diamonds utilized in exports made by the assessee. The documentary evidences as furnished by the assessee as elaborated by us in para-5 duly support the said propositions. The assessee’s books of accounts have duly been audited as per Income Tax Rules and there are no adverse remarks by the Tax Auditor with respect to purchases, utilization of raw material, sale or closing stock. Upon perusal of the Tax Audit Report, it could be gathered that the assessee has maintained complete quantitative details of raw materials, work-in-progress as well as finished goods sold by it. Upon perusal of financial statements, it could be observed that the assessee has reflected Net profit Rate of around 6% in this year as against net Profit Rate of 5.85% in immediately preceding year. We are of the considered opinion that the onus casted upon assessee to substantiate the purchases was duly discharged and the onus was on revenue to dislodge the assessee’s submissions as well as documentary evidences. The whole basis of addition is statement made by the tainted group during search operations. The opportunity to cross-examine the same has never been provided to the assessee. It could be concluded that the additions are made merely on the basis of allegations without there being any cogent material in the armory of the revenue. Therefore, considering the facts of the case, we are inclined to delete the impugned additions - Decided in favour of assessee partly.
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