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2017 (9) TMI 641 - ITAT MUMBAIReopening of assessment - assessee was beneficiary of hawala accommodation entries from entry providers by way of bogus purchase - reasons to believe - non independent application of mind by AO - borrowed satisfaction - Held that:- Tangible and cogent incriminating material were received by the AO which clearly showed that the assessee was beneficiary of bogus purchase entries from bogus entry providers which formed the reason to believe by the AO that income has escaped assessment. The information so received by the AO has live link with reason to believe that income has escaped assessment. On these incriminating tangible material information, assessment was reopened. At this stage there has to be prima facie belief based on some tangible and material information about escapement of income and the same is not required to be proved to the hilt. See CIT(A) Vs. Rajesh Jhaveri Stock Brokers P. ltd [2007 (5) TMI 197 - SUPREME Court] In this case the sales have not been doubted it is settled law that when sales are not doubted, hundred percent disallowance for bogus purchase cannot be done. This proposition is supported from honourable jurisdictional High Court decision in the case of Nikunj Eximp Enterprises [2013 (1) TMI 88 - BOMBAY HIGH COURT]. However the facts of the present case indicate that assessee has made purchase from the grey market. Making purchases through the grey market gives the assessee savings on account of non-payment of tax and others at the expenses of the exchequer. In such circumstances of the case a 12.5% disallowance out of the bogus purchases would meet the end of justice, following the Hon’ble Gujarat High Court’s decision in the case of Simit P. Seth [2013 (10) TMI 1028 - GUJARAT HIGH COURT]. Accordingly, direct that the disallowance in this case should be restricted to 12.5% of the bogus purchases. - Decided partly in favour of assessee.
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