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2020 (11) TMI 410 - ITAT KOLKATAReopening of assessment u/s 147 - HELD THAT:- Re-opening is bad in law as the AO has not independently applied his mind to the material and has recorded reasons which are vague and based on borrowed satisfaction. Hence this ground of the assessee for both the AY are allowed.- See PROFICIENT COMMODITIES PVT. LTD. VERSUS D.C.I.T., CIRCLE-5 (1) , KOLKATA [2019 (2) TMI 1408 - ITAT KOLKATA] - Applying the propositions of law to the facts of this case we have no other alternative but to hold that the re-opening of assessment is bad in law. Addition made of bogus purchases - The assessee has provided all evidences in the form of invoices, bank statements, bills etc. and whereas the AO has not brought on record any evidence to controvert the same, except for relying on some information furnished by the Investigation Wing, Kolkata. CIT(A) accepts that they were genuine purchases. He directed that a percentage of these purchases may be added by way of gross profit percentage. When the purchases are held as not bogus by the ld. CIT(A), the question of part addition does not arise. Hence these additions as sustained by the ld. CIT(A) to the extent of ₹69,527/- is hereby deleted. Addition u/s 68 - when an addition made based on the reasons recorded for re-opening of assessment does not survive the question of making another addition on some other ground does not arise, as held in Jet Airways India Ltd. [2010 (4) TMI 431 - HIGH COURT OF BOMBAY] and Ranbaxi Laboratories[2011 (6) TMI 4 - DELHI HIGH COURT] Addition under Section 68 of the Act cannot survive, when the addition based on reasons recorded for re-opening does not survive - Borrowing in question was from a sister concern. The partners of the assessee firm and the director of the sister concern which is a company. The bank statement wherein the alleged bogus purchases were recorded, was the same bank statement in which the loans taken from the sister concern were credited. The auditor has mentioned the details of this loan in the Tax audit report. The balance sheet of the creditor company shows that it had the capacity to lend. The creditor company confirmed the loan. The directors of the creditor company, who were also the partners of the assessee firm, have appeared before the AO during the assessment proceedings. Assessee has proved the genuineness of the transaction, the identity and the capacity of the creditor company. Hence the addition made under Section 68 of the Act cannot be sustained on merits. Thus we delete the same. - Decided in favour of assessee.
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