TMI Blog2021 (12) TMI 402X X X X Extracts X X X X X X X X Extracts X X X X ..... any ambiguity, perversity or invalidity in the action of the AO in initiating reassessment proceedings, issuing notice u/s.148 of the Act and framing reassessment order u/s.143(3) r.w.s.147 of the Act. Therefore, we are of the opinion that the findings recorded by the First Appellate Authority is quite reasonable and justified and thus, the same does not call for any interference. Consequently, the findings of the Ld. CIT(Appeals) is upheld and Ground No.1 raised in appeal by the assessee is dismissed. Estimation of income - bogus purchases - Disallowance of 25% of total impugned bogus purchases - HELD THAT:- As per case M/S. PARAMSHAKTI DISTRIBUTORS PVT. LTD. [ 2019 (7) TMI 838 - BOMBAY HIGH COURT] we are of the considered view that ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of the total purchases made from M/s. Oriental Enterprises is very high and the same may kindly be reduced substantially. 5. The appellant craves leave to add, alter, amend or delete any of the above grounds of appeal. 2. When the appeal was called for hearing neither the assessee nor his Authorized Representative was appeared and nor any application for adjournment has been filed. On perusal of the relevant appeal record, we find it proper to decide the appeal after hearing the submissions of the Ld. CIT-DR and on the basis of materials available on record. Ground No.1:- 3. In this ground, the assessee has challenged the order of the Ld. CIT(Appeals) wherein he confirmed the validity of reopening u/s.148 of the Inco ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ration was one of the beneficiaries of these bogus/hawala transactions which claimed to have purchased goods worth ₹ 1,51,69,487/- during the financial period. 5. The Ld. CIT-DR also submitted that information received from Sales Tax Department, Maharashtra constitutes new material which was not before the Assessing Officer during original assessment proceedings and the Assessing Officer had formed reason to believe that due to such bogus claim of inflated purchased expenses, the income chargeable to tax had escaped assessment to that extent of bogus purchases claimed by the assessee. 6. On careful perusal of the order of the First Appellate Authority at Para 5.3, we incline to hold that initiation of reassessment proceedings, u ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 377; 37,92,372/- should be deleted. It was also submitted that disallowance confirmed at the rate of 25% of the total purchases made from M/s. Oriental Enterprises is very high and the same may kindly be reduced substantially. 9. Replying to the above, the Ld. CIT-DR drew attention towards relevant operative Paras i.e. 7.3 to 7.3.2 of the First Appellate order and submitted that after considering various decisions of the Hon ble Gujarat High Court, ITAT Ahmedabad and ITAT, Jaipur and keeping in view of the facts of the present case, the Ld. CIT(Appeals) directed the Assessing Officer to restrict the addition to the tune of 25% of alleged bogus purchases. He also submitted that the Department filed appeal challenging the part relief given ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... The Tribunal, however, restricted to the said sum of ₹ 2,21,600/-. The Tribunal recorded that the Assessing Officer has not rejected either the purchases or the sales made out of the said purchases. The Tribunal therefore, was of the opinion that the addition should be restricted to 10% of the total purchases. The Revenue strongly disputes this proposition. 3. Without elaboration, what the Tribunal by the impugned Judgment held is that the Department had not rejected the instance of the purchases since the sales out of purchase of such raw material was accounted for and accepted. With above position, the Tribunal applied the principle of taxing the profit embedded in such purchases covered by the bogus bills, instead of disallo ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of the Hon ble High Court s decision reads as follows: 2. The first question pertains to restricting the addition of ₹ 23.16 Lakhs to ₹ 2,21,600/- by the Tribunal. The Assessing Officer had made the said addition on the ground that the assessee s purchases were found to be bogus. The entire purchase amount was therefore, added to the assessee s income. The Tribunal, however, restricted to the said sum of ₹ 2,21,600/-. The Tribunal recorded that the Assessing Officer has not rejected either the purchases or the sales made out of the said purchases. The Tribunal therefore, was of the opinion that the addition should be restricted to 10% of the total purchases. The Revenue strongly disputes this proposition. 3. W ..... X X X X Extracts X X X X X X X X Extracts X X X X
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