ITAT Mumbai upholds assessment reopening for A.Ys. 2009-10 & 2010-11 based on DGIT investigation.

The ITAT Mumbai upheld the reopening of assessment for A.Ys. 2009-10 & 2010-11 based on information from DGIT investigation. The ITAT also confirmed the CIT(A)'s decision to restrict the profit rate on unverified purchases at 25%, citing lack of evidence supporting purchases from listed hawala parties. The appeals challenging these decisions were dismissed, with the ITAT finding the CIT(A)'s estimation of profit rate reasonable.

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Issues Involved:
1. Reopening of assessment
2. Restriction of profit rate on unverified purchases

Reopening of Assessment:
The appeals by the assessee challenged the CIT(A)'s confirmation of the reopening of assessment for the A.Ys. 2009-10 & 2010-11. The re-opening was based on information from DGIT investigation indicating bogus purchases by the assessee. The AO issued notices under section 148 of the Income Tax Act, 1961, within four years. The ITAT confirmed the AO's action, as upheld by the CIT(A), citing lack of in-depth inquiries by the AO and failure of the assessee to substantiate purchases from listed hawala dealers. The ITAT found the re-opening justified based on the information received.

Restriction of Profit Rate on Unverified Purchases:
The second issue in the appeals pertained to the CIT(A)'s decision to restrict the profit rate on unverified purchases at 25% instead of the 100% added by the AO. The assessee, engaged in the steel products business, failed to prove purchases from hawala parties listed by the Sales Tax Department. The CIT(A) restricted the disallowance to 25% of the bogus purchases, citing the absence of conclusive evidence of purchases from the listed parties. The ITAT upheld the CIT(A)'s decision, considering the lack of proof of purchases and the reasonable estimation of profit rate at 12.5% based on similar precedents. The ITAT found the CIT(A)'s decision appropriate and dismissed the appeals of the assessee.

In conclusion, the ITAT Mumbai upheld the reopening of assessment based on information from the DGIT investigation and confirmed the CIT(A)'s decision to restrict the profit rate on unverified purchases at 25%. The ITAT found the CIT(A)'s estimation of profit rate reasonable, considering the lack of evidence supporting purchases from the listed hawala parties.

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