Appeals partly upheld in assessment reopening, interest levy upheld, addition reduced, penalty premature.

The Tribunal partly allowed the appeals, upholding the reopening of assessment under Section 147 and the mandatory interest levy under Section 234B. However, the addition for alleged bogus purchases was reduced to 2% from 12.5% due to lack of opportunity for cross-examination. The initiation of penalty proceedings under Section 271(1)(c) was considered premature and not addressed. The decision was pronounced on 05/05/2017.

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Issues Involved:
1. Reopening of assessment under section 147 of the Income Tax Act, 1961.
2. Addition on account of alleged bogus purchases.
3. Levy of interest under section 234B of the Income Tax Act, 1961.
4. Initiation of penalty proceedings under section 271(1)(c) of the Income Tax Act, 1961.

Issue-wise Detailed Analysis:

1. Reopening of Assessment under Section 147:
The assessee challenged the reopening of the assessment under Section 147, contending that the prescribed conditions were not satisfied. The CIT(A) upheld the AO's action in reopening the assessment based on information received from the Sales Tax Department about suspicious dealers. The Tribunal noted that the reopening was based on credible information and upheld the CIT(A)'s decision, confirming the validity of the reopening under Section 147.

2. Addition on Account of Alleged Bogus Purchases:
The primary issue was the addition made by the AO on account of alleged bogus purchases. The AO had added 12.5% of the total alleged bogus purchases as profit, relying on the case of CIT Vs Simit P. Sheth and information from the Sales Tax Department. The assessee argued that all purchases were genuine, supported by sufficient materials, and backed by corresponding sales. The Tribunal acknowledged that the AO had not doubted the sales and that the purchases were recorded in the books of account. The Tribunal noted that the AO had not provided the assessee an opportunity to cross-examine the parties alleged to have provided accommodation entries. The Tribunal concluded that merely because the suppliers did not appear before the AO, it could not be concluded that the purchases were not made. The Tribunal directed the AO to restrict the addition to 2% of the alleged bogus purchases, considering the facts and circumstances of the case.

3. Levy of Interest under Section 234B:
The assessee contested the levy of interest under Section 234B, arguing against its liability. The CIT(A) held that the levy of interest under Section 234B was mandatory. The Tribunal upheld the CIT(A)'s decision, confirming that the interest levy was indeed mandatory under the law.

4. Initiation of Penalty Proceedings under Section 271(1)(c):
The assessee disputed the initiation of penalty proceedings under Section 271(1)(c). The CIT(A) held that the ground raised disputing the initiation of penalty proceedings was premature. The Tribunal agreed with the CIT(A), stating that the initiation of penalty proceedings was a separate matter and could not be contested at this stage.

Conclusion:
The Tribunal partly allowed the appeals of the assessees. It upheld the reopening of the assessment under Section 147 and the mandatory levy of interest under Section 234B. However, it directed the AO to restrict the addition on account of alleged bogus purchases to 2% instead of 12.5%. The initiation of penalty proceedings under Section 271(1)(c) was deemed premature and not addressed at this stage. The order was pronounced in the open court on 05/05/2017.

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