Tribunal Decision on Income Tax Assessment: Disallowance upheld for bogus invoices, partly allowed assessee's appeal.

The Tribunal upheld the reopening of assessment under section 148 of the Income Tax Act based on tangible information about hawala dealers issuing bogus invoices. Disallowance of a portion of bogus purchases was confirmed, with a 12.5% disallowance applied due to lack of evidence. Unexplained expenditure was deleted with evidence of genuine purchases, except for purchases from specific hawala dealers. Addition on purchases from hawala dealers was restricted to 16% of total purchases. The appeals of the assessee were partly allowed, while the revenue's appeals were dismissed. The Tribunal's decision was pronounced on 28th Aug, 2017.

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Issues Involved:
- Reopening of assessment u/s 148 of the Income Tax Act, 1961
- Disallowance of amount on account of bogus purchases
- Deletion of addition of unexplained expenditure u/s 69C of the IT Act, 1961
- Restriction of addition to the extent of purchases from hawala dealers

Reopening of Assessment:
The AO reopened the assessment based on information from DGIT(Inv) regarding a racket involving hawala dealers issuing bogus invoices. The AO disallowed and added a sum relating to bogus purchases to the total income of the assessee. The ld.CIT(A) upheld the reopening, citing specific information with a live link to income escapement. The Tribunal found the reopening justified due to the tangible information available, dismissing the assessee's contention against the reopening.

Disallowance of Bogus Purchases:
The ld.CIT(A) confirmed the disallowance of a portion of the bogus purchases. The Tribunal noted the lack of evidence to prove the genuineness of purchases, highlighting the absence of served notices to suppliers. However, as the sales were not doubted, indicating purchases from the gray market, a 12.5% disallowance was applied on the unverified purchases. The Tribunal directed the AO to make the disallowance accordingly.

Deletion of Unexplained Expenditure:
The AO added an amount as unexplained expenditure, which the ld.CIT(A) deleted due to the appellant providing ample documentary evidence to establish the purchases as genuine. The Tribunal upheld the deletion of the addition related to purchases from a specific supplier not declared as a hawala dealer, while directing a 12.5% addition on purchases from other hawala dealers.

Restriction of Addition on Bogus Purchases:
The AO disallowed purchases from hawala dealers, and the ld.CIT(A) restricted the addition to 16% of the total purchases. The Tribunal found the ld.CIT(A)'s decision reasonable as the sales were not doubted, and the appellant provided supporting documents. The Tribunal upheld the restriction on the addition, dismissing the appeal of the revenue.

Conclusion:
In conclusion, the appeals of the assessee for certain assessment years were partly allowed, while the appeals of the revenue for specific years were dismissed. The cross-objection filed by the assessee was dismissed, and the appeals of the revenue were also dismissed. The Tribunal pronounced the order on 28th Aug, 2017, after considering the various issues and submissions presented during the proceedings.

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