Appeal partly allowed, limits imposed on non-genuine purchases. Reassessment and natural justice grounds dismissed.

The Tribunal partly allowed the appeal, restricting the addition on account of non-genuine purchases to 12.5% of the total disputed amount. The grounds related to reassessment and denial of natural justice were dismissed as not pressed.

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Issues Involved:
1. Reassessment under Section 147 r.w.s. 148 of the Income Tax Act.
2. Denial of natural justice.
3. Addition on account of non-genuine purchases.

Detailed Analysis:

1. Reassessment:
The appellant challenged the initiation of reassessment proceedings under Section 147 r.w.s. 148 by the Assessing Officer (A.O.). The appellant argued that the necessary preconditions for initiating reassessment were not satisfied and that the reassessment framed was "bad, illegal, and void." The Tribunal noted that the initial assessment was completed under Section 143(3) and that the A.O. had examined the purchases. The reassessment was based on information from the DGIT (Investigation), Mumbai, and the Sales Tax Department, Government of Maharashtra, which indicated that the appellant was a beneficiary of accommodation entries from hawala dealers. The Tribunal found no specific submissions from the appellant contesting the reopening and thus dismissed this ground as not pressed.

2. Denial of Natural Justice:
The appellant contended that the A.O. did not grant a proper, sufficient, and adequate opportunity to be heard, thus breaching the principles of natural justice. The Tribunal observed that the appellant did not make any specific submissions regarding this issue and thus dismissed this ground as not pressed.

3. Addition on Account of Non-Genuine Purchases:
The appellant contested the addition of Rs. 2,29,21,394/- made by the A.O. on account of non-genuine purchases. The A.O. had disallowed the entire amount of purchases from five parties identified as hawala dealers by the Sales Tax Department. The appellant argued that the sales were not disputed and that it was impossible to have sales without purchases. The appellant also stated that documents were damaged in rainy water and filed an affidavit and a non-cognizable report with the police. The appellant suggested that only a reasonable percentage of the alleged bogus purchases should be disallowed.

The Tribunal noted that the A.O. disallowed 100% of the purchases based on third-party information without providing an opportunity for cross-examination. The Tribunal observed that the sales were not disputed and that the appellant had declared a Gross Profit (GP) of 5.09%, higher than the previous year's 5.02%. The Tribunal concluded that only the real income could be taxed and that a reasonable percentage of the purchases should be disallowed to account for revenue leakage. The Tribunal restricted the addition to 12.5% of the total disputed purchases, citing a similar view taken by the Hon'ble Bombay High Court in CIT Vs Hariram Bambani.

Conclusion:
The Tribunal partly allowed the appeal, restricting the addition on account of non-genuine purchases to 12.5% of the total disputed amount. The grounds related to reassessment and denial of natural justice were dismissed as not pressed. The order was pronounced in the open court on 11/06/2019.

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