2018 (1) TMI 1317

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....by ld CIT(A) of Rs. 1,77,41,902/- as made by the AO made on account of bogus purchases from M/s. Kinjal Industrial Corporation. 3. The brief facts of the case are that assessment under Section 143(3) r.w.s. 147 of the Income Tax Act, 1961 (hereinafter "the Act") was completed on 26.12.2011 assessing total income at  Rs.2,75,32,370/-. Thereafter reassessment proceedings were initiated by issuing notice under Section 148 of the Act dated 28th March, 2011 after the AO received an information from the office of the ACIT (Inv), Mumbai that the assessee is a beneficiary of bogus purchase bills from various concerns which are being operated by Shri Prakash Kedar Patel. In compliance with notice under Section 148 dated 28.03.2011, the asses....

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....ssment was framed under Section 143(3) r.w.s. 147 of the Act vide order dated 26.08.2011 assessing the income of the assessee at  Rs.4,52,74,270/- .  4. In the appellate proceedings , the learned CIT(A) allowed the appeal of the assessee by holding and observing as under: - "4.10 It is seen that the appellant had submitted all the necessary details to prove the genuineness of the purchases and to enable the AO to conduct independent enquiry with the said party from whom purchase were made. Similarly, the details of the parties to whom the very same goods were sold were also furnished by the appellant. Still the AO did not make any independent enquiry to prove that the transactions with the two parties from whom purchas....

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....ing the purchases comprising bills, vouchers, copy of ledger accounts, evidence of payment, bank statement and evidence of sales in the books of the assessee. Having filed all these evidences with the AO, the AO is not even bothered to do any verification of the said record or even issued notice under Section 133(6) of the Act to the party but merely relied on the statement of the principal officer of M/s. Kinjal Industrial Corporation and the report of the ACIT (Inv), Unit-II(3), Mumbai. The learned A.R. prayed that on the said failure on the part of the AO to carry out investigation, the revenue has no case. The learned AR contended that the assessee has discharged its onus by filing the necessary evidences before the AO and it the AO who....

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....ted the sales by the assessee out of said purchases. The learned CIT(A) has deleted the addition on the basis that the AO has not carried out any investigation and the assessee has fully discharged the onus by filing the necessary proof with the AO. We observed from the assessment records that the AO has failed to bring on record any evidence to justify the addition whereas the CIT(A) has taken a reasonable view of the matter. But when the issue of bogus purchases is involved some addition has to be made thereby accepting the alternative prayer of the ld AR. In the present case the AO has completely failed in carrying out any investigation and therefore only addition based upon some small percentage would be justified. Considering the facts....