2019 (5) TMI 1311

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....se and in law the Ld. CIT (A) erred in confirming the re-assessment proceeding u/s 147 initiated by the Ld. Assessing officer. 2. On the facts and circumstances of the case and in law the Ld. CIT(A) failed to consider that reassessment proceeding cannot be initiated:- a) No reassessment can be made just to make an enquiry or verification. b) Reassessment proceeding cannot be initiate merely on the information received from investigation wing. c) Reassessment proceeding cannot be initiated when the LD. AO have reason to suspect and not reason to believe. 3. On the facts and circumstances of case and law, the Ld. CIT(A) erred in confirming the assessment order passed by Ld. AO u/s 143(3) r.w.s. 147....

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....ely M/s Maharashtra Metals was assessed for impugned AY u/s 143(3) read with section 147 on 05/03/2015 by Ld. Income Tax Officer-29(1)(2), Mumbai [AO] wherein the income of the assessee was determined at Rs. 281.78 Lacs after sole addition on account of alleged bogus purchases for Rs. 278.12 Lacs as against returned income of Rs. 3.66 Lacs e-filed by the assessee on 22/09/2009 which was processed u/s 143(1). Besides validity of reassessment proceedings, the addition of Rs. 278.12 Lacs as made by Ld. AO on account of alleged bogus purchases is the sole subject matter of present appeal before us. 2.2 The reassessment proceedings got triggered pursuant to receipt of certain information from DGIT (Investigation) / Sales Tax Department, Mahar....

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....evidence could be adduced to prove the genuineness of the transactions. Resultantly, the books were rejected u/s 145(3) and aforesaid amount of Rs. 278.12 Lacs was added to the income of the assessee as unexplained investment u/s 69C. 3.1 Aggrieved, the assessee agitated the same with partial success before Ld. CIT(A) vide impugned order dated 14/07/2016, wherein the assessee contested the validity of reassessment proceedings as well as additions on merits. 3.2 On legal ground, it was noted that the case was reopened within 4 years from the end of relevant AY and therefore, prior sanction before issue of notice was not mandated u/s 151(2). Further, the reassessment proceedings were triggered since scam was unearthed by the Sales Tax D....

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.....4 Proceeding further, in the background of various decisions of higher judicial authorities, Ld. CIT(A) proceeded to estimate the addition on account of alleged bogus purchases in view of the fact that the sales were accepted and therefore, the entire purchases could not be termed as bogus purchases. Therefore, the addition was to be restricted to account for element of profit embedded in purchases. Finally, inter-alia, following the decision of Hon'ble Gujarat High Court rendered in CIT Vs. Simit P.Sheth [356 ITR 451] & CIT Vs. Bholanath Poly Fab. P. Ltd. [355 ITR 290], the impugned additions were restricted to 20% of alleged bogus purchases. Aggrieved, the assessee is in further appeal before us. 4. The Ld. AR while contesting the ....