TaxTMI 
TaxTMI 
2018 (9) TMI 2066
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.... dispute assessee filed its return of income on 29.09.2009, declaring total income of Rs. 40,73,78,660/-. Assessment in this case was completed u/s. 143(3) of the Act, on 16.03.2011, determining total income at Rs. 45,01,57,500/- After completion of the assessment as aforesaid, the Assessing Officer received information from the DGIT (Inv), Mumbai, vide letter dated 26.12.2013, wherein, it was informed that in course of search proceedings conducted in case of certain parties. It was found that they were providing accommodation entries only without actual sale/purchase transactions. From the incriminating material found during the search operation, it was revealed that one such hawala entry provider viz. M/s. Srishti Mercantile Pvt. Ltd....
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....tion and delivery of goods. No weighment slip could be produced by the assessee to prove the movement of goods. The Assessing Officer also observed that in course of survey operations conducted in the business premises of the assessee on 17.10.2013, it was found that assessee had made purchases from six hawala operators including M/s. Srishti Mercantile Pvt. Ltd. The Assessing Officer observed, though notices u/s. 133(6) were issued to the concerned parties, all such notices returned unserved by the postal authorities on account of unavailability of concerned persons in the given address. He also noted that an exhaustive inquiry was conducted in course of assessment proceedings for A.Y. 2010-11 and it was found that purchases made from the ....
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.... 5. We have considered rival submissions and perused material on record. Though, it is a fact that assessment in case of the assessee was originally completed u/s. 143(3) of the Act, however, it is evident from the facts on record that specific information came to the possession of the Assessing Officer after completion of the original assessment revealing that certain purchases made by the assessee was not genuine. Therefore, it cannot be said that there was no tangible material in the possession of the Assessing Officer after completion of the original assessment. At the time of reopening of assessment u/s. 147 of the Act, the Assessing Officer has to form a prima facie belief that income has escaped assessment. The belief to be form....
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....shown a very healthy gross profit rate for the impugned assessment year, therefore, any further addition on account of bogus purchase would be improper. The learned DR relied on the observations of the Assessing Officer and learned CIT(A). 7. We have considered rival submissions and perused material on record. The basic issue arising for consideration is, whether the assessee has proved the purchases made from M/s. Srishti Mercantile Pvt. Ltd. as genuine? As could be seen from the facts on record, in course of assessment proceedings for the impugned assessment year, the Assessing Officer apart from calling upon the assessee to prove the genuineness of purchases made, has also conducted enquiry independently by issuing notice u/s. 133(6) to....
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....essee. Therefore, there is a possibility that the assessee has purchased goods from sources other than the declared source to avoid payment of VAT/other taxes. In view of the aforesaid, it will be appropriate to tax the profit element embedded in such bogus purchases. On considering the overall facts and circumstances of the case and the prevalent VAT rate, we are of the view that the addition on account of bogus purchases should be restricted to 12.5% of Rs. 37,20,244/-, The assessee gets relief to that extent. This ground is partly allowed. 8. In ground no.4, assessee has raised the issue of violation of rules of natural justice. However, there is no specific argument by the learned AR on this issue. Even otherwise also, on analysing the....