NAVIN JAIDHAND DOSHI,MUMBAI vs. DCIT-23(3), MUMBAI

order ,dated 10.02.2016 of the CIT(A)-40,Mumbai the assessee has filed the present appeal.Assessee,an individual,engaged in the business of wholesale sale and purchase of Iron & Steel,filed his return of income on 31.10.2006, declaring total income at Rs.2.20 lakhs. Initially, the return was processed under section 143 (1) of the Act. Later on information was received from the investigation wing and the survey was conducted at the business premises of the assessee resulting in impounding of some incriminating documents related to the bogus purchase and purchase of immovable properties. The Assessing Officer (AO) issued a notice under section 148 of the Act after regarding the reasons. He completed the assessment u/s. 143 (3) r.w.s. 147 of the Act, on 27.03.2014 determining the income of the assessee at Rs.6.07 lakhs. 2.First effective ground of appeal is about reopening of the assessment under section 147 of the Act and the second ground deals with the addition made on account of alleged bogus purchases, amounting to Rs. 52,734/-. During the reassessment proceedings, the AO observed that as per the information received from the Sales Tax Department of Government of Maharashtra the assessee had purchased goods from the parties who were doing hawala business and were issuing bills without supplying goods. A survey under section 133A was carried out in the case of the assessee and the AO held that the assessee had purchased goods worth Rs. 4.21 lakhs from the hawala dealers, that the transaction was not genuine. As a result he made an addition of Rs. 4, 21, 869/-to the income of the assessee.

2607/M/16(06-07) Navin Jaidhand 3.Aggrieved by the order of the AO, the assessee preferred an appeal before the First Appellate Authority(FAA).Before him, the assessee stated reopening was bad in law, that the AO had not doubted the sales made by the assessee, that the AO did not consider the material and documentary evidences placed on record. After considering the available material, the F AA held that the AO were justified in reopening the assessment, that there was tangible material to issue notice under section 148 of the Act, that the assessee had not produce the parties from whom he had allegedly purchased the goods. Finally he held that estimation of 12.5% is profit embedded in impugned purchases shown from the tainted parties would meet the ends of Justice. He directed the AO to estimate of it at the rate of 12.5% which worked out to Rs. 52, 734/-.Thus, he reduced the addition from Rs. 4.21 lakhs to Rs. 52,734/-.