M/s. Agarwal Petrochem Pvt.Ltd, Mumbai V. Assistant Commissioner of Income-tax, Panvel Circle, Panvel

ITA 1000/PUN/2018

• Counselvise Citation: [2019] 115 COUNSELVISE.COM (IT) 9159 (ITAT-PUNE)
• Duration Of Justice: 1 year(s) 3 month(s) 21 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 26-09-2019
• Appeal Filed By: Assessee
• Order Result: Partly Allowed
• Bench Allotted: A
• Next Hearing Date: 23-09-2019
• Assessment Year: 2008-2009
• Appeal Filed On: 05-06-2018
• Result in Favour of: Partly Allowed
• Court: TRIBUNAL
• Department Lawyers: S P WALIMBE SR NO SHRI PUSH
• Keywords: Bogus purchase; Revision of order; Principle of natural justice; Opportunity of cross examination; Difference of opinion; Accommodation entries; Block assessment; Tax effect; Reason to believe; Change of opinion; Reassessment proceedings; Set aside
• Section: 143(3); 133(6); 208; 147; 148; 263; 144

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL A BENCH, PUNE BEFORE SHRI R.S.SYAL, VP AND SHRI PARTHA SARATHI CHAUDHURY, JM SL. NO. ITA NO./CO.NO. NAME OF APPELLANT NAME OF RESPONDENT ASST. YEAR 1 975/PUN/2018 DINESH RATHI, (PROP. M/S. ELCON INSTRUMENTS & ENGINEERS), OFFICE NO.805, PINNACLE BROOKSIDE, 52/1A, BAVDHAN KH, OPP SAHGAL MARUTI SHOWROOM, MUMBAI PUNE HIGHWAY, PUNE 411021 PAN: AAPPR5736F DCIT, CIRCLE 3, PUNE 2009-10 2 12/PUN/2018 ADROIT ENTERPRISES, S.NO.6/2/1, YOGIRAJ PARK COLONY, ASMITA BUNGLOW, KARVE NAGAR, PUNE-411052 PAN: AALFA1231E DCIT, CIRCLE 1(2), PUNE 2011-12 3 563/PUN/2019 THUSE ELEKTRONICS PVT. LTD., PLOT NO.33A, SECTOR-7, PCNDTA, BHOSARI, PUNE 411003 PAN:AAACT6285F DCIT, CIRCLE-7, PUNE 2010-11 4-5 1688/PUN/2017 & 1689/PUN/2017 ACIT, CIRCLE-2, SOLAPUR M/S. BEEKAY ENTERPRISES, LAXMI BHAVAN, 3A, MURARJI PETH, SOLAPUR 413001 PAN: AABFB4783A 2011-12 2012-13 6-7 CO NO.26/PUN/2019 & 27/PUN/2019 M/S. BEEKAY ENTERPRISES, LAXMI BHAVAN, 3A, MURARJI PETH, SOLAPUR 413001 PAN: AABFB4783A ACIT, CIRCLE-2, SOLAPUR 2011-12 2012-13 8 2946/PUN/2017 G.V. PUNTAMBEKAR & SONS PVT. LTD., 555, NARAYAN PETH, PUNE 411030 PAN: AAACG6706A DCIT, CIRCLE 1(2), PUNE 2011-12 9 1507/PUN/2018 DCIT, CIRCLE-1, NASHIK CHANDRASHEKH AR ASHOK JOSHI, KRISHNAKUNJ, MAKHMALABAD NAKA, RAJDAL COLONY, 2010-11 2 BOGUS PURCHASES GROUP PANCHAVATI, NASHIK-422003 PAN: AAXPJ0797N 10 2319/PUN/2017 VINAY BADERA, PROP. M/S. SHUBHAM DEVELOPERS, MAHAVIR COMPLEX, PUNE NASIK HIGHWAY, NARAYANGAON, PUNE-411033 PAN: ABJPB1324J DCIT, CIRCLE-10, PUNE 2010-11 11-13 304/PUN/2018 TO 306/PUN/2018 DADASAHEB VITTHALRAO URHE, PLOT NO.5, PANCHWATI COLONY, TALEGAON DABHADE, MAVAL, PUNE 411506 PAN: AAAPU9881D DCIT, CIRCLE 8, PUNE 2009-10 2010-11 2011-12 14 451/PUN/2018 DCIT, PANVEL CIRCLE, NEW PANVEL, RAIGAD M/S. NYKA STEEL PVT. LTD., C-17/6, MIDC, TALOJA, PANVEL, DIST. RAIGAD 410208 PAN: AAACN1660Q 2011-12 15 354/PUN/2018 MR. ASHOK TANNA, 515, KASARWADI, PUNE 411037 PAN: AAGPT7820F DCIT, CIRCLE 8, PUNE 2010-11 16-17 1403/PUN/2017 & 1404/PUN/2017 SS TECHNO LIMITED, 502, MAYFAIR TOWERS-1, WAKDEWADI, SHIVAJINAGAR, PUNE 411005 PAN: AAFCS5339A DCIT, CIRCLE-6, PUNE 2009-10 2010-11 18-19 1519/PUN/2018 & 1520/PUN/2018 SHRI BALRAJ SINGH MANDER, PROP. M/S. NUIMEC ENGINEERING CORPORATION, L-93, MIDC, TALOJA, TAL PANVEL, RAIGAD410208 PAN: AIVPM4818P DCIT, PANVEL CIRCLE 2010-11 2011-12 20 1914/PUN/2017 M/S. ANIKET TRADING COMPANY, 8 & 9, TIP TOP PLAZA, XLO POINT, AMBAD LINK ROAD, NASHIK 422010 PAN: AAGFA0380D DCIT, CIRCLE-1, NASHIK 2011-12 21 1977/PUN/2017 KBK CHEMICAL ENGINEERING PVT. LTD., PLOT NO.33+34, ABOVE SBI, NDA PASHAN ROAD, BAVDHAN, PUNE-411021 PAN: AAACK6827G DCIT, CIRCLE 11(1), PUNE 2009-10 3 BOGUS PURCHASES GROUP 22 2065/PUN/2017 DCIT, PANVEL CIRCLE, NEW PANVEL, RAIGAD SHRI BALRAJ SINGH MANDER, PROP. M/S. NUIMEC ENGINEERING CORPORATION, L-93, MIDC, TALOJA, PANVEL, RAIGAD. PAN: AIVPM4818P 2010-11 23 2192/PUN/2017 HEMANT SUBHASH OSWAL, C-603, KUMAR PURAM, NEAR NIRALI BAUG, MUKUNDNAGAR, PUNE 411042 PAN: AAAPO6795L ITO, WARD 5(5), PUNE 2009-10 24 1365/PUN/2017 SHRI SUKHLAL SAJAN PATIL, SR. NO.15/6, VAIBHAV, WARJE JAKAT NAKA, KARVE NAGAR, PUNE-411052 PAN: AAUPP2758A DCIT, CIRCLE-3, PUNE 2009-10 25 916/PUN/2017 DCIT, CIRCLE 9, PUNE M/S. MADHUBAN TRADE STEEL PVT. LTD. GAT NO.90, S.NO.T/1/1120, JYOTIBA NAGAR, NIGDI, TALWADE ROAD, PUNE- 412114 PAN: AABCM8512H 2010-11 26 963/PUN/2017 M/S. MADHUBAN TRADE STEEL PVT. LTD. GAT NO.90, S.NO.T/1/1120, JYOTIBA NAGAR, NIGDI, TALWADE ROAD, PUNE-412114 PAN: AABCM8512H DCIT, CIRCLE 9, PUNE 2010-11 27 2373/PUN/2017 HAMADULE ENGINEERING PVT. LTD., M/S. SHAH KHANDELWAL JAIN & ASSOCIATES, CHARTERED ACCOUNTANTS, LEVEL 3, BUSINESS BAY, PLOT NO.84, WELLESLEY ROAD, NEAR RTO, PUNE 411001 PAN: AABCH9540A DCIT, CENTRAL CIRCLE 10, PUNE 2009-10 28 1736/PUN/2017 SHRI MUKESHKUMAR PUKHRAJ MEHTA, PROP. OF ARIHANT TUBES FITTINGS, GALA NO.10-B/11-B, GOYAL INDUSTRIAL CO. SOCIETY, J- 5-14 MIDC, BHOSARI, PUNE 411026 PAN: AFQPM9918J ITO, WARD 8 (3), PUNE 2010-11 4 BOGUS PURCHASES GROUP 29-32 1000/PUN/2018 TO 1003/PUN/2018 M/S. AGARWAL PETROCHEM PVT. LTD., 201/202, EASTERN COURT, SION TROMBAY ROAD, CHEMBUR, MUMBAI 400071 PAN: AAECA9473C ACIT, PANVEL CIRCLE, PANVEL. 2008-09 2009-10 2010-11 2011-12 33-35 1092/PUN/2018 TO 1094/PUN/2018 DCIT, PANVEL CIRCLE, NEW PANVEL, RAIGAD M/S. AGARWAL PETROCHEM PVT. LTD., PLOT NO.37, MIDC INDUSTRIAL AREA, TALOJA, DIST. RAIGAD PAN: AAECA9473C 2009-10 2010-11 2011-12 36 1881/PUN/2017 ACIT, CIRCLE-2, NASHIK SMT. ARCHAN A PRASHANT SANGAI, 2, SWASTIK CHAMBERS, PATHARDI PHATA, NASHIK 422009 PAN: ACRPS4103K 2009-10 37 CO NO.31/PUN/2019 SMT. ARCHANA PRASHANT SANGAI, 2, SWASTIK CHAMBERS, PATHARDI PHATA, NASHIK 422009 PAN: ACRPS4103K ITO, WARD 2(3), NASHIK 2009-10 38-39 1659/PUN/2018 & 1660/PUN/2018 RENUKA AUTO COMPONENTS INDIA PVT. LTD., PLOT NO.20/1, D-1 BLOCK, MIDC, PIMPRI CHINCHWAD IND AREA, PUNE 411019 PAN: AADCR5691J ACIT, CIRCLE-10, PUNE 2009-10 2010-11 40 863/PUN/2018 M/S. PNG JEWELLERY & GEMS 693, NARAYAN PETH, KUNTE CHOWK, LAXMI ROAD, PUNE 411030 PAN: AADFP5196K DCIT, CENTRAL CIRCLE 1(2), PUNE 2011-12 41 2932/PUN/2017 MR. RAJESH UMRAOSINGH PARDESH CTS NO.3250, S.NO.584/2/1/2, NEAR EKOPA SOCIETY, SALISBURY PARK, PUNE-411037 PAN: ABQPP0645R DCIT, CIRCLE-5, PUNE 2009-10 42 2835/PUN/2017 DACS ELECTROSYSTEMS PVT. LTD., GAT NO.1/3/4, AT & POST MARUNJI, NEAR HINJEWADI, DIST. PUNE-411057 PAN: AAACD7375A DCIT, CIRCLE 1(2), PUNE 2010-11 5 BOGUS PURCHASES GROUP 43 1951/PUN/2017 M/S PRIMA PVT. LTD. T-73, MIDC, BHOSARI, PUNE 411026 PAN: AABCP1938J ACIT, CIRCLE 10, PUNE 2011-12 44 1716/PUN/2017 M/S. SARSWATI EXTRUSION PVT. LTD. H-20, MIDC WALUJ, AURANGABAD PAN: AAJCS6024J ITO, WARD 2(4), AURANGABAD 2011-12 45 2991/PUN/2016 ACIT, CIRCLE-1, NASHIK CHANDRASHEK HAR ASHOK JOSHI, KRISHNAKUNJ, MAKHMALABAD NAKA, RAJDAL COLONY, PANCHAVATI, NASHIK-422003 PAN: AAXPJ0797N 2009-10 46 53/PUN/2017 CHANDRASHEKHAR ASHOK JOSHI, KRISHNAKUNJ, MAKHMALABAD NAKA, RAJDAL COLONY, PANCHAVATI, NASHIK-422003 PAN: AAXPJ0797N DCIT, CIRCLE 1, NASHIK 2009-10 47-48 2307/PUN/2017 & 2308/PUN/2017 M/S. VIRAJ STEELS OFFICE NO.39, VASTUSHREE COMPLEX, S.NO.587, MARKET YARD, PUNE 411037 PAN: AAGFV0774Q DCIT, CIRCLE 5, PUNE 2009-10 2010-11 49-50 2989/PUN/2017 & 2591/PUN/2017 ITO, WARD 5(1), PUNE M/S. VIRAJ STEELS OFFICE NO.39, VASTUSHREE COMPLEX, S.NO.587, MARKET YARD, PUNE 411037 PAN: AAGFV0774Q 2009-10 2010-11 ASSESSEE(S) BY : SHRI KRISHNA GUJRATHI SR. NO.1, 41 SHRI M.K. KULKARNI SR. NO.2, 8, 24 & 28 SHRI C.H. NANIWADEKAR SR. NO.3 MS. M.N. KULKARNI SR. NO.4-7 SMT. DEEPA KHARE SR. NO.9, 45 & 46 SHRI B.V. MANE SR. 11 13 SHRI S.D. PATHAK SR. NO.14 SHRI MA HAVIR JAIN SR. NO.23 SHRI AN IL LODHA SR. NO.29 35 SHRI NE ELESH KHANDELWAL SR. NO.25-27 SHRI PR AMOD SHINGTE SR. 36, 37 &44 SHRI D. R. BARBE SR. NO.38 & 39 SHRI M. R. BHAGWAT SR. NO.40 SHRI SU NIL GANOO SR. NO.42 SHRI SH ARAD SHAH SR. NO.43 SHRI V. L. JAIN SR. NO.47 - 50 NONE SR. NO.10, 15-19, 21, 22 WRITTEN SUBMISSIONS SR. NO.20 6 BOGUS PURCHASES GROUP REVENUE BY : SHRI S.P. WALIMBE SR. NO.1 19, 2 4-35 38-42, 44 -50 SHRI PUSHKARAJ B. PATIL SR. NO.20-23, 36, 37 & 43 DATE OF HEARING : 23.09.2019 DATE OF PRONOUNCEMENT : 26.09.2019 ORDER PER BENCH : THIS BATCH OF 50 APPEALS CONSISTING OF 37 APPEALS BY THE AS SESSEES AND 13 APPEALS BY THE REVENUE RELATE TO CAPTIONED ASSESSME NT YEARS. 2. IN SOME OF THE APPEALS, THERE IS A DELAY OF CERTAIN DAYS. THE RESPECTIVE ASSESSEES HAVE FILED AFFIDAVITS GIVING REASONS LEA DING TO THE DELAYED FILING OF THE APPEALS. WE ARE SATISFIED WITH SUCH REAS ONS. THE DELAY IN SUCH CASES IS, THEREFORE, CONDONED AND THE APPE ALS ARE ADMITTED FOR DISPOSAL ON MERITS. 3. A COMMON ISSUE HAS BEEN RAISED IN ALL THE APPEALS IN RESPECT OF CONFIRMATION/REDUCTION OF ADDITION ON ACCOUNT OF BOGUS PURCHA SES. MATERIAL FACTS FOR ALL THE APPEALS ON MERITS ARE MUTATIS MUTANDIS COMMON. IN SOME OF THE APPEALS, THERE ARE GROUNDS CHA LLENGING THE INITIATION OF REASSESSMENT PROCEEDINGS. OUT OF THE ABOVE, THE LD. AR DID NOT PRESS SUCH GROUNDS AT THE TIME OF HEARING IN SOME OF THE APPEALS. WE HAVE RECORDED SUCH NON-PRESSING IN THE RESPECTIVE APPEA L FILE AFTER OBTAINING SIGNATURE OF THE CONCERNED LD. AR. SUCH GROUNDS A RE THEREFORE, DISMISSED AS NOT PRESSED. IN SO FAR AS THE CASES IN WHICH SUCH A GROUND 7 BOGUS PURCHASES GROUP HAS BEEN PRESSED, THOSE CAN BE FURTHER SUB-DIVIDED INTO TW O PARTS, VIZ., ONE WHERE THE CHALLENGE TO THE REASSESSMENT HAS BEEN LAID G ENERALLY AND TWO WHERE THERE IS SPECIFIC CHALLENGE TO THE REASSESSMENT D EPENDING UPON THE PECULIAR FACTS OF THE CASE. IN SO FAR AS THE GE NERAL CHALLENGE TO THE INITIATION OF REASSESSMENT PROCEEDINGS IS CONCERNED, WE W ILL DEAL WITH THE SAME IN A COMMON MANNER IMMEDIATELY HEREINAFTER. FOR THE SPECIFIC CHALLENGE TO THE INITIATION OF REASSESSMENT PROCEEDINGS, WE WILL DEAL WITH THEM SEPARATELY. 4. THE FACTUAL MATRIX IS COMMON TO ALL THE APPEALS. THE AS SESSING OFFICERS (AO) GOT INFORMATION FROM SALES TAX DEPARTMENT THA T THE CONCERNED ASSESSEES RECEIVED FAKE PURCHASE BILLS FROM H AWALA DEALERS, WHICH DETAILS HAVE BEEN GIVEN IN THE RESPECTIVE ASSESSMENT OR DERS. FOR THE CASES IN WHICH ASSESSMENTS HAD ALREADY BEEN COMPLETED OR THE TIME TO TAKE UP ASSESSMENTS U/S 143(3) HAD EXPIRED, THE AO ISS UED NOTICES U/S.148 OF THE INCOME-TAX ACT, 1961 (HEREINAFTER ALSO CALLE D `THE ACT). AFTER ENTERTAINING AND DISPOSING OF THE OBJECTIONS FROM THE CON CERNED ASSESSEES, WHEREVER RAISED, THE RESPECTIVE AOS MADE ADD ITIONS @ 100% OF BOGUS PURCHASES IN MOST OF THE CASES. THE LD. CSIT( A) IN SOME CASES CONFIRMED THE ADDITION AT 100%, WHILST IN OTHERS IT WAS REDU CED TO 5%, 7.15%, 12.50%, 15%, 20%, 23% AND 25% OF THE AMOUNT O F BOGUS 8 BOGUS PURCHASES GROUP PURCHASES RESPECTIVELY. AGGRIEVED THEREBY, THE ASSESSE ES AS WELL AS THE REVENUE HAVE COME UP IN APPEALS BEFORE THE TRIBUNAL. 5. WE HAVE HEARD BOTH THE SIDES AND GONE THROUGH THE RELE VANT MATERIAL ON RECORD. FIRST WE DEAL WITH THE DISPOSAL OF OBJECTION TO THE INITIATION OF REASSESSMENT PROCEEDINGS OF THE FIRST CATEGORY, NAMELY, WHERE THE OBJECTION HAS BEEN RAISED GENERALLY. 6. IT IS CLEAR THAT THE AO GOT SPECIFIC INFORMATION FROM THE SALES TAX DEPARTMENT ABOUT THE CONCERNED ASSESSEES BEING BENEFICIAR IES OF FAKE ACCOMMODATION ENTRIES FROM HAWALA DEALERS. THE CONTENTION OF THE ASSESSEES IN SUCH GENERAL CASES THAT REASSESSMENT ON THE GIVEN BASIS IS WRONG, IN OUR CONSIDERED OPINION, IS COMPLETELY UNFOUNDED . 7. THE HONBLE SUPREME COURT IN RAYMOND WOOLEN MILLS VS. ITO (1999) 236 ITR 34 (SC) HAS HELD THAT THERE SHOULD BE REASON TO BELIEVE ABOUT THE ESCAPEMENT OF INCOME AT THE STAGE OF INITIATION OF RE ASSESSMENT PROCEEDINGS. SUFFICIENCY OR CORRECTNESS OF SUCH MATERIA L CANNOT BE CONSIDERED AT THAT STAGE. THE HONBLE APEX COURT HAS HELD IN ACIT VS. RAJESH JHAVERI STOCK BROKER (P) LTD. (2007) 291 ITR 500 (SC) THAT : `THE WORD 'REASON' IN THE PHRASE 'REASON TO BELIEVE' WOU LD MEAN CAUSE OR JUSTIFICATION. IF THE AO HAS CAUSE OR JUSTIFICATION TO KNOW OR SUPPOSE THAT INCOME HAD ESCAPED ASSESSMENT, IT CAN BE SAID TO HAVE REASON TO BELIEVE THAT AN INCOME HAD ESCAPED ASSESSMENT. THE EXPRES SION CANNOT 9 BOGUS PURCHASES GROUP BE READ TO MEAN THAT THE AO SHOULD HAVE FINALLY ASCERTAINED THE FACT BY LEGAL EVIDENCE OR CONCLUSION. EXPLAINING THE POSITION FURTHER, IT LAID DOWN THAT: `AT THE INITIATION STAGE, WHAT IS REQUIRED IS 'REASON TO BELIEVE', BUT NOT THE ESTABLISHED FACT OF ESCAPEMENT OF INCOME. AT THE STAGE OF ISSUE OF NOTICE, THE ONLY QUESTION IS WHETHER THERE WAS RELEVAN T MATERIAL ON WHICH A REASONABLE PERSON COULD HAVE FORMED A REQUIS ITE BELIEF. WHETHER THE MATERIALS WOULD CONCLUSIVELY PROVE THE ESCAPEME NT IS NOT THE CONCERN AT THAT STAGE. THIS IS SO BECAUSE THE FORMATION OF BELIEF BY THE AO IS WITHIN THE REALM OF SUBJECTIVE SATISFACTION. 8. AT THIS STAGE, IT IS RELEVANT TO TAKE NOTE OF THE JUDGMENT OF THE HONBLE SUPREME COURT IN PHOOLCHAND BAJRANG LAL AND ANR VS. ITO AND ANR (1993) 203 ITR 456 (SC), IN WHICH THE AOS JURISDICTION TO INITIATE REASSESSMENT WAS CHALLENGED. REPELLING THE ASSESSEES ARGUMENTS, THE HONBLE SUPREME COURT HELD THAT AN ITO ACQU IRES JURISDICTION TO REOPEN ASSESSMENT UNDER S. 147(A) R/W S. 1 48 ONLY IF ON THE BASIS OF SPECIFIC, RELIABLE AND RELEVANT INFORMATION COMING TO HIS POSSESSION SUBSEQUENTLY, HE HAS REASONS WHICH HE MUST R ECORD, TO BELIEVE THAT BY REASON OF OMISSION OF FAILURE ON THE PART OF THE ASSESSEE TO MAKE A TRUE AND FULL DISCLOSURE OF ALL MATERIAL FACTS NECES SARY FOR HIS ASSESSMENT DURING THE CONCLUDED ASSESSMENT PROCEEDINGS, A NY PART OF HIS INCOME, PROFIT OR GAINS CHARGEABLE TO INCOME-TAX HAS ESCAP ED 10 BOGUS PURCHASES GROUP ASSESSMENT. HE MAY START REASSESSMENT PROCEEDINGS EITHER BECAUSE SOME FRESH FACTS COME TO LIGHT WHICH WERE NOT PREVIOUSLY DISCLOSED OR SOME INFORMATION WITH REGARD TO THE FACTS PREVIOUSLY DISCLOSED COMES INTO HIS POSSESSION WHICH TEND TO EXPOSE THE UNTRUTHFULNESS OF THOS E FACTS. IN THAT CASE, THE ITO WAS HELD TO HAVE RIGHTLY INITIATED THE REASSESSME NT PROCEEDINGS ON THE BASIS OF SUBSEQUENT INFORMATION, WHICH W AS SPECIFIC, RELEVANT AND RELIABLE. 9. IN BRIGHT STAR SYNTEX PVT. LTD. VS. ITO (2016) 387 ITR 231 (BOM ) , THE AO INITIATED THE REASSESSMENT ON THE BASIS OF SOME INFORM ATION INDICATING THE ASSESSEE AS A BENEFICIARY TO ACCOMMODATION ENTR Y. THE ASSESSEE CHALLENGED THE INITIATION OF REASSESSMENT BY WAY OF A WRIT. DISMISSING THE PETITION, THE HONBLE JURISDICTIONAL HIGH COURT HELD TH AT AT THE STAGE OF INITIATION OF REASSESSMENT, THE AO IS NOT REQUIR ED TO HAVE CONCLUSIVE EVIDENCE THAT INCOME CHARGEABLE TO TAX HAS ESCAPE D ASSESSMENT. AS THE REASONS RECORDED FOR REOPENING ESTAB LISHED A LINK BETWEEN THE MATERIAL AVAILABLE AND THE CONCLUSION REACHED BY THE AO FOR REOPENING THE ASSESSMENT, THE HONBLE HIGH COURT REFUSED TO INTERFERE BY OBSERVING THAT THE EXPRESSION `REASON TO BELIEVE CANNOT BE READ TO MEAN THAT THE AO SHOULD HAVE FINALLY ESTABLISHED BEYOND DOUB T THAT INCOME CHARGEABLE TO TAX HAS ESCAPED ASSESSMENT. SIMILAR VIEW HAS BEEN TAKEN BY THE HONBLE GUJARAT HIGH COURT IN PR. CIT VS. LAXMIRAJ 11 BOGUS PURCHASES GROUP DISTRIBUTORS PVT. LTD. (2019) 410 ITR 495 (GUJ) AND THE SLP FILED BY THE ASSESSEE AGAINST SUCH JUDGMENT HAS SINCE BEEN DISMISSE D IN (2018) 405 ITR (ST) 27. 10. REVERTING TO THE FACTS OF THE INSTANT CASES, IT IS SEEN THAT THE CONCERNED AOS RECEIVED INFORMATION FROM THE SALES TAX DEP ARTMENT ABOUT THE DETAILS OF ACCOMMODATION ENTRY PROVIDERS AND THE AS SESSES HAD ALSO RECORDED PURCHASES FROM SUCH HAWALA ENTRY PROVIDE RS. THERE WAS A CLOSE NEXUS BETWEEN THE REPORT OF THE SALES TAX DEPARTMENT AND THE FORMATION OF BELIEF BY THE ASSESSING OFFICER ABOUT THE ESCAP EMENT OF INCOME OF THE ASSESSEE FOR THE YEAR(S) UNDER CONSIDERATIO N. SUCH INFORMATION WAS SPECIFIC, NOT GENERAL OR VAGUE. THUS, IT IS A BUNDANTLY CLEAR THAT RECEIPT OF SUCH AN INFORMATION WAS SUFFICIENT ENOU GH FOR THE ASSESSING OFFICER TO INITIATE THE REASSESSMENT. IN OUR CONSID ERED OPINION, NO EXCEPTION CAN BE TAKEN TO THE VIEW CANVASSED BY THE ASSESSING OFFICER(S) IN INITIATING THE REASSESSMENT ON THIS SCOR E. THE GROUND(S) TAKEN BY THE ASSESSEES IN CHALLENGING THE INITIATION O F REASSESSMENT PROCEEDINGS IN GENERAL WAY ARE THUS DISMISSE D. 11. NOW WE TURN TO THE MERITS OF THE CASES. THE ASSAIL IS TO THE MAKING OF ADDITION(S) ON THE BASIS OF BOGUS PURCHASE BILLS RECEIVED BY THE ASSESSEE(S) AS ACCOMMODATION ENTRIES FROM HAWALA DEALERS. IT IS SEEN THAT THE ISSUE OF BOGUS PURCHASES HAS RECENTLY COME UP FOR C ONSIDERATION 12 BOGUS PURCHASES GROUP BEFORE THE HONBLE BOMBAY HIGH COURT IN PR.CIT VS. MOHOMMAD HAJI ADAM & CO. VIDE ITS JUDGMENT DATED 11-02-2019 IN ITA NO.1004 OF 2016 AND OTHERS, THE HONBLE JURISDICTIONAL HIGH COURT HAS HELD THAT NO AD HOC ADDITION FOR BOGUS PURCHASES SHOULD BE MADE. IT LAID DOWN THAT THE ADDITION SHOULD BE MADE TO THE EXTENT OF DIFFERENCE BETWE EN THE GROSS PROFIT RATE ON GENUINE PURCHASES AND GROSS PROFIT RATE ON HAWALA PURCHASES. SUCH CASE SPECIFIC DETAILS ARE NOT READILY AVAILAB LE WITH THE RESPECTIVE LD. ARS OR THE LD. DRS FOR FACILITATING THE CALCULA TION OF GROSS PROFIT RATES OF GENUINE AND HAWALA PURCHASES. UNDER THESE CIRCUMSTANCES, WE SET-ASIDE THE IMPUGNED ORDERS AND REM IT THE MATTER TO THE FILE OF THE RESPECTIVE AOS FOR APPLYING THE RATIO LAID DOWN BY THE HONBLE JURISDICTIONAL HIGH COURT IN THE ABOVE NOTED CASE AND RECOMPUTE THE AMOUNT OF ADDITIONS, IF ANY, AFTER ALLOWING A RE ASONABLE OPPORTUNITY OF HEARING TO THE ASSESSEE. 12. IN THE RESULT, ALL THE APPEALS, EXCEPT SEPARATELY D ISPOSED OFF INFRA, ARE FULLY/PARTLY ALLOWED FOR STATISTICAL PURPOSES. 13. NOW WE ESPOUSE SUCH APPEALS SEPARATELY IN WHICH EITHER THE CHALLENGE TO THE INITIATION OF REASSESSMENT IS A CASE SPECIFIC AN D PECULIAR TO ITS OWN FACTS IN CONTRAST TO THE GENERAL CHALLENGE AS DISCUSS ED ABOVE OR THE APPEALS IN WHICH THE RATIO OF THE HONBLE JURISDICTIONAL HIGH COURT IN THE CASE OF PR.CIT VS. MOHOMMAD HAJI ADAM & CO (SUPRA) IS NOT 13 BOGUS PURCHASES GROUP APPLICABLE IN VIEW OF THE FACT THAT THE GOODS PURCHASED THROU GH HAWALA ENTRIES HAVE BEEN CONSUMED IN MANUFACTURING AND NOT SOLD A S SUCH. BOTH THE SIDES HAVE ADMITTED, AND RIGHTLY SO, THAT IN SUCH CASES, THE JUDGMENT IN MOHOMMAD HAJI ADAM & CO (SUPRA) CANNOT BE APPLIED. MS.ARCHANA P. SANGAI - ITA NO.1881/PUN/2017 & CO NO.31/PUN/2019 14. IN THIS CASE, THE LD. CIT(A) QUASHED THE INITIATION OF REASSESSMENT AND ACCORDINGLY DELETED THE ADDITION IN QUESTION ON ACCOUNT OF BOGUS PURCHASES. THE REVENUE HAS CHALLENGED THE QUASHING OF TH E REASSESSMENT AND THE ASSESSEE IN HER CROSS OBJECTION HAS ALSO CHALLENGED THE INITIATION OF RE-ASSESSMENT PROCEEDINGS BY THE AO ON THE GROUND THAT THE ASSESSEE WAS NOT SUPPLIED REASONS TO BELIEVE U/S.148 OF THE ACT DESPITE SPECIFIC REQUEST. 15. THE FACTS OF THIS CASE ARE THAT NOTICE U/S.148 WAS ISSUED ON 26-06-2014. THE ASSESSEE FILED RETURN IN RESPONSE TO NO TICE U/S.148 ON 13-11-2014 AND REQUESTED THE AO TO FURNISH THE REASONS R ECORDED FOR ISSUING NOTICE U/S.148. THE ASSESSMENT WAS TAKEN UP BY M EANS OF NOTICE U/S.142(1) DATED 23-09-2015. THE ASSESSMENT ORDER WAS PASSED ON 04- 03-2016. THE ASSESSEE CHALLENGED THE INITIATION OF REASSESS MENT PROCEEDINGS BEFORE THE LD. CIT(A) CONTENDING THAT DESPITE THE SPECIFIC REQUEST MADE BY THE ASSESSEE FOR SUPPLY OF REASONS, T HE AO FAILED TO FURNISH THE SAME. RELEVANT DISCUSSION HAS BEEN MADE ON P AGES 3 14 BOGUS PURCHASES GROUP ONWARDS OF THE IMPUGNED ORDER. THE LD. CIT(A) CALLED FOR A REPORT FROM THE AO ON THE WRITTEN SUBMISSIONS FILED BY THE ASSESSEE ASSA ILING NON- SUPPLY OF REASONS TO BELIEVE. THE AO VIDE HIS REPORT DA TED 29-03-2017, AS DISCUSSED ON PAGE 5 OF THE IMPUGNED ORDER, RELIED ON SOME MENTIONING IN HIS NOTICE ABOUT THE CONTENTS OF THE REASONS. TH E CRUX OF THE MATTER IS THAT THE REASONS WERE NOT SUPPLIED TO THE ASSES SEE. BASED ON THIS FACTUAL POSITION, THE LD. CIT(A) HELD THE INITIATION OF ASS ESSMENT ORDER TO BE BAD IN LAW. 16. HAVING HEARD THE RIVAL SUBMISSIONS AND PERUSED THE RELEVANT MATERIAL ON RECORD, IT IS FOUND AS AN ADMITTED POSITION THAT THE ASSESSEE WAS NOT SUPPLIED THE REASONS WHICH LED TO THE ISSUANCE OF N OTICE U/S.148 OF THE ACT. THE HONBLE BOMBAY HIGH COURT IN BAYER MATERIAL SCIENCE PVT. LTD. VS. DCIT (2016) 382 ITR 333 (BOM.) HAS QUASHED THE INITIATION OF REASSESSMENT IN THE ABSENCE OF THE AO SUPPLYING THE REA SONS TO THE ASSESSEE DESPITE SPECIFIC REQUEST. RECENTLY, THE HONBLE JUR ISDICTIONAL HIGH COURT IN FORMENTO RESORTS & HOTELS PVT. LTD. VS. ACIT VIDE JUDGMENT DATED 30-08-2019 IN ITA NO.63/2007 HAS ALSO QUAS HED THE REASSESSMENT ON THE GROUND THAT THE REASONS WERE NOT SUP PLIED TO THE ASSESSEE DESPITE THE REQUEST. 15 BOGUS PURCHASES GROUP 17. TURNING TO THE FACTS OF THE INSTANT CASE, WE FIND THA T THE SAME MISTAKE WAS COMMITTED BY THE AO IN THE INSTANT CASE AS WELL. THE ASSESSEE SPECIFICALLY REQUESTED THE AO TO SUPPLY THE REASON S WHICH LED TO THE ISSUING OF NOTICE U/S.148. THE AO, WITHOUT SUPPLYING THE REASONS, PROCEEDED TO MAKE THE REASSESSMENT. RESPECTFULLY FOLLOWING THE PRECEDENTS OF THE HONBLE JURISDICTIONAL HIGH COURT, WE UPHOLD THE SETTING ASIDE AND QUASHING OF THE INITIATION OF REASSESSMENT PR OCEEDINGS AND THE RESULTANT ASSESSMENT ORDER. 18. IN THE RESULT, THE DEPARTMENTAL APPEAL IS DISMISSED AN D THE C.O. OF THE ASSESSEE IS ALSO DISMISSED AS HAVING BECOME INFRUCTUOU S. M/S. PRIMA PVT. LTD. - ITA NO.1951/PUN/2017 19. THE ISSUE IN THE APPEAL IS ONLY ON MERITS OF THE ADDITIO N SUSTAINED ON ACCOUNT OF BOGUS PURCHASES. HERE ALSO, THE AO MADE ADDITION AT 100% OF THE AMOUNT OF BOGUS PURCHASE BILLS, WHICH WAS SUS TAINED BY THE LD. CIT(A) AT THE SAME LEVEL. 20. HEARD BOTH THE SIDES AND PERUSED THE RELEVANT MATER IAL ON RECORD. IN VIEW OF THE JUDGMENT OF HONBLE JURISDICTIONAL HIGH COURT IN TH E CASE OF PR.CIT VS. MOHOMMAD HAJI ADAM & CO. (SUPRA) , THE MATTER REQUIRES RECONSIDERATION. HOWEVER, THE FACTUAL POSITION IN THE INSTANT CASE IS A LITTLE DIFFERENT. THE HONBLE JURISDICTIONAL HIGH COURT IN THE ABOVE MATTER HAS DEALT WITH A SITUATION IN WHICH THE PURCHASES MADE THR OUGH 16 BOGUS PURCHASES GROUP BOGUS BILLS WERE SOLD AS SUCH AND THE HONBLE HIGH COURT D IRECTED TO COMPUTE THE NORMAL PROFIT AS WELL AS PROFIT ARISING FROM HAW ALA TRANSACTIONS AND THEN DIRECTED TO MAKE ADDITION TOWARDS BOGUS PURCHASES ON ACCOUNT OF DIFFERENCE BETWEEN SUCH TWO PROFITS RATES. HOWEVER, IN THE FACTS OF THE EXTANT CASE, THE PURCHASES MADE THROUGH HAWALA ENTRIES HAVE NOT BEEN SOLD AS SUCH. SUCH PURCHASES, BEING, O F RAW MATERIAL, HAVE BEEN CONSUMED AND GONE INTO THE MANUFACTURING OF PR ODUCTS BY THE ASSESSEE THEREBY LOSING IDENTITY OF SEPARATE PURCHASE PRICE AND THE CORRESPONDING SALE PRICE. BOTH THE SIDES HAVE FAIRLY ADMITTE D THAT THE RATIO OF THE HONBLE JURISDICTIONAL HIGH COURT IN THE CASE OF PR.CIT VS. MOHOMMAD HAJI ADAM & CO. (SUPRA) CANNOT BE APPLIED TO THE FACTS OF THE INSTANT CASE. 21. IN THIS REGARD, IT IS RELEVANT TO NOTE THAT THE PUNE B ENCHES OF THE TRIBUNAL HAS DISPOSED OFF A GROUP OF CASES ON SUCH AN ISSUE BEFORE THE AFORE REFERRED VERDICT OF THE HONBLE HIGH COURT. VIDE TH E LEAD ORDER IN THE CASE OF M/S. CHHABI ELECTRICALS PVT. LTD. AND OTHERS VS. DCIT DATED 28-04-2017 IN ITA NO.795/PUN/2014 AND OTHERS, THE TRIBUNAL HAS MADE CERTAIN CATEGORIES. FINDINGS IN RESPECT OF CATEGORY NO. IV OF THE SAID ORDER, WHICH IS GERMANE TO THE INSTANT APPEAL, ARE AS UNDE R: IV. THE NEXT INSTANCE IS THE CASE OF GOODS WHICH H AVE BEEN ADMITTEDLY SOLD BY THE HAWALA DEALER AND HAS BEEN RECEIVED BY TH E ASSESSEE, WHO IN TURN HAD MAINTAINED QUANTITATIVE DETAILS AND ALSO E VIDENCE OF ITS MOVEMENT I.E. TRANSPORTATION DETAILS AND QUALITY CONTROL DETAILS OF CONSUMPTION OF THE SAID MATERIAL OR EXACT DETAILS OF S ALE OF THE SAME 17 BOGUS PURCHASES GROUP CONSIGNMENT THROUGH SAME TRANSPORTER DIRECTLY TO THE PARTY, THEN THE TOTAL PURCHASES CANNOT BE ADDED IN THE HANDS OF ASSESSEE. HOWEVER, SINCE THE PURCHASES ARE MADE FROM THE GREY MARKET, SOME EST IMATION NEEDS TO BE MADE IN THE HANDS OF ASSESSEE. THE TRIBUNAL IN M/ S. CHETAN ENTERPRISES VS. ACIT (SUPRA) HAS ALREADY HELD THAT THE AD DITION BE MADE BY ESTIMATING THE SAME @ 10% OF THE ALLEGED HAWALA PURC HASES, OVER AND ABOVE THE GP SHOWN BY THE RESPECTIVE ASSESSEE. 22. GOING BY THE RATIO LAID DOWN IN THE CASE OF M/S. CHHABI ELECTRICALS PVT. LTD. AND OTHERS (SUPRA), WHICH BOTH THE SIDES AGREE TO BE APPLIED FOR THE INSTANT CASE, WE HOLD THAT THE ADDITION SHOULD BE SUSTAINED O N THE AMOUNT OF HAWALA PURCHASES @10% PLUS THE NORMAL GP RATE S HOWN BY THE ASSESSEE FOR THE YEAR UNDER CONSIDERATION. WE, THER EFORE, SET ASIDE THE IMPUGNED ORDER AND REMIT THE MATTER TO THE FILE OF AO FO R RE- COMPUTING THE AMOUNT OF ADDITION ACCORDINGLY. 23. IN THE RESULT, THE APPEAL IS ALLOWED FOR STATISTICAL PURP OSES. CHANDRASEKHAR A. JOSHI -ITA NO. 53/PUN/2017&2991/PUN/2016: 24. THE FACTUAL MATRIX OF THESE APPEALS IS SIMILAR INASMUC H AS THE AO INITIATED THE REASSESSMENT AND MADE THE ADDITION AT THE RATE OF 100% OF BOGUS PURCHASES. THE LD. CIT(A) RESTRICTED THE ADDITION TO 1 2.5%. BOTH THE SIDES ARE IN APPEAL. 25. IN SOFARAS THE INITIATION OF REASSESSMENT AND MERITS O F THE ADDITION ARE CONCERNED, THE POSITION IS SIMILAR TO THE CASES DISCUSSE D ABOVE IN GENERAL MANNER. 18 BOGUS PURCHASES GROUP 26. HOWEVER, THE LD. COUNSEL FOR THE ASSESSEE RAISED AN ADDITIONAL ISSUE BY CONTENDING THAT THE ASSESSMENT ORDER REQUIRES TO BE QUA SHED BECAUSE THE AO DID NOT CONFRONT THE ASSESSEE WITH THE ADVERSE MATERIA L USED FOR MAKING THE ADDITION. THIS WAS STRONGLY CONTROVERTED BY THE LD. DR, WHO STATED THAT THE ASSESSEE CHOSE TO REMAIN ABSENT DURING THE CO URSE OF ASSESSMENT PROCEEDINGS WHICH LED TO THE PASSING OF THE ASSE SSMENT ORDER U/S.144 R.W.S. 147 OF THE INCOME-TAX ACT, 1961. 27. THE ARGUMENT ON BEHALF OF THE ASSESSEE BEFORE THE TRIBUNAL IS THAT THE AO FAILED TO PROVIDE OPPORTUNITY OF CROSS EXAMINATION AND CONFRONT THE ASSESSEE WITH THE ADVERSE STATEMENTS OF THE ALLEGED HAWA LA DEALERS. THE LD. AR PUT FORTH THAT IN THE ABSENCE OF THE AO FOLLOWING TH E PRINCIPLES OF NATURAL JUSTICE, THE ADDITION WAS LIABLE TO BE DELETED. IN SUPPORT OF SUCH A CONTENTION, SHE RELIED ON THE JUDGMENT DA TED 02-09- 2015 OF THE HONBLE SUPREME COURT IN THE CASE OF ANDAMAN TIMBER INDUSTRIES VS. COMMISSIONER OF CENTRAL EXCISE, KOLKATA-II (20 15) 62 TAXMANN.COM 3 (SC) AND CERTAIN OTHER DECISIONS. 28. WE HAVE GONE THROUGH THIS JUDGMENT. THE FACTUAL POS ITION OF THE CASE RENDERED IN THE CONTENT OF CENTRAL EXCISE IS THAT SOME OF THE PRODUCTS MANUFACTURED WERE SOLD TO DEALERS AGAINST WHICH TH E ASSESSEE FILED DECLARATION SHOWING THE PARTICULARS OF THE GOODS AT WHICH THOSE WERE SOLD EX-FACTORY. THE REVENUE FOUND THAT THERE WAS PRICE DIFFERENCE 19 BOGUS PURCHASES GROUP BETWEEN THE GOODS SOLD AT EX-FACTORY AND DELIVERY BASIS IN COMPARISON TO THE GOODS WHICH WERE SOLD TO THE BUYERS FROM THEIR DEPOTS. INVESTIGATION WAS CARRIED OUT. STATEMENTS OF TWO BUYERS WERE RECORDED. THE ASSESSEE WAS CALLED UPON TO EXPLAIN AS TO WHY THE PRICE AT WHICH THE GO ODS WERE SOLD TO THE CUSTOMERS FROM THE DEPOTS MAY NOT BE THE BASIS F OR DETERMINING THE VALUE FOR THE PURPOSE OF EXCISE DUTY. IT WA S SUBMITTED THAT ON THE SAME GROUND PROCEEDINGS WERE TAKEN EARLIER WHIC H RESULTED IN FAVOUR OF THE ASSESSEE BY THE DECISION OF THE TRIBUNAL. T HE ASSESSEE ALSO QUESTIONED THE CORRECTNESS OF THE TWO WITNESSES AND DEMAND ED RIGHT TO CROSS-EXAMINE THEM. THE ADJUDICATING AUTHORITY PASSED THE OR DER CONFIRMING THE DEMAND IN THE SHOW CAUSE NOTICE. THE TRIBUN AL REJECTED THE ASSESSEES GROUND OF NOT ALLOWING CROSS-EXAMINATION. WHEN THE MATTER FINALLY CAME UP BEFORE THE HONBLE SUPREME COURT, IT OB SERVED THAT NOT ALLOWING CROSS-EXAMINATION OF THE WITNESSES, WHOSE STATE MENTS WERE THE BASIS OF THE ORDER, WAS A SERIOUS FLAW, WHICH M ADE THE ORDER NULLITY. IN REACHING THIS CONCLUSION, THE HONBLE COURT OBSER VED THAT ON AN EARLIER OCCASION ALSO WHEN THE MATTER CAME BEFORE THIS C OURT, THE MATTER WAS SENT BACK TO THE TRIBUNAL. FROM THE ABOVE FACTUAL P ANORAMA OF ANDAMAN TIMBER INDUSTRIES (SUPRA), IT IS CLEAR THAT IT WAS A SECOND ROUND OF PROCEEDINGS IN WHICH THE ASSESSEE WAS REPEATEDLY DENIED OPPORTUNITY OF CROSS-EXAMINATION. FURTHER, THE ASSESSEE SPE CIFICALLY REQUESTED THE ADJUDICATING AUTHORITY TO ALLOW CROSS-EXAMINATION, WHICH 20 BOGUS PURCHASES GROUP WAS DENIED. IT WAS UNDER SUCH CIRCUMSTANCES THAT THE HON BLE SUPREME COURT HELD THAT THE ORDER PASSED BY THE CENTRAL EXCISE ADJU DICATING AUTHORITY WAS NULL AND VOID. 29. WHEN WE CONSIDER THE FACTS OF THE INSTANT CASE, IT IS FOU ND THAT, FIRSTLY, WE ARE IN THE FIRST ROUND OF THE PROCEEDINGS AND NOT THE SECOND ROUND. SECONDLY, THE ASSESSEE IN THE INSTANT CASE NEVER REQUESTED THE AO TO CONFRONT IT WITH THE WITNESSES OR ALLOW CROSS EXAMINATION OF THE WITNESSES WHO HAD DEPOSED AGAINST THE ASSESSEE. WHAT TO TALK OF SEEKING CROSS EXAMINATION, THE ASSESSEE CHOSE TO ADOPT A NON-COOP ERATIVE ATTITUDE AND DID NOT APPEAR AT ALL, WHICH LED TO THE PASSING O F THE ASSESSMENT ORDER U/S 144 OF THE ACT. UNDER SUCH CIRCUMS TANCES, IT IS CLEAR THAT THE RATIO DECIDENDI IN THE CASE OF ANDAMAN TIMBER INDUSTRIES (SUPRA) IS NOT APPLICABLE TO THE FACTS OF THE INSTANT CASE. 30. THE HONBLE SUPREME COURT IN ITO VS. M. PIRAI CHOODI (2011) 334 ITR 262 (SC) THROUGH THE JUDGMENT RENDERED BY THREE HONBLE JUDGES AND THAT TOO IN THE CONTEXT OF INCOME-TAX, AS AGAINS T THE JUDGMENT RENDERED IN THE CASE OF ANDAMAN TIMBER INDUSTRIES (SUPRA) DELIVERED BY TWO HONBLE JUDGES IN THE CONTEXT OF CENTRAL EXCISE, WAS CON FRONTED WITH A SITUATION IN WHICH THE HONBLE HIGH COURT SET-ASIDE THE OR DER OF ASSESSMENT ON THE GROUND THAT NO OPPORTUNITY OF CROSS-EXAM INATION WAS GRANTED. OVERTURNING THE VIEW OF THE HONBLE HIGH COURT, THE HONBLE 21 BOGUS PURCHASES GROUP SUPREME COURT HELD THAT: AT THE HIGHEST THE HIGH COURT SHOULD HAVE DIRECTED THE AO TO GRANT AN OPPORTUNITY TO THE ASSESSEE TO C ROSS-EXAMINE THE CONCERNED WITNESS . AS A CONSEQUENCE OF THAT, THE HONBLE SUPREME COURT SET-ASIDE THE JUDGMENT OF THE HONBLE HIGH COURT BY HO LDING THAT : `IN THE CIRCUMSTANCES, WE ARE OF THE VIEW THAT THE HIGH COU RT SHOULD NOT HAVE QUASHED THE ASSESSMENT PROCEEDINGS VIDE IMPUGNE D ORDER AND ACCORDINGLY REMITTED THE MATTER TO LOWER AUTHORITIES FOR DISPOSA L ON MERITS. 31. THE HONBLE DELHI HIGH COURT IN CIT VS. P. C. CHEMICALS (2013) 359 ITR 129 (DELHI), FOLLOWING M. PIRAI CHOODI (SUPRA), HAS RESTORED THE MATTER IN THE ABSENCE OF THE AO GRANTING OPPORTUNITY TO CR OSS- EXAMINE THE WITNESSES, WHICH FORMED THE BASIS FOR ADDITION. 32. THE HONBLE MADRAS HIGH COURT IN CIT VS. S.V. SREENIVASAN (2018) 404 ITR 433 (MADRAS) CONSIDERED BOTH THE JUDGMENTS OF HONBLE SUPREME COURT, NAMELY, ANDAMAN TIMBER INDUSTRIES (SUPRA) AND M. PIRAI CHOODI (SUPRA) AND DECIDED SIMILAR ISSUE RAISED THROUGH QUESTION NO.2 IN FAVOUR OF THE REVENUE BY HOLDING THAT THE TRIBUNAL WAS NOT RIGHT IN DELETING ADDITIONS MADE IN THE BLOCK ASSESSMENT ON THE GROU ND THAT NO OPPORTUNITY TO CROSS-EXAMINE WAS GRANTED, WHEN NO SUCH OP PORTUNITY WAS EVER SOUGHT AT ANY TIME. 22 BOGUS PURCHASES GROUP 33. IN THE CASE OF G. MAHESH BABU, THE TRIBUNAL DELETED THE ADDITION FOR NOT ALLOWING CROSS-EXAMINATION. THE HONBLE SUPREME COU RT IN G. MAHESH BABU VS. PR. CIT (2018) 407 ITR 14 (ST.) DISMISSED THE ASSESSEES SLP AGAINST THE JUDGMENT DATED 6.1.2017 OF THE H ONBLE TELANGANA AND ANDHRA PRADESH HIGH COURT IN I.T.T.A. NOS. 226 AND 208 OF 2016 WHEREBY THE HONBLE HIGH COURT HELD THAT AN ORDER OF ASSESSMENT PASSED ON THE BASIS OF MATERIAL GATHERED BEHIND THE ASSESSEES BACK AND NOT SUPPLIED TO THE ASSESSEE WITH AN OPPORTUNITY TO REBUT, WOULD NOT BE VOID AB INITIO, AND COULD BE RECTIFIED THROUGH AN ORDER OF REMAND. 34. IN UDIT KALRA VS. ITO, DELHI (ITA NO.220/2019 AND C.M.NO.10774/2019, THE ASSESSEE SPECIFICALLY RAISED BEFORE THE HONBLE DELHI HIGH COURT THE ISSUE OF DENIAL OF OPPORTUNITY OF CROSS EXAMINATION. THE HONBLE DELHI HIGH COURT VIDE JUDGMENT DATED 08- 03-2019 HELD THAT THE ADDITION WAS VALID. 35. IN VIRBHADRA SINGH (HUF) VS. PR. CIT (2017) 298 CTR 393 ( HP ), THE ASSESSEE RELYING ON ANDAMAN TIMBER INDUSTRIES (SUPRA), PLEADED FOR QUASHING OF THE ORDER FOR NON GRANTING OF OPPORTUNITY OF CROSS- EXAMINATION. THE HONBLE HIMACHAL PRADESH HIGH COURT DID NO T ACCEPT SUCH A PLEA OF THE ASSESSEE AND AFFIRMED THE ORDER OF THE TRIBUNAL UPHOLDING THE ORDER PASSED U/S 263 OF THE ACT. 23 BOGUS PURCHASES GROUP 36. THE HONBLE JURISDICTIONAL BOMBAY HIGH COURT IN M/S. R.W. PROMOTIONS P. LTD. VS. ACIT IN ITA NO.1489 OF 2013, VIDE ITS JUDGMENT DATED 13-07-2015 CONSIDERED A SITUATION IN WHICH ADDITION WAS MADE WITHOUT GRANTING OPPORTUNITY TO THE ASSESSEE TO CROSS-EXAMINE TH E DEPONENTS WHO HAD DEPOSED AGAINST THE ASSESSEE. THE TR IBUNAL HELD THAT NO CROSS-EXAMINATION WAS CALLED FOR IN THE FACTS AS WERE OBTAINING IN THE CASE. THE HONBLE HIGH COURT, NOTING THAT THERE WAS A BRE ACH OF PRINCIPLES OF NATURAL JUSTICE, HELD THAT : ` IN VIEW OF THE ABOVE, WE SET ASIDE THE ORDER OF THE TRIBUNAL AND RESTORE THE ISSUE TO THE A SSESSING OFFICER FOR FRESH DISPOSAL AFTER FOLLOWING THE PRINCIPLES OF NATURAL JUSTICE . 37. ADVERTING TO THE FACTS OF THE INSTANT CASE, IT IS FOUND TH AT THE AO RELIED ON CERTAIN MATERIAL, FOR WHICH CROSS-EXAMINATION WAS N OT AFFORDED TO THE ASSESSEE FOR ITS OWN FAULT. IT IS NOT A CASE THAT THE AO LACKED JURISDICTION TO PROCEED WITH THE ASSESSMENT. IT IS FURTHER NOT A CASE THAT THE AO MADE THE ADDITION ON HIS WHIMS AND FANCIES AND WITHOU T THERE BEING ANY MATERIAL TO SUBSTANTIATE THE SAME. PER CONTRA, IT IS A CASE OF MAKING THE ADDITION ON THE BASIS OF RELEVANT EVIDENCE BUT SIM PLY USING THE SAME WITHOUT GRANTING OPPORTUNITY TO CROSS EXAMINE. THUS IT IS AN IRREGULARITY COMING IN THE OTHERWISE VALID AND LAWFUL PROCEEDING S. SUCH AN IRREGULARITY IN NOT ALLOWING AN OPPORTUNITY TO CROSS EXAMINE THE 24 BOGUS PURCHASES GROUP WITNESSES, WHO DEPOSED AGAINST THE ASSESSEE, CAN BE REGU LARIZED IF THE ASSESSMENT PROCEEDINGS ARE BROUGHT BACK TO THE STAGE AT W HICH THE IRREGULARITY STEPPED IT. SIMILAR VIEW HAS BEEN TAKEN BY THE PUNE BENCHES OF THE TRIBUNAL IN THE CASE OF THERMAX LTD. VS. DCIT (ITA NO. 512/PN/2014) VIDE ITS ORDER DATED 13.09.2019. WE, THEREFOR E, SET ASIDE THE IMPUGNED ORDER TO THIS EXTENT AND REMIT THE MATTER TO THE FILE OF THE AO WITH A DIRECTION TO FIRST CONFRONT THE ASSESSEE WITH THE ADV ERSE MATERIAL AND ALLOW AN OPPORTUNITY TO CROSS EXAMINE, IF DESIRED , BEFORE DECIDING THE ISSUE ON MERITS. 38. IN THE RESULT, THE APPEAL IS ALLOWED FOR STATISTICAL PURPO SES. M/S. VIRAJ STEELS - ITA NOS. 2307 & 2308/PUN/2017 - A.Y. 2009-10 : ITA NOS. 2989 & 2591/PUN/2017 A.Y. 2010-11 A.Y. 2009-10 : 39. THE FACTS AND CIRCUMSTANCES ON MERITS ARE SIMILAR TO THOSE DISCUSSED ABOVE. THE AO GOT INFORMATION FROM THE SALES TAX DEPARTMENT THAT CERTAIN PARTIES WERE ENGAGED IN ISSUING HAWALA BILLS. THE A SSESSEE WAS ALSO FOUND TO HAVE RECORDED BILLS FROM SUCH PARTIES. THE AO INITIATED REASSESSMENT AND MADE ADDITION AT 100% OF THE BILL AMOU NTS. THE LD. CIT(A) REDUCED THE ADDITION TO 12.5%. 40. THE ASSESSEE HAS CHALLENGED THE INITIATION OF REASSESS MENT PROCEEDINGS. THE FACTS, MATERIAL FOR DETERMINATION OF THE R EASSESSMENT 25 BOGUS PURCHASES GROUP ISSUE, ARE THAT ORIGINAL ASSESSMENT IN THIS CASE WAS COMPLETE D U/S.143(3) ON 30-12-2011. IN FINALIZING THE ASSESSMENT, THE AO MADE ENQUIRIES FROM 10 SUPPLIERS BY MEANS OF NOTICES U/S.133(6). SOME O F THE ENQUIRIES WERE MADE THROUGH INSPECTOR AS WELL. THE NOTICES SENT U /S.133(6) CAME BACK UNSERVED/NOT REPLIED. SUCH SUPPLIERS WERE NOT FOUND E XISTING AT THE ADDRESSES GIVEN BY THE ASSESSEE. IN VIEW OF THESE FACTS , THE AO HELD THAT THE BOOKS OF ACCOUNTS WERE NOT PROPERLY MAINTAINED. REJECTIN G SUCH BOOKS OF ACCOUNTS, HE APPLIED 9% PROFIT RATE AS AGAINST 2. 99% DECLARED BY THE ASSESSEE WHICH RESULTED INTO CERTAIN ADDITION. 41. THEREAFTER, THE AO RECEIVED SPECIFIC INFORMATION DIV ULGING THAT THE ASSESSEE OBTAINED HAWALA BILLS AND RECORDED ACCOMMODATION E NTRIES TO THE TUNE OF RS.22,25,73,556/-. SUCH INFORMATION WAS RECE IVED FROM SALES TAX DEPARTMENT UNEARTHING THE RACKET OF HAWALA DEA LERS WHO HAD ISSUED FAKE BILLS TO THE TRADERS. THE ASSESSEE HAD ALSO RE CORDED PURCHASES FROM SUCH LIST OF HAWALA OPERATORS. BASED ON SUCH INFORMATION, THE AO INITIATED ASSESSMENT PROCEEDINGS AND FINALIZE D THE ASSESSMENT. 42. THE LD. AR CONTENDED THAT THE AO HAVING COMPLETED TH E ORIGINAL ASSESSMENT AND EXAMINED GENUINENESS OF PURCHASES, COU LD NOT HAVE INITIATED REASSESSMENT PROCEEDINGS ON THE SAME ISSUE. 26 BOGUS PURCHASES GROUP 43. IN OUR CONSIDERED OPINION, THE CONTENTION OF THE ASSE SSEE IS NOT CORRECT. DURING THE COURSE OF ORIGINAL ASSESSMENT PROCEED INGS, THE AO SIMPLY EXAMINED CERTAIN PURCHASES RECORDED BY THE ASSES SEE. NOTICES U/S. 133(6) WERE ISSUED TO 10 SUPPLIERS WHICH WERE RETURNE D UNSERVED. IT IS IN THAT BACKDROP OF THE FACTS THAT THE AO PROCEEDED TO CO MPLETE THE ASSESSMENT BY ESTIMATING INCOME AT 9%. HOWEVER, IT WAS AF TER THE COMPLETION OF THE ASSESSMENT U/S.143(3) THAT THE AO GOT SPECIF IC INFORMATION ABOUT THE ASSESSEE HAVING RECEIVED ACCOMMODATION BILLS FROM HAWALA ENTRY OPERATORS TO THE TUNE OF RS.22.25 CRO RES. IT IS ON THE BASIS OF SUCH TANGIBLE INFORMATION COMING TO THE AO AFTER THE COMPLETION OF THE ORIGINAL ASSESSMENT THAT HE INITIATED REASSESSME NT PROCEEDINGS. IN OUR CONSIDERED OPINION, THE FACTUAL PANO MORA AS OBTAINING DURING THE COURSE OF ORIGINAL ASSESSMENT PROCEED INGS AND THE INFORMATION COMING INTO EXISTENCE AFTER THE COMPLETION OF ASSES SMENT PROCEEDINGS LEADING TO INITIATION OF REASSESSMENT PROCEEDINGS, IS QUITE DIFFERENT. IN THE COURSE OF THE ORIGINAL ASSESSMENT PROCE EDINGS, THE AO EXAMINED THE GENUINENESS OF ALL EXPENSES AND PURCHASES R ECORDED IN THE BOOKS OF ACCOUNT IN A GENERAL MANNER. IT WAS ONLY PUR SUANT TO THE SPECIFIC INFORMATION RECEIVED FROM THE SALES TAX DEPARTMENT UNEARTHING THE RACKET OF HAWALA DEALERS, WHO HAD ISSUED FAKE PURCHA SE BILLS TO VARIOUS TRADERS INCLUDING THE ASSESSEE, THAT THE REASSESSMEN T WAS TAKEN UP. IN OUR CONSIDERED OPINION, THE ASSESSEE CANNOT CLAI M QUASHING OF 27 BOGUS PURCHASES GROUP REASSESSMENT BY CONTENDING THAT IT WAS A CASE OF CHANGE OF OPINION FROM THE ONE FORMED AT THE STAGE OF COMPLETION OF ORIGINAL A SSESSMENT PROCEEDINGS. WE, THEREFORE, REJECT THE CONTENTION ON THIS G ROUND. 44. THE LD. AR TOOK UP ANOTHER ARGUMENT FOR QUASHING O F THE REASSESSMENT BY SUBMITTING THAT THE AO DID NOT CONFRONT THE A SSESSEE WITH THE MATERIAL GATHERED BY THE SALES TAX DEPARTMENT ON WH ICH THE ADDITION WAS BASED. IT WAS, THEREFORE, SUBMITTED THAT THE RE ASSESSMENT BE QUASHED. 45. HAVING HEARD BOTH THE SIDES AND GONE THROUGH THE RE LEVANT MATERIAL ON RECORD, WE FIND THAT SIMILAR ISSUE HAS BEEN DEALT WITH BY US SUPRA WHILE DISPOSING OF THE APPEAL IN THE CASE OF CHANDRASEKHAR A. JOSHI IN ITA NOS.2991/PUN/2016 & 53/PUN/2017 . IN THAT CASE ALSO, THE CONTENTION OF THE ASSESSEE WAS THAT THE ADDITION SHOULD BE DELE TED BECAUSE THE ADVERSE MATERIAL WAS NOT CONFRONTED TO THE ASSE SSEE NOR ANY OPPORTUNITY OF CROSS EXAMINATION WAS ALLOWED. THE FACTS AND CIRCUMSTANCES OF THE INSTANT CASE ARE MUTATIS MUTANDIS SIMILAR EXCEPT TO THE EFFECT THAT WHEREAS IN THAT CASE THE ASSESSEE DID NOT APP EAR BEFORE THE AO BUT IN THE INSTANT CASE THE ASSESSEE DID APPEAR BEFORE THE AO. HOWEVER, THE FACT OF THE MATTER REMAINS THAT NON-CONFRONTIN G THE ADVERSE MATERIAL IS SIMPLY AN IRREGULARITY WHICH CANNOT LEAD TO QUASH ING OF THE 28 BOGUS PURCHASES GROUP ASSESSMENT. ADOPTING THE SAME RAISON DETRE AS DISCUSSED SUPRA , WE DISMISS THIS CONTENTION OF THE ASSESSEE AS WELL. 46. ON MERITS, THE FACTUAL POSITION IS SIMILAR IN AS MUCH AS THE AO MADE THE ADDITION @100% OF BOGUS PURCHASES. THE LD. CIT (A) REDUCED IT TO 12.5%. BOTH THE SIDES ARE IN APPEAL BEFORE THE TRIBUNA L. RESPECTFULLY FOLLOWING THE JUDGMENT IN THE CASE OF PR.CIT VS. MOHOMMAD HAJI ADAM & CO. (SUPRA), WE SET-ASIDE THE IMPUGNED ORDER ON THIS ISSUE AND REMIT THE MATTER TO THE FILE OF AO FOR DECIDING ACCORDINGLY. 47. IN THE RESULT, THE APPEAL OF THE ASSESSEE IS PARTLY ALLOWED FOR STATISTICAL PURPOSES AND THAT OF THE REVENUE IS ALLOWED FOR STATIS TICAL PURPOSES. A.Y. 2010-11 48. THE ASSESSEE HAS CHALLENGED THE INITIATION OF REASSESS MENT PROCEEDINGS FOR THIS YEAR BY CONTENDING THAT THE AO DID NOT A LLOW ADEQUATE OPPORTUNITY TO FILE WRIT PETITION AGAINST HIS ORDER DISPO SING THE OBJECTIONS RAISED BY THE ASSESSEE. 49. THE FACTS APROPOS THIS GROUND ARE THAT THE AO REC ORDED THE REASONS FOR ESCAPEMENT OF INCOME ON 22-01-2014 ABOUT HIS RECEIVIN G INFORMATION FROM SALES TAX DEPARTMENT QUA UNEARTHING THE RACKET OF 29 BOGUS PURCHASES GROUP HAWALA DEALERS WHO HAD ISSUED FAKE PURCHASE BILLS TO VAR IOUS TRADERS INCLUDING THE ASSESSEE. THE ASSESSEE WROTE A LETTER DATED 28-02-2014 TO THE AO, WHOSE COPY HAS BEEN PLACED AT PAGE 18 OF THE PA PER BOOK, SUBMITTING THAT THE ORIGINAL RETURN FILED BY IT MAY BE TAKEN AS R ETURN FILED IN RESPONSE TO NOTICE U/S.148. SUCH A LETTER WAS RECEIVED BY THE AO ON 3.3.2014. IT WAS FURTHER REQUESTED VIDE THE SAME LETTER TO PROVIDE A COPY OF REASONS FOR ISSUING NOTICE U/S.148 SO AS TO ENABLE IT TO FILE OBJECTIONS. THE AO SUPPLIED THE REASONS ON 02-03-2015 AS HAS BEEN RECORDED IN HIS LETTER DATED 23-03-2015, A COPY OF WHICH HAS BEEN PLACED ON PAGE 77 OF THE PAPER BOOK. ON RECEIPT OF SUCH REASONS, THE ASSESS EE FILED A LETTER RAISING OBJECTIONS AGAINST THE INITIATION OF REASSESSMENT, WHICH WAS FILED WITH THE AO ON 09-03-2015. THE AO DISPOSED OF SUCH OBJE CTIONS BY MEANS OF HIS ORDER PASSED ON 23-03-2015. THEN, THE A SSESSMENT ORDER WAS PASSED ON 27-03-2015 MAKING ADDITION ON ACCOUNT OF B OGUS PURCHASES. THE VIEW POINT OF THE ASSESSEE IS THAT THE AO DID NOT AFFORD OPPORTUNITY TO THE ASSESSEE FOR FILING WRIT PETITION AGAINST HIS ORD ER DISPOSING OF THE OBJECTIONS AND HURRIEDLY COMPLETED THE ASSESS MENT WITHIN A PERIOD OF 4 DAYS FROM THE DATE OF HIS ORDER DISPOS ING THE OBJECTIONS. 50. IN THIS REGARD, IT IS RELEVANT TO NOTE THE JUDGMENT OF HONBLE JURISDICTIONAL HIGH COURT IN ASIAN PAINTS LTD. VS. DCIT (2008) 296 ITR 30 BOGUS PURCHASES GROUP 90 (BOM.) IN WHICH IT HAS BEEN HELD THAT THE AO SHOULD NOT PROCEED FURTHER IN THE MATTER FOR A PERIOD OF 4 WEEKS FROM THE DA TE OF SERVICE OF ORDER REJECTING THE OBJECTIONS OF THE ASSESSEE SO THAT REMEDY COULD BE SOUGHT FROM THE HIGH COURT. AT THE SAME TIME, IT IS EQUALLY RE LEVANT TO NOTE ANOTHER JUDGMENT OF THE HONBLE JURISDICTIONAL HIGH COURT DA TED 01-02-2019 IN CENVEO PUBLISHER SERVICES INDIA LTD. VS. UNION OF INDIA (2019) 104 CCH 0108 MUM-HC IN WHICH IT HAS BEEN HELD THAT : `THE FACT THAT IN THIS CASE THE PETITIONER RAISED OBJECTIONS PROMPTLY AF TER WITHDRAWING THE PETITION FROM THIS COURT, WOULD NOT IN ANY MANNER DILUTE THE FACT THAT IT WAS ON THE GROUND OF THE PETITIONER'S CONDUCT THAT THE ASSESSING OFFICER WAS LEFT WITH LITTLE TIME TO DISPOSE OF HIS OBJEC TIONS AND THEREAFTER COMPLETE THE ASSESSMENT BEFORE IT BECOMES TIME BARRED. AFTER NOTING THE CASE OF ASIAN PAINTS LTD. (SUPRA), THE HONBLE COURT HELD THAT : ` THE PETITIONER BY ITS CONDUCT DESTROYED THIS FORMULA PROVIDED BY THE COURT IN THE CASE OF ASIAN PAINTS (SUPRA), MAKING IT IMP OSSIBLE FOR THE ASSESSING OFFICER TO WAIT FOR FOUR WEEKS AFTER DISPOSAL O F OBJECTIONS WITHOUT RUNNING THE RISK OF ALLOWING THE ASSESSMENT TO BE TIME BARRED. 51. TURNING TO THE FACTS OF THE INSTANT CASE, WE FIND TH AT IT IS NOT THE CASE WHERE THE ASSESSEE WAS NOT COOPERATING OR THE DELAY OCCURRED DUE TO SOME FAULT OF THE ASSESSEE. IMMEDIATELY ON RECEIPT OF NOTIC E, THE AO 31 BOGUS PURCHASES GROUP SOUGHT REASONS ON 03-03-2014. IT WAS THE AO ONLY WHO W AITED FOR A PERIOD OF ONE YEAR IN COMMUNICATING THE REASONS ON 02-03- 2015. THE ASSESSEE AGAIN PROMPTLY RAISED THE OBJECTIONS WITHIN A PERIOD OF ONE WEEK, NAMELY, ON 09-03-2015. THE AO DISPOSED OF THE O BJECTIONS OF THE ASSESSEE BY MEANS OF HIS ORDER DATED 23-03-2015 AND C OMPLETED THE ASSESSMENT WITHIN A PERIOD OF JUST FOUR DAYS ON 27-03-2015. GOING BY THE RATIO IN THE CASE OF ASIAN PAINTS LTD. (SUPRA), WE HOLD THAT THE AO FAILED IN GIVING APPROPRIATE TIME TO THE ASS ESSEE TO FILE WRIT PETITION BEFORE THE HONBLE HIGH COURT AGAINST HIS ORDE R DISPOSING OFF THE OBJECTIONS. RESPECTFULLY FOLLOWING THE JUDGMENT IN THE CASE OF ASIAN PAINTS LTD. (SUPRA), WHICH IS SQUARELY APPLICABLE IN THE FACTS AND CIRCUMSTANCES OF THE INSTANT CASE, WE QUASH THE RESULTANT REASSESSMENT ORDER. SIMILAR VIEW HAS BEEN TAKEN BY THE PUN E BENCHES OF THE TRIBUNAL IN ITO VS. GAGANDEEP AMARPAL MAAN VS. IN ITA NO.656/PUN/2017 VIDE ITS ORDER DATED 23-05-2018 . 52. IN THE RESULT, THE APPEAL OF THE ASSESSEE IS ALLOWED ON THIS LEGAL ISSUE AND THE DEPARTMENTAL APPEAL IS DISMISSED. RAJESH U. PARDESHI - ITA NO.2932/PUN/2017 53. THE GROUND CHALLENGING THE INITIATION OF REASSESSMENT P ROCEEDINGS WAS NOT PRESSED BY THE LD. AR, WHICH IS HEREBY DISMISSED. 32 BOGUS PURCHASES GROUP 54. THE ONLY ISSUE RAISED ON MERITS IS AGAINST THE CONFIR MATION OF ADDITION ON ACCOUNT OF BOGUS PURCHASES. 55. THE FACTS OF THE INSTANT CASE ARE MUTATIS MUTANDIS SIMILAR TO M/S. PRIMA PVT. LTD. (ITA NO.1951/PUN/2017) DISPOSED OFF SUPRA . HERE ALSO, THE ASSESSEE DID NOT DIRECTLY SELL THE GOODS PURCHASED THRO UGH HAWALA TRANSACTIONS. THESE WERE CONSUMED AS RAW MATERIAL IN MA NUFACTURING. FOLLOWING OUR VIEW TAKEN IN M/S. PRIMA PVT. LTD., (SUPRA) , WE SET ASIDE THE IMPUGNED ORDER AND REMIT THE MATTER TO THE FILE OF A O FOR RE- COMPUTING THE AMOUNT OF ADDITION @10% PLUS THE NORMAL GROSS P ROFIT RATE SHOWN BY THE ASSESSEE FOR THIS YEAR ON THE BOGUS PU RCHASES. 56. IN THE RESULT, THE APPEAL IS PARTLY ALLOWED FOR STATISTIC AL PURPOSES. DACS ELECTROSYSTEMS PVT. LTD. - ITA NO.2835/PUN/2017 57. THE GROUND CHALLENGING THE INITIATION OF REASSESSMENT P ROCEEDINGS WAS NOT PRESSED BY THE LD. AR, WHICH IS HEREBY DISMISSED. 58. THE ISSUE RAISED ON MERITS IS AGAINST THE CONFIRMATION OF ADDITION ON ACCOUNT OF BOGUS PURCHASES. 59. HERE AGAIN, THE FACTS ARE MUTATIS MUTANDIS SIMILAR TO M/S. PRIMA PVT. LTD. (ITA NO.1951/PUN/2017) DISPOSED OFF SUPRA . THE ASSESSEE DID NOT DIRECTLY SELL THE GOODS PURCHASED THROUGH HAWALA TRANSACTIO NS. THESE WERE CONSUMED AS RAW MATERIAL IN THE MANUFACTURING PROCE SS. 33 BOGUS PURCHASES GROUP FOLLOWING OUR VIEW TAKEN IN M/S. PRIMA PVT. LTD., (SUPRA) , WE SET ASIDE THE IMPUGNED ORDER AND REMIT THE MATTER TO THE FILE OF AO FO R RE- COMPUTING THE AMOUNT OF ADDITION @10% PLUS THE NORMAL GROSS P ROFIT RATE SHOWN BY THE ASSESSEE FOR THIS YEAR ON THE BOGUS PU RCHASES. 60. IN THE RESULT, THE APPEAL IS PARTLY ALLOWED FOR STATISTIC AL PURPOSES. ITA NO.863/PUN/2018 M/S. PNG JEWELLERY & GEMS 61. THE ASSESSEE IN THIS APPEAL HAS CHALLENGED THE INITIATION OF REASSESSMENT PROCEEDINGS APART FROM THE CONFIRMATION OF A DDITION ON MERITS. 62. THE FACTS OF THE INSTANT CASE ARE THAT THE AO RECEIVED INFORMATION FROM THE SALES TAX DEPARTMENT ABOUT THE ASSESSEE HAVING R ECEIVED AND RECORDED ACCOMMODATION ENTRIES IN ITS BOOKS OF ACCOUNT. H E, THEREFORE, INITIATED THE REASSESSMENT PROCEEDINGS AND MADE THE ADDITION AT THE RATE OF 100% OF THE AMOUNT OF HAWALA ENTRIES, WHICH CAME TO BE UPHELD IN THE FIRST APPEAL. 63. THE LD. AR SUBMITTED THAT THE ASSESSMENT ORDER SHOU LD BE QUASHED BECAUSE THE ASSESSEE WAS NOT ALLOWED OPPORTUNITY OF CROSS EXAMINATION AND THE ADVERSE MATERIAL WAS NOT CONFRONTED. WHILE DISPOS ING OF THE APPEAL OF M/S. VIRAJ STEELS FOR THE A.Y. 2009-10 SUPRA , WE HAVE DISMISSED SUCH GROUND RAISED BY THE ASSESSEE. SINCE THE FACTS AND 34 BOGUS PURCHASES GROUP CIRCUMSTANCES OF THE INSTANT CASE ARE MUTATIS MUTANDIS SIMILAR, WE DISMISS THIS GROUND OF APPEAL. 64. ON MERITS, THE ISSUE REMAINS THE SAME. FOLLOWING THE JUD GMENT OF HONBLE BOMBAY HIGH COURT IN THE CASE OF PR.CIT VS. MOHOMMAD HAJI ADAM & CO. (SUPRA) , WE SET-ASIDE THE IMPUGNED ORDER AND REMIT THE MATTER TO THE FILE OF THE AO FOR APPLYING THE RATIO LAID DOWN BY THE HONBLE JURISDICTIONAL HIGH COURT IN THE ABOVE NOTED CASE AND RECOMPUTE THE AMOUNT OF ADDITIONS, IF ANY, AFTER ALLOWING A RE ASONABLE OPPORTUNITY OF HEARING TO THE ASSESSEE. 65. IN THE RESULT, THE APPEAL IS PARTLY ALLOWED FOR STATISTIC AL PURPOSES. RENUKA AUTO COMPONENTS INDIA PVT. LTD. - ITA NOS.1659 & 1660/PUN/2018 66. IN THESE APPEALS, THE GROUNDS CHALLENGING THE INITIATION OF REASSESSMENT PROCEEDINGS WERE NOT PRESSED. THE SAME A RE, THEREFORE, DISMISSED AS SUCH. 67. ON MERITS, THE AO MADE ADDITION @100% OF BOGUS PUR CHASES WHICH WAS CONFIRMED BY THE LD. CIT(A) AS SUCH. THE ASS ESSEE IS AGGRIEVED BY THE CONFIRMATION OF ADDITION TO THIS EXTENT. 68. WE HAVE HEARD BOTH THE SIDES AND GONE THROUGH THE RELEVANT MATERIAL ON RECORD. THE LD. AR SUBMITTED THAT THE ENTRIES RECO RDED IN THE BOOKS OF ACCOUNT WHICH HAVE BEEN TREATED BY THE REVENUE AS 35 BOGUS PURCHASES GROUP ACCOMMODATION ENTRIES ARE IN THE NATURE OF PURCHASE OF RAW MATERIAL WHICH HAVE BEEN CONSUMED IN THE MANUFACTURING PROCESS. IT WAS, THEREFORE, SUBMITTED THAT THERE CAN BE NO ASCERTAINMENT OF SE PARATE PROFIT IN RESPECT OF SUCH BOGUS PURCHASES AND GENUINE PURCHAS ES. 69. HAVING HEARD BOTH THE SIDES, WE FIND THAT THE FACTS A ND CIRCUMSTANCES OF THIS CASE ARE SIMILAR TO THOSE OF APPEAL IN THE CASE OF M/S. PRIMA PVT. LTD. (SUPRA). WHILE DISPOSING OF THAT APPEAL, WE HAVE HELD THAT THE ADDITION SHOULD BE SUSTAINED @10% PLUS THE NORM AL GP RATE SHOWN BY THE ASSESSEE FOR THE YEAR ON THE AMOUNT OF HAWALA PURCHASES. FOLLOWING THE SAME, WE SET ASIDE THE IMPUGNED ORDER AND REMIT THE MATTER TO THE FILE OF AO FOR RE-COMPUTING THE AMOUNT OF ADDITION @10% PLUS THE NORMAL GROSS PROFIT RATE SHOWN BY THE ASSESSEE FOR THIS YEAR ON THE BOGUS PURCHASES. 70. IN THE RESULT, BOTH THE APPEALS ARE PARTLY ALLOWED F OR STATISTICAL PURPOSES. M/S. SARASWATI EXTRUSION PVT. LTD. - ITA NO.1716/PUN/2017 71. NO ARGUMENT WAS ADVANCED IN SUPPORT OF INITIATION OF R E-ASSESSMENT PROCEEDINGS. SUCH GROUND IS, THEREFORE, DISMISSED. 72. BRIEFLY STATED, THE FACTS OF THIS CASE ARE THAT THE AO , ON THE BASIS OF INFORMATION RECEIVED FROM SALES TAX DEPARTMENT, NOTICED TH AT THE 36 BOGUS PURCHASES GROUP ASSESSEE HAD RECORDED BOGUS PURCHASES TO THE TUNE OF R S.4,05,92,816/- HE, THEREFORE, MADE ADDITION @100% OF BOGUS PURCHASES. THE LD. CIT(A) ALLOWED RELIEF @95% OF THE BOGUS PURCHASES AND RE STRICTED THE ADDITION TO 5%. 73. THE LD. AR SUBMITTED THAT THE REVENUES APPEAL HAS BEEN DISMISSED BY THE TRIBUNAL ON ACCOUNT OF LOW TAX EFFECT. IT WAS, HOWEVER, POINTED OUT THAT THE TAX EFFECT IN THAT CASE APPEARED TO BE MO RE THAN THE STIPULATED AMOUNT OF RS.50.00 LAKH. 74. HAVING GONE THROUGH THE RELEVANT MATERIAL ON RECORD, WE FIND THAT THE ISSUE INVOLVED IN THIS APPEAL IS DIRECTLY COVERED BY THE JUD GMENT OF HONBLE JURISDICTIONAL HIGH COURT IN THE CASE OF PR.CIT VS. MOHOMMAD HAJI ADAM & CO. (SUPRA) IN WHICH THE DIRECTION HAS BEEN GIVEN TO MAKE ADDITION ONLY AT THE DIFFERENTIAL RATE OF PROFIT BETWEEN THE GENUIN E PURCHASES AND BOGUS PURCHASES. IN THE GIVEN CIRCUMSTAN CES, WE SET-ASIDE THE IMPUGNED ORDER AND REMIT THE MATTER TO THE FILE OF THE AO FOR DECIDING THIS ISSUE IN CONFORMITY WITH THE DISCUSSION MADE ABOV E. HOWEVER, IT IS MADE CLEAR THAT IF SUBSEQUENTLY THE REVENUES APPEAL IS RECALLED ON FILING OF MISCELLANEOUS APPLICATION BY THE DEPARTMEN T ON ACCOUNT OF TAX EFFECT BEING MORE THAN THE AMOUNT OF RS.50. 00 LAKH, THE ASSESSEE WILL BE AT LIBERTY TO TAKE REMEDIAL ACTION FOR RECALLING O F THE ORDER IN HIS CASE AS WELL. 37 BOGUS PURCHASES GROUP 75. IN THE RESULT, THE APPEAL IS PARTLY ALLOWED FOR STATISTIC AL PURPOSES. ORDER PRONOUNCED IN THE OPEN COURT ON 26 TH SEPTEMBER, 2019. SD/- SD/- (PARTHA SARATHI CHAUDHURY) (R.S.SYAL) JUDICIAL MEMBER VI CE PRESIDENT PUNE; DATED : 26 TH SEPTEMBER, 2019 / COPY OF THE ORDER IS FORWARDED TO : 1. / THE APPELLANT; 2. / THE RESPONDENT; 3. THE CIT(A) CONCERNED 4. 5. 6. THE CIT CONCERNED , , / DR A, ITAT, PUNE; / GUARD FILE. / BY ORDER, // TRUE COPY // SENIOR PRIVATE SECR ETARY , / ITAT, PUNE DATE 1. DRAFT DICTATED ON 25-09-2019 SR.PS 2. DRAFT PLACED BEFORE AUTHOR 25-09-2019 SR.PS 3. DRAFT PROPOSED & PLACED BEFORE THE SECOND MEMBER JM 4. DRAFT DISCUSSED/APPROVED BY SECOND MEMBER. JM 5. APPROVED DRAFT COMES TO THE SR.PS/PS SR.PS 6. KEPT FOR PRONOUNCEMENT ON SR.PS 7. DATE OF UPLOADING ORDER SR.PS 8. FILE SENT TO THE BENCH CLERK SR.PS 9. DATE ON WHICH FILE GOES TO THE HEAD CLERK 10. DATE ON WHICH FILE GOES TO THE A.R. 11. DATE OF DISPATCH OF ORDER. *