DOLCHAND KALLAJI & NARESH TRADERS (JV), MUMBAI V. ASST CIT CEN CIR 13, MUMBAI

ITA 1172/MUM/2016

• Counselvise Citation: [2018] 126 COUNSELVISE.COM (IT) 0685 (ITAT-MUMBAI)
• Duration Of Justice: 1 year(s) 10 month(s) 10 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 17-01-2018
• Appeal Filed By: Assessee
• Order Result: Partly Allowed
• Bench Allotted: Not Allotted
• Assessment Year: 2009-2010
• Appeal Filed On: 07-03-2016
• Result in Favour of: Partly Allowed
• Court: TRIBUNAL
• Department Lawyers: RAM TIWARI
• Keywords: Bogus purchase; Unexplained expenditure; Opportunity of being heard; Principle of natural justice; Additional evidence; Reason to believe; Reassessment proceedings
• Section: 69C; 147; 148; 2

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL MUMBAI BENCHES D , MUMBAI BEFORE S HRI SHAMIM YAHYA (AM) AND SHRI RAM LAL NEGI (JM) ITA NO. 1172 /MUM/20 1 6 ASSESSMENT YEAR: 2009 - 10 & ITA NO. 1173 /MUM/201 6 ASSESSMENT YEAR: 2010 - 11 M/S DOLCHAND KALLAJI & NARESH TRAD ERS (JV), 16 - SHAH SADAN, B.S. ROAD, DADAR, MUMBAI - 400028 PAN: AAFFD2746R VS. THE ASSISTANT COMMISSIONER OF INCOME TAX, CENTRAL CIRCLE 13, MUMBAI (APPELLANT) (RESPONDENT) ASSESSEE BY : SHRI ANANT N. PAI ( A R) REVENUE BY : SHRI RAM TIWARI ( SR. DR) DATE OF HEARING: 02/01 /201 8 DATE OF PRONOUNCEMENT: 17 / 01 /201 8 O R D E R PER RAM LAL NEGI, JM THESE APPEAL S HAVE BEE N FILED BY THE ASSESSEE AGAINST THE TWO ORDER S DATED 29.01.2016 PA SSED BY THE LD. COMMISSIONER OF INCOME TAX (APPEALS) - 48 , MUMBAI , FOR THE ASSESSMENT YEAR S 2009 - 20 10 AND 2010 - 20 11 , WHEREBY THE LD. CIT (A) HAS DISMISSED THE APPEAL S FILED BY THE ASSESSEE AGAINST ASSESSMENT ORDER S PASSED U/ S 143 (3) READ WITH SECTION 147 OF THE INCOME TAX ACT, 1961 (FOR SHORT THE ACT) AND CONFIRMED THE ADDITIONS MADE BY THE AO . ITA NO. 1172 /MUM/201 6 (ASSESSMENT YEAR: 2009 - 2010 ) 2. BRIEF FACTS OF THE CASE ARE THAT THE ASSESSEE ENGAGED IN THE BUSINESS OF CIVIL CONSTRUCTION, FILED ITS RETU RN OF INCOME FOR THE A.Y. 2009 - 10 DECLARING THE 2 ITA NO S . 1172 & 1173/MUM/2016 ASSESSMENT YEAR S : 2009 - 10 & 20 10 - 11 TOTAL INCOME OF RS. 1,44,78,064/ - . THE RETURN WAS PROCESSED U/S 143 (1) OF THE ACT. SUBSEQUENTLY, ON THE BASIS OF INFORMATION RECEIVED FROM MAHARASHTRA SALES TAX DEPARTMENT THROUGH DGIT (INV.) TO THE EFFECT T HAT ASSESSEE HAS OBTAINED ACCOMMODATION/FICTITIOUS BILL FROM BOGUS ENTITIES M/S CENTURIAN SALES CORPORATION AND M/S K.K. TRADING COMPANY TO THE EXTENT OF RS. 45,27,177/ - , THE ASSESSMENT WAS RE - OPENED U/S 147 OF THE ACT. IN RESPONSE TO NOTICE U/S 148 THE AS SESSEE ASKED FOR REASONS FOR REOPENING ITS CASE. ACCORDINGLY, THE REASONS WERE PROVIDED AND NOTICE U/S 143 (2) AND 142 (1) ALONG WITH QUESTIONNAIRE WERE ISSUED TO THE ASSESSEE. ACCORDINGLY, THE AUTHORIZED REPRESENTATIVE OF THE ASSESSEE ATTENDED THE PROCEED INGS AND DISCUSSED THE CASE. DURING THE RE - ASSESSMENT PROCEEDINGS, THE ASSESSEE FURNISH, THE LIST OF PERSONS FROM WHOM PURCHASES WERE MADE DURING THE PREVIOUS YEAR. IN THE SAID LIST NAME OF THE SUSPICIOUS DEALERS WERE ALSO THERE , WHO HAD ISSUED BOGUS BILLS WITHOUT DELIVERING ANY GOODS OR MATERIAL. AFTER GOING THROUGH THE MATERIAL SUPPLIED BY THE MAHARASHTRA SALES TAX DEPARTMENT AND AFTER HEARING THE ASSESSEE, THE AO CAME TO THE CONCLUSION THAT THE ASSESSEE HAD OBTAINED BOGUS BILLS FROM 7 PARTIES MENTIONED I N THE ASSESSMENT ORDER AND THE SAID PARTIES RETURN ED THE PAYMENT IN CASH TO THE BENEFICIARIES INCLUDING THE PRESENT ASSESSEE AFTER DEDUCTING THEIR COMMISSION. DURING ASSESSMENT PROCEEDINGS NO REPLY WAS RECEIVED BY AO IN RESPONSE TO THE NOTICES ISSUED TO TH E PARTIES CONCERNED U/S 133 (6) OF THE ACT. THE ASSESSEE ALSO FAILED TO PRODUCE THE PARTIES FOR VERIFICATION. THE AO SUPPLIED ALL THE INCRIMINATING DOCUMENTS RECEIVED FROM THE SALES TAX DEPARTMENT TO THE ASSESSEE AND ASKED TO EXPLAIN AS TO WHY RS. 1,64,69, 137/ - I.E. THE AMOUNT OF BOGUS PURCHASES SHOULD NOT BE TRE ATED AS UNEXPLAINED EXPENDITURE. THE ASSESSEE CONTENDED THAT THE ENTIRE PURCHASE MADE FROM THE CONCERNED PARTIES WERE GENUINE. HOWEVER, REJECTING THE CONTENTION OF THE ASSESSEE THE AO MADE ADDITION OF RS. 1,64,69,137/ - TO THE INCOME OF THE ASSESSEE HOLDING THE ENTIRE PURCHASES AS BOGUS AND UNEXPLAINED EXPENDITURE U/S 69C OF THE ACT. 3 ITA NO S . 1172 & 1173/MUM/2016 ASSESSMENT YEAR S : 2009 - 10 & 20 10 - 11 3. THE ASSESSEE CHALLENGED THE ASSESSMENT ORDER BEFORE THE LD. CIT (A). DURING THE APPELLATE PROCEEDINGS, THE ASSESSEE PRODUCED CERTAIN DOCUMENTS TO SUBSTANTIATE ITS CLAIM, WHICH WERE NOT FILED BEFORE THE AO. THE LD. CIT (A) OBTAINED REMAND REPORT FROM THE AO AND AFTER GOING THROUGH THE SAME AND HEARING THE SUBMISSION OF THE ASSESSEE DIRECTED THE AO TO DELETE THE ADDITION U/S 69C AND DISALLOW THE PURCHASE OF RS. 1,64,69,137/ - AND DISMISSED THE APPEAL FILED BY THE ASSESSEE. 4 . THE ASSESSEE HAS RAISED THE FOLLOWING EFFECTIVE GROUNDS OF APPEAL AGAINST THE IMPUGNED ORDER PASSED BY THE LD. CIT (A): - 1. ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE AND IN LAW, THE LEARNED COMMISSIONER (APPEALS) FAILED TO NOTE THAT THE LEARNED ASSESSING OFFICER HAD INITIATED RE - ASSESSMENT PROCEEDINGS U/S 147 WITHOUT HAVING ANY OWN REASON TO BELIEVE THAT THE INCOME OF THE APPELLANT HAD ESCAPED ASSESSMENT. THE ASSESSMENT ORDER PASSED BY THE LEARNED ASSESSING OFFICER U/S 143 (3) R.W.S. 147 IS ILLEGAL AND DESERVED TO BE QUASHED IN APPEAL. 2. ON FACTS AND CIRCUMSTANCES OF THE CASE AND IN LAW, THE LEARNED COMMISSIONER (APPEALS) ERRED IN HOLDING THAT TH E PURCHASES OF RS. 1,64,69,137 WERE BOGUS AND HENCE, DISALLOWABLE AS EXPENDITURE IN HIS APPELLATE ORDER. 3. ON FACTS AND CIRCUMSTANCES OF THE CASE AND IN LAW THE LEARNED COMMISSIONER (APPEALS) ERRED IN NOT CONSIDERING THE APPELLANTS ADDITIONAL EVIDENCE ADMIT TED BY HIM IN APPEAL BEFORE COMING TO THE CONCLUSION THAT THE PURCHASES OF RS. 1,64,69,137/ - WERE BOGUS. 4. WITHOUT PREJUDICE TO THE ABOVE, THE APPELLANT SUBMITS THAT THE DISALLOWANCE OF THE ENTIRE AMOUNT OF PURCHASES OF RS. 1,64,69,137 IS, ANY CASE, EXCESSIV E AND DESERVES TO BE REDUCED IN APPEAL. THIS IS, MORE PARTICULARLY SO, BECAUSE THE APPELLANT HAD ESTABLISHED THE FACTUM OF USE OF THE MATERIALS REPR ESENTED IN THE PURCHASES IN ITS WORKS CONTRACT. 4 ITA NO S . 1172 & 1173/MUM/2016 ASSESSMENT YEAR S : 2009 - 10 & 20 10 - 11 5. BOTH THE LOWER AUTHORITIES ERRED IN PASSING THEIR RESPECTIV E ORDERS WITHOUT GRANTING YOUR APPELLANT ADEQUATE OPPORTUNITY OF BEING HEARD. THE ORDERS PASSED BY THEM ARE IN CONTRAVENTION OF THE PRINCIPLES OF NATURAL JUSTICE AND HENCE, BAD IN LAW. 5. BEFORE US, THE LD. COUNSEL FOR THE ASSESSEE SUBMITTED THAT THE LD . CIT (A) HAS WRONGLY AFFIRMED THE ACTION OF AO IN RE - OPENING THE ASSESSMENT PROCEEDINGS U/S 147 OF THE ACT AS THE AO HAD NO REASON TO BELIEVE THAT INCOME OF THE ASSESSEE HAS ESCAPED ASSESSMENT. THE LD. COUNSEL FURTHER SUBMITTED THAT THE LD. CIT (A) HAS WR ONGLY AFFIRM THE ACTION OF AO IN HOLDING THE PURCHASES IN QUESTION AS BOGUS . THE LD. COUNSEL FURTHER CONTENDED THAT THE LD. CIT (A) HAS PASSED THE IMPUGNED ORDER WITHOUT CONSIDERING THE ADDITIONAL EVIDENCE PRODUCED BY THE ASSESSEE DURING THE APPELLATE PR OCEEDINGS. WITHOUT PREJUDICE, THE LD. COUNSEL FURTHER SUBMITTED THAT THE DISALLOWANCE OF ENTIRE AMOUNT OF PURCHASE IS NOT IN ACCORDANCE WITH THE PRINCIPLES OF LAW LAID DOWN BY THE COURTS OF LAW AND THE INCOME TAX APPELLATE TRIBUNAL. THE LD. COUNSEL FURTHE R SUBMITTED THAT APART FROM THE DOCUMENTS SUBMITTED BEFORE THE AO, THE ASSESSEE HAS FURNISHED THE DETAILS OF STOCK RECORDS, BANK CERTIFICATE, PAYMENT CERTIFICATES, CONSUMPTION DETAILS, ITEM WISE QUANTITY DETAILS, PURCHASE REGISTER WITH QUANTITY, WORK IN P ROGRESS , PAYMENT CERTIFICATE OF DK INFRASTRUCTURE PVT. LTD. A SUB - CONTRACTOR OF THE ASSESSEE, PAYMENT CERTIFICATE WITH MEASUREMENT BOOK OF MOGRA NALLA WORK OF MCGM BEFORE THE LD. CIT (A) DURING THE APPELLATE PROCEEDINGS. THE LD. COUNSEL FURTHER CONTENDED THAT THE LD. CIT (A) HAS PASSED THE IMPUGNED ORDER WITHOUT TAKING INTO CONSIDERATION THE EVIDENCE ON RECORD INCLUDING THE ADDITIONAL EVIDENCE PRODUCED DURING APPELLATE PROCEEDINGS. 6. ON THE OTHER HAND, THE LD. DEPARTMENTAL REPRESENTATIVE (DR) RELYING O N THE ORDER PASSED BY THE LD. CIT (A) SUBMITTED THAT SINCE THE 5 ITA NO S . 1172 & 1173/MUM/2016 ASSESSMENT YEAR S : 2009 - 10 & 20 10 - 11 ASSESSEE HAS FAILED TO PROVE THE GENUINENESS OF TRANSACTION, THE LD. CIT (A) HAS RIGHTLY UPHELD THE ADDITION OF THE TOTAL AMOUNT OF BOGUS PURCHASES MADE BY THE ASSESSEE DURING THE YEAR RELEVANT TO THE ASSESSMENT YEAR UNDER CONSIDERATION. THE LD. DR FURTHER SUBMITTED THAT THERE IS NO INFIRMITY IN THE ORDER PASSED BY THE LD. CIT (A) TO INTERFERE WITH THE SAME. 7. WE HAVE HEARD THE RIVAL SUBMISSIONS AND ALSO GONE THROUGH THE MATERIAL ON RECORD IN CLUDING THE CASES RELIED UPON BY THE AUTHORITIES BELOW. BASICALLY, THE ASSESSEE HAS CHALLENGED THE IMPUGNED ORDER ON TWO GROUNDS THAT I) THE AO HAD WRONGLY INITIATED THE REASSESSMENT PROCEEDINGS AND THE LD. CIT (A) HAS WRONGLY AFFIRMED THE ACTION OF THE LD . CIT (A) AND II) THE LD. CIT (A) HAS WRONGLY HELD THE ENTIRE PURCHASES AS BOGUS AND WRONGLY DIRECTED THE AO TO MAKE ADDITION OF THE ENTIRE AMOUNT OF BOGUS PURCHASES TO THE INCOME OF THE ASSESSEE. 8. SO FAR AS THE FIRST GROUND IS CONCERNED, WE NOTICE THA T THE AO HAS INITIATED RE - ASSESSMENT PROCEEDINGS ON THE BASIS OF INFORMATION RECEIVED FROM THE MAHARASHTRA SALES TAX DEPARTMENT THROUGH DGIT (INV.) TO THE EFFECT THAT THE ASSESSEE HAD OBTAINED BOGUS BILLS/ENTRIES FROM DIFFERENT ENTITIES, WHO WERE INDULGED IN ISSUING BOGUS BILLS TO VARIOUS PARTIES WITHOUT DELIVERING ANY GOODS. IN INCOME TAX OFFICER VS. PURUSHOTTAM DAS BANGUR AND ANOTHER 224 ITR 362, THE HONBLE SUPREME COURT HAS HELD THAT ITO WAS JUSTIFIED IN REOPENING THE ASSESSMENT U/S 147(B) ON THE BASIS OF LETTER WRITTEN BY DY. DIRECTOR OF INSPECTION (INVESTIGATION) TO JURISDICTIONAL IAC CONTAINING RELEVANT FACTS AND INFORMATION. IN THE SAID CASE, NOTICE WAS ISSUED BY THE ITO ON THE BASIS OF LETTER/INFORMATION RECEIVED FROM DDI (INV. ). IN THE LIGHT OF T HE VERDICT OF THE HONBLE SUPREME COURT, THERE IS NO MERIT IN THE CONTENTION OF THE LD. COUNSEL. HENCE, WE DO NOT FIND ANY INFIRMITY IN THE ACTION OF AO IN INITIATING PROCEEDINGS U/S 147 6 ITA NO S . 1172 & 1173/MUM/2016 ASSESSMENT YEAR S : 2009 - 10 & 20 10 - 11 OF THE ACT. WE THEREFORE UPHOLD THE FINDINGS OF THE LD. CIT (A) AND D ISMISS THIS GROUND OF THE APPEAL OF THE ASSESSEE. 9. VIDE GROUND NO. 2 TO 5 THE ASSESSEE HAS CHALLENGED THE ACTION OF THE LD. CIT (A) IN HOLDING THE QUESTIONED PURCHASES AS BOGUS AND FURTHER ADDITION OF THE ENTIRE AMOUNT TO THE INCOME OF THE ASSESSEE. WE NOTICE THAT APART FROM THE OTHER DOCUMENTS, THE ASSESSEE HAS SUBMITTED THE PAYMENT CERTIFICATES AND MEASUREMENT BOOKS TO ESTABLISH THAT THE MATERIAL PURCHASED WERE USED IN CONSTRUCTION WORK . HOWEVER, IN OUR CONSIDERED VIEW THE SAID FACT DOES NOT ESTABLISH THAT THE PURCHASES WERE MADE BY THE ASSESSEE FROM THE PARTIES CONCERNED. IN FACT THIS IS THE CASE OF THE AO THAT THE QUESTIONED PURCHASES WERE NOT MADE FROM THE PARTIES CONCERNED. ON THE OTHER HAND, THERE IS SUFFICIENT EVIDENCE TO CONCLUDE THAT THE PARTIES FROM WHOM THE ASSESSEE HAS ALLEGED TO HAVE MADE PURCHASES HAD NOT SUPPLIED ANY GOODS TO THE ASSESSEE. UNDER THESE CIRCUMSTANCES, IT CAN BE CONCLUDED THAT THE ASSESSEE HAD PURCHASED THE MATERIAL FROM THE PARTIES OTHER THAN MENTIONED IN THE ASSESEES BOOKS OF ACCOUNT AND IN THIS PROCESS THE ASSESSEE DID NOT PAY THE VAT AND OTHER LOCAL TAXES APPLICABLE DURING THE RELEVANT PERIOD. HENCE, IN VIEW OF THE FACTS AND CIRCUMSTANCES OF THE CASE, 100% DISALLOWANCE IS NOT JUSTIFIED. 10. WE FURTHER NOTICE THAT THE AO HAS NOT REJECTED THE BOOKS OF ACCOUNT. SINCE, THE AO HAS NOT REJECTED THE CONSUMPTION OF MATERIAL IN THE RELEVANT YEAR, THE ENTIRE AMOUNT OF PURCHASES CANNOT BE ADDED TO THE INCOME OF THE ASSESSEE AS THERE CANNOT BE ANY CONSTRUCTION WITHOUT CONSTRUCTION MA TERIAL. IF THE ASSESSEE HAD NOT PURCHASE D THE GOODS IN QUESTION FROM THE PARTIES CONCERNED, IT IMPLIES THAT PURCHASES WERE MADE FROM SOME OTHER SOURCES OTHER THAN THOSE MENTIONED IN THE BOOKS OF ACCOUNT . HENCE, THERE IS NO JUSTIFICATION IN MAKING ADDITION OF THE ENTIRE AMOUNT OF BOGUS PURCHASES DETERMINED BY THE 7 ITA NO S . 1172 & 1173/MUM/2016 ASSESSMENT YEAR S : 2009 - 10 & 20 10 - 11 AO. UNDER THESE CIRCUMSTANCES, THE LD. CIT (A) OUGHT TO HAVE MADE ADDITION KEEPING IN VIEW THE PROFIT ELEMENT EMBEDDED IN THE PURCHASES IN QUESTION. 11 . THE HONBLE BOMBAY HIGH COURT IN CIT VS. NIKUNJ EXIMP ENTERPRISES PVT. LTD. 372 ITR 619 (BOM) , WHILE UPHOLDING THE DECISION OF MUMBAI TRIBUNAL, HAS OBSERVED THAT MERELY BECAUSE THE SUPPLIERS HAD NOT APPEARED BEFORE THE ASSESSING OFFICER OR THE CIT (A) ONE COULD NOT CONCLUDE THAT THE PURCHASES WER E NOT MADE BY THE RESPONDENT/ASSESSEE. THE HONBLE GUJRAT HIGH COURT IN CIT VS. SIMIT P. SETH 356 ITR 451(GUJ) UPHELD THE DECISION OF THE TRIBUNAL AND SUSTAINED THE ADDITION 12.5% OF THE TOTAL BOGUS PURCHASES HOLDING THAT ONLY PROFIT ELEMENT EMBEDDED IN SU CH PURCHASES CAN BE ADDED TO INCOME OF THE ASSESSEE. HENCE, FOLLOWING THE PRINCIPLES LAW LAID DOWN BY THE HONBLE HIGH COURTS OF BOMBAY AND GUJARAT, DISCUSSED ABOVE, WE MODIFY THE ORDER OF THE LD. CIT(A) AND SUSTAIN THE ADDITION OF 12.5% OF THE TOTAL AMOUN T OF BOGUS PURCHASES. WE THEREFORE, PARTLY ALLOW THIS GROUND OF APPEAL OF THE ASSESSEE AND DIRECT THE AO TO MAKE THE ADDITION @ 12.5% OF THE TOTAL AMOUNT OF BOGUS PURCHASES. ITA NO. 1173/MUM/2016 (ASSE SSMENT Y EAR: 2010 - 20 11 ) FACTS OF THE PRESENT CASE ARE SIMILAR TO THE FACTS OF THE CASE OF THE ASSESSEE FOR THE ASSESSMENT YEAR 2009 - 10 DISCUSSED ABOVE EXCEPT THE AMOUNT OF DISALLOWANCE MADE BY THE AUTHORITIES BELOW . SIMILARLY, THE GROUNDS OF APPEAL IN THIS CASE ARE ALSO IDENTICAL TO ASSESSEES APPEAL PERT AINING TO THE ASSESSMENT YEAR 2009 - 10. HENCE, WE DO NOT CONSIDER IT NECESSARY TO REPRODUCE THE FACTS OF THIS CASE HERE. IN THIS CASE THE AO MADE ADDITION OF THE ENTIRE AMOUNT OF BOGUS PURCHASES TO THE INCOME OF THE ASSESSEE TREATING THE SAME AS UNEXPLAINED EXPENDITURE U/S 69C OF THE ACT. IN THE FIRST APPEAL, THE LD. CIT (A) DIRECTED THE AO TO DELETE THE ADDITION U /S 69C AND DISALLOW THE EXPENDITURE. 8 ITA NO S . 1172 & 1173/MUM/2016 ASSESSMENT YEAR S : 2009 - 10 & 20 10 - 11 2. THE ASSESSEE HAS RAISED THE FOLLOWING EFFECTIVE GROUNDS OF APPEAL AGAINST THE IMPUGNED ORDER PASSED BY T HE LD. CIT (A): - 1. ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE AND IN LAW, THE LEARNED COMMISSIONER (APPEALS) FAILED TO NOTE THAT THE LEARNED ASSESSING OFFICER HAD INITIATED RE - ASSESSMENT PROCEEDINGS U/S 147 WITHOUT HAVING ANY OWN REASON TO BELIEVE T HAT THE INCOME OF THE APPELLANT HAD ESCAPED ASSESSMENT. THE ASSESSMENT ORDER PASSED BY THE LEARNED ASSESSING OFFICER U/S 143 (3) R.W.S. 147 IS ILLEGAL AND DESERVED TO BE QUASHED IN APPEAL. 2. ON FACTS AND CIRCUMSTANCES OF THE CASE AND IN LAW, THE LEARNED COMM ISSIONER (APPEALS) ERRED IN HOLDING THAT THE PURCHASES OF RS. 13,54,574 WERE BOGUS AND HENCE, DISALLOWABLE AS EXPENDITURE IN HIS APPELLATE ORDER. 3. ON FACTS AND CIRCUMSTANCES OF THE CASE AND IN LAW THE LEARNED COMMISSIONER (APPEALS) ERRED IN NOT CONSIDERING THE APPELLANTS ADDITIONAL EVIDENCE ADMITTED BY HIM IN APPEAL BEFORE COMING TO THE CONCLUSION THAT THE PURCHASES OF RS. 13,54,574 WERE BOGUS. 4. WITHOUT PREJUDICE TO THE ABOVE, THE APPELLANT SUBMITS THAT THE DISALLOWANCE OF THE ENTIRE AMOUNT OF PURCHASES OF R S. 13,54,574 IS, ANY CASE, EXCESSIVE AND DESERVES TO BE REDUCED IN APPEAL. THIS IS, MORE PARTICULARLY SO, BECAUSE THE APPELLANT HAD ESTABLISHED THE FACTUM OF USE OF THE MATERIALS REPRESENTED IN THE PURCHASES IN ITS WORKS CONTRACT. 5. BOTH THE LOWER AUTHORITIE S ERRED IN PASSING THEIR RESPECTIVE ORDERS WITHOUT GRANTING YOUR APPELLANT ADEQUATE OPPORTUNITY OF BEING HEARD. THE ORDERS PASSED BY THEM ARE IN CONTRAVENTION OF THE PRINCIPLES OF NATURAL JUSTICE AND HENCE, BAD IN LAW. 3. THE FACTS AND THE ISSUES INVOLV ED IN THE PRESENT CASE ARE IDENTICAL TO THE FACTS OF THE CASE AND ISSUES INVOLVED IN THE ASSESSEES OWN CASE FOR THE A.Y. 2009 - 10 DISCUSSED ABOVE AND THE ASSESSEE HAS RAISED THE IDENTICAL GROUNDS OF APPEAL IN THIS CASE. VIDE GROUND NO. 1, THE ASSESSEE HAS CHALLENGED THE JURISDICTION OF AO U/S 147 OF THE ACT AND FURTHER CONTENDED 9 ITA NO S . 1172 & 1173/MUM/2016 ASSESSMENT YEAR S : 2009 - 10 & 20 10 - 11 THAT THE LD. CIT (A) HAS WRONGLY UPHELD THE ACTION OF AO IN RE - OPENING THE ASSESSMENT. SINCE, WE HAVE DISMISSED THIS GROUND OF APPEAL IN THE ASSESSEES CASE FOR THE A.Y. 2009 - 10, CO NSISTENT WITH OUR FINDINGS, WE DISMISS THIS GROUND OF APPEAL IN THIS CASE FOR THE SAME REASONS. 4. VIDE GROUND NO. 2 TO 5, THE ASSESSEE HAS CHALLENGED THE ACTION OF LD. CIT (A) IN CONFIRMING THE DISALLOWANCE OF BOGUS PURCHASES IN QUESTION. SINCE, WE HAVE PARTLY ALLOWED THIS ISSUE IN FAVOUR OF THE ASSESSEE BY RESTRICTING THE ADDITION TO 12.5%, CONSISTENT WITH OUR OWN FINDINGS, WE RESTRICT THE ADDITION TO 12.5% OF TOTAL AMOUNT OF BOGUS PURCHASES IN THIS CASE AND DIRECT THE AO TO COMPUTE THE AMOUNT OF DISALL OWANCE IN TERMS OF OUR ORDER . IN THE RESULT, APPEALS FILED BY THE ASSESSEE FOR ASSESSMENT YEAR S 200 9 - 2010 AND 2010 - 2011 ARE PARTLY ALLOWED. ORDER PRONOUNCED IN THE OPEN COURT ON 17 TH . JANUARY , 2018 . SD/ - SD/ - ( SHAMIM YAHYA ) ( RAM LAL NEGI ) ACCOUNTANT MEMBER JUDICIAL MEMBER MUMBAI ; DATED: 17 / 01 / 2018 ALINDRA, PS / COPY OF THE ORDER FORWARDED TO : 1. / THE APPELLANT 2. / THE RESPONDENT. 3. ( ) / THE CIT(A) - 4. / CIT 5. , , / DR, ITAT, MUMBAI 10 ITA NO S . 1172 & 1173/MUM/2016 ASSESSMENT YEAR S : 2009 - 10 & 20 10 - 11 6. / GUARD FILE . / BY ORDER, //TRUE COPY// / (DY./ASSTT. R EGISTRAR) , / ITAT, MUMBAI