Income-tax Officer, V. Shri Manoj Suresh Sharma, Dhule

ITA 1645/PUN/2016

• Counselvise Citation: [2018] 123 COUNSELVISE.COM (IT) 0722 (ITAT-PUNE)
• Duration Of Justice: 2 year(s) 2 month(s) 4 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 03-10-2018
• Appeal Filed By: Department
• Order Result: Partly Allowed
• Bench Allotted: A
• Next Hearing Date: 18-09-2018
• Assessment Year: 2011-2012
• Appeal Filed On: 29-07-2016
• Result in Favour of: Partly Allowed
• Court: TRIBUNAL
• Department Lawyers: SABANA PARVEEN
• Keywords: Bogus purchase; Business income; Principle of natural justice; Opportunity of cross examination; Corroborative evidences; Onus to prove

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL A BENCH, PUN E . , , , BEFORE SHRI D. KARUNAKARA RAO, AM AND SHRI VIKAS AW ASTHY, JM . / ITA NO.1645/PUN/2016 / ASSESSMENT YEAR : 2009-10 THE INCOME TAX OFFICER, WARD-1, DHULE ....... / APPELLANT / V/S. SHRI MANOJ SURESH SHARMA, PROP. : SHRI RUNECHA SALES AGENCY, H. NO.2433, MADHAVPURA, PALABAZAR, DHULE-424001 PAN : ATKPS6324E / RESPONDENT . /CO.NO.18/PUN/2017 (ARISING OUT OF ITA NO.1645/PUN/2016) /ASSESSMENT YEAR: 2009-10 SHRI MANOJ SURESH SHARMA, PROP. : SHRI RUNECHA SALES AGENCY, H. NO.2433, MADHAVPURA, PALABAZAR, DHULE-424001 PAN : ATKPS6324E .. / CROSS OBJECTOR / V/S. THE INCOME TAX OFFICER, WARD-1, DHULE APPELLANT IN THE APPEAL REVENUE BY : MS. SABANA PARVEEN ASSESSEE BY : SHRI SANKET JOSHI / DATE OF HEARING : 18.09.2018 / DATE OF PRONOUNCEMENT : 03.10.2018 / ORDER PER D. KARUNAKARA RAO, AM: THESE ARE THE CROSS APPEALS INVOLVING A.Y. 2009-10. REVE NUE FILED THE MAIN APPEAL ITA NO.1645/PUN/2016 AND ASSESSEE FILED THE C O NO.18/PUN/2017. THEY ARE FILED AGAINST THE ORDER OF CIT(A) -1, NASHIK, DATED 19.05.2016 2 ITA NO.1645/PUN/2016 AND CO. NO.18/PUN/2017 SHRI MANOJ SURESH SHARMA 2. THE COMMON ISSUE INVOLVED IN THESE APPEALS RELATE TO B OGUS PURCHASES AND THE EXTENT OF GROSS PROFIT ADDITION THAT IS REQUIRED TO BE CONFIRMED. THEREFORE, THESE APPEALS ARE HEARD TOGETHER A ND BEING ADJUDICATED IN THIS COMPOSITE ORDER IN THE SUCCEEDING PARAGRAPHS. 3. GROUNDS RAISED BY THE REVENUE AS WELL AS THE CROSS OBJECTIONS RAISED BY THE ASSESSEE ARE EXTRACTED HERE AS UNDER : GROUNDS BY REVENUE : I. WHETHER ON THE FACTS AND IN THE CIRCUMSTANCES O F THE CASE, THE LD.CIT(A)- I, NASHIK WAS JUSTIFIED IN DELETING THE ADDITION OF RS.88,83,066/-ON ACCOUNT OF ALLEGED BOGUS PURCHASES FROM HAWALA DEALERS/ PAR TIES? II. WHETHER ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE THE LD.CIT(A)-I, NASHIK WAS JUSTIFIED IN DELETING THE PURCHASES TREA TED AS BOGUS WHEN THE APPELLANT HAD NOT BEEN ABLE TO PRODUCE THE CERTAIN PARTIES FROM WHOM PURCHASES WHERE MADE? III. WHETHER THE LD.CIT(A) ERRED IN ASSUMING THAT T HE PURCHASES WERE ONLY INFLATED WHEN IT WAS CLEAR FROM THE RESULTS OF THE ASSESSEE, THE PARTIES FOUND MISSING AND RESULTS OF THE INVESTIGATION OF ANOTHER GOVT. DEPARTMENT (SALES TAX), THAT THE PURCHASES COULD NOT BE PROVED AS GEN UINE AND THEREFORE THE DISALLOWANCE BY THE A.O. WAS JUSTIFIED? IV. WHETHER THE LD.CIT(A) ERRED IN PRESUMING THAT S IMPLY BECAUSE NO ADDITION WAS MADE IN CASE OF SALES, IT WAS ACCEPTED AS GENUI NE AND FURTHER ASSUMING THAT THEREBY PURCHASES SHOULD BE GENUINE? V. THE APPELLANT PRAYS THAT THE ORDER OF THE LD. CI T(A)-I, NASHIK MAY PLEASE BE CANCELLED AND THE ORDER OF ASSESSING OFFICE MAY PLEASE BE RESTORED. VI. THE APPELLANT PRAYS TO ADDUCE SUCH FURTHER EVID ENCE TO SUBSTANTIATE HIS CASE. VII. THE APPELLANT PRAYS LEAVE TO ADD, ALTER, CLARI FY, AMEND AND OR WITHDRAW ANY GROUNDS OF APPEAL AS AND WHEN THE OCCASION DEMA NDS. CROSS OBJECTIONS BY ASSESSEE : 1] THE LEARNED CIT(A) ERRED IN PARTLY CONFIRMING T HE ADDITION MADE BY THE A.O. TOWARDS PURCHASES MADE FROM ALLEGED HAWALA PAR TIES ON THE BASIS OF INFORMATION RECEIVED FROM SALES TAX DEPT. WITHOUT A PPRECIATING THAT NO ADDITION WAS WARRANTED ON FACTS OF THE CASE. 2] THE LEARNED CIT(A) ERRED IN HOLDING THAT THE PRO FIT ON PURCHASES MADE FROM ALLEGED HAWALA PARTIES SHOULD BE ESTIMATED @ 3% OF SUCH PURCHASES FOR THE REASON THAT THE PROBABILITY THAT THE IMPUGNED PURCH ASES COULD HAVE BEEN 3 ITA NO.1645/PUN/2016 AND CO. NO.18/PUN/2017 SHRI MANOJ SURESH SHARMA MADE FROM ANOTHER PARTY COULD NOT BE DENIED AND THU S, THE INVOICES ISSUED BY ALLEGED HAWALA PARTIES COULD BE OVER-PRICED/ INF LATED . 3] THE LEARNED CIT(A) FAILED TO APPRECIATE THAT THE ASSESSEE HAD FURNISHED SUPPORTING EVIDENCES TO PROVE THE GENUINENESS OF TH E PURCHASES AND THERE WAS NO EVIDENCE WITH THE DEPT. THAT THE PAYMENTS WE RE NOT MADE FROM THE ABOVE PARTIES AND HENCE, MERELY ON THE BASIS OF UNC ORROBORATED STATEMENTS OF THE DISHONEST SUPPLIERS WHO HAD EVADED VAT LIABI LITY, THERE WAS NO REASON TO MAKE ANY ADDITION IN THE HANDS OF THE ASSESSEE. 4] THE APPELLANT CRAVES LEAVE TO ADD, ALTER, AMEND OR DELETE ANY OF THE ABOVE GROUNDS OF APPEAL. 4. BRIEFLY STATED RELEVANT FACTS OF THE ASSESSEE INCLUDE T HAT ASSESSEE IS AN INDIVIDUAL AND IS ENGAGED IN THE BUSINESS OF STEEL AND CE MENT TRADING UNDER THE NAME AND STYLE SHRI RUNECHA SALES AGENCIES. ASSESSEE FILED THE RETURN OF INCOME FOR THE IMPUGNED ASSESSMENT YEAR D ECLARING TOTAL INCOME OF RS.1,62,975/-. ON THE BASIS OF INFORMATION RECEIVED FROM SALES TAX DEPARTMENT, GOVT. OF MAHARASHTRA, THAT THE ASSESSEE MADE PURCHASES FROM THE SUPPLIERS WHOSE NAMES ARE LISTED IN THE SUSPECTE D ONES AS HALAWA PARTIES, AO REOPENED THE CASE OF THE ASSESSEE BY ISSUIN G U/S.148 OF THE ACT. AO CALLED FOR THE DETAILS OF THE PURCHASES MADE FROM THE COUPLE OF SUPPLIERS NAMELY (1) SHIVAN GIRI STEEL LTD. RS.42,55,468/- AND (2) GRIFTON INDIA RIDDHI ENTERPRISE RS.46,27,598/-. MR. SURESH DUGRA PRASAD SHARMA, FATHER OF THE ASSESSEE ATTENDED THE ENQUIRY BEFORE THE A O. THE AO PROCEEDED TO MAKE ADDITION OF ENTIRE PURCHASES, I.E. 100% O F SUCH PURCHASES GIVING THE REASONS THAT THE ASSESSEE FAILED TO PRODUCE THE PARTIES. OTHERWISE, THE ASSESSEE DEMONSTRATED THE PAY MENTS INVOLVING BANKING CHANNELS, COPIES OF INVOICES AND THE ENTRIES IN THE BOOKS OF ACCOUNTS ETC. EVENTUALLY, THE AO MADE ADDITION OF RS.88,83 ,066/- TREATING THE SAME AS UNEXPLAINED INCOME. 4 ITA NO.1645/PUN/2016 AND CO. NO.18/PUN/2017 SHRI MANOJ SURESH SHARMA 5. IN THE FIRST APPELLATE PROCEEDINGS, ASSESSEE MADE A P RAYER THAT THE PURCHASES ARE GENUINE AND THEREFORE, THE ADDITION SHOULD BE DELETED ENTIRELY. AS PER THE STATEMENT OF FACTS BEFORE THE CIT(A ), ASSESSEE MADE ELABORATE SUBMISSIONS AND THE RELEVANT PARAGRAPHS OF THE SAID STATEMENT OF FACTS ARE EXTRACTED HERE AS UNDER : THE AO HAS RECEIVED INFORMATION FROM SALES TAX DEP ARTMENT ABOUT ALLEGED HAWALA PURCHASES MADE BY THE APPELLANT FROM THE FOL LOWING PARTIES. NAME OF THE PARTY AMOUNT 1) SHIVAN GIRI STEEL LTD. 42,55,468 2) GRIFTON INDIA RIDDHI ENTERPRISE 46,27,598 TOTAL 88,83,066 THE APPELLANT WAS NOT CONVERSANT WITH THE PROVISION S OF THE INCOME-TAX ACT AND INCOME-TAX PROCEEDINGS AND HAS ALLOTTED THE TAX ATION WORK TO A CHARTERED ACCOUNTANT. DURING ASSESSMENT PROCEEDING S THE C.A. HAS NOT FILED ANY SUBMISSION AND THEREFORE THE APPELLANT AND HIS FATHER ATTENDED BEFORE THE A.O. ON THE DATES OF HEARING, AS APPEARING IN T HE ASSESSMENT ORDER I.E. IN THE LAST WEEK OF MARCH, 2015 ( INADVERTENTLY TYPED AS 2014 IN THE ASSESSMENT ORDER) AND FILED A LETTER IN MARATHI AND REQUESTED THE A.O. TO GRANT JUSTICE. IT WAS EXPLAINED TO THE A.O. THAT TH E BOOKS OF ACCOUNTS ARE AUDITED AND STOCK RECORD HAS BEEN MAINTAINED AND HE NCE NO ADDITION CAN BE MADE. IN FACT THE A.O. HAS MADE ADDITION ON THE BASIS OF INFORMATION RECEIVED FROM SALES-TAX DEPARTMENT ONLY AND HAS NOT PROVIDED STAT EMENTS OF THE PARTIES RELIED ON BY THE SALES-TAX DEPARTMENT AND A.O. HIMS ELF, TO THE APPELLANT. THE SAID PARTIES HAVE NOT PAID VAT WHICH HAS BEEN COLLE CTED FROM THE ASSESSEE AND VARIOUS OTHER PURCHASERS, THOUGH THE PARTIES HA VE SUPPLIED THE GOODS AND HENCE THE APPELLANT AS WELL AS VARIOUS OTHER AS SESSEES HAVE TO PAY VAT TWICE WITHOUT GETTING ANY CREDIT FOR VAT PAID TO TH E ABOVE MENTIONED SUPPLIERS. THE A.O. HAS RELIED ON THE STATEMENTS OF ABOVE MENTIONED DISHONEST SUPPLIERS, WHO ARE NOT RELIABLE WITHOUT G IVING OPPORTUNITY TO CROSS EXAMINE THE SAID PARTIES. IN VIEW OF THE FACTS MENTIONED ABOVE, THAT THE SAID SUPPLIERS HAVE COLLECTED VAT IN RESPECT OF SALES EFFECTED BY IT FROM THE PUR CHASERS, HOWEVER, HAS NOT PAID THE SAME TO SALES -TAX DEPARTMENT AND THEREFOR E THE PURCHASERS HAVE TO PAY THE SAID V AT AGAIN TO THE SALES-TAX DEPARTMENT AND HENCE IN VIEW OF THE ABOVE FACTS THE SUPPLIERS HAVE LEFT THE PLACES OF B USINESS AND HAS NOT COMMUNICATED THE NEW ADDRESS, IF ANY, TO THE APPELL ANT. IN VIEW OF THE ABOVE FACTS, IT IS IMPOSSIBLE FOR THE ASSESSEE TO PRODUCE THE SAID SUPPLIERS. IN FACT THE A.O. HAS ALL THE MACHINERY TO LOCATE THE SAID S UPPLIERS WITH THE HELP OF SALES-TAX DEPARTMENT AND POLICE DEPARTMENT AND COUL D HAVE VERIFIED THE SAID SUPPLIERS AND COULD HAVE ALSO GIVEN OPPORTUNITY OF CROSS EXAMINATION TO THE APPELLANT, IF REQUIRED. THE APPELLANT HAS IN FACT PROVED THE GENUINENESS OF THE PURCHASES AS THE INVOICES ISSUED BY THE SUPPLIES HAVING SALES TAX TI N/VAT NUMBER. 5 ITA NO.1645/PUN/2016 AND CO. NO.18/PUN/2017 SHRI MANOJ SURESH SHARMA CONSIDERING THE SAID SUBMISSIONS OF THE ASSESSEE, THE CIT(A ) PARTLY ALLOWED THE APPEAL OF THE ASSESSEE RESTRICTING THE ADDITION TO ME RELY 3% OF THE SAID SUSPECTED PURCHASES. BEFORE COMING TO THE SAID CONCLUSIO N, THE CIT(A) HAS ELABORATELY DISCUSSED THIS ISSUE AND APPLICABILITY OF THE DE CISION OF PUNE BENCH OF THE TRIBUNAL IN THE CASE OF KOLTE PATIL DEVELOPERS LTD. IN ITA NOS. 1478 TO 1483/PN/2013 FOR THE A.YRS. 2004-05 TO 2009-1 0 DECIDED ON 20-02-2015 ON THE ISSUE OF CROSS EXAMINATION. CIT(A) ALSO CONSIDERED JUDGMENT OF HONBLE BOMBAY HIGH COURT IN THE CASE OF NIK UNJ EXIMP ENTERPRISES VS. CIT REPORTED IN 372 ITR 0619, JUDGMENT OF HONBLE DELHI HIGH COURT IN THE CASE OF CIT VS. LA MEDICA REPORTED IN 250 ITR 575 AS W ELL AS OTHER JUDGMENTS OF VARIOUS COURTS. THE OPERATIONAL PARAS OF THE ORDER OF CIT(A) ARE EXTRAC TED HERE FOR THE SAKE OF COMPLETENESS : 4.87.4 THUS, IN MY OPINION THE FACTS ON RECORD DEM ONSTRATE THAT THIS NOT A CASE OF BOGUS PURCHASE BUT A CASE OF INFLATED PURCHASES AND AT BEST FROM BOGUS PARTIES. 4.87.5 IN THE INSTANT CASE AS OBSERVED FROM P&L AC COUNTS THAT THE TOTAL SALES IS RS.1,06,14,577/- AND TOTAL PURCHASE IS RS.98,95,500/-. THE TOTAL PURCHASES ADDED BY THE AO FROM HAWALA PARTIES IS RS.88,83,066/-. THIS ANALYSIS HAS NOT BEEN DONE BY THE AO. IF THE PURCHASES ARE BOGUS THEN THERE IS NO CLARIFICATION THAT HOW THE SALES ARE MA DE. IF WE EXCLUDE THE PURCHASES MADE FROM HAWALA PARTIES THE G.P. BECOMES 92% WHICH IS OBSERVED. THE PARTIES ARE NOT PRODUCED SO THE EXTR ACT PURCHASES CANNOT BE VERIFIED. THEREFORE, THERE IS ALL PROBABILITY OF INFLATION OF PURCHASES AS IN TURNOVER OF RS.1,06,14,577/- THE RETURNED INCOME OF RS.1,62,975/- IS TOO LOW. NOW, THE ISSUE IS QUANTUM OF INFLATION OF PUR CHASES. CONSIDERING THE FACTS AND CIRCUMSTANCES OF THE CASE TO COVER THE GA P IN THE INCOME BY VIRTUE OF INFLATED PURCHASES THE AO IS DIRECTED TO RESTRIC T THE ADDITION TO 3% OF HAWALA PARTIES. 6. AGGRIEVED WITH THE SUBSTANTIAL RELIEF GRANTED BY THE CI T(A), THE REVENUE IS IN APPEAL BEFORE THE TRIBUNAL. FURTHER, ASSESS EE FILED THE CROSS 6 ITA NO.1645/PUN/2016 AND CO. NO.18/PUN/2017 SHRI MANOJ SURESH SHARMA OBJECTIONS CONTESTING THE 3% ADDITION ADOPTED BY THE CI T(A) WITH THE GROUNDS EXTRACTED ABOVE. 7. BEFORE US, LD. COUNSEL FOR THE ASSESSEE NARRATING THE ABOVE FACTS OF THE CASE SUBMITTED THAT THIS IS A CASE WHERE THE AO MA DE THE ADDITION OF ENTIRE SUSPECTED BOGUS PURCHASES TO THE RETURNED INCO ME FILED BY THE ASSESSEE AND THE CIT(A) RESTRICTED THE SAID ADDITION TO 3 % OF THE SAME AND PARTLY ALLOWED THE APPEAL OF THE ASSESSEE. LD. COUNSEL FOR THE ASSESSEE VEHEMENTLY ARGUED STATING THAT THE PURCHASES MADE BY THE ASSESSEE ARE GENUINE. FURTHER, LD. COUNSEL FOR THE ASSESSEE RELIED ON THE DECIS ION OF THE TRIBUNAL IN THE CASE OF M/S. CHHABI ELECTRICALS PVT. LTD. AND OTHERS VS. DCIT IN ITA NO.795/PUN/2014, RELATING TO ASSESSMENT YEAR 2010-11, DECIDED ON 28-04-2017 AND SUBMITTED THAT THE PRESENT CASE OF THE ASSESSEE FALLS IN GROUP OF CASES WHERE NO ADDITION IS CALLED FOR AT ALL IN VIEW OF THE AUTHENTICITY OF EVIDENCES IN SUPPORT OF THE GENUINENESS O F THE ASSESSEES CLAIM. MERELY BECAUSE THE NAMES OF THE SUPPLIERS ARE APP EARING IN THE LIST OF TAINTED SUPPLIERS, THE ASSESSEE SHOULD NOT BE PENALISED FOR THE SAME. ON THE FAILURE OF THE ASSESSEE TO PRODUCE THE PARTIES, LD. CO UNSEL FOR THE ASSESSEE SUBMITTED THAT IT IS NOT POSSIBLE TO PRODUCE TH E PARTIES AND HIGHLIGHTED THE ASSESSEES REQUEST BEFORE THE REVENUE T O ENFORCE THE ATTENDANCE OF THE SUPPLIERS. FURTHER, RELYING ON THE FACT THAT THE PAYMENTS ARE MADE THROUGH BANKING CHANNELS, GOODS ARE RECEIVED A ND SALES ARE EVIDENCED ESTABLISHING THE TRAIL OF GOODS, LD. COUNSEL SUBMITT ED THAT THE PURCHASES MADE BY THE ASSESSEE ARE GENUINE ONES AND PRAYED FOR DELETING THE ENTIRE ADDITION. 7 ITA NO.1645/PUN/2016 AND CO. NO.18/PUN/2017 SHRI MANOJ SURESH SHARMA FURTHER, ON THE GP RATES, LD. COUNSEL FILED A CHART SHOW ING THE GP RATES OVER THE YEARS AND SUBMITTED, WITHOUT PREJUDICE, T HAT IT SHOULD BE RESTRICTED TO INTERNAL GP RATES OF THE ASSESSEE. HE PR AYED THAT 10% ENVISAGED BY THE TRIBUNAL IN THE CASE OF M/S. CHHABI ELEC TRICALS PVT. LTD. AND OTHERS (SUPRA) NEED NOT BE INVOKED IN THE PRESENT CASE CONSIDERING THE INTERNAL GP RATES OF THE ASSESSEE AND THE NATURE OF BU SINESS, THE FACTS OF THE CASE ETC. 8. ON THE OTHER HAND, LD. DR FOR THE REVENUE RELIED ON T HE ORDER OF THE AO AND SUBMITTED THAT FAILURE TO PRODUCE THE PARTIES BEFO RE THE AO SHOULD BE SEEN IN DIFFERENT PERSPECTIVE AND AGAINST THE ASSESSEE . THIS IS A CASE OF INFLATION OF PURCHASES AND THEREFORE, THE ENTIRE ADDITION SHO ULD HAVE BEEN CONFIRMED BY THE CIT(A). 9. BEFORE US, LD. COUNSEL FOR THE ASSESSEE SUBMITTED THE WRITTEN SUBMISSIONS AND THE SAME ARE EXTRACTED HERE AS UNDER : 7. AT THE OUTSET, THE ASSESSEE SUBMITS THAT THE IN STANT ISSUE IS SQUARELY COVERED IN THE FAVOUR OF THE ASSESSEE BY THE RECENT DECISION OF HONBLE SUPREME COURT IN THE CASE OF PCIT VS. TEJUA RHOITKU MAR KAPADIA [SLP (CIVIL) NO.12670/2018 DATED 04.05.2018 UPHOLDING THE DECISI ON OF HONBLE GUJARAT HIGH COURT DATED 18.09.2017 [TAX APPEAL NO.691/2017 ]. THE COPY OF THE SAID DECISION IS ENCLOSED HEREWITH. IN THAT CASE, ONE OF THE SUPPLIERS, M/S. RAJ IMPEX FROM WHOM THE ASSESSEE HAD MADE PURCHASES , HAD DEPOSED BEFORE THE I.T. AUTHORITIES THAT HE WAS ENGAGED IN THE BUSINESS OF PROVIDING ACCOMMODATION BILLS TO VARIOUS PARTIES INCLUDING TH E ASSESSEE. ON THE BASIS OF THE SAID DEPOSITION, THE A.O. DISALLOWED THE ENT IRE PURCHASES MADE BY THE ASSESSEE FROM THE SAID SUPPLIER. THIS DISALLOWANCE WAS DELETED BY THE CIT(A) AND HON'BLE ITAT DELETED THE DISALLOWANCE. ON FURTH ER APPEAL BY THE DEPT., HON'BLE GUJARAT HIGH COURT NOTED THAT THE PAYMENTS TOWARDS THE IMPUGNED PURCHASES WERE THROUGH BANKING CHANNEL AND THERE WA S NO EVIDENCE THAT THE SAID PAYMENTS WERE RETURNED BACK TO THE ASSESSEE. H ON'BLE HIGH COURT FURTHER NOTED THAT WHEN THE SALES MADE OUT OF SUCH PURCHASES WAS ACCEPTED BY THE A.O., THEN NO DISALLOWANCE ON ACCOUNT OF BOG US PURCHASES WAS WARRANTED ON SUCH FACTS. THE SAID DECISION HAS BEEN UPHELD BY HON'BLE SUPREME COURT VIDE ITS ORDER DATED 04.05.2018. 8. THE ASSESSEE SUBMITS THAT EVEN IN THE INSTANT CA SE, IT IS PROVED BEYOND THAT THE SALES ARE NOT POSSIBLE IN THE ABSEN CE OF IMPUGNED PURCHASES AND FURTHER, THERE IS NO EVIDENCE THAT THE PAYMENTS MADE TO THE SUPPLIERS HAVE BEEN RETURNED BACK TO THE ASSESSEE. BOTH THESE FACTS HAVE BEEN NOTED 8 ITA NO.1645/PUN/2016 AND CO. NO.18/PUN/2017 SHRI MANOJ SURESH SHARMA BY THE LEARNED CIT(A). ACCORDINGLY, THE ASSESSEE SU BMITS THAT THE RATIO LAID DOWN BY HON 'BLE SUPREME COURT IN THE ABOVE CITED R ECENT JUDGMENT IS SQUARELY APPLICABLE TO THE INSTANT CASE AND HENCE, IT IS PRAYED THAT THE DISALLOWANCE SUSTAINED BY THE CIT(A) @ 3% IS ALSO N OT JUSTIFIED AND THE SAME MAY BE DELETED. 9. HERE, IT MAY NOT BE OUT OF PLACE TO MENTION THAT THE DECISION OF HON'BLE ITAT PUNE IN THE CASE OF CHHABI ELECTRICALS PVT. LT D. & ORS. [ITA NO.795/PN/2014] IS DATED 28.04.2017 AND SINCE THE D ECISION OF HON'BLE SUPREME COURT IN THE CASE OF TEJUAKAPADIA DATED 04. 05.2018 IS A SUBSEQUENT DECISION, THE SAID APEX COURT DECISION W AS NOT CONSIDERED IN THE CASE OF CHHABI ELECTRICALS. HOWEVER, IT IS SUBMITTE D THAT SINCE THE ABOVE RECENT DECISION OF HONBLE SUPREME COURT SQUARELY CO VERS THE ISSUE IN FAVOUR OF THE ASSESSEE, THE DISALLOWANCE SUSTAINED BY THE LEARNED CIT(A) MAY PLEASE BE DELETED. WITHOUT PREJUDICE TO THE ABOVE CONTENTIONS , IT IS SUBMITTED AS UNDER- 10. THE ASSESSEE HUMBLY PRAYS THAT THE ISSUE MAY NOT BE SET ASIDE TO THE FILE OF THE A.O/CIT(A) SINCE ALL THE RELEVANT FACTS ARE ON RECORD AND THE ISSUE IS SQUARELY COVERED BY THE RATIO LAID DOWN BY HON'B LE APEX COURT IN ITS RECENT RULING. IN THIS RESPECT, IT IS TO BE NOTED THAT THE BUSINESS OF THE ASSESSEE IS CLOSED DUE TO LACK OF PROFITS AND THE ASSESSEE DOES NOT HAVE THE FINANCIAL 11. HENCE, WITHOUT PREJUDICE TO THE ABOVE CONTENTI ONS AND WITH THE INTENTION TO AVOID PROLONGED LITIGATION, THE ASSESS EE SUBMITS THAT IF THE DEPT. APPEAL IS DISMISSED, THEN THE ASSESSEE HAS NO OBJEC TION IF THE CROSS OBJECTIONS FILED BY THE ASSESSEE IS DISMISSED AS WE LL AND THE ORDER OF THE CIT(A) IS CONFIRMED. 12. IN THIS REGARD, THE ASSESSEE SUBMITS THAT THE O RDER OF THE LEARNED CIT(A) IS REASONABLE VIS-A-VIS THE DEPT. AND THE SA ME CANNOT BE FAULTED WITH BY THE DEPT. EVEN IF THE RECENT DECISION OF HON'BLE S.C. IS NOT TAKEN INTO CONSIDERATION. IN THIS RESPECT, IT IS A FACT ON REC ORD THAT THE SALES MADE BY THE ASSESSEE COULD NOT HAVE BEEN POSSIBLE IN THE ABSENC E OF THE IMPUGNED PURCHASES. THIS FACT IS DEMONSTRATED BEYOND DOUBT I N VIEW OF THE FACT THAT THE A.O. HAS DISALLOWED AROUND 90% OF THE TOTAL PU RCHASES MADE BY THE ASSESSEE AS BOGUS AND THUS, THE AO HAS IMPLIED THA T THE ASSESSEE HAS EARNED HUGE G.P. @ 90% WHICH IS IMPOSSIBLE IN THE B USINESS OF THE ASSESSEE. THUS, IT IS PROVED BEYOND DOUBT THAT THE PURCHASES OF IMPUGNED GOODS HAVE BEEN MADE BY THE ASSESSEE. NOW, FIRSTLY, THERE IS N O EVIDENCE WHATSOEVER, TO PROVE THAT THE SAID PURCHASES HAVE BEEN INFLATED BY WAY OF MAKING PURCHASES FROM GREY MARKET AND HENCE, THE LEARNED C IT(A) IS NOT JUSTIFIED IN SUSTAINING DISALLOWANCE @ 3% ON THE SUSPICION OR TH E SUSPECTED 'PROBABILITY' THAT THE SAID PURCHASES COULD HAVE BEEN MADE FROM G REY MARKET. EVEN SO, EVEN IF IT IS PRESUMED THAT THE PURCHASES ARE INFLA TED AND IF ANY ADDITION IS TO BE SUSTAINED ON G.P.BASIS, THEN THE ADDITION SUS TAINED BY THE LEARNED CIT(A) IS VERY REASONABLE ON FACTS OF THE CASE. IN THIS REGARD, THE DETAILS OF G.P. AND N.P. DECLARED BY THE ASSESSEE FOR VARIOUS YEARS ARE SUBMITTED AS UNDER- ASST. YEAR TURNOVER (RS.) GROSS PROFIT NET PROFIT 2007-08 3,32,47,360 0.92% 0.54% 2009-10 1,06,14,577 3.40% 1.54% 2010-11 31,55,723 1.14% 5.41% 9 ITA NO.1645/PUN/2016 AND CO. NO.18/PUN/2017 SHRI MANOJ SURESH SHARMA * THE RECORDS FOR A.Y. 2008-09 ARE NOT TRACEABLE SI NCE IT HAS BEEN AROUND TEN YEARS AND THE BUSINESS OF THE ASSESSEE H AS BEEN CLOSED MANY YEARS BACK. * IN A.Y. 2010-11, THE ASSESSEE HAS EARNED INDIRECT INCOME BY WAY OF COMMISSION AND SALARY WHICH HAS BEEN CREDITED TO TH E P&L A/C. AND NOT TO TRADING A/C. HENCE, THE N.P. HAS INCREASED TO 1,70 ,568 FROM THE G.P. OF RS.36,069/- WHICH RELATES TO THE ACTIVITY OF TRADIN G IN STEEL AND CEMENT. AVG. G.P. FOR THE ABOVE 3 YEARS WORKS OUT TO 1.82% AVG. N.P. FOR THE ABOVE 8 EIGHT YEARS (SIC) WORKS OUT TO 2.50% 13. THE ASSESSEE SUBMITS THAT CONSIDERING THE G.P. DECLARED BY THE ASSESSEE ON REGULAR PURCHASES @ AROUND 3.40%, THE C IT(A) IS REASONABLE IN ESTIMATING THE G.P. ON PURCHASES MADE FROM ALLEGED HAWALA PARTIES AT TWICE THE G.P. EARNED ON REGULAR PURCHASES I.E. 3% OVER A ND ABOVE THE G.P. @ 3.40% DECLARED BY THE ASSESSEE. IN VIEW OF THE ABOV E FACTS, THE ASSESSEE SUBMITS THAT THE ORDER OF THE LEARNED CIT(A) IS QUI TE REASONABLE VIS-A-VIS THE DEPT. AND THE SAME CANNOT BE FAULTED WITH BY THE DE PT. 14. HERE, IT MAY NOT BE NOT BE OUT OF PLACE TO STAT E THAT SUCH A SCENARIO WAS NOT PRESENT BEFORE HON'BLE ITAT IN THE CONSOLID ATED ORDER PASSED IN CASE OF CHHABI ELECTRICALS PVT. LTD. &ORS. IT IS SUBMITT ED THAT IN NONE OF THE CASES, IT WAS A SITUATION THAT ALMOST THE ENTIRE PURCHASES DEBITED BY THE ASSESSEE WERE DISALLOWED BY THE A.O. AND THEREBY, THE SALES DECLARED BY THE ASSESSEE COULD NOT BE POSSIBLE IN THE ABSENCE OF THE PURCHAS ES DISALLOWED BY A.O. HENCE, HON'BLE ITAT IN THAT CASE, HAD NO OCCASION T O CONSIDER SUCH A SCENARIO. BUT EVEN THE RATIO LAID DOWN BY HON'BIE I TAT IN THE SAID CASE, IS THAT IF THE ASSESSEE IS ABLE TO PROVE THAT HE HAD A CTUALLY MADE PURCHASES OF THE GOODS BY DEMONSTRATING FROM THE QUANTITATIVE ST OCK RECORD, TRAIL OF GOODS ETC., THEN ONLY A REASONABLE G.P. ADDITION IS TO BE MADE AND THE ENTIRE PURCHASES CANNOT BE DISALLOWED. IT IS SUBMITTED THA T THE QUANTUM OF G.P. ADDITION WOULD DEPEND ON FACT TO FACT OF EACH CASE AND APPLYING A BLANKET RATE OF G.P. ADDITION IN ALL BUSINESSES WOULD NOT B E JUSTIFIED IN LAW. ACCORDINGLY, THE ASSESSEE SUBMITS THAT IF AT ALL, A NY ADDITION IS TO BE SUSTAINED ON G.P. BASIS, THEN THE DECISION OF THE L EARNED CIT(A) IN ESTIMATING THE G.P. ADDITION @ 3% IS REASONABLE CONSIDERING TH E G.P. OF AROUND 3.40% DECLARED BY THE ASSESSEE AND N.P. OF AROUND 1.54% D ECLARED BY THE ASSESSEE ON REGULAR PURCHASES. 9.1 LD. COUNSEL ALSO FILED TAX AUDIT REPORT ALONG WITH FINANC IAL STATEMENTS FOR THE A.Y. 2009-10 AND FILED THE COPY OF JUD GMENT OF HONBLE GUJARAT HIGH COURT IN THE CASE OF PR.CIT VS. TEJUA ROHITK UMAR KAPADIA TAX APPEAL NO.691 OF 2017 AND READ OUT THE OPERATIONAL PARA NO.3. 10. WE HEARD BOTH THE PARTIES AND PERUSED THE ORDERS OF THE REVENUE AND THE DECISIONS RELIED ON BY BOTH THE SIDES. WE FIND THE TRIBUNAL, ON IDENTICAL FACTS, IN THE CASE OF ONE OF THE FAMILY MEMBER NAME LY 10 ITA NO.1645/PUN/2016 AND CO. NO.18/PUN/2017 SHRI MANOJ SURESH SHARMA SMT. JAYSHREE SURESH SHARMA HAS DECIDED THE ISSUE. THER EFORE, WE PROCEED TO EXTRACT THE FINDING GIVEN BY THE TRIBUNAL HERE AS UNDER : 10. WE HEARD BOTH THE PARTIES AND PERUSED THE ORDE RS OF THE REVENUE AND THE DECISIONS RELIED ON BY BOTH THE SIDES. TO STAR T WITH, WE PROCEED TO CULL OUT RELEVANT FINDINGS OF CERTAIN DECISIONS RELIED U PON BY THE ASSESSEE. A. WE PERUSED THE JUDGMENT OF HONBLE GUJARAT HIGH COURT IN THE CASE OF PR.CIT VS. TEJUA ROHITKUMAR KAPADIA AND FIND IT REL EVANT TO EXTRACT THE FINDINGS GIVEN BY THE HONBLE HIGH COURT HERE AS UN DER : 3. IT CAN THUS BE SEEN THAT THE APPELLATE AUTHORIT Y AS WELL AS THE TRIBUNAL CAME TO CONCURRENT CONCLUSION THAT THE PURCHASES AL READY MADE BY THE ASSESSEE FROM RAJ IMPEX WERE DULY SUPPORTED BY BILL S AND PAYMENTS WERE MADE BY ACCOUNT PAYEE CHEQUE. RAJ IMPACTS ALSO CON FIRMED THE TRANSACTIONS. THERE WAS NO EVIDENCE TO SHOW THAT T HE AMOUNT WAS RECYCLED BACK TO THE ASSESSEE. PARTICULARLY, WHEN IT WAS FO UND THAT THE ASSESSEE THE TRADER HAD ALSO SHOWN SALES OUT OF PURCHASES MADE F ROM RAJ IMPEX WHICH WERE ALSO ACCEPTED BY THE REVENUE, NO QUESTION OF L AW ARISES. B. FURTHER, WE FIND THE PUNE BENCH OF THE TRIBUNAL ALSO HAD AN OCCASION TO DEAL WITH IDENTICAL ISSUE IN THE CASE OF ACIT VS . SHRI NITIN RAMCHANDRA GITE IN ITA NO.1732/PUN/2015 AND CO NO.46/PUN/2017 FOR THE A.Y. 2011- 12 DECIDED ON 13-10-2017. THE TRIBUNAL CONFIRMED T HE ORDER OF CIT(A) RESTRICTION THE ADDITION TO 5% OF THE BOGUS PURCHAS ES. WE PROCEED TO EXTRACT THE FINDING GIVEN BY THE TRIBUNAL HERE AS UNDER : 6. ON HEARING BOTH THE PARTIES AND AFTER GOING TH ROUGH THE ELABORATE DISCUSSION GIVEN BY THE CIT(A) (PARA NOS. 5.3.1 TO 9.2) RELYING ON CATENA OF DECISIONS OF SUPREME COURT, HIGH COURTS, AND ALSO V ARIOUS TRIBUNALS, WE FIND THE CIT(A) HAS RIGHTLY CONSIDERED THE FOLLOWING FAC TS BEFORE COMING TO CONCLUSION OF ADOPTING 5% ON THE GROSS PROFIT RATE ON THE BOGUS PURCHASES : (I) IF PURCHASES ARE HELD BOGUS THE CORRESPONDING SALES MUST ALSO HELD TO BE BOGUS. OTHERWISE, THERE CANNOT BE ANY GENUINE S ALE OF MATERIAL WITHOUT CORRESPONDING PURCHASES. (II) THE ASSESSEE HAS FILED TAX INVOICE-CUM-CHALLAN FROM THE SUPPLIERS CONFIRMING THE SALES. (III) AO HAS NOT DISPUTED THE SALES. (IV) THERE IS MARGINAL INCREASE IN THE GP RATIO FROM 3.6 3% TO 3.69%. (V) TRADING OF PURCHASES & SALE IS NOT VERY HIGH. (VI) IT CAN BE INFERRED AS A CASE OF INFLATION WHICH SHO ULD BE MINIMUM TO 5%. 7. UNDISPUTEDLY, THE SALES ACCOUNT STANDS UNDISTURB ED BY THE AO. THE BINDING JUDGMENT OF HONBLE HIGH COURT IN THE CASE OF NIKUNJ EXIMP ENTERPRISES PVT. LTD. (SUPRA) IS RELEVANT. FURTHER , WE FIND THIS ISSUE IS COVERED IN FAVOUR OF THE ASSESSEE BY VIRTUE OF THE JUDGMENT OF THE HONBLE GUJARAT HIGH COURT JUDGMENT IN THE CASE OF CIT VS. SIMIT P. SETH 356 ITR 451. CONSIDERING THE LENGTHY REASONING GIVEN BY THE CIT( A) AND THE FACTUAL MATRIX 11 ITA NO.1645/PUN/2016 AND CO. NO.18/PUN/2017 SHRI MANOJ SURESH SHARMA OF THE PRESENT CASE, WE CONCUR WITH THE FINDING GIVEN BY THE CIT(A) RESTRICTING THE DISALLOWANCE TO THE GROSS PROFIT R ATE OF 5% OF BOGUS PURCHASES. THEREFORE, THE GROUNDS RAISED BY THE REVENUE ARE DISMISSED. C. WE FIND THE MUMBAI BENCH OF THE TRIBUNAL, ON IDE NTICAL FACTS, IN THE CASE OF SHRI SANJAY H. SHAH VS. ITO IN ITA NOS. 506 2/MUM/2017 FOR THE A.Y. 2009-10 AND OTHERS DECIDED ON 16-02-2018 HAS O BSERVED AS UNDER : 5. WE HAVE CONSIDERED THE RIVAL SUBMISSIONS OF THE PARTIES AND HAVE GONE THROUGH THE ORDERS OF AUTHORITIES BELOW. DURING THE RE-ASSESSMENT PROCEEDING, THE AO NOTED THAT THE ASSESSEE HAS SHOW N THE PURCHASES FROM THE FOLLOWING11 PARTIES: .............. ............. 6. THE ASSESSEE WAS ASKED TO SUBSTANTIATE THE GENUI NENESS OF THE PURCHASES. THE ASSESSEE SUBMITTED THAT THE PURCHASE S WERE MADE THROUGH BROKERS AND NOT DIRECTLY WITH THE PARTIES. THE ASSE SSEE FURNISHED THE COPY OF BILLS OF CORRESPONDING PURCHASES, LEDGER ACCOUNT OF THE PARTIES AND PROOF OF PAYMENT THROUGH BANKING CHANNEL. THE ASSESSEE ALSO FURNISHED THE CORRESPONDING SALE AND DETAILS OF VENDORS. THE SUBM ISSION OF ASSESSEE WAS NOT ACCEPTED BY AO HOLDING THAT NO LORRY RECEIPT, T RANSPORTATION DETAILS, WEIGHT RECEIPT, EXCISE AND GATE PASS WAS PRODUCED B Y THE ASSESSEE. THE AO FURTHER OBSERVED THAT THE ASSESSEE FAILED TO PRODUCE THE SUPPLIER. THE AO CONCLUDED THAT THERE WAS NO ACTUAL DELIVERY OF GOOD S AND THAT ASSESSEE OBTAINED ACCOMMODATION BILL. THE PURCHASES WERE MAD E BY CASH PAYMENT. THUS, THE AO REJECTED THE BOOKS OF ACCOUNT OF THE ASSESSEE. THE AO DISALLOWED THE 25% OF THE TOTAL PURCHASES FROM 11 P ARTIES. THE AO WORKED OUT THE DISALLOWANCE OF RS. 88,28,305/-. THE AO FUR THER DISALLOWED 1% ON ACCOUNT OF BROKERAGE AND COMMISSION PAYMENT AND WOR KED OUT THE COMMISSION AND BROKERAGE OF RS. 3,53,132/-. NO INQU IRY WAS MADE FROM THE PERSONS WHO HAVE MADE PURCHASES FROM ASSESSEE. THE ASSESSING OFFICER HAS NOT IDENTIFIED, WHICH WERE HAWALA DEALERS, FROM WHO M THE ASSESSEE HAS PURCHASED THE MATERIAL. THE ASSESSEE HAS NOT PRODUC ED THE PARTIES AND TRANSPORT CHALLAN. WE HAVE NOTED THAT DURING THE AS SESSMENT PROCEEDING, THE AO HAS RELIED UPON THE INFORMATION RECEIVED FROM SALES TAX DEPARTMENT ABOUT THE VARIOUS ENTRY PROVIDERS. THE AO HAS NOT MADE ANY INDEPENDENT ENQUIRY. THE AO HAS NOT BROUGHT ANY INCRIMINATING EVIDENCE AGAINST THE ASSESSEE EXCEPT RELYING UPON THE REPORT /INFORMATION OF SALE TAX DEPARTMENT AND SURVEY ACTION CONDUCTED BY INCOME-TA X DEPARTMENT ON THE ALLEGED HAWALA DEALERS. THE AO HAS NOT SPECIFIED AS TO WHICH OF THE HAWALA DEALERS DISCLOSED THE NAME OF ASSESSEE AS BENEFICIA RY OF ACCOMMODATION BILL. THE AO DISALLOWED THE 25% OF TOTAL COST OF PURCHASE S IN ABSENCE OF PROOF OF DELIVERY. THE LD. CIT(A) CONFIRMED THE ACTION OF AO ON HIS OBSERVATION THAT ONUS TO PROVE WAS UPON THE ASSESSEE AND THAT ASSESS EE FAILED TO DISCHARGE HIS ONUS. BEFORE LD. CIT(A), THE ASSESSEE SPECIFICA LLY CONTENDED THAT THE TMT BARS WERE PURCHASED AND PROVIDED TO THE THIRD PART IES (PURCHASERS). NO INVESTIGATION AGAINST SUCH STATEMENT WAS CONDUCTED BY LD CIT(A). THE SUBMISSION OF ASSESSEE WAS DISCARDED BY LD CIT(A) H OLDING AS ASTONISHING AND HIGHLY UNIQUE. THE LOWER AUTHORITIES HAVE NOT E XAMINED THE TRADE PRACTICE. THE LOWER AUTHORITY HAS NOT DISPUTED THE CORRESPONDING SALE AGAINST THE PURCHASES. NO EVIDENCE WAS BROUGHT ON RECORD AB OUT THE OBSERVATION OF AO ABOUT THE CASH PURCHASES. 7. THE LD. AR OF THE ASSESSEE IN HIS SUBMISSION CLA IMED THAT VAT RATE IS ONLY 4%. THE RATE OF VAT IS NOT DISPUTED BY REVENUE. IN OUR VIEW CONSIDERING THE NATURE OF TRADE OF ASSESSEE AND THE FACTS OF THE PR ESENT CASE, THE 12 ITA NO.1645/PUN/2016 AND CO. NO.18/PUN/2017 SHRI MANOJ SURESH SHARMA DISALLOWANCE MADE BY AO AND SUSTAINED BY LD. CIT(A) IS EXCESSIVE AND UNREASONABLE. IN OUR VIEW THE ASSESSEE HAS GIVEN SU FFICIENT EVIDENCES TO SUBSTANTIATE ITS PURCHASES, ON WHICH NO FINDING WAS GIVEN BY THE LOWER AUTHORITIES. MOREOVER, NO INCRIMINATING MATERIAL IS BROUGHT ON RECORD EXCEPT ASSUMPTION AND PRESUMPTION OF AO THAT ASSESSEE HAS AVAILED ACCOMMODATION BILLS. THE ADDITION OF ALLEGED BOGUS PURCHASED ARE BASED ON THIRD PARTY INFORMATION. WE ARE OF THE CONSIDERED O PINION THAT UNDER INCOME TAX ACT ONLY REAL INCOME CAN BE TAXED BY THE REVENUE. WE M AY FURTHER NOTE THAT EVEN IN CASES WHERE THE WHOLE TRANSACTION IS N OT VERIFIABLE DUE TO VARIOUS REASONS, THE ONLY TAXABLE IS THE TAXABLE I NCOME COMPONENT AND NOT THE SUBSTANTIAL PART OF THE TRANSACTION. THUS, KEEP ING IN VIEW THE ASSESSEE HAS PAID THE VAT AT THE APPLICABLE RATE ON ALL THE PURCHASES. FURTHER, IN OUR VIEW NO YARDSTICK FORMULA CAN BE APPLIED WHILE ASSE SSING THE AMOUNT OF REVENUE LEAKAGE. MOREOVER, THE REVENUE HAS NOT DISP UTED THE CONSUMPTION OF STEEL. HENCE, KEEPING IN VIEW OF ANY POSSIBILITY OF THE REVENUE LEAKAGE IN THE PRESENT CASE, THE DISALLOWANCE OF PURCHASES OF STEEL AT 5% OF THE PURCHASES WOULD MEET THE END OF JUSTICE. SIMILAR VIEW WAS TAKEN BY HON'BLE GUJARAT HIGH COURT IN CIT VS SIMITH P SETH [2013(356 ITR 451)] AND BY HON'BLE BOMBAY HIGH COURT IN HARIRAM BHAMBANI IT A NO 313 OF 2013. 8. THUS, RESPECTFULLY FOLLOWING THE DECISION OF HON'BL E GUJARAT HIGH COURT IN CIT VS SIMIT P SETH SUPRA AND BY HON'BLE B OMBAY HIGH COURT IN HARIRAM BHAMBANI (SUPRA), THE DISALLOWANCE OF CO ST OF PURCHASES OF STEEL IS RESTRICTED TO 5% OF THE PURCHASES. THE ASSESSING OFFICER IS DIRECTED ACCORDINGLY. IN THE RESULT THE GROUND NO.1 OF THE APPEAL IS PARTLY ALLOWED. 10.1 THEREFORE, THE GP RATE OF THE ASSESSEE IS AROU ND 2.4%. WITH THE ADDITION OF ENTIRE PURCHASES, THE SAME GOES UP TO A N ABNORMAL FIGURE. THE SAME IS NEVER IN THIS LINE OF BUSINESS OF THE ASSES SEE. AS SUCH, REVENUE NEVER HAD ANY DIRECT/INCRIMINATING MATERIAL IN THEIR POSSESSION TO SUPPORT THE ADDITION. THEREFORE, THE CIT(A) RESTRICTED TO THE GP RATE OF 3% OF THE SAID PURCHASES. REVENUE IS AGGRIEVED WITH THE SAME. IN OUR VIEW, REVENUE HAS NO CASE FOR SUCH A GRIEVANCE AS THEY MERELY RELY ON THE DATE FURNISHED BY THE SALES TAX DEPARTMENT. AS SUCH, REVENUE NEVER COULD FULFILL THE NEEDS OF THE PRINCIPLES OF NATURAL JUSTICE SO FAR AS THE PROVIDI NG THE CROSS EXAMINATION OF THE SUPPLIERS OF THE ASSESSEE. THEREFORE, REVENUE FAILED TO FULFILL THE MANDATORY REQUIREMENT OF MAKING A FULL-FLEDGED CASE AGAINST THE ASSESSEE. IN SUCH CIRCUMSTANCES, THE APPROACH OF CIT(A) STAND S JUSTIFIED BUT FOR THE GP RATES ADOPTED BY HIM. 10.2 REGARDING THE GP RATES, WE FIND THERE ARE SPEC TRUM OF VARIATION IN FIGURES. THE DECISIONS DISCUSSED ABOVE SUPPORTS TH E SAME. LD. COUNSEL FOR THE ASSESSEE ON RECORD SUBMITTED AGAINST REMANDING THE APPEALS TO THE FILE OF AO. FURTHER, HE ALSO SUBMITTED FOR ENHANCING THE G P FROM 3% TO 5% OF THE SAID SUSPECTED PURCHASES. 11. CONSIDERING THE ABOVE AND THE SPECIFIC FACTS OF THIS CASE, WE ARE OF THE OPINION THAT RESTRICTING THE ADDITION TO 5% OF THE BOGUS PURCHASES WOULD MEET THE ENDS OF JUSTICE. THUS, WE AMEND THE ORDER OF C IT(A) RESTRICTING THE ADDITION TO 3% OF THE SUSPECTED PURCHASES. ACCORDI NGLY, THE GROUNDS RAISED BY THE REVENUE ARE PARTLY ALLOWED. SINCE WE HAVE P ARTLY ALLOWED THE APPEAL OF REVENUE, THE ADJUDICATION OF COS BECOMES AN ACAD EMIC EXERCISE. THUS THE COS FILED BY THE ASSESSEE ARE DISMISSED. 13 ITA NO.1645/PUN/2016 AND CO. NO.18/PUN/2017 SHRI MANOJ SURESH SHARMA FROM THE ABOVE, IT IS EVIDENT THAT THE ENTIRE FACTS, ISSUES , DECISION OF AO/CIT(A) ARE IDENTICAL TO THE ONE ADJUDICATED BY THE TRIB UNAL, WE ARE OF THE OPINION THAT THE ISSUE NEEDS TO BE ADJUDICATED PART LY IN FAVOUR OF THE REVENUE. FOLLOWING THE SAME REASONING, THE AO IS DIRECTED TO RESTRICT THE ADDITION TO 5% OF THE BOGUS PURCHASES. THUS, THE GROUND S OF APPEAL RAISED BY THE REVENUE ARE PARTLY ALLOWED. 11. SINCE WE HAVE PARTLY ALLOWED THE APPEAL OF THE REVEN UE, WE FIND THE ADJUDICATION OF CROSS OBJECTIONS BY THE ASSESSEE BECOME S AN ACADEMIC EXERCISE. THEREFORE, THE CO FILED BY THE ASSESSEE IS DISMISSED. 12. IN THE RESULT, APPEAL OF THE REVENUE IS PARTLY ALLOWED AND THE CROSS OBJECTION OF THE ASSESSEE IS DISMISSED. ORDER PRONOUNCED ON 03 RD DAY OF OCTOBER, 2018. SD/- SD/- ( /VIKAS AWASTHY) ( . /D. KARUNAKARA RAO) / JUDICIAL MEMBER / ACCOUNTANT MEMBER / PUNE; / DATED : 03 RD OCTOBER, 2018. SATISH ' $ ' $ ' $ ' $ / COPY OF THE ORDER FORWARDED TO : 1. / THE APPELLANT. 2. / THE RESPONDENT. 3. THE CIT(APPEALS)-1, NASHIK. 4. THE PR.CIT-1, NASHIK. 5. , , $ , / DR, ITAT, A BENCH, PUNE. 6. ' / GUARD FILE. / BY ORDER, // TRUE COPY // SENIOR PRIVATE SECRETARY , / ITAT, PUNE.