R.A. INDUSTRIAL METALS, MUMBAI V. ITO 14(1)(1), MUMBAI

ITA 1850/MUM/2015

• Counselvise Citation: [2017] 128 COUNSELVISE.COM (IT) 0423 (ITAT-MUMBAI)
• Duration Of Justice: 2 year(s) 2 month(s) 12 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 12-06-2017
• Appeal Filed By: Assessee
• Order Result: Partly Allowed
• Bench Allotted: D
• Assessment Year: 2009-2010
• Appeal Filed On: 30-03-2015
• Result in Favour of: Partly Allowed
• Court: TRIBUNAL
• Keywords: Bogus purchase; Unexplained expenditure; Peak credit; Accommodation entries
• Section: 69C; 143(3); 133(6); 10

Judgement Text

, , IN THE INCOME TAX APPELLATE TRIBUNAL BENCH D MUMBAI BEFORE SHRI D.T.GARASIA , JM AND SHRI RAJESH KUMAR, AM I.T.A. NO. 1850 /MUM/20 1 5 ( / ASSESSMENT YEAR S : 20 09 - 10 ) M/ R A INDUSTRIAL METALS, 185, 2 ND FLOOR, BULLION EXCHANGE BUILDING SHEIKH MEMON STREET, ZAVERI BAZAR, MUMBAI - 400002 / VS. INCOME TAX OFFICER 14(1)(1), MUMBAI ./ PAN : AAAFR4672H ( / APPELLANT) : ( / RESPONDENT ) / A SSESSEE BY : SHRI VIMAL PUNAMIYA / RE VENUE T BY : SHRI PURUSHOTTAM KUMAR / DATE OF HEARING : 25.4 .2017 / DATE OF PRONOUNCEMENT : 12. 6. 201 7 / O R D E R PER RAJESH KUMAR, A. M: THE CAPTIONED A PPEAL IS BY THE ASSESSEE PERTAINING TO ASSESSMENT YEAR 2009 - 10 . THE APPEAL IS DIRECTED AGAINST THE ORDER OF THE CIT(A) - 17, MUMBAI , DATED 27.2.2015 WHICH IN TURN HAS ARISE N FROM AN ORDER PASSED BY THE ASSESSING OFFICER DATED 31.1.2014 UNDER SECTION 143(3) O F THE INCOME TAX ACT, 1961(IN SHORT THE ACT). 2 ITA NO.1850/MUM/2015 2 . ORIGINALLY, THE ASSESSEE HAS TAKEN FOLLOWING GROUNDS OF APPEAL: 1. THE LD. CIT(A) ERRED IN NOT CONSIDERING THE FACT THAT ORDER PASSED BY THE LD. AO UNDER SECTION 143(3) RWS 147 OF THE INCOME TAX ACT, 1961 .IS BAD IN LAW. 2. THE LD. CIT(A) ERRED IN CONFIRMING ADDITION MADE BY THE LD. AO OF RS.58,89,729/ - UNDER SECTION 69C OF THE INCOME TAX ACT,1961 TREATING THE SAME AS UNEXPLAINED EXPENDITURE AND ALLEGED THE SAME TO BE BOGUS PURCHASE 3. THE LD. CIT(A) ER RED IN CONFIRMING ADDITION MADE BY THE LD. AO OF RS.1,36,825/ - (I.E. 0.5% OF PURCHASES OF RS2,73,65,128/ - ) IN ORDER TO EQUALIZE THE G.P. 4. THE LD. CIT (A) ERRED IN CONFIRMING INTEREST CHARGED BY LD. AO U/S 234A, 234B, 234C AND 234D OF INCOME TAX ACT, 196 1. 5. THE LD. CIT (A) ERRED IN CONFIRMING INITIATION OF PENALTY PROCEEDING U/S 271(1)( C ) OF THE ACT. 3. THE ASSESSEE VIDE LETTER DATED NIL FILED AMENDED GROUNDS WHICH READ AS UNDER: GROUND NO.2: 'THE LD. CIT(A) ERRED IN CONFIRMING THE ADDITION O F RS.58,89,729/ - MADE BY LD. AO U/S 69C AND ENHANCING THE SAME BY RS.25,10,887/ - ON ACCOUNT OF ALLEGED BOGUS PURCHASE AFTER APPLYING THE PRINCIPALS OF 'PEAK CREDIT''. GROUND NO.3: 'THE LD. CIT(A) ERRED IN CONFIRMING THE ADDITION OF RS. 1, 36,825 / - MADE B Y LD. AO AND E NHANCING THE SAME UPTO RS. 1 0,94,605J - IN ORDER TO EQUALIZE THE GROSS PROFIT MARGIN DUE TO ALLEGED BOGUS PURCHASES'. [I.E. THE LD. AO ADDED 0.5% OF THE ALLEGED BOGUS PURCHASES TO EQUALIZE THE GROSS PROFIT MARGIN WHICH WAS ENHANCED BY THE LD. C IT(A) TO 4% 3 ITA NO.1850/MUM/2015 4. THE ISSUE RAISED IN THE AMENDED GROUND NO. 2 IS AGAINST THE CONFIRMATION OF ADDITION OF RS.58,89,729/ - BY THE LD.CIT(A) AS MADE BY THE AO U/S 69C OF THE ACT AND ALSO ENHANCEMENT BY RS.25,10,887/ - ON ACCOUNT OF A LLEGED BOGUS PURCHASE BY A PPLYING PEAK CREDIT THEORY . 5. THE AO RECEIVED SPECIFIC INFORMATION FROM THE DIRECTOR GENERAL OF INCOME TAX, MUMBAI THAT THE SALES TAX DEPARTMENT, GOVERNMENT OF MAHARASHTRA HAS FOUND THAT THE ASSESSEE IS INVOLVED IN TAKING ACCOMMODATION ENTRIES OF BOGU S PURCHASES AND ACCORDINGLY THE ASSESSEE CALLED UPON BY THE AO TO PRODUCE DETAILS OF GOODS PURCHASED FROM THESE PARTIES, COP IES OF BILLS AND LEDGER ACCOUNT, TRANSPORT BILLS, AND STOCK REGISTER TO PROVE THE ACTUAL SALE OF MATERIALS WHICH W ERE SUBMITTED B Y THE ASSESSEE AS HAS BEEN INCORPORATED IN THE ASSESSMENT ORDER AT PAGE 5 OF THE ASSESSMENT ORDER. HOWEVER, THE AO WAS NOT CONVINCED WITH THE EXPLANATION AND DOCUMENTARY EVIDENCES SUBMITTED BY THE ASSESSEE AND MADE ADDITION BY CALCULATING THE PEAK CREDIT AFTER TAKING INTO CONSIDERATION THE STATEMENT RECORDED FROM THE PARTIES BY THE SALES TAX DEPARTMENT AND MADE ADDITION OF RS.58,89,729/ - UNDER SECTION 69C OF THE ACT AS UNEXPLAINED EXPENDITURE BY OBSERVING THAT THE NOTICES U/S 133(6) SENT TO THE SAID PAR TIES WERE RETURNED UNSERVED AND THE SUPPLIERS H AVE CLEARLY AND CANDIDLY ADMITTED BEFORE THE SALES TAX DEPARTMENT TO HAVE INDULGED IN ISSUING BOGUS BILLS WITHOUT MAKING THE ACTUAL SUPPL IES OF MATERIAL. AGGRIEVED BY THE ORDER OF THE AO, THE ASSESSEE PREFE RRED AN APPEAL BEFORE 4 ITA NO.1850/MUM/2015 THE FAA CHALLENGING THE ADDITION MADE BY THE AO U/S 69C OF THE ACT , WHO ALSO DISMISSED THE APPEAL OF THE ASSESSEE AFTER CONSIDERING THE SUBMISSIONS AND CONTENTIONS RAISED BEFORE THE FAA, WHICH HAS BEEN INCORPORATED BY THE LD.CIT(A) IN APPELLATE ORDER AT PARA 2.2 AND DECIDED THE ISSUE VIDE PARA 2.3.15 BY OBSERVING AND HOLDING AS UNDER : 2.3.15 FURTHER, IT IS A MATTER OF FACT THAT THE APPELLANT HA S PURCHASED THE ITEMS SOLD BY IT FROM THE GREY MARKET AND THEREFORE TH E PAYMENTS SHOWN TO BE MADE TO THESE HAWALA OPERATORS HAVE ACTUALL Y NOT BEEN MADE FOR THE PURPOSES FOR WHICH IT IS STATED TO BE MADE NATURALLY, AS DISCUSSED ABOVE THE APPELLANT HAS INTRODUCED UNEXPLAINE D CASH IN FOR MAKING THE PURCHASES AND SHOWN THE PURCHASES FROM THES E PARTIES AS CREDITS. AS DISCUSSED ABOVE THE PEAK ADDED IS TO BE ADDED T O THE APPELLANT'S INCOME FOR UNEXPLAINED CASH INTRODUCED BY THE APPELLA NT FOR AFFECTING THE PURCHASES. IT IS A MATTER OF RECORD THAT APPELLA NT WORKED OUT THE PEAK ON THE BASIS OF INFORMA TION AVAILABLE HOWEVER, TH E LD.AO DISREGARDED THE PEAK WORKING DONE BY THE APPELLANT. BASED ON THE INFORMATION AVAILABLE ON RECORD, THE LD.AO HAS WORKED OUT THE PEA K CREDIT AT RS.58,89,729/ - BY CALCULATING THE PEAK AFTER MERGING TH E ACCOUNTS OF ALL THE B OGUS PARTIES FROM WHOM THE PURCHASES WERE MAD E DURING THE YEAR U/S 69C OF THE ACT BEING UNEXPLAINED EXPENDITURE. I FIND NO FAULT IN THE ADDITIONS SO MADE BY THE LD.AO AND THE ADDITION MADE IS ACCORDINGLY CONFIRMED. THE LD.AO IS FURTHER DIRECTED TO VERIFY AS TO WHETHER THERE IS ANY OUTSTANDING CREDIT AS ON THE DAY OF CLOSURE OF THE ACCOUNTS OF THE APPELLANT AND IF THERE IS ANY THE SAME NEED TO BE TREATED AS BOGUS AND IDENTIFY WHAT ARE THE CORRESPONDING ASSET CREATED BY THE APPELLANT TO MATCH THE BALANCE S HEET AS ON THAT DATE. THIS G AROUND OF ANNEAL IS THUS DISMISSED WITH ENHANCEMENT (APPX.25,10,887/ - ) 6 . WHILE DISMISSING THE APPEAL OF THE ASSESSEE, THE LD.CIT(A) ENHANCED THE INCOME OF THE ASSESSEE BY RS.25,10,887/ - ON ACCOUNT OF BOGUS PURCHASES BY APPLY ING THE PRINCIPLE OF PEAK CREDIT. THE LD. AR VEHEMENTLY SUBMITTED BEFORE US THAT THE ADDITION U/S 69C OF THE ACT CANNOT BE MADE MERELY ON THE 5 ITA NO.1850/MUM/2015 BASIS OF INFORMATION FROM THE SALES TAX DEPARTMENT WHETHER THE SUPPLIERS WHO HAVE ENGAGED IN THE BUSINESS OF S UPPLYING MATERIAL OR NOT. THE LD.AR SUBMITTED THAT DURING THE COURSE OF ASSESSMENT PROCEEDINGS AND AL S O IN THE APPELLATE PROCEEDINGS, THE ASSESSEE FILE D COPIES OF PART Y - WISE PURCHASES AND SALES, PURCHASE INVOICES, COPIES OF BANK STATEMENT S EVIDENCING THE PAYMENTS MADE TO THE SUPPLIERS BY THE ACCOUNT PAYEE CHEQUES , Q UANTIT ATIVE DETAILS OF MATERIALS SHOWING RECEIPTS OF MATERIAL AND ISSUE OF THE SAME AND ULTIMATELY CLOSING BALANCE AT THE END OF THE YEAR RECONCILI NG PURCHASE S AND SALES. THE LD. AR SUBMITTED THAT THE AO HAS FAILED TO POINT OUT ANY DEFECT IN THE BOOKS OF ACCOUNT AND WHOLLY RELIED UPON THE STATEMENT OF THE SUPPLIERS MADE BEFORE THE SALES TAX AUTHORITIES. THE LD. AR ALSO SUBMITTED THE AO HAS FAILED TO VERIFY, ASSESS AND INVESTIGATE LEGAL AND DOCUMENTARY EVIDENCE S FILED BY THE ASSESSEE BEFORE MAKING ADDITION AND ALSO THE AO DID NOT DISPUTE THE PURCHASE AND THER EFORE UNEXPLAINED EXPENDITURE AND ADDITION THEREOF ON ACCOUNT OF BOGUS PURCHASES CANNOT BE MADE UNDER SECTION 69C OF THE ACT AS UNEXP LAINED EXPENDITURE. BOTH THE AUTHORITIES HAVE NOT DISPUTED THE QUANT IT ATIVE TALLY FURNISHED BY THE ASSESSEE . THE LD. AR ARGUED THAT IF THE ADDITION AS MADE BY THE AO, CONFIRMED AND ENHANCED BY THE LD.CIT(A), THE SAME WOULD BE RESULTED IN UNREALISTIC PICTU RE OF THE GROSS PROFIT OF THE ASSESSEE WHICH IS NOT PRACTICALLY POSSIBLE. THE WHOLE THEORY OF MAKING ADDITION IS BASED ON CONJECTURE, PREMISES AND ASSUMPTION S. THE LD. AR ALSO 6 ITA NO.1850/MUM/2015 POINTED OUT THAT THE SALES TAX WHICH WAS NOT PAID BY THE SUPPLIERS (BOGUS SUPPL IERS) WAS PAID BY THE ASSESSEE. THE LD. AR FINALLY PRAYED BEFORE THE BENCH THAT IN VIEW OF THE FACTS THAT THE REVENUE IS NOT IN POSSESSION OF CONCRETE MATERIAL AND THE ADDITION AS HAS BEEN SUSTAINED AND ENHANCED BY THE LD.CIT(A) SHOULD BE DELETED. IN SUPPO RT HIS CONTENTION, THE LD.AR PLACED RELIANCE ON THE FOLLOWING CASE LAW: A) ACIT V/S M/S JAYBHARAT TEXTILES AND REAL ESTATE LTD IN ITA NO.5163/MUM/2013(AY - 2010 - 11) DATED 24.2.2016; B) ACIT V/S TARLA R SHAH IN ITA NO.5295/MUM/2013 (AY - 2010 - 11) DATED - 2.2.201 6); C) UNI PACK (INDIA V/S ITO) IN ITA NO.5239/M/2013 (AY - 2010 - 11) DATED 16.12.2016; D) RUSHAB ENTERPRISES V/S ACIT ((2015) 60 TAXMANN.COM 134 (BOM); E) FREE INDIA ASSURANCE SERVICES LTD V/S DCIT (2011) 12 TAXMANN.COM 424(MUM); F) SHREE GANPATRAJ A SANGH AVI V/S ACIT IN ITA NO.2826/MUM/2013 (AY - 2009 - 10) DATED 5.11.2014 7 . ON THE OTHER HAND, THE LD.DR SUBMITTED BEFORE THE BENCH THAT THE ASSESSEE HAS AVAILED ACCOMMODATION ENTRIES TO SUPPRESS THE PROFIT S MAKING PURCHASE FROM HAWALA OPERATORS AND THUS THE BOO KS OF ACCOUNTS WERE MANIPULATED AND F UDGED . THE LD. DR ALSO SUBMITTED THAT THERE WAS NO DOUBT AS TO THE ACCOMMODATION ENTRIES BEING AVAILED BY THE ASSESSEE AS THE SUPPLIE R S WHO SUPPLIED THE BILLS TO THE ASSESSEE W ERE NOT TRACEABLE ON THE ADDRESSE S FURNISH ED BY THE ASSESSEE AND NOTICES ISSUED U/S 133(6) WERE RECEIVED BACK UNSERVED BY THE AO WITH THE REMARK UNSERVED. THE LD. DR FURTHER ARGUED THAT FURNISHING OF THE PURCHASE BILLS AND SALES BILLS, STOCK TALLY 7 ITA NO.1850/MUM/2015 REGISTER, TRANSPORT RECEIPTS AND DELIVERY CHALLAN S ETC DID NOT PROVE THE GENUINENESS OF PURCHASES IN ANY MANNER SPECIFICALLY IN VIEW OF THE FACTS THAT THE HAWALA SUPPLIERS HAVE GIVEN THE ACCOMMODATION ENTRIES TO THE ASSESSEE . FINALLY THE LD DR REQUESTED TO SUSTAIN THE ORDER OF THE LD.CIT(A) . 8 . WE HA VE CAREFULLY CONSIDERED THE RIVAL CONTENTIONS AND PERUSED THE MATERIAL PLACED BEFORE US INCLUDING THE IMPUGNED ORDERS AND CASE LAW RELIED UPON BY THE ASSESSEE. THE UNDISPUTED FACTS OF THE CASE ARE THAT THE REVENUE HAS RECEIVED INFORMATION FROM THE SALES T AX DEPARTMENT, GOVERNMENT OF MAHARASHTRA THAT THE ASSESSEE IS ONE OF BENEFICIARY OF THE TRANSACTIONS BY HAWALA OPERATORS WHO PROVIDED ACCOMMODATION ENTRIES TO THE ASSESSEE AND THAT THE PURCHASE S FROM THE SAID PARTIES WERE NOT CONFIRMED AS THE NOTICE ISS UE U/S 133(6) OF THE ACT WERE RETURNED UNSERVED. WHEREAS DURING THE COURSE OF ASSESSMENT PROCEEDINGS AS WELL AS IN THE APPELLATE PROCEEDINGS, THE ASSESSEE HAS PRODUCED VARIOUS BOOKS OF ACCOUNTS CO RRO BORATING THE FACT THAT THE MATERIAL WAS ACTUALLY PURCHASE D AND SOLD, PAYMENTS WERE MADE THROUGH BANKING CHANNEL , STOCK TALLY REGISTER SHOWING RECEIPTS AND ISSUES OF MATERIALS AND BILLS THEREOF , RECONCILIATION OF SALE S AND PURCHASE S AND DELIVERY CHALLAN ETC. IN OUR VIEW, IT IS SETTLED LEGAL POSITION THAT ONCE T HE ASSESSEE HAS FILED ALL THE NECESSARY DETAILS BEFORE THE AO , IT IS FOR THE AO TO DISPROVE THE EVIDENCE S SUBMITTED BY THE ASSESSEE AND POINT OUT FURTHER DEFECTS IN THE BOOKS OF ACCOUNT BEFORE MAKING ADDITION ON ACCOUNT OF BOGUS PURCHASES. IN 8 ITA NO.1850/MUM/2015 THE INSTAN T CASE BEFORE US, THE WHOLE CONCLUSION HAS BEEN DRAWN BY THE REVENUE AUTHORITIES MERELY ON CONJECTURES , SURMISES AND PRESUMPTION THAT THE ASSESSEE MIGHT HAVE TAKEN THE HAWALA ENTRIES FROM THE HAWALA OPERATORS AND THE CASH SO GENERATED WAS USE D FOR MAKING PURCHASES FROM THE GRAY MARKET. HOWEVER, NO CONCRETE FINDING S WITH THE NECESSARY EVIDENCES W ERE GIVEN BY THE REVENUE AUTHORITIES FOR MAKING THE ADDITION /ENHANCEMENT . IN VIEW OF THE FACTS AND CIRCUMSTANCES OF THE CASE, WE ARE NOT IN AGREEMENT WITH THE CON CLUSION DRAWN BY THE FAA THAT THE A DDITION AS MADE BY THE AO AMOUNTING TO RS.58,89,729/ - U/S 69C WAS CORRECT WITH THE FURTHER ENHANCEMENT BY RS. 25,10,887/ - BY THE LD.CIT(A). ACCORDINGLY, WE SET ASIDE THE ORDER OF THE LD.CIT(A) ON THIS ISSUE AND DIRECT THE AO TO DELETE THE ADDITION S . 9 . THE ISSUE RAISED IN THE AMENDED GROUND NO 4 IS AGAINST THE CONFIRMATION OF ADDITION OF RS.1,36,825/ - AND ENHANCING THE SAME UP TO RS.10,94,605/ - BY THE LD.CIT(A) TO EQUALIZE THE GP MARGIN. 10 . DURING THE COURSE OF AS SESSMENT PROCEEDINGS, THE AO OBSERVED THA T THE GP OF THE ASSESSEE IN THE CURRENT YEAR WAS 6.02% AS COMPARED TO 6.36% IN THE IMMEDIATE PRECEDING YEAR. THE AO WAS NOT CONVINCED WITH THE CONTENTION OF THE ASSESSEE THA T THE FALL IN GP IS DUE TO OVERALL MARKET CONDITION S AND ALSO THA T THE SALE S OF THE ASSESSEE INCREASED TO RS.6,30,62,994/ - AS COMPARED TO RS.6,09,13,726/ - / - IN THE IMMEDIATE PRECEDING YEA R AND MADE ADDITION AT THE RA T E OF 0.5% ON RS.2,73,65,128/ - BEING TAINTED PURCHASES OF 9 ITA NO.1850/MUM/2015 RS.1,36,825/ - TO EQUAL IZE THE GP ON TAINTED AND NON - TAINTED PURCHASES . IN THE APPELLATE PROCEEDINGS , THE LD.CIT(A) NOT ONLY SUSTAINED THE ADDITION AS MADE BY THE AO BUT ALSO ENHANCED THE ADDITION BY OBSERVING AND HOLDING AS UNDER (2.3.14) : 2.3.14 HAVING ESTABLISHED THE FAC T THAT THE APPELLANT HAD MADE THE PURCHASES FROM THE BOGUS PARTIES AND THE EVIDENCES GIVEN BY THE SUPPLIERS BEFORE THE SALE TAX AUTHORITIES ARE CREDITABLE EVIDENCE WHICH CANNOT BE IGNORED SO LIGHTLY AS IS BEING DONE BY THE APPELLANT. IN VIEW OF THE FOREGOI NG DISCUSSION, LD .AO SHOULD HAVE REJECTED THE BOOKS OF ACCOUNT AND MADE THE ESTIMATION OF PROFIT. HOWEVER THE LD.AO HAS WITHOUT REJECTING THE BOOKS OF ACCOUNT ESTIMATED THE PROFIT BY STATING THAT 0.5% OF BOGUS PURCHASES(RS.2,73,65,128/ - ) BE ADDED TO EQUA LISE THE GP IN RESPECT OF TAINTED AND NON - TAINTED PURCHASES. FURTHER THE LD.AO HAS ALSO MADE AN ANALYSIS OF GP WORKED OUT IN RESPECT OF TAINTED/NON - TAINTED PURCHASES AT 5.08% AND 6.40% RESPECTIVELY. THE LD.AO THEREAFTER CONCLUDED THAT GP SHOWN BY THE APPEL LANT IN RESPECT OF TAINTED PURCHASES IS LESS THEN GP SHOWN FOR NON - TAINTED PURCHASES. I AM NOT IN AGREEMENT WITH THE OBSERVATION OF THE LD.AO, AND REJECT THE BO OKS OF THE ACCOUNTS OF THE APPELLANT. AS IN CASES LIKE THIS ARE BOUND TO BE INFLATION OF PURCHA SES AS APPELLANT HAS NOT PURCHASES THE ITEMS AS PER THE BILLS WHICH HAS BEEN DEBITED TO THE PROFIT AND LOSS ACCOUNT. THE INFLATION OF BILLS NORMALLY AMOUNTS TO 4 TO 12% OF TAXES WHICH APPELLANT SAVES ONCE IT BUYS GOODS FROM THE GREY MARKET. ACCORDINGLY, I INCREASE THE GP OF THE APPELLANT BY A MARGIN OF 4% AS COMPARED TO 6.02% SHOWN BY IT IN ITS RETURN OF INCOME. THEREFORE, THE LD.AO IS DIRECTED TO ASSESS THE INCOME OF THE APPELLANT BY ADOPTING THE GP OF 10.02% AS COMPARED TO 6.02% ADOPTED. 11 . WE HAVE C AREFULLY CONSIDERED THE RIVAL CONTENTIONS AND PERUSED THE MATERIAL PLACED BEFORE US INCLUDING THE IMPUGNED ORDERS AND CASE LAW RELIED UPON BY THE ASSESSEE. WE FIND THAT THE LD.CIT(A) ACTED PRIMARILY ON THE CONJECTURE, SURMISES AND PRESUMPTIONS BY COMING TO THE CONCLUSION THE ASSESSEE SAVED TAXE S FROM 4 TO 12% BY PURCHASING GOODS FROM GRAY 10 ITA NO.1850/MUM/2015 MARKETS AND ACCORDINGLY, ENHANCE D THE ADDITION BY 4% OF THE TAINTED PURCHASES OF RS. 2,73,65,128/ - . THE LD. CIT(A) HAS NOT GIVEN ANY CONCRETE BASIS BUT GENERALISED THAT 4 TO 12% WE RE GENERALLY SAVED WHEN THE PURCHASES WERE MADE FROM GRAY MARKET. IT IS PERTINENT TO NOTE THE FACT THAT THE ASSESSEE HAS ALSO PAID AMOUNT OF SALES TAX WHICH THE SO CALLED HAWALA OPERATORS SHOULD HAVE PAID WHO PROVIDED ACCOMMODATION ENTR IES TO THE ASSESSEE AS THE ASSESSEE WAS FORCED TO PAY THE SALES TAX BY VAT AUTHORITIES . IN OUR OPINION, THE ENHANCEMENT OF INCOME IS UNREASONABLE AND UNCALLED FOR IN VIEW OF THE FACTS AND DISCUSSION MADE HEREIN ABOVE . W E DO NOT FIND ANY JUSTIFICATION OR RE ASONS FOR ENHANCEMENT BY APPLYING GP OF 4% ON THE BOGUS PURCHASE OF RS.2,73,65,128/ - AS AGAINST 0.50% BY THE AO . HOWEVER, WE DO AGREE WITH THE LD.CIT(A) ON THE ISSUE OF CONFIRMING THE GP ADDITION IN ORDER TO EQUALIZE THE GP ON TAINTED AMOUNT OF PURC HASES WHICH IS MADE AT THE RA T E OF 0.50 % ON BOGUS PURCHASES WHICH COMES TO RS.1,36,825/ - / - WE PARTLY SUSTAIN THE ORDER OF HE LD.CIT(A) BY DELETING THE ADDITION OF RS.9,57,780/ - AND SUSTAIN ING T HE ADDITION OF RS.1,36,825/ - . THIS GROUND IS PARTLY ALLOWED . 12 . IN THE RESULT, THE APPEAL OF THE ASSESSEE IS PARTLY ALLOWED. ORDER PRONOUNCED IN THE OPEN COURT ON 12 TH JUNE , 2017 . SD SD ( D.T.GARASIA ) ( RAJESH KUMAR) JUDICIAL MEMBER ACCOUNTANT MEMBER MUMBAI ; DATED : 12. 6 .2 017 SR.PS:SRL: 11 ITA NO.1850/MUM/2015 / COPY OF THE ORDER FORWARDED TO : 1. / THE APPELLANT 2. / THE RESPONDENT 3. ( ) / THE CIT(A) 4. / CIT CONCERNED 5. , , / DR, ITAT, MUMBAI 6. / GUARD F ILE / BY ORDER, / (DY./ASSTT. REGISTRAR) , / ITAT, MUMBAI