INDO AMINES LTD, DOMBIVALI V. ASST CIT CIR 1, KALYAN

ITA 1858/MUM/2015

• Counselvise Citation: [2017] 126 COUNSELVISE.COM (IT) 8052 (ITAT-MUMBAI)
• Duration Of Justice: 2 year(s) 8 month(s) 12 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 11-12-2017
• Appeal Filed By: Assessee
• Order Result: Partly Allowed
• Bench Allotted: I
• Next Hearing Date: 01-02-2017
• Assessment Year: 2010-2011
• Appeal Filed On: 30-03-2015
• Result in Favour of: Partly Allowed
• Court: TRIBUNAL
• Department Lawyers: SHIR RAM KUMAR TIWARIDR
• Assessee Lawyers: M N NANDAGONKAR
• Keywords: Bogus purchase; Capital asset; Depreciation; Question of law
• Section: 133A

Judgement Text

, , , IN THE INCOME TAX APPELLATE TRIBUNAL MUMBAI BENCHES, I MUMBAI , , , BEFORE SHRI JOGINDER SINGH, JUDICIAL MEMBER, AND SHRI MANOJ KUMAR AGGARWAL, ACCOUNTANT MEMBER ITA NO.1858/MUM/2015 ASSESSMENT YEAR: 2010-11 INDO AMINES LTD., W/44, PHASE-II, MIDC, DOMBIVALI EAST, MUMAI-421203 / VS. ACIT, CIRCLE-1, PLAZA WAYALE NAGAR, KHADAKPADA, KALYAN WEST-421301 ( #$% & /ASSESSEE) ( / REVENUE) PAN. NO . AAACI1374A ' & ( / DATE OF HEARING : 11/12/2017 ' & ( / DATE OF ORDER: 11/12/2017 #$% & ! / ASSESSEE BY SHRI M.N. NANDAGONKAR ! / REVENUE BY SHIR RAM KUMAR TIWARI-DR ITA NO.1858/MUM/2015 M/S INDO AMINES LTD. 2 / O R D E R PER JOGINDER SINGH(JUDICIAL MEMBER) THE ASSESSEE IS AGGRIEVED BY THE IMPUGNED ORDER DAT ED 10/02/2015, OF THE LD. FIRST APPELLATE AUTHORITY, T HANE. THE FIRST GROUND RAISED BY THE ASSESSEE PERTAINS TO DIS ALLOWANCE OF PURCHASES AMOUNTING TO RS.85,07,929/-. 2. DURING HEARING, THE LD. COUNSEL FOR THE ASSESSE E, SHRI M.N. NANDAGAONKAR, EXPLAINED THAT THE ASSESSEE IS A MANUFACTURER AND THERE CANNOT BE SALE WITHOUT PURCH ASES, THEREFORE, A LENIENT VIEW MAY BE TAKEN. A QUERY WAS RAISED BY THE BENCH AS TO WHAT HAPPENED IN ASSESSMENT YEAR 20 09-10. THE LD. COUNSEL EXPLAINED THAT NO APPEAL WAS FILED BY THE ASSESSEE ON QUANTUM ADDITION AND AS SUCH WAS ACCEPT ED. IT WAS CONTENDED THAT FOR ASSESSMENT YEAR 2011-12, THE APPEAL IS PENDING BEFORE THE FIRST APPELLATE AUTHORITY AND IN THE CURRENT YEAR NO PENALTY WAS LEVIED. PLEA WAS ALSO R AISED THAT THE PURCHASES WERE MADE THROUGH BROKER WHO COULD NO T BE PRODUCED BY THE ASSESSEE. OUR ATTENTION WAS INVITE D TO PAGE- 36, 63 TO 67 AND 70 OF THE PAPER BOOK. IT WAS ARGUE D THAT SALES ARE NOT DOUBTED AND THE WHOLE ADDITION WAS MA DE ON THE BASIS OF STATEMENT. THE CRUX OF THE ARGUMENT IS THAT SOME G.P. ADDITION CAN BE MADE AND LENIENT VIEW MAY BE T AKEN. ON ITA NO.1858/MUM/2015 M/S INDO AMINES LTD. 3 THE OTHER HAND, SHRI RAM KUMAR TIWARI, LD. DR, DEFE NDED THE ADDITION MADE BY THE LD. ASSESSING OFFICER AND CONF IRMED BY THE LD. COMMISSIONER OF INCOME TAX (APPEAL). 2.1. WE HAVE CONSIDERED THE SUBMISSIONS OF LD. DR AND PERUSED THE MATERIAL AVAILABLE ON RECORD. IF THE OB SERVATION MADE IN THE ASSESSMENT ORDER, LEADING TO ADDITION M ADE TO THE TOTAL INCOME, CONCLUSION DRAWN IN THE IMPUGNED ORDER, MATERIAL AVAILABLE ON RECORD, ASSERTIONS MADE BY TH E LD. RESPECTIVE COUNSEL, IF KEPT IN JUXTAPOSITION AND AN ALYZED, BEFORE ADVERTING FURTHER, THE FACTS OF THE PRESENT APPEAL BEFORE US, WE DEEM IT APPROPRIATE TO CONSIDER VARIO US DECISIONS FROM HON'BLE HIGH COURTS/HON'BLE APEX COU RT, SO THAT WE CAN REACH TO A PROPER CONCLUSION. THE HON'B LE GUJARAT HIGH COURT IN SANJAY OILCAKES INDUSTRIES VS CIT (2009) 316 ITR 274 (GUJ.) HELD AS UNDER:- 11 . HAVING HEARD THE LEARNED ADVOCATES APPEARING FOR THE RESPECTIVE PARTIES, IT IS APPARENT THAT NO INTERFER ENCE IS CALLED FOR IN THE IMPUGNED ORDER OF THE TRIBUNAL DATED APRIL 29, 1994, READ WITH THE ORDER DATED SEPTEMBER 29, 1994, MADE IN MISCELL ANEOUS APPLICATION. IN THE PRINCIPAL ORDER THE TRIBUNAL HA S RECORDED THE FOLLOWING FINDINGS : '8.3. WE HAVE CONSIDERED THE RIVAL SUBMISSIONS AND PERUSED THE FACTS ON RECORD. IN OUR OPINION, THE ACTION OF THE COMMISSIONER OF INCOME-TAX (APPEALS) CONFIRMING 25 PER CENT. OF THE AMOUNTS CLAIMED IS FAIR AND REASONABLE AND NO INTERFERENCE IS CALLED FOR. THE COMMIS SIONER OF IN COME-TAX (APPEALS) HAS GONE THROUGH THE PURCHASE PRICES OF T HE RAW MATERIAL PREVALENT AT THE TIME AND RIGHTLY CAME TO THE CON ITA NO.1858/MUM/2015 M/S INDO AMINES LTD. 4 CLUSION THAT THE DISALLOWANCE TO THE EXTENT OF 25 P ER CENT. WAS CALLED FOR. IT IS ESTABLISHED THAT THE PARTIES WERE NOT TRACEABLE ; THEY OPENED THE BANK ACCOUNTS IN WHICH THE CHEQUE S WERE CREDITED BUT SOON THEREAFTER THE AMOUNTS WERE WITHD RAWN BY BEARER CHEQUES. THAT FAIRLY LEADS TO THE CONCLUSION THAT THESE PARTIES WERE PERHAPS CREATION OF THE ASSESSEE ITSEL F FOR THE PURPOSE OF BANKING PURCHASES INTO BOOKS OF ACCOUNT BECAUSE THE PURCHASES WITH BILLS WERE NOT FEASIBLE. THUS, T HE ABOVENOTED PARTIES BECOME CONDUIT PIPES BETWEEN THE ASSESSEE-FIRM AND THE SELLERS OF THE RAW MATERIALS. UNDER THE CIRCUMSTANCES, IT WAS NOT IMPOSSIBLE FOR THE ASSESS EE TO INFLATE THE PRICES OF RAW MATERIALS. ACCORDINGLY, A N ADDITION AT THE RATE OF 25 PER CENT. FOR EXTRA PRICE PAID BY TH E ASSESSEE THAN OVER AND ABOVE THE PREVALENT PRICE IS FAIR AND REASONABLE AND WE ACCORDINGLY CONFIRM THE FINDING OF THE COMMI S SIONER OF INCOME-TAX (APPEALS).' 12. THUS, IT IS APPARENT THAT BOTH THE COMMISSIONER (APPEALS) AND THE TRIBUNAL HAVE CONCURRENTLY ACCEPTED THE FIN DING OF THE ASSESSING OFFICER THAT THE APPARENT SELLERS WHO HAD ISSUED SALE BILLS WERE NOT TRACEABLE. THAT GOODS WERE RECE IVED FROM THE PARTIES OTHER THAN THE PERSONS WHO HAD ISSUED B ILLS FOR SUCH GOODS. THOUGH THE PURCHASES ARE SHOWN TO HAVE BEEN MADE BY MAKING PAYMENT THEREOF BY ACCOUNT PAYEE CHE QUES, THE CHEQUES HAVE BEEN DEPOSITED IN BANK ACCOUNTS OS TENSIBLY IN THE NAME OF THE APPARENT SELLERS, THEREAFTER THE ENTIRE AMOUNTS HAVE BEEN WITHDRAWN BY BEARER CHEQUES AND T HERE IS NO TRACE OR IDENTITY OF THE PERSON WITHDRAWING THE AMOUNT FROM THE BANK ACCOUNTS. IN THE LIGHT OF THE AFORESA ID NATURE OF EVIDENCE IT IS NOT POSSIBLE TO RECORD A DIFFERENT C ONCLUSION, DIFFERENT FROM THE ONE RECORDED BY THE COMMISSIONER (APPEALS) AND THE TRIBUNAL CONCURRENTLY HOLDING THA T THE APPARENT SELLERS WERE NOT GENUINE, OR WERE ACTING A S CONDUIT BETWEEN THE ASSESSEE-FIRM AND THE ACTUAL SELLERS OF THE RAW MATERIALS. BOTH THE COMMISSIONER (APPEALS) AND THE TRIBUNAL HAVE, THEREFORE, COME TO THE CONCLUSION THAT IN SUC H CIRCUMSTANCES, THE LIKELIHOOD OF THE PURCHASE PRICE BEING INFLATED CANNOT BE RULED OUT AND THERE IS NO MATERI AL TO DISLODGE SUCH FINDING. THE ISSUE IS NOT WHETHER THE PURCHASE PRICE REFLECTED IN THE BOOKS OF ACCOUNT MATCHES THE PURCHASE PRICE STATED TO HAVE BEEN PAID TO OTHER PERSONS. TH E ISSUE IS WHETHER THE PURCHASE PRICE PAID BY THE ASSESSEE IS REFLECTED AS RECEIPTS BY THE RECIPIENTS. THE ASSESSEE HAS, BY SET OF EVIDENCE AVAILABLE ON RECORD, MADE IT POSSIBLE FOR THE RECIPIENTS NOT BEING TRACEABLE FOR THE PURPOSE OF I NQUIRY AS TO WHETHER THE PAYMENTS MADE BY THE ASSESSEE HAVE BEEN ACTUALLY RECEIVED BY THE APPARENT SELLERS. HENCE, T HE ESTIMATE MADE BY THE TWO APPELLATE AUTHORITIES DOES NOT WARR ANT ITA NO.1858/MUM/2015 M/S INDO AMINES LTD. 5 INTERFERENCE. EVEN OTHERWISE, WHETHER THE ESTIMATE SHOULD BE AT A PARTICULAR SUM OR AT A DIFFERENT SUM, CAN NEVE R BE AN ISSUE OF LAW. IN THE AFORESAID CASE, THE HON'BLE HIGH COURT ACCEP TED THAT THE APPARENT SELLERS, WHO ISSUED THE SAID BILL S WERE NOT TRACEABLE AND THE GOODS RECEIVED FROM PARTIES OTHER THAN THE PERSONS, WHO HAD ISSUED THE BILLS FOR SUCH GOODS. T HE PURCHASES WERE SHOWN TO HAVE BEEN MADE BY MAKING PAYMENTS, THROUGH BANKING CHANNEL AND THUS THE APPA RENT SELLERS WERE NOT GENUINE OR WERE ACTING AS CONDUIT BETWEEN THE ASSESSEE AND THE ACTUAL SELLER. IN SUCH A SITUA TION, THE CONCLUSION DRAWN BY THE LD. COMMISSIONER OF INCOME TAX (APPEAL) AS WELL AS BY THE TRIBUNAL WAS AFFIRMED. HON'BLE APEX COURT IN KACHWALA GEMS VS JCIT (2007) 158 TAXM AN 71 OBSERVED THAT AN ELEMENT OF GUESSWORK IS INEVITABLE IN CASES, WHERE ESTIMATION OF INCOME IS WARRANTED. 2.2. THE HON'BLE GUJARAT HIGH COURT IN CIT VS BHOLANATH POLY FAB. PVT. LTD. (2013) 355 ITR 290 (G UJ.) HELD/OBSERVED AS UNDER:- 5. HAVING COME TO SUCH A CONCLUSION, HOWEVER, THE TRIBUNAL WAS OF THE OPINION THAT THE PURCHASES MAY HAVE BEEN MADE F ROM BOGUS PARTIES, NEVERTHELESS, THE PURCHASES THEMSELVES WER E NOT BOGUS. THE TRIBUNAL ADVERTED TO THE FACTS AND DATA ON RECORD A ND CAME TO THE CONCLUSION THAT THE ENTIRE QUANTITY OF OPENING STOC K, PURCHASES AND THE QUANTITY MANUFACTURED DURING THE YEAR UNDER CONSIDE RATION WERE SOLD ITA NO.1858/MUM/2015 M/S INDO AMINES LTD. 6 BY THE ASSESSEE. THEREFORE, THE PURCHASES OF THE EN TIRE 1,02,514 METRES OF CLOTH WERE SOLD DURING THE YEAR UNDER CON SIDERATION. THE TRIBUNAL, THEREFORE, ACCEPTED THE ASSESSEE'S CONTEN TION THAT THE FINISHED GOODS WERE PURCHASED BY THE ASSESSEE, MAY BE NOT FROM THE PARTIES SHOWN IN THE ACCOUNTS, BUT FROM OTHER SOURC ES. IN THAT VIEW OF THE MATTER, THE TRIBUNAL WAS OF THE OPINION THAT NO T THE ENTIRE AMOUNT, BUT THE PROFIT MARGIN EMBEDDED IN SUCH AMOUNT WOULD BE SUBJECTED TO TAX. THE TRIBUNAL RELIED ON ITS EARLIER DECISION IN THE CASE OF SANKET STEEL TRADERS AND ALSO MADE REFERENCE TO THE TRIBUN AL'S DECISION IN THE CASE OF VIJAY PROTEINS LTD. V. ASST. CIT [1996] 58 ITD 428 (AHD). 6. WE ARE OF THE OPINION THAT THE TRIBUNAL COMMITTE D NO ERROR. WHETHER THE PURCHASES THEMSELVES WERE BOGUS OR WHETHER THE PARTIES FROM WHOM SUCH PURCHASES WERE ALLEGEDLY MADE WERE BOGUS IS ESSENTIALLY A QUESTION OF FACT. THE TRIBUNAL HAVING EXAMINED THE EVIDENCE ON RECORD CAME TO THE CONCLUSION THAT THE ASSESSEE DID PURCHA SE THE CLOTH AND SELL THE FINISHED GOODS. IN THAT VIEW OF THE MATTER , AS NATURAL COROLLARY, NOT THE ENTIRE AMOUNT COVERED UNDER SUCH PURCHASE, BUT THE PROFIT ELEMENT EMBEDDED THEREIN WOULD BE SUBJECT TO TAX. T HIS WAS THE VIEW OF THIS COURT IN THE CASE OF SANJAY OILCAKE INDUSTR IES V. CIT [2009] 316 ITR 274 (GUJ). SUCH DECISION IS ALSO FOLLOWED BY THIS COUR T IN A JUDGMENT DATED AUGUST 16, 2011, IN TAX APPEAL NO. 6 79 OF 2010 IN THE CASE OF CIT V. KISHOR AMRUTLAL PATEL. IN THE RESULT , TAX APPEAL IS DISMISSED. 2.3. LIKEWISE, THE HON'BLE GUJARAT HIGH COURT IN C IT VS VIJAY M. MISTRY CONSTRUCTION LTD. (2013) 355 ITR 49 8 (GUJ.) HELD/OBSERVED AS UNDER:- 6. AS IS APPARENT FROM THE FACTS NOTED HEREINABOVE , THE COMMISSIONER (APPEALS) AFTER APPRECIATING THE EVIDE NCE ON RECORD HAS FOUND THAT THE ASSESSEE HAD IN FACT MADE THE PU RCHASES AND, HENCE, THE ASSESSING OFFICER WAS NOT JUSTIFIED IN D ISALLOWING THE ENTIRE AMOUNT. HE, HOWEVER, WAS OF THE VIEW THAT TH E ASSESSEE HAD INFLATED THE PURCHASES AND, ACCORDINGLY, BY PLACING RELIANCE ON THE DECISION OF THE TRIBUNAL IN THE CASE OF VIJAY PROTE INS (SUPRA) RESTRICTED THE DISALLOWANCE TO 20 PER CENT. THE TRI BUNAL IN THE IMPUGNED ORDER HAS FOLLOWED ITS EARLIER ORDER IN TH E CASE OF VIJAY PROTEINS TO THE LETTER AND ENHANCED THE DISALLOWANC E TO 25 PER CENT. THUS, IN BOTH CASES, THE DECISION OF THE COMMISSION ER (APPEALS) AS WELL AS THAT OF THE TRIBUNAL IS BASED ON ESTIMATE. THIS HIGH COURT IN THE CASE OF SANJAY OIL CAKE [2009] 316 ITR 274 (GUJ) HAS HELD THAT WHETHER AN ESTIMATE SHOULD BE AT A PARTICULAR SUM O R AT A DIFFERENT SUM CAN NEVER BE A QUESTION OF LAW. 7. THE APEX COURT IN THE CASE OF KACHWALA GEMS [200 7] 288 ITR 10 (SC) HAS HELD THAT IN A BEST JUDGMENT ASSESSMENT TH ERE IS ALWAYS A CERTAIN DEGREE OF GUESS WORK. NO DOUBT, THE AUTHORI TIES SHOULD TRY TO ITA NO.1858/MUM/2015 M/S INDO AMINES LTD. 7 MAKE AN HONEST AND FAIR ESTIMATE OF THE INCOME EVEN IN A BEST JUDGMENT ASSESSMENT AND SHOULD NOT ACT TOTALLY ARBI TRARILY BUT THERE IS NECESSARILY SOME AMOUNT OF GUESS WORK INVOLVED I N A BEST JUDGMENT ASSESSMENT. 8. EXAMINING THE FACTS OF THE PRESENT CASE IN THE L IGHT OF THE AFORESAID DECISIONS, THE DECISION OF THE TRIBUNAL, BEING BASED ON AN ESTIMATE, DOES NOT GIVE RISE TO ANY QUESTION OF LAW SO AS TO WARRANT INTERFERENCE. 9. IN SO FAR AS THE PROPOSED QUESTIONS (C), (D) AND (E) ARE CONCERNED, THE SAME ARE SIMILAR TO THE PROPOSED QUE STION (A) WHEREIN THE TRIBUNAL HAS RESTRICTED THE ADDITION TO 25 PER CENT. ON SIMILAR FACTS. IN THE CIRCUMSTANCES, FOR THE REASON S STATED HEREINABOVE, THE SAID GROUNDS OF APPEAL DO NOT GIVE RISE TO ANY QUESTION OF LAW. 10. AS REGARDS THE PROPOSED QUESTION (B) WHICH PERT AINS TO THE DELETION OF ADDITION OF RS. 7,88,590 MADE ON ACCOUN T OF INFLATION OF EXPENSES PAID TO METAL AND MACHINE TRADING CO. (MMT C), THE ASSESSING OFFICER HAS FOUND THAT MMTC WAS A PARTNER SHIP FIRM OF SHRI NITIN GAJJAR ALONG WITH HIS FATHER AND BROTHER OPERATING FROM BHAVNAGAR. A PERUSAL OF THEIR TRANSACTIONS WITH THE ASSESSEE INDICATED THAT THERE IS SOME INFLATION OF EXPENSES AS DETAILED IN PARAGRAPH 6.1 OF THE ASSESSMENT ORDER. AFTER CONSID ERING THE EVIDENCE ON RECORD, THE ASSESSING OFFICER DISALLOWE D THE AMOUNT RS. 7,88,590 ON ACCOUNT OF PAYMENT MADE TO MMTC. 11. THE ASSESSEE PREFERRED AN APPEAL BEFORE THE COM MISSIONER (APPEALS), WHO UPON APPRECIATION OF THE EVIDENCE ON RECORD FOUND THAT THE ASSESSING OFFICER HAD NOT REJECTED THE GEN UINENESS OF THE PURCHASES MADE FROM MMTC WHILE MAKING THE DISALLOWA NCE. HIS OBSERVATIONS WERE BASED ON INFLATION OF RATES WHICH WERE BEING CHARGED FROM THE ASSESSEE. ACCORDING TO THE COMMISS IONER (APPEALS), THOUGH MMTC IN SOME RESPECT COULD BE ATT RIBUTED TO BE ASSOCIATED WITH THE ASSESSEE-COMPANY, STILL IT COUL D NOT BE EXPECTED THAT MMTC WAS CARRYING OUT ITS BUSINESS WITHOUT ANY MOTIVE OR PROFIT. ACCORDING TO THE COMMISSIONER (APPEALS), IT WAS PROVED BY THE ASSESSEE THAT THE RATES CHARGED BY MMTC WERE CO MPARABLE WITH THE PREVAILING MARKET RATES, NO SUCH ADDITION CAN S TAND. THE COMMISSIONER (APPEALS) TOOK NOTE OF THE FACT THAT I T WAS NOT THE CASE OF THE ASSESSING OFFICER THAT THE PURCHASES HA D BEEN DIRECTLY EFFECTED FROM THIRD PARTIES AND NOT DIRECTLY FROM M MTC ; THE DIFFERENCE COULD NOT BE THE NET PROFIT IN THE HANDS OF MMTC ; AND THAT WHILE CONDUCTING THE ENTIRE EXERCISE MMTC WOUL D HAVE TO INCUR CERTAIN EXPENDITURE IN TRANSPORTATION, IN ENGAGING PERSONNEL IN THE OFFICE AND OTHER OPERATIONS AND WAS ACCORDINGLY OF THE VIEW THAT THERE WAS NO CASE OF ACTUAL INFLATION OF RATES AND DELETED THE ADDITION. 12. THE TRIBUNAL, IN THE IMPUGNED ORDER, HAS CONCUR RED WITH THE FINDINGS RECORDED BY THE COMMISSIONER (APPEALS) AND HAS FOUND THAT THE ASSESSEE HAD MADE PURCHASES FROM MMTC AT T HE PREVAILING MARKET RATES AND THAT MMTC HAD INCURRED CERTAIN EXP ENDITURE IN ENGAGING PERSONNEL IN THE OFFICE AND OTHER OPERATIO NS AND WOULD MAKE SOME INCOME FROM THE ENTIRE EXERCISE. IN THE C IRCUMSTANCES, ITA NO.1858/MUM/2015 M/S INDO AMINES LTD. 8 THE PURCHASES MADE BY THE ASSESSEE FROM MMTC WOULD NOT BE HIT BY THE PROVISIONS OF SECTION 40A(2) OF THE ACT. 13. THUS, THE CONCLUSION ARRIVED AT BY THE TRIBUNAL IS BASED ON CONCURRENT FINDINGS OF FACT RECORDED BY THE COMMISS IONER (APPEALS) AS WELL AS THE TRIBUNAL. IT IS NOT THE CASE OF THE REVENUE THAT THE TRIBUNAL HAS TAKEN INTO ACCOUNT ANY IRRELEVANT MATE RIAL OR THAT ANY RELEVANT MATERIAL HAS NOT BEEN TAKEN INTO CONSIDERA TION. IN THE ABSENCE OF ANY MATERIAL TO THE CONTRARY BEING POINT ED OUT ON BEHALF OF THE REVENUE, THE IMPUGNED ORDER BEING BASED ON C ONCURRENT FINDINGS OF FACT RECORDED BY THE TRIBUNAL UPON APPR ECIATION OF THE EVIDENCE ON RECORD, DOES NOT GIVE RISE TO ANY QUEST ION OF LAW IN SO FAR AS THE PRESENT GROUND OF APPEAL IS CONCERNED. 14. IN RELATION TO THE PROPOSED QUESTION (F) WHICH RELATES TO THE DELETION OF ADDITION OF RS. 44,54,426 MADE ON ACCOU NT OF PURCHASE OF CRANE AND ALLOWING DEPRECIATION ON THE SAME, THE ASSESSING OFFICER OBSERVED THAT THE ASSESSEE HAD PURCHASED A CRAWLER CRANE FOR AN AMOUNT OF RS. 24,61,000 EXCLUDING THE COST O F SPARE PARTS OF RS. 14,98,490. THE ASSESSING OFFICER AFTER EXAMININ G THE EVIDENCE ON RECORD AND CONSIDERING THE EXPLANATION GIVEN BY THE ASSESSEE, MADE ADDITION OF RS. 44,54,426, RS. 39,59,490 BEING THE PURCHASE PRICE OF THE CRANE ALONG WITH ITS SPARE PARTS AND R S. 4,94,936 BEING DEPRECIATION CLAIMED BY THE ASSESSEE. THE COMMISSIO NER (APPEALS), UPON APPRECIATION OF EVIDENCE ON RECORD, WAS OF THE VIEW THAT THE ASSESSING OFFICER HAS NOT APPRECIATED THE FACTS OF THE CASE PROPERLY AND HAD MADE DISALLOWANCE WHICH WAS NOT PERMITTED B Y THE INCOME-TAX ACT. IT WAS HELD THAT DISALLOWANCE COULD ONLY HAVE BEEN MADE IN RESPECT OF EXPENSES DEBITED TO THE PROFIT A ND LOSS ACCOUNT WHEREAS IN THE PRESENT CASE THE PURCHASE OF CRANE A ND SPARE PARTS OF THE CRANE AND OTHER MACHINERIES WERE IN THE NATU RE OF ACQUISITION OF CAPITAL ASSET. ACCORDING TO THE COMMISSIONER (AP PEALS), THE DISALLOWANCE COULD HAVE BEEN MADE ON DEPRECIATION O NLY IF AT ALL THE ASSESSING OFFICER CONCLUSIVELY PROVED THAT THE PURC HASES OF CRANE AND OTHER PARTS ARE BOGUS. UPON APPRECIATION OF THE MATERIAL ON RECORD THE COMMISSIONER (APPEALS) FOUND THAT THE AS SESSING OFFICER HAS SIMPLY BRUSHED ASIDE ALL THE EVIDENCE ON ACCOUN T OF TECHNICAL INFIRMITIES AND THAT THE EVIDENCE SUCH AS OCTROI RE CEIPT ; HYPOTHECATION OF THE CRANE TO THE BANK; EXISTENCE O F THE CRANE EVEN TILL DATE WITH THE ASSESSEE CONCLUSIVELY PROVED THA T THE CRANE WAS PURCHASED AND IT WAS IN USE EVEN AS ON DATE WITH TH E ASSESSEE. THE COMMISSIONER (APPEALS) ACCORDINGLY FOUND THAT THERE WAS NO SCOPE FOR ANY DISALLOWANCE AND ACCORDINGLY DELETED THE DI SALLOWANCE MADE ON ACCOUNT OF PURCHASE OF CRANE AND ALLOWED THE DEP RECIATION AS CLAIMED BY THE ASSESSEE. 15. THE TRIBUNAL, IN THE IMPUGNED ORDER, HAS NOTED THAT THE COST OF CRANE WAS NEVER CLAIMED BY THE ASSESSEE IN THE RETU RN OF INCOME. BEFORE THE TRIBUNAL, THE ASSESSEE PRODUCED THE EVID ENCE THAT THE CRANE IN QUESTION WAS REGISTERED WITH THE RTO AND T HE SAME WAS WHOLLY AND EXCLUSIVELY USED FOR THE PURPOSES OF ITS BUSINESS. THE TRIBUNAL, THEREFORE, HELD THAT THE COMMISSIONER (AP PEALS) WAS LEGALLY AND FACTUALLY CORRECT IN DELETING THE DISAL LOWANCE OF COST OF CRANE AS WELL AS DEPRECIATION THEREON. 16. FROM THE FACTS EMERGING FROM THE RECORD, IT IS APPARENT THAT THE ASSESSEE HAD NEVER CLAIMED THE COST OF THE CRANE IN THE RETURN NOR ITA NO.1858/MUM/2015 M/S INDO AMINES LTD. 9 HAD IT DEBITED THE EXPENSES TO THE PROFIT AND LOSS ACCOUNT, AND AS SUCH THE QUESTION OF DISALLOWING THE SAME AND ADDIN G THE SAME TO THE INCOME WOULD NOT ARISE. MOREOVER, IN THE ABSENC E OF ANY EVIDENCE TO INDICATE THAT THE PURCHASE WAS BOGUS OR THAT THE CRANE IN FACT DID NOT EXIST, THE QUESTION OF DISALLOWING THE DEPRECATION IN RESPECT OF THE SAME ALSO WOULD NOT ARISE. WHEN THE ASSESSEE HAD CONCLUSIVELY PROVED THE PURCHASE AND EXISTENCE OF T HE CRANE, AND HAD NOT DEBITED THE EXPENSES TO THE PROFIT AND LOSS ACCOUNT, NO ADDITION COULD HAVE BEEN MADE IN RESPECT OF THE PUR CHASE PRICE NOR COULD HAVE DEPRECIATION BEEN DISALLOWED IN RESPECT THEREOF. THE TRIBUNAL WAS, THEREFORE, JUSTIFIED IN DELETING THE ADDITION AS WELL AS DISALLOWANCE OF DEPRECIATION. 17. IN THE LIGHT OF THE AFORESAID DISCUSSION, IT IS NOT POSSIBLE TO STATE THAT THERE IS ANY LEGAL INFIRMITY IN THE IMPUGNED O RDER MADE BY THE TRIBUNAL SO AS TO WARRANT INTERFERENCE. IN THE ABSE NCE OF ANY QUESTION OF LAW, MUCH LESS, A SUBSTANTIAL QUESTION OF LAW, THE APPEAL IS DISMISSED. 2.4. THE HON'BLE JURISDICTIONAL HIGH COURT IN THE CASE OF CIT VS ASHISH INTERNATIONAL LTD. (ITA NO.4299/2009) ORDER DATED 22/02/2011, OBSERVED/HELD AS UNDER:- THE QUESTION RAISED IN THIS APPEAL IS, WHETHER THE TRIBUNAL WAS JUSTIFIED IN DELETING THE ADDITION ON ACCOUNT OF BO GUS PURCHASES ALLEGEDLY MADE BY THE ASSESSEE FROM M/S. THAKKAR AG RO INDUSTRIAL CHEM SUPPLIES P. LTD. ACCORDING TO THE R EVENUE, THE DIRECTOR OF M/S. THAKKAR AGRO INDUSTRIAL CHEM SUPPL IES P. LTD. IN HIS STATEMENT HAD STATED THAT THERE WERE NO SALE S / PURCHASES BUT THE TRANSACTIONS WERE ONLY ACCOMMODATION BILLS NOT INVOLVING ANY TRANSACTIONS. THE TRIBUNAL HAS RECORD ED A FINDING OF FACT THAT THE ASSESSEE HAD DISPUTED THE CORRECTN ESS OF THE ABOVE STATEMENT AND ADMITTEDLY THE ASSESSEE WAS NOT GIVEN ANY OPPORTUNITY TO CROSS EXAMINE THE CONCERNED DIRE CTOR OF M/S. THAKKAR AGRO INDUSTRIAL CHEM SUPPLIES P. LTD. WHO H AD MADE THE ABOVE STATEMENT. THE APPELLATE AUTHORITY HAD SO UGHT REMAND REPORT AND EVEN AT THAT STAGE THE GENUINENES S OF THE STATEMENT HAS NOT BEEN ESTABLISHED BY ALLOWING CROS S EXAMINATION OF THE PERSON WHOSE STATEMENT WAS RELIE D UPON BY THE REVENUE. IN THESE CIRCUMSTANCES, THE DECISION O F THE TRIBUNAL BEING BASED ON THE FACT, NO SUBSTANTIAL QU ESTION OF LAW CAN BE SAID TO ARISE FROM THE ORDER OF THE TRIBUNAL . THE APPEAL IS DISMISSED WITH NO ORDER AS TO COSTS. ITA NO.1858/MUM/2015 M/S INDO AMINES LTD. 10 2.5. THE HON'BLE JURISDICTIONAL HIGH COURT IN CIT VS NIKUNJ EXIM ENTERPRISES PVT. LTD. (2015) 372 ITR 61 9 (BOM.) HELD/OBSERVED AS UNDER:- 7. WE HAVE CONSIDERED THE SUBMISSION ON BEHALF OF THE REVENUE. HOWEVER, FROM THE ORDER OF THE TRIBUNAL DA TED APRIL 30, 2010, WE FIND THAT THE TRIBUNAL HAS DELETED THE ADDITIONS ON ACCOUNT OF BOGUS PURCHASES NOT ONLY ON THE BASIS OF STOCK STATEMENT, I.E., RECONCILIATION STATEMENT BUT ALSO IN VIEW OF THE OTHER FACTS. THE TRIBUNAL RECORDS THAT THE BOOKS OF ACCOUNT OF THE RESPONDENT-ASSESSEE HAVE NOT BEEN REJECTED. SIM ILARLY, THE SALES HAVE NOT BEEN DOUBTED AND IT IS AN ADMITTED P OSITION THAT SUBSTANTIAL AMOUNT OF SALES HAVE BEEN MADE TO THE G OVERNMENT DEPARTMENT, I.E., DEFENCE RESEARCH AND DEVELOPMENT LABORATORY, HYDERABAD. FURTHER, THERE WERE CONFIRMA TION LETTERS FILED BY THE SUPPLIERS, COPIES OF INVOICES FOR PURC HASES AS WELL AS COPIES OF BANK STATEMENT ALL OF WHICH WOULD INDICAT E THAT THE PURCHASES WERE IN FACT MADE. IN OUR VIEW, MERELY BE CAUSE THE SUPPLIERS HAVE NOT APPEARED BEFORE THE ASSESSING OF FICER OR THE COMMISSIONER OF INCOME-TAX (APPEALS), ONE CANNOT CO NCLUDE THAT THE PURCHASES WERE NOT MADE BY THE RESPONDENT- ASSESSEE. THE ASSESSING OFFICER AS WELL AS THE COMMISSIONER O F INCOME- TAX (APPEALS) HAVE DISALLOWED THE DEDUCTION OF RS. 1.33 CRORES ON ACCOUNT OF PURCHASES MERELY ON THE BASIS OF SUSP ICION BECAUSE THE SELLERS AND THE CANVASSING AGENTS HAVE NOT BEEN PRODUCED BEFORE THEM. WE FIND THAT THE ORDER OF THE TRIBUNAL IS WELL A REASONED ORDER TAKING INTO ACCOUNT ALL THE F ACTS BEFORE CONCLUDING THAT THE PURCHASES OF RS. 1.33 CRORES WA S NOT BOGUS. NO FAULT CAN BE FOUND WITH THE ORDER DATED APRIL 30 , 2010, OF THE TRIBUNAL. 2.6. THE HON'BLE GUJARAT HIGH COURT IN CIT VS M.K. BROTHERS (163 ITR 249) HELD/OBSERVED AS UNDER:- BEING AGGRIEVED BY THE AFORESAID ORDER, THE ASSESS EE WENT IN SECOND APPEAL BEFORE THE TRIBUNAL. IT WAS URGED ON BEHALF OF THE ASSESSEE THAT THE TRANSACTIONS IN QUESTION WERE NOR MAL BUSINESS TRANSACTIONS AND THE ASSESSEE HAD MADE PAYMENTS BY CHEQUES. THE PARTIES DID NOT COME FORWARD AND IF THEY DID NO T COME, THE ASSESSEE SHOULD NOT SUFFER. HOWEVER, ON BEHALF OF T HE REVENUE, IT WAS URGED THAT DETAILED INQUIRIES WERE MADE AND THE REAFTER THE CONCLUSION WAS REACHED. THE TRIBUNAL FOUND THAT THE RE WAS NO EVIDENCE ANYWHERE THAT THESE CONCERNS GAVE BOGUS VO UCHERS TO THE ASSESSEE. NO DOUBT, THERE WERE CERTAIN DOUBTFUL FEATURES, BUT THE EVIDENCE WAS NOT ADEQUATE TO CONCLUDE THAT THE PURCHASES ITA NO.1858/MUM/2015 M/S INDO AMINES LTD. 11 MADE BY THE ASSESSEE FROM THE SAID PARTIES WERE BOG US. THE TRIBUNAL ACCORDINGLY, DID NOT SUSTAIN THE ADDITION RETAINED BY THE APPELLATE ASSISTANT COMMISSIONER. HENCE, AT THE INS TANCE OF THE REVENUE, THE AFORESAID QUESTION HAS BEEN REFERRED T O THIS COURT FOR OPINION. ON A PERUSAL OF THE ORDER OF THE TRIBUNAL, IT CLEAR LY APPEARS THAT WHETHER THE SAID TRANSACTIONS WERE BOGUS OR NOT WAS A QUESTION OF FACT. THE TRIBUNAL HAS ALSO POINTED OUT THAT NOTHIN G IS SHOWN TO INDICATE THAT ANY PART OF THE FUND GIVEN BY THE ASS ESSEE TO THESE PARTIES CAME BACK TO THE ASSESSEE IN ANY FORM. IT I S FURTHER OBSERVED BY THE TRIBUNAL THAT THERE IS NO EVIDENCE ANYWHERE THAT THESE CONCERNS GAVE VOUCHERS TO THE ASSESSEE. EVEN THE TWO STATEMENTS DO NOT IMPLICATE THE TRANSACTIONS WITH T HE ASSESSEE IN ANY WAY. WITH THESE OBSERVATIONS, THE TRIBUNAL ULTI MATELY HAS OBSERVED THAT THERE ARE CERTAIN DOUBTFUL FEATURES, BUT THE EVIDENCE IS NOT ADEQUATE TO CONCLUDE THAT THE PURCHASES MADE BY THE ASSESSEE FROM THESE PARTIES WERE BOGUS. IT MAY BE S TATED THAT THE ASSESSEE WAS GIVEN CREDIT FACILITIES FOR A SHORT DU RATION AND THE PAYMENTS WERE GIVEN BY CHEQUES. WHEN THAT IS SO, IT CANNOT BE SAID THAT THE ENTRIES FOR THE PURCHASES OF THE GOOD S MADE IN THE BOOKS OF ACCOUNT WERE BOGUS ENTRIES. WE, THEREFORE, DO NOT FIND THAT THE CONCLUSION ARRIVED AT BY THE TRIBUNAL IS A GAINST THE WEIGHT OF EVIDENCE. IN THAT VIEW OF THE MATTER, WE ANSWER THE QUESTION IN THE AFFIRMATIVE, THAT IS, IN FAVOUR OF THE ASSESSEE AND AGAINST THE REVENUE. ACCORDINGLY, THE REFERENCE STANDS DISPOSED OF WITH NO ORDER AS TO COSTS. 2.7. THE MUMBAI BENCH OF THE TRIBUNAL IN THE CASE OF DCIT VS RAJEEV G. KALATHIL (2015) 67 SOT 52 (MUM. TRIB.)(URO), IDENTICALLY, HELD AS UNDER:- 2.2.AGGRIEVED BY THE ORDER OF THE AO, ASSESSEE PRE FERRED AN APPEAL BEFORE THE FIRST APPELLATE AUTHORITY(FAA).BE FORE HIM IT WAS ARGUED THAT ASSESSEE HAD FILED COPIES OF BILLS OF P URCHASE FROM DKE AND NBE, THAT BOTH THE SUPPLIERS WERE REGISTERED DE ALERS AND WERE CARRYING PROPER VAT AND REGISTRATION NO.S, THAT LED GER ACCOUNTS OF THE PARTIES IN ASSESSEE'S BOOKS SHOWED BILLS ACCOUN TED FOR, THAT PAYMENT WAS MADE BY CHEQUES, THAT A CERTIFICATE FRO M THE BANKER GIVING DETAILS OF CHEQUE PAYMENT TO THE SAID PARTIE S WAS ALSO FURNISHED. COPIES OF THE CONSIGNMENT, RECEIVED FROM THE GOVERNMENT APPROVED TRANSPORT CONTRACTORS SHOWING T HAT MATERIAL PURCHASED WAS ACTUALLY DELIVERED AT THE SITE WAS FU RNISHED BEFORE THE AO. IT WAS ALSO ARGUED THAT SOME OF THE MATERIA L PURCHASED ITA NO.1858/MUM/2015 M/S INDO AMINES LTD. 12 FROM THE SAID PARTIES WERE LYING PART OF CLOSING ST OCK AS ON 31.03.2009 AS PER THE STATEMENT SUBMITTED ON RECORD . AFTER CONSIDERING THE ASSESSMENT ORDER AND THE SUBMISSION S MADE BY THE ASSESSEE, FAA HELD THAT THE TRANSACTIONS WERE S UPPORTED BY PROPER DOCUMENTARY EVIDENCES, THAT THE PAYMENTS MAD E TO THE PARTIES BY THE ASSESSEE WERE IN CONFIRMATION WITH B ANK CERTIFICATE,T HAT THE SUPPLIERS WAS SHOWN AS DEFAULT UNDER THE MA HARASHTRA VAT ACT COULD NOT BE SUFFICIENT EVIDENCES TO HOLD THAT THE PURCHASES WERE NON-GENUINE, THAT THE AO HAD NOT BROUGHT ANY I NDEPENDENT AND RELIABLE EVIDENCES AGAINST THE ASSESSEE TO PROV E THE NON- GENUINENESS OF THE PURCHASES, THAT THERE WAS NO EVI DENCE REGARDING CASH RECEIVED BACK FROM THE SUPPLIERS. FI NALLY, HE DELETED THE ADDITION MADE BY THE AO . 2.3.BEFORE US, DEPARTMENTAL REPRESENTATIVE ARGUED THAT BOTH THE SUPPLIERS WERE NOT PRODUCED BEFORE THE AO BY TH E ASSESSEE, THAT ONE OF THEM WAS DECLARED HAWALA DEALER BY VAT DEPARTMENT, THAT BECAUSE OF CHEQUE PAYMENT MADE TO THE SUPPLIER TRANSACTION CANNOT BE TAKEN AS GENUINE. HE RELIED UPON THE ORDE R OF THE G BENCH OF MUMBAI TRIBUNAL DELIVERED IN THE CASE OF W ESTERN EXTRUSION INDUSTRIES. (ITA/6579/MUM/2010-DATED 13.1 1.2013). AUTHRORISED REPRESENTATIVE (AR) CONTENDED THAT PAYM ENTS MADE BY THE ASSESSEE WERE SUPPORTED BY THE BANKERS STAT EMENT, THAT GOODS RECEIVED BY THE ASSESSEE FROM THE SUPPLIE WAS PART OF CLOSING STOCK,THAT THE TRANSPORTER HAD ADMITTED THE TRANSPORTATION OF GOODS TO THE SITE.HE RELIED UPON THE CASE OF BAB ULA BORANA (282 ITR251), NIKUNJ EXIMP ENTERPRISES (P) LTD. (216TAXMAN171)DELIVERED BY THE HONBLE BOMBAY HIGH COURT. 2.4.WE HAVE HEARD THE RIVAL SUBMISSIONS AND PERUSED THE MATERIAL BEFORE US. WE FIND THAT AO HAD MADE THE AD DITION AS ONE OF THE SUPPLIER WAS DECLARED A HAWALA DEALER BY THE VAT DEPARTMENT. WE AGREE THAT IT WAS A GOOD STARTING PO INT FOR MAKING FURTHER INVESTIGATION AND TAKE IT TO LOGICAL END. BUT, HE LEFT THE JOB AT INITIAL POINT ITSELF. SUSPICION OF HIGHE ST DEGREE CANNOT TAKE PLACE OF EVIDENCE. HE COULD HAVE CALLED FOR TH E DETAILS OF THE BANK ACCOUNTS OF THE SUPPLIERS TO FIND OUT AS WHETH ER THERE WAS ANY IMMEDIATE CASH WITHDRAWAL FROM THEIR ACCOUNT. W E FIND THAT NO SUCH EXERCISE WAS DONE. TRANSPORTATION OF GOOD T O THE SITE IS ONE OF THE DECIDING FACTOR TO BE CONSIDERED FOR RES OLVING THE ISSUE. THE FAA HAS GIVEN A FINDING OF FACT THAT PART OF TH E GOODS RECEIVED BY THE ASSESSEE WAS FORMING PART OF CLOSIN G STOCK. AS FAR AS THE CASE OF WESTERN EXTRUSION INDUSTRIES. (SUPRA )IS CONCERNED, WE FIND THAT IN THAT MATTER CASH WAS IMMEDIATELY WI THDRAWN BY THE SUPPLIER AND THERE WAS NO EVIDENCE OF MOVEMENT OF GOODS. BUT, IN THE CASE BEFORE US, THERE IS NOTHING, IN TH E ORDER OF THE AO, ABOUT THE CASH TRAIAL. SECONDLY, PROOF OF MOVEM ENT OF GOODS IS NOT IN DOUBT. THERERFORE, CONSIDERING THE PECULI AR FACTS AND CIRCUMSTANCES OF THE CASE UNDER APPEAL, WE ARE OF T HE OPINION THAT THE ORDER OF THE FAA DOES NOT SUFFER FROM ANY LEGAL INFIRMITY AND THERE ARE NOT SUFFICIENT EVIDENCE ON FILE TO EN DORSE THE VIEW ITA NO.1858/MUM/2015 M/S INDO AMINES LTD. 13 TAKEN BY THE AO. SO, CONFIRMING THE ORDER OF THE FA A, WE DECIDE GROUND NO.1 AGAINST THE AO . 2.8. THE RATIO LAID DOWN IN THE CASE OF M/S NEETA TEXTILES VS INCOME TAX OFFICER 6138/MUM/2013, ORDER DATED 27/05/2013, SHRI JIGAR V. SHAH VS INCOME TAX OFFICE R (ITA NO.1223/M/2014) ORDER DATED 22/01/2016, M/S IMPERIA L IMP. & EXP. VS INCOME TAX OFFICER ITA NO.5427/MUM/2 015, ORDER DATED 18/03/2016 SUPPORTS THE CASE OF THE ASS ESSEE AND THE CONCLUSION DRAWN IN THE IMPUGNED ORDER. HOW EVER, AS RELIED BY THE LD. DR, THE HON'BLE GUJARAT HIGH C OURT IN THE CASE OF N.K. INDUSTRIES LTD.,ETC VS DCIT (SUPRA) CO NSIDERING VARIOUS DECISIONS DECIDED THE ISSUE IN FAVOUR OF TH E REVENUE AND THE HON'BLE APEX COURT DISMISSED THE SLP VIDE O RDER DATED 16/01/2017 (SLP NO.(C) 769 OF 2017). WE FIND THAT IN THAT CASE, DURING SEARCH PROCEEDINGS, CERTAIN BLANK SIGNED CHEQUE BOOKS AND VOUCHERS WERE FOUND AND THUS THE PURCHASES MADE FROM THESE CONCERNS, WERE TREATED AS BOGUS BY THE ASSESSING OFFICER. 2.9. THE HON'BLE GUJARAT HIGH COURT IN N.K. INDUST RIES LTD. VS DCIT (IT APPEAL NO.240, 261, 242, 260 AND 2 41 OF 2003), VIDE ORDER DATED 20/06/2016 CONSIDERED THE D ECISION OF THE TRIBUNAL AND VARIOUS JUDICIAL DECISIONS INCL UDING THE ITA NO.1858/MUM/2015 M/S INDO AMINES LTD. 14 CASE OF VIJAY PROTEINS AND SANJAY OILCAKES INDUSTRI ES LTD., M/S WOOLEN CARPET FACTORY VS ITAT (2002) 178 CTR 42 0 (RAJ.), THE TRIBUNAL WAS HELD TO BE JUSTIFIED IN DE CIDING THE CASE AGAINST THE ASSESSEE. THE HON'BLE APEX COURT CONFIRMED THE DECISION OF THE HIGH COURT FOR ADDING THE ENTIR E INCOME ON ACCOUNT OF BOGUS PURCHASES (SLP (C) NO.S 769 OF 201 7, ORDER DATED 16/01/2017. 2.10. IF THE OBSERVATION MADE IN THE ASSESSMENT OR DER, LEADING TO ADDITION MADE TO THE TOTAL INCOME, CONCL USION DRAWN IN THE IMPUGNED ORDER, MATERIAL AVAILABLE ON RECORD, ASSERTIONS MADE BY THE LD. RESPECTIVE COUNSEL, IF K EPT IN JUXTAPOSITION AND ANALYZED, IN SUCH TYPE OF CASES, BROADLY, THE LD. COMMISSIONER OF INCOME TAX (APPEAL) AS WELL AS THIS TRIBUNAL HAS FOLLOWED THE DECISIONS FROM HON'BLE GU JARAT HIGH COURT IN THE CASE OF SIMIT P. SETH (2013) 356 ITR 451 (GUJ.), CIT VS VIJAY M. MISTRY CONSTRUCTION LTD. (2 013) 355 ITR 498 (GUJ.), CIT VS BHOLA NATH POLY FAB. (P.) LT D. (2013) 355 ITR 290 (GUJ.) AND VARIOUS OTHER DECISIONS OF T HE TRIBUNAL AND THE DECISION OF M/S NIKUNJ EXIMP(SUPRA ) FROM HON'BLE JURISDICTIONAL HIGH COURT, WHEREIN, THE AGG REGATE DISALLOWANCE WAS RESTRICTED TO 12.5% DEPENDING UPON THE ITA NO.1858/MUM/2015 M/S INDO AMINES LTD. 15 FACTS OF EACH CASE IN THE CASES OF TRADER. THEREFOR E, THERE IS NO OPTION BUT TO ESTIMATE THE PROFIT WHICH DEPENDS UPO N THE SUBJECTIVE APPROACH OF AN INDIVIDUAL AND THE MATERI AL FACTS AVAILABLE ON RECORD. IN THE PRESENT APPEAL, THE FA CTS, IN BRIEF ARE THAT THE ASSESSEE COMPANY IS ENGAGED IN THE BUS INESS OF SALE OF FINE CHEMICALS, PERFORMANCE CHEMICAL, ETC, WHICH ARE MAINLY USED IN PHARMACEUTICAL AND AGRO CHEMICAL IND USTRIES. THE ASSESSEE DECLARED INCOME OF ` 2,34,01,460/-. DURING SCRUTINY PROCEEDINGS, THE ASSESSEE FILED THE DOCUMENTS/DETAILS. THE LD. ASSESSING OFFICER MADE DISALLOWANCE OF RS.85,07,929/- ON ACCOUNT OF SUPPRE SSED PROFIT IN RESPECT OF BOGUS PURCHASES. THERE WAS AN INFORMATION FROM THE SALES TAX DEPARTMENT AND ALSO FROM THE INVESTIGATION WING OF THE INCOME TAX DEPARTMENT THA T THERE WERE BOGUS PURCHASES BY THE ASSESSEE IN RESPECT OF M/S SHREEJI COMMERCIAL CORPORATION. A SURVEY U/S 133A O F THE ACT WAS CARRIED OUT ON 06/02/2013, WHEREIN, THE ASS ESSEE WAS ASKED TO FURNISH THE NECESSARY DETAILS WITH RES PECT TO PURCHASES. THE ASSESSEE COULD PRODUCE SOME OF THE D ETAILS. STATEMENT OF SHRI VIJAY PALKAR, M.D. OF THE ASSESSEE COMPANY WAS RECORDED, WHEREIN, HE OFFERED THE AMOUNT OF ITA NO.1858/MUM/2015 M/S INDO AMINES LTD. 16 RS.85,07,929/- FOR TAXATION. THE RELEVANT PORTION O F THE STATEMENT HAS BEEN REPRODUCED IN THE ORDER. HE ALSO AGREED TO THE STATEMENT TENDERED BY SHRI NAIK. CONSIDERING THE TOTALITY OF FACTS, THE ADDITION WAS MADE. THUS, CON SIDERING THE TOTALITY OF FACTS AND SINCE, PART DETAILS WERE FURNISHED BY THE ASSESSEE AND THE FACT THAT THERE CANNOT BE ANY SALE WITHOUT PURCHASES, CONSEQUENTLY, FOLLOWING THE AFOREMENTIONED JUDICIAL PRONOUNCEMENTS AND TO PLUG THE LEAKAGE OF REVENUE, IT WILL BE JUSTIFIED TO RESTRIC T THE G.P. @25% OF THE BOGUS PURCHASES, AS AGREED BY THE LD. C OUNSEL FOR THE ASSESSEE ALSO. THUS, THIS GROUND IS PARTLY ALLOWED. 3. THE NEXT GROUND RAISED BY THE ASSESSEE PERTAINS TO CONFIRMING THE ADDITION OF RS.3,94,853/- ON ACCOUNT OF INTEREST ON BANK DEPOSITS. THE CRUX OF ARGUMENT IS THAT SOME LENIENT VIEW MAY BE TAKEN. ON THE OTHER HAND, DEFEN DED THE ADDITION. 3.1. WE HAVE CONSIDERED THE RIVAL SUBMISSIONS AND PERUSED THE MATERIAL AVAILABLE ON RECORD. IT IS NOT ED THAT THE LD. ASSESSING OFFICER MADE THE ADDITION OF RS.3,94, 853/-, ON ACCOUNT OF INTEREST ON THE BASIS OF 26AS STATEMENT, WHICH REFLECTS THE REAL INCOME OF THE ASSESSEE AND TDS HA S BEEN ITA NO.1858/MUM/2015 M/S INDO AMINES LTD. 17 DEDUCTED FOR THE RELEVANT PERIOD. THE ASSESSEE RECE IVED RS.5,89,993/- AS INTEREST ON WHICH TDS HAS BEEN DED UCTED. THE ASSESSEE SHOWN ONLY RS.1,95,140/- IN ITS BOOKS OF ACCOUNTS, THEREFORE, IN OUR VIEW, THERE IS NO INFIR MITY IN THE ORDER OF THE LD. COMMISSIONER OF INCOME TAX (APPEAL ), THIS GROUND OF THE ASSESSEE IS (AS AGREED BY THE LD. COU NSEL FOR THE ASSESSEE ALSO), THEREFORE, DISMISSED. FINALLY, THE APPEAL OF THE ASSESSEE IS PARTLY ALLOW ED. THIS ORDER WAS PRONOUNCED IN THE OPEN COURT IN THE PRESENCE OF LD. REPRESENTATIVES FROM BOTH SIDES AT THE CONCLUSION OF HEARING ON 11/12/2017. SD/- (MANOJ KUMAR AGGARWAL) SD/- (JOGINDER SINGH) '!# / ACCOUNTANT MEMBER $!# /JUDICIAL MEMBER MUMBAI; * DATED : 11/12 /2017 F{X~{T? P.S/. .. %$&'()(*& / COPY OF THE ORDER FORWARDED TO : 1. ,-. / THE APPELLANT (RESPECTIVE ASSESSEE) 2. /0-. / THE RESPONDENT. 3. 1& ( , ) / THE CIT, MUMBAI. 4. 1& / CIT(A)- , MUMBAI, ITA NO.1858/MUM/2015 M/S INDO AMINES LTD. 18 5. 34 /&# , ,( # 5 , / DR, ITAT, MUMBAI 6. 6$ 7 / GUARD FILE. ! / BY ORDER, 03,& /& //TRUE COPY// /! (DY./ASSTT. REGISTRAR) , / ITAT, MUMBAI