MAESTRO INTERIOR SOLUTIONS (I) P.LTD, MUMBAI V. ITO WD 12(3)(3), MUMBAI

ITA 2640/MUM/2017

• Counselvise Citation: [2019] 117 COUNSELVISE.COM (IT) 7210 (ITAT-MUMBAI)
• Duration Of Justice: 2 year(s) 11 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 22-04-2019
• Appeal Filed By: Assessee
• Order Result: Partly Allowed
• Bench Allotted: I
• Assessment Year: 2011-2012
• Appeal Filed On: 11-04-2017
• Result in Favour of: Partly Allowed
• Court: TRIBUNAL
• Keywords: Bogus purchase; Unexplained expenditure; TDS
• Section: 69C; 43B; 133(6); 69

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL, MUMBAI BENCH D, MUMBAI BEFORE SHRI RAJESH KUMAR, ACCOUNTANT MEMBER AND SHRI RAM LAL NEGI, JUDICIAL MEMBER ITA NO.2640/M/2017 ASSESSMENT YEAR: 2011-12 M/S. MAESTRO INTERIOR SOLUTIONS (I) PVT. LTD., 705, SAIKRUPA CHS, SECTOR -7, CHARKOP, C-4, KANDIVALI (WEST), MUMBAI 400 067 PAN: AAFCM0234J VS. ITO, WD 12(3)(3), 2 ND FLOOR, AAYAKAR BHAVAN, M.K. ROAD, MUMBAI - 400020 (APPELLANT) (R ESPONDENT) PRESENT FOR: ASSESSEE BY : SHRI DHARMESH SHAH, A.R. REVENUE BY : SHRI DHAVAL SHAH, D.R. DATE OF HEARING : 12.02.2019 DATE OF PRONOUNCEMENT : 22.04.2019 O R D E R PER RAJESH KUMAR, ACCOUNTANT MEMBER: THE PRESENT APPEAL HAS BEEN PREFERRED BY THE ASSES SEE AGAINST THE ORDER DATED 09.12.2016 OF THE COMMISSIO NER OF INCOME TAX (APPEALS) [HEREINAFTER REFERRED TO AS TH E CIT(A)] RELEVANT TO ASSESSMENT YEAR 2011-12. 2. THE VARIOUS GROUNDS RAISED BY THE ASSESSEE ARE A S UNDER: 1. ON THE FACTS AND THE CIRCUMSTANCES, THE HON'BLE COMMISSIONER OF INCOME- TAX (APPEALS) HAS ERRED IN CONFIRMING THE ADDITIONS MADE BY THE ASSESSING OFFICER AT RS.12,09,742/- BEING EXCESS PURCHASES. 2. ON THE FACTS AND THE CIRCUMSTANCES, THE HON'BLE COMMISSIONER OF INCOME- TAX (APPEALS) HAS ERRED IN CONFIRMING THE ADDITION MADE BY THE ASSESSING OFFICER OF RS.13.40.817/- AS INCOME, OF THE ASSESSEE. ITA NO.2640/M/2017 M/S. MAESTRO INTERIOR SOLUTIONS (I) PVT. LTD. 2 3. ON THE FACTS AND THE CIRCUMSTANCES, THE HON'BLE COMMISSIONER OF INCOME- TAX (APPEALS) HAS ERRED IN CONFIRMING THE ACTION OF THE ASSESSING OFFICER IN DISALLOWING A SUM OF RS.4,08,864/- BEING EXCESS REN T PAID. 4. ON THE FACTS AND THE CIRCUMSTANCES, THE HON'BLE COMMISSIONER OF INCOME- TAX (APPEALS) HAS ERRED IN CONFIRMING THE ACTION OF THE ASSESSING OFFICER IN DISALLOWING A SUM OF RS.20,597/- ON ACCOUNT OF INTE REST ON DELAYED PAYMENT OF TDS. 5. ON THE FACTS AND THE CIRCUMSTANCES, THE HON 'BLE COMMISSIONER OF INCOME-TAX (APPEALS) HAS ERRED IN CONFIRMING THE ACTION OF THE ASSESSING OFFICER IN DISALLOWING A SUM OF RS.1,03,547/- U/S 43B BEING NEW MUMBAI CESS TAX PAID. 6. ON THE FACTS AND THE CIRCUMSTANCES, THE HON'BLE COMMISSIONER OF INCOME- TAX (APPEALS) HAS ERRED IN CONFIRMING THE ACTION OF THE ASSESSING OFFICER IN TAXING A SUM OF RS.12,58,893/- AS UNEXPLAINED EXPENDITURE U/ S 69C OF THE ACT. 7. ON THE FACTS AND THE CIRCUMSTANCES, THE HONBLE COMMISSIONER OF INCOME TAX (APPEALS) HAS ERRED IN CONFIRMING THE ACTION OF THE ASSESSING OFFICER FOR NOT GRANTING THE CREDIT OF TDS AT RS.3,64,228/-. 3. THE ISSUE RAISED IN GROUND NO.1 IS AGAINST CONFI RMATION OF BOGUS PURCHASES TO THE TUNE OF RS.12,09,742/- BY CI T(A) UPHOLDING THE ORDER OF AO ON ADDITION OF BOGUS PURC HASES. 4. THE FACTS IN BRIEF ARE THAT DURING THE COURSE OF ASSESSMENT PROCEEDINGS, THE AO ISSUED NOTICE UNDER SECTION 133 (6) TO VERIFY THE PURCHASES MADE BY THE ASSESSEE DURING THE YEAR. THE NOTICES WERE ISSUED TO SHRI SUKHTHANKAR AND M/S. P ERFECT PLY N WOOD AND DULY REPLIED BY M/S. PERFECT PLY N WOOD B UT SHRI SUKHTHANKAR HAS NOT REPLIED FROM WHOM THE PURCHASE S OF RS.12,09,742/- WERE MADE AS PER BOOKS OF ACCOUNTS. THE ASSESSEE WAS ASKED TO FURNISH THE COPIES OF BILLS, PAYMENT DETAILS ETC. IN RESPECT THE SAID PURCHASES. THE ASS ESSEE PROVIDED THE DETAILS OF PURCHASES FROM M/S. PERFECT PLY N WOOD WHEREAS AS REGARDS SHRI SUKHTHANKAR, THE ASSESSEE S UBMITTED VIDE LETTER DATED 07.03.2014 THAT THE DETAILS WERE FILED IN THE COURSE OF ASSESSMENT PROCEEDINGS ON THE BASIS OF WH ICH THE NOTICES UNDER SECTION 133(6) WERE ISSUED TO THE SAI D PARTY. THE ITA NO.2640/M/2017 M/S. MAESTRO INTERIOR SOLUTIONS (I) PVT. LTD. 3 ASSESSEE SUBMITTED THAT WHILE FILING THE DETAILS B EFORE THE AO THAT ADDRESSES WERE WRONGLY MENTIONED AS SAME. M/ S. PERFECT PLY N WOOD IS A MATERIAL SUPPLIERS WHEREAS SHRI SUK HTHANKAR IS THE CUSTOMER OF THE ASSESSEE. THE ASSESSEE SUBMITT ED THAT THE ASSESSEE PURCHASED MATERIAL WORTH RS.12,09,742/- FR OM M/S. PERFECT PLY N WOOD WHICH WAS SUPPLIED AT GOA SITE. THE SAID SUPPLIER HAD DIRECTLY COLLECTED THE PAYMENT FROM OU R CUSTOMER SHRI SUKHTHANKAR UNDER INSTRUCTION FROM THE ASSESS EE WHICH WAS NOT INTIMATED TO US AND THUS THIS ANOMALY HAS H APPENED IN THE BOOKS OF ACCOUNT AS THE ACCOUNT OF SHRI SUKHTHA NKAR WAS SHOWN SUNDRY CREDITOR. THE AO, NOT ACCEPTING THE E XPLANATION OF THE ASSESSEE, ADDED THE SAME TO THE INCOME OF TH E ASSESSEE. 5. IN THE APPELLATE PROCEEDINGS ALSO, THE LD. CIT(A ) CONFIRMED THE SAME BY HOLDING THAT THE GENUINENESS OF THE SAI D PURCHASES FROM SHRI SUKHTHANKAR COULD NOT BE ESTABLISHED AND NOTICE ISSUED UNDER SECTION 133(6) WAS ALSO RETURNED UNSER VED AND THUS UPHELD THE ORDER OF THE AO. 6. AFTER HEARING BOTH THE PARTIES AND PERUSING THE MATERIAL ON RECORD, WE OBSERVE THAT IN THIS CASE THE FACTS AS P LACED BEFORE US BY THE LD. COUNSEL NEED TO BE VERIFIED AT THE LE VEL OF AO THAT MATERIAL WAS SUPPLIED BY M/S. PERFECT PLY N WOOD AT GOA SITE AND THE PAYMENT WAS COLLECTED FROM SHRI SUKHTHANKAR FOR THE SAID SUPPLIES ON BEHALF OF THE ASSESSEE. IF THE THI S IS SO, NO ADDITION IS REQUIRED TO BE MADE AS THERE WERE NO PURCHASES FROM SHRI SUKHTHANKAR. THEREFORE, WE ARE OF THE VI EW THAT THE MATTER NEEDS TO BE RESTORED TO THE FILE OF THE AO T O DECIDE THE SAME AFRESH AFTER EXAMINATION OF THE EVIDENCES AS M AY BE FILED ITA NO.2640/M/2017 M/S. MAESTRO INTERIOR SOLUTIONS (I) PVT. LTD. 4 BY THE ASSESSEE AFTER AFFORDING A REASONABLE OPPOR TUNITY TO THE ASSESSEE. THE GROUND IS ALLOWED STATISTICALLY. 7. THE ISSUE RAISED IN GROUND NO.2 IS AGAINST THE C ONFIRMATION OF ADDITION OF RS.13,40,817/- BY LD. CIT(A) AS MADE BY THE AO ON ACCOUNT OF UNRECONCILED ENTRIES. 8. THE FACTS IN BRIEF ARE THAT THE AO ,DURING THE C OURSE OF ASSESSMENT PROCEEDINGS, OBSERVED THAT ASSESSEE HAS NOT RECONCILED ENTRIES TO THE TUNE OF RS.13,40,817/- WI TH AIR INFORMATION AVAILABLE AND ACCORDINGLY ASKED THE ASS ESSEE AS TO WHY THE SAME SHOULD NOT BE BROUGHT TO TAX AS THE AS SESSEE HAS CLAIMED TDS QUA THE SAID ENTRIES. THE ASSESSEE REPL IED BY SUBMITTING THAT ASSESSEE HAS RECEIVED ADVANCE FROM M/S. SANTEC FABRICATORS INDIA PVT. LTD. OF RS.13,40,817/- AGAIN ST INTERIOR WORK TO BE DONE. THE WORK ASSIGNED TO THE ASSESSEE COULD NOT BE COMMENCED AND COMPLETED DUE TO SOME DISPUTE. THE ASSESSEE IS IN NEGOTIATION WITH THE SAID PARTY TO SETTLE THE DISPUTE AND AS AND WHEN THE MATTER WOULD BE SORTED OUT, RS.13,40,817/- WOULD BE OFFERED TO TAX. THE ASSESS EE ALSO SUBMITTED THAT IT HAD ISSUED LEGAL NOTICE AND ALSO FILED SUITE FOR PERFORMANCE. THE SUBMISSIONS OF THE ASSESSEE DID N OT FIND FAVOUR WITH THE AO AND HE ADDED THE SAME TO THE INC OME OF THE ASSESSEE ON ACCOUNT OF SUPPRESSED SALE. 9. IN THE APPELLATE PROCEEDINGS, THE LD. CIT(A) DIS MISSED THE APPEAL OF THE ASSESSEE BY OBSERVING AND HOLDING AS UNDER: 6.3 I HAVE GONE THROUGH THE ASSESSMENT ORDER AND T HE DETAILS FILED IN THIS REGARD. IT IS NOTED THAT DURING THE COURSE OF ASSES SMENT PROCEEDINGS, THE A.O. THAT THE ASSESSEE HAD NOT RECONCILED THE INCOME OF RS.13 ,40,81-. THE ASSESSEE WAS ASKED TO EXPLAIN WHY THE INCOME OF RS.13,40, 817/- SHOULD NOT BE BROUGHT TO TAX AS THE SAME WAS NOT OFFERED BUT TDS HAD BEEN CLAIMED D URING THE IMPUGNED YEAR. THE ITA NO.2640/M/2017 M/S. MAESTRO INTERIOR SOLUTIONS (I) PVT. LTD. 5 EXPLANATION FURNISHED BY THE ASSESSEE WAS DULY CONS IDERED BUT THE SAME WAS NOT FOUND TO BE ACCEPTABLE BY THE A.O. AND HENCE AND AD DITION OF RS.13,40,817/- WAS MADE TO THE TOTAL INCOME OF THE ASSESSEE. THE AR HAS SUBMITTED THAT IF THE ASSESSING OFFICER HAD CERTAIN DOUBTS REGARDING NON- RECONCILIATION OF AIR ENTRIES, HE OUGHT TO HAVE MADE INQUIRIES WITH SANTEC FOR CREDIT S APPEARING IN THE NAME OF THE APPELLANT. THE ASSESSING OFFICER SHOULD HAVE INVOKE D POWERS U/S 131/133(6) OF THE ACT AND ISSUED SUMMONS TO SANTEC TO CONFIRM THE NAT URE OF THE PAYMENTS MADE BY THEM TO THE APPELLANT. HOWEVER, WITHOUT ANY SUCH EN QUIRIES, THE ASSESSING OFFICER ADDED THE SAID AMOUNT AS INCOME OF THE APPELLANT. T HEREFORE, THE ADDITION MADE BY THE ASSESSING OFFICER OF RS.13,40,817/- IS INCORREC T AND DESERVES TO BE DELETED. IT IS NOTED THAT DURING THE COURSE OF ASSESSMENT PROCEEDI NGS THE ASSESSEE IS BOUND TO FILE EXPLANATION FOR THE DISCREPANCIES AND MISMATCH ES NOTICED IN THE ACCOUNTS AND AIR INFORMATION. THE ASSESSEE CANNOT THROW THE BALL IN THE COURT OF THE AO TO CALL FOR EXPLANATION BY ISSUING STATUTORY NOTICES TO THI RD PARTIES. IN THE INSTANT CASE IT IS NOTED THAT THE DIFFERENCE IN THE AIR INFORMATION HA S NOT BEEN RECONCILED CORRECTLY AND THE ADDITION MADE BY THE AO ON THE BASIS OF AIR INFORMATION IS FOUND TO BE IN ORDER AND IS UPHELD. ACCORDINGLY THIS GROUND OF AP PEAL IS DISMISSED. 10. THE LD. A.R. SUBMITTED BEFORE THE BENCH THAT TH E SAID AMOUNT OF RS.13,40,817/- REPRESENTED ADVANCE RECEIV ED FROM M/S. SANTEC FABRICATORS INDIA PVT. LTD. AGAINST WOR K TO BE EXECUTED BUT THE SAID WORK WAS NEVER CARRIED OUT BY THE ASSESSEE. THE LD. A.R. TOOK US THROUGH THE PAGE NO .13 & 14 OF THE PAPER BOOK AND SUBMITTED THAT IN THE WORK ORDER DATED 14.07.2010 THE WORK ASSIGNED TO THE ASSESSEE WAS TO THE TUNE OF RS.11,84,22,305/-. THEREAFTER, THE LD. A.R. SUBMIT TED THAT ASSESSEE ISSUED A LEGAL NOTICE DATED 11.02.2012 A C OPY OF WHICH IS FILED AT PAGE NOS.50 TO 56. THE LD. A.R. SUBMIT TED THAT THE AMOUNT RECEIVED OF RS. 13,40,4817/- IS ONLY A TOKEN AMOUNT RECEIVED AT THE TIME OF SIGNING THE CONTRACT WHICH WAS NEVER CARRIED OUT BY THE ASSESSEE AND CONSEQUENTLY THE S AME WAS NOT TREATED AS REVENUE PENDING THE NEGOTIATION WITH THE SAID PARTY. THE LD. A.R., THEREFORE, PRAYED BEFORE THE BENCH TH AT THE SAME MAY KINDLY BE ALLOWED TO BE CARRIED FORWARD IN THE BOOKS OF ACCOUNTS AS ADVANCE TILL THE DISPUTE IS FINALLY SET TLED WITH THE SAID PARTY BY REVERSING THE ORDER OF LD. CIT(A). ITA NO.2640/M/2017 M/S. MAESTRO INTERIOR SOLUTIONS (I) PVT. LTD. 6 11. THE LD. D.R., ON THE OTHER HAND, RELIED ON THE ORDERS OF AUTHORITIES BELOW BY SUBMITTING THAT THE ENTIRE AMO UNT RECEIVED IS INCOME OF THE ASSETS AS ASSESSEE HAS NOT INCURRE D EXPENSES IN CONNECTION WITH THE SAID WORK ASSIGNED TO IT. THERE FORE, THE ORDER OF LD. CIT(A) MAY BE AFFIRMED ON THIS ISSUE B Y ALLOWING THE GROUND RAISED BY THE ASSESSEE. 12. AFTER HEARING BOTH THE PARTIES AND PERUSING THE MATERIAL ON RECORD, WE OBSERVE THAT IN THIS CASE THE MATTER IS UNDER DISPUTE N AND THE ASSESSEE HAS RECEIVED ONLY RS.13,40,817/- AGAINST THE WORK ASSIGNED OF RS.11,84,22,305/- AT THE TIME OF S INGING OF THE AGREEMENT. EVEN THE WORK WAS NOT COMMENCED OR CARRI ED OUT BY THE ASSESSEE AND THUS THE WHOLE MATTER WENT INTO DI SPUTE AND IS YET TO BE RESOLVED. IN OUR OPINION, TILL THE MATTE R IS SETTLED BETWEEN BOTH THE PARTIES, THE ADVANCE RECEIVED CAN NOT BE TREATED AS SUPPRESSED SALES IN THE HANDS OF THE ASS ESSEE. ACCORDINGLY, WE REVERSE THE ORDER OF LD. CIT(A) AND DIRECT THE AO TO DELETE THE ADDITION. 13. THE ISSUE RAISED IN GROUND NO.3 IS AGAINST THE CONFIRMATION OF RS.4,08,864/- BEING THE EXCESS RENT PAID BY THE ASSESSEE. 14. THE FACTS IN BRIEF ARE THAT THE AO, DURING THE COURSE OF ASSESSMENT PROCEEDINGS, NOTICED THAT ASSESSEE HAS S HOWN RENT OF RS.5,46,486/- AND CALLED UPON THE ASSESSEE TO FU RNISH THE COPIES OF RENT AGREEMENTS AND RENT RECEIPTS. THE A O ALSO OBSERVED ON THE BASIS OF RENT AGREEMENT WHICH WAS R EGISTERED ON 27.12.2010 THAT THE ASSESSEE HAS CLAIMED EXCESS REN T IN THE P & L A/C AND CALLED UPON THE ASSESSEE TO EXPLAIN THE S AME. THE SAID QUERY OF THE AO WAS ANSWERED BY THE ASSESSEE V IDE LETTER ITA NO.2640/M/2017 M/S. MAESTRO INTERIOR SOLUTIONS (I) PVT. LTD. 7 DATED 07.03.2014 BY SUBMITTING THAT DURING THE YEAR ASSESSEE HAS INCURRED RENT EXPENDITURE OF RS.5,46,486/- AS U NDER: BHAVARLAL SUTHAR (DIRECTOR) 2,73,432 CHAMPA BHAVARLAL (DIRECTOR) 1,36,716 TEJARAM SUTHAR 1,36,716 THE ASSESSEE SUBMITTED THAT ALL THESE RENTS WERE P AID UNDER THREE SEPARATE AGREEMENTS. THE ASSESSEE HAS B EEN USING THE PREMISES OF ITS DIRECTORS FOR DOING THE BUSIN ESS BUT THE AGREEMENT WAS DELAYED TILL 27.12.2010. THE ASSESSE E SUBMITTED BEFORE THE AO THAT SINCE THIS EXPENDITURE WAS GENUI NE AND INCURRED IN CONNECTION BUSINESS OF THE ASSESSEE IN THE FORM OF RENT PAID THE SAME MAY KINDLY BE ALLOWED. HOWEVER, THE AO, NOT FINDING THE REPLY OF THE ASSESSEE AS TENABLE, ADDED A SUM OF RS.4,08,864/- BY OBSERVING THAT LEAVE AND LICENSE A GREEMENT WAS ENTERED INTO ON 27.12.2010 FOR THE PROPERTY SIT UATED AT KANDIVALI (WEST), MUMBAI AND AT CLAUSE NO.2 IT IS S TATED THAT LICENSE WAS GRANTED FOR A PERIOD OF 33 MONTHS IS WR ONG AND NOT ACCEPTABLE. THE AO OBSERVED THAT THE SAID WHOLE EX ERCISE WAS INTENDED TO REDUCE THE TAX LIABILITY OF THE ASSESSE E AND ACCORDINGLY THE ADDITION WAS MADE. 15. IN THE APPELLATE PROCEEDINGS, THE LD. CIT(A) AL SO DISMISSED THE APPEAL OF THE ASSESSEE BY HOLDING THE FINDINGS OF THE AO THAT AGREEMENT WAS REGISTERED ON 27.12.2010 BUT THE RENT WAS CLAIMED FOR THE ENTIRE PERIOD OF 12 MONTHS BY REJEC TING THE CONTENTIONS AND SUBMISSIONS OF THE ASSESSEE THAT TH E PREMISES WERE IN FACT USED FOR THE PURPOSE OF BUSINESS DURIN G THE WHOLE PERIOD OF 12 MONTHS AND IT IS ONLY THE REGISTRATION OF THE UNIT HAS HAPPENED ON 27.12.2010. ITA NO.2640/M/2017 M/S. MAESTRO INTERIOR SOLUTIONS (I) PVT. LTD. 8 16. AFTER HEARING BOTH THE PARTIES AND PERUSING THE MATERIAL ON RECORD, WE OBSERVE THAT IN THIS CASE THE ASSESSEE H AS CLAIMED TO HAVE USED THE PREMISES BELONGING TO THE DIRECTORS O F THE ASSESSEE COMPANY FOR THE PURPOSE OF BUSINESS. THE SAID FACT IS DULY SUBSTANTIATED BY THE CLAUSE NO.2 OF THE AGREEM ENT AND THE DOUBTS AND SUSPICIONS OF THE REVENUE AUTHORITY HAVE NO BASIS. MOREOVER, THE ASSESSEE HAS DULY DEDUCTED THE TDS ON THE SAID RENT AND DEPOSITED THE SAME IN THE GOVERNMENT TREAS URY. THE ASSESSEE HAS ALSO SUCCESSFULLY REFUTED AND REBUTTED THE ALLEGATIONS OF THE AO THAT RENT WAS BOOKED IN THE M ONTH OF MARCH 2011 WHEREAS ON THE BASIS OF RECORDS PLACED B EFORE US IN THE FORM OF BANK STATEMENTS AND COPY OF LEDGER ACCO UNTS, WE OBSERVE THAT THE RENT HAS BEEN PAID PERIODICALLY DU RING THE YEAR. UNDER THESE CIRCUMSTANCES, WE ARE NOT IN AGREEMENT WITH THE CONCLUSION DRAWN BY THE LD. CIT(A) THAT THE RENT PA ID IS TO AVOID THE TAXES AND ACCORDINGLY THE SAME IS REVERSED. TH E AO IS DIRECTED TO DELETE THE ADDITION. 17. THE ISSUE RAISED IN GROUND NO.4 IS NOT PRESSED AT THE TIME OF HEARING DUE TO SMALLNESS OF THE AMOUNT AND ACCOR DINGLY THE SAME IS DISMISSED AS NOT PRESSED. 18. THE ISSUE RAISED IN GROUND NO.5 IS AGAINST THE CONFIRMATION OF ACTION OF THE AO IN DISALLOWING THE SUM OF RS.1, 03,547/- UNDER SECTION 43B BEING NEW MUMBAI CESS TAX PAID. 19. THE FACTS IN BRIEF ARE THAT THE AO DURING THE A SSESSMENT PROCEEDINGS OBSERVED THAT ASSESSEE HAS PAID A SUM O F RS.1,03,547/- AS NEW MUMBAI CESS AND ADDED THE SAM E TO THE ITA NO.2640/M/2017 M/S. MAESTRO INTERIOR SOLUTIONS (I) PVT. LTD. 9 INCOME OF THE ASSESSEE FOR THE REASONS THAT THE AS SESSEE HAS NOT PRODUCED CHALLANS FOR PAYMENT OF NEW MUMBAI CE SS. 20. IN THE APPELLATE PROCEEDINGS, THE LD. CIT(A) AL SO UPHELD THE ADDITION ON THE GROUND THAT ASSESSEE HAS NOT BEEN A BLE TO EXPLAIN AS TO HOW THE OUTSTANDING PAYMENT OF TAX OF NEW MUMBAI CESS TAX SHOULD BE ALLOWED AS THE ASSESSEE H AS NOT FURNISHED ANY PROOFS OF PAYMENT. 21. AFTER HEARING BOTH THE PARTIES AND PERUSING THE MATERIAL ON RECORD, WE OBSERVE THAT THE SAID PAYMENT WAS DISALL OWED BY THE AO FOR THE REASON THAT ASSESSEE HAS NOT PRODUCED AN Y PROOF OF PAYMENT SUCH AS CHALLANS ETC. IN OUR OPINION, THE ASSESSEE SHOULD BE GIVEN ONE MORE OPPORTUNITY TO PRODUCE TH E PROOFS BEFORE THE AO FOR VERIFICATION AND IF THE SAID TAXE S ARE PAID , THE DEDUCTION HAS TO BE ALLOWED. ACCORDINGLY, WE SET A SIDE ISSUE TO THE FILE OF THE AO TO DECIDE THE SAME AS PER FACTS AND LAW WITH THE DIRECTION TO ALLOW THE ASSESSEE A REASONABLE OP PORTUNITY. 22. THE ISSUE RAISED IN GROUND NO.6 IS AGAINST THE CONFIRMATION OF ADDITION OF RS.12,58,893/- AS MADE BY THE AO ON ACCOUNT OF UNEXPLAINED EXPENDITURE UNDER SECTION 69C OF THE AC T. THE AO, AFTER RECEIVING INFORMATION FROM SALES TAX DEPARTME NT, GOVERNMENT OF MAHARASHTRA, CAME TO THE CONCLUSION T HAT ASSESSEE HAS RECEIVED BOGUS BILLS FOR PURCHASES TO THE TUNE OF RS.17,98,419/- FROM TWO PARTIES NAMELY SHIVRAJ TRAD ER OF RS.11,25,669/- AND SPICE TRADING CO. OF RS.6,72,750 /-. THE AO OBSERVED THAT THE PROPRIETORS OF SHIVRAJ TRADER AND SPICE TRADING CO. HAVE GIVEN THEIR AFFIDAVITS BEFORE SAL ES TAX AUTHORITIES THAT THEY WERE ENGAGED IN ISSUING BOGUS BILLS. ITA NO.2640/M/2017 M/S. MAESTRO INTERIOR SOLUTIONS (I) PVT. LTD. 10 ACCORDINGLY, THE AO ASKED THE ASSESSEE TO FURNISH T HE CONFIRMATIONS FROM THE SAID PARTIES BUT THE ASSESSE E COULD PRODUCE ONLY COPIES OF BILLS, VOUCHERS AND BANK STA TEMENTS EVIDENCING THE PAYMENT THROUGH ACCOUNT PAYEE CHEQUE SANS CONFIRMATIONS. THEREAFTER, THE AO ISSUED NOTICE UN DER SECTION 133(6) OF THE ACT TO THE SAID PARTIES WHICH COULD N OT BE SERVED. FINALLY, THE AO ADDED THE ENTIRE AMOUNT OF BOGUS OF PURCHASES OF RS.17,98,419/- UNDER SECTION 69 OF THE ACT TO TH E INCOME OF THE ASSESSEE . 23. IN THE APPELLATE PROCEEDINGS, THE LD. CIT(A) AP PLIED THE GP OF 30% ON THE SAID ALLEGED PURCHASES AS AGAINST 100 % DISALLOWANCE BY THE AO BY HOLDING THAT IT IS ONLY P ROFIT ON THE BOGUS PURCHASES WHICH COULD BE TAXED AND NOT THE EN TIRE PURCHASES. 24. AFTER HEARING BOTH THE PARTIES AND PERUSING THE MATERIAL ON RECORD, WE OBSERVE THAT LD. CIT(A) HAS PARTLY SUS TAINED THE ADDITION AT THE RATE OF 30% BY GIVING REASONS THAT ONLY PROFIT ELEMENT IN THE BOGUS PURCHASES CAN BE BROUGHT TO TA X AND NOT ENTIRE PURCHASES. WE ARE QUITE CONVINCED WITH THE R EASONING GIVEN BY LD CIT(A) FOR APPLYING PERCENTAGE TO BOGUS PURCHASES BUT RATE APPLIED IS EXCESSIVE. IN SIMILAR TYPE OF CASES, THE CO- ORDINATE BENCHES OF THE TRIBUNAL HAVE TAKEN A VIEW DIRECTING THE ADDITION TO BE MADE AT THE RATES RANGING FROM 8% TO 15%. ACCORDINGLY, WE ARE OF THE VIEW THAT IT WOULD BE RE ASONABLE IF THE ADDITION IS SUSTAINED @ 12.50%. ACCORDINGLY, WE DI RECT THE AO TO ADD 12.50% INSTEAD OF 30% AS DIRECTED BY THE LD. CIT(A). ITA NO.2640/M/2017 M/S. MAESTRO INTERIOR SOLUTIONS (I) PVT. LTD. 11 25. IN THE RESULT, THE APPEAL OF THE ASSESSEE IS PA RTLY ALLOWED FOR STATISTICAL PURPOSES. ORDER PRONOUNCED IN THE OPEN COURT ON 22.04.2019. SD/- SD/- ( RAM LAL NEGI) (RAJESH KUMAR) JUDICIAL MEMBER ACCOUNTANT MEMBER MUMBAI, DATED: 22.04.2019. * KISHORE, SR. P.S. COPY TO: THE APPELLANT THE RESPONDENT THE CIT, CONCERNED, MUMBAI THE CIT (A) CONCERNED, MUMBAI THE DR CONCERNED BENCH //TRUE COPY// [ BY ORDER DY/ASS TT. REGISTRAR, ITAT, MUMBAI.