SCIENTIFIC DEVICES (BOMBAY) P.LTD, THANE V. ACIT CIR 3, THANE

ITA 2708/MUM/2017

• Counselvise Citation: [2018] 126 COUNSELVISE.COM (IT) 0493 (ITAT-MUMBAI)
• Duration Of Justice: 9 month(s) 17 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 31-01-2018
• Appeal Filed By: Assessee
• Order Result: Partly Allowed
• Bench Allotted: SMC
• Assessment Year: 2010-2011
• Appeal Filed On: 13-04-2017
• Result in Favour of: Partly Allowed
• Court: TRIBUNAL
• Keywords: Reopening of assessment; Bogus purchase; Accommodation entries
• Section: 69C; 142(1); 37(1); 147

Judgement Text

1 SCIENTIFIC DEVICES (BOMBAY) PVT LTD IN THE INCOME TAX APPELLATE TRIBUNAL MUMBAI BENCH E, MUMBAI BEFORE SHRI SAKTIJIT DEY (JUDICIAL MEMBER) AND SHRI G MANJUNATHA (ACCOUNTANT MEMBER) I.T.A NOS.2708 & 2709/MUM/2017 (ASSESSMENT YEARS: 2010-11 & 2011-12) SCIENTIFIC DEVICES (BOMBAY) PVT LTD, SCIENTIFIC CENTRE, S.NO.65 HISSA NO.7, BY PASS JUNCTION, KAUSA, MUMBRAI, DIST. THANE, PIN- 400 604 PAN : AAACS7115B VS ACIT, CIR.3, THANE APPELLANT RESPONDEDNT I.T.A NOS.2697 & 2698/MUM/2017 (ASSESSMENT YEARS: 2010-11 & 2011-12) DY.CIT, CIR.3, THANE VS SCIENTIFIC DEVICES (BOMBAY) PVT LTD, SCIENTIFIC CENTRE, S.NO.65 HISSA NO.7, BY PASS JUNCTION, KAUSA, MUMBRAI, DIST. THANE, PIN- 400 604 PAN : AAACS7115B APPELLANT RESPONDEDNT ASSESSEE BY SHRI SUBODH RATNAPARKHI RESPONDENT BY SHRI V JUSTIN DATE OF HEARING 23-01-2018 DATE OF PRONOUNCEMENT 31-01-2018 O R D E R PER BENCH, AM : THESE CROSS APPEALS FILED BY THE ASSESSEE AS WELL AS THE REVENUE 2 SCIENTIFIC DEVICES (BOMBAY) PVT LTD ARE DIRECTED AGAINST THE COMMON ORDER PASSED BY THE CIT(A)-2,THANE DATED 31-01-2017 FOR THE ASSESSMENT YEARS 2010-11 & 2011-12. SINCE FACTS ARE COMMON AND IDENTICAL ISSUES ARE INVOLVED , FOR THE SAKE OF CONVENIENCE, THESE APPEALS WERE HEARD TOGETHER AND ARE DISPOSED OF BY THIS COMMON ORDER. 2. T HE BRIEF FACTS OF THE CASE ARE THAT THE ASSESSERE C OMPANY ENGAGED IN THE BUSINESS OF MANUFACTURE OF PROCESS CONTROL I NSTRUMENTS AND ROTA METERS, OIL CONSUMPTION METERS AND VARIOUS SCIENTIF IC DEVICES. THE ASSESSEE HAS FILED ITS RETURN OF INCOME FOR THE ASS ESSMENT YEARS 2010- 11 & 2011-12 ON 06-10-2010 AND 29-9-2011, RESPECTIV ELY. THE CASE HAS BEEN REOPENED U/S 147 ON THE BASIS OF INFORMATI ON RECEIVED FROM INVESTIGATION WING WHICH STATED THAT THE ASSESSEE I S ONE OF THE BENEFICIARIES OF BOGUS PURCHASE BILLS ISSUED BY SUS PICIOUS / HAWALA DEALERS AS PER THE LIST PREPARED BY MAHARASHTRA SAL ES-TAX DEPARTMENT. SUBSEQUENTLY, THE CASE HAS BEEN SELECTED FOR SCRUTI NY AND NOTICES U/S 143(2) AND 142(1) OF THE ACT WERE ISSUED. IN RESPO NSE, AUTHORIZED REPRESENTATIVE OF THE ASSESSEE SUBMITTED VARIOUS DE TAILS, AS CALLED FOR. DURING THE COURSE OF ASSESSMENT PROCEEDINGS, THE AO NOTICED THAT THE ASSESSEE HAS PURCHASED MATERIALS FROM CERTAIN PARTI ES, WHO WERE LISTED IN THE LIST OF HAWALA / SUSPICIOUS DEALERS PREPARED BY MAHARASHTRA SALES- TAX DEPARTMENT. THOSE PARTIES, IN THEIR STATEMENTS , ADMITTED THAT THEY HAVE NOT ACTUALLY DELIVERED ANY GOODS, BUT HAVE MER ELY PROVIDED THE BILLS 3 SCIENTIFIC DEVICES (BOMBAY) PVT LTD AND REFUNDED BACK CASH TO THE BUYERS AFTER DEDUCTIN G THEIR COMMISSION. THE DETAILS OF PURCHASES MADE FROM SUCH PARTIES ARE AS UNDER:- SR.NO. NAME OF THE PARTY AY 2010-11 AY 2011-12 1 M/S SUNNY INTERNATIONAL 51,480/- 18,73,361 2 M/S TRIVENI METAL INDIA 5,16,462/- 4,81,419 3 M/S OSIAN STEEL IMPEX 18,27,174/- 4 M/S SUBHAM STEEL IMPEX 5 M/S MARUTI IMPEX 17,04,894 6 M/S REGISTHAN METAL (INDIA) 7,08,693/- 7 M/S APOLLO METALS 7,08,328 8 M/S CHOKSI BROTHERS 2,17,717 9 M/S HARSHIL FERROMENT PVT LTD 12,95,772 3. IN VIEW OF THE ABOVE FACT, THE AO CALLED UPON THE A SSESSEE TO FURNISH NECESSARY EVIDENCE TO JUSTIFY PURCHASES FRO M THE ABOVE PARTIES. IN RESPONSE TO NOTICES, THE ASSESSEE HAS FILED PURC HASE BILLS ALONGWITH PAYMENT PROOF FOR SUCH PURCHASES AND SUBMITTED THAT MERELY BECAUSE THIRD PARTY INFORMATIONS REVEAL THAT THE PARTIES AR E INVOLVED IN PROVIDING ACCOMMODATION ENTRIES, PURCHASES SUPPORTED BY VALID EVIDENCE CANNOT BE CONSIDERED AS BOGUS. THE AO, AFTER CONSIDERING RELEVANT SUBMISSIONS OF THE ASSESSEE AND ALSO TAKING INTO AC COUNT INFORMATION RECEIVED FROM INVESTIGATION WING OBSERVED THAT THOU GH THE ASSESSEE HAS FILED CERTAIN DETAILS TO JUSTIFY PURCHASES FROM THE ABOVE PARTIES, FAILED TO FURNISH FURTHER EVIDENCE IN THE BACKDROP OF CLEA R FINDINGS OF THE SALES- TAX DEPARTMENTS THAT THOSE PARTIES ARE INVOLVED IN PROVIDING ACCOMMODATION ENTRIES AND THIS FACT HAS BEEN CONFIR MED IN THE 4 SCIENTIFIC DEVICES (BOMBAY) PVT LTD STATEMENT GIVEN BEFORE THE SALES-TAX AUTHORITIES. THE ASSESSEE ALSO FAILED TO FILE ANY OTHER EVIDENCES INCLUDING TRANSP ORT BILLS, DELIVERY CHALLANS AND GOODS INWARD RECEIPT EXCEPT FURNISHING PURCHASE BILLS AND PAYMENT PROOF. THEREFORE, HE OPINED THAT PURCHASES FROM THE ABOVE PARTIES ARE BOGUS IN NATURE AND HENCE, MADE ADDITIO N U/S 69C OF THE INCOME-TAX ACT, 1961 TOWARDS TOTAL PURCHASES MADE F ROM THE ABOVE PARTIES. 4. AGGRIEVED BY THE ASSESSMENT ORDER, ASSESSEE PREFERR ED APPEAL BEFORE CIT(A). BEFORE THE CIT(A), THE ASSESSEE HAS CHALLENGED REOPENING OF ASSESSMENT U/S 147 ON THE GROUND THAT THE AO HAS REOPENED THE ASSESSMENT WITHOUT THERE BEING ANY IND EPENDENT AND VALID REASON COUPLED WITH ANY INCOME CHARGEABLE TO TAX HA D ESCAPED ASSESSMENT. INSOFAR AS ADDITION MADE BY THE AO TOW ARDS BOGUS PURCHASES, THE ASSESSEE HAS REITERATED ITS SUBMISSI ONS MADE BEFORE THE AO TO ARGUE THAT ITS PURCHASES ARE SUPPORTED BY VAL ID PURCHASE BILLS AND PAYMENT FOR SUCH PURCHASES HAS BEEN MADE THROUGH PR OPER BANKING CHANNEL. THE AO IN THE ABSENCE OF ANY INCORRECTNES S AS TO BOOKS OF ACCOUNT MAINTAINED BY THE ASSESSEE OR MADE OUT A CA SE OF SALES OUTSIDE THE BOOKS OF ACCOUNT CONSIDERED PURCHASES F ROM THE ABOVE PARTIES MERELY ON THE GROUND THAT THEY WERE APPEARI NG IN THE LIST OF SUSPICIOUS / HAWALA DEALERS PREPARED BY THE MAHARAS HTRA SALES-TAX DEPARTMENT. THE CIT(A), AFTER CONSIDERING RELEVANT SUBMISSIONS OF THE 5 SCIENTIFIC DEVICES (BOMBAY) PVT LTD ASSESSEE AND ALSO BY RELYING UPON CERTAIN JUDICIAL PRECEDENT REJECTED GROUND RAISED BY THE ASSESSEE CHALLENGING VALIDITY OF REOPENING OF ASSESSMENT ON THE GROUND THAT THE AO HAS VALID REAS ONS FOR REOPENING OF ASSESSMENT WHICH IS EVIDENT FROM THE FACT THAT T HE INFORMATION RECEIVED FROM INVESTIGATION WING CLEARLY ESTABLISHE S THE FACT THAT THE ASSESSEE IS ONE OF THE BENEFICIARIES OF BOGUS PURCH ASE BILLS ISSUED BY CERTAIN SUSPICIOUS / HAWALA DEALERS PREPARED BY THE MAHARASHTRA SALES- TAX DEPARTMENT. INSOFAR AS ADDITION MADE TOWARDS B OGUS PURCHASES U/S 69C, THE CIT(A), AFTER ANALYZING THE RAW MATERIAL C ONSUMPTION DETAILS AND GROSS PROFIT DECLARED BY THE ASSESSEE IN THE PA ST AND SUBSEQUENT YEARS DETERMINED GROSS PROFIT ON THE BASIS OF GROSS PROFIT DECLARED BY THE ASSESSEE FOR THE ASSESSMENT YEAR 2013-14 AND WORKED OUT ADDITION SUSTAINED TOWARDS BOGUS PURCHASES FOR BOTH THE ASSE SSMENT YEARS. THE RELEVANT PORTION OF THE ORDER OF THE CIT(A) IS EXTR ACTED BELOW:- 7.13 CONSIDERING THE ABOVE FACTS AND IN VIEW OF THE DECISION OF THE HON. DELHI HIGH COURT _ IN THE CASE OF CIT VS. JANSAMPARK ADVE RTISING AND MARKETING (P) LTD, IT IS ALSO AN OBLIGATION ON ON CREDITS, WHICH WERE NOT MEN OF THE MEANS, HENCE RUN AWAY IMMEDIATELY AFTER ACTION OF THE SALES TAX DEPT . AS PER NORMS THE GENUINE PARTIES WILL NEVER RUN AWAY ON ACCOUNT OF SUCH ACTI ON. THE PAYMENTS CLAIMED TO HAVE BEEN MADE IN SUBSEQUENT YEARS, IN SPITE OF HAV ING SUFFICIENT BALANCE ON THE DATES OF PURCHASES. THE APPELLANT COULD NOT PRODUCE PROOF REGARDING MODE OF PAYMENTS, MADE IN SUBSEQUENT YEARS. IT IS DIFFICULT TO BELIEVE THAT THESE HAWALA PARTIES WERE SELLING GOODS ON CREDITS FOR SEVERAL L AKHS, THAT TO WHEN THEY COULD NOT PAY THEIR NEGLIGIBLE VAT LIABILITY AND RUN AWAY FRO M THE TOWN. IN SUPPORT OF THESE FINDINGS, THE FEW COPIES OF LEDGER ACCOUNTS OF THES E HAWALA PARTIES ARE ENCLOSED HEREWITH, FOR READY REFERENCE. 7.15 IN COMPLIANCE, THE LD. AR COULD NOT OFFER ANY VALID EXPLANATION FOR NOT MAKING ANY PAYMENTS TO THESE PARTIES AND ALSO FAILE D TO OFFER PROPER REASONS, FOR FALL IN THE GP RATE VIS-A-VIS EXCESS CONSUMPTION OF RAW-MATERIAL, WITH CREDIBLE DOCUMENTS, AS COMPARED TO A.Y.2013-14. THIS CLEARLY ESTABLISHES THE FACT THAT THE 6 SCIENTIFIC DEVICES (BOMBAY) PVT LTD APPELLANT HAD SUPPRESSED ITS PROFIT BY INFLATING HI S HAWALA PURCHASES, WHICH ARE NOT OPEN FOR VERIFICATION. 7.16 FROM THE ABOVE CHART IT IS SEEN THAT THE APPEL LANT IS CAPABLE OF HARVESTING GP @ 48.44% IN AY 2013-14 FROM THE SAME SET OF BUSINES S AND WITH THE SAME MANAGEMENT. IF THE GP FOR AY 2013-14 IS ADOPTED, AF TER REJECTING THE ACCOUNTS U/S. 145(3) OF THE ACT, IN THESE YEARS, THEN THE RE SULTANT SUPPRESSED GP IS WORKED OUT AT RS 11,I9,546/-(5,83,09,680/- X 1.92/100) AND RS 33,76,0257- (7,92,49,413/- /- X 4.26/100), RESPECTIVELY. IN THIS REGARD, I WOU LD LIKE TO PLACE MY RELIANCE ON THE RATIO LAID DOWN BY THE FOLLOWING COURTS - // IS HELD BY THE HON 'BLE SUPREME COURT IN THE CASE OF H M ESUFALI H M ABDULLA 90 ITR 271 ( SC) THAT IF THE ESTIMATION MADE BY THE ASSESSING AUTHORITY IS A BONAFIDE ESTIM ATE AND BASED ON A RATIONABLE BASIS, THE FACT THAT THERE IS NO GOOD PROOF IN SUPP ORT OF THAT ESTIMATE IS IMMATERIAL. APEX COURT HAS FARTHER HELD IN THE CASE OFM/S. KANC HWALA GEMS PVT. LTD VS JCIT 288 ITR 10 (SC) THAT IT IS WELL SETTLED THAT IN A B EST JUDGMENT ASSESSMENT, THERE IS ALWAYS A CERTAIN AMOUNT OF 'GUESS WORFC\ THE HON'BLE SUPREME COURT, IN THE CASE OF CIT V. CALCUTTA AGENCY LTD. (SC) 19 ITR 191 AND LAKSHIMARATAN COTTON MILLS CO. LTD. V. CIT (SC) 73 ITR 634, HAS HELD THAT IN O RDER TO CLAIM THAT AN EXPENDITURE FALLS U/S 37(1) OF THE ACT, THE BURDEN OF PROVING THE NECESSARY FACTS IN THAT CONNECTION IS ON THE ASSESSEE AND NOT ON THE D EPARTMENT. SIMILARLY, THE APEX COURT, IN THE CASE OF LAKSHMINARAYAN MADAN LAL V. C IT (SC) 86 TTR 439 AND IN THE CASE OF SWADESHI COTTON MILLS CO. LTD. V. CIT 6 3 7.17 SINCE THE SUPPRESSED GP OF RS 11,19,5467- AND RS 33,76,0257-, IN THESE Y EARS, IS MORE THAN 25% OF BOGUS PURCHASES, I.E. RS 5,98,7797- & RS. 17,61,046 7-, THEREFORE, THE DISALLOWANCE TO THE EXTENT OF SUPPRESSED GP I.E. RS 11,19,5467- & RS.33,76,0257-, AS AGAINST TOTAL DISALLOWANCE OF RS 23,95,1167- & RS.70,44,1847-, IS HEREBY SUSTAINED AND BALANCE DIS ALLOWANCE OF RS 12,75,5707- & RS 36,68,1597-, RESPECTIVELY, IS DELETED. ALL THE GROUNDS OF APPEAL ARE PARTLY ALLOWED. 5. AGGRIEVED BY THE ORDER OF THE CIT(A), THE ASSESSEE AS WELL AS THE REVENUE ARE IN APPEAL BEFORE US. 6. THE LD.AR FOR THE ASSESSEE SUBMITTED THAT THE LD.CI T(A) ERRED IN CONFIRMING ADDITION TOWARDS ALLEGED BOGUS PURCHASES FROM CERTAIN PARTIES ON THE BASIS OF ESTIMATION OF GROSS PROFIT ON TOTAL TURNOVER BY TAKING INTO ACCOUNT GROSS PROFIT DECLARED BY THE AS SESSEE FOR THE ASSESSMENT YEAR 2013-14 BY TOTALLY DEVIATING FROM T HE ISSUE OF BOGUS PURCHASES ADDITION MADE BY THE AO U/S 69C OF THE IN COME-TAX ACT, 1961. THE AO HAS MADE ADDITION TOWARDS 100% BOGUS PURCHASES, 7 SCIENTIFIC DEVICES (BOMBAY) PVT LTD WHEREAS THE CIT(A) HAS GONE ON A DIFFERENT FOOTING BY ESTIMATION OF GROSS PROFIT ON TOTAL TURNOVER WHICH IS NOT AT ALL RELEVANT TO SUSTAIN ADDITION MADE BY THE AO TOWARDS BOGUS PURCHASES. T HE ASSESSEE HAS PRODUCED VALID DETAILS TO JUSTIFY PURCHASES FROM TH E ABOVE PARTIES WHEREAS THE AO HAS GONE ONLY ON THE BASIS OF INFORM ATION RECEIVED FROM SALES-TAX DEPARTMENT WITHOUT CONDUCTING FURTHER ENQ UIRIES WITH REGARD TO THE CORRECTNESS OF PURCHASES FROM THE ABOVE PARTIES WHICH IS EVIDENT FROM THE FACT THAT THE AO HAS NOT CARRIED OUT ANY K IND OF INVESTIGATION ABOUT THE CLAIM MADE BY THE ASSESSEE WITH NECESSARY EVIDENCES. THE LD.AR FURTHER SUBMITTED THAT THE AO HAS REJECTED BO OKS OF ACCOUNT U/S 145(3) WITHOUT ANY FINDING AS TO INCORRECTNESS OF B OOKS OF ACCOUNT OR SALES MADE OUTSIDE THE BOOKS OF ACCOUNT. IN THE AB SENCE OF ANY FINDING AS TO INCORRECTNESS OF BOOKS OF ACCOUNT, REJECTION OF BOOKS OF ACCOUNT U/S 145(3) IS INCORRECT AND ADDITION TOWARDS TOTAL PURCHASES FROM ABOVE PARTIES IS BASELESS. THE CIT(A), WITHOUT APPRECIAT ING THE FACTS HAS SUSTAINED ADDITION BY ESTIMATING GROSS PROFIT ON TO TAL SALES WHICH IS INCORRECT. 7. THE LD.DR, ON THE OTHER HAND, SUBMITTED THAT THE LD .CIT(A) WAS ERRED IN ALLOWING PARTIAL RELIEF TO THE ASSESSEE WI THOUT APPRECIATING THE FACT THAT THE ASSESSEE HAS FAILED TO JUSTIFY PURCHA SES FROM ABOVE PARTIES IN THE BACKDROP OF CLEAR FINDINGS BY THE SALES-TAX DEPARTMENT THAT THOSE PARTIES ARE HAWALA OPERATORS INVOLVED IN PROVIDING ACCOMMODATION 8 SCIENTIFIC DEVICES (BOMBAY) PVT LTD ENTRIES WITHOUT ANY ACTUAL BUSINESS ACTIVITY. THE LD.DR FURTHER SUBMITTED THAT THE LD.CIT(A) WAS ERRED IN RELYING U PON CERTAIN JUDICIAL PRECEDENTS INCLUDING THE DECISION OF HONBLE SUPREM E COURT IN THE CASE OF KACHWALA GEMS VS CIT 288 ITR 10 (SC) AS THE FAC T OF THOSE CASES ARE NOT AT ALL RELEVANT TO DECIDE THE ISSUE BEFORE THE CIT(A) INSOFAR AS BOGUS PURCHASES IS CONCERNED. THE LD.DR FURTHER SU BMITTED THAT THE ASSESSEE COULD NOT PRODUCE PRIMARY EVIDENCE LIKE OC TROI RECEIPTS, DELIVERY CHALLANS, ETC. TO PROVE THE GENUINENESS OF THE PURCHASES. THEREFORE, THE AO WAS RIGHT IN APPRECIATING THE FAC TS GATHERED DURING THE COURSE OF ASSESSMENT PROCEEDINGS AS WELL AS AFFIDAV ITS FILED BY THE ENTRY PROVIDERS BEFORE SALES-TAX AUTHORITIES TO MAKE ADDI TION TOWARDS PURCHASES FROM THE ABOVE PARTIES AND HIS ORDER SHOU LD BE UPHELD. 8. WE HAVE HEARD BOTH THE PARTIES, PERUSED THE MATERIA L AVAILABLE ON RECORD AND GONE THROUGH THE ORDERS OF AUTHORITIES B ELOW. THE AO DISALLOWED PURCHASES FROM CERTAIN PARTIES ON THE GR OUND THAT THOSE ARE INVOLVED IN PROVIDING ACCOMMODATION ENTRIES WITHOUT THERE BEING ANY ACTUAL DELIVERY OF GOODS. ACCORDING TO THE AO, THE INFORMATION COLLECTED DURING THE COURSE OF ASSESSMENT PROCEEDINGS COUPLED WITH ENQUIRIES AFFIDAVITS FILED BY THE ENTRY PROVIDERS BEFORE SALE S-TAX AUTHORITIES CLEARLY PROVE THAT THE ASSESSEE IS NOT ABLE TO JUSTIFY PURC HASES FROM ABOVE PARTIES EXCEPT FURNISHING PURCHASE INVOICES AND PAY MENT PROOF. MERE FURNISHING OF PURCHASE BILLS AND PAYMENT PROOF WOUL D NOT SUFFICIENT TO 9 SCIENTIFIC DEVICES (BOMBAY) PVT LTD JUSTIFY PURCHASES FROM ABOVE PARTIES IN THE BACKDRO P OF CLEAR FINDINGS BY THE SALES-TAX DEPARTMENT THAT THEY ARE INVOLVED IN PROVIDING ACCOMMODATION ENTRIES. THE ENTRY PROVIDERS ALSO AD MITTED BEFORE THE SALES-TAX DEPARTMENT THAT THEY ACTUALLY ISSUED BOGU S PURCHASE BILLS WITHOUT ACTUAL DELIVERY OF GOODS AND RETURNED CASH BACK TO THE PARTIES AFTER RETAINING NOMINAL COMMISSION. IT IS THE CONT ENTION OF THE ASSESSEE THAT IT PURCHASES ARE SUPPORTED BY VALID DOCUMENTS AND MERELY BECAUSE THIRD PARTY INFORMATION SAYS THAT THE PARTIES ARE I NVOLVED IN PROVIDING ACCOMMODATION ENTRIES, PURCHASES FROM ABOVE PARTIES CANNOT BE CONSIDERED AS BOGUS. THE ASSESSEE FURTHER CONTENDE D THAT THE AO HAS NOT POINTED OUT ANY DISCREPANCY IN BOOKS OF ACCOUNT OR MADE OUT ANY CASE OF SALES OUTSIDE THE BOOKS OF ACCOUNT. IN THE ABSENCE OF ANY INCORRECTNESS IN BOOKS OF ACCOUNT OR STOCK DETAILS , REJECTION OF BOOKS OF ACCOUNT U/S 145(3) AND ADDITION TOWARDS BOGUS PURCH ASES IS INCORRECT. 9. HAVING HEARD BOTH THE SIDES AND CONSIDERED MATERIAL AVAILABLE ON RECORD, WE FIND THAT THE AOS MAIN ALLEGATION IS THA T THE PARTIES APPEARED IN THE LIST PREPARED BY THE SALES-TAX DEPARTMENT AS HAWALA / SUSPICIOUS DEALERS, WHO WERE INDULGING IN ISSUING BOGUS PURCHA SE BILLS. THE AO HAS NOT CONDUCTED ANY INDEPENDENT ENQUIRY ABOUT THE GENUINENESS OF PURCHASES. ON THE OTHER HAND, THE ASSESSEE HAS FUR NISHED VARIOUS DETAILS TO JUSTIFY PURCHASES FROM THE ABOVE PARTIES INCLUDING PURCHASE BILLS AND PAYMENT PROOF. HOWEVER, FAILED TO FURNIS H FURTHER EVIDENCES LIKE 10 SCIENTIFIC DEVICES (BOMBAY) PVT LTD LORRY RECEIPTS AND DELIVERY CHALLANS TO FURTHER STR ENGTHEN ITS CASE TO JUSTIFY PURCHASES FROM THE ABOVE PARTIES IN THE BAC KDROP OF CLEAR FINDINGS BY THE SALES-TAX DEPARTMENT. UNDER THESE CIRCUMSTA NCES, WE ARE OF THE CONSIDERED VIEW THAT IT IS DIFFICULT TO ACCEPT THE ARGUMENTS OF THE ASSESSEE THAT THE PURCHASES FROM ABOVE PARTIES ARE GENUINE IN NATURE AND SUPPORTED BY VALID EVIDENCES. 10. HAVING SAID SO, LET US EXAMINE WHAT IS REQUIRED TO BE DONE IN CASE OF BOGUS PURCHASES WHERE THE AO HAS MADE ADDITION T OWARDS ALLEGED BOGUS PURCHASES ONLY ON THE BASIS OF THIRD PARTY IN FORMATION WITHOUT CONDUCTING ANY INDEPENDENT ENQUIRY. VARIOUS COURTS AND TRIBUNALS HAVE CONSIDERED THE ISSUE OF BOGUS PURCHASES AND DE PENDING UPON THE FACTS OF EACH CASE, ESTIMATED NET PROFIT OF 12.5% T O 25%. THE HONBLE GUJARAT HIGH COURT IN THE CASE OF VIJAY PROTEINS L TD VS CIT (2015) TMI 828 (GUJ HIGH COURT) UNDER SIMILAR SET OF FACTS HAS UPHELD ESTIMATION OF NET PROFIT OF 15% ON BOGUS PURCHASES. THE HONBLE GUJARAT HIGH COURT IN THE CASE OF CIT VS SIMIT P SHETH 56 ITR 451 (GUJ ) HAS HELD THAT NO UNIFORM YARDSTICK COULD BE APPLIED TO ESTIMATE NET PROFIT BECAUSE OF VARIOUS NATURE OF RISK INVOLVED IN VARIOUS TYPES OF BUSINESS AND NET PROFIT DEPENDS UPON FACTS OF EACH CASE. THE ITAT, MUMBAI BENCH IN A NUMBER OF CASES HAVE TAKEN A CONSISTENT VIEW AND E STIMATED NET PROFIT OF 12.5% ON BOGUS PURCHASES. THE SUM AND SUBSTANCE OF RATIOS OF THE DECISIONS OF COURTS AND TRIBUNALS ARE THAT IN THE C ASE OF BOGUS 11 SCIENTIFIC DEVICES (BOMBAY) PVT LTD PURCHASES ONLY PROFIT ELEMENT EMBEDDED IN BOGUS PUR CHASES NEEDS TO BE TAXED BUT NOT THE TOTAL ALLEGED BOGUS PURCHASES. THEREFORE, WE ARE OF THE CONSIDERED VIEW THAT THE AO WAS ERRED IN MAK ING 100% ADDITION TOWARDS ALLEGED BOGUS PURCHASES U/S 69C OF THE ACT. THE CIT(A), WITHOUT APPRECIATING THE FACTS HAS GONE ON A DIFFER ENT FOOTING AND ESTIMATED GROSS PROFIT BY ADOPTING ASSESSMENT YEAR 2013-14 GROSS PROFIT TO SUSTAIN THE ADDITION MADE BY THE AO TOWARDS ALLE GED BOGUS PURCHASES. 11. COMING TO THE CASE LAWS RELIED UPON BY THE LD.DR. THE LD.DR RELIED UPON THE CASE OF HONBLE SUPREME COURT IN TH E CASE OF NK PROTEINS LTD VS CIT (2017)-TIOL-23-SC-IT. WE HAVE GONE THROUGH THE CASE LAW RELIED UPON BY THE LD.DR WITH THE FACTS OF THE PRESENT CASE AND FIND THAT IN THE CASE BEFORE THE HONBLE SUPREME CO URT, THE FACTS ARE ENTIRELY DIFFERENT INASMUCH AS THE DEPARTMENT HAS G ATHERED VARIOUS INFORMATION INCLUDING UNSIGNED CHEQUE BOOKS AND BIL LS DURING THE COURSE OF SURVEY. UNDER THESE CIRCUMSTANCES, THE HONBLE SUPREME COURT CAME TO THE CONCLUSION THAT ONCE PURCHASES ARE CONS IDERED AS BOGUS, THEN ADDITION SHOULD BE MADE FOR TOTAL PURCHASES AN D NOT FOR NET PROFIT EMBEDDED IN SUCH PURCHASES. IN THIS CASE, THE ASSE SSEE HAS FILED VARIOUS DETAILS TO JUSTIFY PURCHASES. THOUGH THE A O HAS MADE ADDITION ON THE BASIS OF INFORMATION RECEIVED FROM SALES-TAX DEPARTMENT FAILED TO MAKE ANY FURTHER ENQUIRIES IN THE LIGHT OF EVIDENCE S FILED BY THE ASSESSEE 12 SCIENTIFIC DEVICES (BOMBAY) PVT LTD TO ASCERTAIN GENUINENESS OF PURCHASES. THEREFORE, WE ARE OF THE CONSIDERED VIEW THAT THE CASE LAW RELIED UPON BY TH E LD.DR IS NOT APPLICABLE TO THE FACTS OF PRESENT CASE. IN THIS V IEW OF THE MATTER AND CONSIDERING THE RATIOS OF THE CASE LAWS DISCUSSED B Y US, WE DIRECT THE AO TO ESTIMATE NET PROFIT ON TOTAL ALLEGED BOGUS PU RCHASES AT 12.5% FOR AYS 2010-11 AND 2011-12. 12. THE ASSESSEE HAS CHALLENGED REOPENING OF ASSESSMENT U/S 147 FOR BOTH THE ASSESSMENT YEARS. DURING THE COURSE OF HE ARING THE LD.AR FOR THE ASSESSEE SUBMITTED THAT HE DID NOT WANT TO PRES S THE GROUND OF REOPENING OF ASSESSMENT. THEREFORE, THE GROUND RAI SED BY THE ASSESSEE CHALLENGING REOPENING OF ASSESSMENT FOR BOTH THE AS SESSMENT YEARS IS DISMISSED AS NOT PRESSED. 13. IN THE RESULT, APPEALS FILED BY THE ASSESSEE FOR BO TH THE ASSESSMENT YEARS ARE PARTLY ALLOWED AND APPEALS FILED BY THE R EVENUE FOR BOTH THE ASSESSMENT YEARS ARE DISMISSED. ORDER PRONOUNCED IN THE OPEN COURT ON 31 ST JANUARY, 2018. SD/- SD/- (SAKTIJIT DEY) (G MANJUNATHA) JUDICIAL MEMBER ACCOUNTANT MEMBER MUMBAI, DT : 31 ST JANUARY, 2018 PK/- 13 SCIENTIFIC DEVICES (BOMBAY) PVT LTD COPY TO : 1. APPELLANT 2. RESPONDENT 3. CIT(A) 4. CIT 5. DR /TRUE COPY/ BY ORDER ASSTT. REGISTRAR, ITAT, MUMBAI