ITO 21(2)(4), MUMBAI V. YOGESH MAHENDRA PANDYA, MUMBAI

ITA 2893/MUM/2012

• Counselvise Citation: [2015] 134 COUNSELVISE.COM (IT) 2154 (ITAT-MUMBAI)
• Duration Of Justice: 3 year(s) 7 month(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 30-11-2015
• Appeal Filed By: Department
• Order Result: Partly Allowed
• Bench Allotted: G
• Next Hearing Date: 03-09-2015
• Assessment Year: 2007-2008
• Appeal Filed On: 30-04-2012
• Result in Favour of: Partly Allowed
• Court: TRIBUNAL
• Keywords: Bogus purchase
• Section: 143(3); 133(6); 145

Judgement Text

G IN THE INCOME TAX APPELLATE TRIBUNAL G BENCH, MUMBAI BEFORE SHRI AMIT SHUKLA, JUDICIAL MEMBER AND SHRI RAMIT KOCHAR, ACCOUNTANT MEMBER ./ I.T.A. NO. 2893 /MUM/2012 ( / ASSESSMENT YEAR : 2007-08) ITO- 21(2)(4), ROOM NO. 503, 5 TH FLOOR, C-10, PRATYAKSH KAR BHAVAN, BANDRA KURLA COMPLEX, BANDRA (E), MUMBAI 51. / V. SHRI YOGESH MAHENDRA PANDYA, 22, IST FLOOR, VIJAY VILLA, BAJAJ ROAD, VILE PARLE (W), MUMBAI 400 056. ./ PAN :AGIPP 9554A ( / APPELLANT ) .. ( / RESPONDENT ) REVENUE BY SHRI A BANI KANTA NAYAK D R ASSESSEE BY : NONE / DATE OF HEARING : 18-11-2015 / DATE OF PRONOUNCEMENT : 30-11-2015 / O R D E R PER RAMIT KOCHAR, ACCOUNTANT MEMBER : THIS APPEAL, FILED BY THE REVENUE, BEING ITA NO. 28 93/MUM/2012, IS DIRECTED AGAINST THE ORDER DATED 29-02-2012 PASSED BY THE LEARNED COMMISSIONER OF INCOME TAX(APPEALS) - 32, MUMBAI (H EREINAFTER CALLED THE CIT(A)), FOR THE ASSESSMENT YEAR 2007-08. 2. THE GROUNDS RAISED BY THE REVENUE READ AS UNDER :- ITA 2893/M/12 2 1. ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE A ND IN LAW, THE ID. CIT(A) HAS ERRED IN DELETING THE ADDITION MADE OF RS.30,09,819/- ON ACCOUNT OF DIFFERENCE IN PURCHASE AS PER P&L A/E. & PURCHASE REGISTER WITHOUT APPRECIATING THE FACT THAT THE SUBJECT ADDITION IS BASED ON THE FACT. 2. ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE AN D IN LAW, THE ID. CIT(A) HAS ERRED IN DELETING THE ADDITION OF RS. 3,06,54,370/- IN RESPECT OF PURCHASES FROM HARSH ENTERPRISES & PRECI SION CONTAINERS WITHOUT APPRECIATING THE FACT THAT THESE TRANSACTIONS AR E NOT GENUINE & INVOLVED PARTIES DENIED THE TRANSACTION. 3. ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE AN D IN LAW, THE ID. CIT(A) HAS ERRED IN DELETING THE ADDITION OF RS.2 6,26,083/- IN RESPECT OF PURCHASE FROM M/S. SHREEJI ENTERPRISES & M/S. INTERNATIONAL STEEL INDUSTRIES AS HAWALA PURCHASES WITHOUT APPRECIA TING THE FACT THAT THESE TRANSACTIONS WERE NOT GENUINE & THE ASSESSEE DID NOT PRODUCE ANY EVIDENCE TO PROVE ITS VERACITY. 4. ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE AN D IN LAW, THE ID. CIT(A) HAS ERRED IN DELETING THE ADDITION OF RS.23 ,00,80S/- ON ACCOUNT OF PURCHASES MADE FROM M/S. PANAM SALES PVT. LTD. WITHOUT APPRECIATING THE FACT THAT THESE TRANSACTIONS WERE NOT GEN UINE & THE ASSESSEE DID NOT PRODUCE ANY EVIDENCE TO PROVE ITS VE RACITY. 5. THE APPELLANT PRAYS THAT THE ORDER OF THE ID. CIT(A) ON THE ABOVE GROUNDS BE SET ASIDE AND THAT OF THE ASSESSING OFFIC ER BE RESTORED. 3. THE BRIEF FACTS OF THE CASE ARE THAT THE ASSESSE E IS PROPRIETOR OF RIDDHI SIDDHI MARKETING AND IS ENGAGED IN THE BUSINESS OF TRADING IN IRON AND STEEL. DURING THE YEAR UNDER CONSIDERATION ON THE TOTAL TU RNOVER OF RS. 4.09 CRORES, THE G.P. OF 0.95% AND N.P. OF 0.25% HAD BEEN DECLAR ED BY THE ASSESSEE IN THE RETURN OF INCOME FILED WITH THE REVENUE WHILE FOR I MMEDIATELY PRECEDING ASSESSMENT YEAR 2006-07, THE ASSESSEE HAS DECLARED TOTAL TURNOVER OF RS.6,08,292/- . DURING THE COURSE OF ASSESSMENT PR OCEEDINGS U/S 143(3) READ WITH SECTION 143(2) OF THE INCOME TAX ACT, 196 1(HEREINAFTER CALLED THE ACT) , THE ASSESSEE WAS ASKED BY THE LEARNED ASSES SING OFFICER (HEREINAFTER CALLED THE AO) TO FURNISH PARTY-WISE DETAILS OF PURCHASES AND SALES WITH ADDRESSES OF THE PARTIES. HOWEVER, THE ASSESSEE DI D NOT FURNISH THE REQUIRED ITA 2893/M/12 3 DETAILS PARTY WISE AND ONLY FILED A STATEMENT ON 19 -10-2009 OF SALES AND PURCHASES ENCLOSING SAMPLE THREE PURCHASE BILLS IN RESPECT OF THREE PARTIES I.E. INTERNATIONAL STEEL INDUSTRIES, J.D. SALES COR PORATION AND PANAM SALES P. LTD. AGAIN THE ASSESSEE WAS ASKED TO FURNISH THE PU RCHASE DETAILS ON 4-11- 2009 AND IN RESPONSE THE ASSESSEE FILED ONLY ADDRES S OF FOLLOWING SEVEN PARTIES: 1. PANAM SALES PVT. LTD. 2. SHREEJI ENTERPRISES 3. INTERNATIONAL STEEL INDUSTRIES, 4. OM SHIV AGENCY 5. J.D. SALES CORPORATION 6. HARSH ENTERPRISES 7. PRECISION CONTAINERS LTD. THE ASSESSEE WAS AGAIN ASKED BY THE AO TO FURNISH T HE REMAINING DETAILS WHICH WAS NOT FURNISHED EARLIER INCLUDING PARTY WIS E DETAILS OF PURCHASE AND SALE RECORDED IN PROFIT AND LOSS ACCOUNT. THE A.O. ISSUED NOTICES U/S 133(6) OF THE ACT TO T HE FOLLOWING PARTIES:- 1. M/S PANAM SALES PVT. LTD. 2. M/S PRECISION CONTAINERS LTD. 3. M/S INTERNATIONAL STEEL INDUSTRIES 4. M/S SHEERJI ENTERPRISES 5. M/S HARSH ENTERPRISES THE NOTICE U/S 133(6) OF THE ACT ISSUED TO M/S PANA MA SALES PVT. LTD. WAS RETURNED BY THE POSTAL AUTHORITIES WITH THE REMARKS LEFT ADDRESSEE. THERE WERE NO RESPONSES FROM THE OTHER PARTIES, ANOTHER N OTICE WAS ISSUED TO THEM ITA 2893/M/12 4 ON 10-12-2009 AND 22-12-2009 WHICH WAS DULY SERVED ON THE PARTIES. THE ASSESSEE WAS ALSO ASKED BY THE AO TO PRODUCE THE PA RTIES ALONG WITH THEIR BOOKS OF ACCOUNTS WITH SUPPORTING DOCUMENTS, COPIES OF TAX RETURNS, BALANCE SHEET, PROFIT AND LOSS ACCOUNT AND PAN DETAILS . TH E ASSESSEE SUBMITTED THAT HE HAS GIVEN COPIES OF PURCHASE BILLS AND ADDRESSES OF THE PARTIES AND ALL THE PURCHASES ARE GENUINE. THE ASSESSEE SUBMITTED BEFOR E AO THAT PURCHASE RATES ARE THOSE PREVAILING AT THAT TIME AND GOODS A RE SOLD ONLY WHEN PURCHASES ARE MADE. THE ASSESSEE SUBMITTED THAT HE HAS DISCONTINUED THE BUSINESS DUE TO CERTAIN DISPUTES WITH THE PARTIES A ND REQUESTED REVENUE TO TAKE COERCIVE ACTION AGAINST THE PARTIES INCLUDING LEVYING PENALTIES IF THEY DONT CO-OPERATE WITH REVENUE . THE ASSESSEE ALSO S UBMITTED THAT HE HAS ALREADY FILED POLICE COMPLAINT FOR LOSS OF BOOKS OF ACCOUNTS DUE TO WHICH SOME DETAILS WERE NOT SUBMITTED. THE AO OBSERVED THAT THE ASSESSEE IS NOT MAINTAININ G ANY STOCK REGISTER . THE ANALYSIS OF THE BILLS SHOW THAT THESE BILLS ARE NOT PROPER BILLS AS THE ORDER NUMBER,DATE OF ORDER, DISPATCH THROUGH WHOM, LORRY ETC ARE NOT FILLED UP. THERE IS NO OPENING AND CLOSING STOCK AND HENCE THE AO TREATED THESE PURCHASES AS BOGUS PURCHASES. ONE OF THE PARTIES, M /S HARSH ENTERPRISES VIDE THEIR LETTER DATED 22-12-2009 STATED THAT THEY HAVE NOT DONE ANY TRANSACTION WITH THE ASSESSEE DURING THE ASSESSMENT YEAR. SIMILARLY, M/S PRECISION CONTAINERS LTD. STATED VIDE LETTER DATED 22-12-2009 THAT THEY HAVE NOT DONE ANY TRANSACTION WITH THE ASSESSEE DURING T HE ASSESSMENT YEAR. THE A.O. OBSERVED THAT THERE WAS A DIFFERENCE IN THE PU RCHASES DEBITED IN THE P&L ACCOUNT OF RS.4,85,74,742/- AND THE DETAILS OF PURC HASE OF RS.4,55,64,926/- FROM VARIOUS PARTIES SUBMITTED BY THE ASSESSEE WHIC H COMES TO RS. 30,09,816/- AND ACCORDINGLY THE SAME AMOUNT WAS ADD ED TO THE INCOME OF THE ASSESSEE BY THE AO VIDE ASSESSMENT ORDERS DATED 29-12-2009 U/S 143(3) OF ACT. THE A.O. ALSO MADE ADDITION OF RS. 3,06,54 ,370/- U/S 69 OF THE ACT VIDE ASSESSMENT ORDERS DATED 29-12-2009 U/S 143(3) OF ACT ON THE GROUND ITA 2893/M/12 5 THAT THE ASSESSEE HAS INFLATED THE PURCHASES MADE F ROM HARSH ENTERPRISES AND M/S PRECISION CONTAINERS LTD. WHO HAVE FILED WR ITTEN CONFIRMATION THAT THERE WERE NO TRANSACTIONS BETWEEN THE ASSESSEE AND THE SAID PARTIES DURING THE ASSESSMENT YEAR. SIMILARLY, ANOTHER ADDITION O F RS. 23,00,805/- BY THE AO VIDE ASSESSMENT ORDERS DATED 29-12-2009 U/S 143( 3) OF ACT WAS MADE ON PROTECTIVE BASIS AGAINST THE PURCHASES MADE FROM M/ S PANAM SALES PVT. LTD. AS THE ASSESSEE HAS NOT SUBMITTED THE REQUIRED DETA ILS AND NEW ADDRESS WAS SUBMITTED ONLY ON 24-12-2009. SINCE 25 TH TO 28 TH OF DECEMBER, 2009 WERE PUBLIC HOLIDAYS, THE A.O. COULD NOT VERIFY THE INFO RMATION FROM THE PARTY. SIMILARLY, ADDITION OF RS. 26,26,083/- WAS MADE BY THE AO VIDE ASSESSMENT ORDERS DATED 29-12-2009 U/S 143(3) OF ACT WITH RESP ECT TO PURCHASES FROM M/S SHREEJI ENTERPRISES AND M/S INTERNATIONAL STEEL INDUSTRIES ON THE GROUND THAT THE ASSESSEE HAS NOT PRODUCED THESE PARTIES WI TH BOOKS OF ACCOUNT AND THE AO TREATED THE PURCHASE FROM THESE PARTIES AS H AWALA PURCHASES. 4. AGGRIEVED BY THE ASSESSMENT ORDER DATED 29-12-20 09 U/S 143(3) OF ACT PASSED BY THE AO, THE ASSESSEE CARRIED THE MATTER IN APPEAL BEFORE THE CIT(A). 5.THE CIT(A) ISSUED SEVERAL NOTICES WHICH WERE SERV ED ON THE ASSESSEE BUT THE ASSESSEE DID NOT ATTEND THE HEARING MOST OF THE TIM E WHILE ADJOURNMENTS WERE SOUGHT MANY TIMES WHICH WAS GRANTED BY THE CIT(A) A ND ON ONE OCCASION ON 19-03-2010, THE LD. COUNSEL OF THE ASSESSEE, MR AMI T JAIN,CA APPEARED AND FILED PAPER BOOKS AND REPLY, AS APPEARING IN PAGE 1-2 AND 6 OF THE CIT(A) ORDERS DATED 29-02-2012. THE CIT(A) DISPOSED OF T HE APPEAL ON THE BASIS OF FACTS MENTIONED IN THE ASSESSMENT ORDER AND OTHER M ATERIAL AVAILABLE ON RECORD. IT WAS CONTENDED BY THE ASSESSEE BEFORE THE CIT(A) ON 19-03-2010, WHEN MR AMIT JAIN, CA APPEARED, THAT THE LETTERS R ECEIVED FROM HARSH ENTERPRISES AND PRECISION CONTAINERS PRIVATE LIMITE D WERE NEVER CONFRONTED TO THE ASSESSEE AND NOR ANY OPPORTUNITY WAS GIVEN TO T HE ASSESSEE TO MAKE ITA 2893/M/12 6 SUBMISSIONS THEREON AND THE ADDITIONS HAVE BEEN MAD E BASED ON GUESS WORK. IT WAS CONTENDED BY THE ASSESSEE BEFORE THE CIT(A) THAT BECAUSE OF THE DISPUTES WITH THE PARTIES, THE PARTIES HAVE NOT SUB MITTED THE DETAILS AS CALLED BY THE AO U/S 133(6) OF THE ACT. IT WAS CONTENDED T HAT IF THERE ARE NO PURCHASES , THEN SALES WOULD NOT HAVE BEEN POSSIBLE AND THE AO HAS NOT DISPUTED THE SALES MADE BY THE ASSESSEE AND SALES T URNOVER WAS ACCEPTED BY THE REVENUE. IT WAS SUBMITTED BY THE ASSESSEE BEFOR E THE CIT(A) THAT THE ASSESSSEE IS A TRADER AND WHENEVER HE RECEIVE THE O RDER, THE GOODS ARE PURCHASED AND THEN SOLD IN TO OTHER PARTIES AND NO STOCK IS MAINTAINED BY THE ASSESSEE. THE ASSESSEE RELIED UPON THE FOLLOWIN G DECISIONS IN THE CASE OF : 1. ROHINI BUILDERS 127 TAXMAN 523(GUJ.) 2. KANCHAN SINGH 174 TAXMAN 383(ALL.) 3. M.K.BROS. 163 ITR 249(GUJ.) 4. MEHTA P. LTD. 174 TAXMAN 114 (BOM.) 5.DHAKESHWARI COTTON MILLS 26 ITR 775(SC) THE ASSESSEE CONTENDED BY PLACING RELIANCE ON ABOV E JUDGMENTS THAT MERELY BECAUSE THE SUMMONS ISSUED TO SOME CREDITORS COULD NOT BE SERVED OR THE CREDITORS FAILED TO APPEAR BEFORE THE AO COULD NOT BE A GROUND FOR TREATING THOSE CREDITORS TO BE NON-GENUINE. SIMILARLY, THE A SSESSEE CONTENDED THAT THE AO IS NOT ENTITLED TO MAKE GUESS WORK AND MAKE THE ASSESSMENT WITHOUT REFERENCE TO ANY MATERIAL AT ALL. THE CIT(A) RESTRICTED THE ADDITION TO GP RATE OF 20 % ON TURNOVER OF ASSESSEE OF RS. 4,90,43,129/- WHICH COMES TO RS. 98,08,625/- AN D AFTER REDUCING THE NET ITA 2893/M/12 7 PROFIT OF RS. 1,25,989/- DECLARED BY THE ASSESSEE I N RETURN OF INCOME FILED WITH THE REVENUE, THE DIFFERENTIAL PROFIT COMES TO RS. 9 6,82,636/- AND THE ADDITIONS WERE RESTRICTED TO THIS AMOUNT OF RS. 96,82,636/- ON THE GROUND THAT EVEN IN THE APPELLATE PROCEEDINGS THE ASSESSEE IS NOT ABLE TO JUSTIFY THE PURCHASES. THE CIT(A) HELD THAT TWO PARTIES HAVE DENIED THE TR ANSACTION WITH THE ASSESSEE AND THE ASSESSEE HAD CONTENDED THAT THE AS SESSEE WAS NOT CONFRONTED BY THE AO AND HENCE THE CIT(A) REMANDED THE MATTER TO AO FOR REMAND REPORT DURING APPELLATE PROCEEDINGS AND THE AO STATED VIDE REMAND REPORT THAT ONCE AGAIN THE ASSESSEE HAS MADE ONLY S UMMARY STATEMENT THAT SOME OF THE INTERMEDIARIES HAVE CHEATED HIM BY ISSU ING BOGUS BILLS OF THE ASSESSEES CONCERN AND USED THEM AS ACCOMMODATION B ILLS BY OTHER FIRMS BUT NO EVIDENCE OR DETAILS TO PROVE THE PURCHASES FROM THE TWO PARTIES WHICH DENIED THE SALE TO THE ASSESSEE WAS FURNISHED EVEN DURING THE REMAND PROCEEDINGS AND ALSO BOOKS OF ACCOUNTS WERE NOT PRO DUCED ON THE GROUND THAT THE SAME HAS BEEN LOST . THUS, THE CIT(A) HEL D THAT EVEN DURING THE REMAND PROCEEDINGS AT THE APPELLATE STAGE THE ASSES SEE IS NOT ABLE TO PROVE THE PURCHASES OF RS.2,51,57,526/- FROM M/S PRECISIO N CONTAINERS AND RS.54,98,844/- FROM M/S HARSH ENTERPRISES THOUGH IT WAS KNOWN TO THE ASSESSEE THAT THESE TWO PARTIES HAVE DENIED TO HAVE MADE SALES TO THE ASSESSEE . THE CIT(A) NOTED THAT THERE ARE DISCREP ANCIES IN THE BILLS SUBMITTED BY THE ASSESSEE FOR PURCHASES MADE FROM J D SALES CORPORATION AND PANAM SALES PRIVATE LIMITED . THE GP OFFERED FO R TAXATION BY THE ASSESSEE IS 0.95% AND THE NP OFFERED FOR TAXATION OF 0.25% O F THE TURNOVER. THERE IS NO OPENING AND CLOSING STOCK DESPITE THE ASSESSEE HAVI NG A TURNOVER OF RS.4.90 CRORES . THE OTHER EXPENDITURE DEBITED IN THE P & L ACCOUNT IS VERY NOMINAL AND THERE ARE NO FIXED ASSETS AND CAPITAL IS MEAGER SUM OF RS.3,06,255/- AND THERE ARE NO LOANS ALSO IN THE BOOKS OF ACCOUNTS TO JUSTIFY THE TURNOVER OF RS.4.90 CRORES. THERE ARE SUNDRY DEBTORS OF RS.72,5 00/- AND THE ASSESSEE CLAIMS TO HAVE MADE PURCHASES TO THE TUNE OF 60% FR OM THE TWO PARTIES ONLY WHICH HAVE DENIED ANY TRANSACTIONS WITH THE ASSESSE E. THE BOOKS OF ACCOUNT ITA 2893/M/12 8 HAVE NOT BEEN PRODUCED BY THE ASSESSEE AND THE ACCO UNTS ARE UNRELIABLE AND ARE LIABLE TO BE REJECTED U/S 145 OF THE ACT AND M ERE FACT THAT THE TRANSACTION OF PURCHASE AND SALES ARE THROUGH CHEQUES IS NOT CO NCLUSIVE THAT THE TRANSACTIONS ARE GENUINE IN THE FACTS AND CIRCUMSTA NCES OF THE CASES. THE NOTICES ISSUED U/S 133(6) OF THE ACT WERE ALSO RETU RNED UNSERVED IN SOME CASES . THESE FACTS INDICATE THAT THE ASSESSEE IS NOT MAKING GENUINE PURCHASES OR SALE OF IRON AND STEEL BUT THERE CANNO T BE SALE WITHOUT PURCHASES AND HENCE SOME DEDUCTIONS FOR THE PURCHAS ES HAS TO BE MADE, IF THE SALES ARE TO BE ACCEPTED. THE CIT(A) HELD THAT ESTIMATION OF 20% OF GP RATIO IS REASONABLE AND THE ADDITIONS WERE CONFIRME D TO THAT EXTENT. 6. AGGRIVED BY THE ORDERS OF THE CIT(A), THE REVENUE F ILED AN APPEAL BEFORE THE TRIBUNAL. 7. AT THE TIME OF HEARING, NONE APPEARED ON BEHALF OF THE ASSESSEE AND THERE HAS BEEN NON-APPEARANCE BY THE ASSESSEE SINCE 2013 , THEREFORE, WE PROCEED TO DISPOSE OF THE APPEAL AFTER HEARING THE LD. D.R.THE LD. DR SUBMITTED THAT NOTICES HAVE BEEN SERVED ON THE CHAR TERED ACCOUNTANT OF THE ASSESSEE BUT THERE IS NO APPEARANCE BEFORE THE TRIB UNAL SINCE 2013. 8. THE LD. D.R. RELIED UPON THE ORDERS OF AO AND SU BMITTED THAT ASSESSEES PURCHASES TO A LARGE EXTENT ARE NOT VERIFIABLE AND THE A.O. HAS RIGHTLY MADE THE ADDITIONS WHILE THE CIT(A) ERRED IN RESTRICTING ADDITIONS TO 20% OF GP RATIO BASED ON TURNOVER. 9. WE HAVE HEARD THE LD. D.R. AND PERUSED THE MATER IAL PLACED ON RECORD. WE OBSERVE THAT THE ASSESSEE HAS MADE THE PURCHASES FROM THE PARTIES TO THE TUNE OF RS.4,85,74,742/- DEBITED TO PROFIT AND LOSS ACCOUNT OUT OF WHICH TWO PARTIES NAMELY M/S PRECISION CONTAINERS AND HARSH E NTERPRSIES HAVE DENIED THE TRANSACTION FROM WHOM PURCHASES OF RS.2,51,57,5 26/- AND RS.54,98,844/- RESPECTIVELY WERE MADE BY THE ASSESSEE . THE NOTICE S SENT U/S 133(6) OF THE ACT BY THE AO TO VERIFY PURCHASES MADE BY THE ASSESSEE FROM SOME OF THE PARTIES ITA 2893/M/12 9 HAS ALSO REMAINED UN-COMPLIED WITH. THE BOOKS OF A CCOUNT WERE ALSO NOT PRODUCED BY THE ASSESSEE BEFORE THE AUTHORITIES BEL OW AND THE ASSESSEE HAS ALSO STATED BEFORE THE AUTHORITIES BELOW THAT BOOKS ARE LOST AND POLICE COMPLAINT HAS BEEN FILED FOR LOSS OF BOOKS OF ACCOU NTS. THERE WERE SEVERAL OTHER DISCREPANCIES NOTED IN THE ACCOUNTS OF THE ASSESSEE BY THE AUTHORITIES BELOW WHICH ARE DETAILED IN PRECEDING PARAS AND ARE NOT REPEATED FOR SAKE OF BREVITY. THE PAYMENTS ARE ALSO STATED TO BE MADE FOR PURCHAS E AND SALE THROUGH CHEQUES . THE AUTHORITIES BELOW HAVE NOT REJECTED O R DISPUTED THE SALE OF RS.4,90,43,129/- MADE BY THE ASSESSEE DURING THE AS SESSMENT YEAR. THE AO MADE ADDITIONS OF PURCHASES TO THE TUNE OF RS.3,85, 91,074 /- TREATING THE SAME MAINLY HAS BOGUS/ HAVALA /UNPROVED PURCHASES F OR THE DETAIL REASONS CITED IN THE ASSESSMENT ORDER DATED 29-12-2009 WHIC H ARE ALSO PRODUCED IN THE PRECEDING PARAS AND ARE NOT REPEATED FOR SAKE OF BREVITY. THUS, THE AO ACCEPTED PURCHASE OF RS.99,83,668/- OUT OF TOTAL PU RCHASE OF RS.4,85,74,742/- DEBITED IN PROFIT AND LOSS ACCOUNT WHILE THE ENTIRE TURNOVER/SALE OF RS. 4,90,43,129/- WAS ACCEPTED BY THE AO AND NOT DISPUT ED BY THE AO. KEEPING IN VIEW FACTS AND CIRCUMSTANCES OF THE CASE AND SEVERA L DISCREPANCIES IN THE ACCOUNTS, THE CIT(A) REJECTED BOOKS OF ACCOUNTS U/ S 145 OF THE ACT AND ESTIMATED THE GP RATE OF 20% ON TURNOVER KEEPING IN VIEW THE RATIO OF DECISION OF HONBLE SUPREME COURT IN KACHWALA GEMS 288 ITR 1 0(SC) WHEREBY THE HONBLE SUPREME COURT HAS HELD THAT IN BEST JUDGMEN T ASSESSMENT THERE IS ALWAYS SOME DEGREE OF GUESS WORK IN ABSENCE OF PROP ER AND CORRECT ACCOUNTS AND ONLY REQUIREMENT IS THAT THE GUESS WORK SHOULD BE HONEST AND FAIR. THE CIT(A) HAS CITED SEVERAL REASONS IN HIS ORDERS DATE D 29.02.2012 FOR REJECTING BOOKS OF ACCOUNTS OF THE ASSESSEE WHICH ARE ALSO RE PRODUCED IN THE PRECEDING PARAS ABOVE AND ARE NOT REPEATED AGAIN FOR THE SAK E OF BREVITY. WE ARE FULLY IN AGREEMENT WITH THE JUDGMENT OF HONBLE SUPREME COUR T AND HOLD THAT THE CIT(A) HAS KEEPING IN VIEW THE PECULIAR FACTS AND C IRCUMSTANCES OF THE CASE HAS RIGHTLY REJECTED THE ACCOUNTS OF THE ASSESSEE AS BE ING UNRELIABLE HOWEVER, IN OUR CONSIDERED VIEW, HOWEVER, THE INCOME BASED ON G P RATIO SHOULD HAVE BEEN ITA 2893/M/12 10 ESTIMATED BY THE CIT(A) BASED ON FINANCIAL DATAS P ERTAINING TO THE OTHER ENTITIES BELONGING TO THE IRON AND STEEL INDUSTRY S O THAT HONEST AND FAIR ESTIMATE OF INCOME BASED ON GP RATIO IN THE CASE O F THE ASSESSEE MAY BE MADE AS WE HAVE OBSERVED THAT THE CIT(A) HAS MERELY MADE ESTIMATION OF GP RATIO OF 20% OF THE TURNOVER WITHOUT DISCLOSING THE BASIS OF ARRIVING AT THE FIGURE OF 20% AND HOW THE INCOME BASED ON THE SAID GP RATIO OF 20 % IN CASE OF THE ASSESSEE IS HONEST AND FAIR AS PER MANDATE OF APEX COURT DE CISION IN 288 ITR 10. ACCORDINGLY, WE SET ASIDE THE ORDER OF THE CIT(A) T O THE EXTENT OF ESTIMATION OF INCOME OF THE ASSESSEEE BASED ON GP RATIO @20% OF T URNOVER DONE BY THE CIT(A) IN HIS ORDERS DATED 29.02.2012 AND DIRECT TH E CIT(A) TO PASS AN ORDER ESTIMATING INCOME BASED ON GP RATIO BASED ON FINANC IAL DATAS PERTAINING TO THE OTHER ENTITIES BELONGING TO THE IRON AND STEEL IND USTRY SO THAT HONEST AND FAIR ESTIMATE OF INCOME OF THE ASSESSEE CAN BE BROUGHT TO TAX. THE ASSESSEE IS ALSO DIRECTED TO APPEAR BEFORE THE CIT(A) AND PRODUCE A LL THE RELEVANT MATERIAL REQUIRED BY THE CIT(A) FOR ESTIMATION OF GP RATIO BASED ON FINANCIAL DATAS PERTAINING TO THE OTHER ENTITIES BELONGING TO THE IRON AND STEEL INDUSTRY SO THAT HONEST AND FAIR ESTIMATE OF INCOME OF THE ASSESSEE CAN BE BROUGHT TO TAX AND SUCH DATA AS MAY BE PRODUCED BY THE ASSESSEE SHALL BE DULY CONSIDERED BY THE CIT(A) BEFORE MAKING HONEST AND FAIR ESTIMATION OF GP RATIO TO DETERMINE CORRECT INCOME OF THE ASSESSEE CHARGEABLE TO TAX. WE ORDER ACCORDINGLY. 10. IN THE RESULT, THE APPEAL FILED BY THE REVENUE IS PARTLY ALLOWED FOR STATISTICAL PURPOSE. ORDER PRONOUNCED IN THE OPEN COURT ON 30 TH NOVEMBER, 2015. # $% &' 30-11-2015 ( ) SD/- SD/- - (AMIT SHUKLA) (RAMIT KOCHAR) JUDICIAL MEMBER ACCOUNTANT MEMBER $ MUMBAI ; & DATED 30-11-2015 [ ITA 2893/M/12 11 .9../ R.K. R.K. R.K. R.K. , EX. SR. PS !'#$%&%# / COPY OF THE ORDER FORWARDED TO : 1. / THE APPELLANT 2. / THE RESPONDENT. 3. : ( ) / THE CIT(A)- CONCERNED, MUMBAI 4. : / CIT- CONCERNED, MUMBAI 5. =>( 99?@ , ?@ , $ / DR, ITAT, MUMBAI H BENCH 6. (BC D / GUARD FILE. / BY ORDER, = 9 //TRUE COPY// / ( DY./ASSTT. REGISTRAR) , $ / ITAT, MUMBAI