ITO 24(1)(4), MUMBAI V. DEEPAK KHUSALDAS MEHTA, MUMBAI

ITA 3019/MUM/2014

• Counselvise Citation: [2016] 131 COUNSELVISE.COM (IT) 3867 (ITAT-MUMBAI)
• Duration Of Justice: 2 year(s) 3 month(s) 10 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 11-08-2016
• Appeal Filed By: Department
• Order Result: Partly Allowed
• Bench Allotted: D
• Assessment Year: 2010-2011
• Appeal Filed On: 01-05-2014
• Result in Favour of: Partly Allowed
• Court: TRIBUNAL
• Department Lawyers: VISHWAS JADHAV
• Assessee Lawyers: K P KAPADIA
• Keywords: Bogus purchase; Unexplained investment; Income from undisclosed sources; Opportunity of cross examination; Corroborative evidences; Accommodation entries; Revised return
• Section: 69C; 143(3); 133A; 133(6); 131

Judgement Text

D IN THE INCOME TAX APPELLATE TRIBUNAL D BENCH, MUMBAI BEFORE SHRI SAKTIJIT DEY, JUDICIAL MEMBER AND SHRI RAMIT KOCHAR, ACCOUNTANT MEMBER ./ I.T.A. NO.3019 /MUM/2014 ( / ASSESSMENT YEAR : 2010-11) INCOME TAX OFFICER 24(1)(4), R. NO. 502, C-13, PRATYAKSHA KAR BHAVAN, BANDRA-KURLA COMPLEX, BANDRA (EAST), MUMBAI 400 051`. / V. SHRI DEEPAK KHUSALDAS MEHTA, PROP. MEHTA STEEL SYNDICATE, 201, GANGA, R.S. MARG, MALAD (EAST) MUMBAI 400 097. ./ PAN : AABPM7200P ( / APPELLANT ) .. ( / RESPONDENT ) REVENUE BY : SHRI VISHWAS JADHAV ASSESSEE BY : SHRI K.P. KAPADIA / DATE OF HEARING : 24-05-2016 / DATE OF PRONOUNCEMENT : 11-08-2016 / O R D E R PER RAMIT KOCHAR, ACCOUNTANT MEMBER THIS APPEAL, FILED BY THE REVENUE, BEING ITA NO. 3 019/MUM/2014, IS DIRECTED AGAINST THE APPELLATE ORDER DATED 11 TH FEBRUARY, 2014 PASSED BY LEARNED COMMISSIONER OF INCOME TAX (APPEALS)- 34, M UMBAI (HEREINAFTER CALLED THE CIT(A)), FOR THE ASSESSMENT YEAR 2010- 11, THE APPELLATE PROCEEDINGS BEFORE THE LEARNED CIT(A) ARISING FROM THE ASSESSMENT ORDER DATED 22 ND MARCH, 2013 PASSED BY THE LEARNED ASSESSING OFFICE R (HEREINAFTER CALLED THE AO) U/S 143(3) OF THE INCOME TAX ACT,1 961 (HEREINAFTER CALLED THE ACT). ITA 3019/MUM/2014 2 2. THE GROUNDS OF APPEAL RAISED BY THE REVENUE BEF ORE INCOME TAX APPELLATE TRIBUNAL, MUMBAI (HEREINAFTER CALLED THE TRIBUNAL) IN THE MEMO OF APPEAL FILED WITH THE TRIBUNAL READ AS UNDER:- 1. ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE A ND IN LAW, THE LEARNED CIT [A] ERRED IN DIRECTING THE AO TO ACCEPT THE G.P. @3% AND DELETING THE BALANCE ADDITION FROM THE TOTAL OF RS. 95 ,25,636/- MADE BY THE AO ON ACCOUNT OF NON-GENUINE AND UNPROVED PURCHAS E FROM THE PARTIES DECLARED AS 'HAWALA OPERATOR' BY THE SALES TAX DEPARTMENT OF MAHARASTRA STATE. 2. ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE AN D IN LAW, THE LEARNED CIT [A] OUGHT TO HAVE UNDERSTOOD THAT IT IS THE R ESPONSIBILITY OF THE ASSESSEE TO PROVE ITS PURCHASE AND THE LD. CIT(A) SHOULD HAVE HELD THAT IN THE ABSENCE OF THAT, THE ENTIRE UNSUBSTANTIAL PUR CHASE CANNOT BE ALLOWED AS DEDUCTION WHILE COMPUTING THE TOTAL INCOME OF THE ASSESSEE. 3. ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE AN D IN LAW, THE LEARNED CIT [A] ERRED IN ADOPTING 3% OF RS. 95,25,6 36/- AS THE INCOME ESCAPED TAX WITHOUT EXPLAINING HOW SHE ARRIVED AT THIS 3% AS INCOME ESCAPED TAX. 4. THE APPELLATE PRAYS THAT THE ORDER OF THE CIT(A) B E SET ASIDE AND MATTER MAY BE DECIDED ACCORDING TO LAW. THE APPELLANT CRAVES LEAVES TO AMEND OR ALTER ANY GROUND OR ADD A NEW GROUND WHICH MAY BE NECESSARY. 3. THE BRIEF FACTS OF THE CASE ARE THAT THE ASSESSE E IS ENGAGED IN WHOLESALE TRADING OF IRON AND STEEL. DURING THE COURSE OF ASSESSMENT PROCEEDINGS U/S 143 (3) READ WITH SECTION 143(2) OF THE ACT, IT WAS OBSERVED BY THE AO THAT T HE ASSESSEE HAS MADE PURCHASES OF RS. 6,93,56,301/-. THE ASSESSEE WAS C ALLED UPON TO FILE THE DETAILS OF PURCHASES LIKE TIN, NAME & ADDRESSES OF PARTIES FROM WHOM THE PURCHASES WERE MADE. THE ASSESSEE FILED THE DETAIL S ALONG WITH DOCUMENTARY EVIDENCES. MEANWHILE, INFORMATION WAS RECEIVED BY THE AO FROM SALES TAX ITA 3019/MUM/2014 3 DEPARTMENT, MUMBAI WHICH IS ALSO AVAILABLE ON WEB-S ITE OF MAHARASHTRA GOVERNMENT, SALES TAX DEPARTMENT, MUMBAI REGARDING SUSPICIOUS DEALERS WHO ARE ONLY PROVIDING ACCOMMODATION ENTRIES WITHO UT DOING ANY ACTUAL BUSINESS. THE A.O. OBSERVED FROM THE DETAILS SUBMI TTED BY THE ASSESSEE THAT 20 PARTIES WERE AMONG THE LIST OF BOGUS PARTIES WIT H WHOM THE ASSESSEE HAD MADE PURCHASES, THE DETAILS OF WHICH ARE AS UNDER:- SR NAME TIN PAN PARTICULARS AY AMOUNT 01 NEGESHWAR ENTERPRISES 27030540755V ANMPP9773E 2010-11 493272 02 NATIONAL TRADING COMPANY 27210561220V AAGFN0083N 2010-11 662558 03 SHUBHLAXMI SALES CORPN 27490615192V AAVPS1333B 2010-11 401024 04 BHAVANI TRADE IMPEX 27520680505V BBZPS3489Q 2010-11 299853 05 SS ENTERPRISES 27950562074V ABGFS2578E 2010-11 678912 06 DARSHAN SALES CORPORATION 27920382883V AAGPG7681P 2010-11 310424 07 SIDDHI ENTERPRISES 27860154093V AHUPK6877P 2010-11 886584 08 AMAR ENTERPRISE 27030265566V AIRPB6559J 2010-11 67564 09 DHRUV SALES CORPORATION 27760622173V AHYPD6115E 2010-11 399360 10 RIDDHIHI SIDDHI ENTERPRISES 27020601531V AFIPV64 75P 2010-11 262694 11 SAMARTH ENTERPRISES 27560694451V APBPS3000G 2010 -11 689837 12 DIAMOND TRADERS 27550698385V AJXPG7259F 2010-11 166608 13 ROHIT ENTERPRISES 27870215246V AAIPV81961 2010-11 596268 14 BRIGHT CORPORATION 27490198480V AKWPM5913C 2010-11 616871 15 JAIMATA DI TRADING CO 27480539295V AHUPK6877A 2010-11 1170801 16 SHRADHHA TRADING CO. 27460624763V AOTPM8042B 2010-11 246675 17 GURURAJ ENTERPRISES 27420603736V AKYPS7058N 2010-11 513321 18 LEO IMPEX 27230614753V AOXPK1621F 2010-11 170914 19 MAHAVEER SALES CORPORATION 27090707756V AMMPM3778R 2010-11 494816 20 NAVEEP TRADING CORPN. 27540616280V AAAPV4487A 2010-11 397280 TOTAL 95,25,636 IT WAS OBSERVED BY THE A.O. THAT THE SALES TAX DEPA RTMENT CONDUCTED INDEPENDENT ENQUIRIES IN EACH OF THE HAWALA PARTIES AND IT WAS CONCLUSIVELY PROVED THAT THESE PARTIES WERE ENGAGED IN THE BUSIN ESS OF PROVIDING ITA 3019/MUM/2014 4 ACCOMMODATION ENTRIES ONLY. THE SALES TAX DEPARTME NT HAD PROVIDED SEVERAL DOCUMENTS WITH RESPECT TO NINE PARTIES FROM WHOM AS SESSEE HAD MADE PURCHASES AND THE LIST OF DOCUMENTS ARE AS UNDER:- 1. STATEMENT DATED 28-03-2010 & AFFIDAVIT DATED 10 -06-2010 OF SHRI NITIN R PADVEKAR PARTNER OF M/S NAGESHWER E NTERPRISES. 2. STATEMENT DATED 17-08-2011 & AFFIDAVIT DATED 12- 08-2011 OF SHRI SANJAY JAYSUKBAL DOSHI PARTNER OF M/S NATIO NAL TRADING COMPANY, M/S LEO IMPEX, M/S AMAR ENTERPRISES AND NA GESHWAR ENTERPRISES. 3. STATEMENT DATED 15-07-2011 & AFFIDAVIT DATED 16- 07-2011 OF SHRI SANJAY MANHARLAL SOLANKI PROP BHAVANI TRADE IMPEX. 4. STATEMENT & AFFIDAVIT DATED 18-07-2011 OF SHIR P RAVIN MERAJ BISHONI/SHAH PARTNER OF M/S AMAR ENTERPRISES, M/S BRIGHT CORPN, M/S NAGESHWAR ENTERPRISE, M/S SAMARTH ENTERPRISES AND M/ S SHUBHLAXMI SALES CORPN. THE COPIES OF THE ABOVE DOCUMENTS WERE GIVEN TO THE ASSESSEE BY THE AO WHEREBY IT WAS PROVED THAT THESE 20 PARTIES DID NOT SUPPLY ANY GOODS TO THE ASSESSEE AND THE PARTIES ISSUED BILLS WITHOUT DELIV ERING ANY GOODS OR SERVICES AND THE PAYMENTS RECEIVED BY THESE PARTIES WERE RET URNED TO THE ASSESSEE IN CASH AFTER DEDUCTING THEIR COMMISSION. NOTICES WER E SENT U/S 133(6) OF THE ACT TO ALL THESE PARTIES BUT THE SAME WERE RETURNED BY THE POSTAL AUTHORITIES WITH THE REMARK THAT UNCLAIMED/NOT KNOWN. THE A SSESSEE WAS ASKED TO PRODUCE THE WHEREABOUTS OF THE PARTIES OR PRODUCE T HE PARTIES FOR VERIFICATION AND TO PROVE THE GENUINENESS OF THE PURCHASES. HOW EVER, THE ASSESSEE HIMSELF SUBMITTED THE LEDGER OF THE PARTIES, WHICH AS PER THE A.O. CANNOT BE RELIED UPON AS THE ASSESSEE NEITHER PRODUCED THE PA RTIES NOR PROVIDED THE NEW ADDRESSES. THUS, THE A.O. HELD THAT THE ASSESSEE D ID NOT PURCHASE ANY GOODS FROM THESE 20 PARTIES AS MENTIONED ABOVE, AND ACCOR DINGLY TREATED THE AMOUNT OF RS. 95,25,636/- AS UNEXPLAINED EXPENDITUR E U/S 69C OF THE ACT ITA 3019/MUM/2014 5 AND ADDED THE SAME TO THE RETURNED INCOME OF THE AS SESSEE VIDE ASSESSMENT ORDER DATED 22-03-2013 PASSED BY THE AO U/S 143(3) OF THE ACT. 4. AGGRIEVED BY THE ASSESSMENT ORDER DATED 22-03-20 13 PASSED BY THE A.O. U/S 143(3) OF THE ACT, THE ASSESSEE HAS FILED ITS FIRST APPEAL BEFORE THE LD. CIT(A). 5. BEFORE THE LD. CIT(A), THE ASSESSEE SUBMITTED TH AT ASSESSEE IS AN INDIVIDUAL BEING A RESELLER TRADER IN IRON & STEEL CARRYING ON THE BUSINESS IN NAME & STYLE OF M/S. MEHTA STEEL SYNDICATE AND CARR YING ON THE BUSINESS ON 'MADE TO ORDER' BASIS WHEREBY THE ASSESSEE PROCURE MATERIALS ONLY UPON RECEIPT OF CONFIRMED SALE ORDERS. THE ASSESSEE SUBM ITTED THAT HE DO NOT CARRY ANY INVENTORY AT ANY GIVEN POINT OF TIME. ALL THE P URCHASES EFFECTED BY THE ASSESSEE CAN BE INDENTIFIED & CO-RELATED AGAINST SA LES MADE BY HIM. THE ASSESSEE GET THE ORDER WHICH ARE NORMALLY VERBAL OR IN WRITING OR THROUGH SMS ALSO. UPON RECEIPT OF THE ORDER ,HE CONTACTS VARIOU S SUPPLIERS EITHER DIRECTLY OR THROUGH BROKERS FOR PROCUREMENT OF MATERIALS FOR TH E CLIENTS. THE GOODS ARE DIRECTLY SENT TO THE CUSTOMERS FOR WHICH THE ASSESS EE DIRECT THE TRANSPORTER TO PICK THE MATERIAL FROM THE SUPPLIERS' PREMISES. THE ASSESSEE WAS NOT HAVING ANY GODOWN. THE TRANSPORTER PREPARES BILLS IN ASSES SEES NAME AND SHIFTS THE MATERIAL TO THE CUSTOMERS. THE GOODS ARE WEIGHED EI THER AT THE POINT OF ORIGIN OR IN TRANSIT FOR WHICH WEIGHMENT SLIPS ARE OBTAINE D AT APPROVED WEIGH BRIDGE. THIS WEIGH SLIPS FORM PART OF DELIVERY DOCUMENTS AN D ULTIMATELY GOODS ARE DELIVERED TO THE CUSTOMERS. THE DETAILS OF THE SUPP LIERS WHEREBY THE SALES TAX DEPARTMENT CONSIDERED THEM AS HAWALA DEALERS ARE AS UNDER:- SR NAME AMOUNT REMARKS REMARKS REMARKS 1 NAGESHWAR ENTERPRISES 4,93,272/- STATEMENT FILED WITH SALES TAX DEPARTMENT OLD SUPPLIER 2 NATIONAL TRADING COMPANY 6,62,558/- STATEMENT FILED WITH SALES TAX OLD SUPPLIER ITA 3019/MUM/2014 6 DEPARTMENT 3 SHUBHLAXMI SALES CORPN. 4,01,024/- STATEMENT FILED WITH SALES TAX DEPARTMENT NEW SUPPLIER CONFIRMATION ALREADY FILED DURING ASSESSMENT PROCEEDINGS!. 4 BHAVANI TRADE IMPEX 2,99,853/- STATEMENT FILED WITH SALES TAX DEPARTMENT NEW SUPPLIER - 5 SS ENTERPRISES 6,78,912/- OLD SUPPLIER 6 DARSHAN SALES CORPORATION 3,10,424/- NEW SUPPLIER 7 SIDDHI ENTERPRISES 8,86,584/- NEW SUPPLIER 8 AMAR ENTERPRISES 67,564/- STATEMENT FILED WITH SALES TAX DEPARTMENT NEW SUPPLIER 9 DHRUV SALES CORPORATION 3,99,360/- NEW SUPPLIER CONFIRMATION ALREADY FILED DURING ASSESSMENT PROCEEDINGS `10 RIDDHI SIDDHI ENTERPRISES 2,62,694/- OLD SUPPLIER 11 SAMARTH ENTERPRISES 6,89,837/- STATEMENT FILED WITH SALES TAX DEPARTMENT OLD SUPPLIER 12 DIAMOND TRADERS 16,608/- NEW SUPPLIER CONFIRMATION ALREADY FILED DURING ASSESSMENT PROCEEDINGS 13 ROHIT ENTERPRISES 5,96,268/- NEW SUPPLIER 14 BRIGHT CORPORATION 6,16,871/- STATEMENT FILED WITH SALES TAX DEPARTMENT OLD SUPPLIER 15 JAIMATA DI TRADING CO 11,70,801/- OLD SUPPLIER CONFIRMATION ALREADY FILED DURING ASSESSMENT PROCEEDINGS 16 SHARDHA TRADING CO. 2,46,675/- NEW SUPPLIER 17 GURURAJ ENTERPRISES 5,13,321/- OLD SUPPLIER CONFIRMATION ALREADY FILED DURING ASSESSMENT PROCEEDINGS ITA 3019/MUM/2014 7 18 LEO IMPEX 1,70,914/- STATEMENT FILED WITH SALES TAX DEPARTMENT OLD SUPPLIER 19 MAHAVEER SALES CORPORATION 4,94,816/- OLD SUPPLIER 20 NAVNEEP TRADING CORPN 3,97,280/- NEW SUPPLIER 95,25,636/- IT WAS FURTHER SUBMITTED THAT ALL THE PURCHASES WER E MADE THROUGH THE BROKERS AND THE ASSESSEE HAVE NO DIRECT CONTACTS WI TH THE PARTIES. IT WAS SUBMITTED THAT THE A.O. RELIED UPON THE INFORMATION RECEIVED FROM THE SALES TAX AUTHORITIES AND THE WEBSITE OF THE MAHARASHTRA GOVERNMENT WHEREBY IT WAS ALLEGED THAT THE TWENTY PARTIES WERE ENGAGED IN HAWALA BUSINESS AND DID NOT SUPPLY MATERIAL TO THE ASSESSEE AND ISSUED BOGU S SALES INVOICES. IT WAS SUBMITTED BY THE ASSESSEE THAT THE A.O. IN HIS ASSE SSMENT ORDER CONFIRMED THAT ONLY 9 PARTIES HAVE GIVEN STATEMENTS/AFFIDAVIT S TO SALES TAX DEPARTMENT THAT THEY WERE ENGAGED IN PROVIDING ACCOMMODATION B ILLS. IT WAS SUBMITTED THAT THE A.O. HAS NOT EXAMINED THE PARTIES AND HAD NOT GIVEN OPPORTUNITY TO THE ASSESSEE TO CROSS EXAMINE THESE PARTIES. ONLY N INE PARTIES HAD GIVEN STATEMENT OR AFFIDAVITS TO THE SALES TAX DEPARTMENT S AND TOTAL PURCHASES FROM SUCH PARTIES AMOUNTS TO RS. 34,01,893/- AS AGA INST ADDITION OF RS. 95,25,636/-. IT WAS SUBMITTED THAT THE AO HAS NOT G ATHERED ANY MATERIAL DIRECTLY BUT HAS RELIED UPON THE INFORMATION RECEIV ED FROM SALES TAX DEPARTMENT AND ALSO WEBSITE OF MAHARASHTRA GOVERNME NT. IT WAS SUBMITTED THAT THE ASSESSEE WAS NEVER ASKED TO PROVIDE THE WH EREABOUTS OF THE PARTIES OR PRODUCE THE PARTIES FOR VERIFICATION AND THEREBY PROVE THE GENUINENESS OF THE TRANSACTIONS. IT WAS SUBMITTED THAT WHILE MAKI NG THE ADDITION, THE A.O. DID NOT CONSIDER THE VARIOUS DETAILS FILED IN THE F ORM OF QUANTITATIVE RECONCILIATION AND ONE TO ONE IDENTIFICATION OF SAL E AND PURCHASES PRODUCED BY THE ASSESSEE, AND THE TRANSPORT RECEIPTS AND WEIGH MENT SLIPS FILED BEFORE THE AO. THE PAYMENTS TO THESE PARTIES WERE MADE THROUG H CHEQUES. THE ASSESSEE SUBMITTED THAT THE A.O. HAS ERRED IN MAKIN G THE ADDITION OF RS. ITA 3019/MUM/2014 8 95,25,636/- BY TREATING THE ENTIRE PURCHASES AS BOG US ALTHOUGH THE SALE WAS GENUINE. THE A.O. HAS NOT MADE ANY ENQUIRY AS WELL DID NOT CONSIDER THE QUANTITATIVE RECONCILIATION AND THE ONE TO ONE IDEN TIFICATION OF SALE AND PURCHASE WHEREBY THE STOCK WAS RECONCILED. THE ASS ESSEE SUBMITTED THAT THE ASSESSEE WAS NOT GIVEN OPPORTUNITY TO PRODUCE THE P ARTIES FOR NECESSARY EXAMINATION. IT WAS SUBMITTED THAT ALL THE PAYMENT S WERE THROUGH CHEQUES AND BOOKS OF ACCOUNTS WERE NOT REJECTED BY THE AO A ND INSTEAD ENTIRE PURCHASES OF RS.95,25,636/- WAS ADDED TO THE INCOME OF THE ASSESSEE. THUS IT WAS SUBMITTED BY THE ASSESSEE THAT THE A.O. HAS NOT BEEN ABLE TO CONCLUSIVELY PROVE THAT THE PURCHASES MADE BY THE A SSESSEE WERE BOGUS. THE DETAILS OF PURCHASES, SALES, GROSS PROFIT AND NET P ROFIT FOR THE PAST FIVE YEARS WERE SUBMITTED BY THE ASSESSEE BEFORE THE LEARNED C IT(A), THE DETAILS OF WHICH ARE AS UNDER:- ASSESSMENT YEAR SALES GROSS PROFIT GP RATIO NET PROFIT NET PROFIT RATIO 2010-11 7,34,89,568/- 22,73,639/- 3.09% 5,46,192/- 0.74% 2009-10 6,04,24,903/- 19,46,679/- 3.22% 5,25,046/- 0.87% 2008-09 10,54,65,051/- 29,24,984/- 2.77% 5,22,258/- 0.51% 2007-08 7,29,28,591/- 21,14,467/- 2.90% 4,53,424/- 0.62% 2006-07 7,55,19,447/- 19,02,826/- 2.52% 4,26,624/- 0.56% THE ASSESSEE SUBMITTED THAT THE PURCHASES WERE EFFE CTED ONLY UPON RECEIPT OF CORRESPONDING ORDER FOR SALES AND THE ASSESSEE DID NOT CARRY ANY OPENING AND CLOSING INVENTORY AND THE ACTION OF THE AO OF DISAL LOWING THE PURCHASES OF RS.95,25,636/- LEADS TO ABSURD RESULTS AS UNDER:- SR NO ITEM AMOUNT AMOUNT 1 SALE 7,34,89,568/- 2 PURCHASES 6,93,56,301/- LESS: ALLEGED BOGUS PURCHASES (95,25,636/-) 5,98,30,665/- 3 GROSS PROFIT 1,36,58,913/- 4 GROSS PROFIT RATIO 18.57% ITA 3019/MUM/2014 9 IN SUPPORT, THE ASSESSEE RELIED UPON THE FOLLOWING DECISIONS:- SR NO. CASE CITATION AUTHORITY 1 COMMISSIONER OF INCOME TAX V. LEADERS VALVES (P) LTD. 258 ITR 435 HIGH COURT OF PUNJAB & HARYANA 2 J. R. SOLVENT INDUSTRIES (P) LTD. V. ASSTT. COMMISSIONER OF INCOME TAX 68 ITD 65 (TM) ITAT, CHANDIGARH THIRD MEMBER BENCH WITHOUT PREJUDICE TO THE ABOVE, THE ASSESSEE SUBMIT TED THAT ONLY NINE PARTIES OUT OF TWENTY ALLEGED HAWALA DEALERS HAD FILED AFFI DAVIT/STATEMENT WITH THE SALES TAX DEPARTMENT THAT THEY WERE ENGAGED IN PROV IDING ACCOMMODATION BILLS AND THE QUANTUM OF SUCH PURCHASES FROM THESE NINE PARTIES AMOUNTS TO THE TUNE OF RS. 34,01,893/- . IF THE ACTION OF THE A.O. TO MAKE ADDITION ON ACCOUNT OF BOGUS PURCHASES IS TO BE SUSTAINED, THEN IT CAN ONLY BE TO THE EXTENT OF RS. 34,01,893/- ON ACCOUNT OF ALLEGED BOG US PURCHASES FROM THESE NINE PARTIES WITH RESPECT TO THE DEALERS WHO HAVE F ILED THE AFFIDAVIT/STATEMENT. THE ASSESSEE SUBMITTED THAT AS PER THE ASSESSMENT O RDER, THE A.O. HAD SENT NOTICES U/S 133(6) OF THE ACT TO TWENTY DEALERS WHO WERE HAWALA DEALERS AND THE NOTICES WERE RETURNED UNDELIVERED. THE ASSESSE E SUBMITTED THAT THE ASSESSEE WANT TO BUY PEACE AND DO NOT WANT TO LITIG ATE THE MATTER THEREFORE REQUESTED TO MAKE LUMPSUM ADDITION ON ACCOUNT OF AL LEGED BOGUS PURCHASES BY ADOPTING GP RATIO ON THE SAID BOGUS PURCHASES. IN THE SUPPORT, THE ASSESSEE RELIED ON THE FOLLOWING DECISIONS :- 1. CIT V. LEADERS VALVES PRIVATE LIMITED REPORTED IN 2 58 ITR 435(P & H HC) 2. J.R.SOLVENT INDUSTRIES PRIVATE LIMITED V. ACIT 68 I TD 65(TM) , ITAT CHANDIGARH 3. ITO V. SUNSTEEL, 92 TTJ 1126, ITAT AHMADABAD BENCH 4. VIJAY PROTEINS LTD. V. ACIT, 58 ITD 428, ITAT AH MADABAD ITA 3019/MUM/2014 10 5. RAMESH VERMA V. ITO, ITA NO. 541/AHD/2007, ITAT AHMADABAD 6. SHRI SIMIT P. SHETH V. ITO, ITA 3238 & 3293/AHD/ 2009, ITAT AHMADABAD BENCH. THUS, IT WAS PRAYED THAT THE ADDITION MAY BE DELETE D. THE LD. CIT(A) CONSIDERED THE SUBMISSIONS OF THE ASSESSEE AND OBSE RVED THAT THE ASSESSEE HAS CLAIMED THAT OUT OF 20 PARTIES, 9 PARTIES HAD G IVEN STATEMENTS/AFFIDAVITS TO SALES TAX DEPARTMENT THAT THEY WERE ENGAGED IN P ROVIDING ACCOMMODATION BILLS AND REST OF THE PARTIES HAD NOT GIVEN STATEME NTS/AFFIDAVITS. THE LEARNED CIT(A) OBSERVED THAT IN THE ABSENCE OF ANY AFFIDAVI TS/STATEMENTS, THE ASSESSEE SEEMS TO BE UNDER THE IMPRESSION THAT REST OF THE A MOUNT COULD BE TREATED AS GENUINE. THE ONUS IS ON THE ASSESSEE TO BRING THE EVIDENCES ON RECORD TO PROVE GENUINENESS OF THE PURCHASES. THE A.O. ASKED THE ASSESSEE TO GET THE PARTIES VERIFIED, WHICH WAS NOT DONE BY THE ASSESSE E. THUS, THE LD. CIT(A) HELD THAT SINCE THE A.O. ALSO HAD ACCEPTED THE SALES COR RESPONDING TO THE BOGUS PURCHASES INTRODUCED, A.O. WAS DIRECTED TO ACCEPT T HE GP @ 3% AS THE INCOME HAD ESCAPED TAX AND LEARNED CIT(A) ORDERED DELETION OF THE BALANCE AMOUNT, VIDE APPELLATE ORDER DATED 11.02.2014. 6. AGGRIEVED BY THE APPELLATE ORDER DATED 11.02.201 4 PASSED BY THE LD. CIT(A), THE REVENUE IS IN APPEAL BEFORE THE TRIBUNA L. 7. THE LD. D.R. RELIED UPON THE ORDERS OF THE A.O. AND SUBMITTED THAT NOTICES WERE ISSUED U/S 133(6) OF THE ACT TO THE 20 PARTIES FROM WHOM THE BOGUS PURCHASES WERE MADE BY THE ASSESSEE AGGREGATI NG TO RS.95,25,636/- WHICH COULD NOT BE SERVED ON THESE PARTIES AS THESE PARTIES WERE NOT AVAILABLE AT THEIR GIVEN ADDRESSES. INFORMATION WAS RECEIVED FROM SALES TAX DEPARTMENT THAT THESE TWENTY PARTIES ARE INDULGING IN BOGUS AC COMMODATION ENTRIES AND NINE OUT OF THESE TWENTY PARTIES HAVE GIVEN AFFIDAV IT/STATEMENT BEFORE THE SALES TAX AUTHORITIES THAT THE PURCHASE BILLS PROVI DED BY THEM ARE BOGUS AND MERELY ACCOMMODATION ENTRIES WHEREBY CASH WAS GIVEN TO THE ASSESSEE BACK ITA 3019/MUM/2014 11 AFTER RETAINING THEIR COMMISSION. THE COPIES OF THE IR AFFIDAVIT/STATEMENT WAS DULY FURNISHED TO THE ASSESSEE. NO DETAILS WERE PRO VIDED BY THE ASSESSEE WITH RESPECT TO THESE PARTIES NEW ADDRESSES NOR THESE PA RTIES WERE PRODUCED BY THE ASSESSEE BEFORE THE AO. TOTAL ADDITION WERE MADE F OR RS. 95,25,636/- U/S 69C OF THE ACT RIGHTLY BY THE AO WHICH LEARNED CIT( A) ERRONEOUSLY REDUCED THE SAME BY APPLYING GP RATIO OF 3% AS PER APPELLATE OR DERS DATED 11.02.2014 . THE ONUS IS ON THE ASSESSEE TO PROVE THE GENUINENES S OF THE PURCHASES BY PROVIDING COGENT EVIDENCES AND MATERIAL TO SUBSTANT IATE ITS CONTENTIONS AS THE SAID AMOUNT IS DULY REFLECTED IN BOOKS OF ACCOUNTS OF THE ASSESSEE. HE RELIED UPON THE DECISION OF HONBLE ALLAHABAD HIGH COURT I N THE CASE OF SRI GANESH RICE MILLS V. CIT (2007) 294 ITR 316 (ALL. HC). 8. ON THE OTHER HAND, THE LD. COUNSEL FOR THE ASSES SEE SUBMITTED THAT THE ASSESSEE HAS MADE PURCHASES FROM THESE 20 PARTIES A GAINST WHICH PROPER QUANTITATIVE RECONCILIATION OF SALE AND PURCHASE W AS MADE WHEREBY STOCK WAS DULY RECONCILED. COMPLETE DETAILS OF THE PURCHASES WERE FURNISHED BEFORE THE A.O. WHEREBY QUANTITATIVE RECONCILIATION OF SALES A ND CORRESPONDING PURCHASES WERE ALSO SUBMITTED TO RECONCILE STOCK. T HE REVENUE HAS ACCEPTED SALES AS GENUINE BUT DOUBTED PURCHASES. THE LD. CO UNSEL SUBMITTED THAT IN THE EARLIER YEARS, THE DEPARTMENT HAS ACCEPTED THE ASSESSEES BOOKS OF ACCOUNT AND GP RATIO. GP RATIO OF FIVE YEARS WERE PRODUCED BEFORE THE AUTHORITIES BELOW AND GP RATIO OF THE CURRENT YEAR UNDER APPEAL IS IN LINE WITH GP RATIO OF EARLIER YEARS. MOVEMENT OF GOODS WAS A LSO NOT IN DISPUTE WITH THE REVENUE. PAYMENTS HAVE BEEN MADE BY CHEQUES FOR SA ID PURCHASES. THESE DETAILS WERE SUBMITTED BEFORE THE A.O. AS WELL AS T HE LD. CIT(A). THE A.O. HAS NOT MADE ANY ENQUIRY AS TO VERIFY GENUINENESS OF PU RCHASES. IT IS THE CONTENTION OF THE LEARNED COUNSEL FOR THE ASSESSEE THAT NO OPPORTUNITY WAS GIVEN TO THE ASSESSEE TO PRODUCE THE PARTIES BEFORE THE A.O. . IT IS SUBMITTED THAT THE LD. CIT(A) HAS ACCEPTED THE GP RATIO @ 3% WHICH IS ALSO ACCEPTED BY THE ASSESSEE. THE ASSESSEE REITERATED THE SUBMISSIO NS AS MADE BEFORE THE ITA 3019/MUM/2014 12 AUTHORITIES BELOW AND RELIED UPON THE ORDER OF LEAR NED CIT(A). THE ASSESSEE ALSO DREW OUR ATTENTIONS TO THE REPLIES AND EVIDENC ES SUBMITTED BEFORE THE AUTHORITIES BELOW TO SUPPORT ITS CONTENTIONS THAT P URCHASES ARE GENUINE WHICH ARE PLACED IN PAPER BOOK I.E. PURCHASES WERE SUPPORTED BY INVOICES, PAYMENTS WERE MADE BY CHEQUE , RECONCILIATION OF QU ANTITATIVE STOCK OF SALE WITH PURCHASES TO RECONCILE STOCK, CONFIRMATIONS FR OM CERTAIN PARTIES WHICH ARE PLACED IN VOLUMINOUS PAPER BOOK FILED WITH THE TRIBUNAL RUNNING INTO 384 PAGES. 9. WE HAVE CONSIDERED THE RIVAL CONTENTIONS AND ALS O PERUSED THE MATERIAL AVAILABLE ON RECORD INCLUDING THE CASE LAWS RELIED ON. WE HAVE OBSERVED THAT THE ASSESSEE IS A TRADER IN IRON AND STEEL. THE AS SESSEE HAS MADE PURCHASES TO THE TUNE OF RS.6.94 CRORES DURING THE PREVIOUS Y EAR RELEVANT TO THE ASSESSMENT YEAR. DURING THE COURSE OF ASSESSMENT P ROCEEDINGS, INFORMATION WAS RECEIVED BY THE A.O. FROM THE SALES TAX DEPARTM ENT THAT 20 PARTIES WITH WHOM THE ASSESSEE DEALT HAD INDULGED IN ACCOMMODATI ON ENTRIES FOR PROVIDING BOGUS BILLS, AND THESE HAWALA DEALERS WERE ENGAGED IN PROVIDING ACCOMMODATION ENTRIES BY WAY OF BOGUS PURCHASE BILL S WERE ALSO LISTED IN MAHARASHTRA GOVERNMENT- SALES TAX WEBSITE AS BOGUS DEALERS. THEY WERE HAWALA DEALERS ENGAGED IN PROVIDING BOGUS PURCHASE BILLS WHEREBY THERE IS NO ACTUAL SUPPLY OF MATERIAL AND AS AGAINST CHEQUE REC EIVED BY THEM AGAINST BOGUS BILLS, CASH WAS RETURNED TO THE ASSESSEE AFTE R DEDUCTING COMMISSION. OUT OF 20 PARTIES, 9 PARTIES HAD GIVEN AFFIDAVIT/ST ATEMENT BEFORE THE SALES TAX DEPARTMENT THAT THEY WERE HAWALA DEALERS ENGAGED IN PROVIDING BOGUS PURCHASE BILLS WHEREBY THERE IS NO ACTUAL SUPPLY OF MATERIAL AND AS AGAINST CHEQUE RECEIVED BY THEM AGAINST BOGUS BILLS, CASH W AS RETURNED TO THE ASSESSEE AFTER DEDUCTING COMMISSION. THE COPIES OF THE SAID AFFIDAVITS/STATEMENTS WERE DULY FURNISHED TO THE AS SESSEE. THE A.O. HAS ISSUED NOTICES U/S 133(6) OF THE ACT TO THESE TWENT Y PARTIES AND ALL THE NOTICES WERE RECEIVED BACK UNSERVED. THE NOTICES HAVE BEEN RETURNED BACK BY THE ITA 3019/MUM/2014 13 POSTAL AUTHORITIES WITH THE REMARK NOT KNOWN. TH E PARTIES WERE NOT AVAILABLE AT THE GIVEN ADDRESS AND ARE UNTRACEABLE. THE ASSESSEE ALSO EXPRESSED HIS INABILITY TO SUPPLY NEW ADDRESSES OF THESE TWENTY PARTIES NOR WAS ABLE TO PRODUCE THESE PARTIES BEFORE THE AUTHOR ITIES BELOW ON BEING CALLED UPON TO PRODUCE THESE PARTIES BEFORE THE REVENUE. T HE ASSESSEE SUBMITTED THAT THE ASSESSEE IS NOT IN CONTACT WITH THESE PART IES AND THE DEALINGS WERE MADE THROUGH THE BROKERS AND THE ASSESSEE IS NOT AW ARE OF THE WHEREABOUTS OF THESE PARTIES. THE PRIMARY ONUS WAS ON THE ASSE SSEE TO PROVE THE GENUINENESS OF THE TRANSACTIONS ENTERED INTO ITS BO OKS OF ACCOUNTS. HOWEVER, THE ASSESSEE DULY PRODUCED THE DETAILS OF QUANTITAT IVE RECONCILIATION OF SALES AND PURCHASES WHEREBY THE STOCK TALLIED. THE ASSES SEE IS NOT MAINTAINING ANY INVENTORY AS IT IS STATED THAT AFTER RECEIPT OF CUSTOMER ORDERS, THE GOODS WERE SOURCED AND HENCE NO GODOWN IS MAINTAINED BY T HE ASSESSEE. THE BOOKS OF ACCOUNT WERE NOT REJECTED BY THE A.O. WHILE THE PURCHASES WERE DOUBTED AND ADDITION OF RS.95,25,636/- HAS BEEN MADE BY THE AO TO THE RETURNED INCOME U/S 69C OF THE ACT. IN THE PRECEDING YEAR, T HE REVENUE HAS DULY ACCEPTED THE RETURN OF INCOME FILED BY THE ASSESSEE AND GP RATIO DECLARED WERE ACCEPTED AND ONLY MINOR ADDITIONS WERE MADE. WE HAVE ALSO OBSERVED THAT THE GP RATIO IS CONSISTENT WITH THE PRECEDING YEAR. THE LD. CIT(A) RESTRICTED THE ADDITION TO GP RATIO OF 3% OF THE BO GUS PURCHASES AND ORDERED THE DELETION OF THE BALANCE AMOUNT ADDED BY THE AO. WE ARE ALSO AWARE THAT PRINCIPLES OF RES-JUDICATE IS NOT APPLICABLE TO THE INCOME TAX PROCEEDINGS BUT PRINCIPLES OF CONSISTENCY IS TO BE MAINTAINED. IN T HIS PREVIOUS YEAR RELEVANT TO THE ASSESSMENT YEAR, THE REVENUE IS IN POSSESSION O F INCRIMINATING MATERIAL AGAINST THE ASSESSEE. THE ASSESSEE HAS OFFERED THA T THE LUMPSUM ADDITION BE MADE AS IT DID NOT WANTED TO LITIGATE THE MATTER FU RTHER AND WANTED TO BUY PEACE OF MIND. NINE OUT OF TWENTY PARTIES HAVE ALRE ADY GIVEN THE STATEMENT AND THE AFFIDAVIT THAT THEY HAD INDULGED IN HAWALA BOGUS ACCOMMODATION ENTRIES WHEREBY CASH WAS RETURNED TO THE ASSESSEE B Y THESE PARTIES AFTER DEDUCTING THEIR COMMISSIONS AGAINST THE CHEQUE PAID BY THE ASSESSEE TO SETTLE ITA 3019/MUM/2014 14 PAYMENT AGAINST THE BOGUS PURCHASE BILLS WHICH WERE MERELY ACCOMMODATION ENTRIES ARRANGED BY THESE 20 BOGUS DEALERS WHEREBY NO ACTUAL SUPPLY OF MATERIAL TOOK PLACE AS PER THE CONTENTIONS OF THE R EVENUE AND AS PER FACTS AS EMERGING FROM THE RECORDS WHICH REMAINED UNCONTROVE RTED AS THE ASSESSEE COULD NOT BRING ON RECORD NEW ADDRESSES OF THESE 20 DEALERS NOR COULD PRODUCE THESE 20 DEALERS BEFORE THE REVENUE . THE A SSESSEE HAS SUBMITTED THAT HE IS PURCHASING THE MATERIAL THROUGH BROKERS AND HE IS NOT AWARE OF THE PARTIES WHO WERE SUPPLYING MATERIAL TO THE ASSESSEE . IT IS INCUMBENT UPON THE ASSESSEE TO PRODUCE THE PARTIES BEFORE THE A.O. IN ORDER TO ESTABLISH GENUINENESS OF THE PURCHASES . KEEPING IN VIEW THE PECULIAR FACTS AND CIRCUMSTANCES OF THE CASE AS EMERGING FROM THE RECO RDS AND SURROUNDING CIRCUMSTANCES , WE ARE OF THE CONSIDERED OPINION TH AT END OF JUSTICE WILL BE MET WHEREBY FURTHER ADDITION OF 5% OF THE ALLEGED B OGUS PURCHASES OF RS.95,25,636/- ARE MADE TO INCOME OF THE ASSESSEE T O COVER PAYMENT OF COMMISSION IN CASH BY THE ASSESSEE TO THESE BOGUS H AWALA DEALERS WHO HAVE PROVIDED ACCOMMODATION ENTRIES TO THE ASSESSEE BY P ROVIDING BOGUS BILLS WHEREBY CASH WAS RETURNED TO THE ASSESSEE BY THESE 20 DEALERS AFTER DEDUCTING THEIR COMMISSION IN LIEU OF CHEQUE GIVEN BY THE ASSESSEE WHICH IS CORROBORATED BY THE STATEMENT / AFFIDAVITS OF THESE 9 BOGUS DEALERS. WE ORDER ACCORDINGLY. WE WOULD ALSO LIKE TO PLACE RELIANCE ON THE RECENT DECISION OF THE TRIBUNAL PRONOUNCED BY A DIVISION BENCH CONSISTING OF BOTH O F US ON 25-07-2016 RECENTLY WHEREIN UNDER SIMILAR CIRCUMSTANCES, SAME VIEW WAS TAKEN BY US IN THE CASE OF RELIANCE CABLES AND CONDUCTORS PRIVATE LIMITED V. ITO IN ITA NO 3311/MUM/2012 FOR ASSESSMENT YEAR 2007-08 VIDE ORDE RS DATED 25-07-2016, WHEREBY IT WAS HELD BY THE TRIBUNAL AS UNDER : 10. WE HAVE CONSIDERED THE RIVAL CONTENTIONS AND P ERUSED THE MATERIAL PLACED ON RECORD INCLUDING THE TRIBUNAL ORDERS IN I TA NO. 6457/MUM/2012 & ITA 3019/MUM/2014 15 ITA 6611/MUM/2012 DATED 17 TH FEBRUARY, 2016 IN THE CASE OF SISTER CONCERN OF THE ASSESSEE NAMELY M/S PRAKASH METALS WHICH WAS ALSO COVERED BY SURVEY ACTION ON 12-12-2007. THE TRIBUNAL IN ITA NO. 6457/ MUM/2012 & ITA 6611/MUM/2012 DATED 17 TH FEBRUARY, 2016 IN ASSESSEE COMPANYS SISTER CONCERN NAMELY PRAKASH METALS DECIDED THE CASE WHER EBY THE FINDINGS ARE AS UNDER:- THESE ARE CROSS APPEALS BY THE ASSESSEE AND REVENUE DIRECTED AGAINST THE ORDER OF THE CIT(APPEALS)-31, MUMBAI DA TED 17/08/2012 FOR ASSESSMENT YEAR 2007-08. 2. THE FACTS OF THE CASE, BRIEFLY, ARE AS UNDER:- 2.1 THE ASSESSEE FIRM, ENGAGED IN THE BUSINESS AS M ANUFACTURES, TRADERS OF CONDUCTORS AND FERROUS AND NON-FERROUS M ETALS, FILED ITS RETURN FOR ASSESSMENT YEAR 2007-08 ON 29/10/2007 DECLARING NIL INCOME. A REVISED RETURN WAS FILED ON 1/9/2008 DEC LARING TOTAL INCOME OF RS.5,91,912/-. THE RETURN WAS PROCESSED UNDER SECTION 143(1) OF THE INCOME TAX ACT, 1961 ( IN SHORT THE ACT) AND THE CASE WAS SUBSEQUENTLY TAKEN UP FOR SCRUTINY. 2.2 A SURVEY UNDER SECTION 133A OF THE ACT WAS COND UCTED IN THIS CASE BY THE ADIT (INV), UNIT IV(I), MUMBAI ON 12/12 /2007 ON THE BASIS OF INFORMATION/VERIFICATION OF BANK DATA UND ER THE BANKING CASH TRANSACTION ACT THAT M/S. SHRADDHA SABURI MERC HANTS LTD. AND M/S. SAI KRIPA METALLIC TRADECOM LTD.AND OTHER CON CERN PROMOTED BY SHRI PRAVIN AGARWAL HAD INDULGED IN SUSPICIOUS T RANSACTIONS BUT ADMITTED THAT NO ACTUAL BUSINESS OF SALE AND PURCHA SE WAS CARRIED ITA 3019/MUM/2014 16 OUT BY THEM AND THAT THESE TRANSACTIONS WERE ALL AC COMMODATION ENTRIES IN RESPECT OF WHICH THE ASSESSEE AND OTHERS WERE BENEFICIARIES. IN THIS SURVEY IT WAS FOUND THAT IN THE PERIOD RELEVANT TO ASSESSMENT YEAR 2007-08, THE ASSESSEE HAD PURCHA SED MATERIALS WORTH RS.2,27,60,254/- FROM M/S. SHRADDHA SABURI ME RCHANTS LTD. AND RS.1,55,09,505/- FROM M/S. SAI KRIPA METALLIC T RADECOM LTD., FOR WHICH PAYMENTS MADE BY THE ASSESSEE WERE CREDIT ED IN THE AFORESAID TWO PARTIES BANK ACCOUNTS AND THE SAME WA S WITHDRAWN IN CASH ON THE VERY NEXT DATES AFTER ITS DEPOSITS; THE ASSESSEE BEING THE MAIN BENEFICIARY OF THESE ACTIVITIES. THE SURVEY A CTION REVEALED THAT THE ASSESSEE HAD TAKEN ACCOMMODATION BILLS SHOWING BOGUS PURCHASE DURING THE PERIOD RELEVANT TO ASSESSMENT Y EAR 2006-07 AND 2007-08 FROM M/S. SHRADDHA SABURI MERCHANTS LTD., A ND M/S. SAI KRIPA METALLIC TRADECOM LTD. THE ABOVE MODUS OPERAN DI AND THE FACT THAT THE ASSESSEE WAS A BENEFICIARY OF SUCH AC TIVITIES WAS CONFIRMED BY SHRI PRAVIN T. AGARWAL IN A STATEMENT FILED BEFORE ADIT (INV), UNIT IV(I), MUMBAI ON 2/11/2007. THE ADIT (INV) ALSO REPORTEDLY INFORMED THE ASSESSING OFFICER THAT THE PARTNER OF THE ASSESSEE FIRM SHRI PRAKASH J. SHAH WAS AFFORDED AN OPPORTUNITY TO CROSS-EXAMINE SHRI PRAVIN T. AGARWAL, WHICH HE DID NOT AVAIL. 2.3 IN THE LIGHT OF THE ABOVE MATERIAL ON RECORD, T HE ASSESSING OFFICER AFFORDED THE ASSESSEE AN OPPORTUNITY OF BEI NG HEARD IN THE MATTER TO EXPLAIN THE PURCHASE TRANSACTIONS CARRIE D OUT WITH THESE PARTIES IN THE RELEVANT PERIOD (SUPRA). IN THIS RE GARD, THE STATEMENT OF SHRI PRAKASH J. SHAH, PARTNER OF THE ASSESSEE FI RM WAS RECORDED ON 12/12/2007 WHEREIN, INTER-ALIA, HE HAS STATED TH AT HE IS ONLY ITA 3019/MUM/2014 17 ACTING AS AN INDENTING AGENT WHEREIN THE MATERIALS PURCHASED BY IT IS DIRECTLY DISPATCHED THROUGH THE PARTIES FROM WHOM T HE MATERIAL WAS PURCHASED TO THE CUSTOMERS TO WHOM IT IS SOLD I.E. M/S. RAJASTHAN ALUMINIUM & M/S. D.C.METALS, PAYMENTS/RECEIPTS IN T HIS REGARD BEING BOTH BY WAY OF ACCOUNT PAYEE CHEQUE. ALTERNA TIVELY, IT WAS SUBMITTED BY THE ASSESSEE THAT IN CASE THE SAID PUR CHASES FROM THE AFORESAID TWO PARTIES ARE TREATED AS BOGUS, THEN TH E CORRESPONDING SALES SHOWN BY THE ASSESSEE SHOULD ALSO BE CONSIDER ED BOGUS AND THE DIFFERENCE BETWEEN PURCHASES AND SALES BEING THE G. P, ONLY THIS AMOUNT SHOULD BE CONSIDERED AS ITS INCOME. THE ASS ESSING OFFICER DID NOT ACCEPT THE EXPLANATIONS PUT FORTH BY THE AS SESSEE OBSERVING THAT EXCEPT FOR MAKING THE AFORESAID CLAIMS, THE AS SESSEE COULD NOT FURNISH MATERIAL TO PROVE THE MODE OF DELIVERY OF G OODS PURCHASED/SOLD, NAMES AND ADDRESSES AND OTHER RELAT ED PARTICULARS AND DETAILS OF THE PARTIES TO WHOM GOODS WERE ALLEG EDLY SOLD, OR TO EXPLAIN WITH DOCUMENTARY EVIDENCE THE TRANSACTIONS ENTERED INTO FOR PURCHASE FROM THE AFORESAID TWO PARTIES. 2.4 THE AFORESAID SUBMISSIONS OF THE ASSESSEE DID N OT FIND FAVOUR WITH THE ASSESSING OFFICER WHO OBSERVED THAT THESE AVERMENTS OF THE ASSESSEE WERE ALREADY DEALT WITH IN THE COURSE OF S URVEY, POST SURVEY INVESTIGATIONS. THE ASSESSING OFFICER WAS OF THE V IEW THAT AS PER THE FACTS ON RECORD THE TRANSACTIONS ENTERED INTO BY TH E ASSESEE WITH M/S. SHRADDHA SABURI MERCHANTS LTD., M/S. SAI KRIPA ME TALLIC TRADECOM LTD. (PURCHASE PARTIES), M/S. RAJASTHAN AL LUMINIUM AND M/S. D.C. METALS (SALE PARTIES) WERE ONLY ACCOMMOD ATION ENTRIES ITA 3019/MUM/2014 18 RENDERED BY SHRI PRAVIN T. AGARWAL AND ACCEPTED BY SHRI PRAKASH J. SHAH OF THE ASSESSEE FIRM AND NOT REAL SALE/PURCHAS E TRANSACTIONS AS PRESENTLY CLAIMED BY THE ASSESSEE. IN THIS VIEW OF THE MATTER, THE ASSESSING OFFICER AT PARA 10 TO 12 OF THE ORDER OF ASSESSMENT HELD THAT SINCE THE ASSESSEE COULD NOT SUBSTANTIATE THE PURCHASES MADE FROM THE AFORESAID TWO CONCERNS, THE ENTIRE ALLEGED PURCHASES OF RS.3,82,69,759/- SHOWN BY THE ASSESSEE FROM M/S. SH RADDHA SABURI MERCHANTS LTD. AND M/S. SAI KRIPA METALLIC TRADECOM LTD. AS BOGUS AND BROUGHT THE ENTIRE AMOUNT TO TAX IN THE ASSESS EES HANDS. THE ASSESSMENT WAS ACCORDINGLY COMPLETED UNDER SECTION 143(3) OF THE ACT VIDE ORDER DATED 31/12/2009 WHEREIN, THE INCOME OF THE ASSESSEE WAS DETERMINED AT RS.3,87,89,670/-. 3.1 AGGRIEVED BY THE ORDER OF ASSESSMENT FOR ASSESS MENT YEAR 2007-08 DATED 31/12/2009, THE ASSESSEE PREFERRED AN APPEAL BEFORE THE CIT(APPEALS)-31, MUMBAI. THE CIT(APPEALS) DIS POSED OFF THE ASSESSEES APPEAL VIDE THE IMPUGNED ORDER DATED 17/ 8/2012 ALLOWING THE ASSESSEE PARTIAL RELIEF. IN THE COURSE OF APPE LLATE PROCEEDINGS, THE CIT(APPEALS) REMANDED TO THE FILE OF THE ASSESS ING OFFICER FOR ENQUIRIES TO BE MADE FOR THE PURPOSE OF CORROBORA TING THE ASSESSING OFFICERS FINDING THAT THE ENTIRE INVESTM ENT IN PURCHASES BY THE ASSESSEE FROM M/S. SHRADDHA SABURI MERCHANTS L TD. AND M/S. SAI KRIPA METALLIC TRADECOM LTD. AMOUNTING TO RS.3, 82,69,759/- CONSTITUTED UNACCOUNTED INCOME OF THE ASSESSEE. IN THIS CONTEXT THE ASSESSING OFFICER WAS ALSO REQUIRED TO MAKE AVAIL ABLE TO THE ASSESSEE COPIES OF STATEMENTS OF SHRI PRAVIN T. AGA RWAL DATED ITA 3019/MUM/2014 19 12/12/2007, PRIMARILY RELIED ON BY THE ASSESSING O FFICER TO MAKE THE ADDITION OF UNDISCLOSED INCOME OF RS.3,82,69,759/- AND TO AFFORD THE ASSESSEE OPPORTUNITY OF CROSS EXAMINATION OF SHRI PRAVIN T. AGARWAL. THE MATTER WAS REMANDED TO THE ASSESSING OFFICER ON MORE THAN ONE OCCASION TO ADDRESS THE REBUTTALS PUT FORTH BY THE ASSESSEE. REPORT IN THE MATTER WAS ALSO CALLED FO R FROM THE DDIT (INV) UNIT IV(I), MUMBAI. 3.2 AFTER TAKING INTO ACCOUNT ALL THE FACTS BEFORE HIM, THE CIT(APPEALS) OBSERVED THAT THE ASSESSEE HAD ONLY FA CILITATED THE CONCERNED PURCHASE AND SALE PARTIES, AS AN INDENTIN G AGENT FOR COMMISSION, IN THEIR TRANSACTIONS OF BOGUS SALE AND PURCHASES. THE CIT(APPEALS) OBSERVED THAT NO EVIDENCE WAS BROUGHT ON RECORD BY THE ASSESSING OFFICER /DDIT TO ESTABLISH THAT THE A SSESSEE PURCHASED THE GOODS FROM THIRD PARTIES IN CASH, AS ALL THE T RANSACTIONS OF THE ASSESSEE WITH BOTH THE CONCERNED SALE AND PURCHASE PARTIES WAS ADMITTEDLY THROUGH BANKING CHANNELS. IN THIS VIEW OF THE MATTER, THE CIT(APPEALS) HELD THAT THE ASSESSING OFFICER WAS N OT JUSTIFIED IN HOLDING THAT THE ENTIRE PURCHASES BY THE ASSESSEE A RE ITS UNDISCLOSED INCOME AND THAT THE CORRESPONDING SALES ONLY ARE GE NUINE; PARTICULARLY WHEN THE QUANTITY PURCHASED AND SOLD A RE IDENTICAL. THE CIT(APPEALS) WAS OF THE VIEW THAT THE ASSESSEE FACILITATED THESE BOGUS TRANSACTIONS FOR THE PECUNIARY BENEFIT OF CO MMISSION. THE CIT(APPEALS) WAS OF THE VIEW THAT SINCE THE ENTIRE TRANSACTION WAS CLANDESTINE, THE ASSESSEE WOULD HAVE EARNED MORE T HAN THE 0.17% COMMISSION DECLARED BY IT; (WHICH WAS THE DIFFERENC E BETWEEN THE ITA 3019/MUM/2014 20 CONCERNED SALES AND PURCHASE TRANSACTIONS) OR WHICH IS NORMALLY DECLARED IN THIS BUSINESS AT 1 TO 2% ACCORDING TO T HE ASSESSEE. FOLLOWING THE RATIO OF THE DECISION OF THE ITAT, AH MEDABAD BENCH, IN THE CASE OF VIJAY PROTEINS LTD. (15 ITD 428), TH E CIT(APPEALS) ESTIMATED THE COMMISSION EARNED BY THE ASSESSEE AT 5% OF THE SAID PURCHASE OF RS.3,82,69,759/- IN THE PECULIAR FACTS AND CIRCUMSTANCES OF THE CASE ON HAND. 4. AGGRIEVED BY THE ORDER OF THE CIT(APPEALS) -31, MUMBAI DATED 17/8/2012 FOR ASSESSMENT YEAR 2007-08, BOTH REVENUE AND THE ASSESSEE HAVE PREFERRED APPEALS BEFORE THE TRIBUNAL IN RESPECT OF THE ISSUES HELD AGAINST THEM. 4.1.1 THE GROUNDS RAISED IN THE ASSESSEES APPEAL A RE AS UNDER:- I 1.THE COMMISSIONER OF INCOME TAX ('CIT(A)') ERR ED IN MAKING CONFIRMING ADDITION OF RS. 18,48,429/-, BEING ESTIM ATING THE ADDITIONAL COMMISSION INCOME ON THE ACCOMMODATION BILLS OF BOG US PURCHASES MADE FROM M/S. SAI KRIPA METTALIC TRADECOM PVT. LTD., AND M/S SHARDHHA SABURI MERCHANTS LTD @ 5% OF THE TOTAL PURCHASE AMOUNT FRO M THE ABOVE TWO PARTIES, AFTER DEDUCTING THE NET COMMISSION INCOME OF RS. 65 ,0591- SHOWN IN THE BOOKS OF ACCOUNT. 2. THE LEARNED CIT(A) WAS ALREADY SATISFIED AND HAS VERIFIED ALL THE PURCHASES AND SALES BILLS WITH THE NET INCOME OUT OF THESE TR ANSACTIONS WHICH WERE FULLY SUPPORTED BY THE ACCOUNT PAYEE CHEQUES AND WAS ACCE PTED THAT NO CASH TRANSACTIONS WERE INVOLVED. 3. THE TRANSACTIONS PROVED THE MODUS OPERENDI OF DI RECT PURCHASES AND SALES BY THE PARTIES WHERE YOUR APPELLANT WAS ONLY DELCREDER AGENT SUPPORTED BY VARIOUS DOCUMENTARY CONFIRMATIONS UNDER THE CIRCUMSTANCES. 4. THE LEARNED CIT(A) FAILED TO APPRECIATE THAT THE APPELLANT HAD ACTED AS AN INDENTING AGENT AND ACCORDINGLY, EARNED THE COMMISS ION INCOME AS SHOWN IN THE FORM OF PROFIT WHICH IS IN THE NATURE OF COMM ISSION AND SHOWN IN THE PROFIT & LOSS ACCOUNT. HENCE NO ADDITION IS CALLED FOR. 3. THE APPELLANT PRAYS THAT THE ADDITION OF RS.18,4 8,429/- BE DELETED AS UNWARRANTED AND UNJUSTIFIED. ITA 3019/MUM/2014 21 4. WITHOUT PREJUDICE TO THE ABOVE THE APPELLANT PRA YS THAT THE ADDITION BE REDUCED TO REASONABLE APPROPRIATE RATE DEPENDING U PON THE CIRCUMSTANCES OF THE APPELLANTS CASE. II. 1. THE APPELLANT CRAVES LEAVE TO ADD TO , AMEND AND/OR ALTER THE ABOVE GROUNDS OF APPEAL. 4.1.2 AT THE OUTSET, THE LD. REPRESENTATIVE FOR THE ASSESSEE FOR THE ASSESSEE SUBMITTED THAT IN ITS APPEAL, THE ASSESSEE WILL BE PRESSING ONLY GROUND NO.I (SUPRA) AND THAT ALL OTHER GROUNDS I (2 TO 4) AND ( 2 TO 4) AS WELL AS II(1) ARE NOT BEING PRESSED. SINCE THE GROUNDS AT S.NOS. I (2 TO 4) AND (2 TO4) AND II(1) ARE NOT PRESSED IN THIS APPEAL, THE SAME ARE RENDERED INFRUCTUOUS AND ACCORDINGLY DISMISSED. 4.2 THE GROUNDS RAISED IN REVENUES APPEAL ARE AS U NDER:- 1. THE LEARNED CIT(A) HAS ERRED ON FACTS AND CIRCUMSTA NCES OF THE CASE AND IN LAW IN DIRECTING AO TO DELETE RS. 3,64,21,330/- HEL D AS BOGUS PURCHASES BY THE ASSESSING OFFICER. 2. THE LEARNED CIT(A) HAS ERRED ON THE FACTS AND CIRCU MSTANCES OF THE CASE AND IN LAW IN ASSUMING THE ASSESSEE AS MERELY AN AGENT REC EIVING PREFIXED COMMISSION IN RESPECT OF THE TRANSACTION OF ALLEGED BOGUS PURC HASES. 3. THE APPELLANT PRAYS THAT THE ORDER OF THE CIT (APP EALS) ON THE ABOVE GROUNDS BE SET ASIDE AND THAT OF THE AO BE RESTORED. 4. 4. THE APPELLANT CRAVES LEAVE TO AMEND OR ALTER ANY GROUND OR TO SUBMIT ADDITIONAL NEW GROUND WHICH MAY BE NECESSARY. 5.1 IN GROUND NO.1 OF ASSESSEES APPEAL , IT IS CONTENDED THAT THE CIT(APPEALS) ERRED IN ESTIMATING THE COMMISSION INC OME EARNED BY THE ASSESSEE ON ACCOMMODATION BILLS OF BOGUS PURCHASES MADE FROM M/S. SHRADDHA SABURI MERCHANTS LTD. AND M/S. SAI KRIPA M ETALLIC TRADECOM LTD. @5% OF THE TOTAL PURCHASES OF RS.3,82,69,759/- FROM THESE TWO PARTIES. 5.2 IN GROUNDS NO.1 TO 4 OF REVENUES APPEAL, IT IS CONTENDED THAT CIT(APPEALS) ERRED IN DIRECTING THE ASSESSING OFFIC ER TO DELETE THE ADDITION OF RS.3,82,89,579/- HELD BY THE ASSESSING OFFICER AS INCOME OF THE ITA 3019/MUM/2014 22 ASSESSEE ARISING OUT OF BOGUS PURCHASES FROM THE AF ORESAID TWO PARTIES AND IN ASSUMING THAT THE ASSESSEE HAS MERELY EARNED COM MISSION IN RESPECT OF THE AFORESAID PURCHASES. 5.3 THE ASSESSEES GROUNDS I(1) AND REVENUES GROUN DS (1 TO 4)(SUPRA) BEING BOTH IN RESPECT OF THE CONTRARY FINDINGS OF THE ASSESSING OFFICER AND THE CIT(APPEALS) ON THE SAME ISSUE OF DETERMINATIO N OF THE INCOME EARNED BY THE ASSESSEE FROM OUT OF THE TRANSACTIONS OF BOGUS PURCHASES AMOUNTING TO RS.3,82,69,759/- MADE BY THE ASSESSEE FROM THE TWO PARTIES M/S. SHRADDHA SABURI MERCHANTS LTD. AND M/S. SAI KR IPA METALLIC TRADECOM LTD., THESE ISSUES BEING INTER CONNECTED A ND ARISING FROM THE GROUNDS RAISED BY BOTH SIDES IN RESPECT OF THE SAME SET OF TRANSACTIONS, THEY ARE BEING CONSIDERED AND DISPOSED OFF TOGETHER HERE UNDER. 5.4.1 THE LD. REPRESENTATIVE FOR THE ASSESSEE , ON THE ISSUE RAISED IN REVENUES APPEAL, VEHEMENTLY SUPPORTED THE IMPUGNED ORDER OF THE CIT(APPEALS) IN RESPECT OF ITS FINDING HOLDING T HAT THE ASSESSING OFFICER WAS NOT JUSTIFIED IN HOLDING THAT THE ENTIRE PURCHA SES OF RS.3,82,69,759/- MADE BY THE ASSESSEE FROM THE TWO PURCHASE PARTIE S I.E. M/S. SHRADDHA SABURI MERCHANTS LTD. AND M/S. SAI KRIPA METALLIC T RADECOM LTD. WAS THE ASSESSEES UNDISCLOSED INCOME; PARTICULARLY WHEN T HERE WERE IMMEDIATE AND IDENTICAL QUANTITIES SOLD TO M/S.D.C.METALS AND M/S. RAJASTHAN ALUMINIUM THROUGH BANKING CHANNELS. IT IS SUBMITTE D THAT THE CIT(APPEALS) HAD, AFTER DUE CONSIDERATION OF THE FA CTUAL MATERIAL ON RECORD, FOUND THAT THE ASSESSEE HAD ONLY FACILITATE D THE CONCERNED PURCHASE AND SALE PARTIES AS AN INDENTING AGENT FOR REMUNERA TION IN COMMISSION IN THEIR TRANSACTION OF BOGUS SALES AND PURCHASES. ITA 3019/MUM/2014 23 5.4.2 IN RESPECT OF GROUND NO.I(1) IN THE ASSESSES APPEAL, THE LD. REPRESENTATIVE FOR THE ASSESSEE CONTENDED THAT THE CIT(APPEALS), AFTER OBSERVING THAT THE ASSESSEE WAS ONLY AN INDENTING A GENT OR FACILITATOR FOR THE AFORESAID SELLERS AND PURCHASERS IN THEIR TRANS ACTIONS OF BOGUS SALES AND PURCHASES IN RETURN FOR REMUNERATION OF COMMISS ION, ERRED IN NOT ACCEPTING THE COMMISSION OF 0.17% AS ADMITTED BY TH E ASSESSEE. IT IS CONTENDED THAT THE ESTIMATION OF COMMISSION INCOME EARNED BY THE ASSESSEE ON THE AFORESAID TRANSACTIONS AS A FACILIT ATOR @5% THEREON WAS TOO HIGH AND THE SAME COULD NOT BE MORE THAN 1 TO 2 % THEREOF IN SUCH BUSINESS. 5.5.1 IN RESPECT OF THE GROUNDS RAISED AT S.NO. 1 T O 4 OF REVENUES APPEAL, THE LD. DEPARTMENTAL REPRESENTATIVE PLACING STRONG RELIANCE ON THE FINDINGS OF THE ASSESSING OFFICER IN THE ORDER OF A SSESSMENT, CONTENDED THAT THE CIT(APPEALS) HAD ERRED IN HOLDING THAT THE ASS ESSEE WAS MERELY AN INDENTING AGENT RECEIVING COMMISSION IN RESPECT OF TRANSACTIONS OF BOGUS PURCHASES AND IN CONSEQUENTLY DELETING THE ADDITION MADE BY THE ASSESSING OFFICER ON ACCOUNT OF BOGUS PURCHASES FROM THE AFO RESAID TWO PARTIES; I.E. M/S. SHRADDHA SABURI MERCHANTS LTD. AND M/S. SAI KR IPA METALLIC TRADECOM LTD.. IT WAS PRAYED THAT THE FINDING IN T HE ASSESSING OFFICERS ORDER BE RESTORED. 5.5.2 IN RESPECT OF THE AVERMENTS OF THE LD. REPRES ENTATIVE FOR THE ASSESSEE ON THE ASSESSEES GROUNDS CLAIMING THAT THE ASSESSE ES INCOME FROM COMMISSION @ 0.17% OF PURCHASES SHOULD BE ACCEPTED AS SUCH AND NOT AT 5% DETERMINED BY THE CIT(APPEALS), THE LD. DEPARTME NTAL REPRESENTATIVE SUBMITTED THAT, WITHOUT PREJUDICE TO REVENUES STAN D THAT THE ENTIRE BOGUS PURCHASES AMOUNTING TO RS.3,82,69,759/- MADE BY THE ASSESSEE FROM THE ITA 3019/MUM/2014 24 AFORESAID TWO PARTIES OUGHT TO BE BROUGHT TO TAX IN THE ASSESSEES HANDS AS HELD BY THE ASSESSING OFFICER, THE CLAIM OF THE LD. REPRESENTATIVE FOR THE ASSESSEE IS CONTRADICTORY AS BEFORE THE CIT(APPEALS ) THE CLAIM WAS THAT COMMISSION IN SUCH TYPE OF BUSINESS WOULD BE 1 TO 2 % THEREOF. IN THESE CIRCUMSTANCES, SINCE THE AVERMENTS OF THE ASSESSEE ARE BEREFT OF ANY CORROBORATIVE MATERIAL EVIDENCE, THE ASSESSEES APP EAL OUGHT TO BE DISMISSED. 5.6.1 WE HAVE HEARD THE RIVAL CONTENTIONS, IN RESPE CT OF BOTH THE ASSESSEES AS WELL AS REVENUES CROSS APPEALS, AND PERUSED AND CAREFULLY CONSIDERED THE MATERIAL ON RECORD. THE FACTS OF TH E MATTER, FROM THE ASSESSMENT TO THE FIRST APPELLATE PROCEEDINGS, LEAD ING TO THE PRESENT APPEAL HAVE BEEN BRIEFLY NARRATED AT PARA 2.1 TO 3.2 OF TH IS ORDER (SUPRA). ON A PERUSAL OF THE IMPUGNED ORDER, WE FIND THAT THE CIT (APPEALS) HAS MADE A DETAILED CONSIDERATION OF THE ORDER OF ASSESSMENT, THE AVERMENTS OF THE LD. REPRESENTATIVE FOR THE ASSESSEE FOR THE ASSESSEE, T HE VARIOUS REMAND REPORTS SUBMITTED BY THE ASSESSING OFFICER , THE A SSESSEES REBUTTALS, DETAILS FILED IN THE REPORT OF DDIT(INV) UNIT IV, M UMBAI. WE ALSO FIND THAT, AFTER CONSIDERATION OF ALL THESE MATERIAL ON RECORD, THE CIT(APPEALS) OBSERVED THAT NO MATERIAL EVIDENCE WAS BROUGHT ON R ECORD BY THE ASSESSING OFFICER /DDIT (INV) TO ESTABLISH THAT THE ASSESSEE PURCHASED THE GOODS FROM THIRD PARTIES IN CASH, AS ALL THE TRANSACTIONS OF THE ASSESSEE WITH BOTH THE SALE AND PURCHASE PARTIES WERE THROUGH BANKING CHANNELS. THE CIT(APPEALS) NOTICED FROM THE MATERIAL BEFORE HIM, THAT THE ASSESSEE HAD ONLY FACILITATED THE CONCERNED PURCHASE AND SALE PA RTIES IN THEIR TRANSACTIONS OF BOGUS SALES AND PURCHASES AS AN IND ENTING AGENT FOR COMMISSION. IT WAS IN THIS FACTUAL MATRIX THAT THE CIT(APPEALS) HELD THAT ITA 3019/MUM/2014 25 THE ASSESSING OFFICER WAS NOT JUSTIFIED IN HOLDING THAT THE ENTIRE PURCHASES BY THE ASSESSEE FROM M/S. SHRADDHA SABURI MERCHANTS LTD. AND M/S. SAI KRIPA METALLIC TRADECOM LTD. ARE THE ASSESSEES UND ISCLOSED INCOME AND THAT ONLY THE CORRESPONDING SALES TO M/S. RAJASTHAN ALUMINIUM AND M/S. D.C METALS ARE GENUINE, PARTICULARLY WHEN THE ITEMS /QUANTITY PURCHASED AND SOLD ARE IDENTICAL. 5.6.2 IT IS SEEN THAT THE CIT(APPEALS) FROM THE MAT ERIAL ON RECORD, WAS OF THE VIEW THAT THE ASSESSEE FACILITATED THESE BOGUS TRANSACTIONS OF SALE AND PURCHASE FOR THE AFORESAID SALE AND PURCHASE PARTIE S AS AN INDENTING AGENT AND RECEIVED COMMISSION THEREON. WE FIND THAT CIT( APPEALS) WAS OF THE OPINION THAT SINCE THE AFORESAID BOGUS TRANSACTIONS OF SALES AND PURCHASES WERE CLANDESTINELY CARRIED OUT, THE ASSESSEE WOULD HAVE CERTAINLY EARNED MORE THAN THE 0.17% DECLARED BY THE ASSESSEE OR 1 T O 2% EARNED IN SUCH TYPE OF BUSINESS AS ADMITTED BY THE LD. REPRESENTAT IVE FOR THE ASSESSEE. THE CIT(APPEALS) FOLLOWING THE RATIO OF THE DECISION O F THE ITAT AHMEDABAD BENCH IN VIJAY PROTEIN LTD. (SUPRA) PROCEEDED TO E STIMATE THE COMMISSION EARNED BY THE ASSESSEE @5% ON THE SAID PURCHASE TRA NSACTIONS AMOUNTING TO RS.3,82,69,759/- IN THE PECULIAR FACTS AND CIRCU MSTANCES OF THE CASE. 5.6.3 THE FINDINGS OF THE LD. CIT(A) AT PARAS 2.4 T O 2.4.3 OF THE IMPUGNED ORDER, IN RESPECT OF THE ISSUES BEFORE US IS EXTRAC TED HEREUNDER :- 2.4 I HAVE CAREFULLY CONSIDERED :HE ASSESSMENT OR DER AND THE SUBMISSIONS OF THE AR. I HAVE ALSO GONE THROUGH THE VARIOUS REMAND REPORTS AND ITS REBUTTALS INCLUDING THE VARIOUS DETAILS FILED BY THE AR AND T HE REPORT OF DDIT(INV)UNIT-V, MUMBAI AS DISCUSSED ABOVE. I HAVE ALSO GONE THROUGH THE VARIOUS STATEMENTS RECORDED BY THE AO DURING THE REMAND PROCEEDINGS I. E. STATEMENTS OF SHRI PRAKASH J. SHAH DATED 21.07.2011 AND STATEMENTS OF SHRI RAJU BHANSALI & SHRI CHANDUPRAKASH BHANSALI DATED 19.07.2011 AND THE AFF IDAVIT OF SHRI PRAKASH J. ITA 3019/MUM/2014 26 SHAH DATED 06.01.2012 AS WELL AS THE AFFIDAVITS OF SHRI RAJU BHANSALI & SHRI CHANDUPRAKASH BHANSALI DATED 14.05.2010 AND THE AFF IDAVIT OF SHRI PRAVIN T. AGARWAL DATED 19.05.2010 AS DISCUSSED ABOVE. BESIDE S, I HAVE ALSO GONE THROUGH THE STATEMENT OF SHRI PRAKASH J. SHAH PARTNER OF TH E APPELLANT FIRM RECORDED DURING THE COURSE OF SURVEY U/S 133A OF THE ACT AS WELL AS THE STATEMENT OF SHRI PRAVIN T. AGARWAL RECORDED U/S 131 OF THE ACT DATED 24.03.2008 AND HIS WRITTEN CONFESSION SUBMITTED VIDE LETTER DATED 02.11.2007 B EFORE THE ADIT (INV). ON PERUSAL THEREOF I FIND THE APPELLANT HAS SHOWN PURC HASES OF ALLUMINIUM AND COPPER RODS OF RS.3,82,69,759/- FROM M/S SHRADDHA S ABURI MERCHANTS LTD AND M/S SAI KRIPA METALLIC TRADECOM LIMITED AND ITS COR RESPONDING SALES TO M/S D.C. METALS AND M/S RAJASTHAN ALUMINUM DURING THE R ELEVANT ACCOUNTING YEAR. HOWEVER, BASED ON THE VARIOUS ENQUIRIES MADE AND EV IDENCES GATHERED IN THE CASE OF THE APPELLANT BY THE ADIT (INV.), UNIT - IV (1), MUMBAI IT WAS FOUND THAT NO SUCH GOODS WERE PURCHASED FROM M/S SHRADDHA SABU RI MERCHANTS LTD AND M/S SAI KRIPA METALLIC TRADECOM LTD INASMUCH AS THE SE SALES BILLS ISSUED BY M/S SHRADDHA SABURI MERCHANTS LTD. AND M/S. SAI KRIPA M ETALLIC TRADECOM LTD. WERE BOGUS ACCOMMODATION BILLS ISSUED WITHOUT SUPPL Y OF ACTUAL MATERIAL AS DISCLOSED THEREIN. OR IN OTHER WORDS, THE APPELLAN T HAS NOT MADE ANY SUCH PURCHASES FROM M/S. SHRADDHA SABURI MERCHANTS LTD. AND M/S. SAI KRIPA METALLIC TRADECOM LTD. AND THEREFORE, THE ENTIRE PU RCHASES SHOWN WAS CONSIDERED AS BOGUS OR UNEXPLAINED PURCHASES AND AC CORDINGLY THE SAME WAS ADDED TO ITS TOTAL INCOME. HOWEVER, THE APPELLANT HAS SUBMITTED THAT IT IS ONLY ENGAGED IN THE INDENTING AGENCY BUSINESS; WHEREBY, THE GODS PURCHASED WERE DIRECTLY DISPATCHED BY M/S. SHRADDHA SABURI MERCHAN TS LTD AND M/S. SAI KRIPA METALLIC TRADECOM LTD. TO THE GODOWNS OF M/S. D.C.M ETAL AND M/S. RAJASTHAN ALLUMINIUM WITHOUT ANY INVOLVEMENT OF THE APPELLANT . IT WAS FURTHER SUBMITTED THAT THE APPELLANT FOR ITS INDENTING AGENCY SERVICE S WAS DULY COMPENSATED BY WAY OF COMMISSION WHICH IS THE DIFFERENCE BETWEEN THE SALE PRICE AND THE PURCHASE PRICE AS SHOWN IN ITS BOOKS OF ACCOUNT. AT THE SAME TIME THE AR HAS VEHEMENTLY ARGUED THAT NEITHER A COPY OF THE STATEMENT RECORDE D OF SHRI PRAVIN T. AGARWAL AS DISCUSSED IN THE ASSESSMENT ORDER WAS PROVIDED N OR THE APPELLANT WAS ALLOWED TO CROSS EXAMINE SHRI PRAVIN T. AGARWAL EITHER BY T HE AO OR BY THE ADIT. IT WAS VEHEMENTLY ARGUED THAT THE DENIAL OF THE CROSS EXAM INATION BY THE APPELLANT OF SHRI PRAVIN T. AGARWAL AS DISCUSSED IN THE ASSESSME NT ORDER IS FALSE AND INCORRECT. ACCORDINGLY, THE APPELLANT HAS FILED AN AFFIDAVIT DATED 19.05.2010 OF SHRI PRAVIN T. AGARWAL; WHEREIN, HE HAS ADMITTED HA VING MADE SALE OF MATERIAL AS PER THE SALE BILLS ISSUED TO THE APPELLANT. THE AR HAS ALSO FILED CORRESPONDING AFFIDAVITS DATED 14.05.2010 OF SHRI RAJU BHANSALI P ARTNER OF M/S RAJASTHAN ALLUMINIUM AND SHRI CHANDRA PRAKASH BHANSALI PARTNE R OF M/S D.C. METALS CONFIRMING THE CONTENTION OF THE APPELLANT, AS DISC USSED ABOVE. THEREFORE, ON ACCOUNT OF THESE FACTS PLACED ON RECORD THE MATTER WAS REMANDED TO THE AO ON VARIOUS OCCASIONS AS DISCUSSED ABOVE. THE MATTER WA S ALSO REFERRED TO THE CONCERNED DDIT(INV) FOR MAKING FURTHER ENQUIRIES AN D INVESTIGATIONS AS DISCUSSED ABOVE. HOWEVER, IN SPITE THEREOF NO FRUIT FUL OR LOGICAL DETAILS AND EVIDENCES ARE BROUGHT ON RECORD SO AS TO HOLD THAT THE ENTIRE PURCHASES SHOWN BY ITA 3019/MUM/2014 27 THE APPELLANT FROM M/S SHRADDHA SABURI MERCHANTS LT D AND M/S SAI KRIPA METALLIC TRADECOM LTD ARE TO BE CONSIDERED AS ITS U NACCOUNTED OR UNEXPLAINED INCOME. THE AO HERSELF VIDE PARA-4 OF HER REMAND REPORT DATED 19.09.2011 HAS CONFIRMED THE SUBMISSIONS OF THE APPELLANT THAT THE SOURCE OF PAYMENTS MADE TO M/S SHRADDHA SABURI MERCHANTS LTD AND M/S SAI KRIPA METALLIC TRADECOM LTD THROUGH BANKING CHANNELS ARE ORIGINATING OUT OF THE PAYMENTS RECEIVED FROM M/S D.C. METAL AND M/S RAJASTHAN ALUMINUM BY THE APPELL ANT. FROM THE SAME AS WELL AS FROM THE DETAILS AND EVIDENCES BROUGHT ON R ECORD IT IS SEEN THAT THE APPELLANT HAS BEEN ACTING ONLY AS AN CONDUIT ORAN A GENT TO FACILITATE THE BOGUS TRANSACTIONS OF PURCHASES AND SALE OF ALUMINUM SHEE TS AND COPPER WIRES & RODS TAKEN PLACE BETWEEN M/S SHRADDHA SABURI MERCHANTS L TD AND MLS SAI KRIPA METALLIC TRADECOM LTD (SALE PARTIES) AND M/S D.C. M ETAL AND M/S. RAJASTHAN ALUMINUM ( PURCHASE PARTIES) MERELY AS AN MIDDLEMEN OR AN INDENTING AGENT; WHEREBY, THE APPELLANT HAS IN TURN ISSUED BOGUS OR ACCOMMODATION SALE BILLS IN FAVOUR OF M/S D.C. METAL AND M/S. RAJASTHAN ALUMINU M AGAINST THE RECEIPT OF SIMILAR BOGUS OR ACCOMMODATION SALE BILLS ISSUED BY M/S.SHRADDHA SABURI MERCHANTS LTD AND M/S.SAI KRIPA METALLIC TRADECOM L TD. OR IN OTHER WORDS, IT HAS ACTED MERELY AS AN INDENTING AGENT OR AS AN FAC ILITATOR TO LEGALISE SUCH BOGUS TRANSACTIONS; WHEREAS, THE REAL BENEFICIARIES OF TH ESE BOGUS TRANSACTIONS ARE M/S. D.C. METAL AND M/S RAJASTHAN ALUMINUM, AS NO EVIDE NCES EXCEPT FOR THE MOVEMENT OF FUNDS NO OTHER CORRESPONDING OR CORROB ORATIVE EVIDENCES TO ESTABLISH THE ACTUAL PURCHASE AND SALE OF GOODS M ENTIONED IN THESE SALE /PURCHASE BILLS ARE PRODUCED NEITHER BY M/S SHRADDH A SABURI MERCHANTS AND M/S SAI KRIPA METALLIC TRADECOM LTD, NOR BY THE APP ELLANT OR BY M/S D.C. METAL AND M/S. RAJASTHAN ALUMINIUM. NOTHING IS BROUGHT ON RECORD TO PROVE THE MOVEMENT, TRANSPORTATION AS WELL AS THE NAMES AND PARTICULARS OF THE PARTIES FROM WHOM THESE GOODS WERE EITHER PURCHASED M/S S HRADDHA SABURI MERCHANTS LTD AND M/S SAI KRIPA METALLIC TRADECOM LTD OR BY T HE APPELLANT OR BY THE M/S D.C. METAL AND M/S RAJASTHAN ALUMINUM; EXCEPT FOR T HE ISSUE OF BOGUS SALES BILLS BY M/S. SHRADDHA SABURI MERCHANTS LTD AND M/S . SAI KRIPA METALLIC TRADECOM LTD AND BY THE APPELLANT WHICH AS DISCUS SED ABOVE ARE ALREADY CONFIRMED TO BE BOGUS BILLS WITHOUT SALE OF ACTUAL MATERIAL BY M/S. SHRADDHA SABURI MERCHANTS LTD. AND M/S. KRIPA METALLIC TRADE COM LTD. (STATEMENT OF SHRI PRAVIN T. AGARWAL DATED 24.03.2008) AND BY THE APPE LLANT (AFFIDAVIT OF SHRI PRAKASH J. SHAH DATED 06.01.2012). NO OTHER EVIDENC ES ARE BROUGHT ON RECORD BY THE AO OR BY THE DDIT SO AS TO PROVE THAT THE APPEL LANT HAS PURCHASED THESE GOODS FROM THIRD PARTIES IN CASH. NOTHING IS PRODUC ED TO PROVE THAT SUCH MATERIAL PURCHASED IS SOLD TO M/S. D.C. METAL AND M/S RAJAST HAN ALUMINUM BY THE APPELLANT AS NO SUCH EVIDENCES TO PROVE THE MOVEMEN T OF GOODS IS EITHER PRODUCED BY THE AO OR BY THE DDIT OR BY THE CONCERN ED PURCHASE PARTIES. THE AO HAS NOT BROUGHT ANY SUCH DETAILS AND EVIDENCES ( IN REMAND) EVEN THOUGH STATEMENTS OF SRI PRAKASH J. SHAH AND SHRI RAJU BHA NSALI & SHRI CHANDUPRAKASH BHANSALI WERE RECORDED DURING REMAND PROCEEDINGS. IT IS NOT PROVED THAT THE CASH WITHDRAWN FROM THE BANK ACCOUN TS OF M/S.SHRADDHA SABURI MERCHANTS LTD AND M/S SAI KRIPA METALLIC TRADECOM L TD WERE GIVEN TO THE ITA 3019/MUM/2014 28 APPELLANT. THEREFORE, IT IS SEEN THAT NO SUCH MATER IAL IS SOLD BY THE APPELLANT TO M/S. D.C. METALS AND M/S RAJASTHAN ALUMINUM EXCEPT FOR THE ISSUE OF BOGUS BILLS IN CONSONANCE WITH THE MOVEMENT OF FUNDS AS DISCUSS ED ABOVE. NO MATERIAL OR EVIDENCE IS PRODUCED BY THE AO OR BY THE DDIT THAT THESE GOODS WERE PROCURED BY THE APPELLANT FROM GREY MARKET IN CASH AND THERE AFTER SOLD TO M/S D.C. METALS AND M/S RAJASTHAN ALUMINUM. ON THE OTHER HAND FROM THE AFFIDAVITS OF THE SHRI CHANDRA PRAKASH BHANSALI AND RAJU BHANSALI DATED 14 .05.2010, THE MATERIAL PURCHASED IS DIRECTLY DELIVERED BY THE CONCERNED MA NUFACTURERS OR SUPPLIERS TO THEIR GODOWNS WITHOUT ANY INVOLVEMENT OF THE APPELL ANT. IT WAS ALSO STATED THAT THESE SUPPLIERS I MANUFACTURERS ARE HAVING THEIR GO DOWNS SITUATED OUTSIDE MUMBAI, CHECK NAKA, WHERE M/S D C METALS AND RAJAST HAN ALLUMINIUM ARE ALSO HAVING THEIR GODOWNS I WAREHOUSES. ON ACCOUNT OF THESE FACTS AND EVIDENCES PLACED ON RECORD, I FIND SUFFICIENT MERIT S IN THE SUBMISSIONS OF THE AR THAT THE APPELLANT HAS ONLY FACILITATED THE CONCERN ED PURCHASE AND SALE PARTIES, BEING A CONDUIT IN THE PROCESS OF LEGALIZATION OF T HE TRANSACTION OF BOGUS PURCHASES AND SALES AGAINST PAYMENT OF PRE-FIXED CO MMISSION. THESE SUBMISSIONS OF THE APPELLANT ARE DULY CORROBORATED BY THE AFFIDAVITS OF SHRI PRAVIN T AGARWAL, PROMOTER OF M/S. SHRADDHA SABURI MERCHANTS LTD AND M/S. SAI KRIPA METALLIC TRADECOM LTD AND SHRI CHANDRA PR AKASH BANSALI AND SHRI RAJU BHANSALI, PARTNERS OF M/S. D C METALS AND M/S. RAJASTHAN ALLUMINIUM RESPECTIVELY. THE AO HAS CONFIRMED THAT THE FUNDS O RIGINATING FROM M/S. D.E. METALS AND M/S. RAJASTHAN ALUMINUM ARE IMMEDIATELY TRANSFERRED TO THE BANK ACCOUNTS OF M/S SHRADDHA SABURI MERCHANTS LTD AND M /S. SAI KRIPA METALLIC TRADECOM LTD THROUGH THE BANK ACCOUNTS OF THE APPEL LANT. THEREAFTER, THE SAME ARE WITHDRAWN IN CASH FROM THE BANK ACCOUNTS OF M/S . SHRADDHA SABURI MERCHANTS LTD AND M/S. SAI KRIPA METALLIC TRADECOM LTD BUT ULTIMATELY TO WHOM THE SAME IS PAID IS NOT INVESTIGATED EITHER BY THE AO OR BY THE ADIT/DDIT EITHER DURING THE COURSE OF THE ASSESSMENT ORDER OR DURING THE REMAND PROCEEDINGS. BOTH THESE AUTHORITIES AS DISCUSSED AB OVE HAVE FAILED TO EXAMINE SHRI PRAVIN T. AGARWAL ON THIS ISSUE NOR THEY COU LD SUCCEED IN RECORDING THE STATEMENT OF SHRI PRAVIN #T. AGARWAL AND FURTHER TO BE CROSS EXAMINED BY THE APPELLANT AS DISCUSSED ABOVE. THE AO AS WELL AS THE DDIT HAVE EXPRESSED THEIR IN THIS REGARD. SIMILARLY, NO CROSS EXAMINATION OF SHRI CHANDRA PRAKASH BHANSALI AND SHRI RAJU BHANSALI IS GRANTED TO THE A PPELLANT IN SPITE OF THE CONTENTS OF THEIR AFFIDAVITS DATED 14.05.2010 AS DI SCUSSED ABOVE VIS-A-VIS THEIR INDEPENDENT STATEMENTS RECORDED BY THE AO DURING T HE REMAND PROCEEDINGS ON 19.07.2011. ON ACCOUNT OF THESE FACTS BROUGHT ON R ECORD, I FIND SUFFICIENT MERITS IN THE SUBMISSIONS OF THE AR THAT THE STATEMENTS RE CORDED BY THE AO AT THE BACK OF THE APPELLANT CANNOT BE CONSIDERED AS VALID PIEC E OF EVIDENCE. 2.4.1. BESIDES, IT MAY BE NOTICED THAT IN SPITE OF GRANTING SUFFICIENT OPPORTUNITY BY WAY OF REMANDING THE PROCEEDINGS TO THE AO AS WE LL AS REFERRING THE MATTER TO THE DDIT (INV), AS DISCUSSED ABOVE, THEY HAVE FAILE D TO SUBSTANTIATE OR CORROBORATE THE FINDINGS OF THE AO AS DISCUSSED IN THE ASSESSMENT ORDER BY BRINGING ANY COGENT MATERIAL SO AS TO ESTABLISH THA T THE ENTIRE PURCHASES SHOWN ITA 3019/MUM/2014 29 BY THE APPELLANT ARE ITS UNEXPLAINED INCOME. BOTH T HE AO AND THE DDIT(INV) HAVE FAILED TO RECORD THE STATEMENT OF SHRI PRAVIN T AGARWAL AND ALLOWING HIM TO BE CROSS-EXAMINED BY THE APPELLANT, SO AS TO ASCERT AIN THE CORRECT FACTS OF THE CASE IN HAND. IN THE ABSENCE OF SUCH A STATEMENT AN D FURTHER CORROBORATIVE DOCUMENTARY EVIDENCES BROUGHT ON RECORD, TO MY CONS IDERED OPINION, IT IS UNJUSTIFIED ON THE PART OF THE AO TO HOLD THAT THE ENTIRE PURCHASES SHOWN BY THE APPELLANT ARE TO BE CONSIDERED AS ITS UNEXPLAINED I NCOME. IT IS PATENTLY INCORRECT CONCLUSION ON THE PART OF THE AO THAT THE PURCHASES ARE NOT GENUINE BUT AT THE SAME TIME THE CORRESPONDING SALES SHOWN ARE GENUINE SALES. IF THE PURCHASES ARE BOGUS WITHOUT PROVING THAT THE APPELLANT HAS PURCHA SED THE SAME ITEMS IN GREY MARKET IN CASH IT CANNOT BE HELD THAT THE CORRESPON DING SALES ARE GENUINE. HOWEVER, NOTHING IS BROUGHT ON RECORD EITHER BY THE AO OR BY THE DDIT EVEN THOUGH THE MATTER WAS SPECIFICALLY REMANDED FOR THI S PURPOSE. THEREFORE, I FIND SUFFICIENT MERITS IN THE SUBMISSIONS OF THE AR THAT IF THE PURCHASES ARE FOUND BOGUS, THE CORRESPONDING SALES OF THE SAME ITEM AS SHOWN BY THE APPELLANT IN ITS BOOKS OF ACCOUNTS CANNOT BE CONSIDERED AS GENUINE S ALES. NEVERTHELESS, NO DETAILS OF WHATSOEVER NATURE ABOUT THE PARTIES FROM WHOM, THE MATERIAL IS PURCHASED, ITS MOVEMENT OR TRANSPORTATION TO THE GO DOWN OF M/S. D C METALS AND M/S. RAJASTHAN ALLUMINIUM IS BROUGHT ON RECORD BY THE AO OR BY THE DDIT(INV), IN SPITE OF CONDUCTING SURVEY U/S 133A O F THE ACT. FURTHER, THERE IS NO EVIDENCE TO PROVE THAT THE CASH WITHDRAWN BY SHRI P RAVIN T AGARWAL IS RETURNED TO THE APPELLANT AND NOT TO M/S. D C METALS OR M/S. RAJASTHAN ALLUMINIUM, PARTICULARLY CONSIDERING TO THE CONTENTS OF THE AFF IDAVIT OF SHRI PRAKASH J SHAH, PARTNER OF THE APPELLANT FIRM DATED 06.01.2012. THE REFORE, IT IS SEEN THAT IN SPITE OF REMANDING THE MATTER ON SEVERAL OCCASIONS, NO NE W FACTS AND EVIDENCES ARE BROUGHT ON RECORD BY THE AO OR BY THE DDIT(INV), SO AS TO JUSTIFY THE BOGUS PURCHASES MADE BY THE APPELLANT OUT OF ITS UNACCOUN TED INCOME. ON THE OTHER HAND, AS DISCUSSED ABOVE, THE AO HERSELF HAS ADMITT ED ON VERIFICATION OF THE RELEVANT BANK ACCOUNTS THAT THE SOURCE OF THE ENTIR E PAYMENTS MADE TO M/S SHRADDHA SABURI MERCHANTS LTD AND M/S. SAI KRIPA ME TALLIC TRADECOM LTD BY THE APPELLANT THROUGH BANKING CHANNELS IS OUT OF TH E PAYMENTS RECEIVED FROM M/S. D C METALS AND M/S. RAJASTHAN ALLUMINIUM. THIS PROVES THAT NO UNACCOUNTED INVESTMENT IS MADE BY THE APPELLANT FOR THIS PURPOSE DURING THE RELEVANT ACCOUNTING YEAR. 2.4.2 BESIDES, SHRI PRAKASH J SHAH IN HIS STATEMENT DATED 06.01.2012 HAS SATED THE DETAILED MODUS-OPERANDI OF THE ENTIRE TRA NSACTIONS ARRANGED BY THE APPELLANT, WHICH PROVES THAT THE APPELLANT HAS MERE LY RENDERED OR FACILITATED THESE TWO PARTIES I.E. M/S. SHRADDHA SABURI MERCHAN TS LTD. AND M/S. SAI KRIPA METALLIC TRADECOM LTD.(PURCAHSE PARTIES) AND M/S. D C METALS AND M/S. RAJASTHAN ALUMINIUM (SALES PARTIES) BY WAY OF ISSUE OF BOGUS SALES BILLS AGAINST PRE-FIXED COMMISSION RECEIVED. THE CONTENTS OF THE AFFIDAVIT FILED ARE FURTHER CORROBORATED BY WAY OF THE EVIDENCES FURNISHED I.E. FROM THE COPIES OF BANK ACCOUNT OPENING FORMS FILED, IT IS SEEN THAT THE AP PELLANT HAS OPENED A NEW ACCOUNT PARTICULARLY FOR THIS PURPOSE IN THE SAME BANK AND BRANCH (RATNAKAR ITA 3019/MUM/2014 30 BANK) IN WHICH, THE BANK ACCOUNTS OF M/S. D C METAL S AND M/S. RAJASTHAN ALLUMINIUM WERE MAINTAINED AND THE NEW ACCOUNT OPEN ING FORM OF THE APPELLANT IS INTRODUCED BY THE DIRECTOR/PARTNER OF M/S.D C ME TALS AND M/S RAJASTHAN ALLUMINIUM. SECONDLY, IT IS ALSO NOTICED A THE APP ELLANT HAS NEVER DEALT IN THE BUSINESS OF ALLUMINIUM SHEETS AND RODS, WHICH ARE FOUND MENTIONED IN THESE ACCOMMODATION BILLS ISSUED. FURTHER, THE APPELLANT HAS NO FACILITY OR WAREHOUSING TO STORE THE MATERIAL PURCHASED, WHICH IS ADMITTED BY THE PARTNERS OF M/S.RAJASTHAN ALLUMINIUM AND M/S. D.C. METALS IN THEIR AFFIDAVITS DATED 14- 05-2012, CONTENDING THAT THE MATERIAL PURCHASED WAS DIRECTLY DELIVERED BY MANUFACTURERS / SUPPLIERS IN THEIR OWN DELIVERY VAN S / HANDCARTS FROM THEIR GODOWNS SITUATED OUTSIDE MUMBAI CHECK NAKA, WHERE M /S. D.C. METALS/ M/S. RAJASTHAN ALLUMINIUM WERE ALSO HAVING THEIR GODOWNS /WAREHOUSING FACILITIES. FURTHER, IT IS ALSO NOTICED THAT THE ENTIRE AMOUNT OF MAHARASHTRA-VAT ON THESE TRANSACTIONS IS PAID BY M/S DC METALS / M/S. RAJAST HAN ALLUMINIUM. 2.4.3. THEREFORE, ON ACCOUNT OF THESE FACTS AVAILAB LE IN THE CASE OF THE APPELLANT, AS DISCUSSED ABOVE AND FURTHER IN THE ABSENCE OF AN Y NEW FACTS AND EVIDENCES BROUGHT ON RECORD BY THE AO AS WELL AS IN THE ABSEN CE OF ANY CORROBORATIVE EVIDENCES PLACED ON RECORD IN SPITE OF REMANDING TH E MATTER ON VARIOUS OCCASIONS, I FIND IT CANNOT BE HELD THAT THE ENTIRE PURCHASES MADE BY THE APPELLANT ARE OUT OF ITS UNACCOUNTED SOURCES OR THE SAME IS TO BE CONSIDERED AS ITS UNEXPLAINED INCOME. EVEN OTHERWISE, EVEN IF THE PURCHASES ARE HELD AS BOGUS, TO MY CONSIDERED OPINION, IT CANNOT BE HELD THAT TH E CORRESPONDING SALES ARE GENUINE; PARTICULARLY WHEN THE QUANTITY PURCHASED A ND SOLD ARE SAME. OBVIOUSLY, IN SUCH A CIRCUMSTANCE IF THE PURCHASES ARE CONSIDERED THE CORRESPONDING SALES ALSO HAS TO BE BOGUS. THEREFORE , ON ACCOUNT OF THE SAME, IT IS EVIDENT THAT UNDER THE GIVEN FACTS AND CIRCUMSTA NCES THE APPELLANT HAS MERELY ISSUED ACCOMMODATION SALES BILLS AGAINST THE PAYMEN T OF PRE-FIXED COMMISSION AS DISCUSSED ABOVE. HOWEVER, SINCE THE ENTIRE TRANS ACTION IS CARRIED OUT IN A CLANDESTINE MANNER, IT CANNOT BE HELD THAT THE RATE OF COMMISSION IS AS PER THE NORMAL PRACTICE FOLLOWED IN THIS LINE OF BUSINESS. NATURALLY, IT HAS TO BE MORE THAN THE NORMAL RATE OF COMMISSION PAID IN THIS LIN E OF BUSINESS. IN THE CASE OF VIJAY PROTEINS LTD VS. ACIT REPORTED IN 15 ITD 428, THE HON'BLE ITAT AHMEDABAD 'C' BENCH UNDER SIMILAR CIRCUMSTANCES, WH ERE THE AO DISALLOWED THE ENTIRE EXPENDITURE ON ACCOUNT OF PURCHASES MAD E FROM CERTAIN PARTIES TRATING THE SAME AS BOGUS, HAS HELD THAT 'IT IS AN ELEMENTARY RULE OF ACCOUNTANCY AS WELL AS OF TAXATION LAWS THAT PROFIT FROM BUSINE SS CANNOT ASCERTAINED WITHOUT DEDUCTING COST OF PURCHASE FROM SALES/ OTHERWISE IT COULD AMOUNT TO LEVY OF INCOME TAX ON GROSS RECEIPTS OR ON SALES. SUCH RECO URSE IS NOT PERMISSIBLE UNLESS IT IS SPECIFICALLY AUTHORIZED TO DO SO UNDER ANY P ARTICULAR PROVISIONS CONTAINED IN THE ACT. IT HAS BEEN HELD BY THE HON'BLE TRIBU NAL THAT IN SUCH CIRCUMSTANCES, A CERTAIN PERCENTAGE OF EXPENDITURE HAS TO BE DISAL LOWED ON ACCOUNT OF INFLATION OF PURCHASE PRICE. THE ITAT HAS HELD THAT IF PURCHA SES ARE MADE FROM THE OPEN MARKET WITHOUT INSISTING FOR THE GENUINE BILLS, THE SUPPLIERS MAY BE WILLING TO SELL THOSE PRODUCTS AT A MUCH LOWER RATE COMPARED TO TH E RATE AT WHICH THEY MAY ITA 3019/MUM/2014 31 CHARGE IN CASE THE DEALER HAS TO GIVE A GENUINE SAL E INVOICE IN RESPECT OF THAT SALE AND SUPPLY OF GOODS. THERE MAY BE VARIOUS FAC TORS DUE TO WHICH THERE IS BOUND TO BE A SUBSTANTIAL DIFFERENCE BETWEEN THE P ARTY PURCHASE PRICE OF UNACCOUNTED MATERIAL AND RATE OF PURCHASE OF UNACCO UNTED FOR GOODS. THERE MAY BE A SAVING ON ACCOUNT OF SALES-TAX AND OTHER T AXES AND DUTIES WHICH MAY BE LEVIABLE IN RESPECT OF MANUFACTURE OF SALE OF GOODS IN QUESTION. THE SUPPLIERS OR MANUFACTURERS MAKE A SUBSTANTIAL SAVING IN THE INCO ME TAX IN RESPECT OF INCOME FROM SALE OF UNACCOUNTED GOODS PRODUCED AND SOLD B Y THEM. THIS MAY ALSO BE ONE OF THE FACTORS DUE TO WHICH THE SELLER MAY BE WILLING TO CHARGE LOWER RATES FOR UNACCOUNTED GOODS AS COMPARED TO ACCOUNTED FOR GOODS. THE AR HAS NOT FILED THE DETAILS OF COMMISSION EARNED ON THIS BOGU S TRANSACTION SEPARATELY. HOWEVER, FROM THE P&L ACCOUNT IT IS SEEN THAT IT HA S SHOWN TOTAL COMMISSION OF RS.85,948.70 ON TOTAL PURCHASES OF RS.5,0L,02,850/- WHICH IS INCLUSIVE OF THE BOGUS SALES MADE TO M/S. RAJASTHAN ALLUMINIUM AND M /S. D.C. METALS. THE SAME WORKS OUT TO 0.17% OF THE TOTAL PURCHASES. THE BOGU S PURCHASES MADE FROM M/S. SHRADDHA SABURI MERCHANTS LTD. AND M/S. SAI KRIPA METALLIC TRADECOM LTD IS OF RS.3,82,69,759/- FOR THE RELEVANT ACCOUNTING YEA R. THE AR HAS CONSISTENTLY ARGUED THAT THE RATE OF COMMISSION ALLOWED IN THIS LINE OF BUSINESS NORMALLY DOES NOT EXCEED MORE THAN 1% TO 2% OF THE SALE VALUE. HO WEVER, TO MY CONSIDERED OPINION THE SAME CANNOT BE TAKEN ON ITS FACE VALUE, PARTICULARLY IN VIEW OF THE LACK OF EVIDENCES AND THE CLANDESTINE NATURE OF BUS INESS CARRIED OUT BY THE APPELLANT. AND ALSO CONSIDERING TO THE FACT THAT TH E APPELLANT ITSELF HAS SHOWN SUCH COMMISSION OF 0.17%( AS DISCUSSED ABOVE) WHICH IS MUCH LESSER THAN THE RATE OF COMMISSION ADMITTED BY THE AR IN THE SIMILA R LINE OF BUSINESS OR PRACTICE. THEREFORE, ON ACCOUNT OF THE SAME, I FIND IT WOULD MEET THE END OF JUSTICE, IN CASE, THE RATE OF COMMISSION CHARGED BY THE APPELLANT IS TAKEN @ 5% OF THE TOTAL PURCHASE VALUE OF THE APPELLANT DURING THE RELEVANT ACCOUNTING YEAR. THE SAME ON TOTAL SUCH PURCHASES OF RS.3,82,69,759/- WORKS O UT TO RS.19,13,488/-FOR THE RELEVANT ASSESSMENT YEAR. SINCE, THE APPELLANT HAS SHOWN NET DIFFERENCE BETWEEN THE SALE AND PURCHASE OF RS.85,948.70 IN ITS TRADIN G ACCOUNT PERTAINING TO THE BOGUS PURCHASES AS WELL AS GENUINE . TRADING CARRIE D OUT, THEREFORE, THE PROPORTIONATE PROFIT OR COMMISSION PERTAINING TO BO GUS TRANSACTION IS WORKED OUT AT RS.65,059/-(I.E. 0.17% OF RS.3,82,69,759/-) WHICH IS ALREADY ASSESSED TO TAX, THEREFORE, CONSIDERING TO THE SAME, THE BALANC E AMOUNT OF RS.18,48,429/- (I.E. RS.19,13,488/- (-) RS.65,059/-) OF ADDITION M ADE ON THIS ACCOUNT IS SUSTAINED AND THE REMAINING ADDITION MADE IS DIRECTED TO BE D ELETED. THIS GROUND RAISED BY THE APPELLANT IS THEREFORE PARTLY ALLOWED. 5.6.4 BEFORE US, BOTH REVENUE AND THE ASSESSEE HAVE MERELY REITERATED THEIR RESPECTIVE CLAIMS (I) OF REVENUE THAT THE ENT IRE PURCHASE TO M/S. SHRADDHA SABURI MERCHANTS LTD. AND M/S. SAI KRIPA M ETALLIC TRADECOM LTD. AMOUNTING TO RS.3,82,69,759/- BE BROUGHT TO TA X AS THE ASSESSEES ITA 3019/MUM/2014 32 INCOME AND; (II) OF THE ASSESSEE THAT THE COMMISSIO N INCOME BE ASSESSED AT 0.17% AS PURCHASES AS DECLARED BY IT. WE FIND THAT APART FROM PUTTING FORTH THESE AVERMENTS, BOTH PARTIES HAVE FAILED TO BRING ON RECORD ANY MATERIAL EVIDENCE TO CONTROVERT THE FINDINGS RENDER ED BY THE LD. CIT(A) IN THE IMPUGNED ORDER ON THESE TWO ISSUES IN CROSS APP EALS. IN THIS VIEW OF THE MATTER, AND AFTER CAREFUL CONSIDERATION OF THE MATERIAL ON RECORD, WE FIND NO REASON FOR INTERFERENCE IN THE ORDER OF THE LD. CIT(A) ON BOTH THESE ISSUES BEFORE US RAISED RESPECTIVELY BY REVENUE AND THE ASSESSEE. WE, THEREFORE, CONFIRM THE ORDER OF THE LD. CIT(A) IN H OLDING THAT (I) THE AO WAS NOT JUSTIFIED IN HOLDING THAT THE EN TIRE BOGUS PURCHASES BY THE ASSESSEE FROM THE AFORESAID TWO PA RTIES AMOUNTING TO RS.3,82,69,759/- IN THE ASSESSEES UNDISCLOSED I NCOME AND (II) THAT THE ASSESSEE HAD EARNED COMMISSION @ 5% FOR CLANDESTINELY FACILITATING THE BOGUS TRANSACTIONS O F THE PARTIES TO PURCHASES AND SALES. CONSEQUENTLY, REVENUES GROUN DS AT SR. NOS. 1 TO 4 AND THE ASSESSEES GROUND AT SR. NO. I(1) ARE DISMISSED. 6. IN THE RESULT, BOTH THE ASSESSEES APPEAL FOR AS ST. YEAR 2007-08 AND REVENUES CROSS APPEAL ARE DISMISSED. WE HAVE OBSERVED THAT THE FACTS AND CIRCUMSTANCES O F THE INSTANT CASE BEFORE US ARE SIMILAR TO THE FACTS IN THE CASE OF SISTER C ONCERN OF THE ASSESSEE COMPANY NAMELY PRAKASH METALS VIDE AFORE-STATED ORDERS IN I TA NO.6457/MUM/2012 AND ITA NO. 6611/MUM/2012 VIDE ORDERS DATED 17-02-2016, RESPECTFULLY FOLLOWING THE ORDERS OF THE CO-ORDINATE BENCH OF THIS TRIBUNA L IN ITA NO.6457/MUM/2012 AND ITA NO. 6611/MUM/2012 VIDE ORDERS DATED 17-02-2 016 IN THE CASE OF ASSESSEE COMPANYS SISTER CONCERN M/S PRAKASH METAL S, WE PARTLY ALLOW THE ITA 3019/MUM/2014 33 APPEAL FILED BY THE ASSESSEE COMPANY BY HOLDING THA T THE ASSESSEE COMPANYS INCOME FROM THESE TRANSACTIONS BE COMPUTED AS 5% OF COMMISSION FOR CLANDESTINELY FACILITATING THE BOGUS TRANSACTION OF THE PARTIES TO THE PURCHASE AND SALE AS HELD BY THE TRIBUNAL IN ITS ORDERS IN T HE CASE OF THE SISTER CONCERN OF THE ASSESSEE COMPANY NAMELY M/S PRAKASH METALS IN I TA NO.6457/MUM/2012 AND ITA NO. 6611/MUM/2012 VIDE ORDERS DATED 17-02-2 016, WHICH WILL MEET THE END OF THE JUSTICE WHICH IS ALSO CONCEDED BY TH E ASSESSEE COMPANYS COUNSEL TO BE ACCEPTABLE TO THE ASSESSEE COMPANY TO END LIT IGATION WITH THE REVENUE , KEEPING ALSO IN VIEW OF THE AFORE-STATED DECISION O F THE TRIBUNAL IN THE CASE OF THE ASSESSEES SISTER CONCERN M/S PRAKASH METALS ON SIMILAR FACTS WHICH WAS STATED BY THE LEARNED COUNSEL FOR THE ASSESSEE COMP ANY WAS ALSO ACCEPTED BY THE SAID CONCERN M/S PRAKASH METALS TO END LITIGATI ON WITH REVENUE. WE ORDER ACCORDINGLY. 7. IN THE RESULT, THE APPEAL FILED BY THE REVENUE I N ITA N0. 3019/MUM/2014 FOR THE ASSESSMENT YEAR 2010-11 IS PA RTLY ALLOWED AS INDICATED ABOVE. ORDER PRONOUNCED IN THE OPEN COURT ON 11 TH AUGUST , 2016. # $% &' 11-08-2016 ( ) SD/- SD/- (SAKTIJIT DEY) (RAMIT KOCHAR) JUDICIAL MEMBER ACCOUNTANT MEMBER $ MUMBAI ; & DATED 11-08-2016 [ .9../ R.K. R.K. R.K. R.K. , EX. SR. PS ITA 3019/MUM/2014 34 !'#$%&%# / 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 D BENCH 6. (BC D / GUARD FILE. / BY ORDER, = 9 //TRUE COPY// / ( DY./ASSTT. REGISTRAR) , $ / ITAT, MUMBAI