ITO 19(2)(4), MUMBAI V. NARAYANSINGH H. RATHOD, MUMBAI

ITA 310/MUM/2017

• Counselvise Citation: [2017] 126 COUNSELVISE.COM (IT) 9793 (ITAT-MUMBAI)
• Duration Of Justice: 7 month(s) 9 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 23-08-2017
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: Not Allotted
• Assessment Year: 2009-2010
• Appeal Filed On: 13-01-2017
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: ARJU GARODIA
• Assessee Lawyers: SUSHIL CHOKHANI
• Keywords: Bogus purchase; Principle of natural justice; Question of law; Accommodation entries; Onus to prove
• Section: 143(3); 133(6); 148

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL J , BENCH MUMBAI BEFORE SHRI R.C.SHARMA, AM & SHRI SANDEEP GOSAIN , JM ITA NO. 310 / MUM/20 1 7 ( ASSESSMENT YEAR : 2009 - 10 ) ITO 19(2)(4) R.NO.217, MATRU MANDIR MUMBAI 400 007 VS. SHRI NARAYANSINGH H RATHOD, STEE L APT., 155, TRIMBAK PARSHOURAM MUMBAI PAN/GIR NO. AABPR0249R APPELLANT ) .. RESPONDENT ) CO NO. 185/ MUM/20 17 ( ASSESSMENT YEAR : 2009 - 10 ) SHRI NARAYANSINGH H RATHOD, STEEL APT., 155, TRIMBAK PARSHOURAM MUMBAI VS. ITO 19(2)(4) R.NO. 217, MATRU MANDIR MUMBAI 400 007 PAN/GIR NO. ABPR0249R APPELLANT ) .. RESPONDENT ) REVENUE BY MS. ARJU GARODIA ASSESSEE BY SHRI SUSHIL CHOKHANI DATE OF HEARING 21 / 08 /201 7 DATE OF PRONOUNCEME NT 23 / 08 /201 7 / O R D E R PER R.C.SHARMA (A.M) : THIS IS AN APPEAL FILED BY THE REVENUE AND CROSS OBJECTION BY THE ASSESSEE AGAINST THE ORDER OF CIT(A) - 30, MUMBAI DATED 17/10/2016 IN THE MATTER OF ORDER PASSED U/S.143(3) R.W.S 147 OF THE IT ACT. 2. IN THIS APPEAL, REVENUE IS AGGRIEVED FOR THE ACTION OF CIT(A) IN UPHOLDING ADDITION OF 12.5% ONLY ON THE ALLEGED BOGUS PURCHASE, WHERE ITA NO. 310/MUM/2017 CO NO.185/MUM/2017 SHRI NARAYAN SINGH H. RATHOD 2 AS IN THE CROSS OBJECTION, ASSESSEE HAS ALLEGED THAT CIT(A) WAS IN JUSTIFIED IN UPHOLDING ADDITION OF 12.5% ON PURCHASE OF RS.46,06,432/ - . 3. RIVAL CONTENTIONS HAVE BEEN HEARD AND RECORD PERUSED. THE FACTS IN BRIEF ARE THAT T HE ASSESSEE IS AN INDIVIDUAL. THE ASSESSEE IS A MANUFACTURER AND TRADER OF METAL FURNITURE AND F ABRICATORS IN THE NAME AND STYL E M/S PAV AN STEEL. THE RETURN OF INCOME FOR T HE YEAR UNDER APPEAL WA S FILED ON 28/ 09 /2009 DECLARING TOTAL INCOME OF RS. 10,10,948 / - . THE RETURN WAS PROCESSED U/S 143(1) OF THE ACT. THE CASE WAS REOPENED U/S 147, BY ISSUING NOTICE U/S 148 OF THE ACT ON 07/ 03 / 2014, BASED ON THE INFOR MATION RECEIVED FROM THE DGIT (I NV.), MUMBAI, THAT THE A SSESSEE IS ONE OF THE BENEFICIARIES OF THE ACCOMMODATION ENTRIES PROVIDED BY SOME OF THE MVAT DEALERS, WHO WERE INDULGING IN ISSUING BOGUS SALE/PURCHASE BILLS, WHICH WAS INVESTIGATED AND KEPT ON THE PUBLIC DOMAIN BY THE SALES TAX DEPARTMENT. ASSESSMENT U/S. 143(3) R.W.S. 147 OF THE I.T. ACT, 1961 WA S COMPLETED BY THE LD. AO ON 20/ 03 / 2015, DETERMINING THE TOTAL INCOME AT RS. 56,17,380/ - . AFTER CONSIDERING ASSESSEES REPLY AO ADDED 100% ADDITION WITH RESPECT TO SUCH PURCHASE S. 4. BY THE IMPUGNED ORDER, CIT(A) RESTRICTED THE ADDITION TO THE EXTENT OF 12.5% AFTER OBSERVING AS UNDER: - 5. CAREFULLY CONSIDERED THE RIVAL SUBMISSIONS, PERUSED THE MATERIAL ON RECORD AND DULY CONSIDERED THE FACTUAL MATRIX OF THE CASE AS WELL AS THE A PPLICABLE LEGAL POSITION, BEFORE ARRIVING THE FOLLOWING CONCLUSION/DECISION. 6. APPELLANT HAS RAISED 13 GROUNDS OF APPEAL. ALMOST ALL THE GROUNDS OF AP PEAL RELATE TO THE ADDITION OF RS. 46,06,432/ - , MADE BY AO AS NON - GENUINE PURCHASES EXCEPT GROUND NO. 13 W HICH IS GENERAL IN NATURE. IT IS SUBMITTED IN THE GROUNDS THAT THE APPELLANT HAS SUBMITTED THE DOCUMENTARY ITA NO. 310/MUM/2017 CO NO.185/MUM/2017 SHRI NARAYAN SINGH H. RATHOD 3 EVIDENCES SUCH AS INVOICES, CHALLANS, ENTRIES IN BANK STATEMENT THAT PAYMENTS ARE MADE BY ACCOUNT PAYEE CHEQUES. THE DEFAULTS ON THE PART OF THE SUPP LIERS UNDER THE PROVISIONS OF MVAT ACT WOULD NOT BE SUFFICIENT TO HOLD APPELLANT'S PURCHASES AS NON - GENUINE AND TO DISALLOW THE PURCHASES. ALL THE DEALERS ARE HOLDING MVAT NOS. AND TO SAVE THE MVAT LIABILITY ISSUED ACCOMMODATION BILLS AND NOT SUPPLIED THE MATERIAL AND FOR THIS REASON NOT RESPONDED TO THE ENQUIRIES WHICH LED TO THE HARDSHIP TO THE GENUINE BUYER. NONE OF THE DEALERS WITH WHOM HE DEALT GIVEN ANY STATEMENT BEFORE THE I TO '' N ' ' ASSESSEE HAS NOT BEEN GIVEN ANY OPPORTUNITY TO CROSS EXAMINE THEM. AO TREATED THE PURCHASES AS NON - GENUINE WITHOUT BRINGING ON RECORD ANY INDEPEN DENT AND RELIABLE EVIDENCES. APPELLANT FURTHER SUBMITTED THAT IF THE ENTIRE PURCHASES A - ~ TREATED AS NON - GENUINE, THE GP WILL SHOOT UP TO 51.81% AND NP WILL SHOOT UP TO 45.97% WH ICH IS ARBITRARY. IT IS ALSO POINTED OUT BY THE APPELLANT THAT IN RESPECT OF PURCHASE BILL OF RS. 3,18,06 0 / - FROM OCEAN STEEL IMPEX PART OF THE AMOUNT OF RS. 89,409/ - WAS TREATED AS NON - GENUINE AND PART OF THE BILL AMOUNTING TO RS. 2,28,651/ - WAS TREATED AS GENUINE PURCHASES. IN CASE OF PURCHASE ARE SAID TO BE BOGUS THE ADDITION IS TO BE MADE OF PROFIT ELEMENT AS THE REAL INCOME IS ONLY TO BE TAXED UNDER THE TAX PROVISIONS. 6.1 IN MAKING THE ADDITION, LD. AO RELIED ON THE DEPOSITION AND AFFIDAVIT BY THE SOME OF THE ENTITIES BEFORE THE SALES TAX AUTHORITIES AS PER WHICH THEY HAVE ONLY GIVEN BOGUS BIL' - S WITHOUT SUPPLYING ANY GOODS. APART FROM THAT INDEPENDENT INQUIRIES WERE ALSO CONDUCTED BY THE AO BY SENDING NOTICES U/S 133(6) OF THE ACT WHICH WERE RETURNED BY THE POSTAL AUTHORITIES WITH THE REMARKS 'NOT KNOWN', 'NO SUCH ADDRESS', OR L EFT' ETC., FROM THIS IT IS CONFIRMED THAT THE PARTIES ARE NOT AVAILABLE IN THE GIVEN ADDRESSES. THESE FACTS WERE BROUGHT TO THE NOTICE OF THE APPELLANT'S AR AND HE WAS ASKED TO PR ODUCE THE SAID ENTITIES FROM WHOM GOODS WERE ALLEGEDLY PURCHASED. AS THE APPELLANT WAS UNABLE TO PRODUCE THE SAID PARTIES, LD. AO HELD THAT IN ABSENCE OF THE SUPPLY OF GOODS, EVEN THOUGH THE DOCUMENTATION ASPECT OF THE TRANSACTION WAS NOT BEING DENIED, IT WOULD LEAD TO THE ONLY HUMAN PROBABILITY THAT THE GOODS MENTIONED IN THE PAPER TRANSACTION WERE NOT PURCHASED FROM THOSE PARTIES. HENCE TREATING THE PURCHASES AS ACCOMMODATION ENTRIES IN ORDER TO INFLATE THE PURCHASES/EXPENSES, AO ADDED THE ENTIRE PURCHASE AMOUNT OF RS. 46,06,432/ - , TO THE TOTAL INCOME OF THE APPELLANT. 6.2 PER CONTRA, LD. AR HAS VEHEMENTLY ARGUED THAT THE ADDITION IS BASED ON THE INFORMATION RECEIVED FROM THE DGTT (INV.) BASED ON INQUIRIES CARRIED OUT BY THE SALES TAX DEPARTMENT. MERE DIS PLAY OF INFORMATION ON WEBSITE OF VAT AUTHORITY CANNOT BE SOLE GROUND FOR REJECTING THE CLAIM OF ASSESSEE. IT COULD NOT PRODUCE THE SUPPLIER, HOWEVER, DOCUMENTARY EVIDENCE LIKE INVOICES, DELIVERY CHALLANS, PAYMENTS MADE BY CROSS ACCOUNT PAYEE CHEQUES, STOC K REGISTER ITA NO. 310/MUM/2017 CO NO.185/MUM/2017 SHRI NARAYAN SINGH H. RATHOD 4 MAINTAINED SHOWING QUANTITATIVE DETAILS AND DETAILS OF SALES OUT OF PURCHASES MADE SUGGESTED THAT ALL THE TRANSACTIONS WERE GENUINE, AND PLEADED THAT THE ADDITION SHOULD BE DELETED. IT IS ALSO STATED THAT IN ONE CASE BY NAME M/S OCEAN STEEL IMPE X BIL L NO. 316 DATED 23 - 10 - 2008 OF RS. 3,18,0607 - , AGAINST WHICH AN AMOUNT OF RS. 89,049/ - ONLY WAS ADDED AS BOGUS. 6.3 ON PERUSAL OF THE MATERIAL ON RECORD IT IS NOTICED THAT, IN THE APPELLANT'S CASE, LD. AO, HAS NOT SOLELY RELIED ON THE SALES TAX DEPARTMEN T INFORMATION BUT ALSO MADE INDEPENDENT VERIFICATIONS BY ISSUING NOTICES U/S. 133(6) OF THE IT. ACT, WHICH WERE RETURNED UNSERVED, AND THERE WAS AN OVERWHELMING EVIDENCE IN THE FORM OF STATEMENT GIVEN BY SOME OF THE SUPPLIERS GIVEN BEFORE THE SALES TAX AUT HORITIES THAT IT WAS ENGAGED ONLY IN ISSUING HAWALA BILLS AND NO GOODS WERE EVER SUPPLIED BY THEM. 6.4 AFTER WEIGHING THE EVIDENCE PROS AND CONS, I FIND THAT THE APPELLANT HAS NOT RECONCILED THE PURCHASES WITH THE ITEMS SOLD AND FAILED TO RECONCILE 1:1 OF THE ITEMS PURCHASED AND SOLD. ONUS WAS ALWAYS ON THE APPELLANT TO PROVE AS TO HOW THE MATERIAL PURCHASED WAS FIRSTLY OBTAINED. I RECORD A FINDING OF FACT HERE THAT NO PROOF OF DELIVERY OF PURCHASES HAS BEEN FILED EITHER BEFORE THE LD. AO OR BEFORE ME. THU S, IT CAN BE SAFELY PRESUMED THAT EITHER THEY ARE NON - EXISTENT OR EVEN IF THEY DID EXIST, THEY WERE NOT BACKED BY SUFFICIENT EVIDENCE TO UNDERGO THE TEST OF SCRUTINY. 6.5 THE SUPPLIER WAS IN FACT THE APPELLANT'S WITNESS AND THE LD. AO WAS NOT REQUIRED TO FORCE THEIR ATTENDANCE. IT WAS FOR THE APPELLANT TO PRODUCE IT AS PER CIVIL PROCEDURE CODE WHICH APPLIES ON ALL FOURS TO THE INCOME - TAX PROCEEDINGS. IT IS TRITE THAT ONCE A TRANSACTION IS SHOWN TO BE OF THE NATURE OF INCOME, THE ONUS SHIFTS TO THE ASSESSEE TO SHOW THAT THE SAME WAS NOT TAXABLE. IT CAN THUS BE SAFELY ASSUMED THAT THE APPELLANT HAS GROSSLY FAILED IN ITS DUTY TO MITIGATE THE BURDEN CAST UPON IT IN SO FAR AS PROVING THE GENUINENESS OF THE TRANSACTION FROM THE SAID PARTY IS CONCERNED. THOUGH THE APPELLANT IS A MANUFACTURER, HE HAS FAILED TO FURNISH ANY IN RESPECT OF CONSUMPTION OR USE OF THE R AW MATERIALS FROM THE SAID EIGHT. 6.6 IN THIS REGARD IT IS ALSO PERTINENT TO MENTION THAT WHILE DEALING WITH THE CONCEPT OF BURDEN OF PROOF, ONUS OF PROVIN G IS ALWAYS ON THE PERSON WHO MAKES THE CLAIM AND NOT ON THE REVENUE. WHILE DEALING WITH THE ISSUE OF DECIDING THE BURDEN OF PROOF, HON'BLE SUPREME COURT IN THE CASES OF CIT VS. DURGAPRASAD MORE 82 ITR 540 AND SUMATI DAYAL VS. CIT 214 ITR 801 HAS HELD THAT THE APPARENT MUST BE CONSIDERED REAL UNTIL IT IS SHOWN THAT THERE ARE REASONS TO BELIEVE THAT THE APPARENT IS NOT REAL AND THAT TAXING AUTHORITIES ARE ENTITLED TO LOOK INTO SURROUNDING CIRCUMSTANCES TO FIND OUT THE REALITY AND THE MATTER ITA NO. 310/MUM/2017 CO NO.185/MUM/2017 SHRI NARAYAN SINGH H. RATHOD 5 HAS TO BE CONSIDE RED BY APPLYING THE TEST OF HUMAN PROBABILITIES, THE HON'BLE COURT ALSO HELD THAT, IT IS NO DOUBT, TRUE THAT IN A/I CASES IN WHICH A RECEIPT IS SOUGHT TO BE TAXED AS INCOME, THE BURDEN LIES ON THE DEPARTMENT TO PROVE THAT IT IS WITHIN THE TAXING PROVISION AND IF A RECEIPT IS IN THE NATURE OF INCOME, THE BURDEN TO PROVE THAT IT IS NOT TAXABLE BECAUSE IT FALLS WITHIN EXEMPTION PROVIDED BY THE ACT, LIES UPON THE ASSESSEE. IN THE CASE OF DURGAPRASAD MORE (SUPRA), THE HON'BLE COURT WENT ON TO ADD THAT A PARTY WHO RELIES ON A RECITAL IN A DEED HAS TO ESTABLISH THE TRUTH OF THIS RECITAL, OTHERWISE IT WILL BE VERY EASY TO MAKE SELF SERVING STATEMENTS IN DOCUMENTS EITHER EXECUTED OR TAKEN BY A PARTY WHO RELIED ON THOSE RECITALS. IF ALL THAT AN ASSESSEE WHO WANTS T O EVADE TAX HAS TO HAVE SOME RECITALS MADE IN A DOCUMENT EITHER EXECUTED BY HIM OR EXECUTED IN HIS FAVOUR THEN THE DOOR WILL BE LEFT WIDE OPEN TO EVADE TAX. THE HON'BLE COURT FURTHER HELD THAT THE TAXING AUTHORITIES WERE NOT REQUIRED TO PUT ON BLINKERS W HILE LOOKING AT THE DOCUMENTS PRODUCED BEFORE THEM. THEY WERE ENTITLED TO LOOK IN TO THE SURROUNDING CIRCUMSTANCES TO FIND OUT THE REALITY OF THE RECITALS MADE IN THOSE DOCUMENTS. 6.7 THE ONUS TO PROVE THAT APPARENT, IS NOT THE REAL ONE, IS ON THE PARTY WHO CLAIMS IT TO BE SO, AS HELD BY THE HON'BLE SUPREME COURT IN THE CASE OF CIT V. DAUIAT RAM RAWATMUIL [1973] 87 ITR 349 AND CIT V. DURGA PRASAD MORE (SUPRA). IT IS ALSO A SETTLED LEGAL PROPOSITION THAT IF NO EVIDENCE IS GIVEN BY THE PARTY ON WHOM THE BUR DEN IS CAST, THE ISSUE MUST BE FOUND AGAINST HIM. THEREFORE, ONUS IS ALWAYS ON A PERSON WHO ASSERTS A PROPOSITION OR FACT, WHICH IS NOT SELF EVIDENT. THE ONUS, AS A DETERMINING FACTOR OF THE WHOLE CASE CAN ONLY ARISE IF THE TRIBUNAL, WHICH VESTED WITH THE AUTHORITY TO DETERMINE, FINALLY ALL QUESTIONS OF FACT, FINDS THE EVIDENCE PRO & CON, SO EVENLY BALANCED THAT IT CAN COME TO NO CONCLUSION, THEN, THE ONUS WILL DETERMINE THE MATTER. THERE CANNOT BE ANY DOUBT THAT ONUS AS A DETERMINING FACTOR COMES INTO PLAY WHERE, EITHER THERE IS NO EVIDENCE ON EITHER SIDE, OR WHERE IT IS EQUALLY WORTHLESS OR WHERE IT IS EQUALLY BALANCED. IT IS IMPERATIVE TO MENTION HERE THAT WHERE SUCH IS NOT THE CASE AND ALL AVAILABLE EVIDENCE IS CONSIDERED, WITHOUT REFERENCE TO THE ONUS A ND WITHOUT RELYING ON THE CIRCUMSTANCES THAT ONUS LIES ON A PARTICULAR PARTY, THE ISSUE IS DETERMINED ON FACTS AND THE ONUS CANNOT BE SAID TO HAVE INFLUENCED THE DECISIONS. HOWEVER, IN THE INSTANT CASE, THE APPELLANT HAS MISERABLY FAILED TO LEAD EVIDENCE. 6.8 WITH REGARD TO THE CLAIM OF THE APPELLANT THAT THE PARTIES ARE NOT OFFERED FOR CROSS - EXAMINATION BY THE APPELLANT, IT IS TO BE NOTED THAT, THE RIGHT OF CROSS - EXAMINATION IS NOT AUTOMATIC, BUT IT WOULD BE INCUMBENT ONLY IN A SITUATION WHERE THE APPELLA NT IS ABLE TO PRIMA ITA NO. 310/MUM/2017 CO NO.185/MUM/2017 SHRI NARAYAN SINGH H. RATHOD 6 FACIE DEMONSTRATE THAT THE ONUS CAST ON HIM TO ESTABLISH HIS VERSION OF AFFAIRS IS BASED ON PRIMARY EVIDENCE. IN THIS CASE, THE APPELLANT HAD FAILED TO LEAD ANY PRIMARY EVIDENCE, VIZ. GRNS, OCTROI RECEIPTS, DELIVERY CHALLANS, ETC. WHICH WOULD SHOW THAT THE SUPPLIES WERE INDEED MADE. IN SUCH A SITUATION, THE AO IS JUSTIFIED IN DRAWING THE INFERENCE THAT THE PURCHASES AGGREGATING TO ? 46,06,432/ - ARE NOT GENUINE. AS REGARDS THE ISSUE OF THE DENIAL OF THE CROSS EXAMINATION, IN THE CASE OF G TC INDUSTRIES LTD. VS. ASSISTANT COMMISSIONER OF INCOME - TAX [1998] 65 ITD 380 (BOM), IT WAS HELD AS UNDER: '1 05. IN OUR OPINION RIGHT TO CROSS - EXAMINE THE WITNESS WHO MADE - ADVERSE REPORT, IS NOT AN INVARIABLE ATTRIBUTE OF THE REQUIREMENT OF THE DIC TUM, 'AUDIALTERAMPARTEM'. THE PRINCIPLES OF NATURAL JUSTICE DO NOT REQUIRE FORMAL CROSS - EXAMINATION. FORMAL CROSS - EXAMINATION IS A PART OF PROCEDURAL JUSTICE. IT IS GOVERNED BY THE RULES OF EVIDENCE, AND IS THE CREATION OF COURT. IT IS PART OF LEGAL AND S TATUTORY JUSTICE, AND NOT A PART OF NATURAL JUSTICE, THEREFORE, IT CANNOT BE LAID DOWN AS A GENERAL PROPOSITION OF LAW THAT THE REVENUE CANNOT RELY ON ANY EVIDENCE WHICH HAS NOT BEEN SUBJECTED TO CROSS - EXAMINATION. 6.9 HON'BLE GUJARAT HIGH COURT IN THE CA SE OF CIT VS. SIMIT SHETH (2013) 38 TAXMANN.COM 385 (GUJ), HON'B,E COURT, WAS SEIZED WITH A SIMILAR ISSUE OF BOGUS PURCHASES, WHERE THE AO HAD FOUND THAT SOME OF THE ALLEGED SUPPLIERS OF STEEL TO THE ASSESSEE HAD NOT SUPPLIED ANY GOODS BUT HAD ONLY PROVIDE D SAFE BILLS AND HENCE, PURCHASES FROM THE SAID PARTIES WERE HELD TO BE BOGUS. THE AO, IN THAT CASE ADDED THE ENTIRE AMOUNT OF PURCHASES TO GROSS PROFIT OF THE ASSESSEE. LD. CIT(A) HAVING FOUND THAT THE ASSESSEE HAD INDEED PURCHASED THOUGH NOT FROM NAMED P ARTIES BUT OTHER PARTIES FROM GREY MARKET, PARTIALLY SUSTAINED THE ADDITION AS PROBABLE PROFIT OF THE ASSESSEE. THE TRIBUNAL HOWEVER, SUSTAINED THE ADDITION TO THE EXTENT OF 12.5%. TAKING INTO ACCOUNT THE ABOVE FACTS, THE HON'BLE GUJARAT HIGH COURT HELD TH AT SINCE THE PURCHASES WERE NOT BOGUS, BUT WERE MADE FROM PARTIES OTHER THAN THOSE MENTIONED IN BOOKS OF ACCOUNTS, ONLY THE PROFIT ELEMENT EMBEDDED IN SUCH PURCHASES COULD BE ADDED TO T H E ASSESSEE'S INCOME AND AS SUCH NO QUESTION OF LAW AROSE IN SUCH ESTIM ATION. 6.10 IN THE PRESENT CASE, AO CONCLUDED THAT THE APPELLANT HAS NOT PURCHASED FROM THOSE PARTIES, AT THE SAME TIME HE DID NOT DISTURBED THE SALES. CONSIDERING THE FACTS OF THE CASE THAT THE GOODS HAVE BEEN SOLD AND THE ASSESSEE OFFERED THE PROFIT ON SALE FOR TAXATION, THE DECISION OF HON'BLE GUJARAT HIGH COURT IN THE CASE OF CIT VS. SIMIT ITA NO. 310/MUM/2017 CO NO.185/MUM/2017 SHRI NARAYAN SINGH H. RATHOD 7 SHETH 356 ITR 451 (GUJ) DISCUSSED ABOVE IS VERY MUCH APPLICABLE TO THE PRESENT SET OF FACTS. 6.11 APART FROM THE ABOVE, DURING THE PRESENT PROCEEDINGS, AR FURNISHE D A COPY OF THE ASSESSMENT ORDER PASSED U/S 143(3) R.W.S 147 OF THE ACT ON 29 - 02 - 2016, FOR THE A.Y. 2010 - 11, WHEREIN SIMILAR ISSUE OF NON - GENUINE PURCHASES WAS CONSIDERED BY THE AO, AND RELYING ON THE CASE OF SIMITH P. SETH CASE CITED (SUPRA), AO ADOPTED 1 2.5% OF THE PURCHASES AS THE PROFIT ELEMENT EMBEDDED ON SUCH PURCHASES. ON VERIFICATION OF THE SAID ORDER, TWO OF THE THREE PARTIES CONSIDERED AS BOGUS PARTIES FOR THAT YEAR ARE AVAILABLE IN THE PRESENT ASSESSMENT YEAR ALSO. AS THE FACTS OF THE CASE FOR TH IS ASST. YEAR ARE SIMILAR TO THE CASE FOR THAT YEAR AND THE PARTIES FROM WHOM THE PURCHASES ARE MADE ALSO SAME IN TWO OUT OF THREE CASES AND ALSO THE FACTS OF THE CASE ARE EXACTLY SIMILAR TO THE CASE OF CIT VS. SIMIT SHETH 356 ITR 451 (GUJ), RESPECTFULLY F OLLOWING THE ABOVE CITED DECISION, WHICH WAS ADOPTED BY THE AO FOR THE A.Y. 2010 - 11, AO IS DIRECTED TO SUSTAIN THE ADDITION @12.5% ON THE TOTAL PURCHASES. 6.12 DURING THE PRESENT PROCEEDINGS, AR POINTED OUT THAT IN RESPECT OF PURCHASE MADE FROM M/S OSIAN S TEEL IMPEX, OF ? 3,18,060/ - , PART OF THE AMOUNT OF ? 89,409/ - WAS TREATED AS NON - GENUINE AND PART OF THE BILL AMOUNTING TO RS. 2,28,651/ - WAS TREATED AS GENUINE PURCHASES BY AO AT THE TIME OF PASSING THE ASSESSMENT ORDER. AO IS DIRECTED TO CONSIDER THE TOTA L AMOUNT OF PURCHASE FROM M/S OSIAN STEEL IMPEX AS RS. 3,18,060/ - INSTEAD OF THE AMOUNT ADOPTED OF 89,409/ - BY THE AO WHILE CALCULATING THE PROFIT ELEMENT EMBEDDED @12.5%, AS DIRECTED EARLIER. WITH THE ADDITION OF THE DIFFERENTIAL AMOUNT, TOTAL AMOUNT OF N ON - GENUINE PURCHASES COMES TO RS. 48,35,083/ - FROM THE EIGHT PARTIES. AO IS DIRECTED TO ADOPT 12.5% ON THE SAID AMOUNT AS THE PROFIT ELEMENT EMBEDDED ON THE NON - GENUINE PURCHASES. GROUND NO. 1 TO 12 ARE TREATED AS 'PARTLY ALLOWED'. 6.13 THE APPELLANT IN TH E WRITTEN SUBMISSIONS PLEADS FOR DELETING THE ENTIRE ADDITION BASED ON SEVERAL CASE LAWS OF HON'BLE HIGH COURT/ TRIBUNAL, INCLUDING IN THE CASE OF NIKUNJ EXIMP ENTERPRISES (P) LTD VS. CIT216 TAXMAN 171 (BOMBAY HIGH COURT) TO SUGGEST THAT NO ADDITION COULD BE MADE ON ACCOUNT OF DISALLOWANCE OF BOGUS PURCHASES. HAVING GONE THROUGH THE OTHER CASE LAWS, IT IS SEEN THAT IN NONE OF THOSE CASES SO MUCH OF INVESTIGATION WAS DONE INCLUDING THOSE BY ANOTHER GOVERNMENT AUTHORITY, VIZ., MAHARASHTRA SALES TAX AUTHORITY BEFORE WHOM AFFIDAVITS WAS FILED STATING THAT ONLY BOGUS BILLS WERE SUPPLIED WITHOUT DELIVERY OF GO ODS. IN THE CASE BEFORE THE HONB LE BOMBAY HIGH COURT IN NIKUNJ EXIMP (SUPRA), THE SUPPLIERS HAD NOT APPEARED BEFORE THE ASSESSING OFFICER AND FROM THE JUDGM ENT IT APPEARS THAT IT WAS NOT A CASE OF THE SUPPLIERS BEING NON - ITA NO. 310/MUM/2017 CO NO.185/MUM/2017 SHRI NARAYAN SINGH H. RATHOD 8 EXISTENT. HOWEVER, IN THE PRESENT CASE IN APPEAL, THE ALLEGED SUPPLIER HAS BEEN FOUND TO BE NON - EXISTENT. THIS IS NOT MERELY A CASE WHERE THE SUPPLIER HAS FAILED TO APPEAR BEFORE THE ASSESSIN G OFFICER. HENCE, THE JUDGMENT OF THE HON'BLE BOMBAY HIGH COURT RELIED UPON BY THE APPELLANT WOULD BE OF NO HELP. IN FACT, IN A LATER DECISION IN NIKUNJ EXIMP (2014) 48 TAXMANN.COM 20 (BOM), HON'BLE BOMBAY HIGH COURT ON THE VERY SAME ISSUE OF OBTAINING BOG US BILLS DISMISSED THE ASSESSEE'S WRIT PETITION FILED AGAINST NOTICE U/S. 148. THE OTHER CASES CITED IN THE SUBMISSIONS ARE ALSO .DISTINGUISHABLE TO THE PRESENT CASE, IN VIEW OF THE FACT THAT THE APPELLANT MISERABLY FAILED TO PROVE THE GENUINENESS OF SUCH PURCHASES WITH CONCLUSIVE EVIDENCES,, THOSE CASE LAWS CITED ARE NOT APPLICABLE TO THE FACTS OF THE PRESENT CASE. 7. IN GROUND NO. 13, IT IS STATED THAT 'THE APPELLANT CRAVES LEAVE TO ADD, ALTER, AMEND AND/OR DELETE ANY OF THE ABOVE GROUNDS OF APPEAL'. NO SUCH OPTION HAS BEEN EXERCISED BY THE APPELLANT DURING THE APPELLATE PROCEEDINGS. THEREFORE, IT IS CLEAR THAT THIS GROUND OF APPEAL IS ACADEMIC IN NATURE AND NO DECISION IS REQUIRED IN RESPECT OF THIS GROUND OF APPEAL. FOR THE STATISTICAL PURPOSE, THIS SHO ULD BE TAKEN TO BE DISMISSED GROUNDS OF APPEAL. 8. IN THE RESULT, FOR THE STATISTICAL PURPOSES, APPEAL FILED FOR THE A.Y. 2009 - 10, IS TREATED AS 'PARTLY ALLOWED'. 5. WE HAVE CONSIDERED RIVAL CONTENTIONS AND FOUND THAT CIT(A) HAS DEALT WITH THE ISSUE THR EADBARE AND AFTER APPLYING PROPOSITION OF LAW LAID DOWN BY THE VARIOUS HIGH COURTS TO THE FACTS OF THE INSTANT CASE REACHED TO THE CONCLUSION THAT ADDITION TO THE EXTENT OF 12.5% IN RESPECT OF PROFIT EMBEDDED IN SUCH PURCHASES WOULD SERVE THE PURPOSE OF JU STICE. THE DETAILED FINDING SO RECORDED BY CIT(A) HAS NOT BEEN CONTROVERTED BY LEARNED DR BY BRINGING ANY POSITIVE MATERIAL ON RECORD. ACCORDINGLY, WE DO NOT FIND ANY REASON TO INTERFERE IN THE FINDINGS RECORDED BY CIT(A). ITA NO. 310/MUM/2017 CO NO.185/MUM/2017 SHRI NARAYAN SINGH H. RATHOD 9 6. IN THE RESULT, APPEAL FILED BY REVENUE AND CROSS OBJECTION FILED BY THE ASSESSEE ARE DISMISSED. O RDER PRONOUNCED IN THE OPEN COURT ON THIS 23 / 08 /2017 S D/ - ( SANDEEP GOSAIN ) S D/ - ( R.C.SHARMA ) JUDICIAL MEMBER ACCOUNTA NT MEMBER MUMBAI ; DATED 23 / 08 /201 7 KARUNA SR. PS COPY OF THE ORDER FORWARDED TO : BY ORDER, ( ASSTT. REGISTRAR) ITAT, MUMBAI 1. THE APPELLANT 2. THE RESPONDENT. 3. THE CIT(A), MUMBAI. 4. CIT 5. DR, ITAT, MUMBAI 6. GUARD FILE. //TRUE COPY//