SHANTILAL G. JAIN, MUMBAI V. ITO WD 19(3)(3), MUMBAI

ITA 3117/MUM/2017

• Counselvise Citation: [2019] 117 COUNSELVISE.COM (IT) 1797 (ITAT-MUMBAI)
• Duration Of Justice: 2 year(s) 1 month(s) 10 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 11-06-2019
• Appeal Filed By: Assessee
• Order Result: Partly Allowed
• Bench Allotted: J
• Assessment Year: 2009-2010
• Appeal Filed On: 01-05-2017
• Result in Favour of: Partly Allowed
• Court: TRIBUNAL
• Department Lawyers: SATISH RAJORE
• Keywords: Bogus purchase; Principle of natural justice; Accommodation entries; Reassessment proceedings
• Section: 143(3); 142(1); 133(6); 147; 145

Judgement Text

1 IN THE INCOME-TAX APPELLATE TRIBUNAL G BENCH MUMB AI BEFORE SHRI PAWAN SINGH, JUDICIAL MEMBER AND SHRI M. BALAGANESH, ACCOUNTANT MEMBER ITA NO. 3117/MUM/2017 (ASSESSMENT YEAR 2009-10 ) SHRI SHANTILAL G. JAIN, 122, 4 TH FLOOR, KIKA STREET, GULALWADI, MUMBAI-400004 . PAN: ACWPJ0062D VS. ITO WARD-19(3)(3), ROOM NO. 202, MATRU MANDIR, TARDEO ROAD, MUMBAI-400007 APPELLANT RESPONDE NT APPELLANT BY : MS. DINKLE HARIYA (C.A) RESPONDENT BY : SHRI SATISH RAJORE (SR. DR) DATE OF HEARING : 11.06.2019 DATE OF PRONOUNCEMEN T : 11.06.2019 ORDER UNDER SECTION 254(1)OF INCOME TAX ACT PER PAWAN SINGH, JUDICIAL MEMBER; 1. THIS APPEAL BY ASSESSEE IS DIRECTED AGAINST THE ORD ER OF LD. COMMISSIONER OF INCOME TAX (APPEALS)-30 [THE LD. CIT(A)], MUMBAI DA TED 08.02.2017 FOR ASSESSMENT YEAR 2009-10. THE ASSESSEE HAS RAISED T HE FOLLOWING GROUNDS OF APPEAL: 1. REASSESSMENT 1.1 THE LD. COMMISSIONER OF INCOME - TAX (APPEALS) - 30, MUMBAI ['LD. CIT (A)']' ERRED IN CONFIRMING THE ACTION OF THE A.O. I N INITIATING REASSESSMENT PROCEEDINGS AND FRAMING THE ASSESSMENT OF THE APPEL LANT BY INVOKING THE PROVISIONS OF SECTION 147 R.W.S. 148 OF THE INCOME TAX ACT, 1961 [THE ACT']. 1.2 WHILE DOING SO, THE LD. CIT (A) FAILED TO APPRE CIATE THAT: (I) THE CASE OF THE APPELLANT DID NOT FALL WITHIN T HE PARAMETERS LAID DOWN BY SECTION 147 R.W.S. 148 OF THE ACT; (II) THE NECESSARY PRECONDITIONS FOR INITIATING THE REASSESSMENT PROCEEDING AND COMPLETION THEREOF WERE NOT SATISFIED. ITA NO. 3117 MUM 2017-SHRI SHANTILAL G. JAIN 2 1.3 IT IS SUBMITTED THAT IN THE FACTS AND THE CIRCU MSTANCES OF THE CASE, AND IN LAW, THE REASSESSMENT FRAMED IS BAD, ILLEGAL AND VO ID. 2. NATURAL JUSTICE 2.1 THE LD. CIT (A) ERRED IN CONFIRMING THE ACTION OF THE A.O. IN NOT GRANTING PROPER, SUFFICIENT AND ADEQUATE OPPORTUNITY OF BEIN G HEARD TO THE APPELLANT WHILE FRAMING THE ASSESSMENT. 2.2 IT IS SUBMITTED THAT IN THE FACTS AND THE CIRCU MSTANCES OF THE CASE, AND IN LAW, THE ASSESSMENT SO FRAMED BE HELD AS BAD AND IL LEGAL, AS THE SAME IS FRAMED IN BREACH OF THE PRINCIPLES OF NATURAL JUSTI CE AND WITHOUT APPLICATION OF MIND TO THE FACTS BROUGHT ON RECORD BY THE APPELLAN T. WITHOUT PREJUDICE TO THE ABOVE 3.1 THE LD. CIT (A) ERRED IN CONFIRMING THE ACTION OF THE A.D. IN MAKING ADDITION OF RS. 2,29,21,394/- TO THE INCOME OF THE APPELLANT ON ACCOUNT OF NON - GENUINE PURCHASES. 3.2 WHILE DOING SO, THE LD. CIT (A) ERRED IN CONFIR MING THE ACTION OF THE A.O. IN REJECTING THE BOOK RESULT U/S 145 (3) OF THE ACT . 3.3 WHILE DOING SO, THE LD. CIT (A) ERRED IN: (I) BASING HIS ACTION ONLY ON SURMISES, SUSPICION A ND CONJECTURE; (II) TAKING INTO ACCOUNT IRRELEVANT AND EXTRANEOUS CONSIDERATIONS; AND (III) IGNORING RELEVANT MATERIAL AND CONSIDERATIONS AS SUBMITTED BY THE APPELLANT. 3.3 IT IS SUBMITTED THAT IN THE FACTS AND THE CIRCU MSTANCES OF THE CASE, AND IN LAW, NO SUCH ADDITION WAS CALLED FOR. 3.4 WITHOUT PREJUDICE TO THE ABOVE, ASSUMING - BUT NOT ADMITTING - THAT SOME ADDITION WAS CALLED FOR, IT IS SUBMITTED THAT THE C OMPUTATION OF THE ADDITION MADE BY THE A.O. IS ARBITRARY, EXCESSIVE AND NOT IN ACCORDANCE WITH THE LAW. 2. BRIEF FACTS OF THE CASE ARE THAT THE ASSESSEE IS A PROPRIETOR OF AMBIKA STEEL CENTRE AND ENGAGED IN TRADING OF FERROUS AND NON FE RROUS METALS. THE ASSESSEE FILED HIS RETURN OF INCOME FOR ASSESSMENT YEAR 2009-10 ON 26.09.2009 DECLARING TOTAL INCOME AT RS. 94,741/-. THE ASSESSMENT WAS COMPLETED UNDER SECTION 143(3) ON 17.10.2011 ASSESS ING THE TOTAL INCOME AT ITA NO. 3117 MUM 2017-SHRI SHANTILAL G. JAIN 3 RS. 2,79,690/- BY MAKING VARIOUS ADDITIONS/DISALLOW ANCES. THE ASSESSMENT WAS RE-OPENED UNDER SECTION 147 BY ISSUING NOTICE U NDER SECTION 148 ON 06.03.2014. THE ASSESSMENT WAS RE-OPENED ON THE BAS IS OF INFORMATION RECEIVED FROM DGIT (INVESTIGATION), MUMBAI ABOUT TH E INFORMATION RECEIVED FROM SALES TAX DEPARTMENT, GOVERNMENT OF MAHARASHTR A THAT CERTAIN DEALERS ARE INDULGING IN PROVIDING ACCOMMODATION ENTRIES IN THE FORM OF ISSUING BOGUS BILLS/PURCHASE BILLS WITHOUT ACTUAL DELIVERY OF GOODS. THE ASSESSEE WAS SHOWN AS ONE OF THE BENEFICIARY FROM SUCH HAWALA DE ALERS. ON THE BASIS OF SUCH INFORMATION, THE ASSESSMENT WAS RE-OPENED. THE ASSESSEE FILED REPLY DATED 20.03.2014, IN RESPONSE TO THE NOTICE UNDER S ECTION 148. IN THE REPLY, THE ASSESSEE STATED THAT THE RETURN OF INCOME FILED ORIGINALLY MAY BE TREATED AS RETURN IN RESPONSE TO THE NOTICE UNDER SECTION 148. THE ASSESSING OFFICER ISSUED NOTICE UNDER SECTION 143(2) AND 142(1) AND P ROCEEDED FOR RE- ASSESSMENT. DURING THE RE-ASSESSMENT PROCEEDING, TH E ASSESSING OFFICER NOTED THAT THE ASSESSEE HAS SHOWN PURCHASES FROM FI VE. THE NAMES OF ALL THE PARTIES APPEARED IN THE LIST OF HAWALA DEALERS. THE ASSESSEE HAS SHOWN THE TOTAL PURCHASES FROM ALL FIVE PARTIES IN THE FOLLOW ING MANNER : SR.NO. NAME OF HAWALA PARTIES F.Y. AMOUNT 1. SHRI GANESH STEEL 2008-09 19,14,692/- 2. TRISHLA TRADWINGS 2008-09 9,67,569/- 3. AAYUSHI ENTERPRISES 2008-09 77,33,606/- 4. MANAV IMPEX 2008-09 54,50,159/- ITA NO. 3117 MUM 2017-SHRI SHANTILAL G. JAIN 4 5. MANIBHADRA TRADING CO. 2008 - 09 68,55,368/ - TOTAL 2,29,21,394/- 3. THE ASSESSING OFFICER ASKED THE ASSESSEE TO FURNISH THE DETAILS AND COMPLETE ADDRESS OF PARTIES, PURCHASE BILL, INVOICES, LEDGER ACCOUNT, DETAILS OF TRANSPORTATION OF GOODS, LORRY RECEIPT SHOWING THE EVIDENCE THAT GOODS WERE RECEIVED IN THE PREMISES OF ASSESSEE. THE ASSESSING OFFICER ALSO ISSUED NOTICE UNDER SECTION 133(6) TO ALL THE PARTIES/DEALERS. NO TICES SENT TO M/S MANAV IMPEX AND M/S AAYUSHI ENTERPRISES WAS REPLIED BY TH E DEALERS STATING THAT THEY HAVE NOT DONE ANY BUSINESS WITH THE ASSESSEE A ND THAT THEIR FIRM CLOSED DURING THE ASSESSMENT YEAR 2009-10. NOTICE SENT TO OTHER THREE REMAINING PARTIES WERE RETURNED BACK UN-SERVED WITH THE REMAR K OF POSTAL AUTHORITIES NOT KNOWN/ NO SUCH ADDRESS OR LEFT. THE ASSES SEE WAS ISSUED SHOW- CAUSE NOTICE AS TO WHY THE PURCHASES FROM ALL FIVE PARTIES SHOULD NOT BE TREATED AS NON-GENUINE. THE ASSESSING OFFICER RECOR DED THAT THE ASSESSEE HAS NOT PRODUCED ANY DETAILS/DOCUMENTS DURING THE ASSES SMENT PROCEEDING. THE ASSESSING OFFICER CONCLUDED THAT THE SALES TAX DEPA RTMENT, GOVERNMENT OF MAHARASHTRA HAS CONDUCTED ENQUIRY WHICH CONCLUSIVEL Y PROVED THAT THE PARTIES WERE ENGAGED IN PROVIDING ACCOMMODATION ENT RIES. THE PARTIES WERE ISSUING BILLS WITHOUT DELIVERY OF ANY GOODS. INVEST IGATION WING OF INCOME TAX DEPARTMENT ALSO CONDUCTED THE ENQUIRIES AGAINST SUCH HAWALA PARTIES. THE ASSESSEE HAS ADOPTED MODUS OPERANDI TO REDUCE T HE TRUE PROFITS BY INFLATING HIS EXPENSES BY TAKING ACCOMMODATION ENTR IES FROM SUCH PARTIES. ITA NO. 3117 MUM 2017-SHRI SHANTILAL G. JAIN 5 THE ASSESSING OFFICER FAILED TO PRODUCE THE BILLS F OR THEIR EXAMINATION, SO THE BOOKS OF ACCOUNT OF ASSESSEE TO THE EXTENT THAT PUR CHASE MADE FROM THESE PARTIES REMAINED UNVERIFIABLE. THE ASSESSEE NOT DIS CHARGES HIS ONUS TO SUBSTANTIATE THE GENUINENESS OF PARTIES. THE ASSESS ING OFFICER DISALLOWED THE ENTIRE/AGGREGATE PURCHASES OF FIVE PARTIES OF RS. 2 ,29,21,394/- WHILE PASSING THE ASSESSMENT ORDER UNDER SECTION 143(3) R.W.S. 14 7. ON APPEAL BEFORE THE LD. CIT(A), THE ACTION OF ASSESSING OFFICER IN RE-OPENI NG AS WELL AS IN MAKING 100% ADDITION WAS SUSTAINED. THUS, FURTHER AGGRIEVE D BY THE ORDER OF LD. CIT(A), THE ASSESSEE HAS FILED THE PRESENT APPEAL B EFORE US. 4. WE HAVE HEARD THE SUBMISSION OF LD. AUTHORIZED REPR ESENTATIVE (AR) OF THE ASSESSEE AND LD. DEPARTMENTAL REPRESENTATIVE (DR) F OR THE REVENUE AND PERUSED THE MATERIAL AVAILABLE ON RECORD. GROUND NO .1 RELATES TO VALIDITY OF RE-OPENING UNDER SECTION 147 R.W.S. 148 AND GROUND NO.2 RELATES TO DENIAL OF NATURAL JUSTICE AND GROUND NO.3 RELATES TO ADDITION OF RS. 2.29 CRORE ON ACCOUNT OF NON-GENUINE PURCHASES. THE LD. AR OF THE ASSESSEE SUBMITS THAT INITIAL ASSESSMENT WAS COMPLETED UNDER SECTION 143( 3) ON 17.10.2011. THE ASSESSING OFFICER EXAMINED THE COMPLETE DETAILS OF PURCHASES SHOWN BY ASSESSEE. THE ASSESSEE HAS SHOWN INCOME FROM HIS PR OPRIETARY CONCERN, WHEREIN THE ASSESSEE IS DEALING IN FERROUS AND NON- FERROUS METALS. THE ASSESSEE HAS SHOWN TURNOVER OF RS. 2.56 CRORE AND D ECLARED GROSS PROFIT (GP) @ 5.09% WHICH IS HIGHER THAN THE PRECEDING ASS ESSMENT YEAR GP DECLARED OF 5.02%. THE ASSESSING OFFICER AFTER EXAM INING THE OTHER ISSUES ITA NO. 3117 MUM 2017-SHRI SHANTILAL G. JAIN 6 MADE CERTAIN DISALLOWANCES NO DISALLOWANCES ON ACCO UNT OF PURCHASES WAS MADE AS THE ASSESSING OFFICER WAS FULLY SATISFIED. THE ASSESSMENT WAS RE- OPENED ON THE BASIS OF THIRD PARTY INFORMATION. THE ASSESSING OFFICER DISALLOWED THE 100% OF THE PURCHASES. THE SALES OF ASSESSEE WERE NOT DISPUTED BY ASSESSING OFFICER. THE SALE IS NOT POSS IBLE IN ABSENCE OF PURCHASE; THE TOTAL TURNOVER SHOWN BY ASSESSEE AT RS. 2.56 CR ORE WAS DULY ACCEPTED BY ASSESSING OFFICER WHILE PASSING THE ASSESSMENT ORDE R UNDER SECTION 143(3) ON 17.10.2011. THE ASSESSING OFFICER IN RE-ASSESSMENT PROCEEDING DISALLOWED THE 100% OF THE PURCHASES I.E. RS. 2.29 CRORE. THE LD. AR OF THE ASSESSEE FURTHER SUBMITS THAT IT IS BEYOND THE IMAGINATION T HAT THE SALE IS POSSIBLE WITHOUT PURCHASE OF GOODS. THE LD. AR OF THE ASSESS EE FURTHER SUBMITS THAT THOUGH ALL DOCUMENTS WERE FURNISHED DURING THE ORIG INAL ASSESSMENT THAT IS WHY THE ASSESSING OFFICER WAS SATISFIED WITH THE EX PLANATION FURNISHED BY ASSESSEE. THE LD. AR OF THE ASSESSEE FURTHER SUBMIT S THAT ASSESSEE HAS FILED HIS AFFIDAVIT STATING THEREIN THAT HIS ENTIRE RECOR D OF THE FIRM FROM ASSESSMENT YEAR 2001-02 TO 2010-11 I.E. UPTO SEPTEMBER 2010 WA S DAMAGED IN RAINY WATER. THE ASSESSEE MADE A NON-COGNIZABLE REPORT WI TH THE CONCERNED POLICE STATION. THE ASSESSEE ALSO FILED CERTAIN PHOTOGRAPH AND WOULD SUBMIT THAT THE ASSESSEE FILED AFFIDAVIT BEFORE THE LD. CIT(A) ALON G WITH THE AFFIDAVIT AND ORIGINAL OF NON-COGNIZABLE REPORT FILED WITH THE PO LICE STATION. THE LD. AR FURTHER SUBMITS THAT A REASONABLE PERCENTAGE OF ALL EGED BOGUS PURCHASES MAY BE DISALLOWED TO AVOID THE POSSIBILITY OF REVENUE L EAKAGE, THOUGH THE ITA NO. 3117 MUM 2017-SHRI SHANTILAL G. JAIN 7 PURCHASES MADE BY ASSESSEE WERE GENUINE ONE. THE AS SESSING OFFICER MADE THE ADDITION ON THE BASIS OF THIRD PARTY INFORMATIO N AND WITHOUT GIVING ANY OPPORTUNITY TO CROSS-EXAMINE THE ALLEGED HAWALA DEA LERS. THE STATEMENT OF DEALER RECORDED BY SALES TAX DEPARTMENT, GOVERNMENT OF MAHARASHTRA WAS NOT PROVIDED. 5. ON THE OTHER HAND, THE LD. DR FOR THE REVENUE SUPPO RTED THE ORDERS OF AUTHORITIES BELOW. THE LD. DR FOR THE REVENUE ARGUE D THAT THE INVESTIGATION WING OF THE INCOME-TAX DEPARTMENT MADE FULL-FLEDGED ENQUIRY. THE PARTIES FROM WHOM THE ASSESSEE HAS SHOWN THE PURCHASES ARE BOGUS HAWALA DEALERS. THE HAWALA DEALERS ARE INDULGED IN ISSUING BOGUS BI LLS WITHOUT DELIVERY OF ANY MATERIAL OR GOODS. THE ASSESSEE OBTAINED ACCOMM ODATION BILLS ONLY IN ORDER TO INFLATE THE EXPENSES AND TO BRING DOWN THE PROFITABILITY IN ORDER TO AVOID THE TAX. THE LD. DR FOR THE REVENUE PRAYED FO R DISMISSAL OF THE APPEAL . 6. WE HAVE CONSIDERED THE RIVAL SUBMISSIONS OF THE PAR TIES AND HAVE GONE THROUGH THE ORDERS OF AUTHORITIES BELOW. GROUND NO. 1 & 2 RELATES TO RE- OPENING AND DENIAL OF NATURAL JUSTICE. WE HAVE NOTE D THAT THE LD. AR OF THE ASSESSEE HAS NOT MADE ANY SPECIFIC SUBMISSION EXCEP T SUBMITTING THAT IN THE ORIGINAL ASSESSMENT, THE PURCHASES WERE VERIFIED AN D ACCEPTED BY ASSESSING OFFICER. THEREFORE, IN OUR VIEW, THE LD. AR OF THE ASSESSEE HAS NOT CONTESTED THE GROUND NO. 1 & 2 OF THE APPEAL. THUS, THE GROUN D NO.1 & 2 OF THE APPEAL ARE DISMISSED AS NOT PRESSED. ITA NO. 3117 MUM 2017-SHRI SHANTILAL G. JAIN 8 7. GROUND NO.3 RELATES TO ADDITION OF RS. 2.29 CRORE ( 100% OF THE PURCHASES). WE HAVE NOTED THAT INITIALLY, THE ASSESSMENT WAS CO MPLETED UNDER SECTION 143(3) ON 17.10.2011. THE ASSESSING OFFICER ACCEPTE D THE GP DECLARED BY ASSESSEE AT 5.09%. IN PRECEDING ASSESSMENT YEAR, TH E ASSESSEE HAS DECLARED GP @ 5.02%. THE ASSESSEE IS DEALING IN FERROUS AND NON FERROUS STEEL. THE ASSESSMENT WAS RE-OPENED BY ASSESSING OFFICER ON TH E BASIS OF INFORMATION RECEIVED FROM DGIT (INVESTIGATION), MUMBAI ON THE I NFORMATION RECEIVED BY SALES TAX DEPARTMENT, GOVERNMENT OF MAHARASHTRA. TH E SALES TAX DEPARTMENT, GOVERNMENT OF MAHARASHTRA IDENTIFIED TH E DEALERS WHO ARE ALLEGEDLY INDULGED IN PROVIDING ACCOMMODATION ENTRI ES. THE NAME OF ASSESSEE ALSO APPEARED IN THE LIST OF BENEFICIARY W HO HAS SHOWN PURCHASES FROM THE PARTIES, WHO WERE DECLARED AS HAWALA DEALE RS BY SALES TAX DEPARTMENT, GOVERNMENT OF MAHARASHTRA. THE ASSESSEE HAS SHOWN AGGREGATE PURCHASES OF RS. 2.29 CRORE FROM FIVE SUCH PARTIES. DURING THE ASSESSMENT PROCEEDING, THE ASSESSING OFFICER ISSUED NOTICE TO THE PARTIES, OUT OF WHICH TWO PARTIES NAMELY M/S MANAV IMPEX AND M/S AAYUSHI ENTERPRISES REPLIED THAT THEY HAVE NOT DONE ANY BUSINESS WITH ASSESSEE. SO FAR AS REMAINING THREE PARTIES ARE CONCERNED, THE ASSESSING OFFICER NOTED THAT THE NOTICES SENT THROUGH REMAINING THREE PARTIES WERE RETURNED BACK AS UNSERVED BY THE POSTAL DEPARTMENT WITH THE REMARK NOT KNOWN, NO SUCH AD DRESSES OR LEFT. THE ASSESSING OFFICER BY TOOK HIS VIEW THAT ASSESSEE HA S NOT PROVED THE GENUINENESS OF PURCHASES DISALLOWED THE 100% O THE PURCHASES. THE ITA NO. 3117 MUM 2017-SHRI SHANTILAL G. JAIN 9 ASSESSING OFFICER CONCLUDED THAT THE SALES TAX DEPA RTMENT, GOVERNMENT OF MAHARASHTRA HAS CONDUCTED ENQUIRY WHICH CONCLUSIVEL Y PROVED THAT THE PARTIES WERE ENGAGED IN PROVIDING ACCOMMODATION ENT RIES. THE PARTIES WERE ISSUING BILLS WITHOUT DELIVERY OF ANY GOODS. INVEST IGATION WING OF INCOME TAX DEPARTMENT ALSO CONDUCTED THE ENQUIRIES AGAINST SUCH HAWALA PARTIES. THE ASSESSEE HAS ADOPTED MODUS OPERANDI TO REDUCE T HE TRUE PROFITS BY INFLATING HIS EXPENSES BY TAKING ACCOMMODATION ENTR IES FROM SUCH PARTIES. THE ASSESSING OFFICER FAILED TO PRODUCE THE BILLS F OR THEIR EXAMINATION, SO THE BOOKS OF ACCOUNT OF ASSESSEE TO THE EXTENT THAT PUR CHASE MADE FROM THESE PARTIES REMAINED UNVERIFIABLE. THE ASSESSEE NOT DIS CHARGES HIS ONUS TO SUBSTANTIATE THE GENUINENESS OF PARTIES AND DISALLO WED THE ENTIRE PURCHASES. 8. BEFORE THE LD. CIT(A), THE ASSESSEE STATED THAT HIS DOCUMENTS WERE DAMAGED/SPOILED IN RAINY WATER AND THAT HE HAS MADE AN FIR WITH POLICE STATION ON 12.01.2011. IT WAS FURTHER STATED THAT T HE ADDITION WAS MADE ONLY ON THE BASIS OF STATEMENT OF THIRD PARTY BEFORE SAL ES TAX DEPARTMENT/VAT AUTHORITIES. THE SALES TAX AUTHORITY HAS NOT RECEIV ED THE TAX FROM THOSE SUSPICIOUS DEALERS. THE ASSESSEE FURTHER STATED THA T MERE RETURN OF NOTICE UNDER SECTION 133(6) DOES NOT MEAN THAT THE PARTIES ARE BOGUS. THE ASSESSEE MAINTAINED THE STOCK REGISTER AND THAT SALE OF THE ASSESSED ARE NOT DISPUTED. THE ASSESSEE ALSO SPECIFICALLY STATED THAT ONLY PRO FIT ELEMENT EMBEDDED IN SUCH TYPE OF DISPUTED PURCHASES MAY BE SUBJECT TO T AX. THE LD. CIT(A) NOT ACCEPTED THE CONTENTION OF ASSESSEE AND CONFIRMED T HE ACTION OF ASSESSING ITA NO. 3117 MUM 2017-SHRI SHANTILAL G. JAIN 10 OFFICER. THE LD. CIT(A) CONCLUDED THAT OUT OF FIVE PARTIES, TWO PARTIES NAMELY M/S MANAV IMPEX AND AAYUSHI ENTERPRISES STATED THAT THEY HAVE NOT DONE ANY BUSINESS WITH THE ASSESSEE AND THAT THEIR FIRM ARE CLOSED DURING THE RELEVANT PERIOD. THE OTHER THREE PARTIES, NOTICES W ERE RETURNED BACK UNSERVED. THE LD. CIT(A) ON THE BASIS OF HIS OBSERVATION TOOK HIS VIEW THAT PURCHASES MADE FROM ALL FIVE PARTIES ARE BOGUS IN ABSENCE OF EVIDENCE EITHER BEFORE ASSESSING OFFICER OR BEFORE HIM. 9. WE HAVE NOTED THAT SALE OF ASSESSEE IS NOT DISPUTED BY THE ASSESSING OFFICER. IT IS SETTLED POSITION THAT NO SALE IS POSSIBLE IN ABSENCE OF PURCHASES. THE TOTAL TURNOVER OF ASSESSEE DURING THE YEAR WAS OF RS. 2.5 6 CRORE. THE ASSESSEE HAS SHOWN THE PURCHASE OF RS. 2.29 CRORE AND HAS DECLAR ED THE INCOME OF RS. 94,741/-. THE ASSESSEE HAS ALREADY DECLARED GP @ 5. 09%. THEREFORE, AFTER CONSIDERING THE FACTS AND THE NATURE OF BUSINESS OF THE ASSESSEE, PARTICULARLY, WHEN THE SALES OF THE IMPUGNED PURCHASES WERE NOT D ISPUTED, AND THAT THE ASSESSEE HAS ALREADY SHOWN GP OF 5.09%% ON SUCH PUR CHASES, WE ARE OF THE CONSIDERED OPINION THAT UNDER INCOME TAX ACT ONLY R EAL INCOME CAN BE TAXED BY THE REVENUE. EVEN IF THE TRANSACTION IS NOT VERI FIABLE, THE ONLY TAXABLE IS THE TAXABLE INCOME COMPONENT AND NOT THE ENTIRE TRA NSACTION. AND AFTER CONSIDERING THE FACTS OF THE CASE AND THE RIVAL CON TENTIONS OF THE PARTIES WE ARE OF THE OPINION THAT IN ORDER TO FULFILL THE GAP OF REVENUE LEAKAGE THE DISALLOWANCE OF REASONABLE PERCENTAGE OF SUCH PURCH ASES WOULD MEET THE END OF JUSTICE. HENCE, THE ADDITION IS RESTRICTED TO 12 .5% OF THE TOTAL IMPUGNED ITA NO. 3117 MUM 2017-SHRI SHANTILAL G. JAIN 11 (DISPUTED) PURCHASES. SIMILAR VIEW WAS TAKEN BY HON BLE BOMBAY HIGH COURT IN CIT VS HARIRAM BAMBANI (ITA NO. 313 OF 20 13 DATED 04.02.2015). IN THE RESULT THE GROUND NO.3 OF THE APPEAL IS PART LY ALLOWED.. 10. IN THE RESULT, APPEAL OF THE ASSESSEE IS PARTLY ALL OWED. ORDER PRONOUNCED IN THE OPEN COURT ON 11/06/2019. SD/- SD/- M. BALAGANESH, PAWAN SINGH ACCOUNTANT MEMBER JUDICIAL MEMBER MUMBAI, DATE: 11.06.2019 SK COPY OF THE ORDER FORWARDED TO : 1. ASSESSEE 2. RESPONDENT 3. THE CONCERNED CIT(A) 4. THE CONCERNED CIT 5. DR G BENCH, ITAT, MUMBAI 6. GUARD FILE BY ORDER, DY./ASST. REGISTRAR ITA T, MUMBAI