THE BENGAL MILL STORES SUPPLY CO., MUMBAI V. ITO 13(3)(4), MUMBAI

ITA 3425/MUM/2016

• Counselvise Citation: [2017] 127 COUNSELVISE.COM (IT) 9832 (ITAT-MUMBAI)
• Duration Of Justice: 1 year(s) 2 month(s) 9 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 26-07-2017
• Appeal Filed By: Assessee
• Order Result: Dismissed
• Bench Allotted: H
• Next Hearing Date: 17-05-2017
• Assessment Year: 2009-2010
• Appeal Filed On: 17-05-2016
• Result in Favour of: Revenue
• Court: TRIBUNAL
• Department Lawyers: M C OMI NINGSHEN
• Keywords: Bogus purchase; Rejection of books of accounts; Difference of opinion; Accommodation entries; Change of opinion; Borrowed satisfaction
• Section: 69C; 143(3); 148

Judgement Text

I T A N O . 3 4 2 5 / M U M / 2 0 1 6 P A G E | 1 IN THE INCOME TAX APPELLATE TRIBUNAL H BENCH, MUMBAI BEFORE SHRI R. C. SHARMA , AM AND SHRI RAVISH SOOD, JM ./ I.T.A. NO. 3425/MUM/2016 ( / ASSESSMENT YEAR: 2009 - 10 ) THE BENGAL MILL STORES SUPPLY C O. 205, MAGANLAL CHAMBERS, BABURAO BOBDE MARG, IRON MARKET, MUMBAI - 400009 / VS. ITO 13(3)(4) MUMBAI ./ ./ PAN/GIR NO. AAEFT7645Q ( / APPELLANT ) : ( / RESPONDENT ) / APPELLANT BY : SHRI BHUPENDRA SHAH, A.R. / RESPONDENT BY : SHRI M.C. OMI N INGSHEN, D.R. / DATE OF HEARING : 17/05 /2017 / DATE OF PRONOUNCEMENT : 26 /07/2017 / O R D E R PER RAVISH SOOD, JUDICIAL MEMBER THE PRESENT APPEAL FILED BY THE ASSESSEE IS DIRECTED AGAINST THE ORDER PASSED BY THE CIT(A) - 28 , MUMBAI, DATED 15.02.2016 , WHICH IN ITSELF ARISES FROM THE ORDER PASSED BY THE A.O U/S 143(3) R.W.S 147 OF THE INCOME - TAX ACT 1961 (FOR SHORT ACT) , DATED 12.11.2014 . THE I T A N O . 3 4 2 5 / M U M / 2 0 1 6 P A G E | 2 ASSESSEE ASSAILING THE ORDER OF THE CIT(A) HAD RAISED THE FOLLOWING GROUNDS OF APPEAL BEFORE US: - 1 . IN THE FACTS AND THE CIRCUMSTANCES OF THE CASE AND IN LAW, THE LEARNED A.O. ERRED IN REOPENING THE ASSESSMENT U/S 148 MERELY ON THE BASIS OF CHANGE OF OPINION AND BORROWED SATISFACTION, PRESUMPTION AND SURMISES AND AFTER A GAP OF 4 YEARS AND THE COMMISSION ER OF INCOME TAX(A) DISMISSED THE SAID GROUND RAISED BY THE APPELLANT. 2. IN THE FACTS AND THE CIRCUMSTANCES OF THE CASE AND IN LAW, THE LEARNED A.O. ERRED IN DISALLOWING R S. 26,47,645/ - OUT OF TOTAL PURCHASES OF RS. 2,11,81,156/ - BY WAY OF ALLEGED BOGUS PURCHASES ONLY ON THE BASIS OF THE INFORMATION ON THE WEBSITE WWW.MAHAVAT.GOV.IN ABOUT 7 SUSPICIOUS DEALERS WHOSE COPY OF STATEMENT RECORDED WERE NOT FURNISHED TO THE APPELLANT AND THE COMMISSIONER OF INCOME TAX(A) ERRED IN CONFIRMING RS. 10,59,058/ - OUT OF THE SAME, BEING ESTIMATED PROFIT AT 5% OF TOTAL PURCHASES CALCULATED ON AN AD HOC BASIS AND EVEN THOUGH THE APPELLANT'S BOOKS WERE NOT REJECTED. 3. THE ASSESSING OFFICER WRONGLY CHARGED INTEREST U/S 234 AND INITIATED PENALTY U/S 271(1)(C) . [B] RELIEF PRAYED T HE APPELLANT THEREFORE PRAYS AS FOLLOWS, 1. TO QUASH THE ORDER OF REASSESSMENT PASSED U/S 148. 2. TO DELETE THE DISALLOWANCE OF RS. 10,59, 058/ - OUT OF THE SAME, BEING ESTIMATED PROFIT CONFIRMED BY THE COMMISSIONER OF INCOME TAX(A) AT 5% OF TOTAL PURCHASES CALCULATED ON AN AD HOC BASIS. 3. TO DELETE THE INTEREST CHARGED U/S 234 AND INITIATION OF PENALTY U/S 271(1)(C) [C] GENERAL: THE APPELLANT RESERVE RI GHTS TO ADD ALTER OR DELETE ANY PORTION OF THIS APPEAL BEFORE ITS CONCLUSION. THIS APPEAL IS FILED IN TIME AND MAY PLEASE BE ALLOWED IN FULL. A DETAILED PAPER BOOK ALONG WITH CASE LAWS SUBMITTED AT THE TIME OF HEARING. 2. BRIEFLY STATED, THE FACTS OF THE CASE ARE THAT THE ASSESSEE FIRM WHICH IS ENGAGED IN THE BUSINESS OF TRADING IN PIPES , HARDWARE AND I T A N O . 3 4 2 5 / M U M / 2 0 1 6 P A G E | 3 ENGINEERING GOODS HAD FILED ITS RETURN OF INCOME FOR A.Y. 2009 - 10 ON 30.09.2009 , DECLARING TOTAL INCOME AT RS. 13,30,930/ - . THE CASE OF THE ASSESSEE WAS REOPENED AFTER RECORDING THE REASONS TO BELIEVE AND A N OTICE U/S. 148, DATED 27.01.2014 WAS ISSUED AND SERVED UPON THE ASSESSEE. 3. THAT INFORMATION WAS RECEIVED BY THE A.O FROM THE S ALE S TA X DEPARTMENT THAT THE ASSESSEE FIRM DURING THE YEAR UNDER CONSIDERATION HAD TAKEN ACCOMMODATION ENTRIES OF BOGUS PURCHASES FROM THE FOLLOWING CONCERNS : - SR.NO. PARTICULAR S 1 SIDDHI VINAYAK STEEL 2 LEO IMPEX 3 NATIONAL TRADING CO. 4 CHANCHAL TUBE CORPORATION 5 SHRISTI ENTERPRISES 6 SURAJ TUBE CORPORATION 7 ASIAN STEEL THE A.O WAS INFORMED BY THE S ALE S TAX DEPARTMENT THAT THE AFOREMENTIONED CONCERNS WERE NOT DOING ANY GENUINE BUSINESS OF PURCHASE AND SALE O F GOODS AND WERE MERELY PROVIDING BOGUS BILLS. THE A.O THUS ACTING UPON THE AFORESAID INFORMATION , THEREIN CALLED UPON THE ASSESSEE FIRM TO SHOW CAUSE AS TO WHY THE PURCHASE TRANSACTIONS MADE FROM THE AFOREMENTIONED CONCERNS MAY NOT BE TREATED AS BOGUS , AND ACCORDINGLY DISALLOWED . THE ASSESSEE SUBMITTED BEFORE THE A.O THAT IT HAD CARRIED OUT GENUINE PUR CHASE TRANSACTIONS WITH THE AFORESAID PARTIES AND IN SUPPORT THEREOF PLACED ON RECORD THE LEDGER COPIES OF THE PURCHASES , WHICH THEREIN REVEALED THAT THE PAYMENT OF I T A N O . 3 4 2 5 / M U M / 2 0 1 6 P A G E | 4 THE PURCHASE CONSIDERATION TO THE SAID RESPECTIVE PARTIES HAD BEEN MADE THROUGH CHEQUES . TH E A.O CALLED UPON THE ASSESSEE TO PRODUCE THE RESPECTIVE PARTIES FOR EXAMINATION , AS WELL AS PLACE ON RECORD DOCUMENTARY EVIDENCE IN ORDER TO SUBSTANTIATE THE GENUINENESS AND VERACITY OF THE PURCHASE TRANSACTIONS UNDER CONSIDERATION. THE ASSESSEE HOWEVER N EITHER PRODUCED THE RESPECTIVE PARTIES FOR EXAMINATION BEFORE THE A.O, NOR PLACED ON RECORD ANY SUPPORTING DOCUMENT S , VIZ. DELIVERY CHALLANS, LORRY RECEIPTS, TRANSPORTATION DETAILS ETC., WHICH COULD IRREBUTABLY EVIDENCE THE GENUINENESS OF THE PURCHASE TRA N SACTIONS AS WERE CLAIMED BY THE ASSESSEE TO HAVE BEEN MADE FROM THE AFOREMENTIONED PARTIES. THE A.O TAKING NOTE OF THE FACT THAT THE ASSESSEE EXCEPT FOR PLACING ON RECORD COPIES OF THE LEDGER ACCOUNTS AND STRESSING ON THE FACT THAT THE PAYMENT S TO THE AFOREMENTIONED PARTIES WERE MADE VIDE CHEQUES, HAD HOWEVER FAILED TO LEAD ANY EVIDENCE WHICH COULD PROVE THE VERACITY OF THE PURCHASE TRANSACTIONS WAS THUS DISSUADED TO SUBSCRIBE TO THE CLAIM OF THE ASSESSEE THAT IT HAD MADE GENUINE PURCHASES FROM THE AFOR EMENTIONED PARTIES . THE A.O THUS IN THE BACKDROP OF THE AFORESAID FACTUAL MATRIX, THEREIN TAKING COGNIZANCE OF THE FACT THAT THOUGH THE AFOREMENTIONED PARTIES HAD DULY ADMITTED BEFORE THE S ALE S TAX DEPARTMENT THAT THEY WERE INVOLVED IN PROVIDING ACCOMMODAT ION ENTRIES AND HAD NOT MADE ANY GENUINE PURCHASE OR SALE TRANSACTIONS , HOWEVER AS THE PURCHASE TRANSACTIONS UNDER CONSIDERATION STOOD DULY RECORDED IN THE BOOKS OF ACCOUNTS OF THE ASSESSEE , THEREFORE , IT COULD SAFELY BE CONCLUDED THAT THE ASSESSEE HAD MADE THE PURCHASES OF THE AFORESAID GOODS , THOUGH NOT FROM THE ABOVEMENTIONED PARTIES, BUT FROM THE OPEN MARKET. THE A.O DELIBERATING ON THE TRADING RESULTS OF THE ASSESSEE FOR THE YEAR UNDER CONSIDERATION AS IN COMPARISON TO THOSE OF THE PRECEDING YEARS , THEREIN CONCLUDED THAT THE ASSESSEE WAS ONLY A BENEFICIARY OF THE ACCOMMODATION BILLS WHICH WERE ISSUED BY THE AFOREMENTIONED PARTIES I T A N O . 3 4 2 5 / M U M / 2 0 1 6 P A G E | 5 AND NO GENUINE PURCHASES WERE MADE FROM THE SAID RESPECTIVE PARTIES. THE A.O BEING OF THE VIEW THAT AS THE SALES COULD NOT HAVE BEEN MADE BY THE ASSESSEE WITHOUT CORRESPONDING PURCHASES , THEREFORE CONCLUDED THAT THE ASSESSEE AFTER MAKING THE PURCHASES OF THE GOODS FROM THE OPEN/ GREY MARKET , HAD PROCURE D THE BILLS FROM THE AFOREMENTIONED PARTIES IN ORDER TO FACILITATE ROUTING OF THE PURCHASE S AND SALES TRANSACTIONS THROUGH ITS BOOKS OF ACCOUNTS. THE A.O THUS HOLDING A CONVICTION THAT THE ASSESSEE BY PURCHASING THE GOODS FROM THE OPEN/ GREY MARKET MUST HAVE BEEN BENEFITED BY PROCURING THE SAME AT A LOW ER PR ICE , THEREFORE HELD THAT THE PURCHASE RATE AS STOOD MENTIONED IN THE BOGUS INVOICES ISSUED BY THE AFOREMENTIONED PARTIES COULD NOT BE ACCEPTED. THE A.O THUS IN THE BACKDROP OF HIS AFORESAID OBSERVATIONS REJECTED THE BOOKS OF ACCOUNTS OF THE ASSESSEE UNDER SEC. 145(3) OF THE ACT . 4. THE A.O ON THE BASIS OF THE AFORESAID FACTS , THUS HOLDING A CONVICTION THAT AS THE ASSESSEE HAD P URCHAS ED THE GOODS FROM THE OPEN/ GREY MARKET , THEREFORE, IT COULD SAFELY BE CONCLUDED THAT THE PURCHASES BOOKED BY THE ASSESSEE ON THE BASIS OF THE BOGUS BILLS PROCURED FROM THE AFOREMENTIONED PARTIES W ERE INFLATED . THE A.O BEING OF THE VIEW THAT THOUGH IT WAS NOT POSSIBLE TO CORRECTLY ASSESS THE EXACT MAGNITUDE OF THE BENEFIT IN THE HANDS OF THE ASSESSEE, THEREFORE, FOLLOWING THE JUDGMENTS OF THE HONBLE HIGH COURT OF GUJARAT IN THE CASE OF CIT - 1 VS. SIMIT P. SHETH (2013) 356 ITR 451 AND CIT VS. M/S. BHOLANATH POLY FAB P. LTD. (2013) 355 ITR 290, MADE AN ADDITION @ 12.5% OF THE AGGREGATE VALUE OF THE PURCHASES OF RS.2 ,11,81,156/ - CLAIMED BY THE ASSESSEE TO HAVE BEEN FROM THE AFOREMENTIONED PARTIES, THEREIN LEADING TO A CONSEQUENTIAL ADDITION OF RS.26,47,645/ - , B Y OBSERVING AS UNDER: - A. THAT THE PHYSICAL DELIVERY OF THE GOODS WERE OBTAINED FROM THE PARTY HOSED IN GREY MA RKET AND TO GIVE IT COLOUR OF BEING A I T A N O . 3 4 2 5 / M U M / 2 0 1 6 P A G E | 6 GENUINE PURCHASE, THE BOGUS BILL/ACCOMMODATION BILL WAS OBTAINED FROM THE SUPPLIER WHO DECLARED HIMSELF AS HAWALA DEALER UNDER MVAT ACT, 2 002. B. THOUGH THE PURCHASES ALLEGED AS GE NUINE AND SHOWN TO HAVE BEEN MAD E BY MAKING PAYMENT THEREOF BY AN ACCOUNT PAYEE CHEQUES, THE CHEQUES HAVE BEEN DEPOSITED IN BANK ACCOUNTS OSTENSIBLY IN THE NAME OF THE APPARENT SELLERS. [[ C. THERE IS INFORMATION AVAILABLE IN PUBLIC DOMAIN FROM WHICH, THE ASSESSEE WAS WELL AWARE THAT HE WAS ENTERING INTO COLORABLE TRANSACTIONS WITH THE ALLEGED SUPPLIERS, AS THERE ALLEGED SUPPLIERS WERE INDULGING IN SUCH TRANSACTIONS RIGHT FROM THEIR INCEPTION. D. THE ASSESSEE COULD NOT PRODUCE ANY DELIVERY CHALLAN TO PROVE THAT THE DELIVERY OF THESE GOODS HA VE BEEN ACTUALLY RECEIVED BY THEM FROM THESE ALLEGED SUPPLIERS. E. ALTHOUGH NO DEFECTS WERE POINTED OUT BY THE TAX AUDITORS, THIS IS PURELY BECAUSE OF THE COMBINED EFFECT OF THE TWO FACTS, NAMELY, ON ONE HAND, AUDIT WAS CARRIED OUT ON THE BASIS OF EXPLANATIONS AS FURNISHED BY THE ASSESSEE VIDE HIS REPORTING IN FORM NO. 3CD AND ON THE OTHER HAND, TAX AUDIT IS ALWAYS CARRI ED OUT ON A TEST CHECK BASIS AS IT WILL BE EXTREMELY DIFFICULT IF NOT IMPOSSIBLE TO CARRY OUT 100% CHECKING FOR ANY LAY M A N GIVING THE VARIOUS RESTRICTIONS. THUS THERE IS ALWAYS POSSIBILITY OF ANY DEFECTS GETTING MISSED OUT BY THE TAX AUDITOR. F. THE ASSESSEE WAS ALSO ASKED TO PRODUCT THE ABOVE SUPPLIERS FOR VERIFICATION BUT THE ASSESSEE FAILED TO PRODUCE THEM BEFORE THE UNDERSIGNED. WHEN EXPENDITURE (PURCHASE) IS CLAIMED TO HAVE BEEN INCURRED, THE INITIAL BURDEN WILL BE ON THE ASSESSEE TO PROVE THAT THE PURCHASES WERE GENUINE. RELIANCE IS PLACED ON JUDGEMENT OF THE GUJARAT HIGH COURT REPORTED IN CIT VS CHAN DRA VILAS HOTEL (1987) 164 I TR 1 02 (GUI). THIS ONUS HAS NOT BEEN DISCHARGED BY THE ASSESSEE. G. THE PURCHASES OF THE ASSESSEE, PERSE, WAS NOT THE 'ISSUE' HERE AND HENCE THESE ALLEGED PURCHASES WERE NOT BEING TREATED AS BOGUS UNTIL SPECIFIC INFORMATION WAS RECEIVED FROM SALES TAX DEPART MENT. THE SALES TAX DEPARTMENT CAME DOWN HARD AN D THE PERNICIOUS PRACTICES INDULGED IN BY THESE UNSCRUPULOUS I T A N O . 3 4 2 5 / M U M / 2 0 1 6 P A G E | 7 TRADERS FIGURING IN THE LIST OF SUSPICIOUS DEALERS AND HENCE THEY DECLARED THEMSELVES TO BE A 'HAWALA DEALER' UNDER MVAT ACT, 2002. IT IS EVIDENT T HAT THE ASSESSEE HAS NOT PURCHASED THE GOODS FROM THESE ALLEGED SUPPLIERS. IT IS EQUALLY ALSO TRUE THAT THE GOODS HAVE, IN FACT, SOMEHOW ENTERED IN THE ASSESSEE'S REGULAR B USINESS PREMISES. HOWEVER, THE A SSESSEE HAS BEEN UNABLE TO GIVE ANY CONVINCING OR COGENT EXPLANATION, AS TO HOW, THESE GOODS HAPPENED TO COME IN THEIR POSSESSION. THE ASSESSEE HAS THUS INCURRED EXPENDITURE ON SUCH PURCHASES WHICH HE HAS F A ILED T O FULLY EXPLAIN WITH DOCUMENTARY EVIDENCES. 5. THE ASSESSEE BEING AGGRIEVED WITH THE ORDER PASSED BY THE A.O , CARRIED THE MATTER IN APPEAL BEFORE THE CIT(A) . THE CIT(A) AFTER DELIBERATING ON THE CONTENTIONS OF THE ASSESSEE IN THE BACKDROP OF THE FACTS OF THE CASE, THEREIN CONCLUDED THAT ON A CONSPECTUS OF THE FACTS EMERGING FROM THE RECORDS, THE ADDITION IN THE HANDS OF THE ASSESSEE WAS IN ALL FAIRNESS LIABLE TO BE MADE @ 5% OF THE BOGUS PURCHASES. THE CIT(A) THUS ON THE BASIS OF HIS AFORESAID OBSERVATIONS RESTRICTED THE ADDITION IN THE HANDS OF THE ASSESSEE AT RS.10,59,058/. 6. THE ASSESSEE BEING AGGRIEVED WITH THE ORDER OF THE CIT(A) HAD CARRIED THE MATTER IN APPEAL BEFORE US. THAT DURING THE COURSE OF HEARING OF THE APPEAL IT WAS SUBMITTED BY THE LD. AUTHORISED REPRESENTATIVE (FOR SHORT A.R ) FOR THE ASSESSEE THAT THE ASSESSEE FIRM W HICH WAS ENGAGED IN THE BUSINESS OF TRADING IN PIPES, HARDWARE AND ENGINEERIN G GOODS , HAD MADE GENUINE PURCHASE FROM THE AFOREMENTIONED PARTIES . THE LD. A.R SUBMITTED THAT THE GENUINENESS OF THE AFORESAID PURCHASE TRANSACTIONS IN ITSELF STOOD EVIDENCED FROM THE FACT THAT THE PAYMENT S TOWARDS THE PURCHASE CONSIDERATION HAD BEEN MADE TO THE RESPECTIVE PARTIES VIDE CHEQUES . IT WAS FURTHER SUBMITTED BY THE LD. A.R. THAT AS IT WAS NOT THE CASE OF THE DEPARTMENT THAT THE PURCHASE CONSIDERATION PAID TO THE AFOREMENTIONED PARTIES HAD FOUND ITS WAY BACK TO THE POCKET OF THE ASSESSEE, THEREFORE , THERE WAS NO REASON FOR DRAWING OF ADVERSE INFERENCES AS REGARDS THE GENUINE NESS OF I T A N O . 3 4 2 5 / M U M / 2 0 1 6 P A G E | 8 THE PURCHASE TRANSACTION S. THE LD. A.R. RELYING ON THE ORDER OF THE INCOME TAX APPELLATE TRIBUNAL, B BEN CH, MUMBAI , PASSED IN THE CASE OF ACIT - 25(2), MUMBAI VS. SHRI MAHESH K. SHAH (ITA NO. 5194/MUM/2014, DATED 31.01.2017) ( PAGE 85 TO 95 OF APB ), THEREIN SUBMITTED THAT NOW WHEN THE ASSESSEE HAD PLACED ON RECORD DOCUMENTARY EVIDENCE TO ESTABLISH THE GENUINE NESS OF THE AFORESAID PURCHASE TRANSACTIONS AND THE PAYMENTS TOWARDS THE PURCHASE CONSIDERATION HAD BEEN MADE THROUGH PROPER BANKING CHANNELS, THEREFORE , NO ADDITION AS REGARDS ANY PART OF THE AFORESAID PURCHASES W AS CALLED FOR IN THE HANDS OF THE ASSESSEE . IT WAS THUS AVERRED BY THE LD. A.R THAT THE A DDITION SUSTAIN ED BY THE CIT(A) TO THE EXTENT OF RS.10,59,058/ - WAS LIABLE TO BE VACATED . THE LD. A.R. FURTHER RELIED ON THE JUDGMENT OF THE HONBLE HIGH COURT OF BOMBAY IN THE CASE OF CIT - 13, VS. ASHISH INTE RNATIONAL (ITA NO. 4299 OF 2009) , DATED 22.02.2011, IN ORDER TO DRIVE HOME HIS CONTENTION THAT NOW WHEN NO OPPORTUNITY HAD BEEN AFFORDED TO THE ASSESSEE TO CROSS EXAMINE THE AFOREMENTIONED SUPPLIER PARTIES, THEREFORE , THE ADVERSE INFERENCES SUMMARILY DRAWN BY THE LOWER AUTHORITIES BY ACTING ON THE STATEMENTS OF THE SAID RESPECTIVE PARTIES, ON THE SAID COUNT ITSELF WERE LIABLE TO BE VACATED. THE LD. A.R FURTHER TAKING SUPPORT OF THE JUDGMENT OF THE HONBLE HIGH COURT OF BOMBAY IN THE CASE OF NIKUNJ EXIMP ENTERPRISES PVT. LTD. (2015) 372 ITR 619 (BOM) , THEREIN AVERRED THAT THE ADDITION OF R S . 10,59,058/ - SUSTAINED BY THE CIT(A) ON AN ESTIMATE BASIS COULD NOT BE SUSTAINED. PER CONTRA, IT WAS SUBMITTED BY THE LD. DEPARTMENT AL REPRESENTATIVE (FOR SHORT D.R ) THAT UNLIKE THE FACTS INVOLVED IN THE AFOREMENTIONED CASE LAWS RELIED UPON BY THE ASSESSEE WHEREIN ADDITIONS HAD BEEN MADE U/S. 69C , NO SUCH ADDITION HAD BEEN MADE IN THE HANDS OF THE ASSESSEE BY INVOKING THE AFORESAID S TATUTORY PROVISION. IT WAS SUBMITTED BY THE LD. D.R. THAT AS THE ASSESSEE HAD MERELY TAKEN ACCOMMODATION ENTRIES FROM THE I T A N O . 3 4 2 5 / M U M / 2 0 1 6 P A G E | 9 AFOREMENTIONED PARTIES AND NOT CARRIED OUT ANY GENUINE PURCHASE FROM THEM, THEREFORE , THE A.O KEEPING IN VIEW THE FACT THAT THE ASSESS EE HAD MADE THE PURCHASES FROM THE OPEN/ GREY MARKET HAD THUS FAIRLY MADE AN ADDITION TO THE EXTENT OF 12.5% IN RESPECT OF THE AGGREGATE VALUE OF THE PURCHASE S UNDER CONSIDERATION . IT WAS SUBMITTED BY THE LD. D.R. THAT THE CIT(A) HAD ALREADY TAKEN A LIBERAL VIEW AND REDUCED THE ADDITION TO 5% OF THE VALUE OF THE PURCHASES UNDER CONSIDERATION AND THEREIN SUSTAINED THE ADDITION TO THE EXTENT OF RS.10,59,058/ - . IT WAS SUBMITTED BY THE LD. D.R THAT THE APPEAL OF THE ASSESSEE BEING DEVOID OF ANY MERIT WAS THUS LIABLE TO BE DISMISSED. 7. WE HAVE HEARD THE A UTHORIZED REPRESENTATIVES FOR BOTH THE PARTIES, PERUSED THE ORDERS OF THE LOWER AUTHORITIES AND THE MATERIAL PRODUCED BEFORE US. WE HAVE GIVEN A THOUGHTFUL CONSIDERATION TO THE FACTS OF THE CASE AND ARE OF THE CONSIDERED VIEW THAT IT COULD SAFELY BE CONCLUDED THAT THE ASSESSEE WHO HAD CARRIED OUT PURCHASE OF GOODS FROM THE OPEN/ GREY MARKET , HAD THEREAFTER MERELY OBTAINED THE BILLS FROM THE AFOREMENTIONED PARTIES . WE FIND THAT THE AFOREMENTIONED PARTIES HA D CONCE DED BEFORE THE S ALES TAX AUTHORITIES THAT THEY WERE INVOLVED IN THE BUSINESS OF PROVIDING ACCOMMODATION ENTRIES , AND WERE NOT CARRYING OUT ANY GENUINE PURCHASE / SALE TRANSACTIONS . WE FURTHER FIND THAT THE A.O AFTER THOROUGHLY PERUSING THE RECORDS HAD FAIRLY CONCLUDED THAT THE ASSESSEE AFTER CARRYING OUT PURCHASES OF THE AFORESAID GOODS FROM THE OPEN/GREY MARKET , HAD THERE AFTER IN ORDER TO FACILITATE ROUTING OF THE SAID PURCHASE TRANSACTIONS THROUGH ITS BOOKS OF ACCOUNTS OBTAINED BOGUS BILLS FROM THE AFOREMENTIONED PARTIES. T HE A.O AFTER DULY APPRECIATING THAT THE ASSESSEE WHO HAD PURCHASE D THE GOODS FROM THE OPEN/GREY MARKET MUST HAVE BEEN BENEFITTED BY PROCURING SUCH GOODS AT A LOWER RATE, AS AGAINST THE INFLATED BOGUS BILLS PROCURED F ROM THE AFOREMENTIONED PARTIES, THEREFORE, ESTIMATED SUCH MARGIN IN THE HANDS OF THE ASSESSEE AT THE RATE OF 12.5% OF THE I T A N O . 3 4 2 5 / M U M / 2 0 1 6 P A G E | 10 AGGREGATE VALUE OF SUCH BOGUS PURCHASES . WE FIND THAT THE CIT(A) ON A FURTHER APPEAL BY THE ASSESSEE HAD THEREIN ADOPTED A LIBERAL APP ROACH AND RESTRICTED THE ADDITION TO 5% OF THE AGGREGATE VALUE OF THE BOGUS PURCHASES MADE BY THE ASSESSEE FROM THE AFOREMENTIONED PARTIES AND SUSTAINED THE ADDITION TO THE EXTENT OF RS.10,59,058/ - . 8. WE HAVE GIVEN A THOUGHTFUL CONSIDERATION TO THE FACTS OF THE CASE AND ARE OF THE CONSIDERED VIEW THAT AS IT SO EMERGES FROM THE RECORDS, IT REMAINS AS A MATTER OF FACT THAT THE ASSESSEE EXCEPT FOR TAKING SUPPORT OF THE FACT THAT THE PAYMENT S TO THE AFOREMENTIONED PARTIES HAD BEEN MADE VIDE CHEQUES HOWEVER HAD MISERABLY FAILED TO PROVE THE GENUINE NESS OF THE AFORESAID PURCHASE TRANSACTION S BY PLACING ON RECORD ANY MATERIAL WHICH COULD GO TO IRREBUTABLY SUBSTANTIATE THE SAME . WE THUS ARE OF THE CONSIDERED VIEW THAT THE ASSESSEE HAD ABSOLUTELY FAILED TO DISCHARGE THE ONUS AS REGARDS THE VERACITY OF THE PURCHASE TRANSACTIONS UNDER CONSIDERATION . WE FURTHER FIND THAT THE RELIANCE PLACED BY THE ASSESSEE ON THE JUDGMENT OF THE HONBLE HIGH COURT OF BOMBAY IN THE CASE OF ASHISH INTERNATIONAL (SUPRA) IS DISTINGUISHABLE ON FACTS , AS IN THE CASE OF THE PRESENT ASSESSEE, THE A.O HAD NOT MERELY DRAWN ADVERSE INFERENCES AS REGARDS THE GENUINENESS OF THE PURCHASE TRANSACTIONS BY ACTING UPON THE STATEMENT S OF AFOREMENTIONED PARTIES . WE FIND THAT AS THE ASSESSEE HAD MISERABLY F AILED TO SUBSTANTIATE THE GENUINENESS OF THE PURCHASE TRANSACTIONS BY P LAC ING ON RECORD THE REQUISITE DOCUMENTARY EVIDENCE, THEREFORE , THE A.O AFTER DULY APPRECIATING THAT THE RESPECTIVE PURCHASE AND SALE TRANSACTIONS STOOD RECORDED IN THE BOOKS OF ACCOUNTS OF THE ASSESSEE, HAD THEREIN IN THE BACKDROP OF THE CIRCUMSTANCES ATTENDING THERETO, RIGHTLY CONCLUDED THAT THE ASSESSEE HAD MADE THE PURCH ASES UNDER CONSIDERATION FROM THE OPEN/GREY MARKET. WE FURTHER FIND THAT THE RELIANCE PLACED BY THE LD. A.R ON THE JUDGMENT OF THE HONBLE HIGH COURT OF BOMBAY IN THE CASE OF NIKUNJ EXIMP ENTERPRISES PVT. LTD. I T A N O . 3 4 2 5 / M U M / 2 0 1 6 P A G E | 11 (SUPRA) IS ALSO DISTINGUISHABLE ON FACTS. THAT UNLIKE THE FACTS INVOLVED IN THE CASE BEFORE THE HONBLE HIGH COURT, IN THE CASE OF THE PRESENT ASSESSEE THE A.O HAD REJECTED THE BOOKS OF ACCOUNTS OF THE ASSESSEE. STILL FURTHER, UNLIKE THE CASE OF THE PRESENT ASSESSEE, IN THE CASE BEFORE THE HONBLE H IGH COURT, THE CONFIRMATION LETTERS OF THE SUPPLIERS AND THE COPIES OF INVOICES FOR PURCHASES WERE PL ACED ON RECORD. WE ARE OF THE CONSIDERED VIEW THAT AS THE ASSESSEE BEFORE US HAD MISERABLY FAILED TO SUBSTANTIATE THE GENUINENESS OF THE PURCHASE TRANSACTI ONS, THEREFORE RELIANCE PLACED BY THE LD. A.R ON THE JUDGMENT OF T H E HONBLE HIGH COURT , WHICH AS OBSERVED BY US IS DISTINGUISHABLE ON FACTS, WOULD NOT COME TO THE RESCUE OF THE ASSESSEE. THAT THE RELIANCE PLACED BY THE LD. A.R ON THE ORDER PASSED BY THE I NCOME TAX APPELLATE TRIBUNAL, B BENCH, MUMBAI PASSED IN THE CASE OF ACIT - 25(2), MUMBAI VS. SHRI MAHESH K. SHAH (ITA NO. 5194/MUM/2014, DATED 31.01.2017) IS ALSO FOUND TO BE DISTINGUISHABLE ON FACTS , AS WE FIND THAT UNLIKE THE CASE OF THE PRESENT ASSESSEE, IN THE SAID CASE ADDITION WAS MADE U/S. 69C OF THE ACT . WE THUS IN THE TOTALITY OF THE FACTS INVOLVED IN THE CASE OF THE PRESENT ASSESSEE ARE THUS OF THE CONSIDERED VIEW THAT THE CIT(A) BY RESTRICTING THE ADDITION TO THE EXTENT OF 5% OF THE AGG REGATE VALUE OF THE BOGUS PURCHASES, HAD THUS TAKEN A LIBERAL VIEW AND R ESTRICTED THE ADDITION TO THE EXTENT OF RS.10,59,058/ - WE THUS FINDING NO INFIRMITY IN THE ORDER OF THE CIT(A) , THEREFORE UPHOLD THE SAME. 9. THE APPEAL OF THE ASSESSEE IS DISMISSED. ORDER PRONOUNCED IN THE OPEN COURT ON 26 .07.2017 SD/ - SD/ - ( R.C.SHARMA ) ( RAVISH SOOD ) ACCOUNTANT MEMBER JUDICIAL MEMBER MUMBAI ; 26 .0 7 .2017 I T A N O . 3 4 2 5 / M U M / 2 0 1 6 P A G E | 12 / COPY OF THE ORDER FORWARDED TO : 1. / THE APPELLANT 2. / THE RESPONDENT. 3. ( ) / THE CIT(A) - 4. / CIT 5. , , / DR, ITAT, MUMBAI 6. / GUARD FILE . //TRUE COPY// / BY ORDER, / (DY./ASSTT. REGISTRAR) , / ITAT, MUMBAI