SAMDANI STEEL P. LTD, MUMBAI V. DCIT RG 5(3), MUMBAI

ITA 3636/MUM/2014

• Counselvise Citation: [2018] 118 COUNSELVISE.COM (IT) 9550 (ITAT-MUMBAI)
• Duration Of Justice: 4 year(s) 6 month(s) 26 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 18-12-2018
• Appeal Filed By: Assessee
• Order Result: Partly Allowed
• Bench Allotted: E
• Assessment Year: 2010-2011
• Appeal Filed On: 22-05-2014
• Result in Favour of: Partly Allowed
• Court: TRIBUNAL
• Department Lawyers: RAM TIWARI; DR SANTESHWAR SWAMI
• Assessee Lawyers: RISHABH MEHTA
• Keywords: Bogus purchase; Unexplained expenditure; Principle of natural justice; Opportunity of cross examination
• Section: 69C; 40A(3); 143(3); 133(6)

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL E , BENCH MUMBAI BEFORE SHRI R.C.SHARMA, AM & SHRI AMARJIT SINGH , JM ITA NO. 3636 / MUM/20 1 4 ( ASSESSMENT YEAR : 2010 - 11 ) M/S. SAMDANI STEEL PVT. LTD., R.NO.16, HABIB BUILDING, 65/73, C.P.TANK ROAD, MUMBAI 400 004 VS. DCIT RG 5(3), AAYAKAR BHAVAN, 2 ND FLOOR, MUMBAI 400 020 PAN/GIR NO. AAKCS1663A APPELLANT ) .. RESPONDENT ) ASSESSEE BY SHRI RISHABH MEHTA REVENUE BY DR. SANTESHWAR SWAMI & SHRI RAM TIWARI DATE OF HEARING 16/11/2 018 DATE OF PRONOUNCEME NT 18 / 12 /201 8 / O R D E R PER R.C.SHARMA (A.M) : THIS IS AN APPEAL FILED BY ASSESSEE AGAINST THE ORDER OF CIT(A) - 9, MUMBAI DATED 11/02/2017 FOR THE A.Y.2010 - 11 IN THE MATTER OF ORDER PASSED U/S.143(3) OF THE IT ACT. 2. THE FOLLOWING GROUNDS HAVE BEEN TAKEN BY THE ASSESSEE: - 1. THE ID. CIT(A) ERRED IN FACTS AND LAW IN CONFIRMING THE ORDER PASSED BY THE ASSESSING OFFICER ('AO') U/S. 143(3) WITHOUT APPRECIATING THAT THE SAME IS AGAINST THE PRINCIPLE OF NATURAL JUS TICE, INVALID AND BAD IN LAW. 2. DISALLOWANCE OF PURCHASES OF RS. 3,81,58,739/ - (A) THE ID. CIT(A) ERRED IN FACTS AND LAW IN CONFIRMING THE ACTION OF THE AO IN TREATING THE PURCHASES AGGREGATING TO RS. 3,81,58,739/ - MADE FROM NINE PARTIES AS BOGUS MERE LY BECAUSE THEY WERE LISTED AS SUSPICIOUS DEALERS ON THE WEBSITE OF THE SALES TAX DEPARTMENT ITA NO. 3636/MUM/2014 M/S. SAMDANI STEELS PVT. LTD., 2 WITHOUT APPRECIATING' THE COGENT EVIDENCES PLACED ON RECORD AND EXPLANATIONS OFFERED IN RESPECT OF THE SAID PURCHASES; WHILE FULLY ACCEPTING THE SALES AND HENCE TH E DISALLOWANCE NEEDS TO BE DEL E TED (B) THE ID. CIT(A) ERRED IN FACTS AND LAW IN CONFIRMING THE ADDITION OF PURCHASES WITHOUT BRINGING ON RECORD ANY EVIDENCE IN RELATION TO THE ALLEGED 6 PARTIES AND DESPITE ABSENCE OF ANY COGENT EVIDENCES BEING AVAILABLE IN RESPECT OF THE PURCHASES MADE FROM REMAINING ALLEGED 3 PARTIES. (C) THE ID. CIT(A) AND ID. AO ERRED IN FACTS AND LAW IN NOT AFFORDING ANY OPPORTUNITY OF CROSS EXAMINATION OF THE PARTIES ON WHOSE SO CALLED PHOTOCOPIES OF AFFIDAVITS AND SECONDARY EVIDENC E, RELIANCE HAS BEEN PLACED AND ALSO IN NOT PROVIDING THE COPIES OF THE SAME FOR REBUTTAL EITHER IN ASSESSMENT OR REMAND PROCEEDINGS. THE ID. CIT(A) ALSO ERRED IN NOT CONSIDERING THE REBUTTAL TO REMAND REPORT. (D) THE ID. CIT(A) ERRED IN FACTS AND LAW IN INVOKING THE PROVISIONS OF SECTION 40(A)(3) IN RESPECT OF PURCHASES AGGREGATING TO RS. 3,81,58,739/ - CONSTRUING THE SAME AS CASH PURCHASES ON HIS OWN SURMISES AND CONJECTURES, WITHOUT BRINGING ON RECORD ANY EVIDENCE IN THAT REGARD AND IN NOT AFFORDING ANY OPPORTUNITY IN CONTROVERTING THE DIFFERENT GROUND ON WHICH ADDITION WAS SOUGHT TO BE SUSTAINED. (E) THE ID. CIT(A) ERRED IN FACTS AND LAW IN HOLDING THE PURCHASES OFRS.3,81,58,739/- AS UNEXPLAINED U/S. 69C ALLEGING THE SAME BEING MADE FROM GREY MARKET ON HIS OWN SURMISES AND CONJECTURES WITHOUT APPRECIATING THAT THE PAYMENTS TO ALL THE PARTIES WERE MADE THROUGH ACCOUNT PAYEE CHEQUES FROM THE DULY EXPLAINED BALANCES AVAILABLE IN BANK ACCOUNTS, DULY DISCLOSED IN THE FINANCIAL STATEMENT AND WHICH IS AN UNDISP UTED FACT. THE SAID GROUND INVOKED BY THE CIT(A) IS DIFFERENT FROM THE BASIS ON WHICH THE ADDITION IS MADE BY THE ID. AO AND NO OPPORTUNITY WAS GRANTED TO CONTROVERT THE SAME. (F) THE ID. CIT(A) ERRED IN FACTS AND LAW IN INFERRING THAT THE APPELLANT COUL D NOT PRODUCE THE ALLEGED PARTIES WITHOUT APPRECIATING THAT IT WAS NEVER ASKED TO PRODUCE THEM AND SAID ONUS SOLELY LIED UPON THE A.O. AS PER RULES OF EVIDENCE. 3. WITHOUT PREJUDICE TO ABOVE GROUND NOS. (1) & (2), THE ID. CIT(A) ERRED IN FACTS AND LAW IN NOT ADJUDICATING UPON THE GROUND NOS. (3), (4) AND (5) APPEALED BEFORE HIM IN RESPECT OF: (I) RESTRICTION OF THE ADDITION TO THE EXTENT OF GROSS PROFIT OF RS.2, 14, 112/- WORKED OUT ON THE BASIS OF AVERAGE GROSS PROFIT RATIO OF LAST FOUR YEARS, WHEN THE SALES ARE FOUND TO BE GENUINE AND FULLY EXPLAINED. ITA NO. 3636/MUM/2014 M/S. SAMDANI STEELS PVT. LTD., 3 (II) DELETION OF THE DISALLOWANCE OF VAT OF RS. 14,68,003/ - ON PURCHASES ALTHOUGH SUCH VAT IS NOT DEBITED/CLAIMED AS EXPENSES IN THE PROFIT & LOSS ACCOUNT. (III) DELETION OF THE ADDITION OF PURCHASES MA DE TO THE EXTENT OF RS. 9,54,546/- IGNORING THE FACT THAT THE SAME IS WRITTEN BACK AND OFFERED TO TAX IN A. Y. 2011 - 12. 4. YOUR APPELLANT PRAYS THAT - A) ORDER U/S. 143(3) BE TREATED AS AGAINST THE PRINCIPLE OF NATURAL JUSTICE, INVALID AND BAD IN LAW. B) DISALLOWANCE OF PURCHASES OF RS.3,81,58,739/ - U/S. 69C/40A(3) BE DELETED. C) WITHOUT PREJUDICE TO ABOVE (A) & (B), THE ADDITION BE RESTRICTED TO GROSS PROFIT OF RS.2,14,112/ - . D) WITHOUT PREJUDICE TO ABOVE (A),(B)&(C), ADDITION ON ACCOUNT OF VAT OF RS . 14,68,003/ - BE DELETED. E) WITHOUT PREJUDICE TO ABOVE (A),(B)&(C), THE ADDITION BE REDUCED BY RS. 9,54,546/ - ALREADY OFFERED TO TAX. F) ANY OTHER RELIEF, AS MAY BE DEEMED FIT IN THE MATTER, BE GRANTED. 5. THE ABOVE GROUNDS OF APPEAL ARE WITHOUT PREJU DICE TO ONE ANOTHER AND THE APPELLANT CRAVES LEAVE TO ADD, AMEND, ALTER OR DELETE ANY OR ALL THE GROUNDS OF APPEAL. 3. RIVAL CONTENTIONS HAVE BEEN HEARD AND RECORD PERUSED. FACTS IN BRIEF ARE THAT DURING THE SCRUTINY PROCEEDINGS THE LAO NOTICED THAT THE ASSESSEE HAD MADE PURCHASES OF FERROUS / NON - FERROUS METALS AMOUNTING TO RS.3,81,58,739/ - FROM THE BOGUS DEALERS WHO HAD ISSUED FALSE BILLS WITHOUT DELIVERY OF GOODS. THE LAO ASKED THE ASSESSEE TO SHOW - CAUSE AS TO WHY THE BOGUS PURCHASES SHOULD NOT BE DISA LLOWED AND ADDED TO THE TOTAL INCOME. THE ASSESSEE SUBMITTED THAT THE ASSESSEE COMPANY HAD CARRIED OUT ONLY TRADING ACTIVITY IN RESPECT OF PURCHASES MADE FROM LISTED SUSPICIOUS PARTIES AND EFFECTED SALES OUT OF PURCHASES MADE FROM THE DEALERS. THE SUBMISS ION OF THE ASSESSEE IN THIS REGARD IS ITA NO. 3636/MUM/2014 M/S. SAMDANI STEELS PVT. LTD., 4 DISCUSSED IN DETAIL IN THE ASSESSMENT ORDER OF THE LAO VIDE PAGE NOS. 2 TO 5. THE LAO DID NOT ACCEPT THE SUBMISSIONS MADE BY THE ASSESSEE IN RESPECT OF PURCHASES MADE FROM THE ALLEGED DEALERS. IT IS OBSERVED BY THE A.O . THAT THE SALES TAX DEPARTMENT UPLOADED ON ITS WEBSITE THE LIST OF SUSPICIOUS DEALERS AFTER GETTING THEIR AFFIDAVITS THAT THEY HAD ISSUED FALSE BILLS WITHOUT DELIVERY OF THE GOODS WHICH REVEALED THAT NO GOODS WERE DELIVERED TO THE ASSESSEE FROM THE SUSPIC IOUS DEALERS AND ACCORDINGLY NO PURCHASES WERE MADE BY THE ASSESSEE FROM THE SUSPICIOUS DEALERS . 4. BY THE IMPUGNED ORDER, CIT(A) CONFIRMED THE ACTION OF THE AO BY OBSERVING THAT THE ASSESSEE HAS NOT BEEN ABLE TO EXPLAIN THE SOURCE OF PURCHASES, THEREFORE , LIABLE TO BE TREATED AS UNEXPLAINED EXPENDITURE UNDER PROVISIONS OF SECTION 69C OF THE IT ACT. 5. AGAINST THE ABOVE ORDER OF CIT(A), ASSESSEE IS IN FURTHER APPEAL BEFORE US. 6. IT WAS ARGUED BY LEARNED AR THAT THE ID. ASSESSING OFFICER DISALLOWED THE PUR CHASES OF RS. 3,81,58,739/ - TREATING IT AS BOGUS PURCHASES MERELY RELYING ON THE LIST OF SUSPICIOUS DEALERS PLACED ON THE WEBSITE OF THE SALES TAX DEPARTMENT WITHOUT APPRECIATING AMPLE EVIDENCES BROUGHT ON RECORD. ALSO THE ID. ASSESSING OFFICER ERRED IN FA CTS AND LAW IN NOT GIVING ANY OPPORTUNITY OF CROSS EXAMINATION OF THE SUPPLIERS TO REBUT THE SAME. EVEN THESE AFFIDAVITS/S TATEMENTS WERE NOT PROVIDED TO ASSESSEE ALTHOUGH ASSES S EE HAD SPECIFICALLY REQUESTED FOR THE SAME FOR CROSS EXAMINATION BEFORE THE ID. AO VIDE LETTER DATED 28.01.2013. THE ID. ASSESSING OFFICER HAS GROSSLY ERRED BY VIOLATING THE PRINCIPLES OF NATURAL JUSTICE IN AS MUCH ITA NO. 3636/MUM/2014 M/S. SAMDANI STEELS PVT. LTD., 5 AS SHE SHOULD HAVE GIVEN AN OPPORTUNITY TO ASSESSEE TO CROSS - EXAMINE AND CONTROVERT THE MATERIAL USED BEFORE USING IT AT THE BACK OF ASSESSEE . THUS THE ASSESSMENT MADE IN DISREGARD OF THE BASIC PRINCIPLES OF NATURAL JUSTICE IS VOID - AB - INITIO; BAD IN LAW AND SUFFERS FROM INCURABLE INFIRMITY. IT WAS FURTHER SUBMITTED THAT THE ID. AO HAS MERELY PRESUMED THAT THE PURCHASES ARE BOGUS BY RELYING ON THE PIECE OF INFORMATION WHICH DO NOT HAVE ANY EVIDENTIARY VALUE . 7. AS PER LEARNED AR , C OMPLETE EVIDENCES IN SUPPORT OF THE ALLEGED PURCHASES ARE SUBMITTED BEFORE THE LOWER AUTHORITIES WHICH ARE NOT DISPUTED AT ALL VIZ. COPY OF LEDGER ACCOUNT, DELIVERY CHALLANS VEHICLE NOS. WHEREVER APPLICABLE ARE ALSO MENTIONED IN DELIVERY CHALANS AS MAY BE SEEN AT PAGE NO. 179 TO 184 WHEREAS IN FEW INSTANCES, EITHER DELIVERY IS TAKEN BY OWN VEHICLE OF THE ASSESSEE OR RECEIVED LOCALLY THROUGH HAND C ARTS. CORRESPONDING SALES INVOICE RELEVANT EXTRACT OF STOCK REGISTER REVEALING MATCHING STATEMENT OF QUANTITATIVE DETAILS. STOCK DETAILS ARE ALSO FURNISHED IN THE TAX AUDIT REPORT. COPY OF BANK STATEMENTS REVEALING PAYMENT THROUGH ACCOUNT PAYEE CHEQUE . PLEASE REFER PAGE NO. 62 TO 177 OF PAPER BOOK IN THIS REGARD. 8. LEARNED AR FURTHER CONTENDED THAT THE ALLEGED SUPPLIERS ARE VAT DEFAULTERS AND HAVE VESTED INTEREST AND THEREFORE ESCAPING FROM MAKING THEIR APPEARANCE BEFORE ANY GOVERNMENT AUTHORITIES. IN ANY CASE, MERELY BECAUSE THE NOTICES ISSUED U/S. 133(6) ARE RETURNED CANNOT BE THE GROUND TO STAMP THE ALLEGED PURCHASES AS BOGUS. IN THIS REGARD, RELIANCE IS PLACED ON THE JUDGMENT IN THE CASE OF NIKUNJ EXIMP ENTERPRISES LTD. (ITA NO. 5604 OF 2010) (BO M. HC). ITA NO. 3636/MUM/2014 M/S. SAMDANI STEELS PVT. LTD., 6 AS PER LD. AR THE V ISIT OF THE INSPECTOR WAS MADE AT THE OFFICE PREMISES AT MUMBAI IN 2013 WHEN HE DID NOT FIND THE ASSESSEE COMPANY OPERATIONAL I.E. MANY YEARS AFTER THE ALLEGED TRANSACTION WERE EXECUTED. FURTHER, THE ASSESSEE HAD ALREADY SHIFTED ITS BUSINESS AND HAD GOT THE ACCOUNTS AUDITED FROM AHMEDABAD WHERE ITS FACTORY IS LOCATED. THIS FACT IS EVIDENT FROM THE REPORT OF THE AUDITOR AND THE FINANCIAL STATEMENTS SIGNED AT AHMEDABAD FOR A.Y. 2012 - 13 ON 20.09.2012, MUCH BEFORE THE VISIT OF THE INS PECTOR. BUSINESS OF THE ASSESSEE IS OPERATED FROM GUJARAT WHERE THE FACTORY IS LOCATED. THE ID. ASSESSING OFFICER COMPLETELY IGNORED THIS FACT WHILE ISSUING THE REMAND REPORT. 9. IT WAS FURTHER SUBMITTED THAT DURING THE APPELLATE PROCEEDINGS BEFORE THE CIT (A), STATEMENTS OF ALLEGED SUPPLIERS RECORDED BEFORE THE SALES TAX AUTHORITIES WERE CALLED FOR BY THE CIT(A). HOWEVER, THE ID. ASSESSING OFFICER ONLY SUBMITTED STATEMENTS MADE BY THE PROPRIETOR / PERSON - IN - CHARGE OF M/S. AVION SALES PVT. LTD., JINALAYA TRA DING PVT. LTD. AND ARIHANT TRADING CORPORATION I.E. 3 ENTITIES OUT OF 9 ALLEGED ENTITIES. 10. STATEMENT ON OATH GIVEN BY MR. PARASMAL JAIN ON BEHALF OF M/S. AVION SALES PVT. LTD, AND JINALAYA TRADING PVT. LTD. WAS CONTROVERTED AS UNDER: I. THE DESIGNATIO N OF MR. PARASMAL JAIN IN BOTH THE ENTITIES IS NOT MENTIONED IN THE STATEMENT; II. NO EVIDENCE IS ADDUCED TO PROVE THAT MR. PARASMAL JAIN IS RUNNING BOTH THE ENTITIES; III. IT WAS STATED IN RESPONSE TO Q. NO. 4 THAT OWNERS OF M/S. AVION SALES PVT, LTD. AND JINALAYA TRADING PVT. LTD. ARE MR, BABULAL J. BISHNOI AND MR. UTTAMCHAND P. JAIN RESPECTIVELY. THUS, STATEMENT OF A THIRD PARTY HAS NO EVIDENTIARY VALUE; IV. THE SIGNATURE IN THE INVOICE AND DELIVERY CHALLAN DOES NOT MATCH WITH THE SIGNATURE MADE O N THE STATEMENT; V. IT WAS STATED IN RESPONSE TO Q NO. 7 THAT THE PERSON - IN - CHARGE OF THE ENTITIES WERE EMPLOYED WITH HIM. HOWEVER, NO CORROBORATIVE EVIDENCE IN THE FORM OF MUSTER REGISTER AND PAYMENT PROOF OF SALARY WAS PROVIDED; VI. IT WAS STATED IN RESPONSE TO Q. NO. 14 THAT THE MVAT RETURNS ARE NOT FILED WHICH SUGGEST THAT THE DEALERS MAY HAVE TRIED TO EVADE SALES TAX LIABILITY. ITA NO. 3636/MUM/2014 M/S. SAMDANI STEELS PVT. LTD., 7 11. STATEMENT ON OATH GIVEN BY MR. JIGNESH DOSHI ON BEHALF OF ARIHANT TRADING CORPORATION WAS ALSO DISCUSSED AS UNDER: I . CLAMED TO THE PROPRIETOR IN RESPONSE TO Q. NO. 4; II. IT WAS STATED IN RESPONSE TO Q. NO. 5 THAT MVAT RETURNS WERE FILED UPTO MARCH 2010 AND HAS PAID TAXES UPTO DATE. AUDIT REPORT FOR F.Y. 2008 - 09 IS FILED WITH THE SALES TAX AUTHORITIES. THIS PROVES THAT THE DEALER WAS IN EXISTENCE AND CARRIED OUT SALES AND PURCHASE OF GOODS; III. IT WAS STATED IN RESPONSE TO Q. NO. 7 THAT THE ENTITY WAS INVOLVED IN TRADE OF HARDWARE AND IRON & STEEL AND THE ACTIVITIES OF THE CONCERN ARE DULY RECORDED IN THE BOOKS OF ACCOUNTS. THUS, THE BOOKS OF ACCOUNTS ARE DULY MAINTAINED BY THE DEALER; IV. IN RESPONSE TO Q. NO. 8 IT WAS NOWHERE MENTIONED THAT THE ENTITY WAS ENGAGED IN THE ACTIVITY OF MERELY ISSUING INVOICES WITHOUT ANY ACTUAL DELIVERY OF GOODS 12. THU S, IT IS CLEAR THAT THE ID. ASSESSING OFFICER AND THE CIT(A) HAD NO EVIDENCE AT ALL FOR THE OTHER 6 ENTITIES AND EVEN FOR THE - 3 ENTITIES, THE STATEMENT REFERRED CANNOT GO AGAINST THE ASSESSEE FOR THE REASONS DISCUSSED ABOVE. 13 . FURTHER, CIT(A) IN HIS OR DER HAS MADE A GROSS ERROR IN STATING THAT THE MOVEMENT OF GOODS WAS NOT PROVED CLEARLY OVERLOOKING THE VITAL EVIDENCES ALREADY SUBMITTED BEFORE HIM IN THE FORM OF DELIVERY CHALLANS FOR EACH AND EVERY PURCHASE MADE FROM ALLEGED PARTIES EVEN REVEALING THE V EHICLE NO. AS CAN BE SEEN FROM PAGE NO. 178 TO 184 OF PAPER BOOK. 14 . THE CONTENTION OF THE CIT(A) AT PARA 5.4 THAT DETAILED INQUIRES BY SALES TAX DEPARTMENT REVEALED THAT NONE OF THE PARTIES FROM WHOM PURCHASES ARE MADE APPEARS IN A POSITION TO ACTUALLY SUPPLY THE MATERIAL TO THE ASSESSEE AS THEY DO NOT HAVE ANY INFRASTRUCTURE AND CAPACITY AND ONLY EXIST ON PAPER IS COMPLETELY DEVOID OF ANY BASIS OR JUSTIFICATION OR MATERIAL ON RECORD. ITA NO. 3636/MUM/2014 M/S. SAMDANI STEELS PVT. LTD., 8 15 . CIT(A) ALSO ERRED IN INVOKING PROVISIONS OF SECTION 40A(3) WITHOU T EVEN POINTING OUT ANY EVIDENCE IN REGARD TO THE PURCHASES MADE IN CASH ABOVE THE PRESCRIBED LIMIT OF RS. 20,000/ - MENTIONED THEREIN. ATTENTION WAS ALSO INVITED BY LD. AR TO THE DECISION OF THE HON'BLE BOMBAY HIGH COURT IN THE CASE OF LODHA DEVELOPERS P, LTD, & OTHERS (W.P. NO. 25G2 OF 2015) WHEREIN IT IS HELD THAT THE ONUS IS ON R EVENUE TO PROVE THAT THE PROVISIONS OF SECTION 40A(3) IS VIOLATED BY BRINGING POSITIVE EVIDENCE ON RECORD AND NOT TO ACT SOLELY ON SURMISES AND CONJECTURES. 16 . CIT(A) HAS ALSO G ROSSLY ERRED IN INVOKING PROVISIONS OF SECTION 69C WITHOUT APPRECIATING THE UNDISPUTED CORRESPONDING SALES AND OTHER VITAL EVIDENCES ALREADY PLACED ON RECORD WITH COMPLETE QUANTITATIVE TALLY OF STOCK MOVEMENT, FURTHER, NONE OF THE LOWER AUTHORITIES HAVE BR OUGHT ON RECORD ANYTHING TO EVEN REMOTELY DEMONSTRATE OR PROVE THAT THE CASH WAS RECEIVED BACK AGAINST THE ISSUANCE OF CHEQUES TO THESE PARTIES. 17. CIT(A) HAS SOLELY MADE A PASSING REMARK THAT THE ASSESSEE COULD NOT PRODUCE THE ALLEGED PARTIES WITHOUT EVE N APPRECIATING THAT NEITHER THE AO NOR CIT(A) HIMSELF HAD EVER CALLED THE ASSESSEE TO PRODUCE THE ALLEGED PARTIES. 18 . OUR ATTENTION WAS ALSO INVITED TO THE GP RATE SHOWN BY THE ASSESSEE DURING THE YEAR UNDER CONSIDERATION WHICH IS 3.61% AS COMPARED TO AV ERAGE GP RATE OF 2.52% OF LAST FOUR YEARS. AS PER LEARNED AR IT IS ALSO NOT IN DISPUTE THAT THE ASSESSEE HAS PAID THE VAT BUT THE ALLEGED SUPPLIERS HAVE NOT PAID THE SAME. ONLY BECAUSE OF THE MISDEEDS OF THESE ITA NO. 3636/MUM/2014 M/S. SAMDANI STEELS PVT. LTD., 9 SUPPLIERS, THE ASSESSEE CANNOT BE PUNISHED TO SAY THAT THE PURCHASES MADE FROM THEM ARE BOGUS, WITHOUT BRINGING ON RECORD EVEN A SINGLE IOTA OF EVIDENCE AGAINST THE ASSESSEE AND ACTING MERELY ON BASIS OF SUSPICION FROM THE LIST OF SUSPICIOUS DEALERS HOSTED ON THE WEBSITE OF THE SALES TAX DEPARTMENT. 1 9 . IN VIEW OF THE ABOVE FACTUAL AND LEGAL MATRIX, IT WAS PRAYED THAT THE DISALLOWANCE MADE OF RS. 3,81,58,739/ - BE DELETED. 20. ON THE OTHER HAND, LEARNED DR RELIED ON THE ORDER OF THE LOWER AUTHORITIES AND CONTENDED THAT AO MADE FULL ENQUIRY AND THEREAFT ER REACHED TO THE CONCLUSION THAT ALLEGED SUPPLIERS WERE NOT EXISTING AND THE PURCHASES SO MADE BY THE ASSESSEE WERE WITHOUT DELIVERY OF THE GOODS. 21.WE HAVE CONSIDERED RIVAL CONTENTIONS AND CAREFULLY GONE THROUGH THE ORDERS OF THE AUTHORITIES BELOW. 22. FROM THE RECORD, WE FOUND THAT ASSESSEE IS ENGAGED IN THE BUSINESS OF TRADING IN FERROUS AND NON - FERROUS METALS. ON THE BASIS OF INFORMATION FROM SALES TAX DEPARTMENT, AO HAS TAKEN THE ASSESSEES CASE UNDER SCRUTINY AND AFTER VERIFICATION REJECTED THE ENT IRE PURCHASES SO MADE BY THE ASSESSEE. 23. FROM THE RECORD, WE FOUND THAT C OMPLETE EVIDENCES IN SUPPORT OF THE ALLEGED PURCHASES ARE SUBMITTED BEFORE THE LOWER AUTHORITIES WHICH ARE NOT DISPUTED AT ALL VIZ. COPY OF LEDGER ACCOUNT, DELIVERY CHALLANS VEHI CLE NOS. WHEREVER APPLICABLE ARE ALSO MENTIONED IN DELIVERY CHALANS AS MAY BE SEEN AT PAGE NO. 179 TO 184 WHEREAS IN FEW INSTANCES, EITHER ITA NO. 3636/MUM/2014 M/S. SAMDANI STEELS PVT. LTD., 10 DELIVERY IS TAKEN BY OWN VEHICLE OF THE ASSESSEE OR RECEIVED LOCALLY THROUGH HAND CARTS. CORRESPONDING SALES INVOICE RELEVANT EXTRACT OF STOCK REGISTER REVEALING MATCHING STATEMENT OF QUANTITATIVE DETAILS. STOCK DETAILS ARE ALSO FURNISHED IN THE TAX AUDIT REPORT. COPY OF BANK STATEMENTS REVEALING PAYMENT THROUGH ACCOUNT PAYEE CHEQUE. PLEASE REFER PAGE NO. 62 TO 177 OF PAPER BOOK IN THIS REGARD . 24. WE FOUND THAT THE ASSESSING OFFICER MERELY RELIED ON THE LIST OF SUSPICIOUS DEALERS HOSTED ON THE WEBSITE OF THE SALES TAX DEPARTMENT AS MAY BE SEEN FROM PARA 3.3 OF THE IMPUGNED ASSESSMENT ORDER AND MADE THE COMPLETE DI SALLOWANCE OF THE PURCHASES TO THE TUNE OF RS. 3,81,58,739/ - . THE NOMENCLATURE ITSELF PROVES THAT THE SALES TAX DEPARTMENT HAS MADE THE LIST OF DEALERS ON WHICH THEIR SUSPICION AROSE. THUS, MERELY ACTING ON THE SUSPICION AND CONJECTURES, THE ID. ASSESSING OFFICER OUGHT NOT TO HAVE MADE ANY DISALLOWANCE. 25. WE ALSO FOUND THAT IN ASSESSEES OWN CASE FOR THE A.Y.2011 - 12 UNDER SIMILAR FACTS AND CIRCUMSTANCES ADDITION WAS RESTRICTED TO EXTENT OF 2% OF OVERALL ALLEGED BOGUS PURCHASES IN ITA NOS.4439/MUM/2016 AND 3500/MUM/2016. 26. WE ALSO OBSERVE THAT CORRESPONDING SALES MADE BY THE ASSESSEE HAVE NOWHERE DECLINED BY ANY OF THE LOWER AUTHORITIES. FURTHERMORE CHALLANS OF EACH AND EVERY PURCHASE MADE FROM ALLEGED PARTIES HAVE BEEN REVEALING VEHICLE NUMBER WAS FILED BEFORE THE LOWER AUTHORITIES. THEREFORE, KEEPING IN VIEW TOTALITY OF FACTS AND CIRCUMSTANCES OF THE CASE, VIS - - VIS GP DECLARED BY THE ASSESSEE DURING THE YEAR UNDER ITA NO. 3636/MUM/2014 M/S. SAMDANI STEELS PVT. LTD., 11 CONSIDERATION WHICH IS MUCH BETTER THAN THE GP REVEALED IN THE EARLIER YEAR , W E DIRECT THE AO TO REST RICT ADDITION TO THE EXTENT OF 2 % OF ALLEGED BOGUS PURCHASES. 27. IN THE RESULT, APPEAL OF THE ASSESSEE IS ALLOWED IN PART. O RDER PRONOUNCED IN THE OPEN COURT ON THIS 18 / 12 /2018 SD / - ( AMARJIT SINGH ) SD/ - ( R.C.SHARMA ) JUDICIAL MEMBER ACCOUNTANT MEMBER MUMBAI ; DATED 18 / 12 /201 8 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, I TAT, MUMBAI 6. GUARD FILE. //TRUE COPY//