JAYESHKUMAR RASIKLAL & CO., MUMBAI V. ACIT 14(3), MUMBAI

ITA 4118/MUM/2012

• Counselvise Citation: 411819914 RSA 2012
• Duration Of Justice: 1 year(s) 6 month(s) 28 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 10-01-2014
• Appeal Filed By: Assessee
• Order Result: Partly Allowed
• Bench Allotted: J
• Next Hearing Date: 20-03-2014
• Assessment Year: 2004-2005
• Appeal Filed On: 12-06-2012
• Result in Favour of: Partly Allowed
• Court: TRIBUNAL
• Department Lawyers: SU RENDRA KUMAR
• Assessee Lawyers: TARUN GHIA
• Keywords: Bogus purchase; Accommodation entries; Retraction
• Section: 69; 143(3); 133A

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL J BENCH, MUMBAI . .. . . . . . , ,, , !'# !'# !'# !'# $ $ $ $ %$$ $& %$$ $& %$$ $& %$$ $&, ,, , ' !'# ' !'# ' !'# ' !'# !( !( !( !( BEFORE SHRI P.M. JAGTAP, AM AND SHRI VIVEK VARMA , JM !./ I.T.A. NO. 4118/MUM/2012 ( '* & $+& '* & $+& '* & $+& '* & $+& / / / / ASSESSMENT YEAR:2004-05) M/S JAYESHKUMAR RASIKLAL & CO. 107, GADIAL GALLY, M.J. MARKET, KALBADEVI, MUMBAI-400002 * * * * / VS. ACIT 14(3), 6 TH FLOOR, EARNEST HOUSE, NARIMAN POINT, MUMBAI-400021 #, ! ./ PAN : AAAFJ1091L ( '* &- / ASSESSEE ) .. ( #$ / // / REVENUE ) !./ I.T.A. NO. 4352/MUM/2012 ( '* & $+& '* & $+& '* & $+& '* & $+& / / / / ASSESSMENT YEAR:2004-05) ACIT 14(3), 6 TH FLOOR, EARNEST HOUSE, NARIMAN POINT, MUMBAI-400021 * * * * / VS. M/S JAYESHKUMAR RASIKLAL & CO. 107, GADIAL GALLY, M.J. MARKET, KALBADEVI, MUMBAI-400002 #, ! ./ PAN : AAAFJ1091L ( #$ / // / REVENUE ) .. ( '* &- / ASSESSEE ) '* &- . / ! / ASSESSEE BY SHRI TARUN GHIA #$ . / ! / REVENUE BY : SHRI SURENDRA KUMAR ! *$ . / // / DATE OF HEARING : 02/01/2014 01+ . / DATE OF PRONOUNCEMENT : 10/01/2014 '2 / O R D E R PER P.M. JAGTAP, A.M . .. , !'# : THESE TWO APPEALS, ONE FILED BY THE ASSESSEE BEING ITA NO.4118/MUM/2012 AND THE OTHER FILED BY THE REVENUE BEING ITA NO.4352/MUM/2012 ARE CROSS APPEALS WHICH ARE DIRECT ED AGAINST THE ORDER OF THE LD. CIT(A)-25, MUMBAI, DATED 19.04.201 2. 2 ITA NO.4118 & 4352/MUM/2012 JAYESHKUMAR RASIKLAL & CO. 2. THE MAIN COMMON ISSUE INVOLVED IN THESE APPEALS RELATES TO THE ADDITION OF RS.18,87,612/- MADE BY THE AO ON ACCOUN T OF BOGUS PURCHASES WHICH HAS BEEN SUSTAINED BY THE LD. CIT(A ) TO THE EXTENT OF RS.95,000/- AND THE SAME IS RAISED BY WAY OF THE FO LLOWING GROUNDS. GROUNDS OF REVENUES APPEAL:- ON THE FACTS AND CIRCUMSTANCES OF THE CASE, THE CIT (A) HAS ERRED I LAW IN AS WELL AS ON FACT BY NOT SUSTAINING ADDITION U/ S 69 AFTER HAVING ACCEPTED THE FINDING IN PRINCIPLE THAT THERE WAS IN VOLVEMENT OF CAST TO HAVE PURCHASES MADE FROM UNDISCLOSED/UNVERIFIABLE/U NIDENTIFIABLE PARTIES AND PURCHASES FROM THE CONCERNS OF SHRI RAK ESH GUPTA & FAMILY WERE ONLY ACCOMMODATION ENTRIES AND NOT BY A CTUAL PURCHASES. THE LD. CIT(A) ERRED IN LAW AS WELL AS ON FACT IN N OT SUSTAINING ANY ADDITION ON THE PEAK VALUE OF CASH INVOLVED IN MAKI NG PURCHASES FROM THE SO CALLED UNIDENTIFIABLE PARTIES AND UNVERIFIAB LE PARTIES U/S 69. ADDITIONAL GROUNDS OF REVENUES APPEAL ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE, THE LD. CIT(A) AFTER HAVING ACCEPTED THE FACT THAT THE PURCHASE MADE FRO M OR THROUGH SHRI RAKESH KUMAR GUPTA AND HIS FAMILY MEMBERS ARE BOGUS , ERRED IN LAW IN NOT CONFIRMING THE ADDITION AT LEAST TO THE EXTE NT OF PEAK OF THE PURCHASES MADE FROM SUCH PARTIES ON ACCOUNT OF BOGU S PURCHASES MADE IN CASH FROM OPEN MARKET OUT OF UNACCOUNTED CA SH, IN VIEW OF THE DECISION HELD IN AHMEDABAD HONBLE ITATS C-BENCH D ECISION DECIDED IN THE CASE OF VIJAY PROTEIN LTD. VS. ACIT 58 ITD 4 28. GROUNDS OF ASSESSEES APPEAL:- IN THE FACTS AND CIRCUMSTANCES OF THE CASE AND IN L AW, LD. CIT(A) HAS ERRED IN COMPUTING ADDITION OF RS. 95,000/- ON THE BASIS OF ESTIMATE OF PROFIT @ 5% OF DISPUTED PURCHASES. 3. THE ASSESSEE IN THE PRESENT CASE IS A PARTNERSHI P FIRM WHICH IS ENGAGED IN THE BUSINESS OF TRADING IN TEXTILES. TH E RETURN OF INCOME FOR THE YEAR UNDER CONSIDERATION WAS FILED BY IT ON 31.08.2004 DECLARING TOTAL INCOME OF RS.1,20,43,120/-. IN THE ASSESSMENT ORIGINALLY COMPLETED U/S 143(3) VIDE AN ORDER DATED 28.09.2006, THE TOTAL INCOME OF THE ASSESSEE WAS DETERMINED BY THE AO AT RS.1,21,96,560/- AFTER MAKING CERTAIN DISALLOWANCES OUT OF VARIOUS EXPENSES CLAIMED BY THE ASSESSEE. IN THE CASE OF S HRI RAKESH KUMAR GUPTA, ONE OF THE SUPPLIERS OF THE ASSESSEE FIRM, S URVEY U/S 133A OF THE ACT WAS CARRIED OUT ON 13/14.02.2009. IN HIS S TATEMENT RECORDED DURING THE COURSE OF SURVEY, SHRI RAKESH KUMAR GUPT A STATED THAT HE 3 ITA NO.4118 & 4352/MUM/2012 JAYESHKUMAR RASIKLAL & CO. WAS PROVIDING ACCOMMODATION BILLS FOR PURCHASES IN THE NAME OF THREE PROPRIETARY CONCERNS M/S. MANOJ MILLS, M/S ASTHA SI LK INDUSTRIES AND M/S SHREE RAM SALES AND SYNTHETICS BELONGING TO HIM AND HIS FAMILY MEMBERS. THE SAID STATEMENT HOWEVER WAS SUBSEQUENT LY RETRACTED BY SHRI RAKESH KUMAR GUPTA IN PART THROUGH WRITTEN COM MUNICATION TO THE AO AND ALSO BY WAY OF SWORN-IN AFFIDAVITS BY HI M AND HIS FAMILY MEMBERS WHO WERE PROPRIETORS OF THESE CONCERNS. IN THE AFFIDAVITS, SHRI RAKESH KUMAR GUPTA AND HIS FAMILY MEMBERS STAT ED IN CATEGORICAL TERMS THAT THE PURCHASES MADE BY THE AS SESSEE FROM THEM WERE GENUINE. THE ASSESSEE ALSO PRODUCED EVIDENCE TO SHOW THAT THE PAYMENTS AGAINST THE SAID PURCHASES WERE MADE BY AC COUNT PAYEE CHEQUES. DURING THE COURSE OF ASSESSMENT PROCEEDIN GS, THE ASSESSEE ALSO PRODUCED THE QUANTITATIVE DETAILS OF ALL THE P URCHASES AND SALES ALONGWITH BOOKS OF ACCOUNT IN ORDER TO ESTABLISH TH E GENUINENESS OF THE PURCHASE. IT WAS PLEADED ON BEHALF OF THE ASSES SEE BEFORE THE AO THAT NO ADVERSE INFERENCE COULD BE DRAWN AGAINST IT ON THE BASIS OF GENERAL STATEMENT OF 3 RD PARTY. IT WAS ALSO CONTENDED THAT NO FURTHER ENQUIRY WAS CARRIED OUT EITHER IN THE CASE OF THE A SSESSEE OR SHRI RAKESH KUMAR GUPTA IN SPITE OF THE FACT THAT THE ST ATEMENT RECORDED DURING THE COURSE OF SURVEY WAS SUBSEQUENTLY RETRAC TED IN PART BY SHRI RAKESH KUMAR GUPTA AND THE PURCHASES MADE BY T HE ASSESSEE WERE CONFIRMED IN THEIR AFFIDAVITS FILED BY THE CON CERNED SELLERS. THE ASSESSING OFFICER DID NOT ACCEPT THE STAND OF THE A SSESSEE THAT THE PURCHASES IN QUESTION WERE GENUINE AND THAT THERE W AS NO INFLATION OF PURCHASES. ACCORDINGLY, HE COMPLETED THE ASSESSMEN T U/S 143(3) R.W.S. 147 OF THE ACT VIDE AN ORDER DATED 30.12.201 0 MAKING ADDITION OF RS.18,87,612/- TO THE TOTAL INCOME OF THE ASSESS EE ON ACCOUNT OF BOGUS PURCHASES. 4. THE ADDITION MADE BY THE AO ON ACCOUNT OF BOGUS PURCHASES WAS CHALLENGED BY THE ASSESSEE IN THE APPEAL FILED BEFORE THE LD. CIT(A) AND ELABORATE SUBMISSIONS WERE MADE ON BEHAL F OF THE ASSESSEE 4 ITA NO.4118 & 4352/MUM/2012 JAYESHKUMAR RASIKLAL & CO. IN SUPPORT OF ITS CASE ON THIS ISSUE WHICH, AS SUMM ARIZED BY LD. CIT(A) IN HIS IMPUGNED ORDER WERE AS UNDER:- I. ALL THE PURCHASES MADE FROM THE PARTIES IN QUESTION ARE GENUINE. II. ALL PAYMENTS HAVE BEEN MADE BY THE ACCOUNT PAYEE C HEQUES ONLY. III. WE REFUTE ANY CLAIM BY THE PARTY OF HAVING ANY CASH DEALING WITH OUR COMPANY AND STATE THAT ALL THE CONTENTS OF THE SUBM ISSION TO BE TRUE . IV. WE HAVE NO CONCERN WITH THE SOURCE OF OUR SUPPLIERS AND THEIR BUSINESS AFFAIRS. V. THAT QUANTITATIVE DETAILS METER WISE OF THE STOCK W AS PRODUCED BEFORE THE AO. 5. IT WAS ALSO SUBMITTED AS ALTERNATIVE CONTENTION BY THE ASSESSEE BEFORE THE LD. CIT(A) THAT THE ENTIRE PURCHASES TRE ATED AS BOGUS BY THE AO COULD NOT BE ADDED TO ITS TOTAL INCOME AND THE A DDITION ON THIS ISSUE SHOULD BE RESTRICTED ONLY TO THE EXTENT OF SO ME PERCENTAGE AS DONE BY THE LD. CIT(A) IN THE CASE OF OTHER ASSESSE ES WHEREIN A SIMILAR ISSUE WAS INVOLVED. 6. AFTER CONSIDERING THE SUBMISSIONS OF THE ASSESSE E, THE LD. CIT(A) DECIDED THIS ISSUE VIDE PARAGRAPH NO. 4.5 TO 4.7 OF HIS IMPUGNED ORDER AS UNDER:- 4.5 I HAVE GONE THROUGH THE ASSESSMENT ORDER AS WE LL AS THE SUBMISSIONS GIVEN BY THE ASSESSEE AND ALSO JUDICIAL PRONOUNCEMENTS OF HONBIE ITATS AND HONBLE HIGH COURT AND DECISIO NS OF LD. CIT(A) OF MUMBAI REGION AS RELIED UPON BY THE ID. AR AND ISSU E IN DISPUTE IS ADJUDICATED IN LIGHT THEREOF. IT IS SEEN THAT IN TH IS CASE SALES ARE IDENTIFIABLE AND QUANTITATIVE TALLY WAS AVAILABLE O N RECORD. THE REJECTION OF ALLEGED DISPUTED PURCHASES IS BASED ON THE GENERAL STATEMENT OF THE THIRD PARTY MADE IN THE YEAR 2009 WITHOUT ANY REFERENCE TO THE ASSESSEE WHERE AS INSTANT YEAR IS 2003-04. THE SAID PERSONS WERE NEITHER MADE AVAILABLE FOR EXAMINATION OR CROSS EXAMINATION NOR THE MATERIAL FOUND/IMPOUNDED FROM T HE THIRD PARTY WAS MADE AVAILABLE TO THE ASSESSEE INSPITE OF REQUE ST FROM THE ASSESSEE. HOWEVER, BEFORE THEIR AO, THE SAID THREE PARTIES HAVE CONFIRMED BY WRITTEN COMMUNICATION THAT THEY HAD SO LD THE SAID GOODS TO THE ASSESSEE. THE SAID PARTIES HAD RETRACTED THE IR STATEMENTS IN PART SUBSEQUENT TO SURVEY ACTION BY WRITTEN COMMUNICATIO NS. THEY ALSO FURNISHED AFFIDAVITS BEFORE THEIR A.O. CONFIRMING G ENUINE SALE TO CERTAIN PARTIES. ALL THE ABOVE MENTIONED 3 PERSONS HAVE FIL ED AFFIDAVITS STATING THAT AS FAR AS ASSESSEE IS CONCERNED THESE PERSONS ACTUALLY MADE THE SALES TO THE ASSESSEE AND CONSEQUENTLY PURCHASES MA DE BY THE ASSESSEE WERE GENUINE. THE ASSESSEE HAD SHOWN THAT THE ITEMS SHOWN TO BE PURCHASED FROM THESE 3 CONCERNS WHICH WERE DI SPUTED BY THE AO, HAVE BEEN DULY RECORDED IN BOOKS OF ACCOUNTS AND SO LD BY THE ASSESSEE TO OTHER PERSONS/RETAILERS OR ARE PART OF CLOSING S TOCK, AND THIS FACTS HASBEEN BROUGHT ON RECORD BY THE ASSESSEE EVEN DURI NG THE COURSE OF 5 ITA NO.4118 & 4352/MUM/2012 JAYESHKUMAR RASIKLAL & CO. ASSESSMENT PROCEEDINGS AND REMAND PROCEEDING AND TH IS FACT REMAINS UNCONTROVERTED EVEN NOW AS OF DATE. IT IS UNDISPUTE D THAT NO SURVEY ACTION OR ANY FURTHER INQUIRY WAS CARRIED OUT IN TH E CASE OF THE ASSESSEE. IT IS SEEN THAT NEITHER ANY MEANINGFUL IN QUIRY OR INVESTIGATION WAS CARRIED OUT EITHER IN THE CASE OF THE ASSESSEE OR GUPTAS AFTER SURVEY ACTION OR DURING ASSESSMENT PROCEEDING AS WE LL AS REMAND PROCEEDING. THE SOLE RELIANCE WAS PLACED ON INITIAL GENERAL STATEMENTS OF SHRI RAKESHKUMAR GUPTA. NO COUNTER INQUIRY OR IN VESTIGATION WAS CARRIED OUT AFTER RETRACTION. THE ASSESSEE FURNISHE D QUANTITATIVE TALLY OF PURCHASES, SALES AND STOCK. THE AO HAD NOT COMMENTE D THERE ON IN ASSESSMENT ORDER. THIS CLEARLY ESTABLISHES THAT THE RE WERE PURCHASES BY THE ASSESSEE (ALTHOUGH NOW DISPUTED) AND ITS CON SEQUENT SALES, WHICH HAD BEEN OFFERED FOR TAXATION BY THE ASSESSEE . IN GIVEN FACTS THE AO COULD NOT HAVE TREATED THE ENTIRE PURCHASES OF R S. 18,87,612/- AS UNEXPLAINED WHEN THERE IS QUANTATIVE TALLY OF PURCH ASES, SALES STOCK AS WELL AS PAYMENT WAS BY BANKING CHANNELS AND MORE SO SELLERS THEMSELVES CONFIRMED SALES BY AFFIDAVITS. THUS, THE ISSUE TO BE DECIDED IS THAT IN SUCH CASES WHERE ONE PARTY INITIALLY DEN YING THE SALES BY GENERAL SWEEPING STATEMENT IN PECULIAR CIRCUMSTANCE S WITHOUT REFERRING TO ANY SPECIFIC PERSON AFTER 5 YEARS AND THAT TOO I N SURVEY AND THE OTHER PARTY AFFIRMS OF HAVING RECEIVED THE GOODS AN D OF HAVING MADE THE PAYMENTS BY ACCOUNT PAYEE CHEQUES AND SUBSEQUEN TLY HAVING SOLD TO 3RD PARTIES AND ACCOUNTING THESE SALES/CLOSING S TOCK AS INCOME, CAN THE ENTIRE PURCHASES BE ADDED BACK AS UNEXPLAINED O R ONLY AN ADHOC ADDITION, IF AT ALL, BE MADE TO COVER THE LEAKAGE. HOWEVER, FACTS OF THE CASE ARE MORE FAVOURABLE TO THE ASSESSEE FOR THE RE ASON THAT THE SAID PARTIES HAD CONFIRMED SALES TO THE ASSESSEE BY AFFI DAVIT DURING THE COURSE OF ASSESSMENT PROCEEDINGS AND RECEIPT OF PU RCHASE PRICE WAS BY ACCOUNT PAYEE CHEQUE. MORE SO, THESE PARTIES WER E NOT EXAMINED OR CROSS EXAMINED EITHER DURING THE COURSE OF ASSESSME NT PROCEEDINGS OR REMAND PROCEEDINGS INSPITE OF ASSESSEES REQUESTS. THE IRREGULARITIES CARRIED OUT BY THE SAID SELLERS IN THEIR RECORDS CA NNOT BE IMPOSED UPON THE ASSESSEE. 4.6 IN MY OPINION, KEEPING IN VIEW THE TOTALITY OF FACTS AND CIRCUMSTANCES OF THE CASE, ALTHOUGH THE PURCHASES F ROM MR. RAKESHKUMAR GUPTA, PROPRIETOR OF MANOJ SILK MILLS, MRS. HEMA GUPTA, PROPRIETRESS SHREE RAM SALES & SYNTHETICS AND MR. M OHIT GUPTA, THE PROPRIETOR OF ASHTA SILK INDUSTRIES ARE DISPUTED, B UT WHEN THE ASSESSEE HAS SOLD THESE VERY ITEMS AND ACCOUNTED FOR AS SALE S/CLOSING STOCK AND CONSEQUENTIAL INCOME OFFERED FOR TAXATION THE ONL Y ADDITION TO BE MADE CAN BE FOR POSSIBLE LEAKAGE RELATING TO PURCHA SES, AS THEY HAVE BECOME THE SUBJECT MATTER OF DISPUTE I.E. WHETHER A SSESSEE IN FACT PURCHASED FROM ONE MR. RAKESHKUMAR GUPTA, PROPRIETO R OF MANOJ SILK MILLS, MRS. HEMA GUPTA, PROPRIETRESS OF SHREE RAM S ALES & SYNTHETICS AND MR. MOHIT GUPTA, PROPRIETOR OF ASTHA SILK INDUS TRIES OR FROM SOME OTHER PARTIES OR FROM THE OPEN MARKET AND THEN EFFE CTED THE SALES. OTHERWISE, THE CORRESPONDING SALES/CLOSING STOCK HA S TO BE REDUCED WHICH WILL GIVE ABSURD RESULTS OF NEGATIVE INCOME. THE ISSUE HAS ANOTHER FACET ALSO. IN THIS CASE, THE GP IS MORE TH AN 15% WHICH IS REASONABLE IN THIS LINE OF BUSINESS, ALTHOUGH IT IS MORE THAN SOME CASES TRADING IN SAME LINE. IT IS NOT THE CASE OF THE AO THAT GP IS LESS THAN OTHER ASSESSEES OR PROCEEDING YEARS. THE AO HAD A LSO REMAINED SILENT ON QUANTATIVE TALLY OF PURCHASE, SALES AND STOCK AS FURNISHED DURING 6 ITA NO.4118 & 4352/MUM/2012 JAYESHKUMAR RASIKLAL & CO. THE COURSE OF ASSESSMENT PROCEEDINGS AS WELL AS REM AND PROCEEDING WHICH ESTABLISHES THE EXISTENCE OF GOODS INVOLVED B Y THE SAID IMPUGNED PURCHASES. AS REVEALING FROM THE SUBMISSI ONS MADE BEFORE THE AO, THERE WAS QUANTATIVE TALLY OF IMPUGNED PURC HASES AND CORRESPONDING SALES. HOWEVER, ACCORDING TO THE AO, THE PURCHASES SHOWN BY THE ASSESSEE FROM THE AFORESAID PARTIES AR E IN DOUBT AS THE COUNTER PARTIES ARE STATED TO BE ACCOMMODATION BIL L PROVIDER. AT THE SAME TIME THE SALES/CLOSING STOCK SHOWN BY THE ASSE SSEE HAVE NOT BEEN DOUBTED BY THE AO. THE GP RATE DISCLOSED BY TH E ASSESSEE IS NOT DOUBTED. IT IS NOT THE CASE OF THE AO THAT THE GP R ATE IS LOW IN COMPARISON OF OTHER ASSESSEES OR PROCEEDING YEARS. THE QUANTITATIVE TALLY OF PURCHASES AND SALES / STOCK COULD NOT BE R EBUTED. SIMILARLY THE AO HAD ACCEPTED THE EXISTENCES OF PURCHASES IN QUAN TITY, ALBEIT NOT FROM THE GUPTAS. THEREFORE, THE LOGICAL COROLLARY OF THIS IS THAT PURCHASES HAVE BEEN MADE BY THE ASSESSEE, PERHAPS M AY NOT BE FROM THE PARTIES FROM WHOM HE HAS SHOWN THE PURCHASES AS STATED BY THE A.O. OR CONCERN PARTIES MIGHT HAVE GIVEN DELIVERY O F GOODS THROUGH OTHERS. SO LONG AS SALES/CLOSING STOCK ARE NOT PROV ED AS BOGUS, THE EXISTENCE OF PURCHASE CANNOT BE DENIED. IF THE PURC HASES ARE NOT EFFECTED ROUGH SHRI RAKESHKUMAR GUPTA & OTHERS, ONE LOGICAL INFERENCE THAT CAN BE DRAWN AS ALSO DRAWN BY THE AO IS THAT T HE SAME MIGHT HAVE BEEN MADE FROM THE OPEN MARKET/UNREGISTERED DE ALERS AND THEN COVERED BY THE BILLS TAKEN FROM SHRI RAKESHKUMAR GU PTA & OTHERS. THERE IS ANOTHER POSSIBILITY THAT THESE PARTIES (I. E. GUPTAS) MIGHT HAVE PURCHASED THE GOODS THROUGH OPEN MARKET OR OTHER SE LLERS WHO SELLS GOODS WITHOUT BILLS OR IN CASH AND ARRANGED DIRECT DELIVERY TO THE ASSESSEE. IN FACT THE SAID PARTY HAD STATED THAT TH EIR PURCHASES WERE IN CASH AND SOLD TO THE ASSESSEE. SUCH TYPE OF TRAD ING IS WELL PREVAILING AND KNOWN. IT IS A MATTER OF COMMON KNOWLEDGE THAT GOODS ARE ALSO SOLD BY ONE PARTY WITHOUT TAKING DELIVERY IN OWN GO DOWN, I.E. DELIVERY THROUGH OTHER PARTY. SUCH TYPE OF INDIRECT TRADING IS PREVAILING BY CHARGING 1 TO 2 PERCENTAGE COMMISSION AND ASSESSED AS SUCH IN SO MANY CASES. THE ACCOUNTS OF THE ASSESSEE ARE AUDITE D. THE AUDIT REPORT CONTAINS QUANTITATIVE DETAILS OF CLOSING STO CK FOLLOWED BY METER WISE DETAILS OF OPENING STOCK, PURCHASES, SALES AND CLOSING STOCK IN ASSESSMENT PROCEEDINGS. DURING THE COURSE OF ASSESS MENT PROCEEDINGS THE ASSESSEE HAD FURNISHED QUANTITATIVE TALLY OF ST OCK, PURCHASES AND SALES. THE ASSESSEE ALSO PRODUCED DELIVERY CHALLA NS. THE PAYMENTS HAVE BEEN MADE BY ACCOUNT PAYEE CHEQUES. THERE IS N O EVIDENCE ON RECORD THAT THE PAYMENTS MADE BY THE ASSESSEE HAVE COME BACK TO HIM IN CASH. THE ASSESSEE IS ABLE TO CORRELATE PURCHASE S WITH CORRESPONDING SALES/CLOSING STOCK. THE AO HAS MERELY RELIED UPON THE INITIAL STATEMENT OF SHRI RAKESHKUMAR GUPTA AND OTHERS WHIC H WAS SUBSEQUENTLY RETRACTED IN PART BY WAY OF WRITTEN CO MMUNICATION AND AFFIDAVITS. THEREFORE, IN MY CONSIDERED VIEW THE PU RCHASES SHOWN BY THE ASSESSEE CANNOT BE HELD TO BE BOGUS OR NON EST (NON EXISTENCE) PURCHASES SO LONG AS THE SALES/CLOSING STOCK SHOWN BY THE ASSESSEE ARE NOT HELD BOGUS. IT IS NOT THE CASE OF THE AO TH AT THE SALES/CLOSING STOCKS SHOWN BY THE ASSESSEE ARE UNPROVED AND BOGUS . THEREFORE, THE ADDITION MADE ON ACCOUNT OF DISPUTED PURCHASES OF R S. 18,87,612/- CANNOT BE SUSTAINED. AS STATED ABOVE, THE ONE POSSI BLE LOGICAL INFERENCE CAN BE THAT OF DELIVERY OF GOODS THROUGH OTHER PART Y ARRANGED BY THE SAID DISPUTED SELLERS. UNDER SUCH FACTS AND IN THE CIRCUMSTANCES OF THE CASE, THE ONLY ADDITION THAT CAN BE MADE IS ON ACCO UNT OF ESTIMATION OF PROFITS OF THE ASSESSEE COVERING THE GP DIFFERENCE BETWEEN THE 7 ITA NO.4118 & 4352/MUM/2012 JAYESHKUMAR RASIKLAL & CO. PURCHASES MADE FROM MANOJ MILLS, ASTHA SILK INDUSTR IES AND SHREE RAM SALES & SYNTHETICS AND OTHER PARTIES AND OTHER LEAKAGE OF REVENUE, IF ANY. IN THIS CASE, THE DISPUTE IS LIMIT ED TO PURCHASES FROM AFORESAID THREE PARTIES AND ENTIRE DISALLOWANCE OF PURCHASES FROM THESE PARTIES CANNOT BE SUSTAINED FOR REASONS DISCU SSED IN HEREINABOVE AND IN PRECEDING PARAS. THE JUDICIAL PRONOUNCEMENTS RENDERED BY HONBLE HIGH COURT AND HONBLE I.T.A.T RELIED UPON BY THE ASSESSEE AS REPRODUCED IN PARA 4.3 OF THIS ORDER DID NOT UPHELD THE ADDITION IN GIVEN FACTS. HOWEVER, THE DECISIONS OF DIFFERENT 4 COMMISSIONERS OF INCOME-TAX (APPEALS) AS RELIED UPON BY THE LD. A.R. AND SUMMARY REPRODUCED IN PARA 4.4 OF THIS ORDER ARE BASED ON I DENTICAL FACTS I.E. PURCHASES FROM THESE PARTIES ONLY AND THEREFORE I A M OF THE CONSIDERED VIEW THAT THE SAME SHOULD BE FOLLOWED WHICH TAKES C ARE OF LEAKAGE, IF ANY. 4.7 IN LIGHT OF FACTS AND CIRCUMSTANCES OF THE CASE DISCUSSED HEREINABOVE AND JUDICIAL DECISIONS AND ORDERS OF DI FFERENT COMMISSIONERS OF INCOME-TAX (APPEALS) RELIED UPON B Y THE ASSESSEE AND ALSO HAVING REGARD TO OVERALL GP DISCLOSED BY T HE ASSESSEE, ESTIMATE OF PROFIT @ 5% OF DISPUTED PURCHASES WILL BE FAIR AND REASONABLE TO COVER UP THE DIFFERENCE OF GP OF PURC HASES FROM MANOJ MILLS, ASTHA SILK INDUSTRIES AND SHREE RAM SALES & SYNTHETICS AND FROM OTHER PARTIES AS WELL AS TO PLUG ANY LEAKAGE O F REVENUE. THEREFORE, ADDITION @ 5% OF DISPUTED PURCHASES I.E. RS. 94,385 /- (ROUNDED OFF TO RS. 95,000/-) IS CONFIRMED AND BALANCE AMOUNT OF AD DITION IS DELETED. IN TERMS OF DISCUSSION MADE AS ABOVE, THE ASSESSEE GETS PARTIAL RELIEF ACCORDINGLY. THE LD. CIT(A) THUS RESTRICTED THE ADDITION MADE B Y THE AO ON ACCOUNT OF BOGUS PURCHASE TO RS.95,000/-. AGGRIEVE D BY THE ORDER OF THE LD. CIT(A), THE ASSESSEE AND REVENUE BOTH ARE I N APPEAL BEFORE US. 7. WE HAVE HEARD THE ARGUMENTS OF BOTH THE SIDES AN D ALSO PERUSED THE MATERIAL ON RECORD. THE LD. COUNSEL FOR THE AS SESSEE HAS SUBMITTED THAT A SIMILAR ISSUE INVOLVING IDENTICAL FACTS HAS ALREADY BEEN CONSIDERED AND DECIDED IN FAVOUR OF THE ASSESS EE BY THE MUMBAI I BENCH OF THIS TRIBUNAL IN THE CASE OF M/S JITEN DRA HARSHAD KUMAR TEXTILES PVT. LTD. (ITA NO.771 AND 2211/MUM/2011 DA TED 21.11.2012) FOR A.Y. 2007-08 AND THE SAME HAS BEEN FOLLOWED BY THE TRIBUNAL, MUMBAI J BENCH TO DECIDE A SIMILAR ISSU E IN THE CASE OF M/S JITENDRA HARSHAD KUMAR & COMPANY FOR A.Y. 2005- 06 TO 2008- 09 VIDE ITS COMMON ORDER DATED 13.11.2013 PASSED IN ITA NO. 3141 TO 3144/MUM/2012 AND 4349 TO 4351/MUM/2012. THE LD. D R ON THE OTHER HAND SUBMITTED THAT THE MUMBAI J BENCH OF T HE TRIBUNAL IN 8 ITA NO.4118 & 4352/MUM/2012 JAYESHKUMAR RASIKLAL & CO. THE CASE OF M/S JITENDRA HARSHAD KUMAR TEXTILES PVT . LTD. HAS SENT BACK A SIMILAR ISSUE TO THE FILE OF THE AO FOR A.Y. 2006-07, 2008-09 AND 2009-10 VIDE ITS ORDER DATED 17 TH OCTOBER 2013 PASSED IN ITA NO. 2107 AND 2108/MUM/2012 AND 3564/MUM/2012. HE HAS P LACED A COPY OF THE SAID ORDER ON RECORD BEFORE US TO POINT OUT THAT THE ORDER OF BY MUMBAI I BENCH OF THE TRIBUNAL DATED 21.11. 2012 FOR A.Y. 2007-08 WAS DULY TAKEN INTO CONSIDERATION. IT IS T HUS CLEAR THAT THE SUBSEQUENT DECISION RENDERED ON 17 TH OCTOBER 2013 IN THE CASE OF M/S JITENDRA HARSHAD KUMAR TEXTILES PVT. LTD. FOR A.Y. 2006-07, 2008-09 AND 2009-10 WAS NOT BROUGHT TO THE NOTICE OF THE MU MBAI J BENCH OF ITAT AT THE TIME OF HEARING OF THE CASE OF M/S JITE NDRA HARSHAD KUMAR & COMPANY ON 31.10.2013 AND INSTEAD RELIANCE WAS PLACED ON EARLIER DECISION OF MUMBAI I BENCH OF THE TRIBUNA L RENDERED ON 21.11.2012 FOR A.Y. 2007-08 WHICH WAS IN THE FAVOUR OF THE ASSESSEE. WHILE DEPLORING THIS UNFAIR AND UNWARRANTED APPROAC H ADOPTED ON BEHALF OF THE ASSESSEE, WE ARE OF THE VIEW THAT IT WOULD BE FAIR AND REASONABLE AND IN THE INTEREST OF JUSTICE TO RESTOR E THE SIMILAR ISSUE INVOLVED IN THE PRESENT CASE TO THE FILE OF THE AO BY FOLLOWING THE ORDER OF THE MUMBAI J BENCH OF THE ITAT DATED 17 TH OCTOBER 2013 PASSED IN THE CASE OF THE M/S JITENDRA HARSHAD KUMAR TEXTI LES PVT. LTD. FOR A.Y. 2006-07, 2008-09 AND 2009-10(SUPRA), WHEREIN A SIMILAR ISSUE WAS RESTORED TO THE AO WITH THE FOLLOWING DIRECTION S AS GIVEN IN PARAGRAPH NO. 9 OF THE TRIBUNALS ORDER DATED 17 TH OCTOBER 2013. AS WE HAVE ALREADY OBSERVED THAT THE ADDITION CANNO T BE MADE SOLELY ON THE BASIS OF THE STATEMENT OF THE THIRD PART BUT SINCE THE RELEVANT RECORD HAS RELIED UPON THE ASSESSEE BEFORE US HAS N OT BEEN EXAMINED AND PARTICULARLY THE ALLEGED BILLS THROUGH WHICH TH E ASSESSEE HAS CLAIMED TO HAVE PURCHASED THE MATERIAL. IT IS PERTI NENT TO NOTE THAT FOR ALL THESE 3 YEARS THE ASSESSEE HAS NOT SHOWN ANY OP ENING STOCK OR CLOSING STOCK WHICH FURTHER SUPPORTS THE VIEW OF TH E ASSESSING OFFICER THAT THERE WAS NO PHYSICAL PURCHASE AND SALE OF THE GOODS IN QUESTION. SINCE, THE RELEVANT MATERIAL HAS NOT BEEN EXAMINED BY THE AUTHORITIES BELOW THEREFORE, IN THE FACTS AND CIRCUMSTANCES OF THE CASE AND IN THE INTEREST OF JUSTICE WE SET ASIDE THE MATTER TO THE RECORD OF THE ASSESSING OFFICER FOR ALL 3 YEARS FOR CONSIDERATION AND DECID ING THE SAME DENOVO AFTER EXAMINATION AND VERIFICATION OF THE RECORD FI LED BY THE ASSESSEE. WHILE DECIDING THE ISSUE ON MERITS ONE OF THE RELEV ANT AND MATERIAL 9 ITA NO.4118 & 4352/MUM/2012 JAYESHKUMAR RASIKLAL & CO. ASPECTS IS THE PHYSICAL DELIVERY OF THE GOODS. SINC E THE ASSESSEE HAS RELIED UPON THE AFFIDAVITS FILED BY SHRI RAKESHKUMA R GUPTA AND OTHER FAMILY MEMBERS THEREFORE, TO PROVE THE GENUINENESS OF THE PURCHASE AND SALE THE SUPPORTING MATERIAL HAS TO BE PRODUCED TO SHOW THAT THE TRANSACTIONS IN QUESTION ARE BACKED BY ACTUAL DELIV ERY. ACCORDINGLY, THE AO IS DIRECTED TO DECIDE THE ISSUE IN THE LIGHT OF THE ABOVE OBSERVATION. 8. ACCORDINGLY, THE IMPUGNED ORDER OF THE LD. CIT(A ) ON THE ISSUE RELATING TO THE ADDITION MADE ON ACCOUNT OF BOGUS P URCHASE IS SET- ASIDE AND THE MATTER IS RESTORED TO THE FILE OF THE AO FOR DECIDING THE SAME AFRESH AS PER THE SAME DIRECTIONS AS GIVEN BY THE TRIBUNAL IN THE CASE OF M/S JITENDRA HARSHAD KUMAR TEXTILES PVT. LT D.(SUPRA). THE APPEAL OF THE REVENUE AS WELL AS GROUND NO. 2 OF TH E ASSESSEES APPEAL ARE ACCORDINGLY TREATED AS ALLOWED FOR STATISTICAL PURPOSE. 9. AS REGARDS THE ISSUE RAISED IN GROUND NO. 1 OF T HE ASSESSEES APPEAL RELATING TO VALIDITY OF THE ASSESSMENT MADE BY THE AO U/S 143 R.W.S.147 OF THE ACT, THE LD. COUNSEL FOR THE ASSES SEE HAS NOT RAISED ANY CONTENTION AT THE TIME OF HEARING BEFORE US. TH E SAME IS ACCORDINGLY TREATED AS NOT PRESSED AND DISMISSED. 10. IN THE RESULT, THE APPEAL OF THE ASSESSEE IS TR EATED AS PARTLY ALLOWED FOR STATISTICAL PURPOSE WHILE THE APPEAL OF THE REVENUE IS TREATED AS ALLOWED FOR STATISTICAL PURPOSE. ORDER PRONOUNCED IN THE OPEN COURT ON 10/01/2014 . '2 . 01+ 3'*4 10 / 01/2014 1 . SD/- SD/- ( VIVEK VARMA ) (P.M. JAGTA P ) ' !'# / JUDICIAL MEMBER !'# / ACCOUNTANT MEMBER MUMBAI ; 3'* DATED 10 /01/2014 F{X~{T? P.S./ '*.!. 10 ITA NO.4118 & 4352/MUM/2012 JAYESHKUMAR RASIKLAL & CO. '2 . 5'6% 7%+ '2 . 5'6% 7%+ '2 . 5'6% 7%+ '2 . 5'6% 7%+/ COPY OF THE ORDER FORWARDED TO : 1. ,8 / THE APPELLANT 2. 59,8 / THE RESPONDENT. 3. : ( ) / THE CIT (A) - , MUMBAI 4. : /CIT MUMBAI 5. %$= 5''* , , / DR, ITAT, MUMBAI BENCH 6. >& ? / GUARD FILE. '2* ! '2* ! '2* ! '2* ! / BY ORDER, !9% 5' //TRUE COPY// @ @@ @/ // /!A !A !A !A ( DY./ASSTT. REGISTRAR) , , , , / ITAT, MUMBAI,