SHREE SAI STEEL INDUSTRIES INDIA (PRIVATE) LIMITED, MUMBAI V. ASSISTANT COMMISSIONER OF INCOME TAX-8(2)(1), MUMBAI

ITA 4576/MUM/2017

• Counselvise Citation: [2017] 126 COUNSELVISE.COM (IT) 7993 (ITAT-MUMBAI)
• Duration Of Justice: 5 month(s) 27 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 20-12-2017
• Appeal Filed By: Assessee
• Order Result: Dismissed
• Bench Allotted: E
• Assessment Year: 2009-2010
• Appeal Filed On: 23-06-2017
• Result in Favour of: Revenue
• Court: TRIBUNAL
• Keywords: Reopening of assessment; Bogus purchase; Additional evidence; Reason to believe
• Section: 143(3); 133(6); 147; 131; 148

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL, BENCH E, MU MBAI BEFORE SHRI R. C. SHARMA, ACCOUNTANT MEMBER AND SHRI PAWAN SINGH, JUDICIAL MEMBER ITA NO.4576/MUM/2017 (ASSESSMENT YEAR- 2009-10) M/S SHRI SAI STEEL INDUSTRIES INDIA (P) LTD., 127A, MAGAZINE STREET, DARUKHANA, MUMBAI-40001O PAN: AAJCS7709N VS. ACIT-8(2)(1), MUMBAI. (APPELLANT) (RESPONDENT) ASSESSEE REPRESENTED BY SH. PAVAN VED (AR) REVENUE REPRESENTED BY -- SH. V. JUSTINE (DR) DATE OF HEARING: 16.10.2017 DATE OF ORDER: 20.12.2017 ORDER UNDER SECTION 254(1) OF INCOME TAX ACT PER PAWAN SINGH, JUDICIAL MEMBER: 1. THIS APPEAL BY ASSESSEE UNDER SECTION 253 OF INCOME TAX ACT (THE ACT) IS DIRECTED AGAINST THE ORDER OF LD. COMMISSIONER O F INCOME-TAX (APPEALS)-14, [THE LD. CIT(A)] MUMBAI DATED 18.05 .2017 FOR ASSESSMENT YEAR (AY) 2009-10. THE ASSESSEE HAS RAIS ED FOLLOWING GROUNDS OF APPEAL: 1. THE LEARNED CIT(A) ERRED IN CONFIRMING ACTION OF LA O OF REOPENING THE ORIGINAL ASSESSMENT WHICH WAS COMPLETED U/S 143(3) AND THEREFORE THE REOPENING BE HELD AS NULL VOID AND ILLEGAL BECAUSE OF VARIOUS REASONS. 2. THE LD. CIT(A) ERRED IN CONFIRMING 12.5% OF ADDITIO NS MADE BY LAO OF RS. 42,95,62,364/- IN RESPECT OF BOGUS PURCHASES. 3. THE LAO HAS ERRED IN LEVYING INTEREST U/S 234A, B A ND C. 2. BRIEF FACTS OF THE CASE ARE THAT THE ASSESSEE-COMPA NY IS ENGAGED IN BUSINESS OF RETAILER OF IRON, STEEL AND MACHINERY , FILED ITS RETURN OF ITA NO.4576/M/2017 M/S SHRI SAI STEEL INDUSTRIES INDIA (P) LTD. 2 INCOME FOR RELEVANT AY ON 27.09.2009 DECLARING TOTA L INCOME OF RS.1,45,65,720/-. THE ASSESSMENT WAS COMPLETED ON 2 5.03.2011 UNDER SECTION 143(3). THE AO MADE ADDITION OF RS. 68,000/ - ON ACCOUNT OF INTEREST RECEIVED WHICH WAS NOT OFFERED TO INCOME. SUBSEQUENTLY, THE ASSESSMENT WAS RE-OPENED UNDER SECTION 147 OF THE A CT. THE ASSESSMENT WAS RE-OPENED ON THE BASIS OF INFORMATION THAT THE ASSESSEE HAS OBTAINED BOGUS BILLS OF RS. 42,95,62,364/- FROM THE ENTITY L ISTED IN THE WEBSITE OF SALES TAX DEPARTMENT, GOVERNMENT OF MAHARASHTRA, WH ICH WERE DECLARED AS HAWALA DEALERS. THE NOTICE UNDER SECTION 148 DAT ED 20.03.2014 WAS SERVED ON THE ASSESSEE. THE ASSESSEE IN RESPONSE T O THE NOTICE UNDER SECTION 148 VIDE ITS REPLY DATED 22.03.2014 CONTEND ED THAT RETURN ALREADY FILED BY ASSESSEE ON 27.09.2009 (WRONGLY MENTIONED AS16.07.2014) MAY BE TREATED AS RETURN OF INCOME IN RESPONSE TO THE N OTICE UNDER SECTION 148 OF THE ACT. THE ASSESSING OFFICER RECORDED THE FOLL OWING REASONS; IN THE INSTANT CASE, INFORMATION GATHERED/ AVAILAB LE IN THE OFFICE REVEALED THAT M/S SHREE SAI STEEL INDUSTRIES PRIVATE LTD HAS OBTAINED BOGUS BILLS OF RS. 42,95,62,364/-FROM ENTITY THE LISTED IN SALES T AX WEBSITE AND DECLARED AS HAWALA DEALERS BY THE SALE TAX DEPARTMENT, MUMBA I THEREBY INFLATING ITS EXPENSES AND SUPPRESSING THE PROFIT FOR AY 2009 -10. INFORMATION RECEIVED FROM THE DGIT (INV.) MUMBAI THAT M/S SHREE SAI STEEL INDUSTRIES PRIVATE LTD HAS OBTAINED BOGUS BILLS FROM THE FOLLO WING PARTIES; SR.NO. NAME OF THE PUR. PARTIES AMT. (IN RS.) 1. I S K TRADING COMPANY PVT. LTD. 16,81,58,700 2. K R C TRADING CO. PVT. LTD. 20,75,00,990 3. S B. METAL CORPN 2,03,20,320 4. HANUMAN STEEL 3,55,82,354 TOTAL 42,95,62,364 THUS ASSESSEES CASE CLEARLY FALSE WITHIN THE PROV ISIONS OF EXPLANATION 2 (C) (I) OF SECTION 147 AS THE INCOME CHARGEABLE TO TAX HAS BEEN ASSESSED. IN ITA NO.4576/M/2017 M/S SHRI SAI STEEL INDUSTRIES INDIA (P) LTD. 3 VIEW OF THE ABOVE, I HAVE REASON TO BELIEVE THAT TH E INCOME TO THE EXTENT OF RS. 42,95,62,364/- CHARGEABLE TO TAX FOR ASSESSMENT YEAR 2009-10 HAS ESCAPED ASSESSMENT, AS ASSESSEE HAS FAILED TO DISC LOSE FULLY AND TRULY ALL MATERIAL FACTS NECESSARY FOR ITS ASSESSMENT IN THIS CASE IN TERMS OF THE PROVISIONS OF SECTION 147 OF THE IT ACT. THE TAX EF FECT COMES TO RS. 12,88,68,709/-. 3. THE ASSESSEE FILED OBJECTION AGAINST RE-OPENING. TH E OBJECTION OF THE ASSESSEE AGAINST THE RE-OPENING WAS REJECTED BY AO. THEREAFTER, THE AO PROCEEDED TO COMPLETE MAKE THE RE-ASSESSMENT PROCEE DINGS. DURING THE RE-ASSESSMENT PROCEEDING, THE ASSESSING OFFICER (AO ) NOTICED THAT THE ASSESSEE HAS SHOWN THE PURCHASES FROM THE FOUR PART IES WHICH ARE SHOWN AS HAWALA DEALERS AS PER THE INFORMATION RECEIVED B Y AO FROM THE OFFICE OF DGIT(INV.). THE ASSESSEE WAS ASKED TO SUBSTANTIA TE THE PURCHASES AND TO PRODUCE THE PARTIES FOR VERIFICATION. THE ASSESS EE FAILED TO PRODUCE THE PARTIES FOR VERIFICATION. THE AO ON HIS OBSERVATION THAT THAT THE ASSESSEE FAILED TO PRODUCE THE GENUINENESS OF TRANSACTION DI SALLOWED THE ENTIRE PURCHASES FROM FOUR PARTIES. ON APPEAL BEFORE THE L D. CIT(A), THE ASSESSEE CHALLENGED THE VALIDITY OF RE-OPENING AS WELL AS TH E ADDITION ON ACCOUNT OF BOGUS PURCHASES. THE LD. CIT(A) SUSTAINED THE ACTIO N OF AO FOR RE- OPENING OF THE ASSESSMENT. HOWEVER, THE ADDITION ON ACCOUNT OF BOGUS PURCHASES WAS RESTRICTED TO 12.5% OF THE TOTAL IMPU GNED/BOGUS PURCHASES. THUS, FURTHER AGGRIEVED BY THE ORDER OF LD. CIT(A), THE ASSESSEE HAS FILED THE PRESENT APPEAL BEFORE US. 4. WE HAVE HEARD THE LD. AUTHORIZED REPRESENTATIVE (AR ) OF THE ASSESSEE AND LD. DEPARTMENTAL REPRESENTATIVE (DR) FOR THE RE VENUE AND PERUSED ITA NO.4576/M/2017 M/S SHRI SAI STEEL INDUSTRIES INDIA (P) LTD. 4 THE MATERIAL AVAILABLE ON RECORD. GROUND NO.1 RELAT ES TO THE VALIDITY OF RE- OPENING. THE LD. AR OF THE ASSESSEE ARGUED THAT DUR ING THE ASSESSMENT PROCEEDING, COMPLETE DETAILS WERE FURNISHED INCLUDI NG THE TAX AUDIT REPORT, DETAILS OF SUNDRY DEBTOR AND CREDITOR AND T HE LIST OF THE PARTIES FROM WHOM THE ASSESSEE HAS SHOWN THE PURCHASES. THE AO AFTER VERIFYING THE FACTS PASSED THE ASSESSMENT ORDER UNDER SECTION 143(3) OF THE ACT ON 25.03.2011. IN THE REASONS OF RE-OPENING, NO SPECIF IC DISCLOSURE ABOUT THE INFORMATION RECEIVED FROM INVESTIGATION WING WAS DI SCLOSED. THE AO HAS NOT SUPPLIED THE COPY OF INFORMATION RECEIVED FROM THE DGIT(INV.) TO ENABLE THE ASSESSEE TO MAKE HIS SUBMISSION AGAINST SUCH INFORMATION. THE ASSESSMENT WAS RE-OPENED ON THE BASIS OF THIRD PARTY INFORMATION. IT WAS ARGUED THAT RE-OPENING OF THE ASSESSMENT CAN BE MADE ONLY WITH THE APPROVAL OF JOINT COMMISSIONER OF INCOME-TAX(JCIT). IN ABSENCE OF PRIOR APPROVAL OF JCIT OF INCOME-TAX, THE RE-OPENING IS I NVALID. IN THE ALTERNATIVE SUBMISSION, THE LD. AR OF THE ASSESSEE ARGUED THAT THE ASSESSMENT WAS RE-OPENED WITHOUT APPLICATION OF MIN D AS NO APPROVAL OF REASSESSMENT WAS OBTAINED. DURING THE ASSESSMENT, T HE ASSESSEE REQUESTED THE AO TO ALLOW THE INSPECTION ON RECORD. THE ASSES SEE WAS NOT ALLOWED THE INSPECTION OF RECORD. IN SUPPORT OF HIS SUBMISS ION, THE LD. AR OF THE ASSESSEE RELIED UPON THE DECISION OF HONBLE BOMBAY HIGH COURT IN CIT VS. TREND ELECTRONICS (2015) 379 ITR 056 (BOM), GUJ ARAT HIGH COURT IN VERSHABEN SHANTILAL PATEL VS. ITO (2016) 282 CTR 00 75 (GUJ.) AND DELHI ITA NO.4576/M/2017 M/S SHRI SAI STEEL INDUSTRIES INDIA (P) LTD. 5 HIGH COURT IN SABH INFRASTRUCTURE LTD. VS ACIT W.P. (C)1357/2015. ON THE OTHER HAND, THE LD. DR FOR THE REVENUE SUPPORTE D THE ORDERS OF AUTHORITIES BELOW. IT WAS ARGUED THAT THE AO HAS RE CEIVED CREDIBLE INFORMATION FROM THE DGIT (INV.). NO ENQUIRY IS REQ UIRED BEFORE RE- OPENING. THE AO HAS NO JURISDICTION TO MAKE ANY ENQ UIRY UNLESS THE ASSESSMENT IS RE-OPENED. THE ASSESSMENT WAS RE-OPEN ED WITH THE APPROVAL OF HIGHER AUTHORITIES. IT WAS ARGUED THAT THE RE-OP ENING OF THE ASSESSMENT IS VALID AND LAWFUL. THE ASSESSEE IS RAISING TECHNI CAL OBJECTIONS AS THEY HAVE NO MERIT IN ITS APPEAL. NO SUCH OBJECTION ABOU T THE PRIOR PERMISSION OR APPROVAL FROM JOINT COMMISSIONER WAS RAISED BEFO RE THE FIRST APPELLATE STAGE. THE ORDER WAS PASSED AFTER DUE COMPLIANCE OF STATUTORY PROVISIONS. THE LD CIT(A) HAS ALREADY GRANTED SUFFICIENT RELIEF TO THE ASSESSEE AND THAT THE APPEAL IS LIABLE TO BE DISMISSED. 5. WE HAVE CONSIDERED THE RIVAL SUBMISSION OF THE PART IES AND HAVE GONE THROUGH THE ORDERS OF AUTHORITIES BELOW. THE AO RE- OPENED THE ASSESSMENT ORDER ON THE BASIS OF INFORMATION RECEIV ED FROM DGIT (INV.) THAT ASSESSEE HAS CLAIMED CERTAIN PURCHASES FROM TH E PARTIES WHO WERE DECLARED AS HAWALA TRADERS. THE HAWALA TRADERS WERE ENGAGED IN PROVIDING THE BOGUS BILLS. IN OUR VIEW, AT THE TIME OF ISSUAN CE OF NOTICE UNDER SECTION 148, RELEVANT INFORMATION OR MATERIAL ON TH E BASIS OF WHICH A REASONABLE PERSON CAN FORM A BELIEF IS SUFFICIENT. IF THE MATERIAL OR INFORMATION RECEIVED BY AO WOULD CONCLUSIVELY PROVE D THE ESCAPEMENT ITA NO.4576/M/2017 M/S SHRI SAI STEEL INDUSTRIES INDIA (P) LTD. 6 OF INCOME IS NOT RELEVANT AT THAT STAGE. THE AO RE- OPENED THE ASSESSMENT PROCEEDING ON THE BASIS OF INFORMATION RECEIVED FRO M DGIT(INV.). THE ASSESSEE HAS NOT DISPUTED THAT THE REASONS WERE NOT RECORDED BEFORE RE- OPENING OF THE CASE. THE REASONS RECORDED WERE DULY SUPPLIED TO THE ASSESSEE. THE ASSESSMENT WAS RE-OPENED WITHIN FOUR YEAR AS FROM THE END OF RELEVANT AY. 6. THE HONBLE APEX COURT IN CASE OF RAJESH JHAVERI ST OCK BROKER PVT. LTD. VS. ACIT (291 ITR 500) HELD THAT AT THE INITIAL STA GE, WHAT IS REQUIRED IS REASON TO BELIEVE, BUT NOT THE ESTABLISHED FACT ABO UT ESCAPEMENT OF INCOME. THE HONBLE GUJARAT HIGH COURT IN CASE OF P EASS INDUSTRIAL ENGINEERS (P.) LTD. VS. DEPUTY COMMISSIONER OF INCO ME-TAX[2016] 76 TAXMANN.COM 122 (GUJARAT) HELD THAT SECTION 147 AUT HORIZES AND PERMITS THE ASSESSING OFFICER TO ASSESS OR RE-ASSESS THE IN COME CHARGEABLE TO TAX IF HE HAS REASON TO BELIEVE THAT INCOME FOR ANY ASS ESSMENT YEAR HAS ESCAPED THE ASSESSMENT. THE WORD 'REASON' IN THE PH RASE 'REASON TO BELIEVE' WOULD MEAN CAUSE OR JUSTIFICATION AND AFTER CONSIDE RING AND ANALYZING THE PROVISION, IT HAS BEEN PROPOUNDED THAT THE EXPRESSI ON CANNOT BE READ TO MEAN THAT ASSESSING OFFICER SHOULD HAVE FINALLY ASC ERTAINED THE FACT OF LEGAL EVIDENCE OR CONCLUSION. IT WAS ALSO HELD THAT AT THE INITIAL STAGE WHAT IS REQUIRED IS REASON TO BELIEVE BUT, NOT ESTABLISH ED FACT OF ESCAPEMENT OF INCOME. THEREFORE, AT THIS STAGE ONLY QUESTION WHE THER THERE WAS RELEVANT MATERIAL TO FORM A REASONABLE BELIEF IS TO BE SEEN AND IN THE BACKGROUND OF ITA NO.4576/M/2017 M/S SHRI SAI STEEL INDUSTRIES INDIA (P) LTD. 7 PRESENT FACTS, THERE IS A SPECIFIC INFORMATION RECE IVED DURING THE INVESTIGATION BY THE AUTHORITY AND IT HAS BEEN PRIMA FACIE FOUND THAT ASSESSEE IS ALSO THE BENEFICIARY OF THE SAID PARTIE S, THE RE-REOPENING OF ASSESSMENT IS VALID. THE DECISION RELIED BY LD. AR OF THE ASSESSEE ARE N OT APPLICABLE ON THE FACTS OF THE PRESENT CASE. IN CI T VS TREND ELECTRONICS (SUPRA) THE ASSESSMENT UNDER SECTION 143(3) RWS 147 WAS COMPLETED WITHOUT SUPPLYING THE REASONS RECORDED. IN VARSHABE N SHANTILAL PATEL VS ITO (SUPRA) THE AO MADE RELIANCE ON THE MATERIAL FR OM EXTERNAL SOURCE, THE SAID ASPECT IS NOT REFLECTED IN THE REASONS REC ORDED. AND IN SABH INFRASTRUCTURE LTD. (SUPRA) THE NOTICE UNDER SECTIO N 148 FOR RE-OPENING THE ASSESSMENT WAS ISSUED AFTER FOUR YEAR FROM THE END OF RELEVANT ASSESSMENT YEAR AND THE AO HAS NOT SPECIFIED AS TO WHAT MATERI AL FACTS AND INFORMATION THE ASSESSEE HAS FAILED TO DISCLOSE. HO WEVER, ALL THESE LEACHES ARE NOT AVAILABLE IN THE PRESENT CASE. THE OTHER SU BMISSIONS OF THE LD AR FOR THE ASSESSEE THAT NO PRIOR PERMISSION OR APPROV AL OF JCIT WAS OBTAINED HAS NO FORCE. THE LD AR FOR THE ASSESSEE I S HIS WRITTEN SUBMISSIONS DATED 04.10.2017 HAS SPECIFICALLY CONTE NDED THAT FROM THE DOCUMENTS RELATING TO THE APPROVAL OF JCIT WAS WITH THE LAO AND THEREFORE HE HAS TO PROVE THAT THE APPROVAL WAS WIT H THE APPLICATION OF MIND ( PARA17 OF PAGE 8 OF PB). NO OTHER MATERIAL WAS BROUGHT TO OUR NOTICE TO TAKE A CONTRARY VIEW THAT THERE WAS NO AP PROVAL OF JCIT FOR RE- OPENING THE ASSESSMENT. THUS, WE DO NOT FIND ANY FO RCE IN THE SUBMISSION ITA NO.4576/M/2017 M/S SHRI SAI STEEL INDUSTRIES INDIA (P) LTD. 8 OF LD. AR OF THE ASSESSEE; HENCE, THE GROUND NO.1 O F THE APPEAL IS DISMISSED. 7. GROUND NO.2 RELATES TO SUSTAINING THE ADDITION ON A CCOUNT OF BOGUS PURCHASES. THE LD. AR OF THE ASSESSEE ARGUED THAT A LL THE PURCHASES FROM ALL FOUR PARTIES WERE GENUINE. THE ASSESSEE HAS GIV EN SUFFICIENT MATERIAL TO THE AO TO PROVE THE GENUINENESS OF ENQUIRY. IT W AS ARGUED THAT M/S KRC TRADING PVT. LTD. AND HANUMAN STEEL TRADER HAVE FILED AFFIDAVIT CONFIRMING THE TRANSACTION. BOTH THE PARTIES HAVE C ONFIRMED THE TRANSACTION WERE HIGHER AMOUNT THAN THE AMOUNT DISA LLOWED/ADDED BY THE AO. THE AO ACCEPTED THE GENUINENESS OF SOME PART OF THE TRANSACTION BY BOTH THE PARTIES. THE AO HAS NOT CONSIDERED THE AFF IDAVIT AS THE SAME WAS PASSED ON THE DAY WHEN ASSESSMENT ORDER WAS PASSED. THIS FACT WAS BROUGHT IN THE NOTICE OF LD. CIT(A). THE LD. CIT(A) DID NOT CONSIDER THE AFFIDAVIT THAT IT WAS AN ADDITIONAL EVIDENCE. M/S. HANUMAN STEEL TRADERS IS NOT SHOWN IN THE LIST OF HAWALA DEALERS BY THE S ALE TAX DEPARTMENT. THUS, THE TRANSACTION WITH HANUMAN STEEL TRADERS CA NNOT BE TREATED AS BOGUS. THE PURCHASES SHOWN FROM SB METAL CORPORATIO N WERE THROUGH ACCOUNT PAYEE CHEQUE. THE PURCHASES MADE FROM SB ME TAL CORPORATION ARE VERY SMALL AMOUNT. THE LD. AR OF THE ASSESSEE P RAYED FOR DELETING THE ENTIRE ADDITION. ON THE OTHER HAND, THE LD. DR FOR THE REVENUE SUPPORTED THE ORDER OF AUTHORITIES BELOW. THE LD. DR FOR THE REVENUE FURTHER ARGUED THAT THE LD. CIT(A) RESTRICTED THE ADDITION @ 12.5% AS NO DELIVERY OF ITA NO.4576/M/2017 M/S SHRI SAI STEEL INDUSTRIES INDIA (P) LTD. 9 MATERIAL WAS PROVED BY THE ASSESSEE. THE LD. DR FOR THE REVENUE PRAYED FOR DISMISSAL OF THE APPEAL. 8. WE HAVE CONSIDERED THE RIVAL SUBMISSION OF THE PART IES AND HAVE GONE THROUGH THE ORDERS OF AUTHORITIES BELOW. DURING THE RE-ASSESSMENT PROCEEDINGS THE ASSESSEE WAS ASKED TO SUBSTANTIATE THE PURCHASES AND TO FURNISH THE DOCUMENTS RELATED TO THE PURCHASES AND TO PRODUCE THE PARTIES FOR VERIFICATION. THE ASSESSEE FAILED TO PRODUCE TH E PARTIES FOR VERIFICATION AND THE RELEVANT DOCUMENTS TO PROVE THE GENUINENESS OF THE PURCHASES. THE AO ON HIS OBSERVATION THAT THAT THE ASSESSEE FA ILED TO PRODUCE THE GENUINENESS OF TRANSACTION DISALLOWED THE ENTIRE PU RCHASES FROM FOUR PARTIES. THE AO HAS NOT ISSUED ANY NOTICE UNDER SE CTION 133(6) OR SUMMONS UNDER SECTION 131 OF THE ACT. THE AO DISALL OWED THE PURCHASES OF RS.42,95,62,363/-. ON APPEAL BEFORE THE LD. CIT( A) RESTRICTED THE DISALLOWANCE @12.5% OF THE PURCHASES DISALLOWED BY AO. BEFORE US AS WELL AS LD CIT(A), THE LD AR OF THE ASSESSEE CONTE NDED THAT HE HAS FILED AFFIDAVIT OF THE TWO SUPPLIER WHICH WAS NOT CONSIDE RED BY AO. THE LD CIT(A) WHILE CONSIDERING THE CONTENTION OF LD AR OB SERVE THAT THE AFFIDAVIT WERE SWORN ON 27.02.2015 AND THE ASSESSME NT ORDER WAS ALSO PASSED ON THE SAME DAY. THE LD CIT(A) TREATED THE C OPY OF THE AFFIDAVIT AS ADDITIONAL EVIDENCE AND THE SAME WAS NOT CONSIDERED . EVEN BEFORE US THE LD AR HAS NOT PRAYED FOR TAKING ADDITIONAL EVIDENCE ON RECORD. THOUGH, THE COPY OF THE SAID AFFIDAVIT IS PLACED ON RECORD, HOWEVER, THE LD AR FOR ITA NO.4576/M/2017 M/S SHRI SAI STEEL INDUSTRIES INDIA (P) LTD. 10 THE ASSESSEE OR THE ASSESSEE HAS NOT CERTIFIED THAT THE COPY OF THE AFFIDAVIT WERE FILED BEFORE AO. REGARDING THE CONTENTION THA T THE PURCHASES FROM KRC TRADING AND ISK TRADING WAS MORE, THE LD AR FOR ASSESSEE VIDE ORDER SHEET NOTING DATED 30.03.2017 BEFORE THE LD. CIT(A) ACCEPTED THAT THERE WAS A MISTAKE DUE TO INCLUSION OF OPENING STO CK AND FIGURE TAKEN BY AO WAS CORRECT. WE HAVE NOTED THAT THE LD AR FOR TH E ASSESSEE, DESPITE ADMITTING MISTAKE BEFORE LD. CIT(A), HAS AGAIN ARGU ED BEFORE US THAT THE PURCHASES MADE FROM KRC TRADING AND ISK TRADING WAS MORE. THE LD CIT(A) OBSERVE THAT THE ASSESSEE HAS NOT FURNISHED THE EVIDENCE OF TRANSPORTATION. HOWEVER, THE LD CIT(A) ON HIS OBSER VATION THAT THERE CANNOT BE ANY SALE WITHOUT PURCHASES FURTHER BY MAK ING ADDITIONS THE GP/NP WILL INCREASED BY 26% FOR WHICH THERE IS NO C OMPARABLE. THE LD. CIT(A) SUSTAINED THE ADDITION AT 12.5% OF THE BOGUS PURCHASES ON THE BASIS OF DECISION OF DIFFERENT HIGH COURTS WHICH IN CLUDES BHOLANATH POLY FEB PVT. LTD. 355 ITR 290 (GUJ), SANKET STEEL TRADE RS VS. ITO AND THE VIJAY PROTEINS LTD. VS. ACIT 58 ITR 428 (AHD.) AND CIT VS. SIMIT P. SHETH [39 TAXMAN.COM 385 (GUJ)] ETC. WE ARE ALSO OF THE VIEW THAT UNDER INCOME-TAX ACT, THE ONLY REAL INCOME CAN BE TAXED B Y THE REVENUE, EVEN IF THE TRANSACTION IS NOT VERIFIABLE DUE TO ANY REA SON, THE ONLY TAXABLE IS THE TAXABLE INCOME COMPONENT AND NOT AGGREGATE OF T HE TRANSACTION. AFTER CONSIDERING THE FACT AND NATURE OF BUSINESS OF ASSE SSEE, WE ARE OF THE OPINION THAT IN ORDER TO FULFIL THE GAP OF REVENUE LEAKAGE, THE DISALLOWANCE ITA NO.4576/M/2017 M/S SHRI SAI STEEL INDUSTRIES INDIA (P) LTD. 11 OF REASONABLE PERCENTAGE OF IMPUGNED PURCHASES WOUL D MEET THE END OF JUSTICE. THE HON'BLE BOMBAY HIGH COURT IN CIT V. HARIRAM BHAMBHANI [IT APPEAL NO. 313 OF 2013, DATED 04-2-2015] HELD T HAT REVENUE IS NOT ENTITLED TO BRING THE ENTIRE SALES CONSIDERATION TO TAX, BUT ONLY THE PROFIT ATTRIBUTABLE ON THE TOTAL UNRECORDED SALES CONSIDER ATION ALONE CAN BE SUBJECT TO INCOME TAX. WE HAVE NOTED THAT THE LD CIT(A) AFT ER RELYING ON VARIOUS DECISIONS RESTRICTED THE DISALLOWANCE AT 12 .5% OF THE TAINTED/ BOGUS PURCHASE. THUS, WE DO NOT FIND ANY ILLEGALITY OR INFIRMITY IN THE ORDER PASSED BY LD CIT(A), WHICH WE SUSTAINED. 9. IN THE RESULT THE APPEAL OF THE ASSESSEE IS DISMIS SED. ORDER PRONOUNCED IN THE OPEN C OURT ON 20.12.2017 SD/- SD/- R.C.SHARMA PAWAN SIN GH ACCOUNTANT MEMBER JUD ICIAL MEMBER MUMBAI, DATED: 20.12.2017 COPY OF THE ORDER FORWARDED TO : 1. THE ASSESSEE; 2. THE REVENUE; 3. THE CIT(A); 4. THE CIT, MUMBAI CITY CONCERNED; 5. THE DR, ITAT, MUMBAI; 6. GUARD FILE. BY ORDER SK PRIVATE SECRETARY (DY./ASSTT.REGISTRAR) ITAT, MUMBAI