MR ANIL AGARWAL, MUMBAI V. INCOME TAX OFFER WARD 1(1), THANE

ITA 4682/MUM/2018

• Counselvise Citation: [2019] 114 COUNSELVISE.COM (IT) 6129 (ITAT-MUMBAI)
• Duration Of Justice: 1 year(s) 2 month(s) 15 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 17-10-2019
• Appeal Filed By: Assessee
• Order Result: Partly Allowed
• Bench Allotted: SMC
• Assessment Year: 2009-2010
• Appeal Filed On: 02-08-2018
• Result in Favour of: Partly Allowed
• Court: TRIBUNAL
• Department Lawyers: AKHTAR HANSARI
• Assessee Lawyers: SHREYA DOSHI
• Keywords: Bogus purchase; Business income; Accommodation entries
• Section: 133(6)

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL SMC, BENCH MUMBAI BEFORE SHRI MAHAVIR SINGH, JUDICIAL MEMBER & SHRI G. MANJUNATHA, ACCOUNTANT MEMBER ITA NO.4682 & 4683/MUM/2018 ( ASSESSMENT YEARS :2009-10 & 2010-11 ) ANIL AGARWAL (PROP OF M/S DIVYA STEELS) 201/B-53, NEELGIRI 2 ND POKHRAN ROAD VASANT VIHAR, THANE(WEST) THANE-400 610 VS. ITO, WARD-1(1) THANE PAN/GIR NO. ABEPA0522A APPELLANT ) .. RESPONDENT ) ASSESSEE BY SHREYA DOSHI REVENUE BY AKHTAR H.ANSARI DATE OF HEARING 17/10/2019 DATE O F PRONOUNCEME NT 17 /10 /201 9 / O R D E R PER G.MANJUNATHA (A.M) : THESE TWO APPEALS FILED BY THE ASSESSEE ARE DIRECTE D AGAINST COMMON ORDER PASSED BY THE LD. COMMISSIONER OF INCO ME TAX (APPEALS) -3, NASIK, DATED 25/05/2018 FOR THE ASSES SMENT YEARS (AY) 2009-10 & 2010-11. SINCE, THE FACTS ARE IDENTI CAL AND ISSUES ARE COMMON, FOR THE SAKE OF CONVENIENCE, THESE APPE ALS WERE HEARD TOGETHER AND ARE DISPOSED-OFF BY THIS CONSOLIDATED ORDER. ITA.NO.4682/MUM/2018: 2. THE ASSESSEE HAS, MORE OR LESS FILED COMMON GROU NDS OF APPEAL FOR BOTH ASSESSMENT YEARS. THEREFORE, FOR T HE SAKE OF ITA NOS.4682 & 4683/MUM/2018 ANIL AGARWAL 2 BREVITY, GROUNDS OF APPEAL FILED FOR AY 2009-10 ARE REPRODUCED AS UNDER:- 1. THE LEARNED CIT(A) HAS ERRED IN FACTS AND LAW BY DISALLOWING 8% OF THE VALUE OF ALLEGED NON-GENUINE PURCHASES OF RS 1, 00, 04, 992/- AMOUNTING TO RS 8,00,399 BY COMPLETELY IGNORING VARIOUS DOCUMENTARY EVIDENCES SUBMITTED IN SUPPORT OF SUBJECT TRANSACTIONS SUCH AS INVOICES (C ONTAINING VEHICLE NOS. WHEREVER POSSIBLE), LEDGER EXTRACTS, STOCK TALLY AN D ENTRIES IN BANK STATEMENT IN RESPECT OF PAYMENTS MADE BY ACCOUNT PAYEE CHEQUE 2. THE LEARNED CIT(A) HAS ERRED IN FACTS AND LAW BY NO T REALIZING THAT OUR OF ALLEGED NON-GENUINE PURCHASES OF RS 1 ,00,04, 992/- ; ONLY PURCHASES AMOUNTING TO RS 10,33,032 HAS BEEN RESOLD DURING DI E YEAR AND BALANCE AMOUNT OF RS 89,71,960 IS FORMING PART OF CLOSING S TOCK. THEREFORE, WITHOUT PREJUDICE TO THE OTHER GROUNDS, THE ADDITIONS, IF A NY, SHOULD HAVE BEEN RESTRICTED ON THE PROFIT ELEMENT ON PURCHASES (I,E. CLAIMED AS EXPENSES)OF RS 10,33, 032/- AND NOT ON ENTIRE AMOUNT OF RS.1,00,04 992/-. 3. THE CIT(A) HAS IGNORED THE TRACK RECORD OF THE ASSESSES WHOSE GP RATIO IN THE EARLIER THREE YEARS WERE LESS THAN 1% OF SALES. 3. THE BRIEF FACTS OF THE CASE ARE THAT, THE ASSESS EE IS ENGAGED IN THE BUSINESS OF MANUFACTURER OF IRON AND STEEL GOOD S, FILED ITS RETURN OF INCOME FOR AY 2009-10 ON 29/09/2009, DECLARING T OTAL INCOME OF RS.4,56,250-. THEREAFTER, THE CASE HAS BEEN REOPENE D U/S 147, ON THE BASIS OF INFORMATION RECEIVED FROM DGIT, INVEST IGATION, MUMBAI, AS PER WHICH, SALES TAX AUTHORITIES OF GOVERNMENT O F MAHARASHTRA HAD TAKEN ACTIONS AGAINST NUMBER OF HAWALA DEALERS , WHO HAD ISSUED BOGUS PURCHASE BILLS TO VARIOUS PARTIES IN M UMBAI TO REDUCE PROFITS. AS PER LIST OF BENEFICIARIES, THE ASSESSE E IS ONE OF THE BENEFICIARY, WHO HAD TAKEN ACCOMMODATION BILLS OF BOGUS PURCHASES FROM VARIOUS PARTIES AS LISTED BY THE AO IN HIS ASSESSMENT ORDER AMOUNTING TO RS. 1,00,04,992/-. TH E CASE WAS SELECTED FOR SCRUTINY AND THE ASSESSMENT HAS BEEN C OMPLETED U/S. 143(3).R.W.S. 147 OF THE I.T.ACT, 1961 ON 16/02/201 5 AND DETERMINED ITA NOS.4682 & 4683/MUM/2018 ANIL AGARWAL 3 TOTAL INCOME OF RS. 17,06,870/-, AFTER MAKING ADDIT IONS OF 12.50% PROFIT ON ALLEGED PURCHASES FROM THOSE PARTIES AND MADE ADDITIONS OF RS. 12,50,624/-. 4. AGGRIEVED BY THE ASSESSMENT ORDER, THE ASSESEE P REFERRED AN APPEAL BEFORE THE LD.CIT(A). BEFORE THE LD.CIT(A), THE ASSESSE HAS REITRATED ITS ARGUMENTS MADE BEFORE THE AO. THE SUM AND SUBSTANCE OF THE ARGUMENTS OF THE ASSESSEE BEFORE THE LD.CIT( A) ARE THAT PURCHASE FROM THE ABOVE PARTY IS GENUINE, WHICH IS SUPPORTED BY NECESSARY EVIDENCES. THEREFORE, NO ADDITIONS COULD BE MADE ON THE BASIS OF INFORMATION RECEIVED FROM THIRD PARTY. THE LD.CIT(A), AFTER CONSIDERING RELEVANT SUBMISSION OF THE ASSESSEE AND ALSO, ON ANALYSIS OF INFORMATION COLLECTED DURING THE COURSE OF APPELLATE PROCEEDINGS AND ALSO BY FOLLOWING THE DECISION OF H ONBLE GUJARAT HIGH COURT, IN THE CASE OF CIT VS. SIMITH P. SHETH (356 ITR 451), SCALED DOWN ESTIMATION OF PROFIT FROM 12.50% TO 8%. THE RELEVANT FINDINGS OF THE LD.CIT(A) ARE AS UNDER:- 7. I HAVE CAREFULLY CONSIDERED THE APPELLANT'S SUBM ISSIONS, OBSERVATIONS OF THE AO IN THE ASSESSMENT ORDER AND THE FACTS OF THE CASE THE APPELLANT HAD SHOWN PURCHASES AMOUNTING TO RS 1,00,04992/- IN AY 2009-10 AND RS 49,07,280/- IN AY 2010-11 WHICH APPEARED IN THE LIS T OF SALES-TAX DEPARTMENT WHO HAD INDULGED IN HAWALA TRANSACTIONS I.E PROVIDING ONLY BILLS WITHOUT THERE IS BEING ANY ACTUAL PURCHASE OR SALE TRANSACTION 7.1. BEFORE THE CASE IS DISCUSSED, IT IS IMPORTANT TO KNOW THE BACKGROUND IN WHICH THE CASE OF THE APPELLANT WAS SELECTED FOR SC RUTINY. AS PER SECTION 3 OF THE MVAT ACT, 2002, EVERY REGISTERED DEALER, IS LIABLE TO PAY TAX ON A SALE TRANSACTION WITH A PURCHASING DEALER WHOSE TURNOVER OF SALES O R PURCHASES HAS EXCEEDED RUPEES FIVE LAKH THE SELLING DEALER IS SUES A TAX INVOICE, WHICH SHOWS THE AMOUNT OF LAX RECOVERED FROM THE PURCHASI NG DEALER THE SALE MADE BY THE SELLING DEALER NEEDS TO BE ACCOUNTED IN HIS TURNOVER OF SALES WHILE FILING THE TAX RETURN AND PAY THE DUE TAXES F URTHER, THE PURCHASING DEALER IS ALSO ENTITLED TO CLAIM BY WAY OF A SET OF F UNDER SECTION 48 THE TAX PAID ON HIS PURCHASES AS ITC (INPUT TAX CREDIT). THE SALES TAX AUTHORITIES FOUND THAT A LARGE NUMBER _OF SELLING DEALERS, HAD .NEITHER FILED THEIR, RETURNS NOR PAID THE TAXES COLLECTED B Y THEM FROM PURCHASING DEALERS THE SALES TAX AUTHORITIES DENIED THE BENEFIT OF SE T-OFT OF INPUT TAX CREDIT TO PURCHASING DEALERS, WHO WENT INTO APP EAL BEFORE HONBLE BOMBAY HIGH COURT AGAINST THE SAID ORDERS. THE SAME WAS REJECTED BY THE ITA NOS.4682 & 4683/MUM/2018 ANIL AGARWAL 4 BOMBAY HIGH COURT IN WRIT PETITION NO.33 OF 2012 IN CASE OF M/S MAHALAXMI COTTON GINNING VS THE STATE OF MAHARASHTR A & ORS ON 11 WAY, 2012 AND OTHER SIMILAR CASES. IN THE SAID APPEALS, THE PURCHASING DEALERS LOOK A PLEA BEFORE THE HIGH COURT THAT AS HE HAS PA ID THE TAX TO THE SELLING DEALER, HE SHOULD NOT BE DENIED THE BENEFIT OF A SE T OFF OF TAXES PAID, WHICH IS ARBITRARY HOWEVER THE STATE GOVERNMENT IN AN AFFIDA VIT BEFORE THE COURT SUBMITTED THAT INVESTIGATIONS REVEALED THAT THERE W AS A EXISTENCE OF LARGE- SCALE HAWALA RACKET, WHEREIN THE SELLING DEALERS ME RELY ISSUED TAX INVOICES TO THE PURCHASING DEALER WITHOUT ANY SALE OF GOODS THE COURT DID NOT ACCEPT THE PLEA OF THE PURCHASING DEALER AND HELD THAT IF THE SET OFF IS ALLOWED TO THE PURCHASING DEALER THOUGH THE TAX HAS NOT BEEN PAID ACTUALLY, IT WOULD DEFEAT THE LEGITIMATE INTERESTS OF THE REVENUE. THE SALES TAX DEPARTMENT RECOVERED THE TAX FROM SUCH PURCHASING DEALERS THE SALES TAX DEPARTMENT ACCORDINGLY PASSED ON THE INFORMATION OF SUCH PURCHASING DEALERS TO THE INCOME TAX DEPARTMENT TO VERIFY THE PURCHASES MADE BY THEM. 8. IN THIS BACKGROUND THE CASE OF THE ASSESSEE NEED S TO BE EXAMINED. THE APPELLANT HAD SHOWN PURCHASES AMOUNTING TO RS. 1,00 ,04,992/- IN AY 2009- 10 AND RS. 49,07,280/- IN AY 2010-11 FROM VARIOUS P ARTIES WHICH APPEARED IN THE LIST OF SALES-TAX DEPARTMENT WHO HAD INDULGE D IN HAWALA TRANSACTIONS I.E. PROVIDING ONLY BILLS WITHOUT THERE IS BEING AN Y ACTUAL PURCHASE OR SALE TRANSACTION. THE AO WAS REQUIRED TO EXAMINE THE VER ACITY OF SUCH PURCHASES AND TO SEE A) WHETHER THE PURCHASES HAVE ACTUALLY B EEN MADE OR NOT, B) THE END USE OF SUCH PURCHASES AND C) THE GENUINENESS OF THE PARTIES FROM WHOM THE PURCHASES ARE MADE. IN ASSESSMENT PROCEEDINGS, THE ASSESSEE COULD SHOW THAT THERE ARE CORRESPONDING SALES AGAINST THE SE PURCHASES HOWEVER THE ASSESSEE WAS UNABLE TO PRODUCE THE PARTIES DURI NG APPELLATE PROCEEDINGS ALSO HE PLEADED INABILITY TO PRODUCE TH EM. FURTHER THE ASSESSEE HAS ALSO PAID THE SALE TAX ON BEHALF OF THESE PARTI ES THEREFORE AO HAS RIGHTLY HELD THAT THIS IS NOT A CASE OF BOGUS PURCHASES BUT PURCHASES FROM BOGUS PARTIES, WHEREIN THE BILLS ARE TAKEN FROM HAWALA DE ALERS AND PURCHASES FROM OTHER PARTIES AND HAS CORRECTLY APPLIED THE RATIO O F VARIOUS CASE LAWS AND CAME TO THE CONCLUSION THAT ONLY THE PROFIT ELEMENT EMBEDDED IN THE TRANSACTIONS NEEDED TO BE TAXED. THEREFORE GROUND O F APPEAL TO DELETE THE ADDITION IS DISMISSED. 8.1. WITH REGARD TO THE APPELLANT'S RELIANCE ON VAR IOUS DECISIONS, THERE ARE LARGE NUMBER OF CASES, WHEREIN THE APPELLATE AUTHORITIES HAVE HELD THAT IT WOULD NOT BE TO CONSIDER THAT PURCHASES WERE GENUINE ONLY BEC AUSE THE ASSESSEE MADE THE PAYMENT BY CHEQUE AND THE ASSESSEE RECEIVED BIL LS. IT IS HELD BY VARIOUS COURTS THAT WHERE THE ASSESSEE COULD SHOW THAI HE HAS MADE THE PURCHASES AND THERE ARE CORRESPONDING SALES AGAINST THESE PURCHASES, IT WOULD BE APPROPRIATE TO TAX THE POSSIBLE PROFIT OUT OF PU RCHASES MADE THROUGH NON- GENUINE PARTIES IN VARIOUS CASE LAWS AVAILABLE ON T HE ISSUE INCLUDING DECISION OF THE HON'BLE GUJARAT HIGH COURT M THE CASE OF CIT VS SIMITH P SHETH, 356 ITR 451 THE APPELLATE AUTHORITIES HAVE RESTRICTED (HE A DDITIONS BASED ON CERTAIN PERCENTAGE OF SUCH UNVENFIABFE PURCHASES. THE APPEL LATE AUTHORITIES HAVE ALSO STRESSED UPON THE REASONABILITY OF THE PROFIT SHOWN BY THE TRADERS WHILE MAKING ANY SUCH DISALLOWANCE HONBLE HIGH COURT IN SMITH P SHETH HELD THAT THE ESTIMATION OF THE RATE OF PROFIT MUST NECESSARILY V ARY WITH THE NATURE OF BUSINESS. IN THIS BACKGROUND, THE PLEA OF THE ASSESSEE THAT T HE PROFIT ELEMENT APPLIED BY THE AO IS VERY HIGH NEEDS TO BE EXAMINED HE SUBMITT ED GP RATES FOR DIFFERENT YEARS WHICH ARE REPRODUCED AS UNDER ITA NOS.4682 & 4683/MUM/2018 ANIL AGARWAL 5 PARTICULARS A,Y 2007 - 08 200 8 - 09 2009-10 2010 - 11 SALES 51801882 55388096 8,11,47,045 15,65,63,683 GROSS PROFIT 397730 528735 831243 2395676 NET PROFIT 276128 494413 543897 498561 GP% 077 0.95 1.02 1 53 NP% 0.53 0.89 0.67 0.32 PARTICULARS 2009 - 10 2010-11 GROSS PROFIT AS PER BOOKS 8,31.243 23,95,676 NET PROFIT AS PER BOOKS OF A/C 5,43,897 4,98 P 561 ADDITION MADE BY AO 12,50,624 6,13,410 GROSS PROFIT AFTER ADDITION 20,81,867 30,09,086 NET PROFIT AFTER ADDITION 17,94.521 11,11,971 REVISED GP% 2.51 1.92 REVISED NP % 2.21 0.71 6 2. ON GOING THROUGH THE SUBMISSION OF THE ASSESSE E, IL IS NOTICED THAT THE GP HAS BEEN INCREASING FROM AY 2007-08 TO AY 2010-11 D ESPITE THE INCREASE IN SALES. IN AY 2009-10, THE GROSS PROFIT WAS RS B31.2 43/- ON SALES OF RS 8,11,47,045- AND THE AO HAS ADDED AN AMOUNT OF RS 12.50.624/- ON PURCHASES OF RS 1 .QO.Q4.492/-, WHICH HAS RESULTED M INCREASE M GP FROM 1.02% LO 2 51% IN AY 2010-11. THE COMPONENT OF HAWA LA PURCHASES IS ONLY RS 49.07 LACS OUT OF TOTAL SALES OF RS 15.65 CRS, THER EFORE AFTER APPLYING 12 5% OF THE PURCHASES AND MAKING ADDITION OF RS 6,13,410/-. THE GP HAS INCREASED TO 1.92% IN VIEW OF THESE FINDINGS, IT IS NOTICED THAT THE GP OF THE BUSINESS VARIES VANES ACCORDING TO THE COMPONENT OF HAWALA PURCHASE S TO THE TOTAL SALES OF THE BUSINESS. IN AY 2009-10, THE GP INCREASE TO 2.51%, WHICH IS MUCH HIGHER THAN THE GP IN EARLIER YEARS AND EVEN HIGHER THAN A .Y 2010-11 WHEN THE GP AFTER ADDITION WAS 1 92% AS DISCUSSED ABOVE, BY ENT ERING INTO SUCH TRANSACTIONS THE ASSESSEE HAS BENEFITED AS THE PRIC E AT WHICH THE ACTUAL PURCHASES WERE MADE AND THE PRICE AT WHICH BILL WAS TAKEN CANNOT BE ASCERTAINED AS THESE WERE COLLUSIVE TRANSACTIONS. M OREOVER IN SUCH TYPE OF TRANSACTIONS, THERE HAS TO BE ESTIMATION VARIOUS CO URTS HAVE UPHELD ADDITION RANGING FROM 10% TO 25% DEPENDING UPON THE QUANTUM OF HAWALA PURCHASES AND NATURE OF BUSINESS. FOR AY 2010-11, EVEN AFTER THE ADDITION, THE GP INCREASES TO 1 92% AND NIP TO 0 71% EVEN AFTER THE ADDITION WHICH IS VERY REASONABLE THEREFORE FOR AY 2010-11, THE PLEA OF TH E ASSESSEE THAT THE ITA NOS.4682 & 4683/MUM/2018 ANIL AGARWAL 6 PERCENTAGE OF PURCHASES DISALLOWED BY THE AO IS HIG H IS NOT CORRECT NEEDS TO BE REJECTED. THE APPEAL FOR AY 2010-11 IS THEREFORE DI SMISSED. 9. IN AY 2009-10, !T CAN BE SEEN THAT THE GP INCREA SES TO 2.5%, WHICH IS MUCH HIGHER THAN THE GP IN AY 2010-11, THEREFORE IT WOUL D BE APPROPRIATE IF ADDITION OF 8% OF RS. 1,00,04,992 IS MADE WHICH WOULD RESULT IN ADDITION OF RS. 6,00.399/- AND THE GP AFTER ADDITION WOULD BE RS 16 ,31,642/-, RESULTING IN GP OF 2%, WHICH WOULD BE REASONABLE THE GROUND OF APPEAL IS PARTLY ALLOWED. 9.1 THE ASSESSEE HAS ALSO TAKEN A PLEA THAT T HE SALES OF ONLY RS 9.93.300/- WERE MADE OUT OF TOTAL HAWALA PURCHASES OF RS 1,00,04,49 2/- AND THEREFORE ADDITION SHOULD NOT BE MADE IN THE YEAR UNDER CONSI DERATION. THE SUBMISSION OF THE APPELLANT IS NOT ACCEPTABLE AS THE PURCHASE ACC OUNT HAS BEEN DEBITED WITH INFLATED PURCHASES DURING THE YEAR AND THE RELEVANT YEAR TO TAX WOULD BE THE YEAR IN WHICH THE PURCHASES ARE MADE AND NOT THE YE AR IN WHICH THE SALES ARE MADE. THEREFORE THE PLEA OF THE ASSESSEE IS REJECTE D AND GROUND OF APPEAL IS DISMISSED. 5. WE HAVE HEARD BOTH THE PARTIES, PERUSED THE MATE RIAL AVAILABLE ON RECORD AND GONE THROUGH ORDERS OF THE AUTHORITIE S BELOW. WE FIND THAT THE LD. AO HAS MADE ADDITIONS TOWARDS ALLEGED BOGUS PURCHASES @ 12.50% OF SUCH PURCHASES, ON THE GROUND THAT THE ASSESSEE IS ONE OF THE BENEFICIARY OF ACCOMMODATION ENTRIES OF BOGUS PURCHASE BILLS ISSUED BY HAWALA DEALERS. ACCO RDING TO THE LD. AO, ALTHOUGH ASSESEE HAS FILED CERTAIN BASIC EVIDEN CES, BUT FAILED TO FILE FURTHER EVIDENCE IN THE BACKDROP OF CLEAR FIND ING BY THE SALES TAX DEPARTMENT, MAHARASHTRA THAT THOSE PARTIES ARE INVO LVED IN PROVIDING ACCOMMODATION ENTRIES WITHOUT ACTUAL DELIVERY OF GO ODS. THE LD. AO HAD ALSO TAKEN SUPPORT FROM THE INVESTIGATION CONDU CTED DURING THE COURSE OF ASSESSMENT PROCEEDINGS, AS PER WHICH NOTI CE ISSUED U/S 133(6) TO THE PARTY WERE RETURNED UN-SERVED BY THE POSTAL AUTHORITIES. THEREFORE, HE CAME TO THE CONCLUSION THAT PURCHASE FROM THE SAID PARTY IS BOGUS IN NATURE. IT IS THE CONTENTIONS OF THE ASSESSEE BEFORE THE LOWER AUTHORITIES THAT PURCHASES FROM THE ABOVE PARTY ARE SUPPORTED BY NECESSARY EVIDENCES. IT HAS FURNISHED ALL POSSIBLE EVIDENCES, INCLUDING BOOKS OF ACCOUNTS, STOCK DETAI LS AND BANK STATEMENT TO PROVE THAT PAYMENT AGAINST SAID PURCHA SES HAVE BEEN MADE THROUGH PROPER BANKING CHANNELS. ITA NOS.4682 & 4683/MUM/2018 ANIL AGARWAL 7 6 HAVING CONSIDERED ARGUMENTS OF BOTH SIDES AND ALS O, MATERIAL AVAILABLE ON RECORD, WE FIND THAT BOTH THE SIDES FA ILED TO PROVE THE CASE IN THEIR FAVOUR WITH NECESSARY EVIDENCES. ALTH OUGH, ASSESSEE HAS FILED CERTAIN BASIC EVIDENCES, BUT FAILED TO FI LE FURTHER EVIDENCES TO CONCLUSIVELY PROVE PURCHASES TO THE SATISFACTION S OF THE LD.AO. AT THE SAME TIME, THE LD. AO HAD ALSO FAILED TO TAKE T HE INVESTIGATION TO A LOGICAL CONCLUSION BY CARRYING OUT NECESSARY ENQU IRES, BUT HE SOLELY RELIED UPON INFORMATION RECEIVED FROM INVES TIGATION WING, WHICH WAS FURTHER SUPPORTED BY INFORMATION RECEIVED FROM MAHARASHTRA SALES TAX DEPARTMENT. UNDER THESE CIRC UMSTANCES, IT IS DIFFICULT TO ACCEPT ARGUMENTS OF BOTH THE SIDES. FURTHER, VARIOUS HIGH COURTS AND TRIBUNALS HAD CONSIDERED AN IDENTIC AL ISSUE IN LIGHT OF INVESTIGATION CARRIED OUT BY THE SALES TAX DEPA RTMENT AND HELD THAT IN CASE PURCHASES CLAIMS TO HAVE MADE FROM ALL EGED HAWALA DEALERS , ONLY PROFIT ELEMENT EMBEDDED IN THOSE PUR CHASES NEEDS TO BE TAXED, BUT NOT TOTAL PURCHASE FROM THOSE PARTIES . THE HONBLE GUJARAT HIGH COURT, IN THE CASE OF CIT VS SIMITH P. SHETH 356 ITR 451 HAD CONSIDERED A SIMILAR ISSUE AND HELD THAT AT THE TIME OF ESTIMATION OF PROFIT FROM ALLEGED BOGUS PURCHASES N O UNIFORM YARDSTICKS COULD BE ADOPTED, BUT IT DEPENDS UPON FA CTS OF EACH CASE. THE ITAT, MUMBAI, IN NUMBER OF CASES HAD CONSIDERED AN IDENTICAL ISSUE AND DEPENDING UPON FACTS OF EACH CASE, DIRECT ED THE LD.AO TO ESTIMATE PROFIT OF 10% TO 15% ON TOTAL ALLEGED BOGU S PURCHASES. IN THIS CASE, CONSIDERING THE NATURE OF BUSINESS OF TH E ASSESSEE THE LD. AO HAS ESTIMATED 12.50% PROFIT, WHEREAS THE LD.CIT( A) HAS SCALED DOWN ESTIMATION OF PROFIT TO 8% ON TOTAL ALLEGED BO GUS PURCHASE. ALTHOUGH, BOTH AUTHORITIES HAVE TAKEN DIFFERENT RAT E OF PROFIT FOR ESTIMATION OF INCOME FROM ALLEGED BOGUS PURCHASE, B UT NO ONE COULD SUPPORT SAID RATE OF GROSS PROFIT WITH NECESSARY EV IDENCES OR ANY ITA NOS.4682 & 4683/MUM/2018 ANIL AGARWAL 8 COMPARABLE CASES. THEREFORE, CONSIDERING FACTS AND CIRCUMSTANCES OF THIS CASE AND ALSO CONSIDERING NATURE OF BUSINES S OF THE ASSESSEE, WE ARE OF THE CONSIDERED VIEW THAT 5% PRO FIT ON ALLEGED BOGUS PURCHASES WOULD BE REASONABLE AND END DISPUTE BETWEEN THE PARTIES. WE, THEREFORE DIRECT THE AO TO ESTIMATE 5% PROFIT ON ALLEGED BOGUS PURCHASES. 7. IN THE RESULT, APPEAL FILED BY THE ASSESSEE IS P ARTLY ALLOWED. ITA.NO.4683/MUM/2018:- 8. THE ASSESSEE HAS RAISED THE FOLLOWING GROUNDS OF APPEAL: 1. THE LEARNED CIT(A) HAS ERRED IN FACTS AND LOW BY DISALLOWING 12.5% OF THE VALUE OF ALLEGED NON-GENUINE PURCHASES OF RS 49,07,280/- AMOUNTING TO RS 6,13,410 BY COMPLETELY IGNORING VAR IOUS DOCUMENTARY EVIDENCES SUBMITTED IN SUPPORT OF SUBJE CT TRANSACTIONS SUCH AS INVOICES (CONTAINING VEHICLE NOS. WHEREVER POSSIBLE), LEDGER EXTRACTS, WEIGH BRIDGE RECEIPTS, LORRY VOUCHERS, ST OCK TALLY AND ENTRIES IN BANK STATEMENT IN RESPECT OF PAYMENTS MADE BY AC COUNT PAYEE CHEQUES. 2. THE LEARNED CIT(A) HAS IGNORED THE TRACK RECORD OF THE ASSESSEE WHOSE GP RATIO IN THE EARLIER THREE YEARS WERE AROU ND 1% OF SALES . 9. THE FACTS AND ISSUES ARE INVOLVED IN THIS APPEAL ARE IDENTICAL TO FACTS AND ISSUES, WHICH WE HAD ALREADY CONSIDERED I N ITA.NO4682/MUM/2018. THE REASONS GIVEN BY US IN PRE CEDING PARAGRAPH IN ITA NO. 4682/MUM/2018 SHALL MUTATIS MU TANDIS APPLY TO THIS APPEAL ALSO. WE, THEREFORE FOR SIMILAR REAS ONS, DIRECT THE AO TO ESTIMATE 5% PROFIT ON ALLEGED BOGUS PURCHASES 10. IN THE RESULT, APPEAL FILED BY THE ASSESSEE IS PARTLY ALLOWED. ITA NOS.4682 & 4683/MUM/2018 ANIL AGARWAL 9 11. AS A RESULT, BOTH APPEALS FILED BY THE ASSESSEE FOR AYS 2009- 10 & 2010-11 ARE PARTLY ALLOWED. ORDER PRONOUNCED IN THE OPEN COURT ON THIS 17 /1 0/2019 SD/- (MAHAVIR SINGH) SD/- (G. MANJUNATHA) JUDICIAL MEMBER ACCOUNTANT MEMBER MUMBAI ; DATED 17/10/2019 THIRUMALESH 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, ITAT, MUMBAI 6. GUARD FILE. //TRUE COPY//