HITESH H. SHAH, MUMBAI V. ITO 13(2)(4), MUMBAI

ITA 4756/MUM/2016

• Counselvise Citation: [2018] 125 COUNSELVISE.COM (IT) 9719 (ITAT-MUMBAI)
• Duration Of Justice: 1 year(s) 8 month(s) 7 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 22-03-2018
• Appeal Filed By: Assessee
• Order Result: Partly Allowed
• Bench Allotted: H
• Assessment Year: 2009-2010
• Appeal Filed On: 15-07-2016
• Result in Favour of: Partly Allowed
• Court: TRIBUNAL
• Department Lawyers: M C OMI NINGSHEN
• Keywords: Bogus purchase; Condonation of delay
• Section: 143(3); 133(6); 147

Judgement Text

IN THE INC OME TAX APPELLATE TRIBUNAL H BENCH, MUMBAI BEFORE SHRI R. C. SHARMA , AM & SHRI SANDEEP GOSAIN, JM ./ I.T.A. NO . 4756 , 4757 & 4758 / MUM/201 6 ( / ASSESSMENT YEAR: 2009 - 10 , 2010 - 11 & 2011 - 12 ) HITESH H. SHAH 8, K. M. MEHTA BLDG, AHMEDABAD STREET, CARNAC BUNDER, MUMBAI - 400 009 . / VS. ITO 13(2)(4) ROOM NO. 477, AAYAKARBHAVAN, MUMBAI - 400020 . ./ ./ PAN/GIR NO. AADPS7257C ./ I.T.A. NO. 5585, 5586 & 5587 /MUM/201 7 ( / ASSESSMENT YEAR: 2009 - 10, 2010 - 11 & 2011 - 12 ) MANJIRAMDEVRAJ PATEL 238, 1 ST FLOOR, PANWALA BUILDING, SANTSENA, MAHARAJ MARG, 2 ND KUMBHARWADI LANE, MUMBAI 400 004 / VS. ITO 19(2)(3) R. NO. 221, 2 ND FLOOR, MATRUMANDIR, TARDEOROAD, MUMBAI - 400007. ./ ./ PAN/GIR NO. AAAPP6047L ./ I.T.A. NO. 4633/MUM/2016 ( / ASSESSMENT YEAR: 2009 - 10 ) BASTIMALKALIDAS SHAH M/S SURAJ STEEL HOUSE, 26/24, 6B/1, GROUND FLOOR, SINDHI LANE, MUMBAI - 400 004 / VS. ACIT 19 (1 ) R. NO. 203 , 2 ND FLOOR, MATRUMANDIR, TARDEOROAD, MUMBAI - 400007. ./ ./ PAN/GIR NO. AADPS4053Q 2 ITA NO. 4756, 4757, 4758 & 4633 /MUM/2016, 5585, 5586 & 5587 /MUM/201 7& I.T.A. NO. 5942/MUM/2014 HITESH H. SHAH & OTHERS & ./ I.T .A. NO. 5942 /MUM/201 4 ( / ASSESSMENT YEAR: 2010 - 11 ) KIRAN BAWA HOTELS PVT. LTD. 1676 HOTEL BAWA REGENCY GOKULDAS PASTA RD, BEHIND CHITRA CINEMA DADAR (EAST) MUMBAI 400 0 14 / VS. ACIT CEN CIR 29, AAYAKARBHAVAN,M. K. ROAD, MUMBAI - 400020. ./ ./ PAN/GIR NO. AAACK1500E / APPELLANT BY : SHRI NEELKANTH KHANDELWAL, AR / RESPONDENTBY : SHRI M. C. OMI NINGSHEN, DR / DATE OF HEARING : 08/0 2 /201 8 / DATE OF PRONOUNCEMENT : 22/03/2018 / O R D E R PER SHRI SANDEEP GOSAIN, JUDICIAL MEMBER : THE SE EIGHT A PPE AL S FILED BY THE ASSESSEE S ARE AGAINST THE ORDER OF COMMISSIONER OF INCOME TAX (APPEALS) - 2 8 , 30, & 40 , MUMBAI DATED 13.04.16 , 16.06.17, 04.05.16, 05.04.13 FOR AY 2009 - 10 , 2010 - 11 & 2011 - 12 RESPECTIVELY . 3 ITA NO. 4756, 4757, 4758 & 4633 /MUM/2016, 5585, 5586 & 5587 /MUM/201 7& I.T.A. NO. 5942/MUM/2014 HITESH H. SHAH & OTHERS 2. SINCE ALL THE ISSUES INVOLVED IN THESE EIGHT APPEALS ARE COMMON, THEREFORE, THEY HAVE BEEN CLUBBED , HEARD TOGETHER AND A CONSOLIDATED ORDER IS BEING PASSED FOR THE SAKE OF CONVENIENCE AND BREVITY. 3 . LD. AR APPEARING ON BEHALF OF THE ASSESSEE FIRST OF ALL DRAWN OUR ATTENTION TO ITA NO. 5942/MUM/14 WHEREIN THERE IS A DELAY IN FILING THE APPEAL. IN THIS RESPECT, OUR ATTENTION WAS DRAWN TOWARDS LETTER DATED 03.11.14 WHICH RELATES TO CONDONATION OF DELAY IN FILING APPEAL BEFORE HONBLE ITAT. LD. AR SUBMITTED THAT THE PRESENT APPEAL COULD NOT BE FILED WI THIN TIME BECAUSE THE CHIEF ACCOUNTANT, WHO WAS LOOKING AFTER THE TAXATION MATTERS HAD GONE ON LEAVE AND HAD KEPT THE ORDERS OF LD. CIT(A) WHICH WERE INITIALLY NOT TRACEABLE AND GOT TRACED AT A LATER STAGE. THEREFORE BECAUSE OF THESE REASONS, THE APPEAL CO ULD NOT BE FILED WITHIN TIME. IN SUPPORT OF HIS CONTENTIONS, THE ASSESSEE HAS ALSO FILED AFFIDAVIT OF THE DIRECTOR OF THE COMPANY. 4 ITA NO. 4756, 4757, 4758 & 4633 /MUM/2016, 5585, 5586 & 5587 /MUM/201 7& I.T.A. NO. 5942/MUM/2014 HITESH H. SHAH & OTHERS 4 . ON THE OTHER HAND, LD. DR REQUESTED FOR DISMISSAL OF THE SAID APPLICATION. 5 . WE HAVE HEARD THE COUNSELS FOR BOTH THE PAR TIES ON THIS APPLICATION FOR SEEKING CONDONATION OF DELAY AND WHILE TAKING INTO CONSIDERATION THE CONTENTS OF APPLICATION FILED BY THE ASSESSEE AND FOLLOWING THE PRINCIPLES LAID DOWN BY HONBLE SUPREME COURT IN CASE OF LAND ACQUISITION COLLECTOR VRS. MSTK ITZI, AIR 1987 S.C. 1353 /(1987) 167 ITR 471 (SC), WE CONDONE THE DELAY OF 78 DAYS IN FILING THE APPEAL. RESULTANTLY, THIS APPLICATION IS ALLOWED AND APPEAL IS ADMITTED TO BE HEARD ON MERITS. ITA NO. 4756/MUM/2016 (AY 20 09 - 10 ) 6 . FIRST OF ALL WE TAKE UP ASSESSEE S APPEAL IN ITA NO. 4756/MUM/2016 FOR ASSESSMENT YEAR 2009 - 10 AS LEAD CASE . THE GROUND S OF APPEAL ARE MENTIONED HEREIN BELOW: - 1. LEARNED CIT(APPEAL) ERRED IN CON FIRMING THE PROFIT ELEMENT TO 12. 5% AND FURTHER, REDUCING THE GP DECLARED IN THE SAID ASSESSMENT YEAR AND ERRED IN TREA TING THE SANE AS BOGUS PURCHASE . 5 ITA NO. 4756, 4757, 4758 & 4633 /MUM/2016, 5585, 5586 & 5587 /MUM/201 7& I.T.A. NO. 5942/MUM/2014 HITESH H. SHAH & OTHERS 2. LEARNED CIT(APPEAL) ERRED IN IGNORING THE DETAILED EVIDENCES BROUGHT ON RECORD AND IGNORING THE JUDICIAL PRECEDENTS BROUGHT TO HIS KNOWLEDGE. 3. LEARNED ASSESSING OFFICER ERRED IN REJECT ING THE BOOKS OF ACCOUNT ON SUMMARISE AND CONJECTURE BASIS AND LEARNED CIT(APPEAL) ERRED IN CONFIRMING THE SAME. 4. THE ASSESSEE CRAVES LEAVE TO AMEND, ALTER OR MODIFY OF THE ABOVE GROUNDS OF APPEAL. 7 . AS PER THE FACTS OF THE PRESENT CASE, T HE ASSESSEE IS A N I NDIVIDUAL AND IS INVOLVED IN THE BUSINESS ACTIVITY OF TRADING IN IRON AND STEEL AND SUCH ACTIVITY IS CARRIED OUT IN THE NAME AND STYLE AS M/S H ITESH ENTERPRISES. THE RETURN OF INCOME FOR THE YEAR UNDER CONSIDERATION WAS FILED ON 29.09.2009 DECLARING T OTAL INCOME OF RS. 6,32,980/ - . THERE AFTER , T HE CASE WAS RE - OPENED U/S 147 ON ACCOUNT OF INFORMATION RECEI VED FROM THE SALES TAX DEPARTMENT, STATE OF MAHARASHTRA OF CERTAIN PERSONS WHO HAVE PROVIDED ENTRIES OF BOGUS PURCHASE BILLS TO TAX PAYERS. T HE AO CARRIED OUT INVESTIGATIONS AND AFTER SEEKING REPLY FROM THE 6 ITA NO. 4756, 4757, 4758 & 4633 /MUM/2016, 5585, 5586 & 5587 /MUM/201 7& I.T.A. NO. 5942/MUM/2014 HITESH H. SHAH & OTHERS ASSESSEE, AO PASSED ORDER OF ASSESSMENT U/S 143(3) R.W.S 147 OF THE I.T. ACT, THEREBY MAKING ADDITION @ 25% OF THE TOTAL PURCHASES AND 1% OF THE PURCHASE WAS ADOPTED AS BROKERAGE. 8 . AGGRI EVED BY THE ORDER OF AO, ASSESSEE PREFERRED APPEAL BEFORE LD. CIT(A) AND LD. CIT(A) AFTER CONSIDERING THE CAS E OF BOTH T HE PARTIES PARTLY ALLOWEDTHE APPEAL OF THE ASSESSEE AND RESTRICTED THE ADDITION @ 12.5% AND AFTER GIVING CREDIT OF GP, THE TOTAL DISALLO WANCE WAS MADE @ 11.43%. AGGRIEVED BY THE O RDER OF LD. CIT(A), ASSESSEE FILED THE PRESENT APPEAL BEFORE US ON THE GROUND MENTIONED HEREIN ABOVE. GROUND NO. 1 TO 3. 9 . THESE GROUNDS RAISEDBY THE ASSESSEE ARE INTER - CONNECTED AND INTER - RELATED AND RELATES TO CHALLENGING THE ORDER OF LD. CIT(A) IN MAKING ADDITIONS ON ACCOUNT OF BOGUS PURCHASES MADE BY THE ASSESSEE, THEREFORE WE THOUGHT IT FIT TO DISPOSE OF BY THIS COMMON ORDER. 7 ITA NO. 4756, 4757, 4758 & 4633 /MUM/2016, 5585, 5586 & 5587 /MUM/201 7& I.T.A. NO. 5942/MUM/2014 HITESH H. SHAH & OTHERS 10 . LD. AR APPEARING ON BEHALF OF THE ASSESSEE REITERATED THE SAME ARGUMENTS WHICH WERE RAISED BEFORE LD. CIT(A) AND SUBMITTED THAT ALL THE TRANSACTIONS THAT ARE NOW ALLEGED AS BOGUS PURCHASES WERE CONDUCTED THROUGH BROKER. IT WAS SUBMITTED TH AT ASSESSEE HAD ALREADY SUBMITTED THE DETAILS OF PURCHASES MADE, DETAILS OF EXPENSES INCURRED , COPY OF BALANCE SHEET , TAX AUDIT REPORT, LEDGER ACCOUNT OF ALL THE PARTIES, COPIES OF BILLS AND COPIES OF BANK STATEMENTS SHOWING PAYMENTS MADE TO THE PARTIES WERE ALSO FILED BEFORE THE AO. R ELIANCE WAS PLACED ON THE DECISION OF THE BOMBAY HIGH COURT IN THE CASE OF NIKUNJ EXIM PVT. LTD. 372 ITR 619 AND GOOLAMALLYHASANJEE (ITA/3740 - 41/MUM/2012 A. Y.06 - 07 AND 08 - 09 ) AND ALSO ON THE CASE OF ASHOK TALREJA HUF (ITA / 4629/MUM/2014 &ORS. A.Y.S 07 - 08 TO 09 - 10 DECIDED ON 17/03/2016) AND STATED THAT FACTS OF THAT CASE WERE SIMILAR TO THE CASE UNDER CONSIDERATION. 11 . AS PER LD. AR IN THE CASE OF JEETENDRAHARSHADKUMAR TEXTILES (ITA/771 & 2211 / MUM/2011 DATED 21 - 11 - 2012), SIMILAR ISSUE WAS DECIDED IN FAVOUR OF THE ASSESS EE, THAT THE 8 ITA NO. 4756, 4757, 4758 & 4633 /MUM/2016, 5585, 5586 & 5587 /MUM/201 7& I.T.A. NO. 5942/MUM/2014 HITESH H. SHAH & OTHERS DECISION OF THE TRIBUNAL IN THE CASE OF JEETENDRAHARSHADKUMAR TEXTILES WAS SUBSEQUENTLY FOLLOWED BY THE TRIBUNAL TO DECIDE A SIMILAR ISSUE IN FAVOUR OF THE ASSESSEE IN THE CASE OF M/S PRAMIT TEXTILES (ITA/3948 TO 3953/MUM/2012 AND ITA/4012 TO 4015 AND 4020 TO 4021/MUM/2012 DATED 01.10.2013) AND NEETA TEXTILES (ITA/6138 - 40/MUM/2013,DTD. 27.05.2015). IN THE CASE OF NIKUNJ EXIM(SUPRA) THE HON'BLE BOMBAY HIGH COURT HAS DEALT THE ISSUE OF BOGUS PURCHASES AND CORRESPONDING SALES AS UNDER : 'WE HAVE CO NSIDERED THE SUBMISSION ON BEHALF OF THE REVENUE. HOWEVER, FROM THE ORDER OF THE TRIBUNAL DATED APRIL 30, 2010, WE FIND THAT THE TRIBUNAL HAS DELETED THE ADDITIONS ON ACCOUNT OF BOGUS PURCHASES NOT ONLY ON THE BASIS OF STOCK STATEMENT, I.E., RECONCILIATION STATEMENT BUT ALSO IN VIEW OF THE OTHER FACTS. THE TRIBUNAL RECORDS THAT THE BOOKS OF ACCOUNT OF THE RESPONDENT - ASSESSEE HAVE NOT BEEN REJECTED. SIMILARLY, THE SALES HAVE NOT BEEN DOUBTED AND IT IS AN ADMITTED POSITION THAT SUBSTANTIAL AMOUNT OF SALES HA VE BEEN MADE TO THE GOVERNMENT DEPARTMENT, I.E., DEFENCE RESEARCH AND DEVELOPMENT LABORATORY, 9 ITA NO. 4756, 4757, 4758 & 4633 /MUM/2016, 5585, 5586 & 5587 /MUM/201 7& I.T.A. NO. 5942/MUM/2014 HITESH H. SHAH & OTHERS HYDERABAD. FURTHER, THERE WERE CONFIRMATION LETTERS FILED BY THE SUPPLIERS, COPIES OF INVOICES FOR PURCHASES AS WELL AS COPIES OF BANK STATEMENT ALL OF WHICH WOUL D INDICATE THAT THE PURCHASES WERE IN FACT MADE. IN OUR VIEW, MERELY BECAUSE THE SUPPLIERS HAVE NOT APPEARED BEFORE THE ASSESSING OFFICER OR THE COMMISSIONER OF INCOME - TAX (APPEALS), ONE CANNOT CONCLUDE THAT THE PURCHASES WERE NOT MADE BY THE RESPONDENT - AS SESSEE. THE ASSESSING OFFICER AS WELL AS THE COMMISSIONER OF INCOME - TAX (APPEALS) HAVE DISALLOWED THE DEDUCTION OF RS. 1.33 CRORES ON ACCOUNT OF PURCHASES MERELY ON THE BASIS OF SUSPICION BECAUSE THE SELLERS AND THE CANVASSING AGENTS HAVE NOT BEEN PRODUCED BEFORE THEM. WE FIND THAT THE ORDER OF THE TRIBUNAL IS WELL A REASONED ORDER TAKING INTO ACCOUNT ALL THE FACTS BEFORE CONCLUDING THAT THE PURCHASES OF RS. 1.33 CRORES WAS NOT BOGUS. NO FAULT CAN BE FOUND WITH THE ORDER DATED APRIL 30, 2010, OF THE TRIBUNA L.' 12 . AS PER LEARNED AR, THERE IS NO DOUBT THAT THE AO HAD ACCEPTED THE GENUINENESS OF SALES MADE BY THE ASSESSEE. HE HAD NOT MADE ANY EFFORT TO MAKE FURTHER INVESTIGATION TO SUBSTANTIATE HIS ALLEGATIONS WITH REGARD TO NON GENUINENESS OF THE PURCHASES . CONSIDERING THE FACTS AND CIRCUMSTANCES OF THE CASE, THE FAA 10 ITA NO. 4756, 4757, 4758 & 4633 /MUM/2016, 5585, 5586 & 5587 /MUM/201 7& I.T.A. NO. 5942/MUM/2014 HITESH H. SHAH & OTHERS WAS NOT JUSTIFIED IN UPHOLDING THE ADDITIONS. IT WAS ALSO ARGUED THAT THE DEALERS ARE REGULARLY ASSESSED TO TAX AND THE PURCHASES WERE ALSO PROPERLY REFLECTED IN THE BOOKS OF ACCOUNT AND PAYMEN TS WERE MADE THROUGH ACCOUNT PAYEE CHEQUES AND ON PAYMENT OF THE AMOUNT TO THE SELLER, THE PURCHASER HAS NO CONTROL ON THEIR AFFAIRS AND THERE IS NO EVIDENCE THAT THE CASH IS RECEIVED BACK FROM THE SUPPLIERS AND THE PURCHASES CANNOT BE TREATED AS BOGUS. AS PER LEARNED AR, THE ASSESSEE MAINTAINED STOCK REGISTER AND ALSO MAINTAINED THE QUANTITATIVE DETAILS. THE GROSS PROFIT SHOWN DURING THE PREVIOUS YEAR WAS REASONABLE AND SATISFACTORY IN COMPARISON TO THE PREVIOUS YEARS AND RELIED ON SEVERAL CASES CITED ALON G WITH BRIEF OF THE CASE LAWS OF HON'BLE ITAT BENCHES GIVING RELIEF IN SIMILAR BOGUS PURCHASE CASES. WITHOUT APPRECIATING THE FACTS OF THE CASE AO MADE ADDITIONS @ 25% OF THE ALLEGED BOGUS PURCHASES BY RELYING UPON THE CASE OF SANJAY OILCAKE INDUSTRIES VRS . CIT (2009) 316 ITR 274(GUJ) AND LD. CIT(A) WHILE RELYING UPON THE CASE TITLED CIT VRS. SIMIT P. SHETH 356 ITR 451 ADOPTED 12.5% AS PROFIT ELEMENT EMBEDDED , BUT THE FACTS OF THE CASEARE DISTINGUISHABLE AS IN THAT CASE , THE 11 ITA NO. 4756, 4757, 4758 & 4633 /MUM/2016, 5585, 5586 & 5587 /MUM/201 7& I.T.A. NO. 5942/MUM/2014 HITESH H. SHAH & OTHERS ASSESSEE WAS DOING BUSINESS IN THE STATE OF GUJARAT, WHEREAS THE PRESENT ASSE SSEE IS DOING BUSINESS IN MUMBAI WHERE COMPETITION IS VERY HIGH AND PROFIT MARGIN RANGE BETWEEN 3 TO 4%. IN VIEW OF THE ABOVE FACTS, IT WAS SUBMITTED THAT SINCE THE ASSESSEE HAD ALREADY DECLARED GROSS PROFIT IN THE BOOKS ON THE PURCHASES, NO FURTHER ADDITION WAS WARRANTED. IT WAS FURTHER SUBMITTED THAT THE TRANSACTIONS CARRIED ON BY THE ASSESSEE FOR THE PURCHASE OF MATERIAL WERE GENUINE AND IN CONSONANCE WITH THE SALES TAX ACT, I.T. ACT AND SUCH OTHER LAWS AS MA Y BE APPLICABLE. IT WAS FURTHER SUBMITTED THAT THE MATERIAL PURCHASED FROM THE ALLEGED PARTIES HAD BEEN RE - SOLD WHICH WAS OFFER ED AS INCOME IN THE I.T. RETURN. THE LD. AR FURTHER SUBMITTED THAT NO OPPORTUNITY OF THE CROSS - EXAMINATION WAS EVER PROVIDED TO THE ASSESSEE WHEREAS ALL THE NECESSARY DETAILS AVAILABLE WITH THE ASSESSEE TO PROVE HIS CLAIM HAD ALREADY BEEN BROUGHT ON RECORD AND THE ASSESSEE HAD REPLIED TO EACH AND EVERY NOTICE ISSUED BY THE AO, AND FURTHER SUBMITTED ALL RELEVANT DETAILS AND SUBMISS IONS ALONGWITH THE PARTIES LEDGER, CORRESPONDENCE SALES 12 ITA NO. 4756, 4757, 4758 & 4633 /MUM/2016, 5585, 5586 & 5587 /MUM/201 7& I.T.A. NO. 5942/MUM/2014 HITESH H. SHAH & OTHERS AGAINST THE PURCHASES WERE ALSO IDENTIFIED AND THE STATEMENT WAS SUBMITTED TO THE AO. THE LD. AR FURTHER SUBMITTED THAT THE MECHANICAL DETERMINATION OF LIABILITY AND SUCH ESTIMATION BY THE REVENUE IS CONTRARY TO LAW MORE PARTICULARLY WHEN NECESSARY EVIDENCES WERE BROUGHT ON RECORD. 13 . ON THE OTHER HAND, LEARNED DR RELIED ON THE ORDER OF THE LOWER AUTHORITIES AND CONTENDED THAT CIT(A) HAS VERY REASONABLY RESTRICTED THE ADDITION TO THE EXTENT OF 12.5% OF ALLEGED BOGUS PURCHASES. 1 4 . WE HAVE HEARD THE COUNSELS OF BOTH THE PARTIES AT LE NGTH AND WE HAVE ALSO GONE THROUGH THE FACTS OF THE PRESENT CASE, JUDGMENT CITED, MATERIAL PLACED ON RECORD AND THE ORDERS PASSED BY THE REVENUE AUTHORITIES. FROM THE RECORD , WE FOUND THAT THE BASIS ON WHICH AO DISALLOWED THE ALLEGED BOGUS PURCHASES IS TH E NON - APPEARANCE OF THE SUPPLIERS BEFORE THE AO TO VERIFY THE PURCHASES. IN THIS REGARD WE FOUND THAT MANY BENCHES OF ITAT AND HON'BLE HIGH COURTS HAVE HELD THAT WHEN PURCHASES ARE 13 ITA NO. 4756, 4757, 4758 & 4633 /MUM/2016, 5585, 5586 & 5587 /MUM/201 7& I.T.A. NO. 5942/MUM/2014 HITESH H. SHAH & OTHERS SUPPORTED BY SUFFICIENT DOCUMENTARY EVIDENCES THEN MERELY BECAUSE OF NON - AP PEARANCE BEFORE THE AO, ONE CANNOT CONCLUDE THAT THE PURCHASES WERE NOT MADE BY THE ASSESSEE. SEVERAL DECISIONS CITED IN SUPPORT OF THE SAID ARGUMENT ARE NIKUNJEXIMP ENTERPRISES (P.) LTD. V. CIT 216 TAXMAN 171 (BOM.), CIT V. NANGALIA FABRICS (P.) LTD. 220 TAXMANN 17 (GUJ.), CIT V. M.K. BROS. 163 ITR 249 (GUJ.), ASSTT. CIT V. AKRUTI DYEING & PRINTING MILLS (P.) LTD. [TAX APPEAL NO. 997 OF 2008, DATED 27/01/2009], CIT V. VEEKAY PRINTS (P.) LTD. [TAX APPEAL NO. 2557 OF 2010, DATED. 1/2/2012], DIAGNOSTICS V. CIT 334 ITR 111 (CAL.), ITO V. TOTARAM B. SHARMA [TAX APPEAL NOS. 1344/2008 & 1355/2008, DATED 9 - 2 - 2010], DY. CIT V. ADINATH INDUSTRIES [2001] 252 ITR 476 (GUJ.), CIT V. PRECIOUS JEWELS CORPN. 17 TAXMANN.COM 264 (RAJ.), CIT V. RAJESH P. SONI [TAX APPEAL NO.1107 OF 2006, DATED 27 - 2 - 2012. 15 . ON IDENTICAL FACTS AND CIRCUMSTANCES, THE HON'B LEJURISDICTIONAL HIGH COURT AS WELL AS THE TRIBUNAL, 14 ITA NO. 4756, 4757, 4758 & 4633 /MUM/2016, 5585, 5586 & 5587 /MUM/201 7& I.T.A. NO. 5942/MUM/2014 HITESH H. SHAH & OTHERS MUMBAI BENCH, HAS DELETED THE ADDITION MADE UNDER SECT ION 69C, IN THE FOLLOWING CASES: - I ) CIT V/S NIKUNJEXIMP ENTERPRISE PVT. LTD. 372 ITR 619 (BOM.); II ) A CIT V/S TARLA R. SHAH , ITA NO.5295/MUM./2013, DATED 2ND FEBRUARY 2016; AND III ) SHRI HARILALCHUNILAL JAIN V/S ITO , ITA NO.4547/MUM./2014, DATED 1 JANUARY 2016. 1 6 . IT IS EVIDENT FROM THE ASSESSMENT ORDER THAT ON THE BASIS OF INFORMATION OBTAINED FROM THE SALES TAX DEPARTMENT, ASSESSING OFFICER ISSUED NOTICES UNDER SECTION 133(6). AS THE ASSESSEE FAILED TO PRODUCE THE CONCERNED PARTIES, THE ASSESSING OFFICER, PRIM ARILY RELYING UPON THE INFORMATION OBTAINED FROM THE SALES TAX DEPARTMENT HELD THE PUR CHASES TO BE BOGUS AND ADDED 2 5% PROFIT IN ADDITION TO THE NORMAL PROFIT DECLARED BY THE ASSESSEE. THOUGH, IT MAY BE A FACT THAT ASSESSEE WAS NOT ABLE TO PRODUCE THE CONC ERNED PARTIES BEFORE THE ASSESSING OFFICER, FOR WHATEVER MAY BE THE REASON, FACT REMAINS THAT DURING ASSESSMENT PROCEEDINGS ITSELF THE ASSESSEE HAD PRODUCED LEDGER COPIES OF CONCERNED 15 ITA NO. 4756, 4757, 4758 & 4633 /MUM/2016, 5585, 5586 & 5587 /MUM/201 7& I.T.A. NO. 5942/MUM/2014 HITESH H. SHAH & OTHERS PARTIES, BANK ACCOUNT STATEMENT, P URCHASE BILLS , ETC., TO PROVE THE GENU INENESS OF THE PURCHASES. IT IS ALSO A FACT ON RECORD THAT THE ASSESSING OFFICER HAS NOT DOUBTED THE SALES EFFECTED BY THE ASSESSEE. THUS, IT IS LOGICAL TO CONCLUDE THAT WITHOUT CORRESPONDING PURCHASES BEING EFFECTED THE ASSESSEE COULD NOT HAVE MADE THE SA LES. MOREOVER, THE ASSESSING OFFICER HAS NOT BROUGHT ANY MATERIAL ON RECORD TO CONCLUSIVELY ESTABLISH THE FACT THAT PURCHASES ARE BOGUS. MERELY RELYING UPON THE INFORMATION FROM THE SALES TAX DEPARTMENT OR THE FACT THAT PARTIES WERE NOT PRODUCED THE ASSESS ING OFFICER COULD NOT HAVE TREATED THE PURCHASES AS BOGUS AND MADE ADDITION. IF THE ASSESSING OFFICER HAD ANY DOUBT WITH REGARD TO PURCHASES MADE, IT WAS INCUMBENT UPON HIM TO MAKE FURTHER INVESTIGATION TO ASCERTAIN THE GENUINENESS OF THE TRANSACTIONS. WIT HOUT MAKING ANY FURTHER ENQUIRY OR INVESTIGATION THE ASSESSING OFFICER CANNOT SIT BACK AND MAKE THE ADDITION BY SIMPLY RELYING UPON THE INFORMATION OBTAINED FROM THE SALES TAX DEPARTMENT AND ISSUING NOTICES UNDER SECTION 133(6) OF THE ACT. AS THE ASSESSING OFFICER HAS FAILED TO MAKE ANY ENQUIRY OR INVESTIGATION TO PROVE THE FACT THAT 16 ITA NO. 4756, 4757, 4758 & 4633 /MUM/2016, 5585, 5586 & 5587 /MUM/201 7& I.T.A. NO. 5942/MUM/2014 HITESH H. SHAH & OTHERS THE PURCHASE TRANSACTIONS ARE NOT GENUINE WHEREAS THE ASSESSEE HAS BROUGHT DOCUMENTARY EVIDENCES ON RECORD TO PROVE GENUINENESS OF SUCH TRANSACTIONS WHICH ARE NOT FOUND TO BE F ABRICATED OR NON - GENUINE, THE ACTION OF THE ASSESSING OFFICER IN IGNORING THEM CANNOT BE ACCEPTED. WHEN THE PAYMENT TO THE CONCERNED PARTIES ARE THROUGH PROPER BANKING CHANNEL AND THERE IS NO EVIDENCE BEFORE THE ASSESSING OFFICER THAT THE PAYMENTS MADE WER E AGAIN ROUTED BACK TO THE ASSESSEE, THE ADDITION MADE B Y ESTIMATING FURTHER PROFIT OF 25%EARNED BY THE ASSESSEE , WHICH WAS REDUCED BY LD. CIT(A) TO 12.5%, IS NOT SUSTAINABLE IN LAW AND FACTS. WE FURTHER NOTICE THAT AO MADE NO EFFORTS TO CHECK THE BANK ACC OUNTS OF THE SUSPECTED PARTIES TO FIND THE TRACK OF MONEY PAID, WHETHER IT WAS RECEIVED BACK BY THE ASSESSEE. EVEN THE STATEMENTS RECORDED BY THE SALES TAX DEPARTMENT AND THE MATERIAL COLLECTED BY I.T. DEPARTMENT HAD NOT BEEN MADE AVAILABLE TO THE ASSESSEE . THE I.T. ACT 1961 IS A SELF CONTAINED CODE AND THE ASSESSMENT HAS TO BE FRAMED AS PER THE LETTER AND SPIRIT OF SAID I.T. ACT 1961. WHILE MAKING SUCH ASSESSMENT, THE AO IS DUTY 17 ITA NO. 4756, 4757, 4758 & 4633 /MUM/2016, 5585, 5586 & 5587 /MUM/201 7& I.T.A. NO. 5942/MUM/2014 HITESH H. SHAH & OTHERS BOUND TO EXAMINE ALL RECORDS AND EVIDENCES ARE TO BE EXAMINED AND A RATIONALE JUDGMENT HAS TO BE FORMED THEREON, WHICH IS LACKING IN THE PRESENT CASE. IN THE PRESENT CASE, THE AO DID NOT APPRECIATED THE EVIDENCES ADDUCED BY THE ASSESSEE TO SUBSTANTIATE HIS PURCHASES FROM THE SAID PARTIES, INCLUDING DETAILS SUCH AS BILLS, L EDGER ACCOUNT, COPY OF INVOICES, BANK STATEMENTS, ETC. SINCE THE ABOVE EVIDENCES ARE PRIMARY EVIDENCES, THE AO HAS EITHER TO ACCEPT THEM OR POINT OUT IRREGULARITY WITH CONCRETE AND LEADING EVIDENCES, THESE COULD NOT HAVE BEEN COMPLETELY BRUSHED ASIDE. KEE PING IN VIEW THE TOTALITY OF FACTS AND CIRCUMSTANCES OF THE CASE , THE ADDITION MADE BY AO AND RESTRICTED BY LD. CIT(A) ARE NOT SUSTAINABLE IN THE EYES OF LAW. HOWEVER, WE ARE FURTHER OF THE VIEW THAT IN ORDER TO CHECK POSSIBLE REVENUE LEAKAGE, CERTAIN ADDI TIONS MAY BE SUSTAINED IN THE PRESENT CASE ON THE BASIS OF COMPARATIVE ANALYSIS OF GP OF THE PRESENT YEAR COMPARED TO THE EARLIER YEARS. 17. LD. AR DRAWN OUR ATTENTION TO THE DECISION OF THE COORDINATE BENCH OF HONBLE ITAT F BENCH IN ITA NO. 3699, 18 ITA NO. 4756, 4757, 4758 & 4633 /MUM/2016, 5585, 5586 & 5587 /MUM/201 7& I.T.A. NO. 5942/MUM/2014 HITESH H. SHAH & OTHERS 4276 4917 & 4760/MUM/16 TITLED M/S GEOLIFE ORGANICS VRS. ACIT , VIKRAM N. CHANDAN VRS. ITO , JABARSING H B DA IYA VRS. ITO & RAJENDRA NEMICHANDJI CHANDAN VRS. ITO, HONBLE ITAT J BENCH IN ITA NO. 1177/MUM/17 CASE TITLED M/S SVPHN STEEL SERVICE VRS. ITO AND ITA N O. 1864/MUM/17 CASE TITLED JABARSINGH VRS. ITO , WHEREIN THE HONBLE ITAT HAS TAKEN A CONSISTENT VIEW AND RESTRICTED THE ADDITIONS TO THE EXTENT OF 2% OF SUCH PURCHASES. LD. AR ALSO SUBMITTED THAT THE FACTS OF THE ABOVE MENTIONED CASE ARE ABSOLUTELY SIMILAR TO THE FACTS OF THE PRESENT CASE. 18. AFTER ANALYZING THE ABOVE REFERRED ORDERS PASSED BY DIFFERENT BENCHES OF HONBLE ITAT AND AFTER HAVING GONE THROUGH THE COMPARATIVE ANALYSIS OF THE GP OF THE PRESENT YEAR COMPARED TO THE EARLIER YEARS IN THE CASE OF PRESENT ASSESSEES, WE FIND THAT IDENTICAL QUESTION INVOLVED IN THE PRESENT CASE HAS ALREADY BEEN DECIDED BY THE COORDINATE BENCH ES OF HONBLE ITAT MUMBAI. THEREFORE KEEPING IN VIEW THE PECULIAR FACTS OF THE PRESENT CASE AND RESPECTFULLY FOLLOWING THE DEC ISION OF THE COORDINATE BENCHES AND IN ORDER T O MAINTAIN JUDICIAL 19 ITA NO. 4756, 4757, 4758 & 4633 /MUM/2016, 5585, 5586 & 5587 /MUM/201 7& I.T.A. NO. 5942/MUM/2014 HITESH H. SHAH & OTHERS CONSISTENCY, WE ARE INCLINED TO MODIFY THE ORDERS PASSED BY LD. CIT(A) AND TO RESTRICT THE ADDITIONS TO THE EXTENT OF 2% OF SUCH PURCHASES. WE DIRECT ACCORDINGLY. 19 . AS THE FACTS AND CIRCUMSTANCES IN ALL THE OTHER CASES ARE SIMILAR, RESPECTFULLY FOLLOWING THE REASONING GIVEN HEREINABOVE, WE DIRECT THE AO TO RESTRICT THE ADDITION S TO THE EXTENT AS MENTIONED IN THE MAIN APPEAL IN ITA NO. 4756/MUM/16 ON SUCH PURCHASES. WE DIRECT ACCORDINGLY. 20 . IN THE NET RESULT, ALL THE APPEAL S FILED BY THE ASSESSEES STANDS PARTLY ALLOWED. ORDER PRONOUNCED IN THE OPEN COURT ON 22 ND MARCH , 2018. SD/ - SD/ - (R. C. SHARMA ) (SANDEEP GOSAIN) / ACCOUNTANT MEMBER / JUDICIAL MEMBER MUMBAI ; DATED : 22 . 0 3 .201 8 SR.PS . DHANANJAY 20 ITA NO. 4756, 4757, 4758 & 4633 /MUM/2016, 5585, 5586 & 5587 /MUM/201 7& I.T.A. NO. 5942/MUM/2014 HITESH H. SHAH & OTHERS / COPY OF THE ORDER FORWARDED TO : 1. / THE APPELLANT 2. / THE RESPONDENT 3. ( ) / THE CIT(A) 4. / CIT - CONCERNED 5. , , / DR, ITAT, MUMBAI 6. / GUARD F I LE / BY ORDER, . / (DY./ASSTT.REGISTRAR) , / ITAT, MUMBAI