SATELLITE DEVELOPERS P. LTD, MUMBAI V. DCIT CEN CIR 37, MUMBAI

ITA 4874/MUM/2016

• Counselvise Citation: [2017] 126 COUNSELVISE.COM (IT) 9814 (ITAT-MUMBAI)
• Duration Of Justice: 1 year(s) 1 month(s) 1 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 23-08-2017
• Appeal Filed By: Assessee
• Order Result: Partly Allowed
• Bench Allotted: I
• Assessment Year: 2011-2012
• Appeal Filed On: 22-07-2016
• Result in Favour of: Partly Allowed
• Court: TRIBUNAL
• Department Lawyers: SAURABH KUMAR
• Assessee Lawyers: V C SHAH
• Keywords: Bogus purchase; Accommodation entries
• Section: 143(3); 133(6)

Judgement Text

ITA NO. 4 874 /MUM/2015 M/S SATELLITE DEVELOPERS PVT. LTD. 1 IN THE INCOME TAX APPELLATE TRIBUNAL I BENCH, MUMBAI BEFORE SHRI G.S. PANNU , AM AND SHRI RAVISH SOOD, JM ./ I.T.A. NO. 4 874 /MUM/201 6 ( / ASSESSMENT YEAR: 20 11 - 12 ) M/S SATELLITE DEVELOPERS PVT. LTD, BUILDING NO. 12, 7 TH FLOOR, SOLITAIRE CORPORATE PARK, ANDHERI - GHATKOPAR LINK, ROAD, ANDHERI (E), MUMBAI - 400 093. / VS. DEPUTY COMMISSIONER OF INCOME TAX, CENTRAL CIRCLE - 37, MUMBAI . ./ ./ PAN/GIR NO. AADCS0420Q ( / APPELLANT ) : ( / RESPONDENT ) / ASSESSEE BY : SH. V.C. SHAH / REVENUE BY : SH SAURABH KUMAR , D.R. / DATE OF HEARING : 06/06/2017 / DATE OF PRONOUNCEMENT : 23 /0 8 /2017 / O R D E R PER RAVISH SOOD, JUDICIAL MEMBER THE PRESENT APPEAL FILED BY THE ASSESSEE IS DIRECTED AGAINST THE ORDER PASSED BY THE CIT(A) - 53 , MUMBAI, DATED 23.03.2016 FOR A.Y. 2011 - 12 , WHICH IN ITSELF ARISES FROM THE ORDER PASSED BY THE A.O U/S 143(3) OF THE INCOME - TAX ACT 1961 (FOR SHORT ITA NO. 4 874 /MUM/2015 M/S SATELLITE DEVELOPERS PVT. LTD. 2 ACT), DATED 24. 03 .20 14 . THE ASSESSEE ASSAILING THE ORDER OF THE CIT(A) HAD RAISED THE FOLLOWING GROUNDS OF APPEAL BEFORE US: - 1. ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE AND IN LAW THE LEARNED COMMISSIONER OF INCOME TAX (APPEALS) ERRED IN SU STAINING THE ADDITION MADE IN COMPUTING TOTAL INCOME AMOUNTING TO RS. 7,28,613/ - BEING THE PEAK AMOUNT OF PURCHASES THOUGH THE CONSUMPTION RECORDS OF SUCH PURCHASES WITH UTILIZATION WAS GIVEN AND ALL PAYMENTS TO SUPPLIERS WERE MADE BY ACCOUNT PAYEE CHEQUES AS IS DONE FOR ALL SUPPLIERS INVOICES IN THE NORMAL COURSE OF BUSINESS AND YOUR APPELLANT CAN NOT BE EXPECTED TO PRODUCE ANY SUPPLIER OF MATERIAL PARTICULARLY AS HE DOES NOT ENJOY ANY SUCH AUTHORITY UNDER ANY LAW AND THE SUPPLIERS HAS BANK ACCOUNTS AND WE RE REGISTERED DEALER WITH THE MAHARASHTRA SALES TAX DEPARTMENT . 2. YOUR APPELLANT C RAVES, LEAVE TO ADD , ALTER , AMEND OR DELETE ANY OF THE GROUNDS AS MAY BE ADVISED . 2. BRIEFLY STATED, THE ASSESSEE COMPANY WHICH IS ENGAGED IN THE BUSINESS OF REAL ESTATE DEVELOPMENT, POWER GENERATION (WIND MILL), FINANCE AND TRADING HAD E - FILED ITS RETURN OF INCOME DECLARING TOTAL INCOME OF RS. 15,68,32,429/ - , WHICH WAS PROCESSED AS SUCH U/S 143(1) OF THE ACT. THE CASE OF THE ASSESSEE WAS THEREAFTER TAKEN UP FOR SCRUTINY ASSESSMENT U/S 143(2). 3. THAT THE A . O WAS I N RECEIPT OF INFORMATION FR OM THE INVESTIGATION WING THAT THE ASSESSEE HAD MADE BOGUS PURCHASES FROM THE FOLLOWING CONCERNS WHICH HAD BEEN DECLARED AS H AW ALA PARTIES BY THE SALES TAX DE PARTMENT : - S. NO. PARTICULARS 1. DARSHAT TRADING PVT. LTD. 2. RAHUL TRADERS 3. MAIRU ENTERPRISES ITA NO. 4 874 /MUM/2015 M/S SATELLITE DEVELOPERS PVT. LTD. 3 4. AJAY STO N E 4. THE ASSESSEE ON BEING CALLED UPON BY THE A.O TO PUT FORTH AN EXPLANATION AS REGARDS THE TRANSACTION S ENTERED INTO WITH THE AFORESAID PARTIES, THEREIN FILED HIS SUBMISSIONS AS REGARDS THE PURCHASE S MADE FROM THE RESPECTIVE CONCERNS, AS UNDER: - A) M/S DARSHAT TRADING PVT. LTD. THE ASSESSEE SUBMITTED THAT ITS MAIN TRANSACTION WITH THE AFORESAID CONCERN WAS FOR PURCHASE OF R EADY M IX C ONCRETE (RMC) DURING THE PERIOD 1 7.02.2011 TO 31.03.2011, VIDE FOUR BILLS AGGREGATING TO RS. 17,31,807/ - , AGAINST WHICH TRANSPORTATION CHARGES OF RS. 54,425/ - HAD BEEN INCURRED . THE TOTAL QUANTITY OF RMC PURCHASED VIDE THE FOUR BILLS WAS SAID TO BE 311 CUBIC METERS. TH AT AS PER THE ASSESSEE THE RMC PURCHASED FROM THE AFORESAID CONCERN WAS USED FOR CASTING 16 TH , 17 TH AND 1 8 TH RCC SLABS OF THEIR RESIDENTIAL PROJECT KNOWN AS SATELLITE ROYALE. IT WAS STATED BY THE ASSESSEE THAT SLABS OF THE SAID BUILDING HAD BEEN PHYSICALLY CASTED , AND THE FACT THAT THE SAID BUILDING HAD BEEN DULY CONSTRUCTED STOOD AS A PHYSICAL EVIDENCE OF THE RMC PROCURED AND USED. IT WAS POINTED OUT TH AT RMC PURCHASED FROM THE SAID PARTY DURING THE YEAR WAS APPROXIMATELY 3% OF RMC PURCHASED DURING THE YEAR (AGGREGATING TO RS. 5.38 CRORES) BY THE COMPANY. THE ASSESSEE SUBMITTED THAT THOUGH THE OTHER SUPPLIERS OF THE ASSESSEE WERE REPUTED SUPPLIERS LIKE ULTRATECH CEMENT, ACC CONCRETE, RELCON INFRAPR O JECTS E TC , HOWEVER IT WAS COMPELLED TO PROCURE RMC FROM THIS SMALL SUPPLIER FOR THE REASON THAT IN SEPTEMBER, 2010 THE ITA NO. 4 874 /MUM/2015 M/S SATELLITE DEVELOPERS PVT. LTD. 4 HONBLE BOMBAY HIGH COURT HAD IMPOSED TOTAL BAN ON SAND MINING/EXTRACTION TH R OUGHOUT MAHARASHTRA , AS WELL AS HAD CAME UP WITH SEVERE RESTRICTION S ON IMPORTING SAND FROM OTHER STATES. THE ASSESSEE SUBMITTED THAT IN THE BACKDROP OF THE AFORESAID STATE OF AFFAIRS, SAND WHICH WAS AN ESSENTIAL ITEM IN PREPARATION OF RMC BECAME SCARCELY AVAILABLE IN THE STATE, AS A CONSEQUENCE OF WHICH THE CONSTRUCTION INDUSTRY WAS ADVERSELY HIT IN A BIG WAY. IT WAS SUBMITTED BY THE ASSESSEE THAT IN THE AFORESAID SCENARIO LARGE SUPPLIERS OF RMC DISCONTINUED THEIR SUPPLY AND THE ASSESSEE WAS THUS COMPELLED TO PROCURE RMC FROM TH E AFORESAID SMALL SUPPLIER, VIZ. DARSHAT TRADING PVT. LTD.,AS THE LATTER COULD MANAGE TO GET SAND THROUGH ITS OWN RESOURCES AND PROVIDE THE RMC REQUIRED BY THE ASSESSEE FOR CASTING THE SLABS. B) M/S MAIRU ENTERPRISES THE ASSESSEE SUBMITTED THAT THE SOLE TRANSACTION WITH THE A F ORES A I D CONCERN WAS IN RESPECT OF INSTALLATION OF AN ARTIFICIAL CRICKET PITCH IN THE CLUB HOUSE , WHICH WAS PROVIDED AS AN AMENITY IN THEIR PROJECT SOL I TAIRE CORPORATE PARK . THE EXPENDITURE INCURRED FOR THE SAME WAS RS. 1,59,000/ - , INCLUDING VAT. IT WAS CLAIMED BY THE AS SESSEE THAT AS THE INSTALLATION OF AN ARTIFICIAL CRICKET PITCH WAS NOT A N USUAL ITEM OF SUPPLY , THEREFORE, IT WAS DIFFICULT FOR THEM TO PROCURE ANY REGULAR/LARGE SUPPLIER FOR SUCH WORK. IT WAS SUBMITTED BY THE ASSESSEE THAT IT WAS IN LIGHT OF THE AFORESAID STATE OF AFFAIRS THAT THE SAID WORK WAS ENTRUSTED TO THE AFORESAID SUPPLIER , VIZ. M/S MAIRU ENTERPRISES, WHO AGREED TO FINISH THE WORK AS PER STANDARDS EXPECTED OF THE CLUB. ITA NO. 4 874 /MUM/2015 M/S SATELLITE DEVELOPERS PVT. LTD. 5 C) M/S RAHUL TRADERS TH E ASSESSEE SUBMITTED THAT IT HAD PURCHASED A SMALL QUANT ITY OF ROUGH MARBLE (3,825 SQ. FT.) FOR THEIR PROJECT SATELLITE R OYALE, AS WELL AS A SMALL QUANTITY OF C E RAMIC TILES (1,453 SQ. FT.) FOR THE IR RESIDENTIAL PROJECT KNOWN AS SATELLITE TOWER FRO M THE AFORESAID CONCERN, VIZ. M/S RAHUL TRADERS . IT WAS SUBMI TTED BY THE ASSESSEE THAT AS LARGE SUPPLIERS FOCUS ED ON VALUE ADDED/IMPORTED/PREMIUM QUALITY MARBLE, THE ASSESSEE WHO REQUIRED CHEAP QUALITY MARBLE AND CERAMIC TILES WAS THUS COMPELLED TO PROCURE THE SAME FROM THE AFO RE SAID SUPPLIER. D) M/S AJAY STONE THE ASSESSEE SUBMITTED THAT IT HAD PURCHASED A SMALL QUANTITY OF ROUGH MARBLE FOR THE CLUB HOUSE OF SOLITAIRE C ORPORATE PARK VIDE TWO PURCHASE BILL S , AND A SMALL QUANTITY (50 SQ. FT.) FOR THEIR NEPEAN SEA ROAD PROJECT VIDE ONE PURCHASE BILL FROM THE AFOR ESAID SUPPLIER, VIZ. M/S AJAY STONE . 5. THE A.O AFTER DELIBERATING ON THE EXPLANATION/ SUBMISSIONS OF THE ASSESSEE, HOWEVER DID NOT FIND FAVOR WITH THE SAME AND OBSERVED IN RESPECT OF THE AFORESAID PARTIES , AS UNDER: I) M/S RAHUL TRADERS : T HE CONCERN M/S RAHUL TRADERS WAS NOT TRACEABLE AT THE PLACE OF THE BUSINESS DURING THE COURSE OF THE INVESTIGATION VISIT MADE BY THE SALES TAX DEPARTMENT. ITA NO. 4 874 /MUM/2015 M/S SATELLITE DEVELOPERS PVT. LTD. 6 II) M/S DARSHAT TRADING PVT. LTD. : THE PERSON CONCERNED WAS NOT FOUND AT HIS PLACE OF BUSINESS. III) M/S MAIRU ENTERPRIS ES : SH. RAMESH P BAFNA OF THE SAID CONCERN HAD IN HIS STATEMENT RECORDED BEFORE THE SALES TAX DEPARTMENT ADMITTED THAT HE DID NOT KEEP BOOKS OF ACCOUNTS , BUT HAD ONLY ISSUE D BILLS ON DEMAND TO THE CONCERN ED PARTIES AND RECEIVED ONE PERCENT COMMISSION OF THE BILL AMOUNT ISSUED TO THE RESPECTIVE PARTIES. IV) M/S AJAY STONE : THE AFORESAID CONCERN WAS PROVIDING ACCOMMODATION ENTRIES AND DID N OT PERFORM ANY BUSINESS ACTIVITY . 6. THE A.O THOUGH HELD THAT THE ASSESSEE HAD NOT MADE ANY ACTUAL PURCHASES FROM THE AFORESAID FOUR HAWALA PARTIES, BUT CONCEDED THAT THE ASSESSEE HAD RECEIVED THE GOODS UNDER CONSIDERATION AND CONSUMED THE SAME IN THE COURSE OF ITS BUSINESS. TH E A.O OBSERVED THAT THE ASSESSEE HAD MADE PURCHASES OF THE GOODS UNDER CONSIDERATION IN CASH FROM THE OPEN MARKET, AND THEREAFTER TO ROUTE THE SAME THROUGH ITS BOOKS OF ACCOUNTS HAD TAKEN BILLS FROM THE AFORESAID FOUR HAWALA PARTIES. THE A.O THUS ON THE BASIS OF THE AF ORESAID CONVICTION WORKED OUT THE PEAK INVESTMENT IN CASH MADE BY THE ASSESSEE FOR THE BOGUS PURCHASES (I.E . PURCHASES MADE IN CASH BY THE ASSESSEE FROM THE OPEN MARKET) AT RS. 7,28,613/ - AND ADDED THE SAME TO THE TOTAL INCOME OF THE ASSESSEE. THE A.O ALSO MADE A SEPARATE ADDITION OF RS. 24,404/ - TOWARDS COMMISSION THAT MUST HAVE BEEN PAID BY THE ASSESSEE TO THE AFORESAID HAWALA PARTIES FOR PROVIDING THE ACCOMMODATION ENTRIES. ITA NO. 4 874 /MUM/2015 M/S SATELLITE DEVELOPERS PVT. LTD. 7 7. THE ASSESSEE BEING AGGRIEVED WITH THE ORDER OF THE A.O CARRIED THE MATTER IN APPEAL BEFORE THE CIT(A). THE CIT(A) AFTER DELIBERATING ON THE CONTENTIONS RAISED BY THE ASSESSEE BEFORE HIM, THEREIN DID NOT FIND FAVOR WITH THE SAME AND DISMISSED THE APPEAL BY OBSERVING AS UNDER : - I HAVE CO NSIDERED THE SUBMISSIONS OF THE APPELLANT AND PERUSED THE MATERIAL AVAILABLE ON RECORD. THE POINT FOR ADJUDICATION IS WHETHER ON THE PECULIAR FACTS AND CIRCUMSTANCES OF THE CASE AND IN LAW, THE A.O WAS JUSTIFIED IN MAKING ADDITIONS OF RS. 7,28,613/ - ON ACC OUNT OF PEAK INVESTMENT IN CASH MADE BOGUS PURCHASES MADE FROM AFORESAID FOUR PARTIES AND RS. 24,404/ - ON ACCOUNT OF COMMISSION PAID FOR OBTAINING ACCOMMODATION ENTRIES. AT THE OUTSET, IT IS PROPOSED TO TAKE NOTE OF A FEW JUDICIAL PRECEDENTS HAVING BEARING ON THE ISSUE UNDER ADJUDICATION. IT IS NOW WELL SETTLED THAT THE ONUS IS UPON THE ASSESSEE TO PROVE THE GENUINENESS OF THE PURCHASES [178 CTR (RAJ) 420 AND 186 CTR (MP) 718]. IN THE CASE OF CIT VS. PRECISION FINANCE PVT. LTD 208 ITR 465 (CAL.), IT HAS BEE N HELD THAT PAYMENT MADE BY ACCOUNT PAYEE CHEQUE IS NOT SACROSANCT AND IT WOULD NOT MAKE AN OTHERWISE NON - GENUINE TRANSACTION GENUINE. A PERUSAL OF THE ASSESSMENT ORDER REVEALS THAT THE A.OS CONCLUSION THAT THE AFORESAID FOUR PARTIES FROM WHOM PURCHASES W ERE MADE WERE ACCOMMODATION ENTRY PROVIDERS WAS BASED ON THE FOLLOWING : - I) THE AFORESAID FOUR PARTIES WERE DECLARED AS HAWALA PARTIES ON THE WEBSITE OF MAHARASHTRA SALES TAX/VAT AUTHORITIES. M/S RAHUL TRADERS WAS NOT TRACEABLE AT HIS PLACE OF BUSINESS DURI NG THE SPOT INQUIRIES MADE BY THE SALES TAX DEPARTMENT. THE PERSON CONCERNED WITH M/S DARSHAT TRADING PVT. LTD. WAS ALSO NOT FOUND AT ITS PLACE OF BUSINESS. RAMESH P. BAFNA OF M/S MAIRU ENTERPRISES IN HIS STATEMENT BEFORE THE SALES TAX AUTHORITIES ADMITTED THAT HE WAS ONLY ISSUING BILLS TO VARIOUS PARTIES AND RECEIVING 1% COMMISSION THEREON. M/S AJAY STONE WAS ALSO FOUND TO BE PROVIDING ACCOMMODATION ENTRIES ONLY AND NOT CARRYING ON ANY GENUINE ACTIVITY. II) NOTICES U/S. 133(6) ISSUED BY THE A.O TO THE SAID PAR TIES WERE RETURNED UNDELIVERED WITH THE REMARKS LEFT OR UNKNOWN. III) THE APPELLANT WAS ASKED TO FURNISH NEW OR PRESENT ADDRESSES OF THE ABOVE MENTIONED PARTIES BUT IS FAILED TO DO SO. ITA NO. 4 874 /MUM/2015 M/S SATELLITE DEVELOPERS PVT. LTD. 8 IV) THE APPELLANT FAILED TO FURNISH CONFIRMATIONS FROM THE AFORESAID FOUR PA RTIES IN REGARD TO THE PURCHASES SHOWN TO HAVE BEEN MADE FROM THEM. V) THOUGH THE APPELLANT CONTENDS THE A.O COULD HAVE OBTAINED DETAILS OF AFORESAID PARTIES FROM THEIR BANK ACCOUNTS, IT HAS NOT FURNISHED DETAILS OF BANK ACCOU N TS OF SUPPLIERS DESPITE HAVING B EEN ASKED TO DO SO. IN THE ABSENCE OF THESE DETAILS, NO ENQUIRY CAN BE MADE FROM THE BANK. VI) THE APPELLANT FAILED TO PRODUCE TRANSPORT RECEIPTS/LORRY RECEIPT, OCTROI RECEIPTS ETC. IN SUPPORT OF ITS CLAIM OF PURCHASES FROM THE AFORESAID PARTIES. VII) ALTHOUGH THE APPELLANT HAS FURNISHED COPIES OF DELIVERY CHALLANS, A CLOSE SCRUTINY OF THE SAME DOES NOT SUPPORT THE APPELLANTS CLAIM OF GENUINENESS OF PURCHASES MADE FROM THE AFORESAID PARTIES. A FEW ILLUSTRATIVE INSTANCES OF DELIVERY CHALLANS OF M/S DARSHAT TRADING P VT. LTD. IN RESPECT OF ALLEGED SUPPLY AND TRANSPORTATION OF RMC FROM ITS BUSINESS PREMISES LOCATED AT 14, KADAM CHAWL, IST F LOOR, NEAR PANJRAPOLE LANE, OPP. GAUSHALA, MUMBAI - 400002 TO THE APPELLANT AT ITS GOREGAON SITE (SATELLITE ROYAL D - 6) ARE DESCRIBED I N THE TABLE BELOW : CHALLAN NO. DATE QUANTITY (M 3 ) PLANT EXIT TIME SITE REACHING TIME* 2 27.02.2011 6.00 07:35 A.M. 08:10 A.M. 3 27.02.2011 6.00 08:00 A.M. 08:20 A.M. 5 27.02.2011 6.00 10:25 A.M. 10:40 A.M. 7 27.02.2011 6.00 11:00 A.M. 11:15 A.M. 10 27.02.2011 6.00 12:08 P.M. 12:20 P.M. 11 27.02.2011 6.00 12:50 P.M. 01:00 P.M. 12 27.02.2011 6.00 01:25 P.M. 01:35 P.M. 13 27.02.2011 6.00 01:41 P.M. 01:50 P.M. *AS PER MATERIAL RECEIPT STATEMENT NO. MR2044 DATED 27.02.2011 IN THIS CONNECTION, IT IS NOTICED FROM PERUSAL OF THE SAID DELIVERY CHALLANS THAT THE ADDRESS OF THE RMC PLANT OF M/S DARSHAT TRADING PVT. LTD. (FROM WHICH THE MATERIAL WAS DISPATCHED) IS NOT AT ALL MENTIONED THEREON. IT IS HARD TO BELIEVE THAT RMC OF 102 M 3 ALLEGEDLY DISPATCHED TO THE APPELLANT ON 27.02.2011 WOULD BE STORED ON THE 1 ST FLOOR OF CHAWL. AND FINALLY, IT IS HIGHLY IMPROBABLE OR RATHER IMPOSSIBLE THAT A TRUCK OR A VEHICLE CARRYING 6 M 3 OF RMC CAN TRAVEL FROM PANJRAPOLE TO GOREGAON SITE OF THE APPELLANT WITHIN A SHORT T IME RANGING BETWEEN 9 TO 35 MINUTES BEATING ITA NO. 4 874 /MUM/2015 M/S SATELLITE DEVELOPERS PVT. LTD. 9 EVEN THE SPEED OF FAST SUBURBAN TRAINS. IT ALSO DESERVES TO BE NOTED THAT THE APPELLANT MERELY FURNISHED COPIES OF LEDGER ACCOUNTS, INVOICES OF THE AFORESAID PARTIES AND ITS WON BANK STATEMENT BEFORE THE A.O WHI CH ARE NOT ENOUGH TO ESTABLISH THE GENUINENESS OF SAID PURCHASES. IN VIEW OF THE FACTS AND CIRCUMSTANCES STATED ABOVE, IT IS HELD THAT THE ONUS PLACED ON THE APPELLANT TO ESTABLISH THE GENUINENESS OF THE AFORESAID PURCHASES REMAINS UNDISCHARGED, AS RIGHTLY HELD BY THE A.O. HOWEVER AT THE SAME TIME, I AM IN AGREEMENT WITH THE A.OS FINDING THAT THE APPELLANT WAS ABLE TO PROVE CONSUMPTION OF THE MATERIALS. IN THESE CIRCUMSTANCES, THE A.O IS JUSTIFIED IN COMING TO THE CONCLUSION THAT THE APPELLANT HAD PURCHASE D THE MATERIAL IN CASH AND ARRANGED THE BILLS FROM THE AFORESAID HAWALA PARTIES. THEREFORE, THE ADDITIONS MADE BY THE A.O TOWARDS PEAK INVESTMENTS IN CASH FOR BOGUS PURCHASES (RS. 7,28,613/ - ) AND UNACCOUNTED COMMISSION PAID FOR PROCURING ACCOMMODATION ENTR IES (RS. 24,404/ - ) IN THE HANDS OF THE APPELLANT CANNOT BE SAID TO BE UNREASONABLE OR UNJUSTIFIED. TAKING INTO ACCOUNT OF TOTALITY OF THE FACTS AND CIRCUMSTANCES AS BROUGHT OUT ABOVE, I DO NOT FIND ANY ERROR OR INFIRMITY IN THE ACTION OF THE A.O IN MAKING THE AFORESAID AD D ITIONS AGGREGATING TO RS. 7,53,014/ - WHICH ARE CONFIRMED. GROUNDS BEARING N O S. 1 TO 3 RAISED BY THE APPELLANT ARE ACCORDINGLY DISMISSED . 8. THE ASSESSEE AGGRIEVED WITH THE ORDER OF THE CIT(A) HAD CARRIED THE MATTER IN APPEAL BEFORE US. THE LEARNED AUTHORIZED REPRESENTATIVE (FOR SHORT A . R) FOR THE ASSESSEE SUBMITTED THAT IT WAS DULY ACCEPTED BY THE A.O THAT THE MATERIAL PURCHASED BY THE ASSESSEE FROM THE AFORESAID PARTIES UNDER CONSIDERATION HAD BEEN CONSUMED IN THE COURSE OF ITS BUSINE SS. THE LD. A.R IN ORDER TO FORTIFY HIS CONTENTION TOOK US THROUGH THE RELEVANT EXTRACT S OF THE ORDER PASSED BY THE A.O. THE LD. A.R SUBMITTED THAT THE CIT(A) FAILING TO APPRECIATE THE FACTS OF THE CASE IN THE RIGHT PERSPECTIVE HAD THUS ERRONEOUSLY SUSTAIN ED THE ADDITION MADE BY THE A.O. IT WAS FURTHER AVERRED BY THE LD. A.R. THAT AN ADDITION OF 2% OF THE VALUE OF THE PURCHASES MADE FROM ITA NO. 4 874 /MUM/2015 M/S SATELLITE DEVELOPERS PVT. LTD. 10 THE AFORESAID PARTIES MAY ONLY BE SUSTAINED IN ALL FAIRNESS . PER CONTRA, THE LD. DEPARTMENTAL REPRESENTATIVE (FOR SHORT D.R) PLACED RELIANCE ON THE ORDER OF THE CIT(A). THE LD. D.R. SUBMITTED THAT THE HAWALA PARTIES HAD ACCEPTED THAT THEY WERE PROVIDING ACCOMMODATION ENTRIES. IT WAS FURTHER SUBMITTED BY THE LD. D.R THAT NEITHER THE CONFIRMATIONS OF THE AFORESAID PARTIES WE RE FURNISHED BY THE ASSESSEE WITH THE A.O, NOR THE DETAILS OF THE BANK ACCOUNT OF THE SUPPLIER, TRANSPORT DETAILS, DELIVERY CHALLANS WERE PLACED ON RECORD DURING THE COURSE OF THE ASSESSMENT PROCEEDING S . THE LD. D.R. TAKING SUPPORT OF THE AFORESAID FACTS , THUS SUBMITTED THAT THE CIT(A) HAD RIGHTLY UPHELD THE ADDITION MADE BY THE A.O , AND AS SUCH NO INFIRMITY DID EMERGE FROM HIS ORDER. IT WAS SUBMITTED BY THE LD. D.R. THAT THE APPEAL OF THE ASSESSEE LACKED ANY MERIT AND WAS LIABLE TO BE DISMISSED. 9. WE H AVE HEARD THE AUTHORIZED REPRESENTATIVES FOR BOTH THE PARTIES, PERUSED THE ORDER S OF THE LOWER AUTHORITIES AND THE MATERIAL AVAILABLE ON RECORD . WE HAVE GIVEN A THOUGHTFUL CONSIDERATION TO THE FACTS OF THE CASE AND ARE OF THE CONSIDERED VIEW THAT IT REMAIN S AS A MATTER OF FACT THAT THE ASSESSEE HAD CARRIED OUT PURCHASE OF GOODS FROM THE OPEN/GREY MARKET, AND HAD MERELY OBTAINED THE BILLS FROM THE AFOREMENTIONED FOUR PARTIES, VIZ. (I) DARSHAT TRADING (P) LTD., (II) RAHUL TRADERS, (III) MAIRU ENTERPRISES AND (IV) AJAY STONE, WHO WE FIND HAD MERELY PROVIDED ACCOMMODATION ENTR IES /BOGUS BILLS TO THE ASSESSEE AND HAD NOT CARRIED OUT ANY GENUINE SALE OF GOODS TO THE LATTER . WE ARE OF THE CONSIDERED VIEW THAT THE ASSESSEE HAD CARRIED OUT PURCHASES OF THE AFORESAID GOODS FROM THE OPEN/GREY MARKET , AND ITA NO. 4 874 /MUM/2015 M/S SATELLITE DEVELOPERS PVT. LTD. 11 THEREAFTER IN ORDER TO BRING THE SAID PURCHASE TRANSACTIONS IN ITS BOOKS OF ACCOUNTS HAD OBTAINED BOGUS BILLS FROM THE AFOREMENTIONED FOUR PARTIES. WE HAVE GIVEN A THOUGHTFUL CONSIDERATION TO THE FACTS OF THE CASE AND ARE OF THE CONSIDERED VIEW THAT THE ASSESSEE WHO HAD PURCHASE D THE GOODS FROM THE OPEN/GREY MARKET MUST HAVE BEEN BENEFITTED BY PROCURING THE SAME AT A LOWER RATE, AS AGAINST THAT BOOKED BY IT IN ITS BOOKS OF ACCOUNTS ON THE BASIS OF THE BOGUS BILLS PROCURED FROM THE AFOREMENTIONED FOUR PARTIES, VIZ. (I) DARSHAT TRADING (P) LTD., (II) RAHUL TRADERS, (III) MAIRU ENTERPRISES AND (IV) AJAY STONE. WE THOUGH FIND OURSELVES TO BE IN AGREEMENT WITH THE VIEW ARRIVED AT BY THE LOWER AUTHORITIES THAT THE ASSES SEE HAD NOT CARRIED OUT ANY GENUINE PURCHASES FROM THE AFORESAID PARTIES, BUT HAD MERELY OBTAINED BOGUS BILLS FROM THEM IN ORDER TO FACILITATE ROUTING OF THEIR PURCHASES MADE FROM THE OPEN/GREY MARKET THROUGH ITS BOOKS OF ACCOUNTS, BUT HOWEVER , ARE NOT P ERSUADED TO ACCEPT THE EXORBITANT ADDITION OF RS. 7,53,014/ - (I.E. PEAK INVESTMENT TOWARDS CASH PURCHASES MADE FROM OPEN/GREY MARKET : RS. 7,28,613/ - + C OMMISSION CHARGES PAID TO THE ENTRY PROVIDERS (1%) : RS. 24,401/ - ) SO MADE BY THE A.O ON THE SAID COUN T IN THE HANDS OF THE ASSESSEE . WE FIND THAT THE LOWER AUTHORITIES HAD DULY ACCEPTED THAT THE ASSESSEE HAD CARRIED OUT PURCHASES UNDER CONSIDERATION, THOUGH NOT FROM THE AFOREMENTIONED FOUR PARTIES, BUT HOWEVER FROM THE OPEN/GREY MARKET, AS A RESULT WHEREO F THE ONLY ADDITION IN THE BACKDROP OF THE AFORESAID FACTUAL POSITION THAT COULD HAVE BEEN MADE IN THE HANDS OF THE ASSESSEE WOULD BE IN RESPECT OF THE PROFIT MARGIN MADE BY THE ASSESSEE BY PURCHASING THE SAID GOODS FROM THE ITA NO. 4 874 /MUM/2015 M/S SATELLITE DEVELOPERS PVT. LTD. 12 OPEN/GREY MARKET , AS AGAINST THE VALUE BOOKED ON THE BASIS OF THE BOGUS BILLS PROCURED FROM THE ABOVEMENTION E D PARTIES. WE ARE OF THE CONSIDERED VIEW THAT THE ADDITION OF RS. 7,53,014/ - (SUPRA) MADE BY THE A.O IN RESPECT OF THE PURCHASES AGGREGATING TO RS. 24,40,309/ - MADE FROM THE AFOREMENTIONED FOUR PARTIES , WOULD GIVE A PROFIT MARGIN AT 30.86%, WHICH WE ARE OF THE CONSIDERED VIEW IS HIGHLY EXORBITANT AND BEYOND OUR COMPREHENSION. WE THOUGH ARE NOT OBLIVIOUS OF THE FACT THAT THE ASSESSEE MUST HAVE BEEN BEEN BENEFITED FROM MAKING THE PURCHASES FROM THE OPEN/GREY MARKET, AND AS SUCH IT CAN FAIRLY BE HELD THAT THE PURCHASES BOOKED BY THE ASSESSEE IN ITS BOOKS OF ACCOUNTS ON THE BASIS OF THE BOGUS BILLS PROCURED FROM THE AFORESAID PARTIES WERE INFLATED, BUT SUCH A PROFIT/MAR GIN WHICH IN THE ABSENCE OF ANY CONCRETE EVIDENCE HA S TO BE LEFT TO A FAIR ESTIMATE. WE FIND THAT THE HONBLE HIGH COURT OF GUJARAT IN THE CASE OF CIT - I VS. SIMIT P. SHETH (ITA NO. 553 OF 2013, DATED 16.01.2013) HAS HELD THAT THE PROFIT MARGIN FROM MAKING OF BOGUS PURCHASES CAN FAIRLY BE TAKEN AT 12.5% OF THE VALUE OF THE BOGUS PURCHASES. WE THUS IN ALL FAIRNESS RESTRICT THE PROFIT MARGIN IN RESPECT OF THE BOGUS PURCHASE OF RS.24,40,309/ - MADE BY THE ASSESSEE FROM THE AFOREMENT IONED FOUR PARTIES AT 12.5% OF THE SA ID AMOUNT, WHICH THEREIN SHALL WORK OUT AT RS. 3,05,039/ - (I.E . 12.5% OF RS. 24,40,309/ - ). WE THUS SUBSTITUTE THE ADDITION OF RS. 7,53,014/ - (SUPRA) SUSTAINED BY THE CIT(A), BY AN AMOUNT OF RS. 3,05,039/ - (SUPRA) . THE G ROUND OF APPEAL NO. 1 RAISED BY THE ASSESSEE BEFORE US IS PARTLY ALLOWED IN TERMS OF OUR AFORESAID OBSERVATIONS. ITA NO. 4 874 /MUM/2015 M/S SATELLITE DEVELOPERS PVT. LTD. 13 10. THAT AS THE GROUND OF APPEAL NO. 2 IS GENERAL IN NATURE, THEREFORE, THE SAME IS DISMISSED AS NOT PRESSED. 11. THE APPEAL OF THE ASSESSEE MARKED AS ITA NO. 4874/MUM/2015 IS PARTLY ALLOWED IN TERMS OF OUR AFORESAID OBSERVATIONS. ORDER PRONOUNCE D IN THE OPEN COURT ON 23 /08/2017 SD/ - SD/ - ( G.S. PANNU ) (RAVISH SOOD ) ACCOUNTANT MEMBER JUDICIAL MEMBER DATED 23 /0 8 /2017 PS. ROHIT KUMAR COPY OF THE ORDER FORWARDED TO : 1. THE APPELLANT 2. THE RESPONDENT. 3. CONCERNED CIT 4. THE CIT(A) 5. D.R., BY ORDER, //TRUE COPY// (DY./ASSTT. REGISTRAR) ITAT, MUMBAI ITA NO. 4 874 /MUM/2015 M/S SATELLITE DEVELOPERS PVT. LTD. 14