DCIT CIR. 13(1)(2), MUMBAI V. P-CUBE CONSTRUCTION PVT. LTD., MUMBAI

ITA 5019/MUM/2016

• Counselvise Citation: [2017] 126 COUNSELVISE.COM (IT) 8728 (ITAT-MUMBAI)
• Duration Of Justice: 1 year(s) 2 month(s) 25 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 31-10-2017
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: Not Allotted
• Assessment Year: 2009-2010
• Appeal Filed On: 05-08-2016
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Assessee Lawyers: PRANJIVAN PATEL
• Keywords: Bogus purchase; Capital asset; Depreciation; Question of law
• Section: 69C; 37(1)

Judgement Text

, , , IN THE INCOME TAX APPELLATE TRIBUNAL MUMBAI BENCHES, D MUMBAI , , , BEFORE SHRI JOGINDER SINGH, JUDICIAL MEMBER, AND SHRI RAJESH KUMAR, ACCOUNTANT MEMBER ITA NO.5019/MUM/2016 ASSESSMENT YEAR: 2009-10 DCIT, CIRCLE-13(1)(2), ROOM NO.218, 02 ND FLOOR, AAYAKAR BHAVAN, M. K. ROAD, MUMBAI-400020 / VS. M/S P-CUBE CONSTRUCTION PRIVATE LTD. 1/A/101, UMIYA NAGAR, VISHESHWAR NAGAR ROAD, OFF AAREY ROAD, GOREGAON (EAST), MUMBAI-400054 ( / REVENUE) ( !'# $ /ASSESSEE) PAN. NO. AADCP9320N % & $ ' / DATE OF HEARING : 31/10/2017 & $ ' / DATE OF ORDER: 02/11/2017 ! / REVENUE BY SHRI SAURABH DESHPANDE-DR !'# $ ! / ASSESSEE BY SHRI PRANJIVAN PATEL ITA NO. 5019/MUM/2016 P-CUBE CONSTRUCTION PVT. LTD. 2 / O R D E R PER JOGINDER SINGH (JUDICIAL MEMBER) THE REVENUE IS IN APPEAL, CHALLENGING THE IMPUGNED ORDER DATED 23/05/2016 OF THE LD. FIRST APPELLATE A UTHORITY, MUMBAI, RESTRICTING THE ADDITION OF RS.67,92,560/- MADE ON ACCOUNT OF BOGUS PURCHASES TO RS.8,49,070/- AT THE RATE OF 12.5% OF THE BOGUS PURCHASES WITHOUT APPRECIATING T HE FACT AND CONSEQUENT, DELETING THE ADDITION. 2. DURING HEARING THE LD.DR, SHRI SAURABH DESHPANDE , DEFENDED THE ADDITION MADE BY THE ASSESSING OFFICER BY ADVANCING ARGUMENTS WHICH ARE IDENTICAL TO THE GROU ND RAISED. ON THE OTHER HAND, THE SHRI PRANJIVAN PATE L, LD. COUNSEL FOR THE ASSESSEE, DEFENDED THE IMPUGNED ORD ER. 2.1 WE HAVE CONSIDERED THE RIVAL SUBMISSIONS AND PE RUSED THE MATERIAL AVAILABLE ON RECORD. SO FAR AS, DELETI NG THE ADDITION ON ACCOUNT OF BOGUS PURCHASES MADE FROM H AWALA DEALERS AS UNEXPLAINED EXPENSES U/S 69C OF THE ACT IS CONCERNED, IF THE OBSERVATION MADE IN THE ASSESSMEN T ORDER, LEADING TO ADDITION MADE TO THE TOTAL INCOME, CONCL USION ITA NO. 5019/MUM/2016 P-CUBE CONSTRUCTION PVT. LTD. 3 DRAWN IN THE IMPUGNED ORDER, MATERIAL AVAILABLE ON RECORD, ASSERTIONS MADE BY THE LD. DR, IF KEPT IN JUXTAPOSI TION AND ANALYZED, BEFORE ADVERTING FURTHER, THE FACTS OF TH E PRESENT APPEALS BEFORE US, WE DEEM IT APPROPRIATE TO CONSID ER VARIOUS DECISIONS FROM HON'BLE HIGH COURTS/HON'BLE APEX COU RT, SO THAT WE CAN REACH TO A PROPER CONCLUSION. THE HON'B LE GUJARAT HIGH COURT IN SANJAY OILCAKES INDUSTRIES VS CIT (2009) 316 ITR 274 (GUJ.) HELD AS UNDER:- 11 . HAVING HEARD THE LEARNED ADVOCATES APPEARING FOR THE RESPECTIVE PARTIES, IT IS APPARENT THAT NO INTERFER ENCE IS CALLED FOR IN THE IMPUGNED ORDER OF THE TRIBUNAL DATED APRIL 29, 1994, READ WITH THE ORDER DATED SEPTEMBER 29, 1994, MADE IN MISCELL ANEOUS APPLICATION. IN THE PRINCIPAL ORDER THE TRIBUNAL HA S RECORDED THE FOLLOWING FINDINGS : '8.3. WE HAVE CONSIDERED THE RIVAL SUBMISSIONS AND PERUSED THE FACTS ON RECORD. IN OUR OPINION, THE ACTION OF THE COMMISSIONER OF INCOME-TAX (APPEALS) CONFIRMING 25 PER CENT. OF THE AMOUNTS CLAIMED IS FAIR AND REASONABLE AND NO INTERFERENCE IS CALLED FOR. THE COMMIS SIONER OF IN COME-TAX (APPEALS) HAS GONE THROUGH THE PURCHASE PRICES OF T HE RAW MATERIAL PREVALENT AT THE TIME AND RIGHTLY CAME TO THE CON CLUSION THAT THE DISALLOWANCE TO THE EXTENT OF 25 P ER CENT. WAS CALLED FOR. IT IS ESTABLISHED THAT THE PARTIES WERE NOT TRACEABLE ; THEY OPENED THE BANK ACCOUNTS IN WHICH THE CHEQUE S WERE CREDITED BUT SOON THEREAFTER THE AMOUNTS WERE WITHD RAWN BY BEARER CHEQUES. THAT FAIRLY LEADS TO THE CONCLUSION THAT THESE PARTIES WERE PERHAPS CREATION OF THE ASSESSEE ITSEL F FOR THE PURPOSE OF BANKING PURCHASES INTO BOOKS OF ACCOUNT BECAUSE THE PURCHASES WITH BILLS WERE NOT FEASIBLE. THUS, T HE ABOVENOTED PARTIES BECOME CONDUIT PIPES BETWEEN THE ASSESSEE-FIRM AND THE SELLERS OF THE RAW MATERIALS. UNDER THE CIRCUMSTANCES, IT WAS NOT IMPOSSIBLE FOR THE ASSESS EE TO INFLATE THE PRICES OF RAW MATERIALS. ACCORDINGLY, A N ADDITION AT THE RATE OF 25 PER CENT. FOR EXTRA PRICE PAID BY TH E ASSESSEE THAN OVER AND ABOVE THE PREVALENT PRICE IS FAIR AND REASONABLE AND WE ACCORDINGLY CONFIRM THE FINDING OF THE COMMI S SIONER OF INCOME-TAX (APPEALS).' ITA NO. 5019/MUM/2016 P-CUBE CONSTRUCTION PVT. LTD. 4 12. THUS, IT IS APPARENT THAT BOTH THE COMMISSIONER (APPEALS) AND THE TRIBUNAL HAVE CONCURRENTLY ACCEPTED THE FIN DING OF THE ASSESSING OFFICER THAT THE APPARENT SELLERS WHO HAD ISSUED SALE BILLS WERE NOT TRACEABLE. THAT GOODS WERE RECE IVED FROM THE PARTIES OTHER THAN THE PERSONS WHO HAD ISSUED B ILLS FOR SUCH GOODS. THOUGH THE PURCHASES ARE SHOWN TO HAVE BEEN MADE BY MAKING PAYMENT THEREOF BY ACCOUNT PAYEE CHE QUES, THE CHEQUES HAVE BEEN DEPOSITED IN BANK ACCOUNTS OS TENSIBLY IN THE NAME OF THE APPARENT SELLERS, THEREAFTER THE ENTIRE AMOUNTS HAVE BEEN WITHDRAWN BY BEARER CHEQUES AND T HERE IS NO TRACE OR IDENTITY OF THE PERSON WITHDRAWING THE AMOUNT FROM THE BANK ACCOUNTS. IN THE LIGHT OF THE AFORESA ID NATURE OF EVIDENCE IT IS NOT POSSIBLE TO RECORD A DIFFERENT C ONCLUSION, DIFFERENT FROM THE ONE RECORDED BY THE COMMISSIONER (APPEALS) AND THE TRIBUNAL CONCURRENTLY HOLDING THA T THE APPARENT SELLERS WERE NOT GENUINE, OR WERE ACTING A S CONDUIT BETWEEN THE ASSESSEE-FIRM AND THE ACTUAL SELLERS OF THE RAW MATERIALS. BOTH THE COMMISSIONER (APPEALS) AND THE TRIBUNAL HAVE, THEREFORE, COME TO THE CONCLUSION THAT IN SUC H CIRCUMSTANCES, THE LIKELIHOOD OF THE PURCHASE PRICE BEING INFLATED CANNOT BE RULED OUT AND THERE IS NO MATERI AL TO DISLODGE SUCH FINDING. THE ISSUE IS NOT WHETHER THE PURCHASE PRICE REFLECTED IN THE BOOKS OF ACCOUNT MATCHES THE PURCHASE PRICE STATED TO HAVE BEEN PAID TO OTHER PERSONS. TH E ISSUE IS WHETHER THE PURCHASE PRICE PAID BY THE ASSESSEE IS REFLECTED AS RECEIPTS BY THE RECIPIENTS. THE ASSESSEE HAS, BY SET OF EVIDENCE AVAILABLE ON RECORD, MADE IT POSSIBLE FOR THE RECIPIENTS NOT BEING TRACEABLE FOR THE PURPOSE OF I NQUIRY AS TO WHETHER THE PAYMENTS MADE BY THE ASSESSEE HAVE BEEN ACTUALLY RECEIVED BY THE APPARENT SELLERS. HENCE, T HE ESTIMATE MADE BY THE TWO APPELLATE AUTHORITIES DOES NOT WARR ANT INTERFERENCE. EVEN OTHERWISE, WHETHER THE ESTIMATE SHOULD BE AT A PARTICULAR SUM OR AT A DIFFERENT SUM, CAN NEVE R BE AN ISSUE OF LAW. IN THE AFORESAID CASE, THE HON'BLE HIGH COURT ACCEP TED THAT THE APPARENT SELLERS, WHO ISSUED THE SAID BILL S WERE NOT TRACEABLE AND THE GOODS RECEIVED FROM PARTIES OTHER THAN THE PERSONS, WHO HAD ISSUED THE BILLS FOR SUCH GOODS. T HE ITA NO. 5019/MUM/2016 P-CUBE CONSTRUCTION PVT. LTD. 5 PURCHASES WERE SHOWN TO HAVE BEEN MADE BY MAKING PAYMENTS, THROUGH BANKING CHANNEL AND THUS THE APPA RENT SELLERS WERE NOT GENUINE OR WERE ACTING AS CONDUIT BETWEEN THE ASSESSEE AND THE ACTUAL SELLER. IN SUCH A SITUA TION, THE CONCLUSION DRAWN BY THE LD. COMMISSIONER OF INCOME TAX (APPEAL) AS WELL AS BY THE TRIBUNAL WAS AFFIRMED. HON'BLE APEX COURT IN KACHWALA GEMS VS JCIT (2007) 158 TAXM AN 71 OBSERVED THAT AN ELEMENT OF GUESSWORK IS INEVITABLE IN CASES, WHERE ESTIMATION OF INCOME IS WARRANTED. 2.2 THE HON'BLE GUJARAT HIGH COURT IN CIT VS BHOLANATH POLY FAB. PVT. LTD. (2013) 355 ITR 290 (G UJ.) HELD/OBSERVED AS UNDER:- 5. HAVING COME TO SUCH A CONCLUSION, HOWEVER, THE TRIBUNAL WAS OF THE OPINION THAT THE PURCHASES MAY HAVE BEEN MADE F ROM BOGUS PARTIES, NEVERTHELESS, THE PURCHASES THEMSELVES WER E NOT BOGUS. THE TRIBUNAL ADVERTED TO THE FACTS AND DATA ON RECORD A ND CAME TO THE CONCLUSION THAT THE ENTIRE QUANTITY OF OPENING STOC K, PURCHASES AND THE QUANTITY MANUFACTURED DURING THE YEAR UNDER CONSIDE RATION WERE SOLD BY THE ASSESSEE. THEREFORE, THE PURCHASES OF THE EN TIRE 1,02,514 METRES OF CLOTH WERE SOLD DURING THE YEAR UNDER CON SIDERATION. THE TRIBUNAL, THEREFORE, ACCEPTED THE ASSESSEE'S CONTEN TION THAT THE FINISHED GOODS WERE PURCHASED BY THE ASSESSEE, MAY BE NOT FROM THE PARTIES SHOWN IN THE ACCOUNTS, BUT FROM OTHER SOURC ES. IN THAT VIEW OF THE MATTER, THE TRIBUNAL WAS OF THE OPINION THAT NO T THE ENTIRE AMOUNT, BUT THE PROFIT MARGIN EMBEDDED IN SUCH AMOUNT WOULD BE SUBJECTED TO TAX. THE TRIBUNAL RELIED ON ITS EARLIER DECISION IN THE CASE OF SANKET STEEL TRADERS AND ALSO MADE REFERENCE TO THE TRIBUN AL'S DECISION IN THE CASE OF VIJAY PROTEINS LTD. V. ASST. CIT [1996] 58 ITD 428 (AHD). 6. WE ARE OF THE OPINION THAT THE TRIBUNAL COMMITTE D NO ERROR. WHETHER THE PURCHASES THEMSELVES WERE BOGUS OR WHETHER THE PARTIES FROM ITA NO. 5019/MUM/2016 P-CUBE CONSTRUCTION PVT. LTD. 6 WHOM SUCH PURCHASES WERE ALLEGEDLY MADE WERE BOGUS IS ESSENTIALLY A QUESTION OF FACT. THE TRIBUNAL HAVING EXAMINED THE EVIDENCE ON RECORD CAME TO THE CONCLUSION THAT THE ASSESSEE DID PURCHA SE THE CLOTH AND SELL THE FINISHED GOODS. IN THAT VIEW OF THE MATTER , AS NATURAL COROLLARY, NOT THE ENTIRE AMOUNT COVERED UNDER SUCH PURCHASE, BUT THE PROFIT ELEMENT EMBEDDED THEREIN WOULD BE SUBJECT TO TAX. T HIS WAS THE VIEW OF THIS COURT IN THE CASE OF SANJAY OILCAKE INDUSTR IES V. CIT [2009] 316 ITR 274 (GUJ). SUCH DECISION IS ALSO FOLLOWED BY THIS COUR T IN A JUDGMENT DATED AUGUST 16, 2011, IN TAX APPEAL NO. 6 79 OF 2010 IN THE CASE OF CIT V. KISHOR AMRUTLAL PATEL. IN THE RESULT , TAX APPEAL IS DISMISSED. 2.3 LIKEWISE, THE HON'BLE GUJARAT HIGH COURT IN CI T VS VIJAY M. MISTRY CONSTRUCTION LTD. (2013) 355 ITR 49 8 (GUJ.) HELD/OBSERVED AS UNDER:- 6. AS IS APPARENT FROM THE FACTS NOTED HEREINABOVE , THE COMMISSIONER (APPEALS) AFTER APPRECIATING THE EVIDENCE ON RECORD HAS FOUND THAT THE ASSESSEE HAD IN FACT MADE THE PURCHASES AND, HENCE, THE ASSESSING OFFICER WAS NOT JUSTIFIED IN DISALLOWING THE ENTIRE AMOUNT. HE, HOWEVER, WAS OF THE VIEW THAT THE ASSESSEE HAD INFLATED THE PURCHASES AND, ACCORDINGLY, BY PLACING RELIANCE ON THE DECISION OF THE TRIBUNAL IN THE CASE OF VIJAY PROTEINS (SUPRA) RESTRICTED THE DISAL LOWANCE TO 20 PER CENT. THE TRIBUNAL IN THE IMPUGNED ORDER HAS FOLLOW ED ITS EARLIER ORDER IN THE CASE OF VIJAY PROTEINS TO THE LETTER AND ENH ANCED THE DISALLOWANCE TO 25 PER CENT. THUS, IN BOTH CASES, T HE DECISION OF THE COMMISSIONER (APPEALS) AS WELL AS THAT OF THE TRIBU NAL IS BASED ON ESTIMATE. THIS HIGH COURT IN THE CASE OF SANJAY OIL CAKE [2009] 316 ITR 274 (GUJ) HAS HELD THAT WHETHER AN ESTIMATE SHOULD BE AT A PARTICULAR SUM OR AT A DIFFERENT SUM CAN NEVER BE A QUESTION OF LAW. 7. THE APEX COURT IN THE CASE OF KACHWALA GEMS [200 7] 288 ITR 10 (SC) HAS HELD THAT IN A BEST JUDGMENT ASSESSMENT TH ERE IS ALWAYS A CERTAIN DEGREE OF GUESS WORK. NO DOUBT, THE AUTHORI TIES SHOULD TRY TO MAKE AN HONEST AND FAIR ESTIMATE OF THE INCOME EVEN IN A BEST JUDGMENT ASSESSMENT AND SHOULD NOT ACT TOTALLY ARBI TRARILY BUT THERE IS NECESSARILY SOME AMOUNT OF GUESS WORK INVOLVED IN A BEST JUDGMENT ASSESSMENT. 8. EXAMINING THE FACTS OF THE PRESENT CASE IN THE L IGHT OF THE AFORESAID DECISIONS, THE DECISION OF THE TRIBUNAL, BEING BASE D ON AN ESTIMATE, DOES NOT GIVE RISE TO ANY QUESTION OF LAW SO AS TO WARRANT INTERFERENCE. 9. IN SO FAR AS THE PROPOSED QUESTIONS (C), (D) AND (E) ARE CONCERNED, THE SAME ARE SIMILAR TO THE PROPOSED QUESTION (A) W HEREIN THE TRIBUNAL HAS RESTRICTED THE ADDITION TO 25 PER CENT. ON SIMI LAR FACTS. IN THE ITA NO. 5019/MUM/2016 P-CUBE CONSTRUCTION PVT. LTD. 7 CIRCUMSTANCES, FOR THE REASONS STATED HEREINABOVE, THE SAID GROUNDS OF APPEAL DO NOT GIVE RISE TO ANY QUESTION OF LAW. 10. AS REGARDS THE PROPOSED QUESTION (B) WHICH PERT AINS TO THE DELETION OF ADDITION OF RS. 7,88,590 MADE ON ACCOUN T OF INFLATION OF EXPENSES PAID TO METAL AND MACHINE TRADING CO. (MMT C), THE ASSESSING OFFICER HAS FOUND THAT MMTC WAS A PARTNER SHIP FIRM OF SHRI NITIN GAJJAR ALONG WITH HIS FATHER AND BROTHER OPER ATING FROM BHAVNAGAR. A PERUSAL OF THEIR TRANSACTIONS WITH THE ASSESSEE INDICATED THAT THERE IS SOME INFLATION OF EXPENSES AS DETAILE D IN PARAGRAPH 6.1 OF THE ASSESSMENT ORDER. AFTER CONSIDERING THE EVIDENC E ON RECORD, THE ASSESSING OFFICER DISALLOWED THE AMOUNT RS. 7,88,59 0 ON ACCOUNT OF PAYMENT MADE TO MMTC. 11. THE ASSESSEE PREFERRED AN APPEAL BEFORE THE COM MISSIONER (APPEALS), WHO UPON APPRECIATION OF THE EVIDENCE ON RECORD FOUND THAT THE ASSESSING OFFICER HAD NOT REJECTED THE GENUINEN ESS OF THE PURCHASES MADE FROM MMTC WHILE MAKING THE DISALLOWA NCE. HIS OBSERVATIONS WERE BASED ON INFLATION OF RATES WHICH WERE BEING CHARGED FROM THE ASSESSEE. ACCORDING TO THE COMMISS IONER (APPEALS), THOUGH MMTC IN SOME RESPECT COULD BE ATTRIBUTED TO BE ASSOCIATED WITH THE ASSESSEE-COMPANY, STILL IT COULD NOT BE EXPECTE D THAT MMTC WAS CARRYING OUT ITS BUSINESS WITHOUT ANY MOTIVE OR PRO FIT. ACCORDING TO THE COMMISSIONER (APPEALS), IT WAS PROVED BY THE ASSESS EE THAT THE RATES CHARGED BY MMTC WERE COMPARABLE WITH THE PREVAILING MARKET RATES, NO SUCH ADDITION CAN STAND. THE COMMISSIONER (APPEA LS) TOOK NOTE OF THE FACT THAT IT WAS NOT THE CASE OF THE ASSESSING OFFICER THAT THE PURCHASES HAD BEEN DIRECTLY EFFECTED FROM THIRD PAR TIES AND NOT DIRECTLY FROM MMTC ; THE DIFFERENCE COULD NOT BE THE NET PRO FIT IN THE HANDS OF MMTC ; AND THAT WHILE CONDUCTING THE ENTIRE EXERCIS E MMTC WOULD HAVE TO INCUR CERTAIN EXPENDITURE IN TRANSPORTATION , IN ENGAGING PERSONNEL IN THE OFFICE AND OTHER OPERATIONS AND WA S ACCORDINGLY OF THE VIEW THAT THERE WAS NO CASE OF ACTUAL INFLATION OF RATES AND DELETED THE ADDITION. 12. THE TRIBUNAL, IN THE IMPUGNED ORDER, HAS CONCUR RED WITH THE FINDINGS RECORDED BY THE COMMISSIONER (APPEALS) AND HAS FOUND THAT THE ASSESSEE HAD MADE PURCHASES FROM MMTC AT THE PR EVAILING MARKET RATES AND THAT MMTC HAD INCURRED CERTAIN EXPENDITUR E IN ENGAGING PERSONNEL IN THE OFFICE AND OTHER OPERATIONS AND WO ULD MAKE SOME INCOME FROM THE ENTIRE EXERCISE. IN THE CIRCUMSTANC ES, THE PURCHASES MADE BY THE ASSESSEE FROM MMTC WOULD NOT BE HIT BY THE PROVISIONS OF SECTION 40A(2) OF THE ACT. 13. THUS, THE CONCLUSION ARRIVED AT BY THE TRIBUNAL IS BASED ON CONCURRENT FINDINGS OF FACT RECORDED BY THE COMMISS IONER (APPEALS) AS WELL AS THE TRIBUNAL. IT IS NOT THE CASE OF THE REV ENUE THAT THE TRIBUNAL HAS TAKEN INTO ACCOUNT ANY IRRELEVANT MATERIAL OR T HAT ANY RELEVANT MATERIAL HAS NOT BEEN TAKEN INTO CONSIDERATION. IN THE ABSENCE OF ANY MATERIAL TO THE CONTRARY BEING POINTED OUT ON BEHAL F OF THE REVENUE, THE IMPUGNED ORDER BEING BASED ON CONCURRENT FINDIN GS OF FACT RECORDED BY THE TRIBUNAL UPON APPRECIATION OF THE E VIDENCE ON RECORD, DOES NOT GIVE RISE TO ANY QUESTION OF LAW IN SO FAR AS THE PRESENT GROUND OF APPEAL IS CONCERNED. ITA NO. 5019/MUM/2016 P-CUBE CONSTRUCTION PVT. LTD. 8 14. IN RELATION TO THE PROPOSED QUESTION (F) WHICH RELATES TO THE DELETION OF ADDITION OF RS. 44,54,426 MADE ON ACCOU NT OF PURCHASE OF CRANE AND ALLOWING DEPRECIATION ON THE SAME, THE AS SESSING OFFICER OBSERVED THAT THE ASSESSEE HAD PURCHASED A CRAWLER CRANE FOR AN AMOUNT OF RS. 24,61,000 EXCLUDING THE COST OF SPARE PARTS OF RS. 14,98,490. THE ASSESSING OFFICER AFTER EXAMINING TH E EVIDENCE ON RECORD AND CONSIDERING THE EXPLANATION GIVEN BY THE ASSESSEE, MADE ADDITION OF RS. 44,54,426, RS. 39,59,490 BEING THE PURCHASE PRICE OF THE CRANE ALONG WITH ITS SPARE PARTS AND RS. 4,94,9 36 BEING DEPRECIATION CLAIMED BY THE ASSESSEE. THE COMMISSIO NER (APPEALS), UPON APPRECIATION OF EVIDENCE ON RECORD, WAS OF THE VIEW THAT THE ASSESSING OFFICER HAS NOT APPRECIATED THE FACTS OF THE CASE PROPERLY AND HAD MADE DISALLOWANCE WHICH WAS NOT PERMITTED B Y THE INCOME- TAX ACT. IT WAS HELD THAT DISALLOWANCE COULD ONLY H AVE BEEN MADE IN RESPECT OF EXPENSES DEBITED TO THE PROFIT AND LOSS ACCOUNT WHEREAS IN THE PRESENT CASE THE PURCHASE OF CRANE AND SPARE PA RTS OF THE CRANE AND OTHER MACHINERIES WERE IN THE NATURE OF ACQUISI TION OF CAPITAL ASSET. ACCORDING TO THE COMMISSIONER (APPEALS), THE DISALLOWANCE COULD HAVE BEEN MADE ON DEPRECIATION ONLY IF AT ALL THE ASSESSING OFFICER CONCLUSIVELY PROVED THAT THE PURCHASES OF C RANE AND OTHER PARTS ARE BOGUS. UPON APPRECIATION OF THE MATERIAL ON REC ORD THE COMMISSIONER (APPEALS) FOUND THAT THE ASSESSING OFF ICER HAS SIMPLY BRUSHED ASIDE ALL THE EVIDENCE ON ACCOUNT OF TECHNI CAL INFIRMITIES AND THAT THE EVIDENCE SUCH AS OCTROI RECEIPT ; HYPOTHEC ATION OF THE CRANE TO THE BANK; EXISTENCE OF THE CRANE EVEN TILL DATE WIT H THE ASSESSEE CONCLUSIVELY PROVED THAT THE CRANE WAS PURCHASED AN D IT WAS IN USE EVEN AS ON DATE WITH THE ASSESSEE. THE COMMISSIONER (APPEALS) ACCORDINGLY FOUND THAT THERE WAS NO SCOPE FOR ANY D ISALLOWANCE AND ACCORDINGLY DELETED THE DISALLOWANCE MADE ON ACCOUN T OF PURCHASE OF CRANE AND ALLOWED THE DEPRECIATION AS CLAIMED BY TH E ASSESSEE. 15. THE TRIBUNAL, IN THE IMPUGNED ORDER, HAS NOTED THAT THE COST OF CRANE WAS NEVER CLAIMED BY THE ASSESSEE IN THE RETU RN OF INCOME. BEFORE THE TRIBUNAL, THE ASSESSEE PRODUCED THE EVID ENCE THAT THE CRANE IN QUESTION WAS REGISTERED WITH THE RTO AND THE SAM E WAS WHOLLY AND EXCLUSIVELY USED FOR THE PURPOSES OF ITS BUSINESS. THE TRIBUNAL, THEREFORE, HELD THAT THE COMMISSIONER (APPEALS) WAS LEGALLY AND FACTUALLY CORRECT IN DELETING THE DISALLOWANCE OF C OST OF CRANE AS WELL AS DEPRECIATION THEREON. 16. FROM THE FACTS EMERGING FROM THE RECORD, IT IS APPARENT THAT THE ASSESSEE HAD NEVER CLAIMED THE COST OF THE CRANE IN THE RETURN NOR HAD IT DEBITED THE EXPENSES TO THE PROFIT AND LOSS ACCO UNT, AND AS SUCH THE QUESTION OF DISALLOWING THE SAME AND ADDING THE SAM E TO THE INCOME WOULD NOT ARISE. MOREOVER, IN THE ABSENCE OF ANY EV IDENCE TO INDICATE THAT THE PURCHASE WAS BOGUS OR THAT THE CRANE IN FA CT DID NOT EXIST, THE QUESTION OF DISALLOWING THE DEPRECATION IN RESPECT OF THE SAME ALSO WOULD NOT ARISE. WHEN THE ASSESSEE HAD CONCLUSIVELY PROVED THE PURCHASE AND EXISTENCE OF THE CRANE, AND HAD NOT DE BITED THE EXPENSES TO THE PROFIT AND LOSS ACCOUNT, NO ADDITION COULD H AVE BEEN MADE IN RESPECT OF THE PURCHASE PRICE NOR COULD HAVE DEPREC IATION BEEN DISALLOWED IN RESPECT THEREOF. THE TRIBUNAL WAS, TH EREFORE, JUSTIFIED IN DELETING THE ADDITION AS WELL AS DISALLOWANCE OF DE PRECIATION. 17. IN THE LIGHT OF THE AFORESAID DISCUSSION, IT IS NOT POSSIBLE TO STATE THAT THERE IS ANY LEGAL INFIRMITY IN THE IMPUGNED O RDER MADE BY THE ITA NO. 5019/MUM/2016 P-CUBE CONSTRUCTION PVT. LTD. 9 TRIBUNAL SO AS TO WARRANT INTERFERENCE. IN THE ABSE NCE OF ANY QUESTION OF LAW, MUCH LESS, A SUBSTANTIAL QUESTION OF LAW, T HE APPEAL IS DISMISSED. 2.4 THE HON'BLE JURISDICTIONAL HIGH COURT IN THE C ASE OF CIT VS ASHISH INTERNATIONAL LTD. (ITA NO.4299/2009) ORDER DATED 22/02/2011, OBSERVED/HELD AS UNDER:- THE QUESTION RAISED IN THIS APPEAL IS, WHETHER THE TRIBUNAL WAS JUSTIFIED IN DELETING THE ADDITION ON ACCOUNT OF BO GUS PURCHASES ALLEGEDLY MADE BY THE ASSESSEE FROM M/S. THAKKAR AG RO INDUSTRIAL CHEM SUPPLIES P. LTD. ACCORDING TO THE R EVENUE, THE DIRECTOR OF M/S. THAKKAR AGRO INDUSTRIAL CHEM SUPPL IES P. LTD. IN HIS STATEMENT HAD STATED THAT THERE WERE NO SALE S / PURCHASES BUT THE TRANSACTIONS WERE ONLY ACCOMMODATION BILLS NOT INVOLVING ANY TRANSACTIONS. THE TRIBUNAL HAS RECORD ED A FINDING OF FACT THAT THE ASSESSEE HAD DISPUTED THE CORRECTN ESS OF THE ABOVE STATEMENT AND ADMITTEDLY THE ASSESSEE WAS NOT GIVEN ANY OPPORTUNITY TO CROSS EXAMINE THE CONCERNED DIRE CTOR OF M/S. THAKKAR AGRO INDUSTRIAL CHEM SUPPLIES P. LTD. WHO H AD MADE THE ABOVE STATEMENT. THE APPELLATE AUTHORITY HAD SO UGHT REMAND REPORT AND EVEN AT THAT STAGE THE GENUINENES S OF THE STATEMENT HAS NOT BEEN ESTABLISHED BY ALLOWING CROS S EXAMINATION OF THE PERSON WHOSE STATEMENT WAS RELIE D UPON BY THE REVENUE. IN THESE CIRCUMSTANCES, THE DECISION O F THE TRIBUNAL BEING BASED ON THE FACT, NO SUBSTANTIAL QU ESTION OF LAW CAN BE SAID TO ARISE FROM THE ORDER OF THE TRIBUNAL . THE APPEAL IS DISMISSED WITH NO ORDER AS TO COSTS. 2.5 THE HON'BLE JURISDICTIONAL HIGH COURT IN CIT V S NIKUNJ EXIM ENTERPRISES PVT. LTD. (2015) 372 ITR 61 9 (BOM.) HELD/OBSERVED AS UNDER:- 7. WE HAVE CONSIDERED THE SUBMISSION ON BEHALF OF THE REVENUE. HOWEVER, FROM THE ORDER OF THE TRIBUNAL DA TED 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. SIM ILARLY, THE SALES HAVE NOT BEEN DOUBTED AND IT IS AN ADMITTED P OSITION THAT SUBSTANTIAL AMOUNT OF SALES HAVE BEEN MADE TO THE G OVERNMENT ITA NO. 5019/MUM/2016 P-CUBE CONSTRUCTION PVT. LTD. 10 DEPARTMENT, I.E., DEFENCE RESEARCH AND DEVELOPMENT LABORATORY, HYDERABAD. FURTHER, THERE WERE CONFIRMA TION LETTERS FILED BY THE SUPPLIERS, COPIES OF INVOICES FOR PURC HASES AS WELL AS COPIES OF BANK STATEMENT ALL OF WHICH WOULD INDICAT E THAT THE PURCHASES WERE IN FACT MADE. IN OUR VIEW, MERELY BE CAUSE THE SUPPLIERS HAVE NOT APPEARED BEFORE THE ASSESSING OF FICER OR THE COMMISSIONER OF INCOME-TAX (APPEALS), ONE CANNOT CO NCLUDE THAT THE PURCHASES WERE NOT MADE BY THE RESPONDENT- ASSESSEE. THE ASSESSING OFFICER AS WELL AS THE COMMISSIONER O F INCOME- TAX (APPEALS) HAVE DISALLOWED THE DEDUCTION OF RS. 1.33 CRORES ON ACCOUNT OF PURCHASES MERELY ON THE BASIS OF SUSP ICION 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 F ACTS BEFORE CONCLUDING THAT THE PURCHASES OF RS. 1.33 CRORES WA S NOT BOGUS. NO FAULT CAN BE FOUND WITH THE ORDER DATED APRIL 30 , 2010, OF THE TRIBUNAL. 2.6 THE HON'BLE GUJARAT HIGH COURT IN CIT VS M.K. BROTHERS (163 ITR 249) HELD/OBSERVED AS UNDER:- BEING AGGRIEVED BY THE AFORESAID ORDER, THE ASSESS EE WENT IN SECOND APPEAL BEFORE THE TRIBUNAL. IT WAS URGED ON BEHALF OF THE ASSESSEE THAT THE TRANSACTIONS IN QUESTION WERE NOR MAL BUSINESS TRANSACTIONS AND THE ASSESSEE HAD MADE PAYMENTS BY CHEQUES. THE PARTIES DID NOT COME FORWARD AND IF THEY DID NO T COME, THE ASSESSEE SHOULD NOT SUFFER. HOWEVER, ON BEHALF OF T HE REVENUE, IT WAS URGED THAT DETAILED INQUIRIES WERE MADE AND THE REAFTER THE CONCLUSION WAS REACHED. THE TRIBUNAL FOUND THAT THE RE WAS NO EVIDENCE ANYWHERE THAT THESE CONCERNS GAVE BOGUS VO UCHERS TO THE ASSESSEE. NO DOUBT, THERE WERE CERTAIN DOUBTFUL FEATURES, BUT THE EVIDENCE WAS NOT ADEQUATE TO CONCLUDE THAT THE PURCHASES MADE BY THE ASSESSEE FROM THE SAID PARTIES WERE BOG US. THE TRIBUNAL ACCORDINGLY, DID NOT SUSTAIN THE ADDITION RETAINED BY THE APPELLATE ASSISTANT COMMISSIONER. HENCE, AT THE INS TANCE OF THE REVENUE, THE AFORESAID QUESTION HAS BEEN REFERRED T O THIS COURT FOR OPINION. ON A PERUSAL OF THE ORDER OF THE TRIBUNAL, IT CLEAR LY APPEARS THAT WHETHER THE SAID TRANSACTIONS WERE BOGUS OR NOT WAS A QUESTION OF FACT. THE TRIBUNAL HAS ALSO POINTED OUT THAT NOTHIN G IS SHOWN TO INDICATE THAT ANY PART OF THE FUND GIVEN BY THE ASS ESSEE TO THESE PARTIES CAME BACK TO THE ASSESSEE IN ANY FORM. IT I S FURTHER OBSERVED BY THE TRIBUNAL THAT THERE IS NO EVIDENCE ANYWHERE THAT THESE CONCERNS GAVE VOUCHERS TO THE ASSESSEE. EVEN THE TWO STATEMENTS DO NOT IMPLICATE THE TRANSACTIONS WITH T HE ASSESSEE IN ANY WAY. W ITH THESE OBSERVATIONS, THE TRIBUNAL ULTIMATELY HAS ITA NO. 5019/MUM/2016 P-CUBE CONSTRUCTION PVT. LTD. 11 OBSERVED THAT THERE ARE CERTAIN DOUBTFUL FEATURES, BUT THE EVIDENCE IS NOT ADEQUATE TO CONCLUDE THAT THE PURCHASES MADE BY THE ASSESSEE FROM THESE PARTIES WERE BOGUS. IT MAY BE S TATED THAT THE ASSESSEE WAS GIVEN CREDIT FACILITIES FOR A SHORT DU RATION AND THE PAYMENTS WERE GIVEN BY CHEQUES. WHEN THAT IS SO, IT CANNOT BE SAID THAT THE ENTRIES FOR THE PURCHASES OF THE GOOD S MADE IN THE BOOKS OF ACCOUNT WERE BOGUS ENTRIES. WE, THEREFORE, DO NOT FIND THAT THE CONCLUSION ARRIVED AT BY THE TRIBUNAL IS A GAINST THE WEIGHT OF EVIDENCE. IN THAT VIEW OF THE MATTER, WE ANSWER THE QUESTION IN THE AFFIRMATIVE, THAT IS, IN FAVOUR OF THE ASSESSEE AND AGAINST THE REVENUE. ACCORDINGLY, THE REFERENCE STANDS DISPOSED OF WITH NO ORDER AS TO COSTS. 2.7. THE MUMBAI BENCH OF THE TRIBUNAL IN THE CASE OF DCIT VS RAJEEV G. KALATHIL (2015) 67 SOT 52 (MUM. TRIB.)(URO), IDENTICALLY, HELD AS UNDER:- 2.2.AGGRIEVED BY THE ORDER OF THE AO, ASSESSEE PRE FERRED AN APPEAL BEFORE THE FIRST APPELLATE AUTHORITY(FAA).BE FORE HIM IT WAS ARGUED THAT ASSESSEE HAD FILED COPIES OF BILLS OF P URCHASE FROM DKE AND NBE, THAT BOTH THE SUPPLIERS WERE REGISTERED DE ALERS AND WERE CARRYING PROPER VAT AND REGISTRATION NO.S, THAT LED GER ACCOUNTS OF THE PARTIES IN ASSESSEE'S BOOKS SHOWED BILLS ACCOUN TED FOR, THAT PAYMENT WAS MADE BY CHEQUES, THAT A CERTIFICATE FRO M THE BANKER GIVING DETAILS OF CHEQUE PAYMENT TO THE SAID PARTIE S WAS ALSO FURNISHED. COPIES OF THE CONSIGNMENT, RECEIVED FROM THE GOVERNMENT APPROVED TRANSPORT CONTRACTORS SHOWING T HAT MATERIAL PURCHASED WAS ACTUALLY DELIVERED AT THE SITE WAS FU RNISHED BEFORE THE AO. IT WAS ALSO ARGUED THAT SOME OF THE MATERIA L PURCHASED FROM THE SAID PARTIES WERE LYING PART OF CLOSING ST OCK AS ON 31.03.2009 AS PER THE STATEMENT SUBMITTED ON RECORD . AFTER CONSIDERING THE ASSESSMENT ORDER AND THE SUBMISSION S MADE BY THE ASSESSEE, FAA HELD THAT THE TRANSACTIONS WERE S UPPORTED BY PROPER DOCUMENTARY EVIDENCES, THAT THE PAYMENTS MAD E TO THE PARTIES BY THE ASSESSEE WERE IN CONFIRMATION WITH B ANK CERTIFICATE,T HAT THE SUPPLIERS WAS SHOWN AS DEFAULT UNDER THE MA HARASHTRA VAT ACT COULD NOT BE SUFFICIENT EVIDENCES TO HOLD THAT THE PURCHASES WERE NON-GENUINE, THAT THE AO HAD NOT BROUGHT ANY I NDEPENDENT AND RELIABLE EVIDENCES AGAINST THE ASSESSEE TO PROV E THE NON- GENUINENESS OF THE PURCHASES, THAT THERE WAS NO EVI DENCE REGARDING CASH RECEIVED BACK FROM THE SUPPLIERS. FI NALLY, HE DELETED THE ADDITION MADE BY THE AO . 2.3.BEFORE US, DEPARTMENTAL REPRESENTATIVE ARGUED THAT BOTH THE SUPPLIERS WERE NOT PRODUCED BEFORE THE AO BY TH E ASSESSEE, ITA NO. 5019/MUM/2016 P-CUBE CONSTRUCTION PVT. LTD. 12 THAT ONE OF THEM WAS DECLARED HAWALA DEALER BY VAT DEPARTMENT, THAT BECAUSE OF CHEQUE PAYMENT MADE TO THE SUPPLIER TRANSACTION CANNOT BE TAKEN AS GENUINE. HE RELIED UPON THE ORDE R OF THE G BENCH OF MUMBAI TRIBUNAL DELIVERED IN THE CASE OF W ESTERN EXTRUSION INDUSTRIES. (ITA/6579/MUM/2010-DATED 13.1 1.2013). AUTHRORISED REPRESENTATIVE (AR) CONTENDED THAT PAYM ENTS MADE BY THE ASSESSEE WERE SUPPORTED BY THE BANKERS STAT EMENT, THAT GOODS RECEIVED BY THE ASSESSEE FROM THE SUPPLIE WAS PART OF CLOSING STOCK,THAT THE TRANSPORTER HAD ADMITTED THE TRANSPORTATION OF GOODS TO THE SITE.HE RELIED UPON THE CASE OF BAB ULA BORANA (282 ITR251), NIKUNJ EXIMP ENTERPRISES (P) LTD. (216TAXMAN171)DELIVERED BY THE HONBLE BOMBAY HIGH COURT. 2.4.WE HAVE HEARD THE RIVAL SUBMISSIONS AND PERUSED THE MATERIAL BEFORE US. WE FIND THAT AO HAD MADE THE AD DITION AS ONE OF THE SUPPLIER WAS DECLARED A HAWALA DEALER BY THE VAT DEPARTMENT. WE AGREE THAT IT WAS A GOOD STARTING PO INT FOR MAKING FURTHER INVESTIGATION AND TAKE IT TO LOGICAL END. BUT, HE LEFT THE JOB AT INITIAL POINT ITSELF. SUSPICION OF HIGHE ST DEGREE CANNOT TAKE PLACE OF EVIDENCE. HE COULD HAVE CALLED FOR TH E DETAILS OF THE BANK ACCOUNTS OF THE SUPPLIERS TO FIND OUT AS WHETH ER THERE WAS ANY IMMEDIATE CASH WITHDRAWAL FROM THEIR ACCOUNT. W E FIND THAT NO SUCH EXERCISE WAS DONE. TRANSPORTATION OF GOOD T O THE SITE IS ONE OF THE DECIDING FACTOR TO BE CONSIDERED FOR RES OLVING THE ISSUE. THE FAA HAS GIVEN A FINDING OF FACT THAT PART OF TH E GOODS RECEIVED BY THE ASSESSEE WAS FORMING PART OF CLOSIN G STOCK. AS FAR AS THE CASE OF WESTERN EXTRUSION INDUSTRIES. (SUPRA )IS CONCERNED, WE FIND THAT IN THAT MATTER CASH WAS IMMEDIATELY WI THDRAWN BY THE SUPPLIER AND THERE WAS NO EVIDENCE OF MOVEMENT OF GOODS. BUT, IN THE CASE BEFORE US, THERE IS NOTHING, IN TH E ORDER OF THE AO, ABOUT THE CASH TRAIAL. SECONDLY, PROOF OF MOVEM ENT OF GOODS IS NOT IN DOUBT. THERERFORE, CONSIDERING THE PECULI AR FACTS AND CIRCUMSTANCES OF THE CASE UNDER APPEAL, WE ARE OF T HE OPINION THAT THE ORDER OF THE FAA DOES NOT SUFFER FROM ANY LEGAL INFIRMITY AND THERE ARE NOT SUFFICIENT EVIDENCE ON FILE TO EN DORSE THE VIEW TAKEN BY THE AO. SO, CONFIRMING THE ORDER OF THE FA A, WE DECIDE GROUND NO.1 AGAINST THE AO . 2.8. THE RATIO LAID DOWN IN THE CASE OF M/S NEETA TEXTILES VS INCOME TAX OFFICER 6138/MUM/2013, ORDER DATED 27/05/2013, SHRI JIGAR V. SHAH VS INCOME TAX OFFICE R (ITA NO.1223/M/2014) ORDER DATED 22/01/2016, M/S IMPERIA L IMP. & EXP. VS INCOME TAX OFFICER ITA NO.5427/MUM/2 015, ORDER DATED 18/03/2016 SUPPORTS THE CASE OF THE ASS ESSEE ITA NO. 5019/MUM/2016 P-CUBE CONSTRUCTION PVT. LTD. 13 AND THE CONCLUSION DRAWN IN THE IMPUGNED ORDER. HOW EVER, AS RELIED BY THE LD. DR, THE HON'BLE GUJARAT HIGH C OURT IN THE CASE OF N.K. INDUSTRIES LTD.,ETC VS DCIT (SUPRA) CO NSIDERING VARIOUS DECISIONS DECIDED THE ISSUE IN FAVOUR OF TH E REVENUE AND THE HON'BLE APEX COURT DISMISSED THE SLP VIDE O RDER DATED 16/01/2017 (SLP NO.(C) 769 OF 2017). WE FIND THAT IN THAT CASE, DURING SEARCH PROCEEDINGS, CERTAIN BLANK SIGNED CHEQUE BOOKS AND VOUCHERS WERE FOUND AND THUS THE PURCHASES MADE FROM THESE CONCERNS, WERE TREATED AS BOGUS BY THE ASSESSING OFFICER. 2.9 THE HON'BLE GUJARAT HIGH COURT IN N.K. INDUSTR IES LTD. VS DCIT (IT APPEAL NO.240, 261, 242, 260 AND 2 41 OF 2003), VIDE ORDER DATED 20/06/2016 CONSIDERED THE D ECISION OF THE TRIBUNAL AND VARIOUS JUDICIAL DECISIONS INCL UDING THE CASE OF VIJAY PROTEINS AND SANJAY OILCAKES INDUSTRI ES LTD., M/S WOOLEN CARPET FACTORY VS ITAT (2002) 178 CTR 42 0 (RAJ.), THE TRIBUNAL WAS HELD TO BE JUSTIFIED IN DE CIDING THE CASE AGAINST THE ASSESSEE. THE HON'BLE APEX COURT CONFIRMED THE DECISION OF THE HIGH COURT FOR ADDING THE ENTIR E INCOME ON ITA NO. 5019/MUM/2016 P-CUBE CONSTRUCTION PVT. LTD. 14 ACCOUNT OF BOGUS PURCHASES (SLP (C) NO.S 769 OF 201 7, ORDER DATED 16/01/2017. 2.10 IN THE CASE OF M/S. SANKET STEEL TRADERS (ITA NO.2801/AHD/2008) ORDER DATED 20.05.2011 WHEREIN IT WAS HELD/OBSERVED AS UNDER : 3. AT THE TIME OF HEARING BEFORE US, IT IS SUBMITT ED BY THE LEARNED COUNSEL THAT THE ADDITION SUSTAINED IS EXCESSIVE. I N SUPPORT OF THIS CONTENTION HE REFERRED TO THE DECISION OF THE TRIBU NAL IN THE CASE OF ITO VS. SUN STEEL 92 TTJ (AHD) 1126 WHEREIN THE TRIBUNA L HAS SUSTAINED THE ADDITION OF RS.50,000/- ON ACCOUNT OF BOGUS PURCHAS ES. HOWEVER, WE FIND THAT THE FACTS IN THE ABOVE CASE WERE DIFFERENT. IN THE ABOVE CASE, THE ASSESSEE HAS SHOWN PURCHASES OF RS.27,39,410/-, SAL E OF RS.28,17,207/- AND GP AT RS.94,740/-. THE ASSESSING OFFICER MADE T HE ADDITION OF RS.27,39,407/- FOR BOGUS PURCHASES. IF THE ABOVE SU M IS ADDED TO THE GP, THE GP WORKS OUT RS.28,34,1247/- WHICH WAS MORE THA N THE SALE ITSELF. THE TRIBUNAL HELD THAT IT IS IMPOSSIBLE THAT THE GP IS MORE THAN THE SALE ITSELF. THE TRIBUNAL ALSO FOUND THAT THE ASSESSEE H AS MAINTAINED THE QUANTITATIVE DETAILS IN RESPECT OF MATERIALS PURCHA SED AND SOLD. CONSIDERING PECULIAR FACTS OF THAT CASE, THE TRIBUN AL ARRIVED AT THE CONCLUSION THAT IT WOULD BE FAIR AND REASONABLE TO ESTIMATE THE ADDITION AT RS.50,000/- AS AGAINST THE ADDITION OF RS.27,39,407 /- MADE BY THE ASSESSING OFFICER. HOWEVER, THE LEARNED COMMISSIONE R OF INCOME TAX (APPEALS) CONSIDERING THE FACTS OF THE ASSESSEES C ASE, HAS SUSTAINED THE ADDITION AT 12.5%. WHILE DOING SO, HE HAS ALSO RELI ED UPON THE DECISION OF THE TRIBUNAL IN THE CASE OF M/S.VIJAY PROTEINS L TD., 55 TTJ (AHD) 76. IN THE CASE OF M/S. VIJAY PROTEINS LTD., THE TRIBUN AL HAS SUSTAINED THE ADDITION OF 25% OF THE BOGUS PURCHASES. HOWEVER, CO NSIDERING THE FACTS OF THE ASSESSEES CASE THE CIT(A) RESTRICTED THE DI SALLOWANCE TO 12.5% AS AGAINST 25% MADE IN THE CASE OF M/S.VIJAY PROTEINS LTD. FROM THESE FACTS IT IS EVIDENT THAT THE CIT(A) HAS SUSTAINED T HE ADDITION AT 12.5% OF THE NON-GENUINE PURCHASES CONSIDERING THE FACTS OF THE ASSESSEES CASE. WE, THEREFORE, DO NOT FIND ANY JUSTIFICATION TO INT ERFERE WITH THE ORDER OF THE CIT(A) IN THIS REGARD. THE SAME IS SUSTAINED. AFTER CONSIDERING THE FACTS AND THE ARGUMENTS OF BO TH THE SIDES, WE ARE OF THE OPINION THAT IT WOULD MEET ENDS OF JUSTICE, IF THE DISALLOWANCE IS SUSTAINED AT 12.5% OF THE PURCHASE FROM THESE TWO P ARTIES. THE ASSESSING OFFICER IS DIRECTED TO WORK OUT THE DISALLOWANCE AC CORDINGLY. ITA NO. 5019/MUM/2016 P-CUBE CONSTRUCTION PVT. LTD. 15 2.11. IN SUCH TYPE OF CASES, BROADLY, THE LD. COMMISSIONER OF INCOME TAX (APPEAL) AS WELL AS THIS TRIBUNAL HAS FOLLOWED THE DECISIONS FROM HON'BLE GUJARAT HIG H COURT IN THE CASE OF SIMIT P. SETH (2013) 356 ITR 451 (GU J.), CIT VS VIJAY M. MISTRY CONSTRUCTION LTD. (2013) 355 ITR 49 8 (GUJ.), CIT VS BHOLA NATH POLY FAB. (P.) LTD. (2013) 355 IT R 290 (GUJ.) AND VARIOUS OTHER DECISIONS OF THE TRIBUNAL AND THE DECISION OF M/S NIKUNJ EXIMP(SUPRA) FROM HON'BLE JURISDICTIONAL HIGH COURT, WHEREIN, THE AGGREGATE DISALLOWANCE WAS RESTRICTED TO 12.5%. ADMITTEDLY, T HERE CANNOT BE SALE WITHOUT PURCHASES. THE CASE OF THE REVENUE IS THAT THERE IS BOGUS NATURE OF PURCHASES MADE FRO M SUPPLIERS AND THE PARTIES WERE NOT FOUND EXISTING A T THE GIVEN ADDRESSES. AFTER CONSIDERING AFOREMENTIONED JUDICI AL PRONOUNCEMENTS, NOW WE SHALL DEAL WITH THE FACTS OF THE PRESENT APPEAL AND THE APPLICABILITY OF THE AFOREME NTIONED JUDICIAL DECISIONS. IN THE PRESENT APPEAL, AN INFO RMATION WAS RECEIVED FROM THE SALES TAX DEPARTMENT/INVESTIGATIO N WING, THAT THE ASSESSEE HAS MADE BOGUS PURCHASES FROM BAL AJI TRADING CORPORATION AMOUNTING TO RS.67,92,560/-. TH E ASSESSEE WAS ASKED TO PRODUCE THE PARTIES FOR CONFI RMATION. ITA NO. 5019/MUM/2016 P-CUBE CONSTRUCTION PVT. LTD. 16 THE ASSESSEE FURNISHED THE COPY OF INVOICES BUT DID NOT PRODUCE THE PARTIES. THE ASSESSEE FILED ITS REPLY VIDE LETTER DATED 19/03/2015. THE LD. ASSESSING OFFICER REJECTE D THE EXPLANATION OF THE ASSESSEE AND CONSIDERING THE PRO VISION OF SECTION 37(1) OF THE ACT ADDED THE PURCHASES TO THE INCOME OF THE ASSESSEE. ON APPEAL BEFORE THE LD. COMMISSIONER OF INCOME TAX (APPEAL), THE FACTUAL MATRIX WAS CONSIDE RED AND FOLLOWING VARIOUS DECISIONS, THE AMOUNT OF RS.8,49, 070/- (12.5% OF RS.67,92,560/-) WAS SUSTAINED AND THE REM AINING ADDITION OF RS.59,43,490/- WAS DELETED. WE NOTE THAT THE CONSUMPTION/SALES OF THE GOODS HAS NOT BEEN DOUBTED, THUS, FOLLOWING THE RATIO LAID DOWN I N AFORESAID CASES AND SPECIFICALLY HON'BLE JURISDICTIONAL HIGH C OURT IN NIKUNJ EXIMPS PVT. LTD(SUPRA), WE DO NOT FIND ANY I NFIRMITY IN THE ORDER OF THE LD.CIT(A), ADOPTING THE DISALLOWAN CE AT 12.5% OF THE BOGUS PURCHASES TO PLUG THE LEAKAGE OF THE REVENUE AND HE HAS TAKEN ONE OF THE JUSTIFIABLE VI EW WHICH WAS POSSIBLE UNDER THE FACTS AND CIRCUMSTANCES AVA ILABLE ON RECORD, RESULTANTLY, THE APPEAL OF THE REVENUE IS H AVING NO MERIT, CONSEQUENTLY, DISMISSED. ITA NO. 5019/MUM/2016 P-CUBE CONSTRUCTION PVT. LTD. 17 FINALLY, THE APPEAL OF THE REVENUE IS DISMISSED. THIS ORDER WAS PRONOUNCED IN THE OPEN COURT IN THE PRESENCE OF THE LD. REPRESENTATIVES FROM BOTH SIDES AT THE CONCLUSION OF THE HEARING ON 31/10/2017. SD/- SD/- ( RAJESH KUMAR ) (JOGINDER SINGH) '!# / ACCOUNTANT MEMBER $!# /JUDICIAL MEMBER % MUMBAI; ) DATED : 02/11/2017 F{X~{T? P.S / /. . . %$&'()(*& / COPY OF THE ORDER FORWARDED TO : 1. +,-. / THE APPELLANT (RESPECTIVE ASSESSEE) 2. /0-. / THE ASSESSEE. 3. 1 1 2$ ( +, ) / THE CIT, MUMBAI. 4. 1 1 2$ / CIT(A)- , MUMBAI, 5. 45 /$ ! , 1 +,' +! 6 , % / DR, ITAT, MUMBAI 6. ' 7% / GUARD FILE. ! / BY ORDER, 04,$ /$ //TRUE COPY// /! (DY./ASSTT. REGISTRAR) , % / ITAT, MUMBAI