ETESH PRAKASH JAIN (HUF), BHIWANDI V. ITO WARD 1(1), KALYAN, KALYAN

ITA 5046/MUM/2016

• Counselvise Citation: [2017] 126 COUNSELVISE.COM (IT) 8421 (ITAT-MUMBAI)
• Duration Of Justice: 1 year(s) 3 month(s) 1 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 10-11-2017
• Appeal Filed By: Assessee
• Order Result: Dismissed
• Bench Allotted: Not Allotted
• Assessment Year: 2010-2011
• Appeal Filed On: 08-08-2016
• Result in Favour of: Revenue
• Court: TRIBUNAL
• Department Lawyers: RAM TIWARI
• Assessee Lawyers: MAHESH O RAJORA A R P A G E
• Keywords: Reopening of assessment; Bogus purchase; Accommodation entries
• Section: 133(6); 148

Judgement Text

P A G E | 1 ITA NOS. 5046, 5047, 5358, 5359/MUM/2016 AY: 2010 - 11 & 2011 - 12 SHRI ETESH PRAKASH JAIN VS. ITO WARD 1(1) IN THE INCOME TAX APPELLATE TRIBUNAL G BENCH, M UMBAI BEFORE SHRI RAJENDRA , AM AND SHRI RAVISH SOOD, JM ITA NOS. 5046 & 5047/MUM/2016 ( / ASSESSMENT YEARS: 2010 - 11 & 2011 - 12) SHRI ETESH PRAKASH JAIN (HUF) M/S SHREE DARSHAN PIPES 331/5, SURYA DARSHAN BUILDING, KASAR ALI, GOKUL NAGAR BHIWANDI - 421 302 / VS. INCOME TAX OFFICER, WARD NO. 1(1) 1 ST FLOOR , MOHAN PLAZA, WAYALE NAGAR, KALYAN WEST . ./ ./ PAN NO. AAAHE1478G ( / A SSESSEE ) : ( / R EVENUE ) ITA NOS. 5358 & 5359/MUM/2016 ( / ASSESSMENT YEARS: 2010 - 11 & 2011 - 12 ) INCOME TAX OFFICER, WARD NO. 1(1), 1 ST FLOOR, MOHAN PLAZA, WAYALE NAGAR KALYAN WEST. / VS. SHRI ETESH PRAKASH JAIN (HUF) M/S SHREE DARSHAN PIPES 331/5, SURYA DARSHAN BUILDING, KASAR ALI, GOKUL NAGAR BHIWANDI - 421 302 ./ ./ PAN NO. AAAHE1478G ( / REVENUE) : ( / ASSESSEE ) / REVENUE BY : SHRI RAM TIWARI, D .R / ASSESSEE BY : SHRI MAHESH O. RAJORA, A .R P A G E | 2 ITA NOS. 5046, 5047, 5358, 5359/MUM/2016 AY: 2010 - 11 & 2011 - 12 SHRI ETESH PRAKASH JAIN VS. ITO WARD 1(1) / DATE OF HEARING : 06 .11.2017 / DATE OF PRONOUNCEMENT : 10 .11.2017 / O R D E R PER RAVISH SOOD, JUDICIAL MEMBER: THE PRESENT SET OF CROSS APPEALS FILED BY THE ASSESSEE AND THE REVENUE FOR AYS: 2010 - 11 AND 2011 - 12 ARE DIRECTED AGAINST THE CONSOLIDATE ORDER OF THE CIT(A), DATED 17.06.2016, WHICH IN ITSELF ARISES FROM THE RESPECTIVE ASSESSMENT ORDERS PASSED UNDER SEC. 143(3 ) R.W.S 147 OF THE INCOME TAX ACT, 1961 (FOR SHORT ACT) , EACH DATED 13.03.2015. THAT AS COMMON ISSUE S ARE I NVOLVED IN THE AFOREMENTIONED CROSS APPEALS, THEREFORE, THE SAME ARE BEING TAKEN UP TOGETHER AND ARE BEING DISPOSED OF BY WAY OF A CONSOLIDATE ORDER. WE SHALL FIRST TAKE UP THE CROSS APPEALS FOR AY: 2010 - 11. THE ASSESSEE ASSAILING THE ORDER OF THE CIT(A) HAD RAISED BEFORE US THE FOLLOWING GROUNDS OF APPEAL: 1. THE COMMISS IONER OF INCOME TAX (APPEALS) - 2, THA NE [HEREINAFTER REF E RRED TO AS CIT(A)] ERRED IN CONFIRMING THE ACTION OF A . O IN REOPENING OF THE ASSESSMENT BY INVOKING THE PR OVISIONS OF SECTION 147 READ WITH SECTION 148 OF THE INCOME TAX ACT, 1961 . THE APPELLANT SUBMITS THAT THE NOTICE ISSUED U/S 148 AND REOPENING OF ASSES SMENT U/S 147 IS BAD IN LAW, ILLEGAL. U LTRA - VI RUS AND CONT RAY TO THE PRO VISION OF THE I .T. ACT AND SAME SHALL BE QUASHE D. 2. THE CIT(A) ERRED IN CONFIRMING TH E ADDITION TO THE EXTENT OF RS. 1 7,31,5 10/ - CONSIDERING THE SAME AS SUPPRESSED GROSS PROFIT, ON RAW MATERIAL PURCHASED FROM TEN PARTIES TREATED AS NON GENUINE/BOGUS PURCHASES BY THE AO. THE APPELLANT SUBMITS THAT IT HAS ACTUALLY PURCHASED THE RAW MATERIALS FROM RESPECTIVE PARTIES, PAYMENT FOR PURCHASES WERE MADE THROUGH PROPER BANKING CHANNELS, THE RAW M ATERIAL WERE PROCESSED AT IT MANU FACTURING UNITS AND FINISHED GOODS HAS P A G E | 3 ITA NOS. 5046, 5047, 5358, 5359/MUM/2016 AY: 2010 - 11 & 2011 - 12 SHRI ETESH PRAKASH JAIN VS. ITO WARD 1(1) ACTUALLY BEEN SOLD TO INDEPENDENT THIRD PARTY BU Y ERS AND SALES HAVE BEEN DULY ACCOUNTED FOR COMPUTING TAXABLE INCOME; HENCE UNDER THE FACTS AND CIRCUMSTANCES OF T HE CASE OF THE A PPELLANT RAW MA TERIAL PURCHASED FROM THESE PARTIES CANNOT BE TR EATED AS NON GENUINE/BOGUS PURCHA SES. 3. ON THE FACTS AND CI RCUMSTANCES OF THE CASE OF THE A PPELLANT AND IN LAW, THE CIT(A) ERRED IN REJECTING THE BOOKS OF ACCOUNTS OF THE A PPELLANT U/S 145(3) OF THE I . T. ACT. THE APPELLANT SUBMITS THAT THE ACTION OF CIT(A) IN REJECTING THE BOOKS OF ACCOUNTS IS ILLEGAL AND CONTRARY TO THE PROVISIONS OF THE ACT AND ON THE FACTS AND CIRCUMSTANCES OF THE CASE OF THE APPELLANT PROVISIONS OF SECTION 145(3) CANNOT BE RESORTED TO BY THE CIT(A) AND SAME SHOULD BE STRUCK DOWN. YOUR APPELLANT CRAVES LEAVE TO ADD, TO ALTER OR TO AMEND THE AFORESAID GROUND OF APPEAL. 2. THAT THE REVENUE ON THE OTHER HAND CHALLENGING THE ORDER OF THE CIT(A) HAD RAISED BEFORE US THE FOLLOWING GROUNDS OF APPEAL: - 1. ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE, THE LD. CIT(A) HAS ERRED IN RELYING ON THE DECISION OF SUPRE ME COURT IN THE CASE OF KANCHWAL A GEMS VS. J CIT 288 ITR 10(SC) AND HON'BLE HIGH COURT'S DECISION IN THE CASE OF VIJAY PROTEIN, SANJAY OIL CAKE INDUSTRIES, ETC. 2. ON THE FACTS AND IN THE CIRCUMSTANC ES O F THE CASE, AND IN LAW, THE HON BLE CIT(A) ERRED IN NOT FOLLOW ING THE ORDER OF ITAT, PUNE IN ITA NO. 1411 - 1 415 DATED 20 .02.2015 IN THE CASE OF M/S. KOL TE PATIL DEVELOPERS LTD. WHEREIN 100% ADDITION O F BOGUS PURCHASES WAS CONFIRMED 3. ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE, THE LD. C I T(A) HAS ERRED IN GIVING RELIEF TO THE ASSESSEE TO THE EXTENT OF SUPPRESSED G.P. OUT OF TOTAL BOGUS PURCHASES EVEN THOUGH - (I) THE ASSESSEE COULD NOT PRODUCE PRIMARY EVIDENCES LIKE OCTROI RECEIPTS, DELIVERY CHALLAN ETC. EVIDENCE TO PROVE THE GENUINENESS OF THE PURCHASES BEFORE THE AO AND BEFORE CIT(A). (II) THE AFFIDAVITS FILED BY THE ENTRY PROVIDERS BEFORE SALES TAX AUTHORITIES CANNOT BE IGNORED HAVING EVIDENTIARY VALUE. 4. THE ORDER OF THE CIT(A) MAY BE VACATED AND THAT OF THE ASSESSING OFFICER MAY BE RESTORED. 5. THE APPELLANT CRAVES LEAVE TO ADD, AMEND, ALTER OR DELETE ANY GROUND OF APPEAL. P A G E | 4 ITA NOS. 5046, 5047, 5358, 5359/MUM/2016 AY: 2010 - 11 & 2011 - 12 SHRI ETESH PRAKASH JAIN VS. ITO WARD 1(1) 3. BRIEFLY STATED, THE FACTS OF THE CASE ARE THAT THE ASSESSEE WHO IS ENGAGED IN THE BUSINESS OF MANUFACTURING AND TRADING OF H.D.P.E P IPES AND F ITTINGS HAD E - FILED ITS RETURN OF INCOME ON 29.09.2010 FOR AY: 2010 - 11, DECLARING TOTAL INCOME OF RS. 5,66,719/ - . THE RETURN OF INCOME FILED BY THE ASSESSEE WAS PROCESSED AS SUCH UNDER SEC. 143(1) OF THE ACT. I NFORMATION WAS RECEIVED BY THE A.O FROM THE S ALES T AX D EPARTMENT, MAHARASHTRA , THEREIN DISCLOSING THE NAMES AND ADDRESSES OF CERTAIN CONCERNS WHICH HAD PROVIDED ENTRIES FOR BOGUS BILLS TO A LARGE NUMBER OF TAX PAYERS ACROS S THE S TATE . THAT IT WAS GATHERED BY THE A.O THAT THE NAME OF THE ASSESSEE ALSO APPEARED IN THE LIST OF THE PERSONS WHO HAD OBTAINED BOGUS PURCHASE BILLS FROM THE AFORESAID ACCOMMODATION ENTRY PROVIDERS . THAT AS PER THE INFORMATION RECEIVED BY THE A.O, THE ASSESSEE HAD OBTAINED BOGUS PURCHASE BILLS ,AS UNDER: SR. NO. NAME OF THE ENTRY PROVIDER MAHARASHTRA VAT NO. A.Y. AMOUNT IN THE BILLS TAKEN BY THE ASSESSEE 1. DHIREN MERCANTILE PVT. LTD. 27450680107V 2010 - 11 2196691 2. SACHI MERCANTILE PVT. LTD. 27770610285V 2010 - 11 410410 3. GOODLUCK IMPEX INDIA 27440677542V 2010 - 11 400452 4. SUNRISE ENTERPRISES 27370565400V 2010 - 11 1252357 5. K.V. TRADING CO. 27240652044V 2010 - 11 887738 6. SURCHI MULTITRADE PVT. LTD. 27200610259V 2010 - 11 386296 7. SARADGI SYNDICATE 27140326567V 2010 - 11 1693083 8. SIDHIVINAYAK STEELS 27050389521V 2010 - 11 451746 9. TASHIL TRADING PVT. LTD. 27020044072V 2010 - 11 1856648 10. SHALAKA INTERNATIONAL 27980662404V 2010 - 11 404804 P A G E | 5 ITA NOS. 5046, 5047, 5358, 5359/MUM/2016 AY: 2010 - 11 & 2011 - 12 SHRI ETESH PRAKASH JAIN VS. ITO WARD 1(1) TOTAL 99,43,225 THAT ON THE BASIS OF THE AFORESAID INFORMATION THE A.O REOPENED THE CASE OF THE ASSESSEE UNDER SEC. 147 OF THE ACT. THE ASSESSEE IN COMPLIANCE TO THE NOTICE SERVED UPON IT UNDER SEC. 148, THEREIN VIDE ITS LETTER DATED 23.02.2015 SUBMITTED THAT ITS ORIGINAL RETURN OF INCOME FILED ON 29.09.2010 MAY BE TREATED AS THE RETURN FILED IN COMPLIANCE TO THE NOTICE ISSUED UNDER SEC. 148. THE AFORESAID REQUEST OF TH E ASSESSEE WAS ACTED UPON AND NOTICE S UNDER SEC. 143(2)/142(1 ) WERE THEREAFTER ISSUED TO THE ASSESSEE. 4. THE A.O DURING THE COURSE OF THE ASSESSMENT PROCEEDINGS CALLED FOR INFORMATION UNDER SEC. 133(6) FROM THE AFOREMENTIONED PARTIES, VIZ. (I). DHIREN MERCANTILE PVT. LTD ; (II). SACHI MERCANTILE PVT. LTD ; (III). GOODLUCK IMPEX INDIA ; (IV). SUNRISE ENTERPRISES ; (V). K.V. TRADING CO ; (VI). SURACHI MULTITRADE PVT. LTD ; (VII). SARADGI SYNDICATE ; (VIII). SIDHIVINAYAK STEELS ; (IX). TAKSHIL TRADING PVT. LTD ; AND (III). SHALAKA INTERNATIONAL. THE A.O CALLED UPON THE AFOREMENTIONED PARTIES TO FURNISH THE EXTRACTS OF THE ACCOUNT OF THE ASSESSEE AS WAS SO APPEARING IN THEIR BOOKS OF ACCOUNT FOR THE PERIOD 01.04.2009 TO 31.03.2010. HOWEVER , ALL OF THE AFORESAID LETTERS WERE RETURNED UNSERVED BY THE POSTAL AUTHORITIES . T HE INSPECTOR OF INCOME - TAX WHO WAS DEPUTED BY THE A.O TO EFFECT SERVICE OF THE AFORESAID NOTICES ON THE AFOREMENTIONED PARTIES, THEREIN REPORTED THAT NEITHER OF TH E PARTIES WERE AVAILABLE AT THE RESPECTIVE ADDRESSES. T HE A.O IN THE BA CKDROP OF THE AFORESAID FACTS HELD A CONVICTION THAT THE ASSESSEE HAD NOT MADE ANY GENUINE PURCHASES FROM THE AFOREMENTIONED PARTIES. THE A.O CALLED UPON THE ASSESSEE TO PRODUCE THE AFOREMENTIONED PARTIES ALONG WITH SUPPORTING DOCUMENTARY EVIDENCE . HOWEVER , THE ASSESSEE FAILED TO E FFECT COMPLIANCE TO THE DIRECTIONS OF THE A.O. AND FAILED T O PRODUCE P A G E | 6 ITA NOS. 5046, 5047, 5358, 5359/MUM/2016 AY: 2010 - 11 & 2011 - 12 SHRI ETESH PRAKASH JAIN VS. ITO WARD 1(1) THE PARTIES FOR EXAMINATION BEFORE THE A.O. THAT IN THE BACKDROP OF THE AFORESAID FACTS , THE A.O CONCLUDED THAT THE ASSESSEE WHO REMAINED UNDER A HEAVY ONUS TO ESTABLISH THE GENUINENESS AND VERACITY OF THE PURCHASE TRANSACTIONS AGGREGATING TO RS.99,43,225/ - WHICH WERE CLAIMED TO HAVE BEEN MADE FROM THE AFORESAID PARTIES, HAD HOWEVER FAILED TO SUBSTANTIATE THE SAME ON THE BASIS OF IRREFUTABLE DOCUMENTARY EVIDENCE . THE A.O ON THE BASIS OF HIS AFORESAID OBSERVATIONS ADDED THE AGGREGATE VALUE OF PURCHASES OF RS.99,43,225/ - IN THE HANDS OF THE ASSESSEE AND ASSESSED ITS INCOME AT RS.1,05,09,944/ - . 5. AGGRIEVED , THE ASSESSEE CARRIED THE MATTER IN APPEAL BEFORE THE CIT(A ). THE CIT(A) AFTER DELIBERATING ON THE FACTS OF THE CASE , THEREIN OBSERVED THAT THE A.O HAD GATHERED INFORMATION IN THE FORM OF AFFIDAVITS AND THE STATEMENTS OF THE AFOREMENTIONED PARTIES RECORDED BY THE SALES TAX DEPARTMENT, WHEREIN THE SAID RESPECTIVE P ARTIES HAD DULY ADMITTED THAT THEY WERE ONLY PROVIDING ACCOMMODATION ENTRIES AND HAD NOT SUPPLIED ANY GOODS. THE CIT(A) OBSERVED THAT THE ASSESSEE DESPITE SPECIFIC DIRECTIONS BY THE A.O , NOT ONLY FAILED TO PLACE ON RECORD THE CONFIRMATION S OF THE RESPECTIV E PARTIES , BUT EVEN FAILED TO FURNISH THE CURRENT MAILING ADDRESS ES OF THE SAID RESPECTIVE PARTIES . IT WAS FURTHER OBSERVED BY THE CIT(A) THAT ALL THE NOTICE S ISSUED BY THE A.O UNDER SEC. 133(6) TO THE AFOREMENTIONED PARTIES WERE RETURNED BACK UNSERVED BY THE POSTAL AUTHORITIES . THE CIT(A) OBSERVED THAT THE A.O IN THE BACKDROP OF THE AFORESAID FACTS HAD DEPUTED HIS INSPECTOR TO SERVE THE NOTICES UNDER SEC. 133(6) ON THE AFOREMENTIONED PARTIES, HOWEVER , THE ENQUIRIES MADE BY THE INSPECTOR REVEALED THAT NEIT HER OF THE SAID PARTIES EXISTED AT THE GIVEN ADDRESS. THE CIT(A) OBSERVED THAT THOUGH THE A.O BROUGHT THE AFORESAID FACTS TO THE NOTICE OF THE ASSESSEE AND DIRECTED HIM TO PRODUCE THE PARTIES FOR EXAMINATION IN P A G E | 7 ITA NOS. 5046, 5047, 5358, 5359/MUM/2016 AY: 2010 - 11 & 2011 - 12 SHRI ETESH PRAKASH JAIN VS. ITO WARD 1(1) PERSON, HOWEVER, THE ASSESSEE FAILED TO COMPL Y WITH THE SAID DIRECTIONS OF THE A.O. THE CIT(A) TOOK COGNIZANCE OF THE FACT THAT T HE ASSESSEE EXCEPT FOR STRESSING ON THE FACT THAT THE PURCHASE CONSIDERATION WAS PAID TO THE AFOREMENTIONED PARTIES VIDE ACCOUNT PAYEE CHEQUES , HOWEVER, UTTERLY FAILED TO S UBSTANTIATE THE GENUINENESS AND VERACITY OF THE PURCHASE TRANSACTIONS ON THE BASIS OF IRREFUTABLE DOCUMENTARY EVIDENCE. 6. THE CIT(A) DURING THE COURSE OF THE APPELLATE PROCEEDINGS DIRECTED THE ASSESSEE TO PLACE ON RECORD THE MONTHLY ITEM WISE QUANTITATIVE/QUALITATIVE DETAILS , SUPPORTED BY THE COMPLETE DETAIL S OF THE OPENING STOCK, PURCHASES AND SALES OF THE GOODS WHICH WERE CLAIMED TO HAVE BEEN PURCHASE D FROM THE AFOREMENTIONED HAWALA PARTIES. HOWEVER, THE ASSESSEE FAILED TO PLACE ON RECORD THE REQUISITE DETAILS , FOR THE REASON THAT THE SAME WERE NOT MAINTAINED IN THE REQUIRED MANNER. THE CIT(A) OBSERVED THAT THE A.O BEING OF THE VIEW THAT THE BOOKS OF ACCOUNTS OF THE ASSESSEE DID NOT INSPIRE ANY CONFIDENCE , HAD THU S JUSTIFIABLY REJECTED THE SAM E AS PER THE PROVISIONS TO SEC. 145(3) OF THE ACT. THE CIT(A) KEEPING IN VIEW THE AFORESAID FACTS , WHICH CLEARLY ESTABLISHED THAT THE ASSESSEE HAD FAILED TO SUBSTANTIATE THE GENUINENESS AND VERACITY OF PURCHASE TRANSACTIONS UNDER CONSIDERATION, THEREFORE , REJECTED THE CONTENTION OF THE ASSESSEE THAT IT HAD MADE GENUINE PURCHASES FROM THE AFOREMENTIONED PARTIES , BY OBSERVING AS UNDER: A. THE APPELLANT'S CLAIM THAT THE PA YMENTS TO THE HAWALA PARTIES HAVE BEEN MADE THROUGH BANKING CHANNEL S, IS NOT TENABLE AS HAWALA PAR TIES HAVE DULY ADMITTED IN THEIR STATEMENT /AFFIDAVIT THAT AFTER DEDUCTING THEIR DUE COMMISSION I.E. APPROXIMATELY 1%, TH EY HAVE REFUNDED BACK THE BALANCE CASH TO THE BUYERS. B. IT IS THE DUTY OF THE APPELLANT TO JUSTIFY T HE GENUINENESS OF P URCHASES, BY FURNISHING NECESSARY SUPPORTING DOCUMENTS, B ANK STATEME NT, CONFIRMATION, DELIVERY CHALL AN, TRANSPORT RECEIPT ETC. AND P A G E | 8 ITA NOS. 5046, 5047, 5358, 5359/MUM/2016 AY: 2010 - 11 & 2011 - 12 SHRI ETESH PRAKASH JAIN VS. ITO WARD 1(1) PRODUCE THE PARTIES FOR EXAMINATION. EVEN DURING THE COURSE OF APPELLATE PROCEEDINGS, THE APPELLANT, NUMBER OF TIMES, WAS ASKED TO FILE ABOVE DETAILS AND PRODUCE PARTIES FOR EXAMINATION, BUT FAILED TO DO SO. NO TRANSPORT / OCTROI RECEIPTS WERE F ILED TO JUSTIFY GENUINENESS OF PURCHASES. C. AS REGARDS THE APPELLANTS CLAIM THAT THERE CANNOT BE AN Y SALES WITHOUT THERE BEING CORRESPONDING PURCHASES , IS ALS O NOT TENABLE AS THE A PPELLANT COULD NOT RECONCIL E THE QUANTITY WISE DETAILS OF PURCHASES FROM TH ES E HAWALA PARTIES VI S, A VIS. SALES THEREOF. THE LD AR WAS ALSO NOT ABLE TO RECONCILE THE STOCK. D. THE PERUSAL OF HAWALA BILLS REVEALS THAT THESE ARE PLAIN BILLS WITHOUT ANY MARKING OR SIGNATURE OF EITHER OF RECEIPT CLERK OR OF CASHIER, WHO HAS ISSUED THE PAYMENT. IN THE CASE OF REGUL AR B ILLS / PARTIES, TH E PAYMENTS HAVE BEEN MADE ON REGULAR BASIS, IMMEDIATELY A FTE R PURCHA SES, WHEREAS IN THE CASE OF HAW ALA PARTIES, THE PURCHASES HAVE BEEN SHOWN ON VARIOUS DATES BUT THE PAYMENTS HAV E NOT BEEN MADE IN THE MANNER PATTER N , AS PAID TO THE REGULAR SUPPLIERS. E. THE APPELLANT COULD NOT P RODUCE PROPER VERI FIABLE DOCUMENTS WHICH COULD PROVE PHYSICAL DELIVERY OF GOODS VS. A VI S. CORRESPONDING CONSUMPTION / S ALES THEREOF. ON THE OTHER HAND, IN TH E CASE OF REGUL AR PURCHASES, ON THE SAME SET OF CIRCUMSTANCES, THE DEPARTMENT HAD ACCEPTED SUCH PURCHASES WITHOUT QUESTIONING THEIR GENUINENESS, AS ALL RELEV ANT DOCUMENTS / RECORDS HAVE DULY BEEN MAINTAINED BY THE APPELLANT. F. IF, THE PRACTICE OF B OOKING OF BOGUS BILLS IS LEGALIZED, BY DISALLOWING NOMINAL PERCENTAGE OR ESTIMATING NOMINAL RATE OF GP / NP OF A PARTICULAR TRADE, THEN THIS MAY LEAD TO PROVIDE AN EASY WEAPON IN THE HANDS OF THE MANIPULATIVE ASSESSEE TO SUPPRESS / MANIPULATE THEIR PROFIT, AS AND WHEN SO WARRANTED. G. THE PRACTICE OF OBTAINING OF FAKE BILLS TO SUPPORT THE CLAIM OF BOGUS / UNVERIFIED PURCHASE BEING FOLLOWED BY THE LARGE NUMBER OF ASSESSES. THIS MALPRACTICE IS IN THE OPERATION FOR QUITE SOME TIME AND IS USED BRAZENLY TO SUPPRESS THE PROFITS BY OBTAINING BOGUS / PAPER PURCHASE BILLS (WI THOUT MAKING ACTUAL PURCHASE OF GOODS) AND THEREBY EVADING PAYMENT OF LEGITIMATE TAXES TO GOVERNMENT EXCHEQUER. THERE EXISTS AN UNHOLY NEXUS BETWEEN THE BOGUS BILL PROVIDERS AND BUSINESSMEN ENGAGED IN THE VARIOUS TRADES. THE EFFECT OF THIS MALPRACTICE IS NOT ONLY OF VERY SERIOUS NATURE BUT ALSO MULTI DIMENSIONAL. ON ONE SIDE, IT DISHEARTENS THE HONEST TAX PAYERS WHO DO NOT RESORT TO SUC H MALPRACTICE AND PAY THEIR LEGITIMATE TAXES HONESTLY. ON THE RESULTANTLY, THE LEAKAGE OF THE REVENUE TURNS OUT TO A NATURAL CASUALTY. ANY LENIENT APPROACH IN THE MATTER WILL NOT SERVE THE CAUSE OF JUSTICE P A G E | 9 ITA NOS. 5046, 5047, 5358, 5359/MUM/2016 AY: 2010 - 11 & 2011 - 12 SHRI ETESH PRAKASH JAIN VS. ITO WARD 1(1) AND GUILTY WILL NEITHER DETER NOR MEND THEIR UNETHICAL SPURIOUS AND OBJECTIONABLE WAYS IN FUTURE AS WELL. H. ONUS ON THE ASSESSE E TO P ROVE THE CLAIM OF EXPENSES : THE ASSESSEE HAS DEBITED THE PURCHASES IN TRADING ACCOUNT (INCLUDING THE BOGUS/UNVERIFI ED PURCHASES) AND CLAIMED THE DEDUCTION FOR EXPENSES. SINCE THE EXPENDITURE HAS APPELLANT'S KNOWLEDGE, THE PRIMARY ONUS' LIES ON THE ASSESSEE TO PROVE THAT THE PURCHASES CLAIMED BY HIM ARE G ENUINE AND WHOLLY & EXCLUSIVE LY FOR THE PURPOSE OF BUSINESS. FOR THIS PURPOSE. THE ASSESSEE HAS TO LEAD THE EVIDENCE TO SHOW THAT THE EXPENDITURE HAS ACTUAL LY BEEN INCURRED B Y IT AND THE SAME IS FOR GENUINE BUSINESS NEEDS. HERE, IF THE ASSESSEE CLAIMS THAT PURCHASE S ARE MADE FROM THE ALLEGED BOGU S PAR TY THEN IT IS THE RESPONSIBILITY OF THE ASSESSEE TO ESTABLISH THA T (A) PARTY IS IN EXISTENCE (B) PARTY IS CAPAB L E OF SUPPLY OF GOODS AND (C) PARTY HAS ACTUALLY SUPPLIED THE GOODS (D) G OODS SO RECEIVED HAD ACTUALLY BEEN USED FOR BUSINESS AND DECLARED AS PART OF THE SALE FOR THE YEAR . IF THE ASSESSEE IS ASKED TO PRODUCE THE PARTIES FOR VERIFICATION, THEN IT IS THE DUT Y OF THE ASSESSEE TO SO TO ESTABLIS H THE GENUINENESS OF THE CLAIM OF THE EXPENSE. IN THESE CASES, THE ASSESSEE HAS TRIED TO CLAIM THAT THE Y HAVE DISCHARGED THEIR ONUS BY DOI NG THE FOLLOWING: (I) BY SUBMITTING THE NAME, ADDRESS. PAN (II) BY CLAIMING THAT PA Y MENTS WERE THROU G H BANKING CHANNELS (III) BY CLAIMIN G THAT THE PURCHASES ARE REFLECTED IN THE HOOKS OF ACCOUNTS. CONSIDERING THE FACTS OF THE CASES UNDER CONSIDERATION, IT CAN SAFELY BE CONCLUDED THAT ASSESSEE HAD FAILED IN THEIR EFFORTS IN DISCHARGING THE ONU S CAST UPON THEM. MEREL Y FILING NAME, ADDRESS, PAN & PA Y MENTS BY CHEQUE WIL L NOT DISCHARGE HIM FROM THE ONUS ESPECIALL Y WHEN THE DEPARTMENT HAD RECEIVED SPECIFIC MATERIAL / INFORMATION FROM THE SALES - TAX/ VAT DEPARTMEN T WHEREIN THESE SUPPLIERS, ON OATH HAD ADMITTED THE FACT THAT THEY HAVE MEREL Y PROVIDED ENTRY / ISSUED BILLS WITHOUT PHYSICALLY DELIVERING ANY GOODS. 7. THE CIT(A) AFTER DELIBERATING ON THE CONTENTIONS RAISED BY THE ASSESSEE BEFORE HIM IN THE BACKDROP OF THE FACTS OF THE CASE , THEREIN HELD A STRONG CONVICTION THAT THE ASSESSEE BY FAILING TO FURNISH WITH THE A.O THE CONFIRMATIONS, CURRENT MAILING ADDRESSES AND BANK STATEMENTS OF THE AFORESAID RESPECTIVE PARTIES, AS WELL AS BY FAILING TO PRODUCE THEN FOR EXAMINATION BEFORE THE A.O., HAD THUS FAILED TO P A G E | 10 ITA NOS. 5046, 5047, 5358, 5359/MUM/2016 AY: 2010 - 11 & 2011 - 12 SHRI ETESH PRAKASH JAIN VS. ITO WARD 1(1) EXPLAIN/JUSTIFY THE GENUINEN ESS OF THE PURCHASES WHICH WERE CLAIMED TO HAVE BEEN MADE FROM THEM. THE CIT(A) HELD A CONVICTION THAT UNDER THE AFORESAID CIRCUMSTANCES IT WAS NOT POSSIBLE FOR THE A.O TO HAVE EXAMINED THE CORRECTNESS, REASONABLENESS AND GENUINENESS OF THE PURCHASE TRANSA CTIONS UNDER CONSIDERATION. THE CIT(A) WAS ALSO NOT INSPIRED BY THE CONTENTION OF THE ASSESSEE THAT THE GENUINENESS OF THE PURCHASE TRANSACTIONS COULD BE GATHERED FROM THE FACT THAT PAYMENTS TO THE AFOREMENTIONED SUPPLIER PARTIES HAD BEEN MADE VIDE ACCOUNT PAYEE CHEQUES. THE CIT(A) WAS OF THE VIEW THAT MAKING OF PAYMENTS VIDE ACCOUNT PAYEE CHEQUES TO THE AFOREMENTIONED PARTIES WOULD NOT CONCLUSIVELY PROVE THE GENUINENESS AND VERACITY OF THE PURCHASE TRANSACTIONS UNDER CONSIDERATION. THAT AS REGARDS THE CONT ENTION THAT THE DEPARTMENT HAD FAILED TO ALLOW CROSS EXAMINATION OF THE AFOREMENTIONED PARTIES TO THE ASSESSEE, IT WAS OBSERVED BY THE CIT(A) THAT AS NEITHER OF THE PARTIES WERE AVAILABLE AT THEIR ORIGINAL ADDRESSES, AND THEIR CURRENT ADDRESSES WERE NOT MA DE AVAILABLE BY THE ASSESSEE TO THE A.O, THEREFORE, THE QUESTION OF CROSS EXAMINATION OF THE SAID PARTIES DID NOT ARISE AT ALL. THE CIT(A) FURTHER OBSERVED THAT VARIOUS COURTS HAD UPHELD THE DISALLOWANCES IN RESPECT OF BOGUS PURCHASES TO THE EXTENT OF 12.5% TO 100% , KEEPING IN VIEW THE FACTS INVOLVED IN THE SAID RESPECTIVE CASES. THE CIT(A) AFTER DELIBERATING ON THE HAWALA BUSINESS WHICH WAS BEING CARRIED ON IN A SYSTEMATIC MANNER IN THE MARK ET, THER EIN CONCLUDED THAT SUCH SCANDALOUS ACTIVITIES SHOULD NOT BE LEGALIZED BY RESTRICTING THE DISALLOWANCE OF BOGUS PURCHASE TO A CERTAIN PERCENTAGE, UNTIL AND UNLESS IT WAS PROVED THAT THE ASSESSEE HAD MADE PURCHASES OF THE GOODS FROM THE OPEN/GREY MAR KET UNDER CERTAIN COMPELLING CIRCUMSTANCES. THE CIT(A) AFTER DELIBERATING ON THE FACTS OF THE CASE, THEREIN OBSERVED THAT THE DISPUTE IN THE CASE OF THE ASSESSEE WAS ONLY IN RESPECT OF THE PURCHASES MADE IN CONTEXT OF ITS MANUFACTURING ACTIVITY. THE CIT(A) CALLED FOR AND DELIBERATED ON THE P A G E | 11 ITA NOS. 5046, 5047, 5358, 5359/MUM/2016 AY: 2010 - 11 & 2011 - 12 SHRI ETESH PRAKASH JAIN VS. ITO WARD 1(1) Y EAR WISE GROSS PROFIT AND NET PROFIT RATIOS OF THE ASSESSEE FOR THE AYS 2007 - 08 TO 2014 - 15 . THE C IT(A) OBSERVED THAT THE PURCHASES OF RS.99,43,225/ - AND RS.66,79,476/ - MADE BY THE ASSESSEE IN AY 2010 - 11 AND 2011 - 12 FROM THE AFOREMENTIONED PARTIES CONSTITUTED 98.5% AND 46.90% OF THE TOTAL PURCHASES OF RAW MATERIAL OF RS.1,00,89,971/ - AND RS.1,42,39,733/ - , RESPECTIVELY , MADE BY THE ASSESSEE DURING THE SAID RESPECTIVE YEARS AS REGARDS ITS MANUFACTURING ACTIVITIES. THE CIT(A) OBSERVED THAT THE ASSESSEE HAD DURING THE COURSE OF THE ASSESSMENT PROCEEDINGS FURNISH ED THE DETAILS ALONG WITH QUANTITATIVE ANALYSIS OF THE PURCHASES WITH THE A.O. THE CIT(A) FURTHER DELIBERATED ON THE CONTENTION OF THE ASSESSEE THAT IT WOULD NOT HAVE BEEN POSSIBLE FOR IT TO HAD CARRIED OUT MANUFACTURING SALES OF RS.1,34,56,371/ - AND RS.1,46,73,041/ - IN AY: 2010 - 11 AND 2011 - 12, RESPECTIVELY, ON THE BASIS OF THE REMAINING PURCHASE OF RAW MATERIAL OF RS.1,46,746/ - AND RS.79,93,565/ - PERTAINING TO A Y: 2010 - 11 AND 2011 - 12, RESPECTIVELY. THE CIT(A) FOUND FAVOUR WITH THE CONTENTIONS OF THE ASSESSEE AND OBSERVED THAT IT WOULD NOT HAVE BEEN POSSIBLE FOR THE ASSESSEE TO HAVE HARVESTED A TURNOVER OF RS.1,34,56,311/ - AND RS.1,46,73,041/ - FROM THE MANUFACTURE D GOODS , ON THE BASIS OF THE PURCHASES OF RAW MATERIAL OF RS.1,46,746/ - AND RS.79,93,565/ - IN AY: 2010 - 11 AND 2011 - 12, RESPECTIVELY, AS REMAINED AVAILABLE WITH IT, IN CASE THE PURCHASES OF GOODS CLAIMED BY THE ASSESSEE TO HAVE BEEN MADE FROM THE AFOREMENTI ONED PARTIES WAS EXCLUDED. THUS , THE CIT(A) CONCLUDED THAT THE ASSESSEE HAD MADE THE PURCHASES OF THE GOODS UNDER CONSIDERATION , THOUGH NOT FROM THE AFOREMENTIONED HAWALA PARTIES , BUT FROM THE UNIDENTIFIED PARTIES OPERATING IN THE OPEN/GREY MARKET. THE CIT (A) ON THE BASIS OF HIS AFORESAID CONVICTION , THEREIN OBSERVED THAT T HE G.P. RATE OF THE YEARS UNDER CONSIDERATION, VIZ. AY: 2010 - 11 AND 2011 - 12 HAD GONE DOWN TO 4.64% AND 4.95% , AS AGAINST THE G.P RATE OF 9.11% DECLARED BY THE ASSESSEE IN AY: 2007 - 08 . THE CIT(A) P A G E | 12 ITA NOS. 5046, 5047, 5358, 5359/MUM/2016 AY: 2010 - 11 & 2011 - 12 SHRI ETESH PRAKASH JAIN VS. ITO WARD 1(1) ADOPTING THE G.P RATE FOR A.Y. 2007 - 08 AS A YARD STICK, THEREIN CONCLUDED THAT THE ASSESSEE BY INFLAT ING ITS PURCHASES HAD SUPPRESS ED ITS PROFIT , VIZ. BY 4.47% [ 9.11% (MINUS) 4.64% ] I.E. RS.17,31,510/ - IN A.Y 2010 - 11 AND 4.16% [ 9.11% (MINUS) 4.95%] I.E. RS.20,47,872/ - IN A.Y. 2011 - 12, RESPECTIVELY. THE CIT(A) PITTING THE CALCULATION OF THE SUPPRESSED PROFIT BY HIM AS AGAINST THE CONSEQUENTIAL DISALLOWANCE THAT OTHERWISE WOULD HAVE BEEN ARRIVED AT BY COMPUTING THE SAME @ 12.5% OF THE AGGREGATE VALUE O F THE BOGUS PURCHASE S , THEREIN OBSERVED THAT THAT THE ADDITION ON THE BASIS OF THE WORKING OF THE SUPPRESS ED G.P RATE WAS FOUND TO BE ON THE HIGHER SI D E. THE CIT(A) ON THE BASIS OF HIS AFORESAID OBSERVATIONS SUSTAINED THE DISALLOWANCE IN THE HANDS OF THE ASSESSEE TO THE EXTENT OF RS.17,31,510/ - AND RS.20,47,872/ - , AS AGAINST THE ADDITION OF RS.99,43,225/ - AND RS.66,79,476/ - THAT WAS MADE BY THE A.O IN A . Y S : 2010 - 11 AND 2011 - 12, RESPECTIVELY. 8. THAT BOTH THE ASSESSEE AND THE REVENUE BEING AGGRIEVED WITH THE ORDER OF THE CIT(A) HAD CARRIED THE MATTER IN APPEAL BEFORE US. THAT AT THE VERY OUTSET OF THE HEARING OF THE APPEAL IT WAS SUBMITTED BY THE LD. AUTHORIZED REPRESENTATIVE (FOR SHORT A.R ) FOR THE ASSESSEE THAT THE ISSUE WAS SQUARELY COVERED BY THE ORD ER PASSED BY THE TRIBUNAL IN THE ASSESSEES OWN CASE FOR AY: 2009 - 10. THE LD . A.R PLACE D ON RECORD THE COPY OF THE CONSOLIDATE ORDER OF THE TRIBUNAL, MARKE D AS ITO VS. ETESH P. JAIN HUF (ITA NO. 3353/MUM/2016 ) , AND ETESH P. JAIN HUF VS. ITO (ITA NO. 3021/MUM/2016 , BOTH DATED 2 4 .10.2016, FOR AY: 2009 - 10 . IT WAS SUBMITTED BY THE LD. A.R THAT THE TRIBUNAL WHILE DISPOSING OF THE AFORESAID CROSS APPEALS WHICH INVOLVED SIMILAR FACTS HAD RESTRICTED THE ADDITION TO 10% OF THE AGGREGATE VALUE OF THE BOGUS PURC HASE . T HE LD. A.R SUBMITTED THAT THE ESTIMATION OF THE PROFIT ELEMENT @10% OF THE AGGREGATE VALUE OF THE BOGUS PURCHASES IN ALL FAIRNESS MAY FURTHER BE REDUCED BY THE PROFIT WHICH ON THE SALE OF P A G E | 13 ITA NOS. 5046, 5047, 5358, 5359/MUM/2016 AY: 2010 - 11 & 2011 - 12 SHRI ETESH PRAKASH JAIN VS. ITO WARD 1(1) THE SAID GOODS HAD ALREADY BEEN BOOKED IN THE BOOKS OF ACCOUN T OF THE ASSESSEE. PER CONTRA, THE LD. DEPARTMENTAL REPRESENTATIVE (FOR SHORT D.R) RELIED ON THE JUDGMENT OF THE HONBLE SUPREME COURT IN THE CASE OF N.K. PROTEINS LTD. VS. DCIT ( S PECIAL L EAVE P ETITION) (CCNO) (S) 769/ MUM/2017, DATED 16.01.2017 . THE LD. D.R SUBMITTED THAT IN THE BACKDROP OF THE AFORESAID JUDGMENT OF THE HONBLE SUPREME COURT , THE ENTIRE BOGUS PURCHASE WAS LIABLE TO BE ADDED IN THE HANDS OF THE ASSESSEE. THE LD. D.R SUBMITTED THAT THE A.O HAD RIGHTLY MADE THE ADDITION OF THE ENTIR E VALUE OF THE PURCHASES CLAIMED BY THE ASSESSEE TO HAVE BEEN MADE FROM THE AFOREMENTIONED HAWALA PARTIES, WHICH HOWEVER HAD WRONGLY BEEN RESTRICTED BY THE CIT(A) TO THE EXTENT OF THE SUPPRESSED GROSS PROFIT RATE. 9. WE HAVE HEARD THE AUTHORIZED REPRESE NTATIVES FOR BOTH THE PARTIES, PERUSED THE ORDERS OF THE LOWER AUTHORITIES AND THE MATERIAL AVAILABLE ON RECORD. WE ARE OF THE CONSIDERED VIEW THAT IN THE BACKDROP OF THE FACTS INVOLVED IN THE PRESENT CASE , IT STAN D S CONCLUSIVELY PROVED THAT THE ASSESSEE DESPITE BEING AFFORDED SUFFICIENT OPPORTUNITY BY THE A.O HAD FAILED TO SUBSTANTIATE THE GENUINENESS AND VERACITY OF THE PURCHASE TRANSACTIONS. WE FIND THAT THE FACTS OF THE CASE CLEARLY REVEALS THAT THE ASSESSEE HAD N OT MADE ANY GENUINE PURCHASES FROM THE AFOREMENTIONED PARTIES . WE FIND THAT INDEPENDENT OF THE FACTS ON THE BASIS OF WHICH SERIOUS DOUBTS HAD EMERGED AS REGARDS THE GENUINENESS OF THE PURCHASE TRANSACTIONS, VIZ. THE AFFIDAVITS AND STATEMENTS OF THE AFOREME NTIONED PARTIES WITH THE SALES TAX DEPARTMENT, THE ASSESSEE EVEN OTHERWISE HAD FAILED TO PLACE ON RECORD ANY DOCUMENTARY EVIDENCE WHICH COULD GO TO IRREFUTABLY SUBSTANTIATE THE GENUINENESS AND VERACITY OF THE PURCHASES WHICH WERE CLAIMED T O HAVE BEEN MADE FROM THE AFOREMENTIONED PARTIES. WE FIND THAT THE NOTICES SENT BY THE A.O TO THE AFOREMENTIONED PARTIES U/S P A G E | 14 ITA NOS. 5046, 5047, 5358, 5359/MUM/2016 AY: 2010 - 11 & 2011 - 12 SHRI ETESH PRAKASH JAIN VS. ITO WARD 1(1) 133(6) WERE RETURNED UNSERVED BY THE POSTAL AUTHORITIES , AND ALL THE ATTEMPTS ON THE PART OF THE A.O TO CARRY OUT SERVICE OF THE NOTICE S ON THE AFOR EMENTIONED PARTIES NOT ONLY FAILED, BUT RATHER IT EMERGED THAT NEITHER THE AFOREMENTIONED PARTIES WERE EXISTING AT THE RESPECTIVE ADDRESS ES. WE FIND THAT NO DOCUMENTARY EVIDENCE WAS PLACE D ON RECORD BY THE ASSESSEE TO SUBSTANTIATE THE AUTHENTICITY OF THE P URCHASE TRANSACTIONS. WE THUS , IN THE BACKDROP OF THE AFORESAID FACTS ARE OF THE CONSIDERED VIEW THAT THE ASSESSEE HAD NOT CARRIED OUT ANY GENUINE PURCHASES FROM THE AFOREMENTIONED PARTIES. HOWEVER, WE ARE PERSUADED TO BE IN AGREEMENT WITH THE VIEW TAKEN B Y THE CIT(A) THAT IT WOULD NOT HAVE BEEN POSSIBLE FOR THE ASSESSEE TO HAD CARRIED OUT THE SUBSTANTIAL MANUFACTURING SALES WITHOUT PURCHASING THE REQUISITE MATERIALS. WE ARE OF THE CONSIDERED VIEW THAT THE ASSESSEE HAD PURCHASE D THE GOODS UNDER CONSIDERATIO N , THOUGH NOT FROM THE AFOREMENTIONED PARTIES , BUT FROM UNIDENTIFIED PARTIES OPERATING IN THE OPEN/GREY MARKET. WE ARE OF THE VIEW THAT IN THE BACKDROP OF THE AFORESAID FACTS , THE ADDITION IN THE HANDS OF THE ASSESSEE WAS LIABLE TO BE RESTRICTED ONLY TO TH E EXTENT OF THE PROFIT ELEMENT INVOLVED IN MAKING OF SUCH PURCHASES FROM THE OPEN/GREY MARKET. WE FIND THAT A SIMILAR ISSUE HAD CAME BEFORE A COORDINATE BENCH OF THE TRIBUNAL IN THE CROSS APPEALS OF THE ASSESSEE AND THE REVENUE ITO VS. ETESH P. JAIN HUF (I TA NO. 3353/MUM/2016 ) , AND ETESH P. JAIN HUF VS. ITO (ITA NO. 3021/MUM/2016 , BOTH DATED 24.10.2016, FOR AY: 2009 - 10 ,W HEREIN THE TRIBUNAL HAD OBSERVED AS UNDER: - WE HAVE CONSIDERED RIVAL CONTENTIONS AND CAREFULLY GONE THROUGH THE ORDERS OF TH E AUTHORITIES BELOW AND FOUND FRO M RECORD THAT A.O HAS REOPENED ASSESSMENT ON THE BASIS OF INFORMATION FROM SALES TAX DEPARTMENT REGARDING BOGUS PURCHASES. AFTER REOPENING THE ASSESSMENT A.O ADDED ENTIRE AM O UNT OF SUCH PURCHASES IN THE TOTAL INCOME OF THE AS SESSEE. WE HAVE OBSERVED THAT ASSESSEE FAILED TO FURNISH CONFIRMED COY OF LEDGER ACCOUNT AND CURRENT MAILING ADDRESS OF THE HAWALA PARTIES. ACCORDINGLY, BOOKS OF ACCOUNTS WERE REJECTED U/S 145(3) BY FOLLOWING THE DECISION OF HONBLE DELHI HIGH COURT I N THE CASE OF JANSAMPARK ADV ERTISING AND MARKETING (P) LTD. AFTER CONSIDERING THE FACT THAT THE MATERIAL SO PURCHASED HAVE ACTUALLY BEEN USED BY THE ASSESSEE IN P A G E | 15 ITA NOS. 5046, 5047, 5358, 5359/MUM/2016 AY: 2010 - 11 & 2011 - 12 SHRI ETESH PRAKASH JAIN VS. ITO WARD 1(1) MANUFACTURING ACTIVITY AND ALSO THE FACT THAT ASSESSEE HAS FURNISHED QUANTITATIVE ANALYSIS OF CONSUM PTION AS PER TAX AUDIT REPORT, THE CIT(A) HAS RESTRICTED ADDITION TO THE EXT ENT OF 12.5%. KEEPING IN VIEW THE FINDINGS RECORDED BY CIT(A) VIS - A - VIS G.P. RATE DISCLOSED BY ASSESSEE DURING THE YEAR UNDER CONSIDERATION IN ITS MANUFACTURING ACTIVITY, WE MODIFY THE ORDERS OF THE LOWER AUTHORITIES AND DIRECT FOR UPHOLDING ADDITION BY APPLYING PROFIT RATE OF 10%. WE DIRECT ACCORDINGLY. 10. WE HAVE DELIBERAT ED ON THE AFORESAID OBSERVATIONS OF THE COORDINATE BENCH OF THE TRIBUNAL AND ARE PERSUADED TO BE IN AGREEMENT WITH A VIEW TAKEN BY IT. WE THUS , IN THE BACKDROP OF OUR AFORESAID OBSERVATIONS , BEING OF THE VIEW THAT SAME FACTS ARE INVOLVED IN THE PRESENT CASE, THEREFORE, RESTRICT THE ADDITION IN THE HANDS OF THE ASSESSEE TO THE EXTENT OF 10% OF THE AGGREGATE VALUE OF THE PURCHASES CLAIMED TO HAVE BEEN BY THE ASSESSEE MADE BY THE ASSESSEE FROM THE AFOREMENTIONED HAWALA DEALERS. WE ARE OF THE CONSIDERED VIEW THAT THE CONTENTION OF THE ASSESSEE THAT A FURTHER REDUCTION OF THE PROFIT ELEMENT THAT HAD ALREADY BEEN BOOKED IN ITS BOOKS OF ACCOUNT IN RESPECT OF THE SALES OF THE GOODS UNDER CONSIDERATION MAY BE MADE, IS FOUND TO BE DEVOID OF ANY FORCE AND THUS DOES NOT MERIT ACCEPTANCE. THAT AS REGARDS THE RELIANCE PLACED BY THE LD. D.R. O N THE JUDGEMENT OF THE HONBLE SUPREME COURT IN THE CASE OF N.K. PROTEINS LTD. VS. DCIT ( S PECIAL L EAVE P ETITION) (CC NO) (S) 769/ MUM/2017, DATED 16.01.2017 , W E ARE OF THE CONSIDERED VIEW THAT THE FACTS INVOLVED IN THE SAID CASE ARE DISTINGUISHABLE AS AGAIN S T THE FACTS INVOLVED IN THE CASE OF THE ASSESSEE BEFORE US . WE FIND THAT IN THE CASE OF N.K PROTEINS LTD. (SUPRA) SEARCH PROCEEDINGS WERE CONDUCTED ON THE ASSESSEE, IN THE COURSE OF WHICH CERTAIN SIGNED BLANK CHEQUES AND VOUCHERS OF THE PARTIES FROM WHOM THE ASSESSEE CLAIMED TO HAVE BEEN MAKING PURCHASES WERE FOUND. IT WAS THUS IN THE BACKDROP OF THE AFORESAID FACTUAL MATRIX, THAT THE REVENUE HELD THAT THE CASH DEPOSITED IN THE BANK ACCOUNT S OF THE SAID RESPECTIVE SUPPLIER PARTIES WAS THE U NDISCLOSED INCOME OF THE ASSESSEE, P A G E | 16 ITA NOS. 5046, 5047, 5358, 5359/MUM/2016 AY: 2010 - 11 & 2011 - 12 SHRI ETESH PRAKASH JAIN VS. ITO WARD 1(1) AND THE PURCHASES MADE THERE FROM, AS BOGUS. WE ARE OF THE CONSIDERED VIEW THAT THE FACTS INVOLVED IN THE CASE OF THE PRESENT ASSESSEE ARE ABSOLUTELY DISTINGUISHABLE AS A GAINST THE PECULIAR AND IRREBUTABLE FACTS AS HAD EMERGED IN THE CASE OF N.K PROTEINS LTD. (SUPRA). 11 . WE THUS IN THE BACKDROP OF OUR AFORESAID OBSERVATIONS DISMISS BOTH THE APPEAL S OF THE ASSESSEE AND THE REVENUE FOR AY: 2010 - 11 . ITA NO. 5047 /MUM/2016 (ASSESSES APPEAL) ITA NO. 5359/MUM/2016 (REVENUES APPEAL) AY: 2011 - 12 12 . THE ASSESSEE HAD ASSAIL ED THE ORDER OF THE CIT(A) FOR AY: 2011 - 12 BY RAISING BEFORE US THE FOLLOWING GROUNDS OF APPEAL: - 1. THE COMMISSIONER OF INCOME TAX (APPEALS) - 2, THANE [HEREINAFTER REFERRED TO AS CIT(A)] ERRED IN CONFIRMING THE ACTION OF A.O IN RE - OPENING OF THE ASSESSMENT BY INVOKING THE PROVISIONS OF SECTION 147 READ WITH SECTION 148 OF THE INCOME TAX ACT, 1961. THE APPELLANT SUBMITS THAT THE NOTICE ISSUED U/S 148 AND REOPENING OF ASSESSMENT U/S 147 IS BAD IN LAW, ILLEGAL, ULTRA - VIRUS AND CONTRARY TO THE PROVISION OF THE I.T. ACT AND SAME SHALL BE QUASHED. 2. THE CIT(A) ERRED IN CONFIRMING THE ADDITION TO THE EX TENT OF RS.20,47,872/ - CONSIDERING THE SAME AS SUPPRESSED GRASS PROFIT, ON RAW MATERIAL PURCHASED FROM TEN PARTIES TREATED AS NON GENUINE/BOGUS PURCHASES BY THE AO. THE APPELLANT SUBMITS THAT IT HAS ACTUALLY PURCHASED THE RAW MATERIALS FROM RESPECTIVE PA RTIES, PAYMENT FOR PURCHASES WERE MADE THROUGH PROPER BANKING CHANNELS, THE RAW MATERIAL WERE PROCESSED AT IT MANUFACTURING UNITS AND FINISHED GOODS HAS ACTUALLY BEEN SOLD TO INDEPENDENT THIRD PARTY BUYERS AND SALES HAVE BEEN DULY ACCOUNTED FOR COMPUTING T AXABLE INCOME; HENCE UNDER THE FACTS AND CIRCUMSTANCES OF THE CASE OF THE APPELLANT RAW MATERIAL PURCHASED FROM THESE PARTIES CANNOT BE TREATED AS NON GENUINE/BOGUS PURCHASES. 3. ON THE FACTS AND CIRCUMSTANCES OF THE CASE OF THE APPELLANT AND IN LAW, THE CIT(A) ERRED IN REJECTING THE BOOKS OF ACCOUNTS OF THE APPELLANT U/S 145(3) OF THE I.T. ACT. P A G E | 17 ITA NOS. 5046, 5047, 5358, 5359/MUM/2016 AY: 2010 - 11 & 2011 - 12 SHRI ETESH PRAKASH JAIN VS. ITO WARD 1(1) THE APPELLANT SUBMITS THAT THE ACTION OF CIT(A) IN REJECTING THE BOOKS OF ACCOUNTS IS ILLEGAL AND CONTRARY TO THE PROVISIONS OF THE ACT AND ON THE FACTS AND CIR CUMSTANCES OF THE CASE OF THE APPELLANT PROVISIONS OF SECTION 145(3) CANNOT BE RESORTED TO BY THE CIT(A) AND SAME SHOULD BE STRUCK DOWN. YOUR APPELLANT CRAVES LEAVE TO ADD, TO ALTER OR TO AMEND THE AFORESAID GROUND OF APPEAL. 13 . THAT ON THE OTHER HAND THE REVENUE HAD CHALLENGED THE ORDER OF THE CIT(A) BY RAISING THE FOLLOWING GROUNDS OF APPEAL: - 1. ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE, THE LD. CIT(A) HAS ERRED IN RELYING ON THE DECISION OF SUPREME COURT IN THE CASE OF KANCHWA LA GEMS VS. JCIT 288 ITR 10(SC) AND HON'BLE HIGH COURT'S DECISION IN THE CASE OF VIJAY PROTEIN, SANJAY OIL CAKE INDUSTRIES, ETC. 2. ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE, AND IN LAW, THE HON'BLE CIT(A) ERRED IN NOT FOLLOWING THE ORDER OF ITAT, PUNE IN ITA NO. 1411 - 1415 DATED 20.02.2015 IN THE CASE OF M/S. KOLTE PATIL DEVELOPERS LTD. WHEREIN 100% ADDITION OF BOGUS PURCHASES WAS CONFIRMED. 3. ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE, THE L D. CIT(A) HAS ERRED IN GIVING RELIEF TO THE ASSESSEE TO THE EXTENT OF SUPPRESSED G.P. OUT OF TOTAL BOGUS PURCHASES EVEN THOUGH - (I) THE ASSESSEE COULD NOT PRODUCE PRIMARY EVIDENCES LIKE OCTROI RECEIPTS, DELIVERY CHALLAN ETC. EVIDENCE TO PROVE THE GENUINENESS OF THE PURCHASES BEFORE THE A.O AND BEFORE CIT(A). (II) THE AFFIDAVITS FILED BY THE ENTRY PROVIDERS BEFORE SALES TAX AUTHORITIES CANNOT BE IGNORED HAVING EVIDENTIARY VALUE. 4. THE ORDER OF THE CIT(A) MAY BE VACATED AND THAT OF THE ASSESSING OFFICER MAY BE RESTORED. 5. THE APPELLANT CRAVES LEAVE TO ADD, AMEND, ALTER OR DELETE ANY GROUND OF APPEAL. 1 4 . BRIEFLY STATED, THE FACTS OF THE CASE THAT THE ASSESSEE HAD E - FILED ITS RETURN OF INCOME FOR A.Y. 2011 - 12 ON 28.09.2011 , DECLARING TOTAL INCOME OF RS.6,97,981/ - . THE A.O ON THE BASIS OF INFORMATION RECEIVED FROM THE SALES TAX DEPARTMENT, MAHARASHTRA THAT THE ASSESSEE HAD TAKEN FOLLOWING BOGUS PURCHASE BILLS: - SR. NO. NAME OF THE ENTRY MAHARASHTRA VAT A.Y. AMOUNT IN THE P A G E | 18 ITA NOS. 5046, 5047, 5358, 5359/MUM/2016 AY: 2010 - 11 & 2011 - 12 SHRI ETESH PRAKASH JAIN VS. ITO WARD 1(1) PROVIDER NO. BILLS TAKEN BY THE ASSESSEE 1. NISHA ENTERPRISE 27940256772V 2011 - 12 2114682 2. POLARIS SALES AGENCY PRIVATE LIMITED 27410680420V 2011 - 12 1338332 3. KAMALANAYAN EXIM PRIVATE LIMITED 27470782431V 2011 - 12 1919722 4. ASHTAVINAYAK SALES AGENCY 27580638762V 2011 - 12 1306740 TOTAL 6679476 ,T HEREIN MADE AN ADDITION OF RS.66,79,476/ - IN THE HANDS OF THE ASSESSEE, AND ASSESSED ITS INCOME AT RS.73,77,457/ - . 1 5 . AGGRIEVED , THE ASSESSEE CARRIED THE MATTER IN APPEAL BEFORE THE CIT(A) WHO PARTLY ALLOWED THE APPEAL AND RESTRICTED THE ADDI TION IN THE HANDS OF THE ASSESSEE TO THE EXTENT OF THE SUPPRESSED GROSS PROFIT OF RS.20,47,872/ - PERTAINING TO THE BOGUS PURCHASES . 16 . THAT BOTH THE ASSESSEE AND THE REVENUE HAD FURTHER CARRIED THE MATTER IN APPEAL BEFORE US. WE FIND THAT THAT AS THE FAC TS AND THE ISSUE INVOLVED IN THE PRESENT APPEALS ARE SAME AS WERE INVOLVED IN THE CROSS APPEALS FILED BY THE ASSESSEE AND THE REVENUE FOR A . Y 2010 - 11, MARKED AS ITA NO. 5046/MUM/2016 AND 5358/MUM/2016, RESPECTIVELY, THEREFORE , THE ORDER PASSED BY US WHILE DISPOSING OF THE AFORE SAID APPEALS SHALL APPLY MUTATIS MUTANDIS FOR DISPOSING OF THE PRESENT CROSS APPEALS OF THE ASSESSEE AND THE REVENUE FOR A.Y 2011 - 12, VIZ. MARKED AS ITA NO. 5 047 /MUM/2016 AND ITA NO. 535 9 /MUM/2016, RESPECTIVELY. P A G E | 19 ITA NOS. 5046, 5047, 5358, 5359/MUM/2016 AY: 2010 - 11 & 2011 - 12 SHRI ETESH PRAKASH JAIN VS. ITO WARD 1(1) 17 . THAT BOTH THE APPEALS OF THE ASSESSEE AND THE REVENUE FOR A.Y. 2011 - 12 ARE DISMISSED . 18 . THAT ALL THE APPEALS OF THE ASSESSEE AND THE REVENUE FOR A.Y. 2010 - 11 AND A.Y. 2011 - 12 , MARKED AS ITA NO. 5046/MUM/2016, ITA NO.5047/MUM/2016,ITA NO. 5358/MUM/2016 AND 5359/MUM/20 16 ARE DISMISSED IN TERMS OF OUR AFORESAID OBSERVATIONS. ORDER PRONOUNCED IN THE OPEN COURT ON 10 . 11.2017 SD/ - SD/ - ( R AJENDRA ) ( RAVISH SOOD ) ACCOUNTANT MEMBER JUDICIAL MEMBER MUMBAI ; 10 .11 .2017 PS. ROHIT KUMAR / COPY OF THE ORDER FORWARDED TO : 1. / THE APPELLANT 2. / THE RESPONDENT. 3. ( ) / THE CIT(A) - 4. / CIT 5. , , / DR, ITAT, MUMBAI 6. / GUARD FILE . //TRUE COPY// / BY ORDER, / (DY./ASSTT. REGISTRAR) , / ITAT, MUMBAI P A G E | 20 ITA NOS. 5046, 5047, 5358, 5359/MUM/2016 AY: 2010 - 11 & 2011 - 12 SHRI ETESH PRAKASH JAIN VS. ITO WARD 1(1)