SHRI MAGANLAL M. PATEL, MUMBAI V. ITO 22(1)(3), NAVI MUMBAI

ITA 5118/MUM/2018

• Counselvise Citation: [2020] 111 COUNSELVISE.COM (IT) 7634 (ITAT-MUMBAI)
• Duration Of Justice: 1 year(s) 4 month(s) 23 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 29-01-2020
• Appeal Filed By: Assessee
• Order Result: Partly Allowed
• Bench Allotted: SMC
• Assessment Year: 2010-2011
• Appeal Filed On: 05-09-2018
• Result in Favour of: Partly Allowed
• Court: TRIBUNAL
• Department Lawyers: AKTAR H ANSARI
• Assessee Lawyers: RUCHI RATHOLD
• Keywords: Bogus purchase; Accommodation entries
• Section: 133(6); 274

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL SMC, BENCH M UMBAI BEFORE SHRI SAKTIJIT DEY, JUDICIAL MEMBER & SHRI G. MANJUNATHA, ACCOUNTANT MEMBE R ITA NO.5118/MUM/2018 ( ASSESSMENT YEAR: 2010-11 ) MAGANLAL M.PATEL 502, NEW VISHWAJYOTI APARTMENT BALAJI LANE, TILAK ROAD OP. BALAJI MANDIR, GHATKOPAR(E) MUMBAI-400 077 VS. ITO-27(2)(2) 4 TH FLOOR, TOWER NO.6 RAILWAY STATION COMMERCIAL COMPLEX VASHI, NAVI MUMBAI MUMBAI-400 703 PAN/GIR NO. A A BPP4490L APPELLANT ) .. RESPONDENT ) REVENUE BY SHRI. AKTAR.H.ANSARI, DR ASSESSEE BY MS. RUCHI RATHOLD, AR DATE OF HEARING 20/01/2020 DATE OF PRONOUNCEME NT 29 /01/2020 / O R D E R PER G.MANJUNATHA (A.M) : THIS APPEAL FILED BY THE ASSESSEE IS DIRECTED AGAI NST, THE ORDER OF THE LD. COMMISSIONER OF INCOME TAX (APPEALS)25, MUMBAI, DATED 14/06/2018 AND IT PERTAINS TO ASSESSMENT YEAR 2010-11. 2. THE ASSESSEE HAS RAISED THE FOLLOWING GROUNDS OF APPEAL:- 1. LEARNED CIT(APPEALS) ERRED IN CONFIRMING PROFI T @ 12.5% ON THE PURCHASES EFFECTED FROM REGISTERED DEALERS AND ERRE D IN TREATING THE SAME AS BOGUS PURCHASE IGNORING THE DETAILED EVIDEN CES BROUGHT ON RECORD & FURTHER ERRED IN LEVYING INTEREST THEREON AND IGNORING THE JUDICIAL PRECEDENTS BROUGHT TO HIS KNOWLEDGE. 2. LEARNED CIT(APPEAL) ERRED IN CONFIRMING THE PUR CHASES PROFIT @ 12.5% ON THE PURCHASES ON THE BASIS OF INFORMATION RECEIVED FROM SALES TAX AUTHORITIES WHICH CONTRARY TO THE MATERIAL FAD ON RECORD. ITA NO.5118/MUM/2018 MAGANLAL M.PATEL 2 3. LEARNED CIT(APPEALS) ERRED IN CONFIRMING THE A SSESSMENT ORDER, THOUGH SAFES MADE BY THE APPELLANT WERE NOT IN DOUB T END ALSO IGNORING THE QUANTITATIVE DETAILS BROUGHT ON RECORD. 4. THE APPELLANT CRAVES LEAVE TO ADD, TO AMEND, TO AFTER, TO MODIFY OR TO DELETE ANY OF [HE ABOVE GROUNDS OF APPEAL. 3. THE BRIEF FACTS OF THE CASE ARE THAT THE ASSESSE E IS ENGAGED IN THE BUSINESS OF TRADING IN TIMBER, FILED HIS RETURN OF INCOME FOR AY 2010-11 ON 26/09/2010, DECLARING TOTAL INCOME OF RS . 3,96,220/-. THE CASE WAS SUBSEQUENTLY REOPENED U/S 147, ON THE BASIS OF INFORMATION RECEIVED FROM DGIT, INVESTIGATION, MUMB AI, AS PER WHICH, SALES TAX AUTHORITIES OF GOVERNMENT OF MAHAR ASHTRA HAD TAKEN ACTIONS AGAINST NUMBER OF HAWALA DEALERS, WH O HAD ISSUED BOGUS PURCHASE BILLS TO VARIOUS PARTIES. AS PER LI ST OF BENEFICIARIES, THE ASSESSEE IS ONE OF THE BENEFICIARY, WHO HAD TAK EN ACCOMMODATION BILLS OF BOGUS PURCHASES FROM TWO PAR TIES AS LISTED BY THE AO IN HIS ASSESSMENT ORDER AMOUNTING TO RS. 39,34,288/-. THE CASE WAS SELECTED FOR SCRUTINY AND THE ASSESSME NT HAS BEEN COMPLETED U/S. 143(3).R.W.S. 147 OF THE I.T.ACT, 19 61 ON 14/12/2015 AND DETERMINED TOTAL INCOME OF RS. 8,88,184/-, AFTE R MAKING 12.50% ADDITIONS TOWARDS ALLEGED BOGUS PURCHASE FROM ABOVE PARTIES AND MADE ADDITIONS OF RS. 4,91,786/-. 4. AGGRIEVED BY THE ASSESSMENT ORDER, THE ASSESEE P REFERRED AN APPEAL BEFORE THE LD.CIT (A). BEFORE THE LD.CIT (A ), THE ASSESSE HAS FILED ELABORATE WRITTEN SUBMISSIONS, ON THE ISS UE, WHICH HAS BEEN REPRODUCED AT PARA 4 ON PAGE 3 TO 6 OF LD. CIT (A) ORDER. THE SUM AND SUBSTANCE OF THE ARGUMENTS OF THE ASSESSEE BEFORE THE LD.CIT(A) ARE THAT PURCHASE FROM THE ABOVE PARTY IS GENUINE, WHICH IS SUPPORTED BY NECESSARY EVIDENCES. THEREFORE, NO ADDITIONS COULD BE MADE ON THE BASIS OF INFORMATION RECEIVED FROM T HIRD PARTY. THE ITA NO.5118/MUM/2018 MAGANLAL M.PATEL 3 LD.CIT(A), AFTER CONSIDERING RELEVANT SUBMISSION OF THE ASSESSEE AND ALSO, BY FOLLOWING THE DECISION OF HONBLE GUJA RAT HIGH COURT, IN THE CASE OF CIT VS. SIMITH P. SHETH (356 ITR 451) H AS SUSTAINED ADDITION MADE BY THE AO TOWARDS 12.50% PROFIT ON AL LEGED BOGUS PURCHASES FROM THOSE PARTIES. THE RELEVANT FINDINGS OF THE LD.CIT(A) ARE AS UNDER:- 5.2 HAVING CONSIDERED THE ASSESSMENT ORDER OF THE A O AND THE SUBMISSIONS OF THE ASSESSEE, IT IS SEEN THAT THE MA IN PLANK OF ASSESSEES ARGUMENTS REGARDING ME GENUINENESS OF THE PURCHASES WAS THAT THE PAYMENT HAS BEEN MADE BY CHEQUE/BANKING CHANNELS AN D WHICH HAS NOT FOUND FAVOUR WITH COURTS/TRIBUNALS PRONOUNCEMENTS LIKE IN THE CASE OF M/S, KONCHWOLA GEMS VS. JCIT ITA NO. 134/JP/2002 DATED 10.12.2003 BY THE HON'BLE FTAT, JAIPUR WHEREIN IT IS HELD THAT PAYMENT BY ACCOUNT PAYEE CHEQUE IS NOT SUFFICIENT TO ESTABLISH THE GEN UINENESS OF PURCHASES. THE SAID DECISION OF THE 1TAT, JAIPUR HAS BEEN AFFI RMED BY THE HON'BLE SUPREME COURT IN THE CASE OF M/S. KACHWALA GEMS VS. JCIT (2006) 206 CTK (SC) 585: 2881TR 10 (SC). THUS, THE MAIN CONTENTION OF THE APPELLANT DOES NOT HOLD MUCH WATER. THE AO HAS FORM ED HIS VIEWS ABOUT THE BOGUS NATURE OF THE PURCHASES MADE BY THE APPEL LANT FROM THE ABOVE PARTY ON THE BASIS OF STATEMENTS RECORDED BY THE SA LES TAX AUTHORITIES AS WELL AS FURTHER INQUIRIES CARRIED OUT BY HIM INDEPE NDENTLY. THE INFORMATION RECEIVED FROM THE SALES TAX AUTHORITIES WAS ONLY A PIECE OF EVIDENCE TO INITIATE IN-DEPTH INDEPENDENT INVESTIGATION ON THE ISSUE. THE APPELLANT HAS NOT BEEN ABLE TO ESTABLISH ONE TO ONE RELATIONSHIP/ NEXUS BETWEEN THE PURCHASES AND SALES. THE ASSESEE HAS NOT BEEN ABLE TO PRODUCE THE PARTY FROM WHOM PURCHASES HAVE BEEN ALLEGED TO HAVE BEEN MADE. THE APPELLANT HAS ALSO FAILED TO PRODUCE CORROBORATIVE EVIDENCE IN THE FORM OF TRANSPORTATION BILLS ETC. TO ESTABLISH THAT THE ALL EGED PURCHASES WERE ACTUALLY TRANSPORTED TO ITS PREMISES AND ENTERED IN THE STOCK REGISTER. IT IS ALSO A FACT THAT THE AO HAS NOT CONFRONTED THE ASSE SSEE WITH ALL THE INFORMATION IN HIS POSSESSION; LIKE STATEMENTS OF T HE ALLEGED HAWALA OPERATORS. FURTHER, THE AO STOPPED INVESTIGATION WITH THE RETURN OF HIS 133(6) NOTICES AND INSPECTOR'S FILED INQUIRY AND HI S REPORT. HE DID NOT GO AHEAD WITH MONEY TRAIL OF CHEQUES DEBITED IN APPELL ANT'S BANK ACCOUNT TOWARDS THE ALLEGED PURCHASES THOUGH SUCH INVESTIGA TION DO NOT LEAD TO CONCRETE RESULTS IN THE CASE OF HAWALA DEALERS AND INVESTIGATORS OFTEN REACH DEAD END IN SUCH CASES. IT IS NOT THE CASE OF THE AO THAT THE IMPUGNED PURCHASES HAVE CONCLUSIVELY BEEN ESTABLISH ED AS NOT HAVING BEEN EFFECTED AT ALL. THE AO HAS ONLY FOUND THE IMP UGNED SUPPLIER AS A BOGUS PARTY. 5.2.1 IN MANY JUDICIAL PRONOUNCEMENTS ON THE I SSUE, THE COURTS HAVE TAKEN A CONSISTENT VIEW THAT IN CASE OF NON-EXISTEN T PARTIES FROM WHICH THE PURCHASES ARE SHOWN TO HAVE BEEN MADE, ONLY A P ART OF SUCH PURCHASES CAN BE DISALLOWED, PARTICULARLY IN SUCH C ASES WHERE THE CORRESPONDING SALES ARE NOT DOUBTED. ALTERNATIVELY, THE PROFIT EMBEDDED ITA NO.5118/MUM/2018 MAGANLAL M.PATEL 4 IN SUCH SALES AGAINST THE ALLEGED BOGUS PURCHASES S HOULD BE BROUGHT TO TAX. 5.2.2 IN THE CASE OF CU-1 VS SIMIT P. SHETH, ITA NO. 553 OF 2012, DATED 16/01/2013, WHILE DECIDING A SIMILAR ISSUE, T HE HONBLE HIGH COURT OF GUJARAT HAS HELD THAT: 'WE. ARE BROADLY IN AGREEMENT WITH THE REASONING ADOPTED BY THE COMMISSIONER (APPEALS) WITH RESPECT TO THE NATURE O F DISPUTED PURCHASES OF STEEL IT MAY BE THAT THE THREE SUPPLIE RS FROM WHOM THE ASSESSES CLAIMED TO HAVE PURCHASED THE STEEL DI D NOT OWN UP TO SUCH SALES. HOWEVER, VITAL QUESTION WHILE CONSID ERING WHETHER THE ENTIRE AMOUNT OF PURCHASES SHOULD BE ADDED BACK TO THE INCOME OF THE ASSESSEE OR ONLY THE PROFIT ELEMENT E MBEDDED THEREIN WAS TO ASCERTAIN WHETHER THE PURCHASES THEM SELVES WERE COMPLETELY BOGUS AND NON EXISTENT OR THAT THE PURCH ASES WERE ACTUALLY MADE BUT NOT FROM THE PARTIES FROM WHOM IT WAS CLAIMED TO HAVE BEEN MADE AND INSTEAD MAY HAVE BEEN PURCHAS ED FROM GREY MARKET WITHOUT PROPER BILLING OR DOCUMENTATION THE PRESENT CASE, CIT BEHAVED THAT WHEN AS A TRADER IN STEEL TH E ASSESSEE SOLD CERTAIN QUANTITY OF STEEL HE WOULD HAVE PURCHA SED THE SAME QUANTITY FROM SOME SOURCE. WHEN THE TOTAL SALE IS A CCEPTED BY THE ASSESSING OFFICER, HE COULD NOT HAVE QUESTIONED THE VERY BASIS OF THE PURCHASES. IN ESSENCE THEREFORE, THE COMMISSION ER (APPEALS) BELIEVED ASSESSEE THEORY THAT THE PURCHASES WERE NO T BOGUS BUT WERE MADE FROM THE PARTIES OTHER THAN THOSE MENTION ED IN THE BOOKS OF ACCOUNTS. THAT BEING THE POSITION, NOT THE ENTIRE PURCHASE PRICE BUT ONLY PROFIT ELEMENT EMBEDDED IN SUCH PURC HASES CAN BE ADDED TO THE INCOME OF THE ASSESSES SO MUCH IS CLEAR BY DECISION OF THIS COURT. IN PARTICULAR, COURT HAS ALSO TAKEN A SIMILAR VIEW IN CASE OF COMMISSIONER OF INCOME TAX-IV VS. VIJAY M M ISTRY CONSTRUCTION LTD. VIDE ORDER DATED 10.01.2011 PASSE D IN TAX APPEAL NO. 1090 OF 2009 AND IN CASE OF COMMISSIONER OF INCOME TAX-I VS. BHOLANATH POLY FAB PVT. LTD VIDE ORDER D ATED 23.10.2012 PASSED IN TAX APPEAL NA 63 OF 2012, THE VIEW TAKEN BY THE TRIBUNAL IN CASE OF VIJAY PROTEINS PVT. LTD, VS. CI T REPORTED IN 58ITD 428 CAME TO BE APPROVED.' 5.2.3 SIMILARLY, WHILE DEALING WITH AN IDENTICAL ISSUE, IN THE CASE OF C1T, VS. BHOLANATH POLY FAB (P) LTD-, I.TA NO. 63 OF 2012, I N THE ORDER DATED 23/10/2012, THE HONBLE HIGH COURT OF GUJARAT HAS HE LD AS UNDER: - 'WE ARE OF THE OPINION THAT THE TRIBUNAL COMMITTED NO ERROR. WHETHER THE PURCHASES THEMSELVES WERE BOGUS OR WHETHER THE PART IES FROM WHOM SUCH PURCHASES WERE ALLEGEDLY MADE WERE BOGUS IS ES SENTIALLY 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 SEELL THE FINISHED GOODS. IN THAT VIEW OF THE MATTE R, AS NATURAL COROLLARY, NOT THE ENTIRE AMOUNT COVERED UNDER SUCH PURCHASE, BUT THE PROFIT ELEMENT EMBEDDED WOULD BE SUBJECT TO TAX. THIS WAS THE VIEW OF THIS COURT IN THE CASE OF SANJAY OILCAKE INDUSTRIES V. C JT 120091 316 FTR 274 (GUJ). SUCH DECISION IS ALSO FOLLOWED BY THIS C OURT IN A JUDGMENT DATED AUGUST 16,2011, IN TAX APPEAL NO.679 OF 2010 IN THE CASE OF CJT ITA NO.5118/MUM/2018 MAGANLAL M.PATEL 5 V. KISHOR AMRUTLAL PATEL IN THE RESULT, TAX APPEAL DISMISSED.'(EMPHASIS SUPPLIED) 5.24 IN VIEW OF THE FACTS AND CIRCUMSTANCES OF THE CASE AND THE JUDICIAL PRONOUNCEMENTS CITED ABOVE, WHAT CAN BE DISALLOWED OR TAXED IN THE INSTANT CASE, IS THE EXCESS PROFIT ELEMENT EMBEDDED HI SUCH PURCHASES SHOWN TO HAVE BEEN MADE FROM AFORESAID PARTY. AS NARRATED EARLIER , THE AO IN THIS CASE HAS HELD THAT THE PARTIES FROM WHOM THE PURCHASES WERE MADE BY THE APPELLANT WERE FOUND TO BE BOGUS, ESTIMATIONS RANGING FROM 12 ,5% TO 25% HAVE BEEN UPHELD BY THE HONBLE GUJARAT HIGH COURT, DEPENDING UPON THE NATURE OF THE BUSINESS. 5.2.4,1 IN A NUMBER/SERIES OF RECENT CASES, INVO LVING THE ISSUE OF BOGUS PURCHASES CARRIED OUT IN A ORGANIZED MANNER THROUGH SOME HAWALA OPERATORS AND THE MODUS OPERANDI UNEARTHED BY THE MAHARASHTRA SALES TAX DEPARTMENT, THE HON'BLE MUMBAI TRIBUNAL HAS ESTIMATED THE G.P A DDITION IN THE HANDS OF THE PURCHASERS ON ACCOUNT OF SUCH BOGUS PURCHASES AS 12 .5%. SOME OF WHICH ARE LISTED BELOW: I) SMT. KIRVN NAVIN DOSHI IN FTA NO. 2601/MUM/2016 18.01.2017. II) ASHWIN PURSHOTETM RAJAJ & AM. VS ITO & ANR ., IN 1TA NO.736/MUM/2Q14,52Q7/MUM/2Q14,DATED:14-12-2016. III) ITO &ANR. VS. MANISH KANJI PATEL &ANR~, IN JTA NO. 7299/MUM/2014, 7154/MUM/2012 & 7300/MUM/2014, 7627/ MUM/2014, DATED: 18-05-2017. IV) METROPOLITAN EXIMCHEM LTD., JTA NO. 2935/MU M/2015, DATED:29- 03-2017 V) KANAKA-METAL INDUSTRIES VS. ITQ, TTA NO. 722/MUM.2017 DTD 04.09.2017 VI) I/TO VS. JUGRAJ R. JAIN, TTA NO. 2571/MUM/2016 A 02.08.2017; VII) B. J. EXPORTS VS. ASSN. COMMISSIONER OF INCOME TAX, ITA NO. 5442- 5444/MUM/2016 DATED 13.09.2017; VIII) BATLIBOI ENVIRONMENTAL ENGINEERING LTD. VS. DEPUTY COMMISSIONER OF INCOME-TAX, ITA NO. 2840 & 3482/M/2015 DATED 15-03. 2017; IX) DEPUTY COMMISSIONER OF INCOME-TAX & ANR. VS . REMI PROCESS PLANT & MACHINERY LTD. & ANR., ITA NO. 1723/M/2015, 1817/ M/2015 DATED 21.03.2017. X) SMT. USHA B. AGARWAL VS. ITO, ITA NO. 7 034/MUM/2016, DATED 01.09.2017. 5.2.5 AS FAR AS ASSESSEE'S RELIANCE ON THE GUJARAT HIGH COURT DECISION IN THE CASE OF JAGDISH H PATEL, SUPRA, IS CONCERNED, I T MAY BE MENTIONED THAT THE CASE OF THE ASSESSEE IS FACTUALLY DISTINGU ISHABLE FROM THE CASE SOUGHT TO BE RELIED UPON BY THE ASSESSEE IN AS MUCH AS IN THE CASE OF JAGDISH H PATEL SUPRA, NO SCAM OF THE NATURE INVOLV ING ISSUE OF BILLS BY HAWALA OPERATORS AGAINST NO DELIVERY OF GOODS AS UN EARTHED BY THE MAHARASHTRA SALES TAX DEPARTMENT WHEREIN THE HAWALA PARTIES ISSUING THE BILLS WITHOUT DELIVERY OF GOODS HAD ADMITTED BE FORE THE SALES TAX AUTHORITIES THAT THEY HAD ONLY ISSUED THE BILLS AND GOODS HAD NOT BEEN ITA NO.5118/MUM/2018 MAGANLAL M.PATEL 6 DELIVERED. THE AO HAS CARRIED OUT INDEPENDENT INVESTIGATIONS AS WELL. THEREFORE, THE ASSESSEE DOES NOT GET ANY HELP FROM THE GUJARAT HIGH COURT DECISION IN THE CASE OF JAGDISH H PATEL SUPRA . 5.2.6 IN VIEW OF THE ABOVE DISCUSSED FACTUAL MATRIX AND PRECEDENTS, I AM OF THE VIEW THAT THE AO IS JUSTIFIED IN ESTIMATING THE PROFIT ELEMENT CALCULATED @ 12.5% EMBEDDED IN IMPUGNED PURCHASES OF RS. 39,34,288/- SHOWN FROM ALLEGED HAWALA PARTIES AND A DDING THE SAME TO THE TOTAL INCOME RETURNED. THE ASSESSMENT ORDER OF THE AO IS A WELL- REASONED AND A SPEAKING ORDER GIVING IN DETAIL THE REASONS FOR HIS FAIR ESTIMATION AND THEREFORE, I DO NOT SEE ANY REASONS TO TAKE A VIEW IN THE MATTER DIFFERENT FROM THE ONE TAKEN BY THE LD. AO. THE ACTION OF THE AO IN ESTIMATION OF 12.5% GP IS SUSTAINED. THUS, THE GROU ND OF APPEAL NO.1 IS DISMISSED. 5. WE HAVE HEARD BOTH THE PARTIES, PERUSED THE MATE RIAL AVAILABLE ON RECORD AND GONE THROUGH ORDERS OF THE AUTHORITIE S BELOW. WE FIND THAT THE LD. AO HAS MADE ADDITIONS TOWARDS 12.50% P ROFIT ON ALLEGED BOGUS PURCHASES, ON THE GROUND THAT THE ASS ESSEE IS ONE OF THE BENEFICIARY OF ACCOMMODATION ENTRIES OF BOGUS P URCHASE BILLS ISSUED BY HAWALA DEALERS. ACCORDING TO THE LD. AO, ALTHOUGH ASSESEE HAS FILED CERTAIN BASIC EVIDENCES, BUT FAIL ED TO FILE FURTHER EVIDENCE IN THE BACKDROP OF CLEAR FINDING BY THE SA LES TAX DEPARTMENT, MAHARASHTRA THAT THOSE PARTIES ARE INVO LVED IN PROVIDING ACCOMMODATION ENTRIES WITHOUT ACTUAL DELIVERY OF GO ODS. THE LD. AO HAD ALSO TAKEN SUPPORT FROM THE INVESTIGATION CONDU CTED DURING THE COURSE OF ASSESSMENT PROCEEDINGS, AS PER WHICH NOTI CE ISSUED U/S 133(6) TO THE PARTY WERE RETURNED UN-SERVED BY THE POSTAL AUTHORITIES. THEREFORE, HE CAME TO THE CONCLUSION THAT PURCHASE FROM THE SAID PARTY IS BOGUS IN NATURE. IT IS THE CONTENTIONS OF THE ASSESSEE BEFORE THE LOWER AUTHORITIES THAT PURCHASE FROM THE ABOVE PARTY ARE SUPPORTED BY NECESSARY EVIDENCES. IT HAS FURNISHED ALL POSSIBLE EVIDENCES, INCLUDING BOOKS OF ACCOUNTS; STOCK DETAI LS AND BANK STATEMENT TO PROVE THAT PAYMENT AGAINST SAID PURCHA SES HAVE BEEN MADE THROUGH PROPER BANKING CHANNELS. ITA NO.5118/MUM/2018 MAGANLAL M.PATEL 7 6 HAVING CONSIDERED ARGUMENTS OF THE LD. DR AND ALS O, MATERIAL AVAILABLE ON RECORD, WE FIND THAT BOTH THE SIDES FA ILED TO PROVE THE CASE IN THEIR FAVOUR WITH NECESSARY EVIDENCES. ALTH OUGH, ASSESSEE HAS FILED CERTAIN BASIC EVIDENCES, BUT FAILED TO FI LE FURTHER EVIDENCES TO CONCLUSIVELY PROVE PURCHASES TO SATISFACTIONS OF THE LD.AO. AT THE SAME TIME, THE LD. AO HAD ALSO FAILED TO TAKE THE I NVESTIGATION TO A LOGICAL CONCLUSION BY CARRYING OUT NECESSARY ENQUIR ES, BUT HE SOLELY RELIED UPON INFORMATION RECEIVED FROM INVESTIGATIO N WING, WHICH WAS FURTHER SUPPORTED BY INFORMATION RECEIVED FROM MAHA RASHTRA SALES TAX DEPARTMENT. UNDER THESE CIRCUMSTANCES, IT IS D IFFICULT TO ACCEPT ARGUMENTS OF BOTH THE SIDES. FURTHER, IN A SITUATIO N WHERE PURCHASE IS MADE FROM ALLEGED HAWALA DEALERS, VARIOUS HIGH C OURTS AND TRIBUNALS HAD CONSIDERED AN IDENTICAL ISSUE IN LIGH T OF INVESTIGATION CARRIED OUT BY THE SALES TAX DEPARTMENT AND HELD TH AT IN CASE PURCHASES CLAIMS TO HAVE MADE FROM ALLEGED HAWALA D EALERS, ONLY PROFIT ELEMENT EMBEDDED IN THOSE PURCHASES NEEDS TO BE TAXED, BUT NOT TOTAL PURCHASE FROM THOSE PARTIES. THE HONBLE GUJARAT HIGH COURT, IN THE CASE OF CIT VS SIMITH P.SHETH 356 ITR 451 HAD CONSIDERED A SIMILAR ISSUE AND HELD THAT AT THE TIM E OF ESTIMATION OF PROFIT FROM ALLEGED BOGUS PURCHASES NO UNIFORM YARD STICKS COULD BE ADOPTED, BUT IT DEPENDS UPON FACTS OF EACH CASE. TH E ITAT, MUMBAI, IN NUMBER OF CASES HAD CONSIDERED AN IDENTICAL ISSU E AND DEPENDING UPON FACTS OF EACH CASE, DIRECTED THE LD.AO TO ESTI MATE PROFIT OF 10 TO 15% ON TOTAL ALLEGED BOGUS PURCHASES. IN THIS CA SE, CONSIDERING THE NATURE OF BUSINESS OF THE ASSESSEE THE LD. AO H AS ESTIMATED 12.50% PROFIT, WHICH WAS CONFIRMED BY THE LD. CIT ( A). IN THIS CASE, THE TRIBUNAL FOR ASST YEAR 2009-10 HAS APPROVED 12. 50% PROFIT ON PURCHASES, BUT REDUCED GP ALREADY DECLARED FOR THE YEAR. THEREFORE, ITA NO.5118/MUM/2018 MAGANLAL M.PATEL 8 CONSIDERING FACTS AND CIRCUMSTANCES OF THIS CASE AN D CONSISTENT WITH VIEW TAKEN BY THE CO-ORDINATE BENCH IN ASSESSEE OWN CASE FOR EARLIER YEAR, WE DIRECT THE AO TO ESTIMATE 12.50% P ROFIT ON ALLEGED BOGUS PURCHASES AND ALLOW FURTHER DEDUCTION TOWARDS GP ALREADY DECLARED FOR THE YEAR. 7. IN THE RESULT, APPEAL FILED BY THE ASSESSE IS PA RTLY ALLOWED. ORDER PRONOUNCED IN THE OPEN COURT ON THIS 29/01/2 020 SD/- (SAKTIJIT DEY) SD/- (G. MANJUNATHA) JUDICIAL MEMBER ACCOUNTANT MEMBER MUMBAI ; DATED 29/01/2020 THIRUMALESH SR.PS COPY OF THE ORDER FORWARDED TO : BY ORDER, (ASSTT. REGISTRAR) ITAT, MUMBAI 1. THE APPELLANT 2. THE RESPONDENT. 3. THE CIT(A), MUMBAI. 4. CIT 5. DR, ITAT, MUMBAI 6. GUARD FILE. //TRUE COPY//