ION EXCHANGE WATERLEAU LTD., MUMBAI V. ITO 6(3)(2), MUMBAI

ITA 5209/MUM/2016

• Counselvise Citation: [2018] 121 COUNSELVISE.COM (IT) 7481 (ITAT-MUMBAI)
• Duration Of Justice: 1 year(s) 8 month(s) 2 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 19-04-2018
• Appeal Filed By: Assessee
• Order Result: Partly Allowed
• Bench Allotted: Not Allotted
• Assessment Year: 2009-2010
• Appeal Filed On: 17-08-2016
• Result in Favour of: Partly Allowed
• Court: TRIBUNAL
• Department Lawyers: SAURABH KUMAR RAIDR
• Assessee Lawyers: R R V RAGHAVAN
• Keywords: Bogus purchase; Capital asset; Depreciation; Question of law

Judgement Text

, , , IN THE INCOME TAX APPELLATE TRIBUNAL MUMBAI BENCHES I, MUMBAI , , , BEFORE SHRI JOGINDER SINGH, JUDICIAL MEMBER, AND SHRI RAMIT KOCHAR, ACCOUNTANT MEMBER ITA NO.5209/MUM/2016 ASSESSMENT YEAR: 2009-10 ION EXCHANGE WATERLEAU LTD ION HOUSE, 4 TH FLOOR, DR. E. MOSES ROAD, MAHALAKSHMI, MUMBAI-400011 / VS. ITO-6(3)(2), ROOM NO.503, 5 TH FLOOR, AAYAKAR BHAVAN, M. K. ROAD, MUMBAI-400020 ( /ASSESSEE) ( ! / REVENUE) PAN. NO. AABCI4403P / ASSESSEE BY SHRI R.R.V.RAGHAVAN ! / REVENUE BY SHRI SAURABH KUMAR RAI-DR ' !# $ % / DATE OF HEARING : 19/04/2018 $ % / DATE OF ORDER: 19/04/2018 ION EXCHANGE WATERLEAU LTD. ITA NO.5209/MUM/2016 2 / O R D E R PER JOGINDER SINGH (JUDICIAL MEMBER ) THE ASSESSEE IS AGGRIEVED BY THE IMPUGNED ORDER DA TED 04/05/2016 OF THE LD. FIRST APPELLATE AUTHORITY, MU MBAI, CONFIRMING THE ASSESSMENT ORDER WITH RESPECT TO ALL EGED BOGUS PURCHASES FROM M/S NB ENTERPRISES, IGNORING THE STO CK RECORD, TRANSPORTATION BILLS AND THE PAYMENT WAS MADE THROU GH BANKING CHANNEL. 2. DURING HEARING, THE LD. COUNSEL FOR THE ASSESSE E, SHRI R.R. V. RAGHAVAN, CLAIMED THAT THE TOTAL TURNOVER O F THE ASSESSEE, DURING THE RELEVANT TIME, WAS RS.38,15,84 ,089/- AND THE LD. ASSESSING OFFICER MADE THE ADDITION OF RS.8 ,48,728/- ON ACCOUNT OF BOGUS PURCHASES. IT WAS CONTENDED THAT T HE NECESSARY DOCUMENTS LIKE STOCK REGISTER, PURCHASE D ETAILS AND EVIDENCES OF TRANSPORTATION OF GOODS WERE DULY FURN ISHED BY THE ASSESSEE ALONG WITH PROOF OF PAYMENT. ON THE OTHER HAND, THE LD. DR, SHRI SAURABH KUMAR RAI, DEFENDED THE ADDITI ON MADE BY THE LD. ASSESSING OFFICER AND CONFIRMED BY THE L D. COMMISSIONER OF INCOME TAX (APPEAL) BY CONTENDING T HAT THE ASSESSEE COULD NOT PRODUCE THE NECESSARY EVIDENCE. ION EXCHANGE WATERLEAU LTD. ITA NO.5209/MUM/2016 3 2.1. WE HAVE CONSIDERED THE RIVAL SUBMISSIONS AND PERUSED THE MATERIAL AVAILABLE ON RECORD. BEFORE AD VERTING FURTHER, WE DEEM IT APPROPRIATE TO CONSIDER VARIOUS DECISIONS FROM HON'BLE HIGH COURTS / HON'BLE APEX COURT, SO T HAT WE CAN REACH TO A FAIR CONCLUSION. THE HON'BLE GUJARAT HI GH COURT IN SANJAY OILCAKES INDUSTRIES VS. CIT (2009) 316 ITR 2 74 (GUJ.) HELD AS UNDER:- 11. HAVING HEARD THE LEARNED ADVOCATES APPEARING F OR THE RESPECTIVE PARTIES, IT IS APPARENT THAT NO INTE RFERENCE IS CALLED FOR IN THE IMPUGNED ORDER OF THE TRIBUNAL DATED APRIL 29, 1994, READ WITH THE ORDER DATED SEPTEMBER 29, 1994, MADE IN MISCELLANEOUS APPLICATION. IN THE PRINCIPAL ORDER THE TRIBUNAL HAS RECORDED THE FOLLO WING 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 INCOME-TAX (APPEALS) HAS GONE THROUGH THE PURCHASE PRICES OF THE RAW MATERIAL PREVALENT AT THE TIME AND RIGHTLY CAME TO THE CON CLUSION THAT THE DISALLOWANCE TO THE EXTENT OF 25 PER CENT. WAS CALLED FOR. IT IS ESTABLISHED THAT THE PARTIES WERE NOT TRACEABLE ; THEY OPENED THE BANK ACCOUNTS IN WHICH THE CHEQUES WERE CREDITED BUT SOON THEREAFTER THE AMOUNTS WERE WITHDRAWN BY BEARER CHEQUES. THAT FAIRLY LEADS TO THE CONCLUSION THAT THESE PARTIES WERE PERHAPS CREATION OF THE ASSESSEE ITSELF FOR THE PURPOSE OF BANKING PURCHASES INTO BOOKS OF ACCOUNT ION EXCHANGE WATERLEAU LTD. ITA NO.5209/MUM/2016 4 BECAUSE THE PURCHASES WITH BILLS WERE NOT FEASIBLE. THUS, THE 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 ASSESSEE TO INFLATE THE PRICES OF RAW MATERIALS. ACCORDINGLY, AN ADDITION AT THE RATE OF 25 PER CENT. FOR EXTRA PRICE PAID BY THE ASSESSEE THAN OVER AND ABOVE THE PREVALENT PRICE IS FAIR AND REASONABLE AND WE ACCORDINGLY CONFIRM THE FINDING OF THE COMMIS SIONER OF INCOME-TAX (APPEALS).' 12. THUS, IT IS APPARENT THAT BOTH THE COMMISSIONER (APPEALS) AND THE TRIBUNAL HAVE CONCURRENTLY ACCEPTED THE FINDING OF THE ASSESSING OFFICER THAT THE APPARENT SELLERS WHO HAD ISSUED SALE BILLS WERE NOT TRACEABLE. THAT GOODS WERE RECEIVED FROM THE PARTIES OTHER THAN THE PERSONS WHO HAD ISSUED BILLS FOR SUCH GOODS. THOUGH THE PURCHASES ARE SHOWN TO HAVE BEEN MADE BY MAKING PAYMENT THEREOF BY ACCOUNT PAYEE CHEQUES, THE CHEQUES HAVE BEEN DEPOSITED IN BANK ACCOUNTS OSTENSIBLY IN TH E NAME OF THE APPARENT SELLERS, THEREAFTER THE ENTIRE AMOUNTS HAVE BEEN WITHDRAWN BY BEARER CHEQUES AND THERE IS NO TRACE OR IDENTITY OF THE PERSON WITHDRAWING THE AMOUNT FROM THE BANK ACCOUNTS. IN THE LIGHT OF THE AFORESAID NATURE OF EVIDENCE IT IS NOT POSSIBLE TO REC ORD A DIFFERENT CONCLUSION, DIFFERENT FROM THE ONE RECORDED BY THE COMMISSIONER (APPEALS) AND THE TRIBUNAL CONCURRENTLY HOLDING THAT THE APPARENT SELLERS WERE NOT GENUINE, OR WERE ACTING AS 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 SUCH CIRCUMSTANCES, THE LIKELIHOOD OF THE PURCHASE PRI CE BEING INFLATED CANNOT BE RULED OUT AND THERE IS NO MATERIAL 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. THE ISSUE IS WHETHER THE ION EXCHANGE WATERLEAU LTD. ITA NO.5209/MUM/2016 5 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 T HE RECIPIENTS NOT BEING TRACEABLE FOR THE PURPOSE OF INQUI RY AS TO WHETHER THE PAYMENTS MADE BY THE ASSESSEE HAVE BEEN ACTUALLY RECEIVED BY THE APPARENT SELLERS. HENCE, THE ESTIMATE MADE BY THE TWO APPELLATE AUTHORITIES DOES NOT WARRANT INTERFERENCE. EVEN OTHERWISE, WHETHER THE ESTIMATE SHOULD BE AT A PARTICULAR SUM OR AT A DIFFEREN T SUM, CAN NEVER BE AN ISSUE OF LAW. IN THE AFORESAID CASE, THE HON'BLE HIGH COURT ACCEP TED THAT THE APPARENT SELLERS, WHO ISSUED THE SAID BILLS WER E NOT TRACEABLE AND THE GOODS RECEIVED FROM PARTIES OTHER THAN THE PERSONS, WHO HAD ISSUED THE BILLS FOR SUCH GOODS. T HE 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 SITUATION , 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 TAXMAN 71 OBSERVED THAT AN ELEMENT OF GUESSWORK IS INEVITABLE IN CASES, WHERE ESTIMATION OF INCOME IS WARRANTED. ION EXCHANGE WATERLEAU LTD. ITA NO.5209/MUM/2016 6 2.2 THE HON'BLE GUJARAT HIGH COURT IN CIT VS BHOLA NATH POLY FAB. PVT. LTD. (2013) 355 ITR 290 (GUJ.) 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 FROM BOGUS PARTIES, NEVERTHELESS, TH E PURCHASES THEMSELVES WERE NOT BOGUS. THE TRIBUNAL ADVERTED TO THE FACTS AND DATA ON RECORD AND CAME T O THE CONCLUSION THAT THE ENTIRE QUANTITY OF OPENING STOCK, PURCHASES AND THE QUANTITY MANUFACTURED DURING THE YEAR UNDER CONSIDERATION WERE SOLD BY THE ASSESSEE. THEREFORE, THE PURCHASES OF THE ENTIRE 1,02,514 MET RES OF CLOTH WERE SOLD DURING THE YEAR UNDER CONSIDERAT ION. THE TRIBUNAL, THEREFORE, ACCEPTED THE ASSESSEE'S CONTENTION THAT THE FINISHED GOODS WERE PURCHASED B Y THE ASSESSEE, MAY BE NOT FROM THE PARTIES SHOWN IN THE ACCOUNTS, BUT FROM OTHER SOURCES. IN THAT VIEW OF T HE MATTER, THE TRIBUNAL WAS OF THE OPINION THAT NOT TH E ENTIRE AMOUNT, BUT THE PROFIT MARGIN EMBEDDED IN SU CH AMOUNT WOULD BE SUBJECTED TO TAX. THE TRIBUNAL RELI ED ON ITS EARLIER DECISION IN THE CASE OF SANKET STEEL TRADERS AND ALSO MADE REFERENCE TO THE TRIBUNAL'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 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 PURCHASE THE CLOTH AND SELL THE FINISHED GOODS. IN THAT VIEW OF THE MATTER, AS NATURAL COROLLARY, NOT THE E NTIRE ION EXCHANGE WATERLEAU LTD. ITA NO.5209/MUM/2016 7 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 OI LCAKE INDUSTRIES V. CIT [2009] 316 ITR 274 (GUJ). SUCH DECISION IS ALSO FOLLOWED BY THIS COURT IN A JUDGME NT DATED AUGUST 16, 2011, IN TAX APPEAL NO. 679 OF 201 0 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 EVIDE NCE ON RECORD HAS FOUND THAT THE ASSESSEE HAD IN FACT M ADE 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 CAS E OF VIJAY PROTEINS (SUPRA) RESTRICTED THE DISALLOWANCE TO 20 PER CENT. THE TRIBUNAL IN THE IMPUGNED ORDER HAS FOLLOWED ITS EARLIER ORDER IN THE CASE OF VIJAY PRO TEINS TO THE LETTER AND ENHANCED THE DISALLOWANCE TO 25 PER CENT. THUS, IN BOTH CASES, THE DECISION OF THE COMMISSIONER (APPEALS) AS WELL AS THAT OF THE TRIBU NAL IS BASED ON ESTIMATE. THIS HIGH COURT IN THE CASE O F SANJAY OIL CAKE [2009] 316 ITR 274 (GUJ) HAS HELD THAT WHETHER AN ESTIMATE SHOULD BE AT A PARTICULAR SUM O R 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 THERE IS ALWAYS A CERTAIN DEGREE OF GUES S WORK. NO DOUBT, THE AUTHORITIES SHOULD TRY TO MAKE AN HONEST AND FAIR ESTIMATE OF THE INCOME EVEN IN A BE ST JUDGMENT ASSESSMENT AND SHOULD NOT ACT TOTALLY ION EXCHANGE WATERLEAU LTD. ITA NO.5209/MUM/2016 8 ARBITRARILY 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 TRIBUN AL, BEING BASED ON AN ESTIMATE, DOES NOT GIVE RISE TO A NY 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) WHEREIN THE TRIBUNAL HAS RESTRICTED TH E ADDITION TO 25 PER CENT. ON SIMILAR FACTS. IN THE CIRCUMSTANCES, FOR THE REASONS STATED HEREINABOVE, THE SAID GROUNDS OF APPEAL DO NOT GIVE RISE TO ANY QUES TION OF LAW. 10. AS REGARDS THE PROPOSED QUESTION (B) WHICH PERTAINS TO THE DELETION OF ADDITION OF RS. 7,88,59 0 MADE ON ACCOUNT OF INFLATION OF EXPENSES PAID TO ME TAL AND MACHINE TRADING CO. (MMTC), THE ASSESSING OFFIC ER HAS FOUND THAT MMTC WAS A PARTNERSHIP FIRM OF SHRI NITIN GAJJAR ALONG WITH HIS FATHER AND BROTHER OPER ATING FROM BHAVNAGAR. A PERUSAL OF THEIR TRANSACTIONS WIT H THE ASSESSEE INDICATED THAT THERE IS SOME INFLATION OF EXPENSES AS DETAILED IN PARAGRAPH 6.1 OF THE ASSESSMENT ORDER. AFTER CONSIDERING THE EVIDENCE ON RECORD, THE ASSESSING OFFICER DISALLOWED THE AMOUNT RS. 7,88,590 ON ACCOUNT OF PAYMENT MADE TO MMTC. 11. THE ASSESSEE PREFERRED AN APPEAL BEFORE THE COMMISSIONER (APPEALS), WHO UPON APPRECIATION OF TH E EVIDENCE ON RECORD FOUND THAT THE ASSESSING OFFICER HAD NOT REJECTED THE GENUINENESS OF THE PURCHASES MADE FROM MMTC WHILE MAKING THE DISALLOWANCE. HIS OBSERVATIONS WERE BASED ON INFLATION OF RATES WHICH WERE BEING CHARGED FROM THE ASSESSEE. ACCORDING TO THE COMMISSIONER (APPEALS), THOUGH MMTC IN SOME RESPECT COULD BE ATTRIBUTED TO BE ASSOCIATED WITH THE ASSES SEE- COMPANY, STILL IT COULD NOT BE EXPECTED THAT MMTC W AS CARRYING OUT ITS BUSINESS WITHOUT ANY MOTIVE OR PRO FIT. ACCORDING TO THE COMMISSIONER (APPEALS), IT WAS PRO VED BY THE ASSESSEE THAT THE RATES CHARGED BY MMTC WERE ION EXCHANGE WATERLEAU LTD. ITA NO.5209/MUM/2016 9 COMPARABLE WITH THE PREVAILING MARKET RATES, NO SUC H ADDITION CAN STAND. THE COMMISSIONER (APPEALS) TOOK NOTE OF THE FACT THAT IT WAS NOT THE CASE OF THE AS SESSING OFFICER THAT THE PURCHASES HAD BEEN DIRECTLY EFFECT ED FROM THIRD PARTIES AND NOT DIRECTLY FROM MMTC ; THE DIFFERENCE COULD NOT BE THE NET PROFIT 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 WAS ACCORDINGLY OF THE VIEW TH AT 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 PREVAILING MARKET RATES AND THAT MMTC HAD INCURRED CERTAIN EXPENDITURE IN ENGAGING PERSONNEL IN THE OFFICE AND OTHER OPERATIO NS AND WOULD MAKE SOME INCOME FROM THE ENTIRE EXERCISE . IN THE CIRCUMSTANCES, THE PURCHASES MADE BY THE ASSESSEE FROM MMTC WOULD NOT BE HIT BY THE PROVISIO NS 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 TH E COMMISSIONER (APPEALS) AS WELL AS THE TRIBUNAL. IT IS NOT THE CASE OF THE REVENUE THAT THE TRIBUNAL HAS T AKEN INTO ACCOUNT ANY IRRELEVANT MATERIAL OR THAT ANY RE LEVANT MATERIAL HAS NOT BEEN TAKEN INTO CONSIDERATION. IN THE ABSENCE OF ANY MATERIAL TO THE CONTRARY BEING POINT ED OUT ON BEHALF OF THE REVENUE, THE IMPUGNED ORDER BE ING BASED ON CONCURRENT FINDINGS OF FACT RECORDED BY TH E TRIBUNAL UPON APPRECIATION OF THE EVIDENCE ON RECOR D, DOES NOT GIVE RISE TO ANY QUESTION OF LAW IN SO FAR AS THE PRESENT GROUND OF APPEAL IS CONCERNED. 14. IN RELATION TO THE PROPOSED QUESTION (F) WHICH RELATES TO THE DELETION OF ADDITION OF RS. 44,54,42 6 MADE ON ACCOUNT OF PURCHASE OF CRANE AND ALLOWING DEPRECIATION ON THE SAME, THE ASSESSING OFFICER OBSERVED THAT THE ASSESSEE HAD PURCHASED A CRAWLER ION EXCHANGE WATERLEAU LTD. ITA NO.5209/MUM/2016 10 CRANE FOR AN AMOUNT OF RS. 24,61,000 EXCLUDING THE COST OF SPARE PARTS OF RS. 14,98,490. THE ASSESSING OFFI CER AFTER EXAMINING THE EVIDENCE ON RECORD AND CONSIDER ING THE EXPLANATION GIVEN BY THE ASSESSEE, MADE ADDITIO N OF RS. 44,54,426, RS. 39,59,490 BEING THE PURCHASE PRICE OF THE CRANE ALONG WITH ITS SPARE PARTS AND R S. 4,94,936 BEING DEPRECIATION CLAIMED BY THE ASSESSEE . THE COMMISSIONER (APPEALS), UPON APPRECIATION OF EVIDENCE ON RECORD, WAS OF THE VIEW THAT THE ASSESS ING OFFICER HAS NOT APPRECIATED THE FACTS OF THE CASE PROPERLY AND HAD MADE DISALLOWANCE WHICH WAS NOT PERMITTED BY THE INCOME-TAX ACT. IT WAS HELD THAT DISALLOWANCE COULD ONLY HAVE BEEN MADE IN RESPECT O F EXPENSES DEBITED TO THE PROFIT AND LOSS ACCOUNT WHEREAS IN THE PRESENT CASE THE PURCHASE OF CRANE A ND SPARE PARTS OF THE CRANE AND OTHER MACHINERIES WERE IN THE NATURE OF ACQUISITION OF CAPITAL ASSET. ACCORDI NG 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 CRANE AND OTHER PARTS ARE BOGUS. UPON APPRECIATION OF THE MATERIAL ON RECORD THE COMMISSI ONER (APPEALS) FOUND THAT THE ASSESSING OFFICER HAS SIMP LY BRUSHED ASIDE ALL THE EVIDENCE ON ACCOUNT OF TECHNI CAL INFIRMITIES AND THAT THE EVIDENCE SUCH AS OCTROI RE CEIPT ; HYPOTHECATION OF THE CRANE TO THE BANK; EXISTENCE O F THE CRANE EVEN TILL DATE WITH THE ASSESSEE CONCLUSIVELY PROVED THAT THE CRANE WAS PURCHASED AND IT WAS IN U SE EVEN AS ON DATE WITH THE ASSESSEE. THE COMMISSIONER (APPEALS) ACCORDINGLY FOUND THAT THERE WAS NO SCOPE FOR ANY DISALLOWANCE AND ACCORDINGLY DELETED THE DISALLOWANCE MADE ON ACCOUNT OF PURCHASE OF CRANE AND ALLOWED THE DEPRECIATION AS CLAIMED BY THE ASSESSEE. 15. THE TRIBUNAL, IN THE IMPUGNED ORDER, HAS NOTED THAT THE COST OF CRANE WAS NEVER CLAIMED BY THE ASSESSEE IN THE RETURN OF INCOME. BEFORE THE TRIBUNAL, THE ASSE SSEE PRODUCED THE EVIDENCE THAT THE CRANE IN QUESTION WA S REGISTERED WITH THE RTO AND THE SAME WAS WHOLLY AND EXCLUSIVELY USED FOR THE PURPOSES OF ITS BUSINESS. THE ION EXCHANGE WATERLEAU LTD. ITA NO.5209/MUM/2016 11 TRIBUNAL, THEREFORE, HELD THAT THE COMMISSIONER (APPEALS) WAS LEGALLY AND FACTUALLY CORRECT IN DELE TING THE DISALLOWANCE OF COST 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 CO ST OF THE CRANE IN THE RETURN NOR HAD IT DEBITED THE EXPENSES TO THE PROFIT AND LOSS ACCOUNT, AND AS SUC H THE QUESTION OF DISALLOWING THE SAME AND ADDING THE SAME TO THE INCOME WOULD NOT ARISE. MOREOVER, IN TH E ABSENCE OF ANY EVIDENCE TO INDICATE THAT THE PURCHA SE WAS BOGUS OR THAT THE CRANE IN FACT 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 T HE CRANE, AND HAD NOT DEBITED THE EXPENSES TO THE PROF IT AND LOSS ACCOUNT, NO ADDITION COULD HAVE BEEN MADE IN RESPECT OF THE PURCHASE PRICE NOR COULD HAVE DEPRECIATION BEEN DISALLOWED IN RESPECT THEREOF. TH E TRIBUNAL WAS, THEREFORE, JUSTIFIED IN DELETING THE ADDITION AS WELL AS DISALLOWANCE OF DEPRECIATION. 17. IN THE LIGHT OF THE AFORESAID DISCUSSION, IT IS NOT POSSIBLE TO STATE THAT THERE IS ANY LEGAL INFIRMITY IN THE IMPUGNED ORDER MADE BY THE TRIBUNAL SO AS TO WARRAN T INTERFERENCE. IN THE ABSENCE OF ANY QUESTION OF LAW , MUCH LESS, A SUBSTANTIAL QUESTION OF LAW, THE APPEA L 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 BOGUS PURCHASES ALLEGEDLY MADE BY THE ASSESSEE FROM M/S. THAKKAR AGRO INDUSTRIAL CHEM SUPPLIES P. LTD. ACCORDING TO THE REVENUE, THE ION EXCHANGE WATERLEAU LTD. ITA NO.5209/MUM/2016 12 DIRECTOR OF M/S. THAKKAR AGRO INDUSTRIAL CHEM SUPPLIES P. LTD. IN HIS STATEMENT HAD STATED THAT THERE WERE NO SALES / PURCHASES BUT THE TRANSACTIONS WERE ONLY ACCOMMODATION BILLS NOT INVOLVING ANY TRANSACTIONS. THE TRIBUNAL HAS RECORDED A FINDING OF FACT THAT THE ASSESSEE HAD DISPUTED THE CORRECTNESS OF THE ABOVE STATEMENT AND ADMITTEDLY THE ASSESSEE WAS NOT GIVEN ANY OPPORTUNITY TO CROSS EXAMINE THE CONCERNED DIRECTOR OF M/S. THAKKAR AGRO INDUSTRIAL CHEM SUPPLIES P. LTD. WHO HAD MADE THE ABOVE STATEMENT. THE APPELLATE AUTHORITY HAD SOUGHT REMAND REPORT AND EVEN AT THAT STAGE THE GENUINENESS OF THE STATEMENT HAS NOT BEEN ESTABLISHED BY ALLOWING CROSS EXAMINATION OF THE PERSON WHOSE STATEMENT WAS RELIED UPON BY THE REVENUE. IN THESE CIRCUMSTANCES, THE DECISION OF THE TRIBUNAL BEING BASED ON THE FAC T, NO SUBSTANTIAL QUESTION 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 DELET ED THE ADDITIONS ON ACCOUNT OF BOGUS PURCHASES NOT ONL Y ON THE BASIS OF STOCK STATEMENT, I.E., RECONCILIATI ON 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. SIMILAR LY, THE SALES HAVE NOT BEEN DOUBTED AND IT IS AN ADMITT ED POSITION THAT SUBSTANTIAL AMOUNT OF SALES HAVE BEEN MADE TO THE GOVERNMENT DEPARTMENT, I.E., DEFENCE RESEARCH AND DEVELOPMENT LABORATORY, HYDERABAD. FURTHER, THERE WERE CONFIRMATION LETTERS FILED BY T HE SUPPLIERS, COPIES OF INVOICES FOR PURCHASES AS WELL AS ION EXCHANGE WATERLEAU LTD. ITA NO.5209/MUM/2016 13 COPIES OF BANK STATEMENT ALL OF WHICH WOULD INDICAT E THAT THE PURCHASES WERE IN FACT MADE. IN OUR VIEW, MERELY BECAUSE THE SUPPLIERS HAVE NOT APPEARED BEFO RE THE ASSESSING OFFICER OR THE COMMISSIONER OF INCOME - TAX (APPEALS), ONE CANNOT CONCLUDE THAT THE PURCHAS ES WERE NOT MADE BY THE RESPONDENT-ASSESSEE. THE ASSESSING OFFICER AS WELL AS THE COMMISSIONER OF INCOME-TAX (APPEALS) HAVE DISALLOWED THE DEDUCTION OF RS. 1.33 CRORES ON ACCOUNT OF PURCHASES MERELY ON T HE BASIS OF SUSPICION BECAUSE THE SELLERS AND THE CANVASSING AGENTS HAVE NOT BEEN PRODUCED BEFORE THEM. WE FIND THAT THE ORDER OF THE TRIBUNAL IS WEL L A REASONED ORDER TAKING INTO ACCOUNT ALL THE FACTS BE FORE CONCLUDING THAT THE PURCHASES OF RS. 1.33 CRORES WA S NOT BOGUS. NO FAULT CAN BE FOUND WITH THE ORDER DAT ED 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 U RGED ON BEHALF OF THE ASSESSEE THAT THE TRANSACTIONS IN QUESTION WERE NORMAL BUSINESS TRANSACTIONS AND THE ASSESSEE HAD MADE PAYMENTS BY CHEQUES. THE PARTIES DID NOT COME FORWARD AND IF THEY DID NOT COME, THE ASSESSEE SHOULD NOT SUFFER. HOWEVER, ON BEHALF OF T HE REVENUE, IT WAS URGED THAT DETAILED INQUIRIES WERE MADE AND THEREAFTER THE CONCLUSION WAS REACHED. THE TRIB UNAL FOUND THAT THERE WAS NO EVIDENCE ANYWHERE THAT THES E CONCERNS GAVE BOGUS VOUCHERS TO THE ASSESSEE. NO DO UBT, THERE WERE CERTAIN DOUBTFUL FEATURES, BUT THE EVIDE NCE WAS NOT ADEQUATE TO CONCLUDE THAT THE PURCHASES MAD E BY THE ASSESSEE FROM THE SAID PARTIES WERE BOGUS. T HE TRIBUNAL ACCORDINGLY, DID NOT SUSTAIN THE ADDITION RETAINED BY THE APPELLATE ASSISTANT COMMISSIONER. H ENCE, AT THE INSTANCE OF THE REVENUE, THE AFORESAID QUEST ION HAS BEEN REFERRED TO THIS COURT FOR OPINION. ION EXCHANGE WATERLEAU LTD. ITA NO.5209/MUM/2016 14 ON A PERUSAL OF THE ORDER OF THE TRIBUNAL, IT CLEAR LY APPEARS THAT WHETHER THE SAID TRANSACTIONS WERE BOG US OR NOT WAS A QUESTION OF FACT. THE TRIBUNAL HAS ALS O POINTED OUT THAT NOTHING IS SHOWN TO INDICATE THAT ANY PART OF THE FUND GIVEN BY THE ASSESSEE TO THESE PAR TIES CAME BACK TO THE ASSESSEE IN ANY FORM. IT IS FURTHE R 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 THE ASSESSEE IN ANY WAY. WITH THE SE OBSERVATIONS, THE TRIBUNAL ULTIMATELY HAS OBSERVED THAT THERE ARE CERTAIN DOUBTFUL FEATURES, BUT THE EVIDEN CE 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 DURATION AND THE PAYMENTS WERE GIVEN BY CHEQUES. WH EN THAT IS SO, IT CANNOT BE SAID THAT THE ENTRIES FOR THE PURCHASES OF THE GOODS MADE IN THE BOOKS OF ACCOUNT WERE BOGUS ENTRIES. WE, THEREFORE, DO NOT FIND THAT THE CONCLUSION ARRIVED AT BY THE TRIBUNAL IS AGAINST TH E 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 CO STS. 2.7 THE MUMBAI BENCH OF THE TRIBUNAL IN THE CASE O F 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) .BEFORE HIM IT WAS ARGUED THAT ASSESSEE HAD FILED COPIES OF BILLS OF PURCHASE FROM DKE AND NBE, THAT BOTH THE SUPPLIE RS WERE REGISTERED DEALERS AND WERE CARRYING PROPER VA T AND REGISTRATION NO.S, THAT LEDGER ACCOUNTS OF THE PARTIES ION EXCHANGE WATERLEAU LTD. ITA NO.5209/MUM/2016 15 IN ASSESSEE'S BOOKS SHOWED BILLS ACCOUNTED FOR, THA T PAYMENT WAS MADE BY CHEQUES, THAT A CERTIFICATE FRO M THE BANKER GIVING DETAILS OF CHEQUE PAYMENT TO THE SAID PARTIES WAS ALSO FURNISHED. COPIES OF THE CONSIGNME NT, RECEIVED FROM THE GOVERNMENT APPROVED TRANSPORT CONTRACTORS SHOWING THAT MATERIAL PURCHASED WAS ACTUALLY DELIVERED AT THE SITE WAS FURNISHED BEFORE THE AO. IT WAS ALSO ARGUED THAT SOME OF THE MATERIAL PURCHASED FROM THE SAID PARTIES WERE LYING PART OF CLOSING STOCK AS ON 31.03.2009 AS PER THE STATEMENT SUBMITT ED ON RECORD. AFTER CONSIDERING THE ASSESSMENT ORDER A ND THE SUBMISSIONS MADE BY THE ASSESSEE, FAA HELD THAT THE TRANSACTIONS WERE SUPPORTED BY PROPER DOCUMENTARY EVIDENCES, THAT THE PAYMENTS MADE TO THE PARTIES BY THE ASSESSEE WERE IN CONFIRMATION WITH BANK CERTIFICATE ,T HAT THE SUPPLIERS WAS SHOWN AS DEFAULT UNDER THE MAHARASHTRA VAT ACT COULD NOT BE SUFFICIENT EVIDENC ES TO HOLD THAT THE PURCHASES WERE NON-GENUINE, THAT THE AO HAD NOT BROUGHT ANY INDEPENDENT AND RELIABLE EVIDEN CES AGAINST THE ASSESSEE TO PROVE THE NON-GENUINENESS O F THE PURCHASES, THAT THERE WAS NO EVIDENCE REGARDING CAS H RECEIVED BACK FROM THE SUPPLIERS. FINALLY, HE DELET ED THE ADDITION MADE BY THE AO . 2.3.BEFORE US, DEPARTMENTAL REPRESENTATIVE ARGUED THAT BOTH THE SUPPLIERS WERE NOT PRODUCED BEFORE THE AO BY THE ASSESSEE, 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 ORDER OF THE G BENCH OF MUMBAI TRIBUNAL DELIVERED IN THE CASE OF WESTERN EXTRUSION INDUSTRIES. (ITA/6579/MUM/2010- DATED 13.11.2013). AUTHRORISED REPRESENTATIVE (AR) CONTENDED THAT PAYMENTS MADE BY THE ASSESSEE WERE SUPPORTED BY THE BANKERS STATEMENT, 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 BABULA BORANA (282 ITR251), NIKUNJ EXIMP ENTERPRISES (P) LTD. (216TAXMAN171)DELIVERED BY THE HONBLE BOMBAY HIGH COURT. ION EXCHANGE WATERLEAU LTD. ITA NO.5209/MUM/2016 16 2.4.WE HAVE HEARD THE RIVAL SUBMISSIONS AND PERUSED THE MATERIAL BEFORE US. WE FIND THAT AO HAD MADE TH E ADDITION AS ONE OF THE SUPPLIER WAS DECLARED A HAWA LA DEALER BY THE VAT DEPARTMENT. WE AGREE THAT IT WAS A GOOD STARTING POINT FOR MAKING FURTHER INVESTIGATIO N AND TAKE IT TO LOGICAL END. BUT, HE LEFT THE JOB AT INI TIAL POINT ITSELF. SUSPICION OF HIGHEST DEGREE CANNOT TAKE PLA CE OF EVIDENCE. HE COULD HAVE CALLED FOR THE DETAILS OF T HE BANK ACCOUNTS OF THE SUPPLIERS TO FIND OUT AS WHETH ER THERE WAS ANY IMMEDIATE CASH WITHDRAWAL FROM THEIR ACCOUNT. WE FIND THAT NO SUCH EXERCISE WAS DONE. TRANSPORTATION OF GOOD TO THE SITE IS ONE OF THE DE CIDING FACTOR TO BE CONSIDERED FOR RESOLVING THE ISSUE. TH E FAA HAS GIVEN A FINDING OF FACT THAT PART OF THE GOODS RECEIVED BY THE ASSESSEE WAS FORMING PART OF CLOSING STOCK. AS FAR AS THE CASE OF WESTERN EXTRUSION INDUSTRIES. (SUPRA )IS CONCERNED, WE FIND THAT IN THAT MATTER CASH WAS IMMEDIATELY WITHDRAWN BY THE SUPPLIER AND THERE WAS NO EVIDENCE OF MOVEMENT OF GOODS. BUT, IN THE CASE BEFORE US, THERE IS NOTHING, IN THE ORDER OF THE AO , ABOUT THE CASH TRAIAL. SECONDLY, PROOF OF MOVEMENT OF GOO DS IS NOT IN DOUBT. THERERFORE, CONSIDERING THE PECULIAR FACTS AND CIRCUMSTANCES OF THE CASE UNDER APPEAL, WE ARE OF THE OPINION THAT THE ORDER OF THE FAA DOES NOT SUFF ER FROM ANY LEGAL INFIRMITY AND THERE ARE NOT SUFFICIENT EV IDENCE ON FILE TO ENDORSE THE VIEW TAKEN BY THE AO. SO, CONFIRMING THE ORDER OF THE FAA, WE DECIDE GROUND N O.1 AGAINST THE AO . 2.8 THE RATIO LAID DOWN IN THE CASE OF M/S NEETA T EXTILES 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/2015, ORDER DATED 18/03/2016 SUPPORTS THE CASE OF THE ASSESSEE AND THE ION EXCHANGE WATERLEAU LTD. ITA NO.5209/MUM/2016 17 CONCLUSION DRAWN IN THE IMPUGNED ORDER. HOWEVER, AS RELIED BY THE LD. DR, THE HON'BLE GUJARAT HIGH COURT IN THE C ASE OF N.K. INDUSTRIES LTD.,ETC VS DCIT (SUPRA) CONSIDERING VAR IOUS DECISIONS DECIDED THE ISSUE IN FAVOUR OF THE REVENU E AND THE HON'BLE APEX COURT DISMISSED THE SLP VIDE ORDER DAT ED 16/01/2017 (SLP NO.(C) 769 OF 2017). WE FIND THAT I N THAT CASE, DURING SEARCH PROCEEDINGS, CERTAIN BLANK SIGNED CHE QUE BOOKS AND VOUCHERS WERE FOUND AND THUS THE PURCHASES MADE FROM THESE CONCERNS, WERE TREATED AS BOGUS BY THE ASSESS ING 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 INCLUDI NG THE CASE OF VIJAY PROTEINS AND SANJAY OILCAKES INDUSTRIES LTD., M/S WOOLEN CARPET FACTORY VS ITAT (2002) 178 CTR 420 (RAJ.), T HE TRIBUNAL WAS HELD TO BE JUSTIFIED IN DECIDING THE CASE AGAIN ST THE ASSESSEE. THE HON'BLE APEX COURT CONFIRMED THE DEC ISION OF THE HIGH COURT FOR ADDING THE ENTIRE INCOME ON ACCOUNT OF BOGUS PURCHASES (SLP (C) NO.S 769 OF 2017, ORDER DATED 16 /01/2017. ION EXCHANGE WATERLEAU LTD. ITA NO.5209/MUM/2016 18 2.10 IN SUCH TYPE OF CASES, BROADLY, THE LD. COMMI SSIONER OF INCOME TAX (APPEAL) AS WELL AS THIS TRIBUNAL HAS FOLLOWED THE DECISIONS FROM HON'BLE GUJARAT HIGH COURT IN THE CA SE OF SIMIT P. SETH (2013) 356 ITR 451 (GUJ.), CIT VS VIJAY M. MISTRY CONSTRUCTION LTD. (2013) 355 ITR 498 (GUJ.), CIT VS BHOLA NATH POLY FAB. (P.) LTD. (2013) 355 ITR 290 (GUJ.) AND V ARIOUS OTHER DECISIONS OF THE TRIBUNAL AND THE DECISION OF M/S N IKUNJ EXIMP(SUPRA) FROM HON'BLE JURISDICTIONAL HIGH COURT , WHEREIN, THE AGGREGATE DISALLOWANCE WAS RESTRICTED TO 12.5%. ADMITTEDLY, THERE CANNOT BE SALE WITHOUT PURCHASES. THE CASE O F THE REVENUE IS THAT THERE IS BOGUS NATURE OF PURCHASES MADE FROM SUPPLIERS AND THE PARTIES WERE NOT FOUND EXISTING A T THE GIVEN ADDRESSES. 2.11 ADMITTEDLY, IN SUCH TYPE OF CASES, THERE IS N O OPTION BUT TO ESTIMATE THE PROFIT WHICH DEPENDS UPO N THE SUBJECTIVE APPROACH OF AN INDIVIDUAL AND THE MATERI AL FACTS AVAILABLE ON RECORD. IN THE PRESENT APPEAL, THERE W AS AN INFORMATION FROM THE INVESTIGATION WING AND SALES T AX DEPARTMENT THAT THE ASSESSEE OBTAINED ACCOMMODATION BILL AMOUNTING TO RS.8,48,728/- FROM M/S N. B. ENTERPRIS ES. THE ION EXCHANGE WATERLEAU LTD. ITA NO.5209/MUM/2016 19 ASSESSEE WAS ASKED TO SUBMIT THE PURCHASE DETAILS, BILLS AND LEDGER, COPY OF THE SAID CONCERN AND ALL OTHER DOCU MENTARY EVIDENCE FOR TRANSPORTATION OF GOODS. FROM PARA 4.2 OF THE ASSESSMENT ORDER, IT HAS BEEN ADMITTED BY THE LD. A SSESSING OFFICER ITSELF THAT THE ASSESSEE VIDE LETTER DATED 12/02/2015 SUBMITTED THE PURCHASE DETAILS, LEDGER ACCOUNT OF T HE SAID PARTY ALONG WITH BILLS, BANK ACCOUNT SHOWING THE PR OOF OF PAYMENTS. HOWEVER, THE LD. ASSESSING OFFICER OBSERV ED THAT THE ASSESSEE COULD NOT SUBMIT ANY DOCUMENTARY EVIDE NCE THAT GOODS WERE ACTUALLY TRANSACTED AND FURTHER THE PARTY COULD NOT BE PRODUCE. IT IS NOTED THAT THE ADDITION AT THE RATE OF 100% WAS MADE BY THE ASSESSING OFFICER SIMPLY ON THE BASIS THAT THE ASSESSEE FAILED TO PRODUCE THE CORRO BORATIVE EVIDENCE RELATING TO TRANSACTION OF GOODS. KEEPING IN VIEW, THE TOTALITY OF FACTS, THE MATERIAL AVAILABLE ON RECORD AND SPECIFICALLY THE FINANCIAL STATEMENT ALONG WITH AUD IT REPORT OF THE YEAR ENDING 31 ST MARCH, 2009 CONTAINING THE NECESSARY DETAILS, WE FEEL THAT THE ADDITION AT THE RATE OF 1 00% IS NOT JUSTIFIED. THE TOTAL TURNOVER OF THE ASSESSEE IS TO THE TUNE OF RS.38,15,84,089/- OUT OF WHICH THE ADDITION OF RS.8 ,48,728/- IS PURELY BASED UPON PRESUMPTION. THE ASSESSEE DULY ION EXCHANGE WATERLEAU LTD. ITA NO.5209/MUM/2016 20 FURNISHED THE NECESSARY DETAILS BEFORE THE ASSESSIN G OFFICER. STILL CONSIDERING THE LEAKAGE OF REVENUE, WE DEEM I T APPROPRIATE TO DISALLOW 12.5% OF THE BOGUS PURCHASE S (AS AGREED BY THE LD. COUNSEL FOR THE ASSESSEE ALSO) SO THAT THE INTEREST OF THE REVENUE CAN BE SAFEGUARDED AND MORE SPECIFICALLY WHEN THE CLAIMED PURCHASES WERE CONSUM ED BY THE ASSESSEE. THE DECISION FROM HON'BLE BOMBAY HIGH COURT IN THE CASE OF NIKUNJ EXIM ((SUPRA)) CLEARLY COMES TO THE RESCUE OF THE ASSESSEE. OUR VIEW FIND SUPPORT FROM THE AFOREMENTIONED DECISIONS AND MORE SPECIFICALLY HON' BLE JURISDICTIONAL HIGH COURT, THUS, THE APPEAL OF THE ASSESSEE IS PARTLY ALLOWED. FINALLY, THE APPEAL OF THE ASSESSEE IS PARTLY ALLOW ED. THIS ORDER WAS PRONOUNCED IN THE OPEN COURT IN THE PRESENCE OF LD. REPRESENTATIVE FROM BOTH SIDES AT T HE CONCLUSION OF THE HEARING ON 19/04/2018. SD/- SD/- ( RAMIT KOCHAR ) (JOGINDER SINGH) '# / ACCOUNTANT MEMBER $# / JUDICIAL MEMBER ' # MUMBAI; ' DATED :19/04/2018 F{X~{T? P.S/. . . ION EXCHANGE WATERLEAU LTD. ITA NO.5209/MUM/2016 21 %$&'()(*& / COPY OF THE ORDER FORWARDED TO : 1. )*+, / THE APPELLANT 2. -.+, / THE RESPONDENT. 3. / / ' 0 ( )* ) / THE CIT, MUMBAI. 4. / / ' 0 / CIT(A)- , MUMBAI 5. 2!3 - , / )*% )4 , ' # / DR, ITAT, MUMBAI 6. 5 6# / GUARD FILE. / BY ORDER, / (DY./ASSTT. REGISTRAR) , ' # / ITAT, MUMBAI