ACIT CIR. 1, KALYAN, KALYAN V. KAKA RAYON, BHIWANDI

ITA 5365/MUM/2016

• Counselvise Citation: [2020] 110 COUNSELVISE.COM (IT) 2292 (ITAT-MUMBAI)
• Duration Of Justice: 4 year(s) 3 month(s) 1 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 02-12-2020
• Appeal Filed By: Department
• Order Result: Partly Allowed
• Bench Allotted: Not Allotted
• Assessment Year: 2011-2012
• Appeal Filed On: 31-08-2016
• Result in Favour of: Partly Allowed
• Court: TRIBUNAL
• Department Lawyers: SUNIL DESH
• Assessee Lawyers: B P PUROHIT
• Keywords: Bogus purchase; Opportunity of being heard; Principle of natural justice; Onus to prove; Set aside
• Section: 143(3); 37(1); 191; 73; 13; 145(3)

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL MUMBAI BENCH H MUMBAI BEFORE SHRI SAKTIJIT DEY (JUDICIAL MEMBER) AND SHRI N.K. PRADHAN (ACCOUNTANT MEMBER) ITA NO. 1852/PUN/2016 ASSESSMENT YEAR: 2011-12 M/S KAKA RAYON S 29/B, DWARKANATH COMPOUND, VILLAGE KARIWALI, BHIWANDI, THANE-421302 VS. ACIT, CIRCLE-1 MOHAN PLAZA, WAYLE NAGAR, KHADAK PADA KALYAN-421301. PAN NO. AAHFK2626H APPELLANT RESPONDENT ITA NO. 5365/MUM/2016 ASSESSMENT YEAR: 2011-12 ASSTT. COMMISSIONER OF INCOME TAX, CIRCLE-1, 1 ST FLOOR, MOHAN PLAZA, WAYALE NAGAR, KALYAN WEST-421301. VS. M/S KAKA RAYON S 29/B, DWARKANATH COMPOUND, VILLAGE KARIWALI, BHIWANDI, THANE-421302 PAN NO. AAHFK2626H APPELLANT RESPONDENT ASSESSEE BY : MR. B.P. PUROHIT, AR REVENUE BY : MR. SUNIL DESHPANDE, DR DATE OF HEARING : 05/11/2020 DATE OF PRONOUNCEMENT : 02/12/2020 ITA NOS. 1852/MUM/2015 & ORS M/S KAKA RAYON 2 ORDER PER N.K. PRADHAN, A.M. THE CAPTIONED CROSS APPEALS - ONE BY THE ASSESSEE A ND OTHER BY THE REVENUE - ARE DIRECTED AGAINST THE ORDER OF THE COM MISSIONER OF INCOME TAX (APPEALS)-2, THANE [IN SHORT CIT(A)] AND ARISE OU T OF THE ASSESSMENT COMPLETED U/S 143(3) OF THE INCOME TAX ACT 1961 (TH E ACT). AS COMMON ISSUES ARE INVOLVED, WE ARE PROCEEDING TO DISPOSE T HEM OFF BY THIS CONSOLIDATED ORDER FOR THE SAKE OF CONVENIENCE. ITA NO. 1852/PUN/2015 ASSESSMENT YEAR: 2012-13 2. THE GROUNDS OF APPEAL FILED BY THE ASSESSEE READ AS UNDER : 1) ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE A ND IN LAW, THE LD. CIT (A) HAS ERRED IN SUSTAINING PARTLY THE ADDITION MADE BY THE ACIT, CIRCLE-1, KALYAN (THE AO) TREATING THE GENUINE BONA FIDE PURCHASES AS BOGUS P URCHASES WITHOUT APPRECIATING THAT ALL OF OUR PURCHASES ARE GENUINE AND BONA FIDE REAL PURCHASES AND THAT THE APPELLANT HAS ADDUCED VARIOUS EVIDENCES, NONE OF WH ICH HAVE BEEN BELIED OR DISPROVED BY THE AO. THE SAID ADDITION MADE BY THE AO AND SUSTAINED BY THE CIT (A) MAY THEREFORE BE DELETED. 2) ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE A ND IN LAW, THE LD. CIT (A) HAS ERRED IN SUSTAINING PARTLY THE ADDITION MADE BY THE AO, ON THE BASIS OF MATERIALS / INFORMATION, IF ANY, COLLECTED BEHIND THE BACK, WIT HOUT GIVING OPPORTUNITY TO CROSS EXAMINE THE WITNESSES AND TO REBUT THE SAME. THE IM PUGNED ORDER IS THEREFORE AGAINST THE PRINCIPLES OF NATURAL JUSTICE AND HENCE VOID ON THIS SCORE ALONE. THE IMPUGNED ORDER MAY THEREFORE BE DECLARED VOID AND / OR THE ADDITION MADE / SUSTAINED THEREBY MAY BY DELETED. 3) ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE A ND IN LAW, THE LD. CIT (A) HAS ERRED IN SUSTAINING PARTLY THE ADDITION MADE BY THE AO, IGNORING THE FACT THAT THE ITA NOS. 1852/MUM/2015 & ORS M/S KAKA RAYON 3 APPELLANT HAS PRODUCED ALL AND EVERY DETAILS, DOCUM ENTS AND RECORDS PROVING GENUINENESS OF HIS IMPUGNED PURCHASES AND THAT TOO WITHOUT POINTING OUT ANY INFIRMITY IN THE DETAILS, DOCUMENTS AND RECORDS PRO DUCED BY THE APPELLANT. THE IMPUGNED ORDER IS THEREFORE WITHOUT ANY SUBSTANCE A ND IS BASED ON ASSUMPTION AND PRESUMPTION. SUCH ORDER CANNOT BE SUSTAINED IN THE EYES OF LAW. IT MAY PLEASE BE QUASHED. 4) ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE A ND IN LAW, THE LD. CIT (A) HAS ERRED IN SUSTAINING PARTLY THE ADDITION MADE BY THE AO, WITHOUT APPRECIATING THAT IT IS FOR THE AO TO RAISE SPECIFIC REQUISITION AND ASK THE ASSESSEE TO PRODUCE DETAILS, DOCUMENTS AND RECORDS HE WANTS THE ASSESSEE TO PROD UCE. IF HE FAILS TO DO SO, HE CANNOT FASTEN THE BLAME ON THE DOOR OF THE ASSESSEE AND MAKE ADDITION. THE AO HAS NOT POINTED OUT EVEN A SINGLE INSTANCE WHERE THE AP PELLANT HAS FAILED TO PRODUCE THE REQUISITIONED DETAILS ETC. HENCE, THE ADDITION MADE BY THE AO AND SUSTAINED PARTLY BY THE CIT (A) IS ARBITRARY, UNWARRANTED AND UNLAWF UL. 5) THE APPELLANT THEREFORE SUBMITS THAT THE ADDITION S USTAINED PARTLY BY THE CIT(A) BY TREATING THE GENUINE AND BONA FIDE PURCHASES AS BOG US MAY BE DELETED AND SUCH OTHER AND FURTHER RELIEFS, AS MAY BE FAVORABLE TO T HE APPELLANT, MAY BE GRANTED AS MAY BE THOUGHT FIT TO MEET THE ENDS OF JUSTICE. ITA NO. 5365/MUM/2016 ASSESSMENT YEAR: 2012-13 3. THE GROUNDS OF APPEAL FILED BY THE REVENUE READ AS UNDER : 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 KAN CHWALA GEMS VS. JCIT 288 ITR 10(SC) AND HON'BLE HIGH COURT'S DECISION IN THE CAS E OF VIJAY PROTEIN,SANJAY OIL CAKE INDUSTRIES, ETC. 2) ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE, AND IN LAW, THE LD. CIT(A) ERRED IN NOT FOLLOWING THE ORDER OF ITAT, PUNE IN ITA NO. 14 11-1415 DATED 20.02.2015 IN THE ITA NOS. 1852/MUM/2015 & ORS M/S KAKA RAYON 4 CASE OF M/S. KOLTE PATIL DEVELOPERS LTD. WHEREIN 10 0% ADDITION OF BOGUS PURCHASES WAS CONFIRMED. 3) ON THE FACTS AND IN ME CIRCUMSTANCES OF THE CASE, T HE LD. 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 LI KE OCTROI RECEIPTS, DELIVERY CHALLAN ETC. EVIDENCE TO PROVE THE GENUINE NESS 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. BRIEFLY STATED, THE FACTS OF THE CASE ARE THAT T HE ASSESSEE FILED ITS RETURN OF INCOME FOR THE ASSESSMENT YEAR (AY) 2011-12 ON 2 9.09.2011 SHOWING TOTAL INCOME OF RS.24,02,437/-. DURING THE COURSE OF ASSE SSMENT PROCEEDINGS, THE AO RECEIVED INFORMATION FROM THE SALES TAX DEPARTME NT, GOVERNMENT OF MAHARASHTRA THAT THE ASSESSEE HAD OBTAINED BOGUS PU RCHASE BILLS FROM THE FOLLOWING ENTRY PROVIDERS: S. NO. NAME OF THE ENTRY PROVIDER AMOUNT IN THE BILLS TAKEN BY THE ASSESSEE IN RS. 1 ASHTAVINAYAK SALES AGENCY 13,22,210 2 ADINATH TRADING COMPANY 15,30,123 3 NISHA ENTGRPRISE 95,737 4 CHOKSI BROTHERS 20,12,843 5. KAMALNAYAN EXIM PRIVATE LIMITED 14 , 03 , 761 6. POLARIS SALES AGENCY PRIVATE LIMITED 20 , 61 , 382 7. BSR MULTITRADE TRADING PRIVATE LIMITED 13,39,735 8. ANSHU MERCANTILE PVT. LTD 4 , 41 , 369 1 , 02 , 07 , 160 NOTING THAT THE PROPRIETORS/PARTNERS OF THE ABOVE ENTRY PROVIDERS HAVE ALSO FILED AFFIDAVITS BEFORE THE SALES TAX AUTHORIT IES STATING THAT THEY HAVE ITA NOS. 1852/MUM/2015 & ORS M/S KAKA RAYON 5 ISSUED ONLY SALE BILLS AND NO REAL TRANSACTION HAS TAKEN PLACE, THE AO ASKED THE ASSESSEE TO PROVE THE PURCHASES FROM THE ABOVE 8 PA RTIES. IN RESPONSE TO IT, THE ASSESSEE FILED COPY OF PURCHASE BILLS, LEDGER A CCOUNT ALONG WITH SALES INVOICE, DELIVERY CHALLANS. HOWEVER, THE ASSESSEE F AILED TO FILE CONFIRMATION OF PURCHASES FROM THE ABOVE PARTIES. IN RESPONSE TO TH E ACTION OF THE AO TO PRODUCE THE ABOVE PARTIES FOR VERIFICATION OF THE G ENUINENESS OF THE TRANSACTION, THE ASSESSEE FILED THE FOLLOWING REPLY : PLEASE APPRECIATE THAT ALL OUR PURCHASES ARE GENUI NE, BONA-FIDE, REAL AND ACTUAL. THEREFORE THERE IS NO REASON TO RAISE ANY SUSPICION OR QUESTION REGARDING PURCHASES FROM THESE PARTIES. PLEASE APPRECIATE THAT THE ONUS TO PROVE OR ESTABLI SH GENUINENESS OF OUR CASE ON IS PRIMA FACIE. BY ADDUCING THE ABOVE EVIDENCES, WE DI SCHARGED THE SAID ONUS. NOW, THE ONUS SHIFTS ON THE DEPARTMENT TO PROVE WHY OUR VERS ION OF THE CASE SHOULD NOT BE ACCEPTED BY THE DEPARTMENT. FOR THAT PURPOSE, YOU H AVE TO DISPROVE OUR CASE ON THE BASIS OF COGENT MATERIALS. WITHOUT DOING SO NONE OF OUR PURCHASES CAN BE DISBELIEVED OR DISALLOWED. HOWEVER, THE AO WAS NOT CONVINCED WITH THE ABOVE R EPLY ON THE REASON THAT THE ASSESSEE SHOWED ITS INABILITY TO FILE THE CONFIRMATION OF THE SAID PURCHASES ; ALSO THE ASSESSEE SHOWED ITS INABILITY TO PRODUCE THE ABOVE PARTIES TO PROVE THE GENUINENESS OF THE PURCHASES. AS THE ASSESSEE FAILED TO DISCHARGE THE ONUS CAST ON IT, THE AO MADE AN ADDITION OF RS.1,02,07,160/- AS BOGUS PURCHASES. 5. AGGRIEVED BY THE ORDER OF THE AO, THE ASSESSEE F ILED AN APPEAL BEFORE THE LD. CIT(A). DURING THE COURSE OF APPELLATE PROCEEDI NGS, THE ASSESSEE FILED ITA NOS. 1852/MUM/2015 & ORS M/S KAKA RAYON 6 WRITTEN SUBMISSION ALONG WITH PAPER BOOK CONTAINI NG VARIOUS EVIDENCE STATING THEREIN THAT THE AO HAS NOT ALLOWED PROPER OPPORTUNITY OF BEING HEARD. ACCORDINGLY, THE LD. CIT(A) CALLED FOR A REMAND RE PORT FROM THE AO, AFTER ALLOWING DUE OPPORTUNITY OF BEING HEARD TO THE ASSE SSEE. IN PURSUANCE TO IT, THE AO SUBMITTED A REMAND REPORT BEFORE THE LD. C IT(A). AFTER RECEIPT OF THE SAID REMAND REPORT, THE LD. CIT(A) FORWARDED A CO PY OF IT TO THE ASSESSEE FOR INFORMATION AND COMMENTS, IF ANY IN THE MATTER. THE ASSESSEE FILED A REPLY VIDE LETTER DATED 06.01.2016. HAVING EXAMINED THE FACTS OF THE CASE ALONG WITH T HE REMAND REPORT SUBMITTED BY THE AO AND REPLY TO IT BY THE ASSESSEE IN THE BACKGROUND OF FACTS OF THE CASE, THE LD. CIT(A) CAME A FINDING THAT (I) THE ASSESSEE, INSTEAD OF JUSTIFYING THE GENUINENESS OF PURCHASES MADE FROM T HE SAID ENTRY PROVIDERS, BY FILING CONFIRMATION, CURRENT MAILING ADDRESS ETC ., HAS MERELY REITERATED THE FACT THAT PAYMENT TO THESE PARTIES WERE MADE IN CHE QUES, THE MATERIAL PURCHASED HAS BEEN USED FOR MANUFACTURING/PACKING T HE GOODS AND CORRESPONDING SALES HAVE BEEN RECORDED, (II) THE AS SESSEE FAILED TO ESTABLISH THE GENUINENESS OF THOSE PURCHASES BY FURNISHING CR EDIBLE DOCUMENTS ALONG WITH CONFIRMATION OF LEDGER ACCOUNTS AND ALSO FAILE D TO PRODUCE THOSE PARTIES FOR EXAMINATION IN PERSONS. KEEPING IN MIND, THE OBSERVATION OF THE HONBLE DE LHI HIGH COURT IN THE CASE OF CIT V. JANSAMPARK ADVERTISING & MARKETING (P.) LTD . THAT IT WAS ALSO THE OBLIGATION OF THE FIRST APPELLATE AUTHORITY, AS IND EED OF ITAT, TO HAVE ENSURED THAT EFFECTIVE INQUIRY WAS CARRIED, THE LD. CIT(A) PROVIDED A FRESH ITA NOS. 1852/MUM/2015 & ORS M/S KAKA RAYON 7 OPPORTUNITY TO THE ASSESSEE TO ESTABLISH THE GENUIN ENESS OF THOSE PURCHASES BY FURNISHING THE FOLLOWING INFORMATION : KEEPING IN VIEW THE ABOVE FACTS AND SUBMISSIONS OF THE LD. AR. THE APPELLANT WAS REQUESTED TO ESTABLISH THE GENUINENESS OF THESE PUR CHASES, AFFORDING A FRESH OPPORTUNITY BY FURNISHING THE INFORMATION AS UNDER: PLEASE FURNISH CURRENT MAILING ADDRESS OF THE HAWAL A PARTIES, THEIR CONFIRMATION OF ACCOUNTS, THEIR BANK STATEMENTS, PR ODUCE FOR EXAMINATION, PROOF FOR DELIVERY OF GOODS I.E. DELIVERY CHALLAN TRANSPORT RECEIPTS, OCTROI RECEIPTS, LOADING, UNLOADING EXPENSES, STOCK REGIST ER, ETC. TO PROVE THE HAWALA PURCHASES. ALSO FURNISH QUALITATIVE QUANTITATIVE DE TAILS I.E. O.S., PURCHASES, TOTAL, SALES. C.S. ITEM-WISE PARTY-WISE, ON MONTH T O MONTH BASIS. PLEASE ALSO FURNISH COMPARATIVE TURNOVER, GP, GP RATE, NP & NP FOR THE HAWALA YEAR LAST 2 YEARS & SUBSEQUENT 2 YEARS & ALSO FURNISH SIMILAR D ETAILS AFTER ADDITION OF PURCHASE FOR THE YEAR AND LAST 2 YEARS AND SUBSEQUE NT 2 YEARS AND JUSTIFY THE ACCOUNT W.R.T THE PROVISION OF SECTION 145(3) OF TH E ACT, IN VIEW OF THE ABOVE FACTS. FURNISH THE QUALITATIVE/QUANTITATIVE DETAILS I.E. O .S., PURCHASES, TOTAL SALES, C.S, ITEM- WISE/PARTY-WISE, ON MONTH TO MONTH BASIS, IN THE FO LLOWING FORMAT, FOR HAWALA PARTIES:- NAME OF THE PARTY- DATE OF PURCHASES AMOUNT DATE OF PAYMENT AMOUNT M ODE OF PAYMENT TILL DATE QUANTITATIVE TALLY WITH HP & WITHOUT HP- RAW MATERIAL OPENING STOCK (QUANTITY) PURCHASE (QUANTITY) TOTAL (QUANTITY) CONSUMPTION (QUANTITY) CLOSING STOCK (QUANTITY) ITA NOS. 1852/MUM/2015 & ORS M/S KAKA RAYON 8 FINISHED GOODS OPENING STOCK (QUANTITY) PRODUCTION (QUANTITY) TOTAL (QUANTITY) SALE (QUANTITY) CLOSING STOCK (QUANTITY) AS NOTED BY THE LD. CIT(A), THE ASSESSEE COULD NOT FURNISH THOSE DETAILS IN THE PRESCRIBED FORMAT ITEM-WISE/PARTY-WISE WITH THE PLEA THAT THE REQUIRED INFORMATION ARE NOT MAINTAINED IN THE PRESCRIBED FO RMAT ; THE ASSESSEE ALSO COULD NOT FURNISH CONFIRMED COPY OF LEDGER ACCOUNT, PRESENT MAILING ADDRESS; THE ASSESSEE ALSO FAILED TO PRODUCE THOSE PARTIES F OR VERIFICATION. OBSERVING THAT IN THE ABSENCE OF CURRENT MAILING ADDRESS, IT IS NOT POSSIBLE FOR THE REVENUE TO SUMMON THEM FOR EXAMINATION/VERIFICATION /CROSS-EXAMINATION, THE LD. CIT(A) FOUND DEFECTS IN THE CASE OF M/S ASH TAVINAYAK SALES AGENCY, M/S ADINATH TRADING COMPANY, M/S BSR MULTITRADE TRA DING PVT. LTD. ALSO OBSERVING THAT THE ASSESSEE COULD NOT RECONCILE THE QUANTITY-WISE DETAILS OF PURCHASES FROM THOSE HAWALA PARTIES VIS--VIS SALES THEREOF, THE LD. CIT(A) HELD AS UNDER : 5.13 CONSIDERING THE ABOVE FACTS AND IN VIEW OF THE DECISION OF THE HON. DELHI HIGH COURT IN THE CASE OF CIT VS. JANSAMPARK ADVERTISING AND MARKETING (P) LTD. IT IS ALSO AN OBLIGATION ON THE PART OF THE FIRST APPELLATE AU THORITY TO ENSURE THAT THE EFFECTIVE ENQUIRY IS CARRIED OUT TO ARRIVE AT LOGICAL CONCLUS ION. THEREFORE, TO UNDERSTAND THE IMPACT OF BOOKING OF HAWALA PURCHASES ON THE PROFIT OF THE YEAR, THE LD AR WAS REQUIRED TO FURNISH THE COMPARATIVE DETAILS OF GP/N P AND GP/NP RATES FOR HAWALA YEARS, PRECEDING TWO YEARS AND SUBSEQUENT TWO YEARS . IN COMPLIANCE, THE APPELLANT HAS SUBMITTED THE DETAILS, AS UNDER :- A YR SALES GP % OF GP TO T/O NP % AGE OF NP TO T/O 2009 - 10 9,94, 11,179 4615181 4.64 1107004 1.11 2010 - 1 1 14,07,22,110 6632260 4.71 1377429 0.98 2011 - 12 19,19,29,209 8513330 4.44 2402434 1.25 ITA NOS. 1852/MUM/2015 & ORS M/S KAKA RAYON 9 2012 - 13 18,84,92, 010 8678937 4.60 2737800 1.45 2013 - 14 18 , 03 , 16 , 961 11296727 6.26 ( - )55451 4 ( - )0.3 1 5.14 FROM THE ABOVE CHART, IT IS NOTICED THAT THE G ROSS PROFIT RATE HAS GONE DOWN FROM 6.26% IN A YR 2013-14 (NON-HAWALA PURCHASE YEA R) TO 4.44% IN A Y 2011-12, THE YEAR IN WHICH THE ALLEGED HAWALA PURCHASES WERE BOOKED, FOR WHICH THE APPELLANT COULD NOT OFFER ANY VALID EXPLANATION. TH ESE FACTS CLEARLY ESTABLISHED THAT THE APPELLANT HAD SUPPRESSED ITS PROFITS BY BOOKING ALLEGED HAWALA PURCHASES, AS ABOVE BY 1.82% (6.26 - 4.44) IN A YR 2011-12, AS CO MPARED TO GP OF A YR 2013-14. THIS HAS RESULTED INTO SUPPRESSION OF GROSS PROFIT BY RS.34,93,111/- (19,19,29,209 X 1.82%). CONSIDERING THE NATURE OF APPELLANT'S B USINESS, I.E. DYEING OF YARN AND THE TURNOVER, THE APPELLANT HAS SHOWN GP QUITE AT LOWER SIDE, HENCE THE SAME IS LIABLE TO BE RE-ESTIMATED BY REJECTING THE ACCOUNTS. IN THIS REGARD, I WOULD LIKE TO PLACE MY RELIANCE ON THE RATIO LAID DOWN BY THE FOLLOWING CO URTS - IT IS HELD BY THE HONBLE SUPREME COURT IN THE CASE OF H M ESUFALI H M ABDULLA 90 ITR 271 (SC) THAT IF THE ESTIMATION MADE BY THE ASSESSING AUTHORITY IS A BON D FIDE ESTIMATE AND BASED ON A RATIONABLE BASIS, THE FACT THAT THERE IS NO GOOD PR OOF IN SUPPORT OF THAT ESTIMATE IS IMMATERIAL. APEX COURT HAS FURTHER HELD IN THE CASE OF M/S. KANCHWALA GEMS PVT. LTD. VS. JCIT 288 ITR 10 (SC) THAT IT IS WELL SETTLED THAT IN A BEST JUDGMENT ASSESSMENT, THERE IS ALWAYS A CERTAIN AMOUNT GUESS WORK. THE HONBLE SUPREME COURT, IN THE CASE OF CIT V. CALCUTTA AGENCY LTD . (SC) 19 ITR 191 AND LAKSHIMARATAN COTTON MILLS CO. LTD. V. CIT (SC) 73 ITR 634 HAS HELD THAT IN ORDER TO CLAIM TH AT AN EXPENDITURE FALLS U/S 37(1) OF THE ACT, THE BURDEN OF PROVING T HE NECESSARY FACTS IN THAT CONNECTION IS ON THE ASSESSEE AND NOT ON THE DEPART MENT. SIMILARLY, THE APEX COURT IN THE CASE OF LAKSHMINARAYAN MADAN LAL V. CIT (SC) 86 ITR 439 AND IN THE CASE OF SWADESHI COTTON MILLS CO. LTD. V. CIT 63 ITR 57, HAS HELD THAT THE TAXING AUTHORITIES HAVE RIGHT TO CONSIDER WHETHER THE EXPENDITURE CLAI MED BY THE ASSESSEE WAS EXCESSIVE. 5.15 IT IS PERTINENT TO MENTION HERE THAT THE APPEL LANT WAS ABLE TO HARVEST GP @ 6.26% IN A YR 2013-14, FROM SAME BUSINESS, BY SAME MANAGEMENT, AS AGAINST GP OF ITA NOS. 1852/MUM/2015 & ORS M/S KAKA RAYON 10 4.44% DECLARED IN A Y. 2011-12. IN THE ABSENCE OF A NY VALID EXPLANATION, ALONG WITH CREDIBLE DOCUMENTS, THE CONTENTION OF THE APPELLANT IS NOT TENABLE, THEREFORE BOOKS OF ACCOUNTS ARE HEREBY REJECTED AND GP DECLARED IN A Y 2013-14. I.E. 6.26% IS ESTIMATED IN THE HAWALA YEAR AS WELL, IN THE LIGHT OF DECISION OF THE HON'BLE S.C. IN THE CASE OF M/S KANCHWALA GEM 288 ITR 10. ACCORDINGLY, THE SUPPRESSED GP IS WORK OUT AT RS.34,93,111/- (19,19,29,209 X 1.82%). THE APPEL LANT BEING MANUFACTURER, AND IN THE LIGHT OF THE DECISIONS HON'BLE GUJARAT HIGH COU RT IN THE CASE OF VIJAY PROTEINS 58 ITD 428 AND SANJAY OIL CAKE INDUSTRIES 316 ITR 274, IF THE ANALOGY OF DISALLOWANCE @ 25% OF THE BOGUS PURCHASES I.E. RS.25,51,790/- (1 ,02,07,160 X 25/100) IS CONSIDERED, WHICH IS ALSO WORKED OUT ALMOST AT PAR TO THE SUPPRESSED GP OF RS.34,93,111/-. THIS SQUARELY ESTABLISHES THE FACT THAT THE APPELLANT HAD SUPPRESSED ITS PROFITS BY INFLATING ITS PURCHASES. 5.16 BY BOOKING ALLEGED BOGUS PURCHASES, AS COMPARE D TO THE A.Y. 2013-14. THE APPELLANT HAS SUPPRESSED ITS PROFIT BY RS.34,93,111 /-. IN COMPLIANCE, THE LD. AR COULD NOT OFFER ANY VALID REASONS FOR FALL IN THE G P RATE. CONSIDERING THE FACTS IN ENTIRETY AND RELYING ON DECISIONS IN THE CASE OF M/ S. KANCHWALA GEMS PVT. LTD. V/S JCIT 288 ITR 10 (SC), ETC. AS QUOTED ABOVE, IN MY C ONSIDERED OPINION, THE ESTIMATION OF GP @ 6.26% WILL BE JUSTIFIED. THEREFORE, THE DIS ALLOWANCE TO THE EXTENT OF RS.34,93,111/-, OUT OF HAWALA PURCHASES OF RS.1,02,07,160/-, IS SUSTAINED AND BALANCE AMOUNT OF RS.67,14,049/- (RS.1,02,07,160/- LESS RS.34,93,111/-) IS HEREBY DELETED. ALL THE GROUNDS OF APPEAL, AS RAISED ABOVE , ARE PARTLY ALLOWED. 6. BEFORE US, THE LD. COUNSEL FOR THE ASSESSEE FILE S A COPY OF (I) THE LETTER DATED 04.03.2014 ADDRESSED TO THE AO, (II) TABULAR STATEMENT SHOWING PURCHASE AND SUPPORTING DOCUMENTS IN RESPECT OF THE 8 NAMED PARTIES AND (III) STOCK REGISTER. IT IS CERTIFIED BY THE ASSESS EE THAT THE ABOVE DOCUMENTS WERE FILED BEFORE THE AO/CIT(A). ITA NOS. 1852/MUM/2015 & ORS M/S KAKA RAYON 11 THEN THE LD. COUNSEL REFERS TO THE OBSERVATION OF THE HONBLE SUPREME COURT IN ANDAMAN TIMBER INDUSTRIES V. COMMISSIONER OF CENTRA L EXCISE (CIVIL APPEAL NO. 4228 OF 2006) DATED 02.09.2015 THAT N OT ALLOWING THE ASSESSEE TO CROSS-EXAMINE THE WITNESSES BY THE ADJUDICATING AUTHORITY THOUGH THE STATEMENTS OF THOSE WITNESSES WERE MADE THE BASIS O F THE IMPUGNED ORDER IS A SERIOUS FLAW WHICH MAKES THE ORDER NULLITY IN AS MU CH AS IT AMOUNTED TO VIOLATION OF PRINCIPLES OF NATURAL JUSTICE BECAUSE OF WHICH THE ASSESSEE WAS ADVERSELY AFFECTED. IT IS ARGUED THAT THE ONUS ON THE ASSESSEE IS TO A DDUCE SUFFICIENT EVIDENCE WHICH ARE IN ITS POSSESSION TO PROVE THE T RANSACTIONS PRIMA FACIE ; THE ASSESSEE HAS ALREADY SUBMITTED ORIGINAL PURCHASE BI LLS OF THE PARTIES IN QUESTION, THEIR LEDGER ACCOUNTS, ASSESSEES BANK ST ATEMENTS REFLECTING PAYMENTS MADE TO THE PARTIES IN QUESTION AGAINST PU RCHASES MADE FROM THEM. IT IS FURTHER STATED THAT ONCE THE ASSESSEE HAS ADD UCED THE EVIDENCE TO PROVE THE TRANSACTION PRIMA FACIE , THE ONUS SHIFTS TO THE REVENUE, WHEREAS IN THE PRESENT CASE THE AO HAS NEITHER BEEN ABLE TO DISPRO VE THE DOCUMENTS ADDUCED BY THEM, NOR HAS HE EXPLAINED WHY THE ASSESSEES CA SE SHOULD NOT BE ACCEPTED BASED ON COGENT MATERIAL IN HIS POSSESSION. IT IS FURTHER STATED THAT THE STOCK REGISTER FILED BY THE ASSESSEE CONTAINED DETAILED INFORMATION OF OPENING STOCK, PURCHASES, S ALES, CONSUMPTION, CLOSING STOCK ETC. TO SUMMARIZE THE CONTENTIONS, IT IS STAT ED BY THE LD. COUNSEL THAT THE ASSESSEE HAD FURNISHED BEFORE THE AO/CIT(A) ALL REL EVANT DETAILS SUCH AS COPIES OF PURCHASE BILLS, LEDGER ACCOUNTS, DELIVERY CHALLANS, COMPUTER GENERATED STOCK REGISTER. ITA NOS. 1852/MUM/2015 & ORS M/S KAKA RAYON 12 AS AN ALTERNATE ARGUMENT, THE LD. COUNSEL RELIES O N THE DECISION OF THE HONBLE BOMBAY HIGH COURT IN PR. CIT V. M/S MOHOMMAD HAJI ADAM & CO . (ITA NO. 1004 OF 2016). IN THAT CASE, DURING THE COURSE OF SURVEY OPERATIONS IN THE CASE OF ENTITIES FROM WHOM THE ASSESSEE HAD CLAIMED TO HAVE MADE PURCHASES, THE DEPARTMENT COLLECTED INFORMATION SUGGESTING THA T SUCH PURCHASES WERE NOT GENUINE. THE AO NOTICED THAT THE ASSESSEE HAD S HOWN PURCHASES OF FABRICS WORTH RS.29.41 LAKHS FROM THREE GROUP CONCERNS, NAM ELY M/S MANOJ MILLS, M/S ASTHA SILK INDUSTRIES AND M/S SHRI RAM SALES AN D SYNTHETICS. ON THE BASIS OF STATEMENT RECORDED DURING SUCH SURVEY OPERATIONS , THE AO CONCLUDED THAT THE SELLING PARTIES WERE ENGAGED ONLY IN SUPPLYING THE BOGUS BILLS, THAT THE GOODS IN QUESTION WERE NEVER SUPPLIED TO THE ASSESS EE, AND THEREFORE, THE PURCHASES WERE BOGUS. HE, THEREFORE, ADDED THE ENTI RE SUM IN THE HANDS OF THE ASSESSEE AS ITS ADDITIONAL INCOME. THE ASSESSEE CAR RIED THE MATTER IN APPEAL BEFORE THE CIT(A), WHO ACCEPTED THE FACTUM OF PURCH ASES BEING BOGUS. HOWEVER, HE COMPARED THE PURCHASES AND SALES STATEM ENTS OF THE ASSESSEE AND OBSERVED THAT THE DEPARTMENT HAD ACCEPTED THE S ALE, AND THEREFORE, THERE WAS NO REASON TO REJECT THE PURCHASES, BECAUSE WITH OUT PURCHASES THERE CANNOT BE SALES. HE, THEREFORE, HELD THAT UNDER THE SE CIRCUMSTANCES THE AO WAS NOT CORRECT IN ADDING THE ENTIRE AMOUNT OF PURCHASE S AS THE ASSESSEES INCOME. HE, THEREFORE, DELETED THE ADDITION RESTRICTING IT TO 10% OF THE PURCHASE AMOUNT. HE ALSO DIRECTED THE AO TO MAKE ADDITION TO THE EXTENT OF DIFFERENCE BETWEEN THE GROSS PROFIT RATE AS PER THE BOOKS OF A CCOUNTS ON UNDISPUTED PURCHASES AND GROSS PROFIT ON SALES RELATING TO THE PURCHASES MADE FROM THE SAID THREE PARTIES. THE ASSESSEE CARRIED THE MATTER BEFORE THE TRIBUNAL. THE REVENUE ALSO CARRIED THE ISSUE BEFORE THE TRIBUNAL. THE TRIBUNAL ALLOWED THE ITA NOS. 1852/MUM/2015 & ORS M/S KAKA RAYON 13 APPEAL OF THE ASSESSEE PARTLY AND DISMISSED THAT OF THE REVENUE. THE TRIBUNAL NOTED THAT THE CIT(A) HAD NOT GIVEN ANY REASONS FOR RETAINING 10% OF THE PURCHASES BY WAY OF AD-HOC ADDITIONS. THE TRIBUNAL, THEREFORE, DELETED SUCH ADDITIONS, BUT RETAINED THE PORTION OF THE ORDER OF THE CIT(A) TO THAT EXTENT HE PERMITTED THE AO TO TAX THE ASSESSEE ON THE BASIS O F DIFFERENCE IN THE GP RATES. IN FURTHER APPEAL BEFORE THE HONBLE BOMBAY HIGH CO URT, THE REVENUE REFERRED TO THE DECISION OF THE DIVISION BENCH OF T HE HONBLE GUJARAT HIGH COURT IN THE CASE OF N.K. INDUSTRIES LTD. V. DCIT I N TAX APPEAL NO. 240 OF 2003 AND CONNECTED APPEALS DECIDED ON 20.06.2016 AND ALS O POINTED OUT THAT THE SLP AGAINST SUCH DECISION WAS DISMISSED BY THE HON BLE SUPREME COURT. THE HONBLE BOMBAY HIGH COURT HELD : 8. IN THE PRESENT CASE, AS NOTED ABOVE, THE ASSESS EE WAS A TRADER OF FABRICS. THE A.O. FOUND THREE ENTITIES WHO WERE INDULGING IN BOG US BILLING ACTIVITIES. A.O. FOUND THAT THE PURCHASES MADE BY THE ASSESSEE FROM THESE ENTITIES WERE BOGUS. THIS BEING A FINDING OF FACT, WE HAVE PROCEEDED ON SUCH BASIS. DESPITE THIS, THE QUESTION ARISES WHETHER THE REVENUE IS CORRECT IN CONTENDING THAT T HE ENTIRE PURCHASE AMOUNT SHOULD BE ADDED BY WAY OF ASSESSEE'S ADDITIONAL INC OME OR THE ASSESSEE IS CORRECT IN CONTENDING THAT SUCH LOGIC CANNOT BE APPLIED. THE F INDING OF THE CIT(A) AND THE TRIBUNAL WOULD SUGGEST THAT THE DEPARTMENT HAD NOT DISPUTED THE ASSESSEE'S SALES. THERE WAS NO DISCREPANCY BETWEEN THE PURCHASES SHOW N BY THE ASSESSEE AND THE SALES DECLARED. THAT BEING THE POSITION, THE TRIBUN AL WAS CORRECT IN COMING TO THE CONCLUSION THAT THE PURCHASES CANNOT BE REJECTED WI THOUT DISTURBING THE SALES IN CASE OF A TRADER. THE TRIBUNAL, THEREFORE, CORRECTL Y RESTRICTED THE ADDITIONS LIMITED TO THE EXTENT OF BRINGING THE G.P. RATE ON PURCHASES A T THE SAME RATE OF OTHER GENUINE PURCHASES. THE DECISION OF THE GUJARAT HIGH COURT I N THE CASE OF N.K. INDUSTRIES (SUPRA) CANNOT BE APPLIED WITHOUT REFERENCE TO THE FACTS. IN FACT IN PARAGRAPH 8 OF THE SAME JUDGMENT THE COURT HELD AND OBSERVED AS UN DER- ITA NOS. 1852/MUM/2015 & ORS M/S KAKA RAYON 14 SO FAR AS THE QUESTION REGARDING ADDITION OF RS.3 ,70,78,125/- AS GROSS PROFIT ON SALES OF RS.37.08 CRORES MADE BY THE ASSESSING O FFICER DESPITE THE FACT THAT THE SAID SALES HAD ADMITTEDLY BEEN RECORDED IN THE REGULAR BOOKS DURING FINANCIAL YEAR 1997-98 IS CONCERNED, WE ARE OF THE VIEW THAT THE ASSESSEE CANNOT BE PUNISHED SINCE SALE PRICE IS ACCEPTED BY THE REVENUE. THEREFORE, EVEN IF 6 % GROSS PROFIT IS TAKEN INTO ACCOUNT, THE CORRESPONDING COST PRICE IS REQUIRED TO BE DEDUCTED AND TAX CANNOT BE LEVIED ON THE SAME PRICE. WE HAVE TO REDUCE THE SELLING PRICE ACCORDINGLY AS A RESULT OF WHICH PROFIT COMES TO 5.66 %. THEREFORE, CONSIDERING 5.66 % OF RS.3,70,78 ,125/- WHICH COMES TO RS.20,98,621.88 WE THINK IT FIT TO DIRECT THE REVEN UE TO ADD RS.20,98,621.88 AS GROSS PROFIT AND MAKE NECESSARY DEDUCTIONS ACCOR DINGLY. ACCORDINGLY, THE SAID QUESTION IS ANSWERED PARTIALLY IN FAVOUR OF TH E ASSESSEE AND PARTIALLY IN FAVOUR OF THE REVENUE. 7. ON THE OTHER HAND, THE LD. DEPARTMENTAL REPRESEN TATIVE (DR) SUBMITS THAT AS THE ASSESSEE FAILED TO FILE BEFORE THE LD. CIT(A) THE DETAILS IN THE PRESCRIBED FORMAT, ITEM-WISE/PARTY-WISE [PAGE 13 OF THE CIT(A)S ORDER]; FAILED TO FILE CONFIRMED COPY OF LEDGER ACCOUNTS, P RESENT MAILING ADDRESS; FAILED TO PRODUCE THOSE PARTIES FOR VERIFICATION, T HE LD. CIT(A) SHOULD HAVE CONFIRMED THE ADDITION OF RS.1,02,07,160/- INSTEAD OF SUSTAINING DISALLOWANCE ON ESTIMATE OF GP @ 6.26% WHICH COMES TO RS.34,93,1 11/-. 8. WE HAVE HEARD THE RIVAL SUBMISSIONS AND PERUSED THE RELEVANT MATERIALS ON RECORD. THE REASONS FOR OUR DECISIONS ARE GIVEN BELOW. IN THE INSTANT CASE, AS MENTIONED EARLIER, IT IS T HE CONTENTION OF THE LD. COUNSEL THAT THE PAYMENTS TO THOSE PARTIES WERE MAD E IN CHEQUES, THE MATERIALS PURCHASED WERE USED FOR MANUFACTURING/PAC KING THE GOODS AND THE CORRESPONDING SALES HAVE BEEN RECORDED. IT IS ALSO THE CONTENTION OF THE LD. ITA NOS. 1852/MUM/2015 & ORS M/S KAKA RAYON 15 COUNSEL THAT THE ASSESSEE HAD FURNISHED ALL RELEVAN T DETAILS SUCH AS COPIES OF PURCHASE BILLS, LEDGER ACCOUNTS, DELIVERY CHALLANS, COMPUTER GENERATED STOCK REGISTERS BEFORE THE AO. A PERUSAL OF THE ORDER OF THE LD. CIT(A) CLEARLY SH OWS THAT THE ASSESSEE COULD NOT FILE BEFORE HIM THE QUALITATIVE/QUANTITAT IVE DETAILS I.E. OPENING STOCK, PURCHASES, TOTAL SALES, CLOSING STOCK, ITEM-WISE/PA RTY-WISE MONTH TO MONTH BASIS IN THE REQUIRED FORMAT. DURING THE COURSE OF HEARING ON 5.11.2020, THE LD. COUNSEL EMPHASIZED AGAIN AND AGAIN THAT THE ASSESSEE WAS NOT GIVEN OPP ORTUNITY TO CROSS-EXAMINE THE WITNESSES. THIS IS ALSO THE SECOND GROUND OF AP PEAL WHICH IS CLOSELY LINKED WITH THE FIRST GROUND FILED BY THE ASSESSEE. IT IS TO THIS THAT WE TURN BELOW. IN ANDAMAN TIMBER INDUSTRIES (SUPRA), RELIED ON BY THE LD. COUNSEL, THE ASSESSEE WAS ENGAGED IN THE BUSINESS OF MANUFACTURE AND SALE OF PLY WOOD. SOME OF THE PRODUCTS WERE SOLD DIRECTLY FROM THE FA CTORY PREMISES IN SOUTH ANDAMAN TO CERTAIN BUYERS. THE MAJOR PORTION OF PRO DUCTS MANUFACTURED WERE SOLD TO OTHER DEALERS FROM THE ASSESSEES NUME ROUS DEPOTS, SITUATED AT VARIOUS PLACES OF THE COUNTRY. THE ASSESSEE HAD FIL ED ITS DECLARATION U/S 173C OF THE CENTRAL EXCISE RULES SHOWING THE PRICE OF TH E GOODS AT WHICH THEY WERE SOLD EX-FACTORY AND DELIVERY BASIS. THE AO OBSERVED THAT THERE WAS A LARGE PRICE DIFFERENCE BETWEEN THE GOODS SOLD AT EX-FACTO RY BASIS IN COMPARISON WITH THE GOODS WHICH WERE SOLD TO THE BUYERS FROM T HEIR DEPOTS. WHILE INVESTIGATING THE PRICE DIFFERENTIAL, THE STATEMENT S OF TWO CUSTOMERS WERE TAKEN AND RELIED ON BY THE REVENUE TO ADOPT THE DEP OT SALE PRICE AS THE VALUE OF THE GOODS FOR EXCISE PURPOSES. THE ASSESSEE INTER-ALIA QUESTIONED THE ITA NOS. 1852/MUM/2015 & ORS M/S KAKA RAYON 16 CORRECTNESS OF THE STATEMENTS OF THE AFORESAID TWO WITNESSES AND DEMANDED RIGHT TO CROSS-EXAMINE THEM. THE TRIBUNAL REJECTED THE PLEA OF THE ASSESSEE TO CROSS-EXAMINE THE DEALERS WHOSE STATEMENTS WERE REL IED UPON BY THE AO ON THE BASIS THAT CROSS-EXAMINATION WOULD NOT HELP THE ASSESSEE AS IT WOULD NOT BRING OUT ANY MATERIAL WHICH WOULD NOT ALREADY BE I N THE POSSESSION OF THE APPELLANT THEMSELVES. THE HONBLE SUPREME COURT HAS HELD THAT NOT ALLOWING THE ASSESSEE TO CROSS-EXAMINE THE WITNESSES BY THE AO THOUGH THE STATEMENTS OF THOSE WITNESSES WERE MADE THE BASIS OF THE IMPUG NED ORDER IS A SERIOUS FLAW WHICH MAKES THE ORDER NULLITY IN AS MUCH AS IT AMOUNTED TO VIOLATION OF PRINCIPLES OF NATURAL JUSTICE BECAUSE OF WHICH THE ASSESSEE WAS ADVERSELY AFFECTED; THE TRIBUNAL SIMPLY STATED THAT CROSS-EXA MINATION OF THE SAID DEALERS COULD NOT HAVE BROUGHT OUT ANY MATERIAL WHICH WOULD NOT BE IN POSSESSION OF THE APPELLANTS THEMSELVES TO EXPLAIN AS TO WHY THEI R EX-FACTORY PRICES REMAIN STATIC; IT WAS NOT FOR THE TRIBUNAL TO GUESS AS TO FOR WHAT PURPOSES THE APPELLANT WANTED TO CROSS-EXAMINE THOSE DEALERS AND WHAT INFORMATION THE APPELLANT WANTED TO EXTRACT FROM THEM. IN THE INSTANT CASE, THE ASSESSEE FAILED TO FILE BE FORE THE AO/CIT(A) CONFIRMED COPY OF THE LEDGER ACCOUNT, PRESENT MAILI NG ADDRESS OF THE SAID PARTIES. IN SUCH A SITUATION, IN ABSENCE OF CURRENT MAILING ADDRESS, IT WAS NOT POSSIBLE FOR THE REVENUE TO SUMMON THOSE PARTIES FO R EXAMINATION/VERIFICATION/CROSS-EXAMINATION. THEREFO RE, THE RELIANCE PLACED BY THE LD. COUNSEL ON THE DECISION IN ANDAMAN TIMBER INDUSTRIES (SUPRA) IS MISPLACED. ITA NOS. 1852/MUM/2015 & ORS M/S KAKA RAYON 17 IN THE INSTANT CASE, THE ISSUE IS GENUINENESS OF P URCHASES, WHICH AROSE BECAUSE OF THE INVESTIGATION DONE BY THE SALES TAX DEPARTMENT, GOVERNMENT OF MAHARASHTRA WHICH RESULTED IN THE AFFIDAVITS FIL ED BY THE ENTRY PROVIDERS THAT THEY HAD MERELY PROVIDED ENTRIES AND NO GOODS WERE SUPPLIED. IN THE OVERALL FACTS AND CIRCUMSTANCES OF THE CASE , THE CONTENTIOUS ISSUE WOULD BE RESOLVED THROUGH CROSS-EXAMINATION OF THE PARTIES. A PROPER HEARING MUST ALWAYS INCLUDE A FAIR OPPORTUNITY TO THOSE WHO ARE PARTIES IN THE CONTROVERSY FOR CORRECTING OR CONTRADICTING ANYTHIN G PREJUDICIAL TO THEIR VIEW. CROSS-EXAMINATION IS ALLOWED BY PROCEDURAL RULES AN D EVIDENTLY ALSO BY THE RULES OF NATURAL JUSTICE. ANY WITNESS WHO HAS BEEN SWORN ON BEHALF OF ANY PARTY IS LIABLE TO BE CROSS-EXAMINED ON BEHALF OF T HE OTHER PARTY TO THE PROCEEDINGS. THE HON'BLE SUPREME COURT IN STATE OF KERALA VS. K.T. SHADULI GROCERY DEALER AIR 1977 SC 1627, RECOGNISED THE IMPORTANCE OF ORA L EVIDENCE BY HOLDING THAT THE OPPORTUNITY TO PROVE THE CORRECTNE SS OR COMPLETENESS OF THE RETURN NECESSARILY CARRY WITH IT THE RIGHT TO EXAMI NE WITNESSES AND THAT INCLUDES EQUALLY THE RIGHT TO CROSS-EXAMINE WITNESS ES. IN ITO VS. M. PIRAI CHOODI (2012) 20 TAXMANN.COM 733 (SC), THE HON'BLE SUPREME COURT HAS HELD THAT ORDER OF ASSESSMENT PA SSED WITHOUT GRANTING AN OPPORTUNITY TO ASSESSEE TO CROSS-EXAMINE, SHOULD NO T HAVE BEEN SET ASIDE BY HIGH COURT; AT MOST, HIGH COURT SHOULD HAVE DIRECTE D ASSESSING OFFICER TO GRANT AN OPPORTUNITY TO ASSESSEE TO CROSS-EXAMINE C ONCERNED WITNESS. ITA NOS. 1852/MUM/2015 & ORS M/S KAKA RAYON 18 THUS CONSIDERING THE ABOVE FACTUAL SCENARIO AND POS ITION OF LAW, WE SET ASIDE THE ORDER OF THE LD. CIT(A) AND RESTORE THE M ATTER TO THE FILE OF THE AO TO MAKE A DE NOVO ORDER, AFTER ALLOWING THE OPPORTUNITY OF CROSS-EXA MINATION TO THE ASSESSEE. WE DIRECT THE ASSESSEE TO FILE THE RE LEVANT ACCOUNTS/DOCUMENTS/EVIDENCE BEFORE THE AO. NEEDLESS TO SAY, THE AO WOULD GIVE REASONABLE OPPORTUNITY OF BEING HEARD TO THE A SSESSEE BEFORE PASSING THE ORDER. 9. IN THE RESULT, THE APPEALS ARE ALLOWED FOR STATI STICAL PURPOSES. ORDER PRONOUNCED IN THE OPEN COURT ON 02/12/2020. SD/- SD/- (SAKTIJIT DEY) (N.K. PRADHAN) JUDICIAL MEMBER ACCOUNTANT MEMBER MUMBAI; DATED: 02/12/2020. RAHUL SHARMA, SR. P.S. 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 . BY ORDER, //TRUE COPY// (DY.//ASST. REGISTRAR) ITAT, MUMBAI