SHEKASA ENGINEERING CO., MUMBAI V. DCIT CIR 7(2), MUMBAI

ITA 5572/MUM/2015

• Counselvise Citation: [2017] 126 COUNSELVISE.COM (IT) 9754 (ITAT-MUMBAI)
• Duration Of Justice: 1 year(s) 9 month(s) 5 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 14-09-2017
• Appeal Filed By: Assessee
• Order Result: Partly Allowed
• Bench Allotted: Not Allotted
• Assessment Year: 2009-2010
• Appeal Filed On: 09-12-2015
• Result in Favour of: Partly Allowed
• Court: TRIBUNAL
• Department Lawyers: V JUSTIN DR
• Keywords: Reopening of assessment; Bogus purchase; Capital asset; Depreciation; Question of law
• Section: 147; 148

Judgement Text

, , , IN THE INCOME TAX APPELLATE TRIBUNAL MUMBAI BENCHES E, MUMBAI , . , , BEFORE SHRI JOGINDER SINGH, JUDICIAL MEMBER, AND SHRI G. MANJUNATHA, ACCOUNTANT MEMBER ITA NO.5572/MUM/2015 ASSESSMENT YEAR: 2009-10 SHEKASA ENGINEERING CO. PVT. LTD., 02 ND FLOOR, 182/186, METAL HOUSE, KALBADEVI ROAD, OPP. COTTON EXCHANGE, MUMBAI-400002 / VS. DCIT, CIRCLE-8(2)(1), ROOM NO.670, AAYAKAR BHAVAN, M. K. ROAD, MUMBAI-400002 ( ! ' /ASSESSEE) ( ' / REVENUE) PAN NO.:-AAACS7426F ! ' / ASSESSEE BY SHRI SATISH MODY ' / REVENUE BY SHRI V. JUSTIN-DR ( ' ) ' * / DATE OF HEARING : 14/09/2017 ) ' * / DATE OF ORDER: 14/09/2017 ITA NOS. 5572/MUM/2015 SHEKASA ENGINEERING CO. 2 / O R D E R PER JOGINDER SINGH (JUDICIAL MEMBER) THE ASSESSEE IS AGGRIEVED BY THE IMPUGNED ORDER DATED 29/10/2015 OF THE FIRST APPELLATE AUTHORITY, MUMBAI. THE GROUND OF REOPENING OF ASSESSMENT U/S 147 R.W.S 148 OF THE INCOME TAX ACT, 1961 (HEREINAFTER THE ACT) WAS NOT AGITATED BY THE ASSESSEE, THEREFORE, GROUND NO.4 IS DISMISSED AS NOT PRESSED. 2. THE ONLY GROUND AGITATED, BEFORE US, IS WITH RESPECT TO CONFIRMING THE ADDITION ON ACCOUNT OF BO GUS PURCHASES AMOUNTING TO ` 3,55,00,233/-. DURING HEARING, SHRI SATISH MODY, LD. COUNSEL FOR THE ASSESSEE, ADV ANCED ARGUMENTS, WHICH IS IDENTICAL TO THE GROUND RAISED BY SUBMITTING THAT SUFFICIENT OPPORTUNITY WAS NOT PROV IDED TO THE ASSESSEE AND THUS THE ADDITION WAS MADE. IT WAS EXPLAINED THAT THE ADDITION WAS MADE MERELY ON THE BASIS OF INFORMATION RECEIVED BY THE ASSESSING OFFICER AN D NO INDEPENDENT ENQUIRY WAS MADE. IT WAS FURTHER EXPLAI NED THAT THE ASSESSEE PURCHASES PIPE. ON THE OTHER HAND , SHRI V. JUSTIN, LD. DR, STRONGLY DEFENDED THE ASSESSMENT ITA NOS. 5572/MUM/2015 SHEKASA ENGINEERING CO. 3 ORDER/IMPUGNED ORDER BY CONTENDING THAT THE ASSESSE E DID NOT PROVE CONSUMPTION AND NECESSARY DETAILS WERE NO T FILED BEFORE THE ASSESSING OFFICER, THEREFORE, THE ADDITI ON WAS RIGHTLY MADE. THE LD. COUNSEL FOR THE ASSESSEE AGRE ED THAT TO PLUG THE LEAKAGE OF REVENUE, THE ADDITION MAY BE SUSTAINED TO THE EXTENT OF 20% OF THE BOGUS PURCHAS ES. 2.1. WE HAVE CONSIDERED THE RIVAL SUBMISSIONS AND PERUSED THE MATERIAL AVAILABLE ON RECORD. IF THE OB SERVATION MADE IN THE ASSESSMENT ORDER, LEADING TO ADDITION M ADE TO THE TOTAL INCOME, CONCLUSION DRAWN IN THE IMPUGNED ORDER, MATERIAL AVAILABLE ON RECORD, ASSERTIONS MADE BY TH E LD. RESPECTIVE COUNSEL, IF KEPT IN JUXTAPOSITION AND AN ALYZED, BEFORE ADVERTING FURTHER, THE FACTS OF THE PRESENT APPEAL BEFORE US, WE DEEM IT APPROPRIATE TO CONSIDER VARIO US DECISIONS FROM HON'BLE HIGH COURTS/HON'BLE APEX COU RT, SO THAT WE CAN REACH TO A PROPER CONCLUSION. THE HON'B LE GUJARAT HIGH COURT IN SANJAY OILCAKES INDUSTRIES VS CIT (2009) 316 ITR 274 (GUJ.) HELD AS UNDER:- 11 . HAVING HEARD THE LEARNED ADVOCATES APPEARING FOR THE RESPECTIVE PARTIES, IT IS APPARENT THAT NO INTERFER ENCE IS CALLED FOR IN THE IMPUGNED ORDER OF THE TRIBUNAL DATED APRIL 2 9, 1994, READ WITH THE ORDER DATED SEPTEMBER 29, 1994, MADE IN MISCELLANEOUS APPLICATION. IN THE PRINCIPAL ORDER T HE TRIBUNAL HAS RECORDED THE FOLLOWING FINDINGS : ITA NOS. 5572/MUM/2015 SHEKASA ENGINEERING CO. 4 '8.3. WE HAVE CONSIDERED THE RIVAL SUBMISSIONS AND PERUSED THE FACTS ON RECORD. IN OUR OPINION, THE AC TION OF THE COMMISSIONER OF INCOME-TAX (APPEALS) CONFIRMING 25 PER CENT. OF THE AMOUNTS CLAIMED IS FAIR AND REASON ABLE 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 PA RTIES WERE NOT TRACEABLE ; THEY OPENED THE BANK ACCOUNTS IN WH ICH THE CHEQUES WERE CREDITED BUT SOON THEREAFTER THE AMOUN TS 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 PURCHASE S INTO BOOKS OF ACCOUNT BECAUSE THE PURCHASES WITH BILLS W ERE NOT FEASIBLE. THUS, THE ABOVENOTED PARTIES BECOME CONDU IT PIPES BETWEEN THE ASSESSEE-FIRM AND THE SELLERS OF THE RAW MATERIALS. UNDER THE CIRCUMSTANCES, IT WAS NOT IMPO SSIBLE FOR THE ASSESSEE TO INFLATE THE PRICES OF RAW MATER IALS. 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 ACCOR DINGLY 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 ACCEPT ED 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 PERSO NS WHO HAD ISSUED BILLS FOR SUCH GOODS. THOUGH THE PURCHAS ES ARE SHOWN TO HAVE BEEN MADE BY MAKING PAYMENT THEREOF B Y ACCOUNT PAYEE CHEQUES, THE CHEQUES HAVE BEEN DEPOSI TED IN BANK ACCOUNTS OSTENSIBLY IN THE NAME OF THE APPA RENT SELLERS, THEREAFTER THE ENTIRE AMOUNTS HAVE BEEN WI THDRAWN BY BEARER CHEQUES AND THERE IS NO TRACE OR IDENTITY OF THE PERSON WITHDRAWING THE AMOUNT FROM THE BANK ACCOUNT S. IN THE LIGHT OF THE AFORESAID NATURE OF EVIDENCE IT IS NOT POSSIBLE TO RECORD A DIFFERENT CONCLUSION, DIFFEREN T FROM THE ONE RECORDED BY THE COMMISSIONER (APPEALS) AND THE TRIBUNAL CONCURRENTLY HOLDING THAT THE APPARENT SEL LERS WERE NOT GENUINE, OR WERE ACTING AS CONDUIT BETWEEN THE ASSESSEE-FIRM AND THE ACTUAL SELLERS OF THE RAW MAT ERIALS. BOTH THE COMMISSIONER (APPEALS) AND THE TRIBUNAL HA VE, THEREFORE, COME TO THE CONCLUSION THAT IN SUCH CIRCUMSTANCES, THE LIKELIHOOD OF THE PURCHASE PRICE BEING INFLATED CANNOT BE RULED OUT AND THERE IS NO MATERI AL TO DISLODGE SUCH FINDING. THE ISSUE IS NOT WHETHER THE PURCHASE PRICE REFLECTED IN THE BOOKS OF ACCOUNT MA TCHES THE PURCHASE PRICE STATED TO HAVE BEEN PAID TO OTHE R ITA NOS. 5572/MUM/2015 SHEKASA ENGINEERING CO. 5 PERSONS. THE ISSUE IS WHETHER THE PURCHASE PRICE PA ID BY THE ASSESSEE IS REFLECTED AS RECEIPTS BY THE RECIPI ENTS. THE ASSESSEE HAS, BY SET OF EVIDENCE AVAILABLE ON RECOR D, MADE IT POSSIBLE FOR THE RECIPIENTS NOT BEING TRACEABLE FOR THE PURPOSE OF INQUIRY AS TO WHETHER THE PAYMENTS MADE BY THE ASSESSEE HAVE BEEN ACTUALLY RECEIVED BY THE APP ARENT SELLERS. HENCE, THE ESTIMATE MADE BY THE TWO APPELL ATE AUTHORITIES DOES NOT WARRANT INTERFERENCE. EVEN OTH ERWISE, WHETHER THE ESTIMATE SHOULD BE AT A PARTICULAR SUM OR AT A DIFFERENT 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 BILL S WERE NOT TRACEABLE AND THE GOODS RECEIVED FROM PARTIES OTHER THAN THE PERSONS, WHO HAD ISSUED THE BILLS FOR SUCH GOOD S. THE PURCHASES WERE SHOWN TO HAVE BEEN MADE BY MAKING PAYMENTS, THROUGH BANKING CHANNEL AND THUS THE APPA RENT SELLERS WERE NOT GENUINE OR WERE ACTING AS CONDUIT BETWEEN THE ASSESSEE AND THE ACTUAL SELLER. IN SUCH A SITUA TION, THE CONCLUSION DRAWN BY THE LD. COMMISSIONER OF INCOME TAX (APPEAL) AS WELL AS BY THE TRIBUNAL WAS AFFIRMED. HON'BLE APEX COURT IN KACHWALA GEMS VS JCIT (2007) 158 TAXM AN 71 OBSERVED THAT AN ELEMENT OF GUESSWORK IS INEVITA BLE IN CASES, WHERE ESTIMATION OF INCOME IS WARRANTED. 2.2. THE HON'BLE GUJARAT HIGH COURT IN CIT VS BHOLANATH POLY FAB. PVT. LTD. (2013) 355 ITR 290 (G UJ.) HELD/OBSERVED AS UNDER:- ITA NOS. 5572/MUM/2015 SHEKASA ENGINEERING CO. 6 5. HAVING COME TO SUCH A CONCLUSION, HOWEVER, THE TRIBUNAL WAS OF THE OPINION THAT THE PURCHASES MAY HAVE BEEN MADE F ROM BOGUS PARTIES, NEVERTHELESS, THE PURCHASES THEMSELVES WER E NOT BOGUS. THE TRIBUNAL ADVERTED TO THE FACTS AND DATA ON RECO RD AND CAME TO 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 METRES OF CLOTH WERE SOLD DURING THE YEAR UNDER CONSIDERATION. THE TRIBUNAL, THEREFORE, ACCEPTED TH E 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 THE MATTER, THE TRIBUNAL W AS OF THE OPINION THAT NOT THE ENTIRE AMOUNT, BUT THE PROFIT MARGIN E MBEDDED IN SUCH AMOUNT WOULD BE SUBJECTED TO TAX. THE TRIBUNAL RELI ED ON ITS EARLIER DECISION IN THE CASE OF SANKET STEEL TRADERS AND AL SO 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 WHET HER THE PARTIES FROM WHOM SUCH PURCHASES WERE ALLEGEDLY MAD E WERE BOGUS IS ESSENTIALLY A QUESTION OF FACT. THE TRIBUNAL HAV ING 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 ENTIRE AMOUNT COVERED UNDER SUCH PURCHASE, BUT THE PROFIT ELEMENT EMBEDDED THER EIN WOULD BE SUBJECT TO TAX. THIS WAS THE VIEW OF THIS COURT IN THE CASE OF SANJAY OILCAKE INDUSTRIES V. CIT [2009] 316 ITR 274 (GUJ). SUCH DECISION IS ALSO FOLLOWED BY THIS COURT IN A JUDGMENT DATED AUG UST 16, 2011, IN TAX APPEAL NO. 679 OF 2010 IN THE CASE OF CIT V. KI SHOR AMRUTLAL PATEL. IN THE RESULT, TAX APPEAL IS DISMISSED. 2.3. LIKEWISE, THE HON'BLE GUJARAT HIGH COURT IN C IT VS VIJAY M. MISTRY CONSTRUCTION LTD. (2013) 355 ITR 498 (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 MADE THE PURCHASES AND, HENCE, THE ASSESSING OFFICER WAS NOT JUSTIFIED IN DISALLOWING THE ENTIRE AMOUNT. HE, HOWEVER, WAS OF THE VIEW THAT THE ASSESSEE HAD INFLATED THE PURCHASES AND, ACCORD INGLY, BY PLACING RELIANCE ON THE DECISION OF THE TRIBUNAL IN THE CASE 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 PROTEINS TO THE LETTER AND ENH ANCED THE DISALLOWANCE TO 25 PER CENT. THUS, IN BOTH CASES, T HE DECISION OF ITA NOS. 5572/MUM/2015 SHEKASA ENGINEERING CO. 7 THE COMMISSIONER (APPEALS) AS WELL AS THAT OF THE T RIBUNAL IS BASED ON ESTIMATE. THIS HIGH COURT IN THE CASE OF S ANJAY OIL CAKE [2009] 316 ITR 274 (GUJ) HAS HELD THAT WHETHER AN ESTIMATE SHOULD BE AT A PARTICULAR SUM OR AT A DIFFERENT SUM CAN NEVER BE A QUESTION OF LAW. 7. THE APEX COURT IN THE CASE OF KACHWALA GEMS [200 7] 288 ITR 10 (SC) HAS HELD THAT IN A BEST JUDGMENT ASSESSMENT T HERE IS ALWAYS A CERTAIN DEGREE OF GUESS WORK. NO DOUBT, TH E AUTHORITIES SHOULD TRY TO MAKE AN HONEST AND FAIR ESTIMATE OF T HE INCOME EVEN IN A BEST JUDGMENT ASSESSMENT AND SHOULD NOT A CT TOTALLY 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 TRIBUNAL, BEING BASED ON AN ESTIMATE, DOES NOT GIVE RISE TO ANY QUESTION OF LAW SO AS TO WARRANT INTERFERENCE. 9. IN SO FAR AS THE PROPOSED QUESTIONS (C), (D) AND (E) ARE CONCERNED, THE SAME ARE SIMILAR TO THE PROPOSED QUE STION (A) WHEREIN THE TRIBUNAL HAS RESTRICTED THE ADDITION TO 25 PER CENT. ON SIMILAR FACTS. IN THE CIRCUMSTANCES, FOR THE REA SONS STATED HEREINABOVE, THE SAID GROUNDS OF APPEAL DO NOT GIVE RISE TO ANY QUESTION OF LAW. 10. AS REGARDS THE PROPOSED QUESTION (B) WHICH PERT AINS TO THE DELETION OF ADDITION OF RS. 7,88,590 MADE ON ACCOUN T OF INFLATION OF EXPENSES PAID TO METAL AND MACHINE TRADING CO. ( MMTC), THE ASSESSING OFFICER HAS FOUND THAT MMTC WAS A PARTNER SHIP FIRM OF SHRI NITIN GAJJAR ALONG WITH HIS FATHER AND BROTHER OPERATING FROM BHAVNAGAR. A PERUSAL OF THEIR TRANSACTIONS WITH THE ASSESSEE INDICATED THAT THERE IS SOME INFLATION OF EXPENSES AS DETAILED IN PARAGRAPH 6.1 OF THE ASSESSMENT ORDER. AFTER CONSID ERING THE EVIDENCE ON RECORD, THE ASSESSING OFFICER DISALLOWE D THE AMOUNT RS. 7,88,590 ON ACCOUNT OF PAYMENT MADE TO MMTC. 11. THE ASSESSEE PREFERRED AN APPEAL BEFORE THE COM MISSIONER (APPEALS), WHO UPON APPRECIATION OF THE EVIDENCE ON RECORD FOUND THAT THE ASSESSING OFFICER HAD NOT REJECTED T HE GENUINENESS OF THE PURCHASES MADE FROM MMTC WHILE M AKING THE DISALLOWANCE. HIS OBSERVATIONS WERE BASED ON INFLAT ION OF RATES WHICH WERE BEING CHARGED FROM THE ASSESSEE. ACCORDI NG TO THE COMMISSIONER (APPEALS), THOUGH MMTC IN SOME RESPECT COULD BE ATTRIBUTED TO BE ASSOCIATED WITH THE ASSESSEE-COMPA NY, STILL IT COULD NOT BE EXPECTED THAT MMTC WAS CARRYING OUT IT S BUSINESS WITHOUT ANY MOTIVE OR PROFIT. ACCORDING TO THE COMM ISSIONER (APPEALS), IT WAS PROVED BY THE ASSESSEE THAT THE R ATES CHARGED BY MMTC WERE COMPARABLE WITH THE PREVAILING MARKET RATES, NO SUCH ADDITION CAN STAND. THE COMMISSIONER (APPEALS) TOOK NOTE OF THE FACT THAT IT WAS NOT THE CASE OF THE ASSESSI NG OFFICER THAT THE PURCHASES HAD BEEN DIRECTLY EFFECTED FROM THIRD PARTIES AND NOT DIRECTLY FROM MMTC ; THE DIFFERENCE COULD NOT B E THE NET PROFIT IN THE HANDS OF MMTC ; AND THAT WHILE CONDUC TING THE ENTIRE EXERCISE MMTC WOULD HAVE TO INCUR CERTAIN EX PENDITURE IN TRANSPORTATION, IN ENGAGING PERSONNEL IN THE OFFICE AND OTHER ITA NOS. 5572/MUM/2015 SHEKASA ENGINEERING CO. 8 OPERATIONS AND WAS ACCORDINGLY OF THE VIEW THAT THE RE WAS NO CASE OF ACTUAL INFLATION OF RATES AND DELETED THE A DDITION. 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 T HE PREVAILING MARKET RATES AND THAT MMTC HAD INCURRED CERTAIN EXPENDITURE IN ENGAGING PERSONNEL IN THE OFFICE AND OTHER OPERATIONS AND WOULD MAKE SOME INCOME FROM THE ENTI RE 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 THE COMMISS IONER (APPEALS) AS WELL AS THE TRIBUNAL. IT IS NOT THE CA SE OF THE REVENUE THAT THE TRIBUNAL HAS TAKEN INTO ACCOUNT AN Y IRRELEVANT MATERIAL OR THAT ANY RELEVANT MATERIAL HAS NOT BEEN TAKEN INTO CONSIDERATION. IN THE ABSENCE OF ANY MATERIAL TO TH E CONTRARY BEING POINTED OUT ON BEHALF OF THE REVENUE, THE IMP UGNED ORDER BEING BASED ON CONCURRENT FINDINGS OF FACT RECORDED BY THE TRIBUNAL UPON APPRECIATION OF THE EVIDENCE ON RECOR D, DOES NOT GIVE RISE TO ANY QUESTION OF LAW IN SO FAR AS THE P RESENT GROUND OF APPEAL IS CONCERNED. 14. IN RELATION TO THE PROPOSED QUESTION (F) WHICH RELATES TO THE DELETION OF ADDITION OF RS. 44,54,426 MADE ON ACCOU NT OF PURCHASE OF CRANE AND ALLOWING DEPRECIATION ON THE SAME, THE ASSESSING OFFICER OBSERVED THAT THE ASSESSEE HAD PU RCHASED A CRAWLER CRANE FOR AN AMOUNT OF RS. 24,61,000 EXCLUD ING THE COST OF SPARE PARTS OF RS. 14,98,490. THE ASSESSING OFFI CER AFTER EXAMINING THE EVIDENCE ON RECORD AND CONSIDERING TH E EXPLANATION GIVEN BY THE ASSESSEE, MADE ADDITION OF RS. 44,54,426, RS. 39,59,490 BEING THE PURCHASE PRICE O F THE CRANE ALONG WITH ITS SPARE PARTS AND RS. 4,94,936 BEING D EPRECIATION CLAIMED BY THE ASSESSEE. THE COMMISSIONER (APPEALS) , UPON APPRECIATION OF EVIDENCE ON RECORD, WAS OF THE VIEW THAT THE ASSESSING OFFICER HAS NOT APPRECIATED THE FACTS OF THE CASE PROPERLY AND HAD MADE DISALLOWANCE WHICH WAS NOT PE RMITTED BY THE INCOME-TAX ACT. IT WAS HELD THAT DISALLOWANCE C OULD ONLY HAVE BEEN MADE IN RESPECT OF EXPENSES DEBITED TO TH E PROFIT AND LOSS ACCOUNT WHEREAS IN THE PRESENT CASE THE PURCHA SE OF CRANE AND SPARE PARTS OF THE CRANE AND OTHER MACHINERIES WERE IN THE NATURE OF ACQUISITION OF CAPITAL ASSET. ACCORDING T O THE COMMISSIONER (APPEALS), THE DISALLOWANCE COULD HAVE BEEN MADE ON DEPRECIATION ONLY IF AT ALL THE ASSESSING OFFICE R CONCLUSIVELY PROVED THAT THE PURCHASES OF CRANE AND OTHER PARTS ARE BOGUS. UPON APPRECIATION OF THE MATERIAL ON RECORD THE COM MISSIONER (APPEALS) FOUND THAT THE ASSESSING OFFICER HAS SIMP LY BRUSHED ASIDE ALL THE EVIDENCE ON ACCOUNT OF TECHNICAL INFI RMITIES AND THAT THE EVIDENCE SUCH AS OCTROI RECEIPT ; HYPOTHECATION OF THE CRANE TO THE BANK; EXISTENCE OF THE CRANE EVEN TILL DATE WITH THE ASSESSEE CONCLUSIVELY PROVED THAT THE CRANE WAS PUR CHASED AND IT WAS IN USE EVEN AS ON DATE WITH THE ASSESSEE. THE C OMMISSIONER (APPEALS) ACCORDINGLY FOUND THAT THERE WAS NO SCOPE FOR ANY DISALLOWANCE AND ACCORDINGLY DELETED THE DISALLOWAN CE MADE ON ITA NOS. 5572/MUM/2015 SHEKASA ENGINEERING CO. 9 ACCOUNT OF PURCHASE OF CRANE AND ALLOWED THE DEPREC IATION 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 R ETURN OF INCOME. BEFORE THE TRIBUNAL, THE ASSESSEE PRODUCED THE EVIDENCE THAT THE CRANE IN QUESTION WAS REGISTERED WITH THE RTO AND THE SAME WAS WHOLLY AND EXCLUSIVELY USED FOR THE PURPOS ES OF ITS BUSINESS. THE TRIBUNAL, THEREFORE, HELD THAT THE CO MMISSIONER (APPEALS) WAS LEGALLY AND FACTUALLY CORRECT IN DELE TING THE DISALLOWANCE OF COST OF CRANE AS WELL AS DEPRECIATI ON THEREON. 16. FROM THE FACTS EMERGING FROM THE RECORD, IT IS APPARENT THAT THE ASSESSEE HAD NEVER CLAIMED THE COST OF THE CRAN E IN THE RETURN NOR HAD IT DEBITED THE EXPENSES TO THE PROFI T AND LOSS ACCOUNT, AND AS SUCH THE QUESTION OF DISALLOWING TH E SAME AND ADDING THE SAME TO THE INCOME WOULD NOT ARISE. MORE OVER, IN THE ABSENCE OF ANY EVIDENCE TO INDICATE THAT THE PURCHA SE WAS BOGUS OR THAT THE CRANE IN FACT DID NOT EXIST, THE QUESTI ON OF DISALLOWING THE DEPRECATION IN RESPECT OF THE SAME ALSO WOULD N OT ARISE. WHEN THE ASSESSEE HAD CONCLUSIVELY PROVED THE PURCH ASE AND EXISTENCE OF THE CRANE, AND HAD NOT DEBITED THE EXP ENSES TO THE PROFIT AND LOSS ACCOUNT, NO ADDITION COULD HAVE BEE N MADE IN RESPECT OF THE PURCHASE PRICE NOR COULD HAVE DEPREC IATION BEEN DISALLOWED IN RESPECT THEREOF. THE TRIBUNAL WAS, TH EREFORE, JUSTIFIED IN DELETING THE ADDITION AS WELL AS DISAL LOWANCE OF DEPRECIATION. 17. IN THE LIGHT OF THE AFORESAID DISCUSSION, IT IS NOT POSSIBLE TO STATE THAT THERE IS ANY LEGAL INFIRMITY IN THE IMPU GNED ORDER MADE BY THE TRIBUNAL SO AS TO WARRANT INTERFERENCE. IN T HE ABSENCE OF ANY QUESTION OF LAW, MUCH LESS, A SUBSTANTIAL QUEST ION OF LAW, THE APPEAL IS DISMISSED. 2.4. THE HON'BLE JURISDICTIONAL HIGH COURT IN THE CASE OF CIT VS ASHISH INTERNATIONAL LTD. (ITA NO.4299/20 09) 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 O F BOGUS PURCHASES ALLEGEDLY MADE BY THE ASSESSEE FROM M/S. THAKKAR AGRO INDUSTRIAL CHEM SUPPLIES P. LTD. ACCOR DING TO THE REVENUE, THE DIRECTOR OF M/S. THAKKAR AGRO INDU STRIAL CHEM SUPPLIES P. LTD. IN HIS STATEMENT HAD STATED T HAT 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 AS SESSEE HAD DISPUTED THE CORRECTNESS OF THE ABOVE STATEMENT AND ADMITTEDLY THE ASSESSEE WAS NOT GIVEN ANY OPPORTUNI TY TO CROSS EXAMINE THE CONCERNED DIRECTOR OF M/S. THAKKA R AGRO ITA NOS. 5572/MUM/2015 SHEKASA ENGINEERING CO. 10 INDUSTRIAL CHEM SUPPLIES P. LTD. WHO HAD MADE THE A BOVE STATEMENT. THE APPELLATE AUTHORITY HAD SOUGHT REMAN D REPORT AND EVEN AT THAT STAGE THE GENUINENESS OF THE STATE MENT HAS NOT BEEN ESTABLISHED BY ALLOWING CROSS EXAMINATION OF THE PERSON WHOSE STATEMENT WAS RELIED UPON BY THE REVEN UE. IN THESE CIRCUMSTANCES, THE DECISION OF THE TRIBUNAL B EING BASED ON THE FACT, NO SUBSTANTIAL QUESTION OF LAW C AN 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 VS NIKUNJ EXIM ENTERPRISES PVT. LTD. (2015) 372 ITR 61 9 (BOM.) HELD/OBSERVED AS UNDER:- 7. WE HAVE CONSIDERED THE SUBMISSION ON BEHALF OF THE REVENUE. HOWEVER, FROM THE ORDER OF THE TRIBUNAL DA TED APRIL 30, 2010, WE FIND THAT THE TRIBUNAL HAS DELETED THE ADDITIONS ON ACCOUNT OF BOGUS PURCHASES NOT ONLY ON THE BASIS OF STOCK STATEMENT, I.E., RECONCILIATION STATEMENT BUT ALSO IN VIEW OF THE OTHER FACTS. THE TRIBUNAL RECORDS THAT THE BOOK S OF ACCOUNT OF THE RESPONDENT-ASSESSEE HAVE NOT BEEN RE JECTED. SIMILARLY, THE SALES HAVE NOT BEEN DOUBTED AND IT I S AN ADMITTED POSITION THAT SUBSTANTIAL AMOUNT OF SALES HAVE BEEN MADE TO THE GOVERNMENT DEPARTMENT, I.E., DEFENCE RE SEARCH AND DEVELOPMENT LABORATORY, HYDERABAD. FURTHER, THE RE WERE CONFIRMATION LETTERS FILED BY THE SUPPLIERS, COPIES OF INVOICES FOR PURCHASES AS WELL AS COPIES OF BANK STATEMENT A LL OF WHICH WOULD INDICATE THAT THE PURCHASES WERE IN FACT MADE . IN OUR VIEW, MERELY BECAUSE THE SUPPLIERS HAVE NOT APPEARE D BEFORE THE ASSESSING OFFICER OR THE COMMISSIONER OF INCOME -TAX (APPEALS), ONE CANNOT CONCLUDE THAT THE PURCHASES W ERE NOT MADE BY THE RESPONDENT-ASSESSEE. THE ASSESSING OFFI CER AS WELL AS THE COMMISSIONER OF INCOME-TAX (APPEALS) HA VE DISALLOWED THE DEDUCTION OF RS. 1.33 CRORES ON ACCO UNT OF PURCHASES MERELY ON THE BASIS OF SUSPICION BECAUSE THE SELLERS AND THE CANVASSING AGENTS HAVE NOT BEEN PRO DUCED BEFORE THEM. WE FIND THAT THE ORDER OF THE TRIBUNAL IS WELL 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 DATED A PRIL 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:- ITA NOS. 5572/MUM/2015 SHEKASA ENGINEERING CO. 11 BEING AGGRIEVED BY THE AFORESAID ORDER, THE ASSESS EE WENT IN SECOND APPEAL BEFORE THE TRIBUNAL. IT WAS URGED ON BEHALF OF THE ASSESSEE THAT THE TRANSACTIONS IN QUESTION WERE NOR MAL BUSINESS TRANSACTIONS AND THE ASSESSEE HAD MADE PAYMENTS BY CHEQUES. THE PARTIES DID NOT COME FORWARD AND IF THEY DID NO T COME, THE ASSESSEE SHOULD NOT SUFFER. HOWEVER, ON BEHALF OF T HE REVENUE, IT WAS URGED THAT DETAILED INQUIRIES WERE MADE AND THEREAFTER THE CONCLUSION WAS REACHED. THE TRIBUNAL FOUND THAT THERE WAS NO EVIDENCE ANYWHERE THAT THESE CONCERNS GAVE BOGUS VOUCHERS TO THE ASSESSEE. NO DOUBT, THERE WERE CERTAIN DOUBT FUL FEATURES, BUT THE EVIDENCE WAS NOT ADEQUATE TO CONCLUDE THAT THE PURCHASES MADE BY THE ASSESSEE FROM THE SAID PARTIE S WERE BOGUS. THE TRIBUNAL ACCORDINGLY, DID NOT SUSTAIN TH E ADDITION RETAINED BY THE APPELLATE ASSISTANT COMMISSIONER. H ENCE, AT THE INSTANCE OF THE REVENUE, THE AFORESAID QUESTION HAS BEEN REFERRED TO THIS COURT FOR OPINION. ON A PERUSAL OF THE ORDER OF THE TRIBUNAL, IT CLEAR LY APPEARS THAT WHETHER THE SAID TRANSACTIONS WERE BOGUS OR NOT WAS A QUESTION OF FACT. THE TRIBUNAL HAS ALSO POINTED OUT THAT NOT HING IS SHOWN TO INDICATE THAT ANY PART OF THE FUND GIVEN BY THE ASSESSEE TO THESE PARTIES CAME BACK TO THE ASSESSEE IN ANY FORM . IT IS FURTHER OBSERVED BY THE TRIBUNAL THAT THERE IS NO E VIDENCE ANYWHERE THAT THESE CONCERNS GAVE VOUCHERS TO THE A SSESSEE. EVEN THE TWO STATEMENTS DO NOT IMPLICATE THE TRANSA CTIONS WITH THE ASSESSEE IN ANY WAY. WITH THESE OBSERVATIONS, T HE TRIBUNAL ULTIMATELY HAS OBSERVED THAT THERE ARE CERTAIN DOUB TFUL FEATURES, BUT THE EVIDENCE IS NOT ADEQUATE TO CONCLUDE THAT T HE PURCHASES MADE BY THE ASSESSEE FROM THESE PARTIES WERE BOGUS. IT MAY BE STATED THAT THE ASSESSEE WAS GIVEN CREDIT FACILITIE S 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 PURC HASES OF THE GOODS MADE IN THE BOOKS OF ACCOUNT WERE BOGUS ENTRI ES. WE, THEREFORE, DO NOT FIND THAT THE CONCLUSION ARRIVED AT BY THE TRIBUNAL IS AGAINST THE WEIGHT OF EVIDENCE. IN THAT VIEW OF THE MATTER, WE ANSWER THE QUESTION IN THE AFFIRMATIVE, THAT IS, IN FAVOUR OF THE ASSESSEE AND AGAINST THE REVENUE. ACC ORDINGLY, THE REFERENCE STANDS DISPOSED OF WITH NO ORDER AS T O COSTS. 2.7. THE MUMBAI BENCH OF THE TRIBUNAL IN THE CASE OF DCIT VS RAJEEV G. KALATHIL (2015) 67 SOT 52 (MUM. TRIB.)(URO), IDENTICALLY, HELD AS UNDER:- 2.2.AGGRIEVED BY THE ORDER OF THE AO, ASSESSEE PRE FERRED AN APPEAL BEFORE THE FIRST APPELLATE AUTHORITY(FAA).BE FORE HIM IT ITA NOS. 5572/MUM/2015 SHEKASA ENGINEERING CO. 12 WAS ARGUED THAT ASSESSEE HAD FILED COPIES OF BILLS OF PURCHASE FROM DKE AND NBE, THAT BOTH THE SUPPLIERS WERE REGI STERED DEALERS AND WERE CARRYING PROPER VAT AND REGISTRATI ON NO.S, THAT LEDGER ACCOUNTS OF THE PARTIES IN ASSESSEE'S BOOKS SHOWED BILLS ACCOUNTED FOR, THAT PAYMENT WAS MADE BY CHEQUES, TH AT A CERTIFICATE FROM THE BANKER GIVING DETAILS OF CHEQU E PAYMENT TO THE SAID PARTIES WAS ALSO FURNISHED. COPIES OF THE CONSIGNMENT, RECEIVED FROM THE GOVERNMENT APPROVED TRANSPORT CON TRACTORS SHOWING THAT MATERIAL PURCHASED WAS ACTUALLY DELIVE RED AT THE SITE WAS FURNISHED BEFORE THE AO. IT WAS ALSO ARGUE D THAT SOME OF THE MATERIAL PURCHASED FROM THE SAID PARTIES WER E LYING PART OF CLOSING STOCK AS ON 31.03.2009 AS PER THE STATEM ENT SUBMITTED ON RECORD. AFTER CONSIDERING THE ASSESSME NT ORDER AND THE SUBMISSIONS MADE BY THE ASSESSEE, FAA HELD THAT THE TRANSACTIONS WERE SUPPORTED BY PROPER DOCUMENTARY E VIDENCES, THAT THE PAYMENTS MADE TO THE PARTIES BY THE ASSESS EE WERE IN CONFIRMATION WITH BANK CERTIFICATE,T HAT THE SUPPLI ERS WAS SHOWN AS DEFAULT UNDER THE MAHARASHTRA VAT ACT COULD NOT BE SUFFICIENT EVIDENCES TO HOLD THAT THE PURCHASES WERE NON-GENUI NE, THAT THE AO HAD NOT BROUGHT ANY INDEPENDENT AND RELIABLE EVI DENCES 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 DELETED THE AD DITION MADE BY THE AO . 2.3.BEFORE US, DEPARTMENTAL REPRESENTATIVE ARGUED THAT BOTH THE SUPPLIERS WERE NOT PRODUCED BEFORE THE AO BY TH E ASSESSEE, THAT ONE OF THEM WAS DECLARED HAWALA DEAL ER 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 DE LIVERED 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 ENTERPRISE S (P) LTD. (216TAXMAN171)DELIVERED BY THE HONBLE BOMBAY HIGH COURT. 2.4.WE HAVE HEARD THE RIVAL SUBMISSIONS AND PERUSED THE MATERIAL BEFORE US. WE FIND THAT AO HAD MADE THE AD DITION AS ONE OF THE SUPPLIER WAS DECLARED A HAWALA DEALER BY THE VAT DEPARTMENT. WE AGREE THAT IT WAS A GOOD STARTING PO INT FOR MAKING FURTHER INVESTIGATION AND TAKE IT TO LOGICAL END. BUT, HE LEFT THE JOB AT INITIAL POINT ITSELF. SUSPICION OF HIGHEST DEGREE CANNOT TAKE PLACE OF EVIDENCE. HE COULD HAVE CALLED FOR THE DETAILS OF THE BANK ACCOUNTS OF THE SUPPLIERS TO FI ND OUT AS WHETHER THERE WAS ANY IMMEDIATE CASH WITHDRAWAL FRO M THEIR ACCOUNT. WE FIND THAT NO SUCH EXERCISE WAS DONE. TRANSPORTATION OF GOOD TO THE SITE IS ONE OF THE DE CIDING FACTOR ITA NOS. 5572/MUM/2015 SHEKASA ENGINEERING CO. 13 TO BE CONSIDERED FOR RESOLVING THE ISSUE. THE FAA H AS GIVEN A FINDING OF FACT THAT PART OF THE GOODS RECEIVED BY THE ASSESSEE WAS FORMING PART OF CLOSING STOCK. AS FAR AS THE CA SE OF WESTERN EXTRUSION INDUSTRIES. (SUPRA)IS CONCERNED, WE FIND THAT IN THAT MATTER CASH WAS IMMEDIATELY WITHDRAWN BY THE SUPPLI ER 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 GOODS I S NOT IN DOUBT. THERERFORE, CONSIDERING THE PECULIAR FACTS A ND CIRCUMSTANCES OF THE CASE UNDER APPEAL, WE ARE OF T HE OPINION THAT THE ORDER OF THE FAA DOES NOT SUFFER FROM ANY LEGAL INFIRMITY AND THERE ARE NOT SUFFICIENT EVIDENCE ON FILE TO ENDORSE THE VIEW TAKEN BY THE AO. SO, CONFIRMING THE ORDER OF THE FAA, WE DECIDE GROUND NO.1 AGAINST THE AO . 2.8. THE RATIO LAID DOWN IN THE CASE OF M/S NEETA TEXTILES VS INCOME TAX OFFICER 6138/MUM/2013, ORDER DATED 27/05/2013, SHRI JIGAR V. SHAH VS INCOME TAX OFFICER (ITA NO.1223/M/2014) ORDER DATED 22/01/2016 , M/S IMPERIAL IMP. & EXP. VS INCOME TAX OFFICER ITA NO.5427/MUM/2015, ORDER DATED 18/03/2016 SUPPORTS THE CASE OF THE ASSESSEE AND THE CONCLUSION DRAWN I N THE IMPUGNED ORDER. HOWEVER, AS RELIED BY THE LD. DR, T HE HON'BLE GUJARAT HIGH COURT IN THE CASE OF N.K. INDU STRIES LTD.,ETC VS DCIT (SUPRA) CONSIDERING VARIOUS DECISI ONS DECIDED THE ISSUE IN FAVOUR OF THE REVENUE AND THE HON'BLE APEX COURT DISMISSED THE SLP VIDE ORDER DATED 16/01/2017 (SLP NO.(C) 769 OF 2017). WE FIND THAT I N THAT CASE, DURING SEARCH PROCEEDINGS, CERTAIN BLANK SIGN ED CHEQUE BOOKS AND VOUCHERS WERE FOUND AND THUS THE ITA NOS. 5572/MUM/2015 SHEKASA ENGINEERING CO. 14 PURCHASES MADE FROM THESE CONCERNS, WERE TREATED AS BOGUS BY THE ASSESSING OFFICER. 2.9. THE HON'BLE GUJARAT HIGH COURT IN N.K. INDUSTRIES LTD. VS DCIT (IT APPEAL NO.240, 261, 242 , 260 AND 241 OF 2003), VIDE ORDER DATED 20/06/2016 CONSI DERED THE DECISION OF THE TRIBUNAL AND VARIOUS JUDICIAL D ECISIONS INCLUDING THE CASE OF VIJAY PROTEINS AND SANJAY OIL CAKES INDUSTRIES LTD., M/S WOOLEN CARPET FACTORY VS ITAT (2002) 178 CTR 420 (RAJ.), THE TRIBUNAL WAS HELD TO BE JUS TIFIED IN DECIDING THE CASE AGAINST THE ASSESSEE. THE HON'BL E APEX COURT CONFIRMED THE DECISION OF THE HIGH COURT FOR ADDING THE ENTIRE INCOME ON ACCOUNT OF BOGUS PURCHASES (SL P (C) NO.S 769 OF 2017, ORDER DATED 16/01/2017. 2.10. IN SUCH TYPE OF CASES, BROADLY, THE LD. COMMISSIONER OF INCOME TAX (APPEAL) AS WELL AS THIS TRIBUNAL HAS FOLLOWED THE DECISIONS FROM HON'BLE GU JARAT HIGH COURT IN THE CASE OF SIMIT P. SETH (2013) 356 ITR 451 (GUJ.), CIT VS VIJAY M. MISTRY CONSTRUCTION LTD. (2 013) 355 ITR 498 (GUJ.), CIT VS BHOLA NATH POLY FAB. (P.) LT D. (2013) 355 ITR 290 (GUJ.) AND VARIOUS OTHER DECISIONS OF T HE TRIBUNAL AND THE DECISION OF M/S NIKUNJ EXIMP(SUPRA ) FROM ITA NOS. 5572/MUM/2015 SHEKASA ENGINEERING CO. 15 HON'BLE JURISDICTIONAL HIGH COURT, WHEREIN, THE AGG REGATE DISALLOWANCE WAS RESTRICTED TO 12.5%. ADMITTEDLY, T HERE CANNOT BE SALE WITHOUT PURCHASES. THE CASE OF THE REVENUE IS THAT THERE IS BOGUS NATURE OF PURCHASES MADE FRO M SUPPLIERS AND THE PARTIES WERE NOT FOUND EXISTING A T THE GIVEN ADDRESSES. 2.11. ADMITTEDLY, IN SUCH TYPE OF CASES, THERE IS NO 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, THE FA CTS, IN BRIEF ARE THAT THE ASSESSEE DECLARED INCOME OF ` 40,68,210/- IN ITS RETURN, WHICH WAS PROCESSED U/S 143(1) OF TH E ACT. SUBSEQUENTLY, INFORMATION WAS RECEIVED FROM THE INVESTIGATION WING THAT THE ASSESSEE HAD CLAIMED CE RTAIN PURCHASES IN ITS ACCOUNT AGGREGATING ` 3,55,00,233/- IN THE F.Y. 2008-09 (ASSESSMENT YEAR 2009-10) FROM THE SAL ES TAX DEPARTMENT, WHEREIN, THE CONCERNED PARTIES ADMI TTED THAT BOGUS BILLS WERE MADE/ISSUED, WITHOUT EFFECTIN G THE ACTUAL DELIVERY OF GOODS TO VARIOUS BENEFICIARIES. THE ASSESSEE WAS ASKED TO EXPLAIN THE FACTUAL MATRIX AN D TO FURNISH THE NECESSARY DETAILS. THE ASSESSEE WAS ALS O ASKED ITA NOS. 5572/MUM/2015 SHEKASA ENGINEERING CO. 16 TO PRODUCE THE CONCERNED PARTIES (MENTIONED IN 4.1 OF THE ASSESSMENT ORDER) BEFORE THE ASSESSING OFFICER FOR VERIFICATION. THE ASSESSEE DID NOT PRODUCE THE PART IES. THE LD. ASSESSING OFFICER RELIED UPON CERTAIN JUDICIAL PRONOUNCEMENT MENTIONED IN PARA 4.6 ONWARDS AND HEL D THAT THE CLAIMED PURCHASES WERE BOGUS AND WERE ADDE D TO THE INCOME OF THE ASSESSEE. ON APPEAL BEFORE THE LD . COMMISSIONER OF INCOME TAX (APPEAL), THE ADDITION M ADE BY THE LD. ASSESSING OFFICER WAS AFFIRMED. THE ASSE SSEE IS IN APPEAL BEFORE THIS TRIBUNAL. THE ASSESSEE COULD NOT PRODUCE THE NECESSARY DETAILS LIKE DELIVERY OF CHAL LANS, ETC.. AS PER THE REVENUE, AT THE SAME TIME, THE ASSESSEE DID NOT PRODUCE THE EVIDENCE OF GENUINE PURCHASE, THEREFORE , CONSIDERING THE MATERIAL FACTS, WE HAVE NO OPTION B UT TO ESTIMATE THE PROFIT. IT WILL MEET THE END OF JUSTIC E AND TO PUT AN END TO THE LITIGATION, IF THE DISALLOWANCE IS RE STRICTED TO @ 20% (AS AGREED BY THE LD. COUNSEL FOR THE ASSESSEE) OF THE BOGUS PURCHASES. IT WILL THE SAFEGUARD THE INTEREST OF REVENUE AND WILL COVER THE LEAKAGE OF REVENUE. ACCO RDINGLY, THE APPEAL OF THE ASSESSEE IS PARTLY ALLOWED. FINALLY, THE APPEAL OF THE ASSESSEE IS PARTLY ALLOW ED. ITA NOS. 5572/MUM/2015 SHEKASA ENGINEERING CO. 17 THIS ORDER WAS PRONOUNCED IN THE OPEN COURT IN THE PRESENCE OF LD. REPRESENTATIVE OF BOTH SIDES AT THE CONCLUSION OF THE HEARING ON 14/09/2017. SD/- (G. MANJUNATHA) SD/- (JOGINDER SINGH) '# / ACCOUNTANT MEMBER $# / JUDICIAL MEMBER ( MUMBAI; , DATED :-14/09/2017 F{X~{T? P.S / -' %$&'()(*& / COPY OF THE ORDER FORWARDED TO : 1. ./01 / THE APPELLANT 2. 2301 / THE RESPONDENT. 3. 4 4 ( 5' ( ./ ) / THE CIT, MUMBAI. 4. 4 4 ( 5' / CIT(A)- , MUMBAI 5. 6'7 2' , 4 ./* . 8 , ( / DR, ITAT, MUMBAI 6. 9 : / GUARD FILE. / BY ORDER, 36/' 2' //TRUE COPY// / (DY./ASSTT. REGISTRAR) , ( / ITAT, MUMBAI,