ACIT 17 (3), Mumbai V. M/S RASHMI BEARING CO, Mumbai

ITA 5732/MUM/2019

• Counselvise Citation: [2021] 107 COUNSELVISE.COM (IT) 5543 (ITAT-MUMBAI)
• Duration Of Justice: 1 year(s) 9 month(s) 27 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 02-07-2021
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: SMC
• Assessment Year: 2011-2012
• Appeal Filed On: 05-09-2019
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Keywords: Bogus purchase; Opportunity of cross examination; Question of law; Cost of acquisition; Accommodation entries; Onus to prove; Set aside
• Section: 133(6); 143(1); 195; 208; 72; 13

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL SMC BENCH, MUMBAI BEFORE SHRI RAJESH KUMAR , AM AND SHRI AMARJIT SINGH, JM / I.T.A. NO . 5732 /M UM /201 9 ( / ASSESSMENT YEAR : 2011 - 12 ) ACIT - 17(3) ROOM NO.122, 1 ST FLOOR, KAUTILYA BHAVAN, G - BLOC K BKC, MUMBAI - 400051 . / VS. M/S. RASHMI BEARING CO. 115, ROOM NO.7, 2 ND FLOOR NAGDEVI STREET, MUMBAI - 400003. ./ ./ PAN/GIR NO. : AAEFR2683Q ( / APPELLANT ) .. ( / RESPONDENT ) / DATE OF HEARING: 08 / 0 4 / 20 2 1 /DATE OF PRONOUNCEMENT: 02 / 07 / 2021 / O R D E R PER AMARJIT SINGH, JM: THE REVENUE HAS FILED THE PRESENT A PPEAL AGAINST THE ORDER DATED 17 . 0 6 .201 9 PASSED BY THE COMMISSIONER OF INCOME TAX (APPEALS) - 28 , MUMBAI [HEREINAFTER REFERRED TO AS THE CIT(A)] RELEVANT TO THE A.Y. 20 11 - 1 2 . 2 . THE REVENUE HAS RAISED THE FOLLOWING GROUNDS: - 1. 'WH ETHER ON THE FACTS AND CIRCUMSTANCES OF THE CASE AND IN LAW, THE LD. CIT(A) JUSTIFIED IN RESTRICTING THE ADDITION MADE BY THE AO TO 12.5% OF BOGUS PURCHASES AS AGAINST THE ADDITION MADE AT 17.04% OF THE BOGUS PURCHASES, IGNORING THAT THERE WAS NO COMPL IANCE TO THE NOTICES ISSUED U/S 133(6) BY AO, AND THE ASSESSEE WAS ALSO UNABLE TO PROVE THE GENUINENESS OF THE. PURCHASES EITHER, BY PRODUCING THE SUPPLIERS FOR EXAMINATION OR BY FURNISHING REVENUE BY: MS. SMITA VERMA (SR. A R) ASSESSEE BY : SHRI NITESH GANDHI ITA. NO. 5732 / M UM /201 9 A.Y . 20 11 - 12 2 OTHER SUBSTANTIATING DOCUMENTS WHICH WERE REQUIRED BY THE ASS ESSING OFFICER?' 2. 'WHETHER ON THE FACTS AND CIRCUMSTANCES, OF THE CASE AND IN LAW, THE LD. CIT(A) ERRED IN OVERLOOKING THE FACT THAT THE ADDITION MADE BY THE AC WAS BASED ON CREDIBLE INFORMATION RECEIVED FROM THE SALES TAX DEPARTMENT, WHEREIN IT WAS ESTABLISHED THAT THE ASSESSEE HAS TAKEN MERE ACCOMMODATION ENTRIES/BOGUS BILLS FROM SUPPLIERS WITHOUT ACTUALLY MAKING PURCHASES FROM THEM?' (THE CASE FALLS UNDER THE EXCEPTION 10(E) OF THE CIRCULAR NO.03/2018 DATED 11.07.2018 AS AMENDED ON 20.08.2018) 3. 'THE APPELLANT PRAYS THAT THE ORDER OF THE CIT(A) ON THE ABOVE GROUNDS BE SET ASIDE AND THAT OF AO BE RESTORED.' 4. THE APPELLANT CRAVES LEAVE TO AMEND OR ALTER ANY GROUND OR ADD A NEW GROUND WHICH MAY BE NECESSARY. 3 . THE BRIEF FACTS OF THE CA SE ARE THAT THE ASSESSEE FILED ITS R ETURN OF INCOME ON 23 . 0 2 .20 1 6 DECLARING TOTAL INCOME TO TH E TUNE OF RS. 34,29,300/ - FOR THE A.Y. 2011 - 12 . THE RETURN WAS PROCESSED U/S 143(1) OF THE I. T. ACT, 1961 . THEREAFTER, THE ASSESSMENT OF THE ASSESSEE WAS REOPENED ON THE BASIS OF THE INFORMATION RECEIVED FROM THE DGIT(INV.), MUMBAI IN WHICH IT WAS CONVEYED THAT THE ASSESSEE HAS TAKEN THE BOGUS PURCHAS E ENTRIES IN SUM OF RS.16,97,681 / - FROM THE FOLLOWING PARTIES.: - SR. NO. NAME OF SUPPLIERS AMOUNT 1 POLSONS SALES A GENCY LTD. 2 PRATIK ENTERPRISES 34,125 3 ASHTAVINAYAK TRADING CO. 12,033 4 VOLCANO TRADING PVT. LTD. 1,04,811 5 VIHOL ENTERPRISES 35,186 6 SUPREME ENTERPRISES 50,873 7 SAMARTH ENTERPRISES 1,30,415 ITA. NO. 5732 / M UM /201 9 A.Y . 20 11 - 12 3 8 BAVIK ENTERPRISES 4,43,557 9 BALAJI MAREKTING PV T. LTD. 74,182 10 PARK DISTRIBUTOR PVT. LTD. 1,60,965 11 PURVI SALES AGENCY PVT. LTD. 13,125 12 YOAM METALLIC TRADING PVT. LTD. 1,27,890 13 JAINAM ENTERPRISES 2,46,618 14 GIRNAR SALES CORPORATION 2,05,879 TOTAL 16,97,681 A FTER THE REPLY OF THE ASSE SSEE, THE AO RAISED THE ADDITION TO THE EXTENT OF 17.04 % OF BOGUS PURCHA SE IN SUM OF RS.16,97,681 / - . THE TOTAL INCOME OF THE ASSESSEE WAS ASSE SSED TO THE TUNE OF RS.37,18,590 / - . FEELING AGGRIEVED, THE ASSESSEE FILED AN APPEAL BEFORE THE CIT(A) WHO PARTLY A LLOWED THE CLAIM OF THE ASSESSEE BUT THE REVENUE WAS NOT SATISFIED, THEREFORE, THE REVENUE HAS FILED THE PRESENT APPEAL BEFORE US. 4 . WE HAVE HEARD THE ARGUMENTS ADVANCED BY THE LD. REPRESENTATIVE OF THE PARTIES AND PERUSED THE RECORD. BEFORE GOING FURTHER , WE DEEM IT NECESSARY TO ADVERT THE FINDING OF THE CIT(A) ON RECORD.: - 5.3 I HAVE VERY CAREFULLY PERUSED THE IMPUGNED ORDER, THE ENSURE ATTENDANT FACTS AND CIRCUMSTANCES OF THE MATTER AND THE SUBMISSIONS OF THE LD. AR. I HAVE ALSO PERUSED WITH CIRCUMSPEC TION, THE PERTINENT DETAILS AND MATERIALS ON RECORD. 5.4 AT THIS STAGE, IT WILL BE RELEVANT TO MENTION THAT THE IN THE SUBMISSIONS OF THE A.R., NUMEROUS CASE LAWS HAVE BEEN QUOTED. HOWEVER, ON A CAREFUL PERUSAL OF THE SAME, IT IS SEEN THAT RATHER THAN PIN - POINT AS TO HOW AND IN WHAT MODE OR MANNER DO THESE PRECEDENTS, APPLY TO THE INSTANT CASE, THE SUBMISSIONS SEEM TO BE A RAMBLING EXPOSITION ON THE VARIOUS ASPECTS OF DIFFERENT CASE LAWS. IT IS HARDLY POINTED OUT AS TO HOW THEY ARE APPLICABLE TO THE PECULIA R FACTS OF THE APPELLANT'S CASE. FURTHER, IT IS NEITHER JUDICIALLY EXPEDIENT, NOR PRUDENT TO SUPERIMPOSE THE FACTS OF THE ITA. NO. 5732 / M UM /201 9 A.Y . 20 11 - 12 4 CASE CITED BY THE AR TO THE FACTS OF THE PRESENT CASE. IN THIS SENSE, EACH CASE IS UNDISPUTEDLY UNIQUE AND STANDS ON DIFFERENT PEDESTA L. 5.5 IN FACT, IN THIS CASE, THE ACTION OF THE AO IS QUITE FAIR, JUST AND REASONABLE IN AS MUCH AS THE FACT THAT THE AO DID NOT RUSH TO JUDGMENT BY ADDING THE ENTIRE AMOUNT AS, BOGUS PURCHASES, DESPITE THE FACT THAT THE APPELLANT DID NOT DISCHARGE ITS BUR DEN OF PROOF IN ESTABLISHING THE GENUINENESS OF THE TRANSACTIONS. THE AO HOWEVER, NOTED AND DISCUSSED ENTIRE MODUS - OPERANDI INVOLVED IN SUCH GREY MARKET TRANSACTIONS AND SINCE THE AO DID NOT DOUBT THE SALES CORRESPONDING TO SUCH BOGUS PURCHASE IN ENTIRETY, HENCE HE HAD TO ESSENTIALLY TAKE A VERY JUDICIOUS APPROACH WHICH WAS THAT THE PROFIT MARGIN EMBEDDED IN THE TRANSACTION SHOULD ONLY BE ADDED. IN THE PRESENT CASE ON THE ABOVE LINES, IT IS SEEN THAT THE AO HAS INDEED TAXED ONLY THE PROFIT ELEMENT EMBEDDED IN THE BOGUS PURCHASE TRANSACTION. 5.6 IT IS PERTINENT TO NOTE THAT THE HIGH COURT OF GUJARAT. IN THE CASE OF COMMISSIONER OF INCOME - TAX V. SIMIT P. SHETH [2013] 356 ITR 451 (GUJARAT) HAS HELD THAT WHERE PURCHASES WERE NOT BOGUS BUT WERE MADE FROM PARTIES OTHER THAN THOSE MENTIONED IN BOOKS OF ACCOUNT, NOT ENTIRE PURCHASE PRICE BUT ONLY PROFIT ELEMENT EMBEDDED IN SUCH PURCHASES CAN BE ADDED TO INCOME OF ASSESSEE. IN THIS CASE THE ASSESSING OFFICER NOTICED THAT SOME OF THE ALLEGED SUPPLIERS OF STEEL TO THE A SSESSEE HAD MADE THEIR STATEMENTS ON OATH TO THE EFFECT THAT THEY HAD NOT SUPPLIED THE STEEL TO THE ASSESSEE BUT HAD ONLY PROVIDED SALE BILLS. THE CIT(A) NOTED THAT THE APPELLANT - ASSESSEE MAY HAVE HAD MADE THE PURCHASES FROM OTHER PARTIES IN THE OPEN MARKE T. THEREUPON, HE RETAINED 30 PER CENT OF THE PURCHASE COST AS THE PROBABLE PROFIT OF THE ASSESSEE. THE ITAT WAS OF THE OPINION THAT TWELVE AND HALF PER CENT OF THE DISPUTED PURCHASES SHOULD BE RETAINED IN THE HANDS OF THE ASSESSEE AS BUSINESS PROFIT. IN TH E RESULT, THE TRIBUNAL PARTIALLY ALLOWED THE ASSESSEE'S APPEAL. THE HIGH COURT HELD THAT ONCE THE ASSESSEE'S SALE OF 'X' QUANTITY OF STEEL IS ACCEPTED, THE PURCHASES OF THE SAME QUANTITY HAD TO BE BELIEVED. IT WAS HELD THAT IT MAY BE THAT THE THREE SUPPLIE RS FROM WHOM THE ASSESSEE CLAIMED TO HAVE PURCHASED THE STEEL DID NOT ITA. NO. 5732 / M UM /201 9 A.Y . 20 11 - 12 5 OWN UP TO SUCH SALES BUT THE VITAL QUESTION REMAINS I.E. WHETHER THE ENTIRE AMOUNT OF PURCHASES SHOULD BE ADDED BACK TO THE INCOME OF THE ASSESSEE OR ONLY THE PROFIT ELEMENT EMBEDDED THE REIN WAS TO ASCERTAINED; AND WHETHER THE PURCHASES THEMSELVES WERE COMPLETELY BOGUS AND NON - EXISTENT OR THAT THE PURCHASES WERE ACTUALLY MADE BUT NOT FROM THE PARTIES FROM WHOM IT WAS CLAIMED TO HAVE BEEN MADE AND INSTEAD MAY HAVE BEEN PURCHASED FROM GREY MARKET WITHOUT PROPER BILLING OR DOCUMENTATION. THE HIGH COURT HELD THAT IN THE PRESENT CASE WHEN THE TOTAL SALE IS ACCEPTED BY THE ASSESSING OFFICER, HE COULD NOT HAVE QUESTIONED THE VERY BASIS OF THE PURCHASES. THAT BEING THE POSITION, NOT THE ENTIRE PUR CHASE PRICE BUT ONLY THE PROFIT ELEMENT EMBEDDED IN SUCH PURCHASES CAN BE ADDED TO THE INCOME OF THE ASSESSEE. THIS DECISION WAS TAKEN IN VIEW OF THE EARLIER DECISIONS OF THE GUJARAT HIGH COURT IN THE CASE OF CIT V. VIJAY M. MISTRY CONSTRUCTION LTD. [20131 355 ITR 498 (GUJ) AND IN THE CASE OF CIT V. BHOLANATH POLY FAB (P.) LTD. (20131 355 ITR 290 (GUJ). THE COURT ALSO HELD THAT IF THE ENTIRE PURCHASES WERE WHOLLY BOGUS AND THERE WAS A FINDING OF FACT ON RECORD THAT NO PURCHASES WERE MADE AT ALL, THE COUNSE L FOR THE REVENUE WOULD BE JUSTIFIED IN ARGUING THAT THE ENTIRE AMOUNT OF SUCH BOGUS PURCHASES SHOULD BE ADDED BACK TO THE INCOME OF THE ASSESSEE. THE HIGH COURT FINALLY CONCLUDED THAT THE ONLY QUESTION THAT SURVIVES IN THIS CASE IS WHAT SHOULD BE THE FA IR PROFIT RATE OUT OF THE BOGUS PURCHASES WHICH SHOULD BE ADDED BACK TO THE INCOME OF THE ASSESSEE. THE COURT HELD THAT IN ESSENCE, THE TRIBUNAL HAS ESTIMATED THE POSSIBLE PROFIT OUT OF PURCHASES MADE THROUGH NON - GENUINE PARTIES AT 12.5% AND NO QUESTION OF LAW IN SUCH ESTIMATION WOULD ARISE. IT WAS ALSO HELD THAT THE ESTIMATION OF RATE OF PROFIT RETURN MUST NECESSARILY VARY WITH THE NATURE OF BUSINESS AND NO UNIFORM YARDSTICK CAN BE ADOPTED. IN THE CASE OF THE APPELLANT AS WELL, THE RATIO OF THE ABOVE SAID DECISION WOULD LARGELY APPLY, IN AS MUCH AS THE FACT THAT HERE ALSO IT WOULD BE A QUESTION OF A REASONED ESTIMATE OF THE PROFIT EMBEDDED IN THE TRANSACTIONS. IN THE ABOVE CASE, I.E. THAT OF COMMISSIONER OF INCOME - TAX V. SIMIT P. SHETH, ESSENTIALLY THE GUJR AT HIGH COURT HELD THAT IN SUCH CASES IT IS A QUESTION OF ITA. NO. 5732 / M UM /201 9 A.Y . 20 11 - 12 6 ESTIMATION OF THE G.P.% AND NOT THE ENTIRE PURCHASE PRICE OF TRANSACTION. I FIND THAT THE ORDER OF THE AO ALSO GOES BY THIS YARDSTICK, SO HOWEVER, THAT INSTEAD OF ADOPTING THE RATE OF 12.5%, THE AO IN HIS PERCEPTION HAS ADOPTED THE RATE OF 17.04%. 5.7 FURTHER, IT CAN BE SEEN THAT THERE IS NO EFFECTIVE AND PLAUSIBLE COUNTER TO THE FACT THAT THE APPELLANT HAS NOT BEEN ABLE TO GIVE ANY CONVINCING OR COGENT EXPLANATION AS TO HOW THESE GOODS HAPPENED TO C OME IN HIS POSSESSION AS NO DOCUMENTS SUCH AS DELIVERY CHALLANS, TRANSPORTATION BILLS, GOODS RECEIPT NOTES, STOCK REGISTER ETC. HAVE BEEN PRODUCED AS EVIDENCE FOR HAVING MADE PHYSICAL DELIVERY OF THE GOODS TO THE APPELLANT BY THE ALLEGED HAWALA PARTIES. TH E FACT REMAINS THAT THE VARIOUS PARTIES FROM WHOM THE ACCOMMODATION ENTRIES ARE TAKEN, ARE DECLARED AS HAWALA PARTY BY THE SALES TAX DEPARTMENT. HENCE, THE PURCHASES OF THE APPELLANT THEREFROM CANNOT BE VALIDATED AND ESTABLISHED. THIS ASPECT RENDERS THE DE CISION OF THE AO ON A STRONG FOOTING SINCE HE HAS TAKEN A BALANCED AND JUDICIOUS APPROACH. 5.8 IN THE PRESENT FACTS AND CIRCUMSTANCES OF THE CASE, IT IS OBSERVED THAT THE AFORESAID PURCHASES ARE SUPPORTED BY DUBIOUS BILLS WITH SUBSEQUENTENTRIES IN THE BOOK S OF ACCOUNTS AND PAYMENT HAS BEEN CLAIMED TO HAVE BEEN MADE BY ACCOUNT PAYEE CHEQUES. THE CLAIM OF THE APPELLANT THAT THE PAYMENTS HAVE BEEN MADE BY THE A/C PAYEE CHEQUE ALSO DOES NOT MAKE THE CLAIM AS BONAFIDE IN VIEW OF THE JUDICIAL PRONOUNCEMENT MADE B Y HON'BLE CALCUTTA HIGH COURT IN THE CASE OF CIT VS. PRECISION FINANCE PVT. LTD. 208 ITR 465 CAL. (1994). IT WAS HELD THAT TRANSACTION THROUGH BANK IS NOT SUFFICIENT TO PROVE A TRANSACTION AS BONAFIDE. MERELY BECAUSE THE MONEY IS TRANSFERRED THROUGH THE BA NK ACCOUNT DOES NOT PROVE THAT THE MONEY IS EXPLAINED. IT IS ESSENTIAL TO PROVE THE CREDITWORTHINESS OF THE PERSONS OR GENUINENESS OF THE TRANSACTIONS. MERELY FURNISHING OF PARTICULARS IS NOT ENOUGH. IT WAS HELD THAT MERE PAYMENT BY ACCOUNT PAYEE CHEQUE IS NOT SACROSANCT NOR CAN IT MAKE A NON - GENUINE TRANSACTION GENUINE. THE RATIO LAID DOWN IN THE CASE OF PRECISION FINANCE IS SQUARELY APPLICABLE TO THE FACTS AND CIRCUMSTANCES IN THE PRESENT CASE OF THE APPELLANT. ITA. NO. 5732 / M UM /201 9 A.Y . 20 11 - 12 7 5.9 IT IS FURTHER PERTINENT TO NOTE THAT THE VERACITY OF THE TRANSACTIONS THROUGH BANKING CHANNELS IS NOT A SINE - QUA - NON TO PROVE THAT THE TRANSACTION MUST INDEED BE BEYOND THE SHADOW OF DOUBT AND ALSO THAT THERE CANNOT BE ANY INFIRMITY WITH THE SAME. JUDICIAL DECISIONS HAVE ALSO TAKEN NOTE OF THIS ASPECT AND STARTED RECOGNIZING THAT MODERN INSTRUMENTS OF TAX EVASION ARE INGENIOUS ENOUGH TO SHAPE THEM IN SUCH A MANNER THAT ON THE SURFACE, THEY APPEAR GENUINE ENOUGH. THE ABOVE IS SUPPORTED BY THE FOLLOWING CASE LAWS I.E.: - 1. CIT VS. JANSAMPARK ADVT. DEL, HIGH COURT/ITA NO.525/2014. RATIO 'THE FACT THAT TRANSACTIONS ARE THROUGH BANKING CHANNEL, IT DOES NOT NECESSARILY FOLLOW THAT SATISFACTION AS TO THE CREDITWORTHINESS OF PARTIES OR GENUINENESS OF TRANSACTION HAS BEEN ESTABLISHED.' 2. CIT VS. VIR BHAN & SONS, 273 ITR, 206(P&H) - HIGH COURT. 'MERE FACT THAT AMOUNT WAS RECEIVED BY CHEQUE, BY ITSELF DOES NOT CONCLUSIVELY PROVE THE GENUINENESS OF THE TRANSACTION.' 5.10 FURTHER, IT IS THE LEGAL POSITION THAT THE ONUS IS ON THE APPELLANT TO PRODUCE THE IDENTITY OF THE SO - CALLED SUPPLIERS AND GENUINENESS OF TRANSACTIONS, WHEN HE HAS CLAIMED THE PURCHASES TO HAVE BEEN MADE FROM THEM. THERE IS NO CONCRETE EVIDENCE PRODUCED BY THE APPELLANT TO PROVE DELIVERY OF GOODS THROUGH INDEPENDENT AGENCY / THIRD PARTY IN THE C ASE OF THE PURCHASES. 5.11 IT IS ALSO CANVASSED THAT THE ADDITION IS BASED ON THIRD - PARTY STATEMENTS. HOWEVER, IT IS PERTINENT TO NOTE THAT THE FACT REMAINS THAT IN THE CASE OF THE APPELLANT THE ADDITION WAS MADE, INTER - ALIA, NOT MERELY ON THIRD PARTY STAT EMENT BUT RATHER ON ACCOUNT OF THE FAILURE OF THE APPELLANT TO DISCHARGE THE BURDEN OF PROOF CAST ON IT TO ESTABLISH THE VERACITY AND THE GENUINENESS OF THE TRANSACTION. 5.12 FURTHER, IT IS PERTINENT TO NOTE THAT IT IS THE SAY OF THE ID. AR THAT ADDITION C ANNOT BE MADE ON SUSPICION ALONE. ON THIS ASPECT, I FIND THAT RATHER THAN MAKING THE ADDITION PURELY ON SUSPICION AND SURMISES, THE AO HAS MADE THE IMPUGNED ADDITION ON SPECIFIC AND CREDIBLE EVIDENCE, WHICH THE APPELLANT IS UNABLE TO COUNTER. NOT ITA. NO. 5732 / M UM /201 9 A.Y . 20 11 - 12 8 ONLY THIS , THE ID. AO HAS BEEN FAIR AND JUST IN TAXING THE EMBEDDED PROFIT ELEMENT IN THE HAWALA TRANSACTIONS/BOGUS PURCHASE TRANSACTIONS. 5.13 IT IS FURTHER ARGUED THAT NO OPPORTUNITY OF CROSS EXAMINATION IS AFFORDED TO THE APPELLANT AND ALSO THAT THE SOLE RELIANC E ON SALES TAX/VAT IS NOT CORRECT. IN THIS REGARD, IT IS OBSERVED THAT THE OPPORTUNITY OF CROSS EXAMINATION MAY NOT BE SACROSANCT AND FATAL TO THE ASSESSMENT AS HELD BY HON'BLE BOMBAY HIGH COURT IN GTC INDUSTRIES LTD. VS. ACIT (1998)65 ITD 380/60 TTJ 308(B OM). IN THE PRESENT APPEAL, AT THE COST OF REPETITION IT IS OBSERVED THAT AO DID NOT BASE HIS DECISION SOLELY ON THE SALES TAX/VAT AND CAME TO AN INDEPENDENT CONCLUSION AFTER DUE CONSIDERATION OF A MYRIAD OF FACTORS AND ON ACCOUNT OF THE INABILITY OF THE A PPELLANT TO DISCHARGE THE BURDEN OF PROOF CAST ON IT. 5.14 IT IS A WELL - ESTABLISHED POSITION AT LAW, THAT THE IMPORTANCE OF VAT INVESTIGATION CANNOT BE IN ANY MANNER TRIVIALIZED. FURTHER, IT IS IMPORTANT TO APPRECIATE THAT IT IS NOT PROPER TO SAY THAT SALE S TAX RECORDS/INVESTIGATION HAS NO VALUE IS NOT CORRECT. IT HAS STRONG CORROBORATIVE VALUE. FURTHER, THE SIGNIFICANCE OF VAT INVESTIGATION HAS BEEN JUDICIALLY NOTED IN THE CASE OF ARUN SHIMPI VS. ITO (2016)48 CCH 195 (MUM)... 5.15 IN CONTEXT OF CENTRAL EXC ISE (A SIMILAR LAW) RECORDS MAINTAINED WERE HELD TO BE IMPORTANT PIECE OF EVIDENCE AS HELD IN MOTIPUR SUGAL FACTORY (P) LTD. V. CIT (1974) 95 ITR 401 (PAT)(HC)(409)(PRO ASSESSE JUDGMENT OTHERWISE ACTUALLY) AND IN SHANKER RICE CO. V. ITO (2000) 72 ITD 139 ( ASR.) (SB)(TRIB.) (158). BY PARITY OF REASONING THE SAME APPLIES TO SALES TAX LAW AS WELL IN CONTEXT OF DETERMINATION OF TAXABLE INCOME IN IT LAW. 5.16 IN THE CONTEXT OF THE JUDICIAL PRONOUNCEMENTS RENDERED ON BEHALF OF THE APPELLANT, IT IS A TRITE LAW THA T EACH JUDICIAL DECISION IS RENDERED IN THE VERY PECULIAR AND FACTUAL MATRIX OF THAT CASE AND THEREFORE IT IS NOT EITHER JUDICIALLY EXPEDIENT OR PRUDENT TO SUPERIMPOSE THE FACTS OF THE CASE CITED BY THE AR TO THE FACTS OF THE ITA. NO. 5732 / M UM /201 9 A.Y . 20 11 - 12 9 PRESENT CASE. IN THIS SENSE, E ACH CASE IS UNDISPUTEDLY UNIQUE AND STANDS ON DIFFERENT PEDESTAL. 5.17 FURTHER, I NOTE THAT IN VARIOUS DECISIONS, THE HON'BLE ITAT, MUMBAI HAS HELD THAT IN SUCH CASES WHICH ARE ESSENTIALLY OF TRADING, ESTIMATION F 12.5% PROFIT AS HAVING BEEN EMBEDDED IN TH E BOGUS PURCHASE TRANSACTION WAS HELD TO BE A FAIR AND JUST OUTCOME. SOME OF THESE DECISIONS ARE QUOTED BELOW: MERU IMPEX EX IN ITA NO.2660/MUM/2017. MP RECYCLING CO. IN ITA NO.6358/MUM/2016. Y.A. MAMAJI FURNISHING & CO. IN ITA'S 4756,4757 & 4758/MUM/2014 1) MANISH M SHAH IN ITA 2975/ MUM/2015. 5.18 IN VIEW OF THE ABOVE DISCUSSION, IN MY CONSIDERED VIEW WHEREAS THE HIDING AND FINAL DECISION OF THE AO TO TAX THE EMBEDDED PROFIT ELEMENT IN THE TRANSACTION IS HELD TO BE VALID, SO HOWEVER, RESPECTFULLY FOLLOWIN G THE ABOVE QUOTED ITAT DECISIONS, THE ADDITION IS RESTRICTED TO 12.5% OF THE BOGUS/HAWALA PURCHASES, I NSTEAD OF 17.04% TAKEN BY THE AO . THE AO IS DIRECTED TO REWORK THE DISALLOWANCE ON THE ABOVE LINES. 5.19 CONSEQUENTLY, THE IMPUGNED ISSUE OF THE DISALLOW ANCE OUT OF BOGUS PURCHASES IS PARTIALLY DECIDED IN FAVOUR AND PARTIALLY AGAINST THE APPELLANT AS PER THE ABOVE STIPULATION AND THEREFORE, APPEAL IS PARTLY ALLOWED. 5 . ON APPRAISAL OF THE ABOVE MENTIONED FINDING, WE NOTICE D THAT THE CIT(A) HAS DECIDED THE MATTER OF CONTROVERSY ON THE BASIS OF THE DECISION OF THE HONBLE HIGH COURT OF GUJARAT IN THE CASE OF CIT VS. SIMIT P. SHETH (356 ITR 451) AND IN THE CASE OF MERU IMPEX EX. IN ITA. NO.2660/MUM/2017, MP RECYCLING CO. IN ITA. NO.6358/MUM/2016, Y. A. MAMAJI FURNISHING & CO. IN ITA.S 4756, 4757 & 4758/MUM/2014 & MAN ISH M SHAH IN ITA 2975/MUM/2015 AND THE OTHER JUDGMENTS ITA. NO. 5732 / M UM /201 9 A.Y . 20 11 - 12 10 WHICH HAVE BEEN REPRODUCED IN THE ORDER. THE FACTS ARE NOT DISTINGUISHABLE AT THIS STAGE. GROSS PROFIT RATIO OF THE ASSESSEE AND THE PROFIT EMBEDDED INTO THE BOGUS PURCHASE TRANSACTION HAS TAKEN INTO CONSIDERATION. TAKING INTO ACCOUNT ALL THE FACTS AND CIRCUMSTANCES OF THE CASE, WE ARE OF THE VIEW THAT THE CIT(A) HAS DECIDED THE MATTER OF CONTROVERSY JUDICIOUSLY AND CORRECTLY WHICH IS NOT LIAB LE TO BE INTERFERE WITH AT THIS APPELLATE STAGE. ACCORDINGLY, THESE ISSUES ARE DECIDED IN FAVOUR OF THE ASSESSEE AGAINST THE REVENUE . 7 . IN THE RESULT, APPEAL FILED BY THE REVENUE IS HEREBY DISMISSED . ORDER PRONOUNCE D IN THE OPEN COURT ON 02 / 0 7 / 20 2 1 SD/ - SD/ - ( RAJESH KUMAR ) (AMARJIT SINGH) / ACCOUNTANT MEMBER /JUDICIAL MEMBER MUMBA I DATED : 02 /0 7 /20 21 VIJAY PAL SINGH ( SR. PS ) / 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 CO PY// / /(DY./ASSTT. REGISTRAR) , / ITAT, MUMBAI