PARESH H. SHAH, MUMBAI V. INCOME TAX OFFICER 32(2)(5), MUMBAI

ITA 5835/MUM/2017

• Counselvise Citation: [2018] 126 COUNSELVISE.COM (IT) 0641 (ITAT-MUMBAI)
• Duration Of Justice: 4 month(s) 27 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 09-02-2018
• Appeal Filed By: Assessee
• Order Result: Dismissed
• Bench Allotted: SMC
• Assessment Year: 2009-2010
• Appeal Filed On: 12-09-2017
• Result in Favour of: Revenue
• Court: TRIBUNAL
• Department Lawyers: RAJAT MITTAL
• Keywords: Bogus purchase; Rejection of books of accounts; Borrowed satisfaction
• Section: 143(3); 133(6); 148

Judgement Text

C IN THE INCOME TAX APPELLATE TRIBUNAL C BENCH, MUMBAI BEFORE SHRI MAHAVIR SINGH JUDICIAL MEMBER AND SHRI RAMIT KOCHAR, ACCOUNTANT MEMBER ./ I.T.A. NO. 5835/ MUM/2017 ./ I.T.A. NO. 5836/ MUM/2017 ./ I.T.A. NO. 5837/ MUM/2017 ( / ASSESSMENT YEAR: 2009 - 10, 2010 - 11 & 2011 - 12) PARESH H. SHAH 301, NARBADA NIWAS, R.C. PATEL ROAD, BORIVALI (W), MUMBAI - 400092 / V. ITO 32(2)(5) 305 - D, 3 RD FLOOR, C - 13, PRATYAKSHAKAR BHAVAN, BANDRA(E), BKC, MUMBAI 400051 ./ PAN : AAFPS2328J ( / APPELLANT ) .. ( / RESPONDENT ) ASSESSEE BY: SHRI. BHUPENDRA SHAH REVENUE BY : SHRI. RAJAT MITTAL / DATE OF HEARING : 23.01.2018 / DATE OF PRONOUNCEMENT : 09 .02.2018 / O R D E R PER RAMIT KOCHAR, ACCOUNTANT MEMBER THESE THREE APPEALS, FILED BY THE ASSESSEE, BEING ITA NO. 5835/MUM/2017 , I.T.A. NO. 5836/MUM/ 2017 & I.T.A. NO. 5837/MUM/2017 FOR ASSESSMENT YEAR 2009 - 10, 2010 - 11 & 2011 - 12 RESPECTIVELY ARE DIRECTED AGAINST THE SEPARATE APPELLATE ORDER S ALL DATED 15.06.2017 PASSED BY LEARNED COMMISSIONER OF INCOME - TAX (APPEALS) - 44, MUMBAI (HEREINAFTER CALLED THE CIT(A)) FOR ASSESSMENT YEAR 2009 - 10, 2010 - 11 & 2011 - 12 RESPECTIVELY , APPELLATE PROCEEDINGS HAD ARISEN BEFORE LEARNED CIT(A) FROM THE SEPARATE ASS ESSMENT ORDER S ALL DATED 02.03.2015 PASSED BY LEARNED ASSESSING OFFICER (HEREINAFTER CALLED THE AO) U/S 143(3) R.W.S. 147 OF THE INCOME - TAX ACT, 1961 (HEREINAFTER CALLED THE ACT). I.T.A. NO. 5835/ MUM/2017 I.T.A. NO. 5836/ MUM/2017 I.T.A. NO. 5837/ MUM/2017 2 2. FIRST WE SHALL TAKE THE APPEAL OF THE ASSESSEE FOR THE ASSESSMENT YEAR 2009 - 10. THE G ROUNDS OF APPEAL RAISED BY THE A SSESSEE IN THE MEMO OF APPEAL FILED WITH THE INCOME - TAX APPELLATE TRIBUNAL, MUMBAI (HEREINAFTER CALLED THE TRIBUNAL) IN ITA NO. 5835/MUM/2017 FOR AY 2009 - 10 READ AS UNDER: - GROUNDS OF APPEAL BEFORE THE HONOURABLE ITAT MUMBAI. (A) GROUNDS OF APPEAL : 1) IN THE FACTS AND THE CIRCUMSTANCES OF THE CASE AND IN LAW, THE LEARNED COMMISSIONER OF INCOME TAX (A) ERRED IN PASSING THE ORDER U/S 143(3) R.W.S 147 BY IGNORING VARIOUS DETAILED WRITTEN SUBMISSIONS AND CASE LAWS SUBMITTED BY THE APPELLANT DURING THE COURSE OF APPEAL PROCEEDING. WITHOUT PREJUDICE TO THE ABOVE AND ALTERNATIVELY 2) THE LEARNED A.O. ERRED IN PASSING THE ORDER U/S 143(3) R.W.S 147 AND THEREFORE RENDERING THE WHOLE RE - ASSESS MENT BAD IN LAW, THAT TOO ON THE BASIS OF BORROWED SATISFACTION, PRESUMPTION AND SURMISES AND ALSO NOT MENTIONING THE DATE OF RECORDING THE REASONS. 3) THE ASSESSING OFFICER ERRED IN ADDING RS 21,89,946/ - AS ALLEGED NON - GENUINE PURCHASES BEING 12.5% OF T HE TOTAL PURCHASES AMOUNTING TO RS. 1,74,43,835/ - WHICH HAS BEEN FURTHER WRONGLY CONFIRMED BY THE LEARNED COMMISSIONER OF INCOME TAX (A). A) EVEN THOUGH THE PAYMENT FOR PURCHASES IS MADE FROM THE BOOKS BY A/C PAYEE CHEQUES AND CANNOT BE TERMED AS NON - GEN UINE EVEN THOUGH THE SAME HAS BEEN FULLY ALLOWED BY THE JURISDICTIONAL MUMBAI TRIBUNAL IN RECENT CASE OF RAJEEV M KALATHIL 67 27/M/12, GANPATRAJ A SANGHAVI [I. T.A. NO.2826/MUM/2013], RAMESH KUMAR & CO. APPEAL NO. 2959/MUM/2014, DEEPAK POPATLAL GALA [ITA NO 5920/M/13], RAMILA P SHAH [ITA NO 5246/M/13] PARESH GANDHI [ITA NO - 5706/M/2013], HIRALAL CHUNILAL JAIN [ITA NO 4547/M/14], TARLA SHAH [ITA NO. 5295/MUM/2013] AND M/S. IMPERIAL IMP. & EXP [ITA NO. 5427/MUM/2015], SHIVSHANKAR R. SHARMA, [ITA NO. 5149/MUM/201 4 & 4260/MUM/2015], GOVIND RATHOD [ITA NO :439/MUM/2016], SHRI MAHESH K. SHAH ITA NO. 5194/MUM/2014, SHRI SANJAY DHOKAD [ITA NO. 929/MUM/2015], MANOHAR AND ANITA KANDA [ITA NO. 4693 - 97/MUM/2016], BIGWIN PAPER DISTRIBUTORS PVT. LTD. [ITA NO. 5293 - 97/MUM/2 016], SHRI SANJAY DHOKAD 2010 - 11 [ITA NO. I.T.A. NO. 5243/MUM/2013] AND HI ROCK CONSTRUCTION CO. [ITA NO. I.T.A/960/MUM/2015] JEETENDRA DEVNANI [5426/MUM/2015]. I.T.A. NO. 5835/ MUM/2017 I.T.A. NO. 5836/ MUM/2017 I.T.A. NO. 5837/ MUM/2017 3 B) ONLY ON THE BASIS OF THE INFORMATION OF THE WEBSITE WWW.MAHAVAT.GOV.IN ABOUT 16 SUSPICIOUS DEALERS WHOSE COPY OF STATEMENT RECORDED WERE NOT FURNISHED TO THE APPELLANT. C) WITHOUT APPRECIATING THE FACT THAT NO ADDITION CAN BE MADE IF THE SUPPLIERS ARE NOT TRACEABLE AS PER THE JUDGMENT OF THE BOMBAY HIGH C OURT. [ BL RELIEF PRAYED: THE APPELLANT THEREFORE PRAYS FOLLOWS, 1. TO QUASH THE ORDER FOR REOPENING THE CASE U/S 143 R.W.S 147. 2. TO DELETE THE ADDITION OF RS.21,89,946/ - BEING 12.5% OF TOTAL PURCHASES OF RS.1,74,43,835/ - ON ACCOUNT OF ALLEGED BOGUS PURCHASES AND AGAINST DECIDED CASES OF MUMBAI ITAT. [CL GENERAL: THE APPELLANT RESERVE RIGHTS TO ADD ALTER OR DELETE ANY PORT ION OF THIS APPEAL BEFORE ITS CONCLUSION. A DETAILED PAPER BOOK ALONG WITH CASE LAWS WILL BE SUBMITTED AT THE TIME OF HEARING. THIS APPEAL HAS BEEN FILED ON TIME AND MAY PLEASE BE ALLOWED IN FULL. 3. THE BRIEF FACTS OF THE CASE ARE THAT THE ASSE SSEE IS ENGAGED IN THE BUSINESS OF DEALERS IN DYES, CHEMICALS AND SOLVENTS THROUGH M/S PARESH CHEMICALS . THE INFORMATION WAS RECEIVED BY THE AO FROM SALES TAX DEPARTMENT AND DGIT (INV.) ,MUMBAI THAT THE ASSESSEE IS BENEFICIARY OF BOGUS PURCHASES FROM THE FO LLOWING PARTIES: - TIN NAME OF THE PARTY AMOUNT , 27660 5 91188V SAILEELA TRADING PVT LTD 63,16 , 422 27280 5 04194V MANAV IMPEX 52,803 27520270001V REKHA TRADING CO 2,36 , 366 27060103705 V ANKIT ENTERPRISES 5 ,98,234 2703019834 5 V KLYAN KIRTL LNTERNATIONAL 6,82,571 278400 97650V PRAKASH ENTERPRISES .. 9 , 53,680 27870S43397V RUMGGT ENTERPRISES 4,65,660 27430616389V NAVPAD EXPORTS PVT LTD 8 , 23 , 940 27630606579V PAWAN ENTERPRISES 23,86,S70 I.T.A. NO. 5835/ MUM/2017 I.T.A. NO. 5836/ MUM/2017 I.T.A. NO. 5837/ MUM/2017 4 BASED ON THE ABOVE INCRIMINATING MATERIAL BEING RECEIVED BY THE AO, T HE AO HAD REASONS TO BELIEVE THAT INCOME HAS ESCAPED ASSESSMENT WHICH LED TO REOPENING OF THE CONCLUDED ASSESSMENT U/S. 147 BY ISSUANCE OF NOTICE DATED 16 - 01 - 2014 BY THE AO U/S. 148 AFTER RECORDING THE REASONS FOR REOPENING AS IS REQUIRED UNDER PROV ISION OF SECTION 148 OF THE ACT. THE REASONS FOR REOPENING OF THE ASSESSMENT WERE COMMUNICATED TO THE ASSESSEE. THE ASSESSEE FILED OBJECTIONS TO THE REOPENING OF THE ASSESSMENT WHICH WAS DISPOSED OF BY THE AO . THESE PARTIES HAVE ADMITTED ON OATH BEFORE SALES TAX AUTHORITIES THAT THEY WERE ONLY ISSUING BOGUS BILLS WITHOUT SUPPLYING ANY MATERIAL AND NO BUSINESS WAS CARRIED ON BY THEM. IN ORDER TO VERIFY TRANSACTIONS WITH THESE PARTIES, THE AO ISSUED NOTICES U/S. 133(6) TO THESE PARTIES WHICH RETURNED UN - SERVED OR NO REPLIES WERE RECEIVED BY THE AO FROM THESE PARTIES. THE ASSESSEE ALSO COULD NOT PROD UCE THESE PARTIES BEFORE THE AO AND HENCE GENUINENESS OF THE TRANSACTION COULD NOT BE PROVED BY THE ASSESSEE . THE AO OBSERVED THAT THE ONUS IS ON THE ASSESSEE TO PROVE THAT THE PURCHASES ARE GENUINE. AS PER THE AO , THESE PURCHASES REMAINED UNVERIFIABLE AN D THERE IS POSSIBILITY OF LEAKAGES . T HE AO REJECTED THE BOOKS OF ACCOUNTS U/S. 145(3) AND ESTIMATED INCOME AT THE RATE OF 12.5% OF THE ALLEGED BOGUS PURCHASES TO THE TUNE OF RS. 1,75,19,573/ - FROM THE ALLEGED HAWALA DEALERS ON THE GROUNDS THAT THE ASSESSE E HAS ARRANGED ACCOMMODATION BILLS FROM THESE PARTIES TO SUPPRESS ITS TRUE PROFITS, VIDE ASSESSMENT ORDER DATED 02 - 03 - 2015 PASSED BY THE AO U/S 143(3) R.W.S. 147 OF THE 1961 ACT. WHILE PASSING THE ASSESSMENT ORDERS, THE AO , INTER - ALIA, RELIED UPON THE DEC ISION OF HONBLE SUPREME COURT IN THE CASE OF KACHWALA GEMS V. JCIT REPORTED IN (2007) 288 ITR 10(SC) AND HONBLE GUJARAT HIGH COURT DECISION IN THE CASE OF SIMIT P SHETH (2013) 356 ITR 451(GUJ). 2712037226SV TOP SHOP TRADING COMPANY PVT LTD 22,500 27020257763V DARSHANA CORPORATION 2,62,504 27340554213V YASH ENTERPRIE 3,05,151 27210283!L!L4V L P TRADEFLS 4,40,073 27240227766V ELEGANT TRADING CO 10,30,797 27610637339V RIYA ENTERPRISE 12,83.790 27270583788V S P CORPORATION 15,82,774 TOTAL 1.74.43,835 I.T.A. NO. 5835/ MUM/2017 I.T.A. NO. 5836/ MUM/2017 I.T.A. NO. 5837/ MUM/2017 5 4. AGGRIEVED BY THE ASSESSMENT ORDER DATED 02 - 03 - 2015 PASSED BY THE AO U/S 143(3) R.W.S. 147, THE ASSESSEE CARRIED THE MATER IN APPEAL BEFORE THE LEARNED CIT - A WHO DISMISSED THE APPEAL OF THE ASSESSEE BY HOLDING AS UNDER , VIDE APPELLATE ORDER DATED 15 - 06 - 2 017 : - 4.3. I HAVE CAREFULLY GONE THROUGH THE ASSESSMENT ORDER AS WELL AS THE WRITTEN SUBMISSION OF THE APPELLANT. I HAVE ALSO PERUSED THE DETAILS FILED BY THE APPELLANT. SOME 5 - 6 YEARS AGO, THE SALE TAX DEPARTMENT OF THE GOVERNMENT OF MAHARASHTRA HAD CONDUCTED EXTENSIVE ENQUIRIES AGAINST SUCH DEALERS WHO USED TO PROVIDE BILLS FACILITATING BOGUS PURCHASES/SALES. AS A RESULT OF THIS INQUIRY, INFORMATION ABOUT MANY ASSESSEES WERE FORWARDED TO THE INCOME TAX DEPARTMENT. THE A.O. HAS STATED IN THE ASSESSMEN T ORDER THAT THE APPELLANT IS ONE SUCH PERSON WHO HAS INFLATED HIS PURCHASES BY SHOWING PURCHASES FROM MANY SUCH PERSONS WHO APPEAR IN THE LIST OF BOGUS ENTRIES PROVIDERS AS PREPARED BY THE SALES TAX DEPARTMENT. DURING THE COURSE OF ASSESSMENT PROCEEDINGS, THE A.O. FOUND THAT THE ASSESSEE HAD NOT BEEN ABLE TO ESTABLISH THE GENUINENESS OF PURCHASES IN DISPUTE. THE MAIN ARGUMENTS OF THE AO ON THE BASIS OF WHICH HE HAD FORMED HIS OPINION WERE - (1) THE ASSESSEE WAS NOT ABLE TO SUBMIT ANY LORRY RECEIPTS OR ANY DETAILS REGARDING TRANSPORTATION OF GOODS. (2) THE SUPPLIERS FROM WHOM THE DISPUTED PURCHASES HAVE BEEN ARE INCLUDED IN THE LIST OF HAWALA OPERATORS PREPARED BY THE SALES TAX DEPARTMENT. (3) THE SUPPLIERS FROM WHOM THE DISPUTED PURCHASES HAVE BEEN MADE, DID NOT COMPLY TO NOTICE U/S 133(6). (4) THE SUPPLIERS FROM WHOM THE DISPUTED PURCHASES HAVE BEEN MADE, WERE NOT PRODUCED BEFORE THE AO. (5) EVEN IF THE PURCHASES ARE NOT TREATED AS BOGUS, THE EXPENDITURE ON SUCH PURCHASES REMAIN UNEXPLAINED. 4.4 I T IS SEEN FROM RECORD THAT THE A.O. HAS NOT MECHANICALLY DISALLOWED THE ENTIRE DISPUTED PURCHASES AMOUNTING TO RS. 1,74,43,835/ - , RATHER HE HAS ESTIMATED THE ADDITIONAL PROFIT WHICH SHOULD HAVE ARISEN BECAUSE OF UNPROVED PURCHASES. IT IS NOT IN DISPUTE THA T THE NOTICES U/S 133(6) ISSUED TO THE SUPPLIERS MENTIONED ABOVE COULD NOT BE SERVED BECAUSE PARTIES WERE NOT FOUND AT THE GIVEN ADDRESS. WHEN THE BASIC DETAILS LIKE PURCHASES REMAIN UNVERIFIABLE, IT IS OPEN FOR THE A.O. TO REJECT THE BOOK RESULTS OF THE A SSESSEE. THUS, IT IS HELD THAT THE A.O. WAS RIGHT IN REJECTING THE BOOK RESULTS OF THE ASSESSEE. FURTHERMORE, AS STATED ABOVE THE A. O . HAS HIMSELF ESTIMATED THE ADDITIONAL PROFIT WHICH SHOULD HAVE ARISEN BECAUSE OF THE UNSUBSTANTIATED PURCHASES FROM THE PA RTIES MENTIONED IN THE LIST OF HAWALA OPERATOR RATHER THAN DISALLOWING THE ENTIRE DISPUTED PURCHASES. THE A.O. ALSO FAIRLY CONCEDED IN PARA 8.5 OF HIS ORDER THAT THE APPELLANT HAD INCURRED EXPENDITURE ON, SUCH PURCHASES, BUT NOT FROM THE 16 PARTIES MENTION ED IN THE ASSESSMENT I.T.A. NO. 5835/ MUM/2017 I.T.A. NO. 5836/ MUM/2017 I.T.A. NO. 5837/ MUM/2017 6 ORDER. FURTHER THE RATE OF PROFIT TAKEN BY THE AO ON THE DISPUTED PURCHASES SEEMS TO BE REASONABLE CONSIDERING THE NATURE AND SCALE OF THE BUSINESS OF THE APPELLANT. SINCE THE A.O. HAS HIMSELF GIVEN SUBSTANTIAL RELIEF TO THE ASSESS EE B Y A SPEAKING ORDER I DO NOT SEE ANY REASON TO INTERFERE IN THE ORDER OF THE A.O . THE GROUNDS OF APPEAL NOS. 2, 4, 5 & 6 ARE DISMISSED AND ACCORDINGLY ADDITION OF RS. 21,89,946/ - IS CONFIRMED. 6. IN THE RESU LT , THE APPEAL IS DISMISSED THE LEARNED CIT(A) ALSO UPHELD THE LEGALITY AND VALIDITY OF REOPENING OF THE ASSESSMENT U/S 147 OF THE 1961 AS THE AO REOPENED THE CONCLUDED ASSESSMENT BASED ON MATERIAL EVIDENCES BEING RECEIVED FROM SALES TAX DEPARTMENT AS WELL DGIT(INV), MUMBAI THAT INCOME HAS ESCAPED ASS ESSMENT, VIDE APPELLATE ORDER DATED 15 - 06 - 2017 PASSED BY LEARNED CIT(A). 5. AGGRIEVED BY THE APPELLATE ORDER DATED 15 - 06 - 2017 PASSED BY LEARNED CIT(A), THE ASSESSEE HAS COME IN AN APPEAL BEFORE THE TRIBUNAL AND AT THE OUTSET LD. COUNSEL FOR THE ASSESSEE SU BMITTED THAT THE GROUNDS OF APPEAL RELATED TO CHALLENGING LEGALITY AND VALIDITY OF INVOCATION OF PROVISIONS OF SECTION 148 FOR REOPENING OF THE CONCLUDED ASSESSMENT ARE NOT PRESSED AND THE SAME MAY BE DISMISSED AS NOT PRESSED . THE LD. DR SUBMITTED THAT REVENUE HAS NO OBJECTION FOR THE DISMISSAL OF THE GROUNDS RELATED TO THE CHALLENGE TO THE LEGALITY AND VALIDITY OF REOPENING OF THE ASSESSMENT U/S. 148 IS CONCERNED AND THE SAME MAY BE DISMISSED . AFTER HEARING BOTH THE PARTIES WE ARE OF THE CONSIDERED VIE W THAT THE GROUND S OF APPEAL BEING GROUND NO 1 AND 2 RELATED TO CHALLENGING THE LEGALITY AND VALIDITY OF INVOCATION OF PROVISIONS OF SECTION 147/148 CONCERNING REOPENING OF THE CONCLUDED ASSESSMENT BE DISMISSED AS NOT BEING PRESSED. THE GROUND NO 1 AND 2 STAND ACCORDINGLY DISMISSED. WE ORDER ACCORDINGLY. 6. ON MERITS THE LD. COUNSEL FOR THE ASSESSEE SUBMITTED THAT THE AO HAS M ADE A N ADDITION TO THE TUNE OF 12 .5% OF THE ALLEGED BOGUS PURCHASES WHICH WAS CONFIRM ED BY THE LD. CIT - A AND PRAYER WAS MADE BY LE ARNED COUNSEL FOR THE ASSESSEE FOR REDUCING THE ADDITION S SO MADE . THE LD. DR SUBMITTED THAT INCRIMINATING INFORMATION WAS RECEIVED BY THE AO FROM SALES TAX DEPARTMENT AS WELL DGIT(INV) , MUMBAI THAT THE ASSESSEE IS BENEFICIARY OF OBTAINING BOGUS ACCOMMODA TION BILLS FROM 16 HAWALA DEALERS WHEREIN ONLY BOGUS BILLS WERE ISSUED BY THESE HAWALA DEALERS AND NO MATERIAL WAS PHYSICALLY SUPPLIED BY THESE DEALERS. THE LEARNED DR SUBMITTED THAT THE ASSESSEE HAS THUS I.T.A. NO. 5835/ MUM/2017 I.T.A. NO. 5836/ MUM/2017 I.T.A. NO. 5837/ MUM/2017 7 PURCHASED MATERIAL FROM GREY MARKET AT LOWER RATES AND TO JUSTIFY THE BOOKS OF ACCOUNTS THE BOGUS BILLS WERE OBTAINED FROM THESE 16 HAWALA DEALERS. T HE LEARNED DR SUBMITTED THAT NOTICES U/S. 133(6) WERE ISSUED BY THE AO TO THE SE PARTIES WHICH RETURNED UN - SERVED OR WERE NOT REPLIED WITH . IT IS ALSO SUBMITTE D THAT THE ASSESSEE COULD NOT PRODUCE THESE PARTIES BEFORE THE AUTHORITIES BELOW AND THESE PARTIES HAVE CONFESSED TO HAVE ISSUED BOGUS ACCOMMODATION BILLS WITHOUT SUPPLYING ANY MATERIAL AND IT IS ADMITTED BY THEM THAT THEY WERE NOT ENGAGED IN DOING GENUINE BUSINESS . IT WAS SUBMITTED BY LEARNED DR THAT THE AO HAS RIGHTLY REJECTED BOOKS OF ACCOUNTS U/S 145(3) AND PROFITS WERE ESTIMATED WHICH WAS A N REASONABLE ESTIMATE AS WAS DONE BY THE AO BY MAKING ADDITIONS TO THE TUNE OF 12.5% OF THE A LLEGED BOGUS PURCHAS ES WHICH WERE RIGHTLY CONFIRMED BY LEARNED CIT(A). THUS LEARNED DR SUBMITTED THAT ORDERS OF THE AUTHORITIES BELOW BE CONFIRMED. 7. WE HAVE CONSIDERED RIVAL CONTENTIONS AND PERUSED THE MATERIAL ON RECORD INCLUDING ORDERS OF THE AUTHORITIES BELOW . WE HAVE OBSERVED THAT THE ASSESSEE IS ENGAGED AS DEALERS IN DYES, CHEMICALS AND SOLVENTS THROUGH M/S PARESH CHEMICALS. THE INFORMATION WAS RECEIVED BY THE AO FROM SALES TAX DEPARTMENT AND DGIT (INV.),MUMBAI THAT THE ASSESSEE IS BENEFICIARY OF BOGUS PURCHA SES FROM THE FOLLOWING SIXTEEN PARTIES: - TIN NAME OF THE PARTY AMOUNT , 27660 5 91188V SAILEELA TRADING PVT LTD 63,16 , 422 27280 5 04194V MANAV IMPEX 52,803 27520270001V REKHA TRADING CO 2,36 , 366 27060103705 V ANKIT ENTERPRISES 5 ,98,234 2703019834 5 V KLYAN KIRTL LNTERNATIONAL 6,82,571 278400 97650V PRAKASH ENTERPRISES .. 9 , 53,680 27870S43397V RUMGGT ENTERPRISES 4,65,660 27430616389V NAVPAD EXPORTS PVT LTD 8 , 23 , 940 27630606579V PAWAN ENTERPRISES 23,86,S70 2712037226SV TOP SHOP TRADING COMPANY PVT LTD 22,500 27020257763V DARSHANA CORPORATION 2,62,504 27340554213V YASH ENTERPRIE 3,05,151 27210283!L!L4V L P TRADEFLS 4,40,073 I.T.A. NO. 5835/ MUM/2017 I.T.A. NO. 5836/ MUM/2017 I.T.A. NO. 5837/ MUM/2017 8 BASED ON THE ABOVE INFORMATION , THE REVENUE REOPENED THE CONCLUDED ASSESSMENT BY INVOKING PROVISIONS OF SECTION 147/148 OF THE 1961 ACT AFTER RECORDING REASONS FOR REOPENING WHICH WERE DULY FURNISHED TO THE ASSESSEE. THE ASSESSEE OBJECTED TO REOPENING OF THE CONCLUDED ASSESSMENT U/S 147/148 AND THE AO DISPOSED OF THE OBJECTIONS VIDE ORDERS DATED 13 - 10 - 2014. THE REOPENING OF THE ASSESSMENT U/S 147 OF THE 1961 ACT WAS DONE WITHIN FOUR YEARS FROM THE END OF THE ASSESSMENT BY ISSUANCE OF NOTICE DATED 16 - 01 - 20 14 U/S 148 OF THE 1961 ACT. THE ASSESSEE HAS ALREADY CONCEDED BEFORE THE TRIBUNAL THAT THE ASSESSEE DID NOT WANT TO PRESS THE GROUNDS RAISED BY HIM IN MEMO OF APPEAL RELATED TO CHALLENGE TO LEGALITY AND VALIDITY OF INVOCATION OF SECTION 147/148 OF THE 1961 ACT BY THE REVENUE. THESE PARTIES HAVE ADMITTED ON OATH BEFORE SALES TAX AUTHORITIES THAT THEY WERE ONLY ISSUING BOGUS BILLS WITHOUT SUPPLYING ANY MATERIAL AND NO BUSINESS WAS CARRIED ON BY THEM. IN ORDER TO VERIFY TRANSACTIONS WITH THESE PARTIES, THE AO ISSUED NOTICES U/S. 133(6) TO THESE PARTIES WHICH RETURNED UNSERVED OR NO REPLIES WERE RECEIVED BY THE AO FROM THESE PARTIES. THE ASSESSEE ALSO COULD NOT PRODUCE THESE PARTIES BEFORE THE AO AND HENCE GENUINENESS OF THE TRANSACTION COULD NOT BE PROVED BY THE ASSESSEE. THE AO OBSERVED THAT THE ONUS IS ON THE ASSESSEE TO PROVE THAT THE PURCHASES ARE GENUINE. AS PER THE AO , THESE PURCHASES REMAINED UNVERIFIABLE AND THERE IS POSSIBILITY OF LEAKAGES . THE AO REJECTED THE BOOKS OF ACCOUNTS U/S. 145(3) AND ESTIMATED INCOME AT THE RA TE OF 12.5% OF THE ALLEGED BOGUS PURCHASES TO THE TUNE OF RS. 1,75,19,573/ - FROM THE ALLEGED HAWALA DEALERS ON THE GROUNDS THAT THE ASSESSEE HAS ARRANGED ACCOMMODATION BILLS FROM THESE PARTIES TO SUPPRESS ITS TRUE PROFITS. THE LEARNED CIT(A) CONFIRMED THE ASSESSMENT ORDER OF THE AO BY UPHOLDING THE ADDITIONS, BEFORE US THE ONLY PRAYER HAS BEEN MADE BY THE LEARNED COUNSEL FOR ASSESSEE FOR REDUCING THE INCOME ESTIMATED BY THE AO FROM THESE ALLEGED BOGUS PURCHASES TO THE TUNE OF 12.5% . THUS, FROM THE PLEADING S OF THE ASSESSEE IT IS CLEAR THAT FACTUM OF OBTAINING BOGUS BILLS FROM THESE PARTIES STOOD ACCEPTED AND SINCE SALES ARE ACCEPTED , THE ONLY FOREGONE 27240227766V ELEGANT TRADING CO 10,30,797 27610637339V RIYA ENTERPRISE 12,83.790 27270583788V S P CORPORATION 15,82,774 TOTAL 1.74.43,835 I.T.A. NO. 5835/ MUM/2017 I.T.A. NO. 5836/ MUM/2017 I.T.A. NO. 5837/ MUM/2017 9 CONCLUSION IS THAT THE ASSESSEE HAS OBTAINED THE MATERIAL FROM GREY MARKET AT LOWER PRICES WITHOUT BILL AN D HENCE MADE UNDISCLOSED SAVINGS ON PRICES AND UNDERLYING TAXES. UNDER THESE CIRCUMSTANCES AS HELD BY THE HONBLE SUPREME COURT IN THE CASE OF KACHWALA GEMS V. JCIT REPORTED IN (2007) 288 ITR 10(SC) , INCOME EMBEDDED IN SUCH PURCHASES NEED TO BE ESTIMATED BY WAY OF PURCHASE AT LOWER RATES FROM GREY MARKET WITHOUT BILLS AS WELL SAVINGS IN TAX ES MADE BY THE ASSESSEE BY OBTAINING ACTUAL MATERIAL FROM GREY MARKET WHICH WAS NOT DISCLOSED IN BOOKS OF ACCOUNTS , AS THE ASSESSEE COULD HAVE PURCHASE MATERIAL FROM GR EY MARKET AT A LOWER RATE WITHOUT BILLS AND THEREAFTER INVOICES AT HIGHER RATE FROM BOGUS A CCOMMODATION ENTRY PROVIDERS WERE OBTAIN TO RECONCILE BOOKS OF ACCOUNTS AND STOCKS, THUS LEADING TO SAVING S ON LOWER RATES IN PRICES AS WELL SAVING ON TAXES ETC. WH ICH INCOME IS NOT REFLECTED IN THE BOOKS OF ACCOUNTS . THE ESTIMATION OF PROFITS TO THE TUNE OF 12.5% OF THE ALLEGED BOGUS PURCHASES TO BRING TO TAX SAID UNDISCLOSED INCOME AS WAS DONE BY THE AO IN OUR CONSIDERED VIEW IS A REASONABLE AND FAIR ESTIMATE AS W AS MADE BY THE AO WHICH STOOD CONFIRMED BY LEARNED CIT(A) KEEPING IN VIEW FACTUAL MATRIX OF THE CASE AND WE ARE NOT INCLINED TO INTERFERE WITH THE ORDER S OF BOTH THE AUTHORITIES BELOW WHO HAVE TAKEN A N CONCURRENT VIEW, WHICH WE CONSIDERED TO BE A REASONAB LE AND FAIR VIEW KEEPING IN VIEW FACTUAL MATRIX OF THE CASE. THUS , WE DISMISS THE APPEAL OF THE ASSESSEE. THE ASSESSEE FAILS IN THIS APPEAL. WE ORDER ACCORDINGLY. 8. IN THE RESULT APPEAL OF THE ASSESSEE IN ITA NO. 5835/MUM/2017 FOR AY 2009 - 10 STOOD DISMISSED. 9 . OUR DECISION IN ITA NO. 5835/MUM/2017 FOR ASSESSMENT YEAR 2009 - 10 SHALL APPLY MUTATIS MUTANDIS TO THE APPEAL (S) OF THE ASSESSEE IN ITA NO. 5836/M/2017 AND 5837/M/17 FOR AY 2010 - 11 AND 2011 - 12 RESPECTIVELY AS FACTS ARE SIMILAR IN THESE TWO APPEALS FOR AY 2010 - 11 AND 2011 - 12 AS WERE THERE IN APPEAL FOR AY 2009 - 10 . THESE TWO APPEALS ALSO STOOD DISMISSED. THE ASSESSEE FAILS IN THESE TWO APPEALS ALSO. WE ORDER ACCORDINGLY. I.T.A. NO. 5835/ MUM/2017 I.T.A. NO. 5836/ MUM/2017 I.T.A. NO. 5837/ MUM/2017 10 10 . IN THE RESULT , ALL THE THREE APPEALS FILED BY THE A SSESSEE STOOD DISMISSED. ORDER PRONOUNCED IN THE OPEN COURT ON 0 9 .02.2018 0 9 .02.2018 S D / - S D / - ( MAHAVIR SINGH ) (RAMIT KOCHAR) JUDICIAL MEMBER ACCOUNTANT MEMBER MUMBAI, DATED: 0 9 .02.2018 NISHANT VERMA SR. PRIVATE SECRETARY COPY TO 1 . THE APPELLANT 2 . THE RESPONDENT 3 . THE CIT(A) CONCERNED, MUMBAI 4 . THE CIT - CONCERNED, MUMBAI 5 . THE DR BENCH, E 6 . MASTER FILE // TUE COPY// BY ORDER DY/ASSTT. REGISTRAR ITAT, MUMBAI