ITO 14(2)(2), MUMBAI V. T M MOHAMEDALLY, MUMBAI

ITA 6062/MUM/2014

• Counselvise Citation: [2017] 126 COUNSELVISE.COM (IT) 9732 (ITAT-MUMBAI)
• Duration Of Justice: 2 year(s) 11 month(s) 12 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 11-09-2017
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: E
• Next Hearing Date: 11-09-2017
• Assessment Year: 2009-2010
• Appeal Filed On: 29-09-2014
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: V JUSTIN DR
• Keywords: Reopening of assessment; Bogus purchase; Capital asset; Depreciation; Question of law
• Section: 69C; 143(3)

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.6062/MUM/2014 ASSESSMENT YEARS: 2009-10 INCOME TAX OFFICER - 14(2)(2), ROOM NO.304, 3 RD FLOOR, EARNEST HOUSE, NARIMAN POINT, MUMBAI-400021 / VS. M/S T M MOHAMEDALLY HARARWALA BLDG. 112, LOHAR CHAWL, MUMBAI-400002 ( / REVENUE) ( !' # /ASSESSEE) PAN NO.:-AACFT2448M / REVENUE BY SHRI V. JUSTIN-DR !' # / ASSESSEE BY NONE ( ) # * / DATE OF HEARING : 11/09/2017 ) # * / DATE OF ORDER: 11/09/2017 ITA NO.6062/MUM/2014 T. M. MOHAMEDALY 2 / O R D E R PER JOGINDER SINGH (JUDICIAL MEMBER) THE REVENUE IS AGGRIEVED BY THE IMPUGNED ORDER DATE D 02/07/2014 OF THE LD. FIRST APPELLATE AUTHORITY, MU MBAI, DELETING THE ADDITION TO THE EXTENT OF ` 6,34,75,252/- ON ACCOUNT OF ADDITION MADE U/S 69C OF THE INCOME TAX ACT, 1961 (HEREINAFTER THE ACT) HOLDING THAT THE PURCHAS ES FROM NINE PARTIES WERE GENUINE AND ALLOWING THE SAME BY PLACING RELIANCE UPON THE DECISION FROM HON'BLE JURISDICTIO NAL HIGH COURT IN CIT VS NIKUNJ EXIMP ENTERPRISES LTD. (2013 ) 216 TAXMAN 171 (BOM.). 2. DURING HEARING, NONE WAS PRESENT FOR THE ASSESSEE, IN SPITE OF THE FACT THAT THE REGISTERED AD NOTICE WAS ISSUED TO THE ASSESSEE ON 13/04/2017 FOR 16/05/ 2017 AND 27/07/2017 FOR 11/09/2017 I.E. TODAY. THE ASSES SEE NEITHER PRESENTED ITSELF NOR MOVED ANY ADJOURNMENT PETITION. IT SEEMS THAT THE ASSESSEE HAS NOTHING TO SAY, THER EFORE, WE HAVE NO OPTION BUT TO PROCEED EX-PARTE, QUA THE ASS ESSEE, AND TEND TO DISPOSE OF THIS APPEAL ON THE BASIS OF MATERIAL ITA NO.6062/MUM/2014 T. M. MOHAMEDALY 3 AVAILABLE ON RECORD. ON THE OTHER HAND, SHRI V. JU STIN, LD. DR, ADVANCED ARGUMENTS WHICH IS IDENTICAL TO THE GR OUND RAISED BY DEFENDING THE ADDITION MADE BY THE LD. AS SESSING OFFICER. 2.1. WE HAVE CONSIDERED THE SUBMISSIONS OF LD. DR AND PERUSED THE MATERIAL AVAILABLE ON RECORD. IF TH E OBSERVATION MADE IN THE ASSESSMENT ORDER, LEADING T O ADDITION MADE TO THE TOTAL INCOME, CONCLUSION DRAWN IN THE IMPUGNED ORDER, MATERIAL AVAILABLE ON RECORD, ASSER TIONS MADE BY THE LD. DR, IF KEPT IN JUXTAPOSITION AND AN ALYZED, BEFORE ADVERTING FURTHER, THE FACTS OF THE PRESENT APPEALS 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 MI SCELLANEOUS APPLICATION. IN THE PRINCIPAL ORDER THE TRIBUNAL HA S RECORDED THE FOLLOWING FINDINGS : '8.3. WE HAVE CONSIDERED THE RIVAL SUBMISSIONS AND PERUSED THE FACTS ON RECORD. IN OUR OPINION, THE ACTION OF THE ITA NO.6062/MUM/2014 T. M. MOHAMEDALY 4 COMMISSIONER OF INCOME-TAX (APPEALS) CONFIRMING 25 PER CENT. OF THE AMOUNTS CLAIMED IS FAIR AND REASONABLE AND NO INTERFERENCE IS CALLED FOR. THE COMMIS SIONER OF IN COME-TAX (APPEALS) HAS GONE THROUGH THE PURCHASE PRICES OF T HE RAW MATERIAL PREVALENT AT THE TIME AND RIGHTLY CAME TO THE CON CLUSION THAT THE DISALLOWANCE TO THE EXTENT OF 25 P ER CENT. WAS CALLED FOR. IT IS ESTABLISHED THAT THE PARTIES WERE NOT TRACEABLE ; THEY OPENED THE BANK ACCOUNTS IN WHICH THE CHEQUES WERE CREDITED BUT SOON THEREAFTER THE AMOUN TS WERE WITHDRAWN BY BEARER CHEQUES. THAT FAIRLY LEADS TO T HE 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 RA W MATERIALS. UNDER THE CIRCUMSTANCES, IT WAS NOT IMPO SSIBLE FOR THE ASSESSEE TO INFLATE THE PRICES OF RAW MATERIALS . ACCORDINGLY, AN ADDITION AT THE RATE OF 25 PER CENT . FOR EXTRA PRICE PAID BY THE ASSESSEE THAN OVER AND ABOVE THE PREVALENT PRICE IS FAIR AND REASONABLE AND WE 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 GOOD S WERE RECEIVED FROM THE PARTIES OTHER THAN THE PERSONS WH O HAD ISSUED BILLS FOR SUCH GOODS. THOUGH THE PURCHASES A RE SHOWN TO HAVE BEEN MADE BY MAKING PAYMENT THEREOF BY ACCO UNT PAYEE CHEQUES, THE CHEQUES HAVE BEEN DEPOSITED IN B ANK ACCOUNTS OSTENSIBLY IN THE NAME OF THE APPARENT SEL LERS, THEREAFTER THE ENTIRE AMOUNTS HAVE BEEN WITHDRAWN B Y 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, DIFFERENT FROM TH E ONE RECORDED BY THE COMMISSIONER (APPEALS) AND THE TRIB UNAL CONCURRENTLY HOLDING THAT THE APPARENT SELLERS WERE NOT GENUINE, OR WERE ACTING AS CONDUIT BETWEEN THE ASSE SSEE- FIRM AND THE ACTUAL SELLERS OF THE RAW MATERIALS. B OTH THE COMMISSIONER (APPEALS) AND THE TRIBUNAL HAVE, THERE FORE, COME TO THE CONCLUSION THAT IN SUCH CIRCUMSTANCES, THE LIKELIHOOD OF THE PURCHASE PRICE BEING INFLATED CAN NOT BE RULED OUT AND THERE IS NO MATERIAL TO DISLODGE SUCH FINDING. THE ISSUE IS NOT WHETHER THE PURCHASE PRICE REFLECT ED IN THE BOOKS OF ACCOUNT MATCHES THE PURCHASE PRICE STATED TO HAVE BEEN PAID TO OTHER PERSONS. THE ISSUE IS WHETHER TH E PURCHASE PRICE PAID BY THE ASSESSEE IS REFLECTED AS RECEIPTS ITA NO.6062/MUM/2014 T. M. MOHAMEDALY 5 BY THE RECIPIENTS. THE ASSESSEE HAS, BY SET OF EVID ENCE AVAILABLE ON RECORD, MADE IT POSSIBLE FOR THE RECIP IENTS NOT BEING TRACEABLE FOR THE PURPOSE OF INQUIRY AS TO WH ETHER THE PAYMENTS MADE BY THE ASSESSEE HAVE BEEN ACTUALLY RE CEIVED BY THE APPARENT SELLERS. HENCE, THE ESTIMATE MADE B Y THE TWO APPELLATE AUTHORITIES DOES NOT WARRANT INTERFER ENCE. EVEN OTHERWISE, 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 GOODS. T HE PURCHASES WERE SHOWN TO HAVE BEEN MADE BY MAKING PAYMENTS, THROUGH BANKING CHANNEL AND THUS THE APPA RENT SELLERS WERE NOT GENUINE OR WERE ACTING AS CONDUIT BETWEEN THE ASSESSEE AND THE ACTUAL SELLER. IN SUCH A 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 NO.6062/MUM/2014 T. M. MOHAMEDALY 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 RECORD A ND CAME TO THE CONCLUSION THAT THE ENTIRE QUANTITY OF OPENING STOC K, PURCHASES AND THE QUANTITY MANUFACTURED DURING THE YEAR UNDER CON SIDERATION WERE SOLD BY THE ASSESSEE. THEREFORE, THE PURCHASES OF T HE ENTIRE 1,02,514 METRES OF CLOTH WERE SOLD DURING THE YEAR UNDER CON SIDERATION. THE TRIBUNAL, THEREFORE, ACCEPTED THE ASSESSEE'S CONTEN TION THAT THE FINISHED GOODS WERE PURCHASED BY THE ASSESSEE, MAY BE NOT FROM THE PARTIES SHOWN IN THE ACCOUNTS, BUT FROM OTHER SOURC ES. IN THAT VIEW OF THE MATTER, THE TRIBUNAL WAS OF THE OPINION THAT NO T THE ENTIRE AMOUNT, BUT THE PROFIT MARGIN EMBEDDED IN SUCH AMOU NT WOULD BE SUBJECTED TO TAX. THE TRIBUNAL RELIED ON ITS EARLIE R DECISION IN THE CASE OF SANKET STEEL TRADERS AND ALSO MADE REFERENCE TO THE TRIBUNAL'S DECISION IN THE CASE OF VIJAY PROTEINS LTD. V. ASST . CIT [1996] 58 ITD 428 (AHD). 6. WE ARE OF THE OPINION THAT THE TRIBUNAL COMMITTE D NO ERROR. WHETHER THE PURCHASES THEMSELVES WERE BOGUS OR 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 PU RCHASES AND, HENCE, THE ASSESSING OFFICER WAS NOT JUSTIFIED IN D ISALLOWING THE ENTIRE AMOUNT. HE, HOWEVER, WAS OF THE VIEW THAT THE ASSES SEE HAD INFLATED THE PURCHASES AND, ACCORDINGLY, 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 IM PUGNED ORDER HAS FOLLOWED ITS EARLIER ORDER IN THE CASE OF VIJAY PRO TEINS TO THE LETTER AND ENHANCED THE DISALLOWANCE TO 25 PER CENT. THUS, IN BOTH CASES, THE ITA NO.6062/MUM/2014 T. M. MOHAMEDALY 7 DECISION OF THE COMMISSIONER (APPEALS) AS WELL AS T HAT OF THE TRIBUNAL IS BASED ON ESTIMATE. THIS HIGH COURT IN THE CASE O F SANJAY OIL CAKE [2009] 316 ITR 274 (GUJ) HAS HELD THAT WHETHER AN ESTIMATE SHOULD BE AT A PARTICULAR SUM OR AT A DIFFERENT SUM CAN NE VER 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 TH ERE IS ALWAYS A CERTAIN DEGREE OF GUESS WORK. NO DOUBT, THE AUTHORI TIES SHOULD TRY TO MAKE AN HONEST AND FAIR ESTIMATE OF THE INCOME EVEN IN A BEST JUDGMENT ASSESSMENT AND SHOULD NOT ACT TOTALLY ARBI TRARILY BUT THERE IS NECESSARILY SOME AMOUNT OF GUESS WORK INVOLVED I N 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 BASE D 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 REASONS STATED HEREINABOVE, THE SAID GROUNDS OF APPEAL DO NOT GIVE RISE TO ANY QUES TION OF LAW. 10. AS REGARDS THE PROPOSED QUESTION (B) WHICH 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. (MMT C), THE ASSESSING OFFICER HAS FOUND THAT MMTC WAS A PARTNER SHIP FIRM OF SHRI NITIN GAJJAR ALONG WITH HIS FATHER AND BROTHER OPER ATING 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 THE GEN UINENESS OF THE PURCHASES MADE FROM MMTC WHILE MAKING THE DISALLOWA NCE. HIS OBSERVATIONS WERE BASED ON INFLATION OF RATES WHICH WERE BEING CHARGED FROM THE ASSESSEE. ACCORDING TO THE COMMISS IONER (APPEALS), THOUGH MMTC IN SOME RESPECT COULD BE ATT RIBUTED TO BE ASSOCIATED WITH THE ASSESSEE-COMPANY, STILL IT COUL D NOT BE EXPECTED THAT MMTC WAS CARRYING OUT ITS BUSINESS WITHOUT ANY MOTIVE OR PROFIT. ACCORDING TO THE COMMISSIONER (APPEALS), IT WAS PRO VED BY THE ASSESSEE THAT THE RATES CHARGED BY MMTC WERE COMPAR ABLE WITH THE PREVAILING MARKET RATES, NO SUCH ADDITION CAN STAND . THE COMMISSIONER (APPEALS) TOOK NOTE OF THE FACT THAT I T WAS NOT THE CASE OF THE ASSESSING OFFICER THAT THE PURCHASES HAD BEE N DIRECTLY EFFECTED FROM THIRD PARTIES AND NOT DIRECTLY FROM MMTC ; THE DIFFERENCE COULD NOT BE THE NET PROFIT IN THE HANDS OF MMTC ; AND TH AT WHILE CONDUCTING THE ENTIRE EXERCISE MMTC WOULD HAVE TO I NCUR CERTAIN EXPENDITURE IN TRANSPORTATION, IN ENGAGING PERSONNE L IN THE OFFICE AND ITA NO.6062/MUM/2014 T. M. MOHAMEDALY 8 OTHER OPERATIONS AND WAS ACCORDINGLY OF THE VIEW TH AT THERE 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 THE PR EVAILING MARKET RATES AND THAT MMTC HAD INCURRED CERTAIN EXP ENDITURE IN ENGAGING PERSONNEL IN THE OFFICE AND OTHER OPERATIO NS AND WOULD MAKE SOME INCOME FROM THE ENTIRE EXERCISE. IN THE C IRCUMSTANCES, THE PURCHASES MADE BY THE ASSESSEE FROM MMTC WOULD NOT BE HIT BY THE PROVISIONS 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 CASE OF THE REVENUE THAT THE TRIBUNAL HAS TAKEN INTO ACCOUNT ANY IRRELEVANT MATE RIAL OR THAT ANY RELEVANT MATERIAL HAS NOT BEEN TAKEN INTO CONSIDERA TION. IN THE ABSENCE OF ANY MATERIAL TO THE CONTRARY BEING POINT ED OUT ON BEHALF OF THE REVENUE, THE IMPUGNED ORDER BEING BASED ON C ONCURRENT FINDINGS OF FACT RECORDED BY THE TRIBUNAL UPON APPR ECIATION OF THE EVIDENCE ON RECORD, DOES NOT GIVE RISE TO ANY QUEST ION OF LAW IN SO FAR AS THE PRESENT GROUND OF APPEAL IS CONCERNED. 14. IN RELATION TO THE PROPOSED QUESTION (F) WHICH RELATES TO THE DELETION OF ADDITION OF RS. 44,54,426 MADE ON ACCOU NT OF PURCHASE OF CRANE AND ALLOWING DEPRECIATION ON THE SAME, THE AS SESSING OFFICER OBSERVED THAT THE ASSESSEE HAD PURCHASED A CRAWLER CRANE FOR AN AMOUNT OF RS. 24,61,000 EXCLUDING THE COST OF SPARE PARTS OF RS. 14,98,490. THE ASSESSING OFFICER AFTER EXAMINING TH E EVIDENCE ON RECORD AND CONSIDERING THE EXPLANATION GIVEN BY THE ASSESSEE, MADE ADDITION OF RS. 44,54,426, RS. 39,59,490 BEING THE PURCHASE PRICE OF THE CRANE ALONG WITH ITS SPARE PARTS AND RS. 4,94,9 36 BEING DEPRECIATION CLAIMED BY THE ASSESSEE. THE COMMISSIO NER (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 PERMITTED B Y THE INCOME- TAX ACT. IT WAS HELD THAT DISALLOWANCE COULD ONLY H AVE BEEN MADE IN RESPECT OF EXPENSES DEBITED TO THE PROFIT AND LOSS ACCOUNT WHEREAS IN THE PRESENT CASE THE PURCHASE OF CRANE AND SPARE PA RTS OF THE CRANE AND OTHER MACHINERIES WERE IN THE NATURE OF ACQUISI TION OF CAPITAL ASSET. ACCORDING TO THE COMMISSIONER (APPEALS), THE DISALLOWANCE COULD HAVE BEEN MADE ON DEPRECIATION ONLY IF AT ALL THE ASSESSING OFFICER CONCLUSIVELY PROVED THAT THE PURCHASES OF C RANE AND OTHER PARTS ARE BOGUS. UPON APPRECIATION OF THE MATERIAL ON RECORD THE COMMISSIONER (APPEALS) FOUND THAT THE ASSESSING OFF ICER HAS SIMPLY BRUSHED ASIDE ALL THE EVIDENCE ON ACCOUNT OF TECHNI CAL INFIRMITIES AND THAT THE EVIDENCE SUCH AS OCTROI RECEIPT ; HYPOTHEC ATION OF THE CRANE TO THE BANK; EXISTENCE OF THE CRANE EVEN TILL DATE WITH THE ASSESSEE CONCLUSIVELY PROVED THAT THE CRANE WAS PURCHASED AN D IT WAS IN USE EVEN AS ON DATE WITH THE ASSESSEE. THE COMMISSIONER (APPEALS) ACCORDINGLY FOUND THAT THERE WAS NO SCOPE FOR ANY D ISALLOWANCE AND ACCORDINGLY DELETED THE DISALLOWANCE MADE ON ACCOUN T OF PURCHASE OF CRANE AND ALLOWED THE DEPRECIATION AS CLAIMED BY TH E ASSESSEE. ITA NO.6062/MUM/2014 T. M. MOHAMEDALY 9 15. THE TRIBUNAL, IN THE IMPUGNED ORDER, HAS NOTED THAT THE COST OF CRANE WAS NEVER CLAIMED BY THE ASSESSEE IN THE RETU RN OF INCOME. BEFORE THE TRIBUNAL, THE ASSESSEE PRODUCED THE EVID ENCE THAT THE CRANE IN QUESTION WAS REGISTERED WITH THE RTO AND T HE SAME WAS WHOLLY AND EXCLUSIVELY USED FOR THE PURPOSES OF ITS BUSINESS. THE TRIBUNAL, THEREFORE, HELD THAT THE COMMISSIONER (AP PEALS) WAS LEGALLY AND FACTUALLY CORRECT IN DELETING THE DISALLOWANCE OF COST OF CRANE AS WELL AS DEPRECIATION THEREON. 16. FROM THE FACTS EMERGING FROM THE RECORD, IT IS APPARENT THAT THE ASSESSEE HAD NEVER CLAIMED THE COST OF THE CRANE IN THE RETURN NOR HAD IT DEBITED THE EXPENSES TO THE PROFIT AND LOSS ACCOUNT, AND AS SUCH THE QUESTION OF DISALLOWING THE SAME AND ADDIN G THE SAME TO THE INCOME WOULD NOT ARISE. MOREOVER, IN THE ABSENCE OF ANY EVIDENCE TO INDICATE THAT THE PURCHASE WAS BOGUS OR THAT THE CR ANE IN FACT DID NOT EXIST, THE QUESTION OF DISALLOWING THE DEPRECATION IN RESPECT OF THE SAME ALSO WOULD NOT ARISE. WHEN THE ASSESSEE HAD CO NCLUSIVELY PROVED THE PURCHASE AND EXISTENCE OF THE CRANE, AND HAD NOT DEBITED THE EXPENSES TO THE PROFIT AND LOSS ACCOUNT, NO ADD ITION COULD HAVE BEEN MADE IN RESPECT OF THE PURCHASE PRICE NOR COUL D HAVE DEPRECIATION BEEN DISALLOWED IN RESPECT THEREOF. TH E TRIBUNAL WAS, THEREFORE, JUSTIFIED IN DELETING THE ADDITION AS WE LL AS DISALLOWANCE OF DEPRECIATION. 17. IN THE LIGHT OF THE AFORESAID DISCUSSION, IT IS NOT POSSIBLE TO STATE THAT THERE IS ANY LEGAL INFIRMITY IN THE IMPUGNED O RDER MADE BY THE TRIBUNAL SO AS TO WARRANT INTERFERENCE. IN THE ABSE NCE OF ANY QUESTION OF LAW, MUCH LESS, A SUBSTANTIAL QUESTION OF LAW, T HE 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. ACCORDING TO THE REVENUE, THE DIRECTOR OF M/S. THAKKAR AGRO INDUSTRI AL CHEM SUPPLIES P. LTD. IN HIS STATEMENT HAD STATED THAT T HERE 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 INDUSTRIAL CHEM SUPPLIES P. LTD. WHO HAD MADE THE A BOVE STATEMENT. THE APPELLATE AUTHORITY HAD SOUGHT REMAN D REPORT ITA NO.6062/MUM/2014 T. M. MOHAMEDALY 10 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 CAN BE SAID TO ARISE FROM THE ORDER OF THE TRIBUNAL. THE APPEAL IS DISMI SSED 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 BOOKS OF ACCOUNT OF THE RESPONDENT-ASSESSEE HAVE NOT BEEN REJECTED. SIM ILARLY, THE SALES HAVE NOT BEEN DOUBTED AND IT IS AN ADMITTED P OSITION THAT SUBSTANTIAL AMOUNT OF SALES HAVE BEEN MADE TO THE GOVERNMENT DEPARTMENT, I.E., DEFENCE RESEARCH AND DEVELOPMENT LABORATORY, HYDERABAD. FURTHER, THERE W ERE CONFIRMATION LETTERS FILED BY THE SUPPLIERS, COPIES OF INVOICES FOR PURCHASES AS WELL AS COPIES OF BANK STATEMENT ALL O F 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 PRODUCED BE FORE THEM. WE FIND THAT THE ORDER OF THE TRIBUNAL IS WEL L A REASONED ORDER TAKING INTO ACCOUNT ALL THE FACTS BEFORE CONC LUDING THAT THE PURCHASES OF RS. 1.33 CRORES WAS NOT BOGUS. NO FAULT CAN BE FOUND WITH THE ORDER DATED APRIL 30, 2010, OF TH E TRIBUNAL. 2.6. THE HON'BLE GUJARAT HIGH COURT IN CIT VS M.K. BROTHERS (163 ITR 249) HELD/OBSERVED AS UNDER:- ITA NO.6062/MUM/2014 T. M. MOHAMEDALY 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 THE REAFTER THE CONCLUSION WAS REACHED. THE TRIBUNAL FOUND THAT THE RE WAS NO EVIDENCE ANYWHERE THAT THESE CONCERNS GAVE BOGUS VO UCHERS TO THE ASSESSEE. NO DOUBT, THERE WERE CERTAIN DOUBTFUL FEATURES, BUT THE EVIDENCE WAS NOT ADEQUATE TO CONCLUDE THAT THE PURCHASES MADE BY THE ASSESSEE FROM THE SAID PARTIES WERE BOG US. THE TRIBUNAL ACCORDINGLY, DID NOT SUSTAIN THE ADDITION RETAINED BY THE APPELLATE ASSISTANT COMMISSIONER. HENCE, AT THE INS TANCE OF THE REVENUE, THE AFORESAID QUESTION HAS BEEN REFERRED T O 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 ASS ESSEE TO THESE PARTIES CAME BACK TO THE ASSESSEE IN ANY FORM. IT I S FURTHER OBSERVED BY THE TRIBUNAL THAT THERE IS NO EVIDENCE ANYWHERE THAT THESE CONCERNS GAVE VOUCHERS TO THE ASSESSEE. EVEN THE TWO STATEMENTS DO NOT IMPLICATE THE TRANSACTIONS WITH T HE ASSESSEE IN ANY WAY. WITH THESE OBSERVATIONS, THE TRIBUNAL ULTI MATELY HAS OBSERVED THAT THERE ARE CERTAIN DOUBTFUL FEATURES, BUT THE EVIDENCE IS NOT ADEQUATE TO CONCLUDE THAT THE PURCH ASES MADE BY THE ASSESSEE FROM THESE PARTIES WERE BOGUS. IT MAY BE STATED THAT THE ASSESSEE WAS GIVEN CREDIT FACILITIES FOR A SHORT DURATION AND THE PAYMENTS WERE GIVEN BY CHEQUES. WHEN THAT I S SO, IT CANNOT BE SAID THAT THE ENTRIES FOR THE PURCHASES O F THE GOODS MADE IN THE BOOKS OF ACCOUNT WERE BOGUS ENTRIES. WE , THEREFORE, DO NOT FIND THAT THE CONCLUSION ARRIVED AT BY THE T RIBUNAL 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. ACCORDINGLY, THE REFERENCE STANDS DISPOSED OF WITH NO ORDER AS TO 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:- ITA NO.6062/MUM/2014 T. M. MOHAMEDALY 12 2.2.AGGRIEVED BY THE ORDER OF THE AO, ASSESSEE PRE FERRED AN APPEAL BEFORE THE FIRST APPELLATE AUTHORITY(FAA).BE FORE HIM IT WAS ARGUED THAT ASSESSEE HAD FILED COPIES OF BILLS OF P URCHASE FROM DKE AND NBE, THAT BOTH THE SUPPLIERS WERE REGISTERE D DEALERS AND WERE CARRYING PROPER VAT AND REGISTRATION NO.S, THA T 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 ARGUED THA T SOME OF THE MATERIAL PURCHASED FROM THE SAID PARTIES WERE LYING PART OF CLOSING STOCK AS ON 31.03.2009 AS PER THE STATEMENT SUBMITTED ON RECORD. AFTER CONSIDERING THE ASSESSMENT ORDER A ND THE SUBMISSIONS MADE BY THE ASSESSEE, FAA HELD THAT THE TRANSACTIONS WERE SUPPORTED BY PROPER DOCUMENTARY 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 DEALER BY VAT DEPARTMENT, THAT BECAUSE OF CHEQUE PAYMENT MADE TO THE SUPPLIER TRANSACTION CANNOT BE TAKEN AS GENUINE. HE RELIED UPON THE ORDER OF THE G BENCH OF MUMBAI TRIBUNAL DELIVER ED 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 B Y THE BANKERS STATEMENT, THAT GOODS RECEIVED BY THE ASSE SSEE FROM THE SUPPLIE WAS PART OF CLOSING STOCK,THAT THE TRAN SPORTER HAD ADMITTED THE TRANSPORTATION OF GOODS TO THE SITE.HE RELIED UPON THE CASE OF BABULA BORANA (282 ITR251), NIKUNJ EXIM P ENTERPRISES (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 ITA NO.6062/MUM/2014 T. M. MOHAMEDALY 13 WHETHER THERE WAS ANY IMMEDIATE CASH WITHDRAWAL FRO M THEIR ACCOUNT. WE FIND THAT NO SUCH EXERCISE WAS DONE. TR ANSPORTATION OF GOOD TO THE SITE IS ONE OF THE DECIDING FACTOR T O BE CONSIDERED FOR RESOLVING THE ISSUE. THE FAA HAS GIVEN A FINDIN G OF FACT THAT PART OF THE GOODS RECEIVED BY THE ASSESSEE WAS FORM ING PART OF CLOSING STOCK. AS FAR AS THE CASE OF WESTERN EXTRUS ION INDUSTRIES. (SUPRA)IS CONCERNED, WE FIND THAT IN THAT MATTER CA SH WAS IMMEDIATELY WITHDRAWN BY THE SUPPLIER AND THERE WAS NO EVIDENCE OF MOVEMENT OF GOODS. BUT, IN THE CASE BEF ORE US, THERE IS NOTHING, IN THE ORDER OF THE AO, ABOUT THE CASH TRAIAL. SECONDLY, PROOF OF MOVEMENT OF GOODS IS NOT IN DOUB T. THERERFORE, CONSIDERING THE PECULIAR FACTS AND CIRC UMSTANCES OF THE CASE UNDER APPEAL, WE ARE OF THE OPINION THAT T HE ORDER OF THE FAA DOES NOT SUFFER FROM ANY LEGAL INFIRMITY AN D 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 OFFICE R (ITA NO.1223/M/2014) ORDER DATED 22/01/2016, M/S IMPERIA L IMP. & EXP. VS INCOME TAX OFFICER ITA NO.5427/MUM/2 015, ORDER DATED 18/03/2016 SUPPORTS THE CASE OF THE ASS ESSEE AND THE CONCLUSION DRAWN IN THE IMPUGNED ORDER. HOW EVER, AS RELIED BY THE LD. DR, THE HON'BLE GUJARAT HIGH C OURT IN THE CASE OF N.K. INDUSTRIES LTD.,ETC VS DCIT (SUPRA ) CONSIDERING VARIOUS DECISIONS DECIDED THE ISSUE IN FAVOUR OF THE REVENUE AND THE HON'BLE APEX COURT DISMISSED TH E SLP VIDE ORDER DATED 16/01/2017 (SLP NO.(C) 769 OF 2017 ). WE FIND THAT IN THAT CASE, DURING SEARCH PROCEEDINGS, CERTAIN ITA NO.6062/MUM/2014 T. M. MOHAMEDALY 14 BLANK SIGNED CHEQUE BOOKS AND VOUCHERS WERE FOUND A ND THUS THE PURCHASES MADE FROM THESE CONCERNS, WERE T REATED AS BOGUS BY THE ASSESSING OFFICER. 2.9. THE HON'BLE GUJARAT HIGH COURT IN N.K. INDUST RIES LTD. VS DCIT (IT APPEAL NO.240, 261, 242, 260 AND 2 41 OF 2003), VIDE ORDER DATED 20/06/2016 CONSIDERED THE D ECISION OF THE TRIBUNAL AND VARIOUS JUDICIAL DECISIONS INCL UDING THE CASE OF VIJAY PROTEINS AND SANJAY OILCAKES INDUSTRI ES LTD., M/S WOOLEN CARPET FACTORY VS ITAT (2002) 178 CTR 42 0 (RAJ.), THE TRIBUNAL WAS HELD TO BE JUSTIFIED IN DE CIDING THE CASE AGAINST THE ASSESSEE. THE HON'BLE APEX COURT CONFIRMED THE DECISION OF THE HIGH COURT FOR ADDING THE ENTIRE INCOME ON ACCOUNT OF BOGUS PURCHASES (SLP (C ) NO.S 769 OF 2017, ORDER DATED 16/01/2017. 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) ITA NO.6062/MUM/2014 T. M. MOHAMEDALY 15 355 ITR 290 (GUJ.) AND VARIOUS OTHER DECISIONS OF T HE TRIBUNAL AND THE DECISION OF M/S NIKUNJ EXIMP(SUPRA ) FROM 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 OPTI ON BUT TO ESTIMATE THE PROFIT WHICH DEPENDS UPON THE SUBJECTIVE/OBJECTIVE APPROACH OF AN INDIVIDUAL AND THE MATERIAL FACTS AVAILABLE ON RECORD. IN THE PRESENT APPEAL, THE FACTS, IN BRIEF, ARE THAT THE ASSESSEE IS A PARTNER SHIP FIRM, ENGAGED IN THE BUSINESS OF TRADING IN TOLL, ADHESIV E, ETC, DECLARED INCOME OF ` 16,61,619/- IN ITS RETURN FILED ON 22/10/2010, WHICH WAS ACCEPTED U/S 143(1) OF THE AC T. THE ASSESSMENT WAS REOPENED U/S 148/147 OF THE ACT AND THUS THE REASSESSMENT ORDER WAS PASSED U/S 143(3) R.W.S. 147 OF THE ACT DISALLOWING THE PURCHASES MADE BY THE ASSES SEE FROM ELEVEN PARTIES AGGREGATING TO ` 7,46,76,767/-. THE ASSESSEE PREFERRED AN APPEAL BEFORE THE LD. COMMISSIONER OF INCOME ITA NO.6062/MUM/2014 T. M. MOHAMEDALY 16 TAX (APPEAL), WHEREIN, THE REOPENING OF ASSESSMENT U/S 147/148 WAS CHALLENGED ALONG WITH THE DISALLOWANCE MADE U/S 69C OF THE ACT. THE LD. COMMISSIONER OF INCOME TAX (APPEAL) UPHOLD THE VALIDITY OF REOPENING, WHEREAS, THE DISALLOWANCE OF ADDITION U/S 69C OF THE ACT WAS PAR TLY SUSTAINED BY FOLLOWING VARIOUS DECISIONS INCLUDING NIKUNJ EXIM ENTERPRISES PVT. LTD. (SUPRA) FROM HON'BLE JUR ISDICTIONAL HIGH COURT AND ALSO THE CASE OF CIT VS SMIT P. SETH (356 ITR 451)(GUJ.) BY HOLDING THAT THE DISALLOWANCE AT THE RATE OF 15% OF THE ALLEGED PURCHASES AMOUNTING TO ` 1,12,01,515/- IS FAIR AND REASONABLE. THIS ORDER OF THE LD. FIRST APPELLATE AUTHORITY IS UNDER CHALLENGE, ON BEHALF OF THE REVENUE, BEFOR E THIS TRIBUNAL. THE FACTS HAS BEEN ANALYZED BY US AND AR E IN AGREEMENT THAT BROADLY IN SUCH TYPE OF CASES, THE G ROSS PROFIT IS ADOPTED AT THE RATE OF 12.05% OF THE BOGUS PURCH ASES MADE BY THE ASSESSEE, THOUGH DEPENDS UPON PECULIAR FACTS OF EACH CASE. CONSIDERING THE MATERIAL FACTS AVAILABLE ON R ECORD, VARIOUS CASE LAWS, DISCUSSED HEREINABOVE, THE DISAL LOWANCE WERE MADE BY THE ASSESSEE ON THE PLEA THAT THE QUAN TITATIVE DETAILS WERE NOT FURNISHED BY THE ASSESSEE ON THE P LEA THAT THE PURCHASES MADE FROM NINE TAINTED PARTIES WERE IN FA CT SOLD. ITA NO.6062/MUM/2014 T. M. MOHAMEDALY 17 ADMITTEDLY, THERE CANNOT BE SALE WITHOUT PURCHASES AND THE G.P. RATIO FOR FINANCIAL YEAR 2008-09 (@ 15.38%), T HE G.P. OF ASSESSMENT YEAR 2007-08 (@ 15.53%) AND OF ASSESSMEN T YEAR 2009-10 (@ 15.59%), CLEARLY INDICATES THAT THE FIRS T APPELLATE AUTHORITY HAS JUSTIFIABLY, UNDER THE FACTS AND THE CIRCUMSTANCES OF THE CASE ADOPTED THE DISALLOWANCE AT THE RATE OF 15% OF THE ALLEGED BOGUS PURCHASES. EVEN OTHERWI SE, THE CASE OF THE ASSESSEE/REVENUE IS ALSO COVERED BY THE DECISION FROM HON'BLE JURISDICTIONAL HIGH COURT IN THE CASE OF M/S NIKUNJ EXIM ENTERPRISES PVT. LTD.(SUPRA) AND CIT VS SMIT P. SETH (SUPRA) (GUJ.). THIS VIEW OF THE LD. COMMISSIO NER OF INCOME TAX (APPEAL) WILL PLUG THE REVENUE LEAKAGE, THEREFORE, WE AFFIRM THE STAND OF THE LD. COMMISSIONER OF INCO ME TAX (APPEAL), RESULTING INTO DISMISSAL OF APPEAL, FILED BY THE REVENUE. FINALLY, THE APPEAL OF THE REVENUE IS DISMISSED. THIS ORDER WAS PRONOUNCED IN THE OPEN COURT IN THE PRESENCE OF LD. DR AT THE CONCLUSION OF THE HEARING ON 11/09/2017. SD/- SD/- ( G. MANJUNATHA ) (JOGINDER SINGH) '# / ACCOUNTANT MEMBER $# / JUDICIAL MEMBER ( MUMBAI; , DATED :-11/09/2017 F{X~{T? P.S / - ITA NO.6062/MUM/2014 T. M. MOHAMEDALY 18 %$&'()(*& / 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. 67 2# , 4 ./* . 8 , ( / DR, ITAT, MUMBAI 6. 9! : / GUARD FILE. / BY ORDER, 36/# 2# //TRUE COPY// / (DY./ASSTT. REGISTRAR) , ( / ITAT, MUMBAI,