DCIT CEN CIR 1(4), MUMBAI V. MP RECYCLING CO P LTD, MUMBAI

ITA 6385/MUM/2016

• Counselvise Citation: [2018] 126 COUNSELVISE.COM (IT) 0580 (ITAT-MUMBAI)
• Duration Of Justice: 1 year(s) 3 month(s) 9 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 07-02-2018
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: Not Allotted
• Assessment Year: 2009-2010
• Appeal Filed On: 28-10-2016
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: Y K BHASKAR
• Keywords: Bogus purchase; Earning of tax free income; Accommodation entries
• Section: 153A; 14A

Judgement Text

, INCOME-TAX APPELLATE TRIBUNAL -GBENCH MUMBAI BEFORE S/SH.RAJENDRA,ACCOUNTANT MEMBE R AND C. N. PRASAD,JUDICIAL MEMBER ./I.T.A./6385/MUM/2016, /ASSESSMENT YEAR: 2009-10 DY. CIT-CC-1(4) ROOM NO.902, PRATISHTA BHAVAN, 9TH FLOOR, OLD CGO BLDG. ANNEXE, M.K. ROAD, MUMBAI-400 020. VS. M/S. M.P. RECYCLING CO. PVT. LTD., 51-53, A-WING, MITTAL COURT, J.B. MARG, NARIMAN POINT, MUMBAI-400 021. PAN:AADCM 3153 A ( /APPELLANT) ( / RESPONDENT) / REVENUE BY: SHRI Y.K. BHASKAR-CIT-DR /ASSESSEE BY: SHRI RAKESH JOSHI / DATE OF HEARING: 16/11/2017 / DATE OF PRONOUNCEMENT: 07/ 02/2018 , / PER RAJENDRA A.M. - CHALLENGING THE ORDER DATED 09/08/2016 OF THE CIT( A)- 47,MUMBAI,THE ASSESSING OFFICER (AO)HAS FILED PRESENT APPEAL.ASSESSEE-COMPANY IS EN GAGED IN THE BUSINESS OF SHIP BREAKING AND IS A TRADER IN STEEL ITEMS.IT ALSO PRODUCES OF STEE L PELLETS.IT FILED ITS RETURN OF INCOME ON 30/ 09/ 2009.PURSUANT TO SEARCH PROCEEDINGS,THE ASSESSEE FI LED ITS RETURN OF INCOME ON 20/ 06/ 2012,DECLARING TOTAL INCOME AT RS.3,86,03,702/-.THE COMPLETED ASSESSMENT,ON 27/03/2014, DETERMINING ITS INCOME AT RS.5,95,67,159 U/S.143(3 ) R.W.S. 153A OF THE ACT. 2. FIRST GROUND OF APPEAL IS ABOUT RESTRICTING THE ADD ITION ON ACCOUNT OF BOGUS PURCHASES FROM RS. 1.70 CRORES TO RS. 12.06 LAKHS. DURING THE SEARCH P ROCEEDINGS, IT WAS FOUND THAT THE ASSESSEE HAD BOOKED BOGUS EXPENDITURE BY OBTAINING BOGUS PURCHAS E BILLS/ACCOMMODATION ENTRIES FROM VARIOUS ENTITIES, INCLUDING PRAMOD KUMAR SINGH(PKS) ,SIDHI VINAYAK STEEL, ASIAN STEEL, CHANCAL TUBE CORPORATION AND SURAJ TUBE CORPORATION.HE DIRE CTED THE ASSESSEE TO SUBSTANTIATE THE PURCHASES BY PRODUCING LEDGER CONFIRMATIONS,BILLS, LORRY RECEIPTS, DELIVERY CHALLANS ETC. AFTER CONSIDERING THE EXPLANATION FILED BY THE ASSESSEE, THE AO HELD THAT SUFFICIENT EVIDENCES EXISTED TO SHOW THAT THE ASSESSEE HAD MADE BOGUS PURCHASES, TH AT THE STATEMENTS OF PKS WERE RECORDED ON 28/02/2011 WHEREIN HE HAD ADMITTED THAT BOGUS BILLS WERE ISSUED TO VARIOUS PARTIES BY HIM AND HIS ASSOCIATED CONCERNS, THAT ASSESSEE WAS ONE OF T HE BENEFICIARIES OF BOGUS BILLS, THAT THE SALES TAX DEPARTMENT HAD IDENTIFIED PKS AS PROVIDER OF BO GUS INVOICES, THAT ENQUIRIES WERE CARRIED OUT BY DEPUTING THE INSPECTOR IN THAT REGARD, THAT THE INSPECTOR HAD REPORTED THAT THE PARTIES FROM WHOM PURCHASES WERE SHOWN TO BE MADE BY THE ASSESSE E WERE NOT AVAILABLE AT THE GIVEN 6385/MUM/2016- M/S. M.P. RECYCLING CO. PVT. LTD. 2 ADDRESSES, THAT NOTICES ISSUED UNDER SECTION 133 (6 ) CALLING FOR INFORMATION FROM THOSE PARTIES HAD BEEN RETURNED UNSERVED IN MOST CASES,THAT THE PROPR IETOR OF ONE OF THE SUPPLIERS HAD ADMITTED THAT THE PURCHASES SHOWN BY THE GROUP COMPANIES WERE PAP ER TRANSACTIONS, THAT BOGUS PURCHASES WERE INTRODUCED IN THE BOOKS OF ACCOUNTS TO REDUCE PROFI T,THAT THE ASSESSEE WAS UNABLE TO PROVE THE GENUINENESS OF THE PURCHASES.FINALLY, HE ADDED BACK BE PURCHASE OF RS. 1.70 CRORE TO THE TOTAL INCOME OF THE ASSESSEE,WHILE COMPLETING THE ASSESSM ENT. 2.1. AGGRIEVED BY THE ORDER OF THE AO, THE ASSESSEE PREF ERRED AN APPEAL BEFORE THE FIRST APPELLATE AUTHORITY (FAA) AND MADE ELABORATE SUBMISSIONS AND RELIED UPON SEVERAL CASE LAWS. AFTER CONSIDERING ASSESSMENT ORDER AND THE SUBMISSIONS OF THE ASSESSEE, SHE HELD THAT THE SALES TAX DEPARTMENT HAD PUT OF LISTS OF PARTIES WHO WERE FOU ND TO BE ENGAGED IN ISSUING BOGUS BILLS WITHOUT ACTUAL SALE OF GOODS, THAT THE TRIBUNAL AND THE HONORABLE HIGH COURT SAID DEALT WITH THE ISSUE OF BOGUS PURCHASES AND THE CONSEQUENTIAL EFFE CT THEREOF. THE FAA RECORDED THE VARIOUS THEORIES PROPOUNDED BY THE JUDICIAL FORUMS AND REFE RRED TO THE CASES OF NIKUNJ EXIMP ENTERPRISES PRIVATE LIMITED(IT APPEAL NO.5604 OF 2010 DTD.17.12 .2012),BABULAL C BORANA,M K BROTHERS(163 ITR 249),BHOLANATH POLY FAB (355 ITR 2 90),SIMIT P SHETH(356 ITR 451) AND RAJEEV G KALATHIL(51TAXMANN.COM 514).SHE FURTHER HE LD THAT THE AO HAD ACCEPTED THE SALES MADE BY THE ASSESSEE,THAT PURCHASE SALE CORRELATION HAD NOT BEEN CONTROVERTED BY THE AO,THAT NO DISCREPANCY IN THE STOCK WAS POINTED OUT, THAT THE PAYMENTS MADE FOR THE PURCHASES WERE ROUTED THROUGH BANKING CHANNELS, THAT THE EXTRACTS OF THE STATEMENTS FROM THE PARTIES WHO RESPONDED TO NOTICES ISSUED UNDER SECTION 133 (6) DID NOT PROVID E ANY INFORMATION TO SUPPORT THE ALLEGATION OF BOGUS PURCHASES,THAT THE PRIMARY IMPETUS BEHIND AVA ILING BOGUS BILLS WAS TO SAVE ON THE GP RATE, THAT THE AVERAGE GP RATE OF THE ASSESSEE FOR THE PA ST THREE YEARS WAS 7.09%. CONSIDERING THE FACTS ON RECORD IS AND THE JUDICIAL PRONOUNCEMENTS DISALL OWANCE MADE BY THE AO WAS UPHELD TO THE EXTENT OF 7.09% OF THE PEAK PURCHASES. 2.2. BEFORE US,THE DEPARTMENTAL REPRESENTATIVE(DR)SUPPOR TED THE ORDER OF THE AO AND STATED THAT NOTICES ISSUED U/S.133(6)REMAINED UNSERVED,THAT THE ASSESSEE HAD NOT PRODUCED THE PARTIES BEFORE THE AO.THE AUTHORISED REPRESENTATIVE(AR)RELIED UPON THE ORDER OF THE FAA. 2.3. WE HAVE HEARD THE RIVAL SUBMISSIONS AND PERUSED THE MATERIAL BEFORE US.WE FIND THAT WHILE DECIDING THE APPEAL,THE FAA HAD REFERRED TO THE JUD GMENTS AND ORDERS OF VARIOUS HIGH COURTS 6385/MUM/2016- M/S. M.P. RECYCLING CO. PVT. LTD. 3 AND THE TRIBUNAL.AFTER LOGICALLY ANALYZING THE PRIN CIPLES EMERGING FROM THE JUDGMENTS/ORDERS,SHE APPLIED THEM TO THE FACTS OF THE CASE.SO,IN OUR OPI NION,THERE IS NO DEFECT IN HER APPROACH. ONE OF THE BASIC AND FUNDAMENTAL PRINCIPAL OF ACCOU NTANCY AND TAXATION JURISPRUDENCE IS THAT WITHOUT PURCHASES THERE CANNOT BE ANY SALE.IF SALES ARE ACCEPTED BY THE AO OR IF THE BOOKS OF ACCOUNTS ARE NOT REJECTED BY HIM ON ACCOUNT OF NON GENUINE SALES,THEN EXISTENCE OF PURCHASES CANNOT BE DENIED.IN SUCH A SITUATION,IT BECOMES A C ASE OF PURCHASE FROM BOGUS PARTIES AND NOT A CASE OF BOGUS PURCHASES,AS EXPLAINED BY THE HONB LE GUJARAT HIGH COURT. WE ARE NOW REPRODUCING THE FACTS OF THE CASE OF BHO LANATH POLY FAB(SUPRA).IN THAT MATTER THE ASSESSEE,FOR THE AY.2005-06,WAS FOUND TO BE ENGAGED IN THE BUSINESS OF TRADING IN FINISHED FABRICS.THE AO HELD THAT PURCHASES WORTH RS. 40,69, 546/- WERE UNEXPLAINED AND DISALLOWED THE EXPENDITURE CLAIMED BY THE ASSESSEE AND COMPUTED TH E TOTAL INCOME OF RS. 41,10,187/-. IN SO FAR AS THE QUESTION OF BOGUS PURCHASES WAS CONCERNED, T HE TRIBUNAL CONCURRED WITH THE REVENUES VIEWS THAT SUCH PURCHASES WERE MADE FROM BOGUS PART IES. THE TRIBUNAL NOTED THAT THE AO HAD ISSUED NOTICES TO ALL THE PARTIES FROM WHOM SUCH PU RCHASES WERE ALLEGEDLY MADE. SUCH NOTICES WERE RETURNED UNSERVED BY THE POSTAL AUTHORITIES WI TH THE REMARK THAT THE ADDRESSES WERE INCOMPLETE. THE INSPECTOR DEPUTED BY THE INCOME-TAX DEPARTMENT ALSO COULD NOT FIND ANY OF THE PARTIES AVAILABLE AT THE GIVEN ADDRESSES. THE ASSES SEE WAS UNABLE TO PRODUCE ANY CONFIRMATION FROM ANY OF THE PARTIES. THOUGH THE ASSESSEE HAD CL AIMED TO HAVE MADE PAYMENT BY ACCOUNT PAYEE CHEQUES, UPON VERIFICATION, IT WAS FOUND THAT THE CHEQUES WERE ENCASHED BY SOME OTHER PARTIES AND NOT BY THE SUPPOSED SELLERS. HOWEVER, T HE TRIBUNAL WAS OF THE OPINION THAT THOUGH THE PURCHASES MIGHT HAVE BEEN MADE FROM BOGUS PARTIES, THE PURCHASES THEMSELVES WERE 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 QUANTI TY MANUFACTURED DURING THE YEAR 2005-06 WERE SOLD BY THE ASSESSEE. THEREFORE, THE PURCHASES OF THE ENTIRE 1,02,514 METRES OF CLOTH WERE SOLD DURING THE YEAR 2005-06. THE TRIBUNAL, THEREFO RE, ACCEPTED THE ASSESSEES CONTENTION THAT THE FINISHED GOODS WERE PURCHASED BY THE ASSESSEE, THOU GH NOT FROM THE PARTIES SHOWN IN THE ACCOUNTS, BUT FROM OTHER SOURCES. THE TRIBUNAL WAS OF THE OPINION THAT NOT THE ENTIRE AMOUNT, BUT THE PROFIT MARGIN EMBEDDED IN SUCH AMOUNT WOULD BE SUBJECTED TO TAX. ON APPEAL THE HONBLE COURT HELD AS UNDER: .. WHETHER THE PURCHASES THEMSELVES WERE BOGUS OR WHETHER THE PARTIES FROM WHOM SUCH PURCHASES WERE ALLEGEDLY MADE WERE BOGUS WAS ESSENT IALLY A QUESTION OF FACT. THE TRIBUNAL HAVING EXAMINED THE EVIDENCE ON RECORD CAME TO THE CONCLUSION THAT THE ASSESSEE DID PURCHASE 6385/MUM/2016- M/S. M.P. RECYCLING CO. PVT. LTD. 4 THE CLOTH AND SELL THE FINISHED FABRICS. THEREFORE, AS A NATURAL COROLLARY, NOT THE ENTIRE AMOUNT COVERED UNDER SUCH PURCHASES, BUT THE PROFIT ELEMEN T EMBEDDED THEREIN WOULD BE SUBJECT TO TAX. WE WOULD ALSO LIKE TO REFER TO THE JUDGMENT OF SIM IT P SETH(SUPRA).IN THAT CASE THE ASSESSEE WAS ENGAGED IN THE BUSINESS OF TRADING IN STEEL ON WHOL ESALE BASIS.DURING THE COURSE OF THE REASSESS - MENT PROCEEDINGS FOR THE YEAR 2006-07,THE AO NOTICE D THAT SOME OF THE SUPPLIERS OF STEEL TO THE ASSESSEE HAD MADE THEIR STATEMENTS ON OATH TO THE E FFECT THAT THEY HAD NOT SUPPLIED THE STEEL TO IT,BUT HAD ONLY PROVIDED SALE BILLS. IN TURN, THEY WERE RECEIVING A SMALL COMMISSION. THE AO CONCLUDED THAT THE TOTAL PURCHASE OF RS.41,04,903/- CUMULATIVELY MADE FROM THE THREE PARTIES WERE BOGUS.HE THUS TREATED SUCH PURCHASES AS BOGUS PURCHASES AND ADDED THE ENTIRE AMOUNT OF RS. 41,04,903/-TO THE GROSS PROFIT OF THE ASSESSEE. HE ALSO REJECTED THE BOOKS OF ACCOUNT AND ESTIMATED THE ASSESSEES BUSINESS PROFITS AT RS. 5 LAKHS.THE FAA HELD THAT THE ASSESSEE HAD MADE PURCHASES FROM OTHER PARTIES IN THE OPEN MARKET. TH EREFORE, HE RETAINED 30% OF THE PURCHASES COST AS THE PROBABLE PROFIT OF THE ASSESSEE AND EDU CED THE ADDITIONS FROM RS.41,04,903/- TO RS. 12,31,471/- AND DELETED THE BALANCE OF RS. 28,73,43 2/-. WHILE DOING SO, HE DELETED THE ADDITION OF RS. 5 LAKHS AS MADE BY THE AO,ON THE GROUND THAT TH E ADDITION ON ACCOUNT OF BOGUS PURCHASES HAD ALREADY BEEN MADE. THE TRIBUNAL WAS OF THE OPIN ION THAT 12.5% OF THE DISPUTED PURCHASES SHOULD BE RETAINED IN THE HANDS OF THE ASSESSEE AS BUSINESS PROFITS.ON APPEAL, THE HONBLE HIGH COURT HELD AS UNDER: .THE COMMISSIONER (APPEALS) BELIEVED THAT THE PUR CHASES WERE NOT BOGUS BUT WERE MADE FROM THE PARTIES OTHER THAN THOSE MENTIONED IN THE BOOKS OF ACCOUNT. THAT BEING THE POSITION, NOT THE ENTIRE PURCHASE PRICE BUT ONLY THE PROFIT ELEME NT EMBEDDED IN SUCH PURCHASES COULD BE ADDED TO THE INCOME OF THE ASSESSEE. IN ESSENCE, THE TRIB UNAL ONLY ESTIMATED THE POSSIBLE PROFIT OUT OF PURCHASES MADE THROUGH NON-GENUINE PARTIES. THE EST IMATION OF RATE OF PROFIT RETURN MUST NECESSARILY VARY WITH THE NATURE OF BUSINESS AND NO UNIFORM YARDSTICK COULD BE ADOPTED. IN THE CASE BEFORE US,THE ASSESSEE IS NOT A WHOLESA LE TRADER OF STEEL,BUT IS A MANUFACTURER OF STEEL ITEMS.IT HAD PURCHASED AND USED STEEL FROM THE PART IES,WHO HAVE NOT ISSUED BILLS.IN OTHER WORDS,PKS AND OTHERS FROM WHOM THE ASSESSEE HAS CL AIMED TO HAVE PURCHASED STEEL,HAD NOT SUPPLIED GOODS TO IT.BUT CONSUMPTION OF STEEL HAS N OT BEEN QUESTIONED-RATHER SALES HAVE BEEN ACCEPTED AS IT IS.UNLIKE THE MATTER OF BHOLANATH PO LY FAB(SUPAR)IT IS NOT A CASE WHERE THE CHEQUE ISSUED BY THE ASSESSEE HAVE BEEN ENCASHED BY UNKNO WN PERSONS.AT LEAST THE AO HAS NOT ALLEGED THAT.CONSIDERING THE ABOVE,IT CAN SAFELY BE SAID TH AT IT IS A CASE OF PURCHASES MADE FROM NON - GENUINE PARTIES AND NOT A CASE OF BOGUS PURCHASES.T HE FAA HAD ADOPTED A FORMULA TO DETERMINE POSSIBLE PROFIT OUT OF PURCHASES MADE FROM UNKNOWN SUPPLIERS.IN OUR OPINION,THERE IS NO LEGAL OR FACTUAL INFIRMITY IN HER ORDER.NO HARD AND FAST RUL ES CAN BE APPLIED IN SUCH CASES.THE RATE OF 6385/MUM/2016- M/S. M.P. RECYCLING CO. PVT. LTD. 5 PROFIT WOULD VARY FROM BUSINESS TO BUSINESS AND CAS E TO CASE.SO,WE ARE NOT INTERESTED IN INTERFERING WITH HER ORDER.CONFIRMING THE SAME,WE DECIDE FIRST GROUND OF APPEAL AGAINST THE AO. 3. NEXT GROUND OF APPEAL IS ABOUT ADDITION OF RS. 1.70 LAKHS ON ACCOUNT OF COMMISSION EXPENSES. THE AO OBSERVED THAT FOR AVAILING BOGUS BILLS THE A SSESSEE WOULD HAVE INCURRED COMMISSION EXPENSES AT THE RATE OF 1%, THAT PAYMENT AND RECEIP T OF COMMISSION WAS CONFIRMED BY THE STATEMENTS OF VARIOUS PARTIES RECORDED DURING SUCH. CONSIDERING THE RATE OF COMMISSION IN THE TRADE, THE AO ESTIMATED COMMISSION AT THE RATE OF 1 % AND ADDED BACK AND AMOUNT OF RS. 1, 70, 223/-. 3.1. BEFORE THE FAA,THE ASSESSEE ARGUED THAT ADDITION WA S BASED PURELY ON ESTIMATE WITHOUT ANY EVIDENCE OF INCURRING OF SUCH EXPENDITURE BY THE AS SESSEE, THAT NO INCRIMINATING MATERIAL SUGGESTING PAYMENT OF COMMISSION WAS FOUND/SEIZED D URING THE SEARCH PROCEEDINGS. THE FAA, AFTER CONSIDERING THE AVAILABLE MATERIAL HELD THAT ESTIMATED COMMISSION EXPENSES COULD NOT BE UPHELD. AFTER CONSIDERING THE ABOVE WE ARE OF THE OPINION T HAT THE FAA HAD RIGHTLY HELD THAT NO AD HOC DISALLOWANCE CAN BE MADE WITHOUT RELYING UPON ANY C OGENT MATERIAL. CONFIRMING HER ORDER,WE DISMISS SECOND GROUND,RAISED BY THE AO. 4. LAST GROUND OF APPEAL IS ABOUT DISALLOWANCE OF RS. 37.70 LAKHS, MADE UNDER SECTION 14A OF THE ACT. WHILE COMPLETING THE ASSESSMENT THE AO ASKED T HE ASSESSEE AS TO WHY DISALLOWANCE UNDER SECTION 14 A READ WITH RULE 8D OF THE INCOME TAX RU LES, 1962(RULES) SHOULD NOT BE MADE. AFTER CONSIDERING THE SUBMISSION OF THE ASSESSEE IN THAT REGARD, THE AO HELD THAT THERE WERE CONTRADIC- TIONS IN THE DETAILS OF DIRECT AND INDIRECT EXPENSE S INCURRED BY THE ASSESSEE DURING THE YEAR UNDER CONSIDERATION, THAT ALL THE INVESTMENTS WERE NOT OL D INVESTMENTS, THAT IT HAD MADE INVESTMENT IN UNQUOTED SHARES OF ITS ASSOCIATES SISTER CONCERN, T HAT IT HAD INCURRED TOTAL FINANCIAL COST, INCLUDING INTEREST, OF RS.7.59 CRORE IN RESPECT OF THE LOANS AND ADVANCES BORROWED FROM THE FINANCIAL INSTITUTIONS. FINALLY, HE MADE A DISALLOWANCE OF MO VIES 37, 70, 860/-(RS. 5.32 LAKHS-EXPENDITURE DIRECTLY RELATED TO EARNING OF EXEMPT INCOME + RS. 26.72 LAKHS-AVERAGE VALUE OF TOTAL ASSETS AS APPEARING IN THE BALANCE SHEET OF THE ASSESSEE ON T HE FIRST DAY AND THE LAST DAY OF THE PREVIOUS YEAR + RS. 5.66 LAKHS-0.5% OF THE AVERAGE VALUE OF INVESTMENT, INCOME FROM WHICH DID NOT FORM PART OF TOTAL INCOME). 6385/MUM/2016- M/S. M.P. RECYCLING CO. PVT. LTD. 6 4.1. THE ASSESSEE CHALLENGED THE ORDER OF THE AO BEFORE THE FAA. BEFORE US, IT WAS STATED THAT ADDITIONS WHICH DID NOT RELATE TO INCRIMINATING MAT ERIAL YIELDED BY THE SEARCH COULD NOT BE MADE, WHILE COMPLETING THE ASSESSMENT UNDER SECTION 153A IN NON-ABATED ASSESSMENT, THAT THE DISALLOWANCE MADE BY THE AO UNDER SECTION14A WAS NO T BASED ON ANY SUCH SEIZED THE MATERIAL. THE FAA REFERRED TO THE CASE OF ALL CARGO GLOBAL LO GISTICS LTD. (18 ITR-TRIB-106) AND OBSERVED THAT ORDER OF THE TRIBUNAL WAS UPHELD BY THE HONORA BLE BOMBAY HIGH COURT, THAT THE ORIGINAL RETURN FOR THE YEAR UNDER CONSIDERATION WAS FILED O N 30/09/2009, THE TIME LIMIT FOR ISSUE OF NOTICE UNDER SECTION 143 (2) WAS SIX MONTHS FROM THE END O F THE FINANCIAL YEAR IN WHICH THE RETURN WAS FILED, THAT THE SEARCH TOOK PLACE ON 29/04/2011, TH AT TIME LIMIT FOR ISSUE OF NOTICE AT EXPIRED ON THE DATE OF INITIAL OF SEARCH, THAT THE ASSESSMENT FOR THE YEAR UNDER APPEAL COULD NOT BE SAID TO BE PENDING OR ABATED, THAT THE IMPUGNED ORDER DID NOT REFLECT THAT ANY MATERIAL EMANATING FROM THE SEARCH LED TO THE DISALLOWANCE,MADE BY THE AO,UNDER SECTION 14A OF THE ACT. FOLLOWING THE JUDGMENT OF DIVISION HIGH COURT IN THE CASE OF ALL CARGO,SHE DELETED THE DISALLOWANCE. THE DR LEFT THE ISSUE TO THE DISCRETION OF THE BENC H AND THE AR SUPPORTED THE ORDER OF THE FAA.WE FIND THAT WHILE DELETING THE ADDITION,THE FA A HAS SPECIFICALLY RELIED UPON THE JUDGMENT OF HONBLE BOMBAY HIGH COURT.IN OUR OPINION,THERE I S NO LEGAL OR FACTUAL ORDER INFIRMITY IN THE ORDER OF THE FAA,AS SHE HAS FOLLOWED THE JURISDICTI ONAL HIGH COURT.SO,CONFIRMING HER ORDER,WE DECIDE THE LAST GROUND OF APPEAL AGAINST THE AO. AS A RESULT, APPE AL FILED BY THE AO STANDS DISMISSED. ORDER PRONOUNC ED IN THE OPEN COURT ON 7 TH FEBRUARY, 2018. 07 2018 SD/- SD/- ( / C.N.PRASAD ) ( / RAJENDRA) / JUDICIAL MEMBER / ACCOUNTANT MEMBER MUMBAI; /DATED : 07.02.2018. JV.SR.PS. / COPY OF THE ORDER FORWARDED TO : 1. APPELLANT / 2. RESPONDENT / 3. THE CONCERNED CIT(A)/ , 4. THE CONCERNED CIT / 5. DR G BENCH, ITAT, MUMBAI / , , . . . 6. GUARD FILE/ //TRUE COPY// / BY ORDER, / DY./ASST. REGISTRAR , /ITAT, MUMBAI.