PRAKASH METALS, MUMBAI V. ITO 20(2)(1), MUMBAI

ITA 6457/MUM/2012

• Counselvise Citation: [2016] 133 COUNSELVISE.COM (IT) 3846 (ITAT-MUMBAI)
• Duration Of Justice: 3 year(s) 3 month(s) 24 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 17-02-2016
• Appeal Filed By: Assessee
• Order Result: Dismissed
• Bench Allotted: C
• Next Hearing Date: 05-02-2015
• Assessment Year: 2007-2008
• Appeal Filed On: 23-10-2012
• Result in Favour of: Revenue
• Court: TRIBUNAL
• Department Lawyers: RAJIV
• Keywords: Bogus purchase; Unexplained investment; Income from undisclosed sources; Opportunity of being heard; Corroborative evidences; Accommodation entries; Revised return
• Section: 143(3); 133A; 131

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL MUMBAI BENCH C, MUMBAI BEFORE SHRI JASON P. BOAZ ACCOUNTANT MEMBER AND SHRI SANDEEP GOSAIN, JUDICIAL MEMBER ITA NO. 6457/MUM/2012 (ASSESSMENT YEAR : 2007-08) M/S. PRAKASH METALS, 12, SHANTI SADAN, 3 RD FLOOR, 45 TELLE PARK ROAD, ANDHERI (E), MUMBAI 400 069 PAN: AAAFP 4656K ... APPELLANT VS. INCOME TAX OFFICER-20(2)(1), MUMBAI. .... RESPOND ENT ITA NO. 6611/MUM/2012 (ASSESSMENT YEAR : 2007-08) INCOME TAX OFFICER-20(2)(1), MUMBAI. .... APPEL LANT VS. M/S. PRAKASH METALS, 12, SHANTI SADAN, 3 RD FLOOR, 45 TELLE PARK ROAD, ANDHERI (E), MUMBAI 400 069 PAN: AAAFP 4656K ... APPELLANT ASSESSEE BY : SHRI HAR IDAS BHAT REVENUE BY : SHRI RA JIV PANT DATE OF HEARING : 01/02/2016 DATE OF PRONOUNCEMENT : 17/02/2016 2 ITA NO. 6457/MUM/2012 (ASSESSMENT YEAR : 2007-08) ORDER PER JASON P. BOAZ, A.M: THESE ARE CROSS APPEALS BY THE ASSESSEE AND REVENU E DIRECTED AGAINST THE ORDER OF THE CIT(APPEALS)-31, MUMBAI DA TED 17/08/2012 FOR ASSESSMENT YEAR 2007-08. 2. THE FACTS OF THE CASE, BRIEFLY, ARE AS UNDER:- 2.1 THE ASSESSEE FIRM, ENGAGED IN THE BUSINESS AS M ANUFACTURES, TRADERS OF CONDUCTORS AND FERROUS AND NON-FERROUS M ETALS, FILED ITS RETURN FOR ASSESSMENT YEAR 2007-08 ON 29/10/2007 DECLARING NIL INCOME. A REVISED RETURN WAS FILED ON 1/9/2008 DEC LARING TOTAL INCOME OF RS.5,91,912/-. THE RETURN WAS PROCESSED UNDER S ECTION 143(1) OF THE INCOME TAX ACT, 1961 ( IN SHORT THE ACT) AND THE CASE WAS SUBSEQUENTLY TAKEN UP FOR SCRUTINY. 2.2 A SURVEY UNDER SECTION 133A OF THE ACT WAS COND UCTED IN THIS CASE BY THE ADIT (INV), UNIT IV(I), MUMBAI ON 12/12 /2007 ON THE BASIS OF INFORMATION/VERIFICATION OF BANK DATA UNDER THE B ANKING CASH TRANSACTION ACT THAT M/S. SHRADDHA SABURI MERCHANTS LTD. AND M/S. SAI KRIPA METALLIC TRADECOM LTD.AND OTHER CONCERN PROM OTED BY SHRI PRAVIN AGARWAL HAD INDULGED IN SUSPICIOUS TRANSACTI ONS BUT ADMITTED THAT NO ACTUAL BUSINESS OF SALE AND PURCHASE WAS CA RRIED OUT BY THEM AND THAT THESE TRANSACTIONS WERE ALL ACCOMMODATION ENTRIES IN RESPECT OF WHICH THE ASSESSEE AND OTHERS WERE BENEFICIARIES . IN THIS SURVEY IT WAS FOUND THAT IN THE PERIOD RELEVANT TO ASSESSMENT YEAR 2007-08, THE ASSESSEE HAD PURCHASED MATERIALS WORTH RS.2,27,60,2 54/- FROM M/S. SHRADDHA SABURI MERCHANTS LTD. AND RS.1,55,09,505/- FROM M/S. SAI 3 ITA NO. 6457/MUM/2012 (ASSESSMENT YEAR : 2007-08) KRIPA METALLIC TRADECOM LTD., FOR WHICH PAYMENTS MA DE BY THE ASSESSEE WERE CREDITED IN THE AFORESAID TWO PARTIES BANK ACC OUNTS AND THE SAME WAS WITHDRAWN IN CASH ON THE VERY NEXT DATES AFTER ITS DEPOSITS; THE ASSESSEE BEING THE MAIN BENEFICIARY OF THESE ACTIVI TIES. THE SURVEY ACTION REVEALED THAT THE ASSESSEE HAD TAKEN ACCOMMO DATION BILLS SHOWING BOGUS PURCHASE DURING THE PERIOD RELEVANT T O ASSESSMENT YEAR 2006-07 AND 2007-08 FROM M/S. SHRADDHA SABURI MERCH ANTS LTD., AND M/S. SAI KRIPA METALLIC TRADECOM LTD. THE ABOVE MOD US OPERANDI AND THE FACT THAT THE ASSESSEE WAS A BENEFICIARY OF SUC H ACTIVITIES WAS CONFIRMED BY SHRI PRAVIN T. AGARWAL IN A STATEMENT FILED BEFORE ADIT (INV), UNIT IV(I), MUMBAI ON 2/11/2007. THE ADIT ( INV) ALSO REPORTEDLY INFORMED THE ASSESSING OFFICER THAT THE PARTNER OF THE ASSESSEE FIRM SHRI PRAKASH J. SHAH WAS AFFORDED AN OPPORTUNITY TO CROS S-EXAMINE SHRI PRAVIN T. AGARWAL, WHICH HE DID NOT AVAIL. 2.3 IN THE LIGHT OF THE ABOVE MATERIAL ON RECORD, T HE ASSESSING OFFICER AFFORDED THE ASSESSEE AN OPPORTUNITY OF BEING HEARD IN THE MATTER TO EXPLAIN THE PURCHASE TRANSACTIONS CARRIED OUT WITH THESE PARTIES IN THE RELEVANT PERIOD (SUPRA). IN THIS REGARD, THE STATE MENT OF SHRI PRAKASH J. SHAH, PARTNER OF THE ASSESSEE FIRM WAS RECORDED ON 12/12/2007 WHEREIN, INTER-ALIA, HE HAS STATED THAT HE IS ONLY ACTING AS AN INDENTING AGENT WHEREIN THE MATERIALS PURCHASED BY IT IS DIRE CTLY DISPATCHED THROUGH THE PARTIES FROM WHOM THE MATERIAL WAS PURC HASED TO THE CUSTOMERS TO WHOM IT IS SOLD I.E. M/S. RAJASTHAN AL UMINIUM & M/S. D.C.METALS, PAYMENTS/RECEIPTS IN THIS REGARD BEING BOTH BY WAY OF ACCOUNT PAYEE CHEQUE. ALTERNATIVELY, IT WAS SUBMIT TED BY THE ASSESSEE THAT IN CASE THE SAID PURCHASES FROM THE AFORESAID TWO PARTIES ARE 4 ITA NO. 6457/MUM/2012 (ASSESSMENT YEAR : 2007-08) TREATED AS BOGUS, THEN THE CORRESPONDING SALES SHOW N BY THE ASSESSEE SHOULD ALSO BE CONSIDERED BOGUS AND THE DIFFERENCE BETWEEN PURCHASES AND SALES BEING THE G.P, ONLY THIS AMOUNT SHOULD BE CONSIDERED AS ITS INCOME. THE ASSESSING OFFICER DID NOT ACCEPT THE E XPLANATIONS PUT FORTH BY THE ASSESSEE OBSERVING THAT EXCEPT FOR MAKING TH E AFORESAID CLAIMS, THE ASSESSEE COULD NOT FURNISH MATERIAL TO PROVE TH E MODE OF DELIVERY OF GOODS PURCHASED/SOLD, NAMES AND ADDRESSES AND OTHER RELATED PARTICULARS AND DETAILS OF THE PARTIES TO WHOM GOOD S WERE ALLEGEDLY SOLD, OR TO EXPLAIN WITH DOCUMENTARY EVIDENCE THE T RANSACTIONS ENTERED INTO FOR PURCHASE FROM THE AFORESAID TWO PARTIES. 2.4 THE AFORESAID SUBMISSIONS OF THE ASSESSEE DID N OT FIND FAVOUR WITH THE ASSESSING OFFICER WHO OBSERVED THAT THESE AVERMENTS OF THE ASSESSEE WERE ALREADY DEALT WITH IN THE COURSE OF S URVEY, POST SURVEY INVESTIGATIONS. THE ASSESSING OFFICER WAS OF THE V IEW THAT AS PER THE FACTS ON RECORD THE TRANSACTIONS ENTERED INTO BY TH E ASSESEE WITH M/S. SHRADDHA SABURI MERCHANTS LTD., M/S. SAI KRIPA ME TALLIC TRADECOM LTD. (PURCHASE PARTIES), M/S. RAJASTHAN ALLUMINIUM AND M /S. D.C. METALS (SALE PARTIES) WERE ONLY ACCOMMODATION ENTRIES REN DERED BY SHRI PRAVIN T. AGARWAL AND ACCEPTED BY SHRI PRAKASH J. SHAH OF THE ASSESSEE FIRM AND NOT REAL SALE/PURCHASE TRANSACTIONS AS PRESENT LY CLAIMED BY THE ASSESSEE. IN THIS VIEW OF THE MATTER, THE ASSESSIN G OFFICER AT PARA 10 TO 12 OF THE ORDER OF ASSESSMENT HELD THAT SINCE THE ASSESSEE COULD NOT SUBSTANTIATE THE PURCHASES MADE FROM THE AFORESAID TWO CONCERNS, THE ENTIRE ALLEGED PURCHASES OF RS.3,82,69,759/- SHOWN BY THE ASSESSEE FROM M/S. SHRADDHA SABURI MERCHANTS LTD. AND M/S. S AI KRIPA METALLIC TRADECOM LTD. AS BOGUS AND BROUGHT THE ENTIRE AMOU NT TO TAX IN THE 5 ITA NO. 6457/MUM/2012 (ASSESSMENT YEAR : 2007-08) ASSESSEES HANDS. THE ASSESSMENT WAS ACCORDINGLY C OMPLETED UNDER SECTION 143(3) OF THE ACT VIDE ORDER DATED 31/12/20 09 WHEREIN, THE INCOME OF THE ASSESSEE WAS DETERMINED AT RS.3,87,89 ,670/-. 3.1 AGGRIEVED BY THE ORDER OF ASSESSMENT FOR ASSESS MENT YEAR 2007- 08 DATED 31/12/2009, THE ASSESSEE PREFERRED AN APPE AL BEFORE THE CIT(APPEALS)-31, MUMBAI. THE CIT(APPEALS) DISPOSE D OFF THE ASSESSEES APPEAL VIDE THE IMPUGNED ORDER DATED 17/8/2012 ALLO WING THE ASSESSEE PARTIAL RELIEF. IN THE COURSE OF APPELLATE PROCEED INGS, THE CIT(APPEALS) REMANDED TO THE FILE OF THE ASSESSING OFFICER FOR ENQUIRIES TO BE MADE FOR THE PURPOSE OF CORROBORATING THE ASSESSING OFFI CERS FINDING THAT THE ENTIRE INVESTMENT IN PURCHASES BY THE ASSESSEE FROM M/S. SHRADDHA SABURI MERCHANTS LTD. AND M/S. SAI KRIPA METALLIC T RADECOM LTD. AMOUNTING TO RS.3,82,69,759/- CONSTITUTED UNACCOUNT ED INCOME OF THE ASSESSEE. IN THIS CONTEXT THE ASSESSING OFFICER W AS ALSO REQUIRED TO MAKE AVAILABLE TO THE ASSESSEE COPIES OF STATEMENTS OF SHRI PRAVIN T. AGARWAL DATED 12/12/2007, PRIMARILY RELIED ON BY T HE ASSESSING OFFICER TO MAKE THE ADDITION OF UNDISCLOSED INCOME OF RS.3, 82,69,759/- AND TO AFFORD THE ASSESSEE OPPORTUNITY OF CROSS EXAMINATI ON OF SHRI PRAVIN T. AGARWAL. THE MATTER WAS REMANDED TO THE ASSESSING OFFICER ON MORE THAN ONE OCCASION TO ADDRESS THE REBUTTALS PUT FORT H BY THE ASSESSEE. REPORT IN THE MATTER WAS ALSO CALLED FOR FROM THE DDIT (INV) UNIT IV(I), MUMBAI. 3.2 AFTER TAKING INTO ACCOUNT ALL THE FACTS BEFORE HIM, THE CIT(APPEALS) OBSERVED THAT THE ASSESSEE HAD ONLY FA CILITATED THE CONCERNED PURCHASE AND SALE PARTIES, AS AN INDENTIN G AGENT FOR COMMISSION, IN THEIR TRANSACTIONS OF BOGUS SALE AND PURCHASES. THE 6 ITA NO. 6457/MUM/2012 (ASSESSMENT YEAR : 2007-08) CIT(APPEALS) OBSERVED THAT NO EVIDENCE WAS BROUGHT ON RECORD BY THE ASSESSING OFFICER /DDIT TO ESTABLISH THAT THE ASSES SEE PURCHASED THE GOODS FROM THIRD PARTIES IN CASH, AS ALL THE TRANS ACTIONS OF THE ASSESSEE WITH BOTH THE CONCERNED SALE AND PURCHASE PARTIES W AS ADMITTEDLY THROUGH BANKING CHANNELS. IN THIS VIEW OF THE MATT ER, THE CIT(APPEALS) HELD THAT THE ASSESSING OFFICER WAS NOT JUSTIFIED IN HOLDING THAT THE ENTIRE PURCHASES BY THE ASSESSEE ARE ITS UNDISCLOSE D INCOME AND THAT THE CORRESPONDING SALES ONLY ARE GENUINE; PARTICULA RLY WHEN THE QUANTITY PURCHASED AND SOLD ARE IDENTICAL. THE CIT (APPEALS) WAS OF THE VIEW THAT THE ASSESSEE FACILITATED THESE BOGUS TRAN SACTIONS FOR THE PECUNIARY BENEFIT OF COMMISSION. THE CIT(APPEALS) WAS OF THE VIEW THAT SINCE THE ENTIRE TRANSACTION WAS CLANDESTINE, THE ASSESSEE WOULD HAVE EARNED MORE THAN THE 0.17% COMMISSION DECLARE D BY IT; (WHICH WAS THE DIFFERENCE BETWEEN THE CONCERNED SALES AND PURCHASE TRANSACTIONS) OR WHICH IS NORMALLY DECLARED IN THIS BUSINESS AT 1 TO 2% ACCORDING TO THE ASSESSEE. FOLLOWING THE RATIO OF THE DECISION OF THE ITAT, AHMEDABAD BENCH, IN THE CASE OF VIJAY PROTEIN S LTD. (15 ITD 428), THE CIT(APPEALS) ESTIMATED THE COMMISSION EARNED BY THE ASSESSEE AT 5% OF THE SAID PURCHASE OF RS.3,82,69,759/- IN THE PECULIAR FACTS AND CIRCUMSTANCES OF THE CASE ON HAND. 4. AGGRIEVED BY THE ORDER OF THE CIT(APPEALS) -31, MUMBAI DATED 17/8/2012 FOR ASSESSMENT YEAR 2007-08, BOTH REVENU E AND THE ASSESSEE HAVE PREFERRED APPEALS BEFORE THE TRIBUNAL IN RESPECT OF THE ISSUES HELD AGAINST THEM. 4.1.1 THE GROUNDS RAISED IN THE ASSESSEES APPEAL A RE AS UNDER:- 7 ITA NO. 6457/MUM/2012 (ASSESSMENT YEAR : 2007-08) I 1.THE COMMISSIONER OF INCOME TAX ('CIT(A)') ERR ED IN MAKING CONFIRMING ADDITION OF RS. 18,48,429/-, BEING ESTIM ATING THE ADDITIONAL COMMISSION INCOME ON THE ACCOMMODATION BILLS OF BOG US PURCHASES MADE FROM M/S. SAI KRIPA METTALIC TRADECOM PVT. LTD., AN D M/S SHARDHHA SABURI MERCHANTS LTD @ 5% OF THE TOTAL PURCHASE AMOUNT FRO M THE ABOVE TWO PARTIES, AFTER DEDUCTING THE NET COMMISSION INCOME OF RS. 65,0591- SHOWN IN THE BOOKS OF ACCOUNT. 2. THE LEARNED CIT(A) WAS ALREADY SATISFIED AND HAS VERIFIED ALL THE PURCHASES AND SALES BILLS WITH THE NET INCOME OUT OF THESE TR ANSACTIONS WHICH WERE FULLY SUPPORTED BY THE ACCOUNT PAYEE CHEQUES AND WAS ACCE PTED THAT NO CASH TRANSACTIONS WERE INVOLVED. 3. THE TRANSACTIONS PROVED THE MODUS OPERENDI OF DI RECT PURCHASES AND SALES BY THE PARTIES WHERE YOUR APPELLANT WAS ONLY DELCRE DER AGENT SUPPORTED BY VARIOUS DOCUMENTARY CONFIRMATIONS UNDER THE CIRCUMS TANCES. 4. THE LEARNED CIT(A) FAILED TO APPRECIATE THAT THE APPELLANT HAD ACTED AS AN INDENTING AGENT AND ACCORDINGLY, EARNED THE COMMISS ION INCOME AS SHOWN IN THE FORM OF PROFIT WHICH IS IN THE NATURE OF COMM ISSION AND SHOWN IN THE PROFIT & LOSS ACCOUNT. HENCE NO ADDITION IS CALLED FOR. 3. THE APPELLANT PRAYS THAT THE ADDITION OF RS.18,4 8,429/- BE DELETED AS UNWARRANTED AND UNJUSTIFIED. 4. WITHOUT PREJUDICE TO THE ABOVE THE APPELLANT PRA YS THAT THE ADDITION BE REDUCED TO REASONABLE APPROPRIATE RATE DEPENDING U PON THE CIRCUMSTANCES OF THE APPELLANTS CASE. II. 1. THE APPELLANT CRAVES LEAVE TO ADD TO , AMEND AND/OR ALTER THE ABOVE GROUNDS OF APPEAL. 4.1.2 AT THE OUTSET, THE LD. REPRESENTATIVE FOR THE ASSESSEE FOR THE ASSESSEE SUBMITTED THAT IN ITS APPEAL, THE ASSESSEE WILL BE PRESSING ONLY GROUND NO.I (SUPRA) AND THAT ALL OTHER GROUNDS I (2 TO 4) AND (2 TO 4) AS WELL AS II(1) ARE NOT BEING PRESSED. SINCE THE GRO UNDS AT S.NOS.I (2 TO 4) AND (2 TO4) AND II(1) ARE NOT PRESSED IN THIS APPEA L, THE SAME ARE RENDERED INFRUCTUOUS AND ACCORDINGLY DISMISSED. 4.2 THE GROUNDS RAISED IN REVENUES APPEAL ARE AS U NDER:- 8 ITA NO. 6457/MUM/2012 (ASSESSMENT YEAR : 2007-08) 1. THE LEARNED CIT(A) HAS ERRED ON FACTS AND CIRCUMSTA NCES OF THE CASE AND IN LAW IN DIRECTING AO TO DELETE RS. 3,64,21,330/- HEL D AS BOGUS PURCHASES BY THE ASSESSING OFFICER. 2. THE LEARNED CIT(A) HAS ERRED ON THE FACTS AND CIRCU MSTANCES OF THE CASE AND IN LAW IN ASSUMING THE ASSESSEE AS MERELY AN AGENT RECEIVING PREFIXED COMMISSION IN RESPECT OF THE TRANSACTION OF ALLEGED BOGUS PURCHASES. 3. THE APPELLANT PRAYS THAT THE ORDER OF THE CIT (APP EALS) ON THE ABOVE GROUNDS BE SET ASIDE AND THAT OF THE AO BE RESTORED. 4. 4. THE APPELLANT CRAVES LEAVE TO AMEND OR ALTER ANY GROUND OR TO SUBMIT ADDITIONAL NEW GROUND WHICH MAY BE NECESSARY. 5.1 IN GROUND NO.1 OF ASSESSEES APPEAL , IT IS CONTENDED THAT THE CIT(APPEALS) ERRED IN ESTIMATING THE COMMISSION INC OME EARNED BY THE ASSESSEE ON ACCOMMODATION BILLS OF BOGUS PURCHASES MADE FROM M/S. SHRADDHA SABURI MERCHANTS LTD. AND M/S. SAI KRIPA M ETALLIC TRADECOM LTD. @5% OF THE TOTAL PURCHASES OF RS.3,82,69,759/- FROM THESE TWO PARTIES. 5.2 IN GROUNDS NO.1 TO 4 OF REVENUES APPEAL, IT IS CONTENDED THAT CIT(APPEALS) ERRED IN DIRECTING THE ASSESSING OFFIC ER TO DELETE THE ADDITION OF RS.3,82,89,579/- HELD BY THE ASSESSING OFFICER AS INCOME OF THE ASSESSEE ARISING OUT OF BOGUS PURCHASES FROM TH E AFORESAID TWO PARTIES AND IN ASSUMING THAT THE ASSESSEE HAS MEREL Y EARNED COMMISSION IN RESPECT OF THE AFORESAID PURCHASES. 5.3 THE ASSESSEES GROUNDS I(1) AND REVENUES GROUN DS (1 TO 4)(SUPRA) BEING BOTH IN RESPECT OF THE CONTRARY FI NDINGS OF THE ASSESSING OFFICER AND THE CIT(APPEALS) ON THE SAME ISSUE OF DETERMINATION OF THE INCOME EARNED BY THE ASSESSEE FROM OUT OF THE TRANS ACTIONS OF BOGUS PURCHASES AMOUNTING TO RS.3,82,69,759/- MADE BY THE ASSESSEE FROM THE TWO PARTIES M/S. SHRADDHA SABURI MERCHANTS LTD. AND M/S. SAI KRIPA METALLIC TRADECOM LTD., THESE ISSUES BEING INTER CO NNECTED AND ARISING 9 ITA NO. 6457/MUM/2012 (ASSESSMENT YEAR : 2007-08) FROM THE GROUNDS RAISED BY BOTH SIDES IN RESPECT OF THE SAME SET OF TRANSACTIONS, THEY ARE BEING CONSIDERED AND DISPOSE D OFF TOGETHER HEREUNDER. 5.4.1 THE LD. REPRESENTATIVE FOR THE ASSESSEE , ON THE ISSUE RAISED IN REVENUES APPEAL, VEHEMENTLY SUPPORTED THE IMPUGNED ORDER OF THE CIT(APPEALS) IN RESPECT OF ITS FINDING HOLDING T HAT THE ASSESSING OFFICER WAS NOT JUSTIFIED IN HOLDING THAT THE ENTIRE PURCHA SES OF RS.3,82,69,759/- MADE BY THE ASSESSEE FROM THE TWO PURCHASE PARTIES I.E. M/S. SHRADDHA SABURI MERCHANTS LTD. AND M/S. S AI KRIPA METALLIC TRADECOM LTD. WAS THE ASSESSEES UNDISCLOSED INCOM E; PARTICULARLY WHEN THERE WERE IMMEDIATE AND IDENTICAL QUANTITIES SOLD TO M/S.D.C.METALS AND M/S. RAJASTHAN ALUMINIUM THROUGH BANKING CHANNELS. IT IS SUBMITTED THAT THE CIT(APPEALS) HA D, AFTER DUE CONSIDERATION OF THE FACTUAL MATERIAL ON RECORD, F OUND THAT THE ASSESSEE HAD ONLY FACILITATED THE CONCERNED PURCHAS E AND SALE PARTIES AS AN INDENTING AGENT FOR REMUNERATION IN COMMISSION I N THEIR TRANSACTION OF BOGUS SALES AND PURCHASES. 5.4.2 IN RESPECT OF GROUND NO.I(1) IN THE ASSESSES APPEAL, THE LD. REPRESENTATIVE FOR THE ASSESSEE CONTENDED THAT THE CIT(APPEALS), AFTER OBSERVING THAT THE ASSESSEE WAS ONLY AN INDENTING A GENT OR FACILITATOR FOR THE AFORESAID SELLERS AND PURCHASERS IN THEIR T RANSACTIONS OF BOGUS SALES AND PURCHASES IN RETURN FOR REMUNERATION OF C OMMISSION, ERRED IN NOT ACCEPTING THE COMMISSION OF 0.17% AS ADMITTED B Y THE ASSESSEE. IT IS CONTENDED THAT THE ESTIMATION OF COMMISSION INC OME EARNED BY THE ASSESSEE ON THE AFORESAID TRANSACTIONS AS A FACILIT ATOR @5% THEREON WAS 10 ITA NO. 6457/MUM/2012 (ASSESSMENT YEAR : 2007-08) TOO HIGH AND THE SAME COULD NOT BE MORE THAN 1 TO 2 % THEREOF IN SUCH BUSINESS. 5.5.1 IN RESPECT OF THE GROUNDS RAISED AT S.NO. 1 T O 4 OF REVENUES APPEAL, THE LD. DEPARTMENTAL REPRESENTATIVE PLACIN G STRONG RELIANCE ON THE FINDINGS OF THE ASSESSING OFFICER IN THE ORDER OF ASSESSMENT, CONTENDED THAT THE CIT(APPEALS) HAD ERRED IN HOLDI NG THAT THE ASSESSEE WAS MERELY AN INDENTING AGENT RECEIVING COMMISSION IN RESPECT OF TRANSACTIONS OF BOGUS PURCHASES AND IN CONSEQUENTLY DELETING THE ADDITION MADE BY THE ASSESSING OFFICER ON ACCOUNT O F BOGUS PURCHASES FROM THE AFORESAID TWO PARTIES; I.E. M/S. SHRADDHA SABURI MERCHANTS LTD. AND M/S. SAI KRIPA METALLIC TRADECOM LTD.. IT WAS PRAYED THAT THE FINDING IN THE ASSESSING OFFICERS ORDER BE RESTOR ED. 5.5.2 IN RESPECT OF THE AVERMENTS OF THE LD. REPRES ENTATIVE FOR THE ASSESSEE ON THE ASSESSEES GROUNDS CLAIMING THAT TH E ASSESSEES INCOME FROM COMMISSION @ 0.17% OF PURCHASES SHOULD BE ACCE PTED AS SUCH AND NOT AT 5% DETERMINED BY THE CIT(APPEALS), THE LD. D EPARTMENTAL REPRESENTATIVE SUBMITTED THAT, WITHOUT PREJUDICE T O REVENUES STAND THAT THE ENTIRE BOGUS PURCHASES AMOUNTING TO RS.3,8 2,69,759/- MADE BY THE ASSESSEE FROM THE AFORESAID TWO PARTIES OUGHT TO BE BROUGHT TO TAX IN THE ASSESSEES HANDS AS HELD BY THE ASSESSING OF FICER, THE CLAIM OF THE LD. REPRESENTATIVE FOR THE ASSESSEE IS CONTRADICTOR Y AS BEFORE THE CIT(APPEALS) THE CLAIM WAS THAT COMMISSION IN SUCH TYPE OF BUSINESS WOULD BE 1 TO 2% THEREOF. IN THESE CIRCUMSTANCES, SINCE THE AVERMENTS OF THE ASSESSEE ARE BEREFT OF ANY CORROBORATIVE MAT ERIAL EVIDENCE, THE ASSESSEES APPEAL OUGHT TO BE DISMISSED. 11 ITA NO. 6457/MUM/2012 (ASSESSMENT YEAR : 2007-08) 5.6.1 WE HAVE HEARD THE RIVAL CONTENTIONS, IN RESPE CT OF BOTH THE ASSESSEES AS WELL AS REVENUES CROSS APPEALS, AND PERUSED AND CAREFULLY CONSIDERED THE MATERIAL ON RECORD. THE F ACTS OF THE MATTER, FROM THE ASSESSMENT TO THE FIRST APPELLATE PROCEEDI NGS, LEADING TO THE PRESENT APPEAL HAVE BEEN BRIEFLY NARRATED AT PARA 2 .1 TO 3.2 OF THIS ORDER (SUPRA). ON A PERUSAL OF THE IMPUGNED ORDER , WE FIND THAT THE CIT(APPEALS) HAS MADE A DETAILED CONSIDERATION OF T HE ORDER OF ASSESSMENT, THE AVERMENTS OF THE LD. REPRESENTATIVE FOR THE ASSESSEE FOR THE ASSESSEE, THE VARIOUS REMAND REPORTS SUB MITTED BY THE ASSESSING OFFICER , THE ASSESSEES REBUTTALS, DETAI LS FILED IN THE REPORT OF DDIT(INV) UNIT IV, MUMBAI. WE ALSO FIND THAT, AFTE R CONSIDERATION OF ALL THESE MATERIAL ON RECORD, THE CIT(APPEALS) OBSERVED THAT NO MATERIAL EVIDENCE WAS BROUGHT ON RECORD BY THE ASSESSING OFF ICER /DDIT (INV) TO ESTABLISH THAT THE ASSESSEE PURCHASED THE GOODS FRO M THIRD PARTIES IN CASH, AS ALL THE TRANSACTIONS OF THE ASSESSEE WITH BOTH THE SALE AND PURCHASE PARTIES WERE THROUGH BANKING CHANNELS. TH E CIT(APPEALS) NOTICED FROM THE MATERIAL BEFORE HIM, THAT THE ASSE SSEE HAD ONLY FACILITATED THE CONCERNED PURCHASE AND SALE PARTIES IN THEIR TRANSACTIONS OF BOGUS SALES AND PURCHASES AS AN INDENTING AGENT FOR COMMISSION. IT WAS IN THIS FACTUAL MATRIX THAT THE CIT(APPEALS) HE LD THAT THE ASSESSING OFFICER WAS NOT JUSTIFIED IN HOLDING THAT THE ENTIR E PURCHASES BY THE ASSESSEE FROM M/S. SHRADDHA SABURI MERCHANTS LTD. A ND M/S. SAI KRIPA METALLIC TRADECOM LTD. ARE THE ASSESSEES UNDISCLOS ED INCOME AND THAT ONLY THE CORRESPONDING SALES TO M/S. RAJASTHAN ALUM INIUM AND M/S. D.C METALS ARE GENUINE, PARTICULARLY WHEN THE ITEMS/QUA NTITY PURCHASED AND SOLD ARE IDENTICAL. 12 ITA NO. 6457/MUM/2012 (ASSESSMENT YEAR : 2007-08) 5.6.2 IT IS SEEN THAT THE CIT(APPEALS) FROM THE MAT ERIAL ON RECORD, WAS OF THE VIEW THAT THE ASSESSEE FACILITATED THESE BO GUS TRANSACTIONS OF SALE AND PURCHASE FOR THE AFORESAID SALE AND PURCHA SE PARTIES AS AN INDENTING AGENT AND RECEIVED COMMISSION THEREON. W E FIND THAT CIT(APPEALS) WAS OF THE OPINION THAT SINCE THE AFO RESAID BOGUS TRANSACTIONS OF SALES AND PURCHASES WERE CLANDESTI NELY CARRIED OUT, THE ASSESSEE WOULD HAVE CERTAINLY EARNED MORE THAN THE 0.17% DECLARED BY THE ASSESSEE OR 1 TO 2% EARNED IN SUCH TYPE OF BUSI NESS AS ADMITTED BY THE LD. REPRESENTATIVE FOR THE ASSESSEE. THE CIT(AP PEALS) FOLLOWING THE RATIO OF THE DECISION OF THE ITAT AHMEDABAD BENCH IN VIJAY PROTEIN LTD. (SUPRA) PROCEEDED TO ESTIMATE THE COMMISSION EARNED BY THE ASSESSEE @5% ON THE SAID PURCHASE TRANSACTIONS AMOUNTING TO RS.3,82,69,759/- IN THE PECULIAR FACTS AND CIRCUMSTANCES OF THE CASE . 5.6.3 THE FINDINGS OF THE LD. CIT(A) AT PARAS 2.4 T O 2.4.3 OF THE IMPUGNED ORDER, IN RESPECT OF THE ISSUES BEFORE US IS EXTRACTED HEREUNDER :- 2.4 I HAVE CAREFULLY CONSIDERED :HE ASSESSMENT OR DER AND THE SUBMISSIONS OF THE AR. I HAVE ALSO GONE THROUGH THE VARIOUS REM AND REPORTS AND ITS REBUTTALS INCLUDING THE VARIOUS DETAILS FILED BY TH E AR AND THE REPORT OF DDIT(INV)UNIT-V, MUMBAI AS DISCUSSED ABOVE. I HAVE ALSO GONE THROUGH THE VARIOUS STATEMENTS RECORDED BY THE AO DURING THE RE MAND PROCEEDINGS I.E. STATEMENTS OF SHRI PRAKASH J. SHAH DATED 21.07.2011 AND STATEMENTS OF SHRI RAJU BHANSALI & SHRI CHANDUPRAKASH BHANSALI DATED 1 9.07.2011 AND THE AFFIDAVIT OF SHRI PRAKASH J. SHAH DATED 06.01.2012 AS WELL AS THE AFFIDAVITS OF SHRI RAJU BHANSALI & SHRI CHANDUPRAKASH BHANSALI DA TED 14.05.2010 AND THE AFFIDAVIT OF SHRI PRAVIN T. AGARWAL DATED 19.05.201 0 AS DISCUSSED ABOVE. BESIDES, I HAVE ALSO GONE THROUGH THE STATEMENT OF SHRI PRAKASH J. SHAH PARTNER OF THE APPELLANT FIRM RECORDED DURING THE C OURSE OF SURVEY U/S 133A OF THE ACT AS WELL AS THE STATEMENT OF SHRI PRAVIN T. AGARWAL RECORDED U/S 131 OF THE ACT DATED 24.03.2008 AND HIS WRITTEN CONFESSION SUBMITTED VIDE LETTER DATED 02.11.2007 BEFORE THE ADIT (INV). ON PERUSAL THEREOF I FIND THE 13 ITA NO. 6457/MUM/2012 (ASSESSMENT YEAR : 2007-08) APPELLANT HAS SHOWN PURCHASES OF ALLUMINIUM AND COP PER RODS OF RS.3,82,69,759/- FROM M/S SHRADDHA SABURI MERCHANTS LTD AND M/S SAI KRIPA METALLIC TRADECOM LIMITED AND ITS CORRESPONDING SAL ES TO M/S D.C. METALS AND M/S RAJASTHAN ALUMINUM DURING THE RELEVANT ACCO UNTING YEAR. HOWEVER, BASED ON THE VARIOUS ENQUIRIES MADE AND EVIDENCES G ATHERED IN THE CASE OF THE APPELLANT BY THE ADIT (INV.), UNIT - IV (1), MU MBAI IT WAS FOUND THAT NO SUCH GOODS WERE PURCHASED FROM M/S SHRADDHA SABURI MERCHANTS LTD AND M/S SAI KRIPA METALLIC TRADECOM LTD INASMUCH AS THE SE SALES BILLS ISSUED BY M/S SHRADDHA SABURI MERCHANTS LTD. AND M/S. SAI KRI PA METALLIC TRADECOM LTD. WERE BOGUS ACCOMMODATION BILLS ISSUED WITHOUT SUPPLY OF ACTUAL MATERIAL AS DISCLOSED THEREIN. OR IN OTHER WORDS, THE APPEL LANT HAS NOT MADE ANY SUCH PURCHASES FROM M/S. SHRADDHA SABURI MERCHANTS LTD. AND M/S. SAI KRIPA METALLIC TRADECOM LTD. AND THEREFORE, THE ENTIRE PU RCHASES SHOWN WAS CONSIDERED AS BOGUS OR UNEXPLAINED PURCHASES AND AC CORDINGLY THE SAME WAS ADDED TO ITS TOTAL INCOME. HOWEVER, THE APPELLANT HAS SUBMITTED THAT IT IS ONLY ENGAGED IN THE INDENTING AGENCY BUSINESS; WHER EBY, THE GODS PURCHASED WERE DIRECTLY DISPATCHED BY M/S. SHRADDHA SABURI ME RCHANTS LTD AND M/S. SAI KRIPA METALLIC TRADECOM LTD. TO THE GODOWNS OF M/S. D.C.METAL AND M/S. RAJASTHAN ALLUMINIUM WITHOUT ANY INVOLVEMENT OF THE APPELLANT. IT WAS FURTHER SUBMITTED THAT THE APPELLANT FOR ITS INDENT ING AGENCY SERVICES WAS DULY COMPENSATED BY WAY OF COMMISSION WHICH IS THE DIFFERENCE BETWEEN THE SALE PRICE AND THE PURCHASE PRICE AS SHOWN IN ITS B OOKS OF ACCOUNT. AT THE SAME TIME THE AR HAS VEHEMENTLY ARGUED THAT NEITHE R A COPY OF THE STATEMENT RECORDED OF SHRI PRAVIN T. AGARWAL AS DIS CUSSED IN THE ASSESSMENT ORDER WAS PROVIDED NOR THE APPELLANT WAS ALLOWED TO CROSS EXAMINE SHRI PRAVIN T. AGARWAL EITHER BY THE AO OR BY THE ADIT. IT WAS VEHEMENTLY ARGUED THAT THE DENIAL OF THE CROSS EXAMINATION BY THE APP ELLANT OF SHRI PRAVIN T. AGARWAL AS DISCUSSED IN THE ASSESSMENT ORDER IS FAL SE AND INCORRECT. ACCORDINGLY, THE APPELLANT HAS FILED AN AFFIDAVIT D ATED 19.05.2010 OF SHRI PRAVIN T. AGARWAL; WHEREIN, HE HAS ADMITTED HAVING MADE SALE OF MATERIAL AS PER THE SALE BILLS ISSUED TO THE APPELLANT. THE AR HAS ALSO FILED CORRESPONDING AFFIDAVITS DATED 14.05.2010 OF SHRI RAJU BHANSALI P ARTNER OF M/S RAJASTHAN ALLUMINIUM AND SHRI CHANDRA PRAKASH BHANSALI PARTNE R OF M/S D.C. METALS CONFIRMING THE CONTENTION OF THE APPELLANT, AS DISC USSED ABOVE. THEREFORE, ON ACCOUNT OF THESE FACTS PLACED ON RECORD THE MATTER WAS REMANDED TO THE AO ON VARIOUS OCCASIONS AS DISCUSSED ABOVE. THE MATTER WAS ALSO REFERRED TO THE CONCERNED DDIT(INV) FOR MAKING FURTHER ENQUIRIES AN D INVESTIGATIONS AS DISCUSSED ABOVE. HOWEVER, IN SPITE THEREOF NO FRUIT FUL OR LOGICAL DETAILS AND EVIDENCES ARE BROUGHT ON RECORD SO AS TO HOLD THAT THE ENTIRE PURCHASES SHOWN BY THE APPELLANT FROM M/S SHRADDHA SABURI MER CHANTS LTD AND M/S SAI KRIPA METALLIC TRADECOM LTD ARE TO BE CONSIDERED AS ITS UNACCOUNTED OR UNEXPLAINED INCOME. THE AO HERSELF VIDE PARA-4 OF H ER REMAND REPORT DATED 19.09.2011 HAS CONFIRMED THE SUBMISSIONS OF THE APP ELLANT THAT THE SOURCE 14 ITA NO. 6457/MUM/2012 (ASSESSMENT YEAR : 2007-08) OF PAYMENTS MADE TO M/S SHRADDHA SABURI MERCHANTS L TD AND M/S SAI KRIPA METALLIC TRADECOM LTD THROUGH BANKING CHANNELS ARE ORIGINATING OUT OF THE PAYMENTS RECEIVED FROM M/S D.C. METAL AND M/S RAJAS THAN ALUMINUM BY THE APPELLANT. FROM THE SAME AS WELL AS FROM THE DETAIL S AND EVIDENCES BROUGHT ON RECORD IT IS SEEN THAT THE APPELLANT HAS BEEN AC TING ONLY AS AN CONDUIT ORAN AGENT TO FACILITATE THE BOGUS TRANSACTIONS OF PURCH ASES AND SALE OF ALUMINUM SHEETS AND COPPER WIRES & RODS TAKEN PLACE BETWEEN M/S SHRADDHA SABURI MERCHANTS LTD AND MLS SAI KRIPA METALLIC TRADECOM L TD (SALE PARTIES) AND M/S D.C. METAL AND M/S. RAJASTHAN ALUMINUM ( PURCHASE P ARTIES) MERELY AS AN MIDDLEMEN OR AN INDENTING AGENT; WHEREBY, THE APPEL LANT HAS IN TURN ISSUED BOGUS OR ACCOMMODATION SALE BILLS IN FAVOUR OF M/S D.C. METAL AND M/S. RAJASTHAN ALUMINUM AGAINST THE RECEIPT OF SIMILAR B OGUS OR ACCOMMODATION SALE BILLS ISSUED BY M/S.SHRADDHA SABURI MERCHANTS LTD AND M/S.SAI KRIPA METALLIC TRADECOM LTD. OR IN OTHER WORDS, IT HAS AC TED MERELY AS AN INDENTING AGENT OR AS AN FACILITATOR TO LEGALISE SUCH BOGUS T RANSACTIONS; WHEREAS, THE REAL BENEFICIARIES OF THESE BOGUS TRANSACTIONS ARE M/S. D.C. METAL AND M/S RAJASTHAN ALUMINUM, AS NO EVIDENCES EXCEPT FOR THE MOVEMENT OF FUNDS NO OTHER CORRESPONDING OR CORROBORATIVE EVIDENCES TO ESTABLISH THE ACTUAL PURCHASE AND SALE OF GOODS MENTIONED IN THESE SAL E /PURCHASE BILLS ARE PRODUCED NEITHER BY M/S SHRADDHA SABURI MERCHANTS AND M/S SAI KRIPA METALLIC TRADECOM LTD, NOR BY THE APPELLANT OR BY M /S D.C. METAL AND M/S. RAJASTHAN ALUMINIUM. NOTHING IS BROUGHT ON RECORD T O PROVE THE MOVEMENT, TRANSPORTATION AS WELL AS THE NAMES AND PARTICULAR S OF THE PARTIES FROM WHOM THESE GOODS WERE EITHER PURCHASED M/S SHRADD HA SABURI MERCHANTS LTD AND M/S SAI KRIPA METALLIC TRADECOM LTD OR BY T HE APPELLANT OR BY THE M/S D.C. METAL AND M/S RAJASTHAN ALUMINUM; EXCEPT F OR THE ISSUE OF BOGUS SALES BILLS BY M/S. SHRADDHA SABURI MERCHANTS LTD A ND M/S. SAI KRIPA METALLIC TRADECOM LTD AND BY THE APPELLANT WHICH AS DISCUS SED ABOVE ARE ALREADY CONFIRMED TO BE BOGUS BILLS WITHOUT SALE OF ACTUAL MATERIAL BY M/S. SHRADDHA SABURI MERCHANTS LTD. AND M/S. KRIPA METALLIC TRADE COM LTD. (STATEMENT OF SHRI PRAVIN T. AGARWAL DATED 24.03.2008) AND BY THE APPELLANT (AFFIDAVIT OF SHRI PRAKASH J. SHAH DATED 06.01.2012). NO OTHER EV IDENCES ARE BROUGHT ON RECORD BY THE AO OR BY THE DDIT SO AS TO PROVE THAT THE APPELLANT HAS PURCHASED THESE GOODS FROM THIRD PARTIES IN CASH. N OTHING IS PRODUCED TO PROVE THAT SUCH MATERIAL PURCHASED IS SOLD TO M/S. D.C. METAL AND M/S RAJASTHAN ALUMINUM BY THE APPELLANT AS NO SUCH EVID ENCES TO PROVE THE MOVEMENT OF GOODS IS EITHER PRODUCED BY THE AO OR B Y THE DDIT OR BY THE CONCERNED PURCHASE PARTIES. THE AO HAS NOT BROUGHT ANY SUCH DETAILS AND EVIDENCES (IN REMAND) EVEN THOUGH STATEMENTS OF SRI PRAKASH J. SHAH AND SHRI RAJU BHANSALI & SHRI CHANDUPRAKASH BHANSALI WERE RE CORDED DURING REMAND PROCEEDINGS. IT IS NOT PROVED THAT THE CASH WITHDRA WN FROM THE BANK ACCOUNTS OF M/S.SHRADDHA SABURI MERCHANTS LTD AND M/S SAI KR IPA METALLIC TRADECOM LTD WERE GIVEN TO THE APPELLANT. THEREFORE, IT IS S EEN THAT NO SUCH MATERIAL IS 15 ITA NO. 6457/MUM/2012 (ASSESSMENT YEAR : 2007-08) SOLD BY THE APPELLANT TO M/S. D.C. METALS AND M/S R AJASTHAN ALUMINUM EXCEPT FOR THE ISSUE OF BOGUS BILLS IN CONSONANCE W ITH THE MOVEMENT OF FUNDS AS DISCUSSED ABOVE. NO MATERIAL OR EVIDENCE IS PROD UCED BY THE AO OR BY THE DDIT THAT THESE GOODS WERE PROCURED BY THE APPELLAN T FROM GREY MARKET IN CASH AND THEREAFTER SOLD TO M/S D.C. METALS AND M/S RAJASTHAN ALUMINUM. ON THE OTHER HAND FROM THE AFFIDAVITS OF THE SHRI C HANDRA PRAKASH BHANSALI AND RAJU BHANSALI DATED 14.05.2010, THE MATERIAL PU RCHASED IS DIRECTLY DELIVERED BY THE CONCERNED MANUFACTURERS OR SUPPLIE RS TO THEIR GODOWNS WITHOUT ANY INVOLVEMENT OF THE APPELLANT. IT WAS AL SO STATED THAT THESE SUPPLIERS I MANUFACTURERS ARE HAVING THEIR GODOWNS SITUATED OUTSIDE MUMBAI, CHECK NAKA, WHERE M/S D C METALS AND RAJASTHAN ALLU MINIUM ARE ALSO HAVING THEIR GODOWNS I WAREHOUSES. ON ACCOUNT OF THESE FAC TS AND EVIDENCES PLACED ON RECORD, I FIND SUFFICIENT MERITS IN THE SUBMISSI ONS OF THE AR THAT THE APPELLANT HAS ONLY FACILITATED THE CONCERNED PURCHA SE AND SALE PARTIES, BEING A CONDUIT IN THE PROCESS OF LEGALIZATION OF THE TRA NSACTION OF BOGUS PURCHASES AND SALES AGAINST PAYMENT OF PRE-FIXED COMMISSION. THESE SUBMISSIONS OF THE APPELLANT ARE DULY CORROBORATED BY THE AFFIDAVITS O F SHRI PRAVIN T AGARWAL, PROMOTER OF M/S. SHRADDHA SABURI MERCHANTS LTD AND M/S. SAI KRIPA METALLIC TRADECOM LTD AND SHRI CHANDRA PRAKASH BANSALI AND S HRI RAJU BHANSALI, PARTNERS OF M/S. D C METALS AND M/S. RAJASTHAN ALLU MINIUM RESPECTIVELY. THE AO HAS CONFIRMED THAT THE FUNDS ORIGINATING FROM M/ S. D.E. METALS AND M/S. RAJASTHAN ALUMINUM ARE IMMEDIATELY TRANSFERRED TO T HE BANK ACCOUNTS OF M/S SHRADDHA SABURI MERCHANTS LTD AND M/S. SAI KRIP A METALLIC TRADECOM LTD THROUGH THE BANK ACCOUNTS OF THE APPELLANT. THEREAF TER, THE SAME ARE WITHDRAWN IN CASH FROM THE BANK ACCOUNTS OF M/S. SH RADDHA SABURI MERCHANTS LTD AND M/S. SAI KRIPA METALLIC TRADECOM LTD BUT ULTIMATELY TO WHOM THE SAME IS PAID IS NOT INVESTIGATED EITHER BY THE AO OR BY THE ADIT/DDIT EITHER DURING THE COURSE OF THE ASSESSMEN T ORDER OR DURING THE REMAND PROCEEDINGS. BOTH THESE AUTHORITIES AS DISCU SSED ABOVE HAVE FAILED TO EXAMINE SHRI PRAVIN T. AGARWAL ON THIS ISSUE NOR THEY COULD SUCCEED IN RECORDING THE STATEMENT OF SHRI PRAVIN #T. AGARWAL AND FURTHER TO BE CROSS EXAMINED BY THE APPELLANT AS DISCUSSED ABOVE. THE A O AS WELL AS THE DDIT HAVE EXPRESSED THEIR IN THIS REGARD. SIMILARLY, NO CROSS EXAMINATION OF SHRI CHANDRA PRAKASH BHANSALI AND SHRI RAJU BHANSALI I S GRANTED TO THE APPELLANT IN SPITE OF THE CONTENTS OF THEIR AFFIDAVITS DATED 14.05.2010 AS DISCUSSED ABOVE VIS-A-VIS THEIR INDEPENDENT STATEMENTS RECORD ED BY THE AO DURING THE REMAND PROCEEDINGS ON 19.07.2011. ON ACCOUNT OF TH ESE FACTS BROUGHT ON RECORD, I FIND SUFFICIENT MERITS IN THE SUBMISSIONS OF THE AR THAT THE STATEMENTS RECORDED BY THE AO AT THE BACK OF THE AP PELLANT CANNOT BE CONSIDERED AS VALID PIECE OF EVIDENCE. 2.4.1. BESIDES, IT MAY BE NOTICED THAT IN SPITE OF GRANTING SUFFICIENT OPPORTUNITY BY WAY OF REMANDING THE PROCEEDINGS TO THE AO AS WELL AS 16 ITA NO. 6457/MUM/2012 (ASSESSMENT YEAR : 2007-08) REFERRING THE MATTER TO THE DDIT (INV), AS DISCUSSE D ABOVE, THEY HAVE FAILED TO SUBSTANTIATE OR CORROBORATE THE FINDINGS OF THE AO AS DISCUSSED IN THE ASSESSMENT ORDER BY BRINGING ANY COGENT MATERIAL SO AS TO ESTABLISH THAT THE ENTIRE PURCHASES SHOWN BY THE APPELLANT ARE ITS UNE XPLAINED INCOME. BOTH THE AO AND THE DDIT(INV) HAVE FAILED TO RECORD THE STAT EMENT OF SHRI PRAVIN T AGARWAL AND ALLOWING HIM TO BE CROSS-EXAMINED BY TH E APPELLANT, SO AS TO ASCERTAIN THE CORRECT FACTS OF THE CASE IN HAND. IN THE ABSENCE OF SUCH A STATEMENT AND FURTHER CORROBORATIVE DOCUMENTARY EVI DENCES BROUGHT ON RECORD, TO MY CONSIDERED OPINION, IT IS UNJUSTIFIED ON THE PART OF THE AO TO HOLD THAT THE ENTIRE PURCHASES SHOWN BY THE APPELLANT AR E TO BE CONSIDERED AS ITS UNEXPLAINED INCOME. IT IS PATENTLY INCORRECT CONCLU SION ON THE PART OF THE AO THAT THE PURCHASES ARE NOT GENUINE BUT AT THE SAME TIME THE CORRESPONDING SALES SHOWN ARE GENUINE SALES. IF THE PURCHASES ARE BOGUS WITHOUT PROVING THAT THE APPELLANT HAS PURCHASED THE SAME ITEMS IN GREY MARKET IN CASH IT CANNOT BE HELD THAT THE CORRESPONDING SALES ARE GEN UINE. HOWEVER, NOTHING IS BROUGHT ON RECORD EITHER BY THE AO OR BY THE DDIT E VEN THOUGH THE MATTER WAS SPECIFICALLY REMANDED FOR THIS PURPOSE. THEREFO RE, I FIND SUFFICIENT MERITS IN THE SUBMISSIONS OF THE AR THAT IF THE PURCHASES ARE FOUND BOGUS, THE CORRESPONDING SALES OF THE SAME ITEM AS SHOWN BY TH E APPELLANT IN ITS BOOKS OF ACCOUNTS CANNOT BE CONSIDERED AS GENUINE SALES. NEVERTHELESS, NO DETAILS OF WHATSOEVER NATURE ABOUT THE PARTIES FROM WHOM, THE MATERIAL IS PURCHASED, ITS MOVEMENT OR TRANSPORTATION TO THE GODOWN OF M/S . D C METALS AND M/S. RAJASTHAN ALLUMINIUM IS BROUGHT ON RECORD BY THE AO OR BY THE DDIT(INV), IN SPITE OF CONDUCTING SURVEY U/S 133A OF THE ACT. FUR THER, THERE IS NO EVIDENCE TO PROVE THAT THE CASH WITHDRAWN BY SHRI PRAVIN T A GARWAL IS RETURNED TO THE APPELLANT AND NOT TO M/S. D C METALS OR M/S. RAJAST HAN ALLUMINIUM, PARTICULARLY CONSIDERING TO THE CONTENTS OF THE AFF IDAVIT OF SHRI PRAKASH J SHAH, PARTNER OF THE APPELLANT FIRM DATED 06.01.2012. THE REFORE, IT IS SEEN THAT IN SPITE OF REMANDING THE MATTER ON SEVERAL OCCASIONS, NO NEW FACTS AND EVIDENCES ARE BROUGHT ON RECORD BY THE AO OR BY THE DDIT(INV), SO AS TO JUSTIFY THE BOGUS PURCHASES MADE BY THE APPELLANT OUT OF IT S UNACCOUNTED INCOME. ON THE OTHER HAND, AS DISCUSSED ABOVE, THE AO HERSE LF HAS ADMITTED ON VERIFICATION OF THE RELEVANT BANK ACCOUNTS THAT THE SOURCE OF THE ENTIRE PAYMENTS MADE TO M/S SHRADDHA SABURI MERCHANTS LTD AND M/S. SAI KRIPA METALLIC TRADECOM LTD BY THE APPELLANT THROUGH BANK ING CHANNELS IS OUT OF THE PAYMENTS RECEIVED FROM M/S. D C METALS AND M/S. RAJASTHAN ALLUMINIUM. THIS PROVES THAT NO UNACCOUNTED INVESTMENT IS MADE BY THE APPELLANT FOR THIS PURPOSE DURING THE RELEVANT ACCOUNTING YEAR. 2.4.2 BESIDES, SHRI PRAKASH J SHAH IN HIS STATEMENT DATED 06.01.2012 HAS SATED THE DETAILED MODUS-OPERANDI OF THE ENTIRE TRA NSACTIONS ARRANGED BY THE APPELLANT, WHICH PROVES THAT THE APPELLANT HAS MERE LY RENDERED OR FACILITATED THESE TWO PARTIES I.E. M/S. SHRADDHA SABURI MERCHAN TS LTD. AND M/S. SAI KRIPA 17 ITA NO. 6457/MUM/2012 (ASSESSMENT YEAR : 2007-08) METALLIC TRADECOM LTD.(PURCAHSE PARTIES) AND M/S. D C METALS AND M/S. RAJASTHAN ALUMINIUM (SALES PARTIES) BY WAY OF ISSUE OF BOGUS SALES BILLS AGAINST PRE-FIXED COMMISSION RECEIVED. THE CONTENT S OF THE AFFIDAVIT FILED ARE FURTHER CORROBORATED BY WAY OF THE EVIDENCES FURNIS HED I.E. FROM THE COPIES OF BANK ACCOUNT OPENING FORMS FILED, IT IS SEEN THAT T HE APPELLANT HAS OPENED A NEW ACCOUNT PARTICULARLY FOR THIS PURPOSE IN THE S AME BANK AND BRANCH (RATNAKAR BANK) IN WHICH, THE BANK ACCOUNTS OF M/S. D C METALS AND M/S. RAJASTHAN ALLUMINIUM WERE MAINTAINED AND THE NEW AC COUNT OPENING FORM OF THE APPELLANT IS INTRODUCED BY THE DIRECTOR/PARTNER OF M/S.D C METALS AND M/S RAJASTHAN ALLUMINIUM. SECONDLY, IT IS ALSO NOTI CED A THE APPELLANT HAS NEVER DEALT IN THE BUSINESS OF ALLUMINIUM SHEETS AN D RODS, WHICH ARE FOUND MENTIONED IN THESE ACCOMMODATION BILLS ISSUED. FURT HER, THE APPELLANT HAS NO FACILITY OR WAREHOUSING TO STORE THE MATERIAL PURCH ASED, WHICH IS ADMITTED BY THE PARTNERS OF M/S.RAJASTHAN ALLUMINIUM AND M/S. D.C. METALS IN THEIR AFFIDAVITS DATED 14-05-2012, CONTENDING THAT THE MA TERIAL PURCHASED WAS DIRECTLY DELIVERED BY MANUFACTURERS / SUPPLIERS IN THEIR OWN DELIVERY VANS / HANDCARTS FROM THEIR GODOWNS SITUATED OUTSIDE MUMBA I CHECK NAKA, WHERE M/S. D.C. METALS/ M/S. RAJASTHAN ALLUMINIUM WERE AL SO HAVING THEIR GODOWNS /WAREHOUSING FACILITIES. FURTHER, IT IS ALSO NOTICE D THAT THE ENTIRE AMOUNT OF MAHARASHTRA-VAT ON THESE TRANSACTIONS IS PAID BY M/ S DC METALS / M/S. RAJASTHAN ALLUMINIUM. 2.4.3. THEREFORE, ON ACCOUNT OF THESE FACTS AVAILAB LE IN THE CASE OF THE APPELLANT, AS DISCUSSED ABOVE AND FURTHER IN THE AB SENCE OF ANY NEW FACTS AND EVIDENCES BROUGHT ON RECORD BY THE AO AS WELL AS IN THE ABSENCE OF ANY CORROBORATIVE EVIDENCES PLACED ON RECORD IN SPITE O F REMANDING THE MATTER ON VARIOUS OCCASIONS, I FIND IT CANNOT BE HELD THAT TH E ENTIRE PURCHASES MADE BY THE APPELLANT ARE OUT OF ITS UNACCOUNTED SOURCES OR THE SAME IS TO BE CONSIDERED AS ITS UNEXPLAINED INCOME. EVEN OTHERWIS E, EVEN IF THE PURCHASES ARE HELD AS BOGUS, TO MY CONSIDERED OPINION, IT CAN NOT BE HELD THAT THE CORRESPONDING SALES ARE GENUINE; PARTICULARLY WHEN THE QUANTITY PURCHASED AND SOLD ARE SAME. OBVIOUSLY, IN SUCH A CIRCUMSTANC E IF THE PURCHASES ARE CONSIDERED THE CORRESPONDING SALES ALSO HAS TO BE B OGUS. THEREFORE, ON ACCOUNT OF THE SAME, IT IS EVIDENT THAT UNDER THE G IVEN FACTS AND CIRCUMSTANCES THE APPELLANT HAS MERELY ISSUED ACCOM MODATION SALES BILLS AGAINST THE PAYMENT OF PRE-FIXED COMMISSION AS DISC USSED ABOVE. HOWEVER, SINCE THE ENTIRE TRANSACTION IS CARRIED OUT IN A CL ANDESTINE MANNER, IT CANNOT BE HELD THAT THE RATE OF COMMISSION IS AS PER THE N ORMAL PRACTICE FOLLOWED IN THIS LINE OF BUSINESS. NATURALLY, IT HAS TO BE MORE THAN THE NORMAL RATE OF COMMISSION PAID IN THIS LINE OF BUSINESS. IN THE CA SE OF VIJAY PROTEINS LTD VS. ACIT REPORTED IN 15 ITD 428, THE HON'BLE ITAT AHMED ABAD 'C' BENCH UNDER SIMILAR CIRCUMSTANCES, WHERE THE AO DISALLOWED THE ENTIRE EXPENDITURE ON ACCOUNT OF PURCHASES MADE FROM CERTAIN PARTIES TRA TING THE SAME AS BOGUS, 18 ITA NO. 6457/MUM/2012 (ASSESSMENT YEAR : 2007-08) HAS HELD THAT 'IT IS AN ELEMENTARY RULE OF ACCOUNT ANCY AS WELL AS OF TAXATION LAWS THAT PROFIT FROM BUSINESS CANNOT ASCERTAINED WITHOUT DEDUCTING COST OF PURCHASE FROM SALES/ OTHERWISE IT COULD AMOUNT TO L EVY OF INCOME TAX ON GROSS RECEIPTS OR ON SALES. SUCH RECOURSE IS NOT PE RMISSIBLE UNLESS IT IS SPECIFICALLY AUTHORIZED TO DO SO UNDER ANY PARTICU LAR PROVISIONS CONTAINED IN THE ACT. IT HAS BEEN HELD BY THE HON'BLE TRIBUNAL THAT IN SUCH CIRCUMSTANCES, A CERTAIN PERCENTAGE OF EXPENDITURE HAS TO BE DISAL LOWED ON ACCOUNT OF INFLATION OF PURCHASE PRICE. THE ITAT HAS HELD THAT IF PURCHASES ARE MADE FROM THE OPEN MARKET WITHOUT INSISTING FOR THE GENU INE BILLS, THE SUPPLIERS MAY BE WILLING TO SELL THOSE PRODUCTS AT A MUCH LO WER RATE COMPARED TO THE RATE AT WHICH THEY MAY CHARGE IN CASE THE DEALER HA S TO GIVE A GENUINE SALE INVOICE IN RESPECT OF THAT SALE AND SUPPLY OF GOODS . THERE MAY BE VARIOUS FACTORS DUE TO WHICH THERE IS BOUND TO BE A SUBSTA NTIAL DIFFERENCE BETWEEN THE PARTY PURCHASE PRICE OF UNACCOUNTED MATERIAL A ND RATE OF PURCHASE OF UNACCOUNTED FOR GOODS. THERE MAY BE A SAVING ON A CCOUNT OF SALES-TAX AND OTHER TAXES AND DUTIES WHICH MAY BE LEVIABLE IN RES PECT OF MANUFACTURE OF SALE OF GOODS IN QUESTION. THE SUPPLIERS OR MANUFA CTURERS MAKE A SUBSTANTIAL SAVING IN THE INCOME TAX IN RESPECT OF INCOME FROM SALE OF UNACCOUNTED GOODS PRODUCED AND SOLD BY THEM. THIS MAY ALSO BE ONE OF THE FACTORS DUE TO WHICH THE SELLER MAY BE WILLING TO CHARGE LOWER RA TES FOR UNACCOUNTED GOODS AS COMPARED TO ACCOUNTED FOR GOODS. THE AR HAS NOT FILED THE DETAILS OF COMMISSION EARNED ON THIS BOGUS TRANSACTION SEPARAT ELY. HOWEVER, FROM THE P&L ACCOUNT IT IS SEEN THAT IT HAS SHOWN TOTAL CO MMISSION OF RS.85,948.70 ON TOTAL PURCHASES OF RS.5,0L,02,850/- WHICH IS INCLUS IVE OF THE BOGUS SALES MADE TO M/S. RAJASTHAN ALLUMINIUM AND M/S. D.C. METALS. THE SAME WORKS OUT TO 0.17% OF THE TOTAL PURCHASES. THE BOGUS PURCHASES M ADE FROM M/S. SHRADDHA SABURI MERCHANTS LTD. AND M/S. SAI KRIPA METALLIC TRADECOM LTD IS OF RS.3,82,69,759/- FOR THE RELEVANT ACCOUNTING YEAR. THE AR HAS CONSISTENTLY ARGUED THAT THE RATE OF COMMISSION ALLOWED IN THIS LINE OF BUSINESS NORMALLY DOES NOT EXCEED MORE THAN 1% TO 2% OF THE SALE VALU E. HOWEVER, TO MY CONSIDERED OPINION THE SAME CANNOT BE TAKEN ON ITS FACE VALUE, PARTICULARLY IN VIEW OF THE LACK OF EVIDENCES AND THE CLANDESTINE N ATURE OF BUSINESS CARRIED OUT BY THE APPELLANT. AND ALSO CONSIDERING TO THE F ACT THAT THE APPELLANT ITSELF HAS SHOWN SUCH COMMISSION OF 0.17%( AS DISCUSSED AB OVE) WHICH IS MUCH LESSER THAN THE RATE OF COMMISSION ADMITTED BY THE AR IN THE SIMILAR LINE OF BUSINESS OR PRACTICE. THEREFORE, ON ACCOUNT OF THE SAME, I FIND IT WOULD MEET THE END OF JUSTICE, IN CASE, THE RATE OF COMMISSION CHARGED BY THE APPELLANT IS TAKEN @ 5% OF THE TOTAL PURCHASE VALUE OF THE APPEL LANT DURING THE RELEVANT ACCOUNTING YEAR. THE SAME ON TOTAL SUCH PURCHASES O F RS.3,82,69,759/- WORKS OUT TO RS.19,13,488/-FOR THE RELEVANT ASSESSMENT YE AR. SINCE, THE APPELLANT HAS SHOWN NET DIFFERENCE BETWEEN THE SALE AND PURCH ASE OF RS.85,948.70 IN ITS TRADING ACCOUNT PERTAINING TO THE BOGUS PURCHAS ES AS WELL AS GENUINE . TRADING CARRIED OUT, THEREFORE, THE PROPORTIONATE P ROFIT OR COMMISSION 19 ITA NO. 6457/MUM/2012 (ASSESSMENT YEAR : 2007-08) PERTAINING TO BOGUS TRANSACTION IS WORKED OUT AT RS .65,059/-(I.E. 0.17% OF RS.3,82,69,759/-) WHICH IS ALREADY ASSESSED TO TAX, THEREFORE, CONSIDERING TO THE SAME, THE BALANCE AMOUNT OF RS.18,48,429/- (I.E . RS.19,13,488/- (-) RS.65,059/-) OF ADDITION MADE ON THIS ACCOUNT IS SU STAINED AND THE REMAINING ADDITION MADE IS DIRECTED TO BE DELETED. THIS GROUN D RAISED BY THE APPELLANT IS THEREFORE PARTLY ALLOWED. 5.6.4 BEFORE US, BOTH REVENUE AND THE ASSESSEE HAVE MERELY REITERATED THEIR RESPECTIVE CLAIMS (I) OF REVENUE THAT THE ENT IRE PURCHASE TO M/S. SHRADDHA SABURI MERCHANTS LTD. AND M/S. SAI KRIPA M ETALLIC TRADECOM LTD. AMOUNTING TO RS.3,82,69,759/- BE BROUGHT TO TA X AS THE ASSESSEES INCOME AND; (II) OF THE ASSESSEE THAT THE COMMISSIO N INCOME BE ASSESSED AT 0.17% AS PURCHASES AS DECLARED BY IT. WE FIND THAT APART FROM PUTTING FORTH THESE AVERMENTS, BOTH PARTIES HA VE FAILED TO BRING ON RECORD ANY MATERIAL EVIDENCE TO CONTROVERT THE FIND INGS RENDERED BY THE LD. CIT(A) IN THE IMPUGNED ORDER ON THESE TWO ISSUE S IN CROSS APPEALS. IN THIS VIEW OF THE MATTER, AND AFTER CAREFUL CONSI DERATION OF THE MATERIAL ON RECORD, WE FIND NO REASON FOR INTERFERE NCE IN THE ORDER OF THE LD. CIT(A) ON BOTH THESE ISSUES BEFORE US RAISE D RESPECTIVELY BY REVENUE AND THE ASSESSEE. WE, THEREFORE, CONFIRM T HE ORDER OF THE LD. CIT(A) IN HOLDING THAT (I) THE AO WAS NOT JUSTIFIED IN HOLDING THAT THE EN TIRE BOGUS PURCHASES BY THE ASSESSEE FROM THE AFORESAID TWO PA RTIES AMOUNTING TO RS.3,82,69,759/- IN THE ASSESSEES UND ISCLOSED INCOME AND (II) THAT THE ASSESSEE HAD EARNED COMMISSION @ 5% FOR CLANDESTINELY FACILITATING THE BOGUS TRANSACTIONS OF THE PARTIES TO PURCHASES AND SALES. CONSEQUENTLY, REVENUES GROUNDS AT SR. NOS. 1 TO 4 AND THE ASSESSEES GROUND AT SR. NO. I(1) ARE DISMISSED. 20 ITA NO. 6457/MUM/2012 (ASSESSMENT YEAR : 2007-08) 6. IN THE RESULT, BOTH THE ASSESSEES APPEAL FOR AS ST. YEAR 2007-08 AND REVENUES CROSS APPEAL ARE DISMISSED. ORDER PRONOUNCED IN THE OPEN COURT ON 17/02/2016 SD/- SD/- (SANDEEP GOSAIN) (JASON P. BOAZ) JUDICIAL MEMBER ACCOUNTANT ME MBER MUMBAI, DATED 17/02/2016 VM , 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 COPY// (DY./ASSTT. REGISTRAR) ITAT, MUMBAI