SMT. NEETA SANJAY SHAH, MUMBAI V. INCOME TAX OFFICER 26 (2) (3), MUMBAI

ITA 6700/MUM/2017

• Counselvise Citation: [2018] 125 COUNSELVISE.COM (IT) 5494 (ITAT-MUMBAI)
• Duration Of Justice: 7 month(s) 26 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 20-07-2018
• Appeal Filed By: Assessee
• Order Result: Dismissed
• Bench Allotted: SMC
• Assessment Year: 2010-2011
• Appeal Filed On: 24-11-2017
• Result in Favour of: Revenue
• Court: TRIBUNAL
• Department Lawyers: N HEMLATHA
• Keywords: Reopening of assessment; Bogus purchase; Principle of natural justice; Opportunity of cross examination; Difference of opinion; Third party statement; Accommodation entries; Onus to prove; Change of opinion; Borrowed satisfaction
• Section: 143(3); 142(1)

Judgement Text

1 NEETA SANJAY SHAH IN THE INCOME TAX APPELLATE TRIBUNAL MUMBAI BENCH SMC, MUMBAI BEFORE SHRI JOGINDER SINGH(JUDICIAL MEMBER) AND SHRI G MANJUNATHA (ACCOUNTANT MEMBER) I.T.A NO.6700 /MUM/2017 (ASSESSMENT YEAR: 2010-11) SMT. NEETA SANJAY SHAH PROP. M/S PRIME INDUSTRIES, 246/20, MAHESHWAR BHUWAN, GOKUL MARG, SION (E), MUMBAI-400 022 PAN : AAPPS2652H VS ITO 26(2)(3), MUMBAI APPELLANT RESPONDENT APPELLANT BY SHRI BHUPENDRA SHAH RESPONDENT BY SMT. N HEMLATHA DATE OF HEARING 01 -05-2018 DATE OF PRONOUNCEMENT 20-07-2018 O R D E R PER G MANJUNATHA, AM : THIS APPEAL FILED BY THE ASSESSEE IS DIRECTED AGA INST THE ORDER OF THE CIT(A)-38, MUMBAI DATED 22-09-2017 AND IT PERTA INS TO AY 2010-11. THE ASSESSEE HAS RAISED THE FOLLOWING GROUNDS OF AP PEAL:- 1) IN THE FACTS AND THE CIRCUMSTANCES OF THE CASE AND IN LAW, THE LEARNED COMMISSIONER OF INCOME TAX(A) ERRED IN CONFIRMING T HE ORDER U/S 143(3) R.W.S 147 PASSED BY THE ASSESSING OFFICER BY IGNORING VARIOUS DETAILED WRITTEN SUBMISSIONS AND CASE LAWS SUBMITTED BY THE APPELLANT DURING THE COU RSE OF APPELLATE PROCEEDING. WITHOUT PREJUDICE TO THE ABOVE AND ALTERNATIVELY 2) IN THE FACTS AND THE CIRCUMSTANCES OF THE CASE AND IN LAW, THE LEARNED A.O. ERRED IN PASSING THE ORDER U/S 143(3) R.W.S 147 AND THEREFORE RENDERING THE WHOLE RE-ASSESSRNENT BAD IN LAW, ALSO ON THE BASIS OF BORROWED SATISFACTION, PRESUMPTION AND SUR MISES. 3) IN THE FACTS AND CIRCUMSTANCES OF THE CASE AND IN LAW, THE ASSESSING OFFICER ERRED IN DISALLOWING RS 6,46,545/- AS ALLEGED NON-GENUINE- P URCHASES BEING 12.5% OF THE TOTAL PURCHASES AMOUNTING TO RS. 51.72.357/- WHICH HAS BE EN FURTHER WRONGLY CONFIRMED BY THE 2 NEETA SANJAY SHAH LEARNED COMMISSIONER OF INCOME TAX(A) BY IGNORING D ETAILED WRITTEN SUBMISSIONS AND CASE LAWS FILED. A) EVEN THOUGH THE PAYMENT FOR PURCHASES IS MADE FROM THE BOOKS BY A/C PAYEE CHEQUES AND CANNOT BE TERMED AS NON-GENUINE EVEN THOUGH THE SAME HAS BEEN FULLY ALLOWED BY THE JURISDICTIONAL MUMBAI TRIBUNAL IN RECENT CASE OF RA JEEV M KALATHIL 6727/M/12, GANPATRAJ A SANGHAVI [I .T.A. NO.2826/MUM/20L3], RA MESH KUMAR & CO. APPEAL NO. 2959/MUM/20]4, DEEPAK POPATLAL GALA [ITA NO 5920/M/ 13], RAMILA P SHAH [ITA NO 5246/M/13] PARESH GANDHI [ITA NO-5706/M/2013], HIRA LAL CHUNILAL JAIN [ITA NO 4547/M/14], TARLA SHAH [ITA NO. 5295/MUM/2013J AND M/S. IMPERIAL IMP. & EXP [ITA NO, 5427/MUM/2015J, SHIVSHANKAR R. SHARMA, [ITA NO. 5149/MUM/2014 & 4260/MUM/20I5], GOVIND RATHOD [ITA NO ;439/MUM/2016 ], SHRI MAHESH K. SHAH ITA NO. 5I94/MUM/20I4, SHRI SANJAY DHOKAD [ITA NO. 929/ MUM/2015], MANOHAR AND ANITA KANDA [ITA NO. 4693-97/MUM/2016], BIGWIN PAPER DIST RIBUTORS PVT. LTD. [ITA NO. 5293-97/MUM/2016], SHRI SANJAY DHOKAD 2010-11 [ITA NO. I.T.A. NO.5243/MUM/2013] AND HI ROCK CONSTRUCTION CO. [ITA NO. I.T.A. /960/MUM/2015] JEETENDRA DEVNANI [5426/MUM/2015]. B) ONLY ON THE BASIS OF THE INFORMATION ON THE WE BSITE WWW.MAHAVAT.GOV.IN ABOUT 9 SUSPICIOUS DEALERS WHOSE COPY OF STATEMENT RECORDED WERE NOT F URNISHED TO THE APPELLANT. C) AS ALLEGED NON-GENUINE PURCHASES WITHOUT APPRE CIATING THE FACT THAT NO ADDITION CAN BE MADE IF THE SUPPLIERS ARE NOT TRACEABLE AS PER THE JUDGMENT OF THE BOMBAY HIGH COURT. D) THEREBY TREATING THE SAME AS ALLEGED NON-GENUI NE PURCHASES EVEN THOUGH THE PAYMENTS WERE MADE BY A/C PAYEE CHEQUES FROM THE DISCLOSED B ANK ACCOUNTS. 4) THE ASSESSING OFFICER HAS ERRED IN CHARGING INT EREST U/S 234A, B, C & D AND INITIATED PENALTY U/S 271(L)(C) WHICH IS FURTHER WR ONGLY CONFIRMED BY THE LEARNED COMMISSIONER OF INCOME TAX(A). 2. THE BRIEF FACTS OF THE CASE ARE THAT THE ASSESSE E IS AN INDIVIDUAL AND PROPRIETOR OF M/S PRIME INDUSTRIES ENGAGED IN THE B USINESS OF RESELLING DYES CHEMICALS AND SOLVENTS, FILED HER RETURN OF IN COME FOR AY 2010-11 DECLARING TOTAL INCOME AT RS.5,84,570. THE RETURN OF INCOME WAS PROCESSED U/S 143(1) OF THE ACT. THEREAFTER, THE C ASE HAS BEEN REOPENED U/S 147 OF THE ACT, AFTER RECORDING REASON S FOR REOPENING ON THE BASIS OF INFORMATION RECEIVED FROM DGIT (INV) W HICH SUGGESTS THAT THE ASSESSEE IS THE BENEFICIARY OF ACCOMMODATION EN TRIES PROVIDED BY SUSPICIOUS DEALERS / HAWALA OPERATORS, AS PER THE L IST PREPARED BY SALES- TAX DEPARTMENT. THEREAFTER, THE CASE HAS BEEN SELE CTED FOR SCRUTINY AND NOTICES U/S 143(2) AND 142(1) OF THE ACT, WERE ISSU ED. IN RESPONSE TO 3 NEETA SANJAY SHAH NOTICES, THE AUTHORIZED REPRESENTATIVE OF THE ASSES SEE APPEARED FROM TIME TO TIME AND FILED VARIOUS DETAILS, AS CALLED F OR. DURING THE COURSE OF ASSESSMENT PROCEEDINGS, THE AO CALLED UPON THE ASSE SSEE TO PROVIDE NECESSARY EVIDENCES IN RESPECT OF PURCHASES FROM 9 PARTIES AS LISTED AT PARA 5 OF THE AOS ORDER IN THE LIGHT OF FACTS GATHE RED BY THE DGIT(INV), MUMBAI THAT THE SAID PARTIES ARE HAWALA OPERATORS I NVOLVED IN PROVIDING ACCOMMODATION ENTRIES. IN RESPONSE TO NOTICE, THE ASSESSEE, VIDE LETTER DATED 25-01-2016 SUBMITTED VARIOUS DETAILS INCLUDIN G COPIES OF PURCHASE BILLS AND PAYMENT PROOF FOR SUCH PURCHASES. IN ORD ER TO VERIFY GENUINENESS OF PURCHASES FROM THE ABOVE PARTIES, TH E AO ISSUED NOTICES U/S 133(6); HOWEVER, SUCH NOTICES HAVE BEEN RETURNE D UNSERVED WITH REMARK LEFT OR UNKNOWN. THE AO, BASED ON THE INF ORMATION RECEIVED FROM THE DGIT (INV) COUPLED WITH FURTHER ENQUIRIES MADE DURING THE COURSE OF ASSESSMENT PROCEEDINGS, CAME TO THE CONCL USION THAT PURCHASES FROM THE ABOVE PARTIES ARE BOGUS IN NATUR E AND ACCORDINGLY, ESTIMATED NET PROFIT OF 12.5% ON TOTAL PURCHASES MA DE FROM THOSE PARTIES AND MADE ADDITION OF RS.6,46,545 TO THE TOT AL INCOME. THE RELEVANT PORTION OF THE ORDER OF THE AO IS EXTRACTE D BELOW:- 8. IN VIEW OF THE ABOVE FACTS, IT IS CLEAR THAT EV EN IF THE MATERIAL IN QUESTION SHOWN AS PURCHASE FROM THE ABOVEMENTIONED PARTIES T HROUGH FICTITIOUS INVOICE WAS ACTUALLY PURCHASED BY THE ASSESSEE, IT WAS PURC HASED FROM A SOURCE BEST KNOWN TO THE ASSESSEE, AND NOT FROM THE ABOVE MENTI ONED BOGUS PARTIES. THE RECEIPT OF MATERIAL IS NOT IN MUCH DOUBT BECAUSE TH E ASSESSEE IS A TRADER AND WITHOUT RECEIVING SUCH MATERIAL THE CORRESPONDING S ALES WOULD NOT HAVE-BEEN POSSIBLE. HOWEVER, IT IS AMPLY CLEAR THAT BILL FROM THE SAID PARTY HAS BEEN 4 NEETA SANJAY SHAH PROCURED FOR ACCOMMODATING PURCHASE FRO M THE GREY MARKET, FOR ACCOMMODATING PURCHASE FROM THE GREY MARKET. 8.1 AFTER CONSIDERING THE ENTIRE MATERIAL, I AM OF THE OPINION THAI THS ASSESSEE DID NOT PURCHASE THE GOODS FROM THE PARTY MENTIONED IN THE SALE BILL. THEREFORE, PURCHASE RATE MENTIONED IN THE ALLEGED SALES BILL C ANNOT BE ACCEPTED. ANY PERSON WHO PURCHASES GOODS FROM THE GREY MARKET DOES IT FO R GETTING SOME BENEFIT. THE RATES MAY BE LOWER IN GREY MARKET, OR THERE COULD B E BENEFIT OF SALES TAX. THIS MAY ALSO BE ONE OF THE FACTORS DUE TO WHICH THE SEL LER MAY BE WILLING TO CHARGE LOWER RATES FOR UNACCOUNTED GOODS AS COMPARED TO AC COUNTED GOODS. HENCE THE MARGINS ACHIEVED MUST BE HIGHER THAN THOSE MADE IN THE COURSE OF NORMAL TRADING. THEREFORE, I AM INCLINED TO BELIEVE THAT A N ADDITION ON ACCOUNT OF A HIGHER MARGIN WOULD BE FAIR AND EQUITABLE. 8.2 HOWEVER THE VITAL QUESTION THAT ARISES FOR CONS IDERATION HERE IS WHETHER THE ENTIRE AMOUNT OF PURCHASES SHOULD BE ADDED BACK TO THE INCOME OF THE ASSESSEE OR ONLY THE PROFIT ELEMENT EMBEDDED THEREIN WAS TO ASCERTAIN, WHETHER THE PURCHASE THEMSELVES WERE COMPLETELY BOGUS AND NON-E XISTENT OR THAT THE PURCHASES WERE ACTUALLY MADE BUT NOT FROM THE PARTI ES FROM WHOM IT WAS CLAIMED TO HAVE BEEN MADE AND INSTEAD MAY HAVE BEEN PURCHAS ED FROM GREY MARKET WITHOUT BILLING OR DOCUMENTATION. AS STATED ABOVE, DURING THE COURSE OF ASSESSMENT PROCEEDINGS, THE ASSESSEE HAS SUBMITTED THAT HE HAS SOLD THE GOODS PURCHASED FROM THE ALLEGED BOGUS PARTIES TO VARIOUS PARTIES. THAT BEING THE POSITION, ONLY THE PROFIT ELEMENT EMBEDDED IN SUCH PURCHASES CAN BE ADDED TO THE INCOME OF THE ASSESSEE. FURTHER, THERE WILL BE INFLATION OF PURCHASES ALSO, WHICH MUST BE TAKEN INTO ACCOUNT. THESE TWO ITEMS A DDED TOGETHER WILL DEFINITELY BE AB'OUT 12.5% OF THE COST OF DISPUTED PURCHASES. 8.3 IN THE INSTANT CASE ALSO, THE PURCHASE HAVE BEE N MADE BY THE ASSESSEE NOT FROM THE PARTIES FROM WHOM IT IS SHOWN TO HAVE BEEN PURCHASED BUT FROM 2 DIFFERENT SOURCE WHICH THE ASSESSEE DID NOT DISCLOS E TO THE DEPARTMENT. ONUS TO PROVE ANY EXPENDITURE IS ON ASSESSEE AND ASSESSEE D ID NOT PROVE PURCHASES FROM THE PARTIES IT CLAIMED TO HAVE BEEN PURCHASED. HENCE, ONUS WAS NOT DISCHARGED BY THE ASSESSEE. 8.4 IN VIEW OF THE DISCUSSION AT FOREGOING PARAS, I T IS HELD THAT THE ASSESSEE HAS INFLATE THE PURCHASES PRICE /COST SAVE D IN BUYING FROM UNACCOUNTED SOURCES TO THE TUNE OF RS 6,46,545/- BE ING 12.5% OF NON- GENUINE PURCHASES OF RS 51.72.357/- FOR THE YEAR UN DER CONSIDERATION, AND THE SAME IS ACCORDINGLY, DISALLOWED AND ADDED BACK TO THE TOTAL INCOME OF THE ASSESSEE. PENALTY PROCEEDINGS U/S 271(1) (C) AR E SEPARATELY INITIATED FOR FURNISHING INACCURATE PARTICULARS OF INCOME AND FOR CONCEALING THE INCOME. 3. AGGRIEVED BY THE ASSESSMENT ORDER, ASSESSEE PREF ERRED APPEAL BEFORE THE CIT(A). BEFORE THE CIT(A), ASSESSEE HAS CHALLENGED REOPENING OF ASSESSMENT ON THE GROUND THAT THE AO H AS REOPENED THE ASSESSMENT ON MERE CHANGE OF OPINION WITHOUT THERE BEING ANY FRESH MATERIAL TO FORM REASONABLE BELIEF OF ESCAPEMENT OF INCOME WHICH IS 5 NEETA SANJAY SHAH EVIDENT FROM THE FACT THAT THE AO HAS RECORDED REAS ONS FOR REOPENING OF ASSESSMENT ON THE BASIS OF INFORMATION RECEIVED FRO M DGIT (INV). THE ASSESSEE ALSO FILED ELABORATE WRITTEN SUBMISSIONS O N THE ISSUE OF ADDITION MADE BY THE AO TOWARDS ESTIMATION OF NET P ROFIT ON ALLEGED BOGUS PURCHASES. THE SUM AND SUBSTANCE OF THE ARGU MENTS OF THE ASSESSEE ARE THAT THE AO HAS MADE ADDITION TOWARDS BOGUS PURCHASES ONLY ON THE BASIS OF THIRD PARTY STATEMENTS WITHOUT PROVIDING AN OPPORTUNITY OF CROSS EXAMINATION OF THE PARTIES TO THE ASSESSEE IGNORING ALL EVIDENCES FILED BY THE ASSESSEE INCLUDING PURCH ASE BILLS AND PAYMENT PROOF FOR SUCH PURCHASES. 4. THE CIT(A), AFTER CONSIDERING RELEVANT SUBMISSIO NS OF THE ASSESSEE AND ALSO RELYING UPON VARIOUS JUDICIAL PRECEDENTS, INCLUDING THE JUDGEMENT OF HONBLE SUPREME COURT IN THE CASE OF P VS BEEDIES PVT LTD 273 ITR 13 (SC), REJECTED GROUND TAKEN BY THE A SSESSEE CHALLENGING REOPENING OF THE ASSESSMENT ON THE GROUND THAT THE AO HAS VALIDLY REOPENED ASSESSMENT ON THE BASIS OF INFORMATION REC EIVED FROM EXTERNAL AGENCIES LIKE SALES-TAX DEPARTMENT AND DGIT (INV) W HICH CONSTITUTES NEW MATERIAL, THEREFORE, THERE IS NO MERIT IN THE A RGUMENTS OF THE ASSESSEE THAT THE REOPENING OF ASSESSMENT IS MERELY ON CHANGE OF OPINION. INSOFAR AS ADDITIONS MADE TOWARDS ESTIMAT ION OF PROFIT ON ALLEGED BOGUS PURCHASES, THE LD.CIT(A), AFTER CONSI DERING RELEVANT FACTS 6 NEETA SANJAY SHAH AND ALSO BY RELYING UPON THE DECISION OF HONBLE GU JARAT HIGH COURT IN THE CASE OF CIT VS SIMIT P SHETH 356 ITR 341 (GUJ) HELD THAT ALTHOUGH ASSESSEE HAS FILED CERTAIN BASIC EVIDENCE LIKE PURC HASE BILLS AND PAYMENT PROOF, FAILED TO FILE FURTHER EVIDENCE IN THE BACKDROP OF CLEAR FINDINGS FROM DGIT(INV) AND SALES-TAX DEPARTMENT TH AT THE PARTIES ARE HAWALA OPERATORS INVOLVED IN PROVIDING ACCOMMODATIO N ENTRIES. THEREFORE, BY FOLLOWING THE DECISION OF HONBLE GUJ ARAT HIGH COURT, HE OPINED THAT THE AO WAS RIGHT IN ESTIMATING 12.5% NE T PROFIT ON ALLEGED BOGUS PURCHASES. THE RELEVANT PORTION OF THE ORDER OF LD. CIT(A) IS EXTRACTED BELOW:- XIII. IN THE PRESENT FACTS AND CIRCUMSTANCE'S OF I LIE CANE, THE CASE OF THE AO IS THAT THE APPELLANT ONLY TOOK BILLS FROM THE ABOVE PARTIES TO EXPLAIN THE PURCHASES MADE ALBEIT FROM OPEN MARKET. IDENTICAL ISSUE CAME UP BEFORE THE HON 'BLE HIGH COURT OF GUJARAT IN THE CASE OF CIT VS. BHOLANATH POLY FAB FVT. LTD. REPORTED I N 35S ITR 290 (GUJ WHEREIN THE HON'BLE ITAT WAS OF THE VIEW THAT ONLY PROFIT MARGI N EMBEDDED IN SUCH PURCHASES WOULD BE SUBJECTED TO TAX. THE HON'BLE TRIBUNAL RELIED ON ITS EARLIER DECISION IN THE CASE OF M/S SAKET STEEL TRADERS VS ITO (ITA NO. 2801/AHD/2008 D ATED 20/05/2008) AND ALSO MADE REFERENCE TO THE DECISION IN THE CASE OF VIJAYA PRO TEIN VS CIT 58 ITD 423 (AHDJ ON APPEAL BY THE DEPARTMENT FILED IN THE CASE OF BHOLA NATH POLY FAB PVT. LTD, THE HON'BLE HIGH COURT DISMISSED THE APPEAL AND CONCURRED WITH THE FINDINGS OF HON'BLE TRIBUNAL THAT NOT ENTIRE PURCHASE PRICE B UT PROFIT ELEMENT EMBEDDED IN SUCH PURCHASES WOULD BE LIABLE TO TAX. INFACT THE APPELLANT ALSO PLACED RELIANCE ON THE JUDGEMENT IN THE CASE OF BHOLANATH POLY FAB PVT. LT D. AND HAS ADMITTED THAT PROFIT ELEMENT IS REQUIRED TO BE TAXED. XIV. THUS IN VIEW OF THE ABOVE FACTS AND CIRCUMSTANCES O F THE CASE AND THE RECENT JUDGEMENTS QUOTED AS ABOVE, IT IS OBSERVED THAT THE LIKELIHOOD OF THE PURCHASE PRICE BEING INFLATED CANNOT BE RULED OUT AND THEREFORE IN VIEW OF THE ABOVE, THE AO HAS NOT TREATED THE ENTIRE PURCHASES FROM THE AFORESAID PARTIES TO BE B OGUS BUT HELD TO HAVE BEEN MADE FROM THE PARTIES OTHER THAN THOSE MENTIONED IN THE BOOKS OF ACCOUNTS AND THAT BEING THE POSITION, NOT THE ENTIRE PURCHASE PRICE BUT ONLY TH E PROFIT ELEMENT EMBEDDED IN SUCH PURCHASES HAS BEEN TAXED BY THE AO @ 12.5%. XV. THEREFORE THE POSSIBLE PROFIT OUT OF PURCHASES MADE THROUGH NON GENUINE PARTIES HAS BEEN ESTIMATED BY THE AO WHICH IS COMMENSURATE WITH THE JUDGMENT IN THE CASE OF CIT VS. SIMIT P SHETH 356 ITR 451 (GUJ.) OF HON'BLE GUJ RAT HIGH COURT WHEREIN DISALLOWANCE ON ACCOUNT OF BOGUS PURCHASES IN THE CASE OF TRADER S WAS SUSTAINED AT 12.5% OF THE ALLEGED BOGUS PURCHASES. I 7 NEETA SANJAY SHAH XVI. THE AG HAS ONLY ADDED THE PROFIT ELEMENT EMBED DED IN THE AFORESAID BOGUS PURCHASES @12.5% WHICH SEEMS TO LX: JUSTIFIED IN VI EW OF THE NATURE OF THE BUSINESS OF THE APPELLANT. IN VIEW OF THE FACTS AND CIRCUMSTANCES OF THE CASE AND DISCUSSION HEREIN ABOVE, THE CONTENTIONS AND SUBMIS SIONS OF THE ASSESSEE ARE NOT FOUND TO BE ACCEPTABLE AND ARE THEREFORE REJECTED A ND THE ADDITION MADE BY THE AO OF RS.6,46,545/-IS FOUND TO BE JUSTIFIABLE AND IS A CCORDINGLY UPHELD. 5. THE LD.AR FOR THE ASSESSEE SUBMITTED THAT THE LD .CIT(A) WAS ERRED IN CONFIRMING ADDITION MADE BY THE AO TOWARDS ESTIM ATION OF PROFIT ON ALLEGED BOGUS PURCHASES WITHOUT APPRECIATING THE FA CT THAT THE ASSESSEE HAS FILED VARIOUS DETAILS TO PROVE PURCHASES FROM T HE ABOVE PARTIES ARE GENUINE IN NATURE. THE LD.AR FURTHER SUBMITTED THA T THE AO HAS MADE ADDITIONS ONLY ON THE BASIS OF THIRD PARTY STATEMEN T WITHOUT PROVIDING OPPORTUNITY OF CROSS EXAMINATION TO THE ASSESSEE WH ICH IS A CLEAR CASE OF VIOLATION OF PRINCIPLES OF NATURAL JUSTICE, THER EFORE, THE ADDITION MADE BY THE AO TOWARDS ESTIMATION OF NET PROFIT IS NOT S USTAINABLE UNDER LAW. AS FAR AS REOPENING OF THE ASSESSMENT, THE LD.AR SU BMITTED THAT THE LD.CIT(A) WAS ERRED IN UPHOLDING RE-ASSESSMENT ORDE R PASSED BY THE AO IGNORING VARIOUS DETAILS, WRITTEN SUBMISSIONS AN D CASE LAWS SUBMITTED BY THE ASSESSEE DURING THE COURSE OF ASSE SSMENT PROCEEDINGS. ON THE OTHER HAND, THE LD.DR STRONGLY SUPPORTED THE ORDER OF THE LD.CIT(A). 6. WE HAVE HEARD BOTH THE PARTIES AND PERUSED MATER IALS AVAILABLE ON RECORD. ADMITTEDLY, THE AO HAS REOPENED ASSESSMENT ON THE BASIS OF INFORMATION RECEIVED FROM DGIT(INV) WHICH WAS FURTH ER SUPPORTED BY 8 NEETA SANJAY SHAH INFORMATION RECEIVED FROM SALES-TAX DEPARTMENT AS P ER WHICH, THE LIST PREPARED BY MVAT DEPARTMENT CONTAINED CERTAIN PARTI ES WHO WERE INVOLVED IN PROVIDING ACCOMMODATION ENTRIES. THE A O HAS REOPENED ASSESSMENT ON THE BASIS OF SAID INFORMATION RECEIVE D FROM THE EXTERNAL AGENCIES WHICH CONSTITUTES FRESH MATERIAL FOR THE P URPOSE OF FORMATION OF REASONABLE BELIEF OF ESCAPEMENT OF INCOME. THEREFO RE, WE ARE OF THE CONSIDERED VIEW THAT THERE IS NO MERIT IN THE ARGUM ENT OF THE ASSESSEE THAT THE ASSESSMENT HAS BEEN REOPENED WITHOUT THERE BEING ANY NEW MATERIAL WHICH AMOUNTS TO CHANGE OF OPINION. ACCOR DINGLY, WE REJECT GROUND TAKEN BY THE ASSESSEE CHALLENGING VALIDITY O F REOPENING OF ASSESSMENT. 7. COMING TO THE ADDITION MADE BY THE AO TOWARDS ES TIMATION OF NET PROFIT ON ALLEGED BOGUS PURCHASES. IT IS AN ADMITT ED FACT THAT THE ASSESSEE HAS MADE PURCHASES FROM CERTAIN PARTIES, W HO WERE APPEARING IN THE LIST OF SUSPICIOUS DEALERS / HAWALA OPERATOR S PREPARED BY SALES-TAX DEPARTMENT. IT IS ALSO AN ADMITTED FACT THAT NOTIC ES ISSUED U/S 133(6() TO SUCH PARTIES RETURNED UNSERVED WITH THE REMARK LEF T OR NOT KNOWN. AT THE SAME TIME, THE ASSESSEE ALSO FILED CERTAIN BASI C EVIDENCES LIKE PURCHASE BILLS AND BANK DETAILS FOR HAVING MADE PAY MENT BY ACCOUNT PAYEE CHEQUES. UNDER THESE CIRCUMSTANCES, IT IS VE RY DIFFICULT TO ACCEPT THAT PURCHASES FROM THE ABOVE PARTIES ARE GENUINE I N NATURE AND 9 NEETA SANJAY SHAH SUPPORTED BY PROPER EVIDENCE. HAVING SAID SO, LET US EXAMINE THE PROFIT ESTIMATED BY THE AO. THE AO HAS ESTIMATED 12.5% PR OFIT ON ALLEGED BOGUS PURCHASES. VARIOUS COURTS AND TRIBUNALS HAVE CONSISTENTLY UPHELD ESTIMATION OF NET PROFIT AT 12 TO 15% IN CAS E OF ALLEGED BOGUS PURCHASES DEPENDING UPON FACTS AND CIRCUMSTANCES OF EACH CASE. THE HONBLE GUJARAT HIGH COURT IN THE CASE OF CIT VS SI MIT P SHETH (SUPRA) HELD THAT NO UNIFORM YARDSTICK COULD BE APPLIED FOR ESTIMATION OF NET PROFIT AND SUCH ESTIMATION SHOULD BE BASED ON FACTS OF EAC H CASE. THE HONBLE GUJARAT HIGH COURT FURTHER OBSERVED THAT CO NSIDERING THE FACT THAT THE ASSESSEE HAS PAID VAT AT 10.5% HAS MADE A REASONABLE ESTIMATE OF 12.5% PROFIT ON ALLEGED BOGUS PURCHASES INCLUDING 2% MARGIN + 10.5% VAT PAID BY THE ASSESSEE. THE CO-OR DINATE BENCHES OF TRIBUNAL IN A NUMBER OF CASES HAS TAKEN A CONSISTEN T VIEW AND HELD THAT 12.5% PROFIT ESTIMATION ON ALLEGED BOGUS PURCHASES IS FAIR AND REASONABLE. THEREFORE, CONSISTENT WITH THE VIEW TA KEN BY THE CO-ORDINATE BENCH AND CONSIDERING THE FACTS AND CIRCUMSTANCES O F THE CASE, WE ARE OF THE CONSIDERED VIEW THAT THE AO WAS RIGHT IN EST IMATING 12.5% PROFIT ON ALLEGED BOGUS PURCHASES. THE LD.CIT(A) AFTER CO NSIDERING RELEVANT FACTS HAS RIGHTLY UPHELD ADDITION MADE BY THE AO. WE DO NOT FIND ANY ERROR IN THE ORDER OF THE LD.CIT(A). HENCE, WE ARE INCLINED TO UPHOLD THE FINDINGS OF THE LD.CIT(A) AND DISMISS APPEAL FILED BY THE ASSESSEE. 10 NEETA SANJAY SHAH 7. IN THE RESULT, APPEAL FILED BY THE ASSESSEE IS D ISMISSED. ORDER PRONOUNCED IN THE OPEN COURT ON 20 TH JULY, 2018. SD/- SD/- (JOGINDER SINGH) (G MANJUNATHA) JUDICIAL MEMBER ACCOUNTANT MEMBER MUMBAI, DT : 20 TH JULY, 2018 PK/- COPY TO : 1. APPELLANT 2. RESPONDENT 3. CIT(A) 4. CIT 5. DR /TRUE COPY/ BY ORDER SR.PS, ITAT, MUMBAI