ITO WD 23(2)(4), MUMBAI V. MUKESH KANTIAL SHAH (HUF), MUMBAI

ITA 6756/MUM/2014

• Counselvise Citation: [2017] 128 COUNSELVISE.COM (IT) 0798 (ITAT-MUMBAI)
• Duration Of Justice: 2 year(s) 6 month(s) 11 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 19-05-2017
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: B
• Assessment Year: 2009-2010
• Appeal Filed On: 07-11-2014
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: JYOTILAKSHMI NAYAK
• Assessee Lawyers: DEVENDRA H JAIN
• Keywords: Bogus purchase; Unexplained investment; Wrong claim; Accommodation entries
• Section: 69C; 143(3); 133(6); 147; 69

Judgement Text

P AGE | 1 IN THE INCOME TAX APPELLATE TRIBUNAL B BENCH, MUMBAI BEFORE SHRI B.R BASKARAN , AM AND SHRI RAVISH SOOD,JM ./ I.T.A. NO. 6756 / MUM/ 201 4 ( / ASSESSMENT YEAR: 2009 - 10 ) INCOME TAX OFFICER, WARD 23(2)(4); MUMBAI / VS. M/S MUKESH KANTILAL SHAH (HUF) B - 12, CHANDRA NIWAS, P.K ROAD, PANCH RASTA, MULUND (WEST) MUMBAI 400 080. ./ ./ PAN/GIR NO. AAGHS 3814 L ( / APPELLANT ) : ( / RESPONDENT ./ I.T.A. NO. 75 / MUM/ 2014 ( / ASSESSMENT YEAR: 2009 - 10) M/S MUKESH KANTILAL SHAH (HUF) B - 12, CHANDRA NIWAS, P.K ROAD, PANCH RASTA, MULUND (WEST) MUMBAI 400 080. INCOME TAX OFFICER, WARD 23(2)(4); MUMBAI / ASSESSEE BY : SHRI DEVENDRA H. JAIN / REVENUE BY : SMT. JYOTILAKSHMI NAYAK / DATE OF HEARING : 23/03/2017 / DATE OF PRONOUNCEMENT : 19 /05/2017 / O R D E R PER RAVISH SOOD, JM : THAT THE PRESENT SET OF APPEALS ARISES FROM THE ORDER PASSED BY THE CIT(A) IN THE CASE OF THE ASSESSEE FOR THE A.Y 2009 - 10. THAT THE ASSESSEE AND THE REVENUE BY WAY OF CROSS APPEALS HAD ASSAILED THE ORDER PASSED BY THE CIT(A), DATED 25/08/2014, WHICH IN IT SELF ARISES FROM THE ORDER PASSED BY THE ASSESSING OFFICER U/S 143(3) OF THE INCOME TAX ACT, 1961 (FOR SHORT ACT), P AGE | 2 DATED 10/03/2014 FOR A.Y.2009 - 10. WE FIRST ADVERT TO THE APPEAL OF THE REVENUE. I.T.A.NO. 6756 /MUM/2014 (REVENUES APPEAL A.Y. 200 9 - 10 ) 2. BRIEFLY STATED, THE FACTS OF THE CASE ARE THAT THE ASSESSEE HAD FILED ITS RETURN OF INCOME ON 11.09.2009, DECLARING INCOME AT RS. 9,68,150/ - , WHICH WAS PROCESSED AS SUCH U/S 143(1) OF THE ACT. THAT THEREAFTER INFORMATION WAS RECEIVED BY THE A.O FROM THE OFFICE OF THE DG IT (INV . ) THAT THE ASSESSEE HAD MADE PURCHASES AGGREGATING TO RS. 69,58,432/ - FROM TWO PARTIES, VIZ. M/S SANDESH SALES PVT. LTD. AND M/S MANI BHADRA SALES PVT. LTD. , AS UNDER: - NAME OF THE PARTY PAN A.Y AMOUNT (RS.) M/S SANDESH SALES P. LTD. AAKCS7499G 2009 - 10 RS. 43,27,232/ - M/S MANI BHADRA SALES P. LTD. AAFCM0272M 2009 - 10 RS. 26,31,200/ - , WHEREIN BOTH OF THE AFORESAID PARTIES AS PER THE INFORMATION RECEIVED FROM THE SALES TAX DEPARTMENT WERE INVOLVED IN THE BUSINESS OF PROVIDING BOGUS BILLS AND HAD BEEN UPLOADED AS HAWALA PARTIES ON THE WEBSITE OF THE SALES TAX DEPARTMENT . THE A.O THUS ON THE BASIS OF THE AFORESAID INFORMATION REOPENED THE CASE OF THE ASSESSEE UNDER SEC. 147 OF THE ACT. 3. THAT DURING THE COURSE OF THE ASSESSMENT PROCEEDINGS IT WAS OBSERVED BY THE A.O THAT ON THE BASIS OF INFORMATION RECEIVED FROM THE SALES TAX DEPARTMENT, SEARCHES WERE CONDUCTED BY THE DGIT(INV), MUMBAI, WHICH THEREIN REVEALED THAT THE AFORESAID PARTIES , VIZ. M/S SANDESH SALES PVT. LTD. AND M/S MANI BHADRA SALES PVT. LTD., WERE INVOLVED IN THE BUSINESS OF PROVIDING ACCOMMODATION ENTRIES , AND AS SUCH WERE ONLY ISSUING BILLS AND NOT DOING ANY GENUINE BUSINESS. THE A.O ON THE BASIS OF THE P AGE | 3 AFORESAID INFORMATION ISSUED NOTICES U/S 133(6) TO THE AFORESAID TWO PARTIES TO ASCERTAIN THE GENUINENESS OF THE PURCHASE S MADE BY THE ASSESSEE FROM THEM , BUT HOWEVER THE SAID NOTICES WERE RETURNED BY THE POSTAL AUTHORITIES WITH THE REMARK S NOT KNOWN. THE A.O THEREAFTER DIRECTED THE ASSESSEE TO PRODUCE BOTH THE PARTIES FOR VERIFICATION OF THE GENUINE NE SS OF THE RESPECTIVE PURCHASE TRANSACTIONS, AS WELL AS PRODUCE ITS BOOKS OF ACCOUNTS, CORRESPONDING SALES, TRANSPORTATION BILLS ETC. THE ASSESSEE IN ORDER TO SUBSTANTIATE THE GENUINENESS AND VERACITY OF ITS PURCHASES, THOUGH PRODUCED BEFORE THE A.O THE COPIES OF THE PURCHASES INVOICES, DELIVERY CHALLANS, LEDGER ACCOUNTS OF PARTIES, STOCK LEDGER, COMPARATIVE STATEMENTS OF SALES AND PURCHASES , TRANSPORTATION V O UCHERS ETC., BUT HOWEVER FAILED TO PRODUCE EITHER OF THE AFORESAID PARTIES FOR EXAMINATION . THE A.O AFTER DELIBERATING ON THE CONTENTIONS OF THE ASSESSEE THEREIN CONCLUDED THAT THE PRODUCTION OF THE PURCHASE INVOICES ETC. AND CLAIM OF THE ASSESSEE THAT THE PAYMENTS TO BOTH OF THE AFORESAID PARTIES WERE MADE THROUGH BANKING CHANNELS WAS IN ITSELF NOT A CONCLUSI VE PROOF TO ESTABLISH THE GENUINENESS OF THE PURCHASE TRANSACTIONS. THE A.O IN THE BACKDROP OF THE AFORESAID FACTS HELD THAT AS THE ASSESSEE HAD FAILED TO SUBMIT THE DETAILS OF TRANSPORTATION OF GOODS WHICH WERE CLAIMED TO HAVE BEEN PURCHASED FROM THE AFOR ESAID PARTIES, AS WELL AS HAD FAILED TO PRODUCE THE PARTIES FOR VERIFICATION OF THE PURCHASE TRANSACTIONS BEFORE HIM, THUS REJECTED THE EXPLANATION OF THE ASSESSEE AND CONCLUDED THAT THE ASSESSEE HAD AS A MATTER OF FACT NOT CARRIED OUT ANY PURCHASE OF GOOD S FROM THE AFOREMENTIONED PARTIES, BUT HAD MERELY OBTAINED THE PURCHASE BILLS AMOUNTING TO RS. 69,58,432/ - FROM THE M. THE A.O THUS ON THE BASIS OF HIS AFORESAID OBSERVATIONS HELD THAT THE ASSESSEE HAD RAISED A BOGUS CLAIM IN RESPECT OF PURCHASES AMOUNTING TO RS. P AGE | 4 69,58,432/ - AND ON THE SAID PREMISES REJECTED THE BOOK RESULTS OF THE ASSESSEE IN TERMS OF THE PROVISIONS OF SEC. 145(3) OF THE ACT . THE A.O ON THE BASIS OF HIS AFORESAID CONVICTION, THOUGH ON THE ONE HAND OBSERVED THAT AS THE ASSESSEE HAD CLAIMED TO HAVE INCURRED EXPENDITURE OF RS. 69,58,432/ - ON PURCHASE OF GOODS FROM THE AFORESAID PARTIES, FOR WHICH THE SOURCE HAVE NOT BEEN SATISFACTORILY EXPLAINED, THEREFORE MADE AN ADDITION OF RS. 69,58,432/ - UNDER SEC. 69C OF THE ACT, WH ILE FOR ON THE OTHER HAND OBSERVED THAT AS IT COULD NOT BE RULED OUT THAT THE ASSESSEE WAS IN POSSESSION OF UNDISCLOSED STOCK OF GOODS WITH HIM, AND THUS MIGHT HAVE ARRANGED FOR THE PURCHASE BILLS IN ORDER TO FACILITATE SALE OF THE SAID UNDISCLOSED STOCK T HROUGH HIS BOOKS OF ACCOUNT , THEREFORE ALSO ON THE SAID COUNT JUSTIFIED THE ADDITION MADE ON ACCOUNT OF AN UNEXPLAINED INVESTMENT U/S 69 OF THE ACT . THE A.O THEREAFTER ASSESSED THE INCOME OF THE ASSESSEE AT RS. 79,26,580/ - . 4. THE ASSESSEE BEING AGGRIEVED WITH THE ORDER OF THE A.O, THEREIN CARRIED THE MATTER IN APPEAL BEFORE THE CIT(A). THE CIT (A) OBSERVED THAT THE A.O WHILE FRAMING THE ASSESSMENT HAD CATEGORICALLY HELD THAT THE ASSESSEE HAD, IN FACT, MADE PURCHASES OF THE GOODS UNDER CONSIDERATION, AND ALSO MADE SALES OUT OF THE SAID PURCHASES. THE CIT(A) FURTHER OBSERVED THAT THE A.O WHILE FRA MING THE ASSESSMENT HAD DISALLOWED THE PURCHASES FOR THE REASON THAT THE SAID PARTIES, VIZ. M/S SANDESH SALES PVT. LTD. AND M/S MANI BHADRA SALES PVT. LTD., WERE NON - EXISTENT AT THE ADDRESS PROVIDED BY THE ASSESSEE, OR, THEIR NAMES WERE FOUND IN THE LIST O F HAWALA DEALERS PUBLISHED BY THE MVAT DEPARTMENT. THUS IN THE BACKDROP OF THE AFORESAID OBSERVATIONS OF THE A.O AS W ERE BORNE FROM THE ASSESSMENT ORDER, THE CIT(A) OBSERVED THAT THE A.O HAD CONCLUDED THAT THE ASSESSEE HAD CARRIED OUT P AGE | 5 PURCHASES FROM OTHER UNDISCLOSED PARTIES AND HAD OBTAINED BOGUS AND INFL ATED BILLS FROM THE AFORESAID HAWALA PARTIES, AS WELL AS HELD THAT THE ASSESSEE HAD MADE CASH PURCHASES FROM UNDISCLOSED PARTIES . 5. THE CIT(A) THUS IN THE BACKDROP OF THE AFORESAID FACTS BORNE FROM THE A SSESSMENT ORDER, THEREIN CONCLUDED, AS UNDER: - (I). T HAT THE A.O HAD ACCEPTED THE FACT THAT THE PURCHASES WERE MADE BY THE ASSESSEE . THE ASSESSEE HAD DURING THE COURSE OF THE ASSESSMENT PROCEEDINGS FURNISHED WITH THE A.O ITS BANK STATEMENT TO PROVE THAT T HE PAYMENTS IN RESPECT OF THE PURCHASES WERE MADE VIDE ACCOUNT PAYEE CHEQUES , WHICH FACTUAL POSITION HAD NEITHER BEEN DOUBTED BY THE A.O . , NOR AN Y MATERIAL HAD BEEN MADE AVAILABLE ON RECORD WHICH COULD GO TO SUGGEST THAT THE AMOUNTS PAID BY THE ASSESSEE TO THE HAWALA DEALERS HAD BEEN RETURNED BACK TO THE ASSESSEE BY THE AFORESAID PARTIES . THUS ON A CONJOINT PERUSAL OF THE AFORESAID FACTS, AND IN THE ABSENCE OF ANY MATERIAL BROUGHT ON RECORD TO SHOW THAT THE ASSESSEE HAD MADE PAYMENTS IN CASH FOR THE PURCHASES OTHER THAN WHAT HAD BEEN PAID BY CHEQUES, THE VIEW OF THE A.O THAT THE ASSESSEE HAD CARRIED OUT CASH PURCHASES COULD NOT BE ACCEPTED . (II). THAT THE OBSERVATION OF THE A.O THAT THE ASSESSEE HAD ARRANGED BOGUS BILLS TO SELL HIS UNDISCLOSED STOCK OF GOODS WAS NOT BACKED BY ANY EVIDENCE OR MATERIAL ON RECORD, AND THE SAME BEING BASED ON MERE CONJECTURES AND SURMISES, THUS COULD NOT BE AC CEPTED. (III). THAT EVEN IF IN REALITY, THE PURCHASES HAVE BEEN MADE BY THE ASSESSEE FROM PARTIES OTHER THAN TH O SE APPEARING IN THE P AGE | 6 ASSESSES RECORDS, AND THE HAWALA PARTIES HAVE PROVIDED MERELY THEIR NAMES TO THE TRANSACTIONS, IT CANNOT BE SAID, IN THE AB SENCE OF ANY MATERIAL ON RECORD THAT ANY PAYMENT WAS MADE BY THE ASSESSEE OUTSIDE THE BOOKS OF ACCOUNTS FOR THE PURCHASES OF RS. 69,58,432/ - , AND THUS IN THE ABSENCE OF ANY MATERIAL BROUGHT ON RECORD, NO ADDITION OF THE AFORESAID AMOUNT OF RS. 69,58,432 / - (SUPRA) COULD HAVE BEEN MADE ON THE GROUND THAT THE ASSESSEE HAD MADE PAYMENTS OUT OF UNDISCLOSED SOURCES . (IV). THAT ON THE CONSIDERATION OF THE FACTS AND CIRCUMSTANCES OF THE CASE, IT EMERGED THAT THE ASSESSEE HAD PURCHASED THE GOODS, AS HELD BY THE A.O HIMSELF, BUT M AY BE FROM UNREGISTERED DEALERS WHO DO NOT ACCOUNT FOR THEIR TRANSACTIONS AND, HENCE DO NOT ISSUE BILLS TO THE PARTIES FOR THE SALES MADE BY THEM. THUS IT WAS IN ORDER TO FILL THE GAP THAT THE SERVICES OF THE AFORESAID HAWALA PARTIES WHO PROVIDE ACCOM M ODATION BILLS TO LEND AUTHENTICITY TO THE TRANSACTIONS AT PRICE, WERE AVAILED, IN ORDER TO GIVE THE COLOR OF GENUINENESS TO THE PURCHASES MADE BY THE ASSESSEE FROM THE AFORESAID PARTIES OPERATING IN THE GREY MARKET. ( V). THAT PLACING RELIANCE ON THE JUDGMENT OF THE HONBLE GUJARAT HIGH COURT IN THE CASE OF CIT VS. BHOLANATH POLYFAB P. LTD. (2013) 355 ITR 290 (GUJ) , IT WAS HELD THAT AS IN THE CASE OF THE PRESENT ASSESSEE IT WAS OBSERVED BY THE A.O THAT THE ASSESSEE DID PURCHASE AND SELL THE GOODS AND HAD OFFERED THE INCOME ON SUCH SALE OF GOODS, THEREFORE NEITHER IT COULD BE HELD THAT THE ASSESSEE HAD CARRIED OUT PURCHASES IN CASH, NOR THE ENTIRE PURCHASES COULD BE DISALLOWED. P AGE | 7 (V I ). THAT THE TRADING ACCOUNT FURNISHED BY THE ASSESSEE AT THE BEHEST OF THE CIT(A) WITH A DIRECTION TO CO - RELATE THE PURCHASES WITH THE SALES IN QUANTITY AND VALUE, REVEALED A LOSS OF R S . 2,65,574/ - , WHICH PROVED THAT THE ASSESSEE HAD TAKEN THE PURCHASE BIL LS IN ORDER TO REDUCE ITS PROFITS. THAT IN THE BACKDROP OF THE AFORESAID FACTS THE CIT(A) HELD THAT FROM T HE AFORESAID LOSS OF RS. 2,65,574/ - , IT COULD SAFELY BE GATHERED THAT THE ASSESSEE HAD TAKEN THE PURCHASE BILLS IN ORDER TO REDUCE ITS PROFITS . THE CI T(A) THUS ON THE BASIS OF HIS AFORESAID O BSERVATIONS DIRECTED THAT THE LOSS OF RS. 2,65,574/ - (SUPRA) IN LIGHT OF THE ATTENDING CIRCUMSTANCES WAS LIABLE TO B E DISALLOWED. (VI I ). THAT KEEPING IN VIEW THE FACT THAT EXCLUDING THE PURCHASES MADE FROM THE HAWA LA PARTIES, THE ASSESSEE HAD SHOWN OVERALL GROSS PROFIT, IT WAS THUS OBSERVED BY THE CIT(A) THAT THE PROBABILITY THAT THE ASSESSEE HAD EARNED PROFIT ON THE PURCHASE TRANSACTIONS OF RS. 69,58,432/ - COULD NOT BE RULED OUT. THUS BESIDES THE ADDITION ON ACCOUN T OF DISALLOWANCE OF LOSS OF RS. 2,65,574/ - (SUPRA), ADDITION OF GROSS PROFIT OF 10%, I.E RS. 6,95,843/ - WAS DIRECTED TO BE MADE, AND AS A CONSEQUENCE THERE OF THE BALANCE ADDITION OF RS. 59,97,015/ - [I.E RS. 69,58,432/ - ( - ) RS. 2,65,574/ - ( - ) 6,95,843/ - ] W AS DIRECTED TO BE DELETED. 6. THAT THE REVENUE BEING AGGRIEVED WITH THE ORDER OF THE CIT(A) HAD THEREIN CARRIED THE MATTER IN APPEAL BEFORE US. THE LD. DEPARTMENTAL REPRESENTATIVE (FOR SHORT D.R) SUBMITTED THAT THE CIT(A) FAILING TO APPRECIATE THE FACTS OF THE CASE IN THE RIGHT PERSPECTIVE, HAD THUS WRONGLY DISLODGED THE WELL REASONED ORDER OF THE A.O. THE LD. D.R DRAWING OUR ATTENTION TO PAGE 4 P AGE | 8 OF THE ASSESSMENT ORDER, THEREIN SUBMITTED THAT THE A.O FINDING THAT THE ASSESSEE HAD FAILED TO PLACE ON RECORD THE LORRY/TRUCK DETAILS THROUGH WHOM THE GOODS WERE TRANSPORTED, ,WAS NOT FOUND TO HAVE MAINTAINED ANY STOCK REGISTER, AS WELL AS FAILED TO PRODUCE FOR VERIFICATION EITHER OF THE AFORESAID PARTIE S , VIZ. M/S SANDESH SALES PVT. LTD. AND M/S MANI BHADRA SALES PVT. LTD, BOTH OF WHICH HAD BEEN LABELED BY THE SALES TAX DEPARTMENT AS HAWALA PARTIES, DESPITE SPECIFIC DIRECTIONS OF THE A.O , THUS IN THE BACKDROP OF THE AFORESAID FACTS RIGHTLY CONCLUDED T HAT THE ASSESSEE HAD CARRIED OUT BOGUS PURCHASES, AND THEREIN MADE A CONSEQUENTIAL ADDITION OF RS. 69,58,432/ - (SUPRA) IN THE HANDS OF THE ASSESSEE. T HE LD. D.R DRAWING OUR ATTENTION TO PAGE 3 PARA 2.4 THEREIN AVERRED THAT THE CIT(A) HAD WRONGLY OBSERVED THAT THE A.O HAD HELD THAT THE ASSESSEE HAD SOLD THE GOODS PURCHASED FROM THE AFORESAID PARTIES. PER CONTRA, THE LD. AUTHORIZED REPRESENTATIVE (FOR SHORT A.R) FOR THE ASSESSEE PLACED RELIANCE ON THE ORDER OF THE CIT(A). 7 . WE HAVE HEARD THE AUTHORIZED REPRESENTATIVES FOR BOTH THE PARTIES, PERUSED THE ORDERS OF THE LOWER AUTHORITIES AND THE MATERIAL PRODUCED BEFORE US. WE ARE NOT PERSUADED TO ACCEPT THE CONTENTION OF THE LD. D.R THAT THE CIT(A) HAD WRONGLY OBSERVED THAT AS PER THE A.O THE ASSESSEE HAD SOLD THE GOODS PURCHASED FROM THE AFORESAID PARTIES, AS WE FIND THAT CLEAR OBSERVATIONS OF THE A.O TO THE SAID EFFECT ARE FOUND RECORDED AT PAGE 4 PARA 3 (UNNUMBERED PARAGRAPH) OF THE ASSESSMENT ORDER. WE ARE OF THE CONSI DERED VIEW THAT THE CIT(A) HAD CORRECTLY OBSERVED THAT NOW WHEN THE A.O HAD ACCEPTED THE FACT THAT THE PURCHASES WERE MADE BY THE ASSESSEE, AND THE ASSESSEE HAD DURING THE COURSE OF THE ASSESSMENT PROCEEDINGS P AGE | 9 FURNISHED WITH THE A.O ITS BANK STATEMENT TO PR OVE THAT THE PAYMENTS IN RESPECT OF THE PURCHASES WERE MADE VIDE ACCOUNT PAYEE CHEQUES, WHICH FACTUAL POSITION HAD NEITHER BEEN DOUBTED BY THE A.O., NOR ANY MATERIAL HAD BEEN MADE AVAILABLE ON RECORD WHICH COULD GO TO SUGGEST THAT THE AMOUNTS PAID BY THE A SSESSEE TO THE HAWALA DEALERS HAD BEEN RETURNED BACK TO THE ASSESSEE BY THE AFORESAID PARTIES, THEREFORE , ON A FAIR READING OF THE AFORESAID FACTS, IN THE ABSENCE OF ANY MATERIAL B E ING MADE AVAILABLE ON RECORD WHICH COULD GO TO SHOW THAT THE ASSESSEE HAD M ADE ANY PAYMENTS IN CASH, OTHER THAN WHAT HAD BEEN PAID BY CHEQUES FOR THE PURCHASES UNDER CONSIDERATION, THE VIEW OF THE A.O THAT THE ASSESSEE HAD CARRIED OUT CASH PURCHASES COULD NOT BE ACCEPTED. WE FURTHER ARE OF THE CONSIDERED VIEW THAT THE CIT(A) HAD RIGHTLY HELD THAT THE OBSERVATION OF THE A.O THAT THE ASSESSEE HAD ARRANGED BOGUS BILLS TO SELL HIS UNDISCLOSED STOCK OF GOODS, LACKED EVIDENCE AND AS SUCH WAS NOTHING BETTER THAN A HOLLOW ALLEGATION, WHICH THUS COULD NOT ACCEPTED. THAT EVEN IF IN REALITY, THE PURCHASES WERE MADE BY THE ASSESSEE FROM PARTIES OTHER THAN THE PARTIES APPEARING IN THE ASSESSES RECORDS, AND THE HAWALA PARTIES HAVE PROVIDED MERELY THEIR NAMES TO THE TRANSACTIONS, EVEN THEN IN THE ABSENCE OF ANY M ATERIAL ON RECORD WHICH COULD PROVE THAT ANY PAYMENT WAS MADE BY THE ASSESSEE OUTSIDE THE BOOKS OF ACCOUNTS FOR THE PURCHASES OF RS. 69,58,432/ - , NO ADDITION WAS CALLED FOR IN THE HANDS OF THE ASSESSEE ON THE GROUND THAT PAYMENTS IN RESPECT OF THE SAID PURCHASES WERE MADE BY THE ASSES SEE OUT OF HIS UNDISCLOSED SOURCES. WE FIND OURSELVES T O BE IN AGREEMENT WITH THE OBSERVATIONS OF THE CIT(A) AND CONCUR WITH HIS VIEW THAT NOW WHEN THE ASSESSEE HAD DULY ACCOUNTED FOR IN ITS BOOKS OF P AGE | 10 ACCOUNTS THE PURCHASE AND S ALE OF THE GOODS UNDER CONSID ERATION AND OFFERED THE INCOME ON SUCH SALE OF GOODS, THEREFORE NEITHER IT COULD BE HELD THAT THE ASSESSEE HAD CARRIED OUT PURCHASES IN CASH, NOR THE ENTIRE PURCHASES COULD BE DISALLOWED. 8. WE FIND THAT IN THE BACKDROP OF THE FACTS OF THE C ASE, THE CIT(A) IN ALL FAIRNESS AFTER PERUSING THE TRADING ACCOUNT PREPARED BY THE ASSESSEE TO CO - RELATE THE PURCHASES WITH THE SALES , BOTH IN QUANTITY AND VALUE, THEREIN OBSERVING THAT THE SAME REVEALED A LOSS OF RS. 2,65,574/ - AS AGAINST THE OVERALL PROFIT AS STOOD REFLECTED BY THE ASSESSEE, THEREIN BEING OF THE VIEW THAT THE ASSESSEE HAD TAKEN THE PURCHASE BILLS IN ORDER TO REDUCE ITS PROFITS, THUS DIRECTED DISALLOWANCE OF THE AFORESAID LOSS. WE FURTHER FIND THAT THE CIT(A) AFTER TAKING DUE COGNIZANCE OF THE FACT THAT THE PROBABILITY THAT THE ASSESSEE HAD EARNED PROFIT ON THE PURCHASE TRANSACTIONS OF RS. 69,58,432/ - COULD NOT BE RULED OUT, HAD THEREIN IN ALL FAIRNESS DIRECTED SU STAINING OF AN ADDITION OF GROSS PROFIT OF 10%, I.E RS. 6,95,843/ - IN THE HANDS OF THE ASSESSEE. WE HAVE GIVEN A THOUGHTFUL CONSIDERATION TO THE FACTS OF THE CASE AND ARE OF THE CONSIDERED VIEW THAT THE CIT(A) HAD ON THE BASIS OF A WELL REASONED ORDER DELE TED THE CONSEQUENTIAL ADDITION OF RS. 59,97,015/ - [I.E RS. 69,58,432/ - ( - ) RS. 2,65,574/ - ( - ) 6,95,843/ - ] . WE THUS FIND ING NO INFIRMITY IN THE ORDER OF THE CIT(A) WHICH COULD HAVE PERSUADED US TO DISLODGE THE OBSERVATIONS ARRIVED AT BY HIM AND TAKE A DIFFE RENT VIEW, THEREIN UPHOLD THE ORDER OF THE CIT(A). 9. THE APPEAL FILED BY THE REVENUE IS DISMISSED. P AGE | 11 I.T.A.NO. 75 /MUM/2014 ( ASSESSES APPEAL A.Y. 2009 - 10) 1. WE NOW TAKE UP THE APPEAL OF THE ASSESSEE. THE ASSESSEE BEING AGGRIEVED WITH THE SUSTAINING OF AN ADDITION OF RS. 6,95,438/ - HAD THEREIN CARRIED THE MATTER IN APPEAL BEFORE US, THEREIN RAISING THE FOLLOWING GROUNDS OF APPEAL: - 1. ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE AND IN LAW, THE LEARNED CIT(A) HAS ERRED IN CONFIRMING ADDITION TO THE EXTENT OF RS. 6,95,843/ - BEING 10% OF THE PURCHASES ALLEGED TO BE BOGUS. 2. YOUR APPELLANT CRAVE, LEAVE TO ADD/ALTER AMEND, MODIFY THE GROUND OF APPEAL BEFORE AND DURING THE HEARING OF APPEAL. 2 . THAT DURING THE COURSE OF HEARING OF THE APPEAL IT WAS SUBMITTED BY THE LD. A.R THAT THE CIT(A) DESPITE ABSENCE OF ANY MATERIAL AVAILABLE ON RECORD, HAD HOWEVER MOST ARBITRARILY MADE AN ADDITION OF 10% OF THE PURCHASES OF RS. 69,58,432/ - IN THE HANDS OF THE AS SESSEE. PER CONTRA, THE LD. D.R SUPPORTED THE ADDITION MADE IN THE HANDS OF THE ASSESSEE. 3. WE HAVE HEARD THE AUTHORIZED REPRESENTATIVES FOR BOTH THE PARTIES AND THE ORDERS OF THE LOWER AUTHORITIES. WE FIND THAT AS AGAINST THE OVERALL GROSS PROFIT AS S TOOD REFLECTED BY THE ASSESSEE, THE T RADING ACCOUNT COMPILED BY THE ASSESSEE PURSUANT TO THE DIRECTIONS OF THE CIT(A), THEREIN CO - RELATING THE PURCHASES OF THE GOODS UNDER CONSIDERATION WITH THE SALES, BOTH IN TERMS OF QUANTITY AND VALUE, THEREIN REVEAL ED A LOSS OF RS. 2,65,574/ - . THE CIT(A) IN THE BACKDROP OF THE AFORESAID FACTS, THUS BEING OF THE VIEW THAT THE LOSS INCURRED BY THE ASSESSEE IN THE BACKDROP OF THE P AGE | 12 FACTS AS REGARDS THE OVERALL PROFIT OF THE ASSESSEE, THEREIN HELD THAT THE SAME CLEARLY EVIDENCED THE FACT THAT THE ASSESSEE HAD TAKEN THE PURCHASE BILLS IN ORDER TO REDUCE ITS PROFITS . THE CIT(A) THUS ON THE BASIS OF HIS AFORESAID CONVICTION DISALLOWED THE AFORESAID LOSS OF RS. 2,65,574/ - (SUPRA), AND DIRECTED THAT AN ADDITION OF THE SAID AM OUNT MAY BE SUSTAINED IN THE HANDS OF THE ASSESSEE. WE FIND THAT THE AFORESAID DIRECTION OF THE CIT(A) HAD BEEN ACCEPTED BY THE ASSESSEE , WHO HAD NOT CARRIED IN APPEAL BEFORE US. 4. WE HAVE GIVEN A THOUGHTFUL CONSIDERATION TO THE FACTS OF THE CASE AND ARE OF THE CONSIDERED VIEW THAT THE CIT(A) REFERRING TO THE FACTS INVOLVED IN SIMILAR CASES WHEREIN IT WAS OBSERVED BY THE COURTS/TRIBUNALS THAT THE PURCHASERS WHO WOULD CARRY OUT PURCHASES FROM THE OPEN MARKET , COULD SAFELY BE HELD TO HAVE PROCURED SUCH G OODS AT A MUCH LOWER RATE , AS IN COMPARISON TO THE RATE WHICH A GENUINE DEALER SELLING THE SAID GOODS AGAINST A GENUINE SALE INVOICE WOULD HAD CHARGED. THE CIT(A) FURTHER OBSERVED THAT THE SELLER S IN THE OPEN/GREY MARKET BY SELLING THE GOODS WITHOUT INVOIC ES, BY SO DOING WOULD BE BENEFITING FROM SAVINGS ON ACCOUNT OF SALES TAX AND OTHER TAXES AND DUTIES WHICH WOULD OTHERWISE BE LEVIABLE IN THE CASE OF A DULY ACCOUNTED SALE TRANSACTION , AS WELL WOULD REMAIN BEYOND THE REALM OF INCOME - TAX AS REGARDS SUCH UNAC COUNTED SALES CARRIED OUT BY THEM. THE CIT(A) THUS TAKING INTO ACCOUNT THE AFORESAID MULTIPLE FACTORS, THEREIN KEEPING IN VIEW THE FACT THAT EXCLUDING THE PURCHASE TRANSACTIONS UNDER CONSIDERATION THE ASSESSEE HAD REFLECTED OVERALL PROFIT, THEREFORE CONCLU DED THAT THE PROBABILITY THAT THE ASSESSEE MUST HAVE EARNED PROFITS FROM THE SALE OF THE PURCHASES UNDER CONSIDERATION COULD NOT BE RULED OUT . WE FIND THAT THE CIT(A) FURTHER KEEPING IN VIEW THE AFORESAID FACTS , WHICH CLEARLY REVEALED THAT THE PURCHASES MA DE BY THE ASSESSEE FROM THE P AGE | 13 OPEN/GREY MARKET WOULD FACILITATE PURCHASE OF GOODS AT LOWER RATES, AS WELL AS THE FACT THAT EXCLUDING THE PURCHASE TRANSACTIONS UNDER CONSIDERATION, THE ASSESSEE HAD REFLECTED AN OVERALL PROFIT, HAD THUS IN ALL FAIRNESS WORKED OUT THE PROFIT ON THE SALES OF THE AFORESAID PURCHASES UNDER CONSIDERATION AT 10% AND MADE AN ADDITION OF RS. 6,95,843/ - IN THE HANDS OF THE ASSESSEE . 5. WE HAVE PERUSED THE ORDER OF THE CIT(A) AND ARE PERSUADED TO BE IN AGREEMENT WITH THE WELL REASONED VIEW ARRIVED AT BY THE HIM IN CONTEXT OF THE ISSUE UNDER CONSIDERATION. WE HAVE GIVEN A THOUGHTFUL CONSIDERATION TO THE FACTS OF THE CASE AND ARE OF THE CONSIDERED VIEW THAT THE CIT(A) HAD IN ALL FAIRNESS MADE AN ADDITION OF 10% OF THE PURCHASE VALUE ON ACCOUNT OF THE PROFIT THAT WOULD HAD BEEN GENERATED BY THE ASSESSEE ON THE SALE OF THE SAID GOODS. WE DO NOT FIND ANY INFIRMITY IN THE ORDER PASSED BY THE CIT(A), AND THUS NOT FINDING ANY REASON TO TAKE A D IFFERENT VIEW THEN THAT ARRIVED AT BY HIM, THUS UPHOLD HIS ORDER IN CONTEXT OF THE ISSUE UNDER CONSIDERATION. 6. THE APPEAL FILED BY THE ASSESSEE BEFORE US IS THUS DISMISSED. ORDER PRONOU NCED IN THE OPEN COURT AS ON 19 /0 5 /2017. SD/ - SD/ - (B.R BASKARAN) (RAVISH SOOD) / ACCOUNTANT MEMBER / JUDICIAL MEMBER MUMBAI ; DATED : 19 .05.2017 / COPY OF THE ORDER FORWARDED TO : P AGE | 14 1. / THE APPELLANT 2. / THE RESPONDENT 3. ( ) / THE CIT(A) 4. / CIT CONCERNED 5. , , / DR, ITAT, MUMBAI 6. / GUARD FI LE / BY ORDER, / (DY./ASSTT. REGISTRAR) , / ITAT, MUMBAI.