DEPUTY COMMISSIONER OF INCOME TAX, CENTRAL CIRCLE 5(2), MUMBAI V. MILAN H. SANGHAVI, MUMBAI

ITA 6831/MUM/2017

• Counselvise Citation: [2019] 118 COUNSELVISE.COM (IT) 2633 (ITAT-MUMBAI)
• Duration Of Justice: 1 year(s) 3 month(s) 4 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 08-03-2019
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: SMC
• Assessment Year: 2006-2007
• Appeal Filed On: 04-12-2017
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: NARENDRA JANGPANGI
• Assessee Lawyers: JAYESH KALA
• Keywords: Bogus purchase; Unexplained investment; Search and seizure; Peak credit
• Section: 133(6)

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL MUMBAI BENCHES D , MUMBAI BEFORE SHRI B.R. BASKARAN, ACCOUNTANT MEMBER AND SHRI RAVISH SOOD, JUDICIAL MEMBER ITA NO. A.Y. APPELLANT RESPONDENT 6826/MUM/17 2006-07 DY. COMMISSIONER OF INCOME TAX, CENTRAL CIRCLE-5(2) MUMBAI MILAN H. SANGHAVI (HUF), (PROP. P.M. ENTERPRISES) 602/A, RADHIKA DARSHAN, HEMU KALANI X ROAD, NO. 2, KANDIVALI (W), MUMBAI [PAN: AAGHM4782D] 6827/MUM/17 2007-08 6851/MUM/17 2008-09 6828/MUM/17 2009-10 6829/MUM/17 2010-11 6830/MUM/17 2011-12 6831/MUM/17 2006-07 DY. COMMISSIONER OF INCOME TAX, CENTRAL CIRCLE-5(2) MUMBAI MILAN H. SANGHAVI, (PROP.DIPEN TRADING COMPANY) 602/A, RADHIKA DARSHAN, HEMU KALANI X ROAD, NO. 2, KANDIVALI (W), MUMBAI [PAN: AACPS1842C] 6832/MUM/17 2008-09 6833/MUM/17 2009-10 6834/MUM/17 2011-12 APPELLANT BY : S HRI NARENDRA JANGPANGI, CIT - DR RESPONDENT BY : S HRI JAYESH KALA, DATE OF HEARING : 0 6 - 03 - 201 9 DATE OF PRONOUNCEMENT : 08 - 03 - 201 9 O R D E R PEN BENCH: THE REVENUE HAS FILED ALL THESE APPEALS, CHALLENGING THE ORDERS PASSED BY THE LD. COMMISSIONER OF INCOME TAX MILAN H. SANGHAVI (HUF) & MILAN H. SANGHAVI (GROUP CASES) : 2 : (APPEALS)-53, MUMBAI, IN THE HANDS OF BOTH THE ASSESSE ES HEREIN. THE APPEALS FILED IN THE CASE OF MILAN H. SA NGHAVI, PERTAINS TO AYS. 2006-07, 2008-09, 2009-10 AND 2011-1 2. THE APPEALS FILED IN THE CASE OF MILAN H. SANGHAVI (HUF), PERTAINS TO AYS. 2006-07 TO 2011-12. SINCE THE ISSUES URGED IN ALL THESE APPEALS ARE IDENTICAL IN NATURE, ALL THE A PPEALS WERE HEARD TOGETHER AND ARE BEING DISPOSED-OF BY THIS COMMON ORDER FOR THE SAKE OF CONVENIENCE. 2. IN ALL THESE CASES, THE REVENUE IS CONTESTING THE DECISION OF THE LD. CIT(A) IN DIRECTING THE AO TO SUSTA IN ADDITION @ 12.5% ON THE VALUE OF THE ALLEGED BOGUS PUR CHASES. 3. THE FACTS RELATING TO THE ISSUE ARE STATED IN BRIEF . THE REVENUE CARRIED OUT SEARCH AND SEIZURE OPERATIONS IN THE CASE OF A COMPANY NAMED M/S. SATRA PROPERTIES (I) LTD ., ON 23-12-2010. SIMULTANEOUSLY, SEARCH OPERATION WAS CAR RIED OUT IN THE HANDS OF THE ASSESSEE, SHRI MILAN H. SANGHA VI ON THE VERY SAME DAY. IT WAS NOTICED THAT SHRI MILAN H. SA NGHAVI IS THE PROPRIETOR OF M/S. DIPEN TRADING CO. ANOTHER C ONCERN NAMED M/S. P.M. ENTERPRISES WAS OWNED BY MILAN H. SANGHAVI (HUF). BOTH OF THESE CONCERNS ARE ENGAGED IN THE BUSINESS OF TRADING IN STEEL AND CEMENT. MILAN H. SANGHAVI (HUF) & MILAN H. SANGHAVI (GROUP CASES) : 3 : 4. IN THE CASE OF M/S. SATRA PROPERTIES (I) LTD., THE PURCHASES MADE BY THEM FROM THREE CONCERNS NAMED M/S. J.B. INTERLINK, M/S. P.K. TRADING CO., M/S. N.B. ENT ERPRISES WERE ACCEPTED AS BOGUS BY M/S. SATRA PROPERTIES (I) L TD. IT APPEARS THAT THE SEARCH PARTIES IDENTIFIED THE TWO CONCER NS BELONGING TO THE ASSESSEES HEREIN, VIZ., M/S. P.M. EN TERPRISES AND M/S. DIPEN TRADING CO. ALSO AS BOGUS BILLERS. H OWEVER, DURING THE COURSE OF SEARCH OPERATION, M/S. SATRA PROP ERTIES (I) LTD., DID NOT ACCEPT THAT THE PURCHASES MADE FROM THE ENTITIES BELONGING TO ASSESSEES HEREIN ARE BOGUS. 5. IN THE ABOVE SAID BACKGROUND, AO EXAMINED THE PURCHASES MADE BY THE ASSESSEES HEREIN. IT WAS NOTIC ED THAT THE ASSESSEES HAVE PURCHASED MATERIALS FROM THE FOLLO WING CONCERNS, WHICH WERE IDENTIFIED AS HAWALA PARTIES, I. E, THEY WERE PROVIDING ONLY ACCOMMODATION BILLS, WITHOUT ACTUA LLY SUPPLYING THE MATERIALS: I. M/S. SHREE SAI TRADING CO II. M/S. ENTECH ENTERPRISES III. M/S. CNS TRADE LINKS PVT. LTD., IV. M/S. J.B. INTERLINK V. M/S. KRC TRADING CO MILAN H. SANGHAVI (HUF) & MILAN H. SANGHAVI (GROUP CASES) : 4 : VI. M/S. R.K. ISPAT VII. M/S. JINDAL STEEL CORPORATION VIII. M/S. TULSIANI TRADING PVT. LTD., IX. M/S. PARAS ENTERPRISES X. M/S. CENTURION SALES CORPORATION XI. M/S. RASHMI ENTERPRISES XII. M/S. MACOS IRON & STEEL PVT. LTD., 5.1. THE AO ISSUED SUMMONS TO THE ABOVE SAID PARTIES BUT NONE OF THEM APPEARED. HENCE, AO ASKED THE ASSESS EE TO PRODUCE THE ABOVE ENTITIES. THE ASSESSEE PRODUCED SHRI DHARMENDRA KUMAR AMRITLAL DARJEE ON BEHALF OF M/S. K RC TRADING CO. IN THE STATEMENT TAKEN FROM HIM, HE SUBMITTE D THAT HE HAS ACTUALLY SUPPLIED THE MATERIALS TO THE ASSESS EES HEREIN. HE ALSO FURNISHED DETAILS OF HIS INCOME TAX R ETURNS, SALES TAX RETURNS ALONG WITH SUPPORTING DOCUMENTS TO SHO W PAYMENT OF VAT. THE ASSESSEE ALSO FURNISHED SALES TAX RETURNS PERTAINING TO ANOTHER SUPPLIER NAMED M/S. MACOS IRON & STEEL CO. LTD. IN RESPECT OF REMAINING 10 PARTIES, THE ASSESS EE COULD NOT PRODUCE ANYTHING. 5.2. THE AO NOTICED THAT THE ASSESSEE HAD ALSO PURCHASED MATERIALS FROM M/S. J.B. INTERLINK. THE PR OPRIETOR MILAN H. SANGHAVI (HUF) & MILAN H. SANGHAVI (GROUP CASES) : 5 : OF M/S. J.B. INTERLINK NAMED SHRI KANTILAL JAYSHANKAR TRIVEDI HAD ADMITTED BEFORE SALES TAX AUTHORITIES THAT HE HAD PROV IDED ONLY ACCOMMODATION BILLS AND DID NOT SUPPLY MATERIALS. THE AO FURTHER NOTICED THAT SHRI DHARMENDRA KUMAR AMRITLAL DARJEE OF M/S. KRC TRADING CO., WHO HAD APPEARED BE FORE HIM, HAD ALSO ADMITTED BEFORE THE SALES TAX DEPARTMENT TH AT HE WAS SIGNING CHEQUES ON BEHALF OF A PERSON NAMED SHRI SRIKANT CHITALIYA, WHO USED TO PAY HIM RS. 5,000/- PER MONTH TO DO HIS JOB. 5.3. IN VIEW OF THE ABOVE, THE AO TOOK THE VIEW THAT THE PURCHASES MADE FROM THE ABOVE SAID PARTIES ARE BOGUS IN NATURE. THE AO TOOK THE VIEW THAT THE ASSESSEES HAVE US ED THEIR UNACCOUNTED CASH FOR MAKING THESE PURCHASES AND HENCE PROPOSED TO ASSESS PEAK AMOUNT OF BOGUS PURCHAS ES MADE BY THE ASSESSEE. BEFORE THE AO, THE ASSESSEES SUB MITTED THAT THE PAYMENTS HAVE BEEN MADE TO THE PARTIES BY WAY OF CHEQUES AND FURTHER THE ASSESSEE WAS ENJOYING CREDIT P ERIOD OF 90 DAYS AND ACCORDINGLY SUBMITTED THAT THE PEAK AMOUNT SHOULD BE WORKED OUT BY CONSIDERING THE CREDIT PERIOD OF 90 DAYS. THE AO DID NOT ACCEPT THE SAME. AS PER THE VIEW TAKEN BY HIM, THE AO PROCEEDED TO WORK OUT THE PEAK CREDIT IN BOTH MILAN H. SANGHAVI (HUF) & MILAN H. SANGHAVI (GROUP CASES) : 6 : THE CASES. IN THE CASE OF MILAN H. SANGHAVI (HUF), TH E PEAK AMOUNT WAS WORKED OUT AT RS. 386.83 LAKHS ON 25-11-200 9, WHICH FELL IN AY. 2010-11. IN THE CASE OF MILAN H. SANGHAVI, THE PEAK AMOUNT WAS WORKED OUT AT RS. 326.37 LAKHS ON 2 2- 10-2008, WHICH FELL IN AY. 2009-10. ACCORDINGLY, THE AO ASSESSED THE ABOVE SAID AMOUNT IN THE HANDS OF RESPECTI VE ASSESSEES IN THE YEARS MENTIONED ABOVE. HE DID NOT MA KE ANY ADDITION IN THE REMAINING YEARS. 6. AGGRIEVED BY THE ORDERS PASSED BY THE AO BOTH THE ASSESSEES FILED APPEALS BEFORE THE CIT(A). 6.1. BEFORE THE LD. CIT(A), THE ASSESSEE FURNISHED DETAILED EXPLANATIONS AND HENCE THE LD. CIT(A) CALLED FOR A REMAND REPORT FROM THE AO. IN THE REMAND REPORT, AO SUBMITTED THAT THE NOTICES ISSUED U/S. 133(6) OF THE ACT TO THE ALLEGED SUPPLIERS WAS RETURNED UN-SERVED BY THE POSTAL AUTHORITIES. FURTHER, THE INSPECTOR ALSO COULD NOT TRACE THESE PARTIES. HE ALSO REPORTED THAT THE VEHICLE NUMBERS MENTI ONED IN THE TRANSPORT DOCUMENTS PERTAINED TO MOTOR-CARS/MOTOR CYCLES AND NOT LORRIES. THE LD.CIT(A) FURNISHED A CO PY OF REMAND REPORT TO THE ASSESSEE AND ASKED THEM TO FILE THE REJOINDER WITHIN SEVEN DAYS. HOWEVER, THE ASSESSEE DI D NOT MILAN H. SANGHAVI (HUF) & MILAN H. SANGHAVI (GROUP CASES) : 7 : RESPOND TO THE SAME. THE ASSESSEE ALSO DID NOT FURNIS H FURTHER DETAILS CALLED FOR BY THE LD. CIT(A). ACCORDINGLY, TH E FIRST APPELLATE AUTHORITY TOOK THE VIEW THAT THE ASSESSEE HAS N OT PROVED THE GENUINENESS OF THE PURCHASES. 6.2. HOWEVER, THE LD. CIT(A) NOTICED THAT THE AO HAS ACCEPTED THE PURCHASES. HE HAS ONLY HELD THAT THE ASSES SEE HAS MADE THE PURCHASES BY USING UNACCOUNTED CASH AVAI LABLE WITH THE ASSESSEE. HENCE THE AO HAS APPLIED PEAK CRED IT THEORY AND ASSESSED THE PEAK AMOUNT AS INCOME OF THE ASSESSEE IN A PARTICULAR YEAR. THE LD. CIT(A) NOTICE D THAT THE IMPUGNED BOGUS PURCHASES MADE DURING THE PERIODS UN DER CONSIDERATION WAS 23% OF THE AGGREGATE AMOUNT OF PURCH ASES IN THE CASE OF MILAN H. SANGHAVI (HUF) AND 8% OF THE AGGREGATE AMOUNT OF PURCHASES IN THE CASE OF MILAN H . SANGHAVI. THE ADDITION MADE BY THE AO WORKED OUT TO 42 % OF THE VALUE OF IMPUGNED BOGUS PURCHASES IN THE CASE OF MILAN H SANGHAVI (HUF) AND THE ADDITION MADE IN THE HANDS OF MILAN H SANGHAVI WORKED OUT TO 36% OF THE VALUE OF IM PUGNED BOGUS PURCHASES. THE ASSESSEE CONTENDED BEFORE THE L D. CIT(A) THAT THE ADDITION SO WORKED OUT BY THE AO IS ON HI GHER MILAN H. SANGHAVI (HUF) & MILAN H. SANGHAVI (GROUP CASES) : 8 : SIDE. IT WAS FURTHER POINTED OUT THAT NO UNACCOUNTED ASSE TS OR CASH WERE IDENTIFIED DURING THE COURSE OF SEARCH ACTIO N. 6.3. UNDER THESE SET OF FACTS, LD. CIT(A) DIRECTED TH E AO TO MAKE ADDITION TO THE TUNE OF @12.5% OF THE VALUE OF THE BOGUS PURCHASES IN ALL THE YEARS UNDER CONSIDERATION WITH THE FOLLOWING OBSERVATIONS: 19. A PERUSAL OF THE AUDITED ACCOUNTS FILED SHOW T HAT A SIMILAR HUGE AMOUNT OF DEBTORS IS ALSO SHOWN. IT DO ES SUGGEST THAT THE APPELLANT IS PROVIDING HAWALA ENTRIES. ALT ERNATIVELY, BY PURCHASING FROM THE GREY MARKET, THE APPELLANT W OULD HAVE BENEFITTED BY THE SAVINGS OF VAT. ON A WITHOUT PREJ UDICE BASIS THE APPELLANT HAS SUGGESTED THAT A DISALLOWANCE OF THE IMPUGNED PURCHASES MAY BE MADE. THEREFORE, IN FACT AND CIRCUMSTANCES OF THE CASE, IN THIS PARTICULAR CASE, IT IS CONSIDERED MOST APPROPRIATE TO ADOPT 12.5% PROFIT W HICH CAN TAKE CARE OF THE ROTATION OF CAPITAL UTILISED FOR S UCH TRANSACTION. HENCE IN THE LIGHT OF FINDING OF .THE HON'BLE GUJAR AT HIGH COURT IN THE CASE OF CIT VS. SIMIT P. SHETH, 12.5% PROFIT IS FOUND TO BE APPROPRIATE FOR ASCERTAINMENT OF TAXABLE INCOME REL ATED TO SUCH TRANSACTION. IN THE FACTS OF THE CASE, THE ASSESSING OFFICER IS DIRECTED TO COMPUTE THE DISALLOWANCE FOR EACH OF THE ASSESSMENT YEARS ON THE BASIS OF 12.5% OF THE PURCH ASES FROM THE IMPUGNED PARTIES IN PLACE OF THE UNACCOUNT ED INCOME COMPUTED ON THE BASIS OF ESTIMATED PEAK WORKING OF UNACCOUNTED INVESTMENTS. THE ASSESSING OFFICER WILL VERIFY THE PURCHASES AMOUNT DEBITED IN THE BOOKS OF THE APPELLANT IN RESPECT OF THESE PARTIES IN EACH OF THE ASSESSMENT YEAR WHILE COMPUTING AND GIVING APPEAL EFFECT TO THIS ORDER. IN LIGHT OF THE ABOVE THE APPEAL IS PARTLY ALLOWED. MILAN H. SANGHAVI (HUF) & MILAN H. SANGHAVI (GROUP CASES) : 9 : THE REVENUE IS AGGRIEVED BY THE ORDERS SO PASSED BY LD CIT(A) IN THE HANDS OF BOTH THE ASSESSEES. 7. THE LD D.R SUBMITTED THAT THE LD CIT(A) HAS ACCEPTED THE FACT THAT THE PURCHASES WERE BOGUS IN NATURE . HAVING HELD SO, THE LD CIT(A) SHOULD NOT HAVE DIRECTE D THE AO TO RESTRICT THE ADDITION TO 12.50% OF THE VALUE OF BOGUS PURCHASES. HE SUBMITTED THAT THE HONBLE SUPREME COURT H AS SUSTAINED ADDITION OF ENTIRE AMOUNT OF PURCHASES IN THE CASE OF N.K.PROTEINS LTD (84 TAXMANN.COM 195). HE SUBMITTED THAT THE AO HAS ASSESSED THE PEAK AMOUNT OF BOGUS PURCHASES IN THE HANDS OF THE ASSESSEES, WHILE THE LD CIT(A) HAS A DOPTED DIFFERENT METHODOLOGY AND GRANTED SUBSTANTIAL RELIEF TO THE ASSESSEES. THE LD D.R ACCORDINGLY SUBMITTED THAT THE ADD ITION MADE BY THE AO SHOULD BE SUSTAINED. 8. ON THE CONTRARY, THE LD A.R SUBMITTED THAT THE ASSESSING OFFICER WAS NOT JUSTIFIED IN PRESUMING THAT THE ASSESSEE HAD INTRODUCED UNACCOUNTED CASH BY WAY OF PURCHASES. HE SUBMITTED THAT THE ASSESSEE HAS SOLD THE MATERIALS AND THE SAID SALES HAVE BEEN ACCEPTED BY T HE AO. THE ASSESSEE COULD NOT HAVE SOLD THE GOODS WITHOUT ACTUA LLY PURCHASING THE MATERIALS. HE SUBMITTED THAT THE SUPPLIERS MILAN H. SANGHAVI (HUF) & MILAN H. SANGHAVI (GROUP CASES) : 10 : HAVE GIVEN SELF SERVING STATEMENTS BEFORE THE SALES TAX AUTHORITIES. FURTHER THE PAYMENTS TOWARDS PURCHASES HAVE BEEN MADE THROUGH ACCOUNT PAYEE CHEQUES. UNDER THESE SET OF FACTS, THERE WAS NO BASIS FOR THE AO TO PRESUME THAT THE ASSESSEE HAS INTRODUCED UNACCOUNTED CASH. HE SUBMITTED THAT THE LD CIT(A) HAS APPRECIATED ALL THESE ASPECTS AN D ACCORDINGLY ESTIMATED THE PROFIT FROM THE ALLEGED BOGUS PURCHASES. ACCORDINGLY HE SUBMITTED THAT THE ORDERS PAS SED BY LD CIT(A) DO NOT CALL FOR ANY INTERFERENCE. 9. WE HAVE HEARD RIVAL CONTENTIONS AND PERUSED THE RECORD. FROM THE FACTS WE NOTICE THAT THE SEARCH OFFICIAL S WHO SEARCHED M/S SATARA PROPERTIES INDIA LTD PROPOSED TO IN CLUDE THE CONCERNS BELONGING TO THE ASSESSEES HEREIN ARE AL SO HAWALA OPERATORS, BUT M/S SATARA PROPERTIES INDIA LTD DI D NOT ACCEPT THE SAME. THIS FACT WOULD SHOW THAT M/S SATARA PROPERTIES INDIA LTD, WHOSE SEARCH HAD TRIGGERED SEARC H ACTION IN THE HANDS OF THE ASSESSEES HEREIN, HAS CONFIRMED THE FACT THAT THE ASSESSEES HEREIN HAVE SUPPLIED MATERIALS TO IT. HENCE THE AO DID NOT DISTURB THE SALES DECLARED BY THE ASSESS EE. HOWEVER, IT WAS NOTICED THAT THE ASSESSEES PURCHASES HA VE BEEN MADE FROM SOME OF THE PARTIES, WHO HAVE BEEN IDE NTIFIED MILAN H. SANGHAVI (HUF) & MILAN H. SANGHAVI (GROUP CASES) : 11 : AS HAWALA OPERATORS. THESE HAWALA OPERATORS HAVE ADMI TTED BEFORE THE SALES TAX DEPARTMENT THAT THEY HAVE PROVIDED ON LY ACCOMMODATION BILLS AND DID NOT ACTUALLY SUPPLY MATERI ALS. HENCE THE AO HAS DRAWN CONCLUSION THAT THE ASSESSEES H AD ACTUALLY PURCHASED MATERIALS FROM OPEN MARKET, BUT PR OCURED BILLS FROM THE HAWALA PARTIES. ACCORDINGLY THE AO HAS PRESUMED THAT THE ASSESSEES HAVE ISSUED CHEQUES TO THESE PARTIES AND OBTAINED BACK CASH, WHICH WAS USED TO PURC HASE MATERIALS FROM THE OPEN MARKET. ACCORDINGLY, THE AO H AS TAKEN THE VIEW THAT THE ASSESSEES HAVE USED THEIR UNACCOUNTED CASH FOR MAKING THESE PURCHASES AND HENCE COMPUTED PEAK AMOUNT OF CASH AND ASSESSED THE SAME. 10. ON THE CONTRARY, THE LD CIT(A) HAS TAKEN THE VIEW THAT THE PROFIT ELEMENT EMBEDDED IN SUCH PURCHASES SHOUL D BE ASSESSED TO TAX. THE LD CIT(A) HAS SO TAKEN THE VIE W, SINCE THE AO HAS ACCEPTED THE SALES DECLARED BY THE ASSESSEES AND THE SALES COULD NOT HAVE BEEN MADE BY MAKING PURCHASE S. ACCORDINGLY, HE HAS ESTIMATED THE PROFIT @ 12.50% OF TH E VALUE OF ALLEGED BOGUS PURCHASES MADE BY THESE ASSESSEES I N ALL THE YEARS UNDER CONSIDERATION. THE LD CIT(A) HAS DRAWN S UPPORT MILAN H. SANGHAVI (HUF) & MILAN H. SANGHAVI (GROUP CASES) : 12 : FROM THE DECISION RENDERED BY HONBLE GUJARAT HIGH CO URT IN THE CASE OF CIT VS. SIMIT P SHETH (356 ITR 451). 11. UNDER THE INCOME TAX ACT, THE PROFIT EARNED FROM THE BUSINESS TRANSACTIONS IS ALONE TAXABLE. SINCE THE SA LES HAS BEEN ACCEPTED, THE CORRESPONDING PURCHASES IS REQUIR ED TO BE DEDUCTED FOR THE PURPOSE OF ARRIVING AT PROFIT. THE AS SESSEE HAS SHOWN THAT IT HAS PURCHASED MATERIALS FROM CERTAIN DEALERS, BUT THE SAME HAS NOT BEEN ACCEPTED FOR THE REA SON THAT THE SAID DEALERS HAVE ADMITTED BEFORE THE SALES TAX AUTHORITIES THAT THEY HAVE NOT SUPPLIED MATERIALS. DURI NG THE COURSE OF ASSESSMENT PROCEEDINGS, ONE OF SUCH DEALER S HAS APPEARED BEFORE THE AO AND CONFIRMED THAT HE HAS ACTUA LLY SUPPLIED MATERIALS TO THE ASSESSEE. IN RESPECT OF ANO THER DEALER, THE ASSESSEE HAS FURNISHED COPIES OF SALES TA X RETURNS FILED BY IT. THESE FACTS WOULD SHOW THAT THESE SUPPLIE RS HAVE BEEN TAKING CONTRADICTORY STANDS. ACCORDINGLY THE ASSE SSEE HAS CONTENDED THAT THE AO SHOULD NOT RELY UPON SELF SERV ING STATEMENTS OF THOSE DEALERS MADE BEFORE THE SALES TAX AUTHORITIES. 12. EVEN THOUGH THE AO HAS PRESUMED THAT THE ASSESSEES MIGHT HAVE RECEIVED CASH BACK FROM SUCH DE ALERS, MILAN H. SANGHAVI (HUF) & MILAN H. SANGHAVI (GROUP CASES) : 13 : THE SAME HAS NOT BEEN SUBSTANTIATED WITH ANY MATERIAL. ON THE BASIS OF AVAILABLE FACTS, THE AO HAS DRAWN SUCH PRESUMPTION AND IN THE ABSENCE OF ANY MATERIAL TO SUPP ORT THE VIEW SO TAKEN, IT MAY NOT BE PROPER TO PRESUME THAT UNACCOUNTED CASH WOULD HAVE BEEN INTRODUCED. ANOTHER IMPORTANT FACTOR, WHICH HAS BEEN REJECTED BY THE AO IS THE SUBMISSION OF THE ASSESSEE THAT THEY WERE GETTING CREDIT P ERIOD OF 90 DAYS FOR MAKING PAYMENT TO THE SUPPLIERS. IF THE SAME IS FACTORED IN, THEN THE ADDITION COMPUTED BY THE AO WOULD GO DOWN DRASTICALLY. 13. THE LD. DR PLACED HIS RELIANCE ON THE DECISION RENDERED BY HONBLE SUPREME COURT IN THE CASE OF N.K. PROTEINS (SUPRA). WE NOTICE THAT THE DECISION IN THE ABO VE SAID CASE HAS BEEN RENDERED ON THE BASIS OF FACTS AVAILABL E IN THE CASE BEFORE HONBLE SUPREME COURT, WHILE NO SUCH PAR ITY OF FACTS WAS SHOWN IN THE PRESENT CASES. 14. FOR THE REASONS DISCUSSED IN THE PRECEDING PARAGRAPH AND IN THE FACTS AND CIRCUMSTANCES OF THE PRE SENT CASES, WE ARE OF THE VIEW THAT THE LD CIT(A) WAS JUSTI FIED IN DIRECTING THE AO TO ASSESS THE PROFIT ELEMENT EMBEDDED IN THE ALLEGED BOGUS PURCHASES BY TAKING THE RATE OF PROFIT A S MILAN H. SANGHAVI (HUF) & MILAN H. SANGHAVI (GROUP CASES) : 14 : 12.50%. AS NOTED EARLIER, HIS VIEW ALSO GETS SUPPORT FROM THE DECISION RENDERED BY HONBLE GUJARAT HIGH COURT IN TH E CASE OF SIMIT P SHETH (SUPRA). HENCE WE DO NOT FIND ANY IN FIRMITY IN THE ORDERS PASSED BY HIM AND ACCORDINGLY WE UPHOL D THE SAME. 15. IN THE RESULT, ALL THE APPEALS OF THE REVENUE ARE DISMISSED. ORDER PRONOUNCED IN THE OPEN COURT ON 8 TH DAY OF MARCH, 2019 SD/- SD/- (RAVISH SOOD) (B.R. BASKARAN) /JUDICIAL MEMBER /ACCOUNTANT MEMBER /MUMBAI; /DATED : 8 TH MARCH, 2019 TNMM MILAN H. SANGHAVI (HUF) & MILAN H. SANGHAVI (GROUP CASES) : 15 : / COPY OF THE ORDER FORWARDED TO : 1. !' / THE APPELLANT 2. #!' / THE RESPONDENT 3. $ % ( ) / THE CIT(A), MUMBAI 4. $ % / CIT, MUMBAI 5. ()* +, , $ .+,$/ , / DR, ITAT, MUMBAI 6. *012 / GUARD FILE $ / BY ORDER, # //TRUE COPY// / $ (DY./ASST. REGISTRAR) $ .+,$/, / ITAT, MUMBAI