HARSHAD FULCHAND SHETH, MUMBAI V. ITO 19(1)(5), MUMBAI

ITA 687/MUM/2019

• Counselvise Citation: [2020] 111 COUNSELVISE.COM (IT) 5738 (ITAT-MUMBAI)
• Duration Of Justice: 1 year(s) 7 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 14-02-2020
• Appeal Filed By: Assessee
• Order Result: Dismissed
• Bench Allotted: SMC
• Assessment Year: 2009-2010
• Appeal Filed On: 07-02-2019
• Result in Favour of: Revenue
• Court: TRIBUNAL
• Assessee Lawyers: MRS ADITI KHATIWALA ARS; AAKASH SANJAY KHATIWALA
• Keywords: Bogus purchase; Accommodation entries
• Section: 133(6); 143(1); 274; 147

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL SMC, BENCH M UMBAI BEFORE SHRI SAKTIJIT DEY, JUDICIAL MEMBER & SHRI G. MANJUNATHA, ACCOUNTANT MEMBE R ITA NO.687 & 688/MUM/2019 ( ASSESSMENT YEARS: 2009-10 & 2010-11 ) HARSHAD FULCHAND SHETH 12-A MANEK, 11 L.D. RUPAREL MARG MALABAR HILL MUMBAI-400 006 VS. ITO-19(1)(5) ROOM NO.215, 2 ND FLOOR MATRU MANDIR TARDEO ROAD MUMBAI-400 007 PAN/GIR NO. AAHPS4577P ( APPELLANT ) .. RESPONDENT ) REVENUE BY SHRI ASHISH KUMAR, DR ASSESSEE BY SHRI AAKASH SANJAY KHATIWALA & MRS. ADITI KHATIWALA, ARS DATE OF HEARING 30 / 01/2020 DATE OF PRONOUNCEMENT 14 /02/2020 / O R D E R PER G.MANJUNATHA (A.M) : THESE TWO APPEALS FILED BY THE ASSESSEE ARE DIRECT ED AGAINST, SEPARATE, BUT IDENTICAL ORDERS OF THE LD. COMMISSIO NER OF INCOME TAX (APPEALS)7, MUMBAI, BOTH DATED 27/11/2018, FOR THE AY 2009- 10 & 2010-11. SINCE, FACTS ARE IDENTICAL AND ISSUES ARE COMMON, FOR THE SAKE OF CONVENIENCE, THESE APPEALS WERE HEARD T OGETHER AND ARE DISPOSED-OFF BY THIS CONSOLIDATED ORDER. 2. THE ASSESSEE HAS MORE OR LESS RAISED COMMON GROU NDS OF APPEAL FOR BOTH AYS. THEREFORE, FOR THE SAKE OF BR EVITY, GROUNDS OF APPEAL FILED FOR AY 2009-10 ARE REPRODUCED AS UNDER :- 1. THAT THE LD.CIT(APPEALS) HAS ERRED IN CONFIRMING THE PURCHASES AS BOGUS. THE ADDITION OF PRESUMPTIVE GP OF 12.5% IS U NJUSTIFIED. IT ITA NOS.687 & 688/MUM/2019 HARSHAD FULCHAND SHETH 2 HAS NOT BEEN PROVEN THAT THE PURCHASES ARE IN FACT BOGUS IN NATURE. THEREFORE THE ALLEGED ADDITION MADE BY THE LEARNED AO AND CONFIRMED BY THE LEARNED CIT(A) BEING WRONG ON FACT S AND BAD IN LAW THEREFORE MAY KINDLY BE DELETED. 3. THE BRIEF FACTS OF THE CASE ARE THAT THE ASSESSE E IS AN INDIVIDUAL ENGAGED IN THE BUSINESS OF TRADER/DEALE R IN IRON AND STEEL, FILED ITS RETURN OF INCOME FOR AY 2009-10 ON 29/09/2009, DECLARING TOTAL INCOME OF RS. 7,16,270/- AND SAID R ETURN WAS PROCESSED U/S 143(1) OF THE I.T.ACT, 1961. THE CASE HAS BEEN SUBSEQUENTLY, REOPENED U/S 147 OF THE ACT, ON THE B ASIS OF INFORMATION RECEIVED FROM DGIT, INVESTIGATION, MUMB AI, AS PER WHICH, SALES TAX AUTHORITIES OF GOVERNMENT OF MAHAR ASHTRA HAD TAKEN ACTIONS AGAINST NUMBER OF HAWALA DEALERS, WH O HAD ISSUED BOGUS PURCHASE BILLS TO VARIOUS PARTIES IN MUMBAI A ND OTHER PLACES. AS PER LIST OF BENEFICIARIES, THE ASSESSEE IS ONE O F THE BENEFICIARY, WHO HAD TAKEN ACCOMMODATION BILLS OF BOGUS PURCHASE S FROM VARIOUS PARTIES AS LISTED BY THE AO IN PARA 2 OF H IS ASSESSMENT ORDER AMOUNTING TO RS. 59,82,406/-. THE CASE WAS SE LECTED FOR SCRUTINY AND THE ASSESSMENT HAS BEEN COMPLETED U/S. 143(3).R.W.S. 147 OF THE I.T.ACT, 1961 ON 27/02/2015 AND DETERMIN ED TOTAL INCOME OF RS. 14,64,070/-, AFTER MAKING 12.50% ADDITIONS T OWARDS ALLEGED BOGUS PURCHASE FROM THOSE PARTIES AND MADE ADDITION S OF RS. 7,47,801/-. 4. AGGRIEVED BY THE ASSESSMENT ORDER, THE ASSESEE P REFERRED AN APPEAL BEFORE THE LD.CIT(A). BEFORE THE LD.CIT(A), THE ASSESSE HAS FILED ELABORATE WRITTEN SUBMISSIONS, ON THE ISSUE, WHICH HAS BEEN REPRODUCED AT PARA 4 ON PAGES 4 TO 8 OF LD.CIT(A) O RDER. THE SUM AND SUBSTANCE OF ARGUMENTS OF THE ASSESSEE BEFORE T HE LD.CIT(A) ARE THAT PURCHASE FROM THE ABOVE PARTY IS GENUINE, WHICH IS ITA NOS.687 & 688/MUM/2019 HARSHAD FULCHAND SHETH 3 SUPPORTED BY NECESSARY EVIDENCES. THEREFORE, NO ADD ITIONS COULD BE MADE ON THE BASIS OF INFORMATION RECEIVED FROM THIR D PARTY. THE LD.CIT(A), AFTER CONSIDERING RELEVANT SUBMISSION OF THE ASSESSEE AND ALSO, BY FOLLOWING THE DECISION OF HONBLE GUJA RAT HIGH COURT, IN THE CASE OF CIT VS. SIMITH P. SHETH (356 ITR 451) H AS UPHELD ADDITION MADE BY THE AO TOWARDS ALLEGED BOGUS PURCH ASES TO 12.50% GROSS PROFIT ON TOTAL PURCHASES FROM THOSE P ARTIES. THE RELEVANT FINDINGS OF THE LD.CIT(A) ARE AS UNDER:- 6.3.1 IN THE FACTS AND THE CIRCUMSTANCES OF THE CA SE, THE TOTAL PURCHASES SHOWN TO BE MADE FROM THE AFORESAID PARTY COULD NOT BE HELD TO BE ENTIRELY BOGUS. IT NEEDS TO BE APPRECIATED THAT IN ORDER TO ACHIEVE THE REPORTED SALES/TURNOVER, THERE MUST BE SOME CORRESP ONDING PURCHASES, WHETHER EFFECTED FROM THE ALLEGED ENTRY PROVIDERS O R FROM THE GREY MARKET WITHOUT BILLS. THUS, THERE OUGHT TO BE SOME PURCHAS ES MADE AND HENCE, ENTIRE DISALLOWANCE IS NOT JUSTIFIED. IN THIS REGAR D, THE RATIO LAID DOWN BY THE HON'BLE BOMBAY HIGH COURT IN THE CASE OF CIT V. NIKUNJ EXIMP ENTERPRISES (P.) LTD., IS QUITE RELEVANT WHEREIN HON'BLE HIGH COURT HAS HELD THAT - 'WHEN THE ASSESSEE HAVE FILED LETTER OF CONFIRMATIO NS OF THE SUPPLIERS. BANK STATEMENTS HIGHLIGHTING THE PAYMENT ENTRIES THROUGH ACCOUNT PAYEE CHEQUE, COPIES OF INVOICES, S TOCK RECONCILIATION STATEMENTS BEFORE THE AO: AND MERELY BECAUSE THE SUPPLIERS DID NOT APPEAR BEFORE THE AO, ONE CANNOT CONCLUDE THAT THE PURCHASES WERE NOT MADE FR Y THE ASSESSES. THE AO CANNOT DISALLOW THE PURCHASES ON T HE BASIS OF SUSPICION BECAUSE THE SUPPLIERS WERE NOT P RODUCED BEFORE THEM.' 6.3.2 IN VIEW OF THE DISCUSSION AS ABOVE, IT IS C LEAR THAT MATERIALS PURCHASED AND SOLD BY THE APPELLANT CANNOT BE DOUBT ED THOUGH IT IS NOT POSSIBLE FOR THE ASSESSEE TO ESTABLISH ONE TO ONE N EXUS/LINK BETWEEN PURCHASES AND SALES. HOWEVER, THE FACT OF THE MATTE R REMAINS THAT THESE TRANSACTIONS ARE NOT VERIFIABLE FROM THE PARTY IN Q UESTION AS IT COULD NOT BE ESTABLISHED THAT PURCHASES HAD BEEN EFFECTED FROM T HE PARTY IN QUESTION. THUS, THE PURCHASE PRICES SHOWN ON THE INVOICES PRO DUCED COULD NOT BE SUBJECTED TO VERIFICATION AND AS SUCH IT WAS DIFFIC ULT TO ESTABLISH THE CORRECTNESS OF THE PURCHASE PRICES PAID FOR THE MAT ERIALS PURCHASED. IN THE ABSENCE OF ANY SUCH VERIFICATION AS TO THE CORR ECTNESS OF THE PRICE PAID FOR THE MATERIALS PURCHASED BY THE APPELLANT, THE PURCHASE PRICE PAID AS MENTIONED ON THE INVOICES/BILLS CANNOT BE ACCEPT ED AS THE CORRECT PRICE PAID FOR THE GOODS PURCHASED FROM SUCH PARTIE S, IN VIEW OF THE SAME, THE POSSIBILITY OF OVER-INVOICING OF THE MATE RIALS PURCHASED TO REDUCE THE PROFIT CANNOT BE RULED OUT. THEREFORE, T HE GROSS PROFIT RATE SHOWN BY THE APPELLANT FOR THE YEAR UNDER CONSIDERA TION CANNOT BE RELIED UPON. IN THE CIRCUMSTANCES, THE CORRECT APPROACH IN SUCH TRANSACTIONS ITA NOS.687 & 688/MUM/2019 HARSHAD FULCHAND SHETH 4 WOULD BE TO ESTIMATE THE ADDITIONAL BENEFIT OR PROF IT EARNED ON THESE PURCHASES AND NOT TO DISALLOW THE ENTIRE PURCHASES FROM THE AFORESAID PARTIES. IN MY VIEW EITHER THE PURCHASES FROM SUCH PARTY IS OVER INVOICED OR THE PURCHASES WERE ACTUALLY MADE BUT NOT FROM TH E PARTY FROM WHICH IT WAS CLAIMED TO HAVE BEEN MADE AND INSTEAD MAY HAVE BEEN PURCHASED FROM GREY MARKET WITHOUT PROPER BILLING OR DOCUMENT ATION. 6.3.3 IN MANY JUDICIAL PRONOUNCEMENTS ON THE ISS UE, THE COURTS HAVE TAKEN A CONSISTENT VIEW THAT IN CASE OF NON-EXISTEN T PARTY FROM WHICH THE PURCHASES ARE SHOWN TO HAVE BEEN MADE, ONLY A PART OF SUCH PURCHASES CAN BE DISALLOWED, PARTICULARLY IN SUCH CASES WHERE THE CORRESPONDING SALES ARE NOT DOUBTED. ALTERNATIVELY, THE PROFIT EM BEDDED IN SUCH SALES AGAINST THE ALLEGED BOGUS PURCHASES SHOULD BE BROUG HT TO TAX. 6.3.3. 1 IN THE CASE OF OT-1 VS SIMIT P. SHETH, I TA NO. 553 OF 2012, ORDER DATED 16/01/2013, WHILE DECIDING A SIMILAR IS SUE, THE HON'BLE HIGH COURT OF GUJARAT HAS HELD THAT: 'WE ARE BROADLY IN AGREEMENT WITH THE REASONING ADO PTED BY THE COMMISSIONER (APPEALS) WITH RESPECT TO THE NATURE O F DISPUTED PURCHASES OF STEEL IT MAY BE THAT THE THREE SUPPLIE RS FROM WHOM THE ASSESSES CLAIMED TO HAVE PURCHASED THE STEEL DI D NOT OWN UP TO SUCH SATES. HOWEVER, VITAL QUESTION WHILE CONSID ERING WHETHER THE ENTIRE AMOUNT OF PURCHASES SHOULD BE ADDED BACK TO THE- INCOME OF THE ASSESSEE OR ONLY THE PROFIT ELEMENT E MBEDDED THEREIN WAS TO ASCERTAIN WHETHER THE PURCHASES THEM SELVES WERE COMPLETELY BOGUS AND NON EXISTENT OR THAT THE PURCH ASES WERE ACTUALLY MADE BUT NOT FROM THE PARTIES FROM WHOM IT WAS CLAIMED TO HAVE BEEN MADE AND INSTEAD MAY HAVE BEEN PURCHAS ED FROM GREY MARKET WITHOUT PROPER BILLING OR DOCUMENTATIO N. IN THE PRESENT CASE, CIT BELIEVED THAT WHEN AS A TR ADER IN STEEL THE ASSESSEE SOLD CERTAIN QUANTITY OF STEEL, HE WOULD H AVE PURCHASED THE SAME QUANTITY FROM SOME SOURCE. WHEN THE TOTAL SALE IS ACCEPTED BY THE ASSESSING OFFICER, HE COULD NOT HAVE QUESTIONED THE VERY BASIS OF THE PURCHASES. IN ESSENCE THEREFORE, THE COMMISSIONER ( APPEALS) BELIEVED ASSESSES THEORY THAT THE PURCHASES WERE NOT BOGUS B UT WERE MADE FROM THE PARRIES OTHER THAN THOSE MENTIONED IN THE BOOKS OF ACCOUNTS. THAT BEING THE POSITION, NOT THE ENTIRE PURCHASES P RICE BUT ONLY PROFIT ELEMENT EMBEDDED IN SUCH PURCHASES CAN BE ADDED TO THE INCOME OF THE ASSESSEE .. SO MUCH IS DEAF BY DECISION OF THIS CONN IN PART ICULAR. COURT TAKEN A SIMILAR VIEW IN CASE OF COMMISSIONER OF INC OME TAX-IV VS. VIJAY M MISTRY CONSTRUCTION LTD. VIDE ORDER DATED 10.01-2 011 PASSED IN TAX APPEAL NO. 1090 OF 2009 AND IN CASE OF COMMISSIONER OF INCOME TAX-I VS. BHOLANATH POLY FAB PVT. LTD. VIDE ORDER DATED 2 3.10.2012 PASSED IN TAX APPEAL NO. 63 OF 2012. THE VIEW TAKEN BY THE TR IBUNAL IN CASE OF VIJAY PROTEINS PVT LTD. VS. CIT REPORTED IN 58 1TD 42B CAME TO BE APPROVED.' 6.3.4 SIMILARLY, WHILE DEALING WITH AN IDENTICAL ISSUE, IN THE CASE OF CJT, VS. BHOLANATH POLY FAB (P) LTD., I.T.A. NO. 63 OF 2 012, IN THE ORDER DATED 23/10/2012, THE HONBLE HIGH COURT OF GUJARAT HAS H ELD AS UNDER: - ITA NOS.687 & 688/MUM/2019 HARSHAD FULCHAND SHETH 5 'WE ARE OF THE OPINION THAT THE TRIBUNAL COMMITTED NO ERROR. WHETHER THE PURCHASES THEMSELVES WERE BOGUS OR WHET HER THE PARTIES FROM WHOM SUCH PURCHASES WERE ALLEGEDLY MAD E WERE BOGUS IS ESSENTIALLY A QUESTION OF FACT. THE TRIBUN AL HAVING EXAMINED THE EVIDENCE ON RECORD CAME TO THE CONCLUS ION THAT THE ASSESSES DID PURCHASE THE CLOTH AND SELL THE FINISH ED GOODS, IN THAT VIEW OF THE MATTER, AS NATURAL COROLLARY, NOT THE ENTITY AMOUNT COVERED UNDER SUCH PURCHASE, BUT THE PROFIT ELEMNT EMBEDDED THEREIN WOULD BE SUBJECT TO TAX. THIS WAS THE VIEW OF THIS COURT IN THE CASE OF SANJAY OILCAKE INDUSTRIES V. CIT [2009] 316 ITR 274 (GUJ.). SUCH DECISION IS ALSO FOLLOWED BY THIS COURT IN A J UDGMENT DATED AUGUST 16,2011, IN TAX APPEAL NO.673 OF 2010 IN THE CASE OF CIT V, KISHORAMRUTLAL PATEL. IN THE RESULT, TAX APPEAL IS DISMISSED,' (EMPHASIS SUPPLIED) 6.3.5 IN VIEW OF THE FACTS AND CIRCUMSTANCES OF THE CASE AND THE JUDICIAL PRONOUNCEMENTS CITED ABOVE, WHAT CAN BE DI SALLOWED OR TAXED IN THE INSTANT CASE, IS THE EXCESS PROFIT ELEMENT EMBE DDED IN SUCH PURCHASES SHOWN TO HAVE BEEN MADE FROM AFORESAID PA RTIES. AS NARRATED EARLIER, THE AO IN THIS CASE HAS HELD THAT THE PART Y FROM WHOM THE PURCHASES WERE MADE BY THE APPELLANT WERE FOUND TO BE BOGUS, ESTIMATIONS RANGING FROM 12.5% TO 25% HAVE BEEN UP HELD BY THE HON'BLE GUJARAT HIGH COURT, DEPENDING UPON THE NATU RE OF THE BUSINESS. 6.3.5.1 IN A NUMBER/SERIES OF RECENT CASES IN VOLVING THE SCAM UNEARTHED BY THE SALES TAX DEPT OF MAHARASHTRA WHER EBY THE HAWALA DEALERS WERE FOUND TO BE BOGUS PURCHASE BILLS WITHO UT DELIVERY OF GOODS, THE HON'BLE MUMBAI TRIBUNAL HAS ESTIMATED THE G.P A DDITION ON ACCOUNT OF SUCH BOGUS PURCHASES AS 12.5%, SOME OF WHICH ARE LISTED BELOW: I) SMT KIRANNOVINDOSHI IN ITA NO, 260L/MUM/2016 DAT ED 18.01.2017. II) ASHWIN PURSHOTAM BUJAJ &ANR. VS /TO &ANR,IN ITA NO.4736/MUM/2014,5207/MUIN/2014, DATED 14-12-20 16 III) ITO &ANR. VS. MAMSH KANJI PATEL &ANR., I N ITA 7299/MUM/2014, 7154/MUM/2012 & 7300/MUM/2014, 7627/MUM/2014 T DARED: 18-05-2017, IV) METROPOLITAN EXIMCHEM LTD., ITA NO. 2935/M UM/20L5. DATED:29- - 03-2017; V) RORTAK METAL INDUSTRIES VS. ITO, ITA NO. 722/MUM.2017 DTD. 04.09.2017; VI) ITO VS. JUGRAJ R. JAIN, ITA NO. 2571/MM/20 16 & 2572/M/2016 DTD. 02.08.2017; VII) B. J. EXPORTS VS. ASST, COMMISSIONER OF IN COME TAX, ITA NO. 5442- 5444/MUM/2016 DATED 13.09.2017; VIII) BATLIBOI ENVIRONMENTAL ENGINEERING LID. VS. DEPUTY COMMISSIONER OF INCOME-TAX, ITA NO. 2840 & 3482/M/2015 DATED 15,03. 2017; IX) DEPUTY COMMISSIONER OF INCOME-TAX &ANR, VS . REMI PROCESS PLANT & MACHINERY LTD. &ANR., ITA NO. 1723/M/2015, 1817/M/2015 DATED ITA NOS.687 & 688/MUM/2019 HARSHAD FULCHAND SHETH 6 21.03.2017. X) SMT. USNA B. AGARWA! VS ITO ITA NO . 7034/MUM/2016, DATED 01.09.2017. IN VIEW OF THE ABOVE DISCUSSED FACTUAL MATRIC AND P RECEDENTS, I AM OF THE VIEW THAT THE AO IS JUSTIFIED IN ESTIMATING THE PRO FIT ELEMENT CALCULATED 12.5% EMBEDDED IN IMPUGNED PURCHASES OF RA. 59,82,4 06/-, SHOWN FROM THE ALLEGED HAWALA PARTY AND ADDING THE SAME TO THE TOTAL INCOME RETURNED. THE ASSESSMENT ORDER OF THE AO IS A WELL- REASONED AND A SPEAKING ORDER GIVING IN DERAIL THE REASONS FOR HIS FAIR ESTIMATION AND THEREFORE, I DO NOT SEE ANY REASON TO LAKE A VIEW I N THE MATTER DIFFERENT FROM THE ONE TAKEN BY THE AO. THE ACTION OF THE AO IN ESTIMATION OF 12.5% GP IS SUSTAINED. HENCE, THE GROUND OF APPEAL NO. IS DISMISSED. 5. WE HAVE HEARD BOTH THE PARTIES, PERUSED THE MATE RIAL AVAILABLE ON RECORD AND GONE THROUGH ORDERS OF THE AUTHORITIE S BELOW. WE FIND THAT THE LD. AO HAS MADE ADDITION OF 12.50% PROFIT ON ALLEGED BOGUS PURCHASES ON THE GROUND THAT THE ASSESSEE IS ONE OF THE BENEFICIARY OF ACCOMMODATION ENTRIES OF BOGUS PURCHASE BILLS IS SUED BY HAWALA DEALERS. ACCORDING TO THE LD. AO, ALTHOUGH ASSESEE HAS FILED CERTAIN BASIC EVIDENCES, BUT FAILED TO FILE FURTHER EVIDENC E IN THE BACKDROP OF CLEAR FINDING BY THE SALES TAX DEPARTMENT, MAHARASH TRA THAT THOSE PARTIES ARE INVOLVED IN PROVIDING ACCOMMODATION ENT RIES WITHOUT ACTUAL DELIVERY OF GOODS. THE LD. AO HAD ALSO TAKEN SUPPORT FROM THE INVESTIGATION CONDUCTED DURING THE COURSE OF AS SESSMENT PROCEEDINGS, AS PER WHICH NOTICE ISSUED U/S 133(6) TO THE PARTIES WERE RETURNED UN-SERVED BY THE POSTAL AUTHORITIES. THEREFORE, HE CAME TO THE CONCLUSION THAT PURCHASES FROM THE SAID PARTIES ARE BOGUS IN NATURE. IT IS THE CONTENTIONS OF THE ASSES SEE BEFORE THE LOWER AUTHORITIES THAT PURCHASES FROM THE ABOVE PAR TY ARE SUPPORTED BY NECESSARY EVIDENCES. IT HAS FURNISHED ALL POSSIB LE EVIDENCES, INCLUDING BOOKS OF ACCOUNTS; STOCK DETAILS AND BANK STATEMENT TO PROVE THAT PAYMENT AGAINST SAID PURCHASES HAVE BEEN MADE THROUGH PROPER BANKING CHANNELS. ITA NOS.687 & 688/MUM/2019 HARSHAD FULCHAND SHETH 7 6 HAVING CONSIDERED ARGUMENTS OF THE LD. DR AND ALS O, MATERIAL AVAILABLE ON RECORD, WE FIND THAT BOTH THE SIDES HA VE FAILED TO PROVE THE CASE IN THEIR FAVOUR WITH NECESSARY EVIDENCES. ALTHOUGH, ASSESSEE HAS FILED CERTAIN BASIC EVIDENCES, BUT FAI LED TO FILE FURTHER EVIDENCES TO CONCLUSIVELY PROVE PURCHASES TO THE SA TISFACTIONS OF THE LD.AO. FURTHER, MERE PAYMENT BY CHEQUE DOES NOT PRO VE THE GENUINENESS OF PURCHASE, MORE PARTICULARLY WHEN OTH ER CIRCUMSTANTIAL EVIDENCE SAYS OTHERWISE. AT THE SAME TIME, THE LD. AO HAD ALSO FAILED TO TAKE THE INVESTIGATION TO A L OGICAL CONCLUSION BY CARRYING OUT NECESSARY ENQUIRES, BUT HE SOLELY RELI ED UPON INFORMATION RECEIVED FROM INVESTIGATION WING, WHICH WAS FURTHER SUPPORTED BY INFORMATION RECEIVED FROM MAHARASHTRA SALES TAX DEPARTMENT. THE AO NEITHER POINTED OUT ANY DESCREPA NICES IN BOOKS OF ACCOUNTS NOR MADE OUT A CASE OF SALES OUTSIDE BO OKS OF ACCOUNTS. IN FACT, THE AO DID NOT DISPUTED SALES DECLARED FOR THE YEAR. UNDER THESE CIRCUMSTANCES, IT IS DIFFICULT TO ACCEPT ARGU MENTS OF BOTH THE SIDES. FURTHER, IN A CASE WHERE PURCHASES ARE CONSI DERED TO BE PURCHASED FROM SUSPICIOUS/HAWALA DEALERS, VARIOUS H IGH COURTS AND TRIBUNALS HAD CONSIDERED AN IDENTICAL ISSUE IN LIGH T OF INVESTIGATION CARRIED OUT BY THE SALES TAX DEPARTMENT AND HELD TH AT IN CASE OF PURCHASES CLAIMS TO HAVE MADE FROM ALLEGED HAWALA D EALERS, ONLY PROFIT ELEMENT EMBEDDED IN THOSE PURCHASES NEEDS TO BE TAXED, BUT NOT TOTAL PURCHASE FROM THOSE PARTIES. THE HONBLE GUJARAT HIGH COURT, IN THE CASE OF CIT VS SIMITH P.SHETH 356 ITR 451 HAD CONSIDERED A SIMILAR ISSUE AND HELD THAT AT THE TIM E OF ESTIMATION OF PROFIT FROM ALLEGED BOGUS PURCHASES NO UNIFORM YARD STICKS COULD BE ADOPTED, BUT IT DEPENDS UPON FACTS OF EACH CASE. TH E ITAT, MUMBAI, IN NUMBER OF CASES HAD CONSIDERED AN IDENTICAL ISSU E AND DEPENDING UPON FACTS OF EACH CASE, DIRECTED THE LD.AO TO ESTI MATE GROSS PROFIT ITA NOS.687 & 688/MUM/2019 HARSHAD FULCHAND SHETH 8 OF 10% TO 15% ON TOTAL ALLEGED BOGUS PURCHASES. IN THIS CASE, CONSIDERING THE NATURE OF BUSINESS OF THE ASSESSEE THE LD. AO HAS MADE 12.50% PROFIT ADDITIONS, WHICH HAS BEEN UPHELD BY THE LD.CIT(A). ALTHOUGH, BOTH AUTHORITIES HAVE TAKEN 12 .50% RATE OF PROFIT FOR ESTIMATION OF INCOME FROM ALLEGED BOGUS PURCHASE, BUT NO ONE COULD SUPPORT SAID RATE OF GROSS PROFIT WITH NE CESSARY EVIDENCES OR ANY COMPARABLE CASES. THEREFORE, CONSIDERING FAC TS AND CIRCUMSTANCES OF THIS CASE AND CONSISTENT WITH VIEW TAKEN BY THE CO- ORDINATE BENCH IN NUMBER OF CASES, WE ARE OF THE CO NSIDERED OPINION THAT THE LD. CIT(A) HAS TAKEN ONE OF THE POSSIBLE V IEW AND ESTIMATED 12.50% GROSS PROFIT ON ALLEGED BOGUS PURCHASES TO SETTLE DISPUTE BETWEEN THE PARTIES AND HENCE, WE ARE INCLINED TO U PHOLD ORDER OF THE LD. CIT(A) AND DISMISS APPEAL FILED BY THE ASSE SSEE. 7. IN THE RESULT, APPEAL FILED BY THE ASSESEE IS DI SMISSED. ITA NO.688/MUM/2019:- 8. THE FACTS AND ISSUES INVOLVED IN THIS APPEAL ARE IDENTICAL TO THE FACTS AND ISSUES, WHICH WE HAD CONSIDERED IN ITA NO . 687/MUM/2019 FOR AY 2009-10. THE REASONS GIVEN BY U S IN PRECEDING PARAGRAPHS IN ITA NO. 687/MUM/2019 FOR AY 2009-10 SHALL MUTATIS MUTANDIS APPLY TO THIS APPEAL, AS WELL. THEREFORE, FOR SIMILAR REASONS RECORDED IN HIS ITA NO. 687/MUM/201 9, WE ARE INCLINED TO UPHOLD ORDER OF THE LD. CIT(A) AND DISM ISS APPEAL FILED BY THE ASSESSEE. 9. IN THE RESULT, BOTH APPEALS FILED BY THE ASSESS EE ARE DISMISSED. ITA NOS.687 & 688/MUM/2019 HARSHAD FULCHAND SHETH 9 ORDER PRONOUNCED IN THE OPEN COURT ON THIS 14/02/2 020 SD/- (SAKTIJIT DEY) SD/- (G. MANJUNATHA) JUDICIAL MEMBER ACCOUNTANT MEMBER MUMBAI ; DATED 14 /02/2020 THIRUMALESH SR.PS COPY OF THE ORDER FORWARDED TO : BY ORDER, (ASSTT. REGISTRAR) ITAT, MUMBAI 1. THE APPELLANT 2. THE RESPONDENT. 3. THE CIT(A), MUMBAI. 4. CIT 5. DR, ITAT, MUMBAI 6. GUARD FILE. //TRUE COPY//