M/S ATLANTA LTD, MUMBAI V. DCIT IRCLE-9 (1)(2), MUMBAI

ITA 7424/MUM/2019

• Counselvise Citation: [2021] 107 COUNSELVISE.COM (IT) 2988 (ITAT-MUMBAI)
• Duration Of Justice: 1 year(s) 10 month(s) 22 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 26-10-2021
• Appeal Filed By: Assessee
• Order Result: Partly Allowed
• Bench Allotted: A
• Assessment Year: 2010-2011
• Appeal Filed On: 04-12-2019
• Result in Favour of: Partly Allowed
• Court: TRIBUNAL
• Department Lawyers: BRAJENDRA KUMAR LD
• Assessee Lawyers: VIJAY MEHTALD
• Keywords: Reopening of assessment; Bogus purchase; Unexplained cash credit; Rectification of order; Source of fund; Tangible material; Sham transactions; Reason to believe; Reassessment proceedings; Capital Gains
• Section: 143(3); 142(1); 133A; 133(6); 143(2); 13; 131; 148; 154; 68

Judgement Text

1 IN THE INCOME TAX APPELLATE TRIBUNAL A BENCH, MUMBAI , , BEFORE HONBLE SHRI C.N. PRASAD , JM AND HONBLE SHRI MANOJ KUMAR AGGARWAL, AM (HEARING THROUGH VIDEO CONFERENCING MODE) 1 . ./ I.T.A. NO. 7424 /MUM/20 1 9 ( / ASSESSMENT YEAR : 2010 - 11 ) 2 . ./ I.T.A. NO. 7425 /MUM/2019 ( / ASSESSMENT YEAR : 2011 - 12 ) M/S ATLANTA LIMITED 301, SHREE AMBASHANTI CH A MBERS OPP . HOTEL LEELA, ANDHERI (E AST), MUMBAI - 400 059 / VS. DCIT CIRCLE 9(1)(2) , AAYKAR BHAVAN, MUMBAI - 400 020 ./ ./ PAN/GIR NO . A A ACA - 8865 - E ( / APPELLANT ) : ( / RESPO NDENT ) & 3 . ./ I.T.A. NO. 7630 /MUM/2019 ( / ASSESSMENT YEAR : 2011 - 12 ) 4 . ./ I.T.A. NO. 7631 /MUM/2019 ( / ASSESSMENT YEAR : 2012 - 13 ) 5 . ./ I.T.A. NO. 7632 /MUM/2019 ( / ASSES SMENT YEAR : 2013 - 14 ) DCIT CIRCLE 9(1)(2), R. NO. 210, 2 ND FLOOR AAYKAR BHAVAN, M. K. ROAD, MUMBAI - 400 020 / VS. M/S ATLANTA LIMITED 301, SHREE AMBASHANTI CHAMBERS OPP. HOTEL LEELA, ANDHERI (EAST), MUMBAI - 400 059 ./ ./ PAN/GIR NO . A AACA - 8865 - E ( / APPELLANT ) : ( / RESPONDENT ) ASSESSEE BY : SHRI VIJAY MEHTA , LD. AR REVENUE BY : SHRI BRAJENDRA KUMAR LD. SR. DR / DATE OF HEARING : 02 /09 /2021 / DATE OF PRONOUNCEMENT : 26/10/2021 2 / O R D E R PER BENCH 1. THE ASSESSEE IS IN FURTHER APPEAL FOR AYS 2010 - 11 & 2011 - 12 WHEREAS THE REVENUE IS IN FURTHER APPEAL FOR AYS 2011 - 12 TO 2013 - 14. FACTS AS WELL AS ISSUES ARE INTER - CONNECTED AND THEREFORE, THE APPEALS WERE HEARD TOGETHER AND ARE NOW BE ING DISPOSED - OFF BY WAY OF THIS COMMON ORDER FOR THE SAKE OF CONVENIENCE & BREVITY. FIRST WE TAKE UP ASSESSEES APPEAL FOR AY 2010 - 11 WHICH ARISES OUT OF THE ORDER OF LEARNED COMMISSIONER OF INCOME - TAX (APPEALS) - 16 , MUMBAI [CIT(A)], DATED 30/09/2019 IN THE MATTER OF ASSESSMENT FRAMED BY LD. ASSESSING OFFICER (AO) U/S 143(3) R.W.S. 147 OF THE ACT ON 29/12/2017. THE GROUNDS RAISED BY THE ASSESSEE READ AS UNDER: - 1. REOPENING OF ASSESSMENT U/S. 147 A) ON THE FACTS AND CIRCUMSTANCES OF THE CASE AND IN LAW, TH E LEARNED CIT(A) ERRED IN CONFIRMING THE REOPENING BEYOND A PERIOD OF FOUR YEARS FROM THE END OF THE RELEVANT ASSESSMENT YEAR OF ORIGINAL ASSESSMENT THAT WAS PASSED U/S. 143(3) U/S. 147 OF THE ACT THAT WAS PASSED AFTER VERIFYING THE LOANS. IN THE ABSENCE O F FAILURE ON PART OF THE APPELLANT TO DISCLOSE FULLY OR TRULY ALL MATERIAL FACTS NECESSARY FOR ITS ASSESSMENT, THE REOPENING OF ASSESSMENT IS BAD IN LAW AND NEEDS TO BE QUASHED. B) THE LEARNED CIT(A) ERRED IN CONFIRMING THE REOPENING OF ASSESSMENT U/S. 14 7 OF THE ACT WHICH WAS REOPENED MERELY ON THE BASIS OF THE INFORMATION RECEIVED FROM THE INVESTIGATION WING AND WITHOUT INDEPENDENT APPLICATION OF MIND BY THE LEARNED ASSESSING OFFICER. C) THE LEARNED CIT(A) ERRED IN CONFIRMING THE REOPENING OF ASSESSMENT U/S. 147 OF THE ACT WITHOUT APPRECIATING THAT THE LEARNED ASSESSING OFFICER HAD DISPOSED OFF THE OBJECTIONS IN GENERAL AND WITHOUT PROPERLY MEETING THE OBJECTIONS RAISED. 2. A DDITION OF RS.50,00,000/ - U/S. 68 ON ACCOUNT OF UNEXPLAINED CASH CREDIT A) WITHO UT PREJUDICE TO THE ABOVE AND WITHOUT ADMITTING, ON THE FACTS AND CIRCUMSTANCES OF THE CASE AND IN LAW, THE LEARNED CIT(A) ERRED IN CONFIRMING ADDITION OF RS. 50,00,000/ - BEING LOAN TAKEN FROM M/S. GATEWAY LEASING PVT. LTD. ('GLPL') AGAINST PLEDGE OF PROMO TERS' SHARES U/S. 68 OF THE ACT AS UNEXPLAINED CASH CREDIT MERELY ON THE BASIS OF INFORMATION RECEIVED FROM THE INVESTIGATION WING AND WITHOUT DUE APPLICATION OF MIND TO THE EXPLANATION AND DOCUMENTARY EVIDENCES PLACED ON RECORD. B) ON THE FACTS AND CIRCU MSTANCES OF THE CASE AND IN LAW, THE LEARNED CIT(A) ERRED IN CONFIRMING ADDITION OF RS.50,00,000/ - BEING LOAN TAKEN FROM GLPL U/S. 68 AS UNEXPLAINED CASH CREDIT WITHOUT APPRECIATING THAT SUFFICIENT TIME WAS NOT PROVIDED TO PRODUCE THE DIRECTOR OF THE LENDE R COMPANY BUT THE DIRECTOR APPEARED ON 02.01.2018 3 (AFTER COMPLETING THE ASSESSMENT) AND SUBMITTED THE REQUIRED DETAILS WHICH PROVED BEYOND DOUBT THE IDENTITY AND CREDITWORTHINESS OF THE LENDER COMPANY AS WELL AS GENUINENESS OF THE LOAN TRANSACTIONS. 2. TH E LD. AR ADVANCED ARGUMENTS TO ASSAIL THE VALIDITY OF REASSESSMENT PROCEEDINGS WHEREAS LD. SR. DR CONTROVERTED THE SUBMISSIONS MADE BY LD. AR. HAVING HEARD RIVAL SUBMISSIONS AND UPON CAREFUL CONSIDERATION OF MATERIAL FACTS, OUR ADJUDICATION TO THE APPEAL W OULD BE AS UNDER. ASSESSMENT PROCEEDINGS 3.1 THE ASSESSEE BEING RESIDENT CORPORATE ASSESSEE WAS ASSESSED U /S 143(3) ON 22/03/2013. HOWEVER, PURSUANT TO THE RECEIPT OF CERTAIN INFORMATION FROM DDIT (INV.), UNIT - 5(2), MUMBAI THAT A SURVEY ACTION WAS CONDUCTE D U/S 133A ON ASSESSEE ON 21/03/2017, THE CASE WAS REOPENED AND NOTICE U/S 148 WAS ISSUED ON 31/03/2017. THE REASONS FOR REOPENING WERE DULY COMMUNICATED TO THE ASSESSEE AND THE SAME HAS BEEN EXTRACTED AT PARA - 4 OF THE ASSESSMENT ORDER. DURING SURVEY ACTIO N, IT WAS FOUND THAT DURING THE YEAR THE ASSESSEE OBTAINED UNSECURED LOANS OF RS.50 LACS EACH FROM TWO PART IES VIZ. M/S GATEWAY L EASING PRIVATE LTD. & M/S SPECTRUM TRIMPEX PVT. THESE TWO ENTITIES, AS PER THE FINDINGS OF KOLKATA INVESTIGATION WING, WERE INV OLVED IN PENNY STOCK MANIPULATION AND PROVIDED EXIT TO BENEFICIARIES OF LONG TERM CAPITAL GAINS. THESE TWO ENTITIES WERE ALLEGEDLY DUMMY PAPER ENTITIES WITH NO REAL BUSINESS AND INVOLVED IN SHAM TRANSACTIONS. THEREFORE, THE CASE WAS REOPENED AND IT WAS ALL EGED THAT THE ASSESSEE FAILED TO DISCLOSE FULLY AND TRULY ALL MATERIAL FACTS AS TO THE GENUINENESS OF LOAN TRANSACTIONS. 3.2 THE ASSESSEE RAISED OBJECTIONS TO REOPENING OF THE ASSESSMENT , HOWEVER, THE SAME WERE REJECTED AND NOTICES U/S 143(2) AND 142(1) 4 WE RE ISSUED IN DUE COURSE REQUIRING ASSESSEE TO PROVE THE GENUINENESS OF LOAN TRANSACTIONS. HOWEVER, THE ASSESSEE FAILED TO REPLY TO THE SHOW CA USE NOTICES. A SUMMON U/S 131 WAS ISSUED TO THE PRINCIPAL OFFICERS OF BOTH THESE ENTITIES. HOWEVER , THE SUMMONS WE RE NOT ACCEPTED WHICH WERE CONFRONTED TO THE DIRECTOR O THE ASSESSEE. THE ASSESSEE FAILED TO PRODUCE THE DIRECTORS OF THE TWO ENTITIES AND ACCORDINGLY , IT WAS OPINED THAT THE ASSESSEE FAILED TO ESTABLISH THE IDENTITY AND GENUINENESS OF BOTH THE ENTITIES. S INCE THE ASSESSE E FAILED TO D ISCHARGE THE PRIMARY ONUS OF ESTABLISHING THE GENUINENESS OF LOAN TRANSACTIONS , THE AMOUNT OF RS.100 LACS WAS ADDED TO THE INCOME OF THE ASSESSEE AS UNEXPLAINED CASH CREDIT U/S 68 WHILE FRAMING ASSESSMENT ON 29/12/2017. 3.3 HO WEVER, THIS ORDER HAS SUBSEQUENTLY BEEN RECTIFIED U/S 154 ON 12/02/2018 IN VIEW OF THE FACT THAT DURING THE COURSE OF ASSESSMENT PROCEEDINGS FOR AY 2011 - 12, SHRI ANIL CHOKHANI ( DIRECTOR OF BOTH THE ENTITIES ) APPEARED BEFORE LD. AO AND HIS STATEMENT WAS REC ORDED ON OA TH U/S 131. SHRI ANIL CHOKHANI CONFIRMED THAT THE LOAN OF RS.50 LACS WAS GIVEN BY M/S GATEWAY LEASING P RIVATE LIMITED TO ASSESSEE ON 02/12/2009 AND THE SAME WAS REPAID ON 21/05/2010. HOWE VER, IT WAS NOTED BY LD. AO THAT ANOTHER SHELL COMPANY NAM ELY M/S ANUSHREE TIE - UP PVT. LTD. WAS MERGED WITH THIS ENTITY ON 01/04/2009 AND TH E LOAN WAS EXTENDED BY GATEWAY L EASING PRIVATE L IMITED TO THE ASSESSEE SUBSEQUENTLY ON 02/12/2009. THEREFORE, THIS ENTITY WAS ALSO A S HELL COMPANY IN VOLVED IN THE BUSINESS OF ACCOMMODATION ENT RIES AND THESE FACTS WOULD STRENGTHEN THE ADDITIONS MADE U/S 68. 3.4 HOWEVER, IT TRANSPIRED THAT THE NAME OF M/S SPECTRUM TRIMPEX PRIVATE LTD DID NOT APPEAR IN THE SHELL COMPANY DATABASE OF K OLKATA INVESTIGATION WING AND NO MATERIAL WAS AVAILABLE WHICH WOULD S HOW THAT 5 THIS ENTITY WAS A BO GUS ENTITY. MOREOVER, THIS ENTITY HAD DULY RESPONDED TO THE NOTICES ISSUED U/S 133(6) AND THEREFOR E, THE ADDITION WITH RESPECT TO THIS ENTITY WAS TO BE DELETED. ACCORDINGLY, THE ASSESSMENT ORDER WAS RECTI FIED LEAVING ADDITION OF RS.50 LACS WITH RESPECT TO M/S GATEWAY L EASING PRIVATE LIMITED. APPELLATE PROCEEDINGS 4.1 THE ASSESSEE ASSAILED THE VALIDITY OF REASSESSMENT PROCEEDINGS ON VARIOUS GROUNDS. HOWEVER, IT WAS NOTED BY LD. CIT(A) THAT THE INFORMATION RECEIVED BY LD. AO WAS TANGIBLE MATERIAL ON THE BASIS OF WHICH AN OPINION OF ESCAPEMENT OF INCOME WAS FORMED. THE LD. AO HAD DEFINITE REASON TO BELIEVE THAT INCOME HAD ESCAPED ASSESSMENT AND THEREFORE, THE REASSESSMENT PROCEEDINGS WERE VALID. 4.2 THE ADDI TIONS ON MERITS WERE CONFIRMED WITH FOLLOWING OBSERVATIONS: - 6.2.21 IN THE PRESENT CASE, THE A.O. HAD CONDUCTED DETAILED ENQUIRY WHICH REVEALED THAT: I. T HERE WAS NO MATERIAL ON RECORD TO PROVE, OR EVEN REMOTELY SUGGEST, THAT THE UNSECURED MONEY WAS REC EIVED FROM INDEPENDENT LEGAL ENTITIES. THE INQUIRY REVEALED THAT THE LENDERS WERE NON - EXISTENT, AND HAD NO OFFICE AT THE ADDRESS MENTIONED BY THE APPELLANT. IT IS CLEAR SAID BECAUSE, NONE OF THE PERSON AT THE REGISTERED ADDRESS HAS ACCEPTED THE SUMMON. II. THERE WAS NO EXPLANATION WHATSOEVER OFFERED AS TO WHY THE LENDER HAD LEND SUCH HUGE AMOUNT. IT IS THE ONUS ON THE APPELLANT COMPANY TO PROVE THE CREDITWORTHINESS OF THE LENDERS AND GENUINE SOURCES BEHIND THE LOAN TAKEN. III. FURTHERMORE, NONE OF THE SO - C ALLED LENDER ESTABLISHED THE SOURCE OF FUNDS FROM WHICH, THEY LEND MONEY. FURTHER, IT IS CLEAR SEEN FROM THE PARA NO. 4 OF THE ASSESSMENT ORDER THAT BOTH THE COMPANIES W ERE INVOLVED IN LTCG SCAM AS HELD IN - DEPTH IN VESTIGATION UNDERTAKEN BY THE KO LKATA INVE STIGATION DIRECTORATE OF THE INCOME TAX DEPARTMENT. AS PER THE INVESTIGATION REPORT OF THE KOLKATA DIRECTORATE, BOTH THE LENDERS HAD PROVIDED EXIT TO THE BE NEFICIARY OF LONG TERM CAPITAL GAIN AND BOOKED SHORT TERM CAPITAL LOSS IN THEIR BOOKS AND UNACCOUNTE D CASH WAS HAN DLE OVER TO THEM IN LIES OF CHEQUES OF EQUAL AMOUNT FROM THEM OSTENSIBLE FOR PURCHASE OF SUCH SHARES AT ARTIFICIALLY INFLATED MARKET PRICE. V. THE MERE SUBMISSION OF THE CONFIRMATION OR BANK TRANSACTION COPY OF/FROM THE LENDER WAS NOT SUFFICI ENT TO DISCHARGE THE ONUS UNDER SECTION 68 OF THE ACT. 6. 2.22 IN VIEW OF ABOVE FACTS AND THAT NO FURTHER EVIDENCES OR ARGUMENTS HAVE BEEN PUT FORTH BY THE APPELLANT DURING THE COURSE OF APPELLATE PROCEEDINGS. IT IS HELD THAT NO INTERFERENCE IS CALLED FOR I N THE DECISION OF ASSESSING OFFICER AS THE APPELLANT HAS 6 FAILED TO DISCHARGE THE ONUS REQUIRED UNDER SECTION 68 OF THE ACT AND THE ASSESSING OFFICER WAS JUSTIFIED IN ADDED THE AMOUNTS TO THE APPELL ANT'S INCOME OF RS.50,00,000/ - . THEREFORE, ADDITION U/S 68 OF THE ACT IS CONFIRMED. THE APPEAL OF THE ASSESSEE ON THIS GROUND IS D ISMISSED. AGGRIEVED AS AFORESAID, THE ASSESSEE IS IN FURTHER APPEAL BEFORE US. OUR FINDINGS & ADJUDICATION 5. SO FAR AS THE ISSUE OF VALIDITY OF REASSESSMENT PROCEEDING IS CONCERNED, WE CONCUR WITH THE ADJUDICATION OF LD. CIT(A) IN VIEW OF THE FACT THAT SUBSEQUENT TO COMPLETION OF ASSESSMENT U/S 143(3), THE LD. AO WAS CLINCHED WITH SPECIFIC INFORMATION WHICH INDICATED POSSIBLE ESCAPEMENT OF INCOME IN THE HANDS OF THE ASSESSEE. THE ASSESS MENT U/S 143(3) WAS COMPLETED ON 22/03/2013 WHEREAS TANGIBLE INFORMATION WAS RECEIVED BY LD. AO VIDE LETTER DATED 29/03/2017 WHEREIN IT TRANSPIRED THAT THE LOANS TAKEN BY THE ASSESSEE DURING THE YEAR WERE FROM THOSE ENTITIES WHICH WERE INVOLVED IN PENNY ST OCK MANIPULATION AND PROVIDED EXIT TO BENEFICIARIES OF LONG TERM CAPITAL GAINS. THESE TWO ENTITIES WERE ALLEGEDLY DUMMY PAPER ENTITIES WITH NO REAL BUSINESS AND INVOLVED IN SHAM TRANSACTIONS. THESE FACTS, IN OUR OPINION, WERE QUITE SUFFICIENT TO REOPEN THE CASE OF THE ASSESSEE. THE LD. AR HAS ARGUED THAT THERE WAS NO INDEPENDENT APPLICATION OF MIND BY LD. AO WHICH IS EVIDENT FROM THE FACT THAT THE ORDER WAS RECTIFIED U/S 154 AND THE ADDITION OF RS.50 LACS WITH RESPECT TO ONE OF THE ENTITIES WAS DELETED SINC E NO MATERIAL WAS FOUND WITH RESPECT TO THAT ENTITY. HOWEVER, THE RECTIFICATION ORDER HAS BEEN PASSED BASED ON THE OUTCOME OF ASSESSMENT PROCEEDINGS OF AY 2011 - 12 WHEREIN THE DIRECTOR OF THESE TWO ENTITIES APPEARED BEFORE LD. AO AND RECORDED HIS STATEMENT ON OATH. THEREFORE, THE ARGUMENT S MADE BY LD. AR DO NOT CONVINCE US. AT THE TIME OF REOPENING, THE ONLY REQUIREMENT IS THAT LD.AO SHOULD HAVE SPECIFIC TANGIBLE INFORMATION WHICH INDICATE POSSIBLE ESCAPEMENT OF INCOME IN THE 7 HANDS OF THE ASSESSEE. NOTHING M ORE IS REQUIRED AT THIS STAGE TO REOPEN THE CASE OF THE ASSESSEE. THE INFORMATION SO RECEIVED, IN OUR CONSIDERED OPINION, WAS SUFFICIENT TANGIBLE MATERIAL. THEREFORE, LEGAL GROUNDS RAISED BY LD. AR STAND REJECTED. 6. SO FAR AS THE MERIT OF THE ADDITIONS AR E CONCERNED, UPON PERUSAL OF RECTIFICATION ORDER U/S 154, IT COULD BE GATHERED THAT THE DIRECTOR OF M/S GATEWAY LEASING PRIVATE LIMITED APPEARED BEFORE LD. AO AND HIS STATEMENT WAS RECORDED ON OATH U/S 131. IN THE RECORDED STATEMENT, THE FACT OF ADVANCING LOAN TO THE ASSESSEE AS WELL AS REPAYMENT WAS DULY ACCE PTED. UPON PERUSAL OF PAPER - BOOK AS PLACED BEFORE US, IT COULD BE GATHERED THAT THE ASSESSEE HAS DULY FILED LEDGER ACCOUNT OF THE PARTY ALONG WITH NAME, ADDRESS, PAN OF THE LENDER, DETAILS OF BROKERS W HO ARRANGED LOAN, SECURITIES OFFERED, TERM SHEET / SANCTION LETTER, BOARD RESOLUTION, INTER - CORPORATE DEPOSIT RECEIPT, PLEDGE AGREEMENT AND VARIOUS OTHER SIMILAR DOCUMENTS IN SUPPORT OF THE GENUINENESS OF THE LOAN TRANSACTION. THE LOAN WAS FULLY PAID ON 21 /05/2010 ALONG WITH INTEREST. THE TRANSACTIONS WERE CONFIRMED BY M/S GATEWAY LEASING PRIVATE LIMITED IN RESPONSE TO NOTICE U/S 133(6). THUS, THE ASSESSEE HAD DULY DISCHARGED THE ONUS OF PROVING THE IDENTITY OF THE LENDER, THEIR CREDITWORTHINESS AND THE GEN UINENESS OF THE LOAN TRANSACTION. THIS BEING SO, THE IMPUGNED ADDITIONS ARE NOT SUSTAINABLE IN LAW. BY DELETING THE SAME, WE ALLOW GROUND NO.2 OF THE APPEAL. THE APPEAL STAND PARTLY ALLOWED. ASSESSEES APPEAL, ITA NO.7425/MUM/2019, AY 2011 - 12 7 . THE ONLY GROUND URGED IN THE APPEAL IS INTEREST DISALLOWANCE OF RS.1.21 LACS AS PAID BY THE ASSESSEE TO M/S GATEWAY LEASING PRIVATE LIMITED. AN ASSESSMENT FOR THE YEAR WAS SIMILARLY FRAMED U/S 143(3) 8 R.W.S. 147 ON 12/02/2018. SINCE THE LOAN TAKEN BY THE ASSESSEE FR OM M/S GATEWAY LEASING PRIVATE LIMITED WAS HELD TO BE BOGUS IN AY 2010 - 11 , THE INTEREST PAID ON THIS LOAN FOR RS.1.21 LACS WAS ADDED BACK TO THE INCOME OF THE ASSESSEE. THE SAME, UPON CONFIRMATION BY LD. CIT(A), IS IN FURTHER CHALLENGE BEFORE US. SINCE WE HAVE DELETED THE QUANTUM ADDITION IN AY 2010 - 11, THE INTEREST PAID BY THE ASSESSEE WOULD BE AN ALLOWABLE DEDUCTION. WE ORDER SO. THE APPEAL STAND PARTLY ALLOWED. REVENUES APPEALS FOR AYS 2011 - 12 TO 2013 - 14 8. THE GRIEVANCE OF THE REVENUE IN ALL THESE YE ARS IS COMMON I.E. ESTIMATED ADDITIONS ON ACCOUNT OF ALLEGED BOGUS PURCHASES MADE BY ASSESSEE FROM SALES TAX HAWALA DEALERS. DURING ASSESSMENT PROCEEDINGS OF AY 2011 - 12, IT TRANSPIRED THAT THE ASSESSEE MADE PURCHASES OF RS.7.26 LACS FROM TWO ENTITIES AND W AS REQUIRED TO SUBSTANTIATE THE PURCHASES. THOUGH THE ASSESSEE FILED CERTAIN DOCUMENTS, HOWEVER, NOTICES ISSUED U/S 133(6) TO THESE ENTITIES REMAINED UN - SERVED. THE ASSESSEE COULD NOT PRODUCE THE PARTIES FOR CONFIRMATION OF PURCHASES. ACCORDINGLY, THESE PU RCHASES WERE DISALLOWED AND ADDED BACK TO ASSESSEES INCOME. THE LD.CIT(A), INTER - ALIA, RELYING UPON THE DECISION OF HONBLE GUJARAT HIGH COURT IN CIT V/S SIMIT P. SHETH (38 TAXMANN.COM 385) , HELD THAT ONLY PROFIT ELEMENT EMBEDDED IN SUCH TRANSACTIONS WAS TO BE CONSIDERED AS INCOME OF THE ASSESSEE. THE SAME WAS ESTIMATED @12.5%. SIMILAR ESTIMATIONS WERE MADE FOR AYS 2012 - 13 & 2013 - 14. AGGRIEVED, THE REVENUE IS IN FURTHER APPEAL BEFORE US. 9. UPON CAREFUL CONSIDERATION OF FACTUAL MATRIX, IT COULD BE GATHERED THAT THE PURCHASES WERE SUPPORTED BY PRIMARY PURCHASE DOCUMENTS AND 9 THE PAYMENTS TO THE SUPPLIERS WAS THROUGH BANKING CHANNELS. THE WHOLE OF PURCHASES HAVE BEEN DISALLOWED WHILE ACCEPTING THE SALES WHICH COULD NOT BE HELD TO BE JUSTIFIED. THEREFORE, THE E STIMATION MADE BY LD. CIT(A), FOR ALL THE THREE YEARS, IS QUITE FAIR AND REASONABLE. FINDING NO REASON TO DEVIATE FROM THE SAME, WE DISMISS THE APPEALS FOR ALL THE THREE YEARS. CONCLUSION 10. THE ASSESSEES APPEAL S STANDS PARTLY ALLOWED WHEREAS THE APPEALS OF THE REVENUE STAND DISMISSED. ORDER PRONOUNCED ON 26 TH OCTOBER, 2021. SD/ - SD/ - ( C. N. PRASAD ) (MANOJ KUMAR AGGARWAL) / JUDICIAL MEMBER / ACCOUNTANT MEMBER MUMBAI; DATED : 26/10/2021 SR.PS, DHANANJAY / COPY OF THE ORDER FORWARDED TO : 1. / THE APPELLANT 2. / THE RESPONDENT 3. ( ) / THE CIT(A) 4. / CIT CONCERNED 5. , , / DR, ITAT, MUMBAI 6. / GUARD FILE / BY ORDER, / (DY./ASSTT.REGISTRAR) , / ITAT, MUMBAI.