Ganesh Industries, Gandhinagar V. The CIT(A), Gandhinagar, Ahmedabad

ITA 814/AHD/2016

• Counselvise Citation: [2018] 122 COUNSELVISE.COM (IT) 4040 (ITAT-AHMEDABAD)
• Duration Of Justice: 2 year(s) 6 month(s) 8 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 10-10-2018
• Appeal Filed By: Assessee
• Order Result: Partly Allowed
• Bench Allotted: Not Allotted
• Assessment Year: 2010-2011
• Appeal Filed On: 01-04-2016
• Result in Favour of: Partly Allowed
• Court: TRIBUNAL
• Department Lawyers: LALIT P JAIN
• Keywords: Bogus purchase; Question of law
• Section: 40A(3)

Judgement Text

, - IN THE INCOME TAX APPELLATE TRIBUNAL AHMEDABAD - BENCH C BEFORE SHRI RAJPAL YADAV, JUDICIAL MEMBER AND SHRI AMARJIT SINGH, ACCOUNTANT MEMBER ./ ITA NO.93/AHD/2016 / ASSTT. YEAR: 2010-2011 AND ./ ITA NO.814/AHD/2016 / ASSTT. YEAR: 2010-2011 GANESH INDUSTRIES 157, PINDARA VILLAGE GANDHINAGAR. PAN : AAIFK 1646 G VS. ITO, WARD-2 GANDHIANGAR. / (APPELLANT) / (RESPONDENT) ASSESSEE BY : SHRI TUSHAR P. HEMANI, AR REVENUE BY : SHRI LALIT P. JAIN, SR.DR ! / DATE OF HEARING : 18/09/2018 '#$ ! / DATE OF PRONOUNCEMENT: 10/10/2018 %& / O R D E R PER RAJPAL YADAV, JUDICIAL MEMBER: ITA NO.93/AHD/2016 IS DIRECTED AGAINST ORDER OF THE LD.CIT(A), GANDHINAGAR, AHMEDABAD VIDE WHICH THE LD.CIT(A) HAS DISMISSED APPEAL OF THE ASSESSEE AND FURTHER ENHANCED THE INC OME. ITA NO.814/AHD/2016 IS AGAINST ORDER OF THE LD.CIT(A) V IDE WHICH THE LD.CIT(A) HAS IMPOSED PENALTY OF RS.70,72,217/- UND ER SECTION 271(1)(C) OF THE INCOME TAX ACT, 1961 ON THE ADDITI ON MADE BY ENHANCING THE INCOME AT HIS END. ITA NO.93 AND 814/AHD/2016 2 2. FIRST WE TAKE QUANTUM APPEAL: THOUGH THE ASSESS EE HAS TAKEN SIX GROUNDS OF APPEAL, BUT ITS GRIEVANCE RELATES TO DISALLOWANCE OF EXPENSES DEBITED TOWARDS PURCHASES AMOUNTING TO RS. 2,08,06,760/- AND RS.3,15,000/-. 3. BRIEF FACTS OF THE CASE ARE THAT THE ASSESSEE AT THE RELEVANT TIME WAS ENGAGED IN THE BUSINESS OF MANUFACTURE OF CERAM IC GLAZE MIXTURE. IT HAS FILED ITS RETURN OF INCOME ON 8.9.2010 DECLA RING TOTAL INCOME OF RS.7,89,630/-. THE CASE OF THE ASSESSEE WAS SELEC TED FOR SCRUTINY ASSESSMENT AND NOTICE UNDER SECTION 143(2) WAS ISSU ED AND SERVED UPON THE ASSESSEE. ON SCRUTINY OF THE ACCOUNTS, TH E LD.AO FOUND OUTSTANDING LIABILITY AS ON 31.3.2010 AGAINST THREE ENTITIES FROM WHICH PURCHASES WERE MADE. HE NOTICED SUCH DETAILS AS UN DER: SR. NO. NAME OF THE PARTY PURCHASES IN RS. OUTSTANDING LIABILITY IN RS. 1. MAHARAJA MINERAL & TRADERS RS.81,14,080/- RS.61,39,449/- 2. BALAJI GRINDING MILLS RS.44,89,680/- RS.40,71,680/- 3. NATURAL TRADERS RS.82,03,000/- RS.77,85,000/- 4. THE LD.AO, THEREAFTER ISSUED NOTICE TO ALL THESE CONCERNS AS WELL AS TO THE ASSESSEE AND CALLED FOR VARIOUS DETAILS. AF TER DETAILED INQUIRY, HE DISALLOWED CERTAIN PAYMENTS MADE TO THESE PARTIES W ITH THE HELP OF SECTION 40A(3). THIS SECTION CONTEMPLATES THAT PAY MENTS MADE TO A PARTY AT A TIME EXCEED RS.20,000/- IN CASH WOULD NO T BE ALLOWABLE AS DEDUCTION. IN THIS WAY, THE LD.AO HAS MADE ADDITIO N OF RS.28,01,631/-. THE LD.AO HAS DETERMINED THE TAXABLE INCOME OF THE ASSESSEE AT RS.39,87,513/- AS AGAINST RETURNED INCOME AT RS.7,8 9,630/-. THE LD.AO HAS ALSO DISALLOWED A SUM OF RS.3,15,000/- ALSO. 5. DISSATISFIED WITH THESE ADDITIONS, THE ASSESSEE CARRIED THE MATTER IN APPEAL BEFORE THE LD.CIT(A). THE LD.CIT(A) HAD ISSUED A NOTICE FOR ENHANCEMENT OF INCOME. ACCORDING TO THE LD.CIT(A) THE ALLEGED PURCHASES FROM THREE CONCERNS VIZ. MAHARAJA MINERAL S & TRADERS, BALAJI GRINDING MILLS AND NATURAL TRADERS ARE TO BE TREATE D AS BOGUS. THE ITA NO.93 AND 814/AHD/2016 3 LD.CIT(A) MADE ADDITION OF THE ALLEGED OUTSTANDING LIABILITY AS WELL AS PAYMENT MADE BY THE ASSESSEE TO THESE CONCERNS. IN OTHER WORDS, THE PURCHASES MADE FROM THESE CONCERNS WERE TREATED AS BOGUS AND CORRESPONDING PURCHASES COST WAS DISALLOWED TO THE ASSESSEE. HE MADE ADDITION OF RS.2,08,06,760/-. SIMILARLY, WITH REGA RD TO THE ADDITION OF RS.3,15,000/- IT WAS OUTSTANDING BALANCE OF RICASIL CERAMIC INDUSTRIES P.LTD. THE LD.CIT(A) DID NOT ALLOW OF THIS AMOUNT ON THE GROUND THAT NO PAYMENT HAS BEEN MADE BY THE ASSESSEE TO THIS CONCE RN, AND THIS CONCERN DID NOT RESPOND TO THE NOTICE OF THE AO. 6. BEFORE US, THE LD.COUNSEL FOR THE ASSESSEE CONTE NDED THAT IT HAS MADE GENUINE PURCHASES FROM THE ABOVE REFERRED THRE E PARTIES AND IN SUPPORT OF ITS CLAIM, IT HAS FILED FOLLOWING DOCUME NTARY EVIDENCE: PARTICULARS PGS OF P/B PURCHASE LEDGERS 106-112 LEDGERS OF CONCERNED THREE PARTIES 113-117 PURCHASE BILLS W.R.T. PURCHASES FROM CONCERNED PARTIES 118-133 DETAILS W.R.T. PURCHASES VIZ. NAME AND ADDRESS OF PARTIES, DATE OF PURCHASE, AMOUNT AND QUANTITY OF PURCHASES, ETC. AND LIKE DETAILS FOR SALES AS WE WELL 134-154 QUANTITATIVE DETAILS OF STOCK 154 TAX AUDIT REPORT AND ANNUAL ACCOUNTS 82-87, 93-104 7. HE PLACED ON RECORD COPY OF HONBLE GUJARAT HIGH COURTS JUDGMENT. ON THE OTHER HAND, THE LD.DR RELIED UPON ORDER OF THE LD.CIT(A). HE SUBMITTED THAT THE ASSESSEE FAILED T O PROVE GENUINENESS OF THE PURCHASES, HENCE, THE LD.CIT(A) HAS RIGHTLY DISALLOWED THE CLAIM OF THE ASSESSEE. ITA NO.93 AND 814/AHD/2016 4 8. WE HAVE DULY CONSIDERED RIVAL SUBMISSIONS AND GO NE THROUGH THE RECORD CAREFULLY. THE CASE OF THE ASSESSEE IS THAT IT HAS MADE TOTAL PURCHASES OF RS.5,31,42,644/-. THE DETAILS OF SUCH PURCHASES HAVE BEEN PLACED IN THE PROFIT & LOSS ACCOUNT AT PAGE NO .86 OF THE PAPER BOOK. THE SALES DISCLOSED BY THE ASSESSEE HAVE NOT BEEN DISTURBED EITHER BY THE AO OR BY THE LD.CIT(A). IN OTHER WOR DS, SALE TARGET ACHIEVED BY THE ASSESSEE HAVE BEEN ACCEPTED. THE C ASE OF THE AO WHILE EXAMINING PURCHASES WAS THAT CERTAIN BILLS MA DE TO THREE CONCERNS WERE EXCEEDING RS.20,000/- AND THOSE PAYME NTS WERE MADE IN CASH. THEREFORE, DISALLOWANCE UNDER SECTION 40A (3) DESERVES TO BE MADE. HE ACCORDINGLY DISALLOWED A SUM OF RS.28,10, 631/-. BUT THE LD.CIT(A) HARBOURED A BELIEF THAT TOTAL PURCHASES M ADE FROM THESE THREE CONCERNS DESERVES TO BE TREATED AS BOGUS AND A DISA LLOWANCE IS TO BE MADE. THE LD.COUNSEL FOR THE ASSESSEE POINTED OUT TO US THAT IF THESE PURCHASES ARE BEING TREATED AS BOGUS, THEN ALMOST 4 0% OF THE PURCHASES WOULD BE WIPED OUT FROM THE TOTAL PURCHAS ES, AND IF THAT BE SO, THEN HOW THE ASSESSEE WOULD ACHIEVE THE SALE TA RGET ACCEPTED BY THE AO. THE GP RATE WOULD BE INCREASED TO A FIGURE WHICH COULD NOT BE ACHIEVED IN THIS LINE OF BUSINESS. ALTERNATIVELY, IT WAS SUBMITTED THAT SUCH ISSUES CAN BE BAFFLING THE REVENUE AUTHORITIES AT DIFFERENT STAGES AND TRAVELLED UPTO THE HONBLE HIGH COURT. HE PLACE D ON RECORD JUDGMENT OF THE HONBLE GUJARAT HIGH COURT IN THE C ASE OF CIT VS. GUJARAT AMBUJA EXPORT LTD., TAX APPEAL NO.840 OF 20 13 WHEREIN THE TRIBUNAL HAS UPHELD THE ADDITION TO THE EXTENT OF 5 % OF TOTAL PURCHASES WHICH WERE TREATED AS BOGUS. IN THAT CASE PURCHASE S WERE SHOWN TO BE MADE FROM VISHAL TRADERS, BUT ACTUALLY SOMEONE ELSE MADE SUPPLIES TO THE ASSESSEE. IN THAT CIRCUMSTANCE, CONSIDERING TH E EXTRA ELEMENT OF PROFIT EARNED BY THE ASSESSEE AN ADDITION TO THE EX TENT OF 5% IS MADE. REVENUE WAS NOT SATISFIED ON THIS ADDITION AND TOOK THE DISPUTE BEFORE THE HONBLE HIGH COURT. IT WAS CONTENDED THAT ATLE AST 25% OF PURCHASES OUGHT TO BE DISALLOWED BECAUSE IN THE PAS T CERTAIN CASES VIZ. SANJAY OILCAKE INDUSTRIES VS. CIT, (2009) 316 ITR 2 74 (GUJ) 25% OF ITA NO.93 AND 814/AHD/2016 5 PURCHASES WERE DISALLOWED TO THE ASSESSEE AND ADDIT ION WAS MADE. HOWEVER, CONSIDERING THE NATURE OF BUSINESS CARRIED OUT BY THE ASSESSEE IN THE CASE OF GUJARAT AMBUJA, THE HONBLE GUJARAT HIGH COURT UPHELD THE ADDITION MADE BY THE TRIBUNAL AT 5% OF THE TOTA L PURCHASES. NO DOUBT, THERE IS DISCREPANCY IN THE PURCHASES MADE B Y THE ASSESSEE FROM THREE PARTIES. THE PAYMENTS WERE OUTSTANDING AT CL OSE OF THE ACCOUNTS SUBSTANTIALLY, AND BEFORE US, THE LD.COUSNEL FOR TH E ASSESSEE AGREED THAT IF AN ADHOC DISALLOWANCE OF THE PURCHASES IS BEING MADE THEN T HE ASSESSEE WOULD HAVE NO OBJECTION. HE PRAYED THAT S UCH ADHOC ADDITION SHOULD BE RESTRICTED AT 5% OF THE TOTAL PURCHASES M ADE FROM THESE CONCERNS. THE LD.DR CONTENDED THAT IT SHOULD NOT B E LESS THAN 25%. 9. ON DUE CONSIDERATION OF THE ABOVE FACTS AND CIRC UMSTANCES, WE ARE OF THE VIEW THAT THE ASSESSEE FAILED TO SUBSTAN TIATE ITS PURCHASES WITH PLAUSIBLE EVIDENCE, THOUGH IT HAS SUBMITTED DE TAILS, BUT THESE ARE PURCHASE LEDGERS MAINTAINED BY THE ASSESSEE. THEY DEMONSTRATED QUANTITATIVE DETAILS OF PURCHASES, DETAILS OF PARTI ES, BUT CONFIRMATION FROM THOSE PARTIES HAVE NOT BEEN FILED. HENCE, PUR CHASES FROM THESE THREE PARTIES ARE TO BE TREATED AS NON-GENUINE. EL EMENT OF EXTRA PROFIT EARNED BY THE ASSESSEE IN THIS EXERCISE DESERVES TO BE ADDED IN THE TOTAL INCOME. THE DISPUTE CAN BE APPRECIATED WITH AN EXAMPLE VIZ. AN ASSESSEE MAKES PURCHASES FROM PARTY A, BUT OBTAIN S BILL FROM PARTY B. IN THIS EXERCISE IT AVOIDS TO PAY CERTAIN LOC AL TAXES, EXCISE ETC. OTHERWISE QUANTITY OF SALES CANNOT BE ACHIEVED IF P URCHASES AT ALL ARE NOT BEING MADE. THUS QUESTION IS, HOW MUCH IS THE EXTRA PROFIT EARNED BY AN ASSESSEE. AT THE END OF THE ASSESSEE IT WAS CONTENDED THAT 5% SHOULD BE ESTIMATED, WHEREAS REVENUE PLEADED THAT I T SHOULD NOT BE LESS THAN 25%. WE HAVE TAKEN INTO CONSIDERATION TH IS ASPECT. WE FIND THAT ON THE TOTAL TURNOVER INCLUDING THE ALLEGED BO GUS PURCHASES, THE ASSESSEE HAS ALREADY SHOWN GP AT THE RATE OF 14.27% . IF WE FURTHER ESTIMATE 5% TO 6% MORE THAN THE GP ON THE TOTAL TUR NOVER INCLUDING THE ALLEGED BOGUS PURCHASE WOULD BE MORE THAN 20%. THIS WILL MEET ITA NO.93 AND 814/AHD/2016 6 ENDS OF JUSTICE. THEREFORE, WE DIRECT THE AO TO CA LCULATE NET PROFIT AT 5% (FIVE PERCENT) ON THE ALLEGED BOGUS PURCHASES AM OUNTING TO RS.2,08,06,760/- AND MAKE ADDITION TO THE TOTAL INC OME OF THE ASSESSEE. AS FAR AS DISALLOWANCE OF RS.3.15 LAKHS IS CONCERNED, THE ASSESSEE HAS SUBMITTED COMPLETE DETAILS. THE ONLY REASON ASSIGNED BY THE AO IS THAT THIS CONCERN FAILED TO RESPOND TO SH OW CAUSE NOTICE. CONSIDERING OUR ABOVE DISCUSSION ON THE PURCHASES M ADE FROM THREE PARTIES, WE DIRECT THE AO TO ESTIMATE THE NET PROFI T ON THE PURCHASES MADE FROM THESE PARTIES ALSO. IN OTHER WORDS, HE W ILL TAKE 5% OF NET PROFIT OF RS.3,15,000/- AND MAKE ADDITION TO THE IN COME OF THE ASSESSEE. 10. NOW WE TAKE PENALTY APPEAL. THE LD.AO DID NOT IMPOSE ANY PENALTY UPON THE ASSESSEE, THOUGH HE MADE DISALLOWA NCE UNDER SECTION 40A(3) OF THE ACT. HOWEVER, ON APPEAL, THE LD.CIT( A) MADE ENHANCEMENT TO THE INCOME OF THE ASSESSEE BY TREATI NG THE TOTAL PURCHASES MADE FROM THREE PARTIES AS NON-GENUINE. THE LD.CIT(A) INITIATED PENALTY PROCEEDINGS AND IMPOSED PENALTY O F RS.70,72,217/- UNDER SECTION 271(1)(C) OF THE ACT. 11. BEFORE US, THE LD.COUNSEL FOR THE ASSESSEE CONT ENDED THAT IDENTICAL ISSUE TRAVELLED UPTO THE HONBLE GUJARAT HIGH COURT IN THE CASE OF RAMESHCHANDRA A SHAH VS. ACIT (TAX APPEAL NO.800 OF 2008 COPY FILED) WHEREIN HONBLE HIGH COURT DELETED THE PENA LTY BY OBSERVING THAT INCOME OF THE ASSESSEE IS ESTIMATED AND NO PENALTY UNDER SECTION 271(1)(C) IS IMPOSABLE. THE QUESTION FRAMED BY THE HONBLE HIGH COURT IN THAT CASE READS AS UNDER: 'A) WHETHER ON THE FACTS AND CIRCUMSTANCES OF THE C ASE, THE INCOME-TAX APPELLATE TRIBUNAL, WAS RIGHT IN LAW IN CONFIRMING THE PENALTY UNDER SECTION 271(1)(C) OF THE INCOME-TAX A CT, 1961 IN RESPECT OF THE ADDITION OF RS.2,09,150/- BEING 25% OF PURCHASES OF RS.8,36,601/-? ITA NO.93 AND 814/AHD/2016 7 B) WHETHER ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE, THE INCOME-TAX APPELLATE TRIBUNAL, WAS RIGHT IN LAW IN UPHOLDING THE ORDER OF CIT(A) TO CONFIRM THE PENALTY UNDER SECTIO N 271(1)(C) OF THE INCOME-TAX ACT, 1961 IN RESPECT OF ADDITION OF RS.2,09,150/- SUSTAINED IN APPEAL?' 12. HONBLE HIGH COURT THEREAFTER REPLIED TO THE QU ESTION AS UNDER: 4. LEARNED COUNSEL FOR THE APPELLANT HAS DRAWN THE ATTENTION OF THIS COURT TO THE DECISION OF THIS COURT IN THE CAS E OF VIJAY PROTEINS LTD. V. COMMISSIONER OF TAXMANN.COM 44 (GU JARAT) AND RELEVANT PARAGRAPHS ARE REPRODUCED AS UNDER :- 'INSOFAR AS T.A.NO.243/2002 IS CONCERNED, THE QUEST ION OF LAW RAISED THEREIN IS ALREADY CONCLUDED BY A DECISI ON OF THIS COURT RENDERED IN T.A. NO.461/2000 & ALLIED MATTERS , AS STATED HEREIN ABOVE. PARAS 6 & 6.1 OF THE SAID DECI SION ARE RELEVANT FOR OUR PURPOSE, WHICH READ THUS; '6. HEARD BOTH THE PARTIES AND GONE THROUGH THE MATERIAL AVAILABLE ON RECORD. IN THE INSTANT CASE, WE ARE OF THE OPINION THAT ASSESSMENT MADE IS JUST AN D PROPER. THE STATEMENTS MADE IN THE AFFIDAVITS ARE N OT BASED ON ANY RECORD OR CORROBORATED WITH COGENT EVIDENCE. THE PRESUMPTION RAISED BY THE PAPERS WHICH WERE SEIZED FROM THE CUSTODY OF THE APPELLANT HAD NOT BEEN REBUTTED. THEREFORE, THE ISSUES RAISED IN APPEALS NO. 461 TO 464 OF 2000 ARE REQUIRED TO BE ANSWERED IN THE AFFIRMATIVE AND AGAINST THE ASSESSE E. 6.1 SO FAR AS THE ISSUE INVOLVED IN APPEALS NO. 833 TO 836 OF 2005 IS CONCERNED, IN VIEW OF THE DECISIONS CITED HEREINABOVE BY LEARNED ADVOCATE FOR THE APPELLANT WE ARE OF THE OPINION THAT THE PENALTY HA S BEEN WRONGLY IMPOSED UNDER SECTION 271(1)(C) OF THE ACT. IN THE CASE OF KRISHI TYRE RETREADING AND RUBB ER INDUSTRIES (SUPRA), IT HAS BEEN HELD THAT AS THE ADDITION HAD BEEN SUSTAINED PURELY ON ESTIMATE BASI S AND NO POSITIVE FACT OR FINDING HAD BEEN HAD BEEN FOUND SO AS TO EVEN MAKE THE ADDITION WHICH WAS A PURE GUESS WORK, NO PENALTY UNDER SECTION 271(1)(C) OF THE ACT COULD BE SAID TO BE LEVIABLE O N SUCH GUESS WORK OR ESTIMATION. WE THEREFORE ANSWER THE ISSUE INVOLVED IN APPEALS NO. 833 TO 836 OF 200 5 IN THE NEGATIVE AND IN FAVOUR OF THE ASSESSEE.' ITA NO.93 AND 814/AHD/2016 8 18.1 AT THIS JUNCTURE, IT WOULD BE RELEVANT TO REFE R TO A DECISION OF THE APEX COURT IN THE CASE OF ASST. COMMISSIONER OF INCOME-TAX V. GEBILAL KANHAIALAL, HUF, [2012] 348 ITR 561 (SC) WHEREIN, IT HAS BEEN HELD THAT THE ONLY CONDITION WHICH WAS REQUIRED TO BE FULFILLED FOR GETTING THE IMMUNITY, AFTER THE SEARC H PROCEEDINGS GOT OVER, WAS THAT THE ASSESSEE HAD TO PAY THE TAX TOGETHER WITH INTEREST IN RESPECT OF SU CH UNDISCLOSED INCOME UP TO THE DATE OF PAYMENT. CLAUS E (2) DID NOT PRESCRIBE THE TIME LIMIT WITHIN WHICH T HE ASSESSEE SHOULD PAY TAX ON INCOME DISCLOSED IN THE STATEMENT U/S.132(4) AND THUS, THE ASSESSEE WAS ENTITLED TO IMMUNITY UNDER CLAUSE (2) OF EXPLANATIO N 5 TO SECTION 271(1)(C).' LEARNED COUNSEL FOR THE APPELLANT HAS ALSO PLACED R ELIANCE ON THE DECISION OF THIS COURT IN THE CASE OF VIJAY PROTEINS LTD. V. COMMISSIONER OF INCOME-TAX IN INCOME TAX REFERENCE NO.139/1996 WITH TAX APPEAL NO.243/2002 WHEREIN THE QUESTION OF LAW WAS ANSWERED IN FAVOUR OF THE ASSESSEE AND AGAINST THE REVENUE AND CONSEQUENTLY, THE PENALTY IMPOSED WAS QUASHED AND SET ASIDE. IT IS SUBMITTED IN THE FACTS OF PRESENT CASE, THE O RDER OF PENALTY ALSO IMPOSED UPON THE ASSESSEE MAY BE DISMI SSED. 5. ON THE OTHER HAND, LEARNED COUNSEL FOR THE RESPO NDENT - DEPARTMENT HAS SUBMITTED THAT IN VIEW OF THE BOGUS PURCHASES, THE ORDER OF PENALTY MAY BE CONFIRMED. 6. WE HAVE HEARD LEARNED COUNSEL FOR THE RESPECTIVE PARTIES AND PERUSED THE RECORDS OF THE CASE. TAKING INTO CONSIDERATION THE ORDER THE TRIBUNAL, THE EVIDENCE WHICH HAS SURFACED ON RECORD AS WELL AS THE DECISION OF THIS COURT IN THE CASE OF VIJAY PROTEINS LTD. V. COMMISSIONER OF INCOME- TAX (SUPRA), WE ARE OF THE VIEW THAT THE ISSUES RAI SED IN THIS APPEAL ARE TO BE ANSWERED IN FAVOUR OF THE ASSESSEE AND AGAINST THE DEPARTMENT. 13. A PERUSAL OF THE ABOVE JUDGMENT WOULD INDICATE THAT ADDITION IN THAT CASE WAS MADE ON THE SIMILAR LINE. PENALTY WA S ALSO IMPOSED ON SIMILAR REASONING. TRIBUNAL HAS CONFIRMED THE PENA LTY AND HONBLE HIGH COURT REVERSED ORDER OF THE TRIBUNAL AND DELETED PE NALTY. HONBLE COURT PUT RELIANCE UPON ITS EARLIER JUDGMENT IN THE CASE OF VIJAY PROTEINS LTD. CIT, TAX REFERENCE NO.139 OF 1996 AS WELL AS KRISHI TYRE RETREADING ITA NO.93 AND 814/AHD/2016 9 AND RUBBER INDUSTRIES. BASICALLY, HONBLE HIGH COU RT WAS OF THE VIEW THAT CONCLUSIVELY IT WAS NOT BROUGHT ON RECORD WHET HER THE PURCHASES ARE TO BE TREATED AS BOGUS OR NOT. THE INCOME HAS BEEN ESTIMATED ON THE BASIS OF CIRCUMSTANCES BROUGHT ON RECORD. THER E IS NO DISPARITY ON FACTS. IN THE PRESENT APPEAL ALSO, ON THE BASIS OF CIRCUMSTANTIAL EVIDENCE, IT HAS BEEN CONCLUDED THAT THE PURCHASES MADE BY THE ASSESSEE TO SOME EXTENT ARE NON-GENUINE, AND THEREF ORE PROFIT ELEMENT INVOLVED IN SUCH PURCHASES DESERVES TO BE ASSESSED AS INCOME OF THE ASSESSEE. RESPECTFULLY FOLLOWING THE JUDGMENT OF H ONBLE JURISDICTIONAL HIGH COURT WE ALLOW THIS APPEAL OF THE ASSESSEE AND DELETE THE PENALTY. 14. IN THE RESULT, ITA NO.93/AHD/2016 IS PARTLY ALL OWED AND ITA NO.814/AHD/2016 IS ALLOWED. ORDER PRONOUNCED IN THE COURT ON 10 TH OCTOBER, 2018 AT AHMEDABAD. SD/- SD/- (AMARJIT SINGH) ACCOUNTANT MEMBER (RAJPAL YADAV) JUDICIAL MEMBER