TMI Blog2019 (11) TMI 870X X X X Extracts X X X X X X X X Extracts X X X X ..... o it, the assessee failed to file the complete details. Also the assessee failed to produce before the AO the books of accounts for verification - As relying on N.K. Industries Ltd. [ 2016 (6) TMI 1139 - GUJARAT HIGH COURT ] we set aside the order of the Ld. CIT(A) and direct the AO to restrict the additions limited to the extent of bringing the G.P. rate on disputed purchases at the same rate of other genuine purchases. We direct the assessee to file the relevant documents/evidence before the AO. Needless to say, the AO would give reasonable opportunity of being heard to the assessee before finalizing the order. Assessee's appeal is partly allowed. - ITA No. 3053/MUM/2019 - - - Dated:- 15-11-2019 - Shri Ravish Sood (Judicial Member) And Shri N.K. Pradhan (Accountant Member) For the Assessee : Shri Surendra K. Chauhan, AR For the Revenue : Shri K. Bhoopathi, DR ORDER PER N.K. PRADHAN, AM This is an appeal filed by the assessee. The relevant assessment year is 2011-12. The appeal is directed against the order of the Commissioner of Income Tax (Appeals)-3, Mumbai [in short ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... re of additions. In any case as both the authorities failed to prove the inflated purchases or purchase price and without rejecting the books of accounts result the addition may be deleted or reduced substantially. 6. Judgments of Honourable Jurisdictional High Court and MSTT, Mumbai cited, referred and relied on by the Appellant are being ignored by both the authorities, the same may be considered in this appeal as the same are bound to be followed being lower forum of appeal and the decisions of the co-ordinate Benches are required to be followed as required under Article 141 and 144 of the Constitution of India. 7. In any case considering the facts and circumstances of the case, orders passed by both the lower authorities may be set aside with deletion of addition and / or sustaining the same giving substantial relief in the matter and highly oblige. 8. Penal interest levied on additional demand of tax due to addition made may be directed not to be levied. 9. Appellant crave the liberty to add or to alter or to amend or to change any grounds of appeal on or before of the hearing or at the time of hearing of the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... I have considered the facts of the case, AO s contentions and appellants submission and also the case laws relied upon by the appellant. The assessee is engaged in the business of trading of ferrous and non-ferrous metals. The assessee has shown purchases of ₹ 55,72,229/- from various non-genuine parties as per the information received from the Investigation Wing. Sales Tax Department has found that the said concerns were not doing genuine business of purchases and sales and merely indulging providing accommodation bills. AO has denied the explanation offered by the assessee as it is seen from the details on record that barring the ledger account and cheque payment, no other documents such as lorry receipts, transportation details are produced during the course of assessment proceedings. Moreover, the fact remains that these parties have admitted in front of the Sales Tax department they have not made any sale or purchase transaction. This proves that the purchases shown to have been made by the assessee from these firms are non-genuine. The AO after considering the submission and also giving due consideration to the fact that th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... enture P. Ltd. v. ITO (2019) 411 ITR 321 (Bom), the Hon ble Bombay High Court referring to the above decision has held: That the return had been accepted without scrutiny. The income-tax investigation had subsequently provided information about certain companies having bank accounts with a bank in Kolkata and who were involved in giving accommodation entries of various nature to several beneficiaries including the assessee. The information supplied by the Investigation Wing to the Assessing Officer formed a prima facie basis to enable the Assessing Officer to form a belief of income chargeable to tax having escaped assessment. The Assessing Officer perused the information supplied by the Investigation Wing and having formed the belief that income chargeable to tax had escaped assessment, could not be stated to have acted mechanically. Further, the mere fact that the assessee had asked for certain information from the Assessing Officer, which at this stage was not supplied, would not invalidate the reasons recorded by the Assessing Officer in issuing the notice. The notice was valid. Thus in the instant case, the AO has rightly issued notice u/s 1 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... o carried the issue before the Tribunal. The Tribunal allowed the appeal of the assessee partly and dismissed that of the Revenue. The Tribunal noted that the CIT(A) had not given any reasons for retaining 10% of the purchases by way of ad-hoc additions. The Tribunal, therefore, deleted such additions, but retained the portion of the order of the CIT(A) to that extent he permitted the AO to tax the assessee on the basis of difference in the GP rates. In further appeal before the Hon ble Bombay High Court, the Revenue referred to the decision of the Division Bench of the Hon ble Gujarat High Court in the case of N.K. Industries Ltd. v. DCIT in Tax Appeal No. 240 of 2003 and connected appeals decided on 20.06.2016 and also pointed out that the SLP against such decision was dismissed by the Hon ble Supreme Court. The Hon ble Bombay High Court held : 8. In the present case, as noted above, the assessee was a trader of fabrics. The A.O. found three entities who were indulging in bogus billing activities. A.O. found that the purchases made by the assessee from these entities were bogus. This being a finding of fact, we have proceeded on such basis. Desp ..... X X X X Extracts X X X X X X X X Extracts X X X X
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