TMI Blog2021 (10) TMI 726X X X X Extracts X X X X X X X X Extracts X X X X ..... T HIGH COURT] . Accordingly, in all fairness, we herein set-aside the order of the CIT(A) and restore the matter to the file of the A.O. In the course of the set-aside proceedings, if the assessee is able to demonstrate before the A.O that the impugned bogus/unverified purchases in question formed part of its sales and/or closing stock for the year under consideration, then, the A.O shall restrict the addition in the hands of the assessee to the extent of 12.5% of the aggregate value of the impugned purchases - Appeal of the assessee is partly allowed for statistical purposes - ITA Nos.1099 & 1100/MUM/2020 [Assessment Years: 2010-11 & 2011-12] - - - Dated:- 17-9-2021 - SHRI PRAMOD KUMAR (VICE PRESIDENT) AND SHRI RAVISH SOOD (JUDICIAL MEMBER) Revenue by : Shri Deepkant Prasad, D.R Assessee by : Shri Morvi Chaturvedi, A.R ORDER PER RAVISH SOOD, J.M : The present appeals filed by the assessee are directed against the respective orders passed by the CIT(A)-30, Mumbai, dated 21.11.2019, which in turn arises from the assessment orders passed u/s 144 r.w.s 147 of the Income Tax Act, 1961 (for short Act‟) dated 14.03.2016 and 12.03.2016 for A.Y. 2010-1 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 68- 5. Kanak Steel (India) 92,674/- 6. Arihant Trading Co 2,20,039/- 7. Mortan Steel India 5,06,183/- 8. Jinalay Trading Private Limited 5,13,878/- 9. Shankeshwar Sles 5,23,541/- 10. Goodluck Metal 6,50,735/- 11. Nerolac Metal (India) 10,05,662/- 12. Avion Sales Private Limited 12,64,722/0 13. Prakash Steel Allies 15,87,956/- 14. Meridian Trading Co. 2,43,71,639/- 15. Globe Impex (India) 3,93,90,764/- Total 7,11,82,340/- Notices u/ss. 143(2)/143(1) of the Act were issued and duly served upon the assessee by the A.O. Howev ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... p to the extent of the profit which the assessee would had made by procuring the goods/material in question not from the aforementioned parties, but at a discounted value from the open/grey market. On a specific query by the bench, it was submitted by the ld. A.R that the profit element in the case of the assessee could in all fairness be estimated @ 12.5% of the value of the impugned purchases in question. 6. Per contra, the ld. Departmental Representative (for short D.R‟) relied on the orders of the lower authorities. It was submitted by the ld. D.R that as the assessee had failed to comply with the notices issued u/s 143(2)/142(1) of the Act and had failed to place on record any documentary evidence to substantiate the authenticity of the impugned purchases that were claimed to have been made from the aforementioned parties, therefore, the A.O had rightly added the entire value of the impugned purchases to the returned income of the assessee. It was submitted by the ld. D.R that the appeal filed by the assessee being devoid and bereft of any merit was thus liable to be dismissed. 7. We have heard the ld. Authorized Representatives for both the parties, perused the o ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... assessee would have made by procuring the goods at a discounted value from the open/grey market. Insofar the nature of the addition made by the A.O is concerned, we find that the addition of the entire value of the impugned purchases have been made by him by treating the same as an unexplained business expenditure incurred by the assessee. We are unable to persuade ourselves to concur with the aforesaid basis adopted by the A.O for making the impugned addition in the hands of the assessee. Insofar the source of purchasing the goods under consideration is concerned, we are unable to comprehend as to how and on what basis an addition qua the impugned purchases could have been made by the A.O by stamping it as an unexplained business expenditure. Although, we concur with the A.O that the assessee had failed to substantiate the genuineness of the impugned purchase transactions, but in the backdrop of the fact admitted by him that the assessee would have probably purchased the impugned goods from the grey market, we are of the considered view that the addition qua the said purchases was liable to be restricted to the extent of the profit element involved in procuring such goods at a dis ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he reopening is bad in law and liable to be quashed. b) The ld. A.O erred in reopening the assessment u/s 147 based on suspicion and surmises without any tangible material showing escapement of income and as such, the reopening is bad in law and liable to be quashed. 2. That on the facts and circumstances of the case and in law, the ld. CIT(A) erred in confirming the action of AO in disallowing 100% of alleged bogus purchase amounting to ₹ 7,11,82,340/-. 3. Your appellant craves leave to add to, amend or alter or delete any of the above grounds of appeal. 10. Briefly stated, the assessee had filed his return of income for A.Y 2011-12 on 30.09.2011, declaring a total income of ₹ 32,21,680/-. The return of income filed by the assessee was initially processed as such u/s 143(1) of the Act. Subsequently, on the basis of information received from the office of the DGIT(Inv.) Mumbai, that the assessee as a beneficiary had obtained bogus purchase bills aggregating to ₹ 9,97,40,017/- from 11 parties, its case was reopened u/s 147 of the Act. 11. During the course of the assessment proceedings, it was observed by the A.O that the assessee had claimed to hav ..... X X X X Extracts X X X X X X X X Extracts X X X X
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