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TMI Blog2019 (10) TMI 725X X X X Extracts X X X X X X X X Extracts X X X X ..... CIT(A) confirming the order of the AO in disallowing the purchases made from two parties @ 12.5% of alleged bogus purchases - HELD THAT:- We 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. - ITA No. 3564/MUM/2018 And ITA No. 3565/MUM/2018 - - - Dated:- 28-8-2019 - Shri Saktijit Dey (Judicial Member) And Shri N.K. Pradhan (Accountant Member) For the Assessee : Mr. Sashank Dundu, AR For the Revenue : Mr. Nitin Waghmode, DR ORDER PER N.K. PRADHAN, AM The captioned appeals filed by the assessee are directed against the order of the Commissioner of Income Tax (Appeals)-25, Mumbai [in short CIT(A) ] and arise out of assessment completed u/s 143(3) r.w.s. 147 of the Income Tax Act, 1961 (in short the Act ). As common issues are involved, we are proceeding to dispose off these appeal through a consolidated order for the sake of convenience. Facts being identical we begin with the assessment year (AY) 2010-11. 2. The 1st ground raised in this appeal is against the reopening ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... stinction between the acceptance of a return u/s 143(1) and an assessment which is framed u/s 143(3) of the Act. In the former case, the AO would have much wider latitude to reopen the assessment. In the case of Avirat Star Homes Venture 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, wh ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... AAHPD5571AX001 having warehouse at M/s Gupta Udyog, B-17, MIDE, Taloja, Dist-Raigad, New Mumbai-410208 and also purchases are duly supported by bank statement showing payment made to supplier, purchase bills, ledger a/c, quantitative details etc. which were furnished before lower authorities. It is further explained by him that merely on the basis of information received from the Sales Tax Department and third party statement, without providing an opportunity for cross-examination, purchases cannot be treated as non-genuine. It is also stated that details of sale invoice were filed before the AO along with a chart showing sale of those materials along with corresponding purchases. Thus it is stated that merely because those parties failed to respond to notice u/s 133(6) issued by the AO, addition u/s 69C cannot be made. Further, the Ld. counsel submits that the percentage of 12.5% arrived at by the AO is without any basis because the gross profits of the assessee over the years have remained in the range of 2% to 2.5%. Finally, the Ld. counsel relies on the order of the Hon ble Bombay High Court dated 11.02.2019 in Pr. CIT v. M/s Mohommad Haji Adam Co. (ITA No. 1004 of 2016) and ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... as per the books of accounts on undisputed purchases and gross profit on sales relating to the purchases made from the said three parties. The assessee carried the matter before the Tribunal. The Revenue also 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 enti ..... X X X X Extracts X X X X X X X X Extracts X X X X
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