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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 ..... al 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 done by the AO vide notice u/s 148 dated 08.05.2015. The brief facts are that the assessee filed his return of income for the AY 2010-11 on 07.10.2010 declaring total income at Rs. 17,94,210/-. The return of income was processed u/s 143(1) of the Act. The Assessing Officer (AO) reopened the assessment on the basis of the information received from the Sales Tax Department, Government of Maharashtra that the assessee had obtained bogus purchase bills amounting to Rs. 2,78,05,034/- from two dealers. The details are as under : TIN of the Dealers N ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 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 Ass ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ed that, although requested to furnish the details of purchases vide notice u/s 142(1) dated 23.10.2015, the assessee failed to produce before him (i) delivery challan, lorry receipt and details of unloading/loading charges with documentary proof and (ii) stock register, to substantiate his claim that the goods were actually purchased and delivered to him. On the basis of the above facts, the AO arrived at a finding that the assessee had inflated the purchases. Therefore, the AO estimated the profit @ 12.5% on the above disputed purchases of Rs. 2,78,05,034/- and made an addition of Rs. 34,75,629/- as unexplained expenditure u/s 69C of the Act. 6. Aggrieved by the order of the AO, the assessee filed an appeal before the Ld. CIT(A). We fin ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... M/s Mohommad Haji Adam & Co. (ITA No. 1004 of 2016) and the order of the Tribunal dated 16.05.2019 in VR Enterprises v. ITO (ITA No. 4650/Mum/2018 for AY 2009-10) 8. On the other hand, the Ld. DR submits that in the instant case, the AO vide order sheet entry dated 16.12.2015 informed the assessee that the notices issued u/s 133(6) could not be served. In response to it, the assessee expressed his inability to provide the new address of the above two parties. For this reason, the AO could not issue summons u/s 131 of the Act. Also, the assessee could not produce before the AO the above two parties for verification. As observed by the AO, the assessee failed to produce the details of challan, lorry receipts, stock register. We are of the c ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ed the addition refreshing it to 10% of the purchase amount. He also directed the AO to make addition to the extent of difference between the gross profit rate 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 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ing the G.P. rate on purchases at the same rate of other genuine purchases. The decision of the Gujarat High Court in the case of N.K. Industries (supra) cannot be applied without reference to the facts. In fact in paragraph 8 of the same Judgment the Court held and observed as under- " So far as the question regarding addition of Rs. 3,70,78,125/- as gross profit on sales of Rs. 37.08 Crores made by the Assessing Officer despite the fact that the said sales had admittedly been recorded in the regular books during Financial Year 1997-98 is concerned, we are of the view that the assessee cannot be punished since sale price is accepted by the revenue. Therefore, even if 6 % gross profit is taken into account, the corresponding cost price is ..... X X X X Extracts X X X X X X X X Extracts X X X X
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