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TMI Blog2019 (11) TMI 870X X X X Extracts X X X X X X X X Extracts X X X X ..... e filed by the assessee and also the books of accounts to be reproduced. In response to 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. - 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 CIT(A) ] and arises out of the assessment completed u/s 143(3) r.w.s ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 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 appeal. 3. Briefly stated, the facts of the case are that the assessee filed its return of income of the assessment year (AY) 2011-12 on 25.09.2009 declaring total income of ₹ 2,56,110/-. The return was processed u/s.143(1) of the Act. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rties 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 the assessee has recorded such purchases in the books of account that 12.5% of total amount of the said purchases, which comes to ₹ 6,96,528/- (total unproved purchases being ₹ 55,72,229/-) is taken as unproved/non-genuine purchases and added to the total income of the assessee. Thus, addition of the AO is confirmed and grounds of appeal nos. 2 to 6 are dismissed. 5. Before us, the ld. counsel for the assessee submits that the assessee-firm is a trader in various items of ferrous and non-ferrous metals during the year under consideration. It is stated that the re-assessment proceedings are not properly and legally initiated by the AO as required as per terms laid down in the Act. In this respect, it is argued by him that the AO has issued notice u/s. 147/148 after one month of recording of reasons for reopening of assessment. Further, it is stated that the AO has not pr ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... icer, 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 148 for reopening the return of income processed u/s 143(1) of the Act. No irregularity has been committed by the AO in recording the reasons and then issuing the notice u/s.148 of the Act. 7.1 As mention earlier, the AO had issued notice u/s. 142(1) calling for details to be filed by the assessee and also the books of accounts to be reproduced. In response to it, the assessee failed to file the complete details. Also the assessee failed to produce before the AO the books of accounts for verification In view of the above facts, we are of the considered view that the decision of the Hon ble Bombay High Court in the case of Pr. CIT v. M/s Mohommad Haji Adam Co. (ITA No. 1004 of 2016) has relevance to the present case. In that case, during the course of survey operations in the case of entities from whom the assessee had claimed to have made purchases, the Department collected information suggesting that such purchases were not genuine. The AO noticed that the assessee ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ing 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. Despite this, the question arises whether the Revenue is correct in contending that the entire purchase amount should be added by way of assessee's additional income or the assessee is correct in contending that such logic cannot be applied. The finding of the CIT(A) and the Tribunal would suggest that the department had not disputed the assessee's sales. There was no discrepancy between the purchases shown by the assessee and the sales declared. That being the position, the Tribunal was correct in coming to the conclusion that the purchases cannot be rejected without disturbing the sales in case of a trader. The Tribunal, therefore, correctly restricted the additions limited to the extent of bringing 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 addi ..... X X X X Extracts X X X X X X X X Extracts X X X X
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