OMKAR METAL AND ALLOYS CORPORATION ,C P TANK MUMBAI vs. INCOME TAX OFFICER 19. 2. 4, MATRU MANDIR

PER OM PRAKASH KANT, AM

This appeal by the assessee is directed against order dated 28.07.2023 passed by the Ld. Commissioner of Income-tax (Appeals) – National Faceless Appeal Centre, Delhi [in short ‘the Ld. CIT(A)’] for assessment year 2009-10, raising following grounds:

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Provisions of the Act ought to have been properly construed and Provisions of the Act ought to have been properly construe Provisions of the Act ought to have been properly construe regard being had to facts of the case such addition should not regard being had to facts of the case such addition should not regard being had to facts of the case such addition should not have been confirmed. Reasons assigned by him are wrong and have been confirmed. Reasons assigned by him are wrong and have been confirmed. Reasons assigned by him are wrong and insufficient to justify confirming of addition of Rs.9550585/-. insufficient to justify confirming of addition of Rs.9550585/ insufficient to justify confirming of addition of Rs.9550585/ 2. On the facts and in the circumstances of the case and in law the On the facts and in the circumstances of the case and in law the On the facts and in the circumstances of the case and in law the learned Commissioner of Income Tax (Appeals) erred in confirming learned Commissioner of Income Tax (Appeals) erred in confirming learned Commissioner of Income Tax (Appeals) erred in confirming invoking of provisions of section 145(3) of the Act and rejecting invoking of provisions of section 145(3) of the Act and rejecting invoking of provisions of section 145(3) of the Act and rejecting books of account by the Assessing books of account by the Assessing - Officer. 3. On the facts and in the circumstances of the case and in law the On the facts and in the circumstances of the case and in law the On the facts and in the circumstances of the case and in law the learned Commis learned Commissioner of Income Tax (Appeals) failed to provide sioner of Income Tax (Appeals) failed to provide copy of remand report and opportunity to file rejoinder of the same. copy of remand report and opportunity to file rejoinder of the same. copy of remand report and opportunity to file rejoinder of the same. 4. On the facts and in the circumstances of the case and in law the On the facts and in the circumstances of the case and in law the On the facts and in the circumstances of the case and in law the learned Commissioner of Income Tax (Appeals) erred in confirming learned Commissioner of Income Tax (Appeals) erred in confirming learned Commissioner of Income Tax (Appeals) erred in confirming initiating proceeding under section 147 of the Act by issuing notice ng proceeding under section 147 of the Act by issuing notice ng proceeding under section 147 of the Act by issuing notice under section 148 of the Act in as much as reasons recorded by under section 148 of the Act in as much as reasons recorded by under section 148 of the Act in as much as reasons recorded by Assessing Officer depict mere suspicion and no tangible material is Assessing Officer depict mere suspicion and no tangible material is Assessing Officer depict mere suspicion and no tangible material is available in possession of the Assessing Officer. available in possession of the Assessing Officer. 5. The Commission The Commissioner of Income Tax (Appeals) erred in upholding er of Income Tax (Appeals) erred in upholding order made under section 143(3) rws 147 of the Act which is order made under section 143(3) rws 147 of the Act which is order made under section 143(3) rws 147 of the Act which is illegal, bad illegal, bad-in-law, ultra virus and without allowing reasonable law, ultra virus and without allowing reasonable opportunity of the hearing, and without appreciating facts, opportunity of the hearing, and without appreciating facts, opportunity of the hearing, and without appreciating facts, submission and evidences submission and evidences in their proper perspective and without in their proper perspective and without providing copies of material relied upon, without providing providing copies of material relied upon, without providing providing copies of material relied upon, without providing opportunity to cross examine, which is liable to be annulled. opportunity to cross examine, which is liable to be annulled. opportunity to cross examine, which is liable to be annulled. 6. The learned Commissioner of Income Tax (Appeals) erred in The learned Commissioner of Income Tax (Appeals) erred in The learned Commissioner of Income Tax (Appeals) erred in upholding charging of interest under upholding charging of interest under section 234A. 234B and section 234A. 234B and 234C and 234D of the Act 234C and 234D of the Act 2. Briefly stated, facts of the case are that the assessee filed its Briefly stated, facts of the case are that the assessee filed its Briefly stated, facts of the case are that the assessee filed its return of income for the year under consideration on 29.09.2009 return of income for the year under consideration on 29.09.2009 return of income for the year under consideration on 29.09.2009 declaring total income declaring total income at Rs.27,95,800/-. The return of income was . The return of income was processed u/s 143(1) of the Income ed u/s 143(1) of the Income-tax Act, 1961 (in short ‘the tax Act, 1961 (in short ‘the Act’). Subsequently, information had been received from the Act’). Subsequently, information had been received from the Act’). Subsequently, information had been received from the Director General of Income Director General of Income-tax (Investigation), Mumbai that tax (Investigation), Mumbai that assessee had taken accommodation entries in the form of bogus assessee had taken accommodation entries in the form of bogus assessee had taken accommodation entries in the form of bogus purchase/sale bills without supplying any goods. On the basis of ls without supplying any goods. On the basis of ls without supplying any goods. On the basis of the information received, the Assessing Office the information received, the Assessing Officer recorded the reasons r recorded the reasons to believe that income that income had escaped assessment and accordingly escaped assessment and accordingly, he

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issued notice u/s 148 of the Act on 08.03.2014. During the course notice u/s 148 of the Act on 08.03.2014. During the course notice u/s 148 of the Act on 08.03.2014. During the course of the reassessment proceedings, the Assessing Officer observed reassessment proceedings, the Assessing Officer observed reassessment proceedings, the Assessing Officer observed that 19 parties from whom the assessee had received total that 19 parties from whom the assessee had received total that 19 parties from whom the assessee had received total accommodation entries entries of Rs.7,64,04,685/-. During the course of . During the course of the assessment proceedings, the Assessing Officer asked the the assessment proceedings, the Assessing Officer asked the the assessment proceedings, the Assessing Officer asked the assessee to furnish details and complete address of those parties sh details and complete address of those parties sh details and complete address of those parties including purchase bills details including purchase bills details/invoice bills details of transaction invoice bills details of transaction of the goods i.e. lorry receipts of the goods i.e. lorry receipts, documentary evidence reflecting the documentary evidence reflecting the relevant entries having received goods relevant entries having received goods in premises of the assessee premises of the assessee and having consumed such goods etc. However, no such and having consumed such goods etc. However, no such and having consumed such goods etc. However, no such information except copy of the ledger account information except copy of the ledger account, copy of the invoices copy of the invoices and bank statement of the assessee was provided to the Assessing bank statement of the assessee was provided to the Assessing bank statement of the assessee was provided to the Assessing Officer. Further, the Assessing Officer issued notice u/s 133(6) of Officer. Further, the Assessing Officer issued notice u/s 133(6) of Officer. Further, the Assessing Officer issued notice u/s 133(6) of the Act on the address of the parties provided by the assessee e Act on the address of the parties provided by the assessee e Act on the address of the parties provided by the assessee however same were returned back with the remark of the postal however same were returned back with the remark of the postal however same were returned back with the remark of the postal authorities that parties left or address not known. In the authorities that parties left or address not known. In the authorities that parties left or address not known. In the circumstances, the Assessing Officer asked the assessee to produce circumstances, the Assessing Officer asked the assessee to produce circumstances, the Assessing Officer asked the assessee to produce rchase parties for examination however, the assessee failed said purchase parties for examination however, the assessee failed rchase parties for examination however, the assessee failed in doing so. Thereafter hereafter, the Assessing Officer following decision the Assessing Officer following decision of the Hon’ble Gujarat High Court in the case of CIT v. Simit P. Seth CIT v. Simit P. Seth the Hon’ble Gujarat High Court in the case of (supra) treated 12.5% treated 12.5% of total non-genuine purchase genuine purchase amount as the profit margin earned from such purchases and accordingly made profit margin earned from such purchases and accordingly made profit margin earned from such purchases and accordingly made addition observing as under: addition observing as under:

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“6. Now, in the given face and circumstance of the case, it is held that 6. Now, in the given face and circumstance of the case, it is held that 6. Now, in the given face and circumstance of the case, it is held that the assessee has indulged in non the assessee has indulged in non-genuine transaction. The intention of genuine transaction. The intention of indulging in su indulging in such activity is to supress the true profits and to reduce the ch activity is to supress the true profits and to reduce the tax liability. Therefore, an addition on account of a higher margin of tax liability. Therefore, an addition on account of a higher margin of tax liability. Therefore, an addition on account of a higher margin of profit would be fair and equitable. Hence, following the decision of the profit would be fair and equitable. Hence, following the decision of the profit would be fair and equitable. Hence, following the decision of the Gujarat High Court in the case of CIT Vs. Simit P. Gujarat High Court in the case of CIT Vs. Simit P. Sheth (2013) reported Sheth (2013) reported in 356 ITR 451 (Guj.) and also giving due consideration to the fact that in 356 ITR 451 (Guj.) and also giving due consideration to the fact that in 356 ITR 451 (Guj.) and also giving due consideration to the fact that the assesse has recorded such purchases in the books of account, I am the assesse has recorded such purchases in the books of account, I am the assesse has recorded such purchases in the books of account, I am of the considered opinion that, it would be just and fair, if profit element of the considered opinion that, it would be just and fair, if profit element of the considered opinion that, it would be just and fair, if profit element embedded in su embedded in such purchases is taken as the profit carned from ch purchases is taken as the profit carned from purchases shown to have been made from the above mentioned non purchases shown to have been made from the above mentioned non purchases shown to have been made from the above mentioned non- genuine parties. Therefore, an amount of Rs. 95,50,585/ genuine parties. Therefore, an amount of Rs. 95,50,585/ - being 12.5% of the total non of the total non-genuine purchases of Rs. 7,64,04,685/- is added to the is added to the total income of the assesse as profit earned from such purchases. al income of the assesse as profit earned from such purchases. al income of the assesse as profit earned from such purchases. Proceedings under 274 r.w.s 271(1)(c) are separately initiated for Proceedings under 274 r.w.s 271(1)(c) are separately initiated for Proceedings under 274 r.w.s 271(1)(c) are separately initiated for furnishing inaccurate particulars of income chargeable to furnishing inaccurate particulars of income chargeable to tax. tax.” 3. On further appeal, the Ld. CIT(A) upheld the disallowance On further appeal, the Ld. CIT(A) upheld the disallowance On further appeal, the Ld. CIT(A) upheld the disallowance following various decisions cited in the impugned appellate order decisions cited in the impugned appellate order decisions cited in the impugned appellate order including the decision of the Hon’ble Supreme Court in the case of decision of the Hon’ble Supreme Court in the case of decision of the Hon’ble Supreme Court in the case of Sumati Dayal v. CIT (1995) 214 ITR 801 Sumati Dayal v. CIT (1995) 214 ITR 801. The Ld. CIT(A) also . The Ld. CIT(A) also rejected the contention of the assessee that no opportunity of cross- rejected the contention of the assessee that no opportunity of c rejected the contention of the assessee that no opportunity of c examination was provided provided, on the ground that the assessee failed on the ground that the assessee failed to substantiate its purchase to substantiate its purchase with documentary evidence documentary evidences and therefore the assessee cannot shift its burden to the Assessing therefore the assessee cannot shift its burden to the Assessing therefore the assessee cannot shift its burden to the Assessing Officer.

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“8. We We have hav e heard heard the the argument argument advanced advanced by by the the Ld. Ld. Representative of the parties and perused the record. The brief facts of Representative of the parties and perused the record. The brief facts of Representative of the parties and perused the record. The brief facts of the case are that assessee is engaged in the business of trading in the case are that assessee is engaged in the business of trading in the case are that assessee is engaged in the business of trading in ferrous and non ferrous and non-ferrous metals. The AO got an information from the ferrous metals. The AO got an information from the Sales Tax Department regarding assessee taken purchase bills which ax Department regarding assessee taken purchase bills which ax Department regarding assessee taken purchase bills which was alleged to be bogus. Accordingly, the AO reopened the assessment was alleged to be bogus. Accordingly, the AO reopened the assessment was alleged to be bogus. Accordingly, the AO reopened the assessment and after making inquiry added 12.5% of the alleged bogus purchases and after making inquiry added 12.5% of the alleged bogus purchases and after making inquiry added 12.5% of the alleged bogus purchases in the assessee’s income in all the years under considerati in the assessee’s income in all the years under considerati in the assessee’s income in all the years under consideration. By impugned order by the CIT(A) after considering various judicial impugned order by the CIT(A) after considering various judicial impugned order by the CIT(A) after considering various judicial pronouncements directed the AO to restrict the addition to the extent of pronouncements directed the AO to restrict the addition to the extent of pronouncements directed the AO to restrict the addition to the extent of 6.5% of alleged bogus purchases. The precise observation of CIT(A) read 6.5% of alleged bogus purchases. The precise observation of CIT(A) read 6.5% of alleged bogus purchases. The precise observation of CIT(A) read as under.:- “7.9 The appellant made purc “7.9 The appellant made purchases from eleven parties who are said to hases from eleven parties who are said to be hawala operators, who is indulged in providing bogus bills without be hawala operators, who is indulged in providing bogus bills without be hawala operators, who is indulged in providing bogus bills without supply of any material. Independent inquiries conducted revealed that supply of any material. Independent inquiries conducted revealed that supply of any material. Independent inquiries conducted revealed that no such party is existing in the given address. When asked to produce no such party is existing in the given address. When asked to produce no such party is existing in the given address. When asked to produce the party during the assessment proceedings by the AO, appellant party during the assessment proceedings by the AO, appellant party during the assessment proceedings by the AO, appellant expressed his inability to do so. In the present case, A.O. estimated the expressed his inability to do so. In the present case, A.O. estimated the expressed his inability to do so. In the present case, A.O. estimated the profit percentage on bogus purchases as 12.5%. The simple issue to be profit percentage on bogus purchases as 12.5%. The simple issue to be profit percentage on bogus purchases as 12.5%. The simple issue to be decided is whether the percentage adopted by the AO decided is whether the percentage adopted by the AO is correct in the is correct in the line of business i.e. trading in ferrous and non line of business i.e. trading in ferrous and non-ferrous metals. As ferrous metals. As noticed above, in the similar circumstances of bogus purchases, Hon'ble noticed above, in the similar circumstances of bogus purchases, Hon'ble noticed above, in the similar circumstances of bogus purchases, Hon'ble Gujarat High Court estimated the additional advantage towards tax Gujarat High Court estimated the additional advantage towards tax Gujarat High Court estimated the additional advantage towards tax benefit (10% and the profit mar benefit (10% and the profit margin (2.5%) totaling to 12.5%. In the gin (2.5%) totaling to 12.5%. In the present case on perusal of copies of the invoices furnished by the present case on perusal of copies of the invoices furnished by the present case on perusal of copies of the invoices furnished by the

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appellant in the bill the percentage of VAT levied is © 4%. Applying the appellant in the bill the percentage of VAT levied is © 4%. Applying the appellant in the bill the percentage of VAT levied is © 4%. Applying the same logic, the profit margin should be adopted @ 2.5%. In view of the same logic, the profit margin should be adopted @ 2.5%. In view of the same logic, the profit margin should be adopted @ 2.5%. In view of the above, in my considered opinion, applying the logic of the above said n my considered opinion, applying the logic of the above said n my considered opinion, applying the logic of the above said case the profit percentage embedded on such purchases is restricted to case the profit percentage embedded on such purchases is restricted to case the profit percentage embedded on such purchases is restricted to 6.5% (i.e. 4% of VAT levied + 2.5% towards profit margin), that will meet 6.5% (i.e. 4% of VAT levied + 2.5% towards profit margin), that will meet 6.5% (i.e. 4% of VAT levied + 2.5% towards profit margin), that will meet the ends of the justice. Taking all the facts int the ends of the justice. Taking all the facts into consideration and o consideration and applying the logic of Simit P. Sheth case, the A.O. is defected to restrict applying the logic of Simit P. Sheth case, the A.O. is defected to restrict applying the logic of Simit P. Sheth case, the A.O. is defected to restrict the estimation © 6.5% on the non the estimation © 6.5% on the non-genuine purchases of Rs. genuine purchases of Rs. 6,22,26,968/-. Appeal on Ground No. 1 is treated as 'Partly Allowed'.” . Appeal on Ground No. 1 is treated as 'Partly Allowed'.” . Appeal on Ground No. 1 is treated as 'Partly Allowed'.” 9. It was argued by Ld. AR that It was argued by Ld. AR that all the documents in support of the all the documents in support of the purchases were furnished to the AO during the course of assessment purchases were furnished to the AO during the course of assessment purchases were furnished to the AO during the course of assessment proceedings and the AO after considering the same and also the proceedings and the AO after considering the same and also the proceedings and the AO after considering the same and also the material on record, expressed his view that the explanation is not I material on record, expressed his view that the explanation is not I material on record, expressed his view that the explanation is not I tenable for the reas tenable for the reason that the Sales Tax Department has certified these on that the Sales Tax Department has certified these parties to be non parties to be non-genuine operators. When the bills bearing VAT No. genuine operators. When the bills bearing VAT No. allotted by Sales Tax Department the further enquiry should have been allotted by Sales Tax Department the further enquiry should have been allotted by Sales Tax Department the further enquiry should have been made from Sales Tax Department. Just because their names appear i made from Sales Tax Department. Just because their names appear i made from Sales Tax Department. Just because their names appear in the list it cannot be concluded that the said purchases from the the list it cannot be concluded that the said purchases from the the list it cannot be concluded that the said purchases from the suppliers are bogus. The A.O. should have called for KYC details. It is suppliers are bogus. The A.O. should have called for KYC details. It is suppliers are bogus. The A.O. should have called for KYC details. It is stated that since the period of more than six years has elapsed, the stated that since the period of more than six years has elapsed, the stated that since the period of more than six years has elapsed, the assessee being businessman cannot keep track of assessee being businessman cannot keep track of the transactions of the transactions of the other party with whom he has made purchases. The A.O. should the other party with whom he has made purchases. The A.O. should the other party with whom he has made purchases. The A.O. should have deputed ward inspector and forced the attendance of these have deputed ward inspector and forced the attendance of these have deputed ward inspector and forced the attendance of these parties. It is submitted that the A.O. failed to collect and bring on record parties. It is submitted that the A.O. failed to collect and bring on record parties. It is submitted that the A.O. failed to collect and bring on record the evidences from Sales Tax De the evidences from Sales Tax Department and not provided copies of the partment and not provided copies of the same to the assessee. It is submitted that observation made by the A.O. same to the assessee. It is submitted that observation made by the A.O. same to the assessee. It is submitted that observation made by the A.O. that purchases made by the appellant from the above parties are non that purchases made by the appellant from the above parties are non that purchases made by the appellant from the above parties are non- genuine is wrong and baseless therefore requested to delete the genuine is wrong and baseless therefore requested to delete the genuine is wrong and baseless therefore requested to delete the additions. Appellant placed reliance on the following decisions which ppellant placed reliance on the following decisions which ppellant placed reliance on the following decisions which includes:- Ramanand Sagar Vs. DCIT (256 ITR 134), CIT v. Nangalia Ramanand Sagar Vs. DCIT (256 ITR 134), CIT v. Nangalia Ramanand Sagar Vs. DCIT (256 ITR 134), CIT v. Nangalia Fabrics (P.) Ltd. 220 Taxmann 17 (Guj.), CIT Vs. M.K. Brothers (163 FR Fabrics (P.) Ltd. 220 Taxmann 17 (Guj.), CIT Vs. M.K. Brothers (163 FR Fabrics (P.) Ltd. 220 Taxmann 17 (Guj.), CIT Vs. M.K. Brothers (163 FR 547), Nikunj Eximp Enterprises (P.) Ltd. v. CIT 216 Taxman 17 547), Nikunj Eximp Enterprises (P.) Ltd. v. CIT 216 Taxman 17 547), Nikunj Eximp Enterprises (P.) Ltd. v. CIT 216 Taxman 171 (Born.), CIT v. M.K. Bros. 163 FIR 249 (Guj.),etc. It is also argued that the CIT v. M.K. Bros. 163 FIR 249 (Guj.),etc. It is also argued that the CIT v. M.K. Bros. 163 FIR 249 (Guj.),etc. It is also argued that the dealers are regularly assessed to tax and the purchases properly dealers are regularly assessed to tax and the purchases properly dealers are regularly assessed to tax and the purchases properly reflected in the books of account and payments are made through reflected in the books of account and payments are made through reflected in the books of account and payments are made through account payee cheques and on payment of the amo account payee cheques and on payment of the amount to the seller, the unt to the seller, the purchaser has no control on their affairs and there is no evidence that purchaser has no control on their affairs and there is no evidence that purchaser has no control on their affairs and there is no evidence that the cash is received back from the suppliers and the purchases cannot the cash is received back from the suppliers and the purchases cannot the cash is received back from the suppliers and the purchases cannot be treated as bogus. Appellant maintained stock register and also be treated as bogus. Appellant maintained stock register and also be treated as bogus. Appellant maintained stock register and also maintained the quantitati maintained the quantitative details. The gross profit shown during the ve details. The gross profit shown during the previous year is reasonable and satisfactory in comparison to the G.P previous year is reasonable and satisfactory in comparison to the G.P previous year is reasonable and satisfactory in comparison to the G.P shown in the same line of business in which assessee is engaged and shown in the same line of business in which assessee is engaged and shown in the same line of business in which assessee is engaged and relied on several cases cited along with brief of the case laws of Hon'b relied on several cases cited along with brief of the case laws of Hon'b relied on several cases cited along with brief of the case laws of Hon'ble ITAT Benches giving relief in similar bogus purchase cases. It is stated ITAT Benches giving relief in similar bogus purchase cases. It is stated ITAT Benches giving relief in similar bogus purchase cases. It is stated that after addition the rate of G.P. would work out to 10% which is not that after addition the rate of G.P. would work out to 10% which is not that after addition the rate of G.P. would work out to 10% which is not possible in this line of business. The assessee has declared G.P. at the possible in this line of business. The assessee has declared G.P. at the possible in this line of business. The assessee has declared G.P. at the rate of 4.91% for year under consid rate of 4.91% for year under consideration.

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and the sales declared. That being the position, the Tribunal and the sales declared. That being the position, the Tribunal and the sales declared. That being the position, the Tribunal was correct in coming to the conclusion that the purchases was correct in coming to the conclusion that the purchases was correct in coming to the conclusion that the purchases cannot be rejected without disturbing the sales in case of a cannot be rejected without disturbing the sales in case of a cannot be rejected without disturbing the sales in case of a trader. The Tribunal, t trader. The Tribunal, therefore, correctly restricted the additions herefore, correctly restricted the additions limited to the extent of bringing the G.P. rate on purchases at the limited to the extent of bringing the G.P. rate on purchases at the limited to the extent of bringing the G.P. rate on purchases at the same rate of other genuine purchases. The decision of the same rate of other genuine purchases. The decision of the same rate of other genuine purchases. The decision of the Gujarat High Court in the case of N.K. Industries Ltd. (supra) Gujarat High Court in the case of N.K. Industries Ltd. (supra) Gujarat High Court in the case of N.K. Industries Ltd. (supra) cannot be applied with cannot be applied without reference to the facts." 12. The Coordinate Bench of the ITAT, Mumbai in the case of Shri The Coordinate Bench of the ITAT, Mumbai in the case of Shri The Coordinate Bench of the ITAT, Mumbai in the case of Shri Rameshkumar Daulatraj Vs ITO in ITA No. 4192/Mum/2018 order Rameshkumar Daulatraj Vs ITO in ITA No. 4192/Mum/2018 order Rameshkumar Daulatraj Vs ITO in ITA No. 4192/Mum/2018 order dated 07/05/2019 after following the above decision of Hon’ble dated 07/05/2019 after following the above decision of Hon’ble dated 07/05/2019 after following the above decision of Hon’ble Bombay High Court held as under: Bombay High Court held as under: “9. When these facts were confronted to the learned Sr. DR, When these facts were confronted to the learned Sr. DR, he requested for application of reasonable profit rate and he requested for application of reasonable profit rate and he requested for application of reasonable profit rate and according to him the profit rate applied by the AO and confirmed according to him the profit rate applied by the AO and confirmed according to him the profit rate applied by the AO and confirmed by CIT(A) is quite reasonable in view of the decision of Hon’ble by CIT(A) is quite reasonable in view of the decision of Hon’ble by CIT(A) is quite reasonable in view of the decision of Hon’ble Gujarat Hig Gujarat High court in the case of Smith P. Seth (supra). We have h court in the case of Smith P. Seth (supra). We have considered the rival contentions ITA No. 4192/Mum/2018 and considered the rival contentions ITA No. 4192/Mum/2018 and considered the rival contentions ITA No. 4192/Mum/2018 and are of the view that Hon'ble Bombay High Court in the case of are of the view that Hon'ble Bombay High Court in the case of are of the view that Hon'ble Bombay High Court in the case of Mohammad Haji Adam & Co. and Ors. (supra) has considered Mohammad Haji Adam & Co. and Ors. (supra) has considered Mohammad Haji Adam & Co. and Ors. (supra) has considered this issue and respectfu this issue and respectfully following the same, we direct the AO lly following the same, we direct the AO to restrict the profit rate only to the extent of differential to restrict the profit rate only to the extent of differential to restrict the profit rate only to the extent of differential percentage as declared on the bogus purchases and as declared percentage as declared on the bogus purchases and as declared percentage as declared on the bogus purchases and as declared on the regular purchases, Hence, we direct the AO accordingly.” on the regular purchases, Hence, we direct the AO accordingly.” on the regular purchases, Hence, we direct the AO accordingly.” 13. It is clear from the a It is clear from the above decisions that in case of bogus bove decisions that in case of bogus purchases where sales are accepted, quantitative details of purchases, purchases where sales are accepted, quantitative details of purchases, purchases where sales are accepted, quantitative details of purchases, sales and stock was filed with copy of delivery challans, the addition is sales and stock was filed with copy of delivery challans, the addition is sales and stock was filed with copy of delivery challans, the addition is required to be made only to the extent of lower GP declared by the required to be made only to the extent of lower GP declared by the required to be made only to the extent of lower GP declared by the assessee on bogus purchases as compared to G.P. on normal e on bogus purchases as compared to G.P. on normal e on bogus purchases as compared to G.P. on normal purchases. As per the G.P. statement chart placed on record we found purchases. As per the G.P. statement chart placed on record we found purchases. As per the G.P. statement chart placed on record we found that the GROSS PROFIT declared by assessee in respect of alleged that the GROSS PROFIT declared by assessee in respect of alleged that the GROSS PROFIT declared by assessee in respect of alleged bogus purchases was more than the GROSS PROFIT declared in the bogus purchases was more than the GROSS PROFIT declared in the bogus purchases was more than the GROSS PROFIT declared in the normal purchases. Under these facts circumstances, applying the urchases. Under these facts circumstances, applying the urchases. Under these facts circumstances, applying the judicial pronouncement laid down by Hon’ble Jurisdictional High Court judicial pronouncement laid down by Hon’ble Jurisdictional High Court judicial pronouncement laid down by Hon’ble Jurisdictional High Court as discussed above, we do not find any merits for the addition so as discussed above, we do not find any merits for the addition so as discussed above, we do not find any merits for the addition so upheld by CIT(A). upheld by CIT(A).” 5.1 Since in the year under consideration al Since in the year under consideration also it is not disputed so it is not disputed that assessee has taken taken been accommodation entries of the bogus entries of the bogus purchases and the only only issue in dispute is regarding the quantum issue in dispute is regarding the quantum of addition to be made on the basis of thos of addition to be made on the basis of those bogus purchases. In bogus purchases. In the case of Haji Adam (supra) it is obse the case of Haji Adam (supra) it is observed that corresponding rved that corresponding

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sales were not doubted and quantitative details of bogus purchase sales were not doubted and quantitative details of bogus purchase sales were not doubted and quantitative details of bogus purchase and sales was duly submitted to indentify the sales corresponding and sales was duly submitted to indentify the sales corresponding and sales was duly submitted to indentify the sales corresponding to the bogus purchases and identify the amount of the profit earned to the bogus purchases and identify the amount of the profit earned to the bogus purchases and identify the amount of the profit earned in the case of every transaction in the case of every transaction of bogus purchases. The Ld. of bogus purchases. The Ld. Counsel for the assessee was asked to file details of the sales the assessee was asked to file details of the sales the assessee was asked to file details of the sales corresponding to the bogus purchases corresponding to the bogus purchases, however he submitted that however he submitted that said details were not said details were not currently available and therefore, available and therefore, he requested that matter might be sent might be sent back to the file of the Assessing Officer k to the file of the Assessing Officer for deciding in the issue in dispute relying on the decision of the for deciding in the issue in dispute relying on the decision of the for deciding in the issue in dispute relying on the decision of the Mohammad Haji Adam Haji Adam & Co. (supra). Accordingly (supra). Accordingly, we feel it appropriate to restore this issue back to the file of the Assessing appropriate to restore this issue back to the file of the Assessing appropriate to restore this issue back to the file of the Assessing Officer with the direct with the directions to identify the sales corresponding to identify the sales corresponding to the the gross profit earned in each bogus purchases and compute bogus purchases and compute the gross profit earned in each transaction of the sale transaction of the sale of the bogus purchases and wh of the bogus purchases and wherever the gross profit on transaction of sale corresponding to bogus gross profit on transaction of sale corresponding to bogus gross profit on transaction of sale corresponding to bogus purchases is found to be purchases is found to be less than the gross profit on the genuine the gross profit on the genuine purchases, then he may make addition for the corresponding then he may make addition for the corresponding then he may make addition for the corresponding of gross profit. Following the decision of the amount of deficiency deficiency of gross profit. Following the decision of the Hon’ble Bombay High Court in the case of Haji Adam (supra) the Hon’ble Bombay High Court in the case of Haji Adam (supra) the Hon’ble Bombay High Court in the case of Haji Adam (supra) the ground No. 1 to 3 of the ground No. 1 to 3 of the appeal of the merit are are allowed for statistical purposes. The ground No. 4 and 5 of the appeal statistical purposes. The ground No. 4 and 5 of the appeal statistical purposes. The ground No. 4 and 5 of the appeal challenging the validity of the reassessment challenging the validity of the reassessment were not pressed not pressed before and therefore same are dismissed as infructuous. The ground No. 6 and therefore same are dismissed as infructuous. The ground No. 6 and therefore same are dismissed as infructuous. The ground No. 6

Omkar Metal and Alloys Corp. 10 ITA No. 2838/Mum/2023

being consequential and g being consequential and ground No. 7 being general round No. 7 being general, same are dismissed as infructuous infructuous.

Order pronounced in the open Court on nounced in the open Court on 29/12/2023. /12/2023. Sd/ Sd/- Sd/- Sd/ (SANDEEP SINGH KARHAIL SANDEEP SINGH KARHAIL) (OM PRAKASH KANT OM PRAKASH KANT) JUDICIAL MEMBER JUDICIAL MEMBER ACCOUNTANT MEMBER ACCOUNTANT MEMBER Mumbai; Dated: 29/12/2023 Rahul Sharma, Sr. P.S. Copy of the Order forwarded to Copy of the Order forwarded to : 1. The Appellant 2. The Respondent. 3. CIT 4. DR, ITAT, Mumbai 5. Guard file. BY ORDER, BY ORDER, //True Copy// (Assistant Registrar) (Assistant Registrar) ITAT, Mumbai ITAT, Mumbai