ITO 6 (1)(1), MUMBAI vs. M/S A J COAL PVT LTD., MUMBAI

PER OM PRAKASH KANT, AM PER OM PRAKASH KANT, AM

These cross appeals by the assessee and the These cross appeals by the assessee and the These cross appeals by the assessee and the Revenue are directed against order dated 08/05/2019 passed by the Ld. directed against order dated 08/05/2019 passed by the directed against order dated 08/05/2019 passed by the Commissioner of Income Commissioner of Income-tax(Appeals)-12, Mumbai, [in short 12, Mumbai, [in short ‘the Ld. CIT(A)’] for assessment year 2009 ] for assessment year 2009-10. Both these appeals were Both these appeals were heard and pronounced by the heard and pronounced by the Tribunal earlier, however, in view of earlier, however, in view of the orders being ex-parte parte qua the assessee, same have been recalled , same have been recalled by the Tribunal vide MA No. 212/Mum/2022 d ribunal vide MA No. 212/Mum/2022 dated 16/12/2022 ated 16/12/2022 and 71/Mum/2023 No. dated 26/05/2023, thus and 71/Mum/2023 No. dated 26/05/2023, thus, the these appeals are before us.

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received from the external agency that the assessee had received from the external agency that the assessee had received from the external agency that the assessee had received accommodation entry from such party." received accommodation entry from such party." 6. Though the tax effect in this case is Rs.3,41,042/ 6. Though the tax effect in this case is Rs.3,41,042/ 6. Though the tax effect in this case is Rs.3,41,042/-, however this appeal has been filed because it is covered by exception his appeal has been filed because it is covered by exception his appeal has been filed because it is covered by exception mentioned in para 10(e) of the CBDT Circular No. 3/2018 dt 11 mentioned in para 10(e) of the CBDT Circular No. 3/2018 dt 11 mentioned in para 10(e) of the CBDT Circular No. 3/2018 dt 11- 7-2018 as subsequently clarified by Board letter dtd 2018 as subsequently clarified 2018 as subsequently clarified by Board by Board letter letter dtd dtd 20/08/2018 vide no. 279/misc./ 142/2007 20/08/2018 vide no. 279/misc./ 142/2007-ITJ (Pt.) which is ITJ (Pt.) which is effective as on date. effective as on date. 3. Briefly stated facts of the case are that stated facts of the case are that the assessee was the assessee was engaged in the business of trading in coke and coal and for the year engaged in the business of trading in coke and coal and engaged in the business of trading in coke and coal and under consideration, the assessee filed return of income on under consideration, the assessee filed return of income on under consideration, the assessee filed return of income on 29/09/2009 declaring total income at ₹21,10,400/ 29/09/2009 declaring total income at 400/-, which was processed under section 143(1) of the Income processed under section 143(1) of the Income-tax Act tax Act, 1961 (in short ‘the Act’) on 01/03/2011. ) on 01/03/2011. Subsequently, on receipt of Subsequently, on receipt of information that assessee had entered into information that assessee had entered into various various purchase transactions with M/s Sthapna Trade Impex P Ltd M/s Sthapna Trade Impex P Ltd M/s Sthapna Trade Impex P Ltd aggregating to Rs.49,98,475/-, who had been , who had been declared as hawala dealers by the declared as hawala dealers by the Maharashtra sales tax department, th Maharashtra sales tax department, the Assessing Officer after e Assessing Officer after analyzing the information and verification of the records, recorded the information and verification of the records, recorded the information and verification of the records, recorded the reasons to believe that income escaped assessment and issued the reasons to believe that income escaped assessment and issued the reasons to believe that income escaped assessment and issued notice under section 148 of the nder section 148 of the Act on 29/03/2016. In response the on 29/03/2016. In response the assessee’s representative submitted that return of income filed on assessee’s representative submitted that return of income filed on assessee’s representative submitted that return of income filed on 30/03/2016, might be treated as return filed in response to notice 30/03/2016, might be treated as return filed in response to notice 30/03/2016, might be treated as return filed in response to notice under section 148 dated 29/03/2016. A copy of the reasons under section 148 dated 29/03/2016. A copy of the reasons under section 148 dated 29/03/2016. A copy of the reasons recorded was provided to the assessee ded was provided to the assessee vide letter dated 30/05/2016 ide letter dated 30/05/2016 of the Assessing Officer. The Assessing Officer also rejected the of the Assessing Officer. The Assessing Officer also rejected the of the Assessing Officer. The Assessing Officer also rejected the

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objection of the assessee against the reopening of the assessment objection of the assessee against the reopening of the assessment objection of the assessee against the reopening of the assessment vide letter dated 27/06/2016. dated 27/06/2016.

3.1 During the course of the During the course of the re-assessment proceedings, the assessment proceedings, the assessee filed ledger account of assessee filed ledger account of the said purchase party in its books the said purchase party in its books of accounts, bank statement of assessee and invoices issued by the of accounts, bank statement of assessee and invoices issued by the of accounts, bank statement of assessee and invoices issued by the said party. The Assessing Officer asked the assessee to produce the said party. The Assessing Officer asked the assessee to produce said party. The Assessing Officer asked the assessee to produce party for examination party for examination, however the assessee expressed his inability however the assessee expressed his inability in producing the said party. The Assessing Officer further noted in producing the said party. The Assessing Officer further noted in producing the said party. The Assessing Officer further noted that the assessee failed to establish that material was actually that the assessee failed to establish that material was actually that the assessee failed to establish that material was actually supplied by the said party and same was received by the assessee. supplied by the said party and same was received by the assessee supplied by the said party and same was received by the assessee The learned Assessing Officer observed that payment by account Assessing Officer observed that payment by account Assessing Officer observed that payment by account payee cheque was not payee cheque was not conclusive evidence to prove the genuineness to prove the genuineness of the transaction. In support of the transaction. In support, he relied on the decision of the he relied on the decision of the coordinate bench of the Tribunal in the case of Kachwala Gems Vs Kachwala Gems Vs coordinate bench of the JCIT (ITA No. 134/JP/2002) A No. 134/JP/2002) affirmed by the Hon’ble Supreme affirmed by the Hon’ble Supreme Court as reported in Kachwala Gems Vs JCIT (2006) 206 CTR Kachwala Gems Vs JCIT (2006) 206 CTR Court as reported in 585(SC). The Ld. Assessing Officer finally concluded that assessee Assessing Officer finally concluded that assessee Assessing Officer finally concluded that assessee failed to discharge its onus of establishing the purchases and failed to discharge its onus of establishing the purchases and failed to discharge its onus of establishing the purchases and disallowed peak amount of unexplained money mount of unexplained money of Rs. of Rs. 17,28,507/-. utilised for purchase of such stocks observing as under: utilised for purchase of such stocks observing as under: utilised for purchase of such stocks observing as under:

“The assessee has failed (i) to prove the genuineness of the The assessee has failed (i) to prove the genuineness of the The assessee has failed (i) to prove the genuineness of the aforesaid Purchases, (ji) to produce the suppliers, (iii) to aforesaid Purchases, (ji) to produce the suppliers, (iii) to aforesaid Purchases, (ji) to produce the suppliers, (iii) to produce the transportation det produce the transportation details or evidence for receipts of ails or evidence for receipts of goods, (iv) to furnish any brokers or third party evidence. goods, (iv) to furnish any brokers or third party evidence. goods, (iv) to furnish any brokers or third party evidence.

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been purchased from the bogus suppliers). The addition in been purchased from the bogus suppliers). The addition in been purchased from the bogus suppliers). The addition in respect of unexplained investment made in stock Purchased respect of unexplained investment made in stock Purchased respect of unexplained investment made in stock Purchased form undisclosed party or undisclosed sources but wrongly form undisclosed party or undisclosed sources but wrongly form undisclosed party or undisclosed sources but wrongly shown in the b shown in the books of accounts as having been Purchased ooks of accounts as having been Purchased from bogus suppliers was, held as correctly added as from bogus suppliers was, held as correctly added as from bogus suppliers was, held as correctly added as assessee's income. assessee's income. 13. The Hon'ble High Court Of Gujarat in the case of Sanjay 13. The Hon'ble High Court Of Gujarat in the case of Sanjay 13. The Hon'ble High Court Of Gujarat in the case of Sanjay Oilcake Industries Versus CIT 316 ITR 274 (Gui) held that Oilcake Industries Versus CIT 316 ITR 274 (Gui) held that Oilcake Industries Versus CIT 316 ITR 274 (Gui) held that income used for inflated income used for inflated Purchase price and arising Purchase price and arising therefrom where the apparent sellers who had issued sale therefrom where the apparent sellers who had issued sale therefrom where the apparent sellers who had issued sale bills were not traceable and that goods were received from bills were not traceable and that goods were received from bills were not traceable and that goods were received from the parties other than the persons who had issued bills for the parties other than the persons who had issued bills for the parties other than the persons who had issued bills for such goods, disallowance of 25% Purchase from bogus such goods, disallowance of 25% Purchase from bogus such goods, disallowance of 25% Purchase from bogus parties is justified. In the case CIT v/s Bholanath Poly Fab parties is justified. In the case CIT v/s Bholanath Poly Fab parties is justified. In the case CIT v/s Bholanath Poly Fab Pvt Ltd. 355 IT 290 which was a case of Purchases from Pvt Ltd. 355 IT 290 which was a case of Purchases from Pvt Ltd. 355 IT 290 which was a case of Purchases from bogus parties, sale being not bogus and the entire quantity of bogus parties, sale being not bogus and the entire quantity of bogus parties, sale being not bogus and the entire quantity of opening stock, Purchases and the quantity manufactured opening stock, Purchases and the quantity manufactured opening stock, Purchases and the quantity manufactured during the year under during the year under consideration sold by the assessee consideration sold by the assessee and that the finished goods were Purchased by the and that the finished goods were Purchased by the and that the finished goods were Purchased by the assessee, may be not from the parties shown in the assessee, may be not from the parties shown in the assessee, may be not from the parties shown in the accounts, but from other sources and the HC approved accounts, but from other sources and the HC approved accounts, but from other sources and the HC approved Tribunal decision which was of the opinion that not the entire Tribunal decision which was of the opinion that not the entire Tribunal decision which was of the opinion that not the entire amount, but the profit margin embedded in such amount nt, but the profit margin embedded in such amount nt, but the profit margin embedded in such amount would be subiected to tax and it was held that, not the entire would be subiected to tax and it was held that, not the entire would be subiected to tax and it was held that, not the entire Purchase price but only profit element embedded in such Purchase price but only profit element embedded in such Purchase price but only profit element embedded in such Purchases can be added to the income of the assessee. The Purchases can be added to the income of the assessee. The Purchases can be added to the income of the assessee. The Tribunal had also made refere Tribunal had also made reference to the Tribunal's decision nce to the Tribunal's decision in the case of Vijay Proteins. The peak credit method though in the case of Vijay Proteins. The peak credit method though in the case of Vijay Proteins. The peak credit method though not directly applied in this case was approved by HC by not directly applied in this case was approved by HC by not directly applied in this case was approved by HC by reference to ITAT decision in the case of M/s Vijay Protiens reference to ITAT decision in the case of M/s Vijay Protiens reference to ITAT decision in the case of M/s Vijay Protiens Ltd. 14. Thus, in all cases of sales being acce 14. Thus, in all cases of sales being accepted, the income pted, the income from sale of goods have been charged to tax on estimate from sale of goods have been charged to tax on estimate from sale of goods have been charged to tax on estimate basis and the most scientific method adopted was of the basis and the most scientific method adopted was of the basis and the most scientific method adopted was of the peak credit method for calculation of undisclosed income peak credit method for calculation of undisclosed income peak credit method for calculation of undisclosed income used for acquisition of stock, and undisclosed profit used for acquisition of stock, and undisclosed profit used for acquisition of stock, and undisclosed profit therefrom as dec therefrom as decided in the case of Vijay Proteins Ltd v/s ided in the case of Vijay Proteins Ltd v/s ACIT by ITAT, Ahmadabad, which was approved in all other ACIT by ITAT, Ahmadabad, which was approved in all other ACIT by ITAT, Ahmadabad, which was approved in all other cases, though not directly applied in all cases. cases, though not directly applied in all cases.

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proving that such deductions are permissible is on the proving that such deductions are permissible is on the proving that such deductions are permissible is on the assessee especially since the claims are based on facts assessee especially since the claims are based on facts assessee especially since the claims are based on facts which are exclusively within the know which are exclusively within the knowledge of the assessee. ledge of the assessee. 17. The statements recorded by Sales Tax Department are 17. The statements recorded by Sales Tax Department are 17. The statements recorded by Sales Tax Department are hard evidence in public domain and assessee has not denied hard evidence in public domain and assessee has not denied hard evidence in public domain and assessee has not denied fact of such statements. Such statements have not been fact of such statements. Such statements have not been fact of such statements. Such statements have not been rebutted by the assessee by proper documentary evidence or rebutted by the assessee by proper documentary evidence or rebutted by the assessee by proper documentary evidence or producing those parties to prove that the Purchase shown by ucing those parties to prove that the Purchase shown by ucing those parties to prove that the Purchase shown by them were made from that party in reality. In any case onus them were made from that party in reality. In any case onus them were made from that party in reality. In any case onus is on the assessee to prove that Purchases are genuine. This is on the assessee to prove that Purchases are genuine. This is on the assessee to prove that Purchases are genuine. This has not been discharged by the assessee to the full has not been discharged by the assessee to the full has not been discharged by the assessee to the full satisfaction of the undersi satisfaction of the undersigned. Accordingly, pure and simple gned. Accordingly, pure and simple conclusion is to be drawn that the assessee has made the conclusion is to be drawn that the assessee has made the conclusion is to be drawn that the assessee has made the Purchases in respect of so called tainted Purchases from the Purchases in respect of so called tainted Purchases from the Purchases in respect of so called tainted Purchases from the open market by putting his own unaccounted cash. open market by putting his own unaccounted cash. open market by putting his own unaccounted cash. 18. Considering the fact that the payment for goods 18. Considering the fact that the payment for goods 18. Considering the fact that the payment for goods Purchased from unknown parties in open market has been rchased from unknown parties in open market has been rchased from unknown parties in open market has been made in cash, by calculating the peak after merging the made in cash, by calculating the peak after merging the made in cash, by calculating the peak after merging the accounts of all the bogus parties from whom Purchases made accounts of all the bogus parties from whom Purchases made accounts of all the bogus parties from whom Purchases made during the year where assessee has shown profit from sale during the year where assessee has shown profit from sale during the year where assessee has shown profit from sale of these goods shown as Purcha of these goods shown as Purchased from hawala parties, no sed from hawala parties, no addition is made on profit element. addition is made on profit element. 19. In view of the above stated facts, the sum of Rs 19. In view of the above stated facts, the sum of Rs 19. In view of the above stated facts, the sum of Rs 17,28,507/-. being peak an . being peak an-of credits is treated as of credits is treated as undisclosed cash utilized by the assessee for making come undisclosed cash utilized by the assessee for making come undisclosed cash utilized by the assessee for making come Taro payments to undisclosed real suppliers and the amount Taro payments to undisclosed real suppliers and the amount Taro payments to undisclosed real suppliers and the amount of Rs 17,28,507/ of Rs 17,28,507/- is therefore added U/s 69C of IT Act 1961 ed U/s 69C of IT Act 1961 as deemed income in the hands of the as deemed income in the hands of the assessee.” 4. On further appeal, the assessee challenged validity of the further appeal, the assessee challenged validity of the further appeal, the assessee challenged validity of the reassessment as well as addition on merit. The Ld. CIT(A) though reassessment as well as addition on merit. The Ld. CIT(A) though reassessment as well as addition on merit. The Ld. CIT(A) though upheld the validity of the reassessment, however on merit restricted upheld the validity of the reassessment, however on mer upheld the validity of the reassessment, however on mer the disallowance to 12.5% of the purchases from said party, which the disallowance to 12.5% of the purchases from said party, which the disallowance to 12.5% of the purchases from said party, which was worked out to ₹ ₹ 6,24,809/-. Aggrieved with the finding of the with the finding of the Ld. CIT(A), both the assessee Ld. CIT(A), both the assessee and the Revenue are before us, by way evenue are before us, by way of raising grounds as as reproduced above.

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supply of material received from sales tax department observing as supply of material received from sales tax department observing as supply of material received from sales tax department observing as under:

“4. Ground Nos. 4 & 9 raised by the assessee relate to Ground Nos. 4 & 9 raised by the assessee relate to Ground Nos. 4 & 9 raised by the assessee relate to completing the reassessment without providing any material completing the reassessment without providing any material completing the reassessment without providing any material received from Sales Tax Department received from Sales Tax Department to the assessee and to the assessee and also without giving reasonable opportunity to the assessee in also without giving reasonable opportunity to the assessee in also without giving reasonable opportunity to the assessee in violation of principles of natural justice. The case was violation of principles of natural justice. The case was violation of principles of natural justice. The case was reopened after recording the reasons and following due reopened after recording the reasons and following due reopened after recording the reasons and following due procedure as the income for the year under consideration procedure as the income for the year under consideration procedure as the income for the year under consideration had escaped assessment. It is seen from the assessment scaped assessment. It is seen from the assessment scaped assessment. It is seen from the assessment order that the notice u/s 148 was issued on 29.03.2016. order that the notice u/s 148 was issued on 29.03.2016. order that the notice u/s 148 was issued on 29.03.2016. Assessee asked for reasons recorded which were supplied to Assessee asked for reasons recorded which were supplied to Assessee asked for reasons recorded which were supplied to the assessee on 30.05.2016. The objections raised by the the assessee on 30.05.2016. The objections raised by the the assessee on 30.05.2016. The objections raised by the assessee on the reopening were dis assessee on the reopening were disposed of on 27.06.2016. posed of on 27.06.2016. Notice u/s 143(2) was issued on 30.05.2016 and notice us Notice u/s 143(2) was issued on 30.05.2016 and notice us Notice u/s 143(2) was issued on 30.05.2016 and notice us 142(1) was issued on 20.06.2016. In response to the notices 142(1) was issued on 20.06.2016. In response to the notices 142(1) was issued on 20.06.2016. In response to the notices the authorised representative of the assessee attended from the authorised representative of the assessee attended from the authorised representative of the assessee attended from time to time and filed replies as recorded by the AO in time to time and filed replies as recorded by the AO in time to time and filed replies as recorded by the AO in paragraphs 2, 3 and 6 of the assessment order. Therefore paragraphs 2, 3 and 6 of the assessment order. Therefore paragraphs 2, 3 and 6 of the assessment order. Therefore there is no violation of principles of natural justice and there is no violation of principles of natural justice and there is no violation of principles of natural justice and ground number 9 is dismissed. Assessee contended that the ground number 9 is dismissed. Assessee contended that the ground number 9 is dismissed. Assessee contended that the material received from the Sales tax department was not material received from the Sales tax department was not material received from the Sales tax department was not provided. The A.. receive provided. The A.. received an information from the Sales Tax d an information from the Sales Tax Department of Maharashtra, that M/s. A. J. Coal Pvt. Ltd., Department of Maharashtra, that M/s. A. J. Coal Pvt. Ltd., Department of Maharashtra, that M/s. A. J. Coal Pvt. Ltd., had taken accommodation entries of Rs.49,98,475 from had taken accommodation entries of Rs.49,98,475 from had taken accommodation entries of Rs.49,98,475 from Sthapna Trade Impex Pvt. Ltd. by way of taking bogus bills Sthapna Trade Impex Pvt. Ltd. by way of taking bogus bills Sthapna Trade Impex Pvt. Ltd. by way of taking bogus bills of purchase during the year under consideration. of purchase during the year under consideration. of purchase during the year under consideration. The information was also available in the public domain i.e. the information was also available in the public domain i.e. the information was also available in the public domain i.e. the website of the Sales Tax Department along with TIN numbers website of the Sales Tax Department along with TIN numbers website of the Sales Tax Department along with TIN numbers of parties. The information was that Sthapna Trade Impex of parties. The information was that Sthapna Trade Impex of parties. The information was that Sthapna Trade Impex Pvt. Ltd issued the bills without actual delivery of goods and Pvt. Ltd issued the bills without actual delivery of goods and Pvt. Ltd issued the bills without actual delivery of goods and purchases sh purchases shown by the assessee from the above party were own by the assessee from the above party were non-genuine.As the information was also available in public genuine.As the information was also available in public genuine.As the information was also available in public domain, there was no need for supplying the same domain, there was no need for supplying the same domain, there was no need for supplying the same separately. Further, the information received was also part of separately. Further, the information received was also part of separately. Further, the information received was also part of the reasons recorded wherein PAN, TIN, the reasons recorded wherein PAN, TIN, Financial year and Financial year and the amount of such bogus purchases was also mentioned the amount of such bogus purchases was also mentioned the amount of such bogus purchases was also mentioned which was supplied to the assessee.Therefore, the argument which was supplied to the assessee.Therefore, the argument which was supplied to the assessee.Therefore, the argument that material was not supplied is not correct and the ground that material was not supplied is not correct and the ground that material was not supplied is not correct and the ground number 4 is dismissed. In view of the above, reopening of number 4 is dismissed. In view of the above, reopening of number 4 is dismissed. In view of the above, reopening of

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assessment and the reassessment order passed is found to ssment and the reassessment order passed is found to ssment and the reassessment order passed is found to be in order and upheld. Accordingly, these grounds of appeal be in order and upheld. Accordingly, these grounds of appeal be in order and upheld. Accordingly, these grounds of appeal 1, 3, 4 and 9 are dismissed. 1, 3, 4 and 9 are dismissed.” 7.1 Before us Ld. counsel Ld. counsel of the assessee referred to page No. 16 referred to page No. 16 of the paperbook, which is a copy of order dated 19/06/2023 of the paperbook, which is a copy of order dated 19/06/2023 of the paperbook, which is a copy of order dated 19/06/2023 passed by the Central Public information Officer (CPIO) under right passed by the Central Public information Officer (CPIO) under right passed by the Central Public information Officer (CPIO) under right to information (RTI) Act,2005, wherein he provided copy of notices, to information (RTI) Act,2005, wherein he provided copy of notices, to information (RTI) Act,2005, wherein he provided copy of notices, their response filed by the assesse their response filed by the assessee, material / information relied e, material / information relied upon for initiating reassessment etc. in the case of the assessee, upon for initiating reassessment etc. in the case of the assessee, upon for initiating reassessment etc. in the case of the assessee, sought by the director of the assessee company. The learned sought by the director of the assessee company. The learne sought by the director of the assessee company. The learne counsel referred to the information supplied by the CPIO and l referred to the information supplied by the CPIO and l referred to the information supplied by the CPIO and submitted that no material relied f submitted that no material relied for initiating reassessment or initiating reassessment proceeding was provided to the assessee. Accordingly, the learned proceeding was provided to the assessee. Accordingly, the learne proceeding was provided to the assessee. Accordingly, the learne counsel of the assessee submitted that in absence of any material, l of the assessee submitted that in absence of any material, l of the assessee submitted that in absence of any material, the learned Assessing Officer was not justified in initiating the learned Assessing Officer was not justified in initiating the learned Assessing Officer was not justified in initiating reassessment proceeding. reassessment proceeding.

7.2 The Ld.Departmental Representative Departmental Representative (DR) on the other hand (DR) on the other hand the information, which was in submitted that whatever material o submitted that whatever material or the information the possession of the Assessing Officer the possession of the Assessing Officer, has already been supplied has already been supplied in response to application filed by the director of the assessee in response to application filed by the director of the assessee in response to application filed by the director of the assessee invoking RTI Act, 2005. He further submitted that in the grounds invoking RTI Act, 2005. He further submitted that in the grounds invoking RTI Act, 2005. He further submitted that in the grounds raised the assessee has only challenged validity of the reassessment raised the assessee has only challenged validity of the reassessment raised the assessee has only challenged validity of the reassessment ns to believe, whereas reasons to on the ground of without reaso on the ground of without reasons to believe, whereas reasons to believe were duly provided to the assessee and against which believe were duly provided to the assessee and against which believe were duly provided to the assessee and against which assessee also objected before the assessee also objected before the Ld CIT(A) and the Assessing and the Assessing

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Officer has duly disposed of as duly disposed off objections of the assessee of the assessee also. Accordingly, he submitted that there Accordingly, he submitted that there was no substance in the was no substance in the arguments of the assessee that no material or information for arguments of the assessee that no material or information for arguments of the assessee that no material or information for initiating reassessment proceeding was supplied to the assessee. initiating reassessment proceeding was supplied to the assessee. initiating reassessment proceeding was supplied to the assessee.

7.3 We have heard rival submission of the parties on the issue in rival submission of the parties on the issue in dispute and perused the relevant mater dispute and perused the relevant material on record. We find that ial on record. We find that Ld. CIT(A) has duly rejected the contention of the assessee that no Ld. CIT(A) has duly rejected the contention of the assessee that no Ld. CIT(A) has duly rejected the contention of the assessee that no material or information for initiating reassessment proceeding was material or information for initiating reassessment proceeding was material or information for initiating reassessment proceeding was provided to the assessee. Relevant f provided to the assessee. Relevant finding of the Ld. CIT(A) has been nding of the Ld. CIT(A) has been reproduced above. Furth reproduced above. Further, we find that whatever information from we find that whatever information from the Sales Tax Department Department received in relation to the assessee has received in relation to the assessee has been duly referred in the reasons recorded and same as has been been duly referred in the reasons recorded and same as has been been duly referred in the reasons recorded and same as has been already supplied to the assessee under right to information already supplied to the assessee under right to information already supplied to the assessee under right to information Act,2005, therefore, we ,2005, therefore, we do not find any substance in the arguments do not find any substance in the arguments of the assessee challenging validity of the reassessment on this of the assessee challenging validity of the reassessment on this of the assessee challenging validity of the reassessment on this ground. Accordingly, the ground No. ground. Accordingly, the ground No. 1 of the appeal of the assessee of the appeal of the assessee is dismissed.

8.1 We find that objection of the assessee of no valid approval We find that objection of the assessee of no valid approval We find that objection of the assessee of no valid approval under section 151 of the under section 151 of the Act has been disposed of has been disposed off by the Ld. CIT(A), observing as under: observing as under:

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“5.1 I have perused the assessment order and the 5.1 I have perused the assessment order and the 5.1 I have perused the assessment order and the submissions of the assessee on the issue. Appellant submissions of the assessee on the issue. Appellant submissions of the assessee on the issue. Appellant contended that the reassessment order was passed without contended that the reassessment order was passed without contended that the reassessment order was passed without obtaining valid approval of the Pr. Commissioner of Income obtaining valid approval of the Pr. Commissioner of Income obtaining valid approval of the Pr. Commissioner of Income tax us 151 of the Act.It is seen from the record that the of the Act.It is seen from the record that the assessee filed RTI Application for copy of approval granted assessee filed RTI Application for copy of approval granted assessee filed RTI Application for copy of approval granted by CIT u/s 151 of the Act and the copy of approval granted by CIT u/s 151 of the Act and the copy of approval granted by CIT u/s 151 of the Act and the copy of approval granted by Pr. CIT-6 was supplied by the AO. From the approval it 6 was supplied by the AO. From the approval it 6 was supplied by the AO. From the approval it can be seen that, Pr. CIT writt can be seen that, Pr. CIT written in his hand writing that en in his hand writing that 'Yes, I Am Satisfied' and signed. This approval, the 'Yes, I Am Satisfied' and signed. This approval, the 'Yes, I Am Satisfied' and signed. This approval, the assessee contends that is no approval as such. It is seen assessee contends that is no approval as such. It is seen assessee contends that is no approval as such. It is seen that section 151(1) only requires the satisfaction of the Pr. that section 151(1) only requires the satisfaction of the Pr. that section 151(1) only requires the satisfaction of the Pr. Commissioner of Income tax on the reasons recorded by Commissioner of Income tax on the reasons recorded by Commissioner of Income tax on the reasons recorded by the assessing officer, that it is a fit case for the issue of notice, assessing officer, that it is a fit case for the issue of notice, assessing officer, that it is a fit case for the issue of notice, which is extracted here under. which is extracted here under. 151. (1) No notice shall be issued under section 148 by 151. (1) No notice shall be issued under section 148 by 151. (1) No notice shall be issued under section 148 by an Assessing Officer, after the expiry of a period of an Assessing Officer, after the expiry of a period of an Assessing Officer, after the expiry of a period of four years from the end of the relevant assessment four years from the end of the relevant asses four years from the end of the relevant asses year, unless the Principal Chief Commissioner or Chief year, unless the Principal Chief Commissioner or Chief year, unless the Principal Chief Commissioner or Chief Commissioner Commissioner Commissioner or or or Principal Principal Principal Commissioner Commissioner Commissioner or or or Commissioner is satisfied, on the reasons recorded by Commissioner is satisfied, on the reasons recorded by Commissioner is satisfied, on the reasons recorded by the Assessing Officer, that it is a fit case for the issue the Assessing Officer, that it is a fit case for the issue the Assessing Officer, that it is a fit case for the issue of such notice. of such notice. 5.2As can be seen from t 5.2As can be seen from the wording of the very section he wording of the very section which specifies the requirement of approval states that which specifies the requirement of approval states that which specifies the requirement of approval states that 'Principal Commissioner or Commissioner is satisfied, on the 'Principal Commissioner or Commissioner is satisfied, on the 'Principal Commissioner or Commissioner is satisfied, on the reasons recorded by the Assessing Officer, that it is a fit case reasons recorded by the Assessing Officer, that it is a fit case reasons recorded by the Assessing Officer, that it is a fit case for the issue of such notice. As can be see for the issue of such notice. As can be seen from the n from the assessment order and copy of the approval issued by the Pr. assessment order and copy of the approval issued by the Pr. assessment order and copy of the approval issued by the Pr. Commissioner of Income tax, the AO has recorded reasons Commissioner of Income tax, the AO has recorded reasons Commissioner of Income tax, the AO has recorded reasons for reopening and sought approval of the Pr. Commissioner of for reopening and sought approval of the Pr. Commissioner of for reopening and sought approval of the Pr. Commissioner of Income tax in the proforma. The Pr. Commissioner of Income Income tax in the proforma. The Pr. Commissioner of Income Income tax in the proforma. The Pr. Commissioner of Income tax, based on the reasons recorded, has recorded that he is d on the reasons recorded, has recorded that he is d on the reasons recorded, has recorded that he is Whether Pr.CIT is satisfied on the Whether Pr.CIT is satisfied on the Yes, I am satisfied Yes, I am satisfied 11 reasons recorded by the AO that it is reasons recorded by the AO that it is Sd a fit case for issue of Notice u/s 148 a fit case for of the Act 1961 of the Act 1961 (…………) Pr. Commissioner of Income Pr. Commissioner of Income

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Tax-6 Mumbai

5.3 The column is very clear whether Pr.CIT is satisfied on 5.3 The column is very clear whether Pr.CIT is satisfied on 5.3 The column is very clear whether Pr.CIT is satisfied on the reasons recorded by the AO that it is a fit case for issue the reasons recorded by the AO that it is a fit case for issue the reasons recorded by the AO that it is a fit case for issue of Notice of Notice u/s. 148 of the Act 1961.Against which of Notice of Notice u/s. 148 of the Act 1961.Against which of Notice of Notice u/s. 148 of the Act 1961.Against which the Pr.CIT has recorded in his own hand writing that he is the Pr.CIT has recorded in his own hand writing that he is the Pr.CIT has recorded in his own hand writing that he is satisfied.There satisfied.Therefore, I do not think anything more is required fore, I do not think anything more is required to be written by the Pr.Commissioner of Income tax to record to be written by the Pr.Commissioner of Income tax to record to be written by the Pr.Commissioner of Income tax to record his satisfaction. If the aim is only hair splitting, to the extent his satisfaction. If the aim is only hair splitting, to the extent his satisfaction. If the aim is only hair splitting, to the extent of expecting the Pr. Commissioner of Income tax to write the of expecting the Pr. Commissioner of Income tax to write the of expecting the Pr. Commissioner of Income tax to write the words the assessee d words the assessee deems is sufficient to his satisfaction, eems is sufficient to his satisfaction, then there is no end and it is not possible for the authority to then there is no end and it is not possible for the authority to then there is no end and it is not possible for the authority to write the words to the satisfaction of each andevery write the words to the satisfaction of each andevery write the words to the satisfaction of each andevery assessee. With due respect to the decisions relied by the assessee. With due respect to the decisions relied by the assessee. With due respect to the decisions relied by the assessee, I have no hesitation in holdin assessee, I have no hesitation in holding that the approval g that the approval given by the Pr. Commissioner of Income tax given by the Pr. Commissioner of Income tax-6 is as per the 6 is as per the provisions of the section 151 of the Act and there is no provisions of the section 151 of the Act and there is no provisions of the section 151 of the Act and there is no violation of any condition laid down in the Act before violation of any condition laid down in the Act before violation of any condition laid down in the Act before reopening. Therefore the ground of appeal 2 of the assessee reopening. Therefore the ground of appeal 2 of the assessee reopening. Therefore the ground of appeal 2 of the assessee that the reopening is not proper is baseless and dismissed. the reopening is not proper is baseless and dismissed. the reopening is not proper is baseless and dismissed.” 8.2 Before us the Ld. counsel Ld. counsel of the assessee referred to the referred to the case ofCIT Vs Goyanka Lime and Chemicals Ltd CIT Vs Goyanka Lime and Chemicals Ltd (2023) 453 ITR 242 (2023) 453 ITR 242 (SC) and submitted that the Commissioner has mechanically and submitted that the Commissioner has mechanically and submitted that the Commissioner has mechanically approved the reasons recorded without application of mind, approved the reasons recorded without application of mind, approved the reasons recorded without application of mind, therefore the reassessment proceeding need to be quashed. The Ld. therefore the reassessment proceeding need to be quashed. The therefore the reassessment proceeding need to be quashed. The DR on the other hand relied on the finding of the Ld. CIT(A) and DR on the other hand relied on the finding of the Ld. CIT(A) and DR on the other hand relied on the finding of the Ld. CIT(A) and submitted that facts of the case relied upon by the facts of the case relied upon by the facts of the case relied upon by the Ld. counsel of the assessee are different from the facts of the instant case and the the assessee are different from the facts of the instant case and the the assessee are different from the facts of the instant case and the Ld. CIT(A) has approved the reasons recorded after verification of Ld. CIT(A) has approved the reasons recorded after verification of Ld. CIT(A) has approved the reasons recorded after verification of the information along with the records of the assessee and due the information along with the records of the assessee and due the information along with the records of the assessee and due application of mind, pplication of mind, therefore, the reassessment has been validly the reassessment has been validly initiated in the case of the assessee. initiated in the case of the assessee.

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8.3 We have heard rival submission of the parties on the issue in We have heard rival submission of the parties on the issue in We have heard rival submission of the parties on the issue in dispute and perused the relevant material on record. The Ld. CIT(A) dispute and perused the relevant material on record. The Ld. CIT(A) dispute and perused the relevant material on record. The Ld. CIT(A) has reproduced all the facts in relation to issue in dispute. In the l the facts in relation to issue in dispute. In the l the facts in relation to issue in dispute. In the instant case there is no dispute that information received from the instant case there is no dispute that information received from the instant case there is no dispute that information received from the sales tax department as well as records of the assessee were sales tax department as well as records of the assessee were sales tax department as well as records of the assessee were available available available before before before the the the appropriate appropriate appropriate authority authority authority while while while sanctioning/approving the sanctioning/approving the reasons recorded for reopening of the reasons recorded for reopening of the reassessment. In the case relied upon by the assessee, the Hon’ble reassessment. In the case relied upon by the assessee reassessment. In the case relied upon by the assessee Supreme Court has held that Commissioner acted mechanically as Supreme Court has held that Commissioner acted mechanically as Supreme Court has held that Commissioner acted mechanically as he performed in less than 24 less than 24-hours of the time for granting hours of the time for granting sanction for issue of notice sanction for issue of notice under section 148 of the under section 148 of the Act. In the present case, there are no such allegations. Even looking to the No. present case, there are no such allegations. Even looking to the No. present case, there are no such allegations. Even looking to the No. of pages of the information received from the of pages of the information received from the Sales Tax Sales TaxDepartment, time taken of less than 24 time taken of less than 24-hours might be reasonable in the case of hours might be reasonable in the case of the assessee. The decision relied upon by the learne The decision relied upon by the learne The decision relied upon by the learned consul of the assessee is distinguishable on facts. Accordingly, we uphold the assessee is distinguishable on facts. Accordingly, we uphold the assessee is distinguishable on facts. Accordingly, we uphold the finding of the Ld. CIT(A) on the issue in dispute and dismiss the finding of the Ld. CIT(A) on the issue in dispute and dismiss the finding of the Ld. CIT(A) on the issue in dispute and dismiss the ground No. 2 of the appeal of the assessee. of the appeal of the assessee.

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“6.4 In this case, the appellant produced invoices, ledger 6.4 In this case, the appellant produced invoices, ledger 6.4 In this case, the appellant produced invoices, ledger accounts, Purchase and Sales Register and copy of bank accounts, Purchase and Sales Register and copy of bank accounts, Purchase and Sales Register and copy of bank statement indicating the payment made statement indicating the payment made to the seller to prove to the seller to prove the genuineness of the purchases. It is also a fact on record the genuineness of the purchases. It is also a fact on record the genuineness of the purchases. It is also a fact on record that the Assessing Officer has not doubted the sales affected that the Assessing Officer has not doubted the sales affected that the Assessing Officer has not doubted the sales affected by the appellant. Thus, it is logical to conclude that without by the appellant. Thus, it is logical to conclude that without by the appellant. Thus, it is logical to conclude that without corresponding purchases being affected, the a corresponding purchases being affected, the appellant could ppellant could

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not have made the sales. Merely relying upon the information not have made the sales. Merely relying upon the information not have made the sales. Merely relying upon the information from the Sales Tax Department the Assessing Officer could from the Sales Tax Department the Assessing Officer could from the Sales Tax Department the Assessing Officer could not have treated the purchases as bogus or made in cash not have treated the purchases as bogus or made in cash not have treated the purchases as bogus or made in cash particularly when the appellant has brought documentary particularly when the appellant has brought documentary particularly when the appellant has brought documentary evidences on record to prove genuineness of purchases, the on record to prove genuineness of purchases, the on record to prove genuineness of purchases, the action of the Assessing Officer in ignoring them cannot be action of the Assessing Officer in ignoring them cannot be action of the Assessing Officer in ignoring them cannot be accepted. When the payment to the concerned parties are accepted. When the payment to the concerned parties are accepted. When the payment to the concerned parties are through proper banking channel and there is no evidence through proper banking channel and there is no evidence through proper banking channel and there is no evidence before the AO that the amounts were before the AO that the amounts were routed back to the routed back to the appellant, the addition of bogus purchases or peak amount appellant, the addition of bogus purchases or peak amount appellant, the addition of bogus purchases or peak amount of assumed cash payments is not sustainable in law and of assumed cash payments is not sustainable in law and of assumed cash payments is not sustainable in law and facts. Only corollary that follows in such situation is that the facts. Only corollary that follows in such situation is that the facts. Only corollary that follows in such situation is that the entity may not be the actual supplier but may have provided entity may not be the actual supplier but may have provided entity may not be the actual supplier but may have provided the bills for the material purchased locally. This is not case in the bills for the material purchased locally. This is not case in the bills for the material purchased locally. This is not case in which the signed blank cheque books etc. found with the which the signed blank cheque books etc. found with the which the signed blank cheque books etc. found with the buyer to say that the purchases of material were not at all buyer to say that the purchases of material were not at all buyer to say that the purchases of material were not at all made but entered in the stock to inflate the raw material. made but entered in the stock to inflate the raw material. made but entered in the stock to inflate the raw material. Therefore the Therefore the decision of the Supreme Court in the case of N decision of the Supreme Court in the case of N K Proteins Ltd 250 taxman 0022(SC) would notapply K Proteins Ltd 250 taxman 0022(SC) would notapply K Proteins Ltd 250 taxman 0022(SC) would notapply to the case. Therefore the saving on account of VAT and other case. Therefore the saving on account of VAT and other case. Therefore the saving on account of VAT and other incidentalcharges made by the appellant on the said incidentalcharges made by the appellant on the said incidentalcharges made by the appellant on the said disputed purchases can be brought to disputed purchases can be brought to tax as a ax as additional profit. Keeping in view the totality of facts and circumstances profit. Keeping in view the totality of facts and circumstances profit. Keeping in view the totality of facts and circumstances of the case, the disallowance made by the A is restricted to of the case, the disallowance made by the A is restricted to of the case, the disallowance made by the A is restricted to 12.5% of such purchases.Therefore the AO is directed add 12.5% of such purchases.Therefore the AO is directed add 12.5% of such purchases.Therefore the AO is directed add 12.5% of Rs.49,98,475 working out to Rs.6,24,809 and 12.5% of Rs.49,98,475 working out to Rs.6,24,809 and 12.5% of Rs.49,98,475 working out to Rs.6,24,809 and modify the addition accordingly. Appellant gets part relief. addition accordingly. Appellant gets part relief. addition accordingly. Appellant gets part relief. These grounds are partly allowed. These grounds are partly allowed.” 10.1 Before us the Ld. counsel Ld. counsel of the assessee relied on the decision of the assessee relied on the decision of Hon’ble Bombay High Court in the case of PCIT Vs Sanjay PCIT Vs Sanjay of Hon’ble Bombay High Court in the case of Dhakod (2023) 150taxmann.com 362 ( Dhakod (2023) 150taxmann.com 362 (Bombay Bombay), wherein the Hon’ble High Court had as under: Hon’ble High Court had as under:

“The revenue challenged the order of the Commissioner The revenue challenged the order of the Commissioner The revenue challenged the order of the Commissioner (Appeals) before the Tribunal, which on reconsideration of the (Appeals) before the Tribunal, which on reconsideration of the (Appeals) before the Tribunal, which on reconsideration of the material on record, has concluded that the assessee had material on record, has concluded that the assessee had material on record, has concluded that the assessee had shown gross profit and net profit, w shown gross profit and net profit, which were accepted by hich were accepted by the Assessing Officer and in the absence of rejection of the the Assessing Officer and in the absence of rejection of the the Assessing Officer and in the absence of rejection of the books and account such additions were not tenable at law. books and account such additions were not tenable at law. books and account such additions were not tenable at law.

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The Tribunal has further noted that the assessee has The Tribunal has further noted that the assessee has The Tribunal has further noted that the assessee has disclosed the addresses of all the parties, who were disclosed the addresses of all the parties, who were disclosed the addresses of all the parties, who were suppliers and has furnished details of payments through and has furnished details of payments through and has furnished details of payments through bank accounts into the bank accounts of such suppliers. It bank accounts into the bank accounts of such suppliers. It bank accounts into the bank accounts of such suppliers. It has further found that after having received details of the has further found that after having received details of the has further found that after having received details of the payments made by the respondent through cheques to such payments made by the respondent through cheques to such payments made by the respondent through cheques to such suppliers, it was incumbent upon t suppliers, it was incumbent upon the Assessing Officer to he Assessing Officer to verify the transactions which had been done. The Tribunal verify the transactions which had been done. The Tribunal verify the transactions which had been done. The Tribunal has held that the evidence given by the assessee, which is in has held that the evidence given by the assessee, which is in has held that the evidence given by the assessee, which is in the documentary form, has nowhere been discussed and the documentary form, has nowhere been discussed and the documentary form, has nowhere been discussed and discredited by the Assessing Officer and in that light, mer discredited by the Assessing Officer and in that light, mer discredited by the Assessing Officer and in that light, merely because the names of such parties were found on the official because the names of such parties were found on the official because the names of such parties were found on the official website of the Sales Tax department would by itself not be website of the Sales Tax department would by itself not be website of the Sales Tax department would by itself not be sufficient to prove that the transactions were bogus. The sufficient to prove that the transactions were bogus. The sufficient to prove that the transactions were bogus. The Tribunal has held that the respondent had sufficiently Tribunal has held that the respondent had sufficiently Tribunal has held that the respondent had sufficiently discharged the burd discharged the burden of proving the transactions. en of proving the transactions.” 10.2 In our opinion, facts of the case relied upon by the assessee is our opinion, facts of the case relied upon by the assessee is our opinion, facts of the case relied upon by the assessee is distinguishable. In the instant case assessee has failed to distinguishable. In the instant case assessee has failed to distinguishable. In the instant case assessee has failed to substantiate transport of material from the supplier to the place of substantiate transport of material from the supplier to the place of substantiate transport of material from the supplier to the place of the assessee, and theref the assessee, and therefore Assessing Officer has not merely relied ore Assessing Officer has not merely relied on the information received from the on the information received from the Sales Tax Department Sales Tax Department but taken into consideration taken into consideration other facts and circumstances of the case. facts and circumstances of the case. In the case purchases from the said party are bogus in view of no In the case purchases from the said party are bogus in view of no In the case purchases from the said party are bogus in view of no evidence of supply of material by the said party, but in the stock ly of material by the said party, but in the stock ly of material by the said party, but in the stock register said material is shown to be have entered and register said material is shown to be have entered and register said material is shown to be have entered and corresponding sale has not been corresponding sale has not been doubted by the Assessing Officer, by the Assessing Officer, therefore, we concur with the finding of the Ld. CIT(A) that only therefore, we concur with the finding of the Ld. CIT(A) that only therefore, we concur with the finding of the Ld. CIT(A) that only possibility is that assessee might have t assessee might have made purchase from grey purchase from grey market in cash and obtained benefit of non market in cash and obtained benefit of non-payment of sales tax or payment of sales tax or value-added tax (VAT) and cash discount et cetera, which the Ld. added tax (VAT) and cash discount et cetera, which the Ld. added tax (VAT) and cash discount et cetera, which the Ld. CIT(A) has estimated to 12.5% of the bogus purchases. In our CIT(A) has estimated to 12.5% of the bogus purchases. In our CIT(A) has estimated to 12.5% of the bogus purchases. In our

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opinion, the estimation by the Ld. CIT(A) is justified. In identical mation by the Ld. CIT(A) is justified. In identical mation by the Ld. CIT(A) is justified. In identical circumstances Hon’ble Bombay High Court in the case of PCIT Vs circumstances Hon’ble Bombay High Court in the case of circumstances Hon’ble Bombay High Court in the case of Mohommad Haji Adam & Co.in ITA 1004 of 2016 Mohommad Haji Adam & Co.in ITA 1004 of 2016 held as under:

In the present case, as noted above, the assessee was a In the present case, as noted above, the assessee was a In the present case, as noted above, the assessee was a trader of fabrics. The A.O. found three entities who were trader of fabrics. The A.O. found three entities who were trader of fabrics. The A.O. found three entities who were indulging in bogus billing activities. A.O. found that the indulging in bogus billing activities. A.O. found that the indulging in bogus billing activities. A.O. found that the purchases made by the assessee from these entities were purchases made by the assessee from these entities were purchases made by the assessee from these entities were bogus. This being a finding bogus. This being a finding of fact, we have proceeded on of fact, we have proceeded on such basis. Despite this, the question arises whether the such basis. Despite this, the question arises whether the such basis. Despite this, the question arises whether the Revenue is correct in contending that the entire purchase Revenue is correct in contending that the entire purchase Revenue is correct in contending that the entire purchase amount should be added by way of assessee’s additional amount should be added by way of assessee’s additional amount should be added by way of assessee’s additional income or the assessee is correct in contending that s income or the assessee is correct in contending that s income or the assessee is correct in contending that such logic cannot be applied. The finding of the CIT(A) and the logic cannot be applied. The finding of the CIT(A) and the logic cannot be applied. The finding of the CIT(A) and the Tribunal would suggest that the department had not Tribunal would suggest that the department had not Tribunal would suggest that the department had not disputed the assessee’s sales. There was no discrepancy disputed the assessee’s sales. There was no discrepancy disputed the assessee’s sales. There was no discrepancy between the purchases shown by the assessee and the sales between the purchases shown by the assessee and the sales between the purchases shown by the assessee and the sales declared. That being the pos declared. That being the position, the Tribunal was correct in ition, the Tribunal was correct in coming to the conclusion that the purchases cannot be coming to the conclusion that the purchases cannot be coming to the conclusion that the purchases cannot be rejected without disturbing the sales in case of a trader. The rejected without disturbing the sales in case of a trader. The rejected without disturbing the sales in case of a trader. The Tribunal, therefore, correctly restricted the additions limited Tribunal, therefore, correctly restricted the additions limited Tribunal, therefore, correctly restricted the additions limited to the extent of bringing the G.P. rate to the extent of bringing the G.P. rate on purchases at the 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 without reference to the facts. In fact in cannot be applied without reference to the facts. In fact in cannot be applied without reference to the facts. In fact in paragraph 8 of the same Judgment the Court held and paragraph 8 of the same Judgment the Court held and paragraph 8 of the same Judgment the Court held and observed as under served as under- “So far as the question regarding “So far as the question regarding addition of Rs.3,70,78,125/ addition of Rs.3,70,78,125/- as gross profit on sales of as gross profit on sales of Rs.37.08 Crores made by the Assessing Officer despite the Rs.37.08 Crores made by the Assessing Officer despite the Rs.37.08 Crores made by the Assessing Officer despite the fact that the said sales had admittedly been recorded in the fact that the said sales had admittedly been recorded in the fact that the said sales had admittedly been recorded in the regular books during Financia regular books during Financial Year 1997-98 is concerned, 98 is concerned, we are of the view that the assessee cannot be punished we are of the view that the assessee cannot be punished we are of the view that the assessee cannot be punished since sale price is accepted by the revenue. Therefore, even if since sale price is accepted by the revenue. Therefore, even if since sale price is accepted by the revenue. Therefore, even if 6 % gross profit is taken into account, the corresponding cost 6 % gross profit is taken into account, the corresponding cost 6 % gross profit is taken into account, the corresponding cost price is required to be deducted and tax can price is required to be deducted and tax cannot be levied on not be levied on the same price. We have to reduce the selling price the same price. We have to reduce the selling price the same price. We have to reduce the selling price accordingly as a result of which profit comes to 5.66 %. accordingly as a result of which profit comes to 5.66 %. accordingly as a result of which profit comes to 5.66 %. Therefore, considering 5.66 % of Rs.3,70,78,125/ Therefore, considering 5.66 % of Rs.3,70,78,125/ Therefore, considering 5.66 % of Rs.3,70,78,125/-which comes to Rs.20,98,621.88 we think it fit to direct the revenue comes to Rs.20,98,621.88 we think it fit to direct the revenue comes to Rs.20,98,621.88 we think it fit to direct the revenue to add Rs.20 to add Rs.20,98,621.88 as gross profit and make necessary ,98,621.88 as gross profit and make necessary deductions accordingly. Accordingly, the said question is deductions accordingly. Accordingly, the said question is deductions accordingly. Accordingly, the said question is

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answered partially in favour of the assessee and partially in answered partially in favour of the assessee and partially in answered partially in favour of the assessee and partially in favour of the revenue.” 9 In these circumstances, no question favour of the revenue.” 9 In these circumstances, no question favour of the revenue.” 9 In these circumstances, no question of law, therefore, arises. A of law, therefore, arises. All Income Tax Appeals are ll Income Tax Appeals are dismissed, accordingly. No order as to costs. dismissed, accordingly. No order as to costs. 10.3 In view of the finding of the Hon’ble Bombay High Court In view of the finding of the Hon’ble Bombay High Court In view of the finding of the Hon’ble Bombay High Court (supra), wherein the decision in the case of NK Proteins Ltd. (supra) (supra), wherein the decision in the case of NK Proteins (supra), wherein the decision in the case of NK Proteins has been distinguished, we do not find any error in the order of the has been distinguished, we do not find any error in t has been distinguished, we do not find any error in t Ld. CIT(A) on the issue in dispute. Accordingly, the grounds raised Ld. CIT(A) on the issue in dispute. Accordingly, the ground Ld. CIT(A) on the issue in dispute. Accordingly, the ground by the assessee as well as the by the assessee as well as the Revenue on merit are dismissed. on merit are dismissed.

Order pronounced in the Order pronounced in the open Court on 10/07/2023. /07/2023. Sd/- Sd/ Sd/ Sd/- (KAVITHA RAJAGOPAL KAVITHA RAJAGOPAL) (OM PRAKASH KANT OM PRAKASH KANT) JUDICIAL MEMBER JUDICIAL MEMBER ACCOUNTANT MEMBER ACCOUNTANT MEMBER Mumbai; Dated: 10/07/2023 Dragon Legal/Rahul Sharma, Sr. P.S. Dragon Legal/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