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

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.

2. On the facts and circumstances of the case and On the facts and circumstances of the case and On the facts and circumstances of the case and judicial proposition, Hon. CIT Appeals erred in judicial proposition, Hon. CIT Appeals erred in judicial proposition, Hon. CIT Appeals erred in confirming the CIT (A) order of Ld. AO, which was confirming the CIT (A) order of Ld. AO, which was confirming the CIT (A) order of Ld. AO, which was passed without obtaining valid approval u/s 151, passed without obtaining valid approval u/s 151, passed without obtaining valid approval u/s 151, and such assessment and such assessment order in pursuance of such order in pursuance of such approval is erroneous in facts and bad in law and approval is erroneous in facts and bad in law and approval is erroneous in facts and bad in law and liable to be quashed. liable to be quashed. 3. On the facts and circumstances of the case and On the facts and circumstances of the case and On the facts and circumstances of the case and judicial proposition, Hon. CIT (Appeals) erred in judicial proposition, Hon. CIT (Appeals) erred in judicial proposition, Hon. CIT (Appeals) erred in estimating the profit to the extent of 12.5% of CIT(A) - estimating the profit to the extent of 12.5% of CIT(A) estimating the profit to the extent of 12.5% of CIT(A) purchases made from M/s. Sthapna Trade Impex, chases made from M/s. Sthapna Trade Impex, chases made from M/s. Sthapna Trade Impex, such addition is bad in law and liable to be deleted. such addition is bad in law and liable to be deleted such addition is bad in law and liable to be deleted M/s A.J. Coal Pvt. Ltd. 3 & 7289/Mum/2019 5718 & 7289/Mum/2019

1. "On the facts and in the circumstances of the case and in 1. "On the facts and in the circumstances of the case and in 1. "On the facts and in the circumstances of the case and in law, the Id. law, the Id. CIT (A) has erred in directing the Assessing Officer CIT (A) has erred in directing the Assessing Officer to disallow 12.5% at Rs.6,24,809/ to disallow 12.5% at Rs.6,24,809/- of the bogus purchases of of the bogus purchases of Rs. 49,98,475/ Rs. 49,98,475/- rather than an amount of Rs. 17,28,507/ rather than an amount of Rs. 17,28,507/- computed in the assessment order dated 28/11/2016 passed computed in the assessment order dated 28/11/2016 passed computed in the assessment order dated 28/11/2016 passed u/s. 143(3) r.w.s. 147». u/s. 143(3) r.w.s. 147». 2. "On the facts and in the circimstances of the case and in law, "On the facts and in the circimstances of the case and in law, "On the facts and in the circimstances of the case and in law, Id. CIT(A) has erred' in directing the Assessing Officer to Id. CIT(A) has erred' in directing the Assessing Officer to Id. CIT(A) has erred' in directing the Assessing Officer to disallow 12.5% of the bogus purchases rather than the whole of disallow 12.5% of the bogus purchases rather than the whole of disallow 12.5% of the bogus purchases rather than the whole of such purchases Without appreciating that such allowance of such purchases Without appreciating that such allowance of such purchases Without appreciating that such allowance of 87.5% of expenditure imply allowance of purchases made in 87.5% of expenditure imply allowance of purchases made in penditure imply allowance of purchases made in cash from the 'grey market, thereby rendering the provisions of cash from the 'grey market, thereby rendering the provisions of cash from the 'grey market, thereby rendering the provisions of section 40(A/3) of the Income Tax Act, 1961 totally redundant section 40(A/3) of the Income Tax Act, 1961 totally redundant section 40(A/3) of the Income Tax Act, 1961 totally redundant which could not have been the intention of the statute." which could not have been the intention of the statute." which could not have been the intention of the statute." 3. "On the facts and in th 3. "On the facts and in the circumstances of the case and in e circumstances of the case and in law, Id.CIT(A) has erred in failing to abide by the landmark law, Id.CIT(A) has erred in failing to abide by the landmark law, Id.CIT(A) has erred in failing to abide by the landmark decision of Hon'ble Supreme Court in the case of I. K.Proteins decision of Hon'ble Supreme Court in the case of I. K.Proteins decision of Hon'ble Supreme Court in the case of I. K.Proteins Ltd Ltd 16/01/2017 wherein the Hon'ble Supreme Court has Ltd Ltd 16/01/2017 wherein the Hon'ble Supreme Court has Ltd Ltd 16/01/2017 wherein the Hon'ble Supreme Court has confirmed the addition of 100% of the bo confirmed the addition of 100% of the bogus purchases". gus purchases". 4. "On the facts and in the circumstances of the case and in 4. "On the facts and in the circumstances of the case and in 4. "On the facts and in the circumstances of the case and in law, Id. CIT(A) has erred in deleting the quantum addition to law, Id. CIT(A) has erred in deleting the quantum addition to law, Id. CIT(A) has erred in deleting the quantum addition to the extent of Rs. 11,03,698/ the extent of Rs. 11,03,698/- made by the O on account of made by the O on account of bogus bill purchases from one party by not appreciating tha bogus bill purchases from one party by not appreciating tha bogus bill purchases from one party by not appreciating that the assessee had Failed to produce the party/ furnish the the assessee had Failed to produce the party/ furnish the the assessee had Failed to produce the party/ furnish the evidence of transportation of material or evidence for receipts of evidence of transportation of material or evidence for receipts of evidence of transportation of material or evidence for receipts of goods with the purchase party." goods with the purchase party." 5. "On the facts and in the circumstances of the case and in 5. "On the facts and in the circumstances of the case and in 5. "On the facts and in the circumstances of the case and in law, Id.CIT(A) has erred in restrict law, Id.CIT(A) has erred in restricting the quantum addition ing the quantum addition ignoring that the information on account of bogus purchases is ignoring that the information on account of bogus purchases is ignoring that the information on account of bogus purchases is M/s A.J. Coal Pvt. Ltd. 4 & 7289/Mum/2019 5718 & 7289/Mum/2019 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.

3.1 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.

M/s A.J. Coal Pvt. Ltd. 6 & 7289/Mum/2019 5718 & 7289/Mum/2019

11. In view of the facts discussed above and also 11. In view of the facts discussed above and also 11. In view of the facts discussed above and also considering the facts that the assessee is a trader and the considering the facts that the assessee is a trader and the considering the facts that the assessee is a trader and the purchases have resulted in its disposal of sales, the purchases have resulted in its disposal of sales, the purchases have resulted in its disposal of sales, the aforesaid transactions ie. purchases from the aforesaid transactions ie. purchases from the alleged party alleged party is a case of accommodation entry. The assessee in fact, is a case of accommodation entry. The assessee in fact, is a case of accommodation entry. The assessee in fact, makes Purchases from undisclosed party in cash and makes Purchases from undisclosed party in cash and makes Purchases from undisclosed party in cash and records Purchases in its account in the name of bogus records Purchases in its account in the name of bogus records Purchases in its account in the name of bogus supplier.Therefore, the peak of credits in the accounts of supplier.Therefore, the peak of credits in the accounts of supplier.Therefore, the peak of credits in the accounts of bogus supplier would bogus supplier would represent the amount of undisclosed represent the amount of undisclosed cash utilized by the assessee for making payments to cash utilized by the assessee for making payments to cash utilized by the assessee for making payments to undisclosed real supplier. undisclosed real supplier. 12. How to deal with taxability of the income from sale of 12. How to deal with taxability of the income from sale of 12. How to deal with taxability of the income from sale of goods accounted as purchased from established bogus goods accounted as purchased from established bogus goods accounted as purchased from established bogus parties have been dealt by th parties have been dealt by the Hon'ble judicial bodies based e Hon'ble judicial bodies based on facts of each case. In one of the land mark cases of M/s on facts of each case. In one of the land mark cases of M/s on facts of each case. In one of the land mark cases of M/s Vijay Proteins Ltd. vs. Assistant Commissioner of Income 58 Vijay Proteins Ltd. vs. Assistant Commissioner of Income 58 Vijay Proteins Ltd. vs. Assistant Commissioner of Income 58 ITD 428, the learned ITAT, Ahd. upheld computation of the ITD 428, the learned ITAT, Ahd. upheld computation of the ITD 428, the learned ITAT, Ahd. upheld computation of the peak amount of unexplained money utilized for peak amount of unexplained money utilized for purchase of purchase of stock (wrongly shown in the books of accounts as having stock (wrongly shown in the books of accounts as having stock (wrongly shown in the books of accounts as having M/s A.J. Coal Pvt. Ltd. 7 & 7289/Mum/2019 5718 & 7289/Mum/2019 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.

M/s A.J. Coal Pvt. Ltd. 8 & 7289/Mum/2019 5718 & 7289/Mum/2019

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.

M/s A.J. Coal Pvt. Ltd. 10 & 7289/Mum/2019 5718 & 7289/Mum/2019

“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 M/s A.J. Coal Pvt. Ltd. 12 & 7289/Mum/2019 5718 & 7289/Mum/2019 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 M/s A.J. Coal Pvt. Ltd. 13 & 7289/Mum/2019 5718 & 7289/Mum/2019 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:

M/s A.J. Coal Pvt. Ltd. 14 & 7289/Mum/2019 5718 & 7289/Mum/2019 “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 M/s A.J. Coal Pvt. Ltd. 15 & 7289/Mum/2019 5718 & 7289/Mum/2019 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.

M/s A.J. Coal Pvt. Ltd. 16 & 7289/Mum/2019 5718 & 7289/Mum/2019 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.

M/s A.J. Coal Pvt. Ltd. 17 & 7289/Mum/2019 5718 & 7289/Mum/2019

10. We have heard We have heard rival submission of the parties on the issue in dispute and perused the relevant material on record. We find that dispute and perused the relevant material on record. We find that dispute and perused the relevant material on record. We find that assessee has undertaken large No assessee has undertaken large Nos. of purchase transaction . of purchase transactions with the said party. The assessee assessee filed ledger account of the party in its filed ledger account of the party in its books of accounts alongwith invoices alongwith invoices issued by the issued by the said party and stock register but no evidence in support of transport of goods i.e. stock register but no evidence in support of transport of goods i.e stock register but no evidence in support of transport of goods i.e coal were filed by the assessee. The Assessing Officer treated the coal were filed by the assessee. The Assessing Officer treated the coal were filed by the assessee. The Assessing Officer treated the transactions as made in cash and accordingly drawn peak of the transactions as made in cash and accordingly drawn peak of the transactions as made in cash and accordingly drawn peak of the cash credit amounting to ₹17,28,507/- as amount liable to be cash credit amounting to as amount liable to be disallowed out of the total purchases. The Ld. CIT(A) though disallowed out of the total purchases. The Ld. CIT(A) though disallowed out of the total purchases. The Ld. CIT(A) though rejected the observation of the Assessing Officer of payments made ected the observation of the Assessing Officer of payments made ected the observation of the Assessing Officer of payments made by the assessee in cash while purchases but held that said supplier by the assessee in cash while purchases but held that said supplier by the assessee in cash while purchases but held that said supplier party might not be actual supplier but might have provided the bills party might not be actual supplier but might have provided the bills party might not be actual supplier but might have provided the bills for the material purchase locally. The Ld. CIT(A) is of the opinion for the material purchase locally. The Ld. CIT(A) is of for the material purchase locally. The Ld. CIT(A) is of that assessee might have obtained benefit on account of VAT and that assessee might have obtained benefit on account of VAT and that assessee might have obtained benefit on account of VAT and other other incidental incidental charges charges and and therefore, therefore he he restricted restricted the the disallowance to the extent of such benefit, which was estimated to disallowance to the extent of such benefit, which was estimated to disallowance to the extent of such benefit, which was estimated to 12.5% of the total purchase of ₹49,98,475/-and this di 12.5% of the total purchase of and this disallowance was worked out to ₹6,24,809/-. The relevant finding of the Ld. was worked out to nding of the Ld. CIT(A) is reproduced as under: CIT(A) is reproduced as under:

“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 M/s A.J. Coal Pvt. Ltd. 18 & 7289/Mum/2019 5718 & 7289/Mum/2019 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.

M/s A.J. Coal Pvt. Ltd. 19 & 7289/Mum/2019 5718 & 7289/Mum/2019 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 M/s A.J. Coal Pvt. Ltd. 20 & 7289/Mum/2019 5718 & 7289/Mum/2019 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 M/s A.J. Coal Pvt. Ltd. 21 & 7289/Mum/2019 5718 & 7289/Mum/2019 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.