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RAJNISH BHARTI HUF,MUMBAI vs THE INCOME TAX OFFICER 20(3)(1), MUMBAI , LALBAUG, MUMBAI | BharatTax

RAJNISH BHARTI HUF,MUMBAI vs. THE INCOME TAX OFFICER 20(3)(1), MUMBAI , LALBAUG, MUMBAI

ITA 3941/MUM/2023Status: DisposedITAT Mumbai30 January 2025AY 2010-11Bench: SHRI OM PRAKASH KANT (Accountant Member), SHRI SUNIL KUMAR SINGH ( (Judicial Member)54 pages

AI SummaryDismissed

Facts

The assessee, Rajnish Bharti HUF, engaged in trading steel products, filed an Income Tax Return for AY 2009-10. The Assessing Officer initiated reassessment proceedings under Section 147 based on information from the DGIT (Investigation) indicating bogus purchases aggregating Rs. 17,22,95,332/- and unexplained deposits of Rs. 2,30,04,247/- in bank accounts not reflected in the balance sheet. The assessee challenged the validity of the reassessment on grounds of improper notice service and lack of 'reason to believe', and contested additions for bogus purchases and unexplained bank deposits.

Held

The Tribunal dismissed the assessee's appeals, upholding the validity of the reassessment proceedings, including the proper issue and deemed service of notice under Section 148, and confirming that the AO had valid 'reason to believe'. For AY 2009-10, the Tribunal upheld the entire disallowance of Rs. 10,55,84,256/- as unexplained bank deposits, setting aside the CIT(A)'s restriction to 2% commission. For AY 2010-11, the Tribunal set aside the CIT(A)'s restriction of disallowance for bogus purchases to 12.5% and sustained the entire disallowance of Rs. 1,32,93,190/-, finding the assessee failed to substantiate the purchases or maintain stock registers. The issue of unexplained deposits for AY 2010-11 was decided mutatis mutandis.

Key Issues

Whether the reassessment proceedings initiated under Section 147 were valid, and whether the entire additions for unexplained bank deposits and bogus purchases were justified.

Sections Cited

147, 148, 143(3), 142(1), 149, 133(6), 69C, 69A, 131, 40A(3), 271(1)(c), 254(2)

AI-generated summary — verify with the full judgment below

Income Tax Appellate Tribunal, MUMBAI BENCH “D” MUMBAI

Before: SHRI OM PRAKASH KANT & SHRI SUNIL KUMAR SINGH

Hearing: 30/01/2025

The captioned appeals by the assessee and cross appeals by The captioned appeals by the assessee and cross appeals by The captioned appeals by the assessee and cross appeals by the Revenue are directed against two the Revenue are directed against two separate orders separate orders, both dated 03.10.2023, passed by the Ld. Commissioner of Income passed by the Ld. Commissioner of Income passed by the Ld. Commissioner of Income-tax (Appeals) – National Faceless Appeal Centre, Delhi [in short ‘the Ld. National Faceless Appeal Centre, Delhi [in short ‘the Ld. National Faceless Appeal Centre, Delhi [in short ‘the Ld. CIT(A)’] for assessment year 2009 CIT(A)’] for assessment year 2009-10 & 2010-11 respectively. As 11 respectively. As identical issues-in-dispute are invol dispute are involved in both these appeals ved in both these appeals, therefore, same were heard together and disposed off by way of this therefore, same were heard together and disposed off by way of this therefore, same were heard together and disposed off by way of this consolidated order for the sake of convenience. consolidated order for the sake of convenience.

2. Firstly, we take up the appeal of the assessee and Revenue for Firstly, we take up the appeal of the assessee and Revenue for Firstly, we take up the appeal of the assessee and Revenue for assessment year 2009 assessment year 2009-10. The relevant grounds 10. The relevant grounds raised are reproduced as under: reproduced as under:

Assessee’s Ground

1. The Learned Commissioner of Income Tax Appeal (Ld. CITA) The Learned Commissioner of Income Tax Appeal (Ld. CITA) The Learned Commissioner of Income Tax Appeal (Ld. CITA) has erred in upholding the impugned assessment order passed has erred in upholding the impugned assessment order passed has erred in upholding the impugned assessment order passed by the Learned Assessing Officer (Ld. A.O.) u/s 143(3) r.w.s. by the Learned Assessing Officer (Ld. A.O.) u/s 143(3) r.w.s. by the Learned Assessing Officer (Ld. A.O.) u/s 143(3) r.w.s. 147 without issuing/ servin 147 without issuing/ serving any notice u/s 148. The Ld. CITA g any notice u/s 148. The Ld. CITA has further erred in not considering the fact that the Ld. A.O. has further erred in not considering the fact that the Ld. A.O. has further erred in not considering the fact that the Ld. A.O. had failed to provide failed to provide any proof of issue/ service of notice any proof of issue/ service of notice u/s 148, u/s 148, despite specific request being made from the despite specific request being made from the appellant.

5. On the facts, in the circumstances of the case and in law, Ld. On the facts, in the circumstances of the case and in law, Ld. On the facts, in the circumstances of the case and in law, Ld. CITA CITA has has erred erred in in upholding upholding the the disallowance disallowance of of Rs.2,15,36,916/ Rs.2,15,36,916/- made by the Ld. AO.by disallowing 12.50% made by the Ld. AO.by disallowing 12.50% of the alleged bogus purchases worth Rs. 17,22,95,332/-, of the alleged bogus purchases worth Rs. 17,22,95,332/ of the alleged bogus purchases worth Rs. 17,22,95,332/ merely on the basis of doubt, surmises and conjectures without merely on the basis of doubt, surmises and conjectures without merely on the basis of doubt, surmises and conjectures without considering the relevant facts on record and wit considering the relevant facts on record and without bringing hout bringing on record any adverse evidence. on record any adverse evidence. 6. On the facts, in the circumstances of the case and in law, Ld. On the facts, in the circumstances of the case and in law, Ld. On the facts, in the circumstances of the case and in law, Ld. CITA has erred in sustaining the addition of 2% of bank CITA has erred in sustaining the addition of 2% of bank CITA has erred in sustaining the addition of 2% of bank deposits amounting to Rs. 10,55,84,256/ deposits amounting to Rs. 10,55,84,256/-without considering without considering the fact that total bank deposi the fact that total bank deposits were duly explained and full ts were duly explained and full reconciliation of bank deposits with sales and other business reconciliation of bank deposits with sales and other business reconciliation of bank deposits with sales and other business transactions was made available to the CITA. The Ld. CITA has transactions was made available to the CITA. The Ld. CITA has transactions was made available to the CITA. The Ld. CITA has further erred to appreciate that the Ld. A.O. had grossly erred further erred to appreciate that the Ld. A.O. had grossly erred further erred to appreciate that the Ld. A.O. had grossly erred in making an addition of bank deposi in making an addition of bank deposits under the pretext of ts under the pretext of unexplained credits in bank accounts without considering the unexplained credits in bank accounts without considering the unexplained credits in bank accounts without considering the fact that the deposits and credits in the said bank accounts fact that the deposits and credits in the said bank accounts fact that the deposits and credits in the said bank accounts had appeared due to a transfer from another bank account of had appeared due to a transfer from another bank account of had appeared due to a transfer from another bank account of the appellant, so they were not independent credits and the appellant, so they were not independent credit the appellant, so they were not independent credit accordingly there was no income due to these credits. accordingly there was no income due to these credits. accordingly there was no income due to these credits. 7. The appellant therefore prays your honour to be kind enough The appellant therefore prays your honour to be kind enough The appellant therefore prays your honour to be kind enough to- 1. 1. Admit the appeal and grant stay against the demand. 1. Admit the appeal and grant stay against the demand. 1. Admit the appeal and grant stay against the demand.

"Whether on the facts and circumstances of the case and in law 1. "Whether on the facts and circumstances of the case and in law 1. "Whether on the facts and circumstances of the case and in law the Ld CIT(A) has the Ld CIT(A) has erred in restricting the addition made of erred in restricting the addition made of Rs.10,55,84,256/ Rs.10,55,84,256/-to 2% of the unexplained credits in the bank to 2% of the unexplained credits in the bank account?" 2. "Whether on the facts and circumstances of the case and in law 2. "Whether on the facts and circumstances of the case and in law 2. "Whether on the facts and circumstances of the case and in law the Ld CIT(A) has erred in not considering the fact that the the Ld CIT(A) has erred in not considering the fact that the the Ld CIT(A) has erred in not considering the fact that the assessee failed to furnish any explanation, on the credits in the ed to furnish any explanation, on the credits in the ed to furnish any explanation, on the credits in the bank account held by assessee in HDFC and DCB banks, during bank account held by assessee in HDFC and DCB banks, during bank account held by assessee in HDFC and DCB banks, during the assessment proceedings?" the assessment proceedings?" 3. Briefly stated, facts of the case are that the assessee was Briefly stated, facts of the case are that the assessee was Briefly stated, facts of the case are that the assessee was engaged in trading of goods including steel products through his engaged in trading of goods including steel product engaged in trading of goods including steel product proprietary concern namely M/s Bharti Tradelink. For the year proprietary concern namely M/s Bharti Tradelink. For the year proprietary concern namely M/s Bharti Tradelink. For the year 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 27.07.2009 declaring total income at Rs.2,50,580/ 27.07.2009 declaring total income at Rs.2,50,580/- -. The return of income filed by the assessee was processed u/s 143(1) of the income filed by the assessee was processed u/s 143(1) income filed by the assessee was processed u/s 143(1) Income-tax Act, 1961 (in short ‘the Act’). Subsequently, the tax Act, 1961 (in short ‘the Act’). Subsequently, the tax Act, 1961 (in short ‘the Act’). Subsequently, the Assessing Officer received information from the two sources. Assessing Officer received information from the two sources. Assessing Officer received information from the two sources. Firstly, information from , information from the Director General of Income Director General of Income-tax (Investigation), Mumbai , Mumbai was received vide their letter dated was received vide their letter dated 26.12.2012 to the effect that assessee had obtained bogus bills to 26.12.2012 to the effect that assessee had obtained bogus bills to 26.12.2012 to the effect that assessee had obtained bogus bills to reduce and suppress profit. The information contained evidences reduce and suppress profit. The information contained evidences reduce and suppress profit. The information contained evidences gathered by the sales tax authorities of Maharashtra during inquiry gathered by the sales tax authorities of Maharashtra during inquiry gathered by the sales tax authorities of Maharashtra during inquiry proceedings against ‘ ‘hawala’ dealers, who had issued bogus bills to had issued bogus bills to beneficiaries for suppressing or reducing their profit. The beneficiaries for suppressing or reducing their profit. The beneficiaries for suppressing or reducing their profit. The information provided by the Investigation Wing contained name of information provided by the Investigation Wing contained name of information provided by the Investigation Wing contained name of the parties who issued bogus bills to assessee who issued bogus bills to assessee and amount of bogus and amount of bogus & 3941, 4378 & & 3941 4377/MUM/2023

Secondly, bills obtained, aggregating aggregating aggregating to to to Rs.17,22,95,332/-. Rs.17,22,95,332/ Rs.17,22,95,332/ information was received was received from the Asst. Director of Income from the Asst. Director of Income-tax Investigation, Unit Mumbai wherein it was mentioned that Investigation, Unit Mumbai wherein it was mentioned that Investigation, Unit Mumbai wherein it was mentioned that credits/deposits of Rs.2,30,04,247/ credits/deposits of Rs.2,30,04,247/- in various bank accounts of in various bank accounts of the assessee were appearin the assessee were appearing and source of deposits those could not g and source of deposits those could not be explained by the assessee. In view of the be explained by the assessee. In view of the information information received, the Assessing Officer recorded reasons to believe in terms of section the Assessing Officer recorded reasons to believe in terms of section the Assessing Officer recorded reasons to believe in terms of section 147 of the Act that income escaped assessment and accordingly, he 147 of the Act that income escaped assessment and accordingly 147 of the Act that income escaped assessment and accordingly issued notice u/s 148 of the Act on 22 e u/s 148 of the Act on 22.03.2016. The said notice .03.2016. The said notice returned back by the postal authorities with the remark ‘left’. The returned back by the postal authorities with the remark ‘left’. The returned back by the postal authorities with the remark ‘left’. The said notice was thereafter served on the assessee by way of affixture said notice was thereafter served on the assessee by way of affixture said notice was thereafter served on the assessee by way of affixture by the Inspector of the Office of the Assessing Officer. Details of by the Inspector of the Office of the Assessing Officer. by the Inspector of the Office of the Assessing Officer. subsequent notices issued by the AO as mentioned in assessment subsequent notices issued by the AO as mentioned in assessment subsequent notices issued by the AO as mentioned in assessment order are reproduced as under: order are reproduced as under:

& 3941, 4378 & & 3941 4377/MUM/2023 On 28.11.2016, the assessee filed balance sheet, profit and loss On 28.11.2016, the assessee filed balance sheet, profit and loss On 28.11.2016, the assessee filed balance sheet, profit and loss account and detail of the income alo of the income along with tax audit report. The ng with tax audit report. The assessee stated that books of the assessee had been seized by the assessee stated that books of the assessee had been seized assessee stated that books of the assessee had been seized sales tax authorities. On verification of the impounding order issued sales tax authorities. On verification of the impounding sales tax authorities. On verification of the impounding by Sales Tax Authorities, Authorities, the Assessing Officer found that only the Assessing Officer found that only purchase and sales registe purchase and sales register had been impounded by the concerned r had been impounded by the concerned authority. Still, the assessee did not file the other books of accounts authority. Still, the assessee did not file the other books of accounts authority. Still, the assessee did not file the other books of accounts including other documents. The Assessing Officer in the assessment including other documents. The Assessing Officer in the assessment including other documents. The Assessing Officer in the assessment order has discussed the objection discussed the objections raised by the assessee regarding raised by the assessee regarding service of the notices u/s 148 of the Act as well the notices u/s 148 of the Act as well as reopening of the as reopening of the assessment. The Assessing Officer rejected the contention The Assessing Officer rejected the contentions/ The Assessing Officer rejected the contention objections of the assessee and thereafter of the assessee and thereafter decided the issue decided the issue on merit. Regarding the undisclosed bank accounts, a Regarding the undisclosed bank accounts, after verification with th fter verification with the balance sheet of the assessee, the Assessing Officer found that balance sheet of the assessee, the Assessing Officer found that balance sheet of the assessee, the Assessing Officer found that bank accounts maintained with the maintained with the ‘DCB Bank’ and the ‘HDFC Bank’ were not appearing in the balance sheet. The assessee was were not appearing in the balance sheet. The assessee was were not appearing in the balance sheet. The assessee was asked to explain the source of the deposits in those bank asked to explain the source of the deposits in those bank asked to explain the source of the deposits in those bank statements. However, the assessee did not file any reply in respect s. However, the assessee did not file any reply in respect s. However, the assessee did not file any reply in respect of source or credit appearing in those bank statements and credit appearing in those bank statements and credit appearing in those bank statements and therefore, therefore, therefore, the Assessing Officer held the the Assessing Officer held the total deposit of the Assessing Officer held the total total deposit of deposit of Rs.10,55,84,256/- appearing in those bank accounts of the appearing in those bank accounts of the appearing in those bank accounts of the assessee as unexplain as unexplained cash credits. Regarding the bogus credits. Regarding the bogus purchases, also the Assessing Officer asked the assessee to support also the Assessing Officer asked the assessee to support also the Assessing Officer asked the assessee to support the claim of the purchases but the assessee did not file either claim of the purchases but the assessee did not file either claim of the purchases but the assessee did not file either & 3941, 4378 & ITA Nos. 3912 & 3941 4377/MUM/2023 purchase bills, detail of the payments, transportation detail, stock purchase bills, detail of the payments, transportation detail, stock purchase bills, detail of the payments, transportation detail, stock register etc. on the plea that books of the assessee were impounded he plea that books of the assessee were impounded he plea that books of the assessee were impounded by the Sales Tax Department. The Assessing Officer issued notice by the Sales Tax Department. The Assessing Officer issued notice by the Sales Tax Department. The Assessing Officer issued notice u/s 133(6) of the Act to the parties however same were return un- u/s 133(6) of the Act to the parties however same were return un u/s 133(6) of the Act to the parties however same were return un served and therefore, the Assessing Officer asked the assessee to served and therefore, the Assessing Officer asked the assessee to served and therefore, the Assessing Officer asked the assessee to produce those parties for verification. Thereafter, the assessee filed ose parties for verification. Thereafter, the assessee filed ose parties for verification. Thereafter, the assessee filed ledger account in respect of those parties and claimed that payment ledger account in respect of those parties and claimed that payment ledger account in respect of those parties and claimed that payment were made by the account payee cheque but the Assessing Officer were made by the account payee cheque but the Assessing Officer were made by the account payee cheque but the Assessing Officer rejected the contention of the assessee that account payee cheque rejected the contention of the assessee that account payee cheq rejected the contention of the assessee that account payee cheq was not conclusive was not conclusive evidence to prove genuineness of the to prove genuineness of the transaction. The Assessing Officer asked the assessee to produce transaction. The Assessing Officer asked the assessee to produce transaction. The Assessing Officer asked the assessee to produce those parties or the brokers those parties or the brokers or third party evidences s to support the purchases, transport receipt or lorry receipts or octroi receipts purchases, transport receipt or lorry receipts or octroi receipts purchases, transport receipt or lorry receipts or octroi receipts particularly in view of the fact that those seller parties had already particularly in view of the fact that those seller parties had already particularly in view of the fact that those seller parties had already admitted before the Sales Tax Authorities admitted before the Sales Tax Authorities the fact of issuing the fact of issuing only accommodation bills. The Ld. Assessi accommodation bills. The Ld. Assessing Officer recorded that the ng Officer recorded that the assessee failed to discharge its burden of the proof and accordingly, assessee failed to discharge its burden of the proof and accordingly assessee failed to discharge its burden of the proof and accordingly he relying on the decision of the the decision of the Ahmadabad Bench of Ahmadabad Bench of Tribunal in the case of Vijay Proteins Proteins Ltd. (1990) 15 ITD 428 Ltd. (1990) 15 ITD 428, held 12.5% of such purchases as unexplain unexplained in terms of section 69C of the Act ed in terms of section 69C of the Act, which was worked out to Rs.2,15,36,960/ worked out to Rs.2,15,36,960/-. In this manner in the . In this manner in the assessment order passed, the Assessing Officer made two additions, assessment order passed, the Assessing Officer made two additions assessment order passed, the Assessing Officer made two additions firstly, addition addition of of Rs.10,55,84,257/- Rs.10,55,84,257/ for for unexplained unexplained Rajnish Bharti HUF 10 & 3941, 4378 & ITA Nos. 3912 & 3941 4377/MUM/2023 /deposit in Banks and secondly, addition of Rs.2,15,36,916/ credit/deposit in Banks addition of Rs.2,15,36,916/- for bogus purchases u/s 69C of the Act. for bogus purchases u/s 69C of the Act.

4. On further appeal, the assessee challenged the validity of the On further appeal, the assessee challenged the validity of the On further appeal, the assessee challenged the validity of the reassessment as well as addition on the merit. The assessee could reassessment as well as addition on the merit. The assessee could reassessment as well as addition on the merit. The assessee could not succeed on the legal ground challenging validity of the not succeed on the legal ground challenging val not succeed on the legal ground challenging val reassessment however on the ground of unexplained deposits in the reassessment however on the ground of unexplained deposits in the reassessment however on the ground of unexplained deposits in the bank account, the Ld. CIT(A) assumed the deposits as part of the bank account, the Ld. CIT(A) assumed the deposits as part of the bank account, the Ld. CIT(A) assumed the deposits as part of the accommodation entry as held in the case of Shri Rajnish Bharti accommodation entry as held in the case of Shri Rajnish Bharti accommodation entry as held in the case of Shri Rajnish Bharti (Individual) by the Ld. First Appellate Authority (Individual) by the Ld. First Appellate Authority and estimated commission @ 2% and thus restricted the addition in respect of commission @ 2% and thus restricted the addition in respect of commission @ 2% and thus restricted the addition in respect of unexplained deposit in the bank to 2% of total addition of unexplained deposit in the bank to 2% of total unexplained deposit in the bank to 2% of total Rs.10,55,84,256/-. T . The addition of Rs.2,15,36,916/ of Rs.2,15,36,916/- in respect of the bogus purchases was however sustained. Aggrieved with the the bogus purchases was however sustained. Aggrieved the bogus purchases was however sustained. Aggrieved legal ground challenging validity and additions sustained in respect legal ground challenging validity and additions sustained in respect legal ground challenging validity and additions sustained in respect of bogus purchases as well as unexplained deposits, the assessee is of bogus purchases as well as unexplained deposits, the assessee is of bogus purchases as well as unexplained deposits, the assessee is in appeal whereas in respect of relief granted in appeal whereas in respect of relief granted on on unexplained deposit in the bank, the Revenue is in appeal. the Revenue is in appeal.

5.1 First issue raised by the assessee is of non First issue raised by the assessee is of non-issue of the notice issue of the notice u/s 148 of the Act. However a copy of the said notice was produced u/s 148 of the Act. However a copy of the said notice u/s 148 of the Act. However a copy of the said notice and filed by the Ld. DR before us by the Ld. DR before us. From the said rom the said document, it is clear that notice has been printed/computer generated and which that notice has been printed/computer generated and which that notice has been printed/computer generated and which is issued on 22.03.2016 is issued on 22.03.2016. The notice is also duly singed by the duly singed by the Assessing Officer. A copy of said notice was also provided to the ld A copy of said notice was also provided to the ld A copy of said notice was also provided to the ld Counsel for the assessee. Counsel for the assessee. Therefore, the contention of the Ld. the contention of the Ld. counsel for the assessee that no notice u/s 148 of the Act was nsel for the assessee that no notice u/s 148 of the Act was nsel for the assessee that no notice u/s 148 of the Act was issued by the Assessing Officer is totally he Assessing Officer is totally unfounded. unfounded. From the Rajnish Bharti HUF 12 & 3941, 4378 & & 3941 4377/MUM/2023 assessment order, we note that c , we note that copy of said notice said notice was also provided to the assessee on many occasions during assessment the assessee on many occasions during assessment the assessee on many occasions during assessment proceedings. Despite knowing this fact very well that the notice was Despite knowing this fact very well that the notice was Despite knowing this fact very well that the notice was duly issued, the assessee raised this frivolous ground just to waste the assessee raised this frivolous ground just to waste the assessee raised this frivolous ground just to waste time of the authorities. We time of the authorities. We condemn such practice on the part of practice on the part of the assessee. The ground No. 1 of the appeal to the extent is the assessee. The ground No. 1 of the appeal to the extent is the assessee. The ground No. 1 of the appeal to the extent is according dismissed. ording dismissed.

149.

Time limit for notice. [1) No notice under section 148 149. Time limit for notice. [1) No notice under section 148 149. Time limit for notice. [1) No notice under section 148 shall be issued shall be issued for the relevant assessment year,— (a) if four years have elapsed from the end of the relevant (a) if four years have elapsed from the end of the relevant (a) if four years have elapsed from the end of the relevant assessment year, unless the c assessment year, unless the case falls under clause (b) [or clause ase falls under clause (b) [or clause (c)]; (b) if four years, but not more than six years, have elapsed from (b) if four years, but not more than six years, have elapsed from (b) if four years, but not more than six years, have elapsed from the end of the relevant assessment year unless the income the end of the relevant assessment year unless the income the end of the relevant assessment year unless the income chargeable to tax which has escaped assessment amounts to or chargeable to tax which has escaped assessment amounts to or chargeable to tax which has escaped assessment amounts to or is likely to amount to one is likely to amount to one lakh rupees or more for that year;] lakh rupees or more for that year;]” 6.1 It is evident that t 6.1 It is evident that the provisions of the Act do not specify he provisions of the Act do not specify limitation for service of the notice service of the notice but the limitation the limitation has been provided of the issue of notice u/s 148 of the Act. provided of the issue of notice u/s 148 of the Act. The limitation for The limitation for service of notice has been provided in section 148 of the Act, where service of notice has been provided in section 148 of the Act, where service of notice has been provided in section 148 of the Act, where it is mentioned that before making assessment, reass before making assessment, reass before making assessment, reassessment or re- Rajnish Bharti HUF 13 & 3941, 4378 & & 3941 4377/MUM/2023 computation under section 147 of the Act, the Assessing officer shall computation under section 147 of the Act, the Assessing officer shall computation under section 147 of the Act, the Assessing officer shall is issue came up before the Hon’ble serve notice on the assessee serve notice on the assessee. This issue came up before the Supreme Court in the case of R.K. Upadhyaya v. Shanabhai P. Supreme Court in the case of R.K. Upadhyaya v. Shanabhai P. Supreme Court in the case of R.K. Upadhyaya v. Shanabhai P. Patel reported in 166 ITR 163 (SC). Patel reported in 166 ITR 163 (SC). The Hon’ble Supreme Court The Hon’ble Supreme Court held that service of the notices is not a condition precedent to service of the notices is not a condition precedent to service of the notices is not a condition precedent to confirmation of jurisdiction of t confirmation of jurisdiction of the ITO but the condition precedent he ITO but the condition precedent for making of the order of the assessment and thus if notice u/s 148 is making of the order of the assessment and thus if notice u/s 148 is making of the order of the assessment and thus if notice u/s 148 is served before completion of the assessment , it is a mpletion of the assessment , it is a mpletion of the assessment , it is a valid service of the notice. In the instant . In the instant case, the Assessing Officer has case, the Assessing Officer has issued notice u/s 148 of the Act on 22.03.2016 and same was sent by the 8 of the Act on 22.03.2016 and same was sent by the 8 of the Act on 22.03.2016 and same was sent by the registered post at the address of the assessee available in the PAN registered post at the address of the assessee available in the PAN registered post at the address of the assessee available in the PAN data base i.e. M/s Bharati Enterprises 4/281 Opposite Britania data base i.e. M/s Bharati Enterprises 4/281 Opposite Britania data base i.e. M/s Bharati Enterprises 4/281 Opposite Britania Company, Reay Road, Mumbai Maharashtra Company, Reay Road, Mumbai Maharashtra. The said notice was returned un-served with the remark ‘left’ and thereafter, the erved with the remark ‘left’ and thereafter, the erved with the remark ‘left’ and thereafter, the Assessing Officer invoked Assessing Officer invoked ‘substituted service’ of the notice by of the notice by affixing notice on said premises through Ward Inspector. A copy of affixing notice on said premises through Ward Inspector. affixing notice on said premises through Ward Inspector. notice u/s 148 dated 22/03/2016 was also served on the assessee notice u/s 148 dated 22/03/2016 was also served on the assessee notice u/s 148 dated 22/03/2016 was also served on the assessee on 8/09/2016 by post, which was not returned back by post, which was not returned back by post, which was not returned back. The Ld. CIT(A) has considered objection CIT(A) has considered objections of the assessee on the issue of of the assessee on the issue of validity of service of of notice u/s 148 of the Act through postal notice u/s 148 of the Act through postal authorities. The relevant finding of the Ld. CIT(A) is reproduced as authorities. The relevant finding of the Ld. CIT(A) is reproduced as authorities. The relevant finding of the Ld. CIT(A) is reproduced as under:

“6.2.3 The ITO 20(3)(1) Mumbai sent the notice through speed 6.2.3 The ITO 20(3)(1) Mumbai sent the notice through speed 6.2.3 The ITO 20(3)(1) Mumbai sent the notice through speed post. The Speed post bar code no. read as EMS 962227432IN, post. The Speed post bar code no. read as EMS 962227432IN, post. The Speed post bar code no. read as EMS 962227432IN, the letter was returned by the postal authority with marking of the letter was returned by the postal authority with marking of the letter was returned by the postal authority with marking of Rajnish Bharti HUF 14 & 3941, 4378 & & 3941 4377/MUM/2023 "LEFT" dated 4.04.2016 and received in the office of the ITO "LEFT" dated 4.04.2016 and received in the office of the ITO "LEFT" dated 4.04.2016 and received in the office of the ITO on 05.04.201 on 05.04.2016. The ITO Ward 20(3)(1) Mumbai deputed ITI to 6. The ITO Ward 20(3)(1) Mumbai deputed ITI to serve the notice and the ITI submitted the report to the ITO of serve the notice and the ITI submitted the report to the ITO of serve the notice and the ITI submitted the report to the ITO of serving the notice through affixture on 12.04.2016. The AO serving the notice through affixture on 12.04.2016. The AO serving the notice through affixture on 12.04.2016. The AO issued various notices which are mentioned in detail in the issued various notices which are mentioned in detail in the issued various notices which are mentioned in detail in the assessment order and are a assessment order and are also part of the appeal record. lso part of the appeal record. Therefore, the contention of the appellant that the AO had not Therefore, the contention of the appellant that the AO had not Therefore, the contention of the appellant that the AO had not followed the due procedure and that the notice was not followed the due procedure and that the notice was not followed the due procedure and that the notice was not properly served does not appear to be having a credible force. properly served does not appear to be having a credible force. properly served does not appear to be having a credible force. The Hon'ble High Court of Punjab & Haryana i High Court of Punjab & Haryana in 151 The Hon'ble taxmann.com 120 in case of Anita Gupta vs. ITO dated taxmann.com 120 in case of Anita Gupta vs. ITO dated taxmann.com 120 in case of Anita Gupta vs. ITO dated 14th March 2023, 14th March 2023, held that where assessee had been held that where assessee had been served notice under section 148A(b) at address given on PAN served notice under section 148A(b) at address given on PAN served notice under section 148A(b) at address given on PAN database which was correct address and had been given database which was correct address and had been given database which was correct address and had been given seven days to respond, proceedin seven days to respond, proceedings initiated for reassessment gs initiated for reassessment could not be quashed. The relevant part of the order is could not be quashed. The relevant part of the order is could not be quashed. The relevant part of the order is reproduced below: reproduced below: 7. On this very issue, Hon'ble the Supreme Court in a case of 7. On this very issue, Hon'ble the Supreme Court in a case of 7. On this very issue, Hon'ble the Supreme Court in a case of Pr. CIT v. I-ven Interactive Ltd. ven Interactive Ltd. [2019] 110 taxmann.com [2019] 110 taxmann.com 332/267 Taxman 471/418 ITR 662 332/267 Taxman 471/418 ITR 662, held that issuance of , held that issuance of notice at the address listed in the PAN database is sufficient notice at the address listed in the PAN database is sufficient notice at the address listed in the PAN database is sufficient compliance of issue of notice, and that in the absence of any compliance of issue of notice, and that in the absence of any compliance of issue of notice, and that in the absence of any specific intimation to the Assessing Officer, the Assessing specific intimation to the Assessing Officer, the Assessing specific intimation to the Assessing Officer, the Assessing Officer would be Officer would be justified in sending notice at the available justified in sending notice at the available address mentioned in the PAN Database. address mentioned in the PAN Database.

Rajnish Bharti HUF 15 & 3941, 4378 & & 3941 4377/MUM/2023 "The above provisions are statutory recognition of the "The above provisions are statutory recognition of the "The above provisions are statutory recognition of the principles principles principles of of of natural natural natural justice justice justice which which which are are are applicable applicable applicable to to to assessment proceedings under the Act. The affected party is assessment proceedings under the Act. The affected party is assessment proceedings under the Act. The affected party is entitled to the fair opportunity and fair procedure. Since the entitled to the fair opportunity and fair procedure. Since the entitled to the fair opportunity and fair procedure. Since the period of 15 days period of 15 days has been specified statutorily, it may not be has been specified statutorily, it may not be fair to expect filing of return in shorter period. At the same fair to expect filing of return in shorter period. At the same fair to expect filing of return in shorter period. At the same time, the effect of violation of the principles of natural justice is time, the effect of violation of the principles of natural justice is time, the effect of violation of the principles of natural justice is not to always nullify the exercise of jurisdiction unless not to always nullify the exercise of jurisdiction unless not to always nullify the exercise of jurisdiction unless prejudice is caused prejudice is caused. Where period specified in the notice is less . Where period specified in the notice is less than the statutory period, no prejudice is caused if return filed than the statutory period, no prejudice is caused if return filed than the statutory period, no prejudice is caused if return filed is taken into account. The notice specifying lesser period can is taken into account. The notice specifying lesser period can is taken into account. The notice specifying lesser period can be read as specifying the statutory period. The principle is be read as specifying the statutory period. The principle is be read as specifying the statutory period. The principle is duly recognised und duly recognised under section 292B of the Act. In State Bank of Patiala v. S.K. Sharma: [1996] 3 SCC 364. In State Bank of Patiala v. S.K. Sharma: [1996] 3 SCC 364. In State Bank of Patiala v. S.K. Sharma: [1996] 3 SCC 364. after considering the case law on the point. The Division Bench after considering the case law on the point. The Division Bench after considering the case law on the point. The Division Bench answered the questions in favour of the Revenue. It was held answered the questions in favour of the Revenue. It was held answered the questions in favour of the Revenue. It was held as under: 33. We may summarise the principle 33. We may summarise the principles emerging from the above s emerging from the above discussion. (These are by no means intended to be exhaustive discussion. (These are by no means intended to be exhaustive discussion. (These are by no means intended to be exhaustive and are evolved keeping in view the context of disciplinary and are evolved keeping in view the context of disciplinary and are evolved keeping in view the context of disciplinary enquiries and orders of punishment imposed by an employer enquiries and orders of punishment imposed by an employer enquiries and orders of punishment imposed by an employer upon the employee): . . . . . upon the employee): . . . . . (3) In the case of v (3) In the case of violation of a procedural provision, the iolation of a procedural provision, the position is this: procedural provisions are generally meant for position is this: procedural provisions are generally meant for position is this: procedural provisions are generally meant for affording a reasonable and adequate opportunity to the affording a reasonable and adequate opportunity to the affording a reasonable and adequate opportunity to the delinquent officer employee. They are, generally speaking. delinquent officer employee. They are, generally speaking. delinquent officer employee. They are, generally speaking. conceived in his interest. Violation o conceived in his interest. Violation of any and every procedural f any and every procedural provision cannot be said to automatically vitiate the enquiry provision cannot be said to automatically vitiate the enquiry provision cannot be said to automatically vitiate the enquiry held or order passed. Except cases falling under held or order passed. Except cases falling under- 'no notice'. 'no notice'. 'no opportunity' and 'no hearing categories, the complaint of 'no opportunity' and 'no hearing categories, the complaint of 'no opportunity' and 'no hearing categories, the complaint of violation of procedural provision should b violation of procedural provision should be examined from the e examined from the point of view of prejudice, viz., Whether such violation has point of view of prejudice, viz., Whether such violation has point of view of prejudice, viz., Whether such violation has prejudiced the delinquent officer/employee in defending prejudiced the delinquent officer/employee in defending prejudiced the delinquent officer/employee in defending himself properly and effectively. If it is found that he has been himself properly and effectively. If it is found that he has been himself properly and effectively. If it is found that he has been so prejudiced, appropriate orders have to be made to so prejudiced, appropriate orders have to be made to so prejudiced, appropriate orders have to be made to repair and remedy the prejudice including setting aside the enquiry and remedy the prejudice including setting aside the enquiry and remedy the prejudice including setting aside the enquiry and/or the order of punishment. If no prejudice is established and/or the order of punishment. If no prejudice is established and/or the order of punishment. If no prejudice is established to have resulted therefrom, it is obvious, no interference is to have resulted therefrom, it is obvious, no interference is to have resulted therefrom, it is obvious, no interference is called for. In this connection, it may be remembered that there called for. In this connection, it may be remembered that there called for. In this connection, it may be remembered that there may be certain procedural provisions which are of a may be certain procedural provisions which are of a may be certain procedural provisions which are of a fundamental character, whose violation is by itself proof of fundamental character, whose violation is by itself proof of fundamental character, whose violation is by itself proof of prejudice. The court may not insist on proof of prejudice in prejudice. The court may not insist on proof of prejudice in prejudice. The court may not insist on proof of prejudice in such cases. As explained in the body of the judgment, take a such cases. As explained in the body of the judgment, take a such cases. As explained in the body of the judgment, take a case where there is case where there is a provision expressly providing that after a provision expressly providing that after Rajnish Bharti HUF 16 & 3941, 4378 & ITA Nos. 3912 & 3941 4377/MUM/2023 the evidence of the employer/Government is over, the the evidence of the employer/Government is over, the the evidence of the employer/Government is over, the employee shall be given an opportunity to lead defence in his employee shall be given an opportunity to lead defence in his employee shall be given an opportunity to lead defence in his evidence, and in a given case, the enquiry officer does not give evidence, and in a given case, the enquiry officer does not give evidence, and in a given case, the enquiry officer does not give that opportunity in spite of the that opportunity in spite of the delinquent officer/employee delinquent officer/employee asking for it. The prejudice is self asking for it. The prejudice is self-evident. No proof of prejudice evident. No proof of prejudice as such need be called for in such a case. To repeat, the test is as such need be called for in such a case. To repeat, the test is as such need be called for in such a case. To repeat, the test is one of prejudice, i.e., whether the person has received a fair one of prejudice, i.e., whether the person has received a fair one of prejudice, i.e., whether the person has received a fair hearing considering all things. hearing considering all things. Now, this very aspect can also Now, this very aspect can also be looked at from the point of view of directory and mandatory be looked at from the point of view of directory and mandatory be looked at from the point of view of directory and mandatory provisions, if one is so inclined. The principle stated under (4) provisions, if one is so inclined. The principle stated under (4) provisions, if one is so inclined. The principle stated under (4) hereinbelow is only another way of looking at the same aspect hereinbelow is only another way of looking at the same aspect hereinbelow is only another way of looking at the same aspect as is dealt with herein and not a as is dealt with herein and not a different or distinct principle." different or distinct principle."

11.

The procedure to be followed upon receipt of the Notice 11. The procedure to be followed upon receipt of the Notice 11. The procedure to be followed upon receipt of the Notice came to be considered by the Hon'ble Supreme Court in the came to be considered by the Hon'ble Supreme Court in the came to be considered by the Hon'ble Supreme Court in the case titled as GK case titled as GKN Driveshafts (India) Ltd. v. ITO [2002] 125 [2002] 125 Taxman 963/[2003] 259 ITR 19 Taxman 963/[2003] 259 ITR 19, wherein it has been held as , wherein it has been held as under:- "However, we clarify that when a notice under section 148 of "However, we clarify that when a notice under section 148 of "However, we clarify that when a notice under section 148 of the Income-tax Act is issued, the proper course of tax Act is issued, the proper course of action for the action for the noticee is to file return and if he so desires, to seek reasons for noticee is to file return and if he so desires, to seek reasons for noticee is to file return and if he so desires, to seek reasons for issuing notices. The Assessing Officer is bound to furnish issuing notices. The Assessing Officer is bound to furnish issuing notices. The Assessing Officer is bound to furnish reasons within a reasonable time. On receipt of reasons, the reasons within a reasonable time. On receipt of reasons, the reasons within a reasonable time. On receipt of reasons, the noticee is entitled to file objections to issuance o noticee is entitled to file objections to issuance of notice and f notice and the Assessing Officer is bound to dispose of the same by the Assessing Officer is bound to dispose of the same by the Assessing Officer is bound to dispose of the same by passing a speaking order. In the instant case, as the reasons passing a speaking order. In the instant case, as the reasons passing a speaking order. In the instant case, as the reasons have been disclosed in these proceedings, the Assessing have been disclosed in these proceedings, the Assessing have been disclosed in these proceedings, the Assessing Officer has to dispose of the objections, if filed, by passing a Officer has to dispose of the objections, if filed, by passing a Officer has to dispose of the objections, if filed, by passing a speaking order, before proceeding with the assessment in aking order, before proceeding with the assessment in aking order, before proceeding with the assessment in respect of the abovesaid five assessment years" respect of the abovesaid five assessment years"

13.

Reference at the very outset can be made to section 148 A 13. Reference at the very outset can be made to section 148 A 13. Reference at the very outset can be made to section 148 A (b) of Act 1961, which reads as under: (b) of Act 1961, which reads as under:- "148A. The Assessing Officer shall, before issuing any notice "148A. The Assessing Officer shall, before issuing any notice "148A. The Assessing Officer shall, before issuing any notice under section 148, under section 148,- Rajnish Bharti HUF 17 & 3941, 4378 & & 3941 4377/MUM/2023 (b) provide an opportunity of being heard to the assessee, by (b) provide an opportunity of being heard to the assessee, by (b) provide an opportunity of being heard to the assessee, by serving upon him a notice to show cause within such time, as serving upon him a notice to show cause within such time, as serving upon him a notice to show cause within such time, as may be specified in the notice, being not less may be specified in the notice, being not less than seven days than seven days and but not exceeding thirty days from the date on which such and but not exceeding thirty days from the date on which such and but not exceeding thirty days from the date on which such notice is issued, or such time, as may be extended by him on notice is issued, or such time, as may be extended by him on notice is issued, or such time, as may be extended by him on the basis of an application in this behalf, as to why a notice the basis of an application in this behalf, as to why a notice the basis of an application in this behalf, as to why a notice under section 148 should not be issued on the basis of under section 148 should not be issued on the basis of under section 148 should not be issued on the basis of information which suggests that income chargeable to tax has information which suggests that income chargeable to tax has information which suggests that income chargeable to tax has escaped assessment in his case for the relevant assessment escaped assessment in his case for the relevant assessment escaped assessment in his case for the relevant assessment year and results of enquiry conducted, if any, as per clause year and results of enquiry conducted, if any, as per clause year and results of enquiry conducted, if any, as per clause (a);"

14.

In the present case, the petitioner was having the 14. In the present case, the petitioner was having the 14. In the present case, the petitioner was having the knowledge of knowledge of notice on 26-3-2022 and she has not given any 2022 and she has not given any reply to the said show cause notice. Thus, the impugned order reply to the said show cause notice. Thus, the impugned order reply to the said show cause notice. Thus, the impugned order came to be passed on the 7th day i.e on 7 came to be passed on the 7th day i.e on 7-4-2022. The notice 2022. The notice has been sent at the address given on the PAN Database. The has been sent at the address given on the PAN Database. The has been sent at the address given on the PAN Database. The Assessing Officer initiated Assessing Officer initiated the proceedings in accordance with the proceedings in accordance with section 148A read with section 149/151. The approval of section 148A read with section 149/151. The approval of section 148A read with section 149/151. The approval of specified authority as per section 151 of Act, 1961 was specified authority as per section 151 of Act, 1961 was specified authority as per section 151 of Act, 1961 was obtained at every stage. The petitioner chose not to file reply to obtained at every stage. The petitioner chose not to file reply to obtained at every stage. The petitioner chose not to file reply to the notice and hence the notice issued on the notice and hence the notice issued on 20-3-2022 through 2022 through speed post at the address given on the PAN Database was speed post at the address given on the PAN Database was speed post at the address given on the PAN Database was sufficient to return a finding that the respondents had served sufficient to return a finding that the respondents had served sufficient to return a finding that the respondents had served the notice at the correct address. Moreover, petitioner herself the notice at the correct address. Moreover, petitioner herself the notice at the correct address. Moreover, petitioner herself has admitted that the notice was received on 26 has admitted that the notice was received on 26-3-2022 2022.

relating to case and the grounds of appeal relating to the non-serving of the notice u/s 148 of the Act is seen in light serving of the notice u/s 148 of the Act is seen in light serving of the notice u/s 148 of the Act is seen in light of the above decision of the Hon'ble High Court and therefore of the above decision of the Hon'ble High Court and therefore of the above decision of the Hon'ble High Court and therefore does not stand on a legally valid ground. Further reliance is does not stand on a legally valid ground. Further reliance is does not stand on a legally valid ground. Further reliance is Rajnish Bharti HUF 18 & 3941, 4378 & & 3941 4377/MUM/2023 also placed on the deci also placed on the decision of the Hon'ble Supreme Court in sion of the Hon'ble Supreme Court in case of PCIT vs. M/s I case of PCIT vs. M/s I- Ven Interactive Ltd. Mumbai, in Civil Mumbai, in Civil Appeal No. 8132 of 2019 of SLP (C) No. 3530/2019. The AO Appeal No. 8132 of 2019 of SLP (C) No. 3530/2019. The AO Appeal No. 8132 of 2019 of SLP (C) No. 3530/2019. The AO had followed the due procedure established by law in serving had followed the due procedure established by law in serving had followed the due procedure established by law in serving the notice. And as discussed above, the the notice. And as discussed above, the notice was validly and notice was validly and legally served on the appellant. The ground relating to the legally served on the appellant. The ground relating to the legally served on the appellant. The ground relating to the service of notice is accordingly dismissed. service of notice is accordingly dismissed.” 6.2 We note that Hon’ble We note that Hon’ble Gujarat High Court in the case of Gujarat High Court in the case of Atulbhai Hiralal Shah v. C.P. Meena, Deputy Commissioner of Atulbhai Hiralal Shah v. C.P. Meena, Deputy Commissioner of Atulbhai Hiralal Shah v. C.P. Meena, Deputy Commissioner of Income-tax (2016) 73 taxmann.com 320 (Guj.) ax (2016) 73 taxmann.com 320 (Guj.) held that since the assessee had not the assessee had not joined the Postal Department why remark ‘left’ joined the Postal Department why remark ‘left’ was made and Assessing Officer was entitled to proceed on the was made and Assessing Officer was entitled to proceed on the was made and Assessing Officer was entitled to proceed on the basis of remark of postal department and thus only on the ground postal department and thus only on the ground postal department and thus only on the ground of non-service of the notice, the reassessment could not be rvice of the notice, the reassessment could not be rvice of the notice, the reassessment could not be terminated. The SLP filed against the same by the assessee has terminated. The SLP filed against the same by the assessee has terminated. The SLP filed against the same by the assessee has been dismissed by the Hon’ble Supreme Court as reported in (2016) been dismissed by the Hon’ble Supreme Court as reported in (2016) been dismissed by the Hon’ble Supreme Court as reported in (2016) 73 taxmann.com 325 (SC). 73 taxmann.com 325 (SC). We further note that Hon’ble Supreme Hon’ble Supreme Court in the case of Jagdish Singh Vs. Natthu Singh (1992) 1 ase of Jagdish Singh Vs. Natthu Singh (1992) 1 ase of Jagdish Singh Vs. Natthu Singh (1992)

1. SCC 647 held that when a notice is sent by registered post and is held that when a notice is sent by registered post and is held that when a notice is sent by registered post and is returned with the postal endorsement that ‘refused’ or ‘not returned with the postal endorsement that ‘refused’ or ‘not returned with the postal endorsement that ‘refused’ or ‘not available’ or ‘house locked’ or ‘shop closed’ or ‘addressee not in available’ or ‘house locked’ or ‘shop closed’ or ‘addressee not in available’ or ‘house locked’ or ‘shop closed’ or ‘addressee not in station’ , then due service has to be presumed. In the instant case due service has to be presumed. In the instant case due service has to be presumed. In the instant case also, notice was sent at the address provided by the assessee to also, notice was sent at the address provided by the assessee to also, notice was sent at the address provided by the assessee to income tax department and the postal department endorsed that income tax department and the postal department endorsed that income tax department and the postal department endorsed that party ‘left’ the place, therefore, the notice issued is deemed to be party ‘left’ the place, therefore, the notice issued is deemed to be party ‘left’ the place, therefore, the notice issued is deemed to be served on the assessee on the assessee Rajnish Bharti HUF 19 & 3941, 4378 & ITA Nos. 3912 & 3941 4377/MUM/2023 6.3 Further, we note that the Assessing Officer has also sent copy Further, we note that the Assessing Officer has also sent copy Further, we note that the Assessing Officer has also sent copy of the notice u/s 148 of the Act at another Mumbai address which of the notice u/s 148 of the Act at another Mumbai address which of the notice u/s 148 of the Act at another Mumbai address which was provided by the authorized representative of the assessee. was provided by the authorized representative of the assessee. was provided by the authorized representative of the assessee. Same was returned by the postal authorities Same was returned by the postal authorities with the remark with the remark ‘unclaimed’. The Assessing Officer also had provided copy of such ‘unclaimed’. The Assessing Officer also had provided copy of such ‘unclaimed’. The Assessing Officer also had provided copy of such notices on the e-mail ID of the authorized represent mail ID of the authorized represent mail ID of the authorized representative of the assessee. Thereafter, the notice u/s 148 of the Act , the notice u/s 148 of the Act was sent at the , the notice u/s 148 of the Act new address provided by the Authorised new address provided by the Authorised representative, which was presentative, which was duly served before completion of the assessment duly served before completion of the assessment, , which is also undisputedly a valid service of the notice u/s 148 of the Act. The valid service of the notice u/s 148 of the Act. The valid service of the notice u/s 148 of the Act. The Ld. counsel for the assessee raised doubt on the substituted service Ld. counsel for the assessee raised doubt on the substituted service Ld. counsel for the assessee raised doubt on the substituted service of the notice through affixture a of the notice through affixture and submitted that no independent nd submitted that no independent witness was present while affixing the notice and another inspector witness was present while affixing the notice and another inspector witness was present while affixing the notice and another inspector of the Income-tax Department had signed as witness which is not tax Department had signed as witness which is not tax Department had signed as witness which is not valid in law. In our opinion, in view of deemed service of the notice valid in law. In our opinion, in view of deemed service of the notice valid in law. In our opinion, in view of deemed service of the notice issued for the first issued for the first time by the Assessing Officer and also time by the Assessing Officer and also subsequent copy of the notice u/s 148 of the Act sent at the new subsequent copy of the notice u/s 148 of the Act sent at the new subsequent copy of the notice u/s 148 of the Act sent at the new address provided by the assessee and on the e-mail of the address provided by the assessee and on the e address provided by the assessee and on the e authorized representative which have been served before completion authorized representative which have been served before completion authorized representative which have been served before completion of the assessment, amounts amounts to valid service and therefore, we do to valid service and therefore, we do not feel it appropriate to comment on the doubts raised on the not feel it appropriate to comment on the doubts raised on the not feel it appropriate to comment on the doubts raised on the substituted service of the notice. Accordingly, the grounds substituted service of the notice. Accordingly, the ground substituted service of the notice. Accordingly, the ground challenging validity of the service of the notice are rejected. challenging validity of the service of the notice are rejected. challenging validity of the service of the notice are rejected.

“6.2.5 The AO also disposed the objections raised by the 6.2.5 The AO also disposed the objections raised by the 6.2.5 The AO also disposed the objections raised by the appellant against the issuance of notice u/s 148 of the Act appellant against the issuance of notice u/s 148 of the Act appellant against the issuance of notice u/s 148 of the Act vide his letter dated 22.11.2016. The AO had disposed the vide his letter dated 22.11.2016. The AO had disposed the vide his letter dated 22.11.2016. The AO had disposed the objection u/s 148 of objection u/s 148 of the Act vide dated 22.11.2016 satisfying the Act vide dated 22.11.2016 satisfying the condition as provided by the Hon'ble Supreme Court in the the condition as provided by the Hon'ble Supreme Court in the the condition as provided by the Hon'ble Supreme Court in the case of GKN Driveshaft. The order disposing the objection is case of GKN Driveshaft. The order disposing the objection is case of GKN Driveshaft. The order disposing the objection is reproduced below: reproduced below: "PAN: AAEHR6595K "PAN: AAEHR6595K M/S. RAJNISH BHARTI HUF M/S. RAJNISH BHARTI HUF Flat No. 506-B, Evershine Nagar, B, Evershine Nagar, Rajendra Vihar, Malad West, Mumbai 400 064 Rajendra Vihar, Malad West, Mumbai 400 064 Sir, Sub: Removal of objection against reopening proceedings Sub: Removal of objection against reopening proceedings Sub: Removal of objection against reopening proceedings- initiated notice u/s 148 dtd.22.03.2016 for Asst. Year 2009 notice u/s 148 dtd.22.03.2016 for Asst. Year 2009 notice u/s 148 dtd.22.03.2016 for Asst. Year 2009- 10-reg. vide Kindly refer to the above noted subject and objection filed by Kindly refer to the above noted subject and objection filed by Kindly refer to the above noted subject and objection filed by M/s Jain Ambava Ambavat& Associates, CAs dtd. 22.11.2016. t& Associates, CAs dtd. 22.11.2016. 2 Vide the above referred letter did. 22.11.2016, it has been 2 Vide the above referred letter did. 22.11.2016, it has been 2 Vide the above referred letter did. 22.11.2016, it has been contended that the provision of section 148 have no contended that the provision of section 148 have no contended that the provision of section 148 have no application on the following grounds: application on the following grounds:

3. The parawise comments are as under: 3.1 Para No. 1 to 4 of the Para No. 1 to 4 of the letter dtd 22.11.2016, the assessee letter dtd 22.11.2016, the assessee contended that the contended that the notice issued u/s 148 dtd. 22.03.2016 notice issued u/s 148 dtd. 22.03.2016 which was posted on 02.04.2016 which was posted on 02.04.2016 accordingly the same was accordingly the same was time barred. Further, the notice was never served on the time barred. Further, the notice was never served on the time barred. Further, the notice was never served on the Rajnish Bharti HUF 21 & 3941, 4378 & & 3941 4377/MUM/2023 assessee hence, the notice is fructous. The assess assessee hence, the notice is fructous. The assess assessee hence, the notice is fructous. The assessee also contended that since the notice server, Shri Krishna Vasant contended that since the notice server, Shri Krishna Vasant contended that since the notice server, Shri Krishna Vasant Karale, who served the notice by pasting on the premises Karale, who served the notice by pasting on the premises Karale, who served the notice by pasting on the premises mentioned in the notice and also the notice server made mentioned in the notice and also the notice server made mentioned in the notice and also the notice server made another Inspector the evidence of serving and has not made another Inspector the evidence of serving and has not made another Inspector the evidence of serving and has not made the neighbors ev the neighbors evidences the notice is not valid and void abinito idences the notice is not valid and void abinito 3.2 The said objection is not valid. It needs to be stated that The said objection is not valid. It needs to be stated that The said objection is not valid. It needs to be stated that that the notice u/s 148 was issued on the address as evident that the notice u/s 148 was issued on the address as evident that the notice u/s 148 was issued on the address as evident with the Department which was provided by the assessee with the Department which was provided by the assessee with the Department which was provided by the assessee himself in the return of in himself in the return of income for Asst. Year 2009-10. It is not 10. It is not the case that addresses are different. Assessee if changes the the case that addresses are different. Assessee if changes the the case that addresses are different. Assessee if changes the address is required to accordingly intimate the Department address is required to accordingly intimate the Department address is required to accordingly intimate the Department about the change in address which has not been done in this about the change in address which has not been done in this about the change in address which has not been done in this case till the issue of notice u/s 1 case till the issue of notice u/s 148. Further, the notice has 48. Further, the notice has been issued on 22.03.2016 and the same has been posted on been issued on 22.03.2016 and the same has been posted on been issued on 22.03.2016 and the same has been posted on 23.03.2016 under EMS No. 23.03.2016 under EMS No. EM962227432IN and Sr. No.1244 EM962227432IN and Sr. No.1244 dd 23.03.2016 of Postal Book. The same has been returned dd 23.03.2016 of Postal Book. The same has been returned dd 23.03.2016 of Postal Book. The same has been returned back on 05.04.2016 by the postal authorities with a remark back on 05.04.2016 by the postal authorities with a remark back on 05.04.2016 by the postal authorities with a remarks 'LEFT. Since the notice u/s 148 was returned back by the Since the notice u/s 148 was returned back by the Since the notice u/s 148 was returned back by the postal authorities, the same was served by affixture by the postal authorities, the same was served by affixture by the postal authorities, the same was served by affixture by the Ward Inspector, Shri Krishna Karale in the Presence of another Ward Inspector, Shri Krishna Karale in the Presence of another Ward Inspector, Shri Krishna Karale in the Presence of another Inspector which is as per procedure of service of notice. The Inspector which is as per procedure of service of notice. The Inspector which is as per procedure of service of notice. The copy of the copy of the said Ward Inspectors report has also been said Ward Inspectors report has also been provided to assessee. Therefore, objection in this regard, is provided to assessee. Therefore, objection in this regard, is provided to assessee. Therefore, objection in this regard, is hereby unsustainable and rejected. hereby unsustainable and rejected. 3.3 Para No. 5 to 22: In Para Para No. 5 to 22: In Para-No.5 to 22 the assessee has No.5 to 22 the assessee has contended that reopening has been done without any reasons contended that reopening has been done without any reasons contended that reopening has been done without any reasons to believe that income had escaped assessment. The assessee to believe that income had escaped assessment. The assessee to believe that income had escaped assessment. The assessee has stated that the list of suspicious dealers appearing on has stated that the list of suspicious dealers appearing on has stated that the list of suspicious dealers appearing on Sales Tax Department is only a caution to other dealers while Sales Tax Department is only a caution to other dealers while Sales Tax Department is only a caution to other dealers while dealing with them. The dealing with them. The assessee relied upon the judgment of assessee relied upon the judgment of M/s. Chandulal M/s. ChandulalNarandas Vs State of Maharashtra VAT Narandas Vs State of Maharashtra VAT Appeal No 884 of 2015 with VAT Appeal No.882 of 882 of Appeal No 884 of 2015 with VAT Appeal No.882 of 882 of Appeal No 884 of 2015 with VAT Appeal No.882 of 882 of 2015). Assessee stated that in view of this judgment Assessee stated that in view of this judgment Assessee stated that in view of this judgment Information on sales tax department is not very reliable unless Information on sales tax department is not very reliable unless Information on sales tax department is not very reliable unless thoroughly verified. The assessee thereafter ve thoroughly verified. The assessee thereafter verbatim the rbatim the reproduced the reasons for reopening and stated that notice reproduced the reasons for reopening and stated that notice reproduced the reasons for reopening and stated that notice u/s 148 has been issued as the behest of DGIT Mumbai u/s 148 has been issued as the behest of DGIT Mumbai u/s 148 has been issued as the behest of DGIT Mumbai without any tangible material available before you to form an without any tangible material available before you to form an without any tangible material available before you to form an independent opinion. The assessee thereafter relied upon the independent opinion. The assessee thereafter relied upon the independent opinion. The assessee thereafter relied upon the Mumbai ITAT judgment of Rajiv G Kalathil Vs CIT dtd AT judgment of Rajiv G Kalathil Vs CIT dtd AT judgment of Rajiv G Kalathil Vs CIT dtd 20.08.2014. 20.08.2014. 20.08.2014. Thereafter Thereafter Thereafter assessee assessee assessee contended contended contended that that that the the the jurisdiction is having a reason to suspect but there is no jurisdiction is having a reason to suspect but there is no jurisdiction is having a reason to suspect but there is no reasons to believe and relied upon the Supreme Court's reasons to believe and relied upon the Supreme Court's reasons to believe and relied upon the Supreme Court's judgment ITO Vs LakhnaniMewaldas 103 ITR 437, Ke judgment ITO Vs LakhnaniMewaldas 103 ITR 437, Ke judgment ITO Vs LakhnaniMewaldas 103 ITR 437, Kelvinator Rajnish Bharti HUF 22 & 3941, 4378 & ITA Nos. 3912 & 3941 4377/MUM/2023 of India Ltd 320 /TR 561 (Supreme Court), CIT Vs Lucas TVS of India Ltd 320 /TR 561 (Supreme Court), CIT Vs Lucas TVS of India Ltd 320 /TR 561 (Supreme Court), CIT Vs Lucas TVS Ltd 249 ITR 306. The assessee thereafter relied on the ITR 306. The assessee thereafter relied on the ITR 306. The assessee thereafter relied on the judgment of Prashant S. Joshi Vs. ITO judgment of Prashant S. Joshi Vs. ITO 324 ITR 154 to contend 324 ITR 154 to contend that the AO was not having tangible material before him for that the AO was not having tangible material before him for that the AO was not having tangible material before him for reopening. Assessee also stated that the information of Sales ssessee also stated that the information of Sales ssessee also stated that the information of Sales Tax Department is also irrelevant as Sales Tax Department is Tax Department is also irrelevant as Sales Tax Department is Tax Department is also irrelevant as Sales Tax Department is more concern with set of taken by dealers under MVAT Act more concern with set of taken by dealers under MVAT Act more concern with set of taken by dealers under MVAT Act and since the vendor dealer does not paid tax the set off is and since the vendor dealer does not paid tax the set off is and since the vendor dealer does not paid tax the set off is disallowed and accordingly disallowed and accordingly the dealer is identified as hawala the dealer is identified as hawala operator Hence, disallowance of set off is not relevant for operator Hence, disallowance of set off is not relevant for operator Hence, disallowance of set off is not relevant for income tax purpose. income tax purpose. 3.4 The contention of the assessee in the said para The contention of the assessee in the said para-No.5 to 22 No.5 to 22 is also not sustainable and acceptable. sustainable and acceptable. In this regard it needs to be stated In this regard it needs to be stated that reopening has been that reopening has been done after concrete information received not only from DGIT, concrete information received not only from DGIT, concrete information received not only from DGIT, Mumbai but also from Sales Tax Department of Maharashtra. Mumbai but also from Sales Tax Department of Maharashtra. Mumbai but also from Sales Tax Department of Maharashtra. Sales Tax Department is completely different Sales Tax Department is completely different investigative investigative authority wherein they have found out that assessee is authority wherein they have found out that assessee is authority wherein they have found out that assessee is involved in the circle of obtaining accommodation bills from involved in the circle of obtaining accommodation bills from involved in the circle of obtaining accommodation bills from hawala operators. It is not the case that the investigative hawala operators. It is not the case that the investigative hawala operators. It is not the case that the investigative finding of Sales Tax Department is wrong. It is also not the finding of Sales Tax Department is wrong. It is also not the finding of Sales Tax Department is wrong. It is also not the case that assessee has filed any petition against the Sales case that assessee has filed any petition against the Sales case that assessee has filed any petition against the Sales Tax Departmen Tax Department. As far as the contention of disallowance of t. As far as the contention of disallowance of set of is concerned the same is legal under MVAT Act. set of is concerned the same is legal under MVAT Act. set of is concerned the same is legal under MVAT Act. It is hereby clarified that the AO has sufficient material on record hereby clarified that the AO has sufficient material on record hereby clarified that the AO has sufficient material on record and on the basis of the said material and information, and on the basis of the said material and information, and on the basis of the said material and information, proceedings u/s 147 has been in proceedings u/s 147 has been initiated and notice u/s 148 itiated and notice u/s 148 has been issued on 22.03.2016. The information and material has been issued on 22.03.2016. The information and material has been issued on 22.03.2016. The information and material on record is nothing but the concrete evidences on record, on on record is nothing but the concrete evidences on record, on on record is nothing but the concrete evidences on record, on the basis of which the AO has specifically noted that he has the basis of which the AO has specifically noted that he has the basis of which the AO has specifically noted that he has "reason to believe that income chargeable to t "reason to believe that income chargeable to tax has escaped ax has escaped assessment for the Asst. year 2009 assessment for the Asst. year 2009-10 and therefore, 10 and therefore, proceedings u/s 147 has been initiated and notice u/s 148 proceedings u/s 147 has been initiated and notice u/s 148 proceedings u/s 147 has been initiated and notice u/s 148 has been issued as per Income Tax Act, 1961. has been issued as per Income Tax Act, 1961. It is not only the It is not only the AO has applied his mind before recording the reasons for AO has applied his mind before recording the reasons for AO has applied his mind before recording the reasons for reopening but also has come to the satisfaction that the income but also has come to the satisfaction that the income but also has come to the satisfaction that the income chargeable to tax has escaped assessment in your case. chargeable to tax has escaped assessment in your case. chargeable to tax has escaped assessment in your case. Therefore, notice issued u/s 148 is not illegal and bad in law. Therefore, notice issued u/s 148 is not illegal and bad in law. Therefore, notice issued u/s 148 is not illegal and bad in law. Therefore, it is very clear that the notice issued u/s 148 is Therefore, it is very clear that the notice issued u/s 148 is Therefore, it is very clear that the notice issued u/s 148 is issued as per Income issued as per Income Tax Act, 1961 and the same is within Tax Act, 1961 and the same is within the jurisdiction, the objection raised by you in this regard is the jurisdiction, the objection raised by you in this regard is the jurisdiction, the objection raised by you in this regard is not correct and hereby rejected. The decision relied upon by not correct and hereby rejected. The decision relied upon by not correct and hereby rejected. The decision relied upon by you has also been perused, however, it is noticed that the you has also been perused, however, it is noticed that the you has also been perused, however, it is noticed that the facts of the case are different th facts of the case are different than your case.

4. Reopening of assessment in the above case is perfectly 4. Reopening of assessment in the above case is perfectly 4. Reopening of assessment in the above case is perfectly justified in view of justified in view of following decisions: i) Hon'ble Supreme Court in the case of Sri Krishna Pvt. Ltd (87 i) Hon'ble Supreme Court in the case of Sri Krishna Pvt. Ltd (87 i) Hon'ble Supreme Court in the case of Sri Krishna Pvt. Ltd (87 Taxman 315) has held that even in respect of an issue Taxman 315) has held that even in respect of an issue Taxman 315) has held that even in respect of an issue accepted u/s 143(3), pr accepted u/s 143(3), proceedings U/s 147 can be initiated. oceedings U/s 147 can be initiated. The enquiry at the stage of examining the validity of a The enquiry at the stage of examining the validity of a The enquiry at the stage of examining the validity of a reassessment notice is only to see whether there are reassessment notice is only to see whether there are reassessment notice is only to see whether there are reasonable grounds for the Assessing Officer and not whether reasonable grounds for the Assessing Officer and not whether reasonable grounds for the Assessing Officer and not whether the omission/ failure and the escapement of income the omission/ failure and the escapement of income the omission/ failure and the escapement of income is established. It is necessary to keep this distinction in mind. established. It is necessary to keep this distinction in mind. established. It is necessary to keep this distinction in mind. ii) Hon'ble Bombay High Court in the case of Yuvraj Vs. Union ii) Hon'ble Bombay High Court in the case of Yuvraj Vs. Union ii) Hon'ble Bombay High Court in the case of Yuvraj Vs. Union of India & Anr. (2009) of India & Anr. (2009) 315 ITR 84 has held that reassessment 315 ITR 84 has held that reassessment to be valid in this case. While passing the assessment order to be valid in this case. While passing the assessment order to be valid in this case. While passing the assessment order the Asstt. CIT merely noted that the assessee has sold her sstt. CIT merely noted that the assessee has sold her sstt. CIT merely noted that the assessee has sold her right to purchase an open plot and computed the total income right to purchase an open plot and computed the total income right to purchase an open plot and computed the total income as per the chart mentioned in the order. There was no as per the chart mentioned in the order. There was no as per the chart mentioned in the order. There was no application of mind on the part of the Asstt. CIT to the facts of application of mind on the part of the Asstt. CIT to the facts of application of mind on the part of the Asstt. CIT to the facts of the case and the issu the case and the issue involved. The issue relating to assess e involved. The issue relating to assess ability of capital gain or casual income was not addressed. ability of capital gain or casual income was not addressed. ability of capital gain or casual income was not addressed. Thus, AO was justified in issuing the impugned notice under s. Thus, AO was justified in issuing the impugned notice under s. Thus, AO was justified in issuing the impugned notice under s. 148. He had applied his mind for issuing the notice. It was not 148. He had applied his mind for issuing the notice. It was not 148. He had applied his mind for issuing the notice. It was not a case of mere change of opi a case of mere change of opinion. iii) Hon'ble Bombay High Court in the case of Multi screen ) Hon'ble Bombay High Court in the case of Multi screen ) Hon'ble Bombay High Court in the case of Multi screen Media (P) Ltd. Vs. Union of India & Anr. (2010) 324 /TR 54 has Media (P) Ltd. Vs. Union of India & Anr. (2010) 324 /TR 54 has Media (P) Ltd. Vs. Union of India & Anr. (2010) 324 /TR 54 has held that when the Court is concerned with a challenge to a held that when the Court is concerned with a challenge to a held that when the Court is concerned with a challenge to a notice under s. 148, the issue is not as to whether it can be notice under s. 148, the issue is not as to whether it can be notice under s. 148, the issue is not as to whether it can be conclusively demonstrated that the income had escaped sively demonstrated that the income had escaped sively demonstrated that the income had escaped assessment, but whether as a matter of fact, there was a assessment, but whether as a matter of fact, there was a assessment, but whether as a matter of fact, there was a reason to believe to justify recourse to exercise of power under reason to believe to justify recourse to exercise of power under reason to believe to justify recourse to exercise of power under s. 147. In the instant case, the AO has concrete material on s. 147. In the instant case, the AO has concrete material on s. 147. In the instant case, the AO has concrete material on record to reasons to beli record to reasons to believe that the income has escaped eve that the income has escaped assessment to that extent. Recourse to the provisions of s. 147 assessment to that extent. Recourse to the provisions of s. 147 assessment to that extent. Recourse to the provisions of s. 147 was taken on the ground that Investigation Wing has was taken on the ground that Investigation Wing has was taken on the ground that Investigation Wing has conducted search operation and during the said operation conducted search operation and during the said operation conducted search operation and during the said operation material gathered has been admitted on oath by the material gathered has been admitted on oath by the party and party and the same has been established. The, AO did have tangible the same has been established. The, AO did have tangible the same has been established. The, AO did have tangible material to reopen the assessment under 5 147. Where though material to reopen the assessment under 5 147. Where though material to reopen the assessment under 5 147. Where though assessment has been made, income chargeable to tax is assessment has been made, income chargeable to tax is assessment has been made, income chargeable to tax is under-assessed, the law deems that income chargeable to tax assessed, the law deems that income chargeable to tax assessed, the law deems that income chargeable to tax has escaped ass has escaped assessment. Therefore, recourse to the provisions essment. Therefore, recourse to the provisions of s. 147 was valid. s. 147 was valid. 4.2 Further, the quality of the reason recorded is not to be 4.2 Further, the quality of the reason recorded is not to be 4.2 Further, the quality of the reason recorded is not to be questioned or analyzed by the assessee in the guise of such questioned or analyzed by the assessee in the guise of such questioned or analyzed by the assessee in the guise of such Rajnish Bharti HUF 24 & 3941, 4378 & & 3941 4377/MUM/2023 an objection. The very jurisdiction under sec 147 of the Act is an objection. The very jurisdiction under sec 147 of the Act is an objection. The very jurisdiction under sec 147 of the Act is open for challenge by the assessee in the regular appellate n for challenge by the assessee in the regular appellate n for challenge by the assessee in the regular appellate channels. Therefore, the assessee's present objection seeking Therefore, the assessee's present objection seeking Therefore, the assessee's present objection seeking a judicial review of the issue which is yet to hatch through the a judicial review of the issue which is yet to hatch through the a judicial review of the issue which is yet to hatch through the re-assessment proceedings, cannot be accepted. I may refer to assessment proceedings, cannot be accepted. I may refer to assessment proceedings, cannot be accepted. I may refer to the following decisions of the Hon. Supreme Court in regard to ing decisions of the Hon. Supreme Court in regard to ing decisions of the Hon. Supreme Court in regard to the point at issue as under: the point at issue as under: a. In Chhugmal Raj Pal v. SP Chaliha &Ors (1971) 79 ITR 603 a. In Chhugmal Raj Pal v. SP Chaliha &Ors (1971) 79 ITR 603 a. In Chhugmal Raj Pal v. SP Chaliha &Ors (1971) 79 ITR 603 (SC), which was decided against the Revenue, the Apex Court (SC), which was decided against the Revenue, the Apex Court (SC), which was decided against the Revenue, the Apex Court has held that "AO must give reasons has held that "AO must give reasons for issuing a notice under for issuing a notice under section 148. In other words, AO must have some prima facie section 148. In other words, AO must have some prima facie section 148. In other words, AO must have some prima facie grounds before him for taking recourse action under section grounds before him for taking recourse action under section grounds before him for taking recourse action under section 148." b. In ITO v. Selected Daluv Band Coal Co. (P) Ltd. (1996) 217 b. In ITO v. Selected Daluv Band Coal Co. (P) Ltd. (1996) 217 b. In ITO v. Selected Daluv Band Coal Co. (P) Ltd. (1996) 217 ITR 597 (SC), the Apex Court observed that at the stage of ITR 597 (SC), the Apex Court observed that at the stage of ITR 597 (SC), the Apex Court observed that at the stage of issuance of notice under section 148, the only question is ssuance of notice under section 148, the only question is ssuance of notice under section 148, the only question is whether there was relevant material, on which a reasonable whether there was relevant material, on which a reasonable whether there was relevant material, on which a reasonable person could have formed the requisite belief. person could have formed the requisite belief. c. Again, in Raymond Woolen Mills Ltd. v. ITO &Ors (1999) 236 c. Again, in Raymond Woolen Mills Ltd. v. ITO &Ors (1999) 236 c. Again, in Raymond Woolen Mills Ltd. v. ITO &Ors (1999) 236 ITR 34 (SC), the Apex Court wh ITR 34 (SC), the Apex Court while refusing to interfere with the ile refusing to interfere with the reassessment proceedings, observed reassessment proceedings, observed "we have only to see "we have only to see whether there was prima facie some material on the basis of whether there was prima facie some material on the basis of whether there was prima facie some material on the basis of which the department could reopen the case." which the department could reopen the case." It is evident that income of the assessee has escaped It is evident that income of the assessee has escaped It is evident that income of the assessee has escaped assessment and the assessment and the A. O. was perfectly justified in reopening A. O. was perfectly justified in reopening the assessment. the assessment.

5. In the light of discussion in foregoing paragraphs, your 5. In the light of discussion in foregoing paragraphs, your 5. In the light of discussion in foregoing paragraphs, your objection in respect of the proceedings objection in respect of the proceedings-initiated u/s 148 is initiated u/s 148 is hereby rejected and there is no question of dropping hereby rejected and there is no question of dropping hereby rejected and there is no question of dropping proceedings-initiated u/s 148. Therefore, the application filed initiated u/s 148. Therefore, the application filed initiated u/s 148. Therefore, the application filed by M/s Jain Ambavat& Associates, CA stands disposed off by M/s Jain Ambavat& Associates, CA stands disposed off by M/s Jain Ambavat& Associates, CA stands disposed off 6 In view of the discussion above, you are hereby requested to 6 In view of the discussion above, you are hereby requested to 6 In view of the discussion above, you are hereby requested to comply with the proceedings comply with the proceedings-initiated u/s 147. Your case fixed initiated u/s 147. Your case fixed for hearing on for hearing on 28.11.2016 at 10.30 A.M. before the A.M. before the undersigned and produce the details called for. Please undersigned and produce the details called for. Please undersigned and produce the details called for. Please produce the details called for as per Annexure to this notice." produce the details called for as per Annexure to this notice." produce the details called for as per Annexure to this notice." 6.2.5 Taking into account the fact that the objections raised 6.2.5 Taking into account the fact that the objections raised 6.2.5 Taking into account the fact that the objections raised u/s 148 of the Act were of the Act were disposed. The AO had followed the AO had followed the due procedure as set out in the order of GKN Driveshaft. due procedure as set out in the order of GKN Driveshaft. due procedure as set out in the order of GKN Driveshaft. The order disposing objections u/s 148 of the Act was also sent to order disposing objections u/s 148 of the Act was also sent to order disposing objections u/s 148 of the Act was also sent to Rajnish Bharti HUF 25 & 3941, 4378 & & 3941 4377/MUM/2023 the appellant by the AO at the last known postal address of the appellant by the AO at the last known postal address of the appellant by the AO at the last known postal address of the appellant. Therefore, the subsequent assessment the appellant. Therefore, the subsequent assessment the appellant. Therefore, the subsequent assessment u/s 143(3) r.w.s 147 of the Act is a valid assessment in pursuance 143(3) r.w.s 147 of the Act is a valid assessment in pursuance 143(3) r.w.s 147 of the Act is a valid assessment in pursuance of a valid notice u/s 148 of the Act, after disposing the of a valid notice u/s 148 of the Act, after disposing the of a valid notice u/s 148 of the Act, after disposing the objections raised by the appellant. Therefore, the ground objections raised by the appellant. Therefore, the ground objections raised by the appellant. Therefore, the ground relating to the legal validity of the impugned assessment order relating to the legal validity of the impugned assessment order relating to the legal validity of the impugned assessment order is accordingly dismissed. ingly dismissed.” 6.3 Further, the Ld. CIT(A) upheld that the Assessing Officer has Further, the Ld. CIT(A) upheld that the Assessing Officer has Further, the Ld. CIT(A) upheld that the Assessing Officer has followed due procedure as set out in the case of G.K. Drivesaft due procedure as set out in the case of G.K. Drivesaft due procedure as set out in the case of G.K. Drivesaft (supra), and served said and served said order at the last known address of the order at the last known address of the assessee. Before us the ld Counsel stated . Before us the ld Counsel stated that a separate order was that a separate order was not issued for disposing objections and objections were casually not issued for disposing objections and objections were casually not issued for disposing objections and objections were casually removed. The ld counsel relied on decision of Hon’ble Bombay High The ld counsel relied on decision of Hon’ble Bombay High The ld counsel relied on decision of Hon’ble Bombay High Court in the case of Asian Paints Court in the case of Asian Paints ltd vs DCIT reported in 296 ITR ltd vs DCIT reported in 296 ITR 90 (Bom) but facts of said case 90 (Bom) but facts of said case are different. In that case the are different. In that case the assessee raised objections well in time but the AO disposed the assessee raised objections well in time but the AO disposed the assessee raised objections well in time but the AO disposed the objections just before completion of assessment. But in instant objections just before completion of assessment. But in instant objections just before completion of assessment. But in instant case, the assessee raised objections at the fag end of expiry of case, the assessee raised objections at the fag end of expiry of case, the assessee raised objections at the fag end of expiry of limitation for completing asses limitation for completing assessment but the AO disposed the sment but the AO disposed the objections on same date. The objections on same date. The AO has disposed objections by way of disposed objections by way of detailed order, a copy of which has been reproduced by us in order, a copy of which has been reproduced by us in order, a copy of which has been reproduced by us in preceding paras, hence the contention of ld counsel hence the contention of ld counsel that no hence the contention of ld counsel separate order was passed by the AO, was passed by the AO, are baseless and devoid of re baseless and devoid of merit.

6.4 Further, the ld counsel argued that tangible material on the Further, the ld counsel argued that tangible material on the Further, the ld counsel argued that tangible material on the basis of which reasons were recorded was not provided. Firstly, basis of which reasons were recorded was not provided. First basis of which reasons were recorded was not provided. First before us the ld counsel us the ld counsel has not referred to to any document Rajnish Bharti HUF 26 & 3941, 4378 & & 3941 4377/MUM/2023 evidencing that any such request any such request was made by the assessee. was made by the assessee. Secondly, when no return of income was filed by the assessee, then Secondly, when no return of income was filed by the assessee, then Secondly, when no return of income was filed by the assessee, then it is the assessee who has not followed the procedure provided in it is the assessee who has not followed the procedure pr it is the assessee who has not followed the procedure pr GKN Drishaft (supra). I GKN Drishaft (supra). In such circumstances, the AO was not n such circumstances, the AO was not obliged to provide material relied fo obliged to provide material relied for reopening the assessment. r reopening the assessment. Before us, the Ld. counsel for the assessee Before us, the Ld. counsel for the assessee further further repeated the arguments that objections arguments that objections were not disposed off properly. In our properly. In our opinion, the requirement of the law is of the disposal of the opinion, the requirement of the law is of the disposal of the opinion, the requirement of the law is of the disposal of the objection and whether it is objection and whether it is it is proper or not proper is very roper or not proper is very subjective issue. The Ld. counsel has not been able to substantiate . The Ld. counsel has not been able to substantiate . The Ld. counsel has not been able to substantiate as how the order for disposal was not proper. as how the order for disposal was not proper. Thus, accordingly Thus, accordingly, we reject the contention of the Ld. counsel of the assessee. the contention of the Ld. counsel of the assessee. The ground the contention of the Ld. counsel of the assessee. No. 3 of the appeal of No. 3 of the appeal of the assessee is accordingly dismissed. the assessee is accordingly dismissed.

In ground No. 2, the assessee has challenged validity of the In ground No. 2, the assessee has challenged validity of the In ground No. 2, the assessee has challenged validity of the reassessment as there was no reason to believe that income had reassessment as there was no reason to believe that income had reassessment as there was no reason to believe that income had escaped assessment. escaped assessment. The Ld. counsel for the assessee assailed the he Ld. counsel for the assessee assailed the reassessment proceedin reassessment proceedings, firstly, on the ground that reopening on the ground that reopening was made for making fishing or a roving inquiry. The Ld. counsel was made for making fishing or a roving inquiry. The Ld. counsel was made for making fishing or a roving inquiry. The Ld. counsel has referred to the sentence in the reasons recorded ‘that the source has referred to the sentence in the reasons recorded ‘ has referred to the sentence in the reasons recorded ‘ of the credit/deposit at Rs.2,30,04,247/ of the credit/deposit at Rs.2,30,04,247/- remains unexplained and remains unexplained and verification. In support thereof, the Ld. counsel for the the Ld. counsel for the thus requires verification assessee relied on the decision of the Hon assessee relied on the decision of the Hon’ble Supreme Court in the ’ble Supreme Court in the case of PCIT v. Manzil Dinesh Kumar Shah, Special Leave Petition PCIT v. Manzil Dinesh Kumar Shah, Special Leave Petition PCIT v. Manzil Dinesh Kumar Shah, Special Leave Petition (Civil) Diary No. 45862/2018 (Civil) Diary No. 45862/2018. However, we find that this claim of . However, we find that this claim of Rajnish Bharti HUF 27 & 3941, 4378 & & 3941 4377/MUM/2023 the assessee of carrying out roving/fishing inquiry by the AO has the assessee of carrying out roving/fishing inquiry by the AO has the assessee of carrying out roving/fishing inquiry by the AO has been rejected by the Ld. CIT(A) observing as under: been rejected by the Ld. CIT(A) observing as under:

“6.2.7 The submission of the appellant is perused. The above 6.2.7 The submission of the appellant is perused. The above 6.2.7 The submission of the appellant is perused. The above order of the Hon'ble ITAT in of the Hon'ble ITAT in in 5826/Mum/2016is in relation to the assessee Rajnish Chimanlal Bharti relation to the assessee Rajnish Chimanlal Bharti relation to the assessee Rajnish Chimanlal Bharti-PAN- AABPB6150F AABPB6150F-A.Y. 2009-10, while the present appeal is in 10, while the present appeal is in case of Rajnish Bharti case of Rajnish Bharti-HUF-AAEHR6595K-A.Y.-2009- 2009-10. The above fact is only brought in to just differentiate that they are above fact is only brought in to just differentiate that they are above fact is only brought in to just differentiate that they are two different assessees. However, it is necessary to examine different assessees. However, it is necessary to examine different assessees. However, it is necessary to examine the reasons recorded for the A.Y. 2009 the reasons recorded for the A.Y. 2009-10 in ITA No. 10 in ITA No. 5826/Mum/2016which has been the subject matter of 5826/Mum/2016which has been the subject matter of 5826/Mum/2016which has been the subject matter of adjudication before the Hon'ble ITAT with the reason recorded adjudication before the Hon'ble ITAT with the reason recorded adjudication before the Hon'ble ITAT with the reason recorded for the impugned A.Y. in the case for the impugned A.Y. in the case of assessee. The Hon'ble of assessee. The Hon'ble ITAT in the above order noted that reason to believe are to ITAT in the above order noted that reason to believe are to ITAT in the above order noted that reason to believe are to read as they are recorded by the AO, no substitution or read as they are recorded by the AO, no substitution or read as they are recorded by the AO, no substitution or alteration is permissible [Hindustan Lever Ltd. 268 ITR 332]. alteration is permissible [Hindustan Lever Ltd. 268 ITR 332]. alteration is permissible [Hindustan Lever Ltd. 268 ITR 332]. The reasons for the recorded by the AO are a part of The reasons for the recorded by the AO are a part of Para 5 of Para 5 of the Hon'ble ITATin Para 6.2.6 above. However, for brevity the the Hon'ble ITATin Para 6.2.6 above. However, for brevity the the Hon'ble ITATin Para 6.2.6 above. However, for brevity the same is reproduced below: same is reproduced below: "An information received from the office of the DGIT(INV) "An information received from the office of the DGIT(INV) "An information received from the office of the DGIT(INV) regarding bogus claim of expenses of Rs. 6, 16,79, 235/ regarding bogus claim of expenses of Rs. 6, 16,79, 235/ regarding bogus claim of expenses of Rs. 6, 16,79, 235/- by the assessee form various parties. I hav the assessee form various parties. I have therefore, reason to e therefore, reason to believe that income chargeable to tax of Rs.6, 16,79, 235/ believe that income chargeable to tax of Rs.6, 16,79, 235/ believe that income chargeable to tax of Rs.6, 16,79, 235/- for the A. Y.2009 the A. Y.2009-10 has escaped assessment in this assessee's 10 has escaped assessment in this assessee's case within the meaning of the provisions of section 147 of the case within the meaning of the provisions of section 147 of the case within the meaning of the provisions of section 147 of the Act dated on 27.11.2011. Notice u/s 148 issued Act dated on 27.11.2011. Notice u/s 148 issued" 6.2.8 It is in the light of the above the reasons recorded by the 6.2.8 It is in the light of the above the reasons recorded by the 6.2.8 It is in the light of the above the reasons recorded by the AO in the impugned A.Y. AO in the impugned A.Y. Now this reason is compared with the Now this reason is compared with the reasons recorded by the AO in the impugned A.Y. for initiating reasons recorded by the AO in the impugned A.Y. for initiating reasons recorded by the AO in the impugned A.Y. for initiating proceeding u/s 147 of the Act. The reasons recorded by the proceeding u/s 147 of the Act. The reasons recorded by the proceeding u/s 147 of the Act. The reasons recorded by the AO is reproduced above in Para 6.2.2. The reasons recorded reproduced above in Para 6.2.2. The reasons recorded reproduced above in Para 6.2.2. The reasons recorded by the AO is detailed one. In Para 1 of the reasons the AO by the AO is detailed one. In Para 1 of the reasons the AO by the AO is detailed one. In Para 1 of the reasons the AO mentions the source and basis pf information i.e., Sales Tax mentions the source and basis pf information i.e., Sales Tax mentions the source and basis pf information i.e., Sales Tax Department through DGIT (Inv) about the bogus hawala Department through DGIT (Inv) about the bogus hawala Department through DGIT (Inv) about the bogus hawala purchases by the assessee. Fu purchases by the assessee. Further, in Para 3 of the reasons rther, in Para 3 of the reasons the AO mentions the credits/ deposits into various bank the AO mentions the credits/ deposits into various bank the AO mentions the credits/ deposits into various bank accounts and summons were issued u/s 131 of the Act for accounts and summons were issued u/s 131 of the Act for accounts and summons were issued u/s 131 of the Act for making an enquiry about the source and genuineness of the making an enquiry about the source and genuineness of the making an enquiry about the source and genuineness of the deposits. The AO categorically mentions that the enqui deposits. The AO categorically mentions that the enqui deposits. The AO categorically mentions that the enquiry was indicative and not exhaustive which require examination and indicative and not exhaustive which require examination and indicative and not exhaustive which require examination and verification, and that the assessee has not fully verification, and that the assessee has not fully and truly and truly disclosed all the material facts a deeper examination is disclosed all the material facts a deeper examination is disclosed all the material facts a deeper examination is Rajnish Bharti HUF 28 & 3941, 4378 & ITA Nos. 3912 & 3941 4377/MUM/2023 necessary and only after that the AO came to a primary necessary and only after that the AO came to a primary necessary and only after that the AO came to a primary conclusion that i conclusion that income of Rs. 195299579/- has escaped has escaped assessment which requires issuance of notice u/s 148 of the assessment which requires issuance of notice u/s 148 of the assessment which requires issuance of notice u/s 148 of the Act. A comparative analysis of the reasons recorded by the AO Act. A comparative analysis of the reasons recorded by the AO Act. A comparative analysis of the reasons recorded by the AO in the impugned A.Y. under litigation and the reason recorded in the impugned A.Y. under litigation and the reason recorded in the impugned A.Y. under litigation and the reason recorded by the AO adjudicated by the Hon'bl by the AO adjudicated by the Hon'ble ITAT in ITAT in I.T.A. No. 5826/Mum/2016, there is discernible difference and effort 5826/Mum/2016, there is discernible difference and effort 5826/Mum/2016, there is discernible difference and effort made by the AO i.e., to move beyond the information provided made by the AO i.e., to move beyond the information provided made by the AO i.e., to move beyond the information provided by the DGIT (Inv), to arrive at some sort of primary conclusion by the DGIT (Inv), to arrive at some sort of primary conclusion by the DGIT (Inv), to arrive at some sort of primary conclusion that there is an escapement of income. that there is an escapement of income. 6.2.9 The abo 6.2.9 The above discussion is further analyzed in the light of ve discussion is further analyzed in the light of some of the judicial rulings mentioned below: some of the judicial rulings mentioned below:

1. In the case of Eureka Stock and Share Broking Services Ltd. Vs CIT, [2017] 82 taxmann.com 10 (SC)/[2017] 248 Taxman Vs CIT, [2017] 82 taxmann.com 10 (SC)/[2017] 248 Taxman Vs CIT, [2017] 82 taxmann.com 10 (SC)/[2017] 248 Taxman 81 (SC), the Hon'ble Supreme Court has up 81 (SC), the Hon'ble Supreme Court has upheld the order of the held the order of the Hon'ble High Court. The relevant portion is reproduced below: Hon'ble High Court. The relevant portion is reproduced below: Hon'ble High Court. The relevant portion is reproduced below: "16. The last judgment, in the case of Kelvinator of India Ltd. "16. The last judgment, in the case of Kelvinator of India Ltd. "16. The last judgment, in the case of Kelvinator of India Ltd. (supra), the question for consideration was whether the (supra), the question for consideration was whether the (supra), the question for consideration was whether the concept of change of opinion stood obliterated with concept of change of opinion stood obliterated with effect from effect from April 1, 1989 after substitution of section 147 of the Income April 1, 1989 after substitution of section 147 of the Income April 1, 1989 after substitution of section 147 of the Income Tax Act, 1961 by the Direct Tax Laws (Amendment) Act, 1987. Act, 1961 by the Direct Tax Laws (Amendment) Act, 1987. Act, 1961 by the Direct Tax Laws (Amendment) Act, 1987. That question was answered in the negative by the Apex That question was answered in the negative by the Apex That question was answered in the negative by the Apex Court. Far from helping the assessee, the judgment, in our Court. Far from helping the assessee, the judgment, in our Court. Far from helping the assessee, the judgment, in our view, militates against him. Their Lordships held, litates against him. Their Lordships held, "Hence, April, 1989, the Assessing Officer has power to reopen, April, 1989, the Assessing Officer has power to reopen, April, 1989, the Assessing Officer has power to reopen, provided there is "tangible material" to come to the conclusion provided there is "tangible material" to come to the conclusion provided there is "tangible material" to come to the conclusion that there is escapement of income from assessment. Reasons that there is escapement of income from assessment. Reasons that there is escapement of income from assessment. Reasons must have a live link wit must have a live link with the formation of the belief."

4. 4. Vasudev Vasudev Vasudev Fatandas Fatandas Fatandas Vaswani Vaswani Vaswani Vs Vs Vs ITOGujarat ITOGujarat ITOGujarat High High High Court2018-TIOL TIOL-2305-HC-AHM-ITheld ITheld that that when when issuing issuing notice for re-opening assessment, the opening assessment, the AO is only required to AO is only required to show reasonable belief that income escaped assessment & is show reasonable belief that income escaped assessment & is show reasonable belief that income escaped assessment & is not required to establish the same beyond reasonable doubt; not required to establish the same beyond reasonable doubt; not required to establish the same beyond reasonable doubt; 5. Gujarat Ambuja Exports Ltd. Vs DCITGujarat High Court86 5. Gujarat Ambuja Exports Ltd. Vs DCITGujarat High Court86 5. Gujarat Ambuja Exports Ltd. Vs DCITGujarat High Court86 taxmann.com 69 held that where purchases made by taxmann.com 69 held that where purchases made by taxmann.com 69 held that where purchases made by assessee from a proprietary concern were bogus and entries see from a proprietary concern were bogus and entries see from a proprietary concern were bogus and entries were in nature of accommodation entries, merely because were in nature of accommodation entries, merely because were in nature of accommodation entries, merely because assessee had disclosed such entries in return filed and also assessee had disclosed such entries in return filed and also assessee had disclosed such entries in return filed and also showed such purchases in books of accounts would hardly be showed such purchases in books of accounts would hardly be showed such purchases in books of accounts would hardly be sufficient to advance argu sufficient to advance arguments of full and true disclosure by ments of full and true disclosure by assessee. 6.2.10 After careful consideration of the facts and laws as 6.2.10 After careful consideration of the facts and laws as 6.2.10 After careful consideration of the facts and laws as discussed above it is apparent the facts of the case are discussed above it is apparent the facts of the case are discussed above it is apparent the facts of the case are distinguishable from the facts of the case adjudicated by the distinguishable from the facts of the case adjudicated by the distinguishable from the facts of the case adjudicated by the Hon'ble ITAT in ITAT in I.T.A. No. 5826/Mum/2016. Therefore, the 6/Mum/2016. Therefore, the appellant fails to get its cover. Hence, the grounds of appeal of appellant fails to get its cover. Hence, the grounds of appeal of appellant fails to get its cover. Hence, the grounds of appeal of the appellant with regard to validity of notice issued uls 148 of the appellant with regard to validity of notice issued uls 148 of the appellant with regard to validity of notice issued uls 148 of the Act, the service of the notice, the validity of the reasons the Act, the service of the notice, the validity of the reasons the Act, the service of the notice, the validity of the reasons recorded and the subsequent reass recorded and the subsequent reassessment u/s 143(3) r.w.s essment u/s 143(3) r.w.s 147 of the Act are dismissed in light of the discussion in 147 of the Act are dismissed in light of the discussion in 147 of the Act are dismissed in light of the discussion in foregoing paras. foregoing paras.” 7.1 In view of the above observation of the Ld. CIT(A), it is evident In view of the above observation of the Ld. CIT(A), it is evident In view of the above observation of the Ld. CIT(A), it is evident that for verification of the credit/deposits into various bank that for verification of the credit/deposits into various bank that for verification of the credit/deposits into various bank accounts summons u/s 131 of the Act were not issued not issued to the assessee but same were not complied and the Assessing Officer has same were not complied and the Assessing Officer has same were not complied and the Assessing Officer has mentioned that the inquiry was not vindictive and not exhaustive mentioned that the inquiry was not vindictive and not exhaustive mentioned that the inquiry was not vindictive and not exhaustive and therefore, credits remain unexplained till verification. In our and therefore, credits remain unexplained till verification. In our and therefore, credits remain unexplained till verification. In our opinion, reopening has not been carried out for fishing inquiry but ning has not been carried out for fishing inquiry but ning has not been carried out for fishing inquiry but it was based on information gathered by the Investigation Wing. it was based on information gathered by the Investigation Wing. it was based on information gathered by the Investigation Wing. Secondly, the Ld. counsel assailed the reassessment proceedings , the Ld. counsel assailed the reassessment proceedings , the Ld. counsel assailed the reassessment proceedings on the ground that reopening was on the on the ground that reopening was on the ‘borrowed borrowed satisfaction’ as the Ld. AO has only relied on the relied on the information provided by the DGIT information provided by the DGIT- Rajnish Bharti HUF 30 & 3941, 4378 & & 3941 4377/MUM/2023 Investigation, who in turn received the information from the Sales , who in turn received the information from the Sales , who in turn received the information from the Sales Tax Department, without independently verifying the same. With without independently verifying the same. With without independently verifying the same. With reference to the above arguments of the Ld. counsel for the reference to the above arguments of the Ld. counsel for the reference to the above arguments of the Ld. counsel for the assessee, we are of the view that while recording reasons to believe we are of the view that while recording reasons to believe we are of the view that while recording reasons to believe, the Assessing Officer has to keep the Assessing Officer has to keep in mind that the material or information in his possession, in his possession, is relevant to the case is relevant to the case in hand and material should be should be such that a reasonable person can make a reasonable person can make requisite believe that income escaped. Thus requirement of the law isite believe that income escaped. Thus requirement of the law isite believe that income escaped. Thus requirement of the law is that the Assessing Officer h is that the Assessing Officer has to form a requisite belief a requisite belief on the basis of information that income escaped assessment and during basis of information that income escaped assessment and basis of information that income escaped assessment and relevant period there there was no requirement for independent no requirement for independent verification by the AO by the AO from the assessee as under the law during the assessee as under the law during relevant time the Assessing Officer was not authorized to make he Assessing Officer was not authorized to make he Assessing Officer was not authorized to make inquiry from the assessee unless, assessment proceedings is inquiry from the assessee unless, assessment proceedings is inquiry from the assessee unless, assessment proceedings is pending. Thus, contentions of the assessee are pending. Thus, contentions of the assessee are accordingly accordingly rejected.

Rajnish Bharti HUF 31 & 3941, 4378 & & 3941 4377/MUM/2023 7.3 Further, the Ld. counsel for the assessee submitted that the Further, the Ld. counsel for the assessee submitted that the Further, the Ld. counsel for the assessee submitted that the information provided by the Sales Tax Department was not reliable information provided by the Sales Tax Department was not reliable information provided by the Sales Tax Department was not reliable in view of the judgments of the Hon’ble Bombay High Court and in view of the judgments of the Hon’ble Bombay High Court and in view of the judgments of the Hon’ble Bombay High Court and there was no live link information given by the Sales Tax there was no live link information given by the Sales Tax there was no live link information given by the Sales Tax Department. In our opinion, these observations or arguments of the Department. In our opinion, these observations or arguments of the Department. In our opinion, these observations or arguments of the Ld. counsel for the asse Ld. counsel for the assessee are liable to be rejected in view of the ssee are liable to be rejected in view of the Hon’ble Supreme Court in the case of Raymond decision of Hon’ble Supreme Court in the case of Hon’ble Supreme Court in the case of Woolen Mills (1999) 236 ITR 34 (1999) 236 ITR 34 wherein it is it is held that ‘sufficiency’ or ‘correctness correctness’ of the material for reopening need not of the material for reopening need not be seen at the stage of recording reasons to believe. The information of recording reasons to believe. The information of recording reasons to believe. The information was in respect of parties from whom the assessee has shown was in respect of parties from whom the assessee has shown was in respect of parties from whom the assessee has shown purchases and therefore, the information of the material was purchases and therefore, the information of the material was purchases and therefore, the information of the material was relevant to the assessee and therefore, in view of the decision of the relevant to the assessee and therefore, in view of the decision of the relevant to the assessee and therefore, in view of the decision of the Hon’ble Supreme Court in the case of Court in the case of Rajesh Jhaveri Stock Broker Rajesh Jhaveri Stock Broker Pvt. Ltd. 291 ITR 500 291 ITR 500 reopening on the basis of relevant material is reopening on the basis of relevant material is valid reopening. The relevant part of the decision is reproduced as The relevant part of the decision is reproduced as The relevant part of the decision is reproduced as under:

16.

Section 147 authorises and permits the Assessing Officer 16. Section 147 authorises and permits the Assessing Officer to assess or 16. Section 147 authorises and permits the Assessing Officer reassess income chargeable to tax if he has reason to believe that income reassess income chargeable to tax if he has reason to believe that income reassess income chargeable to tax if he has reason to believe that income for any assessment year has escaped assessment. The word reason in for any assessment year has escaped assessment. The word reason in for any assessment year has escaped assessment. The word reason in the phrase reason to believewould mean cause or justification. If the the phrase reason to believewould mean cause or justification. If the the phrase reason to believewould mean cause or justification. If the Assessing Officer has cause or justification to know or suppose that Assessing Officer has cause or j ustification to know or suppose that income had escaped assessment, it can be said to have reason to believe income had escaped assessment, it can be said to have reason to believe income had escaped assessment, it can be said to have reason to believe that an income had escaped assessment. The expression cannot be read that an income had escaped assessment. The expression cannot be read that an income had escaped assessment. The expression cannot be read to mean that the Assessing Officer should have finally ascertained the to mean that the Assessing Officer should have finally ascertained the to mean that the Assessing Officer should have finally ascertained the Rajnish Bharti HUF 32 & 3941, 4378 & & 3941 4377/MUM/2023 fact by legal evidence or conclusion. The function of the Assessing Officer legal evidence or conclusion. The function of the Assessing Officer legal evidence or conclusion. The function of the Assessing Officer is to administer the statute with solicitude for the public exchequer with is to administer the statute with solicitude for the public exchequer with is to administer the statute with solicitude for the public exchequer with an inbuilt idea of fairness to taxpayers. As observed by the Delhi High an inbuilt idea of fairness to taxpayers. As observed by the Delhi High an inbuilt idea of fairness to taxpayers. As observed by the Delhi High Court in Central Provinces Manganese Ore Co. Ltd. v. ITO Central Provinces Manganese Ore Co. Ltd. v. ITO Central Provinces Manganese Ore Co. Ltd. v. ITO [1991 (191) ITR 662], for initiation of action under section 147(a) (as the provision ITR 662], for initiation of action under section 147(a) (as the provision ITR 662], for initiation of action under section 147(a) (as the provision stood at the relevant time) fulfillment of the two requisite conditions in stood at the relevant time) fulfillment of the two requisite conditions in stood at the relevant time) fulfillment of the two requisite conditions in that regard is essential. At that stage, the final outcome of the proceeding that regard is essential. At that stage, the final outcome of the proceeding that regard is essential. At that stage, the final outcome of the proceeding is not relevant. In other words, at the initiation stage, what is required is In other words, at the initiation stage, what is required is In other words, at the initiation stage, what is required is reason to believe, but not the established fact of escapement of income. reason to believe, but not the established fact of escapement of income. reason to believe, but not the established fact of escapement of income. At the stage of issue of notice, the only question is whether there At the stage of issue of notice, the only question is whether there At the stage of issue of notice, the only question is whether there was relevant material on which a reasonable person cou was relevant material on which a reasonable person could have was relevant material on which a reasonable person cou formed a requisite belief. Whether the materials would conclusively formed a requisite belief. Whether the materials would conclusively prove the escapement is not the concern at that stage. This is so because prove the escapement is not the concern at that stage. This is so because the formation of belief by the Assessing Officer is within the realm of the formation of belief by the Assessing Officer is within the realm of the formation of belief by the Assessing Officer is within the realm of subjective satisfaction. ( emphasis supplied externally) subjective satisfaction

In ground No. 4, the Ld. counsel for the assessee submitted In ground No. 4, the Ld. counsel for the assessee submitted In ground No. 4, the Ld. counsel for the assessee submitted that notice u/s 148 of the Act had been issued without any mention that notice u/s 148 of the Act had been issued without any mention that notice u/s 148 of the Act had been issued without any mention of the approval of the notice of the approval of the notice. However during the course of the owever during the course of the hearing before us, the Ld. DR filed a hearing before us, the Ld. DR filed a copy of the approval copy of the approval communicated communicated communicated vide vide vide letter letter letter dated dated dated 17/03/2016 17/03/2016 17/03/2016 of of of the the the ITO( ITO( ITO( headquarter) of the office of the approving authority. According to headquarter) of the office of the approving authority headquarter) of the office of the approving authority the documents filed before us, the Assessing Officer applied for the documents filed before us, the Assessing Officer applied for the documents filed before us, the Assessing Officer applied for approval on 14.03.2016 which has been granted on 17th March, approval on 14.03.2016 which has been granted on approval on 14.03.2016 which has been granted on 2016. Therefore, the argument of the Ld. counsel for the assessee 2016. Therefore, the argument of the Ld. counsel for the assessee 2016. Therefore, the argument of the Ld. counsel for the assessee that no sanction was obtained that no sanction was obtained is also without any basis. Further, also without any basis. Further, he alleged that reasons recor reasons recorded are dated 22.03.2016 ded are dated 22.03.2016, whereas Rajnish Bharti HUF 33 & 3941, 4378 & & 3941 4377/MUM/2023 sanctioned was obtained obtained on 17.03.2016. However on verification .03.2016. However on verification assessment record which was produced by the ld DR before the assessment record which was produced by the ld DR before the assessment record which was produced by the ld DR before the bench and the ld AR was also allowed for inspection, we find that bench and the ld AR was also allowed for inspection bench and the ld AR was also allowed for inspection reasons were recorded prior to 14.03.2016 and approval was sought reasons were recorded prior to 14.03.2016 and approval was sought reasons were recorded prior to 14.03.2016 and approval was sought by the appropriate authority by the appropriate authority which was granted on 17.03.2016 and which was granted on 17.03.2016 and thereafter notice has been issued on 22.03.2016. The Assessing thereafter notice has been issued on 22.03.2016. The Assessing thereafter notice has been issued on 22.03.2016. The Assessing Officer has only added the fact of issue of notice Officer has only added the fact of issue of notice u/s 148 of the Act u/s 148 of the Act in the reasons recorded on 22.03.2016. Therefore, the contention of in the reasons recorded on 22.03.2016. Therefore, the contention of in the reasons recorded on 22.03.2016. Therefore, the contention of the Ld. counsel that reasons were recorded after approval is without at reasons were recorded after approval is without at reasons were recorded after approval is without any basis and without without proper appreciation of the facts. Accordingly, proper appreciation of the facts. Accordingly, the contention challenging approval granted u/s 151 of the Act are the contention challenging approval granted u/s 151 of the Act are the contention challenging approval granted u/s 151 of the Act are accordingly rejected. accordingly rejected.

Name of the Party Amount of transaction (Rs.) Amount of transaction (Rs.) M/s. Appex Steel 2008-09 21166608/- M/s. Tara Enterprises M/s. Tara Enterprises 2008-09 15988608/- M/s. Shyam Corporarion M/s. Shyam Corporarion 2008-09 17555248/- M/s. Universal Enterprises Enterprises 2008-09 14144479/- M/s. G.S. Trading Co. M/s. G.S. Trading Co. 2008-09 9572004/- M/s. Shakti Enterprises M/s. Shakti Enterprises 2008-09 11319670/- M/s. Anikesh Trading P. Ltd. M/s. Anikesh Trading P. Ltd. 2008-09 9889921/- M/s. S. B. Metel Corporation. M/s. S. B. Metel Corporation. 2008-09 649032/- Rajnish Bharti HUF 34 & 3941, 4378 & & 3941 4377/MUM/2023 M/s. Sangura Trading P. Ltd. M/s. Sangura Trading P. Ltd 2008-09 25451306/- M/s. Sairam Trading M/s. Sairam Trading Corporation 2008-09 9020206/- M/s. Mahavir Enterprises M/s. Mahavir Enterprises 37538548/- Total 172295332/- 9.1 The assessee failed to file copy of the bills, transportation The assessee failed to file copy of the bills, transportation The assessee failed to file copy of the bills, transportation therefore, the Assessing Officer details, and stock register register etc, therefore, the Assessing Officer issued notice u/s 133(6) of the Act to the parties. However, the issued notice u/s 133(6) of the Act to the parties. However, the issued notice u/s 133(6) of the Act to the parties. However, the notices issued remained un notices issued remained un-complied and therefore, the Assessing complied and therefore, the Assessing Officer asked the assessee to Officer asked the assessee to produce all those parties for produce all those parties for verification. But the assessee fa verification. But the assessee failed in producing so iled in producing so. The assessee has also failed in substantiating transport with the help of has also failed in substantiating transport with the help of has also failed in substantiating transport with the help of transport receipt, lorry receipt, octroi receipt. In view of the non- transport receipt, lorry receipt, octroi receipt. In view of the non transport receipt, lorry receipt, octroi receipt. In view of the non production of the party particularly keeping in view their statement production of the party particularly keeping in view their statement production of the party particularly keeping in view their statement before Sales Tax Autho before Sales Tax Authorities of denying sales to the assessee, the rities of denying sales to the assessee, the assessee failed to discharge his burden of substantiating the assessee failed to discharge his burden of substantiating the assessee failed to discharge his burden of substantiating the purchases. Accordingly, the assessee applying ratio in the case of purchases. Accordingly, the assessee applying ratio in the case of purchases. Accordingly, the assessee applying ratio in the case of M/s Vijay Proteins M/s Vijay Proteins (supra) sustained 12.5% purchases of sustained 12.5% purchases of Rs.17,22,95,382/- which was worked out to Rs.2,13,66,916/ which was worked out to Rs.2,13,66,916/ which was worked out to Rs.2,13,66,916/- as undisclosed income u/s 69 of the Act. The Ld. CIT(A) also upheld undisclosed income u/s 69 of the Act. The Ld. CIT(A) also upheld undisclosed income u/s 69 of the Act. The Ld. CIT(A) also upheld the disallowance observing as under : the disallowance observing as under :

6. An appeal was preferred before the ITAT both by the 6. An appeal was preferred before the ITAT both by the 6. An appeal was preferred before the ITAT both by the assessee as also the revenue, which was finally decided by essee as also the revenue, which was finally decided by essee as also the revenue, which was finally decided by virtue of the order impugned dated 20th January, 2017, which virtue of the order impugned dated 20th January, 2017, which virtue of the order impugned dated 20th January, 2017, which is impugned in the present appeal. The Tribunal upheld the is impugned in the present appeal. The Tribunal upheld the is impugned in the present appeal. The Tribunal upheld the view of the CIT(A) to treat the purchases from ten parties as view of the CIT(A) to treat the purchases from ten parties as view of the CIT(A) to treat the purchases from ten parties as bogus and also uph bogus and also upheld the view expressed by the CIT(A) to eld the view expressed by the CIT(A) to sustain the addition to the extent of 12.5% of the amount of the sustain the addition to the extent of 12.5% of the amount of the sustain the addition to the extent of 12.5% of the amount of the disputed purchases relying upon the decision of Gujarat High disputed purchases relying upon the decision of Gujarat High disputed purchases relying upon the decision of Gujarat High Court in the case of CIT VS. Bholanath Poly Fab Pvt. Ltd. Court in the case of CIT VS. Bholanath Poly Fab Pvt. Ltd. Court in the case of CIT VS. Bholanath Poly Fab Pvt. Ltd. In a case involving a similar is In a case involving a similar issue, even this Court in Income sue, even this Court in Income Tax Appeal No. 398 of 2018 decided on 18th July, 2022, had Tax Appeal No. 398 of 2018 decided on 18th July, 2022, had Tax Appeal No. 398 of 2018 decided on 18th July, 2022, had dismissed the appeal filed by the revenue on the ground that dismissed the appeal filed by the revenue on the ground that dismissed the appeal filed by the revenue on the ground that the entire amount of purchases was to be held as non the entire amount of purchases was to be held as non the entire amount of purchases was to be held as non-genuine purchases, then it would not be possible to then it would not be possible to justify as to how the works allotted to the assessee for execution by the semi works allotted to the assessee for execution by the semi works allotted to the assessee for execution by the semi- Government Agencies, could be completed Government Agencies, could be completed 7. Even in the present case the Appellant is a contractor, who 7. Even in the present case the Appellant is a contractor, who 7. Even in the present case the Appellant is a contractor, who had been allotted a subcontract for carrying out civil works of had been allotted a subcontract for carrying out civil works of had been allotted a subcontract for carrying out civil works of road and buildings repairs for which various types of building buildings repairs for which various types of building buildings repairs for which various types of building materials are stated to have been purchased from several materials are stated to have been purchased from several materials are stated to have been purchased from several suppliers including the ten suppliers, who are alleged to have suppliers including the ten suppliers, who are alleged to have suppliers including the ten suppliers, who are alleged to have been providing accommodation entries. It is not denied that the been providing accommodation entries. It is not denied that the been providing accommodation entries. It is not denied that the works allotted had works allotted had been completed for the concerned agency, been completed for the concerned agency, which would have been otherwise impossible, if the entire which would have been otherwise impossible, if the entire which would have been otherwise impossible, if the entire purchases made by the Appellant were to be held as non purchases made by the Appellant were to be held as non purchases made by the Appellant were to be held as non- genuine.

Rajnish Bharti HUF 36 & 3941, 4378 & & 3941 4377/MUM/2023 In our opinion the order passed by the Tribunal warrants no In our opinion the order passed by the Tribunal warrants no In our opinion the order passed by the Tribunal warrants no interference. No substantial que interference. No substantial questions of law arise in the stions of law arise in the present appeal." present appeal." ii) The Mumbai High Court in the case of PCIT vs Batliboi ii) The Mumbai High Court in the case of PCIT vs Batliboi ii) The Mumbai High Court in the case of PCIT vs Batliboi Environmental Engineering Ltd./2022] 141 taxmann.com 245 Environmental Engineering Ltd./2022] 141 taxmann.com 245 Environmental Engineering Ltd./2022] 141 taxmann.com 245 (Bombay)dated 10.06.2022 had held as under: (Bombay)dated 10.06.2022 had held as under: "I Section 69C of the Income "I Section 69C of the Income-tax Act, 1961- Unexplain Unexplained expenditure (Bogus purchases) expenditure (Bogus purchases) - Assessment year 2011 Assessment year 2011-12 Assessing Officer treated purchases Assessing Officer treated purchases made by assessee us made by assessee us bogus purchases and disallowed in totality Commissioner bogus purchases and disallowed in totality Commissioner bogus purchases and disallowed in totality Commissioner (Appeals) directed Assessing Officer to disallow 12.5 per cent (Appeals) directed Assessing Officer to disallow 12.5 per cent (Appeals) directed Assessing Officer to disallow 12.5 per cent of bogus purchases and of bogus purchases and to add 12.5 per cent of amount of to add 12.5 per cent of amount of purchases to income of assessee purchases to income of assessee - Tribunal upheld view of Tribunal upheld view of Commissioner (Appeals) Commissioner (Appeals) - Revenue contended before High Revenue contended before High Court that bogus purchases ought to have been disallowed in Court that bogus purchases ought to have been disallowed in Court that bogus purchases ought to have been disallowed in totality- It was noted that if factum of sales h It was noted that if factum of sales had been accepted ad been accepted by department then even if it was established that there were by department then even if it was established that there were by department then even if it was established that there were bogus purchases, it was not necessary that entire amount of bogus purchases, it was not necessary that entire amount of bogus purchases, it was not necessary that entire amount of purchases should be added to income of assessee as there purchases should be added to income of assessee as there purchases should be added to income of assessee as there could not be a sale without purchase could not be a sale without purchase -In instant case sales In instant case sales effected by assessee had been accepted by department effected by assessee had been accepted by department effected by assessee had been accepted by department- Whether Whether Whether Tribunal Tribunal Tribunal was was was right right right in in in upholding upholding upholding view view view of of of Commissioner (Appeals) Commissioner (Appeals) - Held, yes [Para 41" (iii) The Mumbai High Court in the case of PCIT vs Ram (iii) The Mumbai High Court in the case of PCIT vs Ram (iii) The Mumbai High Court in the case of PCIT vs Ram Builders Builders [2023] [2023] 146 146 taxmann.com taxmann.com 447 447 (Bombay)dated (Bombay)dated 18.07.2022 had held as under .2022 had held as under "Section 68 of the Income "Section 68 of the Income-tax Act, 1961-Cash credit (non Cash credit (non- genuine purchases) genuine purchases) - Assessment year 2010-11-Assessee was Assessee was involved in execution of civil works involved in execution of civil works- It had shown purchases of It had shown purchases of construction material from twelve parties construction material from twelve parties-Assessing O Assessing Officer asked assessee to produce twelve parties asked assessee to produce twelve parties - As assessee failed As assessee failed to produce twelve parties for verification. Assessing Officer to produce twelve parties for verification. Assessing Officer to produce twelve parties for verification. Assessing Officer treated purchase bills as bogus and held entire purchases as treated purchase bills as bogus and held entire purchases as treated purchase bills as bogus and held entire purchases as non-genuine purchases and added amount to genuine purchases and added amount to income of income of assessee-Com Commissioner (Appeals) held that purchases per se missioner (Appeals) held that purchases per se were not in dispute but parties from whom purchases were were not in dispute but parties from whom purchases were were not in dispute but parties from whom purchases were shown to have been made were disputed only profit element shown to have been made were disputed only profit element shown to have been made were disputed only profit element on such purchases to be considered for addition He, thus, on such purchases to be considered for addition He, thus, on such purchases to be considered for addition He, thus, restricted addition by estimating pr restricted addition by estimating profit of 12.5 per cent on total ofit of 12.5 per cent on total purchases- Tribunal upheld order of Commissioner (Appeals) Tribunal upheld order of Commissioner (Appeals) - Tribunal upheld order of Commissioner (Appeals) It was noted that if entire purchases were to be held as non It was noted that if entire purchases were to be held as non It was noted that if entire purchases were to be held as non- genuine purchases then it would not be possible to justify as genuine purchases then it would not be possible to justify as genuine purchases then it would not be possible to justify as to how works allotted to assessee for exe to how works allotted to assessee for execution by semi cution by semi Rajnish Bharti HUF 37 & 3941, 4378 & ITA Nos. 3912 & 3941 4377/MUM/2023 Government Agencies could be completed Government Agencies could be completed-Whether order Whether order passed by Tribunal was legally valid warranting no passed by Tribunal was legally valid warranting no passed by Tribunal was legally valid warranting no interference - Held, yes [Paras 12 and 13]" (iv) The ITAT, Mumbai in the case DCIT vs DBM Geotechnics (iv) The ITAT, Mumbai in the case DCIT vs DBM Geotechnics (iv) The ITAT, Mumbai in the case DCIT vs DBM Geotechnics and Construction (P.) and Construction (P.) Ltd. [2022] 136 taxmann.com 345 36 taxmann.com 345 (Mumbai - Trib.) dated25.03.2022 had held as under: Trib.) dated25.03.2022 had held as under: "Section 69C of the Income "Section 69C of the Income-tax Act, 1961 - Unexplained Unexplained expenditure (Bogus purchases) expenditure (Bogus purchases) - Assessment year 2012 Assessment year 2012-13 - Whether where assessee's sales figures were not doubted, Whether where assessee's sales figures were not doubted, Whether where assessee's sales figures were not doubted, 100 per cent dis 100 per cent disallowance for bogus purchases was not allowance for bogus purchases was not justified by drawing adverse inference on his inability to justified by drawing adverse inference on his inability to justified by drawing adverse inference on his inability to produce produce suppliers-Held, suppliers yes-Purchases Purchases were were made made by by assessee from grey market assessee from grey market -Making purchases through grey Making purchases through grey market gave assessee savings on account of non market gave assessee savings on account of non-paym payment of tax at expenses of exchequer Whether in said circumstances, tax at expenses of exchequer Whether in said circumstances, tax at expenses of exchequer Whether in said circumstances, Commissioner (Appeals) Commissioner (Appeals) was justified in deleting 100 per cent was justified in deleting 100 per cent disallowance of purchases by Assessing Officer and limiting disallowance of purchases by Assessing Officer and limiting disallowance of purchases by Assessing Officer and limiting disallowance to 12.5 per cent out of bogus purchases disallowance to 12.5 per cent out of bogus purchases disallowance to 12.5 per cent out of bogus purchases - Held, yes (Para 4J"s ara 4J"s 6.3.3 The submission of the appellant is examined in the light The submission of the appellant is examined in the light The submission of the appellant is examined in the light of the above cited judicial decisions. The AO action of of the above cited judicial decisions. The AO action of of the above cited judicial decisions. The AO action of disallowing 12.5% of the purchases being bogus in view of the disallowing 12.5% of the purchases being bogus in view of the disallowing 12.5% of the purchases being bogus in view of the non-compliance e and no compliance e and no-genuinity and the report of the Sales genuinity and the report of the Sales Tax Department and the Investigation Wing report is judicious Department and the Investigation Wing report is judicious Department and the Investigation Wing report is judicious and as per law accordingly the addition of Rs. 21536916/ and as per law accordingly the addition of Rs. 21536916/ and as per law accordingly the addition of Rs. 21536916/- is upheld. The Ground of Appeal is dismissed. upheld. The Ground of Appeal is dismissed.” 9.2 We have heard rival submissions of the parties and perused We have heard rival submissions of the parties and perused We have heard rival submissions of the parties and perused the relevant materials on reco the relevant materials on record. Before us, also no evidence in , also no evidence in support of purchases including transportation of the goods purchases including transportation of the goods was purchases including transportation of the goods filed. As the assessee has shown purc s the assessee has shown purchases in its books of hases in its books of accounts, the onus is on the assessee to substantiate that he onus is on the assessee to substantiate that he onus is on the assessee to substantiate that purchases are genuine purchases are genuine. In view of failure on the part of the failure on the part of the assessee in discharging its onus, w assessee in discharging its onus, we do not find any infirmity in the e do not find any infirmity in the order of the Ld. CIT(A) on the issue in dispute. Accordingly, we order of the Ld. CIT(A) on the issue in dispute. Accordingly, we order of the Ld. CIT(A) on the issue in dispute. Accordingly, we Rajnish Bharti HUF 38 & 3941, 4378 & ITA Nos. 3912 & 3941 4377/MUM/2023 uphold the same. The ground No. 5 of the appeal of the assessee is uphold the same. The ground No. 5 of the appeal of the assessee is uphold the same. The ground No. 5 of the appeal of the assessee is accordingly dismissed. accordingly dismissed.

“6.4 The appellant in its ground of appeal no. 6 assailed the The appellant in its ground of appeal no. 6 assailed the The appellant in its ground of appeal no. 6 assailed the AO in making addition of Rs. 105584256/ AO in making addition of Rs. 105584256/-. The AO in Para 5 . The AO in Para 5 of the assessment order noted of the assessment order noted that assessee is having several that assessee is having several bank accounts. The AO issued notices to the assessee, bank accounts. The AO issued notices to the assessee, bank accounts. The AO issued notices to the assessee, however in the face of non however in the face of non-compliance the AO added the total compliance the AO added the total balance of Rs. 105584256/ balance of Rs. 105584256/- u/s 69A of the Act. The appellant u/s 69A of the Act. The appellant filed the copy of the bank statement and in its filed the copy of the bank statement and in its submission submission submitted submitted submitted that that that credits credits credits found found found in in in thevariousbankaccountsoftheappellantare transfer from one thevariousbankaccountsoftheappellantare transfer from one thevariousbankaccountsoftheappellantare transfer from one bank bank bank to to to other other other and and and addition addition addition on on on this this this account account account is is is arbitraryandperverse, asthe credits in one bank account were arbitraryandperverse, asthe credits in one bank account were arbitraryandperverse, asthe credits in one bank account were out of the withdrawals from anotherbank account out of the withdrawals from anotherbank account and these and these transactions transactions transactions did did did not not not constitute constitute constitute anybusinesstransactionsonwhichanyincomecouldhavebeenear anybusinesstransactionsonwhichanyincomecouldhavebeenear anybusinesstransactionsonwhichanyincomecouldhavebeenear ned.The appellant in its submission for A.Y. 2010 ned.The appellant in its submission for A.Y. 2010 ned.The appellant in its submission for A.Y. 2010-11 has relied on the judgment of Hon'ble Bombay High Court in case relied on the judgment of Hon'ble Bombay High Court in case relied on the judgment of Hon'ble Bombay High Court in case of PCIT-14 vs Alag Securities Pvt Ltd. (I 14 vs Alag Securities Pvt Ltd. (ITA 1512 of 2017), TA 1512 of 2017), Where the Hon'ble High Court has held (attachedas Annexure Where the Hon'ble High Court has held (attachedas Annexure Where the Hon'ble High Court has held (attachedas Annexure- 7)asunder:

20. We are in agreement with the view taken by the Tribunal. In a case of this In a case of this nature Section 68 of the Act would not be nature Section 68 of the Act would not be attracted. Section 68 would come in to play wh attracted. Section 68 would come in to play when any sum is en any sum is found credited in the books of the assessee and the assessee found credited in the books of the assessee and the assessee found credited in the books of the assessee and the assessee offers no explanation about the nature andsource thereof or offers no explanation about the nature andsource thereof or offers no explanation about the nature andsource thereof or the explanation offered by the assessee is not in the opinion of the explanation offered by the assessee is not in the opinion of the explanation offered by the assessee is not in the opinion of the Assessing Officer satisfactory. In such a situation the Assessing Officer satisfactory. In such a situation the Assessing Officer satisfactory. In such a situation the sum so credited may be charged to income tax as the income of the so credited may be charged to income tax as the income of the so credited may be charged to income tax as the income of the assessee of the relevant previous year. But that is not the assessee of the relevant previous year. But that is not the assessee of the relevant previous year. But that is not the Rajnish Bharti HUF 39 & 3941, 4378 & & 3941 4377/MUM/2023 position here. It has been the consistent stand of the assessee position here. It has been the consistent stand of the assessee position here. It has been the consistent stand of the assessee which has been accepted by the FirstAppellate Authority and which has been accepted by the FirstAppellate Authority and which has been accepted by the FirstAppellate Authority and affirmed by the Tribunal that the business of the assessee firmed by the Tribunal that the business of the assessee firmed by the Tribunal that the business of the assessee centered around customers / beneficiaries making deposits in centered around customers / beneficiaries making deposits in centered around customers / beneficiaries making deposits in cash amounts and in lieu thereof taking cheques from the cash amounts and in lieu thereof taking cheques from the cash amounts and in lieu thereof taking cheques from the assessee for amounts slightly lesser than the quantum of assessee for amounts slightly lesser than the quantum of assessee for amounts slightly lesser than the quantum of deposits, the difference deposits, the difference representing the commission realized representing the commission realized by the assessee. The cash amounts deposited by the by the assessee. The cash amounts deposited by the by the assessee. The cash amounts deposited by the customers i.e., the beneficiaries had been accounted for in the customers i.e., the beneficiaries had been accounted for in the customers i.e., the beneficiaries had been accounted for in the assessment orders of these assessment orders of these 21. Coming to the percentage of commission, Tribunal had 21. Coming to the percentage of commission, Tribunal had 21. Coming to the percentage of commission, Tribunal had already held 0.1% already held 0.1% commission in similar type of transactions commission in similar type of transactions to beare as on able percentage of commission. Therefore, to beare as on able percentage of commission. Therefore, to beare as on able percentage of commission. Therefore, Tribunal accepted the percentage of commission at 0.15% Tribunal accepted the percentage of commission at 0.15% Tribunal accepted the percentage of commission at 0.15% disclosed by the assessee it self. This finding is aplausible one disclosed by the assessee it self. This finding is aplausible one disclosed by the assessee it self. This finding is aplausible one and it cannot be said that the rat and it cannot be said that the rate of commission was arrived e of commission was arrived at in an arbitrary manner. at in an arbitrary manner. The same does not suffer from any The same does not suffer from any error error error or or or infirmity infirmity infirmity to to to warrant warrant warrant interference, interference, interference, that that that too, too, too, underSection260 underSection260-AoftheAct." The appellant further in its submission for the A.Y. 2010 The appellant further in its submission for the A.Y. 2010 The appellant further in its submission for the A.Y. 2010-11 submitted that that in t submitted that that in the present case, the facts are identical, he present case, the facts are identical, where the deposits of fundshave been withdrawn and paid to where the deposits of fundshave been withdrawn and paid to where the deposits of fundshave been withdrawn and paid to the customers, whose cheques are discounted. Therefore, any the customers, whose cheques are discounted. Therefore, any the customers, whose cheques are discounted. Therefore, any addition in excess of 0.05% of the turnover is unjustified. addition in excess of 0.05% of the turnover is unjustified. addition in excess of 0.05% of the turnover is unjustified. Further, in case of individual asse Further, in case of individual assessment of the Karta, Mr. ssment of the Karta, Mr. Rajnish Bharti of the appellant HUF in AY 2008 Rajnish Bharti of the appellant HUF in AY 2008 Rajnish Bharti of the appellant HUF in AY 2008-09, the addition has been made byconsidering 2% commission on addition has been made byconsidering 2% commission on addition has been made byconsidering 2% commission on accommodation entries provided by theKarta of the appellant. accommodation entries provided by theKarta of the appellant. accommodation entries provided by theKarta of the appellant. After considering the factual matrix of the case, the additio After considering the factual matrix of the case, the additio After considering the factual matrix of the case, the addition u/s 69A of the Act is restricted to 2% of the total addition of u/s 69A of the Act is restricted to 2% of the total addition of u/s 69A of the Act is restricted to 2% of the total addition of Rs. 105584256/ Rs. 105584256/- following the addition made in the A.Y. following the addition made in the A.Y. 2008-09 in case of the Karta of the Rainish Bharti 09 in case of the Karta of the Rainish Bharti-HUF. The HUF. The Ground of Appeal is partly allowed. Ground of Appeal is partly allowed.” The ground No. 1 of the appeal of the Revenue is also 10.1 The ground No. 1 of the appeal of the Revenue is also The ground No. 1 of the appeal of the Revenue is also connected to the above ground of the assessee. connected to the above ground of the assessee. We have considered We have considered the rival submissions of both parties and examined the relevant the rival submissions of both parties and examined the relevant the rival submissions of both parties and examined the relevant materials on record. materials on record. The brief facts of the dispute are that the The brief facts of the dispute are that the Assessing Officer (AO) observed substantial transactions in bank ng Officer (AO) observed substantial transactions in bank ng Officer (AO) observed substantial transactions in bank accounts maintained with HDFC Bank, DSB Bank, and the State accounts maintained with HDFC Bank, DSB Bank, and the State accounts maintained with HDFC Bank, DSB Bank, and the State Rajnish Bharti HUF 40 & 3941, 4378 & ITA Nos. 3912 & 3941 4377/MUM/2023 Bank of India. Upon verifying the assessee’s balance sheet, the AO Bank of India. Upon verifying the assessee’s balance sheet, the AO Bank of India. Upon verifying the assessee’s balance sheet, the AO noted that the balances of HDFC Bank and DSB Bank were not noted that the balances of HDFC Bank and DSB Bank were not noted that the balances of HDFC Bank and DSB Bank were not reflected. Consequently, the AO asked the assessee to explain the onsequently, the AO asked the assessee to explain the onsequently, the AO asked the assessee to explain the source of the deposits/credit entries in these bank accounts. source of the deposits/credit entries in these bank accounts. source of the deposits/credit entries in these bank accounts. However, the assessee failed to provide a satisfactory explanation. However, the assessee failed to provide a satisfactory explanation. However, the assessee failed to provide a satisfactory explanation. The Learned Commissioner of Income Tax (Appeals) [CIT(A)] relied The Learned Commissioner of Income Tax (Appeals) [CIT(A)] relied The Learned Commissioner of Income Tax (Appeals) [CIT(A)] relied on the findings of the First Appellate Authority in the case of findings of the First Appellate Authority in the case of findings of the First Appellate Authority in the case of Rajnish Bharati (Individual), where it was established that the Rajnish Bharati (Individual), where it was established that the Rajnish Bharati (Individual), where it was established that the assessee was engaged in accommodation entries. In that case, it assessee was engaged in accommodation entries. In that case, it assessee was engaged in accommodation entries. In that case, it was observed that the assessee was involved in cheque discounting, was observed that the assessee was involved in cheque discounting, was observed that the assessee was involved in cheque discounting, where funds were withdrawn in cash and paid to customers who e funds were withdrawn in cash and paid to customers who e funds were withdrawn in cash and paid to customers who provided cheques for discounting. Accordingly, an addition of 2% provided cheques for discounting. Accordingly, an addition of 2% provided cheques for discounting. Accordingly, an addition of 2% commission was sustained. However, in the present case, the commission was sustained. However, in the present case, the commission was sustained. However, in the present case, the assessee has not provided any evidence to substantiate engagement assessee has not provided any evidence to substantiate engagement assessee has not provided any evidence to substantiate engagement in the business of accommodation entries or cheque discounting. usiness of accommodation entries or cheque discounting. usiness of accommodation entries or cheque discounting. Furthermore, the assessee’s arguments are contradictory—while Furthermore, the assessee’s arguments are contradictory Furthermore, the assessee’s arguments are contradictory claiming to have conducted actual business concerning purchases, claiming to have conducted actual business concerning purchases, claiming to have conducted actual business concerning purchases, the assessee simultaneously asserts that the deposits in the bank the assessee simultaneously asserts that the deposits in the bank the assessee simultaneously asserts that the deposits in the bank accounts were related to accommodation entries. To support such a s were related to accommodation entries. To support such a s were related to accommodation entries. To support such a claim, the assessee was required to submit affidavits from each claim, the assessee was required to submit affidavits from each claim, the assessee was required to submit affidavits from each party to whom accommodation entries were allegedly provided. party to whom accommodation entries were allegedly provided. party to whom accommodation entries were allegedly provided. Since the assessee failed to discharge the burden of proof as Since the assessee failed to discharge the burden of proof as Since the assessee failed to discharge the burden of proof as required under the provisions of the Act, the deposits in the bank nder the provisions of the Act, the deposits in the bank nder the provisions of the Act, the deposits in the bank accounts are liable to be assessed as undisclosed income under the accounts are liable to be assessed as undisclosed income under the accounts are liable to be assessed as undisclosed income under the Rajnish Bharti HUF 41 & 3941, 4378 & ITA Nos. 3912 & 3941 4377/MUM/2023 Act. In view of the above facts and circumstances, we set aside the Act. In view of the above facts and circumstances, we set aside the Act. In view of the above facts and circumstances, we set aside the findings of the Learned CIT(A) on the disputed issue and uphold the findings of the Learned CIT(A) on the disputed issue and uphold findings of the Learned CIT(A) on the disputed issue and uphold entire disallowance of ₹10,55,84,256/-. The ground No. 6 of the entire disallowance of The ground No. 6 of the appeal of assessee is accordingly dismissed whereas the ground 1 of is accordingly dismissed whereas the ground 1 of is accordingly dismissed whereas the ground 1 of appeal of the Revenue is allowed. appeal of the Revenue is allowed.

2. "Whether on the facts and circumstances of the case and in 2. "Whether on the facts and circumstances of the case and in 2. "Whether on the facts and circumstances of the case and in law, the Ld.CIT(A) has erred in not considering the fact that law, the Ld.CIT(A) has erred in not considering the fact that law, the Ld.CIT(A) has erred in not considering the fact that the addition was made on the basis of information received the addition was made on the basis of information received the addition was made on the basis of information received from DGIT(Investigation), Mumbai and Sales Tax Authorities." om DGIT(Investigation), Mumbai and Sales Tax Authorities." om DGIT(Investigation), Mumbai and Sales Tax Authorities." 3. "Whether on the facts and circumstances of the case and in 3. "Whether on the facts and circumstances of the case and in 3. "Whether on the facts and circumstances of the case and in law, the Ld.CIT(A) has erred in not considering the decision of law, the Ld.CIT(A) has erred in not considering the decision of law, the Ld.CIT(A) has erred in not considering the decision of Hon'ble Supreme Court in the case of M/s. N.K. Hon'ble Supreme Court in the case of M/s. N.K. Proteins Ltd. in Proteins Ltd. in SLP CC Nos. 769 of 2017: Nos. 769 of 2017: 2017-TIOL-23-SC-IT dated IT dated 16.01.2017." 4. "Whether on the facts and in the circumstances of the case 4. "Whether on the facts and in the circumstances of the case 4. "Whether on the facts and in the circumstances of the case and in law, the Ld.CIT(A) has erred in restricting the addition and in law, the Ld.CIT(A) has erred in restricting the addition and in law, the Ld.CIT(A) has erred in restricting the addition made of Rs. 14,41,26,765/ made of Rs. 14,41,26,765/-to 2% of the unexplained credits in to 2% of the unexplained credits in the bank account." count." 5. "Whether on the facts and in the circumstances of the case 5. "Whether on the facts and in the circumstances of the case 5. "Whether on the facts and in the circumstances of the case and in law, the Ld.CIT(A) has erred in not considering the fact and in law, the Ld.CIT(A) has erred in not considering the fact and in law, the Ld.CIT(A) has erred in not considering the fact that the assessee failed to furnish any explanation on the that the assessee failed to furnish any explanation on the that the assessee failed to furnish any explanation on the credits in the bank account of HDFC and DCB banks during credits in the bank account of HDFC and DCB banks during credits in the bank account of HDFC and DCB banks during the assessment proceedings.?" ssessment proceedings.?" 13. The ground challenging the validity of the reassessment by the The ground challenging the validity of the reassessment by the The ground challenging the validity of the reassessment by the assessee from ground No. 1 to 4 of the appeal are identical to the assessee from ground No. 1 to 4 of the appeal are identical to the assessee from ground No. 1 to 4 of the appeal are identical to the ground raised

4. BOGUS PURCHASES: 4. BOGUS PURCHASES: The data provided by the Sales Tax Department contains the The data provided by the Sales Tax Department contains the The data provided by the Sales Tax Department contains the details of transactions of each ben details of transactions of each beneficiary with bogus biller, eficiary with bogus biller, their TIN and PAN details and the PAN details of the their TIN and PAN details and the PAN details of the their TIN and PAN details and the PAN details of the beneficiaries. From the data, it was found that assessee beneficiaries. From the data, it was found that assessee beneficiaries. From the data, it was found that assessee during F.Y. 2009 during F.Y. 2009-10 has acquired bogus purchase bills 10 has acquired bogus purchase bills amounting to Rs. 1,32,93, 190/ amounting to Rs. 1,32,93, 190/- from above below mentioned from above below mentioned parties. During the course of assessment proceedings, the es. During the course of assessment proceedings, the es. During the course of assessment proceedings, the assessee's representative was repeatedly asked to explain the assessee's representative was repeatedly asked to explain the assessee's representative was repeatedly asked to explain the said entries of purchases as evident from information received said entries of purchases as evident from information received said entries of purchases as evident from information received from Sales Tax Department. from Sales Tax Department. F.Y. Amount (Rs.) Sr.No. Hawala Party Name Hawala Party Name 1. M/s Sangura Trading Pvt Ltd M/s Sangura Trading Pvt Ltd 2009-10 28,14,269 2. Yashudhasan Enterprises Yashudhasan Enterprises 2009-10 72,89,289 3. Shyam Corporation Shyam Corporation 2009-10 31,89,632 1,32,93,190 4.2 Till date the assessee could not furnish any bills vouchers, Till date the assessee could not furnish any bills vouchers, Till date the assessee could not furnish any bills vouchers, details of payments, transportation details, payments, transportation details, stock register, etc. stock register, etc. in support of his claim. The AR of the assessee only stated in support of his claim. The AR of the assessee only stated in support of his claim. The AR of the assessee only stated that the books has been impounded by the Sales Tax that the books has been impounded by the Sales Tax that the books has been impounded by the Sales Tax Department and no bills are available with the assessee. Department and no bills are available with the assessee. Department and no bills are available with the assessee. However on going through However on going through the Audit Report the auditor has the Audit Report the auditor has specifically mentioned that all the books of account are lly mentioned that all the books of account are lly mentioned that all the books of account are maintained on the computer system and the same are Sales maintained on the computer system and the same are Sales maintained on the computer system and the same are Sales Register, Purchaser Register, Ledger, Cash Book, Journal Register, Purchaser Register, Ledger, Cash Book, Journal Register, Purchaser Register, Ledger, Cash Book, Journal Register, Bank Book. It is pertinent to mention here that as per Register, Bank Book. It is pertinent to mention here that as per Register, Bank Book. It is pertinent to mention here that as per the impounding order of the S the impounding order of the Sales Tax Department, the Sales ales Tax Department, the Sales Tax Department has impounded only Sales Invoice File and Tax Department has impounded only Sales Invoice File and Tax Department has impounded only Sales Invoice File and Purchase Invoice File. Since the books of accounts were Purchase Invoice File. Since the books of accounts were Purchase Invoice File. Since the books of accounts were maintained on the computer system, the assessee was maintained on the computer system, the assessee was maintained on the computer system, the assessee was supposed to be produced the same for verification, which has supposed to be produced the same for verification, which has supposed to be produced the same for verification, which has not been done purposely. The assessee only stated that the not been done purposely. The assessee only stated that the not been done purposely. The assessee only stated that the assessee assessee assessee is is is not not not having having having any any any transactions transactions transactions with with with M/s M/s M/s Yashudhasan Enterprises. In this regard, the assessee was Yashudhasan Enterprises. In this regard, the assessee was Yashudhasan Enterprises. In this regard, the assessee was asked to produce copies of VAT returns filed by them. asked to produce copies of VAT returns filed by them. asked to produce copies of VAT returns filed by them. However, the assessee could not pro However, the assessee could not produce the copy of VAT duce the copy of VAT return. Therefore, a letter was issued to Sales Tax Department return. Therefore, a letter was issued to Sales Tax Department return. Therefore, a letter was issued to Sales Tax Department copy of Annexure J1 & J2 was obtained. The same was also copy of Annexure J1 & J2 was obtained. The same was also copy of Annexure J1 & J2 was obtained. The same was also provided to the assessee wherein the Name of M/s. provided to the assessee wherein the Name of M/s. provided to the assessee wherein the Name of M/s.

Rajnish Bharti HUF 45 & 3941, 4378 & & 3941 4377/MUM/2023 Yashudhasan Enterprises was duly reflected. Yashudhasan Enterprises was duly reflected. The assessee The assessee taken the plea that the transactions Rs. 72,89,289/ e plea that the transactions Rs. 72,89,289/- pertains to M/s Universal Enterprises and not M/s. Yashudhasan to M/s Universal Enterprises and not M/s. Yashudhasan to M/s Universal Enterprises and not M/s. Yashudhasan Enterprises. However, no Enterprises. However, no documentary evidences have been documentary evidences have been produced by the assessee in support of their contention. produced by the assessee in support of their contention. produced by the assessee in support of their contention. Therefore, the plea taken by the a Therefore, the plea taken by the assessee cannot be ssessee cannot be considered as the Annexure J1 also establishes the fact that considered as the Annexure J1 also establishes the fact that considered as the Annexure J1 also establishes the fact that the assessee has made transactions with M/s Yashudhasan the assessee has made transactions with M/s Yashudhasan the assessee has made transactions with M/s Yashudhasan Enterprises. Even if it is considered that the said purchases Enterprises. Even if it is considered that the said purchases Enterprises. Even if it is considered that the said purchases pertains to M/s Universal Enterprises, in that case also, t pertains to M/s Universal Enterprises, in that case also, t pertains to M/s Universal Enterprises, in that case also, the assessee is unable to produce any evidences in support of assessee is unable to produce any evidences in support of assessee is unable to produce any evidences in support of their claim. 4.3. It needs to be stated that assessee obtained entries from It needs to be stated that assessee obtained entries from It needs to be stated that assessee obtained entries from Hawala Operators to the tune of Rs. 1,32,93,190/ Operators to the tune of Rs. 1,32,93,190/-. It is well . It is well accepted facts that purchases are shown in the books of accepted facts that purchases are shown in the books of accepted facts that purchases are shown in the books of accounts in order to support the sales, so as to explain ccounts in order to support the sales, so as to explain ccounts in order to support the sales, so as to explain that sales are also from genuine source sales are also from genuine source 4.4. Further, notices u/s 133(6) were issued to parties which Further, notices u/s 133(6) were issued to parties which Further, notices u/s 133(6) were issued to parties which were declared were declared as hawala traders/bogus parties. All the as hawala traders/bogus parties. All the notices served have remained to be complied notices served have remained to be complied till date. till date. Accordingly, vide order sheet noting dated 06.12.2017, Accordingly, vide order sheet noting dated 06.12.2017, Accordingly, vide order sheet noting dated 06.12.2017, 14322017 and order sheet notings dtd. 1 14322017 and order sheet notings dtd. 14.12.2017 assessee .12.2017 assessee was asked to produce was asked to produce the parties for verification from whom the parties for verification from whom the purchases were made. In response, the purchases were made. In response, assessee showed his assessee showed his inability to produce the alleged parties. produce the alleged parties. The above said The above said submission of the assessee clearly shows that the submission of the assessee clearly shows that the assessee is assessee is unable to produce the parties for verification. The assessee unable to produce the parties for verification. The assessee unable to produce the parties for verification. The assessee has merely stated that it is not possible to produce these has merely stated that it is not possible to produce these has merely stated that it is not possible to produce these parties for verification. It i parties for verification. It is a fact that notices issued to the s a fact that notices issued to the above said parties has been returned back by the postal above said parties has been returned back by the postal above said parties has been returned back by the postal authorities in cases and in other cases there is no compliance authorities in cases and in other cases there is no compliance authorities in cases and in other cases there is no compliance from their end. In short all the notices issued u/s 133(6) are from their end. In short all the notices issued u/s 133(6) are from their end. In short all the notices issued u/s 133(6) are remained unattended and assessee has f remained unattended and assessee has failed to produce ailed to produce single party for verification. Further, the Ward Inspector was single party for verification. Further, the Ward Inspector was single party for verification. Further, the Ward Inspector was also deputed to make inquiries in these cases, the Ward also deputed to make inquiries in these cases, the Ward also deputed to make inquiries in these cases, the Ward Inspector reported that no such parties are available on the Inspector reported that no such parties are available on the Inspector reported that no such parties are available on the given addresses. Ward Inspectors report is on record. given addresses. Ward Inspectors report is on record. 4.5 The explanation of the assessee has been considered and he explanation of the assessee has been considered and he explanation of the assessee has been considered and the same is the same is found to be untenable. On perusal of the found to be untenable. On perusal of the explanation of the assessee, it is noticed that the assessee explanation of the assessee, it is noticed that the assessee explanation of the assessee, it is noticed that the assessee could furnish only ledger account. The assessee has failed to could furnish only ledger account. The assessee has failed to could furnish only ledger account. The assessee has failed to establish one to one co r establish one to one co relation with regard to purchase and elation with regard to purchase and payments made to them. Assessee tried to state that the payments made to them. Assessee tried to state that the payments made to them. Assessee tried to state that the material is received and sold by it, the same material is received and sold by it, the same was without any was without any Rajnish Bharti HUF 46 & 3941, 4378 & ITA Nos. 3912 & 3941 4377/MUM/2023 supporting evidences. Even the banks statements were supporting evidences. Even the banks statements were supporting evidences. Even the banks statements were provided to the assessee still he was unable to c provided to the assessee still he was unable to correlate the orrelate the purchases and payments made to them. The assessee also purchases and payments made to them. The assessee also purchases and payments made to them. The assessee also submitted that for the Sales Tax purpose all the persons submitted that for the Sales Tax purpose all the persons submitted that for the Sales Tax purpose all the persons who has defaulted in payment of VAT were treated as defaulters has defaulted in payment of VAT were treated as defaulters has defaulted in payment of VAT were treated as defaulters and were included in the list of entry providers. and were included in the list of entry providers. 4.6 The purchase m The purchase made by the assessee cannot be treated as ade by the assessee cannot be treated as genuine in view of the fact that the concerned parties have view of the fact that the concerned parties have view of the fact that the concerned parties have confessed before the Sales Tax Authorities that they are in the confessed before the Sales Tax Authorities that they are in the confessed before the Sales Tax Authorities that they are in the business of issuing bills without actually selling any material. business of issuing bills without actually selling any material. business of issuing bills without actually selling any material. The ledger account is only The ledger account is only a self made evidence. The details of a self made evidence. The details of payment made by account payee cheque is also not an payment made by account payee cheque is also not an payment made by account payee cheque is also not an conclusive evidence to prove the genuineness of transaction. conclusive evidence to prove the genuineness of transaction. conclusive evidence to prove the genuineness of transaction. The Sales Tax Department has displayed all the data in The Sales Tax Department has displayed all the data in The Sales Tax Department has displayed all the data in respect of these parties on their website. respect of these parties on their website. 4.7 It may be noted here that the assessee has not furnished may be noted here that the assessee has not furnished may be noted here that the assessee has not furnished any third party evidence to prove the genuineness of the party evidence to prove the genuineness of the party evidence to prove the genuineness of the purchases. The assessee was specifically asked to produce purchases. The assessee was specifically asked to produce purchases. The assessee was specifically asked to produce the seller and prove the genuineness of the transaction again the seller and prove the genuineness of the transaction again the seller and prove the genuineness of the transaction again and again. The assessee a and again. The assessee also failed to establish that how the lso failed to establish that how the seller acquired seller acquired the material which was supplied to it. The the material which was supplied to it. The same detail was also called for u/s 133(6) but the same same detail was also called for u/s 133(6) but the same same detail was also called for u/s 133(6) but the same remained non remained non-complied and the letters came back unserved complied and the letters came back unserved 4.8 The assessee has failed to prove the genuin The assessee has failed to prove the genuineness of the eness of the aforesaid purchases, has failed to produce the suppliers, purchases, has failed to produce the suppliers, purchases, has failed to produce the suppliers, failed to produce the brokers/third party evidence in spite of failed to produce the brokers/third party evidence in spite of failed to produce the brokers/third party evidence in spite of repeated opportunities granted. No transport receipts or lorry repeated opportunities granted. No transport receipts or lorry repeated opportunities granted. No transport receipts or lorry receipts or octroi receipts, delivery challans, in and out receipts or octroi receipts, delivery challans, in and out receipts or octroi receipts, delivery challans, in and out register have been submitted. Further these hawala parties have also have been submitted. Further these hawala parties have also have been submitted. Further these hawala parties have also admitted before the Sales Tax authorities that they have admitted before the Sales Tax authorities that they have admitted before the Sales Tax authorities that they have issued only accommodation bills. At this stage, the assessee is issued only accommodation bills. At this stage, the assessee is issued only accommodation bills. At this stage, the assessee is unable to produce the suppliers to refute their admission made unable to produce the suppliers to refute their admission made unable to produce the suppliers to refute their admission made before sales tax authorities ore sales tax authorities 4.9 The onus lies on the assessee to establish any claim for The onus lies on the assessee to establish any claim for The onus lies on the assessee to establish any claim for deduction for deduction for expenditure which is claimed as deduction in expenditure which is claimed as deduction in computing its taxable income. Reliance is placed on judgment computing its taxable income. Reliance is placed on judgment computing its taxable income. Reliance is placed on judgment of Hon'ble Gujarat High Court reported in CIT vs. of Hon'ble Gujarat High Court reported in CIT vs. Chandra Chandra Vilas Hotel (1987) 164 ITR 102 (Guj), CIT vs. Navasari Cotton Vilas Hotel (1987) 164 ITR 102 (Guj), CIT vs. Navasari Cotton Vilas Hotel (1987) 164 ITR 102 (Guj), CIT vs. Navasari Cotton & Silk Mills Ltd. & Silk Mills Ltd. (1982) 135 ITR 546 (Guj) and Karjan Co (1982) 135 ITR 546 (Guj) and Karjan Co- operative Cotton Sales Ginning & Pressing Society vs. CIT operative Cotton Sales Ginning & Pressing Society vs. CIT operative Cotton Sales Ginning & Pressing Society vs. CIT (1993) 109 ITR 17 (Guj). (1993) 109 ITR 17 (Guj).

Rajnish Bharti HUF 47 & 3941, 4378 & & 3941 4377/MUM/2023 4.10 Therefore the onus in the present case s Therefore the onus in the present case squarely lies on quarely lies on the assessee to prove the genuineness of purchases, said to to prove the genuineness of purchases, said to have been made from the above mentioned parties, who have have been made from the above mentioned parties, who have have been made from the above mentioned parties, who have denied any sales to the assessee before Sales Tax Authorities. denied any sales to the assessee before Sales Tax Authorities. denied any sales to the assessee before Sales Tax Authorities. The assessee did not make any efforts to contact these part The assessee did not make any efforts to contact these part The assessee did not make any efforts to contact these parties and and and produce produce produce them them them during during during the the the course course course of of of assessment assessment assessment proceedings. He just tried to shift the burden on the Revenue. proceedings. He just tried to shift the burden on the Revenue. proceedings. He just tried to shift the burden on the Revenue. Such submissions have been made in complete disregard Such submissions have been made in complete disregard Such submissions have been made in complete disregard of the fact that the burden clearly lies on the assessee to prove the fact that the burden clearly lies on the assessee to prove the fact that the burden clearly lies on the assessee to prove the genuineness of t the genuineness of the transaction. It was incumbent on the he transaction. It was incumbent on the assessee to prove that the suppliers were genuine and they assessee to prove that the suppliers were genuine and they assessee to prove that the suppliers were genuine and they really supplied such material to the assessee and the really supplied such material to the assessee and the really supplied such material to the assessee and the assessee really made payments by cheques to these very assessee really made payments by cheques to these very assessee really made payments by cheques to these very parties and none else. Such a burden has to be d parties and none else. Such a burden has to be discharged by ischarged by the assessee with very strong and clinching evidence in view the assessee with very strong and clinching evidence in view the assessee with very strong and clinching evidence in view of a blatant denial by the parties. No serious efforts were of a blatant denial by the parties. No serious efforts were of a blatant denial by the parties. No serious efforts were made by the assessee to discharge such burden of proving the made by the assessee to discharge such burden of proving the made by the assessee to discharge such burden of proving the genuineness of the transactions with the party. genuineness of the transactions with the party. 4.11 In view of the above, it can be said that the transactions of the above, it can be said that the transactions of the above, it can be said that the transactions in respect of in respect of Tate material shown as purchases by the Tate material shown as purchases by the assessee from the above mentioned parties assessee from the above mentioned parties circumstances and circumstances and human probability for arriving at conclusion as held in human probability for arriving at conclusion as held in human probability for arriving at conclusion as held in CIT V/s Durga Prasad 82 ITR 540 (SC Durga Prasad 82 ITR 540 (SC) and Sumati Dayal V/s CIT 214 ) and Sumati Dayal V/s CIT 214 ITR 801 (SC). (vii) The purchases from hawala operator falls within the ambit The purchases from hawala operator falls within the ambit The purchases from hawala operator falls within the ambit of the term "colourable devices" and the Supreme Court "colourable devices" and the Supreme Court observed in the case of MC observed in the case of MC Dowell and Company Ltd V/s CTO Dowell and Company Ltd V/s CTO 154 ITR 148 that "Tax planningmay 154 ITR 148 that "Tax planningmay be legitimate provided it is be legitimate provided it is within the framework of law. Colourable devices cannot be within the framework of law. Colourable devices cannot be within the framework of law. Colourable devices cannot be part of tax planning and it is wrong to encourage or entertain part of tax planning and it is wrong to encourage or entertain part of tax planning and it is wrong to encourage or entertain the belief that it is honorable to avoid the payment of tax by the belief that it is honorable to avoid the payment of tax by the belief that it is honorable to avoid the payment of tax by resorting to dubious methods. It is obligat resorting to dubious methods. It is obligation of every citizen to ion of every citizen to pay the taxes honestly without resorting to subterfuges." pay the taxes honestly without resorting to subterfuges." pay the taxes honestly without resorting to subterfuges." (viii) Since the information available on Maharashtra Sales Tax Since the information available on Maharashtra Sales Tax Since the information available on Maharashtra Sales Tax Department's website leads to doubt regarding to genuineness Department's website leads to doubt regarding to genuineness Department's website leads to doubt regarding to genuineness of the purchases, it is incumbent on the assessee of the purchases, it is incumbent on the assessee to produce to produce this party alongwith their necessary documents to establish this party alongwith their necessary documents to establish this party alongwith their necessary documents to establish the genuineness of the transaction as this party were not the genuineness of the transaction as this party were not the genuineness of the transaction as this party were not found at the given address. It is really surprising that none of found at the given address. It is really surprising that none of found at the given address. It is really surprising that none of this party were found on the given addresses nor were they this party were found on the given addresses nor were they this party were found on the given addresses nor were they produced by the assessee before the undersigned to get the oduced by the assessee before the undersigned to get the oduced by the assessee before the undersigned to get the claim of the purchases verified claim of the purchases verified Rajnish Bharti HUF 48 & 3941, 4378 & ITA Nos. 3912 & 3941 4377/MUM/2023 (ix) There is a specific finding of Maharashtra Sales Tax There is a specific finding of Maharashtra Sales Tax There is a specific finding of Maharashtra Sales Tax Department that this party had issued false bills without Department that this party had issued false bills without Department that this party had issued false bills without delivery of goods and the onus is on the assessee t delivery of goods and the onus is on the assessee t delivery of goods and the onus is on the assessee to prove conclusively that he had made the purchases from this very conclusively that he had made the purchases from this very conclusively that he had made the purchases from this very party. (x) No stock register has been maintained by the assessee, No stock register has been maintained by the assessee, No stock register has been maintained by the assessee, also the assessee could not produce any details in respect of also the assessee could not produce any details in respect of also the assessee could not produce any details in respect of transportation of the said goods. Despite the specific query transportation of the said goods. Despite the specific query transportation of the said goods. Despite the specific query the assessee was not able to produce delivery challan, transport assessee was not able to produce delivery challan, transport assessee was not able to produce delivery challan, transport details, any payment made to Octori, In and out register, the details, any payment made to Octori, In and out register, the details, any payment made to Octori, In and out register, the inability of the assessee to produce this details leads to the inability of the assessee to produce this details leads to the inability of the assessee to produce this details leads to the facts that the material was never purchased from the alleged facts that the material was never purchased from the alleged facts that the material was never purchased from the alleged party. At the same time the fact that the assessee has shown . At the same time the fact that the assessee has shown . At the same time the fact that the assessee has shown the sales of said goods leads to the conclusion that assessee the sales of said goods leads to the conclusion that assessee the sales of said goods leads to the conclusion that assessee had purchased goods from the grey market with funds, had purchased goods from the grey market with funds, had purchased goods from the grey market with funds, sources of which is not explained. The whole transaction is sources of which is not explained. The whole transaction is sources of which is not explained. The whole transaction is ploy by the assessee brin the assessee brings his unaccounted money in the gs his unaccounted money in the books in the form of accommodation of entry from the said books in the form of accommodation of entry from the said books in the form of accommodation of entry from the said alleged bogus party. alleged bogus party. (xi) In view of the above discussion of the facts of the case, it is In view of the above discussion of the facts of the case, it is In view of the above discussion of the facts of the case, it is clear that the assessee has taken accommodation entry of clear that the assessee has taken accommodation entry of clear that the assessee has taken accommodation entry of purchases from the purchases from the said party only to reduce its profit. This said party only to reduce its profit. This purchases were shown only on paper and no material was purchases were shown only on paper and no material was purchases were shown only on paper and no material was received in respect of this purchases which could have been received in respect of this purchases which could have been received in respect of this purchases which could have been included in the closing stock of the assessee from this party. included in the closing stock of the assessee from this party. included in the closing stock of the assessee from this party. As the assessee has been able to co As the assessee has been able to correlate the purchases of rrelate the purchases of materials with the sales, it is assumed that the assessee has materials with the sales, it is assumed that the assessee has materials with the sales, it is assumed that the assessee has purchased this goods from purchased this goods from some other party by way of cash some other party by way of cash and has introduced this in the regular stock of the assessee by and has introduced this in the regular stock of the assessee by and has introduced this in the regular stock of the assessee by obtaining bills/accommodation bills from the sa obtaining bills/accommodation bills from the said party. id party. (xii) Any person indulging in the practice of purchasing the Any person indulging in the practice of purchasing the Any person indulging in the practice of purchasing the goods from the grey market and obtaining bogus bills of some goods from the grey market and obtaining bogus bills of some goods from the grey market and obtaining bogus bills of some other party would do so far getting some benefit. other party would do so far getting some benefit. 4.13 In view of the above facts and circumstances, it is hereby 4.13 In view of the above facts and circumstances, it is hereby 4.13 In view of the above facts and circumstances, it is hereby held that the assessee has failed to prove the genuineness of the assessee has failed to prove the genuineness of the assessee has failed to prove the genuineness of purchases from the said party and purchases from the alleged purchases from the said party and purchases from the alleged purchases from the said party and purchases from the alleged party are bogus and non party are bogus and non-genuine. Delhi High Court in the case genuine. Delhi High Court in the case of CIT V/s La Medica 117 Taxman 628 (2001) has held that of CIT V/s La Medica 117 Taxman 628 (2001) has held that of CIT V/s La Medica 117 Taxman 628 (2001) has held that once it is accepted that once it is accepted that the supplies were not made by the the supplies were not made by the bogus party to whom payments were alleged to have been bogus party to whom payments were alleged to have been bogus party to whom payments were alleged to have been made, the question whether the purchases were made from made, the question whether the purchases were made from made, the question whether the purchases were made from some other source ought not to have weighed with the Tribunal some other source ought not to have weighed with the Tribunal some other source ought not to have weighed with the Tribunal Rajnish Bharti HUF 49 & 3941, 4378 & ITA Nos. 3912 & 3941 4377/MUM/2023 as a factor of the assessee. The court thus conf as a factor of the assessee. The court thus confirmed the irmed the addition made by the AO. addition made by the AO. Further, the Gujarat High Court in the case of Simit P. Sheth, Further, the Gujarat High Court in the case of Simit P. Sheth, Further, the Gujarat High Court in the case of Simit P. Sheth, 356 ITR 451 dealing with the matter of bogus purchase has dealing with the matter of bogus purchase has held that : “…………..The estimation of rate of profit return must The estimation of rate of profit return must The estimation of rate of profit return must necessarily vary with the nature of vary with the nature of business and no uniform business and no uniform yardstick can be adopted." yardstick can be adopted." 4.14. In nutshell, the assessee has failed to establish the 4.14. In nutshell, the assessee has failed to establish the 4.14. In nutshell, the assessee has failed to establish the genuineness of transactions. But the fact which can not be genuineness of transactions. But the fact which can not be genuineness of transactions. But the fact which can not be disputed that the assessee has a Shown the corresponding disputed that the assessee has a Shown the corresponding disputed that the assessee has a Shown the corresponding sales. This facts leads to th sales. This facts leads to the conclusion that the assessee had assessee had purchased the said goods from the grey market and the source purchased the said goods from the grey market and the source purchased the said goods from the grey market and the source of the funds used for purchase from grey market has not been of the funds used for purchase from grey market has not been of the funds used for purchase from grey market has not been explained. As discussed the whole transaction is nothing but a explained. As discussed the whole transaction is nothing but a explained. As discussed the whole transaction is nothing but a accommodation entry obtained by the accommodation entry obtained by the assessee and cannot be assessee and cannot be allowed as genuine expenditure in the form of purchase. allowed as genuine expenditure in the form of purchase. allowed as genuine expenditure in the form of purchase. Section u/s 69C of the Income Tax Act, 1961 is very specific in Section u/s 69C of the Income Tax Act, 1961 is very specific in Section u/s 69C of the Income Tax Act, 1961 is very specific in this regard, the same is reproduced as under : this regard, the same is reproduced as under : "69C: Where in any financial year as assessee has incurred "69C: Where in any financial year as assessee has incurred "69C: Where in any financial year as assessee has incurred any expenditure and he offers no explanation about the source expenditure and he offers no explanation about the source expenditure and he offers no explanation about the source of such expenditure or part thereof, or the explanation, if any, of such expenditure or part thereof, or the explanation, if any, of such expenditure or part thereof, or the explanation, if any, offered by him is not, in the opinion of the [Assessing] Officer, offered by him is not, in the opinion of the [Assessing] Officer, offered by him is not, in the opinion of the [Assessing] Officer, satisfactory, the amount covered by such expenditure or part satisfactory, the amount covered by such expenditure or part satisfactory, the amount covered by such expenditure or part thereof, as the case may be, may be deemed to be the income f f, as the case may be, may be deemed to be the income f f, as the case may be, may be deemed to be the income f the assessee for such financial year." the assessee for such financial year." Further, Hon'ble Supreme Court vide order dated 16.01.2017 Further, Hon'ble Supreme Court vide order dated 16.01.2017 Further, Hon'ble Supreme Court vide order dated 16.01.2017 in the case of M/s. N.K Proteins Ltd. In SLP © CC Nos. 769 of 2017: 2017 of M/s. N.K Proteins Ltd. In SLP © CC Nos. 769 of 2017: 2017 of M/s. N.K Proteins Ltd. In SLP © CC Nos. 769 of 2017: 2017- TIOL-23-SC-IT has clearly hel IT has clearly held as below; "Once a finding of fact has been given that entire purchases "Once a finding of fact has been given that entire purchases "Once a finding of fact has been given that entire purchases shown on the basis of fictitious invoices and debited in the P & shown on the basis of fictitious invoices and debited in the P & shown on the basis of fictitious invoices and debited in the P & L A/c are established as bogus, restricting the addition to a L A/c are established as bogus, restricting the addition to a L A/c are established as bogus, restricting the addition to a certain percentage goes against the principles of sectio certain percentage goes against the principles of sectio certain percentage goes against the principles of sections 68 and 69C of the I.T. Act. " and 69C of the I.T. Act. " In view of the above discussion, I am satisfied that the In view of the above discussion, I am satisfied that the In view of the above discussion, I am satisfied that the transaction made by transaction made by the assessee with the abovesaid alleged the assessee with the abovesaid alleged party are covered by section 69C and the entire amount of Rs. party are covered by section 69C and the entire amount of Rs. party are covered by section 69C and the entire amount of Rs. 1,32,93,190/ 1,32,93,190/- corresponding to the amount of purchases purchases Rajnish Bharti HUF 50 & 3941, 4378 & ITA Nos. 3912 & 3941 4377/MUM/2023 claimed to have made by the assessee from the non existent / claimed to have made by the assessee from the non existent / claimed to have made by the assessee from the non existent / bogus purchase entry bogus purchase entry provider party needs to disallowed as provider party needs to disallowed as unexplained expenditure. unexplained expenditure.

5. Notwithstanding the above conclusion that the source of the 5. Notwithstanding the above conclusion that the source of the 5. Notwithstanding the above conclusion that the source of the purchases from purchases from the grey market are not explained and the t explained and the amount is disallowable u/s 69C, it is also a fact that in the amount is disallowable u/s 69C, it is also a fact that in the amount is disallowable u/s 69C, it is also a fact that in the absence of any proof of payment by way of account payee absence of any proof of payment by way of account payee absence of any proof of payment by way of account payee crossed cheques for the grey market purchases, the assessee crossed cheques for the grey market purchases, the assessee crossed cheques for the grey market purchases, the assessee had made payments in cash only. This cash payments clearly had made payments in cash only. This cash payments clearly had made payments in cash only. This cash payments clearly attracts the provision of Section 40A(3) of the income tax Act attracts the provision of Section 40A(3) of the income tax Act attracts the provision of Section 40A(3) of the income tax Act and are disallowable as such. and are disallowable as such. 5.1. Accordingly, the purchases from the said party of Rs. 5.1. Accordingly, the purchases from the said party of Rs. 5.1. Accordingly, the purchases from the said party of Rs. 1,32,93,190/ 1,32,93,190/- is hereby 2o isallowed u/s 69C of the Income 2o isallowed u/s 69C of the Income Tax Act, 1961 and added to the total income Tax Act, 1961 and added to the total income of the assessee. assessee. The undersigned is satisfied that the assessee has filed The undersigned is satisfied that the assessee has filed The undersigned is satisfied that the assessee has filed inaccurate particulars of income, particulars of income, therefore penalty proceedings therefore penalty proceedings u/s 271(1)(c) are initiated u/s 271(1)(c) are initiated separately. 14.1 The Ld. CIT(A) however following his finding in assessment The Ld. CIT(A) however following his finding in assessment The Ld. CIT(A) however following his finding in assessment year 2009-10 restricted the disallowance to the extent of 12.5% of restricted the disallowance to the extent of 12.5% of restricted the disallowance to the extent of 12.5% of the bogus purchases. The relevant finding of the Ld. CIT(A) is the bogus purchases. The relevant finding of the Ld. CIT(A) is the bogus purchases. The relevant finding of the Ld. CIT(A) is reproduced as under: reproduced as under:

15. We have heard rival submissions of the parties and perused We have heard rival submissions of the parties and perused We have heard rival submissions of the parties and perused the relevant materials on record. the relevant materials on record. The extent of disallowance The extent of disallowance for bogus purchases—whether a complete (100%) disallowance or a whether a complete (100%) disallowance or a whether a complete (100%) disallowance or a partial disallowance— —depends on the specific facts of each case. In depends on the specific facts of each case. In Rajnish Bharti HUF 51 & 3941, 4378 & & 3941 4377/MUM/2023 cases involving trading activities, if an assessee successfully cases involving trading activities, if an assessee successfully cases involving trading activities, if an assessee successfully demonstrates that the goods corresponding to bogus purchase bills demonstrates that the goods corresponding to bogus purchase demonstrates that the goods corresponding to bogus purchase are linked to recorded sales in the books of account, and these sales are linked to recorded sales in the books of account, and these sales are linked to recorded sales in the books of account, and these sales are genuine (e.g., goods exported or supplied to the government), it are genuine (e.g., goods exported or supplied to the government), it are genuine (e.g., goods exported or supplied to the government), it is presumed that the sales are verified. In such instances, it is is presumed that the sales are verified. In such instances, it is is presumed that the sales are verified. In such instances, it is generally accepted that the assessee must hav generally accepted that the assessee must have procured the goods e procured the goods from the grey market in cash at a discounted price before exporting from the grey market in cash at a discounted price before exporting from the grey market in cash at a discounted price before exporting or supplying them. The Hon’ble Courts and Tribunals have or supplying them. The Hon’ble Courts and Tribunals have or supplying them. The Hon’ble Courts and Tribunals have recognized that in such cases, the taxpayer benefits from discounts, recognized that in such cases, the taxpayer benefits from discounts, recognized that in such cases, the taxpayer benefits from discounts, VAT, or GST savings when purchasing from VAT, or GST savings when purchasing from the grey market. the grey market. Consequently, instead of disallowing the entire amount of bogus Consequently, instead of disallowing the entire amount of bogus Consequently, instead of disallowing the entire amount of bogus purchases, the Courts and Tribunals have estimated and sustained purchases, the Courts and Tribunals have estimated and sustained purchases, the Courts and Tribunals have estimated and sustained a certain percentage of the purchase value as the benefit derived by a certain percentage of the purchase value as the benefit derived by a certain percentage of the purchase value as the benefit derived by the assessee, which is then added back to the assessee, which is then added back to the income. the income. The relevant finding of Hon’ble High Court of Bombay in the case of Mohommad finding of Hon’ble High Court of Bombay in the case of finding of Hon’ble High Court of Bombay in the case of Haji Ada & Co. in of 2016 Haji Ada & Co. in ITA No. 1004 of 2016 observed as under: observed as under:

“8 In the present case, as noted above, the assessee was a 8 In the present case, as noted above, the assessee was a 8 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 findi bogus. This being a finding of fact, we have proceeded on such ng of fact, we have proceeded on such basis. Despite this, the question arises whether the Revenue is basis. Despite this, the question arises whether the Revenue is basis. Despite this, the question arises whether the Revenue is correct in contending that the entire purchase amount should correct in contending that the entire purchase amount should correct in contending that the entire purchase amount should be added by way of assessee's additional income or the be added by way of assessee's additional income or the be added by way of assessee's additional income or the assessee is correct in contending that assessee is correct in contending that such logic cannot be such logic cannot be applied. The finding of the CIT(A) and the Tribunal would applied. The finding of the CIT(A) and the Tribunal would applied. The finding of the CIT(A) and the Tribunal would suggest that the department had not disputed the assessee's suggest that the department had not disputed the assessee's suggest that the department had not disputed the assessee's sales. There was no discrepancy between the purchases sales. There was no discrepancy between the purchases sales. There was no discrepancy between the purchases shown by the assessee and the sales declared. That being the shown by the assessee and the sales declared. That being the shown by the assessee and the sales declared. That being the position, the Tribunal was correct in coming to the conclusion osition, the Tribunal was correct in coming to the conclusion osition, the Tribunal was correct in coming to the conclusion that the purchases cannot be rejected without disturbing the that the purchases cannot be rejected without disturbing the that the purchases cannot be rejected without disturbing the Rajnish Bharti HUF 52 & 3941, 4378 & & 3941 4377/MUM/2023 sales in case of a trader. The Tribunal, therefore, correctly sales in case of a trader. The Tribunal, therefore, correctly sales in case of a trader. The Tribunal, therefore, correctly restricted the additions limited to the extent of bringing the restricted the additions limited to the extent of bringing the restricted the additions limited to the extent of bringing the G.P. rate on purchases at the same rate of other genuine e on purchases at the same rate of other genuine e on purchases at the same rate of other genuine purchases. The decision of the Gujarat High Court in the case purchases. The decision of the Gujarat High Court in the case purchases. The decision of the Gujarat High Court in the case of N.K. Industries Ltd. N.K. Industries Ltd. (supra) cannot be applied without (supra) cannot be applied without reference to the facts. In fact in reference to the facts. In fact in paragraph 8 of the same paragraph 8 of the same Judgment the Court held and observed as under Judgment the Court held and observed as under- " So far as the question regarding addition of " So far as the question regarding addition of " So far as the question regarding addition of Rs.3,70,78,125/ Rs.3,70,78,125/- as gross profit on sales of Rs.37.08 as gross profit on sales of Rs.37.08 Crores made by the Assessing Officer despite the fact Crores made by the Assessing Officer despite the fact Crores made by the Assessing Officer despite the fact that the said sales had admi that the said sales had admittedly been recorded in the ttedly been recorded in the regular books during Financial Year 1997-98 is regular books during Financial Year 1997 regular books during Financial Year 1997 concerned, we are of the view that the assessee cannot concerned, we are of the view that the assessee cannot concerned, we are of the view that the assessee cannot be punished since sale price is accepted by the revenue. be punished since sale price is accepted by the revenue. be punished since sale price is accepted by the revenue. Therefore, even if 6 % gross profit is taken into account, Therefore, even if 6 % gross profit is taken into account, Therefore, even if 6 % gross profit is taken into account, the corres the corresponding cost price is required to be deducted ponding cost price is required to be deducted and tax cannot be levied on the same price. We have to and tax cannot be levied on the same price. We have to and tax cannot be levied on the same price. We have to reduce the selling price accordingly as a result of which reduce the selling price accordingly as a result of which reduce the selling price accordingly as a result of which profit comes to 5.66 %. Therefore, considering 5.66 % of profit comes to 5.66 %. Therefore, considering 5.66 % of profit comes to 5.66 %. Therefore, considering 5.66 % of Rs.3,70,78,125/ Rs.3,70,78,125/- which comes to Rs.20,98,621.88 we ,621.88 we think it fit to direct the revenue to add Rs.20,98,621.88 think it fit to direct the revenue to add Rs.20,98,621.88 think it fit to direct the revenue to add Rs.20,98,621.88 as gross profit and make necessary deductions as gross profit and make necessary deductions as gross profit and make necessary deductions accordingly. Accordingly, the said question is answered accordingly. Accordingly, the said question is answered accordingly. Accordingly, the said question is answered partially in favour of the assessee and partially in partially in favour of the assessee and partially in partially in favour of the assessee and partially in favour of the revenue." favour of the revenue." 15.1 In the assessee’s case for Assessment Year 2009 the assessee’s case for Assessment Year 2009-10, a the assessee’s case for Assessment Year 2009 percentage-based disallowance of bogus purchases based disallowance of bogus purchases has been has been upheld accordingly. However, the second category of cases involves However, the second category of cases involves However, the second category of cases involves taxpayers who fail to establish a clear link between the purchase taxpayers who fail to establish a clear link between the purchase taxpayers who fail to establish a clear link between the purchase quantities mentioned in bogus bills and corresponding sales based ntioned in bogus bills and corresponding sales based ntioned in bogus bills and corresponding sales based on day-to-day inventory records. In such cases, it cannot be day inventory records. In such cases, it cannot be day inventory records. In such cases, it cannot be presumed that the assessee procured goods from the grey market. presumed that the assessee procured goods from the grey market. presumed that the assessee procured goods from the grey market. Instead, it is reasonable to conclude that the bogus purchases were Instead, it is reasonable to conclude that the bogus purchases were Instead, it is reasonable to conclude that the bogus purchases were merely recorded in the books to artificially reduce business profits, orded in the books to artificially reduce business profits, orded in the books to artificially reduce business profits, without any actual procurement or corresponding sales. Under without any actual procurement or corresponding sales. Under without any actual procurement or corresponding sales. Under Rajnish Bharti HUF 53 & 3941, 4378 & ITA Nos. 3912 & 3941 4377/MUM/2023 such circumstances, the entire amount of bogus purchases is liable such circumstances, the entire amount of bogus purchases is liable such circumstances, the entire amount of bogus purchases is liable to be disallowed.