INCOME TAX OFFICER 41(3)(3), BKC vs. RAJNISH BHARTI HUF, DARUKHANA

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.

2. Without prejudice to the issue Without prejudice to the issue of notice u/s 148, the Ld. CITA of notice u/s 148, the Ld. CITA has further failed to appreciate that the reassessment has further failed to appreciate that the reassessment has further failed to appreciate that the reassessment proceedings were null and void as the Ld. proceedings were null and void as the Ld. A.O. had invoked the A.O. had invoked the provisions of sec 147 without there being any reason to without there being any reason to provisions of sec 147 believe that the income had escaped that the income had escaped assessment.

& 3941, 4378 & & 3941 4377/MUM/2023

3. Without prejudice, the Ld. CITA has failed to appreciate that thout prejudice, the Ld. CITA has failed to appreciate that thout prejudice, the Ld. CITA has failed to appreciate that the reassessment proceedings were bad in law as the Ld. A.O. the reassessment proceedings were bad in law as the Ld. the reassessment proceedings were bad in law as the Ld. had failed to follow the procedure laid down by the Supreme had failed to follow the procedure laid down by the Supreme had failed to follow the procedure laid down by the Supreme Court of India in case of Court of India in case of GKN Drive Shaft as he had GKN Drive Shaft as he had not dealt with the obje with the objections raised by the appellant appellant against re- opening proceedings opening proceedings because no inspection of documents and/ because no inspection of documents and/ or examination/ cross examination of suspicious parties was or examination/ cross examination of suspicious parties was or examination/ cross examination of suspicious parties was provided.

4. The impugned assessment order is barred by the Law of The impugned assessment order is barred by the Law of The impugned assessment order is barred by the Law of limitation as notice in this case was never served u/s 148 ase was never served u/s 148 limitation as and accordingly notice issued u/s 142(1) was time barred. accordingly notice issued u/s 142(1) was time barred. accordingly notice issued u/s 142(1) was time barred. Also the impugned assessment order has been passed without Also the impugned assessment order has been passed without Also the impugned assessment order has been passed without jurisdiction in law. jurisdiction in law.

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.

2. Quash the order of the Ld AO passed u/s 143(3) r.w.s 147 of IT 2. Quash the order of the Ld AO passed u/s 143(3) r.w.s 147 of IT 2. Quash the order of the Ld AO passed u/s 143(3) r.w.s 147 of IT Act, 1961, 3. Delete the disallowance/addition of Rs2,15,36,916/ Delete the disallowance/addition of Rs2,15,36,916/ Delete the disallowance/addition of Rs2,15,36,916/- and Rs.21,11,685/ Rs.21,11,685/-sustained by the Ld. CITA.

4. Grant any other relief deemed fit by your honours. 4. Grant any other relief deemed fit by your honours. & 3941, 4378 & & 3941 4377/MUM/2023 Revenue’s Ground:

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:

(i)Notices u/s 142(1) of the Act u/s 142(1) of the Act were issued on 17.06.2016 and 30.06.2016 by the Assessing Officer, which were by the Assessing Officer, which were sent by by the Assessing Officer, which were postal authorities postal authorities but were returned back with the remark of were returned back with the remark of the postal authorities that party ‘left/not known’. the postal authorities that party ‘left/not known’. the postal authorities that party ‘left/not known’.

(ii) Thereafter, again one more notice was issued on again one more notice was issued on 26.07.2016 at another address namely Flat No. 506/B 26.07.2016 at another address namely Flat No. 506/B 26.07.2016 at another address namely Flat No. 506/B Oversine Nagar, Rajendra Vihar, Malad West, Mumbai Oversine Nagar, Rajendra Vihar, Malad West, Mumbai Oversine Nagar, Rajendra Vihar, Malad West, Mumbai-400064 fixing the hearing on 05.08.2016. The said notice was also xing the hearing on 05.08.2016. The said notice was also xing the hearing on 05.08.2016. The said notice was also sent on e-mail ID mail IDs of assessee which were gathered by the which were gathered by the & 3941, 4378 & & 3941 4377/MUM/2023 Assessing Officer Assessing Officer from record. But, no compliance was made , no compliance was made on the scheduled date of the hearing. on the scheduled date of the hearing.

(iii) Thereafter, on 10.08.2016 representative of assessee of assessee from Chartered Accountant Chartered Accountant firm namely M/s Jain Ambavat & namely M/s Jain Ambavat & Associates, sought , sought for adjournment and on their request for adjournment and on their request matter was adjourned to 16.08.2016. But none attended on matter was adjourned to 16.08.2016. But none attended on matter was adjourned to 16.08.2016. But none attended on the said date.

(iv) Thereafter, , on 17.08.2016 M/s Jain Associates filed M/s Jain Associates filed a letter stating that assessee had not received any notice u/s letter stating that assessee had not received any notice u/s letter stating that assessee had not received any notice u/s 148 of the Act. The Ld. Authorized Representative also 148 of the Act. The Ld. Authorized Representative also 148 of the Act. The Ld. Authorized Representative also provided address of the assessee at Flat No. 506/B Evershine provided address of the assessee at Flat No. 506/B Evershine provided address of the assessee at Flat No. 506/B Evershine Nagar Malad West, Mumbai. Nagar Malad West, Mumbai.

(v)Accordingly, the A Accordingly, the Assessing Officer issued a fresh notice u/s ssessing Officer issued a fresh notice u/s 142(1) of the Act 142(1) of the Act on 18/08/2016 clarifying with regard to clarifying with regard to service of the notice u/s 148 of the Act and matter was fixed service of the notice u/s 148 of the Act and matter was fixed service of the notice u/s 148 of the Act and matter was fixed for hearing on for hearing on 30.08.2016. But no compliance was made on compliance was made on the part of the assessee. the part of the assessee.

(vi) The Assessing Assessing Assessing Officer Officer Officer again again again issued issued issued notice notice notice on on on 08.09.2016 along with a fresh copy of the notice u/s 148 08.09.2016 along with a fresh copy of the notice u/s 148 08.09.2016 along with a fresh copy of the notice u/s 148 of the Act and the ma of the Act and the matter was fixed for hearing on tter was fixed for hearing on 19.09.2016 but but same was also not complied by the assessee same was also not complied by the assessee. (vii) Thereafter, the Assessing Officer further provided a final hereafter, the Assessing Officer further provided a final hereafter, the Assessing Officer further provided a final & 3941, 4378 & & 3941 4377/MUM/2023 opportunity on 26.10.2016 at the Mumbai address which was opportunity on 26.10.2016 at the Mumbai address which was opportunity on 26.10.2016 at the Mumbai address which was provided by the authorized representative of the assessee and provided by the authorized representative of the assessee and provided by the authorized representative of the assessee and also on the last address given in the return of income. The also on the last address given in the return of income. The also on the last address given in the return of income. The Assessing Officer Assessing Officer also provided reasons of reopening but said also provided reasons of reopening but said notice also returned back by the postal authorities with the notice also returned back by the postal authorities with the notice also returned back by the postal authorities with the remark ‘un-claimed’. claimed’.

(viii) The Assessing Officer The Assessing Officer again on 8/11/2016 on 8/11/2016 issued a show cause notice at both the addresses of assessee and one copy of assessee and one copy was e-mailed to the assessee and authorized representative of to the assessee and authorized representative of to the assessee and authorized representative of the assessee and the assessee was requested to appear for the assessee and the assessee was requested to appear for the assessee and the assessee was requested to appear for hearing on 16.11.2016 hearing on 16.11.2016, but again no compliance was made on no compliance was made on the part of the assessee except a letter the part of the assessee except a letter seeking seeking proof of issue and service of the n the notice u/s 148 of the Act and stated otice u/s 148 of the Act and stated that the notice u/s 148 of the Act notice u/s 148 of the Act was not served on the assessee and the assessee and matter was time barred. matter was time barred.

3.1 In background of the above facts, the Assessing Officer further background of the above facts, the Assessing Officer further background of the above facts, the Assessing Officer further issued a final show cause notice on 16.11.2016 fixing the matter for issued a final show cause notice on 16.11.2016 fixing the issued a final show cause notice on 16.11.2016 fixing the hearing on 21.11.2016 hearing on 21.11.2016. In the said notice, the Assessing Officer n the said notice, the Assessing Officer proposed additions in respect of deposits in bank as well as bogus in respect of deposits in bank as well as bogus in respect of deposits in bank as well as bogus purchases. As matter was approaching toward limitation . As matter was approaching toward limitation . As matter was approaching toward limitation for passing the assessment order passing the assessment order, on 22.11.2016 the the assessee filed a letter objecting to the reopening of the assessment. T he reopening of the assessment. T he reopening of the assessment. The Assessing Officer disposed off the said objections vide letter dated 22.11.2016. the said objections vide letter dated 22.11.2016. the said objections vide letter dated 22.11.2016.

& 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.

4.1 We have heard rival submissions and material placed on We have heard rival submissions and material placed on We have heard rival submissions and material placed on record including Paper Book containing pages Paper Book containing pages 1 to 127 1 to 127 filed by the assessee and copy of various decisions filed by both the parties. The assessee and copy of various decisions filed by both the parties assessee and copy of various decisions filed by both the parties Departmental Representative also produced assessment folder and Departmental Representative also produced assessment folder and Departmental Representative also produced assessment folder and filed copies of various notices/documents from the assessment filed copies of various notices/documents from the assessment filed copies of various notices/documents from the assessment folder, which were taken on record. folder, which were taken on record. We have taken note of all the We have taken note of all the Rajnish Bharti HUF 11 & 3941, 4378 & & 3941 4377/MUM/2023 decisions cited by the parties but have referred the decisions which decisions cited by the parties but have referred the decisi decisions cited by the parties but have referred the decisi are relevant to the facts of the case and necessary for disposal of are relevant to the facts of the case and necessary for disposal of are relevant to the facts of the case and necessary for disposal of the issue-in-dispute before us. dispute before us.

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.

“S.

“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.

8. Reference has further been made to judgment of Hon'ble the 8. Reference has further been made to judgment of Hon'ble the 8. Reference has further been made to judgment of Hon'ble the Supreme Court of India in a case of C.C. Alavi Haji v. Supreme Court of India in a case of C.C. Alavi Haji v. Supreme Court of India in a case of C.C. Alavi Haji v. Palapetty Muhammed Palapetty Muhammed [2007] 77 SCL 117/6 SCC 555, wherein , wherein it has been held as under: it has been held as under:- "Section 27 gives rise to a presumption that service of notice "Section 27 gives rise to a presumption that service of notice "Section 27 gives rise to a presumption that service of notice has been effected when it is sent to the correct address by has been effected when it is sent to the correct address by has been effected when it is sent to the correct address by registered post. In view of the said presumption, when stating registered post. In view of the said presumption, when stating registered post. In view of the said presumption, when stating that a notice has been sent by registered post to the address notice has been sent by registered post to the address notice has been sent by registered post to the address of the drawer, it is unnecessary to further aver in the of the drawer, it is unnecessary to further aver in the of the drawer, it is unnecessary to further aver in the complaint that in spite of the return of the notice unserved, it is complaint that in spite of the return of the notice unserved, it is complaint that in spite of the return of the notice unserved, it is deemed to have been served or that the addressee is deemed deemed to have been served or that the addressee is deemed deemed to have been served or that the addressee is deemed to have knowledge to have knowledge of the notice."

9. Reference has been made to judgment of this Court in a 9. Reference has been made to judgment of this Court in a 9. Reference has been made to judgment of this Court in a case of CIT v. Naveen Verma case of CIT v. Naveen Verma [2013] 33 taxmann.com [2013] 33 taxmann.com 527/[2012] 346 ITR 100 (Punj. & Har.) [2012] 346 ITR 100 (Punj. & Har.), wherein it was held as , wherein it was held as under:

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."

12. Heard learned counsel for the parties at length.

16. Further the case i.e.Jindal Forgings case (sup 16. Further the case i.e.Jindal Forgings case (supra), cited by ra), cited by learned counsel for the petitioner will not be applicable to the learned counsel for the petitioner will not be applicable to the learned counsel for the petitioner will not be applicable to the facts of the present case, as in that case only three days time facts of the present case, as in that case only three days time facts of the present case, as in that case only three days time was given to the petitioner to file reply. In the present case, the was given to the petitioner to file reply. In the present case, the was given to the petitioner to file reply. In the present case, the show cause notice was issued to the petitione show cause notice was issued to the petitioner on 26 r on 26-3-2022 (Annexure P-2) and on the 7th day itself, the impugned notice 2) and on the 7th day itself, the impugned notice 2) and on the 7th day itself, the impugned notice dated 01-4-2022 (P 2022 (P-3) was passed. The petitioner instead of 3) was passed. The petitioner instead of filing reply chose to approach this Court. filing reply chose to approach this Court.

17. Finding no merit, the writ petition is dismissed.

17. Finding no merit, the writ petition is dismissed. 6.2.4 The fact of the 6.2.4 The fact of the case and the grounds of appeal

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.

Rajnish Bharti HUF 20 & 3941, 4378 & & 3941 4377/MUM/2023 6.4 The next issue challenging issue challenging validity of reassessment of reassessment on the ground of objections raised not properly dealt by the Assessing ground of objections raised not properly dealt by the Assessing ground of objections raised not properly dealt by the Assessing Officer, has been raised in ground No. 3 has been raised in ground No.

3. In this regard, the Ld. . In this regard, the Ld. CIT(A) in para 6.2.5 to 6.2.6 CIT(A) in para 6.2.5 to 6.2.6 of impugned order has reproduced the has reproduced the order of the AO disposing disposing the objections. The relevant para is . The relevant para is reproduced as under: reproduced as under:

“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. 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.

Rajnish Bharti HUF 23 & 3941, 4378 & & 3941 4377/MUM/2023

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.

“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. 1. In the case of Eureka Stock and Share Broking Services Ltd.

1. In the case of Eureka Stock and Share Broking Services Ltd.

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."

17. There is in fact tangible material to come to the conclusion 17. There is in fact tangible material to come to the conclusion 17. There is in fact tangible material to come to the conclusion that income escaped assessment which we have already that income escaped assessment which we have already that income escaped assessment which we have already discussed. There is thus no question of any change of opinion." discussed. There is thus no question of any change of opinion." discussed. There is thus no question of any change of opinion."

2. Avirat Star Homes Venture (P.) Ltd. Vs 2. Avirat Star Homes Venture (P.) Ltd. Vs ITO, [2019] 102 ITO, [2019] 102 taxmann.com taxmann.com 60 60 (Bombay)/[2019] (Bombay)/[2019] 261 261 Taxman Taxman 184 184 (Bombay)/[2019] 411 ITR 321; (Bombay)/[2019] 411 ITR 321; 3. PCIT Vs Paramount Communication (P.) Ltd.Delhi High 3. PCIT Vs Paramount Communication (P.) Ltd.Delhi High 3. PCIT Vs Paramount Communication (P.) Ltd.Delhi High Courttaxmann.com Courttaxmann.com 409held that Information regarding bogus 409held that Information regarding bogus purchase by assessee received by DRI from CCE which purchase by assessee received by DRI from CCE which purchase by assessee received by DRI from CCE which was passed on to revenue authorities was 'tangible material passed on to revenue authorities was 'tangible material passed on to revenue authorities was 'tangible material outside record' to initiate valid reassessment proceedings; outside record' to initiate valid reassessment proceedings; outside record' to initiate valid reassessment proceedings; Rajnish Bharti HUF 29 & 3941, 4378 & & 3941 4377/MUM/2023

7.2 Thirdly, the Ld. counsel for the assessee assailed , the Ld. counsel for the assessee assailed the validity , the Ld. counsel for the assessee assailed of reassessment proceedings on the ground that no tangible of reassessment proceedings on the ground that no of reassessment proceedings on the ground that no material was provided to the assessee on the basis of which reasons material was provided to the assessee on the basis of which reasons material was provided to the assessee on the basis of which reasons was recorded. In the background of the facts mentioned above, we was recorded. In the background of the facts mentioned above, we was recorded. In the background of the facts mentioned above, we find that the assessee has neither complied with the notice u/s 148 find that the assessee has neither complied with the notice u/s 148 find that the assessee has neither complied with the notice u/s 148 of the Act nor the notice u/s 142(1) of the Act and no such evidence of the Act nor the notice u/s 142(1) of the Act and no such evidence of the Act nor the notice u/s 142(1) of the Act and no such evidence has been placed before us of making such request for providing has been placed before us of making such request for providing has been placed before us of making such request for providing material on the basis of which reasons were recorded. Thus, the material on the basis of which reasons were recorded. T material on the basis of which reasons were recorded. T contentions of the assessee are accordingly rejected. contentions of the assessee are accordingly rejected. contentions of the assessee are 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:

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 :

6.3.2 The appellant assailed the AO and filed detailed reply 6.3.2 The appellant assailed the AO and filed detailed reply 6.3.2 The appellant assailed the AO and filed detailed reply placing reliance on a number of case laws. The submission of placing reliance on a number of case laws. The submission of placing reliance on a number of case laws. The submission of the appellant is examined. Regarding the taxability of such the appellant is examined. Regarding the taxability of such the appellant is examined. Regarding the taxability of such transactions, the reliance is placed on the decisions of transactions, the reliance is placed on the decisions of transactions, the reliance is placed on the decisions of jurisdictional Mumbai High Court/ITAT in the following cases jurisdictional Mumbai High Court/ITAT in the following cases jurisdictional Mumbai High Court/ITAT in the following cases on on the the issue issue of of estimation e stimation of of profits profits where where bogus bogus accommodation accommodation entries of purchases had been taken:

Rajnish Bharti HUF 35 & 3941, 4378 & & 3941 4377/MUM/2023 i) In a recent judgement, the Mumbai High Court in the case of i) In a recent judgement, the Mumbai High Court in the case of i) In a recent judgement, the Mumbai High Court in the case of PCIT. Mumbai vs Vishwashakti Construction ITXA. 1016 & PCIT. Mumbai vs Vishwashakti Construction ITXA. 1016 & PCIT. Mumbai vs Vishwashakti Construction ITXA. 1016 & 1026 of 2018 dated 04.05.2023 had held as 1026 of 2018 dated 04.05.2023 had held as "5. An appeal was preferred before the CIT(A) by the assessee, l was preferred before the CIT(A) by the assessee, l was preferred before the CIT(A) by the assessee, who concurred with the A.O. that purchases from the ten who concurred with the A.O. that purchases from the ten who concurred with the A.O. that purchases from the ten parties in question were bogus but held that the entire amount parties in question were bogus but held that the entire amount parties in question were bogus but held that the entire amount of such purchases could not be added to the total income and of such purchases could not be added to the total income and of such purchases could not be added to the total income and that only the profit elem that only the profit element embedded and suppressed in the ent embedded and suppressed in the disputed purchases be assessed to income, which he disputed purchases be assessed to income, which he disputed purchases be assessed to income, which he estimated at 12.5% The CIT(A) accordingly retained the estimated at 12.5% The CIT(A) accordingly retained the estimated at 12.5% The CIT(A) accordingly retained the addition to the extent of 12.5% while deleting the rest. addition to the extent of 12.5% while deleting the rest.

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.

10. The ground No. 6 of the appeal of the assessee relate to The ground No. 6 of the appeal of the assessee relate to The ground No. 6 of the appeal of the assessee relate to credit/deposits of Rs.10,55,84,256/ credit/deposits of Rs.10,55,84,256/- which were held by the which were held by the Assessing Officer as unexplained. However, the Ld. CIT(A) has Assessing Officer as unexplained. However, the Ld. CIT(A) has Assessing Officer as unexplained. However, the Ld. CIT(A) has restricted addition of 2% of the such deposits following the finding restricted addition of 2% of the such deposits following the finding restricted addition of 2% of the such deposits following the finding in the case of Shri Rajnish Bharati (Individual). The relevant finding case of Shri Rajnish Bharati (Individual). The relevant finding case of Shri Rajnish Bharati (Individual). The relevant finding of the Ld. CIT(A) is reproduced as under: of the Ld. CIT(A) is reproduced as under:

“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.

20. We are in agreement with the view taken by the Tribunal.

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.

11. In ground No. 7, the assessee has prayed for In ground No. 7, the assessee has prayed for In ground No. 7, the assessee has prayed for admitting the appeal and granting appeal and granting stay against the recovery of demand. F recovery of demand. For seeking stay on the demand demand, the assessee has to file , the assessee has to file a proper stay application before the application before the ITAT in terms of section 254(2) of the Act 254(2) of the Act. . We don’t know whether any such application has been filed by the We don’t know whether any such application has been filed by the We don’t know whether any such application has been filed by the assessee, but it is clear that no it is clear that no stay petition of assessee petition of assessee was listed before us and therefore, this before us and therefore, this ground of appeal

is dismissed as ground of appeal is dismissed as infructuous. The ground No.

7. (ii) and 7(iii infructuous. The ground No.

7. (ii) and 7(iii) stands stands already covered while disposing the grounds challenging validity of grounds challenging validity of reassessment as reassessment as well as ground on merit. The ground No. 8 is general in nature well as ground on merit. The ground No. 8 is general in nature well as ground on merit. The ground No. 8 is general in nature therefore, same is dismissed as therefore, same is dismissed as infructuous.

12. The ground raised in assessment year 2010 The ground raised in assessment year 2010 The ground raised in assessment year 2010-11 by the assessee and the Revenue are reproduced as under: assessee and the Revenue are reproduced as under:

Assessee’s Ground

1. The Learned The Learned Commissioner of Income Tax Appeal (Ld. CITA) Tax Appeal (Ld. CITA) has erred in upholding the impugned assessment order has erred in upholding the impugned assessment order has erred in upholding the impugned assessment order passed by the Learned Assessing Officer (Ld. A.O.) u/s 143(3) passed by the Learned Assessing Officer (Ld. A.O.) u/s 143(3) passed by the Learned Assessing Officer (Ld. A.O.) u/s 143(3) r.w.s. 147 without issuing/ serving any notice u/s 148. The r.w.s. 147 without issuing/ serving any notice u/s 148. The r.w.s. 147 without issuing/ serving any notice u/s 148. The Ld. CITA has further erred in not CITA has further erred in not considering the fact that the nsidering the fact that the Ld. A.O. had failed to provide any proof of issue/ service of Ld. A.O. had failed to provide any proof of issue/ service of Ld. A.O. had failed to provide any proof of issue/ service of Rajnish Bharti HUF 42 & 3941, 4378 & & 3941 4377/MUM/2023 notice u/s 148, despite specific request being made from the notice u/s 148, despite specific request being made from the notice u/s 148, despite specific request being made from the appellant.

2. Without prejudice to the issue of notice u/s 148, the Ld.

2. Without prejudice to the issue of notice u/s 148, the Ld.

5. On the facts, in the circumstances of the case and in law, On the facts, in the circumstances of the case and in law, On the facts, in the circumstances of the case and in law, Ld. CITA has erred in upholding the disallowance of Ld. CITA has erred in upholding the disallowance of Ld. CITA has erred in upholding the disallowance of addition of bank deposits unde of bank deposits under the pretext of unexplained credits in credits in bank accounts without considering bank accounts without considering the fact that the deposits and credits in the said bank accounts had appeared due to a and credits in the said bank accounts had appeared due to a and credits in the said bank accounts had appeared due to a transfer from another bank account of the appellant, so they transfer from another bank account of the appellant, so they transfer from another bank account of the appellant, so they were not independent credits and a were not independent credits and accordingly there was no ccordingly there was no income due to these credits. income due to these credits.

5. The appellant therefore prays your honour to be kind The appellant therefore prays your honour to be kind The appellant therefore prays your honour to be kind enough to: i. Admit the appeal and grant stay against the enough to: i. Admit the appeal and grant stay against the enough to: i. Admit the appeal and grant stay against the recovery of demand, ii. Set aside the order of A.O., iii. Delete recovery of demand, ii. Set aside the order of A.O., iii. Delete recovery of demand, ii. Set aside the order of A.O., iii. Delete all illegal additions an all illegal additions and disallowances made by A.O., iv. Grant d disallowances made by A.O., iv. Grant justice Revenue’s Ground

1. " Whether on the facts and in the circumstances of the case 1. " Whether on the facts and in the circumstances of the case 1. " 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 u/s. 69C of Rs. made u/s. 69C of Rs. 1,32,93,190/- from 100% to 12.5% of from 100% to 12.5% of the bogus purchases, even after considering the said us purchases, even after considering the said us purchases, even after considering the said purchases to be bogus." purchases to be bogus."

Rajnish Bharti HUF 43 & 3941, 4378 & & 3941 4377/MUM/2023

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

in the assessment year 2009 ground raised in the assessment year 2009-10. As the facts and 10. As the facts and circumstances in the year under c circumstances in the year under consideration are identical to the onsideration are identical to the facts and circumstances circumstances in assessment year 2009-10 and therefore, 10 and therefore, following our finding in assessment year 2009 ing in assessment year 2009-10, t 10, the grounds No. 1 to 4 of the appeal of the assessee are decided mutatis mutandis. 1 to 4 of the appeal of the assessee are decided mutatis mutandis. 1 to 4 of the appeal of the assessee are decided mutatis mutandis.

14. As far as ground No. 5 As far as ground No. 5 of the appeal of assessee of the appeal of assessee and ground Nos. 1 to 3 of the appeal of the Revenue are concerned . 1 to 3 of the appeal of the Revenue are concerned, there is . 1 to 3 of the appeal of the Revenue are concerned slight changes in facts as compared to assessment year 2009 in facts as compared to assessment year 2009 in facts as compared to assessment year 2009-10. In the year under consideration, the Assessing Officer has made entire the year under consideration, the Assessing Officer has made en the year under consideration, the Assessing Officer has made en disallowance disallowance disallowance of of of the the the bogus bogus bogus purchases purchases purchases amounting amounting amounting to to to Rajnish Bharti HUF 44 & 3941, 4378 & & 3941 4377/MUM/2023 Rs.1,32,93,190/-. The relevant . The relevant finding of the Assessing Officer is finding of the Assessing Officer is reproduced as under: reproduced as under:

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:

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 o of the above cited judicial decisions. The AO action o of the above cited judicial decisions. The AO action of disallowing total purchase of Rs. 13293190/ disallowing total purchase of Rs. 13293190/- is not proper is not proper and the disallowance is restricted to 12.5% of the total and the disallowance is restricted to 12.5% of the total and the disallowance is restricted to 12.5% of the total purchases, which had been done by the AO in immediately purchases, which had been done by the AO in immediately purchases, which had been done by the AO in immediately preceding A.Y. Accordingly, the addition on account of the preceding A.Y. Accordingly, the addition on account of the preceding A.Y. Accordingly, the addition on account of the bogus purchases is rest bogus purchases is restricted to 12.5% of Rs. 13293190/ ricted to 12.5% of Rs. 13293190/-. The AO is directed to work out the disallowance @12.5%. The AO is directed to work out the disallowance @12.5%. The AO is directed to work out the disallowance @12.5%. The Ground of Appeal is partly allowed. Ground of Appeal is partly allowed.

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.

For the current assessment year, the assessee For the current assessment year, the assessee For the current assessment year, the assessee falls into this 15.2 second category. The assessee has failed to substantiate the linkage second category. The assessee has failed to substantiate the linkage second category. The assessee has failed to substantiate the linkage between the goods reported in bogus purchases and actual sales between the goods reported in bogus purchases and actual sales between the goods reported in bogus purchases and actual sales using day-to-day inventory records or a stock register. The day inventory records or a stock register. The day inventory records or a stock register. The Assessing Officer (AO) has specifically noted t Assessing Officer (AO) has specifically noted that no stock register hat no stock register was produced by the assessee, further supporting the conclusion was produced by the assessee, further supporting the conclusion was produced by the assessee, further supporting the conclusion that the entire amount of bogus purchases should be disallowed. In that the entire amount of bogus purchases should be disallowed that the entire amount of bogus purchases should be disallowed view of the above facts and circumstances, the finding of the Ld. view of the above facts and circumstances, the finding of the Ld. view of the above facts and circumstances, the finding of the Ld. CIT(A) is set aside and order of the CIT(A) is set aside and order of the Assessing Officer is sustained. Assessing Officer is sustained. The ground Nos. 1 to 3 of the appeal of the Revenue is accordingly . 1 to 3 of the appeal of the Revenue is accordingly . 1 to 3 of the appeal of the Revenue is accordingly allowed.

16. The ground No. 5 of the appeal of the assessee and ground No. The ground No. 5 of the appeal of the assessee and ground No. The ground No. 5 of the appeal of the assessee and ground No. 4 and 5 of the appeal of the Revenue relates to addition of 4 and 5 of the appeal of the Revenue relates to addition of 4 and 5 of the appeal of the Revenue relates to addition of unexplained deposits/ unexplained deposits/credits in the bank account amounting to credits in the bank account amounting to Rs.14,41,26,765/-. The Ld. CIT(A) has reduced this addition to the . The Ld. CIT(A) has reduced this addition to the . The Ld. CIT(A) has reduced this addition to the 2% of such credit/deposits. Aggrieved, both the assessee and the 2% of such credit/deposits. Aggrieved, both the assessee and the 2% of such credit/deposits. Aggrieved, both the assessee and the Revenue are in appeal before the Tribunal. Since above grounds are Revenue are in appeal before the Tribunal. Since above grounds are Revenue are in appeal before the Tribunal. Since above grounds are identical to the ground in relation to the deposits/credit in bank ground in relation to the deposits/credit in bank ground in relation to the deposits/credit in bank account adjudicated in assessment year 2009 account adjudicated in assessment year 2009-10 and therefore, 10 and therefore, following our finding in assessment year 2009 following our finding in assessment year 2009-10. These grounds 10. These grounds are also decided mutatis mutandis. are also decided mutatis mutandis.

Rajnish Bharti HUF 54 & 3941, 4378 & & 3941 4377/MUM/2023

Order pronounced in the open Court on nounced in the open Court on 30/01/2025. /01/2025.