JAYANT ASHOK JOSHI,,NASHIK vs. INCOME TAX OFFICER,,

आयकर अपीलीय अिधकरण “ए” �यायपीठ पुणे म� । IN THE INCOME TAX APPELLATE TRIBUNAL “A” BENCH, PUNE BEFORE SHRI D. KARUNAKARA RAO, AM AND SHRI PARTHA SARATHI CHAUDHURY, JM आयकर अपील सं. / ITA Nos.54 & 55/PUN/2017 िनधा�रण वष� / Assessment Years : 2009-10 & 2010-11 Jayant Ashok Joshi, Krishna Kunj, Rajpal Colony, Makhmalabad, Panchavati, Nashik-422003. .......अपीलाथ� / Appellant PAN : ABEPJ3735C बनाम / V/s. DCIT, Circle-1, ……��यथ� / Respondent Nashik. Assessee by : Smt. Deepa Khare Revenue by : Shri S. P. Walimbe सुनवाई क� तारीख / Date of Hearing : 19.09.2019 घोषणा क� तारीख / Date of Pronouncement : 23.09.2019 आदेश / ORDER PER D. KARUNAKARA RAO, AM: There are two appeals under consideration filed by the assessee. Both the appeals are directed against the order of CIT(A)-1, Nashik commonly dated 07.11.2016 for the Assessment Years 2009-10 and 2010-11 respectively. Since the facts and issues are common in both the appeals, therefore, these were heard together and are being disposed of by this composite order. 2. The grounds raised by the assessee are common in both the appeals. Therefore, for the sake of brevity, we proceed to extract the grounds in ITA No.54/PUN/2017 for the assessment year 2009-10 as follows :- “1. On the facts and circumstances of the case, the reassessment proceedings u/s 147 being initiated in absence of material showing escapement of income in the hands of the appellant is void and may kindly be cancelled. The material

2 ITA Nos.54 & 55/PUN/2017 based for reopening is vague and has no live link with escapement of income in the hands of the appellant. 2. The learned CIT(A) erred in law and on facts in confirming addition of Rs.17,54,878/- being 25% of total purchase of Rs.70,19,512/- on account of inflated purchases alleged to be from bogus parties. 3. The learned CIT(A) erred in law and on facts in confirming the addition inspite of holding the ld. A.O. has not brought on record any evidence to prove that the purchases were bogus and further ignoring the evidence produced in support of the purchases. 4. The appellant craves to add, alter, modify or substitute any ground of appeal at the time of hearing.” 3. Before us, at the outset, ld. Counsel for the assessee demonstrated that this is a case of bogus purchases where the trail of goods were demonstrated. Further, bringing our attention to the order of the Assessing Officer and the CIT(A), ld. Counsel submitted that both the officers i.e. Assessing Officer and CIT(A) resorted to make the addition applying the ad-hoc rate of 25% of the said bogus purchases for the assessment years 2009-10 and 2010-11 respectively. The additions are Rs.52,64,634/- for A.Y. 2009-10 and Rs.24,48,097/- for A.Y. 2010-11. 4. In this background, ld. Counsel mentioned that in this case the decision of the Tribunal in the case of M/s. Chhabi Electricals Pvt. Ltd. and others Vs. DCIT in ITA No.795/PUN/2014, relating to assessment year 2010-11, decided on 28-04-2017 should apply and the disallowance should be restricted only @ 10% of the bogus purchases. 5. The ld. DR for the Revenue, on the other hand, relied heavily on the orders of the Assessing Officer and the CIT(A).

3 ITA Nos.54 & 55/PUN/2017 6. On hearing both the parties, we find this is a case of bogus purchases reassessed by reopening the completed assessment. The assessee raised the issue of violation to the principle of natural justice raised in the grounds on the basis of “change of opinion”. Deviating from the above legal issue, referring to the merits of addition, the assessee relied heavily on the order of the Co- ordinate Bench of the Tribunal in the case of M/s. Chhabi Electricals Pvt. Ltd. and others (supra). The assessee pleaded for restricting the disallowance @ 10% of the bogus purchases. Meanwhile, we find the Jurisdictional High Court has decided similar issue in the case of Pr.CIT vs. M/s. Mohommad Haji Adam & Co. vide Income Tax Appeal No.1004 of 2016 dated 11.02.2019. In para 8 of this judgement (supra), we find the Hon’ble Jurisdictional High Court dismissed the appeals filed by the Revenue with the following observations :- “8. In the present case, as noted above, the assessee was a trader of fabrics. The A.O. found three entities who were indulging in bogus billing activities. A.O. found that the purchases made by the assessee from these entities were bogus. This being a finding of fact, we have proceeded on such basis. Despite this, the question arises whether the Revenue is correct in contending that the entire purchase amount should be added by way of assessee's additional income or the assessee is correct in contending that such logic cannot be applied. The finding of the CIT(A) and the Tribunal would suggest that the department had not disputed the assessee's sales. There was no discrepancy between the purchases shown by the assessee and the sales declared. That being the position, the Tribunal was correct in coming to the conclusion that the purchases cannot be rejected without disturbing the sales in case of a trader. The Tribunal, therefore, correctly restricted the additions limited to the extent of bringing the G.P. rate on purchases at the same rate of other genuine purchases. The decision of the Gujarat High Court in the case of N.K. I (supra) cannot be applied without reference to the facts. In fact in paragraph 8 of the same Judgment the Court held and observed as under- “ So far as the question regarding addition of Rs.3,70,78,125/- as gross profit on sales of Rs.37.08 Crores made by the Assessing Officer despite the fact that the said sales had admittedly been recorded in the regular books during Financial Year 1997-98 is concerned, we are of the view that the assessee cannot be punished since sale price is accepted by the revenue. Therefore, even if 6 % gross profit is taken into account, the corresponding cost price is required to be deducted and tax cannot be levied on the same price. We have to reduce the selling price accordingly

4 ITA Nos.54 & 55/PUN/2017 as a result of which profit comes to 5.66 %. Therefore, considering 5.66 % of Rs.3,70,78,125/- which comes to Rs.20,98,621.88 we think it fit to direct the revenue to add Rs.20,98,621.88 as gross profit and make necessary deductions accordingly. Accordingly, the said question is answered partially in favour of the assessee and partially in favour of the revenue.”

5 ITA Nos.54 & 55/PUN/2017 stands remanded to the file of the Assessing Officer. Considering the commonality of the facts, we are of the opinion the issue under consideration should also be remanded to the file of the Assessing Officer with similar direction as given in para 4 of the order of the Tribunal (supra). The Assessing Officer is also directed to examine the arguments relating to the change of opinion while passing a speaking order on technical ground after granting reasonable opportunity of being heard to the assessee. Accordingly, all the issues raised by the assessee in both the appeals on legal as well as on merits are allowed for statistical purposes. 9. In the result, both the appeals of the assessee are allowed for statistical purposes. Order pronounced on 23rd day of September, 2019. Sd/- Sd/- (PARTHA SARATHI CHAUDHURY) (D. KARUNAKARA RAO) �याियक सद�य/JUDICIAL MEMBER लेखा सद�य/ACCOUNTANT MEMBER पुणे / Pune; �दनांक / Dated : 23rd September, 2019 Sujeet आदेश क� �ितिलिप अ�ेिषत / Copy of the Order forwarded to : अपीलाथ� / The Appellant. 1. ��यथ� / The Respondent. 2. 3. The CIT(A)-1, Nashik. 4. The CCIT, Nashik. िवभागीय �ितिनिध, आयकर अपीलीय अिधकरण, “ए” ब�च, 5. पुणे / DR, ITAT, “A” Bench, Pune. गाड� फ़ाइल / Guard File. 6. आदेशानुसार / BY ORDER, // True Copy // Senior Private Secretary आयकर अपीलीय अिधकरण, पुणे / ITAT, Pune.