MITHALAL BHAWARLAL JAIN,MUMBAI vs. ITO WD - 19(2)(3), MUMBAI

PER B.R. BASKARAN, A.M :

The assessee has filed this Miscellaneous Application submitting that there are mistakes apparent from record in theorder dated
05-10-2018 passed by the Tribunal in ITA No. 1131/Mum/2018. 2. The appeal of the assessee in ITA No.1131/Mum/2018 was dismissed by the Tribunal, vide its order dated 05-10-2018. The Ld A.R submitted that the issues agitated therein were related to the validity of reopening of assessment and addition of 12.50% of the value of alleged bogus purchases. Since there were mistakes apparent from record, the assessee filed a Miscellaneous Application before the Tribunal, which was numbered as MA No.328/Mum/2019. However, the said MA was rejected by the co-ordinate bench, vide its order dated 11-10-2019.Not satisfied with the order so passed by the Tribunal, the assessee filed a Writ Petition before the Hon’ble Bombay High Court challenging the order dated
11-10-2019 passed by the Tribunal against the order passed in the MA.
The said writ petition was numbered as W.P. No. 1241/2021. The Hon’ble
Bombay High Court, vide its order dated February 08, 2022, set aside the order dt. 11-10-2019 passed by the Tribunal in the MA and restored the matter back to the file of the Tribunal with a direction to dispose-of the Miscellaneous Application of the assessee afresh. Accordingly, the Miscellaneous Application was restored back by the Tribunal and the same is placed before this Bench.
3. The Ld.AR submitted that the issue involved in the appeal was related to alleged bogus purchases made by the assessee from the suppliers, who were identified as accommodation entry providers. Before

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the Tribunal, the assessee had challenged the validity of reopening of assessment and on merits, the assessee contended that the addition should be restricted to difference between the Gross Profit on alleged bogus purchases and undisputed purchases, as laid down by the Hon’ble
Bombay High Court in the case of PCIT vs. Mohommad Haji Adam & Co.,
[ITA No. 1004 of 2016, dt.11-02-2019]. However, the Tribunal without adjudicating both the above said grounds, has sustained the addition made by Ld CIT(A) to the extent of 12.5% of the value of alleged bogus purchases. Hence, the assessee filed this Miscellaneous Application. The Ld.AR submitted that non-adjudication of the grounds specifically urged by the assessee has resulted in a mistake apparent from record in the impugned order passed by the Tribunal. Accordingly, he prayed for re-call of the said order.
4. We heard the Ld.DR and perused the record. We notice that the specific grounds raised by the assessee, which are narrated above have not been disposed of by the Tribunal. Hence, we are of the view that there is merit in the Miscellaneous application filed by the assessee, as non- disposal of specific grounds urged by the assessee results in mistakes apparent from the record. Since those grounds also go to the root of the matter, we recall the order dt.05-10-2018 passed by the Tribunal.
Accordingly, the Miscellaneous application filed by the assessee is allowed.
5. With the concurrence of both the parties, we took up the above said appeal itself for hearing.
6. The Ld.AR did not press ground relating to validity of reopening of assessment. He submitted that the addition should be restricted to the extent of difference between Gross Profit earned on alleged bogus

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purchases and the gross profit earned on undisputed purchases, if the rate of GP on alleged bogus purchases is less than the rate of GP on other purchases. He submitted that the above methodology has been upheld by the Hon’ble Bombay High Court in the case of PCIT vs. Mohommad Haji
Adam & Co.,(supra).
7. We heard the Ld.DR and perused the record. The Hon’ble Bombay
High Court has held in the case of PCIT vs. Mohommad Haji Adam & Co.,
(supra) that the addition should be restricted to the difference between
Gross Profit on alleged bogus purchases and the GP on undisputed purchases, if the rate of GP on alleged bogus purchases is less than the rate of GP on genuine purchases. We notice that the decision rendered by Ld CIT(A) is not in accordance with the above said decision of Hon’ble
Bombay High Court. Accordingly, we set aside the order passed by the Ld.CIT(A) and restore this issue to the file of the AO with a direction to compute the addition in accordance with the decision rendered by the Hon’ble Bombay High Court in the case of PCIT vs. Mohommad Haji Adam
& Co.,(supra).
8. In the result, the Miscellaneous Application filed by the assessee is allowed and the appeal of the assessee is partly allowed.

Order pronounced in the open court on 02-01-2025 [ANIKESH BANERJEE]

[B.R. BASKARAN]
JUDICIAL MEMBER ACCOUNTANT MEMBER

Mumbai, Dated: 02-01-2025

TNMM

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Copy to :
1)
The Appellant
2)
The Respondent
3)
The CIT concerned
4)
The D.R, “SMC” Bench, Mumbai
5)
Guard file

By Order

Dy./Asst.