IN INCOME TAX APPELLATE TRIBUNAL MUMBAI BENCH C , MUMBAI BEFORE SHRI AMIT SHUKLA, JUDICIAL MEMBER AND SHRI RAJESH KUMAR, ACCOUNTANT MEMBER ITA No. : 7708/Mum/2014 (Assessment year: 2008-09) ITA No. : 7709/Mum/2014 (Assessment year: 2009-10) ITA No. : 7710/Mum/2014 (Assessment year: 2010-11) Vs DCIT Cent. Cir.10, M/s Pride Steels Pvt Ltd, R. No.108, 1st Floor, Flat No.109, Pratyakshkar Bhavan, Ashirwad Building, BKC Bandra, Ahemdabad Street, Mumbai -400 051 Masjid (East), Mumbai -400 009 PAN:AAACP 2140 B (Appellant) (Respondent) Appellant by None Respondent by Shri Deepkant Prasad Date of Hearing : 19-10-2016 Date of Pronouncement : 19-10-2016 ORDER PER BENCH: aforesaid appeals have been filed by assessee against common impugned order dated 16.10.2014, passed by Ld. CIT(Appeals)-37, Mumbai for assessment year 2008-09, 2009-10 and 2010-11. Since issue involved in all 2 M/s Pride Steels Pvt Ltd ITAs No. : 7708 to 7710/Mum/2014 three appeal are common arising out of identical set of facts, therefore, they are being disposing off by way of this consolidated order. 2. At outset, it is noticed that, first date of hearing was fixed for 01.08.2006 and assessee was intimated date of hearing through notice on address mentioned in Form No.36. Thereafter, on 01.08.2016, again notice was sent through RPAD fixing date of hearing for 19.10.2016. said registered post was sent on same address as mentioned in column 10 of Form No.36. However, said RPAD too has been returned back unserved. Thus, it is presumed that, assessee has either shifted his address without intimating to Registry or is not interested in prosecuting its appeal. Accordingly, we are proceeding to decide appeal on merits. 3. common issue involved in all these appeals is estimation of commission income @ 3% on transaction of purchase and sales. 4. brief facts, as noted in impugned order are that, search and seizure action under section 132(1) was conducted in case of Rustomjee Evershine Group on 20.10.2010 wherein, certain data and documents were seized belonging to assessee. Accordingly, notice under section 153A r.w.s. 153C was issued on 26.12.2012 to assessee, in response to which assessee has also filed its return of income. assessee was engaged in business of trade/supply of iron and steel such as M S Plate, Sheet, Pipes and other allied products. survey was conducted on 3 M/s Pride Steels Pvt Ltd ITAs No. : 7708 to 7710/Mum/2014 assessee Company on 05.12.2012 under section 133A by DDIT(Inv.), Unit 1(4), Mumbai, during course of which certain bills of purchase and sales and other information was gathered. It was found that assessee company along with its sister concern, M/s Pawan Jyoti Steels Private Limited was taking accommodation entries in nature of bogus purchases from suspicious hawala traders, who were known in market of having indulged in providing only accommodation entries. In search proceedings of Rustomjee Group, it was found that assessee company along with its sister concern M/s Pawan Jyoti Steels Private Limited had issued accommodation bills to Rustomjee Group. bill invoices were found to be unsigned. order no. was mentioned as verbal . Where ever, order nos. was mentioned, they were numbered serially and thereafter bills were prepared at one go. None of vouchers were supported by goods receipt or delivery challans or any other transport documents. acceptance of accommodation bill was admitted by Shri Hemant Chokshi of Rustomjee Group in statement recorded on 20.10.20010. relevant extract of statement has been incorporated in assessment order. At time of survey, statement of Director of assessee company was recorded under section 131 at premises of assessee-company, wherein he admitted that, he was involved in giving accommodation bills to Rustomjee Group. However, it was also stated that for other parties, assessee was carrying out genuine and actual transactions. Assessing Officer had further noted that, assessee company along with sister concern, had admitted that, they have provided accommodation entries to tune of Rs.1.29 crores. Since assessee was unable to give 4 M/s Pride Steels Pvt Ltd ITAs No. : 7708 to 7710/Mum/2014 correct details of delivery of goods and other details, he therefore, rejected books of accounts and estimated net profit report of 2.5%, that is, 2% on accommodation sales and 3% for other sales right from assessment year 2008-09 to 2010-11. Ld. CIT (A) after noting down following facts observed and held as under:- 4.5 position emerging from copies of profit & loss account and based on assessment orders is tabulated below: Particulars AY 2005-06 2006-07 2007-08 2008-09 Sales 56,542,240 59,948,599 181,638,984 241,977,049 Other Income - 1,000 25,626 - Purchases /COGS 55,662,891 58,938,498 176,898,810 235,898,931 Gross Profit 879,349 1,010,101 4,740,174 6,078,118 GP % of Sales 1.56 1.68 2.61 2.51 Net Profit 26,086 120,927 211,560 202,221 NP % of Sales 0.05 0.20 0.12 0.08 Enhancement as Per AO 1,387,470 1,377,563 4,329,415 6,371,346 NP as per AO 1,413,556 1,498,714 4,540,975 6,573,567 NP as % of sales As per AO 2.5% 2.50% 2.50% 2.72% Particulars AY 2009-10 2010-11 2011-12 Sales 235,882,382 242,114,182 264,862,070 Other Income 90,361 7,116 327,248 Purchases /COGS 232,720,740 236,987,400 258,844,013 Gross Profit 3,161,642 5,126,782 6,018,057 GP % of Sales 1.34 2.12 2.27 Net Profit 234,474 830,050 2,210,428 NP % of Sales 0.14 0.34 0.46 Enhancement as Per AO 5,840,943 5,345,978 5,260,673 NP as per AO 6,165,417 6,176,028 6,471,101 NP as % of sales As per AO 2.61% 2.55% 2.44% 4.6. It has been contended that statement made by personnel of Rustomjee Group does not state that transactions are not genuine. It is seen that Director of Keystone Realtors Pvt Ltd Shri Boman Irani of Rustomjee Group in his various statements recorded including that on 21/10/2010 has clearly admitted that no material was received from appellant company and its sister concern and therefore has admitted its false claim of expenditure to extent of Rs.1.92 cores. Even Shri Govardhan Shah of 5 M/s Pride Steels Pvt Ltd ITAs No. : 7708 to 7710/Mum/2014 appellant has admitted as much by his detailed depreciation of modus operandi. Hence this contention of appellant is contrary to facts and is rejected. 4.7 It has been contended that impugned transactions with Rustomjee Group is for AY 2008-09 to AY 2010-11 and how can that be extrapolated to earlier and subsequent assessment years and to transactions other than that with Rustomjee Group. I find that assessing officer has clearly brought parties who have given hawala bills without any genuine transactions. appellant has shown purchases from these parties issing Hawala Bills. Further, total purchases from these parties far exceeds transactions with Rustomjee Group. Despite being confronted by these facts, appellant has been unable to rebut same before assessing officer. Nothing is presented before me either. Lastly, evidences to establish genuineness of other sale and purchase transactions were not presented before me nor assessing officer. only plea taken is that books of accounts were impounded by sales tax authorities. Even after 3 years of sales tax action, why appellant could not gather information to prove any genuineness of transactions as is claimed is not explained. It would know at least some parties with whom it had regular transactions. Confirmations from such parties could have been obtained. It could have obtained information from its bank statements from its bankers and reconstructed details of purchase and sales transactions, if they were indeed genuine. No such efforts were made. In such circumstances, logical inference is that appellant did not have any genuine transactions and is merely using action by sales tax authority as ruse to express helplessness. contention of appellant is rejected. transactions are rightly held to be in nature of providing accommodation bills by assessing officer. 4.8 Before me it was argued that no banks were produced before assessing officer so how can books be rejected. Section 145(3) speaks of situation where assessing officer is not satisfied about correctness or completeness of accounts of 6 M/s Pride Steels Pvt Ltd ITAs No. : 7708 to 7710/Mum/2014 assessee. In present case, return is based on audited accounts but appellant is unable to substantiate its accounts by producing books and basic records. It is admitted fact that purchases are bogus as is sales. Thus, no fault can be found in action of assessing officer in rejecting books of accounts of appellant . 6. After hearing Ld. DR and on perusal of finding given in impugned orders, we find that, neither before CIT(A) nor before us there is any rebuttal of finding of fact arrived at on basis of appraisal of facts and material gathered. Even for application of net profit rate, assessee has been unable to give any comparable transaction or any other material fact to demonstrate that net profit rate estimated by Assessing Officer is either high or excessive. Thus, in absence of any contrary material, we have no option but to affirm order of CIT(A). Accordingly, order of CIT(A) is affirmed and resultantly, grounds raised in all appeals of assessee are dismissed. 7. In result, appeals of assessee are dismissed. Order pronounced in open court on 19th October, 2016. Sd/- Sd/- (RAJESH KUMAR) (AMIT SHUKLA) ACCOUNTANT MEMBER JUDICIAL MEMBER Mumbai, Date: 19th October, 2016. 7 M/s Pride Steels Pvt Ltd ITAs No. : 7708 to 7710/Mum/2014 Copy to:- 1) /The Appellant. 2) Respondent. 3) CIT (Appeal) 37, Mumbai. 4) CIT-Central-I, Mumbai 5) D.R. C Bench, Mumbai. 6) Copy to Guard File. By Order / / True Copy / / Dy./Asstt. Registrar I.T.A.T., Mumbai * . . *Chavan, Sr.PS M/s Pride Steels Pvt Ltd v. DCITCent. Cir.10, Mumbai