1. Aforesaid appeal by Revenue for Assessment Year [AY] 2010-11 contest the order of the Ld. Commissioner of Income-Tax (Appeals)-3 [CIT(A)], Mumbai, Appeal No. CIT(A)-3/IT-112/ACIT-2(1)(1)/2016-17 dated 16/01/2017 qua certain relief provided to the assessee on account of alleged bogus purchases and u/s 68 of the. ITA No. 2564/Mum/2017 M/s. Blue Circle Organics Pvt.Ltd. Assessment Year: 2010-11 2

2.1 Facts in brief are that the assessee being resident corporate entity stated to be engaged in manufacturing of fine chemicals was subjected to reassessment proceedings for impugned AY u/s 143(3) read with Section 147 on 31/03/2015 by Ld. Assistant Commissioner of Income Tax-Circle 2(1)(1), Mumbai [AO]. The income of the assessee was determined at Rs.586.59 lakhs under normal provisions after certain additions as against revised returned income of Rs.379.44 Lacs filed by the assessee on 07/02/2011. The addition of Rs.129.89 Lacs on account of alleged bogus purchases & addition of Rs.77.25 Lacs u/s 68 is the subject matter of present appeal before us.

2.2 The reassessment proceedings got triggered pursuant to receipt of certain information that the assessee stood benefitted by accommodation purchase bills aggregating to Rs.129.89 Lacs from three entities, the details of which have already been extracted at para 2 of the quantum assessment order. Consequently, notice u/s 148 dated 13/03/2104 was issued which was followed by statutory notices u/s. 143(2) and 142(1).

2.3 The assessee was asked to substantiate purchases made from three suppliers. In response, the assessee submitted copy of purchase invoices & bank statements but expressed inability to produce any of the parties for verification of the transaction. The overall factual matrix led the Ld. AO to believe that the assessee failed to discharge the onus casted upon him to prove the genuineness of the purchases and therefore, these were added to the income of the assessee. ITA No. 2564/Mum/2017 M/s. Blue Circle Organics Pvt.Ltd. Assessment Year: 2010-11 3

2.4 The Ld. AO, in the alternative, opined that since purchases were not made by the assessee from the stated parties, actual goods were purchased from undisclosed sources in cash and therefore the said amount was disallowable in terms of Section 40A (3) of thealso.

2.5 Another addition u/s 68 stem from the fact that the assessee was in receipt of share application money aggregating to Rs.557.25 Lacs from 7 entities as per the following details: - S.No Name Amount (In Rs.)

1. Anikesh Trading Pvt Ltd Rs.25,00,000/-

2. HPL Multi trade Pvt Ltd Rs.25,00,000/-

3. IFSL Ltd Rs.2,00,00,000/-

4. Indravarun Sales Agencies Rs.12,25,000/-

5. Algorithmic Software System Pvt Ltd Rs.15,00,000/-

6. Buniyad Chemicles Ltd Rs.1,00,00,000/-

7. Talent Infoway Ltd Rs.1,80,00,000/- TOTAL Rs.5,57,25,000/- The dispute before us is with respect to 4 entities listed at Serial Nos.1,2,4, & 5 aggregating to Rs.77.25 Lacs which have been added by Ld. AO u/s 68 since the assessee failed to substantiate the same with documentary evidences.

3. Aggrieved, the assessee agitated the same with success before first appellate authority vide impugned order dated 16/01/2017 wherein addition on account of alleged bogus purchases was restricted to 12.5% whereas addition u/s 68 was deleted since the assessee, in the opinion of first appellate authority, demonstrated the fulfilment of primary ingredients of Section 68. Aggrieved, the revenue is in further appeal before us.

4. The Ld. Departmental Representative [DR] submitted that the assessee failed to demonstrate consumption of material and therefore, ITA No. 2564/Mum/2017 M/s. Blue Circle Organics Pvt.Ltd. Assessment Year: 2010-11 4 full additions qua alleged bogus purchases were justified. Regarding addition u/s. 68 of the, it was submitted that the assessee did not file any documentary evidences before Ld. AO. Per Contra, Ld. Authorized Representative for assessee, Sh. H.P.Shah, drawing our attention to the documents placed in the paper-book, submitted that the assessee purchased various chemicals from the stated suppliers which were consumed in the manufacturing process. Regarding addition u/s 68, our attention has been drawn to the supporting documents placed in the paper-book.

5. We have carefully considered the rival submissions and perused relevant material on record including documents placed in the paper book. So far as the addition on account of alleged bogus purchases is concerned, it is noted that the assessee was engaged in manufacturing activities which could not be carried out without actual purchase / consumption of material. The assessee was in possession of primary purchase documents and the payment to suppliers was through banking channels. The books of accounts were subjected to Audit wherein quantitative details have been provided. At the same time, the assessee failed to produce any of the supplier for confirmation of the transactions and could not substantiate delivery of material. Under these circumstances, the estimation of 12.5% as made by first appellate authority, in our opinion, was quite fair & justified which do not require any interference. We order so. This ground stands dismissed.

6. So far as the additions u/s 68 is concerned, the perusal of documents placed in the paper-book on page numbers-148 to 276 reveals that the assessee has placed on record voluminous documents ITA No. 2564/Mum/2017 M/s. Blue Circle Organics Pvt.Ltd. Assessment Year: 2010-11 5 to demonstrate fulfilment of primary ingredients of Section 68 with respect to 4 parties. These documents are certified to have been filed before Ld. AO as well vide letter dated 25/03/2015. However, from the perusal of quantum assessment order, it appears that these documents have been overlooked by Ld. AO since the additions have been made for want of adequate details / documentary evidences. Therefore, keeping in view the same, without delving much deeper, this issue stand remitted back to the file of Ld. AO for fresh re-adjudication in the light of these documentary evidences. Needless to add that adequate opportunity of being heard shall be provided to the assessee, who, in turn, is directed to substantiate his stand, in this regard. This ground stands allowed for statistical purposes.

7. The appeal stands partly allowed for statistical purposes. Order pronounced in the open court on 26 th February, 2019. Sd/- Sd/- (Pawan Singh) (Manoj Kumar Aggarwal)  / Judicial Member  / Accountant Member Mumbai; Dated : 26/02/2019 Sr. PS : Pratima Shakyawar : Sr.PS : Jaisy Varghese /Copy of the Order forwarded to : 1. !/ The Appellant 2. "#!/ The Respondent ITA No. 2564/Mum/2017 M/s. Blue Circle Organics Pvt.Ltd. Assessment Year: 2010-11 6 3. %() / The CIT(A) 4. %/ CIT concerned 5. ", , / DR, ITAT, Mumbai 6. , / Guard File / BY ORDER, / (Dy./Asstt.Registrar) , / ITAT, Mumbai.