Shri Akshay Rajesh Samdariya, Jalna V. Assistant Commissioner of Income-tax, (OSD), Ward-1, Jalna

CO 58/PUN/2018

• Counselvise Citation: [2018] 118 COUNSELVISE.COM (IT) 8585 (ITAT-PUNE)
• Duration Of Justice: 2 month(s) 27 day(s)
• Appeal Type: Cross Objection
• Pronouncement Date: 31-12-2018
• Appeal Filed By: Assessee
• Order Result: Dismissed
• Bench Allotted: A
• Assessment Year: 2009-2010
• Appeal Filed On: 04-10-2018
• Result in Favour of: Revenue
• Court: TRIBUNAL
• Department Lawyers: SABHANA PARVEEN
• Assessee Lawyers: K SRINIVASAN
• Keywords: Bogus purchase; Business income; Accommodation entries; Reassessment proceedings
• Section: 143(3); 133(6); 148; 144

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL A BENCH, PUN E . , , , BEFORE SHRI D. KARUNAKARA RAO, AM AND SHRI VIKAS AWASTHY, JM . / ITA NO.2076/PUN/2016 / ASSESSMENT YEAR : 2009-10 ACIT (OSD), WARD-1, JALNA ....... / APPELLANT / V/S. SHRI AKSHAY RAJESH SAMDARIYA, PROP. M/S. SHREE OSIYA TRADERS, 1-28-76/3, SRPF ROAD, YADAV NAGAR, JALNA 431 203 PAN : BMKPS2012M / RESPONDENT C.O. NO.58/PUN/2018 / ASSESSMENT YEAR : 2009-10 SHRI AKSHAY RAJESH SAMDARIYA, PROP. M/S. SHREE OSIYA TRADERS, 1-28-76/3, SRPF ROAD, YADAV NAGAR, JALNA 431 203 PAN : BMKPS2012M .......CROSS OBJECTOR / V/S. ACIT (OSD), WARD-1, JALNA APPELLANT IN THE APPEAL ASSESSEE BY : SHRI K. SRINIVASAN REVENUE BY : MS. SABHANA PARVEEN / DATE OF HEARING : 11-10-2018 / DATE OF PRONOUNCEMENT : 31-12-2018 / ORDER 2 ITA NO. 2076/PUN/2016 & CO NO.58/PUN/2018 AKSHAY R. SAMDARIYA PER VIKAS AWASTHY, JM : THIS APPEAL BY THE REVENUE IS DIRECTED AGAINST THE ORDER OF COMMISSIONER OF INCOME TAX (APPEALS)-1, AURANGABAD DATED 27-06-2016 FOR THE ASSESSMENT YEAR 2009-10 IN RESTRICT ING THE ADDITION ON ACCOUNT OF THE BOGUS PURCHASES TO 3% OF THE TOTAL BOGUS PURCHASES. THE ASSESSEE HAS FILED CROSS OBJECTIONS AGAINST THE OR DER OF COMMISSIONER OF INCOME TAX (A)-1, AURANGABAD IN CONFIRMING THE ADDITION OF RS. 8,35,680, I.E. 3% OF THE ALLEGED HAWALA PURCHASES. 2. BRIEFLY, THE FACTS OF THE CASE, AS EMANATING FROM RECO RDS ARE; THE ASSESSEE IS AN INDIVIDUAL ENGAGED IN THE BUSINESS OF TRAD ING IN MS STEEL, MS SCRAP, MS INGOTS, MS BARS, ETC. THE ASSESSE E FILED HIS RETURN OF INCOME FOR THE IMPUGNED ASSESSMENT YEAR ON 23 -09-2009 DECLARING TOTAL BUSINESS INCOME OF RS.3,10,520/-. THE ASSESS MENT ORDER UNDER SECTION 143(3) WAS PASSED IN THE CASE OF AS SESSEE ON 12-12-2011 DETERMINING THE TOTAL INCOME AT RS.5,49,701/-. THEREAFTER, THE DEPARTMENT RECEIVED INFORMATION FROM THE M AHARASHTRA SALES TAX DEPARTMENT THAT THE ASSESSEE HAS INDULGED IN BOGUS PURCHASES FROM HAWALA OPERATORS. ON THE BASIS OF SAID INFO RMATION RECEIVED, THE ASSESSING OFFICER REOPENED THE ASSESSMENT A ND ISSUED NOTICE UNDER SECTION 148 OF THE INCOME TAX ACT, 1961 (HE REINAFTER REFERRED TO AS, THE ACT) ON 23-04-2013. IN THE RE-AS SESSMENT PROCEEDINGS, THE ASSESSEE FAILED TO SUBSTANTIATE THAT THE PURCHASES MADE FROM THE ALLEGED HAWALA DEALERS WERE INFACT GENUINE. THE ASSESSING OFFICER MADE INDEPENDENT ENQUIRIES AND COLLECTED INFORMATION UNDER SECTION 133(6) OF THE ACT. ON THE BASIS O F INFORMATION COLLECTED AND THE INFORMATION RECEIVED FROM THE SALES TAX DEPARTMENT, THE ASSESSING OFFICER HELD THAT THE ASSESSEE HAS INDULGED 3 ITA NO. 2076/PUN/2016 & CO NO.58/PUN/2018 AKSHAY R. SAMDARIYA IN BOGUS PURCHASES TO THE TUNE OF RS.2,78,55,984/- FROM TH E FOLLOWING PARTIES : SR.NO. NAME OF HAWALA DEALER FROM WHOM PURCHASES MADE AMOUNT 1 SAMCO STEEL & ALLOYS, PROP. SHRI SHANKARLAL NARSINGMAL JAIN RS.26,04,992/- 2 M/S. RAJRATAN METAL INDUSTRIES RS.51,32,946/- 3 M/S. ANMOL INDUSTRIES RS.19,10,064/- 4 M/S. MANAV IMPEX RS.36,53,286/- 5 M/S. ALLIANCE STEEL INDUSTRIES RS.1,45,54,696/- TOTAL RS.2,78,55,984/- 3. THE ASSESSING OFFICER VIDE ASSESSMENT ORDER DATED 27-03-2015 PASSED UNDER SECTION 144 R.W.S. 147 MADE AD DITION OF THE ENTIRE AMOUNT HELD TO BE BOGUS PURCHASES. AGGRIEVED A GAINST THE ASSESSMENT ORDER, THE ASSESSEE FILED APPEAL BEFORE THE CI T(A). THE CIT(A) AFTER TAKING INTO CONSIDERATION THE SUBMISSION OF THE ASSESSEE, DOCUMENTS ON RECORD AND VARIOUS CASE LAWS RESTRICTED T HE ADDITION TO RS.8,35,680/-, I.E. 3% OF THE TOTAL BOGUS PURCHASES. AGAINST THE FINDINGS OF THE CIT(A), THE REVENUE IS IN APPEA L. ASSAILING DELETING OF THE ADDITION MADE AND THE ASSESSEE IN CROSS OBJECTIONS HAS ALSO ASSAILED THE ORDER OF CIT(A) IN CONFIRMING THE ADDITION TO THE EXTENT OF 3%. 4. MS. SABHANA PARVEEN REPRESENTING THE DEPARTMENT SUB MITTED THAT THE CIT(A) HAS ERRED IN GRANTING SUBSTANTIAL RELIEF TO THE ASSESSEE WITHOUT TAKING COGNIZANCE OF THE FACT THAT DURING RE-ASSE SSMENT PROCEEDINGS THE ASSESSEE FAILED TO FURNISH DOCUMENTARY EV IDENCES SUBSTANTIATING PURCHASE OF MATERIAL FROM THE HAWALA OPERAT ORS. THE ASSESSING OFFICER HAD CARRIED OUT INDEPENDENT ENQUIRIES WH ICH REVEALED THAT THE HAWALA OPERATORS NEVER CARRIED OUT A NY BUSINESS. 4 ITA NO. 2076/PUN/2016 & CO NO.58/PUN/2018 AKSHAY R. SAMDARIYA THE INCOME-TAX DEPARTMENT RECEIVED INFORMATION FROM THE SALES TAX DEPARTMENT ALONG WITH THE AFFIDAVITS OF THE SELLERS WHEREIN T HEY HAVE CONFIRMED THAT THEY HAVE INFACT NOT MADE ANY PURCHASES AND CONSEQUENTLY HAVE NOT SOLD ANY GOODS TO THE ASSESSEE . IN THE BACKDROP OF THESE FACTS, THE ASSESSING OFFICER RIGHTLY MADE ADDITION OF THE ENTIRE BOGUS PURCHASES. THE ASSESSEE HAS TAKEN A CCOMMODATION ENTRIES FROM THE DEALERS MERELY TO REDUCE THE PROFITS. T HE LD. DEPARTMENTAL REPRESENTATIVE PRAYED FOR SETTING ASIDE THE IMPUGNED ORDER AND RESTORING THE FINDINGS OF THE ASSESSING OFFICER. 5. ON THE OTHER HAND, SHRI K. SRINIVASAN, APPEARING ON B EHALF OF THE ASSESSEE SUBMITTED THAT THE ASSESSING OFFICER HAS E RRED IN COMING TO THE CONCLUSION THAT THE ASSESSEE HAS INDULGED IN PROC URING ACCOMMODATION ENTRIES. THE LD. AUTHORIZED REPRESENTATIVE POINTED THAT IN SCRUTINY ASSESSMENT PROCEEDINGS THE ASSESSEE H AD FURNISHED COMPLETE SET OF BOOKS ALONG WITH SUPPORTING SALE BILLS, PURCH ASE BILLS, BANK STATEMENTS, VOUCHERS ETC., AND THE SAME WERE TEST CHECKED BY THE ASSESSING OFFICER BEFORE PASSING THE ASSESSMENT ORDER . THE ASSESSING OFFICER NEVER DOUBTED THE BOOKS OF ACCOUNT AT ANY STAGE. EVEN IN THE REASSESSMENT PROCEEDINGS, THE BOOKS OF ASSE SSEE HAVE NOT BEEN REJECTED. THE BOOKS OF ASSESSEE ARE SUBJECT TO AUDIT AND THE ASSESSEE HAS FURNISHED AUDITED BOOKS BEFORE THE LOWER AU THORITIES. THE LD. AUTHORIZED REPRESENTATIVE SUBMITTED THAT THE SA LES HAVE NOT BEEN DOUBTED BY THE AUTHORITIES BELOW. WITHOUT PURCHASE S THERE CANNOT BE SALES. THE LD. AUTHORIZED REPRESENTATIVE FURTHER SUBMITTED THAT SINCE ALL THE SUPPORTING DOCUMENTS SUBSTANTIATING PU RCHASE OF GOODS WERE FURNISHED BY THE ASSESSEE, NO ADDITION IS CALLE D FOR. THE LD. 5 ITA NO. 2076/PUN/2016 & CO NO.58/PUN/2018 AKSHAY R. SAMDARIYA AUTHORIZED REPRESENTATIVE PRAYED FOR MODIFYING THE IMPUGN ED ORDER BY DELETING THE ADDITION MADE TO THE EXTENT OF 3% OF BOGUS PURCHASES. 6. WE HAVE HEARD THE RIVAL SUBMISSIONS AND HAVE PERUSED THE ORDERS OF THE AUTHORITIES BELOW. THE SOLITARY ISSUE RAISED IN THE APPEAL BY THE REVENUE AND CROSS OBJECTIONS BY THE ASSESSEE IS AGAINST ADDITION DELETED/CONFIRMED ON ACCOUNT OF BOGUS PURCHASES . THE ASSESSING OFFICER IN RE-ASSESSMENT PROCEEDINGS MADE ADDITIO N OF RS.2,78,55,984/- AS BOGUS PURCHASES PURPORTEDLY MADE BY THE ASSESSEE. IN FIRST APPEAL PROCEEDINGS, THE CIT(A) RESTRICTED THE ADDIT ION TO 3% OF THE SAID PURCHASES, I.E. RS.8,35,680/-. A PERUSAL O F THE IMPUGNED ORDER SHOWS THAT THE ASSESSEE HAS FAILED TO PR ODUCE DOCUMENTARY EVIDENCE IN THE FORM OF LORRY RECEIPTS, WEIGHM ENT SLIPS, OCTROI RECEIPTS ETC. THE ASSESSEE HAS FAILED TO SUBSTAN TIATE MOVEMENT OF GOODS FROM THE SUPPLIERS TO THE ASSESSEE. THE ASSESSI NG OFFICER DURING ASSESSMENT PROCEEDINGS HAS NOT DISCARDED TOTAL S ALES OF THE ASSESSEE. IN OTHER WORDS, THE SALES OF THE ASSESSEE H AVE BEEN ACCEPTED BY THE DEPARTMENT. WITHOUT PURCHASES, THERE CANNOT BE SALES. THUS, ENTIRE ALLEGED BOGUS PURCHASES CANNOT BE ADDED IN THE H ANDS OF THE ASSESSEE. UNDER SUCH CIRCUMSTANCES, THE POSSIBILITY OF AS SESSEE PURCHASING THE GOODS FROM GREY MARKET AND PROCURING BILLS FROM THE HAWALA DEALERS CANNOT BE RULED OUT. THE CIT(A) AFTER CONS IDERING CATENA OF JUDGMENTS ON VARIOUS FACETS INCLUDING THE GP RA TIO TO BE APPLIED IN DIFFERENT SET OF INDUSTRIES ESTIMATED 3% OF GP ADDIT ION ON ACCOUNT OF BOGUS PURCHASES IN THE HANDS OF THE ASSESSE E. WE FIND THE IMPUGNED ORDER IS REASONED AND HENCE, REQUIRES NO INTERFE RENCE. TAKING INTO CONSIDERATION ENTIRETY OF FACTS, THE IMPUGNED ORDER IS 6 ITA NO. 2076/PUN/2016 & CO NO.58/PUN/2018 AKSHAY R. SAMDARIYA UPHELD. THE APPEAL OF THE REVENUE AND THE CROSS OBJEC TIONS FILED BY THE ASSESSEE ARE DISMISSED BEING DEVOID OF ANY MERIT. 7. IN THE RESULT, THE APPEAL OF REVENUE AND THE CROSS OB JECTIONS FILED BY THE ASSESSEE ARE DISMISSED. ORDER PRONOUNCED ON MONDAY, THE 31 ST DAY OF DECEMBER, 2018. SD/- SD/- (D. KARUNAKARA RAO) (VIKAS AWASTHY) ACCOUNTANT MEMBER JU DICIAL MEMBER / PUNE; / DATED : 31 ST DECEMBER, 2018 SATISH / COPY OF THE ORDER FORWARDED TO : 1. / THE APPELLANT. 2. / THE RESPONDENT. 3. ( ) / THE CIT(A)-1, AURANGABAD 4. / THE PR.CIT 1, AURANGABAD 5. , , $ , / DR, ITAT, A BENCH, PUNE. 6. ' / GUARD FILE. // // / BY ORDER, // TRUE COPY // SENIOR PRIVATE SECRETARY, , / ITAT, PUNE 7 ITA NO. 2076/PUN/2016 & CO NO.58/PUN/2018 AKSHAY R. SAMDARIYA DATE 1. DRAFT DICTATED ON 27-12-18 SR.PS 2. DRAFT PLACED BEFORE AUTHOR 28-12-18 SR.PS 3. DRAFT PROPOSED & PLACED BEFORE THE SECOND MEMBER AM 4. DRAFT DISCUSSED/APPROVED BY SECOND MEMBER. AM 5. APPROVED DRAFT COMES TO THE SR.PS/PS SR.PS 6. KEPT FOR PRONOUNCEMENT ON SR.PS 7. DATE OF UPLOADING ORDER SR.PS 8. FILE SENT TO THE BENCH CLERK SR.PS 9. DATE ON WHICH FILE GOES TO THE HEAD CLERK 10. DATE ON WHICH FILE GOES TO THE A.R. 11. DATE OF DISPATCH OF ORDER.