M/s. CTR Manufacturing Industries Limited, Pune V. Deputy Commissioner of Income tax, Pune

ITA 1056/PUN/2017

• Counselvise Citation: [2019] 116 COUNSELVISE.COM (IT) 8437 (ITAT-PUNE)
• Duration Of Justice: 2 year(s) 2 month(s) 20 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 17-07-2019
• Appeal Filed By: Assessee
• Order Result: Partly Allowed
• Bench Allotted: B
• Assessment Year: 2011-2012
• Appeal Filed On: 27-04-2017
• Result in Favour of: Partly Allowed
• Court: TRIBUNAL
• Department Lawyers: M K VERMA
• Keywords: Bogus purchase
• Section: 69C; 143(3); 250

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL PUNE BENCH B , PUNE , , BEFORE MS. SUSHMA CHOWLA, JM AND SHRI ANIL CHATURVEDI, AM . / ITA NO. 10 56 /P U N/201 7 / ASSESSMENT YEAR : 20 1 1 - 1 2 M/S. CTR MANUFACTURING INDUSTRIES LTD., NAGAR ROAD, PUNE 411014 . / APPELLANT PAN: AA A CC7256R VS. THE DY. COMMISSIONER OF INCOME TAX, CIRCLE 1(1), PUNE . / RESPONDENT / APPELLANT BY : SHRI NIKHIL PATHAK / RESPONDENT BY : SHRI M.K. VERMA / DATE OF HEARING : 0 8 . 0 7 .201 9 / DATE OF PRONOUNCEMENT: 17 . 0 7 .201 9 / ORDER PER SUSHMA CHOWLA, J M : THE APPEAL FILED BY ASSESSEE IS AGAINST ORDER OF CIT (A) , PUNE - 1 , DATED 16 . 0 1 .201 7 RELATING TO ASSESSMENT YEAR 20 1 1 - 1 2 AGAINST ORDER PASSED UNDER SECTION 143(3) R.W.S. 147 / 250 OF THE INCOME - TAX ACT , 1961 (IN SHORT THE A CT) . 2. THE ASSESSEE HAS RAISED THE FOLLOWING GROUNDS OF APPEAL: - ON FACTS AND IN LAW, 1] THE LEARNED CIT(A) ERRED IN CONFIRMING THE DISALLOWANCE OF PURCHASES OF RS.1,37,99,275 / - MADE BY THE APPELLANT COMPANY FROM M/S. HARIOM TRADERS AND SUPREME ENTERP RISES ON THE GROUND THAT THE SAID PURCHASES WERE NOT GENUINE. ITA NO. 10 56 /P U N/20 1 7 M/S. CTR MANUFACTURING INDUSTRIES LTD . 2 2] THE LEARNED CIT(A) ERRED IN HOLDING THAT THE APPELLANT COMPANY HAD FAILED TO PROVE WITH PROPER DOCUMENTARY EVIDENCE THAT IT HAD PURCHASES FROM THE ABOVE REFERRED TWO PARTIES AND HENCE, THE D ISALLOWANCE OF PURCHASES WAS JUSTIFIED. 3] THE LEARNED CIT(A) ERRED IN HOLDING THAT EVEN IF, THE PURCHASES ARE CONSIDERED TO HAVE BEEN MADE, IN THAT EVENT, THE APPELLANT HAS MADE THE SAID PURCHASES FROM UNEXPLAINED SOURCES AND THEREFORE, THE SAME IS REQUI RED TO BE ADDED AS AN INCOME U/S 69C OF THE ACT. 4] THE LEARNED CIT(A) FAILED TO APPRECIATE THAT - A . THE ASSESSEE HAD ACTUALLY PURCHASED THE MATERIAL AND IT WAS USED IN ITS MANUFACTURING OPERATIONS AND THEREFORE, NO DISALLOWANCE WAS WARRANTED. B . THE ASSESSE E HAD SUBMITTED THE RELEVANT STATISTICAL DATA AND DRAWINGS WHICH CLEARLY INDICATED THAT IT HAD MADE THE PURCHASES OF MS PLATES AND PIPES OF RS.1,37,99,275 / - AS OTHERWISE, IT WAS IMPOSSIBLE FOR THE ASSESSEE TO MANUFACTURE THE FINAL PRODUCT SOLD TO THE CUSTO MERS. C . THE ASSESSEE HAD SUBMITTED VARIOUS DOCUMENTARY EVIDENCES TO INDICATE THAT IT HAD RECEIVED THE MATERIAL WHICH WAS UTILISED IN MANUFACTURING OPERATIONS AND THEREFORE, THE DISALLOWANCE ON ACCOUNT OF NON GENUINE PURCHASES WAS NOT JUSTIFIED IN LAW. 5] T HE LEARNED CIT(A) ERRED IN NOT APPRECIATING THE CORRECT FACTS OF THE CASE WHILE DISALLOWING THE CLAIM OF THE APPELLANT. 6] THE LEARNED CIT(A) ERRED IN HOLDING THAT THE ADDITION IS WARRANTED U/S 69C WITHOUT APPRECIATING THAT THE APPELLANT HAD NOT MADE ANY UNACCOUNTED PURCHASES AND THEREFORE, THE QUESTION OF APPLYING THE PROVISIONS OF SECTION 69C SIMPLY DID NOT ARISE. 7] WITHOUT PREJUDICE TO THE ABOVE GROUNDS, THE APPELLANT SUBMITS THAT THE DISALLOWANCE OF ENTIRE PURCHASES AMOUNTING TO RS.1,37,99 , 275/ - IS N OT JUSTIFIED AND ONLY THE GROSS PROFIT ON THE SAME CAN AT THE MOST BE ADDED TO THE INCOME OF THE APPELLANT. 3. THE ONLY ISSUE RAISED IN THE PRESENT APPEAL IS AGAINST ADDITION MADE ON ACCOUNT OF BOGUS PURCHASES AND THE AFORESAID ADDITION WAS MADE ON THE BA SIS OF INFORMATION RECEIVED FROM MAHARASHTRA STATE SALES TAX DEPARTMENT, WHICH HAD CONDUCTED ENQUIRIES AND UNEARTHED CERTAIN HAWALA DEALERS OF HAVING NOT DEPOSITED VAT AGAINST THE SAID PURCHASES. 4. THE LEARNED AUTHORIZED REPRESENTATIVE FOR THE ASSESSEE P OINTED OUT THAT THE ISSUE IN THE PRESENT APPEAL STANDS COVERED BY THE ORDER OF PUNE BENCH OF TRIBUNAL IN M/S. CHHABI ELECTRICALS PVT. LTD. AND OTHERS VS. DCIT IN ITA ITA NO. 10 56 /P U N/20 1 7 M/S. CTR MANUFACTURING INDUSTRIES LTD . 3 NO.795/PUN/2014, RELATING TO ASSESSMENT YEAR 2010 - 11, DECIDED ON 28 . 04 . 2017 AND THE SAID R ATIO MAY BE APPLIED. 5. THE LEARNED DEPARTMENTAL REPRESENTATIVE FOR THE REVENUE PLACED RELIANCE ON THE ORDERS OF AUTHORITIES BELOW. 6. WE HAVE HEARD THE RIVAL CONTENTIONS AND PERUSED THE RECORD. THE ISSUE WHICH ARISES IN THE PRESENT APPEAL IS AGAINST AD DITION MADE ON ACCOUNT OF ALLEGED BOGUS PURCHASES. THE CASE OF ASSESSEE BEFORE THE REVENUE AUTHORITIES WAS THAT THE SAID GOODS WERE UTILIZED IN THE MANUFACTURING ACTIVITY CARRIED ON BY IT AND WITHOUT THE SAID RAW MATERIALS, THE MANUFACTURING ACTIVITY CANN OT BE CARRIED ON. THE TRIBUNAL IN SERIES OF DECISIONS HAVE DECIDED THE ISSUE WITH LEAD ORDER IN M/S. CHHABI ELECTRICALS PVT. LTD. AND OTHERS VS. DCIT (SUPRA). THE TRIBUNAL IN THE SAID DECISION HAD HELD THAT THE ADDITION IS TO BE RESTRICTED TO 10% OF GROS S PROFIT OVER AND ABOVE THE GROSS PROFIT DECLARED BY THE ASSESSEE IN ITS BOOKS OF ACCOUNT, ON THE ALLEGED BOGUS PURCHASES. ACCORDINGLY, THE ASSESSING OFFICER IS DIRECTED TO RESTRICT THE ADDITION TO 10% OF GROSS PROFIT OVER AND ABOVE THE GROSS PROFIT DECLA RED BY THE ASSESSEE ON THE AFORESAID PURCHASES OF RS. 1,37,99,275/ - . THE GROUNDS OF APPEAL RAISED BY THE ASSESSEE ARE THUS PARTLY ALLOWED. 7 . IN THE RESULT, THE APPEAL OF ASSESSEE IS PARTLY ALLOWED. ORDER PRONOUNCED ON THIS 17 TH DAY OF JU LY , 201 9 . SD/ - SD/ - (ANIL CHATURVEDI) (SUSHMA CHOWLA) / ACCOUNTANT MEMBER / JUDICIAL MEMBER / PUNE ; DATED : 17 TH JULY , 201 9 . GCVSR ITA NO. 10 56 /P U N/20 1 7 M/S. CTR MANUFACTURING INDUSTRIES LTD . 4 / COPY OF THE ORDER IS FORWARDED TO : 1. / THE APPELLANT ; 2. / THE RESPONDENT; 3. ( ) / THE CIT(A) - 1 , PUNE ; 4. THE PR. CIT - 1 , PUNE ; 5. 6. , , / DR B , ITAT, PUNE ; / GUARD FILE . / BY ORDER , // TRUE COPY // / SR. PRIVATE SECRETARY , / ITAT, PUNE