M/s. Capital Constructions, , Nashik V. Income-tax Officer, Ward - 1(2), Nashik

ITA 110/PUN/2019

• Counselvise Citation: [2019] 118 COUNSELVISE.COM (IT) 0596 (ITAT-PUNE)
• Duration Of Justice: 2 month(s) 2 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 25-03-2019
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: SMC
• Assessment Year: 2010-2011
• Appeal Filed On: 22-01-2019
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: M K VERMA
• Keywords: Bogus purchase
• Section: 143(1); 147; 148

Judgement Text

] IN THE INCOME TAX APPELLATE TRIBUNAL PUNE BENCH SMC, PUNE BEFORE MS. SUSHMA CHOWLA, JM AND SHRI ANIL CHATURVEDI, AM . / ITA NO.110/PUN/2019 / ASSESSMENT YEAR : 2010-11 M/S. CAPITAL CONSTRUCTIONS, 10, SIDDHI PARK, SHARANPUR ROAD, NEW PANDIT COLONY, NASHIK, PIN 422002. PAN : AACFC7452L. . / APPELLANT V/S THE INCOME TAX OFFICER, WARD 1(2), NASHIK. . / RESPONDENT ASSESSEE BY : NONE (WRITTEN SUBMISSIONS FILED) REVENUE BY : SHRI M.K. VERMA. / ORDER PER ANIL CHATURVEDI, AM : 1. THE APPEAL FILED BY ASSESSEE IS EMANATING OUT OF T HE ORDER OF COMMISSIONER OF INCOME-TAX (A) 1, NASHIK DT.10.01.2017 FOR A.Y. 2010-11. 2. THE RELEVANT FACTS AS CULLED OUT FROM THE MATERIAL ON R ECORD ARE AS UNDER :- ASSESSEE IS AN INDIVIDUAL AND STATED TO BE ENGAGED IN THE BUSINESS OF CONSTRUCTION. ASSESSEE FILED ITS RETURN OF INCO ME FOR A.Y. 2010-11 ON 13.10.2010 DECLARING TOTAL INCOME OF RS.11,37,8 60/-. THE RETURN OF INCOME WAS INITIALLY PROCESSED U/S 143(1) OF T HE ACT. SUBSEQUENTLY, INFORMATION WAS RECEIVED FROM SALES TAX DEP ARTMENT / DATE OF HEARING : 11.03.2019 / DATE OF PRONOUNCEMENT: 12.03.2019 2 REGARDING DETAILS OF ASSESSEE OBTAINING BOGUS PURCHASE B ILLS OF RS.2,73,007/- FROM ENTRY PROVIDER NAVKAR AGENCIES ON TH E SCRUTINY OF THE AFORESAID INFORMATION, AO NOTICED THAT ASSESSEE WAS ONE OF THE BENEFICIARY OF THE HAWALA TRANSACTIONS. ON THE BASIS OF THE AFORESAID INFORMATION, THE CASE OF ASSESSEE WAS REOPENED AND NOTICE U/S 148 OF THE ACT WAS ISSUED ON 16.06.2015 AND SERVED ON THE AS SESSEE. THE CASE WAS THEREAFTER TAKEN FOR SCRUTINY. DURING THE COURSE OF ASSESSMENT PROCEEDINGS, ASSESSEE WAS ASKED TO SUBSTANTIATE THE PURCHASES AND ALSO TO PR OVE THE GENUINENESS OF THE TRANSACTIONS. THE SUBMISSIONS OF THE AS SESSEE WERE NOT FOUND ACCEPTABLE TO AO. AO NOTED THAT THE AS SESSEE DID NOT FURNISH ALL THE REQUIRED DETAILS. AO THEREFORE TREATED AN A MOUNT OF RS.68,250/- I.E., (25% OF PURCHASES OF RS.2,73,007/-) AS UNEXPLAINED PURCHASES MADE FROM M/S. NAVKAR AGENCIES, BEING THE HAW ALA PARTY AND ADDED IT TO THE TOTAL INCOME OF THE ASSESSEE. AGGR IEVED BY THE ORDER OF AO, ASSESSEE CARRIED THE MATTER BEFORE LD.CIT(A), WHO UPHELD THE ORDER OF AO VIDE ORDER DT.05.11.2018 (IN APPEAL NO.NSK/C IT(A)- 1/317/2016-17). AGGRIEVED BY THE ORDER OF LD.CIT(A), ASSE SSEE IS NOW IN APPEAL BEFORE US AND HAS RAISED THE FOLLOWING GROUNDS : 1. ON THE BASIS OF THE FACTS AND IN THE CIRCUMSTAN CES OF THE CASE AND AS PER LAW, THE COMMISSIONER OF INCOME TAX, (APPEAL S)-I, NASHIK, IS NOT JUSTIFIED IN CONFIRMING THE VALIDITY OF NOTICE ISSU ED U/S.148 BY AO. 2. ON THE BASIS OF THE FACTS AND IN THE CIRCUMSTANC ES OF THE CASE AND AS PER LAW, THE COMMISSIONER OF INCOME TAX, (APPEALS)- I, NASHIK, IS NOT JUSTIFIED M CONFIRMING THE ASSESSMENT ORDER PASSED U/S 147 OF THE ACT, AS THE ASSESSING OFFICER HAS SUMMARILY REJECTED THE OBJECTIONS RAISED AGAINST NOTICE ISSUED U/S.148 OF THE ACT. 3. ON THE BASIS OF FACTS AND IN THE CIRCUMSTANCES O F THE CASE AND AS PER LAW, THE COMMISSIONER OF INCOME TAX, (APPEALS)-I, NA SHIK, IS NOT JUSTIFIED IN CONFIRMING THE DISALLOWANCE OF PURCHAS ES TO THE EXTENT OF 25%, PARTICULARLY WHEN THE AO HAS NOT ALLOWED THE A PPELLANT THE CROSS-EXAMINATION OF THE WITNESS OF THE REVENUE I.E. PARTIES FROM WHOM THE PURCHASES WERE MADE AS WELL AS THE COMPETE NT SALES TAX AUTHORITY ON THE BASIS OF WHOSE INFORMATION/ STATEM ENTS THE NOTICE U /S. 148 OF THE ACT WAS ISSUED BY THE AO. 3 4. ON THE BASIS OF THE FACTS AND IN THE CIRCUMSTANC ES OF THE CASE AND AS PER LAW, THE COMMISSIONER OF INCOME TAX, (APPEALS)- I, NASHIK, IS NOT JUSTIFIED IN UPHOLDING THE DISALLOWANCE MADE BY AO OF RS. 68,250/- I.E. 25% OF TOTAL PURCHASES OF RS. 2,73,007/-, PARTICULA RLY WHEN THE AO HAS HIMSELF ACCEPTED THE GENUINENESS OF PURCHASES MADE BY THE APPELLANT DURING THE YEAR UNDER REVIEW AND MORE PAR TICULARLY WHEN THE REASONABILITY OF THE AMOUNT PURCHASES IS NOT DOUBTE D BY AO . 3. ALL THE GROUNDS BEING INTER-CONNECTED ARE CONSIDERED TOGETHER. 4. ON THE DATE OF HEARING NONE APPEARED ON BEHALF OF ASS ESSEE NOR ANY ADJOURNMENT APPLICATION WAS FILED THOUGH THE NOTICE OF HEARING WAS ISSUED TO ASSESSEE. SINCE THE ISSUE INVOLVED IN THE P RESENT APPEAL IS COVERED BY VARIOUS DECISIONS OF PUNE TRIBUNAL, W E PROCEED TO DECIDE THE ISSUE EX-PARTE QUA THE ASSESSEE ON THE BASIS OF MATERIAL ON RECORD AND AFTER HEARING THE REVENUE. 5. A PERUSAL OF THE ASSESSMENT ORDER REVEALS THAT THE C ASE OF THE ASSESSEE WAS RE-OPENED FOR THE REASON THAT ASSESSEE HAD MADE ALLEGED BOGUS PURCHASES OF RS.2,73,007/- FROM M/S. NAVKA R AGENCIES. DURING THE COURSE OF ASSESSMENT PROCEEDINGS , AO ASKED THE ASSESSEE TO PROVE THE GENUINENESS OF PURCHASES. B EFORE AO, ASSESSEE SUBMITTED THAT THE PURCHASES WERE NOT BOGU S AND ALSO OBJECTED TO THE RE-OPENING OF THE ASSESSMENT. THE SUB MISSIONS OF THE ASSESSEE WERE NOT FOUND ACCEPTABLE TO THE AO. AO NOTE D THAT ASSESSEE HAD FAILED TO PRODUCE THE CONFIRMATION LETTER FRO M THE SAID PARTY BEFORE THE AO FOR EXAMINATION. AO ALSO NOTED THAT ASSESSEE HAD NOT FURNISHED L.R. RECEIPTS, DELIVERY CHALLAN AND HAS ON LY PRODUCED PURCHASE BILLS. AO THEREFORE CONCLUDED THAT ASSE SSEE HAS NOT PROVED THE PURCHASES AND TREATED 25% OF PURCHASE S I.E., RS.68,250/- AS UNEXPLAINED AND MADE ITS ADDITION. THE LD.CIT (A) CONFIRMED THE ACTION OF AO. AGGRIEVED BY THE ORDER OF LD.C IT(A), ASSESSEE IS NOW BEFORE US. 4 6. A PERUSAL OF THE WRITTEN SUBMISSIONS FILED BY THE ASSESSE E REVEALS THAT ASSESSEE HAD SOUGHT OPPORTUNITY TO CROS S-EXAMINE THE ALLEGED HAWALA DEALERS AND THE RESPONSE / INFORMATION REC EIVED FROM ALLEGED HAWALA DEALERS BUT AO HAD NOT GRANTED THE ASS ESSEE THE OPPORTUNITY TO CROSS EXAMINE THE ALLEGED BOGUS SUPPLIER. H E THEREFORE SUBMITTED THAT NO ADDITION IS CALLED FOR. HE ALSO RELIED ON T HE DECISION OF HONBLE APEX COURT IN THE CASE OF M/S. ANDAMAN TIMBER INDUSTRIES VS. COMMISSIONER OF CENTRAL EXCISE AND DECISION O F PUNE ITAT IN THE CASE OF AMITA SANJAY AGARWAL VS. ITO (ITA NO.2622/PN/2016 ORDER DT.28.03.2018). THE LD DR ON THE OTHER HAND SUPPORTED THE ORDER OF AO AND SUBMITTED THAT LD.C IT(A) WAS JUSTIFIED IN UPHOLDING THE ADDITION TO THE EXTENT OF 25% OF THE BOGUS PURCHASES MADE BY THE AO. 7. WE HAVE HEARD THE LD.D.R. AND PERUSED THE MATERIAL ON RECORD. THE ISSUE IN THE PRESENT CASE IS WITH RESPECT TO ADDITION ON ACCOUNT OF BOGUS PURCHASES. AO TREATED 25% OF PURCHASES OF RS.2,7 3,007/- MADE FROM ALLEGED HAWALA PARTY TO BE BOGUS AND THEREBY DISALLOWED AN AMOUNT OF RS.68,250/- BEING UNEXPLAINED PURCHASES. WH EN THE MATTER WAS CARRIED BEFORE LD.CIT(A), LD.CIT(A) UPHELD THE OR DER OF AO AS THE ASSESSEE FAILED TO PROVE THE GENUINENESS OF PUR CHASE TRANSACTIONS BY PRODUCING TRANSPORTATION BILLS AND DELIVERY CHALLANS IN RESPECT OF THE PURCHASES MADE FROM THE ALLEGED HAWALA PARTY. WE FIND THAT THE CO-ORDINATE BENCH OF THE TRIBUNAL ON IDENTICA L FACTS IN THE CASE OF ANITA SANJAY AGARWAL VS. ITO (SUPRA) AND AFTER RELYING ON THE DECISION OF HONBLE APEX COURT IN THE CASE OF ANDAMAN TIMBER INDUSTRIES (SUPRA) HAS DELETED THE ADDITION BY NOTING THA T THE CROSS- EXAMINATION WAS NOT GRANTED TO ASSESSEE. WE THEREFORE FOLLOWING THE DECISION OF PUNE TRIBUNAL IN THE CASE OF ANITA SANJAY AGAR WAL (SUPRA) 5 HOLD THAT NO ADDITION IS CALLED FOR IN THE PRESENT CASE. THUS THE GROUNDS OF ASSESSEE ARE ALLOWED. 8. IN THE RESULT, THE APPEAL OF ASSESSEE IS ALLOWED. ORDER PRONOUNCED ON THE 12 TH DAY OF MARCH, 2019. SD/- SD/- ( SUSHMA CHOWLA ) ( ANIL CHATURVEDI ) / JUDICIAL MEMBER ' / ACCOUNTANT MEMBER PUNE; DATED : 12 TH MARCH, 2019. YAMINI #$%&'(' % / COPY OF THE ORDER FORWARDED TO : 1. / THE APPELLANT 2. / THE RESPONDENT 3 . 4. 5. 6. CIT(A)-1, NASHIK. PR. CIT-1, NASHIK. '#$ %%&',) &' *+ / DR, ITAT, SMC PUNE; $-.// GUARD FILE. / BY ORDER , // TRUE COPY // COP 012%3&4 / SR. PRIVATE SECRETARY ) &', / ITAT, PUNE