ASST CIT 25(3), MUMBAI V. PINAKI D. PANANI, MUMBAI

ITA 119/MUM/2015

• Counselvise Citation: [2017] 126 COUNSELVISE.COM (IT) 7970 (ITAT-MUMBAI)
• Duration Of Justice: 2 year(s) 11 month(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 08-12-2017
• Appeal Filed By: Department
• Bench Allotted: C
• Assessment Year: 2009-2010
• Appeal Filed On: 07-01-2015
• Court: TRIBUNAL
• Keywords: Bogus purchase; Unexplained expenditure; Accommodation entries

Judgement Text

, , , IN THE INCOME TAX APPELLATE TRIBUNAL MUMBAI BENCHES, C MUMBAI , , , BEFORE SHRI JOGINDER SINGH, JUDICIAL MEMBER, AND SHRI RAJESH KUMAR, ACCOUNTANT MEMBER ITA NO.119/MUM/2015 ASSESSMENT YEAR: 2009-10 ACIT-25(3), 6 TH FLOOR, C-10 PRATYAKSHKAR BHAVAN, BANDRA KURLA COMPLEX, BANDRA (EAST), MUMBAI-400051 / VS. SMT. PINAKI D. PANANI, 401, MANGAL VILLA, V.S. KHANDEKAR MARG, VILE PARLE (E), MUMBAI-400057 ( / REVENUE) ( !' # /ASSESSEE) PAN. NO.AIJPP0802A C.O. NO.117/MUM/2015 (ARISING OUT OF ITA NO.119/MUM/2015) ASSESSMENT YEAR: 2009-10 SMT. PINAKI D. PANANI, 401, MANGAL VILLA, V.S. KHANDEKAR MARG, VILE PARLE (E), MUMBAI-400057 / VS. ACIT-25(3), 6 TH FLOOR, C-10 PRATYAKSHKAR BHAVAN, BANDRA KURLA COMPLEX, BANDRA (EAST), MUMBAI-400051 ( !' # /ASSESSEE) ( / REVENUE) PAN. NO.AIJPP0802A ITA NO. 119/MUM/2015 & C.O. 117/MUM/2015 SMT. PINAKI D. PANANI 2 $ % # & / DATE OF HEARING : 08/12/2016 % # & / DATE OF ORDER: 19/12/2016 / O R D E R PER JOGINDER SINGH (JUDICIAL MEMBER) THE REVENUE AS WELL AS THE ASSESSEE IS AGGRIEVED BY THE IMPUGNED ORDER DATED 21/10/2014 OF THE LD. FIRS T APPELLATE AUTHORITY, MUMBAI. THE REVENUE HAS PREFER RED APPEAL, WHEREAS, THE ASSESSEE HAS PREFERRED CROSS O BJECTION AGAINST THE IMPUGNED ORDER. FIRST, WE SHALL TAKE UP APPEAL OF THE REVENUE, WHEREIN, APPLYING THE NET PROFIT RA TIO OF 5.76% OF THE TOTAL TURNOVER IN RESPECT OF ADDITION MADE BY THE ASSESSING OFFICER ON THE ALLEGED BOGUS PURCHASE S FROM THE HAWALA DEALERS HAS BEEN CHALLENGED. 2. DURING HEARING, THE LD. DR, SHRI RAJAT MITTAL, ADVANCED ARGUMENTS, WHICH IS IDENTICAL TO THE GROUN D RAISED BY CONTENDING THAT THE LD. COMMISSIONER OF I NCOME TAX (APPEAL), WHILE GRANTING RELIEF TO THE ASSESSEE , DID NOT CONSIDERED THE FACT THAT THE ADDITION WAS MADE BY T HE ASSESSING OFFICER ON THE BASIS OF INFORMATION RECEI VED FROM DIT(INVEST.) AND THE SALES TAX DEPARTMENT OF MAHARA SHTRA GOVERNMENT WITH RESPECT TO BOGUS PURCHASES MADE BY THE ASSESSEE FROM SUSPICIOUS DEALERS, WHEREIN, GOODS WE RE ACTUALLY NOT SUPPLIED. THE CRUX OF THE ARGUMENT IS THAT !' # ! / ASSESSEE BY SHRI RAHUL K. HAKKANI ! / REVENUE BY SHRI RAJAT MITTAL-DR ITA NO. 119/MUM/2015 & C.O. 117/MUM/2015 SMT. PINAKI D. PANANI 3 ASSESSEE COULD NOT PROVE THE GENUINENESS OF THE PUR CHASES BEFORE THE ASSESSING OFFICER. 2.1. ON THE OTHER HAND, THE LD. COUNSEL FOR THE ASSESSEE, SHRI RAHUL H. HAKKANI, DEFENDED THE IMPUG NED ORDER BY CONTENDING THAT THE LD. COMMISSIONER OF IN COME TAX (APPEAL) DULY CONSIDERED THE FACTUAL MATRIX, VA RIOUS CASE LAWS, AS DISCUSSED IN THE ORDER INCLUDING FROM HON'BLE JURISDICTIONAL HIGH COURT IN THE CASE OF NIKUNJ EXI MP ENTERPRISES PVT. LTD.. 2.2. WE HAVE CONSIDERED THE RIVAL SUBMISSIONS AND PERUSED THE MATERIAL AVAILABLE ON RECORD. IF THE OB SERVATION MADE IN THE ASSESSMENT ORDER, LEADING TO ADDITION M ADE TO THE TOTAL INCOME, CONCLUSION DRAWN IN THE IMPUGNED ORDER, MATERIAL AVAILABLE ON RECORD, ASSERTIONS MADE BY TH E LD. RESPECTIVE COUNSEL, IF KEPT IN JUXTAPOSITION AND AN ALYZED, WE FIND THAT THE ASSESSEE IS ENGAGED IN THE BUSINES S OF CIVIL CONSTRUCTION, ON SUB-CONTRACT BASIS, FROM OTHER CONTRACTORS, WHO WERE AWARDED CONTRACTS BY MUNICIPA L CORPORATION OF GREATER MUMBAI (IN SHORT HEREINAFTER MCGM). THE ASSESSEE CARRIED OUT VARIOUS REPAIRS AND CONSTRUCTION JOB IN THE NATURE OF BUILDING REPAIR, WATER DRAIN REPAIRS, REINSTATEMENTS OF DRENCHES AND ROAD REPAIRS, ETC. FOR EXECUTION OF THE WORK THE ASSESSEE USED LA BOUR AND MACHINERY ALONG WITH RAW MATERIAL SUCH AS BRICK S, SAND, CEMENT, STEEL, ETC. THE STAND OF THE ASSESSEE IS THAT THE MATERIAL WAS SUPPLIED AT THE SITE, WHERE SUCH W ORK WAS UNDERTAKEN AND THE SAME WAS INSPECTED BY THE ENGINE ERS, ITA NO. 119/MUM/2015 & C.O. 117/MUM/2015 SMT. PINAKI D. PANANI 4 WHO APPROVED THE MATERIAL AND RECEIPT THEREOF. THE PAYMENT OF SUCH MATERIAL WAS MADE BY THE ASSESSEE. IT IS NOTED THAT THE FACTUAL MATRIX CONSIDERED BY THE HON 'BLE SETTLEMENT COMMISSION AND EXPLAINED BY THE ASSESSEE WITH RESPECT TO WHOLE PROCESS OF WORKS WAS CONSIDERED BY THE LD. COMMISSIONER OF INCOME TAX (APPEAL) AS IS EVIDE NT FROM PARA 2.6 ONWARDS OF THE IMPUGNED ORDER. IT IS NOTED THAT THE ASSESSEE MADE PURCHASES WORTH RS.1,69,48,368/- FROM THE PARTIES, WHO WERE SUSPECTED TO BE NON-GENUINE B Y THE SALES TAX DEPARTMENT OF THE MAHARASHTRA GOVERNMENT AS THE HAWALA DEALERS MADE CERTAIN STATEMENT BEFORE TH E SALES TAX DEPARTMENT THAT THEY DID NOT SUPPLY ANY MATERIA L TO ANY PARTY AND MERELY ISSUED THE BILLS. ON THE BASIS OF THIS STATEMENT, THE ASSESSING OFFICER MADE ADDITION OF T HE ENTIRE PURCHASES. IT IS NOTED THAT THE PAYMENT WAS MADE TH ROUGH BANKING CHANNEL BY MCGM AFTER FULLY GETTING SATISFI ED ABOUT THE QUANTITY AND QUALITY OF THE MATERIAL, DUL Y CERTIFIED BY THE ENGINEER OF THE MCGM, THAT TOO SUB JECT TO TAX DEDUCTION AT SOURCE, RETENTION AMOUNT, ETC. THE PAYMENTS TO THE SUPPLIER PARTIES WAS ALSO MADE THRO UGH BANKING CHANNEL. IN VIEW OF THIS FACTUAL MATRIX, TH E CASE OF THE ASSESSEE IS FULLY COVERED BY THE DECISION FROM HON'BLE JURISDICTIONAL HIGH COURT IN THE CASE OF CIT VS M/S NIKUNJ EXIM ENTERPRISES PVT. LTD. 372 ITR 619 (BOM.), DHAKESHWARI COTTON MILLS LTD. VS CIT 26 ITR 775 (SC ), HITAL CHUNILAL JAIN & ORS. (2016) 46 CCH 0020(MUM.) AND DCIT VS RAJEEV G. KALATHIL (2014) 41 CCH 552 (MUM.) . THE HON'BLE HIGH COURT IN THE CASE OF M/S NIKUNJ EXIMP ITA NO. 119/MUM/2015 & C.O. 117/MUM/2015 SMT. PINAKI D. PANANI 5 ENTERPRISES PVT. LTD. (SUPRA) HELD THAT MERELY BECA USE THE SUPPLIERS COULD NOT BE PRODUCED BEFORE THE AUTHORIT IES BUT OTHER RELEVANT DETAILS HAVE BEEN FILED TO SHOW THAT THE TRANSACTION WAS GENUINE THE PURCHASES CANNOT BE DISALLOWED. THE RELEVANT EXTRACT OF THE JUDGMENT IS AS UNDER: 'WHETHER ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE AND IN LAW THE TRIBUNAL WAS RIGHT IN DELETING THE ADDITION MADE BY THE ASSESSING OFFICER OF RS. I,33,41,917/- TOWARDS BOGUS PURCHASES EVEN THOUGH THE SUPPLIERS WERE NON-EXISTENT AND ONE OF THE PARTIES HAD CATEGORICALLY DENIED HAVING ANY BUSINESS DEALINGS WITH THE APPELLANT COMPANY'. ............. WE HAVE CONSIDERED THE SUBMISSIONS ON BEHALF OF THE REVENUE. HOWEVER, FROM THE ORDER OF THE TRIBUNA L DATED 30.04.2010, WE, FIND THAT THE TRIBUNAL HAS DELETED THE ADDITIONS ON ACCOUNT OF BOGUS PURCHASES NOT ONLY ON THE BASIS OF STOCK STATEMENT I.E. RECONCILIATION STATEMENT, BUT ALSO IN VIEW OF THE O THER FACTS. THE TRIBUNAL RECORDS THAT THE BOOKS OF ACCOUNTS OF THE ASSESSEE APPELLANT HAVE NOT BEEN REJECTED. SIMILARLY, THE SALES HAVE NOT BEEN DOUBTE D AND IT IS AN ADMITTED POSITION THAT SUBSTANTIAL AMOUNT OF SALES HAVE BEEN MADE TO THE GOVERNMENT DEPARTMENT I.E. DEFENCE RESEARCH AND DEVELOPMENT LABORATORY, HYDERABAD. FURTHER, THERE WERE CONFIRMATION LETTERS FILED BY THE SUPPLIERS, COPIES OF INVOICES FOR PURCHASES AS WELL AS COPIES OF BANK STATEMENT ALL OF WHICH WOULD INDICATE THAT THE PURCHASES WERE INFLICT MADE. IN OUR VIEW, MERELY BECAUSE THE SUPPLIERS HAVE NOT APPEARED BEFORE THE ASSESSING OFFICER OR THE CIT(A), ONE CANNOT CONCLUD E THAT THE PURCHASES WERE NOT MADE BY THE ASSESSEE- APPELLANT. THE ASSESSING OFFICER AS WELL AS CIT(A) HAVE DISALLOWED THE DEDUCTION OF RS. 1.33 CRORES ON ITA NO. 119/MUM/2015 & C.O. 117/MUM/2015 SMT. PINAKI D. PANANI 6 ACCOUNT OF PURCHASES MERELY ON THE BASIS OF SUSPICION BECAUSE THE SELLERS AND THE CANVASSING AGENTS HAVE NOT BEEN PRODUCED BEFORE THEM. WE FIND THAT THE ORDER OF THE TRIBUNAL IS WELL A REASO NED ORDER TAKING INTO ACCOUNT ALL THE FACTS BEFORE CONCLUDING THAT THE PURCHASES OF RS. 1.33 ERORES WAS NOT BOGUS. NO FAULT CAN HE .FOUND WITH THE ORDE R DATED 30.04.2010 OF THE TRIBUNAL'. 2.3. SO FAR AS, THE CONTENTION OF THE LD. DR, THE LD. COMMISSIONER OF INCOME TAX (APPEALS) WAS NOT JUSTIF IED IN ACCEPTING GENUINENESS OF PURCHASES WHEN THE NAME OF SUPPLIER PARTIES APPEARED ON THE LIST OF SUSPICIOUS DEALERS ON THE WEBSITE OF THE SALES TAX DEPARTMENT, IN CONC ERNED, WE ARE OF THE VIEW THAT THE ASSESSMENT UNDER INCOME TAX ACT BY THE ASSESSING OFFICER, SHOULD HAVE BEEN DON E ON ITS OWN ENQUIRY AND SHOULD HAVE CONFRONTED THE ASSESSEE WITH THE MATERIAL THUS GATHERED. IF THE ASSESSING OFFICE R REALLY WANTED TO APPLY THE TENTATIVE INFERENCES OF THE SAL ES TAX DEPARTMENT TO THE ASSESSMENT PROCEEDINGS OF THE ASS ESSEE, HE WAS DUTY BOUND TO CALL THE DEPONENTS AND MAKE TH EM CONFIRM THE NATURE OF DEALINGS WITH THE ASSESSEE. I F THEY DEPOSE THAT THE DEALINGS WITH THE ASSESSEE ARE NOT GENUINE THE ASSESSEE WOULD HAVE RIGHT TO CROSS EXAMINE THEM TO BRING THE TRUTH OF THE DEPOSITION ON THE SURFACE. T HIS HAS NOT BEEN DONE BY THE ASSESSING OFFICER. THUS THE CONCLUSION REACHED BY THE ASSESSING OFFICER IS DEVO ID OF MERIT. 2.4. EVEN OTHERWISE, FACT REMAINS THAT THE ASSESSE E MADE PURCHASES, FOR WHICH PAYMENTS HAVE BEEN MADE B Y ITA NO. 119/MUM/2015 & C.O. 117/MUM/2015 SMT. PINAKI D. PANANI 7 CROSS-CHEQUE. IT IS NOBODY'S CASE THAT PAYMENTS MAD E TO PURCHASE PARTIES WERE RECEIVED BACK IN CASH BY THE ASSESSEE OR THE CHEQUES ISSUED TO THEM WERE NOT IN CASHED, MEANING THEREBY, THE PURCHASES FROM THE CONCERNED P ARTIES CANNOT BE DISPUTED. WHERE PAYMENTS ARE MADE BY ACCO UNT PAYEE CHEQUES, NOBODY CAN DENY THE EXISTENCE OF THE PARTIES. ONCE THE ASSESSEE ESTABLISHES CONSUMPTION OF ITEMS PURCHASED NOTHING MORE REMAINS TO BE PROVED B Y THE ASSESSEE. THE FACT THAT THE ASSESSEE HAS MADE THE PURCHASES BY PAYMENT THROUGH ACCOUNT PAYEE CHEQUES AND ITS CONSUMPTION HAS BEEN BROADLY EXPLAINED WHICH CL EARLY ESTABLISHES THE ASSESSEE'S CASE THAT THE PURCHASES AS RECORDED BY THE ASSESSEE IN THE BOOKS OF ACCOUNTS A RE GENUINE. THE RATIO LAID DOWN BY HON'BLE APEX COURT IN THE CASE OF DHAKESWARI COTTON MILLS LTD. VS COMMISSIONE R OF INCOME TAX, WEST BENGAL REPORTED AT 26 ITR 775 (SC) THE RELEVANT PARA OF THE ORDER IS REPRODUCED HEREUNDER: - ' WE ARE IN ENTIRE AGREENEI1 WITH THE LEARNED SOLICIT OR- GENERAL WHEN HE SAYS THAT THE INCOME-TAX OFFICER IS NOT FETTERED BY TECHNICAL RULES OF EVIDENCE AND PLEADIN GS, AND THAT HE IS ENTITLED TO ACT ON MATERIAL WHICH MA Y NOT BE ACCEPTED AS EVIDENCE IN A COON OF LAW, HUT THERE THE AGREEMENT ENDS , BECAUSE IT IS EQUALLY CLEAR THAT I N MAKING THE ASSESSMENT TINDER SITH-SECTION ('3) OF S ECTIOII 23 OF THE ACT, THE INCOME-TAX OFFICER IS NOT ENTITL ED TO MAKE A PURE GUESS AND MAKE AN ASSESSMENT WITHOUT REFERENCE TO ANY EVIDENCE OR ANY MATERIAL AT ALL. T HERE MUST HE SOMETHING MORE THAN HARE SUSPICION TO SUPPO RT THE ASSESSMENT UNDER SECTION 23(3).' ITA NO. 119/MUM/2015 & C.O. 117/MUM/2015 SMT. PINAKI D. PANANI 8 LIKEWISE, THE MUMBAI BENCH OF THE TRIBUNAL IN THE CASE OF HIRALAL CHUNILAL JAIN & OTHERS VS. ITO & OT HERS (2016) 46 CCH 0020 (MUM) WHEREIN THE TRIBUNAL HELD AS UNDER: ' 2. ASSESSEE,AN INDIVIDUAL IS PROPRIETOR OF M/S.DIVY A ALLOYS AND IS ENGAGED IN BUSINESS OF RESELLERS OF F ERROUS AND NON FERROUS METALS. EFFECTIVE GROUND OF APPEAL IS ABOUT AN ADDITION OF RS. 1,44,348/- DURING THE ASSESSMENT PROCEEDINGS, THE A0 FOUND THAT THE ASSES SEE HAD PURCHASED GOODS WORTH RS. 7.21 LAKSH SHIV SAGAR STEEL(INDIA),THAT THE NAME OF SHIV SAGAR WAS APPEAR ING IN THE LIST OF BOGUS PARTIES FORWARDED BY THE SALES TA X AUTHORITIES, THAT THE NAME OF THE ASSESSEE WAS APPE ARING AS A BENEFICIARIES IN THE LIST. THE AO DIRECTED THE ASSESSEE TO PRODUCE THE PARTY FROM WHOM HE HAD CLAIMED TO HA VE PURCHASED GOODS. HOWEVER, THE SUPPLIER WAS NOT PROD UCED BY THE ASSESSEE. SUMMONS ISSUED TO SHIV SAGAR COULD NOT HE SERVED ON THE GIVEN ADDRESS. THE AO HELD THE PUR CHASE TRANSACTION BOGUS AND TREATED THE ENTIRE PURCHASE ( RS. 7.21 LAKHS)AS UNEXPLAINED EXPENDITURE U/S.69C OF TH E ACT. 5. WE HAVE HEARD THE RIVAL SUBMISSIONS AND PERUSED THE MATERIAL BEFORE US. WE FIND THAT THE AO HAD RECEIVE D INFORMATION FROM THE INVESTIGATION WING OF STD, MAHARASHTRA THAT THE ASSESSEE WAS ONE OF THE BENEFICIARIES OF ACCOMMODATION ENTRIES, THAT SHIV S AGAR THE SUPPLIER OF THE GOODS WAS ONE OF THE ENTITIES W HO HAD ADMITTED TO HAVE BOGUS BILLS, THAT THE ASSESSEE HAD ASKED FOR CROSS EXAMINATION OF THE SUPPLIER BUT SAME WAS NOT GIVEN, THAT THE AO HAD NOT SUPPLIED THE COPY OF THE STATEMENTS OF SHIV SAGAR TO THE ASSESSEE,THAT IN TH E BOOKS OF ACCOUNTS OF THE ASSESSEE ALL THE PURCHASES AND S ALES WERE RECORDED, THAT PAYMENTS WERE MADE THROUGH BANK ING CHANNELS, THAT THE AO HAD MADE ADDITION OF ENTIRE PURCHASES U/S.69 OF THE ACT, THAT THE FAA HAD REDUC ED IT TO 20%. IT IS A FACT THAT THE AO HAD NOT REJECTED T HE SALES OF THE ASSESSEE AND THE ASSESSEE WAS MAINTAINING THE QUANTATIVE DERAILS AND STOCK REGISTER. IN OUR OPINI ON, ONCE THE SALES ARE ACCEPTED AS J'ENUIIZE OR NOT DOUBTED THE AO ITA NO. 119/MUM/2015 & C.O. 117/MUM/2015 SMT. PINAKI D. PANANI 9 CANNOT REJECT THE ENTIRE PURCHASE. IN THE CASE OF N IKUNJ EXIMP(SUPRA)THE HON'BLE BOMBAY HIGH COURT HAS HELD IF SALES WERE NOT DOUBTED BY THE AO AND COPIES OF BANK STATEMENT SHOWING ENTRIES OF PAYMENT THROUGH ACCOUN T PAYEE CHEQUES TO THE SUPPLIERS, COPIES OF INVOICES FOR PURCHASES AND A STOCK STATEMENT, I.E. STOCK RECONCI LIATION STATEMENT ARE FILED PURCHASED COULD NOT BE REJECTED . IN THE CASE OF RAJEEV KALATHIL('SUPRA)THE TRIBUNAL HAS HEL D AS UNDER: '2.4. WE FIND THAT AG HAD MADE THE ADDITION AS ONE OF THE SUPPLIER WAS DECLARED A HAWALA DEALER BY THE VAT DEPARTMENT. WE AGREE THAT IT WAS A GOOD STARTING PO INT FOR MAKING FURTHER INVESTIGATION AND TAKE IT TO LOGICAL END. BUT, HE LEFT THE JOB AT INITIAL POINT ITSELF SUSPICION O F HIGHEST DEGREE CANNOT TAKE PLACE OF EVIDENCE. HE COULD HAVE CALLED FOR THE DETAILS OF THE BANK ACCOUNTS OF THE SUPPLIE RS TO FIND OUT AS WHETHER THERE WAS ANY IMMEDIATE CASH WITHDRA WAL FROM THEIR ACCOUNT. WE FIND THAT NO SUCH EXERCISE W AS DONE.' IN THE PRESENT CASE ALSO THE AG HAD MADE THE ADDITI ON ON THE BASIS OF INFORMATION RECEIVED FROM THE SALES TA X DEPARTMENT, BUT, HE DID NOT MAKE ANY INDEPENDENT INQUIRY. HE DID NOT FOLLOW THE PRINCIPLES OF NATURA L JUSTICE BEFORE MAKING THE ADDITION. THE FAA HAD REDUCED THE ADDITION TO 20%, BUT HE HAS NOT GIVEN ANY JUSTIFICA TION EXCEPT STATING THAT SAME WAS DONE TO PLUG THE PROBA BLE LEAKAGE REVENUE. CONSIDERING THE PECULIAR FACTS AND CIRCUMSTANCES OF THE CASE, WE ARE REVERSING THE ORD ER OF THE FAA EFFECTIVE GROUND OF APPEAL IS DECIDED IN FA VOUR OF THE ASSESSEE.' IN ANOTHER CASE, THE MUMBAI BENCH OF THE TRIBUNAL IN THE CASE OF DGIT VS. RAJEEV G. KALATHIL REPORTED AT (2014) 41 CCH 0552 (MUM), WHEREIN IT WAS HELD AS UNDER: '2.3 BEFORE US, DEPARTMENTAL REPRESENTATIVE ARGUED THAT BOTH THE SUPPLIERS WERE NOT PRODUCED BEFORE THE AO BY THE ASSESSEE, THAT ONE OF THEM WAS DECLARED HAWALA DEAL ER BY VAT DEPARTMENT, THAT BECAUSE OF CHEQUE PAYMENT MADE TO ITA NO. 119/MUM/2015 & C.O. 117/MUM/2015 SMT. PINAKI D. PANANI 10 THE SUPPLIER TRANSACTION CANNOT BE TAKEN AS GENUINE . HE RELIED UPON THE ORDER OF THE G BENCH OF MUMBAI TRIB UNAL DELIVERED IN THE CASE OF WESTERN EXTRUSION INDUSTRI ES. (ITA/6579/MUM/2010-DATED 13.11.2013). AUTHORISED REPRESENTATIVE (AR) CONTENDED THAT PAYMENTS MADE BY THE ASSESSEE WERE SUPPORTED BY THE BANKER'S STATEMENT, THAT GOODS RECEIVED BY THE ASSESSEE FROM THE SUPPLIER WA S PART OF CLOSING STOCK, THAT THE TRANSPORTER HAD ADMITTED TH E TRANSPORTATION OF GOODS TO THE SITE. HE RELIED UPON THE CASE OF BABULA BORANA (282 ITR251), NIKUNJ EXIMP ENTERPRISE S (P) LTD. (216TAXMAN 1 71) DELIVERED BY THE HON'BLE BOMB AY HIGH COURT. 2.4 WE HAVE HEARD THE RIVAL SUBMISSIONS AND PERUSED THE MATERIAL BEFORE US. WE FIND THAT AO HAD MADE THE AD DITION AS ONE OF THE SUPPLIER WAS DECLARED A HAWALA DEALER BY THE VAT DEPARTMENT. WE AGREE THAT IT WAS A GOOD STARTIN G POINT FOR MAKING FURTHER INVESTIGATION AND TAKE IT TO LOG ICAL END. BUT, HE LEFT THE JOB AT INITIAL POINT ITSELF SUSPIC ION OF HIGHEST DEGREE CANNOT TAKE PLACE OF EVIDENCE. HE COULD HAVE CALLED FOR THE DETAILS OF THE BANK ACCOUNTS OF THE SUPPLIE RS TO FIND OUT AS WHETHER THERE WAS ANY IMMEDIATE CASH WITHDRA WAL FROM THEIR ACCOUNT. WE FIND THAT NO SUCH EXERCISE W AS DONE. TRANSPORTATION OF GOOD TO THE SITE IS ONE OF THE DE CIDING FACTOR TO BE CONSIDERED FOR RESOLVING THE ISSUE. THE FAA H AS GIVEN A FINDING OF FACT THAT PART OF THE GOODS RECEIVED BY THE ASSESSEE WAS FORMING PART OF CLOSING STOCK. AS FAR AS THE CASE OF WESTERN EXTRUSION INDUSTRIES. (SUPRA)IS CON CERNED, WE FIND THAT IN THAT MATTER CASH WAS IMMEDIATELY WITHDRAWN BY THE SUPPLIER AND THERE WAS NO EVIDENCE OF MOVEMENT OF GOODS. BUT, IN THE CASE BEFORE US, THER E IS NOTHING, IN THE ORDER OF THE AO, ABOUT THE CASH TRI AL. SECONDLY, PROOF OF MOVEMENT OF GOODS IS NOT IN DOUB T. THEREFORE, CONSIDERING THE PECULIAR FACTS AND CIRCU MSTANCES OF THE CASE UNDER APPEAL, WE ARE OF THE OPINION THA T THE ORDER OF THE FAA DOES NOT SUFFER FROM ANY LEGAL INF IRMITY AND THERE ARE NOT SUFFICIENT EVIDENCE ON .FILE TO ENDOR SE THE VIEW TAKEN BY THE AO. SO, CONFIRMING THE ORDER OF THE FA A, WE DECIDE GROUND NO.1 AGAINST THE AO.' CONSIDERING THE TOTALITY OF FACTS AND THE FOREGOING DISCUSSION INCLUDING VARIOUS JUDICIAL PRONOUNCEMENT S, WE FIND THAT THE ASSESSEE DULY MAINTAINED BOOKS OF ACC OUNT. THE CONTRACT RECEIPTS ARE COMPLETELY VERIFIABLE AS THEY ARE ITA NO. 119/MUM/2015 & C.O. 117/MUM/2015 SMT. PINAKI D. PANANI 11 PAID/RECEIVED THROUGH ACCOUNTS PAYEE CHEQUE AND SUBJECTED TO TDS. THIS FACTUAL MATRIX WAS NOT EVEN CONTROVERTED BY THE REVENUE. THUS, MERE APPEARANCE OF THE PURCHASE PARTIES ON THE WEBSITE OF THE SALES TAX DEPARTMENT DOES NOT FALSIFY THE PURCHASES, CLAIMED TO BE MADE BY THE ASSESSEE. THERE IS A POSSIBILITY THAT S OME OTHER PARTIES MIGHT HAVE ENGAGED WITH SUCH PARTIES IN A SUSPICIOUS MANNER BUT IN THE PRESENT CASE, NO EVIDE NCE HAS BEEN BROUGHT ON RECORD TO FORTIFY THE SUSPICION RAISED BY THE ASSESSING OFFICER, MORE SPECIFICALLY WHEN TH E PURCHASE WAS MADE THROUGH ACCOUNT PAYEE CHEQUE AND THE PAYMENT OF RECEIPT FROM THE CONTRACTEE PARTY/MCGM I S ALSO THROUGH BANKING CHANNEL. THERE IS NO EVIDENCE THAT ANY PAYMENT WAS PAID BACK IN CASH. IN THE LIGHT OF THE FOREGOING DISCUSSION, WE FIND NO INFIRMITY IN THE C ONCLUSION OF THE LD. COMMISSIONER OF INCOME TAX (APPEAL), IT IS AFFIRMED, RESULTING INTO DISMISSAL OF APPEAL OF THE REVENUE. FINALLY, THE APPEAL OF THE REVENUE IS DISMISSED. 3. SO FAR AS, THE CROSS OBJECTION (C.O. NO.117/MUM/2015) IS CONCERNED, THE ASSESSEE HAS CHALLENGED ESTIMATION OF NET PROFIT AT THE RATE OF 5.76% AND THUS CONFIRMING THE ADDITION OF RS.50,44,947/- ONLY ON THE REASON THAT SOME OF THE SUPPLIERS NAMES WERE APPEAR ING IN THE LIST OF HAWALA DEALERS IS NOT JUSTIFIED. DURING HEARING, THE LD. COUNSEL FOR THE ASSESSEE, FAIRLY AGREED THA T IF THE IMPUGNED ORDER OF THE LD. COMMISSIONER OF INCOME TA X (APPEAL) IS CONFIRMED THEN THERE IS NO MERIT IN THE CROSS ITA NO. 119/MUM/2015 & C.O. 117/MUM/2015 SMT. PINAKI D. PANANI 12 OBJECTION OF THE ASSESSEE. SINCE, BY HAVING AN ELA BORATE DISCUSSION, WHILE DISPOSING OF THE APPEAL OF THE RE VENUE, WE HAVE DISMISSED THE APPEAL OF THE REVENUE, CONFIR MING THE STAND OF THE LD. COMMISSIONER OF INCOME TAX (AP PEAL), THUS, CONSIDERING THE ARGUMENT OF THE ASSESSEE, THE CROSS OBJECTION OF THE ASSESSEE HAS BECOME IN-FRUCTUOUS ( AS ADMITTED BY THE LD. COUNSEL FOR THE ASSESSEE), CONS EQUENTLY, DISMISSED. FINALLY, THE APPEAL OF THE REVENUE AS WELL AS CROSS OBJECTION OF THE ASSESSEE IS DISMISSED. THIS ORDER WAS PRONOUNCED IN THE OPEN COURT IN THE PRESENCE OF THE LD. REPRESENTATIVE FROM BOTH SIDES AT THE CONCLUSION OF THE HEARING ON 08/12/2016. SD/- SD/- ( RAJESH KUMAR ) (JOGINDER SINGH) '!# / ACCOUNTANT MEMBER $!# /JUDICIAL MEMBER $ MUMBAI; ( DATED : 19/12/2016 F{X~{T? P.S / /. .. %$&'()(*& / COPY OF THE ORDER FORWARDED TO : 1. *+,- / THE APPELLANT (RESPECTIVE ASSESSEE) 2. ./,- / THE RESPONDENT. 3. 0 0 1# ( *+ ) / THE CIT, MUMBAI. 4. 0 0 1# / CIT(A)- , MUMBAI, 5. 34 .# , 0 *+& * 5 , $ / DR, ITAT, MUMBAI 6. 6! 7$ / GUARD FILE. ! / BY ORDER, /3+# .# //TRUE COPY// /! (DY./ASSTT. REGISTRAR) , $ / ITAT, MUMBAI