DCIT CIR 3, THANE V. RAJDULARI ENGINEERING P.LTD, THANE

ITA 1204/MUM/2016

• Counselvise Citation: [2017] 127 COUNSELVISE.COM (IT) 0256 (ITAT-MUMBAI)
• Duration Of Justice: 1 year(s) 5 month(s) 1 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 09-08-2017
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: Not Allotted
• Assessment Year: 2009-2010
• Appeal Filed On: 08-03-2016
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Keywords: Bogus purchase
• Section: 133(6)

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL 'D' BENCH, MUMBAI BEFORE SHRI P K BANSAL, VICE PRESIDENT AND SHRI D.T. GARASIA, JUDICIAL MEMBER ITA NO.1204 /MUM/2016 (ASSESSMENT YEAR: 2009-10) DCIT, CIRCLE - 3 VS. M/S. RAJDULARI ENGG. PVT. LTD. 6TH FLOOR, ASHAR IT PARK B-WING, WAGLE INDAL. ESTATES THANE (W) 400604 RH - 31, VASANT VIHAR THANE (W) 400601 PAN AAACR8079D APPELLANT RESPONDENT APPELLANT BY: SHRI PURUSHOTTAM KUMAR RESPONDENT BY: NONE DATE OF HEARING: 05.07.2017 DATE OF PRONOUNCEMENT: 09.08.2017 O R D E R PER D.T. GARASIA, JM THIS APPEAL HAS BEEN FILED BY THE REVENUE AGAINST T HE ORDER OF THE CIT(A)-2, THANE DATED 23.12.2015 FOR A.Y. 2009-10. 2. THE ASSESSEE HAS RAISED THE FOLLOWING GROUNDS OF AP PEAL: - 1. ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CA SE, THE LD. CIT(A) HAS ERRED IN GIVING RELIEF TO THE ASSESSEE OUT OF T OTAL BOGUS PURCHASES EVEN THOUGH- (I) THE ASSESSEE COULD NOT PRODUCE PRIMARY EVI DENCES LIKE OCTROI RECEIPTS DELIVERY CHALLAN ETC. EVIDENCE TO PROVE TH E GENUINENESS OF THE PURCHASES BEFORE THE AO AND BEFO RE CIT(A). (II) THE AFFIDAVITS FILED BY THE ENTRY PROVIDE RS BEFORE SALES TAX AUTHORITIES CANNOT BE IGNORED HAVING EVIDENTIARY VA LUE. 2. ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CAS E, AND IN LAW, THE HON'BLE CIT(A) ERRED IN NOT FOLLOWING THE ORDER OF ITAT, PUNE IN ITA NO. 1411-1415 DATED 20.02.2015 IN THE CASE OF M/S. KOLTE PATIL DEVELOPERS LTD. WHEREIN 100% ADDITION S OF BOGUS PURCHASES WAS CONFIRMED. ITA NO. 1204/MUM/2016 M/S. RAJDULARI ENGG. PVT. LTD. 2 3. THE ORDER OF THE CIT(A) MAY BE VACATED AND THAT OF THE ASSESSING OFFICER MAY BE RESTORED. 3. THE BRIEF FACTS OF THE CASE ARE THAT THE AO RECEIV ED INFORMATION FROM THE SALES TAX DEPARTMENT, GOVERNMENT OF MAHARASHTRA THAT A LARGE NUMBER OF ENTITIES HAVE PROVIDED ENTRIES FOR BOGUS PURCHASE BILLS TO A LARGE NUMBER OF TAX PAYERS. THE ASSESSEE HAPPENS TO BE ON E OF SUCH BENEFICIARIES. THEREFORE, THE AO HAS REOPENED THE A SSESSMENT AND HE TRIED TO VERIFY THE BOGUS PURCHASE BILLS PROVIDED BY THE FOLLOWING PARTIES: - SL. NO. NAME AMOUNT 1 NIKHIL ENTERPRISE 13,46,842/ - 2 MAHAVIR ENTERPRISE 9,90,829/ - 3 DAKSHA ENTERPRISE 10,14,333/ - 4 TOP SHOP TRADING CO. PVT. LTD. 18,34,134/ - 5 PARSHVA & CO. 10,13,355/ - 6 SHREEJI ENTERPRISE 2,80,720/ - TOTAL 64,80,213/ - THE AO HAS ISSUED NOTICE UNDER SECTION 133(6) OF TH E INCOME TAX ACT FOR VERIFYING THE GENUINENESS OF THE ABOVE TRANSACTIONS . HOWEVER, THE NOTICE WAS RETURNED BACK BY THE POSTAL AUTHORITIES. THEREF ORE, THE AO MADE THE ADDITION ON ACCOUNT OF BOGUS PURCHASE OF ` 64,80,213/-. THE MATTER WAS CARRIED TO THE CIT(A). THE CIT(A) ALLOWED PARTIAL RELIEF TO THE ASSESSEE BY OBSERVING AS UNDER: - 8. FROM THE ABOVE DETAILS, IT IS SEEN THAT THE GP OF THE YEAR UNDER APPEAL HAS BEEN DECLARED @ 20.94% WHICH IS HIGHER T HAN THE GP SHOWN IN THE EARLIER YEARS AS WELL AS SUBSEQUENT YE ARS. THE GP AFTER ADDITION OF RS 64,80,213/- ON ACCOUNT OF HAWALA PUR CHASES WORKS OUT @ 69.28% AND NP @ 56.62% AS ABOVE, WHICH IS VER Y ABNORMAL. HOWEVER TO ASCERTAIN, THE REASONABLENESS, CORRECTNE SS AND GENUINENESS OF THOSE PURCHASE, THE LD. AR WAS ASKED TO FURNISH THE CONFIRMATION, CURRENT MAILING ADDRESS ETC AS ABOVE. IN RESPONSE, VIDE WRITTEN SUBMISSION DATED 22.12.2015, THE APPELLANT STATED THAT THE ASSESSEE IS UNABLE TO OBTAIN CONFIRMATIONS FROM THE PURCHASE PARTIES, AS THE ABOVE PURCHASES WERE AFFECTED THROUGH AN AGE NT, WHO HAS ALSO EXPIRED. THEREFORE, THE PURCHASE PARTIES CANNO T BE CONTACTED. ACCORDINGLY VIDE WRITTEN SUBMISSION AND ORDER SHEET NOTING DATED 22.12.2015, THE APPELLANT REQUESTED THAT THE DISALL OWANCE TO BE RESTRICTED AT THE MOST 25% OF THE HAWALA PURCHASES INSTEAD OF 100% AS HAD BEEN MADE BY THE AO, AS THE GP AS WELL AS NP INCREASES ABNORMALLY HIGH, WITH ABOVE ADDITION. ITA NO. 1204/MUM/2016 M/S. RAJDULARI ENGG. PVT. LTD. 3 9. CONSIDERING THE FACTS IN ENTIRETY AND RELYING ON DECISIONS, AS QUOTED ABOVE, IN MY CONSIDERED OPINION, THE DISALLO WANCE @25% OUT OF HAWALA PURCHASES AS REQUESTED ABOVE, WILL BE REA SONABLE, IN THE CASE OF THE APPELLANT'S BUSINESS I.E. MANUFACTURER OF STORAGE SYSTEMS. IN THIS REGARD THE RELIANCE IS PLACED ON THE RATIO, LAID DOWN IN THE CASE OF VIJAY PROTEINS LTD VS ACIT 58 ITD 428 (ABAD), SA NJAY OIL CAKE INDUSTRIES VS CIT (2008) 316 ITR 274 (GUJ) ETC. AS ABOVE. THE DISALLOWANCE OF 25% OF HAWALA PURCHASES IS WORK OUT AT RS 16,20,053/- (25% OF RS.74,80,213). ACCORDINGLY, THE DISALLOWANCE OF RS.16,20,053/-, OUT OF HAWALA PURCHASES OF RS.64 ,80,213/-, IS SUSTAINED AND BALANCE AMOUNT OF RS 48,60,160/- I S HEREBY DELETED. BOTH THE GROUNDS OF APPEAL ARE DECIDED ACCORDINGLY . 4. NONE APPEARED ON BEHALF OF THE ASSESSEE. HAVING HE ARD THE LEARNED D.R. WE FIND THAT THE CIT(A) HAS RELIED ON THE DECI SION OF SANJAY OIL CAKE INDUSTRIES VS CIT (2008) 316 ITR 274 (GUJ). WE FIND THAT THE CIT(A) HAS RIGHTLY DISALLOWED 20% OF THE HAWALA PURCHASES RELY ING THE DECISION OF THE HONBLE HIGH COURT. DURING THE COURSE OF HEARING TH E LEARNED D.R. HAS DRAWN OUT ATTENTION TO THE DECISION OF THE HON'BLE GUJARAT HIGH COURT IN THE CASE N.K. PROTEINS LTD. DCIT WHEREIN THE COURT HAS REVERSED THE DECISION OF THE ITAT RESTRICTING THE ADDITION ON AC COUNT OF ALLEGED BOGUS PURCHASES @25% AND HAS MODIFIED THE ORDER OF THE TR IBUNAL AND MADE THE ADDITION ON ENTIRE BOGUS PURCHASE. SIMILARLY THE LE ARNED D.R. HAS ALSO RELIED UPON THE DECISION OF THE HON'BLE GUJARAT HIG H COURT WHEREIN THE DECISION OF THE ITAT IN THE CASES OF IT(SS) NO. 16/ AHD/2002, IT(SS) NO. 38/AHD/2002 AND IT(SS) NO. 15/AHD/2002 WAS CHALLENG ED. 5. WE HAVE GONE THROUGH THE ORDERS OF THE HON'BLE SUPR EME COURT AND THE HON'BLE HIGH COURT. WE FIND THAT IN THESE CASES THE ASSESSEE WAS A MANUFACTURER AND THERE WAS SEARCH PROCEEDINGS AT TH E BUSINESS PREMISES WHERE BLANK SIGNED CHEQUE BOOKS AND VOUCHERS OF NUM BER OF CONCERNS WERE FOUND AND ENDORSED BLANK CHEQUES OF THE CONCER N WERE FOUND FROM THE OFFICE PREMISES OF THE ASSESSEE. IN THESE CASES THE COURTS FOUND THAT THE ASSESSEE HIMSELF WAS PREPARED THE BOGUS BILLS. THEREFORE 100% ADDITION WAS MADE. HOWEVER, IN THIS CASE THERE IS N O DIRECT EVIDENCE AGAINST THE ASSESSEE. THE ASSESSMENT WAS REOPENED O N THE BASIS OF THE INFORMATION RECEIVED FROM THE SALES TAX DEPARTMENT. THERE IS NO BLANK CHEQUE OR ANY EVIDENCE WAS FOUND. THEREFORE, RELYIN G ON THE DECISION OF THE ITA NO. 1204/MUM/2016 M/S. RAJDULARI ENGG. PVT. LTD. 4 SANJAY OIL CAKE INDUSTRIES VS CIT (2008) 316 ITR 27 4 (GUJ) WE CONFIRM THE ORDER OF THE CIT(A). 6. IN THE RESULT, THE APPEAL OF THE REVENUE IS DISMISS ED. ORDER PRONOUNCED IN THE OPEN COURT ON 9 TH AUGUST, 2017. SD/ - SD/ - (P.K. BANSAL) (D.T. GARASIA) VICE PRESIDENT JUDICIAL MEMBER MUMBAI, DATED: 9 TH AUGUST, 2017 COPY TO: 1. THE APPELLANT 2. THE RESPONDENT 3. THE CIT(A) -2, THANE 4. THE PR. CIT - 2, THANE 5. THE DR, D BENCH, ITAT, MUMBAI BY ORDER //TRUE COPY// ASSISTANT REGISTRAR ITAT, MUMBAI BENCHES, MUMBAI N.P.