M/s. Metallurgical Products (India) Pvt.Ltd, Raigad V. Income-tax Officer, Ward - 3, Raigad

ITA 146/PUN/2018

• Counselvise Citation: [2018] 119 COUNSELVISE.COM (IT) 0694 (ITAT-PUNE)
• Duration Of Justice: 10 month(s) 11 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 26-11-2018
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: SMC
• Next Hearing Date: 22-11-2018
• Assessment Year: 2011-2012
• Appeal Filed On: 15-01-2018
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: M K VERMA
• Keywords: Bogus purchase; Depreciation

Judgement Text

- IN THE INCOME TAX APPELLATE TRIBUNAL PUNE BENCH SMC, PUNE , BEFORE SHRI VIKAS AWASTHY, JM . / ITA NOS. 145 & 146/PUN/2018 ! '! / ASSESSMENT YEARS: 2010-11 & 2011-12 M/S. METALLURGICAL PRODUCTS (INDIA) PVT. LTD. PLOT NO. T-27, MIDC INDL. AREA, TALOJA, TALUKA- PANVEL, RAIGAD. PAN : AACCM7042D ....... / APPELLANT # / V/S. THE INCOME TAX OFFICER, WARD-3, PANVEL, DIST. RAIGAD. / RESPONDENT APPELLANT BY : SHRI PRAYAG JHA RESPONDENT BY : SHRI M.K. VERMA / DATE OF HEARING : 22.11.2018 / DATE OF PRONOUNCEMENT : 26.11.2018 $ / ORDER PER VIKAS AWASTHY, JM THESE TWO APPEALS BY ASSESSEE ARE DIRECTED AGAINST THE ORDER OF COMMISSIONER OF INCOME TAX (APPEALS)-2, PUNE FOR THE ASSES SMENT YEARS 2010-11 & 2011-12, RESPECTIVELY. BOTH THE IMPUGNED ORDE RS ARE OF EVEN DATE I.E. 07.09.2017. 2 ITA NOS.145 & 146/PUN/2018 A.YS.2010-11 & 2011-12 2. SINCE THE ISSUE RAISED BY ASSESSEE IN BOTH THE APPEA LS IS IDENTICAL AND IS ARISING FROM SAME SET OF FACTS, THESE APPEALS ARE TAKEN UP TOGETHER FOR ADJUDICATION AND ARE BEING DISPOSED OF VIDE THIS COMMON ORDER. ITA NO. 145/PUN/2018 A.Y.2010-11 3. IN ITA NO.145/PUN/2018, THE ASSESSEE HAS ASSAILED TH E ORDER OF COMMISSIONER OF INCOME TAX (APPEALS) BY RAISING FOLLOWING CONCIS E GROUNDS/ ADDITIONAL GROUNDS OF APPEAL: 1. THE LEARNED CIT(A) ERRED IN SUSTAINING THE DISAL LOWANCE OF RS.16,53,022/- MADE ON ACCOUNT OF BOGUS PURCHASES W ITHOUT APPRECIATING THAT THE DISALLOWANCE WAS MADE MECHANI CALLY WITHOUT CONSIDERING THE EVIDENCES FURNISHED BY THE ASSESSEE AND ALSO WITHOUT REJECTING THE BOOKS OF ACCOUNT. 2.WITHOUT PREJUDICE TO GROUND NO.1, THE LEARNED CIT (A) ERRED IN NOT APPRECIATING THAT AT BEST ONLY A PERCENTAGE OF THE ALLEGED BOGUS PURCHASES COULD HAVE BEEN DISALLOWED AND NOT THE EN TIRE CLAIM OF RS.16,53,022/-. ADDITIONAL GROUNDS OF APPEAL: 1. THE LEARNED CIT(A) ERRED IN NOT APPRECIATING THA T THE LEARNED ASSESSING OFFICER WHILE PASSING THE ASSESSMENT ORDE R HAD IGNORED THE FACT THAT THE ASSESSEE, BEING A 100% EXPORT ORIENTE D UNIT, WAS ELIGIBLE FOR DEDUCTION U/S.10B OF THE I.T. ACT. 2. THE LEARNED CIT(A) ERRED IN NOT APPRECIATING THA T THE LEARNED ASSESSING OFFICER, WHILE PASSING THE ASSESSMENT ORD ER, HAD NOT ALLOWED SET OFF FOR DEPRECIATION OF RS.59,40,244/- OF THE C URRENT YEAR AND ALSO THE BUSINESS LOSSES AND DEPRECIATION BROUGHT FORWARD FR OM THE EARLIER ASSESSMENT YEARS. 4. SHRI PRAYAG JHA APPEARING ON BEHALF OF THE ASSESSEE S UBMITTED AT THE OUTSET THAT IN THE ASSESSMENT YEAR UNDER APPEAL, RE-A SSESSMENT PROCEEDINGS WERE INITIATED ON THE BASIS OF INFORMATION RECEIVED FROM MAHARASHTRA SA LES TAX DEPARTMENT. THE ASSESSING OFFICER IN RE-ASSESSMENT PROCEE DINGS HELD THAT THE ASSESSEE HAS MADE PURCHASES FROM SUSPICIOUS HAWALA DEALER S VIZ. M/S. RIDDHI ASSOCIATES AND M/S. A.P ENTERPRISES AND MADE ADDITION O F THE ENTIRE PURCHASES MADE FROM THE ABOVE SAID DEALERS AGGREGATING TO RS.16,53 ,022/-. 3 ITA NOS.145 & 146/PUN/2018 A.YS.2010-11 & 2011-12 4.1 THE LD. AR SUBMITTED THAT DURING RE-ASSESSMENT PROCE EDINGS, THE ASSESSEE HAD FURNISHED NECESSARY DOCUMENTS TO SUBSTAN TIATE THE PURCHASE OF GOODS. THE ASSESSEE VIDE COMMUNICATION DATED 19.12.2014 H AD SUBMITTED BEFORE THE ASSESSING OFFICER COPY OF LEDGER ACCOUNT OF M/S. RIDDHI ASSOCIATES AND M/S. A.P ENTERPRISES, COPY OF TAX INVOICE OF THE AFORES AID PARTIES, COPY OF STOCK REGISTER FOR THE PERIOD RELEVANT TO ASSESSMENT YE AR 2010-11, COPY OF PURCHASE ORDER AND COPY OF BANK ACCOUNT STATEMENTS FR OM 01.04.2009 TO 03.03.2010. THE ASSESSEE HAD MADE PAYMENT FOR THE PURCH ASE THROUGH BANKING CHANNELS. THE ASSESSING OFFICER WITHOUT TAKING INTO CONSIDERATION ABOVE SAID DOCUMENTS, MADE ADDITION OF THE ENTIRE PURCHAS ES. THE ASSESSEE ASSAILED THE ADDITION BEFORE THE COMMISSIONER OF INCOME TA X (APPEALS). THE FIRST APPELLATE AUTHORITY WITHOUT APPRECIATING THE DOCUMEN TS ON RECORD CONFIRMED THE ADDITION, IN TOTO. HENCE, THE PRESENT APPEAL. 4.2 THE LD. AR FILED ADDITIONAL GROUND OF APPEAL STATING THAT AUTHORITIES BELOW HAVE FAILED TO TAKE INTO CONSIDERATION THAT THE ASS ESSEE IS 100% EXPORT ORIENTATED UNIT AND ELIGIBLE FOR DEDUCTION U/S.10B OF THE INC OME TAX ACT, 1961 (HEREINAFTER REFERRED TO AS THE ACT) AND ALSO THE FACT THAT ASSESSEE HAS SUFFERED LOSSES. THE ADDITION, IF ANY, IS TO BE SET OFF AGAINST LOSS. 5. SHRI M.K. VERMA REPRESENTING THE DEPARTMENT VEHEMENT LY SUPPORTED THE IMPUGNED ORDER. THE LD. DR SUBMITTED THAT THE ASSES SEE HAS FAILED TO SHOW GENUINENESS OF THE DEALERS FROM WHOM PURCHASES WER E MADE. THE DEPARTMENT HAD RECEIVED INFORMATION FROM MAHARASHTRA SALE S TAX DEPARTMENT REGARDING HAWALA DEALERS. THE ASSESSEE IS ON E OF THE BENEFICIARIES FROM THE DEALERS WHO INDULGE IN PROVIDING BOOK ENTRIES WITHO UT ACTUAL SUPPLY OF GOODS. THE LD. DR PRAYED FOR DISMISSING THE APPEAL OF ASSESSEE. 4 ITA NOS.145 & 146/PUN/2018 A.YS.2010-11 & 2011-12 6. BOTH SIDES HEARD. ORDERS OF THE AUTHORITIES BELOW PER USED. THE ASSESSEE IN APPEAL HAS ASSAILED THE ADDITION OF RS.16,53,022/- MADE O N ACCOUNT OF BOGUS PURCHASES. THE ASSESSEE IS ENGAGED IN THE BUSINES S OF MANUFACTURING OF CHEMICALS LIKE NIOBIUM OXIDE USING NIOBIUM AND TANTALUM. DURIN G THE PERIOD RELEVANT TO THE ASSESSMENT YEAR 2010-11, THE ASSESSEE HAD MADE PURCHASES FROM M/S. RIDDHI ASSOCIATES AND M/S. A.P ENTERPRISES. PURPOR TEDLY BOTH THE ABOVE SAID FIRMS HAVE BEEN DECLARED AS HAWALA DEALERS BY THE MAHARASHTRA SALES TAX DEPARTMENT. THE ASSESSING OFFICER MADE ADDITION OF RS.16,53,022/- ON ACCOUNT OF GOODS PURCHASED BY ASSESSEE FROM THE AFO RESAID PARTIES. THE ASSESSEE WAS ASKED TO PROVE GENUINENESS OF THE PURCHA SES BY THE ASSESSING OFFICER. THE ASSESSEE VIDE LETTER DATED 19.12.2014 FURNISHED FOLLOWING DOCUMENTS; I) COPY OF LEDGER ACCOUNT OF M/S. RIDDHI ASSOCIATES AND M/S . A.P ENTERPRISES. II) COPY OF TAX INVOICES FROM M/S. RIDDHI ASSOCIATES AND M/S. A.P ENTERPRISES. III) COPY OF STOCK REGISTER IV) COPY OF PURCHASE ORDER V) COPY OF BANK ACCOUNT STATEMENTS INDICATING PAYMENTS. THE SHORT CONTENTION OF THE LD. AR FOR THE ASSESSEE IS T HAT WHILE HOLDING THE PURCHASES AS NON GENUINE, AUTHORITIES BELOW HAVE FAILED TO CONSIDER DOCUMENTS FURNISHED BY THE ASSESSEE. 7. THE LD. AR HAS RAISED ADDITIONAL GROUNDS OF APPEAL STAT ING THAT THE ASSESSEE IS 100% EXPORT ORIENTED UNIT AND ELIGIBLE FOR DEDU CTION U/S.10B OF THE ACT. FURTHER, THE ASSESSING OFFICER HAS NOT ALLOWED SET OFF OF DEPRECIATION OF THE CURRENT YEAR AND THE BUSINESS LOSSES AND DEPREC IATION BROUGHT FORWARD FROM EARLIER ASSESSMENT YEAR. THE ADDITIONAL GROUNDS RAISED BY ASSESSEE ARE LEGAL IN NATURE, HENCE, THE SAME ARE ADMITTED IN LINE WITH T HE DECISION OF 5 ITA NOS.145 & 146/PUN/2018 A.YS.2010-11 & 2011-12 HON'BLE SUPREME COURT OF INDIA IN THE CASE OF NTPC LTD. VS. CIT REPORTED AS 229 ITR 383 (SC). 8. AFTER TAKING INTO CONSIDERATION ENTIRE FACTS OF THE CAS E, WE ARE OF CONSIDERED VIEW THAT THE APPEAL NEEDS A REVISIT TO THE FILE OF ASSESSING OFFICER FOR EXAMINATION OF THE DOCUMENTS FILED BY THE ASSESSEE DUR ING THE COURSE OF ASSESSMENT PROCEEDINGS. THE ASSESSING OFFICER IS FURTHER D IRECTED TO EXAMINE ASSESSEES CLAIM U/S.10B OF THE ACT AND THE CLAIM OF SET O FF OF BROUGHT FORWARD BUSINESS LOSS AND DEPRECIATION AS CLAIMED IN ADDITIONAL GROUNDS OF APPE AL. THE ASSESSING OFFICER AFTER CONSIDERING THE DOCUMENTS FURNISHED BY ASSESSEE TO PROVE GENUINENESS OF THE PURCHASES TRANSACTION AND THE CLAIM OF DEDUCTION U/S.10B SHALL PASS A SPEAKING ORDER AFTER GRANTING SUFFICIEN T OPPORTUNITY OF HEARING TO THE ASSESSEE, IN ACCORDANCE WITH LAW. 9. IN THE RESULT, THE IMPUGNED ORDER IS SET ASIDE AND APP EAL OF THE ASSESSEE IS ALLOWED FOR STATISTICAL PURPOSE. ITA NO. 146/PUN/2018 A.Y.2011-12 10. THE LD. AR SUBMITTED THAT IN THE ASSESSMENT YEAR 2 011-12, SIMILAR ADDITION WAS MADE BY THE ASSESSING OFFICER IN RESPECT OF ALLE GED BOGUS PURCHASES FROM HAWALA DEALERS VIZ. M/S. SHRADHA TRADING C OMPANY AND A.P. ENTERPRISES AGGREGATING TO RS.2,71,762/-. THE ASSESSEE FOR THE ASSESSMENT YEAR 2011-12 AS WELL, HAD FURNISHED ALL THE DOCUMENTS IN S UPPORT OF THE PURCHASES MADE BY THE ASSESSEE. HOWEVER, AUTHORITIES BE LOW HAVE FAILED TO CONSIDER THE SAME. THE ASSESSING OFFICER MADE ADDITION OF TH E ENTIRE PURCHASES MADE BY THE ASSESSEE FROM THE ALLEGED HAWALA DEALERS AND THE COMMISSIONER OF INCOME TAX (APPEALS) HAS CONFIRMED THE SAME. 6 ITA NOS.145 & 146/PUN/2018 A.YS.2010-11 & 2011-12 11. THE LD. AR SUBMITTED THAT THE ASSESSEE HAS RAISED A DDITIONAL GROUNDS OF APPEAL QUA ASSESSEES ELIGIBILITY FOR CLAIMING DEDUCTION U/S.10B OF THE ACT AND SET OFF OF DEPRECIATION AND BROUGHT FORWARD BUSINESS LOSSE S. THE ADDITIONAL GROUNDS RAISED IN ASSESSMENT YEAR 2011-12 ARE IDENTICAL TO ADDITIO NAL GROUNDS RAISED IN ASSESSMENT YEAR 2010-11. 12. BOTH SIDES HEARD. BOTH SIDES ARE UNANIMOUS IN STATING THAT THE FACTS AND GROUNDS OF APPEAL IN ASSESSMENT YEAR 2011-12 ARE IDENTICAL TO ASSESSMENT YEAR 2010-11. FOR THE SAKE OF BREVITY THE GROUNDS OF APPEAL/ ADDITIONAL GROUNDS ARE NOT REPRODUCED AGAIN. THE ONLY DIFFE RENCE IS THAT IN THE ASSESSMENT YEAR 2011-12, THE ASSESSEE HAS MADE ALLEGED BOGUS PURCHASES FROM M/S. SHRADHA TRADING COMPANY INSTEAD OF M/S. RIDDHI AS SOCIATES. THE TOTAL ALLEGED BOGUS PURCHASES MADE BY ASSESSEE IN ASSES SMENT YEAR 2011-12 ARE TO THE TUNE OF RS.2,71,762/-. IN VIEW OF IDENTICAL ISSUES AND FACTS IN BOTH THE APPEALS, THE FINDINGS GIVEN IN ITA NO.145/PUN/2018 FOR ASSESSMENT YEAR 2010-11 WOULD MUTATIS-MUTANDIS APPLY TO ASSESSMENT YEAR 2011-12, AS WELL. ACCORDINGLY, APPEAL OF THE ASSESSEE IN ASSESSMENT YEAR 2 011-12 IS ALLOWED FOR STATISTICAL PURPOSE. 13. TO SUM UP, THE APPEALS OF ASSESSEE FOR ASSESSMENT Y EAR 2010-11 AND 2011-12 ARE ALLOWED FOR STATISTICAL PURPOSE. ORDER PRONOUNCED ON MONDAY, THE 26 TH DAY OF NOVEMBER, 2018. SD/ - ( /VIKAS AWASTHY) / JUDICIAL MEMBER / PUNE; ! ' / DATED : 26 TH NOVEMBER, 2018. SB 7 ITA NOS.145 & 146/PUN/2018 A.YS.2010-11 & 2011-12 $%&'()'' / COPY OF THE ORDER FORWARDED TO : 1. / THE APPELLANT. 2. / THE RESPONDENT. 3. THE CIT(APPEALS)-2, PUNE. 4. THE PR. CIT-2, THANE 5. %&' () , * () , - +,- , / DR, ITAT, SMC BENCH, PUNE. 6. './ 01 / GUARD FILE. // TRUE COPY // * 2 / BY ORDER, 3 (- /PRIVATE SECRETARY * () , / ITAT, PUNE.