Vijay Tukaram Raundal, Pune V. Deputy Commissioner of Income-tax, Circle - 2, Pune

ITA 160/PUN/2019

• Counselvise Citation: [2019] 118 COUNSELVISE.COM (IT) 1718 (ITAT-PUNE)
• Duration Of Justice: 1 month(s) 24 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 18-03-2019
• Appeal Filed By: Assessee
• Order Result: Partly Allowed
• Bench Allotted: SMC
• Assessment Year: 2012-2013
• Appeal Filed On: 25-01-2019
• Result in Favour of: Partly Allowed
• Court: TRIBUNAL
• Keywords: Bogus purchase; Revised return; Set aside
• Section: 133(6)

Judgement Text

- IN THE INCOME TAX APPELLATE TRIBUNAL SMC BENCH, P UNE BEFORE SHRI R.S.SYAL, VP AND SHRI PARTHA SARATHI CHAUDHURY, JM / ITA NO.160/PUN/2019 / ASSESSMENT YEAR : 2012-13 VIJAY TUKARAM RAUNDAL, OFFICE NO. C 708, TEERTH TECHNOSPACE, NEXT TO MERCEDES SHOWROOM, BANGALORE MUMBAI HIGHWAY, BANER ROAD, BANER PUNE-411 045 PAN : AAQPR0124G ....... / APPELLANT ! / V/S. THE DEPUTY COMMISSIONER OF INCOME TAX, CIRCLE-2, PUNE. / RESPONDENT ASSESSEE BY : SHRI S.N. PURANIK REVENUE BY : SHRI RAJESH GAWALI / DATE OF HEARING : 18.03.2019 / DATE OF PRONOUNCEMENT : 18.03.2019 ' / ORDER PER PARTHA SARATHI CHAUDHURY, JM : THIS APPEAL PREFERRED BY THE ASSESSEE EMANATES FROM TH E ORDER OF LD. CIT(APPEALS)-3, PUNE DATED 26.10.2018 FOR THE ASSESSMENT YEAR 2012-13 AS PER FOLLOWING GROUNDS OF APPEAL ON RECORD: 1. HONORABLE COMMISSIONER OF INCOME TAX HAS ERRED I N CONFIRMING ASSESSING OFFICERS ACTION OF REDUCING CLOSING STOCK /WORK IN PROGRESS VALUATION AS ON 31.03.2012 BY REJECTING PURCHASES O F RS.18,84,991/-. APPELLANT PRAYS TO ACCEPT AND CONFIRM THE CLOSING S TOCK AS PER RETURN AND BALANCE SHEET. 2 ITA NO. 160/PUN/2019 A.Y.2012-13 2. APPELLANT DENIES CONSEQUENTIAL LIABILITY OF INTE REST U/S.234B AND PRAYS TO CANCEL THE SAME. 3. APPELLANT PRAYS FOR JUST AND EQUITABLE RELIEF. 4. APPELLANT PRAYS TO ADD, ALTER, AMEND AND /OR WIT HDRAW THE GROUND/S AS THE OCCASION MAY DEMAND DURING APPELLATE PROCEED INGS. 2. THE BRIEF FACTS IN THIS CASE ARE THAT THE ASSESSEE IS AN INDIVIDUAL AND FILED REVISED RETURN OF INCOME FOR ASSESSMENT YEAR 2012-13 ON 14.02.2013 DECLARING TOTAL INCOME OF RS. NIL AND SHOWING CURRENT YEAR LO SS OF (-) RS.2,65,218/-. THE RETURN WAS SELECTED FOR SCRUTINY THROUG H CASS AND ACCORDINGLY, NOTICE U/S.143(2) OF THE INCOME TAX ACT, 1961 (HEREINAFTER REFERRED TO AS THE ACT) WAS SERVED ON THE ASSESSEE. THE ASSESSMENT WAS COMPLETED U/S.143(3) OF THE ACT BY MAKING VARIOUS ADDITION S/DISALLOWANCES AS APPEARING IN THE ASSESSMENT ORDER. 3. THE ONLY GRIEVANCE OF THE ASSESSEE IS WITH REGARD T O THE ADDITION MADE IN RESPECT OF NON GENUINE PURCHASES OF RS.18,84,991/-. THAT DURING THE ASSESSMENT PROCEEDINGS, THE LD. AR OF THE ASSESSEE WAS ASKED TO FURNISH DETAILS OF PURCHASE OF MATERIALS SUCH AS CEMENT, STEEL, BRIC KS, MARBLE AND OTHER MATERIALS VIDE QUESTIONNAIRE. HE WAS ALSO ASKED TO FU RNISH SAMPLE COPY OF BILLS FROM EACH PARTY AGAINST PURCHASES MADE ALONG WITH THE CASH INVOICE, DELIVERY CHALLAN, OCTROI AND STOCK REGISTER REFLECTING SUCH PURCHASES. IN RESPONSE, THE ASSESSEE PRODUCED DETAILS OF PURCHASE OF MATERIALS ALONG WITH NAME, ADDRESS OF SUCH PARTIES ALONG WITH TAX INVOICE ONLY. THAT WITH REGARD TO PURCHASES FROM M/S. SIDDHIVINAYAK CORPORATION, IT WAS OBSER VED THAT THE ASSESSEE SUBMITTED TAX INVOICE AND NO SUPPORTING DETAILS RELATING TO PURCHASES WERE PRODUCED BEFORE THE ASSESSING OFFICER AND FURTHER, M/S. SIDDHIVINAYAK CORPORATION WAS A HAWALA PARTY AS DECLARED BY THE SALES TAX DEPARTMENT. THEREFORE, THE ASSESSING OFFICER HELD THAT NO GENUINE PURCHASES 3 ITA NO. 160/PUN/2019 A.Y.2012-13 HAVE BEEN MADE FROM THIS PARTY AND AN AMOUNT OF RS.18,8 4,991/- WAS DISALLOWED. 4. DURING FIRST APPELLATE PROCEEDINGS, THE LD. CIT(APPEALS) A LSO CONFIRMED THE ADDITION MADE BY THE ASSESSING OFFICER. 5. WE HAVE PERUSED THE CASE RECORDS AND ANALYZED TH E FACTS AND CIRCUMSTANCES IN THIS CASE. IT IS ALLEGED THAT PURCHASES O F RS.18,84,991/- MADE BY THE ASSESSEE WERE NOT GENUINE PURCHASES MAINL Y BECAUSE PURCHASES BILLS WERE NOT PRODUCED BY THE ASSESSEE AND ALSO FOR THE REASON THAT THE NAME OF M/S.SIDDHIVINAYAK CORPORATION WAS APPEARING IN THE LIST OF HAWALA OPERATORS AS DECLARED BY THE SALES TAX DEPARTMENT, MAH ARASHTRA. THE ASSESSING OFFICER CONFIRMED THE ENTIRE PURCHASES AS NON GE NUINE AND THIS WAS UPHELD BY THE LD. CIT(APPEALS). WE FIND THAT BEING SIMILAR SITUATION IN THE CASE OF M/S. CHHABI ELECTRICALS PVT. LTD. VS. DCIT IN ITA NO. 795/PUN/2014 FOR THE ASSESSMENT YEAR 2010-11, WHEREIN ON THE SAME FACTS AND CIRCUMSTANCES, WE HAVE OBSERVED THAT : 40. IN VIEW OF THE ABOVE SAID RATIOS, THE PRESENT ISSUE OF BOGUS PURCHASES IS TO BE DECIDED ON THE BASIS OF FACTS OF EACH CASE. THE FIRST ASPECT IS THE INFORMATION RECEIVED BY THE ASSESSING OFFICER FROM THE SALES TAX DEPARTMENT IN RESPECT OF ALLEGED HAWALA DEALERS . IN MANY CASES, THE ASSESSING OFFICER HAS NOT EVEN RECEIVED THE COPY OF STATEMENT RECORDED OR ANY OTHER EVIDENCE FROM THE SALES TAX DEPARTMENT , EXCEPT THE LIST OF HAWALA DEALERS AND ON THE BASIS OF THE SAID LIST, T HE ASSESSMENT PROCEEDINGS HAVE BEEN COMPLETED IN THE HANDS OF ASS ESSEE, WHO HAD MADE THE PURCHASES FROM THE SAID PARTIES. IN CASE, NO SUCH EVIDENCE HAS BEEN RECEIVED BY THE ASSESSING OFFICER BEFORE MAKIN G ADDITION, THEN THERE IS NO WARRANT IN MAKING AFORESAID ADDITION IN THE HANDS OF ASSESSEE MERELY ON THE BASIS OF SO CALLED LIST OF H AWALA DEALERS. THERE ARE OTHER CASES, WHERE THE ASSESSING OFFICER HAD RE CEIVED THE STATEMENT OF THE PERSONS WHO WERE HAWALA DEALERS AND WHO HAD ADMITTED TO HAVE JUST ISSUED BILLS OF SALE WITHOUT DELIVERY OF GOODS . IN SUCH CIRCUMSTANCES, THERE IS EVIDENCE AGAINST THE RESPECTIVE ASSESSEE T HAT WHERE THE SELLER OF THE GOODS, HAS ADMITTED NOT TO HAVE ENTERED INTO RE AL TRANSACTION OF SALE OF GOODS. AGAINST SUCH NON-TRANSACTION, THERE CAN B E NO DELIVERY OF GOODS, THEN IT IS CASE OF PASSING OF BILLS OF SALE AND PURCHASES, AGAINST WHICH NO VAT HAS BEEN PAID. SUCH BOGUS PURCHASES AR E THEN TO BE ADDED IN THE HANDS OF ASSESSEE. WHERE THE ASSESSING OFFICER HAD CONFRONTED THE ASSESSEE WITH THE INFORMATION RECEIV ED, SUPPLIED COPIES OF STATEMENTS AND WHERE THE PERSONS HAVE NOT BEEN TRAC ED AND NO CONFIRMATION HAS BEEN FILED BY THE ASSESSEE IN THIS REGARD, THEN THE 4 ITA NO. 160/PUN/2019 A.Y.2012-13 ADDITION IS TO BE MADE IN THE HANDS OF ASSESSEE ON ACCOUNT OF SUCH BOGUS PURCHASES. IN THE FACTS AND CIRCUMSTANCES OF SOME CASES, THE GOODS HAVE BEEN TRANSFERRED BY SUCH HAWALA DEALERS TO THE RESPECTIVE PURCHASERS, AGAINST WHICH THE ASSESSEE HAS TO DISCH ARGE ONUS OF ESTABLISHING THE TRAIL OF GOODS WHICH ARE TRANSFERR ED AND FURTHER SOLD BY THEM. WHERE THE ASSESSEE IS ABLE TO PRODUCE EVIDENC E OF PURCHASE OF GOODS BY WAY OF WEIGHMENT BRIDGE RECEIPTS, TRANSPOR TATION DOCUMENTS, PAYMENT OF OCTROI AND SUBSEQUENT SALE OF GOODS TO T HE RESPECTIVE PARTIES AND / OR WHERE THE ASSESSEE HAS MAINTAINED COMPLETE QUANTITATIVE DETAILS OF PURCHASE AND SALE OF GOODS, THEN TOTAL B OGUS PURCHASES CANNOT BE ADDED IN THE HANDS OF ASSESSEE, BUT GP RATE OF 1 0% IS TO BE APPLIED ON BOGUS PURCHASES. WHERE THE ASSESSEE DOES NOT EST ABLISH ITS CASE, THEN THE COMPLETE BOGUS PURCHASES ARE TO BE ADDED A S HAWALA PURCHASES. FURTHER, IN CASES, WHERE THE STATEMENTS ARE RECORDED AND COPIES OF WHICH HAVE BEEN SUPPLIED TO THE ASSESSEE AND ASSESSEE ESTABLISHED THE CASE OF RECEIPT OF GOODS AND ITS ON WARD TRANSMISSION BY WAY OF SALE BILLS, THEN THE FACTUM OF PURCHASES BY THE ASSESSEE STANDS ESTABLISHED IN SUCH CIRCUMSTANCES. HOWEVER, THE BEN EFIT OF PURCHASES BEING MADE FROM GREY MARKET, NEEDS ESTIMATION IN TH E HANDS OF ASSESSEE. THE TRIBUNAL HAS ALREADY HELD THAT THE AD DITION BE MADE BY ESTIMATING THE SAME @ 10% OF THE ALLEGED HAWALA PUR CHASES. ACCORDINGLY, IT IS SO HELD. IN VIEW THEREOF, THE IS SUES WHICH EMERGE ARE AS UNDER:- I. IN CASE NO INFORMATION IS RECEIVED BY THE ASSESS ING OFFICER FROM THE SALE TAX DEPARTMENT AND NO COPY OF STATEMENT RECORD ED OR ANY OTHER EVIDENCE IS RECEIVED FROM THE SALES TAX DEPARTMENT, THEN NO ADDITION IS TO BE MADE ON THE BASIS OF NAME OF HAWALA DEALER IN THE LIST PREPARED BY THE SALES TAX DEPARTMENT, WHERE THE ASSESSEE HAD AS KED FOR THE SAID INFORMATION DURING ASSESSMENT PROCEEDINGS. II. WHERE THE ASSESSING OFFICER HAD RECEIVED THE ST ATEMENTS OF PERSONS WHO HAD ADMITTED TO HAVE JUST ISSUED BILLS OF SALE WITHOUT ANY DELIVERY OF GOODS. IN VIEW OF SUCH EVIDENCE, WHERE THE ASSES SEE HAD NOT ENTERED INTO REAL TRANSACTION OF PURCHASE OF GOODS AND IN T HE ABSENCE OF ANY DELIVERY OF GOODS, THE SALES ARE BOGUS AND THE ENTI RE SALES ARE TO BE ADDED IN THE HANDS OF ASSESSEE. ADMITTEDLY, THE DEA LER HAD NOT EVEN PAID VAT AGAINST SUCH PASSING OF GOODS. III. THE CASE WHERE THE ASSESSING OFFICER HAD CONFR ONTED THE INFORMATION RECEIVED FROM THE SALES TAX DEPARTMENT AND HAD SUPP LIED COPIES OF STATEMENTS RECORDED AND HAD ALSO ISSUED NOTICE UNDE R SECTION 133(6) OF THE ACT, WHERE HAWALA DEALER WAS NOT TRACEABLE AND IN THE ABSENCE OF THE ASSESSEE FAILING TO FILE ANY DOCUMENTARY EVIDEN CE OF DELIVERY OF GOODS, ADDITION IS TO BE UPHELD IN THE HANDS OF ASS ESSEE ON ACCOUNT OF SUCH BOGUS PURCHASES. IV. THE NEXT INSTANCE IS THE CASE OF GOODS WHICH HA VE BEEN ADMITTEDLY SOLD BY THE HAWALA DEALER AND HAS BEEN RECEIVED BY THE ASSESSEE, WHO IN TURN HAD MAINTAINED QUANTITATIVE DETAILS AND ALS O EVIDENCE OF ITS MOVEMENT I.E. TRANSPORTATION DETAILS AND QUALITY CO NTROL DETAILS OF CONSUMPTION OF THE SAID MATERIAL OR EXACT DETAILS O F SALE OF THE SAME CONSIGNMENT THROUGH SAME TRANSPORTER DIRECTLY TO TH E PARTY, THEN THE TOTAL PURCHASES CANNOT BE ADDED IN THE HANDS OF ASSESSEE. HOWEVER, SINCE THE PURCHASES ARE MADE FROM THE GREY MARKET, SOME E STIMATION NEEDS TO BE MADE IN THE HANDS OF ASSESSEE. THE TRIBUNAL IN M /S. CHETAN ENTERPRISES VS. ACIT (SUPRA) HAS ALREADY HELD THAT THE ADDITION BE MADE BY ESTIMATING THE SAME @ 10% OF THE ALLEGED HAWALA PURCHASES, OVER AND ABOVE THE GP SHOWN BY THE RESPECTIVE ASSESSEE. V. ANOTHER SET OF CASES WHERE THE STATEMENTS RECORD ED BY THE SALES TAX DEPARTMENT HAVE BEEN HANDED OVER TO THE ASSESSEE AN D THE COPIES OF 5 ITA NO. 160/PUN/2019 A.Y.2012-13 SAME HAVE BEEN SUPPLIED TO THE ASSESSEE, THEN WHERE THE ASSESSEE ESTABLISHED THE CASE OF RECEIPT OF GOODS AND ITS ON WARD TRANSMISSION, THEN THE FACTUM OF PURCHASES BY THE ASSESSEE STANDS ESTABLISHED IN SUCH CIRCUMSTANCES. HOWEVER, ESTIMATION IS TO BE MADE IN THE HANDS OF ASSESSEE BECAUSE OF PURCHASES FROM THE GREY MARKET AND FOLLOWING THE ABOVE SAID RATIO, ADDITION IS TO BE MADE BY ESTIMAT ING THE SAME @ 10% OF THE ALLEGED HAWALA PURCHASES, OVER AND ABOVE THE NE T PROFIT SHOWN BY THE ASSESSEE. WE, THEREFORE, RESPECTFULLY, FOLLOWING OUR ABOVE STATED DECIS ION AND APPRECIATING THE SIMILAR SET OF FACTS AND CIRCUMSTANCES IN T HE PRESENT CASE OF THE ASSESSEE, WE HOLD ADDITION @10% OF THE ALLEGED HAWALA PURCHASES, OVER AND ABOVE THE GP SHOWN BY THE ASSESSEE FOR THE YEAR. WE THEREFORE, SET ASIDE THE ORDER OF LD. CIT(A) AND HOLD AS AFORESAID. 6. IN THE RESULT, APPEAL OF THE ASSESSEE IS PARTLY ALLOWED. ORDER PRONOUNCED ON 18 TH DAY OF MARCH, 2019. SD/- SD/- R.S.SYAL PA RTHA SARATHI CHAUDHURY VICE PRESIDENT JUDICIAL MEMBER / PUNE; / DATED : 18 TH MARCH, 2019. SB '#$%&'(' % / COPY OF THE ORDER FORWARDED TO : 1. / THE APPELLANT. 2. / THE RESPONDENT. 3. THE CIT(APPEALS)-3, PUNE. 4. THE PR. CIT-2, PUNE. 5. '#$ %%&' , ( &' , - )*+ , / DR, ITAT, SMC BENCH, PUNE. 6. $,- ./ / GUARD FILE. // TRUE COPY // (0 / BY ORDER, %1 &+ / PRIVATE SECRETARY ( &' , / ITAT, PUNE. 6 ITA NO. 160/PUN/2019 A.Y.2012-13 DATE 1 DRAFT DICTATED ON 18 .03 .2019 SR.PS/PS 2 DRAFT PLACED BEFORE AUTHOR 18 .03 .201 9 SR.PS/PS 3 DRAFT PROPOSED AND PLACED BEFORE THE SECOND MEMBER JM/AM 4 DRAFT DISCUSSED/APPROVED BY SECOND MEMBER AM/JM 5 APPROVED DRAFT COMES TO THE SR. PS/PS SR.PS/PS 6 KEPT FOR PRONOUNCEMENT ON SR.PS/PS 7 DATE OF UPLOADING OF ORDER SR.PS/PS 8 FILE SENT TO BENCH CLERK SR.PS/PS 9 DATE ON WHICH THE FILE GOES TO THE HEAD CLERK 10 DATE ON WHICH FILE GOES TO THE A.R 11 DATE OF DISPATCH OF ORDER