Kishor Jagannath Singare, Jalna V. Income-tax Officer, Ward - 1, Jalna

ITA 1755/PUN/2017

• Counselvise Citation: [2020] 110 COUNSELVISE.COM (IT) 6114 (ITAT-PUNE)
• Duration Of Justice: 3 year(s) 2 month(s) 5 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 25-09-2020
• Appeal Filed By: Assessee
• Order Result: Partly Allowed
• Bench Allotted: B
• Next Hearing Date: 25-09-2020
• Assessment Year: 2013-2014
• Appeal Filed On: 20-07-2017
• Result in Favour of: Partly Allowed
• Court: TRIBUNAL
• Keywords: Bogus purchase

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL PUNE BENCH B, PUNE VIRTUAL COURT BEFORE SHRI R.S. SYAL, VICE PRESIDENT AND SHRI S.S. VISWANETHRA RAVI, JUDICIAL MEMBER ITA NO.1746/PUN/2017 / ASSESSMENT YEAR : 2013-14 RAM JAGANNATH SINGARE, PROP. GANESH REFINERY AND BALAJI OIL MILL, PLOT NO. A-9/6/2, ADDL. MIDC, JALNA 431 203 PAN : AUWPS7900H VS. ITO, WARD-1, JALNA APPELLANT RESPONDENT ITA NO.1755/PUN/2017 / ASSESSMENT YEAR : 2013-14 KISHOR JAGANNATH SINGARE, NILESH OIL INDUSTRIES, PLOT NO.A-9/3, ADDL. MIDC, JALNA 431 203 PAN : AECPS9036P VS. ITO, WARD-1, JALNA APPELLANT RESPONDENT / ORDER PER R.S.SYAL, VP : THESE TWO APPEALS BY DIFFERENT BUT CONNECTED ASSESSEES A RISE OUT OF SEPARATE ORDERS DATED 23-06-2017 & 30-06-2017 P ASSED BY THE CIT(APPEALS)-1, AURANGABAD IN RELATION TO THE ASSESSMEN T YEAR ASSESSEE BY NONE (WRITTEN SUBMISSIONS) REVENUE BY SHRI VISHAL A. MAKAWANE DATE OF HEARING 25-09-2020 DATE OF PRONOUNCEMENT 25-09-2020 ITA NOS. 1746 & 1755/PUN/2017 RAM J. SINGARE & KISHOR J. SINGARE 2 2013-14. SINCE COMMON ISSUES HAVE BEEN RAISED IN THESE A PPEALS, WE ARE, THEREFORE, DISPOSING THEM OFF BY THIS CONSOLIDATED ORDER FOR THE SAKE OF CONVENIENCE. 2. ITA NO.1746/PUN/2017 IS APPEAL BY SH. RAM JAGANNATH SINGARE. THIS CASE WAS FIXED FOR HEARING FOR THE FIRST TIM E ON 07-08-2019. IT WAS ADJOURNED FROM TIME TO TIME, BUT THE ASSESSEE REMAINED UNREPRESENTED. LAST TIME WHEN THE MATTER WAS FIXED ON 17-03-2020, THE ASSESSEE WAS ABSENT AND THE APPEAL WAS ADJOURNED FOR TODAY, I.E. 25-09-2020. TODAY, AGAIN NEITHER THE ASS ESSEE HAS APPEARED IN PERSON OR THROUGH SOME REPRESENTATIVE NOR FILE D ANY ADJOURNMENT APPLICATION. WE, THEREFORE, PROCEED TO DISPOSAL OFF THE APPEAL EX PARTE QUA THE ASSESSEE. 3. FIRST GROUND RAISED IN THIS APPEAL IS AGAINST THE CONFIRMATION OF ADDITION OF RS.85,78,487/- TOWARDS BOGUS PURCHASES. 4. BRIEFLY STATED, THE FACTS OF THIS ISSUE ARE THAT THE ASSESSE E IS ENGAGED IN THE BUSINESS OF EXTRACTION OF OIL FROM COTTONSEED AND REFINING THE WASH OIL. THE ASSESSING OFFICER (AO) OBSERVE D THAT CERTAIN BOGUS PURCHASES OF RAW MATERIAL IN THE FORM OF SOYA BEAN WERE MADE BY THE ASSESSEE, WHICH WERE SUBSEQUENTLY SHO WN TO HAVE BEEN SOLD TO ONE OF THE SISTER CONCERNS AS SUCH, WH ICH, IN TURN, ITA NOS. 1746 & 1755/PUN/2017 RAM J. SINGARE & KISHOR J. SINGARE 3 EXTRACTED THE OIL. THE ASSESSEE CLAIMED TO HAVE PURCHASED SOYABEAN FROM TOTAL 457 TRADERS DURING THE PERIOD 03-10- 2012 TO 05-01-2013 WITH TOTAL ALLEGED PURCHASES QUANTIFYING TO 2779.41 QUINTALS INVOLVING AMOUNT OF RS.85,78,487/-. SINCE THESE PURCHASES WERE FOUND TO BE BOGUS, THE AO MADE ADDITION FOR WHOLE OF THE AMOUNT, WHICH CAME TO BE CONFIRMED IN THE FIRS T APPEAL. AGGRIEVED THEREBY, THE ASSESSEE HAS APPROACHED THE TRIBUNAL. 5. WE HAVE HEARD THE LD. DR THROUGH VIRTUAL COURT AND GONE THROUGH THE RELEVANT MATERIAL ON RECORD. WRITTEN SUBMISSIONS FILED ON BEHALF OF THE ASSESSEE HAVE BEEN TAKEN INTO CONSIDERA TION, AS PER WHICH THE ASSESSEE HAS NO OBJECTION TO THE SUSTENANCE O F ADDITION AT THE RATE OF 10% OF THE AMOUNT OF BOGUS PURCHASE S BY RELYING ON THE JUDGMENT OF HONBLE BOMBAY HIGH COURT IN THE CASE OF PR.CIT VS. MOHOMMAD HAJI ADAM & CO. (IN ITA NO.1004 OF 2016). IN THIS CASE IT HAS BEEN HELD THAT NO AD HOC ADDITION FOR BOGUS PURCHASES CAN BE MADE. RATHER, THE ADDITION SHOULD BE MADE TO THE EXTENT OF DIFFERENCE BETWEEN THE GROSS PROFIT RATE ON GENUINE PURCHASES AND GROSS PROFIT RATE ON HAWALA PURCHASES. I T IS MANIFEST THAT SUCH PURCHASES MADE BY THE ASSESSEE WERE SOLD TO A SISTER CONCERN. IT IS NOTICED THAT THE ASSESSEES NORMAL GROSS PR OFIT IS ITA NOS. 1746 & 1755/PUN/2017 RAM J. SINGARE & KISHOR J. SINGARE 4 5.78%. WE, THEREFORE, UPHOLD THE ADDITION @10% OF THE BOG US PURCHASES, WHICH COMES TO RS.8,57,848/-. 6. THE SECOND GROUND IS AGAINST THE CONFIRMATION OF DISALLOWANCE OF INTEREST AMOUNTING TO RS.1,30,273/-. 7. THE FACTS OF THIS ISSUE ARE THAT THE ASSESSEE CLAIMED D EDUCTION ON ACCOUNT OF INTEREST PAID ON CERTAIN BORROWINGS. THE AO OBSERVED THAT THE ASSESSEE HAD TRANSFERRED INTEREST BEARING FUNDS TO ITS SISTER CONCERNS. DISALLOWANCE OF INTEREST WAS MADE @12% , WHICH AMOUNTED TO RS.1,30,270/-. THE LD. CIT(A) RECORD ED IN PARA 6 OF THE IMPUGNED ORDER THAT THE ASSESSEE DID NOT RAISE AN Y SPECIFIC ARGUMENT AGAINST THIS GROUND. HE, THEREFORE, SUSTAINED TH E SAME. 8. AFTER CONSIDERING THE ARGUMENTS OF LD. DR AND WRITTEN SUBMISSIONS FILED ON BEHALF OF THE ASSESSEE, IT IS FOUND THAT HERE AGAIN THE ASSESSEE HAS NOT MADE ANY SUBMISSION ANENT TO THE ABOVE DISALLOWANCE OF INTEREST. NEITHER IN ASSESSMENT ORDER NOR IN THE IMPUGNED ORDER ANY NEXUS BETWEEN ADVANCING OF FUNDS TO SISTER CONCERNS AND THE BUSINESS PURPOSE HAS BEEN ESTABLISHED . WE, THEREFORE, UPHOLD THE IMPUGNED ORDER ON THIS SCORE. 9. IN THE RESULT, THE APPEAL IS PARTLY ALLOWED. ITA NOS. 1746 & 1755/PUN/2017 RAM J. SINGARE & KISHOR J. SINGARE 5 10. ITA NO.1755/PUN/2017 IS APPEAL BY SH. KISHOR JAGANNATH SINGARE. THE FIRST ISSUE RAISED IN THIS APPEAL IS AGAINST CONFIRMATION OF BOGUS PURCHASES AMOUNTING TO RS.64,99,065 /-. FACTS AND CIRCUMSTANCES OF THIS APPEAL ARE MUTATIS MUTANDIS SIMILAR TO THOSE OF SH. RAM JAGANNATH SINGARE. FOLLOWING THE VIEW TAKEN HEREINABOVE, WE SUSTAIN THE ADDITION AT 10% OF BOGUS PURCHA SES, WHICH COMES TO RS.6,49,906/-. 11. THE SECOND GROUND IS AGAINST THE CONFIRMATION OF DISALLOWANCE OF INTEREST AMOUNTING TO RS.71,478/-. HERE AG AIN, THE FACTS ARE SIMILAR. FOLLOWING THE VIEW TAKEN HEREINABOVE, W E SUSTAIN THE DISALLOWANCE. 12. IN THE RESULT, THE APPEAL IS PARTLY ALLOWED. ORDER PRONOUNCED IN THE OPEN COURT ON 25 TH SEPTEMBER, 2020. SD/- SD/- (S.S. VISWANETHRA RAVI) (R.S.SY AL) JUDICIAL MEMBER VIC E PRESIDENT PUNE; DATED : 25 TH SEPTEMBER, 2020 SATISH ITA NOS. 1746 & 1755/PUN/2017 RAM J. SINGARE & KISHOR J. SINGARE 6 / COPY OF THE ORDER IS FORWARDED TO : 1. / THE APPELLANT; 2. / THE RESPONDENT; 3. THE CIT(A)-1, AURANGABAD 4. 5. THE PR.CIT-1, AURANGABAD , , / DR B, ITAT, PUNE 6. / GUARD FILE / BY ORDER, // TRUE COPY // SENIOR PRIVATE SECRETARY , / ITAT, PUNE DATE 1. DRAFT DICTATED ON 25-09-2020 SR.PS 2. DRAFT PLACED BEFORE AUTHOR 25-09-2020 SR.PS 3. DRAFT PROPOSED & PLACED BEFORE THE SECOND MEMBER JM 4. DRAFT DISCUSSED/APPROVED BY SECOND MEMBER. JM 5. APPROVED DRAFT COMES TO THE SR.PS/PS SR.PS 6. KEPT FOR PRONOUNCEMENT ON SR.PS 7. DATE OF UPLOADING ORDER SR.PS 8. FILE SENT TO THE BENCH CLERK SR.PS 9. DATE ON WHICH FILE GOES TO THE HEAD CLERK 10. DATE ON WHICH FILE GOES TO THE A.R. 11. DATE OF DISPATCH OF ORDER. *