Anjali Arvind Mithsagar, Pune V. Income-tax Officer, Ward - 3 (4), Pune

ITA 1841/PUN/2019

• Counselvise Citation: [2020] 110 COUNSELVISE.COM (IT) 4180 (ITAT-PUNE)
• Duration Of Justice: 11 month(s) 3 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 29-10-2020
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: SMC
• Assessment Year: 2011-2012
• Appeal Filed On: 25-11-2019
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Keywords: Bogus purchase; Set aside

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL PUNE BENCH SMC, PUNE VIRTUAL COURT BEFORE SHRI R.S. SYAL, VICE PRESIDENT ITA NO.1841/PUN/2019 / ASSESSMENT YEAR : 2011-12 ANJALI ARVIND MITHSAGAR, FLAT NO.13, S.NO.140, 5A, SADASHIV APARTMENT, BHELKE NAGAR, KOTHRUD, PUNE 411 038 PAN : ABKPM6391B VS. ITO, WARD-3(4), PUNE APPELLANT RESPONDENT / ORDER PER R.S.SYAL, VP : THIS APPEAL BY THE ASSESSEE IS DIRECTED AGAINST THE ORDER DA TED 02-08-2019 PASSED BY THE COMMISSIONER OF INCOME-TAX (AP PEALS)- 3, PUNE IN RELATION TO THE ASSESSMENT YEAR 2011-12. 2. THIS APPEAL IS TIME BARRED BY 55 DAYS. THE ASSESSEE HAS FILED CONDONATION APPLICATION WITH AFFIDAVIT GIVING THE REASONS FOR THE DELAY. I AM SATISFIED WITH THE SAME. THE DELAY IS CONDONED AND THE APPEAL IS ADMITTED FOR HEARING FOR DISPOSAL ON MERITS. ASSESSEE BY SHRI M.K. KULKARNI REVENUE BY SHRI S.P.WALIMBE DATE OF HEARING 29-10-2020 DATE OF PRONOUNCEMENT 29-10-2020 ITA NO.1841/PUN/2019 ANJALI ARVIND MITHSAGAR 2 3. THE ONLY ISSUE RAISED IN THIS APPEAL THROUGH VARIOUS GR OUNDS IS AGAINST THE CONFIRMATION OF ADDITION OF RS.8,86,163/- ON A CCOUNT OF BOGUS PURCHASES AT 100% OF THE AMOUNT OF PURCHASES. 4. BRIEFLY STATED, THE FACTS OF THE CASE ARE THAT THE ASSESS MENT IN THIS CASE WAS REOPENED BY MEANS OF NOTICE U/S.148 ON THE ASSESSING OFFICER (AO) ON RECEIVING INFORMATION ABOUT THE ASSESSEE HAVING RECEIVED BOGUS BILLS FROM ENTITIES CONTROLLED A ND OPERATED BY SANGLI BASED HAWALA OPERATORS VIZ., SHRI SURESH AMRUTLAL PAREKH, SHRI DINESH AMRUTLAL PAREKH AND SHRI SUSHANT RAJENDRA LADDA. BASED ON SUCH INFORMATION, THE AO CONFR ONTED THE ASSESSEE AND REQUIRED HIM TO TO TENDER EXPLANATION. TH E AO ALSO ISSUED SUMMONS TO SMT. LALITA A. LADDA, PROP. OF VIDHI ENTERPRISES ON 17-10-2018 FROM WHOM THE BOGUS PURCHASE S WERE RECORDED. THE ASSESSEE WAS ALSO ASKED TO PRODUCE SMT . LALITA A. LADDA FOR CROSS EXAMINATION. IN THE ABSENCE OF ANY CO- OPERATION FORTHCOMING FROM THE ASSESSEES END, THE AO MADE ADDITION @100% OF PURCHASES, WHICH CAME TO BE AFFIRMED IN THE FIR ST APPEAL. ITA NO.1841/PUN/2019 ANJALI ARVIND MITHSAGAR 3 5. I HAVE HEARD BOTH THE SIDES THROUGH VIRTUAL COURT AND GO NE THROUGH THE RELEVANT MATERIAL ON RECORD. THE ISSUE OF BOG US PURCHASES HAS COME UP FOR CONSIDERATION BEFORE THE HO NBLE BOMBAY HIGH COURT IN PR. CIT & ORS. VS. MOHAMMAD HAJI ADAM & CO. & ORS. (2019) 104 CCH 0391 MUMHC. THE HONBLE JURISDICTIONAL HIGH COURT HAS HELD IN THIS CASE THAT NO AD HOC ADDITION OF BOGUS PURCHASES IS WARRANTED. RATHER THE ADDITIO N SHOULD BE MADE TO THE EXTENT OF DIFFERENCE BETWEEN THE GRO SS PROFIT RATE ON GENUINE PURCHASES AND GROSS PROFIT RATE OF HAWALA PURCHASES. 6. THERE IS NO DISPUTE THAT THE ASSESSEE HAD PROPERLY ACCOUNTED FOR THE PURCHASES SO MADE AGAINST HAWALA TRANSACTIONS. IN OTHER WORDS, THE ACTUAL PURCHASES MADE AGAINST THE HAWALA PURCHA SES HAVE BEEN EITHER CONSUMED OR AVAILABLE IN THE CLOSING STOCK. IN THIS HUE, THERE CANNOT BE ANY QUESTION OF MAKING ADDITION AT 100% OF THE PURCHASES. THE QUANTUM OF ADDITION TOWARDS BOGUS PURCHASES, BEING THE EXCESS AMOUNT OF PURCHASES DEBITED BY THE ASSESSEE TO THE TRADING ACCOUNT FOR AVAILING TAX BENEFIT, NE EDS TO BE WORKED OUT BY CONSIDERING SIMILAR PURCHASES MADE BY THE ASSESSEE THROUGH GENUINE TRANSACTIONS AND THEREAFTER FIND OUT THE EX CESS ITA NO.1841/PUN/2019 ANJALI ARVIND MITHSAGAR 4 AMOUNT OF PURCHASES RECORDED THROUGH HAWALA TRANSACTIONS. THE DIFFERENTIAL PERCENTAGE BETWEEN THE TWO PRICES IS DIRECTED TO BE APPLIED TO THE AMOUNT OF HAWALA PURCHASES FOR MAKING ADDITION ON THIS SCORE. I, THEREFORE, SET ASIDE THE IMPUGNED ORDER A ND REMIT THE MATTER TO THE FILE OF THE AO FOR WORKING OUT THE CORRECT AMOU NT OF ADDITION IN TERMS OF ABOVE OBSERVATIONS AFTER ALLOWING A REASO NABLE OPPORTUNITY OF HEARING TO THE ASSESSEE. 7. IN THE RESULT, THE APPEAL IS ALLOWED FOR STATISTICAL PURPOSES . ORDER PRONOUNCED IN THE OPEN COURT ON 29 TH OCTOBER, 2020. SD/- (R.S.SYAL) / VICE PRESIDENT PUNE; DATED : 29 TH OCTOBER, 2020 ITA NO.1841/PUN/2019 ANJALI ARVIND MITHSAGAR 5 / COPY OF THE ORDER IS FORWARDED TO : 1. / THE APPELLANT; 2. / THE RESPONDENT; 3. ( ) / THE CIT (APPEALS)-3, PUNE 4. THE PR. CIT-2, PUNE 5. , , SMC / DR SMC, ITAT, PUNE; 6. / GUARD FILE. // TRUE COPY // / BY ORDER, // TRUE COPY // SENIOR PRIVATE SECRETARY , / ITAT, PUNE DATE 1. DRAFT DICTATED ON 29-10-2020 SR.PS 2. DRAFT PLACED BEFORE AUTHOR 29-10-2020 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. *