Pradeep Kisanlal Boob, Nashik V. Deputy Commissioner of Income-tax,

ITA 1908/PUN/2016

• Counselvise Citation: [2019] 117 COUNSELVISE.COM (IT) 1881 (ITAT-PUNE)
• Duration Of Justice: 2 year(s) 9 month(s) 25 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 25-06-2019
• Appeal Filed By: Assessee
• Order Result: Partly Allowed
• Bench Allotted: B
• Next Hearing Date: 03-04-2019
• Assessment Year: 2011-2012
• Appeal Filed On: 30-08-2016
• Result in Favour of: Partly Allowed
• Court: TRIBUNAL
• Keywords: Bogus purchase; Accommodation entries; Reassessment proceedings
• Section: 143(3)

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL B BENCH, PUNE BEFORE SHRI R.S. SYAL, VICE PRESIDENT AND SHRI VIKAS AWASTHY, J UDICIAL MEMBER . / ITA NO . 1908 /P U N/201 6 / ASSESSMENT YEAR : 20 11 - 12 PRADEEP KISANLAL BOOB, K.R. BOOB & SONS, P 8, MIDC, AMBAD, NASHIK 422010 PAN : ABRPB9542Q ....... / APPELLANT / V/S. DEPUTY COMMISSIONER OF INCOME TAX, CIRCLE 1, NASHIK / RESPONDENT . / ITA NO . 1639 /PUN/2016 / ASSESSMENT YEAR : 2011 - 12 ASSISTANT COMMISSIONER OF INCOME TAX, CIRCLE 1, NASHIK ....... / APPELLANT / V/S. PRADEEP KISANLAL BOOB, PLOT NO. P - 8, MIDC, AMBAD, NASHIK 422010 PAN : ABRPB9542Q / RESPONDENT ASSESSEE BY : S HRI SANKET JOSHI REVENUE BY : SHRI SUDHENDU DAS / DATE OF HEARING : 03 - 04 - 2019 / DATE OF PRONOUNCEMENT : 25 - 0 6 - 201 9 2 ITA NO S.1908 & 1639/PUN/2016, A.Y. 2011 - 12 / ORDER PER VIKAS AWASTHY, JM : TH ESE CROSS APPEALS BY THE ASSESSEE AND THE REVENUE ARE DIRECTED AGAINST THE ORDER OF COMMISSIONER OF INCOME TAX (APPEALS) - 1, NASHIK DATED 18 - 05 - 2016 FOR THE ASSESSMENT YEAR 20 11 - 12. 2. THE BRIEF FACTS OF THE CASE AS EMANATING FROM RECORDS ARE: THE ASSESSEE IS A RESELLER OF PETROL, OIL, GREASE AND SPARE PARTS. THE ASSESSEE IS ALSO ENGAGED IN TRANSPORT BUSINESS. THE INFORMATION WAS RECEIVED BY THE DEPARTMENT FROM MAHARASHTRA SALES TAX DEPARTMENT THAT THE ASSESSEE IS ONE OF THE BENEFICIARIES FROM DECLARED HAWALA OPERATORS. ON THE BASIS OF INFORMATION RECEIVED FROM SALES TAX DEPARTMENT, ASSESSMENT OF THE ASSESSEE FOR ASSESSMENT YEAR 2011 - 12 WAS REOPENED. IN REASSESSMENT PROCEEDINGS THE ASSESSING OFFICER HELD THAT THE ASSESSEE IS ENGAGED IN BOGUS PURCHASES FROM SE VERAL HAWALA DEALERS AND THUS, MADE ADDITION OF ENTIRE SUCH BOGUS PURCHASES AGGREGATING TO RS.56,871,059/ - . AGGRIEVED AGAINST THE ASSESSMENT ORDER DATED 30 - 03 - 2015 PASSED U/S. 143(3) R.W.S. 147 OF THE ACT, THE ASSESSEE FILED APPEAL BEFORE THE COMMISSIONER OF INCOME TAX (APPEALS). THE COMMISSIONER OF INCOME TAX (APPEALS) RESTRICTED THE ADDITION TO 10% OF THE HAWALA PURCHASES. AGAINST THESE FINDINGS OF COMMISSIONER OF INCOME TAX (APPEALS), THE ASSESSEE , AS WELL AS , THE REVENUE ARE IN APPEAL BEFORE THE TRIB UNAL. THE DEPARTMENT IN APPEAL HAS ASSAILED THE FINDINGS OF COMMISSIONER OF INCOME TAX (APPEALS) IN DELETING THE ADDITION OF RS.5,41,52,622/ - ON ACCOUNT OF ALLEGED BOGUS PURCHASES FROM HAWALA DEALERS . W HEREAS , THE ASSESSEE IN ITS APPEAL HAS 3 ITA NO S.1908 & 1639/PUN/2016, A.Y. 2011 - 12 ASSAILED THE ADDITION CONFIRMED BY THE COMMISSIONER OF INCOME TAX (APPEALS). 3. SHRI SANKET JOSHI APPEARING ON BEHALF OF THE ASSESSEE SUBMITTED THAT THE ASSESSEE HAS MAINTAINED DETAIL ED STOCK RECORD S . IN SUPPORT OF HIS CONTENTIONS THE LD. AR REFERRED TO STOCK REGIS TER AT PAGE 413 OF THE PAPER BOOK. THE LD. AR STATED AT THE BAR THAT THE QUALITY OF MATERIAL ALLEGED TO HAVE BEEN PURCHASED THROUGH HAWALA DEALERS AND THE MATERIAL PURCHASED IN REGULAR COURSE BY THE ASSESSEE ARE IDENTICAL. THERE IS NOTHING ON RECORD TO S HOW ANY DISCREPANCIES IN QUALITY OF MATERIAL. HENCE, NO ADDITION ON ACCOUNT OF BOGUS PURCHASES IS WARRANTED. THE LD. AR FURTHER SUBMITTED THAT WITHOUT PREJUDICE TO HIS PRIMARY SUBMISSIONS , THE ADDITION IF AT ALL HAS TO BE MADE IN RESPECT OF ALLEGED BOGUS PURCHASES THE SAME SHOULD BE RESTRICTED TO GP DECLARED BY THE ASSESSEE IN RESPECT OF REGULAR SALES. TO SUPPORT HIS CONTENTIONS THE LD. AR PLACED RELIANCE ON THE DECISION OF HONBLE BOMBAY HIGH COURT IN THE CASE OF PR. COMMISSIONER OF INCOME TAX VS. M/S. MOHOMMAD HAJI ADAM & CO. IN INCOME TAX APPEAL NO. 1004 OF 2016 DECIDED ON 11 - 02 - 2019. THE LD. AR SUBMITTED THAT THE HONBLE HIGH COURT HAS HELD THAT THE ADDITION IN CASE OF BOGUS PURCHASES SHOULD BE LIMITED TO THE GP DECLARED BY THE ASSESSEE IN RESPECT OF REGULAR SALES. 4. ON THE OTHER HAND SHRI SUDHENDU DAS REPRESENTING THE DEPARTMENT VEHEMENTLY DEFENDED THE ASSESSMENT ORDER AND PRAYED FOR REVERSING THE FINDINGS OF COMMISSIONER OF INCOME TAX (APPEALS). 5. W E HAVE HEARD THE SUBMISSIONS MADE BY REPRESENTATIVES OF RIVAL SIDES AND HAVE PERUSED THE ORDERS OF AUTHORITIES BELOW . THE SOLITARY ISSUE 4 ITA NO S.1908 & 1639/PUN/2016, A.Y. 2011 - 12 IN CROSS APPEALS IS THE DISALLOWANCE IN RESPECT OF ALLEGED BOGUS PURCHASES MADE BY THE ASSESSEE. THE ASSESSMENT PROCE EDINGS WERE REOPENED IN THE CASE OF ASSESSEE AFTER RECEIVING INFORMATION FROM MAHARASHTRA SALES TAX DEPARTMENT INDICATING ASSESSEES INVOLVEMENT IN BOGUS PURCHASES FROM THE FOLLOWING HALAWA DEALERS : I . M/S. PARAS ENTERPRISES RS.1,70,62,370/ - II . M/S. RUMEET EN TERPRISES RS.45,08,719/ - III . M/S. MAHALAXMI CORPORATION RS.1,34,96,512/ - IV . M/S. NAYAN CORPORATION RS.15,83,550/ - V . M/S. NUTAN ENTERPRISES RS.30,86,775/ - VI . M/S. MONARCH ENTERPRISES RS.31,26,939/ - VII . M/S. SIDDHI VINAYAK CORPORATION RS.1,18,16,382/ - VIII . M/S. DIYA INTE RNATIONAL RS.21,89,812/ - TOTAL RS.56,871,059/ - 6. THE ASSESSING OFFICER MADE ADDITION OF THE ENTIRE ALLEGED BOGUS PURCHASES. IN FIRST APPELLATE PROCEEDINGS, THE COMMISSIONER OF INCOME TAX (APPEALS) CONCLUDED THAT IT IS NOT A CASE OF BOGUS PURCHASES AS THE SALES HAVE NOT BEEN DISPUTED BY THE ASSESSING OFFICER. AT THE MOST IT IS A CASE OF INFLATED PURCHASES. THE COMMISSIONER OF INCOME TAX (APPEALS) RESTRICTED THE ADDITION TO 10% OF THE BOGUS PURCHASES. THE LD. AR OF THE ASSESSEE BEFORE US HAS CONTENDE D THAT NO ADDITION IS WARRANTED AS THE ASSESSEE HAS ESTABLISHED COMPLETE TRAIL OF GOODS. IT IS AN UNDISPUTED FACT THAT THE ASSESSEE HAS FAILED TO PRODUCE THE SUPPLIERS AND HAS ALSO FAILED TO FILE CONFIRMATIONS FROM THE SUPPLIERS. THE ASSESSEE HAS NOT BEEN ABLE TO CONCLUSIVELY PROVE GENUINENESS OF PURCHASES. WE CONCUR WITH THE FINDINGS OF FIRST APPELLATE AUTHORITY THAT IN THE ABSENCE OF ANY DOUBT ON SALES THE 5 ITA NO S.1908 & 1639/PUN/2016, A.Y. 2011 - 12 ENTIRE AMOUNT OF ALLEGED BOGUS PURCHASES CANNOT BE ADDED IN THE HANDS O F ASSESSEE. THE POSSIBILITY OF ASSESSEE MAKING PURCHASE OF GOODS FROM GREY MARKET CANNOT BE RULED OUT. TAKING INTO CONSIDERATION ENTIRETY OF FACTS , THE PRIMARY CONTENTION OF THE ASSESSEE AGAINST ADDITION IS REJECTED. 7. IN AN ALTERNATE SUBMISSION THE LD. AR HAS PLACED RELIANCE ON THE DECISION OF HONBLE BOMBAY HIGH COURT IN THE CASE OF PR. COMMISSIONER OF INCOME TAX VS. M/S. MOHOMMAD HAJI ADAM & CO. (SUPRA) FOR RESTRICTING THE ADDITION ON THE BASIS OF GP DECLARED BY THE ASSESSEE IN RESPECT OF REGULAR S ALES. THE HONBLE BOMBAY HIGH COURT IN THE AFORESAID CASE WHERE THE ASSESSEE WAS INVOLVED IN DEALINGS WITH HAWALA OPERATORS WHO WAS PROVIDING ACCOMMODATION ENTRIES , RESTRICTED THE ADDITION TO THE EXTENT OF GP RATE AS ON GENUINE PURCHASES. FOR THE SAKE OF COMPLETENESS THE RELEVANT EXTRACT OF THE JUDGMENT OF HONBLE HIGH COURT IS REPRODUCED HERE - IN - BELOW : 8. IN THE PRESENT CASE, AS NOTED ABOVE, THE ASSESSEE WAS A TRADER OF FABRICS. THE A.O. FOUND THREE ENTITIES WHO WERE INDULGING IN BOGUS BILLING ACTIVITI ES. A.O. FOUND THAT THE PURCHASES MADE BY THE ASSESSEE FROM THESE ENTITIES WERE BOGUS. THIS BEING A FINDING OF FACT, WE HAVE PROCEEDED ON SUCH BASIS. DESPITE THIS, THE QUESTION ARISES WHETHER THE REVENUE IS CORRECT IN CONTENDING THAT THE ENTIRE PURCHASE AM OUNT SHOULD BE ADDED BY WAY OF ASSESSEES ADDITIONAL INCOME OR THE ASSESSEE IS CORRECT IN CONTENDING THAT SUCH LOGIC CANNOT BE APPLIED. THE FINDING OF THE CIT(A) AND THE TRIBUNAL WOULD SUGGEST THAT THE DEPARTMENT HAD NOT DISPUTED THE ASSESSEES SALES. THER E WAS NO DISCREPANCY BETWEEN THE PURCHASES SHOWN BY THE ASSESSEE AND THE SALES DECLARED. THAT BEING THE POSITION, THE TRIBUNAL WAS CORRECT IN COMING TO THE CONCLUSION THAT THE PURCHASES CANNOT BE REJECTED WITHOUT DISTURBING THE SALES IN CASE OF A TRADER. T HE TRIBUNAL, THEREFORE, CORRECTLY RESTRICTED THE ADDITIONS LIMITED TO THE EXTENT OF BRINGING THE G.P. RATE ON PURCHASES AT THE SAME RATE OF OTHER GENUINE PURCHASES. 8. THUS, IN VIEW OF THE FACTS OF THE INSTANT CASE AND THE DECISION RENDERED IN THE CASE OF PR. COMMISSIONER OF INCOME TAX VS. M/S. 6 ITA NO S.1908 & 1639/PUN/2016, A.Y. 2011 - 12 MOHOMMAD HAJI ADAM & CO. (SUPRA) , WE DEEM IT APPROPRIATE TO RESTORE THIS ISSUE BACK TO THE FILE OF ASSESSING OFFICER TO RECOMPUTE GP IN LINE WITH THE DIRECTIONS OF THE HONBLE JURISDICTIONAL HIGH COURT ON THE ALLE GED BOGUS PURCHASES. 9. IN THE RESULT, THE APPEAL OF ASSESSEE IS PARTLY ALLOWED FOR STATISTICAL PURPOSE AND THE APPEAL OF REVENUE IS DISMISSED. ORDER PRONOUNCED ON TUESDAY, THE 25 TH DAY OF JUNE, 201 9 . SD/ - SD/ - ( R.S. SYAL ) (VIKAS AWASTHY) VICE PRESIDENT JUDICIAL MEMBER / PUNE; / DATED : 25 TH JUNE, 2019 RK / COPY OF THE ORDER FORWARDED TO : 1. / THE APPELLANT. 2. / THE RESPONDENT. 3. ( ) / THE CIT(A) - 1, NASHIK 4. THE PR. COMMISSIONER OF INCOME TAX - 1, NASHIK 5. , , , / DR, ITAT, B BENCH, PUNE. 6. / GUARD FILE. / / / / TRUE COPY// / BY ORDER, / PRIVATE SECRETARY, , / ITAT, PUNE