Income-tax Officer, V. M/s. Somnath Deokisan Boob, Nashik

ITA 1969/PUN/2016

• Counselvise Citation: [2018] 123 COUNSELVISE.COM (IT) 0660 (ITAT-PUNE)
• Duration Of Justice: 2 year(s) 27 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 28-09-2018
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: B
• Assessment Year: 2009-2010
• Appeal Filed On: 01-09-2016
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: DR VIVEK AGGARWAL
• Keywords: Bogus purchase; Principle of natural justice; Opportunity of cross examination; Reassessment proceedings

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL B BENCH, PUN E , ! ' # , $% &' #' , ' # '( BEFORE SHRI ANIL CHATURVEDI, AM AND SHRI VIKAS AWAS THY, JM '%. / ITA NOS. 1969 TO 1971/PUN/2016 * +* / ASSESSMENT YEARS : 2009-10 TO 2011-12 INCOME TAX OFFICER, WARD 2(1), NASHIK ....... / APPELLANT / V/S. M/S. SOMNATH DEOKISAN BOOB, 4, PALSEKAR BUILDING, SUBHASH ROAD, NASHIK ROAD 422101 PAN : AAMFS9591C / RESPONDENT ASSESSEE BY : SHRI SANKET JOSHI REVENUE BY : DR. VIVEK AGGARWAL / DATE OF HEARING : 02.07.2018 / DATE OF PRONOUNCEMENT : 28.09.2018 , / ORDER PER VIKAS AWASTHY, JM : THESE THREE APPEALS BY REVENUE ARE DIRECTED AGAINST TH E ORDER OF COMMISSIONER OF INCOME TAX (APPEAL)-2, NASHIK COMMON FOR TH E ASSESSMENT YEARS 2009-10 TO 2011-12, WHEREBY THE ADDITION MADE BY THE ASSESSING OFFICER ON ACCOUNT OF BOGUS PURCHASES FROM HAWALA DEALERS HAS B EEN DELETED BY THE COMMISSIONER OF INCOME TAX (APPEAL) IN TOTO. 2 ITA NOS. 1969 TO 1971/PUN/2016 2. SINCE, THE ISSUES INVOLVED IN ALL THE THREE APPEALS ARE S IMILAR AND ARE ARISING FROM SAME SET OF FACTS, THESE APPEALS ARE TAKEN UP TOGETHER FOR ADJUDICATION AND ARE DISPOSED OF VIDE THIS COMMON ORDER. 3. THE BRIEF FACTS OF THE CASE AS EMANATING FROM RECORDS ARE: THE ASSESSEE IS A PARTNERSHIP FIRM ENGAGED IN THE BUSINESS OF SALE OF PETR OLEUM PRODUCTS, KEROSENE AND LUBRICANT OILS ETC. THE ASSESSEE FILED ITS RET URN OF INCOME FOR THE IMPUGNED ASSESSMENT YEARS WHICH WERE PROCESSED U/S.143 (1) OF THE INCOME TAX ACT, 1961 (HEREINAFTER REFERRED TO AS THE ACT). ON T HE BASIS OF INFORMATION RECEIVED FROM SALES TAX DEPARTMENT, MAHARASHTRA THROUG H DIRECTOR GENERAL OF INCOME TAX (INVESTIGATION) THAT THE ASSESSEE HAS INDULGED IN TRANSACTION OF BOGUS PURCHASES FROM HAWALA DEALERS, ASSESSMENTS OF TH E ASSESSEE FOR ASSESSMENT YEARS 2009-10 TO 2011-12 WERE REOPENED. IN RE-ASSESSMENT PROCEEDINGS, THE ASSESSING OFFICER HELD THAT ASSESSEE HAS MADE BOGUS PURCHASES FROM FOLLOWING DEALERS: I) M/S. LAXMI TRADING COMPANY II) DEV ENTERPRISES III) M/S. STHAPANA TRADE IMPEX PVT. LTD. IV) SHREE AMAAYA ENTERPRISES V) M/S. RUMEET ENTERPRISES. 4. AGGRIEVED BY THE ASSESSMENT ORDERS PASSED U/S. 143(3 ) R.W.S. 147 OF THE ACT FOR THE RESPECTIVE ASSESSMENT YEARS, THE ASSESSEE FILED APPEALS BEFORE THE COMMISSIONER OF INCOME TAX (APPEAL). THE COMMISSIONER OF INC OME TAX (APPEALS) ON THE BASIS OF DOCUMENTS ON RECORD AND SUBMIS SIONS OF ASSESSEE DELETED THE ENTIRE ADDITION MADE BY THE ASSESSING OFFICER O N ACCOUNT OF BOGUS PURCHASES. 3 ITA NOS. 1969 TO 1971/PUN/2016 5. AGAINST THE FINDINGS OF COMMISSIONER OF INCOME TAX (APPEALS ), THE REVENUE IS IN SECOND APPEAL BEFORE THE TRIBUNAL. 6. DR. VIVEK AGGARWAL REPRESENTING THE DEPARTMENT VEHEME NTLY DEFENDING THE ASSESSMENT ORDERS SUBMITTED THAT ASSESSEE HAS FAILE D TO PRODUCE THE PARTIES FROM WHOM ASSESSEE HAD MADE PURCHASES. THE ASS ESSING OFFICER VIDE NOTICE U/S.133(6) OF THE ACT DATED 24.07.2013 ASKED THE A SSESSEE TO FURNISH VARIOUS DOCUMENTS SUCH AS BILLS FOR PURCHASING GOODS FROM SUSPICIOUS DEALERS, PURCHASE ORDER, DELIVERY INVOICE, TRANSPORTATION BILLS, OC TRAI RECEIPTS, DETAILS OF PAYMENTS MADE, COMPLETE POSTAL ADDRESS OF THE DEALERS FRO M WHOM PURCHASES WERE MADE, ETC. HOWEVER, THE ASSESSEE FAILED TO FURNISH ALL T HE DOCUMENTS AS SOUGHT BY THE ASSESSING OFFICER. NOTICE SENT TO M/S. STHAP ANA TRADE IMPEX PVT. LTD., M/S.LAXMI TRADING COMPANY AND M/S. RUMEET ENTERPRISE S WERE RECEIVED BACK UNDELIVERED WITH REMARKS UNCLAIMED, REFUSED AND NOT-KNOWN RESPECTIVELY. THE NOTICE TO THE OTHER TWO SUPPLIERS I.E. S HREE AMAAYA ENTERPRISES AND M/S.DEV ENTERPRISES WAS DULY SERVED. HO WEVER, THEY FAILED TO RESPOND. THE ASSESSEE FURTHER FAILED TO FURNISH CONFIRMATION S FROM ANY OF THE PARTIES MENTIONED ABOVE. THE ASSESSEE IS ONE OF THE BENE FICIARIES OF THE BOGUS PURCHASES. BOGUS PURCHASES BILLS AND ENTRIES WERE PROVIDE D BY THE HAWALA DEALERS. THE ASSESSING OFFICER AFTER ANALYSING THE FACTS AN D DOCUMENTS ON RECORD MADE ADDITIONS ON ACCOUNT OF BOGUS PURCHASES IN THE IMPUGNED ASSESSMENT YEARS AS UNDER: ASSESSMENT YEAR BOGUS PURCHASES AS DETERMINED BY THE ASSESSING OFFICER 2009-10 RS.85,47,019/- 2010-11 RS.1,32,96,599/- 4 ITA NOS. 1969 TO 1971/PUN/2016 6.1 IN FIRST APPELLATE PROCEEDINGS, THE COMMISSIONER OF INCOME TAX (A PPEALS) WHILE DELETING ADDITIONS HAS ERRED IN OBSERVING THAT ASSESS ING OFFICER HAS SIMPLY RELIED ON THE INFORMATION SUPPLIED BY THE SALES TAX D EPARTMENT. THE COMMISSIONER OF INCOME TAX (APPEALS) HAS FAILED TO CONSIDER THE FACT THAT NOTICE SENT TO THE PARTIES ON THE ADDRESSES FURNISHED B Y THE ASSESSEE, WERE RECEIVED BACK UNDELIVERED. THUS, THE WHEREABOUTS OF THE D EALERS FROM WHOM THE ASSESSEE HAD MADE PURCHASES WERE NOT KNOWN. THER EFORE, IT CAN BE SAFELY CONSTRUED THAT PURCHASES MADE BY THE ASSESSEE FROM S USPICIOUS DEALERS WERE BOGUS AND HAVE BEEN RIGHTLY DISALLOWED BY THE ASSESSING OFFICER. THE LD. DR PLACED RELIANCE ON THE DECISION OF PUNE BENCH OF THE TRIBUN AL IN THE CASE OF CHHABI ELECTRICALS PVT. LTD. VS. DCIT, IN ITA NO.795/PUN/2014 FOR ASSESSMENT YEAR 2010-11 DECIDED ON 28-04-2017 AND SUBMITTED THAT THE CASE OF THE ASSESSEE FALLS IN CLAUSE II AND CLAUSE-III OF PARA 40 OF T HE SAID ORDER. THE LD. DR PRAYED FOR SETTING ASIDE THE ORDER OF COMMISSIONER O F INCOME TAX(APPEALS) AND RESTORING THE FINDINGS OF ASSESSING OFFICER. 7. ON THE OTHER HAND, SHRI SANKET JOSHI APPEARING ON BEH ALF OF THE ASSESSEE VEHEMENTLY SUPPORTED THE FINDINGS OF COMMISSIONE R OF INCOME TAX (APPEALS) IN DELETING THE ADDITIONS AND PRAYED FOR DISMISSING T HE APPEALS OF THE REVENUE. THE LD. AR SUBMITTED THAT IN RESPONSE TO NOTICE DATED 24.07.2013 U/S.133(6) OF THE ACT, THE ASSESSEE FURNISHED REQUISITE DOCU MENTS VIDE LETTER 06.08.2011. THE LD. AR REFERRED TO THE SAID COMMUNICATION AT PAGE 11 TO 14 OF THE PAPER BOOK. THE LD. AR CONTENDED THAT THE COMMISSION ER OF INCOME TAX (APPEALS) AFTER APPRECIATING THE FACTS OF THE CASE AND DOCU MENTS ON RECORD HAS DELETED THE ADDITIONS. 2011-12 RS.1,45,80,248/- 5 ITA NOS. 1969 TO 1971/PUN/2016 7.1 THE LD. AR CONTENDED THAT NO OPPORTUNITY WAS GIVEN T O THE ASSESSEE TO CROSS EXAMINE THE PERSONS WHOSE STATEMENT WERE USED TO REOPEN THE ASSESSMENT AND FOR MAKING THE ADDITION. THE ASSESSMENT H AS BEEN COMPLETED BY VIOLATING THE PRINCIPLES OF NATURAL JUSTICE. TO SUPPORT H IS SUBMISSIONS, THE LD. AR PLACED RELIANCE ON THE FOLLOWING DECISIONS: I) M/S.JOTO ABRASIVES PVT. LTD. VS. DCIT, ITA NO.2902/PUN/ 2016 FOR THE ASSESSMENT YEAR 2009-10, DECIDED ON 28.03.2018. II) ACIT VS. M/S. MAHALAXMI ELECTRICALS, ITA NO.301/PUN/2016 FOR THE ASSESSMENT YEAR 2009-10, DECIDED ON 26.04.2018. III) ANITA SANJAY AGRAWAL VS. ITO (BEING LEAD CASE), ITA NOS.26 22 TO 2624/PUN/2016 FOR THE ASSESSMENT YEARS 2009-10 TO 20 11-12, DECIDED ON 28.03.2018 8. THE LD. DR CONTROVERTING THE SUBMISSIONS OF AR SUBMIT TED THAT THE ASSESSEE WAS SUPPLIED WITH THE STATEMENT OF HAWALA DEAL ERS. THE ASSESSEE NEVER ASKED FOR CROSS EXAMINATION. THEREFORE, IT IS WRONG T O SAY THAT OPPORTUNITY OF CROSS EXAMINATION WAS NOT GIVEN TO THE ASSESSEE. 9. WE HAVE HEARD THE SUBMISSIONS MADE BY REPRESENTATIVE S OF RIVAL SIDES AND HAVE PERUSED THE ORDERS OF AUTHORITIES BELOW. THE REVENUE IN APPEAL FOR THE ASSESSMENT YEARS 2009-10 TO 2011-12 HAS ASSAILED THE ORDER OF COMMISSIONER OF INCOME TAX (APPEALS) IN DELETING THE ADDITION S MADE BY THE ASSESSING OFFICER ON ACCOUNT OF BOGUS PURCHASES FROM HAWA LA OPERATORS. ACCORDING TO THE REVENUE, ASSESSEE HAS MADE BOGUS PUR CHASES DURING THE IMPUGNED ASSESSMENT YEARS FROM FOLLOWING SUSPICIOUS DEALERS: NAME OF THE SUPPLIER A.Y 2009-10 A.Y 2010-11 A.Y 2011-12 M/S. LAXMI TRADING COMPANY 3,32,663/- 6 ITA NOS. 1969 TO 1971/PUN/2016 DURING THE COURSE OF REASSESSMENT PROCEEDINGS, THE ASS ESSEE SUBMITTED VARIOUS DOCUMENTS BEFORE THE ASSESSING OFFICER INCLUDING STO CK REGISTER, TAX INVOICE, PURCHASE BILLS, PURCHASED SUMMERY, SALES SUMMERY, CO NFIRMATIONS FROM THE PURCHASES TO WHOM SALES WERE MADE. THE ASSESS ING OFFICER DID NOT FIND ANY FAULT WITH THE DOCUMENTS FURNISHED BY ASSESSEE TO SUBSTANTIATE PURCHASES/SALES TRANSACTIONS. THE ACCOUNTS OF THE ASSE SSEE WERE NOT REJECTED BY THE ASSESSING OFFICER. THE ASSESSING OFFICER RAISED NO SUS PICION ON THE SALES MADE BY THE ASSESSEE. IT IS A WELL SETTLED LAW THAT IF NO D OUBT HAS BEEN RAISED ON THE SALES, PURCHASES CANNOT BE DOUBTED. MERELY FOR T HE REASON THAT THE SUPPLIER DID NOT RESPOND/NOTICE IS NOT SERVED TO THE SUP PLIER, GENUINENESS OF THE PURCHASES CANNOT BE DOUBTED. 10. BEFORE THE COMMISSIONER OF INCOME TAX (APPEAL), THE ASSE SSEE ALSO FILED QUARTERLY STOCK RECORD FROM THE OFFICE OF COLLECTOR, NASHIK WHICH INCLUDES ALLEGED HAWALA PURCHASES, COPIES OF THE LEDGER EXTRACT OF T HE ALLEGED HAWALA DEALERS, PURCHASE INVOICE, WAY BILL RECEIPTS, PROOF OF TRANSPO RTATION AND COPIES OF BANK STATEMENTS SHOWING PAYMENT TO THE SUPPLIER BY A CCOUNT PAYEE CHEQUE/DEMAND DRAFT. IT IS NOT THE CASE OF REVENUE THAT THE MONEY PAID BY THE ASSESSEE THROUGH BANKING CHANNELS HAS FLOWN BACK TO THE ASSESSEE. THE ASSESSEE HAS BEEN ABLE TO SHOW TRAIL OF GOODS PURCHASE D. IN VIEW OF THE M/S. DEV ENTERPRISES 78,54,356/- 23,10,470/- 23,28,717/- M/S. STHAPANA TRADE IMPEX PVT. LTD. 3,60,000/- SHREE AMAAYA ENTERPRISES 13,50,338/- 62,80,562/- M/S.RUMEET ENTERPRISES 96,35,791/- 59,70,969/- TOTAL 85,47,019/- 1,32,96,599/- 1,45,80,248/- 7 ITA NOS. 1969 TO 1971/PUN/2016 UNDISPUTED FACTS OF THE CASE AS DISCUSSED ABOVE, NO CLOUD OF SUSPICION SHOULD BE RAISED WITH RESPECT TO THE PURCHASE OF GOODS. 11. A PERUSAL OF THE IMPUGNED ORDER SHOWS THAT THE ASSE SSEE HAS GIVEN WORKING OF GROSS PROFIT PERCENTAGE IN THE NORMAL COURSE O F BUSINESS AS WELL AS AFTER ADDING THE ALLEGED BOGUS PURCHASES. THE GROSS PROFIT RATIO AFTER MAKING ADDITIONS OF THE ENTIRE BOGUS PURCHASES HAS RESULTED IN ABSURD FIGURES OF GROSS PROFIT. AFTER TAKING INTO CONSIDERATION ENTIRE VITAL FACTS, WE ARE OF OPINION THAT ASSESSEE HAS BEEN ABLE TO ESTABLISH TRAIL OF GOODS. THE A SSESSEE HAS FURNISHED BEFORE THE AUTHORITIES BELOW ORIGINAL PURCHASE INVOICE, PROOF OF TRANSPORTATION, WAY BILL RECEIPTS, DETAILS OF PAYMENTS MADE TO SUPPLIERS THRO UGH BANKING CHANNELS, RECEIPT OF GOODS AND RECORDING OF THE SAME IN ST OCK REGISTER COUPLED WITH THE FACTS THAT NO SUSPICION HAS BEEN RAISED BY ASSE SSING OFFICER ON THE SALE OF GOODS, WE DO NOT FIND ANY INFIRMITY IN THE ORDER OF CO MMISSIONER OF INCOME TAX (APPEAL). ACCORDINGLY, THE IMPUGNED ORDER IS UP HELD AND APPEALS OF THE REVENUE ARE DISMISSED BEING DEVOID OF ANY MERIT. 12. IN THE RESULT, APPEALS OF THE REVENUE FOR ASSESSMENT YEARS 2009-10 TO 2011-12 ARE DISMISSED. ORDER PRONOUNCED ON FRIDAY, THE 28 TH DAY OF SEPTEMBER, 2018. SD/- SD/- ( / ANIL CHATURVEDI) ( ! / VIKAS AWASTHY) ' ! / ACCOUNTANT MEMBER # ! / JUDICIAL MEMBER ' / PUNE; $% / DATED : 28 TH SEPTEMBER, 2018 SB 8 ITA NOS. 1969 TO 1971/PUN/2016 , - ./& 0&+ / COPY OF THE ORDER FORWARDED TO : 1. / THE APPELLANT. 2. / THE RESPONDENT. 3. & & ' () / THE CIT(A)-2, NASHIK 4. * & & ' / THE PR. CIT-2, NASHIK 5. +, -* , & -* , . ./ , ' / DR, ITAT, B BENCH, PUNE. 6. ,01 23 / GUARD FILE. // // TRUE COPY// &'4 / BY ORDER, 5 - / PRIVATE SECRETARY, & -* , ' / ITAT, PUNE.