Softcon Systems Pvt. ltd., Pune V. Deputy Commissioner of Income-tax,

ITA 213/PUN/2015

• Counselvise Citation: [2019] 118 COUNSELVISE.COM (IT) 6291 (ITAT-PUNE)
• Duration Of Justice: 3 year(s) 10 month(s) 24 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 24-01-2019
• Appeal Filed By: Assessee
• Order Result: Partly Allowed
• Bench Allotted: B
• Assessment Year: 2010-2011
• Appeal Filed On: 02-03-2015
• Result in Favour of: Partly Allowed
• Court: TRIBUNAL
• Department Lawyers: S DAS
• Assessee Lawyers: PRAMOD JADHAV
• Keywords: Bogus purchase
• Section: 133(6); 6

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL B BENCH, PUN E BEFORE SHRI R.S. SYAL, VP AND SHRI PARTHA SARATHI CHAUDHURY, JM / ITA NO. 213/PUN/2015 / ASSESSMENT YEAR : 2010-11 SOFTCON SYSTEMS PVT. LTD. SOFTCON HOUSE, S. NO. 80/02, OFF. MUMBAI BANGALORE HIGHWAY, TATHWADE, PUNE-411 033 PAN : AAJCS0459H ....... / APPELLANT / V/S. THE DEPUTY COMMISSIONER OF INCOME TAX, CIRCLE-10, PUNE. / RESPONDENT ASSESSEE BY : SHRI PRAMOD JADHAV REVENUE BY : SHRI S. DAS / DATE OF HEARING : 23.01.2019 / DATE OF PRONOUNCEMENT : 24.01.2019 / ORDER PER PARTHA SARATHI CHAUDHURY, JM : THIS APPEAL PREFERRED BY THE ASSESSEE EMANATES FROM TH E ORDER OF LD. CIT(APPEALS), PUNE-6 DATED 26.12.2014 FOR THE ASSESSMENT Y EAR 2010-11 AS PER GROUNDS OF APPEAL ON RECORD. 2 ITA NO. 213/PUN/2015 A.Y.2010-11 2. THE SOLITARY GRIEVANCE OF THE ASSESSEE IN ALL THESE GRO UNDS IS CONFIRMATION OF ADDITION OF RS.34,25,000/- MADE BY THE ASSESS ING OFFICER ON ACCOUNT OF BOGUS PURCHASES. 3. THE BRIEF FACTS IN THIS CASE ARE THAT DURING THE COURS E OF ASSESSMENT PROCEEDINGS, THE ASSESSING OFFICER VERIFIED THE PURCHASES MA DE BY THE ASSESSEE-COMPANY AND ISSUED NOTICE U/S.133(6) OF THE INCO ME TAX ACT, 1961 (HEREINAFTER REFERRED TO AS THE ACT). SOME OF THE NOTICES RETURNED UNSERVED WITH THE REMARK LEFT PLACE/LEFT/REFUSED/UNCLAIMED. THE ASSE SSING OFFICER VERIFIED THESE PARTIES WITH THE LIST OF HAWALA PARTIES AVAILABLE ON THE OFFICIAL WEB-SITE OF THE SALES TAX DEPARTMENT OF GOVT. OF MAHARASH TRA. THE ASSESSING OFFICER FOUND THAT THESE PARTIES WERE ALSO APPEARING IN THE LIST. THEREAFTER, THE ASSESSING OFFICER CONFRONTED THE ASSESSEE ON THIS ISSUE AN D ASKED THE ASSESSEE TO PROVE GENUINENESS OF THE TRANSACTIONS BY P ROVIDING IDENTITY OF THE PARTIES, BY PROVIDING PAN DETAILS, RETURN OF INCOME AS WELL A S OTHER DETAILS. THE ASSESSEE WAS ALSO ASKED TO FURNISH DELIVERY CHALLANS, TRANSPORTATION BILLS, OCTROI PAID CHALLANS, WEIGH BRIDGE BILLS, GOODS RECEIPT REGIST ER, STORE REGISTER, STOCK REGISTER WITH RELEVANT ENTRIES IN ORDER TO PROVE G ENUINENESS OF THE TRANSACTIONS ALONG WITH LEDGER EXTRACTS. IN RESPONSE, TH E ASSESSEE COULD NOT PRODUCE ANY DETAILS EXCESS FOR THE PURCHASE BILLS. THAT FUR THER THE LD. AR OF THE ASSESSEE HIMSELF ADMITTED THAT THE PURCHASES WERE BOGUS AND CONSIDERING DETAILS OF FACTS, ENTIRE AMOUNT OF RS.34,25,000/- WAS ADDED T O THE TOTAL INCOME OF THE ASSESSEE. 4. DURING FIRST APPELLATE PROCEEDINGS, THE LD. CIT(APP EALS) CONFIRMED THE ADDITION MADE BY THE ASSESSING OFFICER AS PER REASONS APP EARING IN HIS ORDER ON RECORD SPECIFICALLY OPINING THAT THE REPRESENTATIVE OF THE ASSESSEE HAS ACCEPTED THE DISALLOWANCE AND OFFERED TO PAY TAX BEING C ONFRONTED ON THIS 3 ITA NO. 213/PUN/2015 A.Y.2010-11 ISSUE. THIS ADMISSION OF THE ASSESSEE ITSELF PROVES THAT T HE ASSESSEE HAS NO CASE IN THIS REGARD. 5. AT THE TIME OF HEARING, THE LD. AR OF THE ASSESSEE SUB MITTED THAT IN THE PREVIOUS YEAR I.E. ASSESSMENT YEAR 2009-10, THE ASSESSING OFFICER HAD DISALLOWED 20% OF THE BOGUS PURCHASES. SIMILARLY IN THE SUBS EQUENT YEAR I.E. ASSESSMENT YEAR 2011-12, THE ASSESSING OFFICER DISALLOWED 2 0% OF THE BOGUS PURCHASES. SHOWING THESE STATISTICS, THE LD. AR OF THE ASS ESSEE SUBMITTED THAT ADDITION TO THE EXTENT 20% OF BOGUS PURCHASES SH OULD BE MADE IN CONFORMITY WITH THESE AFORESAID YEARS. 6. ON THE OTHER HAND, THE LD. DR HAS PLACED RELIANCE ON THE ORDERS OF THE AUTHORITIES BELOW AND VEHEMENTLY ARGUED THAT IT IS CASE WHERE THE ASSESSEE HIMSELF HAS ADMITTED THE BOGUS PURCHASES AND THEREFORE, T HE ENTIRE AMOUNT SHOULD BE CONFIRMED. 7. WE HAVE PERUSED THE CASE RECORD AND HEARD THE RIV AL CONTENTIONS. WE HAVE ALSO ANALYZED THE FACTS IN THE CASE. WE FIND THAT V ARIOUS SCENARIOS OF BOGUS PURCHASE ISSUE WAS ADJUDICATED IN SERIES OF DECISION S BY THE PUNE BENCHES OF TRIBUNAL WITH LEAD ORDER IN M/S. CHHABI ELECTRICA LS PVT. LTD. VS. DCIT, IN ITA NO.795/PUN/2014 FOR ASSESSMENT YEAR 2010- 11 DATED 28.04.2017. IN THE CASE SIMILAR TO ASSESSEE, THE CO-ORDINAT E BENCH OF THE TRIBUNAL IN THE CASE OF M/S. CHHABI ELECTRICALS PVT. LTD. VS. DCIT (SUPRA.) HAD UPHELD THE ADDITION OF 10% OF THE BOGUS PURCHASES OV ER AND ABOVE THE GP SHOWN BY ASSESSEE BY OBSERVING AS UNDER: 40. IN VIEW OF THE ABOVE SAID RATIOS, THE PRESENT I SSUE 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 4 ITA NO. 213/PUN/2015 A.Y.2010-11 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 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. 5 ITA NO. 213/PUN/2015 A.Y.2010-11 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 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. RESPECTFULLY, FOLLOWING THE DECISION OF THE CO-ORDINATE BENCH OF THE TRIBUNAL IN THE CASE OF M/S. CHHABI ELECTRICALS PVT. LTD. VS. D CIT (SUPRA.), WE DIRECT 10% OF THE BOGUS PURCHASES OVER AND ABOVE GP P ERCENTAGE SHOWN BY THE ASSESSEE TO BE ADDED AS BOGUS PURCHASES. HENCE, G ROUNDS RAISED BY THE ASSESSEE ARE PARTLY ALLOWED. 8. IN THE RESULT, APPEAL OF THE ASSESSEE IS PARTLY ALLOWED. ORDER PRONOUNCED ON 24 TH DAY OF JANUARY, 2019. SD/- SD/- R.S . SYAL PARTHA SARAT HI CHAUDHURY VICE-PRESIDENT JUDICIAL MEMBER / PUNE; / DATED : 24 TH JANUARY, 2019. SB 6 ITA NO. 213/PUN/2015 A.Y.2010-11 !'#$%&%# / COPY OF THE ORDER FORWARDED TO : 1. / THE APPELLANT. 2. / THE RESPONDENT. 3. THE CIT(APPEALS), PUNE-6 4. THE CIT-5, PUNE. 5. '#$ %%&' , ( &' , )*+ , / DR, ITAT, B BENCH, PUNE. 6. $,- ./ / GUARD FILE. // TRUE COPY // (0 / BY ORDER, %1 &+ / PRIVATE SECRETARY ( &' , / ITAT, PUNE. 7 ITA NO. 213/PUN/2015 A.Y.2010-11 DATE 1 DRAFT DICTATED ON 23 .01.2019 SR.PS/PS 2 DRAFT PLACED BEFORE AUTHOR 24 .01 .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