Income tax Officer, V. M/s. Steel Point , Nashik

ITA 218/PUN/2017

• Counselvise Citation: [2019] 118 COUNSELVISE.COM (IT) 2590 (ITAT-PUNE)
• Duration Of Justice: 2 year(s) 1 month(s) 11 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 07-03-2019
• Appeal Filed By: Department
• Order Result: Partly Allowed
• Bench Allotted: B
• Next Hearing Date: 06-03-2019
• Assessment Year: 2009-2010
• Appeal Filed On: 27-01-2017
• Result in Favour of: Partly Allowed
• Court: TRIBUNAL
• Keywords: Bogus purchase; Validity of assessment
• Section: 142(1)

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL PUNE BENCH B, PUNE BEFORE SHRI R.S. SYAL, VICE PRESIDENT AND SHRI PARTHA SARATHI CHAUDHURY, JUDICIAL MEMBER . / ITA NOS.218 TO 220/PUN/2017 / ASSESSMENT YEARS : 2009-10 TO 2011-12 ITO, WARD-2(1), NASHIK VS. M/S. STEEL POINT D-52/1, MIDC, AMBAD, NASHIK 422 011 PAN : ABGFS1015G (APPELLANT) (RESPONDENT) / ORDER PER R.S.SYAL, VP : THESE THREE APPEALS FILED BY THE REVENUE RELATE TO ASSES SMENT YEARS 2009-10 TO 2011-12. SINCE COMMON ISSUES ARE RAISE D IN THESE APPEALS, WE ARE, THEREFORE, PROCEEDING TO DISPOSE THEM OFF BY THIS CONSOLIDATED ORDER FOR THE SAKE OF CONVENIENCE. A.Y. 2009-10 : 2. THE FIRST ISSUE RAISED IN THIS APPEAL IS AGAINST THE DELETION OF ADDITION OF RS.2,03,58,071/- IN RESPECT OF BOGUS PURCHAS ES. APPELLANT BY SHRI PANKAJ GARG RESPONDENT BY SHRI DEVENDRA JAIN DATE OF HEARING 06-03-2019 DATE OF PRONOUNCEMENT 07-03-2019 ITA NOS.218 TO 220/PUN/2017 M/S. STEEL POINT 2 3. BRIEFLY STATED, THE FACTS OF THE CASE ARE THAT AN INFORMA TION WAS RECEIVED FROM THE DIRECTOR OF INCOME-TAX (INVESTIGATION) , PUNE REGARDING THE BENEFICIARIES IN HAWALA TRANSACTIONS DETECTED BY THE SALES TAX DEPARTMENT OF MAHARASHTRA GOVERNMENT. ONE OF THE BENEFICIARIES, IN A SUCH LIST, WAS THE ASSESSEE ALSO. A SU RVEY ACTION WAS TAKEN U/S.133A OF THE INCOME-TAX ACT, 1961 (HEREINAF TER ALSO CALLED THE ACT) ON 21-03-2013 AT THE BUSINESS PREMISES OF THE ASSESSEE FIRM. THE INFORMATION RECEIVED FROM THE DIRECTOR OF INCOME-TAX (INVESTIGATION), PUNE WAS VERIFIED IN AS MUCH AS THE ASSESSEE HAD RECORDED PURCHASES FROM THE HAWALA PARTIE S TO THE TUNE OF RS.2,03,58,071/-. THE AO MADE ADDITION FOR THE EQUAL AMOUNT, WHICH CAME TO BE DELETED BY THE LD. CIT(A). AGGRIE VED THEREBY, THE REVENUE HAS COME UP IN APPEAL BEFORE THE TR IBUNAL. 4. WE HAVE HEARD BOTH THE SIDES AND GONE THROUGH THE RELE VANT MATERIAL ON RECORD. IT IS SEEN THAT SEVERAL ASSESSEES HAD OBTAINED BOGUS PURCHASES FROM SUCH HAWALA PARTIES. THE PUNE BENC HES OF THE TRIBUNAL HAS DISPOSED OFF A GROUP OF SIMILAR CASES. VIDE THE LEAD ORDER IN THE CASE OF M/S. CHHABI ELECTRICALS PVT. LTD. AND OTHERS VS. DCIT DATED 28-04-2017 IN ITA NO.795/PUN/2014 AND OTHERS, THE TRIBUNAL HAS MADE CERTAIN CATEGORIES. FINDING IN ITA NOS.218 TO 220/PUN/2017 M/S. STEEL POINT 3 RESPECT OF CATEGORY NO. IV OF THE SAID ORDER, WHICH IS GE RMANE TO THE INSTANT APPEAL, IS AS UNDER : 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 DETAI LS AND ALSO EVIDENCE OF ITS MOVEMENT I.E. TRANSPORTATION DETAILS A ND QUALITY CONTROL DETAILS OF CONSUMPTION OF THE SAID MATERIAL OR EXACT DETAILS OF SALE OF THE SAME CONSIGNMENT THROUGH SAME TRANSPOR TER DIRECTLY TO THE PARTY, THEN THE TOTAL PURCHASES CANNOT BE ADDED IN THE HANDS OF ASSESSEE. HOWEVER, SINCE THE PURCHASES ARE MADE F ROM THE GREY MARKET, SOME ESTIMATION NEEDS TO BE MADE IN THE HANDS OF ASSESSEE. THE TRIBUNAL IN M/S. CHETAN ENTERPRISES VS. A CIT (SUPRA) HAS ALREADY HELD THAT THE ADDITION BE MADE BY ES TIMATING THE SAME @ 10% OF THE ALLEGED HAWALA PURCHASES, OVER A ND ABOVE THE GP SHOWN BY THE RESPECTIVE ASSESSEE. 5. GOING BY THE RATIO LAID DOWN IN THE CASE OF M/S. CHHABI ELECTRICALS PVT. LTD. AND OTHERS (SUPRA), WHICH HAS BEEN F OLLOWED IN INNUMERABLE CASES, WE HOLD THAT THE ADDITION SHOULD HAVE BEEN SUSTAINED ON THE AMOUNT OF HAWALA PURCHASES @10% PLUS THE NORMAL GP RATE SHOWN BY THE ASSESSEE FOR THE YEAR. WE , THEREFORE, SET ASIDE THE IMPUGNED ORDER AND REMIT THE MATTER TO THE FILE OF AO FOR RE-COMPUTING THE AMOUNT OF ADDITION @10% PLUS THE NORMAL GROSS PROFIT RATE SHOWN BY THE ASSESSEE FOR THIS YEAR ON THE BOGUS PURCHASES. 6. THE ONLY OTHER EFFECTIVE GROUND NO.4 READS AS UNDER : 4. ON THE FACTS AND CIRCUMSTANCES OF THE CASE, WHETHER THE LD.CIT(A)-2, NASHIK WAS JUSTIFIED IN HOLDING THAT NOTICE U/S.143(2) IS MANDATORY BEFORE PASSING THE ORDER U/S.147, WHEN THE ACT HAS GIVEN IMMUNITY TO THE AO U/S.292BB THAT ITA NOS.218 TO 220/PUN/2017 M/S. STEEL POINT 4 WHEN NO OBJECTION IS TAKEN REGARDING THIS DURING THE ASSESSMENT PROCEEDING, THE OBJECTION IS NOT SUSTAINABLE. 7. FACTS APROPOS THIS GROUND ARE THAT THE ASSESSEE CONTEND ED BEFORE THE LD. CIT(A) FOR THE FIRST TIME THAT NO NOTICE U/S.1 43(2) OF THE ACT WAS ISSUED AND HENCE, THE PROCEEDINGS BE QUASHED . THE LD. CIT(A) CALLED FOR A REPORT FROM THE AO. VIDE THE REMAND REPORT DATED 15-09-2016, THE AO WROTE THAT NOTICE U/S.143(2) WAS IS SUED ON 22-11-2013 BUT ACKNOWLEDGEMENT FOR SERVICE OF ABOVE NOTICE WAS NOT FOUND ON RECORD. EVEN THE ORDER SHEET ENTRY DA TED 22-01- 2013 PROPERLY RECORDED THAT NOTICES U/S.143(2) AND 142(1) WERE ISSUED FIXING THE CASE FOR HEARING ON 29-01-2013 AT 4.30 PM. THE LD. CIT(A) OBSERVED THAT THE AO HAS NOT MADE A MENTION OF ISSUING NOTICE U/S.143(2) IN THE ASSESSMENT ORDER. HE, HOWEVER, DID NOT ADJUDICATE ON THE ISSUE OF VALIDITY OF REASSESSMENT ON THIS SC ORE IN VIEW OF THE FACT THAT ADDITION ITSELF WAS DELETED. 8. WE HAVE HEARD BOTH THE SIDES AND GONE THROUGH THE RELE VANT MATERIAL ON RECORD. IT IS SEEN THAT THE LD. CIT(A) HAS NOT A DVERSELY ADJUDICATED ON THE SO-CALLED NON-ISSUANCE OF NOTICE U/S.143(2 ) QUA THE REVENUE, THOUGH HE RECORDED IN THE IMPUGNED ORDER TH AT THE AO ADMITTED TO HAVE ISSUED SUCH A NOTICE. AS SUCH, THE REV ENUE CAN HAVE NO GRIEVANCE AGAINST SUCH NON-ADJUDICATION. THE ASSESSEE ITA NOS.218 TO 220/PUN/2017 M/S. STEEL POINT 5 HAS NEITHER PREFERRED ANY CROSS OBJECTION NOR TAKEN RECOU RSE TO ANY OTHER LEGAL REMEDY CHALLENGING THE VALIDITY OF ASSESSMENT IN VIEW OF THE ALLEGED NON-ISSUANCE OF NOTICE U/S.143(2). AS SUC H, THE GROUND RAISED BY THE REVENUE IS DISMISSED. A.YRS. 2010-11 AND 2011-12 : 9. BOTH SIDES ARE IN AGREEMENT THAT THE FACTS AND CIRCUMSTANC ES FOR THESE YEARS ARE MUTATIS MUTANDIS SIMILAR TO THOSE OF THE PRECEDING YEAR 2009-10. BUT FOR THE DIFFERENCE IN THE AM OUNT OF HAWALA ENTRIES RECORDED BY THE ASSESSEE, THE FACTS ARE A DMITTEDLY SIMILAR. FOLLOWING THE VIEW TAKEN HEREINABOVE FOR THE A.Y. 20 09- 10, WE DIRECT THE AO TO RE-COMPUTE THE AMOUNT OF ADDITION IN TH E LIGHT OF OUR ABOVE OBSERVATIONS, THAT IS, 10% OVER AND ABO VE THE NORMAL G.P. RATE OF THE RESPECTIVE YEAR ON THE AMOUNT OF H AWALA PURCHASES. 10. THE OTHER GROUND ON THE VALIDITY OF REASSESSMENT FOR THE REASON OF NON-ISSUANCE OF NOTICE IS SIMILAR TO THAT OF THE P RECEDING YEAR. THE SAME IS DISMISSED AS NOT ARISING OUT OF THE IMP UGNED ORDER. ITA NOS.218 TO 220/PUN/2017 M/S. STEEL POINT 6 11. IN THE RESULT, ALL THE THREE APPEALS ARE PARTLY ALLOWED FOR STATISTICAL PURPOSES. ORDER PRONOUNCED IN THE OPEN COURT ON 07 TH MARCH, 2019. SD/- SD/- (PARTHA SARATHI CHAUDHURY) (R.S.SYAL) JUDICIAL MEMBER VI CE PRESIDENT PUNE; DATED : 07 TH MARCH, 2019 / COPY OF THE ORDER IS FORWARDED TO : 1. / THE APPELLANT; 2. / THE RESPONDENT; 3. THE CIT(A)-2, NASHIK 4. 5. 6. THE PR.CIT-2, NASHIK , , / DR B, ITAT, PUNE; / GUARD FILE. / TRUE COPY // / BY ORDER, // TRUE COPY // SENIOR P RIVATE SECRETARY , / ITAT, PUNE ITA NOS.218 TO 220/PUN/2017 M/S. STEEL POINT 7 DATE 1. DRAFT DICTATED ON 06-03-2019 SR.PS 2. DRAFT PLACED BEFORE AUTHOR 06-03-2019 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. *