Laxmikant Ramniwas Baldawa, Latur V. Income-tax Officer,

ITA 2307/PUN/2016

• Counselvise Citation: [2018] 125 COUNSELVISE.COM (IT) 9269 (ITAT-PUNE)
• Duration Of Justice: 1 year(s) 4 month(s) 24 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 27-02-2018
• Appeal Filed By: Assessee
• Order Result: Partly Allowed
• Bench Allotted: SMC
• Next Hearing Date: 21-02-2018
• Assessment Year: 2010-2011
• Appeal Filed On: 03-10-2016
• Result in Favour of: Partly Allowed
• Court: TRIBUNAL
• Keywords: Bogus purchase; Difference of opinion; Change of opinion
• Section: 144; 139

Judgement Text

- IN THE INCOME TAX APPELLATE TRIBUNAL PUNE BENCH SMC , PUNE , , BEFORE MS. SUSHMA CHOWLA, JM AND SHRI ANIL CHATURVEDI , AM . / ITA NO. 2 307 /P U N/201 6 / ASSESSMENT YEAR : 20 1 0 - 11 SHRI LAXMIKANT RAMNIWAS BALDAWA, MAHALAXMI WIRES, MURUD, RING ROAD, LATUR - 413572 . / APPELLANT PAN: A BBPB1789K VS. THE INCOME TAX OFFICER , WARD 3 ( 3 ) , LATUR . / RESPONDENT / APPELLANT BY : NONE / RESPONDENT BY : S HRI ACHAL SHARMA / DATE OF HEARING : 2 1 . 0 2 .201 8 / DATE OF PRONOUNCEMENT: 27 . 0 2 .201 8 / ORDER PER SUSHMA CHOWLA, J M : TH E APPEAL FILED BY THE ASSESSEE IS AGAINST THE ORDER OF CIT (A) - 2 , AURANGABAD , DATED 03 . 0 5 .20 1 6 RELATING TO ASSESSMENT YEAR 20 1 0 - 11 AGAINST ORDER PASSED UNDER SECTION 144 R.W.S. 147 OF THE INCOME - TAX ACT , 1961 (IN S HORT THE ACT) . ITA NO. 2 307 /P U N/20 1 6 SHRI LAXMIKANT RAMNIWAS BALDAWA 2 2. THE ASSESSEE HAS RAISED THE FOLLOWING GROUNDS OF APPEAL: - 1) ON THE FACTS AND CIRCUMSTANCES OF THE CASE AND IN LAW THE LD. CIT(A) WAS NOT JUSTIFIED IN CONFIRMING THE ESTIMATE MADE BY THE A. O , @ 12.5 % OF UNVERIFIABLE PURCHASES WHEN IN FACT AND LAW THE A. O . FAILED TO REJECT THE WELL MAINTAINED AND AUDITED BOOKS OF ACCOUNT. THE ESTIMATION OF GP AN UNVERIFIABLE PURCHASES @ 12.5 % AMOUNTING INTO ADDITION OF RS.5,86,837/ - WITHOUT INVOKING THE PROVISIONS OF S.145(3) OF THE ACT AT TH E SAME TIME ACCEPTING THE SA L ES OUT OF THE SAID PURCHASES IS NOT JUSTIFIED. THE ADDITION BE DELETED. 2) ON THE FACTS AND CIRCUMSTANCES OF THE CASE AND IN LAW THE ASSESSMENT COMPLETED BY THE A. O . U/S 144 R.W.S. 147 OF THE ACT AND CONFIRMED BY LD. CIT(A) IS NOT SUSTAINABLE IN LAW SINCE THE A. O . FAILED TO ISSUE STATUTORY AND MANDATORY NOTICE UNDER S. 143(2) OF THE ACT. THE PROVISIONS OF S. 292BB ARE NOT APPLICABLE TO THE FACTS OF THIS CASE AS THOSE PROVISIONS CAN BE INVOKED WHEN IT IS A MATTER OF SERVICE OF N OTICE. HERE IS THE CASE WHEN NO STATUTORY NOTICE U/S 143(2) WAS NOT ISSUED AT A L L. THE ASSESSMENT, THEREFORE, IS ILLEGAL AND WITHOUT JURISDICTION. IT BE QUASHED. 3) ON THE FACTS AND CIRCUMSTANCES OF THE CASE AND IN LAW THE ASSESSMENT MADE BY THE A. O . UNDE R S. 147 R.W.S. 144 IS ALSO VITIATED IN LAW AS THE SAME IS WITHOUT JURISDICTION AS THE ACTION UNDER S. 147 WAS WITHOUT JURISDICTION SINCE NO ASSESSMENT WAS FINALIZED ON THE BASIS OF ORIGINAL RETURN OF INCOME FILED U/S 139 OF THE ACT. THE RELIANCE IS PLACED ON THE SUPREME COURT JUDGMENT IN THE CASE OF STANDARD CHARTERED FINANCE LTD. (2016) 284 CTR (SC) 210. THE ACTION INITIATED U/S 147 IS BAD IN LAW AND WITHOUT JURISDICTION. THE ASSESSMENT BE SET ASIDE AS THE ACTION U/S 147 IS SIMPLY ON CHANGE OF OPINION. 4 ) ON THE FACTS AND CIRCUMSTANCES OF THE CASE AND IN LAW THE ASSESSMENT IS ALSO VITIATED IN LAW AS IT HAS BEEN FINALIZED U/S 144 R.W.S. 147 IGNORING THE STATUTORY PROCEDURE MANDATED BY HONBLE SUPREME COURT IN GKN DRIVESHAFTS (I) LTD. (SUPRA). THE ASSESSME NT BE SET ASIDE. 3. DESPITE SERVICE OF NOTICE, NONE APPEARED ON BEHALF OF THE ASSESSEE NOR ANY APPLICATION WAS MOVED FOR ADJOURNMENT. THE PERUSAL OF RECORDS REFLECT THAT THE ISSUE RAISED IN THE PRESENT APPEAL IS AGAINST ESTIMATION OF GP ON BOGUS PURCHASE S. THE ISSUE IS COVERED BY THE ORDERS OF PUNE BENCH OF TRIBUNAL. HENCE, THE APPEAL IS DECIDED AFTER HEARING THE LEARNED DEPARTMENTAL REPRESENTATIVE FOR THE REVENUE. ITA NO. 2 307 /P U N/20 1 6 SHRI LAXMIKANT RAMNIWAS BALDAWA 3 4. BRIEFLY, IN THE FACTS OF THE CASE, THE ASSESSING OFFICER HAD RECEIVED INFORMATION F ROM THE SALES TAX DEPARTMENT IN RESPECT OF HAWALA OPERATORS. THE ASSESSEE HAD MADE PURCHASES FROM THE SAID PARTIES TO THE TUNE OF 46,94,694/ - . THE ASSESSEE WAS TRADER OF M S WIRE. THE ASSESSEE WAS ASKED TO FURNISH THE DETAILS IN RESPECT OF AFORESAID PURCHASES. THE ASSESSING OFFICER MADE CERTAIN ENQUIRIES. HOWEVER, THE HAWALA PARTIES DID NOT RESPOND. THE CASE OF ASSESSEE BEFORE THE ASSESSING OFFICER WAS THAT IT HAD PURCHASED MATERIAL FROM THE ABOVE PARTIES, AGAINST WHICH THE PAYMENTS WERE MADE THROU GH CHEQUES / DEMAND DRAFTS FROM ICICI BANK. THE ASSESSEE ALSO FURNISHED THE COPY OF INWARD & OUTWARD REGISTER, DIESEL BILL FOR EXPENSES, VAT PAID CHALLAN ON THESE PURCHASES, WHERE THE SELLER HAD NOT PAID THE SAME. THE ASSESSEE CLAIMED THAT THE GOODS WERE TRANSPORTED BY HIS OWN VEHICLE. THE ASSESSEE STRESSED THAT ACTUAL PURCHASES WERE MADE AND THE ASSESSING OFFICER ON VERIFICATION OF COPY OF INWARD & OUTWARD REGISTER NOTICED THAT THE ASSESSEE HAD SHOWN THE MATERIAL PURCHASED FROM THE ABOVE PARTIES AND ALS O THE SALES OF MATERIAL. HOWEVER, AS PER THE ASSESSING OFFICER, NO OTHER EVIDENCE REGARDING TRANSPORTATION OF MATERIAL HAD BEEN FILED. THEREFORE, HE WAS OF THE VIEW THAT PURCHASES COULD NOT BE SAID TO BE MADE FROM THE ABOVE PARTIES. RELYING ON THE DECIS ION OF THE HONBLE HIGH COURT OF GUJARAT IN CIT VS. SIMIT P. SHETH IN TAX APPEAL NO.553 OF 2012, WHEREIN HIGHER GP RATE WAS ADOPTED, THE ASSESSING OFFICER HELD THAT SINCE THE FACTS OF INSTANT CASE WERE SIMILAR, THEN THE PROFIT @ 12.5% OF DISPUTED PURCHASES IS TO BE ESTIMATED AND HENCE, THE ADDITION OF 5,86,837/ - . ITA NO. 2 307 /P U N/20 1 6 SHRI LAXMIKANT RAMNIWAS BALDAWA 4 5. THE CIT(A) REFERRED TO DIFFERENT DECISIONS, WHEREIN 25% TO 100% DISALLOWANCE OF BOGUS PURCHASES HAD BEEN UPHELD. THE CIT(A) WAS OF THE VIEW THAT PERCENTAGE OF DISALLOWANCE OF BOGUS PURCHAS ES HAD TO BE BASED ON FACTS OF EACH CASE. THE CIT(A) WAS OF THE VIEW THAT WHERE THE ASSESSEE HAD FAILED TO PROVE THE GENUINENESS OF PURCHASES MADE BY IT AND FURTHER WHERE THAT THE ASSESSING OFFICER HAD HELD THAT ASSESSEE HAD ACTUALLY PURCHASED THE MATERIA L IN CASH FROM OPEN MARKET AND ONLY BILLS WERE TAKEN FROM HAWALA PARTY , THE EXPLANATION OF ASSESSEE WAS NOT ACCEPTED . THE CIT(A) ALSO ACKNOWLEDGES THAT PURCHASE AMOUNT HAD BEEN PAID TO THE ALLEGED SUPPLIER THROUGH BANKING CHANNEL. HE THUS, CONCLUDED BY H OLDING THAT IT WAS A CASE WHERE AT MOST PURCHASE EXPENSES MIGHT HAVE BEEN INFLATED. THE CIT(A) THUS, UPHELD THE ORDER OF ASSESSING OFFICER, AGAINST WHICH THE ASSESSEE IS IN APPEAL. 6. THE ISSUE ARISING IN THE PRESENT APPEAL IS SQUARELY COVERED BY THE DEC ISION OF PUNE BENCH OF TRIBUNAL IN BUNCH OF APPEALS WITH LEAD ORDER IN M/S. CHHABI ELECTRICALS PVT. LTD. VS. DCIT IN ITA NO.795/PUN/2014, RELATING TO ASSESSMENT YEAR 2010 - 11, ORD ER DATED 28.04.2017, WHEREIN IT WAS DIRECTED TO APPLY GP RATE OF 10% ON THE GOODS PURCHASED, OVER AND ABOVE THE GP RATE DECLARED BY THE ASSESSEE. THE ASSESSING OFFICER AND CIT(A) IN THIS REGARD HAD MADE ADDITION BY ADOPTING GP RATE OF 12.5% ON BOGUS PURCH ASES. HOWEVER, THE SAME IS RESTRICTED TO 10% OF GP RATE ON BOGUS PURCHASES OVER AND ABOVE THE GP RATE DECLARED BY THE ASSESSEE. 7. THE ASSESSEE HAS ALSO RAISED THE ISSUE OF JURISDICTION OF ASSESSING OFFICER UNDER SECTION 147 R.W.S. 144 OF THE ACT AND ALS O FAILURE OF ASSESSING OFFICER TO ISSUE MANDATORY NOTICE UNDER SECTION 143(2) OF THE ACT. HOWEVER, THIS GROUND OF APPEAL RAISED BY THE ASSESSEE IS DISMISSED AS IN THE CASE OF ITA NO. 2 307 /P U N/20 1 6 SHRI LAXMIKANT RAMNIWAS BALDAWA 5 BUNCH OF APPEALS ALSO, ACTION WAS TAKEN UNDER SECTION 147 R.W.S. 144 OF THE ACT AND THE SAME HAS BEEN UPHELD. THE GROUNDS OF APPEAL RAISED BY THE ASSESSEE ARE THUS, PARTLY ALLOWED. 8 . IN THE RESULT, APPEAL OF ASSESSEE IS PARTLY ALLOWED. ORDER PRONOUNCED ON THIS 27 TH DAY OF FEBRUARY , 201 8 . SD/ - SD/ - ( ANIL CHATURVEDI ) (SUSHMA CHOWLA ) / ACCOUNTANT MEMBER / JUDICIAL MEMBER / PUNE ; DATED : 27 TH FEBRUARY , 201 8 . GCVSR / COPY OF THE ORDER IS FORWARDED TO : 1. / THE APPELLANT ; 2. / THE RESPONDENT; 3. ( ) / THE CIT(A) - 2 , AURANGABAD ; 4. THE PR. CIT - 2 , AURANGABAD ; 5. 6. , , , - / DR SMC , ITAT, PUNE; / GUARD FILE . / BY ORDER , // TRUE COPY // / SR. PRIVATE SECRETARY , / ITAT, PUNE