Deputy Commissioner of Income-tax, V. Mohd. Ashif Siddiqui, Raigad

ITA 2318/PUN/2016

• Counselvise Citation: [2018] 118 COUNSELVISE.COM (IT) 6801 (ITAT-PUNE)
• Duration Of Justice: 2 year(s) 2 month(s) 16 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 20-12-2018
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: SMC
• Next Hearing Date: 21-02-2018
• Assessment Year: 2010-2011
• Appeal Filed On: 04-10-2016
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Keywords: Bogus purchase

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL B BENCH, PUN E . , , ! ' , # $ BEFORE SHRI D. KARUNAKARA RAO, AM AND SHRI VIKAS AW ASTHY, JM . / ITA NOS.2318 & 2319/PUN/2016 #& ' (' / ASSESSMENT YEARS : 2010-11 & 2011-12 THE DEPUTY COMMISSIONER OF INCOME TAX, PANVEL CIRCLE, RAIGAD. ....... / APPELLANT & / V/S. MOHD. ASHIF SIDDIQUI, PROP. M/S. MERIDIAN METALS, C-17/6, MIDC, TALOJA AREA, DIST.- RAIGAD PAN : AMCPS3230J / RESPONDENT ASSESSEE BY : SHRI HIMANSHU GANDHI REVENUE BY : SHRI SUDHENDU DAS / DATE OF HEARING : 26.09.2018 / DATE OF PRONOUNCEMENT : 20.12.2018 ) / ORDER PER VIKAS AWASTHY, JM THESE TWO APPEALS BY DEPARTMENT ARE DIRECTED AGAINST THE ORDER OF COMMISSIONER OF INCOME TAX (APPEAL)-2, THANE DATED 14.07.20 16 COMMON FOR THE ASSESSMENT YEARS 2010-11 & 2011-12. SINCE THE ISSUE RAISED IN BOTH THE APPEALS IS IDENTICAL AND IS ARISING FROM SAME SET OF FACTS, THESE APPEALS ARE TAKEN UP TOGET HER FOR ADJUDICATION AND ARE BEING DISPOSED OF VIDE THIS COMMON ORDER. 2 ITA NOS. 2318 & 2319/PUN/2016 A.Y.2010-11 & 2011-12 2. THE BRIEF FACTS OF THE CASE AS EMANATING FROM RECORDS A RE: THE ASSESSEE IS ENGAGED IN THE BUSINESS OF MANUFACTURING AND TRADING OF M.S. ERW, SEAMLESS PIPES, ELECTRIC POLES, ETC. INFORMATION WAS RECEIVED BY THE DEPARTMENT FROM MAHARASHTRA SALES TAX DEPARTMENT THAT THE ASSESSEE HAS INDULGED IN PROCURING BOGUS BILLS FOR PURCHASE OF GOODS FROM HAWALA OPERATORS. CONSEQUENTLY, ASSESSMENTS FOR ASSESSMENT YE ARS 2010-11 AND 2011-12 WERE REOPENED. IN RE-ASSESSMENT PROCEEDINGS, THE ASSESSING OFFICER HELD THAT THE ASSESSEE HAS INDULGED IN BOGUS PURCHASES OF GOODS FROM HAWALA DEALERS AND THUS, MADE ADDITIONS OF THE ENTIRE ALLEGED BOGU S PURCHASES AS UNDER: 3. AGGRIEVED BY THE ASSESSMENT ORDERS FOR THE RESPECTIV E ASSESSMENT YEARS PASSED U/S.143(3) R.W.S. 147 OF THE INCOME TAX ACT, 1961 (HEREINAFTER REFERRED TO AS THE ACT) BOTH DATED 23.02.2015, THE ASSESSEE FILE D APPEARS BEFORE THE COMMISSIONER OF INCOME TAX (APPEALS) CHALLENGING VALIDITY OF RE -OPENING OF ASSESSMENT U/S.147 R.W.S.148 OF THE ACT AND THE ADDITION ON MERITS. 4. IN FIRST APPELLATE PROCEEDINGS, THE COMMISSIONER OF INCOM E TAX (APPEAL) UPHELD THE VALIDITY OF RE-OPENING OF ASSESSMENTS. HOWEVER, ON MERITS, THE COMMISSIONER OF INCOME TAX (APPEAL) RESTRICTED THE ADDITION TO 1 5% OF THE BOGUS PURCHASES. NOW, THE REVENUE IS IN APPEAL ASSAILING TH E FINDINGS OF COMMISSIONER OF INCOME TAX (APPEAL). THE REVENUE HAS RAISE D FOLLOWING GROUNDS OF APPEAL IN ASSESSMENT YEAR 2010-11 ASSAILING T HE ORDER OF COMMISSIONER OF INCOME TAX (APPEAL). ASSESSMENT YEAR ADDITION 2010-11 RS.8,76,918/- 2011-12 RS.2,67,82,697/- 3 ITA NOS. 2318 & 2319/PUN/2016 A.Y.2010-11 & 2011-12 1. ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE, THE LD. CIT(A) HAS ERRED IN RELYING ON THE DECISION OF SUPREME COURT I N THE CASE OF KANCHWALA GEMS VS. JCIT 288 ITR 10(SC) AND HON'BLE HIGH COURT 'S DECISION IN THE CASE OF VIJAY PROTEIN, SANJAY OIL CAKE INDUSTRIES, ETC . 2. ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CAS E, AND IN LAW, THE HON'BLE CIT(A) ERRED IN NOT FOLLOWING THE ORDER OF ITAT, PU NE IN ITA NO.1411-1415 DATED 20.02.2015 IN THE CASE OF M/S. KOLTE PATIL DEVELOPERS LTD. WHEREIN 100% ADDITION OF BOGUS PURCHASES WAS CONFIRMED. 3. ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CAS E, THE LD. CIT(A) HAS ERRED IN GIVING RELIEF TO THE ASSESSEE TO THE EXTENT OF S UPPRESSED G.P. OUT OF TOTAL BOGUS PURCHASES EVEN THOUGH- (I) THE ASSESSEE COULD NOT PRODUCE PRIMARY EVIDENCE S LIKE OCTROI RECEIPTS, DELIVERY CHALLAN ETC. EVIDENCE TO PROVE T HE GENUINENESS OF THE PURCHASES BEFORE THE AO AND BEFORE CIT(A). (II) THE AFFIDAVITS FILED BY THE ENTRY PROVIDERS BE FORE SALES TAX AUTHORITIES CANNOT BE IGNORED HAVING EVIDENTIARY VALUE. 4. THE ORDER OF THE CIT(A) MAY BE VACATED AND THAT OF THE ASSESSING OFFICER MAY BE RESTORED. 5. THE APPELLANT CRAVES LEAVE TO ADD, AMEND, ALTER OR DELETE ANY GROUND OF APPEAL. IDENTICAL GROUNDS HAVE BEEN RAISED BY THE REVENUE IN A PPEAL FOR ASSESSMENT YEAR 2011-12. 5. SHRI SUDHENDU DAS REPRESENTING THE DEPARTMENT SUBMIT TED THAT ASSESSEE HAS INDULGED IN BOGUS PURCHASES FROM VARIOUS P ARTIES DURING IMPUGNED ASSESSMENT YEAR. DURING THE COURSE OF ASSESSME NT PROCEEDINGS, THE ASSESSEE WAS ASKED TO FURNISH EVIDENCE TO PROVE G ENUINENESS OF THE PURCHASE TRANSACTIONS. THE ASSESSEE FAILED TO SUBSTANTIA TE THE PURCHASES MADE AND THUS, THE ASSESSEE FAILED TO DISCHARGE HIS ONUS OF PROVING GENUINENESS OF THE PURCHASES. HENCE, THE ASSESSING OFF ICER WAS JUSTIFIED IN MAKING ADDITION OF 100% OF BOGUS PURCHASES MADE BY ASS ESSEE. IN FIRST APPELLATE PROCEEDINGS, THE COMMISSIONER OF INCOME TAX (APPE AL) GRANTED RELIEF TO THE ASSESSEE BY RESTRICTING ADDITION TO 15% OF THE BOGUS PURCHASES MERELY ON THE GROUND THAT THERE WAS FIRE IN THE PREMISE S OF THE ASSESSEE IN WHICH THE DOCUMENTS GOT DESTROYED. THE FINDINGS OF COMMISS IONER OF INCOME 4 ITA NOS. 2318 & 2319/PUN/2016 A.Y.2010-11 & 2011-12 TAX (APPEAL) ARE MERELY BASED ON PRESUMPTIONS AND ASSUM PTIONS. HENCE, THEY DESERVE TO BE QUASHED AND FINDINGS OF ASSESSING OFFICER BE RESTO RED. 6. ON THE OTHER HAND, SHRI HIMANSHU GANDHI APPEARING ON B EHALF OF THE ASSESSEE VEHEMENTLY DEFENDED THE ORDER OF COMMISSIONER OF INCOME TAX (APPEAL). THE LD. AR SUBMITTED THAT THE COMMISSIONER OF INCOM E TAX (APPEAL) WHILE RESTRICTING THE ADDITION TO 15% OF BOGUS PURCHASES H AS NOT ONLY TAKEN INTO CONSIDERATION GENUINE DIFFICULTY FACED BY THE ASSESSEE IN PRODUCING SUPPORTING DOCUMENTS AS THEY WERE DESTROYED BY FIRE B UT HAS ALSO TAKEN INTO CONSIDERATION GP RATIO OF THE EARLIER AND SUBSEQUENT ASSE SSMENT YEARS. THE LD. AR POINTED THAT WHILE RESTRICTING ADDITION TO 15%, THE CO MMISSIONER OF INCOME TAX(APPEAL) HAS TAKEN INTO CONSIDERATION VARIOUS DE CISIONS OF THE HON'BLE SUPREME COURT OF INDIA. THE LD. AR POINTED THAT IT IS AN UNDISPUTED FACT THERE WAS FIRE IN THE PREMISES OF THE ASSESSEE ON 10 .10.2011. THE ASSESSEE HAS PRODUCED PANCHANAMA WHEREIN IT IS CLEARL Y MENTIONED THAT THE RECORDS ARE DESTROYED DUE TO FIRE. HOWEVER, THE ASSE SSEE TO SUBSTANTIATE PURCHASES MADE ARE GENUINE, PRODUCED BANK STATEMENT INDICATING PAYMENTS MADE TO THE CREDITORS FOR PURCHASE OF GOODS. THE ASSES SEE ALSO PRODUCE DETAILS OF PURCHASES AND SALES TRANSACTION ALONG WITH PART Y-WISE DETAILS DISCLOSED IN M-VAT REPORT SUBMITTED TO THE SALES TAX DEP ARTMENT THROUGH E- FORM 704. THE SALES MADE BY THE ASSESSEE WERE NEVER DIS PUTED BY THE DEPARTMENT. WITHOUT THERE BEING PURCHASE, THERE COULD NO T HAVE BEEN SALES. THUS, FINDINGS OF THE COMMISSIONER OF INCOME TAX (APPEAL) ARE WELL-REASONED. THE LD. AR PRAYED FOR DISMISSING THE APPEALS OF THE DEPARTMENT. 7. WE HAVE HEARD THE SUBMISSIONS MADE BY REPRESENTATIVE S OF RIVAL SIDES AND HAVE PERUSED THE ORDERS OF THE AUTHORITIES BELOW. DU RING IMPUGNED ASSESSMENT YEARS, THE ASSESSEE PURPORTEDLY INDULGED IN MAKING BOGUS PURCHASES FROM FOLLOWING HAWALA DEALERS: 5 ITA NOS. 2318 & 2319/PUN/2016 A.Y.2010-11 & 2011-12 IT IS AN UNDISPUTED FACT THAT DURING RE-ASSESSMENT PRO CEEDINGS, THE ASSESSEE FAILED TO PRODUCE DOCUMENTARY EVIDENCES SUCH A S TRANSPORT RECEIPT, DELIVERY CHALLAN, GOODS RECEIPTS NOTE AND OCTROI RECEIPTS T O SUBSTANTIATE THE PURCHASES. THE ASSESSEE ALSO FAILED TO FILE CONFIRMATIONS FROM THE PARTIES IN SUPPORT OF HIS CONTENTIONS. THE ASSESSING OFFICER MADE ADDIT ION OF THE ENTIRE BOGUS PURCHASES, HOWEVER, THE COMMISSIONER OF INCOME TAX (APPEAL) RESTRICTED THE ADDITION TO 15%. 8. A PERUSAL OF THE IMPUGNED ORDER SHOWS THAT THE COMM ISSIONER OF INCOME TAX (APPEAL) WHILE ESTIMATING BOGUS PURCHASES TO 15 % HAS CONSIDERED THE FACT THAT ASSESSEE COULD SUBSTANTIATE MAJOR PART O F THE PURCHASES 96% IN THE YEAR 2010-2011 AND 60% IN THE YEAR 2011-12 OF THE TOTAL TURNOVER FROM THE REGULAR SUPPLIERS. IT WAS ONLY SMALL PART OF THE PURCH ASES IN ASSESSMENT YEAR 2010-11 THAT THE ASSESSEE COULD NOT SUBSTANTIATE . WHEREAS, FOR THE ASSESSMENT YEAR 2011-12, AMOUNT OF THE ALLEGED BOGUS PU RCHASES IS FAIRLY LARGE. THE REASONS GIVEN BY THE ASSESSEE FOR NOT PRODU CING THE SUPPORTING DOCUMENTS IS LOSS/ DAMAGE OF RECORDS DUE TO FIRE IN THE P REMISES OF THE ASSESSEE. IN THE ABSENCE OF SUPPORTING DOCUMENTS AND REASONS BEYOND CONTROL OF ASSESSEE FOR NOT PRODUCING THE DOCUMENTS, RE ASONABLE ESTIMATION OF BOGUS PURCHASES HAS BEEN MADE BY COMMISSIONER OF INCOM E TAX(APPEALS). S.NO. HAWALA DEALERS AMOUNT (IN RS.) A.Y.2010-11 A.Y.2011-12 1 ASIAN TUBE TRADING RS.3,84,093/- RS.13,61,412/- 2 RUPANI & CO. RS.4,92,825/- - 3 REHBAR ENTERPRISES - RS.16,95,565/- 4 GAZI ENTERPRISES - RS.2,37,25,720/- TOTAL RS.8,76,918/- RS.2,67,82,697/- 6 ITA NOS. 2318 & 2319/PUN/2016 A.Y.2010-11 & 2011-12 THE DEPARTMENT HAS NOT DISPUTED THE SALES MADE BY THE ASSESSEE. THUS, WITHOUT PURCHASES THERE CANNOT BE SALES. THEREFORE, THE ENTIRE PURCHASES CANNOT BE HELD TO BE BOGUS. THERE COULD BE POSSIBILITY O F ASSESSEE PROCURING GOODS FROM GREY MARKET AND OBTAINING BILLS FROM HAWALA OPER ATORS. TAKING INTO CONSIDERATION ENTIRETY OF FACTS, WE FIND THAT ORDER OF C OMMISSIONER OF INCOME TAX(APPEAL) IS WELL REASONED IN ESTIMATING ADDITION TO 15% OF THE BOGUS PURCHASES IN THE IMPUGNED ASSESSMENT YEARS. WE D O NOT FIND ANY INFIRMITY IN THE IMPUGNED ORDER, ACCORDINGLY, THE SAME IS UPHELD. 9. IN THE RESULT, BOTH THE APPEALS OF REVENUE ARE DISMISSED. ORDER PRONOUNCED ON THURSDAY, THE 20 TH DAY OF DECEMBER, 2018. SD/- SD/- ( . / D. KARUNAKARA RAO ) ( ! ' /VIKAS AWASTHY) / ACCOUNTANT MEMBER / JUDICIAL MEMBER / PUNE; !' / DATED : 20 TH DECEMBER, 2018 SB ) * +#,-! .!(, / COPY OF THE ORDER FORWARDED TO : 1. / THE APPELLANT. 2. / THE RESPONDENT. 3. THE CIT (APPEAL)-2, THANE. 4. THE PR. CIT-2, THANE. 5. %&' () , * () , +,- , / DR, ITAT, B BENCH, PUNE. 6. './ 01 / GUARD FILE. // TRUE COPY // *2 / BY ORDER, 3 (- / PRIVATE SECRETARY * () , / ITAT, PUNE. 7 ITA NOS. 2318 & 2319/PUN/2016 A.Y.2010-11 & 2011-12 DATE 1 DRAFT DICTATED ON 20.12.2018 SR.PS/PS 2 DRAFT PLACED BEFORE AUTHOR 20.12.2018 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