Icon Industries, Nashik V. Deputy Commissioner of Income tax, Nashik

ITA 265/PUN/2017

• Counselvise Citation: [2019] 118 COUNSELVISE.COM (IT) 5234 (ITAT-PUNE)
• Duration Of Justice: 2 year(s) 3 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 06-02-2019
• Appeal Filed By: Assessee
• Order Result: Partly Allowed
• Bench Allotted: B
• Assessment Year: 2009-2010
• Appeal Filed On: 02-02-2017
• Result in Favour of: Partly Allowed
• Court: TRIBUNAL
• Assessee Lawyers: P S SHINGTE
• Keywords: Bogus purchase
• Section: 143(3)

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL PUNE BENCH B , PUNE , , BEFORE MS. SUSHMA CHOWLA, JM AND SHRI ANIL CHATURVEDI, AM . / ITA NO. 2 6 5 /P U N/201 7 / ASSESSMENT YEAR : 20 09 - 10 ICON INDUSTRIES M - 100/15, MIDC, AMBAD, NASHIK 422010 . / APPELLANT PAN: A A AFI6025M VS. THE DY . COMMISSIONER OF INCOME TAX, CIRCLE 1, NASHIK . / RESPONDENT / APPELLANT BY : SHRI P.S. SHINGTE / RESPONDENT BY : S HRI SUDHENDU DAS / DATE OF HEARING : 13 . 12 .201 8 / DATE OF PRONOUNCEMENT: 06 . 0 2 .201 9 / ORDE R PER SUSHMA CHOWLA, J M : THE APPEAL FILED BY ASSESSEE IS AGAINST ORDER OF CIT (A) - 1 , NASHIK , DATED 1 5 . 1 1 .201 6 RELATING TO ASSESSMENT YEAR 20 09 - 10 AGAINST ORDER PASSED UNDER SECTION 143(3) R.W.S. 147 OF THE INCOME - TAX ACT , 1961 (IN SHORT THE ACT) . 2. TH E GROUNDS OF APPEAL NO.1 AND 2 RAISED BY ASSESSEE ARE NOT PRESSED AND HENCE, THE SAME ARE DISMISSED AS NOT PRESSED. 3. THE ISSUE RAISED IN GROUND S OF APPEAL NO.3 AND 6 ARE AGAINST ADDITION MADE ON ACCOUNT OF BOGUS PURCHASES. HOWEVER, BY WAY OF GROUND OF APPEAL ITA NO. 265 /P U N/20 1 7 ICON INDUSTRIES 2 NO.5, ON WITHOUT PREJUDICE BASIS, THE ASSESSEE HAS RAISED THE ISSUE OF APPLICATION OF NET PROFIT RATE TO BE APPLIED WHILE MAKING THE AFORESAID ADDITION. 4. THE LEARNED AUTHORIZED REPRESENTATIVE FOR THE ASSESSEE IN FAIRNESS POINTED OUT THAT IN EAR LIER YEAR, THE TRIBUNAL IN ASSESSEES OWN CASE VIDE ORDER DATED 15.05.2018 HAD RESTRICTED THE SAID ADDITION TO THE EXTENT OF 10% BY APPLYING REASONING IN THE CASE OF M/S. CHHABI ELECTRICALS PVT. LTD. VS. DCIT IN ITA NO.795/PUN/2014, RELATING TO ASSESSMENT YEAR 2010 - 11, ORDER DATED 28.04.2017 . 5. WE FIND THAT THE PRESENT ISSUE RAISED IN THE PRESENT APPEAL IS SQUARELY COVERED BY THE ORDER OF TRIBUNAL IN ASSESSEES OWN CASE, WHEREIN VIDE PARAS 7 AND 8 THE TRIBUNAL IN ITA NO.264/PUN/2017, RELATING TO ASSESSM ENT YEAR 2010 - 11, VIDE ORDER DATED 15.05.2018 HAD IN TURN, RELYING ON THE RATIO LAID DOWN 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, ORDER DATED 28.04.2017 , DIRECTED THE ASSESSING OFFICER TO APPLY GP RATE OF 10% ON ALLEGED HAWALA PURCHASES. THE RELEVANT FINDINGS OF TRIBUNAL ARE AS UNDER: - 7. ON PERUSAL OF THE RECORD, THE ISSUE WHICH ARISES IN PRESENT APPEAL IS AGAINST THE APPLICATION OF GP RATE OF 25% ON BO GUS PURCHASES TOTALING TO RS.16,43,850/ - . THE ASSESSEE HAD MADE THE AFORESAID PURCHASES FROM THE PARTIES WHOSE NAMES APPEARED IN THE LIST OF HAWALA DEALERS I.E. THE PERSONS WHO HAD NOT PAID VAT AGAINST THE SALES MADE BY THEM. THE SALES TAX DEPARTMENT H AD GATHERED CERTAIN INFORMATION IN THIS REGARD WHICH HAD PASSED ON THE INFORMATION TO THE ASSESSING OFFICER TO TAKE NECESSARY ACTION AGAINST THE PERSONS. THE ASSESSEE HAD MADE THE ALLEGED PURCHASES FROM TWO PARTIES I.E. M/S. RIM ASSOCIATES OF RS.11,63,818 / - AND M/S. PARIKH TRADERS OF RS.4,80,032/ - TOTALING TO RS.16,43,850/ - . THE ISSUE WHICH ARISES IN THE PRESENT APPEAL IS THE RATE TO BE APPLIED FOR MAKING THE ADDITION ON ACCOUNT OF BOGUS PURCHASES IN THE HANDS OF THE ASSESSEE. THE ASSESSING OFFICER HAD DISALLOWED THE SAME TOTALLY FOR WHICH THE COMMISSIONER OF INCOME TAX (APPEALS) HAS APPLIED GP RATE OF 25% ON THE BOGUS PURCHASES. THE REVENUE IS NOT IN APPEAL AGAINST THE ORDER OF COMMISSIONER OF INCOME TAX (APPEALS). THE ONLY ISSUE WHICH REMAINS FOR ADJUDICATION IS THE RATE TO BE APPLIED. 8. THE ISSUE HAS BEEN DECIDED BY THE SERIES OF DECISIONS BY THE PUNE BENCH OF THE TRIBUNAL WITH THE LEAD ORDER IN BUNCH OF APPEALS OF CHHABI ELECTRICALS AND OTHERS (SUPRA). THE TRIBUNAL HAS DIRECTED THAT WHERE TH E TRAIL OF ITA NO. 265 /P U N/20 1 7 ICON INDUSTRIES 3 GOODS HAS BEEN ESTABLISHED, THEN THE ADDITION HAS TO BE RESTRICTED TO GP RATE OF 10% OVER AND ABOVE THE GP RATE DECLARED BY THE ASSESSEE ON THE ALLEGED BOGUS PURCHASES MADE BY IT. THE NAME OF THE ASSESSEE APPEARED IN THE LIST OF HAWALA DEALER S AND THE CASE OF THE REVENUE WAS THAT SUCH HAWALA DEALERS HAD NOT MADE GENUINE TRANSACTIONS SINCE THEY HAD FAILED TO DEPOSIT THE VAT AGAINST THE SALES MADE BY THEM. THE ASSESSEE ON THE OTHER HAND, CLAIMS THAT THE TRAIL OF GOODS HAS BEEN ESTABLISHED WHE REIN THE GOODS WERE RECEIVED BY THE ASSESSEE AND THEREAFTER SOLD BY THE ASSESSEE. THE QUESTION THUS IS LIMITED TO THE GP RATE TO BE APPLIED ON SUCH PURCHASES. FOLLOWING THE REASONING IN THE CASE OF CHHABI ELECTRICALS VS. DCIT AND OTHERS (SUPRA), I DIRECT THE ASSESSING OFFICER TO APPLY THE GP RATE OF 10% ON THE ALLEGED HAWALA PURCHASES. THE GP RATE IS TO BE APPLIED OVER AND ABOVE IS THE GP RATE DECLARED BY THE CONCERN IN THEIR BOOKS OF ACCOUNT. ACCORDINGLY, THE GROUNDS OF APPEAL RAISED BY THE ASS ESSEE ON MERITS ARE PARTLY ALLOWED. THUS, THE GROUNDS OF APPEAL OF THE ASSESSEE ARE PARTLY ALLOWED. 6. THE ISSUE RAISED IN THE PRESENT APPEAL IS SIMILAR TO THE ISSUE BEFORE THE TRIBUNAL (SUPRA) AND FOLLOWING THE SAME PARITY OF REASONING, WE DIRECT THE ASSESSING OFFICER TO APPLY GP RATE OF 10% ON THE ALLEGED HAWALA PURCHASES FOR MAKING ADDITION IN THE HANDS OF ASSESSEE. CONSEQUENTLY, GROUND OF APPEAL NO.5 ON WITHOUT PREJUDICE BASIS, IS ALLOWED AND GROUND S OF APPEAL NO.3 AND 6 ARE DISMISSED. 7. NOW, COM ING TO GROUND OF APPEAL NO.4, WHEREIN ADDITION HAS BEEN MADE UNDER SECTION 41(1) OF THE ACT ON ACCOUNT OF PURCHASES FROM TWO PARTIES I.E. 6,99,732/ - FROM CORAL TRADING CO. AND 17,95,423/ - FROM PARIKH TRADERS. AS AGAINST THE AFORESAID PAYMENTS AS ON T HE CLOSE OF YEAR I.E. 31.03.2009, OUTSTANDING AMOUNT WAS 3,86,617/ - FOR CORAL TRADING CO. AND 4,26,449/ - IN RESPECT OF PARIKH TRADERS. THE ASSESSING OFFICER APPLIED THE PROVISIONS OF SECTION 41(1) OF THE ACT ON THE PRETEXT THAT PAYMENTS WERE NOT MADE . HOWEVER, THE LEARNED AUTHORIZED REPRESENTATIVE FOR THE ASSESSEE BEFORE US HAS POINTED OUT THAT SUM OF 3,86,617/ - DUE TO CORAL TRADING CO. WAS PAID ON 21.04.2009 AND SUM OF 4,26,449/ - WAS PAID TO PARIKH TRADERS ON 05.05.2009 AND HENCE, THERE WAS NO ME RIT IN MAKING ANY ADDITION ON THIS COUNT. WE FIND MERIT IN THE PLEA OF ASSESSEE. IN THE FIRST INSTANCE, THERE IS NO MERIT IN MAKING AFORESAID ITA NO. 265 /P U N/20 1 7 ICON INDUSTRIES 4 ADDITION UNDER SECTION 41(1) OF THE ACT MERELY BECAUSE THE AMOUNT WAS DUE TO CERTAIN PARTIES. THE ASSESSEE HAS RECOGNIZED THE LIABILITY AND IN SUCH CIRCUMSTANCES, PROVISIONS OF SECTION 41(1) OF THE ACT CANNOT BE APPLIED. IN ANY CASE, THE AFORESAID OUTSTANDING AMOUNTS HAVE BEEN CLEARED IN THE NEXT FINANCIAL YEAR AND HENCE, THERE IS NO MERIT IN THE STAND OF ASSESSIN G OFFICER THAT THE ASSESSEE HAS FAILED TO MAKE PAYMENTS TO THE SAID PARTIES, THOUGH BELATEDLY. ACCORDINGLY, WE DIRECT THE ASSESSING OFFICER TO DELETE THE ADDITION OF 3,86,617/ - AND 17,95,423/ - . THE GROUND OF APPEAL NO.4 IS THUS, ALLOWED. THE GROUNDS OF APPEAL RAISED BY ASSESSEE ARE THUS, PARTLY ALLOWED. 8 . IN THE RESULT, THE APPEAL OF ASSESSEE IS PARTLY ALLOWED. ORDER PRONOUNCED ON THIS 6 TH DAY OF FEBRUARY , 2 01 9 . SD/ - SD/ - (ANIL CHATURVEDI) (SUSHMA CHOWLA) / ACCOUNTANT MEMBER / JUDICIAL MEMBER / PUNE ; DATED : 6 TH FEBRUARY , 201 9 . GCVSR / COPY OF THE ORDER IS FORWARDED TO : 1. / THE APPELLANT ; 2. / THE RESPONDENT; 3. ( ) / THE CIT(A) - 1 , NASHIK ; 4. THE PR. CIT - 1 , NASHIK ; 5. 6. , , / DR B , ITAT, PUNE ; / GUARD FILE . / BY ORDER , // TRUE COPY // / SR. PRIVATE SECRETARY , / ITAT, PUNE