Anil C. Mhaske, Pune V. Additional Commissioner of Income-tax,

ITA 268/PUN/2016

• Counselvise Citation: [2018] 125 COUNSELVISE.COM (IT) 9483 (ITAT-PUNE)
• Duration Of Justice: 1 year(s) 11 month(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 24-01-2018
• Appeal Filed By: Assessee
• Order Result: Partly Allowed
• Bench Allotted: A
• Assessment Year: 2010-2011
• Appeal Filed On: 24-02-2016
• Result in Favour of: Partly Allowed
• Court: TRIBUNAL
• Assessee Lawyers: S N DOSHI
• Keywords: Bogus purchase
• Section: 131

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL A BENCH, PUNE . , , , BEFORE SHRI D. KARUNAKARA RAO, AM AND SHRI VIKAS AWASTHY, JM . / ITA NO . 268 /P U N/201 6 / ASSESSMENT YEAR : 20 10 - 11 SHRI ANIL C. MHASKE, 650 - B, PRATIK APARTMENT, DECCAN GYMKHANA, PUNE 411004 PAN : ABIPM1477C ....... / APPELLANT / V/S. ADDITIONAL COMMISSIONER OF INCOME TAX, RANGE 3, PUNE / RESPONDENT ASSESSEE BY : S HRI S.N. DOSHI REVENUE BY : SHRI ACHAL SHARMA / DATE OF HEARING : 2 2 - 01 - 2018 / DATE OF PRONOUNCEMENT : 24 - 01 - 201 8 / ORDER PER VIKAS AWASTHY, JM : TH IS APPEAL BY THE ASSESSEE IS DIRECTED AGAINST THE ORDER OF COMMI SSIONER OF INCOME TAX (APPEALS) - 10, PUNE, DATED 08 - 01 - 2016 FOR THE ASSESSMENT YEAR 2010 - 11. 2 ITA NO .268/PUN/2016, A.Y. 2010 - 11 2. THE SOLITARY ISSUE RAISED BY THE ASSESSEE IN APPEAL IS AGAINST THE ADDITION OF ENTIRE PURCHASES TO THE TUNE OF RS.38,81,674/ - MADE FROM M/S. VIDHI AND VRUSHTI TRADE PVT. LTD. STATED TO BE HAWALA DEALER. 3. THE BRIEF FACTS OF THE CASE AS EMANATING FROM RECORD S ARE: THE ASSESSEE IS ENGAGED IN TRADING OF COMPUTER HARDWARE AND SERVICES. DURING THE COURSE OF SCRUTINY ASSESSMENT PROCEEDINGS, THE ASSESSING OFFICER OBSERVED THAT THE ASSESSEE HAD MADE PURCHASES WORTH RS.38,81,674/ - FROM M/S. VIDHI AND VRUSHTI TRADE PVT. LTD. TO VERIFY THE GENUINENESS OF PURCH ASES MADE , THE ASSESSING OFFICER ISSUED NOTICE U/S. 131 O F THE INCOME TAX ACT, 1961 (HEREINAFTER REFERRED TO AS THE ACT ) TO THE AFORESAID COMPANY. HOWEVER, NOTICE SENT BY ASSESSING OFFICER THROUGH RPAD WAS RETURNED BACK UN - SERVED WITH POSTAL REMARKS TH E PARTY HAS LEFT THE PLACE. THEREAFTER, THE ASSESSING OFFICER DEPUTED INSPECTOR TO VISIT THE ADDRESS OF M/S. VIDHI AND VRUSHTI TRADE PVT. LTD. AT BOMBAY. AS PER INSPECTORS REPORT THE SAID COMPANY NEVER EXISTED ON THE GIVEN ADDRESS. LATER ON IT TRANSPI RED THAT M/S. VIDHI AND VRUSHTI TRADE PVT. LTD. IS ONE OF THE HAWALA DEALERS AS PER LIST COMPILED BY SALES TAX DEPARTMENT, GOVERNMENT OF MAHARASHTRA. THUS, THE ASSESSING OFFICER MADE ADDITION OF ENTIRE AMOUNT OF ALLEGED PURCHASES MADE FROM THE SAID COMPAN Y BY ASSESSEE. AGGRIEVED BY ASSESSMENT ORDER DATED 06 - 03 - 2013, THE ASSESSEE FILED APPEAL BEFORE THE COMMISSIONER OF INCOME TAX (APPEALS). THE COMMISSIONER OF INCOME TAX (APPEALS) CONFIRMED THE ENTIRE ADDITION HOLDING IT TO BE BOGUS PURCHASES. NOW, THE A SSESSEE IS IN SECOND APPEAL BEFORE THE TRIBUNAL . 3 ITA NO .268/PUN/2016, A.Y. 2010 - 11 4. SHRI S.N. DOSHI APPEARING ON BEHALF OF THE ASSESSEE SUBMITTED THAT THE ASSESSEE CAN SHOW ENT IRE TRAIL OF GOODS PURCHASED AND SOLD. THE AUTHORITIES BELOW HAVE ERRED IN MAKING ADDITION OF ENTIRE AMOUNT OF BOGUS PURCHASES. THE LD. AR SUBMITTED THAT SOME MINOR ADDITIONS CAN BE MADE IN RESPECT OF ALLEGED BOGUS PURCHASES. THE LD. AR IN SUPPORT OF HIS SUBMISSIONS PLACED RELIANCE ON THE DECISION IN THE CASE OF M/S. CHHABI ELECTRICALS PVT. LTD. VS. DY. COMMIS SIONER OF INCOME TAX IN ITA NO. 795/PUN/2014 FOR ASSESSMENT YEAR 2010 - 11 DECIDED ON 28 - 04 - 2017. 5. ON THE OTHER HAND SHRI ACHAL SHARMA REPRESENTING THE DEPARTMENT VEHEMENTLY SUPPORTED THE FINDINGS OF COMMISSIONER OF INCOME TAX (APPEALS) AND PRAYED FOR C ONFIRMING THE SAME. 6. W E HAVE HEARD THE SUBMISSIONS MADE BY REPRESENTATIVES OF RIVAL SIDES AND HAVE PERUSED THE ORDERS OF AUTHORITIES BELOW . WE HAVE ALSO CONSIDERED THE DECISION RENDERED IN THE CASE OF M/S. CHHABI ELECTRICALS PVT. LTD. VS. DY. COMMISS IONER OF INCOME TAX (SUPRA). IT IS AN UNDISPUTED FACT THAT M/S. VIDHI AND VRUSHTI TRADE PVT. LTD. FROM WHOM THE ASSESSEE HAS MADE ALLEGED PURCHASES IS A DECLARED HAWALA DEALER. THEREFORE, THE PURCHASES MADE BY ASSESSEE FROM THE SAID DEALER CANNOT BE ACCE PTED AS GENUINE. THE LD. AR HAS MENTIONED THAT AVERAGE GP OF INDUSTRY TO WHICH THE ASSESSEE BELONGS IS 6% TO 7%. THE ADDITION OF ENTIRE PURCHASES MADE BY AUTHORITIES BELOW IS NOT JUSTIFIED. IT IS ONLY THE ELEMENT OF PROFIT EMBEDDED IN SUCH PURCHASES THAT CAN BE SUBJECT TO TAX. TAKING INTO CONSIDERATION ENTIRETY OF FACTS WE ARE OF CONSIDERED VIEW THAT SOME GP ADDITION IS REQUIRED TO BE MADE. IN OUR CONSIDERED VIEW ADDITION OF 12.5% 4 ITA NO .268/PUN/2016, A.Y. 2010 - 11 OF BOGU S PURCHASES OVER AND ABOVE THE GP ALREADY DECLARED BY ASSESSEE WOULD MEET THE ENDS OF JUSTICE. OUR THIS ESTIMATION FINDS SUPPORT FROM THE DECISION OF HONBLE GUJARAT HIGH COURT IN THE CASE OF COMMISSIONER OF INCOME TAX VS. SUMIT P. SHETH (356 ITR 451). W E HOLD AND DIRECT, ACCORDINGLY. THUS, THE IMPUGNED ORDER IS MODIFIED IN THE TERMS AFORESAID. 7. IN THE RESULT, APPEAL OF ASSESSEE IS PARTLY ALLOWED. ORDER PRONOUNCED ON WEDNESDAY, THE 24 TH DAY OF JANUARY, 201 8 . SD/ - SD/ - ( . /D. KARUNAKARA RAO ) ( / VIKAS AWASTHY) / ACCOUNTANT MEMBER / JUDICIAL MEMBER / PUNE; / DATED : 24 TH JANUARY, 2018 RK / COPY OF THE ORDER FORWARDED TO : 1. / THE APPELLANT. 2. / THE RESPONDENT. 3. ( ) / THE CIT(A) - 10, PUNE 4. THE PR. COMMISSIONER OF INCOME TAX - 2, PUNE 5. , , , / DR, ITAT, A BENCH, PUNE. 6. / GUARD FILE. / / // TRUE COPY// / BY ORDER, / PRIVATE SECRETARY, , / ITAT, PUNE