HINGLAJ METALS & ALLOYS PVT. LTD., MUMBAI V. ITO WD, 9(2)(1), MUMBAI

ITA 2877/MUM/2018

• Counselvise Citation: [2019] 112 COUNSELVISE.COM (IT) 2485 (ITAT-MUMBAI)
• Duration Of Justice: 1 year(s) 6 month(s) 28 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 05-12-2019
• Appeal Filed By: Assessee
• Order Result: Partly Allowed
• Bench Allotted: H
• Assessment Year: 2009-2010
• Appeal Filed On: 07-05-2018
• Result in Favour of: Partly Allowed
• Court: TRIBUNAL
• Department Lawyers: S MICHAEL GERALD LD
• Assessee Lawyers: DHARMIL JHAVERI LD
• Keywords: Bogus purchase; Rejection of books of accounts; Opportunity of being heard; Principle of natural justice
• Section: 143(3); 142(1); 133(6); 143(2); 145; 148

Judgement Text

ITA NOS.2877-78,2951/MUM/2018 M/S. HINGLAJ METALS & ALLOYS PRIVATE LIMITED ASSESSMENT YEARS 2009-10 TO 2011-12 1 IN THE INCOME TAX APPELLATE TRIBUNAL H BENCH, MUMBAI , , BEFORE HONBLE SHRI PAWAN SINGH, JM AND HONBLE SHRI MANOJ KUMAR AGGARWAL, AM ./ I.T.A. NO.2877/MUM/2018 ( / ASSESSMENT YEAR:2009-10) & ./ I.T.A. NO.2951/MUM/2018 ( / ASSESSMENT YEAR:2010-11) & ./ I.T.A. NO.2878/MUM/2018 ( / ASSESSMENT YEAR:2011-12) M/S. HINGLAJ METALS & ALLOYS PVT. LTD. 2, SHEETAL, CHS ORIPADA DAHISAR (E), MUMBAI-400 068. / VS. I TO - WARD - 9(2)( 1 ) 6 TH AAYKAR BHAVAN M.K. ROAD, MUMBAI-400 020. ./ ./PAN/GIR NO. AAACH-9744-H ( /APPELLANT ) : ( !' / RESPONDENT ) ASSESSEE BY : SHRI DHARMIL JHAVERI- LD. AR REVENUE BY : SHRI S.MICHAEL GERALD - LD.DR / DATE OF HEARING : 19/09/2019 / DATE OF PRONOUNCEMENT : 05/12/2019 / O R D E R PER MANOJ KUMAR AGGARWAL (ACCOUNTANT MEMBER) 1. AFORESAID APPEALS BY ASSESSEE FOR ASSESSMENT YEA RS [IN SHORT REFERRED TO AS AY] 2009-10 TO 2011-12 CONTEST SEP ARATE ORDERS OF FIRST APPELLATE AUTHORITY. SINCE COMMON ISSUES ARE INVOLV ED, THE APPEALS WERE ITA NOS.2877-78,2951/MUM/2018 M/S. HINGLAJ METALS & ALLOYS PRIVATE LIMITED ASSESSMENT YEARS 2009-10 TO 2011-12 2 HEARD TOGETHER AND NOW DISPOSED-OFF BY WAY OF THIS COMMON ORDER FOR THE SAKE OF CONVENIENCE & BREVITY. FIRST WE TAKE UP APPEAL FOR AY 2009- 10 WHICH CONTEST THE ORDER OF LD. COMMISSIONER OF I NCOME-TAX (APPEALS)-20, MUMBAI-20, [IN SHORT REFERRED TO AS CIT(A)], APPEAL NO. CIT(A)-20/ITO-12(2)(4)/IT-10753/2014-15 DATED 28/04/2014 ON FOLLOWING GROUNDS OF APPEAL: - GOA NO. 1 :- 100% ADDITION ON ACCOUNT OF BOGUS PURC HASES OF RS. 1,86,77,093/- 1. THE LD.CIT(A) NOT JUSTIFIED IN CONFIRMING THE 10 0% DISALLOWANCES ON ACCOUNT OF PURCHASES AFFECTED FROM SUSPICIOUS HAWALA DEALER, WHICH IS UN WARRANTED/ UNJUSTIFIED. 2.THE LD.CLT(A) NOT CONSIDERED THE FACTS THAT ASSES SEE IS PURELY RESELLER IN IRON & STEEL AND WITHOUT PURCHASES HOW CAN SALES HE AFFECTED IN TRADING CONC ERN? 3. THE LEARNED CIT (A), CONFIRMED THE SALES FIGURE AS PER BOOKS OF ACCOUNTS BUT CONFIRMED THE ADDITION MADE THE LEARNED AO IN ASSESSMENT ORDER U/ S 143(3) FOR GP ADDITION @ 100%. 4. THE LEARNED CIT (A), NEITHER CONSIDERED THE FACT THAT WITHOUT PURCHASE HOW SALES CAN BE AFFECTED? NOR CONSIDERED THE FACTS THAT BOOKS OF AC COUNTS WERE NEVER REJECTED U/S 145 BY THE DEPARTMENT NOR PROVED THE CASH TRAIL BY THE DEPARTM ENT NOR DONE ANY INDEPENDENT ENQUIRY EXCEPT ISSUANCE OF NOTICE U/S 133(6). 5.THE LD. CIT(A) NOT CONSIDERED THE FACTS THAT THE HONBLE ITAT DELETED THE ADHOC ADDITIONS FULLY IN SIMILAR CASES. WE RELIED ON THE FOLLOWING JUDGMENTS OF THE HIGHER FORUM :- M/S FANCY WEAR V/S 1TO WARD 24(3)0), IT A NO. 159 6/1597/MUM/2016 DT. 20/09/2017. SHRI HIRALAL CHUNILAL JAIN V/S ITO WARD 14(1)(4). IT A NO. 4547/1275/MUM/2014 DT. 01/01/2016. M/S RAMESH KUMAR & CO. V/S AC1T WARD 21(1). ITA N O. 2959/MUM/2014 DT. 28/11/2014. SHRI PRANHAT GUPTA V/S ITO, ITAT MUMBAI DT. 09/03 /2018. M/S PARAS ORGANIC PVT LTD VS DCIT 10(2), ITA NO. 2369/MUM/20L4 DT 26/02/2016. M/S TALCO MARKETING VS ITO 14(2)(3) ITA NO. 3394/ MUM/2014 DT 07/07/2016. SHREE GANPATRAJ A SANGHAVI V/S ACIT 15(3), ITA NO 2826/MUM/2013 DT 05/11/2014. ACIT 8(3) V/S TRISTAR JEWLLERY, ITA NO 7593/ 2011 & 6435/MUM/2013 DT 31/04/2015. ACIT 25(2) V/S TARLA R SHAH ITA NO 5295/MUM/2013 DT 02/02/2016. PRAYER / RELIEF CLAIM IN THE APPEAL 1. THE APPELLANT HEREBY PRAYS THAT 100% ADDITION ON ACCOUNT OF PURCHASES OF RS.1,86,77,093/- TO BE DELETED IN FULL. WE HAVE HEARD AND CONSIDERED THE ARGUMENTS ADVANCED BY BOTH THE REPRESENTATIVES. 2.1 FACTS ON RECORD WOULD REVEAL THAT THE ASSESSEE BEING RESIDENT CORPORATE ASSESSEE STATED TO BE ENGAGED IN TRADING OF IRON & STEEL, WAS ASSESSED FOR IMPUGNED AY U/S. 143(3) R.W.S. 147 ON 27/03/2014 WHEREIN THE INCOME OF THE ASSESSEE WAS DETERMINED AT RS.308 .99 LACS, INTER- ITA NOS.2877-78,2951/MUM/2018 M/S. HINGLAJ METALS & ALLOYS PRIVATE LIMITED ASSESSMENT YEARS 2009-10 TO 2011-12 3 ALIA, AFTER ADDITION OF RS.186.77 LACS ON ACCOUNT OF ALLEGED BOGUS PURCHASES AS AGAINST RETURNED INCOME OF RS.0.39 LACS E-FILED BY THE ASSESSEE ON 29/09/2009 WHICH WAS PROCESSED U/S.143( 1). 2.2 PURSUANT TO RECEIPT OF CERTAIN INFORMATION FROM INVESTIGATION WING / SALES TAX DEPARTMENT, GOVT. OF MAHARASHTRA, IT TRAN SPIRED THAT THE ASSESSEE STOOD BENEFICIARY OF ALLEGED BOGUS PURCHAS ES TO THE TUNE OF RS.186.77 LACS FROM 14 ENTITIES, THE DETAILS OF WHI CH HAVE ALREADY BEEN EXTRACTED AT PARA-5.2 OF THE QUANTUM ASSESSMENT ORD ER. ACCORDINGLY, AS PER DUE PROCESS OF LAW, RE-ASSESSMENT PROCEEDINGS W ERE INITIATED AGAINST THE ASSESSEE U/S 147 BY ISSUANCE OF NOTICE U/S 148 ON 19/12/2012 FOLLOWED BY STATUTORY NOTICES U/S 143(2) & 142(1) WHEREIN THE ASSESSEE WAS DIRECTED TO SUBSTANTIATE THE PURCHASE TRANSACTIONS. DURING THE YEAR, THE ASSESSEE HAD REFLECTED SALES & PURCHA SES FOR RS.446.23 LACS & RS.442.25 LACS RESPECTIVELY. 2.3 ALTHOUGH, THE ASSESSEE DEFENDED THE PURCHASES, HOWEVER, NOTICE ISSUED U/S 133(6) TO ALL THE PARTIES TO CONFIRM THE TRANSACTIONS, REMAINED UN-SERVED AS WELL AS UN-RESPONDED TO. CONSEQUENTLY, THE ASSESSEE WAS SHOW-CAUSED TO SUBSTANTIATE THE PURCHASE TRANSACTIO NS. THE ASSESSEE FURNISHED LEDGER EXTRACTS AND SUBMITTED THAT THE PA YMENT WAS THROUGH BANKING CHANNELS. THE ASSESSEE ALSO DEMANDED FOR CR OSS-EXAMINATION OF THE PARTIES. HOWEVER, THE ASSESSEE FAILED TO PRO VIDE THE WHEREABOUTS OR NEW ADDRESSES OF THE SUPPLIERS. 2.4 FINALLY NOT SATISFIED WITH ASSESSEES SUBMISSIO NS / EXPLANATIONS FOR VARIOUS REASONS AS ENUMERATED IN PARA 6.5, THE LEAR NED AO REJECTED THE BOOKS OF ACCOUNTS U/S 145(3) AND MADE 3 ADDITIONS I N THE HANDS OF THE ITA NOS.2877-78,2951/MUM/2018 M/S. HINGLAJ METALS & ALLOYS PRIVATE LIMITED ASSESSMENT YEARS 2009-10 TO 2011-12 4 ASSESSEE- (I) ADDITION OF RS.98.48 LACS U/S 41(1) R EPRESENTING AMOUNT PAYABLE TO AFORESAID SUNDRY CREDITORS (II) ADDITION OF RS.186.77 LACS, BEING PURCHASES MADE BY THE ASSESSEE FROM SUSPICIOU S DEALERS & (III)ADDITION OF RS.23.34 LACS, BEING SUPPRESSED GR OSS PROFIT @12.5% ON AFORESAID PURCHASES. 2.5 ALTHOUGH THE ASSESSEE PREFERRED FURTHER APPEAL BEFORE LD. FIRST APPELLATE AUTHORITY, HOWEVER, DESPITE VARIOUS NOTIC ES AS TABULATED IN PARA 3.1 OF THE IMPUGNED ORDER, THE ASSESSEE FAILED TO A TTEND THE APPELLATE PROCEEDINGS. CONSEQUENTLY, THE MATTER WAS PROCEEDED WITH EX-PARTE. FINALLY, THE ADDITION OF RS.186.77 LACS AS MADE BY LEARNED AO WAS CONFIRMED SINCE THE ASSESSEE FAILED TO SUBSTANTIATE THE DELIVERY OF MATERIAL AND FAILED TO PRODUCE THE DAY TO DAY STOCK REGISTER. HOWEVER, THE ADDITION MADE U/S 41(1) WAS DELETED SINCE THE S AME WOULD AMOUNT TO DOUBLE ADDITION. SIMILARLY, THE ESTIMATED ADDITI ON @12.5% WAS DELETED SINCE THE WHOLE PURCHASES WERE FOUND TO BE BOGUS AND THE FULL DISALLOWANCE WAS ALREADY MADE. AGGRIEVED, THE ASSES SEE IS IN FURTHER APPEAL BEFORE US. 3. UPON DUE CONSIDERATION OF FACTUAL MATRIX AS ENUM ERATED BY US IN THE PRECEDING PARAGRAPHS, IT TRANSPIRES THAT THE AS SESSEE HAS BEEN SADDLED WITH SUBSTANTIAL ADDITION ON ACCOUNT OF ALLEGED BOGUS PURCHASES SINCE IT FAILED TO PROVE THE GENUINENESS OF THE PUR CHASE TRANSACTIONS DURING ASSESSMENT PROCEEDINGS. ALTHOUGH THE ASSESSE E PREFERRED FURTHER APPEAL BEFORE FIRST APPELLATE AUTHORITY BUT FAILED TO DEFEND THE TRANSACTIONS DESPITE BEING PROVIDED WITH VARIOUS OP PORTUNITIES OF BEING HEARD. KEEPING IN THE VIEW THE QUANTUM OF ADDITIONS AND IN VIEW OF ITA NOS.2877-78,2951/MUM/2018 M/S. HINGLAJ METALS & ALLOYS PRIVATE LIMITED ASSESSMENT YEARS 2009-10 TO 2011-12 5 PRINCIPLE OF NATURAL JUSTICE, WE ARE OF THE OPINION THAT THE ASSESSEE DESERVE ANOTHER OPPORTUNITY OF BEING HEARD TO SUBST ANTIATE THE STATED TRANSACTIONS. THEREFORE, WE SET-ASIDE THE IMPUGNED ORDER AND RESTORE THE MATTER BACK TO THE FILE OF LEARNED FIRST APPELL ATE AUTHORITY FOR RE- ADJUDICATION WITH A DIRECTION TO THE ASSESSEE TO DE FEND THE STATED TRANSACTIONS FORTHWITH FAILING WHICH LD. CIT(A) SHA LL BE AT LIBERTY TO RE- ADJUDICATE THE MATTER ON THE BASIS OF MATERIAL ON R ECORD. RESULTANTLY, THE APPEAL STANDS PARTLY ALLOWED FOR STATISTICAL PURPOS ES. 4. FACTS ARE PARI-MATERIA THE SAME IN AYS 2010-11 & 2011-12 WHEREIN THE ASSESSEE WAS, SADDLED WITH CERTAIN ADDI TIONS ON ACCOUNT OF ALLEGED BOGUS PURCHASES. ALTHOUGH THE ASSESSEE PREFERRED FURTHER APPEAL BUT NON-APPEARANCE OF THE ASSESSEE RESULTED INTO EX-PARTE ADJUDICATION BY LD. CIT(A). AGGRIEVED, THE ASSESSE E IS IN FURTHER APPEAL BEFORE US WITH SIMILAR GROUNDS OF APPEAL. FACTS BEI NG IDENTICAL, OUR FINDINGS, OBSERVATIONS AS WELL AS ADJUDICATION AS F OR AY 2009-10 SHALL MUTATIS MUTANDIS APPLY TO THESE YEARS ALSO. CONSEQUENTLY, BOTH THESE APPEALS ARE ALSO RESTORED BACK TO THE FILE OF LD. C IT(A) ON SIMILAR LINES / DIRECTIONS. BOTH THESE APPEALS STAND PARTLY ALLOWED FOR STATISTICAL PURPOSES. 5. FINALLY, ALL THE APPEALS STANDS PARTLY ALLOWED F OR STATISTICAL PURPOSES IN TERMS OF OUR ABOVE ORDER. ORDER PRONOUNCED IN THE OPEN COURT ON 5 TH DECEMBER, 2019. SD/- SD/- (PAWAN SINGH) (MANOJ KUMAR AGGARWAL) / JUDICIAL MEMBER / ACCOUNTANT MEMBER ITA NOS.2877-78,2951/MUM/2018 M/S. HINGLAJ METALS & ALLOYS PRIVATE LIMITED ASSESSMENT YEARS 2009-10 TO 2011-12 6 MUMBAI; DATED : 05/12/2019 SR.PS, JAISY VARGHESE #$&'(' / COPY OF THE ORDER FORWARDED TO : 1. / THE APPELLANT 2. !' / THE RESPONDENT 3. 1 ( ) / THE CIT(A) 4. 1 / CIT CONCERNED 5. 2 3!45 , 5 , / DR, ITAT, MUMBAI 6. 3 78 / GUARD FILE / BY ORDER, / (DY./ASSTT.REGISTRAR) , / ITAT, MUMBAI.