M/s. Taloja Warehouse, Panvel V. Income tax Officer,

ITA 2941/PUN/2016

• Counselvise Citation: [2018] 121 COUNSELVISE.COM (IT) 7653 (ITAT-PUNE)
• Duration Of Justice: 1 year(s) 3 month(s) 29 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 25-04-2018
• Appeal Filed By: Assessee
• Order Result: Partly Allowed
• Bench Allotted: SMC
• Assessment Year: 2010-2011
• Appeal Filed On: 26-12-2016
• Result in Favour of: Partly Allowed
• Court: TRIBUNAL
• Department Lawyers: MUKESH JHA
• Keywords: Bogus purchase
• Section: 143(3)

Judgement Text

- IN THE INCOME TAX APPELLATE TRIBUNAL PUNE BENCH SMC , PUNE , BEFORE MS. SUSHMA CHOWLA, JM . / ITA NO. 2 941 /P U N/201 6 / ASSESS MENT YEAR : 20 1 0 - 1 1 M/S. TALOJA WAREHOUSE, PLOT NO.486, NEAR PANVEL TILES, MARKET YARD, PANVEL 410206 . / APPELLANT PAN: A ACFT2240H VS. THE INCOME TAX OFFICER , WARD 2 , PANVEL . / RESPONDENT / APPELLANT BY : SHRI C.H. NANIWADEKAR / RESPONDENT BY : S HRI MUKESH JHA / DATE OF HEARING : 1 8 . 0 4 .201 8 / DATE OF PRONOUNCEMENT: 25 . 0 4 .201 8 / ORDER PER SUSHMA CHOWLA, J M : TH E APPEA L FILED BY THE ASSESSEE IS AGAINST THE ORDER OF CIT (A) - 2 , THANE , DATED 24 . 11 .20 1 6 RELATING TO ASSESSMENT YEAR 20 1 0 - 1 1 AGAINST ORDER PASSED UNDER SECTION 143(3) R.W.S. 147 OF THE INCOME - TAX ACT , 1961 (IN SHORT THE ACT) . ITA NO. 2 941 /P U N/20 1 6 M/S. TALOJA WAREHOUSE 2 2. THE ASSESSEE HAS RAISED THE FOL LOWING GROUND S OF APPEAL: - 1. ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE AND IN LAW THE LEARNED COMMISSIONER OF INCOME TAX (APPEALS) - II, THANE ERRED IN CONFIRMING THE ADDITION OF RS.21,28,445/ - BEING MADE ON ESTIMATED BASIS IN TREATING THE GENUINE P URCHASES OF RS.1,70,27,565/ - AS NON - GENUINE/BOGUS PURCHASES FROM THE PARTIES ON THE BASIS OF INFORMATION HAS BEEN RECEIVED FROM SALES TAX DEPARTMENT THAT SUCH PARTIES ARE SUSPICIOUS DEALERS PROVISIONS OF THE ACT OUGHT TO HAVE BEEN PROPERLY CONSTRUED AN D REGARD BEING HAD TO FACTS OF THE CASE NO SUCH ADDITIONS TO BE MADE. REASONS ASSIGNED BY HIM ARE WRONG AND INSUFFICIENT TO JUSTIFY THE ADDITIONS. 2. THE ORDER MADE UNDER SECTION 143(3) R.W.S. 147 OF THE ACT BY THE LEARNED ASSESSING OFFICER IS BAD - IN - LAW , ULTRA VIRUS AND WITHOUT APPRECIATING THE FACTS, SUBMISSION MADE AND LAW IN THEIR PROPER PERSPECTIVE AND IS LIABLE TO BE ANNULLED. 3. THE ISSUE RAISED IN THE PRESENT APPEAL IS AGAINST ADDITION MADE ON ACCOUNT OF ALLEGED BOGUS PURCHASES. THE ADDITION HAS BEEN CONFIRMED AT 21,28,445/ - . THE ASSESSEE IS AGGRIEVED BY THE ORDERS OF AUTHORITIES BELOW IN TREATING GENUINE PURCHASES OF 1.70 CRORES AS NON - GENUINE / BOGUS PURCHASES FROM THE PARTIES ON THE BASIS OF INFORMATION RECEIVED FROM SALES TAX DEPARTMENT. 4. BRIEFLY, IN TH E FACTS OF THE CASE, THE ASSESSEE WAS TRADER OF IRON STEEL SCRAP. THE ASSESSEE HAD MADE PURCHASES FROM ONE M/S. HAITVI STEEL TRADERS PVT. LTD. THE TOTAL PURCHASES MADE FROM THE SAID PARTY WERE 1.70 CRORES. THE SALES TAX DEPARTMENT, MAHARASHTRA HAD CON DUCTED CERTAIN INVESTIGATIONS AND HAD UNEARTHED FRAUDULENT RACKET OF CERTAIN PARTIES ISSUING BOGUS BILLS WITHOUT ACTUAL DELIVERY OF GOODS AND NON - PAYMENT OF VAT. THE SAID PARTIES WERE LISTED AS HAWALA DEALERS. FURTHER, INFORMATION WAS ALSO COLLECTED IN R ESPECT OF PERSONS WHO HAD AVAILED THE SERVICES OF ALLEGED HAWALA DEALERS. INFORMATION WAS PASSED ON TO THE INCOME TAX DEPARTMENT, WHICH IN TURN, INITIATED PROCEEDINGS UNDER SECTION 147/148 OF THE ACT AGAINST BENEFICIARIES OF PURCHASES MADE FROM HAWALA DEA LERS. THE ASSESSEE WAS ALLEGED TO HAVE ITA NO. 2 941 /P U N/20 1 6 M/S. TALOJA WAREHOUSE 3 OBTAINED BOGUS PURCHASE BILLS FROM ENTRY PROVIDER HAITVI STEEL TRADERS PVT. LTD. THE ASSESSMENT PROCEEDINGS IN THE HANDS OF ASSESSEE WERE INITIATED UNDER SECTION 147/148 OF THE ACT AND THE ASSESSEE WAS CONFRONTED WI TH THE INFORMATION. THE ASSESSEE EXPLAINED THAT PURCHASES WERE MADE FROM VARIOUS PARTIES AND THE GOODS WERE SOLD IN THE ORDINARY COURSE OF BUSINESS, AGAINST WHICH PROFIT WAS OFFERED. THE TURNOVER FOR THE YEAR UNDER CONSIDERATION WAS 177.97 LAKHS. THE ASSESSEE EXPLAINED THAT PURCHASES MADE BY IT WERE GENUINE AND THE AMOUNTS WERE PAID THROUGH BANKING CHANNEL. THE ASSESSING OFFICER NOTED THAT THE ASSESSEE HA D FAILED TO PROVIDE ANY DELIVERY CHALLANS, LORRY RECEIPTS, TRANSPORTATION DETA ILS, ETC. AND SINCE THE PARTIES FROM WHOM PURCHASES WERE MADE HAD ADMITTED TO HAVE MADE BOGUS SALES ; H ENCE, THE PURCHASES MADE BY THE ASSESSEE WERE ALSO HELD TO BE BOGUS. THE ASSESSING OFFICER APPLIED GP RATE OF 12.5% ON THE ALLEGED BOGUS PURCHASES OF 1 .70 CRORES AND MADE ADDITION OF 21,28,445/ - . 5. THE CIT(A) HAS UPHELD THE AFORESAID ADDITION IN THE HANDS OF ASSESSEE. THE CIT(A) ALSO UPHELD RE - ASSESSMENT PROCEEDINGS INITIATED UNDER SECTION 147/148 OF THE ACT. 6. THE ASSESSEE IS IN APPEAL AGAINST BOTH THE COUNTS. 7. THE FIRST ISSUE RAISED BY THE ASSESSEE IS AGAINST MERITS OF ADDITION. SECOND GROUND OF APPEAL RAISED BY THE ASSESSEE IS AGAINST INITIATION OF RE - ASSESSMENT PROCEEDINGS. THE LEARNED AUTHORIZED REPRESENTATIVE FOR THE ASSESSEE DURING THE COURSE OF HEARING DID NOT PRESS THE GROUND OF APPEAL NO.2. IN RESPECT OF ISSUE ON MERITS, IT WAS POINTED OUT THAT THE ASSESSEE HAD MAINTAINED STOCK STATEMENT, WHEREIN PURCHASES WERE MADE FROM ONE CONCERN ITA NO. 2 941 /P U N/20 1 6 M/S. TALOJA WAREHOUSE 4 AND WERE ALSO SOLD TO ONE CONCERN ONLY. HE FUR THER POINTED OUT THAT THE PARTY FROM WHOM PURCHASES WERE MADE WAS GENUINE PARTY AS IN THE EARLIER YEARS , VAT RETURN WAS FILED AND HAS BEEN ACCEPTED. HE FURTHER POINTED OUT THAT GOODS WERE PURCHASED IN THE MONTH OF JANUARY, BUT THE PAYMENTS WERE MADE TO TH E SAID CONCERN IN THE MONTH OF FEBRUARY, AFTER SALE PROCEEDS WERE RECEIVED. HE ALSO POINTED OUT THAT THERE WAS DEFAULT IN VAT, WHICH WAS MADE GOOD BY THE ASSESSEE. 8. THE LEARNED DEPARTMENTAL REPRESENTATIVE FOR THE REVENUE ON THE OTHER HAND, PLACING REL IANCE ON THE ORDERS OF AUTHORITIES BELOW, PLACED SPECIAL RELIANCE ON PARA 4.5 OF ASSESSMENT ORDER AND POINTED OUT THAT THE ASSESSEE HAS FAILED TO FILE DELIVERY CHALLANS, LORRY RECEIPTS, ETC. 9. ON PERUSAL OF RECORD AND AFTER HEARING BOTH THE LEARNED AUTHO RIZED REPRESENTATIVES, THE ISSUE WHICH ARISES IN THE PRESENT APPEAL IS AGAINST THE ADDITION MADE ON ACCOUNT OF PURCHASES MADE BY THE ASSESSEE. THE ASSESSING OFFICER HAD RECEIVED INFORMATION FROM THE SALES TAX DEPARTMENT IN RESPECT OF ALLEGED HAWALA DEALER S, WHO HAD SOLD THE GOODS WITHOUT DELIVERY OF SAID GOODS. THE ASSESSING OFFICER ON THE BASIS OF SAID INFORMATION RECEIVED FROM THE SALES TAX DEPARTMENT, ASKED THE ASSESSEE TO EXPLAIN PURCHASES OF 1.70 CRORES. THE EXPLANATION OF ASSESSEE IN THIS REGARD WAS THAT IT HAD MADE SAID PURCHASES FROM THE SAID PARTY IN THE MONTH OF JANUARY, 2010 AND HAD SOLD THE GOODS TO ONE PARTY ITSELF I.E. B. VRAJLAL & CO. IN THE MONTH OF FEBRUARY, 2010. THE ASSESSEE HAS FURNISHED BEFORE THE TRIBUNAL THE RECONCILIATION OF GOO DS, QUANTITATIVE PURCHASES AND QUANTITY SOLD AND HAS POINTED OUT THAT SALES MADE BY THE ASSESSEE HAVE BEEN ACCEPTED. THE SECOND PLEA OF LEARNED AUTHORIZED REPRESENTATIVE FOR THE ASSESSEE WAS THAT PAYMENT TO M /S. HAITVI STEEL TRADERS PVT. LTD. WAS MADE ONLY ON THE RECEIPT OF PAYMENT FROM THE PERSON TO WHOM ITA NO. 2 941 /P U N/20 1 6 M/S. TALOJA WAREHOUSE 5 GOODS WERE SOLD. IN RESPECT OF M/S. HAITVI STEEL TRADERS PVT. LTD., THE LEARNED AUTHORIZED REPRESENTATIVE FOR THE ASSESSEE HAS POINTED OUT THAT THE SAID PAR TIES WERE GENUINE SINCE IN EARLIER YEARS VAT RETURN WAS FILED BY THE SAID PARTY AND ON SUCH BASIS, NO ADDITION IS WARRANTED IN THE HANDS OF ASSESSEE. THE ASSESSEE HAD PAID VAT ON THE VALUE OF GOODS PURCHASED. IN THE ENTIRETY OF THE ABOVE SAID FACTS AND C IRCUMSTANCES, WHERE THE ASSESSEE HAS MAINTAINED AND FURNISHED THE QUANTITY DETAILS OF GOODS PURCHASED AND SOLD BY IT, THEN THE TRAIL OF GOODS STANDS ESTABLISHED AND ANOTHER FEATURE TO BE NOTED IS THAT TOTAL PURCHASES MADE BY THE ASSESSEE FROM ALLEGED HAWAL A DEALER HA D BEEN SOLD TO ONE PERSON ONLY. THE ASSESSING OFFICER HAS NOT MADE ANY ENQUIRIES FROM THE PURCHASER OF GOODS AND IN THE ABSENCE OF THE SAME, THERE IS NO MERIT IN THE ORDERS OF AUTHORITIES BELOW IN HOLDING THAT THE PURCHASES MADE BY ASSESSEE ARE BOGUS PURCHASES. REVERSING THE ORDER OF CIT(A), THE ASSESSING OFFICER IS DIRECTED TO DELETE THE ADDITION OF 21,28,445/ - MADE ON ACCOUNT OF GP RATE ON THE ALLEGED BOGUS PURCHASES. THE GROUND OF APPEAL NO.1 IS THUS, ALLOWED. 10. THE GROUND OF APPEAL NO.2 RAISED BY THE ASSESSEE IS NOT PRESSED AND HENCE, THE SAME IS DISMISSED AS NOT PRESSED. 1 1 . IN THE RESULT, APPEAL OF ASSESSEE IS PARTLY ALLOWED. ORDER PRONOUNCED ON THIS 25 TH DAY OF APRIL , 201 8 . SD/ - (SUSHMA CHOWLA) / JUDICIAL MEMBER / PUNE ; DATED : 25 TH APRIL , 201 8 . GCVSR ITA NO. 2 941 /P U N/20 1 6 M/S. TALOJA WAREHOUSE 6 / COPY OF THE ORDER IS FORWARDED TO : 1. / THE APPELLANT ; 2. / THE RESPONDEN T; 3. ( ) / THE CIT(A) - 2 , THANE ; 4. THE PR. CIT - 2, THANE ; 5. 6. , , , - / DR SMC , ITAT, PUNE; / GUARD FILE . / BY ORDER , // TRUE COPY // / SR. PRIVATE SECRETARY , / ITAT, PUNE