Income tax Officer, V. M/s. Maharashtra Industries & Re-Rolling Mills, Nashik

ITA 2972/PUN/2016

• Counselvise Citation: [2018] 121 COUNSELVISE.COM (IT) 7597 (ITAT-PUNE)
• Duration Of Justice: 1 year(s) 4 month(s) 19 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 17-05-2018
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: SMC
• Assessment Year: 2011-2012
• Appeal Filed On: 29-12-2016
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Keywords: Bogus purchase; Revised return

Judgement Text

SMC IN THE INCOME TAX APPELLATE TRIBUNAL SMC BENCH, PUNE . , BEFORE SHRI D. KARUNAKARA RAO, AM . / ITA NOS.2971 & 2972/PUN/2016 / ASSESSMENT YEARS : 2009-10 & 2011-12 ITO, WARD-1(4), NASHIK . /APPELLANT VS. M/S. MAHARASHTRA INDUSTRIES & RE-ROLLING MILLS, PLOT NO.G-16, MIDC INDUSTRIAL AREA, AMBAD LINK ROAD, NASHIK PAN : AAMFM1272G . / RESPONDENT / APPELLANT BY : SHRI PANKAJ GARG / RESPONDENT BY : SHRI SANKET JOSHI / DATE OF HEARING : 16.05.2018 / DATE OF PRONOUNCEMENT: 17.05.2018 / ORDER PER D. KARUNAKARA RAO, AM : THERE ARE 2 APPEALS FILED BY THE REVENUE UNDER CON SIDERATION INVOLVING ASSESSMENT YEARS 2009-10 AND 2011-12. THEY ARE FILE D AGAINST THE COMMON ORDER OF CIT(A)-1, NASHIK, DATED 06-10-2016. 2. GROUNDS RAISED BY THE REVENUE ARE COMMON FOR BOT H THE ASSESSMENT YEARS UNDER CONSIDERATION IN VERBATIM, EXCEPT THE FIGURES . THEREFORE, THE GROUNDS RAISED BY THE REVENUE FOR A.Y. 2009-10 ARE REPRODUC ED BELOW : 1.1 WHETHER ON THE FACTS AND IN CIRCUMSTANCES OF T HE CASE AND IN LAW, THE CIT(A)-1, NASHIK WAS JUSTIFIED IN DELETING THE ADDI TION OF RS.14,63,641/- ON ACCOUNT OF ALLEGED BOGUS PURCHASES FROM HAWALA DEAL ERS/PARTIES. 1.2 WHETHER ON THE FACTS AND IN CIRCUMSTANCES OF TH E CASE AND IN LAW, THE CIT(A)-1, NASHIK WAS JUSTIFIED IN DELETING THE ADDI TION EVEN WHEN THE ASSESSEE HAS FAILED TO DISCHARGE ITS ONUS OF GIVING EVIDENCE FOR PROVING THE PURCHASES. 1.3 WHETHER ON THE FACTS AND IN CIRCUMSTANCES OF TH E CASE AND IN LAW, THE CIT(A)-1, NASHIK WAS JUSTIFIED IN DELETING THE ADDI TION EVEN WHEN HE HAS ADMITTED IN PARA 4.88 THAT THE ASSESSEE HAS NOT PRODUCED THE PARTIES FROM WHOM THE PURCHASES WERE MADE EITHER BEFORE THE A.O. OR CIT(A ). ITA NOS.2971 & 2972/PUN/2016 M/S. MAHARASHTRA INDUSTRIES & RE-ROLLING MILLS 2 1.4 WHETHER ON THE FACTS AND IN CIRCUMSTANCES OF TH E CASE AND IN LAW, THE CIT(A)-1, NASHIK WAS JUSTIFIED IN DELETING THE ADDI TION EVEN WHEN THE ASSESSEE HAS NOT PRODUCED THE QUANTITATIVE TALLY EITHER BEFORE T HE A.O. OR CIT(A). 2. THE ORDER OF THE CIT(A) MAY BE VACATED AND THAT OF THE ASSESSING OFFICER MAY BE RESTORED. 3. THE ASSESSEE CRAVES LEAVE TO ADD, AMEND, ALTER O R DELETE ANY GROUND OF APPEAL. 3. BRIEFLY STATED RELEVANT FACTS FOR A.Y. 2009-10 A RE THAT THE ASSESSEE IS A FIRM AND IS ENGAGED IN THE BUSINESS OF MANUFACTURING OF STEEL ROLLING MILLS. ASSESSEE FILED THE RETURN OF INCOME ON 30-09-2009 DECLARING TOTAL INCOME OF RS.1,23,200/- FOR THE ASSESSMENT YEAR UNDER CONSIDERATION. ON TH E BASIS OF INFORMATION RECEIVED FROM THE INVESTIGATION SECTION OF SALES TAX DEPARTM ENT, AO ISSUED NOTICE U/S.148 OF THE ACT TO THE ASSESSEE ON 26-09-2013 ON FINDING THAT THE ASSESSEE MADE HAWALA PURCHASES TO THE TUNE OF RS.14,63,641/-. IN RESPONSE TO THE SAME, ASSESSEE FILED REVISED RETURN ON 13-03-2015 DECLARI NG INCOME OF RS.15,86,840/-. ASSESSEE HAS SHOWN NET PROFIT AT 4.51% ON THE TOTAL TURNOVER OF RS.1,79,67,808/-. AT THE END OF THE ASSESSMENT PROCEEDINGS U/S.143(3) R.W.S. 147 OF THE ACT, THE AO MADE ENTIRE ADDITION OF RS.14,63,641/- ON ACCOUNT O F BOGUS PURCHASES. 4. AGGRIEVED WITH THE ORDER OF AO, THE ASSESSEE FIL ED AN APPEAL BEFORE THE CIT(A). THE CIT(A) AFTER ELABORATELY DISCUSSING VA RIOUS JUDGMENTS OF HONBLE SUPREME COURT, HIGH COURTS AND THE DIFFERENT BENCHE S OF ITAT, RESTRICTED THE DISALLOWANCE TO 25% OF SUCH BOGUS PURCHASES WHICH C OMES TO RS.3,65,910/-. THUS, THE CIT(A) GAVE RELIEF OF RS.10,97,731/-. SIMILARLY, FOR A.Y. 2011-12, THE AO MADE ADDITION OF RS.47,00,720/- ON ACCOUNT OF BOGUS PURCHASES AND THE CIT(A) RESTRICTE D THE SAID DISALLOWANCE TO 25% OF SUCH BOGUS PURCHASES WHICH COMES TO RS.11,75 ,180/-. ITA NOS.2971 & 2972/PUN/2016 M/S. MAHARASHTRA INDUSTRIES & RE-ROLLING MILLS 3 ASSESSEE IS NOT IN APPEAL AGAINST THE ORDER OF CIT( A) IN CONFIRMING THE ADDITION OF 25% OF THE BOGUS PURCHASES FOR BOTH THE ASSESSMENT YEARS UNDER CONSIDERATION. 5. CHALLENGING THE ORDER OF CIT(A) THE REVENUE FILE D THE PRESENT APPEALS BEFORE THE TRIBUNAL RAISING THE AFORESAID GROUNDS. 6. LD. DR FOR THE REVENUE RELIED ON THE ORDER OF TH E AO. HE SUBMITTED THAT ASSESSEE HAS NOT PRODUCED THE PARTIES BEFORE THE AU THORITIES TO DEMONSTRATE THAT THE PURCHASES MADE BY HIM ARE GENUINE. THEREFORE, LD. DR FOR THE REVENUE PRAYED FOR CONFIRMING THE ENTIRE ADDITION OF BOGUS PURCHASES INSTEAD OF 25% ADOPTED BY THE CIT(A). 7. LD. COUNSEL FOR THE ASSESSEE SUBMITTED THAT THE ASSESSEE ACCEPTED THE DECISION OF THE CIT(A) WHO RESTRICTED THE DISALLOWA NCE TO 25% OF PURCHASES. OTHERWISE, LD. COUNSEL SUBMITTED THAT THIS IS THE C ASE WHERE THE ASSESSEE MAINTAINED THE REQUIRED EVIDENCES BY WAY OF PURCHAS E BILLS AND ACCOUNT EXTRACTS ESTABLISHING THE TRAIL OF GOODS. FURTHER, LD. COUN SEL SUBMITTED THAT THE PUNE BENCH OF THE TRIBUNAL IN A SERIES OF DECISIONS ON T HIS ISSUE HAS BEEN RESTRICTING THE ADDITION TO 10% OF THE BOGUS PURCHASES. IN SUPPORT OF HIS CASE, LD. COUNSEL FOR THE ASSESSEE FILED THE ORDER OF PUNE BENCH OF THE TRIBUNAL IN THE CASE OF ACIT VS. SHRI NITIN RAMCHANDRA GITE AND VICE VERSA IN ITA NO .1732/PUN/2015 AND CO NO.46/PUN/2017, DATED 13-10-2017 FOR THE A.Y. 2011- 12. 8. I HEARD BOTH THE SIDES ON THE SOLITARY ISSUE OF RESTRICTING TO 25% OF BOGUS PURCHASES BY THE CIT(A) AND PERUSED THE DECISION RE LIED ON BY THE LD. COUNSEL FOR THE ASSESSEE. I FIND IT RELEVANT TO REPRODUCE THE FINDING GIVEN BY THE CIT(A) AT PARA NOS. 4.88 AND 4.89 OF HIS ORDER AND THE SAME I S EXTRACTED AS FOLLOWS : 4.88 ADVERTING TO THE FACT IN THE INSTANT CASE, TH E ASSESSEE IS IN THE BUSINESS OF MANUFACTURER IN STEEL ROLLING MILLS. THE PARTIES W HO ARE IN DISPUTE FOR PURCHASES, IS NEITHER PRODUCED BEFORE ME NOR BEFORE THE AO. IN A BSENCE OF PRODUCTION OF ITA NOS.2971 & 2972/PUN/2016 M/S. MAHARASHTRA INDUSTRIES & RE-ROLLING MILLS 4 PARTIES THE ISSUE THAT PURCHASES WERE INDEED FROM T HEM CANNOT BE VERIFIED. THE CONSUMPTION DETAIL IS NO TESTIMONY OF THE FACT THAT THE PURCHASES ARE NOT INFLATED AND PARTIES ARE NOT BOGUS. 4.89 THUS IN MY OPINION THE FACTS ON RECORD DEMONST RATE THAT THIS IS NOT A CASE OF BOGUS PURCHASE BUT A CASE OF INFLATED PURCHASES A ND AT BEST FROM BOGUS PARTIES. CONSIDERING THE FACTS AND CIRCUMSTANCES O F THE CASE, TO MEET THE ENDS OF JUSTICE, THE AO IS DIRECTED TO RESTRICT THE DISALLO WANCE OF PURCHASES TO 25% OF PURCHASES, I.E. RS.3,65,910/- FOR A.Y. 2009-10 & RS. 11,75,180/- FOR A.Y. 2011-12. THE REVENUE WANTS CONFIRMING OF ENTIRE ADDITION OF RS.14,64,641/- AND RS.47,00,720/- FOR A.YRS. 2009-10 AND 2011-12 RESPE CTIVELY. I FIND THE SAID ARGUMENTS OF THE REVENUE IS UNSUSTAINABLE IN VIEW O F CATENA OF DECISIONS ON THIS ISSUE. AS SUCH, THERE IS NO PROBLEM WITH THE TRAIL OF GOODS AS WELL AS ON THE PAYMENT TO THE PARTIES. IN SUCH CIRCUMSTANCES, WE FIND THE ORDER OF CIT(A) IS FAIR AND REASONABLE AND DOES NOT CALL FOR ANY INTERFEREN CE. ACCORDINGLY, THE GROUNDS RAISED BY THE REVENUE FOR BOTH THE ASSESSMENT YEARS ARE DISMISSED. 9. IN THE RESULT, BOTH THE APPEALS OF THE REVENUE A RE DISMISSED. ORDER PRONOUNCED ON THIS 17 TH DAY OF MAY, 2018. SD/- (D.KARUNAKARA RAO) / ACCOUNTANT MEMBER / PUNE; DATED : 17 TH MAY, 2018. SATISH / COPY OF THE ORDER IS FORWARDED TO : 1. / THE APPELLANT; 2. / THE RESPONDENT; 3. ( ) / THE CIT(A) - 1, NASHIK 4. / THE CIT - 1, NASHIK 5. , , SMC / DR SMC, ITAT, PUNE; 6. / GUARD FILE. / BY ORDER, //TRUE COPY// SENIOR PRIVATE SECRETARY , / ITAT, PUNE