M/s. Steel Point (India) Pvt.Ltd, Pune V. Deputy Commissioner of Income-tax, Circle - 10, Pune

ITA 3013/PUN/2017

• Counselvise Citation: [2020] 110 COUNSELVISE.COM (IT) 6765 (ITAT-PUNE)
• Duration Of Justice: 2 year(s) 8 month(s) 26 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 15-09-2020
• Appeal Filed By: Assessee
• Order Result: Partly Allowed
• Bench Allotted: B
• Assessment Year: 2010-2011
• Appeal Filed On: 19-12-2017
• Result in Favour of: Partly Allowed
• Court: TRIBUNAL
• Department Lawyers: A CO NSOLIDATED
• Keywords: Bogus purchase; Reason to believe; Reassessment proceedings; Set aside
• Section: 148

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL PUNE BENCH B, PUNE VIRTUAL COURT BEFORE SHRI R.S. SYAL, VICE PRESIDENT AND SHRI S.S. VISWANETHRA RAVI, JUDICIAL MEMBER ITA NOS.3013 & 3014/PUN/2017 / ASSESSMENT YEARS : 2010-11 & 2011-12 M/S. STEEL POINT (INDIA) PVT. LTD., S.NO.45/2, INDRAYANI NAGAR, MIDC, BHOSARI, PUNE 411 026 PAN : AAGCS3347D VS. DCIT, CIRCLE-10, PUNE APPELLANT RESPONDENT / ORDER PER R.S.SYAL, VP : THESE TWO APPEALS BY THE ASSESSEE ARISE OUT OF SEPARATE ORDERS FOR THE ASSESSMENT YEARS 2010-11 & 2011-12 BOTH DATED 16-08-2017. SINCE COMMON ISSUES ARE RAISED IN THESE APPE ALS, WE ARE, THEREFORE, PROCEEDINGS TO DISPOSE THEM OFF BY A CO NSOLIDATED ORDER FOR THE SAKE OF CONVENIENCE. A.Y. 2010-11 : 2. THIS APPEAL WAS INITIALLY FIXED FOR HEARING ON 25-06-2020 . NOTICE WAS SENT BUT THE ASSESSEE CHOSE TO REMAIN ABSENT. T HE ASSESSEE BY NONE REVENUE BY SHRI ALOK MALVIYA DATE OF HEARING 14-09-2020 DATE OF PRONOUNCEMENT 15-09-2020 ITA NOS.3013 & 3014/PUN/2017 M/S. STEEL POINT (INDIA) PVT. LTD., 2 MATTER WAS ADJOURNED FOR 17-08-2020. AGAIN THE ASSESSEE REMAINED UNREPRESENTED. THE SAME COURSE FOLLOWED ON N EXT DATE OF HEARING ON 14-09-2020, I.E. TODAY, WHEN NEITHER THE AS SESSEE HAS APPEARED IN PERSON OR THOUGH SOME REPRESENTATIVE NOR AN Y ADJOURNMENT APPLICATION HAS BEEN FILED. WE, THEREFORE, PR OCEED TO DISPOSE OFF THIS APPEAL EX PARTE QUA THE ASSESSEE ON MERITS. 3. THE FIRST ISSUE TAKEN UP IN THIS APPEAL IS AGAINST THE INITIATIO N OF REASSESSMENT PROCEEDINGS. 4. BRIEFLY STATED, THE FACTS OF THE CASE ARE THAT THE ASSESSE E FILED THE RETURN DECLARING TOTAL INCOME OF RS.6,31,990/-. THE RE TURN WAS PROCESSED U/S.143(1) OF THE INCOME-TAX ACT, 1961 (HERE INAFTER ALSO CALLED `THE ACT). THEREAFTER, THE ASSESSING OFFICER (AO) OBTAINED INFORMATION FROM THE SALES TAX DEPARTMENT OF MAHARASHTRA GOVERNMENT GIVING NAMES, ADDRESSES AND OTHER DETAILS OF CERTAIN PERSONS WHO WERE PROVIDING ENTRIES FOR BOGUS PURCHASE B ILLS TO A LARGE NUMBER OF TAXPAYERS. THE ASSESSEES NAME ALSO FIGURED IN SUCH LIST OF BENEFICIARIES. ON THE BASIS OF SUCH INFORMATIO N, THE AO INITIATED REASSESSMENT PROCEEDINGS BY MEANS OF A NOTICE U/S. 148 OF THE ACT. THE ASSESSEE REQUESTED TO TREAT THE ORIGINAL RETURN AS ITA NOS.3013 & 3014/PUN/2017 M/S. STEEL POINT (INDIA) PVT. LTD., 3 HAVING BEEN GIVEN IN PURSUANCE OF NOTICE U/S.148. THERE AFTER, IN THE COURSE OF PROCEEDINGS BEFORE THE AO, THE ASSESSEE TRIED TO JUSTIFY ITS CLAIM OF GENUINENESS OF PURCHASE BUT WITHOUT SUCCE SS. THE AO TREATED THE AMOUNT OF BOGUS PURCHASES TOTALING AT RS.830,018/- AS LIABLE FOR INCLUSION IN THE TOTAL INCOME. AS SUCH, THIS AMOUNT WAS ADDED. NO RELIEF WAS ALLOWED IN THE FIRST APP EAL, AGAINST WHICH THE ASSESSEE HAS COME UP IN APPEAL BEFORE THE TRIBUNAL. 5. HAVING HEARD THE LD. DR THROUGH VIRTUAL COURT AND GONE THROUGH THE RELEVANT MATERIAL ON RECORD, WE FIND INSOFAR A S THE INITIATION OF REASSESSMENT PROCEEDINGS IS CONCERNED, THE AO RECEIVED CATEGORICAL INFORMATION FROM THE SALES TAX DEPARTME NT ABOUT THE HAWALA PURCHASES RACKET RUN BY CERTAIN PARTIES. THIS INFORMATION SPECIFICALLY INCLUDED NAME OF THE ASSESSEE IN THE LIS T OF BENEFICIARIES WITH TWO BILLS ISSUED BY ENTRY PROVIDERS NAMELY, PARAS STEEL INDIA AND NAVKAR IMPEX AMOUNTING TO RS.4,15,1 68/- AND RS.4,14,851/- RESPECTIVELY. IT WAS ON THE BASIS OF THIS INFORMATION THAT THE AO ISSUED NOTICE U/S.148. ITA NOS.3013 & 3014/PUN/2017 M/S. STEEL POINT (INDIA) PVT. LTD., 4 6. THE LAW IS TRITE THAT IT IS ONLY THE AOS PRIMA FACIE VIEW ABOUT THE ESCAPEMENT OF INCOME, WHICH IS RELEVANT AT THE STAGE OF ISSUANCE OF NOTICE. THE AO IS NOT REQUIRED TO CONCLUSIVELY P ROVE AT THE STAGE OF INITIATION OF REASSESSMENT PROCEEDINGS THAT THE INCOME OF THE ASSESSEE ESCAPED ASSESSMENT. ONCE SUCH PRIMA FACIE VIEW EXISTS ON THE BASIS OF CERTAIN MATERIAL, WHICH IS A STEP A WAY FROM THE WHIMSICAL OPINION OF THE AO ABOUT THE ESCAPEMENT O F INCOME, NO FAULT CAN BE FOUND WITH THE AO IN INITIATING REASSESSMENT PROCEEDINGS. THE HONBLE SUPREME COURT IN ACIT VS. RAJESH JHAVERI STOCK BROKERS PVT. LTD. (2007) 291 IT R 500 (SC) HAS HELD THAT AT THE INITIATION STAGE, WHAT IS REQUIRED IS REASON TO BELIEVE AND NOT THE ESTABLISHED FACT OF ESCAPEMENT OF INCOM E. IF THE AO HAS CAUSE OR JUSTIFICATION TO KNOW OR SUPPOSE THAT IN COME HAD ESCAPED ASSESSMENT, A NOTICE U/S.148 CAN BE VALIDLY GIV EN. SIMILAR VIEW HAS BEEN RECENTLY EXPRESSED BY THE HONBLE SU PREME COURT IN NEW DELHI TELEVISION LTD. VS. DCIT (2020) 424 ITR 607 (SC). IN VIEW OF THESE PRECEDENTS, IT IS AMPLY CLEAR THAT THE PRIMA FACIE VIEW FORMED BY THE AO ABOUT THE ESCAPEMENT OF INCOME, ON THE BASIS OF CATEGORICAL INFORMATION RECEIVED BY HIM FROM THE SALES TAX DEPARTMENT, DIVULGING THE ASSESSEE AS A BENEFICIARY O F BOGUS ITA NOS.3013 & 3014/PUN/2017 M/S. STEEL POINT (INDIA) PVT. LTD., 5 PURCHASE BILLS, CANNOT BE FOUND FAULT WITH. WE, THEREFORE, APPROVE THE INITIATION OF REASSESSMENT PROCEEDINGS. 7. THE NEXT GROUND RAISED IN THIS APPEAL IS AGAINST THE CONFIRMATION OF ADDITION OF RS.8,30,018/-. IT IS SEEN THAT THE AO MADE ADDITION AT 100% OF THE PURCHASE BILLS, WHICH CAME TO BE COUNTENANCED IN THE FIRST APPEAL. 8. IT IS SEEN THAT THE ISSUE OF BOGUS PURCHASES CAME UP FOR CONSIDERATION BEFORE THE HONBLE BOMBAY HIGH COURT IN PR.CIT VS. MOHOMMAD HAJI ADAM & CO. VIDE ITS JUDGMENT DATED 11-02- 2019 IN ITA NO.1004 OF 2016 AND OTHERS, THE HONBLE JURISDICTIONAL HIGH COURT HAS HELD THAT NO AD HOC ADDITION FOR BOGUS PURCHASES CAN BE MADE. IT LAID DOWN THAT THE ADDITION SHOULD BE MADE TO THE EXTENT OF DIFFERENCE BETWEEN THE GROSS PR OFIT RATE ON GENUINE PURCHASES AND GROSS PROFIT RATE ON HAWALA PURCH ASES. SUCH CASE SPECIFIC DETAILS ARE NOT AVAILABLE ON RECORD FOR FACILITA TING THE CALCULATION OF GROSS PROFIT RATE OF GENUINE AND HAWALA PURCH ASES. UNDER THESE CIRCUMSTANCES, WE SET ASIDE THE IMPUGNED ORDE R AND REMIT THE MATTER TO THE FILE OF THE AO FOR APPLYING THE RATIO LAID DOWN BY THE HONBLE JURISDICTIONAL HIGH COURT IN THE ABOVE NOTE D ITA NOS.3013 & 3014/PUN/2017 M/S. STEEL POINT (INDIA) PVT. LTD., 6 CASE AND RECOMPUTE THE AMOUNT OF ADDITIONS, IF ANY, AFTER A LLOWING A REASONABLE OPPORTUNITY OF HEARING TO THE ASSESSEE. SIMILA R VIEW HAS BEEN TAKEN BY THE PUNE BENCHES OF THE TRIBUNAL VIDE ITS ORDER DATED 26.09.2019 IN A BUNCH OF APPEALS LED BY DINESH RATH I VS. DCIT IN ITA NO.975/PUN/2017. A.Y. 2011-12 : 9. THE FACTS AND CIRCUMSTANCES FOR THE ASSESSMENT YEAR 2011-12 ARE MUTATIS MUTANDIS SIMILAR TO THOSE FOR THE ASSESSMENT YEAR 2010- 11 EXCEPT FOR DIFFERENCE IN THE AMOUNT OF PURCHASE BILLS AM OUNTING TO RS.11,24,562/-. THE AO ADDED 100% OF THE AMOUNT IN THE PROCEEDINGS BY MEANS OF NOTICE U/S.148 OF THE ACT. THE LD. CIT(A) ACCORDED HIS IMPRIMATUR TO THE DECISION OF THE AO. 10. FOLLOWING THE VIEW TAKEN HEREINABOVE, WE HOLD THAT THE ACTION OF THE AO IN INITIATING REASSESSMENT PROCEEDINGS IS VALID AND PROPER. INSOFAR AS THE CONFIRMATION OF ADDITION IS CONCERN ED, WE SET ASIDE THE IMPUGNED ORDER AND REMIT THE MATTER TO THE FIL E OF THE AO FOR DECIDING IT AFRESH IN ACCORDANCE WITH THE DISCUSSION MADE (SUPRA) FOR THE ASSESSMENT 2010-11. ITA NOS.3013 & 3014/PUN/2017 M/S. STEEL POINT (INDIA) PVT. LTD., 7 11. IN THE RESULT, BOTH THE APPEALS ARE PARTLY ALLOWED FOR S TATISTICAL PURPOSES. ORDER PRONOUNCED IN THE OPEN COURT ON 15 TH SEPTEMBER, 2020. SD/- SD/- (S.S. VISWANETHRA RAVI) (R.S.SY AL) JUDICIAL MEMBER VIC E PRESIDENT PUNE; DATED : 15 TH SEPTEMBER, 2020 SATISH / COPY OF THE ORDER IS FORWARDED TO : 1. / THE APPELLANT; 2. / THE RESPONDENT; 3. THE CIT(A)-6, PUNE 4. 5. THE PR. CIT-5, PUNE , , / DR B, ITAT, PUNE 6. / GUARD FILE / BY ORDER, // TRUE COPY // SENIOR PRIVATE SECRETARY , / ITAT, PUNE ITA NOS.3013 & 3014/PUN/2017 M/S. STEEL POINT (INDIA) PVT. LTD., 8 DATE 1. DRAFT DICTATED ON 14-09-2020 SR.PS 2. DRAFT PLACED BEFORE AUTHOR 14-09-2020 SR.PS 3. DRAFT PROPOSED & PLACED BEFORE THE SECOND MEMBER JM 4. DRAFT DISCUSSED/APPROVED BY SECOND MEMBER. JM 5. APPROVED DRAFT COMES TO THE SR.PS/PS SR.PS 6. KEPT FOR PRONOUNCEMENT ON SR.PS 7. DATE OF UPLOADING ORDER SR.PS 8. FILE SENT TO THE BENCH CLERK SR.PS 9. DATE ON WHICH FILE GOES TO THE HEAD CLERK 10. DATE ON WHICH FILE GOES TO THE A.R. 11. DATE OF DISPATCH OF ORDER. *