SUSANTA KUMAR SARKAR, PUNE V. INCOME TAX OFFICER , WARD 3 (4) , PUNE

ITA 336/PUN/2020

• Counselvise Citation: [2021] 107 COUNSELVISE.COM (IT) 4240 (ITAT-PUNE)
• Duration Of Justice: 1 year(s) 6 month(s) 27 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 06-10-2021
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: SMC
• Assessment Year: 2009-2010
• Appeal Filed On: 09-03-2020
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Assessee Lawyers: IS DIRECTED AGAINS T PASSED
• Keywords: Bogus purchase; Reassessment proceedings; Set aside

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL PUNE BENCH, SMC PUNE VIRTUAL COURT BEFORE SHRI R.S. SYAL, VICE PRESIDENT AND SHRI S.S. VISWANETHRA RAVI, JUDICIAL MEMBER . / ITA NO.336/PUN/2020 / ASSESSMENT YEAR : 2009-10 SUSANTA KUMAR SARKAR, M/S. GAYATRI ERECTORS, RAHUL TOWERS, 104, A-1 WING, S.NO.95(P), PLOT NO.-B, PAUD ROAD, KOTHRUD, PUNE 411038 PAN : AKVPS2686K VS. ITO, WARD-3(4), PUNE APPELLANT RESPONDENT / ORDER PER R.S.SYAL, VP : THIS APPEAL BY THE ASSESSEE IS DIRECTED AGAINST THE ORDER PA SSED BY THE CIT(A)-3 PUNE ON 10-12-2019 IN RELATION TO THE ASSES SMENT YEAR 2009-10. 2. THE ONLY ISSUE RAISED IN THIS APPEAL THROUGH VARIOUS GRO UNDS IS AGAINST THE CONFIRMATION OF ADDITION OF RS.6,74,204/- TOWARD S GROSS PROFIT MADE ON ACCOUNT OF BOGUS PURCHASES AT 24.66% OF THE PURCHASE VALUE. 3. BRIEFLY STATED, THE FACTS OF THE CASE ARE THAT THE ASSESS EE IS ENGAGED IN THE BUSINESS OF MANUFACTURING OF VARIOUS TYPES OF ASSESSEE BY SHRI M.K. KULKARNI REVENUE BY SHRI SUDHENDU DAS DATE OF HEARING 05-10-2021 DATE OF PRONOUNCEMENT 06-10-2021 ITA NO.336/PUN/2020 SUSANTA KUMAR SARKAR 2 ENGINEERING & MACHINERY JOBS. THE ASSESSEE IS ALSO INTO TRAD ING OF VARIOUS TYPES OF ENGINEERING MS & SS PIPES, PLATE, FLANGES & M S & CR SHEETS. HE FILED THE RETURN OF INCOME DECLARING TOTAL INCOM E OF RS.17,89,250/-. NOTICE U/S.148 OF THE ACT WAS ISSUED ON 10-03-2014 BY THE ASSESSING OFFICER (AO) ON RECEIVING INF ORMATION FROM THE OFFICE OF DIRECTOR GENERAL (INVESTIGATION) THAT THE A SSESSEE HAD INDULGED IN HAWALA TRANSACTIONS. THE ASSESSEE WAS ONE OF THE BENEFICIARIES HAVING RECEIVED BOGUS BILLS. THE ASSESSEE MA DE HAWALA PURCHASES TO THE TUNE OF RS.31,01,264/-. DURING THE CO URSE OF THE ASSESSMENT PROCEEDINGS, THE ASSESSEE WAS ASKED TO PRODU CE VARIOUS DETAILS IN RELATION TO THE PURCHASES MADE FROM THE SO-CALLED PA RTIES. THE ASSESSEE PRODUCED CONFIRMATIONS IN RESPECT OF THREE P ARTIES, NAMELY, M/S. ANUCOOL INDUSTRIAL AIDS PVT. LTD., AMOUNTING TO RS.3,85,032/-; WAGHMARE SHOES - RS.21,870/-; AND SUPER TRADERS - RS.60,362/-. IN THE ABSENCE OF THE ASSESSEE FURNISHING COMPLETE DETAILS IN RESPECT OF THE REMAINING PARTIES, THE AO MADE AN AD DITION @24.66% OF THE PURCHASE PRICE TOWARDS EXCESS GROSS PRO FIT, WHICH CAME TO BE AFFIRMED IN THE FIRST APPEAL. AGGRIEVED THEREBY, THE ASSESSEE HAS APPROACHED THE TRIBUNAL. 4. WE HAVE HEARD BOTH THE SIDES THROUGH VIRTUAL COURT AND GONE THROUGH THE RELEVANT MATERIAL ON RECORD. IT IS SEEN THAT THE ITA NO.336/PUN/2020 SUSANTA KUMAR SARKAR 3 REASSESSMENT PROCEEDINGS WERE INITIATED AND THE ASSESSMENT WAS COMPLETED U/S.144 R.W.S.147 OF THE INCOME-TAX ACT, 1961 ( HEREINAFTER CALLED THE ACT) ON 23-03-2015 DETERMINING TOTAL INCOME AT RS.24,63,460/-. THE POINT RAISED HEREIN IS AGAINST THE A DDITION ON ACCOUNT OF PROFIT ON HAWALA PURCHASES. THE ISSUE OF BOG US PURCHASES AND THE CONSEQUENTIAL ADDITION HAS COME UP FOR CONSIDERATION BEFORE THE HONBLE BOMBAY HIGH COURT IN PR. CIT & ORS. VS. MOHAMMAD HAJI ADAM & CO. & ORS. (2019) 104 CCH 0391 MUMHC. THE HONBLE JURISDICTIONAL HIGH COURT HAS HELD IN THIS CASE THAT NO AD HOC ADDITION OF BOGUS PURCHASES IS WARRANTED. RATHER THE ADDITIO N SHOULD BE MADE TO THE EXTENT OF DIFFERENCE BETWEEN THE GROSS PROF IT RATE ON GENUINE PURCHASES AND GROSS PROFIT RATE ON HAWALA PURCHA SES. 5. FIRSTLY, IT IS FOUND AS AN ADMITTED POSITION THAT THE H AWALA PURCHASES IN THE EXTANT CASE WERE UTILIZED IN THE TRADING BUSINE SS AND NOT CONSUMED IN THE MANUFACTURING BUSINESS. IT IS FURTHER CLE AR THAT THE ASSESSEE HAD PROPERLY ACCOUNTED FOR THE PURCHASES S O MADE AGAINST HAWALA TRANSACTIONS. IN OTHER WORDS, THE ACTUAL PU RCHASES MADE AGAINST THE DEPICTED HAWALA PURCHASES HAVE BEEN EITHER SOLD OR AVAILABLE IN THE CLOSING STOCK. CERTAINLY ADDITION ON ACCOUNT OF HAWALA PURCHASES IS REQUIRED TO BE MADE, BUT, RESPECTFU LLY FOLLOWING THE RATIO IN THE CASE OF MOHAMMAD HAJI ADAM (SUPRA), THE QUANTUM ITA NO.336/PUN/2020 SUSANTA KUMAR SARKAR 4 OF ADDITION TOWARDS BOGUS PURCHASES, NEEDS TO BE WORKED OUT BY CONSIDERING SIMILAR PURCHASES MADE BY THE ASSESSEE FROM GENUINE TRANSACTIONS AND THEREAFTER FINDING OUT THE EXCESS AMOUNT OF PURCHASES RECORDED THROUGH HAWALA TRANSACTIONS. THE DIFF ERENTIAL PERCENTAGE BETWEEN THE TWO PRICES IS DIRECTED TO BE APPLIED TO THE AMOUNT OF HAWALA PURCHASES FOR MAKING ADDITION ON THIS SCOR E. WE, THEREFORE, SET ASIDE THE IMPUGNED ORDER AND REMIT THE MATTE R TO THE FILE OF THE AO FOR WORKING OUT THE CORRECT AMOUNT OF ADDITION IN TERMS OF OUR ABOVE OBSERVATIONS AFTER ALLOWING A REASONAB LE OPPORTUNITY OF HEARING TO THE ASSESSEE. 6. IN THE RESULT, THE APPEAL IS ALLOWED FOR STATISTICAL PURPOSES . ORDER PRONOUNCED IN THE OPEN COURT ON 06 TH OCTOBER, 2021. SD/- SD/- ( S.S. VISWANETHRA RAVI ) (R.S.SYAL) JUDICIAL MEMBER VIC E PRESIDENT PUNE; DATED : 06 TH OCTOBER, 2021 ITA NO.336/PUN/2020 SUSANTA KUMAR SARKAR 5 / COPY OF THE ORDER IS FORWARDED TO : 1. / THE APPELLANT; 2. / THE CIT(A)-3 PUNE 3. THE PR.CIT-2, PUNE 4. 5. DR, ITAT, SMC BENCH, PUNE / GUARD FILE. / BY ORDER, // TRUE COPY // SENIOR P RIVATE SECRETARY , / ITAT, PUNE DATE 1. DRAFT DICTATED ON 05-10-2021 SR.PS 2. DRAFT PLACED BEFORE AUTHOR 06-10-2021 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. *