SATNAM STEEL TRADERS, THANE V. DCIT CIR 1, MUMBAI

ITA 3555/MUM/2015

• Counselvise Citation: [2017] 128 COUNSELVISE.COM (IT) 0921 (ITAT-MUMBAI)
• Duration Of Justice: 1 year(s) 10 month(s) 23 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 03-05-2017
• Appeal Filed By: Assessee
• Bench Allotted: D
• Assessment Year: 2009-2010
• Appeal Filed On: 10-06-2015
• Court: TRIBUNAL
• Department Lawyers: VINITA J MENON
• Assessee Lawyers: V G GINDE
• Keywords: Bogus purchase
• Section: 143(3)

Judgement Text

D IN THE INCOME TAX APPELLATE TRIBUNAL D BENCH, MUMBAI BEFORE SHRI R.C. SHARMA, AM AND SHRI RAVISH SOOD, JM ./I.T.A. NO.3555/M/2015 ( / ASSESSMENT YEAR: 2009 - 2010 ) SATNAM STEEL TRADERS, NEAR KOTA STONE, KALYAN - BHIWANDI ROAD, VILLAGE RAJNOLI, BHIWANDI, THANE 421302. / VS. DCIT , CIRCLE - 1, 1 ST FLOOR, MOHAN PLAZA, WAYLE NAGAR, KHADAKPARA, KALYAN (W) 421301. ./ PAN : AAGFS8329C ( / APPELLANT) .. ( / RESPONDENT ) ./I.T.A. NO.3618/M/2015 ( / ASSESSMENT YEAR: 2009 - 2010 ) DCIT , CIRCLE - 1, 1 ST FLOOR, MOHAN PLAZA, WAYLE NAGAR, KHADAKPARA, KALYAN (W) 421301. / VS. SATNAM STEEL TRADERS, NEAR KOTA STONE, KALYAN - BHIWANDI ROAD, VILLAGE RAJNOLI, BHIWANDI, THANE 421302. ./ PAN : AAGFS8329C ( / APPELLANT) .. ( / RESPONDENT ) / ASSESSEE BY : SHRI V.G. GINDE / REVENUE BY : V INITA J MENON, DR / DATE OF HEARING : 06.04.2017 / DATE OF PRONOUNCEMENT : 03 .05.2017 / O R D E R PER R.C. SHARMA, AM: THESE ARE THE CROSS APPEALS FILED BY THE ASSESSEE AND THE REVENUE AGAINST THE ORDER OF THE CIT (A) FOR THE AY 2009 - 2010, IN THE MATTER OF ORDER PASSED U/S 143(3) R.W.S 147 OF THE INCOME TAX ACT, 1961. 2 2. BOTH THE ASSESSEE AND THE REVENUE ARE AGGRIEVED FOR ADDITION MADE ON ACCOUNT OF BOGUS PURCHASES. 3. RIVAL CONTENTIONS HAVE BEEN HEARD AND RECORD PERUSED. 4. DURING THE COURSE OF ASSESSMENT U/S 143(3) READ WITH SECTION 147 OF THE ACT, AO OBSERVED THAT ASSESSEE HAS MADE PURCHASES FROM TWO PARTIES NAMELY (I) AMAR ENTERPRISES AND (II) SUNRISE ENTERPIRSES T OTALLING TO RS. 50,56,480/ - , AS PER THE INFORMATION AVAILABLE FROM SALES TAX DEPARTMENT OF MAHARASHTRA THE SAID TWO PARTIES ARE THE HAWALA DEALERS AND NO ACTUAL SALES HAS BEEN EFFECTED. ACCORDINGLY, AO ADDED THE ENTIRE AMOUNT OF PURCHASES IN THE INCOME OF THE ASSESSEE. BY THE IMPUGNED ORDER, CIT (A) GAVE R E L I E F OF 60% AND UPHELD 40% OF SUCH BOGUS PURCHASES. AGAINST THIS ORDER OF THE CIT (A), BOTH THE ASSESSEE AND THE REVENUE ARE IN APPEAL BEFORE US. 5. WE HAVE HEARD THE RIVAL CONTENTIONS CAREFULLY AND GONE THRO UGH THE ORDERS OF THE AUTHORITIES BELOW. FROM THE RECORD, WE FIND THAT ON THE BASIS OF INFORMATION FROM THE SALES TAX DEPARTMENT, AO TREATED THE PURCHASES AS BOGUS. WE FOUND THAT BEFORE THE LOWER AUTHORITIES, ASSESSEE HAS PRODUCED THE FOLLOWING DOCUMENTS : - 2.0. COPY OF LEDGER ACCOUNT OF M/S. SUNRISE ENTERPRISES AND M/S. AMAR ENTERPRISES ALONG WITH COPY OF THEIR PURCHASE INVOICES AND DELIVERY CHALLANS ARE EN CLOSED. 3.0. COPY OF BANK STATEMENTS HIGHLIGHTING THE PAYMENTS MADE TO THE ABOVE SUPPLIERS IS ENC LOSED. 4.0. COPY OF STOCK REGISTER SHOWING THE INWARDS ENTRY FOR THE PURCHASES FROM THE ABOVE MENTIONED PARTIES ARE ENCLOSED. THE SUMMARY OF STOCK REGISTER WAS ALSO ENCLOSED ALONG WITH THE TAX AUDIT REPORT WHICH WAS SUBMITTED DURING THE ASSESSMENT U/S 143 (3). THE ASSESSEE IS A RESELLER OF IRON AND STEEL AND HENCE TO MAKE SALES, PURCHASES WILL BE REQUIRED TO BE MADE. THE BOOKS OF ACCOUNTS HAVE NOT BEEN REJECTED BY THE AO AND HENCE, THE AO AGREES TO THE FACT THAT THE STOCK, SALES AMOUNTS ARE ACCEPTED AND NO DEVIATIONS ARE NOTICED. THE ASSESSEE HAS ALSO PRODUCED QUANTITATIVE DETAILS OF STOCK MOVEMENT. IN SUCH A CASE, IT IS IMPOSSIBLE FOR THE ASSESSEE TO SELL SOMETHING WHICH HAS NOT BEEN PURCHASES. 6. IT WAS CONTENDED BY THE LD AR THE MAHARASHTRA SALES TA X DEPARTMENT HAS TREATED THESE PARTIES AS BOGUS BASED ON WRITTEN STATEMENTS AND AFFIDAVITS TAKEN BY THEM. HOWEVER, STATEMENTS AND AFFIDAVITS OF VENDORS FILED BEFORE THE SALES TAX AUTHORITIES CANNOT BE USED AS EVIDENCE AGAINST THE ASSESSEE UNLESS OPPORTUNI TY FOR CROSS EXAMINATION WAS GIVEN TO THE ASSESSEE. THIS VIEW HAS BEEN TAKEN IN THE FOLLOWING JUDICIAL PRONOUNCEMENTS: 3 ITO VS. PERMANAND [2007] 107 TTJ (JD) 395 KISHICHAND CHELLARAM VS. CIT [1980] 125 ITR 713 (SC) JAGDAMBA TRADING CO. VS. ITO [2007] 107 T TJ (JD) 398 PRAKAS CHAND NAHATA VS. CIT [2008] 301 ITR 134 (MP) 7. IN VIEW OF THE ABOVE DISCUSSION AND KEEPING IN VIEW THE TOTALITY OF THE FACTS AND CIRCUMSTANCES OF THE CASE VIS - A - VIS THE NATURE OF THE ASSESSEES BUSINESS AND THE GP AND THE NP DISCLOSED BY THE OTHER BUSINESS HOUSES ENGAGED IN SIMILAR ACTIVITY, WE DIRECT THE AO TO RESTRICT THE ADDITION TO THE EXTENT OF 10% OF THE BOGUS PURCHASES. WE DIRECT ACCORDINGLY. 8. IN THE RESULT, APPEAL OF THE REVENUE IS DISMISSED WHERE THE APPEAL OF THE ASSESSEE IS ALLOWED IN PART. ORDER PRONOUNCE D IN THE OPEN C OURT ON 0 3 R D MAY, 2017. S D / - S D / - ( RAVISH SOOD) (R.C. SHARMA) JUDICIAL MEMBER ACCOUNTANT MEMBER MUMBAI ; 03.05.2017 . . ./ OKK , SR. PS / COPY OF THE ORDER FORWARDED TO : 1. / THE APPELLANT 2. / THE RESPONDENT. 3. ( ) / THE CIT(A) - 4. / CIT 5. , , / DR, ITAT, MUMBAI 6. / GUARD FILE . //TRUE COPY// / BY ORDER, / (DY./ASSTT. REGISTRAR) , / ITAT, MUMBAI