HARESH A ROHRA, THANE V. ITO WD 1(4), THANE

ITA 4563/MUM/2015

• Counselvise Citation: [2017] 128 COUNSELVISE.COM (IT) 0612 (ITAT-MUMBAI)
• Duration Of Justice: 1 year(s) 10 month(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 05-06-2017
• Appeal Filed By: Assessee
• Bench Allotted: H
• Next Hearing Date: 17-05-2017
• Assessment Year: 2010-2011
• Appeal Filed On: 05-08-2015
• Court: TRIBUNAL
• Department Lawyers: M C OMI NINGSHEN
• Keywords: Bogus purchase
• Section: 69C; 234B; 148

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL H , BENCH MUMBAI BEFORE SHRI R.C.SHARMA, AM & SHRI RAVISH SOOD , JM ITA NO. 4563 / MUM/20 1 5 ( ASSESSMENT YEAR : 2010 - 11 ) HARESH A. ROHRA 4/A, SHALIMAR SOCIETY KOPRI COLONY, THANE VS. ITO WD 1(4), THANE - 400604 PAN/GIR NO. ADVPR3257J APPELLANT ) .. RESPONDENT ) ITA NO. 4551/ MUM/20 15 ( ASSESSMENT YEAR : 2010 - 11 ) ITO WD 1(5), THANE VS. HARESH A ROHRA PROP. M/S. MAHAVIR CORPORATION, FLAT NO.4, SHALIMAR SOCIETY, KOPRI COLONY, THANE 400603 PAN /GIR NO. ADVPR3257J APPELLANT ) .. RESPONDENT ) ASSESSEE BY SHRI ASHWIN KASHINATH REVENUE BY SHRI M.C. OMI NINGSHEN DATE OF HEARING 17 / 05/ 201 7 DATE OF PRONOUNCEME NT 05 / 06 /201 7 / O R D E R PER R.C.SHARM A (A.M) : THESE CROSS APPEALS ARE FILED BY THE ASSESSEE AND REVENUE AGAINST THE ORDER OF CIT(A) - 1, THANE DATED 29/05/2015 FOR THE A.Y.2010 - 11 IN THE MATTER OF ORDER PASSED U/S.143(3) R.W.S.147 OF THE IT ACT. 2. THE FOLLOWING GROUNDS HAVE BEEN TAKEN BY TH E ASSESSEE: - ITA NO. 4563/MUM/2015 & 4551/MUM/2015 HARESH A ROHRA 2 1. ON THE FACTS AND CIRCUMSTANCES OF THE CASE AND IN LAW, THE CIT(A) ERRED IN PARTIALLY UPHOLDING THE ACTION OF THE AO IN MAKING AN ADDITION OF RS.51 ,08,901/ - U/S 69C OF THE ACT BEING ALLEGED BOGUS PURCHASES FROM ALLEGED HAWALA DEALERS BY CON FIRMING THE SAME AT 25% OF THE ORIGINAL ADDITION AMOUNTING TO RS.12,77,226/ - . 2 ON THE FACTS AND CIRCUMSTANCES OF THE CASE AND IN LAW, THE CIT(A) ERRED IN CONFIRMING THE CHARGEABILITY OF INTEREST U/S 234A, 234B & 234C. 3 . THE FOLLOWING GROUNDS HAVE BEE N TAKEN BY THE REVENUE: - 1.1 WHETHER ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE, AND IN LAW, THE HON'BLE C IT(A ) ERRED IN NOT CONFIRMING ADDITION AT 100% OF BOGUS PURCHASES OF RS.51,08,901/ - OUT OF TOTAL P URCHASES OF RS. 1,49,41,933/ - DESPITE HOLDIN G THAT THE PURCHASES OF RS. 51,08,901/ - WERE NOT GENU INE AND THE ASSESSEE FAILED TO PROVE THE GENUINENESS OF THE TRANSACTIONS EVEN AFTER GIVING AMPLE OPPORTUNITIES. 1.2 WHETHER ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE, AND IN LAW, THE HON'BLE C I T(A) ERRED IN DELETING THE ABOVE ADDITION DESPITE THE FACT THAT THE ASSESSEE FAILED TO DISCHARGE HIS ONUS OF PROVING THE PURCHASES. 1.3 WHETHER ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE, AND IN LAW, THE HON'BLE CIT(A) ERRED IN DELETING THE ABOVE A DDITION DESPITE THE FACT THAT THE ASSESSEE FAILED TO EVEN FURNISH QUANTITATIVE T ALLY OF THE STOCK AS STATED BY C IT(A ) IN PARA 5 OF HIS ORDER. 2. THE ORDER OF THE C IT(A ) MAY BE VACATED AND THAT OF THE ASSESSING OFFICER MAY BE RESTORED. 4. RIVAL CONTEN TIONS HAVE BEEN HEARD AND RECORD PERUSED. 5. FACTS IN BRIEF ARE THAT THE ASSESSEE IS A PROPRIETOR OF M/S. MAHAVIR CORPORATION AND ENGAGED IN THE BUSINESS OF MANUFACTURER, IMPORTER, AND EXPORTER OF ALL TYPES OF BEARINGS. I NFORMATION WAS RECEIVED BY THE ASSE SSING OFFICER THAT FEW OF THE PARTIES, FROM WHOM THE ASSESSEE HAD PURCHASED THE MATERIAL / GOODS, WERE SUSPICIOUS. THIS INFORMATION WAS ITA NO. 4563/MUM/2015 & 4551/MUM/2015 HARESH A ROHRA 3 RECEIVED FROM THE SALES TAX DEPARTMENT, WHICH HAD DECLARED IN PUBLIC DOMAIN THAT THESE PARTIES WERE MERE HAW ALA GIVERS . SALES TAX DEPARTMENT ALSO CLAIMED THAT THESE PARTIES HAD STATED ON OATH BEFORE THEM THAT THEY HAVE MERELY PROVIDED ENTRIES TO THE BENEFICIARIES AND NO GOODS WERE ACTUALLY DELIVERED BY THEM. THE AO, THEREFORE, CONCLUDED THAT THE ASSESSEE HAD SUPPRESSED TH E INCOME TO THE EXTENT OF RS.51,08,901/ - , BY DEBITING THESE BOGUS BILLS, IN THE PROFIT & LOSS ACCOUNT. ACCORDINGLY, A NOTICE U/S. 148 OF THE I.T. ACT, 1961, WAS ISSUED, AFTER RECORDING REASONS TO BELIEVE THAT THE INCOME OF THE ASSESSEE, FOR A.Y.2010 - 11, HA S ESCAPED THE ASSESSMENT. DURING THE COURSE OF RE - ASSESSMENT PROCEEDINGS, IN ORDER TO JUSTIFY THE GENUINENESS OF PURCHASES, THE NOTICES U/S.133(6) OF THE I.T. ACT, 1961, WERE ISSUED ON GIVEN ADDRESSES, BUT RETURNED BACK UNSERVED WITH A REMARK NOT KNOWN. IN VIEW OF THESE FACTS, THE AO DISALLOWED ENTIRE HAWALA PURCHASES, AMOUNTING TO RS.51,08,901/ - AND ADDED BACK TO THE TOTAL INCOME OF THE ASSESSEE. 6. BY THE IMPUGNED ORDER CIT(A) RESTRICTED TH E ADDITION TO THE EXTENT OF 25% OF BOGUS PURCHASES AFTER OBSERVI NG AS UNDER: - 5.6. I HAVE CAREFULLY CONSIDERED THE SUBMISSIONS OF THE LD. AR AND NOTICED THAT THE CLAIM OF THE APPELLANT I.E. SALES AGAINST HAWALA PURCHASES HAVE ALSO BEEN CREDITED IN THE P & L A/C., APPEARS TO BE IN ORDER, KEEPING IN VIEW THE GP / NP RATE S, SHOWN IN PAST AND IN SUBSEQUENT YEARS. THEREFORE, THIS IS NOT A CASE WHERE THE ENTIRE AMOUNT HAS BEEN SIPHONED OFF, BY WAY OF DEBITING BOGUS PURCHASES. IN MY CONSIDERED OPINION, IT IS A CASE WHERE, AT THE MOST, PURCHASES MIGHT HAVE BEEN INFLATED. CONSID ERING THE DECISION OF HONBLE GUJARAT HC IN THE CASE OF SANJAY OIL CAKE MILLS AND VIJAY PROTEINS ETC., AS ABOVE, IN MY OPINION, 25% DISALLOWANCE, OUT OF HAWALA PURCHASES, WILL BE REASONABLE. ITA NO. 4563/MUM/2015 & 4551/MUM/2015 HARESH A ROHRA 4 ACCORDINGLY, I HEREBY CONFIRM 25% DISALLOWANCE OF ABOVE PURCHASES I.E., RS.12,77,225/ - (25% OF RS.51,08,901/ - ) AND DELETE THE BALANCE AMOUNT OF RS.38,31,676/ - (RS.51,08,901 - 12,77,225/ - ) OUT OF TOTAL DISALLOWANCE OF RS.51,08,901/ - . BOTH THE GROUNDS OF APPEAL ARE, THEREFORE, DECIDED ACCORDINGLY. 7. AGAINST THE ABOVE ORDE R OF CIT(A), BOTH ASSESSEE AND REVENUE ARE IN APPEAL BEFORE US. 8. FROM THE RECORD, WE FOUND THAT AO HAS MADE ADDITION ON THE PLEA THAT SUPPLIERS WERE NOT TRACEABLE. HOWEVER, THE CIT(A) FOUND THAT ASSESSEE HAS MADE SALES IN RESPECT OF ALLEGED BOGUS PURCHAS ES, THEREFORE, IT IS NOT A CASE WHERE ENTIRE AMOUNT HAS BEEN SIPHONED OFF BY WAY OF OBTAINING BOGUS PURCHASES. THEREFORE, AFTER APPLYING THE JUDICIAL PRONOUNCEMENTS BY GUJARAT HIGH COURT IN CASE OF SANJAY OIL CAKE INDUSTRIES 316 ITR 274 AND VIJAY PROTEINS LTD., 58 ITD 428 RESTRICTED THE ADDITION TO THE EXTENT OF 25%. 9. IT WAS THE CONTENTION OF LEARNED AR THAT FACTS OF SANJAY OIL CAKE INDUSTRIES (SUPRA) WERE ENTIRELY DIFFERENT. OUR ATTENTION WAS INVITED TO THE LEDGER ACCOUNT OF ALL THE SUPPLIERS IN THE ASS ESSEES BOOKS, IN VOICE ISSUE D BY THEM , RELEVANT EXTRACT OF THE BANK STATEMENT SHOWING PAYMENT MADE IN RESPECT OF PURCHASES MADE FROM THESE PARTIES. OUR ATTENTION WAS ALSO INVITED TO THE STATEMENT SHOWING MOVEMENT OF STOCKS AS MAINTAINED BY THE ASSESSEE. WE FOUND THAT ASSESSEE HAS MAINTAINED STOCK REGISTER WITH REGARD TO THE PURCHASE AND SALE OF GOODS. 10. LEARNED AR PLACED ON RECORD THE ORDER OF THE TRIBUNAL IN ASSESSEES OWN CASE FOR THE A.Y.2009 - 10 AND 2011 - 12 DATED 14/09/2016 IN ITA ITA NO. 4563/MUM/2015 & 4551/MUM/2015 HARESH A ROHRA 5 NO.4562 & 4564/MUM/2 015, WHEREIN SIMILAR ADDITION MADE ON ACCOUNT OF BOGUS PURCHASES WHICH WAS UPHELD BY CIT(A) AT 25%, WAS REDUCED BY THE TRIBUNAL TO THE EXTENT OF 12.5%. WE HAD CAREFULLY GONE THROUGH THE ORDER OF THE TRIBUNAL IN ASSESSEES OWN CASE, WHEREIN TRIBUNAL HAVE RE STRICTED THE ADDITION TO THE EXTENT OF 12.5% AFTER HAVING THE FOLLOWING OBSERVATION: - 3. I HAVE HEARD THE RIVAL SUBM I SSIONS, CAREFULLY CONSIDERED THE SAME ALONG WITH THE ORDERS OF THE TAX AUTHORITIES BELOW. I AM OF THE VIEW THAT ONCE THE ASSESSEE IS NOT A BLE TO PROVE THE PURCHASES BUT THE ASSESSEE HAS ACTUALLY CONSUMED THE RAW MATERIAL, THIS PROVES THAT THE ASSESSEE MIGHT HAVE GOT THE RAW MATERIAL NOT FROM THE PARTIES WHICH THE ASSESSEE HAS SHOWN BUT FROM OTHER PARTIES THAT MAY BE WITHOUT BILLS. THE ASSESS EE IN THIS MANNER WOULD HAVE SAVED AT LEAST VAT ON SUCH PURCHASES. SO FAR THE GROSS PROFIT EARNED ON THE GOODS WHICH WERE MANUFACTURES OUT OF THESE PURCHASES WOULD HAVE ALREADY BEEN ACCOUNTED FOR IN THE PROFIT & LOSS ACCOUNT. IT IS THE SAVING IN THE EXCISE OR THE VAT WHICH THE ASSESSEE WOULD HAVE SAVED. I, THEREFORE, KEEPING IN VIEW THIS FACT, AM OF THE VIEW THAT THE ESTIMATION OF DIS ALLOWANCE @ 25% IS ON HIGHER SIDE AND ACCORDINGLY, I REDUCE THE ADDITION TO 12.5% OF SUCH BOGUS PURCHASE. THUS, THE DISALLOWAN CE IN THE ASSESSMENT YEAR 2009 - 10 IS SUSTAINED TO THE EXTENT OF 12.5 % OF RS.37,53,464/ - AND IN THE ASSESSMENT YEAR 2011 - 12 @12.5% OF RS.17,98 , 936/ - . THUS, GROUND NO. 1 IN BOTH THE YEARS IS PARTLY ALLOWED. 11 . AS THE FACTS AND CIRCUMSTANCES DURING THE YEAR UNDER CONSIDERATION ARE PARAMETRIA , RESPECTFULLY FOLLOWING THE ORDER OF THE TRIBUNAL IN ASSESSEES OWN CASE, WE DIRECT THE AO TO RESTRICT THE ADDITION TO THE EXTENT OF 12.5%. 1 2 . IN THE RESULT, APPEAL OF REVENUE IS DISMISSED WHEREAS APPEAL OF ASSESSEE IS AL LOWED IN PART. O RDER PRONOUNCED IN THE OPEN COURT ON THIS 05 / 06 /2017 S D/ - ( RAVISH SOOD ) S D/ - ( R.C.SHARMA ) JUDICIAL MEMBER ACCOUNTANT MEMBER MUMBAI ; DATED 05 /06 /201 7 KARUNA SR. PS ITA NO. 4563/MUM/2015 & 4551/MUM/2015 HARESH A ROHRA 6 COPY OF THE ORDER FORWARDED TO : BY ORDER, ( ASSTT. REGISTRAR) ITAT, MUMBAI 1. THE APPELLANT 2. THE RESPONDENT. 3. THE CIT(A), MUMBAI. 4. CIT 5. DR, ITAT, MUMBAI 6. GUARD FILE. //TRUE COPY//