DCIT 5(1)(1), MUMBAI V. ARVIND PIPES & FITTINGS INDUSTRIES P.LTD, MUMBAI

ITA 636/MUM/2016

• Counselvise Citation: [2018] 126 COUNSELVISE.COM (IT) 0430 (ITAT-MUMBAI)
• Duration Of Justice: 2 year(s) 4 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 13-02-2018
• Appeal Filed By: Department
• Order Result: Allowed
• Bench Allotted: Not Allotted
• Assessment Year: 2009-2010
• Appeal Filed On: 08-02-2016
• Result in Favour of: Revenue
• Court: TRIBUNAL
• Department Lawyers: KRISH DESAI; BHUMIKA RATHOD
• Assessee Lawyers: V JUSTIN
• Keywords: Bogus purchase; Accommodation entries

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL E , BENCH MUMBAI BEFORE SHRI R.C.SHARMA, AM & SHRI SANDEEP GOSAIN , JM ITA NO. 636 / MUM/20 16 ( ASSESSMENT YEAR : 2009 - 10 ) DCIT 5(1)(1) R.NO.568, 5 TH FLOOR AAYAKAR BHAVAN,M.K.ROAD MUMBAI 400 020 VS. M/S. ARVIND PIPES & FITTINGS INDUSTRIES PVT. LTD., SHOP NO.2, GROUND FLOOR 12, NENE BUILDING, SADHASHIV X LANE, V.P.ROAD, GIRGAON MUMBAI 400 004 PAN/GIR NO. AABCA3906B APPELLANT ) .. RESPONDENT ) ASSESSEE BY SHRI V. JUSTIN REVENUE BY S HRI KRISH DESAI AND MS. BHUMIKA RATHOD DATE OF HEARING 07 / 02 /201 8 DATE OF PRONOUNCEME NT 13 / 02 /201 8 / O R D E R PER R.C.SHARMA (A.M) : THIS IS AN APPEAL FILED BY THE REVENUE AGAINST THE ORDER OF CIT(A) - 9, MUMBAI DATED 14/12/2015 FO R A.Y.2009 - 10 IN THE MATTER OF ORDER PASSED U/S.143(3) R.W.S. 147 OF THE I.T.ACT, 1961. 2. IN THIS APPEAL, ASSESSEE IS AGGRIEVED FOR DELETING THE ADDITION ON ACCOUNT OF BOGUS PURCHASES AMOUNTING TO RS.45,50,580/ - COMPUTED BY AO AT 12.5% OF THE ACCOMMODATION PURC HASE ENTRIES. 3. RIVAL CONTENTIONS HAVE BEEN HEARD AND RECORD PERUSED. ITA NO. 636/MUM/2016 M/S. ARVIND PIPES & FITTINGS INDUSTRIES PVT. LTD., 2 4. FACTS IN BRIEF ARE THAT THE ASSESSEE IS ENGAGED IN THE BUSINESS OF MANUFACTURING AND TRADING IN STAINLESS STEEL PIPES, FITTINGS, TUBES AND FLANGES. IN THIS CASE, INFORMATION HAS BEEN RECEIVED FROM THE SALES TAX DEPARTMENT THAT THE ASSESSEE HAS INDULGED IN HAWALA TRANSACTIONS USING THE NAMES OF FOLLOWING DEALERS WHICH ARE AS UNDER: - SR. NO. HAWALA TIN HAWALA NAME HAWALA PAN FY AMOUNT IN RS. 1 27130611219V SHIV SAGAR STEEL (INDIA) AODPP0628N 2008 - 09 39,25,930 2 27930587111V NEW ZONE MULTITRADE PVT. LTD. AAECM7719B 2008 - 09 81,81,233 3 27840662966V TYSON STEEL AND TUBES P. LTD. AACCT9484B 2008 - 09 34,91,779 4 27770552376V PINAKING METAL INDUSTRIE S ADTPV0045L 2008 - 09 2,13,380 5 27280526504V RAJENDRA IMPEX INDIAS ABEPS2046P 2008 - 09 1,96,65,905 6 27440677542V GOOD LUCK IMPEX INDIA' AJXPR6358J 2008 - 09 6,86,642 7 27360684279V KANAK STEEL (INDIA) AFYPB6058G 2008 - 09 2,39 ,772 8 27440677542V GOODLUCK IMPEX INDIA AJXPR6358J 2009 - 10 30,78,388 9 27860664216V PAKSHAL STEEL & ALLOYS AACPD5521F 2010 - 11 45,15,536 5. THE TOTAL AMOUNT INVOLVED IN HAWALA TRANSACTIONS IN THIS CASE FOR THE A.Y.2009 - 10 IS RS.3,6 4,04,641/ - . DU RING THE COURSE OF RE - ASSESSMENT SCRUTINY PROCEEDINGS, A QUESTIONNAIRE DT.21.01.2014 WAS ISSUED TO THE ASSESSEE CALLING FOR VARIOUS SPECIFIC DETAILS IN CONNECTION WITH THE RE - ASSESSMENT PROCEEDINGS: ITA NO. 636/MUM/2016 M/S. ARVIND PIPES & FITTINGS INDUSTRIES PVT. LTD., 3 1. PLEASE FURNISH ALL THE BILLS FOR THE YEAR AND ANY OTHER SUPPORTING DOCUMENTS YOU WISH TO RELY UPON FOR THE TRANSACTIONS / FOR THE FULL YEAR. 2. PLEASE GIVE ALL THE DOCUMENTS SHOWING THE MOVEMENT OF GOODS INTO YOUR PREMISES FROM THE SELLER. IN PARTICULAR, TRANSPORTATION BILLS, DELIVERY CHALLANS AN D ANY OTHER RELEVANT DOCUMENTS. 3. PLEASE GIVE BANK STATEMENTS FOR ALL THE BANK ACCOUNTS IN YOUR NAME ALONG WITH THE BANK BOOKS FOR THE F.YS.2008 - 09, 2009 - 10 & 2010 - 11. 4. PLEASE FURNISH THE CASH BOOK FOR THE F.YS.2008 - 09, 2009 - 10 & 2010 - 11. 5. PLEASE G IVE THE STOCK BOOK FOR F.YS.2008 - 09, 2009 - 10 & 2010 - 11 - SHOWING THE STOCK FLOW. 6. PLEASE GIVE PARTY - WISE PURCHASE DETAILS ALONG WITH QUANTITY, AMOUNT, PAN, ADDRESS FOR THE F.YS.2008 - 09, 2009 - 10 & 2010 - 11 7. PLEASE GIVE PARTY WISE SALES DETAILS ALONG WITH QUANTITY FOR THE F.YS, 2008 - 09, 2009 - 10 & 2010 - 11 . 6. THE AO OBSERVED THAT S INCE THE ASSESSEE HAS NOT FURNISHED THE REQUISITE COMPLETE DETAILS AND FAILED TO PRODUCE THE BROKERS / AGENTS, THE ASSESSEE WAS ASKED TO SHOW CAUSE AS TO WHY THE EXPENDITU RE CLAIMED IN RESPECT OF PURCHASES SHOWN TO HAVE MADE FROM THE AFORESAID HAWALA DEALERS SHOULD NOT BE DISALLOWED. (I) THE ASSESSEE HAS NOT MADE AVAILABLE THE DETAILS OF TRANSPORTATION OF THE MATERIAL PURPORTED TO HAVE PURCHASED FROM THE AFORESAID HAWALA DEALERS, SUCH AS T RANSPORTATIO N RECEIPTS, DELIVERY CHALLANS. THE ITEMS SHOW N TO HAVE PURCHASED FROM THESE PARTIES ARE OF SUCH A NATURE THAT THEY REQUIRE SEPARATE' TRANSPORTATION. ( I I) THE ASSESSEE HAS NOT FURNISHED ANY LEDGER ACCOUNT CONFIRMATION FROM TH E AFORESAID DEALER. ITA NO. 636/MUM/2016 M/S. ARVIND PIPES & FITTINGS INDUSTRIES PVT. LTD., 4 (III) THE ASSESSEE HAS ALSO NOT FURNISHED ANY DETAILS AS TO HOW THE ITEMS PURCHASED FROM THE AFORESAID HAWALA DEALERS WERE UTILIZED/ CONSUMED IN THE PROCESS OF ITS BUSINESS. (IV) THE DEDUCTION OF VAT IN THE BILL ALSO DOES NOT BOL STER THE CASE OF THE ASSESSEE. IT IS BECAUSE OF THE FACT THAT SUCH DEDUCTION DOES NOT PROVE GENUINENESS OF A PARTICULAR TRANSACTION IN TERMS OF SUPPLY OF MATERIAL. SUCH DEDUCTION IS BASICALLY LINKED WITH THE PAYMENT ASPECT ONLY AND CANNOT ESTABLISH THE PUR POSE FOR WHICH PAYMENT IS MADE. (V) THE PRODUCTION OF INVOICE IS OF NO HELP TO THE ASSESSEE, SINCE IN THE ACTIVITY OF ACCOMMODATION ENTRY, SUCH DOCUMENTS ARE METICULOUSLY MAINTAINED BOTH BY THE ENTRY PROVIDER AND ENTRY SEEKER. IT IS ALSO NOT IMPORTANT WHETHER THE AMOUNT IS SMALL OR BIG AND WHETHER THE ASSESSEE IS HAVING LOSS OR PROFIT. THERE MAY BE NUMBER OF REASONS FOR SEEKING THE ACCOMMODATION ENTRY AS IT LEADS TO GENERATION OF THE CASH IN THE HANDS OF ASSESSEE. (VI) THE ONUS WAS UPON THE ASSESSEE TO PROVE THE GENUINENESS OF THE EXPENDITURE CLAIMED AS IT WAS THE ASSESSEE, WHICH HAS MADE THE CLAIM. (VII) THE SALES TAX DEPARTMENT CERTIFIED THAT THE AFORESAID PARTY IS HAWALA OPERATOR AFTER CONDUCTING INDEPENDENT ENQUIRIES. (VIII) THE CONTENTION THAT THE PAYMENT ARE MADE BY ACCOUNT PAYEE CHEQUE IS NOT A FOOL PROOF METHOD OF SUBSTANTIATING THE ASSESSEE'S CLAIM, AS IT WAS ALREADY ACCEPTED BY THE PERSONS, WHOSE STATEMENT, DEPOSITION OR AFFIDAVIT THAT CASH IS RETURNED AFTER DEDUCTING COMMISSION / BROKERAGE ONCE CHEQUE IS REALIZED. (IX) THE SALES TAX DEPARTMENT MADE A FINDING AND UPLOADED IN ITS WEBSITE THE NAME OF ENTITIES WHICH ARE INVOLVED IN GIVING BOGUS BILLS ONLY AFTER IT CARRIED OUT DETAILED ENQUIRY & INVESTIGATION. ITA NO. 636/MUM/2016 M/S. ARVIND PIPES & FITTINGS INDUSTRIES PVT. LTD., 5 (X) IF ALL THE EVIDENCES POINT TO THE FACT THAT NO ACTUAL GOODS WERE SUPPLIED BY THE ABOVE PARTY, THEN THE ARGUMENT OF THE ASSESSEE THAT IT PURCHASED GOODS IN GOOD FAITH IS NOT TENABLE. 7. AS FAR AS THE INDEPENDENT ENQUIRIES IN THE ABOVE MENTIONED CASE CONDUC TED BY THE SALES TAX DEPARTMENT ARE CONCERNED, THE REPORTS OF THE SALES TAX DEPARTMENT, WHICH WERE GIVEN AFTER CONDUCTING ENQUIRIES, INDICATES THAT THE AFORESAID PARTY WAS NOT AVAILABLE AT THE GIVEN PREMISES. IT WAS ALSO REPORTED THAT THE HAWALA PARTIES, I N THEIR STATEMENT RECORDED IN FRONT OF SALES TAX AUTHORITIES, HAS CLEARLY STATED THAT THEY HAVE NOT DONE ANY BUSINESS ACTIVITIES AND WERE INVOLVED MERELY IN PROVIDING ACCOMMODATION ENTRIES, THOUGH ON RECORD THEY SHOW THEMSELVES AS SELLER, TRADER OR RESELLE RS. SOME OF THE PARTIES HAVE CONFIRMED THAT THEY HAVE NOT MAINTAINED EVEN BOOKS OF ACCOUNT AND BOGUS MVAT INVOICES WERE ISSUED WITHOUT ACTUAL SALE / PURCHASE TRANSACTION. IN CERTAIN CASES, THOUGH THE HAWALA PARTIES HAVE COLLECTED VAT THEY WERE NOT DEPOSITE D INTO THE GOVT. TREASURY. THESE HAWALA PARTIES ARE FLOATING COUNTLESS FIRMS/CONCERNS UNDER NUMEROUS NAMES. ALL THESE HAWALA. DEALERS WERE DECLARED BY THE SALES TAX DEPARTMENT AS 'SUSPICIOUS 1 , 'BOGUS', & 'HAWALA' DEALERS. 8. IN VIEW OF THE ABOVE DISCUSSI ON, AO ADDED 12.5% ON SUCH PURCHASES IN ASSESSEES INCOME AFTER RELYING ON THE DECISION OF ITAT AHMEDABAD BENCH IN CASE OF VIJAY PROTEINS 58 ITD 428. THUS, THE ADDITION OF RS.45,50,580/ - WAS MADE ON ACCOUNT OF BOGUS PURCHASE AND RS.2,27,529/ - ON ACCOUNT OF COMMISSION ON SUCH BOGUS PURCHASES. 9. BY THE IMPUGNED ORDER, CIT(A) DELETED THE ENTIRE ADDITION WITHOUT CONTROVERTING THE SPECIFIC FINDING SO RECORDED BY THE AO. NOWHERE, CIT(A) HAS GIVEN ANY OF HIS POSITIVE FINDING SO AS TO COME OUT OF THE ADVERSE OBSER VATION OF ITA NO. 636/MUM/2016 M/S. ARVIND PIPES & FITTINGS INDUSTRIES PVT. LTD., 6 THE AO. UNDER THESE FACTS AND CIRCUMSTANCES, LEARNED AR FAIRLY CONCEDED THAT THE MATTER MAY BE RESTORED BACK TO THE FILE OF THE CIT(A). 10. IN VIEW OF THE ABOVE, WE SET ASIDE THE ORDER OF CIT(A) AND THE MATTER IS RESTORED BACK TO HIM FOR DECIDING THE APPEAL AFRESH AFTER GIVING POSITIVE FINDING WITH RESPECT TO THE OBSERVATION MADE BY THE AO AT PARA 15.6. AND 15.7 OF HIS ORDER. WE DIRECT ACCORDINGLY. 11. IN THE RESULT, APPEAL OF THE REVENUE IS ALLOWED FOR STATISTICAL PURPOSES. O RDER PRONOUNCED IN T HE OPEN COURT ON THIS 13 / 02 /201 8 S D/ - ( SANDEEP GOSAIN ) S D/ - ( R.C.SHARMA ) JUDICIAL MEMBER ACCOUNTANT MEMBER MUMBAI ; DATED 13 / 02 /201 8 KARUNA SR. PS 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//