BHUWANIA STEEL & METAL PVT.LTD., MUMBAI V. INCOME TAX OFFICER WARD 9(1)(2), MUMBAI

ITA 6515/MUM/2008

• Counselvise Citation: 651519914 RSA 2008
• Duration Of Justice: 2 year(s) 6 month(s) 28 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 08-06-2011
• Appeal Filed By: Assessee
• Order Result: Dismissed
• Bench Allotted: B
• Next Hearing Date: 02-06-2011
• Assessment Year: 1989-1990
• Appeal Filed On: 10-11-2008
• Result in Favour of: Revenue
• Court: TRIBUNAL
• Department Lawyers: USHA S NAIR
• Assessee Lawyers: JAIDEV
• Keywords: Bogus purchase; Wrong claim
• Section: 142(1)

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL, MUMBAI BENCH B,MUMBAI BEFORE SHRI R.S. SYAL (AM) & SMT. ASHA VIJAYARAGHAV AN (JM) I.T.A.NO. 6515/MUM/2008 (A.Y. 1989-90) M/S. BHUWANIA STEEL & METAL P.LTD., C/O. M.L. BHUWANIA & CO., DAHANUKAR BLDG., 5 TH FLOOR, 480, KALBADEVI ROAD, MUMBAI- -400 002. PAN: AADCB3220D. VS. INCOME-TAX OFFICER, WARD 9(1)(2), AAYKAR BHAVAN, M.K. ROAD, MUMBAI-400 020. APPELLANT RESPONDENT APPELLANT BY S HRI JAIDEV. RESPONDENT BY SMT. U SHA S. NAIR. O R D E R PER R.S. SYAL, AM : THIS APPEAL BY THE ASSESSEE IS DIRECTED AGAINST THE ORDER PASSED BY THE CIT(A) ON 04-09-2008 IN RELATION TO THE ASSESSMENT YEAR 2989-90. 2. THE FIRST GROUND IS AGAINST THE CONFIRMATION OF ADDITION OF RS.2,83,17,200/- ON ACCOUNT OF ALLEGED BOGUS PURCHASES FROM THREE PR OPRIETORSHIP CONCERNS OF SHRI SHIVKARAN GOEL. GROUND NO. 2, WHICH IS STATED TO BE IN SUPPORT OF GROUND NO. 1, WAS NOT PRESSED BY THE LD. A.R. WE, THEREFORE, DISM ISS GROUND NO. 2 AND TAKE UP GROUND NO. 1 FOR DISPOSAL ON MERITS. 3. BRIEFLY STATED, THE FACTS OF THE CASE ARE THAT T HE ASSESSEE DID NOT FILE ANY RETURN FOR THE YEAR UNDER CONSIDERATION. NOTICE U/S .148 WAS ISSUED REQUESTING THE ASSESSEE TO FILE THE RETURN OF INCOME. IN RESPONSE TO THAT, THE ASSESSEE STATED THAT ITS ACCOUNTS WERE LYING SEIZED BY THE CUSTOMS DEPARTMENT AND AS SUCH IT WAS NOT PRACTICABLE TO FILE THE RETURN OF INCOME. E VENTUALLY, THE ASSESSMENT WAS ITA NO.6515/M/2008 BHUWANIA STEEL & METAL P.LTD. 2 COMPLETED U/S.144 ON TOTAL INCOME OF RS.2,00,000/-. THEREAFTER, IT WAS FOUND BY THE INVESTIGATION WING OF THE DEPTT. FROM THE INQUI RIES CONDUCTED THAT THE ASSESSEE HAD OBTAINED HAWALA BILLS FOR PURCHASES FR OM ONE SHRI SHIVKARAN GOEL. THE ASSESSMENT WAS RE-OPENED U/S.148. FINAL ASSESS MENT WAS MADE DETERMINING TOTAL INCOME OF RS.2,78,58,127/-. THE F ACTS LEADING TO RE-OPENING OF THE ASSESSMENT ARE THAT SOME INFORMATION WAS RECEIV ED THAT THE ASSESSEE HAD OBTAINED HAWALA BILLS FROM SHRI SHIVKARAN GOEL. THE ASSESSEE CLAIMED ITSELF TO BE ENGAGED IN THE MANUFACTURING OF FLANGED LINERS WHIC H IS A COMBINATION OF TIN AND LEAD. THE ENTIRE SALE WAS MADE BY IT TO A SISTER CO NCERN, NAMELY, M/S. SIDDHARTH IMPEX WHICH WAS RUN BY SHRI VIJAYKUMAR R. BHUWANIA, BROTHER OF ONE OF THE DIRECTORS OF THE ASSESSEE COMPANY. THE ENTIRE RAW M ATERIAL FOR MANUFACTURING OF FLANGED LINERS WAS CLAIMED TO HAVE BEEN PURCHASED B Y THE ASSESSEE FROM ONE SHRI SHIVKARAN GOEL, WHO WAS THE PROPRIETOR OF THREE CON CERNS AS UNDER : (1) SHREE VINAYAK TRADING CO. RS.2,31,28, 010/- (2) RELIANCE SALES CORPORATION RS. 34,2 3,249/- (3) TIRUPATI INTERNATIONAL RS. 83,33,122/- RS.3,48,84,381/- M/S. SIDDHARTH IMPEX EXPORTED THESE FLANGED LINERS WHICH IT HAD PURCHASED FROM THE ASSESSEE COMPANY DECLARING THAT FLANGED LINERS CONTAINED 55% TIN AND 45% LEAD. DUTY DRAW BACK ON EXPORTS WAS CLAIMED ACCORDI NGLY. OUT OF 26 CONSIGNMENTS EXPORTED BY M/S. SIDDHARTH IMPEX TO TW O COUNTRIES, THE CUSTOMS DEPARTMENT INTERCEPTED ONE CONSIGNMENT. AFTER INVES TIGATION, THE CUSTOMS DEPTT. CAME TO THE CONCLUSION THAT THE FLANGED LINE RS EXPORTED BY M/S. SIDDHARTH IMPEX HAD METAL CONTENT OF AROUND 98% LEAD AS AGAIN ST ITS CLAIM OF 55% TIN AND 45% LEAD. FURTHER INVESTIGATION CARRIED OUT BY THE CUSTOMS DEPTT. DIVULGED THAT M/S. SIDDHARTH IMPEX WAS MAKING FRAUDULENT CLAIM OF DUTY DRAW BACK. STATEMENT OF SHRI S.N. SHARMA, ONE OF THE DIRECTORS OF THE AS SESSEE COMPANY, AND AFFIDAVIT FILED BY SHRI SHIVKARAN GOEL CONFIRMED THE FINDINGS OF THE CUSTOMS DEPTT. SHRI ITA NO.6515/M/2008 BHUWANIA STEEL & METAL P.LTD. 3 SHARMA, THE DIRECTOR OF THE ASSESSEE COMPANY, ADMIT TED BEFORE THE CUSTOMS AUTHORITIES THAT TIN AND TIN SCRAP SHOWN IN THE DEL IVERY CHALLANS SEIZED BY THE CUSTOMS DEPTT. WAS ACTUALLY NOT RECEIVED IN THE FAC TORY AND MERE ENTRIES WERE MADE IN THE RAW MATERIAL REGISTER AND PRODUCTION RE GISTER MAINTAINED FOR THE CENTRAL EXCISE & CUSTOMS FOR GIVING A COLOUR OF GE NUINENESS TO THESE TRANSACTIONS. DURING THE COURSE OF PROCEEDINGS U/S. 147, STATEMENT OF SHRI SHIVKARAN GOEL WAS RECORDED BY THE AO ON 04-03-1997 IN WHICH HE EMPHATICALLY SUBMITTED THAT NO GOODS WERE EVER SUPPLIED BY HIM T O THE ASSESSEE COMPANY. HE MAINTAINED THAT HE MERELY SUPPLIED BILLS TO THE COM PANY IN ORDER TO INFLATE ITS PURCHASES AND ALSO TO ACCOMMODATE THE ASSESSEE TO E NABLE IT TO SHOW THAT THE GOODS MANUFACTURED BY THE ASSESSEE AND SUPPLIED TO M/S. SIDDHARTH IMPEX HAD METAL CONTENT OF 55% AND 45% LEAD. HE ADMITTED THAT IN ORDER TO FACILITATE SUCH TRANSACTION THROUGH BOGUS BILL, HE WAS ALLOWED COMM ISSION @ 2% NET PLUS 4% SALES-TAX. HE FURTHER ELABORATED THE MODUS OPERANDI OF TRANSACTIONS WITH THE ASSESSEE COMPANY BY STATING THAT HE WAS ISSUING BI LLS IN FAVOUR OF THE ASSESSEE COMPANY IN RESPECT OF SO-CALLED PURCHASES AND THE A SSESSEE WAS GIVING HIM CHEQUES FOR THE AMOUNTS MENTIONED IN THE BILLS. ON THE CLEARANCE OF CHEQUES, HE WAS WITHDRAWING THE AMOUNTS FROM THE BANK AND RETUR NING THE SAME TO THE ASSESSEE COMPANY AFTER RETAINING NET COMMISSION OF 2% PLUS 4% SALES-TAX. 4. ON THE BASIS OF THE EVIDENCE ON RECORD AND INFOR MATION GATHERED DURING THE COURSE OF ASSESSMENT PROCEEDINGS, THE AO CAME T O THE CONCLUSION THAT THE ASSESSEE COMPANY HAD OBTAINED BOGUS BILLS FROM THE CONCERNS OF SHRI SHIVKARAN GOEL AND NO MATERIAL WHATSOEVER WAS ACTUALLY PURCHA SED FROM THE SAID PERSON. IT WAS ALSO OPINED THAT THE ASSESSEE COMPANY PURCHASED THE LEAD FROM THE OPEN MARKET BY PAYMENT IN CASH WHICH WAS RECORDED IN TH E BOOKS BY WAY OF ITA NO.6515/M/2008 BHUWANIA STEEL & METAL P.LTD. 4 PURCHASES FROM THE THREE CONCERNS OF SHRI SHIVKARAN GOEL. HOWEVER, TAKING INTO ACCOUNT THE FACT THAT THE ASSESSEE HAD, IN FACT, M ANUFACTURED FLANGED LINERS CONTAINING ABOUT 100% LEAD ONLY, HE ALLOWED DEDUCTI ON IN RESPECT OF PURCHASES OF LEAD MADE BY THE ASSESSEE FROM THE OPEN MARKET AND ITS VALUE WAS ADOPTED AT 65,66,600/-. THIS AMOUNT WAS HELD TO BE THE ACTUAL EXPENDITURE INCURRED BY THE ASSESSEE TOWARDS PURCHASE OF LEAD WHICH HAD GONE IN TO THE PRODUCTION OF FLANGED LINERS. THIS AMOUNT WAS SET OFF AGAINST THE AMOUNT OF BOGUS PURCHASES OF RS.3.48 CRORES MADE BY THE ASSESSEE FROM SHRI SHIVKARAN GOE L AND THE BALANCE AMOUNT OF RS.2,83,17,200 WAS ADDED TO THE TOTAL INCOME OF THE ASSESSEE AS BOGUS PURCHASES. 5. THE ASSESSEE PREFERRED APPEAL AGAINST THE SAID O RDER OF THE AO BEFORE THE LD. CIT(A) WHO SET ASIDE THE ASSESSMENT WITH A DIRE CTION TO DECIDE THE ISSUE AFTER IN THE LIGHT OF CERTAIN RELEVANT POINTS. THE SET AS IDE ASSESSMENT WAS COMPLETED ON 31-03-2000 CONFIRMING THE FINDINGS GIVEN IN THE ORIGINAL ASSESSMENT ORDER MAKING THE ABOVE REFERRED ADDITION ON ACCOUNT OF BO GUS PURCHASES. THE ASSESSEE AGAIN WENT INTO APPEAL BEFORE THE CIT(A), WHO HELD THAT THE COMMISSION @ 2% AND SALES-TAX @ 4% WERE THE EXPENDITURE INCURRED BY THE ASSESSEE AND HENCE IT WAS ENTITLED TO DEDUCTION FOR SUCH EXPENDITURE WORK ED OUT AT RS.20,93,088/-. TO THIS EXTENT, THE INCOME WAS REDUCED. CROSS APPEALS WERE FILED BY THE ASSESSEE AS WELL AS REVENUE BEFORE THE TRIBUNAL. VIDE ORDER DAT ED 14-11-2005, THE TRIBUNAL SET ASIDE THE ORDER OF THE CIT(A) WITH THE FOLLOWIN G DIRECTIONS : BESIDES THIS, VARIOUS STATEMENTS OF CONCERNED PER SONS WERE RELIED TO MAKE THE ADDITION QUESTION. IT IS AL SO A FACT THAT THERE IS CONTRADICTION INDIFFERENT STATEM ENTS AND AFFIDAVITS BY SIVKARAN GOEL BEFORE THE DIFFEREN T AUTHORITIES. IT IS UNDISPUTED THAT THE ORDER OF THE COLLECTOR OF CUSTOMS DEPARTMENT, IS SUB-JUDICE BEFO RE THE CUSTOM TRIBUNAL AND THE ISSUE IN CUSTOM MATTER IS FOUND THAT THIS INCOME TAX MATTER. WE ALSO FIND TH AT ITA NO.6515/M/2008 BHUWANIA STEEL & METAL P.LTD. 5 FOREIGN PARTY, THE PROPRIETOR OF IMPORTER HAD STATE D IN HIS AFFIDAVIT THAT GOODS IMPORTED WERE OF GOOD QUAL ITY AND WERE AS PER DOCUMENTS MENTIONED. THE CONTENTS O F THIS AFFIDAVIT SHOULD NOT BE REJECTED WITHOUT PROVI DING DUE OPPORTUNITY IN TOTALITY AND AS PER LAW. SIMILAR LY, THERE IS ALSO CONTRADICTION IN THE STATEMENT OF OTH ER PERSON MENTIONED ABOVE, WHOSE STATEMENT HAS BEEN RELIED BY THE REVENUE FOR MAKING THE ADDITION IN QUESTION. IT IS UNDISPUTED THAT SALES TAX ASSESSMEN T OF ALL THREE CONCERNS OF SHIVKARN GOEL HAD BEEN ACCEPT ED BY THE DEPARTMENT. WE ARE OF THE VIEW THAT WITHOUT BEING PREJUDICE TO THE ABOVE, THE ASSESSING OFFICER IS SUPPOSED TO PASS THE ORDER IN SET ASIDE PROCEEDINGS IN THE LIGHT OF DIRECTION OF THE CIT(A) AND AS PER LAW . IN THE FACTS AND CIRCUMSTANCES, WE ARE OF THE VIEW THA T THIS MATTER NEEDS DEEP PROVE AND WE SET ASIDE THE ORDER OF THE CIT(A). ACCORDINGLY, WE RESTORE THIS M ATTER TO THE FILE OF THE ASSESSING OFFICER WITH THE DIREC TION TO DECIDE THE SAME IN THE LIGHT OF THE ABOVE DISCUSSIO N AND AS PER LAW AFTER PROVIDING DUE OPPORTUNITY OF HEARING TO THE ASSESSEE. 6. IN THE PRESENT ROUND OF PROCEEDINGS, THE AO ISSU ED NOTICES U/S.143(2) AND 142(1) ON THE LAST KNOWN ADDRESS OF THE ASSESSEE WH ICH WERE NOT SERVED. ON INQUIRY MADE BY THE AO, IT TRANSPIRED THAT THE ASSE SSEE HAD LEFT THE PREMISES LONG BACK. THEREAFTER, NOTICE WAS ISSUED ON THE AUT HORISED REPRESENTATIVE OF THE ASSESSEE, M/S. M.L. BHUWANI & CO., C.AS. THE A.R. O F THE ASSESSEE, VIDE LETTER DATED 03-12-2007 SUBMITTED THAT THE MATTER WAS 18 Y EARS OLD AND THE ASSESSEE HAD CLOSED ITS BUSINESS ACTIVITIES IN THE YEAR 1989 . IT WAS ALSO STATED THAT THE HONBLE BOMBAY HIGH COURT HAS APPOINTED A COURT RE CEIVER IN THIS CASE WHO HAS TAKEN OVER THE PROPERTIES OF THE ASSESSEE COMPANY. THE AO ALSO SOUGHT INFORMATION FROM THE CUSTOMS DEPTT. REGARDING THE S TATUS OF THE APPEAL PENDING BEFORE THE CUSTOMS APPELLATE TRIBUNAL IN THE CASE O F SHRI VIJAYKUMAR R. BHUWANIA, PROPRIETOR OF M/S. SIDDHARTH IMPEX. THE A CIT, CUSTOMS, VIDE HIS LETTER DATED 06-07-2007 FURNISHED A COPY OF THE ORDER DATE D 24-10-2005 PASSED BY THE CUSTOMS APPELLATE TRIBUNAL. ON PERUSAL OF THE SAID ORDER, IT WAS FOUND THAT SHRI VIJAYKUMAR R. BHUWANIA HAS BEEN DECLARED AS AN INSO LVENT AND THE APPEAL WAS ITA NO.6515/M/2008 BHUWANIA STEEL & METAL P.LTD. 6 TREATED AS ABATED IN TERMS OF RULE 22 OF CESTAT (PR OCEDURE) RULES, 1982. AS NO FURTHER MATERIAL WAS AVAILABLE WITH THE AO, RELYING ON HIS EARLIER VIEW, HE MADE THE ADDITION OF RS.2.83 CRORES (BOGUS PURCHASES OF SHRI SHIVKARAN GOEL RS.3.48 CRORES MINUS SET OFF OF ACTUAL COST OF LEAD RS.65.6 6 LAKHS). NO RELIEF WAS ALLOWED IN THE FIRST APPEAL. 7. WE HAVE HEARD THE RIVAL SUBMISSIONS AT LENGTH AN D PERUSED THE RELEVANT MATERIAL ON RECORD. FROM THE NARRATION OF THE ABOVE FACTS, IT IS AMPLY BORNE OUT THAT THE ASSESSEE COMPANY ISSUED BILLS TO M/S.SIDDH ATH IMPEX, A PROPRIETORSHIP CONCERN OF SHRI VIJAYKUMAR R. BHUWNIA, WHO HAPPENS TO BE BROTHER OF SHRI RAJIV BHUWANIA, DIRECTOR OF THE ASSESSEE COMPANY. THESE B ILLS WERE ISSUED TOWARDS FLANGED LINERS ALLEGEDLY CONTAINING 55% TIN AND 45% LEAD. THE REASON FOR ISSUING SUCH BILLS TO M/S. SIDDHARTH IMPEX WAS TO FACILITAT E SHRI VIJAYKUMAR R. BHUWANI, PROPRIETOR OF THE SAID CONCERN, TO OBTAIN DUTY DRAW BACK FROM CUSTOMS DEPT., WHICH WAS AVAILABLE ON SUCH FLANGED LINERS. OUT OF 26 CONSIGNMENTS EXPORTED BY M/S. SIDDHARTH IMPEX, ONE CONSIGNMENT WAS INTERCEPT ED. IT TRANSPIRED THAT THE FLANGED LINERS EXPORTED HAD METAL CONTENT OF AROUND 98% LEAD AS AGAINST ITS CLAIM OF 55% TIN AND 45% LEAD. ON THAT BASIS, THE A MOUNT OF DUTY DRAW BACK OF RS.2.27 CRORES PAID TO M/S. SIDDHARTH IMPEX IN RESP ECT OF ALL THE SHIPPING BILLS, WAS HELD BY THE CUSTOMS DEPTT. TO BE REFUNDABLE BY M/S. SIDDHARTH IMPEX. EVENTUALLY, WHEN THE MATTER REACHED THE CUSTOMS APP ELLATE TRIBUNAL, SHRI VIJAYKUMAR R. BHUWANIA, PROPRIETOR OF M/S. SIDDHART H, HAD BECOME INSOLVENT AND THE APPEAL WAS TREATED AS ABATED. THE LD. COUNSEL F OR THE ASSESSEE HAS CONTENDED THAT NO ADDITION WAS CALLED FOR ON THE GROUND THAT THE SALES-TAX ASSESSMENT OF THE ASSESSEE COMPANY WAS FINALIZED ACCEPTING THE AM OUNT OF SALES DECLARED AS CORRECT. HE FURTHER CONTENDED THAT THE SALES-TAX AS SESSMENT OF SHRI SHIVKARAN ITA NO.6515/M/2008 BHUWANIA STEEL & METAL P.LTD. 7 GOEL WAS ALSO FRAMED BY ACCEPTING THE FIGURE OF SA LES SHOWN BY HIM AS CORRECT. MERELY ON THE BASIS OF THE PROCEEDINGS BY THE CUSTO MS DEPTT., WHICH EVENTUALLY DID NOT PROVE THE FACT OF CONCEALMENT BY M/S. SIDDH ARTH IMPEX, THE LD. AR CONTENDED THAT THE ASSESSEES SALE TRANSACTIONS AND THE RESULTANT PURCHASE TRANSACTIONS COULD NOT BE DISPUTED. HE FURTHER SUBM ITTED THAT EVEN IF SOME DOUBT WAS TO BE RAISED IN RESPECT OF THE PURCHASES MADE B Y THE ASSESSEE, THE SAME SHOULD HAVE BEEN CONFINED ONLY TO 26 TH TRANSACTION OF EXPORT BY M/S. SIDDHARTH IMPEX, WHICH WAS INTERCEPTED AND FOUND TO BE NOT CO RRECT. AS AGAINST THE REMAINING 25 TRANSACTIONS, THE LD. AR CLAIMED THAT THERE WAS NO EVIDENCE AGAINST M/S SIDDHARTH IMPEX AND IN TURN THE ASSESSEE COMPAN Y. HE SUBMITTED THAT FOR THE REMAINING 25 TRANSACTIONS, THERE WAS NO POSSIBI LITY OF ANY ADDITION. IN THE OPPOSITION, THE LD. DR STRONGLY RELIED ON THE IMPUG NED ORDER. 8. WE ARE NOT CONVINCED WITH THE SUBMISSIONS ON BEH ALF OF THE ASSESSEE. IT IS OBVIOUS THAT M/S. SIDDHARTH IMPEX WAS PROPRIETORSH IP CONCERN OF SHRI VIJAYKUMAR R. BHUWANIA, WHO IS BROTHER OF SHRI RAJ IV BHUWANIA, THE DIRECTOR OF THE ASSESSEE COMPANY. HIS ONLY PURCHASES WERE FROM THE ASSESSEE COMPANY, WHICH WERE EXPORTED BY HIM FOR OBTAINING DUTY DRAW BACK IN A FRAUDULENT MANNER. ONCE HIS EXPORTS OF FLANGED LINERS WERE FOU ND TO BE NOT CONTAINING 55% TIN AND 45% LEAD, THE NATURAL CONCLUSION COMES THAT THE ASSESSEE COMPANY DID NOT SUPPLY THE GOODS DESCRIBED IN THE BILLS. NOW, L ET US SEE THE STATE OF AFFAIRS OF THE ASSESSEE COMPANY. IN ORDER TO SHOW THE SALES OF FLANGED LINERS CONTAINING 55% TIN AND 45% LEAD FOR FACILITATING THE FRAUDULEN T CLAIM OF M/S. SIDDHARTH IMPEX I.E. THE BROTHER OF ONE OF THE DIRECTORS, THE ASSESSEE COMPANY SHOWED FICTITIOUS PURCHASES FROM THREE CONCERNS OF SHRI SH IVKARAN GOEL OF FLANGED LINERS ALLEGEDLY CONTAINING THE REQUIRED PERCENTAGE OF LEA D AND TIN. WHEN SHRI ITA NO.6515/M/2008 BHUWANIA STEEL & METAL P.LTD. 8 SHIVKARAN GOEL, THE PROPRIETOR OF THESE THREE CONCE RNS, WHO ALLEGED SUPPLIED RAW MATERIAL TO THE ASSESSEE COMPANY, WAS CALLED UPON B Y THE AO ON 04-03-1997, HE CONFIRMED THE FACT OF HAVING GIVEN BOGUS HAWALA BIL LS TO THE ASSESSEE COMPANY. THE SAME WAS CONFIRMED BY HIM BY WAY OF AFFIDAVIT ALSO. THE ENTIRE MODUS OPERANDI WAS ALSO EXPLAINED ELABORATING THAT HE HAD CHARGED 2% COMMISSION AND 4% SALES-TAX IN LIEU OF ISSUANCE OF BOGUS BILLS. TH E MATTER DOES NOT END HERE ITSELF. SHRI S.N. SHARMA, THE OTHER MAIN DIRECTOR O F THE ASSESSEE COMPANY, WAS INTERROGATED BY THE CUSTOMS AUTHORITIES. HE STATED THAT THE TIN AND TIN SCRAP SHOWN IN THE DELIVERY CHALLANS SEIZED BY THE CUSTOM S DEPTT. WERE NOT ACTUALLY RECEIVED IN THE FACTORY ALTHOUGH THE ENTRIES OF TIN WERE MADE IN RAW MATERIAL REGISTER AND PRODUCTION REGISTER MAINTAINED BY THE ASSESSEE COMPANY FOR CENTRAL EXCISE AND CUSTOMS AUTHORITIES. HIS SUBMISSION WAS NOT CONFINED ONLY TO THE SUPPLY MADE BY THE ASSESSEE COMPANY AGAINST WHICH SH. VIJAYKUMAR ISSUED 26 TH BILL, WHOSE CONSIGNMENT WAS INTERCEPTED. IT WAS THE SUBMISSION FOR ALL THE SUPPLIES MADE BY THE ASSESSEE COMPANY, WHICH RESULT ED IN EXPORTING ALL THE 26 CONSIGNMENTS BY SH. VIJAYKUMAR. SH. SHARMA ALSO AD MITTED THAT THESE CHALLANS WERE GOT PREPARED BY SHRI RAJIV BHUWANIA, THE OTHER DIRECTOR OF THE ASSESSEE COMPANY. THESE FACTS INDICATE THAT THERE IS NOTHING TO BELIEVE THE ASSESSEES THEORY OF HAVING MADE GENUINE PURCHASE AND SOLD FLA NGED LINERS OF THE REQUISITE SPECIFICATION WHICH WERE, IN TURN, EXPORTED BY THE PROPRIETORSHIP CONCERN OF THE BROTHER OF ONE OF THE DIRECTORS OF THE ASSESSEE COM PANY. NOT ONLY THE EXTERNAL BUT THE INTERNAL EVIDENCE ALSO POINTS TOWARDS THE C ONNIVANCE AMONGST THE ASSESSEE COMPANY, M/S. SIDDHARTH IMPEX AND CONCERNS OF SHRI SHIVKARAN GOEL. THE ULTIMATE OBJECT WAS TO DEFRAUD THE GOVERNMENT B Y MAKING FALSE CLAIM OF DUTY DRAW BACK BY SHRI VIJAYKUMAR R. BHUWANIA. THE ASSESSEE AND SHRI SHIVKARN GOEL BECAME THE INSTRUMENTS OF SHRI VIJAYKUMAR R. B HUWANIA IN GIVING A LOGICAL ITA NO.6515/M/2008 BHUWANIA STEEL & METAL P.LTD. 9 CONCLUSION TO THIS DECEPTIVE PRACTICE. ONCE IT WAS PROVED THAT SHRI VIJAUYKUMAR R. BHUWANIA HAD NOT EXPORTED THE FLANGED LINERS WI TH 55% TIN, THE NEEDLE OF SUSPICION CAME TOWARDS THE ASSESSEE COMPANY WHICH W AS THE SOLE SUPPLIER TO M/S. SIDDHARTH IMPEX. ON INVESTIGATION OF THE ASSES SEES PURCHASES, IT WAS NOTICED THAT THE SAME WERE FROM SHRI SHIVKARAN GOEL WHO ADMITTED BEFORE THE CUSTOMS AUTHORITIES AS WELL AS AO THAT HE HAD NOT S UPPLIED ANY GOODS TO THE ASSESSEE, WITH WHICH FLANGED LINERS WITH 55% TIN C OULD BE MANUFACTURED. HE ACCEPTED TO HAVE RECEIVED COMMISSION @ 2% PLUS 4% S ALES-TAX FROM THE ASSESSEE IN LIEU OF SUPPLYING THE BOGUS BILLS. THE SE FACTS INDICATE THAT THE ASSESSEE HAD IN FACT ARRANGED FOR THE BOGUS BILLS F ROM SHRI SHIVKARAN GOEL TO THE TUNE OF RS.3.48 CRORES SO AS TO HELP SHRI VIJAYKUMA R R. BHUWANIA IN MAKING FALSE CLAIM OF DUTY DRAW BACK WORTH CRORES OF RUPEES. TH US, SUCH AMOUNT OF PURCHASE CANNOT BE ALLOWED DEDUCTION. THE MERE FACT THAT THE SALES-TAX ASSESSMENT IN THE CASE OF ASSESSEE AS WELL AS SHRI SHIVKARAN GOEL HAD BEEN MADE ACCEPTING THE SALES AS SUCH, DO NOT BRING ANY CHANGE TO THE CORRE CT FACTUAL POSITION PREVAILING IN THE CASE. IN FACT, THE SALES-TAX DEPTT. COULD HAVE NO GROUSE AGAINST THE ARTIFICIAL SALES REFLECTED AT A HIGHER FIGURE RESULTING INTO M ORE REVENUE THAN RIGHTLY DUE. 9. WE, THEREFORE, HOLD THAT THE AO WAS JUSTIFIED I N TREATING THE ENTIRE PURCHASES OF RS.3.45 LAKHS FROM SHRI SHIVKARAN GOEL AS BOGUS AND THEREAFTER ALLOWING DEDUCTION OF RS.65.66 LAKHS TOWARDS THE PU RCHASE OF LEAD BY THE ASSESSEE FROM THE OPEN MARKET. WE, THEREFORE, UPHOL D THE IMPUGNED ORDER. 10. IN THE RESULT, THE APPEAL IS DISMISSED. ITA NO.6515/M/2008 BHUWANIA STEEL & METAL P.LTD. 10 ORDER PRONOUNCED ON THE 08TH DAY OF JUNE,2011 . SD/- SD/- (SMT. ASHA VIJAYARAGHAVAN) ( R.S. SYAL) JUDICIAL MEMBER ACCOUNTANT MEMBER MUMBAI: 08TH JUNE, 2011 NG: COPY TO : 1. ASSESSEE. 2. DEPARTMENT. 3. CIT(A)-IX,,MUMBAI. 4. CIT-IX,MUMBAI. 5. DR,B BENCH,MUMBAI. 6. MASTER FILE. (TRUE COPY) BY ORDER, ASST.REGISTRAR, ITAT, MUMBAI. ITA NO.6515/M/2008 BHUWANIA STEEL & METAL P.LTD. 11 DETAILS DATE INITIALS DESIGNATION 1 DRAFT DICTATED ON 2-6-11 SR.PS/ 2 DRAFT PLACED BEFORE AUTHOR 3-6-11 SR.PS/ 3 DRAFT PROPOSED & PLACED BEFORE THE SECOND MEMBER JM/AM 4 DRAFT DISCUSSED/APPROVED BY SECOND MEMBER JM/AM 5. APPROVED DRAFT COMES TO THE SR.PS/PS SR.PS/ 6. KEPT FOR PRONOUNCEMENT ON SR.PS/ 7. FILE SENT TO THE BENCH CLERK SR.PS/ 8 DATE ON WHICH THE FILE GOES TO THE HEAD CLERK 9 DATE ON WHICH FILE GOES TO AR 10 DATE OF DISPATCH OF ORDER *