M/s. Jaihind Welding And Boilers Repair Works, Nashik V. Income tax Officer, Malegaon

ITA 676/PUN/2017

• Counselvise Citation: [2019] 115 COUNSELVISE.COM (IT) 8276 (ITAT-PUNE)
• Duration Of Justice: 2 year(s) 6 month(s) 6 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 27-09-2019
• Appeal Filed By: Assessee
• Order Result: Partly Allowed
• Bench Allotted: A
• Next Hearing Date: 26-09-2019
• Assessment Year: 2011-2012
• Appeal Filed On: 21-03-2017
• Result in Favour of: Partly Allowed
• Court: TRIBUNAL
• Department Lawyers: THIS CONSOLIDATED
• Keywords: Bogus purchase; Accommodation entries

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL PUNE BENCH A, PUNE BEFORE SHRI R.S. SYAL, VICE PRESIDENT AND SHRI PARTHA SARATHI CHAUDHURY, JUDICIAL MEMBER . / ITA NOS.674 TO 676/PUN/2017 / ASSESSMENT YEARS : 2009-10 TO 2011-12 M/S. JAIHIND WELDING AND BOILERS REPAIR WORKS, 25, MANZOOR COMPOUND, MALEGAON, NASHIK PAN : AADFJ6659H VS. ITO, WARD-1, MALEGAON (APPELLANT) (RESPONDENT) / ORDER PER R.S.SYAL, VP : THESE THREE APPEALS FILED BY THE ASSESSEE RELATE TO ASSE SSMENT YEARS 2009-10 TO 2011-12. SINCE COMMON ISSUES ARE RAISE D IN THESE APPEALS, WE ARE, THEREFORE, PROCEEDING TO DISPOSE THEM OFF BY THIS CONSOLIDATED ORDER FOR THE SAKE OF CONVENIENCE. 2. THE ISSUE OF RE-ASSESSMENT WAS NOT PRESSED BY THE LD. AR IN ALL THE APPEALS UNDER CONSIDERATION. THEREFORE, THESE GROU NDS ARE DISMISSED AS SUCH. APPELLANT BY SHRI PRAMOD SHINGTE RESPONDENT BY SHRI PUSHKARAJ B. PATIL DATE OF HEARING 26-09-2019 DATE OF PRONOUNCEMENT 27-09-2019 ITA NOS.674 TO 676/PUN/2017 M/S. JAIHIND WELDING AND BOILERS REPAIR WORKS 2 3. THE ONLY OTHER ISSUE WHICH REMAIN IN THESE APPEALS IS AG AINST THE RESTRICTING THE ADDITION TO 25% OF BOGUS PURCHASES. 4. BRIEFLY STATED, THE FACTS OF THE CASE FOR ALL THE YEARS AR E THAT SOME INFORMATION WAS RECEIVED BY THE AO FROM THE SALES TAX DEPARTMENT OF MAHARASHTRA GOVERNMENT REGARDING THE BENEFICIARIES OF HAWALA TRANSACTIONS DETECTED BY IT. ONE OF TH E BENEFICIARIES, IN A SUCH LIST, WAS THE ASSESSEE ALSO. THE ASSESSING OFFICER (AO) INITIATED RE-ASSESSMENT PROCEEDINGS AND MADE ADDITION AT 100% OF THE AMOUNT OF BILL OF HAWALA ENTRIES. THE LD . CIT(A) RESTRICTED THE ADDITION TO 25% OF ALLEGED BOGUS PUR CHASES, AGAINST WHICH THE ASSESSEE HAS COME UP IN APPEALS BEFOR E THE TRIBUNAL. 5. WE HAVE HEARD THE RIVAL SUBMISSIONS AND GONE THROUGH TH E RELEVANT MATERIAL ON RECORD. IT IS SEEN THAT CASES OF SEV ERAL ASSESSEES WHO HAD OBTAINED BOGUS PURCHASE BILLS FROM HA WALA PARTIES CAME UP FOR CONSIDERATION BEFORE THE PUNE BENCHES OF THE TRIBUNAL. VIDE ITS COMMON ORDER DATED 26.9.2019 IN DINESH RATHI VS. DCIT (ITA NO. 975/PUN/2018) AND OTHERS, THE TRIBUNAL HAS RESTORED THIS ISSUE TO THE FILE OF THE AO BY OBSERVING IN PARA NO. 11 AS UNDER : - ITA NOS.674 TO 676/PUN/2017 M/S. JAIHIND WELDING AND BOILERS REPAIR WORKS 3 `NOW WE TURN TO THE MERITS OF THE CASES. THE ASSAIL IS TO THE MAKING OF ADDITION(S) ON THE BASIS OF BOGUS PURCHASE BILLS RECEIVED BY THE ASSESSEE(S) AS ACCOMMODATION ENTRIES FROM HAWALA DEALERS. IT IS SEEN THAT THE ISSUE OF BOGUS PURCHAS ES HAS RECENTLY COME UP FOR CONSIDERATION BEFORE THE HONBLE BOMBAY HIGH COURT IN PR.CIT VS. MOHOMMAD HAJI ADAM & CO. VIDE ITS JUDGMENT DATED 11-02-2019 IN ITA NO.1004 OF 2016 AND OTHERS, THE HONBLE JURISDICTIONAL HIGH COURT HAS HELD THAT NO AD HOC ADDITION FOR BOGUS PURCHASES SHOULD BE MADE. IT LAID DOWN THAT THE ADDITION SHOULD BE MADE TO THE EXTENT OF DIFFERENCE BETWEEN THE GROSS PROFIT RATE ON GENUIN E PURCHASES AND GROSS PROFIT RATE ON HAWALA PURCHASES. S UCH CASE SPECIFIC DETAILS ARE NOT READILY AVAILABLE WITH THE RESPECTIVE LD. ARS OR THE LD. DRS FOR FACILITATING THE CALCULATION OF GROSS PROFIT RATES OF GENUINE AND HAWALA PURCHASES. UNDER THESE CIRCUMSTANCES, WE SET-ASIDE THE IMPUGNED ORDERS AND REMIT THE MATTER TO THE FILE OF THE RESPECTIVE AOS FOR APPLYING THE RATIO LAID DOWN BY THE HONBLE JURISDICTIONAL HIGH COURT IN THE ABOVE NOTED CASE AND RECOMPUTE THE AMOUNT OF ADDITIONS, IF ANY, AFTER ALLOWING A REASONABLE OPPORTUNITY OF HEARING TO THE ASSESSEE. 6. THEREAFTER THE TRIBUNAL ALSO DISCUSSED A SITUATION IN WHICH THE PURCHASES MADE THROUGH HAWALA ENTRIES WERE NOT SOLD AS S UCH. SUCH PURCHASES, BEING, OF RAW MATERIAL, WERE CONSUME D AND GONE INTO THE MANUFACTURING OF PRODUCTS BY THE ASSESSEE THEREBY LOSING ITA NOS.674 TO 676/PUN/2017 M/S. JAIHIND WELDING AND BOILERS REPAIR WORKS 4 IDENTITY OF SEPARATE PURCHASE PRICE AND THE CORRESPONDING S ALE PRICE. THE TRIBUNAL DEALT WITH SUCH AN ISSUE BY HOLDING THAT : - `BOTH THE SIDES HAVE FAIRLY ADMITTED THAT THE RATIO OF THE HONBLE JURISDICTIONAL HIGH COURT IN THE CASE OF PR.CIT VS. MOHOMMAD HAJI ADAM & CO. (SUPRA) CANNOT BE APPLIED TO THE FACTS OF THE INSTANT CASE. 21. IN THIS REGARD, IT IS RELEVANT TO NOTE THAT THE PUNE BENCHES OF THE TRIBUNAL HAS DISPOSED OFF A GROUP OF CAS ES ON SUCH AN ISSUE BEFORE THE AFORE REFERRED VERDICT OF THE HONBLE HIGH COURT. VIDE THE LEAD ORDER IN THE CASE OF M/S. CHHABI ELECTRICALS PVT. LTD. AND OTHERS VS. DCIT DATED 28-04-2017 IN ITA NO.795/PUN/2014 AND OTHERS, THE TRIBUNAL HAS MADE CERTAIN CATEGORIES. FINDINGS IN RESPECT OF CATEGORY NO. IV OF THE SAID ORDER, WHICH IS GERMANE TO THE INSTANT APPEAL, ARE AS UNDER: IV. THE NEXT INSTANCE IS THE CASE OF GOODS WHICH HA VE BEEN ADMITTEDLY SOLD BY THE HAWALA DEALER AND HAS BEEN RECE IVED BY THE ASSESSEE, WHO IN TURN HAD MAINTAINED QUANTITATIVE DETAILS AND ALSO EVIDENCE OF ITS MOVEMENT I.E. TRANSPORTATION D ETAILS AND QUALITY CONTROL DETAILS OF CONSUMPTION OF THE SAID M ATERIAL OR EXACT DETAILS OF SALE OF THE SAME CONSIGNMENT THROUGH SAME TRANSPORTER DIRECTLY TO THE PARTY, THEN THE TOTAL PURCHASES CANNO T BE ADDED IN THE HANDS OF ASSESSEE. HOWEVER, SINCE THE PURCHASES A RE MADE FROM THE GREY MARKET, SOME ESTIMATION NEEDS TO BE MAD E IN THE HANDS OF ASSESSEE. THE TRIBUNAL IN M/S. CHETAN ENTE RPRISES VS. ACIT (SUPRA) HAS ALREADY HELD THAT THE ADDITION BE MADE BY ESTIMATING THE SAME @ 10% OF THE ALLEGED HAWALA PURCHAS ES, OVER AND ABOVE THE GP SHOWN BY THE RESPECTIVE ASSESSEE. 22. GOING BY THE RATIO LAID DOWN IN THE CASE OF M/S. CHHABI ELECTRICALS PVT. LTD. AND OTHERS (SUPRA), WHICH BOTH THE SIDES AGREE TO BE APPLIED FOR THE INSTANT CASE, WE HOLD ITA NOS.674 TO 676/PUN/2017 M/S. JAIHIND WELDING AND BOILERS REPAIR WORKS 5 THAT THE ADDITION SHOULD BE SUSTAINED ON THE AMOUNT OF HAWALA PURCHASES @10% PLUS THE NORMAL GP RATE SHOWN BY THE ASSESSEE FOR THE YEAR UNDER CONSIDERATION. 7. THE LD. AR FAIRLY ADMITTED THAT THE FACTS AND CIRCUMS TANCES OF THE INSTANT APPEALS ARE MUTATIS MUTANDIS SIMILAR TO THE AFORE REFERRED ORDER OF THE TRIBUNAL. FOLLOWING THE SAME, WE SET A SIDE THE IMPUGNED ORDERS AND REMIT THE MATTER TO THE FILE OF THE AO FOR DECIDING THIS ISSUE AFRESH IN THE LIGHT OF THE OBSERVATIONS MAD E IN THE ORDER. 8. IN THE RESULT, ALL THE THREE APPEALS ARE PARTLY ALLOWED FOR STATISTICAL PURPOSES. ORDER PRONOUNCED IN THE OPEN COURT ON 27 TH SEPTEMBER, 2019. SD/- SD/- (PARTHA SARATHI CHAUDHURY) (R.S.SYAL) JUDICIAL MEMBER VI CE PRESIDENT PUNE; DATED : 27 TH SEPTEMBER, 2019 ITA NOS.674 TO 676/PUN/2017 M/S. JAIHIND WELDING AND BOILERS REPAIR WORKS 6 / COPY OF THE ORDER IS FORWARDED TO : 1. / THE APPELLANT; 2. / THE RESPONDENT; 3. THE CIT(A)-1, NASHIK 4. 5. 6. THE PR.CIT-1, NASHIK , , / DR A, ITAT, PUNE; / GUARD FILE. / TRUE COPY // / BY ORDER, // TRUE COPY // SENIOR PRIVATE SECRETARY , / ITAT, PUNE DATE 1. DRAFT DICTATED ON 26-09-2019 SR.PS 2. DRAFT PLACED BEFORE AUTHOR 27-09-2019 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. *