M/s. Patco Precision Components Pvt. Ltd., Nashik V. Assistant Commissioner of Income-tax,

ITA 695/PUN/2016

• Counselvise Citation: [2016] 131 COUNSELVISE.COM (IT) 0969 (ITAT-PUNE)
• Duration Of Justice: 4 month(s) 17 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 31-08-2016
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: SMC
• Next Hearing Date: 17-08-2016
• Assessment Year: 2009-2010
• Appeal Filed On: 13-04-2016
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: ANIL KUMAR CHAWARE
• Keywords: Bogus purchase; Principle of natural justice; Opportunity of cross examination
• Section: 143(3); 133(6); 10; 11

Judgement Text

- IN THE INCOME TAX APPELLATE TRIBUNAL PUNE BENCH SMC , PUNE , BEFORE MS. SUSHMA CHOWLA, JM . / ITA NO S . 3 65 & 366 /PN/201 6 / A SSESSMENT YEAR S : 20 1 0 - 1 1 & 2011 - 12 M/S. CHETAN ENTERPRISES (PROP. TANAJI ANNASAHEB PATIL) SHOP NO.4, TIP TOP PLAZA, XLO POINT, MIDC, AMBAD, NASHIK 422010 . / APPELLANT PAN: A GVPP0769J VS. THE ASST. COMMISSIONER OF INCOME TAX, CIRCLE - 2, NASHIK . / RESPONDENT . / ITA NO. 695 /PN/201 6 / ASSESSMENT YEAR : 20 09 - 1 0 M/S. PATCO PRECISION COMPONENTS PVT. LTD., A - 25, MIDC, AMBAD, NASHIK 422010 . / APPELLANT PAN: AA BCT3058K VS. THE ASST. COMMISSIONER OF INCOME TAX, CIRCLE - 2, NASHIK . / RESPONDENT / APPELLANT BY : SHRI SANKET JOSHI / RESPONDENT BY : SHRI ANIL KUMAR CHAWARE / DATE OF HEARING : 1 7 . 0 8 .201 6 / DATE OF PRONOUNCEMENT: 31 . 0 8 .201 6 ITA NO S . 365 & 3 66 /PN/20 1 6 ITA NO.695/PN/2016 2 / ORDER PER SUSHMA CHOWLA, J M : TWO APPEAL S FILED BY ONE ASSESSEE ARE AGAINST SEPARATE ORDER S OF CIT (A) - 2 , NASHIK , BOTH DATED 1 6 . 1 2 .20 1 5 RELATING TO ASSESSMENT YEAR S 2010 - 11 AND 20 11 - 12 AGAINST RESPECTIVE ORDER S PASSED UNDER SECTION 1 43(3) R.W.S. 147 OF THE INCOME - TAX ACT , 1961 (IN SHORT THE ACT) . THE OTHER APPEAL FILED BY ANOTHER ASSESSEE IS AGAINST ORDER OF CIT (A) - 2, NASHIK, DATED 28 . 0 1 .201 6 RELATING TO ASSESSMENT YEAR 20 09 - 1 0 AGAI NST ORDER PASSED UNDER SECTION 143(3) R.W.S. 147 OF THE INCOME - TAX ACT , 1961 (IN SHORT THE ACT) 2 . ALL THE APPEALS RELATE TO DIFFERENT ASSESSEES ON SIMILAR ISSUES ARE BEING DISPOSED OF BY THIS CONSOLIDATED ORDER FOR THE SAKE OF CONVENIENCE. HOWEVER, RE FERENCE IS BEING MADE TO THE FACTS IN ITA NO.3 65 /PN/2016 TO ADJUDICATE THE ISSUE. 3. THE ASSESSEE IN ITA NO.3 65 /PN/2016 HAS RAISED THE FOLLOWING GROUNDS OF APPEAL : - 1] THE LEARNED CIT(A) ERRED IN CONFIRMING THE DISALLOWANCE OF RS.3,19,867/ - OUT OF THE T OTAL DISALLOWANCE OF RS.31,98,665/ - MADE BY THE A.O. IN RESPECT OF PURCHASES MADE FROM SIX ALLEGED HAWALA PARTIES ON THE BASIS OF INFORMATION OBTAINED FROM MAHARASHTRA SALES TAX DEPT. 2] THE LEARNED CIT(A) ERRED IN HOLDING THAT 10% OF THE PURCHASES M ADE BY THE ASSESSEE FROM THE ABOVE PARTIES WERE TO BE DISALLOWED WITHOUT APPRECIATING THAT NO DISALLOWANCE WAS WARRANTED ON FACTS OF THE CASE. 3] THE LEARNED CIT(A) FAILED TO APPRECIATE THAT A . THE ENTIRE PURCHASES MADE BY THE ASSESSEE FROM THE SIX PA RTIES WERE SUPPORTED BY PURCHASE INVOICES AND MOST OF THESE PURCHASES WERE ALSO SUPPORTED BY DELIVERY CHALLANS, TRANSPORT RECEIPTS, WEIGH WERE ALSO SUPPORTED BY DELIVERY CHALLANS, TRANSPORT RECEIPTS, WEIGH BRIDGE RECEIPTS ETC. AND HENCE, THERE WAS NO REASON TO DOUBT THE GENUINENESS OF THE SAID PURCHASES. ITA NO S . 365 & 3 66 /PN/20 1 6 ITA NO.695/PN/2016 3 B . THE PAYMENTS TO THESE PARTIES WERE MADE THROUGH BANK CHEQUES AND THE A.O. HAD NOT BROUGHT ANY EVIDENCE ON RECORD TO SHOW THAT THE PAYMENTS MADE BY THE ASSESSEE TO THESE PARTIES WERE THE PAYMENTS MADE BY THE ASSESSEE TO THESE PARTIES WERE WITHDRAWN BY THEM AND RETURNED TO THE ASSESSEE IN CASH AND HENCE, IN THE ABSENCE OF ANY CO NTRARY EVIDENCE, THERE WAS NO REASON TO DOUBT THE GENUINENESS OF THE PAYMENTS MADE BY THE ASSESSEE TO THESE PARTIES . C . THESE PARTIES HAD NOT PAID VAT AND HENCE, THEY MAY HAVE LEFT THEIR REGISTERED PREMISES AND HENCE, IN VIEW OF THE VARIOUS EVIDENCES FURNISH ED BY THE ASSESSEE, THERE WAS NO REASON TO DOUBT THE GENUINENESS OF THE ABOVE PURCHASES MERELY BECAUSE THESE PARTIES WERE NOT FOUND AT THEIR REGISTERED ADDRESSES. 4] THE LEARNED CIT(A) OUGHT TO HAVE APPRECIATED THAT THE DISALLOWANCE MADE MERELY ON THE BAS IS OF STATEMENTS OF THE SIX PARTIES RECORDED BY MADE MERELY ON THE BAS IS OF STATEMENTS OF THE SIX PARTIES RECORDED BY THE SALES TAX DEPT. WAS NOT JUSTIFIED AT ALL FOR THE FOLLOWING REASONS A . THE A. O . HAD NOT PROVIDED THE COPIES OF STATEMENTS RECORDED BY THE SALES TAX AUTHORITIES IN RESPECT OF THREE OUT OF SIX PARTIES AND HE NCE, THE RELIANCE PLACED ON SUCH STATEMENTS WITHOUT CONFRONTING THE SAME TO THE ASSESSEE WAS NOT JUSTIFIED IN LAW. B . THE A. O . HAD NOT PROVIDED THE OPPORTUNITY OF CROSS EXAMINATION OF THE VARIOUS PARTIES IN SPITE OF SPECIFIC REQUEST MADE BY THE ASSESSEE IN THE COURSE OF ASST. PROCEEDINGS AND SUCH STATEMENTS COULD NOT BE USED AGAINST THE ASSESSEE IN VIEW OF THE SUPREME COURT DECISION IN THE CASE OF ANDAMAN TIMBER INDUSTRIES V. CCE DATED 02.09.2015. DATED 02.09.2015. 5] W ITHOUT PREJUDICE, THE ASSESSEE SUBMITS THAT THE DISALL OWANCE MADE @ 10% ON ALLEGED HAWALA PURCHASES IS VERY HIGH CONSIDERING THE NATURE OF BUSINESS OF THE ASSESSEE AND IF AT ALL, ANY ADDITION IS TO BE SUSTAINED, THE SAME MAY BE REDUCED SUBSTANTIALLY. 4. THE ISSUE RAISED IN THE PRESENT APPEAL IS AGAINST THE DISALLOWANCE OF RS.3,19,867/ - MADE OUT OF TOTAL DISALLOWANCE OF RS. 31,98,665/ - IN RESPECT OF PURCHASES MADE FROM SIX ALLEGED HAWALA PARTIES ON THE BASIS OF INFORMATION RECEIVED FROM MAHARASHTRA SALES TAX DEPARTMENT. 5. BRIEFLY, IN THE FACTS OF THE CASE, T HE ASSESSEE WAS ENGAGED IN THE BUSINESS OF S.S. BRASS, ALUMINUM COPPER SHEETS, PLATES, PIPES, BARS, ETC. FOR THE YEAR UNDER CONSIDERATION, THE ASSESSEE HAD FURNISHED THE RETURN OF INCOME DECLARING TOTAL INCOME OF RS. 9,41,932/ - . THE ASSESSING OFFICER RECE IVED INFORMATION FROM THE MAHARASHTRA SALES TAX DEPARTMENT THAT SIX PARTIES FROM ITA NO S . 365 & 3 66 /PN/20 1 6 ITA NO.695/PN/2016 4 WHOM THE ASSESSEE HAD MADE PURCHASES TOTALING RS. 31,98,665/ - DURING THE YEAR, WERE HAWALA PARTIES. THE ASSESSING OFFICER WAS INFORMED THAT IN THE STATEMENTS RECOR DED BY THE S ALES TAX DEPARTMENT, THE SAID PARTIES HAD STATED THAT THEY HAD MERELY ISSUED BILLS TO VARIOUS PARTIES WITHOUT MAKING ANY ACTUAL SALES. ON THE BASIS OF SAID INFORMATION, THE ASSESSING OFFICER REOPENED THE ASSESSMENT IN THE CASE OF ASSESSEE. FURTHER, NOTIC ES UNDER SECTION 133(6) OF THE ACT WERE ISSUED TO THE SAID PARTIES, BUT THE LETTERS WERE RETURNED BACK BY THE POST OFFICE. THEREAFTER, SHOW CAUSE NOTICE WAS ISSUED TO THE ASSESSEE INFORMING HIM THAT AGAINST THE PURCHASES MADE FROM THE AFORESAID PARTIES DU RING THE RELEVANT YEAR, THE NOTICES ISSUED UNDER SECTION 133(6) OF THE ACT HAVE BEEN RETURNED BACK. HE WAS SHOW CAUSED TO EXPLAIN THE GENUINENESS OF PURCHASES MADE DURING THE YEAR. THE ASSESSEE IN REPLY SUBMITTED THAT IT HAD RECEIVED MATERIAL FROM THE SA ID PARTIES AND BILL - WISE DETAILS IN THIS REGARD WERE FURNISHED ALONG WITH PURCHASES INVOICES, SALES INVOICES TO WHOM THE MATERIAL WERE SOLD, TRANSPORT RECEIPTS, WEIGHBRIDGE RECEIPTS, ETC. THE ASSESSEE FURTHER CLAIMS THAT THE PAYMENTS AGAINST PURCHASES WER E THROUGH BANK AND ARE ACCOUNTED FOR IN THE BOOKS OF ACCOUNT. THE ASSESSEE ALSO POINTED OUT THAT IN CASE THE SAID PARTIES HAD NOT PAID VAT TAX, THEN THE SAME WAS OUT OF HIS CONTROL. THE ASSESSING OFFICER REJECTING THE CLAIM OF ASSESSEE IN THE ABSENCE OF ANY TRACE OF THE SAID PARTIES AND THE ASSESSEE HAVING NOT PRODUCED THE SAID PARTIES FOR CONFIRMATION, DISALLOWED PURCHASES TO THE TUNE OF RS. 31,98,665/ - . 6. THE CIT(A) NOTES THAT THE CLAIM OF ASSESSEE WAS THAT THE SAID SUPPLIERS HAD IN FACT SUPPLIED THE G OODS AND HAD COLLECTED VAT ON THE SAID PURCHASES ON THE BASIS OF THEIR REGISTRATION WITH THE SALES TAX DEPARTMENT . THE ASSESSEE ADMITTED THAT THE SAID VAT WAS COLLECTED FROM THE ASSESSEE AND OTHER PURCHASERS , WAS NOT PAID BY THE SAID SUPPLIERS TO THE GOVE RNMENT TREASURY AND ITA NO S . 365 & 3 66 /PN/20 1 6 ITA NO.695/PN/2016 5 HENCE, THE SALE TAX DEPARTMENT HAD DECLARED THEM AS HAWALA DEALERS. IN THIS REGARD, EXPLANATION OF THE ASSESSEE WAS THAT BECAUSE OF FRAUD COMMITTED BY SUPPLIERS, POLICE CASES WERE LODGED AGAINST THEM AND HENCE, THEY HAVE CHANGED THEIR BUSINESS ADDRESSES AND HAD LEFT THE EARLIER BUSINESS LOCATIONS. IN VIEW THEREOF, THE NOTICES UNDER SECTION 133(6) OF THE ACT COULD NOT BE SERVED ON THE SAID SUPPLIERS AND EVEN THEY COULD NOT BE PRODUCED. THE CIT(A) CONSIDERED THE EVIDENCE FILED BY THE AS SESSEE IN RESPECT OF PURCHASES MADE I.E. PURCHASE BILLS, WEIGHBRIDGE RECEIPTS, TRANSPORTATION RECEIPTS AND BANK STATEMENT SHOWING THE PAYMENT OF BANK CHEQUES. THE CIT(A) IN THIS REGARD, NOTED THAT THE ASSESSING OFFICER HAD NOT BROUGHT ON RECORD ANY EVIDEN CE SHOWING THAT THE AMOUNT PAID BY THE ASSESSEE BY ACCOUNT PAYEE CHEQUE HAD BEEN IMMEDIATELY WITHDRAWN BY THE SUPPLIERS AND PAID BACK TO THE ASSESSEE. RELYING ON VARIOUS DECISION S , THE CIT(A) HELD THAT THE ADDITION WAS NOT JUSTIFIED. ANOTHER POINT NOTED BY THE CIT(A) WAS THAT WHERE THE ASSESSING OFFICER HAD NOT SUPPLIED THE COPIES OF STATEMENT RECORDED BY THE SALES TAX DEPARTMENT IN RESPECT OF IMPUGNED PURCHASES, DESPITE THE ASSESSEE ASKING FOR CROSS - EXAMINATION OF THE PERSONS, NO ADDITION COULD BE MADE W ITHOUT ALLOWING CROSS - EXAMINATION TO THE ASSESSEE. IN THIS REGARD, RELIANCE WAS PLACED ON THE RATIO LAID DOWN BY THE HONBLE SUPREME COURT IN M/S. ANDAMAN TIMBER INDUSTRIES VS. COMMISSIONER OF CENTRAL EXCISE, KOLKATA - II, CIVIL APPEAL NO.4228 OF 2006, DATE D 02.09.2015. THE CLAIM OF ASSESSEE THAT WHERE THE PURCHASES MADE FROM THE SAID PARTIES WA S FURTHER EVIDENCED BY THE SALE OF IMPUGNED ITEMS OF PURCHASED, WHICH WE RE DULY RECORDED IN THE BOOKS OF ACCOUNT, NO ADDITION WA S WARRANTED. THE CIT(A) OBSERVED THA T IN THE TOTALITY OF THE FACTS OF THE CASE, THE BENEFIT OF PROBABLE PURCHASES OF GOODS FROM GREY MARKET SHOULD BE ESTIMATED @ 10% OF THE ALLEGED HAWALA PURCHASES OF RS.31,98,665/ - , AGAINST WHICH THE ITA NO S . 365 & 3 66 /PN/20 1 6 ITA NO.695/PN/2016 6 ASSESSEE IS IN APPEAL. THE REVENUE IS NOT IN APPEAL AGAI NST DELETION OF ADDITION TO THE EXTENT OF RS. 28,78,798/ - . 7. THE LEARNED AUTHORIZED REPRESENTATIVE FOR THE ASSESSEE POINTED OUT THAT IN THE ABSENCE OF ASSESSING OFFICER PROVIDING STATEMENTS AND ALSO CROSS - EXAMINATION TO THE ASSESSEE, NO ADDITION IS WARRAN TED IN THE HANDS OF ASSESSEE. HE FURTHER STATED THAT THE COPIES OF STATEMENTS OF THREE PERSONS WERE PROVIDED TO THE ASSESSEE TOTALING RS. 9,49,240/ - . HOWEVER, NO STATEMENTS OF OTHER PERSONS FROM WHOM PURCHASES TO THE TUNE OF RS. 22,49,425/ - WERE MADE HAD B EEN PROVIDED. HE FURTHER STRESSED THAT WHERE THE SOL E BASIS FOR MAKING THE ADDITION WAS THE STATEMENTS OF DIFFERENT PERSONS, THERE IS NO JUSTIFICATION IN THE AFORESAID ADDITION, WHERE THE COPIES OF STATEMENTS HAVE NOT BEEN PROVIDED TO THE ASSESSEE. THE L EARNED AUTHORIZED REPRESENTATIVE FOR THE ASSESSEE FURTHER POINTED OUT THAT THOUGH IN CASE OF KOLTE PATIL DEVELOPERS LTD. VS. DCIT IN ITA NOS.1411 TO 1415/PN/2013, RELATING TO ASSESSMENT YEARS 2003 - 04, 2005 - 06 & 2007 - 08 TO 2009 - 10 , ORDER DATED 20.02.2015 AN D ALSO IN THE CASE OF MUKESHKUMAR PUSHKARAJ MEHTA VS. ITO IN ITA NO.2026/PN/2014 , RELATING TO ASSESSMENT YEAR 2010 - 11, ORDER DATED 03.11.2015, THE ADDITIONS WERE MADE BY THE TRIBUNAL IN RESPECT OF BOGUS PURCHASES BUT THERE WERE DISTINGUISHING FEATURES. 8. THE LEARNED DEPARTMENTAL REPRESENTATIVE FOR THE REVENUE ON THE OTHER HAND, PLACED RELIANCE ON THE ORDERS OF AUTHORITIES BELOW. 9. ON PERUSAL OF RECORD AND AFTER HEARING BOTH THE LEARNED AUTHORIZED REPRESENTATIVES, THE ISSUE WHICH NEEDS ADJUDICATION IN THE PRESENT APPEAL IS IN RELATION TO THE PURCHASES MADE BY THE ASSESSEE. THE ASSESSEE CLAIMS THAT THE ITA NO S . 365 & 3 66 /PN/20 1 6 ITA NO.695/PN/2016 7 PURCHASES WERE MADE IN THE REGULAR COURSE OF CARRYING ON THE BUSINESS FROM PARTIES WHO WERE REGISTERED WITH THE SALES TAX DEPARTMENT AND HAD VAT NUMBER. HOWEVER, THE SALES TAX DEPARTMENT HAD DECLARED THEM TO BE HAWALA DEALERS I.E. PARTIES WHO WERE REGISTERED WITH THE SALES TAX DEPARTMENT BUT HAD NOT PAID THE REQUISITE VAT. INFORMATION IN RESPECT OF AFORESAID HAWALA DEALERS WERE SENT TO THE ASSESSING OFFI CER SINCE THE ASSESSEE HAD MADE PURCHASES FROM SIX OF THE PARTIES WHO WERE IN THE LIST OF HAWALA DEALERS. THE SAID DEALERS HAD COLLECTED VAT FROM THE CUSTOMERS INCLUDING THE ASSESSEE BUT HAD NOT PAID THE SAME TO THE STATE TREASURY. THE ASSESSING OFFICER ON RECEIVING THE AFORESAID INFORMATION HAD REOPENED THE ASSESSMENT IN THE CASE OF ASSESSEE AND HAD CONFRONTED THE ASSESSEE WITH THE AFORESAID INFORMATION. THE ASSESSING OFFICER ALSO ISSUED SUMMONS UNDER SECTION 133(6) OF THE ACT TO THE SAID SIX PARTIES FR OM WHOM PURCHASES WERE MADE BUT THE SAID NOTICES WERE RETURNED UNSERVED SINCE NONE OF THE PARTIES WERE AVAILABLE ON THE GIVEN ADDRESSES. THE ASSESSEE IN THIS REGARD WAS ASKED TO PRODUCE THE SAID PARTIES AND CONFIRM THE TRANSACTIONS. THE ASSESSEE IN REPLY , CLAIMS THAT IT HAD SUBMITTED PURCHASE BILLS, CONSEQUENT SALE BILLS, WEIGHBRIDGE RECEIPTS AND TRANSPORTATION RECEIPTS IN ORDER TO ESTABLISH THAT THE TRANSACTION OF PURCHASES WAS GENUINE. THE ASSESSEE FURTHER CLAIMS THAT THE PAYMENTS AGAINST THESE PURCHAS ES WERE MADE THROUGH BANKING CHANNEL AND THE COPY OF BANK STATEMENT WAS FURNISHED IN THIS REGARD. THE ASSESSEE FURTHER CLAIMS THAT NO CASE HAS BEEN MADE BY THE ASSESSING OFFICER AGAINST THE SAID PAYMENTS MADE BY THE ASSESSEE TO THE SAID PERSONS THAT CASH HAD BEEN WITHDRAWN AND HANDED OVER TO THE ASSESSEE. ANOTHER ASPECT WHICH THE ASSESSEE POINTS OUT IS THAT WHEN HE CAME TO KNOW THAT THE VAT COLLECTED BY THE SAID DEALERS HAS NOT BEEN DEPOSITED WITH THE SALES TAX DEPARTMENT, HE VOLUNTARILY REVISED HIS RETUR N UNDER MVAT ACT BY WITHDRAWING THE SET OF F OF CLAIM IN THE EARLIER RETURN AND ITA NO S . 365 & 3 66 /PN/20 1 6 ITA NO.695/PN/2016 8 PAID THE TAXES WITH INTEREST. ANOTHER EXERCISE CARRIED OUT BY THE ASSESSEE WITH REGARD TO PURCHASES AND SALES WAS THAT THE SAME QUANTITY OF GOODS RECEIVED WERE SOLD TO THEIR CU STOMERS, WHEREIN THE QUANTITY OF GOODS PURCHASED FROM SO - CALLED HAWALA DEALERS TALLIED WITH THE SUPPLIES MADE BY THE ASSESSEE TO ITS CUSTOMERS. THE TRANSPORTATION EXPENDITURE IN RESPECT OF GOODS PURCHASED FROM THE SAID PARTIES WAS INCURRED BY THE ASSESSEE THROUGH ACCOUNT PAYEE CHEQUES. THE BILLS OF TRANSPORTATION INCLUDING OCTROI WERE MADE AVAILABLE BY THE ASSESSEE. IN THIS REGARD, THE ASSESSEE CLAIMS THAT THE PURCHASES MADE BY IT WERE GENUINE. THE ASSESSING OFFICER HAD SHOW CAUSED THE ASSESSEE TO EXPLA IN THE PURCHASES FROM SIX PARTIES ON THE BASIS OF INFORMATION RECEIVED FROM THE SALES TAX DEPARTMENT. THE LIST OF PARTIES TOTALING RS. 31,98,665/ - IS AS UNDER: - NAME OF THE PARTY AMOUNT 1) SANDOZ STEEL 10 , 79 , 483 2) ADIJIN ENTERPRISES 2,39,460 3) HITEN E NTERPRISES 2,30,583 3) HITEN E NTERPRISES 2,30,583 4) BHAVANI TRADE LINK 3,42,4 1 7 5) MERCURY ENTERPRISES 3,76,239 6) AMAR ENTERPRISES 9,30,48 3 TOTAL 31,98,665 10. HOWEVER, THE ASSESSING OFFICER EXCEPT FOR PROVIDING THE STATEMENTS OF THREE PARTIES I.E. PROPRIETOR OF HITEN ENTERPRIS ES, PROPRIETOR OF MERCURY ENTERPRISES AND PROPRIETOR OF BHAVANI TRADE LINK, WHEREIN THE PURCHASES TOTALED TO RS. 9,49,240/ - . NO DOCUMENTS OR PAPERS IN RESPECT OF PURCHASES FROM AMAR ENTERPRISES OF RS. 9,30,48 3 / - , SANDOZ STEEL OF RS. 10,79,483/ - AND ADIJIN EN TERPRISES OF RS. 2,39,460/ - HAS BEEN CONFRONTED TO THE ASSESSEE. IN THE FRIST INSTANCE, THE BASIC PRINCIPLE OF NATURAL JUSTICE DEMAND THAT IN CASE ANY DOCUMENT IS TO BE USED AGAINST THE ASSESSEE, THEN THE SAME SHOULD BE CONFRONTED TO THE ASSESSEE BEFORE IT CAN BE RELIED UPON. THE ASSESSEE ADMITTEDLY, HAD ASKED FOR STATEMENTS AND / OR ANY OTHER DOCUMENTS WHICH HAVE NOT BEEN SUPPLIED TO THE ASSESSEE. THE LEARNED AUTHORIZED REPRESENTATIVE FOR ITA NO S . 365 & 3 66 /PN/20 1 6 ITA NO.695/PN/2016 9 THE ASSESSEE BEFORE THE TRIBUNAL POINTED OUT THAT THE ASSESSING OF FICER HAD PROVIDED STATEMENTS OF THREE PARTIES FROM WHOM THE PURCHASES TOTALING RS .9,49,240/ - WERE MADE AND NO STATEMENTS OF OTHER PARTIES TOTALING PURCHASES RS. 22,49,425/ - WERE MADE AVAILABLE TO THE ASSESSEE. HOWEVER, THE PERUSAL OF LIST OF THE COMPANIES FILED BEFORE THE CIT(A), COPY OF WHICH IS FILED ALONG WITH APPEAL MEMO REFLECTS THAT THERE IS DIFFERENCE IN THE FIGURES OF PURCHASES THOUGH THE TOTAL IS SHOWN AT RS.31,98,665/ - . FURTHER, THE ASSESSEE CLAIMS IN THE STATEMENT OF FACTS THAT THE ASSESSING OF FICER HAD NOT SUPPLIED ANY EVIDENCE IN RESPECT OF PURCHASES OF RS.13,18,943/ - TO PROVE THAT THE SAME WERE NON - GENUINE. IT IS FURTHER STATED THAT IN RESPECT OF REMAINING PURCHASES OF RS.18,79,722/ - , THE ASSESSING OFFICER HAS RELIED ON STATEMENTS OF FOUR SU PPLIERS, WHOSE BILLS WERE SUPPLIED TO THE TRIBUNAL. IN THE PAPER BOOK, THE ASSESSEE HAS FILED THE COPIES OF STATEMENTS OF THREE PARTIES AT PAGES 106 TO 122 BUT IN THE STATEMENT OF FACTS, THE ASSESSEE ADMITS TO HAVE RECEIVED THE STATEMENT OF FOUR SUPPLIERS . BEFORE THE CIT(A) ALSO, THE CLAIM OF ASSESSEE WAS THAT NO STATEMENTS OR EVIDENCE IN RESPECT OF IMPUGNED PURCHASES TO THE EXTENT OF RS. 14,32,856/ - HAS BEEN PROVIDED. THIS ASPECT CAME TO THE KNOWLEDGE OF TRIBUNAL ONLY WHILE DECIDING THE PRESENT APPEAL AN D IN VIEW THEREOF, THE MATTER NEEDS TO BE SET ASIDE TO THE FILE OF ASSESSING OFFICER FOR VERIFYING THE COPIES OF STATEMENTS SUPPLIED TO THE ASSESSEE AND THUS, THE TOTAL AMOUNT OF PURCHASES IN THIS REGARD. IN CASE THE BASIC DOCUMENTS ARE NOT AVAILABLE WITH THE ASSESSING OFFICER, THEN MERELY ON THE BASIS OF ALLEGATION OF IMPUGNED PURCHASES FROM HAWALA DEALERS, NO ADDITION IS WARRANTED IN THE HANDS OF ASSESSEE. HOWEVER, IN CASE THE ASSESSING OFFICER HAS COPIES OF STATEMENTS, THE SAME NEEDS TO BE SUPPLIED TO THE ASSESSEE IN ORDER TO GIVE CHANCE TO THE ASSESSEE TO PROVE HIS CASE. IN CASE ANY OF THE STATEMENTS ARE NOT AVAILABLE WITH THE ASSESSING ITA NO S . 365 & 3 66 /PN/20 1 6 ITA NO.695/PN/2016 10 OFFICER, NO ADDITION TO THE EXTENT OF PURCHASES MADE FROM THE SAID PARTIES IS WARRANTED IN THE HANDS OF ASSESSEE, IN THE ABSENCE OF ANY EVIDENCE. 11. NOW, COMING TO THE CLAIM OF ASSESSEE VIS - - VIS THE IMPUGNED PURCHASES, WHERE THE SAID PURCHASES ARE BACKED BY PURCHASE BILLS AND THE ASSESSEE IS ABLE TO ESTABLISH THE TRANSPORTATION OF GOODS BY WAY OF WEIGHBRIDGE BILLS, COPIES OF TRANSPORTATION BILLS AND FURTHER, WHERE THE ASSESSEE HAS ALSO MADE AVAILABLE THE EVIDENCE OF SALE OF SAID GOODS WHICH WERE PURCHASED FROM SIX PARTIES , THEN PRIMA FACIE THE ASSESSEE HAS ESTABLISHED ITS CASE. ANOTHER ASPECT TO BE KEPT IN MIND IS THAT THE ASSESSEE HAS ALSO ON ITS OWN MOTION NOT CLAIMED THE BENEFIT OF VAT WHICH HAS NOT BEEN DEPOSITED BY HAWALA DEALERS AND HAS REVISED ITS RETURN OF INCOME FILED UNDER MVAT ACT. THE FACTUM OF PURCHASES BEING MADE BY THE ASSESSEE STANDS ESTABLISHED IN VIEW OF SUCH CIRCUMSTANCES . H OWEVER, THE BENEFIT OF PURCHASES BEING MADE FROM GREY MARKET, NEEDS ESTIMATION IN THE HANDS OF ASSESSEE. IN THIS REGARD, THE ORDER OF CIT(A) IS CONFIRMED IN ESTIMATING THE ADDITION @ 10% OF ALLEGED HAWALA PURCHASES. THE QUAN TUM OF HAWALA PURCHASES WOULD BE WORKED OUT BY THE ASSESSING OFFICER AFTER GIVING REASONABLE OPPORTUNITY OF HEARING TO THE ASSESSEE, IN LINE WITH THE DIRECTIONS HEREINABOVE. 12. NOW, COMING TO THE RATIO LAID DOWN BY THE TRIBUNAL IN KOLTE PATIL DEVELOPERS LTD. VS. DCIT (SUPRA), WHEREIN THE STATEMENTS OF HAWALA SUPPLIERS WERE RECORDED BY THE ASSESSING OFFICER AND WERE CONFRONTED TO THE ASSESSEE AND THE OPPORTUNITY OF CROSS - EXAMINATION IS ALSO GRANTED. HOWEVER, THE ASSESSEE DID NOT AVAIL THE SAME. FURTHER, TRANSPORTATION RECEIPTS COULD NOT BE FURNISHED IN RESPECT OF ANY OF THE SUPPLIERS AND IN THIS VIEW, THE PURCHASES MADE FROM THE SAID PARTIES WERE ADDED AS INCOME OF THE ASSESSEE. ANOTHER ITA NO S . 365 & 3 66 /PN/20 1 6 ITA NO.695/PN/2016 11 PR OPOSITION WHICH HAS BEEN LAID D OWN BY THE TRIBUNAL IN THE CASE OF ITO VS. SHRI PURUSHOTTAM SHANKAR KULKARNI IN ITA NO.991/PN/2012, RELATING TO ASSESSMENT YEAR 2009 - 10 , ORDER DATED 07.04.2016, WHEREIN THE ASSESSING OFFICER HAS NOTED THE PAYMENTS IN RESPECT OF ALLEGED BOGUS PURCHASES WERE OUTSTANDING EVEN AS ON THE DATE OF COMPLETION OF ASSESSMENT. FURTHER, THE ASSESSEE WAS NOT ABLE TO FURNISH ANY EVIDENCE RE LATING TO TRANSPORTATION OF GOODS. FURTHER, IN THE CASE OF MUKESHKUMAR PUSHKARAJ MEHTA VS. ITO (SUPRA), THE ASSESSEE HIMSELF ADMITTED BEFORE THE ASSESSING OFFICER THAT THE PURCHASES MADE FROM THE IMPUGNED HAWALA DEALERS WAS TREATED AS BOGUS AND ADDED TO ITS INCOME. IN THIS REGARD, THERE WAS NO QUESTION OF GRANTING OPPORTUNITY TO CROSS - EXAMINE AND THE PLEA OF ASSESSEE REGARDING GENUINENESS OF SALES WAS NOT MADE BEFORE T HE ASSESSING OFFICER AND FURTHER, NO EVIDENCE IN THE FORM OF DELIVERY CHALLANS FURNISHED BY THE ASSESSEE AND HENCE, THE PURCHASES WERE ADDED IN THE HANDS OF ASSESSEE. 13. THE FACTS OF THE PRESENT CASE AS POINTED OUT IN THE PARAS HEREINABOVE ARE AT SLIGH T VARIANCE . T HE FIRST ASPECT WAS THE SAID PARTIES ARE HAWALA DEALERS AND THE ASSESSEE HAS MADE PURCHASES FROM SUCH HAWALA DEALERS, WHO THOUGH COLLECTED VAT BUT HAD NOT DEPOSITED IN THE GOVERNMENT TREASURY, IS COMMON IN RESPECT OF THE CASES. HOWEVER, IN T HE PRESENT CASE BEFORE THE TRIBUNAL, THE ASSESSEE CLAIMS THAT IT HAD MADE AVAILABLE THE EVIDENCE PROVING THE GENUINENESS OF PURCHASES MADE BY IT BY WAY OF COPIES OF TRANSPORTATION RECEIPTS, WEIGHBRIDGE RECEIPTS AND ALSO THE BILLS OF TRANSPORTATION. ANOTHE R ASPECT WHICH IS AT VARIANCE FROM THE OTHER CASES IS THAT THE PAYMENT IN THE CASE HAS BEEN MADE BY CHEQUE. IN VIEW OF THE ABOVE SAID CIRCUMSTANCES, WHERE THE ASSESSEE CAN ESTABLISH ITS CASE OF DELIVERY OF GOODS AND ITS ONWARD TRANSMISSION BY WAY OF SALE BILLS OF NEARLY THE SAME QUANTITY, THE ENTIRE ITA NO S . 365 & 3 66 /PN/20 1 6 ITA NO.695/PN/2016 12 PURCHASES CANNOT BE DISREGARDED. IN THE PARAS HEREINABOVE, THE ADDITION TO THE EXTENT OF 10% OF THE QUANTUM OF HAWALA PURCHASES HAS BEEN ADDED IN THE HANDS OF ASSESSEE AND THE SAID ADDITION WOULD MEET THE ENDS OF JUSTICE , AS THE PURCHASES ARE ADMITTEDLY MADE FROM HAWALA PARTIES . THE ASSESSING OFFICER IS DIRECTED TO COMPUTE THE QUANTUM IN RESPECT OF EVIDENCES FURNISHED BY HIM TO THE ASSESSEE IN THE FORM OF STATEMENTS RECORDED OF THE OTHER PERSONS . W HERE NO SUC H STATEMENTS OR ANY OTHER EVIDENCE IN RESPECT OF ANY PERSON IS MADE AVAILABLE TO THE ASSESSEE, THEN SUCH QUANTUM IS NOT TO BE INCLUDED IN THE HANDS OF ASSESSEE FOR COMPUTING ADDITION ON THIS COUNT. THE GROUNDS OF APPEAL RAISED BY THE ASSESSEE IN BOTH THE APPEALS ARE ALLOWED AS INDICATED ABOVE. ITA NO.695/PN/2016 (ASSESSMENT YEAR : 2009 - 10) 1 4 . THE PRESENT APPEAL WAS ALSO HEARD ALONG WITH OTHER TWO APPEALS. THE LEARNED AUTHORIZED REPRESENTATIVE FOR THE ASSESSEE FAIRLY POINTED OUT THAT THE ISSUE ARISING I N THE PRESENT APPEAL IS IDENTICAL TO THE ISSUE IN THE SAID APPEALS EXCEPT FOR THE FAC T THAT IN THE PRESENT CASE, THE ALLEGED PURCHASES WERE MADE FROM ONE PARTY M/S. VITRAG TRADERS PVT. LTD. , MUMBAI TO THE TUNE OF RS. 13,48,537/ - . THE ASSESSEE HA D ASKED FOR COPIES OF STATEMENTS RECORDED BY THE SALES TAX DEPARTMENT OF THE SUPPLIERS AND TO ALLOW CROSS - EXAMINATION. THE ASSESSING OFFICER IN THE PRESENT CASE HAS ALSO NOT SUPPLIED THE SAID STATEMENTS TO THE ASSESSEE AND THE CASE OF THE ASSESSEE THOUGH WAS THAT , T HE FIRST ASPECT IN THE PRESENT CASE IS THE AVAILABILITY OF STATEMENTS RECORDED BY THE SALES TAX DEPARTMENT AND IN CASE NO SUCH EVIDENCE IS AVAILABLE, THEN THERE IS NO BASIS FOR MAKING AFORESAID ADDITION. AS DIRECTED IN THE ABOVE APPEALS, THE MATTER IS SET ASIDE TO THE FILE OF ASSESSING OFFICER TO VERIFY THE CONTENTION OF ASSESSEE IN THIS REGARD. IN CASE, NO DOCUMENT IS AVAILABLE WITH THE ASSESSING OFFICER, THEN ITA NO S . 365 & 3 66 /PN/20 1 6 ITA NO.695/PN/2016 13 NO ADDITION IS WARRANTED ON ACCOUNT OF HAWALA PURCHASES . O THERWISE, THE ADDITION HAS TO BE RESTRICTED TO 10% OF QUANTUM OF PURCHASES AS DIRECTED IN THE EARLIER APPEALS. 1 5 . IN THE RESULT, ALL THE APPEALS OF ASSESSEE ARE ALLOWED AS INDICATED ABOVE. ORDER PRONOUNCED ON THIS 31 ST DAY OF AUGUST , 201 6 . SD / - (SUSHMA CHOWLA) / JUDICIAL MEMBER / PUNE ; DATED : 31 ST AUGUST , 201 6 . GCVSR / COPY OF THE ORDER IS FORWARDED TO : 1. / THE APPELLAN T ; 2. / THE RESPONDENT; 2. / THE RESPONDENT; 3. ( ) / THE CIT(A) - 2 , NASHIK ; 4. / THE PR. CIT - 2 , NASHIK ; 5. 6. , , , - / DR SMC , ITAT, PUNE; / GUARD FILE . / BY ORDER , // TRUE COPY // / SR. PRIVATE SECRETARY , / ITAT, PUNE