PARSHURAM FORGE PRIVATE LIMITED , NAGPUR V. DEPUTY COMISSIONER OF INCOME TAX , CIRCLE -1 , NAGPUR

ITA 7/NAG/2018

AI Insights

The case involves Parsuram Forge Pvt. Ltd., which appealed against the order of the CIT(A) confirming the AO's addition of Rs.4,99,493 to its income for the assessment year 2010-11, treating it as bogus purchases from M/s. Ashtavinayak Enterprises, identified as a hawala dealer. The AO had reopened the assessment based on information from the Sales Tax Department and required the assessee to provide various documents to substantiate the purchases. The assessee failed to provide satisfactory evidence, leading to the addition. The Tribunal, after considering the submissions and the lack of evidence on the part of the assessee, decided to modify the CIT(A)'s order by adopting a 10% gross profit on the disputed amount instead of the entire amount.

• Counselvise Citation: [2023] 140 COUNSELVISE.COM (IT) 128844 (ITAT-NAGPUR)
• Duration Of Justice: 5 year(s) 6 month(s) 20 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 06-08-2023
• Appeal Filed By: Assessee
• Order Result: PartlyAllowed
• Bench Allotted: DB
• Next Hearing Date: 19-07-2023
• Assessment Year: 2010-2011
• Appeal Filed On: 16-01-2018
• Other Referred Cases: Rajeev G. Kalathil Vs. DCIT, CIT Vs. Nikunj Eximp Pvt. Ltd.
• Laws Referred To: Income Tax Act
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Keywords: Bogus purchase

Judgement Text

आयकर अपीलीय अधिकरण न्यायपीठ नागपूर में । IN THE INCOME TAX APPELLATE TRIBUNAL, NAGPUR (Through Virtual Court) BEFORE SHRI INTURI RAMA RAO, ACCOUNTANT MEMBER AND SHRI S.S. VISWANETHRA RAVI, JUDICIAL MEMBER आयकर अपील सं. / ITA No.07/NAG/2018 धनिाारण वर्ा / Assessment Year : 2010-11 Parsuram Forge Pvt. Ltd., 23, Puspkunj, Commercial Complex, Central Bazar Road, Ramdaspeth, Nagpur – 440010 PAN : AABCP0067A .......अपीलार्थी / Appellant बनाम / V/s. Dy. CIT, Circle – 1, Nagpur ......प्रत्यर्थी / Respondent Assessee by : N O N E Revenue by : Shri Amol Khairnar सुनवाई की तारीख / Date of Hearing : 20-07-2023 घोषणा की तारीख / Date of Pronouncement : 07-08-2023 आदेश / ORDER PER S.S. VISWANETHRA RAVI, JM : This appeal by the assessee against the order dated 16-10-2017 passed by the Commissioner of Income Tax (Appeals)-1, Nagpur [‘CIT(A)’] for assessment year 2010-11. 2. We find no representation on behalf of the assessee nor any application filed seeking adjournment. Thus, the assessee called absent and set ex-parte. Therefore, we proceed to dispose off the appeal by hearing the ld. DR and perusing the material available on record. 2 ITA No. 07/NAG/2018, A.Y. 2010-11 3. The assessee raised two grounds of appeal amongst which the only issue emanates for our consideration is as to whether the CIT(A) justified in confirming the order of AO in making addition on account of hawala purchases. 4. We note that the assessee is a company and filed return of income declaring a total income of Rs.46,84,066/- which was processed u/s. 143(1) of the Act. Thereafter, on receipt of information from Sales Tax Department, the AO reopened the said assessment by issuing a notice u/s. 148 of the Act on account of bogus purchases. The AO asked the assessee to produce copies of Octroi receipts, Purchase bills, Bank statement showing payment, ledger account of parties and copy of stock register. In response to the said query, the assessee relied on two case laws of Mumbai Benches of ITAT in the case of Rajeev G. Kalathil Vs. DCIT in ITA No. 6727/MUM/2012 and in the case of CIT Vs. Nikunj Eximp Pvt. Ltd. in ITA No. 5604/2010 reported in 216 Taxman 171, wherein, it was held that the purchases cannot be bogus for mere listing of supplier as hawala dealer and purchases cannot be bogus for mere non-appearance of suppliers before the AO, respectively. According to the AO, the assessee did not submit transactions relating to the transportation and purchase bills could not be verified for non-appearance of suppliers. Accordingly, an amount of Rs.4,99,493/- was added to the total income of the assessee treating the transaction as bogus. The CIT(A) confirmed the same. 5. On hearing ld. DR, we note from the impugned order that the assessee purchased coal to an extent of Rs.4,99,493/- from M/s. Ashtavinayak Enterprises, Nagpur and the said entity was identified as hawala dealer as per the Sales Tax Department. Further, it is noted from impugned order that the assessee submitted ledger account and copies of 3 ITA No. 07/NAG/2018, A.Y. 2010-11 inspection report, the bills showing the purchase of coal were unstamped and do not mention any details of transportation/delivery of these goods. Further, it is observed that the transaction with M/s. Ashtavinayak Enterprises cannot be believed in view of non-production of seller and stock register as there is no dispute with regard to submission of evidences regarding the purchase of coal from M/s. Ashtavinayak Enterprises, further ledger account and copies of inspection report. Both the authorities below disbelieved these evidences in view of the said M/s. Ashtavinayak Enterprises being identified as hawala dealer. It is also an admitted fact that the assessee purchased the said coal from the said supplier through banking channel and the CIT(A) confirmed the addition made by the AO only on the ground that non-submission of transport and delivery receipts and stock register. We find no such evidences were filed before the CIT(A) and AO as well as before this Tribunal. Therefore, following the various Tribunal orders, we direct the AO to adopt 10% of gross profit of Rs.4,99,493/-. In view of the same, the order of CIT(A) is modified, accordingly. Thus, grounds raised by the assessee are partly allowed. 6. In the result, the appeal of assessee is partly allowed. Order pronounced in the open court on 07 th August, 2023. Sd/- Sd/- (Inturi Rama Rao) (S.S. Viswanethra Ravi) ACCOUNTANT MEMBER JUDICIAL MEMBER पुणे / Pune; दिनाांक / Dated : 07 th August, 2023. रदव 4 ITA No. 07/NAG/2018, A.Y. 2010-11 आदेश की प्रधिधलधप अग्रेधर्ि / Copy of the Order forwarded to : 1. अपीलार्थी / The Appellant. 2. प्रत्यर्थी / The Respondent. 3. The CIT(A)-1, Nagpur 4. The Pr. CIT-I, Nagpur 5. दवभागीय प्रदतदनदि, आयकर अपीलीय अदिकरण, नागपूर, / DR, ITAT, Nagpur. 6. गार्ड फ़ाइल / Guard File. //सत्यादपत प्रदत// True Copy// आिेशानुसार / BY ORDER, वररष्ठ दनजी सदिव / Sr. Private Secretary आयकर अपीलीय अदिकरण ,पुणे / ITAT, Pune