Deepak Tanaji Rainak, Satara V. Assistant Commissioner of Income-tax,

ITA 809/PUN/2016

• Counselvise Citation: [2017] 127 COUNSELVISE.COM (IT) 9506 (ITAT-PUNE)
• Duration Of Justice: 1 year(s) 13 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 05-05-2017
• Appeal Filed By: Assessee
• Order Result: Partly Allowed
• Bench Allotted: A
• Next Hearing Date: 02-02-2017
• Assessment Year: 2010-2011
• Appeal Filed On: 22-04-2016
• Result in Favour of: Partly Allowed
• Court: TRIBUNAL
• Department Lawyers: ORS MS; SUMITRA BANERJEE ITA NO; PUN
• Keywords: Bogus purchase; Principle of natural justice; Opportunity of cross examination
• Section: 143(3); 133(6)

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL PUNE BENCH A , PUNE , , BEFORE MS. SUSHMA CHOWLA, JM AND SHRI RAJESH KUMAR, AM . / ITA NO. 302 /P U N/20 1 6 / ASSESSMENT YEAR: 200 9 - 10 THE ASST. COMMISSIONER OF INCOME TAX, CIRCLE - 2 , NASHIK. . / APPELLANT VS. M/S. CHETAN ENTERPRISES, PROP. TANAJI ANNASAHEB PATIL, SHOP NO.4, TIP TOP PLAZA, XLO POINT, MIDC, AMBAD, NASHIK 422010 . / RESPONDENT PAN: AGVPP0769J . / ITA NO. 3 64 /P U N/20 16 / ASSESSMENT YEAR: 2009 - 10 M/S. CHETAN ENTERPRISES, PROP. TANAJI ANNASAHEB PATIL, SHOP NO.4, TIP TOP PLAZA, XLO POINT, MIDC, AMBAD, NASHIK 422010 . / APPELLANT PAN: AGVPP0769J VS. THE ASST. COMMISSIONER OF INCOME TAX, CIRCLE - 2, NASHIK. . / RESPONDENT ASSESSEE BY : SHRI SANKET JOSHI REVENUE BY : MS. SUMITRA BANERJEE ITA NO. 302 & 364 /PUN/201 6 & ORS M/S. CHETAN ENTERPRISES & ORS 2 . / ITA NO S . 2144 TO 2146 /P U N/20 14 / ASSESSMENT YEAR S : 2009 - 10 TO 2011 - 12 THE ASST. COMMISSIONER OF INCOME TAX, LATUR CIRCLE , LATUR . / APPELLANT VS. SHRI VIKRAM SUGRIV KALE , VIKRAM STOVES & FABRICATORS & DIGVIJAY CONSTRUCTION, P.B. NO.25, A/37 MIDC AREA, OSMANABAD - 413501 . / RESPONDENT PAN: AG APK8979L ASSESSEE BY : SHRI SHARAD SHAH REVENUE BY : MS. ANN KAPTUAMA . / ITA NO. 809 /P U N/20 16 / ASSESSMENT YEAR: 2010 - 11 SHRI DEEPAK TANAJI RAINAK, 66 - D, SHANIWAR PETH, KARAD, DIST. SATARA . / APPELLANT PAN: A FIPR7490C VS. THE ASST. COMMISSIONER OF INCOME TAX, SATARA CIRCLE, SATARA . / RESPONDENT ASSESSEE BY : SHRI M.K. KULKARNI REVENUE BY : MS. SUMITRA BANERJEE / DATE OF HEARING : 04 . 0 5 .201 7 / DATE OF PRONOUNCEMENT: 05 .0 5 .201 7 ITA NO. 302 & 364 /PUN/201 6 & ORS M/S. CHETAN ENTERPRISES & ORS 3 / ORDER PER SUSHMA CHOWLA, JM: OUT OF THIS BUNCH OF APPEALS, CROSS APPEALS FILED BY THE REVENUE AND THE ASSESSEE ARE AGAINST THE ORDER OF CIT(A) - 2, NASHIK, DATED 16.12.2015 RELATING TO ASSESSMENT YEAR 2009 - 10 AGAINST THE ORDER PASSED UNDER SECTION 143(3) R.W.S. 147 OF THE INCOME TAX ACT, 1961 (IN SHORT THE ACT). THE SECOND BUNCH OF APPEALS FILED BY THE REVENUE IN THE CASE OF SHRI VIKRAM SUGRIV KALE ARE AGAINST CONSOLIDATED ORDER OF CIT(A), AURANGABAD, DATED 22.09.2014 RELATING TO ASSESSMENT YEARS 200 9 - 1 0 TO 201 1 - 1 2 AGAINST RESPECTIVE ORDERS PASSED UNDER SECTION 14 3(3) R.W.S. 1 47 OF THE ACT. FURTHER, ANOTHER APPEAL FILED BY THE ASSESSEE IN THE CASE OF SHRI DEEPAK TANAJI RAINAK IS AGAINST THE ORDER OF CIT(A) - 2, PUNE, DATED 15.12.2015 RELATING TO ASSESSMENT YEAR 2010 - 11 AGAINST THE ORDER PASSED UNDER SECTION 143(3) R .W.S. 1 47 OF THE ACT. 2. THIS BUNCH OF APPEALS RELATING TO THE DIFFERENT ASSESSEE ON SIMILAR ISSUE WERE HEARD TOGETHER AND ARE BEING DISPOSED OF BY THIS CONSOLIDATED ORDE R FOR THE SAKE OF CONVENIENCE. ITA NO. 302/ PUN/201 6 , RELATING TO ASSESSMENT YEAR 2009 - 10 M/S. CHETAN ENTERPRISES (REVENUES APPEAL) 3. THE REVENUE IN ITA NO.302/PUN/2016 HAS RAISED THE FOLLOWING GROUNDS OF APPEAL: - 1. THE LD. CLT(A) - 2, NASHIK WAS NOT JUSTIFIED IN OBSERVING THAT AFTER REMOVING THE IMPUGNED PURPOSE, THE GROSS PROFIT WOULD RISE TO 12.27 WITHOUT GIVING ANY BASIS AS WHAT WOULD BE THE CORRECT PERCENTAGE OF THE GROSS PROFIT OF SUCH BUSINESSES. THE LD.CIT(A) HAS ERRED IN IMPOSING OF PROFIT MARGIN OF 10 % OF THE IMPUGNED PURCHASES TO BE ADDED TO THE INCOME WITHOUT INCLUDING I NITIAL CAPITAL EMPLOYED, THE PEAK INVESTMENT AND CONSIDERING THE TURNOVER CYCLE. (T.E. IN THIS CASE IS RS. 17,17,236/ - WHICH IS EXCLUSIVELY ON THE ISSUE OF NON - GENUINE PURCHASES HAWALA) . ITA NO. 302 & 364 /PUN/201 6 & ORS M/S. CHETAN ENTERPRISES & ORS 4 2. WHETHER ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE, THE L D. CIT(A) - 2, NASHIK WAS JUSTIFIED IN DELETING THE ADDITION OF RS.56,13,536 / - ON ACCOUNT OF ALLEGED BOGUS PURCHASES FROM HAWALA DEALERS/PARTIES ? 3. WHETHER ON THE FACTS AND CIRCUMSTANCES OF THE CASE THE C I T(A) WAS JUSTIFIED IN DELETING THE PURCHASES TR EATED AS BOGUS WHEN THE APPELLANT HAD NOT BEEN ABLE TO PRODUCE THE CERTAIN PARTIES FROM WHOM PURCHASES WERE MADE WHEN LETTER SENT TO THE PARTIES WERE RETURN UNDELIVERED OR THE PARTIES DID NOT RESPOND? 4. WHETHER THE LD. CIT(A) ERRED IN ASSUMING THAT THE PURCHASES WERE ONLY INFLATED WHEN IT WAS CLEAR FROM THE CONDUCT OF THE ASSESSEE, THE PARTIES FOUND MISSING AND RESULT OF THE INVESTIGATION OF ANOTHER GOVT. DEPARTMENT (SALES TAX), THAT THE PURCHASES COULD NOT BE PROVED AS GENUINE AND THEREFORE THE DISA LLOWANCE BY THE AO WAS JUSTIFIED? 5. WHETHER THE LD. C I T(A) ERRED IN PRESUMING THAT SIMPLY BECAUSE NO ADDITION WAS MADE IN CASE OF SALES, IT WAS ACCEPTED AS GENUINE AND FURTHER ASSUMING THAT THEREBY PURCHASES SHOULD BE GENUINE? 6. THE APPELLANT PRAYS THAT THE ORDER OF THE LD. CIT(A) - 2, NASHIK MAY PLEASE BE CANCELLED AND THE ORDER OF ASSESSING OFFICE MAY PLEASE BE RESTORED. 4. THE ASSESSEE IN ITA NO.364/PUN/2016 HAS RAISED THE FOLLOWING GROUNDS OF APPEAL: - ON FACTS AND IN LAW, 1] THE LEARNED CI T(A) ERRED IN CONFIRMING THE DISALLOWANCE OF RS.5,61,354/ - OUT OF THE TOTAL DISALLOWANCE OF RS.56, L3,536/ - MADE BY THE A.A. IN RESPECT OF PURCHASES MADE FROM NINE 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 MADE 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 NINE PARTIES WERE SUPPORTED BY PURCHASE INVOICES AND MOST OF THESE PURCHASES WERE ALSO SUPPORTED BY DELIVERY CHALLANS, TRANSPORT RECEIPTS, WEIGH BRIDGE RECEI PTS ETC. AND HENCE, THERE WAS NO REASON TO DOUBT THE GENUINENESS OF THE SAID PURCHASES. 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 THE SE PARTIES WERE WITHDRAWN BY THEM AND RETURNED TO THE ASSESSEE IN CASH AND HENCE, IN THE ABSENCE OF ANY CONTRARY 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 FURNISHED BY THE ASSESSEE, THERE WAS NO REASON TO DOUBT THE GENUINENESS OF THE ABOVE PURCHASES MERELY BECAUSE THESE PARTIES WERE NOT FOUND AT THEIR REGISTER ED ADDRESSES. ITA NO. 302 & 364 /PUN/201 6 & ORS M/S. CHETAN ENTERPRISES & ORS 5 4] THE LEARNED CIT(A) OUGHT TO HAVE APPRECIATED THAT THE DISALLOWANCE MADE MERELY ON THE BASIS OF STATEMENTS OF THE NINE PARTIES RECORDED BY THE SALES TAX DEPT. WAS NOT JUSTIFIED AT ALL FOR THE FOLLOWING REASONS A . THE A.O. HAD NOT PROVIDE D THE COPIES OF STATEMENTS RECORDED BY THE SALES TAX AUTHORITIES IN RESPECT OF SIX OUT OF NINE PARTIES AND HENCE, 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 AND AMAN TIMBER INDUSTRIES V. CCE DATED 02.09.2015. 5] WITHOUT PREJUDICE, THE ASSESSEE SUBMITS THAT THE DISALLOWANCE 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. 5. THE ISSUE ARISING IN THE CROSS APPEALS FILED BY THE REVENUE AND THE ASSESSEE ARE AGAINST THE ADDITION MADE ON ACCOUNT OF PURCHASES FROM THE HAWALA PARTIES. 6. THE LEARNED AUTHORIZED REPRESENTATIVE FOR THE ASSESSEE AT THE OUTSET POINTED OUT THAT THE ISSUE ARISING IN THE PRESENT APPEAL IS SQUARELY COVERED BY THE ORDER OF TRIBUNAL IN ASSESSEES OWN CASE RELATING TO ASSESSMENT YEARS 2010 - 11 AND 2011 - 12 IN ITA NOS.36 5 & 366/PUN/2016, ORDER DATED 31.08.2016. HE FURTHER PLACED RELIANCE ON THE RATIO LAID DOWN BY THE HONBLE BOMBAY HIGH COURT IN CIT VS. M/S. ASHISH INTERNATIONAL IN INCOME TAX APPEAL NO.4299 OF 2009, JUDGMENT DATED 22.02.2011 AND IN H.R. MEHTA VS. ACIT IN INCOME TAX APPEAL NO.58 OF 2001, JUDGMENT DATED 30.06.2016. 7. THE LEARNED DEPARTMENTAL REPRESENTATIVE FOR THE REVENUE ON THE OTHER HAND, PLACED RELIANCE ON THE ORDERS OF AUTHORITIES BELOW. 8. WE HAVE HEARD THE RIVAL CONTENTIONS AND PERUSED THE RECORD. THE ISSUE ARISING IN THE PRESENT APPEALS IS IN RESPECT OF PURCHASE OF GOODS BY THE ITA NO. 302 & 364 /PUN/201 6 & ORS M/S. CHETAN ENTERPRISES & ORS 6 ASSESSEE TO THE EXTENT OF RS.56,13,536/ - FROM NINE PARTIES WHICH WERE DECLARED BY THE SALES TAX DEPARTMENT AS HAWALA DEALERS. THE ASSESSING OFFICER DURING THE COURSE OF AS SESSMENT PROCEEDINGS HAD RECEIVED INFORMATION FROM THE SALES TAX DEPARTMENT AND HAD SHOW CAUSED THE ASSESSEE. IN REPLY, THE ASSESSEE ASKED FOR THE STATEMENT RECORDED OF THE SAID PERSONS. THE ASSESSING OFFICER GAVE COP IES OF STATEMENT IN RESPECT OF THREE PARTIES I.E. HITEN ENTERPRISES, FROM WHOM PURCHASES OF RS.4,06,839/ - WERE MADE, PAYAL ENTERPRISES, PURCHASES OF RS. 7,26,319/ - AND SHREE YAMUNA IMPLEX, PURCHASES OF RS.3,25,924/ - . IN RESPECT OF BALANCE SIX PARTIES FROM WHOM PURCHASES TOTALING RS.41,54,454/ - WERE MADE, THE ASSESSEE WAS NOT PROVIDED WITH THE COPY OF STATEMENT RECORDED BY THE SALES TAX DEPARTMENT. THE ASSESSING OFFICER HOWEVER, ISSUED NOTICES UNDER SECTION 133(6) OF THE ACT TO THE SAID SUPPLIERS WHICH WERE NOT RESPONDED BY THE SAID PARTIES. THE ASSESSEE WAS NOT ABLE TO PRODUCE THE SUPPLIERS BEFORE THE ASSESSING OFFICER. HENCE, THE ASSESSING OFFICER MADE ADDITION OF RS.56,13,536/ - BY TREATING THE SAID PURCHASES TO BE NON - GENUINE OR BOGUS. 9. THE CIT(A) CONSIDERING THE EVIDENCE FILED BY THE ASSESSEE I.E. COPIES OF INVOICES ISSUED BY SUPPLIERS ON VARIOUS DATES, BANK STATEMENT SHOWING PAYMENT BY BANK CHEQUE, EXTRACT OF SUPPLIERS ACCOUNT IN THE AUDITED BOOKS OF ASSESSEE, WEIGHBRIDGE RECEIPTS AND TRANSPORTATION RECEIPTS IN RESPECT OF IMPUGNED GOO DS PURCHASES, WAS OF THE VIEW THAT 10% OF THE ALLEGED HAWALA PURCHASES SHOULD BE ADDED IN THE HANDS OF ASSESSEE. THE PLEA OF THE ASSESSEE THAT IN THE ABSENCE OF ANY STATEMENTS OR EVIDENCE BEING PROVIDED IN RESPECT OF IMPUGNED PURCHASES TO THE EXTENT OF RS . 41,54,454/ - , WHEREIN THE ASSESSEE HAD REQUESTED THE ASSESSING OFFICER TO ALLOW CR OSS - EXAMINATION, WHICH WAS NOT ALLOWED, THEN IN VIEW OF THE DECISION OF HON'BLE SUPREME COURT IN M/S. ANDAMAN TIMBER INDUSTRIES VS. COMMISSIONER OF CENTRAL EXCISE, KOLKATTA - ITA NO. 302 & 364 /PUN/201 6 & ORS M/S. CHETAN ENTERPRISES & ORS 7 I I, CIVIL APPEAL NO.4228 OF 2006, JUDGMENT DATED 02.09.2015 , THE PLEA OF THE ASSESSEE WAS THAT THE ADDITION IN SUCH CIRCUMSTANCES WAS NOT WARRANTED. HOWEVER, THE CIT(A) ACCEPTED THE CASE OF ASSESSEE THAT THE ADDITION OF TOTAL PURCHASES CANNOT BE MADE IN TH E HANDS OF ASSESSEE ; S INCE THE GOODS MAY HAVE PURCHASED FROM GREY MARKET, GP RATE OF 10% ON THE TOTAL HAWALA PURCHASES WAS APPLIED. 10. THE ASSESSEE IS IN APPEAL AGAINST THE ORDER OF CIT(A) IN RESTRICTING THE ADDITION TO 10% OF TOTAL HAWALA PURCHASES. THE REVENUE IS IN APPEAL AGAINST THE ORDER OF CIT(A) IN SCALING DOWN THE ADDITION. 11. WE FIND THAT SIMILAR ISSUE OF ADDITION ON ACCOUNT OF PURCHASES MADE FROM THE HAWALA PARTIES AROSE BEFORE THE TRIBUNAL IN ASSESSEES OWN CASE (SUPRA) AND THE TRIBUNAL VI DE ORDER DATED 31.08.2016 HAS HELD AS UNDER: - 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 ASSESS EE CLAIMS THAT THE 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. PARTI ES 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 OFFICER SINCE THE ASSESSEE HAD MADE PURCHASES FROM SIX OF THE PARTIES WHO WERE IN THE LI ST 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 AS SESSEE 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 FROM WHOM PURCHASES WERE MADE BUT THE SAID NOTICES WERE RETURNED UNSERVED SINCE NONE O F 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 RE CEIPTS AND TRANSPORTATION RECEIPTS IN ORDER TO ESTABLISH THAT THE TRANSACTION OF PURCHASES WAS GENUINE. THE ASSESSEE FURTHER CLAIMS THAT THE PAYMENTS AGAINST THESE PURCHASES 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 ASSESS EE POINTS OUT IS THAT WHEN HE CAME TO KNOW THAT THE VAT COLLECTED BY THE SAID DEALERS HAS NOT BEEN ITA NO. 302 & 364 /PUN/201 6 & ORS M/S. CHETAN ENTERPRISES & ORS 8 DEPOSITED WITH THE SALES TAX DEPARTMENT, HE VOLUNTARILY REVISED HIS RETURN UNDER MVAT ACT BY WITHDRAWING THE SET OFF OF CLAIM IN THE EARLIER RETURN AND 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 CUSTOMERS, WHEREIN THE QUANTITY OF GOODS PURCHASED FROM SO - CALLED HAWALA DEALERS TALLI ED 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 M ADE 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 EXPLAIN THE PURCHASES FROM SIX PARTIES ON THE BASIS OF INFORMATION RECEIVED FROM THE SALE S 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 ENTERPRISES 2,30,583 4) BHAVANI TRADE LINK 3,42,417 5) MERCURY ENTERPRISES 3,76,239 6) AMAR ENTERPRISES 9,30,483 TOTAL 31,98,665 10. HOWEVER, THE ASSESSING OFFICER EXCEPT FOR PROVIDING THE STATEMENTS OF THREE PARTIES I.E. PROPRIETOR OF HITEN ENTERPRISES, 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.9,30,483/ - , SANDOZ STEEL OF RS.10,79,483/ - AND ADIJIN ENTERPRISES 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 A SSESSEE. THE LEARNED AUTHORIZED REPRESENTATIVE FOR THE ASSESSEE BEFORE THE TRIBUNAL POINTED OUT THAT THE ASSESSING OFFICER 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 THOU GH THE TOTAL IS SHOWN AT RS.31,98,665/ - . FURTHER, THE ASSESSEE CLAIMS IN THE STATEMENT OF FACTS THAT THE ASSESSING OFFICER 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 STAT ED THAT IN RESPECT OF REMAINING PURCHASES OF RS.18,79,722/ - , THE ASSESSING OFFICER HAS RELIED ON STATEMENTS OF FOUR SUPPLIERS, WHOSE BILLS WERE SUPPLIED TO THE TRIBUNAL. IN THE PAPER BOOK, THE ASSESSEE HAS FILED THE COPIES OF STATEMENTS OF THREE PARTIES A T 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.1 4,32,856/ - HAS BEEN PROVIDED. THIS ASPECT CAME TO THE KNOWLEDGE OF TRIBUNAL ONLY WHILE DECIDING THE PRESENT APPEAL AND IN VIEW THEREOF, THE MATTER NEEDS TO BE SET ASIDE TO THE FILE OF ASSESSING OFFICER FOR VERIFYING THE COPIES OF STATEMENTS SUPPLIED TO TH E 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 ITA NO. 302 & 364 /PUN/201 6 & ORS M/S. CHETAN ENTERPRISES & ORS 9 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 ASSESSIN G 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 B ACKED 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 PURC HASED 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. HOWEVER, 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 QUANTUM OF HAWALA PURCHASES WOULD BE WORKED OUT BY THE ASSESSING OFFICER AFTER GIVING REASONABLE OPPORTUNITY OF HEARING TO THE ASSESSEE, IN LI NE 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 - EXAMINATI ON 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 PROPOSITION WHICH HAS BEEN LAID DOWN 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 RELATING 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 THE 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 SLIGHT VARIANCE. THE 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 DEPOS ITED IN THE GOVERNMENT TREASURY, IS COMMON IN RESPECT OF THE CASES. HOWEVER, IN THE 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 TRANSPORT ATION RECEIPTS, WEIGHBRIDGE RECEIPTS AND ALSO THE BILLS OF TRANSPORTATION. ANOTHER 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 E STABLISH ITS CASE OF DELIVERY OF GOODS AND ITS ONWARD TRANSMISSION BY WAY OF SALE BILLS OF NEARLY THE SAME QUANTITY, THE ENTIRE PURCHASES CANNOT BE DISREGARDED. IN THE PARAS HEREINABOVE, THE ADDITION TO THE ITA NO. 302 & 364 /PUN/201 6 & ORS M/S. CHETAN ENTERPRISES & ORS 10 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 T HE ASSESSEE IN THE FORM OF STATEMENTS RECORDED OF THE OTHER PERSONS. WHERE NO SUCH 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. 12. IN THE FACTS OF THE PRESENT CASE BEFORE US WHERE THE ASSESSEE HAD SOUGHT COPIES OF STATEMENTS RECORDED OR ANY OTHER EVIDENCE IN R ESPECT OF SUCH HAWALA PARTIES, WHICH W ERE NOT SUPPLIED TO THE ASSESSEE, THEN NO ADDITION IS WARRANTED IN THE HANDS OF ASSESSEE IN RESPECT OF SAID PURCHASES FROM THE SAID PARTIES. THE ASSESSING OFFICER HAD FAILED TO PROVIDE THE STATEMENTS OR EVIDENCE IN RE SPECT OF PURCHASES TO THE EXTENT OF RS.41,54,454/ - . ACCORDINGLY, WE HOLD THAT NO ADDITION IS TO BE MADE IN THIS REGARD. HOWEVER, IN RESPECT OF THE IMPUGNED PURCHASES TO THE EXTENT OF RS.14,59,082/ - , WHERE THE COPIES OF STATEMENTS WERE PROVIDED TO THE ASS ESSEE, THEN ADDITION IS TO BE RESTRICTED BY APPLYING GP RATE OF 10% ON THE SAID PURCHASES OVER AND ABOVE THE GP RATE SHOWN BY THE ASSESSEE. ACCORDINGLY, APPEAL FILED BY THE ASSESSEE IS PARTLY ALLOWED AND THE APPEAL FILED BY THE REVENUE IS DISMISSED. ITA NOS.2144 TO 2146/PUN/2014, RELATING TO ASSESSMENT YEARS 2009 - 10 TO 2011 - 12 (REVENUES APPEAL) 13. THIS BUNCH OF THREE APPEALS RELATING TO THE SAME ASSESSEE WERE HEARD TOGETHER AND ARE BEING DISPOSED OF BY THIS CONSOLIDATED ORDER FOR THE SAKE OF CONVENIENCE. HOWEVER, REFERENCE IS BEING MADE TO THE FACTS IN ITA NO.2144/PUN/2014 TO ADJUDICATE THE ISSUE. 14. THE ONLY ISSUE RAISED IN THE PRESENT APPEAL IS AGAINST THE ORDER OF CIT(A) IN RESTRICTING THE ADDIT ION ON ACCOUNT OF BOGUS PURCHASES. ITA NO. 302 & 364 /PUN/201 6 & ORS M/S. CHETAN ENTERPRISES & ORS 11 15. IN THE FACTS OF THE PRESENT CASE, THE ASSESSING OFFICER HAD RECEIVED INFORMATION IN RESPECT OF PURCHASES MADE FROM HAWALA PARTIES. THE ASSESSING OFFICER ASKED THE ASSESSEE TO PRODUCE THE PURCHASE BILLS, DELIVERY CHAL LANS, LORRY RECEIPTS, STOCK RECEIPTS, BANK STATEMENT, ETC. THE ASSESSEE IN REPLY, FURNISHED THE CONFIRMATION LETTER ALONG WITH RETURN OF INCOME, COPY OF BANK STATEMENT, 7/12 EXTRACT, BOOKS OF ACCOUNT. THE ASSESSEE PRODUCED THE INVOICES AND DELIVERY CHALL ANS BUT COULD NOT PRODUCE THE LORRY RECEIPTS AND STOCK REGISTERS. IN THE ABSENCE OF THE SAME, THE ASSESSING OFFICER WAS OF THE VIEW THAT THE TRANSACTION CANNOT BE VERIFIED AND HENCE, THE PURCHASES OF RS.20,06,939/ - WERE TREATED AS BOGUS. 16. THE CIT(A) T OOK NOTE OF VARIOUS EVIDENCES FILED BY THE ASSESSEE AND THE PLEA OF THE ASSESSEE THAT MERELY BECAUSE IT WAS NOT MAINTAINING DAY - TO - DAY STOCK RECORDS AND LORRY RECEIPTS, THE IMPUGNED PURCHASES COULD NOT BE ADDED IN THE HANDS OF ASSESSEE . T HE CIT(A) HELD TH AT THE ASSESSING OFFICER WAS NOT JUSTIFIED IN MAKING THE ADDITION ON THE BASIS OF INFORMATION RECEIVED FROM THE SALES TAX DEPARTMENT OF WHOLE PURCHASES . THE ASSESSEE BEFORE THE CIT(A) ACCEPTED THAT THE ADDITIONAL INCOME @ 10% OF SAID PURCHASES BE ADDED IN THE HANDS OF ASSESSEE IN ORDER TO BUY PEACE OF MIND. THE CIT(A) ACCORDINGLY, RESTRICTED THE ADDITION IN THE HANDS OF ASSESSEE. 17. THE REVENUE IS IN APPEAL AGAINST THE SAID ORDER OF CIT(A). 18. WE HAVE ALREADY DECIDED THIS ISSUE IN THE CASE OF M/S. CHE TAN ENTERPRISES IN THE PARAS HEREINABOVE. IN THE FACTS OF THE PRESENT CASE, WHERE THE ASSESSEE HAS ESTABLISHED THE TRANSACTION OF PURCHASES BY FILING THE NECESSARY EVIDENCE I.E. PURCHASE BILLS, DELIVERY CHALLANS AND ALSO WHERE THE ITA NO. 302 & 364 /PUN/201 6 & ORS M/S. CHETAN ENTERPRISES & ORS 12 PAYMENT HAS BEEN MADE TH ROUGH BANKING CHANNEL AND WHERE THE ASSESSEE HAS ALSO FILED CONFIRMATION, THEN THE TRANSACTION OF PURCHASES ARE TO BE ACCEPTED IN THE HANDS OF ASSESSEE. HOWEVER, THERE IS PROBABILITY OF THE ASSESSEE HAVING PURCHASED GOODS FROM GREY MARKET AND ACCORDINGLY, WE UPHOLD THE ORDER OF CIT(A) IN MAKING ADDITION ON ACCOUNT OF GP @ 10% OF THE BOGUS PURCHASES OVER AND ABOVE THE GP RATE SHOWN BY THE ASSESSEE. ACCORDINGLY, THE APPEAL OF REVENUE IS DISMISSED. 19. THE FACTS AND ISSUE IN ITA NOS.2145 & 2146/PUN/2014 ARE IDENTICAL TO THE FACTS AND ISSUE IN ITA NO.2144/PUN/2014 AND OUR DECISION IN ITA NO.2144/PUN/2014 SHALL APPLY MUTATIS MUTANDIS TO ITA NOS.2145 & 2146/PUN/2014 . ITA NO.809/PUN/2016, RELATING TO ASSESSMENT YEAR 2010 - 11 (ASSESSEES APPEAL) 20. IN THE FACTS OF PRESENT APPEAL, THE ASSESSEE HAD MADE PURCHASES FROM FOUR DIFFERENT PARTIES TOTALING RS.27,27, 781/ - , OUT OF WHICH MAJOR PURCHASES WERE FROM SUYOG TRADING LINK AT RS. 22,66,388/ - . 21. THE ASSESSEE IS AGGRIEVED BY THE ORDER OF CIT(A) IN MAKING ADDITION ON ACCOUNT OF ENTIRE BOGUS PURCHASES IN THE HANDS OF ASSESSEE. THE ASSESSEE CLAIMS THAT IT HAD FURNISHED EVIDENCE OF PURCHASES BY WAY OF PURCHASE BILLS AND ALSO ITS UTILIZATION IN CIVIL CONSTRUCTION BUSINESS CARRIED ON BY THE ASSESSEE. THE ASSESSEE HAD ALSO FURNISHED BANK STATEMENT AND OTHER DOCUMENTS TO PROVE ITS CASE. THE ASSESSING OFFICER NOTED THAT THE PAYMENTS TO M/S. SUYOG TRADING LINK WERE MADE THROUGH DEMAND DRAFT AND THE REST PAYMENTS WERE MADE IN CASH. THE ASSESSING OFFICER TREATED THE ENTIRE PURCHASES TO BE BOGUS SINCE ITA NO. 302 & 364 /PUN/201 6 & ORS M/S. CHETAN ENTERPRISES & ORS 13 INFORMATION IN THIS REGARD WAS RECEIVED FROM THE SALES TAX DEPARTMENT. THE CIT(A) UPHELD THE ORDER OF ASSESSING OFFICER. 22. WE HAVE ALREADY DECIDED SIMILAR ISSUE IN THE PARAS HEREINABOVE AND FOLLOWING THE SAME PARITY OF REAS ONING, WE DIRECT THE ASSESSING OFFICER TO RESTRICT THE ADDITION BY APPLYING THE GP RATE OF 10% ON BOGUS PURCHASES WHICH IS OVER AND ABOVE THE GP SHOWN BY THE ASSESSEE. THE APPEAL OF THE ASSESSEE IS THUS, PARTLY ALLOWED. 23 . IN THE RESULT, APPEALS OF DIFFERENT ASSESSEE ARE PARTLY ALLOWED AND THE APPEALS OF REVENUE ARE DISMISSED. ORDER P RONOUNCED ON THIS 5 TH DAY OF MAY , 201 7 . SD/ - SD/ - ( RAJESH KUMAR ) (SUSHMA CHOWLA) / ACCOUNTANT MEMBER / JUDICIAL MEMBER / PUNE ; DATED : 5 TH MAY , 201 7 . GCVSR / COPY OF THE ORDER IS FORWARDED TO : 1. / THE APPELLANT ; 2. / THE RESPONDENT; 3. ( ) / THE CIT(A) - 2, NASHIK / CIT(A), AURANGABAD / CIT(A) - 2, PUNE ; 4. / THE CONCERNED CIT ; 5. , , / DR A , ITAT, PUNE; 6. / GUARD FILE . / BY ORDER, // TRUE COPY // / ASSISTANT REGISTRAR, , / ITAT, PUNE