M/s. Govindam Metal & Alloys P.Ltd, Jalna V. Income tax Officer, Jalna

ITA 81/PUN/2017

• Counselvise Citation: [2021] 108 COUNSELVISE.COM (IT) 5488 (ITAT-PUNE)
• Duration Of Justice: 4 year(s) 4 month(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 10-05-2021
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: A
• Next Hearing Date: 10-05-2021
• Assessment Year: 2009-2010
• Appeal Filed On: 10-01-2017
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: A M MAHADEVAN KRISHNAN
• Keywords: Bogus purchase; Set aside
• Section: 69C; 40A(3); 133(6)

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL A BENCH, PUNE (THROUGH VIRTUAL COURT) BEFORE SHRI R.S.SYAL, VP AND SHRI PARTHA SARATHI CHAUDHURY, JM . / I TA NO. 40 /PUN/20 17 / ASSESSMENT YEAR : 2009 - 10 THE INCOME TAX OFFICER, WARD - 2, JALNA. ....... / APPELLANT / V/S. M/S. GOVINDAM METAL & ALLOYS PVT. LTD. PLOT NO.B - 15, ADDL. MIDC AREA, JALNA - 431 203. PAN : AACCT9215F / RESPONDENT . / ITA NO. 81/PUN/2017 / ASSESSMENT YEAR : 2009 - 10 M/S. GOVINDAM METAL & ALLOYS PVT. LTD. C/O. SANDEEP NARENDRA AGARWAL, BHARAT NAGAR, NEAR SHIVAJI STATUE, JALNA - 431 203. PAN : AACCT9215F ....... / APPELLANT / V/S. THE INCOME TAX OFFICER, WARD - 2, JALNA. / RESPONDENT A SSESSEE BY : NONE REVENUE BY : SHRI A M MAHADEVAN KRISHNAN / DATE OF HEARING : 10 .0 5 .2021 / DATE OF PRONOUNCEMENT : 10 . 05 .2021 2 ITA NO. 40 /PUN/20 17 ITA NO.81/PUN/2017 A.Y. 2009 - 10 / ORDER PER PARTHA SARATHI CHAUDHU RY, JM: THESE CROSS - APPEALS PREFERRED BY THE REVENUE AND THE ASSESSEE EMANATES FROM THE COMMON ORDER OF THE LD. CIT(APPEAL) - 1, AURANGABAD DATED 24.10.2016 FOR THE ASSESSMENT YEAR 2009 - 10 AS PER THE GROUNDS OF APPEAL ON RECORD. 2. AT THE TIME OF HEARING, NEITHER THE ASSESSE NOR HIS AUTHORIZED REPRESENTATIVE WAS PRESENT. NO ADJOURNMENT APPLICATION WAS FILED BY THE ASSESSE. THEREFORE, THE SUBMISSIONS OF THE LD. DR WERE RECORDED AND CASES WERE HEARD ON MERITS . FIRST, WE WOULD TAKE UP REVENUES APPEAL IN ITA NO.40/PUN/2017 FOR THE ASSESSMENT YEAR 2009 - 10 FOR ADJUDICATION. ITA NO.40/PUN/2017 ( BY REVENUE) A.Y.2009 - 10 3. I N ITA NO.40/PUN/2017, THE REVENUE HAS RAISED FOLLOWING GROUNDS OF APPEAL: 1. WHETHER ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE THE CIT(A) WAS JUSTIFIED IN TO RESTRICT THE ADDITION TO RS.16,95,879/ - (10% OF RS.1,69,58,793/ - ) THOUGH AO NOTICED THAT ASSESSEE SHOWN PURCHASES IN THE BOOKS OF ACCOUNTS AND WHEREAS NO MATERIAL AGAINST THE PURCHASE BILLS HAD BEEN RECEIVED IN REALITY. 2. WHETHER THE CIT(A) WAS JUSTIFIED IN NOT APPRECIATING THE FACT THAT INFORMATION UNDER SECTION 133(6) OF THE INCOME - TAX ACT,1961 FROM THE HAWALA DEALERS AND THEIR BANK ACCOUNTS FROM THE RESPECTIVE BANKS WERE CALLED FOR WHICH RESULTED INTO RETURNING OF ENVELOPS WITH THE REMARKS THAT, THE SAID CONCERN IS NOT IN EXISTENCES. FURTHER, BANKS HAVE GIVEN IN SOME OF THE CASES THEIR BANK ACCOUNT WHICH CATEGORICALLY INDICATES THAT, THE MONIES HAVE BEEN DEPOSI TED BY CHEQUE AGAINST THE SALES AND WITHDRAWN BY SELF CHEQUES IN CASH ON THE SAME DATE FOR RETURNING TO THE PURCHASER BY CHARGING CERTAIN COMMISSION. IN VIEW OF THIS SITUATION, THE ASSESSEE INDULGED INTO PURCHASE OF MATERIAL UNACCOUNTEDLY IN CASH FROM UNDI SCLOSED SOURCES IN CONTRAVENTION TO THE PROVISIONS OF SECTION 40A(3) AND 69C OF THE IT ACT,1961 FROM SOME OTHER PARTIES AND OBTAINED ONLY THE BILLS FROM THE HAWALA DEALERS WITHOUT MOVEMENT OF GOODS INCLUDING 3 ITA NO. 40 /PUN/20 17 ITA NO.81/PUN/2017 A.Y. 2009 - 10 CIRCUMSTANTIAL EVIDENCES IN THE FORM OF TRANSPOR TATION, WEIGHTMENT SLIPS AND DEBITING THE EXPENSES INTO THE CASH BOOK FOR SUCH EXPENSES. 3. THE ORDER OF THE AO BE RESTORED AND THAT OF THE CIT(A) BE VACATED. 4. THE APPELLANT CRAVES LEAVE TO ADD, AMEND OR ALTER ANY GROUNDS OF APPEAL. 4. THE BRIEF F ACTS IN THIS CASE ARE THAT THE ASSESSE IS A PRIVATE LIMITED COMPANY INCORPORATED ON 16.04.2008 AND IS ENGAGED IN THE BUSINESS OF TRADING IN ALL TYPES OF IRON AND STEEL. DURING THE COURSE OF ASSESSMENT PROCEEDINGS, IT WAS NOTICED BY THE ASSESSING OFFICER TH AT AN INFORMATION IN A DVD CONTAINING INFORMATION ABOUT UNEARTHING A RACKET INVOLVING MORE THAN 1935 HAWALA OPERATORS WHO HAVE ISSUED FAKE PURCHASE BILLS TO MORE THAN 37000 BUSINESS ENTITIES INCLUDING THE ASSESSE WAS RECEIVED FROM THE SALES TAX DEPARTMENT, THE ASSESSE WAS ONE OF THE BENEFICIARY CLAIMED TO HAVE BEEN PURCHASED THE GOODS TO THE EXTENT OF RS.1,69,58,793/ - FROM A HAWALA OPERATOR AND SHOWN IN THE BOOKS OF ACCOUNT AND WHEREAS, NO MATERIAL AGAINST THE PURCHASE BILLS HAD BEEN RECEIVED IN REALITY. TH E ASSESSING OFFICER HAD ALLEGED THAT THE ASSESSE COMPANY HAD PURCHASED 411.825 MT OF GOODS FROM PARTIES DECLARED BY SALES TAX AS HAWALA PARTIES AND, ACCORDINGLY, HE MADE ADDITION OF RS.1,69,58,793/ - ON ACCOUNT OF FOLLOWING ALLEGED HAWALA/INFLATED PURCHASES : SR. NO. PARTY NAME & ADDRESS VAT TIN QUANTITY BASIC VAT TOTAL 1. R.K ISPAT 27430642191V 229.895 9764313 390572 10154885 2. SHIVAM TRADING COMPANY 27490600351V 82.680 2387071 95483 2482554 3. RASHMI ENTERPRISES 27580657871V 99.250 4155148 166206 4321354 TOTAL 411.825 163,06,532 6,52,261 1,69,58,793 4 ITA NO. 40 /PUN/20 17 ITA NO.81/PUN/2017 A.Y. 2009 - 10 5. DURING THE FIRST APPELLATE PROCEEDINGS, THE LD. CIT(APPEALS) CONFIRMED THE ADDITION TO RS.16,95,879/ - (10% OF RS. 1,69,58,793/ - ) AS PER THE REASONS RECORDED IN HIS ORDER AGAINST WHICH THE REVENUE IS IN APPEAL BEFORE US. 6. WE HAVE HEARD THE SUBMISSIONS MADE BY THE LD. DR AND PERUSED THE MATERIALS AVAILABLE ON RECORD. WE FIND THAT THIS IS CASE OF BOGUS PURCHASES WHEREIN INFORMATION OF HAWALA TRADING WAS FURNISHED BY SALES TAX DEPARTMENT AN D THE LD. CIT(APPEALS) HAS CONFIRMED 10% OF THE ENTIRE BOGUS PURCHASES ADDITION. ON THE OTHER HAND, THE ASSESSING OFFICER HAS IMPOSED 100% OF THE ENTIRE BOGUS PURCHASES TRANSACTION. THE LD. DR HAS SUBMITTED FOR CONFIRMATION OF ORDER OF ASSESSING OFFICER WI TH 100% ADDITION. WE FIND THAT IN THE SIMILAR FACTS AND CIRCUMSTANCES AND ON IDENTICAL SITUATION, THE HONBLE BOMBAY HIGH COURT IN THE CASE OF PR.CIT VS. MOHAMMAD HAJI ADAM & CO. VIDE ITS JUDGMENT DATED 11.02.2019 IN ITA NO.1004 OF 2016 WHEREIN IT HAS BEEN HELD THAT NO AD - HOC ADDITION AT THE RATE OF 10% OF BOGUS PURCHASES IS WARRANTED. RATHER, THE ADDITION SHOULD BE MADE TO THE EXTENT OF DIFFERENCE BETWEEN GROSS PROFIT RATE ON GENUINE PURCHASES AND GROSS PROFIT RATE OF BOGUS PURCHASES. FOR EXAMPLE, IF THE G P PERCENTAGE OF GENUINE PURCHASES COMES TO 8% WHEREAS GP PERCENTAGE OF BOGUS PURCHASES COMES TO 10%, THEN 2% OF BOGUS PURCHASES CAN BE ADDED TO THE INCOME OF THE ASSESSEE. 7. REVERTING TO THE FACTS OF THE PRESENT CASE AND TAKING GUIDANCE FROM THE SAID JU DGMENT OF THE HON'BLE BOMBAY HIGH COURT IN THE CASE OF PR.CIT VS. MOHOMMAD HAJI ADAM (SUPRA.), WE SET ASIDE THE ORDER OF THE LD. CIT(APPEAL) AND RESTORE THE MATTER BACK TO THE FILE OF THE ASSESSING OFFICER FOR UNDERTAKING THIS EXERCISE AND FINDING OUT THE EXCESS GROSS PROFIT RATE EARNED FROM BOGUS 5 ITA NO. 40 /PUN/20 17 ITA NO.81/PUN/2017 A.Y. 2009 - 10 PURCHASES AND THEN MAKING THE ADDITION ACCORDINGLY AFTER ALLOWING REASONABLE OPPORTUNITY OF HEARING TO THE ASSESSEE. 8. IN THE RESULT, APPEAL OF THE REVENUE IN ITA NO.40/PUN/2017 IS ALLOWED FOR STATISTICAL PURPOSES . ITA NO. 81 /PUN/2017 ( BY ASSESSEE) A.Y. 2009 - 10 9. IN ITA NO.81/PUN/2017, THE ASSESSEE HAS RAISED FOLLOWING GROUNDS OF APPEAL: 1.CIT(A) HAS ERRED BOTH ON FACTS AND IN LAW IN ESTIMATING AND ADDING ADDITIONAL 10% GRO SS PROFIT ON ALLEGING UNVERIFIABLE PURCHASE BILLS FROM DIFFERENT PARTY AND PURCHASE FROM DIFFERENT PARTY. ADDITIONS CONFIRMED BY CIT(A) MAY BE PLEASE BE DELETED. 2. COMMISSIONER (APPEALS) HAS ERRED IN REJECTING THE BOOKS OF ACCOUNTS. REJECTION OF BOOKS IS BEYOND HIS JURISDICTION AND APPELLANT PRAYS TO RESERVE CIT(A) ACTION OF REJECTION OF BOOKS. 3. COMMISSIONER (APPEALS)S ORDER IS BAD IN LAW AS HE HAS NOT CONSIDE RED THE SUBMISSIONS MADE BEFORE HIM AND ASSESSING OFFICER AND MADE UNWARRANTED OBSERVATIONS. 4. ASSESSMENT PROCEEDINGS U/S.143(3) R.W.S.147 IS BAD IN LAW. ALSO, ASSESSMENT ORDER U/S.143(3) R.W.S.147 IS BAD IN LAW. 5. APPELLANT PRAYS FOR DELETION OF INTEREST U/S.234B. 6. APPELLANT PRAYS TO ADD, ALTER, AMEND, CLARIFY, MODIFY TAKE ADDITIONAL GROUND/S AND OR WITHDRAW THE GROUND/S DURING APPELLATE PROCEEDINGS. 10. THE LD. DR SUBMITTED THAT FACTS AND ISSUES RAISED IN THIS APPEAL ARE SIMILAR AND IDENTIC AL TO THE FACTS RAISED IN ITA NO.40/PUN/2017. THEREFORE, OUR DECISION RENDERED IN ITA NO.40/PUN/2017 FOR THE ASSESSMENT YEAR 2009 - 10 SHALL MUTATIS MUTANDIS APPLY IN THIS CASE ALSO. IN VIEW OF THE REOF , WE SET ASIDE THE ORDER OF THE LD. CIT(APPEALS) IN TH IS APPEAL ALSO AND REMIT THE MATTER BACK TO THE FILE OF ASSESSING OFFICER TO 6 ITA NO. 40 /PUN/20 17 ITA NO.81/PUN/2017 A.Y. 2009 - 10 ADJUDICATE THE SAME IN VIEW OF THE DIRECTIONS GIVEN IN ITA NO.40/PUN/2017 AFTER PROVIDING REASONABLE OPPORTUNITY OF HEARING TO THE ASSESSEE. 11. IN THE RESULT, APPEAL OF THE ASSE SSE IN ITA NO.81/PUN/2017 IS ALLOWED FOR STATISTICAL PURPOSES. 12. IN THE COMBINED RESULT, BOTH, THE APPEAL OF THE REVENUE AND THE APPEAL OF THE ASSESSE ARE ALLOWED FOR STATISTICAL PURPOSES. ORDER PRO NOUNCED ON 10 TH DAY OF MAY , 20 2 1 . S D/ - S D/ - R.S.SYAL PARTHA SARATHI CHAUDHURY VICE PRESIDENT JUDICIAL MEMBER / PUNE; / DATED : 10 TH M AY , 202 1 . SB / COPY OF THE ORDER FORWARDED TO : 1. / THE APPELLANT. 2. / THE RESPONDENT. 3. THE CIT(APPEALS) - 1, AURANGABAD. 4. THE PR. CIT - 1, AURANGABAD. 5. , , , / DR, ITAT, A BENCH, PUNE. 6. / GUARD FILE. / BY ORDER, // T RUE C OPY // / PRIVATE SECRETARY , / ITAT, PUNE . 7 ITA NO. 40 /PUN/20 17 ITA NO.81/PUN/2017 A.Y. 2009 - 10 DATE 1 DRAFT DICTATED ON 10.05 .2021 SR.PS/PS 2 DRAFT PLACED BEFORE AUTHOR 10.05 .202 1 SR.PS/PS 3 DRAFT PROPOSED AND PLACED BEFORE THE SECOND MEMBER JM/AM 4 DRAFT DISCUSSED/APPROVED BY SECOND MEMBER AM/JM 5 APPROVED DRAFT COMES TO THE SR. PS/PS SR.PS/PS 6 KEPT FOR PRONOUNCEMENT ON SR.PS/PS 7 DATE OF UPLOADING OF ORDER SR.PS/PS 8 FILE SENT TO BENCH CLERK SR.PS/PS 9 DATE ON WHICH THE FILE GOES TO THE HEAD CLERK 10 DATE ON WHICH FILE GOES TO THE A.R 11 DATE OF DISPATCH OF ORDER