Rajdeep Engineering Systems Pune Pvt. Ltd., Pune V. Deputy Commissioner of Income-tax,

ITA 974/PUN/2016

• Counselvise Citation: [2017] 127 COUNSELVISE.COM (IT) 9391 (ITAT-PUNE)
• Duration Of Justice: 1 year(s) 21 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 02-06-2017
• Appeal Filed By: Assessee
• Order Result: Partly Allowed
• Bench Allotted: SMC
• Next Hearing Date: 24-05-2017
• Assessment Year: 2011-2012
• Appeal Filed On: 12-05-2016
• Result in Favour of: Partly Allowed
• Court: TRIBUNAL
• Department Lawyers: SUDHENSHU SHEKHAR
• Keywords: Reopening of assessment; Bogus purchase; Reason to believe
• Section: 147; 148; 10

Judgement Text

- IN THE INCOME TAX APPELLATE TRIBUNAL PUNE BENCH SMC , PUNE , BEFORE MS. SUSHMA CHOWLA, JM . / ITA NO S . 972 TO 974 /P U N/201 6 / ASSESSMENT YEAR S : 2009 - 10 TO 2011 - 12 RAJDEEP ENGINEERING SYSTEMS PUNE PVT. LTD., 255/5, GADITAL, HADAPSAR, PUNE 411028 . / APPELLANT PAN: A ADCR0029E VS. THE DY. COMMISSIONER OF INCOME TAX, CIRCLE - 6, PUNE . / R ESPONDENT / APPELLANT BY : SHRI PRAMOD SHINGTE / RESPONDENT BY : S HRI SUDHENSHU SHEKHAR , JCIT / DATE OF HEARING : 2 4 . 0 5 .201 7 / DATE OF PRONOUNCEMENT: 02 . 0 6 .201 7 / ORD ER PER SUSHMA CHOWLA, J M : THIS BUNCH OF THREE APPEAL S FILED BY THE SAME ASSESSEE ARE AGAINST CONSOLIDATED ORDER OF CIT (A) - 2 , PUNE , DATED 1 5 .0 2 .2016 RELATING TO ASSESSMENT YEAR S 200 9 - 1 0 TO 2011 - 12 AGAINST RESPECTIVE ORDER S PASSED UNDER SECTION 1 4 3(3) R.W. S. 147 OF THE INCOME - TAX ACT , 1961 (IN SHORT THE ACT) . ITA NO S . 972 TO 974 /P U N/20 1 6 RAJDEEP ENGG. SYSTEMS PUNE PVT. LTD. 2 2. THIS BUNCH OF THREE APPEALS RELATING TO THE SAME ASSESSEE ON SIMILAR ISSUE WERE HEARD TOGETHER AND ARE BEING DISPOSED OF BY THIS CONSOLIDATED ORDER FOR THE SAKE OF CONVENIENCE. HOWEVER, IN ORDER TO ADJUDICATE THE ISSUE, WE MAKE REFERENCE TO THE FACTS IN ITA NO.972/PUN/2016. 3. THE ASSESSEE IN ITA NO. 972 /PUN/2016 HAS RAISED THE FOLLOWING GROUNDS OF APPEAL: - 1. ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE AND IN LAW, THE LOWER AUTHORITIES HAS ERRED IN REOPENING THE COMPLETED ASSESSMENT U/S 147 OF THE INCOME TAX ACT, 1961 ON THE BASIS OF INFORMATION RECEIVED FROM DG INVESTIGATION, PUNE. ON THE BASIS OF CERTAIN HAWALA TRANSACTION REPORTED BY SALES TAX DEPARTMENT, SINCE SUCH INFORMATION DO NOT H AVE ANY LIVE LINK TO APPELLANT CASE ENTIRE PROCEEDINGS ARE BAD IN LAW AND NEEDS TO BE QUASHED. 2. ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE AND IN LAW, THE LOWER AUTHORITIES ERRED IN MAKING AN ADDITION OF RS.9,94,792/ - , BEING ADHOC 20% OF ALLEGED BOGUS PURCHASES BY DISREGARDING APPELLANTS CONTENTION AND VARIOUS DOCUMENTARY EVIDENCES BROUGHT ON RECORD. 4. THE FIRST ISSUE RAISED IN THE PRESENT APPEAL IS AGAINST REOPENING OF ASSESSMENT UNDER SECTION 147 OF THE ACT. 5. BRIEFLY, IN THE FACTS OF THE C ASE, THE ASSESSEE HAD FILED THE RETURN OF INCOME ON 15.09.2009 DECLARING TOTAL INCOME OF RS.8,13,997/ - . THE SAID RETURN OF INCOME WAS PROCESSED UNDER SECTION 143(1) OF THE ACT. THE ASSESSING OFFICER RECEIVED CERTAIN INFORMATION FROM THE DG, INVESTIGATION WING, PUNE, IN RESPECT OF HAWALA TRANSACTIONS MADE BY THE ASSESSEE. THE ASSESSING OFFICER RECORDED REASONS FOR REOPENING THE ASSESSMENT UNDER SECTION 147 OF THE ACT AND THEREAFTER, ISSUED NOTICE UNDER SECTION 148 OF THE ACT. THE ASSESSEE IN REPLY, STATE D THAT THE ORIGINAL RETURN OF INCOME FILED BY IT SHOULD BE TREATED AS ITA NO S . 972 TO 974 /P U N/20 1 6 RAJDEEP ENGG. SYSTEMS PUNE PVT. LTD. 3 FILED IN RESPONSE TO NOTICE UNDER SECTION 148 OF THE ACT. THE ASSESSEE WAS ASKED TO PRODUCE SELLER FROM WHOM HE HAD MADE THE ALLEGED BOGUS PURCHASES. IN REPLY, THE ASSESSEE SUBMI TTED C OPIES OF PURCHASE INVOICES, DELIVERY CHALLANS AND CONSUMPTION DETAILS AND ALSO SUBMITTED COPIES OF RELEVANT BANK STATEMENTS, THROUGH WHICH PAYMENTS WERE MADE TO THE SAID FIRM. THE ASSESSING OFFICER NOTED THAT THE ASSESSEE HAD SUBMITTED THE DETAILS OF VARI OUS PROJECTS IN WHICH MATERIAL PURCHASED FROM THE HAWALA DEALERS WAS USED. HOWEVER, THE ASSESSING OFFICER NOTED THAT THE ASSESSEE HAD NOT MAINTAINED ANY STOCK REGISTER. THEREFORE, THE THEORY OF ASSESSEE THAT SALES WERE OUT OF SAME STOCK WHICH WERE PURCHA SED FROM HAWALA DEALERS WAS FOUND TO HAVE NO BASIS. FURTHER, THE ASSESSEE COULD NOT PRODUCE THE SUPPLIERS DURING THE COURSE OF ASSESSMENT PROCEEDINGS. THEREFORE, THE ASSESSING OFFICER HELD THAT 20% OF TOTAL PURCHASES MADE FROM THE ALLEGED PARTIES NEEDS T O BE ADDED IN THE HANDS OF ASSESSEE. ACCORDINGLY, ADDITION OF RS.9,94,792/ - WAS MADE. 6. THE CIT(A) NOTED THAT THE DEALER FROM WHOM THE SAID PURCHASES WERE MADE WAS NOT TRACEABLE ON THE GIVEN ADDRESS NOR ANY CONFIRMATION WAS FILED FROM M/S. PARTH STEEL . FURTHER, THE ASSESSEE HAD NOT MAINTAINED ANY STOCK REGISTER AND THE CIT(A) FURTHER OBSERVED THAT THERE WAS PRIMA FACIE EVIDENCE OF MATERIAL PURCHASED FROM SOME OTHER PARTY AND ONLY THE NAME OF M/S. PARTH STEEL WAS SHOWN ON THE BILL. THE PAYMENT WAS ALSO MADE THROUGH BANKING CHANNEL AND IN VIEW THEREOF, THE CIT(A) HELD THAT THE AMOUNT OF GROSS PROFIT WHICH HAD ARISEN OUT OF SUCH PURCHASES, FOR WHICH THE BILLS HAD BEEN PROCURED FROM M/S. PAR TH STEEL, THE HAWALA DEALER, IS ASSESSABLE IN THE HANDS OF ASSESSEE . HE UPHELD THE ORDER OF ASSESSING OFFICER IN APPLYING THE GP RATE OF 20% ON THE AMOUNT OF PURCHASES. ITA NO S . 972 TO 974 /P U N/20 1 6 RAJDEEP ENGG. SYSTEMS PUNE PVT. LTD. 4 7. THE ASSESSEE IS IN APPEAL AGAINST THE ORDER OF CIT(A). 8. THE FIRST ISSUE RAISED BY THE ASSESSEE IS AGAINST THE REOPENING OF ASSESSMENT UNDER SECTIO N 147 OF THE ACT. WE FIND NO MERIT IN THE GROUND OF APPEAL NO.1 RAISED BY THE ASSESSEE, WHERE THE ORIGINAL RETURN OF INCOME FILED BY THE ASSESSEE WAS PROCESSED UNDER SECTION 143(1) OF THE ACT. THEREAFTER, ON THE BASIS OF INFORMATION RECEIVED, THE ASSESSI NG OFFICER HAD REASON TO BELIEVE THAT THERE WAS ESCAPEMENT OF INCOME AND ACCORDINGLY, RECORDED REASONS FOR REOPENING THE ASSESSMENT UNDER SECTION 147 OF THE ACT. FOLLOWING THE RATIO LAID DOWN BY THE HON'BLE SUPREME COURT IN ACIT VS. RAJESH JHAVERI STOCK B ROKERS PVT. LTD. (2007) 291 ITR 500 (HON'BLE SUPREME COURT) , ACTION OF ASSESSING OFFICER IS UPHELD AND THE GROUND OF APPEAL NO.1 RAISED BY THE ASSESSEE IS DISMISSED . 9. THE ISSUE IN GROUND OF APPEAL NO.2 RAISED BY THE ASSESSEE IS AGAINST ADDITION BY APP LYING GP RATE ON THE ALLEGED BOGUS PURCHASES. 10. THE LEARNED AUTHORIZED REPRESENTATIVE FOR THE ASSESSEE IN THIS REGARD POINTED OUT THAT THE GOODS MANUFACTURED AND SOLD WERE EXIGIBLE TO EXCISE DUTY AND THE INTERMEDIARY WAS M/S. PARTH STEELS. HOWEVER, THE GOODS EVENTUALLY WERE SOLD TO THE ASSESSEE. THE LEARNED AUTHORIZED REPRESENTATIVE FOR THE ASSESSEE REFERRED TO THE COPY OF INVOICE PLACED AT PAGE 13 OF THE PAPER BOOK ALONG WITH DELIVERY CHALLAN AND THE INVOICE OF LATA STEELS, WHO HAD MANUFACTURED THE SA ID EXCISABLE ITEMS , WHICH ALSO SHOWS THE EXCISE DUTY INVOLVED. IT WAS POINTED OUT BY THE LEARNED AUTHORIZED REPRESENTATIVE FOR THE ITA NO S . 972 TO 974 /P U N/20 1 6 RAJDEEP ENGG. SYSTEMS PUNE PVT. LTD. 5 ASSESSEE THAT THE SAID GOODS WERE DIRECTLY SENT TO THE CONSIGNEE I.E. THE ASSESSEE THOUGH THE NAME OF M/S. PARTH STEELS IS A LSO MENTIONED THEREIN. ATTENTION WAS DRAWN TO THE DELIVERY CHALLANS IN THIS REGARD. THE LEARNED AUTHORIZED REPRESENTATIVE FOR THE ASSESSEE POINTED OUT THAT THE COMPLETE PURCHASES MADE BY THE ASSESSEE FROM YEAR TO YEAR ARE BACKED BY THE SAID EVIDENCE. HE FURTHER POINTED OUT THAT IN VIEW OF M/S.PARTH STEELS IS NOT DEPOSITING VAT, THE ASSESSEE HAD PAID VAT. HE STRESSED THAT IN VIEW OF THE SAID TRAIL OF GOODS, NO ADDITION IS MERITED IN THE HANDS OF ASSESSEE. RELIAN CE IN THIS REGARD WAS P LACED ON THE DECISI ON IN GROUP CASES WITH LEAD ORDER IN M/S. CHHABI ELECTRICALS PVT. LTD. VS. DCIT IN ITA NO.795/PUN/2014, RELATING TO ASSESSMENT YEAR 2010 - 11, ORDER DATED 28.04.2017. 11. THE LEARNED DEPARTMENTAL REPRESENTATIVE FOR THE REVENUE ON THE OTHER HAND, PLACED REL IANCE ON THE ORDERS OF AUTHORITIES BELOW. 12. ON PERUSAL OF RECORD AND AFTER HEARING BOTH THE LEARNED AUTHORIZED REPRESENTATIVES, THE ISSUE WHICH ARISES IN THE PRESENT APPEAL IS AGAINST ADDITION MADE ON ACCOUNT OF BOGUS PURCHASES. THE ASSESSING OFFICER H AD RECEIVED INFORMATION THAT THE ASSESSEE HAD MADE PURCHASES FROM A CONCERN WHICH WAS DECLARED TO BE A HAWALA DEALER BY THE SALES TAX DEPARTMENT. THE SAID HAWALA DEALER THOUGH HAD COLLECTED VAT FROM THE SALE OF GOODS, BUT HAD NOT DEPOSITED THE SAME WITH T HE SALES TAX DEPARTMENT. CONSEQUENTLY, THE SALES TAX DEPARTMENT DREW A LIST OF HAWALA PARTIES AND ALSO THE SALES MADE BY THE SAID HAWALA PARTIES TO DIFFERENT PERSONS. THE ASSESSEE WAS ONE SUCH PERSON. THE PLEA OF THE ASSESSEE BEFORE THE TRIBUNAL IS THAT IT HAD PHYSICALLY RECEIVED THE GOODS FROM THE MANUFACTURER ITSELF , WHICH WERE EXCISABLE AND THE ITA NO S . 972 TO 974 /P U N/20 1 6 RAJDEEP ENGG. SYSTEMS PUNE PVT. LTD. 6 TRAIL OF THE TRANSPORTATION OF THE SAID GOODS IS CLEARLY AVAILABLE. THE ASSESSEE HAS PLACED ON RECORD THE COPY OF INVOICE ISSUED BY M/S. PARTH STEELS ALONG WI TH DELIVERY CHALLANS. HOWEVER, THE LEARNED AUTHORIZED REPRESENTATIVE FOR THE ASSESSEE REFERS TO THE INVOICE ISSUED BY THE MANUFACTURER OF THE GOODS, WHO HAD ALSO IN THE SAID INVOICE CHARGED EXCISE DUTY ON THE GOODS BEING SOLD BY THEM AND HAD SENT CONSIGNM ENT TO THE PREMISES OF THE ASSESSEE DIRECTLY. THOUGH THE NAME OF M/S. PARTH STEELS IS ALSO MENTIONED IN THE SAID INVOICE BUT THE GOODS WERE DIRECTLY DELIVERED TO THE ASSESSEE. FURTHER, THE ASSESSEE DURING THE COURSE OF ASSESSMENT PROCEEDINGS HAD ESTABLIS HED THE CONSUMPTION OF THE SAID GOODS. IN VIEW THEREOF, THE ASSESSING OFFICER AND THE CIT(A) HAD RESTRICTED THE ADDITION BY APPLYING THE GP RATE ON THE VALUE OF BOGUS PURCHASES. THE ASSESSEE HOWEVER, CLAIMS BEFORE THE TRIBUNAL THAT WHERE IT HAS ESTABLISH ED THE TRAIL OF GOODS AND HAS ALSO DEPOSITED THE VAT, THEN THERE IS NO MERIT IN MAKING ANY ADDITION IN THE HANDS OF ASSESSEE. IN THIS REGARD, HE PLACED RELIANCE ON THE DECISION IN GROUP CASES DECIDED BY THE TRIBUNAL WITH LEAD ORDER IN M/S. CHHABI ELECTRIC ALS PVT. LTD. VS. DCIT (SUPRA). UNDOUBTEDLY, THE ASSESSEE HAS ESTABLISHED THE TRAIL OF GOODS BUT SINCE THE GOODS ARE PURCHASED THROUGH HAWALA DEALER, THEN MARGINS OF PROFIT FOR SUCH GOODS NEEDS TO BE ADDED IN THE HANDS OF ASSESSEE. FOLLOWING THE DECISION IN BUNCH OF APPEAL IN M/S. CHHABI ELECTRICALS PVT. LTD. VS. DCIT (SUPRA), THE ASSESSING OFFICER IS DIRECTED TO APPLY GP RATE OF 10% ON THE GOODS PURCHASED FROM HAWALA DEALERS , OVER AND ABOVE THE GP RATE DECLARED BY THE ASSESSEE. ACCORDINGLY, GROUND OF AP PEAL NO.2 RAISED BY THE ASSESSEE IS PARTLY, ALLOWED. 13. THE FACTS AND ISSUE S IN ITA NOS.973/PUN/2016 & 974/PUN/2016 ARE SIMILAR TO THE FACTS AND ISSUE S IN ITA NO.972/PUN/2016 AND THE DECISION IN ITA ITA NO S . 972 TO 974 /P U N/20 1 6 RAJDEEP ENGG. SYSTEMS PUNE PVT. LTD. 7 NO.972/PUN/2016 SHALL APPLY MUTATIS MUTANDIS TO ITA NOS .973/PUN/2016 & 974/PUN/2016 . 14. IN THE RESULT, ALL THE APPEALS OF ASSESSEE ARE PARTLY ALLOWED. ORDER PRONOUNCED ON THIS 2 ND DAY OF JUNE , 201 7 . SD/ - (SUSHMA CHOWLA ) / JUDICIAL MEMBER / PUNE ; DATE D : 2 ND JUNE , 201 7 . GCVSR / COPY OF THE ORDER IS FORWARDED TO : 1. / THE APPELLANT ; 2. / THE RESPONDENT; 3. ( ) / THE CIT(A) - 2 , PUNE ; 4. / THE PR. CIT - 1 , PUNE ; 5. 6. , , , - / DR SMC , ITAT, PUNE; / GUARD FILE . / BY ORDER , // TRUE COPY // / ASSISTANT REGISTRAR, , / ITAT, PUNE