Income Tax Appellate Tribunal - Mumbai
Pck Metals P.Ltd, Mumbai vs Dcit Cen Cir 13, Mumbai on 6 January, 2017
आयकर अपील य अ धकरण, "ts" खंडपीठ मुंबई
INCOME TAX APPELLATE TRIBUNAL,MUMBAI - 'J' BENCH
सव ी राजे , लेखा सद य एवं iou संह, या यक सद य
Before S/Sh. Rajendra, Accountant Member & Pawan Singh, Judicial Member
आयकर अपील सं/.ITA No.259/Mum/2015, नधा रण वष /Assessment Year-2010-11
M/s. PCK Metals Pvt. Ltd. DCIT, CC-13,
Shop No.1, Kushal Bhavan, बनाम Mumbai.
65, 5th Kumbharwada, Vs.
Mumbai-400004
PAN: AADCP8553Q
(अपीलाथ /Appellant) ( यथ / Respondent)
नधा रती क! ओर से/ Assessee by : Shri Naresh Kumar
राज व ओर से / Revenue by : Ms. AnuKrishan Aggarwal
सन
ु वाई क" तार ख/ Date of Hearing : 02-01-2017
घोषणा क! तार(ख / Date of Pronouncement : 06-01-2017
आयकर अ ध नयम, 1961 क" धारा 254(1) के अ#तग त आदे श
Order u/s.254(1)of the Income-tax Act,1961(Act)
Per Pawan Singh, J.M. या यक सद य iou संह के अनुसार:
1. The present appeal is filed by assessee u/s 53 of the Income-tax Act against the order of ld.
Commissioner of Income-tax (Appeals)-37, Mumbai (for short the CIT(A) dated 03.11.2014 for Assessment Year(AY) 2010-11. The assessee has raised the following grounds of appeal:
1. The Hon'ble Commissioner of Income Tax (Appeal) has erred in confirming the disallowance of Rs.24,27,251/ - made by the learned assessing officer of treating purchases made by the appellant Company as Bogus purchases without considering the facts of the case.
It is submitted that A. O. has made such disallowance on the basis of suspicious list issued by the sales tax department of the entities who are engaged in providing bogus entries or hawala entries and not based on any independent enquiries. It is submitted that since confirmations with PAN No. etc. have been submitted hence, in absence of any independent enquiry, the same cannot be treated as non-genuine. Without prejudice, we would like to state that appellant is trading in goods and in view of the same, if such purchases are treated as non-genuine then the corresponding sales should also be considered as non-genuine in case of goods are sold and in case of goods lying in stock, closing stock should also be reduced to the said extent. In view of the above, it is prayed that necessary direction should be given in this regard.
2. The Hon'ble Commissioner of Income Tax (Appeal) has erred in confirming the addition made by learned assessing officer on account of advances received from the parties by invoking Section 68 of the Income Tax Act, 1961 of Rs.8,60,000/-. Further the learned assessing officer has failed to prove that the said advances received transactions are not genuine in the assessment order passed u/ s. 143(3) of the Income Tax Act, 1961 and also has not provided any proper facts on which the same are added to the income of the appellant company. The learned assessing officer has made such addition on the basis of the pre determined mind rather than making 2 ITA No. 259/M/2015 M/s PCK Metals Pvt. Ltd. independent enquiry for the facts of the case. Therefore, the said order should be squashed and addition made of Rs.8,60,000/ - should be deleted. Accordingly, the necessary direction should be given in this regard.
2. The brief facts of the case are that the assessee-company filed its return of income for relevant AY on 26.09.2010 declaring total income at Rs. 3,33,982/-. The assessment was completed on 26.03.2013 u/s 143(3) of the Income -tax Act, 1962 (for short "the Act"). In the order of assessment, the Assessing Officer (AO) made the disallowance of Rs. 24,72,251/- on account of bogus purchases and further made an addition of Rs. 8,60,000/- u/s 68 of the Act. On appeal before the ld. CIT(A) both the addition/disallowance was confirmed. Thus, further aggrieved by the order of ld. CIT(A), the assessee has filed the present appeal before us.
3. We have heard the ld. Authorized Representative (AR) of assessee and ld. Departmental Representative (DR) for Revenue and perused the material available on record. First Ground of appeal relates to the disallowance on account of alleged bogus purchases. The ld. AR of the assessee argued that the AO without appreciating the fact made an addition of aggregate amount of purchases from three parties i.e. (1) Shakti Steel Corporation of Rs. 5,44,516/- (2) Konika Steel India of Rs. 13,12,635/- and (3) Harsh Metal Corporation of Rs. 5,69,100/- . The AO called the details of those parties only on 30.03.2013 which was much closed to the time limit for completing the assessment for AY 2010-11. It was further argued that the assessee made the genuine purchase and copy of confirmation along with address, PAN Number and Purchase Bill were furnished to the AO. The AO relied upon the information of Sale Tax Department, wherein the loss of certain hawala dealers was appeared. The AO has not made any investigation with regard to the purchase from the said parties before treating the same as bogus purchase. The ld. AR of the assessee further relied upon the decision of Hon'ble Bombay High Court in case of CIT vs. Nikunj Eximp (372 ITR 619 (Bom), decisions of Bombay Tribunal in case of DCIT vs. Sivshankar R. Sharma in ITA No. 5149/Mum/2014 dated 16.09.2016, in M/s Vision vs. ACIT in ITA No. 8501/Mum/2010 dated 13.04.2016, Shri Ashwin Purshotam Bajaj vs. ITO in ITA No. 4736/Mum/2014. On the other hand, ld. DR for the Revenue supported the order of authorities below.
4. We have considered the rival contention of the parties and gone through the orders of authorities below, the AO during the assessment proceeding observed that assessee made the purchases from M/s Shakti Steel Corporation, Manish Steel Corporation, Konika Steel India and Harsh Metal Corporation. The AO issued notice to all parties u/s 136(6) of the Act. The notice sent to the parties was returned back. The assessee was asked to produce the 3 ITA No. 259/M/2015 M/s PCK Metals Pvt. Ltd. parties for verification. The assessee instead of producing the parties filed the confirmation, purchase invoice and corresponding sales invoice in respect of M/s Shakti Steel Corporation, Manish Steel Corporation, Konika Steel India. No confirmation was filed in respect of purchases from Harsh Metal Corporation. The assessee was asked to produce copy of inward register and outward register, delivery challan, godown details and copy of Lorry receipt, their ledger account, and stock movement register to whom the stock has been sold. The assessee has not been able to submit the details called for and not submitted any explanation for non-submission of the details of the parties from whom the assessee has made the purchases are mentioned in the list of hawala operators, who are engaged in providing books entries in the record of Sale Tax Department, Government of Maharashtra. Thus, the purchases made from these parties are not genuine. The AO further held that the assessee's firm is clearly covered by the provisions of section 145(3) and rejected the books of account, the assessee-firm was estimated at Rs. 6.21% and disallowed a bogus purchases of Rs. 24,27,251/- (which the aggregate amount of purchases of three parties i.e. Shakti Steel Corporation, Manish Steel Corporation, Konika Steel India). The ld. CIT(A) confirmed the addition holding that in absence of adequate details, it cannot be accepted that the sale effect is the same as the alleged item covered by bogus purchases and confirmed the addition on account of bogus purchases holding that turnover of Rs. 9,70,000/-, the Gross Profit(GP) is only 6.21% and the Net Profit (NP) is 2.89% which is reasonable in the line of business of assessee.
5. We have noted that ld. CIT(A) has virtually confirmed the entire alleged bogus purchases from three parties instead of examining the estimated GP of assessee's firm. The AO made the addition on the basis of information of three parties without bringing on record any cogent material against the assessee, no finding was given on the documentary evidence furnished by assessee in respect of M/s Shakti Steel Corporation, Manish Steel Corporation, Konika Steel India. We are of the considered opinion that under Income Tax Act only real income can be taxed by the Revenue. We may further conclude that even if the transaction is not verifiable, the only taxable is the taxable income component and not the entire transaction. Thus, after considering the facts of the case and the rival contentions of the parties we are of the opinion that in order to fulfill the gap of revenue leakage the disallowance of reasonable percentage of such purchases would meet the end of justice. Hence, we direct the AO to restrict the additions to 12% of the total impugned (disputed) purchases. With these observations, this ground of appeal is partly allowed.
6. Ground No.2 relates to the addition of Rs. 8,60,000/- u/s 68 of the Act. The Ld. AR of the 4 ITA No. 259/M/2015 M/s PCK Metals Pvt. Ltd. assessee argued that the AO made the addition without making independent enquiry, the AO called the details from the parties at the time which was much closed to the time barring limit of scrutiny assessment. The assessee furnished the details on 21.03.2013 and supplied the name and address of the parties and asked to send the notice to the parties for their confirmation, the AO not issued any notice to the parties. The addition was made on the basis of pre-determined mind. The Ld. AR of the assessee relied upon the decision of Hon'ble Apex Court in CIT vs. Orissa Corporation Pvt. Ltd. (159 ITR 78 (SC) and further on the decision of Gujarat High Court in DCIT vs. Rohini Builders (256 ITR 0360). On the other hand, ld. DR for the Revenue supported the order of authorities below.
7. We have considered the rival contention of the parties and gone through the orders of authorities below. The AO while framing the assessment observed that assessee received advance from customer namely M/s Siddhesh Enterprises of Rs. 2,00,000/- and M/s S.J. Enterprises of Rs. 6,60,000/-. The assessee was asked to furnish document in support of the identity of creditor, creditworthiness and genuineness of transaction. The assessee furnished its reply dated 31.03.2012 and furnished the PAN Number of both the parties for their confirmation. The AO not accepted the contention of the assessee holding that assessee has not furnished the confirmation in respect of both the parties holding that onus is on the assessee to prove the advances received are genuine in nature and concluded that the assessee has failed to discharge the onus to prove the genuineness of transaction and made addition u/s 68 of the Act. Of Rs. 8,60,000/-. In appeal before ld CIT(A) it was submitted that AO has failed to prove that the credit of those two parties are not genuine. The ld. CIT(A) while considering the submission confirmed the addition holding that the onus was on the assessee and the assessee not discharged his onus. We have seen that the assessee has not filed any documentary evidences even before us to substantiate its contention, except arguing that the name, address and PAN was provided to the AO. Considering the fact and contention of the ld AR of the assessee this ground of appeal is restored to the file of AO to consider it afresh and pass appropriate in accordance with law. Needless, to say that the AO shall provide adequate opportunity to the assessee before passing the order. Thus this ground of appeal is allowed for statical purpose.
As a result, appeal filed by the assessee is partly allowed.
फलतः नधा -रती .वारा दा/खल क! गई अपील va"kr% मंजूर क! जाती है .
Order pronounced in the open court on 6th January,2017.
आ दे श क! घोषणा खुले यायालय म6 7दनांक 6 जनवर(,2017 को क! गई ।
5 ITA No. 259/M/2015 M/s PCK Metals Pvt. Ltd. Sd/- Sd/-
(राजे / RAJENDRA (iou संह / PAWAN SINGH))
लेखा सद(य / ACCOUNTANT MEMBER #या यक सद(य / JUDICIAL MEMBER
मंब
ु ई/Mumbai,7दनांक/Date: 06.01.2017
SK
आदे श क" ) त*ल+प अ,े+षत/Copy of the Order forwarded to :
1. Assessee /अपीलाथ 2. Respondent / यथ
3.The concerned CIT(A)/संब.ध अपील(य आ यकर आ य<
ु त, 4.The concerned CIT /संब.ध आ यकर
आ य<
ु त
5. DR "J" Bench, ITAT, Mumbai /=वभागीय त न?ध ts खंडपीठ,आ .अ. याया.मब ुं ई
6. Guard File/गाड फाईल स या=पत त //True Copy// आ दे शानस ु ार/ BY ORDER, उप/सहायक पंजीकार Dy./Asst. Registrar आ यकर अपील(य अ?धकरण, मब ुं ई /ITAT, Mumbai