Income Tax Appellate Tribunal - Mumbai
Ito 20(2)(5), Mumbai vs Praveen Kumar Gupta, Mumbai on 30 August, 2017
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IN THE INCOME TAX APPELLATE TRIBUNAL 'I' BENCH, MUMBAI
BEFORE SHRI RAJENDRA, AM AND SHRI RAVISH SOOD, JM
आयकर अपील सं ./ I.T.A. No. 853/Mum/2017
(निर्धारण वर्ा / Assessment Year: 2010 -11)
ITO-20(2)(5), Praveen Kumar Gupta
Room No. 208, 2nd Floor, Prop. Haryana Steel,
Piramal Chambers बिधम/ International, 228,
Lalbaug, Parel, Vs. Shop No. 02, Motiwala
Mumbai-400 012 Mansion, Azad Road,
Matunga, Mumbai-400 014
स्थायीलेखासं./जीआइआरसं ./ PAN/GIR No. AACPG3961A
(अपीलाथी/Revenue) : (प्रत्यथी / Assessee)
अपीलाथी की ओर से /Revenue by : Shri Saurabh Kumar Rai, D.R
प्रत्यथी की ओर से / Assessee by : None
सुनवाई की तारीख/
: 22/08/2017
Date of Hearing
घोषणा की तारीख /
: 30/08/2017
Date of Pronouncement
आदे श / O R D E R
PER RAVISH SOOD, JUDICIAL MEMBER
The present appeal filed by the revenue is directed against the order passed by the CIT(A)-32, Mumbai, dated 28.11.2016, which in itself arises from the assessment framed by the A.O u/s 143(3) r.w.s. 147 of the Income Tax Act, 1961 (in short 'the Act'), dated Page |2 29.02.2016. The assessee assailing the order of the CIT(A) had raised before us the following grounds of appeal:-
"1. O n t h e f ac ts a n d i n t h e c i r c u m s t a n c e s of th e c a s e a n d i n l a w, t h e L d . C IT ( A ) erred in granting relief of Rs. 71,31,427/ - by restricting the addition f rom 12.5% to 4.60% of total bogus purchases from hawala parties.
2. O n t h e f ac ts a n d i n t h e c i r c u m s t a n c e s of th e c a s e a n d i n l a w, t h e L d . C IT ( A ) f ai l ed to ap p r e c i a te t h e f ac t t h a t th e A s s e s s i n g Of f ic e r d i s al l o we d 1 2 . 5 % of th e total bogus purchases relaying on various case laws.
3. On the f acts and in the circumstances of the case and in l a w, the Id. C IT (A) has f a i l e d t o a p p r e c i a t e t h e f a c t t h a t t h e o n u s i s o n t h e a s s e s s e e t o e x p l a i n a n d substantiate the genuineness and true nature of the purchases transaction.
4. On the f acts and in the circumstances of the case and in l a w, the Id.C IT (A) has f a i l e d t o a p p r e c i a t e t h a t t h e h a wa l a d e a l e r s h a v e a d m i t t e d o n o a t h b e f o r e t h e Sales Tax Authorities that they have not sold any material to anybody.
5. O n t h e f a c t s a n d i n t h e c i r c u m s t a n c e s of t h e c a s e a n d i n l a w, t h e I d . C IT ( A ) erre d i n c o ncl ud i n g th a t as sess ee h ad m ad e c a sh pu rc h as es f rom o th e r p ar ti es w h i c h we r e n o t r e c o r d e d i n t h e b o o k s w i t h o u t m e n t i o n i n g h o w t h i s a n d wi t h wh at ev id e nc e bef ore h im s uc h f ind i n g was ar r i ve d a t. If suc h e vi de n ce of cas h p u r c h as e s wa s g i v e n th e s a m e s h o u l d h av e b e e n r e m an d e d to t h e A . O . f or h i s examination and comments.
6. T he ap p e l l an t p r ay s th at th e o r de r f o r the C IT ( A ) o n th e ab o v e g r o u n d s b e reversed and that of the Assessing Officer be restored.
7. T h e a p p e l l a n t c r a v e s l e av e to a m e n d o r a l te r a n y g r o u n d o r a d d a n e w g r o u n d which may be necessary."
2. Briefly stated, the facts of the case are that the assessee who is engaged in the business of trading in all kinds of iron & steel sheets under the name and style of M/s Haryana Steel International had e- filed his 'return of income' for A.Y. 2010-11 on 04.10.2010, declaring an income of Rs. 13,89,670/-. The A.O on the basis of information received from the office of the Director General of Income tax (Inv.), Mumbai, [for short 'DGIT(Inv.)'] that information was gathered by the Sales tax department, Govt. of Maharashtra, in respect of various suspicious parties who were involved in providing of accommodation Page |3 entries without doing any actual business. The A.O was informed by the office of the DGIT(Inv.) that the details so gathered by the Sales tax department revealed that the assessee had carried out bogus purchases from the following hawala party:-
Sr. No. Name of the party Financial Year Amount (Rs.)
1. M/s Mairu Enterprises 2009-10 9,02,71,220/-
The A.O on the basis of the aforesaid information reopened the case of the assessee under Sec. 147 and issued a Notice u/s 148 on 07.03.2015 to the assessee. The assessee in response to the said notice filed a letter dated. 04.06.2015 and requested that his 'Original' return of income filed on 04.10.2010 may be treated as a 'return of income' filed in compliance to the Notice issued to him u/s 148 of the 'Act'. The A.O accepted the said request of the assessee and issued Notices U/ss. 143(2)/142(1) to the assessee.
3. That during the course of the assessment proceedings the A.O called upon the assessee to substantiate the genuineness of the purchases made by it from M/s Mairu Enterpriese. The assessee in compliance to the directions of the A.O furnished the copies of bills in respect of the purchases made from the aforesaid party, copy of the ledger account and unsigned delivery challans. The assessee however failed to place on record the purchase register, lorry receipts, transportation details etc. to evidence the genuineness of the purchase transactions. The assessee further averred before the A.O that the genuineness of the purchases made from the aforesaid party could be gathered from the very fact that the payment of the purchase consideration was made to the said supplier party, viz. M/s Mairu Enterprises, only vide cheques. The assessee further in order to drive home his contention that it had made genuine purchases from the aforesaid party, therein placed on record an 'Affidavit' of Sh. Ramesh Page |4 P. Bafna, Prop. M/s Mairu Enterprises. In the affidavit it was deposed by the supplier party that though he had issued bills to some parties without actual delivery of goods, however, all the transactions made with the assessee were genuine. The A.O in order to verify the genuineness of the affidavit issued a letter to M/s Mairu Enterprises, therein calling upon it produce the copy and the original affidavit. Though initially no compliance was made by the aforesaid party, however, thereafter when the A.O issued summons u/s 131, Sh. Ramesh P. Bafna, proprietor of the said concern, viz. M/s Mairu Enterprises appeared before the A.O and his statement was recorded on oath u/s 131 of the 'Act'. That Sh. Ramesh P. Bafna though accepted that he had given an affidavit to the assessee, however, on being directed to produce the original copy of the affidavit, he submitted that as the affidavit was prepared by the assessee, therefore, he was neither having the original copy or the xerox of the same. That on being confronted with the contents of the affidavit Sh. Ramesh P. Bafna expressed his unawareness of the same, for the reason that the same was prepared by the assessee. Sh. Ramesh P. Bafna deliberating on the nature of his business submitted that he had made purchases from certain parties through brokers at a rate lower than the prevailing market price, however, subsequently he learnt that his purchases were backed by bogus bills, as the supplier parties had failed to pay the dues with the Sales tax department. He submitted that he thereafter carried out actual sale of these goods to various parties, including the assessee, however, the same having been procured from the open/grey market, was thus sold at a rate lower then that mentioned in bills. Sh. Ramesh P. Bafna further confirmed that he had issued bogus bills to all the parties including the assessee, and in unequivocal terms stated that he had actually supplied the goods to the assessee concern.
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4. The A.O thus persuaded by the aforesaid factual position, therein concluded that the assessee had actually made purchases of the goods from the aforesaid party, however, the same were backed by bogus bills which were inflated as against the actual purchase consideration which was parted by the assessee for procuring the goods from the aforesaid concern. The A.O thus being of the view that the assessee had benefited from making the purchases at a lower rate, as against that shown in the bills, therefore, rejected the 'books of accounts' of the assessee u/s 145(3) of the 'Act'. The A.O thereafter estimating the benefit from making the aforesaid purchases by the assessee at 12.5%, therein scaled down the purchase consideration by an amount of Rs. 1,12,83,903/- (i.e 12.5% of Rs. 9,02,71,220/-) and made a consequential addition of the said amount in the hands of the assessee.
5. The assessee being aggrieved with the part sustaining of the addition by the A.O carried the matter in appeal before the CIT(A). The CIT(A) after deliberating on the facts of the case in the backdrop of the contentions raised by the assessee before him, therein taking cognizance of the G.P rate of 4.60% as stood reflected by the assessee, thus, thus concluded that an addition to the said extent, viz. 4.60% of the value of the purchases made by the assessee from the aforesaid concern would be justified. The CIT(A) on the basis of his aforesaid conviction substituted the disallowance of Rs. 1,12,83,903/- (i.e 12.5% of Rs. 9,02,71,220/-) made by the A.O, by an amount of Rs. 41,52,476/- (i.e 4.60% of Rs. 9,02,71,220/-) in the hands of the assessee.
6. The revenue being aggrieved with the order of the CIT(A) had carried the matter in appeal before us. That as during the course of the hearing of the appeal the assessee respondent despite having been Page |6 put to notice as regards the fixation of the hearing of the present appeal had failed to put up an appearance before us, therefore, as per Rule 25 of the Appellate Tribunal rules, 1963, we are proceeding with to dispose of the present appeal on merits, after hearing the appellant revenue. The ld. Departmental Representatives (for short 'D.R') had placed reliance on the orders of the lower authorities.
7. We have heard the ld. Departmental Representative, perused the orders of the lower authorities and the material available on record. We have given a thoughtful consideration to the facts of the case, and after perusing the observations recorded by the CIT(A) are unable to persuade ourselves to accept the basis of estimation of the extent of the inflation of the bogus bills procured by the assessee from the aforesaid concern, viz. M/s Mairu Enterprises, as against the actual consideration that would have been parted by the assessee for purchasing the goods under consideration. We are of the considered view that the in the backdrop of the fact that the supplier party, viz. M/s Mairu Enterprises had itself admitted that it had purchased goods from the open/grey market at a lower rates, which thereafter was sold by it to various parties, including the assessee concern at a rate lower then that as stood reflected in the bills, therefore, the fact that the assessee had as a matter of fact benefited from purchasing the goods, thus cannot be ruled out. We are of the considered view that in the backdrop of the aforesaid factual position, the quantification of the profit/margin involved in procuring of the goods under consideration, in the absence of any material, is thus left to a fair estimation on the part of the A.O. We are of the considered view that the element of profit earned by an assessee from making of purchases from the open/grey market would inter alia be in the form of saving of the sales tax. We are of the considered view that in the backdrop of the aforesaid fact, the estimation of the profit element on Page |7 the purchase of the steel sheets by the assessee from the open/grey market would fairly be covered by the rate of 4.60% adopted by the CIT(A). We thus find ourselves to be in agreement with the addition sustained by the CIT(A), and find no reason to dislodge the same. We thus uphold the order of the CIT(A).
8. In the result, the appeal filed by the revenue is dismissed.
Order pronounced on the open court on 30.08.2017 Sd/- Sd/-
(RAJENDRA) (RAVISH SOOD) ACCOUNTANT MEMBER JUDICIAL MEMBER भुंफई Mumbai; ददन ुंक 30.08.2017 Ps. Rohit Kumar
आदे श की प्रतिलऱपि अग्रेपिि/Copy of the Order forwarded to :
1. अऩीर थी / The Appellant
2. प्रत्मथी / The Respondent.
3. आमकय आमक्त(अऩीर) / The CIT(A)-
4. आमकय आमक्त / CIT
5. विब गीम प्रतततनधध, आमकय अऩीरीम अधधकयण, भुंफई / DR, ITAT, Mumbai
6. ग र्ड प ईर / Guard file.
सत्म वऩत प्रतत //True Copy// आदे शानुसार/ BY ORDER, उि/सहायक िंजीकार (Dy./Asstt. Registrar) आयकर अिीऱीय अधिकरण, भुंफई / ITAT, Mumbai