M/S. JAIHIND WELDING AND BOILERS REPAIR WORKS,NASHIK vs. INCOME TAX OFFICER, MALEGAON

आदेश / ORDER PER R.S.SYAL, VP :

These three appeals filed by the assessee relate to assessment years 2009-10 to 2011-12. Since common issues are raised in these appeals, we are, therefore, proceeding to dispose them off by this consolidated order for the sake of convenience.

2 ITA Nos.674 to 676/PUN/2017 M/s. Jaihind Welding and Boilers Repair Works

the restricting the addition to 25% of bogus purchases.

some information was received by the AO from the Sales Tax

Department of Maharashtra Government regarding the

beneficiaries of hawala transactions detected by it. One of the

beneficiaries, in a such list, was the assessee also. The Assessing

Officer (AO) initiated re-assessment proceedings and made

addition at 100% of the amount of bill of hawala entries. The ld.

CIT(A) restricted the addition to 25% of alleged bogus purchases,

against which the assessee has come up in appeals before the

Tribunal.

relevant material on record. It is seen that cases of several

assessees who had obtained bogus purchase bills from hawala

parties came up for consideration before the Pune Benches of the

Tribunal. Vide its common order dated 26.9.2019 in Dinesh Rathi

vs. DCIT (ITA No. 975/PUN/2018) and others, the Tribunal has

restored this issue to the file of the AO by observing in para no. 11

as under : -

3 ITA Nos.674 to 676/PUN/2017 M/s. Jaihind Welding and Boilers Repair Works

`Now we turn to the merits of the cases. The assail is to the making of addition(s) on the basis of bogus purchase bills received by the assessee(s) as accommodation entries from hawala dealers. It is seen that the issue of bogus purchases has recently come up for consideration before the Hon’ble Bombay High Court in Pr.CIT Vs. Mohommad Haji Adam & Co. Vide its judgment dated 11-02-2019 in ITA No.1004 of 2016 and others, the Hon’ble jurisdictional High Court has held that no ad hoc addition for bogus purchases should be made. It laid down that the addition should be made to the extent of difference between the gross profit rate on genuine purchases and gross profit rate on hawala purchases. Such case specific details are not readily available with the respective ld. ARs or the ld. DRs for facilitating the calculation of gross profit rates of genuine and hawala purchases. Under these circumstances, we set-aside the impugned orders and remit the matter to the file of the respective AOs for applying the ratio laid down by the Hon’ble jurisdictional High Court in the above noted case and recompute the amount of additions, if any, after allowing a reasonable opportunity of hearing to the assessee.’

purchases made through hawala entries were not sold as such.

Such purchases, being, of raw material, were consumed and gone

into the manufacturing of products by the assessee thereby losing

ITA Nos.674 to 676/PUN/2017 M/s. Jaihind Welding and Boilers Repair Works

identity of separate purchase price and the corresponding sale

price. The Tribunal dealt with such an issue by holding that : -

`Both the sides have fairly admitted that the ratio of the Hon’ble jurisdictional High Court in the case of Pr.CIT Vs. Mohommad Haji Adam & Co. (supra) cannot be applied to the facts of the instant case.

“IV. The next instance is the case of goods which have been admittedly sold by the hawala dealer and has been received by the assessee, who in turn had maintained quantitative details and also evidence of its movement i.e. transportation details and quality control details of consumption of the said material or exact details of sale of the same consignment through same transporter directly to the party, then the total purchases cannot be added in the hands of assessee. However, since the purchases are made from the grey market, some estimation needs to be made in the hands of assessee. The Tribunal in M/s. Chetan Enterprises Vs. ACIT (supra) has already held that the addition be made by estimating the same @ 10% of the alleged hawala purchases, over and above the GP shown by the respective assessee.”

5 ITA Nos.674 to 676/PUN/2017 M/s. Jaihind Welding and Boilers Repair Works

that the addition should be sustained on the amount of hawala purchases @10% plus the normal GP rate shown by the assessee for the year under consideration.’

the instant appeals are mutatis mutandis similar to the afore

referred order of the Tribunal. Following the same, we set aside the

impugned orders and remit the matter to the file of the AO for

deciding this issue afresh in the light of the observations made in

the order.

statistical purposes.

Order pronounced in the Open Court on 27th September, 2019.

Sd/- Sd/- (PARTHA SARATHI CHAUDHURY) (R.S.SYAL) JUDICIAL MEMBER VICE PRESIDENT पुणे Pune; �दनांक Dated : 27th September, 2019 सतीश

ITA Nos.674 to 676/PUN/2017 M/s. Jaihind Welding and Boilers Repair Works

आदेश क� क� क� �ितिलिप क� �ितिलिप �ितिलिप अ�ेिषत �ितिलिप अ�ेिषत अ�ेिषत/Copy of the Order is forwarded to: अ�ेिषत आदेश आदेश आदेश

अपीलाथ� / The Appellant; 1. ��यथ� / The Respondent; 2. 3. The CIT(A)-1, Nashik

/ True copy // आदेशानुसार आदेशानुसार आदेशानुसार/ BY ORDER, आदेशानुसार

// True Copy // Senior Private Secretary आयकर अपीलीय अिधकरण ,पुणे / ITAT, Pune

Date 1. Draft dictated on 26-09-2019 Sr.PS 2. Draft placed before author 27-09-2019 Sr.PS 3. Draft proposed & placed before JM the second member 4. Draft discussed/approved by JM Second Member. 5. Approved Draft comes to the Sr.PS Sr.PS/PS 6. Kept for pronouncement on Sr.PS 7. Date of uploading order Sr.PS 8. File sent to the Bench Clerk Sr.PS 9. Date on which file goes to the Head Clerk 10. Date on which file goes to the A.R. 11. Date of dispatch of Order. *