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Income Tax Appellate Tribunal, PUNE BENCH “A”, PUNE
Before: SHRI R.S. SYAL & SHRI PARTHA SARATHI CHAUDHURY
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.
The issue of re-assessment was not pressed by the ld. AR in all the appeals under consideration. Therefore, these grounds are dismissed as such.
2 ITA Nos.674 to 676/PUN/2017 M/s. Jaihind Welding and Boilers Repair Works
The only other issue which remain in these appeals is against
the restricting the addition to 25% of bogus purchases.
Briefly stated, the facts of the case for all the years are that
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.
We have heard the rival submissions and gone through the
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.’
Thereafter the Tribunal also discussed a situation in which the
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.
In this regard, it is relevant to note that the Pune Benches of the Tribunal has disposed off a group of cases on such an issue before the afore referred verdict of the Hon’ble High Court. Vide the lead order in the case of M/s. Chhabi Electricals Pvt. Ltd. and others Vs. DCIT dated 28-04-2017 in ITA No.795/PUN/2014 and others, the Tribunal has made certain categories. Findings in respect of category No. IV of the said order, which is germane to the instant appeal, are as under:
“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.”
Going by the ratio laid down in the case of M/s. Chhabi Electricals Pvt. Ltd. and others (supra), which both the sides agree to be applied for the instant case, we hold
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 ld. AR fairly admitted that the facts and circumstances of
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.
In the result, all the three appeals are partly allowed for
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
The Pr.CIT-1, Nashik िवभागीय �ितिनिध, आयकर अपीलीय अिधकरण, पुणे 5. “ए” / DR ‘A’, ITAT, Pune; 6. गाड� फाईल / Guard file.
/ 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. *