SANDEEP P. PATEL,,PUNE vs. DEPUTY COMMISSIONER OF INCOME TAX,, PUNE

The assessee in appeal has raised grounds challenging the validity of reopening of assessment u/s. 148 of the Income Tax Act, 1961 (hereinafter referred to as “the Act”) and also on merits of the addition.

The brief facts of the case as emanating from the records are : The assessee is a Government and Civil contractor. The assessee filed his return of income for the impugned assessment year on 29-10-2009 declaring total income of Rs.3,52,53,380/-. The return of assessee was processed u/s. 143(1) of the Act. Thereafter, on the basis of information received from Maharashtra Sales Tax Department, notice u/s. 148 of the Act was issued to the assessee on 10-03-2014. In reassessment proceedings, the Assessing Officer observed that the assessee had made purchases from K R C Trading Co. Pvt. Ltd. Rs.14,03,425/- and Rahul Traders Rs.56,67,478/- aggregating to Rs.70,70,903/- and the names of aforesaid suppliers appear in the list of Hawala operators declared by the Maharashtra Sales Tax Department. The Assessing Officer directed the assessee to produce relevant documents/registers to show genuineness of purchases made and also the genuineness of parties. The assessee produced tax invoices, delivery challan and confirmations from aforesaid parties. However, in the absence of purchase order, octroi receipts, stock register, etc. the Assessing Officer held the alleged purchases made by the assessee from the suspicious dealers as bogus and made addition of the entire purchases from the aforesaid parties.

Shri Nikhil Pathak with Shri Sanket Bora appearing on behalf of the assessee stated at the outset that he is not pressing ground Nos. 1, 2 and 4 of the appeal challenging validity of reopening and reassessment proceedings.

On the other hand Ms. Shabana Parveen representing the Department vehemently defended the impugned order. The ld. DR submitted that the assessee has failed to prove genuineness of purchases. The assessee has failed to show trail of goods purchase and no stock register was maintained by the assessee.

We have heard the submissions made by representatives of rival sides and have perused the orders of authorities below. The assessee in ground Nos. 1, 2 and 4 of the appeal has challenged validity of reopening,

In ground No. 3 of the appeal, the assessee has assailed addition made on account of bogus purchases. The assessee has made purchases aggregating to Rs.70,70,903/- from K R C Trading Co. Pvt. Ltd. and Rahul Traders. The names of both the aforesaid parties appear in the list of Hawala operators declared by the Sales Tax Department. The addition of entire purchases made by the assessee from aforesaid alleged Hawala operators has been confirmed on the ground that the assessee has failed to produce supporting documents such as purchase orders, lorry/octroi receipts, stock register, etc.

The assessee in order to substantiate genuineness of purchases and the parties produced purchase invoices, delivery challan and confirmations from both the parties. Undisputedly, the Department has not raised doubt on the turnover reported by the assessee. The assessee is a Civil contractor. In the absence of material purchased, the assessee could not have completed the contract assigned. It is not the case of Revenue that the goods allegedly held bogus were not relevant or commensurate to the business of assessee. Hence, the entire purchases cannot be held to be bogus. Undisputedly, the assessee has filed confirmations, delivery receipts and tax invoices to show genuineness of the purchases made. At the same time we observe some shortcomings on the part of assessee in maintaining proper document/stock register. Taking into consideration entirety of facts and the decision rendered by Pune Bench of Tribunal in the case of M/s. Chhabi Electricals Pvt. Ltd. Vs. Deputy Commissioner of

The ground Nos. 5 and 6 are general in nature, hence, require no adjudication.

In the result, the appeal of assessee is partly allowed.