What did the Tribunal hold?

The Tribunal held that no ad hoc addition at a fixed percentage is warranted for bogus purchases. The addition should be based on the difference between the gross profit rates of genuine and hawala purchases.

The assessee recorded purchases from a hawala dealer amounting to Rs. 76,20,165. The Assessing Officer added Rs. 8,46,685 at 12.5% on account of excess purchase price, which was reduced to 10% by the CIT(A).

What were the issues?

Whether an ad hoc addition on account of hawala purchases is justified, and if so, on what basis.

Shri. Nandkishore Kishanrao… vs ITO | ITAT Pune 2019

Income Tax Appellate Tribunal, PUNE BENCH “SMC”, PUNE

Before: SHRI R.S. SYAL

For Appellant: Shri Kishor Phadke

For Respondent: Shri Rajesh Gawali

PER R.S.SYAL, VP : This appeal by the assessee arises out of the order passed by the CIT(A)-2, Aurangabad on 27-08-2018 in relation to the assessment year 2010-11.

The only issue raised in this appeal is against the confirmation of addition on account of hawala purchases.

Briefly stated, the facts of the case are that the assessee was found to have recorded purchases from hawala dealer to the tune of Rs.76,20,165/-. On being called upon to substantiate the

2 ITA No.1851/PUN/2018 Shri Nandkishore Kishanrao Dilerao

genuineness of the transaction, the assessee filed certain details.

The Assessing Officer (AO) got convinced to the extent of the

quantity actually received against such hawala purchases. He,

however, made an addition of Rs.8,46,685/- @12.5% on account

of excess purchase price due to hawala transactions. The ld.

CIT(A) reduced the addition to 10%, against which the assessee

has come up in appeal before the Tribunal.

I have heard both the sides and gone through the relevant

material on record. 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 at the rate of 10% of bogus purchases is warranted.

Rather the addition should be made to the extent of difference

between the gross profit rate on genuine purchases and gross

profit rate of hawala purchases. Such details are not readily

available with the ld. AR as well to facilitate the calculation of

gross profit rates of genuine and hawala purchases. Under these

circumstances, I set-aside the impugned and remit the matter to

3 ITA No.1851/PUN/2018 Shri Nandkishore Kishanrao Dilerao

the file of AO for applying the ratio laid down by the Hon’ble

Jurisdictional High Court in the above noted case and recompute

the amount of addition, if any, after allowing a reasonable

opportunity of hearing to the assessee.

In the result, the appeal is allowed for statistical purposes.

Order pronounced in the Open Court on 30th April, 2019.

Sd/- (R.S.SYAL) उपा�य� उपा�य�/ VICE PRESIDENT उपा�य� उपा�य�

पुणे Pune; �दनांक Dated : 30th April, 2019 सतीश

आदेश क� क� �ितिलिप �ितिलिप अ�ेिषत अ�ेिषत / Copy of the Order is forwarded to : आदेश क� क� �ितिलिप �ितिलिप अ�ेिषत अ�ेिषत आदेश आदेश 1. अपीलाथ� / The Appellant; ��यथ� / The Respondent; 2. आयकर आयु�(अपील) / 3. The CIT (Appeals)-2, Aurangabad 4. The Pr. CIT-2, Aurangabad िवभागीय �ितिनिध, आयकर अपीलीय अिधकरण, पुणे “SMC” / DR 5. ‘SMC’, ITAT, Pune; गाड� फाईल / Guard file. 6. // True copy // आदेशानुसार आदेशानुसार आदेशानुसार/ BY ORDER, आदेशानुसार

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

ITA No.1851/PUN/2018 Shri Nandkishore Kishanrao Dilerao

Date 1. Draft dictated on 30-04-2019 Sr.PS 2. Draft placed before author 30-04-2019 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. *

SHRI. NANDKISHORE KISHANRAO DILERAO,NANDED vs. INCOME-TAX OFFICER, WARD - 3(1), NANDED

What did the Tribunal hold?

What were the facts?

What were the issues?

Which sections of the Income-tax Act were involved?

Recent GST High Court judgments