INCOME TAX OFFICER vs. M/S. STEEL POINT, NASHIK

आदेश / ORDER PER R.S.SYAL, VP :

These three appeals filed by the Revenue 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.

A.Y. 2009-10 : 2. The first issue raised in this appeal is against the deletion of addition of Rs.2,03,58,071/- in respect of bogus purchases.

2 ITA Nos.218 to 220/PUN/2017 M/s. Steel Point

was received from the Director of Income-tax (Investigation), Pune

regarding the beneficiaries in hawala transactions detected by the

Sales Tax Department of Maharashtra Government. One of the

beneficiaries, in a such list, was the assessee also. A survey action

was taken u/s.133A of the Income-tax Act, 1961 (hereinafter also

called ‘the Act’) on 21-03-2013 at the business premises of the

assessee firm. The information received from the Director of

Income-tax (Investigation), Pune was verified in as much as the

assessee had recorded purchases from the hawala parties to the

tune of Rs.2,03,58,071/-. The AO made addition for the equal

amount, which came to be deleted by the ld. CIT(A). Aggrieved

thereby, the Revenue has come up in appeal before the Tribunal.

material on record. It is seen that several assessees had obtained

bogus purchases from such hawala parties. The Pune Benches of

the Tribunal has disposed off a group of similar cases. 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. Finding in

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respect of category No. IV of the said order, which is germane to

the instant appeal, is 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.”

Electricals Pvt. Ltd. and others (supra), which has been followed in

innumerable cases, we hold that the addition should have been

sustained on the amount of hawala purchases @10% plus the

normal GP rate shown by the assessee for the year. We, therefore,

set aside the impugned order and remit the matter to the file of AO

for re-computing the amount of addition @10% plus the normal

gross profit rate shown by the assessee for this year on the bogus

purchases.

“4. On the facts and circumstances of the case, whether the ld.CIT(A)-2, Nashik was justified in holding that notice u/s.143(2) is mandatory before passing the order u/s.147, when the Act has given immunity to the AO u/s.292BB that

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when no objection is taken regarding this during the assessment proceeding, the objection is not sustainable.”

before the ld. CIT(A) for the first time that no notice u/s.143(2) of

the Act was issued and hence, the proceedings be quashed. The ld.

CIT(A) called for a report from the AO. Vide the remand report

dated 15-09-2016, the AO wrote that notice u/s.143(2) was issued

on 22-11-2013 but acknowledgement for service of above notice

was not found on record. Even the order sheet entry dated 22-01-

2013 properly recorded that notices u/s.143(2) and 142(1) were

issued fixing the case for hearing on 29-01-2013 at 4.30 pm. The

ld. CIT(A) observed that the AO has not made a mention of issuing

notice u/s.143(2) in the assessment order. He, however, did not

adjudicate on the issue of validity of reassessment on this score in

view of the fact that addition itself was deleted.

material on record. It is seen that the ld. CIT(A) has not adversely

adjudicated on the so-called non-issuance of notice u/s.143(2) qua

the Revenue, though he recorded in the impugned order that the

AO admitted to have issued such a notice. As such, the Revenue

can have no grievance against such non-adjudication. The assessee

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has neither preferred any cross objection nor taken recourse to any

other legal remedy challenging the validity of assessment in view

of the alleged non-issuance of notice u/s.143(2). As such, the

ground raised by the Revenue is dismissed.

A.Yrs. 2010-11 and 2011-12 :

for these years are mutatis mutandis similar to those of the

preceding year 2009-10. But for the difference in the amount of

hawala entries recorded by the assessee, the facts are admittedly

similar. Following the view taken hereinabove for the A.Y. 2009-

10, we direct the AO to re-compute the amount of addition in the

light of our above observations, that is, 10% over and above the

normal G.P. rate of the respective year on the amount of hawala

purchases.

reason of non-issuance of notice is similar to that of the preceding

year. The same is dismissed as not arising out of the impugned

order.

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statistical purposes.

Order pronounced in the Open Court on 07th March, 2019.

Sd/- Sd/- (PARTHA SARATHI CHAUDHURY) (R.S.SYAL) JUDICIAL MEMBER VICE PRESIDENT

पुणे Pune; �दनांक Dated : 07th March, 2019 सतीश

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

अपीलाथ� / The Appellant; 1. ��यथ� / The Respondent; 2. 3. The CIT(A)-2, Nashik 4. The Pr.CIT-2, Nashik िवभागीय �ितिनिध, आयकर अपीलीय अिधकरण, पुणे 5. “बी” / DR ‘B’, 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

ITA Nos.218 to 220/PUN/2017 M/s. Steel Point

Date 1. Draft dictated on 06-03-2019 Sr.PS 2. Draft placed before author 06-03-2019 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. *