INCOME-TAX OFFICER, WARD - 1, JALNA vs. ROCHANDAS KIMATRAM KAWARANI, JALNA

PER R.S.SYAL, VP : This appeal by the Revenue is directed against the order passed by the CIT(A)-1, Aurangabad on 05-09-2018 in relation to the assessment year 2010-11.

ITA No.1871/PUN/2018 Shri Rochandas Kimatram Kawarani

bills to various traders. On verification of such information, it

was found that the assessee was one of the beneficiaries who

had taken fake purchases. Such amount of purchases at

Rs.40,688/- was added by the Assessing Officer. The ld.

CIT(A) restricted the addition to 10% of the hawala bills,

against which the Revenue has come up in appeal before the

Tribunal.

material on record. It is seen that assessee had obtained bogus

purchases from 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 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

3 ITA No.1871/PUN/2018 Shri Rochandas Kimatram Kawarani

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, I 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. I, 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, as against 10%

sustained by the ld. first appellate authority.

purposes.

Order pronounced in the Open Court on 20th March, 2019.

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

पुणे Pune; �दनांक Dated : 20th March, 2019 सतीश

4 ITA No.1871/PUN/2018 Shri Rochandas Kimatram Kawarani

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. आयकर आयु�(अपील) / 3. The CIT (Appeals)-1, Aurangabad 4. The Pr. CIT-1, Aurangabad िवभागीय �ितिनिध, आयकर अपीलीय अिधकरण, पुणे “SMC” / 5. DR ‘SMC’, 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 20-03-2019 Sr.PS 2. Draft placed before author 20-03-2019 Sr.PS 3. Draft proposed & placed JM before the second member 4. Draft discussed/approved JM by Second Member. 5. Approved Draft comes to Sr.PS the 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. *