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Income Tax Appellate Tribunal, “C” BENCH, MUMBAI
आदेश / O R D E R महावीर ससुंह, न्याययक सदस्य/ PER MAHAVIR SINGH, JM:
This appeal of the assessee is arising out of order of the Commissioner of Income Tax (Appeals)]-20, Mumbai [in short CIT(A)], in Appeal No. CIT(A)-20/IT-10175/16-17 vide dated 19.06.2018. The Assessment was framed by the Asst. Commissioner of Income Tax, Circle-12(2)(2), Mumbai (in short ACIT/ AO) for the A.Y. 2010-11 vide order dated 04.02.2016
2 | P a g e 6576/Mum/2018 Intermetal Engineer (India) P. Ltd. under section 143(3) of the Income-tax Act, 1961 (hereinafter ‘the Act’).
The only issue in this appeal of assessee is against the order of CIT(A) confirming the action of the AO by treating the whole amount as bogus purchases.
Briefly stated facts are that the assessee engaged in the business of Manufacturing of slide gate Systems and parts for steel plant. The AO received information from DGIT (Investigation), who in turn received information from Sales Tax Department, Mumbai that the assessee has made purchases from hawala parties, as listed in hawala dealers by the Maharashtra Sales Tax Department who are providing bogus bills of purchase amounting to Rs. 15,02,872/- as admitted by these hawala dealers in their deposition before the authorities.
Name of party Amount Harshil Ferromet Private Limited 3,63,479 Monu Metal 2,52,010 Mona Metal/ Metaflex Metal Corporation 4,74,312 Pinaking Metal Industries 1,63,502 P.M. capturing Company 2,49,559 Total 15,02,872 4. During the course of assessment proceedings and during appellate proceedings, the assessee submitted all the documentary evidences such as inward register, stock register, payment received against such sales, receipt of material purchases, account payee cheque. According to the AO, the assessee failed to establish the genuineness of the purchase
3 | P a g e 6576/Mum/2018 Intermetal Engineer (India) P. Ltd. and accordingly, he made addition of whole amount as unproved purchase at Rs. 15,02,872/- to the return income of the assessee. Aggrieved, assessee preferred the appeal before CIT(A), who confirmed the addition made by the AO by observing in para 5.6 and 5.7 as under: -
“5.6 The appellant's contention that the consumption of the goods purchased were declared in appellant's Excise Duty returns and therefore the same (the consumption) was verifiable from the excise records is not acceptable because Excise Duty returns are not primary documents and they cannot be relied upon by the appellant to prove that the goods purchases were consumed. There is a contradiction in the statement of the appellant because without maintaining stock records, it is not possible to furnish statements of consumption of material. Further, the Excise Duty Return is appellant's own statement, and therefore, cannot be relied upon by the appellant as evidence.
5.7 For the claim of the purchases to be allowed, it was necessary the appellant to establish that goods purchased were 4 | P a g e 6576/Mum/2018 Intermetal Engineer (India) P. Ltd. actually used for the appellant’s business. In this case, the appellant has failed to establish that the goods in question were utilized for the purpose of its business. The case laws relied upon by the appellant are distinguishable from the present case on facts because none of those case laws deals with any case where the assessee did not maintain stock register and thereby failed to prove the consumption of the goods purchased. I, therefore, dismiss the ground of appeal no. 1.”
Aggrieved, assessee preferred the appeal before Tribunal.
We have considered the issue and gone through the facts and circumstances of the case. We find from the facts of the case and argument of both the sides, that the CIT(A) has confirmed the addition by applying whole amount as bogus purchases. We noted from the facts of the case that the AO has not doubted the sales made by assessee out of these purchases alleged to be bogus. Further, we also noted that the assessee has maintained stock register payments are through banking channels either on purchases or on sales made. Only deficiency on the part of the assessee is that the assessee has not maintained any transportation receipts or weighment slips for verification of the AO. Hence, we are of the view that only