ITO 26 (2)(5), MUMBAI vs. RADHESHYAM R. CHOWHAN, MUMBAI

Appellant by Ms. Samantha Mullamudi (Sr DR) Respondent by In Person Date of hearing 15-10-2019 Date of pronouncement 23-10-2019 O R D E R

Per Pawan Singh, JM :

The revenue has raised the following grounds of appeal:-

“1) " On the facts and in the circumstances of the case, the CIT(A) has erred in restricting the addition made by the AO to the extent of 12.5% of the alleged bogus purchases to Rs.78,150/- as against the addition 100% of Rs.6,25,209/-made by the AO." 2) " On the facts and in the circumstances of the case and in law, the Ld. CIT(A) erred in restricting the addition made by the AO to the extent of 12.5% of the alleged bogus purchases without appreciating the fact that detailed enquires made out by the Sales Tax Department, Govt. of Maharashtra it was established that the concerns are into providing bogus bills, no actual goods or services are delivered by these parties and only bogus bills are issued after charging amount of commission." 3) "On the facts and in the circumstances of the case and in law, the Ld. CIT(A) erred in restricting the disallowance made by the AO overlooking the statement given by the parties and explicit finding of the investigation carried out by the Sales Tax Department and corroborated by the enquiries of the AO." 4) "On the facts and in the circumstances of the case and in law, the Ld. CIT(A} has erred in not considering that the assessee has not produced any cogent evidence to substantiate the fact that he had taken actual delivery of goods purchased from the parties". 5) "On the facts and in the circumstances of the case and in law, the Ld. CIT(A) has erred in not considering that inspite of several opportunities given the assessee 1

ITA 5475/Mum/2018 Radheshsyam R Chawhan failed to submit any evidences in support of the genuineness of the purchases made from the purchase parties" 2. The brief facts of the case are that assessee is an individual and proprietor of M/s Rashtriya Steels engaged in trading of M.S. scrap. The assessee filed its return of income on 14-10-2010 declaring total income at Rs.4,95,110/-. The return of income was processed under section 143(1). The assessment was re-opened under section 147 on the basis of information received from Sale Tax Department, Government of Maharashtra that certain hawala operators are indulging in providing accommodation bills without actual delivery of goods. The Sale Tax Department, Government of Maharashtra referred the list of such hawala dealers and the beneficiary to the DGIT (Investigation), Mumbai. The name of assessee appeared in the list of beneficiaries. The assessee allegedly made the purchases of Rs.6,25,209/- from such hawala dealers.

On the basis of information, the Assessing Officer made a belief that the income of the assessee escaped assessment, therefore, re-opened the assessment under section 147. Notice under section 148 dated 19-03-2015 was issued to the assessee. Subsequently, the assessing officer issued notice u/s 143(2) on 02-07-2015 fixing appointment on 21-07-2015; however, there was no compliance from the assessee. The Assessing Officer thereafter issued a notice u/s 142(1) along with a questionnaire dated 06-07-2015 fixing appointment on 21-07-2015. But here also there

ITA 5475/Mum/2018 Radheshsyam R Chawhan was no compliance from the assessee. A reminder to notice u/s 142(1) was also issued on 10-11-2015; but of no avail. Lastly, the assessing officer provided a final opportunity on 16-12-2015 fixing appointment on 28-12-2015. The assessee did not avail this opportunity also. During the assessment, the Assessing Officer noted that the assessee has shown purchases from the following parties, which was declared as hawala dealers by the Sale Tax Department, Government of Maharashtra:

Name of the parties Bill amount (Rs.) 1 Asian Steel 6,25,209 Total 6,25,209 2. As noted above the assessing officer provided opportunity to the assessee to substantiate the purchases and issued show-cause notice as to why the aforesaid transaction should not be treated as non-genuine.

The assessee did not respond to the notices issued by the assessing officer. As there was no compliance from the assessee, the assessing officer held that the assessee has obtained accommodation entries in respect of the above purchases and made addition of Rs.6,25,209/- in the assessment order passed under section 144/147 dated 29.01.2016.

ITA 5475/Mum/2018 Radheshsyam R Chawhan 4. We have heard the submissions of the ld Departmental representative (DR) for the revenue and the assessee, who appeared in person and also perused the material available on record. The Ld. DR heavily relied upon the order of the assessing officer. The ld. DR further submits that the assessing officer provided ample opportunity to the assessee to substantiate the genuineness of the purchases, the assessee despite granting opportunity failed to provide any evidence. The assessing officer made assessment on the basis of material available on record.

The assessing officer solely relied on the information of the sales tax authorities of Government of Maharashtra. Before, ld CIT(A), the assessee made elaborate submissions and stated that the assessee is ITA 5475/Mum/2018 Radheshsyam R Chawhan engaged in the business of scrape from last 15 years. The sale of the assessee was not disputed and that the assessing officer identified only less than 4% of the assessee’s purchases as non-genuine. After considering the submissions and the material placed before ld CIT(A), the ld CIT(A) restricted the disallowance of alleged top the extent of 12.5% of the purchases shown from Asian Steel.

Order pronounced in the open court on 23-10-2019.