Loading judgment…
No AI summary yet for this case.
Income Tax Appellate Tribunal, MUMBAI BENCH “SMC”, MUMBAI
Before: Shri Shamim Yahya (AM) & Shri Pawan Singh (JM)
O R D E R Per Pawan Singh, JM : 1. This appeal filed by the assessee is directed against the order of ld.
CIT(A)-30, Mumbai dated 17.08.2018 for Assessment Year 2010-11.
The assessee has raised the following grounds of appeal:
“01. On the fact and in the circumstances of the case and in law the learned Commissioner of Income Tax (Appeal)-30), erred in confirming addition of Rs. 11,51,018/- being estimating profit element in treating the genuine purchases of Rs. 92,08,1437- as non-genuine purchases without appreciating the law, facts and circumstances of the case. The provisions of the Act ought to have been properly construed and regard being had to facts of the case no such addition should have been made. Reasons assigned by the learned Assessing Officer are wrong and unlawful to justify the addition of Rs 11,51,018/-. The same to be deleted.
2. On the fact and in the circumstances of the case and in law the learned Commissioner of Income Tax (Appeal)-30, erred in passing the order without giving proper opportunity of being heard.”
ITA 6118/Mum/2018 Bharat H Bhansali
Brief facts of the case are that the assessee is proprietor of M/s Bhansali Impex, engaged in the business of trading in ferrous and non- ferrous metal, filed return of income for AY 2010-11 on 08-09-2010 declaring total income at Rs.2,36,2310 /-. 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 beneficiary. The assessee allegedly made the purchases of Rs.92,08,143/- 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 23.09.2014 was issued and served upon the assessee. In response to the notice under section 148, the assessee filed his reply and stated that the return filed on 08.09.2010 be treated as return in response to said notice. Reasons recorded were supplied to the assessee. The Assessing Officer after serving notice under section 143(2) dated 2
ITA 6118/Mum/2018 Bharat H Bhansali 10.08.2015 proceeded for re-assessment. 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 PARSHVA & CO 13,682/- 2 SHUBHA LABH METAL AND ALLOYS / 1,17,286/- BRIGHT ENTERPRISE 3 ROLEX TRADING COMPANY 3,48,749/- 4 AMAR ENTERPRISES 1,88,344/- 5 DAKSHA ENTERPRISES 2,27,894/- 6 LIBERTY TRADING CORPORATION 3,24,472/- 7 MERCURY ENTERPRISES 9,47,234/- 8 RAJDEEP MEALS & TUBES 44,064/- 9 DEEPLOK METAL ALLOYS PVT LTD 7,19,108/- 10 MANIBHADRA METAL INDUSTRIES 8,62,834/- 11 VIJAY INDUSTRIES 8,94,720/- 12 VATIKA TRADING CVO 8,12,030/- 13 PRAYASH STEELAGE 15,97,586/- 14 HITECH IMPEX 7,75,402/- 15 MEHUL TRADERS 6,922 16 MAHAVIR ENTERPRISES 1,03,498/- 17 RAJ TRADELINK 2,21,760/- 18 KALASH METALS PVT LTD 10,02,549/- TOTAL 92,08,143/- 3. The assessee was asked to substantiate the purchases and issued show- cause notice as to why the aforesaid transaction should not be treated
ITA 6118/Mum/2018 Bharat H Bhansali as non-genuine, the assessee was specifically asked to furnish all the evidences in respect of the above purchases and to produce the parties for verification. The assessee filed its explanation and furnished the copy of ledger account and proof of payment through cheques. The assessee expressed his inability to produce the parties. The Assessing Officer after considering the material available before him and the submission made by assessee concluded that the disallowance @ 12.5% of the aggregate of non-genuine/alleged hawala purchases would be fair to tax the element of diluted income by showing the purchases from the said parties in assessment order dated 18.01.2016 passed under section 143(3) r.w.s 147.
On appeal before the ld. CIT(A), the action of Assessing Officer was sustained. Further, aggrieved by the order of ld. CIT(A), the assessee has filed the present appeal before us.
None appeared before us; despite the service of notice of hearing through registered post with acknowledge (RPAD), however on perusal of the record we find that the assessee has already filed his written submission and the documentary evidences in the form of paper book, on record. Thus, we left no option except to hear the submissions of learned departmental representative (ld. DR) and to decide the appeal on the basis of material available on record. We
ITA 6118/Mum/2018 Bharat H Bhansali have heard the submission of ld. DR for the revenue and perused the material available on record. The ld. DR for the revenue submits that investigation wing of Income tax as well as Sales tax department of Government of Maharashtra made a full-fledged investigation to unearth the modus operandi of the hawala traders, who were indulged in providing the bogus bills without actual delivery of the goods. The assessee is one of the beneficiaries of the purchases from the hawala dealers. The assessing officer has already granted sufficient relief to the assessee and the assessee is not entitled for further relief and the appeal of the assessee is liable to be dismissed.
We have considered the submissions of the ld. DR for the revenue and also gone through the written submission of the assessee and the documents filed in the form of the paper books. In the written submission filed before us, the assessee has narrated that in order to substantiate the genuineness of the purchases he had produced purchases invoices, mode of delivery, corresponding sales bills, quantity-wise tally of impugned purchases and corresponding sales.
Banks statement highlighting the name of the parties, copy of audit report and stock register. The assessee has turnover of Rs. 1,19,49,357/ and the gross profit (GP) is Rs.2,86,102/- ( 2.39%) and in case the alleged addition is sustain it would rise to 9.64%, thereby
ITA 6118/Mum/2018 Bharat H Bhansali increase of 403.35% in GP ratio. The assessee also mentioned its GP ratio of AY 2007-08 at 2.31% and for AY 2008-08 @ 3.03%. 7. We have seen that the assessing officer while passing assessment order made addition on account of bogus purchases @ 12.5% of the aggregate of purchases shown from the alleged hawala traders. The ld CIT(A) confirmed the action of the assessing officer on the similar lines. The assessing officer has not made any independent inquiry.
The books of accounts of the assessee were not rejected. The assessee is trader in ferrous and non-ferrous metal, the sale of the assessee was not disputed. The assessee has already shown a GP @2,39%. The assessee in its written submission has mentioned that in case the addition @123.%% is sustained, the GP of assessee would increase to 9.64% which is unreasonable.
The Hon’ble Bombay High Court in a recent decision on similar set of fact in PCIT vs. M Haji Adam & Co. in of 2016 dated 11.02.2019 held that addition in respect of bogus purchases is to be limited to the extent of bringing the GP rate on such purchase at the same rate as on other genuine purchases. Considering the written submissions of the assessee that the disallowance of alleged bogus purchase is unreasonable. We have seen that on similar set of fact, the Hon’ble Bombay High Court in PCIT vs. M Haji Adam & Co. (supra)
ITA 6118/Mum/2018 Bharat H Bhansali held that addition in respect of bogus purchase be limited to the extent of bringing the GP rate on bogus purchase at the same rate as other genuine purchases. We have further noted that the assessee has shown GP of 2.39%. Therefore, considering the fact of the present case and the nature of business activities of the assessee and by following the decision of Hon’ble Bombay High Court, we direct the Assessing Officer to restrict the addition with regard to bogus purchases by brining the GP rate on such purchases at the same rate as that of other genuine purchases. Needles to say that before making addition, the Assessing Officer shall grant opportunity to the assessee before passing the order in accordance with law.
In the result, appeal of the assessee is partly allowed.
Order pronounced in the open court on 23-10-2019.