HINGLAJ METALS & ALLOYS PVT. LTD.,MUMBAI vs. ITO WD, 9(2)(1), MUMBAI

Per Manoj Kumar Aggarwal (Accountant Member) 1. Aforesaid appeals by assessee for Assessment Years [in short referred to as ‘AY’] 2009-10 to 2011-12 contest separate orders of first appellate authority. Since common issues are involved, the appeals were

1. The Ld.CIT(A) not justified in confirming the 100% disallowances on account of purchases affected from suspicious hawala dealer, which is unwarranted/ unjustified. 2.The Ld.ClT(A) not considered the facts that assessee is purely reseller in Iron & Steel and without purchases how can sales he affected in trading concern?

3. The Learned CIT (A), confirmed the sales figure as per books of accounts but confirmed the addition made the Learned AO in assessment order u/s 143(3) for GP addition @ 100%.

4. The Learned CIT (A), neither considered the fact that without purchase how sales can be affected? Nor considered the facts that books of accounts were never rejected u/s 145 by the department nor proved the cash trail by the department nor done any independent enquiry except issuance of notice u/s 133(6). 5.The Ld. CIT(A) not considered the facts that the Hon’ble ITAT deleted the adhoc additions fully in similar cases. We relied on the following judgments of the higher forum :- • M/s Fancy Wear V/s 1TO Ward 24(3)0), IT A No. 1596/1597/Mum/2016 dt. 20/09/2017. • Shri Hiralal Chunilal Jain V/s ITO Ward 14(1)(4). IT A No. 4547/1275/Mum/2014 dt. 01/01/2016. • M/s Ramesh Kumar & Co. v/s AC1T Ward 21(1). dt. 28/11/2014. • Shri Pranhat Gupta v/s ITO, ITAT Mumbai dt. 09/03/2018. • M/s Paras Organic Pvt Ltd vs DCIT 10(2), ITA no. 2369/Mum/20l4 dt 26/02/2016. • M/s Talco Marketing vs ITO 14(2)(3) ITA No. 3394/Mum/2014 dt 07/07/2016. • Shree Ganpatraj A Sanghavi v/s ACIT 15(3), ITA No 2826/Mum/2013 dt 05/11/2014. • ACIT 8(3) v/s Tristar Jewllery, ITA No 7593/2011 & 6435/Mum/2013 dt 31/04/2015. • ACIT 25(2) v/s Tarla R Shah ITA No 5295/Mum/2013 dt 02/02/2016. Prayer / relief claim in the appeal

1. The Appellant hereby prays that 100% addition on account of purchases of Rs.1,86,77,093/- to be deleted in full.

We have heard and considered the arguments advanced by both the representatives. 2.1 Facts on record would reveal that the assessee being resident corporate assessee stated to be engaged in trading of iron & steel, was assessed for impugned AY u/s. 143(3) r.w.s. 147 on 27/03/2014 wherein the income of the assessee was determined at Rs.308.99 Lacs, inter- -78,2951/Mum/2018 M/s. Hinglaj Metals & Alloys Private Limited Assessment Years –2009-10 to 2011-12 alia, after addition of Rs.186.77 Lacs on account of alleged bogus purchases as against returned income of Rs.0.39 Lacs e-filed by the assessee on 29/09/2009 which was processed u/s.143(1). 2.2 Pursuant to receipt of certain information from investigation wing / Sales tax Department, Govt. of Maharashtra, it transpired that the assessee stood beneficiary of alleged bogus purchases to the tune of Rs.186.77 Lacs from 14 entities, the details of which have already been extracted at para-5.2 of the quantum assessment order. Accordingly, as per due process of law, re-assessment proceedings were initiated against the assessee u/s 147 by issuance of notice u/s 148 on 19/12/2012 followed by statutory notices u/s 143(2) & 142(1) wherein the assessee was directed to substantiate the purchase transactions. During the year, the assessee had reflected Sales & purchases for Rs.446.23 Lacs & Rs.442.25 Lacs respectively. 2.3 Although, the assessee defended the purchases, however, notice issued u/s 133(6) to all the parties to confirm the transactions, remained un-served as well as un-responded to. Consequently, the assessee was show-caused to substantiate the purchase transactions. The assessee furnished ledger extracts and submitted that the payment was through banking channels. The assessee also demanded for cross-examination of the parties. However, the assessee failed to provide the whereabouts or new addresses of the suppliers. 2.4 Finally not satisfied with assessee’s submissions / explanations for various reasons as enumerated in para 6.5, the learned AO rejected the books of accounts u/s 145(3) and made 3 additions in the hands of the -78,2951/Mum/2018 M/s. Hinglaj Metals & Alloys Private Limited Assessment Years –2009-10 to 2011-12 assessee- (i) addition of Rs.98.48 Lacs u/s 41(1) representing amount payable to aforesaid sundry creditors (ii) addition of Rs.186.77 Lacs, being purchases made by the assessee from suspicious dealers & (iii)Addition of Rs.23.34 Lacs, being suppressed Gross Profit @12.5% on aforesaid purchases. 2.5 Although the assessee preferred further appeal before Ld. first appellate authority, however, despite various notices as tabulated in para 3.1 of the impugned order, the assessee failed to attend the appellate proceedings. Consequently, the matter was proceeded with ex-parte. Finally, the addition of Rs.186.77 Lacs as made by learned AO was confirmed since the assessee failed to substantiate the delivery of material and failed to produce the day to day stock register. However, the addition made u/s 41(1) was deleted since the same would amount to double addition. Similarly, the estimated addition @12.5% was deleted since the whole purchases were found to be bogus and the full disallowance was already made. Aggrieved, the assessee is in further appeal before us.

. Facts being identical, our findings, observations as well as adjudication as for AY 2009-10 shall mutatis mutandis apply to these years also. Consequently, both these appeals are also restored back to the file of Ld. CIT(A) on similar lines / directions. Both these appeals stand partly allowed for statistical purposes.

5. Finally, all the appeals stands partly allowed for statistical purposes in terms of our above order.