ITO 25 (3) (5), MUMBAI vs. NISHA P. SHAH, MUMBAI

The captioned appeals filed by the revenue were decided by the “A” Bench of Mumbai ITAT vide common order dated 15.09.2017. The revenue filed miscellaneous applications (MAs) on the ground that the Tribunal has not decided Ground No. 8 of the revenue’s appeals and requested for recall of the said order for deciding the said ground. The Tribunal after hearing both the sides allowed the miscellaneous applications and recalled order dated 15.09.2017 in 2250/Mum/2016 for both the assessment years 2009-10 and 2011-12 for the limited purpose of adjudicate ground No. 8 of the appeals filed by the revenue for both the assessment years. Assessment Years: 2009-10 & 2011-12 Ground No. 8 raised by the revenue in its original appeal for the assessment year 2009-10 reads as under:-

These appeals came up for hearing on 16.07.2019. However, when the case was called out on the said date, none appeared on behalf of the assessee. As pointed out by the registry, notice sent to the assessee has been received back with the remarks “unclaimed”. Accordingly, we decided to dispose of the appeals on the basis of material on record after hearing the Ld. Departmental Representative (DR).

Before us, the Ld. Departmental Representative (DR) submitted that the Ld. CIT (A) has erred in deleting the addition made u/s 41 (1) of the Act in respect of the amount of Rs. 28,75,626/- shown as loan obtained from M/s RR Traders. The Ld. DR submitted that the assessee had obtained bogus entries from M/s R.R. Traders to show liability of Rs. 28,75,626/-. Since, M/s R.R. Traders is also a hawala trader and given statement before the Maharashtra Sales Tax Department to the effect that it had not supplied goods to any party and since the assessee failed to produce the said party for before the AO for verification of the details, AO made addition of the said amount to the income of the assessee. In the light of the aforesaid facts, the Ld. DR submitted that the Ld. CIT (A) has wrongly deleted the addition made by the AO. 4. We have perused the material on record in the light of the submissions made by the Ld. DR. We notice that the AO had made addition of Rs. 1,04,86,995/- in respect of bogus purchase bills obtained from the eight hawala parties mentioned in the assessment order and dealt with the Assessment Years: 2009-10 & 2011-12 transaction with M/s RR Traders separately. As per the findings of the AO, since M/s RR Traders is not traceable the liability of the assessee ceases to exist. On the other hand, the Ld. CIT (A) deleted the addition holding that the appellant had not taken any benefit from M/s RR Traders. In our considered view, there is no material difference between the transactions of the assessee with other bogus parties and the transaction with M/s R.R. Traders. In both the cases, the assessee obtained bogus bills to inflate purchases without actual taking of delivery of goods from them.

The coordinate Bench has confirmed the order passed by the Ld. CIT (A) restricting the addition to 12.5% of the total bogus purchases determined by the AO in respect of the transaction with the hawala parties except in respect of transaction with M/s RR Traders. In our considered view, the nature of transaction with M/s RR Traders is similar to the transactions with the other hawala parties. Hence, the Ld. CIT(A) has wrongly deleted the addition made in respect of transaction with M/s RR Traders. We, therefore, respectfully following the decision of the coordinate Bench sustain addition of 12.5% of the total amount of liability shown by the assessee in connection with the transaction with M/s RR Traders amounting to Rs. 28,75,626/-. We accordingly direct the AO to make addition of 12.5% of the said amount and partly allow this ground of appeal of the revenue. The facts of the case and the issue involved in the present case are identical to the facts of the case and the issues involved in assessee’s case for the assessment year 2009-10 discussed above except the amount of transaction with M/s RR Traders. In the first appeal, the Ld. CIT (A) restricted the disallowance to 12.5% as against 100% disallowance made by the AO in respect of the hawala parties other than M/s RR Traders. In respect of M/s RR Assessment Years: 2009-10 & 2011-12