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Income Tax Appellate Tribunal, PUNE BENCH “SMC”, PUNE
Before: SHRI VIKAS AWASTHY, JM
आदेश / ORDER
PER VIKAS AWASTHY, JM
These two appeals by assessee are directed against the order of Commissioner of Income Tax (Appeals)-2, Pune for the assessment years 2010-11 & 2011-12, respectively. Both the impugned orders are of even date i.e. 07.09.2017.
2 ITA Nos.145 & 146/PUN/2018 A.Ys.2010-11 & 2011-12
Since the issue raised by assessee in both the appeals is identical and is
arising from same set of facts, these appeals are taken up together for
adjudication and are being disposed of vide this common order.
ITA No. 145/PUN/2018 A.Y.2010-11
In ITA No.145/PUN/2018, the assessee has assailed the order of
Commissioner of Income Tax (Appeals) by raising following concise grounds/
additional grounds of appeal:
“1. The learned CIT(A) erred in sustaining the disallowance of Rs.16,53,022/- made on account of bogus purchases without appreciating that the disallowance was made mechanically without considering the evidences furnished by the assessee and also without rejecting the books of account. 2.Without prejudice to Ground No.1, the Learned CIT(A) erred in not appreciating that at best only a percentage of the alleged bogus purchases could have been disallowed and not the entire claim of Rs.16,53,022/-.” Additional Grounds of Appeal:
The learned CIT(A) erred in not appreciating that the Learned Assessing Officer while passing the Assessment order had ignored the fact that the assessee, being a 100% Export Oriented Unit, was eligible for deduction u/s.10B of the I.T. Act. 2. The Learned CIT(A) erred in not appreciating that the Learned Assessing Officer, while passing the assessment order, had not allowed set off for depreciation of Rs.59,40,244/- of the current year and also the business losses and depreciation brought forward from the earlier assessment years.”
Shri Prayag Jha appearing on behalf of the assessee submitted at the
outset that in the assessment year under appeal, re-assessment proceedings
were initiated on the basis of information received from Maharashtra Sales Tax
Department. The Assessing Officer in re-assessment proceedings held that the
assessee has made purchases from suspicious hawala dealers viz. M/s. Riddhi
Associates and M/s. A.P Enterprises and made addition of the entire
purchases made from the above said dealers aggregating to Rs.16,53,022/-.
3 ITA Nos.145 & 146/PUN/2018 A.Ys.2010-11 & 2011-12
4.1 The ld. AR submitted that during re-assessment proceedings, the
assessee had furnished necessary documents to substantiate the purchase of
goods. The assessee vide communication dated 19.12.2014 had submitted
before the Assessing Officer copy of ledger account of M/s. Riddhi Associates
and M/s. A.P Enterprises, copy of tax invoice of the aforesaid parties, copy of
stock register for the period relevant to assessment year 2010-11, copy of
purchase order and copy of bank account statements from 01.04.2009 to
03.03.2010. The assessee had made payment for the purchase through
banking channels. The Assessing Officer without taking into consideration
above said documents, made addition of the entire purchases. The assessee
assailed the addition before the Commissioner of Income Tax (Appeals). The
First Appellate Authority without appreciating the documents on record
confirmed the addition, in toto. Hence, the present appeal.
4.2 The ld. AR filed additional ground of appeal stating that Authorities
below have failed to take into consideration that the assessee is 100% Export
Orientated Unit and eligible for deduction u/s.10B of the Income Tax Act,
1961 (hereinafter referred to as ‘the Act’) and also the fact that assessee has
suffered losses. The addition, if any, is to be set off against loss.
Shri M.K. Verma representing the Department vehemently supported
the impugned order. The ld. DR submitted that the assessee has failed to
show genuineness of the dealers from whom purchases were made. The
Department had received information from Maharashtra Sales Tax
Department regarding hawala dealers. The assessee is one of the beneficiaries
from the dealers who indulge in providing book entries without actual supply
of goods. The ld. DR prayed for dismissing the appeal of assessee.
4 ITA Nos.145 & 146/PUN/2018 A.Ys.2010-11 & 2011-12
Both sides heard. Orders of the Authorities below perused. The assessee
in appeal has assailed the addition of Rs.16,53,022/- made on account of
bogus purchases. The assessee is engaged in the business of manufacturing of
chemicals like Niobium Oxide using Niobium and Tantalum. During the period
relevant to the assessment year 2010-11, the assessee had made purchases
from M/s. Riddhi Associates and M/s. A.P Enterprises. Purportedly both the
above said firms have been declared as hawala dealers by the Maharashtra
Sales Tax Department. The Assessing Officer made addition of Rs.16,53,022/-
on account of goods purchased by assessee from the aforesaid parties. The
assessee was asked to prove genuineness of the purchases by the Assessing
Officer. The assessee vide letter dated 19.12.2014 furnished following
documents;
i) Copy of Ledger account of M/s. Riddhi Associates and M/s. A.P Enterprises. ii) Copy of tax invoices from M/s. Riddhi Associates and M/s. A.P Enterprises. iii) Copy of stock register iv) Copy of purchase order v) Copy of bank account statements indicating payments.
The short contention of the ld. AR for the assessee is that while holding
the purchases as non genuine, Authorities below have failed to consider
documents furnished by the assessee.
The ld. AR has raised additional grounds of appeal stating that the
assessee is 100% Export Oriented Unit and eligible for deduction u/s.10B of
the Act. Further, the Assessing Officer has not allowed set off of depreciation
of the current year and the business losses and depreciation brought forward
from earlier assessment year. The additional grounds raised by assessee are
legal in nature, hence, the same are admitted in line with the decision of
5 ITA Nos.145 & 146/PUN/2018 A.Ys.2010-11 & 2011-12
Hon'ble Supreme court of India in the case of NTPC Ltd. Vs. CIT reported as
229 ITR 383 (SC).
After taking into consideration entire facts of the case, we are of
considered view that the appeal needs a revisit to the file of Assessing Officer
for examination of the documents filed by the assessee during the course of
assessment proceedings. The Assessing Officer is further directed to examine
assessee’s claim u/s.10B of the Act and the claim of set off of brought forward
business loss and depreciation as claimed in additional grounds of appeal. The
Assessing Officer after considering the documents furnished by assessee to
prove genuineness of the purchases transaction and the claim of deduction
u/s.10B shall pass a speaking order after granting sufficient opportunity of
hearing to the assessee, in accordance with law.
In the result, the impugned order is set aside and appeal of the assessee
is allowed for statistical purpose.
ITA No. 146/PUN/2018 A.Y.2011-12
The ld. AR submitted that in the assessment year 2011-12, similar
addition was made by the Assessing Officer in respect of alleged bogus
purchases from hawala dealers viz. M/s. Shradha Trading Company and A.P.
Enterprises aggregating to Rs.2,71,762/-. The assessee for the assessment
year 2011-12 as well, had furnished all the documents in support of the
purchases made by the assessee. However, Authorities below have failed to
consider the same. The Assessing Officer made addition of the entire
purchases made by the assessee from the alleged hawala dealers and the
Commissioner of Income Tax (Appeals) has confirmed the same.
6 ITA Nos.145 & 146/PUN/2018 A.Ys.2010-11 & 2011-12
The ld. AR submitted that the assessee has raised additional grounds of
appeal qua assessee’s eligibility for claiming deduction u/s.10B of the Act and
set off of depreciation and brought forward business losses. The additional
grounds raised in assessment year 2011-12 are identical to additional grounds
raised in assessment year 2010-11.
Both sides heard. Both sides are unanimous in stating that the facts
and grounds of appeal in assessment year 2011-12 are identical to
assessment year 2010-11. For the sake of brevity the grounds of appeal/
additional grounds are not reproduced again. The only difference is that in the
assessment year 2011-12, the assessee has made alleged bogus purchases
from M/s. Shradha Trading Company instead of M/s. Riddhi Associates. The
total alleged bogus purchases made by assessee in assessment year 2011-12
are to the tune of Rs.2,71,762/-. In view of identical issues and facts in both
the appeals, the findings given in ITA No.145/PUN/2018 for assessment year
2010-11 would mutatis-mutandis apply to assessment year 2011-12, as well.
Accordingly, appeal of the assessee in assessment year 2011-12 is allowed for
statistical purpose.
To sum up, the appeals of assessee for assessment year 2010-11 and
2011-12 are allowed for statistical purpose.
Order pronounced on Monday, the 26th day of November, 2018.
Sd/- (�वकास अव�थी /VIKAS AWASTHY) �या�यक सद�य/JUDICIAL MEMBER
पुणे / Pune; �दनांक / Dated : 26th November, 2018. SB
7 ITA Nos.145 & 146/PUN/2018 A.Ys.2010-11 & 2011-12
आदेश क� ��त�ल�प अ�े�षत / Copy of the Order forwarded to :
अपीलाथ� / The Appellant. 1. ��यथ� / The Respondent. 2. 3. The CIT(Appeals)-2, Pune. 4. The Pr. CIT-2, Thane 5. �वभागीय ��त�न�ध, आयकर अपील�य अ�धकरण, “एक-सद�य” ब�च, पुणे / DR, ITAT, “SMC” Bench, Pune. गाड� फ़ाइल / Guard File. 6.
// True Copy // आदेशानुसार / BY ORDER,
�नजी स�चव /Private Secretary आयकर अपील�य अ�धकरण, पुणे / ITAT, Pune.