M/S. METALLURGICAL PRODUCTS (INDIA) PVT.LTD,RAIGAD vs. INCOME-TAX OFFICER, WARD - 3, RAIGAD

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

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

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:

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.

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

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.

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).

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.

is allowed for statistical purpose.

ITA No. 146/PUN/2018 A.Y.2011-12

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

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.

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.

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.