INCOME-TAX OFFICER vs. M/S. SOMNATH DEOKISAN BOOB, NASHIK

आदेश / ORDER

PER VIKAS AWASTHY, JM :

These three appeals by Revenue are directed against the order of Commissioner of Income Tax (Appeal)-2, Nashik common for the assessment years 2009-10 to 2011-12, whereby the addition made by the Assessing Officer on account of bogus purchases from Hawala dealers has been deleted by the Commissioner of Income Tax (Appeal) in toto.

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arising from same set of facts, these appeals are taken up together for

adjudication and are disposed of vide this common order.

a partnership firm engaged in the business of sale of petroleum products,

kerosene and lubricant oils etc. The assessee filed its return of income for the

impugned assessment years which were processed u/s.143(1) of the Income

Tax Act, 1961 (hereinafter referred to as ‘the Act’). On the basis of information

received from Sales Tax Department, Maharashtra through Director General of

Income Tax (Investigation) that the assessee has indulged in transaction of

bogus purchases from Hawala dealers, assessments of the assessee for

assessment years 2009-10 to 2011-12 were reopened. In re-assessment

proceedings, the Assessing Officer held that assessee has made bogus

purchases from following dealers:

i) M/s. Laxmi Trading Company

ii) Dev Enterprises

iii) M/s. Sthapana Trade Impex Pvt. Ltd.

iv) Shree Amaaya Enterprises

v) M/s. Rumeet Enterprises.

Act for the respective assessment years, the assessee filed appeals before the

Commissioner of Income Tax (Appeal). The Commissioner of Income Tax

(Appeals) on the basis of documents on record and submissions of assessee

deleted the entire addition made by the Assessing Officer on account of bogus

purchases.

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Revenue is in second appeal before the Tribunal.

the assessment orders submitted that assessee has failed to produce the

parties from whom assessee had made purchases. The Assessing Officer vide

notice u/s.133(6) of the Act dated 24.07.2013 asked the assessee to furnish

various documents such as bills for purchasing goods from suspicious dealers,

purchase order, delivery invoice, transportation bills, octrai receipts, details of

payments made, complete postal address of the dealers from whom purchases

were made, etc. However, the assessee failed to furnish all the documents as

sought by the Assessing Officer. Notice sent to M/s. Sthapana Trade Impex Pvt.

Ltd., M/s.Laxmi Trading Company and M/s. Rumeet Enterprises were received

back undelivered with remarks ‘Unclaimed’, ‘refused’ and ‘not-known’

respectively. The notice to the other two suppliers i.e. Shree Amaaya

Enterprises and M/s.Dev Enterprises was duly served. However, they failed to

respond. The assessee further failed to furnish confirmations from any of the

parties mentioned above. The assessee is one of the beneficiaries of the bogus

purchases. Bogus purchases bills and entries were provided by the Hawala

dealers. The Assessing Officer after analysing the facts and documents on

record made additions on account of bogus purchases in the impugned

assessment years as under:

Assessment Year Bogus purchases as determined by the Assessing Officer 2009-10 Rs.85,47,019/-

2010-11 Rs.1,32,96,599/-

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2011-12 Rs.1,45,80,248/-

6.1 In First Appellate proceedings, the Commissioner of Income Tax (Appeals)

while deleting additions has erred in observing that Assessing Officer has

simply relied on the information supplied by the Sales Tax Department. The

Commissioner of Income Tax (Appeals) has failed to consider the fact that

notice sent to the parties on the addresses furnished by the assessee, were

received back Undelivered. Thus, the whereabouts of the dealers from whom

the assessee had made purchases were not known. Therefore, it can be safely

construed that purchases made by the assessee from suspicious dealers were

bogus and have been rightly disallowed by the Assessing Officer. The ld. DR

placed reliance on the decision of Pune Bench of the Tribunal in the case of

Chhabi Electricals Pvt. Ltd. Vs. DCIT, in ITA No.795/PUN/2014 for assessment year 2010-11 decided on 28-04-2017 and submitted that the case of the

assessee falls in Clause –II and Clause-III of Para 40 of the said order. The ld.

DR prayed for setting aside the order of Commissioner of Income Tax(Appeals)

and restoring the findings of Assessing Officer.

assessee vehemently supported the findings of Commissioner of Income Tax

(Appeals) in deleting the additions and prayed for dismissing the appeals of the

Revenue. The ld. AR submitted that in response to notice dated 24.07.2013

u/s.133(6) of the Act, the assessee furnished requisite documents vide letter

06.08.2011. The ld. AR referred to the said communication at page 11 to 14 of

the paper book. The ld. AR contended that the Commissioner of Income Tax

(Appeals) after appreciating the facts of the case and documents on record has

deleted the additions.

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7.1 The ld. AR contended that no opportunity was given to the assessee to

cross examine the persons whose statement were used to reopen the

assessment and for making the addition. The assessment has been completed

by violating the principles of natural justice. To support his submissions, the

ld. AR placed reliance on the following decisions:

i) M/s.Joto Abrasives Pvt. Ltd. Vs. DCIT, ITA No.2902/PUN/2016 for the assessment year 2009-10, decided on 28.03.2018.

ii) ACIT Vs. M/s. Mahalaxmi Electricals, ITA No.301/PUN/2016 for the assessment year 2009-10, decided on 26.04.2018.

iii) Anita Sanjay Agrawal Vs. ITO (being lead case), ITA Nos.2622 to 2624/PUN/2016 for the assessment years 2009-10 to 2011-12, decided on 28.03.2018

assessee was supplied with the statement of hawala dealers. The assessee

never asked for cross examination. Therefore, it is wrong to say that

opportunity of cross examination was not given to the assessee.

and have perused the orders of Authorities below. The Revenue in appeal for

the assessment years 2009-10 to 2011-12 has assailed the order of

Commissioner of Income Tax (Appeals) in deleting the additions made by the

Assessing Officer on account of bogus purchases from Hawala Operators.

According to the Revenue, assessee has made bogus purchases during the

impugned assessment years from following suspicious dealers:

Name of the A.Y A.Y A.Y supplier 2009-10 2010-11 2011-12 M/s. Laxmi Trading 3,32,663/- Company

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M/s. Dev 78,54,356/- 23,10,470/- 23,28,717/- Enterprises M/s. Sthapana 3,60,000/- Trade Impex Pvt. Ltd. Shree Amaaya 13,50,338/- 62,80,562/- Enterprises M/s.Rumeet 96,35,791/- 59,70,969/- Enterprises Total 85,47,019/- 1,32,96,599/- 1,45,80,248/-

During the course of reassessment proceedings, the assessee submitted

various documents before the Assessing Officer including Stock Register, tax

invoice, purchase bills, purchased summery, sales summery, confirmations

from the purchases to whom sales were made. The Assessing Officer did not

find any fault with the documents furnished by assessee to substantiate

purchases/sales transactions. The accounts of the assessee were not rejected

by the Assessing Officer. The Assessing Officer raised no suspicion on the sales

made by the assessee. It is a well settled law that if no doubt has been raised

on the sales, purchases cannot be doubted. Merely for the reason that the

supplier did not respond/notice is not served to the supplier, genuineness of

the purchases cannot be doubted.

quarterly stock record from the Office of Collector, Nashik which includes

alleged Hawala purchases, copies of the ledger extract of the alleged Hawala

dealers, purchase invoice, way bill receipts, proof of transportation and copies

of bank statements showing payment to the supplier by account payee

cheque/demand draft. It is not the case of Revenue that the money paid by the

assessee through banking channels has flown back to the assessee. The

assessee has been able to show trail of goods purchased. In view of the

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undisputed facts of the case as discussed above, no cloud of suspicion should

be raised with respect to the purchase of goods.

working of gross profit percentage in the normal course of business as well as

after adding the alleged bogus purchases. The gross profit ratio after making

additions of the entire bogus purchases has resulted in absurd figures of gross

profit. After taking into consideration entire vital facts, we are of opinion that

assessee has been able to establish trail of goods. The assessee has furnished

before the Authorities below original purchase invoice, proof of transportation,

way bill receipts, details of payments made to suppliers through banking

channels, receipt of goods and recording of the same in Stock Register coupled

with the facts that no suspicion has been raised by Assessing Officer on the

sale of goods, we do not find any infirmity in the order of Commissioner of

Income Tax (Appeal). Accordingly, the impugned order is upheld and appeals

of the Revenue are dismissed being devoid of any merit.

2011-12 are dismissed.

Order pronounced on Friday, the 28th day of September, 2018.

Sd/- Sd/- (अ�नल चतुव�द� / Anil Chaturvedi) (�वकास अव�थी / Vikas Awasthy) लेखा सद�य / ACCOUNTANT MEMBER �या�यक सद�य / JUDICIAL MEMBER

पुणे / Pune; �दनांक / Dated : 28th September, 2018 SB

8 ITA Nos. 1969 to 1971/PUN/2016

आदेश क� ��त�ल�प अ�े�षत / Copy of the Order forwarded to :

अपीलाथ� / The Appellant. 1. ��यथ� / The Respondent. 2. आयकर आयु�त (अपील) / The CIT(A)-2, Nashik 3. �धान आयकर आयु�त / The Pr. CIT-2, Nashik 4. �वभागीय ��त�न�ध, आयकर अपील�य अ�धकरण, “बी” ब�च, 5. पुणे / DR, ITAT, “B” Bench, Pune. गाड� फ़ाइल / Guard File. 6.

//स�या�पत ��त // True Copy// आदेशानुसार / BY ORDER,

�नजी स�चव / Private Secretary, आयकर अपील�य अ�धकरण, पुणे / ITAT, Pune.