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Income Tax Appellate Tribunal, “SMC” BENCH, PUNE
Before: SHRI D. KARUNAKARA RAO, AM & SHRI VIKAS AWASTHY, JM
आदेश / ORDER
PER VIKAS AWASTHY, JM :
This appeal by the Revenue is directed against the order of Commissioner of Income Tax (Appeals)-2, Aurangabad dated 22-11-2016 for the assessment year 2011-12.
The brief facts of the case as emanating from records are : The assessee filed his return of income for the assessment year 2011-12 on 21-09-2011 declaring income of Rs.11,14,151/-. The return of income
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filed by the assessee was processed u/s. 143(1) of the Income Tax Act, 1961 (hereinafter referred to as “the Act”). Thereafter, on the basis of information received from Sales Tax Department, Maharashtra, assessment of the assessee for assessment year 2010-11 was reopened. In reassessment proceedings, the Assessing Officer observed that the assessee had made purchases to the tune of Rs.3,06,59,371/- from M/s. G.M. Traders one of the suspicious dealer whose name appeared in the list of Hawala operators. The assessee furnished various documents viz. original bills/vouchers for making purchases, Transport receipts, copies of bank statements, name, address, PAN, Ledger extract of the parties from whom the purchases were made to substantiate that the purchases made by the assessee are genuine. The Assessing Officer after considering the submissions of the assessee and documents on record made addition of 12% of the GP on purchases of Rs.3,06,59,371/-. The solitary reason given by the Assessing Officer for making the addition is that the GP in the immediately preceding assessment year was much higher (16%) as compared to the GP (7.93%) shown by the assessee in the assessment year under appeal.
Aggrieved by the assessment order dated 23-03-2015 passed u/s. 143(3) r.w.s. 147 of the Act, the assessee filed appeal before the Commissioner of Income Tax (Appeals). The Commissioner of Income Tax (Appeals) vide impugned order held that the entire purchases made by the assessee are genuine. The Assessing Officer has made addition merely on the basis of presumptions and thus, deleted the entire addition made on account of bogus purchases. Against the order of Commissioner of Income Tax (Appeals), the Revenue is in appeal before the Tribunal assailing the findings of First Appellate Authority by raising following grounds : “1. Whether Ld. CIT(A)-2, Aurangabad was right deleting the entire addition of Rs.36,79,125/- which was 12% of the total bogus purchase of Rs.3,06,59,371/-.
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Whether Ld. CIT(A)-2, Aurangabad was right in holding bogus purchases as genuine purchases despite the fact that no confirmation regarding purchase was ever received from M/s. G.M. Traders. 3. On the facts and circumstances of the case the appellant craves leave to add, amend or alter any ground of appeal.”
Shri Achal Sharma representing the Department submitted that the assessee has indulged in bogus purchases from Hawala Operators. The Assessing Officer after analyzing the documents furnished by the assessee was quite reasonable in making the addition of 12% of the bogus purchases. The ld. DR prayed for setting aside the order of Commissioner of Income Tax (Appeals) and restoring the findings of Assessing Officer.
On the other hand Shri Pramod Shingte appearing on behalf of the assessee vehemently defended the order of Commissioner of Income Tax (Appeals). The ld. AR submitted that during assessment proceedings, the assessee had furnished all relevant documents to show trail of goods. The assessee had made purchases from M/s. G.M. Traders and had supplied the same to M/s. Revati Enterprises. The Assessing Officer raised suspicion on the genuineness of delivery challans furnished by the assessee merely for the reason that registration number of the vehicle was not mentioned on the delivery challans. The ld. AR contended that registration number of the vehicle on delivery challan was to be mentioned by the supplier/transporter of the goods. In case the vehicle number is not mentioned on delivery challan the assessee cannot be faulted. The ld. AR submitted that the assessee had furnished confirmations from M/s. Revati Enterprises regarding purchase of goods from the assessee. The ld. AR referred to the confirmation at pages 66 and 67 of the paper book. The ld. AR submitted that the Assessing Officer accepted the sales declared by the assessee. Once, the sales have not been doubted there is no question of treating the purchases as non-genuine. As regards fall in GP in the
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assessment year under appeal the ld. AR submitted that the GP in the impugned assessment year has decreased because of difference in the products traded by the assessee. The ld. AR pointed that till assessment year 2010-11, the assessee was trading in books. From assessment year 2011-12 onwards the assessee diversified his business and started trading in lamination films and lamination solution gum. Since, the assessee started trading in new items there was change in the overall GP ratio. The ld. AR prayed for dismissing the appeal of Revenue and confirming the findings of Commissioner of Income Tax (Appeals).
We have heard the submissions made by representatives of rival sides and have perused the orders of authorities below. The solitary issue raised by the Revenue in appeal is against deleting the addition of Rs.36,79,125/- on account of alleged bogus purchases made by the assessee from M/s. G.M. Traders. It is an undisputed fact that the assessee during reassessment proceedings had furnished various documents which inter alia includes bills/vouchers, transport receipts, copies of bank statements, name, address, PAN, etc. to show that the assessee had made genuine purchases. The ld. AR of assessee has also drawn our attention to the stock register maintained by the assessee at page 74 of the paper book. During the course of reassessment proceedings, the Assessing Officer has not raised any doubt over the sales reflected by the assessee in its books. Once, the sales have been accepted there are bound to be purchases for affecting such sales. The Assessing Officer has not rejected the explanation of assessee qua the purchases in toto. The Assessing Officer after considering the documents on record estimated GP @ 12% on the alleged bogus purchases made by the assessee from Hawala Operators. The Assessing Officer failed to take note of the fact that the assessee has furnished the trail of goods and the confirmation
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from the parties to whom goods have been supplied by the assessee. Merely for the reason that there is fall in GP in the assessment year under appeal, the Assessing Officer cannot make addition without ascertaining the facts behind decline in GP. The Assessing Officer while making the addition has ignored vital facts. The Commissioner of Income Tax (Appeals) after considering the same has deleted the addition. We do not find any infirmity in the order of Commissioner of Income Tax (Appeals) and concur with the same. Accordingly, the findings of Commissioner of Income Tax (Appeals) are confirmed and the appeal of Revenue is dismissed being devoid of any merit.
In the result, the appeal of Revenue is dismissed.
Order pronounced on Monday, the 17th day of September, 2018.
Sd/- Sd/- (डी. करुणाकरा राव/D. Karunakara Rao) (ववकास अवस्थी / Vikas Awasthy) ऱेखा सदस्य / ACCOUNTANT MEMBER न्याययक सदस्य / JUDICIAL MEMBER ऩुणे / Pune; ददनाांक / Dated : 17th September, 2018 RK आदेश की प्रयिलऱवऩ अग्रेवषि / Copy of the Order forwarded to : अऩीऱाथी / The Appellant. 1. प्रत्यथी / The Respondent. 2. आयकर आयुक्त (अऩीऱ) / The CIT(A)-2, Aurangabad 3. 4. The Pr. Commissioner of Income Tax-2, Aurangabad ववभागीय प्रयतयनधध, आयकर अऩीऱीय अधधकरण, “एक-सदस्य मामऱा” बेंच, 5. ऩुणे / DR, ITAT, “SMC” Bench, Pune. गाडड फ़ाइऱ / Guard File. 6. //सत्यावऩत प्रयत // True Copy// आदेशानुसार / BY ORDER,
यनजी सधचव / Private Secretary, आयकर अऩीऱीय अधधकरण, ऩुणे / ITAT, Pune