Loading judgment…
No AI summary yet for this case.
Income Tax Appellate Tribunal, “E”
Before: SHRI R. C. SHARMA, AM & SHRI SANDEEP GOSAIN, JM
आदेश / O R D E R
Per Sandeep Gosain, Judicial Member:
The present Appeal filed by the assessee is against the order of Commissioner of Income Tax (Appeals)-17, Mumbai dated 02.01.17 for AY 2012-13 on the grounds mentioned herein below:-
Omkar Speciality Chemicals Ltd. 1. The Ld.CIT(A) has erred in partly disallowing purchase from hawala dealers to the tune of 25% of Rs. 87,41,378/-(i.e. Rs. 21,85,345/- approx.)
2. The Ld. CIT(A) has erred in holding that assessee has initiated its expenses by taking bogus bills of purchases from hawala dealers and applying Ration of 25% ad hoc disallowance. The appellant craves leave to add, amend, supplement, alter and or delete any of the above grounds of appeal..
At the very outset, it is noticed that none has appeared on behalf of assessee in spite of several calls and even no application for adjournment was moved. On the other hand Ld. DR is present in the court and is ready with arguments. Therefore we have decided to proceed with the hearing of the case ex-parte with the assistance of the Ld. DR and the material placed on record.
As per the facts of the present case, the assessee is engaged in the business of manufacturing and selling of chemicals. The assessee filed its return of income for AY 2012-13 on 27.09.12
Omkar Speciality Chemicals Ltd. declaring total income of Rs. 18,90,46,750/-. The said return was processed u/s 143(3). Subsequently, the AO received information that the assessee indulged in the acceptance of bogus purchase from hawala entries and after recording reasons for reopening, the case was reopened for the year under consideration. Since it was found that assessee had made bogus purchases and after serving statutory notices and considering the facts as well as legal proposition, AO made additions. Aggrieved by the order of AO, assessee preferred appeal before Ld. CIT(A) and Ld. CIT(A) after considering the case of both the parties partly allowed the appeal of the assessee. Now before us, the assessee has preferred the appeal by raising the above grounds.
Ground No. 1 to 2. 4. Since both the above grounds raised by the assessee are inter connected and inter related and relates to challenging the order of Ld. CIT(A) in deleting the disallowance made by AO on account of bogus purchase by the assessee, therefore we thought it fit to dispose of the same thorough this common order.
Omkar Speciality Chemicals Ltd.
We have heard Ld. DR and we have also perused the material placed on record as well as the orders passed by revenue authorities. Before we decide the merits of the case, it is necessary to evaluate the orders passed by Ld. CIT(A). The Ld. CIT(A) has dealt with the above grounds raised by the assessee in para no. 4 to 11 of its order. The operative portion of the order of Ld. CIT(A) is contained in para no. 9 to 11 of its order and the same is reproduced below:- Conclusion on case laws: The net conclusion that can be arrived at from the above discussion is that where the sales and purchases are verifiable and proven e.g. to or from government bodies or agencies etc no addition may be made. if however, the purchases are bogus but the direct sales are proved, the assumptions are that the purchases were made from unknown parties and the AO can apply a profit rate to determine the liability of the assessee It is also seen that putting an onus on the AO to trace the money trail or verify the withdrawals from the banks etc may give more pointers but it is not sufficient by itself and the ITAT has not accepted such an argument in the case of Sriri Ganpatraj A Sanghavi (supra). If the bogus purchases are unproved and are declared consumed by assessee itself in its trading, manufacturing or non-trading activities, the entire addition
Omkar Speciality Chemicals Ltd. can be made as it only goes to inflate the expenses of the assessee. (refer M/s. Shoreline Hotel Pvt. Ltd s. CIT Central-I in dated 19.06.2015). 10, In view of the above discussion it is seen that the assessee is unable to substantiate its purchases from the claim suppliers who had already established hawala dealers by the Sales Tax Department (Government of Maharashtra) and Investigation Wing of the Income Tax Department. The suppliers were neither produced during the assessment proceedings nor during appellate proceedings when opportunity was so provided. The consumption pattern was also not proved nor even the confirmation from the suppliers have been filed. However, as held in various case laws discussed above, the addition of entire purchases is not justified What is important to find out is the entire benefit derived by the assessee company by using such accommodation entries and actually using the goods from the grey market in this case, the book value shown by the assessee company cannot be relied and deserves to be rejected and reasonable profit out of such purchases needs to be estimated, Therefore it is held that the assessee has inflated its expenses by taking bogus bills of purchases from the hawaia dealers. Going by the ratio of various case laws particularly the discussion and finding of Hon'ble Gujarat High Court in case of Vijay Protein (Supra) 25% of the purchases claimed from hawala dealers i.e. 25% of R5.87,41,3781- Is disallowed. The AO is directed to restrict the disallowance accordingly.
Omkar Speciality Chemicals Ltd. 11. Thus the appeal filed by the assessee company is Partly Allowed u/s. 250 read with section 251 of Income tax Act, 1961.
After having gone through the facts of the present case as well as considering the orders passed by revenue authorities and submissions made by Ld. DR, we find that Ld. CIT(A) after considering the facts as well as legal proposition had rightly concluded that in the present case that the alleged suppliers were neither produced during the assessment proceeding nor during appellate proceedings when opportunity was so provided. In addition it was also pointed out that the assessee could not prove the consumption pattern and even the confirmation from the suppliers have not been filed. Therefore, Ld. CIT(A) rightly held that the assessee has inflated its expenses by taking bogus bills of purchases from hawala dealers. Moreover, no new facts or contrary judgments have been brought on record before us in order to controvert or rebut the findings so recorded by Ld CIT (A). Therefore, there are no reasons for us to interfere into or deviate from the findings recorded by the Ld. CIT (A). Hence, we are of the considered
Omkar Speciality Chemicals Ltd. view that the findings so recorded by the Ld. CIT (A) are judicious and are well reasoned. Resultantly, these ground raised by the assessee stands dismissed.
7. In the net result, the appeal filed by the assessee stands dismissed. Order pronounced in the open court on 29th November 2017 Sd/- Sd/- (R.C. Sharma) (Sandeep Gosain) लेखासदस्य / Accountant Member न्याययकसदस्य / Judicial Member मुंबई Mumbai;यदनांकDated : 29.11.2017 Sr.PS. Dhananjay