Loading judgment…
No AI summary yet for this case.
Income Tax Appellate Tribunal, ‘F’ BENCH, MUMBAI
Before: SHRI B.R BASKARAN,AM & SHRI RAVISH SOOD, JM
आदेश / O R D E R
PER RAVISH SOOD, JUDICIAL MEMBER:
The present appeal filed by the revenue is directed against the order passed by the CIT(A)-3, Mumbai, which in itself arises from the assessment order passed by the A.O under Sec. 144 r.w.s 147 of the Income-tax Act, 1961 (for short ‘Act’), dated. 11.07.2014. The revenue has assailed before us the order of the CIT(A) by raising the following grounds of appeal:
ACIT Vs. Vinod Hariram Narsinghani “1. On the facts and in the circumstances of the case and in law, the ld. CIT(A)-3, Than erred in deleting the addition of Rs. 2,75,28,640/- out of the total addition of Rs. 5,37,86,630/- made on account of bogus purchases, despite holding that the purchases were not genuine and the assessee failed to prove genuineness of the transactions.
2. On the facts and in the circumstances of the case and in law Ld. CIT(A) -3. Thane erred in deleting the above addition despite the fact that the assessee failed to discharge his onus of proving the purchases.
3. The appellant prays that the order of the Ld. CIT(A)-3, Thane, may be set aside and that of the Assessing officer be restored.
4. The appellant craves to add, amend or alter or alter any ground/grounds, which may be necessary.”
Briefly stated, the facts of the case are that the assessee who is engaged in the business of trading in L.D.O and furnace oil had filed his return of income for A.Y. 2009-10 on 30.09.2009, declaring total income of Rs. 1,37,57,990/-. The return of income filed by the assessee was processed as such u/s 143(1) of the ‘Act’.
That from the information received by the A.O from the Sales Tax Department, Maharashtra, it was gathered that the assessee had taken bogus purchase bills of Rs. 42,42,97,705/- from certain accommodation entry providers in the period relevant to A.Y. 2009-10 to A.Y. 2011-12. The details of the bogus purchase bills taken by the assessee during the year under consideration was as under:
S. No. Name of the entry provider Bill Amount 1. Kotsons Impex Pvt. Ltd. Rs. 4,00,28,638/- That on the basis of the aforesaid information a survey action was conducted by the ADIT(Inv.), Kalyan at the office premises of the assessee, viz. M/s Pure Lubes at Kalyan-Amernath Road, Opp. State Bank of India, Ulhasnagar. The assessee during the course of the survey proceedings admitted that no genuine purchases of the goods ACIT Vs. Vinod Hariram Narsinghani under consideration was made by him from the hawala dealers. The A.O on the basis of the aforesaid facts reopened the case of the assessee and issued a notice under Sec.
The assessee in compliance to the notice under Sec. 148 filed his return of income declaring total income of Rs. 2,62,57,988/-. That as the assessee despite having been afforded sufficient opportunities failed to attend the assessment proceedings, therefore, the A.O resorted to framing of a best judgment assessment under Sec. 144 of the ‘Act’.
The A.O during the course of the assessment proceedings observed that during the course of the survey proceedings it had emerged that the assessee had in A.Ys. 2009-10 to 2011-12 made bogus purchases to the extent of Rs. 42,42,97,705/- from various hawala parties. The A.O observed that as per the information gathered during the course of the survey action it was revealed that out of the total bogus purchases of Rs. 42.43 crore (aprox) made by the assessee during the period spread over A.Y. 2009-10 to A.Y. 2011-12, bogus purchases to the extent of Rs. 4,00,28,638/- made by the assessee from M/s Kotsons Impex Pvt. Ltd. pertained to the year under consideration, i.e A.Y. 2009-10. The assessee in his statement recorded under Sec. 131 admitted that the purchases of goods aggregating to Rs. 42.43 crore were actually made by him from the Open/grey market, and he had only in order to facilitate routing of the said purchase transactions through his books of account had procured bogus bills from the accommodation entry providers. The assessee further submitted that it had made purchases of the goods from the Open/grey market to meet the needs of the customers due to scarcity of goods at BPCL and HPCL depots. The assessee further stated that by purchasing the goods from the Open/grey market saved on the VAT liability which varied from 4% to 12.5%. The assessee
ACIT Vs. Vinod Hariram Narsinghani Open/grey market, he would also enjoy enhanced profit margin of 4% to 5%. The assessee in the backdrop of the additional profit which he was generating from making of purchases from the Open/grey market, therefore, came up with a disclosure of an additional income of Rs. 11.15 crores for A.Ys 2009-10, 2010-11 and 2011-12, bifurcated details of which is as under:-
A.Y Total accommodation Additional income disclosed bills taken 2009-10 Rs. 4,00,28,638/- Rs. 1,25,00,000/- 2010-11 Rs. 16,91,27,381/- Rs. 4,50,00,000/- 2011-12 Rs. 21,51,41,686/- Rs. 5,40,00,000/- Total Rs. 42,42,97,705/- Rs. 11,15,00,000/- Thus, on the basis of the aforesaid disclosure the assessee offered an additional income of Rs. 1,25,00,000/- for the year under consideration.
However, the A.O did not accept the additional income of Rs. 1,25,00,000/- offered by the assessee and declined to restrict the additional income pertaining to the bogus purchases of Rs. 4,00,28,638/- made by the assessee during the year under consideration to the said extent, for the following reasons:
(i). The assessee had failed to place on record supporting documents which could go to substantiate his claim that he had made purchases of the goods from the Open/grey market.
ACIT Vs. Vinod Hariram Narsinghani (ii). The assessee had failed to place on record the details about the brokers through whom the purchases were made from the Open/grey market.
(iii). The assessee had neither furnished the details of the undisclosed suppliers from whom purchases were made from the Open/grey market, nor placed on record any evidence which could go to evidence that the purchases were made on credit, failing which it could safely be concluded that the assessee had purchased the goods in cash.
(iv). That as the hawala parties in their statements recorded by the Sale tax authorities had admitted that they had not supplied any goods and whatever payments were received from the parties were returned in cash after deducting commission, therefore, it could safely be concluded that the assessee had made cash purchases from the Open/grey market, which thus was liable to be disallowed under Sec. 40A(3) of the ‘Act’.
(v). That as the assessee had failed to discharge the primary onus that it had actually purchased the goods under consideration, therefore, it could safely be concluded that the assessee in the garb of the purchases claimed to have been made from the aforementioned hawala parties, had actually brought his own unaccounted stock in the books of accounts.
The A.O on the basis of his aforesaid observations concluded that as the assessee had failed to place on record the details of parties from whom and how the purchases were made by him, therefore, in the absence of the requisite details the entire amount of purchase consideration of Rs. 4,00,28,638/- was liable to be disallowed under Sec. 40A(3) or Sec. 69C of the ‘Act’. The A.O afforded another
ACIT Vs. Vinod Hariram Narsinghani opportunity to the assessee to explain the genuineness of the purchases under consideration by placing on record supporting documentary evidences, but the assessee failed to avail the said opportunity and did not came up with any explanation, therefore, the A.O being guided by his aforesaid conviction disallowed the entire purchases of Rs. 4,00,28,638/- and made an addition to the said extent in the hands of the assessee.
6. Aggrieved, the assessee carried the matter in appeal before the CIT(A). The assessee in order to fortify the genuineness of purchases of the goods under consideration, therein tried to drive force from the fact that as the Gross profit rate and the Net profit rate for the year under consideration were quite reasonable as against those of the preceding years, therefore, the genuineness and veracity of the purchase of goods under consideration could not be doubted. The assessee further in order to drive home his aforesaid contention and prove that the goods had actually been purchased by him, therein submitted that the quantitative details of the purchases claimed to have been made from the aforesaid hawala party, viz. M/s Kotsons Impex Pvt. Ltd had been correlated as against the duly recorded sale transactions. It was thus submitted by the assessee that the aforesaid facts proved that the goods under consideration had actually been purchased by him. The assessee further averred before the CIT(A) that he had in his return of income filed in compliance to notice under Sec. 148 offered an additional income of Rs. 1,25,00,000/- towards the profit made from purchasing the goods under consideration from the Open/grey market. The assessee submitted before the CIT(A) that for A.Y 2011-12 he had approached the Settlement Commission, which had agreed for additional income of Rs. 5,40,00,000/- on the total accommodation bills of Rs. 25,51,41,686/-. The assessee further
ACIT Vs. Vinod Hariram Narsinghani A.Y. 2010-11, the department had in the assessment framed under Sec. 143(3) accepted the additional income of Rs. 4,51,41,770/- on the total accommodation bills of Rs. 16,91,27,381/-. Thus, taking support of the aforesaid facts it was submitted by the assessee that now when during the year under consideration he had offered an additional income of Rs. 1,25,00,000/- on the total accommodation bills of Rs. 4,00,28,638/-, which worked out to more than 30%., therefore no further addition on the said count was called for in his hands. The CIT(A) after deliberating at length on the aforesaid submissions of the assessee therein did find favour with the same and accepting the additional income of Rs. 1,25,00,000/- offered by the assessee in addition to the regular returned income of Rs. 1,37,57,990/-, therein allowed the appeal of the assessee.
The revenue being aggrieved with the order of the CIT(A) had carried the matter in appeal before us. The ld. Authorised representative (for short ‘A.R’) for the assessee Sh. K. Gopal submitted that the assessee had made the purchases of the goods, though not from the hawala parties, but from the Open/grey market. It was averred by the ld. A.R that the assessee in order to facilitate routing of the aforesaid purchases through his books of accounts had procured bills from the aforementioned parties. The ld. A.R submitted that now when the duly recorded sales of the goods claimed to have been purchased by the assessee from the hawala parties have not been doubted, therefore, there was no reason to make an addition/disallowance of the entire purchase consideration of the said goods in the hands of the assessee. The ld. A.R in order to drive home his contention that the assessee had purchased the goods from the Open/grey market and had only obtained bills from the ACIT Vs. Vinod Hariram Narsinghani Sec. 131 during the course of survey proceedings conducted on 04.02.2013. The ld. A.R drew our attention to Q.No. 9 at Page 4 of the statement, wherein the assessee in his reply had clearly stated that it had purchased the goods from the Open/grey market and had only obtained the requisite bills from the aforementioned hawala dealers. The ld. A.R further took us through Page 11-29 of his ‘Paper book’ (for short ‘APB’), wherein the complete chart correlating the purchases of Rs. 4,00,28,638/- made by the assessee from M/s Kotsons Impex Pvt. Ltd, had on bill/transaction wise basis had been correlated by the assessee with the corresponding sales that stood recorded in his books of account for the year under consideration. Thus, in the backdrop of the aforesaid facts it was averred by Shri K. Gopal, the ld. A.R, that now when the assessee had offered an additional income of Rs. 1,25,00,000/- on the total accommodation bills of Rs. 4,00,28,638/-, therefore, no further addition was called for in the hands of the assessee. Per Contra, the ld. Departmental representative relied on the order of the A.O.
We have heard the authorised representatives for both the parties, perused the orders of the lower authorities and the material available on record. We have given a thoughtful consideration to the facts of the case and find substantial force in the contentions raised by Mr. K. Gopal, the ld. A.R for the assessee. We find ourselves to be in agreement with the view taken by the A.O that the assessee had not purchased the goods from the aforesaid hawala dealer, viz. M/s Kotsons Impex P. Ltd. However, in the backdrop of the fact that the sales had not been doubted by the assessee, therefore, it can safely be concluded that the same were purchased by the assessee from unidentified parties operating in the Open/grey market. We have ACIT Vs. Vinod Hariram Narsinghani perused the statement of the assessee recorded during the course of the survey proceedings and find that he had right from inception claimed that the goods under consideration were purchased from the Open/grey market, and he had only to facilitate routing of the purchase transactions through his books of account, procured bogus bills from the hawala parties. We are of the considered view that the said claim of the assessee cannot be characterised as an eye wash, as we find that the corresponding sales of the goods under consideration had duly been accepted by the A.O. We are persuaded to be in agreement with the view taken by the CIT(A) that now when the duly recorded sales of the goods under consideration had been accepted by the A.O, therefore, the addition in the hands of the assessee was liable to be restricted only to the extent of the profit involved in making of the purchases under consideration by the assessee from the Open/grey market. We have deliberated on the facts of he case and hold a strong conviction that the additional income of Rs. 1,25,00,000/- offered by the assessee in respect of the profit made on making of the purchases of the goods from the Open/hawala market, which works out to more than 30%, is also found to be fairly sufficient and would not call for any interference on our part. We are rather unable to comprehend that now when the revenue while framing the assessment under Sec. 143(3) in the case of the assessee for A.Y. 2010-11, wherein same facts were involved, had accepted the additional income of Rs. 4,51,41,770/- (i.e 26.69% of purchases) on the total accommodation bills of Rs. 16,91,27,381/- taken by the assessee during the said year, then, in the absence of any material which could have persuaded the A.O to conclude that the bogus purchases for the year under consideration were differently placed as against that of the succeeding year, viz. A.Y. 2010-11, there appears to be no logical reason for the A.O to have taken an inconsistent
ACIT Vs. Vinod Hariram Narsinghani Rs. 1,25,00,000/- (i.e 31.22% of purchases) which was offered by the assessee on the total accommodation bills of Rs. 4,00,28,638/- for the year under consideration. We thus, in the backdrop of our aforesaid observations are persuaded to be in agreement with the view taken by the CIT(A), and finding no reason to dislodge his view, therefore, uphold the same. The Grounds of appeal No. 1 to 4 raised by the revenue before us are dismissed.
The appeal of the revenue is dismissed.
Order pronounced in the open court on 08/11/2017.
Sd/- Sd/- (B.R BASKARAN) (RAVISH SOOD) Accountant Member Judicial Member भुंफई Mumbai;ददनांक 08.11.2017 आदेश की प्रनिलऱपि अग्रेपषि/Copy of the Order forwarded to : अऩीराथी / The Appellant 1. प्रत्मथी / The Respondent. 2. आमकय आमुक्त(अऩीर) / The CIT(A)- 3. आमकय आमुक्त / CIT 4. 5. ववबागीम प्रतततनधध, आमकय अऩीरीम अधधकयण, भुंफई / DR, ITAT, Mumbai 6. गार्ड पाईर / Guard file. सत्मावऩत प्रतत //True Copy// आदेशधिुसधर/ BY ORDER, उि/सहधयक िंजीकधर (Dy./Asstt. Registrar) आयकर अिीऱीय अधर्करण, भुंफई / ITAT, Mumbai.
ACIT Vs. Vinod Hariram Narsinghani