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Income Tax Appellate Tribunal, MUMBAI BENCHES “H”, MUMBAI
Before: Shri Joginder Singh, & Shri Ramit Kochar
आदेश / O R D E R
Per Joginder Singh (Judicial Member) This bunch of five appeals is by the assessee as well as
Revenue against the impugned orders all dated 09/01/2017 of the Ld. First Appellate Authority, Mumbai.
During hearing, the ld. counsel for the assessee, claimed that for Assessment Year 2010-11, the Tribunal vide order dated 10/03/2017 adjudicated the issue and confirmed the addition @ 5% of the bogus purchases. It was explained that the assessee is in the business of manufacturing by explaining that the Ld. Assessing Officer made the addition at the rate of 100% against which the Ld. Commissioner of Income Tax (Appeal) took the peak balance plus 5% of the bogus purchases. The ld. counsel, on a questioning from Bench, fairly agreed that the assessee made purchases from Pioneer Trading Corporation along with other suppliers/parties. On the other hand, the Ld. DR, strongly contended that the assessee did not produce the parties from whom purchases were claimed to be made and even no stock register was produced by the assessee, therefore, the onus caste upon the assessee was never discharged. Plea was also raised that the assessee did not produce the supporting evidence before the Ld. Assessing Officer as the non-genuine nature of purchases was never explained by the assessee and the Ld. Commissioner of Income Tax (Appeal) ignored the factual finding recorded in the assessment order. At this stage, the Bench asked the assessee whether the assessee can produce the parties and the stock register. It was explained that the assessee is in a position to substantiate its claim and also can produce the parties.
2.1. We have considered the rival submissions and perused the material available on record. The facts, in brief, are that the assessee is in the business of manufacturing, fabrication galvanizing, erection and commission of telecom and transmission towers, declared income of `13,01,09380/- (Assessment Year 2009-10) on 30/09/2009, which was processed u/s 143(3) of the Act, assessing the total income at `15,88,60,760/- and book profit of ` 13,33,31,239/-.
Thereafter, the Ld. Assessing Officer received information from the DGIT(Inv.) and also from the Maharashtra Sales Tax Department that the assessee is beneficiary of accommodation bills of purchases from certain bogus hawala dealers, without actual delivery of goods. The name of such parties are mentioned in the impugned orders. The Ld. Assessing Officer reopened the assessment u/s 147/148 of the Act. The enquiries conducted by the Sales Tax Department and also the investigation wing of the Income Tax Department were sent to the assessee. The factum of purchase from the Hawala dealers was also refer to the assessee company vide notice u/s 142(1) of the Act and the assessee was asked to submit stock register, bill, invoices, bill of delivery of goods, transportation details, bank statements and other documentary evidences substantiating the genuineness of the purchases. The assessee was also asked to produce the Principal Officer of the alleged firms for examination from whom purchases were claimed to be made. The assessee did not comply with the notices. The Ld. Assessing Officer, in order to verify the genuineness of the purchases, issued notices u/s 133(6) of the Act, which were returned back unserved. Thus, as per the Revenue, the onus caste upon the assessee was not discharged by the assessee. The only claim made by the assessee was that the payments were made through banking channel. In such as situation, the Ld. Assessing Officer disallowed the purchases made from such parties and added to the total income, while calculating the books profit.
2.2. On appeal before the Ld. Commissioner of Income Tax (Appeal), so far as, reopening is concern, considering the various judicial pronouncements, reopening was upheld. So far as, making the addition with respect to bogus purchases, it was held that the assessee could not prove the genuineness of purchases. However, the First Appellate Authority again discussed various decisions and held that the assessee inflated the expenses by taking bogus bills of purchases from hawala dealers and reduced the disallowance to 20% of the bogus purchases. The Revenue is aggrieved and is in appeal before this Tribunal. The different assessee of the same group are also in appeal, confirming the addition of the respective amounts, being 20% of the total purchases on the basis of decision in the case of Poona Galvanizers Pvt. Ltd. (2016) wherein, the additions were restricted to 5% of the alleged bogus purchases. If the totality of facts and the factual matrix is considered, there are various decision in favour and against the assessee but certainly depends upon facts of each case. In the present cases, the assessees are manufacturers, who are expected to prove the consumption and are expected to produce the stock register for verification to the satisfaction of the Assessing Officer, which has not been done in the present appeals. The objections, leading to the additions, raised in the assessment order, were not considered by the Ld. Commissioner of Income Tax (Appeal), possibly were not brought to the notice of the First Appellate Authority.
Thus, without going into much deliberation, the assessee is directed to produce the stock register and other necessary evidences in support of its claim before the Ld. Assessing Officer. The assessee is also to prove the consumption of the claimed material. The Ld. Assessing Officer is directed to examine the claim of the assessee and after due opportunity of being heard decide in accordance with law. Since, the facts and the issues are identical, therefore, all the appeals of the assessee as well as of the Revenue are allowed for statistical purposes.
Finally, the appeals are allowed for statistical purposes.
This order was pronounced in the open court in the presence of the ld. representative from both sides at the conclusion of the hearing on 26/09/2017
Sd/- Sd/- (Ramit Kochar) (Joginder Singh) लेखा सद�य / ACCOUNTANT MEMBER �या�यक सद�य /JUDICIAL MEMBER मुंबई Mumbai; �दनांक Dated : 29/09/2017 f{x~{tÜ? P.S/.�न.स. आदेश क� ��त�ल�प अ�े�षत/Copy of the Order forwarded to : 1. अपीलाथ� / The Appellant 2. ��यथ� / The Respondent. 3. आयकर आयु�त(अपील) / The CIT, Mumbai. 4. आयकर आयु�त / CIT(A)- , Mumbai 5. �वभागीय ��त�न�ध, आयकर अपील�य अ�धकरण, मुंबई / DR, ITAT, Mumbai 6. गाड� फाईल / Guard file. आदेशानुसार/ BY ORDER, स�या�पत ��त //True Copy//