M/S. TALOJA WAREHOUSE,,PANVEL vs. INCOME TAX OFFICER,,

The assessee has raised the following grounds of appeal:- 1. On the facts and in the circumstances of the case and in law the learned Commissioner of Income Tax (Appeals)-II, Thane erred in confirming the addition of Rs.21,28,445/- being made on estimated basis in treating the genuine purchases of Rs.1,70,27,565/- as non- genuine/bogus purchases from the parties on the basis of information has been received from Sales Tax Department that such parties are “Suspicious Dealers” Provisions of the Act ought to have been properly construed and regard being had to facts of the case no such additions to be made. Reasons assigned by him are wrong and insufficient to justify the additions. 2. The order made under section 143(3) r.w.s. 147 of the Act by the learned Assessing Officer is bad-in-law, ultra virus and without appreciating the facts, submission made and law in their proper perspective and is liable to be annulled.

The issue raised in the present appeal is against addition made on account of alleged bogus purchases. The addition has been confirmed at ₹ 21,28,445/-. The assessee is aggrieved by the orders of authorities below in treating genuine purchases of ₹ 1.70 crores as non-genuine / bogus purchases from the parties on the basis of information received from Sales Tax Department.

Briefly, in the facts of the case, the assessee was trader of Iron Steel scrap. The assessee had made purchases from one M/s. Haitvi Steel Traders Pvt. Ltd. The total purchases made from the said party were ₹ 1.70 crores. The Sales Tax Department, Maharashtra had conducted certain investigations and had unearthed fraudulent racket of certain parties issuing bogus bills without actual delivery of goods and non-payment of VAT. The said parties were listed as hawala dealers. Further, information was also collected in respect of persons who had availed the services of alleged hawala dealers. Information was passed on to the Income Tax Department, which in turn, initiated proceedings under section 147/148 of the Act against beneficiaries of purchases made from hawala dealers. The assessee was alleged to have

The CIT(A) has upheld the aforesaid addition in the hands of assessee. The CIT(A) also upheld re-assessment proceedings initiated under section 147/148 of the Act.

The assessee is in appeal against both the counts.

The first issue raised by the assessee is against merits of addition. Second ground of appeal raised by the assessee is against initiation of re- assessment proceedings. The learned Authorized Representative for the assessee during the course of hearing did not press the ground of appeal No.2. In respect of issue on merits, it was pointed out that the assessee had maintained stock statement, wherein purchases were made from one concern

The learned Departmental Representative for the Revenue on the other hand, placing reliance on the orders of authorities below, placed special reliance on para 4.5 of assessment order and pointed out that the assessee has failed to file delivery challans, lorry receipts, etc.

On perusal of record and after hearing both the learned Authorized Representatives, the issue which arises in the present appeal is against the addition made on account of purchases made by the assessee. The Assessing Officer had received information from the Sales Tax Department in respect of alleged hawala dealers, who had sold the goods without delivery of said goods. The Assessing Officer on the basis of said information received from the Sales Tax Department, asked the assessee to explain purchases of ₹ 1.70 crores. The explanation of assessee in this regard was that it had made said purchases from the said party in the month of January, 2010 and had sold the goods to one party itself i.e. B. Vrajlal & Co. in the month of February, 2010. The assessee has furnished before the Tribunal the reconciliation of goods, quantitative purchases and quantity sold and has pointed out that sales made by the assessee have been accepted. The second plea of learned Authorized Representative for the assessee was that payment to M/s. Haitvi Steel Traders Pvt. Ltd. was made only on the receipt of payment from the person to whom

The ground of appeal No.2 raised by the assessee is not pressed and hence, the same is dismissed as not pressed.

In the result, appeal of assessee is partly allowed.