ASST CIT 17(1), MUMBAI vs. GOLANI BROTHERS, MUMBAI

आदेश / O R D E R

PER RAVISH SOOD, JUDICIAL MEMBER

P a g e | M/s Golani Brothers Vs. ACIT the order of the CIT(A) had raised before us the following grounds of appeal:-

“1. On the facts and circumstances of the case and in law, the learned CIT(A) has erred in holding that the disclosure on the part of the assessee was not on account of bogus purchases but to take care of discrepancies in such purchases and in further directing to delete the disallowance of Rs. 40,96,158/- being 50% of such purchases from M/s Thane Steel which were held to be bogus in the assessment order in addition to the amount of bogus purchases surrendered by the assessee during the course of survey action on 19.03.2013, without appreciating the facts that:- (i) During the course of assessment proceedings, the assessee failed to discharge its onus of proving the genuineness of the so called purchases from M/s Thane Steel, in that the assessee could not produce the test certificates, delivery challans, purchase orders, details of stock purchases consumption, and receipt /despatch of material purchased record of consumption, etc in respect of its so-called purchases made from M/s Thane Steels to substantiate its claim of the said purchase. (ii) The said vendor party viz. M/s Thane Steel in their statement recorded on oath have unambiguously admitted to the fact that they are indulging in providing accommodation entries in the form of bogus purchase bills without affecting any delivery of goods. (iii) The Hon'ble Delhi High Court in the case of CIT vs. La Medica, 250 ITR 575, has held that in similar circumstances, the bogus purchase are to be disallowed in their entirely. As such the disallowance of the bogus purchases made from M/s Thane Steels should have been upheld in its entirety by the Ld. CIT(A).

2. On the facts and circumstances of the case, the order of Id. CIT(A) is perverse and deserves to be cancelled.

3. The appellant prays that the order of the A.O should be restored and order of the Ld. CIT(A) should be set aside.

4. The appellant craves leave to amend or alter any ground or add a new ground which may be necessary.”

P a g e | M/s Golani Brothers Vs. ACIT The case of the assessee was thereafter selected for scrutiny assessment u/s. 143(2).

P a g e | M/s Golani Brothers Vs. ACIT submitted that though all its purchases were genuine, but however, in order to avoid litigation and buy peace of mind it had offered 50% of the purchases made from M/s Thane Steel Pvt. Ltd., amounting to Rs. 40,96,157/- as income in the revised return of income. However, the assessee failed to produce the entire documentary evidence as were called for by the A.O to support the genuineness of the purchase transactions.

P a g e | M/s Golani Brothers Vs. ACIT being aggrieved with the order of the A.O carried the matter in appeal before the CIT(A). The CIT(A) deliberating on the contention of the assessee in the backdrop of the facts of the case observed that the partner of the assessee firm, viz. Shri Kishore Golani whose statement was recorded on 19.03.2013 was an engineer who was earlier looking after the technical aspects of the construction business of the assessee firm. It was observed by the CIT(A) that purchases and procurement of goods by the assessee firm were earlier being looked after by the founder partner of the assessee firm, viz. Shri N.D. Golani, who however expired on 17.02.2011, and thereafter the said purchase and procurement of goods remained under the supervision of Shri. B.D. Golani, who too passed away on 18.09.2011. The CIT(A) observed that Shri Kishore Golani who though was initially looking after the execution of the project work, however, in the backdrop of the aforesaid compelling circumstances was also looking after the purchase and procurement of goods by the assessee firm at the relevant point of time when his statement was recorded on 19.03.2013. The CIT(A) further observed that though the assessee had during the course of the assessment proceedings filed confirmation of account, tax invoice receipts from M/s Thane Steel Pvt. ltd and the copy of the stock extract, however, the A.O disallowed the entire purchases on the ground that the provider of accommodation bills of M/s Thane steels Pvt. Ltd. Hhad in his statement recorded on oath, had stated that only accommodation bills were provided to the assessee firm and no genuine transactions were carried out with the assessee firm. It was observed by the CIT(A) that as Shri Kishore Golani, the partner of the assessee firm had observed that there were certain discrepancies in respect of the documents pertaining to purchases made from M/s Thane Steel Pvt. Ltd., he thus for the said reason had offered 50% of purchases made from the said concern as P a g e | M/s Golani Brothers Vs. ACIT the additional income of the assessee firm for the year under consideration.

AY Section Addition revised Assessed at income 2007-08 143(3) rws 147 6211414 19674254 (total 19674259) 2008-09 143(3)rws 147 1302706 31958666 (total 31958666) 2009-10 143(3)rws 147 7096833 - (total 18159804) 2010-11 143(3) rws. 147 9342548 22947180 (total 22947180)

That in the backdrop of the aforesaid facts, it was submitted by the ld. A.R that it was not permissible on the part of the A.O to have accepted the claim of the assessee and restricted the disallowance of purchases at 50% of the purchases made from M/s Thane Steel Pvt. Ltd. in A.Y: 2007-08 to AY: 2010-11, while for on the basis of the same set of facts and circumstances therein adverted to an absolutely inconsistent view and disallowed the entire purchases made by the assessee firm from the said party during the year under consideration. It was submitted by the assessee that it had came up with the offer of the additional income in respect of the purchases made from M/s Thane Steel Pvt.

P a g e | M/s Golani Brothers Vs. ACIT Ltd., not because the purchases were not genuine, but for the reason that there were discrepancies in respect of the documents pertaining to the said purchase transactions. It was further submitted that the statement of M/s Thane Steel Pvt. Ltd. which was strongly relied upon by the A.O was never provided to the assessee.

P a g e | M/s Golani Brothers Vs. ACIT 9. We have heard the authorized representatives of 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 are of the considered view that it remains as a matter of fact that the partner of the assessee firm, viz. Shri Kishore Golani was an engineer looking after the construction business of the assessee concern, and it was only pursuant to the unfortunate consecutive deaths of his uncles S/Sh. N.D. Golani and B.D. Golani in the year 2011, that he was thereafter looking after the purchase and procurement of goods by the assessee firm. We have deliberated on the facts available on record and are of the considered view that the assessee firm had offered 50% of the purchases made from M/s Thane Steel Pvt. Ltd., for the reason that there were certain discrepancies in the documents pertaining to the purchase transactions. We find that no conclusive and clinching evidence had been placed on record by the revenue to establish that the purchases made by the assessee in itself were found to be bogus beyond doubt, or that the goods claimed by the assessee to have been purchased from the said concern had not been consumed in the business of the assessee firm. We had further observed that Shri. Kishore Golani (supra) had in his statement also offered for disallowance 50% of the purchases for certain other years in the hands of the assessee firm, viz. A.Y. 2007-08 to AY: 2010-11, which thereafter had been accepted by the department in the respective assessments framed u/s 147 r.w.s 143(3). We find it beyond our comprehension that now when under the same set of facts and circumstances the A.O had accepted the statement of the assessee and restricted the disallowance of purchases made by the assessee from M/s Thane Steel Pvt. Ltd. to 50%, then how a different approach could have been adopted and the disallowance of the entire purchases made from the said concern during the year under consideration could

P a g e | M/s Golani Brothers Vs. ACIT be justified. We further find that a coordinate bench of the Tribunal, viz. ITAT ‘G’ bench, Mumbai, vide its order dated 21.10.2016, passed in to 4596/Mum/2016, pertaining to A.Y. 2007-08 to AY: 2010-11 while disposing of the aforesaid appeals of the assessee in respect of penalty imposed u/s. 271(1)(c), had in the said respective orders categorically observed that the assessee had not offered the additional income in respect of the purchases made from M/s Thane Steel Pvt. Ltd., not for the reason that the same were irrebutably proved to be bogus transactions, but only for the reason that there were certain discrepancies in the documentation pertaining to the purchases made by the assessee from the said supplier party, which the partner of the assessee firm, viz. Shri. Kishore Golani not being conversant with, had thus offered as the income of the assessee firm in order to purchase peace of mind and avoid litigation.

P a g e | M/s Golani Brothers Vs. ACIT

Order pronounced in the open court on 15.09.2017