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Income Tax Appellate Tribunal, “H”, BENCH MUMBAI
Before: SHRI R.C.SHARMA, AM & SHRI RAVISH SOOD, JM
आदेश / O R D E R PER R.C.SHARMA (A.M):
These cross appeals are filed by the assessee and revenue against the order of CIT(A)-1, Thane dated 29/05/2015 for the A.Y.2010-11 in the matter of order passed u/s.143(3) r.w.s.147 of the IT Act. 2. The following grounds have been taken by the assessee:-
4551/Mum/2015 Haresh A Rohra 1. On the facts and circumstances of the case and in law, the CIT(A) erred in partially upholding the action of the AO in making an addition of Rs.51 ,08,901/- u/s 69C of the Act being alleged bogus purchases from alleged hawala dealers by confirming the same at 25% of the original addition amounting to Rs.12,77,226/-. 2 On the facts and circumstances of the case and in law, the CIT(A) erred in confirming the chargeability of Interest u/s 234A, 234B & 234C.
The following grounds have been taken by the revenue:- 1.1 Whether on the facts and in the circumstances of the case, and in law, the Hon'ble CIT(A) erred in not confirming addition at 100% of bogus purchases of Rs.51,08,901/- out of total purchases of Rs. 1,49,41,933/- despite holding that the purchases of Rs. 51,08,901/- were not genuine and the assessee failed to prove the genuineness of the transactions even after giving ample opportunities. 1.2 Whether on the facts and in the circumstances of the case, and in law, the Hon'ble CIT(A) erred in deleting the above addition despite the fact that the assessee failed to discharge his onus of proving the purchases. 1.3 Whether on the facts and in the circumstances of the case, and in law, the Hon'ble CIT(A) erred in deleting the above addition despite the fact that the assessee failed to even furnish quantitative tally of the stock as stated by CIT(A) in para 5 of his order.
2. The order of the CIT(A) may be vacated and that of the Assessing Officer may be restored.
4. Rival contentions have been heard and record perused.
5. Facts in brief are that the assessee is a proprietor of M/s. Mahavir Corporation and engaged in the business of manufacturer, importer, and exporter of all types of bearings. Information was received by the Assessing Officer that few of the parties, from whom the assessee had purchased the material / goods, were suspicious. This information was 4551/Mum/2015 Haresh A Rohra received from the Sales Tax Department, which had declared in public domain that these parties were mere „hawala‟ givers. Sales Tax Department also claimed that these parties had stated on oath before them that they have merely provided entries to the beneficiaries and no goods were actually delivered by them. The AO, therefore, concluded that the assessee had suppressed the income to the extent of Rs.51,08,901/-, by debiting these bogus bills, in the Profit & Loss account. Accordingly, a notice u/s. 148 of the I.T. Act, 1961, was issued, after recording reasons to believe that the income of the assessee, for A.Y.2010-11, has escaped the assessment. During the course of re-assessment proceedings, in order to justify the genuineness of purchases, the notices u/s.133(6) of the I.T. Act, 1961, were issued on given addresses, but returned back unserved with a remark “not known”. In view of these facts, the AO disallowed entire hawala purchases, amounting to Rs.51,08,901/- and added back to the total income of the assessee.
By the impugned order CIT(A) restricted the addition to the extent of 25% of bogus purchases after observing as under:- 5.6. I have carefully considered the submissions of the Ld. AR and noticed that the claim of the appellant i.e. sales against hawala purchases have also been credited in the P & L a/c., appears to be in order, keeping in view the GP / NP rates, shown in past and in subsequent years. Therefore, this is not a case where the entire amount has been siphoned off, by way of debiting bogus purchases. In my considered opinion, it is a case where, at the most, purchases might have been inflated. Considering the decision of Honble Gujarat HC in the case of Sanjay Oil Cake Mills and Vijay Proteins etc., as above, in my opinion, 25% disallowance, out of hawala purchases, will be reasonable.
4551/Mum/2015 Haresh A Rohra Accordingly, I hereby confirm 25% disallowance of above purchases i.e., Rs.12,77,225/- (25% of Rs.51,08,901/-) and delete the balance amount of Rs.38,31,676/- (Rs.51,08,901- 12,77,225/-) out of total disallowance of Rs.51,08,901/-. Both the grounds of appeal are, therefore, decided accordingly.
7. Against the above order of CIT(A), both assessee and revenue are in appeal before us.
8. From the record, we found that AO has made addition on the plea that suppliers were not traceable. However, the CIT(A) found that assessee has made sales in respect of alleged bogus purchases, therefore, it is not a case where entire amount has been siphoned off by way of obtaining bogus purchases. Therefore, after applying the judicial pronouncements by Gujarat High Court in case of Sanjay Oil Cake Industries 316 ITR 274 and Vijay Proteins Ltd., 58 ITD 428 restricted the addition to the extent of 25%. 9. It was „the contention of learned AR that facts of Sanjay Oil Cake Industries (supra) were entirely different. Our attention was invited to the ledger account of all the suppliers in the assessee‟s books, invoice issued by them, relevant extract of the bank statement showing payment made in respect of purchases made from these parties. Our attention was also invited to the statement showing movement of stocks as maintained by the assessee. We found that assessee has maintained stock register with regard to the purchase and sale of goods. 10. Learned AR placed on record the order of the Tribunal in assessee‟s own case for the A.Y.2009-10 and 2011-12 dated 14/09/2016 in ITA