INCOME-TAX OFFICER vs. M/S. MAA SARASWAT STEEL INDUSTRIES, NASHIK

आदेश / ORDER PER ANIL CHATURVEDI, AM :

This appeal filed by the Revenue is emanating out of the 1. order of Commissioner of Income Tax (A) – 1, Nashik dt.01.06.2016 for the assessment year 2011-12.

2.1 Assessee is a partnership firm stated to be engaged in the business of manufacturing of steel bars and other steel products.

Assessee electronically filed its return of income for A.Y. 2011-12

on 02.09.2011 declaring total income of Rs.2,50,401/-. The

return of income was processed u/s 143(1)(a) of the Act.

Subsequently, information was received from Investigation section

that the Sales Tax Department has informed that the assessee had

made purchases from certain parties namely, N.R. Traders, Om

Sai Enterprises and EMCO Industries, who are Hawala parties.

Accordingly, notice u/s 148 of the Act was issued on 30.09.2013

and in response to which, assessee submitted that original return

filed be considered to be the return of income against the notice

u/s 148 of the Act. Thereafter, assessment was framed u/s 143(3)

r.w.s. 147 of the Act and the total income was determined at

Rs.46,51,230/-. Aggrieved by the order of AO, assessee carried

the matter before Ld.CIT(A), who vide order dt.01.06.2016 (in

Appeal No.Nsk/CIT(A)-1/111/2015-16) granted partial relief to the

assessee. Aggrieved by the order of Ld.CIT(A), Revenue is now in

appeal before us and has raised the following grounds :

“1. Whether on the facts and in the circumstances of the case, the Learned CIT(A)-1, Nashik was justified in deleting the addition of Rs.33,00,620 / - on account of alleged bogus purchases from Hawala dealers/parties. 2. Whether on the facts and in the circumstances of the case, the Learned CIT(A)-1, Nashik was justified in deleting the purchases treated as bogus when appellant had not been able to produce the certain parties from whom purchases were made when letters sent to the parties were returned undelivered or the parties did not respond? 3. Whether the Learned CIT(A)-1, Nashik erred in assuming that the purchases were only inflated when it was clear from the conduct of the assessee, the parties found missing and results of the investigation of another Govt. Department (Sales Tax), that the purchases could not be proved as line and therefore the disallowance by the AO was justified 4. Whether the Learned CIT(A)-1, Nashik erred in presuming that

simply because no addition was made in the case of Sales, it was accepted as genuine further assuming that thereby purchases should be genuine? 5. Whether the Learned CIT(A)-1, Nashik erred in accepting the affidavits suppliers without any explanation from the assessee why the suppliers could not appear before the AO when they were called for examination? 6. The appellant prays that the order of the Learned CIT(A)-1, Nashik may please be cancelled and the order of Assessing officer may please be restored.”

Revenue has raised various grounds but all the grounds are inter-

connected and the sole controversy is with respect to deleting the

addition of Rs.33,00,620/- on account of alleged bogus purchases

from Hawala dealers / parties.

of the Act has noted that information was received from Sales Tax

Department wherein the statements of Hawala parties were

recorded and it was submitted by them that they had not done

any genuine business transactions of purchases, sales etc., in the

name of the firms but they were only issuing / receiving tax

invoice bills without delivery receipt of goods. Based on the

aforesaid information received from the Sales Tax Department,

assessee was asked to submit the copies of purchase bills, delivery

challans, payment details etc., in support of the purchases made

by it from the alleged Hawala parties and also to produce parties

to substantiate the purchases. AO noted that assessee failed to

produce the relevant parties but had submitted that the

purchases made by it were genuine. The submissions of the

assessee was not found acceptable to the AO. He considered the

total purchases of Rs.44,00,827/- made from the alleged Hawala

parties to be bogus purchases and made its addition. Aggrieved

by the order of AO, assessee carried the matter before Ld.CIT(A),

who after considering the submissions of the assessee has noted

that the case was not bogus purchases but a case of inflated

purchases and at best from bogus parties. She therefore directed

the AO to restrict the disallowance to 25% of Rs.44,00,827/- i.e.,

Rs.11,00,207/-. Aggrieved by the order of Ld.CIT(A), Revenue is

now in appeal before us.

order of Ld.CIT(A), whereby partial relief was granted to assessee,

assessee had carried the matter before the Tribunal. She

submitted that the Co-ordinate Bench of the Tribunal by a

consolidated order comprising of various assessees including the

assessee, by order dt.28.04.2007 in (ITA No.1670 and

1671/PUN/2016 for A.Ys.2010-11 and 2011-12) has deleted the

addition. She pointed to Para 43 of the order of Co-ordinate

Bench of the Tribunal. She therefore submitted since the

Tribunal has already decided the issue in favour of the assessee

and therefore the grounds raised by the Revenue have become

infructuous and therefore appeal of Revenue reads to be

dismissed. Ld.D.R. did not controvert the submissions made by

Ld.A.R. but however supported the order of AO.

material on record. The issue in the present case is with respect

to deleting the addition on account of alleged bogus purchases

from Hawala dealers / parties. We find that the Co-ordinate

Bench of the Tribunal by a consolidated order dt.28.04.2017

wherein, assessee was also a party, has decided the appeals of the

assessee in A.Y. 2010-11 and 2011-12 in favour of assessee by

holding as under :

“43. Similarly, in the case of Maa Saraswati Steel Industries, the argument of the learned Authorized Representative for the assessee was that the copy of statement has not been supplied nor any evidence has been confronted to the assessee. The assessee was also maintaining inward records of goods purchased and their consumption in items, which are excisable in nature. Following the reasoning in M/s. Chetan Enterprises Vs. ACIT (supra), the addition is deleted. The grounds of appeal raised by the assessee are thus, allowed and hence, appeal of assessee is allowed.”

Since the addition has been deleted by the Co-ordinate Bench of

the Tribunal, we are of the view that the present grounds raised by

the Revenue have been rendered infractuous and thus the same

are dismissed.

Order pronounced on 23rd day of February, 2018.

Sd/- Sd/- (VIKAS AWASTHY) (ANIL CHATURVEDI) �या�यक सद�य / JUDICIAL MEMBER लेखा सद�य / ACCOUNTANT MEMBER

पुणे Pune; �दनांक Dated : 23rd February, 2018. Yamini

आदेश क� ��त�ल�प अ�े�षत/Copy of the Order forwarded to : 1. अपीलाथ� / The Appellant 2. ��यथ� / The Respondent 3. CIT(A) – 1, Nashik. Pr.CIT-1, Nashik. 4. 5 �वभागीय ��त�न�ध, आयकर अपील�य अ�धकरण, “ए” / DR, ITAT, “A” Pune; गाड� फाईल / Guard file. 6.

आदेशानुसार/ BY ORDER // True Copy // // True Copy //

व�र�ठ �नजी स�चव / Sr. Private Secretary आयकर अपील�य अ�धकरण ,पुणे / ITAT, Pune.