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Income Tax Appellate Tribunal, BENCH “C”, MUMBAI
Before: SHRI R.C. SHARMA & SHRI PAWAN SINGH
Assessee by : Shri Dinesh S. Acharya (AR) Revenue by : Shri D.V. Singh (DR) Date of hearing : 25.08.2016 Date of Pronouncement : 02.11.2016 O R D E R
PER PAWAN SINGH, JM:
The present appeal u/s 253 of the Income-tax Act (‘Act’) is directed by assessee against the order of ld. Commissioner of Income-tax (Appeals)-9, Mumbai [for Short ‘CIT(A)’] dated 01.10.2014 for Assessment Year (AY)- 2010-11. The assessee has raised the following grounds of appeal: “1. On the facts and in the circumstances of the case, the Commissioner of Income Tax (Appeals) was not justified in confirming the order of the Deputy Commissioner by treating the purchases from certain parties aggregating to Rs. 29,44,125 as bogus when the appellant had in fact placed the assessment requirements of copies of invoices, ledger accounts and bank statements before the Deputy Commissioner which were sought by him during the course of the assessment proceedings and also find mention in the text of his assessment order.
2. On the facts and in the circumstances of the case and in context of the addition of Rs. 29,44,125 the Commissioner of Income Tax (Appeals) was wrong in totally ignoring the facts that, firstly, the appellant's request for sharing the information (if any) was not considered and secondly, the replies , Concorde Designs Pvt. Ltd. under the R.T.I. Act from the various Sales Tax Department Officers was not considered at all and finally the peak credit / G.P. working statements were also not considered in the appellate order.”
Brief facts of the case are that the assessee-company, filed its return of income for relevant AY on 30.09.2010 declaring total income at Rs. 88,77,261/-. The return of income was selected for scrutiny. The Assessing Officer (AO) while framing the assessment besides the other addition disallowed a sum of Rs. 29,44,125/- on account of bogus purchases and made the addition u/.s 69C of the Act. The assessee filed appeal before the ld. CIT(A) wherein the addition was sustained, thus, further aggrieved by the order of ld. CIT(A), the assessee has filed the present appeal before us.
We have heard the ld representatives of the parties and gone through the record of the case. The Ld. Authorised Representative (AR) of the assessee argued that during the assessment proceedings, the AO doubted about the genuineness of certain purchases. The AO asked to explain the details of purchases from (i) Entech Enterprises (ii) G.M. International (iii) Great International & (iv) Shah Industries. The assessee filed its reply, vide reply dated 20.01.2013 and contended that the assessee made the purchases from those parties and payments were made through cheque. The copy of purchase bill, Bank statement and PAN Number of two parties were furnished. It was further contended that out of the total four parties, two parties are regularly filing their tax return. The assessee prayed that no addition in respect of those two parties be made. The contention of the assessee was not accepted by AO. The AO hold that as per the details, the assessee made transactions from the parties who were involved in Hawala transaction as per the record of Sales Tax Department of Gov of Maharashtra, thus, the entire purchases from all four parties was disallowed and added to the income of the assessee. It was further argued that the ld. CIT(A) has not given any different finding except of confirming the addition made by AO. The assessee furnished the details of purchases along with documentary evidence. The ld. CIT (A) despite 2 , Concorde Designs Pvt. Ltd.
giving the details of the sale and purchase transaction did not seek any remand report from the AO in respect of genuineness of purchases. The report of Sales Tax Department or the statement was not supplied to the assessee. The ld AR for assessee that the first appellate authority even not considered the peak credit / G.P. working statements. The ld AR for the assessee further relied on the following decisions: (a) CIT Vs Nikunj Eximp Enterprises Ltd. (Bombay High Court) ITANo.5604/2010. Dated 17.12.2012. (b) H.R. Mehta Vs ACIT (Bombay High Court) ITANo.58/2001. Dated 30.06.2016. (c) Ganpat A Sanghvi Vs ACIT, ITA No 2826/M/2013. (d) Ramesh Kumar &Co Vs ACIT, ITA No.2959/M/2014. (e) ACIT Vs Ramila Pravin Shah; (f) ITO Vs Deepak Popatlal Gala, ITA No. 5929/M/2013. (g) DCIT Vs Aspee Agro Equipment Pvt Ltd.ITA No.4065/M/2014 (h) Jagir Vinaychandra Shah Vs ITO, ITA No 1223/M/ 2014. (i) ACIT Vs Tarla R Shah , ITA No.5295/M/2013. (j) DCIT Vs Rajeev Kalathil ,ITA No. 5312/M/2013. (k) Mohammad Taufiq Navalakiya vs ITO, ITA No1231/M/2012 (l) Paras Organics Vs DCIT, ITA No.2369/M/2014. (m) ACIT Vs Ronak Gems, ITA No.4443t04445/M/2012. (n) ITO Vs Sanjay V Dhruv, ITA No.5089/M/2014. (o) ITO Vs Takhtmal Bhuralal ITA No.4526 to 4528/M/2014. (p) MPIL Steel Structure Vs DCIT ITA No. 6602/M/2014. The ld DR for the revenue supported the order of authorities below and prayed that the tribunal while considering the case of the assessee
We have considered the rival contention of the parties and gone through the order of authorities below and the decisions relied by ld AR for the assessee. The AO while making the disallowance concluded that the assessee has inflated its bogus purchases to the tune of Rs. 29,44,125/- from the dealers who were involved in the Hawala transaction and that the assessee is beneficiary of such transaction. The ld CIT(A) while considering this ground , Concorde Designs Pvt. Ltd.
concluded that during the assessment proceedings the assessee not provided any documentary evidence of actual delivery of the alleged material purchased from the said parties. It was further concluded that even during the appellate stage the assessee not filed any documentary evidence. We have seen that before us the assessee has placed on record seven number of copies of invoices of M/s Entech Enterprises and two invoices of M/s G.M. International. No invoices in respect of purchases from M/s Great International and M/s Shah Industry are filed on record. No delivery with receipt, transport receipt or the copy of stock register with regard to the disputed purchased are is placed on record before us. The assessee has relied on as many as on sixteen decisions facts of which are not exactly same as in the case of assessee. The assessee has not given even a single document in respect of purchase of material from M/s Great International and M/s Shah Industry. From M/s Great International and M/s Shah Industry the assessee has allegedly purchased material of Rs. 3,27,226/- and Rs. 2,57,712/- respectively. Under the Income-tax Act only real income is taxable. In the present case the assessee has not proved the transaction with regard to M/s Great International and M/s Shah Industry. Moreover, in case of other two parties i.e. M/s Entech Enterprises and G.M. International the assessee has not proved the delivery and stock regarding the material purchased. The AO or the ld. CIT(A) has not examined the statement of bank accounts of M/s Entech Enterprises and G.M. International whose particulars were supplied by the assessee. And the aspect regarding if the payment made by assessee was immediately siphoned or not. In such a situation, if we assume that the assessee would have purchased the goods by investing unaccounted cash by making purchase from gray market and availed the accommodation bill, the addition of entire purchase amount from M/s Entech Enterprises and G.M. International cannot be made. We think that cause of justice would be met by making addition of reasonable percentage of such purchases in order to fill 4 , Concorde Designs Pvt. Ltd.