INTERNATIONAL TRANSMISSION LTD,MUMBAI vs. DCIT CIR 10(3), MUMBAI

अिधकरण, ‘आई ’ खंडपीठ आयकर अपीलीय अपीलीय अिधकरण खंडपीठ मुंबई मुंबई आयकर आयकर आयकर अपीलीय अपीलीय अिधकरण अिधकरण खंडपीठ खंडपीठ मुंबई मुंबई INCOME TAX APPELLATE TRIBUNAL,MUMBAI “I” BENCH सव"ी सव"ी सव"ी राजे"" सव"ी राजे"" राजे"", लेखा राजे"" लेखा लेखा सद"य लेखा सद"य सद"य एवं सद"य एवं एवं राम लाल नेगी एवं राम लाल नेगी राम लाल नेगी, , , , "याियक सद"य राम लाल नेगी "याियक सद"य "याियक सद"य "याियक सद"य Before S/Sh. Rajendra,Accountant Member & Ram Lal Negi,Judicial Member आयकर आयकर अपील अपील संसंसंसं/.ITA No.2771/Mum/2014,िनधा"रण िनधा"रण वष" वष"/Assessment Year-2010-11 आयकर आयकर अपील अपील िनधा"रण िनधा"रण वष" वष" International Transmission Ltd. Dy. CIT-Circle-10(3) 501, 5th Floor, Vasudeo Chambers 473, Aayakar Bhavan Mulund-Goregaon Link Road, Vs M.K. Marg Opp. D-Mart, Bhandup(W) Mumbai-400 020. Mumbai-400 078. PAN:AAACI 0975 M (अपीलाथ" /Appellant) (""यथ" / Respondent) िनधा"रती िनधा"रती ओर ओर सेसेसेसे/Assessee by : Shri V.G. Ginde िनधा"रती िनधा"रती ओर ओर राज"व क" ओर से/ Revenue by : Shri Pradeep Kumar Singh-DR सुनवाई सुनवाई क" क" तारीख तारीख / Date of Hearing : 19.01.2016 सुनवाई सुनवाई क" क" तारीख तारीख घोषणा क" तारीख / Date of Pronouncement : 03.02.2016 आयकर आयकर अिधिनयम अिधिनयम,1961 1961 1961 क" 1961 क" धारा धारा 254 254 254(1)केकेकेके अ"तग"त 254 अ"तग"त आदेश आदेश आयकर आयकर अिधिनयम अिधिनयम क" क" धारा धारा अ"तग"त अ"तग"त आदेश आदेश Order u/s.254(1)of the Income-tax Act,1961(Act) लेखा सद"य सद"य राजे"" राजे"" केकेकेके अनुसार अनुसार PER RAJENDRA, AM- लेखा लेखा लेखा सद"य सद"य राजे"" राजे"" अनुसार अनुसार Challenging the order dt.03/02/2014 of the CIT(A)-22,Mumbai the assessee has filed the present appeal.Assessee-company,engaged in the business of manufacturing of international transmi- ssion products,filed its return of income on 28.09.2010,declaring total income of Rs.2,55, 71, 146/-.The Assessing Officer(AO)completed the assessment on 18.01.2013,u/s.143(3) of the Act, determining the income of the assessee at Rs.4.03 Crores. 2.Effective ground of appeal is about confirming the disallowance of Rs.1.47 Crores.During the assessment proceedings,the AO found that the assessee had purchased goods from Sendoz Steel (SS)and Ronak Industries(RI).As per the information received from Maharashtra Sales tax department purchases made by the assessee,from both the parties,were not genuine.He issued a show cause notice to the assessee as to why the purchases from SS and RI should not be treated as bogus.After considering the submissions made by the assessee,the AO added a sum of Rs.1.47 Crores to the total income of the assessee and held that the suppliers had provided bills only and had not supplied the goods and that the assessee had proved the genuineness of the transactions by furnishing delivery challans,inward register etc. 3.Aggrieved by the order of the AO,the assessee preferred an appeal before the First Appellate Authority (FAA).Before him, it was argued that purchases were genuine.The assessee filed copies of sales bills and purchase order from KEC International Ltd.(KIL),copy of sales bills and purchase order from Gammon India Ltd.(GIL),copies of ledger of SS and RI along with the copies of purchase bills,delivery challans and goods inward registers.It was claimed that the payments were made through banking channels,that steel and aluminium were purchased to complete the purchase order/work orders from KIL and GIL.After considering the submissions of the assessee and documents and the assessment order,he held that the assessee had purchased aluminium from RI and steel from SS,that copy of contract/work order was furnished during the appellate proceedings,that that the work order of KIL was of Rs.5.89 Crores,that work order of GIL was of Rs.4.01 Crores,that that GIL had given another order worth Rs.5.24 Crores,that the ITA/2771/M/14,AY.10-11-Intl. Transmission Ltd.

assessee had purchased goods from RI between 06.02.2010 to 24.02.2010,that the materials were delivered from assessee’s Pondha Factory,that copy of lorry receipt and delivery challans were not furnished in support of actual delivery of goods,that invoices in the case of KIL were raised only on 31.03.2010,that invoices of GIL were raised only in the months of December,2009 to January, 2010,that there was no possibility of aluminium being used for the transmission material supplied by SS,that in the case of KIL raw material was purchased in the month of February that the goods were claimed to be manufactured in March,that considering the time gap it was not possible for the assessee to manufacture the same,that the assessee had not purchased any goods from RI in earlier years,that payments to the suppliers were made after six months,that over all picture showed that the purchases from the RI was bogus,that the assessee purchased goods from SS in the AY.s.2009-10 and 2011-12,that purchases from SS were made from October 2009 to February 2011,that there was no evidence that payments were made to the lorries carrying goods to the factory of the assessee,that entire purchase made from SS and RI was to be treated bogus.Finally,he confirmed the addition made by the AO. 4.During the course of hearing before us,the Authorised Representative(AR)of the assessee argued that the assessee had produced all the challans before the tax authorities, that the inward register was made available to the AO/FAA, that the transportation charges were paid by the seller, that the IT and VAT returns of SS were filed by the assessee, that sales were accepted by the Department, that the delivery challan with regard to KIL and GIL were furnished during the assessment/appellate proceedings, that no investigation was made with regard to the turnover of the assessee, that the goods from SS were purchased for two AY.s. He referred to Page Nos. 26, 27,62-78,79-91 and 24-51 of the Paper Book. He relied upon the case of Shri Hiralal Chunilal Jain(ITA/4547/Mum/2014 AY.s2009-10,2010-11 dt.1.1.2016).The Departmental Representative (DR) supported the order of FAA and stated that receipts from transporters were not produced in case of SS. 5.We have heard the rival submissions and perused the material before us.We find that the assessee had claimed to have purchased raw material from SS and RI,that it had supplied goods to KIL and GIL,that the Sales Tax Department had informed that the suppliers of raw material were providing hawala entries,that the AO made the addition to the income of the assessee treating the transactions with SS and RI as bogus purchases,that the FAA had confirmed the addition,that the assessee had furnished various documents before the AO and the FAA. We find that the AO had not rejected the books of account nor had doubted the sales made by the assessee to KIL and GIL.While going through the page Nos.26-27, we find that SS had delivered the goods at the workplace of the assessee and the number of tempo is also mentioned in it. Similar is the position about other purchases made from SS(Pg.No.28-51 of the PB).We find that the ledger account of RI and SS show that purchases were regularly made from both of them. It is also found that RI had made ‘free delivery’ at Pondha Factory of the assessee. It is also a fact that all the payments were made through the banking channels and AO has not brought evidence that money has travelled back to assessee’s account.Page No.62-78 of the Paper Book provide detail of vehicle nos., challan nos., names of supplier of goods, particulars of material, net weight of the goods etc.We have also gone through the return of income and sales tax return filed by SS.The assessee has also placed on record the agreement entered with KIL and GIL. Ignoring all these documentary evidences,the AO had made the addition solely relying on the information supplied by the Sales Tax Department.We do not know as to whether the statements of the directors/partners of SS and RI were recorded or not by the Sales tax authorities. It is also not 2

ITA/2771/M/14,AY.10-11-Intl. Transmission Ltd.

known as to whether they had alleged that the assessee had purchased the goods from them. As the AO had failed to carry out any investigation about alleged bogus purchases after receiving information from sales tax department,so we are of the opinion that his order cannot be endorsed. We find that the FAA had raised certain objections like supply of goods for a particular period, absence of delivery challans or impossibility of production of finished goods. But,he had not given reasons for arriving at such conclusions.The assessee had produced all the delivery challans along with the inward register.The suppliers of the raw material had specifically mentioned that delivery was made at the work place and that they did not charge transportation charges from the assessee. It is a fact that the goods manufactured by the assessee were supplied to parties who are in the field of transmission business.The AO/FAA have not made any enquiry with the recipient of the finished goods. In our opinion,the information received from sales tax was a good starting point for making further investigation,but it was not taken to the logical end. If the evidences produced by the assessee are vague against the conclusions drawn by the AO/ FAA it becomes clear that the assessee had discharged the burden cast upon it. Therefore, reversing the order of the FAA we decided the effective Ground of appeal in favour of the assessee.Here,we would like to refer to the order of Rajeev G. Kalathil (ITA No. 6727/ Mum/2012,dt.20.8.2014) wherein in similar circumstances the Tribunal has held as under : “2.4.We have heard the rival submissions and perused the material before us.We find that AO had made the addition as one of the supplier was declared a hawala dealer by the VAT Department. We agree that it was a good starting point for making further investigation and take it to logical end.But,he left the job at initial point itself.Suspicion of highest degree cannot take place of evidence.He could have called for the details of the bank accounts of the suppliers to find out as whether there was any immediate cash withdrawal from their account.We find that no such exercise was done.Transportation of good to the site is one of the deciding factor to be considered for resolving the issue.The FAA has given a finding of fact that part of the goods received by the assessee was forming part of closing stock.As far as the case of Western Extrusion Industries. (supra)is concerned,we find that in that matter cash was immediately withdrawn by the supplier and there was no evidence of movement of goods.But,in the case before us,there is nothing,in the order of the AO,about the cash traial.Secondly,proof of movement of goods is not in doubt. Thererfore,considering the peculiar facts and circumstances of the case under appeal,we are of the opinion that the order of the FAA does not suffer from any legal infirmity and there are not sufficient evidence on file to endorse the view taken by the AO.So,confirming the order of the FAA,we decide ground no.1 against the AO.” Respectfully,following the above decision,we reverse the order of the FAA and decide effective ground of appeal in favour of the assessee. As a result appeal filed by the assessee stands allowed. फलतः िनधा"रती "ारा दािखल क" गई अपील मंजूर क" जाती है. Order pronounced in the open court on 3rd February, 2016. आदेश क" घोषणा खुले "यायालय म" "दनांक 3 फरवरी, 2016 को क" गई । (राम लाल नेगी /Ram Lal Negi) (राजे"" / RAJENDRA) "याियक सद"य / JUDICIAL MEMBER लेखा लेखा सद"य सद"य / ACCOUNTANT MEMBER लेखा लेखा सद"य सद"य मुंबई/Mumbai,"दनांक/Date: 03.02. 2016 व.िन.स.Jv.Sr.PS. 3

ITA/2771/M/14,AY.10-11-Intl. Transmission Ltd.

आदेश क" क" "ितिलिप "ितिलिप अ"े िषत/Copy of the Order forwarded to : आदेश आदेश आदेश क" क" "ितिलिप "ितिलिप अ"े अ"ेिषत अ"े िषत िषत 1.Appellant /अपीलाथ"