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2016 (3) TMI 908 - ITAT MUMBAI

2016 (3) TMI 908 - ITAT MUMBAI - TMI - Addition u/s 69C - Held that:- The 5 parties should be treated differently as these parties are undisputedly the non-suppliers of the raw materials needed for the contracts. It is evident from the fact that assessee itself offered such claims as unaccounted ones in the past. We cannot appreciate as to how these 5 parties, who do not have the capacity to supply the raw material, have got capacity to supply the same in the year under consideration. considerin .....

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e are of the opinion, considering the orders of the Tribunal in many cases of additions involving the Sales Tax Department, the disclosure of blacklisted suppliers and when the Assessing Officer failed to discharge the onus as discussed above, the additions made u/s 69C amounting to ₹ 12,01,91,407/- out of total addition of ₹ 13.03 Crs is required to be deleted. CIT (A) is directed to examine this issue and pass a speaking order on the issues relating to the aspects of GP and the oth .....

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he Revenue on 31.7.2013 is against the order of the CIT (A)-35, Mumbai for the assessment year 2010-2011. In this appeal, Revenue raised the following grounds which read as under:- 1. On the facts and in the circumstances of the case and in law, the Ld CIT (A) erred in deleting the addition of ₹ 13,02,78,336/- which was made by invoking the provisions of section 69C of the IT Act by treating the purchases are genuine. 2. On the facts and in the circumstances of the case and in law, the Ld .....

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. 4. On the facts and in the circumstances of the case and in law, the Ld CIT (A) has grossly erred in not appreciating the fact that the assessee was not able to produce the parties, from whom alleged bills were received, before the AO despite many opportunities were accorded to him. 5. On the facts and in the circumstances of the case and in law, the Ld CIT (A) has failed to rebut the findings of sales tax department vis-a-vis bogus purchases despite reasonable opportunity was accorded to him. .....

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assessee filed return of income declaring the total income of ₹ 5,82,63,649/-. The Assessing Officer computed the assessed income at ₹ 18,88,69,230/-. In the assessment, AO made an addition of ₹ 5,25,672/- u/s 14A r.w. Rule 8D. Assessing Officer also made another addition of ₹ 13,02,78,336/- u/s 69C of the Act. The said addition made u/s 69C has two segments ie (i) ₹ 12,01,91,407/- and (ii) ₹ 1,00,86,929/-. Matter travelled to the first appellate authority. 3. .....

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s, AO called for the list of the purchases of the raw material ie cement, steel, bricks etc. AO issued noticed u/s 133(6) of the Act to the said purchasers. There was no response to the said letters. Eventually, AO found out that most of these parties ie suppliers of the said raw material, are listed by the Sales Tax Department in their website ie www.mahavat.gov.in as Sales Tax defaulters. Further, AO found out from the said list of the Sales Tax Department that 56 parties are figuring common i .....

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he survey action, assessee admitted that the purchases from several parties are bogus, therefore, the whole of such purchases was offered in the return of income in the AY 2012-2013. AO listed out 5 of such parties, whose sales were considered bogus‟ and such 5 bogus parties also sold raw material during the year under consideration and the names of such 5 parties are (i) Atmass Enterprises; (ii) Om Corporation; (iii) shree Sai Enterprises; (iv) V.K. Enterprise and (v) Virat Enerprises [pa .....

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material was supplied directly to the site for inspect and used by the engineers of the assessee; (ii) the payments were made by way of cheque involving the banking channels; (iii) no delivery bills and delivery challans were made available because of direct supply to the site. The website based list of the Sales Tax Department is no ground for treating them as bogus suppliers‟ when contract works were completed to the satisfaction of the MCGM. Assessee cannot be held responsible for disap .....

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ers of the CIT (A) there is no independent discussion with reference to the statement u/s 133A of the Act with regard to the 5 bogus persons mentioned above that led to the addition of ₹ 1,00,86,929/-. The contents of paras 8.10; 8.11 and 8.12 of the CIT (A)‟s order are relevant in this regard. For the sake of completeness of this order, the same are reproduced as under:- 8.10. All the above clearly indicates that material for the above contracts reached the respective site which got .....

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internet as suspicious dealers the purchases were bogus‟. Without purchase of material such as cement, steel, bricks etc, the appellant could not have completed the contract assigned to it. The Assessing Officer had no material on record to show that how the contracts have been completed by the appellant without purchase of materials from the above suppliers. The books of accounts of the appellant had been duly audited by the C.A., and no discrepancy whatsoever has been brought out in the .....

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e present facts of the case and, therefore, the ratio of judgments of the above referred two cases are fully applicable in the present case. In view of the facts discussed above, as well as binding judicial pronouncements of the jurisdictional ITAT, Mumbai Bench as well as Hon‟ble Mumbai High Court and other legal precedents, the addition made by the AO amounting to ₹ 13,02,78,336/- cannot be sustained. Accordingly, the addition of ₹ 13,02,78,336/- is deleted. In the result, th .....

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in the case of CIT vs. Nikunj Eximp Enterprises Pvt Ltd reported in 2013-TIOL (Tax India Online.com)-04-HCMum- IT, dated 17.12.2012. 8. Before us, Ld DR for the Reveue brought our attention to the grounds and submitted that the deletion of addition of ₹ 13.03 Crs (rounded of) made u/s 69C of the Act is not proper. In the grounds, they reasoned that the CIT (A) erred by relying on the judgment of the Hon‟ble Bombay High Court in the case of Nikunj Eximp Enterprises Pvt Ltd (supra). He .....

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the onus in matter of claims of the assessee. The fact that the contract was successfully done by the assessee to the satisfaction of the MCGM was ignored. The AO‟s decision in rejecting the purchases of the material (cement, steel, bricks etc) to the tune of ₹ 13.03 Crs (rounded of) disproved the fact of execution of the works and therefore the AO‟s decision is not sustainable. Regarding the decision of the Sales Tax Department in black listing 59 of the suppliers in their web .....

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8223;s by holding that the AO failed to discharge the onus and no efforts were made to verify the work done by the assessee for MCGM. Some of the suppliers are common in all these cases. In this regard, he brought our attention paras 6 and 7 of the Tribunal‟s order in the case of Rajkumar Agarwal (supra) and demonstrated the above finding of the Tribunal in those cases. The fact of Tribunal relying on the decision of ITAT in the cases of Deepak Popatlal Gala (supra) and Ramesh Kumar & .....

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listed suppliers, assessee brought our attention to page 10 of the paper book, wherein the names such as (i) Rohit Enterprises (sl no.9); (ii) Samarth Enterprises (sl no.10) etc were found figuring in the list of suppliers enlisted in para 8.1 at pages 3 to 5 of the CIT (A)‟s order. At the end, the arguments of the Ld Counsel for the assessee include that when the GP rates are within the permitted limits and when the AO failed to verify to find out the defects in the quality of the contrac .....

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should not be disturbed. However, he admitted the fact that there is no separate discussion or specific adjudication of the facts relating to the addition of ₹ 1,00,86,929/-, which was separately added as unconnected with the alleged black-listed suppliers but for the reasons given in para 9 of the assessment order involving 5 parties, who are not in the said list of the Sales Tax Department and however, they were considered bogus suppliers of the bills. It is an admitted fact that the pu .....

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#8377; 1,00,86,929/- should not be considered as genuine purchases as they are undisputedly the bill suppliers only and not the material suppliers. 10. We have heard both the parties on this issue of addition made u/s 69C of the Act. We have also examined the aforementioned orders of Tribunal. We find, the decision, made in those cases adjudicated by the Tribunal (supra), is also based on the data available on the webpage of the Sales Tax Department. At least some of the parties are found figuri .....

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ee should be real. The names of the suppliers may or may not be sacrosanct so long as assessee incurred expenditure on the said raw materials. It may be a case that the assessee made the payments by the cheque to the said 56 parties, who may be bill suppliers, cannot be the suppliers. But, so far as the assessee is concerned, payments are incurred on the raw materials purchases by the assessee as per the requirements of the contracts. In these circumstances, as held by the Tribunal in many other .....

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tment ie www.mahavat.gov.in (supra) and all the purchases from these parties were rejected as bogus‟. In the process, the AO ignored the issues about the fact of completion of contracts without compromising the quality of the contract works. For the sake of completeness of this order, we extract the relevant para 8 from the Tribunal‟s order in the case of Ramesh Kumar & Co (supra) and the same reads as under: 8. We have carefully perused the orders of the lower authorities and th .....

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ails from the bank of the assessee and also from the bank of the suppliers to verify whether there was any immediate cash withdrawal from the account. No such exercise has been done. The ld CIT (A) has also confirmed the addition made by the AO by going on the suspicion and the belief that that suppliers of the assessee are Hawala traders. We also find that no effort has been made to verify the work done by the assessee from the Municipal Corporation of Greater Mumbai. We agree with the submissi .....

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n the fact of it in the contract works like the one executed by the assessee. Unfortunately, there is no reference to these aspects in the order of the AO and the CIT (A), despite the reference made by the assessee in his submissions (item 12 in page 10 of the CIT (A)‟s order is relevant in this regard). Therefore, CIT (A) may examine this issue afresh in the remand proceedings. He is free to call for relevant reports from the AO as per the procedure. CIT (A) is required to examine the sac .....

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