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2016 (2) TMI 914 - ITAT MUMBAI

2016 (2) TMI 914 - ITAT MUMBAI - TMI - Addition u/s 69C addition - AO had made the addition as one of the supplier was declared a hawala dealer by the VAT Department - Held that:- As decided in assessee's own case as agreed 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 t .....

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d - Decided in favour of assessee - I.T.A. No. 5295/Mum/2013 - Dated:- 2-2-2016 - Shri Saktijit Dey, JM And Shri Rajesh Kumar, AM For the Appellant : Shri J. Saravanan For the Respondent: Shri Bhupendra Shah ORDER Per Rajesh Kumar, A. M This appeal by the assessee is directed against the order dated 21.05.2013 of Commissioner of Income Tax (Appeals)-35, Mumbai (hereinafter called as the CIT(A) ) for assessment year 2010-11. The assessee has raised following grounds of appeal: 1. "On the fac .....

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he fact that the notices u/s 133(6) issued to the parties were returned unnerved as addressee was not available at the given address." 3. "On the facts and in the circumstances of the case and in law, the ld.CIT(A) erred in giving relief on ₹ 74,08,737/- in case of voluntary disclosure by the assessee against notice u/ s 131 of IT Act by treating it as genuine claims." 4. "On the facts and in the circumstances of the case and in law, the ld.CIT(A) erred in deleting the .....

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umstances of the case and in law, the Ld. CIT (A) has grossly erred in not appreciating the fact that the assessee failed to produce the parties from whom the alleged bill were received despite may opportunities accorded to him." 7. "On the facts and in the circumstances of the case and in law, the Ld .CIT(A) failed to appreciate that the assessee failed to rebut the findings of Sales Tax Department vis-a- vis bogus purchases, despite reasonable opportunities accorded to him." 8. .....

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assessment proceedings. 10. "The appellant prays that the order of the Ld.CIT(A) on the above grounds be set aside and that of the A.O be restored." 2. The brief facts of the case are that the assessee was in the business of Civil Contraction as proprietor under the name and style of of M/s. KR Construction Company which was engaged in the infrastructure development contracts with Mumbai Municipal Corporation. The assessee filed its return of income on 21.09.2010 declaring total incom .....

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received accommodation entries from Shri Mafatlal V. Shah and consequently a statement on oath u/s 131 of the Act of the assessee, he offered additional income of ₹ 1,93,71,170/- by furnishing the details of bogus bills followed by the revised return of income by the assessee at ₹ 7,42,78,888/- on 29.02.2012 offering the amount surrendered above. 3. The first ground relates to deletion of addition of ₹ 87,24,259/- made by the AO u/s 69 C on account of unexplained expenditure. T .....

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nown . The AO added ₹ 87,24,259/- as unexplained expenditure u/s 69 of the Act by rejecting the reply of the assessee as incorporated in para 5.4 of the assessment order by holding that the bills from these parties were fictitious which were procured without purchasing any materials. Similarly, notices u/s 133(6) of the Act were sent to all the parties from whom the purchases were made and which were appearing in the list of the parties as published by the Sales Tax Department and the said .....

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ract expenses and the payments were made to various parties having turnover of less than 40 lakhs mostly offering income as per section 44 AD of the Act. It was however, observed by the AO that number of parties belonging to different group of families was found to be the recipient of payment from the assessee as was clear from the surnames and addresses of the parties and thereby assessee had reduced overall tax liability as most of these persons were below taxable limit or were taxable at lowe .....

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as incorporated in para 5.3.10, 6.1.5, 7.3, 8.3 of the appeal order and the revenue being aggrieved by this order of the CIT(A) filed an appeal before us. 4. At the outset the ld. Counsel for the assesse Shri. Bhupendra Shah pointed out that the case of the assessee was covered in his favour by the following decisions of the Co-ordinate Benches in which identical issues were decided in favour of the assessee:- ITA No.6727/Mum/2012 (AY-2009-10) Dated 20.08.2014. ITA No. 2826/Mum/2013 (AY-2009-10) .....

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nterference and be confirmed. Per contra the ld. DR relied on the order of the AO and prayed for setting aside the order of the CIT(A) and restore that of the AO. 5. We have considered the rival submissions and perused the materials on record. We find from the records and orders of the authorities below that there three additions made by the AO of ₹ 87,24,259/- , ₹ 14,36,653/- and ₹ 20 lakhs u/s 69 C of the IT Act and in respect of 4th ,the AO did not allow any relief in respec .....

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see had also received accommodation entries from Shri Mafatlal V. Shah and various other suppliers who were declared a hawala dealer by sales tax department, Govt. of Maharashtra. The statement of hawala dealer that he provided accommodation entries to the assessee is a good material for conducting further investigation, verification and enquiries but AO instead making further investigation, the AO completed the assessment on suspicion. The assessee had submitted before the AO that payments were .....

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the assesssee is covered in favour of the assessee by the various decisions cited by the ld. Counsel. In the case of ITA No.6727/Mum/2012 (AY-2009-10) dated 20.08.2014 we find that the similar addition was made on the basis of information available on website of Sales Tax Department, Government of Maharashtra, which was deleted by the Tribunal. The relevant para 2.4 is extracted as below. 2.4. We have heard the rival submissions and perused the material before us. We find that AO had made the a .....

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tion 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. www.taxguru.in ITA/6727/Mum/2012/RGK 4 (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 .....

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similar addition to the tune of ₹ 1,74,01,436/- was deleted by the Tribunal. The relevant para 8 is extracted below. 8. Be that as it may, another important factor the bank account copies collected by the assessing officer shows that the assessee had made the a payments to the above said parties by way of account payee cheques. Thus, it is seen that the transactions have been routed through the bank accounts. Further, it is not the case of the assessing officer that the assessee has indul .....

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again based on only surmises. In the absence of any material to support the said view, we are unable to agree with the view taken by the tax authorities that the purchases amount is liable to be disallowed u/s40A(3) of the Act on the same impression only, the AO has expressed the view in the remand report that the purchases amount is also liable to assessed u/s69C of the Act as the source of purchases were not proved. Again the said conclusion is based upon only surmises, which could not be sust .....

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ase of ITA No. 2959/Mum/2014 (AY-2010-11) dated 28.11.2014, similar addition to the tune of ₹ 4,98,80,892/- was deleted by the Tribunal. The relevant para 8 is extracted below. 8. We have carefully perused the orders of the lower authorities and the relevant documentary evidences brought before us. We find that the AO has made the addition as some of the suppliers of the assessee were declared Hawala dealer by the Sales tax Department. This may be a good reason for making further investiga .....

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by going on the suspicion and the belief that the 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 submissions of the Ld. Counsel that if there were no purchases, the assessee would not have been in a position to complete the civil work. 8.1. On civil contract receipts of ₹ 32.05 crores, the assessee has shown gross profit at 14.2% and net profi .....

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hases are supported by proper invoices duly reflected in the books of account. The payments have been made by account payee cheque which are duly reflected in the bank statement of the assessee. There is no evidence to show that the assessee has received cash book from the suppliers. The additions have been made merely on the report of the Sales tax Department but at the same time it cannot be said that purchases are bogus. We, therefore, set aside the findings of the Ld. CIT(A) and direct the A .....

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59/Mum/2014 (AY- 2010-11) dated 28.11.2014; b) DCIT V/s Shri Rajeev G Kalathil in ITA No.6727/Mum/2012 (AY-2009- 10) dated 20.8.2014; and c) Shri Ganpatraj A Sanghavi V/s ACIT in ITA No. 2826/Mum/2013 (AY- 2009-10) dated 5.11.2014 In all the above said cases, the Co-ordinate Benches of the Tribunal has held that the AO was not justified in making the addition on the basis of statements given by the third parties before the Sales Tax Department, without conducting any other investigation. In the .....

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)(25 SOT 11)(Jodh), wherein it has been held that where the AO has made addition merely on the basis of observations made by the Sales tax dept and has not conducted any independent enquiries for making the addition especially in a case where the assessee has discharged its primary onus of ITA. No.5920/Mum/2013 and 6203/Mum/2013 7 showing books of account, payment by way of account payee cheque and producing vouchers for sale of goods, such an addition could not be sustained. The Ld CIT(A) has a .....

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wn by the High Courts and Tribunals in deciding this issue. Hence, we do not find any reason to interfere with his order on this issue. In the case of ITA No. 5246/Mum/2013 (AY: 2010-11) dated 05.03.2015, the Tribunal confirmed the order of the CIT(A) deleting the addition of ₹ 28.08 lakhs. In the case of ITA No. 5706/Mum/2013 (AY: 2010-11) dated 13.05.2015, the order of the CIT(A) was confirmed by the Tribunal which deleted the addition of ₹ 1,37,65,667/-. The relevant para 5 is ext .....

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under :- 2.3.Before us, Departmental Representative argued that both the suppliers were not produced before the AO by the assessee, that one of them was declared hawala dealer by VAT department, that because of cheque payment made to the supplier transaction cannot be taken as genuine. He relied upon the order of the G Bench of Mumbai Tribunal delivered in the case of Western Extrusion Industries. (ITA/6579/Mum/2010-dated 13.11.2013).Authorized representative (AR) contended that payments made b .....

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