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TMI Blog2016 (8) TMI 1203X X X X Extracts X X X X X X X X Extracts X X X X ..... de to the facts in ITA No.3 65/PN/2016 to adjudicate the issue. 3. The assessee in ITA No.365/PN/2016 has raised the following grounds of appeal:- 1] The learned CIT(A) erred in confirming the disallowance of Rs. 3,19,867/- out of the total disallowance of Rs. 31,98,665/- made by the A.O. in respect of purchases made from six alleged hawala parties on the basis of information obtained from Maharashtra Sales Tax Dept. 2] The learned CIT(A) erred in holding that 10% of the purchases made by the assessee from the above parties were to be disallowed without appreciating that no disallowance was warranted on facts of the case. 3] The learned CIT(A) failed to appreciate that - a. The entire purchases made by the assessee from the six parties were supported by purchase invoices and most of these purchases were also supported by delivery challans, transport receipts, weigh bridge receipts etc. and hence, there was no reason to doubt the genuineness of the said purchases. b. The payments to these parties were made through bank cheques and the A.O. had not brought any evidence on record to show that the payments made by the assessee to these parties were withdrawn by them and retu ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the said parties had stated that they had merely issued bills to various parties without making any actual sales. On the basis of said information, the Assessing Officer reopened the assessment in the case of assessee. Further, notices under section 133(6) of the Act were issued to the said parties, but the letters were returned back by the post office. Thereafter, show cause notice was issued to the assessee informing him that against the purchases made from the aforesaid parties during the relevant year, the notices issued under section 133(6) of the Act have been returned back. He was show caused to explain the genuineness of purchases made during the year. The assessee in reply submitted that it had received material from the said parties and bill-wise details in this regard were furnished along with purchases invoices, sales invoices to whom the material were sold, transport receipts, weighbridge receipts, etc. The assessee further claims that the payments against purchases were through bank and are accounted for in the books of account. The assessee also pointed out that in case the said parties had not paid VAT tax, then the same was out of his control. The Assessing Officer ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of probable purchases of goods from grey market should be estimated @ 10% of the alleged hawala purchases of Rs. 31,98,665/-, against which the assessee is in appeal. The Revenue is not in appeal against deletion of addition to the extent of Rs. 28,78,798/-. 7. The learned Authorized Representative for the assessee pointed out that in the absence of Assessing Officer providing statements and also crossexamination to the assessee, no addition is warranted in the hands of assessee. He further stated that the copies of statements of three persons were provided to the assessee totaling Rs. 9,49,240/-. However, no statements of other persons from whom purchases to the tune of Rs. 22,49,425/- were made had been provided. He further stressed that where the sole basis for making the addition was the statements of different persons, there is no justification in the aforesaid addition, where the copies of statements have not been provided to the assessee. The learned Authorized Representative for the assessee further pointed out that though in case of Kolte Patil Developers Ltd. Vs. DCIT in ITA Nos.1411 to 1415/PN/2013, relating to assessment years 2003-04, 2005-06 & 2007-08 to 2009-10, ord ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... points out is that when he came to know that the VAT collected by the said dealers has not been deposited with the Sales Tax Department, he voluntarily revised his retur n under MVAT Act by withdrawing the set off of claim in the earlier return and paid the taxes with interest. Another exercise carried out by the assessee with regard to purchases and sales was that the same quantity of goods received were sold to their customers, wherein the quantity of goods purchased from socalled hawala dealers tallied with the supplies made by the assessee to its customers. The transportation expenditure in respect of goods purchased from the said parties was incurred by the assessee through account payee cheques. The bills of transportation including Octroi were made available by the assessee. In this regard, the assessee claims that the purchases made by it were genuine. The Assessing Officer had show caused the assessee to explain the purchases from six parties on the basis of information received from the Sales Tax Department. The list of parties totaling Rs. 31,98,665/- is as under:- Name of the Party Amount 1) Sandoz Steel 10,79,483 2) Adijin Enterprises 2,39,460 3) Hiten Enterp ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ing the copies of statements supplied to the assessee and thus, the total amount of purchases in this regard. In case the basic documents are not available with the Assessing Officer, then merely on the basis of allegation of impugned purchases from hawala dealers, no addition is warranted in the hands of assessee. However, in case the Assessing Officer has copies of statements, the same needs to be supplied to the assessee in order to give chance to the assessee to prove his case. In case any of the statements are not available with the Assessing Officer, no addition to the extent of purchases made from the said parties is warranted in the hands of assessee, in the absence of any evidence. 11. Now, coming to the claim of assessee vis-à-vis the impugned purchases, where the said purchases are backed by purchase bills and the assessee is able to establish the transportation of goods by way of weighbridge bills, copies of transportation bills and further, where the assessee has also made available the evidence of sale of said goods which were purchased from six parties, then prima facie the assessee has established its case. Another aspect to be kept in mind is that the asses ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... dealers, who though collected VAT but had not deposited in the Government Treasury, is common in respect of the cases. However, in the present case before the Tribunal, the assessee claims that it had made available the evidence proving the genuineness of purchases made by it by way of copies of transportation receipts, weighbridge receipts and also the bills of transportation. Another aspect which is at variance from the other cases is that the payment in the case has been made by cheque. In view of the above said circumstances, where the assessee can establish its case of delivery of goods and its onward transmission by way of sale bills of nearly the same quantity, the entire purchases cannot be disregarded. In the paras hereinabove, the addition to the extent of 10% of the quantum of hawala purchases has been added in the hands of assessee and the said addition would meet the ends of justice, as the purchases are admittedly made from hawala parties. The Assessing Officer is directed to compute the quantum in respect of evidences furnished by him to the assessee in the form of statements recorded of the other persons. Where no such statements or any other evidence in respect of ..... X X X X Extracts X X X X X X X X Extracts X X X X
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