TMI Blog2017 (9) TMI 368X X X X Extracts X X X X X X X X Extracts X X X X ..... And ITA NO.7202 and 7203/Mum/2015 - - - Dated:- 30-6-2017 - SHRI MAHAVIR SINGH, JM AND SHRI RAJESH KUMAR, AM For The Revenue : Shri Aarsi Prasad For The Assessee : Shri Kalpesh Turalkar ORDER PER RAJESH KUMAR, A. M: The captioned are cross-appeals by the Revenue and assessee pertaining to assessment years 2009-10 to 2011-12. The appeals are directed against the order of the CIT(A)-2, Thane, dated 30.6.2015 and 14.9.2016 which in turn have arisen from an orders passed by the Assessing Officer dated 18.3.2014 and 20.3.2015 under section 143(3) of the Income Tax Act, 1961 (in short the Act). ITA NO.4929/Mum/2015 2. The assessee has filed revised grounds of appeal which are reproduced below: i) The Commissioner of Income-Tax (Appeals)-2, Mumbai (hereinafter referred to CIT(A) ) erred both on facts and in law in passing the impugned order dated 30th June, 2015 and therefore the same is liable to be set aside on this ground alone. ii) On the facts and in the circumstances of the case and in law, the learned CIT(A) erred in confirming disallowance of purchase of ₹ 39,07,412/-, by estimating G.P. @ 25% of ₹ 1,56,29,649/- ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... irmation of disallowance of purchase of ₹ 39,07,412/-, by estimating G.P. @ 25% of the bogus purchases i.e.Rs.1,56,29,649/- and thus confirming the addition under section 69C of the Income Tax Act 1961 and the issue raised in ground no.4 is against the rejection of books of account by the ld.CIT(A) u/s 145(3) of the Act. 5. Brief facts of the case are that the assessee was engaged in the business of redrawing of Copper Wire, Patta Strips and Labour thereof and filed return of income on 29.9.2009 declaring total income of ₹ 1,97,370/- which was processed under section 143(1) of the Act and after selecting the case for scrutiny, the assessment was framed u/s 143(3) of the Act vide order dated 20.10.2011 at ₹ 2,68,630/-. Thereafter, the case was reopened u/s 148 of the Act on the ground that the assessee had made bogus purchases from various parties which were declared by the Sales Tax Department, Government of Maharashtra as hawala operator and their names were appearing in the website of the State Government and were providing accommodation entries. According to the information received, the assessee obtained bogus purchase bills from following parties: ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 23,90,349/- @ 4% and nominal NP of ₹ 98,609/- @ 0.16% on total turnover of ₹ 5,97,09,9411- as against GP of ₹ 17,54,417/-@ 6.12% and NP of ₹ 1,59,238/-@0.55% on total turnover of ₹ 2,86,84,541/- of the last year. From these facts, it is seen that the GP rate of the year under appeal (wherein the assessee has debited bogus bills of ₹ 1,56,29,649/-) has gone down by more than 50%, i.e. from 6.12% to 4.00%, for which the Ld AR could not offer any explanation. This clearly shows that the appellant has suppressed its taxable profit, for the reason best known to it. If the accounts of the appellant are rejected, as per provision of section 145(3) of the Act and GP of last F.Y. i.e. 2007-08 is adopted in the year under appeal, then the addition for suppressed GP is worked out at ₹ 12,65,850/-(36,54,248/- Less 23,88,397/-) [(relying on the ruling of Hon. Supreme Court in the case of Kanchwala Gems Vs. JCIT 288 ITR 10 (SC), as above]. This clearly indicates that the appellant had suppressed its income by booking hawala purchases. In this case, the 25% disallowance, out of hawala purchases, is worked out at ₹ 39,07,412/-(Rs.l,56,29,649x25/100), ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 9.2016. The operative part is extracted below:- 8. We have considered rival contentions and carefully gone through the orders of authorities below. We had also deliberated on the judicial pronouncements referred by AO and CIT(A) in their respective orders as well as considered the ratio laid down by various decisions cited by ld. DR and AR during the course of hearing before us in the context of factual matrix of the case. From the record we found that by relying on the official website of the Sales Tax Department, Government of Maharashtra regarding suspicion parities providing accommodation entries, the AO has made an addition. In response to the show cause notice issued by the AO, the assessee has supplied copy of bills, cop of the bank statement to prove that payment made for purchases, and copy of ledger accounts of all eight parties. The assessee is an individual carrying on a proprietary business in the name of M/s Noble Construction Company, undertaking construction work of dams and canals on behalf of Government of Maharashtra in the interior part of the State. In the interior parts the goods are not available easily. The Government contracts are time barring contra ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... fficer - Assessee filed letters of confirmation of suppliers, copies of bank statement showing entries of payment through account payee cheques to suppliers and stock reconciliation statements - Sales of purchased goods were not doubted and substantial amount of sales made by assessee was to Government department - Further, books of account of assessee had not been rejected - Tribunal deleted disallowance - Whether merely because suppliers had not appeared before Assessing Officer or Commissioner (Appeals), it could not be concluded that purchases were not made by assessee - Held, yes [Para 71 [In favour of assessee. The above decision squarely applies to the case of the assessee as entire sales in case of assessee is made to the Government. 10. Hon'ble Chandigarh Tribunal in the case of ITO vs Arora Alloys Ltd (2012) (12 ITR (Trib) 263). This decision has been affirmed by the Punjab Haryana High Court in 370 ITR 372, wherein it was held as under:- Section 69C of the Income-tax Act, 1961 - Unexplained expenditure - Assessment year 2004-05 - Where addition on account of unexplained expenditure incurred for purchase of raw material was solely based on informat ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... lowed and ground no.4 is dismissed. 8. Ground no.5 raised by the assessee is against the reopening of assessment u/s 147/148 of the Act. 9. After examining the assessment order and the appellate order and various facts put before us during the course of hearing, we find that the reopening was based on valid reasons as the AO has received information from the Sales Tax Department, GOM and there was no doubt that the assessee was availing bogus entries for purchases from four parties as stated herein above without purchasing any actual material. Only thereafter recording due satisfaction, the AO reopened the case u/s 147/148 of the Act. Under these circumstances and considering the facts of the case, we are of the considered view that the reopening in such circumstances is quite valid as there were several reasons to justify the reopening. Accordingly, ground of reopening of the assessment taken by the assessee is dismissed. 10. In the result, the appeal of the assessee is partly allowed. ITA NO.7436 7437/Mum/2016 11. We have already decided the identical issue in appeal for the assessment year 2009-10 in favour of the assessee by giving part relied. Since, the ..... X X X X Extracts X X X X X X X X Extracts X X X X
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