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DCIT 25 (1) , Mumbai Versus Amritlal P. Shah

2017 (11) TMI 861 - ITAT MUMBAI

Addition u/s 69C - bogus purchases - purchase from grey market at lower price - profit estimation - Held that:- The assessee did came forward and gave document to prove utilisation/consumption of material which was commented by learned CIT(A) to have proved utilisation/consumption of material for construction contracts executed by the assessee. Under these circumstances, the fair conclusion that can be drawn is that the assessee did purchased these material but from grey market at lower price an .....

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Thus, an additional income of ₹ 38,08,709/- is brought to tax and if the said income is added to the declared income of the assessee in return of income he total income stood at approx 8% of the gross contract value which in the case of the tax-payers engaged in civil contracts is considered as bench mark under presumptive tax scheme for small contractors u/s 44AD . - I.T.A. No. 642/Mum/2014 - Dated:- 14-11-2017 - SHRI D.T GARASIA, JUDICIAL MEMBER AND SHRI RAMIT KOCHAR, ACCOUNTANT MEMBER F .....

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ed by learned Assessing Officer (hereinafter called the AO ) u/s 143(3) of the Income-tax Act, 1961 (hereinafter called the Act ). 2. The grounds of appeal raised by the Revenue in the memo of appeal filed with the Income-Tax Appellate Tribunal, Mumbai (hereinafter called the tribunal ) 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 ₹ 2,03,27,686/- and ₹ 1,01,41,985/- made u/s.69C of the I.T. Act, 196 .....

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eady accepted in their statement on oath that they have not entered into any business with the assessee before the Sales-Tax Authorities. 4. On the facts and in the circumstances of the case, and in law, the Ld.CIT(A) grossly erred in not appreciating the fact that alleged bills were not supported by supply of goods and the notices u/s.133(6) issued to parties from whom alleged bills were received were returned undelivered by the postal authorities. 5. On the facts and in the circumstances of th .....

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of the AO. 7. The appellant prays that the order of the Ld. CIT(A) on the above grounds be set aside and that of the Assessing Officer be restored. 8. The appellant craves leave to amend or alter any ground or add a new ground. 3. The assessee is proprietor of M/s. Narendra Construction Company engaged in the business of execution of civil construction works and takes up various contracts from local authorities. It was observed by the A.O during the course of assessment proceedings u/s 143(3) r .....

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ee was directed by the AO to produce these five parties and furnish details and documents regarding goods and services supplied by these parties to the assessee. However, the assessee did not furnish confirmations/ details of goods and services supplied by these five parties and had also failed to furnish any corroborative evidence regarding receipt of goods and services from theses parties. The AO thus concluded that the assessee has not purchased any goods and services from these five parties .....

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order dated 29-12-2011 passed by the AO u/s 143(3) . Further, the assessee was asked to prove genuineness of the purchase transactions in respect of following seven parties and was asked to submit supporting bills/invoices, proof of supply of goods/services, transportation receipts, delivery challans, proof of payment and bank statements of these seven parties. SI. No. Name of the Party Amount (In Rs.) 1 Tara Enterprise 15,48,287.00 2 Deep Enterprises 42,16,943.00 3 V. K. Enterprise 2,85,002.45 .....

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led to the addition to the income of the assessee of ₹ 1,01,41,985/- w.r.t. purchases from these six parties, vide assessment order dated 29-12-2011 passed by the AO u/s 143(3) . 4. Aggrieved by the assessment order dated 29-12-2011 passed by the AO u/s 143(3), the assessee carried the matter in appeal before the learned CIT(A) . The learned CIT(A) deleted the additions by holding that assessee has discharged its onus . The learned CIT(A) deleted the addition of ₹ 20,12,218/- being .....

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e receipt of remittances from MCGM ii. Paper Book II containing purchase invoices, ledger a/c confirmation and bank statements evidencing the payments to each of the parties involved in disallowance. iii. Paper Book III containing purchase and consumption records (party wide, item wise, month wise) in quantitative and value wise extracted from invoices entered in books of accounts and from stock records maintained by the assesses and its comparative analysis of cross tally between accounted invo .....

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ined at various evidencing the physical receipts of materials. The above details were sent by learned CIT(A) to the A.O for verification and submission of remand report . The AO issued fresh notices u/s 133(6) to these selling parties during remand proceedings but notices to all these ten selling parties again returned un-served even during remand proceedings. The A.O submitted in remand report that notices u/s 133(6) sent to the abovesaid ten selling parties had been received back un-served and .....

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he learned CIT(A) observed that the assessee has submitted inward register of stock and consumption of material has been explained. The learned CIT(A) studied and analysed the profitability ratios of the assessee as also month wise consumption of various input for the period for construction activities . The learned CIT(A) observed that merely because notices u/s 133(6) were returned unserved is not sufficient to fasten the liability to tax on the assessee. He relied upon decision of Hon ble Bom .....

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87%. It was observed by learned CIT(A) that if these additions as made by the AO are added to the income, the GP ratio would go up to 26.80% which led learned CIT(A) to conclude that the assessee has discharged its onus of maintaining and submitting various evidences to substantiate the genuineness of the purchases and the additions as were made by the AO stood deleted, vide appellate order dated 01-11-2013 passed by learned CIT(A). 5. Being aggrieved by the appellate order dated 01-11-2013 pass .....

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n-served. It was submitted that even fresh notices u/s 133(6) were issued by the AO during remand proceedings which also returned unserved. It was also submitted that the assessee did not produced these parties despite being called to produce these parties by the authorities below. The learned DR submitted that the A.O had added 100% of purchases as income by treating the same as bogus purchases as genuineness of the purchases could not be proved by the assessee and the names of these parties ar .....

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nal evidences were given before the learned CIT(A) and remand report was called by learned CIT(A) from the A.O. after verification of the additional evidences which were forwarded by learned CIT(A) to the AO for necessary verification and remand report. The learned counsel for the assessee drew our attention to the remand report issued by the AO which is placed at paper book/page 325- 327. It was submitted that reply was given before the A.O. during remand report proceedings which is placed in p .....

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10-11 vide orders dated 18-08-2017 and also decision of Hon ble Bombay High Court in the case of CIT v. Ashish International in ITA no. 4299 of 2009. The learned counsel for the assessee also relied upon the decision of the tribunal in the case of ITO v. Deepak Popatlal Gala in ITA no. 5920/mum/2013 vide orders dated 27.03.2015, ACIT v. Ramila Pravin Shah in ITA no. 5246/Mum/2013 vide orders dated 05.03.2015, Ramesh Kumar & Company v. ACIT in ITA no. 2959/Mum/2014 vide orders dated 28.11.201 .....

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s assessee is civil contractor . The learned DR relied upon the assessment order of the A.O. . 6. We have considered rival contentions and perused the material on record including orders of the authorities below and cited case laws. We have observed that the assessee is civil work contractor working under the name and style of Narender Construction Company engaged in the business of execution of civil construction work and takes various civil construction contracts from local authorities. The as .....

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rises 53,21,087 2. M/s Daksh Enterprises 43,63,275 3. M/s Sidhivinayak Corporation 56,71,666 4. M/s Om Corporation 49,71,658 5. Tara Enterprise 15,48,287 6. Deep Enterprises 42,16,943 7. V. K. Enterprise 2,85,002 8. Balaji Traders 1,46,880 9. Harsh Corporation 35,51,103 10. Vaishali Enterprise 3,93,770 Total RS. 30469671 The assessee did not produce documents before the A.O to prove genuineness of the purchase transactions from these ten selling parties from whom the assessee had allegedly purch .....

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n details w.r.t. material so purchased by the assessee from these ten selling parties . The details of evidences submitted by the assessee before learned CIT(A) are as under: i Paper Book I containing the work order form MCGM, certified payment order, details of contract receipts with bank statement evidencing the receipt of remittances from MCGM ii. Paper Book II containing purchase invoices, ledger a/c confirmation and bank statements evidencing the payments to each of the parties involved in .....

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GP ratio with and without purchases in question & statement containing effect on consumption if purchases from parties in question is removed. iv. Paper Book IV containing stock inward/outward register evidencing the physical movement of purchased materials. v. Paper Book V containing copy of job cards maintained at various evidencing the physical receipts of materials. The Ld. CIT(A) forwarded these aforesaid evidences to the A.O for verification and remand report . The AO again issued fres .....

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essential to produce these parties and even if notices u/s. 133(6) returned unserved it is not relevant as it is not sufficient to fasten liability to tax on the assessee. it was also observed by learned CIT(A) that despite these selling parties are being listed as bogus dealers by Maharashtra VAT authorities it is not relevant and the additions to the income as made by the AO towards bogus purchases was ordered to be deleted by learned CIT(A). The assessee is a civil contractor and has stated .....

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ala dealers prepared by Maharashtra VAT authorities . The said purchases claimed by the assessee are appearing in the books of accounts of the assessee and the onus is on the assessee to prove genuineness of the purchases. The learned AO did not commented on the documents/evidences produced by the assessee in remand report proceedings and has commented that notices u/s 133(6) sent afresh has also come back unserved and that these parties are listed as hawala dealers by Maharashtra VAT Authoritie .....

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of the assessee and directed to delete the additions made by the AO. The learned CIT(A) did not considered it relevant that notices u/s 133(6) sent twice by the AO returned unserved as also the assessee did not produced these parties. The learned CIT(A) also did not considered it relevant that these selling parties are listed as hawala dealers by Maharashtra VAT authorities and they are engaged in issuing merely bogus bills without supplying any material . The learned CIT(A) also did not conside .....

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