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ACIT-25 (3) , Mumbai Versus Smt. Pinaki D. Panani And Vice-Versa

2016 (12) TMI 1667 - ITAT MUMBAI

Bogus purchases from the Hawala dealers - Held that:- The assessee duly maintained books of account. The contract receipts are completely verifiable as they are paid/received through accounts payee cheque and subjected to TDS. This factual matrix was not even controverted by the Revenue. Thus, mere appearance of the purchase parties on the website of the Sales Tax Department does not falsify the purchases, claimed to be made by the assessee. There is a possibility that some other parties might h .....

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ioner of Income Tax (Appeal), it is affirmed, resulting into dismissal of appeal of the Revenue. - ITA No.119/Mum/2015 And C.O. No.117/Mum/2015 - Dated:- 19-12-2016 - Shri Joginder Singh, Judicial Member And Shri Rajesh Kumar, Accountant Member For The Assessee : Shri Rahul K. Hakkani For The Revenue : Shri Rajat Mittal-DR ORDER Per Joginder Singh (Judicial Member) The Revenue as well as the assessee is aggrieved by the impugned order dated 21/10/2014 of the Ld. First Appellate Authority, Mumbai .....

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ommissioner of Income Tax (Appeal), while granting relief to the assessee, did not considered the fact that the addition was made by the Assessing Officer on the basis of information received from DIT(Invest.) and the Sales Tax Department of Maharashtra Government with respect to bogus purchases made by the assessee from suspicious dealers, wherein, goods were actually not supplied. The crux of the argument is that assessee could not prove the genuineness of the purchases before the Assessing Of .....

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der, leading to addition made to the total income, conclusion drawn in the impugned order, material available on record, assertions made by the ld. respective counsel, if kept in juxtaposition and analyzed, we find that the assessee is engaged in the business of civil construction, on sub-contract basis, from other contractors, who were awarded contracts by Municipal Corporation of Greater Mumbai (in short hereinafter MCGM). The assessee carried out various repairs and construction job in the na .....

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actual matrix considered by the Hon'ble Settlement Commission and explained by the assessee with respect to whole process of works was considered by the Ld. Commissioner of Income Tax (Appeal) as is evident from para 2.6 onwards of the impugned order. It is noted that the assessee made purchases worth ₹ 1,69,48,368/- from the parties, who were suspected to be non-genuine by the Sales Tax Department of the Maharashtra Government as the hawala dealers made certain statement before the Sa .....

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de through banking channel. In view of this factual matrix, the case of the assessee is fully covered by the decision from Hon'ble jurisdictional High Court in the case of CIT vs M/s Nikunj Exim Enterprises Pvt. Ltd. 372 ITR 619 (Bom.), Dhakeshwari Cotton Mills Ltd. vs CIT 26 ITR 775 (SC), Hital Chunilal Jain & Ors. (2016) 46 CCH 0020(Mum.) and DCIT vs Rajeev G. Kalathil (2014) 41 CCH 552 (Mum.). The Hon'ble High Court in the case of M/s Nikunj Eximp Enterprises Pvt. Ltd. (supra) hel .....

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e parties had categorically denied having any business dealings with the Appellant Company . ............. We have considered the submissions on behalf of the revenue. However, from the order of the Tribunal dated 30.04.2010, we, find that the Tribunal has deleted the additions on account of bogus purchases not only on the basis of stock statement i.e. reconciliation statement, but also in view of the other facts. The Tribunal records that the Books of Accounts of the assessee appellant have not .....

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ssessing Officer or the CIT(A), one cannot conclude that the purchases were not made by the assesseeappellant. The Assessing Officer as well as CIT(A) have disallowed the deduction of ₹ 1.33 crores on account of purchases merely on the basis of suspicion because the sellers and the canvassing agents have not been produced before them. We find that the order of the Tribunal is well a reasoned order taking into account all the facts before concluding that the purchases of ₹ 1.33 erores .....

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should have confronted the assessee with the material thus gathered. If the Assessing Officer really wanted to apply the tentative inferences of the Sales Tax Department to the assessment proceedings of the assessee, he was duty bound to call the deponents and make them confirm the nature of dealings with the assessee. If they depose that the dealings with the assessee are not genuine the assessee would have right to cross examine them to bring the truth of the deposition on the surface. This h .....

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unt payee cheques, nobody can deny the existence of the parties. Once the assessee establishes consumption of items purchased nothing more remains to be proved by the assessee. The fact that the assessee has made the purchases by payment through account payee cheques and its consumption has been broadly explained which clearly establishes the assessee's case that the purchases as recorded by the assessee in the books of accounts are genuine. The ratio laid down by Hon'ble Apex court in t .....

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aking the assessment tinder sith-section ('3) of Sectioii 23 of the Act, the Income-tax Officer is not entitled to make a pure guess and make an assessment without reference to any evidence or any material at all. There must he something more than hare suspicion to support the assessment under Section 23(3). Likewise, the Mumbai Bench of the Tribunal in the case of Hiralal Chunilal Jain & Others vs. ITO & Others (2016) 46 CCH 0020 (Mum) wherein the Tribunal held as under: 2. Assessee .....

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ries in the list. The AO directed the assessee to produce the party from whom he had claimed to have purchased goods. However, the supplier was not produced by the assessee. Summons issued to Shiv Sagar could not he served on the given address. The AO held the purchase transaction bogus and treated the entire purchase (Rs. 7.21 lakhs)as unexplained expenditure u/s.69C of the Act. 5. We have heard the rival submissions and perused the material before us. We find that the AO had received informati .....

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ayments were made through banking channels, that the AO had made addition of entire purchases u/s.69 of the Act, that the FAA had reduced it to 20%. It is a fact that the AO had not rejected the sales of the assessee and the assessee was maintaining the quantative derails and stock register. In our opinion, once the sales are accepted as j'enuiize or not doubted the AO cannot reject the entire purchase. In the case of Nikunj Eximp(supra)the Hon'ble Bombay High Court has held if sales wer .....

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r 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 to find out as whether there was any immediate cash withdrawal from their account. We find that no such exercise was done. In the present case also the AG had made the addition on the basis of information received from the Sales tax department, but, he did not m .....

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Rajeev G. Kalathil reported at (2014) 41 CCH 0552 (Mum), wherein it was held as 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-da .....

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the material before us. We find that AO had made the addition as one of the supplier was declared a hawala dealer by the VAT Department. We agree 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 to find out as whether there was any immediate cash withdrawal from their accou .....

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is nothing, in the order of the AO, about the cash trial. Secondly, proof of movement of goods is not in doubt. Therefore, considering the peculiar facts and circumstances of the case under appeal, we are of the opinion that the order of the FAA does not suffer from any legal infirmity and there are not sufficient evidence on.file to endorse the view taken by the AO. So, confirming the order of the FAA, we decide ground no.1 against the AO. Considering the totality of facts and the foregoing dis .....

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