TMI Blog2018 (2) TMI 176X X X X Extracts X X X X X X X X Extracts X X X X ..... s. 6663/Mum/2016 - - - Dated:- 31-1-2018 - SHRI RAJENDRA, AM AND SHRI RAVISH SOOD, JM For The Revenue : Shri Ram Tiwari, D.R For The Assessee : Shri N.R. Agarwal ORDER PER RAVISH SOOD, JUDICIAL MEMBER: The present appeal filed by the revenue is directed against the order passed by the CIT(A)-16, Mumbai, dated 24.08.2016, which in itself arises from the order passed by the A.O under Sec.143(3) r.w.s. 147 of the Income tax Act, 1961 (for short Act ), dated 30.03.2015. The revenue had assailed before us the order of the CIT(A) on the following grounds : 1. Whether on the facts and in the circumstances of the case and in law, the Ld. CIT(A) erred in deleting the addition made on account of bogus purchases ignoring the fact that during the course of survey proceedings, the Managing Director of the company admitted that purchase made from the parties were non-genuine? 2. Whether on the facts and in the circumstances of the case, and in law, the Ld. CIT(A) erred in deleting the addition made by the AO on account bogus purchases when the assessee has failed to give any quantity wise tally of purchases and its consumption in manufacturing proces ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... just entries which the assessee company had procured from the respective parties after providing equivalent amount of cash to them. The A.O observed that the assessee during the course of the survey proceedings had admitted of having booked bogus purchases in order to meet out certain expenditure which were incurred for smooth running of business, but however, the same did not qualify for the claim of deduction as a business expenditure under the provisions of the Income Tax Act. The A.O observed that the assessee on the basis of his aforesaid revelations had came up with an offer of additional income of ₹ 6,50,00,000/- for A.Ys 2010-11, 2011-12 and 2013-14. However, on a subsequent date i.e. 27.12.2012 Sh. Sunil G. Mathreja by way of a sworn affidavit retracted his earlier statement recorded in the course of the survey proceedings on 07th/08th June, 2012. 4. That during the course of the assessment proceedings the A.O on the basis of the information received from the Sales Tax Department that the assessee had made bogus purchases from the following parties :- Party Name Amount Shyam Traders 14, ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... existing at their respective addresses, therefore, the summons could not be served on them. The A.O observed that as regards the other three parties on whom summons were served at the given addresses, neither of them appeared in person in response to the same. The A.O further issued letters under Sec. 133(6) to all of the aforesaid parties, which however were returned unserved by the postal authorities. 5. The A.O in the backdrop of the aforesaid facts directed the assessee to prove the authenticity of the purchase transactions under consideration and place on record documents evidencing the transportation of the goods and consumption of the same in the course of its business. The assessee in compliance to the directions of the A.O submitted a certificate of Mumbai Metropolitan Region Development authority (for short MMRDA ) and the Authorized Certified Lab/Agency to show that the materials had been consumed as per the formula specified in the contract document, which would not had been possible had the above purchases been bogus. The assessee in order to drive home the genuineness of the purchase transactions under consideration, submitted that the payments were released to t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... i) that the assessee did not produce any of the abovementioned supplier parties for examination, specifically when it remained as a matter of fact that neither of the said parties were existing at the given addresses. The A.O further observed that though Sh. Sunil Mathreja had in his statement claimed that the delivery challans were destroyed as a matter of routine practice in the last 5-6 years, however, the said claim militated against the fact that the Sales Tax Department in the course of the search conducted at the premises of the assessee company had laid their hands on the copies of the delivery challans which were available with the assessee. The A.O on the basis of his aforesaid observations, holding a conviction that the assessee had failed to establish the genuineness of the purchases which were claimed to have been made from the aforementioned parties, therefore, disallowed the bogus purchases aggregating to ₹ 5,03,85,966/- and added the same to the returned income of the assessee. 6. Aggrieved, the assessee carried the matter in appeal before the CIT(A). That before the CIT(A) the assessee furnished copy of stock register along with the details of consumption ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ance to the extent of 2% of the alleged bogus purchases. 8. We have heard the authorized representatives for both the parties, perused the orders of the lower authorities and the material available on record. We find that a bare perusal of the facts as had emerged from the records clearly reveals that the assessee had failed to substantiate the genuineness and veracity of the purchases claimed to have been made from the aforementioned parties which had been blacklisted by the Sales Tax Department, Maharashtra as hawala dealers who were involved in providing bogus entries without any genuine sale/supply of goods. We are of the considered view that keeping in view the substantial material which had been placed on record by the assessee before the lower authorities, viz. copy of the stock register and details of consumption and material purchased, details of opening work in progress, closing work in progress, stock statement as on 31.03.2008 and 31.03.2009 and consumption formula required as per Government books, it can safely be concluded that the purchases claimed by the assesses to have been made from the aforementioned parties were utilized by the assessee for the construction ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... hat supplier was found to be bogus by the sales tax department or not available at the given address in respect of certain purchases which were actually made from others and also used in construction and sales, the entire purchase so made cannot be disallowed, for this proposition reliance can be placed on the decision of Hon ble jurisdictional High Court in the case of Nikunj Exim (supra), Atma Prakash Bathra and also Delhi High Court in the case of Sunrise Tolling Pvt. Ltd. (supra). From the record we also found that the material so purchases for construction was as per the work contract and MMRDA and consultant Certificate was obtained for the utilization of those materials. We had also compared the rates at which assessee has purchased the goods with the rates prescribed by the Thane District Schedule Rate as contained at page 73 to 126 of the paper book. We had also verified the certificate issued by Mumbai Metropolitan Region Development Authority with regard to awarding of contract work of widening and construction of eastern express highway to the assessee. The certificate so issued by the Mumbai Metropolitan Region Development Authority also certified that they have been s ..... X X X X Extracts X X X X X X X X Extracts X X X X
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