TMI Blog2018 (6) TMI 504X X X X Extracts X X X X X X X X Extracts X X X X ..... )/2015-16, CIT(A)-48/I.T.594/ACCC-13/2014-15, CIT(A)-52/IT/DC-CC-2(3)/300/2016-17 dated 28.01.2016, 20.11.2015,08-03-2017. The Assessments were framed by the Dy. Commissioner of Income Tax, Asst. Commissioner of Income Tax, Circle-6(2), CC-13, CC-2(3) Mumbai (in short DCIT ACIT / AO) for the A.Y. 2010-11, 2011-12 2012-13 vide orders dated 26.02.2013, 13.12.2013, 21.01.2015 under section 143(3) of the Income Tax Act, 1961 (hereinafter the Act ). 2. The only common issue in this three appeals of assessee is against the order of CIT(A) confirming the action of the AO in disallowing the entire bogus purchases merely on the basis of list of suspicious dealers provided by Maharashtra Sales Tax Department i.e. in AY 2010-11 amounts of Rs. 4,59,25,643/-, in AY 2011-12 amount of Rs. 7,52,77,374/- and in AY 2012-13 an amount of Rs. 2,64,43,393/-. In all the three years the facts and circumstances are exactly identical and issue is common and hence we will take the facts from AY 2010-11 in ITA No. 2173/Mum/2016 and will decide the issue. The ground raised by assessee in AY 2010-11 reads as under: - 1. The learned CIT(A) erred in confirming the disallowance of ₹ 4,59,25, ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... fied and deleted the disallowance instead of directing the AO to verify and allow the claim if found correct and hence, the disallowance of Rs. 2.20 crore is unjustified and liable to be deleted. 3. Briefly stated facts are that the assessee is engaged in manufacturing and/or marketing of bulk drugs and formulation and also in trading activity whereby formulation purchases from other companies are resold. The AO noticed during the course of assessment proceedings on the basis of information received from Maharashtra Sales Tax department Mumbai that the assessee is making purchase from Hawala parties/issuing bills without delivery of goods or articles and assessee being one of the beneficiaries of the hawala entries during the assessment year 2010-11 and 2011-12 and 2012-13 from the following parties - Admittedly, these above parties are declared as hawala parties by Maharashtra Sales Tax Department and these parties have admitted that they were issuing merely bills/ accommodation entries after receiving payment through cheque and non-delivery of actual goods. This was admitted before Maharashtra Sales Tax Department, Mumbai by these parties. In the meantime, a survey ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... der: - careful perusal of the above referred statement, it is very clear that the appellant has itself offered the additional income. The Department has not asked him to offer any income. It is the appellant who has failed to substantiate its claim of purchases and requested the department not to levy penalty. Hence the appellant's submission that the AO relied only on the statement recorded by the Maharashtra VAT Department is absolutely on wrong foot. The appellant, during survey proceedings has itself failed to substantiate its purchases and also faded to substantiate the same said purchases during assessment proceedings. The appellant has also filed a letter offering the same as its income and hence the Department has not investigated deep into the matter. Appellant's subsequent retraction on account of initiation of penalty proceedings by the AO is not worth to be noted. If the appellant has made genuine purchases, then the appellant has to prove it at the time of survey proceeding. It could not be proved also at the time of assessment proceedings. The offering of income on theses two occasions has itself proved that there is no evidence of actual purcha ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... d further that the artificial or technical rules of evidence are not applicable to Income tax proceedings. This aspect of the matter has received carefully consideration by the Hon'ble Supreme Court in Chuharnal V/s CIT 172 ITR 250. It has been held in various cases that the statement given by the assessee at the time of survey I search action is binding on it and any retraction made by him has no meaning at all. The various judicial decisions in this regard areas follows 1 Hiralal Maganlal Co V/s DOT 96 lTD 113 MUM. 2 Rameshchandra Co V/s CIT 168 ITR 375 (BOM) 3. Hotel Kiran v/s Assistant Commissioner of Income-tax 82 lTD 453 4. Video Master V/S Joint Commissioner of Income-tax 83 ITD 102 It is pertinent to mention here that Hon'ble Supreme Court in the case of Pullangodo Rubber Produce co Ltd. V/s State of Kerala 1792 CTYR (SC) 253 has held that, an admission is an extremely important piece of evidence though it is not conclusive. Therefore, statement made voluntarily by the assessee could form the basis of the assessment. The burden lies on the assessee to establish that the admission made in the statement at the time of survey was wrong. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... essee stated that the complete Vat was paid to the Sales Tax Department of Maharashtra on these bogus purchases. At last, the learned Counsel for the assessee before us filed copy of Tribunals order in assessee s sisters concern case in the case of DCIT vs. Laboratories Griffon Pvt. Ltd. dtd. 11.04.2018 for AY 2011-12, wherein Tribunal has restricted the disallowance at 30% of the bogus purchase by observing that the assessee might have made purchase from grey market and obtained bogus purchase bills from hawala parties just to avoid VAT and other regulatory procedures. The Tribunal in Para 19 held as under: - 19. We have heard rival submissions and gone through the facts and circumstances of the case. We note that the assessee company claimed to have disbursed gift articles for an amount of ₹ 20,97,900/- to the distributors/dealers for promotion of the pharmaceuticals products which it manufactures and trades in. The claim of the assessee was not acceptable for the AO for the reason that the 98.18% of the total sale of the pharmaceutical products of the assessee company was sold through the consignee M/s. Franco Indian Pharmaceuticals Pvt. Ltd. and in this assessment ye ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... reme Court in the case of Radhasomy Satsang vs CIT 193 ITR 321 (SC) wherein it was held that when the facts and the law permeating in the earlier years are the same, then a divergent view should not be taken and consistency must be followed. We find considerable force in the aforesaid contention of the assessee on this issue. However, we take note of the fact that the assessees have failed to give the list of the recipients of the gift material or confirmation from them when called upon by the AO/Ld. CIT(A). When a claim of expenditure is claimed the assessee is duty bound to produce the vouchers/bills as well as material to show the genuineness of the claim. Here in this case, the assessee has purchased the material through banking channel from M/s. Subhalakshmi Enterprises. Though in another proceeding (survey/search) which happened in respect to the seller M/s. Subhalakshmi Enterprises of gift items, wherein the seller has given a statement that it is providing accommodation entries cannot be the only material which can make the claim of the assessee that it has purchased the SS Dinner set from them as bogus. Since the assessee has produced bills and invoices for purchase of the ..... 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