TMI Blog2018 (12) TMI 1449X X X X Extracts X X X X X X X X Extracts X X X X ..... and dismiss the appeal of the assessee. - I.T.A. No.1587/Mum/2017 - - - Dated:- 26-9-2018 - Shri Mahavir Singh, Judicial Member And Shri Ramit Kochar, Accountant Member For the Assessee : None For the Revenue : Shri. C.S. Sharma ORDER PER RAMIT KOCHAR, ACCOUNTANT MEMBER: This appeal, filed by assessee, being ITA No. 1587/Mum/2017, is directed against appellate order dated 22.12.2016 passed by learned Commissioner of Income Tax (Appeals)-30, Mumbai (hereinafter called the CIT(A) ), for assessment year 2009-10, the appellate proceedings had arisen before learned CIT(A) from assessment order dated 10.03.2015 passed by learned Assessing Officer (hereinafter called the AO ) u/s 143(3) r.w.s. 147 of the Income-tax Act, 1961 (hereinafter called the Act ) for AY 2009-10. 2. The grounds of appeal raised by the assessee 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 learned Commissioner of Income Tax (Appeal)-30, Mumbai erred in confirming addition of ₹ 47,91,826/- on estimated profit element on treat ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 7,033,440 Suryadev Metal (India) 2008-09 5,236,129 Pinaking Metal Industries 2008-09 4,534,406 Deep Metal Tube 2008-09 1,649,754 Prime Steel Impex 2008-09 3,037,137 Jay Ambe Metal 2008-09 3,719,235 Asian Metal Industries 2008-09 6,722,108 Jindutt Corporation 2008-09 208,166 P M Trading Company 2008-09 1,770,007 Pakshal Steel Engineering CO 2008-09 1,925,995 Viraj Metal Corporation 2008-09 2,498,225 38,334,602 The AO also got information from Maharas ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... assessment order, it is noticed that, in the appellant's case, Id. AO has made independent verifications, apart from the information received from the Sales Tax Department. Notice was issued u/s 142(1) of the Act, calling for several details with regard to the purchases and sales supported by bills and vouchers reflecting the same in the stock register of its entry and exit with detailed description of the items, for which the appellant failed to furnish the full details. The appellant failed to furnish ail the details and requested the AO to complete the assessment after making a reasonable addition. In the present case, there is overwhelming evidence in the form of statement of supplier given before the Sales tax authorities that it was engaged only in issuing hawala bills and no goods were ever supplied by them. 5.4 After weighing the evidence pros and cons; I find that the appellant has not reconciled the purchases with the items sold and failed to reconcile 1:1 of the items purchased and sold, despite giving an opportunity to do so, by the AO during the assessment proceedings. Onus is always on the appellant to prove as to how the material purchased was firstly obtain ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he case of Durgaprasad More (Supra), the Hon'ble Court went on to add that a party who relies on a recital in a Deed has to establish the truth of this recital, otherwise it will be very easy to make self serving statements in documents either executed or taken by a party who relied on those recitals. If all that an assessee who wants to evade tax has to have some recitals made in a document either executed by him or executed in his favour then the door will be left wide open to evade tax. The Hon'ble Court further held that the Taxing Authorities were not required to put on blinkers while looking at the documents produced before them. They were entitled to look in to the surrounding circumstances to find out the reality of the recitals made in those documents. 5.7 The onus to prove that apparent, Is not the real one, is on the party who claims it to be so, as held by the Hon'ble Supreme Court in the case of CIT v. Daulat Ram Rawatmull [1973] 87 ITR 349 and CIT v. Durga Prasad More (supra). It is also a settled legal proposition that if no evidence is given by the party on whom the burden is cast, the issue must be found against him. Therefore; onus is always on a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... any evidence which has not been subjected to cross-examination. 5.9 Coming to the issue of estimated addition on the said bogus purchases, it is pertinent to mention the decision of the Hon'ble Gujarat High Court in the case of CIT vs. Simit Sheth (2013) 38 Taxmann.com 385 (Guj). In the case, Hon'ble Gujarat High Court was seized with a similar issue where the AO had found that some of the alleged suppliers of steel to the assessee had not supplied any goods but had only provided sale bills and hence, purchases from the said parties were held' to be bogus. The AO, in that case added the entire amount of purchases to gross profit of the assesses. Ld. CIT(A) having found that the assesses had indeed purchased though not from named parties but other parties from grey market, partially sustained the addition as probable profit of the assessee. The Tribunal however, sustained the addition to the extent of 12.5%. Taking into account the above facts, the Hon'bie Gujarat High Court held that since the purchases were not bogus, but were made from parties other than those mentioned in books of accounts, only the profit element embedded In such purchases could be added t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... en that In none of those cases so much of investigation was done including those by another Government authority, viz., Maharashtra Sales Tax authority before whom affidavits was filed stating that only bogus bills were supplied without delivery of goods. In the case before the Hon'ble Bombay High Court in Nikunj Eximp (supra), the suppliers had not appeared before the Assessing Officer and from the judgment it appears that it was not a case of the suppliers being non-existent. However, in the present case in appeal, the alleged supplier has been found to be non-existent. This is not merely a case where the supplier has failed to appear before the Assessing Officer. Hence, the judgment of the Hon'ble Bombay High Court relied upon by the appellant would be of no help. In fact in a later decision In Nikunj Eximp (2014) 48 Taxmann.com 20 (Bom), Hon'ble Bombay High Court on the very same issue of obtaining bogus bills dismissed the assessee's Writ Petition filed against notice u/s. 148. The other cases cited in the submissions were also not applicable to the facts of the present case, in view of the fact that the appellant miserably failed to prove the genuineness ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... IT(Inv) Wing, Mumbai which in turn was based on information received by Investigation wing from Maharashtra VAT authorities that there is a scam unearthed by the Maharashtra Sales Tax Department regarding alleged issue of hawala bills or accommodation entries by several parties from Mumbai who have issued bogus bills without supplying any material. It was revealed in the scam so unearthed by Maharashtra VAT authorities that these alleged bogus hawala parties have issued alleged bogus bills without supplying any material physically and these parties are infact non-existent parties and they have not deposited VAT/Sales tax with Maharashtra VAT Authorities while beneficiaries of these bogus bills have taken VAT/Sales tax credits in their VAT returns filed with Maharashtra VAT authorities causing loss to exchequer . The name of the assessee also appeared in the list prepared by the Maharashtra Sale Tax Department as beneficiary of these alleged bogus purchases to the tune of ₹ 3,83,34,603/- from the following alleged bogus parties:- Name of the Party Financial Year Amount (In Rs.) Total Veer I ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ent year. The first proviso to Section 147 is , thus, not applicable. The assessee was confronted with this incriminating information by the AO wherein assessee was called upon by the AO to explain the same . The assessee could not link the purchases with the corresponding sales . The assessee also could not produce books of accounts before the AO . The assessee could not produce these parties before the AO. The assessee vide order sheet entry dated 05.03.2015 requested the AO during the course of re-assessment proceedings to make reasonable additions with respect to the alleged bogus purchases which led AO to quantify additions of the profits embedded in these alleged bogus purchases which was quantified @ 12.5% of the alleged bogus purchases of ₹ 3,83,34,602/- which led to the additions to the tune of ₹ 47,91,826/- to the returned income in the hands of the assessee which was later confirmed by learned CIT(A) as the assessee still could not reconcile purchases with sales as also the assessee could not prove physical movement of material nor proof of delivery of material, transport challans , octroi receipts, GRN s and goods inward register was also not produced before ..... X X X X Extracts X X X X X X X X Extracts X X X X
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