TMI Blog2017 (10) TMI 1558X X X X Extracts X X X X X X X X Extracts X X X X ..... hases under consideration. - I.T.A. Nos. 125 to 127/Mum/2016, I.T.A. Nos.121 to 123/Mum/2016 - - - Dated:- 27-10-2017 - SHRI B.R. BASKARAN, AM AND SHRI RAVISH SOOD, JM For the Assessee : Shri. Raj Kumar Singh For the Revenue : Ms. Pooja Swaroop ORDER PER RAVISH SOOD, JUDICIAL MEMBER: The present set of cross appeals filed by the assessee and the revenue are directed against the consolidate order passed by the CIT(A)-30, Mumbai, in the case of the aforementioned assessee, viz. Vinod H. Sanghvi for A.Y. 2009-10, 2010-11 and A.Y. 2011-12, each dated. 15.10.2015, which in itself arises from the respective assessment orders passed under Sec.143(3) r.w.s 147, dated. 21.03.2014 for A.Y. 2009-10;under Sec. 143(3), dated. 15.03.2013 for A.Y. 2010-11 and under Sec. 143(3) r.w.s 147, dated 21.03.2014 for A.Y. 2011-12. That as common issues are involved, therefore, the said respective appeals are taken up together and disposed of by way of a consolidate order. That as the CIT(A) had taken the case of the assessee for A.Y. 2010-11 as the lead case, therefore, we shall first take up the cross appeals of the assessee and the revenue for A.Y. 2010-11. The assessee vid ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... either with the remarks Not known‟, Left‟ or No such address‟, or in certain cases the same were served but were not complied with by the parties. The details of the said parties alongwith the fate of the notices forwarded to them under Sec. 133(6), is as under: S. No. Name of the Party Amount Remarks [as regards Notices sent u/s 133(6)] 1. M/s Aman Impex 16,63,457 Not Known 2. M/s Chair Impex Trading Pvt. Ltd. 19,87,336 Not Claimed 3. M/s Chirag Steel Centre 10,41,003 Not Known 4. M/s Devang Metals 10,32,140 Left 5. M/s Kanak Steel (India) 17,64,703 Not Known 6. M/s Kanak Guru Tubes Metals Pvt. Ltd. 3,25,47,465 Not Known 7. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e assessee. That in the backdrop of the aforesaid facts the A.O concluded that the assessee by neither producing the aforesaid parties for examination before him, nor placing on record the documentary evidence to substantiate the genuineness and veracity of the purchase transactions, had thus, failed to prove the veracity of the purchase transactions. However, the A.O observed that as the assessee had been able to correlate the quantitative details, therefore, it could safely be concluded that the assessee had made the purchases of the goods under consideration, though not from the aforementioned parties, but from certain unidentified parties in cash. The A.O held a conviction that the assessee after making cash purchases of the goods under consideration, had thus, with the intent to route the purchase and sale of the said goods through its books of account had taken accommodation entries from the aforementioned parties. The A.O observed that despite sufficient opportunity the assessee had failed to place on record the source from where the goods under consideration were purchased by him. Thus, in the backdrop of the aforesaid facts the A.O taking support of the order of the ITAT, ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... bills, octroi receipts, weighing bills, goods receipt notes (GRN), subsequent sale/manufacturing details, despite sufficient opportunity having been afforded to him during the course of the assessment proceedings. The CIT(A) observed that now when the Sales tax Department had classified the aforementioned parties as Hawala dealers and intimated to the Income-tax department that the assessee was one of the beneficiary, therefore, a very heavy onus was cast upon the assessee to dislodge the said observations and prove on the basis of infallible evidence that he had made genuine purchases from the said parties. The CIT(A) observed that the assessee had failed to discharge the onus as stood cast upon him and could not prove the genuineness and veracity of the purchase transactions under consideration to the hilt. The CIT(A) took strong cognizance of the fact that the assessee had failed to produce the copies of consignments, if any, received from the transport contractor showing that the material purchased from the consignors was actually delivered to him and freight was paid on the same. The CIT(A) further deliberated on the fact that the assessee had failed to place on record documen ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... iew of the A.O that the assessee had failed to substantiate the genuineness and veracity of the purchase transactions and could not disprove the findings of the A.O regarding the non-existence of the parties. However, the CIT(A) observed that now when the A.O had not doubted the genuineness of the sales, therefore, he could not have gone ahead and made addition of the peak investment in making of the said purchases by the assessee. The CIT(A) thus concluded that now when it remained as a matter of a conceded fact that the assessee had made purchases of the goods under consideration, though not from the aforementioned bogus parties, but from certain unidentified source, therefore, the addition in the hands of the assessee was liable to be restricted only to the extent of the profit element that would be involved in making of such purchases. The CIT(A) in support of his aforesaid conviction relied on the judgment of the Hon ble High Court of Gujarat in the case of Bholanath Polyfab Pvt. Ltd. 355 ITR 290 (Guj). The CIT(A) in the backdrop of his aforesaid observations deliberated on the aspect of quantification of the estimated profit element in respect of the said bogus purchase trans ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... isallowance of any part of the said purchases was called for in the hands of the assessee. However, on a specific query by the bench the ld. A.R accepted that there was no compliance by either of the parties to notices issued under Sec. 133(6). Alternatively, the ld. A.R submitted that as during the year under consideration the rate of VAT on ferrous and non-ferrous items in which the assessee was trading was 4%, therefore, even if the genuineness of the purchase transactions was to be disbelieved, the addition was liable to be restricted to the extent of VAT of 4% of the value of the purchases under consideration. The ld. A.R to support his aforesaid contention as regards the rate of VAT as was applicable during the year under consideration, therein drew our attention to the purchase invoices (Page 38-39) of his Paper book-1‟ (for short APB-1‟) wherein the VAT rates were reflected at 4%. 9. We have heard the authorized representatives for both the parties, perused the orders of the lower authorities and the material available on record. We have given a thoughtful consideration to the facts of the case and are of the considered view that from a perusal of the recor ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... hase transactions. We are further of the view that now when there were serious allegations in respect of the purchase transactions claimed by the assessee to have been made from the aforementioned parties, therefore, a much more heavy onus was liable to be discharged by the assessee in order to irrebutably evidence the genuineness and veracity of the purchase transactions under consideration. We find that the assessee had failed to substantiate the authenticity of the purchase transactions, and to the extent the material was placed on record by him, the same to our considered view was seriously falling short of the quality of onus which was required to be discharged by him. We have given a thoughtful consideration to the facts of the case and are of the considered view that now when the assessee had failed to discharge the onus as stood cast upon him as regards proving the authenticity of the purchase transactions under consideration, therefore, the same without any choice had been held as ingenuine transactions by the CIT(A). We are further of the considered view that the CIT(A) had fairly concluded that now when the sales of the assessee had been accepted by the A.O, therefore, i ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... CIT(A) by raising the following grounds of appeal before us: 1. That on the facts and circumstances of the case and in law the ld. Assessing officer has erred in making disallowance u/s 69C of ₹ 1,86,43,641/- on account of purchases from ungenuine parties and the ld. CIT(A) has erred in not deleting the said entire addition but has estimated disallowance on account of alleged bogus purchases @ 17.5% of such purchases, net of gross profit declared by the assessee appellant in accounts. In view of the same appellant prays that the alleged estimated disallowance confirmed by the ld. CIT(Appeals) at ₹ 30,67,611/- being wrong on facts and bad in law, therefore the same may kindly be deleted. 2. That the appellant craves the leave to amend, alter, substitute and or to raise new or additional grounds of appeal at the time of hearing. The revenue on the other hand had vide its appeal, marked as ITA No. 121/Mum/2016 had challenged 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) was justified in confirming addition @ 17.5% of total purchases held as bogus. 2. The appellant ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... S K Engineering Co. 9356940 No reply to notice u/s 133(6) received till date 10. Moksha Metals Pvt. Ltd. 803563 No reply to notice u/s 133(6) received till date 11. Malwa Metal Corpn. 829243 No reply to notice u/s 133(6) received tillDate 12. Shree Keshar Impex Metals Private Ltd. 2454905 No reply to notice u/s 133(6) received till date Total 2,16,02,418 14. The A.O after deliberating on the facts of the case, being of te view that as the assessee had failed to substantiate the genuineness and veracity of the aforesaid purchase transactions by either producing the aforementioned parties or by placing on record irrefutable documentary evidences fortifying the veracity of the said purchase transactions, therefore, made an addition of the Peak Investment of ₹ 1,86,43,641/-, which as per the A.O was made by the assessee t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... f the purchases under consideration. 16. That the appeal of the assessee for A.Y 2009-10, marked as ITA No. 125/Mum/2016 is partly allowed and the appeal of the revenue, marked as ITA No. 121/Mum/2016 is dismissed. ITA No. 127/Mum/2016 (Assesses appeal) ITA No. 123/Mum/2016 (Revenues appeal) A.Y. 2011-12 17. We shall now take up the cross appeals of the assessee and the revenue for A.Y. 2011-12. The assessee vide his appeal marked as ITA No. 127/Mum/2016, had assailed the order of the CIT(A) by raising the following grounds of appeal before us: 1. That on the facts and circumstances of the case and in law the ld. Assessing officer has erred in making disallowance u/s 69C of ₹ 76,92,768/- on account of purchases from ungenuine parties and the ld. CIT(A) has erred in not deleting the said entire addition but has estimated disallowance on account of alleged bogus purchases @ 17.5% of such purchases, net of gross profit declared by the assessee appellant in accounts. In view of the same appellant prays that the alleged estimated disallowance confirmed by the ld. CIT(Appeals) at ₹ 12,20,251/- being wrong on facts and bad in law, th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 00425 Return undelivered by the postal authorities. 6. Chirag Steel Centre 752180 Return undelivered by the postal authorities. 7. Darshat Trading Pvt. Ltd. 291329 Return undelivered by the postal authorities. 8. S K Engineering Co. 1213542 Return undelivered by the postal authorities. 9. Good Luck Metal mpex 312000 Return undelivered by the postal authorities. 10. Bright Steel India 473170 Return undelivered by the postal authorities. 11 . Rajendra Impex 607116 Return undelivered by the postal authorities. 12. Navkar Impex 1371299 Return undelivered by the postal authorities. 13. Pioneer Enterprises ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... sposing of the present cross-appeals of the assessee and the revenue before us. We thus, in terms of our observations recorded while disposing of the appeals of the assessee and the revenue for A.Y. 2010-11, therefore, direct the A.O to restrict the addition in the hands of the assessee to 8% of the aggregate value of the purchases of ₹ 93,88,570/- (as tabulated hereinabove) claimed by the assessee to have been made from the aforementioned parties. We thus modify the order of the CIT(A) to the extent of estimation of the profit element involved in making of the purchases under consideration. 22. That the appeal of the assessee for A.Y 2011-12, marked as ITA No. 127/Mum/2016 is partly allowed and the appeal of the revenue, marked as ITA No. 123/Mum/2016 is dismissed. 23. That all the three appeals of the assessee, marked as ITA No. 125/Mum/2016, 126/Mum/2016 and 127/Mum/2016 for A.Y. 2009- 10, A.Y. 2010-11 and A.Y. 2011-12 are partly allowed, while for all the three appeals of the revenue, marked as ITA No. 121/Mum/2016, 122/Mum/2016 and 123/Mum/2016 for A.Y. 2009-10, A.Y. 2010-11 and A.Y. 2011-12 are dismissed. Order pronounced in the open court on 27/10/2017. - ..... X X X X Extracts X X X X X X X X Extracts X X X X
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