IN THE INCOME TAX APPELLATE TRIBUNAL
MUMBAI BENCHES " B ", MUMBAI
BEFORE SHRI B. R. JAIN, AM AND SHRI VIVEK VARMA, JM
ITA No. : 3471/Mum/2011
Assessment Year : 2007-08
Shri Manoj Rameshwar Mittal ITO, Ward 1(4),
C-301, Shruti Park, Thane(W)-400 604
Kolshet Road, Dhokali,
Thane (W)-400 607 Vs.
PAN NO: ADEPM 9476 F
(Appellant) (Respondent)
Appellant by : Shri Subodh L. Ratnaparikh
Respondent by : Shri Pravin Kumar
Date of hearing : 01.10.2012
Date of Pronouncement : 10.10.2012
ORDER
PER B. R. JAIN, A.M. :
This appeal by the assessee against the order dated 29.11.2010 of
Ld. CIT(A)-II, Thane raises the following grounds in appeal :-
1A. The Ld. CIT(A) erred in sustaining the addition of `.25,02,783/-
made by disallowing the purchases of the appellant from one
M/s. Saroj Steel Traders proprietary concern of one Shri Anil
Goyal by holding the same to be bogus purchases.
1B The Ld. CIT(A) erred in upholding the action of the ld. A.O. of
disallowing the purchases from the M/s. Saroj Steel Traders
proprietary concern of one Shri Anil Goyal while at the same
time holding the sales of the said purchased material to be
genuine.
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Shri Manoj Rameshwar Mittal
1C. The Ld. CIT(A) erred in not appreciating the fact that without
purchases of any material, your appellant could not have
effected sales and that by disallowing the purchases of
material, the ld. A.O. has effectively established the proposition
that your appellant is not engaged in any activity of purchase
and sale of material.
2. The Ld. CIT(A) erred in upholding the addition made by the ld.
A.O. without granting your appellant any opportunity to
examine the adverse evidence allegedly in possession of the ld.
A.O. and without affording your appellant any opportunity to
cross examine the source of such adverse evidence, thereby
breaching the salient principles of equity, fairplay and natural
justice.
3. The Ld. CIT(A) erred in confirming the addition on the basis of
evidences allegedly pertaining to F.Y. 1998-99, whereas the
appellant commenced his business activities on 07th May, 2003
and the addition has been made for A.Y. 2007-08."
2. Briefly the facts are that the assessee is a trader in iron and steel
items. He runs his business as a proprietor of M/s. Saroj Steel Traders.
During the course of the assessment proceedings, the Assessing Officer
noticed that the assessee has made purchases amounting to `.25,02,753/-
from M/s. Saroj Steel Traders, but the creditors list revealed an amount of
`.17,02,753/- payable to them. The confirmation of sundry creditors
placed on assessment record revealed that the said outstanding of
`.17,02,753/- was a substantial amount which was kept for a
considerable high period of time by the assessee. The proprietor of this
firm Shri Anil Goyal had been carrying the business of issuing paper bills
in the names of various concerns run by him without actually entering
into any genuine transaction in consideration of commission thereon.
This fact stood admitted by Shri Anil Goyal at various stages of survey,
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Shri Manoj Rameshwar Mittal
assessment and appellate proceedings upto A.Y. 2007-08. In his case, the
appellate Tribunal has estimated his income @ 1% of the Hawala
transactions carried by him. In this background, the purchases claimed
to have been made by the appellant from M/s. Saroj Steel Traders were
not considered genuine and accordingly the Assessing Officer proposed to
disallow the entire purchases so claimed to have been made for the year
under consideration. In response to the show cause notice, the assessee
submitted a letter dated 21.12.2009 and claimed that it shall be absurd to
treat the sales made by the assessee as per its books as genuine sales and
disallow purchases of `.25,02,753/- as bogus disregarding the fact that
the payment of `.8,00,000/- has also been made by the assessee through
account payee cheque to them. The assessee also required the Assessing
Authority to confront him with the documentary evidence leading to the
assumption that there has been a Hawala transaction between the
appellant concern and M/s. Saroj Steel Traders, while the assessee has
recorded the stock as well as purchases in his books of account and part
payment also stood made during the period under consideration itself.
However, in the light of the admission by Shri Anil Goyal before various
authorities that he is involved in Hawala transactions and had issued
paper bills in consideration of receipt of commission, the A.O., held that
the purchases made from M/s. Saroj Steel Traders proprietor Shri Anil
Goyal are not genuine. Accordingly, he disallowed the entire purchases of
`.25,02,783/- and added the same to the total income of the assessee.
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Shri Manoj Rameshwar Mittal
Thus the total income thus stood assessed at `.26,02,453/- as against the
returned income of `.99,670/-.
3. The Ld. CIT(A) after considering the entire facts on record and the
submissions made by the appellant before him upheld the decision taken
by the learned Assessing Authority. The payment by cheque for
`.8,00,000/- could not be taken as conclusive to treat the purchases
genuine. The assessee did not place on record any delivery challan neither
before the Assessing Authority nor before him in the appellate
proceedings. The assessee's submissions dated 25.11.2010 though
mentioned that the copies of bank statements, confirmation letters, and
ledger accounts are submitted for verification, yet the same were not laid
before him. Considering the fact and the modus operandi of Shri Anil
Goyal and in the absence of any cogent material from which it could be
held that the purchases made by the assessee from that concern are a
genuine, the ground raised in appeal stood rejected.
4. In appeal, the learned counsel for the assessee assailing the
impugned order contends that the authorities below have not given any
opportunity to the appellant to examine any adverse evidence allegedly in
possession of the assessing authority. The appellant has laid on record
and also in his paper book, the copies of invoices as well as the delivery
challans substantiating the fact that the purchases have genuinely been
made by the appellant. The authorities below however, proceeded to reject
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the claim of the assessee merely by saying that the delivery challans for
transportation of goods have not been laid on their record. In any event, if
Shri Anil Goyal have made any admission that he is an Hawala operator,
that fact alone does not make the purchases non genuine and as such the
assessee's appeal needs to be allowed.
5. On the other hand, the ld. Departmental Representative (DR)
contends that the authorities below on the peculiar facts set out on record
cannot be said to have erred in concluding that the purchases made by
the assessee are non genuine / bogus. The appellant has not been able to
show that there is any perversity in findings of the facts reached by the
authorities below. In that view of the matter, the appellant's grounds in
appeal being devoid of any merit require to be dismissed.
6. We have heard parties with reference to the material on record.
Essentially, the burden is on the assessee to prove that the purchases
made by him are genuine. He is also duty bound to prove that the same
goods infact have been received from the same party in whose name the
purchases are accounted for in his books of account. The appellant claims
to have laid on record of authorities below the copies of delivery challans
which also revealed mode of transportation of goods through a particular
carrier i.e. truck or tempo etc, but the authorities below are not shown to
have examined that fact in the light of assertion that these were not laid
before them. The transporters bills, however, have not been laid before
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Shri Manoj Rameshwar Mittal
this Tribunal nor before the authorities below to substantiate the fact as to
whether the same goods as stated in the invoices have factually been
received by the assessee of which the recorded sales have been affected by
him. It also has not been verified by the authorities below as to whether
the recorded sales are of some other goods or those of the same goods that
were purchased by the appellant. It is also the plea of the appellant that
the admission made by Shri Anil Goyal, M/s. Saroj Steel Traders is not
put to him for testing the correctness thereof or otherwise to prove the
appellant's case of purchases being genuine. That apart the authorities
below are not found to have tested as to whether the payment of
`.8,00,000/- or any payment in subsequent year against such purchases
is a real payment or it was merely an accommodation entry. In the totality
of the facts, it is evident that the authorities below have not made the
proper enquiry into the facts nor they have confronted the appellant with
any adverse material that they have in their possession for holding the
purchases as non genuine. We, therefore, set aside the impugned order
and remit the matter back to the file of the Assessing Authority to
adjudicate the issue afresh in accordance with law, having regard to the
aforesaid observations and also to the judgments by Hon'ble Delhi High
Court in the case of CIT vs. La-medica. (2001) 250 ITR 575 (Del) and
Hon'ble Gujarat High Court in the case of Adinath Industries (2001) 252
ITR 476(Guj). Needless to add the assessee shall be allowed reasonable
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Shri Manoj Rameshwar Mittal
and effective opportunity of being heard before taking the decision in
accordance with law.
7. In the result, the appeal filed by the assessee stands allowed for
statistical purposes only.
Order pronounced in the open court on 10.10.2012.
Sd/- - Sd/-
( VIVEK VARMA ) ( B. R. JAIN )
JUDICIAL MEMBER ACCOUNTANT MEMBER
MUMBAI, Dt: 10.10.2012
Copy forwarded to :
1. The Appellant,
2. The Respondent,
3. The C.I.T.
4. CIT (A)
5. The DR, - Bench, ITAT, Mumbai
//True Copy//
BY ORDER
ASSISTANT REGISTRAR
ITAT, Mumbai Benches, Mumbai
Roshani
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