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Shri Manoj Rameshwar Mittal C-301,Shruti Park,Kolshet Road, Dhokali,Thane (W)-400 607 Vs. ITO, Ward 1(4),Thane(W)-400 604
October, 12th 2012
               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.
                                     2              ITA No : 3471/Mum/2011
                                                 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,
                                    3             ITA No : 3471/Mum/2011
                                               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.
                                         4             ITA No : 3471/Mum/2011
                                                    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
                                     5             ITA No : 3471/Mum/2011
                                                Shri Manoj Rameshwar Mittal

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
                                     6              ITA No : 3471/Mum/2011
                                                 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
                                    7             ITA No : 3471/Mum/2011
                                               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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