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TMI Blog2016 (8) TMI 1203X X X X Extracts X X X X X X X X Extracts X X X X ..... fficer is directed to compute the quantum in respect of evidences furnished by him to the assessee in the form of statements recorded of the other persons. Where no such statements or any other evidence in respect of any person is made available to the assessee, then such quantum is not to be included in the hands of assessee for computing addition on this count. The grounds of appeal raised by the assessee in both the appeals are allowed as indicated above. - ITA Nos. 365 & 366/PN/2016, ITA No. 695/PN/2016 - - - Dated:- 31-8-2016 - Sushma Chowla ( Judicial Member) For the Appellant : Sanket Joshi For the Respondent : Anil Kumar Chaware ORDER Sushma Chowla ( Judicial Member) Two appeals filed by one assessee are against separate orders of CIT(A)-2, Nashik, both dated 16.12.2015 relating to assessment years 2010-11 and 2011-12 against respective orders passed under section 143(3) r.w.s. 147 of the Income-tax Act, 1961 (in short the Act ). The other appeal filed by another assessee is against order of CIT(A)-2, Nashik, dated 28.01.2016 relating to assessment year 2009-10 against order passed under section 143(3) r.w.s. 147 of the Income-ta ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... in law. b. The A.O. had not provided the opportunity of cross examination of the various parties in spite of specific request made by the assessee in the course of asst. proceedings and such statements could not be used against the assessee in view of the Supreme Court decision in the case of Andaman Timber Industries v. CCE dated 02.09.2015. 5] Without prejudice, the assessee submits that the disallowance made @ 10% on alleged hawala purchases is very high considering the nature of business of the assessee and if at all, any addition is to be sustained, the same may be reduced substantially. 4. The issue raised in the present appeal is against the disallowance of ₹ 3,19,867/- made out of total disallowance of ₹ 31,98,665/- in respect of purchases made from six alleged hawala parties on the basis of information received from Maharashtra Sales Tax Department. 5. Briefly, in the facts of the case, the assessee was engaged in the business of S.S. Brass, Aluminum copper sheets, plates, pipes, bars, etc. For the year under consideration, the assessee had furnished the return of income declaring total income of ₹ 9,41,932/-. The Assessing Officer rece ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... der section 133(6) of the Act could not be served on the said suppliers and even they could not be produced. The CIT(A) considered the evidence filed by the assessee in respect of purchases made i.e. purchase bills, weighbridge receipts, transportation receipts and bank statement showing the payment of bank cheques. The CIT(A) in this regard, noted that the Assessing Officer had not brought on record any evidence showing that the amount paid by the assessee by account payee cheque had been immediately withdrawn by the suppliers and paid back to the assessee. Relying on various decisions, the CIT(A) held that the addition was not justified. Another point noted by the CIT(A) was that where the Assessing Officer had not supplied the copies of statement recorded by the Sales Tax Department in respect of impugned purchases, despite the assessee asking for crossexamination of the persons, no addition could be made without allowing crossexamination to the assessee. In this regard, reliance was placed on the ratio laid down by the Hon ble Supreme Court in M/s. Andaman Timber Industries Vs. Commissioner of Central Excise, Kolkata-II, Civil Appeal No.4228 of 2006, dated 02.09.2015. The claim ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ed with the Sales Tax Department but had not paid the requisite VAT. Information in respect of aforesaid hawala dealers were sent to the Assessing Officer since the assessee had made purchases from six of the parties who were in the list of hawala dealers. The said dealers had collected VAT from the customers including the assessee but had not paid the same to the State Treasury. The Assessing Officer on receiving the aforesaid information had reopened the assessment in the case of assessee and had confronted the assessee with the aforesaid information. The Assessing Officer also issued summons under section 133(6) of the Act to the said six parties from whom purchases were made but the said notices were returned unserved since none of the parties were available on the given addresses. The assessee in this regard was asked to produce the said parties and confirm the transactions. The assessee in reply, claims that it had submitted purchase bills, consequent sale bills, weighbridge receipts and transportation receipts in order to establish that the transaction of purchases was genuine. The assessee further claims that the payments against these purchases were made through banking ch ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 2,39,460/- has been confronted to the assessee. In the frist instance, the basic principle of natural justice demand that in case any document is to be used against the assessee, then the same should be confronted to the assessee before it can be relied upon. The assessee admittedly, had asked for statements and/or any other documents which have not been supplied to the assessee. The learned Authorized Representative for the assessee before the Tribunal pointed out that the Assessing Officer had provided statements of three parties from whom the purchases totaling ₹ 9,49,240/- were made and no statements of other parties totaling purchases ₹ 22,49,425/- were made available to the assessee. However, the perusal of list of the companies filed before the CIT(A), copy of which is filed along with Appeal Memo reflects that there is difference in the figures of purchases though the total is shown at ₹ 31,98,665/-. Further, the assessee claims in the statement of facts that the Assessing Officer had not supplied any evidence in respect of purchases of ₹ 13,18,943/- to prove that the same were nongenuine. It is further stated that in respect of remaining purchases ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... es would be worked out by the Assessing Officer after giving reasonable opportunity of hearing to the assessee, in line with the directions hereinabove. 12. Now, coming to the ratio laid down by the Tribunal in Kolte Patil Developers Ltd. Vs. DCIT (supra), wherein the statements of hawala suppliers were recorded by the Assessing Officer and were confronted to the assessee and the opportunity of cross-examination is also granted. However, the assessee did not avail the same. Further, transportation receipts could not be furnished in respect of any of the suppliers and in this view, the purchases made from the said parties were added as income of the assessee. Another proposition which has been laid down by the Tribunal in the case of ITO Vs. Shri Purushottam Shankar Kulkarni in ITA No.991/PN/2012, relating to assessment year 2009-10, order dated 07.04.2016, wherein the Assessing Officer has noted the payments in respect of alleged bogus purchases were outstanding even as on the date of completion of assessment. Further, the assessee was not able to furnish any evidence relating to transportation of goods. Further, in the case of Mukeshkumar Pushkaraj Mehta Vs. ITO (supra), the as ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ssue in the said appeals except for the fact that in the present case, the alleged purchases were made from one party M/s. Vitrag Traders Pvt. Ltd., Mumbai to the tune of ₹ 13,48,537/-. The assessee had asked for copies of statements recorded by the Sales Tax Department of the suppliers and to allow cross-examination. The Assessing Officer in the present case has also not supplied the said statements to the assessee and the case of the assessee though was that, the first aspect in the present case is the availability of statements recorded by the Sales Tax Department and in case no such evidence is available, then there is no basis for making aforesaid addition. As directed in the above appeals, the matter is set aside to the file of Assessing Officer to verify the contention of assessee in this regard. In case, no document is available with the Assessing Officer, then no addition is warranted on account of hawala purchases. Otherwise, the addition has to be restricted to 10% of quantum of purchases as directed in the earlier appeals. 15. In the result, all the appeals of assessee are allowed as indicated above. Order pronounced on this 31st day of August, 2016. - - ..... X X X X Extracts X X X X X X X X Extracts X X X X
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