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TMI Blog2017 (6) TMI 596X X X X Extracts X X X X X X X X Extracts X X X X ..... Appellant by : Shri M.K. Kulkarni Respondent by : Shri Anil Chaware. ORDER PER ANIL CHATURVEDI, AM : This appeal filed by the assessee is emanating out of the order of Commissioner of Income Tax (A)-I, Aurangabad dt.27.02.2017 for the assessment year 2010-11. 2. The relevant facts as culled out from the material on record are as under :- 2.1 Assessee is an individual stated to be engaged in the business of Civil Contract under the Proprietary concern by the name R.V. Deshmukh. Assessee electronically filed his return of income for A.Y. 2010-11 on 02.10.2010 declaring total income at ₹ 93,41,260/-. The return of income was initially processed u/s 143(1) of the Act. Later on the case was re-opened by issuing notice u/s 148 of the Act on 16.07.2013. Subsequently questionnaire along with notice u/s 143(2) and 142(1) of the Act were issued on 26.09.2014 wherein certain information was called for. Thereafter assessment was framed u/s 143(3) r.w.s. 147 of the Act vide order dt.23.02.2015 and the total income was determined at ₹ 1,25,04,010/-. Aggrieved by the order of AO, assessee carried the matter before Ld.CIT(A), who vide ordet dt.27.02.2017 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ppeal to Aurangabad which is utterly inconvenient be and cancelled. 6. On the facts and circumstances of the case and in law the huge addition made of ₹ 31,62,752/- by the A.O. and Ld. CIT(A) having confirmed the same without following the due process of law be deleted to do complete justice to the assessee. 7. On the facts and circumstances of the case and in law the appeal order of the Ld. CIT(A)-Aurangabad is not sustainable in law as the same has been passed in which the Natural Justice is a victim. The compliance of Natural Justice in any proceedings is an Constitutional Mandate. Without this the order passed by Ld. CIT(A) is unconstitutional. It be quashed. 8. On the facts and circumstances of the case and in law the Ld. CIT(A) was not justified in confirming the addition made by the A. O. of ₹ 31,62,752/- being suspicious (Hawala) Purchases. The sales turned out of such purchases have not been disturbed. The various authorities were quoted before him which were in favour of the assessee. When two views are possible the Ld. CIT(A) ought to have followed the view favourable to the assessee. On this judicial principle no addition is sustainable. Th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... y of goods was ever given. After receipts of cheques, equivalent cash was given back after deducting commission. The AO then directed the assessee to substantiate these purchases but in vain. The AO also directed the assessee to substantiate the alleged purchases with documentary evidences such as the confirmatory letter, lorry receipts, octroi receipts, weighment slips quantitative details but the assessee failed to produce these documents. The AO accordingly held that the purchases of ₹ 31,62,752/- from the alleged supplier were not verifiable and therefore he disallowed the entire unverifiable purchases and made an addition of ₹ 31,62,752/- to the income of the assessee. Even during the present appellate proceedings, the counsel of the appellant has failed to submit confirmatory letters from the alleged supplier namely M/s. Shah Industries. Other circumstantial evidences also goes against the assessee viz. non submission of purchase orders, transport receipts regarding carriage inwards/outwards, weighment bills regarding weight of the goods received/sold, item wise complete details of purchases, sales, opening closing stock. The relevant factors to be taken into ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he assessee had taken accommodation entries and alleged purchases were not genuine. 5.1 It is a settled law that Income Tax authorities are entitled to look into the surrounding circumstances to find out the reality of the recitals made in documents. It was the duty of the court to go behind the smoke-screen and discover the true state of affairs. The court was not to be satisfied with the form but with the substance of the transactions. Though the transactions in the present case were through banking channel but these were ultimately settled in cash. Merely because a paper trail had been created, that would not by itself make the transaction genuine. It was held by Honourable Punjab Haryana High Court in the case of Mittal Belting and Machinery Stores Vs. CIT (253 ITR 341) that if on the examination of the evidence, it is found that there was no genuine transaction between the parties, a pure paper transaction could not have entitled the assessee to claim benefit under the law. Similarly the Hon'ble Mumbai Tribunal held in the case of Balaji Textiles Industries Pvt Ltd Vs, ITO (49 ITD 177) that issue of bills by the alleged supplier was not a conclusive proof. In the c ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e of the fact whether the rate of gross profit goes up and whether the resultant gross profit is higher than the gross profit normally shown in the earlier years. 5.2 In view of the foregoing discussion, the percentage of is allowance of bogus purchases, has to be based on the facts of each case, hence the same cannot be generalized in every case. The counsel of appellant has placed reliance on the decision of Hon'ble Murnbai Tribunal in the case of DCIT Vs. Shri Rajeev G. Kalathil (ITA No.6727/Mum/2012 dated 20.08.2014) but the facts of said case were distinguishable. In the cited case, copies of consignment bills showed that the material so purchased was transported by government approved transport contractors who had delivered the material at the site. Besides above, some of the material so purchased was shown in the closing stock as per the statement submitted on record. The closing stock was also verified by the Auditors. Similarly in the case of Nikunj Eximp Enterprises Pvt. Ltd., there was a categorical finding that the movement of goods was not in doubt. In the present case, the goods have not been transported by the government approved transport contracto ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ng Officer had treated purchases worth ₹ 1.49 crores only as bogus and it was impossible to manufacture the goods shown to have been manufactured by it out of the remaining purchases if the Assessing Officer's conclusion was accepted also found favour with the Tribunal. This was a simple finding of fact based upon appreciation of the material on record and thus no question of law arose. I fail to understand as to how this decision is of any help to the appellant. The purchases from Mis Shah Industries have not been accepted as genuine in the earlier years. The appellant has also failed to show as to how and where the material so purchased was utilized in the civil contracts. Further the appellant has alleged that he was not allowed to cross examine the said supplier alleged to be hawala dealers and therefore it violated principles of natural justice. It must be appreciated here that it was not the Income Tax Department which had recorded the statements of the alleged supplier or had in its possession affidavits of the alleged hawala dealers. The appellant can't deny that he had not been confronted with these evidences as the Sales Tax Department had issued show-cause ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... g only accommodation entries. It is an argument just for the sake of the argument. Mere denial by the appellant is not sufficient to rebut the circumstantial evidence which is in the possession of the department. The appellant has miserably failed to show movement of the goods or quantitative details and stock register. The appellant has not discharged his onus of proving the genuineness of the impugned purchases yet he has blamed the AO for not conducting all kind of enquiries. Looking to the circumstantial evidence in the present case, it is evident that impugned purchases of ₹ 31,62,752/- from the alleged supplier namely M/s Shah. Industries were not genuine. One has to consider the totality of facts, surrounding circumstances and human probability for arriving at such a conclusion. The appellant is not willing to come clean and hence one will have to take resource for arriving at a conclusion on the basis of material on record. The appellant has failed to produce the confirmations from the alleged supplier documentary evidences in support of alleged purchases. The appellant has failed to produce the quantitative details. In view of facts and circumstances in the present ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... peal are accordingly dismissed. Aggrieved by the order of Ld.CIT(A), assessee is now in appeal before us. 5. Before us, at the outset, Ld.A.R. submitted that Ld.CIT(A) has passed an ex-parte order. He submitted that the notice for hearing from Ld.CIT(A) was not received by the assessee. He further submitted that assessee originally filed appeal before Ld.CIT(A), Thane but the appeal was transferred to Ld.CIT(A), Aurangabad and no opportunity was given to assessee before transfer of such appellate proceedings. He therefore submitted that there is violation of natural justice and requested that the matter may be remitted back to Ld.CIT(A) and he under took to co operate by filing the necessary details. Ld.D.R. on the other hand, supported the order of AO and Ld.CIT(A). 6. We have heard both the parties and perused the material on record. The issue in the present case is with respect to addition of ₹ 31,62,752/- made on account of bogus purchases. From the order passed by Ld.CIT(A), it is seen that it is an ex-parte order and has been passed on the basis of material on record by Ld.CIT(A). Before us, Ld.A.R. has submitted that he had originally filed appeal before Ld ..... 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