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TMI Blog2017 (10) TMI 1001X X X X Extracts X X X X X X X X Extracts X X X X ..... nce with law before de-novo adjudicating the issues on merits. The evidences and explanations submitted by the assessee shall be admitted by the AO in the interest of substantial justice. Since, the assessee did not co-operated during assessment proceedings by not participated in the assessment proceedings deliberately, we would like to clarify that this is an open remand. - I.T.A. No. 3527/Mum/2016 And I.T.A. No. 3759/Mum/2016 - - - Dated:- 23-10-2017 - SHRI SAKTIJIT DEY, JUDICIAL MEMBER AND SHRI RAMIT KOCHAR, ACCOUNTANT MEMBER For The Revenue : Shri. T A Khan, DR For The Assessee : Sh M S Mathuria ORDER PER RAMIT KOCHAR, Accountant Member These cross appeals, filed by the Assessee and Revenue, being ITA No. 3527/Mum/2016 and ITA no. 3759/Mum/2016 for assessment year 2009- 10, are directed against the appellate order dated 15-02-2016 passed by learned Commissioner of Income Tax (Appeals)-10, Mumbai (hereinafter called the CIT(A) ), for assessment year 2009-10, appellate proceedings had arisen before learned CIT(A) from the assessment order dated 08-01-2014 passed by learned Assessing Officer (hereinafter called the AO ) u/s 144 r.w.s. 147 of the In ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the assessee. The assessee did not file return of income pursuant to notice u/s 148. The AO also issued and served notices u/s 143(2) and 142(1) to the assessee from time to time including deputing inspectors to personally serve the notices but the assessee did not responded to the notices and show cause issued by the AO which led to the additions of the entire alleged bogus purchase to the tune of Rs. ₹ 7,47,73,908/-. to the income of the assessee vide best judgment assessment order dated 08-01-2014 passed by the AO u/s 144 r.w.s. 147 of the 1961 Act . 3. The assessee filed first appeal with learned CIT(A) being aggrieved by the ex-parte best judgment assessment order passed by the AO. The assessee submitted before learned CIT(A) that no additions can be made on the basis of observations made by third party. It was submitted that all the payments for purchases were made through banking channel . The assessee also filed confirmation letters along with bank statements of the parties. It was submitted that no independent investigation was carried out by the AO and no opportunity to confront the said alleged bogus dealers were provided to the assessee . It was submitted by th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... purchases while the learned CIT(A) restricted additions to 12.5% of bogus purchases without making any enquiry, verifications and investigations . It was submitted that the assessee is trader in metals and the assessee did not cooperated during the assessment proceedings despite several opportunities being granted by the assessee as none appeared on behalf of the assessee before the AO which led to best judgment ex-parte assessment u/s 144 r.w.s. 147. It was submitted that documents by way of additional evidences were filed by the assessee before learned CIT(A) during appellate proceedings which were forwarded by learned CIT(A) to the AO for remand report. It was submitted that no confirmations from said parties were filed by the assessee nor bank statements were filed even during remand proceedings .It was submitted that only list of sundry creditors were filed which showed the name of these five bogus dealers. It was submitted that Maharashtra VAT Authorities conducted enquiry and investigation wherein it was found that these five parties were hawala dealers who were issuing bogus bills without supplying material and the directors of these five concerns have deposed on sworn aff ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ited 2,09,27,566/- 3. Samadhav Steel India Private Limited 1,47,08,066/- 4. Trichipuram Trading Private Limited 1,20,44,570/- 5. Vardhman Trading Co. 1,61,98,599/- Total 7,47,73,908/- The said five dealers from whom the assessee purchased the material to the tune of ₹ 7,47,73,908/- were listed as hawala dealers in Maharashtra Sales Tax departments web site and on investigation, the Maharashtra sales tax department has come to the conclusion that these dealers are allegedly hawala operators wherein bogus bills were issued by these dealers without delivery of goods. These dealers have also filed sworn affidavit and declaration on oath before the sales tax authorities that they are engaged in providing bogus hawala entries without supplying any material . These five dealers also admitted that cheques received by them from purchasing parties were deposited in their bank accounts and cash was withdrawn from bank and returned to purchas ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... are only issuing bogus bills without supplying any material and the assessee is beneficiary of these bogus entries.The learned CIT(A) restricted the additions to the income by estimating profits to the tune of 12.5% of the alleged bogus purchases. It is observed that the learned CIT(A) did not make any further enquiry, verifications and investigations before accepting the additional evidences filed by the assessee. The assessee did not filed bank statements nor confirmations from these parties are filed. The assessee however did filed quantitative reconciliation of stock purchased from these parties as well list of sundry creditors. The assessee also did not produced the parties from whom purchases were made before the authorities below. The assessee did not gave adequate and proper explanation for his conduct of not participating in assessment proceedings . There is an incriminating statements given by these selling parties before Maharashtra VAT authorities wherein sworn affidavits on oath as well declarations were made by these parties that they were only engaged in issuing bogus bills without supplying any material physically . They have also deposed that cheques deposited by t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... sessee during assessment proceedings and also there were incriminating material by way of information from DGIT(Inv.) and Maharashtra VAT authorities that the assessee is beneficiary of bogus hawala entries from alleged five hawala entry operators who have merely issued bills without supplying any material wherein cash was returned by these hawala entry operators to the assessee after deducting their commission. The learned CIT(A) merely accepted the contentions of the assessee without any necessary verifications, enquiry and investigations and estimated income to the tune of 12.5% of bogus purchases based on certain case laws. These purchases to the tune of ₹ 7,47,73,908/- are appearing in books of the assessee and the onus is on the assessee to prove that these are genuine and bonafide expenses claimed by the assessee which were incurred wholly and exclusively for the business of the assessee, including producing the parties before the authorities . This is to be read in the light of provisions of Section 69C read with proviso which was introduced by Finance Act,1998 w.e.f. 1-4-1999 . Under these circumstances keeping in view factual matrix of the matter as discussed by us ..... X X X X Extracts X X X X X X X X Extracts X X X X
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