9911796707
TMI Blog2017 (9) TMI 1919X X X X Extracts X X X X X X X X Extracts X X X X ..... s sought to be prejudiced by Revenue solely based on statement of third parties i.e. selling dealers which incriminating statement was recorded by Maharashtra VAT authorities at the back of the assessee , while no statement has been recorded by the Revenue nor any enquiry whatsoever u/s 133(6)/131 was conducted by Revenue itself, under these factual matrix of the case , the right of cross examination of the assessee has become absolute and no prejudice can be done to the assessee in these circumstances till the said parties are offered by Revenue for cross examination before the assessee, which despite specifically being asked by the assessee, the Revenue did not allow assessee to cross examine these hawala parties. Under these circumstances keeping in view entire factual matrix of the case, in our considered view, the additions as were upheld by learned CIT(A) cannot be sustained in the eyes of law and is hereby ordered to be deleted - Decided in favour of assessee. - I.T.A. No. 1520/Mum/2017 - - - Dated:- 1-9-2017 - SHRI C.N. PRASAD, JUDICIAL MEMBER AND SHRI RAMIT KOCHAR, ACCOUNTANT MEMBER For the Assessee : Shri S.M. Bandi For the Revenue : Shri V. Jenardhanan, D.R ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 65388V S M Trading Co. 2010-11 11,92,800/- 39,43,800/- In view of the above, I have reasons to believe that the income of ₹ 39,43,800/- for the A.Y. 2011-12 has escaped assessment within the meaning of section 147 of the I.T. Act. Thus, it is undisputed that the case of the assessee was reopened within four years from the end of assessment year and no scrutiny assessment was originally framed by Revenue u/s 143(3) r.w.s. 143(2) of the Act. The A.O. received information from DGIT (Inv.), Mumbai that the assessee had obtained accommodation bills from the afore-stated hawala operators who had stated before the Maharashtra Sales Tax Authorities that they had issued bogus accommodation bills without any actual delivery of goods. The name of these hawala parties also appeared in the web site of Maharashtra VAT authorities as hawala dealers. The A.O. asked the assessee to produce the following documents in support of its transactions with these parties:- Bills, Vouchers/Invoices, Bank Statement, Stock register indicating receipt of goods, ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... stances the genuineness of the purchases cannot be accepted. The AO observed that the assessee has issued cheques in favour of bogus billers and has also submitted various details such as bills, proof of delivery, reconciliation of the stock etc. . The AO rejected the contentions of the assessee also because these parties were not produced before the AO and also the selling parties have on oath admitted before Sales Tax Authorities that they have only issued bogus bills without supplying material. The A.O., however, had not suspected the sales made by the assessee and therefore observed that there must have been some purchases corresponding to the sales made by the assessee, therefore the AO concluded that the assessee had made these purchases in cash from undisclosed parties and thereafter has obtained bills from hawala operators. The AO concluded that the assessee had made payments by cheques against such bogus purchase bills to these hawala operators, and thereafter received an equivalent amount of cash back from them, while the actual material is physically bought in cash from grey market from some undisclosed parties for which sources of payment of cash remained unexplained. T ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ngaged in only providing bogus bills without supplying any material. The ld. counsel for the assessee, at the outset submitted that the A.O. has not made any enquiry with respect to these alleged hawala parties. It is submitted that the A.O. has not issued summons u/s 131 nor any notice 133(6) of the Act were issued by the AO to these alleged hawala parties . It was contended that only reliance has been placed by the AO on the information received from Maharashtra Sales Tax Department that these parties are listed as suspicious parties by Maharashtra VAT authorities and that these parties have deposed before Maharashtra VAT authorities that they are issuing only bogus bills without supplying any material. It is stated that complete details as to the purchase of said material along with consumption/utilization details of the said material were submitted before authorities below and no fault has been found by the authorities below. It is submitted by ld. Counsel for the assessee that material was purchased through brokers and now it is not possible to produce these parties. It is submitted that only on the basis of statement of these selling parties, the A.O. had made addition to the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ve that the assessee purchased these material from grey market. It is stated before the tribunal that the assessee is subjected to excise duty and these material so purchased from these alleged hawala dealers were entered in the stock records maintained under excise laws which is also subject to excise audit and the said material was consumed for manufacturing of finished goods. It was submitted that no enquiry whatsoever was made by authorities below u/s 133(6)/131 of the 1961 Act nor these parties were produced before the assessee for cross examination. 7. The ld. D.R., on the other hand, relied on the order of the ld. CIT(A) and submitted that the party from whom the assessee made the additions were bogus parties who had deposed before the Maharashtra VAT authorities that they were engaged in hawala entries wherein only bogus bills were issued without supplying any material. It was submitted that affidavits were given by these parties before Maharashtra VAT authorities of which copies were given to the assessee enclosing the same as annexure with assessment order. 8. We have considered rival contentions and also perused the material available on record. We have observed th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... d purchases and its consumption /utilization for production of finished goods. The assessee has also stated that it is subject to excise duty levied by the Government of India and these purchases are duly included in excise records. There is no whisper by Revenue challenging , disputing and controverting these details and evidences put forward by the assessee in its reply filed with Revenue vide letter dated 04-02-2014 (pb/page 1-92) and even before us learned DR could not challenge and disprove the claim of the assesee. On the other hand , it is writ large from the orders of authorities below that no effort has been made by authorities below to make any enquiries with these selling dealers who are alleged to be bogus hawala dealers as the AO/CIT(A) did not issue any notice u/s 133(6) of the Act to the parties nor any summons were issued to the said alleged hawala dealers u/s 131 . The AO/CIT(A) also did not deputed any inspector to make field visits to enquire about the whereabouts of these parties and to verify the genuineness of the purchase transactions. Thus, in nut-shell except on relying on the statement recorded by Maharashtra VAT authorities of these alleged hawala dealers ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... granted by the learned CIT(A) . The assessment order of the AO has now merged with appellate order of learned CIT(A) keeping in view doctrine of merger. The addition is now existing keeping in view ratio of decision of Hon ble Gujarat High Court in the case of CIT v Simit P Shah 38 taxmann.com 385(Guj HC) wherein profit embedded in these purchases is sought to be brought to tax instead of peak credit as was done by the AO. It is the averments of the Revenue that the assessee has purchased material from grey market in cash while bills are organized from these bogus hawala dealers. No such details of grey material suppliers are brought on record from whom the assessee has allegedly purchased material in cash and also no trail of money to evidence flow of cash is brought on record by authorities below and these are all in the realm of suspicion which is not permissible. The assessee had sought cross examination of these hawala parties who have given incriminating statements before Maharashtra VAT authorities but the cross examination was not granted to the assessee by the A.O./CIT(A). The assessee has discharged its primary burden by bringing on record all details w.r.t. purchase and ..... X X X X Extracts X X X X X X X X Extracts X X X X
|
