×Latest Case Laws on Income Tax by various Income Tax Appellate Tribunals in India
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08-11-2019, Shahaji Bhanudas Bhad, Section 132, 3, 153A, Tribunal Pune
This batch of ten appeals, having six appeals by the assessee and four cross appeals by the Revenue, involving the assessment years 2007-08 to 2012-13, arises out of a consolidated order passed by the ld. CIT(A) on 10-02-2016. Since common issues are raised in these appeals, we are, therefore, proceeding to dispose them off by this combined order for the sake of convenience.
A.Y. 2007-08 :
ITA No.813/PUN/2016 – By assessee
2. Briefly stated, the facts of the case are that a search and seizure action u/s.132 of the Income-tax Act, 1961 (hereinafter also called ‘the Act ) was carried out on 09-08-2011 in Shahaji Bhad group of cases. The assessee, a part of this group as a proprietor of M/s. S.S. Engineers, is engaged in the business of manufacturing of sugar machinery, providing erection and installation services and setting up of sugar factories and also trading in spare parts. In response to notice u/s.153A of the Act, the assessee furnished his return of income on 29-03-2012 declaring total income of Rs.30,82,83,420/- (including disclosure of Rs.99,41,075/- made during the course of search). The Assessing Officer (AO) found that the original assessment in this case was completed u/s.143(3) of the Act determining total income at Rs.29,85,67,639/- as against the declared total income of Rs.29,81,42,340/-. He found that the search action divulged that the assessee was inflating expenses by recording bogus steel purchase bills from Mumbai based parties. Prior to search, a survey u/s.133A was carried out at the business premises of the assessee, which was converted into the instant search action. In the statement u/s.133A of the Act, the assessee was confronted with the fact that it had shown steel purchases from 30 parties in respect of which the relevant bills, purchase orders, goods received note, delivery challans etc. were not fully available. In many cases contact numbers given on the bills were found to be non-existing. On field investigation at the addresses of the 30 parties, it was found that there was no activity of sale of steel and the parties were non-existing entities. In response to question no. 22, the assessee submitted that the goods were purchased from these parties through some agent; goods were received directly at the factory or project sites; bills/delivery challans, lorry/Otroi receipts were submitted after receipt of material; payment was made by account payee cheques to the concerned parties and hence, the transactions were genuine. However, in view of lack of or some weaknesses in the documentation, the assessee admitted to the disallowance of the expenses of Rs.36,01,34,587/- claimed on account of such purchases over the years and also agreed to offer the same as an additional income. In the statement u/s.132(4), the assessee was confronted with his statement recorded u/s.133A of the Act in which he made disclosure of Rs.36.01 crore on account of disallowance of purchases. In response to question no.18 in the statement u/s.132(4), the assessee agreed with such surrender and agreed to offer disallowance in the concerned years. The amount of such purchases relating to the A.Y. 2007-08 stood at Rs.99,41,075/-. The assessee filed return u/s.153A of the Act for the year under consideration by including the said amount of Rs.99.41 lakh in the total income declared. However, during the course of assessment proceedings, the assessee contended that all the purchases were genuine and hence, no addition should be made. It was further submitted that in case of certain purchases, the payment of sales-tax was not made by such parties and if the said suppliers had defaulted in making payment of sales-tax, then the assessee should not be considered to have recorded bogus purchases. He further stated that when the statement was recorded at the time of search, the suppliers were not traceable. However, later on, the assessee managed to get all the necessary documents from the parties who supplied the goods to the assessee. The AO found certain flaws in the purchase documents filed by the assessee during the course of assessment proceedings In view of the fact that the assessee had himself offered Rs.99,41,075/- as additional income on account of bogus purchases in the course of search relating to the year under consideration and included the same in his return of income, the AO disregarded the assessee’s computation and added Rs.99,41,075/- to the income originally determined u/s.143(3) of the Act by rejecting the assessee’s contention for reduction in the amount of income offered in the return u/s.153A on account of such a mistaken notion.
3. The assessee approached the ld. CIT(A) and furnished the relevant documents in support of the genuineness of purchases. It was contended that all the purchases were genuine and payments were made by cheques in respect of the goods received pursuant to