×Latest Case Laws on Income Tax by various Income Tax Appellate Tribunals in India
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06-03-2019, Chetas Control Systems, Section 133A, 133(6), Tribunal Pune
These bunch of six appeals preferred by the assessee emanates from the order of Ld. CIT(Appeals)-1, Pune commonly dated 17.03.2016 for the assessment years 2009-10 to 2011-12 as per grounds of appeal on records.
All these appeals were heard together. Since the facts are common, issues are similar, these cases are being disposed of vide this consolidated order.
2. These cases relates to hawala purchases wherein the Assessing Officer made 100% addition on such purchases and the Ld. CIT(A) has confirmed the same. For sake of convenience, we would take facts as appearing in assessment year 2009-10.
3. The facts in this case are that the assessee company is engaged in the business of manufacturing and installation engineering goods and filed its return of income for A.Y. 2009-10 on 16/9/2009 declaring total income of Rs.3,04,92,010/-. The return was assessed u/s 143(1) of Income Tax Act, 1961 (hereinafter referred to as ‘the Act’) accepting returned income. Thereafter, information was received from the Maharashtra Sales Tax Department which had conducted enquiries in the cases of several dealers located all across Maharashtra resulting into unearthing of a racket involving more than 1935 Hawala dealers and more than 33,700 beneficiaries. 'Hawala' entails making bogus invoices to allow a trader to claim tax credits. In this racket, the Hawala operator posing as the "seller" exists only on paper, issues fake bills to the concern and gets commission in return. The beneficiary, in turn, gets the input tax credit on the material he had never purchased in reality. It has been identified by the Sales Tax Department that there are more than 37,700 such beneficiaries who had used fake invoices to fraudulently claim tax deduction on such purchases. The list of beneficiaries contain the total amount of Hawala availed by the beneficiary for respective Financial Years. The information received from Sales Tax Department was duly examined and verified from record and detail of suppliers and their
statements were examined and it was revealed that the assessee had claimed purchases of Rs.3,51,57,380/- excluding VAT for financial year 2008-09 relevant to A.Y.2009-10 in their books whereas no material as against these purchases were received by it in actual. The verification revealed that the assessee has inflated its expenses to the extent of the bills issued from hawala dealers. Therefore, notice u/s 148 was issued to the assessee on 28/3/2013 and was served on it. The AO has recorded reasons to believe that income has escaped assessment before issue of notice u/s.148 of the Act.
4. Considering the quantum of bogus purchases and circumstances of the case, survey under section 133A of the Act was conducted in the business premises of assessee on 13/08/2013 to 14/08/2013. During the course of survey, statement on oath of Mr. Mahesh S. Deshmukh, Director of assessee Company was recorded and during the course of statement, he accepted following purchases as bogus purchases and offered the same for taxation in respective assessment years as on record. The assessee, accordingly, filed revised return of income in which additional income of Rs.3,40,06,190/- accepted during the course of survey, was offered to tax. The assessment was completed at total income of Rs.6,47,61,890/- and since additional income representing bogus purchases amounting to Rs.3,40,06,190/- was offered in the return of income filed in response to notice u/s 148 of the Act after detection and survey action taken by the Department and thereafter, penalty proceedings were initiated by the Assessing Officer u/s.271(1)(c) of the Act as well.
5. At the time of hearing, the Ld. AR of the assessee vehemently argued that these are not bogus purchases and in fact, purchases were made against which payments have been made to the concerned parties. All the payments have been made through banking channels and bank statements have been filed before the Revenue Authorities. The Ld. AR further submitted that whensurvey action took place, the documentary evidences such as stock register, sales register were maintained and kept at the site since they are required for