Case Law Details
ACIT Vs Pritam S Mahale (ITAT Pune)
ITAT find that, upon the receipt of information from DGIT(INV), the Ld. AO after identifying the list of entry operators with whom the assessee had alleged hawala transactions and quantification of amount of bogus purchases involved, has put the respondent assessee to notice calling evidential documents to prove the existence of parties and genuineness of transactions, and in the event of failure to showcase physical movement of goods & consumption thereof, disallowed the entire amount of bogus. Whereas, the Ld. FAA reverberating the findings of lower authority, restricted the disallowance to the GP ratio in the light of Hon’ble Jurisdictional High Court of Bombay in “Mohammad Haji Adam & Co.” (Supra) for the reason of acceptance of sales/revenue without dispute. Insofar as the bogus purchases are concerned, the ratio laid in “Mohammad Haji Adam & Co.” (Supra) cannot squarely be applied to the present case for three factual variations, firstly the assessee before us is neither a trader nor a dealer but a Govt Civil Contractor and secondly there was complete absentia with regards to quantitative details or consumption of material purchased, and finally the sales or revenue were not exclusively with reference to goods purchases/consumed but inclusive of work contract services. However, the Hon’ble Lordship had occasioned to considered similar facts and circumstance in the case of “PCIT Vs Pinaki D Pinani” (Bombay ITA/1543 of 2017), wherein the assessee being civil contractor, with evidential stock records and sales, was able to demonstrate the quantity of material consumed in execution of work contract undertaken and thereby established the nexus.
In the present case, it has been categorically established that, the amount of bogus purchases ₹64,33,495/- is debited to P&L by fictitious tax invoices and the respondent assessee failed to establish the consumption of such goods in the execution of civil contract by adducing such stock movement records to the satisfaction of Ld. AO., then taxing such bogus purchases GP rate of goes against the principles of taxation embedded in chapter VI of the Act and against the ratio laid down in ‘N K Proteins Ltd’ and ‘PCIT Vs Pinaki D Pinani’ (Supra), for the reason, we are of the considered view that, the Ld. AO was right in making 100% disallowance towards bogus / hawala purchases, and thus we are inclined to uphold the order of assessment and reverse the order the Ld. FAA.
FULL TEXT OF THE ORDER OF ITAT PUNE
The present appeal of the Revenue is assailed against the order of the Commissioner of Income Tax (Appeals)-3, Pune [for short “CIT(A)”] dt. 20/11/2019 passed u/s 250 of the Income-tax Act, 1961 [for short “the Act”] which emanated out of the assessment order dt. 09/03/2015 passed u/s 143(3) r.w.s. 147 of the Act, by the Dy. Commissioner of Income Tax-Circle-3, Pune [for short “AO”] for the assessment year 2009-10.
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