Case Law Details

Case Name : Navin Sirahmal Mukim Vs ITO (ITAT Pune)
Appeal Number : ITA No. 657/PUN/2020
Date of Judgement/Order : 30/06/2022
Related Assessment Year : 2008-09

Navin Sirahmal Mukim Vs ITO (ITAT Pune)

It is observed that the assessee allegedly purchased diamonds through the Hawala purchase bills and thereafter utilized the same in the manufacture of the jewellery. In such a situation, the entire amount of purchase bills does not requires addition but only the profit element because the diamonds must have been actually purchased at lower prices in lieu of which costly hawala purchases were recorded, which were used in the jewellery-making,. The Hon’ble jurisdictional High Court in Pr.CIT Vs. Paramshakti Distributors Pvt. Ltd., vide its judgment dated 15.07.2019 in ITA No.413/2017, has sustained the addition @ 10% of the amount of purchases, being, the profit element involved therein. Respectfully following the precedent, I deem it appropriate to restrict the addition to 10% of the amount of purchases. It is ordered accordingly.

FULL TEXT OF THE ORDER OF ITAT PUNE

This appeal by the assessee is directed against the order passed by the CIT(A)-8, Pune on 06-08-2019 in relation to the assessment year 2008-09.

2. This appeal is time barred by 318 days. The assessee has filed an affidavit stating the reasons that the lockdown was imposed by the Govt. due to Covid-19 pandemic, which led to the late filing of the appeal. The ld. DR did not seriously object to the delay. Therefore, the delay is condoned and the instant appeal is admitted for disposal on merits by virtue of judgment of the Hon’ble Supreme Court in Cognizance for Extension of Limitation, In re 438 ITR 296 (SC) read with judgment in Cognizance for Extension of Limitation, In re 432 ITR 206 (SC) dated 08-03-2021 and 421 ITR 314.

3. The only issue involved in this appeal is against the confirmation of addition of Rs.27,91,507/- made by the AO on account of bogus purchases.

4. Briefly stated, the facts of the case are that the assessee is engaged in the manufacturing and trading of Jewellery items. The Assessing Officer, on verification of information received from the Maharashtra Sales Tax Department, observed that the assessee was one of the beneficiaries of Hawala purchases. Such amount of bills stood at Rs.27,91,507/-. The assessee was called upon to prove the genuineness of the purchases so made. The assessee submitted certain details. Not convinced, the AO made the addition equal to the amount of Hawala purchase bills, which got confirmed in the first appeal. Aggrieved thereby, the assessee has approached the Tribunal.

5. Having heard both sides and gone through the relevant material available on record, it is observed that the assessee allegedly purchased diamonds through the Hawala purchase bills and thereafter utilized the same in the manufacture of the jewellery. In such a situation, the entire amount of purchase bills does not requires addition but only the profit element because the diamonds must have been actually purchased at lower prices in lieu of which costly hawala purchases were recorded, which were used in the jewellery-making,. The Hon’ble jurisdictional High Court in Pr.CIT Vs. Paramshakti Distributors Pvt. Ltd., vide its judgment dated 15.07.2019 in ITA No.413/2017, has sustained the addition @ 10% of the amount of purchases, being, the profit element involved therein. Respectfully following the precedent, I deem it appropriate to restrict the addition to 10% of the amount of purchases. It is ordered accordingly.

6. In the result, the appeal is partly allowed.

Order pronounced in the Open Court on 30th June, 2022.

Download Judgment/Order

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One Comment

  1. Javri Golchha says:

    None of the officer of any states follows the Order of Other state HC. Various case laws are there which are infavour of genuine dealer but the attitude of Officers affect the bonafode dealer.Since 2013, Cheater business entities purposely doing such tactics to have % gain

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