Quality Heightcon Pvt Ltd Mumbai v. Dcit Circle 9 3 Mumbai

In The Income Tax Appellate Tribunal Mumbai Bench H Mumbai Before Shri Saktijit Dey Judicial Member And Shri N K Pradhan Accountant Member Ita No 2236 Mum 2016 Assessment Year 2011 12 M S Quality Heightcon Pvt Ltd 612 Tower A Kohinoor City Mall Kohinoor City Kirol Road Off L B S Kurla W Mumbai 400070 Vs Dcit 9 3 Mumbai Pan No Aaa Cq 1997 R Appellant Respondent Assessee By Mr Gayaneshwar Kataram Ar Revenue By Mr M C Omi Ningshen Dr Date Of Hearing 12 12 2017 Date Of Pronouncement 20 12 2017 Order Per N K Pradhan A M This Is An Appeal Filed By The Assessee The Relevant Assessment Year Is 2011 12 The Appeal Is Directed Against The Order Of The Commiss Ioner Of Income Tax Appeals 21 Mumbai And Arises Out Of The Assessment Order U S 143 3 Of The Income Tax Act 1961 The Act 2 The 1 St Ground Raised By The Assessee In This Appeal Is Against The Order Of The Ld Cit A Upholding The Disallowance Of Rs 14 86 255 I E 12 5 On Purchases Of Rs 1 18 90 046 Even Though The Assessee Had Submitted Documentary Evidence And The Depart Ment Not Controverting The Same M S Quality Heightcon Pvt Ltd Ita No 2236 Mum 2016 2 2 1 Briefly Stated The Facts Of The Case Are That The Assessing Officer Ao Received Information From The Investigation Wing Of Income Tax Department Mumbai That The Assessee Is One Of The Beneficiaries Of Hawala Transactions Routed Through Hawala Operators As Informed By The Sales Tax Department Government Of Mahar Ashtra As Per The Said Information The Assessee Is One Of The Beneficiaries Of The Bogus Purchases From The Following Parties S No Name Of The Party Amount Rs 1 Surat Tube Corporation 1 31 040 2 Adinath Trading Co 92 56 441 3 Millenium Minerals 24 28 360 4 Rakesh Enterprises 14 301 5 R B Enterprises 59 904 Total 1 18 90 046 In Order To Verify The Genuineness Of Transaction The Ao Issued Notice U S 133 6 To The Abovementioned Parties The Said Notices Were Returned Back By The Postal Authorities As Unserved Except In The Case Of Millenium Minerals And Surat Tube Corporatio N The Ao Observed That Even Millenium Minerals And Surat Tube Corporation Did Not Respond To The Said Notices The Ao Further Observed That The Aforesaid Parties Were Not Produced For Examination And Cross Verification Of Transactions Even Though The As Sessee Company Was Given Opportunity To Do So In View Of The Above The Ao Made An Addition Of Rs 1 18 90 046 To The Income Shown By The Assessee 4 Aggrieved By The Order Of The Ao The Assessee Filed An Appeal Before The Ld Cit A We Find That T He Ld Cit A Following The M S Quality Heightcon Pvt Ltd Ita No 2236 Mum 2016 3 Judgment Of The Honble Gujarat High Court In The Case Of Cit Vs Simit P Sheth 2013 38 Taxmann Com Guj Restricted The Disallowance To Rs 14 86 255 12 5 Of Rs 1 18 90 046 Thus He Deleted The Balance Addition Of Rs 1 04 03 791 5 Before Us The Ld Counsel Of The Assessee Files A Copy Of The Confirmation Of Accounts For The Period 01 04 2010 To 31 03 2011 It Is Also Stated By Him That The Ao Failed To Comply With The Rules Of Natural Justice By Not Confronting Th E Assessee With The So Called Information Received From The Sales Tax Depar Tment Or The Investigation Wing It Is Also Stated By Him That The Ao Should Have Confronted The Assessee With The Evidence Which He Desires To Rely Upon Before Taking Any Adverse A Ction Further It Is Stated That The Assessee Should Have Been Given Opportunity To Cross Examine The Parties 6 On The Other Hand The Ld Dr Supports The Order Passed By The Ld Cit A He Files A Copy Of The Order Of The Itat D Bench In The Case Of T He Assessee For The Ay 2012 13 Ita No 4825 Mum 2016 Wherein The Disallowance Restricted By The Ld Cit A To 12 5 Of The Bogus Purchases Has Been Sustained By The Tribunal 7 We Have Heard The Rival Submissions And Perused The Relevant Materials On R Ecord The Fact Remains That The Ao Issued Notices To The Five Parties In The Address Given By The Assessee In The Case Of Three Parties The Notices Could Not Be Served By The Postal Authorities In The Case Of The Other Two Parties Notices Could Be Ser Ved But There Was No Response Also The Assessee Failed To Produce The Above Parties Before The Ao For Examination And Cross Verification Of The Transactions M S Quality Heightcon Pvt Ltd Ita No 2236 Mum 2016 4 In The Case Of Simit P Sheth Supra The Honble Gujarat High Court Has Held That Where Purchases Were Not Bogus But Were Made From Parties Other Than Those Mentioned In The Books Of Account Not Entire Purchase Price But Only Profit Element Embedded In Such Purchases Can Be Added To Income Of The Assessee That Being The Position Not The Entire Purchase Price But Only The Profit Element Embedded In Such Purchases Can Be Added To The Income Of The Assessee The Honble High Court Referred To A Similar View Taken In The Case Of Cit Vs Vijay M Mistry Construction Ltd 2013 355 Itr 498 Guj And Cit Vs Bholanath Poly Fab P Ltd 2013 355 Itr 290 Guj Also The Co Ordinate Bench In The Case Of The Assessee For The Ay 2012 13 Ita No 4825 Mum 2016 Has Confirmed The Disallowance 12 5 Made By The Ld Cit A On The Bogus Purchases The Assessee Is A Civil Contractor 7 1 In View Of The Above We Uphold The Disallowance Of Rs 14 86 255 Made By The Ld Cit A Thus The 1 St Ground Of Appeal Is Dismissed 8 The 2 Nd Ground Of Appeal Rel Ates To Non Granting Of Tds Credit Of Rs 16 07 005 We Find That The Ld Cit A Has Directed The Ao To Verify The Tds Credit Available On The Itd System And As Appearing In The 26 As Statement The Ld Cit A Has Specifically Mentioned After Providing O Pportunity To The Appellant Credit For Tds Must Be Given As Due And Credit Not Granted Should Be Clearly Spelt Out By Way Of Speaking Order We Direct The Ao To Follow The Above Direction Of The Ld Cit A Without Further Delay M S Quality Heightcon Pvt Ltd Ita No 2236 Mum 2016 5 9 In The Result The A Ppeal Is Partly Allowed Order Pronounced In The Open Court On 20 12 2017 Sd Sd Sa K Tijit Dey N K Pradhan Judicial Member Accountant Member Mumbai Dated 20 12 2017 Rahul Sharma Sr P S Copy Of The Order Forwarded To 1 The Appellant 2 The Respondent 3 The Cit A 4 Cit 5 Dr Itat Mumbai 6 Guard File By Order True Copy Dy Asstt Registrar Itat Mumbai