Income-tax Appellate Tribunal - C Bench Mumbai, Before S Shri Rajendra,Accountant Member and C.N. Prasad,Judicial Member . ITA 1322 Mum 2014, Assessment Years: 2010-11 DCIT-25(1) M s. Om Gagangiri Development Pratyakshakar Bhavan, Room Corporation, No.202, 2nd Floor, Bandra Kurla Vs. B-102, Arlanta Building, Mitagar Road, Complex, Bandra (E), Dahisar (W), Mumbai-400 068. Mumbai-400 051. PAN:AAAFO 1526 B ( Appellant) ( Respondent) Revenue by : Shri Airija Jaikaran - DR Assessee by : Shri Sandeep D. Ghelani-AR Date of Hearing : 14.09.2016 Date of Pronouncement: 21.09.2016 ,1961 254(1) Order u s.254(1)of Income-tax Act,1961(Act) PER RAJENDRA, AM- Challenging order dated 02 12 2013 of CIT (A) 35, Mumbai, Assessing Officer (AO) has filed present appeal raising various grounds. Assessee firm is engaged in business of builders and developers. Return of income, declaring total income at Rs. 1.83 crores was filed on 03 09 2010. AO completed assessment under section 143 (3) of Act on 30 01 2013 determining income of assessee at Rs. 2.20 crores. 2.Effective ground of appeal is about deleting addition made by AO on basis of information gathered by him from official website of Sales Tax Department Government of Maharashtra. During course of assessment proceedings, AO directed assessee to furnish list of persons from whom purchases had been made. Out of list nine parties, from whom it had made purchases, were appearing in list of suspicious dealers who indulged in issuing only bills without any goods or materials for commission as per website of Maharashtra Government . assessee was asked to show cause as to why alleged purchases aggregating Rs.37.29 lakhs should not be treated as unexplained expenditure. After considering submission of assessee, AO made addition of Rs.37.29 lakhs on account of unexplained expenditure, invoking provisions of section 69C of Act. 3.During course of hearing before us,it was brought over notice that while deciding appeal for AY.2011-12, in assessee own case Tribunal had dealt with identical 1322 M 14 Om Gagangiri Development Corpn. issue (ITA 5687 Mum 2014, dated 30 06 2016). We find that Tribunal has dealt issue as under: 2.Brief facts of case are that assessee is engaged in business of builders and developers filed return of income for relevant AY on 16.09.2011. return of income was selected for scrutiny. While framing assessment order, Assessing Officer (AO) asked assessee to furnish list of persons from whom assessee purchased material. assessee submitted list of persons from whom purchases were made on receipt of list of such person, AO asked assessee that out of list submitted by assessee, name of 9 persons are appearing in list suspicious dealers who indulge in issuing only bills without supplying any goods or materials for commission as per official website of Sales Tax Department, Government of Maharashtra. assessee was show caused as to why alleged purchases from 9 parties aggregating to Rs. 1,41,57,197 - should not be treated as unexplained expenditure. assessee submitted its reply and contended that assessee has actually purchased building material from supplier and assessee has received material at site which is visible on delivery challans. Against supply, assessee has made payment which is duly reflected from ledger account. contention of assessee was not accepted by AO and AO made addition of aggregate amount of purchase of total Rs. 1,41,57,197 - treating as unexplained expenditure u s 69C of Act, in assessment order dated 17.02.2014. Aggrieved by order of AO, assessee filed present appeal before CIT(A), wherein entire addition was deleted by CIT(A) in its order dated 30.06.2014, against which present appeal is filed before us. 3.We have heard Ld. Departmental Representative (DR) for Revenue and Ld. Authorized Representative (AR) for assessee. Ld DR for Revenue argued that no confirmation was filed by assessee. assessee has obtained accommodation bills only no purchases was made and further relied upon order of AO. Ld. AR of assessee argued that AO has not rejected books of account of assessee. Revenue has not disputed use of building material. assessee further relied upon decision of Hon ble jurisdictional High Court in CIT vs. Nikunj Eximp Enterprises (P) Ltd. [2015] 372 ITR 619 (Bom) and decision of Co-ordinate Bench in ITA No. 6727 Mum 2012 in DCIT vs. Rajeev G. Kalathil (which is authored by ld. AM). 4.We have considered rival contention of parties and perused material available on record. assessing officer during assessment proceeding asked assessee to furnish list of persons from whom purchases (building material) were made. assessee submitted their list and details of parties from whom assessee made purchases. AO further noticed that out of those parties, names of 9 parties were appearing in list of suspicious dealers who indulged in issuing only bills without supply of goods or material for commission, in website of Sale Tax Department, Government of Maharashtra. In reply to show cause notice, assessee contended that he has actually purchased various building materials from supplier. delivery challans contained signature along with seal at time of delivery of goods. assessee made payments against supplies to parties which are duly reflected in their respective ledger accounts. assessee further contended that for assessment year 2010-11. similar additions were made in scrutiny assessment proceeding under section 143(3). assessee preferred appeal before Commissioner of Income Tax Appeals, wherein additions were deleted, copy of order of Commissioner of Income Tax Appeals was also filed. contention of assessee was not accepted by AO, and AO made addition of aggregate of purchases of Rs. 1,41,57,197 - treating same as unexplained expenditure under section 69 C of Act. Before First Appellate Authority(FAA), assessee repeated contention as submitted before AO and further relied upon decision of jurisdictional High Court in case of Nikunj Exim Enterprises Private Limited 372 ITR 619 (Bombay). After considering contention of assessee, Ld CIT appeals comes to conclusion that AO made addition on basis that 9 parties 2 1322 M 14 Om Gagangiri Development Corpn. appear in list suspicious dealers, in Sale Tax Department of Govt. of Maharashtra. AO issued notice under section 133 (6) of act, to these 9 parties which were return unanswered. assessee during course of assessment proceeding submitted purchase invoices with signature of recipient along with copy of delivery challan and copies of bank statement from weird payments were made to these 9 parties along with delivery challan with signature of site supervisor. Ld. CIT further concluded that in case of assessee, project was supervised by Project Management Consultant (PMC) viz. Yash Consultants and signature of Yash Consultant s supervisor are also available on purchase bills. percentage of sales per projects shown by assessee is 24.33%, which cannot be taken to be to low profit ratio. AO have not found and any reason to question various evidence produced by assessee before him. issue that notices under section 133 (6) return unserved being enough to disbelieve accounts and other evidence produced by assessee, has already been decided by jurisdictional High Court in case of Nikunj Exim Enterprise Private Limited(supra), and accepted arguments advanced before her and allowed appeal of assessee. Co-ordinate Bench of this tribunal in ITA No. 6727 Mum 2012 in DCIT versus Rajeev G. Kalathil (supra) held as under: 5.1 Now issue before us is whether aforesaid case of assesssee is covered in favour of assessee by various decisions cited by ld. Counsel. In case of ITA No.6727 Mum 2012 (AY-2009-10) dated 20.08.2014 we find that similar addition was made on basis of information available on website of Sales Tax Department, Government of Maharashtra, which was deleted by Tribunal. relevant para 2.4 is extracted as below. 2.4. "We have heard rival submissions and perused material before us. We find that AO had made addition as one of supplier was declared hawala dealer by VAT Department. We agree that it was good starting point for making further investigation and take it to logical end. But, he left job at initial point itself. Suspicion of highest degree cannot take place of evidence. He could have called for details of bank accounts of suppliers to find out as whether there was any immediate cash withdrawal from their account. We find that no such exercise was done. Transportation of good to site is one of deciding factor to be considered for resolving issue. FAA has given finding of fact that part of goods received by assessee was forming part of closing stock. As far as case of Western Extrusion Industries. www.taxguru.in ITA 6727 Mum 2012 RGK 4 (supra) is concerned, we find that in that matter cash was immediately withdrawn by supplier and there was no evidence of movement of goods. But, in case before us, there is nothing, in order of AO, about cash trail. Secondly, proof of movement of goods is not in doubt. Therefore, considering peculiar facts and circumstances of case under appeal, we are of opinion that order of FAA does not suffer from any legal infirmity and there is no sufficient evidence on file to endorse view taken by AO. So, confirming order of FAA, we decide ground no.1 against AO." Further coordinate bench in case of Pratap U. Purohit, Co-ordinate Bench of ITAT, Mumbai, holding as under: 13. In summary, we are of opinion, considering orders of Tribunal in many cases of additions involving Sales Tax Department, disclosure of black-listed suppliers and when Assessing Officer failed to discharge onus as discussed above, additions made u s 69C amounting to Rs. 12,01,91,407 - out of total addition of Rs. 13.03 Crs is required to be deleted. CIT(A) is directed to examine this issue and pass speaking order on issues relating to aspects of GP and other independent addition of Rs. 1,00,86,929 - after gathering relevant facts from survey statements, if any. CIT (A) shall grant reasonable opportunity of being heard to assessee as per set principles of natural justice. Accordingly, grounds raised by Revenue are partly allowed for statistical purposes. 5.Now, on coming to facts of present case, we find that AO had made addition as 9 of parties, who were declared as Hawala dealer by Sales Tax Department of Government of Maharashtra. AO made addition of aggregate value of purchases from those impugned supplier instead of making any investigation, if any such payment were 3 1322 M 14 Om Gagangiri Development Corpn. credited to their accounts or same was withdrawn immediately. books of account of assessee were not rejected by AO. sales of assessee were not disputed. Use of building material was also not disputed. proof of delivery of purchased goods material is not disputed by AO. CIT(A) considered all material fact before her. Thus, considering fact and circumstances of case stated in present appeal, we do not find any illegality or infirmity in order passed by CIT(A). Hence appeal filed by revenue is dismissed. Respectfully,following above order of Tribunal, we dismiss ground raised by AO. As result, appeal filed by AO is dismissed. . Order pronounced in open court on 21st September, 2016. 21 , 2016 Sd - Sd - (C.N. Prasad ) ( Rajendra) JUDICIAL MEMBER ACCOUNTANT MEMBER Mumbai; Dated : 21.09.2016. Jv.Sr.PS. Copy of Order forwarded to : 1.Appellant 2. Respondent 3.The concerned CIT(A) , 4.The concerned CIT 5.DR E Bench, ITAT, Mumbai , 6.Guard File True Copy BY ORDER, Dy. Asst. Registrar , ITAT, Mumbai. 4 DCIT-25(1), Mumbai v. M/s. Om Gagangiri Development Corporation