(66&67) itxa 1972.18&1932.18.doc IN HIGH COURT OF JUDICATURE AT BOMBAY ORDINARY ORIGINAL CIVIL JURISDICTION INCOME TAX APPEAL NO.1972 OF 2018 Pooja Paper Trading Co. Pvt. Ltd. : Appellant versus Income Tax Officer-4(3)(1), Mumbai : Respondent. WITH NOTICE OF MOTION NO.948 OF 2018 Pooja Paper Trading Co. Pvt. Ltd. : Applicant. In matter between Pooja Paper Trading Co. Pvt. Ltd. : Appellant versus Income Tax Officer-4(3)(1), Mumbai : Respondent. ALONG WITH INCOME TAX APPEAL NO.1932 OF 2018 Pooja Paper Trading Co. Pvt. Ltd. : Appellant versus Income Tax Officer-4(3)(1), Mumbai : Respondent. WITH NOTICE OF MOTION NO.949 OF 2018 Pooja Paper Trading Co. Pvt. Ltd. : Applicant. In matter between Pooja Paper Trading Co. Pvt. Ltd. : Appellant versus Income Tax Officer-4(3)(1), Mumbai : Respondent. Mr. Jayan Gaikwad a/w Mr. Rakesh P Saroj for Appellant/Applicant. Mr. Suresh Kumar for Respondent. lgc 1 of 7 ::: Uploaded on - 28/02/2019 ::: Downloaded on - 01/03/2019 13:42:58 ::: (66&67) itxa 1972.18&1932.18.doc CORAM : AKIL KURESHI & M.S.SANKLECHA, JJ. DATE : FEBRUARY 25, 2019. P.C.: 1 These two Appeals are take up out of turn for admission as Appellant Assessee had taken out Motions seeking stay of order dated 26 th October 2017 of Income Tax Appellate Tribunal. This as revenue is adopting coercive proceedings for recovery. 2 These Appeals under Section 260A of Income Tax Act, 1961 (for short Act ) challenge common order dated 26 th October 2017 of Income Tax Appellate Tribunal (for short Tribunal ) partly allowing Appeals filed by Revenue. common impugned order relates to Assessment Years 2010-2011 and 2011-2012. Hence two Appeals filed by Appellant against impugned order. 3 Although numerous questions are raised in Appeal Memos, Appellant urges only following basic identical re-framed questions of law for our consideration :- Whether on facts and circumstance of case and in law, was Appellate Tribunal justified in disallowing 12.5% of bogus purchases for subject Assessment Years? lgc 2 of 7 ::: Uploaded on - 28/02/2019 ::: Downloaded on - 01/03/2019 13:42:58 ::: (66&67) itxa 1972.18&1932.18.doc 4 It is admitted position between parties that facts and law as applicable in both Appeals are identical. Therefore for purpose of considering aforesaid question, which is common in both Appeals, we are taking facts as set out in Income Tax Appeal No.1932 of 2018 which is relating to Assessment Year 2011- 2012. 5 Respondent Company is engaged in business of trading in paper and paper products. For Assessment Year 2011-2012 Respondent declared income of Rs.5.81,692/-. return was processed under Section 143 (1) of Act. Thereafter Assessing Officer on re-opening of assessment found that Respondent made bogus purchases to tune of Rs.4.17 crores during subject assessment year. This was on finding that Respondent had made purchases from various parties which were Hawala parties who were indulging in hawala business without actual transacting in any goods. basis of re-opening of assessment was information received from Sale Tax Authorities. In aforesaid circumstances, Assessing Officer disallowed purchases to extent of Rs.4.17,57,005/- and added same as unexplained expenditure under Section 69C of Act in order dated 24 th March, 2014 passed by Assessing Officer under Section 143(3) read with Section 147 of Act. 6 Being aggrieved, Respondent filed Appeal to Commissioner of Income Tax (Appeals) [CIT(A)]. By order dated 7 th October, 2015 CIT (A) found that lgc 3 of 7 ::: Uploaded on - 28/02/2019 ::: Downloaded on - 01/03/2019 13:42:58 ::: (66&67) itxa 1972.18&1932.18.doc even if purchase transactions are not verifiable what is taxable is only income component and not entire purchase. Therefore on finding that gross profit ratio for subject Assessment Year was much less than average gross profit of earlier three assessment years it adopted average gross profit for earlier these assessments years at 3.67%. Thus, CIT(A) sustained addition of Rs.5,69,087/- being profit/income element and deleted remaining amount of Rs.4,11,87,918. Thus partly allowing Appeals of Respondent. 7 Being aggrieved by order dated 7 th October, 2015 of CIT (A), Revenue has filed Appeals before Tribunal. impugned order dated 26 th October 2017 Tribunal while partly allowing Appeals of Revenue held that in matters of bogus purchases profit element has to be estimated. It upheld view of CIT (A) that dis-allowance could only be of income/profit attributable to bogus purchases. Tribunal found fault with CIT (A) blindly applying gross profit ratio declared by assessee for earlier assessment years, ignoring factual aspect in subject Assessment Year, where it is found that Respondent was involved in hawala transactions. This fact of Respondent being engaged in hawala transaction was also supported by statement on oath made by one Shri Paras Gandhi, director of companies, who were declared as bogus billers and on which Assessing Officer has placed reliance. Tribunal recorded finding that Appellant Assessee had not produced any evidence to show that purchases made by them were genuine. Thus considering overall facts, impugned order of lgc 4 of 7 ::: Uploaded on - 28/02/2019 ::: Downloaded on - 01/03/2019 13:42:58 ::: (66&67) itxa 1972.18&1932.18.doc Tribunal enhanced disallowance from 3.67% to 12.5% of bogus purchases and directed Assessing Officer to calculate income of Respondent-Assessee accordingly. 8 Mr. Jayant Gaikwad, learned counsel appearing for Appellant herein submits that impugned order of Appellate Tribunal is bad in law as it did not consider various evidences produced by Appellant-Assessee and relied upon third party information to hold that Appellant-Assessee's purchases were bogus. This is without having been given any opportunity to Appellant-Assessee to cross examine person on whose statement Revenue was relying upon. 9 We find that all authorities under Act have come to finding of fact that substantial purchases made by Appellant Assessee were bogus in nature. Only issue on which there is divergence of views between authorities is in respect of extent of disallowance. This conclusion of purchases being bogus by Authorities under Act is on basis of appreciation of entire evidence on record. It is important to bear in mind that Appelllant Assessee had not filed any Appeal from order of CIT (A), holding that disallowance on account of bogus purchases has to be 3.67%. Appellant accepted findings of facts by CIT (A) that there was bogus purchases. Therefore grievance now raised of no cross examination being offered to Appellant-Assesssee, when order of CIT(A) is not challenged before Tribunal, could not have been raised by Appellant Assessee. Moreover, there is no lgc 5 of 7 ::: Uploaded on - 28/02/2019 ::: Downloaded on - 01/03/2019 13:42:58 ::: (66&67) itxa 1972.18&1932.18.doc mention of this grievance by Appellant-Assessee or even with regard to non- consideration of various documents such as Sales Ledger, Purchase Ledger etc. by Assessing Officer in order of sthe Tribunal. submission of Mr. Jayant Gaikwad on behalf of Appellant-Assessee that same was urged before Appellate Tribunal, but was not considered, cannot be accepted. This is particularly so if Tribunal had failed to make note of submission of party in its order, then appropriate remedy for party was to move Tribunal for rectification of order ensuring it that submissions made by it are recorded in order. However, given factual matrix that Appellant had not challenge finding of bogus purchases, above issue could not have been raised by it before Tribunal. 10 In above circumstances, we are of view that extent of disallowance in present facts do not give rise to any substantial question of law. view taken by Tribunal is plausible view and does not require any interference at hands of this Court. Therefore question as proposed does not give any rise to substantial question of law. Thus not entertained. 11 reasons indicated herein to dismiss Appeal No.1932 0f 2018 would equally apply to Income Tax Appeal No.1972 of 2018. 12 For aforesaid reasons, question that is proposed does not give rise to any substantial question of law. above Appeals are accordingly dismissed. lgc 6 of 7 ::: Uploaded on - 28/02/2019 ::: Downloaded on - 01/03/2019 13:42:58 ::: (66&67) itxa 1972.18&1932.18.doc 13 In view of dismissal of above Appeals, Notice of Motion Nos.948 of 2018 and 949 of 2018 taken out by Appellant-Assessee for stay of impugned order dated 26th October 2017 do not survive and same to accordingly stand disposed of as such. [ M.S.SANKLECHA,J.] [ AKIL KURESHI, J ] lgc 7 of 7 ::: Uploaded on - 28/02/2019 ::: Downloaded on - 01/03/2019 13:42:58 ::: Pooja Paper Trading Co. Pvt. Ltd. v. Income-tax Officer-4(3)(1), Mumbai