TaxTMI 
TaxTMI 
TaxTMI 
2016 (3) TMI 908
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....Ld CIT (A) has grossly erred in not appreciating the fact that notice u/s 133(6) issued to the parties from whom alleged bills were received were returned undelivered by the postal authorities and department inspector. 4. On the facts and in the circumstances of the case and in law, the Ld CIT (A) has grossly erred in not appreciating the fact that the assessee was not able to produce the parties, from whom alleged bills were received, before the AO despite many opportunities were accorded to him. 5. On the facts and in the circumstances of the case and in law, the Ld CIT (A) has failed to rebut the findings of sales tax department vis-a-vis bogus purchases despite reasonable opportunity was accorded to him. 6. On the facts and in the circumstances of the case and in law, the Ld CIT (A) has grossly erred in accepting the misleading submissions made by the assessee that the department did not make available the information, provided by Sales Tax Department." 2. Briefly stated relevant facts of the case are that the assessee, who is an individual, is a BMC main contractor engaged in the civil contract works. He owns a proprietorship concern named "M/s. Dev Engineers". For ....
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....ss Enterprises; (ii) Om Corporation; (iii) shree Sai Enterprises; (iv) V.K. Enterprise and (v) Virat Enerprises [para 9 of the AO‟s order is relevant in this regard]. The total purchases from these 5 parties worked out to Rs. 1,00,86,929/-. Thus, the gross addition works out to Rs. 13.03 Crs (rounded off) (ie Rs. 12,01,91,407/- + Rs. 1,00,86,929/-) . 6. During the first appellate proceedings, apart from the submissions made before the AO, assessee gave further submissions and most of the submissions are repeat in nature and they revolve around the following arguments namely (i) the raw material was supplied directly to the site for inspect and used by the engineers of the assessee; (ii) the payments were made by way of cheque involving the banking channels; (iii) no delivery bills and delivery challans were made available because of direct supply to the site. The website based list of the Sales Tax Department is no ground for treating them as „bogus suppliers‟ when contract works were completed to the satisfaction of the MCGM. Assessee cannot be held responsible for disappearance of the parties and absence of reply from the sellers to the notices issued u/s 133(6....
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....are similar to the present facts of the case and, therefore, the ratio of judgments of the above referred two cases are fully applicable in the present case. In view of the facts discussed above, as well as binding judicial pronouncements of the jurisdictional ITAT, Mumbai Bench as well as Hon‟ble Mumbai High Court and other legal precedents, the addition made by the AO amounting to Rs. 13,02,78,336/- cannot be sustained. Accordingly, the addition of Rs. 13,02,78,336/- is deleted. In the result, this ground of appeal is allowed." 7. The above paragraphs suggest that mere suspicion is not a basis for coming to the conclusion against the assessee when the AO has not discharged his onus completely. Aggrieved with the above order of the CIT (A), the Revenue is in appeal before the Tribunal. The grounds raised in this appeal suggest that the Revenue is not happy with the way the CIT (A) decided the issue against the Revenue relying on the judgment of the Hon‟ble jurisdictional High Court in the case of CIT vs. Nikunj Eximp Enterprises Pvt Ltd reported in 2013-TIOL (Tax India Online.com)-04-HCMum- IT, dated 17.12.2012. 8. Before us, Ld DR for the Reveue brought our attenti....
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....ibunal‟s decision in the case of Ramesh Kumar & Co (supra) and submitted that when the AO failed to appreciate the work done by the contractor and the satisfaction of the MCGM and when the AO failed to appreciate the GP rates, declared by the Department, are within the permitted limited, the addition made u/s 69C of the Act is not sustainable. For demonstrating the common alleged blacklisted suppliers, assessee brought our attention to page 10 of the paper book, wherein the names such as (i) Rohit Enterprises (sl no.9); (ii) Samarth Enterprises (sl no.10) etc were found figuring in the list of suppliers enlisted in para 8.1 at pages 3 to 5 of the CIT (A)‟s order. At the end, the arguments of the Ld Counsel for the assessee include that when the GP rates are within the permitted limits and when the AO failed to verify to find out the defects in the quality of the contract works, the additions made by the AO u/s 69C of the Act are not sustainable. It is a fact that with the addition of Rs. 13.03 Crs (rounded of) the GP rate is unusually and abnormally high at 21.38% (para 12 of page 10 of the CIT (A)‟s order is relevant). There is no dispute on the fact that the GP ....
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....said 56 parties, who may be bill suppliers, cannot be the suppliers. But, so far as the assessee is concerned, payments are incurred on the raw materials purchases by the assessee as per the requirements of the contracts. In these circumstances, as held by the Tribunal in many other cases, the onus is on the Assessing Officer to demonstrate the raw materials were not purchased at all from the stated / any supplier or AO should demonstrate the contract works executed by the assessee are of inferior quality and the raw materials to the tune of Rs. 13.03 Crs was an inflated one. Unfortunately, AO failed to discharge the onus on the above issues. The AO mechanically compared the list of suppliers to the assessee with the list available on the website of the Sales Tax Department ie www.mahavat.gov.in (supra) and all the purchases from these parties were rejected as „bogus‟. In the process, the AO ignored the issues about the fact of completion of contracts without compromising the quality of the contract works. For the sake of completeness of this order, we extract the relevant para 8 from the Tribunal‟s order in the case of Ramesh Kumar & Co (supra) and the same reads....