AMRIT VARSHA UDYOG LTD,KOTHDWAR V. THE DEPUTY COMMISSIONER OF INCOME TAX, CIRCLE-1, DEHRADUN

ITA 63/DDN/2022

AI Insights

Amrit Varsha Udyog Limited appealed against the orders of the Commissioner of Income-tax (Appeals)/National Faceless Appeal Centre, which sustained the additions made by the Assessing Officer regarding alleged bogus purchases. The Assessing Officer had reopened the assessment based on information that the assessee had taken accommodation entries in the form of bogus expenses from a non-existing concern, Shri Ganpati Enterprises. The Tribunal considered the nature of the assessee's business, the unorganized sector from which it sourced materials, and the minimal impact of the questioned transactions on the overall purchases. The Tribunal concluded that while the transactions were questionable, they could not be deemed entirely non-genuine, leading to the allowance of the appeals.

• Counselvise Citation: [2024] 140 COUNSELVISE.COM (IT) 23525 (ITAT-DEHRADUN)
• Duration Of Justice: 1 year(s) 10 month(s) 27 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 18-10-2024
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: SMC
• Next Hearing Date: 12-09-2024
• Assessment Year: 2015-2016
• Appeal Filed On: 21-11-2022
• Laws Referred To: Income-tax Act, 1961
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: A. S. RANA
• Assessee Lawyers: RAJAN MALIK
• Keywords: Bogus purchase; Accommodation entries; Bogus
• Section: 147; 148; 143(3); 143(2); 64; 69C

Judgement Text

" IN THE INCOME TAX APPELLATE TRIBUNAL DEHRADUN BENCH “SMC”, DEHRADUN BEFORE SHRI S. RIFAUR RAHMAN, ACCOUNTANT MEMBER AND SHRI VIMAL KUMAR, JUDICIALMEMBER ITA Nos.61, 62, 63, 64 & 65/DDN/2022 (ASSESSMENT YEARS: 2013-14, 2014-15, 2015-16, 2016-17 & 2018-19) Amrit Varsha Udyog Limited, vs. DCIT, Circle 1, Plot No.D1, D2, D12, D-13, Dehradun. UPSIDC Indl. Area, Jashodparpur, Kotdwar – 246 149 (Uttarakhand). (PAN: AABCA1516H) (APPELLANT) (RESPONDENT) ASSESSEE BY : Shri Rajan Malik, Advocate REVENUE BY : Shri A.S. Rana, Sr. DR Date of Hearing : 12.09.2024 Date of Order : 18.10.2024 O R D E R PER S. RIFAUR RAHMAN, AM : 1. These appeals are filed by the assessee against the order of ld. Commissioner of Income-tax (Appeals)/National Faceless Appeal Centre (NFAC), Delhi (hereinafter referred to ‘Ld. CIT (A)’) all dated 30.09.2022 for Assessment Years 2013-14, 2014-15, 2015-16, 2016-17 & 2018-19. 2. Since the issues are common and appeals are inter-connected, the same are 2 ITA Nos.61 to 65/DDN/2022 being disposed off by this common order. We are taking ITA No.61/DDN/2022 for Assessment Year 2013-14 as lead case. 3. Brief facts of the case are, assessee filed its return of income in AY 2013-14 on 28.09.2013 declaring total income at Rs.14,48,980/-. The case was selected for scrutiny under section 143 (3) of the Income-tax Act, 1961 (for short ‘the Act’) and the same was completed on 25.08.2015 accepting the returned income. Based on the information from the Deputy Director of Income-tax (Inv.)-1, New CGO Complex, NH-IV, Faridabad (Haryana)- 121001 that assessee has taken accommodation entries to the extent of Rs.4,92,806/- in the form of bogus expenses from non-existing concern i.e. Shri Ganpati Enterprises during the year. Accordingly, the case of the assessee was reopened u/s 147 of the Act by issue of notice u/s 148 and served on the assessee. In response to the above notice, assessee furnished its return of income on 18.02.2020 declaring the total income at Rs.14,48,980/-. Subsequently, notices u/s 143(2) and 142 (1) were issued and served on the assessee. Several notices were issued u/s 142 (1) to the assessee and subsequently notice u/s 133 (6) of the Act was issued to Shri Ganpati Enterprises on 21.09.2021 to furnish the information in respect of transactions made with the assessee. No response was received from Shri Ganpati Enterprises. Considering the fact that no response from the assessee 3 ITA Nos.61 to 65/DDN/2022 and no response to notice u/s 133 (6) from Shri Ganpati Enterprises, the Assessing Officer held that assessee could not substantiate the above bogus purchases with documentary evidences and fully relying on the information from Investigation Wing and enquiries conducted in the case of bogus entry provider, Manoj Kumar and his associates, the Assessing Officer treated the abovesaid transaction with Shri Ganpati Enterprises, a non-existing concern, as bogus and added the same u/s 69C of the Act to the total income of the assessee. 4. Aggrieved with the above order, assessee preferred an appeal before the ld. CIT (A) and filed detailed submissions before the NFAC, Delhi. After considering the submissions of the assessee, ld. CIT (A) sustained the additions made by the Assessing Officer and dismissed the appeal filed by the assessee. 5. Aggrieved with the above order, assessee is in appeal before us raising following grounds of appeal :- “The first ground of appeal relates to the fact that the Ld. Assessing Officer has erred in law and facts of the case and has wrongly made an addition of Rs.4,92,806/- when all explanations and supporting documents were submitted by the appellant.” 6. At the time of hearing, ld. AR for the assessee submitted that assessee is in the business of manufacture of M.S. Ingots and its manufacturing unit 4 ITA Nos.61 to 65/DDN/2022 located at Kotdwar. He submitted that the original assessment u/s 143(3) was already completed and accepted the returned income filed by the assessee. Subsequently, the assessment was reopened u/s 147 based on the information received from Investigation Wing. He submitted that the assessee is a manufacture of M.S. Ingots and it purchases lot of scrap and steel from various scrap suppliers and it turned the scrap into M.S. Ingots. In the normal course of business, assessee received different batch of scrap material and finally received bills for the same. Considering the unorganized sector, the suppliers of scrap material may or may not have proper units as supplier, they may get bills from other parties and in that process, Shri Ganpati Enterprises may be one of them. He submitted that there may be some issues with the supplier in supplying with proper bills. Considering the fact of unorganized sector, the assessee has actually received scraps and manufactured it. Merely because there are certain issues with the supplier, the assessee should not be penalized. Further, he submitted that even it is a bogus purchase, certain percentage may be disallowed and not the whole purchases. 7. On the other hand, ld. DR for the Revenue submitted that it is clear from the record that the accommodation entry provided to the assessee by Shri Ganpati Enterprises and it is brought on record that this party is not in 5 ITA Nos.61 to 65/DDN/2022 existence. It clearly establishes that the assessee has obtained the bogus invoices to reduce the profit in order to minimize the tax. He relied on the findings of the lower authorities. 8. Considered the rival submissions and material placed on record. We observed that the assessee is a manufacturer of M.S. Ingots and it uses scrap steel to manufacture the same. We observed that the assessee has earned revenue of Rs.27.75 crores and consumed the material of Rs.22.74 crores. Since assessee is dealing with scrap material it has to deal with unorganized sector and in that process, one of the suppliers who is a scrap vendor obtained certain bills from Shri Ganpati Enterprises. In the investigation in the case of Manoj Kumar who was controlling several entities which were not in existence and it is found that Shri Ganpati Enterprises is one of such enterprises through whom Manoj Kumar has issued bills to other parties. As per the facts on record, scrap vendors have received bogus bills to the extent of Rs.4,92,806/- from Mr. Manoj Kumar and submitted the same to the assessee. It is not clear whether these bills were obtained by the assessee or supplied by such scrap supplier who belongs to unorganized sector. It is also relevant to notice that assessee has purchased scraps from several parties to the extent of Rs.24.23 crores and Assessing Officer has found discrepancy only in the case of Rs.4,92,806/-. This is absolutely very 6 ITA Nos.61 to 65/DDN/2022 negligent compared to total material purchased by the assessee i.e. it is only 0.2% of the total purchases. Considering the above facts on record, we are inclined to treat the above purchases questionable but cannot be treated as non-genuine. In the result, we allow the grounds raised by the assessee. 9. In the result, the appeal filed by the assessee for AY 2013-14 is allowed. 10. Since, the facts in other AYs i.e. 2014-15 to 2016-17 & 2018-19 are exactly similar, our above findings in AY 2013-14 are applicable mutatis mutandis in AYs i.e. 2014-15 to 2016-17 & 2018-19. Accordingly, the appeals being ITA Nos.62 to 65/DDN/2022 for AYs i.e. 2014-15 to 2016-17 & 2018-19 filed by the assessee are allowed. 11. To sum up : all the appeals filed by the assessee are allowed Order pronounced in the open court on this 18th day of October, 2024. Sd/- sd/- (VIMAL KUMAR) (S. RIFAUR RAHMAN) JUDICIAL MEMBER ACCOUNTANT MEMBER Dated : 18.10.2024 TS Copy forwarded to: 1. Appellant 2. Respondent 3. CIT 4. CIT(Appeals) 5. DR: ITAT ASSISTANT REGISTRAR ITAT, NEW DELHI "