Shri Anand Prakash Garg,Prop-M/s Anand Trading Co., Indore V. The ITO W-4(2), Indore

CO 11/IND/2010

• Counselvise Citation: [2012] 122 COUNSELVISE.COM (IT) 7210 (ITAT-INDORE)
• Duration Of Justice: 1 year(s) 9 month(s) 19 day(s)
• Appeal Type: Cross Objection
• Pronouncement Date: 10-04-2012
• Appeal Filed By: Assessee
• Order Result: Dismissed
• Bench Allotted: DB
• Assessment Year: 2002-2003
• Appeal Filed On: 21-06-2010
• Result in Favour of: Revenue
• Court: TRIBUNAL
• Department Lawyers: ARUN DEWAN
• Assessee Lawyers: K C AGRAWAL
• Keywords: Reopening of assessment; Bogus purchase; Business income
• Section: 147

Judgement Text

1 IN THE INCOME TAX APPELLATE TRIBUNAL INDORE BENCH, INDORE BEFORE SHRI JOGINDER SINGH, JUDICIAL MEMBER & SHRI R.C. SHARMA, ACCOUNTANT MEMBER ITA NO. 278/IND/2010 A.Y. 2002-03 INCOME TAX OFFICER WARD 4(2) INDORE :: APPELLANT VS ANAND PRAKASH GARG INDORE PAN ABOPG-9119M ::RESPONDENT CO NO. 11/IND/2010 ARISING OUT OF ITA NO. 278/IND/2010 ANAND PRAKASH GARG INDORE ::OBJECTOR VS INCOME TAX OFFICER WARD 4(2) INDORE ::RESPONDENT REVENUE BY SHRI ARUN DEWAN ASSESSEE BY SHRI K.C. AGRAWAL DATE OF HEARING 22.03.2012 DATE OF PRONOUNCEMENT 10.04.2012 O R D E R PER SHRI R.C. SHARMA, ACCOUNTANT MEMBER THIS IS AN APPEAL FILED BY THE REVENUE AND CROSS OBJECTION BY THE ASSESSEE AGAINST THE ORDER DATED 2 5.2.2010 FOR THE ASSESSMENT YEAR 2002-03 IN THE MAT TER OF ORDER PASSED U/S 143(3)/147 OF THE ACT. 2. IN THIS APPEAL, THE REVENUE IS AGGRIEVED BY THE ORDER OF COMMISSIONER OF INCOME TAX (APPEALS) REDUCING TH E ADDITION OF RS.14,60,492/- TO RS.73,000/- MADE BY T HE ASSESSING OFFICER ON ACCOUNT OF BOGUS PURCHASES. 2. RIVAL CONTENTIONS HAVE BEEN HEARD AND RECORD PERUSED. THE FACTS, IN BRIEF, ARE THAT THE ASSESSE E IS GRAIN MERCHANT. THE AO HAS NOTED IN THE ASSESSMENT ORDER THAT DURING THE FINANCIAL YEAR 01-02, THE ASS ESSEE HAS MADE PURCHASES FROM M/S GANESH TRADE4S, INDORE, FOR FOODGRAINS AGGREGATING TO RS. 14,60,492/- AND T HE PAYMENTS MADE BY THE ASSESSEE AGAINST SAID PURCHASE RS WERE REALISED BY THE ASSESSEE THROUGH THE SELF CHEQ UES ISSUED BY THE PROPRIETOR OF M/S GANESH TRADERS. THE AO HAS NOTED THE POSITION OF TOTAL SALES DISCLOSED BY THE ASSESSEE AT RS. 398.67 LACS AND PURCHASES AT RS. 38 9.50 LACS ON WHICH THE GP WAS DISCLOSED AT RS. 2,41,554/ -. 3 THE AO HAS THEN INCORPORATED THE DETAILS OF VARIOUS PURCHASES MADE FROM M/S GANESH TRADERS, INDORE, BY THE ASSESSEE GIVING THE BILL NUMBERS AND THE AMOUNT AND HAS ALSO NOTED THE PAYMENTS MADE BY THE ASSESSEE AGAINST THE SAME AND THE CORRESPONDING WITHDRAWALS MADE IMMEDIATELY AFTER SUCH PAYMENT MADE BY THE ASSESSEE. THE AO RECORDED THE STATEMENT OF THE ASSE SSEE IN RESPECT OF SUCH WITHDRAWALS MADE AND IT WAS MAINTAINED BY THE ASSESSEE BEFORE THE AO THAT THE SIGNATURES APPEARING ON THE REVERSE OF SUCH CHEQUES WERE NEITHER HIS OWN SIGNATURE NOR OF ANY ACQUAINTE E, RELATIVE OR ANY EMPLOYEE. THE AO HAS NOT ACCEPTED T HE ASSESSEES CONTENTION AND HE HAS NOTED THAT THE SIGNATURE ON REVERSE OF ONE OF THE CHEQUES IS ILLEG IBLE AND ON OTHER CHEQUES BRIEF INITIAL OF THE RECIPIENT HAS BEEN MENTIONED AND THUS THE POSITION OF RECIPIENTS OF SU CH AMOUNT WAS NOT BEYOND DOUBT. HE HAS ALSO NOTED THAT THE ASSESSEES CONTENTION THAT ACCOUNT PAYEE CHEQUE S WERE ISSUED FOR PAYMENTS MADE BY HIM TO M/S GANESH 4 TRADERS WERE IN FACT NOT ACCOUNT PAYEE CHEQUES AND HE CONCLUDED THAT THE ASSESSEE HAS WITHDRAWN AMOUNT FR OM THE BANK ACCOUNT OF M/S GANESH TRADERS. HE ACCORDIN GLY TREATED THE ENTIRE PURCHASES MADE BY THE ASSESSEE A S BOGUS AND ADDED THE SAME TO THE INCOME OF THE ASSES SEE. 3. BY THE IMPUGNED ORDER, THE LEARNED CIT(A) REDUCE D THE ADDITION TO RS. 73,000/- AFTER HAVING MADE THE FOLLOWING OBSERVATIONS :- 4.2 NOW COMING TO THE FIRST ISSUE ON MERIT, IT IS SEEN THAT THE AO HAS DOUBTED THE PURCHASES MADE FROM GANESH TRADERS, INDORE, BY THE APPELLANT ON THE BASIS OF WITHDRAWALS MADE FROM THE BANK ACCOUNT OF M/S GANESH TRADERS AND ON OR ABOUT THE DATE SUCH PAYMENTS WERE MADE BY THE APPELLANT. THERE IS NO DEFINITE EVIDENCE ON RECORD EITHER IN THE FORM OF STATEMENT RECORDED FROM THE PROPRIETOR OF M/S GANESH TRADERS THAT ONLY ACCOMMODATION BILLS WERE ISSUED AND NO GOODS WERE SUPPLIED AS MENTIONED IN THE BILLS UNDER CONSIDERATION NOR THERE IS ANY ADMISSION ON THE PART OF THE APPELLANT THAT EITHER SUCH PURCHASES WERE BOGUS OR THE APPELLANT OR HIS AGENT WITHDREW THE GOODS AGAINST 5 SELF-CHEQUES ISSUED BY THE PROPRIETOR M/S GANESH TRADERS, RATHER THE APPELLANT HAS CATEGORICALLY DENIED ANY SUCH WITHDRAWAL EITHER BY HIMSELF OR HIS AGENT(S). THUS, THE AO HAS NOT BEEN ABLE TO BRING ANY DEFINITE MATERIAL ON RECORD TO ESTABLISH THAT SUCH PURCHASES WERE BOGUS IN THE FACE OF QUANTITATIVE DETAILS FURNISHED BY THE APPELLANT OR HE HAD MADE THE ANALYSIS OF THE QUANTITY OF THE GOODS PURCHASES AGAINST THE BILLS WHICH HAS BEEN CONSIDERED BY HIM AS BOGUS PURCHASES. 4.2.1 ON EXAMINATION OF THE BILLS OF M/S GAMESJ TRADERS AS FILED IN COURSE OF APPEAL PROCEEDINGS, IT CLEARLY EMERGES THAT SUCH BILLS RELATE TO PURCHASES OF SOYABEAN AND EVEN THE TRUCK NUMBERS BY WHICH SUCH GOODS WERE PROCURED ARE MENTIONED IN SUCH BILLS AND CORRESPONDING SALES BILLS FOR THE SIMILAR QUANTITY OF PURCHASES AFFECTED FOR SOYABEAN HAVE BEEN ISSUED BY THE APPELLANT TO THE SUBSEQUENT BUYERS AND THE TRUCK NUMBERS MENTIONED IN THOSE BILLS ARE FOUND TO BE ALSO SAME AS EMPHASIZED IN PARA 3.4 OF WRITTEN SUBMISSIONS EXTRACTED ABOVE IN PARA 3.1 OF APPEAL ORDER. IN THE QUANTITATIVE DETAILS FURNISHED, IT IS FURTHER SEEN THAT IN SOYABEAN, THE APPELLANT HAS NOT CLAIMED ANY SHORTAGE WHEREBY THE INFERENCE CAN BE DRAWN TO THE EXTENT 6 OF SUCH PURCHASES NO QUANTITY WAS ACTUALLY PURCHASED. THERE IS NO CO- RELATION BETWEEN PAYMENTS MADE BY THE APPELLANT AND SELF WITHDRAWALS AS NOTED BY AO. FIRST WITHDRAWAL ON 26.9.01N OF RS. 4 LAKHS MENTIONED IS 22 DAYS PRIOR TO FIRST EVER PAYMENT MADE ON 18.10.0-1. SIMILARLY, NO CORRESPONDING WITHDRAWAL AGAINST LAST PAYMENT MADE ON 25.2.02 HAS BEEN NOTED BY A.O. FURTHER, THE AOS STAND THAT PAYMENTS MADE BY APPELLANT WERE NOT THROUGH ACCOUNT PAYEE CHEQUES IS ALSO NOT FOUND TO BE VERIFIABLE AS PER CO[PIES OF CHEQUES FILED AND CLARIFICATIONS FURNISHED IN PARA 3.1 OF WRITTEN SUBMISSIONS OF THE APPELLANT. THUS THE CASE MADE OUT BY AO EVEN OF SIMULTANEOUS WITHDRAWAL OF PAYMENTS MADE IS NOT ESTABLISHED, NOT TO SPEAKP OF ANY OTHER EVIDENCE TO ESTABLISH THAT NO PURCHASES WERE ACTUALLY MADE FROM GANESH TRADERS AS CLAIMED. 4.2. THE APPELLANTS CONTENTION IN THE FACTS OF THE CASE ARE THUS FOUND TO BE BROADLY SUPPORTED BY ITAT, INDORE BENCH DECISIONS REFERRED IN WRITTEN SUBMISSIONS AND HENCE AOS ACTION IN MAKING DISALLOWANCE OF THE ENTIRE PURCHASE VALUE FOR PURCHASES AFFECTED FROM M/S GANESH TRADERS, INDORE, IS NOT FOUND TO BE JUSTIFIED AND CANNOT BE ACCORDINGLY APPROVED. HOWEVER, IT HAS EMERGED THAT IN VARIOUS OTHER CONNECTED APPEAL 7 PROCEEDINGS AS WELL AS IN THE CASES BEFORE HONBLE ITAT AS CITED BY THE APPELLANT, THE SALE PURCHASE TRANSACTION OF M/S GANESH TRADERS WERE NOT FOUND TO BE BEYOND DOUBT AND IN ONE OF SUCH APPEALS SIMULTANEOUSLY TAKEN UP FOR HEARING I.E. IN THE CASE OF SHRI RADHESHYAM AGRAWAL (IT NO. 108/05-06) DECIDED ON 3.2.10, IT HAS BEEN SPECIFICALLY ADMITTED BY THE ASSESSEE/APPELLANT IN THAT CASE THAT PURCHASES AFFECTED FROM M/S GANESH TRADERS ALONG WITH VARIOUS OTHER PARTIES WERE NOT GENUINE PURCHASES AND SUCH BILLS WERE MERELY ACCOMMODATION BILLS. THUS, IN THESE FACTS AND CIRCUMSTANCES, SALE PRICE STATED IN SUCH PURCHASE BILLS CANNOT BE ACCEPTED TO BE GENUINE AND RELIABLE PURCHASE PRICE. IT IS AGAIN SETTLED POSITION OF LAW THAT THE ONUS RESTS ON THE APPELLANT TO ESTABLISH ANY CLAIM OF EXPENDITURE TO THE SATISFACTION OF THE AO. HENCE, ON OVERALL CONSIDERATION OF THE FACTS AND CIRCUMSTANCES OF THE CASE, CONSIDERING THE NATURE OF COMMODITY PURCHASED BEING AGRICULTURAL COMMODITY I.E. SOYABEAN THE DISALLOWANCE OF 5% OF THE PURCHASE VALUE FOR INFLATION IN PURCHASE PRICE IS CONSIDERED TO BE JUSTIFIABLE AND ACCORDINGLY THE DISALLOWANCE IS RESTRICTED TO THAT EXTENT AT RS. 73,000/-. 8 4. WE HAVE CONSIDERED THE RIVAL CONTENTIONS, CAREFULLY GONE THROUGH THE ORDERS OF THE AUTHORITIE S BELOW AND FIND THAT THE AO HAS MADE THE ADDITION IN RESPECT OF PURCHASE MADE BY THE ASSESSEE FROM M/S GANESH TRADERS WHICH WERE TREATED BY THE AO AS BOGUS ON THE PLEA THAT THE PAYMENTS WAS MADE BY THE ASSESSEE THROUGH SELF CHEQUES AND NOT THROUGH ACCOUNT PAYEE CHEQUES. ACCORDINGLY, THE ENTIRE PURCHASES WERE ADDED TO THE ASSESSEES INCOME. THE LEARNED CIT(A) REDUCED THE ADDITION BY OBSERVING THAT BILLS OF M/S GANESH TRADERS RELATE T O PURCHASE OF SOYABEAN AND EVEN THE TRUCK NUMBER BY WHICH SUCH GOODS ARE PROCURED ARE MENTIONED IN THE SALE BILLS AND CORRESPONDING SALE BILLS FOR THE SIMILAR QUANTITY OF PURCHASES EFFECTED FOR SOYABEAN HAVE BEEN EFFECTED BY THE ASSESSEE TO THE SUBSEQUENT BUYERS AND THE TRUCK NUMBERS MENTIONED IN THOSE BILLS WERE ALSO FOUND TO BE THE 9 SAME. HE FURTHER OBSERVED THAT IN THE QUANTITATIVE DETAILS FURNISHED, THE ASSESSEE HAS NOT CLAIMED ANY SHORT FALL WHEREBY THE INFERENCE CAN BE DRAWN TO TH E EXTENT OF SUCH PURCHASES, NO QUANTITY WAS ACTUALLY PURCHASED. THE LEARNED CIT(A) ALSO OBSERVED THAT THERE IS NO CO-RELATION BETWEEN THE PAYMENTS MADE BY THE ASSESSEE AND SELF WITHDRAWALS AS NOTED BY THE AO. IN TERMS OF THE FINDINGS RECORDED BY THE LEARNED CIT(A), IT IS CLEAR THAT THE ASSESSEE HAS ACTUALLY MADE THE PURCHASES AND ALSO THE SAME HAVE BEEN SOLD WHICH IS DULY TALLIED WITH THE QUANTITATIVE DETAILS FILED BY THE ASSESSEE ALONG WI TH TRUCK NUMBER THROUGH WHICH GOODS WERE TRANSPORTED. UNDER THESE CIRCUMSTANCES, THE LEARNED CIT(A) HAS DISALLOWED 5% OF PURCHASE VALUE IN ANTICIPATION OF ANY INFLATED PURCHASE HAVING BEE N SHOWN BY THE ASSESSEE SO AS TO MEET THE ENDS OF JUSTICE. THUS, IN PLACE OF TOTAL DISALLOWANCE OF PURCHASES AMOUNTING TO RS.14,60,492/-, THE 10 LEARNED CIT(A) HAS RESTRICTED THE ADDITION TO RS. 73,000/- WHICH IS MOST JUSTIFIED. THE DETAILED FINDINGS RECORDED BY THE CIT(A) HAVE NOT BEEN CONTROVERTED BY THE LEARNED DR BY BRINGING ANY POSITIVE MATERIAL ON RECORD. ACCORDINGLY, WE DO NO T FIND ANY REASON TO INTERFERE WITH HIS ORDER IN REDUCING THE ADDITION TO THE EXTENT OF RS. 73,000/- ON ACCOUNT OF PURCHASES EFFECTED FROM M/S GANESH TRADERS. 5. IN THE RESULT, THE APPEAL OF THE REVENUE IS DISMISSED. 6. IN THE CROSS OBJECTION, THE ASSESSEE IS AGGRIEVE D BY THE ACTION OF THE COMMISSIONER OF INCOME TAX (APPEA LS) IN UPHOLDING THE REOPENING OF ASSESSMENT U/S 147 O F THE ACT AND ALSO FOR DISALLOWANCE OF 5% ON PURCHASE VAL UE OF SOYABEAN AND MAINTAINING AD HOC DISALLOWANCE OF HAMMALI AND SHOP EXPENSES. 11 7. AFTER GOING THROUGH THE REASONS RECORDED FOR REOPENING, WE FIND THAT THERE WAS SUFFICIENT MATERI AL BEFORE THE ASSESSING OFFICER WHICH CONSTITUTED VALI D REASON TO HAVE A BELIEF THAT THERE IS ESCAPEMENT OF INCOME, ACCORDINGLY, THE REOPENING OF ASSESSMENT W AS VALID AND ACTION OF THE COMMISSIONER OF INCOME TAX (APPEALS) IN CONFIRMING THE SAME DOES NOT REQUIRE A NY INTERFERENCE. 8. WHILE DEALING WITH REVENUES APPEAL, WE HAVE UPHELD THE ORDER OF THE COMMISSIONER OF INCOME TAX (APPEALS) IN RETAINING THE DISALLOWANCE OF 5% OF TH E PURCHASE VALUE OF SOYABEAN AS PER PARA 4 DISCUSSED HEREINABOVE. 9. THE DISALLOWANCE OF RS. 22,974/- OUT OF THE TOTAL HAMMALI EXPENSES OF RS.2,29,792/- AND RS. 127 3/- OUT OF TOTAL OF EXPENSES CLAIMED AT RS. 12,735/- WA S JUSTIFIED AS THE ASSESSEE COULD NOT SUPPORT THE CLA IM OF 12 EXPENSES PROPERLY BY FILING THE RELEVANT VOUCHERS, BILLS, ETC. 10. IN THE RESULT, THE APPEAL OF THE REVENUE AND T HE CROSS OBJECTION OF THE ASSESSEE ARE DISMISSED. THIS ORDER WAS PRONOUNCED IN THE OPEN COURT ON 10.4.2012 SD SD (JOGINDER SINGH) (R.C.SHARMA) JUDICIAL MEMBER ACCOUNTANT MEMBER DATED: 10.4.2012 COPY TO: APPELLANT, RESPONDENT, CIT, CIT(A), DR, GU ARD FILE DN/- 13