M/s. Amrapali Sapphire Developers Pvt. Ltd., Noida V. DCIT, New Delhi

CO 141/DEL/2015

• Counselvise Citation: [2017] 112 COUNSELVISE.COM (IT) 4523 (ITAT-DELHI)
• Duration Of Justice: 2 year(s) 3 month(s) 10 day(s)
• Appeal Type: Cross Objection
• Pronouncement Date: 24-08-2017
• Appeal Filed By: Assessee
• Order Result: Dismissed
• Bench Allotted: A
• Assessment Year: 2011-2012
• Appeal Filed On: 14-05-2015
• Result in Favour of: Revenue
• Court: TRIBUNAL
• Department Lawyers: SHEFALI SWAROOP
• Assessee Lawyers: AMIT GOEL
• Keywords: Bogus purchase; Income from undisclosed sources; Set aside
• Section: 153A; 131

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL (DELHI BENCH E : NEW DELHI) BEFORE HONBLE PRESIDENT, SHRI G.D. AGRAWAL AND SHRI KULDIP SINGH, JUDICIAL MEMBER ITA NO.5275/DEL./2014 (ASSESSMENT YEAR : 2010-11) DCIT, VS. M/S. AMRAPALI SAPPHIRE DEVELOPERS PVT. L TD. CENTRAL CIRCLE 7, C 56/40, SECTOR 62, NEW DELHI. NOIDA (U.P.) (PAN : AAHCA6215D) CO NO.140/DEL/2015 ITA NO.5275/DEL./2014 (ASSESSMENT YEAR : 2010-11) M/S. AMRAPALI SAPPHIRE DEVELOPERS PVT. LTD., VS. DC IT, C 56/40, SECTOR 62, CENTRAL CIRCLE 7, NOIDA (U.P.) NEW DELHI. (PAN : AAHCA6215D) ITA NO.5276/DEL./2014 (ASSESSMENT YEAR : 2011-12) DCIT, VS. M/S. AMRAPALI SAPPHIRE DEVELOPERS PVT. L TD. CENTRAL CIRCLE 7, C 56/40, SECTOR 62, NEW DELHI. NOIDA (U.P.) (PAN : AAHCA6215D) CO NO.141/DEL/2015 ITA NO.5276/DEL./2014 (ASSESSMENT YEAR : 2011-12) M/S. AMRAPALI SAPPHIRE DEVELOPERS PVT. LTD., VS. DC IT, C 56/40, SECTOR 62, CENTRAL CIRCLE 7, NOIDA (U.P.) NEW DELHI. (PAN : AAHCA6215D) (APPELLANT) (RESPONDENT) ITA NO.5275 & 5276/DEL./2014 CO NO.140 & 141/DEL/2015 2 ASSESSEE BY : SHRI AMIT GOEL, CA REVENUE BY : MS. SHEFALI SWAROOP, CIT DR DATE OF HEARING : 10.08.2017 DATE OF ORDER : 24.08.2017 O R D E R PER BENCH : THE AFORESAID APPEALS FILED BY THE REVENUE AND CROS S OBJECTIONS FILED BY THE ASSESSEE ARE BEING DISPOSED OFF BY WAY OF CONSOLIDATED ORDER TO AVOID REPETITION OF DISCUSSIO N. 2. APPELLANT, DEPUTY COMMISSIONER OF INCOME-TAX, CE NTRAL CIRCLE 7, NEW DELHI (HEREINAFTER REFERRED TO AS TH E REVENUE), BY FILING THE PRESENT APPEALS SOUGHT TO SET ASIDE THE IMPUGNED ORDER DATED 10.07.2014 PASSED BY THE COMMISSIONER OF INCO ME-TAX (APPEALS)-1, NEW DELHI, FOR THE ASSESSMENT YEARS 20 10-11 & 2011-12 ON THE GROUNDS INTER ALIA THAT :- ASSESSMENT YEAR : 2010-11 1. THE ORDER OF LD. CIT (A) IS NOT CORRECT IN LAW AND FACTS. 2. ON THE FACTS AND CIRCUMSTANCES OF THE CASE THE LD. CIT (A) HAS ERRED IN LAW IN DELETING THE ADDITION OF RS.1,07,00,116/- MADE BY AO ON ACCOUNT OF DISALLOWANCE OF 'BOGUS PURCHASE' WHICH WERE CAPITALIZED BY THE ASSESSEE COMPANY. 3. THE APPELLANT CRAVES LEAVE TO ADD, AMEND ANY/ALL THE GROUNDS OF APPEAL BEFORE OR DURING THE COURSE OF HEARING OF THE APPEAL. ITA NO.5275 & 5276/DEL./2014 CO NO.140 & 141/DEL/2015 3 ASSESSMENT YEAR : 2011-12 1. THE ORDER OF LD. CIT (A) IS NOT CORRECT IN LAW AND FACTS. 2. ON THE FACTS AND CIRCUMSTANCES OF THE CASE THE LD. CIT (A) HAS ERRED IN LAW IN DELETING THE ADDITION OF RS.8,85,81,435/- MADE BY AO ON ACCOUNT OF DISALLOWANCE OF 'BOGUS PURCHASE' WHICH WERE CAPITALIZED BY THE ASSESSEE COMPANY. 3. THE APPELLANT CRAVES LEAVE TO ADD, AMEND ANY/ALL THE GROUNDS OF APPEAL BEFORE OR DURING THE COURSE OF HEARING OF THE APPEAL. 3. THE OBJECTOR, M/S. AMRAPALI SAPPHIRE DEVELOPERS PVT. LTD., BY FILING THE PRESENT CROSS OBJECTIONS CHALLENGED T HE ASSESSMENT ORDER DATED 25.03.2013 PASSED BY THE ASSESSING OFFI CER QUA THE ASSESSMENT YEARS 2010-11 AND 2011-12 ON THE GROUNDS INTER ALIA THAT :- ASSESSMENT YEAR : 2010-11 1. ON THE FACTS AND CIRCUMSTANCES OF THE CASE AND IN LAW, THE NOTICE U/S 153A ISSUED IN THIS CASE IS ILLEGAL & WITHOUT JURISDICTION AND ACCORDINGLY, THE ASSESSMENT ORDER PASSED ON THE FOUNDATION OF SUCH NOTICE IS NOT SUSTAINABLE AND IS LIABLE TO BE QUASHED. ON THE FACTS AND CIRCUMSTANCES OF THE CASE AND IN LAW, THE COMMISSIONER OF INCOME TAX (APPEALS) SHOULD HAVE HELD THAT THE ASSESSMENT ORDER PASSED BY THE ASSESSING OFFICER IS BAD-IN-LAW AND VOID. 2. ON THE FACTS AND CIRCUMSTANCES OF THE CASE AND IN LAW, THE INITIATION OF ASSESSMENT ITA NO.5275 & 5276/DEL./2014 CO NO.140 & 141/DEL/2015 4 PROCEEDINGS AND ISSUE I SERVICE OF NOTICES BY THE ASSESSING OFFICER IS NOT IN ACCORDANCE WITH THE PROVISIONS OF LAW AND ACCORDINGLY THE ASSESSMENT ORDER PASSED IS LIABLE TO BE QUASHED. 3. ON THE FACTS AND CIRCUMSTANCES OF THE CASE AND IN LAW, THE DISALLOWANCE OF RS.1,07,00,116/- MADE BY THE ASSESSING OFFICER ON ACCOUNT OF ALLEGED BOGUS PURCHASES IS WITHOUT JURISDICTION AND BEYOND THE SCOPE OF PROVISIONS OF SECTION 153A OF INCOME TAX ACT, 1961 AND THE COMMISSIONER OF INCOME TAX (APPEAL) SHOULD HAVE HELD SO. ASSESSMENT YEAR : 2011-12 1. ON THE FACTS AND CIRCUMSTANCES OF THE CASE AND IN LAW, THE INITIATION OF ASSESSMENT PROCEEDINGS AND ISSUE / SERVICE OF NOTICES BY THE ASSESSING OFFICER IS NOT IN ACCORDANCE WITH THE PROVISIONS OF LAW AND ACCORDINGLY THE ASSESSMENT ORDER PASSED IS LIABLE TO BE QUASHED. 4. BRIEFLY STATED THE FACTS NECESSARY FOR ADJUDICAT ION OF THE CONTROVERSY AT HAND ARE : ASSESSING OFFICER NOTICED BOGUS PURCHASES TO THE TUNE OF RS.65,00,054/- FROM M/S. G ANPATI TRADING COMPANY AND RS.42,00,062/- FROM S.C. TRADING COMPAN Y TOTALING RS.1,07,00,116/- DURING ASSESSING YEARS 2010-11 AND 2011-12 RESPECTIVELY AND BEING DIS-SATISFIED WITH THE REPLY FILED BY THE ASSESSEE, PROCEEDED TO CONCLUDE THAT THE IDENTITY A ND EXISTENCE OF THE AFOREMENTIONED PARTIES AND GENUINENESS OF THE T RANSACTIONS OF RAW MATERIAL REMAINED UNVERIFIABLE AND THE ASSESSEE COMPANY HAS ITA NO.5275 & 5276/DEL./2014 CO NO.140 & 141/DEL/2015 5 ALSO NOT BOOKED ANY SALES DURING THE YEAR AND WORK DONE ARE BEING INCLUDED IN THE CLOSING WORK-IN-PROGRESS AND THEREB Y REDUCED THE EXPENSES TO THE EXTENT OF RS.1,07,00,116/- FROM THE CLOSING WORK- IN-PROGRESS CLAIMED AT RS.3,39,22,13,412/- FOR AY 2 010-11 AND REDUCED THE EXPENSES TO THE EXTENT OF RS.8,85,51,43 5/- FROM CLOSING WORK-IN-PROGRESS AT RS.5,58,07,65,902/- FOR AY 2011-12. 5. ASSESSEE CARRIED THE MATTER BEFORE THE LD. CIT ( A) BY WAY OF FILING APPEALS WHO, BY FOLLOWING HIS OWN DECISION R ENDERED IN CASE OF M/S. ULTRA HOME CONSTRUCTION PVT. LTD. FOR AY 20 11-12 ALSO BELONGING TO THE ASSESSEE COMPANY, DELETED THE ADDI TIONS MADE BY THE AO. FEELING AGGRIEVED, THE REVENUE HAS COME UP BEFORE THE TRIBUNAL BY WAY OF CHALLENGING THE IMPUGNED ORDER P ASSED BY LD. CIT (A) AND THE ASSESSEE IMPUGNED THE ASSESSMENT OR DER. 6. WE HAVE HEARD THE LD. AUTHORIZED REPRESENTATIVES OF THE PARTIES TO THE APPEAL, GONE THROUGH THE DOCUMENTS R ELIED UPON AND ORDERS PASSED BY THE REVENUE AUTHORITIES BELOW IN T HE LIGHT OF THE FACTS AND CIRCUMSTANCES OF THE CASE. 7. SO FAR AS AY 2010-11 IS CONCERNED, BARE PERUSAL OF PARA 6.3 & 6.4 FOR AY 2010-11 OF ASSESSMENT ORDER APPARENTLY GOES TO PROVE THAT THE DOCUMENTS REQUISITIONED BY THE AO DU RING ASSESSMENT PROCEEDINGS FROM THE ASSESSEE HAVE BEEN DULY ITA NO.5275 & 5276/DEL./2014 CO NO.140 & 141/DEL/2015 6 SUBMITTED BEFORE HIM (AO) SHOWING COMPLETE TRANSACT IONS BY THE ASSESSEE COMPANY MADE DURING THE YEAR UNDER ASSESSM ENT. FOR READY PERUSAL, PARA 6.3 & 6.4 IS REPRODUCED AS UNDE R : 6.3 IN RESPONSE TO THIS, ASSESSEE VIDE REPLY DATE D 22.02.2013 SUBMITTED THAT THE COMPANY HAS MADE PURCHASES FROM THE FOLLOWING PARTIES: I) M/S. GANPATI TRADING CO., SHOP NO.2, SHARMA MARK ET. MAIN ROAD, GUJHORD ROAD, NOIDA AMOUNTING TO RS.65,0 0,054/- II) M/S. S.C. TRADING COMPANY, SHOP NO.2, VASHISHT MARKET, GIJOD MAIN MARKET, SECTOR-53, NOIDA (U.P) A MOUNTING TO RS.42,00,062/- 6.4 FURTHER, THE REPLY FILED BY THE A.R. OF THE ASS ESSEE IS REPRODUCED AS UNDER:- 'COPY OF INVOICE, TRANSPORTER RECEIPT AND WEIGHING BILL ALONG WITH LEDGER ACCOUNT, SHOWING COMPLETE TRANSAC TION IN RESPECT OF PURCHASES OR OTHERWISE MADE DURING THE Y EAR, OF 01/ THE PARTIES MENTIONED IN THE ABOVE SAID NOTICE FROM WHOM ANY TRANSACTION BY THE ASSESSEE COMPANY MODE DURING THE YEAR IS ENCLOSED AND MARKED AS ANNEXURE-I.' THE ASSESSEE HAS SUBMITTED COPY OF ACCOUNT, PURCHAS E BILLS, FREIGHT BILL AND DHARMA KATA WEIGH BILL BUT FAIL TO PRODUCE THE PARTY TO PROVE THE GENUINENESS OF ABOVE PURCHASE. H OWEVER, HE WAS APPRISED THAT ENQUIRIES WERE GOT CONDUCTED WITH REGARD TO THE IDENTITY & GENUINENESS OF THE ABOVE MENTIONED P ARTIES BY ISSUE OF SUMMONS U/S. 131 AND ENQUIRY THROUGH INSPE CTOR. THE FINDINGS OF ENQUIRIES CONDUCTED TO VERIFY THE EXIST ENCE & GENUINENESS OF THE ABOVE MENTIONED PARTIES ARE AS U NDER: I) M/S. GANPATI TRADING COMPANY: M/S. GANPATI TRADING IS A PROPRIETORSHIP ENTITY OWN ED BY SHRI VIRENDER PAL, - ALLEGED TO BE RUNNING THE BUSI NESS FROM SHOP 0.2, SHARMA MARKET, GUJHORD NOIDA-20130I & IS RESIDING AT 11 KAILAWALAN DELHI GATE, GHAZIABAD, KOTWALI, GH AZIABAD. THE FIRM IS MAINTAINING ACCOUNT NO. 604100301000534 WITH VIJYA BANK, VIKAS MARG DELHI NO.8, RAJDHANI ENCLAVE , DELHI- 110 092. THIS CONCERN HAS RECEIVED PAYMENTS ON ACCO UNTS OF SALE OF GOODS FROM M/S. AMRAPALI SAPPHIRE DEVELOPERS PVT . LTD. AS PER FOLLOWING CHART: ITA NO.5275 & 5276/DEL./2014 CO NO.140 & 141/DEL/2015 7 S. NO. A/C NAME AND ADDRESS DATE PARTICULARS AMOUNT 1. M/S. GANPATI TRADING COMPANY 09.02.2010 CHEQUE NO. 0144425/ 09.02.10 TRANSFER 65,00,000 TO ASCERTAIN THE GENUINENESS OF THIS FIRM AND THE TRANSACTIONS ENTERED BY THE ASSESSEE COMPANY AND OT HER ASSOCIATES OF AMRAPALI GROUP SUMMONS U/S. 131 WAS I SSUED ON 25.10.2012, REQUIRING THE SAID PARTY TO ATTEND THE PROCEEDINGS AND SUBMIT THE EVIDENCES IN SUPPORT OF SALE OF GOOD S TO THESE COMPANIES. THIS SUMMON WAS ISSUED ON BOTH THE ADDRE SSES OF THE SAID PARTY WHICH IS AS UNDER: A) SHOP NO.2, SHARMA MARKET. GUJHORD NOIDA-201301. B) 11 KAILAWALAN DELHI GATE, GHAZIABAD, KOTWALI, GHAZIABAD. BOTH THE SUMMONS HAVE BEEN RETURNED BACK UN-SERVED WITH THE NOTING OF POST MAN, WHO VISITED ON 29.10.2012 & 30. 10.2012 AT SHOP NO.2, SHARMA MARKET, GUJHORD NOIDA-20L301 BUT RETURNED UN-SERVED. SUBSEQUENTLY, INSPECTOR OF THIS CIRCLE W ERE ALSO DEPUTED TO IDENTIFY THE PARTY AND ASCERTAIN THE GEN UINENESS. THE INSPECTOR VIDE THEIR REPORT DATED 23.11.2012 & 26.0 2.2013 SUBMITTED THAT NO SUCH FIRM EXISTS ON THE GIVEN ADD RESSES. LATER ON, ANOTHER SUMMON WERE ISSUED ON 23.01.2013 REQUIRING THE ABOVE PARTY TO ATTEND THE PROCEEDINGS ON 01.02. 2013 ALONG WITH EVIDENCES IN SUPPORT OF TRANSACTIONS MADE WITH THE ASSESSEE COMPANY AND OTHER ASSOCIATED COMPANIES OF AMRAPALI GROUP. HOWEVER, THIS SUMMON ALSO SENT TO BOTH THE ADDRESSE S OF THE PARTY HAVE BEEN RETURNED UN-SERVED. II) M/S. S. C. TRADING COMPANY: M/S. S.C. TRADING COMPANY IS A PROPRIETORSHIP ENTIT Y OWNED BY SHRI GOPAL KRISHN, ALLEGED TO BE RUNNING THE BUSINE SS FROM SHOP NO.2, VASISHT MARKET, SECTOR-53, NOIDA & RESIDING A T C-118, PANCHSHEEL ENCLAVE, SAHIBABAD, LONI ROAD, DELHI-110 032. THE FIRM IS MAINTAINING ACCOUNT NO.604100301000542 WITH VIJYA BANK, VIKAS MARG, RAJDHANI ENCLAVE, DELHI-L L 0092. THIS CONCERN HAS RECEIVED PAYMENTS ON ACCOUNTS OF SALE O F GOODS FROM M/S. AMRAPALI SAPPHIRE DEVELOPERS PVT. LTD., AS PER FOLLOWING CHART: ITA NO.5275 & 5276/DEL./2014 CO NO.140 & 141/DEL/2015 8 S. NO. BANK NAME ADDRESS A/C NAME & ADDRESS ACCOUNT NO. DATE PARTICULARS AMOUNT 1 VIJAYA BANK NO.8, RAJDHANI ENCLAVE, DELHI- 110 092. M/S. S.C. TRADING COMPANY ADD: C-118, PANCHSHEEL ENCLAVE, LONI ROAD, DELHI- 110032 PROP: SH. GOPAL KRISHAN 604100301 000542 14.01.2010 RTGS - 14012990000019 42,00,000 TO ASCERTAIN THE GENUINENESS OF THIS FIRM AND THE TRANSACTIONS ENTERED BY M/S. AMRAPALI SAPPHIRE DEVE LOPERS PVT. LTD. AND OTHER ASSOCIATES OF AMRAPALI GROUP SUMMONS U/S. 131 WAS ISSUED ON 25.10.2012, REQUIRING THE SAID PARTY TO ATTEND THE PROCEEDINGS AND SUBMIT THE EVIDENCES IN SUPPORT OF SALE OF GOODS TO THESE COMPANIES. THIS SUMMON WAS ISSUED ON BOTH THE ADDRESSES OF THE SAID PARTY WHICH IS AS UNDER : A) C-118, PANCHSHEEL ENCLAVE, SAHIBABAD, LONI ROAD , DELHI-110032. B) SHOP NO.2, VASISHT MARKET, SECTOR-53, NOIDA. BOTH THESE NOTICES HAVE BEEN RETURNED BACK UN-SERVE D WITH THE NOTING OF POST MAN, WHO VISITED ON 29.10.2 012 & 30.10.2012 AT THE ABOVE MENTIONED ADDRESSES BUT RET URNED UN- SERVED. SUBSEQUENTLY, INSPECTOR OF THIS CIRCLE WERE ALSO DEPUTED ON IDENTIFY THE PARTY AND ASCERTAIN THE GENUINENESS . THE INSPECTOR VIDE THEIR REPORT DATED 23.11.2012 & 26.0 2.2013 SUBMITTED THAT NO SUCH FIRM EXISTS ON THE GIVEN ADD RESSES. LATER ON, ANOTHER SUMMON WERE ISSUE DON 23.01.2013 REQUIRING THE ABOVE PARTY TO ATTEND THE PROCEEDINGS ON 01.02.2013 ALONG WITH EVIDENCES IN SUPPORT OF TRANS ACTIONS MADE WITH THE ASSESSEE COMPANY AND OTHER ASSOCIATED COMP ANIES OF AMRAPALI GROUP. HOWEVER, THIS SUMMON ALSO SENT TO BOTH THE ADDRESSES OF THE PARTY HAVE BEEN RETURNED UN-SERVED . 8. HOWEVER, AO GOT THE MATTER ENQUIRED INTO THROUGH INSPECTOR WHO HAS CATEGORICALLY REPORTED VIDE REPORT DATED 23 .11.2012 AND 26.02.2013 THAT NO SUCH FIRM IN THE NAMES OF M/S. G ANPATI TRADING ITA NO.5275 & 5276/DEL./2014 CO NO.140 & 141/DEL/2015 9 COMPANY EXISTS ON THE GIVEN ADDRESS AND FURTHER SUM MONS SENT TO BOTH THE ADDRESSES OF THE PARTIES HAVE BEEN RETURNE D UNSERVED. SIMILARLY, INSPECTOR OF THE INCOME-TAX REPORTED THA T M/S. S.C. TRADING COMPANY FROM WHOM THE ASSESSEE HAS CLAIMED PURCHASES, SUBMITTED VIDE REPORT DATED 23.11.2012 AND 26.02.20 13 THAT NO SUCH FIRM EXISTS ON THE GIVEN ADDRESS AND FURTHER S UMMON SENT ON 23.01.2013 ON BOTH THE PARTIES HAVE BEEN RETURNED U NSERVED AND CONSEQUENTLY, PROCEEDED TO CONCLUDE THAT THE ASSESS EE COMPANY HAS NOT BOOKED ANY SALE DURING THE YEAR AND ALL THE WOR K DONE ARE BEING INCLUDED IN THE CLOSING WORK-IN-PROGRESS AND THEREBY REDUCED THE PURCHASE EXPENSES TO THE TUNE OF RS.1,07,00,116 /-. 9. SIMILARLY, IN AY 2011-12, AO TO VERIFY THE VERAC ITY OF THE TRANSACTIONS DIRECTED SHRI ANIL SHARMA, DIRECTOR OF M/S. ULTRA HOME CONSTRUCTION PVT. LTD. TO FURNISH BILLS OF TRA NSPORT, TOLL NAKA ENTRIES, DETAILS OF DESTINATION AND UTILIZATION THE REOF WHICH THE ASSESSEE HAS FAILED TO FURNISH AND DURING RECORDING OF STATEMENT U/S 132(4) OF THE ACT, ASSESSEE AGREED TO SURRENDER RS. 44,87,02,688/- AS UNACCOUNTED INCOME OF M/S. ULTRA HOME CONSTRUCTI ON PVT. LTD. ON ACCOUNT OF BOGUS EXPENSES. THEN, THE AO PROCEED ED TO EXAMINE THE LARGE SCALE BOOKING OF THE BOGUS EXPENS ES AND DIRECTED THE ASSESSEE TO FURNISH DETAIL OF PURCHASE S MADE DURING THE ITA NO.5275 & 5276/DEL./2014 CO NO.140 & 141/DEL/2015 10 YEAR UNDER ASSESSMENT AND CONSEQUENTLY, THE ASSESSE E FURNISHED FOLLOWING DETAILS :- 6.3 IN RESPONSE TO THIS, ASSESSEE VIDE REPLY DATED 22.02.2013 SUBMITTED THAT THE COMPANY HAS MADE PURCHASES FROM THE FOLLOWING PARTIES :- S. NO. NAME OF THE PARTY ADDRESS PURCHASE AMOUNT (IN RS.) 1 M/S. ANCHAL TRADING CO. SHOP NO.1, TYAGI MARKET, ASHRAM ROAD, NANDGRAM, GHAZIABAD (U.P.) 25,00,103/- 2 M/S. VIPIN TRADING CO. SHOP NO.4, PRADHAN JI MARKET, GB NAGAR, GREATER NOIDA 1,00,02,647/ - 3 M/S. OM TRADERS TYAGI MARKET, MAJOR ASHA RAM MARG, OPP. DPS, SIHANI, GHAZIABAD. 1,20,42,182/ - 4 M/S. OM ENTERPRISES J 100, SECTOR 23, SANJAY NAGAR, RAJ NAGAR, GHAZIABAD. 1,00,00,000/ - 5 M/S. PARAS ENTERPRISES 1166, BUDH VIHAR, BY- PASS ROAD, GHAZIABAD. 2,50,36,263/ - 6 M/S. BAJRANG TRADING CO. SHOP NO.1, VILLAGE DADHA, GREATER NOIDA (U.P) 65,00,000/- 7 M/S. JAGAT TRADERS 94, OLD KAMBAL WALI GALI, DELHI GATE, GHAZIABAD 75,00,000/- 8 M/S. TIRUPATI INTERNATIONAL SHOP NO.4, TYAGI MARKET, SIDDIQ NAGAR, GHAZIABAD. 50,00,240/- 9 M/S. SHIV SALES CORPORATION A-117, SECTOR 11, VIJAY NAGAR, GHAZIABAD (U.P) 1,00,00,000/ - TOTAL 8,85,81,435/ - 6.4 FURTHER, THE REPLY FILED BY THE A.R. OF THE ASS ESSEE IS REPRODUCED AS UNDER :- COPY OF INVOICE, TRANSPORTER RECEIPT AND WEIGHING BILL ALONG WITH LEDGER ACCOUNT, SHOWING COMPLETE TRANSACTION I N RESPECT OF PURCHASES OR OTHERWISE MADE DURING THE YEAR, OF ALL THE PARTIES ITA NO.5275 & 5276/DEL./2014 CO NO.140 & 141/DEL/2015 11 MENTIONED IN THE ABOVE SAID NOTICE FROM WHOM ANY TR ANSACTION BY THE ASSESSEE COMPANY MADE DURING THE YEAR IS ENC LOSED AND MARKED AS ANNEXURE 1. THE ASSESSEE HAS SUBMITTED COPY OF ACCOUNT, PURCHAS E BILLS, FREIGHT BILL AND DHARMA KATA WEIGH BILL BUT FAIL TO PRODUCE THE PARTY TO PROVE THE GENUINENESS OF ABOVE PURCHASE. HOWEVER, HE WAS APPRISED THAT ENQUIRIES WERE GOT CONDUCTED WITH REGARD TO THE IDENTITY & GENUINENESS OF THE ABOVE MENTIONED P ARTIES BY ISSUE OF SUMMONS U/S. 131 AND ENQUIRY THROUGH INSPE CTOR. 10. THEN, THE AO GOT THE MATTER ENQUIRED INTO. SO FAR AS PURCHASES FROM M/S. OM TRADERS AND M/S. OM ENTERPRI SES TO THE TUNE OF RS.1,20,00,000/- AND RS.1,00,00,000/- RESPE CTIVELY, BY THE ASSESSEE ARE CONCERNED, THE INSPECTOR OF THE INCOME -TAX CATEGORICALLY REPORTED THAT NO SUCH FIRMS ARE IN EX ISTENCE. THEN AO EXAMINED THE PURCHASE OF RAW MATERIAL OF RS.2,50 ,00,000/- BY THE ASSESSEE FROM M/S. PARAS ENTERPRISES, TO WHOM T HE SUMMONS U/S 131 WERE ISSUED. AO NOTICED THAT OWNER OF THIS CONCERN IS GOPAL GUPTA WHO IS ALSO OWNER OF M/S. OM ENTERPRISE S, PROVED TO BE NOT IN EXISTENCE AND IT HAS COME ON RECORD THAT HE IS MAINTAINING TWO BUSINESSES AND DOES NOT HAVE ANY EVIDENCE TO SU PPORT THE TRANSACTIONS ROUTED THROUGH THE BANK AND DECLARED T HE TRANSACTIONS BOGUS TO INFLATE THE TOTAL COST. 11. THEN IN CASE OF M/S. BAJRANG TRADING CO. FROM W HOM THE ASSESSEE HAS CLAIMED TO HAVE PURCHASED THE RAW MATE RIAL OF RS.65,00,000/- BUT THIS CONCERN ALSO FOUND TO BE NO T IN EXISTENCE AS ITA NO.5275 & 5276/DEL./2014 CO NO.140 & 141/DEL/2015 12 REPORTED BY INSPECTOR OF INCOME-TAX VIDE REPORT DAT ED 23.11.2012 AND 26.02.2013. THEREAFTER, SUMMONS SENT TO THE SA ID PARTY RECEIVED BACK UNSERVED. 12. AO FURTHER FOUND THE PURCHASES OF GOODS OF RS.7 5,00,000/- BY THE ASSESSEE FROM M/S. JAGAT TRADERS AS INSPECTO R ALSO REPORTED VIDE REPORT DATED 23.11.2012 AND 26.02.2013 THAT N O SUCH FIRM IS IN EXISTENCE AT THE GIVEN ADDRESS AND FURTHER SUMMO NS SENT TO THE SAID FIRM RECEIVED BACK UNSERVED. SIMILAR IS THE S TATUS OF PURCHASE OF GOODS FROM M/S. TIRUPATI INTERNATIONAL AND M/S. SHIV SALES CORPORATION FROM WHOM THE ASSESSEE HAS CLAIMED TO H AVE PURCHASED THE GOODS FOR RS.50,00,000/- AND RS.1,00, 00,000/- RESPECTIVELY AND BOTH THE FIRMS REPORTED TO BE NOT IN EXISTENCE AND SUMMONS AT THE GIVEN ADDRESS RECEIVED BACK UNSERVED AND ULTIMATELY AO RETURNED THE FOLLOWING FINDINGS :- 6.6 IN VIEW OF THE ABOVE FACTS, THE IDENTITY & EX ISTENCE OF THE ABOVE MENTIONED PARTIES AND GENUINENESS OF TRAN SACTIONS OF PURCHASES OF RAW MATERIAL BY THE ASSESSEE REMAIN ED UN- VERIFIABLE, AS : A) THE EXISTENCE OF THE PARTIES ON THE GIVEN BUSIN ESS AS WELL AS RESIDENTIAL ADDRESSES WERE NOT VERIFIABLE. B) THE LOCATION OF THE PREMISES FROM WHICH BUSINESS IS PURPORT TO BE CARRIED IS SUCH FROM WHICH OPERATION OF BUSINESS ALLEGED TO BE CARRIED OUT IS NOT POSSIBLE. C) THE LEVEL OF TRANSACTIONS ROUTED THROUGH THE BAN K ACCOUNT OF THESE PARTIES ARE SUCH VOLUMINOUS AND BI G, WHICH PERSON OF STATUS OF THESE PARTIES IN NO MANNER CAN MATCH. ITA NO.5275 & 5276/DEL./2014 CO NO.140 & 141/DEL/2015 13 D) MONEY ROUTED THROUGH THE BANK ACCOUNTS ARE AT FI RST STAGE TRANSFERRED TO OTHER ACCOUNTS AND AT SECOND S TAGE THESE ARE WITHDRAWN MOSTLY IN CASH, WHICH IS REPATRIATED TO THE BENEFICIARY I.E. THE ASSESSEE COMPANY AND ITS ASSOC IATES IN CASH. E) MOREOVER, FAILURE ON THE PART OF THE ASSESSEE T O PRODUCE SUCH PARTIES INSPITE OF THE REPEATED OPPORT UNITY GIVEN TO THEM CONCLUSIVELY PROVE THAT NO SUCH PARTY ACTUA L EXIST WHICH CAN STAND AND OWN-UP THE TRANSACTIONS ALLEGED TO BE ROUTED THROUGH THEIR BANK ACCOUNTS AND ISSUE OF PUR CHASE BILLS. 6. ACCORDINGLY, THE TRANSACTIONS OF PURCHASE OF BU ILDING MATERIALS/STEELS ALLEGED TO BE SOURCED FROM THESE P ARTIES ARE REMAINED UNVERIFIED AND TREATED AS 'BOGUS & UNEXPLA INED EXPENDITURE'. ACCORDINGLY, THE PURCHASES CLAIMED BY THE ASSESSEE FROM THE ABOVE MENTIONED PARTIES TOTALING TO RS.8,85,81,435/-ARE NOT GENUINE AND TO BE TREATED A S 'BOGUS'. AS THE PROJECT IS UNDER INITIAL STATE AND NO SALE HAS BEEN BOOKED DURING THE YEAR BUT THE COST OF CONSTRU CTION IS DEBITED TO THE CLOSING WORK-IN-PROGRESS. THEREFORE, THE PURCHASE EXPENSES TO THE EXTENT OF RS.8,85,81,435/- SHALL BE REDUCED FROM THE VALUE OF CLOSING WORK-IN-PROGRESS CLAIMED AT RS. 558,07,65,902/-. SIMILARLY, IN THE IMMEDIATE PROCEEDING YEAR BOGUS PURCHASES WERE FOUND TO THE EXTENT OF RS.1,07,00,116/- WHICH WAS ORDERED TO BE REDUCED FR OM THE VALUE OF LAST YEAR CLOSING STOCK. 6.7.1 THEREFORE, THE VALUE OF CLOSING WORK-IN-PROGR ESS IS COMPUTED AT RS.5481,484,351/- (RS.558,07,65,902 - B OGUS PURCHASES OF A.Y. 2010-11 AT RS.1,07,00,116/- BOGUS PURCHASE OF A.Y. 2011-12 AT RS.8,85,81,435), WHICH IS ALLOWED TO BE CARRIED FORWARD IN THE NEXT ASSESSMENT YEAR A S OPENING WORK-IN-PROGRESS. 13. WHEN THE AO HAS BASED HIS FINDINGS ON ITS DISCR EET INQUIRY THAT THE FIRMS FROM WHICH THE ASSESSEE HAS CLAIMED TO HAVE PURCHASED THE RAW MATERIAL ARE NOT IN EXISTENCE, TH OUGH THE TRANSACTIONS WERE ROUTED THROUGH BANK, IT CERTAINLY DISPUTES THE GENUINENESS OF THE TRANSACTIONS AND APPARENTLY LEAD S TO THE ITA NO.5275 & 5276/DEL./2014 CO NO.140 & 141/DEL/2015 14 CONCLUSION THAT THESE ARE THE BOGUS PURCHASES MADE TO INFLATE THE COST IN ORDER TO FURTHER EVADE THE TAX. 14. FURTHERMORE, LD. CIT (A) HAS ERRED IN DELETING THE ADDITION BY FOLLOWING HIS EARLIER ORDER PASSED IN M/S. ULTRA HOME CONSTRUCTION PVT. LTD. FOR AY 2011-12 ON THE SOLE G ROUND THAT THERE WAS NO EVIDENCE TO SUPPORT THE DISALLOWANCE M ADE BY THE REVENUE. 15. HOWEVER, FROM THE TOTALITY OF THE FACTS AND CIR CUMSTANCES AND THE ORDERS PASSED BY AO IN AYS 2010-11 & 2011-1 2, IT IS APPARENTLY CLEAR THAT THOUGH THE EXPENDITURE CLAIME D BY THE ASSESSEE DOES NOT HAVE ANY BEARING ON ITS INCOME / PROFIT DURING AYS 2010-11 & 2011-12 AS THE SAME HAVE BEEN ACCOUNT ED FOR AS WORK-IN-PROGRESS, BUT THE SAME WILL CERTAINLY EFF ECT THE INCOME OF THE ASSESSEE AT THE CONCLUSION OF PROJECT. 16. IN THE GIVEN CIRCUMSTANCES, WE ARE OF THE CONSI DERED VIEW THAT THOUGH THE AO HAS MADE A DISCREET ENQUIRY THRO UGH INSPECTOR AS TO THE EXISTENCE OF THE FIRM FROM WHOM THE ASSES SEE ALLEGED TO HAVE PURCHASED THE RAW MATERIAL BUT AT THE SAME TIM E AO CATEGORICALLY RECORDED THE OBSERVATIONS IN PARA 6.6 (E) OF BOTH THE APPEALS THAT THE ASSESSEE HAS FAILED TO PRODUCE SUC H PARTIES INSPITE OF REPEATED OPPORTUNITIES TO THEM BUT NO SUCH ADEQU ATE OPPORTUNITY ITA NO.5275 & 5276/DEL./2014 CO NO.140 & 141/DEL/2015 15 ALLEGEDLY PROVIDED BY THE AO TO THE ASSESSEE IS VIS IBLE ON THE RECORD, PARTICULARLY IN THE LIGHT OF THE FACT THAT LD. CIT (A) HAS CATEGORICALLY MENTIONED IN THE IMPUGNED ORDER THAT THE ASSESSEE HAS FILED ALL THE REQUISITE EVIDENCES AGAIN WITHOUT HIGHLIGHTING THE SAID PIECE OF EVIDENCE. EVEN THE ASSESSEE HAS NOT BEEN CONFRONTED WITH THE REPORT OF INCOME-TAX INSPECTOR DATED 23.11 .2012 & 26.02.2013, RELIED UPON BY THE AO. SO, THE IMPUGNE D ORDER IS LIABLE TO BE SET ASIDE TO REMAND THE SAME TO THE FI LE OF THE AO WHO SHALL PROVIDE ADEQUATE OPPORTUNITY TO THE ASSESSEE TO PROVE THE ALLEGED BOGUS PURCHASES. 17. RESULTANTLY, BOTH THE APPEALS BEARING NOS.5275/ DEL/2014 & 5276/DEL/2014 FOR AYS 2010-11 & 2011-12 RESPECTIVEL Y FILED BY THE REVENUE ARE ALLOWED FOR STATISTICAL PURPOSES. CONSEQUENTLY BOTH THE CROSS OBJECTIONS BEARING NOS.140DEL/2015 & 141/DEL/2015 FOR AYS 2010-11 & 2011-12 FILED BY THE ASSESSEE HAV E BECOME INFRUCTUOUS. ORDER PRONOUNCED IN OPEN COURT ON THIS 24 TH DAY OF AUGUST, 2017. SD/- SD/- (G.D. AGRAWAL) (KULDIP SINGH) PRESIDENT JUDICIAL MEMBER DATED THE 24 TH DAY OF AUGUST, 2017 TS ITA NO.5275 & 5276/DEL./2014 CO NO.140 & 141/DEL/2015 16 COPY FORWARDED TO: 1.APPELLANT 2.RESPONDENT 3.CIT 4.CIT(A)-1, NEW DELHI. 5.CIT(ITAT), NEW DELHI. AR, ITAT NEW DELHI.