M/s. Hitech City Developers Pvt. Ltd., Noida V. DCIT, New Delhi

CO 144/DEL/2016

• Counselvise Citation: [2017] 119 COUNSELVISE.COM (IT) 3457 (ITAT-DELHI)
• Duration Of Justice: 1 year(s) 4 month(s) 11 day(s)
• Appeal Type: Cross Objection
• Pronouncement Date: 25-08-2017
• Appeal Filed By: Assessee
• Order Result: Dismissed
• Bench Allotted: SMC 1
• Next Hearing Date: 24-08-2016
• Assessment Year: 2011-2012
• Appeal Filed On: 13-04-2016
• Result in Favour of: Revenue
• Court: TRIBUNAL
• Department Lawyers: SHEFALI SWAROOP
• Assessee Lawyers: AMIT GOEL
• Keywords: Bogus purchase
• Section: 143(3); 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.5278/DEL./2014 (ASSESSMENT YEAR : 2011-12) DCIT, CENTRAL CIRCLE 7, VS. M/S. HITECH CITY DEVELO PERS PVT. LTD., NEW DELHI. C 56/40, SECTOR 62, NOIDA (U.P.) (PAN : AABCH6570Q) CO NO.144/DEL/2016 (IN ITA NO.5278/DEL./2014) (ASSESSMENT YEAR : 2011-12) M/S. HITECH CITY DEVELOPERS PVT. LTD., VS. DCIT, CE NTRAL CIRCLE 7, C 56/40, SECTOR 62, NEW DELHI. NOIDA (U.P.) (PAN : AABCH6570Q) (APPELLANT) (RESPONDENT) ASSESSEE BY : SHRI AMIT GOEL, CA REVENUE BY : MS. SHEFALI SWAROOP, CIT DR DATE OF HEARING : 10.08.2017 DATE OF ORDER : 25.08.2017 O R D E R PER KULDIP SINGH, JUDICIAL MEMBER : THE AFORESAID APPEAL FILED BY THE REVENUE AND CROSS OBJECTIONS FILED BY THE ASSESSEE ARE BEING DISPOSED OFF BY WAY OF CONSOLIDATED ORDER TO AVOID REPETITION OF DISCUSSIO N. ITA NO.5278/DEL./2014 CO NO.144/DEL/2016 2 2. APPELLANT, DEPUTY COMMISSIONER OF INCOME-TAX, CE NTRAL CIRCLE 7, NEW DELHI (HEREINAFTER REFERRED TO AS TH E REVENUE), BY FILING THE PRESENT APPEAL SOUGHT TO SET ASIDE THE I MPUGNED ORDER DATED 10.07.2014 PASSED BY THE COMMISSIONER OF INCO ME-TAX (APPEALS)-1, NEW DELHI, FOR THE ASSESSMENT YEAR 201 1-12 ON THE GROUNDS INTER ALIA THAT :- 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 DELETING THE ADDITION OF RS.2,00,15,043/- MADE BY ASSESSING OFFICER ON ACCOUNT OF DISALLOWANCES OF 'BOGUS PURCHASE' WHICH WERE CAPITALIZED. 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. HITECH CITY DEVELOPERS PVT. L TD., BY FILING THE PRESENT CROSS OBJECTIONS CHALLENGED THE ASSESSMENT ORDER DATED 18.03.2013 PASSED BY THE ASSESSING OFFICER QU A THE ASSESSMENT YEAR 2011-12 ON THE GROUNDS INTER ALIA T HAT :- 1. ON THE FACTS AND CIRCUMSTANCES OF THE CASE AND IN LAW, THE ASSESSMENT MADE U/S 143(3) OF INCOME TAX ACT, 1961, ISSUED IN THIS CASE IS ILLEGAL & WITHOUT JURISDICTION AND ACCORDINGLY, THE SAME IS LIABLE TO BE QUASHED. 4. BRIEFLY STATED THE FACTS NECESSARY FOR ADJUDICAT ION OF THE CONTROVERSY AT HAND ARE : DURING THE SEARCH AND SEI ZURE OPERATION ITA NO.5278/DEL./2014 CO NO.144/DEL/2016 3 CARRIED OUT ON 09.09.2010 IN THE PREMISES OF M/S. A MARPALI GROUP OF CASES INCLUDING ASSESSEE, CERTAIN DOCUMENTS IN T HE SHAPE OF LEDGER ACCOUNTS OF VARIOUS PARTIES WERE SEIZED FROM WHOM THE ASSESSEE HAS MADE PURCHASES OF RAW MATERIAL / BUILD ING MATERIAL TO THE TUNE OF RS.44,87,02,688/-. M/S. PARAS ENTERPRI SES AND M/S. JAI SHREE TRADING COMPANY SHOWN TO HAVE RECEIVED PAYMEN T OF RS.1,00,00,069/- AND RS.1,00,14,974/- RESPECTIVELY ON ACCOUNT OF SALE OF GOODS TO THE ASSESSEE (AMRAPALI GROUP). AS SESSING OFFICER ON THE BASIS OF REPLY FILED BY THE ASSESSEE AS WELL AS ON THE BASIS OF INQUIRY CONDUCTED DURING ASSESSMENT PROCEEDINGS PRO CEEDED TO CONCLUDE THAT THE ASSESSEE HAS FAILED TO PROVE THE IDENTITY, EXISTENCE OF M/S. PARAS ENTERPRISES OR M/S. JAI SHREE TRADING CO. AND GENUINENESS OF THE TRANSACTION OF THE PURCHASES OF RAW MATERIAL AND TREATED THE PURCHASES CLAIMED BY THE ASSESSEE OF RS .1,00,00,069/- AND RS.1,00,14,974/- FROM M/S. PARAS ENTERPRISES AN D M/S. JAI SHREE TRADING CO. RESPECTIVELY TOTALING RS.2,00,15, 043/- AS BOGUS AND THEREBY REDUCED THE AMOUNT OF RS.2,00,15,043/- FROM THE COST OF WORK-IN-PROGRESS CLAIMED BY THE ASSESSEE. 5. ASSESSEE CARRIED THE MATTER BEFORE THE LD. CIT ( A) BY WAY OF AN APPEAL WHO HAS PARTLY ALLOWED THE APPEAL FOR STA TISTICAL PURPOSES. FEELING AGGRIEVED, THE REVENUE HAS COME UP BEFORE THE ITA NO.5278/DEL./2014 CO NO.144/DEL/2016 4 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. FROM THE GROUNDS OF APPEAL, ARGUMENTS ADDRESSED BY LD. AUTHORIZED REPRESENTATIVES OF THE PARTIES TO THE AP PEAL AND FACTS & CIRCUMSTANCES OF THE CASE, THE SOLE QUESTION ARISES FOR DETERMINATION IN THIS CASE IS :- AS TO WHETHER THE LD. CIT (A) HAS ERRED IN DELETING THE ADDITION MADE BY THE ASSESSING OFFICER BY RELYING UPON HIS OWN ORDER RENDERED IN M/S. ULTRA HOME CONSTRUCTION PVT. LTD. FOR AY 2011-12 ORDER DATED 17.01.2014 IN ITA NO.108/2013-14 AND ON THE GROUND THAT WHEN THE SAID EXPENDITURE EMBEDDED IN THE WORK-IN- PROGRESS WILL BE CONSIDERED FOR COMPUTING THE INCOME OF THE ASSESSEE AS PER POC METHOD, ADDITION MADE BY THE ASSESSING OFFICER IS NOT SUSTAINABLE? 8. AO MADE AFORESAID ADDITION ON THE BASIS OF DISCR EET ENQUIRY CONDUCTED BY HIM FIRSTLY BY ISSUING SUMMONS U/S 131 OF THE ACT WHICH RECEIVED BACK UNSERVED FOR LACK OF COMPLETE A DDRESS AND THEN BY GETTING THE MATTER ENQUIRED INTO THROUGH CI RCLE INSPECTOR, INCOME-TAX WHO HAS ALSO REPORTED THAT NO SUCH FIRMS / SUPPLIER OF ITA NO.5278/DEL./2014 CO NO.144/DEL/2016 5 RAW MATERIAL EXISTS AT THE GIVEN ADDRESSES IN ALL T HE CASES ON THE GROUND THAT THE IDENTITY AND EXISTENCE OF SUPPLIER OF RAW MATERIAL HAS NOT BEEN PROVED AND GENUINENESS OF TRANSACTIONS ALSO REMAINED UNVERIFIABLE BY RETURNING FOLLOWING FINDINGS :- A) 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. B) THE LEVEL OF TRANSACTIONS ROUTED THROUGH THE BANK ACCOUNT OF THESE PARTIES ARE SUCH VOLUMINOUS AND BIG, WHICH PERSON OF STATUS OF THESE PARTIES IN NO MANNER CAN MATCH. C) MOREOVER, FAILURE ON THE PART OF THE ASSESSEE TO PRODUCE SUCH PARTIES INSPITE OF THE REPEATED OPPORTUNITY GIVEN TO THEM CONCLUSIVELY PROVE THAT NO SUCH PARTY ACTUAL EXIST WHICH CAN STAND AND OWN-UP THE TRANSACTIONS ALLEGED TO BE ROUTED THROUGH THEIR BANK ACCOUNTS AND ISSUE OF PURCHASE BILLS. 9. BUT, ON THE OTHER HAND, LD. CIT (A) WITHOUT EXAM INING THE ISSUE AS TO BOGUS PURCHASES, THOROUGHLY ENQUIRED IN TO BY THE AO, DELETED THE ADDITION ON THE GROUND THAT WHEN THE SA ID EXPENDITURE IS EMBEDDED IN THE WORK-IN-PROGRESS, THE SAME WILL BE CONSIDERED FOR COMPUTING THE INCOME OF THE ASSESSEE AS PER POC MET HOD. 10. WHEN THE AO HAS BASED HIS FINDINGS ON ITS DISCR EET INQUIRY THAT THE FIRMS FROM WHOM ASSESSEE HAS CLAIMED TO HA VE PURCHASED ITA NO.5278/DEL./2014 CO NO.144/DEL/2016 6 THE RAW MATERIAL ARE NOT IN EXISTENCE, THOUGH THE T RANSACTIONS WERE ROUTED THROUGH BANK, IT CERTAINLY DISPUTES THE GENU INENESS OF THE TRANSACTIONS AND APPARENTLY LEADS TO THE CONCLUSION THAT THESE ARE THE BOGUS PURCHASES MADE TO INFLATE THE COST IN ORD ER TO FURTHER EVADE THE TAX. 11. HOWEVER, FROM THE TOTALITY OF THE FACTS AND CIR CUMSTANCES AND THE ORDER PASSED BY AO IN THE YEAR UNDER ASSESS MENT, IT IS APPARENTLY CLEAR THAT THOUGH THE EXPENDITURE CLAIME D BY THE ASSESSEE DOES NOT HAVE ANY BEARING ON ITS INCOME / PROFIT DURING THE SAID ASSESSMENT YEAR AS THE SAME HAVE BEEN ACCOUNTE D FOR AS WORK-IN-PROGRESS, BUT THE SAME WILL CERTAINLY EFF ECT THE INCOME OF THE ASSESSEE IN THE NEXT ASSESSMENT YEAR AS WELL AS AT THE CONCLUSION OF PROJECT. 12. 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 TI ME AO CATEGORICALLY RECORDED THE OBSERVATIONS IN PARA 4.1 0 (C) THAT THE ASSESSEE HAS FAILED TO PRODUCE SUCH PARTIES INSPITE OF REPEATED OPPORTUNITIES GIVEN TO THEM BUT NO SUCH ADEQUATE OP PORTUNITY ALLEGEDLY PROVIDED BY THE AO TO THE ASSESSEE IS VIS IBLE ON THE ITA NO.5278/DEL./2014 CO NO.144/DEL/2016 7 RECORD, PARTICULARLY WHEN EXAMINED 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 AGAI N WITHOUT HIGHLIGHTING THE SAID PIECE OF EVIDENCE. EVEN THE ASSESSEE HAS NOT BEEN CONFRONTED WITH THE REPORT OF INCOME-TAX INSPE CTOR, RELIED UPON BY THE AO. SO, THE IMPUGNED ORDER IS LIABLE T O BE SET ASIDE TO REMAND THE SAME TO THE FILE OF THE AO FOR DE NOVO A SSESSMENT WHO SHALL PROVIDE ADEQUATE OPPORTUNITY TO THE ASSESSEE TO PROVE THE ALLEGED BOGUS PURCHASES. 13. RESULTANTLY, THE AFORESAID APPEALS FILED BY THE REVENUE ARE ALLOWED FOR STATISTICAL PURPOSES. CONSEQUENTLY, CR OSS OBJECTIONS FILED BY THE ASSESSEE ARE DISMISSED HAVING BEEN BEC OME INFRUCTUOUS. ORDER PRONOUNCED IN OPEN COURT ON THIS 25 TH DAY OF AUGUST, 2017. SD/- SD/- (G.D. AGRAWAL) (KULDIP SINGH) PRESIDENT JUDICIAL MEMBER DATED THE 25 TH DAY OF AUGUST, 2017 TS COPY FORWARDED TO: 1.APPELLANT 2.RESPONDENT 3.CIT 4.CIT(A)-1, NEW DELHI. 5.CIT(ITAT), NEW DELHI. AR, ITAT NEW DELHI.