M/s. Amrapali Smart City Pvt. Ltd., Noida V. DCIT, New Delhi

CO 153/DEL/2015

• Counselvise Citation: [2017] 119 COUNSELVISE.COM (IT) 3458 (ITAT-DELHI)
• Duration Of Justice: 2 year(s) 3 month(s) 6 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: 28-07-2016
• Assessment Year: 2011-2012
• Appeal Filed On: 19-05-2015
• Result in Favour of: Revenue
• Court: TRIBUNAL
• Department Lawyers: SHEFALI SWAROOP
• Assessee Lawyers: AMIT GOEL
• Keywords: Bogus purchase
• Section: 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.4842/DEL./2014 (ASSESSMENT YEAR : 2011-12) DCIT, VS. M/S. AMRAPALI SMART CITY PVT. LTD., CENTRAL CIRCLE 7, C 56/40, SECTOR 62, NEW DELHI. NOIDA (U.P.) (PAN : AAICA5988Q) CO NO.153/DEL/2015 ITA NO.4842/DEL./2014 (ASSESSMENT YEAR : 2011-12) M/S. AMRAPALI SMART CITY PVT. LTD., VS. DCIT, C 56/40, SECTOR 62, CENTRAL CIRCLE 7, NOIDA (U.P.) NEW DELHI. (PAN : AAICA5988Q) ITA NO.4843/DEL./2014 (ASSESSMENT YEAR : 2011-12) DCIT, VS. M/S. AMRAPALI SMART CITY DEVELOPERS PVT. LTD. CENTRAL CIRCLE 7, C 56/40, SECTOR 62, NEW DELHI. NOIDA (U.P.) (PAN : AAICA5988Q) CO NO.154/DEL/2015 ITA NO.4843/DEL./2014 (ASSESSMENT YEAR : 2011-12) M/S. AMRAPALI SMART CITY DEVELOPERS PVT. LTD., VS. DCIT, C 56/40, SECTOR 62, CENTRAL CIRCLE 7, NOIDA (U.P.) NEW DELHI. (PAN : AAICA5988Q) (APPELLANT) (RESPONDENT) ITA NO.4842 & 4843/DEL./2014 CO NO.153 & 154/DEL/2015 2 ASSESSEE BY : SHRI AMIT GOEL, CA REVENUE BY : MS. SHEFALI SWAROOP, CIT DR DATE OF HEARING : 14.08.2017 DATE OF ORDER : 25.08.2017 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 16.06.2014 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 :- ITA NO.4842/DEL/20114 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.7,75,00,484/- MADE BY AO ON ACCOUNT 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.4842 & 4843/DEL./2014 CO NO.153 & 154/DEL/2015 3 ITA NO.4843/DEL/20114 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.3,77,50,185/- MADE BY AO ON ACCOUNT 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 OBJECTORS, M/S. AMRAPALI SMART CITY PVT. LTD . AND M/S. AMRAPALI SMART CITY DEVELOPERS PVT. LTD., BY FILING THE PRESENT CROSS OBJECTIONS CHALLENGED THE ASSESSMENT ORDER DA TED 26.03.2013 & 25.03.2013 IN CO NO.153/DEL/2015 & 154/DEL/2014 RESPECTIVELY PASSED BY THE ASSESSING OFFICER QUA TH E ASSESSMENT YEAR 2011-12 ON THE GROUNDS INTER ALIA THAT :- CO NO.153/DEL/2015 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. CO NO.154/DEL/2015 ON THE FACTS AND CIRCUMSTANCES OF THE CASE AND IN LAW, THE INITIATION OF ASSESSMENT PROCEEDINGS AND ISSUE / SERVICE OF NOTICES BY THE ITA NO.4842 & 4843/DEL./2014 CO NO.153 & 154/DEL/2015 4 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 : ASSESSEE IS INTO THE BUSI NESS OF BUILDING AND CONSTRUCTION OF RESIDENTIAL / COMMERCIAL PROJEC T AT GREATER NOIDA (U.P.). IN CASE OF M/S. AMRAPALI SMART CITY DEVELOPERS PVT. LTD., ASSESSING OFFICER NOTICED THE BOGUS PURC HASES OF RAW MATERIAL CLAIMED AS EXPENDITURE BY THE ASSESSEE BY MERELY ISSUANCE OF THE PURCHASE BILL AND EFFECTING PAYMENT THROUGH BANKING CHANNEL FOR COMMISSION. AO, IN ORDER TO VERIFY THE VERACIT Y OF THE TRANSACTIONS QUA PURCHASE OF RAW MATERIAL CLAIMED B Y THE ASSESSEE, CALLED UPON DIRECTOR OF M/S. ULTRA HOME CONSTRUCTIO N PVT. LTD. VIZ. SHRI ANIL SHARMA TO VERIFY THE COLLATERAL EVID ENCES VIZ. BILLS OF TRANSPORT, TOLL NAKA ENTRIES, DETAILS OF DESTINATIO N AND UTILIZATION THEREOF. AO, IN THE POST SEARCH ENQUIRY, ISSUED SU MMONS U/S 131 OF THE INCOME-TAX ACT, 1961 (FOR SHORT THE ACT) W HICH CAME BACK UNSERVED WITH THE REPORT NO SUCH ADDRESS. THEN A O GOT THE MATTER ENQUIRED INTO THROUGH INSPECTOR WHO HAS ALSO REPORTED THAT THE ADDRESSES MENTIONED ARE NOT EXISTING AND CONSEQ UENTLY, AO CAME TO THE CONCLUSION THAT THE ALLEGED PURCHASES M ADE BY THE ASSESSEE TO THE TUNE OF RS.1,25,00,163/- FROM M/S. SHIV SALES, ITA NO.4842 & 4843/DEL./2014 CO NO.153 & 154/DEL/2015 5 RS.75,00,008/- FROM M/S. GURU NANAK TRADING CO., RS .50,00,014/- FROM M/S. BALAJI ENTERPRISES ARE BOGUS AND UNEXPLAI NED EXPENDITURE AND THEREBY REDUCED BOGUS PURCHASES OF RS.3,77,50,185/- FROM THE CLOSING WORK-IN-PROGRESS. 4.1 AO FURTHER ENQUIRED INTO THE TRANSACTIONS ENTER ED INTO BETWEEN THE ASSESSEE COMPANY AND M/S. MAURIA UDYOG LTD. AND PROCEEDED TO CONCLUDE THAT THE GROUP OF ASSESSEE CO MPANY, M/S. MAURIA UDYOG LTD. AND SOME OTHER STEEL SUPPLIERS VI Z. RAJSHREE ISPAT AND AARHANN ENTERPRISES HAVE CREATED A WEB OF SALE/PURCHASE TRANSACTIONS JUST TO INFLATE THE COST OF CONSTRUCTI ON BY WAY OF BOOKING OF PURCHASE BILLS AND WITHDRAWAL OF CASH TH ROUGH TWO LAYER OF TRANSACTIONS BY MAKING PAYMENT IN CONSIDERATION OF PURCHASE BILLS AND ON THE BASIS OF ENQUIRES, 50% OF THE EXPE NSES ON ACCOUNT OF PURCHASE BILLS OF M/S. MAURIA UDYOG LTD. I.E. RS .1,27,50,000/- TREATED AS BOGUS AND ADDED THE SAME INTO THE INCOME OF THE ASSESSEE ON ACCOUNT OF BOGUS PURCHASES. 5. SIMILARLY, IN CASE OF AMRAPALI SMART CITY PVT. L TD., AO NOTICED THE BOGUS PURCHASES TO THE TUNE OF RS.7,75, 00,484/- IN AY 2011-12 AND IN ORDER TO VERIFY THE VERACITY AND GEN UINENESS OF THE TRANSACTIONS CALLED UPON THE DIRECTOR OF M/S. ULTRA HOME CONSTRUCTION PT. LTD. VIZ. SHRI ANIL SHARMA TO FURN ISH THE COLLATERAL ITA NO.4842 & 4843/DEL./2014 CO NO.153 & 154/DEL/2015 6 EVIDENCES LIKE BILLS OF TRANSPORT, TOLL NAKA ENTRIE S, DETAILS OF DESTINATION AND UTILIZATION THEREOF ETC. AO SPECIF ICALLY REQUIRED THE ASSESSEE TO FURNISH THE FOLLOWING DETAILS :- (I) PURCHASE BILLS (II) DELIVERY CHALLANS (III) TOLL TAX / NAKA BILL (IV) TRUCK NO. & FREIGHT RECEIPT FOR CARRIAGE INWA RD ETC. (V) DHARAM KATA BILL / WEIGHING BILL ALONG WITH TRU CK NO. FOR GOODS RECEIVED. 5.1 ASSESSEE FURNISHED THE DETAILS OF THE COMPANIES FROM WHOM THE PURCHASES HAVE BEEN MADE. AO CONDUCTED THE ENQ UIRY INITIALLY BY ISSUING SUMMONS U/S 131 WHICH RECEIVED BACK UNSE RVED AND THEN GOT THE MATTER ENQUIRED INTO THROUGH CIRCLE IN SPECTOR OF INCOME-TAX WHO HAS REPORTED THAT NO SUCH FIRMS ARE IN EXISTENCES AND THEREBY FOUND THE AMOUNT OF RS.7,75,00,484/- NO T GENUINE AND TREATED THE SAME AS BOGUS PURCHASES AND REDUCED THE SAME FROM THE CLOSING WORK-IN-PROGRESS DURING THE YEAR UNDER ASSE SSMENT. 6. ASSESSEE CARRIED THE MATTER BEFORE THE LD. CIT ( A) BY WAY OF FILING APPEALS WHO HAS ALLOWED THE APPEALS. FEELIN G AGGRIEVED, THE REVENUE HAS COME UP BEFORE THE TRIBUNAL BY WAY OF C HALLENGING THE IMPUGNED ORDERS PASSED BY LD. CIT. ITA NO.4842 & 4843/DEL./2014 CO NO.153 & 154/DEL/2015 7 7. 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. 8. 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? 9. 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 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 ITA NO.4842 & 4843/DEL./2014 CO NO.153 & 154/DEL/2015 8 HAS NOT BEEN PROVED AND GENUINENESS OF TRANSACTIONS ALSO REMAINED UNVERIFIABLE BY RETURNING FOLLOWING FINDINGS IN BOT H THE AFORESAID CASES :- A) THE EXISTENCE OF THE PARTIES ON THE GIVEN BUSINESS 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 BANK ACCOUNT OF THESE PARTIES ARE SUCH VOLUMINOUS AND BIG, WHICH PERSON OF STATUS OF THESE PARTIES IN NO MANNER CAN MATCH. D) MONEY ROUTED THROUGH THE BANK ACCOUNTS ARE AT FIRST STAGE TRANSFERRED TO OTHER ACCOUNTS AND AT SECOND STAGE THESE ARE WITHDRAWN MOSTLY IN CASH, WHICH IS REPATRIATED TO THE BENEFICIARY I. E. THE ASSESSEE COMPANY AND ITS ASSOCIATES IN CASH. E) 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. 10. WHEN THE AO HAS BASED HIS FINDINGS ON ITS DISCR EET INQUIRY THAT THE FIRMS FROM WHOM THE ASSESSEE HAS CLAIMED T O HAVE PURCHASED THE RAW MATERIAL ARE NOT IN EXISTENCE, TH OUGH THE TRANSACTIONS WERE ROUTED THROUGH BANK, IT CERTAINLY DISPUTES THE ITA NO.4842 & 4843/DEL./2014 CO NO.153 & 154/DEL/2015 9 GENUINENESS OF THE TRANSACTIONS AND APPARENTLY LEAD S TO THE CONCLUSION THAT THESE ARE THE BOGUS PURCHASES MADE TO INFLATE THE COST IN ORDER TO FURTHER EVADE THE TAX. 11. BUT, ON THE OTHER HAND, LD. CIT (A) WITHOUT EXA MINING 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. 12. HOWEVER, FROM THE TOTALITY OF THE FACTS AND CIR CUMSTANCES AND THE ORDERS PASSED BY AO IN AY 2011-12, IT IS AP PARENTLY CLEAR THAT THOUGH THE EXPENDITURE CLAIMED BY THE ASSESSEE DOES NOT HAVE ANY BEARING ON ITS INCOME / PROFIT DURING AY 2011-1 2 AS THE SAME HAVE BEEN ACCOUNTED FOR AS WORK-IN-PROGRESS, BUT THE SAME WILL CERTAINLY EFFECT THE INCOME OF THE ASSESSEE IN THE NEXT ASSESSMENT YEAR AS WELL AS AT THE CONCLUSION OF PROJECT. 13. 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 4.6 (E) (IN ITA NO.4844/DEL/2014 &4845/DEL/2014) AND 5.6(E) (IN ITA NO. ITA NO.4842 & 4843/DEL./2014 CO NO.153 & 154/DEL/2015 10 5273/DEL/2014) THAT THE ASSESSEE HAS FAILED TO PROD UCE SUCH PARTIES INSPITE OF REPEATED OPPORTUNITIES GIVEN TO THEM BUT NO SUCH ADEQUATE OPPORTUNITY ALLEGEDLY PROVIDED BY THE AO T O THE ASSESSEE IS VISIBLE ON THE RECORD, PARTICULARLY WHEN EXAMINE D IN THE LIGHT OF THE FACT THAT LD. CIT (A) HAS CATEGORICALLY MENTION ED 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 IMPUGNED ORDER IS LIABLE TO 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. 14. RESULTANTLY, THE AFORESAID APPEALS FILED BY THE REVENUE ARE ALLOWED FOR STATISTICAL PURPOSES. ORDER PRONOUNCED IN OPEN COURT ON THIS 25 TH DAY OF AUGUST, 2017. SD/- SD/- (G.D. AGRAWAL) (KULDIP SINGH) ACCOUNTANT MEMBER JUDICIAL MEMBER DATED THE 25 TH DAY OF AUGUST, 2017 TS ITA NO.4842 & 4843/DEL./2014 CO NO.153 & 154/DEL/2015 11 COPY FORWARDED TO: 1.APPELLANT 2.RESPONDENT 3.CIT 4.CIT(A)-1, NEW DELHI. 5.CIT(ITAT), NEW DELHI. AR, ITAT NEW DELHI.