M/s. Balaji Builders, Ahmedabad V. The Income Tax Officer, Ward-1(3)(1), Ahmedabad

CO 57/AHD/2016

• Counselvise Citation: [2018] 123 COUNSELVISE.COM (IT) 3828 (ITAT-AHMEDABAD)
• Duration Of Justice: 2 year(s) 1 month(s) 21 day(s)
• Appeal Type: Cross Objection
• Pronouncement Date: 18-06-2018
• Appeal Filed By: Assessee
• Order Result: Dismissed
• Bench Allotted: Not Allotted
• Assessment Year: 2011-2012
• Appeal Filed On: 27-04-2016
• Result in Favour of: Revenue
• Court: TRIBUNAL
• Department Lawyers: VARTIK CHOKSHI AR
• Assessee Lawyers: V K SINGH
• Keywords: Bogus purchase

Judgement Text

, , IN THE INCOME TAX APPELLATE TRIBUNAL D BENCH, AHMEDABAD : , , BEFORE SHRI PRAMOD KUMAR ACCOUNTANT MEMBER & MS. MADHUMITA ROY, JUDICIAL MEMBER ./ I.T.A. NO.593/AHD/2016 AND CO NO.57/AHD/2016 ( / ASSESSMENT YEAR : 2011-12) INCOME TAX OFFICER WARD-1(3)(1) AHMEDABAD / VS. BALAJI BUILDERS 86, KRITISAGAR FLATS USMANPURA, AHMEDABAD-380014 ' ./ ./ PAN/GIR NO. : AAGFB 8542 C ( '% / APPELLANT ) .. ( &'% / RESPONDENT & CROSS OBJECTOR ) '% ' / APPELLANT BY : SHRI V.K. SINGH, SR.DR &'% ( ' / RESPONDENT BY : SHRI VARTIK CHOKSHI, AR ) * ( + / DATE OF HEARING 07/06/2018 ,-. ( + / DATE OF PRONOUNCEMENT 18 / 0 6 /201 8 / O R D E R PER MS. MADHUMITA ROY - JM: THE INSTANT APPEAL AND THE CROSS OBJECTION PREFER RED BY THE REVENUE AND THE ASSESSEE RESPECTIVELY ARE AGAINST THE ORDER PASSED BY THE COMMISSIONER OF INCOME TAX(APPEALS)-10, AHMEDABAD [LD.CIT(A) IN SHORT] DATED 07/01/2016 FOR ASSESSME NT YEAR (AY) 2011-12 ARISING OUT OF THE ORDER PASSED BY THE DCIT, CIRC LE-9, AHMEDABAD. 2. THE ASSESSEE IS ENGAGED IN THE CONSTRUCTION BU SINESS. THE ASSESSEE HAS MADE CERTAIN PAYMENTS TO THE RESPECTIVE PARTIES TOWARDS PURCHASE OF MATERIALS FOR THE CONSTRUCTION WORK THROUGH ACCOUNT PAYEE CHEQUES. NOTICE U/S.133(6) O F THE INCOME TAX ACT, 1961 (HEREINAFTER REFERRED TO AS 'THE ACT') WAS ISSUED TO THE SUPPLIE RS BY THE ASSESSING OFFICER (AO) FOR VERIFICATION OF THE GENUINENESS OF THE TRANSACTIONS FOLLOWED BY ENQUIRY THROUGH INSPECTOR DEPUTED BY THE AO REGARDING GENUINENESS OF THE ADDR ESSES OF THE SUPPLIERS BUT WITHOUT - 2 - ITA NO.59 3/AHD/2016 & CO NO.57/AHD/2016 ITO VS. BALAJI BUILDERS (CO BY ASSESSEE) ASST.YEAR - 2011-12 SUCCESS. THE ASSESSEE WAS THEREAFTER ASKED TO PROD UCE THE PARTIES IN PERSON FOR VERIFICATION OF THE EXPENSES. IN FACT, THE ASSESSEE PROVIDED THE D ETAILS OF THOSE SUPPLIERS INCLUDING PAN, COPY OF BILLS FOR PURCHASE, COPY OF RETURN, AUDITED COPY OF ACCOUNTS ALONG WITH BALANCE-SHEET, PROFIT & LOSS ACCOUNT, DETAILS OF PROFESSIONAL RECE IPTS DURING THE COURSE OF ASSESSMENT PROCEEDINGS. HOWEVER, BEING DISSATISFIED WITH THE PERFORMANCE OF THE ASSESSEE IN NOT BRINGING THE SUPPLIERS IN PERSON BEFORE THE AO, THE AO OBSERVED THAT NO ACTUAL WORK HAS BEEN CARRIED OUT AND MERELY BOGUS BILLS HAVE BEEN ISSUED AND THEREUPON PURCHASE OF RS.1,63,27,255/- MADE FROM PARTIES WERE DISALLOWE D AND ADDED TO THE TOTAL INCOME OF THE ASSESSEE AS BOGUS PURCHASE. 3. IN THE APPELLATE PROCEEDINGS, ON THE BASIS OF RE MAND REPORT AND MATERIAL EVIDENCES INCLUDING THE BANK STATEMENTS OF THE SUPPLIERS REC EIVED BY THE AO FROM THE RESPECTIVE BANKS THE LD.CIT(A) HAS AGREED AS REGARDS THE EXISTENCE OF THOSE PARTIES. THE LD.CIT(A) FURTHER OBSERVED THAT THE DISALLOWANCE MADE BY THE AO OF 57 .35% AS BOGUS PURCHASE OUT OF TOTAL BUILDING MATERIAL OF RS.2.85 CRORES PURCHASED BY TH E ASSESSEE DURING THE PERIOD COMMENCING FROM 01.04.2009 TO 31.03.2014 IS IMPRACTICAL SINCE THE INCOME FROM SALE OF CONSTRUCTED FLATS HAS NOT BEEN CONTROVERTED BY THE AO WHICH WAS SUPPO RTED BY CERTIFICATE OF ENGINEER. IN EFFECT, THE AO DISALLOWED 100% OF PURCHASE MADE FRO M THE PARTIES ON DOUBTFUL IDENTITY. HOWEVER, THE LD.CIT(A) CONSIDERING SOME OF THE PA RTIES HAVE NOT FILED RETURN OF INCOME, SOME OF THEM WERE NOT AVAILABLE AT THE GIVEN ADDRE SS, THOUGHT IT REASONABLE TO RESTRICT DISALLOWANCE OF RS.20,40,905/- I.E. 12.5% OF TOTAL PURCHASE WHICH IS IMPUGNED BEFORE US. THE REVENUE HAS COME UP IN APPEAL AGAINST THE DEL ETION OF ADDITION OF RS.1,42,86,350/- MADE BY THE AO BY DISALLOWING THE NON-GENUINE/BOGUS PURCHASES ON THE PREMISE THAT THE ASSESSEE CREATED BOGUS EVIDENCES OR HAVE TAKEN BOGU S PURCHASE BILLS TO CLAIM BOGUS PURCHASE TO EVADE TAX. - 3 - ITA NO.59 3/AHD/2016 & CO NO.57/AHD/2016 ITO VS. BALAJI BUILDERS (CO BY ASSESSEE) ASST.YEAR - 2011-12 3.1. SIMULTANEOUSLY, THE ASSESSEE HAS FILED A CROSS -OBJECTION ON THE GROUND THAT THE LD.CIT(A) HAS GROSSLY ERRED IN NOT RESTRICTING DISA LLOWANCE MADE ON ACCOUNT OF BOGUS PURCHASES TO 5% IN VIEW OF THE JUDGEMENT PASSED BY THE CO-ORDINATE BENCH OF THIS TRIBUNAL. 4. AT THE TIME OF HEARING OF THE INSTANT APPEAL, TH E LD.REPRESENTATIVE OF THE DEPARTMENT RELIED UPON THE ORDER PASSED BY THE AO AND THE LD.R EPRESENTATIVE OF THE ASSESSEE SUBMITTED BEFORE US THAT THE ISSUE INVOLVED IN THIS MATTER AS POINTED OUT IN THE CROSS-OBJECTION FILED BY THE ASSESSEE IS COVERED BY THE RATIO LAID DOWN BY T HE DECISION PASSED BY THE CO-ORDINATE BENCH OF THIS TRIBUNAL IN THE MATTER OF GUJARAT AMB UJA EXPORTS LTD. VS. ACIT IN IT(SS)A NOS.126, 127, 494/AHD/2012. HE FURTHER PRAYED FOR ORDER RESTRICTING THE ADDITION TO RS.8,16,362/-, I.E. 5% OF THE TOTAL PURCHASE. 5. WE HAVE HEARD THE REPRESENTATIVES OF THE RESPECT IVE PARTIES. WE HAVE PERUSED THE RELEVANT MATERIALS AVAILABLE ON RECORD. SO FAR AS THE GENUINENESS OF THE TRANSACTION IS CONCERNED, WE ARE SATISFIED UPON THE METHOD AND MAN NER APPLIED BY THE LD.CIT(A) IN COMING TO THE CONCLUSION ON THE BASIS OF THE CONTENT OF TH E REMAND REPORT, OTHER EVIDENCES AND SPECIALLY ON THE BANK STATEMENT OF THE SUPPLIERS WH ICH WAS, IN FACT, OBTAINED BY THE AO HIMSELF AND WE THUS DECLINED TO INTERFERE WITH THE SAME. THE APPEAL PREFERRED BY THE REVENUE ON THIS GROUND IS DISMISSED. 5.1. IN RESPECT OF THE CROSS OBJECTION OF THE AS SESSEE, WE HAVE ALSO GONE THROUGH THE ORDER PASSED BY THE LD.TRIBUNAL IN THE MATTER OF GUJARAT AMBUJA EXPORTS LTD.(SUPRA) AS RELIED UPON BY THE LD.AR. THE REASON FOR DISALLOWANCE OF ONLY 5 % OUT OF TOTAL PURCHASE HAS BEEN JUSTIFIED IN THE FOLLOWING MANNER BY THE CO-ORDINAT E BENCH OF THIS TRIBUNAL. HAVING CONSIDERED ALL THE JUDGMENTS CITED BY BOTH SIDES, WE FEEL THAT IN THE FACTS OF THE PRESENT CASE, SOME TOKEN DISALLOWANCE IS TO BE MADE TO TAKE CARE OF SOME POSSIBLE INFLATION IN THE PURCHASE PRICE IN RESPECT OF PURCHASES FROM VIS HAL TRADERS. WE HOLD FOR ONLY A TOKEN DISALLOWANCE ONLY BECAUSE OF THESE REASONS THAT THE YIELD REPORTED BY THE ASSESSEE IS BETTER IN THE PRESENT YEAR AS COMPARED TO THE PRECEDING YEAR. IT IS ALSO NOTED BY US THAT AS NOTED BY LEARNED CIT(A), THE PRICES CHARGED BY VISHAL TRADER S ARE AT PAR WITH OTHER PARTIES AND THE GP/NP IS BETTER IN THE PRESENT YEAR AS COMPARED TO THE PRECEDING YEAR. HENCE, WE FELL THAT - 4 - ITA NO.59 3/AHD/2016 & CO NO.57/AHD/2016 ITO VS. BALAJI BUILDERS (CO BY ASSESSEE) ASST.YEAR - 2011-12 ONLY A TOKEN DISALLOWANCE WILL MEET THE ENDS OF JUS TICE IN THE FACTS OF THE PRESENT CASE AS NOTED ABOVE. HERE, THIS QUESTION MAY BE RELEVANT AS TO W HEN ALL THE ABOVE FACTORS ARE SUPPORTING THE CASE OF THE ASSESSEE THEN WHY EVEN A TOKEN DISA LLOWANCE IS CALLED FOR? ON THIS ASPECT, WE FEEL THAT THERE IS INCONSISTENCY IN THE STATEMENTS OF THREE PERSONS RELATED WITH VISHAL TRADERS AND IT IS QUITE POSSIBLE THAT SOME EXTRA PRICE IS P AID BY THE ASSESSEE TO THIS PARTY TO OBTAIN MATERIAL AND BILLS AND HENCE, WE FEEL THAT IN TOTAL ITY OF THE FACTS OF THIS CASE, SOME DISALLOWANCE IS JUSTIFIED. NOW, THE NEXT QUESTION IS THEN HOW MUCH TOKEN DISALLOWANCE IS JUSTIFIED IN THE FACTS OF THE PRESENT CASE. LEARNE D AR OF THE ASSESSEE HAS INDICATED FOR 2 3 % DISALLOWANCE BUT WE FEEL THAT 5% DISALLOWANCE OUT OF PURCHASE FROM VISHAL TRADERS WILL MEET THE ENDS OF JUSTICE IN THE FACTS OF THE PRESEN T CASE. WE DIRECT THE ASSESSING OFFICER ACCORDINGLY. THE BALANCE DISALLOWANCE IS DELETED. THE RELEVANT GROUND OF THE REVENUE IS REJECTED AND THAT OF THE ASSESSEE IS PARTLY ALLOWED . 5.1 WE FIND THAT THE FACTS OF THE CASE IN HAND IS IDENTICAL TO THAT OF THE ASSESSEE DEALT IN THE AFORESAID JUDGEMENT AND THEREFORE, THE CASE OF THE ASSESSEE IS SQUARELY COVERED BY THE AFORESAID DECISION. TAKING INTO CONSIDERATION THE E NTIRE ASPECTS OF THE MATTER AND THE RATIO OF THE JUDGEMENT, WE THINK IT FIT TO MODIFY THE ORDER PASSED BY THE LD.CIT(A) BY DISALLOWING 5% FROM 12.5% AS MADE BY HIM IN EFFECT RS.8,16,362/- O UT OF THE TOTAL PURCHASE. 6. IN THE RESULT, THE APPEAL OF THE REVENUE IS DISM ISSED AND CROSS OBJECTION FILED BY THE ASSESSEE IS PARTLY ALLOWED. THIS ORDER PRONOUNCED IN OPEN COURT ON 18/ 06/2018 SD/- SD/- ( ) ( ) ( PRAMOD KUMAR ) ( MS. MADHUMITA ROY ) ACCOUNTANT MEMBER JUDICIAL MEMBER AHMEDABAD; DATED 18/ 06/2018 0+..) , .)../ T.C. NAIR, SR. PS - 5 - ITA NO.59 3/AHD/2016 & CO NO.57/AHD/2016 ITO VS. BALAJI BUILDERS (CO BY ASSESSEE) ASST.YEAR - 2011-12 !'#$%$' / COPY OF THE ORDER FORWARDED TO : 1. '% / THE APPELLANT 2. &'% / THE RESPONDENT. 3. 12 3 / CONCERNED CIT 4. 3 ( ) / THE CIT(A)-10, AHMEDABAD 5. 67 8 )2 , + 2 . , 1 / DR, ITAT, AHMEDABAD 6. 8 :; < * / GUARD FILE. / BY ORDER, & 6 //TRUE COPY// / ( DY./ASSTT.REGISTRAR) , / ITAT, AHMEDABAD 1. DATE OF DICTATION .. 8.6.18(DICTATION-PAD 13-PA GES ATTACHED AT THE END OF THIS APPEAL-FILE) 2. DATE ON WHICH THE TYPED DRAFT IS PLACED BEFORE THE DICTATING MEMBER 8.6.18 3. OTHER MEMBER 4. DATE ON WHICH THE APPROVED DRAFT COMES TO THE SR.P. S./P.S.. 5. DATE ON WHICH THE FAIR ORDER IS PLACED BEFORE THE D ICTATING MEMBER FOR PRONOUNCEMENT 6. DATE ON WHICH THE FAIR ORDER COMES BACK TO THE SR.P .S./P.S.18.6.18 7. DATE ON WHICH THE FILE GOES TO THE BENCH CLERK 18.6.18 8. DATE ON WHICH THE FILE GOES TO THE HEAD CLERK ... 9. THE DATE ON WHICH THE FILE GOES TO THE ASSISTANT RE GISTRAR FOR SIGNATURE ON THE ORDER.. 10. DATE OF DESPATCH OF THE ORDER