DCIT, Central Circle, Panaji V. Shri Achintya Mittal, Donapaula

ITA 10/PAN/2020

• Counselvise Citation: [2024] 100 COUNSELVISE.COM (IT) 3426 (ITAT-PANAJI)
• Duration Of Justice: 4 year(s) 1 month(s) 29 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 11-03-2024
• Appeal Filed By: Department
• Order Result: PartlyAllowed
• Bench Allotted: WT(D)
• Next Hearing Date: 03-03-2024
• Assessment Year: 2014-2015
• Appeal Filed On: 12-01-2020
• Result in Favour of: Revenue
• Court: TRIBUNAL
• Keywords: Bogus purchase; Search and seizure; Fair market value

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL PANAJI BENCH : PANAJI [THROUGH VIRTUAL HEARING AT INCOME TAX APPELLATE TRIBUNAL : PUNE BENCHES : PUNE BEFORE SHRI SATBEER SINGH GODARA, JUDICIAL MEMBER AND DR. DIPAK RIPOTE, ACCOUNTANT MEMBER ITA.Nos.10 & 11/PAN./2020 Assessment Years 2014-15 & 2015-16 The DCIT, Central Circle, Pundalik Niwas, Rue De Ourem, Panaji Goa – 403 001. vs. Shri Achintya Mittal, 28-Y, Machado Residential Coves Vainguinim Valley, Dona Paula, Goa – 403 004 PAN AOJPM9124N (Appellant) (Respondent) For Revenue : Shri Badrinath Yamaji Chavan For Assessee : Shri Neeraj Mangla Date of Hearing : 04.03.2024 Date of Pronouncement : 12.03.2024 ORDER PER SATBEER SINGH GODARA, J.M. : These Revenue’s twin appeals, ITA.Nos.10 & 11/PAN./ 2020, arise against the CIT(A)-2, Panaji's as many orders in case nos.ITA.No.695 & 694/CIT(A)-2/PNJ/2017-18, both dated 04.10.2019 for assessment years 2014-15 & 2015-16, respectively, involving proceedings u/sec.153A r.w.s.143(3) of the Income Tax Act, 1961 (in short "the Act"). Heard both the parties at length. Case files perused. 2. The Revenue’s “lead” appeal ITA.No.10/PAN./2020 [A.Y.2014-15] raises the following substantive grounds : 2 ITA.Nos.10 & 11 /PAN./2020 3 ITA.Nos.10 & 11 /PAN./2020 3. The Revenue’s latter appeal ITA.No.11/PAN./2020 for assessment year 2015-16 also pleads the very twin issues since the only difference is that of the bogus purchases amount of Rs.1,44,84,641/- and addition of Rs.28,94,534/- u/sec.56(2)(vii)(c), respectively. 4. We thus take-up the former identical issue of bogus purchases wherein the CIT(A) has granted relief to the assessee in the following terms : 4 ITA.Nos.10 & 11 /PAN./2020 5 ITA.Nos.10 & 11 /PAN./2020 6 ITA.Nos.10 & 11 /PAN./2020 7 ITA.Nos.10 & 11 /PAN./2020 5. Learned CIT-DR vehemently argued that the CIT(A) herein has erred in law and on facts in assessing only the G.P. element in assessee’s bogus purchases despite the fact that the same was based on the incriminating material found/seized during the course of search herein dated 10.02.2016. His case is that contents of such a seized material carry a presumption of correctness going by sec.292C of the Act and therefore, it is not the mere profit element but the assessee’s entire bogus purchases are deserved to be disallowed in the given facts and circumstances of the case. 6. Mr. Mangla on the other hand strongly supports the CIT(A)'s detailed discussion granting part relief to assessee thereby assessing only the profit element therein in the course of lower appellate proceedings. 7. We have given our thoughtful consideration to the vehement rival submissions and find no merit in the Revenue’s stand. This is for the precise reason that not only the assessee is a trader [not manufacturer] engaged in trading of TMT bars etc. but also the department has already accepted it’s corresponding trading receipts in it’s revenue account thereby assessing the same as business income. This clinching fact has gone un-rebutted from the department side before us during the course of hearing. The same forms sufficient reason for us to hold that even if the assessee had been found to have sourced it’s purchases to some other suppliers and availed bogus accommodation entries, it’s entire purchases could not be disallowed as per catena of case law(s) discussed in the CIT(A)'s order. We are further mindful of the fact that hon’ble jurisdictional high court’s recent decision dealing with bogus purchases PCIT vs. Mohd. Hazi Adam & Co. [2019] 103 8 ITA.Nos.10 & 11 /PAN./2020 taxmann.com 459 (Bom.) has rejected the Revenue’s very arguments seeking to disallow such entire bogus purchases. The Revenue’s special leave petition SLP.No.12670/2018 PCIT vs. Tejwan R Kapadia raising the very issue against hon’ble Gujarat high court’s corresponding decision stands declined. That being the factual and legal position, we hardly see any reason to interfere with the CIT(A)'s findings restricting the assessee’s bogus purchases disallowance to that G.P. element only in both these assessment years. The Revenue fails in it’s identical former substantive grounds in the instant twin appeals in very terms. 8. Next comes the second identical issue of sec.56(2)(vii)(c) addition of Rs.1,00,02,103/- and Rs.2,08,94,534/-, assessment year- wise, respectively. The CIT(A)'s identical deduction deleting the same reads as under : 9 ITA.Nos.10 & 11 /PAN./2020 10 ITA.Nos.10 & 11 /PAN./2020 11 ITA.Nos.10 & 11 /PAN./2020 12 ITA.Nos.10 & 11 /PAN./2020 13 ITA.Nos.10 & 11 /PAN./2020 9. Suffice to say, Ld. CIT(A)'s first of all holds that the impugned addition does not deserve to be upheld since not based on any incriminating material to this effect found or seized during the course of search. Learned counsel quoted hon’ble apex court’s recent landmark decision in PCIT vs. Abhisar Buildwell P. Ltd., [2023] 149 taxmann.com 399 (SC) in support of the CIT(A)'s conclusion. We notice that the said case law is in Revenue’s favour qua the instant clinching legal issue once the Assessing Officer had also made other addition(s) of bogus long term capital gains, bogus purchases (supra) etc., based on incriminating material. Their lordships’ have now settled the law that in case of an “unabated” assessment wherein the search in question leads to any incriminating evidence, the departmental authorities are entitled to proceed on the basis of other material as well during the course of assessment. We thus see 14 ITA.Nos.10 & 11 /PAN./2020 no reason to sustain the CIT(A)'s findings on the instant legal issue. 10. Mr. Mangla next vehemently argued that the Assessing Officer had wrongly made the impugned addition u/sec.56(2)(vii)(c) of the Act as the assessee had not purchased the shares in question from any related parties. And that the corresponding agreements had been executed much earlier than in F.Y. 2013-14 and 2014-15, as the case may be. We are afraid that such an interpretation would not rescue the assessee’s cause as the capacity or relationship of other party in case of sec.56(2)(vii) addition hardly forms the decisive factor going by the principle of the stricter interpretation as per Commissioner of Customs (Imports), Mumbai vs. M/s. Dilip Kumar And Co. & Ors. [2018] 9 SCC 1 (SC) (FB). We are of the considered view that an addition under the impugned statutory provision i.e., sec.56(2)(vii)(c)(2) comes into play where the assessee “receives” any property [other than the immovable property] for a consideration which is less than the fair market value thereof by an amount exceeding fifty thousand rupees. Explanation-(d) thereto defines fair market value of such an immovable property as “value determined in accordance with the method as may be prescribed”. And also that clause (d)(ii) to the said Explanation to sec.56(2)(vii) (c)(2) further clarifies such a property to be “shares and securities” as well. 11. Learned CIT-DR at this stage vehemently submitted that the Assessing Officer’s twin assessments had adopted the “net asset method” as prescribed u/sections-11U and 11UA of the I.T. Rules, 1963. The assessee fails to dispute that all these clinching aspects 15 ITA.Nos.10 & 11 /PAN./2020 have nowhere been considered in the CIT(A)'s foregoing detailed discussion since he was more guided by the issue of incriminating material (supra) which now stands settled in hon’ble apex court. We deem it appropriate therefore, to restore the Revenue’s instant identical latter substantive ground(s) in these appeals back to the CIT(A) for his afresh adjudication as per law. Ordered accordingly. No other ground or issue has been pressed before us during the course of hearing. 12. These Revenue’s twin appeals ITA.Nos.10 & 11/PAN./2020 are partly allowed for statistical purposes in above terms. A copy of this common order be placed in the respective case files. Order pronounced in the open Court on 12.03.2024. Sd/- Sd/- [DR. DIPAK P. RIPOTE] [SATBEER SINGH GODARA] ACCOUNTANT MEMBER JUDICIAL MEMBER Pune, Dated 12 th March, 2024 VBP/- Copy to 1. The applicant 2. The respondent 3. The CIT(A)-2, 3 rd Floor, Pundalik Niwas, Rua De Ourem, Panaji, Goa – 403 001. 4. The Prl. CIT, (Central), Bangalore 5. The D.R. ITAT, Panaji Bench, Panaji 6. Guard File. //By Order// //True Copy // Sr. Private Secretary, ITAT, Pune Benches, Pune.