M/s. Gayatri Engineering Corporation, Baroda V. The Income tax Officer,Ward-2(1), Baroda

ITA 1007/AHD/2011

• Counselvise Citation: 100720514 RSA 2011
• Duration Of Justice: 4 month(s) 17 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 23-08-2011
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: SMC
• Next Hearing Date: 23-08-2011
• Assessment Year: 2002-2003
• Appeal Filed On: 06-04-2011
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: VINOD TANWANI
• Assessee Lawyers: BHAVIN MARFATIA
• Keywords: Bogus purchase; Unexplained expenditure; Opportunity of being heard; Accommodation entries; Reason to believe
• Section: 69

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL SMC BENCH AHMEDABAD (BEFORE SHRI BHAVNESH SAINI, JUDICIAL MEMBER) ITA NO.1007/AHD/2011 A. Y.: 2002-03 M/S. GAYATRI ENGINEERING CORPORATION, 746-4-A, GIDC MAKARPURA, BARODA VS INCOME TAX OFFICER, WARD 2 (1), AAYAKAR BHAVAN, RACE COURSE, BARODA PA NO. AAAFG 9831 F (APPELLANT) (RESPONDENT) APPELLANT BY SHRI BHAVIN MARFATIA, AR RESPONDENT BY SHRI VINOD TANWANI, DR DATE OF HEARING: 23-08-2011 DATE OF PRONOUNCEMENT: 23-08-2011 O R D E R PER BHAVNESH SAINI, JM: THIS APPEAL BY THE ASSESSEE IS DIRECTED AGAINST ORDER OF THE CIT(A)-II, BARODA DAT ED 22-12-2010 FOR ASSESSMENT YEAR 2002-03, ON THE FOLLOWING GROUNDS: 1. THE LEARNED COMMISSIONER OF INCOME TAX (APPEALS ) ERRED IN FACT AND IN LAW IN CONFIRMING THE ACTION O F THE AO IN DISALLOWING PURCHASES OF RS.1,76,030/- ON THE GROUND THAT THE SAID PURCHASES ARE BOGUS PURCHASES DESPITE THE FACT THAT THE APPELLANT CONSUMED THE MATERIAL IN QU ESTION. 2. THE LEARNED COMMISSIONER OF INCOME TAX (APPEALS) ERRED IN FACT AND IN LAW IN CONFIRMING THE ACTION O F THE AO IN MAKING THE ADDITION WITHOUT PROVIDING COPIES OF THE DOCUMENTS/PAPER/AFFIDAVITS REFERRED TO IN THE ASSES SMENT ORDER BEFORE MAKING THE ADDITION. ITA NO. 1007/AHD/2011 M/S. GAYATRI ENGINEERING CORPORATION VS ITO, W- 2 ( 1), BARODA 2 2. BRIEFLY, THE FACTS OF THE CASE ARE THAT RETURN O F INCOME WAS FILED DECLARING TOTAL INCOME OF RS.34,272/-.THE ASSESSEE IS ENGAGED IN THE BUSINESS OF MANUFACTURING AND FABRICATION OF ENGINE ERING ITEMS. DURING THE COURSE OF ASSESSMENT PROCEEDINGS, FROM T HE ENQUIRIES CONDUCTED IN THE CASE OF M/S. PRAKASH MARBLES ENGIN EERING CO., DABOHI, IT WAS DISCOVERED BY THE AO THAT BOGUS SALE S BY WAY OF ACCOMMODATION BILLS FOR PURCHASE OF MATERIALS WAS I SSUED BY TWO PARTIES NAMELY SHRI SHRI CHAUHAN AND SHRI RAVAL. TH E BILLS WERE DEPOSITED IN THE CURRENT ACCOUNT WITH SHREE MAHALAX MI MERCANTILE CO-OPERATIVE BANK LTD. THESE PERSONS THROUGH THEIR LETTER DATED 03-02-2005 AND AFFIDAVIT DATED 09-02-2005 HAVE CONF IRMED THE FRAUD. THE ASSESSEE HAS ALSO SHOWN PURCHASES FROM THESE PA RTIES. THE AO NOTED DETAILS OF BOGUS BILLS RECEIVED FROM M/S. GIR NAR SALES CORPORATION, PROPRIETOR SHRI JABBARSINGH CHAUHAN AM OUNTING TO RS.1,76,030/- IN THE ASSESSMENT ORDER AND MADE THE ADDITION ON ACCOUNT OF UNEXPLAINED EXPENDITURE U/S 69 C OF THE IT ACT. IT WAS SUBMITTED BEFORE THE LEARNED CIT(A) THAT SUFFICIENT EVIDENCES WERE PRODUCED TO SHOW PURCHASES WERE GENUINE AND PAYMENT S HAVE BEEN MADE THROUGH ACCOUNT PAYEE CHEQUES. THE LEARNED CIT (A) DID NOT ACCEPT THE CONTENTION OF THE ASSESSEE BECAUSE THE P URCHASES WERE THROUGH ACCOMMODATION ENTRIES AND THE SAID PARTIES HAVE ADMITTED THE SAME. ADDITION WAS ACCORDINGLY CONFIRMED AND TH E APPEAL OF THE ASSESSEE WAS DISMISSED. 3. THE LEARNED COUNSEL FOR THE ASSESSEE REITERATED THE SUBMISSIONS MADE BEFORE THE AUTHORITIES BELOW AND S UBMITTED THAT THE EVIDENCES COLLECTED IN THE CASES OF M/S. PRAKAS H MARBLES ITA NO. 1007/AHD/2011 M/S. GAYATRI ENGINEERING CORPORATION VS ITO, W- 2 ( 1), BARODA 3 ENGINEERING CO. AND OTHERS HAVE NOT BEEN SUPPLIED T O THE ASSESSEE. HE HAS FURTHER SUBMITTED THAT IN OTHER SIMILAR TYPE OF CASES THE TRIBUNAL DISALLOWED 10% OF THE PURCHASES. ON THE OT HER HAND, THE LEARNED DR RELIED UPON THE ORDERS OF THE AUTHORITIE S BELOW. 4. I HAVE CONSIDERED THE RIVAL SUBMISSIONS AND THE MATERIAL ON RECORD. IN MY VIEW, THE MATTER REQUIRES RECONSIDERA TION AT THE LEVEL OF THE AO. THE AO RELIED UPON THE EVIDENCES AND MATERI AL DISCOVERED IN THE CASES OF M/S. PRAKASH MARBLES ENGINEERING CO. A ND OTHERS AND ALSO NOTED THAT PURCHASE BILLS WERE PROCURED FROM M /S. GIRNAR SALES CORPORATION AND M/S. PRAKASH MARBLES ENGINEERING CO . AND THESE PARTIES IN THEIR LETTER AND AFFIDAVIT CONFIRMED THE FRAUD BY ISSUING BOGUS BILLS. IN THE CASE OF THE ASSESSEE, THE PURCH ASES ARE STATED TO HAVE BEEN MADE FROM M/S. GIRNAR SALES CORPORATION. NOTHING FURTHER IS STATED IN THE ASSESSMENT ORDER. IT, THEREFORE, A PPEARS THAT THE MATERIAL USED AGAINST THE ASSESSEE DURING THE COURS E OF ASSESSMENT PROCEEDINGS FOR MAKING THE ADDITION ON ACCOUNT OF B OGUS PURCHASES HAVE NOT BEEN PROVIDED TO THE ASSESSEE. MERELY BECA USE IN ONE CASE PURCHASES WERE FOUND TO BE BOGUS WOULD NOT BE A DEF INITE REASON TO BELIEVE THAT THE ASSESSEE ALSO MADE BOGUS PURCHASES . IT IS SETTLED LAW THAT THE AO CANNOT USE EVIDENCE AND MATERIAL AG AINST THE PARTY UNLESS THE SAME IS CONFRONTED TO HIM AT THE ASSESSM ENT STAGE. IN THE ABSENCE OF ANY MATERIAL TO SHOW THAT INCRIMINATING EVIDENCES AND MATERIAL HAVE BEEN SUPPLIED TO THE ASSESSEE, THE OR DERS OF THE AUTHORITIES BELOW CANNOT BE SUSTAINED. I ACCORDINGL Y SET ASIDE THE ORDERS OF THE AUTHORITIES BELOW AND RESTORE THIS IS SUE TO THE FILE OF THE AO WITH DIRECTION TO PROVIDE COPIES OF THE DOCUMENT S, PAPERS AND ITA NO. 1007/AHD/2011 M/S. GAYATRI ENGINEERING CORPORATION VS ITO, W- 2 ( 1), BARODA 4 AFFIDAVITS REFERRED TO IN THE ASSESSMENT ORDER TO T HE ASSESSEE BEFORE CONSIDERING THE ABOVE ISSUE. THE AO SHALL PASS THE ORDER THEREAFTER IN ACCORDANCE WITH LAW BY GIVING REASONABLE SUFFICI ENT OPPORTUNITY OF BEING HEARD TO THE ASSESSEE. 5. IN THE RESULT, ALL THE APPEAL OF THE ASSESSEE IS ALLOWED FOR STATISTICAL PURPOSES. ORDER PRONOUNCED IN THE OPEN COURT. SD/- (BHAVNESH SAINI) JUDICIAL MEMBER DATE : 23 -08-2011 LAKSHMIKANT/- COPY OF THE ORDER FORWARDED TO: 1. THE APPELLANT 2. THE RESPONDENT 3. THE CIT CONCERNED 4. THE CIT(A)- CONCERNED 5. THE DR, ITAT, CONCERNED 6. GUARD FILE BY ORDER D Y. REGISTRAR, ITAT, AHMEDABAD