Shimmer Chemicals Pvt.Ltd., Baroda V. The ACIT.,Circle-4, Baroda

ITA 1015/AHD/2012

• Counselvise Citation: [2017] 130 COUNSELVISE.COM (IT) 8976 (ITAT-AHMEDABAD)
• Duration Of Justice: 4 year(s) 10 month(s) 11 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 21-03-2017
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: SMC
• Next Hearing Date: 23-01-2017
• Assessment Year: 2007-2008
• Appeal Filed On: 10-05-2012
• Result in Favour of: Partly Allowed
• Court: TRIBUNAL
• Department Lawyers: OM PRAKASH MEENA
• Assessee Lawyers: V.K. SHAH
• Keywords: Bogus purchase
• Section: 32; 147; 131; 68; 246; 69; 145; 27; 148; 54; 37; 6; 56; 263; 63; 132; 12; 28; 144; 10; 90; 154; 2; 11; 15; 271(1)(b); 139; 92; 133(6)

Judgement Text

, , ,, ,* * * * IN THE INCOME TAX APPELLATE TRIBUNAL A BENCH, AHMEDABAD BEFORE SHRI N.K. BILLAIYA, ACCOUNTANT MEMBER AND SHRI MAHAVIR PRASAD, JUDICIAL MEMBER !# I.T.A. NO.1015/AHD/2012 ( / ASSESSMENT YEAR : 2007-08) SHIMMER CHEMICALS PVT. LTD. BLOCK NO.338, PADRA BORSAD ROAD, VILLAGE MUJPUR DIST : VADODARA # VS. THE ACIT CIRCLE -4, VADODARA. $ # % & # PAN/GIR NO. : AACCS 5505 M ( !$' / APPELLANT ) .. ( ($' # RESPONDENT ) !$') # APPELLANT BY : SHRI V.K. SHAH, A.R. ($'*) / RESPONDENT BY : SHRI OM PRAKASH MEENA, SR. D.R. + ,*-. / DATE OF HEARING 23/01/2017 /012*-. / DATE OF PRONOUNCEMENT 20/03/2017 3# O R D E R PER SHRI MAHAVIR PRASAD, JUDICIAL MEMBER : THIS APPEAL HAS BEEN PREFERRED BY THE ASSESSEE I S DIRECTED AGAINST THE ORDER OF THE COMMISSIONER OF INCOME TAX(APPEALS )-III, BARODA, DATED 14/03/2012 FOR THE ASSESSMENT YEAR (AY) 2007- 08. ITA NO.1015/AHD /2012 SHIMMER CHEMICALS PVT. LTD. VS. ACIT ASST.YEAR 2007-08 - 2 - 2. ASSESSEE/APPELLANT HAS BEEN TAKEN FOLLOWING GROU NDS OF APPEAL:- I. T HE LEARNED AO HAS ERRED IN LAW AND ON FACT IN TREAT ING THE PURCHASE OF FIREWOOD OF RS.18,81,680/- FROM JAY MAT AJI FIREWOOD, VANIYA PATIDAR FALIA, AT & PO. : MUVAL, T AL. : PADRA DIST. VADODARA AS BOGUS PURCHASE AND THE LD. COMMIS SIONER OF INCOME TAX (APPEALS)-III, VADODARA HAS ERRED IN LAW AND ON FACTS IN UPHOLDING THE DISALLOWANCE TO THE EXTENT O F 50% I.E. RS.9,40,840/-. 3. THE RELEVANT FACTS AS CULLED OUT FROM THE MATERI ALS ON RECORD ARE AS UNDER:- THE APPELLANT IS A PVT. LTD CO. ENGAGED IN THE BUSI NESS OF MANUFACTURING OF BENZYL CHLORIDE AND BENZYL DEHYDE. 4. DURING THE YEAR UNDER CONSIDERATION THE APPELLAN T COMPANY HAS PURCHASED FIREWOOD AMOUNTING TO RS. 18,81,680/- FRO M JAY MATAJI FIREWOOD SITUATED AT VANIYA PATIDAR FALIYA, AT & PO : MUVAL, TAL: PADRA DIST. VADODARA. THE PARTY HAS CLOSED DOWN THE BUSIN ESS THEREFORE NOTICE SENT U/S. 133(6) WAS RETURNED. THE INSPECTOR DEPLOY ED BY THE LD. AO ALSO COULD NOT FOUND THE PARTY VIZ. JAY MATAJI FIREWOOD AS THE PARTY HAS CLOSED DOWN THEIR BUSINESS. THEREFORE, THE LD. AO A DDED THE ENTIRE AMOUNT AS BOGUS PURCHASE. ITA NO.1015/AHD /2012 SHIMMER CHEMICALS PVT. LTD. VS. ACIT ASST.YEAR 2007-08 - 3 - 5. AGAINST THE SAID ADDITION, THE APPELLANT HAD PRE FERRED FIRST APPEAL. THE HONBLE COMMISSIONER OF INCOME TAX (APPEAL)-III , VADODARA VIDE HIS ORDER DATED 14.03.2012 DIRECTED DISALLOWANCE TO THE EXTENT OF 50% OF THE PAYMENTS MADE TOWARDS PURCHASE OF FIREWOOD FROM JAY MATAJI FIREWOOD AND ACCORDINGLY UPHELD THE DISALLOWANCE TO THE EXTENT OF 50% I.E. RS.9,40,840/-. 6. APPELLANT COMPANY HAS PURCHASED FIREWOOD FROM J AY MATAJI FIREWOODS DURING THE YEAR FOR THE PURPOSE OF FUEL. THE SAID PARTY I.E JAY MATAJI FIREWOODS HAS CLOSED DOWN ITS ACTIVITIES AND ACCORDINGLY THE APPELLANT COMPANY HAS ALSO GRADUALLY STOPPED PURCHA SING FROM THE SAID PARTY. THIS CAN BE EVIDENCED FROM THE LEDGER ACCOUN TS OF JAY MATAJI FIREWOOD FROM THE BOOKS OF THE APPELLANT BOOKS OF A CCOUNTS FOR F.Y. 2006-07 & 2007-08. 7. THE FIREWOOD IS BEING PURCHASE AS FUEL IN PLACE OF LDO(LOCAL DIESEL OIL), AS IT IS COST EFFECTIVE. NAME REQUIREMENT TOTAL COST AVG. COST FOR 1 KG OUTPUT OF STEAM LDO 1 LITRE RS. 30/- RS. 3/- FIREWOOD 3 KG RS. 9/- RS. 1/- ITA NO.1015/AHD /2012 SHIMMER CHEMICALS PVT. LTD. VS. ACIT ASST.YEAR 2007-08 - 4 - 8. THEREFORE FIREWOOD IS BEING PURCHASED AS FUEL TO MINIMIZE THE COST AS WELL AS TO INCREASE THE PROFIT. 9. A COMPARATIVE STATEMENT FOR F.Y. 2004-05, 2005-0 6 AND 2006-07 WAS SUBMITTED DURING ASSESSMENT PROCEEDING WHICH JU STIFIES THE AVERAGE CONSUMPTION OF FUEL REMAINED ALMOST CONSISTENT FOR ALL THE 3 YEARS. ACCORDINGLY EVEN IF IT IS BELIEVED THAT THE APPELLA NT HAD DEBITED BOGUS PURCHASES, THE CONSUMPTION OF FUEL CAN NEVER MATCH WITH OTHER YEARS. IT WAS FURTHER SUBMITTED BY THE LD. AO REGULARLY IN RE SPECTIVE YEAR BY A/C PAYEE CHEQUE AND REFLECTED IN THE BANK STATEMENTS A S WELL AS BANK BOOK. 10. IT IS BEING HELD BY VARIOUS COURTS THAT IN CASE OF NON-AVAILABILITY OF CREDITOR/PARTY HAS BEEN MADE, VARIOUS OTHER ASPECTS ARE ALSO TO BE CONSIDERED. 11. SIMPLY ON NON-AVAILABILITY OF PARTY, THE SAID P URCHASES CANNOT BE ADDED ON ACCOUNT OF BOGUS PURCHASES. 12. IN THE CASE OF CIT VS. SHIMMER CHEMICALS PVT. L TD. HONBLE HIGH COURT DELETED BOGUS PURCHASES, WHERE ASSESSEE HAS M ADE PURCHASE BY A/C PAYEE CHEQUE RECEIPT OF BOOKS. ITA NO.1015/AHD /2012 SHIMMER CHEMICALS PVT. LTD. VS. ACIT ASST.YEAR 2007-08 - 5 - 13. RESPECTFULLY, FOLLOWING THE JUDGMENT OF THE JUR ISDICTIONAL HIGH COURT, WE ARE DELETING THE ADDITION MADE BY THE AO AND SUBSEQUENTLY CONFIRMED BY THE CIT AND LD. AO IS DIRECTED TO GIVE EFFECT TO THE SAME. 14. IN THE RESULT, APPEAL FILED BY THE ASSESSEE IS ALLOWED. THIS ORDER PRONOUNCED IN OPEN COURT ON 20 / 0 3 /201 7 SD/- SD/- ( ) 4 5 (N.K. BILLAIYA) (MA HAVIR PRASAD) ACCOUNTANT MEMBER JUDICIAL MEMBER AHMEDABAD; DATED 20/03/2017 PRITI YADAV, SR. PS !'#$ %$' # COPY OF THE ORDER FORWARDED TO : 1. !$' / THE APPELLANT 2. ($' / THE RESPONDENT. 3. 67- + 8- / CONCERNED CIT 4. + 8- 4!5 / THE CIT(A)-III, BARODA. 5. 9:;-67 !.!672 ! / DR, ITAT, AHMEDABAD 6. ;<=, # GUARD FILE. & ' / BY ORDER, (9-- //TRUE COPY// (/' )* ( DY./ASSTT.REGISTRAR) , / ITAT, AHMEDABAD TRUE COPY