Vishal Iron Works Pvt. Ltd., New Delhi V. ACIT, New Delhi

ITA 1061/DEL/2011

• Counselvise Citation: 106120114 RSA 2011
• Duration Of Justice: 1 year(s) 4 month(s) 17 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 13-07-2012
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: H
• Next Hearing Date: 10-07-2012
• Assessment Year: 2003-2004
• Appeal Filed On: 25-02-2011
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: DR B R R KUMAR
• Assessee Lawyers: A K MATTA
• Keywords: Bogus purchase
• Section: 132; 144

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL IN THE INCOME TAX APPELLATE TRIBUNAL IN THE INCOME TAX APPELLATE TRIBUNAL IN THE INCOME TAX APPELLATE TRIBUNAL DELHI DELHI DELHI DELHI BENCH BENCH BENCH BENCH H HH H : NEW DELHI : NEW DELHI : NEW DELHI : NEW DELHI BEFORE SHRI G. BEFORE SHRI G. BEFORE SHRI G. BEFORE SHRI G.D.AGRAWAL, D.AGRAWAL, D.AGRAWAL, D.AGRAWAL, VICE PRESIDENT AND VICE PRESIDENT AND VICE PRESIDENT AND VICE PRESIDENT AND SHRI SHRI SHRI SHRI RAJPAL YADAV RAJPAL YADAV RAJPAL YADAV RAJPAL YADAV, JUDICIAL MEMBER , JUDICIAL MEMBER , JUDICIAL MEMBER , JUDICIAL MEMBER ITA NO ITA NO ITA NO ITA NOS SS S. .. .1057/DEL/2011 TO 1062/DEL/2011 1057/DEL/2011 TO 1062/DEL/2011 1057/DEL/2011 TO 1062/DEL/2011 1057/DEL/2011 TO 1062/DEL/2011 ASSESSMENT YEAR ASSESSMENT YEAR ASSESSMENT YEAR ASSESSMENT YEARS SS S : : : : 1999 1999 1999 1999- -- -2000 TO 2004 2000 TO 2004 2000 TO 2004 2000 TO 2004- -- -05 0505 05 M/S VISHAL IRON WORKS M/S VISHAL IRON WORKS M/S VISHAL IRON WORKS M/S VISHAL IRON WORKS PVT. PVT. PVT. PVT.LTD., LTD., LTD., LTD., C/O MATTA & ASSOCIATES, C/O MATTA & ASSOCIATES, C/O MATTA & ASSOCIATES, C/O MATTA & ASSOCIATES, JD JDJD JD- -- -21 2121 21- -- -C, PITAMPURA, C, PITAMPURA, C, PITAMPURA, C, PITAMPURA, DELHI DELHI DELHI DELHI 110 088. 110 088. 110 088. 110 088. PAN : AAACV9977E. PAN : AAACV9977E. PAN : AAACV9977E. PAN : AAACV9977E. VS. VS. VS. VS. ASSISTANT COMMISSIONER OF ASSISTANT COMMISSIONER OF ASSISTANT COMMISSIONER OF ASSISTANT COMMISSIONER OF INCOME TAX, INCOME TAX, INCOME TAX, INCOME TAX, CIRCLE CIRCLE CIRCLE CIRCLE- -- -17(1), 17(1), 17(1), 17(1), C.R.BUILDING, C.R.BUILDING, C.R.BUILDING, C.R.BUILDING, NEW DELHI. NEW DELHI. NEW DELHI. NEW DELHI. (APPELLANT) (RESPONDENT) APPELLANT BY : SHRI A.K.MATTA, CA. RESPONDENT BY : DR.B.R.R.KUMAR, SR.DR. ORDER ORDER ORDER ORDER PER BENCH PER BENCH PER BENCH PER BENCH : : : : IN ALL THESE APPEALS BY THE ASSESSEE, THE COMMON G ROUND RAISED IS AGAINST THE LEVY OF PENALTY UNDER SECTION 271(1) (C) OF THE INCOME-TAX ACT, 1961 AS UNDER:- ASSESSMENT YEAR PENALTY LEVIED 1999-2000 ` 29,393/- 2000-2001 ` 2,09,590/- 2001-2002 ` 6,68,275/- 2002-2003 ` 11,48,316/- 2003-2004 ` 12,16,654/- 2004-2005 ` 5,95,125/- 2. THE FACTS OF THE CASE ARE THAT A SEARCH WAS COND UCTED UNDER SECTION 132 ON 30.1.2004 AT THE PREMISES OF THE ASS ESSEE WHICH IS ITA-1057 TO 1062/DEL/2011 2 MANAGED BY SHRI ATUL KUMAR BANSAL AND SHRI DEEPAK K HANDELWAL, BEING DIRECTORS OF THE COMPANY. THE SEARCH REVEALE D THAT SHRI ATUL KUMAR BANSAL AND SHRI DEEPAK KHANDELWAL WERE CONDUC TING BUSINESS IN THE NAMES OF VARIOUS FICTITIOUS CONCERNS BESIDES THE ASSESSEE AND THEY WERE OPERATING NUMBER OF BANK ACCOUNTS OF THES E VARIOUS CONCERNS. DURING SEARCH OPERATION, IT WAS FOUND TH AT THERE WERE HUGE DEPOSITS IN BANK ACCOUNTS OF THE VARIOUS FICTITIOUS CONCERNS. SHRI ATUL KUMAR BANSAL OPERATED THESE BANK ACCOUNTS. DURING THE COURSE OF SEARCH, STATEMENT OF SHRI ATUL KUMAR BANSAL WAS REC ORDED ON 30.01.2004 ON OATH UNDER SECTION 132 OF THE I.T.ACT , 1961 AND HE CATEGORICALLY DEPOSED THAT HE WAS CONTROLLING AND O PERATING BANK ACCOUNTS OF VARIOUS CONCERNS AND THAT ALL THESE CON CERNS WERE PROVIDING BOGUS ENTRIES. IN REALITY, NO ACTUAL PUR CHASE/SALE OF GOODS OR THE TRANSFER OF GOODS WERE MADE. STATEMENT OF SHRI ATUL KUMAR BANSAL WAS ALSO RECORDED ON VARIOUS SUBSEQUENT DATES AFTER SEARCH SUCH AS 10.2.2004, 15.2.2004, 19.2.2004, 4.3.2004, 11.3.200 4 ETC. TO FIND OUT THE NAMES OF THE VARIOUS CONCERNS FOR WHICH HE WAS CONDUCTING BOGUS PURCHASES/SALES AND THE MANNER OF HIS OPERATIONS. HE DISCLOSED THAT IN FACT THEY WERE RECEIVING ONLY NOMINAL COMMISSION AG AINST BOGUS PURCHASE/SALE VOUCHERS ISSUED IN VARIOUS NAMES AND THAT THE TRANSACTIONS IN VARIOUS BANK ACCOUNTS IN DIFFERENT NAMES WERE ALL DONE JUST TO EARN COMMISSION INCOME. 3. THE ASSESSING OFFICER ALSO ACCEPTED THAT SHRI AT UL KUMAR BANSAL AND SHRI DEEPAK KHANDELWAL WERE INDULGING IN THE BU SINESS OF ISSUING ACCOMMODATION BILLS AND WERE EARNING INCOME FROM CO MMISSION. THEREFORE, INCOME IS TO BE ASSESSED IN THEIR HANDS. HOWEVER, HE HELD THAT SO FAR AS THE BUSINESS DONE BY THEM IN THE NAM E OF THE ASSESSEE, I.E., M/S VISHAL IRON WORKS, THOUGH THE INCOME IS B EING ASSESSED ON SUBSTANTIVE BASIS IN THE HANDS OF SHRI ATUL KUMAR B ANSAL AND SHRI DEEPAK KHANDELWAL TO PROTECT THE INTEREST OF THE RE VENUE, COMMISSION ITA-1057 TO 1062/DEL/2011 3 INCOME IS ALSO BEING ASSESSED IN THE HANDS OF THE A SSESSEE ON PROTECTIVE BASIS. THE RELEVANT FINDING OF THE ASSE SSING OFFICER IN PARAGRAPH NOS.9, 10 & 11 OF THE ASSESSMENT ORDER FO R AY 1999-2000 IS REPRODUCED BELOW FOR READY REFERENCE:- 9. I HAVE CONSIDERED THE EXPLANATION RENDERED BY ASSESSEE VERY CAREFULLY. IT IS NOTICED THAT THE AS SESSEE HAS NOT PRODUCED ANY EVIDENCE, WHATSOEVER, IN SUPPORT O F THE GENUINENESS AND EXTENT OF INCOME DECLARED IN THE RE TURN OF INCOME. THE ASSESSEE HAS ALSO NOT FURNISHED ANY EV IDENCE IN SUPPORT OF THE EXTENT OF THE COMMISSION REPORTED AT 0.20% (20 PAISE) PER LAKH OR 0.10% (LATER INFORMED) OR RS.60,000/- P.M. (AS STATED IN ANOTHER STATEMENT). THE NATURE AND EXTENT OF EXPENSES INCURRED TO EARN SUCH COMMISSION AND ITS EVIDENCE HAS NOT BEEN FURNISHED. NO DOUBT, IT IS TRUE THAT THE ASSESSEE HAS BEEN GETTIN G COMMISSION ON ALL THE BOGUS BILLINGS, BUT THE EXTEN T OF COMMISSION EARNED, EXTENT OF EXPENDITURE INCURRED A ND NET INCOME LIABLE TO BE TAXED IS NOT VERIFIABLE. ON TH ESE FACTS OF THE CASE, I AM LEFT WITH NO ALTERNATIVE, EXCEPT TO INVOKE THE PROVISIONS OF SECTION 145(3) OF THE I.T.ACT, 19 61 AND COMPUTE INCOME IN THE MANNERS PROVIDED UNDER SECTIO N 144 OF THE I.T.ACT, 1961. 10. KEEPING IN VIEW THE PECULIAR FACTS AND CIRCUMST ANCES OF THE CASE AND PART OF THE EVIDENCE GATHERED DURIN G SEARCH AS MENTIONED AT PAGE NO.24 TO 31 AND PAGE NO .94 TO 97 OF ANNEXURE A-7 AND THE ASSERTIONS MADE BY SH RI ATUL KUMAR BANSAL AND DEEPAK KHANDELWAL I CONSIDER THAT IT WOULD BE REASONABLE TO ESTIMATE NET INCOME FROM COMMISSION (AFTER CONSIDERING EXPENSES LIABLE TO BE ITA-1057 TO 1062/DEL/2011 4 INCURRED) AT 1.5% ON THE DEPOSITS IN THE VARIOUS BA NK ACCOUNTS OF THE ASSESSEE COMPANY. THE TOTAL AMOUNT OF THE TRANSACTIONS/DEPOSITS IN THE BANK ACCOUNT OF TH E ASSESSEE COMPANY HAVE BEEN DETAILED IN ANNEXURE-C, WHICH IS MADE PART OF THIS ORDER. 11. HOWEVER, AS REGARDS TRANSACTIONS IN PARTICULAR DONE IN THE NAME OF M/S VISHAL IRON WORKS (P) LTD., THOU GH CLAIMED TO BE DONE BY SHRI ATUL KUMAR BANSAL AND SH RI DEEPAK KHANDELWAL AND ACCORDINGLY ASSESSED ON SUBSTANTIVE BASIS IN THEIR HANDS, BUT SINCE THE BUS INESS WAS DONE IN THE NAME OF THE COMPANY, TO PROTECT INT EREST OF REVENUE, COMMISSION INCOME EARNED IN RESPECT OF THESE TRANSACTIONS IS BEING ASSESSED IN THE HANDS OF THE COMPANY, ON PROTECTIVE BASIS. 4. THE ASSESSING OFFICER ALSO LEVIED THE PENALTY UN DER SECTION 271(1)(C) IN THE HANDS OF THE ASSESSEE IN RESPECT O F SUCH COMMISSION INCOME WHICH IS ASSESSED ON PROTECTIVE BASIS. THE SAME IS SUSTAINED BY THE CIT(A). HENCE, THESE APPEALS BY THE ASSESSE E. 5. AT THE TIME OF HEARING BEFORE US, IT IS STATED B Y THE LEARNED COUNSEL THAT THE INCOME FROM COMMISSION ON THE ACCO MMODATION BILLS ISSUED BY SHRI ATUL KUMAR BANSAL AND SHRI DEEPAK KH ANDELWAL HAD ALREADY BEEN ASSESSED ON SUBSTANTIVE BASIS IN THEIR HANDS. THAT BOTH SHRI BANSAL AND SHRI KHANDELWAL HAVE NOT DISPUTED T HAT THE INCOME IS ASSESSABLE IN THEIR HANDS BUT HAVE ONLY DISPUTED TH E QUANTUM OF THE INCOME DETERMINED. THAT IN THE FIRST ROUND OF APPE AL, THE MATTER REACHED TO THE ITAT AND EVEN BEFORE THE ITAT, SHRI ATUL KUMAR BANSAL DISPUTED THE QUANTUM OF INCOME DETERMINED IN HIS HA NDS AND THE ITAT, VIDE ITS ORDER DATED 28 TH AUGUST, 2009 IN ITA NOS.1741 TO 1744 AND ITA-1057 TO 1062/DEL/2011 5 1786/DEL/2008, SET ASIDE THE MATTER TO THE FILE OF THE ASSESSING OFFICER FOR REDETERMINATION OF INCOME. HOWEVER, THE DISPUT E EVEN BEFORE THE ITAT WAS ONLY WITH REGARD TO THE QUANTUM OF INCOME TO BE ASSESSED IN THE HANDS OF SHRI ATUL KUMAR BANSAL AND SHRI DEEPAK KHANDELWAL. THERE WAS NO DISPUTE AS TO WHETHER THE INCOME IS TO BE ASSESSED IN THEIR HANDS OR IN THE HANDS OF THE ASSESSEE. THAT AFTER THE SET ASIDE, AGAIN THE INCOME HAS BEEN DETERMINED IN THE HANDS O F SHRI ATUL KUMAR BANSAL AND SHRI DEEPAK KHANDELWAL. THAT IN THE SEC OND ROUND, IN APPEAL BEFORE THE CIT(A), THE INCOME HAS PARTLY BEE N REDUCED BY THE CIT(A) BUT, THERE IS NO DISPUTE THAT INCOME IS TO B E ASSESSED SUBSTANTIVELY IN THE HANDS OF SHRI ATUL KUMAR BANSA L/SHRI DEEPAK KHANDELWAL. HE, THEREFORE, STATED THAT ONCE THE IN COME IS ASSESSED ON SUBSTANTIVE BASIS IN THE HANDS OF SHRI ATUL KUMAR B ANSAL, NO INCOME IS ASSESSABLE IN THE HANDS OF THE ASSESSEE EVEN ON PRO TECTIVE BASIS AND, THEREFORE, THERE IS NO QUESTION OF LEVY OF PENALTY UNDER SECTION 271(1)(C). HE ALTERNATIVELY SUBMITTED THAT ON PROT ECTIVE ASSESSMENT OF INCOME, THERE CANNOT BE ANY PENALTY UNDER SECTION 2 71(1)(C) BECAUSE, AS PER THE OPINION OF THE DEPARTMENT ALSO, INCOME I S TO BE ASSESSABLE IN THE HANDS OF SHRI ATUL KUMAR BANSAL AND NOT THE ASSESSEE. 6. THE LEARNED DR, ON THE OTHER HAND, RELIED UPON T HE ORDERS OF AUTHORITIES BELOW AND STATED THAT THE QUESTION OF D ETERMINATION OF INCOME IN THE HANDS OF SHRI ATUL KUMAR BANSAL/SHRI DEEPAK KHANDELWAL HAS NOT YET BECOME FINAL. THEREFORE, HE SUBMITTED THAT SINCE THE INCOME HAS BEEN ASSESSED IN THE HANDS OF THE ASSESS EE, PENALTY HAS RIGHTLY BEEN LEVIED AND THE SAME SHOULD BE SUSTAINE D. 7. WE HAVE CAREFULLY CONSIDERED THE ARGUMENTS OF BO TH THE SIDES AND PERUSED THE MATERIAL PLACED BEFORE US. THE FAC TS OF THE CASE HAVE ALREADY BEEN NARRATED ABOVE IN PARAGRAPH NO.2 FROM WHICH, IT IS AN ADMITTED POSITION THAT SHRI ATUL KUMAR BANSAL AND S HRI DEEPAK ITA-1057 TO 1062/DEL/2011 6 KHANDELWAL WERE CARRYING ON THE BUSINESS OF ISSUING ACCOMMODATION BILLS TO VARIOUS PARTIES BY USING THE NAME OF VARIO US CONCERNS. SHRI ATUL KUMAR BANSAL IN HIS STATEMENT RECORDED DURING THE COURSE OF SEARCH ON VARIOUS DATES ADMITTED THIS FACT AND ALSO EXPLAINED THE MANNER IN WHICH BUSINESS WAS BEING CONDUCTED BY HIM . IN THE ASSESSMENT ORDER IN THE CASE OF THE ASSESSEE WHICH IS REPRODUCED IN PARAGRAPH NO.3 ABOVE, THE ASSESSING OFFICER HAS ALS O RECORDED THE FINDING THAT INCOME IS TO BE ASSESSED IN THE HANDS OF SHRI ATUL KUMAR BANSAL AND SHRI DEEPAK KHANDELWAL. WE HAVE SEEN TH E ORDER OF THE APPELLATE AUTHORITIES PRODUCED BEFORE US IN QUANTUM APPEAL IN THE CASE OF SHRI ATUL KUMAR BANSAL WHEREIN HE HAS DISPU TED THE QUANTUM OF THE COMMISSION INCOME DETERMINED IN HIS HANDS. HOWEVER, HE HAS NOT CLAIMED THAT THE INCOME DOES NOT BELONG TO HIM OR THAT IT IS ASSESSABLE IN THE HANDS OF THE CONCERN IN WHOSE NAM ES THE BOGUS BILLS WERE ISSUED. MOREOVER, THE ISSUE BEFORE US IS NOT ABOUT THE ASSESSABILITY OF INCOME BUT ABOUT THE JUSTIFICATION FOR LEVY OF PENALTY UNDER SECTION 271(1)(C). EVEN AS PER THE REVENUE, THE INCOME IS NOT ASSESSABLE IN THE HANDS OF THE ASSESSEE BUT ASSESSA BLE IN THE HANDS OF SHRI ATUL KUMAR BANSAL/SHRI DEEPAK KHANDELWAL. HE ASSESSED THE INCOME OF THE ASSESSEE SIMPLY TO PROTECT THE INTERE ST OF THE REVENUE, MEANING THEREBY, THAT IF IN THE APPELLATE PROCEEDIN GS A VIEW IS TAKEN THAT THE INCOME DOES NOT BELONG TO SHRI ATUL KUMAR BANSAL/SHRI DEEPAK KHANDELWAL, THE DEPARTMENT SHOULD NOT BE REMEDY-LES S TO ASSESS THE INCOME IN THE HANDS OF THE CONCERN IN WHOSE NAME TH E BILL WAS ISSUED. BUT, EVEN AS PER THE REVENUE, THE INCOME DOES NOT B ELONG TO THE ASSESSEE, THEREFORE, ON THE ABOVE FACTS, THE ASSESS EE CANNOT BE HELD TO BE GUILTY OF CONCEALMENT OF INCOME FOR WHICH PEN ALTY UNDER SECTION 271(1)(C) CAN BE LEVIED. THE PENALTY, IF ANY, CAN BE LEVIED IN THE HANDS OF THE PERSON TO WHOM THE INCOME ACTUALLY BELONGS A ND NOT TO THE ASSESSEE IN WHOSE HANDS THE DEPARTMENT ASSESSED THE INCOME ON ITA-1057 TO 1062/DEL/2011 7 PROTECTIVE BASIS. IN VIEW OF THE ABOVE, WE CANCEL THE PENALTY LEVIED UNDER SECTION 271(1)(C) IN THE HANDS OF THE ASSESSE E FOR ALL THE YEARS. 8. IN THE RESULT, ALL THE APPEALS OF THE ASSESSEE A RE ALLOWED. DECISION PRONOUNCED IN THE OPEN COURT ON 13 TH JULY, 2012. SD/- SD/- ( (( (RAJPAL YADAV RAJPAL YADAV RAJPAL YADAV RAJPAL YADAV) )) ) (G.D.AGRAWAL) (G.D.AGRAWAL) (G.D.AGRAWAL) (G.D.AGRAWAL) JUDICIAL JUDICIAL JUDICIAL JUDICIAL MEMBER MEMBER MEMBER MEMBER VICE PRESIDENT VICE PRESIDENT VICE PRESIDENT VICE PRESIDENT DATED : 13.07.2012 VK. COPY FORWARDED TO: - 1. APPELLANT : M/S VISHAL IRON WORKS PVT.LTD., M/S VISHAL IRON WORKS PVT.LTD., M/S VISHAL IRON WORKS PVT.LTD., M/S VISHAL IRON WORKS PVT.LTD., C/O MATTA & ASSOCIATES, C/O MATTA & ASSOCIATES, C/O MATTA & ASSOCIATES, C/O MATTA & ASSOCIATES, JD JDJD JD- -- -21 2121 21- -- -C, PITAMPURA, C, PITAMPURA, C, PITAMPURA, C, PITAMPURA, DELHI DELHI DELHI DELHI 110 110 110 110 088. 088. 088. 088. 2. RESPONDENT : ASSISTANT COMMISSIONER OF ASSISTANT COMMISSIONER OF ASSISTANT COMMISSIONER OF ASSISTANT COMMISSIONER OF INCOME TAX, INCOME TAX, INCOME TAX, INCOME TAX, CIRCLE CIRCLE CIRCLE CIRCLE- -- -17(1), 17(1), 17(1), 17(1), C.R.BUILDING, C.R.BUILDING, C.R.BUILDING, C.R.BUILDING, NEW DELHI. NEW DELHI. NEW DELHI. NEW DELHI. 3. CIT 4. CIT(A) 5. DR, ITAT ASSISTANT REGISTRAR