Shri Anil Gaherilal Duggad, Ahmedabad V. The ACIT, Circle-12, ( Presently Dy. CIT, Circle-6), Ahmedabad

ITA 1087/AHD/2016

• Counselvise Citation: [2018] 125 COUNSELVISE.COM (IT) 8457 (ITAT-AHMEDABAD)
• Duration Of Justice: 1 year(s) 11 month(s) 11 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 10-04-2018
• Appeal Filed By: Assessee
• Order Result: Partly Allowed
• Bench Allotted: Not Allotted
• Assessment Year: 2008-2009
• Appeal Filed On: 29-04-2016
• Result in Favour of: Partly Allowed
• Court: TRIBUNAL
• Assessee Lawyers: G C PIPARA
• Section: 143(3); 131; 148

Judgement Text

, - IN THE INCOME TAX APPELLATE TRIBUNAL AHMEDABAD BENCH SMC BEFORE SHRI RAJPAL YADAV, JUDICIAL MEMBER ./ ITA NO. 1087/AHD/2016 / ASSESSMENT YEAR: 2008-2009 SHRI ANIL GAHERILAL DUGGAD B/2, HARIVADAN FLAT NR. BORINGWALI CHAWL MANINAGAR AHMEDABAD 380 008. PAN : AELPD 5832 J VS ACIT, CIR.12 (PRESENTLY DCIT, CIR.6) NEHRU BRIDGE CORNER ASHRAM ROAD AHMEDABAD. / (APPELLANT) / (RESPONDENT) ASSESSEE BY : SHRI G.C. PIPARA, AR REVENUE BY : SHRI UMASHANKAR PRASAD / DATE OF HEARING : 09/04/2018 /DATE OF PRONOUNCEMENT : 10/04/2018 O R D E R ASSESSEE IS IN APPEAL BEFORE THE TRIBUNAL AGAINST O RDER OF LD.CIT(A)-6, AHMEDABAD DATED 9.3.2016 PASSED FOR TH E ASSTT.YEAR 2008- 09. 2. IN THE FIRST GROUND OF APPEAL, THE ASSESSEE HAS PLEADED THAT THE LD.CIT(A) HAS ERRED IN UPHOLDING REOPENING OF THE A SSESSMENT. HOWEVER, AT THE TIME OF HEARING, THE LD.COUNSEL FOR THE ASSESSEE DID NOT ADVANCE ANY ARGUMENTS IN THIS REGARD, HENCE, IT IS DISMISSED. 3. IN GROUND NO.2, THE ASSESSEE HAS PLEADED THAT TH E LD.CIT(A) HAS ERRED IN CONFIRMING ADDITION OF RS.77,68,002/- BY M AKING AN ENHANCEMENT FROM RS.19,97,584/-. ITA NO.1087/AHD/2016 - 2 - 4. BRIEF FACTS OF THE CASE ARE THAT THE ASSESSEE HA S FILED HIS RETURN OF INCOME ON 29.9.2008 DECLARING TOTAL INCOME AT RS.8, 42,500/-. ASSESSMENT WAS FRAMED UNDER SECTION 143(3) ON 26.11.2010. THE ASSESSMENT WAS THEREAFTER REOPENED AND NOTICE UNDER SECTION 148 WA S ISSUED AND SERVED UPON THE ASSESSEE. ON SCRUTINY OF ACCOUNTS IT REVE ALED TO THE AO THAT THE ASSESSEE IS ENGAGED IN MANUFACTURING AND TRADIN G IN COPPER, BRASS. HE MADE PURCHASES FROM VARIOUS PERSONS. THE LD.AO HAS MADE REFERENCE TO NINE PARTIES TO WHOM SUMMONS UNDER SEC TION 131 WERE ISSUED FOR VERIFYING PURCHASES MADE BY THE ASSESSEE . ACCORDING TO THE AO, SUPPLIERS DID NOT RESPOND TO NOTICES ISSUED BY HIM. HENCE, HE TREATED THE PURCHASES AS BOGUS. THE LD.AO THEREAFT ER OBSERVED THAT OUT OF NINE PARTIES ONLY FIVE ARE HAVING CLOSING BALANC ES WITH THE ASSESSEE. IN OTHER WORDS, THERE ARE OUTSTANDING TRADE CREDITS AGAINST NAMES OF FIVE PERSONS OUT OF THE ALLEGED NINE SUPPLIERS TO WHOM N OTICES WERE ISSUED. THE LD.AO HAS MADE ADDITION OF CLOSING BALANCE APPE ARING AGAINST THESE FIVE PARTIES. HE WORKED OUT ADDITION OF RS.19,94,5 84/-. 5. ON APPEAL, THE LD.CIT(A) HAS ISSUED NOTICES FOR ENHANCEMENT OF THE INCOME. THE LD.CIT(A) DISALLOWED CREDIT PURCHASES MADE BY THE ASSESSEE FROM THESE PARTIES. BASIS FOR MAKING SUCH DISALLOWANCE IS THE ORDER OF THE AO PASSED IN THE ASSTT.YEAR 2009-10. ACCORDING TO THE LD.CIT(A) IN THE ASSTT.YEAR 2009-10, PURCHASES TO T HE TUNE OF RS.38 LAKHS WERE TREATED AS BOGUS AND THIS ORDER OF THE AO WAS CONFIRMED BY THE LD.CIT(A). HENCE, THE LD.CIT(A) CONFIRMED ADDITION OF RS.77,68,002/- BY TREATING THE PURCHASES MADE FROM THESE PARTIES AS B OGUS. 6. BEFORE ME, THE LD.COUNSEL FOR THE ASSESSEE CONTE NDED THAT THE ISSUE IN DISPUTE IS SQUARELY COVERED BY THE DIVISION BENC H OF THE ITAT IN THE ITA NO.1087/AHD/2016 - 3 - CASE OF THE ASSESSEE FOR THE ASSTT.YEAR 2009-10. T HE TRIBUNAL IN PRINCIPLE CONCURRED WITH THE REVENUE AUTHORITIES THAT PURCHAS ES MADE BY THE ASSESSEE WERE NOT GENUINE. HOWEVER, AFTER ANALYZIN G DETAILS I.E. QUANTIFICATION OF PURCHASES AND SALES, THE TRIBUNAL HELD THAT ONLY PROFIT ELEMENT INVOLVED IN THESE PURCHASES WOULD BE TREATE D AS INCOME OF THE ASSESSEE. THE TRIBUNAL HAS CONFIRMED ADDITION TO T HE EXTENT OF 15% OF THE GROSS PURCHASES. IN OTHER WORDS, THE LD.COUNSE L FOR THE ASSESSEE SUGGESTS THAT 15% OF THE RS.77,68,002/- IS TO BE CO NFIRMED. THE LD.DR, ON THE OTHER HAND, RELIED UPON THE ORDER OF THELD.C IT(A), BUT UNABLE TO CONTROVERT CONTENTION OF THE LD.COUNSEL FOR THE ASS ESSEE. 7. I HAVE DULY CONSIDERED RIVAL CONTENTIONS AND GON E THROUGH THE RECORD CAREFULLY. THE LD.CIT(A) HAS RELIED UPON OR DER OF HIS PREDECESSOR IN THE ASSTT.YEAR 2009-10, WHICH HAS BEEN CONSIDERE D BY THE TRIBUNAL IN ITA NO.822/AHD/2014. THE TRIBUNAL HAS UPHELD THE A DDITION TO THE EXTENT OF 15% OF THE ALLEGED PURCHASES. THE FINDIN G RECORDED BY THE TRIBUNAL READS AS UNDER: 5. WE HAVE HEARD BOTH THE PARTIES. LEARNED COUNSEL REPRESENTING ASSESSEE REFERS TO ITS PAPER BOOK INDICATING COPY OF AUDITED ACCOUNTS, TAXED AUDIT REPORT OF THE ABOVE TRADING CONCERN, COPY OF ACCOUN TS OF THE TWO PAYEE ENTERPRISES FOR FINANCIAL YEARS 2008-09 TO 2012-13 IN FORMER PAYEE'S CASE AND FROM FINANCIAL YEARS 2007-08 TO 2012-13 IN LATT ER PARTY'S CASE ALONG WITH BANK STATEMENT EVIDENCE TO BUTTRESS THE FIRST SUBSTANTIVE ARGUMENT SEEKING TO PROVE GENUINENESS OF THE PURCHASES IN QU ESTION. SHRI PIPARA HOWEVER FAILS TO DISPUTE THE FACT THAT THE SAID TWO PAYEES ARE NOT TRACEABLE TILL DATE. WE THEREFORE FIND NO MERIT IN THIS GENUI NENESS ASPECT OF ASSESSEE'S ARGUMENT AS IT WAS ALL THE MORE REASON F OR HIM TO HAVE AT LEAST FILED THE SAID TWO PARTIES' CONFIRMATIONS AND MORE SO IN VIEW OF THE FACT THAT HE HAD BEEN HAVING BUSINESS RELATIONS FOR ABOV E LONG PERIOD OF TIME. WE THUS AFFIRM CIT(A)'S CONCLUSION IN PRINCIPLE THAT THE ASSESSEE HAS NOT BEEN ABLE TO PROVE GENUINENESS OF THE ABOVE PURCHAS ES. ITA NO.1087/AHD/2016 - 4 - 6. LEARNED COUNSEL THEN RAISES AN EQUALLY SIGNIFICA NT PLEA THAT BOTH THE LOWER AUTHORITIES OUGHT TO HAVE DISALLOWED / ADDED ONLY THE PROFIT ELEMENT EMBEDDED IN THE ABOVE PURCHASES IN QUESTION. THE RE VENUE FAILS TO DISPUTE THE FACT THAT THE LOWER AUTHORITIES HAVE DI SALLOWED THOSE PURCHASES WHOSE SALES HAVE BEEN ACCEPTED AS GENUINE STANDING ASSESSED AS SUCH WITHOUT REJECTION OF BOOKS. WE ARE THEREFORE OF THE OPINION THAT THE LEARNED ASSESSING OFFICER OUGHT TO HAVE DISALLOWED ONLY THE PROFIT ELEMENT INSTEAD OF THE ENTIRE PURCHASES. WE NOTICE FROM THE CASE FILE THAT THE ASSESSEE HAD QUOTED UMPTEEN NUMBER OF JUDICIAL PREC EDENTS IN THIS REGARD. HON'BLE JURISDICTIONAL HIGH COURT'S DECISION IN SAN JAY OIL CAKE INDUSTRIES (2009) 316 ITR 274 (GUJ) SUPPORTS THIS LAT TER PLEA. WE ARE THEREFORE OF THE VIEW THAT LARGER INTEREST OF JUSTI CE WOULD BE SERVED IN CASE ONLY THE PROFIT ELEMENT @15% IN THE ABOVE BOGUS PUR CHASES IS DISALLOWED/ADDED RATHER THAN THE ENTIRE AMOUNT. WHI LST CONCLUDING SO, IT IS MADE CLEAR THAT WE HAVE DULY TAKEN INTO ACCOUNT THE FACT THAT THE ASSESSEE IS A TRADER THAN MANUFACTURER SO AS TO ARR IVE AT THE ABOVE DISALLOWANCE PERCENTAGE. WE ACCORDINGLY DIRECT THE ASSESSING OFFICER TO RESTRICT THE IMPUGNED DISALLOWANCE @15%. IT IS MADE CLEAR THAT OUR INSTANT ADJUDICATION SHALL NOT BE TREATED AS A PREC EDENT IN ANY PRECEDING OR SUCCEEDING ASSESSMENT YEAR. LEARNED ASSESSING OF FICER SHALL FRAME CONSEQUENTIAL ASSESSMENT ACCORDINGLY. ITA NO.882/AH D/2014 IS PARTLY ALLOWED. 6. WE COME TO LATTER ASSESSEE'S APPEAL ITA NO.883/A HD/2014 INVOLVING SIMILAR ISSUE OF PURCHASES DISALLOWANCE OF RS.65,05 ,101/- IN RESPECT OF COPPER PURCHASES IN TRADING BUSINESS. BOTH THE LEAR NED REPRESENTATIVES AGREE THAT OUR ABOVE DISCUSSION IN FORMER ASSESSEE' S CASE APPLIES IN TOTO HEREIN AS WELL. WE THUS DIRECT THE ASSESSING OFFICE R TO RESTRICT THE IMPUGNED DISALLOWANCE @15% IN THE INSTANT APPEAL AS WELL WITH ALL OUR STIPULATIONS IN THE PRECEDING PARAGRAPH. ITA NO.883 /AHD/2014 IS ALSO PARTLY ACCEPTED. 8. RESPECTFULLY FOLLOWING ORDER OF THE DIVISION BEN CH AND AFTER GOING THROUGH THE DETAILS, I AM OF THE VIEW THAT THERE IS NO DISPUTE ON FACTS, AND THEREFORE, FOLLOWING ORDER OF THE DIVISION BENC H, I ALLOW THE APPEAL OF THE ASSESSEE PARTLY AND DIRECT THE AO TO ADD 15% (FIFTEEN PERCENT) OF RS.77,68,002/- IN THE TOTAL INCOME OF THE ASSESSEE. ITA NO.1087/AHD/2016 - 5 - 9. GROUND NO.3 IS GENERAL GROUND OF APPEAL, WHICH I S MERELY SUPPORTIVE TO ARGUMENTS OF GROUND NO.2, HENCE, IT I S REJECTED. 10. IN THE RESULT, APPEAL OF THE ASSESSEE IS PARTLY ALLOWED. PRONOUNCED IN THE OPEN COURT ON 10 TH APRIL, 2018. SD/- (RAJPAL YADAV) JUDICIAL MEMBER