The ACIT, Circle-4, Surat V. M/s. Suryanarayan Silk Mills Pvt.Ltd., Surat

ITA 1131/AHD/2013

• Counselvise Citation: [2017] 127 COUNSELVISE.COM (IT) 8685 (ITAT-AHMEDABAD)
• Duration Of Justice: 4 year(s) 4 month(s) 5 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 28-08-2017
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: C
• Next Hearing Date: 04-07-2017
• Assessment Year: 2003-2004
• Appeal Filed On: 23-04-2013
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: PRAJANA PARAMITA
• Assessee Lawyers: M K PATEL
• Keywords: Bogus purchase
• Section: 143(3); 133(6)

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL AHMEDABAD C BENCH AHMEDABAD BEFORE, SHRI S. S. GODARA, JUDICIAL MEMBER AND SHRI AMARJIT SINGH, ACCOUNTANT MEMBER ITA NO. 1131/AHD/2013 (ASSESSMENT YEAR: 2003-04) A.C.I.T., CIRCLE-4, ROOM NO. 223, AAYAKAR BHAVAN, MAJURAGATE, SURAT APPELLANT VS. M/S. SURYANARAYAN SILK MILLS PVT. LTD., GANDHI COLONY, A. K. ROAD, VARACHHA, SURAT RESPONDENT PAN: AADCS3852N /BY REVENUE : PRAJANA PARAMITA, SR. D.R. /BY ASSESSEE : SHRI M. K. PATEL, A.R. /DATE OF HEARING : 10.08.2017 /DATE OF PRONOUNCEMENT : 28.08.2017 ORDER PER S. S. GODARA, JUDICIAL MEMBER THIS REVENUES APPEAL FOR ASSESSMENT YEAR 2003-04 A RISES AGAINST THE CIT(A)-II, SURATS ORDER DATED 14.02.2013, IN CASE NO. CAS-II/58/TRFD/11- 12, PARTLY REVERSING ASSESSING OFFICERS ACTION ADD ING BOGUS PURCHASES OF RS.3,06,53,333/- TO GP RATE @ 12.5%, IN PROCEEDINGS U/S. 143(3) OF THE INCOME TAX ACT, 1961; IN SHORT THE ACT. HEARD BOTH SIDES. CASE FILE PERUSED. ITA NO. 1131/AHD/13 (ACIT VS. M/S. SURYANARAYAN SI LK MILLS PVT. LTD.) A.Y. 2003-04 - 2 - 2. WE FIRST OF ALL TAKE ON RECORD REVENUES REVISED GROUND IS FILED VIDE PETITION DATED 31.08.2016. THE RELEVANT FACTS ARE IN A VERY NARROW COMPASS. THE ASSESSEE ADMITTEDLY PURCHASED GREY CLOTH ALLEGE DLY THROUGH SIX SUPPLIERS NAMELY RESHMA TEXTILES, Y. Z. TRADERS, R. K. TEXTIL ES, KAJ TEXTILES, M. TEX AND MAYURI TEXTILES INVOLVING SUMS OF RS.51,12,520/ -, RS.76,03,947/-, RS.40,85,027/-, RS.55,52,736/-, 48,10,530/- AND RS. 34,88,573/-; RESPECTIVELY, TOTALING TO RS.3,06,53,333/- IN QUESTION. THE ASSE SSING OFFICER OBSERVED IN ASSESSMENT ORDER THAT THE RELEVANT NOTICES SENT TO THEM U/S. 133(6) OF THE ACT HAD NOT YIELDED ANY RESPONSE. RATHER THE SAME HAD BEEN RETURNED WITH REMARKS NO SAID PERSON OR DENIAL AT THE BEHEST OF THE SAID SUPPLIERS. HE THEREFORE REJECTED ASSESSEES EXPLANATION TO HAVE P URCHASED ITS GREY CLOTH FROM THEM AS BROKER TO TREAT ALL OF ITS PURCHASES A S NON GENUINE IN ASSESSMENT ORDER DATED 29.03.2006. HE FURTHER ACCUSED THE ASS ESSEE TO HAVE PURCHASED THROUGH CASH MODE BUT HAVING TAKEN ACCOMMODATION BI LLS FROM ITS SUPPLIERS BY CROSSED CHEQUES. ALL THIS RESULTED IN THE IMPUG NED DISALLOWANCE OF NON GENUINE PURCHASE. 3. THE CIT(A) PARTLY REVERSES THE IMPUGNED DISALLOW ANCE AS UNDER: 4. I HAVE CAREFULLY CONSIDERED THE FACTS OF THE CA SE, REMAND REPORT OF AO AND THE SUBMISSIONS OF APPELLANT. FROM THE FACTS, IT IS APP ARENTLY CLEAR THAT THE ASSESSEE HAS NOT BEEN ABLE TO PROVE THE GENUINENESS OF PURCHASES . HE HAS NOT EVEN TRIED TO BRING ANY NEW EVIDENCE OR DETAILS TO STRENGTHEN HIS CASE' . REPEATEDLY HE HAS BEEN FILLING THE SAME SET OF SUBMISSIONS DURING APPELLATE PROCEEDING S, REMAND PROCEEDINGS AND EVEN DURING PROCEEDINGS BEFORE ITAT. EVEN DURING REMAND PROCEEDINGS, WHEN AO REQUESTED HIM TO FURNISH THE COPY OF BANK STATEMENT TO VERIFY THE GENUINENESS OF PAYMENTS MADE BY HIM, NO COMPLIANCE WAS MADE BY APP ELLANT. ALL THESE ACTIONS OF APPELLANT SHOWS THAT HE IS NOT SERIOUS ABOUT HIS EF FORTS TO PROVE THE GENUINENESS OF PURCHASES. THE COPIES OF AFFIDAVITS FILED BY APPELL ANT ARE ALSO IDENTICAL IN EACH AND EVERY CASE WITH SAME WORDINGS EXCEPT THE AMOUNTS AN D NAMES OF SELLER PARTIES. ONLY PARA 4 OF THE AFFIDAVITS IS RELEVANT AND IN THAT PA RA ALSO IT IS NOT CLEARLY MENTIONED THAT WHO HAS SOLD THE GOODS TO WHOM AND THE PAYMENTS WER E MADE FROM/ TO WHOM. AT THE COST OF REPETITION, PARA 4 OF THE AFFIDAVITS IN ONE CASE IS REPRODUCED AS UNDER. (I) DURING THE FINANCIAL YEAR 2002-03, WE HAVE RECE IVED VARIOUS ORDERS FROM M/S. SURYANARAYAN SILK MILLS PVT. LTD., 1307-08, NE W TEXTILE MARKET, RING ROAD, SURAT FOR SUPPLY OF GREY ART SILK CLOTH AND A CCORDINGLY WE HAD ARRANGED AND SUPPLIED GOODS WORTH RS. 51,12,520/- TO M/S. RESHMA TEXTILES , NATRAJ INDUSTRIAL ESTATE, DHASTIPURA, SURAT. ITA NO. 1131/AHD/13 (ACIT VS. M/S. SURYANARAYAN SI LK MILLS PVT. LTD.) A.Y. 2003-04 - 3 - FURTHER, THE ASSESSEE HAS NOT BEEN ABLE TO PRODUCE ANY OF THE CREDITORS OR EVEN TO THE BROKERS THROUGH WHOM PURCHASES WERE EXECUTED. THE N OTICES SENT BY AO REMAINED UNSERVED OR IF SERVED THE PROPERTIES DENIED TO HAVE MADE ANY SALES TO THE APPELLANT. THE ONUS WAS ON ASSESSEE TO PROVE THAT PURCHASES AR E GENUINE WHICH HE FAILED TO DISCHARGE. HOWEVER, IT IS APPARENT FORM THE RECORD THAT THE AO HAS MADE AN INVESTIGATION AND EXAMINED ALL THE RELEVANT FACTS A ND HAS RIGHTLY COME TO THE CONCLUSION THAT THE ABOVE CREDITORS ARE NOT GENUINE . THE AO HAS ALSO RIGHTLY COME TO A CONCLUSION THAT THE BOOKS OF ACCOUNT OF THE APPELLA NT ARE NOT CORRECT AND ARE INCOMPLETE IN THE SENSE THAT THE SAME DO NOT REFLEC T THE ACTUAL STATE OF AFFAIRS OF THE APPELLANT. IT IS EVIDENT FROM THE ABOVE THAT THE AO HAS BEEN ABLE TO PROVE THAT THE PURCHASES MADE BY APPELLANT FROM THE AFORESAID PART IES ARE NOT GENUINE AND HE HAS MERELY OBTAINED BOGUS PURCHASE BILLS WITH INFLATED COST. CONSIDERING ALL THESE FACTS, IT IS HELD THAT THE SAID PURCHASES OF RS. 3,06,53,333/ - ARE BOGUS PURCHASES. BUT, IN MY OPINION, IT WOULD NOT BE FAIR JUST TO ADD THE ENTIR E AMOUNT TO THE INCOME OF APPELLANT. SUCH CASES OF BOGUS PURCHASES HAVE BEEN DEALT WITH BY HON'BLE JURISDICTIONAL ITAT IN MANY CASES. IN THE CASE OF VIJAY PROTEINS LTD., REP ORTED IN 58 ITD 428, 25% OF SUCH PURCHASES WERE DISALLOWED AND ADDED TO THE INCOME O F ASSESSEE. HOWEVER, FOLLOWING THE RATIO OF THE DECISION IN THE CASE OF VIJAY PROT EINS (SUPRA), HON'BLE ITAT HAS DECIDED THE ISSUE IN MANY OTHER CASES ALSO BUT THE PERCENTAGE HAS BEEN RESTRICTED TO 12.5%. SOME OF THE CASES ARE AS UNDER. I. M/S. BHOLANATH POLY FAB P. LTD. -VS-ITO IN IT A NO. 137/AHD/2009 II. M/S. RAJ EXPORTS-VS-ACIT IN ITA NO. 1827/AHD/ 2005 III. M/S. SANKET STEEL TRADERS -VS- ITO IN ITA NO. 2801/AHD/2008 IV. SMT. SAJJANDEVI B. JAIN -VS- ITO, OSD-1 IN ITA NO. 609/AHD/2009 THUS, IN THE CASE OF APPELLANT ALSO, I HEREBY APPLY THE RATIO GIVEN BY HON'BLE ITAT IN THE DECISIONS OF AFORESAID CASES AND RESTRICT THE A DDITION TO 12.5% OF THE BOGUS PURCHASES MADE BY APPELLANT. THUS, 12.5% OF RS. 3,0 6,53,333/- WHICH COMES TO RS. 38,31,666/- IS ADDED TO THE INCOME OF APPELLANT IN PLACE OF ADDITION OF RS. 3,02,53,360/- MADE BY AO. THE AO IS HEREBY DIRECTED TO MAKE THE ADDITION OF RS. 38,31,666/-.' 4. WE HAVE HEARD RIVAL SUBMISSIONS. THERE IS NO DIS PUTE ABOUT THE FACT FIRST OF ALL THAT THIS TRIBUNALS CO-ORDINATE BENCH DECISION IN ACIT VS. M/S. SUNDAY EXPORTS LTD. ITA NO. 764/AHD/2013 IN CASE OF ASSESSEES SISTER CONCERN (NOT DISPUTED AT REVENUES BEHEST) HAS ALRE ADY UPHELD THE CIT(A)S IDENTICAL ACTION IN RESTRICTING THE IMPUGNED NON GE NUINE PURCHASE DISALLOWANCE TO GP RATE @ 12.5%. LEARNED DEPARTMEN TAL REPRESENTATIVE QUOTES HONBLE JURISDICTIONAL HIGH COURTS DECISION IN N. K. PROTEINS LTD. VS. DCIT, TAX APPEAL NO. 242/2003 DECIDED ON 20.06.2016 AS UPHELD IN HONBLE APEX COURTS ORDER IN SLP (C) CC NO.963/2017 DECIDE D ON 16.01.2017 DISALLOWING SIMILAR ENTIRE PURCHASES. WE HOWEVER F IND THAT A SEARCH HAD BEEN CONDUCTED IN SAID CASE LEADING TO SEIZURE RECOVERY OF BLANK SIGNED CHEQUES, ITA NO. 1131/AHD/13 (ACIT VS. M/S. SURYANARAYAN SI LK MILLS PVT. LTD.) A.Y. 2003-04 - 4 - VOUCHERS OF NUMBER OF CONCERNS ALONGWITH ENDORSEMEN T, BLANK PURCHASE BILL BOOKS, LETTER HEAD FROM THE SEARCHED PREMISES. THE RE ARE NO SUCH FACTS IN THE INSTANT CASE. LEARNED CIT(A) AS WELL AS ASSESSING OFFICER HAVE NOT INDICATED ANY MATERIAL WHICH COULD PROVE THAT ASSESSEES PAYE ES IN QUESTION ARE NOT THE ACTUAL SUPPLIERS TO HAVE RECEIVED THE PAYMENTS IN Q UESTION IN BROKER CAPACITY. THE REVENUES NEXT JUDGMENT CITED IS HONBLE JURISD ICTIONAL HIGH COURTS JUDGMENT IN ACIT VS. PAWANRAJ B BOKADIA TAX APPEAL NO. 2345 OF 2009 DECIDED ON 27.09.2011. THE SAME IS ALSO NOT HELD T O BE APPLICABLE IN FACTS OF THE INSTANT CASE. THE SUPPLIERS CONCERNED IN THE S AID CASE HAD ADMITTEDLY IN THEIR RESPECTIVE STATEMENTS OF HAVING PROVIDED ACCO MMODATION ENTRIES. WE REPEAT THAT THERE IS NO SUCH MATERIAL IN THE CASE F ILE BEFORE US. WE THEREFORE FIND NO REASON TO INTERFERE IN CIT(A)S ABOVE EXTRA CTED FINDINGS PARTLY REVERSING THE IMPUGNED DISALLOWANCE FROM ENTIRE PUR CHASES TO GP @ 12.5%. 5. THIS REVENUES APPEAL IS DISMISSED. [PRONOUNCED IN THE OPEN COURT ON THIS THE 28 TH DAY OF AUGUST, 2017.] SD/- SD/- ( AMARJIT SINGH ) (S. S. GODARA ) ACCOUNTANT MEMBER JUDIC IAL MEMBER AHMEDABAD: DATED 28/08/2017 TRUE COPY S.K.SINHA / COPY OF ORDER FORWARDED TO:- / REVENUE 2 / ASSESSEE ! / CONCERNED CIT 4 !- / CIT (A) ( )*+ ,--. . /0 / DR, ITAT, AHMEDABAD 1 +23 / GUARD FILE. BY ORDER / . // . /0