ACIT, New Delhi V. M/s. Jotindra Steels & Tubes Ltd., Faridabad

ITA 1158/DEL/2017

• Counselvise Citation: [2022] 104 COUNSELVISE.COM (IT) 1566 (ITAT-DELHI)
• Duration Of Justice: 5 year(s) 7 month(s) 8 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 05-10-2022
• Appeal Filed By: Department
• Order Result: PartlyAllowed
• Bench Allotted: D
• Next Hearing Date: 28-09-2022
• Assessment Year: 2012-2013
• Appeal Filed On: 27-02-2017
• Result in Favour of: Revenue
• Court: TRIBUNAL
• Department Lawyers: VIVEK SHARMA
• Keywords: Bogus purchase; Search and seizure; Document seized; Documents seized
• Section: 132; 69A

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL, DELHI ‘D’ BENCH, NEW DELHI BEFORE SHRI SAKTIJIT DEY, JUDICIAL MEMBER, AND SHRI N.K. BILLAIYA, ACCOUNTANT MEMBER ITA No. 501/DEL/2017 [A.Y 2011-12) ITA No. 1158/DEL/2017 [A.Y 2012-13) The A.C.I.T Vs. M/s Jotindra Steels & Tubes Limited Central Circle – 3 14/3, Mathura Road, Village Mewla New Delhi Maharajpur, Faridabad, Haryana PAN: AADCT 1186 G (Applicant) (Respondent) Assessee By : Ms. Supriya Mehta, CA Department By : Shri Vivek Sharma, CIT- DR Date of Hearing : 29.09.2022 Date of Pronouncement : 06.10.2022 ORDER PER N.K. BILLAIYA, ACCOUNTANT MEMBER:- These two separate appeals by the Revenue are preferred against two separate orders of the CIT(A) – 23, New Delhi dated 30.11.2016 & 30.12.2016 pertaining to Assessment Years 2011-12 and 2012-13 respectively. 2 2. Since common grievance is involved in both the appeals, they were heard together and are disposed of by this common order for the sake convenience and brevity. 3. The common grievance in both the appeals relates to the addition made by the Assessing Officer on account of bogus purchases though the quantum may differ in each year. 4. Briefly stated, the facts of the case are that search and seizure proceedings u/s 132 of the Income-tax Act, 1961 [hereinafter referred to as 'The Act'] were conducted in the case of Mauria Udyog Ltd and its group concerns. 5. During the course of scrutiny assessment proceedings, the assessee was asked to explain the purchases made from M/s Ganesh Steel Syndicate, M/s Pacific Sales Corporation, M/s G.P. Trading Company and M/s Nayak Sales Corporation. The Assessing Officer found that as per the seized documents which contain the assessment order passed by the Deputy Commissioner Commercial Tax, Ghaziabad, purchases made from the aforesaid parties were found bogus and, accordingly, disallowed by the Commercial Tax Authority. 3 6. Further post search enquiry and also during the course of assessment proceedings, on the spot verification was done by the department and the Income tax Inspector reported that the aforesaid parties were found non-existent at the given addresses. Accordingly, the assessee was asked to explain the transaction with supporting documentary evidences. 7. In its reply, the assessee stated that the Additional Commissioner Appeal (2), Ghaziabad has remanded back to the Assessing Officer with a direction to look into the facts based on the assessee and the remand proceedings are yet to be initiated. 8. The assessee further replied that the assessment proceedings have been finalized and customers, whose sales were not accepted, have been found in order and additional demand has been created. Therefore, there is every probability that sales of parties mentioned will also be accepted as genuine sale. 9. This reply of the assessee was not accepted by the Assessing Officer who placed strong reliance on the report of the Income-tax Inspector which is exhibited in the assessment order and drawing 4 support from the decision of the Deputy Commissioner, Commercial Taxes, Ghaziabad, the Assessing Officer concluded that the purchases made from parties mentioned elsewhere were bogus and added the same to the returned income of the assessee. 10. The assessee strongly agitated the matter before the ld. CIT(A) and contended that sales have been accepted by the Assessing Officer and no defect has been pointed out. Therefore, the Assessing Officer ought to have accepted the purchases also. 11. After considering the facts and submissions and after verifying the purchases/invoices raised, the ld. CIT(A) opined that payments have been made to the aforesaid parties through Account Payee cheques for which confirmations have been filed by the parties duly supported with affidavits. 12. The ld. CIT(A) further observed that since the impugned credit was denied by VAT authorities, the assessee has not claimed input credit as expenses and all the sales made out of impugned purchases are duly accounted for in the regular books of account and are matching with VAT returns and books of account are supported by purchases and sales invoices. 5 13. The ld. CIT(A) was convinced with the genuineness of the purchases and deleted the impugned addition. 14. Before us, ld. DR strongly placed reliance on the findings of the Assessing Officer and heavily relied on the decision of the Hon'ble Punjab and Haryana High Court in the case of Shree Krishana Kripa Feeds 410 ITR 533. 15. Per contra, the ld. counsel for the assessee supporting the decision of the ld. CIT(A) also filed written synopsis and relied upon several judicial decisions mentioned therein. 16. We have carefully considered the orders of the authorities below and written synopsis alongwith judicial decisions mentioned duly considered. There is no dispute that the findings of the Assessing Officer are based upon the findings given by the Commercial Taxes Officer and the findings of the first appellate authority are based on the appellate order of the commercial Taxes Department. 6 17. It is also not in dispute that on field enquiry made by the Assessing Officer, the parties were found to be non-existent at the given addresses though the assessee/ld. counsel for the assessee has be consistently harping upon the fact that purchases are supported by invoices/bills and corresponding sales have been accepted by the Assessing Officer, therefore, no adverse inference should be drawn. 18. In such transactions, we are of the opinion that goods are purchased from grey market at very nominal rates and to enter the purchases in the regular books of account, the assessee arranges accommodation bills from accommodation entry providers. Keeping this in mind, we are of the considered opinion that the assessee did make purchases and, thereafter, arranged accommodation bills/ invoices and entered the same in its regular books of account. 19. We find that while deleting the impugned additions, the ld. CIT(A) observed that even if the purchases could have been proved to be bogus, only the gross profit related to the quantity purchased and sold could have been considered as income. Though the ld. CIT(A) fairly made the observations, but did not do anything. 7 20. A perusal of the profit and loss account for F.Ys. 2009-10, 2010- 11 and 2011-12 is as under: F.Y F.Y F.Y 2009-10 2010-11 2011-12 Sales 4878299692 5023689123 4559619281 Profit before Taxation 29605417 41867254 26457419 Net Profit 0.606% 0.833% 0.580% 21. The average profit comes to 0.673% and if the same is applied on the impugned bogus purchases for Assessment Year 2011-12, addition would come to Rs. 9,48,468/- and in Assessment Year 2012-13 it would be Rs. 1,86,217/- 22. Our estimation is supported by the findings of the Hon'ble High Court of Delhi in the case of Bhawani Portfolio Pvt Ltd 158/2020 and 163/2020 order dated 12.07.2021 wherein the Hon'ble High Court has observed: 8 “This court is also of the view that the Tribunal being the last fact finding authority, was entitled to guess work and arrive at the ball park commission” 23. Considering the peculiar facts of the case in hand in totality, we direct the Assessing Officer to restrict the disallowance to Rs. 9,48,468/- in Assessment Year 2011-12 and Rs. 1,86,217/- for Assessment Year 2012-13. Thus, this common ground in both the appeals is partly allowed. 24. In ITA No. 1158/DEL/2017, the other ground taken by the Revenue relates to the deletion of addition of Rs. 35.80 lakhs made by the Assessing Officer on account of unexplained cash. 25. At the very outset, the ld. counsel for the assessee stated that the impugned issue has been decided by this Tribunal in favour of the assessee and against the Revenue in earlier Assessment Year in ITA No. 4401/DEL/2017 order dated 18.01.2022. 26. The ld. DR fairly conceded to this and raised no objection. 9 27. We have given thoughtful consideration to the orders of the authorities below qua the issue. We find that the ld. CIT(A), while deleting the impugned addition has followed his own order given in the case Bihariji Ispat Udyog Ltd and Maurya Udyog Ltd. As mentioned elsewhere, this issue was considered by the Tribunal in ITA No. 4401/DEL/2017. The relevant findings of the co-ordinate bench read as under: “21. We have heard the rival arguments made by both the sides, perused the orders of the AO and the CIT(A) and the paper book filed on behalf of the assessee. We have also considered the various decisions cited before us. We find, the AO, in para 6.7 of the assessment order, observed that cash payment of Rs.4,50,00,000/- from Amrapali Group are related to M/s Mauria Udyog Ltd., M/s Bihariji Ispat Udyog Ltd and M/s Jotindra Steel & Tubes Ltd. and, accordingly, made the addition in the hands of these three companies on the basis of their ITA No.4401/Del/2017 turnover with Amrapali group of companies the details of which are already reproduced in para 4 above. We find, the ld.CIT(A) deleted the addition the reasons of which have already been reproduced in the preceding paragraph. We do not find any infirmity in the order of the CIT(A) on this issue. We find, the addition made by the AO in the case of Maurya Udyog Ltd. was deleted by the CIT(A) relying upon the order passed by him in the case of Bijariji Ispat Udyog Ltd. We find, the appeal filed by the 10 Revenue was dismissed by the Tribunal vide ITA No.6660/Del/2016, order dated 29.11.2018 by observing as under:- "10. A plain reading of the aforesaid section clearly shows that it is applicable in a case where the assessee is found to be owner of any money, bullion, jewellery or other valuable article. The facts of the case in hand show that the assessee was never found to be in possession of any real money. The addition having been made only on the strength of some notings found in some file extracted from the computer of Shri Rohtash, clearly establish that the provisions of section 69A of the Act do not apply. We agree with the contention of the ld. AR that the foundation itself is weak and the addition should not survive. However, the Assessing Officer made the addition on the strength of the statement of Shri Rohtash wherein he has admitted that Rs. 1 crore has been received. Exhibit 85 of the paper books reveals that on the date of receipt of the impugned amount, the same was returned back to Amrapali Group by M/s Bihariji group. The entries of Rs. 50 lakhs each on 11.12.2012 and 01.02.2013 can be seen from the said Exhibit 85 of the paper book. This means that the date on which the alleged Rs. 1 crore was received, on the very same day the same was returned back. 11. More importantly, there is no mention of the assessee's name in the impugned document. The Assessing Officer has simply assumed that the reference to the impugned amount is in relation to the assessee. In our understanding, no addition can be made on the basis of presumptions and surmises. Assuming, yet not accepting that the amounts were received by the assessee, the same were 11 returned back on the very same date as per Exhibit 85 of the paper book. Even on this count, addition is uncalled for. 12. In the result, the appeal filed by the Revenue is dismissed." ITA No.4401/Del/2017 22. Since the facts of the instant case are identical to the facts of the case decided by the Tribunal in the case of Maurya Udyog Ltd. (supra), therefore, respectfully following the decision of the Tribunal, we do not find any infirmity in the order of the CIT(A). Accordingly, the same is upheld and the ground raised by the Revenue is dismissed.” 28. Respectfully following the findings of the co-ordinate bench [supra], this ground in Assessment Year 2012-13 is dismissed. 29. In the result, the appeals of the Revenue in ITA Nos. 501/DEL/2017 and 1158/DEL/2018 are partly allowed. The order is pronounced in the open court on 06.10.2022. Sd/- Sd/- [SAKTIJIT DEY] [N.K. BILLAIYA] JUDICIAL MEMBER ACCOUNTANT MEMBER Dated: 06 th October, 2022. 12 VL/ Copy forwarded to: 1. Appellant 2. Respondent 3. CIT 4. CIT(A) 5. DR Asst. Registrar, ITAT, New Delhi Date of dictation Date on which the typed draft is placed before the dictating Member Date on which the typed draft is placed before the Other Member Date on which the approved draft comes to the Sr.PS/PS Date on which the fair order is placed before the Dictating Member for pronouncement Date on which the fair order comes back to the Sr.PS/PS Date on which the final order is uploaded on the website of ITAT Date on which the file goes to the Bench Clerk Date on which the file goes to the Head Clerk The date on which the file goes to the Assistant Registrar for signature on the order Date of dispatch of the Order