ITO, Nashik V. Shri Tribhuvanlal Kanhaiyalal Kalya, Nashik

ITA 1263/PUN/2013

• Counselvise Citation: [2014] 140 COUNSELVISE.COM (IT) 79851 (ITAT-PUNE)
• Duration Of Justice: 11 month(s) 25 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 30-05-2014
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: A
• Assessment Year: 2009-2010
• Appeal Filed On: 04-06-2013
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: HEMANT KUMAR C LUEVA
• Keywords: Bogus purchase
• Section: 143(3)

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL PUNE BENCHE A, PUNE BEFORE SHRI SHAILENDRA KUMAR YADAV, JUDICIAL MEMBER AND SHRI G.S. PANNU, ACCOUNTANT MEMBER ITA NO.1263/PN/2013 (ASSESSMENT YEAR : 2009-10) INCOME TAX OFFICER, WARD 1(3), NASHIK. . APPELLANT VS. SHRI TRIBHUVANLAL KANHAIYALAL KALYA, TARAKUNJ, NEW ADGAON NAKA, PANCHAVATI, NASHIK. PAN : ABGPK0634H . RESPONDENT DEPARTMENT BY : MR. HEMANT KUMAR C LUEVA ASSESSEE BY : MR. DEVENDRA JAIN DATE OF HEARING : 29-05-2014 DATE OF PRONOUNCEMENT : 30-05-2014 ORDER PER G. S. PANNU, AM THE CAPTIONED APPEAL BY THE REVENUE IS DIRECTED AGA INST AN ORDER OF THE COMMISSIONER OF INCOME TAX (APPEALS)-I, NASHIK DATED 18.03.2013 WHICH, IN TURN, HAS ARISEN FROM AN ORDER DATED 28.12.2011 PASSED BY THE ASSESSING OFFICER U/S 143(3) OF THE INCOME-TAX ACT, 1961 (IN SHORT THE ACT) PERTAINING TO THE ASSESSMENT YEAR 2009-10. 2. IN THIS APPEAL, THE REVENUE HAS AGGRIEVED WITH T HE ACTION OF THE CIT(A) IN DELETING AN ADDITION OF RS.20,05,428/- WHICH WAS MADE BY THE ASSESSING OFFICER BY TREATING THE PURCHASES AS NOT GENUINE. 3. IN BRIEF, THE FACTS ARE THAT ASSESSEE IS AN INDI VIDUAL WHO WAS FOUND TO BE, INTER-ALIA, ENGAGED IN THE BUSINESS OF EXPORT O F GRAPES AND CIVIL CONSTRUCTION. FOR THE ASSESSMENT YEAR UNDER CONSID ERATION, ASSESSEE FILED HIS RETURN OF INCOME DECLARING TAXABLE INCOME OF RS.7,5 7,640/- AND AGRICULTURAL INCOME OF RS.87,000/-. WHILE EXAMINING THE INCOME OF ASSESSEES PROPRIETARY CONCERN OF M/S KALYA EXPORTS, WHICH WAS ENGAGED IN THE BUSINESS OF EXPORT OF ITA NO.1263/PN/2013 A.Y. 2009-10 GRAPES, THE ASSESSING OFFICER HELD THAT PURCHASES O F GRAPES MADE FROM ONE, SMT. PADMA HIRAWAT AMOUNTING TO RS. 20,05,428/- WER E NOT GENUINE. THE ASSESSING OFFICER FOUND THAT ON THE BASIS OF CIRCUM STANTIAL EVIDENCE THAT THE AFORESAID AMOUNT OF PURCHASES APPEARED TO BE IN-GEN UINE. THE ASSESSING OFFICER FOUND THAT THE PURCHASES WERE CLAIMED TO HA VE BEEN MADE FROM THE SAID SUPPLIER DURING THE PERIOD 02.4.2008 TO 17.04. 2008 WHEREAS THE PAYMENTS WERE MADE BY THE ASSESSEE ONLY IN THE MONT H OF MARCH, 2009. THE PAYMENT WAS STATED TO HAVE BEEN MADE BY WAY OF BANK ING CHANNELS. ACCORDING TO THE ASSESSING OFFICER, IT IS IMPROBABL E THAT A FARMER WOULD HAVE SOLD THE GOODS AS EARLY AS IN FEBRUARY TO APRIL, 20 08 AND WAITED FOR PAYMENT TILL MARCH, 2009. THE ASSESSING OFFICER ALSO NOTED THAT IN CASE OF OTHER PURCHASES, THE PURCHASE VOUCHERS MENTIONED THE PLAC E FROM WHERE THE GRAPES ARE PURCHASED. IN THE CASE OF PURCHASE FROM SMT. PADMA HIRAWAT EXCEPT IN THE CASE OF ONE PURCHASE BILL, IN ALL OTH ER BILLS THE PLACE OF PURCHASE WAS NOT MENTIONED. THE ASSESSING OFFICER ALSO POIN TED OUT THAT IN THE CASE OF OTHER PURCHASES, THE PAYMENTS WERE REGULARLY MADE A FTER A REASONABLE PERIOD WHEREAS IN THIS CASE THE PAYMENT WAS MADE AFTER AN UNDUE DELAY. FOR ALL THE ABOVE REASONS, THE ASSESSING OFFICER HELD THE PURCH ASES CLAIMED TO HAVE BEEN MADE FROM SMT. PADMA HIRAWAT OF RS.20,05,428/- AS NON-GENUINE AND ADDED THE SAME TO THE RETURNED INCOME AS UNEXPLAIN ED PURCHASES. THE CIT(A) HAS DELETED THE ADDITION BY MAKING OF FOLLOW ING DISCUSSION :- 5.3 I HAVE CAREFULLY CONSIDERED THE FACTS OF THE C ASE AND THE RIVAL CONTENTIONS. ON PERUSAL OF THE SAME, IT HAS BEEN NO TICED THAT THE AO HAS TREATED THE PURCHASES TO THE EXTENT OF RS.20,05.428 /- FROM SMT. PADMA HIRAWART AS NON-GENUINE FOR THE REASON THAT THE PAY MENT OF GRAPES PURCHASED IN APRIL 2008 HAS BEEN MADE IN MARCH 2009 I.E. AFTE R ABOUT 11 MONTHS STATING THAT GENERALLY THE PAYMENT IS MADE WITHIN ABOUT TWO MONTHS FROM THE DATE OF PURCHASE. IN THIS REGARD, IT HAS ALSO BEEN NOTICED THAT THE APPELLANT HAS MAINTAINED REGULAR BOOKS OF ACCOUNT INCLUDING DETAI LED QUANTITATIVE STOCK RECORD IN THE COURSE OF BUSINESS AND HAS AUDITED TH E SAME AND THE PURCHASES, SALES AND PROFIT HAS BEEN CERTIFIED TO B E TRUE AND FAIR BY THE AUDITOR. IT HAS ALSO BEEN NOTICED FROM THE BANK ACC OUNT OF THE APPELLANT THAT THE APPELLANT HAS RECEIVED SUBSTANTIAL SALE PROCEED S OF GRAPES ON 30/03/2009 FROM ALFRED PRICE AND SONS LTD. TO THE EXTENT OF RS .29,88,666/- AND, THEREFORE, THE BANK BALANCE HAS BECOME RS.33,32,412.91. PRIOR TO THAT THE APPELLANT'S BALANCE WAS NOT SUFFICIENT TO MAKE PAYMENT OF RS.20 ,05,428/- TO SMT. PADMA HIRAWART. AFTER RECEIVING THE ABOVE AMOUNT FROM THE CUSTOMER MENTIONED ITA NO.1263/PN/2013 A.Y. 2009-10 ABOVE TOWARDS SALE PROCEEDS OF GRAPES, THE APPELLAN T HAS IMMEDIATELY PAID ON THE SAME DATE THE OUTSTANDING AMOUNT OF RS.20,05 ,428/- BY BANK CHEQUES TO SMT. PADMA SANJAY HIRAWART TOWARDS PURCHASE OF G RAPES. IT IS VERY REASONABLE THAT THE TRADER SHALL FIRST RECOVER SALE PROCEEDS OF THE GOODS SOLD AND THEN SHALL MAKE PAYMENT OF THE SAME TO THE SUPP LIER OF THE GOODS. IT HAS ALSO BEEN OBSERVED THAT THE APPELLANT HAS FILED ON RECORD OF THE AO CONFIRMATION LETTER, COPY OF BANK PASS BOOK, PAN XE ROX, 7/12 EXTRACT AND COPY OF INCOME TAX RETURN OF SMT. PADMA HIRAWART PROVING THE FACTS AND CONTENTIONS ABOUT GENUINENESS OF THE PURCHASES FROM SMT. PADMA HIRAWART. 5.3.1 IN VIEW OF THE ABOVE FACTS, THE AO IS NOT JUSTIFIED IN TREATING THE PURCHASES AS BOGUS FOR THE REASON OF LATE PAYMENT I N RESPECT OF GOODS PURCHASED. THE AO HAS NOT BROUGHT ON RECORD ANY COR ROBORATIVE EVIDENCE TO PROVE THAT THE PURCHASES OF RS.20,05,428/- ARE BOGU S. ON PERUSAL OF THE ASSESSMENT ORDER, IT HAS ALSO BEEN NOTICED THAT THE AO HAS MADE THE VARIOUS ASSUMPTIONS AND PRESUMPTIONS FOR TREATING THE PURCH ASES OF RS.20,05,428/- FROM SMT. PADMA HIRAWART AS BOGUS PURCHASES, WHICH IS NOT PERMISSIBLE AS PER SETTLED LAW. THE ASSESSING OFFICER HAS TRIED TO COMMENT ON THE WAY IN WHICH THE BUSINESS IS TO BE RUN BY THE ASSESSEE AND HAS ADVISED THE MANNER IN WHICH THE BUSINESS HAS TO BE CONDUCTED. THIS IS AGAINST SETTLED LEGAL POSITION, BECAUSE, IT IS HIS SOLE PREROGATIVE OF A BUSINESSMAN TO CONDUCT HIS BUSINESS IN THE MANNER, HE THINKS BEST KEEPING IN V IEW THE BUSINESS INTERESTS IN SHORT AS WELL AS LONG TERM. 4. AGAINST THE AFORESAID ACTION OF THE CIT(A), REVE NUE IS IN APPEAL BEFORE US. AT THE TIME OF HEARING, THE LEARNED DEPARTMENT AL REPRESENTATIVE SUBMITTED THAT THE CIT(A) HAS COMPLETELY OVERLOOKED THE CIRCUMSTANTIAL EVIDENCE POINTED OUT BY THE ASSESSING OFFICER WHICH SHOWED THAT THERE WAS UNDUE DELAY IN MAKING PAYMENT TO SMT. PADMA HIRAWAT TOWARDS PURCHASE OF GRAPES. ACCORDING TO HIM, THE ENTIRE CONSPECTUS OF FACTS RELATING TO THE IMPUGNED PURCHASE SHOWED THAT IT WAS NOT A TRANSACT ION CARRIED OUT IN THE NORMAL COURSE OF BUSINESS. 5. ON THE OTHER HAND, THE LEARNED REPRESENTATIVE FO R THE RESPONDENT- ASSESSEE HAS RELIED UPON THE ORDER OF THE CIT(A) IN SUPPORT OF THE CASE OF THE ASSESSEE. IT IS FURTHER, POINTED OUT THAT THE PURC HASES MADE FROM THE SAID CONCERN WERE GENUINE INASMUCH AS THE ASSESSEE HAD P URCHASED DURING APRIL, 2008 AS WELL AS IN THE MONTH OF MARCH, 2009 AND FOR THAT MATTER, A COPY OF ACCOUNT OF THE SAID CONCERN DULY CONFIRMED BY THE S ELLER SMT. PADMA SANJAY HIRAWAT WAS REFERRED TO. THE LEARNED REPRESENTATIV E FURTHER POINTED OUT THAT THE CIT(A) HAS APPRECIATED THAT THE SAID SUPPLIED O F GRAPES WAS IDENTIFIABLE ITA NO.1263/PN/2013 A.Y. 2009-10 AND THAT THE TRANSACTIONS WERE EFFECTED THROUGH BAN KING CHANNELS. THE LEARNED REPRESENTATIVE ALSO POINTED OUT THAT THERE WAS NO DISPUTE THAT ASSESSEE HAS INDEED SOLD THE GRAPES AND THE SAME WO ULD NOT HAVE BEEN POSSIBLE, IN CASE THE PURCHASES WERE NOT EFFECTED. IT WAS ALSO POINTED OUT THAT BEFORE THE LOWER AUTHORITIES, ASSESSEE HAD FURNISHE D DETAILS OF THE TRANSPORTATION OF GRAPES, FARMER FROM WHOM GRAPE IS PURCHASED, DETAILS OF LOADING AND THE TRANSPORTER WHO TRANSPORTED THE GRA PES ALONG WITH RESPECTIVE REGISTRATION NUMBER OF THE TRANSPORT VEHICLE, ETC.. ON THIS BASIS, IT IS SOUGHT TO BE POINTED OUT THAT DELAYED PAYMENT TO THE SUPPLIED CANNOT BE A GROUND TO TREAT THE PURCHASE AS BOGUS. 6. WE HAVE CAREFULLY CONSIDERED THE RIVAL SUBMISSIO NS. IN THIS CASE, THE CONTROVERSY IS IN RESPECT OF PURCHASE OF RS.20,05,4 28/- MADE BY THE ASSESSEE FROM ONE SMT. PADMA HIRAWAT. THE GENUINENESS OF TH E SAID PURCHASE HAS BEEN DOUBTED BY THE ASSESSING OFFICER PRIMARILY FOR THE REASON THAT THERE WAS AN UNDUE DELAY IN EFFECTING PAYMENT TO THE SAID SUP PLIER. OF COURSE, IT IS NOT DISPUTED THAT THE PAYMENT HAS BEEN MADE THROUGH ACC OUNT PAYEE CHEQUES. IT IS ALSO EVIDENT THAT THE ASSESSEE FURNISHED A CONFI RMATION FROM THE SAID SUPPLIER, COPY OF THE BANK PASSBOOK, COPY OF PAN CA RD, COPY OF INCOME-TAX RETURN AND ALSO THE 7/12 EXTRACT OF THE AGRICULTURA L LAND BELONGING TO THE SAID SUPPLIER. ON THE BASIS OF THE AFORESAID MATERIAL, THE CIT(A) HAS FOUND IT FIT TO ACCEPT THE GENUINENESS OF THE PURCHASES NOTWITHSTAN DING THAT THERE WAS DELAY IN MAKING PAYMENT TO THE CREDITOR. 7. IN OUR CONSIDERED OPINION, THE SINGULAR FACTOR O F UNDUE DELAY IN MAKING PAYMENT TO THE CREDITOR CANNOT BE A GROUND TO HOLD THE PURCHASE AS IN- GENUINE. OF COURSE, SUCH A FACT-SITUATION WOULD BE GOOD GROUND TO FURTHER INVESTIGATE THE MATTER, SO HOWEVER, THERE HAS TO BE CERTAIN CLINCHING EVIDENCE TO SHOW THAT EITHER THE PURCHASES WERE NOT AFFECTED AT ALL OR THAT THE FACT- SITUATION WAS CONTRARY TO THE MATERIAL ON RECORD. ON BOTH THESE ASPECTS, IN OUR ITA NO.1263/PN/2013 A.Y. 2009-10 VIEW, THE ONUS WAS ON THE ASSESSING OFFICER TO ESTA BLISH SO, WHICH HAVING REGARD TO THE MATERIAL ON RECORD, DOES NOT APPEAR T O HAVE BEEN ESTABLISHED BY THE ASSESSING OFFICER. THEREFORE, WE ARE INCLINED TO AFFIRM THE CONCLUSION DRAWN BY THE CIT(A), WHICH IN OUR VIEW, IS JUSTIFIE D HAVING REGARD TO THE MATERIAL AND EVIDENCE ON RECORD. IN THE RESULT, TH E REVENUE FAILS ON THIS ASPECT. 8. RESULTANTLY, THE APPEAL OF THE REVENUE IS DISMIS SED. ORDER PRONOUNCED IN THE OPEN COURT ON 30 TH MAY, 2014. SD/- SD/- (SHAILENDRA KUMAR YADAV) (G . S. PANNU) JUDICIAL MEMBER ACCOUNT ANT MEMBER PUNE, DATED : 30 TH MAY, 2014 SUJEET COPY OF THE ORDER IS FORWARDED TO : - 1) THE ASSESSEE; 2) THE DEPARTMENT; 3) THE CIT(A)-I, NASHIK; 4) THE CIT-I, NASHIK; 5) THE DR A BENCH, I.T.A.T., PUNE; 6) GUARD FILE. BY ORDER //TRUE COPY// SR. PRIVATE SECRETARY I.T.A.T., PUNE