The ITO, Ward-5(3), Baroda V. Shri Amrathbhai P.Prajapati, Baroda

ITA 1269/AHD/2010

• Counselvise Citation: [2013] 120 COUNSELVISE.COM (IT) 0474 (ITAT-AHMEDABAD)
• Duration Of Justice: 2 year(s) 10 month(s) 15 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 08-03-2013
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: D
• Next Hearing Date: 08-01-2013
• Assessment Year: 2007-2008
• Appeal Filed On: 23-04-2010
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: D P GUPTA
• Keywords: Bogus purchase
• Section: 131

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL AHMEDABAD D BENCH AHMADABAD BEFORE SHRI MUKUL KR. SHRAWAT , JUDICIAL MEMBER AND SHRI T.R. MEENA, ACCOUNTANT MEMBER ITA NO. 1269/AHD/2010 ASSESSMENT YEAR :2007-08 INCOME-TAX OFFICER, WARD- 5(3), AAYAKAR BHAVAN, RACE COURSE CIRCLE, BARODA V/S . SHRI AMRATHBHAI P. PRAJAPATI 233, RAJRATNA SOCIETY, OPP. POLO GROUND, NR. BAGIKHANA, BARODA. PAN NO. ABLPP8814E (APPELLANT) .. (RESPONDENT) BY APPELLANT SHRI D.P. GUPTA, CIT D.R. /BY RESPONDENT NONE /DATE OF HEARING 0 8 . 0 1 .201 3 /DATE OF PRONOUNCEMENT 08.03.2013 O R D E R PER : T.R.MEENA, ACCOUNTANT MEMBER THIS IS AN APPEAL AT THE BEHEST OF THE REVENUE WHIC H HAS EMANATED FROM THE ORDER OF CIT(A)-V, BARODA, DATED 26.02.201 0 FOR A.Y. 2007-08. THE SOLE GROUND OF APPEAL OF THE REVENUE IS AGAINST RES TRICTING THE ADDITION OF RS.7,81,54,543/- TO RS.19,53,864/- ON ACCOUNT OF BO GUS ACCOMMODATION SALES BILLS ISSUED BY THE ASSESSEE AND DETERMINING THE PE RCENTAGE OF INCOME AT 2.5% ON IT. 2. THE FACTUAL MATRIX OF THE CASE IS A UNDER: ITA NO. 1269/AHD/10 A.Y. 07-08 PAGE 2 IN ASSESSEES BANK ACCOUNTS IN THE NAME OF BHAGYO DAY ENTERPRISE AND BHAVNA TRADING CO., WITH HDFC BANK, THERE WERE HUGE DEPOSITS, NECESSARY INQUIRIES WERE CONDUCTED B Y THE DY.D.I.T.(INV.)-I, BARODA. DURING THE COURSE OF IN QUIRY, IT WAS GATHERED BY THE DDIT THAT THE ASSESSEE WAS ENGAGED IN ISSUE OF BOGUS SALES BILLS WITHOUT EFFECTING ACTUAL SALES. IN HIS STATEMENT, IT WAS ADMITTED BY THE ASSESSEE THAT ANY PERSON NEEDED BOGUS SALE BILLS, HE CONTACTED THE ASSESSEE AND USED TO GIVE C HEQUE TO THE ASSESSEE AND ASSESSEE WAS ISSUING BOGUS SALE BILLS FOR THE AMOUNT OF CHEQUE TO THE CONCERNED PARTY. THE ASSESSEE RET URNED THE MONEY BY ISSUE OF BEARER CHEQUE FROM HIS BANK ACCOU NT OF THE AMOUNT NEARER TO THE BOGUS BILL. DURING THE COURSE OF INQUIRY, STATEMENT OF THE ASSESSEE WAS RECORDED U/S.131 OF T HE ACT ON 08/09/2006 BY THE DDIT(INV), BARODA. IN REPLY TO Q UESTION NO.5, IT WAS EXPLAINED BY THE ASSESSEE THAT THERE WAS NO ACT UAL TRADING I.E. SALE PURCHASE IN BHAGYODAY ENTERPRISE AND BHAVNA TRADING CO., PROPRIETARY CONCERNS OF THE ASSESSEE. IT WAS ALSO CONFESSED THAT HE HAS ISSUED BOGUS SALES BILLS TO VARIOUS PERSONS IN THE NAME OF BHAGYODAY ENTERPRISE AND BHAVNA TRADING CO., ON COMMISSION/DALAI BASIS. ACTUALLY HE HAS NOT PURCHA SED ANY GOODS OR NOT SOLD ACTUAL GOODS. FOR ISSUE OF BOGUS BILL, AS PER STATEMENT, HE WAS EARNING COMMISSION AT THE RATE OF RS.1500/- PER BOGUS BILL TRANSACTION OF RS.1 LAKH. IN REPLY TO QUESTION NO. 29 OF THE STATEMENT TO DDIT, IT WAS EXPLAINED THAT AS AGAINST THE ISSUE OF BOGUS BILLS, NO BOGUS PURCHASE BILLS WERE OBTAINED BY HIM. IN REPL Y TO QUESTION NO.15, IT WAS EXPLAINED THAT HE HAS NO ANY DETAILS IN RESPECT OF CHEQUES DEPOSITED IN HIS BANK ACCOUNTS I.E. BHAVNA TRADING CO., AND BHAGYODAY ENTERPRISE. THE LD. A.O. GAVE THE REASONABLE OPPORTUNITY OF BEI NG HEARD ON THE BASIS OF ENTRIES MADE IN THE BANK ACCOUNT SALE & PURCHASE EX CEEDING RS.50,000/- ITA NO. 1269/AHD/10 A.Y. 07-08 PAGE 3 ALONGWITH COMPLETE BOOKS OF ACCOUNTS. THE APPELLAN T ADMITTED THAT THERE WAS NEITHER PURCHASE NOR SALE, HE GAVE THE BOGUS SALE B ILLS WITHOUT EFFECTING ACTUAL SALES AND EARNED COMMISSION ON IT. THE LD. A.O. AL SO CONSIDERED THE STATEMENT RECORDED BY THE DDIT (INV.)-I, BARODA, U/ S. 131 OF THE IT ACT, DATED 12.09.2006. THE ASSESSEES BANK ACCOUNTS WERE ALSO VERIFIED BY THE A.O. IN WHICH TOTAL DEPOSIT OF RS.7,81,54,543/- AND TOTAL W ITHDRAWAL OF RS.7,80,48,150/- WERE MADE BY THE APPELLANT. AFTER CONSIDERING THE ASSESSEES REPLY, TOTAL ADDITION OF RS.7,81,54,543/ - WAS MADE UNDER THIS HEAD. BESIDES THIS, THE ALTERNATIVE INCOME ALSO DETERMINE D @ 2.5% ON TOTAL CHEQUE AMOUNT DEPOSITED WITH BANK ACCOUNTS. 3. BEING AGGRIEVED BY THE ORDER OF THE A.O., THE AS SESSEE CARRIED THE MATTER BEFORE THE CIT(A) WHO HAD PARTLY ALLOWED THE APPEAL. THE OPERATIVE PART OF THE ORDER IS AS UNDER: 4.5 I HAVE CAREFULLY CONSIDERED THE FACTS OF THE C ASE, THE ASSESSMENT ORDER, THE SUBMISSIONS OF THE APPELLANT AND THE APPELLATE ORDERS FOR A.Y. 2005-06 AND A.Y. 2006-07. IT IS AN ADMITTED FACT THAT BOOKS OF ACCOUNTS AND COMPLETE S UPPORTING DETAILS ARE NOT MAINTAINED BY THE APPELLANT. THE APPELLANT HAS STATED BEFORE THE DEPARTMENT THAT HE IS A PETTY SCRAP DEAL ER AND THAT HE HAS BEEN INVOLVED IN ISSUING BOGUS BILLS WITHOUT ACTUAL SALES ON COMMISSION BASIS AND THIS ASPECT HAS NOT BEEN REFUT ED BY THE A.O. AS STATED IN THE BODY OF ASSESSMENT ORDER BY THE AO THAT THERE WERE DEPOSITS AS WELL AS CORRESPONDING WITHDRAWALS IN TH E BANK ACCOUNTS, WHICH WAS MAINTAINED BY THE APPELLANT, ITSELF STREN GTHENS THE STAND OF THE APPELLANT. AS STATED BEFORE INVESTIGATION W ING THE APPELLANT RECEIVES THE CHEQUE FOR THE VALUE OF THE BOGUS BILL WHICH WAS ITA NO. 1269/AHD/10 A.Y. 07-08 PAGE 4 DEPOSITED IN HIS BANK ACCOUNT AND FOR ALMOST THE SA ME AMOUNT, BEARER CHEQUE USED TO BE ISSUED TO THE PARTY CONCER NED, WHICH WAS WITHDRAWN IMMEDIATELY AND THAT APPELLANT USED TO EA RN COMMISSION AT THE RATE OF RS.150/- PER RS.10,000/-. UNDER THE SE CIRCUMSTANCES, IT WOULD NOT BE PROPER TO SUBJECT ALL THE CREDITS T O TAX BUT ONLY THE COMMISSION INCOME OUGHT TO HAVE BEEN TAXED. CONSID ERING THESE FACTS, IN EARLIER YEARS, THE ADDITION TO THE EXTENT OF 2.5% OF THE CHEQUE CREDITED WAS SUSTAINED FOR A.Y. 2005-06 AND A.Y. 2006-07 AND IN VIEW OF IDENTICAL NATURE OF FACTS, THE ADDIT ION OF RS.19,53,864/- (RS.7,81,54,543 X 2.5%) IS CONFIRMED. 4. NOW THE REVENUE IS BEFORE US. LD. CIT D.R. VEHE MENTLY RELIED UPON THE ORDER OF THE A.O. AND FURTHER CLARIFIED THAT TH E LD. CIT(A) HAS FOLLOWED HIS PREDECESSORS ORDER FOR A.Y. 05-06 & 06-07 AND DETE RMINED THE INCOME @ 2.5% ON TOTAL BOGUS SALES BILL. FROM THE SIDE OF T HE ASSESSEE, NONE APPEARED BUT THE CO-ORDINATE C BENCH IN ASSESSEES CASE IN ITA NOS. 1541 & 3151/AHD/2009 FOR A.Y. 05-06 & 06-07, HAS UPHELD TH E ORDER OF THE CIT(A) IN BOTH THE ASSESSMENT YEARS. THE OPERATIVE PORTION O F THE ORDER IS AS UNDER: 8. WE HAVE HEARD THE RIVAL SUBMISSIONS AND PERUSE D THE MATERIAL ON RECORD. IT IS AN UNDISPUTED FACT THAT THE ASSESS EE WAS FOUND TO HAVE BEEN ENGAGED IN THE BUSINESS OF ISSUING BILLS ON COMMISSION BASIS WITHOUT THERE BEING ACTUAL SALE/PURCHASE OF G OODS. THE ASSESSEE HAS ADMITTED TO THE FACT THAT HE IS ENGAGE D IN THE BUSINESS OF ISSUING BOGUS BILLS. ASSESSEE HAS ALSO ADMITTED THAT ON ISSUING BOGUS BILL, HE RECEIVES THE CHEQUE FOR THE VALUE OF THE BILL WHICH WAS LATER DEPOSITED IN HIS BANK ACCOUNT AND ALMOST THE SAME AMOUNT OF BEARER CHEQUE WAS ISSUED TO THE PARTY CONCERNED, WH ICH WAS WITHDRAWN IMMEDIATELY ON WHICH HE EARNED A COMMISSI ON OF RS.150 ITA NO. 1269/AHD/10 A.Y. 07-08 PAGE 5 PER RS.10,000/-. THESE FACTS HAVE NOT BEEN DISPUTED BY THE REVENUE BY BRINGING ANY CONTRARY MATERIAL ON RECORD . IT IS ALSO A FACT THAT THE ASSESSEE HAS NOT BEEN MAINTAINING PROPER B OOKS OF ACCOUNTS. IT IS ALSO A FACT THAT THE ENTIRE CREDIT S MADE IN THE BANK ACCOUNT CANNOT BE CONSIDERED AS INCOME AND BE TAXED . IN VIEW OF THESE FACTS CIT(A) HAS HELD THAT AN APPROPRIATE MET HOD TO TAX THE ASSESSEE WAS ONLY BY ESTIMATING INCOME. CIT(A) HAS ESTIMATED THE COMMISSION INCOME AT 2.5% OF THE TOTAL AMOUNTS OF C HEQUES CREDITED IN THE BANK ACCOUNT OF THE ASSESSEE. WE AR E OF THE VIEW THAT THE SUBMISSION MADE BY THE LD. D.R. THAT THE A DDITION MADE BY THE AO BE UPHELD CANNOT BE ACCEPTED IN VIEW OF THE SETTLED LAW THAT THE ENTIRE RECEIPTS CANNOT BE TREATED AS INCOME FOR THE PURPOSE OF TAXATION. EVEN THE ALTERNATIVE SUBMISSION THAT THE INCOME BE ESTIMATED AT 5% OF THE TURNOVER AS HAS BEEN DONE UN DER THE PROVISIONS OF S. 44AF OF THE ACT, CANNOT BE APPLIED TO THE FACTS OF THE PRESENT CASE FOR THE REASON THAT THE PROVISIONS OF S. 44AF ARE APPLICABLE ONLY TO THE TRADERS WHOSE AGGREGATE ANNU AL TURNOVER IS LESS THAN RS.40 LACS. IN THE CASE OF THE ASSESSEE, THE CREDITS IN THE BANK ACCOUNT ARE IN EXCESS OF RS.40 LAKHS. IT IS AL SO A FACT THAT AGAINST THE ORDER OF CIT(A), WHEREIN HE HAD ESTIMAT ED THE INCOME AT 2.5% OF THE TOTAL CREDITS, THE ASSESSEE HAS NOT PRE FERRED ANY APPEAL BEFORE THE TRIBUNAL AND THE ASSESSEE HAS THEREFORE ACCEPTED THE ORDER OF THE CIT(A). THUS CONSIDERING THE TOTALITY OF FACTS, WE ARE OF THE VIEW THAT CONSIDERING THE TOTALITY OF THE FACTS AND CIRCUMSTANCES OF THE PRESENT CASE, CIT(A) HAS MADE A REASONABLE E STIMATION AND THEREFORE NO INTERFERENCE IS CALLED FOR IN THE ORDE R OF CIT(A). WE THUS UPHOLD HIS ORDER. THUS THE GROUND OF THE REVENUE IS DISMISSED. 5. WE HAVE GONE THROUGH THE ORDERS OF A.O., CIT(A) AND RESPECTED C BENCH DECISION, DATED 10.12.2012 FOR A.Y. 05-06 & 0 6-07 IN ASSESSEES OWN ITA NO. 1269/AHD/10 A.Y. 07-08 PAGE 6 CASE. THE FACTS OF THESE YEARS ARE IDENTICAL TO YE AR UNDER CONSIDERATION. THEREFORE, WE ALSO UPHELD THE ORDER OF THE CIT(A) O N SAME REASONING. 6. IN THE RESULT, THE REVENUES APPEAL IS DISMISSED . THIS ORDER PRONOUNCED IN OPEN COURT ON 08.03.2013 SD/- SD/- ( MUKUL KR. SHRAWAT ) (T.R. MEENA) JUDICIAL MEMBER ACCOUNTANT MEMBER TRUE COPY S.K.SINHA ! ! ! ! '! '! '! '! / COPY OF ORDER FORWARDED TO:- 1. / APPELLANT 2. / RESPONDENT 3. '(' ) * / CONCERNED CIT 4. *- / CIT (A) 5. !./ ), ) , 12( / DR, ITAT, AHMEDABAD 6. /45 67 / GUARD FILE. BY ORDER/ , 8/ 1 ': ) , 12( ;