Shree Rama Multi-Tech Ltd., Ahmedabad V. The Dy.CIT.,Crcle-8, Ahmedabad

ITA 1305/AHD/2014

• Counselvise Citation: [2019] 115 COUNSELVISE.COM (IT) 5602 (ITAT-AHMEDABAD)
• Duration Of Justice: 5 year(s) 4 month(s) 11 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 16-09-2019
• Appeal Filed By: Assessee
• Order Result: Partly Allowed
• Bench Allotted: C
• Next Hearing Date: 28-08-2019
• Assessment Year: 1999-2000
• Appeal Filed On: 05-05-2014
• Result in Favour of: Partly Allowed
• Court: TRIBUNAL
• Department Lawyers: O P SHARMA; L P JAIN
• Keywords: Bogus purchase; Depreciation; Set aside

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL AHMEDABAD C BENCH (BEFORE SHRI MAHAVIR PRASAD, JUDICIAL MEMBER & SHRI AMARJIT SINGH, ACCOUNTANT MEMBER) ITA. NO: 1305/AHD/2014 (ASSESSMENT YEAR: 1999-2000) SHREE RAMA MULTI-TECH LTD. 603, SHIKHAR BUILDING, NAVRANGPURA, AHMEDABAD-380009 V/S DY.CIT, CIRCLE-8, AHMEDABAD (APPELLANT) (RESPONDENT) PAN: AAJCS 1563N APPELLANT BY : SHRI BANDISH SOPARKAR, AR RESPONDENT BY : SHRI O.P. SHARMA CIT/DR & L.P. JAIN, SR . D.R. ( )/ ORDER DATE OF HEARING : 11 -07-201 9 DATE OF PRONOUNCEMENT : 16 -09-2019 PER MAHAVIR PRASAD, JUDICIAL MEMBER 1. THIS APPEAL FILED BY THE ASSESSEE IS DIRECTED AGAIN ST THE ORDER OF THE LD. CIT(A)-XIV, AHMEDABAD DATED 15.02.2014 PERTAINING T O A.Y. 1999-2000 AND FOLLOWING GROUNDS HAVE BEEN TAKEN: ITA NO. 1305 /AHD/2014 . A.Y. 1999-20 00 2 1.LD. CIT (A) ERRED IN LAW AND ON FACTS IN CONFIRMI NG DISALLOWANCE BY AO OF LOSS CLAIMED ON ACCOUNT OF FIRE OF RS. 50,11,623/- AGAIN ST INSURANCE CLAIM RECEIVED IN THIS SET ASIDE PROCEEDINGS. LD. CIT (A) FAILED TO A PPRECIATE ACCOUNTING ENTRIES QUANTIFYING LOSS DUE TO FIRE ON THE BASIS OF FINAL SURVEY REPORT FOR DAMAGE TO BUILDING, PLANT/MACHINERY, STOCKS ETC. TO SUBSTANTI ATE LOSS CLAIMED AS DIRECTED BY HON'BLE ITAT. CIT (A) OUGHT TO HAVE ACCEPTED & ALLO WED INSURANCE LOSS CLAIMED BY THE APPELLANT. IT BE SO HELD NOW. 2.LD. CIT (A) ERRED IN LAW AND ON FACTS IN PARTLY U PHOLDING ADDITION MADE BY AO TOWARDS ALLEGED BOGUS PURCHASES OF RS. 12, 00, 000/ - IN PROCEEDINGS SET ASIDE BY THE HON'BLE ITAT. LD. CIT (A) ERRED IN NOT APPRECIA TING IN TOTALITY EVIDENCE ON RECORD THAT GOODS DIRECTLY DISPATCHED BY IPCL ENTER ED IN RG 23 A REGISTER HELD ELIGIBLE FOR CENVAT CREDIT TRANSPORTED IN RTO CERTI FIED GOODS TRANSPORT VEHICLES LEFT NO SCOPE TO TREAT PURCHASES AS BOGUS. LD. CIT (A) OUGHT TO HAVE DELETED ADDITION MADE BY AO ON SURMISES & CONJECTURES IN TO TO. IT BE SO HELD NOW. 3.LEVY OF INTEREST U/S 234A/234B/234C & 234D OF THE ACT IS NOT JUSTIFIED. 4.INITIATION OF PENALTY U/S 271 (L)(C) OF THE ACT I S NOT JUSTIFIED. 2. FACTS OF THE CASE ARE THAT ASSESSEE HAS SHOWN RECE IPT OF RS. 1,25,87,770/- ON ESTIMATED BASIS WHICH HAS BEEN ACCEPTED BY THE DEPA RTMENT AND IN ASSESSMENT ORDER VIDE PARA 4.1 OF THE ORDER. THE AS SESSEE HAD TAKEN INSURANCE COVER FOR PROPERTY DAMAGE ALONG WITH STOC K INSURANCE. THERE WAS A LOSS ON ACCOUNT OF FIRE WHICH WAS TOOK PLACE AT T HE PREMISES OF THE ASSESSEE. 3. DURING THE ASSESSMENT PROCEEDING, LD. A.O. NOTICED THAT CLAIM OF DEDUCTION OF LOSS ON ACCOUNT OF FIRE OF PLANT AND MACHINES AG AINST THE INCOME REFLECTING BY THE ASSESSEE AS CLAIM OF INSURANCE OF RS. 1,25,8 7,770/-. BUT CLAIM OF THE ASSESSEE WAS REJECTED BY THE A.O. BECAUSE SAME WAS NOT SUPPORTED BY EVIDENCE. AND FOR INSURANCE POLICY, ASSESSEE CLAIME D THE EXPENSES OF RS. 50,11,623/- AND AS PER SURVEYOR REPORT, THE MAJOR L OSS OF PLANT AND MACHINERY ARE IN RESPECT OF AUTO TUBE PACK SYSTEM W HICH WERE PURCHASED IN ITA NO. 1305 /AHD/2014 . A.Y. 1999-20 00 3 1995 AND NOT USED TILL FIRE INCIDENT TOOK PLACE IN APRIL 1998. SINCE FILTRONA AUTO PACK SYSTEM WAS NOT PUT TO USE BETWEEN 1995 TO APRIL 1998. 4. IN THIS REGARD, ASSESSEE WAS ASKED TO SUBSTANTIATE FACTS THROUGH RECORDS OF EARLIER YEARS TO ASCERTAIN WHAT TREATMENT, ASSESSEE GIVEN IN BOOKS OF ACCOUNT FOR THESE PLANT & MACHINE. THE APPELLANT SHOWN HIS INABILITY TO PRODUCE SUCH EVIDENCES. CONSIDERING THE BLOCK OF ASSETS SCHEME F OR DEPRECIATION, ANY SUCH LOSS HAS TO BE GIVEN EFFECT BY DEDUCTION OF WDV OF SUCH MACHINE FROM THE BLOCK AND BALANCE LOSS COULD BE CLAIMED FROM THE BL OCK UNLESS SUCH BLOCK GOT EXHAUSTED/COMPLETELY DESTROYED. 5. IN THIS CASE, CLAIM OF DEPRECIATION FROM OTHER PLAN T & MACHINERIES, LOSSES ON ACCOUNT OF FIRE WERE EXCLUDED FROM THE BLOCK ASSETS FOR VALUE REMAINED AFTER INSURANCE CLAIM MINUS WDV. 6. ON THE OTHER HAND, ASSESSEE HAS SHOWN DETAILS OF TH E PREMIUM PAID AND FILTRONA AUTO PACK SYSTEM WAS ALSO INSURED BY THE A PPELLANT. AND ALSO PAID TAX ON INSURANCE CLAIM RECEIPTS. BUT LOWER AUTHORIT IES WERE NOT CONVINCED WITH THE CONTENTION OF THE ASSESSEE AND MADE ADDITI ON OF RS. 50,11,623/- AND CONFIRMED BY THE LD. CIT(A). 7. WE HAVE GONE THROUGH THE RELEVANT RECORD AND IMPUGN ED ORDER AND HEARD BOTH THE PARTIES, ASSESSEE HAS CLAIMED LOSS ON ACCO UNT OF FIRE OF RS. 50,11,623/- AGAINST INSURANCE COMPANY RECEIVED BY T HE APPELLANT. AND IN SUPPORT OF ITS CONTENTION, ASSESSEE HAS SUBMITTED A LL THE DETAILS PERTAINING TO LOSS SUCH AS SURVEYOR REPORT BILLS AND INVOICES OF PURCHASE OF MACHINES WHICH WERE DESTROYED DURING FIRE AND WHATEVER CLAIM HAVE BEEN RECEIVED BY THE APPELLANT SAME WAS AFTER DETAILED ENQUIRY BY TH E INSURANCE COMPANY AND ITA NO. 1305 /AHD/2014 . A.Y. 1999-20 00 4 ASSESSEE/ APPELLANT HAS ALSO SUBMITTED ALL THE DETA ILS WITH REGARD TO PURCHASE OF MACHINES ETC. AND LD. D.R. HAS NOTHING TO CONTRO VERT ARGUMENTS OF THE LD. A.R. 8. AFTER CONSIDERING THE FACTS AND CIRCUMSTANCES OF TH E CASE AND IN THE LIGHT OF MATERIAL AVAILABLE ON RECORD, WE ARE OF THE OPINION THAT GROUND OF APPEAL DESERVE TO BE ALLOWED. 9. IN THIS RESULT, THIS GROUND OF APPEAL IS ALLOWED. 10. NOW WE COME TO NEXT GROUND RELATING TO PARTLY UPHOL DING ADDITION MADE BY A.O. TOWARDS ALLEGED BOGUS PURCHASE OF RS. 12,00,00 0/- IN PROCEEDING. 11. IN THIS CASE, ADDITION OF RS. 58,58,574/- WERE MADE TOWARDS BOGUS PURCHASES. BUT IN APPEAL BEFORE THE LD. CIT(A), ADD ITION WAS REDUCED TO RS. 12,00,000/-. THE APPELLANT CONTENDED BEFORE THE LOW ER AUTHORITIES THAT PURCHASES BEING GENUINE, DULY RECORDED IN QUANTITAT IVE REGISTERS FOR WHICH COMPLETE DETAILS WITH COPIES OF STATUTORY EXCISE RE GISTERS AND EVIDENCE OF PAYMENT BY ACCOUNT PAYEE CHEQUES WERE PRODUCED. AND DETAILS OF COPIES OF PURCHASE BILLS WERE SUBMITTED BUT A.O. NOTICED DISC REPANCIES FROM SUCH DETAIL ABOUT NO DETAILS OF TRANSPORTERS/CHALLANS ON THE INVOICES. THE A.O. FROM THE CENTRAL EXCISE SEARCH REPORT HIGHLIGHTED T HE STATEMENT OF VARIOUS EMPLOYERS/INCHARGE OF APPELLANT COMPANIES WHERE TH EY ADMITTED FOR BOGUS PURCHASE AND RTO REPORTS OF VARIOUS VEHICLES MENTIO NED AS TRANSPORTATION MADE FOR THE PURCHASES FROM M/S GPIL AS THAT FROM S COOTERS, TWO WHEELERS ETC. ITA NO. 1305 /AHD/2014 . A.Y. 1999-20 00 5 12. THE LOWER AUTHORITIES RAISED THE DISCREPANCIES ABOU T VARIATION IN QUANTITY TRANSPORTED AND LOADING CAPACITY AND NO RTO CERTIFI CATE FOR TWO VEHICLES. LOWER AUTHORITIES ALSO MENTIONED THAT THERE WAS DIF FERENCE IN DATE OF INWARD OF MATERIAL AND DATE OF ENTRY IN RG. AND FOLLOWING DISCREPANCIES WERE NOTED: NO. DATE WEIGHT KG. INVOICE NO. VEHICLE NO. LOADING CAPACITY (KG.) (I) 13.06.98 3675 00787 GJ-L-V-6343 3270 (II) 17.07.98 4900 01130 GJ-L-V-6343 3270 (III) 30.09.98 10000 02461 GJ-L-X-5345 9910 (IV) 20.03.99 5000 5077 GJ-L-V-6343 3270 23575 13. AND CONSIDERING THE AVERAGE PURCHASE RATE OF RS. 50 ,000/- PER METRIC TON, THE VALUE OF BOGUS PURCHASE CAME TO AROUND RS. 12,0 0,000/- WAS DISALLOWED BY THE LD. CIT(A). 14. WE HAVE GONE THROUGH THE RELEVANT RECORD AND IMPUGN ED ORDER. LD. CIT(A) SOUGHT DETAIL REMAND REPORT WHEREIN DETAILS OF TRAN SPORT VEHICLES WERE GIVEN WHEREIN IT IS SHOWN THAT GOODS WERE LOADED WERE MOR E THAN OF THE CAPACITY OF THE GOODS VEHICLE AND FOR STRENGTHEN THE GOODS, LD. CIT(A) HAS CALLED FOR RTO RECORD AS WELL. 15. AS WE CAN SEE, ON 20 TH MARCH, 1999, THE VEHICLE NO. GJ-1-V-6343 VEHICLE LOAD CAPACITY WAS 3270 KGS WHEREIN APPELLANT HAS SH OWN 5000 KGS WHEN BENCH ASKED SPECIFICALLY TO LD. A.R. THAT WHETHER A BOVE SAID GOODS VEHICLE WERE EVER CHALLANED BY THE TRANSPORT AUTHORITY OR B Y THE TRAFFIC POLICE FOR ITA NO. 1305 /AHD/2014 . A.Y. 1999-20 00 6 OVERLOADING OF THE GOODS, HE EXPRESSED INABILITY TO GIVE ANY SATISFACTORY REPLY. 16. IN OUR CONSIDERED VIEW, LD. CIT(A) HAS PASSED REASO NED ORDER AFTER MAKING DETAILED ENQUIRY AND SAME DOES NOT REQUIRE ANY KIND OF INTERFERENCE AT OUR END. THEREFORE, WE DISMISS THIS GROUND OF APPEAL. 17. IN THE RESULT, APPEAL FILED BY THE ASSESSEE IS PART LY ALLOWED. ORDER PRONOUNCED IN OPEN COURT ON 16 - 09- 2019 SD/- SD/- (AMARJIT SINGH) (MAHAVIR PRASAD) ACCOUNTANT MEMBER TRUE COPY JUDICIAL MEMBER AHMEDABAD: DATED 16 /09/2019 RAJESH COPY OF THE ORDER FORWARDED TO: - 1. THE APPELLANT. 2. THE RESPONDENT. 3. THE CIT (APPEALS) 4. THE CIT CONCERNED. 5. THE DR., ITAT, AHMEDABAD. 6. GUARD FILE. BY ORDER DEPUTY/ASSTT.REGISTRAR ITAT,AHME DABAD