Prabhat Rajmal Nibjiya, Pune V. Income-tax Officer, Ward - 5(3), Pune

ITA 1342/PUN/2018

• Counselvise Citation: [2019] 117 COUNSELVISE.COM (IT) 7506 (ITAT-PUNE)
• Duration Of Justice: 8 month(s) 9 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 30-04-2019
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: SMC
• Assessment Year: 2011-2012
• Appeal Filed On: 21-08-2018
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Keywords: Bogus purchase; Set aside
• Section: 234B

Judgement Text

- IN THE INCOME TAX APPELLATE TRIBUNAL SMC BENCH, P UNE BEFORE SHRI R.S.SYAL, VP AND SHRI PARTHA SARATHI CHAUDHURY, JM / ITA NO. 1342/PUN/2018 / ASSESSMENT YEAR : 2011-12 SHRI PRABHAT RAJMAL NIBJIYA PROP. M/S. BLUE POINT POWERLINES, 139, BHAVANI PETH, PUNE-411 042. PAN : AANPN7427R .... / APPELLANT ! / V/S. THE INCOME TAX OFFICER, WARD 5(3), PUNE. / RESPONDENT ASSESSEE BY : SHRI M.K. KULKARNI REVENUE BY : SHRI RAJESH GAWALI / DATE OF HEARING : 29.04.2019 / DATE OF PRONOUNCEMENT : 30.04.2019 ' / ORDER PER PARTHA SARATHI CHAUDHURY, JM : THIS APPEAL PREFERRED BY THE ASSESSEE EMANATES FROM TH E ORDER OF THE LD. CIT(APPEAL)-13, PUNE DATED 22.06.2018 FOR THE ASSESSME NT YEAR 2011-12 AS PER FOLLOWING GROUNDS OF APPEAL ON RECORD: 1. ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE A ND IN LAW THE LD. CIT(A) IS NOT JUSTIFIED IN CONFIRMING THE ADDIT ION OF RS.9,24,803/- 2 ITA NO. 1342/PUN/2018 A.Y.2011-12 HOLDING THAT THE PURCHASES WERE FROM THE HAWALA DEA LERS AS REPORTED BY THE SALE-TAX DEPARTMENT BUT AT THE SAME TIME ACCEPTING THE SALES MADE OUT OF IT. THE A.O. DID NOT FOLLOW T HE MATCHING PRINCIPLE OF ACCOUNTANCY I.E. TO SAY THAT THE A.O. HAS NOT DOUBTED THE SALES MADE BUT HAS DISALLOWED WHOLE OF THE PURCHASE S. THE ADDITION BE DELETED. 2. ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CAS E AND IN LAW THE HON'BLE BOMBAY HIGH COURT IN AN UNREPORTED JUDGMENT HAD CONFIRMED THE MATCHING PRINCIPLE OF ACCOUNTANCY AND FURTHER HELD PURCHASES CANNOT BE ADDED. THE ADDITION OF RS.9,24, 803/- BE DELETED. 3. ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CAS E AND IN LAW THE LD.CIT(A) IS NOT JUSTIFIED IN MAKING THE ADDITION O F RS.1,98,649/- ON ACCOUNT OF STOCK DISCREPANCY. NO SUCH DISCREPANCY W AS FOUND SO ALSO THE ADDITION IS 'REVENUE NEUTRAL' AS THE SUBSE QUENT YEARS OPENING STOCK WILL GET INCREASED AS PER THE HON'BLE SUPREME COURT VERDICT. IN ANY CASE THERE IS NO LOSS OF REVENUE. T HE ADDITION BE DELETED. 4. ON THE FACTS AND CIRCUMSTANCES OF THE CASE AND I N LAW THE LEVY OF INTEREST U/S 234B AND 234C IS NOT JUSTIFIED. 5. THE APPELLANT CRAVES TO LEAVE, ADD/AMEND OR ALTE R ANY OF THE ABOVE GROUNDS OF APPEAL. 2. THE BRIEF FACTS IN THIS CASE ARE THAT THE ASSESSEE IS AN INDIVIDUAL ENGAGED IN THE BUSINESS OF PROPRIETARY CONCERN IN THE N AME AND STYLE OF M/S. BLUE POINT POWERLINES WHICH IS DEALING IN COMPUTER HARDWARE AND PERIPHERALS. THE ASSESSEE FILED THE ORIGINAL RETURN ON 30.09.2 011 DECLARING TOTAL INCOME AT RS.11,66,240/-. 3. DURING THE ASSESSMENT PROCEEDINGS, THE ASSESSING OFFICE R FOUND THAT THE ASSESSEE'S OPENING STOCK AMOUNTED TO RS.1,61,32,612/ - AS PER HIS P&L ACCOUNT WHEREAS THE SAME WAS SHOWN AT RS.1,59,33,963/- AS PER HIS STOCK SUMMERY. THUS, THERE WAS A DISCREPANCY IN THE OPENING ST OCK TO THE EXTENT OF RS.1,98,649/- WHICH WAS LATER ADMITTED BY THE ASSESSEE. TH E SAME WAS ADDED BACK TO THE ASSESSEE'S TOTAL INCOME BY THE ASSE SSING OFFICER. THE ASSESSING OFFICER ALSO OBSERVED THAT THE ASSESSEE HAD MA DE PURCHASE TRANSACTIONS FROM CERTAIN PARTIES WHO HAVE BEEN IDENTIFIED AS HAWALA DEALERS PROVIDING BOGUS PURCHASE BILLS BY THE SALES TAX DEPARTMEN T, MAHARASHTRA. 3 ITA NO. 1342/PUN/2018 A.Y.2011-12 SUCH PURCHASES TOTALLED TO RS 9,24,803.0N BEING ASKED TO EXPLAIN THE SAME, THE ASSESSEE SUBMITTED THAT IT HAD MADE DUE PAYMENT TO THESE VENDORS INCLUSIVE OF THE TAXES THEREON AND HENCE, THERE HAS BEEN NO DEFAULT THEREOF. THE ASSESSEE ALSO FURNISHED LEDGER EXTRACT WITH SUCH VEN DORS. THE CONTENTION OF THE ASSESSEE WAS REJECTED BY THE ASSESSING OFFICER ON THE GROUND THAT THE SALE TAX DEPARTMENT SPECIFICALLY FURNISHED THE BENEFIT RECEIV ED BY THE ASSESSEE FROM ONE OF THE VENDORS M/S. SIDDHI ENTERPRISES TO THE EXTENT OF RS.5,96,298/-. WHEREAS THE PURCHASE FROM SUCH VENDOR STO OD IN THE ASSESSEE'S BOOKS AT RS.3,27,982/-. IT WAS ALSO NOTICED T HAT NO BILLS OF PURCHASE HAVE BEEN FILED BY THE ASSESSEE BELOW RS.20,000/ - AGAINST WHICH CASH PAYMENT HAVE BEEN MADE. NO DELIVERY CHALLANS, OCTROI RECEIPT HAVE BEEN SUBMITTED FOR THE SAID PURCHASES. THE ASSESSING OFFICER THU S, OPINED THAT THE PURCHASES SO CLAIMED TO HAVE BEEN MADE AND SHOWN BY T HE ASSESSEE ARE NOT GENUINE, BUT, BOGUS ACCOMMODATION BILLS AND THAT HE IS INVOLV ED IN HAWALA TRANSACTION. THEREFORE, HE ADDED THE ENTIRE AMOUNT OF BOG US PURCHASES SO MADE OF RS 9,24,803/-TO THE ASSESSEE'S TOTAL INCOME. 4. THE LD. CIT(APPEAL) CONFIRMED THE ADDITION OF RS.9,24,803/- ON A CCOUNT OF BOGUS PURCHASES AND ALSO CONFIRMED THE ADDITION OF RS.1,9 8,649/- ON ACCOUNT OF STOCK DISCREPANCY. BEING FURTHER AGGRIEVED TH E ASSESSEE HAS PREFERRED THIS APPEAL BEFORE US. 5. AT THE TIME OF HEARING, THE LD. AR OF THE ASSESSEE HAS PLACED RELIANCE ON THE RATIO LAID DOWN BY THE HON'BLE BOMBAY HIGH COURT IN THE CASE OF PR.CIT VS. MOHAMMAD HAJI ADAM & CO. VIDE ITS JUDGMENT DA TED 11.02.2019 IN ITA NO.1004 OF 2016. THE LD. AR OF THE ASSESSEE HAS FU RTHER SUBMITTED THAT IN SUCH SITUATION OF BOGUS PURCHASES, THE GP RATE OF GENUINE PURCHASES HAS TO BE IDENTIFIED AND ALONG WITH THAT BOGUS PURCHASE G P ALSO HAVE TO BE 4 ITA NO. 1342/PUN/2018 A.Y.2011-12 IDENTIFIED. THE DIFFERENCE OF THESE TWO CAN BE ADDED TO THE INCOME OF THE ASSESSEE. FOR EXAMPLE, IF THE GP PERCENTAGE OF GENUINE PUR CHASES COMES TO 8% WHEREAS GP PERCENTAGE OF BOGUS PURCHASES COMES TO 10%, THEN 2% OF BOGUS PURCHASES CAN BE ADDED TO THE INCOME OF THE ASSESSEE. 6. WE HAVE PERUSED THE CASE RECORDS AND HEARD THE R IVAL CONTENTIONS AND CONSIDERED THE JUDICIAL PRONOUNCEMENT PLACED BEFORE US. WE HAVE ALSO GIVEN CONSIDERABLE THOUGHT TO THE JUDGMENT OF THE HON'BLE BO MBAY HIGH COURT IN THE CASE OF PR. CIT VS. MOHOMMAD HAJI ADAM (SUPRA.) WHER EIN IT HAS BEEN HELD THAT NO AD-HOC ADDITION AT THE RATE OF 10% OF BOGUS PURCHASES IS WARRANTED. RATHER, THE ADDITION SHOULD BE MADE TO THE EX TENT OF DIFFERENCE BETWEEN GROSS PROFIT RATE ON GENUINE PURCHASES AND GRO SS PROFIT RATE OF BOGUS PURCHASES. REVERTING TO THE FACTS OF THE PRESENT CASE AND TAKING GUIDANCE FROM THE SAID JUDGMENT OF THE HON'BLE BOMBAY HIGH COURT IN THE CA SE OF PR.CIT VS. MOHOMMAD HAJI ADAM (SUPRA.), WE SET ASIDE THE ORDER OF THE LD. CIT(APPEAL) AND RESTORE THE MATTER BACK TO THE FILE OF THE ASSESSING OFFICER FOR UND ERTAKING THIS EXERCISE AND FINDING OUT THE EXCESS GROSS PROFIT RATE EARNED FROM BOGUS PURCHASES AND THEN MAKING THE ADDITION ACCORDINGLY AFTER ALLOWING REASONABLE OPPORTUNITY OF HEARING TO THE ASSESSEE. 7. IN THE RESULT, APPEAL OF THE ASSESSEE IS ALLOWED FOR STATISTICAL PURP OSES. ORDER PRONOUNCED ON 30 TH DAY OF APRIL, 2019. SD/- SD/- R.S.SYAL PA RTHA SARATHI CHAUDHURY VICE PRESIDENT JUDICIAL MEMBER / PUNE; / DATED : 30 TH APRIL, 2019. SB 5 ITA NO. 1342/PUN/2018 A.Y.2011-12 '#$%&'(' % / COPY OF THE ORDER FORWARDED TO : 1. / THE APPELLANT. 2. / THE RESPONDENT. 3. THE CIT(APPEALS)-13, PUNE. 4. THE PR. CIT-3, PUNE. 5. '#$ %%&' , ( &' , - )*+ , / DR, ITAT, SMC BENCH, PUNE. 6. $,- ./ / GUARD FILE. // TRUE COPY // (0 / BY ORDER, %1 &+ / PRIVATE SECRETARY ( &' , / ITAT, PUNE. 6 ITA NO. 1342/PUN/2018 A.Y.2011-12 DATE 1 DRAFT DICTATED ON 29 .0 4 .2019 SR.PS/PS 2 DRAFT PLACED BEFORE AUTHOR 30 .04 .201 9 SR.PS/PS 3 DRAFT PROPOSED AND PLACED BEFORE THE SECOND MEMBER JM/AM 4 DRAFT DISCUSSED/APPROVED BY SECOND MEMBER AM/JM 5 APPROVED DRAFT COMES TO THE SR. PS/PS SR.PS/PS 6 KEPT FOR PRONOUNCEMENT ON SR.PS/PS 7 DATE OF UPLOADING OF ORDER SR.PS/PS 8 FILE SENT TO BENCH CLERK SR.PS/PS 9 DATE ON WHICH THE FILE GOES TO THE HEAD CLERK 10 DATE ON WHICH FILE GOES TO THE A.R 11 DATE OF DISPATCH OF ORDER