Dy. Commissioner of Income Tax, Circle-2(1), Hyderabad, Hyderabad V. Kala Jyothi Process Private Limited, Hyderabad, Hyderabad

ITA 1445/Hyd/2017

• Counselvise Citation: [2018] 126 COUNSELVISE.COM (IT) 2535 (ITAT-HYDERABAD)
• Duration Of Justice: 6 month(s) 2 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 14-02-2018
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: A
• Next Hearing Date: 12-02-2018
• Assessment Year: 2014-2015
• Appeal Filed On: 11-08-2017
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: GITENDER MANN
• Keywords: Bogus purchase; Accommodation entries
• Section: 143(3); 133A

Judgement Text

THE INCOME TAX APPELLATE TRIBUNAL HYDERABAD BENCH A, HYDERABAD BEFORE SMT P. MADHAVI DEVI, JUDICIAL MEMBER AND SHRI S. RIFAUR RAHMAN, ACCOUNTANT MEMBER ITA NO.1445/HYD/2017 ASSESSMENT YEAR: 2014-15 THE DY COMMISSIONER OF INCOME TAX, CIRCLE-2(1), HYDERABAD. VS. M/S KALA JYOTHI PROCESS PVT LTD, HYDERABAD PAN- AAACK8353P (APPELLANT) (RESPONDENT) REVENUE BY : SMT. GITENDER MANN ASSESSEE BY : SHRI Y. RATNAKAR DATE OF HEARING : 12-02-2018 DATE OF PRONOUNCEMENT : 14-02-2018 ORDER PER P. MADHAVI DEVI, J.M.: IN THIS APPEAL THE REVENUE IS AGGRIEVED BY THE ORDER OF THE CIT(A)-2, HYDERABAD DATED 19.05.2017, GIVING RELIEF TO THE ASSESSEE BY DELETING THE ADDITION MADE BY THE A.O ON ACCOUNT OF INFLATION OF PURCHASES. 2. THE BRIEF FACTS OF THE CASE ARE THAT, THE ASSESSEE COMPANY, ENGAGED IN THE BUSINESS OF MULTI COLOR OFF-SET PRINTING, FILED ITS RETURN OF INCOME FOR THE A.Y 2014-15 ON 17.10.2014 ADMITTING A TOTAL INCOME OF RS. 7,76,17,661/-. DURING THE ASSESSMENT PROCEEDINGS U/S 143(3) OF THE IT ACT, THE A.O OBSERVED THAT THERE WAS A SURVEY U/S 133A OF THE ACT ON 12.09.2014 BY THE ITO (INV), AND DURING THE COURSE OF 2 ITA NO. 1445/HYD/2017 M/S KALA JYOTHI PROCESS PVT LTD., HYDERABAD. SAID SURVEY, IT WAS FOUND THAT THE COMPANY IS RAISING BOGUS PURCHASE BILLS TO COVER UP THE WASTE MATERIAL PRODUCED WHILE CUTTING THE PAPER TO THE REQUIRED SPECIFICATIONS, WASTAGE WHILE PRINTING, WRONG PRINTING, ETC., WHICH IS FURTHER USED IN ANOTHER WORK. THE A.O CALLED FOR DETAILS AND AFTER PERUSAL OF THE SAME, DISALLOWED A SUM OF RS. 1,19,03,738/- FROM THE PURCHASES AND ADDED IT TO THE TOTAL INCOME OF THE ASSESSEE. AGGRIEVED, THE ASSESSEE PREFERRED AN APPEAL BEFORE THE CIT(A), WHO DELETED THE ADDITION BY FOLLOWING THE ORDER OF HIS PREDECESSOR IN THE ASSESSEES OWN CASE FOR THE A.Y 2012-13. AGGRIEVED BY THE RELIEF GRANTED BY THE CIT(A), THE REVENUE IS IN APPEAL BEFORE US. 3. WHILE THE LD. DR SUPPORTED THE ORDER OF THE A.O, THE LD. COUNSEL OR THE ASSESSEE SUBMITTED THAT THE ISSUE IS COVERED IN FAVAOUR OF THE ASSESSEE BY THE DECISION OF THE ITAT IN THE ASSESSEES OWN CASE FOR THE A.YS 2008-09 TO 2011-12 AND 2013-14 DATED 13.12.2017, COPIES OF THE SAID ORDERS ARE ALSO FILED BEFORE US. 5. HAVING REGARD TO THE RIVAL CONTENTIONS AND MATERIAL ON RECORD, WE FIND THAT THE COORDINATE BENCH OF THIS TRIBUNAL IN THE DECISION CITED SUPRA (TO WHICH BOTH OF US ARE SIGNATORIES) 3 ITA NO. 1445/HYD/2017 M/S KALA JYOTHI PROCESS PVT LTD., HYDERABAD. HAS CONSIDERED THE ISSUE AT LENGTH AND AT PARA 8 OF ITS ORDER HAS HELD AS UNDER: 8. CONSIDERED THE RIVAL SUBMISSIONS AND PERUSED THE MATERIAL FACTS ON RECORD. THE ASSESSEE IS ENGAGED IN THE BUSINESS OF MULTICOLOUR OFFSET PRINTING. FOR THE PURPOSE OF ITS BUSINESS, ASSESSEE REGULARLY PURCHASES PAPERS FROM ITS MAIN SUPPLIERS AND MAINTAINING REGULAR BOOKS OF ACCOUNT FOR THE SAME. ASSESSEE HAS SUBMITTED QUANTITY RECONCILIATION STATEMENT FOR THE CURRENT AY BEFORE AO AND AO HAS NOT FOUND ANY DISCREPANCIES AND ACCEPTED THE SAME. AO HAS NOT FOUND ANY DISCREPANCY IN THE ABOVE QUANTITY, CONSUMPTION AND ALSO QUANTITY CLAIMED BY THE ASSESSEE AS WASTAGE. AO MAINLY RELIED ON THE FINDINGS DURING THE SURVEY, WHICH HE HAS HIGHLIGHTED IN THE REPORT INCLUDING FEW DISCREPANCIES. AO MADE ADDITION AND CAME TO THE CONCLUSION AS INFLATED PURCHASES MERELY ON SUSPICION AND APART FROM FEW DISCREPANCIES, HE HAS NOT BROUGHT ON RECORD ANY COGENT MATERIAL TO PROVE THAT ASSESSEE HAS, IN FACT, RECORDED BOGUS PURCHASES. HE MERELY RELYING ON THE FEW INSTANCES OF DISCREPANCIES POINTED OUT DURING SURVEY, WHICH ARE AS UNDER: A) INVOICE DATED 07/07/2012 OF ECC TRADING PVT. LTD. B) INVOICE DT. 14/07/2012 OF ECC TRADING PVT. LTD. C) INVOICES DT. 20/04/2007, 29/04/2007, 26/05/2007, 27/05/2007 OF MITTAL TRADING COMPANY. THE ABOVE DISCREPANCIES WERE ALSO DISMISSED BY THE CIT(A) BY OBSERVING THAT AO HAS ASSESSED FIVE ASSESSMENT YEARS AND FOUND DISCREPANCIES ONLY IN TWO AYS RELEVANT TO AY 2008- 09 AND 2013-14 AND NONE OF THE REGULAR SUPPLIERS HAVE DENIED THAT THEY HAVE SOLD MATERIAL TO ASSESSEE NOR HAVE THEY ACCEPTED TO HAVE ISSUED ANY ACCOMMODATION ENTRIES. BY CONSIDERING THE ABOVE DISCUSSION, IN OUR CONSIDERED VIEW, THERE IS NO COGENT MATERIAL IN SUPPORT OF THE FINDINGS OF AO THAT ASSESSEE HAS IN FACT RECORDED ANY BOGUS PURCHASES AND IT IS CLEAR FROM THE SUBMISSION OF THE ASSESSEE THAT THESE ARE ACTUAL WASTAGES INCURRED BY THE ASSESSEE IN ITS BUSINESS AND ALSO ASSESSEE HAS DECLARED 'SCRAP SALE' FOR THE VALUE OF WASTAGE TO THE EXTENT OF RS. 90,63,070/-, WHICH IS MUCH HIGHER THAN THE ALLEGED VALUE OF INFLATED INVOICES. HENCE, WE 4 ITA NO. 1445/HYD/2017 M/S KALA JYOTHI PROCESS PVT LTD., HYDERABAD. ARE IN AGREEMENT WITH THE FINDINGS OF THE CIT(A) IN DELETING THE ADDITION MADE BY THE AO ON THIS COUNT AND ACCORDINGLY, WE UPHOLD THE ORDER OF CIT(A) AND DISMISS THE GROUNDS RAISED BY THE REVENUE. 5.1 RESPECTFULLY FOLLOWING THE DECISION OF THE COORDINATE BENCH IN THE ASSESSEES OWN CASE ON THE SAME SET OF FACTS, WE DO NOT FIND ANY REASON TO INTERFERE WITH THE ORDER OF THE CIT(A). 6. IN THE RESULT THE APPEAL FILED BY THE REVENUE IS DISMISSED. PRONOUNCED IN THE OPEN COURT ON 14 TH FEBRUARY, 2018. SD/- SD/- (S. RIFAUR RAHMAN) (P. MADHAVI DEVI) ACCOUNTANT MEMBER JUDICIAL MEMBER HYDERABAD, DATED: 14 TH FEBRUARY, 2018 KRK 1 2 M/S KALA JYOTHI PROCESS PVT LTD, H.NO. 1-1-60/5, IFTEKAT MANSION LANE, RTC X ROAD, MUSHEERABAD, HYDERABAD. THE DY CIT, CIRCLE-2(1), HYDERABAD 3 THE COMMISSIONER OF INCOME TAX(A)-2, HYDERABAD. 4 5 THE PR. COMMISSIONER OF INCOME TAX-2, HYDERABAD. THE DR, ITAT HYDERABAD 6 GUARD FILE