M/s. Jinashish Integrated, Ahmedabad V. The Income tax Officer, Ward-10(2), Ahmedabad

ITA 1472/AHD/2004

• Counselvise Citation: [2009] 114 COUNSELVISE.COM (IT) 9085 (ITAT-AHMEDABAD)
• Duration Of Justice: 5 year(s) 4 month(s) 11 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 11-09-2009
• Appeal Filed By: Assessee
• Order Result: Dismissed
• Bench Allotted: B
• Next Hearing Date: 07-09-2009
• Assessment Year: 1995-1996
• Appeal Filed On: 30-04-2004
• Result in Favour of: Revenue
• Court: TRIBUNAL
• Department Lawyers: NEETA SHAH SENIOR
• Keywords: Bogus purchase; Search and seizure
• Section: 131; 2

Judgement Text

1 IN THE INCOME TAX APPELLATE TRIBUNAL AHMEDABAD BENCH 'B' (BEFORE S/SHRI P K BANSAL AND MAHAVIR SINGH) ITA NOS.1472 AND 1112/AHD/2004 (ASSESSMENT YEARS: 1995-96 AND 1996-97) M/S JINASHISH INTEGRATED, B-44, PARISIMA COMPLEX, C G ROAD, AHMEDABAD V/S THE INCOME-TAX OFFICER, WARD-10(2), AHMEDABAD [APPELLANT] [RESPONDENT] ITA NO.1559/AHD/2004 (ASSESSMENT YEAR: 1995-96) THE INCOME-TAX OFFICER, WARD-10(2), AHMEDABAD V/S M/S JINASHISH INTEGRATED, B-44, PARISIMA COMPLEX, C G ROAD, AHMEDABAD [APPELLANT] [RESPONDENT] PAN NO.: 31-113-FX-7719 ASSESSEE BY :- NONE DEPARTMENT BY:- SMT. NEETA SHAH, SENIOR DR O R D E R PER P K BANSAL (ACCOUNTANT MEMBER): THE CROSS APPEALS [ITA NOS.1559/AHD/2004 AND 1472/AHD/2004 FOR AY 1995-96] HAVE BEEN FILED AGAINST THE ORDER OF THE CIT(A) DATED 21 -04-2003. THE ISSUE INVOLVED IN BOTH THE APPEALS FILED BY THE ASS ESSEE AS WELL AS BY THE REVENUE RELATES TO THE ESTIMATION OF COMMISS ION INCOME ON BOGUS PURCHASES ESTIMATED BY THE AO. THE SECOND ISSUE 2 INVOLVED IN THE ASSESSEES APPEAL RELATES TO SUSTEN ANCE OF AN ADDITION OF RS.45,835/- BY THE CIT(A). 2 IN THE APPEAL FILED BY THE ASSESSEE FOR AY 1996- 97, THE ONLY ISSUE INVOLVED IS SIMILAR TO THE COMMON IS SUE IN THE CROSS APPEALS RELATING TO ESTIMATION OF INCOME ON T HE TOTAL BOGUS BILLS. THIS ISSUE FOR BOTH THE YEARS IS BEING DISP OSED OF BY THIS COMMON ORDER BY APPRECIATING THE FACTS RELATING TO AY 1996-97 AS THE AO HAS ALSO MADE THE ADDITION ON THE BASIS O F FACTS RELATING TO AY 1996-97. THE CIT(A) HAS ALSO REDUCE D THE ADDITION FOLLOWING THE ORDER FOR AY 1996-97. 3 NONE APPEARED ON BEHALF OF THE ASSESSEE. WE, THEREFORE, DECIDED TO DISPOSE OFF THE APPEALS AFTER HEARING THE LEARNED DEPARTMENTAL REPRESENTATIVE. 4 THE BRIEF FACTS AS GATHERED FROM THE ASSESSMENT ORDER ARE THAT THE INFORMATION WAS RECEIVED BY THE REVENU E FROM THE CENTRAL EXCISE AUTHORITIES THAT M/S GUJARAT STEEL I NDUSTRIES WAS ENGAGED IN EVADING THE CENTRAL EXCISE DUTY ON M S R OUND BARS. THE CENTRAL EXCISE AUTHORITIES FOUND THAT M/S GUJAR AT STEEL INDUSTRIES WERE PROCURING SHIP BREAKING MATERIAL / SCRAP FROM DIFFERENT SHIP BREAKERS AND WERE MANUFACTURING M S ROUND BARS WITHOUT ACCOUNTING FOR THE RAW MATERIAL OR THE FINI SHED PRODUCTS AND EVADING EXCISE DUTY. THE GOODS SO PRODUCED WERE BEING SOLD VIA M/S JANTA STEEL INDUSTRIES AND TO PROVE THE GEN UINENESS OF THE SALE THEY WERE PROCURING BOGUS BILLS FROM VARIOUS C ONCERNS, ONE OF WHICH WAS THE ASSESSEE M/S JINASHISH INTEGRATED. ON RECEIPT OF 3 THE INFORMATION FROM CENTRAL EXCISE DEPARTMENT, THE INVESTIGATION UNIT OF THE I.T. DEPARTMENT RECORDED A STATEMENT OF SHRI RAMESHCHANDRA VADILAL SHAH, MANAGING PARTNER O F THE ASSESSEE FIRM U/S 131(1A) ON 2-1-1998. THE SAID INF ORMATION WAS PASSED TO THE ASSESSMENT UNIT ON THE BASIS OF WHICH THE AO REOPENED THE ASSESSMENT. ON BEING ASKED TO PRODUCE THE BOOKS OF ACCOUNT, THE ASSESSEE SUBMITTED ONLY COPY OF BANK A CCOUNTS AND TOOK THE STAND THAT THE BOOKS OF ACCOUNT AND DOCUME NTS WERE LOST DURING THE TORRENTIAL RAIN FALL IN THE MONTH OF JUL Y, 2000. STATEMENT OF SHRI RAMESHCHANDRA VADILAL SHAH WAS AG AIN RECORDED BY THE AO ON 11-12-2002. IN VIEW OF THE AS SESSEE NOT PRODUCING THE BOOKS OF ACCOUNT AND THE VIEW OF THE PARTNERS STATEMENT DATED 2-1-1998 BEFORE THE A D I T, UNIT-I I (3), AHMEDABAD, THE AO DECIDED TO TAKE AN ADVERSE VIEW. AS PER THE INFORMATION COLLECTED DURING THE YEAR UNDER QUESTIO N, BOGUS BILLS AMOUNTING TO RS.15,31,000/- HAD BEEN ISSUED. THE AO INITIALLY ISSUED A SHOW CAUSE NOTICE TAXING IT AT 10% OF THE COMMISSION RECEIVED, BUT ON BEING OBJECTED BY THE ASSESSEE THA T THE STATEMENT ON WHICH THE RELIANCE HAS BEEN PLACED STATES THAT T HE COMMISSION IS ONLY 0.25% CHANGED HIS STAND AND TAXED IT AT 8%. 5 THE ASSESSEE WENT IN APPEAL BEFORE THE CIT(A). B EFORE THE CIT(A) THE ASSESSEE CONTENDED THAT THE ASSESSEE HAS RECORDED ALL THE BILLS. NONE OF THE BILLS IS BOGUS. THEREFOR E, THE QUESTION OF ESTIMATING THE COMMISSION DOES NOT ARISE. EVEN I F THE RELIANCE IS PLACED ON THE STATEMENT OF SHRI RAMESHCHANDRA VA DILAL SHAH, THE FACT OF THE COMMISSION BEING 0.25% AS ADMITTED IN THE STATEMENT COULD BE THE BASIS FOR DETERMINING THE IN COME. THE 4 CIT(A) AFTER APPRECIATING THE SUBMISSIONS REDUCED T HE COMMISSION AT THE RATE OF 3% BY OBSERVING UNDER PAR A-4.2 OF HIS ORDER AS UNDER:- 4.2 THE MATTER HAS BEEN GIVEN DUE CONSIDERATION. I N MY VIEW, IT WOULD HAVE BEEN BETTER IN CASE THE A.O. HAD MADE MO RE INQUIRIES THAN MERELY RELYING ON THE STATEMENT OF THE PARTNER. THE ASSESSMENT ORDER IS EVEN SILENT OVER THE MATTER OF BANK ACCOUNTS MAINTA INED BY THE APPELLANT, THE ONLY DOCUMENT PRODUCED BEFORE THE A. O. IN FACT THE EXCISE ORDER REFERRED EARLIER, HAS DEALT WITH THE M ATTER IN WHICH THE ACCOUNTS WERE CREDITED WITH CHEQUES OF SALES CONSID ERATION AND CASH WAS WITHDRAWN IMMEDIATELY AND HAS GIVEN A CATEGORIC AL FINDING THAT THE PAYMENTS MADE BY CHEQUE DID NOT CO-RELATE AT AL L TO THE BILLS AMOUNT FOR THE M.S. RODS, [PARA 44 TO 51 OF THE ORD ER. NOTWITHSTANDING THAT FROM THE SUBMISSION BEFORE THE A.O. AND BEFORE ME, THE A.O. HAS MORE OR LESS ACCEPTED THE FACT OF ISSUANCE OF BOGUS BILLS. THEREFORE, THE DISPUTE ONLY REMAINS VIS--VIS, THE ESTIMATION OF THE COMMISSION. THE A.O. HAS ESTIMATED THE SAME AT 8% WHICH IN MY V IEW IS ON HIGHER SIDE BECAUSE 8% IS A RATE ONE EXPECTS AS A NET PROF IT OF A CONCERN NORMALLY TRADING AT IN GOODS AT RETAIL LEVEL, AS AL SO ENVISAGED IN SECTION 44AF. WHERE AN ASSESSEE IS ONLY INVOLVED IN THE PRO CESS OF GIVING ENTRIES ONE CANNOT EXPECT A SIMILAR RATE OF RETURN. ON THE OTHER HAND, THE A.O. IS ALSO CORRECT IN OBSERVING THAT ALL THES E EFFORTS WOULD NOT HAVE BEEN DONE FOR A MERE COMMISSION OF 0.25% LEADI NG TO A NET INCOME OF RS.3,827/-. SINCE THERE IS NO OTHER CONCR ETE EVIDENCE ON RECORD, GUIDED BY THE NORMAL RATES OF COMMISSION IN ANY ACTIVITY OF PERFORMING SERVICES, IN MY VIEW, THE COMMISSION RAT E OF 3% APPEARS TO BE QUITE JUSTIFIED FOR ESTIMATION OF INCOME. THE A.O. IS ADVISED TO ACCORDINGLY RE-WORK THE INCOME. 6 WE HAVE HEARD THE LEARNED DR AND PERUSED THE MATERIAL ON RECORD ALONG WITH THE ORDER OF THE AUTH ORITIES BELOW. WE NOTED THAT THE ASSESSEE HAS ALREADY ACCOUNTED FO R AND PROPERLY RECORDED ALL THE BILLS ISSUED WHICH ARE NO T BOGUS AND, THEREFORE, QUESTION OF ESTIMATING COMMISSION EARNED THEREON DOES NOT ARISE. WE, THEREFORE, DO NOT FIND ANY ILLEGALIT Y OR INFIRMITY IN 5 THE ORDER OF THE CIT(A). WE ACCORDINGLY UPHOLD THE ORDER OF THE CIT(A). THUS, THE GROUND TAKEN BY THE REVENUE IN IT S APPEAL FOR AY 1995-96 STANDS DISMISSED WHILE THE FIRST GROUND IN THE APPEAL FILED BY THE ASSESSEE FOR AY 1995-96 STANDS DISMISS ED. 7 THE SECOND ISSUE IN THE APPEAL OF THE ASSESSEE F OR AY 1995-96 RELATES SUSTENANCE OF THE ADDITION OF RS.45 ,835/- BY THE CIT(A). THE BRIEF FACTS ARE THAT THE ASSESSEE HAS S HOWN LOANS AND BORROWINGS OF RS.1,75,497/- AS ON 31-03-1995, THE D ETAILS OF WHICH ARE AS UNDER:- 1 CHIRENKUMAR R SHAH RS. 26,883/- 2 SURESH J DAGLI RS. 15,282/- 3 ARUNA J DAGLI RS. 15,282/- 4 REKHA KIRITBHAI RS. 15,271/- 5 SHALINI R SHAH RS. 2,779/- 6 VIVEK ENTERPRISE RS.1,00,000/- ACCORDING TO THE AO THE ABOVE DEPOSITS HAVE BEEN AC CEPTED BY THE ASSESSEE DURING THE PREVIOUS YEAR RELEVANT TO A Y 1995-96 AND THE ASSESSEE WAS REQUIRED SATISFY THREE CONDITIONS, I.E., (I) IDENTITY OF THE DEPOSITOR, (II) CAPACITY OF THE DEP OSITOR TO LEND THE MONEY; AND (III) GENUINENESS OF TRANSACTIONS. ACCOR DING TO THE AO, THE ASSESSEE HAS SUBMITTED CONFIRMATIONS IN RES PECT OF CHIREN R SHAH, SHALINI R SHAH AND VIVEK ENTERPRISE. THE STATEMENT OF SHRI SURESH B AGRAWAL, PROPRIETOR OF V IVEK ENTERPRISE WAS ALSO RECORDED U/S 131 OF THE ACT. HO WEVER, THE AO FOUND IN RESPECT OF REMAINING THREE DEPOSITORS, I.E., SURESH J DAGLI RS.15,282/-, ARUNA J DAGLI RS.15,282/- AN D REKHA KIRITBHAI RS.15,271/- THAT THESE DEPOSITORS ARE N OT ASSESSED TO 6 TAX AND THERE IS NOTHING MENTIONED ABOUT THE SOURCE OF INCOME AND INVESTMENT BY WAY OF DEPOSITS. HE ACCORDINGLY M ADE AN ADDITION OF RS.45,835/-. WHEN THE MATTER WENT IN AP PEAL BEFORE THE CIT(A), THE CIT(A) CONFIRMED THE ORDER OF THE A O BY OBSERVING AS UNDER:- 6.2 THE MATTER HAS BEEN GIVEN THE DUE CONSIDERATIO N. HOWEVER, I AM AFRAID; THE APPELLANTS POINT OF VIEW CANNOT BE ACC EPTED. IT IS NOW AN ESTABLISHED FACT THAT THE ONUS IS ON THE APPELLANT TO PROVE THE GENUINENESS OF THE CASH CREDITS AND THE THREE COMPO NENTS OF SUCH AN EXERCISE HAS TO BE TO PROVE THE IDENTITY OF LENDER, CAPABILITY OF THE LENDER AND THE GENUINENESS OF THE TRANSACTION. IN T HIS CASE AS PER THE ORDER SHEET NOTING, THE A.O. HAS ASKED FOR THE DEPO SITORS CONFIRMATION ON 5.7.2002. THE CASE WAS ADJOURNED TO 18.7.2003 WH EN NOBODY ATTENDED. ANOTHER HEARING TOOK PLACE ON 11.3.2003 A ND THE A.O. ISSUED A SHOW CAUSE NOTICE FOR THE PROPOSED ADDITIO N. TILL THE TIME OF ISSUE OF THE SHOW CAUSE NOTICE, THE APPELLANT HAD N OT SUPPLIED EVEN A SINGLE CONFIRMATION LETTER TO THE A.O. IN CONTEXT O F THE CASH CREDITS. THEREFORE, TO SAY THAT THE TIME GIVEN TO THE ASSESS EE IN THE CONTEXT WAS INADEQUATE WOULD BE ABSOLUTELY INCORRECT. IT IS ONL Y AFTER THE SHOW CAUSE NOTICE DATED 11.3.2003 HAS BEEN ISSUED BY THE A.O. PROPOSING TO MAKE ADDITION OF THE ENTIRE CASH CREDITS, THE ASSES SEE HAS FILED C1ERTAIN CONFIRMATIONS. THE THREE CONFIRMATIONS IN QUESTION ARE SIMPLE AFFIRMATIONS OF THE LOANS ON A PLAIN PAPER WITHOUT ANY ADDRESS OF THE LENDER AND WITHOUT ANY INDICATION ABOUT THE SOURCE OF INCOME, AS IIGHT1Y POINTED BY THE A.O. THEREFORE, IT IS CLEAR THAT THERE IS NOTHING WHICH PREVENTED THE APPELLANT TO LEAD THE EVIDENCE, THE ONUS OF WHICH WAS ON IT ONLY PROVES ITS CREDITS. I COULD NOT TRAC E ANY PAPER ON RECORD ABOUT THE ASSESSEE BEING AGGRIEVED OF THAT TIME BE ING VERY SHORT TO PRODUCE THE PARTIES OR THERE BEING A COUNTER REQUES T TO THE A.O. TO SUMMON THE PARTIES. IN SUCH A SITUATION, THE CONFIR MATIONS FILED BEFORE THE A.O. BECOME THE FINAL PIECES OF EVIDENCES TO BE RELIED UPON. THE SO-CALLED CONFIRMATIONS FILED BEFORE THE UNDERSIGNE D COULD NOT BE ACCEPTED BECAUSE IF THESE ARE NEW EVIDENCE, THERE C ANNOT BE ANY JUSTIFICATION FOR ITS ADMITTANCE AND IF IT IS NEW E VIDENCE, THE A.O.S FINDING ABOUT THE CREDITS HAVING REMAINED UNPROVED STANDS. THE APPELLANTS REQUEST FOR REMANDING THE MATTER/RESTOR ING THE MATTER TO THE A.O. FOR RE-VERIFICATION OF THESE CREDITS ALSO CANN OT BE ACCEPTED SINCE THAT WOULD TANTAMOUNT TO GIVING A LEASE PIECE OF 1L IFE WITHOUT ANY 7 CONTEXT. THEREFORE, CONSIDERING ALL THE FACTS OF TH E CASE, THE ADDITION OF RS.45,835/- IS CONFIRMED. 8 WE HAVE HEARD THE LEARNED DR AND PERUSED THE MATERIAL ON RECORD ALONG WITH THE ORDER OF THE AUTH ORITIES BELOW. THE ONUS IS ON THE ASSESSEE TO PROVE THE AFORESAID THREE INGREDIENTS THE ASSESSEE HAS NOT FILED ANY EVIDENCE TO PROVE ALL THESE THREE INGREDIENTS EITHER BEFORE THE AUTHORITI ES BELOW NOR BEFORE US. WE, THEREFORE, DO NOT FIND ANY INFIRMITY IN THE ORDER OF THE CIT(A). WE ACCORDINGLY CONFIRM THE ORDER OF THE CIT(A) IN THIS REGARD. 9 IN THE RESULT, ALL THE APPEALS ARE DISMISSED. ORDER PRONOUNCED IN THE OPEN COURT TODAY ON 11-09-2 009 SD/- SD/- (MAHAVIR SINGH) JUDICIAL MEMBER (P K BANSAL) ACCOUNTANT MEMBER DATE : 11-09-2009 COPY OF THE ORDER FORWARDED TO: 1. M/S JINASHISH INTEGRATED, B-44, PARISIMA COMPLEX , C G ROAD, AHMEDABAD 2. THE ITO, WARD-10(2), AHMEDABAD 3. CIT CONCERNED 4. CIT(A)-XVI, AHMEDABAD 5. THE DR, ITAT, AHMEDABAD 6. GUARD FILE BY ORDER DEPUTY REGISTRAR ASSISTANT REGISTRAR