Shri Gufran A.Chaudhari, Valsad V. The ACIT.,Vapi Ward-1, Vapi

ITA 1552/AHD/2012

• Counselvise Citation: [2016] 133 COUNSELVISE.COM (IT) 9183 (ITAT-AHMEDABAD)
• Duration Of Justice: 3 year(s) 7 month(s) 29 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 11-03-2016
• Appeal Filed By: Assessee
• Order Result: Dismissed
• Bench Allotted: A
• Next Hearing Date: 09-03-2016
• Assessment Year: 2006-2007
• Appeal Filed On: 13-07-2012
• Result in Favour of: Revenue
• Court: TRIBUNAL
• Department Lawyers: M K PATEL
• Keywords: Bogus purchase

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL AHMEDABAD A BENCH (BEFORE SHRI N.K. BILLAIYA, ACCOUNTANT MEMBER & SHRI KUL BHARAT, JUDICIAL MEMBER) ITA. NO: 1360 & 1552/AHD/2012 (ASSESSMENT YEAR: 2006-07) INCOME TAX OFFICER, VAPI WARD-1, VAPI SHRI GUFRAN A CHAUDHARI, PROP: SABA TRADING CO., NR. BOMBAY RESTAURANT, BALITHA, VAPI. V/S V/S SHRI GUFRAN A CHAUDHARI, PROP: SABA TRADING CO., NR. BOMBAY RESTAURANT, BALITHA, VAPI. INCOME TAX OFFICER, VAPI WARD-1, VAPI. (APPELLANT) (RESPONDENT) ITA. NO: 1361 & 1553/AHD/2012 (ASSESSMENT YEAR: 2007-08) INCOME TAX OFFICER, VAPI WARD-1, VAPI SHRI GUFRAN A CHAUDHARI, PROP: SABA TRADING CO., NR. BOMBAY RESTAURANT, BALITHA, VAPI. V/S V/S SHRI GUFRAN A CHAUDHARI, PROP: SABA TRADING CO., NR. BOMBAY RESTAURANT, BALITHA, VAPI. INCOME TAX OFFICER, VAPI WARD-1, VAPI. (APPELLANT) (RESPONDENT) ITA. NO: 1362 & 1554/AHD/2012 (ASSESSMENT YEAR: 2008-09) ITA NOS. 155 2, 1553 1554, 1360 1361 & 1362/AHD/2012 A.YS. 2006-07 TO 20008-09 . 2 INCOME TAX OFFICER, VAPI WARD-1, VAPI SHRI GUFRAN A CHAUDHARI, PROP: SABA TRADING CO., NR. BOMBAY RESTAURANT, BALITHA, VAPI. V/S V/S SHRI GUFRAN A CHAUDHARI, PROP: SABA TRADING CO., NR. BOMBAY RESTAURANT, BALITHA, VAPI. INCOME TAX OFFICER, VAPI WARD-1, VAPI. (APPELLANT) (RESPONDENT) PAN: AEYPC0922M APPELLANT BY : SHRI SOMOGYAN PAL. SR. D.R . RESPONDENT BY : SHRI M.K. PATEL, A.R. ( )/ ORDER DATE OF HEARING : 09 -03-2 016 DATE OF PRONOUNCEMENT : 11 -03-2016 PER BENCH 1. ITA NOS. 1360 & 1552/AHD/2012 ARE CROSS APPEALS BY THE REVENUE AND THE ASSESSEE PREFERRED AGAINST THE ORDER OF THE LD. CIT(A), VALSAD FOR A.Y. 2006-07 DATED 30.03.2012, ITA NOS. 1361 & 1553 /AHD/2012 ARE APPEALS BY THE REVENUE AND THE ASSESSEE AGAINST THE ORDER OF THE LD. CIT(A), VALSAD DATED 30.03.2012 FOR A.Y. 2007-08 AN D ITA NOS. 1362 & 1554/AHD/2012 ARE CROSS APPEALS BY THE REVENUE AN D THE ASSESSEE AGAINST THE ORDER OF THE LD. CIT(A),VALSAD DATED 30 .03.2012 FOR A.Y. 2008-09. ITA NOS. 155 2, 1553 1554, 1360 1361 & 1362/AHD/2012 A.YS. 2006-07 TO 20008-09 . 3 2. AT THE VERY OUTSET, REPRESENTATIVES OF BOTH THE SID ES FAIRLY CONCEDED THAT THE FACTS IN ISSUES INVOLVED IN THE IMPUGNED A PPEALS ARE IDENTICAL FOR ALL THE YEARS UNDER CONSIDERATION. ON THIS CONC ESSION MADE BY THE RIVAL PARTIES, ALL THESE APPEALS WERE HEARD TOGETHE R AND ARE DISPOSED OF BY THIS COMMON ORDER FOR THE SAKE OF CONVENIENCE. 3. WE PROCEED BY TAKING THE FACTS OF A.Y. 2006-07 IN I TA NOS. 1552 & 1360/AHD/2012. 4. THE GRIEVANCE OF THE REVENUE AND THE ASSESSEE RELAT ES TO THE ESTIMATION OF PROFIT BY THE LD. CIT(A). 5. DURING THE COURSE OF THE SCRUTINY ASSESSMENT PROCEE DINGS, THE ASSESSEE WAS ASKED TO FURNISH COMPLETE NAMES AND AD DRESSES OF THE PARTIES FROM WHOM PURCHASES HAVE BEEN MADE ALONG WI TH COPY OF THEIR LEDGER ACCOUNT. NO PLAUSIBLE REPLY WAS RECEIVED, TH EREFORE THE OFFICER ONCE AGAIN ISSUE A SHOW CAUSE NOTICE TO THE ASSESSE E ASKING HIM TO EXPLAIN WHY 25% OF THE TOTAL PURCHASES SHOULD NOT B E DISALLOWED ON ACCOUNT OF FAILURE ON THE PART OF THE ASSESSEE TO P ROVE THE GENUINENESS AND CREDITWORTHINESS OF THE TRANSACTION. 6. ASSESSEE FILED A DETAILED REPLY VIDE LETTER DATED 0 4.11.2011 EXPLAINING IN DETAIL THE NATURE OF BUSINESS VIS--VIS THE TRAN SACTIONS RELATED TO PURCHASES. IT WAS EXPLAINED THAT THE BOOKS OF ACCOU NTS OF THE ASSESSEE ARE AUDITED AS PER THE PROVISIONS OF THE INCOME TAX ACT, THE TRADING ACCOUNT IS QUANTIFIED AND ARE WELL SUPPORTED BY PUR CHASE BILLS, SALES INVOICES AS RECORDED IN THE SALES REGISTER. IN SUPP ORT OF ITS CONTENTION, THE ASSESSEE ALSO FILED VAT RETURNS. THE DETAILS OF THE ASSESSEE WERE NOT ACCEPTED BY THE A.O WHO WAS OF THE STRONG BELIE F THAT SINCE THE ITA NOS. 155 2, 1553 1554, 1360 1361 & 1362/AHD/2012 A.YS. 2006-07 TO 20008-09 . 4 ASSESSEE HAS NOT FILED THE DETAILS OF PURCHASES AS REQUIRED. THEREFORE, THE ASSESSEE HAS FAILED TO ESTABLISH THE GENUINENES S OF THE PURCHASES, THE A.O COMPUTED THE DISALLOWANCE @ 15% OF THE TOTA L PURCHASES TREATING THEM AS NON GENUINE AND UNVERIFIABLE AND M ADE AN ADDITION OF RS. 34,48,537/-. 7. AGGRIEVED BY THIS ADDITION, THE ASSESSEE CARRIED TH E MATTER BEFORE THE LD. CIT(A). BEFORE THE LD. CIT(A), THE ASSESSEE RE ITERATED THAT THE BOOKS OF ACCOUNTS ARE AUDITED, THERE IS NO ADVERSE INFERENCE IN SO FAR AS SALES ARE CONCERNED, THE NATURE OF BUSINESS OF T HE ASSESSEE IS SUCH THAT IT IS PRACTICALLY NOT POSSIBLE TO FURNISH THE DETAILS OF RADDIWALLAS. IT WAS FURTHER EXPLAINED THAT THE ASSESSEE HAS SOLD ITS GOODS THROUGH GUJARAT PAPER MILLS ASSOCIATION WHICH FIXES THE RAT E OF EACH TON OF WASTE PAPER IN THE VAPI INDUSTRIAL TOWN WHERE THERE ARE 45 TO 50 SMALL SCALE PAPER MILLS. AFTER CONSIDERING THE FACTS AN D SUBMISSIONS AND ALSO CONSIDERING THE DETAILS OF THE ASSESSMENT MADE IN THE CENTRAL CIRCLE, SURAT, THE LD. CIT(A) WAS OF THE OPINION TH AT AN ADHOC ADDITION OF 15% OF THE PURCHASE VALUE BY THE A.O IS UNREASON ABLE AND SINCE THE PROFIT MARGIN ENHANCED BY THE CENTRAL CIRCLE, SURAT . IN SIMILAR CASES RANGES BETWEEN 0.5% TO 0.75%, THE LD. CIT(A) WAS OF THE FIRM BELIEF THAT THE NP RATE SHOULD APPLY BETWEEN 2 TO 3% AND A CCORDINGLY DIRECTED THE A.O TO APPLY NP RATE OF 2% IN A.Y. 06- 07, 3% IN A.Y. 07- 08 AND 2% IN A.Y. 08-09. 8. AGGRIEVED BY THIS BOTH REVENUE AND THE ASSESSEE ARE IN APPEAL BEFORE US. THE LD. D.R. STRONGLY SUPPORTED THE FINDINGS OF THE A.O AND THE LD. COUNSEL FOR THE ASSESSEE REITERATED WHAT HAS BEEN S TATED BEFORE THE LOWER AUTHORITIES. ITA NOS. 155 2, 1553 1554, 1360 1361 & 1362/AHD/2012 A.YS. 2006-07 TO 20008-09 . 5 9. WE HAVE CAREFULLY CONSIDERED THE ORDERS OF THE AUTHORITIES BELOW AND HAVE GIVEN A THOUGHTFUL CONSIDERATION TO THE FA CTUAL MATRIX BROUGHT ON RECORD BEFORE US. 10. UNDISPUTEDLY, THE BOOKS OF ACCOUNTS OF THE ASSESSEE ARE AUDITED AS PER THE PROVISIONS OF THE LAW. THERE IS ALSO NO DISPUTE THAT THE AUDITORS HAVE NOT QUALIFIED, THE PURCHASES MADE BY THE ASSESSEE DURING THE YEAR UNDER CONSIDERATION. IT IS ALSO AN ADMITTED FACT THAT NO ADVERSE INFERENCE HAS BEEN DRAWN IN SO FAR AS SALES ARE CONCERNED. WE FIND THAT IN THE AUDIT REPORT, THE AUDITORS HAVE ME NTIONED THAT THEY EXAMINED PURCHASE AND SALES REGISTER. WE ALSO FIND THAT THE TRADING ACCOUNTS ARE QUANTIFIED. 11. THERE IS NO DENYING THAT THE PURCHASES OF THE ASSES SEE ARE MADE FROM SMALL RADDIWALLAS THEREFORE, IT IS NOT PRACT ICALLY POSSIBLE TO HAVE PURCHASES SUPPORTED BY BILLS. SECONDLY, IT IS EQUAL LY NOT POSSIBLE TO FURNISH DETAILS OF SUCH SMALL RADDIWALLAS. 12. THEREFORE IN OUR CONSIDERED OPINION, TREATING 15% O F THE TOTAL PURCHASES AS BOGUS PURCHASES IS UNJUSTIFIABLE AND T HE ACTION OF THE A.O IS TOTALLY ERRONEOUS ON THE PECULIAR FACTS OF T HE CASE IN HAND. 13. THERE MAY BE SOME ROOM FOR SOME INFLATION IN THE PURCHASES AND THE ESTIMATION OF THE PROFIT BY THE FIRST APPELLATE AUTHORITY APPEARS TO BE REASONABLE AND PRAGMATIC. WE, THEREFORE, DECLINE TO INTERFERE WITH ITA NOS. 155 2, 1553 1554, 1360 1361 & 1362/AHD/2012 A.YS. 2006-07 TO 20008-09 . 6 THE FINDINGS OF THE LD. CIT(A), ALL THE APPEALS OF THE REVENUE AND THE ASSESSEE ARE ACCORDINGLY DISMISSED. ORDER PRONOUNCED IN OPEN COURT ON 11 - 03 - 2016 SD/- SD/- (KUL BHARAT) (N. K. BILLAIYA) JUDICIAL MEMBER ACCOUNTANT MEMBER AHMEDABAD: TRUE COPY 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,AHM EDABAD