Sh. Rakesh Kataria, Patiala V. ITO, W-1, Patiala

ITA 1562/CHANDI/2017

• Counselvise Citation: [2018] 125 COUNSELVISE.COM (IT) 1587 (ITAT-CHANDIGARH)
• Duration Of Justice: 9 month(s) 21 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 04-09-2018
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: SMC
• Assessment Year: 2008-2009
• Appeal Filed On: 13-11-2017
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Assessee Lawyers: H R SALDI
• Keywords: Reopening of assessment; Bogus purchase; Unexplained investment; Unexplained expenditure
• Section: 69C; 148

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL DIVISION BENCH, CHANDIGARH BEFORE SHRI SANJAY GARG, JUDICIAL MEMBER AND MS.ANNAPURNA GUPTA, ACCOUNTANT MEMBER ITA NO.1562/CHD/2017 (ASSESSMENT YEAR : 2008-09) SH. RAKESH KATARIA, VS. THE ITO, WARD-1, M/S RAKESH JEWELLERS, PATIALA CHOWK FORT, PATIALA PAN NO. AEYPK8266J (APPELLANT) (RESPONDENT) APPELLANT BY : SHRI H.R.SALDI, ADVOCATE RESPONDENT BY : SHRI MANOJ KUMAR, SR.DR DATE OF HEARING : 04.07.2018 DATE OF PRONOUNCEMENT : 04.09.2018 ORDER PER SANJAY GARG, JUDICIAL MEMBER : THE PRESENT APPEAL HAS BEEN PREFERRED BY THE ASSESS EE AGAINST THE ORDER DATED 18.09.2017 OF LD. COMMISSIO NER OF INCOME TAX (APPEALS), LUDHIANA (HEREINAFTER REFERRE D TO AS LD. CIT (A)] 2. THE ASSESSEE HAS TAKEN THE FOLLOWING GROUNDS OF APPEAL:- 1. THAT THE LD. CIT(A) ERRED IN CONFIRMING THAT THE NOTICE U/S 148 IS VALID. 2. THAT THE LD. CIT(A) WRONGLY CONFIRMED REOPENING OF ASSESSMENT FOR ASSESSMENT YEAR 2008-09 DESPITE THE FACT THAT STATEMENT WAS RECORDED IN MARCH 2013 AND THERE WAS NO 2 ITA NO.1562/CHD/2017- M/S RAKESH KATARIA, PATIALA MENTION OF ASSESSMENT YEAR 2008-09 IN THE STATEMENT. 3. THAT LD. CIT(A) WRONGLY CONFIRMED ADDITION U/S 69C DESPITE THE FACT ON RECORD THAT PAYMENTS WERE MADE THROUGH ACCOUNT PAYEE CHEQUES. SECTION 69C DEALS WITH SOURCE OF EXPENDITURE AND NOT THE EXPENDITURE ITSELF. 4. THAT LD. CIT(A) DID NOT GAVE ANY FINING ON SUBMISSIONS THAT EVEN IF THE PURCHASES ARE TREATED AS BOGUS THEN THE CLOSING STOCK WILL ALSO REDUCE BY SAME AMOUNT AND THERE WILL BE NO EFFECT ON THE PROFITS OF THE APPELLANT. 5. THAT THE APPELLANT MAINTAINS COMPLETE BOOKS OF ACCOUNT DULY AUDITED WHICH WERE PRODUCED BUT WERE NOT REJECTED BY THE ASSESSING OFFICER BUT THE LD. CIT(A) WRONGLY CONFIRMED THE ACTION OF THE LD. ASSESSING OFFICER AND CONFIRMED THE ADDITION. 6. THAT THE LD. CIT(A) HAVE BEEN IGNORED THE FACTS THAT THE APPELLANT IS TRADER AND NOT A CONSUMER AND THE PURCHASE AND SALES ARE REGULARLY RECORDED IN BOOKS OF ACCOUNT. 3. THE BRIEF FACTS RELEVANT TO THE ISSUE ARE THAT T HE ASSESSEE IS A TRADER DEALING IN GOLD AND DIAMOND JE WELLERY. IN FEBRUARY 2008, THE ASSESSEE PURCHASED DIAMONDS W ORTH RS. 3,26,000/- FROM M/S SUM DIAM, SURAT. THE PAYMEN TS FOR PURCHASES WERE MADE THROUGH ACCOUNT PAYEE CHEQU ES. THE PURCHASE WORTH RS. 3,26,000/- WERE ALSO RECORDE D IN THE BOOKS OF ACCOUNT AND ASSESSEE HAD ALSO SHOWN T HE SAME IN THE VAT RETURN, I.T. RETURN AND VAT ANNUAL RETURN DURING ASSESSMENT YEAR 2008-09. THE DEPARTMENT CONDUCTED A SEARCH ON THE SELLER IN 2013 I.E SUN DI AM, SURAT AFTER FIVE YEARS OF PURCHASE. THE SELLER IN H IS STATEMENT TO THE DEPARTMENT ALLEGEDLY STATED THAT H E WAS DEALING ONLY IN BILLING AND WAS NOT ACTUALLY SUPPLY ING THE 3 ITA NO.1562/CHD/2017- M/S RAKESH KATARIA, PATIALA GOODS. ON THE BASIS OF ABOVE STATEMENT OF THE SELLE R, THE ABOVE STATED PURCHASE TRANSACTIONS OF THE DIAMONDS WAS TREATED AS BOGUS AND, THEREFORE, THE IMPUGNED ADDIT IONS WERE MADE BY THE ASSESSING OFFICER INTO THE INCOME OF THE ASSESSEE, WHICH HAS BEEN FURTHER CONFIRMED BY CIT( A). 4. WE HAVE HEARD THE RIVAL SUBMISSIONS. ADMITTEDLY , IN THIS CASE THE PAYMENT FOR THE PURCHASE OF DIAMONDS WAS PAID BY THE ASSESSEE THROUGH ACCOUNT PAYEE CHEQUES, HENCE, SOURCE OF THE PAYMENTS HAS NOT BEEN DISPUTED AND THEREFORE, IT CANNOT BE SAID THAT THE INVESTMENT WA S MADE BY THE ASSESSEE OUT OF UNDISCLOSED SOURCE OF INCOM E. THE STOCK OF DIAMOND SO PURCHASED IS PART OF THE CLOSIN G STOCK OF THE ASSESSEE. HENCE, IT CANNOT BE SAID THAT THE ASSESSEE IN THIS CASE HAS CLAIMED BOGUS EXPENDITURE. IN VIE W OF THIS, NEITHER IT IS A CASE OF UNEXPLAINED INVESTMENT NOR OF UNEXPLAINED EXPENDITURE. THE ASSESSEE HAS PRODUCED ALL THE RELEVANT EVIDENCES TO PROVE THE GENUINENESS OF THE TRANSACTIONS. THERE WAS NO SPECIFIC ALLEGATION AGAI NST THE ASSESSEE OF INDULGING IN BOGUS PURCHASES. MOREOVER, WHEN AS OBSERVED ABOVE, STOCK SO PURCHASED BY THE ASSESS EE IS A PART OF THE CLOSING STOCK, THEN IT CANNOT BE SAID T O BE CASE OF BOGUS PURCHASES. THERE IS NO EVIDENCE ON THE FIL E THAT THE ASSESSEE HAD PURCHASED THE ABOVE DIAMONDS FROM GREY MARKET AT A LOWER RATE. IN VIEW OF THIS, WE DO NOT FIND ANY JUSTIFICATION ON THE PART OF THE LOWER AUTHORITIES IN MAKING THE IMPUGNED ADDITIONS AND THE SAME ARE ACCORDINGLY ORDERED TO BE DELETED. 4 ITA NO.1562/CHD/2017- M/S RAKESH KATARIA, PATIALA IN THE RESULT, THE APPEAL OF THE ASSESSEE IS HEREBY ALLOWED. ORDER PRONOUNCED IN THE OPEN COURT ON 04.09.2018. SD/- SD/- (ANNAPURNA GUPTA) (SANJAY GARG) ACCOUNTANT MEMBER JUDICIAL MEMBER DATED : 04.09.2018 RKK COPY TO: 1. THE APPELLANT 2. THE RESPONDENT 3. THE CIT(A) 4. THE CIT 5. THE DR