Howrah Shackle Centre, Howrah V. I.T.O.,Ward-47(2), Kolkata

ITA 1616/KOL/2019

• Counselvise Citation: [2019] 112 COUNSELVISE.COM (IT) 0664 (ITAT-KOLKATA)
• Duration Of Justice: 5 month(s) 15 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 20-12-2019
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: SMC
• Assessment Year: 2012-2013
• Appeal Filed On: 05-07-2019
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: JAYANTA KHANRA JCIT LD
• Assessee Lawyers: PINKI SHAW ACA LD
• Keywords: Bogus purchase; Opportunity of cross examination; Question of law; Accommodation entries; Tax effect
• Section: 147

Judgement Text

1 I.T.A NO.1615/KOL/2019 A.Y 2011-12 ITA NO. 1616/KOL/2019 A.Y 2012-13 HOWRAH SHCKLE CENTRE IN THE INCOME TAX APPELLATE TRIBUNAL A-SMCBENCH: KOLKATA [BEFORE SHRI A. T. VARKEY, JM ] I.TA NO.1615/KOL/2019 A.Y 2011-12 I.TA NO.1616/KOL/2019 A.Y 2012-13 HOWRAH SHACKLE CENTRE PAN: AAFFH2514R VS. I.T.O., WARD 47(2), KOLKATA APPELLANT RESPONDENT DATE OF HEARING 21.11.2019 DATE OF PRONOUNCEMENT 20.12.2019 FOR THE APPELLANT SHRI PINKI SHAW, ACA, LD.AR FOR THE RESPONDENT SHRI JAYANTA KHANRA, JCIT, LD. SR.DR ORDER PER SHRI A.T. VARKEY, JM THESE APPEALS ARE PREFERRED BY THE ASSESS EE AGAINST THE SEPARATE ORDERS OF LD. CIT (A), 14, KOLKATA DATED 02-05-2019 FOR THE ASSESSMEN T YEAR 2011-12. SINCE THE FACTS AND ISSUES ARE IDENTICAL AND SIMILAR IN NATURE, A.Y 2011-12 I S TAKEN AS THE LEAD CASE AND RESULT WILL BE FOLLOWED FOR THE A.Y 2012-13. 2. THE MAIN GRIEVANCE OF THE ASSESSEE IS AGAIN ST THE ACTION OF THE LD. CIT(A) IN SUSTAINING THE ADDITION TO THE TUNE OF 8% OF ALLEGED DISPUTED PURCHASE BY APPLYING THE G.P RATIO OF 8%. 3. THE BRIEF FACTS AS NOTED BY THE AO FOR THE A. Y 2011-12 IS THAT THE ASSESSEE HAD DECLARED IN E- RETURN OF INCOME TOTAL INCOME OF RS.3,438/- . SUBSEQUENTLY, THE CASE WAS SELECTED FOR SCRUTINY AFTER RE-OPENING U/S. 147 OF THE INCOME-TA X ACT, 1961 ( IN SHORT, THE ACT) ON THE BASIS OF SPECIFIC INFORMATION RECEIVED FROM PR. DI T (INV.), KOLKATA THAT THE ASSESSEE HAD SHOWN TO HAVE MADE BOGUS PURCHASE FROM EIGHT (8) DI FFERENT CONCERNS OF SHRI SANJIV KR. SINGH, WHO WHEN SEARCHED BY THE DEPARTMENT GAVE STA TEMENT THAT HE AND HIS CONCERNS ARE PROVIDING ACCOMMODATION ENTRIES IN LIEU OF COMMISSI ON. THE AO NOTED THAT THE ASSESSEE PURCHASED GOODS FROM SHRI SANJIV KR. SINGH AND HIS 8 (EIGHT) CONCERNS TOTAL AMOUNTING TO RS.34,71,094/-. THEREAFTER, THE AO REPRODUCES THE S TATEMENTS OF SHRI SANJIV KR. SINGH AND HE 2 I.T.A NO.1615/KOL/2019 A.Y 2011-12 ITA NO. 1616/KOL/2019 A.Y 2012-13 HOWRAH SHCKLE CENTRE WAS OF THE OPINION THAT SAID PURCHASES FROM EIGHT CONCERNS ARE BOGUS AND ADDED 8% PROFIT ( I.E. RS. 2,77,688/-) OF TOTAL PURCHASES OF RS.34,71 ,094/-. AGGRIEVED, THE ASSESSEE PREFERRED AN APPEAL BEFORE THE LD. CIT(A), WHO WAS PLEASED TO C ONFIRM THE SAME. AGGRIEVED, THE ASSESSEE IS BEFORE US. 4. I HAVE HEARD BOTH THE PARTIES AND PERUSED THE RE CORD. IT IS NOTED THAT THE AO HAS NOTED THAT THE ASSESSEE WAS ENGAGED IN THE MANUFACT URING OF ENGINEERING GOODS AND ITS INCOME WERE FROM SAID BUSINESS AS WELL AS INTEREST INCOME. THE AO BASED ON AN INFORMATION RECEIVED FROM THE INVESTIGATION WING, THAT SHRI SAN JIV KR. SINGH AND HIS GROUP CONCERNS WERE INDULGED IN PROVIDING ACCOMMODATION ENTRIES THROUGH HIS EIGHT (8) CONCERNS AND TAKING NOTE THAT THE ASSESSEE HAD MADE PURCHASE TRANSACTION WIT H THESE CONCERNS TO THE TUNE OF RS.34,71,094/- MADE THE ADDITION OF G.P @ 8% OF TOT AL UN-DISCLOSED PURCHASE FROM THESE CONCERNS (I.E. RS.2,77,688/-) . WHEN THE AO CONFRON TED THE ASSESSEE WITH THE INFORMATION AND THE STATEMENTS OF SRI SANJIV KR. SINGH RECORDED DUR ING SEARCH, THE ASSESSEE HAD BROUGHT TO THE NOTICE OF AO THAT IT HAS PURCHASED GOODS FROM THE PARTIES THROUGH BANKING TRANSACTION AND THE PURCHASES WERE SUPPORTED BY PROPER BILLS, VAT RETUR NS AND PURCHASE INPUTS, WHICH, ACCORDING TO ASSESSEE, COULD GO TO SHOW THAT THE PURCHASES A RE GENUINE. HOWEVER, ACCORDING TO LD. AR, THE AO HAS NOT GIVEN ANY CREDENCE TO THE DOCUME NTS/EVIDENCES PLACED BEFORE HIM BY THE ASSESSEE TO SUBSTANTIATE THE GENUINENESS OF PURCHAS E MADE BY THE ASSESSEE. IN ORDER TO SUBSTANTIATE THE GENUINENESS OF THE TRANSACTION, TH E LD. AR TOOK ME THROUGH THE COPIES OF VARIOUS PURCHASE BILLS, AVAILABLE FROM PAGES 4-34 OF THE PAPER BOOK. FROM THE BILL PLACED AT PAGE-4 OF THE P/B, I NOTE THAT THE ASSESSEE HAD PUR CHASED M.S. ROUND 316 KGS @ 31/- I.E. RS. 98,084/- FROM M/S. JAY SHREE SALES CORPORATION AND PAID VAT @ 4% I.E RS.3,923.36 AND HAS PAID DELIVERY CHARGES AMOUNTING TO RS. 1,00,879/- RESPECTIVELY. IN THE BILL, I NOTE TAX INVOICE NO. 7/10-11 DT. 12.4.10, CHALLAN NO. 7/10-1 1 DT. 12.4.10, VAT NO. 19533274024/C.S.T NO. 19533274024 (PAGE-5 OF THE PA PER BOOK) I ALSO NOTE BUYERS VAT NO. 19705945082 (PAGE-5 OF THE P/B). MY ATTENTION WAS ALSO DRAWN TO BANK STATEMENT PLACED AT PAGES 35-45 OF THE PAPER BOOK, WHEREIN THE ASSES SEE HAS PLACED THE STATEMENT OF BANK A/C FOR THE PERIODS 01-04-2010 TO 31-03-2011 (PAGES 25- 44 OF THE PAPER BOOK), WHEREIN THE DETAILS OF CHEQUE NOS./WITHDRAWALS/DEPOSITS IS SEEN AND PAG ES 46-48 OF PAPER BOOK ACKNOWLEDGEMENT SLIP OF VAT RETURN-14 IS FOUND PLAC ED. I ALSO NOTE THE PAPER BOOK PAGES 49-58 OF PAPER BOOK REG: PURCHASE (INPUT). I NOTE T HAT THE AO IN HIS ASSESSMENT ORDER HAD REPRODUCED THE STATEMENT OF SHRI SANJIV KR. SINGH, BUT THE AO HAD NOT GIVEN ANY OPPORTUNITY TO CROSS EXAMINE HIM. AND NOT ONLY THAT DEFICIENCY, THE AO HAS NEITHER GIVEN ANY CREDENCE TO 3 I.T.A NO.1615/KOL/2019 A.Y 2011-12 ITA NO. 1616/KOL/2019 A.Y 2012-13 HOWRAH SHCKLE CENTRE THE DOCUMENTS (SUPRA) AS FILED BEFORE HIM NOR HAS F OUND ANY FAULT OF IT. IN SUCH CIRCUMSTANCES, I NOTE THE DECISION OF THE HONBLE SUPREME COURT O F INDIA, IN THE CASE OF CIT, NEW DELHI V/S. M/S. ODEN BUILDERS P.LTD [REVIEW PETITION ( C ) DIARY NO. 22394 OF 2019 IN CIVIL APPEAL NOS. 9604-9605 OF 2018], WHEREIN IT HAS BEEN HELD BY THE APEX COURT AS UNDER:- ORDER DELAY CONDONED. WE HAVE PERUSED THE REVIEW PETITION AND FIND THAT T HE TAX EFFECT IN THIS CASE IS ABOVE RS.1 CRORE, THAT IS, RS.6,59,27,298/-. ORDINA RILY, THEREFORE, WE WOULD HAVE RECALLED OUR ORDER DATED 17TH SEPTEMBER, 2018, SINCE THE ORDER WAS PASSED ONLY ON THE BASIS THAT THE TAX EFFECT IN THIS CASE IS LESS THAN RS.1CRORE. HOWEVER, ON GOING THROUGH THE JUDGMENTS OF THE CIT, ITAT AND THE HIGH COURT, WE FIND THAT ON MERITS A DISALLOWANCE OF RS.19,39,6 0,866/- WAS BASED SOLELY ON THIRD PARTY INFORMATION, WHICH WAS NOT SUBJECTED TO ANY FURTHER SCRUTINY. THUS, THE CIT (APPEALS) ALLOWED THE APPEAL OF THE ASSESSE E STATING: 'THUS, THE ENTIRE DISALLOWANCE IN THIS CASE IS B ASED ON THIRD PARTY INFORMATION GATHERED BY THE INVESTIGATION WING OF T HE DEPARTMENT, WHICH HAVE NOT BEEN INDEPENDENTLY SUBJECTED TO FURTHER VERIFIC ATION BY THE AO WHO HAS NOT PROVIDED THE COPY OF SUCH STATEMENTS TO THE APPELL ANT, THUS DENYING OPPORTUNITY OF CROSS EXAMINATION TO THE APPELLANT, WHO HAS PRI MA FACIE DISCHARGED THE INITIAL BURDEN OF SUBSTANTIATING THE PURCHASES THRO UGH VARIOUS DOCUMENTATION INCLUDING PURCHASE BILLS, TRANSPORTATION BILLS, CO NFIRMED COPY OF ACCOUNTS AND THE FACT OF PAYMENT THROUGH CHEQUES, & VAT REGISTRA TION OF THE SELLERS & THEIR INCOME TAX RETURN. IN VIEW OF THE ABOVE DISCUSSION IN TOTALITY, THE PURCHASES MADE BY THE APPELLANT FROM M/S PAD MESH REALTORS PV T. LTD. IS FOUND TO BE ACCEPTABLE AND THE CONSEQUENT DISALLOWANCE RESULTIN G IN ADDITION TO INCOME MADE FOR RS.19,39,60,866/-, IS DIRECTED TO BE DELE TED.' THE ITAT BY ITS JUDGMENT DATED 16TH MAY, 2014 RELIE D ON THE SELF- SAME REASONING AND DISMISSED THE APPEAL OF THE REVENUE. LIKEWISE, THE HIGH COURT BY THE IMPUGNED JUDGMENT DATED 5TH JULY, 2017, AFFIRME D THE JUDGMENTS OF THE CIT AND ITAT AS CONCURRENT FACTUAL FINDINGS, WHICH HAVE NOT BEEN SHOWN TO BE PERVERSE AND, THEREFORE, DISMISSED THE APPEAL STAT ING THAT NO SUBSTANTIAL QUESTION OF LAW ARISES FROM THE IMPUGNED ORDER OF THE ITAT. IN THESE CIRCUMSTANCES, THE REVIEW PETITIONS ARE D ISMISSED. 5. IN VIEW OF THE ABOVE ORDER OF HONBLE SUPREME CO URT IN THE CASE OF M/S. ODEN BUILDERS P. LTD. (SUPRA), I FIND THAT IN THE PRESEN T CASE SINCE THE ENTIRE ADDITION HAS BEEN MADE BASED ON AN INFORMATION GATHERED FROM THE INVESTIGA TION WING OF THE DEPARTMENT AND ADMITTEDLY SINCE THE STATEMENTS WERE RECORDED BEHIN D BACK OF THE ASSESSEE AND THE AO HAS MADE THE ADDITION WITHOUT GIVING ANY OPPORTUNITY TO CROSS EXAMINE ACCORDING TO ME CANNOT 4 I.T.A NO.1615/KOL/2019 A.Y 2011-12 ITA NO. 1616/KOL/2019 A.Y 2012-13 HOWRAH SHCKLE CENTRE BE THE BASIS OF AN ADDITION, WHEN THE FACT IS THAT ASSESSEE HAS PRODUCED ALL THE RELEVANT DOCUMENTS LIKE PURCHASE BILLS, VAT REGISTRATION OF THE SELLERS, C.S.T, BANK TRANSACTION DETAILS ETC., WHICH ARE AVAILABLE IN THE PAPER BOOK, THEREF ORE THE ADDITION IS NOT WARRANTED AND CANNOT BE SUSTAINED. THEREFORE, I ALLOW BOTH THE APPEAL(S ) OF ASSESSEE AND DIRECT THE AO TO DELETE THE ADDITION(S) MADE BY THE AO AND CONFIRMED BY THE LD. CIT(A). 6. IN THE RESULT, BOTH THE APPEALS OF THE ASSESSE E SUCCEEDS AND ARE ALLOWED. ORDER PRONOUNCED IN THE OPEN COURT ON 20TH DECEMBER, 2019 SD/- A.T. VARKEY JUD ICIAL MEMBER DA TED 20 -12-2019 PP(SR.P.S.) COPY OF THE ORDER FORWARDED TO: 1. APPELLANT/ASSESSEE: M/S. HOWRAH SHACKLE CENTRE, NIL HATPUKUR, HATPUKUR, RAMRAJATALA-711112. 2 RESPONDENT/REVENUE: THE I.T.O., WARD 47(2), 3 GOVT PL (W), KOLKATA-700 001. 3. CIT, 4. CIT(A), KOLKATA. 5. DR, KOLKATA BENCHES, KOLKATA **PP/SPS TRUE COPY BY ORDER ASSISTANT REGISTRAR ITAT KOLKATA