The ACIT, Circle-4, Surat V. M/s. Radhika Prints Pvt.Ltd., Surat

ITA 1622/AHD/2008

• Counselvise Citation: [2010] 136 COUNSELVISE.COM (IT) 5933 (ITAT-AHMEDABAD)
• Duration Of Justice: 2 year(s) 1 month(s) 6 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 18-06-2010
• Appeal Filed By: Department
• Order Result: Partly Allowed
• Bench Allotted: D
• Next Hearing Date: 26-05-2010
• Assessment Year: 2003-2004
• Appeal Filed On: 12-05-2008
• Result in Favour of: Partly Allowed
• Court: TRIBUNAL
• Department Lawyers: JYOTI LAXMI
• Assessee Lawyers: S K KABRA
• Section: 250

Judgement Text

- 1 - IN THE INCOME TAX APPELLATE TRIBUNAL AHMEDABAD BENCH D AT SURAT CAMP BEFORE S/SHRI T.K.SHARMA, JM AND D.C.AGRAWAL, AM ASST. CIT, CIR.4, ROOM NO.223, AAYAKAR BHAVAN, MAJURA GATE, SURAT. VS . M/S RADHIKA PRINTS (P) LTD., 432, GIDC, PANDESARA, SURAT. (APPELLANT) .. (RESPONDENT) APPELLANTS BY :- SMT. JYOTI LAXMI, SR. D.R. RESPONDENT BY:- SHRI S. K. KABRA, AR O R D E R PER D. C. AGRAWAL, ACCOUNTANT MEMBER . THIS IS AN APPEAL FILED BY THE REVENUE RAISING FOL LOWING GROUND:- ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE AND IN LAW, THE LD. CIT(A)-III, SURAT, HAS ERRED IN RESTRICTING THE ADD ITION ON ACCOUNT OF DISALLOWANCES OF PURCHASES TO RS.1,36,250/- INSTEAD OF RS.9,09,400/- MADE BY THE AO. 2. THE FACTS OF THE CASE ARE THAT ASSESSEE IS ENGAG ED IN THE BUSINESS OF DYEING AND PRINTING OF ART SILK CLOTH ON JOB WORK B ASIS. DURING THE COURSE OF ASSESSMENT PROCEEDINGS AO NOTICED THAT ASSESSEE INCURRED AN EXPENDITURE OF RS, 2,98,27,611/- ON PURCHASE OF RAW MATERIAL INCLUDING COLOUR AND CHEMICALS. THE AO IDENTIFIED TWO PURCHAS ES AS UNDER :- ITA NO.1622/AHD/2008 ASST. YEAR:2003-04 2 1. M/S ABHI DYES RS.3,64,400/- 2. M/S POOJA DYECHEM RS.5,45,000/- RS.9,09,400/- ONE SHRI ROHIT PANWALA AND HIS FAMILY MEMBER WERE R UNNING THESE CONCERNS. HE CATEGORICALLY ADMITTED THAT HE WAS ISS UING BOGUS BILLS WITHOUT SUPPLYING THE RAW MATERIALS. HE DID NOT SUP PLY ANY MATERIAL TO THE ASSESSEE IN RESPECT OF BILLS ISSUED FOR RS.9,09 ,400/-. THE AO ALSO FOUND THAT SUPPLIERS ARE NOT MAINTAINING STOCK REGI STER OR DAILY OUT-GOING REGISTER AND SIMILARLY THE ASSESSEE COMPANY ALSO DI D NOT MAINTAIN SUCH REGISTERS SHOWING RECEIPT OF COLOURS AND CHEMICAL F ROM THE ABOVE TWO PARTIES. THERE WAS ALSO NO RECORD OF ANY CONSUMPTIO N OF MATERIAL CLAIMED TO HAVE BEEN PURCHASED FROM THESE TWO PARTIES. HE R EJECTED THE ARGUMENTS OF THE ASSESSEE THAT SIMILAR ITEMS ARE PURCHASED FR OM OTHER PARTIES AND ACCEPTED BY THE REVENUE. HE ALSO REJECTED THE ARGUM ENTS OF THE ASSESSEE THAT PURCHASES FROM THESE PARTIES WERE RETURNED IN SUBSEQUENT YEARS. ACCORDINGLY HE DISALLOWED THE ALLEGED PURCHASES FRO M THESE TWO PARTIES AND MADE AN ADDITION OF RS.9,09,400/-. THE LD. CIT( A) ON THE OTHER HAND, TREATED THE PURCHASES OF RS.3,64,400/- FROM ABHI DY ES AS GENUINE AND IN RESPECT OF THE PURCHASES FROM POOJA DYECHEM LD. CIT (A) RELYING ON THE STATEMENT OF ROHIT PANWALA HELD THAT ASSESSEE MUST HAVE PURCHASED MATERIAL AT LOWER RATES FROM SOME WHERE ELSE AND WO ULD HAVE ONLY PROCURED BILLS FROM ROHIT PANWALA. HE ACCORDINGLY R ELIED ON THE DECISION OF THE TRIBUNAL IN THE CASE OF VIJAY PROTEINS 55 TT J 76 AND DISALLOWED 25% OF THE PURCHASES MADE FROM ROHIT PANWALA IN THE CASE OF POOJA DYECHEM. THIS RESULTED IN AN ADDITION OF RS.1,36,25 0/-. 3. AGAINST THIS, LD. DR SUBMITTED THAT THERE IS NO DIFFERENCE BETWEEN THE PURCHASES MADE FROM ABHI DYES AND POOJA DYECHEM . BOTH ARE BOGUS AS ADDRESSES OF BOTH THE PARTIES ARE THE SAME I.E. 307, AVISHKAR APARTMENT, 3 ADAJAN CIRCLE, SURAT WHICH IS FOUND NOT EXISTING AN D SANDHYA PANWALA THE NAME OF THE PERSON WHO WAS OPERATING THE BANK A CCOUNT IS CLOSELY RELATED TO SHRI ROHIT PANWALA. THEREFORE, LD. CIT(A ) SHOULD NOT HAVE GIVEN DIFFERENT TREATMENT TO THE TWO PURCHASES. BOT H PURCHASES ARE BOGUS AND ENTIRE ADDITION SHOULD HAVE BEEN CONFIRMED BY T HE LD. CIT(A). THE LD. DR REFERRED TO THE DECISION OF HON. DELHI HIGH COUR T IN CIT VS. LA- MEDICA (2001) 250 ITR 575 (DEL) WHEREIN IT IS HELD AS UNDER :- THE QUESTION BEFORE THE TRIBUNAL WAS NOT WHETHER T HE PURCHASES WERE MADE FROM ANOTHER CONCERN. WHAT WAS UNDER CONSIDERA TION WAS WHETHER THE PURCHASES WERE MADE FROM KALPANA ENTERPRISES AS WAS CLAIMED BY THE ASSESSEE. AMPLE MATERIAL HAS BEEN BROUGHT ON RE CORD BY THE REVENUE TO SHOW THAT THE PURCHASES WERE IN FACT NOT MADE FR OM KALPANA ENTERPRISES. .THE ASSESSEE KNEW THAT THE WHOLE THING WAS A FICT ITIOUS ARRANGEMENT. ONCE IT IS ACCEPTED THAT THE SUPPLIES WERE NOT MADE BY KALPANA ENTERPRISES TO WHOM PAYMENTS WERE ALLEGED TO HAVE B EEN MADE, THE QUESTION WHETHER THE PURCHASES WERE MADE FROM SOME OTHER SOURCE OUGHT NOT TO HAVE WEIGHED WITH THE TRIBUNAL AS A FACTOR I N FAVOUR OF THE ASSESSEE. THE CONCLUSIONS OF THE TRIBUNAL ARE, THER EFORE CLEARLY ERRONEOUS CONTRARY TO THE MATERIALS ON RECORD AND H AVE BEEN ARRIVED AT WITHOUT TAKING INTO CONSIDERATION RELEVANT MATERIAL AND PLACING RELIANCE ON IRRELEVANT MATERIALS. IT IS TO BE NOTED THAT THE ASSESSEES STAND WAS NOT THAT IT HAD EFFECTED PURCHASES FROM ANY BODY ELSE. ITS STAND THROUGHOUT WAS THAT IT HAD EFFECTED PURCHASES FROM KALPANA ENT ERPRISES. IT WAS NOT OPEN TO THE TRIBUNAL TO MAKE OUT A THIRD CASE, WHIC H WAS NOT EVEN THE CASE OF THE ASSESSEE, TO HOLD THAT THE TRANSACTIONS WERE REAL AND NOT FICTITIOUS AS CLAIMED BY THE REVENUE. 4. WE HAVE HEAD LD. AR ALSO AND CONSIDERED THE RIVA L SUBMISSIONS AND PERUSED THE MATERIAL ON RECORD. NO DOUBT BOTH T HE PURCHASES ONE FROM M/S POOJA DYECHEM AND THE OTHER FROM M/S ABHI DYES CARRIED THE SAME NATURE AND CHARACTER. IF ONE FROM M/S POOJA DY ECHEM IS NOT FOUND GENUINE THEN IT COULD NOT BE SAID THAT PURCHASE FRO M M/S ABHI DYES ARE 4 GENUINE. HOWEVER, THE REVENUE HAS NOT SHOWN THAT NO GOODS WERE ACTUALLY PURCHASED BY THE ASSESSEE FROM ANYWHERE EL SE AND NOTHING WAS USED IN THE BUSINESS. THEREFORE, LD. CIT(A) WAS JUS TIFIED IN INVOKING THE DECISION IN VIJAY PROTEINS (SUPRA)S CASE IN DISALL OWING 25% OF SUCH PURCHASES. HOWEVER, HE SHOULD HAVE DONE THE SAME TR EATMENT IN RESPECT OF BOTH THE PURCHASES AND SHOULD NOT HAVE CONFINED HIMSELF TO PURCHASES FROM M/S POOJA DYECHEM ONLY. AS BOTH THE ALLEGED PU RCHASES CARRY THE SAME CHARACTER THE SAME TREATMENT TO BOTH THE ALLEG ED PURCHASES SHOULD BE GIVEN. ACCORDINGLY, WE RESTORE THE ADDITION @ 25 % ON PURCHASES OF RS.3,64,400/-. ADDITION TO THIS EXTENT IS RESTORED. 5. IN THE RESULT, THE APPEAL FILED BY THE REVENUE I S PARTLY ALLOWED BUT FOR STATISTICAL PURPOSES. ORDER WAS PRONOUNCED IN OPEN COURT ON 18/06/2010 SD/- SD/- (T.K. SHARMA) (D.C.AGRAWAL) JUDICIAL MEMBER ACCOUNTANT MEMBER AHMEDABAD, DATED : 18/06/2010 MAHATA/- COPY OF THE ORDER FORWARDED TO :- 1. THE APPELLANT. 2. THE RESPONDENT. 3. THE CIT(APPEALS)- 4. THE CIT CONCERNS. 5. THE DR, ITAT, AHMEDABAD 6. GUARD FILE. BY ORDER, DEPUTY / ASSTT.REGISTRAR ITAT, AHMEDABAD