ACIT, AMRAVATI CIRCLE, AMRAVATI, Amaravati V. SHRI SHYAM TEKCHAND PINJANI, Amaravati

ITA 164/NAG/2013

• Counselvise Citation: [2015] 140 COUNSELVISE.COM (IT) 93379 (ITAT-NAGPUR)
• Duration Of Justice: 2 year(s) 19 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 08-05-2015
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: DB
• Assessment Year: 2007-2008
• Appeal Filed On: 19-04-2013
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Keywords: Bogus purchase; Loose papers
• Section: 143(3); 131

Judgement Text

1 IN THE INCOME TAX APPELLATE TRIBUNAL, NAGPUR BENCH, NAGPUR. BEFORE SHRI MUKUL K. SHRAWAT, JUDICIAL MEMBER AND SHRI SHAMIM YAHYA, ACCOUNTANT MEMBER. I.T.A. NO. 164/NAG/2013 ASS ESSMENT YEAR : 200 7-08. ASSTT. COMMISSIONER OF INCOME-TAX, SHRI SHYAM TEKCHAND PINJANI, AMRAVATI CIRCLE, AMRAVATI. V/S. PROP. OF M/S SHYAM SONS, KHATRI COMPL EX, JAISTHAMB, AMRAVATI. PAN AATPP8895M APPELLANT. RESPONDENT. APPELLANT BY : SHRI P.R. MANE. RESPONDENT BY : S HRI K.P. DEWANI. DATE OF HEARING - 30-04-2015 DATE OF ORDER 8 TH MAY, 2015. O R D E R PER SHRI MUKUL K. SHRAWAT, J.M. THIS IS AN APPEAL FILED BY THE REVENUE EMANATING F ROM THE ORDER OF LEARNED CIT(APPEALS)-19, MUMBAI (CAMP OFFICE NAGPUR) DATED 14-02-2013. 2. IN RESPECT OF THE SINGLE ISSUE REVOLVING AROUND ALLEGED BOGUS PURCHASES, REVENUE HAS RAISED THE FOLLOWING GROUNDS : 1. THE LEARNED CIT(A) ERRED IN DELETING THE ADDITI ON OF ` .28,69,515/- ON ACCOUNT OF BOGUS PURCHASE HOLDING THAT THE AO HA S NOT BEEN ABLE TO FIND ANY DISCREPANCY IN THE SUBMISSION OF THE ASSESSEE WHICH IS CONTRARY TO THE 2 FACT THAT THE ASSESSEE HIMSELF COULD NOT FURNISH T HE CONFIRMATION OF THE P[ARTIES FROM WHERE THE ALLEGED PURCHASES WERE MAD E. 2. THE LEARNED CIT(A) ERRED IN DELETING THE ADDITI ON OF ` .28,69,515/- MADE ON ACCOUNT OF BOGUS PURCHASE HO LDING THAT THE ASSESSEE HAS PRODUCED ALL THE EVIDENCES IN SUPPOR T OF PURCHASES WITHOUT APPRECIATING THAT THE AO HAS MADE A CASE OF BOGUS PURCHASES IN AS MUCH AS NO RESPONSE WAS RECEIVED FROM THE P URCHASER. 3. THE LEARNED CIT(A) ERRED IN DELETING THE ADDITI ON OF ` .28,69,515/- MADE ON ACCOUNT OF BOGUS PURCHASE HO LDING THAT APPELLANT CANNOT BE ASKED TO DO THE IMPOSSIBLE OF PRODUCING THE PARTIES WHICH ARE NOT IN HIS CONTROL WITHOUT APPRECIATING THAT CONTR OL CAN NEVER BE ENFORCED OVER THE BOGUS PURCHASES AS IT IS NOT A CASE THAT ASSESSEE DID NOT MADE ANY PURCHASE BUT PARTIAL PURCHASES WAS HELD T O BE BOGUS IN ABSENCE OF THE CONFIRMATION FROM THE ALLEGED SELLE R. 3. FACTS IN BRIEF AS EMERGED FROM THE CORRESPONDING ASSESSMENT ORDER WAS PASED UNDER SECTION 143(3) DATED 24-12-2009 WERE TH AT THE ASSESSEE IN INDIVIDUAL CAPACITY IS A WHOLESALE TRADER OF READYMADE GARMENT S. A RETURN OF INCOME WAS FILED AT ` .7,22,500/-. IT WAS NOTED BY THE ASSESSING OFFICER THAT THE ACCOUNTS OF THE ASSESSEE WERE AUDITED AS PER THE PROVISIONS OF SECT ION 44AB OF THE I.T. ACT. IT HAS ALSO BEEN MENTIONED THAT A SURVEY WAS CONDUCTED ON 25-02-2009. A SUMMON UNDER SECTION 131 WAS ISSUED AND IN COMPLIANCE THE ASSESSEE HAS ATTENDED THE ASSESSMENT PROCEEDINGS BEFORE THE ASSESSING OFFICER . THE ASSESSEE WAS ASKED TO PRODUCE THE PURCHASE VOUCHERS FOR ASSESSMENT YEAR 2 007-08. AS PER THE ASSESSING OFFICER ON MATCHING THE ENTRIES OF THE PU RCHASE REGISTER WITH THE CORRESPONDING PURCHASE VOUCHERS, IT WAS FOUND THAT BILLS FOR PURCHASES WORTH ` .30,36,459/- WERE NOT TRACEABLE. THE ASSESSING OFF ICER HAS REPRODUCED THE DETAILS OF SUCH PURCHASES WHICH REMAINED UNVERIFIAB LE. SINCE THE BOOKS OF ACCOUNTS WERE IMPOUNDED BY THE SURVEY PARTY, THEREF ORE, THE ASSESSEE HAS 3 REQUESTED TO PROVIDE XEROX COPY OF LOOSE PAPERS AND BILLS TAKEN AWAY AT THE TIME OF SURVEY. IT HAS ALSO BEEN CONTESTED THAT IT WAS W RONG TO ALLEGE THAT THE PURCHASES WERE NOT VERIFIABLE, BECAUSE THERE COULD BE NO POSSIBILITY OF SALES OF GOODS WITHOUT HAVING CORRESPONDING PURCHASES. ON TH E OTHER HAND, THE ASSESSING OFFICER HAS MENTIONED THAT THERE WERE NO SALE BILLS OR PURCHASE VOUCHERS IN THE IMPOUNDED MATERIAL RELEVANT FOR ASSESSMENT YEAR 200 7-08. THE ASSESSING OFFICER HAS, THEREFORE, REJECTED ALL THE CONTENTIONS OF TH E ASSESSEE AND TAXED THE IMPUGNED AMOUNT IN THE HANDS OF THE ASSESSEE. HOWEV ER, THERE WERE SAME CALCULATION MISTAKE WHICH WAS RECTIFIED AND THE ADD ITION ON ACCOUNT OF NON VERIFICATION OF PURCHASES OF ` .28,69,515/- WAS MADE IN THE HANDS OF THE ASSESSEE. BEING AGGRIEVED, THE MATTER WAS CARRIED BEFORE THE FIRST APPELLATE AUTHORITY. 4. DURING THE COURSE OF APPELLATE PROCEEDINGS, THE ASSESSEE HAS FURNISHED A LIST OF ALL PARTIES FROM WHOM THE PURCHASES HAVE BE EN MADE. THE DETAILS WERE AS UNDER : 1. STYLE KIDS ZONE ` .3,64,345/- 2. AMBARWEAR, KOLKATTA ` .6,80,146/- 3. AMRUT, KOLKATTA ` . 19,596/- 4. ST. FROCK (STF(, KOLKATA ` .3,88,000/- 5. PUSHPA DRESSES(P.D.FANCY) KOLKATA. ` .2,00,000/ - 6. Y. DIAMOND, KOLKATA ` .1,45,000/ - 7. KAMLA WEAR, KOLKATA. ` . 4,020/ - 8. A.T. KAMLA, KOLKATA. ` . 2,090/ - 9. MEHTAB DRESSES, KOLKATA ` .1,60,438/ - 4 10. G.K.COLLECTION(SMT GARMENT) ` .1,37,664/ - 11. ANNA MINIWEAR, KOLKATA ` . 84,344/ - 12. ADONIS FASHION, KOLKATA ` . 13. MODERN DRESSES, KOLKATA ` . 50,000/ - 14. PINKY DRESSES, KOLKATA ` . 7.786/ - 15. TINA DRESSES, KOLKATA ` .1,16,842/ - 16. BAPI DRESS, KOLKATA ` . 61,100/ - 17. S.SHOWMAN (FANTASY),KOLKATA ` .1,00,000/ - TOTAL ` .28,72,685/ - . LEARNED CIT(APPEALS) HAS FORWARDED THE DETAILS AS F URNISHED BY THE ASSESSEE TO THE ASSESSING OFFICER WITH A DIRECTION TO SUBMIT TH E REMAND REPORT. IN THE REMAND REPORT, THE ASSESSING OFFICER HAS INFORMED THAT IN RESPECT OF 7 CASES OF THE LISTED PARTIES THE PURCHASE AMOUNT HAS BEEN VERIFIED AND I T WAS ALSO FOUND THAT THE TRANSACTION WAS IN ORDER. HOWEVER, IN RESPECT OF 10 CASES, IN THE ABSENCE OF NO REPLY, THE ASSESSING OFFICER HAS INFORMED THAT THE TRANSACTION COULD NOT BE VERIFIED. THE ASSESSEE HAS MENTIONED THAT IN RESPEC T OF 10 CASES, THE ASSESSING OFFICER HAS WRONGLY MADE THE ADDITION BECAUSE THE P URCHASES MADE FROM THOSE PARTIES HAD BEEN PARTLY ACCEPTED AS NO OBJECTION WAS RAISED WHILE EXAMINING THE BOOKS OF ACCOUNT OF THE YEAR, THE ASSESSEE HAS FURN ISHED A PARTYWISE EXPLANATION GIVING THE DETAILS OF PART ACCEPTANCE OF THE PURCHA SES FROM THOSE PARTIES. IT HAS ALSO BEEN PLEADED BEFORE THE LEARNED CIT(APPEALS) T HAT THE PAYMENTS HAVE BEEN MADE THROUGH DEMAND DRAFTS AS CERTIFIED BY THE BANK . CONSIDERING THOSE EVIDENCES, LEARNED CIT(APPEALS) HAS REVERSED THE AC TION OF THE ASSESSING OFFICER IN THE FOLLOWING MANNER : 5 I HAVE CAREFULLY CONSIDERED THE FACTS OF THE CA SE, THE SUBMISSIONS OF THE APPELLANT AND ASSESSMENT ORDER, THE REMAND REP ORT AND REJOINDER TO THE REMAND REPORT. IT IS NOTICED THAT WITH SOME PA RTIES THE ASSESSEE IS HAVING REGULAR TRANSACTION SO THE ASSESSING OFFICE R HAS ACCEPTED PART OF THE TRANSACTION AND PART HE HAS NOT ACCEPTED ON THE GR OUND THAT THE PARTY HAS NOT RESPONDED IN RESPONSE TO THE LETTER ISSUED. TH E AO HAS NOT BEEN ABLE TO FIND ANY DISCREPANCY IN THE SUBMISSION OF THE APPE LLANT. THE PAYMENT TO THE PURCHASER HAS BEEN MADE BY DEMAND DRAFT WHICH HAS BEEN EN-CASHED BY THE PURCHASER. THE AO HAS NOT BEEN ABLE TO PRODUC E ANY EVIDENCE TO SHOW THAT THE PAYMENTS ARE BOGUS IN NATURE. I FIND THAT THE APPELLANT HAS PRODUCED ALL THE EVIDENCES IN SUPPORT OF THE CLAIM OF PURCHASES MADE. THE APPELLANT CANNOT BE ASKED TO DO THE IMPOSSIBLE OF PRODUCING THE PARTIES WHICH ARE NOT IN HIS CONTROL. THE AO HAS NOT PROD UCED ANY EVIDENCE TO CONTROVERT THE SUBMISSION AND EVIDENCES PRODUCED B Y THE APPELLANT. IN VIEW OF THIS, I AM OF THE CONSIDERED OPINION THAT THE PURCHASES MADE BY THE ASSESSEE ARE GENUINE. THE ASSESSING OFFICER IS DIR ECTED TO DELETE THE ADDITION OF ` .28,69,515/-. 5. WITH THIS BRIEF FACTUAL BACKGROUND, WE HAVE HEAR D BOTH THE SIDES . THE MAIN EMPHASIS FROM THE SIDE OF THE REVENUE OF LEARNED D. R. MR. P.R. MANE WAS THAT THE ASSESSEE HAS NOT FURNISHED THE DETAILS AT THE T IME OF ASSESSMENT PROCEEDINGS, HENCE IT WAS NOT FAIR ON THE PART OF THE LEARNED CI T(APPEALS) TO ACCEPT CERTAIN EVIDENCES WHICH WERE NOT PLACED BEFORE THE ASSESSIN G OFFICER AT THE TIME OF ASSESSMENT. THE LEARNED D.R. HAS ALSO DRAWN OUR ATT ENTION THAT THE ASSESSING OFFICER HAS MADE AN OBSERVATION RELATING TO THE ASS ESSMENT UNDER CONSIDERATION I.E. ASSESSMENT YEAR 2007-08. THE ASSESSEE HAS TRI ED TO DIVERT ATTENTION OF THE APPELLATE AUTHORITY BY MENTIONING INCORRECT FACTS. ON THE OTHER HAND, FROM THE SIDE OF THE RESPONDEN T-ASSESSEE LEARNED A.R. MR. K.P. DEWANI HAS PLEADED THAT THE BOOKS OF ACC OUNT OF THE ASSESSEE HAVE BEEN AUDITED BY THE AUDITOR AFTER EXAMINING THE DET AILS OF PURCHASES AS WELL AS 6 THE DETAILS OF SALES MAINTAINED BY THE ASSESSEE IN THE REGULAR COURSE OF BUSINESS. HE HAS ALSO INFORMED THAT THE PAYMENTS HAVE BEEN MA DE THROUGH BANKING CHANNELS BY ISSUING BANK DRAFTS. THEREFORE, THE PUR CHASES WERE GENUINE AND VERIFIABLE. IT HAS ALSO BEEN ARGUED BY LEARNED A.R. THAT THE PROFIT FOR THE YEAR UNDER CONSIDERATION WAS 12.24% WHICH WERE HIGHER TH AN PAST ASSESSMENT YEAR. EVEN IN SUBSEQUENT YEARS I.E. IN ASSESSMENT YEAR 20 11-12 THE TRADING RESULTS TO THE TUNE OF 12.43% HAS BEEN ACCEPTED. AN ANOTHER PL EA HAS ALSO BEEN MADE BY THE LEARNED A.R. THAT DUE TO THE IMPUGNED ADDITION OF PURCHASES, THE PERCENTAGE OF GROSS PROFIT HAD GONE UPTO 35.64% WHICH WAS AN INCONCEIVABLE PERCENTAGE OF PROFIT IN THIS LINE OF BUSINESS. 6. AFTER EXAMINING THE EVIDENCES ON RECORD AND FEW CASE LAWS CITED, WE ARE OF THE CONSIDERED OPINION THAT IN A SITUATION WHEN THE ADMITTED FACTUAL POSITION WAS THAT THE BOOKS OF ACCOUNT WERE AUDITED AND EVEN AFT ER SURVEY PROCEEDINGS IT WAS NOT DETECTED BY THE SURVEY TEAM THAT THE PURCHASES WERE NOT VERIFIABLE OR THAT THE SALES HAVE NOT BEEN PROPERLY RECORDED, IT WAS I NCORRECT ON THE PART OF THE ASSESSING OFFICER TO HOLD THAT SOME OF THE PURCHASE S WERE NOT VERIFIABLE. RATHER IN SOME OF THE CASES, WE HAVE BEEN INFORMED THAT FE W INSTANCES OF PURCHASES WERE ACCEPTED BY THE ASSESSING OFFICER, HENCE IT WA S NOT JUSTIFIABLE TO REJECT THE PURCHASES MADE FROM THOSE VERY PARTIES SPECIALLY WH EN THE PAYMENTS HAVE BEEN MADE THROUGH DEMAND DRAFT. IT IS ALSO WORTH TO MENT ION THAT THE CORRESPONDING SALES HAVE NOT BEEN DISTURBED BY THE ASSESSING OFFI CER. THUS UNDER THE TOTALITY OF THE FACTS AND CIRCUMSTANCES OF THE CASE, WE HEREBY ON PRINCIPLE, APPROVE THE RELIEF GIVEN BY THE LEARNED CIT(APPEALS). BUT WE MA Y LIKE TO ADD, BEFORE WE CONCLUDE THE ISSUE THAT WE ARE NOT IN AGREEMENT W ITH THIS OBSERVATION OF THE LEARNED CIT(APPEALS) THAT THE APPELLANT CANNOT B E ASKED TO DO THE IMPOSSIBLE 7 OF PRODUCING THE PARTIES WHICH ARE NOT IN HIS CONTR OL. . ON THE CONTRARY, WE ARE OF THE VIEW THAT THE PRIMARY ONUS IS ON THE ASSESSEE T O FILE ALL EVIDENCES IN SUPPORT OF THE CORRECTNESS OF THE BOOKS OF ACCOUNT AS ALSO THE INCOME-TAX RETURN FILED, WHICH IS A REQUIREMENT OF THE LAW. THEREFORE, THIS FINDING OF LEARNED CIT(APPEALS), WHICH PERTAINS TO THE PARTIES FROM WHOM PURCHASES W ERE MADE BY THE ASSESSEE; ARE NOT APPROVED BY US AND DIRECT TO EXPUNGE FROM THE IMPUGNED ORDER. BY THESE COMMENTS WE HAVE ADJUDICATED GROUND NO. 3 OF T HE REVENUE DEPARTMENT AS WELL. 7. IN THE RESULT GROUNDS ABOUT THE ALLEGED BOGUS PU RCHASES AS RAISED BY THE REVENUE DEPARTMENT ARE HEREBY DISMISSED. 8. IN THE RESULT, REVENUES APPEAL IS DISMISSED. SD/- SD/- (SHAMIM YAHYA) (MUKUL K. SHRAWAT) ACCOUNTANT MEMBER JUDICIAL MEMBER. NAGPUR, DATED: 8 TH MAY, 2015. COPY OF ORDER FORWARDED TO : 1. THE ASSESSEE. 2. REVENUE. 3. THE CIT(A) 4. THE CIT, NAGPUR. 5. THE D.R., ITAT, NAGPUR. 6. GUARD FILE. TRUE COPY BY ORDER WAKODE ASSISTANT REGISTRAR, ITAT, NAGPUR.