DCIT, Circle-5(1), Kolkata, Kolkata V. M/S. Sancia Global Infraprojects Ltd., Kolkata

ITA 170/KOL/2015

• Counselvise Citation: [2019] 117 COUNSELVISE.COM (IT) 2121 (ITAT-KOLKATA)
• Duration Of Justice: 4 year(s) 4 month(s) 7 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 19-06-2019
• Appeal Filed By: Department
• Order Result: Partly Allowed
• Bench Allotted: B
• Next Hearing Date: 01-05-2019
• Assessment Year: 2009-2010
• Appeal Filed On: 11-02-2015
• Result in Favour of: Partly Allowed
• Court: TRIBUNAL
• Assessee Lawyers: ROBIN CHOUDHUR Y
• Keywords: Bogus purchase; Rectification of order; TDS; Set aside
• Section: 143(3); 153A; 115JB; 132; 154; 11; 15

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL B, BENC H KOLKATA BEFORE SHRI S. S. GODARA, JM &DR. A.L.SAINI, AM ./ITA NOS.169 & 170/KOL/2015 ( / ASSESSMENT YEARS:2008-09 & 2009-10) DCIT, CIRCLE-5(1), KOLKATA VS. M/S SANCIA GLOBAL INFRAPROJECTS LTD. 32, EZRA STREET, TODI MANSION, R. NO. 1060, 10 TH FLOOR, KOLKATA- 700001 ./ ./PAN/GIR NO.: AABCG 0802 E (ASSESSEE) .. (REVENUE) ASSESSEE BY :SHRI K.M. GUPTA, AR RESPONDENT BY : SHRI ROBIN CHOUDHURY, ADDL. CIT SR. DR / DATE OF HEARING : 01/05/2019 /DATE OF PRONOUNCEMENT : 19/06/2019 / O R DE R PER DR. A. L. SAINI: THE CAPTIONED TWO APPEALS FILED BY THE REVENUE, PERTAINING TO ASSESSMENT YEARS 2008-09 AND 2009-10 RESPECTIVELY ARE DIRECTED AGAINST THE SEPARATE ORDERS PASSED BY THE LD. COMMISSIONER OF INCOME TAX (APPEA LS)-21, KOLKATA, WHICH IN TURN ARISE OUT OF SEPARATE ORDER PASSED BY THE ASSE SSING OFFICER U/S 154 / 251 / 153A / 143(3) OF THE ACT. 2. SINCE THE ISSUE INVOLVED IN THESE TWO APPEALS AR E COMMON AND IDENTICAL, THEREFORE, THESE APPEALS HAVE BEEN HEARD TOGETHER A ND A CONSOLIDATED ORDER IS BEING M/S SANCIA GLOBAL INFRAPROJECTS LTD. ITA NOS.169 & 170/KOL/2015 ASSESSMENT YEARS:2008-09 & 2009-10 P PP PA AA AG GG GE EE E | || | 2 22 2 PASSED FOR THE SAKE OF CONVENIENCE AND BREVITY. THE ASSESSEES APPEAL IN I.T.A. NO. 170/KOL/2015, FOR ASSESSMENT YEAR 2009-10, IS T AKEN AS A LEAD CASE. 3. GROUNDS OF APPEAL RAISED BY THE REVENUE ARE AS F OLLOWS: 1. THAT ON THE FACTS AND IN CIRCUMSTANCES OF THE CA SE, THE LD. CIT(A) ERRED ON FACTS AS WELL AS IN LAW IN HOLDING THAT RECTIFIC ATION U/S 154 FOR RE- COMPUTING BOOK PROFIT U/S 115JB WAS NOT WARRANTED, IGNORING THE FACT THAT THE BOOK PROFIT WAS COMPUTED ON THE BASIS OF RETURN FILED BY THE ASSESSEE VOLUNTARILY U/S 153A. 2. THAT THE APPELLANT CRAVES FOR LEAVE TO ADD, ALTE R OR WITHDRAW ANY GROUND OR GROUNDS OF APPEAL BEFORE OR AT THE TIME OF HEAR ING OF THE APPEAL. 4. BRIEF FACTS QUA THE ISSUE ARE THAT THE RETURN OF INCOME FOR THE A.Y. 2009-10 OF THE ASSESSEE COMPANY WAS FILED ON 05.07.2012 DISCLO SING TOTAL LOSS OF RS. 10,54,59,094/-. SCRUTINY ASSESSMENT U/S 153A / 143( 3) OF THE ACT WAS COMPLETED ON 09.08.2012 ASSESSING THE TOTAL INCOME AT RS. 15, 01,87,811/-. ON GIVING THE EFFECT U/S 251 OF THE ACT, NET LOSS WAS DETERMINED AT RS. 17,21,96,364 . IT IS SEEN THAT IN THE RETURN OF INCOME THE ASSESSEE DECLARED BOOK PROFIT AT RS. 17,44,73,626/- BUT THE ASSESSMENT WAS COMPLETED ON BOOK PROFIT OF RS. 9,29,04,504/- DUE TO INADVERTENCE. THESE BEING MISTAKES APPARENT FROM TH E RECORD, PROCEEDING FOR RECTIFICATION U/S 154 OF THE ACT WAS INITIATED. A N OTICE FOR RECTIFICATION U/S 15 4 DATED 14.03.2014 WAS SERVED UPON THE ASSESSEE. THE ASSESSEE DID NOT RESPOND TO THE NOTICE. THEREFORE, ASSESSING OFFICER TOOK THE B OOK PROFIT FOR MAT PURPOSES TO THE TUNE OF RS. 17,44,73,626/-. 5. AGGRIEVED BY THE ORDER OF THE ASSESSING OFFICER THE ASSESSEE CARRIED THE MATTER IN APPEAL BEFORE THE LD. CIT(A) WHO HAS DELETED THE ADDITION OBSERVING THE FOLLOWING: I HAVE CONSIDERED THE SUBMISSION OF THE APPELLANT AND PERUSED THE ORDER UNDER APPEAL. I HAVE ALSO GONE THROUGH THE ASSESSMENT OR DER PASSED U/S 153A / 143(3) OF THE ACT DATED 09.08.2012, THE ORDER OF THE LD. C IT(A) AGAINST THE QUANTUM APPEAL IN APPEAL NO. 64/CC-XVI/CIT(A)-C-II/12-13 DA TED 22.11.2012 AND THE ORDER GIVING EFFECT TO THE ORDER OF THE LD. CIT(A) PASSED BY THE ASSESSING OFFICER U/S 251 / 153A / 143(3) DATED 26.12.2012. IT IS OBS ERVED THAT THE SIMILAR ISSUE WAS INVOLVED IN THE CASE OF APPELLANT IN THE IMMEDIATEL Y PRECEDING ASSESSMENT YEAR I.E. A.Y. 2008-09 WHEREIN THE ASSESSING OFFICER HAS PASSED THE ORDER U/S 154 DATED 08.06.2014 ENHANCING THE BOOK PROFIT U/S 115J B IN THE ORDER PASSED U/S 251 M/S SANCIA GLOBAL INFRAPROJECTS LTD. ITA NOS.169 & 170/KOL/2015 ASSESSMENT YEARS:2008-09 & 2009-10 P PP PA AA AG GG GE EE E | || | 3 33 3 / 153A / 143(3) DATED 26.12.2012. ON EXAMINATION OF THE ORDER UNDER APPEAL AND EARLIER ORDERS FOR THE YEAR UNDER CONSIDERATION IT IS OBSERVED THAT IN THE ORDER DATED 26.12.2012 PASSED U/S 251 / 153A / 143(3) THE BOOK PROFIT U/S 115JB HAS BEEN CORRECTLY COMPUTED AT RS. 9,29,04,504/-. THERE IS NO MISTAKE IN THE SAID CALCULATION WHICH HAS BEEN DONE AS PER THE DIRECTIO N OF THE LD. CIT(A) IN THE QUANTUM APPEAL. IN VIEW OF ABOVE FACTS AND FOLLOWIN G MY DECISION IN THE CASE OF APPELLANT IN A.Y. 2008-09 IN APPEAL NO. 286/CC-3(4) /CIT(A)-21/14-15 DATED 21.11.2014, THE A.O. IS DIRECTED TO ASSESS THE BOOK PROFIT U/S 115JB AT RS. 9,29,04,504/-. THE GROUND NO. 2 IS ALLOWED. 6. AGGRIEVED BY THE ORDER OF THE LD. CIT(A) THE REV ENUE IS IN APPEAL BEFORE US. 7. THE LD. DR FOR THE REVENUE SUBMITTED WRITTEN SUB MISSIONS BEFORE US WHICH IS REPRODUCED BELOW: 1. A SEARCH OPERATION U/S 132 OF THE ACT WAS CARRI ED OUT IN AUSTRAL GROUP ON 23/06/2009. THE MAIN COMPANIES OF THIS GROUP ARE M/ S GREEN EARTH RESOURCES AND PROJECTS LTD. (FORMERLY KNOWN AS AUSTRAL COKE A ND PROJECT LTD. ) AND M/S SANCIA GLOBAL INFRA PROJECTS LTD.(FORMERLY KNOWN AS GREMACH INFRASTRUCTURE EQUIPMENTS AND PROJECTS LTD. ) CONSEQUENTLY, THE AS SESSEE FILED ITS RETURN U/S 153A ON 05/07/2012 FOR THE YEAR UNDER CONSIDERATION SHOWING LOSS OF RS. 10,54,59,094/-. ASSESSMENT WAS MADE U/S 153A / 143( 3) ON 09/08/2012. 2. IN THE RETURN FILED BY U/S 153A, THE ASSESSEE CO MPANY HAD SHOWN BOOK PROFIT OF RS. 17,44,73,626/-. IN ORDER TO DETERMINE THE SAID BOOK PROFIT, SOME ADJUSTMENT WAS DONE BY THE ASSESSEE. THE DETAILS OF THE SAME A RE GIVEN AS UNDER: NET PROFIT AS PER THE PROFIT & LOSS ACCOUNT : RS . 41,34,82,495/- ADD: BOGUS PURCHASE : RS. 48,30,41,366/- RS. 89,65,23,861/- LESS: PROPORTIONATE BOGUS SALES ELIMINATED : RS. 72,20,50,234/- (149% OF PURCHASE) BOOK PROFIT : RS. 17,44,73,627/- 3. IN THE COURSE OF THE ASSESSMENT PROCEEDINGS, THE CLAIM WAS REVISED WITH REGARD 0 THE COMPUTATION OF THE FIGURE OF THE BOOK PROFIT. HOWEVER, THE AO DE ERMINED BOOK PROFIT AT RS.41,34,82,494/- AS DETAILED BELOW: NET PROFIT AS PER THE PROFIT & LOSS ACCOUNT : RS. 41,34,82,495/- ADD: BOGUS PURCHASE RS..1,20,41,23,721/- RS.1,61,76 ,06 ,216/- LESS: PROPORTIONATE BOGUS SALES ELIMINATED RS.1,2 0,41 ,23 ,721/- BOOK PROFIT RS. 41,34,82,495/- 4. THE ASSESSEE PREFERRED AN APPEAL BEFORE THE CIT( A) AGAINST THE ORDER PASSED BY THE AO. THE CIT(A) ALLOWED THE APPEAL OF THE ASS ESSEE IN PART VIDE ORDER DT. 22/11/2012 AND DIRECTED THE AO TO ELIMINATE THE BOG US SALES AT RS.1,52,47,01,711/- INSTEAD OF RS.1,20,41,23,721/-. ACCORDINGLY, THE AO WHILE M/S SANCIA GLOBAL INFRAPROJECTS LTD. ITA NOS.169 & 170/KOL/2015 ASSESSMENT YEARS:2008-09 & 2009-10 P PP PA AA AG GG GE EE E | || | 4 44 4 GIVING EFFECT OF THE CIT(A)'S ORDER, DETERMINED THE BOOK PROFIT AT RS.9,29,04,504/- AS UNDER: NET PROFIT AS PER THE PROFIT & LOSS ACCOUNT - RS. 41,34,82,495/- ADD : BOGUS PURCHASE RS.1 ,20,41,23,721/- RS.1,61,76 ,06 ,216/- LESS: PROPORTIONATE BOGUS SALES ELIMINATED RS.1,5 2,4 7,01,711/- (127% OF PURCHASE) BOOK PROFIT RS. 9,29,82,495/- 5. IN THE RETURN OF INCOME FILED U/S. 153A, CREDIT OF TDS OF RS.1 ,09,04,785/- WAS CLAIMED BY THE ASSESSEE. IN THE ORDER U/S. 251/153A /143(3), THE AO ALLOWED CREDIT OF TDS OF RS.1,71,28, 198/- AS PER THE FORM 26AS. LATER, THE SAID APPEAL EFFECT ORDER WAS RECTIFIED BY THE AO VIDE ORDER U/S. 154/2 51/153A/143(3) DATED 08106/2014. IN THE SAID ORDER, THE A.O DETERMINED B OOK PROFIT AT RS.17,44,73,626/- AND ALLOWED CREDIT OF TDS OF RS.1 ,09,04,785/- AS PER THE CLAIM MADE BY THE ASSESSEE IN THE RETURN OF INCOME WHICH RESULTED IN RAISING A DEMAND OF RS.2,18,62,624/-. 6. BEING AGGRIEVED WITH THE RECTIFICATION ORDER PAS SED BY THE A.O, THE ASSESSEE PREFERRED AN APPEAL BEFORE THE CIT(A) WHO VIDE HIS ORDER DT.21.11.2014 IN APPEAL NO.285/CIT(A)-21/14-15 DIRECTED THE AO TO ASSESS BO OK PROFIT U/S.115JB AT RS.9,29,04,504/- HOLDING THAT THERE WAS NO MISTAKE APPARENT IN THE COMPUTATION OF THE BOOK PROFIT MADE IN THE ORDER DT.26.12.2012 U/S .251/ 153A/143(3) OF THE ACT. 7. NO COGENT EXPLANATION WAS GIVEN BY THE ASSESSEE IN THE COURSE OF THE ASSESSMENT PROCEEDINGS AS REGARDS AS THE QUANTUM OF PURCHASE - SALE FIGURE WHICH WAS RECTIFIED AND THE DECREASE IN SALE FROM 1 49/0 OF PURCHASE TO 127% OF PURCHASE. THE ORDER OF THE CIT(A) IS COMPLETELY SIL ENT ON THIS ISSUE. MOREOVER, THE CIT(A) ALSO DIDN'T ELUCIDATE AS TO HOW THE BOOK PR OFIT WAS CORRECTLY COMPUTED AT RS.9,29,04,504/- IN THE ORDER DT.26.12.2012 U/S.25 1/153A/143(3) OF THE ACT. 8. UNDER THE CIRCUMSTANCES, THE ORDER OF THE CIT(A) IS PERVERSE AND THEREFORE IT IS PRAYED THAT THE SAME MAY BE SET ASIDE AND THAT OF T HE AO (ORDER DT.08/06/2014 U/S. 154/251/ 153A/143(3) MAY BE RESTORED. 9. ITA 169/KO1/2015' FOR THE AY 2008-09 IS SIMILAR TO THE FACTS OR THE CASE. HENCE THE SUBMISSION FOR-THE AY 2009-10 MAY KINDLY BE CON SIDERED FOR AY 2008-09 ALSO. 8. THE LD. COUNSEL FOR THE ASSESSEE DEFENDED THE OR DER PASSED BY THE LD. CIT(A). 9. WE HAVE HEARD BOTH THE PARTIES AND PERUSED THE M ATERIAL AVAILABLE ON RECORD. WE NOTE THAT NO COGENT EXPLANATION WAS GIVEN BY THE ASSESSEE IN THE COURSE OF THE ASSESSMENT PROCEEDINGS AS REGARDS AS THE QUANTU M OF PURCHASE - SALE FIGURE M/S SANCIA GLOBAL INFRAPROJECTS LTD. ITA NOS.169 & 170/KOL/2015 ASSESSMENT YEARS:2008-09 & 2009-10 P PP PA AA AG GG GE EE E | || | 5 55 5 WHICH WAS RECTIFIED AND THE DECREASE IN SALE FROM 1 49% OF PURCHASE TO 127% OF PURCHASE. THE ORDER OF THE CIT(A) IS COMPLETELY SIL ENT ON THIS ISSUE. MOREOVER, THE CIT(A) ALSO DIDN'T ELUCIDATE AS TO HOW THE BOOK PR OFIT WAS CORRECTLY COMPUTED AT RS.9,29,04,504/- IN THE ORDER DT.26.12.2012 U/S.25 1/153A/143(3) OF THE ACT. WE NOTE THAT PROVISION OF SECTION 115JB IS A CODE ITSE LF AND HENCE WHATEVER MENTIONED IN THE SECTION SHOULD BE FOLLOWED TO COMPUTE BOOK P ROFIT. WE ARE OF THE VIEW THAT THE ASSESSING OFFICER SHOULD EXAMINE WHAT IS ADDITI ONS OR DEDUCTIONS IN THE BOOK PROFIT AS COMPUTED BY ASSESSEE COMPANY AS PER THE P ROVISIONS OF COMPANIES ACT. WE NOTE THAT THE PROVISIONS RELATING TO ADJUSTMENTS BY WAY OF INCREASE AND DECREASE TO THE NET PROFIT SHOWN BY THE ASSESSEE IN PROFIT AND LOSS ACCOUNT ARE VERY EXPLICIT IN SECTION 115JB OF THE ACT. THE ITEMS WHI CH ARE TO BE ADDED TO THE NET PROFIT HAVE BEEN LISTED OUT IN EXPLANATION 1 TO THA T SECTION. THE LD. A.O. / CIT(A) SHOULD ADHERE TO THAT LIST AND CANNOT TRAVEL BEYOND THESE ITEMS. THE PROVISIONS OF SECTION 115JB DO NOT LEAVE ANY ROOM FOR ADJUSTMENT BY THE ASSESSING OFFICER OTHER THAN THOSE MENTIONED IN EXPLANATION 1 TO SECT ION 115JB TO THE NET PROFIT REFLECTED IN THE ACCOUNTS OF ANY ASSESSEE. WE NOTE THAT NEITHER LD. ASSESSING OFFICER NOR LD. CIT(A) EXPLAINED THE PROVISION OF S ECTION 115JB IN RELATION TO COMPUTATION OF BOOK PROFIT. UNDER THE CIRCUMSTANCES , WE SET ASIDE THE ORDER OF LD. CIT(A) AND REMIT THE ISSUE BACK TO THE FILE OF A.O. WITH THE DIRECTION TO COMPUTE THE BOOK PROFIT AS PER THE PROVISIONS OF SECTION 11 5JB OF THE ACT. 6. IN THE RESULT, BOTH THE APPEALS OF THE REVENUE A RE ALLOWED FOR STATISTICAL PURPOSES. ORDER PRONOUNCED IN THE COURT ON 19.06.2019 SD/- ( S. S. GODARA ) SD/- (A.L.SAINI) / JUDICIAL MEMBER / ACCOUNTANT MEMBER / DATE: 19/06/2019 ( SB, SR.PS ) M/S SANCIA GLOBAL INFRAPROJECTS LTD. ITA NOS.169 & 170/KOL/2015 ASSESSMENT YEARS:2008-09 & 2009-10 P PP PA AA AG GG GE EE E | || | 6 66 6 COPY OF THE ORDER FORWARDED TO: 1. DCIT, CIRCLE-5(1), KOLKATA 2. M/S SANCIA GLOBAL INFRAPROJECTS LTD. 3. C.I.T(A)- 4. C.I.T.- KOLKATA. 5. CIT(DR), KOLKATA BENCHES, KOLKATA. 6. GUARD FILE. TRUE COPY BY ORDER ASSIST ANT REGISTRAR ITAT, KOLKA TA BENCHES