The ACIT, Vapi Circle, Vapi V. Themis Medicare Ltd., Vapi

ITA 1782/AHD/2010

• Counselvise Citation: [2013] 140 COUNSELVISE.COM (IT) 67574 (ITAT-AHMEDABAD)
• Duration Of Justice: 3 year(s) 3 month(s) 1 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 27-08-2013
• Appeal Filed By: Department
• Order Result: Partly Allowed
• Bench Allotted: D
• Next Hearing Date: 31-07-2013
• Assessment Year: 1997-1998
• Appeal Filed On: 26-05-2010
• Result in Favour of: Partly Allowed
• Court: TRIBUNAL
• Department Lawyers: K C MATHEWS
• Assessee Lawyers: MANISH KAJI
• Keywords: Bogus purchase; Opportunity of being heard
• Section: 143(3); 147

Judgement Text

ITA NOS. 1781 TO 1784/A/2010 . A.Y. 1996 T O 2000 1 `IN THE INCOME TAX APPELLATE TRIBUNAL D BENCH, AHMEDABAD (BEFORE SHRI D.K. TYAGI, J.M, & SHRI ANIL CHATURVE DI, A.M.) I.T. A. NOS. 1781 TO 1784/AHD/2010 (ASSESSMENT YE AR: 1996-97 TO 1999-2000) THE ACIT, VAPI CIRCLE, VAPI (APPELLANT) VS. THEMIS MEDICARE LIMITED PLOT NO. 69-A, GIDC, VAPI-396 195 (RESPONDENT) PAN: AABCT1183B APPELLANT BY : SHRI K.C. MATHEWS, SR. D.R . RESPONDENT BY : SHRI MANISH KAJI A.R. ( )/ ORDER DATE OF HEARING : 31-07-2013 DATE OF PRONOUNCEMENT : 27 -08-2013 PER SHRI ANIL CHATURVEDI,A.M. 1. THESE 4 APPEALS ARE FILED BY THE REVENUE AGAINST TH E ORDER OF CIT(A) VALSAD, GUJARAT DATED 30.01.2010 FOR ASSESSMENT YEA RS 1996-97 TO 1999- 2000. 2. BEFORE US AT THE OUTSET THE LD A.R. SUBMITTED THAT THE GROUNDS RAISED IN ALL THE 4 APPEALS THOUGH RELATE TO DIFFERENT YEARS ARE IDENTICAL EXCEPT FOR THE AMOUNTS AND THEREFORE THE SUBMISSIONS AND ARGUM ENTS MADE IN ONE CASE WILL BE EQUALLY APPLICABLE TO THE OTHER AND TH EREFORE ALL THE APPEALS CAN BE HEARD TOGETHER. WE THEREFORE FOR THE SAKE OF CONVENIENCE, PROCEED ITA NOS. 1781 TO 1784/A/2010 . A.Y. 1996 T O 2000 2 TO DECIDE ALL THE APPEALS BY A CONSOLIDATED ORDER. FOR THE SAKE OF CONVENIENCE, WE SET OUT THE FACTS IN ITA NO 1781 FO R AY 1996-97, AS CULLED OUT FROM THE ORDERS AS UNDER: 3. ASSESSEE IS A COMPANY ENGAGED IN THE BUSINESS OF MA NUFACTURING OF PHARMACEUTICAL PRODUCTS. ASSESSEE FILED ITS RETURN ON INCOME FOR AY 1996-97 ON 28.11.2006 DECLARING TOTAL INCOME OF RS 28,39,540/-. ASSESSMENT WAS FRAMED U/S 143(3) VIDE ORDER DATED 1 9.3.1999 AND THE TOTAL INCOME WAS ASSESSED AT RS 2,56,31,707/-. SUBS EQUENTLY THE ASSESSMENT WAS REOPENED U/S 147 OF THE ACT AND ORDE R WAS PASSED U/S 143(3) READ WITH SECTION 147 ON 14.8.2003. WHILE FI NALISING THE REOPENED ASSESSMENT, ADDITION OF RS 13,19,645/- WAS MADE ON ACCOUNT OF BOGUS PURCHASES. ASSESSEE BEING AGGRIEVED BY THE ORDER OF AO CARRIED THE MATTER BEFORE CIT(A). CIT(A) DELETED THE ADDITION A ND THEREFORE REVENUE PREFERRED APPEAL BEFORE ITAT. ITAT VIDE CONSOLIDATE D ORDER DATED 11.8.2006 SET ASIDE THE DISALLOWANCE TO THE FILE OF AO WITH A DIRECTION TO DECIDE THE MATTER AFRESH. PURUSANT TO THE DIRECTION S OF ITAT, ORDER U/S 143(3) RWS SET ASIDE ASSESSMENT DATED 7.12.2007 WAS PASSED WHEREIN THE ADDITION OF RS 13,19,645/- MADE ON ACCOUNT OF BOGUS PURCHASE WAS RETAINED AND CONFIRMED. AGGRIEVED BY THE ORDER OF A O, ASSESSEE CARRIED THE MATTER BEFORE CIT(A). CIT(A) VIDE ORDER DATED 3 0.1.2010 ALLOWED THE APPEAL OF THE ASSESSEE. AGAINST THE AFORESAID ORDER OF CIT(A), REVENUE IS NOW IN APPEAL BEFORE US. THE ONLY EFFECTIVE GROUND OF APPEAL RAISED BY THE REVENUE READS AS UNDER: 1) ON THE FACTS AND CIRCUMSTANCES OF THE CASE AND IN L AW, THE LEARNED CIT(A) HAS ERRED IN DELETING THE DISALLOWANCE MADE ON ACCOUNT OF BOGUS PURCHASES TO THE TUNE OF RS. 13,19,645/-. ITA NOS. 1781 TO 1784/A/2010 . A.Y. 1996 T O 2000 3 4. DURING THE COURSE OF ORIGINAL ASSESSMENT PROCEEDING S, ASSESSEE HAD STATED TO HAVE MADE PURCHASES FROM ALPA TRADERS (RS 5120/-), R.V.CHEM (RS 4,85,571/-) AND WISE PHARMA (RS 8,28,954/-) AGG REGATING TO RS 13,19,645/-. DURING THE COURSE OF ASSESSMENT PROCEE DINGS, AO HELD THE AFORESAID PURCHASES TO BE BOGUS AND UNVERIFIABLE IN VIEW OF THE STATEMENT OF THE DIRECTOR OF RIZVI & CO WHO WAS CONTROLLING T HE AFFAIRS OF ALPHA TRADERS, R.V.CHEM AND WISE PHARMA. DURING THE COURS E OF ASSESSMENT PROCEEDINGS PURSUANT TO DIRECTIONS OF ITAT, SUMMONS WERE ISSUED TO WISE PHARMA AND ALPHA TRADERS ON 8.8.2007 AT THE AD DRESSES AVAILABLE ON RECORD. A COPY OF THE LETTER WAS ALSO ADDRESSED TO ASSESSEE TO PROVIDE PRESENT ADDRESSES OF THE PARTIES AND THE COPY OF TH EIR ACCOUNTS. IN RESPONSE TO THE NOTICE, ALPHA TRADERS VIDE LETTER D ATED 18 TH AUG 2007 SUBMITTED TO HAVE DONE NO TRANSACTIONS WITH THE PAR TIES. SUMMONS ISSUED IN CASE OF R.V.CHEM & WISE PHARMA WERE RETURNED BAC K UNSERVED BY POSTAL AUTHORITIES. THE ASSESSEE WAS THEREAFTER ASK ED TO FURNISH THE COMPLETE ADDRESSES OR THE AGENTS THROUGH WHOM IT HA D MADE PURCHASES AND COPY OF THE LEDGER EXTRACTS. IN RESPONSE, ASSES SEE EXPRESSED ITS INABILITY TO SUBMIT NAMES AND ADDRESSES OF THE AGEN TS AND ALSO RELEVANT RECORDS. THE AO THEREFORE HELD THAT SINCE THE PURCH ASES WERE MADE BY ASSESSEE, ONUS LIES UPON IT TO JUSTIFY THE PURCHASE S WITH GENUINE EVIDENCE. SINCE THE ASSESSEE HAD FAILED TO PROVE TH E GENUINENESS OF PURCHASES, THE ADDITION OF RS 13,19,645/- MADE ON A CCOUNT OF BOGUS PURCHASES WAS RETAINED. 5. AGGRIEVED BY THE ORDER OF AO, ASSESSEE CARRIED THE MATTER BEFORE CIT(A). CIT(A) DELETED THE ADDITION BY HOLDING AS U NDER : ITA NOS. 1781 TO 1784/A/2010 . A.Y. 1996 T O 2000 4 6. I HAVE CONSIDERED THE ASSESSMENT ORDER AND THE S UBMISSIONS OF THE APPELLANT. I FIND THAT THE HON'BLE ITAT HAD ISSUED SPECIFIC DIRECTIONS TO THE A.O. THE HON'BLE ITAT HAD DIRECTED THAT THE APPELLA NT BE AFFORDED AN OPPORTUNITY OF BEING HEARD AND CROSS EXAMINING THE PERSON, WHOSE STATEMENT WAS RELIED UPON IN MAKING ASSESSMENT. THE A.O. HAS NOT PROVIDED THE APPELLANT WITH A COPY OF STATEMENT RELIED UPON NOR HAS THE A.O. AFFORDED THE APPELLANT WITH AN OPPORTUNITY OF CROSS EXAMINING TH E PERSON WHOSE STATEMENT HAS BEEN RELIED UPON. IN THE ORIGINAL ASSESSMENT OR DER PASSED THE A.O. HAS STATED THAT THE DIRECTOR OF RIZVI & CO. WAS CONTROL LING THE AFFAIRS OF ALPHA TRADERS, M/S. R.V.CHEM AND WISE PHARMA. THE A,0. HA S BEEN ABLE TO SERVE SUMMONS ON ALPHA TRADERS. INSPITE OF SERVING THE SU MMONS ON ALPHA TRADERS, THE A.O. HAS NOT ENFORCED ATTENDANCE OF TH E SAID PARTY. INSTEAD, THE A.O. HAS SHIFTED THE BURDEN OF PRODUCING THE DEPONE NT OF THE STATEMENT ON THE APPELLANT. THUS THE A.O. HAS NOT FOLLOWED THE S PECIFIC DIRECTIONS OF THE HON'BLE ITAT. FURTHER THE HON'BLE ITAT HAD DIRECTED THAT IN CASE THE A.O. DID NOT WANT TO UTILIZE THAT STATEMENT, THE ASSESSMENT CAN BE FRAMED ON THE BASIS OF THE MATERIAL ALREADY ON RECORD. IN THIS REGARD I T IS SEEN THAT THE APPELLANT HAD FURNISHED THE DETAILS OF RAW MATERIAL PURCHASED AND ITS CONSUMPTION BOTH BEFORE MY PREDECESSOR CIT(A) AS ALSO THE HON'BLE IT AT. THESE DETAILS WERE ONCE AGAIN SUBMITTED DURING THE ASSESSMENT PROCEEDI NGS. NO ADVERSE INFERENCE HAS BEEN DRAWN WITH REFERENCE TO SUCH DET AILS/RECORDS SUBMITTED BY THE APPELLANT. IN VIEW OF THE FACTS STATED ABOVE, I HAVE TO HOLD THAT THE IMPUGNED ORDER IN APPEAL HAS BEEN PASSED BY THE A.O . WITHOUT FOLLOWING THE SPECIFIC DIRECTIONS OF THE HON'BLE ITAT AND ACCORDI NGLY THE ADDITIONS MADE ON ACCOUNT OF BOGUS PURCHASES DESERVE TO BE DELETED. 6. AGGRIEVED BY THE ORDER OF CIT(A), REVENUE IS NOW IN APPEAL BEFORE US. 7. BEFORE US, LD D.R. SUBMITTED THAT THE ADDITION WERE MADE IN THE ORIGINAL ASSESSMENT PROCEEDINGS AS THE SELLER HAD ADMITTED T HAT THE SALES MADE TO ASSESSEE WERE BOGUS AND WERE EFFECTED THROUGH BROKE RS AND BOGUS COMPANIES AND THEREFORE THE PURCHASES OF THE ASSESS EE REMAINED UNVERIFIABLE AND THEREFORE WERE TREATED AS BOGUS PU RCHASES. HE FURTHER SUBMITTED THAT DURING THE COURSE OF SET ASIDE PROCE EDINGS PURSUANT TO THE DIRECTIONS OF HON. ITAT, SUMMONS WERE ISSUED TO WIS E PHARMA AND ALPA TRADERS. ALPA TRADERS SUBMITTED THAT IT HAD DO NE NO BUSINESS WITH THE ASSESSEE. SUMMON ISSUED TO WISE PHARMA RETURNED UNS ERVED. THE ITA NOS. 1781 TO 1784/A/2010 . A.Y. 1996 T O 2000 5 ASSESSEE WAS THEREAFTER ASKED TO FURNISH THE PRESEN T ADDRESS OF WISE PHARMA AND LEDGER EXTRACT TO WHICH THE ASSESSEE THR OUGH WRITTEN SUBMISSION EXPRESSED ITS INABILITY TO SUBMIT THE RE QUIRED DETAILS. HE FURTHER SUBMITTED THAT CIT(A) DELETED THE ADDITION FOR THE REASON THAT THE AO DID NOT FOLLOW THE SPECIFIC DIRECTIONS OF ITAT T O ALLOW THE CROSS EXAMINATION OF THE PARTIES. LD.D.R. FURTHER SUBMITT ED THAT AO HAD MADE EFFORTS TO ENFORCE THE PARTIES TO BE PRESENT FOR CR OSS EXAMAINATION BY ISSUING SUMMONS BUT IN VIEW OF THE NON AVAILABILITY OF THE LATEST ADDRESS AND ALSO THE INABILITY OF THE ASSESSEE TO FURNISH T HE LATEST ADDRESS, THE ONUS CAST UPON ASSESSEE TO PROVE THE PURCHASES WAS NOT DISCHARGED. IN VIEW OF THESE FACTS, THE LD .D.R. URGED THAT THE AD DITION MADE BY THE AO BE SUSTAINED. 8. THE LD.A.R. ON THE OTHER HAND SUPPORTED THE ORDER O F CIT(A). 9. WE HAVE HEARD THE RIVAL SUBMISSIONS AND PERUSED THE MATERIAL ON RECORD. THE ISSUE IN THE PRESENT APPEAL IS WITH RESPECT TO ADDITION MADE ON ACCOUNT OF BOGUS PURCHASES. ASSESSEE HAS STATED TO HAVE MADE PURCHASES AGGREGATING TO RS 13,19,645/- FROM 3 PARTIES NAMELY , ALPA TRADERS (RS 5120/-), R.V.CHEM (RS 485571/-) AND WISE PHARMA (RS 825954/-). IN VIEW OF THE STATEMENT OF DIRECTOR OF RIZVI & CO, WH O WAS CONTROLLING THE AFFAIRS OF ALPHA TRADERS, R.V.CHEM AND WISE PHARMA, THE PURCHASES WERE HELD TO BE BOGUS. MATTER WAS CARRIED BEFORE ITAT. I TAT VIDE ORDER DATED 11.8.2006 SET ASIDE THE MATTER TO THE FILE OF AO BY HOLDING AS UNDER: BOGUS PURCHASES FROM M/S. ALPA TRADERS, R.V. CHEM & WISE PHARMA: RS. 13,14,525/- ITA NOS. 1781 TO 1784/A/2010 . A.Y. 1996 T O 2000 6 WHILE SETTING ASIDE THE ADDITION, THE HON. MEMBERS OF THE TRIBUNAL HAVE OBSERVED AS FOLLOWS: 'IN THIS APPEAL, THE FIRST ISSUE IS WITH REGARD TO THE ADDITION OF RS.5,120/-, RS. 4,85, 571 AND RS. 8,28,954 ON ACCOUNT OF PURCHA SE MADE FROM M/S. ALPA TRADERS, R.V. CHERN AND WISE PHARRNA. DURING THE CO URSE OF ASSESSMENT PROCEEDINGS, THE ASSESSING OFFICER HELD THAT THESE WERE BOGUS PURCHASES IN VIEW OF THE STATEMENT OF THE. DIRECTOR OF M/S. RIZV I & CO., WHO WAS CONTROLLING THE AFFAIRS OF M/S. ALPHA TRADERS, M/S. R.V. CHEM A ND WISE PHARMA. THE CONTENTION OF THE ASSESSEE IS THAT THE COPY OF THE STATEMENT OF THE SAID DIRECTOR HAS NOT BEEN AVAILABLE BUT A GIST, WAS GIV EN AND THE CROSS- EXAMINATION WAS ALSO NOT ALLOWED TO THE ASSESSEE. T HE ID. DR, ON THE OTHER HAND, BROUGHT TO OUR NOTICE THAT THE SELLERS IN QUE STION ARE BOGUS AND THEY UNAMBIGUOUSLY ADMIT THAT THEIR CONCERNS DO NOTHING MORE THAN ISSUING BOGUS BILLS. APART FROM, ADMISSION, THE TOTAL ABSENCE OF ANY KIND OF STOCK AND ABSENCE OF ANY INDICATION OF MOVEMENT OF STOCK IS A N ADDITIONAL FACTOR CONFIRMING THE POSITION OF BOGUS SALES. ACCORDING T O HIM, THERE IS NO QUESTION OF ASSESSEE ACTUALLY PURCHASING GOODS FROM THESE BO GUS CONCERNS WHOSE ONLY JOB IS TO ISSUE BILLS. THESE FACTS HAVE COME O UT IN COURSE OF SYSTEMATIC ACTION UNDER THE AUTHORITY OF LAW AND THE CASE OF T HE ASSESSEE CAN BE DISTINGUISHED FROM A SITUATION WHERE A PERSON GIVES A MERE STATEMENT AGAINST SOME. WE HAVE HEARD THE PARTIES. WE FAIL TO SUBSCRIBE TO THE VIEW OF THE CIT(A) BECAUSE WHEN A STATEMENT GIVEN BY A PERSON OR PARTY IS BEING RELIED AGAINST THE ASSESSEE FOR MAKING ANY ADDITION, THE ASSESSEE SHOULD BE GIVEN AN OPPORTUNITY TO CROSS-EXAMINE THE PERSON OR PARTY TO BRING OUT THE EXACT FACT ON RECORD. THE CASE, OF THE ASSESSEE IS SUPPORTED BY T HE DECISION OF ORISSA HIGH COURT IN THE CASE OF C1T VS. BIJU PATNAIK (190 1TR 396) AND GUJARAT HIGH COURT IN THE CASE OF C1T VS. D.M. JOSHI AND OTHERS (239 ITR 315). IN THE APPEAL UNDER CONSIDERATION, THE DEPARTMENT HAVING F AILED TO ALLOW CROSS- EXAMINATION, THE ORDER OF THE CIT(A) AND THE ASSESS ING OFFICER ARE SET ASIDE AND REMIT BACK THE FILE OF THE ASSESSING OFFICER WI TH THE DIRECTION TO REFRAME THE ASSESSMENT, AFTER GIVING OPPORTUNITY OF BEING H EARD TO THE ASSESSEE AND ALLOWING CROSS-EXAMINATION OF THE PERSON, WHOSE STA TEMENT WAS RELIED UPON IN MAKING THE ASSESSMENT AND IN UPHOLDING THE ADDIT ION, IF THE SAME IS RELIED UPON IN MAKING THE ASSESSMENT. HOWEVER, IF THE A.O. DOES NOT WANT TO UTILIZE THAT STATEMENT IN FRAMING THE ASSESSMENT, THE ASSES SMENT CAN BE FRAMED ON THE BASIS OF THE MATERIAL ALREADY ON RECORD AND AFT ER GIVING OPPORTUNITY OF BEING HEARD TO THE ASSESSEE. ACCORDINGLY, THIS GROU ND APPEAL IS ALLOWED FOR STATISTICAL PURPOSES.' 10. PURSUANT TO THE DIRECTIONS OF TRIBUNAL, AO ISSUED S UMMONS TO R.V.CHEM AND WISE PHARMA AT THE ADDRESSES AVAILABLE ON RECOR D BUT HOWEVER THE SUMMONS WERE RETURNED UNSERVED BY POSTAL AUTHORITIE S. THEREAFTER THE ITA NOS. 1781 TO 1784/A/2010 . A.Y. 1996 T O 2000 7 AO DIRECTED THE ASSESSEE TO FURNISH THE LATEST ADDR ESSES AND ALSO THE COPY OF THE ACCOUNTS OF THE PARTIES AS APPEARING IN ITS BOOKS OF ACCOUNTS. ASSESSEE EXPRESSED ITS INABILITY TO FURNISH THE INF ORMATION AS ACCORDING TO IT THE PURCHASES WERE MADE THROUGH AGENTS BUT THEY DID NOT HAVE THE ADDRESSES OF THE AGENTS DUE TO NON AVAILABILITY OF THE OLD RECORDS. AO ONCE AGAIN ISSUED SUMMONS TO THE PARTIES BUT THERE WAS NO COMPLIANCE. IN VIEW OF THE AFORESAID FACTS, IT IS VERY CLEAR TH AT THE AO HAD GRANTED SUFFICIENT OPPORTUNITY TO ASSESSEE TO FURNISH THE D ETAILS AND LATEST ADDRESSES BUT THE SAME COULD NOT BE FURNISHED BY AS SESSEE. IN THESE CIRCUMSTANCES SINCE THE ADDITIONS PERTAINS TO PURCH ASES, THE ONUS WAS ON THE ASSESSEE TO PROVE THE GENUINENESS OF THE SAME, WHICH IN OUR VIEW THE ASSESSEE HAS FAILED TO DISCHARGE. IN SUCH CIRCUMST ANCES THE ACTION OF AO IN TREATING THE PURCHASES CANNOT BE FAULTED . 11. WE FIND THAT THE CO-ORDINATE BENCH OF AHMEDABAD TRI BUNAL IN THE CASE OF VIJAY PROTIENS LTD VS ACIT (1996) 55 TTJ (AHD) 76 W HERE THE ASSESSEE HAD FAILED TO PRODUCE THE ALLEGED SUPPLIERS, BROKER S AND TRANSPORTERS OR ANY OTHER EVIDENCE TO PROVE THE GENUINENESS OF TRAN SACTIONS PURCHASES, HAD HELD THE PURCHASES TO BE BOGUS AND 25% OF THE P URCHASE AMOUNT WAS DISALLOWED. 12. IN THE PRESENT CASE, WE FIND THAT THE FACTS ARE IDE NTICAL TO THAT OF VIJAY PROTIENS (SUPRA). IN VIEW OF THE FACT THAT ASSESSEE HAS NOT FURNISHED THE NAMES, ADDRESSES OF SUPPLIERS OR BROKERS NOR HAS IT FURNISHED THE RELEVANT EVIDENCES CALLED FOR BY THE ASSESSING OFFICER AND T HUS COULD NOT DISCHARGE OF THE ONUS OF PROVING THE GENUINENESS OF PURCHASES. WE THUS RESPECTFULLY FOLLOWING THE DECISION OF CO-ORDINATE BENCH IN THE CASE OF ITA NOS. 1781 TO 1784/A/2010 . A.Y. 1996 T O 2000 8 VIJAY PROTIENS (SUPRA) DIRECT THE DISALLOWANCE TO 2 5% OF PURCHASES INSTEAD OF THE TOTAL PURCHASES MADE BY THE AO. THUS THIS GROUND OF REVENUE IS PARTLY ALLOWED . 13. SINCE AS ADMITTED BY BOTH THE PARTIES, THE FACTS OF THE PRESENT CASE ARE IDENTICAL TO THAT IN ALL THE YEARS, WE FOR REASONS GIVEN WHILE DISPOSING THE APPEAL FOR ASSESSMENT YEAR 96-97 HEREINABOVE, ALSO DIRECT ACCORDINGLY FOR ALL THE ASSESSMENT YEARS BEFORE US. 14. IN THE RESULT ALL THE APPEALS OF THE REVENUE ARE PA RTLY ALLOWED . ORDER PRONOUNCED IN OPEN COURT ON 27 -08 - 2013. SD/- SD/- (D.K. TYAGI) (ANIL CHATURVEDI) JUDICIAL MEMBER ACCOUNTANT MEMBER AHMEDABAD. TRUE COPY RAJESH COPY OF THE ORDER FORWARDED TO: - 1. THE APPELLANT. 2. THE RESPONDENT. 3. THE CIT (APPEALS) 4. THE CIT CONCERNED. 5. THE DR., ITAT, AHMEDABAD. 6. GUARD FILE. BY ORDER DEPUTY/ASSTT.REGISTRAR ITA T,AHMEDABAD