Parnami Pump & Projects (P) Ltd., Delhi V. DCIT, Circle- 19(2), New Delhi

ITA 1843/DEL/2018

• Counselvise Citation: [2020] 111 COUNSELVISE.COM (IT) 6848 (ITAT-DELHI)
• Duration Of Justice: 1 year(s) 9 month(s) 28 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 14-01-2020
• Appeal Filed By: Assessee
• Order Result: Partly Allowed
• Bench Allotted: F
• Assessment Year: 2009-2010
• Appeal Filed On: 16-03-2018
• Result in Favour of: Partly Allowed
• Court: TRIBUNAL
• Department Lawyers: SURENDER PAL
• Keywords: Bogus purchase; Reason to believe; Borrowed satisfaction
• Section: 148

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL DELHI BENCH F NEW DELHI BEFORE SHRI G.S. PANNU, VICE PRESIDENT & SHRI AMIT SHUKLA, JUDICIAL MEMBER I.T.A. NO.1843/DEL/2018 ASSESSMENT YEAR 2009-10 PARNAMI PUMP & PROJECTS PVT. LTD., C/O KAPIL GOEL ADV., F-26/124 SECTOR 7, ROHINI, DELHI. V. DCIT, CIRCLE-19(2), NEW DELHI. TAN/PAN: AADCP 0717D (APPELLANT) (RESPONDENT) APPELLANT BY: SHRI KAPIL GOEL, ADV. RESPONDENT BY: SHRI SURENDER PAL, SR.D.R. DATE OF HEARING: 17 10 2019 DATE OF PRONOUNCEMENT: 14 01 2020 O R D E R PER AMIT SHUKLA, J.M.: THE AFORESAID APPEAL HAS BEEN FILED BY THE ASSESSEE AGAINST THE IMPUGNED ORDER DATED 02.01.2018, PASSED BY LD. CIT(A)-VII, NEW DELHI FOR THE QUANTUM OF ASSESSMENT PASSED U/S.143(3)/147 FOR THE ASSESSMENT YEAR 2009-10. IN VARIOUS GROUNDS OF APPEAL, THE ASSESSEE HAS CHALLENGED THE VALIDITY OF REOPENING U/S.147 AND ADDITION OF RS.8 LACS ON ACCO UNT OF ALLEGED BOGUS BILL IN THE NAME OF M/S. VEE GEE INDU STRIAL ENTERPRISES. 2. THE FACTS IN BRIEF ARE THAT THE ASSESSEE HAS FIL ED ITS RETURN OF INCOME ON 15.09.2009 DECLARING INCOME OF RS.51,46,341/-. THE SAID RETURN WAS DULY PROCESSED U/S. I.T.A. NO.1843/DEL/2018 2 143(1). LATER ON, INFORMATION WAS RECEIVED FROM THE OFFICE OF ADIT (INV.)-II, FARIDABAD DATED 23.03.2016 ALONG WI TH BANK STATEMENT OF THE ASSESSEE WHEREIN ASSESSEE-COMPANY HAD ISSUED A CHEQUE IN FAVOUR OF M/S. VEE GEE INDUSTRIA L ENTERPRISES. AS PER THE SAID INFORMATION, M/S. VEE GEE INDUSTRIAL ENTERPRISES WAS MAINLY ENGAGED IN LARGE VALUE CREDITS FROM THE BUSINESS AND INDIVIDUALS IN OTHER BANKS FOLLOWED BY IMMEDIATE CASH WITHDRAWALS. ON INQUIRY, IT WAS FOUND THAT NO SUCH BUSINESS WAS CARRIED OUT BY THE SAID ENTITY AND PERUSAL OF THE BANK STATEMENT ALSO REVEA LED THAT THERE IS NO STATUTORY PAYMENT LIKE VAT, EXCISE DUTY , ETC. FURTHER, NO FREIGHT PAYMENT HAS BEEN OBSERVED FROM BANK RECORDS. ACCORDINGLY, IT WAS FOUND THAT THE SAID EN TITY WAS PROVIDING BOGUS BILLING. IN WAKE OF THIS INFORMATIO N ASSESSEES CASE WAS REOPENED U/S 147/148 AFTER RECORDING FOLLO WING REASONS: IN THIS CASE, THE ASSESSEE COMPANY M/S PARNAMI PU MP & PROJECTS PVT. LTD., 102, SITA RAM MANSION, 718/21, JOSHI ROAD, KAROL BAGH, NEW DELHI (PAN: AADCP0717D, HAD FILED T HE ORIGINAL RETURN OF INCOME ON 15.09.2009 DECLARING A N INCOME OF RS.54,18,852/-. 2. SUBSEQUENTLY, INFORMATION HAS BEEN RECEIVED FROM THE OFFICE OF THE ASSISTANT DIRECTOR OF INCOME-TAX (INV .)-II, NEW CGO COMPLEX, NH-IV, FARIDABAD DATED 23.03.2016 ADDRESSE D TO THIS OFFICE CONTAINING THE FOLLOWING INFORMATION:- IN THIS REGARD, I AM ENCLOSING HEREWITH A BANK ACC OUNT STATEMENT OF M/S. VEE GEE INDUSTRIAL ENTERPRISES, F ARIDABAD AND CHEQUE IMAGE VIDE CHEQUE NO.559394 DATED 08/08/ 2008. I.T.A. NO.1843/DEL/2018 3 PERUSAL FO BANK A/C STATEMENT OF M/S. VEE GEE INDUS TRIAL ENTERPRISES HAVING A/C NO.008305007424 REVEALS THAT M/S PAMAMI PUMP & PROJECT PVT. LTD. ISSUED A CHEQUE IN FAVOUR OF M/S VEE GEE INDUSTRIAL ENTERPRISES OF ICICI BANK LT D. THE ACTIVITY OF VEE GEE INDUSTRIAL ENTERPRISES HAS MAIN LY BEEN LARGE VALUE CREDITS FROM BUSINESS & INDIVIDUALS IN OTHER BANKS FOLLOWED BY IMMEDIATE CASH WITHDRAWALS. ON FILED EN QUIRY, IT IS NOTICED THAT NO SUCH BUSINESS IS CARRIED OUT BY M/S VEE GEE INDUSTRIAL ENTERPRISES. PERUSAL OF BANK A/C STATEME NT ALSO REVEALS THAT THERE IS NO PAYMENT OF ANY STATUTORY N ATURE LIKE PAYMENT OF VAT / EXCISE DUTY ETC. M/S VEE GEE INDUS TRIAL ENTERPRISES IS INTO TRADING OF IRON AND STEEL AS PE R KYC, BUT NO FREIGHT PAYMENT CAN BE OBSERVED FROM THE BANK RECOR DS. PRIMA FACIE, NO PAYMENT OF ADMINISTRATIVE NATURE CAN ALSO BE SEEN FROM THE PERUSAL OF BANK RECORDS. FROM THIS ENTIRE PATTERN IT APPEARS TO BE A CASE OF BOGUS BILLING. DETAILS OF C HEQUE / RTGS ISSUED IN FAVOUR OF M/S. VEE GEE INDUSTRIAL ENTERPR SIES ARE AS UNDER :- S. NO. AMOUNT CHEQUE NO. DATE 1. 8,00,000 559394 08/08/2008 3. THEREFORE, I HAVE REASON TO BELIEVE THAT INCOME CHARGEABLE TO TAX HAS ESCAPED ASSESSMENT. ACCORDING LY, NOTICE U/S 148 OF THE INCOME-TAX ACT, 1961 IS PROPOSED TO BE TAKEN ON THIS ISSUE ALSO. IN VIEW OF THE ABOVE POSITION OF L AW, IT IS REQUESTED THAT NECESSARY ADMINISTRATIVE APPROVAL U/ S 151 FOR THE ISSUE NOTICE U/S 148 OF THE ACT MAY KINDLY BE A CCORDED. 4. SINCE THIS IS A CASE WHERE NOTICE U/S 148 IS PRO POSED TO BE ISSUED AFTER EXPIRY OF A PERIOD OF FOUR YEARS FR OM THE END OF THE RELEVANT ASSESSMENT YEAR, THE PR. COMMISSIONER OF INCOME- I.T.A. NO.1843/DEL/2018 4 TAX, DELHI -7, NEW DELHI IS EMPOWERED TO SANCTION T HE ISSUE OF NOTICE U/S 151 OF THE INCOME-TAX ACT, 1961. NECESSA RY APPROVAL OF THE PR. COMMISSIONER IS SOLICITED U/S 151(1) OF THE INCOME-TAX ACT, 196L - DCIT, CIR 19(2) 3. IN RESPONSE TO THE SAID NOTICES, THE ASSESSEE HA S FILED OBJECTION BEFORE THE ASSESSING OFFICER VIDE LETTER DATED 15.11.2016. THE ASSESSEE STATED THAT IT HAS PURCHAS ED IRON AND STEEL FROM M/S. VEE GEE INDUSTRIAL ENTERPRISES AND SUPPLIER IS REGISTERED WITH VAT AND ALSO GAVE THE T IN NUMBER. ACCORDINGLY, IT WAS STATED THAT IT WAS A GENUINE PU RCHASE OF GOODS WITH THE SUPPLIER HAVING VAT AND TIN NUMBER. THE LD. ASSESSING OFFICER DISPOSED OF THE SAID OBJECTION VI DE SEPARATE ORDER DATED 23.11.2016. THEREAFTER, THE ASSESSING O FFICER ISSUED SUMMONS U/S.131 TO THE PROPRIETOR OF M/S. VE E GEE INDUSTRIAL ENTERPRISES. HOWEVER, NO ONE APPEARED NO R ANY REPLY WAS FILED. THE ASSESSEE WAS THEREFORE ASKED T O ESTABLISH THE GENUINENESS OF THE TRANSACTION. HOWEVER, THE AS SESSEE REITERATED THAT IT HAS FILED COPY OF PURCHASE BILLS , COPY OF COMPUTATION OF TOTAL INCOME, AUDITED FINAL ACCOUNTS , ETC. HOWEVER, LD. ASSESSING OFFICER BASED ON MATERIAL ON RECORD AND INQUIRY CARRIED OUT BY THE INVESTIGATION WING A ND FAILURE TO COMPLY WITH THE SUMMONS ISSUED U/S.131, CAME TO THE CONCLUSION THAT PURCHASE IS BOGUS AND MADE THE ADDI TION OF RS.8 LACS. 4. LD. CIT(A), FIRST OF ALL, DISMISSED THE ASSESSEE S OBJECTION FOR VALIDITY OF REOPENING U/S.147 HOLDING THAT ASSE SSING I.T.A. NO.1843/DEL/2018 5 OFFICER HAS NOT ACTED MECHANICALLY BEFORE FRAMING T HE REASON TO BELIEVE AND HAS APPLIED HIS MIND AND CONSIDERING THE INFORMATION BEFORE HIM AFTER TAKING DUE APPROVAL. S INCE THERE WAS A SPECIFIC DETAIL IN THE INFORMATION OF THE AMO UNT AND IN RESPECT OF ENTITY FROM WHOM THE ASSESSEE HAS TAKEN ACCOMMODATION ENTRY, THEREFORE, THE FORMATION OF RE ASON TO BELIEVE IS SUFFICIENT AND ASSESSING OFFICER DID NOT NEED TO ESTABLISH THE FACT OR SUFFICIENCY OF THE REASONS. A CCORDINGLY, HE DISMISSED THE ASSESSEES GROUND ON THE JURISDICT IONAL ISSUE. 5. REGARDING ADDITION OF RS.8 LAC ON ACCOUNT OF UNEXPLAINED PURCHASES, LD. CIT (A) HAD TAKEN NOTE O F THE FACT THAT THE PROPRIETOR OF M/S. VEE GEE INDUSTRIAL ENTE RPRISES, SHRI SANJAY KUMAR FAILED TO COMPLY WITH THE SUMMONS ISSUED U/S.131 NOR ANY REPLY WAS FILED AND THE ASSESSEE CO ULD NOT PRODUCE THE DIRECTOR/PRINCIPAL OFFICERS AND NO COMP LIANCE WAS MADE IN FURNISHING THE EVIDENCE. LD. CIT (A) AF TER DETAILED DISCUSSION AND RELYING UPON THE VARIOUS JUDGMENTS H AS CONFIRMED THE SAID ADDITION. 6. BEFORE US, LD. COUNSEL FOR THE ASSESSEE SUBMITTE D THAT HERE IN THIS CASE, THE ASSESSING OFFICER HAS RECORD ED THE REASON TO BELIEVE ON BORROWED SATISFACTION SIMPLY B ASED ON INFORMATION RECEIVED FROM INVESTIGATION WING AND HA S NOT APPLIED HIS MIND INDEPENDENTLY. IN SUPPORT, HE RELI ED UPON THE FOLLOWING JUDGMENTS. I.T.A. NO.1843/DEL/2018 6 I). DELHI HIGH COURT IN THE CASE OF SABH INFRASTRUC TURE LTD. VS. ACIT, ORDER DATED 25.09.2017. II) DELHI HIGH COURT IN THE CASE OF PCIT VS. G & G PHARMA INDIA LTD., ORDER DATED 08.10.2015 III) DELHI HIGH COURT IN THE CASE OF PCIT VS. MEENA KSHI OVERSEAS PVT. LTD., ORDER DATED 26.05.2017. IV) DELHI HIGH COURT IN THE CASE OF PCIT VS. RMG PO LYVINYL LTD., ORDER DATED 07.07.2017. 7. ON MERITS, HE SUBMITTED THAT ASSESSEE HAS PRODUC ED THE INVOICES, PURCHASE BILLS, DETAILS OF VAT AND TIN NU MBER OF THE SUPPLIER, THE SOURCE OF THESE PURCHASES ARE FROM BO OKS. ONCE CORRESPONDING SALE HAVE BEEN ACCEPTED, THEREFORE, N O ADDITION ON ACCOUNT OF BOGUS PURCHASES CAN BE MADE. ALTERNAT IVELY, HE SUBMITTED THAT ENTIRE PURCHASES CANNOT BE MADE AND GP RATE CAN BE APPLIED HERE IN THE CASE OF THE ASSESSEE @ 6 %. 8. ON THE OTHER HAND, LD. DR STRONGLY RELIED UPON T HE ORDER OF THE ASSESSING OFFICER AND CIT (A) AND SUBMITTED THAT IT IS A CLEAR CASE OF ACCOMMODATION ENTRY AND EVEN THE NOTI CES SENT TO THE PARTY REMAINED UNCOMPLIED WITH. 9. WE HAVE HEARD THE RIVAL SUBMISSIONS AND ALSO PER USED THE RELEVANT FINDINGS GIVEN IN THE IMPUGNED ORDERS AS WELL AS THE MATERIAL PLACED ON RECORD. FROM THE PERUSAL OF THE REASONS RECORDED, WE FIND THAT THE INVESTIGATION WI NG DURING THE COURSE OF INQUIRY HAS FOUND THAT ASSESSEE HAS I SSUED A CHEQUE IN FAVOUR OF M/S. VEE GEE INDUSTRIAL ENTERPR ISES AND SAID ENTITY WAS NOT FOUND TO CARRY OUT ANY BUSINESS NOR ANY I.T.A. NO.1843/DEL/2018 7 STATUTORY PAYMENT LIKE VAT/EXCISE DUTY, ETC. WAS PA ID WHICH WAS STATUTORY REQUIREMENT FOR A PERSON OR ENTITY CA RRYING OUT SUCH A TRADE. APART FROM THAT, THERE IS NO FREIGHT PAYMENT ALSO. SINCE IN THE INQUIRY, SPECIFIC CHEQUE NUMBER AND ACCOUNT WAS FOUND WHICH IS TALLYING WITH THE ASSESS EES BANK ACCOUNT THEN THERE IS A PRIMA FACIE REASON TO BELIE VE THAT TRANSACTION IS NOT GENUINE AND SUCH A MATERIAL IS S UFFICIENT TO CLOTHE THE ASSESSING OFFICER TO ACQUIRE JURISDICTIO N TO REOPEN THE ASSESSMENT. THE ASSESSING OFFICER AT THE STAGE OF RECORDING THE REASONS AND ISSUANCE OF NOTICE NEED N OT NEED TO ESTABLISH FACT. THUS, THE FINDING OF THE LD. CIT (A ) UPHOLDING THE VALIDITY OF REOPENING U/S.147 IS UPHELD. 10. IN SO FAR AS THE MERITS IS CONCERNED, WE FIND T HAT THE ASSESSING OFFICER HAD ISSUED SUMMONS U/S.131 TO THE PROPRIETOR OF THE SAID ENTITY FROM WHOM ASSESSEE HA S MADE PURCHASES, BUT THAT REMAINED UNCOMPLIED WITH NOR AS SESSEE COULD PRODUCE THE PARTY. HOWEVER, ON THE OTHER HAND , THE SOURCES OF PURCHASE HAVE GONE FROM THE BOOKS OF THE ASSESSEE AND THERE IS A CORRESPONDING SALE. IN SUCH A SITUAT ION AT THE MOST EVEN IF ASSESSEE HAS MADE BOGUS PURCHASES THRO UGH CHEQUE FROM THE SOURCES DISCLOSED IN THE BOOKS OF A CCOUNT AND THEREAFTER HAS TAKEN ACCOMMODATION ENTRY AND HA S RECEIVED THE CASH BACK, THEN THE SAME GOODS MUST HA VE PURCHASED FROM THE GREY MARKET IN CASH, SINCE SALES AND PURCHASE QUANTITY WISE DETAILS IN THE TRADING ACCOU NT HAS NOT BEEN DISTURBED THEN AT THE MOST IT COULD BE A CASE OF SUPPRESSION OF GROSS PROFIT. UNDER THESE CIRCUMSTAN CES, WE I.T.A. NO.1843/DEL/2018 8 HOLD THAT ADDITION ON ACCOUNT OF ENHANCEMENT GP ON THE SAID PURCHASE WOULD BE REASONABLE. HENCE, WE DIRECT THE ASSESSING OFFICER TO APPLY 8% GP ON THE ALLEGED BOG US PURCHASES. ACCORDINGLY, THE APPEAL OF THE ASSESSEE IS PARTLY ALLOWED. 11. IN THE RESULT, THE APPEAL OF THE ASSESSEE IS PA RTLY ALLOWED. ORDER PRONOUNCED IN THE OPEN COURT ON 14 TH JANUARY, 2020. SD/- SD/- [G.S. PANNU] [AMIT SHUKLA] VICE PRESIDENT JUDICIAL MEMBER DATED: 14 TH JANUARY, 2020 PKK: