Shri Shailesh Keshavlal Shah, Patan V. The Income Tax Officer, Ward-2, Patan

ITA 1879/AHD/2015

• Counselvise Citation: [2016] 133 COUNSELVISE.COM (IT) 9285 (ITAT-AHMEDABAD)
• Duration Of Justice: 8 month(s) 15 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 08-03-2016
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: C
• Assessment Year: 2011-2012
• Appeal Filed On: 23-06-2015
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: R P MAURYA
• Assessee Lawyers: M G PATEL
• Keywords: Bogus purchase; Accommodation entries
• Section: 143(3); 148

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL AHMEDABAD C BENCH BEFORE: S H RI N.K. BILLAIYA , ACCOUNTANT MEMBER AND SHR I S. S. GODARA , JUDICIAL MEMBER SH AILESH KESHAVLAL SHAH, PROP. OF SNF ENGINEERING CO, M/S. KESHAVLAL & CO , NR. THREE GATES, AT PATAN - 384265, PAN: AEORS022P (APPELLANT) VS THE ITO, WARD - 2, PATAN (RESPONDENT) REVENUE BY : MR. R.P. MAURYA , SR. D . R. ASSESSEE BY: S H RI M.G. PATEL , A.R. DATE OF HEARING : 26 - 0 2 - 2 016 DATE OF PRONOUNCEMENT : 08 - 03 - 2 016 / ORDER P ER : S. S. GODARA , JUDICIAL MEMBER : - THESE THREE ASSESSEE S APPEALS FOR A.Y. 2009 - 10 TO 2011 - 12 , AR ISE FROM SEPARATE ORDE R OF THE CIT(A ), GANDHINAGAR DATED 24 - 04 - 2015 IN APPEAL NO S . CIT(A)/GNR/313/2014 - 15 , C IT(A)/GNR/314 /2014 - 15 AND C IT(A)/GNR/312 /2014 - 15 , UPH OLDING ASSESSING OFFICER S ACTION MAKING ADDITIONS OF RS. 52,93,515/ - , RS. I T A NO S . 1877 TO 1879 / A HD /20 15 A SSESSMENT YEAR 200 9 - 10 TO 2011 - 12 I .T.A NO S . 1877 TO 1879 /AHD/20 15 A.Y. 2009 - 10 TO 2011 - 12 PAGE NO SHAILESH KESHAVLAL SHAH VS. ITO 2 31,82,439/ - AND RS. 46,28,783/ - ; RESPECTIVELY, IN PROCEEDINGS UNDER SECTION 143(3) R.W.S. 147 OF THE INCOME TAX ACT, 1961; IN SHORT THE ACT . 2. BOTH THE PARTIES EXPRESS AGREEMENT AT THE OUTSET THAT RELEVANT FACTS AND CIRCUMSTANCES INVOLVED IN ALL THE THREE APPEALS ARE IDENTICAL. WE ACCORDINGLY TREAT ITA 1877/AHD/2015 AS THE LEAD CASE. 3. WE COME TO RELEVANT FACTS FIRST. THE ASSESSEE - INDIVIDUAL DEALS IN SEMI - WHOLE SALE OF IRON, STEEL, ALLOY STEEL , STEEL HARDWARE AND TOOLS AS W ELL AS ITS ALLIED PRODUCTS. HE FILED RETURN ON 30 - 07 - 2009 DECLARING INCOME OF RS. 3,41,180/ - . THE SAME WAS PROCESSED. THE ASSESSING OFFICER THEREAFTER FRAMED AN OPINION ON REASONS TO BELIEVE THAT ASESSSEE S INCOME LIABLE TO BE ASSESSED HAD ESCAPED ASSESSMENT IN VIEW OF THE FACT THAT INFORMATION RECEIVED FROM MAHARATRA VAT DEPARTMENT ON THE BASIS OF AN INVESTIGATION REVEALS THAT THERE WAS 2060 HAWAL A DEALERS PROVIDING ACCOMMODATION ENTRIES TO VARIOUS PARTI E S INCLUDING ASSESSEE. THIS LEA D IN OTHER WORDS INDICATED ISSUANCE OF GOODS SALE INVOICES WITHOUT ANY ACTUAL INVOLVEMENT THEREOF. THE ASSESSEE S PURCHASES IN QUESTION AS BENEFICIARY OF THIS BOGUS BILLING IN THE NAM ES OF HIS PROPRIETARY CONCERN M/S. S.N. F. ENGINEERING CO. I NVOLVED FIVE BILLING INSTANCES OF DIFFERENT AMOUNTS AGGREGATING TO THE IMPUGNED SUMS OF RS. 52,93,515/ - . THIS CULMINATED IN ISSUANCE OF SECTION 148 NOTICE DATED 23 - 04 - 2013. THE ASSESSEE APPEARS TO HAVE STRONGLY CONTESTED THE SAME BY PRODU CING THE RELEVANT EVIDENCE OF HAVING EXECUTED SA LE OF PURCHASED GOODS I .T.A NO S . 1877 TO 1879 /AHD/20 15 A.Y. 2009 - 10 TO 2011 - 12 PAGE NO SHAILESH KESHAVLAL SHAH VS. ITO 3 SOUGHT TO BE TREATED AS BOGUS, BOOKS OF ACCOUNTS, CONFIRMATION AND PROOF OF PAYMENTS MADE. IT FURTHER HIGHLIGHTED THAT THE RELEVANT SALES HAD ALREADY BEEN ACCEPTED/ASSESSED. THE ASSESS ING OFFICER RELIED UPON THE ABOVE STATED MAHARASTRA VAT AUTHORITIES LEAD FOR TREATING ASSESSEE S PURCHASE IN QUESTION AS NON - GENUINE AND BOGUS IN RE - ASSESSMENT FRAMED ON 30/01/2015 RESULTING IN THE CONSEQUENTIAL IMPUGNED ADDITION . 4 . THE ASSESSEE PREFERR ED APPEAL. THE CIT(A) CONFIRMS ASSESSING OFFICER S FINDINGS AS UNDER: - I HAVE CONSIDERED THE FACTS OF THE CASE, ASSESSMENT ORDER, SUBMISSION MADE BY THE APPELLANT AND THE CASE LAWS RELIED UPON. AO HAD REOPENED THE ASSESSMENT ON THE BASIS OF I NFORMATION IN RESPECT OF BOGUS PURCHASES ALONG WITH STATEMENT RECORDED U/S 14 OF MAHARASHTRA VAT ACT, 2002 OF 2060 HAWALA DEALERS RECEIVED FROM THE MAHARASHTRA VAT DEPARTMENT. DURING THE INVESTIGATION, THE ASSISTANT COMMISSIONER OF SALES TAX - 15, INVESTIGAT ION BRANCH - B, MUMBAI HAS RECORDED THE STATEMENT OF (I) SHRI RAMESH JAICHAND ASHRA PROP, OF R. D. STEEL CORPORATION, (II) SHRI TUSHAR RAMESH ASHRA PROP. OF TUSHAR ENTERPRISES AND (III) SHRI KAMAL H. SHAH PROP. OF M/S. SHAH TRADERS, DIVYA TRADERS AND KAMAL T RADERS. DURING THE COURSE OF RECORDED THE STATEMENT, THE ABOVE PERSONS ADMITTED THAT THEY WERE DOING BUSINESS OF 'ONLY ISSUANCE OF INVOICE WITHOUT INVOLVEMENT OF GOODS. THEY HAVE STATED THAT THEY NEVER DONE ANY GENUINE SALES OR PURCHASE OF GOODS, BUT ISSUI NG ONLY TAX INVOICE WITHOUT INVOLVEMENT OF GOODS IN THE NAME OF THE ABOVE MENTIONED PROPRIETARY FIRMS. IN VIEW OF THE ABOVE INFORMATION IN RESPECT OF NON - GENUINE BILLS/ BOGUS PURCHASE RECEIVED FROM VAT DEPARTMENT, MUMBAI. IT WAS NOTICED THAT APPELLANT WAS ONE OF THE BENEFICIARY OF BOGUS BILLING AND HAD OBTAINED BOGUS BILLS FOR PURCHASE AMOUNTING TO RS.52,93,515/ - FROM THE PARTIES INVOLVED. APPELLANT FAILED TO PRODUCE BEFORE THE AO AND AO PROCEEDED TO MAKE THE ADDITION AS PROPOSED BY HIM. I .T.A NO S . 1877 TO 1879 /AHD/20 15 A.Y. 2009 - 10 TO 2011 - 12 PAGE NO SHAILESH KESHAVLAL SHAH VS. ITO 4 ON THE OTHER HAND APPELLANT CONTENDED DURING THE APPELLATE PROCEEDINGS IT IS NOT A MANUFACTURER AND DO NOT REQUIRE ANY RAW - MATERIAL IN BUSINESS. THE ENTIRE SALES AND PURCHASE S ARE IN RESPECT OF FINISHED GOODS AND IT A REGULAR TRADE PRACTICE OF BUSINESS TO PURCHASE THE GOODS FROM VARIOUS DEALERS AGAINST THE VERBAL SALE - ORDER OF GOODS AND THE APPELLANT IS NOT HOLDING THE STOCK OF GOODS. CONSEQUENTLY, THE DELIVERY OF GOODS SOLD IS GIVEN DIRECTLY FROM THE GODOWN OF VENDOR TO VENDEE. THEREFORE, THE APPELLANT DOES NOT REQUIRE ANY GODOWN FACILITY FOR STOCK OF THE GOODS. COPY OF DETAILED LEDGER ACCOUNTS OF ALL THE PARTIES FROM/TO WHOM PURCHASE/SATES HAVE BEEN MADE, AS WELL AS COPY OF BANK STATEMENTS REFLECTING PAYMENT MADE FOR PURCHASES ARE ALREADY FURNISHED. RELEVANT BILL/VOUCHER FI LES W ERE ALSO PRODUCED FOR VERIFICATION IN RESPECT OF L.R. RECEIPTS, VOUCHERS, GATE - PASS , DELIVERY CHALLAN AND VOUCHERS BEFORE ASSESSING OFFICER. AS REGARDS THE STOCK REGISTER, APPELLANT CONTENDED THAT DAY - TO - DAY STOCK REGISTER IS NOT MAINTAINED BY THE AP PELLANT, HOWEVER, APPELLANT HAD FURNISHED A DETAILED CHART SHOWING DISPOSAL (SALE) OF THE GOODS PURCHASED FROM THE ALLEGED PARTIES. IT IS ALSO CONTENDED THAT THE PUR CHASES ARE MADE AT MARKET RATE FROM KAMAL TRADERS, TUSHAR ENTERPRISE AND DIVYA E NTERPRISE ARE FULLY SUPPORTED BY VALID AND LEGITIMATE BILLS AND DULY RECORDED IN BOOKS OF ACCOUNTS. IT IS CONTENDED THAT COPY OF SUCH BILLS WERE FURNISHED BEFORE THE AO FOR VERIFICATION. DURING THE APPELLATE PROCEEDINGS, APPELLANT WAS REQUESTED TO FURNIS H BEFORE ME ALL THE EVIDENCES THAT WERE CALLED FOR BY THE AO RELATING TO PURCHASES AND SALES, TO WHICH AR OF THE APPELLANT HAS SHOWN HIS INABILITY TO PRODUCE THE EVIDENCES CALLED FOR. FURTHER, AR OF THE APPELLANT WAS ALSO REQUESTED TO PRODUCE A COPY OF THE VAT ORDER IN THEIR FAVOUR FOR ALLOWABIIITY OF ITS CLAIM OF PURCHASES. AGAIN THE AR OF THE APPELLANT WAS NOT IN A POSITION TO BRING ON RECORD OF THE UNDERSIGNED THE ORDER PASSED BY THE VAT DEPARTMENT. APPELLANT HAS TOTALLY FAILED TO SUBSTANTIATE ITS CLAIM MADE BEFORE ME DURING THE APPELLATE PROCEEDINGS WITH EVIDENCES WHICH WERE CALLED FOR. THEREFOR THE CLAIM OF THE APPELLANT THAT COPY OF DETAILED LEDGER ACCOUNTS OF ALL THE PARTIES WHOM PURCHASES /SALES HAVE BEEN MADE, AS WELL AS COPY OF BANK STATEMENTS REFL ECTING PAYMENT MADE FOR PURCHASES FURNISHED, RELEVANT BILL/VOUCHERS LR RECEIPTS, VOUCHERS, GATE - PASS, DELIVERY CHALLAN AND VOUCHERS, DETAILED CHART SHOWING SALES EFFECTED OF THE GOODS PURCHASED FROM THE ALLEGED PARTIES CANNOT BE ACCEPTED. THESE CLAIM OF TH E APPELLANT HAS ALREADY BEEN REFUTED BY THE AO IN THE ASSESSMENT ORDER WHICH HAS ALREADY BEEN I .T.A NO S . 1877 TO 1879 /AHD/20 15 A.Y. 2009 - 10 TO 2011 - 12 PAGE NO SHAILESH KESHAVLAL SHAH VS. ITO 5 REPRODUCED ABOVE IN PARA.4.1 OF THE APPELLATE ORDER, HOWEVER, THE MAIN CONTENTION OF THE AO IS ONCE AGAIN BRIEFED AS UNDER: _ APPELLANT HAD DISCLOSED SUCH MATTER BEFORE THE GOVERNMENT OFFICE WITH FILING OF AFFIDAVIT ON OATH THAT DUE TO FINANCIAL CRUNCH APPELLANT STARTED WORKING THROUGH THESE FIRMS AND ISSUED BOGUS TAX INVOICES WIT HOUT INVOLVEMENT OF GOODS. THE THREE PARTIES HAD FILED AFFIDAVITS THE NOTARY OF HIGH COURT, MUMBAI WITH THE IDENTITY, HENCE THERE WAS NO DOUBT OF WRONG DECLARATIONS BY THEM UNDER ANY PRESSURE. _ APPELLANT HAD REPLIED BEFORE THE AO ON 18/3/2013 THAT HE HAD BUSINESS OF TRADING IN IRON & STEEL AND USUAL TRADE PRACTICE WAS T O PURCHASE GOODS AGAINST THE SALE ORDER AND AGAIN ON 18/7/2014 IT IS STATED THAT THE ENTIRE SALES AND PURCHASES ARE IN RESPECT OF FINISHED GOODS AND TRADE PRACTICE OF BUSINESS WAS TO PURCHASE THE GOODS FROM VARIOUS DEALERS AGAINST THE VERBAL SALE ORDER OF GOODS. _ FROM THE P&L ACCOUNT IT WAS NOTICED BY THE AO THAT APPELLANT'S HEAD OFFICE IS AT PATAN AND BRANCH OFFICE AT MUMBAI AND DEBITED RS.72,000/ - ON ACCOUNT OF OFFICE RENT. APPELLANT HAD NOT SHOWN ANY PROPERTY I.E. OFFICE BUILDING OR GODOWN IN THE BAL ANCE SHEET. THE NATURE OF BUSINESS OF APPELLANT IS SUCH THAT IT IS NOT POSSIBLE TO MAINTAIN BUSINESS AT DIFFERENT PLACES I.E. PATAN AND MUMBAI AND FURTHER IT IS NOT POSSIBLE THAT THE OFFICE IS AVAILABLE ON AN ANNUAL RENT OF RS.72,000/ - AT MUMBAI. IN SUCH F ACTS, IT IS NOT POSSIBLE FOR THE APPELLANT TO KEEP SUCH GOODS IN THE OFFICE BUILDING WITH A MONTHLY RENT OF RS.6,000/ - AND AO PROVED THAT APPELLANT HAD NOT PURCHASED ANY GOODS BUT ENTERTAINED WITH TAX INVOICE ONLY WITHOUT INVOLVEMENT OF GOODS. _ EXPLANAT ION OF THE APPELLANT WAS ALSO NOT ACCEPTED AS APPELLANT HAD ALSO NOT PRODUCED THE DETAILS REGARDING TRANSPORTATION OF GOODS LIKE GATE PASS, TRANSPORTATION RECEIPT OR LARIBHADA OR ANY OTHER MODE RECEIPT AND LABOUR EXPENSES PROOF FOR CARRYING OUT SUCH GOODS FROM THE PLACE OF SELLER TO PLACE OF PURCHASER LOCATED OUT OF MUMBAI. IN SUCH CIRCUMSTANCES, ACTION OF THE AO IN MAKING THE ADDITION OF R S.52,93,515/ - AS BOGUS PURCHASES IS HELD JUSTIFIED AND THE ADDITION MADE IS HEREBY CONFIRMED. THE RELEVANT GROUNDS OF APPEAL ARE HEREBY REJECTED. I .T.A NO S . 1877 TO 1879 /AHD/20 15 A.Y. 2009 - 10 TO 2011 - 12 PAGE NO SHAILESH KESHAVLAL SHAH VS. ITO 6 5 . WE HAVE RIVAL CONTENTIONS. BOTH LD. REPRESENTATIVES REITERATE THEIR RESPECTIVE STANDS AGAINST AND IN SUPPORT OF THE IMPUGNED BOGUS PURCHASES ADDITION OF RS. 52, 93,515/ - MADE ON THE BASIS OF MAHARASTRA VAT AUTHORITIES TO TH E EFFECT THAT ASSESSEE S SUPPLIERS HAVE ISSUED BOGUS INVOICES WITHOUT INVOLVING ANY ACTUAL DELIVERY OF GOODS. THIS MAKES THE LOWER AUTHORITIES TO TREAT ASSESSEE S PURCHASE AS BOGUS. IT EMERGES THAT HE IS MAINLY A SUPPLIERS OF FINISH ED GOODS FROM PURCHASER S TO SELLERS WITHOUT INVOLVING ANY STOCK BEING MAINTAINED AT HIS BEHEST. THERE IS FURTHER NO DISPUTE THAT ASSESSEE S SALES IN QUESTION CORRESPONDING TO THE IMPUGNED PURCHASES ALREADY STAND ACCEPTED. THERE IS NO ISSUE THAT HE HAS ALREADY PLACED ON RECORD ALL THE RELEVANT BILLS/ VOUCHERS , GATE PASSES, DELIVERY CHALLANS, PROOF OF MODE OF PAYMENTS AND RELEVANT CONFIRMATIONS ON RECORD IN SUPPORT OF THE PURCHASES. BOTH THE LOWER AUTHORITIES DOUBT CREDITWORTHINESS THEREOF WITHOUT THERE BEING ANY REBUT IN ALL EVI DENCE EXCEPT MAHARASTRA VAT AUTHORITIES INFORMATION. THE ALLEGED HAWALA DEALERS HAVE NOWHERE BEEN ALLOWED TO BE CROSS EXAMINED AT ANY STAGED OF THE PROCEEDINGS . WE FIND THAT VARIOUS CO - OR D I N ATE BENCH DECISION OF THE TRIBUNAL IN HIRALAL CHUNILAL JAIN VS. ITO IN ITA 4547/MUM/2014 DECIDED ON 01 - 01 - 2016, ACIT VS. RAMILA P. SHAH IN ITA NO. 5246/MUM/2013 DECIDED ON 05 - 03 - 2015 AND DCIT VS. RAJIV JEE KALATHIL (2015) 67 SOT 52 DELETE IDENTICAL BOGUS PURCHASE ADDITIONS BASED ON ALLEGED HAWALA TRANSACTIONS /ACCOMMODA TION S ENTRIES AS UNEARTHED BY VAT DEPARTMENT FOR THE VERY REASONING. THE REVENUE FAILS TO POINT OUT ANY DISTINCTION ON FACTS OR LAW THEREIN. WE CONCLUDE IN THESE FACTS AND CIRCUMSTANCES THAT THE CIT(A) HAS ERRED I .T.A NO S . 1877 TO 1879 /AHD/20 15 A.Y. 2009 - 10 TO 2011 - 12 PAGE NO SHAILESH KESHAVLAL SHAH VS. ITO 7 IN CONFIRMING THE IMPUGNED ADDITION OF BOG US PURCHASES AMOUNTING TO RS. 52,93,515/ - MADE BY THE ASSESSING OFFICER. THE SAME STANDS DELETED. ITA 1877/AHD/2015 IS ACCEPTED. 6 . SAME ORDER TO FOLLOW IN REMAINING TWO ITA S 1878 & 1879/AHD/2015 FOR WANT OF ANY DISTINCTION ON FACTS AND ISSUES INVOLVED THEREIN. 7 . THESE THREE ASSESSEE S APPEALS ARE ALLOWED. ORDER PR ONOUNCED IN THE OPEN C OURT ON 08 - 03 - 201 6 SD/ - SD/ - ( N.K. BILLAIYA ) ( S. S. GODARA ) ACCOUNTANT MEMBER JUDICIAL MEMBER AHMEDABA D : DATED 08 /03 /2016 AK / COPY OF ORDER FORWARDED TO: - 1. ASSESSEE 2. REVENUE 3. CONCERNED CIT 4. CIT (A) 5. DR, ITAT, AHMEDABAD 6. GUARD FILE. BY ORDER/ , / ,