Sushil Kumar Gupta, Kolkata V. DCIT, CIRCLE-XXVIII, KOLKATA, Kolkata

ITA 1916/KOL/2014

• Counselvise Citation: [2016] 132 COUNSELVISE.COM (IT) 4568 (ITAT-KOLKATA)
• Duration Of Justice: 1 year(s) 8 month(s) 24 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 08-07-2016
• Appeal Filed By: Assessee
• Bench Allotted: SMC
• Assessment Year: 2008-2009
• Appeal Filed On: 14-10-2014
• Court: TRIBUNAL
• Department Lawyers: KALYAN NATH
• Keywords: Bogus purchase; Onus to prove

Judgement Text

I.T.A. NO. 1916/KOL./2014 ASSESSMENT YEAR: 2008-2009 PAGE 1 OF 6 IN THE INCOME TAX APPELLATE TRIBUNAL, KOLKATA C(SMC) BENCH, KOLKATA BEFORE SHRI P.M. JAGTAP, ACCOUNTANT MEMBER I.T.A. NO. 1916 /KOL/ 2014 ASSESSMENT YEAR: 2008-2009 SUSHIL KUMAR GUPTA,................................ ................................APPELLANT C/O. SHANKAR SAREE STORES PVT. LIMITED, 65, SIR HARI RAM GOENKA STREET, 1 ST FLOOR, BANGUR ARCHADE, KOLKATA-700 007 [PAN : ADBPG 6819 R] -VS.- DEPUTY COMMISSIONER OF INCOME TAX,................. .................RESPONDENT CENTRAL CIRCLE-XXVIII, KOLKATA, PODDAR COURT, 18, RABINDRA SARANI, KOLKATA-700 001 APPEARANCES BY: SHRI SUBASH AGARWAL, ADVOCATE, FOR THE ASSESSEE SHRI KALYAN NATH, JCIT, SR. D.R., FOR THE DEPARTMENT DATE OF CONCLUDING THE HEARING : JUNE 07, 2016 DATE OF PRONOUNCING THE ORDER : JULY 8, 2016 O R D E R THIS APPEAL FILED BY THE ASSESSEE IS DIRECTED AGAIN ST THE ORDER OF LD. COMMISSIONER OF INCOME TAX (APPEALS), CENTRAL-I, KO LKATA DATED 02.07.2014 FOR THE ASSESSMENT YEAR 2008-09 AND THE GROUNDS RAISED BY THE ASSESSEE THEREIN READ AS UNDER:- 2. THE GROUND NO. 1 RAISED BY THE ASSESSEE IN THIS APPEAL IS GENERAL WHILE GROUND NO. 3 RAISED BY THE ASSESSEE IS NOT PR ESSED BY THE LD. COUNSEL FOR THE ASSESSEE. THE SAME IS ACCORDINGLY D ISMISSED AS NOT PRESSED. I.T.A. NO. 1916/KOL./2014 ASSESSMENT YEAR: 2008-2009 PAGE 2 OF 6 3. APROPOS THE ISSUE RAISED IN GROUND NO. 2 RELATIN G TO THE ADDITION OF RS.10,23,930/- MADE BY THE ASSESSING OFFICER AND CO NFIRMED BY THE LD. CIT(APPEALS) ON ACCOUNT OF THE ALLEGED INGENUINE PU RCHASES, THE RELEVANT FACTS ARE THAT THE ASSESSEE IS AN INDIVIDUAL, WHO I S ENGAGED IN THE BUSINESS OF TRADING IN SAREES IN THE NAME AND STYLE OF HIS PROPRIETARY CONCERN M/S. SHANKAR SAREE STORES. THE RETURN OF IN COME FOR THE YEAR UNDER CONSIDERATION WAS FILED BY HIM ON 16.09.2008 DECLARING TOTAL INCOME OF RS.5,26,590/-. DURING THE COURSE OF ASSES SMENT PROCEEDINGS, THE CLAIM OF THE ASSESSEE FOR PURCHASES WAS EXAMINE D BY THE ASSESSING OFFICER AND ON SUCH EXAMINATION HE DISALLOWED THE P URCHASES OF RS.10,23,930/- CLAIMED TO BE MADE BY THE ASSESSEE F ROM M/S. EMBROIDERY SAREES BY TREATING THE SAME AS INGENUINE FOR THE FO LLOWING REASONS GIVEN IN PARAGRAPH NO. 2.1 OF THE ASSESSMENT ORDER:- THE ASSESSEE CLAIMED PURCHASE FROM M/S EMBROIDERY FOR RS.10,23,930/-. JUST LIKE EARLIER YEARS I.E, FROM T HE ASSESSMENT YEAR 2006-07, THE ASSESSEE CLAIMED PURCHASE FROM TH IS CONCERN. MR. RASHIK SHAIK IS CLAIMED TO BE PROPRIET OR OF THIS CONCERN. MR. G. L. SINGHAL WAS REQUESTED DURING THE HEARING TO PRODUCE MR. RASHIK SHAIK ALONG WITH BOOKS OF ACCOUN T AND OTHER RELEVANT DOCUMENTS TO VERIFY THIS ALLEGED PUR CHASE. BUT, HE COULD NOT PRODUCE MR. RASHIK SHAIK FOR VERIFICAT ION AND EXAMINATION. IN THE ASSESSMENT YEAR 2006-07, PURCHA SE OF RS.L0,91,559/- FROM THIS CONCERN WAS MADE BY THE AS SESSEE. BUT THIS PURCHASE WAS NOT TREATED AS GENUINE AS THE A/R OF THE ASSESSEE COULD NOT PRODUCE MR. RASHIK SHEIK FOR VER IFICATION. ACCORDINGLY, THIS PURCHASE WAS ADDED TO THE TOTAL I NCOME OF THE ASSESSEE FOR THE ASSESSMENT YEAR 2006-07. ASSES SEE FILED APPEAL BEFORE THE CIT(A) C-I, KOLKATA. AS PER DIREC TION OF THE CIT(A) C- I, KOLKATA, ASSESSEE WAS GIVEN ANOTHER OP PORTUNITY TO PRODUCE EMBROIDERY SAREES FOR VERIFICATION DURIN G THE REMAND PROCEEDINGS. A/R OF THE ASSESSEE PRODUCED MR . RASHIK SHAIK PROPRIETOR OF EMBROIDERY SARCES FOR VERIFICAT ION. AFTER EXAMINATION; IT IS FOUND THAT ALLEGED PURCHASES FRO M EMBROIDERY SAREES ARE NOT GENUINE. IN ACTUAL, MR. R ASIK SHAIK MAY BE KARIGAR OR LABOUR OF THE ASSESSEE FROM WHOM JOB WORKS RELATING TO EMBROIDERY HAD BEEN DONE IN LIEU OF WAGES OR LABOUR CHARGES. THESE PURCHASES TO THE TUNE OF RS.L0,91,559/- WERE BOGUS AND NOT GENUINE. THE CONT ENTION OF THE ASSESSEE ON THIS POINT WAS BASELESS, ERRONEOUS AND NOT ACCEPTABLE. LD. CIT(A) C-II KOL. CONFIRMED THE ADDITION VIDE AP PEAL NO. 351/CC- XXVIII/CIT(A), C-I/08-09 FOR THE ASSESSMENT YEAR 2006-07 DT.15.09.2010. DECISION OF THE CIT(A) C- I RELATING TO THIS ALLEGED PURCHASE IS REPRODUCED AS BELOW: I.T.A. NO. 1916/KOL./2014 ASSESSMENT YEAR: 2008-2009 PAGE 3 OF 6 'THERE WAS NO PROOF OF CORRESPONDING PURCHASE AGAIN ST THE SALE ALLEGEDLY MADE BY HIM TO THE ASSESSEE. NEITHER HAS HE PRODUCED ANY SUPPORTING BILLS NOR ANY OTHER EVIDENC E TO PROVE THAT HE WAS IN A POSITION TO MAKE SALE OF HUGE AMOU NT OF SAREES TO THE ASSESSEE. FURTHER IT WAS FOUND THAT H E HAS MADE SALE ONLY TO THE ASSESSEE AND ONE OF GROUP CONCERNS CONSIDERING ABOVE AND THE DETAIL REPORT OF THE A.O. IT IS HELD THAT THE ASSESSEE HAS FAILED TO PROVE THE GENUINENE SS OF THE EXPENDITURE ON ACCOUNT OF PURCHASE CLAIMED ... ' IN THIS FINANCIAL YEAR I.E., 2007-08, ASSESSEE COUL D NOT PRODUCE MR. RASHIK SHAIK, PROPRIETOR OF EMBROIDERY SAREES, AS CLAIMED FOR VERIFICATION AND EXAMINATION. HENCE, GENUINENES S OF THIS ALLEGED PURCHASE IS NOT ACCEPTED FOR THIS YEAR ALSO . ONUS TO PROVE THE GENUINENESS OF EXPENDITURE LIES ON THE AS SESSEE AND HE DID NOT DISCHARGE THIS ONUS. CONSIDERING THE VIEW TAKEN IN THE REMAND REPORT FOR THE ASSESSMENT YEAR 2006-07 AND DECISION OF LD. CIT(A) C-I, KOL IN HIS ORDER DTD. 15.09.10 IN THE ASSESSEE'S CASE, THE PURCHASE FROM EMBROIDERY SAREES IS TREATED AS BOGUS AND ADDE D TO THE TOTAL INCOME OF THE ASSESSEE. IT HAS HELD BY HON'BL E ALLAHABAD HIGH COURT IN THE CASE OF KAVERI RICE MILLS V CIT K ANPUR (2006) 157 TAXMAN 376(ALL) THAT IN THE CASE OF UNPR OVED PURCHASE, TOTAL AMOUNT OF PURCHASE SHOULD BE ADDED. ACCORDINGLY ADDITION ON ACCOUNT OF THIS ALLEGED PUR CHASE FOR RS.10,23,930/- WAS MADE. 4. THE ADDITION MADE BY THE ASSESSING OFFICER ON AC COUNT OF PURCHASES MADE FROM M/S. EMBROIDERY SAREES BY TREATING THE SA ME AS INGENUINE WAS CHALLENGED BY THE ASSESSEE IN THE APPEAL FILED BEFO RE THE LD. CIT(APPEALS) AND AFTER CONSIDERING THE SUBMISSION MADE BY THE AS SESSEE AND PERUSING THE RELEVANT MATERIAL AVAILABLE ON RECORD, THE LD. CIT(APPEALS) CONFIRMED THE ADDITION MADE BY THE ASSESSING OFFICER ON THIS ISSUE FOR THE FOLLOWING REASONS GIVEN IN PARAGRAPH NO. 3 OF HIS IMPUGNED OR DER:- 3. GROUND NO 1 IS DIRECTED AGAINST THE ADDITION OF RS.10,23,930/- ON ACCOUNT OF BOGUS PURCHASE. THE AS SESSEE WHO IS ENGAGED IN THE BUSINESS OF TRADING IN SAREES HAD SHOWN DURING THE RELEVANT YEAR TOTAL PURCHASES OF RS.10,23,930/- FROM A PROPRIETARY CONCERN M/S EMBROIDERY SAREES. THE AO R EQUIRED THE ASSESSEE TO PRODUCE THE PROPRIETOR SRI RASHIK SHAIK ALONGWITH HIS BOOKS OF ACCOUNT AND RELEVANT DOCUMENTS FOR VER IFYING THE PURCHASES BUT NO COMPLIANCE WAS MADE. THE AO NOTED IN THE IMPUGNED ASSESSMENT ORDER THAT THE ASSESSEE HAD SHO WN I.T.A. NO. 1916/KOL./2014 ASSESSMENT YEAR: 2008-2009 PAGE 4 OF 6 PURCHASES OF RS.10,91,559/- FROM THE SAID CONCERN D URING THE PRECEDING YEAR WHICH WAS FOUND TO BE BOGUS AFTER EX AMINATION OF THE PROPRIETOR SRI RASHIK SHAIK IN COURSE OF THE REMAND PROCEEDINGS. THE FINDING OF THE AO WAS UPHELD BY TH E CIT(A). IN THIS FACTUAL BACKGROUND, THE AO CONCLUDED THAT THE PURCHASES OF RS.10,23,930/- WERE BOGUS. THE LD AR APPEARED FOR T HE ASSESSEE AND CONTENDED THAT THE PURCHASES WERE SUPPORTED BY PROPER BILLS AND DULY RECORDED IN THE BOOKS OF ACCOUNT AND PAYME NTS WERE MADE THROUGH THE BANKING CHANNEL. I HAVE PERUSED TH E IMPUGNED ORDER AND CONSIDERED THE SUBMISSIONS OF THE ASSESSE E. I FIND THAT THE CONCERNED PROPRIETOR DID APPEAR BEFORE THE AO I N COURSE OF THE REMAND PROCEEDINGS FOR THE PRECEDING YEAR AND I T WAS ONLY AFTER HIS EXAMINATION THAT THE AO CONCLUDED THAT TH E PURCHASES SHOWN FROM HIM WERE BOGUS. THE CIT(A) UPHELD THE FI NDING OF THE AO AFTER OBSERVING THAT 'THERE WAS NO PROOF OF CORR ESPONDING PURCHASE AGAINST THE SALE ALLEGEDLY MADE BY HIM TO THE ASSESSEE. NEITHER HAS HE PRODUCED ANY SUPPORTING BILLS NOR AN Y OTHER EVIDENCE TO PROVE THAT HE WAS IN A POSITION TO MAKE SALE OF HUGE AMOUNT OF SAREES TO THE ASSESSEE. FURTHER IT WAS FO UND THAT HE HAS MADE SALE ONLY TO THE ASSESSEE AND ONE OF GROUP CONCERNS CONSIDERING ABOVE AND THE DETAIL REPORT OF THE AO I T IS HELD THAT THE ASSESSEE HAS FAILED TO PROVE THE GENUINENESS OF THE EXPENDITURE ON ACCOUNT OF PURCHASE CLAIMED'. THE CI T(A) THUS UPHELD THE FINDING OF THE AO THAT THE PURCHASES SHO WN IN THE NAME OF M/S EMBROIDERY SAREES IN THE PRECEDING YEAR WERE BOGUS. THE LD AR HAS NOT EXPLAINED AS TO HOW THE YE AR UNDER CONSIDERATION WERE DIFFERENT FROM THOSE OF THE PREC EDING YEAR. UNDER THE CIRCUMSTANCES, I AM NOT INCLINED TO INTER FERE WITH THE ORDER OF THE AO. THE ADDITION OF RS.10,23,930/- IS CONFIRMED. GROUND NO. 1 IS DISMISSED. AGGRIEVED BY THE ORDER OF THE LD. CIT(APPEALS), THE ASSESSEE HAS PREFERRED THIS APPEAL BEFORE THE TRIBUNAL. 5. I HAVE HEARD THE ARGUMENTS OF BOTH THE SIDES AND ALSO PERUSED THE RELEVANT MATERIAL AVAILABLE ON RECORD. AS IS EVIDEN T FROM THE RELEVANT PORTIONS OF THE RESPECTIVE ORDERS OF THE ASSESSING OFFICER AS WELL AS THE LD. CIT(APPEALS) REPRODUCED ABOVE, THE PURCHASES MA DE BY THE ASSESSEE FROM M/S. EMBROIDERY SAREES HAVE BEEN TREATED AS IN GENUINE BY THEM MAINLY ON THE BASIS OF STAND TAKEN IN THE ASSESSEE S OWN CASE FOR A.Y. 2006-07, WHEREIN A SIMILAR ADDITION WAS MADE TO THE TOTAL INCOME OF THE ASSESSEE BY TREATING THE PURCHASES MADE FROM M/S. E MBROIDERY SAREES AS INGENUINE. AS SUBMITTED BY THE LD. COUNSEL FOR THE ASSESSEE, THE ADDITION MADE BY THE ASSESSING OFFICER AND CONFIRMED BY THE LD. CIT(APPEALS) ON I.T.A. NO. 1916/KOL./2014 ASSESSMENT YEAR: 2008-2009 PAGE 5 OF 6 THE SIMILAR ISSUE IN ASSESSEES OWN CASE FOR A.Y. 2 006-07 WAS DISPUTED BY THE ASSESSEE IN THE APPEAL FILED BEFORE THE TRIBUNA L AND THE TRIBUNAL VIDE ITS ORDER DATED DECEMBER 18, 2014 PASSED IN I.T.A. NO. 2168/KOL/2010 HAS DELETED THE SAME FOR THE FOLLOWING REASONS GIVE N IN PARAGRAPH NO. 6:- 6. WE HAVE CONSIDERED THE RIVAL SUBMISSIONS. A PER USAL OF THE REMAND REPORT OF THE ASSESSING OFFICER SHOWS THAT T HE PURCHASES FROM M/S. EMBROIDERY SAREES HAVE BEEN DIS BELIEVED ONLY ON MERE TECHNICALITIES. IT IS AN ADMITTED FACT THAT THE PROPRIETOR OF M/S. EMBROIDERY SAREES HAD APPEARED B EFORE THE ASSESSING OFFICER AND HAD CONFIRMED THE TRANSACTION S. THE PROPRIETOR IS ALSO HAVING PERMANENT ACCOUNT NUMBER AND THE PAYMENTS HAVE ALL BEEN MADE ONLY THROUGH CHEQUES. A PERUSAL OF THE BILLS OF M/S. EMBROIDERY SAREES ALSO SHOWS T HAT ONLY THE INITIAL FOUR OR FIVE BILLS ARE SIGNED IN ENGLISH, T HE REST OF THE BILLS ARE SIGNED IN BENGALI ITSELF. A PERUSAL OF TH E STOCK BOOK OF THE ASSESSEE ALSO CLEARLY SHOWS THAT THE PURCHASES FROM M/S. EMBROIDERY SAREES HAVE BEEN RECORDED IN THE STOCK B OOK AND NECESSARY REDUCTION IN RESPECT OF THE SALES ARE ALS O MADE. IF THE PURCHASES FROM M/S. EMBROIDERY SAREES ARE TREATED A S UN- GENUINE, THEN STOCK DURING THE RELEVANT PERIOD WOUL D HAVE TO BE REMOVED AND IF THAT IS DONE THEN THE SALES AS MADE BY THE ASSESSEE WOULD BE AN IMPOSSIBILITY. FURTHER, THE FA CT THAT THE PAYMENTS HAVE ALL BEEN MADE THROUGH ACCOUNT PAYEE C HEQUES AND EVEN THE BANK STATEMENTS OF SHRI RASIK SHAIK, T HE PROPRIETOR OF M/S. EMBROIDERY SAREES HAVING BEEN PR ODUCED AND NO DEFECTS HAVING BEEN POINTED OUT IN THAT, WE ARE OF THE VIEW THAT THE ADDITION MADE BY THE ASSESSING OFFICE R AND AS CONFIRMED BY THE ID. CIT(APPEALS) IS UNSUSTAINABLE AND CONSEQUENTLY DELETE THE SAME. 6. ALTHOUGH THE LD. D.R. HAS CONTENDED BEFORE ME TH AT THE FACTS INVOLVED IN THE YEAR UNDER CONSIDERATION ARE DIFFER ENT FROM A.Y. 2006-07, INASMUCH AS THE ASSESSEE COULD NOT PRODUCE THE CONC ERNED PARTY, I.E. M/S. EMBROIDERY SAREES FOR VERIFICATION BEFORE THE AUTHO RITIES BELOW, IT IS OBSERVED THAT THE SAID PARTY HAD APPEARED BEFORE TH E ASSESSING OFFICER FOR EXAMINATION DURING THE COURSE OF PROCEEDINGS FO R A.Y. 2006-07 AND HAD CONFIRMED THE RELEVANT TRANSACTIONS WITH THE AS SESSEE. THE GENUINENESS OF THE SIMILAR TRANSACTIONS THUS WAS NO T ONLY PROVED BY THE ASSESSEE BUT THE SAME WAS ACCEPTED BY THE TRIBUNAL IN A.Y. 2006-07 IN THE IDENTICAL FACTS AND CIRCUMSTANCES OF THE CASE. THE ISSUE INVOLVED IN THIS APPEAL THUS IS SQUARELY COVERED BY THE ORDER OF THE TRIBUNAL IN ASSESSEES I.T.A. NO. 1916/KOL./2014 ASSESSMENT YEAR: 2008-2009 PAGE 6 OF 6 OWN CASE FOR A.Y. 2006-07 (SUPRA) AND RESPECTFULLY FOLLOWING THE SAME, I DELETE THE ADDITION OF RS.10,23,930/- MADE BY THE A SSESSING OFFICER AND CONFIRMED BY THE LD. CIT(APPEALS) ON ACCOUNT OF PUR CHASES MADE FROM M/S. EMBROIDERY SAREES. 7. IN THE RESULT, THE APPEAL OF THE ASSESSEE IS ALL OWED. ORDER PRONOUNCED IN THE OPEN COURT ON JULY 8, 2016. SD/- (P.M. JAGTAP) ACCOUNTANT MEMBER KOLKATA, THE 8 TH DAY OF JULY, 2016 COPIES TO : (1) SHRI SUSHIL KUMAR GUPTA, C/O. SHANKAR SAREE STORES PVT. LIMITED, 65, SIR HARI RAM GOENKA STREET, 1 ST FLOOR, BANGUR ARCHADE, KOLKATA-700 007 (2) DEPUTY COMMISSIONER OF INCOME TAX, CENTRAL CIRCLE-XXVIII, KOLKATA, PODDAR COURT, 18, RABINDRA SARANI, KOLKATA-700 001 (3) COMMISSIONER OF INCOME TAX (APPEALS), CENTRAL -1, KOLKATA (4) COMMISSIONER OF INCOME TAX- , (5) THE DEPARTMENTAL REPRESENTATIVE (6) GUARD FILE BY ORDER ASSISTANT REGISTRAR, INCOME TAX APPELLATE TRIBUNAL, KOLKATA BENCHES, KOLKATA LAHA/SR. P.S.