Shri Panne Chand Sarda, Kolkata V. ITO, Wd.35(1), Kolkata, Kolkata

ITA 202/KOL/2017

• Counselvise Citation: [2017] 127 COUNSELVISE.COM (IT) 1703 (ITAT-KOLKATA)
• Duration Of Justice: 6 month(s) 22 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 28-08-2017
• Appeal Filed By: Assessee
• Order Result: Partly Allowed
• Bench Allotted: SMC
• Assessment Year: 2009-2010
• Appeal Filed On: 06-02-2017
• Result in Favour of: Partly Allowed
• Court: TRIBUNAL
• Department Lawyers: S M S TAUHEED CIT SR DR RE
• Keywords: Bogus purchase

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL KOLKATA SMC BENCH, KOLKATA [BEFORE SRI J. SUDHAKAR REDDY, ACCOUNTANT MEMBER] I.T.A. NO. 202/KOL/2017 ASSESSMENT YEAR: 2009-10 & I.T.A. NO. 203/KOL/2017 ASSESSMENT YEAR: 2011-12 SHRI PANNE CHAND SARDA.... ..APPELLANT 56, N.S. ROAD 2 ND FLOOR KOLKATA - 700001 [PAN : ASPPS 5601 L] INCOME TAX OFFICER, WARD 35(1), KOLKATA RESPONDENT AAYKAR BHAVAN POORVA KOLKATA 700 107 APPEARANCES BY: SHRI SUBHASH AGARWAL, ADVOCATE, APPEARING ON BEHALF OF THE ASSESSEE. SHRI S.M.S. TAUHEED, ADDL. CIT, SR. DR, APPEARING ON BEHALF OF THE REVENUE. DATE OF CONCLUDING THE HEARING : JULY 25, 20 17 DATE OF PRONOUNCING THE ORDER : AUGUST 28, 2 017 O R D E R PER J. SUDHAKAR REDDY :- BOTH THESE APPEAL ARE FILED BY THE ASSESSEE AGAINS T SEPARATE BUT IDENTICAL ORDERS OF THE LD. COMMISSIONER OF INCOME TAX (APPEALS)-10, KOLKATA (LD. CIT(A)), DT. 30 TH NOVEMBER, 2016 FOR THE ASSESSMENT YEAR 2009-10 AND 2011-12. 2 I.T.A. NO. 202/KOL/2017 ASSESSMENT YEAR: 2009-10 & I.T.A. NO. 203/KOL/2017 ASSESSMENT YEAR: 2010-11 SHRI PANNE CHAND SARDA 2. AS THE ISSUES ARISING IN BOTH THE APPEALS ARE CO MMON, FOR THE SAKE OF CONVENIENCE, THEY ARE HEARD TOGETHER AND DI SPOSED OFF BY WAY OF THIS COMMON ORDER. 3. THE ASSESSEE IS AN INDIVIDUAL AND IS THE PROPRIE TOR OF M/S. JUPITER CHEMICALS. HE FILED HIS RETURN OF INCOME ON 30/09/2 009, DECLARING TOTAL INCOME AT RS.1,35,090/-. THE ASSESSING OFFICE R PASSED AN ORDER UNDER SECTION 143 R.W.S. 147 OF THE ACT, COMPUTING THE INCOME AT RS.5,27,910/- FOR THE ASSESSMENT YEAR 2009-10 & AT RS.8,24,838/- FOR THE ASSESSMENT YEAR 2011-12. 3.1. THE ASSESSING OFFICER DURING THE ASSESSMENT PR OCEEDINGS REQUESTED THE ASSESSEE SUBMITTED DOCUMENTARY EVIDEN CE TO PROVE THE GENUINENESS OF THE PURCHASES, MADE FROM M/S. HETA SA LES PVT. LTD., SUBHIKSHA ENTERPRISES, OMKAR TRADING CO., SHAH INDUST RIES & HARIOM TRADERS FOR THE ASSESSMENT YEAR 2009-10, AND FROM M AHAVIR ENTERPRISES & SAILEELA TRADING PVT. LTD. FOR THE ASS ESSMENT YEAR 2011- 12. FOR THE REASONS GIVEN IN HIS ORDER, THE ASSESSI NG OFFICER HELD THAT THESE PURCHASES ARE BOGUS PURCHASES. 3.2. AGGRIEVED THE ASSESSEE CARRIED THE MATTER IN A PPEAL. 3 I.T.A. NO. 202/KOL/2017 ASSESSMENT YEAR: 2009-10 & I.T.A. NO. 203/KOL/2017 ASSESSMENT YEAR: 2010-11 SHRI PANNE CHAND SARDA THE LD. FIRST APPELLATE AUTHORITY, REJECTED THE CO NTENTION OF THE ASSESSEE BY HOLDING THAT:- (A) THE ORGANISATIONS FROM WHICH THE ASSESSEE PURCHASED GOODS HAVE BEEN BLACKLISTED AS HAWALA DEA LERS, WHO PROVIDED FAKE BILLS AS PER MAHARASHTRAS SALES TAX WEBSITE. (B) THE ASSESSEE COULD NOT PROVIDE CONFIRMATION FRO M THESE PARTIES. (C) NO EVIDENCE OF TRANSPORTATION OF GOODS WAS PROVIDED. (D) MERE PAYMENTS MADE BY ACCOUNT PAYEE CHEQUES DO NOT INDICATE THE GENUINENESS OF THE TRANSACTIONS. (E) JUST BECAUSE THE AO DID NOT CONDUCT AN INDEPEN DENT ENQUIRY OR INVESTIGATION, IT CANNOT BE CLAIMED THAT THE ONUS THAT LAY ON THE ASSESSEE IS DISCHARGED. (F) IT IS CLEAR THAT THE MONEY CAME BACK TO THE AS SESSEE IN CASH ON ACCOUNT OF SUCH BOGUS PURCHASES. (G) THE ARGUMENT THAT ONLY ELEMENT OF PROFIT CAN BE TAXED, CANNOT BE ACCEPTED AS THE TRANSACTION IS A D UBIOUS TRANSACTION. 4 I.T.A. NO. 202/KOL/2017 ASSESSMENT YEAR: 2009-10 & I.T.A. NO. 203/KOL/2017 ASSESSMENT YEAR: 2010-11 SHRI PANNE CHAND SARDA 3.3. AGGRIEVED THE ASSESSEE IS BEFORE US IN APPEAL ON THE FOLLOWING GROUNDS:- FOR ASSESMENT YEAR 2009-10 1. FOR THAT ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE, THE LD. CIT(A) WAS UNJUSTIFIED IN CONFIRMING THE RE OPENING PROCEEDINGS U/S 147 TO BE VALID IN LAW. 2. FOR THAT ON THE FACTS AND IN THE CIRCUMSTANCES O F THE CASE, THE LD. CIT(A) WAS UNJUSTIFIED IN CONFIRMING THE AD DITION OF RS.3,92,717/- MADE BY THE A.O. ON ACCOUNT OF ALLEGE D BOGUS PURCHASES AND TREATING THE SAME AS INCOME OF THE AS SESSEE. 3. WITHOUT PREJUDICE TO GROUND NO. 2, LD. CIT (A) O UGHT TO HAVE HELD THAT ON THE ONLY THE ELEMENT OF PROFIT EMBEDDE D IN THE BOGUS PURCHASES SHOULD BE TAXED AND NOT THE ENTIRE PURCHA SES. 4. THAT THE APPELLANT CRAVES LEAVE TO ADD, ALTER O R DELETE ALL OR ANY OF THE GROUNDS OF APPEAL. AS THE GROUNDS OF APPEAL FOR BOTH THE ASSESSMENT YE ARS ARE IDENTICAL WITH VARIANCE IN FIGURES THEY ARE NOT REP RODUCED FOR THE SAKE OF BREVITY. 4. AFTER HEARING RIVAL CONTENTIONS, WE DISMISS GROU ND NO. 1 OF THE ASSESSEE FOR BOTH THE ASSESSMENT YEARS, WHICH IS ON THE ISSUE OF THE REOPENING, AS NOT PRESSED. 5 I.T.A. NO. 202/KOL/2017 ASSESSMENT YEAR: 2009-10 & I.T.A. NO. 203/KOL/2017 ASSESSMENT YEAR: 2010-11 SHRI PANNE CHAND SARDA 5. THOUGH THE ASSESSEE HAS RAISED A NUMBER OF CONTE NTIONS ON THE ISSUE AS TO WHETHER THE PURCHASES IN QUESTION ARE G ENUINE OR NOT, HE RELIED ON THE DECISION OF THE HONOURABLE GUJARAT HI GH COURT IN THE CASE OF CIT VS. BHOLANATH POLY FAB (P.) LTD. 355 ITR 290 (G UJ), FOR THE PROPOSITION THAT, ONLY THE PROFIT ELEMENT EMBEDDED IN THESE TRANSACTIONS SHOULD BE BROUGHT TO TAX, WHEREIN IT I S HELD AS FOLLOWS:- 5. HAVING COME TO SUCH A CONCLUSION, HOWEVER, THE TRIBUNAL WAS OF THE OPINION THAT THE PURCHASES MAY HAVE BEEN MADE FROM BOGUS PARTIES, NEVERTHELESS, THE PURCHASES THEMSELVES WERE NOT BOG US. THE TRIBUNAL ADVERTED TO THE FACTS AND DATA ON RECORD AND CAME T O THE CONCLUSION THAT THE ENTIRE QUANTITY OF OPENING STOCK, PURCHASE S AND THE QUANTITY MANUFACTURED DURING THE YEAR UNDER CONSIDERATION WE RE SOLD BY THE ASSESSEE. THEREFORE, THE PURCHASES OF ENTIRE 102514 METERS OF CLOTH WERE SOLD DURING THE YEAR UNDER CONSIDERATION. THE TRIBU NAL, THEREFORE, ACCEPTED THE ASSESSEE'S CONTENTION THAT THE FINISHE D GOODS WERE PURCHASED BY THE ASSESSEE, MAY BE NOT FROM THE PART IES SHOWN IN THE ACCOUNTS, BUT FROM OTHER SOURCES. IN THAT VIEW OF T HE MATTER, THE TRIBUNAL WAS OF THE OPINION THAT NOT THE ENTIRE AMO UNT, BUT THE PROFIT MARGIN EMBEDDED IN SUCH AMOUNT WOULD BE SUBJECTED T O TAX. THE TRIBUNAL RELIED ON ITS EARLIER DECISION IN THE CASE OF M/S.SANKET STEEL TRADERS AND ALSO MADE REFERENCE TO THE TRIBUNAL'S D ECISION IN THE CASE OF VIJAY PROTIENS LTD. VS. ASSTT. CIT [1996] 58 ITD 428 (AHD.) 6. WE ARE OF THE OPINION THAT THE TRIBUNAL COMMITTE D NO ERROR. WHETHER THE PURCHASES THEMSELVES WERE BOGUS OR WHETHER THE PARTIES FROM WHOM SUCH PURCHASES WERE ALLEGEDLY MADE WERE BOGUS IS ESSENTIALLY A 6 I.T.A. NO. 202/KOL/2017 ASSESSMENT YEAR: 2009-10 & I.T.A. NO. 203/KOL/2017 ASSESSMENT YEAR: 2010-11 SHRI PANNE CHAND SARDA QUESTION OF FACT. THE TRIBUNAL HAVING EXAMINED THE EVIDENCE ON RECORD CAME TO THE CONCLUSION THAT THE ASSESSEE DID PURCHA SE THE CLOTH AND SELL FINISHED GOODS. IN THAT VIEW OF THE MATTER, AS NATU RAL COROLLARY, NOT THE ENTIRE AMOUNT COVERED UNDER SUCH PURCHASE, BUT THE PROFIT ELEMENT EMBEDDED THEREIN WOULD BE SUBJECT TO TAX. THIS WAS THE VIEW OF THIS COURT IN THE CASE OF SANJAY OILCAKE INDUSTRIES V. C IT, 316 ITR 274 (GUJ.). SUCH DECISION IS ALSO FOLLOWED BY THIS COURT IN A J UDGMENT DATED 16.8.2011 IN TAX APPEAL NO.679 OF 2010 IN THE CASE OF CIT V. KISHOR AMRUTLAL PATEL. IN THE RESULT, TAX APPEAL IS DISMIS SED. 6. RESPECTFULLY FOLLOWING THE SAME, WE DIRECT THE A SSESSING OFFICER TO BRING TO TAX ONLY THE PROFIT ELEMENT OF THESE TR ANSACTIONS. HE IS DIRECTED TO APPLY THE GP RATE OF 12% ON THE FIGURE OF BOGUS PURCHASES ARRIVED AT, IN EACH OF THE ASSESSMENT YEARS AND RES TRICT THE ADDITION TO THE SAME. THE BALANCE ADDITION IS HEREBY DELETED. 7. IN THE RESULT, THE APPEAL OF THE ASSESSEE IS ALL OWED IN PART. KOLKATA, THE 25 TH DAY OF AUGUST, 2017. SD/- [ J. SUDHAKAR REDDY ] ACCOUNTANT MEMBER DATED : 25.08.2017 {SC SPS} 7 I.T.A. NO. 202/KOL/2017 ASSESSMENT YEAR: 2009-10 & I.T.A. NO. 203/KOL/2017 ASSESSMENT YEAR: 2010-11 SHRI PANNE CHAND SARDA COPY OF THE ORDER FORWARDED TO: 1. SHRI PANNE CHAND SARDA 56, N.S. ROAD 2 ND FLOOR KOLKATA - 700001 2. INCOME TAX OFFICER, WARD 35(1), KOLKATA AAYKAR BHAVAN POORVA KOLKATA 700 107 3. CIT(A)- 4. CIT- , 5. CIT(DR), KOLKATA BENCHES, KOLKATA. TRUE COPY BY ORDER SENIOR PRIVATE SECRETARY HEAD OF OFFICE/ D.D.O. ITAT, KOLKATA BENCHES