Narendrakumar L. Rajput, Pune V. Income-tax Officer,

ITA 2063/PUN/2016

• Counselvise Citation: [2019] 118 COUNSELVISE.COM (IT) 5191 (ITAT-PUNE)
• Duration Of Justice: 2 year(s) 4 month(s) 27 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 05-02-2019
• Appeal Filed By: Assessee
• Order Result: Partly Allowed
• Bench Allotted: A
• Next Hearing Date: 13-12-2018
• Assessment Year: 2008-2009
• Appeal Filed On: 08-09-2016
• Result in Favour of: Partly Allowed
• Court: TRIBUNAL
• Department Lawyers: K J KAWADE
• Keywords: Reason to believe
• Section: 69C; 143(3); 133A; 148

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL PUNE BENCH A , PUNE , , . , BEFORE MS. SUSHMA CHOWLA, JM AND SHRI D. KARUNAKARA RAO , AM . / ITA NO. 2063 /P U N/201 6 / ASSESSMENT YEAR : 20 08 - 09 NARENDRAKUMAR L. RAJPUT PROP. M/S. RITWIK ENTERPRISES, MAIGOLD 2, RAHUL CO - OP. HSG. SOCIETY, LANE NO.14, S.NO.24/1/1, VIDYANAGAR, PUNE 411032 . / APPELLANT P AN: A G BPR3834J VS. THE INCOME TAX OFFICER, WARD 2(3), PUNE . / RESPONDENT / APPELLANT BY : NONE / RESPONDENT BY : SHRI K.J. KAWADE / DATE OF HEARING : 1 3 . 12 .201 8 / DATE OF PRONOUNCEMENT: 05 . 0 2 .201 9 / ORDER PER SUSHMA CHOWLA, J M : THE APPEAL FILED BY ASSESSEE IS AGAINST ORDER OF CIT (A) , PUNE - 5, PUNE , DATED 06 . 0 6 .20 1 6 RELATING TO ASSESSMENT YEAR 20 08 - 09 AGAINST ORDER PASSED UNDER SECTION 143(3) R. W.S. 147 OF THE INCOME - TAX ACT , 1961 (IN SHORT THE ACT) . ITA NO. 2063 /P U N/20 1 6 NARENDRAKUMAR L RAJPUT 2 2. THE ASSESSEE HAS RAISED THE FOLLOWING GROUND S OF APPEAL: - ON FACTS AND IN LAW, 1 ] THE REASST. U/S 147 BE HELD BAD IN LAW AND ACCORDINGLY, THE REASST. BE HELD NULL AND VOID. 2] THE LEARNED CI T(A) ERRED IN CONFIRMING THE ADDITION OF RS.73,44,100/ - ON ACCOUNT OF URD PURCHASES. 3] THE LEARNED CIT(A) FAILED TO APPRECIATE THAT A . THE APPELLANT IS A SCRAP DEALER AND HE MAKES PURCHASES FROM SMALL VENDORS WHO ARE NOT HAVING VAT OR TIN NO. AND THUS, T HERE IS NO REASON TO HOLD THAT THE PURCHASES MADE FROM THEM ARE BOGUS. B . THE G.P. SHOWN BY THE ASSESSEE WAS REASONABLE AND THIS FACT ITSELF INDICATED THAT THE PURCHASES WERE GENUINE AND WERE EFFECTED AS SHOWN IN THE BOOKS. C . THE PURCHASES WERE EFFECTED OUT OF THE SALE PROCEEDS AND ACCORDING, THE QUESTION OF MAKING ANY ADDITION U/S 69C DID NOT ARISE. D . FROM THE CASH BOOK OF THE APPELLANT, IT WAS VERY CLEAR THAT ALL THE PURCHASES WERE PROPERLY RECORDED IN THE BOOKS AND THEREFORE, THE QUESTION OF MAKING ANY ADDI TION U/S 69C DID NOT ARISE. E . THE MISMATCH IN DATES OF FILING VAT RETURNS IS DUE TO THE FACT THAT THE ORIGINAL VAT RETURNS WERE REVISED LATER AND THUS, THERE IS NO REASON TO HOLD THAT THESE RETURNS WERE NOT AUTHENTICATE. 3. DESPITE SERVICE OF NOTICE, NONE APPEARED ON BEHALF OF ASSESSEE NOR ANY APPLICATION WAS FILED FOR ADJOURNMENT. HOWEVER, IN VIEW OF THE ISSUE INVOLVED, WE PROCEED TO DECIDE THE PRESENT APPEAL AFTER HEARING THE LEARNED DEPARTMENTAL REPRESENTATIVE FOR THE REVENUE. 4. THE FIRST ISSUE RAISED IN THE PRESENT APPEAL IS AGAINST INITIATION OF RE - ASSESSMENT PROCEEDINGS UNDER SECTION 147 OF THE ACT. THE ISSUE RAISED ON MERITS IS AGAINST ADDITION MADE ON ACCOUNT OF UNREGISTERED DEALER PURCHASES ( URD PURCHASES ) IN THE HANDS OF ASSESSEE. ITA NO. 2063 /P U N/20 1 6 NARENDRAKUMAR L RAJPUT 3 5. BRIEFLY, IN THE FACTS OF THE CASE, THE ASSESSEE WAS SCRAP DEALER AND WAS MAKING PURCHASES FROM SMALL VENDORS. SURVEY UNDER SECTION 133A OF THE ACT WAS CONDUCTED ON THE PREMISES OF ASSESSEE ON 19.03.2008. DURING THE COURSE OF SURVEY, STATEMENT OF ASSESSEE WAS RECO RDED. THE ASSESSEE DURING THE COURSE OF SURVEY ACCEPTED PURCHASES TO THE TUNE OF 88,44,100/ - TO BE MADE ON ACCOUNT OF URD PURCHASES. THE ASSESSEE COULD NOT SUBSTANTIATE THE AFORESAID URD PURCHASES AND HE VOLUNTARILY DECLARED SUM OF 15 LAKHS ON THE SA ID ACCOUNT DUE TO LACK OF DOCUMENTARY EVIDENCE. THE ASSESSING OFFICER NOTED THAT PURCHASE BILLS WHICH WERE IMPOUNDED DURING THE COURSE OF SURVEY DID NOT BEAR ANY VAT / TIN NUMBER. THE ASSESSEE DURING THE COURSE OF ASSESSMENT PROCEEDINGS ALSO COULD NOT PR ODUCE DOCUMENTARY EVIDENCE FOR BALANCE URD PURCHASES OF 73,44, 1 00/ - . THE ASSESSING OFFICER THUS, RECORDED REASONS FOR REOPENING THE ASSESSMENT AND NOTICE UNDER SECTION 148 OF THE ACT WAS ISSUED TO THE ASSESSEE. DURING THE COURSE OF ASSESSMENT PROCEEDINGS, THE ASSESSEE COULD NOT FURNISH ANY SUPPORTIVE DOCUME NTS AND SIMPLY STATED THAT ALL URD PURCHASES WERE TAKEN INTO PURCHASE ACCOUNT. THE ASSESSING OFFICER HELD THE ASSESSEE NOT TO HAVE EXPLAINED THE SOURCE OF EXPENDITURE AND HENCE, ADDITION OF 73,44,100/ - UNDER SECTION 69C OF THE ACT. 6. THE CIT(A) UPHELD THE ADDITION ON BOTH JURISDICTIONAL ISSUE OF 147 PROCEEDINGS AND ALSO ON MERITS. 7. FIRST, WE SHALL TAKE UP THE ISSUE RAISED ON MERITS I.E. ADDITION MADE ON ACCOUNT OF VALUE OF TOTAL URD PURCHASES TO THE EXTENT OF 88,44,100/ - . THE ASSESSEE ADMITTEDLY, HAD OFFERED ADDITIONAL INCOME OF 15 LAKHS DURING SURVEY PROCEEDINGS AND THE SAME WAS INCLUDED IN HIS RETURN OF INCOME FILED FOR THE YEAR UNDER CONSIDERATION. HOWEVER, THE ASSESSING OFFICER HELD THE ASSESSEE TO ITA NO. 2063 /P U N/20 1 6 NARENDRAKUMAR L RAJPUT 4 HAVE INDULGED IN URD PURCHASES AND IN THE ABSENCE OF ANY VAT / TIN NUMBER OR ANY OTHER SUPPORTIVE EVIDENCE, MADE AN ADDITION OF 73,44,100/ - UNDER SECTION 69C OF THE ACT. THE CASE OF ASSESSEE IS THAT A PERSON ENGAGED IN SCRAP TRADING AND IN THE NORMAL COURSE OF BUSINESS, THE ASSESSEE WAS PURCHAS ING SCRAP FROM STREET HAWKERS IN SMALL QUANTITIES. SO, IN SUPPORT OF SUCH PURCHASES FROM STREET HAWKERS, THERE WAS NO OTHER EVIDENCE AVAILABLE WITH THE ASSESSEE. THE SAID STREET HAWKERS DID NOT HAVE VAT / TIN NUMBER S . IN ORDER TO BE FAIR, THE ASSESSEE H AD OFFERED ADDITIONAL INCOME OF 15 LAKHS DURING THE COURSE OF SURVEY IN THE RETURN OF INCOME FILED. IN SUCH CIRCUMSTANCES, THERE IS NO MERIT IN TREATING TOTAL PURCHASES AS BOGUS IN THE HANDS OF ASSESSEE UNDER SECTION 69C OF THE ACT. IN THE FACTS OF ASSESSEE, WHY WE SAY IS TOTAL PURCH ASES BECAUSE 15 LAKHS ADDITIONAL INCOME HAS BEEN OFFERED BY THE ASSESSEE AND BALANCE 73,44,100/ - HAS BEEN ADDED IN THE HANDS OF ASSESSEE. THE AUTHORITIES BELOW HAVE NOT DISPUTED THE FACT THAT THE ASSESSEE IS ENGAGED IN SCRAP TRADING. ONCE HE IS FOUND TO BE A TRADER IN SCRAP, THEN AT BEST THE ADDITION ON ACCOUNT OF GROSS PROFIT BE MADE IN THE HANDS OF ASSESSEE AND ENTIRE PURCHASES MADE BY ASSESSEE FROM URD DEALERS CANNOT BE ADDED IN THE HANDS OF ASSESSEE. WE FIND NO MERIT IN THE STAND OF REVENUE IN TH IS REGARD. THE ASSESSEE HAD ALREADY OFFERED ADDITIONAL INCOME AT 15 LAKHS AND NO FURTHER ADDITION IS WARRANTED IN THE HANDS OF ASSESSEE ON THE AFORESAID TOTAL PURCHASES OF ABOUT 88 LAKHS. 8. NOW, COMING TO THE SECOND ISSUE OF INITIATING OF RE - ASSESSM ENT PROCEEDINGS AND IN VIEW OF SURVEY PROCEEDINGS CARRIED OUT AND THE EVIDENCE FOUND DURING THE COURSE OF SURVEY, THE ASSESSING OFFICER HAD REASON TO BELIEVE THAT INCOME IN THE HANDS OF ASSESSEE HAS ESCAPED ASSESSMENT, WHICH IS FURTHER ESTABLISHED BY THE F ACT THAT THE ASSESSEE HAD OFFERED ADDITIONAL INCOME ITA NO. 2063 /P U N/20 1 6 NARENDRAKUMAR L RAJPUT 5 OF 15 LAKHS. HENCE, INITIATION OF RE - ASSESSMENT PROCEEDINGS IS UPHELD. THE GROUND OF APPEAL NO.1 RAISED BY ASSESSEE IS THUS, DISMISSED. THE ISSUE ON MERITS IS ALLOWED IN FAVOUR OF ASSESSEE. 9 . IN TH E RESULT, THE APPEAL OF ASSESSEE IS PARTLY ALLOWED. ORDER PRONOUNCED ON THIS 5 TH DAY OF FEBRUARY , 201 9 . SD/ - SD/ - ( D.KARUNAKARA RAO ) (SUSHMA CHOWLA ) / ACCOUNTAN T MEMBER / JUDICIAL MEMBER / PUNE ; DATED : 5 TH FEBRUARY , 201 9 . GCVSR / COPY OF THE ORDER IS FORWARDED TO : 1. / THE APPELLANT ; 2. / THE RESPONDENT; 3. ( ) / THE CIT(A) , PUNE - 5, PUNE ; 4. THE PR. CI T , PUNE - 4, PUNE ; 5. 6. , , / DR A , ITAT, PUNE ; / GUARD FILE . / BY ORDER , // TRUE COPY // / SR. PRIVATE SECRETARY , / ITAT, PUNE