The ITO, Ward-5(3), Baroda V. Shri Chogaram Hardanji Patel, Baroda

ITA 2083/AHD/2010

• Counselvise Citation: [2011] 134 COUNSELVISE.COM (IT) 6593 (ITAT-AHMEDABAD)
• Duration Of Justice: 11 month(s) 1 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 20-05-2011
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: D
• Next Hearing Date: 29-04-2011
• Assessment Year: 2007-2008
• Appeal Filed On: 18-06-2010
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: H P MEENA
• Keywords: Bogus purchase
• Section: 143(3)

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL AT AHMEDABAD, D BENCH (BEFORE S/SHRI G.D. AGARWAL, VICE-PRESIDENT AND BHAVNESH SAINI, JUDICIAL MEMBER) ITA NO.2083/AHD/2010 [ASSTT. YEAR : 2007-2008] ITO, WARD-5(3) BARODA. VS. SHRI CHOGARAM HARDANJI PATEL 6-SUMANGALAM APT., B/H. GANGOTRI APT. RV DESAI ROAD, BARODA. (APPELLANT) (RESPONDENT) REVENUE BY : SHRI H.P. MEENA ASSESSEE BY : NONE (WRITTEN SUBMISSIONS) O R D E R PER G.D. AGARWAL, VICE-PRESIDENT : THIS IS REVENUES APPEAL AGAINST THE ORDER OF THE COMMISSIONER OF INC OME TAX(APPEALS)-V, BARODA DATED 29.04.2010 ARISING OUT OF THE ORDER OF THE ASSESSING OFFICER PASSED UNDER SECTION 143(3) OF THE INCOME TAX ACT, 1961. 2. IN THIS APPEAL, THE REVENUE HAS RAISED THE FOLLO WING GROUNDS: 1(I) ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE AND IN LAW, THE LD. LEARNED COMMISSIONER OF INCOME TAX (APPEALS ) ERRED IN DELETING THE ADDITION TO THE EXTENT OF RS.18,57,899 /- OUT OF TOTAL ADDITION OF RS.26,54,152/- ON ACCOUNT OF BOGUS PURC HASES OF RS.26,54,142/- 1(II) THE CIT(A) ERRED IN RESTRICTING THE ADDITION @30% OF THE TOTAL ADDITION OF RS.26,54,152/- WITHOUT APPRECIATI NG THE RATIO OF THE DECISION OF THE HON. DELHI HIGH COURT IN THE CA SE OF CIT VS. LA MEDICA, 250 ITR 575 IN WHICH IT IS HELD THAT IF THE RE IS AMPLE EVIDENCE TO PROVE THAT THE PURCHASES WERE NOT MADE, THE ENTIRE SUM OF BOGUS PURCHASE IS LIABLE TO BE DISALLOWED. 3. WE HAVE HEARD LEARNED DR AND PERUSED THE WRITTEN SUBMISSIONS FILED ON BEHALF OF THE ASSESSEE. THE FACTS OF THE CASE ARE THAT DURING THE ITA NO.2083/AHD/2010 -2- COURSE OF ASSESSMENT PROCEEDINGS, THE ASSESSING OFF ICER FOUND PURCHASES FROM M/S.BHAGYODAYA ENTERPRISES TO BE BOGUS. ACCOR DINGLY, HE DISALLOWED THE BOGUS PURCHASE AMOUNTING TO RS.26,54 ,142/-. ON APPEAL, THE CIT(A) FOLLOWING CERTAIN DECISIONS OF THE ITAT RESTRICTED THE DISALLOWANCE TO 30% OF THE PURCHASE. IN THE WRITT EN SUBMISSIONS, IT WAS POINTED OUT BY THE LEARNED COUNSEL THAT AGAINST THE ORDER OF THE CIT(A) THE ASSESSEE HAD FILED THE APPEAL VIDE ITA NO.2309/ AHD/2010 IN WHICH THE ITAT HAS FURTHER REDUCED THE DISALLOWANCE TO 20 %. THE ORDER OF THE ITAT DATED 13-10-2010 VIDE ITA NO.2309/AHD/2010. T HE RELEVANT FINDING OF THE ITAT READS AS UNDER: 9. WE FIND THAT LEARNED COMMISSIONER OF INCOME TA X (APPEALS) HAS HELD THAT SINCE THE CORRESPONDING SAL E HAS BEEN ACCEPTED BY THE DEPARTMENT THERE COULD NOT HAVE BEE N SALE WITHOUT CORRESPONDING PURCHASES. ACCORDING TO THE LEARNED C OMMISSIONER OF INCOME TAX (APPEALS) THE ASSESSEE MIGHT HAVE PUR CHASED GOODS IN CASH FROM THE OPEN MARKET AT A LESSER PRICE. THE LEARNED COMMISSIONER OF INCOME TAX (APPEALS) THEREFORE, RES TRICTED THE DISALLOWANCE TO 30% OF THE AMOUNT OF PURCHASE OF RS .26,54,142/-. WE FIND THAT NO MATERIAL WAS BROUGHT BEFORE US TO S HOW THAT THE PRICE OF PURCHASE CLAIMED BY THE ASSESSEE WAS MORE BY 30% THAN THE MARKET VALUE OF SUCH GOODS. KEEPING IN VIEW THE COMPLETE FACTS AND CIRCUMSTANCES OF THE CASE, IN OUR CONSIDERED OP INION DISALLOWANCE OF 20% OF PURCHASE AMOUNT SHALL MEET T HE ENDS OF JUSTICE. WE THEREFORE, MODIFY THE ORDER OF THE LEAR NED COMMISSIONER OF INCOME TAX (APPEALS) TO THE ABOVE E XTENT AND DIRECT THE LEARNED ASSESSING OFFICER TO RESTRICT TH E DISALLOWANCE TO 20% OF THE PURCHASE AMOUNT OF RS.26,54,142/-. THUS, THIS GROUND OF APPEAL OF THE ASSESSEE IS PARTLY ALLOWED. SINCE THE ITAT HAS ALREADY REDUCED THE DISALLOWANCE SUSTAINED BY THE CIT(A), THE CONTENTION IN THE REVENUES APPEAL HAS NO MERIT. THE CIT(A) HAS SUSTAINED THE DISALLOWANCE AT 30% OF THE PURCHASE WHICH HAS FURTHER BEEN REDUCED TO 20% BY THE ITAT IN ASSESSEE S APPEAL. THEREFORE, SO FAR AS THE REVENUE APPEAL AGAINST THE ORDER OF THE LEARNED ITA NO.2083/AHD/2010 -3- COMMISSIONER OF INCOME TAX (APPEALS) IS CONCERNED, THE SAME STOOD CONCLUDED BY THE ORDER OF THE ITAT WHILE DISPOSING OF THE ASSESSEES APPEAL. RESPECTFULLY FOLLOWING THE SAME, WE DISMIS S THE REVENUES APPEAL. 4. IN RESULT, THE APPEAL OF THE REVENUE IS DISMISSE D. ORDER PRONOUNCED IN OPEN COURT ON 20 TH MAY, 2011 SD/- SD/- (BHAVNESH SAINI) JUDICIAL MEMBER (G.D. AGARWAL) VICE-PRESIDENT PLACE : AHMEDABAD DATE : 20-05-2011 C OPY OF THE ORDER FORWARDED TO: 1) : APPELLANT 2) : RESPONDENT 3) : CIT(A) 4) : CIT CONCERNED 5) : DR, ITAT. BY ORDER DR/AR, ITAT, AHMEDABAD