Yeshala Prasuna , Secunderabad V. Asst. Commissioner of Income Tax, Ward-15(1), Hyderabad

ITA 2141/Hyd/2018

• Counselvise Citation: [2019] 115 COUNSELVISE.COM (IT) 9279 (ITAT-HYDERABAD)
• Duration Of Justice: 10 month(s) 28 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 04-10-2019
• Appeal Filed By: Assessee
• Order Result: Dismissed
• Bench Allotted: DB-A
• Assessment Year: 2015-2016
• Appeal Filed On: 06-11-2018
• Result in Favour of: Revenue
• Court: TRIBUNAL
• Department Lawyers: WHILE REITERATING SUBMISSIONS MADE BEFORE
• Keywords: Bogus purchase; Bogus

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL HYDERABAD A BENCH : HYDERABAD BEFORE SMT. P. MADHAVI DEVI, JUDICIAL MEMBER AND SHRI MOHAN ALANKAMONY, ACCOUNTANT MEMBER ITA NO. 2141/HYD./2018 ASSESSMENT YEAR: 2015-16 SMT. YESHALA PRASUNA, VS. ACIT, CIRCLE-15(1), SECUNDERABAD HYDERABAD PAN: AKIPP9925D (APPELLANT) (RESPONDENT) FOR ASSESSEE : SHRI S. RAMA RAO, A.R. FOR REVENUE : SHRI SUNKU SRINIVAS, D.R. DATE OF HEARING : 17/09/19 DATE OF PRONOUNCEMEN T : 04/10/19 O R D E R PER SMT. P. MADHAVI DEVI, J.M. THIS IS ASSESSEES APPEAL FOR A.Y. 2015-16 AGAINST ORDER OF CIT(A)-7, HYDERABAD DATED 20.0 9.2018. 2. BRIEF FACTS OF THE CASE ARE THAT THE ASSESSEE IS A N INDIVIDUAL AND IS ENGAGED IN THE BUSINESS OF TRADING OF INFORMATION T ECHNOLOGY, ELECTRONICS, SCIENTIFIC INSTRUMENTS AND EQUIPMENTS. SHE FILED H ER RETURN OF INCOME FOR A.Y. 2015-16 ON 1.9.2015 OFFERING THE TOTAL INCOME OF RS .28,46,890/- TO TAX. THE CASE WAS SELECTED FOR LIMITED SCRUTINY TO VERIFY- (I) CONTRACTOR RECEIPTS/FEES MISMATCH; (II) CUSTOM DUTY PAYMENT MISMATCH; (III) SUNDRY CREDITORS; AND ITA NO.2141/HYD/2018 AY: 2015-16 SMT. YESHALA PRASUNA 2 (IV) SALES TURNOVER MISMATCH. THE A.O. OBSERVED THAT DURING THE YEAR UNDER CONSID ERATION, THE ASSESSEE HAD MADE TRADE PURCHASES FROM M/S. HIMALAYA SERVICES BU T HAD NOT MADE ANY PAYMENT TO THE SAID CONCERN. HE ALSO NOTICED THAT THE ASSESSEE MADE SIMILAR PURCHASES FROM M/S RAYCHEM TECHNOLOGIES, PROP. SMT. PENDEM RAJESWARI FOR RS.25,98,750/- BUT NO PAYMENT HAS BEEN MADE SO FAR. WHEN ENQUIRED, THE ASSESSEES HUSBAND SUBMITTED THAT THE ASSESSEE HAD PURCHASED THE GOODS FROM BOTH THE PARTIES, BUT SINCE THEY WERE FOUND TO BE DEFECTIVE, THE ASSESSEE HAS NOT MADE PAYMENT FOR SUCH PURCHASES AND PAYMENT REMAINED WITH THE ASSESSEE. HOWEVER, THE AO WAS NOT CONVINCED AND HE LD THAT THESE ARE BOGUS PURCHASES AND THAT THE PARTIES BEING SHOWN AS SUNDR Y CREDITORS IS ALSO BOGUS. THEREFORE, HE TREATED TOTAL AMOUNT AS BOGUS SUNDRY CREDITORS FOR THE A.Y. 2015-16 AND BROUGHT IT TO TAX. 3. AGGRIEVED ASSESSEE PREFERRED APPEAL BEFORE THE CI T(A) WHO CONFIRMED THE ORDER OF AO. ASSESSEE IS IN SECOND APPEAL BEFORE U S BY RAISING FOLLOWING GROUNDS OF APPEAL. 1. THE ORDER OF LD.CIT(A) IS ERRONEOUS BOTH ON FAC TS AND IN LAW. 2. THE LD.CIT(A) ERRED IN CONFIRMING ADDITION OF RS .99,09,322/-. 3. THE LD.CIT(A) ERRED IN HOLDING THAT THE SAID AMO UNT REPRESENTS INFLATION IN PURCHASES AND WHEREAS THE AO TREATED THE SAID AMOUN T AS BOGUS SUNDRY CREDIT. 4. THE LD.CIT(A) OUGHT TO HAVE CONSIDERED THE FACT THAT THE PURCHASES ARE GENUINE AND PAYMENTS WERE MADE GENUINELY AND THAT, THEREFORE, EVEN SUNDRY CREDITORS ARE GENUINE. 4. THE LD.COUNSEL FOR ASSESSEE, WHILE REITERATING SUB MISSIONS MADE BEFORE THE AUTHORITIES BELOW, SUBMITTED THAT THE ASSESSEE HAD PURCHASED GOODS FROM ITA NO.2141/HYD/2018 AY: 2015-16 SMT. YESHALA PRASUNA 3 M/S HIMALAYAN SERVICES AND ALSO M/S RAYCHEM TECHNOL OGIES AND HAS PRODUCED PURCHASE INVOICES FROM BOTH THE PARTIES BE FORE THE AO AS WELL AS CIT(A). HE ADMITTED THAT THE PAYMENT WAS NOT MADE AGAINST THESE PURCHASES BECAUSE THEY WERE FOUND TO BE DEFECTIVE AND WERE NO T USED FOR ASSESSEES BUSINESS. HE ALSO ADMITTED THAT GOODS STILL REMAINE D WITH ASSESSEE AND THE SAID PARTIES HAVE ALSO ACCEPTED THAT GOODS WERE DEF ECTIVE. HE SUBMITTED THAT IF AT ALL THESE AMOUNTS ARE TO BE BROUGHT TO TAX, T HEY CAN ONLY BE BROUGHT TO TAX U/S 41(1) OF THE ACT BUT THEY CANNOT BE TREATE D AS BOGUS SUNDRY CREDITORS. IT HAS TO BE TREATED AS INCOME OF THE ASSESSEE TOWA RDS CESSATION OF LIABILITY IN THE YEAR IN WHICH IT HAS BEEN WRITTEN-OFF BY OTHER PARTIES. 5. THE LD.DR ON THE OTHER HAND, RELIED ON THE ORDER O F AUTHORITIES BELOW AND SUBMITTED THAT THE ASSESSEE HAS NOT BEEN ABLE TO PROVE THAT IT HAD MADE PURCHASES FROM THESE PARTIES. 6. HAVING REGARD TO THE RIVAL CONTENTIONS AND MATERIA L PLACED ON RECORD, WE FIND THAT THE INVOICES OF M/S.HIMALAYA SERVICES AND M/S.RAYCHEM TECHNOLOGIES LTD. ARE PRODUCED BEFORE US AT PAGES 1 9 TO 21 OF THE PAPER BOOK. WE ALSO FIND THAT DURING THE COURSE OF ASSESSMENT P ROCEEDINGS, THE STATEMENTS OF THE PROPRIETORS OF M/S.HIMALAYA SERVI CES AND ALSO M/S. RAYCHEM TECHNOLOGIES HAVE BEEN RECORDED WHEREIN THE Y HAVE CONFIRMED THAT THE GOODS WERE SOLD BUT DUE TO SOME MANUFACTURING D EFECTS, THEY WERE REJECTED BY THE ASSESSEE AND NO PAYMENT HAS BEEN MA DE FOR THE SAME. THEY ALSO ADMITTED THAT THEY HAVE NOT SHOWN IT AS RECEIV ABLES AND HAS NOT RECEIVED ANY INCOME ON THE SAME. THE FACT THAT THESE TWO CO MPANIES HAVE SUPPLIED MATERIAL TO THE ASSESSEE AND THAT THEY HAVE BEEN FO UND WITH MANUFACTURING DEFECTS, HAS NOT BEEN PROVEN TO BE FALSE BUT ONLY F OR THE REASON THAT THE ASSESSEE HAS NOT MADE PAYMENTS TO VENDORS AND ALSO THAT THEY HAVE NOT RECORDED THE SAID TRANSACTION IN THEIR BOOKS OF ACC OUNTS, THE AO HAS HELD THE PURCHASES AS BOGUS AND THE CREDITORS AS BOGUS SUNDR Y CREDITORS. THOUGH, WE AGREE WITH THE ASSESSEE THAT THESE PARTIES COULD NO T HAVE BEEN TREATED AS ITA NO.2141/HYD/2018 AY: 2015-16 SMT. YESHALA PRASUNA 4 BOGUS, THE FACT THAT THE GOODS WERE FOUND TO BE DEF ECTIVE DURING THE RELEVANT YEAR ITSELF AND FOR THAT REASON ALONE THE VENDORS A LSO HAVE NOT SHOWN THE AMOUNT AS RECEIVABLE FROM THE ASSESSEE PROVES THAT THE LIABILITY ALSO GOT CEASED DURING THE RELEVANT FINANCIAL YEAR ITSELF. THEREFORE, IT HAS TO BE TREATED AS THE INCOME OF THE ASSESSEE DURING THE RELEVANT A SSESSMENT YEAR ITSELF NOT AS BOGUS CREDITORS, BUT AS CESSATION OF LIABILITY. AO IS DIRECTED TO RECOMPUTE THE INCOME ACCORDINGLY. IN THE RESULT, THE APPEAL OF THE ASSESSEE IS DISMI SSED. ORDER PRONOUNCED IN OPEN COURT ON 4 TH OCTOBER, 2019. SD/- SD/- (MOHAN ALANKAMONY) (P MADHA VI DEVI) ACCOUNTANT MEMBER JUDICIAL M EMBER DATED: 4 TH OCTOBER, 2019. *GMV *GMV *GMV *GMV / TNMM / TNMM / TNMM / TNMM ITA NO.2141/HYD/2018 AY: 2015-16 SMT. YESHALA PRASUNA 5 COPY FORWARDED TO: 1. SMT.YESHALA PRASUNA, 12-5-35/A/9/51, BALLAD ESTA TES, TARNAKA, SECUNDERABAD. 2. THE ASST. COMMISSIONER OF INCOME TAX, CIRCLE-15( 1), HYDERABAD. 3. CIT(APPEALS)-7, HYDERABAD. 4. PR.CIT-7, HYDERABAD. 5. D.R. ITAT HYDERABAD 6. GUARD FILE // C O P Y //