Shri Nitesh G.Thakkar, Patan V. The Income Tax Officer, Ward-1, Patan

ITA 215/AHD/2015

• Counselvise Citation: [2018] 125 COUNSELVISE.COM (IT) 8239 (ITAT-AHMEDABAD)
• Duration Of Justice: 3 year(s) 3 month(s) 17 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 10-05-2018
• Appeal Filed By: Assessee
• Order Result: Dismissed
• Bench Allotted: A
• Assessment Year: 2008-2009
• Appeal Filed On: 23-01-2015
• Result in Favour of: Revenue
• Court: TRIBUNAL
• Department Lawyers: S K DEV
• Assessee Lawyers: M J SHAH
• Keywords: Bogus purchase
• Section: 133A

Judgement Text

, , IN THE INCOME TAX APPELLATE TRIBUNAL A BENCH, AHMEDABAD BEFORE SHRI RAJPAL YADAV, JUDICIAL MEMBER AND SHRI PRADIPKUMAR KEDIA, ACCOUNTANT MEMBER ITA NO.215/AHD/2015 IN / ASSTT.YEAR : 2008-09 SHRI NITESH G. THAKKAR PROP: M/S.DEEP COTTON INDUSTRIES JASKA ROAD, VALMIKINAGAR HARIJ-384240; DIST : PATAN. PAN : ADWPT 3924 H VS ITO, WARD - 1 PATAN. / (APPELLANT) / (RESPONDENT) ASSESSEE BY : SHRI M.J. SHAH, AR REVENUE BY : SHRI S.K. DEV, SR.DR / DATE OF HEARING : 27/02/2018 / DATE OF PRONOUNCEMENT: 10/05/2018 !'/ O R D E R PER PRADIP KUMAR KEDIA, ACCOUNTANT MEMBER: THE CAPTIONED APPEAL HAS BEEN FILED BY THE ASSESSEE AGAINST ORDER OF THE CIT(A), GANDHINAGAR DATED 5.9.2014 ARISING IN THE P ENALTY ORDER DATED 19.3.2013 PASSED BY THE ASSESSING OFFICER UNDER SEC TION 271(1)(C) OF THE INCOME TAX ACT CONCERNING ASSESSMENT YEAR 2008-09. 2. THE RELEVANT FACTS CONCERNING THE CASE IN BRIEF ARE THAT THE ASSESSEE IS PROPRIETOR OF DEEP COTTON INDUSTRIES DOING BUSINESS OF COTTON PROCESS. A SURVEY ACTION UNDER SECTION 133A OF THE ACT WAS CAR RIED OUT AT THE BUSINESS PREMISES OF THE ASSESSEE ON 1.9.2008 IN CONJUNCTION WITH OTHER SEARCH AND ITA NO.215/AHD/2015 2 SURVEY ACTIONS AT THE PREMISES OF EDIBLE OIL MILLS GROUP OF PATAN DISTRICT AND AGENTS/BROKERS OF MEHSANA AND SABARKANTHA DISTRICTS OF GUJARAT. SUBSEQUENT TO THE SURVEY, THE ASSESSEE FILED RETURN OF INCOME FOR THE ASSTT.YEAR 2008- 2009 ON 30.9.2009 DECLARING A TOTAL INCOME OF RS.1, 49,610/-. THE RETURN FILED BY THE ASSESSEE WAS SUBJECTED TO SCRUTINY ASSESSMEN T. ON THE BASIS OF SEARCH AND SURVEY PROCEEDINGS IN THE CASE OF EDIBLE OIL GR OUP, THE AO FOUND THAT ONE M/S.VISHAL TRADERS (VT FOR SHORT), VIRPUR, DI ST. KHEDA HAD ISSUED BOGUS ADJUSTMENT BILLS TO A LARGE NUMBER OF CONCERN S OF MEHSANA AND PATAN DISTRICTS OF GUJARAT DURING THE FINANCIAL YEAR 2006 -07 ONWARDS TOWARDS SUPPLY, AND THE ASSESSEE IS ONE OF THE BENEFICIARIES OF SUC H ACCOMMODATION BILLS. THE AO MADE A VERY DETAILED INQUIRY INTO TRANSACTIONS A ND FOUND THAT THE ASSESSEE HAS DECLARED PURCHASES FROM VT ONLY ON THE BASIS OF BILLS/INVOICES ISSUED BY THE SAID PARTY WHICH ARE BOGUS ONE. THE AO AFTE R MAKING DETAILED INQUIRY FOUND THAT IMPUGNED TRANSACTIONS WITH VT ARE ONLY AN EYE-WASH AND SUPPLIES PURPORTEDLY MADE BY THE VT ARE FICTITIOUS. THE AO ACCORDINGLY MADE ADDITION OF RS.2,09,49,678/- TOWARDS BOGUS PUR CHASES PURPORTEDLY SHOWN FROM VT AND ADDED THE SAME TO THE TOTAL INC OME OF THE ASSESSEE. IN THE QUANTUM PROCEEDINGS AFORESAID ADDITIONS WAS CON TESTED BEFORE THE CIT(A), AND THEREAFTER BEFORE THE ITAT. COORDINATE BENCH OF ITAT SUSTAINED THE ACTION OF THE CIT(A) TOWARDS OVER-REP ORTING OF PURCHASES TO THE EXTENT OF 25% ON ESTIMATE BASIS HAVING REGARD TO TH E TOTALITY OF THE FACTS AND CIRCUMSTANCES FOUND AND DETECTED WITH REFERENCE TO THE ALLEGED SUPPLIES CONNECTED TO VT. CONSEQUENTLY, ADDITION OF RS.52 ,37,420/- (25% OF PURCHASES SHOWN FROM VT) WAS SUSTAINED IN THE QUA NTUM PROCEEDINGS BY THE COORDINATE BENCH OF TRIBUNAL. ITA NO.215/AHD/2015 3 3. CONSEQUENT UPON THE QUANTUM PROCEEDINGS, THE AO ALSO INVOKED PROVISIONS OF SECTION 271(1)(C) OF THE ACT AND IMPO SED PENALTY ON AFORESAID CONCEALED INCOME OF RS.52,37,420/- AND QUANTIFIED P ENALTY AT RS.17,69,186/-. 4. AGGRIEVED AGAINST AFORESAID ACTION OF THE AO TOW ARDS IMPOSITION OF PENALTY, THE ASSESSEE PREFERRED APPEAL BEFORE THE C IT(A) WITHOUT ANY SUCCESS. 5. FURTHER AGGRIEVED, ASSESSEE HAS KNOCKED DOOR OF THE TRIBUNAL FOR RELIEF FROM THE AFORESAID IMPOSITION OF PENALTY. 6. THE LD.AR FOR THE ASSESSEE VEHEMENTLY CONTENDED THAT PENALTY HAS BEEN ERRONEOUSLY IMPOSED AND CONFIRMED IN THE QUANTUM PR OCEEDINGS ON ESTIMATED ADDITIONS TOWARDS ALLEGED BOGUS PURCHASES. THE LD. AR REFERRED TO THE DECISION OF THE COORDINATE BENCH IN QUANTUM PROCEED INGS AND SUBMITTED THAT THE COORDINATE BENCH HAS CLEARLY OBSERVED IN PARA 1 1 OF ITS ORDER THAT WHILE PURCHASE BILLS FROM VT MAY BE ADJUSTED BILLS, BUT THE PURCHASES ITSELF ARE NOT BOGUS PER SE. THE LD.AR SUBMITTED THAT IT IS NOBODYS CASE THAT PURCHASES HAVE NOT TAKEN PLACE AT ALL. THE FINDING IN THE QU ANTUM PROCEEDINGS LIMITED TO THE EXTENT THAT PURCHASES HAVE NOT HAPPENED FROM V T AS RECORDED IN THE BOOKS OF ACCOUNTS. AS A COROLLARY, IT WAS INFERRED THAT ACTUAL PURCHASES HAVE BEEN POSSIBLY MADE FROM UNKNOWN REGISTERED DEALER. THE ASSESSEE HAS BEEN SADDLED WITH ADDITIONAL TAX LIABILITY BASED ON GUES S-WORK THAT THE PURCHASES MADE HAVE NOT BEEN CORRECTLY REPORTED. THE LD.AR T HUS SUBMITTED THAT WHERE IT HAS BEEN FOUND AS A MATTER OF FACT THAT PURCHASE S DID EVENTUALLY TOOK PLACE, NOTWITHSTANDING FROM DIFFERENT PARTIES, PENALTY ON SUCH HYPOTHETICAL DETERMINATION OF ESTIMATED INCOME IS NOT CALLED FOR IN VIEW OF SEVERAL DECISIONS OF THIS TRIBUNAL. THE LD.AR ALSO RELIE D UPON THE DECISION OF HONBLE GUJARAT HIGH COURT IN THE CASE OF VIJAY PRO TEINS LTD. VS. CIT, TAX APPEAL NO.243 OF 2002 ORDER DATED 9.12.2014 AND CIT VS.VALMIKI PATEL, 282 ITA NO.215/AHD/2015 4 ITR 437 (GUJ) AND SUBMITTED THAT CIRCUMSTANCES EXI STING IN THE PRESENT APPEAL DOES NOT WARRANT IMPOSITION OF PENALTY ON SU CH ESTIMATE BASIS. IN ESSENCE, THE LD.AR CONTENDED THAT WHERE CIRCUMSTANC ES EXISTING FOR ADDITION/DISALLOWANCE OF PURCHASES ITSELF ARE NOT D EFINITE AND ADDITIONS/DISALLOWANCES HAVE BEEN MERELY ESTIMATED, THERE IS NO JUSTIFICATION TO IMPOSE ONEROUS PENALTY BY INVOKING SECTION 271(1 )(C) OF THE ACT. 7. THE LD.DR ON THE OTHER HAND RELIED UPON THE ORDE RS OF THE AUTHORITIES BELOW AND SUBMITTED THAT BOGUS PURCHASES WERE FOUND AS A MATTER OF FACT AFTER METICULOUS INQUIRY. IT WAS SUBMITTED THAT RECORD M AKE IT APPARENT THAT THE ASSESSEE HAD SUBVERTED FACTS AND RECORDED BOGUS PUR CHASES IN ITS BOOKS OF ACCOUNTS, WHICH FACT HAS BEEN ENDORSED BY THE ITAT IN THE APPELLATE PROCEEDINGS. ADDITION ON THIS COUNT WAS ULTIMATELY CONFIRMED BY THE TRIBUNAL ALBEIT PARTLY ON THE GROUND THAT PURCHASES PROBABLY TOOK PLACE IN VIEW OF CORRESPONDING SALES. THE LD.DR SUBMITTED T HAT IN THE WAKE OF SPEAKING FACTS NARRATING DECEPTION AND DESIGN OF TH E ASSESSEE AFTER ELABORATE INQUIRY, THERE CAN BE NO REASONS TO TAKE A DIFFEREN T VIEW IN THE MATTER OF PENALTY. THE LD.DR SUBMITTED THAT ACTION OF THE AO AND THE CIT(A) TOWARDS IMPOSITION OF PENALTY WITH REFERENCE TO THE DECISIO N OF THE HONBLE GUJARAT HIGH COURT IN THE CASE OF A.M. SHAH & CO. VS. CIT, 238 ITR 415 AND EXHORTED THAT PENALTY IS LEVIABLE WHERE DISCREPANCY OF SUCH NATURE HAS BEEN DETECTED GIVING RISE TO THE CONCEALMENT OF INCOME, AND IN THE LIGHT OF FALSITY DISCOVERED IN THE COURSE OF SURVEY AND POST SURVEY INQUIRIES. THE LD.DR FINALLY CONCLUDED THAT ESTIMATION HAVE BEEN MADE ON LY TO DETERMINE QUANTIFICATION OF CONCEALMENT. THE FACT OF CONCEAL MENT IS NOT IN QUESTION AT ALL IN VIEW OF THE DECISION OF THE COORDINATE BENCH IN THE QUANTUM PROCEEDINGS. ITA NO.215/AHD/2015 5 8. WE HAVE CAREFULLY CONSIDERED RIVAL SUBMISSIONS A ND PERUSED THE ORDERS OF THE AUTHORITIES BELOW AND CASE LAWS CITED. THE QUESTION FOR ADJUDICATION BEFORE US IS ON MAINTAINABILITY OF IMPOSITION OF PE NALTY BY THE REVENUE UNDER SECTION 271(1)(C) OF THE ACT HAVING REGARD TO THE F ACTS AND CIRCUMSTANCES OF THE CASE. AS NOTED IN THE PRECEDING PARAGRAPHS, WE OBSERVE THAT FACTS IN THE PRESENT CASE ARE EXTREMELY PECULIAR. IN THE INSTAN T CASE, THE REVENUE HAS ESTABLISHED BEYOND ANY REASONABLE DOUBT THAT THE AS SESSEE WAS INDULGED IN BOOKING BOGUS BILLS OF UNWORTHY SUPPLIES TO INFLATE EXPENSES. TELL-TALE EVIDENCE OF INTERMEDIARY I.E. SHRI MADANLAL L. SHA H AND POWER OF ATTORNEY HOLDER OF THE ASSESSEE AND CONFIRMATION THEREOF IN CROSS-EXAMINATION OF INTERMEDIARIES COUPLED WITH LACK OF PROOF TOWARDS D ELIVERY OF PURCHASES AND CLOUDED AND SUSPICIOUS BANK TRANSACTIONS RECORDED T O THIS EFFECT LEAVES US IN ANY MANNER OF DOUBT THAT THE ASSESSEE HAD DELIBERAT ELY AND WILLFULLY SUBVERTED REAL SOURCE AND CHARACTER OF THE TRANSACTIONS. WHI LE DOING SO, THE ASSESSEE ALSO PREVENTED REVENUE FROM KNOWING REAL SOURCE OF SUPPLY AND WHEREABOUTS OF THE SUPPLIER OF THE ALLEGED GOODS PURCHASED, IF ANY. IN THE CIRCUMSTANCES, APPELLATE AUTHORITIES WERE LEFT WITH NO OPTION BUT TO ESTIMATE A PLAUSIBLE OVER- STATEMENT OF EXPENDITURE ON PURCHASES, AND THEREBY UNDERSTATEMENT OF PROFITS. THUS, IN THESE GROSS FACTS AS RECORDED IN THE QUANT UM PROCEEDINGS, IT IS NOT A MATTER FOR CONSIDERATION AS TO WHETHER THERE WAS AN Y CONCEALMENT RESORTED BY THE ASSESSEE OR NOT. FACT OF UNDER-STATEMENT OF IN COME IS DISCERNIBLE. ONLY MATTER FOR CONSIDERATION IS EXTENT OF QUANTIFICATIO N OF UNDERSTATEMENT OF INCOME. ITAT AS A FINAL FACT FINDING AUTHORITY HAS LENT OBJECTIVITY TO SUCH ESTIMATION. THUS, QUARREL ABOUT QUANTUM OF ESTIMAT ED UNDISCLOSED INCOME ALSO DOES NOT SURVIVE ANY MORE. IN THESE CIRCUMSTA NCES, WE DO NOT SEE ANY RATIONAL GROUND FOR GRANTING LATITUDE TO THE ASSESS EE IN THE MATTER OF RELIEF PLEADED. THE ASSESSEE HAS REFERRED TO CERTAIN CASE LAWS AS NOTED ABOVE WHERE A VIEW HAS BEEN TAKEN THAT ESTIMATE ADDITION DOES N OT NECESSARILY CALL FOR ITA NO.215/AHD/2015 6 IMPOSITION OF PENALTY. HOWEVER, FACTS AS NOTED IN ELABORATION IN THE QUANTUM PROCEEDINGS BY THE COORDINATE BENCH OF ITAT (ITA NO .948-1460/AHD/2012 ORDER DATED 2.11.2017), ASSESSEE IN THE INSTANT CAS E STANDS ON A VERY DIFFERENT FOOTING OF FACTS. THE UNDENIABLE FACTS OF BOGUS PU RCHASES ENTERED IN THE BOOKS OF ACCOUNTS, WHICH VITIATED THE TAXABLE INCOM E OF THE ASSESSEE WAS FOUND, AS A MATTER FACT, AFTER THREADBARE INQUIRY. IN THESE CIRCUMSTANCES, RATIO OF THE AFORESAID DECISIONS CITED ON BEHALF OF THE A SSESSEE IS NOT APPLICABLE AT ALL. AS A CONSEQUENCE, WE DO NOT FIND ANY MERIT WH ATSOEVER IN THE APPEAL OF THE ASSESSEE. THUS, CONCLUSION DRAWN BY THE CIT(A) DOES NOT CALL FOR ANY INTERFERENCE. 9. IN THE RESULT, APPEAL OF THE ASSESSEE IS DISMISS ED. ORDER PRONOUNCED IN THE COURT ON 10 TH MAY, 2018 AT AHMEDABAD. SD/- SD/- (RAJPAL YADAV) JUDICIAL MEMBER (PRADIPKUMAR KEDIA ) ACCOUNTANT MEMBER AHMEDABAD; DATED 10/05/2018