The ITO, Ward-9(3), Surat V. Shri Ratilal Ambaram Dudhwala, Surat

ITA 2152/AHD/2009

• Counselvise Citation: [2011] 134 COUNSELVISE.COM (IT) 6242 (ITAT-AHMEDABAD)
• Duration Of Justice: 1 year(s) 11 month(s) 23 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 30-06-2011
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: C
• Next Hearing Date: 09-06-2011
• Assessment Year: 2003-2004
• Appeal Filed On: 07-07-2009
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: G S SOURYAWANSHI
• Assessee Lawyers: MITESH MODI
• Keywords: Bogus purchase
• Section: 131

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL AHMEDABAD BENCH C BEFORE SHRI BHAAVNESH SAINI, JUDICIAL MEMBER AND SHRI A. K. GARODIA, ACCOUNTANT MEMBER I.T.A. NO. 2152/ AHD/2009 (ASSESSMENT YEAR 2003-04) ITO, WARD 9(3), SURAT VS. SHRI RATILAL AMBARAM DUDHWALA, PROP. OF M/S. TIRUPATI FABRICS, NR. ASHRAM SUB-STATION, GOTALAWADI, KAARGAM, SURAT PAN/GIR NO. : AAPPD6887K (APPELLANT) .. (RESPONDENT) APPELLANT BY: SHRI G S SOURYAWANSHI, SR. DR RESPONDENT BY: SHRI MITESH MODI, AR O R D E R PER SHRI A. K. GARODIA, AM:- THIS IS REVENUES APPEAL DIRECTED AGAINST THE ORDE R OF LD. CIT(A)-V, SURAT DATED 03.04.2009 FOR THE ASSESSMENT YEAR 2003 -04. 2. THE SOLITARY GROUND RAISED BY THE REVENUE IS REP RODUCED AS UNDER: ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE AND IN LAW THE LD. CIT(A) HAS ERRED IN DELETING THE ADDITION OF RS.12, 213,974/- MADE BY THE A.O. ON ACCOUNT OF BOGUS PURCHASES, WITHOUT APP RECIATING THE FACTS OF THE CASE. 3. THE BRIEF FACTS OF THE CASE TILL THE ASSESSMENT STAGE ARE NOTED BY THE LD. CIT (A) ON PAGES 2 & 3 OF HIS ORDER AND THE REL EVANT PARA OF THE ORDER OF LAD. CIT(A) IS REPRODUCED BELOW: I.T.A.NO. 2152 /AHD/2009 2 THE AO OBSERVED THAT THE APPELLANT HAD MADE PURCHA SES FROM DIFFERENT CONCERNS WHICH WERE RUN BY SHRI ROHIT PAN WALA GROUP OF SURAT. THE SAID SHRI ROHIT PANWALA WAS INVOLVED IN ISSUING BOGUS BILLS OF PURCHASES AND IN HIS STATEMENT RECORDED U/ S. 131 OF THE IT. ACT, HAD STATED ON OATH THAT HE WAS RUNNING CERTAIN CONCERNS IN THE NAMES OF HIS FAMILY MEMBERS AND RELATIVES WHO USED TO ISSUE BOGUS BILLS AND THAT NO PHYSICAL GOODS WERE ACTUALLY SOLD . THE AO ALSO OBSERVED THAT IN THE CASE OF THE APPELLANT, SOME PU RCHASES FROM THOSE CONCERNS WERE MADE IN WHICH ROHIT PANWALA AND HIS G ROUP WAS INVOLVED AND CONFIRMATIONS OF THESE PARTIES WERE CA LLED UPON BUT THE APPELLANT DID NOT SUBMIT THE SAME AS THE SAID PARTI ES WERE NOT TRACEABLE AND .HAT THE APPELLANT HAD REMAINED SILEN T ABOUT THE CRUX OF THE MATTER AND COULD DISPROVE THE CONTENTS OF THE S TATEMENT OF SHRI ROHIT PANWALA. THE AO FURTHER STATED THAT SHRI ROHI T PANWALA HAD IN THIS STATEMENT CATEGORICALLY CONFIRMED TO HAVE DEPO SITED CHEQUES IN THE BANK ACCOUNTS OF RESPECTIVE FIRMS FROM WHERE BI LLS WERE ISSUED AND SUBSEQUENTLY AFTER DEDUCTING 0.25% AS COMMISSIO N, USED TO RETURN BACK THE REMAINING AMOUNT IN CASH TO THE PURCHASER THEREFORE, THE CREDITORS FROM WHOM PURCHASES WERE MADE WERE NOTHIN G BUT LIABILITY CREATED TO INFLATE EXPENDITURE AND THE SAME BEING D ISALLOWABLE EXPENSES, RS.13,59,9727= WAS ADDED TO THE TOTAL INC OME OF THE APPELLANT. 4. BEING AGGRIEVED, THE ASSESSEE CARRIED THE MATTER IN APPEAL BEFORE CIT(A). VARIOUS SUBMISSIONS WERE MADE BY THE ASSES SEE BEFORE THE LD. CIT(A). AFTER CONSIDERING THE SAME, IT WAS HELD BY THE LD. CIT(A) THAT HE IS OF THE VIEW THAT INSTEAD OF DISALLOWING THE ENTIRE AMOUNT OF PURCHASES, 10% OF THE PURCHASE PRICE ACCOUNTED FOR IN THE BOOKS OF ACCOUNT THROUGH WHICH FICTITIOUS INVOICES IN THE NAME OF FIVE BOGUS PARTI ES AS ALLEGED BY THE A.O., SHOULD BE DISALLOWED. ACCORDINGLY, HE DIRECTED THE A.O. TO DISALLOW 10% OF RS.13,59,972/- I.E. RS.1,35,997/- AND ALLOWED RELIE F FOR THE BALANCE AMOUNT OF DISALLOWANCE I.E. RS.12,23,972/-. NOW, THE REVE NUE IS IN APPEAL FOR THE SAME BEFORE US. 5. LD. D.R. SUPPORTED THE ASSESSMENT ORDER WHEREAS IT IS SUBMITTED BY THE LD. A.R. THAT IN VARIOUS SIMILAR CASES, WHERE A LSO, THE SAME ALLEGATION WAS THERE THAT PURCHASES ARE BOGUS, BEING PURCHASES FROM THE SAME CONCERNS I.T.A.NO. 2152 /AHD/2009 3 MANAGED BY SHRI ROHIT PANWALA, IT WAS HELD BY THE T RIBUNAL THAT THE DISALLOWANCE MADE IS NOT SUSTAINABLE AND DELETED TH E ENTIRE DISALLOWANCE. WHEREAS, IN THE PRESENT CASE, LD. CIT(A) HAS DELETE D ONLY 90% OF THE DISALLOWANCE AND HAS CONFIRMED 10% OF THE DISALLOWA NCE FOR WHICH THE ASSESSEE IS NOT IN APPEAL AND HENCE, THE PRESENT OR DER OF LD. CIT(A) SHOULD BE CONFIRMED. HE ALSO SUBMITTED THE FOLLOWING TRIB UNAL ORDERS IN SUPPORT OF THIS CONTENTION: (A) AKRUTI DYEING & PRINTING MILLS PVT. LTD., I.T.A.NO. 2551 7 2752/AHD/2006 ORDER DATED 26.10. 2007, (B) DADA SILK MILLS, I.T.A.NO. 1896/AHD/2007; (C) SMT. SANGITABEN M PATEL, I.T.A.NO. 4320/AHD/2007 DATED 29.02.2008 AND (D) SHALU DYEING & PRINTING MILLS PVT. LTD. I.T.A.NO. 1491 & 1492/AHD/2008 DATED 11.07.2008 6. WE HAVE CONSIDERED THE RIVAL SUBMISSIONS, PERUSE D THE MATERIAL ON RECORD AND HAVE GONE THROUGH THE ORDERS OF AUTHORIT IES BELOW AND THE VARIOUS TRIBUNAL DECISIONS CITED BY THE LD. A.R. OF THE ASS ESSEE. WE ARE OF THE CONSIDERED OPINION THAT THIS IS NOT THE CASE OF THE A.O. THAT THE SALES REPORTED BY THE ASSESSEE ARE ALL BOGUS AND HENCE, WHEN THE S ALES ARE NOT BOGUS, THE ENTIRE PURCHASE CANNOT BE BOGUS. AT THE WORST, THE RE MAY BE A CASE OF INFLATION OF PURCHASE PRICE BUT IT CANNOT BE NIL PU RCHASE. CIT (A) HAS ALREADY CONFIRMED THE DISALLOWANCE TO THE EXTENT OF 10% OF PURCHASE PRICE ACCOUNTED FOR IN THE BOOKS OF ACCOUNT OF THE ASSESSEE THROUGH THE ALLEGED FICTITIOUS INVOICES IN THE NAME OF VARIOUS FIVE PARTIES ALLEGE D BY THE A.O. TO BE BOGUS. IT IS ALSO NOTED BY THE LD. CIT (A) THAT THE ASSESS EE HAS REPORTED GP MARGIN @ 9.50% IN THE PRESENT YEAR AS AGAINST 9.231% IN TH E PRECEDING YEAR. IT IS ALSO NOTED BY THE LD. CIT (A) THAT IF THE ENTIRE CO ST OF PURCHASES PURCHASED FROM THESE FIVE PARTIES ARE DISALLOWED, THEN THE M ARGIN OF PROFIT WOULD BE I.T.A.NO. 2152 /AHD/2009 4 AROUND 21%, WHICH IS NOT POSSIBLE IN THIS LINE OF B USINESS. CONSIDERING ALL THESE FACTS, WE DO NOT FIND ANY REASON TO INTERFERE IN THE ORDER OF LD. CIT (A) ON THIS ISSUE. MOREOVER, THE CASE OF THE ASSESSEE IS SUPPORTED BY VARIOUS TRIBUNAL DECISIONS CITED BY THE LD. A.R. OF THE ASS ESSEE WHERE ALSO SIMILAR DISALLOWANCES WERE MADE IN THE HANDS OF VARIOUS ASS ESSEES ON ACCOUNT OF ALLEGATION OF BOGUS PURCHASES FROM THE SAME CONCERN S ALLEGED TO BE MANAGED BY SHRI ROHIT PANWALA. HENCE, WE DECLINE TO INTERF ERE IN THE ORDER OF LD. CIT (A). 7. IN THE RESULT, APPEAL OF THE REVENUE IS DISMISSE D. 8. ORDER PRONOUNCED IN THE OPEN COURT ON 30 TH JUNE 2011 SD/- SD/- (BHAVNESH SAINI) (A. K. GARODIA) JUDICIAL MEMBER ACCOUNTANT MEMBER AHMEDABAD; DATED : 30 TH JUNE, 2011 SP COPY OF THE ORDER FORWARDED TO: 1. THE APPLICANT 2. THE RESPONDENT 3. THE CIT CONCERNED 4. THE LD. CIT (APPEALS)-V, SURAT. 5. THE DR, AHMEDABAD 6. THE GUARD FILE DY.REGISTRAR/ASST. REGISTRAR I.T.A.T., AHMEDABAD. I.T.A.NO. 2152 /AHD/2009 5 1. DATE OF DICTATION. 2. DATE ON WHICH THE TYPED DRAFT IS PLACED BEFORE THE DICTATING MEMBER.. OTHER MEMBER 3. DATE ON WHICH THE APPROVED DRAFT COMES TO THE SR. P .S./P.S. 29-6-11 4. DATE ON WHICH THE FAIR ORDER IS PLACED BEFORE THE D ICTATING MEMBER FOR PRONOUNCEMENT 30-6-2011 5. DATE ON WHICH THE FAIR ORDER COMES BACK TO THE SR. P.S./P.S. 30-6-11 6. DATE ON WHICH THE FILE GOES TO THE BENCH CLERK 30-6 -2011 7. DATE ON WHICH THE FILE GOES TO THE HEAD CLERK .. 8. THE DATE ON WHICH THE FILE GOES TO THE ASSISTANT RE GISTRAR FOR SIGNATURE ON THE ORDER . 9. DATE OF DESPATCH OF THE ORDER. ..