ACIT, New Delhi V. Sh. Hans Raj Dhankar, New Delhi

ITA 2217/DEL/2016

• Counselvise Citation: [2021] 107 COUNSELVISE.COM (IT) 5481 (ITAT-DELHI)
• Duration Of Justice: 5 year(s) 4 month(s) 27 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 21-09-2021
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: E
• Assessment Year: 2012-2013
• Appeal Filed On: 25-04-2016
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: AGAINST DATED PASSED
• Keywords: Bogus purchase; Additional evidence
• Section: 143(3); 244A; 13; 145; 139

Judgement Text

1 ITA NO. 2217/DEL/2016 IN THE INCOME TAX APPELLATE TRIBUNAL DELHI BENCH: E NEW DELHI BEFORE MS SUCHITRA KAMBLE, JUDICIAL ME MBER AND SH. PRASHANT MAHARISHI, ACCOUN TANT MEMBER I.T.A. NO. 2217/DEL/20 16 (A.Y 2012-13) (THROUGH VIDEO CON FERENCING) ACIT CIRCLE 62(1) NEW DELHI (APPELLANT) VS HANS RAJ DHANKAR B-37, ASHOK VIHAR NEW DELHI AAFPD0344P (RESPONDENT) ORDER PER SUCHITRA KAMBLE, JM THIS APPEAL IS FILED BY THE REVENUE AGAINST THE OR DER DATED 26/02/2016 PASSED BY CIT(A)-20, DELHI FOR ASSESSMENT YEAR 20 12-13. 2. THE GROUNDS OF APPEAL ARE AS UNDER:- 1. IN THE FACTS AND CIRCUMSTANCES OF THE CASE, THE LD.CIT(A) HAS ERRED IN REDUCING THE ADDITION FROM RS. 3,25,35,521/- TO RS. 9,76,321/- MADE BY THE A.O ON A/C OF BOGUS PURCHASES AS THE ASSESSEE FAILE D TO SUBSTANTIATE HIS CLAIM DURING THE ASSESSMENT PROCEEDINGS. 3. THE ASSESSEE IS A PROPRIETOR ENGAGED IN THE BUSINESS OF CIVIL CONSTRUCTION ACTIVITIES IN THE NAME AND STYLE OF M/S H R BUILDER S. RETURN OF INCOME WAS FILED BY THE ASSESSEE FOR THE ASSESSMENT YEAR 2012- 13 ON 30/09/2012 APPELLANT BY SH. GAURAV PUNDIR, SR. DR RESPONDENT BY SH. KAPIL GOEL, ADV DATE OF HEARING 29.07.2021 DATE OF PRONOUNCEMENT 21.09.2021 2 ITA NO. 2217/DEL/2016 DECLARING A TOTAL INCOME OF RS,3,43,41,837/- U/S 13 9 OF THE INCOME TAX ACT, 1961. THE ASSESSING OFFICER ASKED THE ASSESSEE TO PRODUCE COMPARATIVE GP/NP CHART FOR LAST THREE ASSESSMENT YEARS. DURING THE YEAR UNDER CONSIDERATION, THE ASSESSEE HAS SHOWN NET PROFIT OF RS. 3,44,41,83 8/- ON TOTAL TURNOVER OF RS.59,87,31,901/- SHOWING NET PROFIT RATE OF 5.75%W HICH IS SLIGHTLY DECREASED FROM PREVIOUS YEAR NET PROFIT OF RS. 5,14,19,208/- ON TOTAL TURNOVER OF RS. 89,71,37,753/- SHOWING NET PROFIT RATE OF 5.86% IN COMPARISON TO PREVIOUS YEAR. THE ASSESSING OFFICER MADE ADDITION U/S 40(A )(IA) AMOUNTING TO RS.11,24,186/-, ADDITION ON ACCOUNT OF BOGUS PURCHA SE AMOUNTING TO RS. 3,25,35,521/-, DISALLOWANCE OUT OF WAGES AND SALARI ES EXPENSES AMOUNTING TO RS.2,00,000/-, DISALLOWANCE OUT OF TELEPHONE EXPENS ES AMOUNTING TO RS. 34,111/-, ADDITION ON ACCOUNT OF INTEREST ALLOWED U /S 244A AMOUNTING TO RS.84,882/- AND DISALLOWANCE OUT OF CAR, VEHICLE EX PENSES AMOUNTING TO RS. 4,06,957/-. 4. BEING AGGRIEVED BY THE ASSESSMENT ORDER, TH E ASSESSEE FILED APPEAL BEFORE THE CIT(A). THE CIT(A) PARTLY ALLOWED THE APPEAL OF THE ASSESSEE. 5. THE LD. DR RELIED UPON THE ASSESSMENT ORDER AND FURTHER SUBMITTED THAT MERELY GIVING CONFIRMATIONS CANNOT BE CALLED AS PRO PER EVIDENCE. IN-FACT, IN CERTAIN DOCUMENTS, THE CONFIRMATIONS WERE NOT SIGNE D AND THE BILLS WERE NOT FILED. THUS, THE EVIDENCES ARE IN DOUBT. THUS, TH E DELETION OF THE ADDITION WAS NOT PROPER AND JUSTIFIED. 6. THE LD. AR SUBMITTED THAT RETURN U/S 139 WAS FI LED ON 30/09/2012 WITH TOTAL INCOME OF RS. 3,43,41,837/-. DURING THE ASSE SSMENT PROCEEDINGS, THE ASSESSING OFFICER ADMITTED THAT ASSESSEE DECLARED N P OF 5.75% WHICH BROADLY TALLIES WITH PAST HISTORY OF THE ASSESSEE AND HAS A CCEPTED HIS SCRUTINY ASSESSMENT. THE LD. AR PLACED CHART OF NP RATIO FR OM AY 2006-07 TO 2014-15 WHERE ALL YEARS ARE ASSESSED U/S 143(3) AND NP RATI O FROM 2.04% TO 6.02% IS ACCEPTED AND ALL ORDERS U/S143(3) WERE PLACED BEFOR E US DELETING ADDITION OF PURCHASES MADE BY THE ASSESSING OFFICER BY THE TRIB UNAL AS WELL AS CIT(A). IN 3 ITA NO. 2217/DEL/2016 ASSESSEES WON CASE. THE LD. AR FURTHER SUBMITTED THAT AUDITED BOOKS OF ACCOUNTS WERE NEVER DOUBTED AND NEVER REJECTED U/S 145 OF THE ACT. THERE IS NO TRADING (SALE/PURCHASE) OUTSIDE THE BOOKS DETECT ED BY THE ASSESSING OFFICER. ALL PURCHASES OF CONSTRUCTION RELATED MATERIAL WERE USED IN CIVIL CONSTRUCTION ACTIVITIES/BUSINESS OF ASSESSEE TO GENERATE THE REV ENUE/GROSS RECEIPTS WHICH ARE VERIFIED BY THE CIT(A). THE ASSESSING OFFICER WITHOUT ADEQUATE SHOW CAUSE NOTICE AND IN VIOLATION OF PRINCIPLES OF NATURAL JU STICE AND MADE HUGE ADDITION OF RS.3,25,35,521/- IN THREE BASKETS OF (1) PURCHASES FROM PARTIES WITHOUT FULL ADDRESS; (2) PURCHASES FROM PARTIES NOT RELIED U/S 133 (6) & (3) PURCHASES FROM PARTIES NOT FOUND ALLEGED IN INSPECT OR REPORT WHICH WERE NEVER CONFRONTED TO ASSESSEE DURING THE ASSESSMENT PROCEEDINGS ON ACCOUNT OF ALLEGED BOGUS PURCHASES. THUS, MAKING P ROFIT PICTURE OF ASSESSEE COMPLETELY DISTORTED WHICH ASSESSEE COULD NOT EARN IN THE BUSINESS AS PER REVENUES OWN ADMISSION IN SECTION 143(3) ASSESSMENTS. THE LD. AR FURTHER SUBMITTED THAT THE FACTUM OF PAY MENT MADE THROUGH BANKING CHANNEL IS THOROUGHLY UNDOUBTED AND WELL AC CEPTED FACTS. THE CIT(A) HAS MADE THE ADDITION OF THE AMOUNTS WHICH DID NOT PERTAIN TO PERIOD UNDER CONSIDERATION WHICH IS STATED TO BE RS. 99,76,726/- WHICH IS EMERGING FROM REPLIES AND BOOKS AVAILABLE TO THE ASSESSING OFFICE R DURING ASSESSMENT PROCEEDINGS. THE CIT(A) ADMITTED THE ADDITIONAL EV IDENCE AFTER DUE COMPLIANCE TO PROCEDURE OF RULE 46 A. THUS, AFTER MAKING EXH AUSTIVE EXAMINATION OF EACH PURCHASES INDIVIDUALLY, THE CIT(A) ACCEPTED ASSESSE ES VERSION THAT ALL PURCHASES ARE TRUE AS PER LAW WHICH IS WRONGLY ADDE D BY THE ASSESSING OFFICER IN ASSESSMENT ORDER. THUS, THE LD. AR SUBMITTED T HAT ONCE RECEIPTS ARE ACCEPTED THEN PURCHASES MADE TO ACHIEVE THEM CANNOT BE LIGHTLY DOUBTED AND BUNKED AS NONE GENUINE ON BASIS OF CONJECTURES AND SURMISES AS ACCEPTANCE OF RECEIPTS IMPLIES THAT PURCHASE ARE TO BE MADE. THE PAYMENT WAS MADE THROUGH BANKING CHANNEL AND NO MATERIAL TO PROVE TH AT THE SAME HAS NOT FOR 4 ITA NO. 2217/DEL/2016 GENUINE BUSINESS PURPOSES. THE LD. AR FURTHER SUBM ITTED THAT REVENUE THOUGH HAS OBJECTED TO ADDITIONAL EVIDENCE BUT DID NOT COMMENT ANY ADVERSE TO THE EFFECT OF EVIDENCE. THE LD. AR RELIED UPON THE DECISION OF HONBLE DELHI HIGH COURT IN CASE OF SUNRISE TOOLING SYSTEMS PVT. LTD. 361 ITR 206. HONBLE BOMBAY HIGH COURT DECISION IN CASE OF BABU LAL C VORAMA VS. ITO 282 ITR 251, BOMBAY HIGH COURT DECISION IN CASE OF M/S NIK UNJ EXIMP ENTERPRISES 372 ITR 619,GUJRAT HIGH COURTS DECISION IN CASE OF CIT VS. M. K. BROTHERS 163 ITR 249, MATHER AND PLATT INDIA LTD. VS. CIT 168 I TR 493 (CAL) & M/S DIAGNOSTICS VS. CIT 334 ITR 111 (CAL). THE LD. AR ALSO RELIED UPON THE DECISION OF THE DELHI HIGH COURT IN CASE OF BANSAL STRIPES PVT. LTD. (ITA NO. 103/2021 ORDER DATED 26/3/2021)). 7. WE HAVE HEARD BOTH THE PARTIES AND PERU SED THE MATERIAL AVAILABLE ON RECORD. IT IS PERTINENT TO NOTE THAT THE ASSESSEE DURING THE APPELLATE PROCEEDINGS BEFORE THE CIT(A) HAS FILED DETAILS IN RESPECT OF IDENTITY OF THE PARTY, ADDRESS OF PARTY, PAN DETAILS, MODE OF PAYME NT THROUGH BANKING CHANNEL ALONG WITH COPY OF BANK ACCOUNTS AS WELL AS CONFIRMATIONS OF THE SAID ACCOUNTS EXCEPT IN THE CASE OF PURCHASES MADE FROM M/S APEX MARKETING COMPANY FOR AN AMOUNT OF RS.9,76,321/- AND THE REST OF THE EVIDENCES RELATED TO EACH PARTY WERE PRODUCED WHICH WAS NEVER DOUBTED BY THE ASSESSING OFFICER WHEN CALLED FOR REMAND REPORT. THE CIT(A) HAS GIVEN A CATEGORICAL FINDING THAT THE REVENUE HAS ACCEPTED THE TRANSACTI ONS FROM SUCH PARTIES IN THE PAST AND THE ASSESSEE HAD MADE PURCHASES ON REG ULAR BASIS AND THESE WERE REGULAR PARTIES FROM PRECEDING YEARS. IN FACT THE ASSESSING OFFICER HAS TAKEN COGNIZANCE OF THE OPENING BALANCES OF THE PUR CHASES PERTAINING TO EARLIER YEARS WHICH WERE NOT CORRESPONDING TO YEAR UNDER CONSIDERATION WHILE MAKING THE ADDITION. AFTER PERUSAL OF THE EVIDENCE S IT IS FOUND THAT THE ASSESSEE HAS FILED PROPER DETAILS BEFORE THE ASSESS ING OFFICER AND HAS PROVED IDENTITY, GENUINENESS AND CREDITWORTHINESS OF THE P ARTIES EXCEPT THE PURCHASES MADE FROM M/S APEX MARKETING COMPANY. THUS, THE CIT (A) WAS CORRECT IN REDUCING THE ADDITION TO THE EXTENT OF RS. 9,766,32 1/-. THEREFORE, THE APPEAL 5 ITA NO. 2217/DEL/2016 OF THE REVENUE IS DISMISSED. 8. IN RESULT, THE APPEAL OF THE REVENUE I S DISMISSED. ORDER PRONOUNCED IN THE OPEN COURT ON THIS 21 ST DAY OF SEPTEMBER, 2021. SD/- SD/- (PRASHANT MAHARISHI) (SUCHITRA KAMBLE) ACCOUNTANT MEMBER JUDICIAL MEM BER DATED: 21/09/2021 R. NAHEED * COPY FORWARDED TO: 1. APPELLANT 2. RESPONDENT 3. CIT 4. CIT(APPEALS) 5. DR: ITAT ASSISTANT REGISTRAR ITAT NEW DELHI