The ACIT, Central Circle-1(4), Ahmedabad V. Shri Kanubhai Mavjibhai Khatri, Patan

ITA 2306/AHD/2012

• Counselvise Citation: [2017] 128 COUNSELVISE.COM (IT) 6114 (ITAT-AHMEDABAD)
• Duration Of Justice: 4 year(s) 6 month(s) 11 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 26-04-2017
• Appeal Filed By: Department
• Order Result: Allowed
• Bench Allotted: B
• Next Hearing Date: 18-04-2017
• Assessment Year: 2008-2009
• Appeal Filed On: 15-10-2012
• Result in Favour of: Revenue
• Court: TRIBUNAL
• Keywords: Bogus purchase; Opportunity of cross examination
• Section: 131

Judgement Text

, IN THE INCOME TAX APPELLATE TRIBUNAL B BENCH, AHMEDABAD IZNHI DQEKJ DSFM;K IZNHI DQEKJ DSFM;K IZNHI DQEKJ DSFM;K IZNHI DQEKJ DSFM;K BEFORE SHRI PRADIP KUMAR KEDIA, ACCOUNTANT MEMBER AND SHRI MAHAVIR PRASAD, JUDICIAL MEMBER . ! I.T.A. NO.2306/AHD/2012 ' ! I.T.A. NO.2376/AHD/2012 # ! I.T.A. NO.1909/AHD/2013 ( / ASSESSMENT YEAR :2008-09) (1). ACIT CENTRAL CIRCLE1(1) AHMEDABAD. (2-3). SHRI KANUBHAI MAVJIBHAI KHATRI ! VS. (1). SHRI KANUBHAI MAVJIBHAI KHATRI 111-B, CHITRAKUT SOCIETY, OPP:GAYATRI TEMPLE, PATAN-384265 (2-3). ACIT CENTRAL CIRCLE 1(1) AHMEDABAD. $ ! %& ! PAN/GIR NO. : AMWPK 0960 H ( $' / APPELLANT ) .. ( ($' ! RESPONDENT ) $') ! APPELLANT BY : SHRI JAMES KURIAN, SR. D.R. ($'*) / RESPONDENT BY : --NONE-- + , -*. / / DATE OF HEARING 18/04/2017 0123 *. / / DATE OF PRONOUNCEMENT 26/04/2017 4! O R D E R PER SHRI MAHAVIR PRASAD, JUDICIAL MEMBER : THESE THREE CONNECTED APPEALS HAVE BEEN FILED BY THE REVENUE AND ASSESSEE ARE DIRECTED AGAINST THE ORDER OF THE COMM ISSIONER OF INCOME TAX(APPEALS)-I, AHMEDABAD, DATED 13/08/2012 (FOR IT A NO.2306 & ITA NO. 2306&2376 /AHD/2012 ITA NO. 1909/AHD/2013 - 2 - 2376/AHD/2012) & 17/05/2013 (FOR ITA NO.1909/AHD/20 13) FOR THE ASSESSMENT YEAR (AY)2008-09. IN THIS CASE, SEVERAL NOTICES WERE GIVEN TO THE ASSESSEE BUT HE HAS NOT TURNED UP TO PURSUE HIS APPEALS. 2. FIRST WE TAKE UP THE REVENUES APPEAL IN ITA NO. 2306/AHD/2012 FOR A.Y.2008-09. THE REVENUE HAS TAKEN FOLLOWING GR OUNDS OF APPEAL:- (I). THE LEARNED CIT(A) HAS ERRED IN LAW AND ON FAC TS IN DELETING THE ADDITION OF RS.1,40,13,079/- OUT OF TOTAL ADDITION OF RS.1,86,84,105/- MADE ON ACCOUNT OF BOGUS PURCHASES . (II). ON FACTS AND IN THE CIRCUMSTANCES OF THE CASE AND IN LAW, THE CIT(A) OUGHT TO HAVE UPHELD THE ENTIRE ADDITION OF RS.1,86,84,105/- MADE ON ACCOUNT OF BOGUS PURCHASES . (III). THE LEARNED CIT(A) HAS ERRED IN LAW AND ON F ACTS IN DELETING THE ADDITION OF RS.94,50,00/-MADE ON ACCOUNT OF UNEXPLA INED CASH DEPOSIT IN BANK ACCOUNTS. 3. THE RELEVANT FACTS AS CULLED OUT FROM THE MATERI ALS ON RECORD ARE AS UNDER:- IN THIS CASE, SEARCH AND SURVEY ACTION IN EDIBLE OI L MILLS GROUP CASES ON 01/09/2008 REVEALED THAT MANY CONCERNS WERE OBTAINI NG ONLY BILLS TO CLAIM PURCHASES IN THEIR ACCOUNTS. 4. IN PARA 3.4 OF THE ASSESSMENT ORDER HAS MENTIONE D THAT A SEARCH U/S.132 WAS CONDUCTED IN THE CASE OF SHRI MADANLAL L. SHAH ON 01/09/2008. HE INFORMED IN STATEMENT DATED 22/02/20 08 THAT HE HAD INTRODUCED VARIOUS TRADERS OF HARIJ AND PATAN TO SH RI DHARMENDRA J. PANDYA, PROPRIETOR OF M/S. VISHAL TRADERS, VIRPUR. HE HAD FURTHER ITA NO. 2306&2376 /AHD/2012 ITA NO. 1909/AHD/2013 - 3 - CONFIRMED THAT M/S. VISHAL TRADERS, VIRPUR HAD ISSU ED ONLY BOGUS BILLS AND NO DELIVERY OF GOODS HAD BEEN MADE BY IT. THAT VISHAL TRADERS HAD ISSUED ONLY BOGUS/ADJUSTMENT BILLS AND HAD NOT DELI VERED ANY GOODS LIKE OIL CAKES OR ANY OTHER ITEMS MENTIONED IN THE BILL. THAT VEHICLE NUMBERS WRITTEN IN THE BILLS WERE ALSO FICTITIOUS. 5. IN PARA 3.5 AND 3.6 AND FINALLY IN PARA 3.8 OF T HE ASSESSMENT ORDER THE ASSESSING OFFICER HAS STATED THAT NO PROOFS LIK E REGISTERS/CHALLANS/TRANSPORTERS/SUPPLIERS WERE PROD UCED BY THE ASSESSEE IN SUPPORT OF THE PURCHASE CLAIMED TO HAVE BEEN MADE F ROM M/S. VISHAL TRADERS. 6. BOGUS PURCHASES WERE MADE BY THE ASSESSEE FROM M /S. VISHAL TRADERS. THIS WAS PROVED BY THE STATEMENTS RECORDED OF THE PROPRIETOR OF VISHAL TRADERS OF VIRPUR WHOSE PROPRIETOR SHRI DHAR MENDRA J. PANDYA IN THE STATEMENT RECORDED BY THE DEPARTMENT ON 09/07/2 008 AND 26/09/2008 HE ADMITTED THAT HE HAD ISSUED ONLY BOGUS BILLS AND HAD NOT MADE ANY DELIVERY OF GOODS. HE STATED THAT HE RECEIVED ONLY CASH COMMISSION FOR ISSUING BILLS. COPIES OF STATEMENTS OF THE SHRI DHA RMENDRA J. PANDYA, PROPRIETOR OF M/S. VISHAL TRADERS AND OF SHRI MADAN LAL L. SHAH WERE PROVIDED TO THE APPELLANT BY THE ASSESSING OFFICER THROUGH LETTER DATED 17/09/2010. THE AO ADDED RS. 1,86,84,105/- AS BOGUS PURCHASES MADE FROM M/S. VISHAL TRADERS. ITA NO. 2306&2376 /AHD/2012 ITA NO. 1909/AHD/2013 - 4 - 7. PARA 3.8 OF THE ASSESSMENT ORDER INFORMS THAT TH E ASSESSING OFFICER THROUGH LETTER DATED 08/10/2010 ASKED THE A SSESSEE TO PRODUCE SUPPLIERS AND TRANSPORTERS. HE ASKED THE ASSESSEE T O SUBSTANTIATE THE CLAIM OF PURCHASES BY PRODUCING GATE-PASS, L.R. RECEIPTS, CHALLANS, VOUCHERS ETC. 8. HE ASKED THE ASSESSEE TO ESTABLISH QUANTITATIVE CO-RELATION BETWEEN THE PURCHASES AND SALES IN VIEW OF THE MANUFACTURIN G PROCESS FLOW CHART, YIELD PERCENTAGE, WASTAGE RATIO AND POWER CONSUMPTI ON. 9. THE ASSESSING OFFICER HAS REPRODUCED ON PAGE NO. 5 OF THE ASSESSMENT ORDER THE FINAL SHOW CAUSE NOTICE DATED 08/10/2010 ISSUED TO THE APPELLANT BEFORE MAKING BOGUS PURCHASES ADDITIO N. DESPITE OPPORTUNITIES, THE ASSESSEE DID NOT PRODUCE ANY EVI DENCE ASKED BY THE ASSESSING OFFICER. 10. IN PARA NO. 3.2 OF THE ASSESSMENT ORDER, THE AS SESSING OFFICER HAS STATED THAT ON PERUSAL OF THE BANK STATEMENTS OF TH E BANK ACCOUNTS OPENED BY SHRI DHARMENDRA J. PANDYA, PROPRIETOR OF M/S. VI SHAL TRADERS, VIRPUR A CONTINUOUS PATTERN OF DEPOSIT IS NOT SEEN IN ANY ACTUAL MANUFACTURING CONCERN. ACCORDING TO THE ASSESSING OFFICER HIS PAT TERN OF DEPOSIT IN BANK ACCOUNT OF VISHAL TRADERS FOLLOWED BY IMMEDIAT E CASH WITHDRAWAL IS IN CONSONANCE WITH THE STATEMENTS OF SHRI DHARME NDRA J. PANDYA AND MADANLAL L. SHAH THAT ONLY BOGUS BILLS WERE ISSUED. ITA NO. 2306&2376 /AHD/2012 ITA NO. 1909/AHD/2013 - 5 - 11. FINALLY ADDITION ON ACCOUNT OF BOGUS PURCHASES WERE MADE RS.1,86,84,105/- AND UNEXPLAINED CASH DEPOSIT IN BA NK A/C. OF RS. 94,50,000/- WERE MADE. 12. AGAINST THE SAID ORDER ASSESSEE PREFERRED FIRST STATUTORY APPEAL BEFORE THE LEARNED CIT(A), WHO PARTLY ALLOWED THE A PPEAL OF THE ASSESSEE. 13. IN THE STATEMENT OF FACTS ASSESSEE STATED THAT DURING THE SURVEY NO INCRIMINATING DOCUMENTS FOUND FROM THE POSSESSIONS OF THE ASSESSEE. THE APPELLANT BELONGS TO QUITE ORDINARY FAMILY WHO POSS ESSES ONLY ONE RESIDENTIAL HOUSE OF ONLY 40 SQ. YARDS AT PATAN AND ONE OLD MOTOR CYCLE. 14. HE FURTHER STATED THAT STATEMENT U/S.131 RECORD ED ON OATH ON 22/09/2008, VIDE QUESTION NO.1 THE APPELLANT HAD SP ECIFICALLY STATED THAT HE HAD DONE BUSINESS AT MARKET YARD, HARIJ ONLY UP TO 31/03/2008 AND AT PRESENT, HE IS DOING ACCOUNTING WORK AND HIS ADDRES S IS 111/B CHITRAKUT NAGAR, B/H GAYATRI MANDIR, PATAN. HE FURTHER STATED THAT THE BUSINESS HAS CLOSED DOWN ON 31/03/2008. 15. HE FURTHER STATED THAT LEARNED ACIT CENTRAL CIR .1, AHMEDABAD HAD SENT ALL THE NOTICES TO GANJ BAZAAR, HARIJ WHICH WE RE RECEIVED BACK BY ACIT CENTRAL CIR. 1(1) AS UNSERVED. EVEN THE LETTER DATED 08/10/2010 AS PER WHICH AN OPPORTUNITY OF CROSS EXAMINATION OF DH ARMEDRA J. PANDYA, PROP. OF M/S. VISHAL TRADERS AND MADANLAL WAS GIVEN ALSO NOT RECEIVED BY KANUBHAI MAVJIBHAI KHATRI. ITA NO. 2306&2376 /AHD/2012 ITA NO. 1909/AHD/2013 - 6 - 16. THE QUANTITATIVE TALLY OF PURCHASE AND CORRESPO NDING SALE OF GOODS ALLEGED TO BE BOGUS IS NOT AVAILABLE WITH EXACTING SPECIFICATION. THE ENQUIRY ABOUT THE BONAFIDE OF THE PURCHASE IS NOT E STABLISHED BY THE CIT(A). THE ASSESSEE IS APPARENTLY NOT INTERESTED I N DEFENDING THE APPEAL OF THE REVENUE AND REVERT THE ALLEGATIONS OF THE AO . CONSEQUENTLY, WE CONSIDER IT APPROPRIATE THAT MATTER BE REMITTED BAC K TO THE FILE OF THE CIT(A) FOR DE-NOVO CONSIDERATION OF THE ENTIRE FACTS IN ISSUE AFTER ASCERTAINING THE CONSUMPTION, STOCK SALE QUA THE PU RCHASE UNDER DISPUTE. ACCORDINGLY THE ORDER OF THE CIT(A) IS SET ASIDE IN TERMS OF DIRECTIONS NOTED ABOVE. THE APPEAL OF THE REVENUE IS ALLOWED F OR STATISTICAL PURPOSE. 17. IN THE RESULT, APPEAL FILED BY THE REVENUE IS A LLOWED FOR STATISTICAL PURPOSE. 18. NOW WE TAKE UP THE ASSESSEES APPEAL IN ITA NO. 2376/AHD/2012 FOR A.Y.2008-09. THE ASSESSEE HAS TAKEN FOLLOWING G ROUNDS OF APPEAL:- (I). THE LEARNED CIT(A) HAS ERRED IN LAW AND ON FAC TS IN CONFIRMING THE ADDITION OF RS.46,71,026/-. (II). THE LEARNED CIT(A) HAS ERRED IN NOT APPRECIAT ING THE FACT THAT THE LEARNED ACIT HAD VIOLATED THE PRINCIPLES OF NAT URAL JUSTICE BY NOT SERVING THE LETTER DTD. 08/10/2010 TO THE APPEL LANT AS PER WHICH THE DATE OF CROSS EXAMINATION OF DHARMENDRA P ANDY AND MADANLAL WAS FIXED ON 15/10/2010 AND FURTHER NO SUP PLYING THE COPY OF STATEMENT OF DHARMENDRA PANDYA AND MADANLAL RECORDED DURING THE CROSS EXAMINATION AS ON 15/10/2 010, IN SPITE OF SPECIFIC REQUEST MADE VIDE APPELLANTS LETTER DT D. 22/11/2010. ITA NO. 2306&2376 /AHD/2012 ITA NO. 1909/AHD/2013 - 7 - (III.A). THE LEARNED CIT(A) HAS ERRED IN IGNORING T HE FACT THAT THE LEARNED ACIT HAS TREATED THE PURCHASE MADE FROM M/S . VISHAL TRADERS AS BOGUS PURCHASES, ONLY ON THE BASIS OF CO NTROVERSIAL STATEMENT OF DHARMENDRA PANDYA AND MADANLAL RECORDE D U/S. 131 OF THE INCOME-TAX ACT. (III.B) THE LEARNED CIT(A) HAS ERRED IN CONFIRMING THE ADDITION OF BOGUS PURCHASES OF RS.46,71,026/- @ 25% OF THE TOTAL PURC HASES OF RS.1,86,84,105/- FROM M/S. VISHAL TRADERS, RELYING UPON HONBLE GUJARAT HIGH COURTS DECISION IN THE CASE OF SANJAY OIL CAKE INDUSTRIES. (III.C) THE LEARNED CIT(A) HAS ERRED IN IGNORING TH E FACT THAT IN THE CASE OF SANJAY OIL CAKE INDUSTIRES; THE UNIT WAS A MANUF ACTURING UNIT, WHEREAS THE APPELLANT IS A WHOLESALE GRAIN TRADER. (III.D) THE LEARNED CIT(A) HAS ERRED IN IGNORING TH E FACT THAT AS PER THE CHARTERED ACCOUNTANTS AUDIT REPORT U/S. 44AB FOR F .Y.2007-08 G.P. IS ONLY 1.01%. (III.E) THE LEARNED CIT(A) HAS ERRED IN IGNORING TH E FACT THAT AS PER THE ADDITION MADE OF BOGUS PURCHASES @ 25% OF TOTAL PUR CHASES FROM M/S. VISHAL TRADERS, G.P. COMES TO 13.15%, WHI CH IS HIGHLY IMPROBABLE IN A WHOLESALE GRAIN BUSINESS AND THAT T OO IN THE BUSINESS DONE ON THE BASIS OF DIRECT PURCHASE AND D IRECT SALE. (III.F) THE LEARNED CIT(A) HAS ERRED IN NOT CONSIDE RING THE REALITY OF BUSINESS AND CONFIRMING THE ADDITION, IGNORING THE SETTLED PRINCIPLE OF INCOME TAX LAW THAT IT IS THE REAL INC OME WHICH IS TAXABLE UNDER THE ACT. (IV) THE LEARNED CIT(A) HAS ERRED IN CONFIRMING THE REJECTION OF THE BOOKS OF ACCOUNTS BY THE LEARNED ACIT ON THE GROUND S OF INFLATION OF EXPENSES TO SUPPRESS THE PROFIT EARNED FROM THE BUSINESS AND MAKING THE ASSESSMENT WITHOUT REFERENC E TO ANY CONCRETE EVIDENCE. 19. FOR THE PARITY OF REASON IN ITA NO.2306/AHD/201 2. THE CAPTIONED APPEAL ITA NO. 2376/AHD/2012 IS ALSO SET ASIDE. ITA NO. 2306&2376 /AHD/2012 ITA NO. 1909/AHD/2013 - 8 - 20. IN THE RESULT, APPEAL FILED BY THE ASSESSEE IS ALLOWED FOR STATISTICAL PURPOSE. 21. NOW WE TAKE UP THE ASSESSEES APPEAL IN ITA NO. 1909/AHD/2013 FOR A.Y.2008-09. THE ASSESSEE HAS TAKEN FOLLOWING G ROUNDS OF APPEAL:- (I). THE LEARNED CIT(A)-I, AHMEDABAD GROSSLY ERRED IN LAW AND ON FACTS IN CONFIRMING PENALTY OF RS. 15,76.438/- U/S. 271(1)(C) FOR FURNISHING INACCURATE PARTICULARS OF INCOME. (II.A) THE LEARNED CIT(A)-I, AHMEDABAD HAS ERRED IN CONFIRMING THE PENALTY LEVIED BY AO WITHOUT SATISFYING THE CONDITI ONS PRECEDENT FOR APPLICABILITY OF SECTION 271(1)(C)AND EXPLANATI ON 1 TO SECTION 271(1)(C). (II.B) THE LEARNED CIT(A)-I, AHMEDABAD HAS ERRED IN NOT APPRECIATING LEGALLY AND FACTUALLY THE SUBMISSIONS AND EXPLANATI ONS OF THE APPELLANT SUBMITTED DURING THE COURSE OF THE APPELL ATE PROCEEDINGS. (II.C) THE LEARNED CIT(A)-I, AHMEDABAD HAS FURTHER ERRED IN CONFIRMING PENALTY WITHOUT HAVING ANY COGENT MATERI AL OR EVIDENCE FROM WHICH IT COULD BE INFERRED THAT THE A PPELLANT HAD FURNISHED INACCURATE PARTICULARS OF INCOME. (III). THE LEARNED CIT(A)-I, AHMEDABAD HAS ERRED IN IGNORING THE FACT THAT THE HONBLE CIT(A) HAS CONFIRMED THE ADDITION OF BOGUS PURCHASES OF RS.46,71,026/- ON ESTIMATE BASIS @25% OF TOTAL PURCHASE OF RS.1,86,84,105/- FROM M/S. VISHAL TRADE RS; BY RELYING ON THE CASE OF SANJAY OIL CAKE INDUSTRIES W HICH WAS A MANUFACTURING UNIT. (IV) THE LEARNED CIT(A)-I, AHMEDABAD HAS ERRED IN R EJECTING THE LEGAL PRECEDENT THAT NO CASE FOR LEVYING PENALTY CA N BE MADE OUT WHEN TWO OPINIONS WERE ARRIVED AT ON THE SAME FACTS AS HELD BY ITA NO. 2306&2376 /AHD/2012 ITA NO. 1909/AHD/2013 - 9 - THE HONBLE HIGH COURT IN THE CASE OF THE CIT VS CA LCUTTA CREDIT CORPORATION 166 ITR 29(CAL.) (V). THE LEARNED CIT(A)-I, AHMEDABAD HAS ERRED IN N OT CONSIDERING THE FACT THAT AS PER THE SHOW CAUSE NOTICE U/S.274 R.W.S 271 NO SPECIFIC CHARGE FOR LEVYING PENALTY U/S. 271(1)(C) WAS SPECIFIED WHEREAS PENALTY ORDER HAD BEEN PASSED FOR FURNISHIN G INACCURATE PARTICULARS. 22. SINCE THE QUANTUM APPEALS HAVE BEEN SET ASIDE T HE PENALTY APPEAL ALSO BE DECIDED AFRESH BY THE LEARNED CIT(A). 23. IN THE RESULT, APPEAL FILED BY THE REVENUE IN I TA NO.2306/AHD/2012 IS ALLOWED FOR STATISTICAL PURPOSE AND APPEALS FILED BY THE ASSESSEE IN ITA NO.2376/AHD/2012 AND ITA NO.190 9/AHD/2013 ARE ALSO ALLOWED FOR STATISTICAL PURPOSES.. THIS ORDER PRONOUNCED IN OPEN COURT ON 26/04/2017 SD/- SD/- IZNHI DQEKJ DSFM;K EGKOHJ IZLKN IZNHI DQEKJ DSFM;K EGKOHJ IZLKN IZNHI DQEKJ DSFM;K EGKOHJ IZLKN IZNHI DQEKJ DSFM;K EGKOHJ IZLKN YKS[KK LN YKS[KK LN YKS[KK LN YKS[KK LNL; L; L; L; U;KF;D LNL; U;KF;D LNL; U;KF;D LNL; U;KF;D LNL; (PRADIP KUMAR KEDIA) ( MAHAVIR PRASAD ) ACCOUNTANT MEMBER JUDICIAL MEMBER AHMEDABAD; DATED 26/04/2017 PRITI YADAV, SR. PS ITA NO. 2306&2376 /AHD/2012 ITA NO. 1909/AHD/2013 - 10 - !'# $#! ! COPY OF THE ORDER FORWARDED TO : 1. $' / THE APPELLANT 2. ($' / THE RESPONDENT. 3. 567. + 8. / CONCERNED CIT 4. + 8. / THE CIT(A)-I, AHMEDABAD. 5. 9: ;.,67 /673 5 / DR, ITAT, AHMEDABAD 6. ; <= - ! GUARD FILE. % & / BY ORDER, ( 9.. //TRUE COPY// '/& () ( DY./ASSTT.REGISTRAR) , / ITAT, AHMEDABAD TRUE COPY