The ITO, Ward-2(3), Now Ward-1(2)(5), Surat V. Umang Overseas, Surat

ITA 2351/AHD/2015

• Counselvise Citation: [2018] 118 COUNSELVISE.COM (IT) 2011 (ITAT-SURAT)
• Duration Of Justice: 3 year(s) 2 month(s) 4 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 11-10-2018
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: DB
• Assessment Year: 2011-2012
• Appeal Filed On: 07-08-2015
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: R P RASTOGI
• Keywords: Bogus purchase; Corroborative evidences

Judgement Text

, IN THE INCOME TAX APPELLATE TRIBUNAL, SURAT BENCH, SURAT , , BEFORE SHRI C.M.GARG, JUDICIAL MEMBER AND SHRI O.P.MEENA, ACCOUNTANT MEMBER . / ITA NO.2351/AHD/2015/SRT / ASSESSMENT YEAR: 2011-12 THE INCOME TAX OFFICER, WARD-1(2)(5), SURAT. VS. UMANG OVERSEAS, 5008, TRADE HOUSE RING ROAD, RING ROAD, SURAT 395 002. [PAN: AALFM 8880 D] ( ' / APPELLANT) ( #$' /RESPONDENT) / ASSESSEE BY : NONE /REVENUE BY : SHRI R.P.RASTOGI - SR.DR /DATE OF HEARING : 03-10-2018 / DATE OF PRONOUNCEMENT : 11-10-2018 / ORDER PER C.M.GARG, JUDICIAL MEMBER: THIS APPEAL HAS BEEN FILED BY THE REVENUE AGAINST THE ORDER OF COMMISSIONER OF INCOME TAX (APPEALS)-II, SURAT (CI T(A) FOR SHORT) DATED 24.06.2015 FOR THE ASSESSMENT YEAR (A.Y) 2011-12. 2. GROUND RAISED BY THE ASSESSEE READS AS FOLLOWS: 1. ON THE FACTS AND CIRCUMSTANCES OF THE CASE AND IN L AW, THE LD.CIT(A) HAS ERRED IN DELETING THE ADDITION MADE O N ACCOUNT OF BOGUS PURCHASE OF RS.1,35,73,675/- WITHOUT APPRE CIATING THE FACT THAT THE ASSESSEE FAILED TO SUBMIT ANY SUP PORTING EVIDENCE TO PROVE THE GENUINENESS OF THE TRANSACTIO NS MADE BY THE ASSESSEE. 2 ITA NO.2351/AHD/2015/SRT (A.Y: 2011-12) UMANG OVERSEAS 2. ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CAS E, THE LD. CIT(A) OUGHT TO HAVE UPHELD THE ORDER OF THE ASSESS ING OFFICER. 3. WHEN THE CASE WAS CALLED FOR HEARING NEITHER THE ASSESSEE NOR ITS AUTHORIZED REPRESENTATIVE APPEARED NOR ANY APPLICAT ION FOR ADJOURNMENT HAS BEEN FILED. HOWEVER, ON PERUSAL OF THE RECORD INCLUDING IMPUGNED ASSESSMENT AND FIRST APPELLATE ORDER, WE ARE OF THE VIEW THAT APPEAL CAN BE ADJUDICATED ON THE BASIS OF RECORD AFTER HEARING THE ARGUMENTS OF LD. DR ON BEHALF OF THE DEPARTMENT. THEREFORE, WE PROC EED TO DECIDE THE APPEAL EXPARTE QUA THE ASSESSEE-RESPONDENT. WE HAVE HEARD THE ARGUMENTS OF LD. DR AND CAREFULLY PERUSED THE RELEV ANT MATERIAL PLACED ON THE RECORD OF THE TRIBUNAL. 4. SUPPORTING THE ACTION OF THE AO, THE LD. DR SUBM ITTED THAT THE AO MADE ADDITION BY OBSERVING THAT THE APPELLANT HAD F AILED TO PRODUCE DOCUMENTARY EVIDENCE IS ERRONEOUS AND INCORRECT AS THE DETAILS HAD BEEN FILED BEFORE THE AO DURING THE ASSESSMENT PROCEEDIN GS VIDE HIS LETTER DATED 18.03.2014. THE LD. DR SUBMITTED THAT THE AO WAS RIGHT IN MAKING DISALLOWANCE ON ACCOUNT OF BOGUS PURCHASES AND FIND INGS RECORDED IN THE ASSESSMENT ORDER ARE QUITE CORRECT AND JUSTIFIED. HE FURTHER SUBMITTED THAT THE LD.CIT(A) HAS ERRED IN DELETING THE ADDITI ON MADE ON ACCOUNT OF BOGUS PURCHASE OF RS.1,35,73,675/- WITHOUT APPRECIA TING THE FACT THAT THE ASSESSEE FAILED TO SUBMIT ANY SUPPORTING EVIDENCE T O PROVE THE 3 ITA NO.2351/AHD/2015/SRT (A.Y: 2011-12) UMANG OVERSEAS GENUINENESS OF THE TRANSACTIONS MADE BY THE ASSESSE E. IT IS ALSO SUBMITTED THAT THE LD. CIT(A) OUGHT TO HAVE UPHELD THE ORDER OF THE ASSESSING OFFICER. THEREFORE, IMPUGNED ORDER MAY K INDLY BE SET ASIDE BY RESTORING THAT OF THE AO. 5. ON CAREFUL CONSIDERATION OF ABOVE SUBMISSIONS OF THE LD. DR ALONG WITH STAND TAKEN BY THE AO FOR MAKING ADDITION AND CONCLUSION RECORDED BY THE LD. CIT(A) FOR DELETING THE ADDITION, FIRST OF ALL, WE OBSERVE THAT THE AO MADE ADDITION BY OBSERVING THAT ON ACCOUNT OF TH E GROSS FAILURE ON THE PART OF THE ASSESSEE TO PROVE TO THE SATISFACTION O F THE UNDERSIGNED VIS-- VIS THE GUIDING PRINCIPLES UNDERLYING THE INCOME TAX A CT, 1961, AN AMOUNT OF RS. 1,35,73,675/- IS TREATED AS BOGUS PURCHASE. FROM THE ORDER OF THE FIRST APPELLATE AUTHORITY, WE OBSERVE THAT THE LD. CIT(A) GRANTED RELIEF TO THE ASSESSEE WITH FOLLOWING OBSERVATIONS AND FINDIN GS: 6.1.1 I HAVE CONSIDERED THE PENALTY ORDER AS WELL AS THE SUBMISSIONS OF THE APPELLANT. THE GROUNDS OF APPEAL- GROUND NO. 1 PERTAINS TO MAKING ADDITION OF ENTIRE AMOUNT OF RS. 1,35,73,675 /- BEING PURCHASED MADE FROM THREE PARTIES WITHOUT REJECTING THE BOOK RESULT AS PER PARA 6 OF THE ASSESSMENT ORDER. THE AO HELD THAT THE APPELLANT DID NOT FURNISH THE DETAILS OF THE PARTIE S FROM WHOM THE PURCHASE WERE MADE SUCH AS ADDRESS, CONFIRMATIONS, PURCHASE BILL, TRANSPORT VOUCHER ETC. THE AO MADE AN ADDITION OF R S. 1,35,73,675/- AS BOGUS PURCHASES IN ABSENCE OF ANY EVIDENCE. THE APPELLANT SUBMITTED THAT THE APPELLANT HAD SUBMITTED THAT THE FIRMS MAIN PARTNER VIJAY MALHOTRA HAD EXPIRED ON 27.01.2011 AN D THEREAFTER THE BUSINESS WAS HIGHLY DISTURBED AND HAD TO BE CLOSED DOWN AND THE OTHER PARTNER DID NOT HAVE MUCH KNOWLEDGE ABOUT THE ACCOUNTS AND COULD SUBMIT WHATEVER DETAILS HE COULD MANAGE TO CO LLECT AS THE ACCOUNTANT HAD ALSO LEFT THE JOB. IT WAS CONTENDED THAT THE M/S REAL EXPORTS HAD GIVEN A TEMPORARY LOAN AND THERE WAS NO PURCHASES FROM THIS CONCERN. THE OTHER TWO CONCERNS NAMELY PO PULAR INTERNATIONAL AND PRABHAT EXPORTS CONFIRMATIONS AND LEDGER ACCOUNTS 4 ITA NO.2351/AHD/2015/SRT (A.Y: 2011-12) UMANG OVERSEAS HAD BEEN FILED BEFORE THE AO BUT HE HAD NOT CONSIDE RED THESE EVIDENCES AND MADE THE ADDITION. 6.1.2 ON THE PERUSAL OF THE DETAILS IT IS OBSERVED THAT THE APPELLANT HAD SHOWN THE FOLLOWING PARTIES UNDER THE HEAD SUND RY CREDITORS NAMELY S. NO. NAME OF THE PARTY PURCHASE AMOUNT RS. 1 POPULAR INTERNATIONAL 2248373 2 PRABHAT EXPORTS 7760302 3 REAL EXPORTS 3565000 THE AO HELD THAT THE APPELLANT DID NOT FURNISH THE COMPLETE DETAILS OF THE CREDITORS BEFORE THE AO WHICH INCLUDED IDENTITY , PURCHASE BILLS, TRANSPORT BILLS/VOUCHERS, STOCK REGISTER, BANK STAT EMENT OF THE SELLER PARTIES BEFORE THE AO AND THE APPELLANT HAD ONLY SU BMITTED THE COPY OF THE LEDGER ACCOUNT WITHOUT ANY SUPPORTING EVIDEN CES. DURING THE APPELLATE PROCEEDINGS THE APPELLANT SUBMITTED THAT THE COPY OF THE DOCUMENTS SUBMITTED BEFORE THE AO DURING THE ASSESS MENT PROCEEDINGS. ON THE PERUSAL OF THE DETAILS, IT IS O BSERVED THAT THE APPELLANT HAD FILED BEFORE THE AO VIDE HIS LETTER D ATED 18.03.2014 , THE ACCOUNT CONFIRMATIONS FROM THE ABOVE 3 PARTIES ALONG WITH THE COMPLETE ADDRESS AND PAN NO. OF EACH PARTIES/THE CO MPLETE INVOICE WITH DETAILS OF THE PAYMENTS MADE VIDE RTGS TRANSFE RS WAS SUBMITTED BEFORE THE AO ALONG WITH THE COPY OF BANK STATEMENT OF DENA BANK, MUMBAI WHICH REFLECTED THE DETAILS OF TH E RTGS PAYMENTS MADE AGAINST THE PURCHASES TO THE ABOVE CO NCERNS. THE APPELLANT ALSO SUBMITTED THAT COPY OF THE CONFIRMAT ION OF M/S REAL EXPORTS REGARDING THE TEMPORARY LOAN OBTAINED ALONG WITH THE COMPLETE ADDRESS AND PAN DETAILS, COPY OF THE IT RE TURNS, AUDIT REPORT SHOWING THE UNSECURED LOANS ETC. ALL THE ABO VE DETAILS HAVE NOT BEEN TAKEN INTO CONSIDERATION BY THE AO WHITE P ASSING THE ASSESSMENT, ORDER. THE OBSERVATION OF THE AO THAT T HE APPELLANT HAD FAILED TO PRODUCE DOCUMENTARY EVIDENCES IS ERRONEOU S AND INCORRECT AS THE DETAILS HAD BEEN FILED BEFORE THE AO DURING THE ASSESSMENT PROCEEDINGS VIDE HIS LETTER DATED 18.03.2014. IN VIEW OF THE ABOVE FACTS, IT IS EVIDENT THAT THE APPELLANT HAD DISCHAR GED THE ONUS OF PROVING THE PURCHASES AND LOAN TO BE GENUINE AND TH E ADDITION MADE BY THE AO OF RS. 1,35,73,675 /- IS DELETED AND THE GROUND OF APPEAL IS ALLOWED . 6. IN VIEW OF ABOVE, WE CLEARLY OBSERVE THAT THE AS SESSEE SUBMITTED COPIES OF THE CONFIRMATIONS OF M/S. REAL EXPORTS RE GARDING THE TEMPORARY LOAN ALONG WITH COMPLETE ADDRESS OF PAN DETAILS, CO PY OF IT RETURN, AUDIT REPORT SHOWING THE UNSECURED LOAN BUT THE SAME WAS NOT CONSIDERED BY 5 ITA NO.2351/AHD/2015/SRT (A.Y: 2011-12) UMANG OVERSEAS THE AO. THUS, THE LD. FIRST APPELLATE AUTHORITY WA S RIGHT IN HOLDING THAT THE OBSERVATIONS OF THE AO THAT THE APPELLANT HAD FAILE D TO PRODUCE DOCUMENTARY EVIDENCES IS ERRONEOUS AND FACTUALLY IN CORRECT AS THE DETAILS WERE FILED BEFORE THE AO DURING ASSESSMENT PROCEEDI NGS VIDE LETTER DATED 18.03.2014. IT IS ALSO AMPLY CLEAR THAT DURING THE APPELLATE PROCEEDINGS THE ASSESSEE SUBMITTED THAT THE COPIES OF THE DOCUM ENTS SUBMITTED BEFORE THE AO DURING THE ASSESSMENT PROCEEDINGS AND THE LD. CIT(A) OBSERVED THAT THE APPELLANT HAD FILED VIDE LETTER D ATED 18.03.2014 THE ACCOUNT CONFIRMATIONS FROM ALL THREE PARTIES ALONG WITH THE COMPLETED ADDRESS AND PAN NUMBER OF EACH PARTY, COMPLETE COPI ES OF THE INVOICE WITH THE DETAILS OF PAYMENTS MADE THROUGH RTGS ALON G WITH COPY OF THE BANK STATEMENT OF ASSESSEE DENA BANK, MUMBAI REFLEC TING THE DETAILS OF RTGS PAYMENTS MADE AGAINST THE IMPUGNED PURCHASES T O THE ALLEGED THREE CONCERNS/PARTIES/CREDITORS. 7. IN THIS ABOVE NOTED FACTUAL SITUATION, WE ARE OF THE VIEW THAT THE AO MADE ADDITION KEEPING ASIDE THE VITAL AND SUSTAINAB LE EVIDENCE OF THE ASSESSEE MERELY ON THE BASIS OF SURMISES AND CONJEC TURES WITHOUT HAVING ANY ADVERSE MATERIAL OR EVIDENCE AGAINST THE ASSESS EE. WHEREAS THE LD. CIT(A) AFTER CONSIDERING THE ENTIRE FACTS AND CIRCU MSTANCES OF THE CASE IN THE LIGHT OF DOCUMENTARY EVIDENCE FILED BY THE ASSE SSEE BEFORE THE AO AS WELL AS BEFORE THE FIRST APPELLATE AUTHORITY RIGHTL Y OBSERVED THAT THE 6 ITA NO.2351/AHD/2015/SRT (A.Y: 2011-12) UMANG OVERSEAS ASSESSEE HAS DISCHARGED THE ONUS LAY ON HIM PROVIN G THE PURCHASES AND LOAN TO BE GENUINE AND THUS, THE LD. CIT(A) WAS RIG HT IN DELETING THE ADDITION. WE ARE UNABLE TO SEE ANY VALID REASON TO INTERFERE WITH THE SAME HENCE, WE UPHOLD THE FIRST APPELLATE ORDER ON DELETION OF ADDITION MADE ON ACCOUNT OF BOGUS PURCHASES FROM THREE PARTI ES. CONSEQUENTLY, SOLE GROUND OF REVENUE BEING DEVOID OF MERITS IS DI SMISSED. 8. IN THE RESULT, APPEAL OF THE REVENUE IS DISMISSE D. ORDER PRONOUNCED IN THE OPEN COURT ON THIS DAY OF 1 1 TH OCTOBER, 2018. / SURAT ; DATED : 11 TH OCTOBER, 2018 / EDN # & / COPY OF THE ORDER IS FORWARDED TO : 1. / THE APPELLANT ; 2. / THE RESPONDENT ; 3. $ ( ) / THE CONCERNED CIT(A); 4. THE CONCERNED PRL. CIT; 5. , , / DR, ITAT, SURAT; 6. / GUARD FILE . / BY ORDER , // TRUE COPY // * / ASSISTANT REGISTRAR , / ITAT, SURAT SD/- SD/- ( ) ( O.P.MEENA ) / ACCOUNTANT MEMBER ( ) (C.M.GARG) /JUDICIAL MEMBER