M/s Bahal Stores, Ghaziabad V. ITO, New Delhi

ITA 2371/DEL/2016

• Counselvise Citation: [2017] 130 COUNSELVISE.COM (IT) 7069 (ITAT-DELHI)
• Duration Of Justice: 8 month(s) 11 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 09-01-2017
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: SMC 1
• Next Hearing Date: 10-11-2016
• Assessment Year: 2006-2007
• Appeal Filed On: 29-04-2016
• Result in Favour of: Partly Allowed
• Court: TRIBUNAL
• Keywords: Bogus purchase; Non passing of speaking order; Onus to prove
• Section: 32; 147; 131; 68; 246; 69; 145; 27; 148; 54; 37; 6; 56; 263; 63; 132; 12; 28; 144; 10; 90; 154; 2; 11; 15; 271(1)(b); 139; 92

Judgement Text

I.T.A .NO.-2371/DEL/2016 BAHAL STORES VS ITO IN THE INCOME TAX APPELLATE TRIBUNAL DELHI BENCH: SMC-I NEW DELHI BEFORE SMT DIVA SINGH, JUDICIAL MEMBER I.T.A .NO.-2371/DEL/2016 (ASSESSMENT YEAR-2006-07) BAHAL STORES, C-1/801, NEELPADAM KUNJ, SECTOR-1, VAISHALI, GHAZIABAD. PAN-AACFB6321M ( APPELLANT) VS ITO, WARD-54(5), NEW DELHI. (RESPONDENT) ASSESSEE BY SH.S.KRISHNAN, ADV. REVENUE BY S H. F.R.MEENA, SR.DR DATE OF HEARING 10 . 11 .2016 DATE OF PRONOUNCEMENT 09.01.2017 ORDER THE PRESENT APPEAL HAS BEEN FILED BY THE ASSESSEE A SSAILING THE CORRECTNESS OF THE ORDER DATED 09.03.2016 OF CIT(A)-12, NEW DELHI PERT AINING TO 200607 ASSESSMENT YEAR ON THE FOLLOWING GROUNDS:- ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE AND IN LAW THE LD. CIT(A) ERRED IN CONFIRMING THE FOLLOWING ACTIONS OF THE ASSESSIN G OFFICER: 1. IN INITIATING PROCEEDINGS U/S 147 OF THE ACT AND COMPUTING THE TAXABLE INCOME AT RS.2,87,804/- AGAINST THE RETURNED INCOME IN A S UM OF RS.1,48,590/-; 2. IN CONSIDERING THE ALLEGED BOGUS PURCHASE OF R S.1,39,214/- FROM MR. VAIBHAV JAIN EVEN THOUGH NO SUCH TRANSACTIONS WERE ENTERED INTO BY THE ASSESSEE; 3. IN MAKING AN ADDITION OF RS.1,39,214/- ON ACCO UNT OF ALLEGED BOGUS PURCHASE. ALL THE ABOVE ACTIONS BEING ARBITRARY, MISCONCEIVED , ERRONEOUS AND UNTENABLE MUST BE QUASHED WITH DIRECTIONS FOR APPROPRIATE RELIEF. 2. THE LD. AR INVITING ATTENTION TO GROUND NO. 2 SU BMITTED THAT THE ASSESSEE HAS NOT CLAIMED ANY PURCHASES FROM THE TAINTED CONCERNS/PER SONS. CONSISTENTLY DURING THE ASSESSMENT PROCEEDINGS AND AGAIN BEFORE THE CIT(A) THE ASSESSEE HAS DENIED ANY TRANSACTION WITH MR. VAIBHAV JAIN. NO EVIDENCE HAS BEEN PLACED ON RECORD BY THE DEPARTMENT TO SHOW THAT THERE WERE BUSINESS TRANSACTION OF THE ASSESSEE WITH EITHER SH. VAIBHAV JAIN OR ANY SUCH CONCERN. IN THE CIRCUMSTANCES, IT WAS HIS SUBMISSION THAT ONCE THE BOOKS OF ACCOUNTS OF THE ASSESSEE HAVE BEEN MADE AVAILABLE TO THE TAX AUTHORITIES AND THE PURCHASES HAVE BEEN ACCEPTED. THE REVENUE WITHOUT REFERRING TO THE EVIDENCE TO REBUT THE CLAIM CANNOT MAKE THE ADDITION. UNLESS THE REVENUE POINTS OUT THE SPECIFIC TRANSACTION, THE RELIANCE PLACED ON UNCONFRONTED ORAL STATEMENT OF SH.VAIBHAV JAIN CANNOT BE THE BASIS OF THE ADDITION. PAGE 2 OF 4 I.T.A .NO.-2371/DEL/2016 BAHAL STORES VS ITO 3. THE LD. SR.DR RELYING UPON THE IMPUGNED ORDER SU BMITTED THAT THE ONUS IS UPON THE ASSESSEE TO SHOW THAT THERE WERE NO TRANSACTIONS WI TH THE SAID CONCERN. THE LD. SR.DR WAS REQUIRED TO SHOW AS TO WHAT KIND OF AN EVIDENCE DO THE TAX AUTHORITIES THINK CAN BE LEAD BY AN ASSESSEE TO SHOW THAT HE HAS NOT DONE ANY TRANSACTI ONS WITH A SPECIFIC CONCERN. IN REPLY, IT WAS HIS PRAYER THAT THE MATTER MAY BE REMANDED. 4. I HAVE HEARD THE RIVAL SUBMISSIONS AND PERUSED T HE MATERIAL AVAILABLE ON RECORD. IT IS NOT DISPUTED BY THE LD.SR.DR THAT COMPLETE BOOKS O F ACCOUNTS AND DETAILS HAVE BEEN MADE AVAILABLE BY THE ASSESSEE TO THE AO. THE PURCHASE ACCOUNT HAS BEEN ACCEPTED. THE DENIAL OF THE ASSESSEE THAT THERE IS NO TRANSACTION WITH T HE TAINTED CONCERN/PERSON IS CONSISTENTLY ON RECORD. IN THE CIRCUMSTANCES, UNLESS THE REVENUE P LACES SOME POSITIVE EVIDENCE TO UPSET THE CONSISTENT CLAIM THAT THE ASSESSEE HAS NOT HAD ANY TRANSACTIONS WITH THE TAINTED PERSONS THE ADDITION CANNOT BE SUSTAINED. A PERUSAL OF THE REC ORD SHOWS THAT SPECIFIC PERSONS SH. RAKESH GUPTA, SH. VISHESH GUPTA, SH. NAVEEN JAIN & SH. VAIBHAV JAIN IN THE SEARCH CASES WERE FOUND TO BE INVOLVED IN PROVIDING ACCOMMODATIO N ENTRIES TO DIFFERENT PERSONS ALLEGEDLY THROUGH 37 PAPER ENTITIES. IT IS THE CLAIM OF THE REVENUE THAT THE ASSESSEES CASE HAS BEEN RE-OPENED ON THE GROUND THAT THE ASSESSEES NAME WA S FOUND TO HAVE BEEN MENTIONED BY SH. VAIBHAV JAIN. AS A RESULT OF THE STATEMENT, THE AS SESSEE WAS REQUIRED TO EXPLAIN THE ALLEGED TRANSACTION OF BOGUS PURCHASES OF RS.1,39,214/- WIT H SH. VAIBHAV JAIN. THE ASSESSEE AS PER THE ASSESSMENT ORDER IS FOUND TO HAVE STATED IN RESPONSE, VIDE VARIOUS LETTERS, THE ASSESSEE DENIED OF ANY SUCH ENTRIES AND ALSO SUBMIT TED VARIOUS DOCUMENTS. THE EXPLANATION HAS NOT BEEN ACCEPTED IN VIEW OF THE FA CT THAT THE STATEMENT HAD BEEN GIVEN BY SH. VAIBHAV JAIN ALLEGING BOGUS PURCHASES. IT IS N OTED THAT THE TAX AUTHORITIES CONSIDERED THE STATEMENT OF SH. VAIBHAV JAIN MORE RELIABLE THAN T HE CONSISTENT WRITTEN AND ORAL ASSERTIONS TO THE CONTRARY OF THE ASSESSEE. WHY THE ORAL STATEMEN T OF SH. VAIBHAV JAIN WAS CONSIDERED TO BE OF GREATER CREDIBILITY DESPITE THE CONSISTENT DE NIAL OF THE ASSESSEE HAS NOT BEEN ADDRESSED BY THE TAX AUTHORITIES. THE LAW IS WELL SETTLED THA T THE ONUS TO PROVE THAT FACTS ARE CONTRARY TO RECORD IS UPON THE PARTY WHO MAKES THE ALLEGATION. IN THE FACTS OF THE PRESENT CASE, IT IS THE PAGE 3 OF 4 I.T.A .NO.-2371/DEL/2016 BAHAL STORES VS ITO CASE OF REVENUE THAT THE ASSESSEE HAD BUSINESS TRAN SACTIONS WITH MR. VAIBHAV JAIN. ONCE THE ASSESSEE MAKES ITS BANK ACCOUNTS, BOOKS OF ACCO UNT AVAILABLE AND THE PURCHASE ACCOUNT IS ACCEPTED THE ONUS SHIFTS TO THE DEPARTMENT TO S HOW THAT THE ADDITION WAS CORRECTLY AND LEGITIMATELY MADE. THE ASSESSEE ADMITTEDLY HAS CON SISTENTLY STATED THAT IT HAD NO TRANSACTIONS WITH THE TAINTED FIRM. A PERUSAL OF T HE IMPUGNED ORDER ALSO SHOWS THAT THE ASSESSEE IS FOUND TO HAVE MADE VARIOUS SUBMISSIONS INCLUDING THE FOLLOWING SUBMISSIONS:- C. DURING ASSESSMENT PROCEEDINGS, THE ASSESSEE UNEQUI VOCALLY DENIED HAVING ENTERED INTO ANY TRANSACTION WITH ANY ENTITY CONTROLLED BY MR.VAIBHAV JAIN, AS ALSO ANY INKLING OF WHO MR. VAIBHAV JAIN W AS. IN SUPPORT OF THE SAID CONTENTION, THE ASSESSEE PLACED BEFORE THE AO, COPI ES OF ITS PURCHASE ACCOUNT & BANK STATEMENT. AN AFFIDAVIT WAS ALSO FI LED DENYING ANY TRANSACTION OR DEALING WITH MR. VAIBHAV JAIN OR HIS ENTITIES. . E. WITH THE SAID EVIDENCE ON HIS TABLE, THE TASK O F THE AO WAS SIMPLE ENOUGH. IN ORDER TO HOLD THAT THE ASSESSEE HAD IND EED SECURED BOGUS PURCHASES FROM AN ENTITY CONTROLLED BY MR.VAIBHAV J AIN, HE HAD SIMPLY TO IDENTIFY WHICH ITEM OF PURCHASE OR WHICH ENTRY IN T HE BANK STATEMENT CORRESPONDED TO THE RS.1,39,214 HE HAD RAISED CAVIL FOR. INSTEAD OF IDENTIFYING ANY PURCHASE TRANSACTION THAT ACCORDING TO HIM WAS TAINTED, THE AO CHOSE TO SIMPLY RELY ON THE STATEMENT OF MR.VAIB HAV JAIN (WHICH HAS NEVER BEEN CONFRONTED TO THE ASSESSEE), AND THROUGH A COMPLETELY NON SPEAKING ORDER, A TAX DEMAND STOOD CREATED. 4.1. IT IS SEEN THAT THIS FACTUAL AND EVIDENTIARY D EFICIENCY QUESTIONED AT THE ASSESSMENT STAGE BY THE ASSESSEE WAS AGAIN QUESTIONED AT THE A PPELLATE STAGE BEFORE THE CIT(A). THE LD.CIT(A) FAILS TO ADDRESS WHAT IS THE KIND OF EVID ENCE AN ASSESSEE CAN PLACE IN ITS DEFENCE TO SHOW THAT THERE WAS NO TRANSACTION WITH THE SPECIFI C CONCERN. A PERSON CANNOT BE CALLED UPON TO PROVE A NEGATIVE, IT GOES AGAINST THE FUNDAMENT AL PRINCIPLES OF COMMON SENSE AND LOGIC TO REQUIRE A PARTY TO PROVE A NEGATIVE. IT IS THE PER SON WHO INSISTS THAT A FACT EXISTS WHO CAN BE CALLED UPON TO EVIDENCE THE CLAIM. ACCORDINGLY, IN THE AFORE-MENTIONED PECULIAR FACTS AND CIRCUMSTANCES, I AM OF THE VIEW THAT THE INSISTENCE OF THE REVENUE TO SADDLE THE ASSESSEE BY AN ADDITION WITHOUT DOING THE COURTESY OF FIRST POI NTING OUT ANY TRANSACTION WHICH THE ASSESSEE HAD WITH SH. VAIBHAV JAIN OR HIS ENTITIES IS AGAINS T ALL TENETS OF LAW AND LOGIC. AS NOTED, THE ASSESSEE HAS PRODUCED ITS BOOKS OF ACCOUNTS; HAS SH OWN HIS PURCHASE ACCOUNT; AND BANK STATEMENT; HAS FILED AN AFFIDAVIT IN SUPPORT OF ITS CLAIM BEFORE THE TAX AUTHORITIES, NONE OF THIS HAS BEEN UPSET BY ANY CONTRARY FINDING. ACCORDINGL Y IN THESE PECULIAR FACTS AND PAGE 4 OF 4 I.T.A .NO.-2371/DEL/2016 BAHAL STORES VS ITO CIRCUMSTANCES, THE REQUEST FOR REMAND I AM OF THE V IEW WOULD BE A TRAVESTY OF JUSTICE AS BLIND RELIANCE ON A STATEMENT OF A THIRD PERSON THAT TOO WITHOUT CONFRONTING IT TO THE ASSESSEE AND WITHOUT CARING TO POINT OUT WHICH TRANSACTION ACCOR DING TO THE TAX AUTHORITIES WAS A BOGUS TRANSACTION CANNOT BE UPHELD. THE ASSESSEE CANNOT BE BURDENED WITH FACING THE LITIGATION COSTS OF GOING THROUGH ONE MORE ROUND OF PROCEEDING S ON THE CHANCE THAT MAY BE SOMETHING AGAINST THE ASSESSEE WOULD BE DISCOVERED IN THE SAI D ROUND. THE ADDITION MADE BY THE ASSESSING OFFICER AND SUSTAINED BY THE CIT(A) ON PR ESUMPTIONS IN THE ABSENCE OF ANY EVIDENCE CANNOT BE UPHELD. IN VIEW OF THE ABOVE, T HE ADDITION IS DELETED. 5. SINCE NO ARGUMENTS WERE ADVANCED ADDRESSING GROU ND NO. 1 ON THE JURISDICTIONAL ISSUE, THE SAME IS TREATED AS NOT PRESSED. 6. IN THE RESULT, THE APPEAL OF THE ASSESSEE IS PAR TLY ALLOWED FOR STATISTICAL PURPOSES. THE ORDER IS PRONOUNCED IN THE OPEN COURT ON 09 TH OF JANUARY 2017. SD/- (DIVA SINGH) JUDICIAL MEMBER *AMIT KUMAR* COPY FORWARDED TO: 1. APPELLANT 2. RESPONDENT 3. CIT 4. CIT(APPEALS) 5. DR: ITAT ASSISTANT REGISTRA R, ITAT NEW DELHI