M/s. G.H. Vijapura, Mumbai V. The Dy.CIT, Sabarkantha Circle, Himatnagar

ITA 2699/AHD/2015

• Counselvise Citation: [2019] 112 COUNSELVISE.COM (IT) 3201 (ITAT-AHMEDABAD)
• Duration Of Justice: 4 year(s) 2 month(s) 11 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 04-12-2019
• Appeal Filed By: Assessee
• Order Result: Dismissed
• Bench Allotted: B
• Next Hearing Date: 25-09-2019
• Assessment Year: 2009-2010
• Appeal Filed On: 23-09-2015
• Result in Favour of: Revenue
• Court: TRIBUNAL
• Assessee Lawyers: K C THAKKER
• Keywords: Bogus purchase; Tangible material; Reason to believe; Reassessment proceedings
• Section: 143(3); 147; 148

Judgement Text

, - IN THE INCOME TAX APPELLATE TRIBUNAL AHMEDABAD BENCH B BEFORE SHRI RAJPAL YADAV, JUDICIAL MEMBER AND SHRI AMARJIT SINGH, ACCOUNTANT MEMBER ./ ITA NO.2699/AHD/2015 / ASSTT. YEAR: 2009-10 M/S.G.H. VIJAPURA, 1 ST FLOOR, AML CENTRE MAHAKALI CAVES ROAD ANDHER, MUMBAI 93. PAN : AABFG 3656 M VS. DCIT, SABARKANTHA CIRCLE HIMATNAGAR. / (APPELLANT) / (RESPONDENT) ASSESSEE BY : SHRI K.C. THAKKER, AR REVENUE BY : SHRI MUDIT NAGPAL, SR.DR ! / DATE OF HEARING : 25/09/2019 '#$ ! / DATE OF PRONOUNCEMENT: 04/12/2019 %& / O R D E R PER RAJPAL YADAV, JUDICIAL MEMBER: ASSESSEE IS IN APPEAL BEFORE THE TRIBUNAL AGAINST O RDER OF LD.CIT(A)-2, AHMEDABAD DATED 19.8.2015 PASSED FOR T HE ASSTT.YEAR 2009-10. 2. IN THE FIRST GROUND OF APPEAL, THE ASSESSEE HAS CHALLENGED REOPENING OF THE ASSESSMENT UNDER SECTION 147 OF TH E INCOME TAX ACT, 1961. ITA NO.2699 /AHD/2015 2 3. BRIEF FACTS OF THE CASE ARE THAT THE ASSESSEE HAS FILED ITS RETURN OF INCOME ON 28.9.2009 DECLARING TOTAL INCOM E ATRS.4,37,69,335/-. ASSESSMENT WAS FINALIZED UNDER SECTION 143(3) ON 59.9.2011 AT THE TOTAL INCOME OF RS.4,42, 69,335/-. THE AO THEREAFTER GOT INFORMATION FROM VAT DEPARTMENT O F MUMBAI EXHIBITING THE FACT THAT THE ASSESSEE HAS OBTAINED BILLS FOR BOGUS PURCHASES FROM ADARSH TRADING, RIYA TRADING COMPANY , SONICO TRADERS, VITRAG TRADERS AND THEREFORE, HE RECORDED REASONS AND REOPENED THE ASSESSMENT BY ISSUANCE OF NOTICE DATED 6.6.2014. RELEVANT PART OF REASONS RECORDED BY THE AO IN THE IMPUGNED ORDER READS AS UNDER: INFORMATION HAS BEEN RECEIVED FROM THE VAT DEPARTM ENT MUMBAI, RELATING TO BOGUS PURCHASES OF THE ABOVE AS SESSEE FROM HAWAL BILLER NAMELY ADARSHA TRADING, RIYA TRAD ING CO., SUNICO-TRADERS AND VITRIG TRADERS ACCORDING TO SAID INFORMATION, G. H. VIJAPURA MADE BOGUS PURCHASES TO THE TUNE OF RS.41,67,822/- FROM ABOVE MENTIONED PARTY DURING F.Y. 2008-09 RELEVANT TO A.Y. 2009-10. IN VIEW OF ABOVE I HAVE REASON TO BELIEVE THAT INCO ME CHARGEABLE TO TAX TO THE EXTENT OF RS.41,61,822/- H AS ESCAPED ASSESSMENT FOR THE YEAR UNDER CONSIDERATION , DUE TO FAILURE OF THE ASSESSEE TO DISCLOSE FULLY AND TRULY ALL MATERIAL FACTS NECESSARY FOR ASSESSMENT. THEREFORE, THIS IS FIT CASE TO REOPEN THE ASSESSMENT OF THE ASSESSEE FOR A.Y. 2009 -10. 4. IN RESPONSE TO THE NOTICE RECEIVED UNDER SECTION 148 OF THE ACT, THE ASSESSEE FILED A LETTER CONTENDING THEREIN THAT THE RETURN SUBMITTED ORIGINALLY BE TREATED AS SUBMITTED IN RES PONSE TO THE NOTICE UNDER SECTION 148 OF THE ACT. THE ASSESSEE THEREAFTER FILED OBJECTION TO THE REOPENING AND CONTENDED THEREIN TH AT ITS PURCHASES ARE GENUINENESS. IN CASE THEY ARE FOUND TO BE NON- GENUINE THEN AT THE MOST 0.5% OF SUCH PURCHASES BE TREATED AS INCOME ESCAPED AND CHARGEABLE TO TAX. THIS PLEA WA S RAISED WITH ITA NO.2699 /AHD/2015 3 AN OBJECT OF AVOIDING LITIGATION WITH THE DEPARTMEN T. THE LD.AO HAS REJECTED OBJECTIONS FILED BY THE ASSESSEE AND P ROCEEDED TO PASS ASSESSMENT ORDER UNDER SECTION 147 R.W.S. 143( 3) OF THE ACT. HE FOUND THAT PURCHASES AMOUNTING TO RS.41,67,822/- WERE ALLEGED TO HAVE BEEN MADE FROM THESE BOGUS CONCERNS . THIS FACT WAS ADMITTED BY SHRI ZAHID H. VIJAPURA DURING A SUR VEY CARRIED OUT AT THE COMPANY WHICH WAS CONVERTED FROM THE PRE SENT PARTNERSHIP FIRM. THUS, ON THE BASIS OF INFORMATIO N COLLECTED FROM VAT DEPARTMENT AS WELL AS NON-PRODUCTION OF ANY EVI DENCE BY THE ASSESSEE PROVED NATURE OF THE PURCHASES BEING BOGUS . THE LD.AO HAS MADE AN ADDITION OF RS.41,67,822/-. 5. DISSATISFIED WITH THE ASSESSMENT ORDER, THE ASSE SSEE CARRIED THE MATTER IN APPEAL BEFORE THE LD.CIT(QA). THE LD .CIT(A) HAS UPHELD OPENING OF THE ASSESSMENT AND ALSO CONFIRMED THE ADDITION. THE LD.COUNSEL FOR THE ASSESSEE WHILE I MPUGNING THE ORDER OF THE LD.CIT(A) CONTENDED THAT THERE WAS NO TANGIBLE MATERIAL WITH THE AO TO FORM A BELIEF THAT INCOME H AS ESCAPED ASSESSMENT. HE FURTHER CONTENDED THAT NOTICE UNDER SECTION 148 WAS ISSUED AFTER EXPIRY OF FOUR YEARS FROM THE RELE VANT ASSESSMENT YEAR, AND PROVISO APPENDED TO SECTION 147 CAME TO T HE RESCUE OF THE ASSESSEE BECAUSE A SCRUTINY ASSESSMENT WAS MADE IN THE PRESENT YEAR, AND THE ASSESSMENT CAN ONLY BE REOPEN ED ON ACCOUNT OF FAILURE OF THE ASSESSEE TO DISCLOSE ALL MATERIAL FACT FULLY AND TRULY. ACCORDING TO THE LD.COUNSEL FOR THE ASS ESSEE THERE IS NO FAILURE AT THE END OF THE ASSESSEE. IT HAS ALSO DIS CLOSED ALL THE MATERIAL FACTS FULLY AND TRULY. IN HIS SECOND FOLD OF SUBMISSIONS, HE CONTENDED THAT THERE IS NO LIVE-LINK BETWEEN THE INFORMATION AVAILABLE WITH THE AO VIS--VIS FORMATION OF BELIEF . HE ALSO SUBMITTED THAT THE AO HAS NOT ANNEXED COMPLETE MATE RIAL WHILE ITA NO.2699 /AHD/2015 4 TAKING APPROVAL FROM THE ADDITIONAL COMMISSIONER FO R REOPENING OF THE ASSESSMENT. IN SUPPORT OF HIS CONTENTIONS, HE TOOK US THROUGH WRITTEN SUBMISSIONS FILED BEFORE THE LD.CIT(A) WHIC H HAS BEEN REPRODUCED ON PAGE NO.3 TO 8 OF THE IMPUGNED. HE A LSO RELIED UPON THE JUDGMENT OF THE HONBLE SUPREME COURT IN T HE CASE OF LAKHMANI MEWAL DAS, 103 ITR 437. HE FURTHER RELIED UPON THE HONBLE ALLAHABAD HIGH COURT IN THE CASE OF HINDUST AN METAL WORKS, 202 ITR 978 (ALL); AND HONBLE BOMBAY HIGH CO URT IN THE CASE OF RAJA BAHADUR MOTILAL P.LTD., 183 ITR 80 (BOM) . 6. ON THE OTHER HAND, THE LD.DR SUPPORTED ORDERS OF THE REVENUE AUTHORITIES. 7. WE HAVE CONSIDERED RIVAL SUBMISSIONS AND GONE TH ROUGH THE RECORD. THE FIRST ISSUE BEFORE US IS VALIDITY OF R EOPENING OF ASSESSMENT BY THE AO UNDER SECTION 147 OF THE ACT. WE FIND THAT ASSESSMENT WAS REOPENED ON THE BASIS OF INFORMATION RECEIVED BY THE AO FROM THE VAT DEPARTMENT OF MUMBAI, AND THERE FORE, THE AO WAS HAVING PRIMA FACIE REASONS TO BELIEVE THAT INCOME HAS ESCAPED ASSESSMENT. A PERUSAL OF THE REASONS RECOR DED BY THE AO FOR INITIATING REASSESSMENT PROCEEDINGS AND ULTIMAT E FINDING OF THE AO THAT AT THE TIME OF FILING OF THE ORIGINAL RETUR N OF INCOME, NEVER PROVED BY THE ASSESSEE THAT PURCHASES RECORDED IN T HE BOOKS OF ACCOUNTS WERE GENUINE. RATHER, SHRI ZAHID H. VIJAP URA, IN HIS STATEMENT RECORDED DURING THE SURVEY CONDUCTED ON 1 8.1.2013 HAS ADMITTED HIS INABILITY TO PRODUCE DOCUMENTARY E VIDENCE LIKE GATE, PASS, LORRY RECEIPTS, GOODS RECEIPTS NOTE, OC TORI AND TRANSPORTATION INVOICE ETC. REGARDING PURCHASES MAD E FROM THE ABOVE PARTIES. THEREFORE, THE ASSESSEE HAS NOT D ISCLOSED FULLY AND TRULY ALL THE RELEVANT MATERIAL NECESSARY FOR A SSESSMENT OF ITS ITA NO.2699 /AHD/2015 5 INCOME. THE LD.AO IS THUS, FOR VALID REASON HAS RE OPENED THE ASSESSMENT ON THE BASIS OF CREDIBLE INFORMATION REC EIVED FROM VAT DEPARTMENT SUPPORTED BY THE ADMISSION OF SHRI ZAHID H.VIJAPURA, WHICH CANNOT BE SAID TO BE BAD IN LAW. THE CASE LA WS RELIED ON THE ASSESSEE ARE DISTINGUISHABLE ON FACTS, AND ARE OF N O HELP TO THE ASSESSEE IN THE PRESENT CASE. WE UPHOLD REOPENING OF THE ASSESSMENT UNDER SECTION 148 OF THE ACT. 8. THE SECOND PLEA OF THE LD.COUNSEL FOR THE ASSESS EE IS THAT ONLY ELEMENT OF PROFIT OUGHT TO BE ASSESSED FROM TH E ALLEGED BOGUS PURCHASE. IN OTHER WORDS, RIGHT FROM THE AO UPTO THE ITAT, IT HAS BEEN SUBMITTED THAT 0.5% OR ANY OTHER AMOUNT S OUGHT TO BE ASSESSED AS INCOME OF THE ASSESSEE AGAINST THE G ROSS- DISALLOWANCE OF ALLEGED BOGUS PURCHASE. QUA THE AB OVE SUBMISSIONS, WE ARE OF THE VIEW THAT WE ARE CONSCIO US ABOUT THE AVAILABILITY OF LARGE NUMBER OF JUDGMENTS, WHEREIN IT HAS BEEN HELD THAT IN CASE OF BOGUS PURCHASE ONLY PROFIT EAR NED BY THE ASSESSEE BY ADOPTING SUCH A MODUS OPERANDI IS TO BE ASSESSED AS AN INCOME. PERCENTAGE SPECIFIED IN THESE JUDGMENTS VARIES BETWEEN 5% TO 25% DEPENDING UPON NATURE OF THE BUSI NESS CARRIED OUT BY THE ASSESSEE OR PURCHASES MADE BY IT . HOWEVER, IT IS PERTINENT TO OBSERVE THAT IN THOSE CASES SALES H AVE BEEN ACCEPTED. THE ASSESSEES HAVE PROVED THE GENUINENESS OF THE SALES AND QUANTIFICATION OF STOCK. IN OTHER WORDS, ASSES SEES HAVE PURCHASED FROM PARTY A, BUT OBTAINED BILLS FROM P ARTY B. IN THAT EXERCISE ASSESSEES HAVE AVOIDED SALES-TAX, VAT ETC., AND THAT AMOUNT HAS BEEN BROUGHT O TAX. BUT IF AN ASSESSEE W AS NOT MAINTAINING QUANTITY DETAILS AND UNABLE TO SHOW THE SALES AND ONLY OBTAINED BOGUS PURCHASE BILLS, IN SUCH CASES, 100% DISALLOWANCE DESERVES TO BE MADE. THIS FACT HAS BEEN RECOGNIZED IN THE CASE OF ITA NO.2699 /AHD/2015 6 SWETAMBAR STEELS LTD., ITO, ITA NO.707/AHD/2002, 1075/AHD/1997. THIS ORDER OF THE ITAT HAS BEEN UPH ELD UPTO THE HONBLE SUPREME COURT. CONSIDERING THE DETAILED FI NDING OF THE LD.CIT(A) ON BOTH THE ASPECTS; THE ISSUE OF REOPENI NG OF THE ASSESSMENT AS WELL AS ON MERIT, WE DO NOT FIND ANY ERROR IN THE ORDER OF THE REVENUE AUTHORITIES. THE APPEAL OF TH E ASSESSEE IS THUS DEVOID OF ANY MERIT. IT IS DISMISSED. 9. IN THE RESULT, APPEAL OF THE ASSESSEE IS DISMISS ED. ORDER PRONOUNCED IN THE COURT ON 4 TH DECEMBER, 2019. SD/- SD/- (AMARJIT SINGH) ACCOUNTANT MEMBER (RAJPAL YADAV) JUDICIAL MEMBER