Shri Kirit D.Vadalia, Baroda V. The Income tax Officer,Ward-2(1), Baroda

ITA 2827/AHD/2011

• Counselvise Citation: [2016] 133 COUNSELVISE.COM (IT) 1583 (ITAT-AHMEDABAD)
• Duration Of Justice: 4 year(s) 5 month(s) 18 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 04-05-2016
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: A
• Next Hearing Date: 29-04-2016
• Assessment Year: 2002-2003
• Appeal Filed On: 16-11-2011
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: A R REWOR
• Assessee Lawyers: DEEPAK R SHAH
• Keywords: Bogus purchase
• Section: 143(3)

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL AHMEDABAD A BENCH (BEFORE SHRI RAJPAL YADAV, JUDICIAL MEMBER & SHRI N.K. BILLAIYA, ACCOUNTANT MEMBER) ITA. NOS: 2827 TO 2829/AHD/2011 (ASSESSMENT YEARS: 2002-03 TO 2004-05) KIRTI D VADALIA PROP. STEEL INDIA 899/4, GIDC MAKARPURA, BARODA-10 V/S INCOME TAX OFFICER, WARD- 2 (1), BARODA (APPELLANT) (RESPONDENT) PAN: AAXPV9634N APPELLANT BY : SHRI DEEPAK R. SHAH, AR RESPONDENT BY : SHRI A.R. REWOR, SR. D.R. ( )/ ORDER DATE OF HEARING : 29 -04-201 6 DATE OF PRONOUNCEMENT : 04 -05-2016 PER N.K. BILLAIYA, ACCOUNTANT MEMBER: 1. THESE THREE APPEALS BY THE ASSESSEE ARE PREFERRED A GAINST THE ORDER OF THE LD. CIT(A)-II, BARODA DATED 01.08.2011 PERTAINI NG TO A.YS. 2002- 03 TO 2004-05. ITA NO. 2827 TO 2829/AHD/2011 . A.Y. 2002-03 TO 2004-05 2 2. SINCE THE FIRST APPELLATE AUTHORITY HAS DECIDED THE APPEALS BY A CONSOLIDATED ORDER, ALL THESE APPEALS WERE HEARD TO GETHER AND ARE DISPOSED OF BY THIS COMMON ORDER FOR THE SAKE OF CO NVENIENCE. 3. THE COMMON GRIEVANCE IN ALL THESE YEARS RELATE TO T HE PENALTY LEVIED U/S. 271(1)(C) OF THE ACT, THOUGH THE QUANTUM MAY D IFFER IN EVERY YEAR. 4. THE ROOTS FOR THE LEVY OF PENALTY LIE IN THE ASSESS MENT ORDER MADE U/S. 143(3) OF THE ACT WHEREIN DURING THE COURSE OF THE ASSESSMENT PROCEEDINGS, ADDITIONS WERE MADE ON ACCOUNT OF CERT AIN BOGUS PURCHASES. CLAIMED TO HAVE MADE FROM M/S. GIRNAR SA LES CORPORATION. THE MATTER TRAVELLED UP TO THE TRIBUNAL IN ITA NOS. 1522, 1523 & 1524/AHD/2008 AND THE TRIBUNAL HAS ACCEPTED THE PUR CHASES THOUGH THE DISALLOWANCE WERE RESTRICTED TO THE EXTENT OF 2 5% OF THE ALLEGED BOGUS PURCHASES. 5. THE PENALTY HAS BEEN LEVIED ACCORDINGLY. 6. BEFORE US, THE LD. COUNSEL FOR THE ASSESSEE STATED THAT THE ENTIRE ADDITIONS ON ACCOUNT OF ALLEGED BOGUS PURCHASE WAS MADE ON ESTIMATION AND, THEREFORE, THIS IS NOT A FIT CASE F OR THE LEVY OF PENALTY U/S. 271(1)(C) OF THE ACT. PER CONTRA, THE LD. D.R. STRONGLY SUPPORTED THE FINDINGS OF THE REVENUE AUTHORITIES. WE HAVE CA REFULLY CONSIDERED THE ORDERS OF THE AUTHORITIES BELOW. UNDISPUTEDLY, THE ADDITIONS WERE MADE ON ACCOUNT OF BOGUS PURCHASES, THE MATTER TRAV ELLED UP TO THE TRIBUNAL IN QUANTUM APPEAL. THE RELEVANT FINDINGS O F THE TRIBUNAL READ AS UNDER:- ITA NO. 2827 TO 2829/AHD/2011 . A.Y. 2002-03 TO 2004-05 3 4. WE HAVE HEARD BOTH THE PARTIES AND GONE THROUGH THE FACTS OF THE CASE. THE MATERIALS BROUGHT ON RECORD ARE SUFFICIEN T TO ESTABLISH THAT THE PURCHASES REPORTEDLY MADE BY THE ASSESSEE FROM THE PARTIES RECORDED IN THE BOOKS, WERE NOT PURCHASED FROM THEM . IT IS EQUALLY TRUE THAT THE ASSESSEE WOULD NOT HAVE BEEN ABOVE TO SELL THE GOODS WITHOUT MAKING PURCHASES. IT IS QUITE POSSIBLE THAT THE ASSESSEE MIGHT HAVE PURCHASED THE GOODS FROM GRAY MARKET WITHOUT P ROPER RECEIPTS AND IN THAT PROCESS SAVED ABOUT 25% OR SO AS THE PR ICE OF THE GOODS IN THE GRAY MARKET IS LOWER THAN THE PRICE OF THE GOOD S CHARGED BY THE REPUTED DEALERS. IN THIS VIEW OF THE MATTER, IT WOU LD BE PROPER TO RESTRICT THE DISALLOWANCE TO THE EXTENT OF 25% OF T HE BOGUS PURCHASES REPORTEDLY MADE BY THE ASSESSEE. THE ASSESSING OFFI CER IS DIRECTED TO RESTRICT THE ADDITION TO 25% OF THE BOGUS PURCHASES IN ALL THE THREE YEARS. 7. A PERUSAL OF THE AFOREMENTIONED FINDING OF THE CO-O RDINATE BENCH SHOWS THAT THE RESTRICTION OF THE DISALLOWANCE IS M ADE PURELY ON ESTIMATION. THUS, IT CAN BE SAFELY CONCLUDED THAT T HE ADDITIONS WERE MADE ON MERE PRESUMPTION AND NOT ON THE BASIS OF AN Y MATERIAL FACT NOT DISCLOSED BY THE ASSESSEE. A PERUSAL OF THE ORD ERS OF THE AUTHORITIES BELOW IN THE ASSESSMENT PROCEEDINGS SHO W THAT THE PURCHASES WERE WELL SUPPORTED BY BILLS/INVOICES THO UGH THE PARTIES FROM WHOM THE PURCHASES WERE MADE WERE FOUND TO BE EITHER NAME LENDERS OR ISSUING ACCOMMODATION BILLS. 8. IN OUR CONSIDERED OPINION, ON THE GIVEN FACTS, THOU GH THE ADDITIONS HAVE BEEN PARTLY SUSTAINED ON ESTIMATION BASIS CANN OT IPSO FACTO, BE CONCLUSIVE FOR THE LEVY OF PENALTY U/S. 271(1)(C) O F THE ACT. WE, THEREFORE, SET ASIDE THE FINDINGS OF THE LD. CIT(A) AND DIRECT THE A.O TO ITA NO. 2827 TO 2829/AHD/2011 . A.Y. 2002-03 TO 2004-05 4 DELETE THE PENALTY SO LEVIED IN ALL THE ASSESSMENT YEARS UNDER CONSIDERATION. 9. IN THE RESULT, ALL THESE APPEALS FILED BY THE ASSES SEE ARE ALLOWED. ORDER PRONOUNCED IN OPEN COURT ON 04- 05 - 201 6. SD/- SD/- (RAJPAL YADAV) (N. K. BILLAIYA) JUDICIAL MEMBER ACCOUNTANT MEMBER AHMEDABAD: TRUE COPY RAJESH COPY OF THE ORDER FORWARDED TO: - 1. THE APPELLANT. 2. THE RESPONDENT. 3. THE CIT (APPEALS) 4. THE CIT CONCERNED. 5. THE DR., ITAT, AHMEDABAD. 6. GUARD FILE. BY ORDER DEPUTY/ASSTT.REGISTRAR ITAT,AHME DABAD