Shahnawaj Quereshi, Meerut V. DCIT, Circle-2, Meerut

ITA 2891/DEL/2018

• Counselvise Citation: [2021] 107 COUNSELVISE.COM (IT) 4345 (ITAT-DELHI)
• Duration Of Justice: 3 year(s) 5 month(s) 7 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 01-10-2021
• Appeal Filed By: Assessee
• Order Result: Partly Allowed
• Bench Allotted: G
• Assessment Year: 2015-2016
• Appeal Filed On: 24-04-2018
• Result in Favour of: Partly Allowed
• Court: TRIBUNAL

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL DELHI B BENCH: NEW DELHI (THROUGH VIDEO CONFERENCING ) BEFORE SHRI ANIL CHATURVEDI, ACCOUNTANT MEMBER AND SHRI SANJAY GARG, JUDICIAL MEMBER ITA NO.2891/DEL/2018 ASSESSMENT YEAR : 2015-16 SH. SHAHNAWAZ QUERESHI H. NO.123, POCKET-A, SAMAR GARDEN, NEAR MASJID FATHELLAPUR ROAD, MEERUT VS DCIT, CIRCLE-2, MEERUT PAN-DFHPS2140E APPELLANT RESPONDENT APPELLANT BY SH. RAMIT KAKKAR, ADV. RESPONDENT BY DR. MANINDER KAUR, SR. DR DATE OF HEARING 28.09.2021 DATE OF PRONOUNCEMENT 01 . 10 .2021 ORDER PER SANJAY GARG, JUDICIAL MEMBER : THE PRESENT APPEAL HAS BEEN PREFERRED BY THE ASSESS EE AGAINST THE ORDER DATED 08.03.2018 OF THE LD. COMMI SSIONER OF INCOME TAX (APPEALS) (HEREINAFTER REFERRED TO CIT( A)), MEERUT, FOR THE ASSESSMENT YEAR 2015-16. ITA NO. 2891/DEL/2018 2 | P A GE 2. THE ASSESSEE HAS TAKEN FOLLOWING GROUNDS OF APPE AL:- THAT ON THE FACTS AND CIRCUMSTANCES OF THE CASE, T HE LD. COMMISSIONER OF INCOME TAX (APPEALS) HAS ERRED IN RESTRICTING THE AD-HOC ESTIMATED DISALLOWANCE TO 5% AS AGAINST 10% DONE BY THE ASSESSING OFFICER FROM THE TOTAL PURCHASES, WHICH COURSE OF ACTION IS ARBITRARY AND ILLEGAL AND BAD IN LAW. 2. THE BRIEF, FACTS OF THE CASE ARE THAT THE ASSES SEE IS ENGAGED IN THE TRADING OF RAW MEAT. THE ASSESSEE DU RING THE YEAR FILED HIS INCOME TAX RETURN ON 26.09.2015 DECL ARING INCOME OF RS.12,83,720/-. DURING THE COURSE OF ASSESSMENT PROCEEDINGS, THE ASSESSING OFFICER OBSERVED THAT TH E ASSESSEE HAD MADE PURCHASE OF RAW MEAT TOTALING RS.5,43,78,98 5/- FROM INDIVIDUAL PARTIES. IN ORDER TO VERIFY THE PURCHA SES, THE ASSESSING OFFICER SUMMONED THREE PARTIES OUT OF WHOM , TWO PARTIES DID NOT APPEAR. ONE MOHD. ASHRAF APPEARED A ND CONFIRMED THE SALES OF RAW MEAT TO THE ASSESSEE. HOW EVER, THE ASSESSING OFFICER FOUND CERTAIN DISCREPANCIES IN HI S STATEMENT AND HELD THAT THE STATEMENT WAS NOT TRUST WORTHY. THE ASSESSING OFFICER ACCORDINGLY HELD THAT THE ASSESSEE HAD FAIL ED TO GET THE PURCHASES VERIFIED. HOWEVER, HE OBSERVED THAT THE ASSESSEE HAD SHOWN CORRESPONDING SALES ALSO AND FURTHER THAT SALE S WERE NOT ITA NO. 2891/DEL/2018 3 | P A GE POSSIBLE WITHOUT PURCHASES. HE THEREFORE DISALLOWED 10% OF THE TOTAL PURCHASES ON AD-HOC BASIS. 3. IN APPEAL BEFORE THE LD. CIT(A), THE ASSESSEE E XPLAINED THAT THE PERSONS FROM WHOM THE ASSESSEE MADE THE PUR CHASES OF RAW MEAT WERE GENERALLY PETTY TRADERS AND WHO GENERAL LY WERE NOT REQUIRED TO MAINTAIN ANY ACCOUNT. MOST OF THEM WERE ILLITERATE AND WERE HESITANT TO COME TO THE INCOME TAX AUTHORITY BECAUSE OF VARIOUS DOUBTS AND FEAR. IT WAS FURTHER SUBMITTED THAT OUT OF THE THREE PARTIES SUMMONED BY THE ASSES SING OFFICER, ONE MOHD. ASHRAF HAD APPEARED AND CONFIRMED THE SAL ES. THE LD. CIT(A) CONSIDERING THE OVERALL FACTS AND CIRCUM STANCES OF THE CASE OBSERVED THAT PURCHASES WERE INTEGRAL PART OF THE BUSINESS BASED ON WHICH THE TURNOVER OF RS.65,70,15,876/- WAS REACHED. HE FURTHER OBSERVED THAT EVEN THE AO HAD ACCEPTED T HE BOOKS OF ACCOUNTS AS WELL AS THE CORRESPONDING SALES ALSO. HOWEVER, HE FURTHER OBSERVED THAT DUE TO FAILURE OF THE ASSESSE E TO GET THE PURCHASES PROPERLY VERIFIED, THERE WAS AN ELEMENT O F DOUBT REGARDING THE PURCHASES SHOWN BY THE ASSESSEE. HE T HEREFORE, HELD THAT IT WOULD BE IN THE FITNESS OF THINS THAT T HE DISALLOWANCE ITA NO. 2891/DEL/2018 4 | P A GE OF PURCHASES BE REDUCED TO 5% AS AGAINST 10% OF PUR CHASES MADE BY THE ASSESSING OFFICER. 4. BEING AGGRIEVED BY THE ORDER OF THE LD. CIT(A), THE ASSESSEE IS IN APPEAL BEFORE US. 5. THE LD. COUNSEL FOR THE ASSESSEE HAS REITERATED THE SUBMISSIONS AS MADE BEFORE THE LD. CIT(A). HE HAS F URTHER SUBMITTED THAT DURING THE YEAR, PURCHASES WERE MADE BY THE ASSESSEE FROM 66 SUPPLIERS, HOWEVER, THE ASSESSING OFFICER HAD MADE ENQUIRIES IN RESPECT OF THREE PARTIES ONLY OUT OF WHICH ONE PARTY HAS CONFIRMED THE PURCHASES SO MADE BY THE AS SESSEE. THE LD. COUNSEL FOR THE ASSESSEE HAS FURTHER SUBMIT TED THAT THE TOTAL PURCHASES FROM THE PARTIES FROM WHOM THE ENQUI RIES WERE MADE WERE ONLY OF RS.17,62,500/-, HOWEVER, THE ASSE SSING OFFICER DISALLOWED 10% OF THE TOTAL PURCHASES MADE OF RS.5,43,78,985/-, THEREBY, MAKING ADDITION OF RS.54 ,37,899/-, WHICH HAS BEEN REDUCED BY THE LD. CIT(A) TO 5% OF TH E TOTAL PURCHASES. THE LD. COUNSEL FOR THE ASSESSEE HAS SU BMITTED THAT THE DISALLOWANCES OUT OF PURCHASES MADE BY THE LOWER AUTHORITIES IS ON THE HIGHER SIDE. HE HAS FURTHER SUBMITTED THAT ITA NO. 2891/DEL/2018 5 | P A GE SINCE, THE PARTIES FROM WHOM THE RAW MEAT WERE PURCHA SED WERE SMALL PARTIES/PETTY TRADERS AND THAT THE AFORESAID TRADE WAS CARRIED OUT IN UNORGANIZED SECTOR AND THAT THOSE PE OPLE WERE RELUCTANT TO COME TO INCOME TAX AUTHORITIES. FURTH ER THAT THE ASSESSEE HAD SHOWN CORRESPONDING SALES ALSO, WHICH HA VE NOT BEEN DOUBTED BY THE ASSESSING OFFICER. HE THEREFORE HAS SUBMITTED THAT NO DISALLOWANCE WAS WARRANTED IN THIS CASE. THE LD. COUNSEL HAS SUBMITTED THAT IN THE ALTERNATIVE, SOME REASONABLE DISALLOWANCE MAY BE MADE OUT OF THE PURCH ASES. 6. THE LD. DR, ON THE OTHER HAND, HAS RELIED UPON THE FINDINGS OF THE AUTHORITIES BELOW. 7. AFTER CONSIDERING THE OVER ALL FACTS AND CIRCUM STANCES OF THE CASE, WE ARE CONVINCED THAT AD-HOC DISALLOWAN CE MADE BY THE LOWER AUTHORITIES IS ON THE HIGHER SIDE ESPECIA LLY WHEN THE SALES HAVE NOT BEEN DOUBTED. HOWEVER, THE ASSESSEE HAS AGREED TO REASONABLE DISALLOWANCE OUT OF PURCHASE MADE ONLY BECAUSE OF THE FACT THAT THE ASSESSEE COULD NOT GET THE PUR CHASES VERIFIED FROM THE INDIVIDUAL PARTIES TO THE SATISFACTION OF THE ASSESSING OFFICER. IN OUR VIEW, IT WILL BE IN THE FITNESS OF T HINGS TO RESTRICT ITA NO. 2891/DEL/2018 6 | P A GE THE DISALLOWANCE TO RS.8 LAKH ONLY, AS ALSO AGREED T O BY THE LD. COUNSEL FOR THE ASSESSEE. WE ORDER ACCORDINGLY. 8. IN THE RESULT, THE APPEAL OF THE ASSESSEE IS TR EATED AS PARTLY ALLOWED. ORDER WAS PRONOUNCED IN THE OPEN COURT ON 01 /10/2021. SD/- SD/- (ANIL CHATURVEDI) (SANJAY GARG) ACCOUNTANT MEMBER JUDICIAL MEMBER DELHI; DATED: 01 / 10 /2021 . F{X~{T F{X~{T F{X~{T F{X~{T COPY FORWARDED TO: 1. APPELLANT 2. RESPONDENT 3. CIT 4. CIT(APPEALS) 5. DR: ITAT ASSISTANT REGISTRAR ITAT, NEW DELHI