Shri Kirtikumar Vasantbhai Thakkar, Patan V. The Income Tax Officer, Ward-1, Patan

ITA 3043/AHD/2014

• Counselvise Citation: [2017] 127 COUNSELVISE.COM (IT) 7940 (ITAT-AHMEDABAD)
• Duration Of Justice: 3 year(s) 1 month(s) 1 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 19-12-2017
• Appeal Filed By: Assessee
• Order Result: Dismissed
• Bench Allotted: B
• Assessment Year: 2008-2009
• Appeal Filed On: 17-11-2014
• Result in Favour of: Revenue
• Court: TRIBUNAL
• Assessee Lawyers: CHHAJAD
• Keywords: Bogus purchase; Search and seizure; Corroborative evidences
• Section: 133A

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL AHMEDABAD B BENCH BEFORE: SHR I RAJPAL YADAV , JUDICIAL MEMBER AND SHRI AMARJIT SINGH, ACCOUNTANT MEMBER SH R I KIRITKUMAR VASANTBHAI THAKKAR, PROP. OF M/S. DIVYA TRADERS PAN: ADVPT8412B (APPELLANT) VS THE ITO, WD - 1, PATAN (RESPONDENT) REVENUE BY : S H RI MUDIT NAGPAL , SR. D . R. ASSESSEE BY: S H RI M. S. CHHAJAD , A.R. DATE OF HEARING : 22 - 11 - 2 017 DATE OF PRONOUNCEMENT : 19 - 12 - 2 017 / ORDER P ER : AMARJIT SINGH, ACCOUNTANT MEMBER : - THIS ASSESSEE S APPEAL FOR A.Y. 2008 - 09 , AR IS ES FROM ORDER OF T HE CIT(A), GANDHINAGAR DATED 01 - 08 - 2014 , IN PROCEEDINGS UNDER SECTION 271(1 ) (C) OF THE INCOME TAX ACT, 1961; IN SHORT THE ACT . I T A NO . 3043 / A HD/20 14 A SS ESSMENT YEAR 200 8 - 09 I.T.A NO. 3043 /AHD/20 14 A.Y. 2008 - 09 PAGE NO SHRI KIRITKUMAR VASANTBHAI THAKKAR VS. ITO 2 2. THE ASSESSEE HAS RAISED FOLLOWING GROUNDS OF APPEAL: - 1.1 THAT ON THE FACTS AND IN THE CIR CUMSTANCES OF THE CASE AND AS PER LAW, LEARNED CIT (APPEALS) ERRED IN SUSTAI NING PENALTY UNDER SECTION 271(1 )(C) OF THE ACT, OF RS. 5,85,773, LEVIED BY THE ASSESSING OFFICER 1.2 THAT LEARNED CIT (APPEALS) WAS OUGHT TO HAVE CONSIDER THE FACT THAT ADDIT IONS MADE TO THE RETURNED INCOME BY THE A.O. IS SOLELY ON ESTIMATE BASIS AND ON THE HYPOTHESIS THAT APPELLANT HAD INFLATED THE PURCHASE PRICE. ADDITIONS HAS BEEN MADE WITHOUT CONSIDERING THE FACT THAT APPELLANT HAD PROVED THE PURCHASES, DISALLOWED BY THE A O, IN TERMS OF QUANTITY AND VALUE. HENCE, NO PENALTY IS LEVIABLE UNDER SECTION 271(1 )(C) OF THE ACT IN RESPECT OF ADDITIONS SUSTAINED, ON ESTIMATE BASIS, AND SAME IS DESERVES TO BE DELETED. 1.3 THAT AS PER LAW AND AS PER SETTLED LEGAL PROPOSITIONS, PE NALTY UNDER SECTION 271(1 )(C) IS NOT APPLICABLE WHEN ADDITIONS ARE MADE ON ESTIMATE BASIS WITHOUT ANY COGENT MATERIAL OR FINDINGS ON RECORD THAT ASSESSEE CONCEALED THE INCOME OR PROVIDED INACCURATE PARTICULARS OF INCOME. \ ALL THE ABOVE MENTIONED THREE G R OUNDS OF APPEAL ARE INTERCONNECTED TO THE SAME ISSUE THEREFORE THEY ARE ADJUDICATED TOGETHER AS BELOW. 3. IN THIS CASE, RETURN OF INCOME DECLARING INCOME OF RS. 1 , 11 , 090/ - WAS FILED ON 30 TH MARCH, 2009. SURVEY ACTION U/S. 133A OF THE ACT WAS CARRIED OUT IN THE CASE OF THE ASSESSEE ON 1 ST SEPTEMBER, 2008. DURING T HE COURSE OF SEARCH AND SURVEY ACTION IN THE CASE OF M/S. V ISHAL TRADER, THE PROPRIETOR, SHRI DHARMENDRA J. PANDYA ADMITTED IN HIS STATEMENT THAT HE WAS INDULGED IN ISSUING OF BOGUS BILL OF SALE WITHOUT ACTUAL DELIVERY OF GOODS ON COMMISSION @ RS. 1 PER BAG/0.25 PER BAG ON THE VARIOUS PRODUCT S . HE HAS ALSO ADMITTED THAT ONE SHRI MADAN LAL L. SHAH HAD INTRODUCED ALL THE PARTIES TO WHOM BOGUS BILLS OF PURCHASES WERE ISSUED BY M/S VISHAL TRADER. T HE ASSESSING OFFICER HAS NOTICED THAT ASSES SEE HAD MADE PURCHASES OF RS. 9 7 , 87 ,524/ - FROM M/ S. VISHAL TRADER DURING THE YEAR I.T.A NO. 3043 /AHD/20 14 A.Y. 2008 - 09 PAGE NO SHRI KIRITKUMAR VASANTBHAI THAKKAR VS. ITO 3 UNDER CONSIDERATION. DURING THE COURSE OF ASSESSMENT PROCEEDINGS, THE ASSESSING OFFICER HAS AFFORDED A NUMBER OF OPPORTUNITIES T O THE ASSESSEE TO PROVE THE GENUINENESS OF THE AFORESAID BOGUS PURCHASES MADE FROM M/S VISHAL TRADER BUT THE ASSESSEE WAS FAILED TO PRODUCE THE RELEVANT SUPPORTING EVIDENCES TO SUBSTANTIATE HIS CLAIM OF PURCHASES MADE FROM M/S VISHAL TRADER. THE ASSESSEE I N REPLY TO QUESTION NO. 3 OF HIS STATEMENT RECORDED ON 10 TH OCTOBER, 2008, HAS ADMITTED THAT HE HA D RECEIVED BILLS OF PURCHAS ES WITHOUT ANY DELIVERY OF GOODS FROM M/S VISHAL TRADER FOR ADJUSTMENT PURPOSES. CONSEQUENTLY , THE TOTAL PURCHASES OF THE AMOUNT OF RS. 97 , 87 , 524/ - MADE FROM M/S VISHAL TRADER UNDER CONSIDERATION WAS DISALLOWED BY THE ASSESSING OFFICER. THE ASSESSING OFFICER HAS ALSO I NI TIATED PENALTY PROCEEDINGS U/S. 271(1) OF THE ACT FOR FURNISHING INACCURATE PARTICULARS OF INCOME. THE LD. CIT(A) HAS CONFIRMED THE BOGUS PURCHASES TO THE AMOUNT OF RS. 19 , 29 , 273/ - OUT OF THE TOTAL BOGUS PURCHASES OF RS. 97 , 87 , 524/ - . THE ASSESSEE CONTENDED THAT T HE LD. CIT(A) HAS ESTIMATED THE INCOME @ 25% OF PURCHASES AND THERE IS NO MATERIAL ON RECORD T O SUBSTANTIATE THAT ASSESSE E HAD INFLATED THE PURCHASES BY INTRODUCING THE BOGUS BILLS. DURING THE COURSE OF PENALTY PROCEEDINGS T HE ASSESSING OFFICER HAS NOT ACCEPTED THE EXPLANATION OF THE ASSESSEE AND STAT ED THAT THE ASSESSEE SHRI KIRITBHAI V. THAK KAR IN HIS STATEMENT RECORDED DURING THE COURSE OF SURVEY ON 10 TH OCTOBER, 2008 HAS ACCEPTED THAT THE ADJUSTMENT BILLS WERE TAKEN BY HIM FROM M/S VISHAL TRADER. HE FURTHER STATED THAT LD. CIT(A) HAS CONFIRMED THE BOGUS PURCHASES TO THE EXTENT OF RS. 25% OF PURCHASES AFTER CONSIDERING THE FACT THAT PURCHASES MADE BY THE I.T.A NO. 3043 /AHD/20 14 A.Y. 2008 - 09 PAGE NO SHRI KIRITKUMAR VASANTBHAI THAKKAR VS. ITO 4 ASSESSSEE FROM M/S VISHAL TRADER W ERE NOT GENUINE. CONSEQUENTLY, THE ASSESSING OFFICER HAS LEVIED PENALTY TO THE AMOUNT OF RS. 5,85,773 / - FOR FURNISH ING INACCURATE PARTICULARS OF INCOME . AGGRIEVED ASSESSEE FILED APPEAL BEFORE THE LD. CIT(A) . THE LD. CIT(A) HAS SUSTAINED THE PENALTY LEVIED BY THE ASSESSING OFFICER BY OBSERVING AS UNDER: - 6. I HAVE CONSIDERED THE FACTS OF THE CASE, ASSESSMENT ORDER, SUBMISSION MADE BY TH E APPELLANT A ND THE CASE LAWS RELIED UPON. THE AO HAS MADE THE ADDITION CONTENDING TH AT THE IN APPEAL THE CLT(A) HAD CONFIRMED THE ADDITION TO THE TUNE OF RS.19,29,273/ - ON ACCOUNT OF BOGUS PURCHASES AND ON THIS ADDITIO N CONFIRMED, AO HELD THAT APPEL LANT HAS HELD THAT APPELLANT HAD FURNI SHED INACCURATE PARTICULARS OF INCOME. NO DETAILS HAVE BEEN FILED BEFORE THE AO EVEN DURING THE PENALTY PROCEEDINGS. APPELLANT DURING THE COURSE OF APPELLATE PROCEEDINGS CONTENDED THAT AO HAD MADE 100% DISALLOWANCE OF PU RCHASES FROM M/S VISHAL TRADERS ON THE GROUND OF BOGUS PURCHASES AND THAT THE HON'BLE CIT(A) NEVER AFFORDED ANY OPPORTUNITY DURING THE APPELLATE PROCEEDINGS TO SUB STANTIATE THE PURCHASE PRICE OF ITEMS PURCHASED FROM VISHAL TRADERS.' APPELLANT IN ITS CONTEN TI ON HAVE ALSO FURNISHED BEFORE M E A COMPARATIVE CHART FOR THE PURCHASES MADE OF WHEAT AND RICE FROM M/S - VISHAL TRADERS: ON CAREFU L CONSIDERATION OF THE CASE OF THE APPELLANT, I FIND THAT BOGUS PURCHASE S WERE MADE BY THE APPELLANT FROM M/S. VISHAL TRADERS. THIS FACT HAS BEEN PROVED FROM STATEMENTS RECORDED OF THE PROPRIETOR OF M/S VISHAI TRADERS (532, MARKET YARD, VIRPUR, DISTRICT - KHEDA). WHOSE PROPRIETOR - SHRI DHARMENDRA. J PA NDVA IN THE STATEMENTS RECORDED BY THE DEPARTMENT ON 9.7.2.008 AND 26.9.2008 ADMITTED THAT HE HAD ISSUED ONLY BOGUS BILLS AND HAD NOT MADE ANY DELIVERY OF GOODS. HE HAD STATED THAT HE RECEIVED ONLY CASH COMMISSION FOR ISSUING BILLS. COPIES OF STATEMENTS OF THE SHRI DHARRNENDRA J. PANDYA WERE PROVIDED TO THE APPELLANT BY THE AO. THE AO HAD MADE THE ADDITION OF RS.97,87,524/ - ONLY BECAUSE ACCORDING TO HIM, APPEL LANT HAD SHOWN PURCHASES OF RS. 9 7,87,524/ - FROM VISHAL TRADERS DURING AY 2008 - 09. THE APPELLANT, IN THE STATEMENT RECORDED AFTER SURVEY ON 10/10/2008 HAD HIMSELF ACCEPTED THAT ACCOMMODATION BILLS WERE TAKEN FROM VISHAL TRADERS. THE RELEVANT PORTION OF THE STATEMENT IN RESPONSE TO QUESTION NO.3 IS RELEVA NT WHICH IS REPRODUCED BELOW : STATEMENT DATED 10.10.20 08 OF SHRI KIRITKUMAR VASANTBHAI THAKKAR - PROPRIETOR IN RESPONSE TO QUESTION NO.3 'Q.3 AS PER THIS OFFICE LETTER DATED 7.10.2008 YOU HAD BEEN INSTRUCTED TO PROVE THE PURCHASE OF RS.72,39, 874 , FROM M/S. VISHAL TRADERS, VIRPUR AND TO BRING BILLS AND OTHER EVIDENCE IN SUPPORT TO THE PURCH ASE. AS INFORMED BY YO U, YOU HAVE PURCHASED OF RS.72,39,874 FROM M/S. VISHAL TRADERS, HOWEVER, AS PER BANK I.T.A NO. 3043 /AHD/20 14 A.Y. 2008 - 09 PAGE NO SHRI KIRITKUMAR VASANTBHAI THAKKAR VS. ITO 5 STATEMENT OF M/S. VISHAL TRADERS WITH 'HARIJ I \ LAGRIK SAHAKARI BANK LTD., HARIJ', YOU HAVE DEPOSITED RS. 1,10,14,492 IN THE SAID BANK ACCOUNT. EXPLAIN ABOUT THE SAME. FUR THER, IF YOU HAVE BROUGHT ANYTHING IN ADDITION T O BILLS PLEASE PRODUCE IT. ' ANS.I HAVE NO OTHER EVIDENCES EXCEPT BILLS. ON 11.9.2008, I HAVE STATED THAT I RECEIVED THE GOODS FROM M/S. VISHAL TRADERS. HOWEVER, I, CONFIRM THAT I HAD NOT RECEIV ED ANY GOODS FROM M/S. VISHAL TRADERS, VIRPUR. I HAD RECEIVED ONLY ACCOMMODATION, BILLS FROM M/S. VISHAL TRADERS. I WAS BENEFITED BY 10% OF BILL AMOUNT. F URTHER, IN MY STATEMENT ON 29.9.2008 HAD STATED THAT I PURCHASED GOODS WORTH RS.72,39,874 FROM M/S. VISHAL TRADERS. HOWEVER, AS PER BANK STATEMENT I HAVE DONE BUSINESS AMOUNTING TO RS. 1,10,14,492 WITH M/S. VISHAL TR ADERS; I HAVE EARNED 10% OF THE S AME I.E. RS. 11,01,449. I DISCLOSE THE SAME AS MY INCOME. I AGREE TO PAY TAX THEREON. I WILL DEPOSIT THE T AX IN FY 2008 - 09.' SHRI DHARMENDRA PANDYA, PROP, OF VISHAL TRADERS HAS ALSO CONFIRMED HAVING ISSUED ONLY BILLS WITHOUT GOODS FOR WHICH HE RECEIVED .ONLY COMMISSION.' FOR THIS QUESTION NUMBER - .13 OF STATEMENT DATED 9/7/2008 OF DHARMENDRA PANDYA IS REPRODUC ED BELOW AND ALSO QUESTION 'NUMBER 7 OF STATEMENT DATED 26/9/2008: NO. 13 OF STATEMENT DATED 9.7.2008 : 'Q. AS STATED IN THE BILLS, HAS THE FIRM OF M/S. VISHAL TRADERS, PROPRIETO R DHARMENDRA D. PANDYA, ADDRESS - 532, MARKET YARI, VIRPUR, KHEDA, DELIVER ED ANY GOODS SUCH AS 'RATDA' 'KHOL', 'RAIDO ERANDO', ETC, TO M/S. TIRUPATI AGRO INDUSTRIES, KADI AS WELL AS OTHER VARIOUS COMPANIES SUCH AS GUAJRAT AMBUJD EXPORTS LTD., THE TRADERS OF HARIJ AND. TRADERS OF AHMEDABAD, KALUPUR ? GIVE COMPLETE DET AI LS. ANS:THE FIRM OF M/S. VISHAL TRADERS, PROPRIETOR DHARMENDRA D. PANDYA, ADDRESS: 532; MARKET YARD, KHEDA, HAS NOT DELIVERED ANY GOODS SUCH AS 'RAIDA 1 , KHPL', 'RAIDP',' 'ERANDO', OIL ETC. TO ANYBODY AND FURTHER, IT IS NOT DOING ITS BUSINESS.'' ON LY BILLS WERE BEING ISSUED UPON WHICH, I WAS BEING PAI D THE COMMISSION OF MONTHLY ABOUT RS.2000 TO 3000 THROUGH SHRI MADANLAL (TAIODWALA). HE WAS PERSONALLY COMING TO GODHRA AND WAS PAYING COMMISSION TO ME. AGAINST THE PAYMENT OF COMMISSION TO ME, THE SAID SHRI MADANLAL (TAIO DWALA) WAS TAKING MY SIGNATURE IN THE BANK ACCOUNT OPENIN G FORMS AS WELL AS CHEQUE BOOKS OF ALL BA NKS..,,.,.,,.,,,......,.....' . QUESTION N O 7 OF S TATEMENT DATED 26.9.2008 'Q.7 AS STATED BY YOU HEREI NABOVE, YOU HAVE DELIVERED ANY TYPE OF GOODS AND HAVE ONLY ISSUED BOGUS BILLS TO THE PARTIES. SO HOW DID YOU BENEFIT FROM THE SAME? HOW WERE THE PARTIES TO WHOM YOU HAD ISSUED THE BOGUS BILLS, BENEFITING FROM THE SAME ? PLEASE EXPLAIN. ANS. AS STATED BY ME HEREINABOVE, I HAVE NOT DELIVERED ANY TYPE OF GOODS BUT HAVE ONLY ISSUED BOGUS BILLS. IN THESE TRANSACTIONS, IN CASE OF ONE B AG OF GRAINS (100 KGS.), I WAS GET TING RS 1 AS COMMISSION AND IN CASE OF OILSEEDS, PER ONE BAG (100 KGS), I WAS GET TING COMMISSION OF R S.0.25 PAISE AS COMMISSION. AND THESE BOGUS BILLS WERE DEMANDED BY THE ABOVE REFERRED PARTIES AND HENCE, THEY WERE GIVEN THE SAME. I AM NOT AWARE AS TO WHAT BENEFIT THEY WERE GETTING FROM THE SAME. I HAD ISSUED THE SAID BOGUS BILL ONLY BECAUSE I WAS GETTING COMMISSION AGAINST THEM.' ON ANALYSIS OF THE BANK ACCO UNT OF THE APPELLANT MAINTAINED AT HARIJ NAGRIK SAHAKAN BANK LTD., HARIJ AND OF VISHAL TRAD ERS IN THE SAME BANK, MY PREDECESSOR NOTICED THAT APPELLANT DEPOSITS CASH IN HIS BANK A CCOUNT BEFORE ISSUING ANY CHEQUE TO VISHAL TRADERS AND VISHAL TRADERS WITHDRAWS CASH OF THE I.T.A NO. 3043 /AHD/20 14 A.Y. 2008 - 09 PAGE NO SHRI KIRITKUMAR VASANTBHAI THAKKAR VS. ITO 6 SAME AMOUNT IMMEDIATELY AFTER DEPOSITING THE CHEQUE RECEIVED FROM THE APPELLANT. THE APPELLANT HAS NOT BROUGHT ON RECORD ANY NEW EVIDENCES IN SUPPORT OF ITS CONTENT ION OTHER THAN WHAT WAS PRODUCED BEFORE MY PREDECESSOR DURING THE QUANTUM PROCEEDINGS OR BEFORE THE AO. IN VIEW OF THE ABOVE, IT IS HELD THAT THE AO IS JUSTIFI ED IN LEVYING PENALTY OF RS.5,85,773/ - U/S 271(1 )(C) OF THE ACT RELYING, ON THE DECISION OF THE HON'BLE GUJARAT HIGH COURT IN THE CASE OF A. K. SHA H & CO. VS CI T REPORTED IN 238 ITR 415. THE PENALTY LEVIED IS THEREFORE HELD JUSTIFIED AND IS HEREBY CONFIRMED. 4. WE HAVE HEARD RIVAL CONTENTION AND PERUSED THE MATERIAL ON RECORD. THE LD. COUNSE L HAS REFERRED THE DECISION OF THE HON,BLE HIGH COURT OF GUJARAT IN THE CASE OF CIT - III V GUJARAT AMBUJA EXPORT LTD AND WE FIND THAT THE FACTS OF THE CASE OF THE ASSESSEE ARE DISTINGUISHABLE FROM THE FACTS OF THE AFORESAID DECISION. WE OBSERVED THAT D URING THE COURSE OF SEARCH AND SURVEY ACTION, PROPRIETOR OF M/S VISHAL TRADER ADMITTED THAT HE WAS INDULGED IN ISSUING ONLY BOGUS BILLS OF PURCHASES WITHOUT MAKING ANY DELIVERY OF GOODS . WE FIND THAT IT IS UNDISPUTED FACT THAT ASSESSE E HAS MADE AFORESAID BOGUS PURCHASES FROM M/S VISHAL TRADER JUST FOR PURPOSE OF ADJUSTMENT ENTRY WITHOUT OBTAINING ANY DELIVERY OF GOODS. THESE FACTS WERE FURTHER PROVED BY THE ADMISSION OF THE ASSESSEE IN HIS STATEMENT THAT HE HA D OBTAINED ONLY BILLS FOR PURCHASES AS A N ADJUSTMENT ENTRY WITHOUT ANY DELIVERY OF GOODS FROM M/S VISHAL TRADERS. THE ESTIMATION OF ADDITION TO THE EXTENT 25% OF BOGUS PURCHASES WAS RESTRICTED BY THE LD. CIT(A) ON THE BASIS OF SPECIFIC SUPPORTING EVIDENCES/MATERIAL AS ELABORATED SUPRA WHICH DE MONSTRATE THAT THE ASSESSEE WAS INDULGED IN SUPPRESSION OF INCOME BY OBTAINING BOGUS BILLS OF PURCHASES WITHOUT ANY DELIVERY OF GOODS FROM THE AFORESAID PARTY . THEREFORE, W E FIND THAT ESTIMATION OF I.T.A NO. 3043 /AHD/20 14 A.Y. 2008 - 09 PAGE NO SHRI KIRITKUMAR VASANTBHAI THAKKAR VS. ITO 7 PURCHASES BY THE LD. CIT(A) TO THE EXTENT OF 25% IS NOT A GENERAL ESTIMATION BUT IT IS BASE D ON SPECIFIC UNDISPUTED FACTS THAT THE GENUINENESS OF THE PURCHASE WAS NO T PROVED BECAUSE IT WAS SUBSTANTIATED WITH RELEVANT MATERIAL AND COMPLETE MODUS OPERANDI OF RECEIVING BOGUS BILLS OF PURCHASES WITHOUT ANY DELIVERY OF GOODS. AFTER CONSIDERING THE ABOVE FACTS AND FINDINGS WE CONSIDERED THAT THE DECISION OF THE LD. CIT(A) IS JUSTIFIED IN SUSTAINING THE PENALTY LEVIED BY THE ASSESSING OFFICER . T HEREFORE, THE APPEAL OF THE ASSESSE IS DISMISSED. 5. IN THE RESULT, THE APPEAL OF THE ASSESSEE IS DISMISSED. ORDER PR ONOUNCED IN THE OPEN C OURT ON 19 - 12 - 201 7 SD/ - SD/ - ( RAJPAL YADAV ) ( AMARJIT SINGH ) JUDICIAL MEMBER ACCOUNTANT MEMBER AHMEDABAD : DATED 19/12 /201 7 / COPY OF ORDER FORWARDED TO: - 1. ASSESSEE 2. REVENUE 3. CONCERNED CIT 4. CIT (A) 5. DR, ITAT, AHMEDABAD 6. GUARD FILE. BY ORDER/ , / ,