Bhagyodaya Metal Industries, Baroda V. The Income tax Officer,Ward-2(1), Baroda

ITA 3066/AHD/2010

• Counselvise Citation: [2013] 120 COUNSELVISE.COM (IT) 0404 (ITAT-AHMEDABAD)
• Duration Of Justice: 2 year(s) 4 month(s) 7 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 22-03-2013
• Appeal Filed By: Assessee
• Order Result: Dismissed
• Bench Allotted: D
• Next Hearing Date: 31-01-2013
• Assessment Year: 1993-1994
• Appeal Filed On: 15-11-2010
• Result in Favour of: Revenue
• Court: TRIBUNAL
• Keywords: Bogus purchase; Condonation of delay

Judgement Text

, , IN THE INCOME TAX APPELLATE TRIBUNAL D BENCH, AHMEDABAD , , BEFORE SHRI MUKUL KR.SHRAWAT, JUDICIAL MEMBER AND SHRI ANIL CHATURVEDI, ACCOUNTANT MEMBER APPEAL(S) BY SL.NO(S) ITA NO(S) BLOCK PERIOD APPELLANT(S) RESPON- DENT(S) 1. 3066/AHD/2010 1993-94 BHAGYODAYA METAL INDUSTRIES PLOT NO.18 GIDC MAKARPURA BARODA PAN: AACFB 4023 C THE ITO WARD-2(1) BARODA 2. 3067/AHD/2010 1994-95 ASSESSEE REVENUE 3. 1485/AHD/2009 1995-96 ASSESSEE REVENUE 4. 06/AHD/2012 1996-97 ASSESSEE REVENUE 5. 1486/AHD/2009 1997-98 ASSESSEE REVENUE 6. 1602/AHD/2012 1998-99 ASSESSEE REVENUE ASSESSEES BY : MS.URVASHI SHODHAN, A.R. REVENUE BY : SHRI T.SANKAR, SR.D.R. / DATE OF HEARING : 31/01/2013 !'# / DATE OF PRONOUNCEMENT : 22/03/2013 $% / O R D E R PER PER BENCH : THESE APPEALS PERTAINED TO AYS 1993-94 TO 1998-99. IN ALL THESE APPEALS THE ASSESSEE HAS CHALLENGED THE CONFI RMATION OF LEVY OF PENALTY U/S.271(1)(C) OF IT ACT. FOR AYS 1993-94 & 1994-95, CIT(A)-II, BARODA HAS AFFIRMED THE PENALTY VIDE ORD ER DATED 11.8.2010, FOR AY 1995-96 VIDE ORDER DATED 27.3.200 9, FOR AY ITA NOS.3066,306 7/AHD/10, 1485/AHD/09,,06/AHD/12, 1486/AHD/09 & 1602/AHD/12 BHAGYODAYA METAL INDUSTRIES VS. ITO ASST.YEARS-1993-94 TO 1998-99 (RESPECTIVELY) - 2 - 1996-97 VIDE ORDER DATED 02.11.2011, FOR AY 1997-98 VIDE ORDER DATED 27.3.2009 AND 1998-99 VIDE ORDER DATED 03/10/ 2011. 2. AT THE OUTSET, OUR ATTENTION WAS DRAWN ON AN IMP UGNED DEFECT THAT THE ASSESSEE HAD PAID THE FINAL FEES OF RS.500 /- ONLY. THIS LEGAL POSITION HAS NOW BEEN RESOLVED AND IT WAS DECIDED T HAT THE APPEAL FILED AGAINST THE LEVY OF PENALTY FALLS WITHIN THE AMBIT OF PROVISIONS OF SECTION 253(6)(D) OF IT ACT. IN THIS REGARD, CA SE LAWS CITED ARE (I) RAJAKAMAL POLYMERS (P) LTD. VS. CIT (2007)291 ITR 314 (KAR) AND AMRUTA ENTERPRISES 79 TTJ 214 (MUM.). IN THE LIGHT OF THESE DECISIONS, THIS DEFECT DO NOT SURVIVE ANY MORE, HEN CE THESE APPEALS ARE HEREBY ADMITTED AND THEREUPON DECIDED ON MERITS . 3. AN ANOTHER OBJECTION WAS ALSO NOTED IN RESPE CT OF AY 1998-99 THAT THIS APPEAL WAS TIME-BARRED BY 189 DAYS. IN T HIS REGARD, AN AFFIDAVIT HAS BEEN PLACED ON RECORD THROUGH WHICH I T WAS STATED ON OATH THAT THE QUANTUM PROCEEDINGS HAVE BEEN DECIDED AT DIFFERENT POINT OF TIME AND THOSE APPEAL-ORDERS WERE NOT RECE IVED AT ONE TIME, HENCE THERE WAS SOME MISUNDERSTANDING BETWEEN THE A DVOCATES. WHEN THE MATTER WERE FORWARDED TO ONE OF THE COUNSE L ENGAGED TO REPRESENT THE CASE BEFORE THE TRIBUNAL, THEN IT WAS FOUND THAT IN ONE YEAR THE APPEAL REMAINED TO BE FILED. ON DUE CONS IDERATION OF THE FACTS AS STATED IN THE SWORN AFFIDAVIT WE HEREBY HO LD THAT THIS ASSESSEE DESERVES CONDONATION OF DELAY IN THE LIGHT OF THE FOLLOWING REASONING. ITA NOS.3066,306 7/AHD/10, 1485/AHD/09,,06/AHD/12, 1486/AHD/09 & 1602/AHD/12 BHAGYODAYA METAL INDUSTRIES VS. ITO ASST.YEARS-1993-94 TO 1998-99 (RESPECTIVELY) - 3 - 3.1. THOUGH UNDISPUTEDLY THE LAW OF LIMITATION IS ENSHRI NED IN THE MAXIM INTEREST REPUBLICA UT SIT FINIS LITIUM ( IT IS FOR GENERAL WELFARE THAT A PERIOD BE PUT TO LITIGATION), BUT WHEN SUBST ANTIAL JUSTICE AND TECHNICAL CONSIDERATION ARE PITTED AGAINST EACH OTH ER; THE CAUSE OF SUBSTANTIAL JUSTICE DESERVES TO BE PREFERRED. OTH ERWISE ALSO THE PRIMARY FUNCTION OF A COURT IS TO ADJUDICATE THE DISPUTE BE TWEEN PARTIES AND TO ADVANCE SUBSTANTIAL JUSTICE. THE QUESTION OF EXPL AINING THE REASONS OF EACH DAYS DELAY HAS ALSO BEEN ADDRESSED BY SEVERA L HON'BLE COURTS AND HELD THAT WHILE EXERCISING THE DISCRETION OF SEC.5 OF LIMITATION ACT A PRAGMATIC APPROACH SHOULD BE MADE TO BE COUPLED WI TH APPLICATION OF A RATIONAL COMMON SENSE, RATHER A PEDANTIC ONE. WE H AVE TAKEN THE GIST FROM THE CITATIONS VIZ. COLLECTOR, LAND ACQUISITION VS. MST. KATIJI & ORS. REPORTED AS 62 CTR 23 (S.C.), AUTO CENTRE VS. STATE OF UTTAR PRADESH REPORTED AS 204 CTR 142 (ALL.) AND STATE OF HARYAN A VS. CHANDRA MANI REPORTED AS AIR 1996 (SC) 1623. 4. IT WAS FOUND BY THE REVENUE DEPARTMENT THAT THE ASSESSEE HAD SHOWN BOGUS PURCHASES FROM TWO CONCERNS, NAMELY M/S .ASIM ENGINEERS AND M/S.S.N.J.STEEL TRADERS. WHILE LEVY ING THE PENALTY, THE AO HAS PREPARED A CHART IN RESPECT OF THE BOGUS PURCHASES SHOWN BY THE ASSESSEE IN THE YEARS UNDER CONSIDERAT ION. CONCERN A.Y.1993-94 A.Y.1994-95 A.Y.1995-96 A.Y.1997-98 ASHIM ENTERPRISES RS.221880 .. .. .. SNJ STEEL TRADERS .. RS.453185 RS.1159091 RS.1014322 ITA NOS.3066,306 7/AHD/10, 1485/AHD/09,,06/AHD/12, 1486/AHD/09 & 1602/AHD/12 BHAGYODAYA METAL INDUSTRIES VS. ITO ASST.YEARS-1993-94 TO 1998-99 (RESPECTIVELY) - 4 - 5. IN AY 1996-97 VIDE AN ORDER PASSED U/S.143(3) OF THE ACT DATED 22.03.1999 FACTS HAVE BEEN DISCUSSED IN DETAI L. IT WAS NOTED BY THE AO THAT THE ASSESSEE HAD SHOWN OUTSTANDING B ALANCES IN RESPECT OF THE SAID TWO SUPPLIERS. THE AO HAS NOTE D THAT FOR AY 1996-97, THE OUTSTANDING BALANCES AMOUNTED TO RS.7, 51,937/- IN THE NAME OF S.N.J.STEEL TRADERS AND A SUM OF RS.5,74,01 2/- IN THE NAME OF M/S.ASHIM ENGINEERS. IN ORDER TO VERIFY THE GE NUINENESS OF THE PURCHASES AS SHOWN BY THE ASSESSEE, THE AO HAD ISSU ED SUMMONS U/S.131 OF THE IT ACT ON THE ADDRESSES AS FURNISHED BY THE ASSESSEE. ON ENQUIRY, IT WAS FOUND THAT THOSE CONCERNS WERE N OT AVAILABLE AT THE ADDRESS GIVEN BY THE ASSESSEE. THE AO HAS ALSO MADE CERTAIN ENQUIRIES FROM THE BANK AND IT WAS INFORMED BY THE BANK AS UNDER:- IN ORDER TO COLLECT THE INFORMATION INDEPENDENTLY ENQUIRIES WERE MADE FROM THE BANKERS OF THE ASSESSEE, THAT IS CENTRAL BANK OF INDIA, MAKARPURA ROAD BRANCH BARODA. THEY REPORTED THAT SOME OF THE CHEQUES ISSUES BY THE ASS ESSEE TO SNJ STEEL TRADERS HAD BEEN CLEARED IN A BANK A/C. I N THE MAKARPURA INDUSTRIAL ESTATE CO.OP.BANK LTD. MAKARPU RA BARODA. WHEN ENQUIRIES WERE MADE FROM THIS BANK, I T WAS FOUND THAT AN ACCOUNT HAD BEEN OPENED IN THE NAME O F THIS CONCERN AND SHRI CHIRAYU T.PATEL, A SON OF THE PART NER OF THE ASSESSEE FIRM SHRI THAKORBHAI PATEL WAS SHOWN AS PROPRIETOR. 5.1. THE ASSESSEE IS STATED TO BE ENGAGED IN THE MA NUFACTURING OF TRANSFORMER RADIATORS. HOWEVER, THE ASSESSEE HAD F AILED TO ESTABLISH ITA NOS.3066,306 7/AHD/10, 1485/AHD/09,,06/AHD/12, 1486/AHD/09 & 1602/AHD/12 BHAGYODAYA METAL INDUSTRIES VS. ITO ASST.YEARS-1993-94 TO 1998-99 (RESPECTIVELY) - 5 - THE GENUINENESS OF THE PURCHASE. THEREFORE, THE A O HAS CONCLUDED IN THE FOLLOWING MANNER: AS DISCUSSED ABOVE THROUGH INDEPENDENT ENQUIRIES A LSO IT HAD BEEN ESTABLISHED THAT THE PURCHASES FROM THESE TWO CONCERNS ARE NOT GENUINE. THE PAYMENT IN RESPECT O F THESE PURCHASES ARE DEPOSITED IN TWO BANK ACCOUNT OPENED IN MAKARPURA INDUSTRIAL ESTATE COOPERATIVE BANK LTD., MAKARPURA BRANCH. THESE BANK A/C. NOS. ARE 4098 AN D 2843. THESE ACCOUNTS HAVE BEEN OPENED IN THE NAME OF SHRI CHIRAYU THAKORBHAI PATEL AND SMT. JYOTIBEN THAKORBHAI PATEL AND THEY ARE SHOWN TO BE PROPRIETORS OF THESE CONCERNS. THESE TWO PERSONS ARE SON AND WIFE OF THE MAIN PARTNER OF THE ASSESSEE FIRM SHRI THAKORBHAI S.PATEL. IT IS INTERESTING TO NOTE HERE THAT THESE BANK ACCOUNTS HAVE BEEN USED FOR A VERY LONG TIME. THE ACCOUNT IN THE NAME OF S.N.J.STEEL TRADERS WAS OPENED ON 29.3.1995 AND THE ONE IN THE NAME ASIM ENGINEERS WA S OPENED ON 3.7.1992. BY USING THESE ACCOUNTS, THE A SSESSEE FIRM HAS NOT ONLY INTRODUCED BOGUS BILLS IN A.Y. 19 96-97 BUT ALSO IN EARLIER ASSESSMENT YEARS AND SUBSEQUENT YEA RS. THUS, THERE IS NO DOUBT THAT THE PURCHASES AMOUNTING TO R S.5,74,012 + 3,05,625 = 8,79,637 ARE BOGUS AND HENCE THEY ARE DISALLOWED. 6. IN APPELLATE PROCEEDINGS, THE ASSESSEE LOST THE FIRST APPEAL, HENCE WENT IN SECOND APPEAL BEFORE ITAT D BENCH A HMEDABAD AND VIDE AN ORDER DATED 30.05.2008 THE ADDITION WAS CONFIRMED IN ITA NOS.2913, 2914, 2915, 2916, 2917 AND 2918/AHD/2 002 FOR AY 1993-94 TO 1998-99 TITLED AS M/S.BHAGYODAYA METAL INDUSTRIES VS. THE INCOME TAX OFFICER. RELEVANT CONCLUSION IS REPRODUCED BELOW:- ITA NOS.3066,306 7/AHD/10, 1485/AHD/09,,06/AHD/12, 1486/AHD/09 & 1602/AHD/12 BHAGYODAYA METAL INDUSTRIES VS. ITO ASST.YEARS-1993-94 TO 1998-99 (RESPECTIVELY) - 6 - 12. WE HAVE HEARD THE RIVAL SUBMISSIONS AND PERUS ED THE ORDERS OF THE LOWER AUTHORITIES AND THE MATERIALS A VAILABLE ON RECORD. WE FIND THAT IT IS NOT IN DISPUTE BEFORE U S THAT THE AMOUNTS DISALLOWED BY THE A.O. ON ACCOUNT OF BOGUS PURCHASES FOR ASSESSMENT YEARS UNDER APPEAL WERE NO T ACTUALLY BOGUS PURCHASES. THE ONLY CONTENTION OF T HE ASSESSEE BEFORE US IS THAT THE DISALLOWANCE OF FULL AMOUNT O F PURCHASES RESULTS IN ASTRONOMICAL INCOME AND HENCE SUITABLE R ATE OF NET PROFIT SHOULD BE APPLIED IN THE INSTANT CASE. HOWE VER, WE FIND THAT NO MATERIAL HAS BEEN BROUGHT BEFORE US TO SHOW THAT THE ADDITION MADE BY THE AO RESULTED IN ASTRONOMICAL RA TE OF PROFIT WHICH IS AGAINST REAL LIFE FACT. NO SUCH CH ART OR STATEMENT SHOWING SUCH CALCULATION WAS FILED BEFORE US. FURTHER, THE ASSESSEE COULD NOT SHOW THAT IT WAS MA INTAINING QUANTITATIVE DETAILS AND FOR THE SALES SECURED BY I T AS ACCEPTED BY THE REVENUE WAS NOT POSSIBLE WITHOUT THE PURCHAS E OF THE QUANTITY OF RAW MATERIALS SO ACCEPTED BY THE AO AFT ER MAKING THE DISALLOWANCE IN QUESTION. IN ABSENCE OF ANY SU CH MATERIALS BROUGHT BEFORE US, WE FIND NO REASON TO I NTERFERE WITH THE ORDERS OF THE LOWER AUTHORITIES ON THESE F ACTS AND CIRCUMSTANCES. THUS THIS GROUND OF APPEAL OF THE A SSESSEE IS DISMISSED. 7. THE ASSESSEE HAS CHALLENGED THE LEVY OF PENALTY BEFORE LD.CIT(A) AND ARGUED THAT THE ASSESSEE DISCLOSED TH E GROSS PROFIT AT A REASONABLE RATE RANGING FROM 8.77% TO 16.95% FOR TH E YEARS 1993-94 TO 1998-99. THERE WAS A GRADUAL INCREASE IN THE PE RCENTAGE OF PROFIT, HENCE THE ALLEGATION OF INFLATED PURCHASES WAS INCORRECT. IT HAS ALSO BEEN ARGUED THAT BY THE ADDITION OF ALLEGE D BOGUS ITA NOS.3066,306 7/AHD/10, 1485/AHD/09,,06/AHD/12, 1486/AHD/09 & 1602/AHD/12 BHAGYODAYA METAL INDUSTRIES VS. ITO ASST.YEARS-1993-94 TO 1998-99 (RESPECTIVELY) - 7 - PURCHASES, THE GROSS PROFIT HAD GONE UP TO 21.56% W HICH WAS AN ABSURD PERCENTAGE OF PROFIT IN THE SAID LINE OF BUS INESS. HOWEVER, LD.CIT(A) WAS NOT CONVINCED AND OPINED THAT THE ASS ESSEE WAS UNABLE TO CONTROVERT THE FINDINGS OF THE TRIBUNAL T HROUGH WHICH THE QUANTUM ADDITION WAS CONFIRMED. BY PLACING RELIANC E ON CERTAIN CASE LAWS, THE ACTION OF THE AO OF LEVY OF PENALTY WAS CONFIRMED. 8. FROM THE SIDE OF THE APPELLANT, LD.AR MS.URVASHI SHODHAN APPEARED AND VEHEMENTLY PLEADED THAT THIS IS NOT TH E CASE OF ACTUAL BOGUS PURCHASES BUT MERELY PROCUREMENT OF BOGUS BIL LS. IN SUCH CASES, GENERALLY THE TRIBUNAL RESOLVES THE ISSUE BY ESTIMATING A PROFIT AT 25% AS RECENTLY HELD IN THE CASE OF RAJLA XMI PRINTS PVT.LTD. (ITA NO.809/AHD/2010 A.Y. 2005-06) ORDER DATED 15 .06.2012. AS AGAINST THE ACCEPTED NORM IN THE PRESENT APPEALS A HUGE QUANTUM ADDITION WAS MADE BY ADDING THE IMPUGNED PURCHASES. SHE HAS FILED A WRITTEN SUBMISSION, RELEVANT PORTION IS REPRODUCE D BELOW:- 1. THE ABOVE MENTIONED APPEALS AGAINST IMPOSITION OF PENALTY U/S.271(1)(C) OF THE ACT ARE FILED BY THE A PPELLANT FROM A.Y. 1993/94 TO 1998/99 (SIX YEARS) 2. FACTS 1. THE APPELLANT IS MANUFACTURER OF RADIATORS FOR TRANSFORMERS. THE RAW MATERIAL CRCA SHEETS FOR PRODUCING THE RADIATORS ARE PURCHASED BY THE APPELL ANT FROM CONCERNS NAMELY ASIM ENGINEERS & SNJ STEEL TRADERS. ITA NOS.3066,306 7/AHD/10, 1485/AHD/09,,06/AHD/12, 1486/AHD/09 & 1602/AHD/12 BHAGYODAYA METAL INDUSTRIES VS. ITO ASST.YEARS-1993-94 TO 1998-99 (RESPECTIVELY) - 8 - 2. THE BOOKS OF THE APPELLANT ARE AUDITED AND REQU ISITE AUDIT REPORT IS SUBMITTED ALONG WITH RETURN OF INCO ME WITHOUT ANY QUALIFICATION OF ADVERSE REMARK BY THE AUDITORS. 3. COMPLETE QUANTITATIVE TALLY OF RAW MATERIAL PUR CHASED & CONSUMED WITH FIGURES OF OPENING & CLOSING STOCK CERTIFIED BY THE AUDITORS IS SUBMITTED & ACCEPTED B Y DEPARTMENT. SALES OFFERED HAVE NOT BEEN DISPUTED. 4. SALES TAX & EXCISE DEPARTMENT HAVE ALSO ACCEPTE D THE BOOKS OF ACCOUNTS MAINTAINED BY THE APPELLANT. 5. DURING THE ASSESSMENT PROCEEDINGS FOR A.Y. 1996 /97, AO ISSUED SUMMONS TO THE SUPPLIERS, ASIM ENGINEERS & SNJ STEEL TRADERS AND CONCLUDED THAT THE PURCHASES SHOWN TO HAVE BEEN MADE FROM THESE CONCERNS WERE BOGUS. ON THIS GROUND, ASSESSMENTS FOR A.Y. 1993/94, 1994/95, 1995/96 & 1997/98 WERE REOPENED AND PURCHASES FROM ABOVE TWO CONCERNS WERE TREATED AS BOGUS AND ADDITI ONS WERE MADE. 6. THE ADDITIONS MADE BY AO ON ACCOUNT OF BOUGS PURCHASES WERE CHALLENGED BEFORE LD.CIT(A) WHO UPHE LD THE ORDER OF AO THAT WAS CONFIRMED BY HONBLE ITAT (PAPER BOOK PAGES 12 -27). 7. ON CONFIRMATION OF THE ADDITIONS BY LD.CIT(A), P ENALTY PROCEEDINGS U/S.271(1)(C) OF THE ACT WERE INITIATED . THE APPELLANT FILED DETAILED REPLY IN RESPONSE TO THE N OTICE. 3. THE APPELLANT SUBMITTED AS UNDER 1. THE CONCERNS ASIM ENGINEERS & SNJ STEEL TRADERS A RE BOTH ASSESSED TO TAX. 2. THE CONCERNS ARE REGISTERED UNDER SALES TAX ACT AND ARE ASSESSED TO SALES TAX. ITA NOS.3066,306 7/AHD/10, 1485/AHD/09,,06/AHD/12, 1486/AHD/09 & 1602/AHD/12 BHAGYODAYA METAL INDUSTRIES VS. ITO ASST.YEARS-1993-94 TO 1998-99 (RESPECTIVELY) - 9 - 3. SALES MADE BY THEM ARE REFLECTED IN THEIR INCOME TA X AS WELL SALES TAX RETURNS. 4. ALL THE PURCHASE BILLS ALONG WITH EVIDENCE WAS PROD UCED BEFORE AO SIMPLY ON THE BASIS OF NON PRODUCTION O F CERTAIN BILLS FOR A.Y. 1996/97, ADDITIONS WERE MADE TREATING THE PURCHASES AS BOGUS AND CONCLUDED ASSESSMENTS WERE RE-OPENED. 5. THE MATERIAL PURCHASES BEING IMPORTED ONE, THE BILL S WERE NOT AVAILABLE AND THE APPELLANT DEBITED ITS PURCHAS E ACCOUNTS IN THE NAME OF THESE 2 CONCERNS. THUS THIS IS NOT A CASE OF BOGUS PURCHASES BUT OF BOGUS BILLING . IN SUCH CIRCUMSTANCES AUTHORITIES OUGHT TO HAVE ESTIMATED S OME AMOUNT OF ADVANTAGE OBTAINED BY THE APPELLANT RATHE R THAN TREATING TOTAL PURCHASES AS BOGUS PURCHASES. 6. THE AUTHORITIES HAVING ACCEPTED VALUE OF SALES ALON G WITH QUANTITY AND VALUE OF OPENING & CLOSING STOCKS THE ADDITION IS UNJUSTIFIED. THE APPELLANT RESPECTFULLY SUBMITS THAT ADDITION CO NFIRMED IN QUANTUM PROCEEDINGS WILL NOT LEAD TO CONFIRMATION O F PENALTY AUTOMATICALLY. BOTH THE PROCEEDINGS ARE INDEPENDE NT AND DETAILED EXPLANATION SUBMITTED BY THE APPELLANT IS NOT CONTROVERTED BY THE AUTHORITIES. THE APPELLANT IS NOT GUILTY OF FURNISHING INACCURATE PARTICULARS OF INCOME OR OF C ONCEALMENT OF INCOME. THE RAW MATERIAL PURCHASED WAS CONSUMED IN MANUFACTURE OF RADIATORS AND PROFIT EARNED WAS OFFE RED FOR TAXATION. THE APPELLANT RELIES ON THE FOLLOWING 2 DECISIONS O F THE CO- ORDINATE BENCH FOR THE PROPOSITION THAT PENALTY IS NOT LEVIABLE ON ADDITIONS CONFIRMED DESPITE COMPLETE QUANTITY TA LLY OF THE STOCK CERTIFIED BY THE AUDITORS. 1. ACIT V. GUJARAT TEA PROCESSORS & PACKERS LTD. ITA # 11 53/AHD/2012 2. MARDIA COPPER INDUSTRIES V ITO ITA # 2020/AHD/2009 ITA NOS.3066,306 7/AHD/10, 1485/AHD/09,,06/AHD/12, 1486/AHD/09 & 1602/AHD/12 BHAGYODAYA METAL INDUSTRIES VS. ITO ASST.YEARS-1993-94 TO 1998-99 (RESPECTIVELY) - 10 - 9. FROM THE SIDE OF THE REVENUE, LD.SR.DR, MR.T.SA NKAR HAS SUPPORTED THE LEVY OF PENALTY. MR.SANKAR HAS ALSO FILED A WRITTEN SUBMISSION, RELEVANT PORTION IS REPRODUCED BELOW:- 3. THE ENQUIRIES DONE BY THE AO, WITH RESPECT TO SUPPLIES CLAIMED TO HAVE BEEN MADE BY THE ALLEGED SUPPLIERS, M/S.SNJ STEEL TRADERS AND M/S.ASIM ENTERPRISES ARE DETAILED THERE IN. THE SALIENT FEATURES ARE AS FOLLOWS:- A. IN PURSUANCE TO SUMMONS U/S.131, IT WAS SEEN TH AT M/S.SNJ STEEL TRADERS DOES NOT EXIST AT THE GIVEN ADDRESS. SHRI RASHMIBHAI Z PATEL, WHO RESIDES THERE STATED THAT HE HAS NO RE LATION WITH THAT CONCERN. B. IN PURSUANCE TO SUMMONS U/S.131, IT WAS SEEN TH AT THE ADDRESS WAS THE RESIDENTIAL ADDRESS OF THE MAIN PARTNER OF THE ASSESSEE FIRM SHRI THAKORBHAI S PATEL C. THE AO MADE ENQUIRIES WITH THE BANK OF THE ASS ESSEE. IT WAS FOUND THAT THE BANK ACCOUNTS IN MAKARPURA INDUSTRIA L CO- OPERATIVE BANK LTD., MAKARPURA, BARODA, WERE IN THE NAMES OF THE WIFE AND SON OF THE MAIN PARTNER. (MORE DETAILS IN AOS PENALTY ORDER, WHICH ARE NOT CONTROVERTED BY THE ASSESSEE). I4. IN PARTICULAR, I DRAW THE KIND ATTENTION OF TH E HONBLE TRIBUNAL TO THE FOLLOWING FINDINGS, RECORDED IN PARA 3 OF QU ANTUM ORDER: A. IN RESPONSE TO THIS LETTER ON 14-10-1998 SHRI. NIRANJAN VAIDYA, ADVOCATE ATTENDED FOR THE ASSESSEE AND PROD UCED HIS ITA NOS.3066,306 7/AHD/10, 1485/AHD/09,,06/AHD/12, 1486/AHD/09 & 1602/AHD/12 BHAGYODAYA METAL INDUSTRIES VS. ITO ASST.YEARS-1993-94 TO 1998-99 (RESPECTIVELY) - 11 - AUTHORITY TO REPRESENT THE ASSESSEE. HE WAS ALSO A CCOMPANIED BY SHRI SASHIKAN SHETH, ACCOUNTANT. BOTH OF THEM ADMITTED THAT THE PURCHASE BILLS FORM SNJ STEEL TRADERS AND ASIM ENTERPRISES WERE NOT GENUINE; THEREFORE THEY ARE NOT ABLE TO PRODUCE ANY CONFIRMATION FROM THESE PARTIES (PARA 3; PAGE 3) B. IN THIS LETTER FILED BY THE ASSESSEE IT WAS CONFESSED THAT PURCHASES FROM ASIM ENTERPRISES AND SNJ STEEL TRADE RS OTHER THAN SHOWN IN THE CONFIRMATION OF ACCOUNTS SUBMITTE D ARE NOTE GENUINE. (PARA 3; PAGE4). C. FOR ANALYSIS OF THESE TRANSACTIONS THE ASSESSE E REQUESTED FOR COPIES OF BANK STATEMENT OF THE BANK ACCOUNT OF ASI M ENTERPRISES AND SNJ STEEL TRADERS OBTAINED BY THE INCOME TAX OF FICE FROM MAKARPURA INDUSTRIAL CO-OPERATIVE BANK LTD. THEY W ERE PROVIDED TO THE REPRESENTATIVE OF THE ASSESSEE SHRI MUKUND B AUXI. SHRI. MUKUND BAUXI ATTENDED ON 11-2-1999 BEFORE THE AO AN D SUBMITTED THAT THE PURCHASE BILLS FROM SNJ STEEL TR ADERS IN RESPECT OF CRCA SHEETS ARE BOGUS. SIMILARLY, PURCH ASES FROM ASIM ENTERPRISES ARE ALSO BOGUS. (PARA 3; PAGE 4) D. THE AO FURTHER OBSERVED THAT THE PAYMENT IN RE SPECT OF THESE PURCHASES WERE DEPOSITED IN TWO BANK ACCOUNTS OPENE D IN INDUSTRIAL CO-OPERATIVE BANK LTD. THE ACCOUNT NUMB ERS ARE 4098 AND 2843. THEY HAVE BEEN OPENED IN THE NAME OF SHR I.CHINUBHAI T PATEL AND SMT.JYOTIBEN PATEL WHO WERE SHOWN AS PR OPRIETORS OF THESE CONCERNS. THEY ARE SON AND WIFE OF THE MAIN PARTNER OF THE ASSESSEE FIRM SHRI.THAKORBHAI Z PATEL. (PARA 4; PA GE 5) 5. IT IS AFTER CONSIDERATION OF THE ENTIRE MATERIA L ON RECORD THAT THE HONBLE ITAT HAS OBSERVED IN PARA 12 OF ITS ORDER: WE HAVE HEARD THE RIVAL SUBMISSIONS AND PERUSED THE ORDERS OF THE LOWER AUTHORITIES AND THE MATERIALS AVAILABLE ON RECORD. WE FIND THAT IT IS NOT IN DISPUTE BEFORE US THAT THE AMOUNTS DISALL OWED BY THE AO ON ACCOUNT OF BOGUS PURCHASES FOR ASSESSMENT YEARS UNDER APPEAL WERE NOT ACTUALLY BOGUS PURCHASES. THUS IT IS CLE AR THAT THE ASSESSEE HAS ACCEPTED THESE PURCHASES AS BOGUS PURC HASES AND YET ITA NOS.3066,306 7/AHD/10, 1485/AHD/09,,06/AHD/12, 1486/AHD/09 & 1602/AHD/12 BHAGYODAYA METAL INDUSTRIES VS. ITO ASST.YEARS-1993-94 TO 1998-99 (RESPECTIVELY) - 12 - WANTED A SUITABLE RATE OF NET PROFIT SHOULD BE APPL IED, A CONTENTION WHICH WAS REJECTED BY THE HONBLE TRIBUNAL. THE OB SERVATIONS IN PARA 12 OF THE HONBLE ITAT HAVE TO BE READ IN CONJ UNCTION WITH THE FACTS RECORDED IN PARAGRAPHS 3 AND 4 OF ITS ORD ER, AND NOT IN ISOLATION . 6. AS SUCH, THE ABOVE FINDINGS REGARDING BOGUS PUR CHASE HAVE REACHED FINALITY. 7. IN VIEW OF THE ABOVE, IT IS NOW NOT OPEN TO THE ASSESSEE TO CONTEND THAT THE PURCHASES ARE NOT BOGUS. IN ANY C ASE, NO MATERIAL HAS BEEN PLACED BY THE ASSESSEE TO SHOW THAT ITS CL AIMS IN THE RETURN OF INCOME REGARDING THE TRANSACTIONS WITH TH ESE 2 PARTIES, WERE BONAFIDE, PARTICULARLY GIVEN THAT (I) THE ASSE SSEE HAS ADMITTED TO NON-GENUINENESS OF PURCHASE DURING ASSESSMENT PR OCEEDINGS AND (II) THE WIFE AND SON OF THE PARTNER OF THE FIR M WERE FOUND TO BE OPERATING THE BANK ACCOUNTS . HENCE, THE INGREDIENTS FOR S.271(1)(C) ARE FULLY SATISFIED, AND THE PENALTY HA S BEEN RIGHTLY LEVIED. THE HONBLE ITAT MAY KINDLY AFFIRM THE ORD ER OF THE LD.CIT(A) AND THE ASSESSING OFFICER ON THIS ISSUE. 9.1. RELIANCE HAS ALSO BEEN PLACED ON A.M.SHAH & CO .VS. CIT (2000) 108 TAXMAN 137 (GUJ.). 10. WE HAVE HEARD BOTH THE SIDES AT SOME LENGTH. W E HAVE ALSO CAREFULLY PERUSED THE ORDERS OF THE REVENUE AUTHORI TIES AS WELL AS THE ORDER OF THE TRIBUNAL. IN THE SAID ORDER DATED 30.05.2008, THE RESPECTED COORDINATE BENCH HAS NOTED THAT THE TRANS ACTION WAS NOT GENUINE. THE TRIBUNAL HAS TAKEN DUE COGNIZANCE OF THE EVIDENCES ITA NOS.3066,306 7/AHD/10, 1485/AHD/09,,06/AHD/12, 1486/AHD/09 & 1602/AHD/12 BHAGYODAYA METAL INDUSTRIES VS. ITO ASST.YEARS-1993-94 TO 1998-99 (RESPECTIVELY) - 13 - FILED BY THE ASSESSEE AND PERUSED THE CONFIRMATIONS AS WELL AS THE ACCOUNTS OF THE PARTIES BUT STILL ARRIVED AT THE CO NCLUSION THAT THIS WAS A CASE OF RECORDING BOGUS PURCHASES IN THE ACCO UNTS OF THE ASSESSEE. THESE FINDINGS ARE PRIMARILY ON THE FAC TS OF THE CASE AND AT PRESENT NOTHING MORE IS LEFT FOR THE ASSESSEE TO CONTROVERT THOSE FACTUAL FINDINGS. RATHER, THE REVENUE DEPARTMENT HAD MADE CERTAIN INVESTIGATIONS AND THEREUPON CONCLUSIVELY PROVED TH AT THIS ASSESSEE WAS ENGAGED; DURING THE YEARS UNDER CONSIDERATION; IN OBTAINING BOGUS BILLS AND THEREUPON RECORDED BOGUS PURCHASES IN THE BOOKS OF ACCOUNTS. ALMOST ON IDENTICAL SITUATION, THE HONB LE JURISDICTIONAL HIGH COURT IN THE CASE OF A.M.SHAH & CO.(SUPRA) HAS HELD THAT A PERSON IS OBLIGED TO FURNISH THE TRUE PARTICULARS O F HIS INCOME AND IF HE CONCEALS THE INCOME, THEN THE LAW PRESCRIBES LEV Y OF PENALTY. BY FURNISHING THE INACCURATE PARTICULARS, THE ASSES SEE HAS SHOWN FALSE RESULT IN THE ACCOUNTS. THE FALSITY IN THE A CCOUNT THUS HAS THE ELEMENT OF CONCEALMENT. RESPECTFULLY FOLLOWING THI S DECISION THROUGH WHICH THE HONBLE COURT HAS HELD THAT IF TH E BOGUS PURCHASES HAVE BEEN ESTABLISHED IN THE QUANTUM PROC EEDINGS, THEN SUBJECT TO LEVY OF PENALTY U/S.271(1)(C). WE ALSO HEREBY HOLD THAT THE REVENUE DEPARTMENT WAS JUSTIFIED IN LEVYING THE CONCEALMENT PENALTY IN THE YEARS UNDER APPEAL. AS FAR AS THE CASE LAWS RELIED UPON BY THE LD.AR ARE CONCERNED, WE HAVE EXAMINED T HE FACTS OF THOSE CASES, HOWEVER FOUND CLEARLY DISTINGUISHABLE, THEREFORE TO BE TREATED AS MISPLACED AS FAR AS THE ISSUE IN HAND IS CONCERNED. IN THE ITA NOS.3066,306 7/AHD/10, 1485/AHD/09,,06/AHD/12, 1486/AHD/09 & 1602/AHD/12 BHAGYODAYA METAL INDUSTRIES VS. ITO ASST.YEARS-1993-94 TO 1998-99 (RESPECTIVELY) - 14 - RESULT, THE GROUND RAISED CHALLENGING THE PENALTY I S HEREBY DISMISSED. 11. IN THE RESULT, ALL THE APPEALS ARE DISMISSED. SD/- SD/- ( ) ( ) ( ANIL CHATURVEDI ) ( M UKUL KR. SHRAWAT ) ACCOUNTANT MEMBER JU DICIAL MEMBER AHMEDABAD; DATED 22 / 03 /2013 '.., .../ T.C. NAIR, SR. PS ! ' / COPY OF THE ORDER FORWARDED TO : 1. )*+ / THE APPELLANT 2. ,-*+ / THE RESPONDENT. 3. ./0 $ $1 / CONCERNED CIT 4. $ $1 ()) / THE CIT(A)-II, BARODA 5. 456 ,/0, $ ) /0#, 7. / DR, ITAT, AHMEDABAD 6. 689 : / GUARD FILE. #$ % / BY ORDER, -4) , //TRUE COPY// &/$ '( ( DY./ASSTT.REGISTRAR) , / ITAT, AHMEDABAD 1. DATE OF DICTATION ON COMPUTER DATED 16.3.13 2. DATE ON WHICH THE TYPED DRAFT IS PLACED BEFORE THE DICTATING MEMBER 18.3.13 OTHER MEMBER 3. DATE ON WHICH THE APPROVED DRAFT COMES TO THE SR.P. S./P.S.. 4. DATE ON WHICH THE FAIR ORDER IS PLACED BEFORE THE D ICTATING MEMBER FOR PRONOUNCEMENT 5. DATE ON WHICH THE FAIR ORDER COMES BACK TO THE SR.P .S./P.S22.3.13 6. DATE ON WHICH THE FILE GOES TO THE BENCH CLERK 22.3.13 7. DATE ON WHICH THE FILE GOES TO THE HEAD CLERK . 8. THE DATE ON WHICH THE FILE GOES TO THE ASSISTANT RE GISTRAR FOR SIGNATURE ON THE ORDER.. 9. DATE OF DESPATCH OF THE ORDER