Mr. Lakhbir Singh, Chandigarh V. DCIT, Chandigarh

ITA 308/CHANDI/2017

• Counselvise Citation: [2021] 107 COUNSELVISE.COM (IT) 8962 (ITAT-CHANDIGARH)
• Duration Of Justice: 4 year(s) 5 month(s) 22 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 04-08-2021
• Appeal Filed By: Assessee
• Order Result: Partly Allowed
• Bench Allotted: Not Allotted
• Next Hearing Date: 29-07-2021
• Assessment Year: 2013-2014
• Appeal Filed On: 13-02-2017
• Result in Favour of: Partly Allowed
• Court: TRIBUNAL
• Department Lawyers: C CHANDRAKANTA
• Keywords: Bogus purchase; Business income; Accommodation entries
• Section: 44AD

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL DIVISION BENCH, A, CHANDIGARH BEFORE SHRI S.S.GODARA, JUDICIAL MEMBER & SMT. ANNAPURNA GUPTA, ACCOUNTANT MEMBER ITA NOS. 302 TO 308/CHD/2017 ASSESSMENT YEARS : 2007-08 TO 2013-14 M R.LAKHBIR SINGH, H.NO.3226, SECTOR 23/D, CHANDIGARH VS. THE DY.COMMISSIONER OF INCOME TAX, CENTRAL CIRCLE-2, CHANDIGARH PAN N O : BIIPS9425A APPELLANT RESPONDENT HEARING THROUGH VIDEO CONFERENCING /ASSESSEE BY : SH.ASHWANI KUMAR, CA SH.NEERAJ ARORA, CA SH.ADITYA KUMAR, CA & SH.BHAVESH JINDAL, CA / REVENUE BY : SMT. C.CHANDRA KANTA, CIT /DATE OF HEARING : 29.07.2021 / DATE OF PRONOUNCEMENT : 04.08.2021 ORDER PER S.S.GODARA, JM: THESE ASSESSEES SEVEN APPEALS, FOR AYS 2007-08 TO 2013-14, ARISE AGAINST THE COMMISSIONER OF INCOME TAX (APPEALS)-3, GURGAONS COMMON ORDER DATED 30.11.2016 PASSED IN CASE NO. 83 TO 89/CIT(A)- 3/GGN/2015-16, INVOLVING PROCEEDINGS U/S.153A R.W.S 153B(1)(B) R.W.S.143(3) OF THE INCOME TAX ACT, 1961 (IN SHORT 'THE ACT'). HEARD BOTH THE PARTIES. CASE FILES PERUSED. ITA NOS. 302 TO 308-CHD-2017 2 IT TRANSPIRES AT THE OUTSET THAT ALL THESE ASSESSE ES APPEALS RAISE IDENTICAL QUESTIONS OF LAW AND FACTS. THE SAME ARE THEREFORE DECIDED TOGETHER FOR THE SAKE OF CONVENIENCE AND BREVITY. 2. THE ASSESSEES LEAD ASSESSMENT YEAR AY.2007-08 APPEAL ITA NO. 302/CHD/2017 CONTAINS THE FOLLOWING SUBSTANTIVE GRO UNDS: 1. THAT THE LD. CIT(A) WAS NOT JUSTIFIED IN PARTLY UPHOLDING THAT THE APPELLANT HAD ARRANGED SOME ACCOMMODATION ENTRIES F OR M/S SYNERGY GROUP AMOUNTING TO RS. 72,36,807/- I.E., 11.09% OF TURNOV ER OF RS.6,52,60,220/- AND ALSO A TURNOVER OF RS.97,04,680/- MADE DURING THE Y EAR. 2. THAT THE LD. CIT(A) WAS NOT JUSTIFIED TO UPHOLD THE ALLEGED COMMISSION EARNED @ 3% ON PROVIDING ALLEGED ACCOMMODATION ENTR IES BY THE APPELLANT. 3. THAT THE LD. CIT(A) WAS NOT JUSTIFIED TO UPHOLD THE DECISION OF THE LD. ASSESSING OFFICER REGARDING REJECTION OF BOOKS OF A CCOUNTS. 4. THAT THE LD. CIT(A) WAS NOT JUSTIFIED TO ESTIMAT E THE NET PROFIT OF THE APPELLANT @ 6% ON TURNOVER DECLARED BY THE APPELLAN T IN THE BOOKS OF M/S INVEET INDUSTRIES AS REDUCED BY ALLEGED BOGUS SALES WITHOUT ANY BASIS AND PARTICULARLY WHEN THE NET PROFIT IN EARLIER YEARS W AS MUCH LESS. 5. THAT THE APPELLANT CRAVES LEAVE TO ADD, AMEND OR DELETE ANY OF THE GROUNDS OF APPEAL ON OR BEFORE THE DISPOSAL OF THE PRESENT APPEAL. 3. WE ADVERT TO THE ASSESSEES FORMER THREE SUBSTAN TIVE GROUNDS QUA COMMISSION ASSESSMENT @3% REGARDING THE ALLEGED BOGUS ACCOMMODATION ENTRIES PROVIDED TO M/S. SYNERGY GROU P AS PER THE INCRIMINATING MATERIAL BASED/SEIZED IN THE SEARCH I N QUESTION DT.15-02- 2013. HE HAS PLEADED THE VERY SUBSTANTIVE GRIEVANCE IN AYS.2008-09, 2009-10, 2011-12 AND 2012-13 AS WELL INVOLVING VARY ING SUMS. THE CIT(A)S DETAILED DISCUSSION REGARDING THE RELEVANT FACTS READS AS FOLLOWS: ITA NOS. 302 TO 308-CHD-2017 3 ITA NOS. 302 TO 308-CHD-2017 4 4. BOTH THE LEARNED REPRESENTATIVES NEXT TAKE US TO THE CIT(A)S FINDINGS UNDER CHALLENGE IN THIS LEAD AY.2007-08 AS FOLLOWS: ITA NOS. 302 TO 308-CHD-2017 5 ITA NOS. 302 TO 308-CHD-2017 6 5. IT HAS COME ON RECORD WITH THE ABLE ASSISTANCE O F BOTH THE PARTIES THAT THE LEARNED INCOME TAX SETTLEMENT COMMISSIONS FINDINGS SEAL THE FINAL OUTCOME OF THE ASSESSEES INSTANT FORMER GRIE VANCE. IT HAS INTER ALIA SINCE HELD THEREIN THAT THE ASSESSEE HAS ALL ALONG BEEN ENGAGED IN VARIOUS TRADING ACTIVITIES THAN A MERE ACCOMMODATIO N ENTRY PROVIDER. AND THAT THE DEPARTMENT COULD NOT PROVE SYNERGY T O HAVE BEEN ENGAGED IN AVAILING BOGUS PURCHASE ENTRIES FROM THI S TAXPAYER AS A CONDUIT THROUGH VARIOUS PROPRIETARY CONCERNS. THER E IS FURTHER NO QUARREL THAT THE ASSESSEES TOTAL SALES TRADING REC EIPTS TO M/S. SYNERGY GROUP READ A COMPOSITE FIGURE OF RS.18.03 CRORES IN THESE ASSESSMENT YEARS. AND WE ARE NOW LEFT WITH THE AMOUNT IN DISPU TE OF RS.2 CRORES ONLY SINCE THE REMAINING SUM OF RS.16.03 CRORES STA NDS ACCEPTED AS GENUINE. LEARNED CIT-DR IS FAIR ENOUGH IN NOT CONTR OVERTING THE CLINCHING FACT THAT THE SETTLEMENT COMMISSIONS FIN DINGS FORMING THE BASIS OF THE CIT(A)S DETAILED DISCUSSION PARTLY UP HOLDING THE BOGUS SALES/PURCHASE FIGURE OF RS.18.03 CRORES TO THE EXT ENT OF RS.2 CRORES ONLY, HAVE ATTAINED FINALTY. ITA NOS. 302 TO 308-CHD-2017 7 FACED WITH THIS SITUATION, WE CONCLUDE THAT THERE I S NO MATERIAL LEFT FOR THE DEPARTMENT TO ASSESS THE ASSESSEE FOR THE R EMAINING AMOUNT OF RS.2 CRORES AT LEAST ON MERE CONJUNCTURES AND SURMI SES SINCE THERE IS NO SPECIFIC MATERIAL FOUND OR SEIZED DURING THE COURSE OF SEARCH CORRELATING THE ALLEGED BOGUS ELEMENT WITH THE CORRESPONDING SA LES/SUPPLIES VOUCHERS. WE THEREFORE ACCEPT THE ASSESSEES INSTAN T FORMER SUBSTANTIVE GROUND IN ASSESSMENT YEARS AYS.2007-08 TO 2009-10 A ND 2011-12 TO 2012-13 (SUPRA) AND DIRECT THE ASSESSING OFFICER TO DELETE THE IMPUGNED COMMISSION INCOME ADDITION. ORDERED ACCORDINGLY. 6. NEXT COMES THE LATTER COMMON ISSUE IN ALL THESE ASSESSMENT YEARS REGARDING REJECTION OF ASSESSEES BOOKS OF ACCOUNTS CULMINATING IN INCOME ELEMENT ASSESSMENT @8% IN THE ASSESSING OFFI CERS ORDERS AND RESTRICTED TO 6% IN THE CIT(A) LOWER APPELLATE DISC USSION. THE REVENUES ONLY ARGUMENT IN LIGHT OF THE CIT(A)S DE TAILED DISCUSSION IS THAT THE HON'BLE JURISDICTIONAL HIGH COURT HAS ALSO ASSESSED PROFIT ELEMENT @12% IN RESOURCES AS WELL WHICH IS MUCH MOR E THAT IN DISPUTE. LEARNED CIT-DRS NEXT CONTENTION IS THAT EVEN SECTI ON 44AD ALSO PRESCRIBES 8% PRESUMPTIVE RATE OF TAXATION AND THER EFORE, THE ASSESSEE HAS ALREADY BEEN GRANTED SUFFICIENT RELIEF. WE FIN D NO MERIT IN REVENUES CONTENTIONS IN ENTIRETY FOR THE REASON TH AT THE ASSESSEES BOOKS OF ACCOUNTS DECLARING WITH GROSS PROFIT @3.31 % AND 1.16% NET PROFIT RATE OF 1.81% AND 0.38% IN AYS.2005-06 AND 2 006-07, RESPECTIVELY, HAVE ALREADY ATTAINED FINALITY. THE M ERE FACT THAT THE SAID ITA NOS. 302 TO 308-CHD-2017 8 TWIN ASSESSMENT YEARS DO NOT INVOLVE SCRUTINY ASSES SMENT(S); IN OUR CONSIDERED OPINION, WOULD NOT FORM THE SOLE SUBSTAN TIVE REASON TO ASSESS THIS TAXPAYER AT A HIGHER PROFIT RATE OF 6% IN ISSU E. WE THEREFORE DIRECT THE ASSESSING OFFICER TO REDUCE THE IMPUGNED PROFIT ELEMENT @6% TO 1.25% ONLY ON ESTIMATION BASIS OR THAT ALREADY RECO RDED IN BOOKS AT ASSESSEES BEHEST, WHICHEVER IS HIGHER, IN ALL THES E ASSESSMENT YEARS WITH A RIDER THAT THE SAME SHALL NOT BE TAKEN AS A PRECEDENT. ORDERED ACCORDINGLY. THE ASSESSEES INSTANT LATTER SUBSTANT IVE GROUND IS PARTLY ACCEPTED IN FOREGOING TERMS. NECESSARY COMPUTATION SHALL FOLLOW AS PER LAW. 8. ALL THESE ASSESSEES APPEALS ARE PARTLY ALLOWED IN ABOVE TERMS. A COPY OF THIS COMMON ORDER BE PLACED IN THE RESPECTI VE CASE FILES. ORDER PRONOUNCED IN THE OPEN COURT ON 04.08.2021 SD/- SD/ - (SMT.ANNAPURNA GUPTA) (S.S. GODARA) ACCOUNTANT MEMBER JUDICIAL MEMBER DATED : 04.08.2021 !'#$%' / COPY OF THE ORDER FORWARDED TO : 1. $#!&' / THE APPELLANT 2. ()&' / THE RESPONDENT 3. ) ) * / CIT 4. ) ) * ( $#! )/ THE CIT(A) 5. '+,)- , ) $#!)- , ./0,1 / DR, ITAT, CHANDIGARH 6. ,02! / GUARD FILE / BY ORDER, ) # / ASSISTANT REGISTRAR