The DCIT, Circle-1, Surat V. M/s. Bajaj Fashion Pvt.Ltd., Surat

ITA 311/AHD/2009

• Counselvise Citation: [2012] 140 COUNSELVISE.COM (IT) 57095 (ITAT-AHMEDABAD)
• Duration Of Justice: 3 year(s) 4 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 03-02-2012
• Appeal Filed By: Department
• Order Result: Partly Allowed
• Bench Allotted: D
• Next Hearing Date: 02-01-2012
• Assessment Year: 2000-2001
• Appeal Filed On: 30-01-2009
• Result in Favour of: Partly Allowed
• Court: TRIBUNAL
• Department Lawyers: B L YADAV
• Assessee Lawyers: P M MEHTA
• Keywords: Bogus purchase

Judgement Text

, , , , , IN THE INCOME TAX APPELLATE TRIBUNAL AT AHMEDABAD, D BENCH . .. . . .. . , !! '#$ !! '#$ !! '#$ !! '#$, , , , %& %& %& %& % %% %. .. .' '' ' . .. .() () () (), , , , '* + '* + '* + '* + ' $ ' $ ' $ ' $ BEFORE S/SHRI G.C. GUPTA, VICE-PRESIDENT AND A. K. GARODIA, ACCOUNTANT MEMBER) ITA NO.311/AHD/2009 [ASSTT.YEAR : 2000-2001] DCIT, CIR.1 SURAT. ! /VS. M/S. BAJAJ FASHION PVT. LTD. 310, METRO TOWER NR. KINNERY CINEMA RING ROAD, SURAT. PAN : AAACB 9520 B ( (( (-. -. -. -. / APPELLANT) ( (( (/0-. /0-. /0-. /0-. / RESPONDENT) + 1 2 '/ REVENUE BY : SHRI B.L. YADAV ! 45 1 2 '/ ASSESSEE BY : SHRI P.M. MEHTA !6 1 5*/ DATE OF HEARING : 2 ND JANUARY, 2012 7(8 1 5*/ DATE OF PRONOUNCEMENT : 03-02-2012 '9 / O R D E R PER G.C. GUPTA, VICE-PRESIDENT: THIS APPEAL OF THE REVENUE FOR A.Y.2000-2001 IS DIRECTED AGAINST THE ORDER OF THE COMMISSIONER OF INCOME-TAX (APPEALS)-I, SURAT. 2. THE GROUND NO.1 OF THE ASSESSEES APPEAL READS A S UNDER: I) ON THE FACT AND CIRCUMSTANCES OF THE CASE AND IN LAW, THE LEARNED CIT(A)-I, SURAT HAS ERRED IN DELETING THE A DDITION MADE BY THE A.O. OF RS.4,13,050/- MADE BY THE A.O. ON ACCOU NT OF BOGUS PURCHASES FROM M/S.SANDHYA TRADING CO., THE FICTITI OUS CONCERN OF ROHIT PANWALA GROUP, IGNORING THE MATERIAL EVIDENCE S IN THE FORM OF STATEMENT OF OATH DEPOSED BY SHRI ROHIT PANWALA DURING THE COURSE OF SEARCH AT HIS RESIDENTIAL PREMISES WHEREI N HE HAD SPECIFICALLY ADMITTED THAT - (A) HE HAS ISSUED BOGUS AND FAKE BILLS IN THE NAMES OF 45 BOGUS CONCERNS CREATED BY HIM, WITHOUT GIVING ACTUAL DELI VERY OF ANY PHYSICAL GOODS AND ITA NO.311/AHD/2009 -2- (B) THE AMOUNT OF CHEQUE RECEIVED FROM THE BUYERS O F BOGUS BILLS WERE RETURNED TO THE BUYERS AFTER GETTING CHEQUES E NCASHED IN THE BANK ACCOUNTS OF HIS BENAMI CONCERN AND RETURNE D CASH TO BUYERS OF THE BOGUS BILLS AFTER DEDUCTING HIS COMMI SSION THEREFROM. 3. THE LEARNED COUNSEL FOR THE ASSESSEE, AT THE OUT SET, SUBMITTED THAT THE ISSUE OF BOGUS PURCHASE IS COVERED IN ITS FAVOU R BY THE DECISION OF THE TRIBUNAL IN ASSESSEES OWN CASE FOR A.Y.2001-02 WHE REIN, IN IDENTICAL SET OF FACTS, THE ADDITION MADE BY THE AO WAS DELETED B Y THE CIT(A) AND THE ORDER OF THE CIT(A) WAS CONFIRMED BY THE TRIBUNAL I N ITA NO.1390/AHD/2009 DATED 3-7-2009. THE LEARNED DR CO ULD NOT CONTROVERT TO THE SUBMISSIONS OF THE LEARNED COUNSEL FOR THE A SSESSEE. 4. WE HAVE CONSIDERED RIVAL SUBMISSIONS. WE FIND T HAT THE TRIBUNAL IN ASSESSEES OWN CASE FOR A.Y.2001-02 IN IDENTICAL FACTS HAS DECIDED THE ISSUE ON ACCOUNT OF BOGUS PURCHASE IN FAVOUR OF THE ASSESSEE AND THE REVENUES APPEAL AGAINST THE ORDER OF THE CIT(A) DE LETING THE ADDITION MADE BY THE AO WAS CONFIRMED BY THE TRIBUNAL. WE B EING IN AGREEMENT WITH THE DECISION OF THE TRIBUNAL IN ASSESSEES OWN CASE FOR A.Y.2001-02 (SUPRA) DECIDE THE ISSUE IN FAVOUR OF THE ASSESSEE AND AGAINST THE DEPARTMENT AND DISMISS THE GROUND NO.1 OF THE REVEN UES APPEAL. 5. THE GROUND NO.2 OF THE REVENUES APPEAL READS AS UNDER: [II] ON THE FACTS AND CIRCUMSTANCES OF THE CASE AN D IN LAW, THE LD.CIT(A) HAS ERRED IN DELETING THE ADDITION MADE B Y THE A.O. OF RS.20,53,224/- ON ACCOUNT OF UNVERIFIABLE AND UNREA SONABLE EXPENSES OUT OF EXPENSES CLAIMED TO RS.10,26,61,188 /- WITHOUT APPRECIATING THE FACTS THAT INSPITE OF REPEATED REQ UEST MADE BY THE A.O. DURING THE COURSE OF ASSESSMENT PROCEEDINGS, T HE ASSESSEE HAD FAILED TO FURNISH ANY PURCHASE BILLS, VOUCHERS AND DETAILS OF THE EXPENSES CLAIMED AND WITHOUT APPRECIATING THE FACT THAT THE A.O. HAD VERY LIBERALLY DISALLOWED ONLY 2% OF THE EXPENS ES CLAIMED OF RS.10,26,61,188/- ALLOWING 98% OF SUCH EXPENSES OF THE ASSESSEE. ITA NO.311/AHD/2009 -3- 6. THE LEARNED DR SUBMITTED THAT THE ADDITION/DISAL LOWANCE MADE ON ACCOUNT OF UNVERIFIABLE AND UNREASONABLE EXPENSES C LAIMED BY THE ASSESSEE TO THE TUNE OF RS.10.26 CRORES AND THE ASS ESSEE HAS FAILED TO PRODUCE ANY PURCHASE BILLS, VOUCHERS AND DETAILS OF THE EXPENSES CLAIMED, THE AO WAS JUSTIFIED IN DISALLOWING ONLY 2% OF THE EXPENSES CLAIMED BY THE ASSESSEE AND THEREBY ALLOWING 98% OF SUCH EXPEN SES. HE RELIED ON THE ORDER OF THE AO. THE LEARNED COUNSEL FOR THE ASSESSEE SUBMITTED THAT ACCOUNTS OF THE ASSESSEE WERE AUDITED AND NO OBJECT ION WITH REGARD TO CORRECTNESS THEREOF WAS TAKEN BY THE AUDITORS IN TH E AUDIT REPORT. THE EXPENSES WERE GENUINE AND NO DEFECT IN THE ACCOUNT BOOKS COULD BE POINTED OUT BY THE DEPARTMENT. HE SUBMITTED THAT NO MATERIAL WAS BROUGHT ON RECORD TO SUGGEST THAT THE EXPENSES WERE EXCESSIVE OR UNREASONABLE. HE SUBMITTED THAT THE EXPENSES INCLU DE EXCISE DUTY, SALARY, WAGES, INTEREST EXPENSES PAID TO THE BANK AND VARIO US OTHER EXPENSES AND MOSTLY PAID THROUGH BANKING CHANNEL. HE RELIED ON THE ORDER OF THE CIT(A). 7. WE HAVE CONSIDERED RIVAL SUBMISSIONS AND PERUSED THE DETAILS OF THE EXPENSES AS REPRODUCED BY THE CIT(A) IN THE APP ELLATE ORDER. WE FIND THAT THE CIT(A) HAS GIVEN A FINDING THAT NO MATERIA L WAS BROUGHT ON RECORD AS TO THE EXCESSIVENESS OR UNREASONABLENESS OF SUCH EXPENSES AND THE DISALLOWANCE WAS PURELY AD HOC AND WITHOUT APPLICATION OF MIND. HOWEVER, WE FIND THAT THE CIT(A) HAS NOT DISPUTED T HE FINDING OF THE AO THAT THE EXPENSES WERE NOT FULLY VERIFIABLE. CONSI DERING THE NATURE OF THE EXPENSES AND THE REASONABLENESS OF THE EXPENSES AND THAT THE EXPENSES INCLUDES EXCISE DUTY, SALARY AND WAGES AND INTEREST EXPENDITURE PAID TO THE BANK AND ALSO THE FACT THAT SOME OF THE EXPENSE S CLAIMED BY THE ASSESSEE WERE UNVERIFIABLE, WE HOLD THAT SOME DISAL LOWANCE OUT OF THE ITA NO.311/AHD/2009 -4- EXPENSES CLAIMED BY THE ASSESSEE WAS CALLED FOR AND THE CIT(A) WAS NOT JUSTIFIED IN DELETING THE ENTIRE DISALLOWANCE MADE ON THIS SCORE. ACCORDINGLY, WE HOLD THAT THE ENDS OF JUSTICE WILL BE MET IF THE DISALLOWANCE OUT OF EXPENSES CLAIMED IS RESTRICTED TO RS.10 LAKHS (RUPEES TEN LAKHS) AS AGAINST THE DISALLOWANCE OF RS.20.55 LAKHS MADE BY THE AO AND ACCORDINGLY GROUND NO.2 OF THE REVENUE IS PA RTLY ALLOWED. 8. IN THE RESULT, THE REVENUES APPEAL IS PARTLY AL LOWED. ORDER PRONOUNCED IN OPEN COURT ON THE DATE MENTIONE D HEREINABOVE. SD/- SD/- ( % %% %. .. .' '' ' . .. .() () () () /A.K. GARODIA) '* + /ACCOUNTANT MEMBER ( . .. . . .. . /G.C. GUPTA) '#$ '#$ '#$ '#$ /VICE-PRESIDENT C OPY OF THE ORDER FORWARDED TO: 1) : APPELLANT 2) : RESPONDENT 3) : CIT(A) 4) : CIT CONCERNED 5) : DR, ITAT. BY ORDER DR/AR, ITAT, AHMEDABAD