SHRI GOPALDAS ASAWA, Indore V. THE ITO 1(2), Indore

ITA 338/IND/2015

• Counselvise Citation: [2016] 133 COUNSELVISE.COM (IT) 5762 (ITAT-INDORE)
• Duration Of Justice: 8 month(s) 19 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 08-02-2016
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: DB
• Assessment Year: 2002-2003
• Appeal Filed On: 20-05-2015
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: G S GAUTAM
• Keywords: Bogus purchase; Unexplained investment
• Section: 69

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL, INDORE BENCH, INDORE (SINGLE MEMBER CASE) BEFORE SHRI D.T. GARASIA, JUDICIAL MEMBER I.T.A.NO. 338/IND/2015 A.Y. : 2002-03 SHRI GOPALDAS ASAWA, ITO, PROP.M/S.CHARBHUJA CORPORATION, VS. 1(2), INDORE. INDORE APPELLANT RESPONDENT PAN NO. AAZPA933OQ A PPELLANT S BY : SHRI ANIL KAMAL GARG, C. A. RESPONDENT BY : SHRI G. S. GAUTAM, DR O R D E R THIS APPEAL BY THE ASSESSEE IS DIRECTED AGAINST THE ORDER OF CIT(A)-I, INDORE, DATED 29.12.2014 FOR THE ASSES SMENT YEAR 2002-03. 2. THE SHORT FACTS OF THE CASE ARE THAT THE ASSESSEE H AS FILED THE RETURN OF INCOME ON 28.10.2002 DECLARING INCOME OF DATE OF HEARING : 29 . 12 . 201 5 . DATE OF PRONOUNCEMENT : 08 . 0 2 .201 6 SHRI GOPALDAS ASAWA, INDORE VS. ITO, 1(2), INDORE. I.T.A.NO. 338/IND/2015 A.Y. 2002-03 2 2 RS. 1,34,618/-. DURING THE YEAR UNDER CONSIDERATION , THE ASSESSEE IS ENGAGED IN THE BUSINESS OF WHOLESALE TR ADING IN GRAINS. DURING THE YEAR UNDER CONSIDERATION, THE AS SESSEE HAS PURCHASED MAIZE AND SOYABEAN OF RS. 6,75,790/- FROM SHRI GANESH TRADERS, INDORE. THE AO RECEIVED SOME INFORM ATION THAT SHRI SUSHIL BANSAL, PROPRIETOR OF GANESH TRADE RS WAS INVOLVED FOR ISSUING BOGUS SALES BILLS FOR GRAINS, GRAMS AND OTHER COMMODITIES AND CERTAIN PARTIES HAVE UTILIZED THE BANK ACCOUNTS OF SHRI GANESH TRADERS FOR WHICH SUSHIL BA NSAL WAS WORKING AS PROPRIETOR. IT WAS NOTICED THAT THE ASSE SSEE HAS RECEIVED THE BILLS FOR PURCHASES WORTH RS. 6,75,790 /- FROM SUCH PARTY. THEREFORE, IT WAS HELD THAT THE ASSESSE E HAS DEBITED BOGUS PURCHASE IN HIS ACCOUNTS AND PAYMENTS SHOWN TO HAVE BEEN MADE AS HIS INCOME FOR THE RELEVANT YE AR. THE AO HAS TREATED THE UNEXPLAINED INVESTMENT U/S 69 OF TH E INCOME- TAX ACT, 1961. 3. THE MATTER CARRIED TO THE LD. CIT(A) AND THE LD. C IT(A) HAS CONFIRMED THE ADDITION. 4. DURING THE COURSE OF HEARING, THE LD. AUTHORIZED REPRESENTATIVE SUBMITTED BEFORE ME THAT THE ASSESSE E WAS SHRI GOPALDAS ASAWA, INDORE VS. ITO, 1(2), INDORE. I.T.A.NO. 338/IND/2015 A.Y. 2002-03 3 3 MAINTAINING REGULAR BOOKS OF ACCOUNT WHEREIN ENTIRE PURCHASE WAS NOT ONLY RECORDED BUT FULLY EXPLAINED. THEREFO RE, SECTION 69 OF THE ACT SHOULD HAVE NOT APPLICABLE TO HIS CAS E. THE LD. AUTHORIZED REPRESENTATIVE SUBMITTED THAT THE ASSESS EE IS MAINTAINING REGULAR BOOKS OF ACCOUNT AND ALL BILLS AND VOUCHERS WERE PRODUCED FOR VERIFICATION BEFORE THE AO AND NO SPECIFIC DISCREPANCY WAS FOUND JUSTIFYING THE ADDIT ION MADE. THE LD. AUTHORIZED REPRESENTATIVE SUBMITTED THAT TH E ASSESSEE WAS MAINTAINING QUANTITATIVE DETAILS AND CORRESPOND ING SALES RELATED TO BOGUS PURCHASES WERE DULY SHOWN BY THE A SSESSEE IN HIS BOOKS OF ACCOUNT. THEREFORE, AS PER THE SETT LED POSITION OF THE LAW, ENTIRE BOGUS PURCHASE SHOULD NOT HAVE B EEN SUBJECTED TO ADDITION. THE LD. AUTHORIZED REPRESENT ATIVE HAS ALSO RELIED UPON THE DECISION OF HON'BLE GUJARAT HI GH COURT IN THE CASE OF CIT VS. PRESIDENT INDUSTRIES, (2002) 25 8 ITR 0654, WHEREIN THE HON'BLE HIGH COURT HAS HELD THAT THE EN TIRE SALES COULD NOT BE ADDED AS INCOME OF THE ASS, BUT THE AD DITION SHOULD HAVE BEEN MADE ONLY TO THE EXTENT OF ESTIMAT ED PROFITS EMBEDDED IN SALES FOR WHICH NET PROFIT RATE WAS ADO PTED. SIMILARLY, THE LD. AUTHORIZED REPRESENTATIVE ALSO R ELIED UPON SHRI GOPALDAS ASAWA, INDORE VS. ITO, 1(2), INDORE. I.T.A.NO. 338/IND/2015 A.Y. 2002-03 4 4 THE DECISION OF VIJAY PROTEINS LIMITED VS. ACIT, (1 996) 55TTJ 0076, WHEREIN IT IS HELD THAT WHEN THERE IS A BOGUS PURCHASE, 25% OF SUCH PURCHASE SHOULD BE DISALLOWED. 5. THE LD. DR RELIED UPON THE ORDER OF THE AO. 6. HAVING HEARD BOTH THE PARTIES AND LOOKING TO THE FA CTS AND CIRCUMSTANCES OF THE CASE, WE FIND THAT IN THIS CASE, THE ASSESSEE IS ENGAGED IN THE BUSINESS OF WHOLESALE TR ADING IN GRAINS. DURING THE YEAR UNDER CONSIDERATION, THE AS SESSEE HAS SHOWN THE PURCHASES OF RS. 6,75,790/- FROM SHRI GAN ESH TRADERS, BUT THE AO FOUND THAT THE ASSESSEE HAS REC EIVED ONLY BOGUS SALES BILLS FOR GRAINS AND GRAMS. THEREFORE, THE ASSESSEE HAS RECEIVED THE BILLS FOR PURCHASES WORTH RS.6,75, 790/- FROM SUCH PARTY. THEREFORE, THE ASSESSEE HAS DEBITED BOG US PURCHASES IN HIS ACCOUNT AND PAYMENT SHOULD HAVE BE EN MADE AS INCOME OF THE ASSESSEE. 7. I HAVE GONE THROUGH THE JUDGEMENT OF HON'BLE GUJARA T HIGH COURT IN THE CASE OF CIT VS. PRESIDENT INDUSTR IES, (SUPRA), WHEREIN IT IS HELD THAT WHEN THERE IS SALES, WHICH WAS NOT DISCLOSED, THE SALES ONLY REPRESENT THE PRICE RECEI VED BY THE SELLER OF THE GOODS FOR ACQUISITION OF WHICH IT HAS ALREADY SHRI GOPALDAS ASAWA, INDORE VS. ITO, 1(2), INDORE. I.T.A.NO. 338/IND/2015 A.Y. 2002-03 5 5 INCURRED THE COST. IT IS THE REALIZATION OF EXCESS OVER THE COST INCURRED THAT ONLY FORMS PART OF THE PROFIT INCLUDE D IN THE CONSIDERATION OF SALES. THEREFORE, THE ASSESSEE HAV E INCURRED COST IN ACQUIRING THE GOODS, WHICH SHOULD HAVE BEEN SOLD BY THE ASSESSEE AND THAT HAS BEEN NOT DISCLOSED. IN AB SENCE OF INCOME OF THE RELEVANT ASSESSMENT YEAR, ENTIRE UNDI SCLOSED SALES CANNOT BE TREATED AS INCOME OF THE ASSESSEE. THEREFORE, ONLY PROFIT EMBEDDED IN THE SALES WHICH REPRESENT T HE INCOME OF THE ASSESSEE. THEREFORE, I DIRECT THE AO TO TREA T 10% AS NET PROFIT ON SUCH BOGUS PURCHASES OF THE ASSESSEE. THE REFORE, I ALLOW THE APPEAL ACCORDINGLY. 8. IN THE RESULT, THE APPEAL OF THE ASSESSEE IS ALLO WED. THIS ORDER HAS BEEN PRONOUNCED IN THE OP EN COURT ON 8 TH FEBRUARY, 2016. SD/- ( D.T.GARASIA) JUDICIAL MEMBER DATED 8 TH FEBRUARY, 2016. CPU* SHRI GOPALDAS ASAWA, INDORE VS. ITO, 1(2), INDORE. I.T.A.NO. 338/IND/2015 A.Y. 2002-03 6 6 41