The ACIT, Indore V. M/s Kapil Steels Ltd., Indore

ITA 345/IND/2010

• Counselvise Citation: [2013] 120 COUNSELVISE.COM (IT) 1484 (ITAT-INDORE)
• Duration Of Justice: 2 year(s) 8 month(s) 21 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 18-02-2013
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: DB
• Next Hearing Date: 25-10-2011
• Assessment Year: 1995-1996
• Appeal Filed On: 28-05-2010
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: MRIDULA BAJPAI
• Keywords: Bogus purchase

Judgement Text

1 IN THE INCOME TAX APPELLATE TRIBUNAL INDORE BENCH, INDORE BEFORE SHRI JOGINDER SINGH, JUDICIAL MEMBER AND SHRI R.C. SHARMA, ACCOUNTANT MEMBER ITA NO. 345/IND/2010 A.Y. 1995-96 ASSTT COMMISSIONER OF INCOME TAX 4(1) INDORE :: APPELLANT VS M/S KAPIL STEELS LIMITED INDORE :: RESPONDENT APPELLANT BY SMT. MRIDULA BAJPAI RESPONDENT BY SHRI PRAKASH JAIN DATE OF HEARING 28.1.2013 DATE OF PRONOUNCEMENT 18.2.2013 O R D E R PER JOGINDER SINGH, JUDICIAL MEMBER THIS IS AN APPEAL FILED BY THE REVENUE AGAINST THE ORDER DATED 19 TH FEBRUARY, 2010 OF THE LEARNED CIT(A). THE ONLY GR OUND TAKEN BY THE REVENUE IS THAT THE LEARNED CIT(A) WA S NOT JUSTIFIED 2 IN DELETING THE ADDITION OF RS. 46,80,500/- MADE BY THE ASSESSING OFFICER ON ACCOUNT OF BOGUS PURCHASES. 2. DURING HEARING, WE HAVE HEARD SMT. MRIDULA BAJPA I, LEARNED CIT DR AND SHRI PRAKASH JAIN, LEARNED COUNSEL FOR T HE ASSESSEE. THE CRUX OF ARGUMENTS ON BEHALF OF THE REVENUE WAS THAT THE PARTIES FROM WHOM LOANS WERE TAKEN WERE NEVER PRODU CED BEFORE THE ASSESSING OFFICER FOR EXAMINATION, THEREFORE, T HE GENUINENESS OF SUCH DEPOSITS COULD NOT BE ESTABLISHED. IT WAS A LSO PLEADED THAT BOGUS BILLS WERE PREPARED BY THE ASSESSEE COMP ANY AND NO STOCK AGAINST THESE BILLS WAS RECEIVED. THE ASSESSM ENT ORDER WAS STRONGLY DEFENDED. ON THE OTHER HAND, THE LEARNED COUNSEL FOR THE ASSESSEE EMPHATICALLY SUPPORTED THE IMPUGNED OR DER BY INVITING OUR ATTENTION TO VARIOUS PAGES OF THE PAPE R BOOK. MR. JAIN READ OVER THE ORDER OF THE LEARNED CIT(A) FROM PAGE 37 OF THE PAPER BOOK FOR THE A.Y. 1994-95. IT WAS ALSO POINT ED OUT THAT THE LEARNED CIT(A) DECIDED THE ISSUE (A.Y. 1994-95) IN FAVOUR OF THE ASSESSEE ON IDENTICAL FACTS AGAINST WHICH NO APPEAL WAS PREFERRED BY THE DEPARTMENT. OUR ATTENTION WAS INVITED TO PAG ES 38 TO 42 OF THE PAPER BOOK AND MORE SPECIFICALLY PAGE 41(PAR A 7). 2.1 WE HAVE CONSIDERED THE RIVAL SUBMISSIONS AND P ERUSED THE MATERIAL AVAILABLE ON RECORD. THE FACTS, IN BRIEF, ARE THAT THE 3 ASSESSEE COMPANY IS ENGAGED IN MANUFACTURING OF ROL LED MATERIALS FROM INGOTS. THE ASSESSEE FILED ITS RETU RN ALONG WITH AUDITED BALANCE SHEET SHOWING THE SALE OF RS. 15,72 ,23,945/- WHICH INCLUDES TRADING SALES OF RS. 10,66,40,920/-. AN ADDITION OF RS. 46,80,520/- FOR PURCHASES FROM M/S STEEL & S CRAP WAS MADE WHICH WAS SUBJECT MATTER OF DEPARTMENTAL APPEA L AND THE MATTER TRAVELLED TO THE TRIBUNAL AND WAS REMANDED B ACK TO THE FILE OF CIT(A). IN TURN, THE LEARNED CIT(A) EXAMIN ED THE CLAIM OF THE ASSESSEE VIS-A-VIS IDENTICAL ISSUE IN THE CASE OF CHIRAG INGOTS DECIDED ON 8.6.2007 (ITA NO. 53/IND/2004), THE RELE VANT PORTION OF THE SAME HAS BEEN REPRODUCED IN PARA 2.1 (PAGE 4 ONWARDS) OF THE IMPUGNED ORDER. FOR THE A.Y. 1994-95 THE LEARN ED CIT(A) ON IDENTICAL ISSUE/FACTS CONCLUDED IN FAVOUR OF THE AS SESSEE. THE RELEVANT PORTION OF SUCH CONCLUSION IS REPRODUCED H EREUNDER :- THE PURCHASES FROM M/S STEEL AND SCRAP HAS BEEN ESTABLISHED TO BE GENUINE, THE BROKER THROUGH WHOM THE PURCHASES WAS MADE WAS PRODUCED BEFORE THE A.O. AND HE CONFIRMED THE GENUINENESS OF THE PURCHASES. THE SALES-TAX REGISTRATION NUMBER WAS ALSO SUBMITTE D. THE PAYMENT AGAINST PURCHASES WAS MADE BY ACCOUNT PAYEE CHEQUES AND THEREFORE THE PURCHASE FROM THE SAID PARTY WAS NOT TO BE DISBELIEVED. I AM, THEREF ORE, OF THE CONSIDERED VIEW THAT IN THE FACTS AND CIRCUMSTANCES OF THE CASE, THERE IS NO JUSTIFICATIO N FOR REJECTING THE BOOKS OF ACCOUNT AND INVOKING THE PROVISIONS OF SECTION 145(2). THE SALES TURNOVER DISCLOSED AT RS. 12,08,91,604/- IS THEREFORE NOT TO BE 4 DISTURBED AND TO BE ACCEPTED AND THE ESTIMATION OF SALES AT RS. 13 CRORES CANNOT BE SUSTAINED. THE ADDITION OF RS. 3,33,828/- IS THEREFORE DELETED. THE ISSUE INVOLVED IN THE PRESENT APPEAL IS REGARDING GENUINENESS OF THE PURCHASES OF RS.46,80,520/- FROM ONE OF THE PARTIES M/S STEEL & SCRAP. INDORE. AT THE TI ME OF ASSESSMENT PROCEEDINGS LEARNED ASSESSING OFFICER OB SERVED THAT ON THE ENQUIRIES CONDUCTED BY HIM THROUGH HIS INSPECTOR IT WAS REVEALED THAT THE SAID PARTY WAS N OT IN EXISTENCE AT THE GIVEN ADDRESS, FURTHER THE PURCHAS ES WERE MADE FROM THE SAID PARTY SINCE NOVEMBER, 1994 AND TI LL DATE NO PAYMENT HAS BEEN MADE TO THE SAID PARTY TIL L THE DATE OF ASSESSMENT AS SUCH A CONCLUSION WAS DRAWN T HAT THE PARTY IS NOT IN EXISTENCE AND ACCORDINGLY THE P URCHASES MADE FROM THE SAID PARTY WAS TREATED AS BOGUS AND A S SUCH THE ADDITION WAS MADE BY THE ASSESSING OFFICER. FEL T AGGRIEVED, THE ASSESSEE APPROACHED THE LEARNED CIT(A ) BY WAY OF FILING APPEAL BEFORE HIM. THE LEARNED CIT(A ) AFTER TAKING INTO ACCOUNT THE FACTS OF THE CASE AND HEARI NG THE LEARNED COUNSEL FOR THE ASSESSEE, DELETED THE ADDIT ION AFTER MAKING THE FOLLOWING OBSERVATIONS :- 5 THUS, IN VIEW OF THE AFORESAID DISCUSSION, THE MATTER BEING RESTORED TO THIS OFFICE FOR THE LIMITE D ISSUE OF VERIFICATION OF THE FACTS OF THE APPELLANT S CASE VIS-A-VIS, THE FACTS NOTICED IN CHIRAG INGOTS CASE, IT HAS TO BE NECESSARILY CONCLUDED THAT THE FACTS ARE BROADLY SIMILAR EXCEPT THE NAME OF THE SUPPLIERS AND THE QUANTITY INVOLVED. FURTHER THE YIELD IN THE CASE OF THE APPELLANT SHOWN AT 94.89% BEING NOT LOWER THAN THE AVERAGE YIELD SHOWN IN OTHER CASES AND BEING HIGHER IF COMPARED WITH THE YIELD IN THE CASE OF THE APPELLANT IN EARLIER YEARS WHICH STOOD AT 94.38%, THE VIEW ADOPTED IN THE CASE OF CHIRAG INGOTS BY ITAT WOULD BE SQUARELY APPLICABLE IN THE FACTS OF THE CASE. 4.1.3 ACCORDINGLY, THE FINDINGS ARRIVED IN ORIGINAL APPEAL STAGE, DELETING THE ADDITION FOR BOGUS PURCHASES AT RS. 46,80,500/- ARE REAFFIRMED FOR DETAILED REASONS RECORDED IN ORIGINAL APPEAL ORDER, IN VIEW OF DISCUSSION ABOVE. IN THE RESULT, THE APPEAL IS ALLOWED. THE LEARNED CIT(A) CONCLUDED THAT BROADLY THE FACTS ARE SIMILAR EXCEPT THE SUPPLIERS AND THE QUANTITY INVOLVED AND FURTHER NOTED THAT THE ASSESSEE SHOWED THE YIELD AT 94.89% WHICH IS BETTER THAN EARLIER YEARS RATHER HIGHER IF COMPARED WITH T HE CASE OF THE ASSESSEE, FOR A.Y. 1994-95, WHICH WAS 94.38%. IT W AS FURTHER NOTED THAT SIMILAR DISALLOWANCE WAS ACCEPTED BY THE CIT(A) AND THE DEPARTMENT IS NOT IN APPEAL FOR EARLIER YEAR. T HE GP IS ALSO BETTER THAN THE EARLIER YEAR. WE, THEREFORE, FIND NO INFIRMITY IN THE STAND OF THE LEARNED CIT(A) AND AFFIRM THE SAME . 6 THIS ORDER WAS PRONOUNCED IN THE OPEN COURT IN THE PRESENCE OF LD. REPRESENTATIVES FROM BOTH SIDES AT THE CONCLUSION OF THE HEARING ON 28.1.2013. SD SD (R.C.SARMA) (JOGINDER SINGH) ACCOUNTANT MEMBER JUDICIAL ME MBER DATED: 18.2.2013 COPY TO: APPELLANT, RESPONDENT, CIT, CIT(A), DR, GU ARD FILE DN/-