Thakur Buildcon (P) Ltd. , Rajsamand V. ITO, Ward-1, RAjsamand

ITA 345/JODH/2019

• Counselvise Citation: [2020] 109 COUNSELVISE.COM (IT) 9986 (ITAT-JODHPUR)
• Duration Of Justice: 1 year(s) 2 month(s) 18 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 21-12-2020
• Appeal Filed By: Assessee
• Order Result: Partly Allowed
• Bench Allotted: DB
• Assessment Year: 2009-2010
• Appeal Filed On: 03-10-2019
• Result in Favour of: Partly Allowed
• Court: TRIBUNAL
• Department Lawyers: A S YADAV LD
• Assessee Lawyers: RAKSHA BIRLACALD ARS
• Keywords: Bogus purchase; Reassessment proceedings
• Section: 143(3); 133(6); 143(1); 69; 148

Judgement Text

1 ITA NOS.345-346/JODH/2019 THAKUR BUILDCON PRIVATE LIMITED ASSESSMENT YEAR: 2009-10 IN THE INCOME TAX APPELLATE TRIBUNAL JODHPUR BENCH , , BEFORE HONBLE SHRI SANDEEP GOSAIN, JM AND HONBLE SHRI MANOJ KUMAR AGGARWAL, AM (HEARING THROUGH VIDEO CONFERENCING MODE) ./ ITA NO.345/JODH/2019 ( / ASSESSMENT YEAR: 2009-10) THAKUR BUILDCO N (P) LTD. C/O. RAJENDRA JAIN ADVOCATE 106, AKSHAY DEEP COMPLEX, 5TH B ROAD, SARDARPURA JODHPUR, RAJASTHAN-342 001. / VS. INCOME TAX OFFICER - WARD - 1 RAJSAMAND RAJASTHAN-313 324. ./ ./PAN/GIR NO. AACCT-7930-M ( /APPELLANT ) : ( / RESPONDENT ) & ./ ITA NO.346/JODH/2019 ( / ASSESSMENT YEAR: 2009-10) INCOME TAX OFFICER - WARD - 1 RAJSAMAND RAJASTHAN-313 324. / VS. THAKUR BUILDCO N (P) LTD. THAKURGARH N.H. 8 SEVALI, RAJSAMAND RAJASTHAN-313 324. ./ ./PAN/GIR NO. AACCT-7930-M ( /APPELLANT ) : ( / RESPONDENT ) ASSESSEE BY : SHRI RAJENDRA JAIN (ADVOCATE) & MS.RAKSHA BIRLA (CA)-LD. ARS. REVENUE BY : SHRI A.S. YADAV - LD. SR. DR / DATE OF HEARING : 04/11/2020 / DATE OF PRONOUNCEMENT : 21/12/2020 2 ITA NOS.345-346/JODH/2019 THAKUR BUILDCON PRIVATE LIMITED ASSESSMENT YEAR: 2009-10 / O R D E R MANOJ KUMAR AGGARWAL (ACCOUNTANT MEMBER): - 1. AFORESAID CROSS APPEALS FOR ASSESSMENT YEAR [AY] 2009-10 CONTEST THE ORDER PASSED BY LD. COMMISSIONER OF INC OME-TAX (APPEALS)-1, UDAIPUR, [IN SHORT REFERRED TO AS CIT (A)], APPEAL NO.71/IT/UDR/2014-15 DATED 26/06/2019. THE ASSESSMENT FOR YEAR UNDER CONSIDERATION WAS FRAMED BY LD. ASSESSING OFF ICER (AO) ON 14/03/2014 U/S 143(3) READ WITH SECTION 148 OF THE INCOME TAX ACT, 1961. IN THE SAID ASSESSMENT, THE ASSESSEE WAS SADD LED WITH CERTAIN PEAK ADDITIONS OF RS.216.77 LACS ON ACCOUNT OF ALLEGED BOGUS PURCHASES AND THE SAME IS THE SOLE SUBJECT MATTER OF CROSS- APPEALS BEFORE US SINCE LD. CIT(A) HAS GRANTED PAR TIAL RELIEF TO THE ASSESSEE IN THE IMPUGNED ORDER. 2. THE EFFECTIVE GROUNDS RAISED BY THE ASSESSEE REA D AS UNDER:- 1. THAT ON THE FACTS AND IN THE CIRCUMSTANCES OF TH E CASE, THE LD. CIT(A)-I, UDAIPUR HAS ERRED IN CONFIRMING THE ACTION INITIATE D BY THE LD. AO U/S. 147/148 OF THE ACT. 2. THAT ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE, THE LD. CIT(A)-I, UDAIPUR HAS ERRED IN SUSTAINING THE ADDITION OF RS .33,99,436/- TO THE TOTAL INCOME OUT OF RS.216,77,531/- MADE BY THE LD. AO U/ S. 69 OF THE ACT AS UNDISCLOSED INVESTMENT TREATING THE SAME AS NOT GEN UINE. THE EFFECTIVE GROUNDS RAISED BY THE REVENUE READ AS UNDER:- 1. WHETHER ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE, THE LD. CIT(A)-I, WAS JUSTIFIED IN RESTRICTING THE ADDITION OF RS.33,99,436/- (I.E. 15% OF RS.2,26,62,908/-) INSTEAD OF RS.216,77,531/- MADE B Y THE LD. AO HOLDING THE SAME AS UNDISCLOSED INVESTMENT IN CASH PURCHASES. 3. WE HAVE CAREFULLY HEARD THE RIVAL SUBMISSIONS AN D PERUSED RELEVANT MATERIAL ON RECORD INCLUDING WRITTEN SUBMI SSIONS AND DOCUMENTS PLACED IN THE PAPER BOOK. THE JUDICIAL PR ECEDENTS AS 3 ITA NOS.345-346/JODH/2019 THAKUR BUILDCON PRIVATE LIMITED ASSESSMENT YEAR: 2009-10 RELIED UPON DURING THE COURSE OF HEARING HAVE DULY BEEN DELIBERATED UPON. OUR ADJUDICATION TO THE SUBJECT MATTER WOULD BE AS GIVEN IN SUCCEEDING PARAGRAPHS. 4.1 THE RELEVANT FACTS ARE THAT THE ASSESSEE BEING RESIDENT CORPORATE ASSESSEE WAS SUBJECTED TO RE-ASSESSMENT P ROCEEDINGS FOR THE YEAR UNDER CONSIDERATION AND AN ASSESSMENT WAS FRAMED ON 14/03/2014 WHEREIN THE ASSESSEE WAS SADDLED WITH PE AK ADDITION OF RS.216.77 LACS AS UNDISCLOSED INVESTMENT ON ACCO UNT OF CASH PURCHASES. THE REASSESSMENT PROCEEDINGS GOT TRIGGER ED PURSUANT TO RECEIPT OF CERTAIN INFORMATION FROM VAT DEPARTME NT, MUMBAI WHEREIN IT WAS ALLEGED THAT M/S BAPU DIAMOND (A UNI T OF ASSESSEE COMPANY) MADE SUSPICIOUS PURCHASES OF RS.226.62 LAC S FROM AN ALLEGED HAWALA DEALER M/S LARCHAN TRADING PVT. LTD. (LTPL). ACCORDINGLY, THE CASE WAS RE-OPENED AS PER DUE PROC ESS OF LAW VIDE NOTICE U/S 148 ON 21/05/2013. THE ORIGINAL RET URN OF INCOME FILED BY THE ASSESSEE AT A LOSS OF RS.1.66 LACS WAS PROCESSED U/S 143(1). 4.2 THE ASSESSEE REFLECTED GROSS PROFIT (GP) RATE O F 13.47% AGAINST SALES OF RS.169.90 LACS. THIS WAS STATED TO BE FIRST YEAR OF ASSESSEES BUSINESS UNDER THAT UNIT. THE ASSESSEE M AINTAINED THAT THE PURCHASES WERE GENUINE, REGULAR BOOKS WERE MAIN TAINED WHICH WERE DULY AUDITED AND PAYMENT TO THE SAID SUPPLIER WAS THROUGH BANKING CHANNELS. HOWEVER, PRIMARILY GOING BY THE FINDINGS OF VAT DEPARTMENT, LD. AO CONCLUDED THAT M/S LTPL WAS HAWALA ENTRY PROVIDER AND NO MOVEMENT OF GOODS WAS EVER DONE. IT WAS ALLEGED THAT THE SAID ENTITY PROVIDED HAWALA ENTRIES FOR SALE OF DIAMONDS 4 ITA NOS.345-346/JODH/2019 THAKUR BUILDCON PRIVATE LIMITED ASSESSMENT YEAR: 2009-10 WITHOUT CARRYING OUT ANY ACTUAL BUSINESS. A PRESUMP TION WAS ALSO RAISED BY LD. AO THAT THE ASSESSEE MADE CASH PURCHA SES FROM UNDISCLOSED PARTIES AND PROCURED THE BILLS FROM THE STATED ENTITY. FINALLY, LD. AO WORKED OUT PEAK ADDITIONS OF RS.216 .77 LACS AS UNDISCLOSED INCOME IN CASH PURCHASES AND ADDED THE SAME TO THE INCOME OF THE ASSESSEE. 5.1 THE ASSESSEE ASSAILED THE STAND OF LD. AO ON LE GAL GROUNDS AS WELL AS ON MERITS. THE CHALLENGE TO JURISDICTION U/S 148 MET WITH NO SUCCESS SINCE LD. CIT(A) OPINED THAT REASSESSMEN T NOTICE ISSUED BY LD. AO ON THE BASIS OF INFORMATION RECEIV ED FROM INVESTIGATION WING OF THE DEPARTMENT, WAS A VALID O NE. 5.2 ON MERITS, THE ASSESSEE, INTER-ALIA , MAINTAINED THAT ALL SALES WERE FULLY VOUCHED WHICH WERE ACCEPTED BY REVENUE A ND THERE COULD BE NO SALE WITHOUT PURCHASES. IT WAS ALSO POI NTED OUT THAT NO MEANINGFUL INQUIRY WAS DONE BY LD. AO U/S 133(6) TO VERIFY THE AUTHENTICITY AND VERACITY OF INFORMATION RECEIVED F ROM VAT DEPARTMENT. RELIANCE WAS PLACED ON VARIOUS JUDICIAL DECISIONS IN SUPPORT OF THE SUBMISSIONS WHICH HAVE ALREADY ELABO RATED IN THE IMPUGNED ORDER AND NOT REPEATED HERE FOR THE SAKE O F BREVITY. THE ASSESSEE AGAIN FURNISHED COPIES OF BILLS, LEDGER AC COUNTS, CONFIRMATION OF ACCOUNT FROM THE CONCERNED PARTY, B ANK DETAILS ETC. AND SUBMITTED THAT IT HAS DISCHARGED THE PRIMARY ON US CASTED UPON IT TO ESTABLISH THE GENUINENESS OF THE PURCHASES. 5.3 THE LD. CIT(A) CONCURRED THAT LD. AO WAS NOT JU STIFIED IN MAKING ADDITION ON THE BASIS OF THIRD PARTY STATEME NTS WITHOUT CONDUCTING ANY FURTHER INVESTIGATION. THE ASSESSEE WAS HAVING ALL 5 ITA NOS.345-346/JODH/2019 THAKUR BUILDCON PRIVATE LIMITED ASSESSMENT YEAR: 2009-10 THE DOCUMENTARY EVIDENCES IN SUPPORT OF THE PURCHAS ES AND MAINTAINED REQUISITE STOCK REGISTERS. FURTHER, SALE S WERE ACCEPTED AND THE PAYMENT TO THE SUPPLIER WAS THROUGH BANKING CHANNEL. THEREFORE, THE PEAK ADDITIONS AS WORKED OUT BY LD. AO WERE NOT JUSTIFIED. AT THE MOST, THE PURCHASE AMOUNT WOULD H AVE BEEN INFLATED AND THEREFORE, THE ADDITIONS WERE FINALLY ESTIMATED AT 15% OF THESE SUSPICIOUS PURCHASES OF RS.226.62 LACS WHICH REDUCED THE ADDITIONS TO RS.33.99 LACS. THE ADJUDICATION BY LD. CIT(A) HAS GIVEN RISE TO CROSS-APPEALS BEFORE US. 6. SO FAR AS THE VALIDITY OF REASSESSMENT JURISDICT ION IS CONCERNED, WE FIND THAT THE ORIGINAL RETURN WAS PRO CESSED U/S 143(1) AND SUBSEQUENTLY, SPECIFIC TANGIBLE INFORMAT ION WAS RECEIVED BY LD. AO WHICH INDICATED POSSIBLE ESCAPEMENT OF IN COME IN THE HANDS OF THE ASSESSEE. IN OUR CONSIDERED OPINION, N OTHING MORE WAS REQUIRED AT THIS STAGE TO TRIGGER REASSESSMENT PROCEEDINGS AGAINST THE ASSESSEE. THE PROCEEDINGS WERE INITIATE D AS PER DUE PROCESS OF LAW AFTER ISSUANCE OF PRESCRIBED STATUTO RY NOTICES. WE DO NOT FIND ANY LEGAL INFIRMITY IN THE JURISDICTION AC QUIRED BY LD. AO. THEREFORE, THE GROUND THUS RAISED BY THE ASSESSEE S TANDS DISMISSED. 7. SO FAR AS THE ESTIMATES ARE CONCERNED, IT IS QUI TE EVIDENT THAT THE ASSESSEE WAS IN POSSESSION OF PRIMARY PURCHASE DOCUMENTS AND THE GOODS PURCHASED WERE DULY ACCOUNTED FOR IN THE BOOKS OF ACCOUNTS. THE PAYMENT TO THE SUPPLIER WAS THROUGH B ANKING CHANNELS AND THE SALES TURNOVER REFLECTED BY THE AS SESSEE HAS BEEN ACCEPTED BY THE REVENUE. UNDOUBTEDLY, THERE CO ULD BE NO SALE 6 ITA NOS.345-346/JODH/2019 THAKUR BUILDCON PRIVATE LIMITED ASSESSMENT YEAR: 2009-10 WITHOUT ACTUAL PURCHASE OF MATERIAL KEEPING IN VIEW THE ASSESSEES NATURE OF BUSINESS. HOWEVER, AT THE SAME TIME, GENU INENESS OF THE PURCHASES COULD NOT BE ESTABLISHED BEYOND DOUBT. TH E ASSESSEE COULD NOT PRODUCE THE TAINTED PARTY SO AS TO CONFIR M THE TRANSACTIONS. THE STATED FACTUAL MATRIX, IN OUR CON SIDERED OPINION, WOULD MAKE IT A FIT CASE TO MAKE ESTIMATED ADDITION S TO ACCOUNT FOR PROFIT ELEMENT EMBEDDED IN THESE SUSPICIOUS / UNVER IFIED PURCHASES TO FACTORIZE FOR PROFIT EARNED BY ASSESSEE AGAINST POSSIBLE PURCHASE OF MATERIAL IN THE GREY / UNORGANIZED MARKET AND UN DUE BENEFIT OF VAT AGAINST SUCH BOGUS PURCHASES, WHICH LD.CIT(A) H AS RIGHTLY DONE SO. HOWEVER, KEEPING IN VIEW THE FACT THAT THE ASSESSEE HAD ALREADY REFLECTED GP RATE OF MORE THAN 13%, FURTHER ADDITION OF 15% WAS NOT JUSTIFIED. THEREFORE, WE REDUCE THE ESTIMAT ION TO 3% OF ALLEGED BOGUS PURCHASES OF RS.2,26,62,908/- WHICH C OMES TO RS.6,79,887/-. THE BALANCE ADDITIONS STAND DELETED. THE LD. AO IS DIRECTED TO RE-COMPUTE THE INCOME OF THE ASSESSEE I N TERMS OF ESTIMATION MADE BY US. ACCORDINGLY, THE REVENUES A PPEAL STANDS DISMISSED WHEREAS THE ASSESSEES GROUND STANDS PART LY ALLOWED. 8. FINALLY, THE REVENUES APPEAL STANDS DISMISSED W HEREAS THE ASSESSEES APPEAL STANDS PARTLY ALLOWED IN TERMS OF OUR ABOVE ORDER. ORDER PRONOUNCED U/R 34(4) OF INCOME TAX (APPELLATE TRIBUNAL) RULES, 1963. SD/- SD/- (SANDEEP GOSAIN) (MANOJ KUMAR AGGARWAL) / JUDICIAL MEMBER / ACCOUNTANT MEMBER 7 ITA NOS.345-346/JODH/2019 THAKUR BUILDCON PRIVATE LIMITED ASSESSMENT YEAR: 2009-10 MUMBAI; DATED : 21/12/2020 SR.PS:-JAISY VARGHESE ! / COPY OF THE ORDER FORWARDED TO : 1. ' / THE APPELLANT 2. #$' / THE RESPONDENT 3. % ( ) / THE CIT(A) 4. % / CIT CONCERNED 5. &'#( ) , ) , / DR, ITAT, JODHPUR 6. '+,- / GUARD FILE / BY ORDER, / (DY./ASSTT.REGISTRAR) , / ITAT, JODHPUR.