Joneja Bright Steel Pvt. Ltd., Faridabad V. Addl. CIT, Faridabad

ITA 3761/DEL/2012

• Counselvise Citation: [2017] 128 COUNSELVISE.COM (IT) 3518 (ITAT-DELHI)
• Duration Of Justice: 4 year(s) 8 month(s) 29 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 18-04-2017
• Appeal Filed By: Assessee
• Order Result: Partly Allowed
• Bench Allotted: D
• Next Hearing Date: 17-04-2017
• Assessment Year: 2008-2009
• Appeal Filed On: 20-07-2012
• Result in Favour of: Partly Allowed
• Court: TRIBUNAL
• Department Lawyers: UC DUBEY
• Assessee Lawyers: RAKESH GUPTA
• Keywords: Opportunity of being heard
• Section: 131

Judgement Text

1 ITA NOS. 3761/DEL & 3884/DEL/2012 IN THE INCOME TAX APPELLATE TRIBUNAL DELHI BENCH: D NEW DELHI BEFORE SHRI R. S. SYAL, VICE PR ESIDENT AND MS SUCHITRA KAMBLE, JUDICIAL MEMBER I.T.A .NO. 3761/DEL/2012 (ASSESSM ENT YEAR-2008-09) JONEJA BRIGHT STEEL PVT. LTD. PLOT NO. 244, SECTOR-24 FARIDABAD AABCJ0369B (APPELLANT) VS ADDL. CIT RANGE-II FARIDABAD (RESPONDENT) I.T.A .NO. 3884/DEL/2012 (ASSESSM ENT YEAR-2008-09) ACIT CIRCLE II, B-BLOCK CGO COMPLEX, NH-IV FARIDABAD (APPELLANT) VS JONEJA BRIGHT STEELS PVT. LTD. PLOT NO. 244, SECTOR 24, FARIDABAD AABCJ0369B (RESPONDENT) APPELLANT BY SH. RAKESH GUPTA, ADV RESPONDENT BY SH. U. C. DUBEY, SR. DR ORDER PER SUCHITRA KAMBLE, JM THESE TWO APPEALS ARE FILED BY THE ASSESSEE AND THE REVENUE AGAINST THE ORDER DATED 24/4/2012 PASSED BY CIT(A)-FARIDABAD ON THE GROUNDS MENTIONED DATE OF HEARING 17.04.2017 DATE OF PRONOUNCEMENT 18.04.2017 2 ITA NOS. 3761/DEL & 3884/DEL/2012 HEREUNDER:- 1. ON THE FACTS & IN THE CIRCUMSTANCES OF THE CASE AND IN LAW, THE LD. COMMISSIONER OF INCOME TAX (APPEALS) ERRED IN CONFI RMING THE REJECTION OF THE BOOKS OF ACCOUNTS OF THE ASSESSEE U/S 145(3) OF THE INCOME TAX ACT, 1961 AND THEREBY CONFIRMING THE DIS ALLOWANCE OF RS.10,00,000/- AND THE REASONS ASSIGNED FOR DOING S O ARE WRONG AND CONTRARY TO THE FACTS AND CIRCUMSTANCES OF THE CASE, PROVISIONS OF THE INCOME TAX ACT, 1961 AND THE RULES MADE THER EUNDER. 2. ON THE FACTS & IN THE CIRCUMSTANCES OF THE CASE AND IN LAW, THE LD. COMMISSIONER OF INCOME TAX (APPEALS) ERRED IN CONFI RMING THE ADDITION OF RS.10,00,000/- WHICH IS CALCULATED ON ADHOC BASIS AND ARE DONE ON ACCOUNT OF MERE REJECTION OF BOOKS OF A CCOUNT AND THE REASONS ASSIGNED FOR DOING SO ARE WRONG AND CONTRAR Y TO THE FACTS AND CIRCUMSTANCES OF THE CASE, PROVISIONS OF THE IN COME TAX ACT, 1961 AND THE RULES MADE THEREUNDER. 2. THE LD. AR SUBMITTED THAT THESE MATTERS HAVE BE EN REMANDED BACK TO THE ITAT FOR FRESH DECISION AFTER AFFORDING THE PAR TIES AN OPPORTUNITY OF BEING HEARD BY THE HONBLE PUNJAB & HARYANA HIGH COURT IN ITA NO. 204/2014 & ITA NO. 423/2014 WHICH ARE FILED BY THE ASSESSEE VIDE O RDER DATED 04.09.2015. PARA 12 OF THE SAID ORDER IS EXTRACTED AS UNDER:- 12. IN THE CIRCUMSTANCES, THE IMPUGNED ORDER IS SE T ASIDE AND THE MATTER IS REMANDED TO THE INCOME TAX APPELLATE TRIBUNAL FO R FRESH DECISION AFTER AFFORDING THE PARTIES AN OPPORTUNITY OF BEING HEARD . IT WILL BE OPEN TO THE PARTIES TO PRODUCE THE PAN NUMBERS BEFORE THE TRIBU NAL. IT IS CLARIFIED THAT IT WOULD BE OPEN TO THE TRIBUNAL TO EITHER DECIDE T HE MATTER ITSELF OR REMAND THE SAME TO THE ASSESSING OFFICER OR TO THE COMMIS SIONER OF INCOME TAX (APPEALS). 3. THE RETURN OF INCOME WAS FILED ON 29/09/2008 DEC LARING INCOME OF RS.1,71,65,900/-. THE ASSESSEE COMPANY IS ENGAGED IN THE BUSINESS OF MANUFACTURING OF COLD DRAWN BRIGHT BARS, GROUND BAR S, PEALED BARS ETC. THE ASSESSEE HAD PURCHASED IRON AND STEEL RODS FOR THE PURPOSE OF MANUFACTURING OF VARIOUS ITEMS. THE ASSESSEE CLAIMED THAT IT HAD PURCHASED THE MATERIAL FROM THREE ENTITIES I.E. M/S RAMA ENTERPRISES, M/S AGS E NTERPRISES & M/S ROYAL INDUSTRIES CORPORATION. THE ASSESSING OFFICER MAD E THE ENQUIRIES FROM THE EXCISE AND TAXATION OFFICER CUM ASSESSING AUTHORITY ON THE BASIS OF TILS 3 ITA NOS. 3761/DEL & 3884/DEL/2012 NUMBERS SHOWN IN THE PURCHASE INVOICES IT WAS FOUND THAT THE PURCHASES HAD BEEN MADE BY THE THREE ENTITIES MENTIONED HEREIN AB OVE AND THEREAFTER IN TURN SOLD TO THE ASSESSEE. THE ASSESSEE PAID THE AMOUNT S WHICH WERE CREDITED IN THE BANK ACCOUNTS OF THE VENDORS. THEREAFTER THESE AMOUNTS WERE WITHDRAWN/PAID OVER/CREDITED TO ANOTHER ENTITY NAME LY M/S TRADING MAA DURGA COMPANY WHO IN TURN WITHDREW THE SAME IMMEDIA TELY. 4. THE SUMMONS WERE ISSUED U/S 131(1) OF THE ACT WH ICH ADMITTEDLY COULD NOT BE SERVED BY THE INSPECTOR WHO REPORTED THAT TH E NAMES OF THE VENDORS APPEARED AT THE ADDRESSES GIVEN BUT THEY HAD LEFT T HE PREMISES. THE EXCISE & TAXATION AUTHORITIES CONFIRMED THAT THE PURCHASES H AD BEEN MADE BY THE VENDORS FROM M/S MAA DURGA TRADING COMPANY. HOWEVE R, THE ENQUIRIES MADE BY THE ASSESSING OFFICER REVEALED THAT M/S MAA DURG A TRADING COMPANY WERE NOT FOUND TO BE GENUINE. IT IS IMPORTANT TO NOTE T HAT WHAT WAS FOUND NOT TO BE GENUINE WERE THE PURCHASES MADE BY M/S MAA DURGA TR ADING COMPANY. IT IS DIFFICULT TO ASCERTAIN WHICH PURCHASES WERE FOUND N OT TO BE GENUINE. IN OTHER WORDS, IT IS DIFFICULT TO ASCERTAIN THAT ALL OR ONL Y SOME OF THE PURCHASES OF M/S MAA DURGA TRADING COMPANY WERE FAKE. IT WAS ALSO N OT CLEAR WHETHER THE ONLY STOCK LYING WITH THE VENDORS WAS PURCHASED FROM M/S MAA DURGA TRADING COMPANY OR WHETHER THE VENDORS HAD ALSO ACQUIRED ST OCK FROM OTHER SOURCES AS WELL. EVEN ASSUMING THAT THEIR PURCHASES FROM M /S MAA DURGA TRADING COMPANY WERE FAKE, IT WOULD NOT NECESSARILY REFLECT ADVERSELY UPON THE SALES BY THE VENDORS TO THE ASSESSEE. THIS EVIDENCE WOULD B E RELEVANT WHILE CONSIDERING WHETHER THE PURCHASES BY THE ASSESSEE WERE GENUINE OR NOT. 5. THE HONBLE HIGH COURT IN PARA 9 AND 10 OF THE O RDER DATED 04.09.2015 OBSERVED THAT: 9. BY AN ORDER DATED 26/11/2014, A DIVISION BENCH OF THIS COURT NOTED THAT A NOTICE U/S 131 OF THE ACT HAD BEEN SERVED UP ON M/S RAMA ENTERPRISES. WE ARE INFORMED THAT PAN NUMBERS WERE CALLED FOR AND HAVE NOW BEEN PRODUCED. THE VENDORS APPEAR TO HAVE PAID TAX. THE EFFECT 4 ITA NOS. 3761/DEL & 3884/DEL/2012 THEREOF WOULD HAVE TO BE CONSIDERED. IT WOULD NOW BE POSSIBLE TO ASCERTAIN IN A MORE SATISFACTORY MANNER THE GENUINE NESS OF THE ENTRIES IN THE ASSESSEES BOOKS OF ACCOUNT AS WELL AS THE GENU INENESS OF THE TRANSACTIONS. 10. WHILE SETTING ASIDE THE DISALLOWANCE OF THE ASS ESSEE DEDUCTIONS ON ACCOUNT OF THE PURCHASES, THE CIT(A) UNDERTOOK A DE TAILED ANALYSIS OF THE PRODUCTION FIGURES FOR THE PREVIOUS ASSESSMENT YEAR S AND FOR THE ASSESSMENT YEAR IN QUESTION. HAVING DONE SO, IT AR RIVED AT THE GP RATIO AND INFERRED THAT THE APPELLANT HAD RECEIVED THE MA TERIAL CORRESPONDING TO THE PURCHASES MADE FROM THE VENDORS. IT WAS FOUND FOR INSTANCE THAT THE EXISTENCE OF THE VENDORS STOOD CONFIRMED BY THE EXC ISE & TAXATION OFFICER. THE ASSESSEE WOULD RELY UPON THE PAN NUMBERS WHICH WERE NOW PRODUCED DURING THE COURSE OF THESE APPEALS. THE E XCISE RECORD WAS ALSO ANALYZED BY THE CIT(A). THE CIT(A) UNDERTOOK A DET AILED ANALYSIS IN COMING TO THIS CONCLUSION. HOWEVER, SOME OF THE CR UCIAL ASPECTS HAVE NOT BEEN CONSIDERED BY THE TRIBUNAL. THE TRIBUNAL FOR INSTANCE HELD THAT THE DETAILED ENQUIRY MADE BY THE ASSESSING OFFICER BY I SSUING SUMMONS U/S 131 OF THE ACT TO THE VENDORS AND ALSO THE ENQUIRY MADE FROM THE BANK AUTHORITIES ESTABLISHED THAT THE PURCHASES WERE NOT GENUINE. THE ORDER DOES NOT INDICATE ANY REASONS IN SUPPORT OF THIS FI NDING AND IN ANY EVENT VARIOUS ASPECTS WHICH HAVE BEEN DEALT WITH BY THE C IT(A) HAVE NOT BEEN TAKEN INTO CONSIDERATION WHILE ARRIVING AT THIS FIN DING. FURTHER, THE EFFECT OF THE FINDING THAT THE PAYMENTS BY THE ASSESSEE TO ITS VENDORS AND OF M/S MAA DURGA TRADING COMPANY HAVING WITHDRAWN THE SAME IS NOT DEALT WITH SATISFACTORILY. MERELY BECAUSE M/S MAA DURGA TRADING COMPANY WITHDREW THE AMOUNT WHICH WAS PAID BY THE ASSESSEE TO ITS VENDORS WOULD NOT LEAD TO THE CONCLUSION THAT THE TRANSACTI ONS BETWEEN THE ASSESSEE AND THE VENDORS WERE FICTITIOUS. SIMILARL Y, THE TRIBUNAL NOTED THAT THE CONFIRMATION RECEIPTS OF THE SAID SUPPLIES WERE SIGNED BY DIFFERENT PERSONS WHILE THE BANK ACCOUNT WERE OPERATED BY OTH ER PERSONS. THIS FACT HAS BEEN HELD AGAINST THE ASSESSEE. THIS FINDING W OULD BE PERVERSE. THERE IS NOTHING UNUSUAL IN DIFFERENT PERSONS OPERA TING THE BANK ACCOUNT OF A COMPANY AND SIGNING THE CONFIRMATION RECEIPTS OF THE SUPPLY OF GOODS. 5 ITA NOS. 3761/DEL & 3884/DEL/2012 5. THE LD. AR SUBMITTED THAT THERE ARE CERTAIN DOCU MENTS WHICH WERE PRESENTED BEFORE THE CIT(A) AS WELL AS THE ASSESSIN G OFFICER AND THE SAME WERE NOT TAKEN INTO COGNIZANCE. THE LD. AR SUBMITTED TH AT THE ASSESSING OFFICER HAS NOT VERIFIED THE SAME. THEREFORE, THE SAME HAS TO BE VERIFIED AND LOOKED INTO BY THE ASSESSING OFFICER. THE LD. AR REQUESTED TO REMAND BACK THE MATTER BEFORE THE ASSESSING OFFICER. THE LD. DR ALSO SUPPO RTED HIS ARGUMENTS. 6. WE HAVE HEARD BOTH THE PARTIES AND PERUSED THE O RDER DATED 4/9/2015 PASSED BY THE HONBLE PUNJAB & HARYANA HIGH COURT I N ASSESSEES CASE FOR ASSESSMENT YEAR 2008-09. THE LD. AR AND LD. DR BOT H AGREED TO REMAND BACK THE MATTER BEFORE THE ASSESSING OFFICER. IT IS NECESSARY TO PRODUCE THE PAN NUMBERS OF THE RESPECTIVE PARTIES WHICH ARE NOW AVAILABLE BEFORE THE ASSESSING OFFICER. THE ENTIRE ISSUE NEEDS TO BE LO OK INTO AFRESH BY THE ASSESSING OFFICER. THEREFORE, WE ARE DIRECTING THE ASSESSING OFFICER TO DECIDE THIS ISSUE AFRESH BY GIVING OPPORTUNITY OF HEARING TO THE ASSESSEE DURING THE COURSE OF ASSESSMENT PROCEEDINGS. 7. IN RESULT, APPEALS OF THE ASSESSEE AND THE REVEN UE ARE PARTLY ALLOWED FOR STATISTICAL PURPOSE. ORDER PRONOUNCED IN THE OPEN COURT ON 18 TH APRIL, 2017 . SD/- SD/- (R. S. SYAL) (SUCHITRA KAMBLE) VICE PRESIDENT JUDICIAL MEMBER DATED: 18/04/2017 R. NAHEED * COPY FORWARDED TO: 1. APPELLANT 2. RESPONDENT 3. CIT 6 ITA NOS. 3761/DEL & 3884/DEL/2012 4. CIT(APPEALS) 5. DR: ITAT ASSISTANT REGISTRAR ITAT NEW DELHI DATE 1. DRAFT DICTATED ON 17/04/2017 PS 2. DRAFT PLACED BEFORE AUTHOR 17/04/2017 PS 3. DRAFT PROPOSED & PLACED BEFORE THE SECOND MEMBER .2017 JM/AM 4. DRAFT DISCUSSED/APPROVED BY SECOND MEMBER. JM/AM 5. APPROVED DRAFT COMES TO THE SR.PS/PS 18.04.2017 PS/PS 6. KEPT FOR PRONOUNCEMENT ON PS 7. FILE SENT TO THE BENCH CLERK 1 8 .04.2017 PS 8. DATE ON WHICH FILE GOES TO THE AR 9. DATE ON WHICH FILE GOES TO THE HEAD CLERK. 10. DATE OF DISPATCH OF ORDER.