Ganga Udyog Ltd, Kolkata V. ITO, Ward-47(1), Kolkata

ITA 384/KOL/2020

• Counselvise Citation: [2021] 108 COUNSELVISE.COM (IT) 6601 (ITAT-KOLKATA)
• Duration Of Justice: 9 month(s) 17 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 12-04-2021
• Appeal Filed By: Assessee
• Order Result: Partly Allowed
• Bench Allotted: SMC
• Next Hearing Date: 31-03-2021
• Assessment Year: 2011-2012
• Appeal Filed On: 25-06-2020
• Result in Favour of: Partly Allowed
• Court: TRIBUNAL
• Department Lawyers: RANU BISWAS ADDITIONAL
• Assessee Lawyers: MIRAJ D. SHAH
• Keywords: Bogus purchase
• Section: 143(3); 250; 147; 148

Judgement Text

ITA NO. 384/KOL/2020 ASS ESSMENT YEAR: 2011-2012 GANGA UDYOG LIMITED 1 IN THE INCOME TAX APPELLATE TRIBUNAL, B BENCH, KOLKATA BEFORE SHRI J. SUDHAKAR REDDY, ACCOUNTANT MEMBER & SHRI A.T. VARKEY, JUDICIAL MEMBER I.T.A. NO. 384/KOL/2020 ASSESSMENT YEAR: 2011-2012 GANGA UDYOG LIMITED,............................... ............................ APPELLANT 34/1/3, BAKSHARA ROAD, BAKSHARA, HOWRAH-711110 [PAN:AAIFG7789E] -VS.- INCOME TAX OFFICER,................................ ............................... RESPONDENT WARD-47(1), KOLKATA, 3, GOVERNMENT PLACE (WEST), KOLKATA-700001 APPEARANCES BY: SHRI MIRAJ D. SHAH, A.R., APPEARED ON BEHALF OF THE ASSESSEE SMT. RANU BISWAS, ADDITIONAL CIT, APPEARED ON BEHAL F OF THE REVENUE DATE OF CONCLUDING THE HEARING : MARCH 31, 2021 DATE OF PRONOUNCING THE ORDER : APRIL 12, 2021 O R D E R PER SHRI J. SUDHAKAR REDDY, ACCOUNTANT MEMBER:- THIS APPEAL FILED BY THE ASSESSEE IS DIRECTED AGAI NST THE ORDER OF LD. COMMISSIONER OF INCOME TAX (APPEALS)-14, KOLKATA DA TED 21.01.2020 PASSED UNDER SECTION 250 OF THE INCOME TAX ACT, 196 1 (IN SHORT THE ACT) FOR THE ASSESSMENT YEAR 2011-12 . 2. AT THE OUTSET, THERE IS A DELAY OF 82 DAYS ON TH E PART OF THE ASSESSEE IN FILING THIS APPEAL BEFORE THE TRIBUNAL. IN THIS REGARD, THE PARTNER OF THE ASSESSEE-COMPANY HAS FILED AN APPLICATION SEEKING C ONDONATION OF THE SAID DELAY STATING THAT IT WAS NOT DUE TO ANY MALAF IDE INTENTION OR ITA NO. 384/KOL/2020 ASS ESSMENT YEAR: 2011-2012 GANGA UDYOG LIMITED 2 NEGLIGENCE ON THE PART OF THE ASSESSEE. HE ALSO SUB MITTED THAT DUE TO THE PREVAILING COVID-19 PANDEMIC SITUATION, THE OFFICES OF THE ASSESSEE AS WELL AS THE GOVERNMENT WERE NOT FUNCTIONING, WHICH WAS THE CAUSE OF DELAY. WE ARE SATISFIED THAT THERE WAS A SUFFICIENT CAUSE FOR THE DELAY ON THE PART OF THE ASSESSEE IN FILING THIS APPEAL BEFO RE THE TRIBUNAL. EVEN THE LD. D.R. HAS NOT RAISED ANY OBJECTION IN THIS REGAR D. WE, THEREFORE, CONDONE THE SAID DELAY AND PROCEED TO DISPOSE OF TH E APPEAL OF THE ASSESSEE ON MERIT. 3. THE ASSESSEE IS A PARTNERSHIP FIRM WHICH DERIVES INCOME FROM BUSINESS AND PROFESSION. IT FILED ITS RETURN OF INC OME ON 25.04.2018 DISCLOSING TOTAL INCOME OF RS.72,130/-. THE CASE WA S REOPENED UNDER SECTION 148 OF THE ACT, THEREAFTER THE ASSESSMENT W AS COMPLETED UNDER SECTION 143(3) READ WITH SECTION 147 OF THE ACT ON 11.12.2018 DETERMINING THE TOTAL INCOME OF THE ASSESSEE AT RS. 9,27,120/-, INTER ALIA, MAKING ADDITION OF RS.8,54,993/- ON ACCOUNT OF BOGU S PURCHASES. THE ASSESSEE CARRIED THE MATTER IN APPEAL BEFORE THE LD . CIT(APPEALS), WHEREIN THE LD. CIT(APPEALS) RESTRICTED THE ADDITIO N TO RS.1,96,477/- BY OBSERVING IN LAST PARA OF HIS IMPUGNED ORDER DATED 21.01.2020 AS UNDER:- THEREFORE, AFTER CONSIDERING THE FACTUAL MATRIX OF THE CASE, IT APPEARS THAT THE AO IN THE ASSESSMENT ORDE R HAD TREATED THE ENTIRE ALLEGED PURCHASE AS BOGUS BU T HAS NOT REJECTED THE BOOKS OF ACCOUNT WHICH IS ESSENTIALLY MEANS THAT HE HAS ACCEPTED THE SALES. U NDER SUCH CIRCUMSTANCES, THE HONBLE COURTS HAVE TAKEN A VIEW THAT THE ENTIRE UNVERIFIED PURCHASES ARE NOT RENDERED VULNERABLE FOR ADDITION, ONLY THE ELEMENT OF PROFIT EMBEDDED FROM SUCH PURCHASE SHOULD BE CONSIDERED FOR ADDITION. THE APPELLANT HAD DISCLOSE D A GP OF 22.98% FOR THE AY 2011-12. THEREFORE, IT WOUL D BE REASONABLE TO LIMIT UNDISCLOSED PROFIT EMBEDDED IN THE BOGUS PURCHASE TO 22.98% AT RS.1,96,477/-. THE ADDITION OF RS.8,54,993/- IS RESTRICTED TO RS.1,96, 477/-. THIS GROUND OF APPEAL PARTLY SUCCEEDS AND IS THEREF ORE PARTLY ALLOWED. ITA NO. 384/KOL/2020 ASS ESSMENT YEAR: 2011-2012 GANGA UDYOG LIMITED 3 AGGRIEVED BY THE ORDER OF THE LD. CIT(APPEALS), THE ASSESSEE IS IN FURTHER APPEAL BEFORE US. 4. THE SOLE SUBMISSION OF THE ASSESSEE IS THAT THE DISALLOWANCE CANNOT BE MADE ON THE BASIS OF THE STATEMENT RECORDED FROM SHRI SANJIV KUMAR SINGH WITHOUT CONFRONTING THE ASSESSEE WITH COPY OF THE SAME AND WITHOUT PROVIDING ANY OPPORTUNITY TO THE ASSESSEE TO CROSS EXAMINE THE WITNESS OF THE REVENUE. HE RELIED ON THE ORDER OF THE A(SMC) BENCH OF THIS TRIBUNAL DATED 20.12.2019 IN THE CASE OF HOWRAH SHA CKLE CENTRE VS.- ITO IN ITA NO. 1615/KOL/2019 FOR AY 2011-12 & ITA NO. 1 616/KOL/2019 FOR AY 2012-13, WHEREIN THE ADDITION MADE ON THE BASIS OF THE STATEMENT RECORDED BEHIND BACK OF THE ASSESSEE FROM THE SAME SHRI SANJIV KUMAR SINGH AND WITHOUT GIVING ANY OPPORTUNITY TO CROSS E XAMINE BY THE PR. DIT (INV.), KOLKATA, WAS DELETED AND PRAYED THAT THE AD DITION BE DELETED. 4. ALTERNATIVELY IT WAS SUBMITTED BY THE LD. COUNSE L FOR THE ASSESSEE THAT THE PERCENTAGE ADOPTED BY THE LD. PR. CIT WAS HIGHLY EXCESSIVE AND AS THE ASSESSEES TURNOVER IS LESS THAN RS.40 LAKHS AN D THEREFORE THE NET PROFIT SHOULD BE CONSIDERED AT 8%. EVEN GOING BY TH E GROSS PROFIT AS DECLARED IN THE PROFIT & LOSS ACCOUNT FOR THE YEAR ENDED 31.03.2011 THE NET PROFIT IS 10.04%. 5. THE LD. D.R. OPPOSED THE CONTENTION OF THE LD. C OUNSEL FOR THE ASSESSEE AND RELIED ON THE ORDER OF THE LD. CIT(APP EALS). 6. AFTER CAREFULLY CONSIDERING THE RIVAL SUBMISSION S AND ALSO PERUSING THE RELEVANT MATERIAL AVAILABLE ON RECORD, WE ACCEP T THE ALTERNATIVE CONTENTION OF THE ASSESSEE. THE LD. CIT(APPEALS) IN THE LAST PARA OF HIS ORDER DATED 21.01.2020 HAS DIRECTED THE ASSESSING O FFICER TO ESTIMATE THE GROSS PROFIT ON THE ALLEGED BOGUS PURCHASES @ 22.98 %. AFTER CONSIDERING THE FACTS OF THE CASE, WE RESTRICT THE ADDITION AT THE RATE OF 10% OF ITA NO. 384/KOL/2020 ASS ESSMENT YEAR: 2011-2012 GANGA UDYOG LIMITED 4 RS.8,54,994/-, WHICH COMES TO RS.85,499/-. THUS THE ASSESSEE GETS PART RELIEF. 7. IN THE RESULT, THE APPEAL OF THE ASSESSEE IS ALL OWED IN PART. ORDER PRONOUNCED IN THE OPEN COURT ON APRIL 12, 202 1. SD/- SD/- (A.T. VARKEY) (J. SUDHAKAR REDDY) JUDICIAL MEMBER ACCOUN TANT MEMBER KOLKATA, THE 12 TH DAY OF APRIL, 2021 COPIES TO : (1) GANGA UDYOG LIMITED, 34/1/3, BAKSHARA ROAD, BAKSHARA, HOWRAH-711110 (2) INCOME TAX OFFICER, WARD-47(1), KOLKATA, 3, GOVERNMENT PLACE (WEST), KOLKATA-700001 (3) COMMISSIONER OF INCOME TAX (APPEALS)-14, KOLKA TA; (4) COMMISSIONER OF INCOME TAX- , (5) THE DEPARTMENTAL REPRESENTATIVE (6) GUARD FILE BY ORDER ASSISTANT REGISTRAR, INCOME TAX APPELLATE TRIBUNAL, KOLKATA BENCHES, KOLKATA LAHA/SR. P.S.