DCIT, New Delhi V. M/s P.P. Jewellers Pvt. Ltd., Delhi

ITA 4387/DEL/2015

• Counselvise Citation: [2019] 116 COUNSELVISE.COM (IT) 3806 (ITAT-DELHI)
• Duration Of Justice: 4 year(s) 1 month(s) 8 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 14-08-2019
• Appeal Filed By: Department
• Order Result: Partly Allowed
• Bench Allotted: F
• Assessment Year: 2007-2008
• Appeal Filed On: 06-07-2015
• Result in Favour of: Partly Allowed
• Court: TRIBUNAL
• Department Lawyers: SULEKHA VERMA
• Assessee Lawyers: R R SINGLA
• Keywords: Bogus purchase
• Section: 40A(3); 143(3); 133A; 153A; 132; 15

Judgement Text

ITA NOS.- 4387 & 3523/DEL/2015 M/S P.P. JEWELLERS PVT. LTD. PAGE 1 OF 7 IN THE INCOME TAX APPELLATE TRIBUNAL (DELHI BENCH: F: NEW DELHI) BEFORE SHRI H.S. SIDHU, JUDICIAL MEMBER AND SHRI ANADEE NATH MISSHRA, ACCOUNTANT MEMBER ITA NO:- 4387/DEL/2015 ( ASSESSMENT YEAR: 2007-08) DCIT, CENTRAL CIRCLE- 25, NEW DELHI. VS. M/S P.P. JEWELLERS PVT. LTD., H-05, P.P. TOWER, NETAJI SUBHASH PLACE, PITAMPURA, DELHI-110034 PAN NO: AAACP0874G APPELLANT RESPONDENT ITA NO:- 3523/DEL/2015 ( ASSESSMENT YEAR: 2007-08) M/S P.P. JEWELLERS PVT. LTD., H-05, P.P. TOWER, NETAJI SUBHASH PLACE, PITAMPURA, DELHI-110034. VS. DCIT, CENTRAL CIRCLE- 25, NEW DELHI. PAN NO: AAACP0874G APPELLANT RESPONDENT REVENUE BY : SMT. SULEKHA VERMA, CIT(DR) ASSESSEE BY : SHRI R.R. SINGLA, CA ORDER PER ANADEE NATH MISSHRA, AM THESE CROSS APPEALS (VIDE ITA NO. 4387/DEL/2015 FIL ED BY REVENUE AND VIDE ITA NO. 3523/DEL/2015 FILED BY THE ASSESSEE) ARE DIRECT ED AGAINST THE ORDER DATED ITA NOS.- 4387 & 3523/DEL/2015 M/S P.P. JEWELLERS PVT. LTD. PAGE 2 OF 7 07/04/2015 OF LEARNED COMMISSIONER OF INCOME TAX (A PPEALS)-29, NEW DELHI. FOR THE SAKE OF CONVENIENCE, THESE APPEALS ARE BEING DISPOS ED OFF THROUGH THIS CONSOLIDATED ORDER. THE GROUNDS OF CROSS APPEALS ARE AS UNDER: (REVENUES APPEAL IN ITA NO.- 4387/DEL/2015) 1. ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CA SE AND IN LAW, THE LD. C1T(A) HAS ERRED IN DELETING THE ADDITION OF RS. 1,29,73,418/- OUT OF TOTAL ADDITION OF RS. 1,39,03,418/- MADE ON ACCOUNT OF BOGUS PURCHASES ON THE BASIS OF ASSUMPTION/PRESUMPTION WHICH IS NOT FLOWING FROM TH E FACTS OF THE CASE. 2. ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CA SE AND IN LAW, THE LD. C1T (A) HAS ERRED IN DELETING THE ADDITION OF RS. 1,29,73,4 18 ESPECIALLY AFTER HOLDING THE PURCHASE TO BE BOGUS BY APPLYING A WHIMSICAL RATIO NOT WARRANTED WITHIN THE PROVISIONS OF THE ACT. 3. ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CA SE AND IN LAW, THE LD. CIT (A) HAS ERRED IN NOT APPRECIATING THE FACT THAT RATIO O F BOGUS PURCHASES TO TOTAL PURCHASES IS 0.8%, WHICH IS VERY NOMINAL AND HENCE THE SAME WERE MEANT FOR ONLY REDUCING ITS PROFIT TO ESCAPE FROM TAXATION. 4. ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CAS E AND IN LAW, THE LD. C1T(A) HAS ERRED IN DELETING THE ADDITION DESPITE HOLDING THAT THE ACTUAL PURCHASES WERE MADE IN CASH IN CONTRAVENTION TO THE PROVISIONS OF SECTION 40A(3) OF THE ACT. 5. ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CAS E AND IN LAW, THE LD. C1T(A) HAS ERRED IN DELETING THE ADDITION ON THE BASIS OF INGE NUINE STOCK REGISTER, WHICH IS PREPARED FROM THE BOGUS INVOICES ISSUED BY NON-EXIS TENT PARTIES. 6. THE ORDER OF THE CIT(A) IS ERRONEOUS AND IS NOT TENABLE ON FACTS AND IN LAW. 7. THE APPELLANT CRAVES LEAVE TO ADD, ALTER OR AMEN D ANY / ALL OF THE GROUNDS OF APPEAL BEFORE OR DURING THE COURSE OF THE HEARING O F THE APPEAL. (ASSESSEES APPEAL IN ITA NO.- 3523/DEL/2015) 1. THAT THE LD. CIT(A) HAS ERRED IN LAW AS WELL AS ON FACTS OF THE CASE IN DECIDING THAT THE APPELLANT COMPANY HAS MISERABLY FAILED TO FILE THE DETAILS OR EVIDENCES TO SHOW THAT ITS 4 SUPPLIERS (FROM WHOM THE APPELLANT COMPANY PURCHASED THE GOODS) WERE HAVING PROFIT EARNING APPARATUS, BY FILING TH E DETAILS OF SUPPLIER ENTITIES, SUCH AS, (I) NAME, PAN AND ADDRESS OF MD / DIRECTORS OF ITS SUPPLIERS ENTITLES, (II) NAME OF THE ASSESSING OFFICERS WITH WHOM SUCH SUPPLIER ENTITIES ARE ASSESSED, (III) COPY OF INCOME TAX RETURNS FILED BY THE SUPPLIER ENTITIES FOR THEIR BUSINESSES AND (IV) THE COPY OF LEDGER ACCOUNT AND COPY OF BANK ACCOUNT OF THE SUPPLIER ENTITIES EVIDENCING THE RECORDING OF PAYME NT MADE BY THE APPELLANT FOR PURCHASE OF GOODS IN NORMAL COURSE OF BUSINESS. 2. THAT THE LD. CIT(A) HAS ERRED IN LAW AS WELL AS ON FACTS OF THE CASE IN DECIDING ITA NOS.- 4387 & 3523/DEL/2015 M/S P.P. JEWELLERS PVT. LTD. PAGE 3 OF 7 THAT THE APPELLANT COMPANY HAS PURCHASED THE DIAMON DS WORTH RS. 1,39,03,418/- FROM THE ENTITIES, OTHER THAN THE SUPPLIER ENTITIES TO WHOM THE APPELLANT MADE PAYMENT QUA PURCHASE OF DIAMONDS, THROUGH BANKING C HANNELS. 3. THAT THE LD. CIT(A) HAS ERRED IN LAW AS WELL AS ON THE FACTS OF THE CASE IN HOLDING THAT THE APPELLANT COMPANY PURCHASED THE DI AMONDS WORTH RS. 1,39,03,418/- IN CASH OUTSIDE THE BOOKS OF ACCOUNT WITHOUT HAVING ANY COGENT OR INCRIMINATING EVIDENCE ON RECORD WHICH IS FOUND AS A RESULT OF SURVEY PROCEEDINGS CARRIED OUT BY THE DEPARTMENT. 4. THAT THE LD. CIT(A) HAS ERRED IN LAW AS WELL AS ON THE FACTS OF THE CASE IN HOLDING THAT THE APPELLANT COMPANY MADE PURCHASES W ORTH RS. 9,30,000/- OUTSIDE THE BOOKS OF ACCOUNTS. 5. THE APPELLANT CRAVES LEAVE TO ADD TO, ALTER, VAR Y MODIFY OR OTHERWISE AMEND THE GROUNDS OF APPEAL BEFORE THE APPEAL IS FINALLY DISP OSED OF. (2) ORIGINAL ASSESSMENT ORDER DATED 18.06.2009 WAS PASSED U/S 143(3) OF INCOME TAX ACT, 1961( I.T. ACT, FOR SHORT) WHEREIN THE R EVISED TOTAL INCOME OF RS. 1,93,79,100/- RETURNED BY ASSESSEE WAS ACCEPTED. F RESH ASSESSMENT ORDER DATED 16/06/2014 WAS PASSED U/S 153A READ WITH SECTION 1 53C OF I.T. ACT, WHEREIN ADDITION AMOUNTING TO RS. 1,39,03,418/- WAS MADE ON ACCOUNT OF BOGUS PURCHASES, AND TOTAL INCOME WAS ASSESSED AT RS. 3,32,82,518/-. FACTS LEA DING TO ASSUMPTION OF JURISDICTION U/S 153C OF I.T. ACT BY ASSESSING OFFICER (AO, FO R SHORT) HAVE BEEN DISCUSSED IN THE FIRST PARAGRAPH OF THE AFORESAID ASSESSMENT ORDER D ATED 16/06/2014; THE RELEVANT PORTION OF WHICH IS REPRODUCED AS UNDER: .SHRI VIDHAN JAIN WAS INTERCEPTED BY THE OFFICERS OF AIU AT IGI AIRPORT ON 02.11.2012. ON INTERCEPTION, HIS STATEMENT WAS RECO RDED U/S 131(1A) OF THE INCOME TAX ACT, 1961WHEREIN HE STATED THAT HE WAS AN EMPLO YEE OF M/S P.P. JEWELLERS PVT. LTD. AND WAS CARRYING JEWELLERY WEIGHTING 13 K.G. ( APPROXIMATELY) RECEIVED FROM M/S APPLY DIAMONDS PVT. LTD. 24, MANA PARMANAND HOUSE, 2 ND FLOOR, OPPOSITE ROXY THEATER, OPERA HOUSE, MUMBAI-4. HE FURTHER STATED THAT HE CARRIED APPROXIMATELY 11 KGS GOLD BAR OF M/S P.P. JEWELLERS PVT. LTD. ISS UED TO M/S APPY DIAMONDS PVT. LTD. ON AN EARLIER TRIP I.E. 22.10.2012 FOR MAKING GOLD JEWELLERY ON JOB WORK BASIS. M/S APPY DIAMONDS PVT. LTD. IS AN ASSOCIATED COMPAN Y OF M/S P.P. JEWELERS PVT. LTD. NOW AFTER GETTING THE JOB WORK DONE HE WAS CARRYING THE GOLD JEWELLERY TO BE ITA NOS.- 4387 & 3523/DEL/2015 M/S P.P. JEWELLERS PVT. LTD. PAGE 4 OF 7 DELIVERED TO M/S P.P. JEWELLERS PVT. LTD. AT KAROL BAGH, DELHI. HE WAS ALSO CARRYING LABOUR CHARGES ISSUE VOUCHER ISSUED BY M/S APPY DIA MONDS PVT. LTD. MUMBAI. THEREFORE, THE SEARCH PROCEEDINGS U/S 132 OF THE IN COME TAX ACT, 1961 WERE CARRIED OUT IN THE CASE OF SHRI VIDHAN JAIN ON 02.11.2012. IN CONSEQUENCE THEREOF, SURVEY U/S 133A OF THE INCOME TAX ACT, 1961 WAS CONDUCTED IN THE BUSINESS PREMISES OF ASSESSEE COMPANY I.E. M/S P.P. JEWELLERS PVT. LTD. 2129-30, GURUDWARA ROAD, KAROL BAGH, DELHI-110005. THE CASE OF THE ASSESSEE COMPA NY WAS ALREADY BEING ASSESSED IN THIS CHARGE. THE ASSESSMENT PROCEEDINGS U/S 153 (C) OF THE INCOME TAX ACT, 1961 HAVE BEEN INITIATED IN THIS CASE AFTER RECORDING TH E SATISFACTION IN WRITING. CONSEQUENTLY, NOTICE U/S 153(C) OF THE INCOME TAX A CT, 1961 DATED 06.12.2013 WAS ISSUED AND SERVED UPON THE ASSESSEE REQUIRING IT TO THE FILE RETURN OF INCOME WITHIN 20 DAYS OF SERVICE OF THE NOTICE. (2.1) THE ASSESSEE FILED APPEAL BEFORE THE LD. COMM ISSIONER OF INCOME TAX (APPEALS)- 29, NEW DELHI, WHEREIN, INTER ALIA, THE ASSESSEE OP POSED THE INVOCATION OF SECTION 153C OF I.T. ACT, IN THE FIRST GROUND OF APPEAL FILED BY THE ASSESSEE BEFORE THE LD. CIT(A). THIS GROUND OF APPEAL WAS DISMISSED BY THE LD. CIT( A) IN PARAGRAPH NOS. 4.1 AND 4.2 OF HIS IMPUGNED APPELLATE ORDER DATED 07/04/2015; RELE VANT PORTION OF WHICH IS REPRODUCED AS UNDER FOR THE EASE OF REFERENCE: 4.1 IN GROUND NO. 1 THE APPELLANT HAS CHALLENGED THE ASSESSMENT FRAMED UNDER SECTION 153A ON THE GROUND THAT NO SEIZURE WAS MADE AND NO INCRIMINATING DOCUMENT/INFORMATION WAS FOUND DURING THE COURSE OF SEARCH. 4.2 WITH REGARD TO THE ABOVE GROUND, I AM OF THE C ONSIDERED VIEW THAT THE PLAIN READING OF THE PROVISIONS OF SECTION 153A INDICATES THAT TH E ASSESSMENT UNDER SECTION 153A IS MANDATORY AND EVEN WHEN NO INCRIMINATING MATERIAL I S FOUND IN THE COURSE OF SEARCH UNDER SECTION 132. AS PER THE PROVISION OF SECTION 153A, ONCE THE SEARCH ACTION HAS BEEN TAKEN, THE AO IS BOUND TO MAKE ASSESSMENT FOR 6 ASS ESSMENT YEARS PRECEDING THE YEAR IN WHICH THE SEARCH TOOK PLACE. SINCE IN THE PRESENT C ASE THE SEARCH WAS CONDUCTED ON 02.11.2012, HENCE THE AO HAS RIGHTLY MADE THE ASSES SMENT UNDER SECTION 153A FOR ASSESSMENT YEAR 2007-08 AS IT FALLS WITHIN A PERIOD OF 6 YEARS PRECEDING THE DATE OF SEARCH. HENCE, I HOLD THAT THE AO HAS PASSED A VALI D ASSESSMENT ORDER. (2.2) ON MERITS, THE LD. CIT(A) ALLOWED PARTIAL REL IEF TO THE ASSESSEE. ITA NOS.- 4387 & 3523/DEL/2015 M/S P.P. JEWELLERS PVT. LTD. PAGE 5 OF 7 (2.3) BOTH REVENUE AS WELL AS ASSESSEE HAVE FILED A PPEALS IN INCOME TAX APPELLATE TRIBUNAL (ITAT, FOR SHORT) AGAINST THE AFORESAID IMPUGNED ORDER DATED 07/04/2015 OF LD. CIT(A). THESE APPEALS ARE NOW BEFORE US. (3) WHEN THE APPEALS CAME UP FOR HEARING BEFORE US, LEARNED AUTHORIZED REPRESENTATIVE (LD. AR, FOR SHORT) FOR THE ASSESS EE SUBMITTED THAT ASSUMPTION OF JURISDICTION U/S 153C OF I.T. ACT BY THE AO WAS IMP ROPER, BECAUSE THE ADDITION WAS NOT MADE ON THE BASIS OF ANY INCRIMINATING MATERIAL FOU ND IN THE COURSE OF SEARCH. THE LD. CIT(DR) OPPOSED THIS CONTENTION OF THE LD. AR. HOW EVER, BOTH SIDES (REVENUE REPRESENTED BY SMT. SULEKHA VERMA, CIT[DR] AND ASSE SSEE REPRESENTED BY SHRI R.R.SINGLA, (CA) AGREED THAT THE LD. CIT(A) HAS NOT PROPERLY ADJUDICATED ON ASSUMPTION OF JURISDICTION BY THE ASSESSING OFFICER U/S 153C O F I.T. ACT. INSTEAD, BOTH SIDES AGREED, THE LD. CIT(A) HAS EXPRESSED HIS VIEW ON APPLICABIL ITY OF SECTION 153A OF I.T. ACT, INSTEAD OF DECIDING THE APPLICABILITY OF SECTION 15 3C OF I.T. ACT IN THE PRESENT CASE. IN THE LIGHT OF THIS, BOTH SIDES EXPRESSED THE VIEW TH AT THE DISPUTED ISSUES IN BOTH APPEALS MAY BE RESTORED TO THE FILE OF THE LD. CIT(A) FOR F RESH ADJUDICATION, AFTER LD. CIT(A) FIRST DECIDES VALIDITY OF ASSUMPTION OF JURISDICTION BY T HE ASSESSING OFFICER U/S 153C OF I.T. ACT. (3.1) WE HAVE HEARD BOTH SIDES. WE HAVE CAREFULLY PERUSED THE MATERIALS AVAILABLE ON RECORD. WE AGREE WITH THE VIEW EXPRESSED BY BOTH S IDES, THAT THE LD. CIT(A) HAS NOT PROPERLY ADJUDICATED ON THE APPLICABILITY ON SECTIO N 153C OF I.T. ACT, ALTHOUGH, THIS WAS RAISED BY THE ASSESSEE IN THE FIRST GROUND OF APPEA L, IN THE APPEAL FILED BEFORE THE LD. CIT(A). THIS IS VERY OBVIOUS FROM THE PERUSAL OF T HE RELEVANT PART OF THE IMPUGNED ITA NOS.- 4387 & 3523/DEL/2015 M/S P.P. JEWELLERS PVT. LTD. PAGE 6 OF 7 ORDER DATED 07/04/2015 OF LD. CIT(A) WHICH HAS ALRE ADY BEEN REPRODUCED IN THE FOREGOING PARAGRAPH NO.(2.1). THEREFORE, IN THE FIT NESS OF THINGS, AND AS BOTH SIDES AGREE TO THIS, WE RESTORE DISPUTED ISSUES IN BOTH T HE APPEALS TO THE FILE OF THE LD. CIT(A) FOR FRESH ORDER WITH THE DIRECTION TO FIRST DECIDE ON VALIDITY OF ASSUMPTION OF JURISDICTION U/S 153C OF I.T. ACT BY THE AO, AND TO PASS FRESH ORDER ON THE MERITS OF THE ADDITIONS IN THE LIGHT OF HIS DECISION ON VALIDITY OF ASSUMPTION OF JURISDICTION BY THE ASSESSING OFFICER U/S 153C OF I.T. ACT. THESE APP EALS ARE DISPOSED OFF WITH THE AFORESAID DIRECTIONS. IN THE RESULT, BOTH APPEALS ARE PARTLY ALLOWED FOR STATISTICAL PURPOSES. ORDER PRONOUNCED IN THE OPEN COURT ON 14 TH DAY OF AUGUST, 2019. SD/- SD/- (H.S. SIDHU) (ANADEE NATH MI SSHRA) JUDICIAL MEMBER ACCOUNTANT MEMBE R DATED: 14.08.2019 POOJA/- COPY FORWARDED TO: 1. APPELLANT 2. RESPONDENT 3. CIT 4. CIT(APPEALS) 5. DR: ITAT ASSISTANT REGISTRAR ITAT NEW DELHI ITA NOS.- 4387 & 3523/DEL/2015 M/S P.P. JEWELLERS PVT. LTD. PAGE 7 OF 7 DATE OF DICTATION 1 3 / 0 8 / 1 9 DATE ON WHICH THE TYPED DRAFT IS PLACED BEFORE THE DICTATING MEMBER DATE ON WHICH THE TYPED DRAFT IS PLACED BEFORE THE OTHER MEMBER DATE ON WHICH THE APPROVED DRAFT COMES TO THE SR. PS/PS DATE ON WHICH THE FAIR ORDER IS PLACED BEFORE THE DICTATING MEMBER FOR PRONOUNCEMENT DATE ON WHICH THE FAIR ORDER COMES BACK TO THE SR. PS/PS DATE ON WHICH THE FINAL ORDER IS UPLOADED ON THE WEBSITE OF ITAT DATE ON WHICH THE FILE GOES TO THE BENCH CLERK DATE ON WHICH THE FILE GOES TO THE HEAD CLERK THE DATE ON WHICH THE FILE GOES TO THE ASSISTANT REGISTRAR FOR SIGNATURE ON THE ORDER DATE OF DISPATCH OF THE ORDER