VILAYATI RAM MITTAL PVT. LTD., NEW DELHI V. ITO, WARD- 26(3), NEW DELHI

ITA 4442/DEL/2017

• Counselvise Citation: [2017] 127 COUNSELVISE.COM (IT) 2779 (ITAT-DELHI)
• Duration Of Justice: 5 month(s) 24 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 28-12-2017
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: G
• Assessment Year: 2010-2011
• Appeal Filed On: 04-07-2017
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: SUBASH VERMA
• Assessee Lawyers: PADMA PRIYA
• Keywords: Bogus purchase; Accommodation entries; Onus to prove
• Section: 69C; 133(6); 147; 148

Judgement Text

PAGE | 1 INCOME TAX APPELLATE TRIBUNAL DELHI BENCH B : NEW DELHI BEFORE SHRI BHAVNESH SAINI , JUDICIAL MEMBER AND SHRI PRASHANT MAHARISHI, ACCOUNTANT MEMBER ITA NO. 4442/DEL/2017 (ASSESSMENT YEAR: 2010 - 11 ) VILAYATI RAM MITTAL PVT. LTD, F - 345, KOTLA MUBARAKPUR, NEW DELHI PAN:AABCV4002F VS. ITO, WARD - 26(3), NEW DELHI (APPELLANT) (RESPONDENT) ASSESSEE BY : MS. PADMA PRIYA, ADV REVENUE BY: SHRI SUBASH VERMA, SR. DR DATE OF HEARING 11/10 /2017 DATE OF PRONOUNCEMENT 2 8 / 1 2 /2017 O R D E R PER PRASHANT MAHARISHI , A. M. 1. THIS IS AN APPEAL FILED BY THE ASSESSEE AGAINST THE ORDER OF THE LD CIT ( A) - 9, NEW DELHI DATED 01.05.2017 FOR THE ASSESSMENT YEAR 2010 - 11. 2. THE ASSESSEE HAS RAISED THE FOLLOWING GROUNDS OF APPEAL: - A. THAT THE ALLEGED NOTICE DATED 05.03.2015 FOR THE RE - OPENING OF ASSESSMENT FOR THE YEAR 2010 - 11 SENT BY THE RESPONDENT REVENUE AUTHORITY WAS NEVER RECEIVED BY THE APPELLANT AND THEREFORE THE RE - ASSESSMENT CANNOT BE SAID TO HAVE REOPENED IN THE ABSENCE OF A NOTICE. B. THAT THE RESPONDENT HAS FAILED TO PRODUCE ANY PROOF OF SERVICE OF NOTICE OF RE - ASSESSMENT. C. THAT THE ADDITION OF RS. 12,70,221/ - PURPORTEDLY DONE UNDER SECTION 69C IS BAD IN LAW, SINCE THE PAYMENTS FOR THE SAID SUM WERE DONE TO BONA FIDE VENDORS VIDE CHEQUES PAID INTO THE ACCOUNTS OF THE RESPECTIVE VENDORS. D. THAT THE IMPUGNED ORDER HAS UNFORTUNATELY IGNORED THE SUBMISSIONS OF THE APPELLANT HEREIN THAT THE ORIGINAL RECORDS OF THE APPELLANT ARE IN THE CUSTODY OF MILITARY TO OBTAIN T HE ABOVEMENTIONED RECORDS FROM MES AND THE RESPONDENT REVENUE AUTHORITY SHOULD HAVE OBTAINED THE SAME FROM MES. E. THAT THE APPELLANT HAS PROVIDED VALID AND SUFFICIENT PROOF OF THE BANKING TRANSACTION CARRIED OUT REGARDING THE PURCHASE FROM FIRMS, NIRUSH TRAD ING CO., AMAR ENTERPRISES, AND LUNAR SALES AGENCY PVT. LTD. IN THE FORM OF LETTER FROM THE BANK OF BARODA, VIDE WHOSE CHEQUE THE ASSAILED TRANSACTIONS WERE CARRIED OUT. F. THAT FURTHER THE RESPONDENT REVENUE AUTHORITY HAS NO JURISDICTION TO PRESUME ILLEGITIMA CY OF A TRANSACTION CARRIED OUT THROUGH BONA FIDE MEANS OF BANKING CHANNELS. SUCH AN ASSUMPTIVE APPROACH HAS THE POTENTIAL OF BRINGING INTO QUESTION THE WHOLE BANKING SYSTEM AND ALL LEGITIMATE TRANSACTIONS CARRIED FORTH WITHIN THE SYSTEM. THIS HONBLE TRIB UNAL IN THE CASE OF ITO WARD 2(2), GHAZIABAD V. RAY STEELS 2016 SCC ONLINE ITAT 3141 FOUND THAT IN THE ABSENCE OF ANY EVIDENCE OR DEFECT IN THE BOOKS OF ACCOUNT OR ANY HEAVY CASH DEPOSIT VILAYATI RAM MITTAL PVT. LTD VS. ITO, ITA NO. 4442/DEL/2017 (ASSESSMENT YEAR: 2010 - 11 ) PAGE | 2 IN THE ACCOUNT OF THE APPELLANT THE TRANSACTIONS ENTERED THROUGH PROP ER BANKING CHANNEL COULD NOT BE TERMED AS BOGUS. G. THAT THE THREE BANKING TRANSACTIONS FROM AMONGST MULTIPLE TRANSACTIONS MANIFESTS THE PRESUMPTIVE NATURE OF THE WHOLE RE - ASSESSMENT EXERCISE WITHOUT THE RESPONDENT REVENUE AUTHORITY DISCHARGING ITS BURDEN OF PROOF TO SHOW THAT THE TRANSACTIONS CARRIED OUT VIDE TRUSTED BANKING CHANNELS WAS PRIMA FACIE BOGUS. REVENUE OUGHT TO HAVE FIRST DISCHARGED ITS OWN BURDEN TO SHOW A PRIMA - FACIE CASE, WHICH IT HAS COMPLETELY FAILED TO DO. H. THAT THE CHEQUES DRAWN BY THE APPE LLANT WERE ACCOUNT PAYEE CHEQUES AND THEREFORE THE SAME COULD NOT HAVE USED FRAUDULENTLY BY THE APPELLANT. I. THAT THE FOLLOWING TRANSACTIONS WERE CARRIED OUT THROUGH BANK CHANNELS AND HENCE STAND PROVED IN THE ABSENCE OF ANY CONTRARY EVIDENCE: PARTY NAME TRA NSACTION DATE CHEQUE NO. AND BANK NAME M/S LINUX SALES AGENCY PVT. LTD. BILL NO. 1035 DATED 21.12.2009 OF RS. 1,86,980/ - AND BILL NO. 1067 DATED 31.12.2009 OF RS. 23069/ - CHEQUE NO. 14027 DATED 12.02.2010 FOR RS. 1,60,000/ - AND ACCOUNT PAYEE CHEQUE NO. 140294 DATED 04.02.2010 FOR RS 49,000/ - RESPECTIVELY ISSUED ON BANK OF BARODA, ANUNDH , PUNE M/S AMAR ENTERPRISES M/S NIRUSH TRADING CO. BILL NO. 196 DATED 02.05.2009 OF RS. 3,42,514/ - BILL NO. 54 DATED OF RS. 3,60,053/ - AND BILL NO. 144 DATED OF RS. 3,5 7,642/ - CHEQUE NO. 132225 DATED 01.06.2009 FOR RS. 3,42,514/ - ISSUED ON BANK OF BARODA, AUNDH, PUNE CHEQUE NO. 133960 DATED 09.08.2009 FOR RS. 3,60,053/ - AND ACCOUNT PAYEE CHEQUE NO. 36336 DATED 05.11.2009 FOR RS. 3,57,642 RESPECTIVELY ISSUED ON BANK OF B ARODA, AUNDH, PUNE M/S NIRUSH TRADING CO. BILL NO. 54 DATED OF RS. 3,60,053/ - AND BILL NO. 144 DATED 16.05.2009 OF RS. 3,57,642/ - CHEQUE NO. 133960 DATED 09.08.2009 FOR RS. 3,60,053/ - AND ACCOUNT PAYEE CHEQUE NO. 136336 DATED 05.11.2009 FOR RS. 3,57,642 RESPECTIVELY ISSUED ON BANK OF BARODA, AUNDH, PUNE J. THAT FURTHER ANY NON - DISCLOSURE ON PART OF THE THREE VENDOR FIRMS OF SUCH INCOME RECEIVED IN THEIR ACCOUNT BOOKS MUST BE DEALT WITH APPROPRIATELY BY REVENUE AUTHORITIES AND THE APPELLANT IS BOUND TO PROVIDE FULL COOPERATION IN THIS REGARD. HOWEVER IN THE SAME VEIN THE ABSENCE OF SUCH INCOMES CANNOT BE FROM THE RECIPIENT VENDORS CANNOT BE A GROUND TO REOPEN ASSESSMENT OF THE APPELLANTS RECORDS. K. THAT THE APPELLANT PAID INCOME TAX OF RS. 6264718/ - FOR T HE ASSESSMENT YEAR 2010 - 11 AND THEREFORE, THERE EXISTED NO REASON ON PART OF THE APPELLANT TO NOT DISCLOSE SUCH INCOME AS HAS BEEN ALLEGED TO HAVE BEEN FRAUDULENTLY HIDDEN BY THE RESPONDENT AUTHORITY. 3. THE ASSESSEE IS A COMPANY ENGAGED IN THE BUSINESS OF BUILDING AND CONTRACT WORK, FILED ITS RETURN OF INCOME ON 30.09.2010 FOR RS. 18054000/ - . SUBSEQUENTLY, BASED ON INFORMATION RECEIVED FROM MAHARASHTRA VAT DEPARTMENT THE CASE WAS REOPENED U/S 147 OF THE A CT BY ISSUE OF NOTICE U/S 148 ON 05.03.2015 . THE CASE OF THE ASSESSEE WAS REOPENED ON THE GROUND THAT ASSESSEE HAS TAKEN ACCOMMODATION ENTRY FROM NON - GENUINE PURCHASE FROM THREE CONCERNS OF RS. 1270221/ - . BEFORE VILAYATI RAM MITTAL PVT. LTD VS. ITO, ITA NO. 4442/DEL/2017 (ASSESSMENT YEAR: 2010 - 11 ) PAGE | 3 THE LD ASSESSING OFFICER THE ASSESSEE CONTESTED, THAT ASSESSEE HAS PURCHASED GOODS AS WELL AS THE PAYMENTS HAVE BEEN MADE FOR PURCHASES THROUGH BANKING CHANNEL. THE MAIN CONTENTION OF THE ASSESSEE WAS THAT THE BILL ARE LYING IN THE CUSTODY OF MES COLLEGE OF MILITARY ENGINEERING , PUNE AS THE BU ILDING IN WHICH THE RECORDS WERE SOLD WAS DEMOLISHED AND RECORDS ARE IN THEIR CUSTODY. THE LD ASSESSING OFFICER REJECTED THE CONTENTION OF THE ASSESSEE AND MADE AN ADDITION OF RS. 1270221/ - U/S 69C AND ASSESSED THE TOTAL INCOME AT RS. 19324221/ - . ASSESSEE PREFERRED APPEAL BEFORE THE LD CIT ( A) CHALLENGING THE ADDITION ON THE MERITS ONLY WHICH WAS CONFIRMED. THEREFORE, THE ASSESSEE IS IN APPEAL. 4. VIDE GROUND NO A & B, THE LD AR CHALLENGED THE REOPENING ALSO BEFORE US AND STATED THAT NOTICE U/S 148 WAS NOT SER VED ON THE ASSESSEE. 5. THE LD DR VEHEMENTLY CONTESTED THE SAME STATING THAT THIS PLEA WAS TAKEN NEITHER BEFORE THE LD AO NOR BEFORE THE LD CIT ( A) AND THEREFORE, IS NOT SUSTAINABLE NOW. HE FURTHER REFERRED TO THE ASSESSMENT ORDER WHEREIN, THE LD AO HAS CATE GORICALLY STATED THAT THE NOTICE WAS SERVED ON THE ASSESSEE. HE FURTHER SUBMITTED THAT THE REOPENING HAS BEEN MADE BASED ON INFORMATION RECEIVED FROM VAT AUTHORITIES AND THEREFORE, REOPENING IS VALID. HE RELIED UPON THE DECISION OF HON'BLE DELHI HIGH COURT IN CASE OF PARAMOUNT COMMUNICATION . 6. WE HAVE CAREFULLY CONSIDERED THE RIVAL CONTENTIONS AND PERUSED THE ORDERS OF THE AO WHERE IT HAS BEEN CATEGORICALLY MENTIONED THAT NOTICE HAS BEEN SERVED ON THE ASSESSEE. THE ABOVE GROUND WAS TAKEN NEITHER BY THE ASSES SEE BEFORE THE LD CIT ( A) NOR BY SUBMITTING AN AFFIDAVIT BEFORE US . THE ADDRESS OF THE ASSESSEE ALSO REMAINS THE SAME. ASSESSEE HAS ALSO NOT STATED REASON THAT WHY THIS ISSUES WAS NOT RAISED BEFORE THE LOWER AUTHORITIES AND NO EVIDENCES WERE LED BEFORE US BY EXAMINATION OF THE FILE OR BY ANY OTHER METHOD THAT NOTICE IS NOT SERVED ON THE ASSESSEE WHEN THE LD AO HAS CATEGORICALLY MENTIONED THE FACT ABOUT SERVICE OF THE NOTICE.. T HEREFORE, IN ABSENCE OF ANY SERIOUS CHALLENGE TO THE ASPECT OF SERVICE OF NOTICE THE ABOVE GROUND IS REJECTED. FURTHER, WITH RESPECT TO THE INFORMATION BASED ON WHICH THE CASE OF THE ASSESSEE IS REOPENED IS ALSO RECEIVED FROM MAHARASHTRA VAT AUTHORITIES STATING THAT ASSESSEE HAS ENTERED INTO ACCOMMODATION ENTRIES TRANSACTION AND THE PURCHASES ARE BOGUS. THE ISSUE OF REOPENING IS FULLY COVERED AGAINST THE ASSESSEE BY THE DECISION OF THE HONBLE DELHI HIGH COURT IN PRINCIPLE COMMISSIONER OF INCOME TAX VS PARAMOUNT COMMUNICATIONS P VT L TD 392 ITR 4 44 (DELHI). IN VIEW OF THIS THE ARGU MENTS OF THE LD. AUTHORIZED REPRESENTATIVE ON THE ISSUE OF REOPENING VIDE GROUND NO A & B ARE DISMISSED. 7. COMING ON THE ISSUE OF THE MERIT VIDE GROUND NO C TO K , THE LD. AUTHORIZED REPRESENTATIVE ARGUED THAT ASSESSEE HAS MADE PAYMENT TO THE PARTIES BY BA NKING CHANNEL AND SHE SUBMITTED THE COPY OF THE BANK CERTIFICATE FROM BANK OF BARODA DATED 3/3/2016 WHEREIN THE DETAILS OF THE CHEQUE AND THE DATE ON WHICH THE AMOUNT HAS BEEN TRANSFERRED TO THE ABOVE PARTIES ARE MENTIONED . SHE ALSO VILAYATI RAM MITTAL PVT. LTD VS. ITO, ITA NO. 4442/DEL/2017 (ASSESSMENT YEAR: 2010 - 11 ) PAGE | 4 SUBMITTED THE COPY OF T HE ACKNOWLEDGEMENT OF SALES TAX RETURN FILED BY THE ASSESSEE WHERE THE SET - OFF ON THE ABOVE PURCHASES WAS CLAIMED AND NO OBJECTION IS HAS BEEN RAISED BY THE VAT AUTHORITIES. IN VIEW OF THIS , SHE SUBMITTED THAT ASSESSEE HAS DISCHARGED ITS COMPLETE ONUS OF P ROVING THE PURCHASES. SHE FURTHER STATED THAT ASSESSEE COULD NOT PRODUCE THE BILLS BEFORE THE LD. ASSESSING OFFICER FOR THE REASON THAT IT WAS CARRYING ON WORK AT PUNE AND AFTER THE CANCELLATION OF THE SUBJECT WORK, THE SITE WAS TAKEN OVER BY THE M ES AND A LL THE RECORDS AND DOCUMENTS WHICH WERE KEPT THEIR SITE OFFICE HAVE BEEN TAKEN OVER AS WELL. THE ASSESSEE IS FREQUENTLY REQUESTING THEM TO RELEASE ALL THE DOCUMENTS AND RECORDS AS THEY WERE REQUIRED FOR THE PURPOSE OF THE INCOME TAX RETURNS ETC . HOWEVER TH E SAME HAS NOT BEEN RETURNED. THE ASSESSEE ON 03/11/2016 HAS FURTHER REQUESTED THE PHOTOCOPY OF THE TAX INVOICES FOR THE ABOVE PERIOD. THEREFORE , SHE SUBMITTED THAT MERELY BECAUSE THE BILLS HAVE NOT BEEN PRODUCED THE ADDITION CANNOT BE MADE. SHE FURTHER RE LIED ON THE DECISION OF THE COORDINATE BENCH IN CASE OF ITO VS. REY STEALS 2016 SCC ONLINE ITAT 3141 DATED 07/12/2015 WHEREIN CASE OF THE BOGUS PURCHASES THE COORDINATE BENCH HAS DELETED THE ADDITION. SHE REQUESTED AN OPPORTUNITY TO SUBMIT BILLS. 8. THE LD DR VEHEMENTLY SUBMITTED THAT AS THE ASSESSEE HAS NOT SUBMITTED THE BILL AS WELL AS THE PARTIES HAVE NOT REPLIED TO NOTICE OF THE ASSESSING OFFICER U/S 133(6) OF THE ACT THE ASSESSEE DOES NOT HAVE ANY CASE ON THE MERITS. HE SUBMITTED THAT DECISION OF THE CO ORDINATE BENCH IN CASE OF R EY STE EL S CITED BY THE LD AR DOES NOT APPLY TO THE FACTS OF THE CASE. IN ANY WAY HE STATED THAT THE DECISION OF REY STEEL IS NOT CORRECT FOR THE REASON THAT IT HAS NOT CONSIDERED THE BINDING DECISION OF THE HON'BLE DELHI HIGH CO URT IN CASE OF LA MEDICA AS WELL AS OF THE HON'BLE SUPREME COURT IN CASE OF VIJAY SHIP BREAKING AS WELL AS NK PROTEINS LTD WHERE, HON'BLE DELHI HIGH COURT UPHELD THE COMPLETE ADDITION AND THE HON'BLE SUPREME COURT IN OTHER CASES SUSTAINED 25% DISALLOWAN CE. 9. WE HAVE CAREFULLY CONSIDERED THE RIVAL CONTENTIONS AND ALSO PERUSED THE ORDER OF THE LOWER AUTHORITIES. THE ASSESSEE HAS PURCHASED MATERIAL FROM THREE PARTIES WHO ARE FOUND TO BE SUPPLIER OF BOGUS BILLS AS PER INVESTIGATION OF MAHARASHTRA VAT AUTHORIT IES. THE ASSESSEE COULD NOT PRODUCE THE COPIES OF THE BILL OF THOSE PARTIES IN VIEW OF THE SPECIFIC CIRCUMSTANCES THAT RECORDS WERE LYING WITH THE PRINCIPAL. ASSESSEE IS FREQUENTLY REQUESTING TO THAT PARTY FOR THE RECORDS PERTAINING TO THE ASSESSEE. THEREF ORE, IN THE INTEREST OF JUSTICE AND ON THE SPECIFIC REQUEST OF THE LD AR THAT THEY ARE IN PROCESS OF GETTING THE COPIES OF THE BILLS , THE ASSESSEE MAY BE GRANTED ONE OPPORTUNITY OF PRODUCING THE COPIES OF THE BILL. FURTHER, MERELY BECAUSE ASSESSEE HAS MADE PAYMENT THROUGH ACCOUNT PAYEE CHEQUES DOES NOT PROVE THE PURCHASES GENUINE, BECAUSE ALL ACCOMMODATION ENTRIES ONE - WAY OR OTHER ARE TRANSACTED THROUGH BANKING CHANNELS. IN CASE OF ALLEGATION OF BOGUS PURCHASES THE FILING OF SALES TAX RETURN BY THE ASSESSEE ALSO DO NOT HELP THE CASE OF THE ASSESSEE BECAUSE ASSESSEE HAS SHOWN PURCHASES NATURALLY IT IS GOING TO TAKE CREDIT OF THE VAT PAID TO THOSE PARTIES. VILAYATI RAM MITTAL PVT. LTD VS. ITO, ITA NO. 4442/DEL/2017 (ASSESSMENT YEAR: 2010 - 11 ) PAGE | 5 FURTHER, THE LD ASSESSING OFFICER HAS NOTED THAT 133(6) ENQUIRY LETTERS WERE ISSUED TO THE PARTIES AND O UT OF WHICH ONLY ONE PARTY REPLY WHICH ALSO HAS DENIED ENTERING INTO ANY TRANSACTION WITH THE ASSESSEE COMPANY. THE STOCK REGISTER WHERE THE PURCHASES HAVE BEEN ENTERED OF THE MATERIAL SUPPLIE D BY THOSE PARTIES HAVE ALSO NOT BEEN PRODUCED BEFORE THE LD ASS ESSING OFFICER. FURTHERMORE, THE DECISION RELIED UPON BY THE LD AR IN CASE OF REY STEELS (SUPRA) DO NOT APPLY TO THE FACTS OF THE CASE FOR THE REASON THAT IN THAT PARTICULAR CASE THE ONWARD SALE OF THE MATERIAL IN CASE OF A TRADER WERE SHOWN AND FURTHER TH E ARGUMENT OF THE LD DR THAT IT HAS NOT CONSIDERED THE DECISION OF THE HON'BLE JURISDICTIONAL HIGH COURT AS WELL AS OF THE HON'BLE SUPREME COURT, WE REJECT THE RELIANCE ON THE ABOVE DECISION. THEREFORE, NOW HEAVY BURDEN LIES ON THE SHOULDER OF THE ASSESSEE TO SHOW THAT PURCHASES ARE GENUINE. THEREFORE, IN THE FACTS AND CIRCUMSTANCES OF THE CASE , WE SET ASIDE THE WHOLE ISSUE OF ADDITION BACK TO THE FILE OF THE LD ASSESSING OFFICER WITH A DIRECTION TO THE ASSESSEE TO PRODUCE THE COPIES OF THE BILLS AND AFTER PRODUCTION THEREOF, JUSTIFY THE GENUINENESS OF THE PURCHASES. THE LD ASSESSING OFFICER MAY CONSIDER THE EVIDENCES AND EXPLANATION OF THE ASSESSEE AND DECIDE THE ISSUE ON MERIT. HE MAY ALOS CONDUCT NECESSARY ENQUIRES AS REQUIRED BY LAW. ACCORDINGLY GROUND N O C TO K ARE ALLOWED WITH ABOVE DIRECTIONS. 10. IN THE RESULT, THE, THE APPEAL OF THE ASSESSEE IS ALLOWED FOR STATISTICAL PURPOSES. ORDER PRONOUNCED IN THE OPEN COURT ON 2 8 / 1 2 /2017. - S D / - - S D / - ( BHAVNESH SAINI ) (PRASHANT MAHARISHI) JUDICIAL MEMBER ACCOUNTANT MEMBER DATED: 2 8 / 1 2 /2017 A K KEOT COPY FORWARDED TO 1. APPLICANT 2. RESPONDENT 3. CIT 4. CIT (A) 5. DR:ITAT ASSISTANT REGISTRAR ITAT, NEW DELHI