Shri Vijay Mundra, Indore V. The Income Tax Officer, 3(2), Indore

ITA 477/IND/2010

• Counselvise Citation: 47722714 RSA 2010
• Duration Of Justice: 11 month(s) 14 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 28-06-2011
• Appeal Filed By: Assessee
• Order Result: Partly Allowed
• Bench Allotted: DB
• Assessment Year: 2007-2008
• Appeal Filed On: 14-07-2010
• Result in Favour of: Partly Allowed
• Court: TRIBUNAL
• Department Lawyers: ARUN DEWAN
• Assessee Lawyers: S S DESHPANDE; PIYUSH MANDOVRA
• Keywords: Bogus purchase; Depreciation
• Section: 133(6)

Judgement Text

1 IN THE INCOME TAX APPELLATE TRIBUNAL, INDORE BENCH, INDORE BEFORE SHRI JOGINDER SINGH, JUDICIAL MEMBER AND SHRI R.C. SHARMA, ACCOUNTANT MEMBER ITA NO.477/IND/2010 AY:2007-08 SHRI VIJAY MUNDRA INDORE PAN ACVPM4455A ..APPELLANT V/S. INCOME TAX OFFICER 3(2), INDORE ..RESPONDENT APPELLANT BY : SHRI S.S. DESHPANDE AND SHRI PIYUSH MANDOVRA RESPONDENT BY : SHRI ARUN DEWAN, SR. DR ORDER PER JOGINDER SINGH, JUDICIAL MEMBER BY WAY OF THIS APPEAL, THE ASSESSEE SEEKS TO CHALLENGE THE ORDER DATED 12 TH MAY, 2010 ON THE FOLLOWING GROUNDS : 2 1. THAT ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE, THE LD. CIT(A) HAS ERRED IN SUSTAINING THE ADDITION OF RS.1338000/- BEING ALLEGED UNEXPLAINED DEPOSIT OF CASH IN BANK ACCOUNT 2. THAT IN DECIDING THE ISSUE, THE LD. CIT(A) HAS FAILED IN ADJUDICATING THE VERY FACT THAT THE A.O. AFTER EXAMINING THE EXPLANATION OF THE APPELLANT MADE AN ADDITION OF RS. 913000/- AS UNEXPLAINED DEPOSIT IN BANK ACCOUNT. THEREFORE, THE ORDER OF LD. CIT(A) OF ENHANCING THE ADDITION FROM RS. 913000/- TO RS. 1338000/- WITHOUT ANY SHOW CAUSE IS BAD IN LAW. 3. THE LD. CIT(A) HAS FAILED IN NOT ADJUDICATING AND DECIDING THE GROUND OF APPEAL RAISED CONCERNING THE DISALLOWANCE OF RS.13838/- OUT OF CAR RUNNING EXPENSES AND DEPRECIATION. 4. THAT THE ADDITIONS AS MADE BY THE A.O. AND TO THE EXTENT SUSTAINED BY THE LD. CIT(A) ARE ARBITRARY AND UNCALLED FOR UNDER THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE. 2. DURING HEARING WE HAVE HEARD SHRI S.S. DESHPANDE , LD. COUNSEL FOR ASSESSEE AND SHRI ARUN DEWAN, LEARN ED SENIOR DR. THE CRUX OF ARGUMENTS ON BEHALF OF THE ASSESSEE IS THAT THE ASSESSEE IS DEALING IN SHARES, IRON AND STEEL TRADING, ALSO GETTING INCOME FROM REMUNER ATION FROM PARTNERSHIP FIRM AND INTEREST INCOME. THE ADDI TION OF RS.6,50,000/- WAS ARGUED TO BE WRONGLY MADE ON T HE PLEA THAT LEARNED COMMISSIONER OF INCOME TAX (APPEA LS) 3 WAS UNJUSTIFIED IN PRESUMING THAT THE ASSESSEE MADE BOGUS PURCHASES. ON THE OTHER HAND, THE LEARNED SE NIOR DR STRONGLY DEFENDED THE IMPUGNED ORDER BY CONTENDI NG THAT THE SALE BILLS WERE NOT SIGNED BY THE ASSESSEE AND THE NECESSARY DETAILS WERE NOT FILED. EVEN THE PERS ON TO WHOM THE SCRAP WAS SOLD WAS NEVER PRODUCED BEFORE T HE ASSESSING OFFICER, THEREFORE, THE ADDITION WAS RIGH TLY MADE. 3. SO FAR AS GROUND NOS. 1 AND 2 ARE CONCERNED, THE FACTS, IN BRIEF, ARE THAT THE ASSESSEE DEPOSITED AN AMOUNT OF RS.13,38,000/- IN CASH IN THE SAVINGS BANK ACCOU NT IN THE FINANCIAL YEAR 2006-07. THE ASSESSING OFFICER ASKED THE ASSESSEE TO EXPLAIN THE SOURCE THEREOF. IN RES PONSE, THE ASSESSEE SUBMITTED THAT THERE WERE CASH WITHDRA WALS OF RS. 4,25,000/- WHICH WERE DEPOSITED AGAIN AND TH E BALANCE AMOUNT OF CASH WAS DEPOSITED OUT OF CASH SA LES OF IRON SCRAP SHOWN AT RS.12,32,771/-. THE ASSESSI NG OFFICER DID NOT AGREE WITH THIS SUBMISSION OF THE A SSESSEE 4 ON THE GROUND THAT THERE WERE NO SALE BILLS AND EVE N THOUGH THE ACCOUNTS OF THE ASSESSEE ARE AUDITED BUT THE SALES ARE NOT VERIFIABLE. HE, THEREFORE, HELD THAT THE REMAINING CASH DEPOSITS OF RS. 9,13,000/- (RS. 13,3 8,000 (-) 4,25,000) IN THE BANK ACCOUNT COULD NOT BE STAT ED TO BE OUT OF SALE PROCEEDS OF SCRAP. IN THIS VIEW OF THE MATTER, THE ASSESSING OFFICER HELD THE CASH DEPOSIT OF RS. 9,13,000/- AS UNEXPLAINED AND ADDED THE SAME TO THE INCOME OF THE ASSESSEE, WHICH WAS AFFIRMED BY LEARN ED COMMISSIONER OF INCOME TAX (APPEALS). NOW THE ASSESSEE IS IN APPEAL BEFORE US. 4. WE HAVE CONSIDERED THE RIVAL SUBMISSIONS AND PERUSED THE MATERIAL AVAILABLE ON FILE. IT IS SEEN THAT WHILE MAKING THE ADDITION OF RS.6,50,000/- THE LEAR NED ASSESSING OFFICER IN PARA 2 (PAGE 2) OBSERVED AS UN DER :- 1 THERE ARE NO SIGNATURES OF THE ASSESSEE ON THE PURCHASE BILLS. 2. THE SALE BILLS WERE NOT PRODUCED FOR VERIFICATIO N. 5 3. THE TRANSACTIONS APPEAR TO BE BOGUS SINCE THE SA LES ARE NEARLY AT THE DOUBLE RATE WHICH IS BEYOND IMAGINATION. 4 NOTICE U/S 133(6) DATED 14.10.2009 WAS SENT TO M/S BHARAT ENTERPRISES, 18, PIPLIA RAO, RING ROAD, INDORE, TO INQUIRE ABOUT THE GENUINENESS OF THE PURCHASES MADE BY THE ASSESSEE AND THE LETTER SENT THROUGH SPEEDS POST WAS RETURNED BACK WITH POSTAL REMARKED ON INQUIRY ADDRESS WAS NOT FOUND, HENCE, RETURNED. 5. THE INSPECTOR OF THE WARD WHO WAS DEPUTED FOR SERVICE OF NOTICE/LETTER REPORTS IN HIS REPORT DATE D 12.11.2009 THAT NO SUCH CONCERN IS AVAILABLE AT THE GIVEN ADDRESS AND THE LAST NUMBER AVAILABLE IS 16 INSTEAD OF 18. 6. THE ASSESSEE WAS ASKED TO PRODUCE THE PROPRIETOR/PARTNER OF M/S BHARAT ENTERPRISES FOR VERIFICATION OF PURCHASES WHO WAS NOT PRODUCED AND EVEN THE DALAL THROUGH WHOM PURCHASES WERE MADE WAS ALSO NOT PRODUCED. 7. THE ASSESSING OFFICER CONDUCTED INQUIRY FROM BAN KS WHEREFROM THE ASSESSEES CHEQUES WERE REALISED FOR WHICH SYNDICATE BANK INFORMED THAT THE ACCOUNT OF BHARAT ENTERPRISES WAS CLOSED ON 1.10.2007. IN VIEW OF THE ABOVE, NOW THE QUESTION ARISES WHETH ER THE ADDITION WAS RIGHTLY MADE BY THE ASSESSING OFFICER/ ENHANCED BY LEARNED COMMISSIONER OF INCOME TAX (APPEALS). WE HAVE PERUSED THE RECORD AVAILABLE ON FILE INCLUDING WRITTEN SUBMISSIONS OF THE ASSESSEE FILED BEFORE LEARNED COMMISSIONER OF INCOME TAX (APPEALS), COPIE S OF PURCHASE BILLS BEING PURCHASE OF IRON SCRAP FROM BH ARAT 6 ENTERPRISES, LEDGER ACCOUNT OF PURCHASES AND LEDGER ACCOUNT OF BHARAT ENTERPRISES, DETAILS OF SALE OF I RON SCRAP, COPY OF CASH BOOK FILED BEFORE THE ASSESSING OFFICER ALONG WITH LETTER DATED 13.10.2009, REPORT OF THE INCOME TAX INSPECTOR DATED 12.11.2009, LETTER DATED 17.12.2009 WRITTEN BY THE ASSESSING OFFICER TO THE MANAGER OF SYNDICATE BANK REGARDING DETAILS OF BANK ACCOUNT OF M/S BHARAT ENTERPRISES, LETTER TO SYNDIC ATE BANK AND VARIOUS OTHER DETAILS WHICH ARE AVAILABLE IN THE PAPER BOOK FILED BEFORE US. AT PAGE 12 THE DETAILS OF SALES OF SCRAP MADE DURING FINANCIAL YEAR 2006-07 MENTION ING DATE, VOUCHER NUMBER, QUANTITY, RATE PER MT AND THE REALISED AMOUNT HAVE BEEN MENTIONED, THE TOTAL OF W HICH COMES TO RS. 12,32,771/-. THE ASSESSEE VIDE LETTER DATED 13.10.2009 FURNISHED THE DETAILS BEFORE THE ASSESSI NG OFFICER AND AT PAGE 15 THE CASH BOOK (AY 2006-07) F OR THE PERIOD FROM IST APRIL 2006 TO 31 ST MARCH, 2007 IS AVAILABLE. THE ASSESSING OFFICER HIMSELF WROTE A LE TTER TO THE MANAGER OF THE SYNDICATE BANK DATED 17.12.2009 IN 7 RESPONSE TO WHICH THE BANK (PAGE 19 OF THE PAPER BO OK) CLARIFIED THAT THE ACCOUNT NUMBER 78013070002904 OF M/S BHARAT ENTERPRISES WAS CLOSED BY FURTHER CONFIR MING THE ADDRESS WHICH WAS SUPPLIED BY THE ASSESSEE AND ALSO AVAILABLE ON THE SALE BILLS (18, PIPLIYA RAO, RING ROAD, INDORE). AT PAGE 20 OF THE PAPER BOOK, THE CURRENT ACCOUNT OF M/S BHARAT ENTERPRISES IS AVAILABLE AND THE SAME ADDRESS IS DEPICTED ON THE PAPER. THE ASSESSIN G OFFICER VIDE LETTER DATED 17.12.2009 ASKED THE MANA GER OF RAJASTHAN BANK REGARDING THE ISSUANCE OF CHEQUE TO BHARAT ENTERPRISES. THE NECESSARY DETAILS WERE FURN ISHED BY THE BANK WHICH ARE AVAILABLE AT PAGE 23 OF THE P APER BOOK. THE COPIES OF CHEQUE ARE AVAILABLE AT PAGES 2 4 TO 26 OF THE PAPER BOOK. THE CURRENT ACCOUNT DETAILS O F M/S BHARAT ENTERPRISES ARE AVAILABLE AT PAGE 27 AND 28 OF THE PAPER BOOK. ALL THESE FACTS CLEARLY INDICATE THAT AT THE RELEVANT TIME M/S BHARAT ENTERPRISES WAS VERY MUCH IN EXISTENCE AT 18, PIPLIA RAO, RING ROAD, INDORE, AND IF THE BUSINESS HAS BEEN CLOSED DOWN THEN THE ASSESSEE CAN NOT 8 BE PENALISED MERELY ON THE BASIS OF SUSPICION. EVE N THE TWO BANKS HAVE CONFIRMED THE EXISTENCE OF M/S BHARA T ENTERPRISES AND THE STATEMENT OF ACCOUNT AND CLEARA NCE OF CHEQUES THROUGH BANKING CHANNEL. IT IS NOT THE CASE THAT THE DETAILS ONLY CARRY THE ACCOUNT WITH THE AS SESSEE RATHER THE DETAILS/TRANSACTIONS OF OTHER PERSONS AR E ALSO AVAILABLE IN THE BANK ACCOUNT. ALL THESE FACTS CLEA RLY INDICATE THAT IN FACT THE ASSESSEE REALLY TRANSACTE D WITH M/S BHARAT ENTERPRISES ESPECIALLY WHEN THE CHEQUES WERE ENCASHED THROUGH THE SAME ACCOUNT. AT PAGE 46 THE COMMERCIAL TAX DEPARTMENT OF THE STATE GOVERNME NT HAS ALSO MENTIONED TIN NUMBER OF BHARAT ENTERPRISES AT THE SAME ADDRESS AND AT PAGE 47 A DEMAND NOTICE HAS BEEN ISSUED TO KISHANLAL DURGAPRASAD BY INDORE MUNICIPAL CORPORATION IN RESPECT OF PROPERTY BEARIN G NO18, PIPLYA RAO, INDORE, THEREFORE, THE OBSERVATIO N OF THE ASSESSING OFFICER THAT THERE NO SUCH ADDRESS IS IN EXISTENCE FALSIFIES THE STAND OF THE REVENUE ITSELF . AS FAR AS THE OBSERVATION OF THE ASSESSING OFFICER THAT A SUM OF 9 RS.12,32,771/- CANNOT BE REALISED FROM THE SALE OF SCRAP ON THE PURCHASE OF SCRAP OF RS. 6,50,000/- IS ALSO UNSUBSTANTIATED. IT IS NOT THE CASE THAT THE ASSESS EE WANTS TO HIDE SOMETHING RATHER WANTS TO PAY TAXES O N THE EARNING MADE BY HIM. EVEN OTHERWISE, FOR PURCHASE/SALE OF SCRAP AT MAJORITY OF TIMES, THE BI LLS ARE EVEN NOT ISSUED AND NORMALLY THERE ARE CASH SALES, WHICH ARE REFLECTED IN THE BOOKS. AS FAR AS THE OBSERVAT ION OF THE ASSESSING OFFICER THAT THERE IS NO SIGNATURE OF THE ASSESSEE ON THE PURCHASE BILLS IS ALSO NOT A PRE-CO NDITION BECAUSE NORMALLY THE SIGNATURES OF THE SELLER ARE REQUIRED. THE LEARNED COMMISSIONER OF INCOME TAX (APPEALS) ALSO WITHOUT ASSIGNING ANY REASON, ENHANC ED THE ADDITION FROM RS. 9,13,000/- TO RS. 13,38,000/- . THE CLAIM OF THE ASSESSEE IS THAT CASH OF RS. 4,25, 000/- WAS WITHDRAWN BY THE ASSESSEE FROM THE BANK WHICH W AS AVAILABLE WITH HIM. HOWEVER, LEARNED COMMISSIONER O F INCOME TAX (APPEALS) REJECTED THIS CLAIM ON THE PLE A THAT THE ASSESSEE WAS TRADING IN IRON AND STEEL SCRAP. 10 HOWEVER, SINCE WE HAVE ACCEPTED THE CLAIM OF THE ASSESSEE REGARDING THE SALE/PURCHASE OF SCRAP, THER EFORE, ON THIS COUNT ALSO THE STAND OF THE ASSESSEE IS ACC EPTED AND THE ORDER OF LEARNED COMMISSIONER OF INCOME TAX (APPEALS) IS REVERSED. GROUND NOS. 1 AND 2 ARE, THE REFORE, ALLOWED. 5. SO FAR AS NON-ADJUDICATION OF GROUND CONCERNING DISALLOWANCE OF RS. 13,838/- OUT OF CAR RUNNING EXP ENSES AND DEPRECIATION IS CONCERNED, SINCE THIS GROUND WA S RAISED BY THE ASSESSEE BEFORE LEARNED COMMISSIONER OF INCOME TAX (APPEALS) AND COULD NOT BE DISPOSED OF, THEREFORE, IN THE INTEREST OF JUSTICE AND FAIR PLAY , WE REMAND THIS ISSUE TO THE FILE OF LEARNED COMMISSION ER OF INCOME TAX (APPEALS) FOR FRESH ADJUDICATION IN ACCORDANCE WITH LAW FOR WHICH DUE OPPORTUNITY OF BE ING HEARD BE PROVIDED TO THE ASSESSEE WITH FURTHER LIBE RTY TO FURNISH EVIDENCE, IF ANY, TO SUBSTANTIATE ITS CLAIM . 11 THEREFORE, THIS GROUND OF THE ASSESSEE IS ALLOWED F OR STATISTICAL PURPOSES. 6. GROUND NOS. 4 AND 5 ARE GENERAL IN NATURE AND AS SUCH REQUIRE NO DELIBERATION. FINALLY, THE APPEAL OF THE ASSESSEE IS PARTLY ALLOWED FOR STATISTICAL PURPOSES. ORDER PRONOUNCED IN THE OPEN COURT IN THE PRESENCE OF LEARNED REPRESENTATIVES OF BOTH THE SIDES 28 TH JUNE, 2011. (R.C. SHARMA) (JOGINDER SINGH) ACCOUNTANT MEMBER JUDICIAL MEMBER DATED:28.6.2011 COPY TO:APPELLANT/RESPONDENT/CIT/CIT(A)/DR/GUARD FI LE D/- 12