ACIT, Rewari V. M/s BRD Textile Spinning Mills Pvt. Ltd., Rewari

ITA 4852/DEL/2009

• Counselvise Citation: [2011] 140 COUNSELVISE.COM (IT) 53493 (ITAT-DELHI)
• Duration Of Justice: 1 year(s) 11 month(s) 23 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 16-12-2011
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: A
• Next Hearing Date: 01-12-2011
• Assessment Year: 1996-1997
• Appeal Filed On: 24-12-2009
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: Y S KAKKAR
• Assessee Lawyers: RAKESH GUPTA SH ASHWANI TANEJA
• Keywords: Bogus purchase; Assessment record
• Section: 133(6)

Judgement Text

ITA NO. 4852/DEL/2009 1 IN THE INCOME TAX APPELLATE TRIBUNAL DELHI BENCH A NEW DELHI BEFORE SHRI R.P. TOLANI, JUDICIAL MEMBER AND SHRI SHAMIM YAHYA, ACCOUNTANT MEMBER I.T.A. NO. 4852/DEL/2009 A.Y. : 1996-1997 ASSISTANT COMMISSIONER OF INCOME TAX, REWARI CIRCLE, AAYAKAR BHAVAN, MODEL TOWN, REWARI VS. M/S BRD TEXTILES SPINNING MILLS PVT. LTD., VPO-DUNGARWAS, DISTT. REWARI (HARYANA) (PAN NO. : AAACB 9347G) (APPELLANT ) (APPELLANT ) (APPELLANT ) (APPELLANT ) (RESPONDENT ) (RESPONDENT ) (RESPONDENT ) (RESPONDENT ) ASSEESSEE BY : SH. RAKESH GUPTA, SH. ASHWANI TANEJA, ADVOCATE DEPARTMENT BY : MS. Y.S. KAKKAR, SR. D.R. ORDER ORDER ORDER ORDER PER SHAMIM YAHYA: AM PER SHAMIM YAHYA: AM PER SHAMIM YAHYA: AM PER SHAMIM YAHYA: AM THIS APPEAL BY THE REVENUE IS DIRECTED AGAINST TH E ORDER OF THE LD. COMMISSIONER OF INCOME TAX (APPEALS) DATED 26.10. 2009 PERTAINING TO ASSESSMENT YEAR 1996-97. 2. THE ISSUE RAISED IS THAT ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE THE LD. COMMISSIONER OF INCOME TAX (APPEALS ) HAS ERRED IN LAW AND FACTS IN DELETING THE ADDITION OF ` 1,59,26 ,311/- MADE ON ACCOUNT OF BOGUS PURCHASES MADE FROM M/S HISSAR COT TON COMPANY BY APPLYING THE YIELD METHOD WITHOUT APPRECIATING T HE FACTS AND MATERIAL BROUGHT ON RECORD BY THE ASSESSING OFFICER. 3. IN THIS CASE PURSUANT TO REMAND FROM THE ITAT, AS SESSING OFFICER PROCEEDED TO VERIFY THE ASSESSEES PURCHASE OF GOOD S FROM M/S HISSAR ITA NO. 4852/DEL/2009 2 COTTON COMPANY AMOUNTING TO ` 1,59,26,312/-. ASSESS ING OFFICER NOTED THAT TO VERIFY THE CLAIM OF THE ASSESSEE NOTIC E U/S 133(6) FOR CALLING INFORMATION WAS ISSUED TO M/S HISSAR COTTON COMPANY BUT REMAINED UN-COMPLIED WITH. INSPECTOR OF THE CIRCLE WAS ALSO DEPUTED TO VERIFY THE GENUINENESS OF THE TRANSACTION MADE WI TH M/S HISSAR COTTON COMPANY. BUT SALES TAX DEPARTMENT OF HISSAR R EPLIED THAT M/S HISSAR COTTON COMPANY WAS REGISTERED DEALER DURING THE FINANCIAL YEAR 1995-96 BUT ASSESSMENT RECORD IS NOT READILY AVAI LABLE. ASSESSING OFFICER FURTHER OBSERVED THAT ASSESSEE FAILED TO P RODUCE THE BILLS OF CARTAGE PAID, DOCUMENTS IN SUPPORT OF TRANSPORTATIO N, PAYMENTS MADE AGAINST GOODS RECEIVED FROM M/S HISSAR COTTON CO. ASS ESSING OFFICER OPINED THAT BILLS AND VOUCHERS IN THE BOOKS OF THE ASSESSEE COULD NOT JUSTIFY THE ASSESSEES CLAIM THAT PURCHASES ARE GENUI NE ESPECIALLY IN THE LIGHT OF THE FACT THAT THE ASSESSEE HAS AS PER HIS OWN ADMISSION DEBITED BOGUS PURCHASE AMOUNTING TO ` 68,63,941/- FR OM THE SAME PARTY. ASSESSING OFFICER FURTHER OBSERVED THAT THE SAME DOCUMENT INCLUDING PURCHASE BILLS, DEMAND DRAFT DETAILS, GATE PASS, TRUCK NUMBERS ETC. WHICH ARE ALSO AVAILABLE FOR THE BOGUS PURCHASE, HAVE BEEN SUBMITTED AS EVIDENCE IN RESPECT OF THE ALLEGED GENUINE PURCHASE. ASSESSING OFFICER FURTHER OBSERVED THAT NO STOCK REGISTER WAS BEING MAINTAINED BY THE ASSESSEE. THEREFORE, O BSERVING THAT ITA NO. 4852/DEL/2009 3 PURCHASE COULD NOT BE VERIFIED, ASSESSING OFFICER HELD THAT THE PURCHASE AMOUNTING TO ` 1,59,26,312/- WERE BOGUS. 4. UPON ASSESSEES APPEAL LD. COMMISSIONER OF INCOME TAX (APPEALS) CONSIDERED THE DETAILS FILED BY THE ASSES SEE AS WELL AS REMAND REPORT OF THE ASSESSING OFFICER AND HELD A S UNDER:- KEEPING IN VIEW THE REMAND REPORT OF THE ASSESSING OFFICER, THE PURCHASES CANNOT BE GOT VERIFIED BY ADOPTING TH E CONVENTIONAL METHOD OF INVESTIGATION BECAUSE (I) PU RCHASES CANNOT BE VERIFIED FROM THE SELLER SINCE THE SELLER IS IN JAIL, (II) THE RECORD OF THE BANK AS WELL AS OF THE SALES TAX DEPARTMENT IS NOT AVAILABLE WITH THEM FOR THE MATTER B EING VERY OLD. THERE ARE TWO OTHER METHODS OF REACHING A CONCLUSI ON AFTER INVESTIGATION:- (I) INDUCTION METHOD IN WHICH CONCLUSION IS ARRIVED AT AFTER ANALYZING THE FACTS GATHERED FROM INVESTIGATION PROCESS. (II) DEDUCTION METHOD IN WHICH A CONCLUSION IS ASSUMED AND THE FACTS PERTAINING TO THE SAME ARE COLLECTED/ GATHERED FROM INVESTIGATION PROCESS, IF THE CONCLUSION APPEARS TO BE ABSURD IN VIEW OF THE PREVAILING FACTS AND CIRCUMSTANCES, THE RESULT IS NOT ACCEPTED. KEEPING IN VIEW THE FACTS AND CIRCUMSTANCES, INDUCT ION METHOD IS NOT APPLICABLE IN THE APPEAL UNDER CONSID ERATION. THEREFORE DEDUCTION METHOD HAS TO BE APPLIED. ITA NO. 4852/DEL/2009 4 THE HONBLE ITAT HAS ACCEPTED THE SALES TO BE GENUI NE. NOW IF THE PURCHASES ARE NOT ACCEPTED AS GENUINE A ND THE SALES ARE TREATED AS GENUINE, IT WOULD GIVE YIELD OF 110 % IN THE CASE OF THE APPELLANT WHICH IS ABSURDITY AS WORKED OUT BY THE APPELLANT ABOVE. MOREOVER THE OTHER CONCERNS IN THE SIMILAR L INES OF BUSINESS I.E. M/S SURYA LUXMI COTTON MILLS LTD. AND M/S SPINTEX INDUSTRIES LTD. HAVE SHOWN YIELD AS UNDER:- A.YEAR YIELD (I) M/S SURYALAXMI COTTON MILLS LTD. 2006-07 76.12% 2007-08 78.61% (II) SPINTEX INDUSTRIES LTD. 2006-07 83.84% 2007-08 83.27% THE FINAL ACCOUNTS OF THE ABOVE TWO CONCERNS HAVE BEEN PRODUCED BY THE APPELLANT AFTER GETTING THE SAME FR OM INTERNET. IF THE PURCHASE ARE ACCEPTED AS GENUINE IN THE CASE OF THE APPELLANT THEN THE YIELD WORKS OUT TO 83.66% WHICH APPEARS TO BE NORMAL. IN VIEW OF THE ABOVE DISCUSSION THERE IS NO ALTERNA TIVE OTHER THAN ACCEPTING THE PURCHASE OF ` 1,59,26,312/- FROM M/S HISSAR COTTON COMPANY AS GENUINE. THEREFORE, THE SAME ARE HE LD AS GENUINE AND THE ADDITION MADE BY THE ASSESSING OFFIC ER IS DELETED. 5. AGAINST THE ABOVE ORDER THE REVENUE IS IN APPEAL BEFORE US. ITA NO. 4852/DEL/2009 5 6. WE HAVE HEARD THE RIVAL CONTENTIONS IN LIGHT OF THE MATERIAL PRODUCED AND PRECEDENTS RELIED UPON. WE FIND TH AT ASSESSING OFFICER HAS GIVEN A FINDING THAT PURCHASES IN THIS CASE CAN NOT BE DIRECTLY VERIFIED. LD. COMMISSIONER OF INCOME TAX (APPEALS) HAS ALSO CONCURRED WITH THE SAME. HOWEVER, IN SUCH SITUATION THE PURCHASES HAVE TO BE VERIFIED THROUGH INDIRECT METHOD AS HAS BEEN RIGHTLY OBSERVED BY THE LD. COMMISSIONER OF INCOME TAX (APPEA LS). WHEN THE ASSESSEES SALES ARE TREATED GENUINE AND THE IMPUGNE D PURCHASES NOT ACCEPTED AS GENUINE IT WOULD GIVE YIELD OF 110% IN THE CASE OF THE ASSESSEE WHICH IS AN ABSURDITY. FURTHERMORE, LD. COMMISSIONER OF INCOME TAX (APPEALS) HAS GIVEN A FINDING THAT OTHER CONCERNS IN THE SIMILAR LINES OF BUSINESS WERE SHOWING YIELD WHICH C OMPARE FAVOURABLY WITH THAT OF ASSESSEE. LD. COMMISSIONER OF INCOME T AX (APPEALS) HAS GIVEN THE COMPARATIVE CHART FROM M/S SURYALAXMI COTTON MILLS LTD. AND SPINTEX INDUSTRIES LTD. WHICH WERE AS UNDER:- A.YEAR YIELD (I) M/S SURYALAXMI COTTON MILLS LTD. 2006-07 76.12% 2007-08 78.61% (II) SPINTEX INDUSTRIES LTD. 2006-07 83.84% 2007-08 83.27% 6.1 LD. COMMISSIONER OF INCOME TAX (APPEALS) HAS FURT HER COMPUTED THAT IF THE PURCHASES ARE ACCEPTED AS GENUINE IN TH E CASE OF THE ASSESSEE THEN THE YIELD WORKS OUT TO 83.66% WHIC H APPEARS TO BE NORMAL. 6.2 UNDER THE CIRCUMSTANCES, WE FIND THAT THE LD. COMMISSIONER OF INCOME TAX (APPEALS) HAS RIGHTLY OBSERVED THAT ON THIS BASIS, THE ITA NO. 4852/DEL/2009 6 PURCHASES OF ` 1,59,26,312/- FROM M/S HISSAR COTTON COMPANY HAS TO BE TREATED AS GENUINE. ACCORDINGLY, WE DO NOT FI ND ANY INFIRMITY IN THE ORDER OF THE LD. COMMISSIONER OF INCOME TAX (APPE ALS) AND HENCE, WE UPHOLD THE SAME. 7. IN THE RESULT, THE APPEAL FILED BY THE REVENUE S TANDS DISMISSED. ORDER PRONOUNCED IN THE OPEN COURT ON 16/12/2011. SD/- SD/- [ [[ [R.P. TOLA R.P. TOLA R.P. TOLA R.P. TOLANI NINI NI] ]] ] [SHAMIM YAHYA] [SHAMIM YAHYA] [SHAMIM YAHYA] [SHAMIM YAHYA] JUDICIAL MEMBER JUDICIAL MEMBER JUDICIAL MEMBER JUDICIAL MEMBER ACCOUNTANT MEMBER ACCOUNTANT MEMBER ACCOUNTANT MEMBER ACCOUNTANT MEMBER DATE 16/12/2011 SRB COPY FORWARDED TO: COPY FORWARDED TO: COPY FORWARDED TO: COPY FORWARDED TO: - -- - 1. APPELLANT 2. RESPONDENT 3. CIT 4. CIT (A) 5. DR, ITAT TRUE COPY BY ORDER, ASSISTANT REGISTRAR, ITAT, DELHI BENCHES