Deputy Commissioner of Income-tax, V. Steel Vision India Pvt. Ltd., Pune

ITA 488/PUN/2015

• Counselvise Citation: [2017] 127 COUNSELVISE.COM (IT) 9478 (ITAT-PUNE)
• Duration Of Justice: 2 year(s) 1 month(s) 10 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 26-05-2017
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: B
• Assessment Year: 2005-2006
• Appeal Filed On: 16-04-2015
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: ALOK MALVIYA
• Keywords: Bogus purchase
• Section: 143(3); 148; 132

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL B BENCH, PUNE . , , , BEFORE SHRI D. KARUNAKARA RAO, AM AND SHRI VIKAS AWASTHY, JM . / ITA NO . 488 /PUN/201 5 / ASSESSMENT YEAR : 20 05 - 06 DY. COMMISSIONER OF INCOME TAX, CIRCLE 10, PUNE ....... / APPELLANT / V S. STEEL VISION INDIA PVT. LTD., PLOT NO. 1, GAT NO. 272/273, NAMEKARWADI, CHAKAN, TAL. - KHED, PUNE 410501 PAN : AAECS7240R / RESPONDENT ASSESSEE BY : S HRI NIKHIL PATHAK REVENUE BY : S HRI ALOK MALVIYA / DATE OF HEARING : 24 - 05 - 2017 / DATE OF PRONOUNCEMENT : 26 - 0 5 - 2017 / ORDER PER VIKAS AWASTHY, JM : TH IS APPEAL BY THE DEPARTMENT IS DIRECTED AGAINST THE ORDER OF COMMISSIONER OF INCOME TAX (APPEALS) - 12, PUNE DATED 27 - 01 - 2015 FOR THE ASSESSMENT YEAR 2005 - 06. 2. IN APPEAL, THE DEPARTMENT HAS ASSAILED THE FINDINGS OF COMMISSIONER OF INCOME TAX (APPEALS) IN DELETING THE ADDITION OF RS. 1,14,45,953/ - MADE 2 ITA NO . 488/PUN/2015, A.Y. 2005 - 06 BY THE ASSESSING OFFICER ON THE BASIS OF DECLARATION OF THE ASSESSEE DURING SEARCH ACTION. 3. THE FACTS OF THE CASE AS EMANATING FROM RECORDS ARE: A SEARCH ACTION U/S. 132 O F THE INCOME TAX ACT, 1961 (HEREINAFTER REFERRED TO AS THE ACT ) WAS CARRIED OUT AT THE PREMISES OF FABTECH PROJECTS & ENGINEERS LTD. ON 31 - 01 - 2012. THE ASSESSEE COMPANY IS A PART OF FABTECH GROUP AND IS ENGAGED IN THE BUSINESS OF FABRICATION AND DEALING IN MS AND SS ITEMS. DURING THE COURSE OF SEARCH, STATEMENT OF SHRI BIRA A. RUPNAR, CHIEF MANAGING DIRECTOR OF FABTECH PROJECTS & ENGINEERS LTD. WAS RECORDED , WHEREIN , HE ADMITTED BOGUS PURCHASES AND DECLARED ADDITIONAL INCOME OF RS.3,95,50,591/ - IN RESPECT OF ASSESSEE COMPANY FOR ASSESSMENT YEAR 2005 - 06 . NOTICE U/S. 148 OF THE ACT WAS ISSUED TO THE ASSESSEE ON 30 - 03 - 2012. IN RESPONSE TO THE SAID NOTICE , THE ASSESSEE FILED RETURN OF INCOME ON 31 - 12 - 2012 DECLAR ING TOTAL INCOME OF RS.2,87,65,689/ - . DURING THE COURSE OF ASSESSMENT PROCEEDINGS THE ASSESSING OFFICER OBSERVED THAT ALTHOUGH THE ASSESSEE IN THE DISCLOSURE STATEMENT HAD DECLARED ADDITIONAL INCOME OF RS.3,95,50,591/ - FOR ASSESSMENT YEAR 2005 - 06 , H OWEVER, IN THE RETURN OF INCOME THE ASSESSEE HAS MERELY DECLARED RS.2,87,65,689/ - (INCLUDING RS.6,61,350/ - DEC LARED AS PER ORIGINAL RETURN OF INCOME FOR ASSESSMENT YEAR 2005 - 06) . THUS, THE ASSESSING OFFICER MADE ADDITION OF AMOUNT SHORT DECLARED BY THE ASSESSEE I.E. RS.1,14,45,953/ - . AGGRIEVED BY THE ASSESSMENT ORDER DATED 15 - 03 - 2013 PASSED U/S. 143(3) R.W.S. 148 OF THE ACT , THE ASSESSEE FILED APPEAL BEFORE THE COMMISSIONER OF INCOME TAX (APPEALS). BEFORE THE FIRST APPELLATE AUTHORITY, THE ASSESSEE EXPLAINED THAT TOTAL BOGUS PURCHASES DECLARED BY THE ASSESSEE DURING THE COURSE OF SEARCH PROCEEDINGS RS.3,95,50, 291/ - INCLUDED OPENING BALANCE OF RS.1,45,68,748/ - AS ON 01 - 04 - 2004 . THUS, FOR 3 ITA NO . 488/PUN/2015, A.Y. 2005 - 06 THE ASSESSMENT YEAR 2005 - 06 ONLY BOGUS PURCHASES DEBITED DURING THE FINANCIAL YEAR 2004 - 05 COULD BE ADDED. THE COMMISSIONER OF INCOME TAX (APPEALS) ACCEPTED THE CONTENTION OF THE ASSESSEE AND DELETED THE ADDITION. NOW, THE DEPARTMENT IS IN APPEAL BEFORE THE TRIBUNAL AGAINST THE FINDINGS OF COMMISSIONER OF INCOME TAX (APPEALS). 4. SHRI ALOK MALVIYA REPRESENTING THE DEPARTMENT VEHEMENTLY DEFENDED THE ASSESSMENT ORDER AND SUBMITTED THAT THE COMMISSIONER OF INCOME TAX (APPEALS) HAS ERRED IN DELETING THE ADDITION MADE BY THE ASSESSING OFFICER. THE COMMISSIONER OF INCOME TAX (APPEALS) HAS FAILED TO APPRECIATE THE FACT THAT THE ASSESSEE HAD DECLARED ADDITIONAL INCOME OF RS.3,9 5,50,291/ - ON ACCOUNT OF BOGUS PURCHASES AFTER DUE APPLICATION OF MIND, AFTER CONSIDERING ALL THE DETAILS IN THE BOOKS OF ACCOUNT AND AFTER RECONCILIATION WITH THE THIRD PARTIES. WHILE FILING RETURN OF INCOME IN RESPONSE TO NOTICE U/S. 148 , THE ASSESSEE O FFERED LOWER INCOME AFTER BIFURCATING THE AMOUNT OFFERED DURING SEARCH AS OPENING BALANCES OF F INANCIAL Y EAR 2004 - 05 AND BOGUS PURCHASES DURING THE F INANCIAL Y EAR 2004 - 05. THIS BIFURCATION AND EXPLANATION OFFERED BY THE ASSESSEE IS AN AFTERTHOUGHT TO AVOI D PAYMENT OF TAX ON THE ENTIRE ADDITION. THE LD. DR PRAYED FOR SETTING ASIDE THE FINDINGS OF COMMISSIONER OF INCOME TAX (APPEALS) ON THIS ISSUE AND RESTORING THE FINDINGS OF ASSESSING OFFICER. 5. ON THE OTHER HAND SHRI NIKHIL PATHAK APPEARING ON BEHALF OF THE ASSESSEE STRONGLY SUPPORTED THE FINDINGS OF COMMISSIONER OF INCOME TAX (APPEALS) IN DELETING THE ADDITION OF RS.1,14,45,953/ - . THE LD. AR SUBMITTED THAT DURING THE COURSE OF SEARCH , THE ASSESSEE ADMITTED BOGUS PURCHASES TO THE TUNE OF RS.3,95,50,2 91/ - FOR THE PERIOD RELEVANT TO THE ASSESSMENT YEAR 2005 - 06. THE LD. AR REFERRED TO THE COPY OF LETTER DATED 28 - 03 - 2012 SUBMITTED TO THE INCOME TAX OFFICER (INV.), UNIT - II, PUNE AT 4 ITA NO . 488/PUN/2015, A.Y. 2005 - 06 PAGE 12 OF THE PAPER BOOK. THE LD. AR SUBMITTED THAT A PERUSAL OF LETTER CLEARLY SHOWS THAT THE ASSESSEE HAD DECLARED TOTAL AMOUNT OF RS.10,22,42,765/ - WHICH INCLUDED THE OPENING BALANCES OF THE FINANCIAL YEAR 2004 - 05. THE LD. AR REFERRED TO THE ANNEXURE I AT PAGE 13 OF THE PAPER BOOK. THE LD. AR POINTED THAT A PERUSAL OF C HART SHOWS THAT FOR THE FI NANCIAL Y EAR 2004 - 05 A BIFURCATION IS GIVEN WHEREIN OPENING BALANCES AS ON 01 - 04 - 2004 IN RESPECT OF SHREE SAI INDUSTRIES RS.42,73,486/ - AND SOHAN METAL PVT. LTD. RS.1,02,95,262/ - ; T OTAL RS.1,45,68,748/ - HAS BEEN GIVEN SEPARATELY . THE AGGREGATE AMOUNT DECLARED FOR F INANCIAL YE AR 2004 - 05 IS RS.3,95,50,291/ - WHICH INCLUDES AFORESAID OPENING BALANCES. THE N OTE GIVEN AT END OF THE TABLE CLEARLY INDICATES THAT DECLARED AMOUNT OF INCOME IN FINANCIAL YEAR 2004 - 05 INCLUDES OPENING BALANC ES TO THE EXTENT OF RS.1,45,68,748/ - WHICH WAS OFFERED AS INCOME ON ACCOUNT OF CESSATION OF LIABILITY IN F INANCIAL Y EAR 2004 - 05. THE LD. AR PRAYED FOR DISMISSING THE APPEAL OF THE DEPARTMENT AND UPHOLDING THE FINDINGS OF COMMISSIONER OF INCOME TAX (APPEAL S). 6. W E HAVE HEARD THE SUBMISSIONS MADE BY THE REPRESENTATIVES OF RIVAL SIDES AND HAVE PERUSED THE ORDERS OF THE AUTHORITIES BELOW . WE HAVE ALSO CONSIDERED THE DOCUMENTS ON WHICH THE LD. AR OF THE ASSESSEE HAS PLACED RELIANCE. THE DEPARTMENT IN APPEAL HAS RAISED SOLITARY ISSUE OF DELETING THE ADDITION OF RS.1,14,45,953/ - BY COMMISSIONER OF INCOME TAX (APPEALS). IT IS AN UNDISPUTED FACT THAT DURING THE COURSE OF SEARCH PROCEEDINGS THE ASSESSEE HAD DECLARED ADDITIONAL INCOME OF RS.3,95,50,291/ - FO R THE ASSESSMENT YEAR 2005 - 06 ON ACCOUNT OF BOGUS PURCHASES. HOWEVER, AT THE TIME OF FILING RETURN OF INCOME IN RESPONSE TO NOTICE U/S. 148 OF THE ACT , THE ASSESSEE DECLARED ADDITION AL INCOME OF RS.2,81,04,338/ - . THE CONTENTION OF THE ASSESSEE IS THAT TH E ADDITIONAL INCOME OF RS.3,95,50,291/ - DECLARED BY THE ASSESSEE INCLUDES OPENING BALANCES OF RS.1,45,68,748/ - AS ON 5 ITA NO . 488/PUN/2015, A.Y. 2005 - 06 01 - 04 - 2004 . BOGUS PURCHASES FOR FINANCIAL YEAR 2003 - 04 CANNOT BE ADDED IN SUBSEQUENT FINANCIAL YEAR. 7. THE COMMISSIONER OF INCOME TAX (APPEALS) HAS DELETED THE ADDITION BY OBSERVING AS UNDER : 2.1.6 I HAVE CAREFULLY CONSIDERED THE FACTS AND HAVE GONE THROUGH THE ASSESSMENT ORDER. I FIND THAT THE APPELLANT HAS DECLARED LOWER ADDITIONAL INCOME IN THE RETURN OF INCOME THAN WHAT WAS ADMITTED AT THE TIME OF SEARCH BECAUSE OF THE FOLLOWING TWO REASONS: 1) APPELLANT HAS REDUCED THE DECLARED AMOUNT OF ADDITIONAL INCOME B Y THE OPENING BALANCE WITH THE ABOVE TWO PARTIES BECAUSE THE OPENING BALANCE PERTAINED TO THE BOGUS PURCHASES MADE IN THE PREVIOUS YEAR. 2) IT HAS DECLARED REDUCED AMOUNT OF THE ADDITIONAL INCOME AFTER VERIFYING ITS OWN RECORDS. 2.1.7 TO APPRECIATE FAC TS, IT MAY BE NECESSARY TO UNDERSTAND AS TO HOW THE APP ELLANT HAS WORKED OUT THE FINAL AMOUNT OF RS . 2,81,04,338 DECLARED AS ADDITIONAL INCOME IN ITS RETURN OF INCOME. AS STATED AT THE TIME OF SEARCH, THE APP ELLANT HAD DECLARED AMOUNT OF RS . 3,95,50 , 291 INCL USIVE OF OPENING BALANCE AND PURCHASES MADE DURING THE YEAR IS AS UNDER: NAME OF THE CREDITOR OPENING BALANCES AS ON 01.04.2004 PURCHASES DEBITED DURING F.Y. 2004 - 05 TOTAL INCOME DECLARED FOR F.Y. 2004 - 05 ON A/C OF BOGUS PURCHASES SHREE SAI INDUSTRIES 42,73,486 1,16,77,100 1,59,50,586 SOHAM METAL PVT. LTD. 1,02,95,262 1,33,04,443 2,35,99,705 TOTAL 1,45,68,748 2,49,81,543 3,95,50,291 2.1.8 AS AGAINST THE ABOVE DECLARATION, THE APPELLANT SUBMITTED THAT THE ABOVE MENTIONED AMOUNTS ALSO INCLUDED THE OPENING BALANCE WITH THESE PARTIES. OPENING BALANCES WERE THE AMOUNT OF THE BOGUS PURCHASES MADE IN THE PREVIOUS YEAR BUT WERE NOT PAID FOR BY THE APPELLANT. THUS, THESE AMOUNTS WERE CLOSING BALANCES WITH THE PARTIES IN THE PREVIOUS YEAR AND BECAME THE OPENING BALANCES IN THE YEAR UNDER CONSIDERATION. IT WAS SUBMITTED THAT SINCE THE OPENING BALANCES REPRESENTED BOGUS PURCHASES MADE DURING THE PREVIOU S YEAR, THE SAME CANNOT BE ADDED DURING THE YEAR. FURTHER, THE APPELLANT HAS OFFERED CORRECT AMOUNT OF THE ADDITIONAL INCOME BASED ON THE BOGUS PURCHASES MADE FROM THESE PARTIES DURING THE YEAR. IT 6 ITA NO . 488/PUN/2015, A.Y. 2005 - 06 MAY BE SEEN THAT THE TOTAL AMOUNT OF THE BOGUS PURCHASES WERE MADE FROM THE PARTIES DURING THE YEAR UNDER CONSIDERATION WAS OF RS.2,49,81,843, AS AGAINST IT, THE APPELLANT HAS OFFERED ADDITIONAL INCOME OF RS.2,81,04,338. IN OTHER WORDS ALTHOUGH THE APPELLANT'S TOTAL OPENING BALANCE WITH THE ABOVE PARTIES IS OF R S.1,45,68,748/ - HOWEVER, THE APPELLANT SEEKS BENEFIT OF THE LOWER AMOUNT OF RS.1,14,45,952. THE BREAK - UP OF ADDITIONAL INCOME OF RS.2,81,04,339 DECLARED BY THE APPELLANT IS AS UNDER: NAME OF THE CREDITOR PURCHASES DEBITED DURING F.Y. 2004 - 05 TOTAL INCOME DECLARED FOR F.Y. 2004 - 05 ON A/C OF BOGUS PURCHASES SHREE SAI INDUSTRIES 1,57,77,101 1,57,77,101 SOHAM METAL PVT. LTD. 1,23,27,238 1,23,27,238 TOTAL 2,81,04,339 2,81,04,339 2.1.9 AS AGAINST THE APPELLANT'S CONTENTION, I FIND THAT THE LEARNED AO HAS CONCLUDED THE ISSUE WITHOUT EXAMINING THE SAME. THE LEARNED AO HAS STATED THAT THE APPELLANT HAD OFFERED ADDITIONAL INCOME DU RING THE SEARCH AFTER DUE APPLICATION OF MIND AND AFTER CONSIDERING ITS BOOKS OF ACCOUNTS. THEREFORE, THE APPELLANT'S ACTION IS AN AFTERTHOUGHT. 2.1.10 I DO NOT AGREE WITH THE LEARNED AO BECAUSE THE APPELLANT'S CONTENTION IS BASED ON ITS BOOKS OF ACCOUNTS AND DOCUMENTS. ENTRIES IN THE BOOKS OF ACCOUNTS AND CONTENTS OF THE DOCUMENTS COULD BE PROVED INCORRECT ON VERIFICATION, IF THEY ARE INCORRECT. HOWEVER, IT WOULD NOT BE POSSIBLE TO STATE THAT THE APPELLANT'S CONTENTION IS AFTERTHOUGHT WITHOUT CARRYING OUT ANY VERIFICATION. THERE IS NO LAW THAT THE ADMISSION ONCE MADE BY THE DEPONENT CANNOT BE CHANGED LATER, IF THE DEPONENT REALIZES THAT STATEMENT ON OATH WAS ERRONEOUSLY MADE. ACCORDINGLY, ACTION OF THE LEARNED AO OF MAKING THE ADDITION WITHOUT CARRYING OUT ANY INQUIRIES OR VERIFICATIONS AND PROVING THE APPELLANT'S CONTENTION INCORRECT CANNOT BE SUSTAINED. THEREFORE, I DELETE THE ADD ITION OF RS .1,14,45,953 MADE BY THE LEARNED AO. 8. THE LD. DR HAS NOT BEEN ABLE TO CONTROVERT THE FINDINGS OF COMMISSIONER OF INCOME TAX (APPEALS). THE ASSESSEE HA S FILED COPY OF LEDGER EXTRACTS OF SHREE SAI INDUSTRIES AND SOHAM METAL PVT. LTD. FOR THE FINANCIAL YEAR 2004 - 05 INDICATING PURCHASES MADE DURING THE FINANCIAL YEAR STARTING FROM 01 - 04 - 2004 TO 31 - 03 - 2005. THE DEPARTMENT HAS NOT RAISED ANY DOUBT OVER THE LEDGER EXTRACTS FURNISHED BY THE ASSESSEE. THE 7 ITA NO . 488/PUN/2015, A.Y. 2005 - 06 LETTER DATED 28 - 03 - 2012 ALONG WITH ANNEXURE - I WAS FILED BY THE ASSESSEE SHORTLY AFTER SEARCH. THE SAID LETTER CLEARLY INDICATES THAT THE ADDITIONAL INCOME DECLARED INCLUDES OPENING BALANCES FOR FINANCIAL YEAR 2004 - 05. WE DO NOT FIND ANY INFIRMITY IN THE FINDINGS OF COMMISSIONER OF INCOME TAX (APPEALS) IN DELETING THE ADDITION. THUS, WE UPHOLD THE FINDINGS OF COMMISSIONER OF INCOME TAX (APPEALS) AND DISMISS THE APPEAL OF DEPARTMENT. 9. IN THE RESULT, THE APPEAL OF THE REVENUE IS DISMISSED. ORDER PRO NOUNCED ON FRIDAY, THE 26 TH DAY OF MAY, 201 7 . SD/ - SD/ - ( . /D. KARUNAKARA RAO ) ( / VIKAS AWASTHY) / ACCOUNTANT MEMBER / JUDICIAL MEMBER / PUNE; / DATED : 26 TH MAY, 2017 RK / COPY OF THE ORDER FORWARDED TO : 1. / THE APPELLANT. 2. / THE RESPONDENT. 3. ( ) / THE CIT(A) - 12, PUNE 4. / THE CIT (CENTRAL), P UNE 5. , , , / DR, ITAT, B BENCH, PUNE. 6. / GUARD FILE. / / // TRUE COPY// / BY ORDER, / ASSISTANT REGISTRAR , , / ITAT, PUNE