ACIT, New Delhi V. Sh. Harinder Dhingra, Gurgaon

ITA 4936/DEL/2015

• Counselvise Citation: [2019] 118 COUNSELVISE.COM (IT) 0754 (ITAT-DELHI)
• Duration Of Justice: 3 year(s) 7 month(s) 24 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 25-03-2019
• Appeal Filed By: Department
• Order Result: Allowed
• Bench Allotted: H
• Assessment Year: 2004-2005
• Appeal Filed On: 31-07-2015
• Result in Favour of: Revenue
• Court: TRIBUNAL
• Department Lawyers: PRAKHAR VIPLAVA GUPTA
• Assessee Lawyers: HARINDER DHINGRA
• Keywords: Bogus purchase; Search and seizure; Additional evidence
• Section: 80HHC; 145; 132; 2

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL DELHI BENCH A, NEW DELHI BEFORE SH. R.K PANDA, ACCOUNTANT MEMBER AND MS. SUCHITRA KAMBLE, JUDICIAL MEMBER ITA NO.4936/DEL/2015 ASSESSMENT YEAR: 2004-05 ASSISTANT COMMISSIONER OF INCOME TAX, CIRCLE 31 (1), NEW DELHI VS SH. HARINDER DHINGRA PROP. M/S. GOLDEN HARVEST D-4/A-7, DLF PHASE-II, GURGAON PAN NO.ADKPD1301A (APPELLANT) (RESPONDENT) APPELLANT BY SH. PRAKHAR VIPLAVA GUPTA, SR. DR RESPONDENT BY SH. HARINDER DHINGRA, ADVOCATE DATE OF HEARING: 25 /0 3 /201 9 DATE OF PRONOUNCEMENT: 25/03/2019 ORDER PER R.K. PANDA, AM: 1. THIS APPEAL FILED BY THE REVENUE IS DIRECTED AGAINS T THE ORDER DATED 13.05.2015 OF THE CIT(A)-29, NEW DELHI, RELATING TO A. Y. 2004-05. 2. THE GROUNDS RAISED BY THE REVENUE ARE AS UNDER : - 1. 'ON THE FACTS AND CIRCUMSTANCES OF THE CASE, THE LD.CIT(A) HAS ERRED IN ALLOWING DEDUCTION U/S 80HHC BY HOLDING THE EXPORT ACTIVITY OF THE ASSESSEE AS GENU INE, 2. ON THE FACTS AND CIRCUMSTANCES OF THE CASE, THE LD. CIT(A) HAS ERRED IN ALLOWING DEDUCTION U/S 80HHC ON THE ONE HAND WHEREAS ON THE OTHER HAND, UPHELD THE ACTION O F AO OF REJECTING THE BOOKS OF ACCOUNT BY INVOKING THE PROV ISIONS OF ITA NO.4936/DEL/2015 2 SECTION 145. 3. THE ORDER OF THE LD. CIT(A) IS ERRONEOUS AND IS NO T TENABLE ON FACTS AND IN LAW. 4. THE APPELLANT CRAYZS LEAVE TO ADD, ALTER OR AMEND ANY OF THE GROUNDS OF APPEAL BEFORE OR DURING THE COURS E OF APPELLATE PROCEEDINGS BEFORE HON'BLE ITAT.' 3. THE FACTS OF THE CASE, IN BRIEF, ARE THAT THE AS SESSEE IS AN INDIVIDUAL. A SEARCH AND SEIZURE OPERATION IN M/S. S. L. DHINGRA GROUP OF CASES WAS CONDUCTED ON 31.07.2003. THE AS SESSEE FILED HIS RETURN OF INCOME ON 01.11.2004 DECLARING TOTAL INCOME OF RS.1,79,502/-. THE ASSESSING OFFICER DURING THE COURSE OF ASSESSMENT PROCEEDINGS NOTED THAT THE ASSESSEE HAS DECLARED TOTAL EXPORT SALES OF RS.8,93,60,175/- AND LOCAL SA LES OF RS.1,68,72,712/-. HE HAS ALSO OBTAINED EXPORT BENE FITS OF DRAW BACK AND DEPB TOTALING TO RS.1,00,34,766/-. AGAINS T THESE RECEIPTS THE ASSESSEE HAS CLAIMED THE PURCHASES OF FABRICS AMOUNTING TO RS.7,90,35,579/- AND HAS INCURRED VARI OUS EXPENSES OF RS.2,11,15,375/-. THE ASSESSEE CLAIMED NET PROFIT OF RS.2,40,088/-AND CLAIMED DEDUCTION U/S 80HHC AGA INST THIS PROFIT OF RS.60,587/-. 4. THE ASSESSING OFFICER ISSUED NOTICE TO THE VARIO US PARTIES FROM WHOM THE ASSESSEE HAS PURCHASED FABRICS, PACKI NG MATERIAL AND CONSUMABLE STORES ETC AND CAME TO THE CONCLUSION THAT THE PURCHASES SHOWN BY THE ASSESSEE ALL ARE BO GUS. HE, THEREFORE, ASKED THE ASSESEE TO EXPLAIN AS TO WHY P URCHASES AND FABRICATION EXPENSES SHOULD NOT BE TREATED AS BOGUS . HE ALSO ASKED THE ASSESSEE TO PRODUCE THE PARTIES FOR HIS V ERIFICATION AND SUBSTANTIATE THE CLAIM. REJECTING THE VARIOUS EXPL ANATION GIVEN BY THE ASSESSEE THE ASSESSING OFFICER REJECTED THE CLAIM OF DEDUCTION U/S. 80 HHC BY HOLDING THE EXPORT ACTIVIT Y OF THE ITA NO.4936/DEL/2015 3 ASSESSEE AS NON GENUINE AND ALSO DETERMINED THE TOT AL INCOME OF THE ASSESSEE AT RS.4,97,96,588/-. 5. IN APPEAL THE LD. CIT(A) ALLOWED THE APPEAL FILE D BY THE ASSESSEE BY OBSERVING AS UNDER :- 4.1 SEARCH AND SEIZURE OPERATION UNDER SECTION 132 WAS CONDUCTED ON 31.07.2003 ON S.L. DHINGRA GROUP OF CASES. THE FAMI LY OF SHRI S.L. DHINGRA CONSISTS OF HIS THREE SONS, NAMELY, S/SH. HARINDER DHINGRA, ANIL DHINGRA AND SANJIV DHINGRA AND DAUGHTERS-IN-LAWS, NAMELY S/SMT. POONAM DHINGRA AND RITA DHINGRA. ALL OF THESE FAMILY MEMBERS WERE ENGA GED IN THE BUSINESS OF MANUFACTURING OF GARMENTS FOR EXPORT AND DETAILS OF VARIOUS FIRMS MANAGED BY FAMILY MEMBERS OF MR. S.L. DHINGRA, AGAINST WHOM SE ARCH ACTION WAS TAKEN ARE AS UNDER:- 4.1.1 DURING THE COURSE OF SEARCH AND SEIZURE OPERA TION ON EACH OF THE ABOVE S . N O . NAME RELATION WITH SHRI S.L. DHINGRA NAME OF THE CONCERN 1 SH. HARINDER DHINGRA ELDEST SON PROPRIETOR, GOLDEN HARVEST 2 SH. ANIL DHINGRA 2 ND SON PROPRIETOR, N.D. SHAH EXPORT 3 SH. SANJEEV DHINGRA 3 RD SON PROPRIETOR, SHAH KNITS 4 SMT. POONAM DHINGRA, W/O SH. DAUGHTER - IN-LAW PROPRIETOR, POONAM CLOTHING 5 SMT. RITA DHINGRA, W/O SH. ANIL DHINGRA DAUGHTER - IN-LAW PROPRIETOR, G&J APPAREL ITA NO.4936/DEL/2015 4 FAMILY MEMBERS, THE INVESTIGATION WING CONDUCTED VA RIOUS ENQUIRIES AND THEY FOUND THAT THE PARTIES, WHO HAVE BEEN SHOWN TO HAVE SUPPLIED FABRICS AND FABRICATION AND PACKING SERVICES/MATERIAL, WERE NOT IN EXISTENCE. THE INQUIRIES MADE BY THE INVESTIGATION WING ALSO REVEALED THAT S HRI ANIL DHINGRA AND ONE SHRI HARDEEP NEHAL SINGH WERE FREQUENT VISITORS TO FOREIGN COUNTRIES AND THEY OWN/CONTROL THE FOLLOWING OVERSEAS COMPANIES IN NET HERLAND/LONDON WHICH APPEAR TO BE SPECIAL PURPOSE COMPANIES. (I) ULTIMATE FASHION, B.V. NETHERLANDS, DIRECTOR/OWNER- SHRI ANIL DHINGRA. (II) FUTURE COLLECTION B V, 1090, AMBONPHIES, AMSTERDAM, NETHERLANDS, DIRECTOR/OWNER, FLADEEP NEHAL SINGH AND SHRI RAVI D HAWAN. (III) CLOTHING STATION LTD. 1, FOREST FIILL, LONDON, UK, DIRECTOR/OWNER, SHRI H.N. SINGH AND SHRI ANIL DHINGRA. (IV) WEXCO TRADING LTD. SUN BRIDGE ROAD, BRED FORD, UK, DIRECTORS, SHRI ANIL DHINGRA, SHRI H.N. SINGH AND SHRI M. VERALD MI LLER. (V) TRANS EUROPE (TEXTILES) B V 124, M J STREET, NETHER LANDS, OWNER, NEENA FLARDEEP SINGH AND SHRI HARDEEP NEHAL SINGH. 4.1.2 IT WAS FOUND IN THE COURSE OF INVESTIGATION, THAT T HE ABOVE OVERSEAS CONCERNS WERE ENGAGED IN THE ALLEGED IMPORT OF READ YMADE GARMENTS AND ACCESSORIES FROM INDIA. FURTHER IT WAS ALSO FOUND T HAT SHRI HARDEEP NEHAL SINGH (H. N. SINGH) IS A RELATIVE OF SHRI ANIL DHIN GRA AND AS A FRIEND/RELATIVE HE HAD BEEN HELPING THE CONCERNS OF SHRI S.L. DHINGRA GROUP IN EXECUTING BOGUS EXPORTS IN THE NAMES OF THE ABOVE NOTED EXPORTS CON CERNS OF THE GROUP. ACCORDINGLY, ON THE BASIS OF INQUIRIES MADE, IN THE SEARCH ASSESSMENT PROCEEDINGS OF ALL THE FIRMS OF DHINGRA GROUP (MENT IONED IN PARA 4.1 ABOVE), THE RESPECTIVE AOS, CAME TO THE CONCLUSION THAT: (A) ALL THE FIRMS OF DHINGRA GROUP WERE MAKING BOGUS E XPORTS AND, (B) THE MONEY RECEIVED IN CONVERTIBLE FOREIGN EXCHANGE AGAINST THE ALLEGED EXPORT IS ONLY THE HAWALA AMOUNT BROUGHT INTO INDIA . AS A RESULT OF THE ABOVE FINDING, THE AO, WHILE ASS ESSING THE INCOME OF ALL THE ABOVE MENTIONED CONCERNS OF DHINGRA GROUP DISALLOWE D THE 'PURCHASES' AND 'FABRICATION/PACKING EXPENSES' AND DISALLOWED THE C LAIM OF DEDUCTION UNDER SECTION 80HHC AND TAXED THE REMITTANCES RECEIVED AN D THE EXPORT BENEFITS VIZ. DUTY DRAW BACK ETC., AS 'INCOME FROM OTHER SOURCES. ' 4.1.3 IN THE CASE OF THE APPELLANT, I.E. SHRI HARIN DER DHINGRA, PROP. GOLDEN ITA NO.4936/DEL/2015 5 HARVEST, IN THE YEAR UNDER CONSIDERATION THE AO FOU ND THAT THE APPELLANT HAD MADE THE PURCHASES OF RS.7,90,35,529. FROM THE ASSESSMENT ORDER IT IS SEEN THAT AO HAS HE LD THAT THE APPELLANT HAD MADE BOGUS PURCHASES, AND HAVE INCURRED BOGUS FABRI CATION/PACKING EXPENSES FROM THE FOLLOWING ENTITIES:- APART FROM ABOVE, IT IS SEEN FROM THE ASSESSMENT OR DER THAT, ENQUIRIES WERE CARRIED DURING THE POST SEARCH INVESTIGATION AND IT WAS FOUND THAT IN RESPECT OF THE PARTIES FROM WHOM PURCHASES WERE MADE AND TO WH OM PAYMENTS WERE MADE ON ACCOUNT OF FABRICATION/PACKING EXPENSES ETC., TH E APPELLANT NEITHER PRODUCED THOSE PARTIES FOR VERIFICATION NOR FILED THE CONFIR MED COPY OF ACCOUNT AND NOR GAVE THE INCOME TAX PARTICULARS. IN VIEW OF THE ABOVE SPECIFIC INFIRMITIES AND IN VI EW OF THE INQUIRIES/ INVESTIGATION BEING CARRIED DURING THE SEARCH ON DH INGRA GROUP, THE AO IN THE CASE OF THE APPELLANT HELD THAT IN THE YEAR UNDER C ONSIDERATION, NO GENUINE EXPORT WAS MADE AND ACCORDINGLY, HE WITHDREW THE CL AIM OF DEDUCTION UNDER SECTION 80HHC. HAVING DONE THAT THE AO CONSIDERED T HE REMITTANCE ON ACCOUNT OF ALLEGED EXPORTS AS INCOME TAXABLE UNDER THE HEAD 'INCOME FROM OTHER SOURCES'. 5. AGGRIEVED WITH THE ABOVE ACTION OF THE AO, THIS APPEAL IS FILED AND THE APPELLANT HAS MADE ALMOST THE SIMILAR SUBMISSIONS A S WERE MADE DURING THE APPELLATE PROCEEDINGS FOR ASSESSMENT YEAR 2000-01, WHERE SIMILAR ISSUE WERE INVOLVED AND ALL THESE SUBMISSIONS WERE DULY BEEN C ONSIDERED WHILE ADJUDICATING THE APPEAL FOR ASSESSMENT YEAR 2000-01 . IN THAT ORDER, I HAVE DISCUSSED THIS ISSUE IN DETAIL AND VIDE MY ORDER DA TED 30.07.2013, I HAVE HELD THAT THOUGH THE EXPORTS ARE HELD TO BE GENUINE, BUT THE BOOK RESULTS ARE NOT RELIABLE AND THEY DESERVE TO BE REJECTED UNDER SECTION 145 AND NET PROFIT RATE OF S.NO. PARTICULARS AMOUNT (IN RS.) 1 . THAKUR ASSOCIATES 1,83,72,148 2. BALAJI AND COMPANY 58,25,000 A ITA NO.4936/DEL/2015 6 19.50% ON GROSS TURNOVER (SALES + EXPORT BENEFITS) IS TO BE ADOPTED FOR DETERMINING THE INCOME FOR ALL ASSESSMENT YEARS 199 9-2000 TO 2005-2006. THEREFORE, AO IS DIRECTED TO RE-COMPUTE THE INCOME AND GIVE CREDIT FOR ALLOWABLE DEDUCTIONS UNDER CHAPTER VIA AVAILABLE TO THE APPELLANT IN THE LIGHT OF THE AFORESAID FINDINGS, AND FOLLOWING MY ORDER DATE D 30.07.2013 PASSED IN APPELLANT'S OWN CASE FOR ASSESSMENT YEAR 2000-2001. 6. AGGRIEVED WITH SUCH ORDER OF THE CIT(A) , THE RE VENUE IS IN APPEAL BEFORE THE TRIBUNAL. 7. THE LD. COUNSEL FOR THE ASSESSEE AT THE OUTSET S UBMITTED THAT ALL PURCHASES MADE BY THE ASSESSEE ARE GENUINE AND REVENUE HAS FAILED TO PROVE THAT ANY OF THE PURCHAS ES ARE BOGUS. REFERRING TO THE DECISION OF THE TRIBUNAL IN THE CA SE OF OTHER FAMILY MEMBERS SUCH AS SMT. RITA DHINGRA AND SH. AN IL DHINGRA, HE SUBMITTED THAT UNDER IDENTICAL CIRCUMST ANCES THE TRIBUNAL HAS RESTORED THE ISSUE TO THE FILE OF THE ASSESSING OFFICER WITH CERTAIN DIRECTIONS. THEREFORE, HE HAS NO OBJECTION IF THE MATTER IS RESTORED TO THE FILE OF THE ASSESSING OFFICER WITH SIMILAR DIRECTIONS. 8. THE LD. DR ON THE OTHER HAND FAIRLY CONCEDED TH AT HE HAS NO OBJECTION IF THE MATTER IS RESTORED TO THE FILE OF THE ASSESSING OFFICER WITH SIMILAR DIRECTIONS. 9. WE HAVE HEARD THE RIVAL ARGUMENTS MADE BY BOTH T HE SIDES AND PERUSED THE MATERIAL AVAILABLE ON RECORD. WE F IND THE ASSESSING OFFICER IN THE INSTANT CASE HAS MADE ADDI TION BY TREATING THE PURCHASES AS BOGUS. WE FIND THE LD. C IT(A) DELETED THE ADDITION, THE REASONS FOR WHICH HAVE ALREADY RE PRODUCED IN THE PRECEDING PARAGRAPH. WE FIND IDENTICAL ISSUE H AD COME UP BEFORE THE TRIBUNAL IN THE CASE OF SMT. RITA DHINGR A PROPRIETOR ITA NO.4936/DEL/2015 7 OF G & J APPAREL. WE FIND THE TRIBUNAL IN ITA NO.3663,3523,3664 & 3524/DEL/2007 A. Y. 2001-02 TO 2004-05 VIDE ORDER DATED 21.11.2008 HAS RESTORED THE ISSUE TO THE FILE OF THE ASSESSING OFFICER BY OBSERVING AS UNDER :- 9. WE HAVE CONSIDERED THE RIVAL SUBMISSIONS. WHAT IS CHALLENGED IN APPEAL IS DELETION OF ADDITION AND TH E REASONS STATED IN THE GROUND IS ADMISSION OF ADDITIONAL EVIDENCE. HOWEVER, WHAT IS CHALLENGED ULTIMATELY IS DELETION OF ADDITI ON AND NOT ONLY ADMISSION OF ADDITIONAL EVIDENCE. WE THEREFORE HAVE TO EXAMIN E AS TO WHETHER THE ADDITION MADE BY THE ASSESSING OFFICER IS LIABLE TO BE DELETED OR NOT. AS RIGHTLY CONTENDED BY THE LEARNED COUNSEL FOR THE AS SESSEE, NO ADDITIONAL EVIDENCES WERE SUBMITTED BEFORE THE COMMISSIONER (A PPEALS) AND HENCE THERE IS NO VIOLATION OF RULE 46A. HOWEVER, THE COM MISSIONER (APPEALS) MUST ENQUIRE INTO ON TWO POINTS NAMELY THE RESULT O F ENQUIRY MADE WITH THE PARTIES FROM WHOM THE PURCHASES WERE MADE AND THE R EPLY BY M/S. NAINA FAB SPECIFICALLY MENTIONED THAT NO GOODS WERE SUPPL IED BY THEM TO THE ASSESSEE. SIMILAR AVERMENTS WERE MADE BY M/S. PAL I NTERNATIONAL ALSO. THOUGH THE EXPORT IS STATED TO BE PROVED, THE PURCH ASES ARE NOT PROVED. THE LEARNED COMMISSIONER (APPEALS) HAS FAILED TO ENQUIR E INTO THE ASPECT AS TO HOW THE PAYMENTS WERE MADE TO M/S. NAINA FAB AND M/ S. PAL INTERNATIONAL PARTICULARLY WHEN THEY HAVE SPECIFICALLY DENIED THE TRANSACTION WITH THE ASSESSEE. WHAT IS THE IMPACT OF DENIAL OF TRANSACTI ON BY THESE TWO PARTIES ON THE COMPUTATION OF INCOME HAS NOT BEEN CONSIDERED. THOUGH THE ASSESSEE MAY BE HELD ELIGIBLE FOR DEDUCTION UNDER SECTION 80 HHC, YET HOW THE UNPROVED PURCHASES SHOULD BE DEALT WITH, IS NOT CON SIDERED BY THE COMMISSIONER (APPEALS). THE LEARNED COMMISSIONER (A PPEALS) HAS GONE OVER WAY ROUND I.E. BY HOLDING THAT SINCE GOODS ARE EXPORTED FOR WHICH THE AMOUNT IS RECEIVED THROUGH BANKING CHANNELS, EVEN T HE PURCHASES ARE TO BE HELD AS GENUINE. IN OUR OPINION THIS IS NOT A CORRECT FI NDING. WE, THEREFORE, RESTORE THE MATTER BACK TO THE FILE OF THE COMMISSIONER (APPEAL S) WHO SHALL DECIDE AS TO ITA NO.4936/DEL/2015 8 WHETHER THE PURCHASE FROM M/S. NAINA FAB AND M/S. P AL INTERNATIONAL WERE GENUINE OR NOT AND THEREAFTER TO DECIDE THE IMPACT ON COMPUTATION OF INCOME. THE ASSESSEE SHALL BE AFFORDED AN OPPORTUNITY TO CONSID ER THE REPLIES RECEIVED FROM M/S. NAINA FAB AND M/S. PAL INTERNATIONAL AND THERE AFTER TO MAKE THEIR SUBMISSIONS REGARDING GENUINENESS OF THE PURCHASES. FOR THIS PURPOSE THE MATTER IS RESTORED BACK TO THE FILE OF THE COMMISSIONER (A PPEALS). THE COMMISSIONER (APPEALS) SHALL AFFORD OPPORTUNITY OF HEARING TO BO TH I.E. THE ASSESSEE AND THE ASSESSING OFFICER AND REDECIDE THE ISSUE IN THE LIG HT OF OUR OBSERVATIONS ABOVE. THIS DISPOSES GROUNDS NO. 1 & 2. 10. RESPECTFULLY FOLLOWING THE DECISION OF COORDINA TE BENCH OF THE TRIBUNAL UNDER IDENTICAL CIRCUMSTANCES IN THE C ASE OF ONE OF THE RELATED PARTY, WE DEEM IT PROPER TO RESTORE THI S ISSUE TO THE FILE OF THE ASSESSING OFFICER WITH DIRECTION TO RE- ADJUDICATE THE ISSUE IN THE LIGHT OF THE DECISION OF THE TRIBUNAL CITED (SUPRA). THE GROUNDS RAISED BY THE REVENUE ARE ACCORDINGLY A LLOWED FOR STATISTICAL PURPOSES. 11. IN THE RESULT, THE APPEAL FILED BY THE REVENUE IS ALLOWED FOR STATISTICAL PURPOSE. ORDER PRONOUNCED IN THE OPEN COURT AT THE TIME OF H EARING ITSELF I.E. ON 25.03.2019. SD/- SD/- (SUCHITRA KAMBLE) (R.K PANDA) JUDICIAL MEMBER ACCO UNTANT MEMBER *NEHA* DATE:- 25 .03.2019 COPY FORWARDED TO: 1. APPELLANT 2. RESPONDENT 3. CIT 4. CIT(APPEALS) 5. DR: ITAT ASSISTANT REGISTRAR ITA NO.4936/DEL/2015 9 ITAT NEW DELHI DATE OF DICTATION 25.03.2019 DATE ON WHICH THE TYPED DRAFT IS PLACED BEFORE THE DICTATING MEMBER 25.03.2019 DATE ON WHICH THE APPROVED DRAFT COMES TO THE SR.PS/PS 25.03.2019 DATE ON WHICH THE FAIR ORDER IS PLACED BEFORE THE DICTATING MEMBER FOR PRONOUNCEMENT 25.03.2019 DATE ON WHICH THE FAIR ORDER COMES BACK TO THE SR. PS/ PS 25.03.2019 DATE ON WHICH THE FINAL ORDER IS UPLOADED ON THE WEBSITE OF ITAT 25.03.2019 DATE ON WHICH THE FILE GOES TO THE BENCH CLERK DATE ON WHICH FILE GOES TO THE HEAD CLERK. THE DATE ON WHICH FILE GOES TO THE ASSISTANT REGIST RAR FOR SIGNATURE ON THE ORDER DATE OF DISPATCH OF THE ORDER