Paramount Propbuild Pvt. Ltd., Delhi V. DCIT, New Delhi

ITA 4981/DEL/2014

• Counselvise Citation: [2019] 117 COUNSELVISE.COM (IT) 8142 (ITAT-DELHI)
• Duration Of Justice: 4 year(s) 7 month(s) 5 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 16-04-2019
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: F
• Assessment Year: 2009-2010
• Appeal Filed On: 11-09-2014
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: SULEKHA VERMA
• Assessee Lawyers: DR RAKESH GUPTA
• Keywords: Bogus purchase; Search and seizure; Fair market value
• Section: 153A; 250; 131; 132

Judgement Text

IN THE INCOME-TAX APPELLATE TRIBUNAL, DELHI BENCH F, NEW DELHI BEFORE : SHRI AMIT SHUKLA, JUDICIAL MEMBER AND SHRI L.P. SAHU, ACCOUNTANT MEMBER ITA NOS. 4981, 4982 & 4983/DEL/2014 ASSESSMENT YEARS: 2009-10, 2010-11 & 2011-12 PARAMOUNT PROPBUILD PVT. LTD., 208, SAVITA VIHAR, SIKKA MANSION, LSC, 2 ND FLOOR, DELHI. PAN AADCP 5228P (APPELLANT) VS. DCIT, CIRCLE - 18, NEW DELHI. (RESPONDENT) ITA NOS. 6100 & 6101/DEL/2014 ASSESSMENT YEARS: 2010-11 & 2011-12 DCIT, CIRCLE - 18, NEW DELHI. (APPELLANT) VS. PARAMOUNT PROPBUILD PVT. LTD., 208, SAVITA VIHAR, SIKKA MANSION, LSC, 2 ND FLOOR, DELHI. (RESPONDENT) A SSESSEE BY DR. RAKESH GUPTA, ADVOCATE & SH. SOMIL AGGARWAL, ADVOCATE RESPONDENT BY SMT. SULEKHA VERMA, CIT(DR) ORDER PER BENCH: OUT OF ABOVE APPEALS, FORMER THREE APPEALS HAVE BE EN FILED BY THE ASSESSEE AND LATER TWO APPEAL BY REVENUE AGAINST SE PARATE ORDERS OF DATE OF HEARING 26.02.2019 DATE OF PRONOUNCEMENT 16.04.2019 ITA NOS. 4981, 4982, 4983, 6100 & 6101/DEL/2014 2 LD.CIT(A)-3, NEW DELHI DATED 11.08.20114, 12.08.201 4 & 12.08.2014 RESPECTIVELY FOR THE ASSESSMENT YEARS 2009-10, 2010 -11 AND 2011-12. 2. THE SOLITARY ISSUE INVOLVED IN ALL THESE APPEALS IS WITH RESPECT TO ADDITIONS MADE ON ACCOUNT OF UNVERIFIABLE PURCHASES . SINCE THE ISSUE, GROUNDS OF APPEALS AND THE FACTS INVOLVED IN THESE APPEALS ARE IDENTICAL BARRING THE AMOUNTS OF ADDITIONS, ALL THESE APPEALS WERE HEARD TOGETHER AND ARE, THUS BEING DISPOSED OF BY THIS CONSOLIDATED ORDER FOR TH E SAKE OF CONVENIENCE AND BREVITY. BOTH THE PARTIES AGREED THAT THE DECISION IN APPEAL FOR A.Y. 2009-10 WOULD BE EQUALLY APPLICABLE TO OTHER APPEALS. WE, T HEREFORE, TAKE UP THE APPEAL OF ASSESSEE FOR A.Y. 2009-10. THE GROUNDS RA ISED IN THIS APPEAL ARE AS UNDER : 1. THAT THE LEARNED COMMISSIONER OF INCOME TAX (APPEA LS) - III ERRED ON FACTS AS WELL AS IN LAW, IN CONFIRMING AN ADDITI ON OF RS. 22,03,491/- ON ACCOUNT OF UNVERIFIABLE PURCHASES, OUT OF SUCH TOTA L ADDITION OF RS. 88,13,962/- 2. THAT THE LEARNED COMMISSIONER OF INCOME TAX (APPE ALS) - III ERRED ON FACTS AS WELL IN LAW, IN NOT PROPERLY APPRECIATI NG THE VARIOUS SUBMISSIONS, ARGUMENTS & DOCUMENTARY EVIDENCES FILE D, IN SUPPORT OF OUR CONTENTIONS. 3. THAT THE LEARNED COMMISSIONER OF INCOME TAX (APPEA LS)- III ERRED ON FACTS AS WELL AS IN LAW, IN RELYING MERELY ON CI RCUMSTANTIAL EVIDENCE/S, WITHOUT ANY CONCRETE & SPECIFIC ADVERSE EVIDENCE/S, ON WHICH TO BASE HIS FINDING/S AND CONCLUSION/S. THAT THE ABOVE GROUNDS OF APPEAL; ARE WITHOUT PREJUD ICE TO EACH OTHER. ITA NOS. 4981, 4982, 4983, 6100 & 6101/DEL/2014 3 3. THE ASSESSEE HAD ALSO FILED ADDITIONAL GROUNDS OF APPEAL BY APPLICATION DATED 16.10.2017, WHICH WAS NOT PRESSED DURING THE COURSE OF HEARING BY THE LD. AR OF THE ASSESSEE. THEREFORE, THIS ADDITIONAL GROUND STANDS REJECTED AS NOT PRESSED. 4. THE BRIEF FACTS OF THE CASE ARE THAT A SEARCH AN D SEIZURE ACTION U/S. 132 OF THE IT ACT WAS CARRIED OUT ON 11.03.2011 IN M/S. PARAMOUNT, GULSHAN AND AJNARA GROUP OF CASES. THE CASE OF THE ASSESSEE WAS ALSO COVERED U/S. 132(1) OF THE ACT. THE ASSESSEE COMPANY BELONGS TO PARAMOU NT GROUP COMPANIES WHICH IS ENGAGED IN THE BUSINESS OF RESIDENTIAL AND COMMERCIAL PROJECTS IN UTTAR PRADESH. THE ASSESSEE WAS ISSUED NOTICE U/S. 153A ON 06.03.2012. IN RESPONSE, THE ASSESSEE FILED RETURN DECLARING INCOM E AT RS.1,27,21,436/- ON 20.12.2012. IN RESPONSE TO THE QUESTIONNAIRE ISSUED , THE ASSESSEE FILED INFORMATION. IT WAS NOTICED BY THE ASSESSING OFFICE R THAT THE ASSESSEE HAD MADE PURCHASES OF MATERIAL FROM FOLLOWING PARTIES : (I). M/S. SHYAMJI TRADERS RS. 1,01,712/- (II). U-TEK SALES CORPORATION RS.87,72,250/- IN THE COURSE OF SEARCH PROCEEDINGS, IT WAS NOTICED BY THE INVESTIGATION WING THAT THESE PARTIES WERE NOT IN EXISTENCE AT THE ADD RESSES MENTIONED ON THE BILLS AND COULD NOT BE FOUND IN THE FIELD ENQUIRIES ALSO. IN ORDER TO ASCERTAIN THE GENUINENESS OF THE PURCHASES, THE ASSESSING OFF ICER ISSUED SUMMONS U/S. 131 OF THE IT ACT. THE SUMMONS WERE RECEIVED BACK U N-SERVED FROM THE POSTAL AUTHORITIES. THE AR OF THE ASSESSEE WAS ASKED MANY A TIMES TO PRODUCE THESE ITA NOS. 4981, 4982, 4983, 6100 & 6101/DEL/2014 4 PARTIES FOR VERIFICATION. HOWEVER, THE ASSESSEE FAI LED TO PRODUCE THE ABOVE PARTIES FOR VERIFICATION OF ALLEGED PURCHASES. THE AR FILED WRITTEN SUBMISSIONS, WHICH HAS BEEN INCORPORATED IN THE ASSESSMENT ORDER BY THE ASSESSING OFFICER. THE ASSESSING OFFICER WAS NOT SATISFIED FROM THE SU BMISSIONS MADE. IN ALL THESE EXISTING FACTS, THE ASSESSING OFFICER DOUBTED THE PURCHASES MADE FROM THE ABOVE PARTIES AND ADDED THE ENTIRE PURCHASES TO THE INCOME OF THE ASSESSEE AS UNVERIFIABLE. IN APPEAL BEFORE THE LD. CIT(A) AND FILED DETAILED WRITTEN SYNOPSIS BEFORE HIM. THE REMAND REPORT WAS ALSO CALLED FROM THE ASSESSING OFFICER AND REJOINDER WAS ALSO FILED BY T HE ASSESSEE. THE LD. CIT(A) WHILE EXAMINING THE REMAND REPORT AND WRITTEN SYNOP SIS AND REJOINDER OF THE ASSESSEE, OBSERVED MANY DRAWBACKS FOR PROVING THE G ENUINENESS OF THE PURCHASES MADE FROM THE ABOVE TWO PARTIES. ACCORDIN GLY, HE PARTLY ALLOWED THE APPEAL OF THE ASSESSEE SUSTAINING THE ADDITION TO THE EXTENT OF 25%. 5. THE LD. AR OF THE ASSESSEE REITERATING THE SUBMI SSIONS MADE BEFORE THE LD. CIT(A), SUBMITTED THAT THE CO-ORDINATE BENCH OF TRIBUNAL IN CROSS APPEALS OF OTHER GROUP CASE OF ASSESSEE, NAMELY, PARAMOUNT RESIDENCY PVT. LTD. VS. DCIT (ITA NO. 4907/DEL/2014 AND 6102/DEL/2014- A.Y. 2010-11). HE FURTHER SUBMITTED THAT IN THE ASSESSMENT PROCEEDINGS AS WEL L AS REMAND PROCEEDINGS SEVERAL EVIDENCE WAS PROVIDED TO THE ASSESSING OFFI CER, VIZ., VAT REGISTRATION, PAN, TIN, PURCHASE BILLS, CONFIRMATION OF ACCOUNTS, GR NOTES, STOCK REGISTER ETC. NO ANY DISCREPANCY HAS BEEN NOTED BY THE ASSES SING OFFICER. PAYMENTS WERE MADE THROUGH BANKING CHANNELS. THERE WAS NO AN Y INSTANCE POINTED OUT BY THE ASSESSING OFFICER THAT ANY CASH TRANSACTION WAS MADE OR ANY CASH WAS RECEIVED BACK FROM THE SUPPLIERS OF GOODS. THE REVE NUE ALSO REFERRED THE CASE ITA NOS. 4981, 4982, 4983, 6100 & 6101/DEL/2014 5 TO THE VALUATION OFFICER AND THE REPORT OF THE DVO WAS ACCEPTED TO THE REVENUE. 6. ON THE OTHER HAND, THE LD. DR RELIED ON THE ORDE R OF THE ASSESSING OFFICER AND SUBMITTED THAT THE PARTIES WERE NOT FOUND AT TH E ADDRESSES GIVEN ON THE BILLS AS WELL AS POST SEARCH ENQUIRY. THE ASSESSING OFFICER ALSO MADE SEPARATE ENQUIRY AND 131 NOTICES ISSUED WERE RETURNED BACK U N-SERVED. THE BANK STATEMENT OBTAINED BY THE ASSESSING OFFICER FROM TH E BANK CLEARLY SHOWED THAT AFTER RECEIVING THE PAYMENT FROM THE ASSESSEE, THE CASH HAD BEEN IMMEDIATELY WITHDRAWN. THE LD. CIT(A) HAS EXAMINED THE ISSUE IN DETAIL. MANY DISCREPANCIES HAVE BEEN NOTED BY THE LD. CIT(A) TOO AND THAT THERE IS HUGE GAP BETWEEN THE DATE OF INVOICES AND THE DATE OF GRS (G OOD RECEIPTS), WHICH CREATES GRAVE DOUBT ON THE GENUINENESS OF THE PURCH ASE. THE CASE LAWS RELIED BY THE AR ARE NOT APPLICABLE TO THE PRESENT FACTS O F THE CASE, ONCE THE PARTIES ARE FOUND FAKE. SHE HAS ALSO RELIED UPON FOLLOWING DECISIONS : (I). N.K. PROTEINS LTD. VS. CIT(2017-TIOL-23-SC-IT ) (II). N.K. PROTEINS LTD. VS. CIT 292 CTR 354 (GUJR AT HC) (III). CIT VS. ARUN MALHOTRA 47 TAXMANN.COM 385(DE LHI) (IV). CIT VS. LA MEDICA, 250 ITR 575 (DEL) 7. WE HAVE HEARD THE RIVAL SUBMISSIONS AND HAVE GON E THROUGH THE ENTIRE MATERIAL AVAILABLE ON RECORD AND THE CASE LAWS CITE D BY PARTIES AND WE FIND THAT THE ISSUE INVOLVED IN THIS APPEAL IS SQUARELY COVERED BY THE DECISION OF HONBLE CO-ORDINATE BENCH OF TRIBUNAL IN GROUP CASE OF THE ASSESSEE (ITA NOS. 4907 AND 6102/DEL/2014 A.Y. 2010-11) DATED 13.08. 2018, WHEREBY IN THE ITA NOS. 4981, 4982, 4983, 6100 & 6101/DEL/2014 6 IDENTICAL FACTS, CIRCUMSTANCES, GROUNDS OF APPEAL, COMMON SEARCH, THE ISSUE HAS BEEN DECIDED IN FAVOUR OF THE ASSESSEE OBSERVIN G AS UNDER : 14. WE HAVE GIVEN THOUGHTFUL CONSIDERATION TO THE O RDERS OF THE AUTHORITIES BELOW. THE FACTS ON RECORD SHOW THAT A S EARCH AND SEIZURE OPERATION WAS CARRIED OUT IN THE APPELLANTS GROUP ON 11.3.2011. IT IS PERTINENT TO MENTION HERE THAT NO INCRIMINATING MAT ERIAL WAS FOUND DURING THE COURSE OF SEARCH PROCEEDINGS. THE AO CHOS E FOUR PARTIES FROM WHOM BUILDING CONSTRUCTION MATERIALS WERE PURCHASED . IT WOULD NOT BE OUT OF PLACE TO MENTION THAT THE FAIR MARKET VALUE OF THE PROJECT SITUATED AT PARAMOUNT SYMPHONY, NH 24, GHAZIABAD IS AT RS. 3,29,82,68,526/- WHICH WAS ESTIMATED BY THE VALUATION CELL OF THE IN COME-TAX DEPARTMENT AT RS. 3,53,47,33,961/-. THIS MEANS THAT THE VALUATI ON CELL OF THE I.T. DEPARTMENT HAS ESTIMATED THE FAIR MARKET VALUE OF T HE SAID PROJECT MUCH HIGHER THAN THE VALUE DECLARED BY THE ASSESSEE. FUR THER, ON A PROJECT OF MORE THAN 300 CRORES, THE AO HAS DOUBTED THE GENUIN ENESS OF PURCHASES ONLY TO THE EXTENT OF RS. 7.86 CRORES, WHICH IS ABO UT 2.52%. 15. THE LOWER AUTHORITIES HAVE HARPED UPON THE FACT THAT THE PARTIES WERE NOT PRODUCED FOR VERIFICATION. WHILE DOING SO, BOTH THE LOWER AUTHORITIES HAVE IGNORED THE CONCLUSIVE DIRECT EVIDENCES BROUGH T ON RECORD, NAMELY, PAN DETAILS, VTA DETAILS, TIN NUMBERS, CONFIRMATIONS AND BANK STATEMENTS. THERE IS NO DISPUTE THAT ALL THE PAYMENT S HAVE BEEN MADE BY ACCOUNT PAYEE CHEQUES. THE LOWER AUTHORITIES HAVE TA KEN AN ADVERSE VIEW BECAUSE THEY FOUND THAT THE PAYEES HAVE WITHDRAWN C ASH ON THE SAME OR SUCCEEDING DAY. THERE IS NOT AN IOTA OF EVIDENCE WHA TSOEVER TO SHOW THAT THE CASH HAS REACHED BACK TO THE ASSESSEE. 16. THE HON'BLE CALCUTTA HIGH COURT IN THE CASE OF C IT VS. DATAWARE PRIVATE LIMITED IN TAX APPEAL NO. 263 OF 2011 & GA NO. 2856 OF 2011 IN ITS ORDER DATED 21.09.2011 HAS OBSERVED AS UNDER: ITA NOS. 4981, 4982, 4983, 6100 & 6101/DEL/2014 7 IN OUR OPINION, IN SUCH CIRCUMSTANCES, THE ASSESSI NG OFFICER OF THE ASSESSEE CANNOT TAKE THE BURDEN OF ASSESSING THE PR OFIT AND LOSS ACCOUNT OF THE CREDITOR WHEN ADMITTEDLY THE CREDITO R HIMSELF IS AN INCOME TAX ASSESSEE. AFTER GETTING THE PAN NUMBER A ND GETTING THE INFORMATION THAT THE CREDITOR IS ASSESSED UNDER THE ACT, THE ASSESSING OFFICER SHOULD ENQUIRE FROM THE ASSESSING OFFICER OF THE CREDITOR AS TO THE GENUINENESS OF THE TRANSACTION A ND WHETHER SUCH TRANSACTION HAS BEEN ACCEPTED BY THE ASSESSING OFFI CER OF THE CREDITOR BUT INSTEAD OF ADOPTING SUCH COURSE, THE A SSESSING OFFICER HIMSELF COULD NOT ENTER INTO THE RETURN OF THE CRED ITOR AND BRAND THE SAME AS UNWORTHY OF CREDENCE 17. THE HON'BLE SUPREME COURT IN THE CASE OF TEJUA RO HIT KUMAR KAPADIA 94 TAXMANN.COM 325 HAS DECLINED TO ALLOW THE SLP AGA INST THE JUDGMENT OF THE HON'BLE GUJARAT HIGH COURT WHEREIN THE HON'B LE HIGH COURT HAS HELD THAT PURCHASES MADE BY THE ASSESSEE - TRADER W ERE DULY SUPPORTED BY BILLS AND PAYMENTS WERE MADE BY ACCOUNT PAYEE CHEQU E AND THE SELLER ALSO CONFIRMED THE TRANSACTION AND THERE WAS NO EVIDENCE TO SHOW THAT THE AMOUNT WAS RECYCLED BACK TO THE ASSESSEE AND, ACCOR DINGLY, HELD THAT ADDITION WAS NOT CALLED FOR. IN THAT CASE ALSO, THE AO HAD DISALLOWED SOME EXPENDITURE TREATING THE PURCHASES AS BOGUS AND MAD E THE ADDITION. 18. THE LD. DR HAS STRONGLY RELIED UPON THE JUDGMENT OF THE HON'BLE GUJARAT HIGH COURT IN THE CASE OF N.K. PROTEINS LTD 2016-TIOL-3165- AHM- IT WHEREIN THE FACTS SHOW THAT DURING THE COURSE OF SEARCH PROCEEDINGS AT THE OFFICE PREMISES OF NKPL, BLANK SIGNED CHEQUE BO OKS AND VOUCHERS OF NUMBER OF CONCERNS WERE FOUND. FURTHER, ENDORSED BL ANK CHEQUES OF NKPL BY THESE CONCERNS WERE ALSO FOUND WHEREIN THE ENDOR SEMENT WAS ON THE BACK OF THE CHEQUES. ACCORDINGLY, THE PURCHASES MAD E FROM THESE CONCERNS WERE TREATED AS BOGUS PURCHASES BY THE AO. 19. THE FACTS OF THE CASE IN HAND ARE CLEARLY DISTIN GUISHABLE FROM THE FACTS OF THIS CASE IN AS MUCH AS THERE WAS NOTHING OF SUC H DOCUMENTS, AS REFERRED, WERE FOUND FROM THE POSSESSION OF THE ASS ESSEE EVEN DURING THE ITA NOS. 4981, 4982, 4983, 6100 & 6101/DEL/2014 8 COURSE OF SEARCH AND SEIZURE OPERATION. THE LD. DR HAS ALSO PLACED RELIANCE ON SOME OTHER JUDICIAL DECISIONS, BUT THE FACTS ARE TOTALLY DIFFERENT FROM THE FACTS OF THE CASE IN HAND. 20. AS MENTIONED ELSEWHERE, TOTAL ESTIMATED VALUE O F THE PROJECT FOR THE YEAR UNDER CONSIDERATION IS MORE THAN RS. 300 CRORE S. THEREFORE, IT WOULD BE A FUTILE EXERCISE TO DOUBT THE GENUINENESS OF A MEAGRE AMOUNT OF RS. 7.86 CRORES. MOREOVER, AS MENTIONED ELSEWHERE, THE PURCHASES WERE DULY SUPPORTED BY BILLS AND VOUCHERS. THE PAYMENTS HAVE B EEN MADE THROUGH ACCOUNT PAYEE CHEQUES. THE PAYMENTS ARE REFLECTED IN THE BANK STATEMENT OF THE PAYER AND THE PAYEE. WE, THEREFORE, DO NOT F IND ANY REASON FOR DOUBTING THE GENUINENESS OF THESE PURCHASES. WHILE RESTRICTING THE DISALLOWANCE TO RS. 1,96,55,330/-, THE REASONING GI VEN BY THE FIRST APPELLATE AUTHORITY IS NOT ONLY ABSURD, BUT ILLOGIC AL. THE FIRST APPELLATE AUTHORITY HAS HEAVILY RELIED UPON THE DECISION IN T HE CASE OF VIJAY PROTEINS LTD 55 TTJ [AHD] 76. CONSIDERING THE FACTS OF THE CA SE IN TOTALITY, AS DISCUSSED HEREINABOVE, WE ARE OF THE CONSIDERED VIE W THAT THAT ENTIRE ADDITION DESERVES TO BE DELETED. WE, ACCORDINGLY, S ET ASIDE THE FINDINGS OF THE CIT(A) AND DIRECT THE AO TO DELETE THE ENTIRE A DDITION OF RS. 7,86,21,320/-. RESPECTFULLY FOLLOWING THE ABOVE DECISION OF CO-ORD INATE BENCH IN THE IDENTICAL FACTS AND CIRCUMSTANCES OF THE CASE, WE DO NOT FIND ANY JUSTIFICATION TO SUSTAIN 25% OF THE ADDITION BY THE LD. CIT(A). THE DECISION S RELIE BY THE LD. DR ARE DISTINGUISHABLE ON FACTS. ACCORDINGLY, THE APPEAL O F THE ASSESSEE DESERVES TO BE ALLOWED. 8. AS ALREADY NOTED, THE ISSUE AND FACTS INVOLVED I N APPEALS FOR THE ASSESSMENT YEARS 2010-11 AND 2011-12 ARE VERBATIM TO THE APPEAL FOR A.Y. 2009-10. THEREFORE, OUR DECISION IN APPEAL FOR A.Y. 2009-10 WOULD EQUALLY ITA NOS. 4981, 4982, 4983, 6100 & 6101/DEL/2014 9 APPLY TO THE APPEALS OF THE ASSESSEE AND THE REVENU E FOR A.YRS. 2010-11 AND 2011-12. ACCORDINGLY, THE APPEALS OF ASSESSEE FOR A .Y. 2010-11 AND 2011-12 ARE ALSO ALLOWED AND THOSE OF REVENUE ARE DISMISSED . 9. IN THE RESULT, ALL THE THREE APPEALS OF THE ASSE SSEE ARE ALLOWED AND THOSE OF THE REVENUE ARE DISMISSED. ORDER PRONOUNCED IN THE OPEN COURT ON 16.04.2019. SD/- SD/- (AMIT SHUKLA) (L.P. SAHU) JUDICIAL MEMBER ACCOUNTANT MEMBER DATED: 16.04.2019 *AKS* COPY OF ORDER FORWARDED TO: (1) THE APPELLANT (2) THE RESPONDENT (3) COMMISSIONER (4) CIT(A) (5) DEPARTMENTAL REPRESENTATIVE (6) GUARD FILE BY ORDER ASSISTANT REGISTRAR INCOME TAX APPELLATE TRIBUNAL DELHI BENCHES, NEW DELHI