BELMARKS METAL WORKS, NEW DELHI V. ITO, WARD- 32(2), NEW DELHI

ITA 5198/DEL/2018

• Counselvise Citation: [2020] 111 COUNSELVISE.COM (IT) 2915 (ITAT-DELHI)
• Duration Of Justice: 1 year(s) 7 month(s) 3 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 05-03-2020
• Appeal Filed By: Assessee
• Order Result: Partly Allowed
• Bench Allotted: SMC
• Assessment Year: 2011-2012
• Appeal Filed On: 01-08-2018
• Result in Favour of: Partly Allowed
• Court: TRIBUNAL
• Department Lawyers: SARAS KUMAR
• Assessee Lawyers: S K SARKAR
• Keywords: Bogus purchase; Sale consideration of property below Jantri Value; Tangible material; Reason to believe
• Section: 113; 2

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL DELHI BENCH SMC NEW DELHI BEFORE SHRI AMIT SHUKLA, JUDICIAL MEMBER I.T.A. NO.5198/DEL/2018 ASSESSMENT YEAR: 2011-12 BELMARKS METAL WORKS, C/O SARKAR & ASSOCIATES, CA, K-45, KAILASH COLONY, NEW DELHI. VS. ITO, WARD-32(2), NEW DELHI. TAN/PAN: AAFFB6650C (APPELLANT) (RESPONDENT) APPELLANT BY: SHRI S.K. SARKAR, CA RESPONDENT BY: SHRI SARAS KUMAR, SR.D.R. DATE OF HEARING: 10 12 2019 DATE OF PRONOUNCEMENT: 05 03 2020 O R D E R PER AMIT SHUKLA, JM THE AFORESAID APPEAL HAS BEEN FILED BY THE ASSESSEE AGAINST THE IMPUGNED ORDER DATED 07.06.2018, PASSED BY LD. COMMISSIONER OF INCOME TAX (APPEALS)-XXXI, DELHI FO R THE QUANTUM OF ASSESSMENT PASSED U/S.147/143(3) FOR THE ASSESSMENT YEAR 2011-12. IN VARIOUS GROUNDS OF APPE AL, THE ASSESSEE HAS CHALLENGED THE VALIDITY OF REOPENING U /S.148 AND ON VARIOUS GROUNDS; ADDITION OF RS.1,93,066/- ON AC COUNT OF BOGUS PURCHASES AND LEVY OF INTEREST U/S.234B AND 2 34C. 2. THE FACTS IN BRIEF ARE THAT THE ASSESSEES CASE WAS REOPENED U/S.148 ON THE BASIS OF INFORMATION RECEIV ED FROM THE INVESTIGATION WING, NEW DELHI, WHEREIN IT WAS M ENTIONED THAT MAHARASHTRA VAT DEPARTMENT HAS FORWARDED THE D ETAILS OF NON-GENUINE/BOGUS BILL AVAILED BY THE ASSESSEE D URING THE I.T.A. NO.5198/DEL/2018 2 YEAR. THE INVESTIGATION WING HAD FORWARDED THE COPI ES OF STATEMENTS OF CONCERNED BOGUS BILLERS (HAWALA DEALE RS) ALONG WITH THEIR TIN AND PAN DETAILS OF BENEFICIARIES, WH EREIN THE ASSESSEE WAS ALSO FOUND TO BE ONE OF THE BENEFICIAR IES MENTIONED IN THE INFORMATION. IN THE INFORMATION, I T WAS MENTIONED THAT ASSESSEE HAS TAKEN BOGUS BILL OF RS.1,93,066/- FROM M/S. SUPREME ENTERPRISES. BASED ON THIS INFORMATION, ASSESSEES CASE WAS REOPENED U/S.147 A ND ACCORDINGLY, NOTICE U/S.148 WAS ISSUED ON 28.02.201 4. IN RESPONSE TO WHICH ASSESSEE HAS FILED THE RETURN OF INCOME AND SUBMITTED THAT ORIGINAL RETURN WAS FILED ON 29.09.2 011 BE TREATED AS RETURN FILED IN RESPONSE TO NOTICE U/S.1 48. THE ASSESSING OFFICER CONFRONTED THE SAID INFORMATION R ECEIVED FROM DIT (INVESTIGATION) TO THE ASSESSEE WHICH WAS AS UNDER: BENEFICIARY TIN BENEFICIARY NAME BENEFICIARY PAN NAME PAN BENEFICIARY ADDRESS PAN BENEFICIARY HAWALA TIN HAWALA NAME 27160298426V BELMARKS METAL WORKS AAFFB6650C BELMARKS METAL WORKS BELMARKS METAL WORKS, A- 237, NEB VALLEY, SAINIK FARM, NEW DELHI 27500257887V SUPREME ENTERPRISES 3. IN RESPONSE, THE ASSESSEE VIDE LETTER DATED 13.1 1.2014 SUBMITTED THAT ASSESSEE FIRM HAS NO TRANSACTION WIT H M/S. SUPREME ENTERPRISES. FURTHER, ASSESSEE HAS ENCLOSED A TAX INVOICE DATED 19.07.2010 ISSUED BY M/S. KRUPA TRADI NG COMPANY FOR THE SALE OF CRCA COIL FOR RS.1,93,066/- . IT WAS STATED THAT M/S. KRUPA TRADING COMPANY, WAS DEALER IN IRON STEEL AND HARDWARE, HAVING OFFICE AT C/28/304, MANG AL I.T.A. NO.5198/DEL/2018 3 SHANTI NAGAR, CHS LIMITED, 3 RD FLOOR, SHANTI NAGAR, SECT-3, MEERA ROAD, EAST MUMBAI, AND WAS DULY ACKNOWLEDGED BY M/S. BELMARKS METAL WORKS. ON PERUSAL OF THE BILL O F M/S. KRUPA TRADING COMPANY DATED 19.07.2010 ISSUED IN TH E FAVOUR OF M/S. BELMARKS METAL WORKS B-273, MIDC MAL EGAON, SINNER, NASIK, MUMBAI, IT WAS STATED THAT TIN NUMBE R IS 27500257887V DATED 20.01.2009. HOWEVER, ASSESSING O FFICER OBSERVED THAT AS PER THE INFORMATION PROVIDED BY TH E DGIT (INV.), MUMBAI, M/S. SUPREME ENTERPRISES WAS ALSO H AVING THE SAME TIN 27500257887V. AGAIN, THE ASSESSING OFF ICER ASKED THE ASSESSEE AS TO WHY THE PURCHASE OF RS.1,9 3,066/- MADE FROM M/S. SUPREME ENTERPRISES BE NOT TREATED A S BOGUS. THE ASSESSEE SUBMITTED AND STATED AS UNDER:- PLEASE REFER TO ANNEXURE-III, THE ASSESSEE FIRM HA S NO TRANSACTION WITH M/S SUPREME ENTERPRISES IT APPEARS THAT THE RE OPENING IS PURELY BASED ON INFORMATION OF INVESTIGATE WING. SU CH A RE-OPENING IS BAD IN LAW AS PER THE ABOVE CITED TRIBUNAL ORDER . WE HUMBLY SUBMIT THAT AN ORDER OF A SUPERIOR AUTHORITY (IN TH IS CASE, TRIBUNAL) IS TO BE FOLLOWED IN LETTER AND SPIRIT UNLESS IT IS REVERSED BY ANOTHER OF THE JURISDICTIONAL OR EVEN NON-JURISDICTIONAL HI GH COURT AND/OR APEX COURT. PLEASE SEE CIT V. SMT. GODAVARIDEVI SAR AF (1978) 113 ITR 5 (BOM.): AC1T V. SHIV SHAKTI FLOUR MILLS (P) L IMITED (2014) 162 TTJ (GAU.) (TM) 568; NANUBHAI D. DESAI V. ACIT (201 4) 162 TTJ (AHD.)(SB) 673. NOT ONLY HAS A WRONG NAME BEEN QUOTED, EVEN THE FIG URE OF ALLEGED BOGUS EXPENDITURE HAS SHIFTED FROM RS.193,006.00 TO RS. 1,96,006.00. THE HONBLE SUPREME COURT CATEGORICALL Y STATED IN PHOOL CHAND BAJARANG LAI V. ITO (1993) 203 ITR 456 (SC) THAT AN INCOME TAX OFFICER ACQUIRED JURISDICTION WHICH COME S INTO HIS I.T.A. NO.5198/DEL/2018 4 POSSESSION SUBSEQUENTLY. THE APEX COURT FURTHER CLA RIFIED IN CIT V. KELVINATOR OF INDIA LIMITED [2010] 320 ITR 561 (561 ) (SC) THAT AFTER APRIL 1, 1989, THERE MUST BE TANGIBLE MATERIAL TO C OME TO THE CONCLUSION THAT THERE WAS ESCAPEMENT OF INCOME FROM ASSESSMENT. REASON MUST HAVE A LINK WITH THE FORMATION OF THE B ELIEF. 4. THE LD. ASSESSING OFFICER HOWEVER TREATED THE IN FORMATION RECEIVED FROM THE INVESTIGATION WING TO BE CORRECT AND AFTER INCORPORATING THE INVOICES AND THE DETAILS RECEIVED FROM MAHARASHTRA VAT DEPARTMENT THAT M/S. KRUPA TRADING COMPANY WAS NOT REGISTERED WITH MAHARASHTRA VAT DEPARTMENT, HELD THAT THE PURCHASE OF RS.1,93,066/- IS BOGUS AND ADDED THE SAME TO THE INCOME OF THE ASSESSEE. 5. LD. CIT (A) AFTER INCORPORATING THE ASSESSMENT O RDER HAS SIMPLY CONFIRMED THE ASSESSMENT WITHOUT EVEN ADJUDI CATING EITHER ON LEGAL ISSUE OR ON MERITS. 6. BEFORE US, THE LD. COUNSEL FOR THE ASSESSEE SUBM ITTED THAT ASSESSEE IS A MANUFACTURER OF CYCLE PARTS AND HAS M AINTAINED REGULAR BOOKS OF ACCOUNT WHICH IS SUBJECTED TO AUDI T. AS PER THE INFORMATION RECEIVED, IT WAS STATED THAT ASSESSEE H AS MADE PURCHASES FROM M/S. SUPREME ENTERPRISES, WHEREAS NO SUCH PURCHASE WAS MADE FROM THE SAID PARTY. IN FACT, IT WAS MADE FROM M/S. KRUPA TRADING CO AND THE PURCHASES OF RS.1,93,066/- HAS BEEN DULY DISCLOSED IN THE BOOKS OF ACCOUNT AND CORRESPONDING SALES AND GROSS PROFIT HAS BEEN A CCEPTED, THEREFORE, THERE WAS NO OCCASION TO TREAT THE PURCH ASES OF RS.1,93,066/- AS BOGUS. IN ANY CASE AND WITHOUT PRE JUDICE, HE SUBMITTED THAT, AT THE BEST, ONLY PROFIT ELEMENT ON SUCH I.T.A. NO.5198/DEL/2018 5 PURCHASE IF AT ALL TREATED TO BE BOGUS CAN BE ADDED . IN SUPPORT, HE STRONGLY RELIED UPON THE JUDGMENT OF HONBLE HIG H COURT IN THE CASE OF PCIT VS. NANDKISHOR HUASCHAND JALAN, (2019) 412 ITR 357 (GUJ.) AND CIT VS. BHOLANATH POLY FAB PVT. LTD., (2013) 355 ITR 290 (GUJ.). ON VALIDITY OF REOPENING, HE SUBMITTED THAT, THE REOPENING WAS BASED ON INFORMAT ION RECEIVED BY INVESTIGATION WING AND ASSESSING OFFICE R HAS EVEN FAILED TO APPLY HIS MIND ON THE INFORMATION, BECAUS E HAD HE DONE SO THEN HE WOULD HAVE TO COME TO THE CONCLUSIO N THAT ASSESSEE HAS NOT MADE PURCHASE FROM M/S. SUPREME ENTERPRISES FOR THAT AMOUNT. IN SUPPORT, HE RELIED UPON THE JUDGMENT OF HONBLE DELHI HIGH COURT IN THE CASE OF PCIT VS. SNG DEVELOPERS LTD., (2018) 404 ITR 312 (DEL.). 7. ON THE OTHER HAND, LD. DR HAS STRONGLY RELIED UP ON THE ORDER OF THE ASSESSING OFFICER AND LD. CIT(A) AND S UBMITTED THAT, HERE IN THIS CASE THE INFORMATION SENT BY THE INVESTIGATION WING SPECIFICALLY CONTAINED THE DETAILS OF THE ASSE SSEE WHO WAS MENTIONED AS A BENEFICIARY OF THE BOGUS PURCHASES M ADE FROM M/S. SUPREME ENTERPRISES. APART FROM THAT, IT CAN B E SEEN THAT THE TIN NUMBER OF M/S. KRUPA TRADING CO. AND M/S. S UPREME ENTERPRISES ARE THE SAME. THUS, ONUS WAS HEAVILY UP ON THE ASSESSEE TO REBUT THE SAID INFORMATION BY CREDIBLE EVIDENCE. ACCORDINGLY, THE ORDER OF THE ASSESSING OFFICER SHO ULD BE CONFIRMED. 8. AFTER CONSIDERING THE AFORESAID SUBMISSIONS AND ON PERUSAL OF THE MATERIAL PLACED ON RECORD, I FIND TH AT ON THE BASIS OF INFORMATION RECEIVED FROM THE INVESTIGATION WING WHICH WAS I.T.A. NO.5198/DEL/2018 6 BASED ON INFORMATION FORWARDED BY MAHARASHTRA VAT DEPARTMENT THAT THE ASSESSEE HAS AVAILED HAWALA ENT RY OF BOGUS BILL PURCHASES OF RS.1,93,066/- IN THE FINANCIAL YE AR 2010-11. BASED ON THIS INFORMATION, REOPENING HAS BEEN DONE U/S.148. HOWEVER, BEFORE THE AUTHORITIES BELOW ASSESSEES CO NTENTION HAS BEEN THAT, FIRSTLY, ASSESSEE HAS NOT MADE ANY PURCH ASES FROM M/S. SUPREME ENTERPRISES ALBEIT IT HAS MADE PURCHASES FROM M/S. KRUPA TRADING CO. FOR THE SAME TAX INVOICE DAT ED 19.07.2010 FOR SALE OF CRCA COIL FOR RS.1,93,066/-; SECONDLY , THE SAID PURCHASES HAVE BEEN DULY DEBITED IN THE BO OKS OF ACCOUNT. THE ADVERSE INFERENCE HAS BEEN DRAWN BY TH E ASSESSING OFFICER ON THE GROUND THAT BOTH M/S. SUPR EME ENTERPRISES AND M/S. KRUPA TRADING CO. HAVE THE SAM E TIN NUMBER AND M/S. KRUPA TRADING CO. WITH THE SAME TIN WAS NOT REGISTERED WITH THE MAHARASHTRA VAT DEPARTMENT AND REGISTRATION OF M/S. SUPREME ENTERPRISES HAS ALREAD Y BEEN CANCELLED BY THE MAHARASHTRA VAT DEPARTMENT. ACCORD INGLY, HE HAS TREATED THE ENTIRE PURCHASES AS BOGUS. HOWEVER, FROM THE PERUSAL OF THE RECORD, IT IS SEEN THAT, NOWHERE ASS ESSING OFFICER HAS DISPUTED THAT THE SOURCE OF PURCHASE IS OUTSIDE THE BOOKS OF ACCOUNT. IN FACT THE PURCHASE OF SAME AMOUNT AND IN VOICE HAS BEEN RECORDED IN THE BOOKS OF ACCOUNT AND DULY DISC LOSED AND THE AMOUNT HAS BEEN PAID THROUGH BANKING CHANNELS. THE CORRESPONDING SALES HAVE ALSO NOT BEEN DISPUTED INC LUDING THE DIRECTED EXPENSES AND THE GROSS PROFIT. AT THE MOST , THIS COULD BE A CASE WHERE ASSESSEE HAS MADE PURCHASES IN CASH AND HAS TAKEN AN ACCOMMODATION BILL FOR SAME QUANTITY FOR W HICH CHEQUE AMOUNT HAS BEEN ISSUED. IN SUCH A CASE ALSO, THE SOURCE I.T.A. NO.5198/DEL/2018 7 OF PURCHASE ARE FROM THE BOOKS, THEREFORE, THE ENTI RE PURCHASES CANNOT BE TREATED AS INCOME OF THE ASSESSEE ESPECIA LLY WHEN BOOKS OF ACCOUNT HAVE NOT BEEN REJECTED AND SALES A ND GP STANDS ACCEPTED IN THE TRADING ACCOUNT. IT COULD BE AT BEST, A CASE OF SUPPRESSION OF GP ON THE PURCHASE OF RS.1,9 3,066/-. UNDER THESE FACTS AND CIRCUMSTANCES, I HOLD THAT PR OFIT ELEMENT OF SUCH AMOUNT SHOULD BE ADDED AS INCOME. ACCORDING LY, ASSESSING OFFICER IS DIRECTED TO APPLY THE GP DECLA RED BY THE ASSESSEE ON PURCHASE OF RS.1,93,066/- AND BALANCE A MOUNT SHOULD BE DELETED. 9. IN SO FAR AS VALIDITY OF REOPENING U/S.148 IS CONCERNED, I DO NOT FIND ANY MERITS IN THE CONTENTION OF THE LD. CO UNSEL FOR THE REASON THAT, FIRSTLY, THERE WAS A CATEGORICAL INFOR MATION WHEREIN THE ASSESSEES NAME WAS APPEARING ALONG WITH DETAIL S OF THE PARTIES FROM WHOM THE ASSESSEE HAS MADE PURCHASES W HICH WERE FOUND TO BE HAWALA OPERATOR PROVIDING ACCOMMOD ATION BOGUS BILLS. THE ASSESSING OFFICER AFTER RECEIVING THE INFORMATION HAS INDEPENDENTLY APPLIED HIS MIND AND RECORDED HIS REASON TO BELIEVE AS TO WHY SUCH A PURCHASE IS NOT GENUINE. T HUS, I DO NOT FIND ANY INFIRMITY IN THE JURISDICTION ACCORDED U/S .147 AND THE SAME IS DISMISSED. 10. IN THE RESULT, THE APPEAL OF THE ASSESSEE IS PA RTLY ALLOWED. ORDER PRONOUNCED IN THE OPEN COURT ON 5 TH MARCH, 2020. SD/- [AMIT SHUKLA] JUDICIAL MEMBER DATED: 5 TH MARCH, 2020 PKK: