SHRI VIKAS DUGAR, JAIPUR V. INCOME TAX OFFICER, WARD-3-2, JAIPUR

ITA 530/JPR/2018

• Counselvise Citation: [2018] 125 COUNSELVISE.COM (IT) 4581 (ITAT-JAIPUR)
• Duration Of Justice: 3 month(s) 18 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 07-08-2018
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: SMC
• Assessment Year: 2013-2014
• Appeal Filed On: 19-04-2018
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: PUNAM RAI
• Section: 133(6)

Judgement Text

VK;DJ VIHYH; VF/KDJ.K] T;IQJ U;K;IHB] T;IQJ IN THE INCOME TAX APPELLATE TRIBUNAL, JAIPUR BENCHE S, JAIPUR JH FOT; IKY JKO] U;KF;D LNL; ,OA JH FOE FLAG ;KNO] YS[KK LNL; DS LE{K BEFORE: SHRI VIJAY PAL RAO, JM & SHRI VIKRAM SINGH YADAV, AM VK;DJ VIHY LA-@ ITA. NO. 530/JP/2018 FU/KZKJ.K O'K Z@ ASSESSMENT YEARS : 2013-14 SHRI VIKASH DUGAR D-275, DUGAR HOUSE, TODERMAL MARG, BANIPARK, JAIPUR. CUKE VS. THE ITO, WARD-3(2), JAIPUR. LFKK;H YS[KK LA-@THVKBZVKJ LA-@ PAN/GIR NO.: ABXPD 6164 G VIHYKFKHZ@ APPELLANT IZR;FKHZ@ RESPONDENT FU/KZKFJRH DH VKSJ L S@ ASSESSEE BY : SHRI P.C. PARWAL (C.A.) JKTLO DH VKSJ LS @ REVENUE BY : SMT. PUNAM RAI (DCIT) LQUOKBZ DH RKJH[ K@ DATE OF HEARING : 30/07/2018 MN?KKS'K.KK DH RKJH[ K@ DATE OF PRONOUNCEMENT : 07/08/2018 VKNS'K@ ORDER PER: VIKRAM SINGH YADAV, A.M. THIS IS AN APPEAL FILED BY THE ASSESSEE AGAINST TH E ORDER OF LD. CIT(A)-I, JAIPUR DATED 09.03.2018 FOR THE ASSESSMEN T YEAR 2013-14 WHEREIN THE ASSESSEE HAS TAKEN THE FOLLOWING SOLE G ROUND OF APPEAL AS UNDER:- 1. THE LD. CIT(A) HAS ERRED ON FACTS AND IN LAW IN CONFIRMING THE ADDITION OF RS. 19,30,214/- BY TREATING THE AMOUNT PAYABLE TO SUNDRY CREDITORS M/S BLUE BIRD OVERSEAS (RS. 9,45,2 00/-) AND M/S MADHAV KRISHNA JEWELLERS (RS. 9,85,014/-) AS NON-GE NUINE BY NOT ITA NO. 530/JP/2018 SHRI VIKAS DUGAR VS. ITO 2 APPRECIATING THE VARIOUS EVIDENCES FILED BY THE ASS ESSEE IN SUPPORT OF THE GENUINENESS OF CREDITORS. 2. BRIEFLY THE FACTS OF THE CASE ARE THAT THE ASSES SEE IS ENGAGED IN THE TRADING OF GEMS & JEWELLERY UNDER HIS PROPRIETO R CONCERN M/S VIKAS EXPORTS. DURING THE COURSE OF ASSESSMENT PROCEEDING S, THE ASSESSING OFFICER ON PERUSAL OF THE AUDITED BALANCE SHEET OF THE ASSESSEE FOR A.Y. 2013-14 NOTICED CERTAIN SUNDRY CREDITORS AND IN ORD ER TO VERIFY THE SAME, THE ASSESSEE WAS ASKED TO SUBMIT POSTAL ADDRE SSES OF THE SUNDRY CREDITORS. THE AO ISSUED NOTICES UNDER SECTION 133 (6) TO VARIOUS CREDITORS, HOWEVER, IN RESPECT OF M/S MADHAV KRISHN A JEWELLERS AND M/S BLUE BIRD OVERSEAS, NO REPLY TO NOTICE ISSUED U/S 1 33(6) OF THE ACT WAS RECEIVED. THEREAFTER, THE AO ISSUED NOTICES IN THE NAME OF PROPRIETORS OF THESE TWO CONCERNS ON THE ADDRESSES AVAILABLE IN PAN DATABASE. HOWEVER, THERE WAS AGAIN NO RESPONSE FROM THESE CRE DITORS EVEN TO THE SUBSEQUENT NOTICES ISSUED U/S 133(6) OF THE ACT. TH EREAFTER, THE AO DEPUTED HIS INSPECTOR TO MAKE FIELD ENQUIRY REGARDI NG THE ACTUAL BUSINESS ACTIVITIES OF THESE TWO CONCERNS. THE INSP ECTOR VIDE HIS REPORT DATED 18.02.2016 REPORTED THAT THERE EXISTS NO PLOT NO. 1087 IN CHITRAKOOT, VAISHALI NAGAR, JAIPUR IN THE NAME OF M /S BLUE BIRD OVERSEAS AND IN RESPECT OF M/S MADHAV KRISHNA JEWELLERS AL SO, THE INSPECTOR REPORTED THAT NO FIRM IS BEING RUN ON THE GIVEN ADD RESS. SUBSEQUENTLY THE ASSESSEE WAS CONFRONTED REGARDING NON-TRACEABIL ITY OF THESE TWO PARTIES AND PROPOSED ADDITION OF RS. 19,30,214/-. T HE AO THEREAFTER HELD THAT THE AMOUNT OUTSTANDING IN THE NAME OF THE SE TWO CONCERNS ARE NOT VERIFIED AND THE SAME WAS ACCORDINGLY TREAT ED AS NON GENUINE AND BROUGHT TO TAX IN THE HANDS OF THE ASSESSEE STA TING THAT IN GEMS ITA NO. 530/JP/2018 SHRI VIKAS DUGAR VS. ITO 3 AND JEWELLERY BUSINESS, IT IS COMMON PRACTICE THAT SALES VOUCHERS ARE ISSUED BY BOGUS BUSINESS ENTITIES WITHOUT ANY ACTUA L BUSINESS ACTIVITIES. 3. BEING AGGRIEVED, THE ASSESSEE CARRIED THE MATTER IN APPEAL BEFORE THE LD. CIT(A) WHO HAS CONFIRMED THE SAID ADDITIONS AND HIS FINDINGS ARE REPRODUCED AS UNDER:- (III) I DO NOT FIND ANY MERIT IN THE CONTENTION OF THE APPELLANT THAT IF THE PURCHASES ARE GENUINE, HOW CAN THE CRED IT BALANCES LYING IN THE ACCOUNT OF SUNDRY CREDITORS BEEN GENUI NE WHEN THE CREDIT IN THE ACCOUNT HAS FLOWN FROM THE SAME PURCH ASE BILLS WHICH WERE FOUND TO BE GENUINE. IT MAY BE MENTIONED THAT IF THE PURCHASES ARE ACCEPTED BY THE AO, IT DOES NOT MEAN THAT THE SUNDRY CREDITORS STANDS PROVED AUTOMATICALLY. IT HA S ALREADY BEEN MENTIONED EARLIER THAT THE RESULT OF ENQUIRIES MADE BY THE AO INCLUDING THE SPOT VERIFICATION WAS CONFRONTED BY T HE AO TO THE APPELLANT BUT THE APPELLANT COULD NOT PROVE THE GEN UINENESS OF THESE SUNDRY CREDITORS. IT IS TO BE NOTED THAT F ROM THE PROFIT AND LOSS ACCOUNT OF THE APPELLANT FOR THE YE AR UNDER CONSIDERATION, THAT DURING THE YEAR DECLARATION IT HAS MADE PURCHASES TO THE TUNE OF RS. 49,11,794/- WHEREAS, A S ON 31.03.2013, THE SUNDRY CREDITORS WERE TO THE TUNE O F RS. 2.49 CRORE I.E. THE SUNDRY CREDITORS WERE APPROXIMA TELY FIVE TIMES THE PURCHASES MADE BY THE APPELLANT DURING TH E YEAR UNDER CONSIDERATION. IT IS PERTINENT TO MENTION HER E THAT IN THE CASE OF M/S VARDHMAN EXIM LINKERS, IT WAS OBSER VED BY THE AO IN THE ASSESSMENT ORDER THAT AS PER THE COPY OF ACCOUNT FILED BEFORE IT, THAT THE APPELLANT HAS SHO WN OUTSTANDING CREDIT BALANCE OF RS. 2,43,144/-, WHERE AS, AS PER THE CONFIRMATION RECEIVED FROM THE SAID PARTY, NO A MOUNT WAS OUTSTANDING FROM THE APPELLANT. IT MAY BE MENTIONED THAT IN ITS WRITTEN SUBMISSIONS, IT HAS BEEN ACCEPTED BY TH E APPELLANT THAT THE PURCHASE OF RS. 2,43,144/- MADE BY IT FROM M/S VARDHMAN EXIM LINKERS WAS ADJUSTED TWICE. THIS FACT ITSELF ITA NO. 530/JP/2018 SHRI VIKAS DUGAR VS. ITO 4 SHOWS THAT THE SUNDRY CREDITORS UNDER CONSIDERATION WERE NOT GENUINE. (IV) THEREFORE, IN VIEW OF THE ABOVE DISCUSSION AND LOOKING TO THE FACTS AND CIRCUMSTANCES OF THE CASE, IT IS HELD THAT THE AO WAS JUSTIFIED IN MAKING ADDITION OF RS. 19,30,214/- ON ACCOUNT OF SUNDRY CREDITORS, NOT BEING GENUINE AND THUS, TH E ADDITION MADE BY THE AO IS HEREBY SUSTAINED. 4.1 DURING THE COURSE OF HEARING, THE LD. AR OF THE ASSESSEE HAS SUBMITTED THAT BOTH THE LOWER AUTHORITIES HAVE CONF IRMED THE ADDITION IN RESPECT OF THE CREDIT BALANCE IN THE ACCOUNT OF M/S MADHAV KRISHNA JEWELLERS AND M/S BLUE BIRD OVERSEAS SOLELY ON ACCO UNT OF NON SERVICE/ REPLY OF NOTICE SENT TO THEM U/S 133(6) AND THE REP ORT OF THE INSPECTOR BY IGNORING THE FOLLOWING EVIDENCES WHICH PROVES TH E GENUINENESS OF PURCHASES MADE FROM THESE TWO PARTIES:- (A) COPY OF THE PURCHASE BILL WHICH CONTAINS THEIR TIN/ PAN AND ALSO THE COMPLETE ADDRESS. THESE PURCHASES WERE MADE ON 04.0 2.2013 & 02.02.2013, I.E. JUST BEFORE END OF THE YEAR AND TH EREFORE, AMOUNT WERE OUTSTANDING AT THE END OF THE YEAR. (B) COPY OF THE CERTIFICATE OF REGISTRATION GIVEN B Y COMMERCIAL TAX DEPARTMENT TO THESE TWO PARTIES . (C) CONFIRMATION GIVEN BY THESE PARTIES. THE CONFIR MATION WAS FILED WITH THE AO ON 15.12.2015 . (D) COPY OF PAN CARD OF THE PROPRIETOR OF THESE CON CERNS WHEREIN THEIR PERMANENT ADDRESS IS MENTIONED. ITA NO. 530/JP/2018 SHRI VIKAS DUGAR VS. ITO 5 (E) PAYMENT TO BOTH THE PARTIES IS MADE BY ACCOUNT PAYEE CHEQUE ON 31.10.2013 AS MENTIONED ON THE BILL ITSELF AND ALSO IN THE CONFIRMATION. 4.2 IT WAS SUBMITTED BY THE LD AR THAT THE LOWER AU THORITIES HAVE NOT DISPUTED THE VERACITY OF TIN/ PAN OF THESE PERSONS AND THE PAYMENT TO THEM BY ACCOUNT PAYEE CHEQUE. AS PER THE PAN DATABA SE, ADDRESS OF THE PROPRIETOR OF M/S MADHAV KRISHNA JEWELLERS IS S HOP NO. 108, YATIM KHANA BUILDING, OPPOSITE MUNICIPAL OFFICE, AHMEDNAG AR AND ADDRESS OF THE PROPRIETOR OF M/S BLUE BIRD OVERSEAS IS D-189, PAVAN PATH, HANUMAN NAGAR, VAISHALI. THERE IS NO FINDING OF AO THAT NOTICE U/S 133(6) ISSUED AT THIS ADDRESS IS NOT SERVED TO THEM . THE REPORT OF THE INSPECTOR STATES THAT IN CASE OF M/S BLUE BIRD OVER SEAS, NO PLOT NO. 1087 IN CHITRAKOOT, VAISHALI NAGAR EXISTS WHEREAS T HE CORRECT PLOT NO. IS 10/87, CHITRAKOOT, VAISHALI NAGAR . IN FACT THE REPORT OF THE INSPECTOR WAS CONFRONTED TO A/R VIDE ORDER SHEET ENTRY DT. 23 .02.2016. IN RESPONSE TO SAME, A/R OF ASSESSEE VIDE LETTER DT. 2 3.02.2016 SUBMITTED THAT THE ASSESSEE IS NOT AVAILABLE AND WOULD BE COM ING BACK ON 15.03.2016 WHEN THE CROSS VERIFICATION OF THESE PAR TIES, IF AT ALL REQUIRED AFTER CONSIDERING THE VARIOUS DOCUMENTS FURNISHED C AN BE ARRANGED. HOWEVER, WITHOUT CONSIDERING THE SAME AO FRAMED THE ASSESSMENT ON 29.02.2016. 4.3 IT WAS SUBMITTED BY THE LD AR THAT EVEN THE LD. CIT(A) HAS NOT CONSIDERED THE ABOVE DOCUMENTS AND EVIDENCES FURNIS HED BY THE ASSESSEE AND HAS CONFIRMED THE ADDITION BY HOLDING THAT ASSESSEE COULD NOT PROVE THE GENUINENESS OF THE PURCHASES WHEREAS FROM THE DOCUMENTS REFERRED ABOVE, THE GENUINENESS OF THE PU RCHASES IS FULLY ESTABLISHED. BEFORE THE LD. CIT(A), THE ASSESSEE HA S ALSO FURNISHED THE ITA NO. 530/JP/2018 SHRI VIKAS DUGAR VS. ITO 6 EVIDENCE THAT THE GOODS PURCHASED THROUGH THESE BIL LS HAS BEEN EXPORTED. HOWEVER, EVEN AFTER PROVIDING ALL THESE E VIDENCES, THE LD. CIT(A) HAS NOT AT ALL COMMENTED OR GIVEN ANY ADVERS E FINDING IN RESPECT OF THE DOCUMENTS PRODUCED BY THE ASSESSEE. THUS, TH E ADDITION MADE BY THE AO AND CONFIRMED BY LD. CIT(A) IS ONLY ON SU RMISES & CONJECTURES AND WITHOUT APPRECIATING THE MATERIAL A VAILABLE ON RECORD IN A CORRECT PERSPECTIVE. 4.4 IN SUPPORT, THE RELIANCE WAS PLACED ON THE DEC ISION OF THE HON'BLE GUJARAT HIGH COURT IN CASE OF PCIT VS. TEJUA ROHITK UMAR KAPADIA (IN TAX APPEAL NO. 691 OF 2017 ORDER DT. 18.09.2017) WHEREIN IT WAS HELD THAT PURCHASES CANNOT BE TREATED AS BOGUS IF (A) TH EY ARE DULY SUPPORTED BY BILLS, (B) ALL PAYMENTS ARE MADE BY AC COUNT PAYEE CHEQUES, (C) THE SUPPLIER HAS CONFIRMED THE TRANSAC TIONS, (D) THERE IS NO EVIDENCE TO SHOW THAT THE PURCHASE CONSIDERATION HA S COME BACK TO THE ASSESSEE IN CASH, (E) THE SALES OUT OF PURCHASES HA VE BEEN ACCEPTED & (F) THE SUPPLIER HAS ACCOUNTED FOR THE PURCHASES MA DE BY THE ASSESSEE AND PAID TAXES THEREON. THE SLP AGAINST THIS DECISI ON HAS BEEN DISMISSED BY HON'BLE SUPREME COURT VIDE ORDER DATED 04.05.2018. THE FACTS OF THE CASE OF ASSESSEE ARE SIMILAR AND THERE FORE, THE ADDITION MADE BY THE LOWER AUTHORITIES IS UNCALLED FOR. RELI ANCE WAS ALSO PLACED IN CASE OF M/S BEAUTY TAX (EARLIER FLORALS INDIA) V S. DCIT (IN ITA NO. 508/JP/2016 DATED 10.04.2017) WHEREIN ON IDENTICAL FACTS, ADDITION WAS DELETED. IN VIEW OF THE ABOVE, THE ADDITION MADE BY THE AO AND CONFIRMED BY LD. CIT(A) BE DIRECTED TO BE DELETED. 5. THE LD. D/R IS HEARD WHO HAS VEHEMENTLY ARGUED THE MATTER AND RELIED ON THE FINDING OF THE LOWER AUTHORITIES. ITA NO. 530/JP/2018 SHRI VIKAS DUGAR VS. ITO 7 6. WE HAVE HEARD THE RIVAL CONTENTIONS AND PERUSED THE MATERIAL AVAILABLE ON RECORD. IT IS THE CONTENTION OF THE LD AR THAT VARIOUS DOCUMENTS IN SUPPORT OF THE PURCHASE TRANSACTIONS W ERE DULY SUBMITTED DURING THE COURSE OF ASSESSMENT PROCEEDINGS WERE NO T CONSIDERED BY THE AO AND EVEN DURING THE APPELLATE PROCEEDINGS, T HE LD CIT(A) HAS NOT TAKEN COGNIZANCE OF THE SAID DOCUMENTS. IT WAS FURTHER CONTENDED THAT DURING THE APPELLATE PROCEEDINGS, THE ASSESSEE HAS FURNISHED THE EVIDENCE THAT THESE PURCHASES WERE SUBSEQUENTLY EXP ORTED DURING THE YEAR. HOWEVER, WE FIND THAT THERE IS NO FINDING WH ICH HAS BEEN RECORDED BY THE LOWER AUTHORITIES EXAMINING THESE D OCUMENTS SO SUBMITTED BY THE ASSESSEE IN SUPPORT OF HIS PURCHAS E TRANSACTIONS. FURTHER, WE NOTE THAT THERE SEEMS TO BE SOME CONFUS ION ON THE CORRECT ADDRESS OF THESE TWO CONCERNS AND THEIR PROPRIETORS AND AS A RESULT, THE NOTICES ISSUED BY THE AO U/S 133(6) WERE NOT COMPLI ED WITH AND EVEN THE INSPECTOR COULD NOT LOCATE THEIR BUSINESS PREMI SES. IN THE ENTIRETY OF FACTS AND CIRCUMSTANCES OF THE CASE, WE DEEM IT APPROPRIATE THAT THE MATTER IS REMANDED BACK TO THE FILE OF THE AO TO EX AMINE THE SAME AFRESH, AFTER PROVIDING REASONABLE OPPORTUNITY TO T HE ASSESSEE. IN THE RESULT, THE APPEAL FILED BY THE ASSESSEE IS ALLOWED FOR STATISTICAL PURPOSES. ORDER PRONOUNCED IN THE OPEN COURT ON 07/08/2018. SD/- SD/- FOT; IKY JKO FOE FLAG ;KNO (VIJAY PAL RAO) (VIKRAM SINGH YADAV) U;KF;D LNL;@ JUDICIAL MEMBER YS[KK LNL;@ ACCOUNTANT MEMBER TK;IQJ@ JAIPUR ITA NO. 530/JP/2018 SHRI VIKAS DUGAR VS. ITO 8 FNUKAD@ DATED:- 07/08/2018. *SANTOSH VKNS'K DH IZFRFYFI VXZSFKR@ COPY OF THE ORDER FORWARDED TO: 1. VIHYKFKHZ@ THE APPELLANT- SHRI VIKASH DUGAR, JAIPUR. 2. IZR;FKHZ@ THE RESPONDENT- ITO, WARD- 3(2), JAIPUR. 3. VK;DJ VK;QDR@ CIT 4. VK;DJ VK;QDR@ CIT(A) 5. FOHKKXH; IZFRFUF/K] VK;DJ VIHYH; VF/KDJ.K] T;IQJ@ DR, ITAT, JAIPUR. 6. XKMZ QKBZY@ GUARD FILE { ITA NO. 530/JP/2018} VKNS'KKUQLKJ@ BY ORDER, LGK;D IATHDKJ@ ASST. REGISTRAR