Dena Gujarat Gramin Bank, Ahmedabad V. The ACIT, Gandhinagar Circle, Gandhinagar

ITA 57/AHD/2014

• Counselvise Citation: [2015] 121 COUNSELVISE.COM (IT) 1242 (ITAT-AHMEDABAD)
• Duration Of Justice: 1 year(s) 10 month(s) 15 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 23-11-2015
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: A
• Next Hearing Date: 16-11-2015
• Assessment Year: 2010-2011
• Appeal Filed On: 08-01-2014
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: M K PATEL
• Assessee Lawyers: ALBINUS TIRKEY
• Keywords: Bogus purchase; Gross profit estimation

Judgement Text

, , IN THE INCOME TAX APPELLATE TRIBUNAL D BENCH, AHMEDABAD - , , BEFORE SHRI KUL BHARAT, JUDICIAL MEMBER AND SHRI MANISH BORAD, ACCOUNTANT MEMBER ./ I.T.A. NO. 1644/AHD/2011 ( / ASSESSMENT YEAR : 2005-06) THE INCOME-TAX OFFICER WARD-9(1) AAYAKAR BHAVAN MAJURAGATE, SURAT / VS. SHRI BHARATBHAI NARANDAS PATEL PROP.OF M/S.ARCHANA IMPEX 119-B, AKSHAR DIAMOND MINI BAZAR VARACHHA ROAD, SUR $ ./ ./ PAN/GIR NO. : ABIPP 6339 A ( $' / APPELLANT ) .. ( ()$' / RESPONDENT ) $' * / APPELLANT BY : SHRI ALBINUS TIRKEY, SR.DR ()$' + * / RESPONDENT BY : SHRI M.K. PATEL, AR ,- + . / DATE OF HEARING 01/09/2015 /0 + . / DATE OF PRONOUNCEMENT 16/09 /2015 / O R D E R PER SHRI KUL BHARAT, JUDICIAL MEMBER : THIS APPEAL BY THE REVENUE IS DIRECTED AGAINST TH E ORDER OF THE LD.COMMISSIONER OF INCOME TAX(APPEALS)-V, SURAT [CIT(A) IN SHORT] DATED 17/02/2011 PERTAINING TO ASSESSMENT YEAR (AY) 2005-06. THE REVENUE HAS RAISED THE FOLLOWING GROUNDS OF APPEAL: - ITA NO.1644 /AH D/2011 ITO VS. SHRI BHARATBHAI NARANDAS PATEL ASST.YEAR 2005-06 - 2 - 1. ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE AND IN LAW, THE LD.CIT(A) HAS ERRED IN DELETING THE PENALTY OF RS.5 1,72,350/- IMPOSED BY THE A.O. U/S.271(1)(C) OF THE ACT DESPIT E FACT THAT A.O. HAS BROUGHT ON RECORD VARIOUS MATERIAL EVIDENCES TO PROVE THAT THE ASSESSEE FIRM HAD FURNISHED INACCURATE PARTICULARS OF INCOME DURING THE ASSESSMENT PROCEEDINGS TO SUPPRESS THE INCOME. 2. IT IS THEREFORE, PRAYED THAT THE APPELLANT ORDER OF THE LD.CIT(A) MAY BE CANCELLED AND THE ORDER OF THE A.O. MAY BE UPHEL D. 2. BRIEFLY STATED FACTS ARE THAT IN QUANTUM PROC EEDINGS, THE AO MADE ADDITION OF RS.1,53,16,052/- ON ACCOUNT OF BOGUS PU RCHASE AND ALSO INITIATED PENALTY PROCEEDINGS U/S.271(1)(C) OF THE ACT. HOWEVER, THE AO VIDE ORDER DATED 29/03/2010 LEVIED PENALTY OF RS.15 ,72,350/-. AGAINST THIS, ASSESSEE PREFERRED AN APPEAL BEFORE THE LD.CI T(A), WHO AFTER CONSIDERING THE SUBMISSIONS OF THE ASSESSEE, DELETE D THE PENALTY. AGGRIEVED BY THE ORDER OF THE LD.CIT(A), THE REVENU E IS IN APPEAL BEFORE US. 3. THE LD.SR.DR REITERATED THE SUBMISSIONS AS WERE MADE IN THE STATEMENT OF FACTS AND SUBMITTED THAT THE LD.CIT(A ) WAS NOT JUSTIFIED IN DELETING THE ADDITION 3.1. ON THE CONTRARY, LD.COUNSEL FOR THE ASSESSEE S UBMITTED THAT IN THE QUANTUM PROCEEDINGS, THE COORDINATE BENCH (ITAT D BENCH AHMEDABAD) IN ITA NO.186/AHD/2009 VIDE ORDER DATED 19/12/2014 HAS REDUCED THE DISALLOWANCE TO THE EXTENT OF 10%, I.E. RS.15,50,000/-. HE ALSO PLACED RELIANCE ON THE DECISION OF THE COORDIN ATE BENCH (ITAT D BENCH AHMEDABAD) IN ITA NO.1925/AHD/2011 FOR AY 200 6-07 IN ITA NO.1644 /AH D/2011 ITO VS. SHRI BHARATBHAI NARANDAS PATEL ASST.YEAR 2005-06 - 3 - ASSESSEES OWN CASE VIDE ORDER DATED 14/08/2015. T HE UNCONTROVERTED FACTS ARE THAT IN QUANTUM PROCEEDINGS, THE MATTER T RAVELLED UPTO THE STAGE OF TRIBUNAL BY WAY OF ITA NO.186/AHD/2009 AND THE T RIBUNAL HAS REDUCED THE DISALLOWANCE BY OBSERVING AS UNDER:- 6. WE HAVE CONSIDERED RIVAL SUBMISSIONS AND PERUSE D THE ORDERS OF THE AO AND THE CIT(A), AND ALSO COPIES OF VARIOU S DETAILS FILED IN THE COMPILATION BEFORE THE TRIBUNAL. THE ASSESSE E IS IN THE BUSINESS OF POLISHING AND TRADING OF DIAMONDS DURIN G THE YEAR. THE ASSESSEE HAS DECLARED GP RATE OF 0.42% ON TURNOVER OF 22.85 CRORES AS AGAINST THE GP OF 0.33% ON TURNOVER OF RS .27.68 CRORES IN THE IMMEDIATELY PRECEDING ASSTT.YEAR 2004-05. TH E ASSESSEE HAS CLAIMED THAT THE TRADING RESULT IN THE IMMEDIATELY PRECEDING ASSESSMENT YEAR WAS ACCEPTED BY THE DEPARTMENT, AND THE REVENUE HAS NOT CONTROVERTED THIS SUBMISSION OF THE ASSESSE E. WE FIND THAT THE ASSESSEE HAS MAINTAINED QUANTITY-WISE STOCK REG ISTER DURING THE YEAR. THE CLAIM OF THE ASSESSEE THAT IN THE LINE OF DIAMOND BUSINESS, IT IS HIGHLY DIFFICULT TO MAINTAIN QUALIT Y-WISE DETAILED STOCK REGISTER OF EACH AND EVERY ITEM OF DIAMONDS, SEEMS TO BE CONVINCING. WE FIND THAT THE AO HAS ACCEPTED THE SA LE FIGURE OF THE ASSESSEE, MEANING THEREBY THAT THE QUANTITY DECLARE D AS PURCHASES OF DIAMONDS IN CARATS HAVE BEEN ACCEPTED BY THE AO. IN THESE FACTS OF THE CASE, WE ARE OF THE VIEW THAT THE FIGURE OF CASH PURCHASES OF DIAMONDS COULD NOT BE DISALLOWED WHOLLY FOR MERE RE ASON THAT THERE WERE MADE IN CASH AND THE SELLER PARTIES COUL D NOT BE MADE AVAILABLE BEFORE THE AO. HOWEVER, THE FACT REMAINS THAT THE ASSESSEE COULD NOT LEAD ANY EVIDENCE WITH REGARD TO CORRECTNESS OR GENUINENESS OF THE PRICE OF DIAMONDS PURCHASED IN C ASH AND COULD NOT PROVE THE IDENTITY OF THE SELLER PARTIES. IN TH ESE FACTS OF THE CASE, AND CONSIDERING THE ENTIRE FACTUAL MATRIX OF THE CASE, WE ARE OF THE VIEW THAT THE ACTION OF THE AO IN DISALLOWIN G THE PURCHASES OF DIAMONDS IN CASH TO THE TUNE OF RS.1.53 CRORES I S NOT SUSTAINABLE, AND THE ENDS OF JUSTICE SHALL BE MET, IF A DISALLOWANCE ITA NO.1644 /AH D/2011 ITO VS. SHRI BHARATBHAI NARANDAS PATEL ASST.YEAR 2005-06 - 4 - OF 10% OF THESE PURCHASES IS MADE ON ACCOUNT OF INA BILITY TO IDENTIFY THE SELLER PARTIES AND TO PROVE THE CORREC TNESS OF THE PURCHASE RATE OF THE DIAMONDS, AND ACCORDINGLY, WE DIRECT A DISALLOWANCE OF RS. 15,50,000/- BY WAY OF ESTIMATE OUT OF THE CASH PURCHASE OF DIAMONDS AND THE BALANCE ADDITION MADE IS DELETED AND THE GROUND OF THE APPEAL OF THE ASSESSEE IS PAR TLY ALLOWED. 3.2. UNDER THE IDENTICAL FACTS, THE COORDINATE BENC H (ITAT D BENCH AHMEDABAD) IN ASSESSEES OWN CASE IN ITA NO.1925/AH D/2011 FOR AY 2006-07 VIDE ORDER DATED 14/07/2015 HAS DELETED THE PENALTY BY OBSERVING AS UNDER:- 4. WE HAVE HEARD BOTH THE PARTIES AND GONE THROUGH THE CASE LAW. WE NOTICE FROM THE CASE RECORD THAT POST FACTO THE CIT(A)'S ORDER DELETING THE IMPUGNED PENALTY, A CO- ORDINATE BENCH OF THE TRIBUNAL IN QUANTUM PROCEEDINGS DECIDED ON 19.12.2014 HAS MO DIFIED THE ADDITION OF BOGUS PURCHASE OF RS.19,04,896/- TO RS. 1,90,000/- @ 10% ONLY. THE OTHER ADDITION OF LOWER GROSS PROFIT OF RS.97,21,982/-(SUPRA) STANDS REDUCED TO RS.18,00,00 0/- BY INCREASING THE G.P. @ 0.34% ALREADY DECLARED TO THA T @ 1.34% ACCEPTING THE ASSESSEE'S CONTENTIONS IN PART. THIS LEADS US TO A CONCLUSION THAT BOTH THE IMPUGNED ADDITIONS ARE BAS ED ON ESTIMATION ONLY RIGHT FROM ASSESSMENT TILL THE SECO ND APPELLATE STAGE. WE OBSERVE IN THESE CIRCUMSTANCES THAT SUCH AN EXERCISE IS PURELY A SUBJECTIVE OPINION WHICH CANNOT BE TREATED AS A CASE OF CONCEALMENT AND FURNISHING OF INACCURATE PARTICULAR S OF INCOME U/S 271(1)(C) OF THE ACT. THE REVENUE'S ARGUMENT SE EING RESTORATION OF THE IMPUGNED PENALTY ACCORDINGLY FAI LS. ITA NO.1644 /AH D/2011 ITO VS. SHRI BHARATBHAI NARANDAS PATEL ASST.YEAR 2005-06 - 5 - 4. WE, THEREFORE, RESPECTFULLY FOLLOWING THE AFORES AID FINDINGS OF THE TRIBUNAL AND TAKING A CONSISTENT VIEW, IN THIS YEAR ALSO, THE APPEAL OF THE REVENUE IS REJECTED. 5. IN THE RESULT, THE APPEAL OF THE REVENUE IS DISM ISSED. ORDER PRONOUNCED IN THE COURT ON WEDNESDAY, THE 16 TH DAY OF SEPTEMBER, 2015 AT AHMEDABAD. SD/- SD/- ( ) ( ) ( MANISH BORAD ) ( KUL BHARAT ) ACCOUNTANT MEMBER JUDICIAL MEMBER AHMEDABAD; DATED 16/ 09 /2015 4..., ,.../ T.C. NAIR, SR. PS !'#$%&' &$ / COPY OF THE ORDER FORWARDED TO : 1. $' / THE APPELLANT 2. ()$' / THE RESPONDENT. 3. 56 7 / CONCERNED CIT 4. 7 ( ) / THE CIT(A)-V, SURAT 5. 8,9 (56 , . 560 , / DR, ITAT, AHMEDABAD 6. 9;< =- / GUARD FILE. ! / BY ORDER, )8 ( //TRUE COPY// / ( DY./ASSTT.REGISTRAR) , / ITAT, AHMEDABAD 1. DATE OF DICTATION .. 1.9.2015 (DICTATION-PAD 5+ PAGES ATTACHED AT THE END OF THIS FILE) 2. DATE ON WHICH THE TYPED DRAFT IS PLACED BEFORE THE DICTATING MEMBER ..1/14.9.2015 3. OTHER MEMBER... 4. DATE ON WHICH THE APPROVED DRAFT COMES TO THE SR.P. S./P.S.. 5. DATE ON WHICH THE FAIR ORDER IS PLACED BEFORE THE D ICTATING MEMBER FOR PRONOUNCEMENT 6. DATE ON WHICH THE FAIR ORDER COMES BACK TO THE SR. P.S./P.S 16.9.15 7. DATE ON WHICH THE FILE GOES TO THE BENCH CLERK 16.9.15 8. DATE ON WHICH THE FILE GOES TO THE HEAD CLERK ... 9. THE DATE ON WHICH THE FILE GOES TO THE ASSISTANT RE GISTRAR FOR SIGNATURE ON THE ORDER.. 10. DATE OF DESPATCH OF THE ORDER