ACIT, New Delhi V. M/s. Madhyam Construction Company Pvt. Ltd., New Delhi

ITA 6078/DEL/2016

• Counselvise Citation: [2021] 109 COUNSELVISE.COM (IT) 8329 (ITAT-DELHI)
• Duration Of Justice: 4 year(s) 1 month(s) 16 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 14-01-2021
• Appeal Filed By: Department
• Order Result: Partly Allowed
• Bench Allotted: E
• Assessment Year: 2011-2012
• Appeal Filed On: 28-11-2016
• Result in Favour of: Partly Allowed
• Court: TRIBUNAL
• Department Lawyers: ON FACTS ON FACTS
• Keywords: Bogus purchase
• Section: 153A

Judgement Text

ITA NO. 6078/DEL/2016 AY 2011-12 1 IN THE INCOME TAX APPELLATE TRIBUNAL DELHI BENCH: E, NEW DELHI BEFORE SHRI H.S. SIDHU, JUDICIAL MEMBER AND SHRI PRASHANT MAHARISHI, ACCOUNTANT MEMBER (THROUGH VIDEO CONFERENCE) ITA NO. 6078/DEL/2016 A.Y. : 2011-12 ACIT, CENTRAL CIRCLE-8, ROOM NO. 333, ARA CENTRE, JHANDEWALAN EXTN., NEW DELHI VS M/S MADHYAM CONSTRUCTION COMPANY PVT. LTD., B-2/6, PLOT NO. 2, ASHOK NAGAR, DB GUPTA ROAD, NEAR FAIZ CHOWK, KAROL BAGH, NEW DELHI 5 (PAN: AADCM8688G) (APPELLANT) (RESPONDENT) ORDER PER H.S. SIDHU, JM: THIS APPEAL FILED BY THE REVENUE AGAINST THE O RDER OF LD. CIT(A)-24, NEW DELHI FOR ASSESSMENT YEAR 2011-12 D ATED 23.09.2016 ON THE FOLLOWING GROUNDS:- 1. THE ORDER OF LD. CITA() IS NOT CORRECT IN LAW AND ON FACTS. 2. ON THE FACTS AND CIRCUMSTANCES OF THE CASE, THE CIT( A) HAS ERRED IN DELETING THE ADDITION OF RS. 2,06,42,177/ - DEPARTMENT BY MS. PRATIMA M. BISWAS, CIT(DR) ASSESSEE BY SH. SHASHWAT BAJPAI, ADVOCATE & SH. SHARAD AGARWAL, ADV. ITA NO. 6078/DEL/2016 AY 2011-12 2 MADE BY AO ON ACCOUNT OF DISALLOWANCE OF BOGUS EXPENSES BY RELYING ON THE ORDER OF HONBLE DELHI H IGH IN THE CASE OF MR. KABUL CHAWLA. 3. ON THE FACTS AND CIRCUMSTANCES OF THE CASE, THE LD. CIT(A) HAS ERRED IN RELYING ON THE ORDER OF HONBL E DELHI HIGH COURT IN THE CASE OF KABUL CHAWLA AS SECTION 153A DOES NOT RESTRICT THE ASSESSMENT TO INCRIMINATING DOCUMENTS. 4. THE APPELLANT CRAVES LEAVE TO ADD, AMEND ANY / ALL T HE GROUND OF APPEAL BEFORE OR DURING THE COURSE OF HEA RING OF THE APPEAL. 2. AT THE TIME OF HEARING, LD. COUNSEL FOR THE ASSESS EE STATED THAT SIMILAR ISSUE HAS ALREADY BEEN DECIDED IN FAVO UR OF THE ASSESSEE BY THE ITAT, A BENCH, NEW DELHI IN THE GR OUP CASE OF ASSESSEE I.E. M/S BECON CONSTRUCTIONS PVT. LTD. VS. ACIT, CENTRAL CIRCLE-8, NEW DELHI IN ITA NO. 5034/DEL/2016 (AY 2012-13) VIDE ORDER DATED 24.12.2020. HE FURTHER STAT ED THAT THE JUDICIAL MEMBER WAS THE AUTHOR OF THIS ORDER. HE FURTHER STATED THAT IN THE SAID CASE THE GROSS PROFIT RATE OF ASSESSEE WAS @9.25% AND THE BENCH HAS DIRECTED THE ASSESSING OFFICER TO RETAIN THE ADDITION @9.25% OF THE BOGUS PURCHASE S. HE REQUESTED THAT THE SAME DIRECTION MAY BE ISSUED IN THE PRESENT CASE OF THE ASSESSEE ALSO. TO SUPPORT THIS AVERMEN TS, HE HAS ALSO FILED THE WRITTEN SYNOPSIS DATED 13.01.2021 ALO NGWITH THE ORDER DATED 24.12.2020 PASSED IN THE CASE OF M/S BECO N CONSTRUCTION PVT. LTD. (SUPRA). ITA NO. 6078/DEL/2016 AY 2011-12 3 2.1 LD. CIT(DR) RELIED UPON THE ORDERS PASSED BY THE AO AND HAS NOT RAISED ANY OBJECTION ON THE REQUEST OF THE LD. COUNSEL FOR THE ASSESSEE. 3. WE HAVE HEARD BOTH THE PARTIES AND PERUSED THE O RDERS PASSED BY THE REVENUE AUTHORITIES ALOGNWITH THE WRI TTEN SYNOPSIS AND ORDER DATED 24.12.2020 PASSED IN ITA NO. 5034/DEL/2016 (AY 2012-13) IN THE CASE OF M/S BECON CONSTRUCTIONS PVT. LTD. VS. ACIT (SUPRA). FOR THE SAK E OF CONVENIENCE, THE RELEVANT PORTION OF THE AFORESAID CASE I.E. PARA NO. 4.1 AT PAGE NO. 14 OF THE TRIBUNALS ORDER DATED 24.12.2020 IS REPRODUCED AS UNDER:- 4.1 COMING TO THE ALTERNATIVE ARGUMENTS OF THE LD. AR THAT IN THE CASE OF BOGUS PURCHASES, IF THEY ARE NOT WRITTEN OFF OR REDUCED FROM THE CLOSING STOCK THEN, NECESSARILY IN THE SALE PRICE THE SAME IS INCLUDED AND THEREFORE, ONLY GROSS PROFIT ON THE SAME CAN BE ADDED. WE FIND THAT THE ABOVE ARGUMENTS ALSO SUPPORTED BY RELYING ON 356 ITR 451 IN THE CASE OF CIT VS. SIMIT P. SHETH OF THE HONBLE GUJARAT HIGH COURT AS WELL AS THE SEVERAL JUDICIAL PRECEDENTS OF THE COORDINATE BENCHES. THE ASSESSEE HAS SHOWN THAT IN THE YEAR ENDING MARCH, 2012, THE GROSS ITA NO. 6078/DEL/2016 AY 2011-12 4 PROFIT RATIO OF THE ASSESSEE IS 9.25%. IN VIEW OF THIS, WE DIRECT THE LD. ASSESSING OFFICER TO RETAIN THE ADDITION @9.25% OF RS. 2.44 CRORES OF RS. 22,57,000/- DESERVE TO BE RETAINED AND THE BALANCE ADDITION OF RS. 2,21,43,000/- DESERVE TO BE DELETED. THE REASONS BEING THAT ONCE THE BOGUS PURCHASES HAVE GONE INTO THE PROFIT AND LOSS ACCOUNT, AND NECESSARY SALES HAVE NOT BEEN DOUBTED, ONLY OPTION LEFT WITH THE REVENUE IS TO MAKE THE ADDITION OF THE GROSS PROFIT EMBEDDED IN THE BOGUS PURCHASES. ACCORDINGLY, THE GROUND NO. 1 OF THE APPEAL IS PARTLY ALLOWED. 3.1 KEEPING IN VIEW OF THE FACTS AND CIRCUMSTANCE S OF THE PRESENT CASE AND THE ARGUMENTS ADVANCED BY THE LD. C OUNSEL FOR THE ASSESSEE AS WELL AS ORDER DATED 24.12.2020 O F THE TRIBUNAL AS REPRODUCED ABOVE, WE ARE OF THE CONSIDE RED VIEW THAT THIS BENCH HAS DECIDED THE EXACTLY SIMILAR IS SUE IN THE CASE OF M/S BECON CONSTRUCTIONS PVT. LTD. VS. ACIT IN ITA NO. 5034/DEL/22016 (AY 2012-13), HENCE, WE ARE OF THE VIEW THAT ASSESSING OFFICER SHOULD RETAIN THE ADDITION @ 9.25 % OF RS. 2,06,42,177/- WHICH COMES TO RS. 19,09,401/- AND BALANC E ADDITION OF RS. 1,87,32,776/- MAY BE DELETED, THEREF ORE, WE ITA NO. 6078/DEL/2016 AY 2011-12 5 ARE DIRECTING THE ASSESSING OFFICER TO DELETE THE ADDITION OF RS. 1,87,32,776/-, BY RESPECTFULLY FOLLOWING THE AF ORESAID TRIBUNALS ORDER DATED 24.12.2020 IN THE CASE OF M/S BECON CONSTRUCTION PVT. LTD. (SUPRA). 4. IN THE RESULT, THE APPEAL OF THE REVENUE IS PART LY ALLOWED. THE DECISION IS PRONOUNCED IN THE OPEN COURT ON 14.01.2021 IN THE PRESENCE OF BOTH THE PARTIES UPON CONCLUSION OF VIRTUAL HEARING. SD/- SD/- (PRASHANT MAHARISHI) (H.S. SIDHU) ACCOUNTANT MEMBER JUDICIAL MEMBER SRB COPY FORWARDED TO: 1. APPELLANT 2. RESPONDENT 3. CIT 4. CIT(A) 5. DR ASSTT. REGISTRAR, ITAT, NEW DELHI