Jt. Commissioner of Income Tax(OSD), Range-1, Hyderabad V. Anjalee Granites Private Limited, Hyderabad

ITA 612/Hyd/2018

• Counselvise Citation: [2021] 109 COUNSELVISE.COM (IT) 7450 (ITAT-HYDERABAD)
• Duration Of Justice: 2 year(s) 9 month(s) 15 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 19-01-2021
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: DB-B
• Next Hearing Date: 11-01-2021
• Assessment Year: 2012-2013
• Appeal Filed On: 03-04-2018
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Assessee Lawyers: A V RAGHURAM
• Keywords: Bogus purchase; Principle of natural justice
• Section: 153

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL HYDERABAD BENCHES B : HYDERABAD (THROUGH VIDEO CONFERENCE) BEFORE SHRI A.MOHAN ALANKAMONY, ACCOUNTANT MEMBER AND SHRI S.S.GODARA, JUDICIAL MEMBER I.T.A. NO. 612/HYD/2018 ASSESSMENT YEAR: 2012-13 JOINT COMMISSIONER OF INCOME TAX (OSD), RANGE-1, HYDERABAD VS M/S.ANJALEE GRANITES PRIVATE LIMITED, HYDERABAD [PAN: AAHCA2687H] (APPELLANT) (RESPONDENT) FOR REVENUE : SHRI ROHIT MUJUMDAR, DR FOR ASSESSEE : SHRI A.V.RAGHURAM, AR DATE OF HEARING : 11-01-2021 DATE OF PRONOUNCEMENT : 19-01-2021 O R D E R PER S.S.GODARA, J.M. : THIS REVENUES APPEAL FOR AY.2012-13 ARISES FROM THE CIT(A)-1, HYDERABADS ORDER DATED 19-12-2017 PASSED IN CASE NO.0155 / CIT(A)-1, HYD / 2015-16 / 2017-18 IN PROC EEDINGS U/S.143(3) OF THE INCOME TAX ACT, 1961 [IN SHORT, THE ACT]. HEARD BOTH THE PARTIES. CASE FILE PERUSED. 2. THE REVENUE HAS RAISED THE FOLLOWING SUBSTANTIVE GROUND IN THE INSTANT APPEAL: (II) THE LD.CIT(A) ERRED IN DELETING THE DISALLOWA NCE OF RS.1,57,64,074/- IN RESPECT OF BOGUS EXPENDITURE WI THOUT GIVING ANY PROPER FINDING. ITA NO. 612/HYD/2018 :- 2 -: 3. LEARNED DEPARTMENTAL REPRESENTATIVE INVITED OUR ATTENTION TO THE CIT(A)S DETAILED DISCUSSION DELETING I MPUGNED DISALLOWANCE/ADDITION OF BOGUS PURCHASE EXPENDITURE AS UNDER: GROUND NO. 9 & 10: ADDITION OF RS.1,57,64,074/- TOWARDS BOGUS EXPENDIT URE 9.1 DURING THE ASSESSMENT PROCEEDINGS, THE ASSESSIN G OFFICER MADE PURCHASES FROM THE VARIOUS PARTIES. THE ASSES SING OFFICER ISSUED NOTICES U/S.133(6) TO VARIOUS PARTIES. HOWEV ER, NO CONFIRMATION WITH RELEVANT DOCUMENTS HAVE BEEN RECE IVED FROM THE FOLLOWING PARTIES: S. NO NAME OF THE PARTIES AMOUNT (IN RS.) 1 M/S.ALLIANCE AP BLACK GALAXY GRANITES, GIMPEX HOUSE, NO.282, LINGHI CHETTY STREET, CHENNAI 600 001 61,86,575 2 M/S.HARSHITA GRANITES & MINERALS NO.1-7-1346, ROAD NO.6, ADVOCATES COLONY, HANAMKONDA, WARANGAL-506 001(AP) 39,40,756 3 M/S.KAMEPALLI EXPORTS, D.NO.6-20-84, GAYATHRI ENCLAVE, 8/1, ARUNDELPET, GUNTUR 1,20,74,994 4 M/S.KISHORE GRANITES, GT ROAD, GANAPAVARAM, GUNTUR-522 619 1,97,26,764 5 M/S.ONGOLE GALAXY, DOOR NO.11/6, MAIN ROAD, CHIMAKURTHY, PRAKASAM DISTRICT-523 226 41,23,786 6 M/S.SWATHI GRANITES, R.L.PURAM, CHIMAKURTHY, PRAKASAM DISTRICT-523 226 64,94,038 TOTAL 5,25,46,913 THE ABOVE PARTIES HAVE NOT CONFIRMED THE OUTSTANDIN G BALANCE EXISTING IN THE NAME OF THE ASSESSEE IN THEIR BOOKS OF ACCOUNT WHEN COMPARED TO THE BALANCES AS SHOWN AGAINST THEIR NAM ES IN THE BOOKS OF THE ASSESSEE. ALSO THE RELEVANT BANK STATEMENT R EFLECTING THE TRANSACTIONS HAS NOT BEEN SUBMITTED BY THESE PARTIE S. THE GENUINENESS OF THE TRANSACTION HAD NOT BEEN PROVED WITH RELEVANT DOCUMENTS. IN VIEW OF THIS, THE ASSESSING OFFICER T REATED 30% OF RS.5,25,46,913/- I.E., RS.1,57,64,074/- AS BOGUS EX PENDITURE. 9.2 BEFORE ME, THE APPELLANT SUBMITTED THAT DURING THE A.Y.2012-13, THE PURCHASE OF RAW MATERIAL WERE MADE, INCLUDED TH E PURCHASES FROM THE FOLLOWING PARTIES: - ITA NO. 612/HYD/2018 :- 3 -: S.NO. NAME OF THE PARTIES AMOUNT (IN RS.) 1 M/S.ALLIANCE AP BLACK GALAXY GRANITES 61,86,575 2 M/S.HARSHITA GRANITES & MINERALS 39,40,756 3 M/S.KAMEPALLI EXPORTS 1,20,74,994 4 M/S.KISHORE GRANITES 1,97,26,764 5 M/S.ONGOLE GALAXY 41,23,786 6 M/S.SWATHI GRANITES 64,94,038 TOTAL 5,25,46,913 A) THE APPELLANT SUBMITTED THAT ALL THE PURCHASES W ERE GENUINELY MADE IN THE REGULAR COURSE OF APPELLANT'S BUSINESS AND THE PAYMENTS THEREFOR WERE MADE THROUGH BANKING CHANNELS. B) IT IS PERTINENT TO MENTION HERE THAT COMPLETE QU ANTITATIVE DATA OF PURCHASES, PRODUCTION, SALES AND STOCKS WAS MAINTAI NED AND DULY RECORDED IN THE BOOKS OF ACCOUNT WHICH WERE SUBJECT TO STATUTORY AUDIT AS REQUIRED UNDER BOTH COMPANIES AND INCOME T AX ACTS. THE TAX AUDIT REPORT AND REGULAR BOOKS OF ACCOUNT WERE PRODUCED BEFORE THE ASSESSING OFFICER FOR HIS VERIFICATION. THE APP ELLANT SUBMITTED THAT COMPLETE DETAILS OF THE SUPPLIERS, INCLUDING THEIR POSTAL ADDRESSES, WERE ALSO SUBMITTED BEFORE THE ASSESSING OFFICER. T HIS PROVES THAT THE APPELLANT HAD FURNISHED CORRECT PARTICULARS OF THE SAID PERSONS, AS AVAILABLE IN ITS RECORDS, AND ACCORDINGLY ESTABLISH ED THE IDENTITY OF SUCH PERSONS. THUS, THE APPELLANT DISCHARGED THE ON US RESTED ON IT IN ESTABLISHING THE PURCHASES IN QUESTION. C) THE APPELLANT SUBMITTED THAT THE IDENTITY OF THE SUPPLIER AND GENUINENESS OF PURCHASES WERE DULY ESTABLISHED BY S UBMITTING COMPLETE DETAILS OF THE SUPPLIERS, THEIR LEDGER EXT RACTS AND COPIES OF RELEVANT INVOICES CONTAINING THE DETAILS OF PRODUCT S SUPPLIED, ADDRESS AND TIN NOS OF THE SUPPLIERS AND OTHER RELEVANT PAR TICULARS. THE PAYMENTS AGAINST THE PURCHASES IN QUESTION WERE MAD E THROUGH BANKING CHANNELS WHICH WAS ESTABLISHED BY RELEVANT BANK STATEMENTS. IT'S A SETTLED PRINCIPLE OF LAW THAT ON CE THE ASSESSEE HAS DISCHARGED HIS INITIAL ONUS OF PROVING THE EXPENSES , BY FILING ALL THE NECESSARY DETAILS AND EVIDENCES, THE ASSESSING OFFI CER CANNOT SUMMARILY BRUSH ASIDE SUCH EXPLANATION/EVIDENCES ME RELY BECAUSE HE CONTINUES TO ENTERTAIN SUSPICION AS TO THE GENUI NENESS OF THE TRANSACTIONS. ON THE CONTRARY, THE BURDEN OF DISPRO VING SUCH EXPENSES SHIFTS TO THE ASSESSING OFFICER, AND IF HE WISHES TO DISALLOW WHOLE OR ANY PART THEREOF, IT IS INCUMBENT UPON HIM TO MAKE FURTHER ENQUIRES AND INVESTIGATION AND PROVE, AS A RESULT O F SUCH INQUIRY, THAT THE EXPENSES WERE BOGUS. D) HOWEVER, THE ASSESSING OFFICER EXCEPT FOR ISSUIN G A LETTER/S.133(6), HAD NOT MADE ANY FURTHER EFFORT TO BRING THE ENQUIR ES INITIATED TO ITS LOGICAL CONCLUSION. 1N THIS REGARD, THIS IS TO SUBM IT THAT THE APPELLANT ITA NO. 612/HYD/2018 :- 4 -: COMPANY CANNOT BE HELD RESPONSIBLE FOR THE NON-COMP LIANCE BY THE SUPPLIER, TO THE LETTER ISSUED BY THE DEPARTMENT, A ND, AS SUCH, IT CANNOT BE SADDLED WITH ANY DISALLOWANCE ON THAT GRO UND ALONE. E) THE APPELLANT SUBMITTED THAT THEY HAD NOT ACCORD ED SUFFICIENT OPPORTUNITY TO SUBSTANTIATE ITS CLAIM, AS THE PROPO SAL FOR ADDITION OF THE AMOUNT IN QUESTION WAS PUT FORTH AT THE FAG END OF THE PROCEEDINGS, HENCE THE IMPUGNED ADDITION, MADE AGAI NST PRINCIPLES OF NATURAL JUSTICE, IS NOT JUSTIFIED. 9.3 ON THIS ISSUE, A REMAND REPORT WAS CALLED FROM THE ASSESSING OFFICER ON 15.09.2017, REGARDING THE SUBMISSIONS MA DE BEFORE ME. THE ASSESSING OFFICER SUBMITTED REMAND REPORT DATED 27.11.2017, THE EXTRACT OF WHICH IS REPRODUCED BELOW: A) M/S. ALLIANCE AP BLACK GALAXY GRANITES: DURING THE COURSE OF REMAND PROCEEDINGS, THE ASSESS EE COMPANY SUBMITTED LEDGER EXTRACT, INVOICES AND BANK ACCOUNT STATEMENT CONFIRMING THE PAYMENTS MADE TO THE ASSESSEE COMPAN Y AND TOTAL CREDITS FOR THE PERIOD 2011-12 IS RS.61,86,575/- AS PER LEDGER EXTRACT AND BALANCE AS ON 31.03.2012 IS RS.7,42,043/-. B) M/S. HARSHITA GRANITES & MINERALS: DURING THE COURSE OF REMAND PROCEEDINGS, THE ASSESS EE COMPANY SUBMITTED LEDGER EXTRACT, INVOICES AND BANK ACCOUNT STATEMENT CONFIRMING THE PAYMENTS MADE TO THE ASSESSEE COMPAN Y AND TOTAL CREDITS FOR THE PERIOD 2011-12 IS RS.39,40,756/- AS PER LEDGER EXTRACT AND BALANCE AS ON 31.03.2012 IS RS.NIL C) M/S. KAMEPALLI EXPORTS: DURING THE COURSE OF REMAND PROCEEDINGS, THE ASSESS EE COMPANY SUBMITTED LEDGER EXTRACT, INVOICES AND BANK ECCOUNT STATEMENT CONFIRMING THE PAYMENTS MADE TO THE ASSESSEE COMPAN Y AND TOTAL CREDITS FOR THE PERIOD 2011-12 IS RS.1,20,74,994/- AS PER LEDGER EXTRACT AND BALANCE AS ON 31.03.2012 IS RS.1,71,365 /-. D) M/S. KISHORE GRANITES: DURING THE COURSE OF REMAND PROCEEDINGS, THE ASSESS EE COMPANY SUBMITTED LEDGER EXTRACT, INVOICES AND BANK ACCOUNT STATEMENT CONFIRMING THE PAYMENTS MADE TO THE ASSESSEE COMPAN Y AND TOTAL CREDITS FOR THE PERIOD 2011-12 IS RS.1,96,47,164/- AS PER LEDGER EXTRACT AND BALANCE AS ON 31.03.2012 IS RS.42/-. E) M/S. ONGOLE GALAXY : DURING THE COURSE OF REMAND PROCEEDINGS, THE ASSESS EE COMPANY SUBMITTED LEDGER EXTRACT, INVOICES AND BANK ACCOUNT STATEMENT ITA NO. 612/HYD/2018 :- 5 -: CONFIRMING THE PAYMENTS MADE TO THE ASSESSEE COMPAN Y AND TOTAL CREDITS FOR THE PERIOD 2011-12 IS RS.48,64,276/- AS PER LEDGER EXTRACT AND BALANCE AS ON 31.03.2012 IS RS.19,87,100/-. F) M/S. SWATHI GRANITES: DURING THE COURSE OF REMAND PROCEEDINGS, THE ASSESS EE COMPANY SUBMITTED LEDGER EXTRACT, INVOICES AND BANK ACCOUNT STATEMENT CONFIRMING THE PAYMENTS MADE TO THE ASSESSEE COMPAN Y AND TOTAL CREDITS FOR THE PERIOD 2011-12 IS RS.64,94,038/- AS PER LEDGER EXTRACT AND BALANCE AS ON 31.03.2012 IS RS.NIL' 9.4 THE SUBMISSIONS OF THE APPELLANT AND THE REMAND REPORT SUBMITTED BY THE ASSESSING OFFICER HAVE BEEN CAREFU LLY CONSIDERED. THE EVIDENCE SUBMITTED BEFORE ME WERE VERIFIED BY T HE ASSESSING OFFICER AND A REMAND REPORT WAS SUBMITTED ON 27.11. 2017. THE ASSESSING OFFICER HAS FOUND A SUBMISSION IN ORDER. THE FIGURES GIVEN BY THE APPELLANT IS MATCHING WITH THE REMAND REPORT SUBMITTED BY THE ASSESSING OFFICER. HENCE, THE ADDITION IS DELETED. -GROUND ALLOWED 3.1. MR.MUJUMDAR VEHEMENTLY CONTENDED DURING THE COUR SE OF HEARING THAT THE ASSESSING OFFICER HAD RIGHTLY DISA LLOWED THE IMPUGNED SUM IN VIEW OF THE FACT THAT THE ASSESSEE COULD NOT PROVE THE CORRESPONDING SUMS BY WAY OF FILING COGENT SUPPORTIVE EVIDENCE. 4. THE ASSESSEE ON THE OTHER HAND HAS FILED A DETAILED PAPER BOOK RUNNING INTO 153 PAGES CONTAINING THE SIX PARTIES M/S.ALLIANCE AP BLACK GALAXY GRANITES, M/S.HARSHITA G RANITES & MINERALS, M/S.KAMEPALLI EXPORTS, M/S.KISHORE GRANI TES, M/S.ONGOLE GALAXY AND M/S.SWATHI GRANITES LEDGER A CCOUNTS, BANK STATEMENTS AND INVOICES PERTAINING TO RELEVANT PRE VIOUS YEAR IN SUPPORT OF ITS CLAIM OF THE PURCHASES IN GRANI TE CUTTING, MANUFACTURING AND POLISHING BUSINESS. ITA NO. 612/HYD/2018 :- 6 -: 5. AFTER GIVING OUR THOUGHTFUL CONSIDERATION TO THE RIVAL PROCEEDINGS AGAINST AND IN SUPPORT OF THE IMPUGNED BO GUS PURCHASES DISALLOWANCE, WE FIND NO REASON TO REVIVE THE SAME. IT HAS COME ON RECORD THAT THE ASSESSING OFFICERS REMA ND REPORT DT.27-11-2017 HAS NOT FOUND ANY SHORTFALL IN ASS ESSEES CORRESPONDING EVIDENCE(S) WHICH HAS FORMED THE PRECI SE REASON FOR THE CIT(A) TO DELETE THIS BOGUS EXPENDITURE DISALL OWANCE. LEARNED DEPARTMENTAL REPRESENTATIVE FAILS TO DISPUTE THA T NO ISSUE HAD ARISEN QUA ASSESSEES CORRESPONDING GRANITE SALES. MEANING THEREBY THAT ASSESSEES GRANITE SALES STOOD ACCEPTED. THE REVENUES SOLE SUBSTANTIVE GROUND HAS NOWHERE RE BUTTED THE CIT(A)S CLINCHING FINDING OF THE FACT THAT THE ASSES SING OFFICERS REMAND REPORT HAS RATHER VERIFIED THE ASSESS EES RAW MATERIAL PURCHASES. CASE LAW (2018) [96 TAXMANN.COM 486] SMT.B.JAYALAKSHMI VS. ACIT HOLDS THAT THE REVENUES AP PEAL IN CASE OF A FAVOURABLE REMAND REPORT SUPPORTING AN A SSESSEES CLAIM IS NOT MAINTAINABLE. WE ACCORDINGLY CONFIRM THE CIT(A)S FINDINGS UNDER CHALLENGE DELETING THE IMPUGNED BOGUS EXPENDITURE DISALLOWANCE THEREFORE. 6. THIS REVENUES APPEAL IS DISMISSED. ORDER PRONOUNCED IN THE OPEN COURT ON 19 TH JANUARY, 2021 SD/- SD/- ( A. MOHAN ALANKAMONY ) ( S.S. GODAR A ) ACCOUNTANT MEMBER JUDICIAL MEMBER HYDERABAD, DATED: 19-01-2021 TNMM ITA NO. 612/HYD/2018 :- 7 -: COPY TO : 1.JOINT COMMISSIONER OF INCOME TAX (OSD), RANGE-1, HYDERABAD. 2.M/S.ANJALEE GRANITES PRIVATE LIMITED, SY.NO.124, VILLA NO.46, THE TRAILS, O.U.COLONY, MANIKONDA VILLAGE, HYDERABAD. 3.CIT(APPEALS)-1, HYDERABAD. 4.PR.CIT-1, HYDERABAD. 5.D.R. ITAT, HYDERABAD. 6.GUARD FILE.