The ITO, Ward-3(1)(3), Ahmedabad V. Rushabhdev Infra Project Pvt. Ltd., Ahmedabad

ITA 646/AHD/2017

• Counselvise Citation: [2019] 115 COUNSELVISE.COM (IT) 9371 (ITAT-AHMEDABAD)
• Duration Of Justice: 2 year(s) 6 month(s) 4 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 19-09-2019
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: D
• Next Hearing Date: 18-09-2019
• Assessment Year: 2013-2014
• Appeal Filed On: 15-03-2017
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Keywords: Bogus purchase; Tax effect; Set aside
• Section: 142(1); 201; 143(2)

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL D BENCH, AH MEDABAD BEFORE SHRI MANISH BORAD , AM AND SHRI AMARJIT SINGH, JM / I .T.A. NO. 646 /AHD /201 7 ( / ASSESSMENT YEAR: 2013 - 14 ) ITO, WARD - 3(1)(3) 4 TH FLOOR, 403 B WING, PRAT YAKSH KAR BHAVAN, NR. POLYTECHNIC COLLEGE, AMWABADI AHMEDABAD - 380015 . / VS. RUSHABHDEV INFRA PROJECT PVT. LTD. 509, ISCON ELEGANCE, S. G. HIGHWAY, SATELLITE, AHMEDABAD - 380015 . I.T.A. NO. 794 /A HD /201 7 ( / ASSESSMENT YEAR: 20 13 - 1 4 ) RUSHAB HDEV INFRA PROJECT PVT. LTD. 509, ISCON ELEGANCE, S. G. HIGHWAY, SATELLITE, AHMEDABAD - 380015. / VS. ITO, WARD - 3(1)(3) 4 TH FLOOR, 403 B WING, PRATYAKSH KAR BHAVAN, NR. POLYTECHNIC COLLEGE, AMWABADI AHMEDABAD - 380015. ./ ./ PAN/GIR NO. : AAFCR2520Q ( / APPELLANT ) .. ( / RESPONDENT ) / DATE OF HEARING : 18 / 0 9 / 201 9 / DATE OF PRONOUNCEMENT : 19 / 0 9 /2019 / O R D E R PER AMARJIT SINGH, J M: THE REVENUE AS WELL AS ASSESSEE HAVE FILED THE ABOVE MENTIONED APPEAL S AGAINST THE ORDER DATED 05 . 0 1 .201 7 PASSED BY THE COMMISSIONER OF REVENUE BY: SHRI VINOD TANWANI ( SR. DR) ASSESSEE BY : SHRI M. S. CHHAJED (AR) ITA. NO.646 / AHD /1 7 794 / AHD /201 7 A.Y. 20 1 3 - 1 4 2 INCOME TAX (A PPEALS) - 9 , AHMEDABAD [HEREINAFTE R REFERRED TO AS THE CIT(A)] RELEVANT TO THE A.Y. 20 13 - 14 . ITA. NO.646 /A HD /201 7 2 . THE REVENUE HAS FILED THE PRESENT APPEAL AGAINST THE ORDER DATED 05 .0 1 .201 7 PASSED BY THE COMMISSIONER OF INCOME TAX (APPEALS) - 9 , AHMEDABAD [HEREINAFTE R REFERRED TO AS THE CIT(A)] RELEVANT TO THE A.Y. 2013 - 1 4. 3. WE HAVE HEARD THE LD. REPRESENTATIVE OF THE PARTIES AND PERUSED THE RECORD. DURING COURSE OF HEARING, LD. DR FOR THE REVENUE SUBMITTED THAT TAX EFFECT INVOLVED IN THIS APPEAL FILED B Y THE REVENUE IS LESS THAN RS. 5 0 LACS AND IN VIEW OF LATEST CBDT CIRCULAR NO. 3/2018 DATED 11 - 7 - 2018, AND ALSO MODIFIED CIRCULAR NO. 17/2019 DATED 08/08/2019, APPEAL FILED BY THE REVENUE IS NOT MAINTAINABLE AND NEEDS TO BE DISMISSED. THE LD. DR, FURTHER A RGUED THAT, THE ISSUE INVOLVED IN THIS APPEAL IS APPEARS TO BE COVERED BY EXCEPTION PROVIDED UNDER CLAUSE (E) OF SUBSEQUENT CIRCULAR AND THEREFORE, IF REQUIRED THE REVENUE SHALL BE ALLOWED TO FILE MISCELLANEOUS APPLICATION TO RE - CALL THE ORDER. WE, FIND THAT, THE CBDT, RECENTLY HAD ISSUED A CIRCULAR NO. 3/2018 DATED 11 - 7 - 2018, SUPERSEDING ITS EARLIER CIRCULAR NO. 21/2015 AND ENHANCED MONETARY LIMIT FOR FILING APPEAL BEFORE VARIOUS APPELLATE AUTHORITIES AND ACCORDINGLY, ENHANCED MONETARY LIMIT TO RS. 20,00, 000/ - FOR FILING APPEAL BEFORE THE TRIBUNAL. FURTHER, THE BOARD HAS ISSUED ONE MORE CIRCULAR VIDE CIRCULAR NO.17/2019 DATED 08/08/2019 AND ENHANCED MONETARY LIMIT FOR FILING APPEAL BEFORE APPELLATE TRIBUNAL TO RS. 50,00,000/ - . FURTHER, IN THE SAID CIRCULAR , THE CBDT HAD INSTRUCTED ITS OFFICERS TO FILE APPLICATION FOR WITHDRAWAL OF APPEAL ALREADY FILED OR NOT TO PURSUE PENDING ITA. NO.646 / AHD /1 7 794 / AHD /201 7 A.Y. 20 1 3 - 1 4 3 APPEALS. WE, THEREFORE, BY TAKING INTO ACCOUNT THE CBDT CIRCULAR NO. 3/2018 DATED 11 - 7 - 2018 AND C IRCULAR NO.17/2019 DATED 08/08/2019 AND ALSO CONSIDERING THE FACT THAT TAX EFFECT INVOLVED IN THE PRESENT APPEAL IS LESS THAN THE AMOUNT OF MONETARY LIMIT FIXED BY THE CBDT FOR NOT FILING APPEAL, DISMISSED APPEAL FILED BY THE REVENUE AS NOT MAINTAINABLE. WE, FURTHER NOTED THAT THE CO - ORDINA TE BENCH OF ITAT, AHMEDABAD A BENCH IN ITA. NO. 1398/AHD/2004, VIDE ORDER DATED 14/08/2019 HAS PASSED DETAILED ORDER CONSIDERING NEW CIRCULAR ISSUED BY THE CBDT AND HELD THAT EXCEPT AMENDMENT TO PARA 3 OF THE CIRCULAR NO.3/2018 DATED 11/07/2018, ALL OTHE R PORTIONS OF THE CIRCULAR NO .03/2018 (SUPRA) HAVE REMAIN IN F ACT, THEREFORE, THIS CIRCULAR IS APPLICABLE EVEN FOR PENDING APPEALS AND ACCORDINGLY, REJECTED THE ARGUMENTS OF THE REVENUE THAT THE EFFECT OF THE CIRCULAR SHALL COME INTO FORCE FROM THE DATE OF ISSUE OF THIS CIRCULAR. THEREFORE, CONSIDERING THE FACTS AND CIRCUMSTANCES OF THIS CASE AND ALSO TAKEN NOTE OF CIRCULARS ISSUED BY THE CBDT INCLUDING CIRCULAR NO. 17/2019 DATED 08/08/2019, AND ALSO BY FOLLOWING THE DECISION OF CO - ORDINATE BENCH, WE DISMIS SED APPEAL FILED BY THE REVENUE AS NOT MAINTAINABLE. HOWEVER, WE KEEP OPEN OPTION TO THE REVENUE TO FILE A MISCELLANEOUS APPLICATION, IF NECESSARY, IN CASE THE ISSUES INVOLVED IN THE PRESENT APPEAL COMES WITHIN 3 EXCEPTIONS AS PROVIDED IN PARA 10 OF SAID C IRCULAR AND CLAUSE (E) OF SUBSEQUENT CIRCULAR. IN THE RESULT, APPEAL FILED BY THE REVENUE IS HEREBY DISMISSED. ITA. NO. 794/AHD/2017 4 . THE ASSESSEE HAS FILED THE PRESENT APPEAL AGAINST THE ORDER DATED 05.01.2017 PASSED BY THE COMMISSIONER OF INCOME TAX (A PPEALS) - 9 , ITA. NO.646 / AHD /1 7 794 / AHD /201 7 A.Y. 20 1 3 - 1 4 4 AHMEDABAD [HEREINAFTE R REFERRED TO AS THE CIT(A)] RELEVANT TO THE A.Y. 2013 - 14. 5. THE ASSESSEE HAS RAISED THE FOLLOWING GROUNDS.: - 1. THE ORDER PASSED BY THE LD. CIT(A) IS AGAINST LAW, EQUITY & JUSTICE. 2. THE LD. CIT(A) HAS ERRED IN LAW A ND ON FACTS IN UPHOLDING ADDITION TO THE EXTENT OF RS.43,53,144/ - BEING 25% OF PURCHASE AS BOGUS PURCHASE. 3. THE APPELLANT CRAVES LIBERTY TO ADD, ALTER, MODIFY OR AMEND ANY OR ALL GROUNDS OF APPEAL BEFORE FINAL HEARING. 6 . THE BRIEF FACTS OF THE CASE AR E THAT THE ASSESSEE FILED ITS RETURN OF INCOME ON 26.09.2013 DECLARING TOTAL INCOME TO THE TUNE OF RS.NIL FOR THE A.Y.2013 - 14. THE ASSESSMENT OF THE ASSESSEE WAS REOPENED UNDER CASS. NOTICES U/S 143(2) & 142(1) OF THE ACT WERE ISSUED AND SERVED UPON THE AS SESSEE. THE ASSESSEE WAS IN THE BUSINESS OF REAL ESTATE DEVELOPMENT. DURING THE SEARCH ACTION OF M/S TRICON CONSTRUCTION SOME BOGUS DEALERS WERE IDENTIFIED. THE ASSESSEE WAS FOUND BENEFICIARY. THE CASE OF THE ASSESSEE WAS REOPENED ON THE BASIS OF THE INFOR MATION RECEIVED FROM THE DIT(INV.), AHMEDABAD. THE ASSESSEE HAS TAKEN THE BOGUS ENTRIES OF SIX PARTIES WHOSE NAMES ARE MENTIONED AS UNDER.: - 1. SHRI BHAVESH R. PATEL (PROP. OF AKSHAR ENTERPRISES) 2. SHRI JIVANLAL H. PATEL (PROP. OF ARASURI ENTERPRISE) 3. S HRI RAHUL V. PATEL (PROP. VAISHVI TRADERS) 4. SHRI HITESHKUMAR G. PATEL 5. SHRI KALPESH R. PATEL 6. SHRI KAMLESH PREMJIBHAI SONDARVA 7. THEREAFTER, THE AO DISALLOWED THE SAID BOGUS PURCHASE AND ADDED TO THE INCOME OF THE ASSESSEE. FEELING AGGRIEVED, THE A SSESSEE FILED AN APPEAL ITA. NO.646 / AHD /1 7 794 / AHD /201 7 A.Y. 20 1 3 - 1 4 5 BEFORE THE CIT(A) WHO RESTRICTED THE ADDITION TO THE EXTENT OF 25% OF THE BOGUS PURCHASE. FEELING AGGRIEVED, THE ASSESSEE FILED THE PRESENT APPEAL BEFORE US. 8. WE HAVE HEARD ARGUMENTS ADVANCED BY THE LD. REPRESENTATIVE OF THE PARTI ES AND PERUSED THE RECORD. THE LD. REPRESENTATIVE OF THE ASSESSEE HAS ARGUED THAT THE CIT(A) HAS WRONGLY CONFIORMED THE ADDITION TO THE EXTENT OF 25% OF THE TOTAL BOGUS PURCHASE IN SUM OF RS.43,53,144/ - , THEREFORE, THE FINDING OF THE CIT(A) IS LIABLE TO BE SET ASIDE IN THE INTEREST OF JUSTICE . IT IS ALSO ARGUED THAT THE TRANSACTION WAS EFFECTED THROUGH BANKING CHANNEL, THEREFORE, THE CLAIM OF THE ASSESSEE IS NOT LIABLE TO BE DECLINED. THE LD REPRESENTATIVE OF THE DEPARTMENT REFUTED THE SAID CONTENTION. THE CASE OF THE ASSESSEE WAS REOPENED UPON THE INFORMATION RECEIVED FROM THE DIT(INV.), AHMEDABAD . THE AO RAISED THE ADDITION TO THE EXTENT OF 100% OF THE TOTAL BOGUS PURCHASE TO THE INCOME OF THE ASSESSEE AND ACCORDINGLY TAXED AND THE CIT(A) HAS ALSO RESTRICT ED THE ADDITION TO THE EXTENT OF 25 % OF THE TOTAL BOGUS PURCHASE OF THE ASSESS EE TO THE TUNE OF RS.43,53,144 / - . THE ASSESSEE IS IN THE PROFESSION OF REAL ESTATE DEVELOPMENT . IT IS SETTLED THAT 100% OF THE ADDITION IS NOT JUSTIFIABLE. IN THIS REGARD, WE FIN D SUPPORT OF LAW SETTLED IN CASE CIT VS.NIKUNJ EXIMPT ENTERPRISES (P) LTD. (2013) 216 TAXMAN 171 (BOM). IN CASE CIT VS. SIMIT P. SHETH (2013) 356 ITR 451 (GUJ) (HIGH COURT) , IT IS HELD THAT T HE ADDITION IS REQUIRED TO BE ADDED TO THE INCOME OF THE ASSESSE E TO THE EXTENT OF INCOME EMBEDDED IN THE BOGUS PURCHASE. THE SALE IS NOT DISPUTED. O N SEEING THE FACTS AND CIRCUMSTANCES OF THE CASE, WE ARE OF THE VIEW THAT THE ADDITION TO THE EXTENT OF 25 % OF THE BOGUS PURCHASE IS VERY HIGH, THEREFORE, WE RESTRICT THE ADDITION OF BOGUS PURCHASE TO THE EXTENT OF 12.5% OF THE BOGUS PURCHASE. ITA. NO.646 / AHD /1 7 794 / AHD /201 7 A.Y. 20 1 3 - 1 4 6 ACCORDINGLY, THESE ISSUES ARE DECIDED IN FAVOUR OF THE ASSESSEE AGAINST THE REVENUE. 9. IN THE RESULT, THE APPEAL FILED BY THE REVENUE IS HEREBY ORDERED TO BE DISMISSED AND THE APPEA L FILED BY THE ASSESSEE IS HEREBY ORDERED TO BE PARTLY ALLOWED . ORDER PRONOUNCE D IN THE OPEN COURT ON 19 /09 / 2019 SD/ - SD/ - ( MANISH BORAD ) (A MARJIT SINGH) / ACCOUNTANT MEMBER /JUDICIAL MEMBER AHMEDABAD DATED : 19/ 09 /2019 VIJAY/SR. PS ITA. NO.646 / AHD /1 7 794 / AHD /201 7 A.Y. 20 1 3 - 1 4 7 / COPY OF THE ORDER FORWARDED TO : 1. / THE APPELLANT 2. / THE RESPONDENT. 3. ( ) / THE CIT(A) - 4. / CIT 5. , , / DR, ITAT, MUMBAI 6. / GUARD FILE. / BY ORDER, //TRUE COPY// ( ASSISTANT REGISTRAR ) ITAT, AHEMEDABAD