The ITO, Ward-3(1)(3), Ahmedabad V. Patidar Steel Pvt. Ltd., Ahmedabad

ITA 647/AHD/2017

• Counselvise Citation: [2019] 117 COUNSELVISE.COM (IT) 7134 (ITAT-AHMEDABAD)
• Duration Of Justice: 2 year(s) 11 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 25-03-2019
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: C
• Assessment Year: 2012-2013
• Appeal Filed On: 15-03-2017
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: LALIT P JAIN
• Keywords: Bogus purchase; Peak credit
• Section: 40A(3); 234B; 133(6)

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL AHMEDABAD C BENCH (BEFORE SHRI PRADIP KUMAR KEDIA, ACCOUNTANT MEMBER & SHRI MAHAVIR PRASAD, JUDICIAL MEMBER) ITA. NO: 647/AHD/2017 (ASSESSMENT YEAR: 2012-13) I.T.O., WARD-3(1)(3), AHMEDABAD V/S PATIDAR STEEL PVT. LTD. 704/705, LOHA BHAVAN, NR. OLD HIGH COURT, NAVRANGPURA, AHMEDABAD- 380009 (APPELLANT) (RESPONDENT) PAN: AAFCP3032R APPELLANT BY : SHRI LALIT P. JAIN, SR. D .R. RESPONDENT BY : NONE ( )/ ORDER DATE OF HEARING : 28 -02-201 9 DATE OF PRONOUNCEMENT : 25 -03-2019 PER MAHAVIR PRASAD, JUDICIAL MEMBER 1. THIS APPEAL FILED BY THE REVENUE IS DIRECTED AGAINS T THE ORDER OF THE LD. CIT(A)-9, AHMEDABAD DATED 06.01.2017 PERTAINING TO A.Y. 2012-13 AND FOLLOWING GROUNDS HAVE BEEN TAKEN: ITA NO . 647 /AHD/2017 . A.Y. 2012-1 3 2 1. THE LD. CIT(A) HAS ERRED IN LAW AND ON FACTS I N GRANTING RELIEF OF RS.95,07,750/- OUT OF TOTAL ADDITION OF RS.1,26,77, 000/- MADE ON ACCOUNT OF INFLATED PURCHASES U/S. 40A(3) OF THE ACT. 1.1 THE CIT(A) HAS ERRED IN LAW AND ON FACTS IN N OT APPRECIATED THE ASSESSEE COMPANY DID NOT PRODUCE ANY EVIDENCES AND ALSO DID NOT PUT ANY SUCH CLAIM DURING THE ASSESSMENT PROCEEDINGS. 1.2 THE LD. CIT(A) HAS ERRED IN LAW AND ON FACTS IN NOT APPRECIATED THE FACT THAT THERE IS AN ELEMENT OF BOGUS PURCHASES WITHOUT PROV ING THE ACTUAL RECEIPT OF THE MATERIAL WHICH HAS BEEN USED FOR FURTHER TRADING BY ISSUING BOGUS SALE BILLS BY THE ASSESSEE AS IT CANNOT TANTAMOUNT TO ACTUAL EXPENSES INCURRED TOWARDS PURCHASES THOUGH WITHOUT OBTAINING PURCHASE BILLS FROM THE GE NUINE SUPPLIERS. 2. ON THE FACTS AND CIRCUMSTANCES OF THE CASE, T HE LD. COMMISSIONER OF INCOME TAX (A) OUGHT TO HAVE UPHELD THE ORDER OF THE ASSES SING OFFICER. 3. IT IS, THEREFORE, PRAYED THAT THE ORDER OF TH E LD. COMMISSIONER OF INCOME TAX (A) MAY BE SET- ASIDE AND THAT OF THE ASSESSING OFF ICER BE RESTORED. 2. THIS CASE IS REGARDING INFLATED AND BOGUS PURCHASES . ASSESSEE WAS ISSUED FOUR NOTICES BY THE ITAT BUT IT DID NOT APPEAR BEFORE US . THEREFORE, AFTER HEARING THE LD. D.R. AND ON THE BASIS OF RECORD AVAILABLE W ITH US. WE WOULD LIKE TO DISPOSE OF THIS APPEAL IN THE ABSENCE OF ASSESSEE . 3. IN THIS CASE, A SEARCH WAS CONDUCTED IN THE CASE OF TRICON CONSTRUCTION AHMEDABAD ON 05/12/2015. DURING THE SEARCH IT WAS L EARNT BY THE INVESTIGATION WING THAT THE SAID CONCERN WAS OBTAIN ING BOGUS BILLS FOR MATERIAL/LABOUR. VARIOUS PERSONS WERE INVOLVED IN I SSUANCE OF SUCH BOGUS BILLS. DETAILED POST SEARCH INVESTIGATIONS REVEALED THAT T HERE WERE SEVERAL BOGUS BILLERS WHO HAD BEEN ISSUING THE BILLS WITHOUT SUPP LYING ACTUAL MATERIAL/LABOUR. THESE BOGUS BILLERS HAD ADMITTED DURING THE POST SE ARCH INVESTIGATION THAT THE ITA NO . 647 /AHD/2017 . A.Y. 2012-1 3 3 AMOUNTS WERE WITHDRAWN BY THEM IN CASH ON RECEIPT O F CHEQUE BY M/S. TRICON CONSTRUCTION AND WAS RETURN BACK TO THE SAME AFTER DEDUCTING THEIR SMALL COMMISSION. DURING THE ASSESSMENT PROCEEDINGS THE A.O HAD CALLED FOR VARIOUS DETAILS BASED ON THE INFORMATION RECEIVED F ROM THE INVESTIGATION WING IN RESPECT OF BOGUS BILLERS. THE A.R OF THE APPEL LANT HAS FURNISHED INCOMPLETE DETAILS DURING THE ASSESSMENT PROCEEDINGS. FURTH ER THE A.O HAS HIMSELF BASED ON THE INFORMATION OF THE INVESTIGATION WING HAS CO NDUCTED CERTAIN ENQUIRIES U/S. 133(6) OF THE ACT AND THEREAFTER HAD INFORMED THE RESULTS OF THE ENQUIRIES TO THE APPELLANT IN THE FORM OF SHOW CAUSE NOTICE. HOWEVER, THE APPELLANT HAS FAILED TO SATISFACTORILY PROVE THE GENUINENESS OF T RANSACTIONS BEFORE THE A.O. DURING THE APPELLATE PROCEEDINGS AS WELL THE APPELL ANT HAS NOT BOTHERED TO ATTEND AND DEFEND ITS OWN GROUNDS OF APPEAL AND THU S LD. CIT(A) DISMISSED THE GROUND OF APPEAL. 4. WE HAVE GONE THROUGH THE RELEVANT RECORD AND IMPUGN ED ORDER. SINCE ASSESSEE HAS NOT APPEARED BEFORE US AND REVENUE HAS TAKEN AC TION ON THE BASIS OF SEARCH CONDUCTED BY THE REVENUE AND THEREAFTER INDEPENDENT INVESTIGATION WAS ALSO MADE BY THE LD. A.O. FROM THREE CREDITORS NAMELY SH RI SHAILESH PATEL, SHRI JITENDRA B. CHAVDA AND SHRI A.A. PATEL. THEY COULD NOT PRODUCE ANY BILLS IN SUPPORT OF PURCHASES MADE BY THE APPELLANT. 5. IT IS OBSERVED THAT LD. A.O. HAS MADE AN ADDITION O F RS. 1,26,77,000/- U/S. 40A(3) OF THE ACT. ACCORDING TO THE A.O. APPELLANT HAS FAILED TO FURNISH ANY PROOF WITH REGARD TO GENUINENESS OF THE TRANSACTION S AMOUNTING TO RS. 1,26,77,000/- AND A.O. HAD THAT APPELLANT HAS INFLA TED PURCHASES IN THE ITEMS OF TRADING BUSINESS AND THUS MADE THE ADDITION OF BOGU S PURCHASES TO THE TOTAL INCOME OF THE APPELLANT. IT IS SEEN THAT THE NATURE OF BUSINESS OF APPELLANT AS ITA NO . 647 /AHD/2017 . A.Y. 2012-1 3 4 TRADING OF IRON AND STEEL AND IT IS CLEAR FROM THE ASSESSMENT ORDER THAT APPELLANT WAS NOT THE END USER OF THE PURCHASES MAD E FROM THE BOGUS BILLERS. FINALLY LD. A.O. MADE ADDITION OF RS. 1,26,77,000/- FOR ALL INFLATED PURCHASE. THEREAFTER IN APPEAL LD. CIT(A) RELYING ON THE JUDG MENT OF N.K. PROTEINS LTD. RESTRICTED THE ADDITION TO THE EXTENT OF RS. 31,69, 250/-. 6. WE HAVE GONE THROUGH THE RELEVANT RECORD AND IMPUGN ED ORDER. IN THE CASE OF N.K PROTEINS LTD. (2004) 4 SOT 479 ITAT, AHMEDABAD HAS HELD AND IN SUCH CASES, DISALLOWANCE OF 25% OF TOTAL AMOUNT OF BOGUS PURCHASES CAN MEET THE END OF JUSTICE AND NO SEPARATE ADDITION WAS REQUIRE D IN RESPECT OF PEAK CREDIT IN THE ACCOUNT. THEREFORE, IN OUR CONSIDERED OPINION, LD. CIT(A) HAS PASSED DETAILED AND REASONED ORDER AND SAME DOES NOT REQUI RE ANY KIND OF INTERFERENCE AT OUR END. 7. NOW WE COME TO GROUND NO. 4 FOR CHARGING OF INTERES T U/S. 234A, 234B AND 234C OF THE ACT, SAME ARE MANDATORY AND CONSEQUENTI AL, SO THIS GROUND DOES NOT REQUIRE ANY INTERFERENCE AT OUR END. 8. IN THE RESULT, APPEAL FILED BY THE REVENUE IS DISMI SSED. ORDER PRONOUNCED IN OPEN COURT ON 25 - 03- 2019 SD/- SD/- (PRADIP KUMAR KEDIA) (MAHAVIR PRASAD) ACCOUNTANT MEMBER TRUE COPY JUDICIAL MEMBER AHMEDABAD: DATED 25/03/2019 RAJESH COPY OF THE ORDER FORWARDED TO: - 1. THE APPELLANT. 2. THE RESPONDENT.