M/s. Reliance Footwear Pvt. Ltd., New Delhi V. ITO, New Delhi

ITA 6705/DEL/2016

• Counselvise Citation: [2018] 126 COUNSELVISE.COM (IT) 3302 (ITAT-DELHI)
• Duration Of Justice: 1 year(s) 2 month(s) 9 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 08-03-2018
• Appeal Filed By: Assessee
• Order Result: Partly Allowed
• Bench Allotted: F
• Assessment Year: 2012-2013
• Appeal Filed On: 30-12-2016
• Result in Favour of: Partly Allowed
• Court: TRIBUNAL
• Department Lawyers: RAVIKANT GUPTA
• Assessee Lawyers: DEVESH PAREKH
• Keywords: Bogus purchase

Judgement Text

, , , , , ,, , INCOME-TAX APPELLATE TRIBUNAL F BENCH, NEW DELHI. , , BEFORE SH. RAJENDRA, ACCOUNTANT M EMBER & BINA PILLAI,JUDICIAL MEMBER ./I.T.A. NO.6705/DEL/2016, /ASSESSMENT YEAR:2012-13 M/S.RELIANCE FOOTWARE PVT.LTD. 69/6A NAJAFGARH ROAD, NEW DELHI- 110015 PAN:AAACR 4434L VS. ITO 21(2) CR BUILIDING, NEW DELHI APPELLANT/ RESPONDENT / REVENUE BY : SH. RAVIKANT GUPTA -DR ASSESSEE BY : SH.DEVESH PAREKH - CA / DATE OF HEARING: 08.03.2018 / DATE OF PRONOUNCEMENT: 08.03.2018. ,1961 254(1) ORDER U/S.254(1)OF THE INCOME-TAX ACT,1961(ACT) , / PER RAJENDRA, AM - CHALLENGING THE ORDER,DATED 10/10/2016, OF THE CIT (A)-7, NEW DELHI, THE ASSESSEE HAS FILED THE PRESEN T APPEAL.ASSESSEE-COMPANY,ENGAGED IN MANUFACTURING AN D SALE OF FOOTWEARS,FILED ITS RETURN OF INCOME ON 28/09/2012,DECLARING INCOME OF RS. 23.65 LAKHS. THE ASSESSING OFFICER (AO) COMPLETED THE ASSESSMENT, U/S.143(3)OF THE ACT,ON 25/03/2015,DETERMINING THE INCOME OF ASSESSEE AT RS.98.85 LAKHS. 2. EFFECTIVE GROUND OF APPEAL IS ABOUT CONFIRMING THE ADDITION OF RS.7.56 LAKHS ON ACCOUNT OF DIFFERENCE BETWEEN THE FIGURES OF PURCHASE REFLECTED IN THE AU DITED FINAL ACCOUNT AND IN VAT RETURNS FILED BY THE ASSESSEE. DURING THE ASSESSMENT PROCEEDINGS,THE AO DIRECTED THE ASSESSEE TO FURNISH COPIES OF VAT/SALE S TAX RETURNS.AS PER THE AO, THE ASSESSEE,VIDE ITS LE TTER DATED 23/01/2015 FURNISHED RECONCILIATION OF S ALES ALONG WITH THE COPIES OF VAT RETURNS. HE FURTHER DI RECTED THE ASSESSEE TO FURNISH THE RECONCILIATION O F PURCHASES.AFTER CONSIDERING THE SAID STATEMENTS,THE AO HELD THAT SUBMISSIONS MADE BY IT WERE NOT SATISFACTORY,THAT UNDER VAT LAWS EVEN IF AN ITEM HA D NOT BEEN SHOWN UNDER PURCHASES BUT SHOWN UNDER ANY OTHER HEAD OF EXPENSES SAME WAS TO BE SHOWN IN THE RETURNS,THAT THE ASSESSEE HAD CLAIMED THAT THER E WAS CLERICAL ERROR,THAT IT WAS NOT ABLE TO RECONCIL E THE FACTS.ACCORDINGLY,THE AGGREGATE DIFFERENCE OF RS.7, 65,537/- WAS TREATED AS BOGUS PURCHASES AND WAS ADD ED TO THE INCOME OF THE ASSESSEE. 3. AGGRIEVED BY THE ORDER OF THE AO, THE ASSESSEE PREF ERRED AN APPEAL BEFORE THE FIRST APPELLATE AUTHORIT Y (FAA)AND MADE SUBMISSIONS.AFTER CONSIDERING THE AVA ILABLE MATERIAL, THE FAA HELD THAT THE ASSESSEE HAD ARGUED THAT SOME PURCHASES WERE SHOWN IN CONSUMABLE ACCOUNTS, THAT THE ARGUMENT WAS LIABLE TO BE REJECTED, THAT THE VAT ASSESSMENT ORDER SHOWED THAT ALL PURCHASES HAD TO BE DISCLOSED IN THE QUARTERLY RETURNS,THAT NO RECONCILIATION OF IMPUGNED DIFFEREN CE WAS AVAILABLE IN THE VAT ASSESSMENT ORDERS, THAT IT WAS NOT UNDERSTOOD AS TO HOW THE PURCHASE FIGURES C OULD BE DIFFERENT IN THE RETURNS FILED BEFORE TWO AUTHORITIES,THAT THE ASSESSEE HAS NOT FURNISHED ANY SATISFACTORY EXPLANATION ON THE DIFFERENCE IN PURC HASE, THAT THE AO WERE JUSTIFIED IN MAKING THE ADDITION. 4. DURING THE COURSE OF HEARING BEFORE US, THE AUTHORI SED REPRESENTATIVE (AR) STATED THAT THE SALES TAX AUTHORITIES HAD ACCEPTED THE RESULTS OF THE ASSESSE E,THAT THE AO DID NOT FIND ANY DEFECT IN THE RECONC ILIA - TION,THAT THERE WERE INADVERTENT CLERICAL MISTAKE O N PART OF THE ASSESSEE, THAT THE MISTAKE WAS DISCOV ERED BY IT AT THE TIME OF AUDIT OF THE ACCOUNTS,THAT ASS ESSEE COULD NOT REVISED THE VAT RETURNS, THAT THE R ETURNS FILED WITH VAT AUTHORITIES COULD HAVE BEEN REVISED WITHIN THE PERIOD OF THREE MONTHS, THAT THE TIME PE RIOD FOR REVISING THE RETURN SAID ALREADY EXPIRED,THAT P URCHASE AMOUNTING RS. 2.05 LAKHS WAS BOOKED BY THE ASSESSEE UNDER THE HEAD CONSUMABLE, THAT AT THE TIM E OF STATUTORY AUDIT THE AUDITORS SUGGESTED THAT SA ME SHOULD HAVE BEEN BOOKED UNDER THE HEAD PURCHASES,TH AT AS PER THE ADVICE OF THE AUDITOR THE ASSESSEE SHIFTED THE EXPENSES OF RS. 5 LAKHS BOOKED UNDER TH E HEAD CONSUMABLE TO THE HEAD PURCHASES, THAT THE ASSESSEE HAD FILED LEDGER ACCOUNTS, THAT SAME WERE NOT CONSIDERED BY THE AO OR THE F A. HE REFERRED TO PAGES 75 AND 76 OF THE PAPER BOOK (LETTER DATED 16/ 3/2015 ADDRESSED TO THE AO)AND STATED THAT NON- CONSIDERATION OF THE LEDGER ACCOUNT RESULTED IN ADD ITION UNDER THE HEAD BOGUS PURCHASES. THE DEPARTMENTAL REPRESENTATIVE (DR) SUPPORTED THE ORDER OF THE FAA AND STATED THAT ASSESSEE HAD NOT EXPLAINED AS TO HOW THE CLERICAL ERROR HAD OCCURRED , THAT IT HAD NOT RECONCILE THE DIFFERENCE NOTED DO WN BY THE AO. 5. WE HAVE HEARD THE RIVAL SUBMISSIONS AND PERUSED THE MATERIAL BEFORE US.WE FIND THAT DURING THE ASSESSMENT PROCEEDINGS,THE AO HAD DIRECTED THE ASSE SSEE TO RECONCILE THE PURCHASES MADE BY IT DURING T HE YEAR UNDER CONSIDERATION, THAT HE FOUND DISCREPANCY IN THE RETURNS FILED BEFORE THE SALES TAX AUTHORIT IES AND THE INCOME TAX DEPARTMENT, THAT HE DIRECTED THE ASS ESSEE TO FILE RECONCILIATION, THAT THE ASSESSEE FIL ED LEDGER ACCOUNTS OF SOME PARTIES AND TRIED TO RECONC ILE THE DIFFERENCE, THAT THE AO MADE AN ADDITION OF RS. 7.65 LAKHS TO THE INCOME OF THE ASSESSEE TREATING T HE ALLEGED UN-RECONCILED PURCHASES AS NONGENUINE, T HAT THE FAA CONFIRMED THE ORDER OF THE AO.WE FIND THAT THE ASSESSEE HAD ALREADY FILED VAT RETURN AND HAD DISCLOSED THE DIFFERENCE IN THE RETURN,THAT THE DIS PUTE ABOUT CONSUMABLES AND PURCHASES WAS NOT CONSIDERED BY THE AO/FAA.IT IS A FACT THAT THE LEDG ER ACCOUNTS WERE NOT REFERRED TO BY THE AO/FAA WHILE DECIDING THE ISSUE. WE ARE OF THE OPINION THA T THE MATTER NEEDS FURTHER VERIFICATION. THEREFORE, IN THE INTEREST OF JUSTICE, WE ARE LIMITING THAT THE ISSUE TO THE FILE OF THE AO FOR FRESH ADJUDICATION. HE I S DIRECTED TO AFFORD A REASONABLE OPPORTUNITY INTO THE ASSESSE E AND CONSIDER DOCUMENTS PRODUCED BEFORE US.EFFECTI VE GROUND OF APPEAL IS DECIDED IN FAVOUR OF THE ASSESS EE,IN PART. AS A RESULT,APPEAL FILE D BY THE ASSESSEE STANDS PARTLY ALLOWED. ORDER PRONOUNCED IN THE OPEN COURT ON : 08.03.2018 . SD/- SD/- (BEENA PILLAI) (RAJENDRA) / JUDICIAL MEMBER / ACCOUNTANT MEMBER NEW DELHI. /DATED : 08 TH MARCH, 2018 . *MEHTA* SR. P.S. / COPY OF THE ORDER FORWARDED TO :- 1. APPELLANT / 2. RESPONDENT / 3. THE CONCERNED CIT(A)/ , 4. THE CONCERNED CIT / 5. DR F BENCH, ITAT, NEW DELHI / , , . . 6. GUARD FILE/ //TRUE COPY// / BY ORDER, / DY./ASST. REGISTRAR ,/ITAT, NEW DELHI.