Rajdeep Buildcon Pvt. Ltd., Ahmednagar V. Deputy Commissioner of Income-tax,

ITA 686/PUN/2015

• Counselvise Citation: [2017] 126 COUNSELVISE.COM (IT) 7470 (ITAT-PUNE)
• Duration Of Justice: 2 year(s) 3 month(s) 30 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 11-09-2017
• Appeal Filed By: Assessee
• Order Result: Partly Allowed
• Bench Allotted: A
• Next Hearing Date: 11-09-2017
• Assessment Year: 2011-2012
• Appeal Filed On: 12-05-2015
• Result in Favour of: Partly Allowed
• Court: TRIBUNAL
• Department Lawyers: MUKESH JHA
• Keywords: Bogus purchase

Judgement Text

, IN THE INCOME TAX APPELLATE TRIBUNAL PUNE BENCH A, PUNE . . . . , , BEFORE SHRI D.KARUNAKARA RAO, AM AND SHRI VIKAS AWASTHY, JM . / ITA NOS. 685 AND 686/PUN/2015 / ASSESSMENT YEARS : 2010-11 & 2011-12 RAJDEEP BUILDCON PVT. LTD., RAJDEEP HOUSE, SAVEDI, AHMEDNAGAR 414 003 PAN : AAACR8605D . /APPELLANT V/S DCIT, CENTRAL CIRCLE - 2(2 ), PUNE . /RESPONDENT ASSESSEE BY : SHRI NIKHIL PATHAK REVENUE BY : SHRI MUKESH JHA, JCIT / ORDER PER D. KARUNAKARA RAO, AM : THERE ARE TWO APPEALS UNDER CONSIDERATION. BOTH A RE FILED BY THE SAME ASSESSEE FOR TWO DIFFERENT ASSESSMENT YEARS. THEY ARE FILED AGAINST THE COMMON ORDER OF THE CIT(A)-12, PUNE, DATED 04-02-20 15 FOR THE A.YRS. 2010- 11 AND 2011-12 RESPECTIVELY. 2. THE ISSUE RAISED IN BOTH THE APPEALS RELATE TO T HE MANNER OF DEALING WITH THE DISALLOWANCE WITH REFERENCE TO THE BOGUS P URCHASES. REFERRING TO THE ASSESSMENT ORDER 2010-11, LD. COUNSEL FOR THE ASSES SEE SUBMITTED THAT THERE IS AN ALLEGATION AGAINST THE ASSESSEE QUA THE ISSUE OF BOGUS PURCHASES TO THE TUNE OF RS.23,81,956/-. THE BOGUS PURCHASES FOR TH E OTHER A.Y. 2011-12 WORKS OUT TO RS.16,80,830/-. IN BOTH ASSESSMENT YE ARS, THE AO ADDED ENTIRE / DATE OF HEARING : 11.09.2017 / DATE OF PRONOUNCEMENT: 11.09.2017 2 ITA NOS.685 AND 686/PUN/2015 RAJDEEP BUILDCON PVT. LTD. SUCH PURCHASES AS INCOME OF THE ASSESSEE. CIT(A) C ONFIRMED THE SAME IN BOTH THE YEARS. 3. DEVIATING FROM THE GROUNDS RAISED IN THE APPEAL, LD. COUNSEL FOR THE ASSESSEE SUBMITTED THAT THE SAID DISALLOWANCE IN BO TH ASSESSMENT YEARS MAY BE RESTRICTED TO THE GROSS PROFIT RATES OF THE ASSE SSEE. UNDERLYING THE UNFAIRNESS IN MAKING ADDITION OF 100% OF SUCH BOGUS PURCHASES, THAT TO WITHOUT DISTURBING THE SALES ACCOUNT, LD. COUNSEL F OR THE ASSESSEE RELIED ON VARIOUS BINDING DECISIONS AND SUBMITTED THAT MAKING SUCH ADDITIONS IS UNSUSTAINABLE. FOR THIS PROPOSITION, HE RELIED ON THE JUDGEMENT OF BOMBAY HIGH COURT JUDGMENT IN THE CASE OF NIKUNJ EXIMP ENT ERPRISES PVT. LTD. VS. CIT 216 TAXMANN 171 (BOM,) (MAG.). FURTHER, IT IS THE SUBMISSION THAT THE HONBLE HIGH COURTS AND THE TRIBUNALS ARE CONSISTEN TLY CONFIRMING THE GROSS PROFIT ADDITION IN THE EVENT OF SUCH BOGUS PURCHASE S. REFERRING TO THE GROSS PROFIT RATES OF THE ASSESSEE, LD. COUNSEL FOR THE A SSESSEE SUBMITTED THAT THE GROSS PROFIT RATES OF THE ASSESSEE ARE 18.35% AND 2 2.46% FOR THE A.YRS. 2010-11 AND 2011-12 RESPECTIVELY. HE PRAYED FOR RE STRICTING THE DISALLOWANCE TO THE GROSS PROFIT RATES OF THE ASSESSEE. 4. ON HEARING BOTH THE PARTIES, WE FIND THE WAY THE AO MADE ADDITIONS OF ENTIRE BOGUS PURCHASES IS NOT SUSTAINABLE IN LAW. UNDISPUTEDLY THE SALES ACCOUNT STANDS UNDISTURBED BY THE AO. THE BINDING JUDGMENT OF HONBLE HIGH COURT IN THE CASE OF NIKUNJ EXIMP ENTERPRISES PVT. LTD. (SUPRA) IS RELEVANT. THEREFORE, WE CONCUR WITH THE PROPOSITION OF THE LD . COUNSEL FOR THE ASSESSEE THAT FOR BOTH THE YEARS THE AO SHOULD RESTRICT THE DISALLOWANCE TO THE GROSS PROFIT RATES ONLY AS PER THE GROSS PROFIT RATES REP ORTED BY THE ASSESSEE IN ITS BOOKS OF ACCOUNTS. ACCORDINGLY, AO IS DIRECTED TO ADOPT THE DISALLOWANCES TO THE GROSS PROFITS DECLARED BY THE ASSESSEE FOR BOTH THE ASSESSMENT YEARS 3 ITA NOS.685 AND 686/PUN/2015 RAJDEEP BUILDCON PVT. LTD. UNDER CONSIDERATION. AO SHALL GRANT REASONABLE OPP ORTUNITY OF BEARING HARD TO THE ASSESSEE BEFORE ADOPTING THE SAID GROSS PROFIT RATES. THEREFORE, TO THIS EXTENT, WE DISMISS THE GROUNDS OF THE ASSESSEE AND PARTLY ALLOW THE APPEALS FOR BOTH THE A.YRS. 2010-11 AND 2011-12. 5. IN THE RESULT, BOTH THE APPEALS OF THE ASSESSEE ARE PARTLY ALLOWED. ORDER PRONOUNCED IN THE OPEN COURT ON THIS 11 TH DAY OF SEPTEMBER, 2017. SD/- SD/- (VIKAS AWASTHY) (D. KARUNAKARA RAO) /JUDICIAL MEMBER / ACCOUNTANT MEMBER PUNE; DATED : 11 TH SEPTEMBER, 2017. COPY OF THE ORDER FORWARDED TO : / BY ORDER , // TRUE COPY // //TRUE COPY// SENIOR PRIVATE SECRETARY , / ITAT, PUNE 1. / THE APPELLANT 2. / THE RESPONDENT 3. THE CIT (A) - 12, PUNE 4. CIT - 12, PUNE 5. , , A BENCH PUNE; 6. GUARD FILE.