ACIT, Circle- 28(1), New Delhi V. Mohit Saraogi, New Delhi

ITA 7381/DEL/2017

• Counselvise Citation: [2021] 108 COUNSELVISE.COM (IT) 8295 (ITAT-DELHI)
• Duration Of Justice: 3 year(s) 3 month(s) 18 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 26-03-2021
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: E
• Assessment Year: 2014-2015
• Appeal Filed On: 08-12-2017
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: AMANPREET
• Assessee Lawyers: BHUPENDER JIT KUMAR
• Keywords: Bogus purchase

Judgement Text

1 | P A GE IN THE INCOME TAX APPELLATE TRIBUNAL DELHI E BENCH: NEW DELHI (THROUGH VIDEO CONFERENCING ) BEFORE SHRI KUL BHARAT, JUDICIAL MEMBER AND SHRI PRASHANT MAHARISHI, ACCOUNTANT MEMBER ITA NO.7381/DEL/2017 ASSESSMENT YEAR : 2014-15 ACIT, CIRCLE-28(1), NEW DELHI-110002. VS SH.MOHIT SARAOGI, C-676, NEW FRIENDS COLONY, NEW DELHI-110065. PAN-AOFPS2703D APPELLANT RESPONDENT APPELLANT BY MS. AMAN PREET, SR.DR RESPONDENT BY SH.BHUPENDER JIT KUMAR, ADV. DATE OF HEARING 22.0 3 .2021 DATE OF PRONOUNCEMENT 2 6 .03.2021 PER KUL BHARAT, JM : THIS APPEAL BY THE REVENUE IS DIRECTED AGAINST THE ORDER OF LD. CIT(A)-31, NEW DELHI DATED 20.09.2017 PERTAINING TO ASSESSMENT YEAR 2014-15. THE REVENUE HAS RAISED FOLLOWING GROUNDS OF APPEAL:- 1. ON THE FACTS AND CIRCUMSTANCES OF THE CASE, THE LD.CIT(A) HAS ERRED IN LAW ON FACTS IN DELETING ADDITION OF RS.2, 04,36,269/- MADE BY THE ASSESSING OFFICER ON ACCOUNT OF BOGUS PURCHASES WITHOUT APPRECIATING THE FACTS THAT THE PHYSICAL VERIFICATI ON OF THE ADDRESS OF THE REFERRED THREE CREDITORS HAS REVEALED THAT THEI R ADDRESSES WERE LOCKED AND UNINHABITED FOR PREVIOUS MANY YEARS. 2. ON THE FACTS AND CIRCUMSTANCES OF THE CASE, THE LD.CIT(A) HAS ERRED IN LAW AND ON FACTS BY OVERLOOKING THE FACT T HAT THE ABOVE THREE PARTIES HAVE PURCHASED THE RAW MATERIALS FROM THE S AME PARTIES WHO ALSO DO NOT EXIST ON THEIR DECLARED BUSINESS PREMIS E. ITA NO. 7381/DEL/2017 PAGE | 2 3. ON THE FACTS AND CIRCUMSTANCES OF THE CASE, THE LD.CIT(A) HAS ERRED IN LAW AND ON FACTS BY OVERLOOKING THE FACT T HAT THE REFERRED THREE CREDITORS HAVING TRADE TURNOVER IN CRORES HAVE EMPL OYED ONLY ONE EMPLOYEE AND EXIST WITHOUT MAINTAINING ANY GODOWN O R WITHOUT HAVING ANY CONTRACTUAL TRANSPORTER TO TRANSFER GOODS TO PU RCHASERS. 4. ON THE FACTS AND CIRCUMSTANCES OF THE CASE, THE LD.CIT(A) HAS ERRED IN LAW AND ON FACTS BY OVERLOOKING THE FACT T HAT THE REFERRED THREE CREDITORS ARE RUNNING THEIR BUSINESS FROM SAME PREM ISE I.E. D-193, GALI NO.8, LAXMI NAGAR, DELHI AND ARE RELATED TO EA CH OTHER. MS. POOJA JAIN, PROPRIETOR OF M/S. POOJA FASHIONS AND SH.PANK AJ JAIN, DIRECTOR OF M/S. EXPO FABS PVT.LTD. ARE CHILDREN OF SMT. HEERAM ANI JAIN. ALL FAMILY MEMBERS ARE RUNNING THEIR BUSINESS WITH DIFF ERENT ENTITIES FROM THE SAME PLACE. 2. THE ONLY EFFECTIVE GROUND RAISED BY THE REVENUE IS AGAINST THE DELETION OF ADDITION OF RS.2,04,36,629/- MADE ON AC COUNT OF BOGUS PURCHASES. 3. FACTS GIVING RISE TO THE PRESENT APPEAL ARE THAT THE CASE OF THE ASSESSEE WAS SELECTED FOR COMPULSORY SCRUTINY THROU GH CASS. THE ASSESSING OFFICER DURING THE COURSE OF ASSESSMENT P ROCEEDINGS CALLED UPON THE ASSESSEE TO GIVE DETAILS OF SUNDRY CREDITORS, PURCHASES EXCEEDING SUM OF RS.50,000/- AND DETAILS OF PURCHASES ABOVE RS.01 LAKH MADE DURING THE YEAR. IN RESPONSE THERETO, THE ASSESSEE FILED REPL Y FURNISHING THE DETAILS AS CALLED FOR. WHILE FRAMING THE ASSESSMENT, THE ASSE SSING OFFICER DOUBTED THE GENUINENESS OF PURCHASES MADE BY THE ASSESSEE F ROM THREE PARTIES NAMELY M/S. HERAMANI IMPACTS; M/S. POOJA FAS HIONS & M/S. P. S. ITA NO. 7381/DEL/2017 PAGE | 3 EXPO FABRIC PVT.LTD. AFTER EXAMINATION OF DETAILS FILED BY TWO PARTIES, THE ASSESSING OFFICER DISALLOWED THE PURCHASES MADE ON THE FOLLOWING GROUNDS:- (I) ALL THE THREE PARTIES ARE RUNNING THEIR BUSINE SS FROM D-193, GALI NO.8, LAXMI NAGAR, DELHI-110092. HOWEVER, THE PREM ISE IS CLOSED FOR A LONG TIME AS IS EVIDENT FROM THE ITI REPORT AS WE LL AS STATEMENT RECORDED ON OATH OF SMT. HEERAMANI JAIN AND SHRI PA NKAJ JAIN. (II) ALL THE THREE PARTIES ARE RELATED TO EACH OTHE R. MS. POOJA JAIN, PROPRIETOR OF M/S. POOJA FASHIONS AND SHRI PANKAJ J AIN, DIRECTOR OF M/S EXPO FABS PVT.LTD. ARE CHILDREN OF SMT. HEERAMA NI JAIN. ALL FAMILY MEMBERS ARE RUNNING THEIR BUSINESS WITH DIFFERENT E NTITIES FROM THE SAME PLACE. (III) ALL ARE RUNNING THEIR BUSINESS FROM RESIDENTI AL PREMISES I.E. 73, VIJAY LAXMI APARTMENT, INDRAPRASTHA EXTENSION, PATP ARGANJ, DELHI. (IV) BOTH SMT. HEERAMANI JAIN AND SHRI PANKAJ JAIN RUN THEIR BUSINESS THROUGH PHONE. 4. HENCE, THE ASSESSING OFFICER ASSESSED THE INCOME AT RS. 2,64,20,900/- AGAINST THE RETURNED INCOME OF RS.59, 84,270/-. AGGRIEVED ASSESSEE PREFERRED THE APPEAL WHO AFTER CONSIDERING THE MATERIAL AVAILABLE ON RECORD AND EXAMINING THE ASSESSMENT FRAMED BY TH E ASSESSING OFFICER DELETED THE ADDITION. AGGRIEVED AGAINST THE DELETI ON, THE REVENUE IS IN APPEAL BEFORE US. 5. THE LD. DR VEHEMENTLY ARGUED THAT THE CIT(A) WAS NOT JUSTIFIED IN DELETING THE ADDITION AS THE ASSESSING OFFICER HAS GIVEN A CATEGORICAL FINDING THAT THE PURCHASES MADE BY THE ASSESSEE FROM THREE PARTIES COULD NOT BE PROVED BY FURNISHING THE MATERIAL EVIDENCES. LD. DR FURTHER SUBMITTED THAT THE NOTICES WERE SERVED UPON THREE PARTIES AN D INQUIRY WAS MADE BY ITA NO. 7381/DEL/2017 PAGE | 4 THE INSPECTOR WHO REPORTED THAT ON THE GIVEN ADDRES S, NO ACTIVITY WAS BEING CARRIED OUT AS SUCH THE PREMISES WAS LOCKED. LD DR . FURTHER SUBMITTED THAT IT WAS INCUMBENT UPON THE ASSESSEE TO PROVE TH E PURCHASES. THE ASSESSEE HAS MISERABLY FAILED TO DISPEL THE SUSPICI ON OF THE ASSESSING OFFICER THAT THE PURCHASES WERE BOGUS. LD. DR FURT HER SUBMITTED THAT THE LD. CIT(A) HAS FAILED TO TAKE NOTE OF THE FACT THAT PARTIES WERE NOT HAVING SUFFICIENT FUNDS TO MAKE PURCHASES. THEREFORE, THE ASSESSING OFFICER WAS JUSTIFIED IN MAKING THE DISALLOWANCE AND ADDING THE SAME IN THE INCOME OF THE ASSESSEE. 6. PER CONTRA, THE LD. COUNSEL FOR THE ASSESSEE OPP OSED THESE SUBMISSIONS AND SUPPORTED THE ORDER OF THE LD. CIT( A). LD. COUNSEL FOR THE ASSESSEE FURTHER TOOK US THROUGH THE ASSESSMENT ORDER AS WELL AS IMPUGNED ORDER TO BUTTRESS THE CONTENTION THAT ASSE SSEE HAD FURNISHED EVERY DETAILS TO THE ASSESSING OFFICER. FURTHER HE SUBMITTED THAT THE ASSESSING OFFICER HAS NOT BROUGHT ANY MATERIAL ON R ECORD THAT THESE PURCHASES WERE BOGUS. MERELY A BALD OBSERVATION HA S BEEN MADE REGARDING THE PURCHASES. HE FURTHER SUBMITTED THAT THE ASSES SING OFFICER HAS NOT DOUBTED THE VERACITY OF THE ACCOUNTS AND THE ACCOUN TS HAVE NOT BEEN REJECTED. THE ASSESSING OFFICER HAS ALSO NOT DOUBT ED ABOUT THE SALES. THE FIGURES OF SALES MADE BY THE ASSESSEE IS NOT DISTU RBED. UNDER THESE FACTS AND CIRCUMSTANCES, THE LD. CIT(A) WAS JUSTIFIED IN DELETING THE ADDITION. 7. WE HAVE HEARD THE RIVAL SUBMISSIONS AND PERUSED THE MATERIAL ON RECORD AND GONE THOUGHT THE ORDERS OF THE AUTHORITI ES BELOW. WE FIND THAT ITA NO. 7381/DEL/2017 PAGE | 5 THE ASSESSING OFFICER HAS DISALLOWED THE PURCHASES MADE FROM M/S. HEERAMANI IMPEX AMOUNTING TO RS.28,40,083/-; PURCHA SES MADE FROM M/S. P.S. EXPO FABS PVT.LTD. AMOUNTING TO RS.1,37,1 9,629/- AND PURCHASES MADE FROM M/S. HEERAMANI IMPEX AMOUNTING TO RS.38,76,917/-. HENCE, OUT OF THE TOTAL PURCHASES AS OBSERVED BY THE CIT(A) OF RS.11,07,31,239/-, ONLY PURCHASES OF THE VALUE OF RS.2,04,36,629/- WAS DOUBTED BY THE ASSESSING OFFIC ER. LD. CIT(A) DELETED THE DISALLOWANCE BY GIVING FINDING ON FACTS AS UN DER:- 4.3.6. THE REASONS FOR SELECTION OF THE CASE IN S CRUTINY AS INFERABLE FROM ASSESSING OFFICERS RECORDS ARE (I) LARGE COMMISSION EXPENSES AND LOW NET PROFIT (II) LARGE OTHER EXPENSES CLAIM IN P&L ACCOUNT (III) MISMATCH IN AMOUNT PAID TO RELATED PARTIES U /S 40(A)(2)(B). I FIND THAT NO ADVERSE INFERENCE HAS BEEN DRAWN BY THE ASSESSING OFFICER SPECIFICALLY WITH REGARD TO THE A BOVE THREE PARAMETERS. 4.3.7. I FIND THAT THE APPELLANT HAD MADE PURC HASES OF RS.11,07,31,239/-. OUT OF THESE, PURCHASES OF THE VALUE OF RS.2,04,36,629/- HAVE BEEN DOUBTED BY THE AO, FOR R EASONS WHICH DO NOT STAND JUDICIAL SCRUTINY. THE AFORESAID THREE PERSONS HAVE DULY CONFIRMED THE SALES. THE APPELLANT WHO IS THE BUYER HAS ALSO CONFIRMED THE P URCHASES. PAYMENTS HAVE BEEN MADE BY ACCOUNT PAYEE CHEQUES. THE SELLERS HAVE SOLD GOOD TO SEVERAL BUYERS AND RECEIVED CHEQU ES IN THEIR RESPECTIVE BANK ACCOUNTS. THE EVIDENCE OF DISPATCH OF GOODS AND RECEIPT OF GOODS HAS BEEN PROVED. MOREOVER, THE AS SESSING OFFICER HAS NOT DISTURBED THE QUANTITATIVE TALLY OF SALES MADE BY THE APPELLANT. IF SALES MADE ARE GENUINE THEN SO ARE THE PURCHASES CO RRESPONDING TO THE SAME, WHICH TOO HAVE TAKEN PLACE, ACTUALLY. ITA NO. 7381/DEL/2017 PAGE | 6 8. THE ABOVE FINDING ON FACTS IS NOT REBUTTED BY TH E REVENUE BY PLACING COGENT EVIDENCE. THE ASSESSING OFFICER HAS NOT DOU BTED THE BOOK RESULTS. MOREOVER, THE ASSESSING OFFICER HAS NOT GIVEN ANY A DVERSE FINDING REGARDING THE ISSUES FOR WHICH THE CASE WAS SELECTED FOR SCRU TINY. FURTHER, THE ASSESSING OFFICER HAS NOT DISTURBED THE SALE. THER E IS NO WHISPER ABOUT OUT OF BOOK SALES MADE BY THE ASSESSEE. WE, THEREF ORE, DO NOT SEE ANY REASON TO INTERFERE IN THE FINDING OF THE LD.CIT(A) . THE GROUNDS RAISED BY THE REVENUE ARE HENCE, REJECTED. 9. IN THE RESULT, THE APPEAL OF THE REVENUE IS DIS MISSED. ORDER PRONOUNCED IN THE OPEN COURT DURING THE COURS E OF VIRTUAL HEARING ON 26 TH MARCH 2021. SD/- SD/- (PRASHANT MAHARISHI) (KUL BHARAT) ACCOUNTANT MEMBER JUDICI AL MEMBER * AMIT KUMAR * COPY FORWARDED TO: 1. APPELLANT 2. RESPONDENT 3. CIT 4. CIT(APPEALS) 5. DR: ITAT ASSISTANT REGISTRAR ITAT, NEW DELHI