Vithaldas and Company (sicne Dissolve), Hyd, Hyderabad V. DCIT, Circle-6(1), Hyderabad, Hyderabad

ITA 756/Hyd/2017

• Counselvise Citation: [2021] 107 COUNSELVISE.COM (IT) 8449 (ITAT-HYDERABAD)
• Duration Of Justice: 4 year(s) 3 month(s) 16 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 18-08-2021
• Appeal Filed By: Assessee
• Order Result: Partly Allowed
• Bench Allotted: DB-A
• Assessment Year: 2008-2009
• Appeal Filed On: 02-05-2017
• Result in Favour of: Partly Allowed
• Court: TRIBUNAL
• Department Lawyers: M NARMADA
• Assessee Lawyers: VINAY KUMAR KABRA
• Keywords: Reopening of assessment; Bogus purchase; Business income; Search and seizure; Tangible material; Accommodation entries
• Section: 147; 148

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL HYDERABAD BENCHES A : HYDERABAD (THROUGH VIDEO CONFERENCE) BEFORE SHRI S.S.GODARA, JUDICIAL MEMBER AND SHRI LAXMI PRASAD SAHU, ACCOUNTANT MEMBER I.T.A. NOS. 755, 756 & 757/HYD/2017 ASSESSMENT YEARS: 2007-08, 2008-09 & 2009-10 VITHALDAS & CO., (SINCE DISSOLVED) HYDERABAD [PAN: AACFV7758C] VS DCIT, CIRCLE-6(1), HYDERABAD (APPELLANT) (RESPONDENT) FOR ASSESSEE : SHRI VINAY KUMAR KABRA, AR FOR REVENUE : SMT. M.NARMADA, DR DATE OF HEARING : 24-06-2021 DATE OF PRONOUNCEMENT : 18-08-2021 O R D E R PER S.S.GODARA, J.M. : THESE THREE ASSESSEES APPEALS FOR AYS.2007-08, 200 8-09 & 2009-10 ARISE FROM THE CIT(A)-6, HYDERABADS ORDER (S) DATED 10-02-2017 PASSED IN CASE NOS.0040, 0039 & 0037/201 5-16/ CIT(A)-6/2016-17, INVOLVING PROCEEDINGS U/S.143(3) R.W.S.147 OF THE INCOME TAX ACT, 1961 [IN SHORT, THE ACT]. HEARD BOTH THE PARTIES. CASE FILES PERUSED. 2. THE ASSESSEE HAS RAISED THE FOLLOWING SUBSTANTIVE GROUNDS IN ITS FIRST AND FOREMOST APPEAL ITA NO.755/HYD/2017: ITA NOS. 755, 756 & 757/HYD/2017 :- 2 -: 1.THE ORDER OF THE COMMISSIONER OF INCOME TAX (APP EALS) - VI, HYDERABAD DT.10.02.2017 TO THE EXTENT TO WHICH IT U PHELD THE ADDITION OF RS.9,04,500/- IS CONTRARY TO LAW AND FA CTS. 2.THE COMMISSIONER OF INCOME TAX (APPEALS) SHOULD H AVE ACCEPTED THE CONTENTION THAT REOPENING OF THE ASSESSMENT IS ILLEGAL AND THAT THE SAID ASSESSMENT IS REOPENED WITHOUT THE MANDATORY C ONDITIONS BEING SATISFIED AS SUCH THE APPELLANT CONTENDS THAT THE N OTICE ISSUED U/S 147 AND ALSO THE CONSEQUENTIAL ASSESSMENT ORDER ARE ILLEGAL AND BAD IN LAW. 3.THE APPELLANT CONTENDS THAT NO BOGUS PURCHASES WE RE MADE BY IT AND THE ALLEGATION THAT IT HAS SHOWED BOGUS PURCHAS ES TO THE EXTENT OF RS.9,04,500/- IS ERRONEOUS AND IS HEREBY DENIED. 4.THE APPELLANT CONTENDS THAT THE DISALLOWANCE OF P URCHASES OF RS.9,04,500/- FROM PRIME STAR TREATING IT AS BOGUS IS UNSUPPORTABLE IN LAW AND IS WITHOUT ANY BASIS. 5.IT IS CONTENDED THAT THE STATEMENTS STATED TO HAV E BEEN MADE BY ONE BHANWARLAL JAIN (ALIAS RATANLAL MANAKCHAND JAIN ) AND SHREYANSH LABCHAND JAIN DO NOT IN ANY WAY SUPPORT T HE CONTENTION OF THE ASSESSING OFFICER THAT THE APPELLANT MADE AN Y BOGUS PURCHASES. 6.THE APPELLANT CONTENDS THAT IN ANY EVENT THE STAT EMENTS OF THESE TWO PERSONS CANNOT BE LOOKED INTO AS THE APPELLANT DID NOT GET AN OPPORTUNITY TO CROSS EXAMINE THESE WITNESS WHICH WA S REQUESTED BY THE APPELLANT. 7.THE LEARNED COMMISSIONER FAILED TO NOTICE THAT TH E APPELLANT FILED AFFIDAVITS DT.19-02-2015 FROM SHREYANSH LABCHAND JA IN, THE CONTENTS OF WHICH SUBSTANTIATE THE APPELLANT'S PLEA THAT THE PURCHASES ARE GENUINE AND NO BOGUS PURCHASES WERE M ADE BY IT. IT IS THEREFORE, CONTENDED THAT THE ADDITION OF SUM OF RS .9,04,500/- IS ERRONEOUS AND DESERVES TO BE DELETED. 8.WITHOUT PREJUDICE IT IS CONTENDED THAT EVEN IF AN Y ADDITION IS CALLED FOR IT CANNOT EXCEED THE PROFIT MARGIN OF 8% ON THE ALLEGED BOGUS PURCHASES. 9.THE APPELLANT CRAVES LEAVE TO ADD TO, AMEND OR AL TER ANY OF THE AFORESAID GROUNDS AS THE OCCASION MAY REQUIRE. 10.FOR THESE AND OTHER GROUNDS THAT WILL BE SUBMITT ED AT THE TIME OF HEARING OF APPEAL, IT IS PRAYED THAT THE REOPENING OF ASSESSMENT MAY BE CANCELLED AS ILLEGAL AND THE ADDITION OF RS.9,04 ,500/- MADE BE DELETED. 3. IT FURTHER EMERGES THAT THE ASSESSEE WHICH APPELLANTS PLEADINGS ARE NO DIFFERENT IN LATTER TWIN APPEALS ITA NOS.756 & ITA NOS. 755, 756 & 757/HYD/2017 :- 3 -: 757/HYD/2017 AS WELL THE ONLY DISTINCTION THEREIN IS THAT ALL THE ALLEGED BOGUS PURCHASES AMOUNTS INVOLVED ARE OF RS.20,05,500/- AND RS.25,48,900/-; RESPECTIVELY. WE THEREFORE PROPOSE TO DECIDE ALL THE INSTANT APPEALS VIDE INSTANT COMMON ADJUDICATION. 4. RELEVANT IDENTICAL FACTS INVOLVED IN ALL THE THREE IN STANT APPEALS ARE IN A VERY NARROW COMPRESS. THE ASSESSIN G AUTHORITY(IES) HEREIN HAD RECEIVED INFORMATION FROM TH E DEPARTMENTS INVESTIGATION WING, MUMBAI THAT THE ASSESSE E HAD SOURCED ITS PURCHASES INVOLVING VARYING SUMS (SU PRA) FROM M/S.BHANWARLAL JAIN GROUP CONCERNS NAMELY M/S.PRIME STAR IN THESE THREE ASSESSMENT YEARS. AND THAT THE DEPARTMENT HAD CARRIED OUT A SEARCH AND SEIZURE OPERATION IN THE SAID GROUP ON 03-10-2013 WHEREIN ITS AUTHORISED PERSON(S) HAD ADM ITTED TO HAVE BEEN PROVIDING BOGUS SALES ENTRIES. THIS MADE TH E ASSESSING OFFICER TO TAKE RECOURSE TO SECTION 148 AND 1 47 MECHANISM CULMINATING IN THE IMPUGNED BOGUS PURCHASES DISALLOWANCES AFFIRMED UPTO THE CIT(A)S ORDER(S) UND ER CHALLENGE. 5. LEARNED COUNSELS FIRST AND FOREMOST VEHEMENT CONTENTION SEEKS TO QUASH THE IMPUGNED REOPENING WITHOU T RECORDING THE REASONS BASED ON TANGIBLE MATERIAL WHIC H COULD EVEN INDICATE ASSESSEES TAXABLE INCOME TO HAVE DECLAR ED ASSESSMENT. WE FIND NO MERIT IN THE INSTANT ARGUMENT IN VIEW OF THE ASSESSING OFFICERS AS WELL AS THE CIT(A)S RE SPECTIVE DETAILED DISCUSSIONS JUSTIFYING THE IMPUGNED RE-OPENIN G(S) BASED ON THE INVESTIGATION WING, MUMBAIS INFORMATION PINPOINTING THE SPECIFIC INPUTS IN SEARCH PROCEEDINGS INCLUDING ITA NOS. 755, 756 & 757/HYD/2017 :- 4 -: M/S.BHANWARLAL JAIN GROUP AUTHORISED PERSONS STATEMENT (S) TO HAVE BEEN PROVIDING BOGUS ACCOMMODATION ENTRIES. WE THEREFORE HOLD THAT THE ASSESSING OFFICER HAD RIGHTLY INITIATED THE IMPUGNED RE-OPENING PROCESS IN ALL THESE THREE CAS ES. THE ASSESSEE FAILS IN ITS IDENTICAL FIRST AND FOREMOST GRO UND THEREFORE. 6. NEXT COMES EQUALLY IMPORTANT ASPECT OF QUANTIFICATIO N OF THE IMPUGNED BOGUS PURCHASES DISALLOWANCES/ADDITIONS OF RS.9,04,500/-, 20,05,500/- AND RS.25,48,900/-; RESP ECTIVELY. THE ASSESSEES ARGUMENT BEFORE US IS THAT ONCE ITS CORRESPONDING SALES HAVE BEEN ASSESSED AS BUSINESS INCOME, DISALLOWANCE OF THE IMPUGNED PURCHASES WOULD RESULT I N ABNORMALLY HIGH PROFIT RATE WHICH IS NOT POSSIBLE IN T HE REGULAR COURSE OF BUSINESS IN JEWELLERY, GOLD, SILVER ORNAM ENTS AND SOME PRECIOUS STONES. THIS CLINCHING ASPECT HAS GONE UN- REBUTTED FROM THE DEPARTMENTAL SIDE WHICH HAS PRIMARILY RELIED ON THE INVESTIGATION WING INFORMATION FURNISHED TO THE ASSESSING OFFICER HEREIN. 7. WE HAVE CONSIDERED THE FOREGOING RIVAL SUBMISSION S AND FIND NO REASON TO DELETE THE IMPUGNED BOGUS PURCHASE S DISALLOWANCE/ADDITION IN ENTIRETY IN ALL THESE THREE ASSESSMENT YEARS. THIS IS FOR THE PRECISE REASON THAT GOING BY THE CIRCUMSTANCES BEFORE US, IT CAN BE SAFELY INFERRED T HAT THE ASSESSEE OBTAINED BOGUS PURCHASE INVOICES FROM M/S.BHANWARLAL JAIN GROUP AND FURTHER SOURCED ITS PU RCHASES FROM OTHER SUPPLIERS. WE NEXT NOTE THAT THIS TRIBUNALS CO - ORDINATE BENCH IN ITA NOS.3451 & 3454/MUM/2017 ITO V S. M.SHAILESH AND CO. DT.22-01-2019 (IN CASE OF THE VERY SEARCH) ITA NOS. 755, 756 & 757/HYD/2017 :- 5 -: AS WELL AS VARIOUS OTHER SIMILAR ORDERS HOLD THAT ONLY A PERCENTAGE OF SUCH PURCHASES THAN THE ENTIRE AMOUNT(S) THEREOF HAS TO BE DISALLOWED. THE FACT ALSO REMAINS THA T SUCH AN ESTIMATION DEPENDS ON FACTS OF EACH AND EVERY CAS E THAN INVOLVING ANY LEGAL INTERPRETATION WHICH COULD BE TREA TED AS A VALID PRECEDENT AS PER THE HON'BLE JURISDICTIONAL HIG H COURTS DECISION IN CIT VS. B.R.CONSTRUCTIONS (1993) 202 ITR 222 (AP). FACED WITH THIS SITUATION, WE DEEM IT APPROPRIATE IN LARGER INTEREST OF JUSTICE THAT THE IMPUGNED BOGUS PURCHA SES IN ALL THESE THREE YEAR(S) DESERVE TO BE RESTRICTED TO DISA LLOWANCE @8% ONLY IN THE GIVEN FACTS AND CIRCUMSTANCES WITH A RI DER THAT THE SAME SHALL NOT BE TAKEN AS A PRECEDENT IN ANY O THER CASE. NECESSARY COMPUTATION SHALL FOLLOW AS PER LAW. 8. THESE THREE ASSESSEES APPEALS ARE PARTLY ALLOWED IN ABOVE TERMS. A COPY OF THIS COMMON ORDER BE PLACED IN THE RESPECTIVE CASE FILES. ORDER PRONOUNCED IN THE OPEN COURT ON 18 TH AUGUST, 2021 SD/- SD/- (LAXMI PRASAD SAHU) (S.S.G ODARA) ACCOUNTANT MEMBER JUDICIAL MEM BER HYDERABAD, DATED: 18-08-2021 TNMM ITA NOS. 755, 756 & 757/HYD/2017 :- 6 -: COPY TO : 1.VITHALDAS & CO., 6-3-1090/2, RAJBHAVAN ROAD, SOMAJIGUDA, HYDERABAD. 2.THE DCIT, CIRCLE-6(1), HYDERABAD. 3.CIT(APPEALS)-6, HYDERABAD. 4.PR.CIT-6, HYDERABAD. 5.D.R. ITAT, HYDERABAD. 6.GUARD FILE.