Ashok Kumar, Delhi V. ACIT, Circle- 36(1), New Delhi

ITA 7603/DEL/2017

• Counselvise Citation: [2021] 108 COUNSELVISE.COM (IT) 5878 (ITAT-DELHI)
• Duration Of Justice: 3 year(s) 4 month(s) 8 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 27-04-2021
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: A
• Assessment Year: 2013-2014
• Appeal Filed On: 19-12-2017
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Keywords: Bogus purchase; Onus to prove; TDS
• Section: 143(3); 133(6); 201

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL, DELHI BENCH: A NEW DELHI BEFORE SHRI BHAVNESH SAINI, JUDICIAL MEMBER AND SHRI O.P. KANT, ACCOUNTANT MEMBER [THROUGH VIDEO CONFERENCING] ITA NO.7603/DEL./2017 ASSESSMENT YEAR: 2013-14 SH. ASHOK KUMAR, C-31, SATYAWATI COLONY, ASHOK VIHAR, PHASE-II, NEW DELHI VS. ACIT, CIRCLE-36(1), NEW DELHI PAN :AALPK9775H (APPELLANT) (RESPONDENT) ORDER PER O.P. KANT, AM: THIS APPEAL BY THE ASSESSEE IS DIRECTED AGAINST OR DER DATED 16/10/2017 PASSED BY THE LEARNED CIT(APPEALS)-12, N EW DELHI [IN SHORT THE LD. CIT(A)] FOR ASSESSMENT YEAR 201 3-14 RAISING FOLLOWING GROUNDS: 1. THE LD. CIT(A) WITHOUT APPRECIATING THE CORRECT FACTS OF THE CASE AND IGNORING THE VARIOUS CASE LAW RELIED UPON IS NO T JUSTIFIED IN LAW AND FACTS AND CIRCUMSTANCES OF THE CASE IN CONF IRMING THE ADDITION OF RS.48,01,597/- MADE BY LEARNED ASSESSIN G OFFICER ON ACCOUNT OF ALLEGED BOGUS PURCHASES WITHOUT POINTING OUT ANY APPELLANT BY SHRI PRATAP GUPTA, CA RESPONDENT BY SHRI ASHOK GAUTAM, SR.DR DATE OF HEARING 22.03.2021 DATE OF PRONOUNCEMENT 27.04.2021 2 ITA NO.7603/DEL./2017 DEFECT IN THE STOCK REGISTER AND QUANTITATIVE INFOR MATION FURNISHED AND REJECTING THE SALES MADE. 2. ASSESSEE HAS EVERY RIGHT TO MADE, ADD, DELETE, M ODIFY OR ALTER ANY GROUNDS OF APPEAL AT THE TIME OF HEARING. 2. BRIEFLY STATED FACTS OF THE CASE ARE THAT THE ASSE SSEE FILED RETURN OF INCOME ON 30/09/2013, DECLARING TOTAL INC OME OF 35,53,238/-. THE SCRUTINY ASSESSMENTS UNDER SECTION 143(3) OF THE INCOME-TAX ACT, 1961 (IN SHORT THE ACT) WAS C OMPLETED ON 29/03/2016 AFTER MAKING DISALLOWANCE OF PURCHASE EX PENSES OF 48,01,597/-. ON FURTHER APPEAL, THE LEARNED CIT(A) UPHELD THE DISALLOWANCE. AGGRIEVED, THE ASSESSEE IS BEFORE THE TRIBUNAL RAISING THE GROUNDS AS REPRODUCED ABOVE. 2. BEFORE US, THE PARTIES APPEARED THROUGH VIDEO CONFE RENCING FACILITY AND FILED PAPER-BOOK THROUGH EMAIL. 3. FACTS IN BRIEF QUA THE ISSUE IN DISPUTE ARE THAT OU T OF THE TOTAL PURCHASES, PURCHASES MADE FROM FOLLOWING PART IES WERE QUESTIONED BY THE ASSESSING OFFICER: 1. M/S MICRO INTERNATIONAL AT H. NO. 125, GROUND F LOOR, KHASRA NO. 760, VILLAGE SIRASPUR, DELHI - 1100042. 2. M/S APEX TRADERS, AT 72/136, SIRASPUR, NEW DELH I - 110042. 3. M/S SILVER LINE (INDIA) AT FLAT NO. 113, 1ST FL OOR, HOUSE NO. 1, 13- BLOCK, PANCHWATI, AZADPUR, DELHI - 110033. 4. M/S REEMA PLOYMERS PVT. LTD. AT 208, NITIKA TOW ER - I, COMMERCIAL COMPLEX, AZADPUR, DELHI-110033. 4. THE ASSESSING OFFICER OBSERVED THAT NOTICES ISSUED UNDER SECTION 133(6) OF THE ACT WERE RETURNED BACK IN CAS E OF THE FIRST TWO PARTIES. IN CASE OF PARTY AT SERIAL NO. 3, NO R EPLY WAS RECEIVED BACK. THE REPLY RECEIVED IN CASE OF FOURTH PARTY WA S NOT FOUND TENABLE BY THE ASSESSING OFFICER. IN VIEW OF THE OB SERVATIONS, THE 3 ITA NO.7603/DEL./2017 ASSESSING OFFICER ASKED THE ASSESSEE TO PRODUCE THO SE PARTIES. BUT, THE ASSESSEE FAILED TO PRODUCE THOSE PARTIES A ND FILED ONLY DOCUMENT AVAILABLE IN HIS BOOKS OF ACCOUNTS I.E. PU RCHASE BILLS AND LEDGER ACCOUNTS OF THOSE PARTIES IN THE BOOKS O F THE ASSESSEE. REGARDING THE PURCHASE BILLS, THE ASSESSING OFFICER OBSERVED THAT SAME WERE IDENTICALLY COMPUTER-GENERATED AND APPEAR ED NOT TO BE GENUINE. THEREFORE, AGAIN THE ASSESSING OFFICER ASK ED THE ASSESSEE TO PRODUCE THOSE PARTIES TO WHOM NOTICE UN DER SECTION 133(6) OF THE ACT WAS ISSUED. THE ASSESSING OFFICER ALSO ATTEMPTED TO VERIFY THE GENUINENESS OF THE PARTIES THROUGH IN SPECTOR OF HIS OFFICE. THE INSPECTOR REPORTED THAT M/S MICRO INTER NATIONAL AND M/S APEX TRADERS COULD NOT BE LOCATED AS NO SUCH AD DRESSES EXISTED. REGARDING M/S SILVER LINE (INDIA), THE INS PECTOR REPORTED THAT AN NGO NAMED PEHALA KADAM WAS RUNNING ITS OP ERATION AT THE GIVEN ADDRESS FOR LAST 2 YEAR AND SAID PARTY DID NOT EXIST AT THAT ADDRESS. 4.1 THE AUTHORISED REPRESENTATIVE OF THE ASSESSEE WAS CONFRONTED WITH THE REPORT OF THE INSPECTOR AND THE ASSESSEE WAS AGAIN ASKED TO PRODUCE THOSE PARTIES. THE ASSESSEE INSISTED THAT PURCHASES WERE MADE FROM DEALERS REGISTERED WITH VAT DEPARTMENT OF DELHI, WHO MUST HAVE VERIFIED THEIR A DDRESSES. AS THE ASSESSEE FAILED TO PRODUCE THOSE PARTIES, AND P URCHASE BILLS WERE NOT FOUND GENUINE BY THE ASSESSING OFFICER, HE DISALLOWED THE PURCHASES AMOUNTING TO 48,01,597 FROM FOLLOWING THREE PARTIES: SL. NO. NAME OF THE PARTY AMOUNT OF PURCHASES IN RS. 1. M/S. MICRO INTERNATIONAL 20,74,222 2. M/S. APEX TRADERS 4,10,550 4 ITA NO.7603/DEL./2017 3. M/S. SILVER LINE (INDIA) 23,16,825 TOTAL 48,01,597 4.2 BEFORE THE LD. CIT(A), THE ASSESSEE REITERATED THE SAME SUBMISSION THAT THOSE PARTIES WERE REGISTERED WITH VAT AND THEREFORE, THE ASSESSEE WAS NOT REQUIRED TO PRODUCE THOSE PARTIES BEFORE THE ASSESSING OFFICER AND IT IS FOR THE ASSE SSING OFFICER TO FIND OUT THEIR ADDRESSES EITHER FROM THE BANK OR FR OM THE REGISTRAR OF COMPANIES. THE LD. CIT(A) UPHELD THE D ISALLOWANCE OBSERVING AS UNDER: 5.3.3 THE SUBMISSION OF THE APPELLANT HAS BEEN QUO TED VERBATIM IN THE BODY OF THIS ORDER. THE ARGUMENTS TAKEN BY THE APPELLANT ARE BEING EVALUATED AND EXAMINED IN THE LIGHT OF THE IN VESTIGATION CARRIED OUT BY THE ASSESSING OFFICER AND THE PROVIS IONS OF LAW. THE ASSESSEE HAS SUBMITTED THAT THE RETURN OF NOTICES U /S 133(6) ISSUED TO M/S MICRO INTERNATIONAL AND M/S APEX TRADERS BY THE POSTAL AUTHORITIES IS NOT CLEAR. IN THIS CONNECTION, THE A SSESSING OFFICER HAS CLEARLY MENTIONED IN THE ASSESSMENT ORDER THAT THE ADDRESSES GIVEN BY THE ASSESSEE ARE NOT CORRECT. THE ASSESSEE HAS T AKEN RECOURSE OF REGISTRATION WITH THE VAT DEPARTMENT. IN THIS RESPE CT IT IS OBSERVED THAT NOT ONLY VAT DEPARTMENT, EVEN THE INCOME TAX D EPARTMENT ISSUES PAN CARDS. BUT THE APPELLANT DOES NOT TAKE S UCH ARGUMENTS. THIS IS DIFFICULT TO SAY AT THIS LEVEL THAT THE PRO PER INQUIRY WAS CONDUCTED BY THE VAT DEPARTMENT BEFORE THE ISSUE OF TIN NO. EVEN IF IT IS ASSUMED THAT AT SOME POINT OF TIME THE PARTIE S MANAGED TO GET VAT NO. REGISTERED, BY SHOWING THEIR ADDRESS AT A P ARTICULAR PLACE, THE REASON FOR NON EXISTENCE OF THOSE ADDRESSES ON SUBSEQUENT INQUIRY IS NOT EXPLAINED AT ALL. IF THE POSTAL AUTH ORITIES ARE WRONG AND THE INSPECTOR OF THE INCOME TAX DEPARTMENT CANN OT TRACE THESE PARTIES ON THE GIVEN ADDRESSES, IT IS NOT EXPLAINED BY THE APPELLANT WHAT EFFORT HAS BEEN MADE BY IT TO LOCATE THESE PAR TIES AND REPORT TO THE ASSESSING OFFICER FOR INQUIRY. OBVIOUSLY, THE A PPELLANT IS TRYING TO SHIFT THE BLAME ON THE ASSESSING OFFICER WHEREAS THE FACT REMAINS THAT THE ONUS TO PROVE THE GENUINENESS OF THE PURCH ASES WAS ON THE ASSESSEE AND THE PRIMARY RESPONSIBILITY WAS TO GIVE CORRECT ADDRESS OF THE PARTIES. THE SUBMISSION OF THE APPELLANT THA T INQUIRIES ARE CONDUCTED AFTER 3 YEARS FROM THE DATES OF TRANSACTI ON IS AGAIN NOT COMPREHENSIBLE BECAUSE ONE PARTY MAY CHANGE ITS ADD RESS IN THE SPAN OF 3 YEARS BUT HOW IS IT POSSIBLE THAT ALL 3 P ARTIES ARE NOT AVAILABLE ? THE APPELLANT HAS STATED THAT THE GROUN D FOR REJECTING THE PURCHASE FROM M/S SILVER LINE (INDIA) IS VAGUE AS S HE HAS ONLY WRITTEN WITH RESPECT TO THE REPLY RECEIVED FROM THI S PARTY - NOT 5 ITA NO.7603/DEL./2017 TENABLE. THOUGH THE ASSESSING OFFICER HAS NOT ELAB ORATED THE REASONS FOR NOT FINDING THE REPLY TENABLE, THE APPE LLANT FAILS TO GIVE THE COMPLETE WHEREABOUTS OF THIS PARTY FOR INQUIRY. THE APPELLANT HAS FAILED TO PROVE THE GENUINENESS OF PURCHASES ON THE GIVEN FACTS. WHEN THE ASSESSING OFFICER WAS TRYING TO LOCATE THE PARTIES ON THE GIVEN ADDRESSES AND WAS FAILING TO DO SO, THE ASSES SEE WAS ONLY BLAMING THE ASSESSING OFFICER ON ONE PRETEXT OR OTH ER INSTEAD OF COOPERATING WITH HER IN FINDING CORRECT ADDRESSES A ND WHEREABOUTS OF THE PARTIES AND INFORMING THE SAME TO THE ASSESS ING OFFICER TO FACILITATE THE EXAMINATION. IN ANOTHER ARGUMENT, TH E APPELLANT HAS STATED THAT THE GOODS PURCHASED FROM THESE PARTIES WERE SUBSEQUENTLY SOLD AND THE ASSESSING OFFICER HAS ACC EPTED THE SALES. THEREFORE, SHE IS NOT JUSTIFIED IN A TREATING THE P URCHASES AS BOGUS EXPENSE. WITH REGARD TO THIS ARGUMENT, IT IS HELD T HAT THE ASSESSING OFFICER HAS ACCEPTED THE SALES IN TERMS OF VALUE SH OWN BY THE ASSESSEE. THERE WAS NO REQUIREMENT ON THE PART OF T HE ASSESSING OFFICER TO DOUBT THE VALUE OF THE SALES. THE ONUS W AS ON THE ASSESSEE TO FURNISH THE QUANTITATIVE DETAILS OF PUR CHASES AND QUANTITATIVE DETAILS OF SALES AND JUSTIFY THE RATES AT WHICH THE SALES WERE MADE. THIS EXERCISE HAS OBVIOUSLY NOT BEEN DON E BY THE ASSESSEE. THEREFORE, THE ASSESSEE CANNOT JUSTIFY TH E DECLARED VALUE OF THE PURCHASES IN THE PROFIT & LOSS ACCOUNT. THE DECISIONS RELIED ON BY THE APPELLANT ARE DISTINGUISHABLE ON FACTS. THE FACTS OF THE QUOTED CASES ARE DIFFERENT FROM THOSE OF THE ASSESSEE. 5. BEFORE US, THE LEARNED COUNSEL OF THE ASSESSEE SUB MITTED THAT THE LOWER AUTHORITIES ARE NOT JUSTIFIED IN SUS TAINING THE DISALLOWANCE OF PURCHASES, WHERE CORRESPONDING SALE S HAVE NOT BEEN DOUBTED. ACCORDING TO HIM, IT IS UNDISPUTED TH AT NO SALES CAN BE MADE WITHOUT CORRESPONDING PURCHASES, NO PUR CHASES CAN BE DISALLOWED IN THE CASE OF THE ASSESSEE WITHOUT D ISTURBING THE SALES. HE SUBMITTED THAT THERE IS VERY MARGINAL DEC REASE IN THE GROSS PROFIT AND NET PROFIT IN THE YEAR UNDER CONSI DERATION AS COMPARED TO EARLIER YEAR. THE LEARNED COUNSEL ALSO SUBMITTED THAT NO BOOKS OF ACCOUNTS HAVE BEEN REJECTED BY THE ASSESSING OFFICER. HE SUBMITTED THAT MERELY BECAUSE THE SUPPL IER HAD NOT APPEARED BEFORE THE ASSESSING OFFICER, IT CANNOT BE CONCLUDED THAT PURCHASES WERE NOT MADE BY THE ASSESSEE AND IN SUPPORT OF 6 ITA NO.7603/DEL./2017 THE ABOVE PROPOSITION, HE RELIED ON THE DECISION OF THE HONBLE BOMBAY HIGH COURT IN THE CASE OF CIT VS NIKUNJ EXIMP ENTERPRISES (P) LTD IN ITA 5604 OF 2010. 6. THE LEARNED DR, ON THE OTHER HAND, RELIED ON THE OR DER OF THE LOWER AUTHORITIES AND SUBMITTED THAT THE ASSESS EE HAS NOT SUPPORTED CORRESPONDING SALES WITH THE HELP OF THE STOCK REGISTER. HE SUBMITTED THAT IN THE CASE RELIED UPON BY THE AS SESSEE, THE TAX PAYER FILED LETTER FROM THE SUPPLIERS WITH STOCK RE CONCILIATION, HOWEVER, IN THE INSTANT CASE, NEITHER CONFIRMATION, NOR ANY STOCK RECONCILIATION STATEMENTS HAS BEEN FILED AND THEREF ORE, THE CASE RELIED UPON IS DISTINGUISHABLE. 7. WE HAVE HEARD RIVAL SUBMISSION OF THE PARTIES ON T HE ISSUE IN DISPUTE AND PERUSED THE RELEVANT MATERIAL ON REC ORD. IN THE INSTANT CASE, THE ASSESSING OFFICER HAS DISALLOWED THE PURCHASES OF RS. 48,01,597 SHOWN BY THE ASSESSEE FROM THREE P ARTIES. ACCORDING TO THE ASSESSING OFFICER, THE BILLS ISSUE D BY THOSE PARTIES ARE COMPUTER-GENERATED IDENTICAL BILLS AND IN HIS OPINION SAME WERE NOT GENUINE. FURTHER, ON VERIFICATION THR OUGH NOTICE UNDER SECTION 133(6) OF THE ACT AND THROUGH INSPECT OR OF HIS OFFICE, THOSE PARTIES WERE FOUND NOT IN EXISTENCE A T THE ADDRESSES PROVIDED BY THE ASSESSEE. THEREFORE, FOR VERIFICATI ON OF THE PURCHASES, THE ASSESSING OFFICER ASKED THE ASSESSEE TO PRODUCE ALL THE PARTIES BEFORE HIM. BUT THE ASSESSEE ONLY S UPPLIED COPY OF PURCHASE BILLS AND LEDGER ACCOUNTS OF THOSE PARTIES IN THE BOOKS OF ACCOUNTS MAINTAINED BY THE ASSESSEE. THE FACT OF RETURNED BACK OF THE NOTICE U/S 133(6) AND PARTIES NOT FOUND DURI NG VERIFICATION BY THE INSPECTOR WERE DULY INFORMED TO THE ASSESSEE , HOWEVER, NO ATTEMPT WAS MADE BY THE ASSESSEE TO PROVIDE THEIR C URRENT 7 ITA NO.7603/DEL./2017 ADDRESSES TO THE ASSESSING OFFICER AND THE ASSESSEE ONLY REITERATED THAT THOSE PARTIES WERE DULY REGISTERED WITH VAT AND THE ASSESSING OFFICER MIGHT OBTAIN THEIR ADDRESS FR OM BANKS OR REGISTRAR OF COMPANIES. DESPITE SPECIFICALLY BEING ASKED TO PRODUCE THOSE PARTIES FOR VERIFICATION OF THEIR PUR CHASES, NO ATTEMPT WAS MADE BY THE ASSESSEE TO PRODUCE THOSE P ARTIES. THE LD. CIT(A) HAS ALSO OBSERVED THAT NO QUANTITATIVE D ETAILS OF PURCHASES AND SALES WERE PROVIDED BY THE ASSESSEE. IN SUCH CIRCUMSTANCES, WE ARE OF THE OPINION THAT THE PURCH ASES CLAIMED BY THE ASSESSEE ARE NOT FREE FROM DOUBT. THE ASSESS EE HAS TO DEMONSTRATE SALES CORRESPONDING TO THE PURCHASES. I N THE CASE RELIED UPON BY THE ASSESSEE, THE SALES WERE MADE TO GOVERNMENT DEPARTMENT AND THUS SALES WERE NOT DOUBTED, BUT THE INSTANT CASE IT HAS NOT BEEN BROUGHT ON RECORD, WHETHER THE SALES ARE MADE TO THE GOVERNMENT DEPARTMENT OR EXPORT SALES. IF THE SALES CORRESPONDING TO THE PURCHASES ARE NOT DEMONSTRATED , THEN POSSIBILITY OF THE ENTIRE PURCHASES BEING DOUBTFUL CANNOT BE DENIED. IF THE CORRESPONDING SALES ARE DEMONSTRATED , THEN EVEN IF DELIVERY OF GOODS FROM PURCHASE PARTIES IS NOT ESTA BLISHED, THEN POSSIBILITY OF PURCHASE OF GOODS IN CASH FROM ANOTH ER PARTIES, CANNOT BE DENIED. IN THE FACTS AND CIRCUMSTANCES OF THE CASE, WE ARE OF THE OPINION THAT WITHOUT RECONCILIATION OF P URCHASES AND CORRESPONDING SALES WITH THE HELP OF THE STOCK REGI STER, SUSTAINING THE DISALLOWANCE OF ENTIRE PURCHASES IS NOT JUSTIFIED. THEREFORE, WE RESTORE THIS ISSUE BACK TO THE FILE O F THE ASSESSING OFFICER FOR DECIDING AFRESH WITH THE DIRECTION TO T HE ASSESSEE TO FILE STOCK RECONSIDERATION STATEMENT ALONG WITH RELEVANT INVOICES OF 8 ITA NO.7603/DEL./2017 SALES, DOCUMENTS IN SUPPORT OF DELIVERY OF THE GOOD S FROM PURCHASE PARTIES. 7.1 THE ASSESSEE SHALL ALSO PRODUCE RELEVANT PURCHASE PARTIES ALONG WITH THEIR CONFIRMATION. THE ASSESSING OFFICE R MAY CARRY OUT INQUIRIES AS DEEMED FIT IN THE FACTS AND CIRCUM STANCES OF THE CASE AND PASS ORDER AFTER PROVIDING ADEQUATE OPPORT UNITY OF BEING HEARD TO THE ASSESSEE. THE GROUND RAISED BY THE ASS ESSEE IS ALLOWED FOR STATISTICAL PURPOSES. 8. IN THE RESULT, THE APPEAL OF ASSESSEE IS ALLOWED F OR STATISTICAL PURPOSES. ORDER PRONOUNCED IN THE OPEN COURT ON 27 TH APRIL, 2021 SD/- SD/- (BHAVNESH SAINI) (O.P. KANT) JUDICIAL MEMBER ACCOUNTANT MEMBER DATED: 27 TH APRIL, 2021. RK/- (DTDS) COPY FORWARDED TO: 1. APPELLANT 2. RESPONDENT 3. CIT 4. CIT(A) 5. DR ASST. REGISTRAR, ITAT, NEW DELHI