The ACIT, Circle-4, Surat V. Sunday Exports Ltd., Surat

ITA 764/AHD/2013

• Counselvise Citation: [2016] 131 COUNSELVISE.COM (IT) 9894 (ITAT-AHMEDABAD)
• Duration Of Justice: 3 year(s) 8 month(s) 11 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 25-11-2016
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: C
• Next Hearing Date: 25-10-2016
• Assessment Year: 2003-2004
• Appeal Filed On: 15-03-2013
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Assessee Lawyers: M K PATEL
• Keywords: Bogus purchase; Additional evidence

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL AHMEDABAD C BENCH AHMEDABAD BEFORE, SHRI S. S. GODARA, JUDICIAL MEMBER AND SHRI AMARJIT SINGH, ACCOUNTANT MEMBER. ITA. NO. 764/AHD/2013 (ASSESSMENT YEAR:2003-04) A.C.I.T., CIRCLE-4, ROOM NO.223, AAYAKAR BHAVAN, MAJURAGATE, SURAT APPELLANT VS. M/S. SUNDAY EXPORTS LTD., SUNDAY HOUSE A.K. ROAD, VARACHHA, SURAT RESPONDENT PAN: AADCS1501J / BY REVENUE : SHRI PRASOON KABRA, SR. D.R. /BY ASSESSEE : SHRI M. K. PATEL, A.R. /DATE OF HEARING : 25.10.2016 /DATE OF PRONOUNCEMENT : 25.11.2016 ORDER PER S. S. GODARA, JUDICIAL MEMBER THIS REVENUES APPEAL FOR ASSESSMENT YEAR 2003-04 A RISES AGAINST THE CIT(A)-II, SURATS ORDER DATED 24.12.2012, IN APPEA L NO. CAS- ITA NO. 764/AHD/2013 (ACIT VS. M/S. SUNDAY EXPORTS LTD.) 2003-04 - 2 - II/49/TRFD/12-13, IN PROCEEDINGS UNDER SECTION 143( 3) R.W.S. 254 OF THE INCOME TAX ACT, 1961; IN SHORT THE ACT. 2. THE REVENUES SOLE SUBSTANTIVE GROUND PLEADS THA T THE CIT(A) HAS ERRED IN RESTRICTING BOGUS PURCHASES ADDITION OF RS .3,02,53,360/- TO RS.37,81,670/- AS MADE BY THE ASSESSING OFFICER IN ASSESSMENT ORDER DATED 24.03.2006. ITS MAIN ARGUMENT IS THAT THE SAME HAS VIOLATED THIS TRIBUNALS REMAND DIRECTIONS IN ITA NO.2089/AHD/2007 DECIDED O N 19.07.2007 IN FIRST ROUND OF PROCEEDINGS. 3. WE COME TO THE RELEVANT FACTS NOW. THE ASSESSIN G OFFICER TREATED THE ABOVE ENTIRE SUM OF RS.3,02,53,360/- INCURRED ON GR EY CLOTH PURCHASES MAINLY ON THE GROUND THAT ALTHOUGH ASSESSEE HAD CLAIMED TH AT THE SAID PURCHASES WERE EXECUTED THROUGH AGENTS ONLY, THEY WERE NEVER PRODUCED IN THE COURSE OF ASSESSMENT PROCEEDINGS. ITS PAYEES PARTIES WERE NOT FOUND ON THE GIVEN ADDRESSES. ALL NOTICES ISSUED U/S.133(6) OF THE AC T STOOD RETURNED. AND THAT THERE WAS NO OTHER EVIDENCE IN ORDER TO SUPPORT THE IMPUGNED PURCHASE CLAIMS. ALL THIS MADE THE ASSESSING OFFICER TO TRE AT THE ENTIRE PURCHASES SUM AS INVESTMENTS MADE OUT OF UNDISCLOSED SOURCES OF I NCOME. THIS RESULTED IN THE IMPUGNED DISALLOWANCE/ADDITION. 4. WE NOTICE FROM THE CASE FILE THAT THE CIT(A) ALS O UPHELD THE ABOVE ADDITION IN HIS LOWER APPELLATE ORDER DATED 28.02.2 007. THIS ASSESSEE FILED ITA NO.2089/AHD/2007 BEFORE THIS TRIBUNAL. A CO-OR DINATE BENCH IN ITS ORDER DATED 19.07.2007 ADMITTED ASSESSEES ADDITIONAL EVI DENCE AND DIRECTED THE CIT(A) TO READJUDICATE THE ISSUE AFRESH. THE CIT(A ) HAS THEREAFTER PASSED THE ORDER UNDER CHALLENGE RESTRICTING THE ABOVE PURCHAS ES DISALLOWANCE AS UNDER: 4. I HAVE CAREFULLY CONSIDERED THE FACTS OF THE CA SE, REMAND REPORT OF ASSESSING OFFICER AND THE SUBMISSIONS OF APPELLANT. FROM THE FACTS, IT IS APPARENTLY ITA NO. 764/AHD/2013 (ACIT VS. M/S. SUNDAY EXPORTS LTD.) 2003-04 - 3 - CLEAR THAT THE ASSESSEE HAS NOT BEEN ABLE TO PROVE THE GENUINENESS OF PURCHASES. HE HAS NOT EVEN TRIED TO BRING ANY NEW EVIDENCE OR DETAILS TO STRENGTHEN HIS CASE. REPEATEDLY HE HAS BEEN FILLING THE SAME SET OF SUBM ISSIONS DURING APPELLATE PROCEEDINGS, REMAND PROCEEDINGS AND EVEN DURING PRO CEEDINGS BEFORE ITAT. EVEN DURING REMAND PROCEEDINGS, WHEN AO REQUESTED HIM TO FURNISH THE COPY OF BANK STATEMENT TO VERIFY THE GENUINENESS OF PAYMENTS MAD E BY HIM, NO COMPLIANCE WAS MADE BY APPELLANT. ALL THESE ACTIONS OF APPELLANT S HOWS THAT HE IS NOT SERIOUS ABOUT HIS EFFORTS TO PROVE THE GENUINENESS OF PURCHASES. THE COPIES OF AFFIDAVITS FILED BY APPELLANT ARE ALSO IDENTICAL IN EACH AND EVERY CASE WITH SAME WORDINGS EXCEPT THE AMOUNTS AND NAMES OF SELLER PARTIES. ONLY PARA 4 OF THE AFFIDAVITS IS RELEVANT AND IN THAT PARA ALSO IT IS NOT CLEARLY MENTIONED THAT WHO HAS SOLD THE GOODS TO WHOM AND THE PAYMENTS WERE MADE FROM/ TO WHOM. AT THE CO ST OF REPETITION, PARA 4 OF THE AFFIDAVITS IN ONE CASE IS REPRODUCED AS UNDER. (I) DURING THE FINANCIAL YEAR 2002-03, WE HAVE RECE IVED VARIOUS ORDERS FROM M/S. SUDAY EXPORTS LTD., 9, SUPREME CHAMBERS, MULCHAND MARKET, RING ROAD, SURAT FOR SUPPLY OF GREY ART SILK CLOTH AND ACCORDINGLY WE HAD ARRANGED AND SUPPLIED GOODS WORTH RS. 24,44,550/- T O M/S. RESHMA TEXTILES, NATRAJ INDUSTRIAL ESTATE, DHASTIPURA, SUR AT. FURTHER, THE ASSESSEE HAS NOT BEEN ABLE TO PRODUCE ANY OF THE CREDITORS OR EVEN TO THE BROKERS THROUGH WHOM PURCHASES WERE EXE CUTED. THE NOTICES SENT BY AO REMAINED UNSERVED OR IF SERVED THE PROPE RTIES DENIED TO HAVE MADE ANY SALES TO THE APPELLANT. THE ONUS WAS ON AS SESSEE TO PROVE THAT PURCHASES ARE GENUINE WHICH HE FAILED TO DISCHARGE. HOWEVER, IT IS APPARENT FORM THE RECORD THAT THE AO HAS MADE AN IN VESTIGATION AND EXAMINED ALL THE RELEVANT FACTS AND HAS RIGHTLY COME TO THE CONCLUSION THAT THE ABOVE CREDITORS ARE NOT GENUINE. THE AO HAS ALSO RIGHTLY COME TO A CONCLUSION THAT THE BOOKS 'OF ACCOUNT OF THE APPE LLANT ARE NOT CORRECT AND ARE INCOMPLETE IN THE SENSE THAT THE SAME DO NOT RE FLECT THE ACTUAL STATE OF AFFAIRS OF THE APPELLANT. IT IS EVIDENT FROM THE AB OVE THAT THE AO HAS BEEN ABLE TO PROVE THAT THE PURCHASES MADE BY APPELLANT FROM THE AFORESAID PARTIES ARE NOT GENUINE AND HE HAS MERELY OBTAINED BOGUS PURCHASE BILLS WITH INFLATED COST. CONSIDERING ALL THESE FAC TS, IT IS HELD THAT THE SAID PURCHASES OF RS. 3,02,53,360/- ARE BOGUS PURCHASES. BUT, IN MY OPINION, IT WOULD NOT BE FAIR JUST TO ADD THE ENTIR E AMOUNT TO THE INCOME OF APPELLANT. SUCH CASES OF BOGUS PURCHASES HAVE BEEN DEALT WITH BY HON'BLE JURISDICTIONAL ITAT IN MANY CASES. IN THE CASE OF V IJAY PROTEINS LTD., REPORTED IN 58ITD 428, 25% OF SUCH PURCHASES WER E DISALLOWED AND ADDED TO THE INCOME OF ASSESSEE. HOWEVER, FOLL OWING THE RATIO OF THE DECISION IN THE CASE OF VIJAY PROTEINS (SUPRA), HON 'BLE ITAT HAS DECIDED THE ISSUE IN MANY OTHER CASES ALSO BUT THE PERCENTA GE HAS BEEN RESTRICTED TO 12.5%. SOME OF THE CASES ARE AS UNDER. I. M/S. PHOLANATH POLY FAB P. LTD. -VS- ITO IN ITA NO. 137/AHD/2009 II. M/S. RAJ EXPORTS -VS- ACIT IN ITA NO. 1827/AHD/ 2005 III. M/S. SANKET STEEL TRADERS -VS- ITO IN ITA NO. 2801/AHD/2008 ITA NO. 764/AHD/2013 (ACIT VS. M/S. SUNDAY EXPORTS LTD.) 2003-04 - 4 - IV. SMT, SAJJANDEVI B. JAIN -VS- ITO, OSD-1 IN ITA NO. 609/AHD/2009 THUS, IN THE CASE OF APPELLANT ALSO, I HEREBY APPLY THE RATIO GIVEN BY HON'BLE ITAT IN THE DECISIONS OF AFORESAID CASES AN D RESTRICT THE ADDITION TO 12.5% OF THE BOGUS PURCHASES MADE BY APPELLANT. THU S, 12.5% OF RS. 3,02,53,360/-WHICH COMES TO RS. 37,81,670/- IS ADDE D TO THE INCOME OF APPELLANT IN PLACE OF ADDITION OF RS. 3,02,53,360/- MADE BY AO. THE AO IS HEREBY DIRECTED TO MAKE THE ADDITION OF RS. 37,81,6 70/-. 4.1 DURING THE APPELLATE PROCEEDINGS, APPELLANT REL IED ON THE DECISIONS OF CIT(A)-V, SURAT IN THE CASES OF M/S. HARIOM SILK MI LLS AND SMT. GEETABEN R. GANDHI, WHICH ARE GROUP CASES OF APPELLANT AND BASE D ON THE SIMILAR FACTS. TAKING INTO CONSIDERATION THE LEGAL DISCIPLINE, IT IS CONS IDERED FAIR TO FOLLOW THE DECISION ALREADY GIVEN BY OTHER CIT(A) ON THE SAME FACTS. BU T, I HAVE DEVIATED FROM THAT PROCEDURE FOR THE REASON THAT I HAVE MANY DECISIONS AVAILABLE WITH ME FOR MY GUIDANCE ON THE SIMILAR FACTS DELIVERED BY HON'BLE JURISDICTIONAL ITAT. FURTHER, IN PLACE OF FOLLOWING THE DECISION OF COLLEAGUE CIT(A) , IT IS ALWAYS PREFERABLE TO FOLLOW THE DECISION OF SUPERIOR AUTHORITY -WHICH IS BINDING ALSO ON LOWER AUTHORITIES. THEREFORE, FOLLOWING THE DECISION OF H ON'BLE ITAT, THE ISSUE HAS BEEN DECIDED BY ME. 5. HEARD BOTH SIDES REITERATING THEIR RESPECTIVE PL EADINGS. THE REVENUES MAIN ARGUMENT IS THAT THE CIT(A)S ABOVE EXTRACTED FINDINGS TRAVERSE BEYOND THE ABOVE REMAND DIRECTIONS. IT ALSO PLACES BEFORE US THIS TRIBUNALS ORDER ON RECORD. WE FIND THAT THE ABOVE REVENUES PLEA IS E NTIRELY MISCONCEIVED SINCE THE SAID CO-ORDINATE BENCH MERELY ADMITTED ASSESSEE S ADDITIONAL EVIDENCE TO DIRECT THE CIT(A) FOR AFRESH ADJUDICATION OF THE IS SUE. THE LOWER APPELLATE AUTHORITY HAS DULY CONSIDERED THE SAME IN ITS ORDER TO AGREE WITH THE ASSESSING OFFICERS FINDINGS IN PRINCIPLE THAT THE ASSESSEE HAS NOT BEEN ABLE TO PROVE GENUINENESS OF ITS GREY CLOTH PURCHASES. IT THEREAFTER IS OF THE OPINION THAT IT IS NOT THE ENTIRE PURCHASES BUT ONL Y THE GROSS PROFIT ELEMENT THEREIN HAS TO BE ADDED @12.5% OF THE AMOUNT IN QUE STION. LD. DEPARTMENTAL REPRESENTATIVE FAILS TO DISPUTE THE FA CT THAT ASSESSEES SALES/EXPORTS OF THE GREY CLOTH ALREADY STAND ACCEP TED. NOR DOES IT FILE BEFORE US ANY MATERIAL TO CONCLUDE THAT THE ABOVE P ERCENTAGE OF THE ADDITION IS IN ANY WAY UNREASONABLE. WE THUS FIND NO REASON TO INTERFERE WITH THE LOWER APPELLATE ORDER RESTRICTING THE IMPUGNED BOGU S PURCHASES ADDITION IN ITA NO. 764/AHD/2013 (ACIT VS. M/S. SUNDAY EXPORTS LTD.) 2003-04 - 5 - PECULIAR FACTS OF THE CASE. IT IS MADE CLEAR THAT THE ABOVE PERCENTAGE SHALL NOT BE TREATED AS A PRECEDENT IN ANY PRECEDING OR SUCCE EDING ASSESSMENT YEAR IN ASSESSEES CASES. 6. THIS REVENUES APPEAL IS DISMISSED. [PRONOUNCED IN THE OPEN COURT ON THIS THE 25 TH DAY OF NOVEMBER, 2016.] SD/- SD/- (AMARJIT SINGH) (S. S. GODARA) ACCOUNTANT MEMBER JUDICIAL MEMBE R AHMEDABAD: DATED 25/11/2016 TRUE COPY S.K.SINHA / COPY OF ORDER FORWARDED TO:- / REVENUE 2 / ASSESSEE ! / CONCERNED CIT 4 !- / CIT (A) ()*+ ,--. ./0 / DR, ITAT, AHMEDABAD 1+23 / GUARD FILE. BY ORDER / . // ./0