Assistant Commissioner of Income-tax, Pune V. Rajeev Bhagwandas Krishnani, Pune

ITA 772/PUN/2017

• Counselvise Citation: [2019] 117 COUNSELVISE.COM (IT) 2422 (ITAT-PUNE)
• Duration Of Justice: 2 year(s) 2 month(s) 20 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 21-06-2019
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: A
• Assessment Year: 2010-2011
• Appeal Filed On: 31-03-2017
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Keywords: Bogus purchase; Rejection of books of accounts; TDS
• Section: 143(3)

Judgement Text

] IN THE INCOME TAX APPELLATE TRIBUNAL PUNE BENCH A, PUNE BEFORE SHRI ANIL CHATURVEDI, AM AND SHRI VIKAS AWASTHY, JM . / ITA NO.772/PUN/2017 / ASSESSMENT YEAR : 2010-11 THE ASST. COMMISSIONER OF INCOME TAX, CIRCLE 2, PUNE. . / APPELLANT V/S RAJEEV BHAGWANDAS KRISHNANI, B-10, SHIRIN GARDEN, OPP. ITI, AUNDH, PUNE 411 007. PAN : ACPPK6199K. . / RESPONDENT ASSESSEE BY : SHRI SUNIL GANOO. REVENUE BY : SHRI SAMARAT RAHI. PER ANIL CHATURVEDI, AM : THIS APPEAL FILED BY THE REVENUE IS EMANATING OUT OF THE ORDER OF COMMISSIONER OF INCOME TAX (A) 3, PUNE, DATED 15.11 .2016 FOR A.Y. 2010-11. 2. THE RELEVANT FACTS AS CULLED OUT FROM THE MATERIAL ON R ECORD ARE AS UNDER :- ASSESSEE IS AN INDIVIDUAL AND IS STATED TO BE A REGISTERE D CIVIL CONTRACTOR. ASSESSEE FILED HIS ORIGINAL RETURN OF INCOME FO R A.Y. 2010- 11 ON 05.10.2010 DECLARING TOTAL INCOME OF RS. 6,07,03,672/ - WHICH WAS REVISED ON 31.03.2012 REVISING THE TOTAL INCOME TO RS.6,17,45,162/-. THE CASE WAS SELECTED FOR SCRUTINY AND THEREAFTER / DATE OF HEARING : 18.06.2019 / DATE OF PRONOUNCEMENT: 21.06.2019 2 ASSESSMENT WAS FRAMED U/S 143(3) OF THE ACT VIDE ORDER DATED 30.03.2013 AND THE TOTAL INCOME WAS DETERMINED AT RS.7 ,21,33,914/-. AGGRIEVED BY THE ORDER OF AO, ASSESSEE CARRIED THE MATT ER BEFORE LD.CIT(A) WHO VIDE ORDER DT.15.11.2016 (IN APPEAL NO.PN/CIT(A )-3/RG- 4, PN/182/2013-14) GRANTED SUBSTANTIAL RELIEF TO THE ASSES SEE. AGGRIEVED BY THE ORDER OF LD.CIT(A), REVENUE IS NOW IN APPE AL BEFORE US AND HAS R AISED THE FOLLOWING GROUNDS : 1. ON THE FACTS AND CIRCUMSTANCES OF THE CASE , THE LD. CIT(A) HAS ERRED IN LAW AS WELL AS THE FACTS IN RESTRICTING THE ADDITIO N MADE BY ASSESSING OFFICER ON ACCOUNT OF BOGUS PURCHASES TO RS. 10,06 , 000/- (10% OF THE HAWALA PURCHASES) INSTEAD OF UPHOLDING THE ENTIRE A MOUNT OF ADDITION OF RS . 1,00,60 , 000/-- . 2 . ON THE FACTS AND CIRCUMSTANCES OF THE CASE, THE LD. CIT(A) HAS ERRED IN LAW AS WELL AS THE FACTS IN NOT CONSIDERING THE FACT THAT AS THE ASSESSING OFFICER HAS PROVED THAT PURCHASES FROM M/S SAI TRADING COMPANY ARE NON GENUINE , THEREFORE, AS PER THE LEGAL PRECEDENT ENTIRE AMOUNT OF THESE PURCHASES NEED TO BE DISALLOWED . 3 . ON THE FACTS AND CIRCUMSTANCES OF THE CASE, THE LD. CIT(A) HAS ERRED IN LAW AS WELL AS THE FACTS IN ALLOWING THE CREDIT OF TDS OF RS. 3,64,863/- (COMPRISING OF TDS OF RS. 3,35,552/- AND RS.30,311/ -) IN SPITE OF THE FACT THAT RECEIPTS PERTAINING TO THESE TDS ARE NOT OFFER ED TO TAX BY THE ASSESSEE IN THE CURRENT ASSESSMENT YEAR . 3. GROUND NOS.1 AND 2 BEING INTER-CONNECTED ARE CONSID ERED TOGETHER. 3.1. GROUND NOS.1 AND 2 ARE WITH RESPECT TO ADDITION MAD E ON ACCOUNT OF BOGUS PURCHASES. AO HAS NOTED THAT THE SA LES-TAX DEPARTMENT ON THE BASIS OF THE INVESTIGATION CARRIED OUT BY THEM HAD NOTED THAT CERTAIN PARTIES HAD GIVEN FICTITIOUS ENTRIES WITH OUT CARRYING OUT ANY GENUINE TRANSACTIONS. FROM THE LIST THAT WAS U PLOADED BY THE SALES-TAX DEPARTMENT ON ITS WEBSITE, IT WAS NOTICED THAT IT INCLUDED THE NAME OF M/S. SHRI SAI TRADING COMPANY FROM WHOM ASSESSEE HAD 3 CLAIMED TO HAVE BEEN MADE PURCHASE OF M.S.STEEL, STRUCTUR AL STEEL ETC. AGGREGATING TO RS.1,00,60,000/-. ASSESSEE WAS ASKED TO J USTIFY ITS CLAIM OF PURCHASES. ASSESSEE MADE SUBMISSIONS AND INTER- ALIA SUBMITTED THAT THE PURCHASES MADE BY IT WERE GENUINE A ND WERE SUPPORTED BY THE EVIDENCE IN THE FORM OF PURCHASE BILLS, DELIVERY CHALLANS ETC. AND THE PAYMENTS HAVE BEEN MADE THROUG H BANKING CHANNELS AND IT WAS ALSO SUBMITTED THAT THE DETAILS OF THE SITES WHEREIN THE SAID PURCHASES HAVE BEEN RECEIVED AND CONSUMED. T HE SUBMISSIONS MADE BY THE ASSESSEE WERE NOT FOUND ACCEPT ABLE TO AO IN VIEW OF THE FACT THAT ON VERIFICATION BY THE INSPECTOR, IT W AS FOUND THAT M/S. SHRI SAI TRADING COMPANY WAS NOT AVAILABLE AT THE STATED ADD RESS. AO THEREAFTER NOTED THAT ASSESSEE ALSO FAILED TO PRODUCE THE PARTIES FROM WHOM IT HAD CLAIMED TO HAVE BEEN MADE PURCHASES AN D FURNISH ITS CORRECT WHEREABOUTS. AO CONSIDERED THE PURCHASES AGG REGATING TO RS.1,00,60,000/- FROM M/S. SHRI SAI TRADING COMPANY AS NON- GENUINE AND ALSO HELD THAT THE PURCHASES HAVE BEEN MADE FROM GREY MARKE T AND IN CASH AND HE ACCORDINGLY MADE ITS DISALLOWANCE. AGGRIEVE D BY THE ORDER OF AO, ASSESSEE CARRIED THE MATTER BEFORE LD.CIT(A), WHO AFTER CONSIDERING THE VARIOUS DECISIONS CITED IN HIS ORDER IN PAR A 5.3.1 TO 5.3.3 RESTRICTED THE ADDITION TO RS.10,06,000/- (BEING 10% OF PURCHASES) INSTEAD OF RS.1,00,60,000/- MADE BY THE AO. AGGRIEVED BY THE ORDER OF LD.CIT(A), REVENUE IS NOW IN APPEAL BEFORE US. 4. BEFORE US, LD. D.R. SUPPORTED THE ORDER OF AO. LD. A.R. O N THE OTHER HAND, REITERATED THE SUBMISSIONS MADE BEFORE AO AN D LD.CIT(A) AND SUBMITTED THAT PUNE BENCHES OF THE TRIBUNAL IN VARIO US DECISIONS 4 ON THE ISSUE OF BOGUS PURCHASES HAS HELD THAT THE ENTIR E PURCHASES CANNOT BE DISALLOWED. HE THUS SUPPORTED THE ORDER OF LD.CIT(A). 5. WE HAVE HEARD THE RIVAL SUBMISSIONS AND PERUSED THE MATERIAL ON RECORD. THE ISSUE IN THE PRESENT GROUND IS WITH RESPEC T TO ADDITION MADE ON ACCOUNT OF BOGUS PURCHASES. WE FIND THAT LD.CIT (A) WHILE GRANTING RELIEF TO THE ASSESSEE HAS NOTED THAT AO HAD N OT REJECTED THE BOOKS OF ACCOUNTS AND THAT THE PAYMENTS WERE MADE TO SUPPLIERS THROUGH BANKING CHANNELS. HE THEREFORE CONSIDERING THE V ARIOUS DECISIONS CITED IN THE ORDER AND THE TOTALITY OF THE FACTS UPHELD THE DISALLOWANCE ONLY TO THE EXTENT OF 10% OF THE ALLEGED BOGU S PURCHASES. WE FIND THAT THE PUNE BENCH OF THE TRIBUNAL IN VARIOUS D ECISIONS HAS ALSO HELD THAT THE ENTIRE AMOUNT OF BOGUS PURCHASES CA NNOT BE DISALLOWED AND ONLY THE PROFIT ELEMENT EMBEDDED THEREIN CA N BE DISALLOWED. BEFORE US, REVENUE HAS NOT POINTED OUT ANY CO NTRARY BINDING DECISION IN ITS SUPPORT. WE THEREFORE DO NOT FIND AN Y REASON TO INTERFERE WITH THE ORDER OF LD.CIT(A). THUS, THE GROUND NOS .1 AND 2 OF REVENUE ARE DISMISSED. 6. 3 RD GROUND IS WITH RESPECT TO ALLOWABILITY OF CREDIT OF TDS OF RS.3,64,863/-. 6.1. DURING THE COURSE OF ASSESSMENT PROCEEDINGS AO NOT ICED THAT AS PER THE ITS DATA, THE CONTRACT INCOME OF ASSESSEE FROM MUNICIPAL CORPORATION OF GREATER MUMBAI FOR THE PROJECT AT DURGA DEVI WAS OF RS.5,41,43,409/- AND THE CORRESPONDING TDS WAS OF RS.11,5 7,102/-. HOWEVER AS PER THE BOOKS OF ACCOUNTS OF ASSESSEE, THE CONTRACT RECEIPTS WERE SHOWN AT RS.5,27,25,075/- AND ASSESSEE HAD CLAIMED THE CREDIT 5 FOR TDS. THE DIFFERENCE OF RS.14,18,334/- AS EXPLAINED BY T HE ASSESSEE WAS ON ACCOUNT OF RETENTION MONEY WHICH WAS NOT CONS IDERED BY THE ASSESSEE AS ITS INCOME. AO WAS OF THE VIEW THAT SINCE TH E RETENTION MONEY HAS NOT BEEN OFFERED BY THE ASSESSEE AS INCOME F OR THE YEAR UNDER CONSIDERATION, THE CORRESPONDING TDS OF SUCH CONTR ACT INCOME AMOUNTING TO RS.30,311/- CANNOT BE CLAIMED BY THE ASSESSEE. 7. AO ALSO NOTICED THAT AS PER ITS DATA, CONTRACT AMOUN T RECEIVED BY THE ASSESSEE FROM KALYAN DOMBIVALI MUNICIPAL CORPORATION W AS RS.17,35,39,916/- AND THE CORRESPONDING TDS CREDIT WAS RS.37,89,746/-. ON PERUSAL OF THE BOOKS OF ACCOUNTS, AO N OTICED THAT ASSESSEE HAD SHOWN THE CONTRACT RECEIPTS OF RS.15,14,28,0 30/- AND HAD CLAIMED TDS CREDIT OF RS.32,88,691/-. ASSESSEE WAS ASKE D TO RECONCILE THE DIFFERENCE OF RS.2,21,11,886/-. ASSESSEE SUBMITTED THA T IT HAD RECEIVED RS.1,47,63,988/- AS MOBILIZATION ADVANCE AND IT WAS NOT CONSIDERED AS INCOME. AO WAS OF THE VIEW THAT THE CORR ESPONDING TDS OF SUCH MOBILIZATION ADVANCE OF RS.3,34,552/- CANNOT BE CLAIM ED BY THE ASSESSEE IN VIEW OF THE FACT THAT THE AMOUNT OF RS.1.47 CR ORE HAS NOT BEEN OFFERED TO TAX. HE ACCORDINGLY DENIED THE CLAIM OF T DS OF RS.3,34,552/-. AGGRIEVED BY THE ORDER OF AO, ASSESSEE CAR RIED THE MATTER BEFORE LD.CIT(A), WHO DECIDED THE ISSUE IN FAVOUR OF T HE ASSESSEE BY OBSERVING AS UNDER : DECISION : IT IS OBSERVED THAT DURING THE ASSESSMENT PROCEEDIN GS, THE AO HAS REJECTED THE CLAIM OF TDS OF THE APPELLANT I N CASE OF MUNICIPAL CORPORATION OF GREATER MUMBAI FOR THE PROJECT DURGA DEVI OF RS. 30,311/- AND RS. 3,34,552/- IN RESPECT OF KALYAN-DOMBIVALI MUNICIPAL CORPORATION. SUCH CLAIM OF TDS WAS REJECTED ON THE SOLE GROUND THAT THE ITS DATA AND THE INCOME CLAIMED BY THE APPELLANT MIS MATCHED. THE LD AR FOR THE APPELLANT DURING THE ASSESSMENT PROCEEDI NGS HAS PRODUCED THE RELEVANT MATERIAL ON RECORD AND HAS CONTENDED T HAT THE DIFFERENCE OF AMOUNT IN CASE OF MUNICIPAL CORPORATION OF GREATER MUMBAI FOR THE PROJECT DURGA DEVI OF RS. 30,311/- WAS TOWARDS THE RETENTION AMOUNT TO 6 BE OFFERED TO AS INCOME ONLY AFTER THE COMPLETION O F PROJECT, BUT TDS WAS DEDUCTED ON SUCH AMOUNT. AND, IN CASE OF THE OTHER PARTY, KALYAN- DORNBIVALI MUNICIPAL CORPORATION, THE AMOUNT RECEIV ED WAS NOT THE INCOME RECEIPTS BUT AN ADVANCE RECEIVED FROM THE PA RTY FOR MOBILIZATION OF FUNDS. IT IS UNDISPUTED THAT THE APPELLANT MAINT AINS MERCANTILE SYSTEM OF ACCOUNTING. IF THE TDS DEDUCTED ON SUCH AMOUNTS IS NOT CLAIMED IN THE CURRENT YEAR, IT WILL BE DIFFICULT F OR THE APPELLANT TO TAKE THE CREDIT OF SUCH TDS IN THE YEAR IN WHICH SUCH RETENT ION AMOUNT/ADVANCES ACTUALLY MATERIALIZE AND ARE BOOKED AS REVENUE. UND ER THE CIRCUMSTANCES, I AGREE WITH THE APPELLANT'S CLAIM O F TDS AND ACCORDINGLY, THE GROUND NOS. 9 AND 10 RAISED BY THE APPELLANT ARE ALLOWED. AGGRIEVED BY THE ORDER OF LD.CIT(A), REVENUE IS NOW BEFORE US. 8. BEFORE US, LD. D.R. SUPPORTED THE ORDER OF AO. LD.A.R. ON THE OTHER HAND, REITERATED THE SUBMISSIONS MADE BEFORE LOWER AUTHORITIES AND SUPPORTED THE ORDER OF LD.CIT(A). 9. WE HAVE HEARD THE RIVAL SUBMISSIONS AND PERUSED THE MATERIAL ON RECORD. THE ISSUE IN THE PRESENT GROUND IS WITH RESPECT TO CLAIM OF TDS. BEFORE US, REVENUE HAS NOT POINTED OUT ANY FALLACY IN THE FINDINGS OF LD.CIT(A). IN SUCH A SITUATION, WE FIND NO REASON TO INTERFER E WITH THE ORDER OF LD.CIT(A). THUS, GROUND NO.3 OF REVENUE IS DISMISSED. 10. IN THE RESULT, THE APPEAL OF REVENUE IS DISMISSED. ORDER PRONOUNCED ON 21 ST DAY OF JUNE, 2019. SD/- SD/- ( VIKAS AWASTHY ) ( ANIL CHATURVEDI ) / JUDICIAL MEMBER ! / ACCOUNTANT MEMBER PUNE; DATED : 21 ST JUNE, 2019. YAMINI 7 '#$%&'('% / COPY OF THE ORDER FORWARDED TO : 1. / THE APPELLANT 2. / THE RESPONDENT 3. 4 5. 6. THE CIT(A)-3, PUNE. THE PR. CIT-2, PUNE. !,# ! , / DR, ITAT, B PUNE; %&'/ GUARD FILE. / BY ORDER // TRUE COPY // ( )*+ , / SR. PRIVATE SECRETARY # ! , / ITAT, PUNE.