Bholanath Poly Fab Pvt.Ltd., Surat V. The Income tax Officer,Ward-1(1), Surat

ITA 807/AHD/2010

• Counselvise Citation: [2012] 140 COUNSELVISE.COM (IT) 63007 (ITAT-AHMEDABAD)
• Duration Of Justice: 2 year(s) 6 month(s) 27 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 12-10-2012
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: D
• Next Hearing Date: 08-08-2012
• Assessment Year: 2005-2006
• Appeal Filed On: 16-03-2010
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: T SHANKAR
• Assessee Lawyers: P D SHAH
• Keywords: Bogus purchase

Judgement Text

ITA NO 807/ AHD/2010 A.YR.. 2005 -06 1 IN THE INCOME TAX APPELLATE TRIBUNAL D BENCH, AH MEDABAD (BEFORE SHRI D.K. TYAGI JM & SHRI ANIL CHATURVEDI A .M.) I.T.A. NO.807 /AHD/2010. (ASSESSMENT YEAR: 2005-06) BHOLAATH POLY FAB PVT. LTD., C/O.A.K. OSTWAL & CO., C-408 INTERNATIONAL TRADE CENTER, MAJURA GATE, SURAT. (APPELLANT) VS. INCOME TAX OFFICER, WARD 1(1), AAYAKAR BHAVAN, MAJURA GATE, SURAT. (RESPONDENT) PAN: AABCB 9391 H APPELLANT BY : MR. P. D. SHAH RESPONDENT BY : MR.T.SHANKAR, SR.D.R. ( )/ ORDER DATE OF HEARING : 8-8-2012 DATE OF PRONOUNCEMENT :12 -10-2012 PER: SHRI ANIL CHATURVEDI, ACCOUNTANT MEMBER. THIS APPEAL IS FILED BY THE ASSESSEE AGAINST THE O RDER OF CIT (A)-I, SURAT DATED 24-11-2009 FOR THE ASSESSMENT YEAR 2005 -06. 2. THE SOLE GROUND RAISED BY THE ASSESSEE READS AS UNDER:- THE LD. CIT (A)-I, SURAT ERRED IN CONFIRMING THE PENALTY LEVIED U/S. 271(1)(C) FOR FURNISHING INACCURATE PARTICULAR S OF INCOME WITHOUT CONSIDERING THE QUANTUM APPEAL OF APPELLANT IS PEND ING BEFORE TRIBUNAL. 3. ASSESSEE IS A COMPANY ENGAGED IN THE BUSINESS OF TRADING OF FINISHED FABRICS. IT FILED ITS RETURN OF INCOME ON 31-10-2005 DECLARING TOTAL ITA NO 807/ AHD/2010 A.YR.. 2005 -06 2 INCOME OF RS.40,641/-. CASE WAS SELECTED FOR SCRUTI NY AND THE ASSESSMENT WAS FINALIZED U/S.143(3) R.W.S.145(3) OF THE ACT ON 31-10-2005, AND THE TAXABLE INCOME WAS DETERMINED AT RS.41,10,190/-. D URING THE COURSE OF ASSESSMENT PROCEEDINGS A.O. REJECTED THE BOOK RESUL TS BY INVOKING THE PROVISIONS OF SEC. 145(3), MADE ADDITION OF RS.40,6 9,546/- AND THEREUPON THE TOTAL VALUE OF PURCHASE OF FINISHED FABRICS OF RS.40,69,546/- WAS CONSIDERED AS UNEXPLAINED ADDITION ADDED TO THE TOT AL INCOME. THE ADDITION MADE BY A.O. WAS UPHELD BY CIT (A). ON THE ADDITION S MADE BY A.O. DURING THE COURSE OF ASSESSMENT PROCEEDINGS, A.O. I NITIATED AND LEVIED PENALTY OF RS.14,89,149/- U/S. 271(1)(C). 4. AGAINST THE PENALTY LEVIED BY A.O. ASSESSEE PREF ERRED APPEAL BEFORE CIT (A). CIT (A) CONFIRMED THE PENALTY FOR THE REAS ON THAT PURCHASES WERE FOUND TO BE TOTALLY BOGUS AND THE ASSESSEE HAD FURN ISHED INACCURATE PARTICULARS OF INCOME BY INTRODUCING BOGUS PURCHASE S AND THEREFORE ASSESSEE HAD CONCEALED ITS REAL INCOME. 5. BEFORE US THE LD. A.R. SUBMITTED THAT AGAINST TH E QUANTUM ADDITION CONFIRMED BY LD. CIT (A), THE ASSESSEE HAD PREFERRE D APPEAL BEFORE HONBLE ITAT. ITAT IN ITS ORDER DATED 26-7-2011 (IT A NO.137/AHD/2009) ON THE BASIS OF QUANTITATIVE DETAILS SUBMITTED BY THE ASSESSEE HELD THAT THE ENTIRE PURCHASES MADE BY THE ASSESSEE WAS SOLD DUR ING THE YEAR WHICH SUPPORTS THE ASSESSEES CONTENTION THAT THE FINISHE D GOODS PURCHASED BY THE ASSESSEE MAY BE FROM, SOME OTHER PARTIES THAN T HE PARTIES FROM WHOM THE PURCHASES WERE SHOWN TO HAVE BEEN MADE. THE HON BLE TRIBUNAL RELYING ON THE DECISION OF CO-ORDINATE BENCH IN THE CASE OF SANKET STEEL TRADERS VS. ITO (ITA NO.2801/AHD/2008 DATED 20-5-20 11) RESTRICTED THE DISALLOWANCE TO 12.5% OF THE PURCHASES. THE LD. A.R . THEREFORE SUBMITTED THAT SINCE IN THE PRESENT CASE THE ADDITION HAS BEE N SUSTAINED ON ESTIMATED ITA NO 807/ AHD/2010 A.YR.. 2005 -06 3 BASIS, NO PENALTY U/S. 271(1)(C) CAN BE LEVIED. FOR THIS PROPOSITION HE RELIED ON THE DECISION IN THE CASE OF CIT VS. SAGRUR VANAS PATI MILLS LTD. (2008) 303 ITR 53, (P&H), NAVJIVAN OIL MILLS VS. CIT (2001 ) 252 ITR 417 (GUJ.) AND THE DECISION OF CO-ORDINATE BENCH IN THE CASE O F RAJLAXMI PRINTS PVT. LTD. (ITA NO.809/AHD/2010 DATED 15-6-2012). HE THUS URGED THAT THE PENALTY LEVIED BY THE A.O. BE DELETED. 6. ON THE OTHER HAND THE LD. D.R. SUBMITTED THAT TH E ASSESSEE HAD INTRODUCED FAKE BILLS OF PURCHASES AND CLAIMED THE EXPENDITURE TO REDUCE THE PROFITS. THE LD. D.R. SUBMITTED THAT THE ASSESS EE HAD FAILED TO PROVE THE GENUINENESS OF PURCHASES AND THE INQUIRIES REVE ALED THAT MOST OF THE CHEQUES ISSUED BY THE ASSESSEE WERE NOT DEPOSITED I N THE BANK ACCOUNT OF THE CREDITORS BUT SOME OTHER ACCOUNT. IN VIEW OF TH IS FACTUAL POSITION THE BOOK RESULTS WERE REJECTED U/S. 145(3).THE LD. D.R. POINTED OUT TO THE FACT THAT THE ASSESSEE ALSO DID NOT FURNISH DETAILS WITH RESPECT TO TRANSPORTATION/OCTROI. LOADING AND UNLOADING EXPENS ES, PROOF OF CHALLANS AND OTHER INDEPENDENT EVIDENCE TO PROVE THE PURCHAS ES. HE THEREFORE SUBMITTED THAT IN THE PECULIAR FACTS, THE A.O. WAS RIGHT IN LEVYING PENALTY. HE FURTHER SUBMITTED THE FACTS IN THE CASE OF RAJLA XMI ARE DISTINGUISHABLE. HE FURTHER SUBMITTED THAT THE FACTS IN THE CASE OF NAVJIVAN OIL MILLS (SUPRA) ARE ALSO DISTINGUISHABLE AND THEREFORE CANNOT BE RE LIED UPON. HE THUS SUBMITTED THAT IN THE FACTS OF THE PRESENT CASE THE A.O. WAS JUSTIFIED IN LEVYING PENALTY ADDITION THEREFORE THE ORDER OF THE A.O. BE UPHELD. 7. WE HAVE HEARD THE RIVAL SUBMISSIONS AND PERUSED THE MATERIAL ON RECORD. IN THE PRESENT CASE WE FIND THAT THE A.O. H AD TREATED THE EXPENDITURE ON PURCHASE OF GOODS TO BE UNEXPLAINED AND ADDED IT TO THE INCOME. IN THE QUANTUM APPEAL, THE HONBLE ITAT ON THE BASIS OF QUANTITATIVE DETAILS OF STOCK SUBMITTED BY THE ASSE SSEE HELD THAT THE ITA NO 807/ AHD/2010 A.YR.. 2005 -06 4 CONTENTION OF THE ASSESSEE THAT THE GOODS WERE IN FACT PURCHASED CANNOT BE DISCARDED BUT MIGHT HAVE BEEN PURCHASED FROM SOM E OTHER PARTY THAN FROM THOSE SHOWN IN THE BOOKS. IN VIEW OF THESE FAC TS, THE HONBLE TRIBUNAL RESTRICTED THE ADDITION TO 15% OF THE PURCHASES. TH US THE ADDITION HAS BEEN MADE ON THE BASIS OF ESTIMATE. IN THE CASE OF CIT V S. SANGRUR VANASPATI MILLS LTD. (SUPRA) IT HAS BEEN HELD THAT THE PROVIS IONS OF SEC. 271(1)(C) OF THE ACT ARE NOT ATTRACTED TO CASES WHERE THE INCOME OF AN ASSESSEE IS ASSESSED ON ESTIMATE BASIS AND ADDITIONS ARE MADE T HEREIN. IN THE PRESENT CASE, THE ADDITION HAS BEEN MADE ON ESTIMATE BASIS. THUS RELYING ON THE AFORESAID DECISION OF HONBLE HIGH COURT IN THE CAS E OF SANGUR VANASPATI(SUPRA), WE ARE OF THE VIEW THAT NO PENALT Y CAN BE LEVIED. WE THUS DELETE THE PENALTY LEVIED BY THE A.O. THUS THE GROUND OF THE ASSESSEE IS ALLOWED. 8. IN THE RESULT, THE APPEAL OF THE ASSESSEE IS ALL OWED. ORDER PRONOUNCED IN OPEN COURT ON 12 10 - 2012. SD/- SD/- ( D. K. TYAGI ) (ANIL CHATURVEDI) JUDICIAL MEMBER ACC OUNTANT MEMBER AHMEDABAD. S.A.PATKI. COPY OF THE ORDER FORWARDED TO: - 1. THE APPELLANT. 2. THE RESPONDENT. 3. THE CIT (APPEALS)-I, SURAT. 4. THE CIT CONCERNED. 5. THE DR., ITAT, AHMEDABAD. 6. GUARD FILE. BY ORDER DEPUTY/ASSTT.REGISTRAR ITAT,AHMEDABAD ITA NO 807/ AHD/2010 A.YR.. 2005 -06 5 1.DATE OF DICTATION 8 - 9 -2012 2.DATE ON WHICH THE TYPED DRAFT IS PLACED BEFORE TH E DICTATING 9 / 10 / 2012 MEMBER.OTHER MEMBER. 3.DATE ON WHICH THE APPROVED DRAFT COMES TO THE SR. P.S./P.S - -2012. 4.DATE ON WHICH THE FAIR ORDER IS PLACED BEFORE THE DICTATING MEMBER FOR PRONOUNCEMENT - -2012 5.DATE ON WHICH THE FAIR ORDER COMES BACK TO THE SR .P.S./P.S - -2012 6.DATE ON WHICH THE FILE GOES TO THE BENCH CLERK - -2012. 7.DATE ON WHICH THE FILE GOES TO THE HEAD CLERK . 8.THE DATE ON WHICH THE FILE GOES TO THE ASSTT. REG ISTRAR FOR SIGNATURE ON THE ORDER 9.DATE OF DESPATCH OF THE ORDER..