Shri Anil Gaherilal Duggad, Ahmedabad V. The ACIT, Circle-12, Ahmedabad

ITA 882/AHD/2014

• Counselvise Citation: [2017] 128 COUNSELVISE.COM (IT) 6138 (ITAT-AHMEDABAD)
• Duration Of Justice: 3 year(s) 1 month(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 26-04-2017
• Appeal Filed By: Assessee
• Order Result: Partly Allowed
• Bench Allotted: SMC
• Next Hearing Date: 20-04-2017
• Assessment Year: 2009-2010
• Appeal Filed On: 26-03-2014
• Result in Favour of: Partly Allowed
• Court: TRIBUNAL
• Department Lawyers: A TIRKEY
• Assessee Lawyers: GYAN PIPARA
• Keywords: Bogus purchase
• Section: 133(6)

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL AHMEDABAD SMC BENCH AHMEDABAD BEFORE SHRI PRAMOD KUMAR, ACCOUNTANT MEMBER, AND SHRI S. S. GODARA, JUDICIAL MEMBER. ITA NO. 882/AHD/2014 (ASSESSMENT YEAR: 2009-10) ANIL GAHERILAL DUGGAD PROP. M/S. JASH TRADING CO. A/1/1, JAGANNATH ESTATE, GUJARAT BOTTLING ROAD, RAKHIAL, AHMEDABAD APPELLANT VS. THE ASSTT. COMMISSIONER OF INCOME TAX, CIRCLE-12, 1ST FLOOR, NARAYAN CHAMBERS, ASHRAM ROAD, AHMEDABAD - 380009 RESPONDENT PAN: AELPD5832J & ITA NO. 883/AHD/2014 (ASSESSMENT YEAR: 2009-10) REKHA ANIL DUGGAD PROP. M/S. COPPER KING, A/1/1, JAGANNATH ESTATE, GUJARAT BOTTLING ROAD, RAKHIAL, AHMEDABAD APPELLANT VS. THE ASSTT. COMMISSIONER OF INCOME TAX, CIRCLE-12, 1ST FLOOR, NARAYAN CHAMBERS, ASHRAM ROAD, AHMEDABAD - 380009 RESPONDENT PAN: AHSPD6134B ITA NOS. 882 & 883/AHD/2014 (ANIL & REKHA DUGGAD VS. ACIT) A.Y. 2009-10 - 2 - /BY ASSESSEE : SHRI GYAN PIPARA, A.R. /BY REVENUE : MR. A. TIRKEY, SR. D.R. /DATE OF HEARING : 20.04.2017 /DATE OF PRONOUNCEMENT : 26.04.2017 ORDER PER S. S. GODARA, JUDICIAL MEMBER THESE TWO ASSESSEES HAVE FILED THEIR RESPECTIVE INS TANT APPEALS FOR ASSESSMENT YEAR 2009-10, AGAINST THE CIT(A)-XX, AHM EDABADS SEPARATE ORDERS; BOTH DATED 20.01.2014 IN CASE NOS. CIT(A)-X X/424 & 423/11-12, CONFIRMING ASSESSING OFFICERS ACTION DISALLOWING P URCHASES OF RS.38LACS AND RS.65,01,101/- IN ASSESSMENT ORDERS DATED 26.12 .2011, IN PROCEEDINGS U/S.143(3) OF THE INCOME TAX ACT, 1961; IN SHORT T HE ACT. HEARD BOTH SIDES. CASE FILES PERUSED. 2. LEARNED COUNSEL INFORMS US AT THE OUTSET THAT BO TH THESE APPEALS CHALLENGE CORRECTNESS OF THE ABOVE PURCHASES DISALL OWANCES IN RESPECT OF SEPARATE ASSESSEES /APPELLANTS WHEREIN THE LOWER A UTHORITIES TREAT THE SAME AS BOGUS. SHRI PIPARA STATES THAT THE SOLE ISSUE HERE IN INVOLVES IDENTICAL FACTUAL BACKDROP. WE THUS TREAT FORMER APPEAL ITA NO.882/A HD/2014 IN RESPECT OF THE FORMER ASSESSEE SHRI ANIL GAHERILAL DUGGAD AS T HE LEAD CASE. 3. WE ADVERT TO RELEVANT FACTS. THIS ASSESSEE TRAD ES IN BRASS METAL IN THE NAME AND STYLE OF M/S. JUST TRADING COMPANY. IT CL AIMED TO HAVE PURCHASED THE SAID METAL FROM VARIOUS PARTIES. PAGE 2 OF ASS ESSMENT ORDER STATES SEVEN SUCH SUPPLIERS. THE INSTANT LIST PERTAINS TO ONLY TWO OF THEM I.E. MAHAVIR ITA NOS. 882 & 883/AHD/2014 (ANIL & REKHA DUGGAD VS. ACIT) A.Y. 2009-10 - 3 - ENTERPRISE AND SHREENATH ENTERPRISE INVOLVING PURCH ASE SUMS OF RS.4.7LACS AND 33.24LACS; TOTALING TO RS.38LACS. THE ASSESSIN G OFFICER WAS NOT ABLE TO SERVE THESE PARTIES U/S. 133(6) OF THE ACT. HE THU S ISSUED A SHOW CAUSE NOTICE DATED 21.12.2011 SEEKING TO DISALLOW THE ABOVE PURC HASES. THE ASSESSEE FILED REPLY THERETO WHEREIN IT CLAIMED TO HAVE RECORDED A LL PURCHASES AND QUANTITY DETAILS IN BOOKS OF ACCOUNTS, STOCK LEDGER WHEREIN THE CORRESPONDING SALES HAD BEEN ASSESSED WITHOUT DISTURBING THE RELEVANT B OOKS RESULTS. THE ASSESSING OFFICER SPECIFICALLY QUOTED ITS FAILURE I N NOT EVEN FILING CONFIRMATION FROM THE END OF THE ABOVE TWO PURCHASE RS SO AS TO DISCHARGE PRIMARY ONUS. HE ALLEGED IN ASSESSMENT ORDER DATED 26.12.2011 THAT THE ASSESSEE HAD BOOKED BOGUS PURCHASES IN ORDER TO RED UCE HIS TRADING PROFITS. HE THEREFORE TREATED THE ABOVE GROSS PURCHASES OF R S.38LACS AS BOGUS IN NATURE RESULTING IN THE IMPUGNED DISALLOWANCE. 4. THE CIT(A) CONFIRMS ASSESSING OFFICERS ACTION. WE FURTHER NOTICE THAT THE ASSESSEE MADE ALL ATTEMPTS TO GET ONLY THE PROFIT ELEMENT TAXED IN RESPECT OF ITS PURCHASE DISALLOWANCE AMOUNTS. LEAR NED CIT(A) HOWEVER DECLINES THIS LATTER PLEA AS WELL. 5. WE HAVE HEARD BOTH THE PARTIES. LEARNED COUNSEL REPRESENTING ASSESSEE REFERS TO ITS PAPER BOOK INDICATING COPY OF AUDITED ACCOUNTS, TAXED AUDIT REPORT OF THE ABOVE TRADING CONCERN, COPY OF ACCOUN TS OF THE TWO PAYEE ENTERPRISES FOR FINANCIAL YEARS 2008-09 TO 2012-13 IN FORMER PAYEES CASE AND FROM FINANCIAL YEARS 2007-08 TO 2012-13 IN LATTER P ARTYS CASE ALONG WITH BANK STATEMENT EVIDENCE TO BUTTRESS THE FIRST SUBST ANTIVE ARGUMENT SEEKING TO PROVE GENUINENESS OF THE PURCHASES IN QUESTION. SH RI PIPARA HOWEVER FAILS TO DISPUTE THE FACT THAT THE SAID TWO PAYEES ARE NOT T RACEABLE TILL DATE. WE THEREFORE FIND NO MERIT IN THIS GENUINENESS ASPECT OF ASSESSEES ARGUMENT AS IT WAS ALL THE MORE REASON FOR HIM TO HAVE AT LEAST FI LED THE SAID TWO PARTIES ITA NOS. 882 & 883/AHD/2014 (ANIL & REKHA DUGGAD VS. ACIT) A.Y. 2009-10 - 4 - CONFIRMATIONS AND MORE SO IN VIEW OF THE FACT THAT HE HAD BEEN HAVING BUSINESS RELATIONS FOR ABOVE LONG PERIOD OF TIME. WE THUS AFFIRM CIT(A)S CONCLUSION IN PRINCIPLE THAT THE ASSESSEE HAS NOT B EEN ABLE TO PROVE GENUINENESS OF THE ABOVE PURCHASES. 6. LEARNED COUNSEL THEN RAISES AN EQUALLY SIGNIFICA NT PLEA THAT BOTH THE LOWER AUTHORITIES OUGHT TO HAVE DISALLOWED / ADDED ONLY THE PROFIT ELEMENT EMBEDDED IN THE ABOVE PURCHASES IN QUESTION. THE R EVENUE FAILS TO DISPUTE THE FACT THAT THE LOWER AUTHORITIES HAVE DISALLOWED THOSE PURCHASES WHOSE SALES HAVE BEEN ACCEPTED AS GENUINE STANDING ASSESS ED AS SUCH WITHOUT REJECTION OF BOOKS. WE ARE THEREFORE OF THE OPINIO N THAT THE LEARNED ASSESSING OFFICER OUGHT TO HAVE DISALLOWED ONLY THE PROFIT ELEMENT INSTEAD OF THE ENTIRE PURCHASES. WE NOTICE FROM THE CASE FILE THAT THE ASSESSEE HAD QUOTED UMPTEEN NUMBER OF JUDICIAL PRECEDENTS IN THI S REGARD. HONBLE JURISDICTIONAL HIGH COURTS DECISION IN SANJAY OIL CAKE INDUSTRIES (2009) 316 ITR 274 (GUJ) SUPPORTS THIS LATTER PLEA. WE ARE TH EREFORE OF THE VIEW THAT LARGER INTEREST OF JUSTICE WOULD BE SERVED IN CASE ONLY THE PROFIT ELEMENT @15% IN THE ABOVE BOGUS PURCHASES IS DISALLOWED/ADD ED RATHER THAN THE ENTIRE AMOUNT. WHILST CONCLUDING SO, IT IS MADE CL EAR THAT WE HAVE DULY TAKEN INTO ACCOUNT THE FACT THAT THE ASSESSEE IS A TRADER THAN MANUFACTURER SO AS TO ARRIVE AT THE ABOVE DISALLOWANCE PERCENTAGE. WE AC CORDINGLY DIRECT THE ASSESSING OFFICER TO RESTRICT THE IMPUGNED DISALLOW ANCE @15%. IT IS MADE CLEAR THAT OUR INSTANT ADJUDICATION SHALL NOT BE TR EATED AS A PRECEDENT IN ANY PRECEDING OR SUCCEEDING ASSESSMENT YEAR. LEARNED A SSESSING OFFICER SHALL FRAME CONSEQUENTIAL ASSESSMENT ACCORDINGLY. ITA NO. 882/AHD/2014 IS PARTLY ALLOWED. 6. WE COME TO LATTER ASSESSEES APPEAL ITA NO.883/A HD/2014 INVOLVING SIMILAR ISSUE OF PURCHASES DISALLOWANCE OF RS.65,05 ,101/- IN RESPECT OF COPPER PURCHASES IN TRADING BUSINESS. BOTH THE LEA RNED REPRESENTATIVES AGREE ITA NOS. 882 & 883/AHD/2014 (ANIL & REKHA DUGGAD VS. ACIT) A.Y. 2009-10 - 5 - THAT OUR ABOVE DISCUSSION IN FORMER ASSESSEES CASE APPLIES IN TOTO HEREIN AS WELL. WE THUS DIRECT THE ASSESSING OFFICER TO REST RICT THE IMPUGNED DISALLOWANCE @15% IN THE INSTANT APPEAL AS WELL WIT H ALL OUR STIPULATIONS IN THE PRECEDING PARAGRAPH. ITA NO.883/AHD/2014 IS AL SO PARTLY ACCEPTED. 5. THESE TWO ASSESSEES PARTLY SUCCEED IN THEIR RESP ECTIVE APPEALS. [PRONOUNCED IN THE OPEN COURT ON THIS THE 26 TH DAY OF APRIL, 2017.] SD/- SD/- ( PRAMOD KUMAR ) (S. S. GODARA) ACCOUNTANT MEMBER JUDICIAL MEMBER AHMEDABAD: DATED 26/04/2017 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