Assistant Commissioner of Income-tax, V. Shri Venkat Mukundrao Garje, Latur

ITA 888/PUN/2015

• Counselvise Citation: [2019] 118 COUNSELVISE.COM (IT) 2459 (ITAT-PUNE)
• Duration Of Justice: 3 year(s) 9 month(s) 4 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 13-03-2019
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: A
• Next Hearing Date: 03-01-2019
• Assessment Year: 2011-2012
• Appeal Filed On: 09-06-2015
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: SANJEEV GHEI
• Keywords: Bogus purchase

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL A BENCH, PUNE . , , , BEFORE SHRI D. KARUNAKARA RAO, AM AND SHRI VIKAS AWASTHY, JM . / ITA NO . 888 /PUN/201 5 / ASSESSMENT YEAR : 20 11 - 12 THE ASSISTANT COMMISSIONER OF INCOME TAX, LATUR CIRCLE, LATUR ....... / APPELLANT / V/S. SHRI VENKAT MUKUNDRAO GARJE, PLOT NO. 30, MIDC AREA, LATUR 413512 PAN : AANPG7527M / RESPONDENT ASSESSEE BY : SHRI NIKHIL PATHAK REVENUE BY : SHRI SAN JEEV GHEI / DATE OF HEARING : 03 - 01 - 2019 / DATE OF PRONOUNCEMENT : 13 - 0 3 - 2019 / ORDER PER VIKAS AWASTHY, JM : TH IS APPEAL BY THE REVENUE IS DIRECTED AGAINST THE ORDER OF COMMI SSIONER OF INCOME TAX (APPEALS) - 2, AURANGABAD DATED 30 - 03 - 2015 FOR THE ASSESSMENT YEAR 20 11 - 12. 2 ITA NO .888/PUN/2015, A.Y. 2011 - 12 2. THE FACTS GERMANE TO THE PRESENT APPEAL ARE : THE ASSESSEE IS ENGAGED IN THE BUSINESS OF FABRICATION AND CONSTRUCTION ACT IVITY. THE CASE OF THE ASSESSEE WAS MANUALLY SELECTED FOR SCRUTINY . IN SCRUTINY ASSESSMENT PROCEEDINGS, THE ASSESSING OFFICER MADE ADDITION OF RS.77,34,539/ - ON ACCOUNT OF BOGUS PURCHASES. THE SAID ADDITION WAS MADE ON THE BASIS OF ALLEGED CONCESSION RE CORDED BY THE CHARTERED ACCOUNTANT OF THE ASSESSEE. APART FROM ADDITION ON ACCOUNT OF BOGUS PURCHASE S, FOLLOWING ADDITIONS WERE MADE : I . DIFFERENCES IN LIABILITY IN THE CASE OF M/S. KIRTI CONSTRUCTION COMPANY RS.11,39,194/ - . II . DIFFERENCES IN ACCOUNT BALANCES OF THREE PARTIES ADDED AS EXCESS LIABILITY RS.28,769/ - . III . DISALLOWANCE OF PERSONAL EXPENDITURES AND AGRICULTURAL INCOME RS.5,29,281/ - . AGGRIEVED BY THE ABOVE ADDITIONS, THE ASSESSEE FILED APPEAL BEFORE THE COMMISSIONER OF INCOME TAX (APPEALS). THE COMMISS IONER OF INCOME TAX (APPEALS) DELETED ENTIRE ADDITION ON ACCOUNT OF BOGUS PURCHASES AND DIFFERENCES IN LIABILITY IN THE CASE OF M/S. KIRTI CONSTRUCTION COMPANY. THE ADDITION ON ACCOUNT OF DIFFERENCES IN ACCOUNT BALANCES OF THE THREE PARTIES THE ADDITION W AS CONFIRMED. THE DISALLOWANCE ON ACCOUNT OF PERSONAL EXPENDITURE AND AGRICULTURAL INCOME WAS PARTLY CONFIRMED BY THE COMMISSIONER OF INCOME TAX (APPEALS) . AGAINST THE FINDINGS OF COMMISSIONER OF INCOME TAX (APPEALS) THE REVENUE IS IN APPEAL BEFORE THE T RIBUNAL ON TWO GROUNDS : I . DELETING THE ADDITION ON ACCOUNT OF BOGUS PURCHASES RS.77,34,539/ - II . DELETING THE ADDITION OF DIFFERENCE IN LIABILITY SHOWN IN THE CASE OF M/S. KIRTI CONSTRUCTION COMPANY RS.11,39,194/ - . 3 ITA NO .888/PUN/2015, A.Y. 2011 - 12 3. SHRI SANJEEV GHEI REPRESENTING THE DEPARTME NT SUBMITTED THAT DURING THE COURSE OF ASSESSMENT PROCEEDINGS THE ASSESSEE FAILED TO PROVIDE THE DETAILS OF PURCHASE AND TRANSPORTATION OF MATERIAL. THE ASSESSEE COULD NOT FURNISH TRUCK NUMBER, TRANSPORT CHALLAN, DELIVERY CHALLAN, TOLL TAX RECEIPT, ETC. T O SHOW PURCHASE AND MOVEMENT OF GOODS FROM THE SUPPLIERS TO THE PREMISES OF ASSESSEE. SINCE, THE ASSESSEE FAILED TO SUBSTANTIATE THE PURCHASE OF GOODS THE AUTHORIZED REPRESENTATIVE OF ASSESSEE CONCEDED THAT THE PURCHASES WERE BOGUS. THE LD. DR POINTED TH AT THE LETTER VIDE WHICH THE CHARTERED ACCOUNTANT OF ASSESSEE SHRI S.V. GANDHI AGREED FOR THE ADDITION IS PART OF ASSESSMENT ORDER AS ANNEXURE A. ONCE, HAVING AGREED FOR THE ADDITION THE ASSESSEE CANNOT RETRACT AND ASSAIL THE ADDITION BEFORE THE APPELLATE FORUM. 3.1 WITH RESPECT TO SECOND GROUND OF APPEAL, THE LD. DR SUBMITTED THAT THE ASSESSEE HAD SHOWN EXCESS LIABILITY IN ASSESSMENT YEAR 2007 - 08 IN THE NAME OF M/S. KIRTI CONSTRUCTION COMPANY. THE EXPLANATION FURNISHED BY THE ASSESSEE WAS NOT SUPPORTED BY COGENT EVIDENCE. THUS, THE ASSESSEE WAS TRYING TO MISLEAD THE AUTHORITIES BELOW BY CREATING BOGUS LIABILITY AMOUNTING TO RS.11,39,194/ - . THE LD. DR VEHEMENTLY DEFENDED THE ASSESSMENT ORDER AND PRAYED FOR REVERSING THE FINDINGS OF COMMISSIONER OF INCOM E TAX (APPEALS). 4. PER CONTRA, SHRI NIKHIL PATHAK APPEARING ON BEHALF OF THE ASSESSEE STRONGLY SUPPORTED THE FINDINGS OF COMMISSIONER OF INCOME TAX (APPEALS) IN DELETING THE ADDITIONS. THE LD. AR SUBMITTED THAT DURING THE COURSE OF ASSESSMENT PROCEEDINGS THE ASSESSEE FURNISHED VARIOUS DOCUMENTS SUCH AS PURCHASE BILLS, NAME OF THE SUPPLIERS, DISTINCTIVE NUMBER OF INVOICES, 4 ITA NO .888/PUN/2015, A.Y. 2011 - 12 PURCHASE ORDERS, VAT NO./TIN NO., NAME OF THE TRANSPORTERS, DETAILS OF PAYMENT MADE ETC. DESPITE HAVING FURNISHE D ALL THE RELEVANT INFORMATION THE ASSESSING OFFICER WAS NOT CONVINCED WITH THE DOCUMENTATION. THE ASSESSING OFFICER PRESSURIZED THE CHARTERED ACCOUNTANT OF THE ASSESSEE SHRI S.V. GANDHI TO CONCEDE FOR THE ADDITION. THUS, UNDER PRESSURE THE CHARTERED ACCOUNTANT WROTE THE LETTER ON BEHALF OF ASSESSEE. THE CHARTERED ACCOUNTANT OF ASSESSEE WAS NOT EVEN GIVEN TIME TO CONSULT THE ASSESSEE. THE LD. AR POINTED THAT A PERUSAL OF LETTER FROM SHRI S.V. GANDHI ANNEXED AS ANNEXURE A TO THE ASSESSME NT ORDER IS DATED 21 - 02 - 2014 AND ON THE SAME DATE THE ASSESSING OFFICER PASSED THE ASSESSMENT ORDER. IT IS NOT A CASE WHERE BOGUS PURCHASES HAVE DETECTED BY THE MAHARASHTRA STATE SALES TAX DEPARTMENT. IN FACT, THE VAT PAID ON THE ALLEGED BOGUS PURCHASES HAS BEEN ACCEPTED BY THE SALES TAX DEPARTMENT. THE SUPPLIERS WHO ARE LIABLE TO EXCISE HAVE ALSO MAINTAIN ED THE EXCISE RECORDS IN RESPECT OF GOODS SOLD TO THE ASSESSEE. THE ASSESSEE FILED CONFIRMATIONS FROM THE SUPPLIERS BEFORE THE COMMISSIONER OF INCOME TAX (APPEALS) AND ALSO COP IES OF RETURN OF INCOME OF SUPPLIERS. THE PAYMENTS WERE MADE TO THE SUPPLIERS THROUGH BANKING CHANNEL . THE LD. AR CONTENDED THAT THE COMMISSIONER OF INCOME TAX (APPEALS) AFTER CONSIDERING ALL THE DOCUMENTS ON RECORD AND THE AFFI DAVIT TENDERED BY CHARTERED ACCOUNTANT OF THE ASSESSEE DELETED ENTIRE ADDITION MADE ON ACCOUNT OF BOGUS PURCHASES. 4.1 IN RESPECT OF GROUND NO. 2 OF APPEAL THE LD. AR SUBMITTED THAT DURING THE COURSE OF ASSESSMENT PROCEEDINGS THE ASSESSING OFFICER OBTAI NED INFORMATION FROM M/S. KIRTI CONSTRUCTION COMPANY DIRECTLY. AS PER BOOKS OF M/S. KIRTI CONSTRUCTION COMPANY RECEIVABLES FROM THE ASSESSEE AS ON 31 - 03 - 2011WERE RS.4,83,944/ - , W HEREAS, IN THE BALANCE SHEET OF ASSESSEE 5 ITA NO .888/PUN/2015, A.Y. 2011 - 12 THE LIABILITIES IN THE NAME OF M/S. KIRTI CONSTRUCTION COMPANY WAS SHOWN AT RS.16,23,138/ - . THE ASSESSING OFFICER MADE ADDITION OF DIFFERENCE BETWEEN THE TWO AMOUNTS. THE LD. AR POINTED THAT THE ASSESSEE WAS NOT HAVING EXTRACT OF THE ACCOUNT IN THE BOOKS OF M/S. KIRTI CONSTRUCTION COMPANY FOR THE PERIOD FROM 01 - 04 - 2007 TO 31 - 03 - 2011. AS ON 31 - 03 - 2007 THE CREDIT BALANCE IN THE BOOKS OF ASSESSEE IN THE NAME OF M/S. KIRTI CONSTRUCTION COMPANY WAS RS.10,01,208/ - . THE ASSESSEE AFTER RECONCILING THE ACCOUNTS FILED RECONCILIATION STATEMENT BEFO RE THE ASSESSING OFFICER. THE DIFFERENCE WAS MAINLY ON ACCOUNT OF ENTRY OF SECURITY DEPOSIT RS.14,51,772/ - . THE SAID SECURITY DEPOSIT WAS IN RESPECT OF LATUR MEDIUM PROJECT DIVISION, LATUR FOR ANJANPUR PROJECT , WHICH WAS NOT RECEIVED BACK BY THE ASSESSEE EVEN UP TO 31 - 03 - 2014. FURTHER, THERE WAS DIFFERENCE ON ACCOUNT OF WRONG ENTRY PASSED BY THE ASSESSEE IN RESPECT OF VAT RS.8,46,867/ - IN FINANCIAL YEAR 2006 - 07. THE ASSESSING OFFICER BRUSHED ASIDE THE RECONCILIATION STATEMENT FILED BY ASSESSEE. THE COM MISSIONER OF INCOME TAX (APPEALS) EXAMINED THE RECONCILIATION STATEMENT AND THEREAFTER DELETED THE ADDITION. 5. W E HAVE HEARD THE SUBMISSIONS MADE BY REPRESENTATIVES OF RIVAL SIDES AND HAVE PERUSED THE ORDERS OF AUTHORITIES BELOW . THE REVENUE IN APPEAL HAS RAISED AS MANY AS 8 GROUNDS. THE GROUND NOS. 1 AND 2 ARE THE PRIMARY GROUNDS ASSAILING THE ADDITIONS DELETED BY COMMISSIONER OF INCOME TAX (APPEALS). THE REMAINING GROUND I.E. GROUND NOS. 3 TO 8 ARE IN SUPPORT OF FIRST TWO GRO UNDS ASSAILING THE FINDINGS OF COMMISSIONER OF INCOME TAX (APPEALS) . 6 ITA NO .888/PUN/2015, A.Y. 2011 - 12 6. THE FIRST GROUND OF APPEAL IS WITH RESPECT TO DELETING THE ADDITION OF BOGUS PURCHASES AMOUNTING TO RS. 77,34,539/ - . WE FIND THAT THE ADDITION WAS MADE PRIMARILY ON THE BASIS OF LET TER DATED 21 - 02 - 2014 FURNISHED BY THE CHARTERED ACCOUNTANT OF THE ASSESSEE SHRI S.V. GANDHI AGREEING FOR THE ADDITION. IT IS AN UNDISPUTED FACT THE ADDITION ON ACCOUNT OF BOGUS PURCHASES IS NOT ARISING FROM THE PURCHASE OF GOODS FROM HAWALA DEALERS. THE ASSESSING OFFICER HAS MADE ADDITION ON THE GROUND THAT THE ASSESSEE HAS FAILED TO FURNISH COGENT DOCUMENTARY EVIDENCE TO SHOW PURCHASE AND TRANSPORT OF MATERIAL. THE ASSESSEE BEFORE THE FIRST APPELLATE AUTHORITY HAS FILED SWORN AFFIDAVIT OF THE CHARTERED ACCOUNT SHRI S.V. GANDHI WHO HAD REPRESENTED THE ASSESSEE BEFORE THE ASSESSING OFFICER. IT HAS BEEN ALLEGED THAT THE ASSESSING OFFICER DURING ASSESSMENT PROCEEDINGS PRESSURIZED CHARTERED ACCOUNTANT OF THE ASSESSEE TO AGREE FOR THE ADDITION AND WAS NOT GIV EN TIME TO CONSULT THE ASSESSEE BEFORE THE ADDITION. A GLARING FACT THAT HAS BEEN BROUGHT TO OUR NOTICE IS THAT THE ASSESSMENT ORDER WAS PASSED ON THE VERY SAME DAY AFTER THE CHARTERED ACCOUNTANT OF ASSESSEE FILED LETTER AGREEING FOR THE ADDITION. THE PR OBABILITY OF AVERMENTS IN THE AFFIDAVIT BEING TRUE IS QUITE HIGH IN THE LIGHT OF FACT THAT THE ASSESSMENT WAS COMPLETED BY ASSESSING OFFICER ON THE SAME DATE WHEN THE CHARTERED ACCOUNTANT OF THE ASSESSEE AGREED FOR ADDITION. THE ASSESSEE HA S FURNISHED CON FIRMATION LETTER S FROM THE SUPPLIERS OF MATERIAL AND ALSO FURNISHED VARIOUS DETAILS OF THE SUPPLIERS SUCH AS NAME, ADDRESS, PAN, ETC. OF THE SUPPLIERS TO PROVE THE IDENTITY AND THE GENUINENESS OF THE SUPPLIERS. THE ASSESSEE IN AN ENDEAVOR TO PROVE THE GEN UINENESS OF THE TRANSACTIONS AND THE SUPPLIERS HA S FURNISHED THE COPIES OF RETURN OF INCOME OF THE SUPPLIERS BEFORE THE COMMISSIONER OF INCOME TAX (APPEALS). AS HAS BEEN OBSERVED EARLIER IT IS NOT THE CASE OF REVENUE THAT THE ASSESSEE HA S MADE 7 ITA NO .888/PUN/2015, A.Y. 2011 - 12 PURCHASE S FROM HAWALA OPERATORS. AFTER TAKING INTO CONSIDERATION ENTIRE FACTS, WE DO NOT FIND ANY INFIRMITY IN THE ORDER OF COMMISSIONER OF INCOME TAX (APPEALS) IN DELETING THE ADDITION. ACCORDINGLY, THE FINDINGS OF COMMISSIONER OF INCOME TAX (APPEALS) ON THIS ISS UE ARE UPHELD AND THE GROUND NO. 1 RAISED IN THE APPEAL BY THE REVENUE IS DISMISSED. 7. IN GROUND NO. 2 OF THE APPEAL THE REVENUE HAS ASSAILED DELETING OF ADDITION OF RS.11,39,194/ - BEING DIFFERENCES IN LIABILITY SHOWN IN THE CASE OF M/S. KIRTI CONSTRUC TION COMPANY. A PERUSAL OF IMPUGNED ORDER REVEAL THAT THE DIFFERENCE BETWEEN THE ACCOUNTS MAINTAINED BY THE ASSESSEE AND M/S. KIRTI CONSTRUCTION COMPANY WAS RECONCILED BY THE ASSESSEE AND THE RECONCILIATION STATEMENT WAS ALSO FURNISHED BY THE ASSESSEE BEF ORE THE ASSESSING OFFICER. THE DIFFERENCE WAS MAINLY ON ACCOUNT OF SECURIT Y DEPOSITS AND WRONG ENTRY PASS ED BY ASSESSEE IN RESPECT OF VAT PAYMENTS IN THE FINANCIAL YEAR 2006 - 07. AFTER HAVING CONSIDERED THE RECONCILIATION STATEMENT , THE COMMISSIONER OF IN COME TAX (APPEALS) DELETED THE ADDITION. THE LD. DR HAS FAILED TO CONTROVERT THE FINDINGS OF COMMISSIONER OF INCOME TAX (APPEALS) ON THE ISSUE. IN THE ABSENCE OF ANY CONTRARY MATERIAL BROUGHT TO OUR NOTICE WE FIND NO REASON TO INTERFERE WITH THE WELL REA SON ED FINDINGS OF COMMISSIONER OF INCOME TAX (APPEALS) IN DELETING THE ADDITION OF RS.11,39,194/ - . ACCORDINGLY, GROUND NO. 2 RAISED IN THE APPEAL BY THE REVENUE IS DISMISSED BEING DEVOID OF ANY MERIT. 8. THE GROUND NOS. 3 TO 8 OF THE APPEAL ARE ARGUMEN TATIVE AND ARE IN SUPPORT OF GROUND NOS. 1 AN D 2. SINCE, BOTH THE SAID GROUNDS HAVE BEEN DISMISSED THE OTHER GROUNDS ARE ALSO LIABLE TO BE DISMISSED. 8 ITA NO .888/PUN/2015, A.Y. 2011 - 12 9. IN THE RESULT, THE IMPUGNED ORDER IS UPHELD AND THE APPEAL OF REVENUE IS DISMISSED. ORDER PRONOUN CED ON WEDNESDAY, THE 13 TH DAY OF MARCH, 2019. SD/ - SD/ - ( . /D. KARUNAKARA RAO ) ( / VIKAS AWASTHY) / ACCOUNTANT MEMBER / JUDICIAL MEMBER / PUNE; / DATED : 13 TH MARCH, 2019 RK / COPY OF THE ORDER FORWARDED TO : 1. / THE APPELLANT. 2. / THE RESPONDENT. 3. ( ) / THE CIT(A) - 2, AURANGABAD 4. THE PR. COMMISSIONER OF INCOME TAX - 2, AURANGABAD 5. , , , / DR, ITAT, A BENCH, PUNE. 6. / GUARD FILE. / / // TRUE COPY// / BY ORDER, / PRIVATE SECRETARY, , / ITAT, PUNE