M/s B.N Perfumes & Flavours, Kanpur V. Asstt. Commissioner of Income Tax, Kanpur

ITA 907/LKW/2014

• Counselvise Citation: 90723714 RSA 2014
• Duration Of Justice: 7 month(s) 6 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 28-07-2015
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: SMC
• Next Hearing Date: 25-06-2015
• Assessment Year: 2007-2008
• Appeal Filed On: 22-12-2014
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Assessee Lawyers: SWATI RATNA
• Keywords: Bogus purchase

Judgement Text

1 IN THE INCOME TAX APPELLATE TRIBUNAL LUCKNOW BENCH A, LUCKNOW BEFORE SHRI SUNIL KUMAR YADAV, JUDICIAL MEMBER AND SHRI A.K. GARODIA, ACCOUNTANT MEMBER ITA NO.907/LKW/2014 ASSESSMENT YEAR:2007 - 2008 A.C.I.T. - II, KANPUR. VS M/S B. N. PERFUMES & FLAVOURS, 112/273 - B, SWAROOP NAGAR, KANPUR. PAN:AAHFB5004C (RESPONDENT) (APPELLANT) SHRI GOVIND KRISHNA, C. A. APPELLANT BY SMT. SWATI RATNA, D. R. RESPONDENT BY 25/06/2015 DATE OF HEARING 28 /07/2015 DATE OF PRONOUNCEMENT O R D E R PER A. K. GARODIA, A.M. THIS IS ASSESSEES APPEAL DIRECTED AGAINST THE ORDER PASSED BY LEARNED CIT(A) - II, KANPUR DATED 17/10/2014 FOR THE ASSESSMENT YEAR 2007 - 2008. 2. THE GROUNDS RAISED BY THE ASSESSEE ARE AS UNDER: 1. THAT ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE LEARNED CIT (APPEALS) HAS ERRED IN LAW AND ON FACTS BY CONFIRMING THE DISALLOWANCE OF ENTIRE PURCHASES MADE FROM HARI SINGH S/O DHYANPAL SINGH AGGREGATING TO RS.285110/ - WHICH HAD BEEN TREATED AS BOGUS PURCHASES BY THE LEARNED A.O. WITHOUT APPRECIATING THE FACT THAT THE QUANTITATIVE TALLY OF STOCKS WERE PRODUCED BEFORE THE LEARNED A.O. AND THE SAME WERE SUBJECTED TO AUDIT, AND THEREFORE IF SALES HAS BEEN ADMITTED BY THE DEPARTMENT, THE RELEVANT PURCHASE S CANNOT BE HELD TO BE BOGUS 2 PURCHASES, AND THEREFORE THE SAID DISALLOWANCE IS LIABLE TO BE DELETED. 2. THAT ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE LEARNED CIT (APPEALS) HAS ERRED IN LAW AND ON FACTS BY CONFIRMING THE DISALLOWANCE MADE BY THE L EARNED A.O. ON THE BASIS OF LETTER OF SRI HARI SINGH S/O SARDAR R/O OF VILLAGE SIKTARA POST HASAYAN DISTT. HATHRAS, SENT BY HIM TO THE LEARNED A.O. BY USING THE SAME AS EVIDENCE AGAINST THE ASSESSEE, WITHOUT MAKING ANY ENQUIRY ABOUT THE IDENTITY AND GENUIN ENESS OF THE SAID HARI SINGH, PARTICULARLY WHEN THE IDENTITY OF THE VENDOR HARI SINGH S/O DHYANPAL SINGH, AS CLAIMED BY THE APPELLANT FROM WHOM PURCHASE HAD MADE PURCHASES, MAY BE A DIFFERENT PERSON ALTOGETHER. HENCE THE SAID DISALLOWANCE IS LIABLE TO BE D ELETED. 3. LEARNED A.R. OF THE ASSESSEE REITERATED THE SAME CONTENTIONS WHICH WERE RAISED BEFORE CIT(A) AND NOTED BY HIM IN PARA 3 OF HIS ORDER. RELIANCE WAS PLACED BY HIM ON THE FOLLOWING JUDICIAL PRONOUNCEMENTS , COPIES OF WHICH WERE ALSO FILED : ( I ) CIT V S. BHOLANATH POLY FAB (P.) LTD. [2013] 40 TAXMANN.COM 494 (GUJARAT) ( II ) DECISION OF BUMBAI BENCH OF THE TRIBUNAL IN THE CASE OF DCIT VS. RAJEEV G. KALATHIL IN I.T.A. NO.6727/MUM/2012 DATED 20/08/2014 ( III ) DECISION OF AGRA BENCH OF THE TRIBUNAL IN THE CASE OF INCOME TAX OFFICER VS. MAYUR AGARWAL IN I.T.A. NO.612/LKW/2008 DATED 28/01/2011 4. LEARNED D. R. OF THE REVENUE SUPPORTED THE ORDERS OF THE AUTHORITIES BELOW. 5. WE HAVE CONSIDERED THE RIVAL SUBMISSIONS. WE FIND THAT THE DISCUSSION DONE BY LEARNED CIT(A) AN D HIS DECISION ARE AVAILABLE IN PARA 3 OF HIS ORDER, WHICH IS REPRODUCED BELOW FOR THE SAKE OF READY REFERENCE: - 3 3. DISCUSSION & DECISION THE ONLY GROUND OF APPEAL RELATES TO THE ADDITION OF RS.2,85,110/ - MADE BY THE A.O. BY DISALLOWING THE PURCHASES MADE BY THE ASSESSEE AS BOGUS PURCHASES. THE A.O. IN THE ASSESSMENT ORDER HAS PLACED ON RECORD A LETTER DATED 28.11.2009 OF HARI SINGH OF VILLAGE SIKTARA DENYING THEREIN ANY BUSINESS DEALINGS WITH THE ASSESSEE. ON THE OTHER HAND IT WAS ARGUED THAT ABOVE H ARI SINGH, WITH WHOM THE APPELLANT HAD BEEN DEALING RESIDES IN A VILLAGE AND HE IS NOT MUCH EDUCATED, HAD BEEN VISITING KANNAUJ ONLY FOR SUPPLY OF MATERIAL AND HE MAY NOT BE AWARE THAT H.O. OF THE APPELLANT IS IN KANPUR AND IN THIS IMPRESSION HE MIGHT HAVE STATED THAT HE HAD NO DEALINGS WITH THE FIRM NAMED B. N. PERFUMES & FLAVOURS OF KANPUR. IN VIEW OF ABOVE FACTS AND IN THE INTEREST OF JUSTICE THE CONFIRMATORY LETTER SENT BY ABOVE MR. HARI SINGH S/O SRI SARDAR SINGH SHOULD NOT BE RELIED UPON FOR MAKING AD DITION TO THE RETURNED INCOME OF THE APPELLANT BY TREATING THE ENTIRE PURCHASES FROM HIM AS BOGUS PURCHASES PARTICULARLY WHEN THE IDENTITY OF THE SAID HARI SINGH MAY BE A DIFFERENT AS AGAINST THE PERSON FROM WHOM THE CONFIRMATION WAS SOUGHT AND ALSO THE QU ANTITATIVE TALLY OF GOODS PURCHASE STANDS RECONCILED AND ACCEPTED BY THE DEPARTMENT. I HAVE EXAMINED THE FACTS ON RECORD AND FIND THAT THOUGH THE APPELLANT HAD BEEN ARGUING THAT THE PERSON WHO HAS SENT THE REPLY TO THE ENQUIRY LETTER MAY BE A DIFFERENT PE RSON THAN THE ONE WITH WHOM HE HAD BEEN DEALING WITH. AND THEREFORE THE SAID ADDITION IS NOT JUSTIFIED IN THE EYES OF LAW. BUT THE FACT REMAINS THAT THE APPELLANT EVEN AFTER HAVING AN OPPORTUNITY TO PRODUCE THE ABOVE MR. HARI SINGH, FAILED TO PRODUCE FOR V ERIFICATION. ON THE OTHER HAND A.O. HAS PLACED ON RECORD THE LETTER OF MR. HARI SINGH S/O SARDAR SINGH WHO HAS DENIED THE BUSINESS DEALINGS WITH THE APPELLANT. IN VIEW OF THESE FACTS, THE ARGUMENTS OF THE APPELLANT DO NOT HAVE FORCE AND THEREFORE THE SAID ADDITION OF RS.2,85,110/ - IS BEING CONFIRMED. 6. WE ALSO FIND THAT IT IS NOTED BY THE ASSESSING OFFICER IN THE ASSESSMENT ORDER THAT WHEN IT WAS CONTENDED BEFORE HIM THAT SHRI HARI SINGH, THE ALLEGED SUPPLIER HAS DENIED THE TRANSACTION UNDER SOME 4 CONFUSION , T HE ASSESSING OFFICER ASKED THE ASSESSEE TO PRODUCE HIM FOR EXAMINATION BUT IN SPITE OF OPPORTUNITY PROVIDED, THE ASSESSEE DID NOT PRODUCE SHRI HARI SINGH. BEFORE CIT(A) ALSO, THERE IS NO EVIDENCE FURNISHED LIKE AFFIDAVIT ETC. OF SHRI HARI SING H IN SUPPORT OF THIS CONTENTION THAT THE TRANSACTION WAS DENIED BY SHRI HARI SINGH DUE TO SOME CONFUSION BUT THIS IS ALSO TRUE THAT THIS ASPECT OF THE MATTER HAS NOT BEEN EXAMINED BY THE LOWER AUTHORITIES THAT THE ALLEGED PURCHASE OF 34.7 KG. OF GENDA ROOH ALLEGED TO HAVE BEEN MADE BY SHRI HARI SINGH IS INCLUDED IN THE STOCK AND IT WAS ALSO SOLD DURING THE PRESENT YEAR ITSELF . HENCE, IF THE PURCHASES ARE TREATED AS BOGUS, THE QUANTITATIVE DETAILS OF SALES AND STOCK CANNOT BE RECONCILED. THIS ASPECT SHOULD BE CONSIDERED BEFORE MAKING A FINAL DECISION ON THIS ISSUE. HENCE, WE FEEL IT PROPER THAT THE MATTER SHOULD GO TO THE FILE OF THE ASSESSING OFFICER FOR FRESH DECISION AFTER EXAMINING THIS ASPECT OF THE MATTER. 7. NOW WE CONSIDER THE APPLICABILITY OF VARI OUS JUDGMENTS CITED BY LEARNED A.R. OF THE ASSESSEE. 7.1 AS PER THE JUDGMENT OF HON'BLE GUJARAT HIGH COURT RENDERED IN THE CASE OF BHOLANATH POLY FAB (P.) LTD. (SUPRA) , IT WAS HELD BY THE TRIBUNAL THAT WHEN THE PURCHASES WERE CONSIDERED IN QUANTITATIVE DE TAILS AND THE SAME IS T ALLYING, IT CANNOT BE SAID THAT THE ENTIRE PURCHASES SHOULD BE ADDED BACK. IT WAS HELD BY THE TRIBUNAL IN THAT CASE THAT THE PURCHASES MADE NOT BE VERY SAME PURCHASES BUT FROM OTHER SOURCES AND THEREFORE, IT WAS HELD THAT THE ENTIRE AMOUNT CANNOT BE ADDED BUT THE PROFIT AMOUNT CAN BE SUBJECTED TO TAX. SINCE IN THE PRESENT CASE , THE MATTER IS BEING RESTORED TO THE ASSESSING OFFICER TO EXAMINE AND DECIDE TH E QUANTITATIVE ASPECT, WE FEEL THAT THIS JUDGMENT SHOULD BE CONSIDERED BY THE A SSESSING OFFICER AT THE 5 TIME OF FINAL DECISION IF IT IS FOUND T HAT THE ALLEGED PURCHASES FROM HARI SINGH IS VERY MUCH PART OF THE STOCK RECONCILIATION. 7.2 REGARDING OTHER JUDGMENTS ALSO, WE FEEL IT PROPER THAT THE SAME SHOULD BE CONSIDERED BY THE ASSESSI NG OFFICER AFTER DECIDING THE ISSUE IN RESPECT OF ASSESSEES CONTENTION THAT THE ALLEGED PURCHASES FROM SHRI HARI SINGH IS VERY MUCH CONSIDERED AS PART OF STOCK RECONCILIATION. 8. IN THE RESULT, THE APPEAL OF THE ASSESSEE STANDS ALLOWED FOR STATISTICAL PURPOSES. (ORDER WAS PRONOUNCED IN THE OPEN COURT ON THE DATE MENTIONED ON THE CAPTION PAGE) SD/. SD/. (SUNIL KUMAR YADAV) ( A. K. GARODIA ) JUDICIAL MEMBER ACCOUNTANT MEMBER DATED: 28 /07/2015 *C.L.SINGH COPY OF THE ORDER FORWARDED TO : 1.THE APPELLANT 2.THE RESPONDENT. 3.CONCERNED CIT 4.THE CIT(A) 5.D.R., I.T.A.T., LUCKNOW ASSTT. REGISTRAR