Nandgopal Nank Krishnani, Pune V. Deputy Commissioner of Income-tax, Pune

ITA 924/PUN/2015

• Counselvise Citation: [2019] 118 COUNSELVISE.COM (IT) 2592 (ITAT-PUNE)
• Duration Of Justice: 3 year(s) 8 month(s) 22 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 07-03-2019
• Appeal Filed By: Assessee
• Order Result: Dismissed
• Bench Allotted: B
• Next Hearing Date: 06-03-2019
• Assessment Year: 2010-2011
• Appeal Filed On: 15-06-2015
• Result in Favour of: Revenue
• Court: TRIBUNAL
• Keywords: Bogus purchase; Loose papers; Document seized; Accommodation entries; Documents seized
• Section: 37(1)

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL PUNE BENCH B, PUNE BEFORE SHRI R.S. SYAL, VICE PRESIDENT AND SHRI PARTHA SARATHI CHAUDHURY, JUDICIAL MEMBER . / ITA NO.924/PUN/2015 / ASSESSMENT YEAR : 2010-11 SHRI NANDGOPAL NANAK KRISHNANI, (PROP. N.N.K. CONSTRUCTION), OFFICE NO.106, PARMAR TRADE CENTRE, SADHUWASWANI CHOWK, CAMP, PUNE 411001 PAN : AJHPK5906D VS. DCIT, CENTRAL CIRCLE-2(1), PUNE (APPELLANT) (RESPONDENT) / ORDER PER R.S.SYAL, VP : THIS APPEAL FILED BY THE ASSESSEE IS DIRECTED AGAINST THE O RDER PASSED BY THE CIT(A)-12, PUNE ON 13-03-2015 IN RELATION TO THE ASSESSMENT YEAR 2010-11. 2. THE FIRST ISSUE RAISED IN THIS APPEAL IS AGAINST THE CONFIRMA TION OF ADDITION OF RS.51 LAKH. APPELLANT BY SHRI KISHOR PHADKE RESPONDENT BY SHRI PANKAJ GARG & SHRI SUDHENDU DAS DATE OF HEARING 06-03-2019 DATE OF PRONOUNCEMENT 07-03-2019 ITA NO.924/PUN/2015 SHRI NANDGOPAL NANAK KRISHNANI 2 3. BRIEFLY STATED, THE FACTS OF THE CASE, AS RECORDED IN AS SESSMENT ORDER ARE THAT A SEARCH IN THE CASE OF SHRADDHA GROUP, E NGAGED IN CARRYING OUT IRRIGATION CONTRACTS, WAS CONDUCTED ON 08-09-20 10. PURSUANT TO IT, A CONSEQUENTIAL SEARCH WAS CARRIED OUT IN THE CASES OF THE ASSESSEE, AS A PROPRIETOR OF NNK CONSTRUCTIONS, UN IGLORY INFRA PROJECTS PVT. LTD., SHRI SOPAN D. PATIL AND DEVGIRI ENGINEERING VIDE A SINGLE WARRANT ON 17-09-2010 AT THE PR EMISES LOCATED AT ROOM NO.102 AND 103, B-WING, PARMAR TRADE CE NTRE, SADHU VASWANI CHOWK, PUNE 01. THE ASSESSING OFFICER ( AO) HAS RECORDED THAT UNIGLORY INFRA PROJECTS PVT. LTD. IS A SUB- CONTRACTOR OF SHRADDHA GROUP AND SHRI SUSHIL AGARWAL OF UN IGLORY INFRA PROJECTS PVT. LTD. IS ASSOCIATED WITH THE ASSESSEE-NNK CONSTRUCTIONS, DEVGIRI ENGINEERING AND SHRI SOPAN D. PATIL IN SOME WAY OR THE OTHER. A BUNDLE OF LOOSE PAPERS CONTAININ G 33 PAGES WAS SEIZED FROM THE SEARCHED PREMISES, THAT IS, 102 -103, B- WING, PARMAR TRADE CENTRE, PUNE, WHICH IS THE OFFICE OF TH E ASSESSEE. SH. SOPAN D. PATIL GOT A CONTRACT IN SANGAMNER FR OM THE IRRIGATION DEPARTMENT AND SUCH WORK OF SANGAMNER PROJECT WA S SUB-CONTRACTED, INTER ALIA, TO THE ASSESSEE. THE AO ISSUED NOTICE U/S.153A OF THE ACT, IN RESPONSE TO WHICH THE ASSESSEE FUR NISHED A RETURN DECLARING TOTAL INCOME OF RS.3,15,50,670/-, WHICH WA S SUBSEQUENTLY REVISED TO RS.6,25,41,874/-. THE ADDITIONA L INCOME ITA NO.924/PUN/2015 SHRI NANDGOPAL NANAK KRISHNANI 3 OF RS.3,09,91,204/- WAS MAINLY ON ACCOUNT OF BOGUS PUR CHASES. THE AO COMPLETED THE ASSESSMENT MAKING ADDITION, INTER ALIA , OF RS.51 LAKH ON ACCOUNT OF `LABOUR EXPENSES MENTIONED ON PAGE 24 OF THE SEIZED BUNDLE NO.1. THE ASSESSEE REMAINED UNSUC CESSFUL BEFORE THE LD. CIT(A). AGGRIEVED BY THE SAME, THE ASSE SSEE HAS COME UP IN APPEAL BEFORE THE TRIBUNAL. 4. WE HAVE HEARD BOTH THE SIDES AND GONE THROUGH THE RELE VANT MATERIAL ON RECORD. THE ADDITION OF RS.51 LAKH HAS BEEN M ADE ON THE BASIS OF SEIZED DOCUMENT NO.24 WHICH, INTER ALIA, RECORDED LABOUR PAYMENT OF RS.51 LAKH. THIS PAGE HAS TOTAL OF SIX TRANSACTIONS TOTALING RS.3,05,39,481/-. APART FROM THAT, PA GE 26 ALSO CONTAINS A LIST OF CERTAIN ITEMS TOTALLING RS.4.69 CRORE. INSTANTLY, WE ARE CONCERNED WITH THE AMOUNT SHOWN AS LABO UR PAYMENT WORTH RS.51 LAKH ON PAGE 24 OF THE SEIZED DOCUM ENT. THE CASE OF THE REVENUE IS THAT THE ASSESSEE MADE PAYME NTS TO SH. SUSHIL AGARWAL FOR SECURING CONTRACTS FROM THE MAHARASHTRA GOVERNMENT IN AN ILLEGAL WAY AND RECORDED SUCH AMOUNTS IN TH E BOOKS OF ACCOUNT THROUGH ACCOMMODATION ENTRIES, INTER ALIA, LABOUR PAYMENT OF RS.51 LAKH. ON THE OTHER HAND, THE CASE OF THE ASSESSEE IS THAT THE ITEMS MENTIONED ON PAGE 24 AND 26 O F THE SEIZED DOCUMENTS CONTAIN CERTAIN ENTRIES WHICH ARE IN THE NA TURE OF ITA NO.924/PUN/2015 SHRI NANDGOPAL NANAK KRISHNANI 4 ACCOMMODATION ENTRIES BUT THIS RS.51 LAKH WAS PAID DIRECTLY BY SH. SUSHIL AGARWAL WITHOUT INVOLVEMENT OF THE ASSESSEE. IN N UTSHELL, THE POSITION IS THAT THE ASSESSEE MADE PAYMENT TO SH. SUSHIL AGARWAL FOR PROCURING CONTRACTS FROM MAHARASHTRA GOVERNM ENT IN AN ILLEGAL MANNER AND IN ORDER TO ADJUST SUCH PAYMENTS IN THE BOOKS OF ACCOUNT, THE ASSESSEE INFLATED EXPENSES. THE DISPUTE IS ABOUT THE SUM OF RS.51 LAKH WHICH HAS BEEN SHOWN AS LABOUR PAY MENT ON PAGE 24 OF THE SEIZED DOCUMENTS, WHICH IS ADMITTEDLY A CHART CONTAINING A LIST OF PAYMENTS MADE BY THE ASSESSEE. IT IS NO T UNDERSTANDABLE AS TO HOW THE ASSESSEE CAN CLAIM THAT THIS S INGLE SUM OF RS.51 LAKH WAS PAID DIRECTLY BY SH. SUSHIL AGARWAL AS BRIBE AND NOT BY HIM, WHEN THE SAME IS ACTUALLY RECORDED ON THE DOCUMENT SEIZED FROM THE ASSESSEE AND THE REMAINING TRANSA CTIONS ARE ADMITTEDLY OF THE ASSESSEE. THE FACT OF THIS AMOUNT PAS SING OVER AS BRIBE TO MAHARASHTRA GOVERNMENT AUTHORITIES IS NOT DISPUTED. ONCE IT IS FOUND THAT THIS SUM OF RS.51 LAKH WAS ADMITTEDLY PAID, THE SAME IS LIABLE TO BE CHARGED TO TAX IN THE HANDS OF THE ASSESSEE AS IT WAS FOUND RECORDED ALONG WITH OTHER ENTRIES, WHICH ADMITTEDLY PERTAIN TO THE ASSESSEE AND FURTHERMORE THERE IS NO EVIDENCE TO SHOW THAT THIS RS.51 LAKH WAS PAID BY SH. SUS HIL AGARWAL. WE, THEREFORE, UPHOLD THE ADDITION OF RS.51 LAKH SUSTAINED IN THE FIRST APPEAL. ITA NO.924/PUN/2015 SHRI NANDGOPAL NANAK KRISHNANI 5 5. THE ONLY OTHER GROUND IS AGAINST THE CONFIRMATION OF ADD ITION OF RS.60,74,000/-. 6. FACTS CONCERNING THIS GROUND ARE THAT A LIST OF SUSPECTED HAWALA DEALERS, MUMBAI, WHO HAD GIVEN ACCOMMODATION ENTR IES TO SEVERAL CUSTOMERS WAS SENT BY SALES TAX DEPARTMENT (VAT) OF MAHARASHTRA GOVERNMENT TO THE INCOME-TAX DEPARTMENT. TH IS LIST CONTAINED A CONCERN NAMED, TUBE INDIA, PLACED AT SL.NO.11 19. THE ASSESSEE HAD ALSO SHOWN TO HAVE MADE PURCHASES FR OM THIS CONCERN. AS THE ASSESSEE COULD NOT PRODUCE TRANSPORT B ILLS, DELIVERY CHALLANS, WEIGHTMENT SLIPS AND ENTRIES IN INWARD REGISTE RS AT SITE IN RESPECT OF SUCH PURCHASES TOTALING RS.60.74 LAKH , THE AO RECORDED IN THE ASSESSMENT ORDER THAT ASSESSEE MADE DISCLO SURE OF RS.60.74 LAKH AS ADDITIONAL INCOME FOR THE YEAR. HE, THER EFORE, MADE ADDITION OF THE SAID AMOUNT, WHICH CAME TO BE SUSTAINE D IN THE FIRST APPEAL. NOW, THE ASSESSEE IS AGGRIEVED BY SUCH A N ADDITION. 7. WE HAVE HEARD BOTH THE SIDES AND GONE THROUGH THE RELE VANT MATERIAL ON RECORD. THE AO HAS CATEGORICALLY RECORDED THAT WHEN THE ASSESSEE WAS CONFRONTED WITH ACCOMMODATION ENTRIES MADE THROUGH HAWALA DEALERS, HE DISCLOSED A SUM OF RS.60.74 LA KH AS ADDITIONAL INCOME. A COPY OF THE LETTER OFFERING SUCH ADDITION AL ITA NO.924/PUN/2015 SHRI NANDGOPAL NANAK KRISHNANI 6 INCOME DATED 04-03-2013 HAS BEEN PLACED AT PAGE 41 OF TH E PAPER BOOK. IT HAS BEEN MENTIONED THEREIN THAT THE ASSESSEE PURCH ASED AND USED MATERIAL AT ITS WORK SITES BUT MOVEMENT OF MATERIAL WAS MISPLACED. IT FURTHER RECORDS THAT AS SUCH WE ARE SUBM ITTING ENTIRE PURCHASES AMOUNTING TO RS.60,74,186/- DURING FINAN CIAL YEAR ENDED ON 31-03-2010 (A.Y. 2010-11) AS DISALLOWANCE U/S. 37(1) OF THE INCOME-TAX ACT, 1961. IN VIEW OF THE ABOVE CATEGO RICAL ADMISSION BY THE ASSESSEE, THERE REMAINS NOTHING WHICH CAN BE DONE FURTHER IN THIS REGARD. THE PUNE BENCHES OF THE TR IBUNAL IN M/S. CHHABI ELECTRICALS PVT. LTD. AND OTHERS VS. DCIT VIDE ITS ORDER DATED 28-04-2017 IN ITA NO.795/PUN/2014 AND OTHERS , HAS DIVIDED SUCH CASES OF THE BENEFICIARIES OF ACCOMMODATION EN TRIES INTO CERTAIN CATEGORIES. ONE OF THE CATEGORIES TALKS OF 100% ADDITION OF THE AMOUNT OF BOGUS PURCHASES, WHEREAS IN OTHE R CATEGORY, IT HAS BEEN HELD THAT 10% OVER AND ABOVE THE NO RMAL GP RATE SHOULD BE ADDED. SINCE THE ASSESSEE HAS HIMSELF OF FERED 100% OF THE AMOUNT OF PURCHASES FOR TAXATION DURING THE COURSE OF ASSESSMENT PROCEEDINGS, WHICH IS ONE OF THE CATEGORIES IN THE CASE OF M/S. CHHABI ELECTRICALS PVT. LTD. (SUPRA), WE HOLD THAT NO F URTHER RELIEF CAN BE GRANTED TO THE ASSESSEE IN THIS REGARD. ITA NO.924/PUN/2015 SHRI NANDGOPAL NANAK KRISHNANI 7 8. IN THE RESULT, THE APPEAL IS DISMISSED. ORDER PRONOUNCED IN THE OPEN COURT ON 07 TH MARCH, 2019. SD/- SD/- (PARTHA SARATHI CHAUDHURY) (R.S.SYAL) JUDICIAL MEMBER VI CE PRESIDENT PUNE; DATED : 07 TH MARCH, 2019 / COPY OF THE ORDER IS FORWARDED TO : 1. / THE APPELLANT; 2. / THE RESPONDENT; 3. THE CIT(A)-12, PUNE 4. 5. 6. THE CIT CENTRAL, PUNE , , / DR B, ITAT, PUNE; / GUARD FILE. / TRUE COPY // / BY ORDER, // TRUE COPY // SENIOR P RIVATE SECRETARY , / ITAT, PUNE ITA NO.924/PUN/2015 SHRI NANDGOPAL NANAK KRISHNANI 8 DATE 1. DRAFT DICTATED ON 06-03-2019 SR.PS 2. DRAFT PLACED BEFORE AUTHOR 06-03-2019 SR.PS 3. DRAFT PROPOSED & PLACED BEFORE THE SECOND MEMBER JM 4. DRAFT DISCUSSED/APPROVED BY SECOND MEMBER. JM 5. APPROVED DRAFT COMES TO THE SR.PS/PS SR.PS 6. KEPT FOR PRONOUNCEMENT ON SR.PS 7. DATE OF UPLOADING ORDER SR.PS 8. FILE SENT TO THE BENCH CLERK SR.PS 9. DATE ON WHICH FILE GOES TO THE HEAD CLERK 10. DATE ON WHICH FILE GOES TO THE A.R. 11. DATE OF DISPATCH OF ORDER. *