The ACIT, Central Circle-1(1), Ahmedabad V. Shri Kiritkumar Vasantbhai Thakkar, Patan

ITA 950/AHD/2012

• Counselvise Citation: [2016] 133 COUNSELVISE.COM (IT) 1176 (ITAT-AHMEDABAD)
• Duration Of Justice: 4 year(s) 2 month(s) 6 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 07-07-2016
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: B
• Next Hearing Date: 04-07-2016
• Assessment Year: 2008-2009
• Appeal Filed On: 01-05-2012
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: AJIT P SANDESARA
• Keywords: Bogus purchase

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL AHMEDABAD B BENCH (BEFORE SHRI RAJPAL YADAV, JUDICIAL MEMBER & SHRI N.K. BILLAIYA, ACCOUNTANT MEMBER) ITA. NOS: 835 & 950/AHD/2012 (ASSESSMENT YEAR: 2008-09) SHRI KIRTIKUMAR VASANTBHAI THAKKAR PROP. OF M/S. DIVYA TRADERS PROP. KIRTIKUAMR V. THAKKAR GANJ BAZAR, AT & POST. HARIJ, DISTRICT: PATNA (N.G) ACIT, CENTRAL CIRCLE-1(1), AHMEDABAD V/S V/S ACIT, CENTRAL CIRCLE-1(1), AHMEDABAD SHRI KIRTIKUMAR VASANTBHAI THAKKAR PROP. OF M/S. DIVYA TRADERS PROP. KIRTIKUAMR V. THAKKAR GANJ BAZAR, AT & POST. HARIJ, DISTRICT: PATNA (N.G) (APPELLANT) (RESPONDENT) PAN: ADNPT8412B APPELLANT BY : SHRI AJIT P. SANDESARA, A. R. RESPONDENT BY : SHRI JAMESH KURIAN, SR. D.R. ( )/ ORDER DATE OF HEARING : 04 -07-20 16 DATE OF PRONOUNCEMENT : 07 -07-2016 ITA NOS. 835 & 950/AHD/2012 . A.Y. 2008-09 2 PER N.K. BILLAIYA, ACCOUNTANT MEMBER: 1. ITA NOS. 950 & 835/AHD/2012 ARE CROSS APPEALS BY TH E REVENUE AND THE ASSESSEE PREFERRED AGAINST THE VERY SAME ORDER OF THE LD. CIT(A)- I, AHMEDABAD DATED 13.03.2012 PERTAINING TO A.Y. 20 08-09. 2. THE GRIEVANCE OF THE REVENUE READS AS UNDER:- 1. THE LD.CIT(A)- HAS ERRED IN LAW AND ON FACTS IN DELETING THE ADDITION OF RS.57,87,821/- OUT OF TOTAL ADDITION OF RS.77,17,09 4/- MADE ON ACCOUNT OF BOGUS PURCHASES. 2. ON FACTS AND IN THE CIRCUMSTANCES OF THE CASE AND IN LAW, THE CIT(A) OUGHT TO HAVE UPHELD THE ENTIRE ADDITION OF RS.77,17,094- MA DE ON ACCOUNT OF BOGUS PURCHASES. 3. AND THE GRIEVANCE OF THE ASSESSEE READS AS UNDER:- 1.1 THAT ON THE FACTS AND IN THE CIRCUMSTANCES OF T HE CASE AND AS PER LAW, LEARNED CIT (APPEALS) ERRED IN SUSTAINING ADDITIONS OF RS. 19,29,273 OUT OF ADDITIONS MADE BY THE ASSESSING OFFICER ON THE GROUND OF 'BOG US PURCHASES'. 1.2 THAT ON THE FACTS AND IN THE CIRCUMSTANCES OF T HE CASE AND AS PER LAW, LEARNED CIT (APPEALS) ERRED IN DETERMINING THE ADDITIONS @2 5% OF THE UNPROVED PURCHASES WITHOUT CONSIDERING THE FACT THAT APPELLA NT IS A TRADER IN FOOD GRAINS ON WHOLESALE MARKET AND HE MAINTAINS QUANTITY RECOR DS. HENCE, DISALLOWANCE SUSTAINED BY THE LEARNED CIT (APPEALS) IS NOT REASO NABLE AS PER THE FACTS AND CIRCUMSTANCES AND DESERVES TO BE DELETED. 1.3 THAT LEARNED CIT (APPEALS) HAVE ERRED IN RELYIN G ON THE DECISION OF GUJARAT HIGH COURT IN THE CASE OF 'SANJAY OIL CAKE INDUSTRI ES' TO DETERMINE THE DISALLOWANCE @ 25% WITHOUT CONSIDERING THE FACT THA T SAME IS CLEARLY DISTINGUISHABLE ON THE FACTS AND SAME CAN-NOT BE AP PLIED IN THE INSTANT CASE OF THE APPELLANT ITA NOS. 835 & 950/AHD/2012 . A.Y. 2008-09 3 4. AS CAN BE SEEN FROM THE AFOREMENTIONED GRIEVANCES O F RESPECTIVE RIVAL PARTIES, THEY EMANATE FROM THE SAME SET OF FACTS; T HEREFORE, BOTH THESE APPEALS WERE HEARD TOGETHER AND ARE BEING DIS POSED OF BY THIS COMMON ORDER FOR THE SAKE OF CONVENIENCE. 5. BRIEFLY STATED, A SEARCH AND SURVEY ACTION TOOK PLA CE AT THE PREMISES OF EDIBLE OIL MILLS GROUP OF PATAN DISTRICT AND AGENTS /BROKERS OF MEHSANA AND SABARKANTHA DISTRICT OF GUJARAT. A SURVEY ACTIO N WAS ALSO CARRIED OUT AT THE BUSINESS PREMISES OF THE ASSESSEE. 6. WITH THE AFORE-STATED FACTS, DURING THE COURSE OF S EARCH AND SURVEY PROCEEDINGS IN THE CASE OF EDIBLE OIL MILLS GROUP, IT WAS NOTICED THAT M/S. VISHAL TRADERS, VIRPUR, DIST. KHEDA HAD ISSUES BOGUS /ADJUSTMENTS BILLS TO A LARGE NUMBER OF CONCERNS OF MEHSANA AND PATAN DISTRICTS DURING FINANCIAL YEAR 2006-07 ONWAR DS. 7. SINCE, THE ASSESSEE WAS ALSO ONE OF THE BENEFICIARI ES OF SUCH ACCOMMODATION BILLS, THE ASSESSEE WAS ASKED TO EXPL AIN THE GENUINENESS OF THE PURCHASES OF RS. 97,87,524/- MAD E FROM M/S. VISHAL TRADERS. ASSESSEE FILED A DETAILED REPLY STA TING THAT HE IS IN THE BUSINESS OF TRADING IN GRAIN ON WHOLE-SALE BASIS AN D IS MAINTAINING DAY TO DAY QUANTITY REGISTER WHICH HAVE BEEN DULY AUDIT ED BY A CHARTERED ACCOUNTANT. IN SO FAR AS PURCHASES FROM VISHAL TRAD ERS ARE CONCERNED, IT WAS EXPLAINED THAT ALL THE PAYMENTS HAVE BEEN MA DE BY ACCOUNT PAYEE CHEQUES. 8. AFTER CONSIDERING THE SUBMISSIONS MADE BY THE ASSES SEE, THE A.O. ASKED THE ASSESSEE TO SUBSTANTIATE THE CLAIM OF PUR CHASE BY PRODUCING GATEPASS, LR RECEIPTS, CHALLANS, VOUCHERS ETC. THE ASSESSEE WAS ALSO ITA NOS. 835 & 950/AHD/2012 . A.Y. 2008-09 4 ASKED TO PRODUCE SUPPLIERS AND TRANSPORTERS. IN SPI TE OF REPEATED OPPORTUNITIES, THE A.O. DID NOT RECEIVE ANY EXPLANA TION FROM THE ASSESSEE. 9. HOWEVER, THE A.O. FOUND THAT THE ASSESSEE HAS DISCL OSED 10% OF THE BOGUS PURCHASES AS HIS UNDISCLOSED INCOME AND HAS O FFERED RS. 9,78,752/- FOR TAXATION. 10. HOWEVER, THE A.O. COMPLETED THE ASSESSMENT BY TREAT ING THE ENTIRE PURCHASES OF RS. 97,87,524/- AS BOGUS PURCHA SES AND MADE THE ADDITIONS ACCORDINGLY. 11. ASSESSEE CARRIED THE MATTER BEFORE THE LD. CIT(A) A ND REITERATED WHAT HAS BEEN STATED DURING THE COURSE OF THE ASSES SMENT PROCEEDINGS. 12. AFTER CONSIDERING THE FACTS AND THE SUBMISSIONS AND THE DOCUMENTARY EVIDENCES SUBMITTED DURING THE COURSE O F THE APPELLATE PROCEEDINGS, THE LD. CIT(A) WAS CONVINCED THAT SINC E THE CORRESPONDING SALES HAVE BEEN ACCEPTED BY THE A.O. AND THE SAME ARE DULY REFLECTED IN THE AUDITED STATEMENTS OF ACCOUNT S, THIS IS A CASE OF INFLATED PURCHASES. FOLLOWING THE DECISION OF THE H ONBLE JURISDICTIONAL HIGH COURT GIVEN IN THE CASE OF SANJAY OIL CAKE IND USTRIES 316 ITR 274. THE LD. CIT(A) DIRECTED THE A.O. TO RESTRICT T HE BOGUS PURCHASES ADDITION FROM VISHAL TRADERS TO 25% OF THE PURCHASE S MADE FROM VISHAL TRADERS I.E. RS. 77,17,094/-. THE LD. CIT(A) FURTHER DELETED THE ADDITION OF RS. 9,78,752/- HOLDING THAT THIS ADDITI ON OF RS. 9,78,752/- GETS TELESCOPED IN THE BOGUS PURCHASES ADDITION WHI CH HAS BEEN RESTRICTED TO 25%. ITA NOS. 835 & 950/AHD/2012 . A.Y. 2008-09 5 13. AGGRIEVED BY THIS, BOTH REVENUE AND THE ASSESSEE AR E NOW IN APPEAL BEFORE US. 14. THE LD. D.R. STRONGLY SUPPORTED THE FINDINGS OF THE A.O. LD. COUNSEL FOR THE ASSESSEE REITERATED WHAT HAS BEEN S TATED BEFORE THE LOWER AUTHORITIES. IN SUPPORT THE LD. COUNSEL RELIE D UPON THE DECISION OF THE CO-ORDINATE BENCH GIVEN IN THE CASE OF GUJARAT AMBUJA EXPORTS IN IT(SS)A NOS. 123, 124 & 481/AHD/2012. 15. WE HAVE GIVEN A THOUGHTFUL CONSIDERATION TO THE ORD ERS OF THE AUTHORITIES BELOW. IT IS AN UNDISPUTED FACT THAT TH E ASSESSEE WAS THE BENEFICIARY OF ACCOMMODATION BILLS ISSUES BY M/S. V ISHAL TRADERS. IT IS ALSO AN UNDISPUTED FACT THAT PURCHASES WERE QUANTIF IED AND CORRESPONDING SALES HAVE BEEN ACCEPTED BY THE A.O. IN OUR UNDERSTANDING OF THE FACTS, THE ASSESSEE HAS PURCHA SED GOODS WITHOUT ANY SUPPORTING BILLS/INVOICES AND HAS TAKEN ACCOMMO DATION BILLS TO SUPPORT THE PURCHASES SO MADE. THEREFORE, IN OUR CO NSIDERED OPINION, THE ENTIRE PURCHASES FROM VISHAL TRADERS CANNOT BE TREATED AS BOGUS PURCHASES. 16. NOW, THE QUESTION THAT REMAINS TO BE ANSWERED IS TH E PERCENTAGE OF PROFIT WHICH THE ASSESSEE MUST HAVE M ADE FROM THE IMPUGNED PURCHASES. WE FIND THAT THE FIRST APPELLAT E AUTHORITY HAS DRAWN SUPPORT FROM THE DECISION OF THE HONBLE JURI SDICTIONAL HIGH COURT GIVEN IN THE CASE OF SANJAY OIL CAKE INDUSTRI ES (SUPRA). THEREFORE, IN OUR HUMBLE OPINION, THE FINDINGS OF T HE FIRST APPELLATE AUTHORITY ARE WELL SUPPORTED BY THE DECISION OF THE HONBLE JURISDICTIONAL HIGH COURT (SUPRA), THEREFORE, NO IN TERFERENCE IS CALLED FOR. ITA NOS. 835 & 950/AHD/2012 . A.Y. 2008-09 6 17. WE ACCORDINGLY CONFIRM THE FINDINGS OF THE LD. CIT( A), APPEALS OF THE REVENUE AS WELL AS THE ASSESSEE ARE ACCORDINGLY DISMISSED. 18. BEFORE PARTING, THE LD. COUNSEL HAS PLACED RELIANCE ON THE DECISION OF THE CO-ORDINATE BENCH IN THE CASE OF GU JARAT AMBUJA EXPORT (SUPRA), WE FIND THAT THE PRODUCTS DEALT BY GUJARAT AMBUJA EXPORT ARE TOTALLY DIFFERENT FROM THOSE OF THE ASSE SSEE. THEREFORE, THE SAME PROFIT MARGIN CANNOT BE ACCEPTED. ORDER PRONOUNCED IN OPEN COURT ON 07- 07 - 20 16. SD/- SD/- (RAJPAL YADAV) (N. K. BILLAIYA) JUDICIAL MEMBER ACCOUNTANT MEMBER AHMEDABAD: TRUE COPY RAJESH COPY OF THE ORDER FORWARDED TO: - 1. THE APPELLANT. 2. THE RESPONDENT. 3. THE CIT (APPEALS) 4. THE CIT CONCERNED. 5. THE DR., ITAT, AHMEDABAD. 6. GUARD FILE. BY ORDER DEPUTY/ASSTT.REGISTRAR ITAT,AHME DABAD