Aspiring Enterprises Private Limited , Hyderabad V. Dy. Commissioner of Income Tax , Circle-1(1), Hyderabad

ITA 959/Hyd/2019

• Counselvise Citation: [2021] 107 COUNSELVISE.COM (IT) 8050 (ITAT-HYDERABAD)
• Duration Of Justice: 2 year(s) 2 month(s) 15 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 23-08-2021
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: DB-A
• Next Hearing Date: 03-08-2021
• Assessment Year: 2008-2009
• Appeal Filed On: 07-06-2019
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: DR R DIPAK
• Assessee Lawyers: P MURALI MOHAN RAO
• Keywords: Sham transactions
• Section: 143(3); 142(1); 143(2); 13; 145

Judgement Text

ITA NO 959 OF 2019 ASPIRING ENTERPRISES P LTD HYD ERABAD PAGE 1 OF 5 IN THE INCOME TAX APPELLATE TRIBUNAL HYDERABAD A BENCH, HYDERABAD (THROUGH VIDEO CONFERENCING) BEFORE SMT. P. MADHAVI DEVI, JUDICIAL MEMBER AND SHRI LAXMI PRASAD SAHU, ACCOUNTANT MEMBER ITA NO.959/HYD/2019 ASSESSMENT YEAR: 2008-09 ASPIRING ENTERPRISES (P) LTD, HYDERABAD PAN:AACCA7306E VS. DY. COMMISSIONER OF INCOME TAX, CIRCLE 1(1) HYDERABAD (APPELLANT) (RESPONDENT) ASSESSEE BY: SRI P. MURALI MOHAN RAO REVENUE BY : DR. R. DIPAK, DR DATE OF HEARING: 03/08/2021 DATE OF PRONOUNCEMENT: 23/08/2021 ORDER PER SMT. P. MADHAVI DEVI, J.M. THIS IS ASSESSEES APPEAL FOR THE A.Y 2008-09 AGAIN ST THE ORDER OF THE CIT (A)-1, HYDERABAD, DATED 28.03. 2019. 2. BRIEF FACTS OF THE CASE ARE THAT THE ASSESSEE CO MPANY WHICH IS ENGAGED IN THE BUSINESS OF TRADING IN STEE L ITEMS, FILED ITS RETURN OF INCOME ON 30.09.08 FOR THE A.Y 2008-09 DE CLARING A LOSS OF RS.27,53,88,115/- UNDER THE REGULAR PROVISIONS O F THE I.T. ACT. ON SELECTION OF THE RETURN OF INCOME FOR SCRUTINY U NDER CASS, THE ASSESSMENT PROCEEDINGS U/S 143(3) WERE TAKEN UP, 3. DURING SUCH ASSESSMENT PROCEEDINGS, THE ASSESSIN G OFFICER OBSERVED THAT THE ASSESSEES REGISTERED OFF ICE WAS EARLIER IN CHENNAI, BUT THE ASSESSEE HAS FILED AN APPLICATION FOR TRANSFER OF ITA NO 959 OF 2019 ASPIRING ENTERPRISES P LTD HYD ERABAD PAGE 2 OF 5 ITS FILES TO HYDERABAD ON THE GROUND THAT THE REGIS TERED OFFICE HAS BEEN SHIFTED TO HYDERABAD. THE ASSESSING OFFICER AC CORDINGLY ISSUED NOTICES U/S 143(2) AND ALSO U/S 142(1) TO TH E ASSESSEES ADDRESS IN HYDERABAD. HOWEVER, THE SAME COULD NOT B E SERVED ON THE ADDRESS GIVEN BY THE ASSESSEE AND THEREFORE, TH E NOTICE WAS SERVED ON THE SAID ADDRESS BY AFFIXTURE ON 8/12/201 0. THEREAFTER, THE ASSESSING OFFICER HAD ALSO SENT NOTICES TO THE EMAIL ADDRESS GIVEN IN THE RETURN OF INCOME. THE ASSESSING OFFICE R OBSERVED THAT THE SAID EMAIL PERTAINS TO THE C.A CONNECTED WITH M /S. SUJANA GROUP OF COMPANIES AND THAT IN RESPONSE TO THE EMAI L NOTICE, MR. K.H.B. ATMARAM, STATED TO BE REPRESENTING SUJANA GR OUP OF COMPANIES APPEARED FOR THE ASSESSEE ON 20.12.2010 A ND HE WAS ASKED TO FURNISH THE REQUIRED DETAILS. THE ASSESSIN G OFFICER OBSERVED THAT ON 24.12.2010, MR. ATMARAM APPEARED A ND PRODUCED TWO COMPUTERIZED BOOKS STATED TO BE LEDGER S RELATING TO PURCHASES AND SALES AND BANK LEDGER. AFTER GOING TH ROUGH THE SAME, THE ASSESSING OFFICER OBSERVED THAT THE ASSES SEES ENTIRE DEALING (BOTH PURCHASES AND SALES) ARE BETWEEN 13 G ROUP COMPANIES AND THAT THERE WAS NO CONTEMPORARY EVIDEN CE FOR THE ACTUAL PURCHASE AND SALE OF GOODS. THEREFORE, HE HE LD THAT NO CREDENCE COULD BE GIVEN TO THE SO CALLED BOOKS OF A CCOUNT. HE ALSO HELD THAT WHEN ALL THE PURCHASES AND SALES ARE MADE WITHIN THE GROUP COMPANIES, IT IS NOT CLEAR AS TO WHY THE ASSE SSEE INCURRED LOSS OF RS.27.53 CRORES. HE THEREFORE, HELD THAT TH E ASSESSEE COMPANY DID NOT CARRY ON ANY TRADING ACTIVITY AND T HEREFORE, THE QUESTION OF INCURRING LOSS DOES NOT ARISE. HE FURTH ER HELD THAT EVEN IF IT IS SO, THE ASSESSEE HAS NOT SUBMITTED PU RCHASES AND SALES INVOICES NOR HAS FURNISHED ANY EVIDENCE IN RE SPECT OF SALE OR TRANSPORT OF STEEL TO THE GODOWNS ETC., THUS, HE DI SALLOWED THE TRADING LOSS CLAIMED BY THE ASSESSEE. AGAINST THE S AME, THE ASSESSEE PREFERRED AN APPEAL BEFORE THE CIT (A), WH O CONFIRMED ITA NO 959 OF 2019 ASPIRING ENTERPRISES P LTD HYD ERABAD PAGE 3 OF 5 THE ORDER OF THE ASSESSING OFFICER AND THE ASSESSEE IS IN SECOND APPEAL BEFORE THE TRIBUNAL BY RAISING THE FOLLOWING GROUNDS OF APPEAL: 1. THE LEARNED CIT (A) ERRED IN DISMISSING THE AP PEAL WITHOUT PROPER APPRECIATION OF THE FACTS OF THE CAS E, WHICH IS AGAINST BOTH ON FACTS OF THE CASE AND LAW. 2. THE LEARNED CIT (A) OUGHT TO HAVE HELD THAT THE ASSESSING OFFICER ERRED BOTH ON THE FACTS OF THE CASE AND IN LAW WHILE FINALIZING THE ASSESSMENT U/S 143(3) OF THE I.T. AC T, 1961 FOR THE A.Y 2008-09. 3. THE LEARNED CIT (A) OUGHT TO HAVE ALSO HELD THAT THE ASSESSING OFFICER ERRED IN DISALLOWING THE ENTIRE B USINESS LOSS OF RS.27,53,88,115/- CLAIMED BY THE ASSESSEE W ITHOUT APPRECIATING THE FACTS OF THE CASE. 4. THE LEARNED CIT (A) OUGHT TO HAVE APPRECIATED TH E FACT THAT TRADING WITH GROUP COMPANIES CANNOT BE THE BAS IS FOR REJECTING THE BOOKS OF ACCOUNT OF THE ASSESSEE WHI CH IS AGAINST THE PROVISIONS U/S 145 OF THE ACT. 5. THE LEARNED CIT (A) OUGHT TO HAVE CONSIDERED THA T PURCHASES AND SALES MADE WITH GROUP COMPANIES CANNO T BE THE BASIS FOR CONSIDERING THE COMPANY AS PAPER COMP ANY OR SHAM, WITHOUT HAVING ANY TANGIBLE EVIDENCE FOR COMI NG TO THE ABOVE CONCLUSION. 6. THE LEARNED CIT (A) OUGHT TO HAVE CONSIDERED THE DOCUMENTS FURNISHED BY THE APPELLANT TO SHOW THAT T HE COMPANY IS NOT A BOGUS COMPANY AND ALL THE PURCHASE S AND SALES MADE BY THE COMPANY ARE GENUINE AND ALL THE PAYMENTS AND RECEIPTS ARE THROUGH BANKING CHANNELS. 7. THE LEARNED CIT (A) OUGHT TO HAVE HELD THAT THE ASSESSING OFFICER ERRED IN REJECTING THE BOOKS OF ACCOUNT WIT H THE PRESUMPTION THAT THE TRANSACTIONS OF THE COMPANY AR E BOGUS, EVEN WHEN THE ASSESSEE HAS SUBMITTED THE REQ UIRED DOCUMENTS. 8. THE LEARNED CIT (A) OUGHT TO HAVE HELD THAT THE ASSESSING OFFICER ERRED IN NOT CONSIDERING THE DOCUMENTS AND VAT RETURNS SUBMITTED BY THE ASSESSEE. 9. THE LEARNED CIT (A) OUGHT TO HAVE APPRECIATED TH E FACT THAT WHEN THE ASSESSEE HAS FURNISHED THE VAT RETURN S ADMITTING THE SALE MADE BY IT SAND THE SAME HAS BEE N ACCEPTED BY THE DEPARTMENT, THE THEN ASSESSING OFFI CER TREATING THE SAME AS SHAM TRANSACTIONS IS NOT ACCEP TABLE. 10. THE LEARNED CIT (A) OUGHT TO HAVE APPRECIATED T HE FACT THAT MERE REJECTION OF THE BOOKS OF ACCOUNT OF ASSE SSEE ITA NO 959 OF 2019 ASPIRING ENTERPRISES P LTD HYD ERABAD PAGE 4 OF 5 WITHOUT MAKING ENQUIRY IS AGAINST THE PROVISIONS OF THE ACT U/S 143 AND 145 OF THE ACT. 11. THE LEARNED CIT (A) OUGHT TO HAVE APPRECIATED T HE FACT THAT THE ASSESSING OFFICER ERRED IN REJECTING THE B OOKS OF ACCOUNT OF THE ASSESSEE WHICH WERE DULY AUDITED BY A CA UNDER THE COMPANIES ACT AS WELL AS UNDER THE I.T. A CT. 12. THE LEARNED CIT (A) OUGHT TO HAVE ALSO HELD TH AT THE ASSESSING OFFICER ERRED IN REJECTING THE BOOKS OF A CCOUNT WITHOUT ANY DISCREPANCIES FOUND WHICH IS AGAINST TH E SECTION 145 OF THE ACT. 13. THE LEARNED CIT (A) OUGHT TO HAVE APPRECIATED T HE FACT THAT THE ACCOUNTING TREATMENT WHICH IS ADOPTED BY T HE ASSESSEE COMPANY IS IN ACCORDANCE WITH ACCOUNTING STANDARDS AND THE SAME IS ACCEPTED BY INDEPENDENT AUDITORS OF THE COMPANY. 14. THE APPELLANT MAY ADD OR ALTER OR AMEND OR MODI FY OR SUBSTITUTE OR DELETE AND/OR RESCIND ALL OR ANY OF T HE GROUNDS OF APPEAL AT ANY TIME BEFORE OR AT THE TIME OF HEAR ING OF THE APPEAL. 4. THE LEARNED COUNSEL FOR THE ASSESSEE SUBMITTED T HAT ONLY ON THE GROUND THAT THE ASSESSEE HAS MADE TRANS ACTIONS WITH ITS GROUP OF COMPANIES, THE ASSESSING OFFICER HAS D ISALLOWED THE CLAIM OF LOSS TOTALLY DISREGARDING THE EVIDENCE FIL ED BY THE ASSESSEE BEFORE HIM. HE HAS DRAWN OUR ATTENTION TO THE DETAI LS FILED BY THE ASSESSEE BEFORE THE ASSESSING OFFICER AS WELL AS TH E CIT (A), WHICH ARE FILED BEFORE THE TRIBUNAL IN THE FORM OF A PAPE R BOOK. HE SUBMITTED THAT NONE OF THESE DETAILS WERE CONSIDERE D BY THE ASSESSING OFFICER AND THEREFORE, PRAYED THAT THE IS SUE MAY BE REMANDED TO THE FILE OF THE ASSESSING OFFICER FOR V ERIFICATION AND RECONSIDERATION IN ACCORDANCE WITH LAW. 5. THE LEARNED DR WAS ALSO HEARD. 6. HAVING GONE THROUGH THE DETAILS, WE FIND THAT TH E ASSESSEE HAS, IN FACT, FILED MANY DETAILS BEFORE BO TH THE ASSESSING OFFICER AS WELL AS THE CIT (A), BUT NONE OF THEM HA VE CONSIDERED ANY OF THEM. THEREFORE, IN THE INTEREST OF JUSTICE, WE DEEM IT FIT ITA NO 959 OF 2019 ASPIRING ENTERPRISES P LTD HYD ERABAD PAGE 5 OF 5 AND PROPER TO REMAND THE ISSUE TO THE FILE OF THE A SSESSING OFFICER FOR DENOVO CONSIDERATION IN ACCORDANCE WITH LAW, AF TER GIVING THE ASSESSEE A FAIR OPPORTUNITY OF HEARING. 7. IN THE RESULT, ASSESSEES APPEAL IS TREATED AS A LLOWED FOR STATISTICAL PURPOSES. ORDER PRONOUNCED IN THE OPEN COURT ON 23 RD AUGUST, 2021. SD/- SD/- (LAXMI PRASAD SAHU) ACCOUNTANT MEMBER (P. MADHAVI DEVI) JUDICIAL MEMBER HYDERABAD, DATED 23 RD AUGUST, 2021. VINODAN/SPS COPY TO: S.NO ADDRESSES 1 ASPIRING ENTERPRISES P LTD, C/O P. MURALI & CO. C .A, 6-3-655/2/3, SOMAJIGUDA, HYDERABAD 500082 2 DY.CIT , CIRCLE 1(1) HYDERABAD 3 CIT (A) - 1, HYDERABAD 4 PR. CIT -5, HYDERABAD 5 DR, ITAT HYDERABAD BENCHES 6 GUARD FILE BY ORDER