ITO ward-35(5), New Delhi V. Triveni Industries , Delhi

ITA 9653/DEL/2019

• Counselvise Citation: [2022] 104 COUNSELVISE.COM (IT) 1510 (ITAT-DELHI)
• Duration Of Justice: 2 year(s) 9 month(s) 18 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 06-10-2022
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: G
• Next Hearing Date: 02-10-2022
• Assessment Year: 2011-2012
• Appeal Filed On: 18-12-2019
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Keywords: Bogus purchase; Accommodation entries
• Section: 147

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL DELHI BENCH, ‘H’: NEW DELHI BEFORE SMT. DIVA SINGH, JUDICIAL MEMBER AND DR. B.R.R. KUMAR, ACCOUNTANT MEMBER ITA No.9653/DEL/2019 [Assessment Year: 2011-12] Income Tax Officer, Ward-35(5), New Delhi Vs M/s Triveni Industries, F-1739, DSIIDC Industrial Area, Narela, Tikri Khurd Village, Delhi-110040 PAN-AADFT7350D Revenue Assessee Cross Objection No.85/DEL/2022 (Arising Out of ITA No.9653/DEL/2019) [Assessment Year: 2011-12] M/s Triveni Industries, F-1739, DSIIDC Industrial Area, Narela, Tikri Khurd Village, Delhi-110040 Vs Income Tax Officer, Ward-35(5), New Delhi PAN-AADFT7350D Assessee Revenue Revenue by Sh. Rajesh Kumar Dhanesta, Sr. DR Assessee by Sh. Suresh K. Gupta, Advocate Date of Hearing 03.10.2022 Date of Pronouncement 07.10.2022 ORDER PER DIVA SINGH, JM, The appeal filed by the Revenue and the Cross Objection filed by the assessee are taken up together as both the parties assail the correctness of the order dated 14.11.2018 of CIT(A)-13, New Delhi, pertaining to 2011-12 assessment year. Whereas the assessee assails the assumption of jurisdiction of the Assessing Officer, which was challenged before the Ld. CIT(A). The grounds raised by the Revenue read as under:- “1. The ld. CIT(A) has erred in deleting the addition of Rs.5,05,41,311/- on account of bogus purchases from M/s Lachhu 2 ITA No.9653/Del/2019 & CO No.85/Del/2022 Ram Aggarwal and songs stating that substantive addition made in the case of M/s R.S. Triveni Foods Pvt. Ltd. had been deleted. 2. It is submitted that Revenue has filed appeal against the CIT(A) order dated 07.08.2019 before the Hon’ble ITAT in the case of R.S. Triveni Foods Pvt. Ltd. vide ITA No.8464/Del/2019 dated 28.10.2019 and hence appeal is recommended in this case also i.e. Triveni Industries basis.” 2. At the time of hearing, the Ld. Authorized Representative of the assessee submitted that appeal of the Revenue is without merit. For the said purpose, he invited our attention to the order dated 29.08.2022 in the case of M/s R.S. Triveni Foods Pvt. Ltd. in ITA No.8464/Del/2019 pertaining to Assessment Year 2011-12. Referring to the order, it was submitted that the issue is covered in favour of the assessee as the allegation of the Assessing Officer that bogus bills of purchases were issued has been held to be not sustainable as a result of which the relief granted by the Ld. CIT(A) has been confirmed by the ITAT. Since facts are identical, the appeal is not maintainable. 3. The Ld. Sr. DR, on the other hand, submitted that the substantive addition is live before the ITAT. In the case of the connected concern of the assessee, the addition deleted accordingly has no material bearing. Accordingly, it was his prayer that the issue may be kept pending. 4. The Ld. AR pointed out that the substantive addition stands deleted on the basis of facts which are identical to the case under consideration in the impugned order. 5. Since, possibly the Ld. Sr. DR did not have the benefit of going through the order of the ITAT. Accordingly time was given to him to go through the order of the ITAT and a pass over has given. 3 ITA No.9653/Del/2019 & CO No.85/Del/2022 6. In the fresh round, the Ld. Sr. DR was required to clarify whether he needs still further time to go through the order of the ITAT. The ld. Sr. DR considering the record submitted that he does not need more time to study the order and he would only want to rely upon the order of the Assessing Officer. No further distinguishing facts or submissions etc was made to canvass a contrary view. 7. The Ld. AR relied upon the impugned order as well as the aforesaid order of the ITAT. 8. We have heard the submissions and perused the material available on record. It is seen that that as a result of information obtained in the search action in the case of M/s Shakti Bhog Group, statement of Kewal Krishan Kumar, under oath was recorded. Mr. Kewal Krishan Kumar admitted as per record having indulged in getting accommodation entries of purchases through M/s Lachuu Ram Aggarwal & Co. (prop. Sh. Devki Nandan Agarwal). The payments for purchases were stated to be received by cheques/RTGS from M/s Lachhu Rama Aggarwal & Co. and no delivery of goods was made. Relatable to the facts of the present case, the names of the assessee M/s Triveni Industries and M/s R.S. Triveni Foods Pvt. Ltd. also surfaced. It has been noticed by the Assessing Officer that there was an agreement between M/s Triveni Industries and M/s R.S. Triveni Foods Pvt. Ltd. dated 30.04.2012, as per which transferor firm and transferee company agreed to transfer its entire business including its assets and liabilities as at close of date ending 30.06.2012 on the book value to be drawn by its partners. Accordingly, as a result of this, additions holding that accommodation entries in the guise of bogus 4 ITA No.9653/Del/2019 & CO No.85/Del/2022 purchases from M/s Lachhu Ram Aggarwal & Sons had been availed of. The addition was made in the hands of firm M/s Triveni Industries on substantive basis and in the hands of the M/s R.S. Triveni Foods Pvt. Ltd. on a protective basis. 8.1. The issue travelled in the appeal before the First Appellate Authority, wherein, in the case of M/s R.S. Triveni Foods Pvt. Ltd. the relief granted by the Ld. CIT(A) was confirmed by the Tribunal by holding as under:- “2. The case of the assessee with regard to reopening o f assessment is a fall out o f the finding of the search conducted in the case o f M/s Shakti Bhog Food Ltd. During the search, Sh . Kewal Krishan Kumar admitted that he has indulged in giving bogus bills of purchases to M/s Shakti Bhog Food Ltd . It was admitted that Sh . K.K . Kumar has given entries at the behest of Sh. Devki Nandan Aggarwal (Prop. M/s Lachhu Ram Aggarwal & Co.) and Sh. Balbir Kumar (Prop. Divya Enterprises). 3. Since, the assessee has also had transactions of purchases with Sh. Devki Nandan Aggarwal (Prop . M/s Lachhu Ram Aggarwal & Co.) to the tune of Rs.5.05 Cr ., the same has been treated as bogus by the Assessing Officer . While passing the order, the observations of the Assessing Officer are reproduced as under for ready reference: “3.2 In response to above, assessee filed its reply by hand which is part of record . Assessee in his reply tried to justify the modus operandi of the business, where a “Kacha Ahartiyas” make cash purchase from the farmers and later sell it to the mill owners and M/s Lachhu Ram Aggarwal is nothing but a “Kacha Ahartiyas”, but assessee failed to justify the genuineness o f the transactions done with M/s Lachhu Ram Aggarwal. Sh. Devki Nandan Agarwal was issued a summon on 5 ITA No.9653/Del/2019 & CO No.85/Del/2022 30.11.2018 and he did present himself before the undersigned till date. In the light of the above, it is clear that the undersigned has no reasons to deviate from the factual findings which are already part o f the record, as reproduced in foregoing paras, and confronted to the assessee during the course of assessment proceedings. 3.3 Thus, the accommodation entry received by the assessee company during the year A .Y. 2011-12 of Rs.5,05,41,311/- in the guise o f bogus purchases is being added to the total income of the assessee. Further, as discussed above in the assessment order, I am satisfied that the assessee has concealed his particulars of income and accordingly Penalty proceedings u/s 271 (1)(c) of the Act are being initiated for concealment o f true particulars of income.” 4. Aggrieved, the assessee filed appeal before the ld. CIT(A) wherein the addition made by the Assessing Officer is deleted . 5. The revenue filed appeal before us. 6. Heard the arguments o f both the parties and perused the material available on record . 7. On the merits of the issue , we find that:- 8. The case of the Assessing Officer: 1. Sh. Kewal Krishan Kumar, Sh. Balbir Kumar and Sh. Devki Nandan Aggarwal involved in giving the entries of bogus purchase to M/s Shakit Bhog Group and they have also had transactions with the assessee and the same is treated as bogus. 2. Sh . Devki Nandan Aggarwal has not responded to the notice issued u/s 131, hence, adverse inference has been drawn . 3. Relied on the inquiries and investigations conducted by the DDIT(Inv.) 9. The facts considered by the ld . CIT(A): 6 ITA No.9653/Del/2019 & CO No.85/Del/2022 1. The reassessment proceedings were initiated on the grounds that the purchases made from Sh. Kewal Krishan Kumar (M/s Keshav Trading Company) of Rs.5.79 Cr. and from Sh. Devki Nandan Aggarwal (Prop . M/s Lachhu Ram Aggarwal & Co .). 2. The purchases from Sh . Kewal Krishan Kumar (M/s Keshav Trading Company) have been accepted by the department in the course o f reassessment proceedings initiated on the basis of same very reason in the hands of erstwhile partnership firm of the assessee M/s Triveni Industries. 3. Vide order date 27.07.2017 passed u/s 147 Sh. Kewal Krishan Kumar (M/s Keshav Trading Company) have been accepted as “Kacha Ahartiyas” wherein after depositing of cheques from the buyers , cash payment was made to agriculturist after withdrawing cash from bank. 4. The stock register has been produced wherein no discrepancies in purchase, sale and the closing stock has been brought out. 5. Since the inward stocks entries have been duly recorded and sale of finished products has also been recorded and since the closing stock tallied it cannot be said that the purchases are bogus. 6. There is no material to prove that Sh . Devki Nandan Aggarwal (Prop . M/s Lachhu Ram Aggarwal & Co .) himself has provided accommodation entries . 7. Relied on the decision of the ld . CIT(A)-13, New Delhi in the case of Ghanshyam Das for the A .Y. 2010-11, A.Y. 2011-12 and A.Y . 2012-13 (Appeal No . 310 to 313 dated 26.12.2017) wherein the purchases from Sh . Devki Nandan Aggarwal (Prop . M/s Lachhu Ram Aggarwal & Co.) were undoubted. 10. We have examined in detail the decisions of both the authorities. We have gone through the order of the Sh . Ghanshyam Das passed by the ld . CIT(A) and the ratio thereof. Further, we have examined the copy of stock register of “Masoor” and “Dal Masoor” purchased from Sh . Devki Nandan Aggarwal (Prop. M/s Lachhu Ram Aggarwal & Co.) and the payment made 7 ITA No.9653/Del/2019 & CO No.85/Del/2022 thereof. We have also examined the purchase bills and the purchase register and quantitative details o f Masoor and Dal Masoor purported to have been purchased from Sh . Devki Nandan Aggarwal (Prop. M/s Lachhu Ram Aggarwal & Co.). The quantitative details of the sale & purchase indicate that there could not have been sale in quantity in the absence of the corresponding quantity. Further , we have perused the judgment of Co-ordinate bench of ITAT in the case of DCIT Vs. Amar Chand Gupta in ITA Nos . 3401 to 3406/Del/2009. No specific evidences have been brought on record with regard to the transaction done by the assessee in relation to D .N. Aggarwal to prove that the transactions are bogus. Hence , keeping in view , the entire factum, we decline to inter fere with the order of the ld . CIT(A) in treating the purchases made from Sh . Devki Nandan Aggarwal (Prop. M/s Lachhu Ram Aggarwal & Co.) as no dif ferent from the purchases made from other regular parties. 11. In the result, the appeal of the Revenue is dismissed .” 8.2. It is further seen that the Ld. CIT(A) in the impugned order has deleted the addition taking cognizance of the facts that in the order dated 07.08.2019, the addition has been deleted on merits. The relevant fact which remains unassailed is evident at page 5 of the impugned order. It is extracted for completeness:- “It is pertinent to note that the Ld. CIT(A)-7 vide order dt. 07.08.2019 in Appeal No.10333/328/CIT(A)-7/Del/2018-19 has deleted the above addition of Rs.5,05,41,311/- on grounds of merits treating the purchases from LRA as genuine purchases. Since, the addition has been deleted on merits, therefore no protective addition made can be sustained. Copy of the order of CIT(A)-7 in the case of M/s R.S. Triveni Industries is enclosed.” (emphasis supplied) 8 ITA No.9653/Del/2019 & CO No.85/Del/2022 8.3. A perusal of the order further shows that opportunity was given to the Assessing Officer by the Ld. CIT(A) to file his objection on 05.07.2019 and again to be present if need on 14.08.2019. These facts are recorded in para 3.2 and 3.3 of the impugned order and reproducing for the sake of completeness.:- “3.2. Vide letter dt.05.07.2019, the AO was asked to send a report regarding maintainability of the appeal with reference to time barring date for filing and verification of other particulars mentioned in Form No.35, with reference to the record by forwarding ITNS-51 along with necessary enclosures. No report has been received from the side of the AO. 3.3. Vide letter dt. 14.08.2019, the AO was also provided opportunity to attend the hearings and submit his version, he did not avail the opportunity to attend the hearing.” (emphasis supplied) 8.4. Considering all these facts, the Ld. CIT(A) deleted the addition holding as under: “4.1. I have considered the material on record including oral and written arguments/submissions of the appellant/AR and the (impugned) assessment order. 4.2 During the course of appeal the above facts were reiterated by the appellant. It has further been informed that the CIT(A)-7 vide order dated 07.08.2019 in appeal no. 10333/328/CIT(A)-7/Del/2018-19 has deleted the above addition of Rs. 5,05,41,311/- on grounds of merit treating the purchases from M/s Lachhu Ram Aggarwal & Company as genuine purchases, in light of the facts and circumstances of the case, since the substantive addition made in case of M/s R S Triveni Foods Pvt. Ltd. has been deleted, the protective assessment on the same ground, of the same amount i.e. Rs. 9 ITA No.9653/Del/2019 & CO No.85/Del/2022 5,05,41,311/- on account of bogus purchases from M/s Lachchhu Ram Aggarwal and Sons in the hands of M/s Triveni Industries (appellant) is not sustainable and is accordingly deleted. 5. All grounds are disposed off, as above. 6. In view of the above, the appeal is treated as allowed, for statistical purposes.” 9. Accordingly, in the above peculiar factual findings on record which remains unassailed, we find no infirmity in the order of the Ld. CIT(A). As observed, no contrary facts/evidence/ arguments has been brought to our notice to persuade us to take a different view. Accordingly, ITA No.9653/Del/2019 filed by the Revenue is dismissed. 10. Cross Objection No.85/Del/2022 filed by the assessee is dismissed as withdrawn. 11. The said order was pronounced in the open Court at the time of hearing itself. 12. In the result, the appeal of the Revenue is dismissed and the Cross objection filed by the assessee is dismissed. Order pronounced in the open court on 07 th October, 2022. Sd/- Sd/- [DR B.R.R.KUMAR] [DIVA SINGH] ACCOUNTANT MEMBER JUDICIAL MEMBER Delhi; 07.10.2022. f{x~{tÜ? f{x~{tÜ?f{x~{tÜ? f{x~{tÜ? Copy forwarded to: 1. Appellant 2. Respondent 10 ITA No.9653/Del/2019 & CO No.85/Del/2022 3. CIT 4. CIT(A) 5. DR Asst. Registrar, ITAT, New Delhi