DCIT, Jaipur V. SHARMA EAST INDIA HOSPITALS 7 MEDICAL RESEARCH LTD., Jaipur

MA 40/JPR/2016

• Counselvise Citation: [2016] 124 COUNSELVISE.COM (IT) 5089 (ITAT-JAIPUR)
• Duration Of Justice: 7 month(s) 3 day(s)
• Appeal Type: Miscellaneous Application
• Pronouncement Date: 26-12-2016
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: A
• Assessment Year: 2010-2011
• Appeal Filed On: 23-05-2016
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: R A VERMA CIT DHK
• Keywords: Bogus purchase; Wrong claim
• Section: 133A; 260A

Judgement Text

VK;DJ VIHYH; VF/KDJ.K] T;IQJ U;K;IHB] T;IQJ IN THE INCOME TAX APPELLATE TRIBUNAL, JAIPUR BENCHE S, JAIPUR JH DQY HKKJR] U;KF;D LNL; ,OA JH FOE FLAG ;KNO] YS [KK LNL; DS LE{K BEFORE: SHRI KUL BHARAT, JM & SHRI VIKRAM SINGH YAD AV, AM VK;DJ VIHY LA-@ MA NO. 40/JP/16 (ARISING OUT OF ITA NO. 718 & 803/JP/14) FU/KZKJ.K O'K Z@ ASSESSMENT YEAR : 2010-11 THE ASSTT. COMMISSIONER OF INCOME TAX , CENTRAL CIRCLE-1, JAIPUR CUKE VS. M/S SHARMA EAST INDIA HOSPITAL & MEDICAL RESEARCH PVT. LTD., H-1, CHITRANJAN MARG, JAIPUR LFKK;H YS[KK LA-@THVKBZVKJ LA-@ PAN NO. AABCS 9729 A VIHYKFKHZ@ APPELLANT IZR;FKHZ@ RESPONDENT FU/KZKFJRH DH VKSJ LS@ ASSESSEE BY : SHRI MANISH AGARWAL, (CA) JKTLO DH VKSJ LS@ REVENUE BY : SHRI R.A.VERMA (ADDL. CIT ) LQUOKBZ DH RKJH[K@ DATE OF HEARING : 23.12.2016 ?KKS'K .KK DH RKJH[K @ DATE OF PRONOUNCEMENT : 26/12/2016. VKNS'K@ ORDER PER SHRI VIKRAM SINGH YADAV, A.M. THIS MISCELLANEOUS APPLICATION HAS BEEN FILED BY TH E REVENUE AGAINST THE ORDER PASSED BY THE CO-ORDINATE BENCH IN ITA NO . 718/JP/14 AND ITA NO. 803/JP/14 05.06.2015DATED 05.06.2015. IN ITS APPLI CATION, THE REVENUE HAS SUBMITTED THAT WHILE DECIDING THE ASSESSEES APPE AL THE HONBLE ITAT IN PARA 3.9 ON PAGE 19 & 20 OF ABOVE REFERRED ORDER HAS OBS ERVED AS UNDER: AS COMPARED TO A.Y. 2009-10 ASSESSEES GROSS RECE IPTS GP AND NP % HAVE GONE UP AND AT THE SAME TIME % CONSUMPTION OF COTTON HAS GONE DOWN THIS DATE ALSO HAS NOT BEEN DISPUTED IN ANY MA NNER BY REVENUE, ASSESSEE CLAIMS THAT NO COTTON WAS PURCHASED FROM S KS IN 2009-10. IN THIS CIRCUMSTANCE AN ALTERNATE PLEA IS ADVANCED TH AT A SUITABLE ESTIMATE OF DISALLOWANCE BE ADOPTED INSTEAD OF TOTAL DISALL OWANCE. RELIANCE IS MA NO. 40/JP/2016 ACIT, CENTRAL CIRCLE-I, JAIPUR VS. M/S SHARMA EAST INDIA HOSPITAL AND MEDICAL RES EARCH LTD., JAIPUR 2 PLACED IN OUR CONSOLIDATED ORDER IN THE CASE OF AN UJ KUMAR VARSHNEY & ORS, IN THIS CASE THE ADDITION QUA UNVERIFIABLE PU RCHASES OF SEMI PREVIOUS STONES HAS BEEN HELD TO BE AT 15% OF SUCH UNVERIFIABLE PURCHASES. LOOKING AT THE ENTIRETY OF FACTS AND CI RCUMSTANCES , I.E. THE BOOKS OF ACCOUNTS BEING NOT REJECTED AND CONSUMPTIO N OF COTTON HAVING COMPARATIVELY DECREASED, WE ARE INCLINED TO FOLLOW OUR JUDGEMENT IN THE CASE OF ANUJ KUMAR VARSHNEY AND DIRECT TO RESTRICT THE DISALLOWANCE TO 15% OF PURCHASES FROM SKS. THUS ASSESSEES APPEALS ARE PARTLY ALLOWED. IT IS SUBMITTED THAT THE DECISION OR THE HONBLE I TAT TO RESTRICT THE DISALLOWANCE TO 15% OF PURCHASE FROM SKS IS NOT JUS TIFIABLE . DURING THE COURSE OF SEARCH AT THE OFFICE PREMISES OF THE COMPANY AN D ALSO RESIDENCE OF ITS MANAGING DIRECTOR SHRI SHAILENDRA SHARMA, CERTAIN D OCUMENTS WERE FOUND AND SEIZED INDICATING BOGUS CLAIMS OF PURCHASE OF COTT ON AND GAUGE PATTIES FROM ON E M/S SHRI KRISHNA SURGICALS WITHOUT ACTUAL DELI VERY OF GOODS. A SURVEY ACTION U/S 133A OF THE ACT HAD ALSO BEEN CONDUCTED AT THE PREMISES O M/S SHRI KRISHNA SURGICALS, WHEREIN, THE PROPRIETOR OF THIS CONCERN SHRI JAYATE KHANDELWAL ADMITTED FOR HAVING MADE CERTAIN SALES T O THE ASSESSEE AND ITS SISTER CONCERN M/S JAIPUR HEART HOSPITAL PVT. LTD. WITHOUT ANY SUPPLY OF GOODS AND SALE PROCEEDS WERE RETURNED TO THESE CONCERNS A FTER DEDUCTING CERTAIN PERCENTAGE FOR EXPENSES. ACCOUNTANT OF THE ASSESSE E GROUP SHRI TARA PRAKASH SHARMA AND MANAGING DIRECTOR OF THE ASSESSEE COMPAN Y SHRI SHAILENDRA SHARMA HAD ALSO ADMITTED IN THEIR STATEMENTS U/S 1 32(4) OF THE ACT THAT CERTAIN PURCHASES OF COTTON AND GAUGE PATTIES WERE MADE FROM SHRI KRISHNA SURGICAL FOR WHICH ONLY BILLS WERE OBTAINED WITHOUT ANY ACTUAL PURCHASE OF GOODS AND PAYMENTS WERE MADE THROUGH CHEQUES AND CA SH WAS OBTAINED BACK FROM M/S SHRI KRISHNA SURGICALS AFTER DEDUCTING CER TAIN PERCENTAGE FOR VAT EXPENSES. IN THE LIGHT OF THE ABOVE FACTS, THE PR ESENT MISCELLANEOUS APPLICATION IS BEING PREFERRED BEFORE THE HONBLE I TAT ON THE FOLLOWING GROUND: MA NO. 40/JP/2016 ACIT, CENTRAL CIRCLE-I, JAIPUR VS. M/S SHARMA EAST INDIA HOSPITAL AND MEDICAL RES EARCH LTD., JAIPUR 3 WHETHER ON THE FACTS AND THE CIRCUMSTANCES OF THE C ASE, THE HONBLE ITAT HAS ERRED IN CONSIDERING THE BOGUS PURCHASES M ADE BY THE ASSESSEE AS GENUINE, EVEN WHEN THE SELLER AND PURCHASER HAVE ACCEPTED THEM AS BOGUS. IT IS THEREFORE, HUMBLY REQUESTED THAT THE ABOVE R EFERRED APPEAL ORDER MAY VERY KINDLY BE AMENDED TO THE EXTENT OF ABOVE FACTS AND CIRCUMSTANCES. 2. THE AR OF THE ASSESEE HAS SUBMITTED THAT THE INS TANT MA HAS BEEN FILED BY THE DEPARTMENT IN A VERY CASUAL/CANDID MANNER, I N TOTAL DISREGARD OF THE SCOPE OF SUB-SECTION (2) OF SECTION254 WHICH IS VER Y LIMITED/RESTRICTED AND DOES NOT EXTENT TO COVER THE RELIEF SOUGHT BY THE DEPART MENT THROUGH THIS MA. THROUGH THIS APPLICATION THE DEPARTMENT IS PRAYING BEFORE THIS HONBLE TRIBUNAL TO REVIEW/RECONSIDER ITS OWN ORDER ON MERI TS WHICH IS CLEARLY APPARENT FROM THE PRAYER IN THE MA AND THE SAME IS REPRODUCE D AS UNDER FOR THE SAKE OF CONVENIENCE. IN THE LIGHT OF THE ABOVE FACTS, THE PRESENT MIS CELLANEOUS APPLICATION IS BEING PREFERRED BEFORE THE HONBLE ITAT ON THE FOLLOWING GROUND: WHETHER ON THE FACTS AND THE CIRCUMSTANCES OF THE C ASE, THE HONBLE ITAT HAS ERRED IN CONSIDERING THE BOGUS PURCHASES M ADE BY THE ASSESSEE AS GENUINE, EVEN WHEN THE SELLER AND PURCHASER HAVE ACCEPTED THEM AS BOGUS. A BARE PERUSAL OF THE ABOVE MENTIONED PRAYER OF THE DEPARTMENT WOULD MAKE IT CLEAR THAT WHAT THE REVENUE HAS SOUGHT THROUGH F ILING THIS APPLICATION IS CLEARLY A REVIEW/REVISION OF THIS HONBLE TRIBUNA LS OWN ORDER, WHICH IS CLEARLY NOT PERMISSIBLE IN VIEW OF THE PROVISIONS OF SECTIO N 254(2). THE PROVISIONS OF SECTION 254(2) CAN BE RESORTED TO ONLY TO GET A MI STAKE RECTIFIED WHICH SHOULD HE APPARENT FROM RECORD. IN THE PRESENT MA THE REV ENUE HAS FAILED TO POINT OUT ANY MISTAKE WHATSOEVER WHICH IS APPARENT FROM R ECORD, AS A RESULT OF WHICH, THE GROUND TAKEN BY THE REVENUE IN THIS MA B ECOMES REDUNDANT AND THUS, THE MA IS NOT MAINTAINABLE AND DESERVES TO B E DISMISSED A THRESHOLD MA NO. 40/JP/2016 ACIT, CENTRAL CIRCLE-I, JAIPUR VS. M/S SHARMA EAST INDIA HOSPITAL AND MEDICAL RES EARCH LTD., JAIPUR 4 ONLY. IT IS WELL SETTLED LAW THAT HONBLE TRIBUNAL HAS NOT BEEN CONFERRED THE JURISDICTION TO REVIEW/REVISIT ITS OWN ORDER ON ME RITS OF THE CASE AND ONLY A MISTAKE WHICH IS APPARENT ON RECORD CAN BE RECTIFI ED. ANY PARTY DISSATISFIED/AGGRIEVED WITH THE ORDER OF THE TRIBUN AL SHALL HAVE TO RESORT TO THE PROVISIONS OF SECTION 260A BY FILING OF APPEAL BEF ORE THE HONBLE HIGH COURT. HOWEVER, IN THE KNOWLEDGE OF THE ASSESSEE NO APPEAL HAS BEEN FILED BY THE REVENUE BEFORE THE HONBLE HIGH COURT. IN ITS STE AD, THIS MA HAS BEEN PREFERRED SEEKING REVIEW OF THE ORDER WHICH IS WHO LLY IMPERMISSIBLE IN LAW. IT IS ALSO A MATTER OF FACT THAT IDENTICAL ISSUE IS IN VOLVED IN THE IMMEDIATELY SUCCEEDING ASSESSMENT YEAR I.E. A.Y. 2011-12 WHERE IN THE HONBLE BENCH IN THE SAME VERY ORDER HAS DECIDED THE ISSUE BY UPHOLD ING THE 15% OUT OF THE PURCHASES ALLEGED AS UNVERIFIABLE. THAT SINCE THE PRESENT MA THE REVENUE HAS FAILED TO ESTABLISH THE EXISTENCE A MISTAKE APPAREN T FROM RECORD, NOR HAS IT BEEN SHOWN THAT THIS HONBLE TRIBUNAL HAS THE JURIS DICTION TO REVIEW ITS ON ORDER, HENCE THE PRESENT MA IS NOT MAINTAINABLE AND IS LIABLE TO BE DISMISSED. ON MERITS IT IS SUBMITTED THAT IN THE WRITTEN SUBM ISSION FILED BEFORE THE HONBLE BENCH ALL THESE FACTS AS HAS BEEN STATED BY THE DEPARTMENT IN THE MISC. APPLICATIONS WERE BROUGHT TO THE KNOWLEDGE OF THE HOBLE BENCH AND IT WAS CONTENDED THAT RESULTS DECLARED BY THE ASSESSE E WAS ACCEPTED WITHOUT DOUBTING THE CONSUMPTION AND USE OF ITEMS PURCHASES FROM WHOM PURCHASES MADE WERE DOUBTED. IT WAS FURTHER SUBMITTED THAT THE PRICE PAID TO THE ALLEGED PARTY WAS IN PARITY WITH THE OTHER SUPPLIE RS FROM WHOM PURCHASES MADE WERE NOT DOUBTED AND THE EXPENSES CLAIMED IN T HE CONSUMPTION OF THE MATERIAL IS IN PARITY WITH THE PAST HISTORY OF THE ASESSEE. FURTHER THE FACT THAT ASSESSEE HAS DECLARED BETTER RESULTS AS COMPARED T O PRECEDING ASSESSMENT YEAR IS ALSO EXPLAINED IN THE TABLE GIVEN AT 5 OF T HE WRITTEN SUBMISSION FILED BEFORE THE HONBLE BENCH. IN THE LAST, ALTERNATIVE LY IT WAS REQUESTED TO APPLY MA NO. 40/JP/2016 ACIT, CENTRAL CIRCLE-I, JAIPUR VS. M/S SHARMA EAST INDIA HOSPITAL AND MEDICAL RES EARCH LTD., JAIPUR 5 15% AS NET PROFIT RATE ON SUCH ALLEGED UNVERIFIABLE PURCHASES IN VIEW OF THE DECISION OF THIS HONBLE BENCH IN THE CASE OF ANUJ KUMAR VARSHNEY & OTHERS VS. ITO IN ITA NO. 187/JP/2012. ALL THESE ARGUMENTS FI ND PLACE IN PARA 3.3 AT PA GE 5 TO 9 OF THE ORDER OF THE HONBLE BENCH WHO AFTER CONSIDERING THE SAME HAS ACCEPTED THE ALTERNATE REQUEST AND BY FOLLOWING ITS OWN ORDER IN THE CASE OF ANUJ KUMAR VARSHNEY (SUPRA) HAS RESTRICTED THE DISA LLOWANCE @ 15% OF THE ALLEGED UNVERIFIABLE PURCHASES BY MAKING DETAILED O BSERVATIONS IN PARA 3.9 AT PAGES 19 & 20 OF THE ORDER. SINCE THE HONBLE BE NCH WHILE DECIDING THE ISSUE HAS DULY TAKEN INTO THE CONSIDERATION ALL THE FACTS AS NARRATED BY THE DEPARTMENT IN THE MISC. APPLICATION ABOUT THE ADMIS SION OF THE MANAGING DIRECTOR OF THE APPELLANT COMPANY, STATEMENTS OF TH E SUPPLIER AND THE STAFF OF THE APPELLANT AND HAD REACHED TO THE CONCLUSION OF MAKING DISALLOWANCE O 15% THUS EVEN ON MERITS IT CANNOT BE STATE THAT THE ORD ER OF THE HONBLE BENCH IS RECTIFIABLE US 254(2) OF THE INCOME TAX ACT, 1961. 2.1 THE DECISION OF COORDINATE BENCH IN ITA NO. 71 8 & 803/JP/2014 IN ASSESSEES OWN CASE FOR A.Y. 2010-11 GIVEN AS UNDER : (3.9) WE HAVE HEARD THE RIVAL CONTENTIONS AND PERUS ED THE MATERIAL AVAILABLE ON RECORD. FIRST WE SHALL TAKE UP THE ASSESSEES AP PEALS WHICH RAISE THE SOLE ISSUE OF ADDITION ON ACCOUNT OF UNVERIFIABLE P URCHASE. AUTHORITIES BELOW HAVE RELIED ON THE STATEMENTS OF MD, ACCOUNTA NT AND PROP. OF SKS SHRI JAYANT KHANDELWAL. STATEMENT OF SHRI KHA NDELWAL WAS NEITHER SUPPLIED NOR THE CROSS EXAMINATION WAS GIVEN TO THE ASSESSEE, CONSEQUENTLY THE STATEMENT OF SHRI KHANDELWAL MAY N OT BE HELD AS RELIABLE EVIDENCE AGAINST ASSESSEE. HOWEVER THE STA TEMENT OF THE MD AND ACCOUNTANT HAVE NEITHER BEEN RETRACTED NOR EFFE CTIVELY CONTROVERTED, CONSEQUENTLY THEY REMAIN VALID PIECE OF EVIDENCE IN THIS BEHALF. ASSESSEE HAS ENDEAVOURED TO DEMONSTRATE T HAT THE COPIOUS CONSUMPTION OF COTTON GAUGE, BANDAGES, ETC. HAS NOT BEEN DISPUTED, BOOKS OF ACCOUNTS ARE PROPERLY MAINTAINED AND NOT R EJECTED BY THE LOWER AUTHORITIES. AS COMPARED TO A.Y. 2009-10 ASS ESSEES GROSS RECEIPTS, GP AND NP % HAVE GONE UP AND AT THE SAME TIME % MA NO. 40/JP/2016 ACIT, CENTRAL CIRCLE-I, JAIPUR VS. M/S SHARMA EAST INDIA HOSPITAL AND MEDICAL RES EARCH LTD., JAIPUR 6 CONSUMPTION OF COTTON HAS GONE DOWN, THIS DATA ALSO HAS NOT BEEN DISPUTED IN ANY MANNER BY REVENUE, ASSESSEE CLAIMS THAT NO COTTON WAS PURCHASED FROM SKS IN 2009-10. IN THIS CIRCUMSTANC E AN ALTERNATE PLEA IS ADVANCED THAT A SUITABLE ESTIMATE OF DISALLOWANCE BE ADOPTED INSTEAD OF TOTAL DISALLOWANCE. RELIANCE IS PLACED ON OUR CONS OLIDATED ORDER IN THE CASE OF ANUJ KUMAR VARSHNEY AND ORS (SUPRA), IN THI S CASE THE ADDITION QUA UNVERIFIABLE PURCHASES OF SEMI PRECIOUS STONES HAS BEEN HELD TO BE AT 15% OF SUCH UNVERIFIABLE PURCHASES. LOOKING AT THE ENTIRETY OF FACTS AND CIRCUMSTANCES I.E. THE BOOKS OR ACCOUNTS BEING NOT REJECTED & CONSUMPTION OF COTTON HAVING COMPARATIVELY DECREASE D, WE ARE INCLINED TO FOLLOW OUR JUDGEMENT IN THE CASE OF ANUJ KUMAR V ARSHNEY (SUPRA) AND DIRECT TO RESTRICT THE DISALLOWANCE TO 15% OF PURCH ASES FROM SKS. THUS ASSESSEES APPEAL ARE PARTLY ALLOWED. 2.2 WE HAVE HEARD THE RIVAL CONTENTIONS AND PERUSED THE MATERIAL AVAILABLE ON RECORD INCLUDING THE ORDER PASSED BY THE CO-ORD INATE BENCH IN ITA NO. 718/JP/14 DATED 05.06.2015 IN RESPECT OF WHICH THE SUBJECT MISC. APPLICATION HAS BEEN FILED BY THE REVENUE. ON PERUSAL OF THE C OORDINATE BENCHS DECISION IT IS APPARENT THAT THE STATEMENTS OF MANAGING DIRE CTOR OF THE ASSESSEE COMPANY SHRI SHAILENDRA SHARMA, ACCOUNTANT OF THE A SSESSEE GROUP SHRI TARA PRAKASH SHARMA AND PROP. OF M/S SHREE KRISHNA SURG ICAL, SHRI JAYANT KHANDELWAL WERE DULY CONSIDERED BY THE COORDINATE BENCH. FURTHER THE COORDINATE BENCH FOLLOWING ITS EARLIER DECISION IN THE CASE OF SHRI ANUJ KUMAR VARSHNEY AND OTHERS HAS ACCEPTED THE ALTERNATE PLEA OF THE ASSESSEE WHEREBY DISALLOWANCE WERE RESTRICTED TO 15% OF PURCHASES FR OM SHREE KRISHNA SURGICAL. IN LIGHT OF THAT, WE DO NOT SEE ANY MISTAKE WHICH IS APPARENT ON RECORD AND RECTIFIABLE U/S 254(2) OF THE IT ACT HENCE THE MISC . PETITION FILED BY THE REVENUE IS DISMISSED. IN THE RESULT THE APPEAL FILED BY THE REVENUE IS DISMISSED. MA NO. 40/JP/2016 ACIT, CENTRAL CIRCLE-I, JAIPUR VS. M/S SHARMA EAST INDIA HOSPITAL AND MEDICAL RES EARCH LTD., JAIPUR 7 O RDER PRONOUNCED IN THE OPEN COURT ON 26/12/2 016. SD/- SD/- (KUL BHARAT ) (VIKRAM SINGH YADAV) U;KF;D LNL;@ JUDICIAL MEMBER YS[KK LNL;@ ACCOUNTANT MEMBER JAIPUR DATED:- 26/12/2016 PILLAI VKNS'K DH IZFRFYFI VXZSF'KR@ COPY OF THE ORDER FORWARDED TO: 1. VIHYKFKHZ@ THE THE ACIT, CENTRAL CIRCLE-1, JAIPUR 2. IZR;FKHZ@ THE RESPONDENT- M/S SHARMA EAST INDIA HOSPITAL & M EDICAL RESEARCH PVT. LTD. JAIPUR 3. VK;DJ VK;QDR@ CIT CENTRAL, JAIPUR 4. VK;DJ VK;QDRVIHY@ THE CIT(A)CENTRAL, JAIPUR 5. FOHKKXH; IZFRFUF/K] VK;DJ VIHYH; VF/KDJ.K] T;IQJ@ DR, ITAT, JAIPUR 6. XKMZ QKBZY@ GUARD FILE (MA NO. 40/JP/2016) VKNS'KKUQLKJ@ BY ORDER, LGK;D IATHDKJ@ ASSISTANT. REGISTRAR.