M/S. SURAJ LIMITED,AHMEDABAD vs. THE DCIT, CENTRAL CIRCLE-1(3), AHMEDABAD

ITSSA 515/AHD/2019Status: DisposedITAT Ahmedabad14 May 2024AY 2012-1313 pages
AI SummaryAllowed

What were the facts?

The appeals before the Income Tax Appellate Tribunal (ITAT) Ahmedabad Bench involved M/s. Suraj Ltd. (Assessee) and the Income Tax Department (Revenue) for Assessment Years (AYs) 2008-09, 2011-12, 2012-13, and 2013-14. The core issue was the disallowance of purchases made by the assessee from three parties: M/s. Shah Foils Ltd., M/s. Sunrise Stainless Pvt. Ltd., and M/s. Sunrise Tradewings Pvt. Ltd. The disallowances were based on information from a search conducted by the Director General of Central Excise Intelligence (DGCEI) on these seller entities, which indicated bogus sales. A subsequent search on the assessee by the Income Tax Department yielded an Excel sheet treated as incriminating material. The Assessing Officer made additions for alleged bogus purchases totaling Rs. 1,84,25,818/- for AY 2008-09, Rs. 13,81,49,189/- for AY 2011-12, Rs. 28,35,53,132/- for AY 2012-13, and Rs. 15,02,55,025/- for AY 2013-14. The Commissioner of Income Tax (Appeals) deleted additions for AYs 2008-09 and 2011-12, but restricted additions to 12% for AYs 2012-13 and 2013-14.

What did the Tribunal hold?

The Tribunal held that the basis for treating the purchases as bogus no longer survived. This conclusion was reached after examining orders from various judicial authorities, including the Gujarat High Court and the Supreme Court, which absolved M/s. Shah Foils Ltd. of charges of clandestine/unaccounted sales. Similarly, CESTAT orders cleared M/s. Sunrise Stainless Pvt. Ltd. and M/s. Sunrise Tradewings Pvt. Ltd. of similar charges. The Tribunal also noted that in the assessee's own case, the CESTAT had considered these orders and that the CENVAT credit reversed by the assessee was refunded, indicating that the assessee was absolved of charges related to availing wrong input credit. Consequently, the Tribunal found no justification for making any addition of bogus purchases in the hands of the assessee. All additions made were directed to be deleted. The appeals filed by the assessee were allowed, and the appeals filed by the Revenue were dismissed.

What were the issues?

1. Whether the disallowance of purchases made by the assessee from M/s. Shah Foils Ltd., M/s. Sunrise Stainless Pvt. Ltd., and M/s. Sunrise Tradewings Pvt. Ltd. is sustainable, considering that these seller entities were subsequently absolved of charges of clandestine removal of goods by various judicial authorities (CESTAT, Gujarat High Court, Supreme Court)? (Question of law and fact, concerning the validity of additions based on the findings against third parties). Assessee's Contention: The disallowance is not sustainable as the basis for holding the purchases as bogus has been nullified by subsequent judicial pronouncements in favor of the seller entities. The assessee relied on orders from the Gujarat High Court and Supreme Court in the case of Shah Foils Ltd., and CESTAT orders in the cases of Sunrise Stainless Pvt. Ltd. and Sunrise Tradewings Pvt. Ltd., as well as an order in its own case by CESTAT concerning CENVAT credit. Revenue's Contention: The Revenue argued that the CIT(A) erred in holding that additions under Section 153A must be confined to incriminating material found during the search, as Section 153A does not stipulate such a condition. They contended that the scheme of assessment under Section 153A would be rendered ineffective if no additions could be made in the absence of seized incriminating material. The Revenue also argued that assessments in relation to issues not connected to the search could arise in the six assessment years preceding the search.

Which sections of the Income-tax Act were involved?

Section 153A,Section 132(1),Section 153BI,Section 158BB

AI-generated summary — verify with the full judgment below

Income Tax Appellate Tribunal, “ A ” BENCH, AHMEDABAD

Before: SMT.ANNAPURNA GUPTA & MS. SUCHITRA KAMBLE

Consolidated Appeals (6)

ITA 446/Ahd/2019AY 2008-09
ITA 515/Ahd/2019AY 2012-13
ITA 516/Ahd/2019AY 2013-14
ITA 536/Ahd/2019AY 2012-13
ITA 543/Ahd/2019AY 2013-14
ITA 447/Ahd/2019AY 2011-12
For Appellant: Shri Jignesh Parikh, AR
Hearing: 22/02/2024Pronounced: 14/05/2024

आदेश आदेश

PER ANNAPURNA GUPTA, ACCOUNTANT MEMBER

All the above appeals relate to the same asse

The order continues below.

Read the full judgment

A free account opens 10 full judgments a month. Re-reading one you have already opened does not count again.

Create a free accountSign in

See plans and prices

The summary, the parties, the sections and the citations above are open to everyone and always will be. Only the text of the order and the PDF are metered.

More judgments on Section 153A

All 18,957 judgments and leading authorities on Section 153A →

Recent GST High Court judgments

Search GST case law →