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Income Tax Appellate Tribunal, INDORE BENCH, INDORE
Before: SHRI MANISH BORAD
Date of Hearing: 07.04.2021 Date of Pronouncement: 25.05.2021 आदेश / O R D E R PER MANISH BORAD, A.M: The above captioned appeal filed at the instance of revenue pertaining to Assessment Year 2012-13 is directed against the order of Commissioner of Income Tax (Appeals)-III (in short ‘Ld.CIT’], Indore dated 28.04.2017 which is arising out of the order u/s 143(3) of the Income Tax Act 1961(In short the ‘Act’) dated 26.03.2015, framed by DCIT-1(1), Indore.
Prakash Oil Limited
Brief acts of the case are culled out from the records are that the assessee (respondent) is a limited company and engaged in the business of manufacturing, refining and trading of oils, de-oiled cakes & allied products. During the year under consideration survey action was carried out u/s 133A of the Act on 10.08.2011 during which the company admitted additional income of Rs. 3,39,57,000/- (on account of excess cash of Rs. 9,57,000/- and on account of excess stock of Rs. 3,30,00,000/-). The return of income for the Assessment year 2012-13 was filed u/s 139(1) on 30.09.2012 declaring total income of Rs. 8,70,81,615/- (including income of Rs. 3,39,57,000/- declared during the course of survey proceedings held on 10.08.2011).
The case was selected for scrutiny under CASS followed by serving of statutory notice u/s 143(2) of the Act and 142(1) of the Act. During the course of assessment proceedings, the company filed detailed written submissions and filing documents and evidence as required by the Learned AO. Books of accounts along with bills and vouchers were produced and were verified on test check basis.
Ld. AO made deeper enquiry to examine the genuineness of purchase of Rs. 2,42,90,382/- from M/s Unique Enterprises. Various information were called for in this regard. Statement of managing director Mr. Anandram Hotchand Chotwani was recorded. Income Tax Inspector posted in range-1 Indore, was also Prakash Oil Limited directed to file a report after visiting the business premises of M/s Unique Enterprises. Finally, ld. AO came to a conclusion that the alleged purchases of Rs.2,42,90,382/- made from M/s. Unique Enterprises are bogus as the assessee failed to prove the genuineness. However, addition was made towards suppressed sales at Rs. 2,42,90,382/-. Income assessed at Rs.11,13,71,997/-.
5. Aggrieved, assessee preferred an appeal before the ld. CIT(A) and succeeded.
6. Now the Revenue is in appeal before the Tribunal raising following grounds of appeal: “1. On the facts and in the circumstances of the case, the Ld. CIT(A) erred in deleting the addition made by the AO of Rs.2,42,90,382/- on account of bogus purchases from M/s Unique Enterprises, Indore without appreciating the facts and evidences brought into light by the AO during assessment proceedings.”
2. On the facts and in the circumstances of the case, the Ld. CIT(A) has erred in allowing the appeal by holding that the AO of Shri Pankaj Panwar has not doubted on transaction with the assessee, whereas the AO of Shri Pankaj Panwar was not aware of any transaction with the assessee because Shri Pankaj Panwar has neither produced books of account nor voucher for purchase, sale and expenses to his AO.
3. On the facts and in the circumstances of the case, the Ld. CIT(A) has erred in allowing the appeal by ignoring the inspector’s report of AO of Shri Pankaj Panwar, Prop. of Unique Enterprises as well as report of Inspector of Range-1, Indore in which both the Inspectors were reported that on the given address no business premises of the said concern was found.
Prakash Oil Limited
7. Ld. Departmental Representative(DR) argued at length referring to the finding of Ld. AO and further submitting that during the course of assessment proceedings on various occasions it was observed by the assessing officer that there was no actual transactions of purchase and it all appeared to be a bogus purchase entered in the books of accounts to reduce the profit. Managing Director of the company was not aware about the transactions with M/s Unique Enterprises. The alleged transactions looks fishy as against the purchase of Rs. 2,42,90,382/- only payment of Rs. 49,238/- was made. In the inspector report dated 23.03.2015 it was stated that the proprietor of M/s. Unique Enterprises was actually doing part time accounting work and there was no such office or godown at the address mentioned in the bills of M/s. Unique Enterprises. Ld. DR, accordingly, relied the finding of Ld. AO.
Per contra, Ld. counsel for the assessee referred to the written submissions running from pages 1 to 20 placed on record. Apart from relying on the finding of Ld. CIT(A) and the submissions made before him during the appellate proceedings reference was also made to the point wise reply to the comments of the assessing officer mentioned in para 7.10 of the written submissions which are reproduced as under:
SS.No AO’s Assessee’s Comments Observations 1. the MD did not - The respondent, having a turnover in knew the details of the range of above 450 crores,
Prakash Oil Limited the name of the transacted with large number of owner of Unique suppliers and customers. The MD of Enterprises his the company cannot be expected to mobile number and maintain and remember the details address. of mobile number, name of the owner or partner and address etc of a party with whom miniscule transaction of 2.43 crores (approx 0.50% of total turnover) were undertaken, that too three years ago. These details were available in the purchase bills filed with the AO. It is important to point out that the respondent had no transactions with the said concern during last 3 years. - Again such details could not be 2. The details of the transporter M/s expected to be kept in memory by Om Sai Roadlines the MD of a company with huge through which turnover. However, these complete material purchased / details were available in the sold from / to M/s documents filed by the assessee Unique Enterprises before the AO. - It is submitted that there is self were transported, contradiction in the stand of the Learned AO as on one hand he was having the complete details of the transporter M/s Om Sai Road lines as mentioned in Para 5.6 of the assessment order and on the other hand it has been alleged that the details of transportation were not provided.
3. The MD who It is submitted that the Learned appeared with the AO did not allowed access to the account head failed Account Head of the books of to give any details accounts and documents and insisted
Prakash Oil Limited about the said to give the replies on the basis of concern. memory, which was not possible. 4 The MD failed it is submitted that the to produce the respondent categorically stated vide partner / owner of point no. 7 of written submission M/s Unique dated 09.03.2015 (copy enclosed at Enterprises. page no. 55 of paper book) that it had no transactions with the said concern when the assessment proceedings were being conducted and therefore it was not possible to ensure the production of the proprietor of the said entity. It was also requested that the personal presence may be secured by using various powers vested upon the Learned AO under the Income Tax Act. However, without making any effort on his part, the Learned AO simply alleged time and again that the respondent failed to produce the proprietor of M/s Unique Enterprises. It is further submitted that as evident from the assessment order of Shri Pankaj Pawar, he presented himself before his AO and his statement was also recorded.
It is also alleged On perusal of the documents filed, it that no truck number, shall be observed that details of name of the driver or transport vehicle have been other transportation mentioned in the ‘material bill pass details were note’. The same is also mentioned in furnished and details the ‘weightiest slip’ and the ‘inward regarding movement gate pass’. These documents are of goods was also not placed on page 62 onwards of the furnished. paper book. Hence the contention of Prakash Oil Limited the learned AO that no transportation details were furnished are not correct.
It has been The respondent wishes to place on record that this observation is stated in the factually incorrect and only a figment assessment order of AO’s imagination as the that the weighing respondent do not have any slips produced were electronic weighing machine and all manual and the such slips are generated only respondent company manually. However, this issue was never used electronic confronted during the assessment weighing machine. proceedings.
It is stated in It is submitted that this allegation is factually not correct as complete the assessment order details as required by the Learned that the respondent AO were filed by way of written was given full submission along with supporting opportunity to documents and are enclosed in the substantiate its claim paper book. of purchases however In this connection at the cost of the respondent did repetition, it is submitted that the not furnish any respondent company had duly details. submitted copy of ledger account of the said party, copies of bills of purchase and sale of the above items alongwith copies of Raw Material Bill Pass Note, Inward Gate Pass of material received in company, Weightment Slip of material purchased from M/s Unique Enterprises and copies of Outward Gate Pass of material dispatched from company, Weightment Slip and challan/ builty slip of transporters for material dispatched to M/s Unique Enterprises were filed during the Prakash Oil Limited
course of assessment proceedings. That details as regards truck number, challan number, transporters name, address and other details were also verified from original documents produced for examination and verification at the time of assessment proceedings. All the said documents are enclosed at page No. 57 to 348 of the paper book.
Ld. counsel for the assessee further submitted that the scrutiny assessment of Mr. Pankaj Panwar proprietor of M/s. Unique Enterprises, was also completed by ITO 1(4), Indore, and the sales made to the assessee firm were accepted. He also stated that there was factual error in the finding of assessing officer that the assessing officer of Mr. Pankaj Panwar was not aware of the transactions with the assessee(Respondent). He stated that the assessing officer of assessee(respondent) called for the account statement with M/s Unique Enterprises from the assessing officer of Mr. Pankaj Panwar only. He further brought to our notice that apart from the purchase made from M/s. Unique Enterprises the Assessee(respondent) made sales also to M/s Unique Enterprise which have been accepted. Therefore, this action of the assessing officer is not justified to just question the purchases and not the sales and this itself proves that M/s.Unique Enterprises is a genuine dealer. Further, Ld. counsel for the assessee also made submission regarding important observations emerging out of the assessment
Prakash Oil Limited order of Shri Pankaj Panwar proprietor M/s Unique Enterprises, Indore and the same reads as follows:
1. 1. Order for AY 2012-13 dated 23.03.2015 is passed u/s 143(3) by ITO 1(4), Indore and the assessment order in the case of the respondent was passed on 26.03.2015.
2. The proceedings were attended by the authorized representative of Shri Pankaj Pawar from time to time - (opening para of the assessment order).
3. The nature of business of Shri Pankaj Pawar is stated to be that of trading and export of cotton, soya doc and oil. The respondent assessee has also transacted with Shri Pankaj Pawar in Soya DOC and Oil.
4. The AO of Shri Pankaj Pawar issued summons u,/s 131 to him in response to which he presented himself and his statement was recorded by his AO. This fact negates the Inspector's report in the case of the respondent assessee and also the contention of the AO that Shri Pankaj Pawar was not available.
5. It is stated in answer to question no. 3 on page 2 of his assessment order that he was doing the business of trading in soybean, doc, oil, cotton and in reply to question no. 4 he stated that this business was done by him only during the FY 2011-12 i.e. AY 2012-13.
6. Though his books of accounts r €re rejected however, his sales were accepted on which a net profit rate of 19lo was applied. The fact remains that the sales made by Shri Pankaj Pawar were accepted by his AO during the course of his regular assessment proceedings. In this peculiar circumstance, the purchases made by the respondent assessee from Shri Pankaj Pawar ought not to have been doubted.
7. The assessment order u/s 143(3) of Shri Pankaj Pawar was passed on 23.03.2015 whereas the assessment order bf the respondent assessee was passed on 26.03.2015 i.e. after the passing of the order of Shri Pankaj Pawar. Another important fact is that the assessment order was passed by an AO of the same range, of which another AO passed the assessment order of the respondent assessee. It is equally important to note that the offices of both the AOs are located opposite to each other on the same floor in the same building.
8. Another important fact is that the AO of the respondent assessee has doubted the purchase transactions with Shri Pankaj Pawar only on the basis of some alleged report of ITO l(4) (AO of 9
Prakash Oil Limited
Shri Pankaj Pawar) that the actual business transactions of Shri Pankaj Pawar appeared suspicious (Para 5 of the assessment order of the respondent assessee), but the fact remains that his assessment was completed accepting the sales turnover declared by him. In view of the above, it is submitted that once the assessment of the supplier party Shri Pankaj Pawar for the same assessment year was completed u/s 143(3), during which proceedings he personally appeared before his AO and his statement was also recorded and also in view of the fact that the sales made by Shri Pankaj Pawar have been duly accepted in his own regular assessment proceedings, the very basis of doubting the purchase transaction of the respondent assessee with Shri Pankaj Pawar does not survive and have no legs to stand.
We have heard rival contentions and perused the records placed before us and carefully gone through the paper book filed on 06.11.2018 running from pages 1 to 370 and written submissions filed before and during the course hearing. Though the revenue has raised three grounds of appeal but the sole issue is with regard to the purchase of Rs.2,42,90,382/- made from M/s. Unique Enterprises, Indore which were held to be bogus by the assessing officer but the addition was deleted by the Ld. CIT(A).
11. Thorough Ground No.1 additions deleted by the Ld. CIT(A) has been challenged. In Ground No.2 the finding of Ld. CIT(A) has been challenged through which it was held that the assessing officer of Shri Pankaj Panwar has not doubted the transactions with the assessee and through ground no.3 of revenue’s appeal has challenged the finding of Ld. CIT(A) of ignoring the Inspector’s report of AO of Shri Pankaj Panwar. Overall, the genuineness of the Prakash Oil Limited purchase of Rs.2,42,90,382/- made from M/s Unique Enterprises is in challenged before us.
12. We find that during the course of appellate proceedings before the Ld. CIT(A) the assessee made detailed submissions about the purchase and sale transactions with M/s Unique Enterprises, stating the genuine ignorance of the Managing Director about the transactions with M/s Unique Enterprises which were just 0.50% of the total turnover of the assessee. Complete details of documents of purchase of raw material, Inward Gate Pass, Weightment slip filed. Submissions were also made with regard to the observations of the assessing officer who on one hand doubted the purchase transactions made with M/s Unique Enterprises holding it to be bogus purchase but to the contrary not doubting the sales made to it and while computing the income had made the addition for suppressed sales.
13. We further observe that Ld. CIT(A) after going through the submissions made by the assessee as well as documentary evidences filed in support of genuineness of purchase and the proof of movement of goods held the purchase with M/s. Unique Enterprises as genuine and deleted the additions for bogus purchase observing as follows: I have gone through the assessment order and the detailed submissions made by the appellant. The appellant has submitted that the assessing officer completely ignored the documents submitted (reference para 3.2 above) during the assessment proceedings. The transactions of the appellant with M/s. Unique Enterprises are as under: S.No. Particulars Amount(in Rs.) 1. Purchases of DOC made from M/s. 2,43,39,620/- 11
Prakash Oil Limited
Unique Enterprises 2. Less: Sales of refined oil to M/s. Unique 2,42,90,382/- Enterprises Net Payment made 49,238/-
4.1 The appellant has submitted that it is important to note that it had no transactions with the said concern during the last 3 years. Further the appellant is having a turnover of above Rs.450 crores and has transactions with large number of suppliers and customers. The MD of the company not remembering the details of transactions of Rs.2.43 crores with a party which constitutes about 0.5% of the turnover undertaken three years ago, cannot be viewed adversely. 4.2 It is also stated that the appellant could not produce the partners owner of M/s Unique Enterprises as it had no transactions with the said concern when the assessment proceedings were being conducted and therefore it was not possible to ensure the attendance of the proprietor of the said entity. 4.3 The assessing officer of M/s Unique Enterprises had also issue summons to the appellant company and the reply was filed on 09.03.2018 in the said reply also it was clearly stated that appellant had purchase Soyabean DOC Yellow, Rapeseed DOC and untoasted Soya DOC as raw material from M/s Unique Enterprises and sold Soya Refined Oil during the period under consideration. The assessment order of Rshir Pankaj Pawar Prop. M/s Unique Enterprises has been passed by ITO 1(4), Indore on 23.03.2015 u/s 143(3). In the said order only addition made is on account of 1% on the total sales turnover of Rs.11,83,50,318/-. No adverse inference has been drawn on the transactions of M/s Unique Enterprises with the appellant company. In view of this assessment order no cognizance can be taken of the Inspectors report stating that M/s Unique Enterprises is not carrying out business activities at its given address 4.4 The assessing officer has completely disregarded the sales of Refined on made to M/s Unique Enterprises. The addition has been made on account of bogus purchases of Rs.2,42,90,382/- which is the amount of sales made to M/s Unique Enterprises. The purchases DOC made from M/s. Unique Enterprises are Rs.2,43,39,620/-. 4.5 In view of the discussions of the preceding paragraphs I am of the opinion that the Assessing Officer was not justified in making the addition on account of bogus purchases from M/s Unique Enterprises and especially in view of the fact that the Assessing Officer of M/s. Unique Enterprises has not doubted the transaction with the 12
Prakash Oil Limited appellant company. The addition of Rs.2,42,90,382/- is therefore, deleted. Ground No.1 is allowed.
From perusal of the finding of Ld. CIT(A) we observe that these findings are purely based on the facts of the case and documentary evidences placed before him and surrounding circumstances. We find that during the year under appeal the assessee has entered into both purchase and sale transactions with M/s Unique Enterprises of which only purchases are disputed but surprisingly sales were accepted by the assessing officer. The relevant documents in support of transactions with M/s Unique Enterprises were filed. Copy of ledger account of the said party. (i) Copies of bills of purchase and sale of the above items. (ii) Copies of Material Bill Pass Note, (iii) Inward Gate Pass of material received in company, (iv) Weightment Slip of material purchased from M/s Unique Enterprises. (v) Copies of Outward Gate Pass of material dispatched from company, (vi) (vii) Weightment Slip and challan/builty slip of transporters for material dispatched to M/s Unique Enterprises.
Further, the observation of the assessing officer that managing Director of the company Mr. Anandram Hotchand Chotwani was not aware of the transactions with M/s Unique Enterprises, do not find much merit as total quantum of purchase during the year is just 0.5% of the total turnover and it is quite possible that the details of each and every vender may not be known to the owner who carries out the business through his staff and in the case of huge turnover separate staff are designated for different works. Further it is also not in dispute that the assessment for the very
Prakash Oil Limited same year was completed u/s 143(3) of the Act in the case of suppliers M/s. Unique Enterprises Proprietor Pankaj Panwar and the sales made to the assessee concern was accepted and the profit estimate of 1%. The assessing officer of Pankaj Panwar has supplied the copy of account of M/s. Unique Enterprises to the assessing officer of the assessee (respondent). Most importantly, both sales and purchases made during the year to and from M/s Unique Enterprises have been accepted.
Further, we find that the assessee’s sales and closing stock were accepted. Books of accounts are not rejected. During the course of survey conducted u/s 133A of the Act on 10.08.2011, excess stock was found and Rs.3.30 crore was surrendered towards excess stock and offered to tax. The alleged purchase made from M/s Unique Enterprises was just few days before the date of survey and had these purchases were not actual and bogus then how come there was an excess stock on the date of survey. This fact remains undisputed and unanswered by the assessing officer and even by the Ld. DR.
We, therefore, in the facts and circumstances of the case, are of the considered view the Ld. CIT(A) has rightly held the purchase from M/s. Unique Enterprises at Rs.2,42,90,382/- as genuine as they are fully supported by documentary evidences and the fact that excess stock found during the course of survey just few days after the last purchase with M/s. Unique Enterprises was accepted by the Survey Team and surrender of Rs.3.30 cr. made by assessee 14
Prakash Oil Limited towards the excess stock so found and offered to tax. The fact that the sales to M/s Unique Enterprises stands accepted and also sales made by M/s. Unique Enterprises to assessee has been accepted by the assessing officer of M/s. Unique Enterprises are sufficient enough to prove that Revenue authorities have accepted that M/s Unique Enterprises is not a bogus concern. Therefore, the addition for bogus purchase made by the assessing officer seems to be made purely on surmises and conjecture and thus rightly held by Ld. CIT(A) that there is no iota of evidence to justify in bringing the transactions held by the respondent in the realm of doubt. Thus, no interference is called for in the finding of Ld. CIT(A). Ground no.1 of revenues appeal is dismissed.
As regard ground no.2 we find no merit in this ground of revenue that Ld. AO of Mr. Pankaj Panwar was not aware of any transactions with the assessee. The fact that the assessee officer of the assessee company has called for the account statement of M/s. Unique Enterprises from the concerned Assessing Officer is sufficient enough to prove that the Ld. AO of Pankaj Panwar was aware of the transactions and further he has made an addition for estimated net profit on the total sales including the sale made to the assessee company. Thus, ground no.2 of the revenue’s appeal is dismissed.
As regard ground no.3 raised by the revenue that the Ld. CIT(A) ignored the Inspector report that on given address, no business premises of the said concern was found. We find that Ld. AO
Prakash Oil Limited referred to the Inspector Report dated 23.03.3015 and on 23.06.2015 the assessment has been completed. It is not discernable from the records that whether the alleged Inspector report was confronted with the respondent at any time, during the proceedings which thus, defies the principle of natural justice. The report of Inspector is dated 23.03.2015 and the alleged transactions are during F.Y.2011-12 but even then in the Inspector Report there is mention that a person named Pankaj Panwar is carrying out some business at this address. We are of the view that this report of Income Tax Inspector is not exhaustive and in no way conclusive as does not carry enough strength to be used against the assessee looking to the surrounding circumstances and evidences showing Unique Enterprises as a genuine concern which remains un- rebutted by the revenue authorities. Thus, the revenue fails to succeed in ground no.3 also.
In the result, all the three grounds raised by the Revenue are dismissed and ITANo.488/Ind/2017 is decided against the revenue. Order was pronounced as per Rule 34 of I.T.A.T. Rules 1963 on 25.05.2021.