M/S SHREE BALAJI LANDMARK HOTELS PVT. LTD.,INDORE vs. THE ACIT 3(1), INDORE

Shri Balaji Landmark ITA No. 865/Ind/2016 IN THE INCOME TAX APPELLATE TRIBUNAL INDORE BENCH, INDORE Before Shri Kul Bharat, Hon’ble Judicial Member and Shri Manish Borad, Hon’ble Accountant Member

ITA No. 865/Ind/2016 A.Y. 2011-12 M/s Shree Balaji Landmark Hotel Private Limited Indore ::: Appellant Vs ACIT 3(1) Indore ::: Respondent Appellant by Shri Pankaj Shah Respondent by Shri K.G. Goyal Date of hearing 4.6.2018 Date of pronouncement 8.6.2018 O R D E R PER SHRI MANISH BORAD, AM

This appeal filed by the assessee pertaining to

Assessment Year 2011-12 is directed against the order of

ld. Commissioner of Income-tax (Appeals)-2, Indore dated

30.06.2016 which is arising out of the order u/s 143(3) of

the Income Tax Act dated 27.03.2014 framed by the JCIT,

Range 3, Indore.

Shri Balaji Landmark ITA No. 865/Ind/2016 2. Briefly stated, the facts, as culled out from

record, are that the assessee declared total income of

Rs.2,50,50,083/- and the return of income filed for the

assessment year 2011-12 on 30.9.201. The assessment

u/s 143(3) of the Act was completed after making few

additions totaling Rs. 3,55,150/- which, inter alia, included

addition towards bogus purchases of Rs. 2,55,150/- from a

concern M/s Omkar Enterprises, Mumbai. The Assessing

Officer investigated the issue of bogus purchases on the

basis of information received from DGIT (Inv.), Mumbai.

During the course of assessment proceedings the assessee

furnished details of purchases from the said party at

Rs.1,27,575/-. However, the Assessing Officer on the basis

of information made an addition for bogus purchases of Rs.

2,55,150/-. The assessee did not file any appeal against

these additions of Rs. 3,55,150/- before the learned

Commissioner of Income Tax (Appeals).

Shri Balaji Landmark ITA No. 865/Ind/2016 3. Subsequently, penalty proceedings were

initiated and the Assessing Officer imposed penalty of Rs. 2

lacs on the alleged addition of bogus purchases of Rs.

2,55,150/-.

the learned Commissioner of Income Tax (Appeals) who

restricted the penalty to 150% as against 250% levied by

the Assessing Officer. Now the assessee is in appeal before

the Tribunal against confirmation of penalty @ 150% of the

alleged tax sought to be evaded.

that the assessee has duly disclosed the purchases of

Rs.1,27,575/- made from Shri Omkar Enterprises but the

Assessing Officer has made an addition of the double

amount i.e. Rs. 2,55,150/- without giving any basis. He

also contended that no opportunity of cross-examination

was provided to the assessee. The learned counsel for the 3

Shri Balaji Landmark ITA No. 865/Ind/2016 assessee also submitted that mere non-filing of quantum

appeal does not lead to presumption of concealment or

furnishing of inaccurate particulars of income. Reliance

was further placed on the following decisions :-

(i) Babulal C. Borana vs. ITO (2006) 282 ITR 251 (Bom) (ii) ACIT vs. Kishan Lal Jewels Pvt. Ltd. (2012) 147 TTJ 308(Del) (Tri.) (iii) Kishinchand Chellaram vs. CIT; 125 ITR 713 (iv) Manjunath Cotton & Ginning Factory 395 ITR 565)

argued supporting the orders of the lower authorities.

material available on record as also the judgments relied

upon by the learned counsel for the assessee.

on the alleged bogus purchases of Rs. 2,55,150/-. From

the perusal of record we find that the assessee declared 4

Shri Balaji Landmark ITA No. 865/Ind/2016 income of Rs. 2,50,50,083/- and is engaged in the

business of running hotels. The books of accounts are

audited and complete details including books of accounts,

cash book, ledger, vouchers were produced before the

learned Commissioner of Income Tax (Appeals). The books

of accounts have not been rejected. The Assessing Officer

on the basis of information from the office of DGIT(Inv.),

Mumbai, called for the reply from the assessee about the

purchases. The assessee duly furnished complete details of

purchases of Rs.1,27,575/- made from M/s Omkar

Enterprises which were duly recorded in the books and the

payment was duly made. The learned Assessing Officer

further made an inquiry from Sunil Gupta, proprietor of

M/s Omkar Enterprises who in his statement recorded on

oath stated that no such sales have been made to the

assessee. We are unable to understand that at one point of

time the revenue is alleging that the assessee has made

Shri Balaji Landmark ITA No. 865/Ind/2016 bogus purchases from M/s Omkar Enterprises and on the

other M/s Omkar Enterprises refused to have made any

sale to the assessee and thirdly the assessee has furnished

details of purchases of Rs. 1,27,575/- from the very same

party. There are three different versions of the same

transaction except the amount of purchase which the

Assessing Officer has taken at double the amount shown

by the assessee. This is also a fact that the assessee was

not provided an opportunity of cross examination which

has been requested by him during the course of penalty

proceedings. The Assessing Officer has also not provided

copy of report of DGIT, Mumbai, to the assessee nor the

copy of the statement was provided. We observe that in the

case of C. Vasantlal & Co.; 45 ITR 2006 the Supreme

Court has held that “it is open to the ITO to collect material

to facilitate assessment even by private enquiry but he if he

desires to use the material so collected, the assessee must

Shri Balaji Landmark ITA No. 865/Ind/2016 be informed of the material and must be given an adequate

opportunity of explaining it”. Similar view has been taken in

the case Kishanchand Chellaram (supra), New Kashmir &

Oriental Transport Co. (P) Ltd.; 92 ITR 334(All) and CIT vs.

Permanand; 107 TTJ 395 (Jd)(Tri). We, therefore,

respectfully following the judgment of the Hon'ble Supreme

Court as well as in the facts and circumstances of the case

wherein the assessee has duly furnished details of

purchases made in its books of accounts, the books of

accounts have not been rejected, the assessee has not been

provided opportunity of cross examination of the alleged

seller M/s Omkar Enterprises, are of the view that both

the lower authorities were not justified in confirming the

penalty u/s 271(1)(c) of the Act on the alleged bogus

purchases. We accordingly delete the penalty imposed on

the alleged bogus purchases of Rs. 2,55,150/- and allow

the appeal of the assessee.

Shri Balaji Landmark ITA No. 865/Ind/2016 9. In the result, the appeal of the assessee is allowed.

Order pronounced in open Court on 8th June, 2018.

Sd/- sd/-

(KUL BHARAT) (MANISH BORAD) JUDICIAL MEMBER ACCOUNTANT MEMBER

June 8, 2018

Copy to : Appellant/Respondent/CIT/CIT(A)/DR Dn/-