ITO, MUZAFFARNAGAR vs. SH WASEEM AHMAD, MUZAFFARNAGAR

AO in order to verify the nature of aforesaid payments issued notice dated 13.12.2011 under section 133 (6) of the Income-tax Act, 1961 (for short ‘the Act’) to six parties, namely, (i) M/s. Steel Grace India (P) Ltd., Delhi; (ii) M/s. Jackson Builder (P) Ltd., Delhi; (iii) M/s. Saraswati Met Stone India Pvt. Ltd., Delhi; (iv) M/s. Sam India Buildwell (P) Ltd., Delhi; (v) M/s.

Assessee carried the matter by way of an appeal before the ld. CIT (A) who has deleted the addition by allowing the appeal.

We have heard the ld. Authorized Representatives of the parties to the appeal, gone through the documents relied upon and orders passed by the revenue authorities below in the light of the facts and circumstances of the case.

Ld. DR for the Revenue challenging the impugned order passed by the ld. CIT (A) contended inter alia that the amount of Rs.4,17,50,140/- credited in the current account of the assessee by way of pay orders from different parties is nothing but sham transaction on account of some bogus purchases out of which most of the payments went to M/s. Barnala Steels Indus. Ltd.; that the assessee has received the entire payments by way of pay orders having names and addresses of other persons than those of the concerned parties of Delhi; that even during the remand report, the assessee has failed to appear before the AO to produce requisite ledger, journal, stock registration, bills, besides copy of form ‘C’ obtained with regard to ex-UP Sales which shows that no sales have been effected rather paper work has been completed and that the ld. CIT (A) has erred by deleting the addition by shifting the entire burden on the AO whereas ld. CIT (A) was having co- terminus power with that of the AO to conduct the enquiry and relied upon the decision of Hon’ble Delhi High Court in case of CIT vs. Jansampark Advertising and Marketing P. Ltd. (2015) 375 ITR 373 (Delhi).

However, on the other hand, in order to repel the arguments addressed by the ld. DR for the Revenue, ld. AR for the assessee contended inter alia that the assessee has duly shown the sale and purchases and the AO has never doubted the purchases, as such, there is no question of bogus purchases; that the assessee has purchased all the purchase bills, VAT returns filed with the VAT authorities, balance sheet, audited accounts, etc. which have been produced before the AO; that the assessee has also produced the bills containing all the details qua sales made outside UP and that the bills produced contain the CST numbers of the parties and GR numbers are also there and the amounts have been offered to show in the income; that the AO has also not doubted the GP and NP and as such, the purchases of Rs.4.71 crores cannot be bogus; that the AO has proceeded on the basis of doubts and suspicion; that mere denial by certain parties that they have no transaction, does not mean that sales are bogus; and relied upon the decision of Hon’ble Gujarat High Court in CIT vs. President Industries (2002) 258 ITR 654 (Gujarat). Ld. AR for the assessee also relied upon the impugned order passed by the ld. CIT (A). 8. Undisputedly, entire payment of Rs.4,17,50,140/- has been received by the assessee within a period of 24 days i.e. 20.01.2009 to 28.03.2009 by way of pay orders. It is also not in dispute that the assessee has received payment in one day from a single person through various pay orders each amounting to Rs.49,000/-. It is also not in dispute that the assessee issued notice u/s 133 (6) of the Act to six parties out of which four parties have denied to have any business transaction with the assessee and the other two parties claimed to have made payment through pay orders have also failed to prove any dealing with the assessee. It is also not in dispute that the AO has also not issued summons to the four parties who denied to have any transaction with the assessee to appear before him.

In the backdrop of the aforesaid undisputed facts, we are of the considered view that when four of the parties, namely, (i) M/s.

Furthermore, when we examine this fact in the light of the fact that neither during assessment proceedings nor during remand proceedings assessee has failed to prove the books of account for AYs 2008-09 & 2009-10 along with ledger, journal, stock register, bills besides copy of form ‘C’ obtained with regard to ex-UP sales, the entire story put-forth by the assessee becomes doubtful.

Furthermore, information received by the AO from AMMCO Bank Ltd. in compliance to notice u/s 133 (6) also proves that all the pay orders are filled up in the handwriting of two or three persons but none of them were having Delhi address which shows that the amount received by the assessee represents cash credit. Furthermore, when this fact is examined in the light of the proved fact that four parties have categorically denied to have any business transaction with the assessee and dealing with remaining two parties have also not been proved, the case of the assessee is merely based upon smart paper work which cannot be believed.

When we examine the entire issue in the totality of the facts and circumstances of the case, it shows that it is not only the case of bogus purchases but, in case, assessee has failed to prove any transaction with the six parties from whom he alleged to have payments of crores of rupees, it would be a case of perjury also.

It is very surprising that four parties from whom huge payments have been received by the assessee categorically claimed that they have no business transaction whatsoever with the assessee but, at the same time, numerous documents like bills of the parties having CST number, GR number, VAT Returns, etc. have been brought on record by the assessee which makes the entire case of the assessee highly doubtful. In these circumstances, it is the duty of the assessee to prove the identity and creditworthiness of the six parties to further prove the genuineness of the transactions. So, in this case, half-baked enquiry has been conducted by the AO as well as ld. CIT (A) and facts and circumstances of the case require that detailed enquiry on the basis of plethora of documents brought on record by the assessee is required to be conducted to bring the truth on record. In these circumstances, impugned order passed by the ld. CIT (A) is not sustainable in the eyes of law.

Moreover, startling facts have come on record from the account books of the assessee that most of the payments have ultimately went to M/s. Barnala Steel Industries Ltd., Muzaffarnagar, which is nothing but round tripping of the money and all these facts need to be thoroughly enquired into.

Reliance in this regard is placed upon the decision rendered by Hon’ble Delhi High Court in CIT vs. Jansampark Advertising and Marketing P. Ltd. (supra) wherein Hon’ble High Court while deciding the identical issue has held as under :-

In view of what has been discussed above, we are of the considered view that the impugned order passed by the ld. CIT (A) deleting the addition made by the AO is required to be set aside, hence set aside and case is remanded back to the AO to decide afresh after providing adequate opportunity of being heard to the assessee. Case law relied upon by the assessee is not applicable to the facts and circumstances of the case. Consequently, the appeal filed by the Revenue is allowed for statistical purposes. Order pronounced in open court on this 26th day of July, 2019.