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Income Tax Appellate Tribunal, “B” BENCH, PUNE
Before: SHRI INTURI RAMA RAO & SHRI S.S. VISWANETHRA RAVI
आदेश / ORDER
PER S.S. VISWANETHRA RAVI, JM :
These three appeals by the assessee against the common order dated 21-11-2016 passed by the Commissioner of Income Tax (Appeals)-7, Pune [‘CIT(A)’] for assessment years 2007-08, 2010-11 & 2011-12, respectively.
Since, the issues raised in these three appeals are similar basing on the same identical facts. Therefore, with the consent of both the parties,
2 ITA Nos.729, 730 & 731/PUN/2017, A.Ys. 2007-08, 2010-11 & 2011-12
we proceed to hear these three appeals together and to pass a consolidated order for the sake of convenience.
First, we shall take up appeal in ITA No.729/PUN/2017 for A.Y. 2007-08.
Ground No. 1 raised by the assessee challenging the action of CIT(A) in confirming the addition of Rs.96,50,000/- made by the AO on account of alleged commission paid by Praj Industries Ltd. on inflated bills under the income from other sources in the facts and circumstances of the case.
The brief facts of the case are that the assessee is a Co-operative Society conducts its business under the name and style of Shri Vitthal Sahakari Sakhar Karkhana Ltd. The assessee is engaged in the business of manufacturing and sale of sugar. The assessee filed return of income declaring a total loss of Rs.21,15,49,623/- which has been reduced to Rs.20,02,59,171/- by the AO u/s. 143(3) r.e.s. 147 of the Act inter alia making additions on account of commission and depreciation on inflated bills. The CIT(A) confirmed the same. Having aggrieved by the order of CIT(A), the assessee is before us.
Heard both the parties and perused the material available on record. We note that there was a search and seizure action u/s. 132 of the Act in the case of Praj Industries Ltd. (hereafter in short as “PIL”) and the said PIL provided accommodation entries to its customers by booking bogus bills in its books of accounts and the assessee is one amongst them. We note that the AO made addition on account of commission based on the oath statement of Shri Anirudha Phadke, Associate Vice President (Commercial) of PIL by stating the amount of inflation of the bills was returned to
3 ITA Nos.729, 730 & 731/PUN/2017, A.Ys. 2007-08, 2010-11 & 2011-12
assessee after charging the commission. The contention of ld. AR, Shri Hanmant Dhavale is that the assessee is an autonomous association is not part of allegation made by Shri Anirudha Phadke. He argued that the assessee is a different legal entity and the allegation of AO and the CIT(A) are that the assessee got back inflated amount is not correct. He argued that it is clear from oath statement that the Chairman, Vice Chairman, MD, DM and others must have received on their personal capacity from the PIL on account of inflated bills amount but not the assessee. The assessee and the said persons are different and separate. The ld. DR, Shri M.G. Jasnani vehemently opposed the submissions of assessee and the CIT(A) discussed the issue in detail and drew our attention to Para No. 5.3 of the impugned order. He argued that it is very much clear from the said discussion of CIT(A) in Page No. 36 that the Chairman, Vice Chairman, MD, DM and others received Rs.96,50,000/- from the PIL and contention of ld. AR is very vague that the assessee has no role in the said transaction. The assessee could not produce any evidence before the CIT(A) as well as before this Tribunal showing that the assessee did not receive any inflated bills amount from the PIL. The CIT(A) considering all the evidences correctly held the view of AO is right in adding the said amount in the hands of the assessee. We note that the case of the AO is that in respect of inflow and outflow, the assessee society received cash from PIL specifically Vitthal pandharpur Chairman, Vice Chairman, MD, DM and others as rightly pointed by the ld. AR. We note that there was no evidence to show that the said persons received cash from PIL under authorization from the assessee and it is also clear that they accepted the cash on account of inflated bills on their individual capacity. Further, there was no opportunity of cross-examining the said Anirudha Phadke who stated on oath that the assessee received cash from PIL. There was no evidence brought on record by the AO as well as CIT(A) in support their
4 ITA Nos.729, 730 & 731/PUN/2017, A.Ys. 2007-08, 2010-11 & 2011-12
view that the above said persons received cash on behalf of the assessee. When there is no evidence proving the receipt such cash from PIL and also entries in the books of accounts, the addition made by the AO and as confirmed by the CIT(A) cannot be held to be made in the hands of the assessee but required to be assessed in the hands of such individuals on their individual capacity that are Vitthal pandharpur Chairman, Vice Chairman, MD, DM and others. Therefore, the addition of Rs.96,50,000/- on account of inflation of bills treating the same as income from other sources in the hands of the assessee is not maintainable and it is deleted. Thus, the order of CIT(A) is set aside and the ground No. 1 raised by the assessee is allowed.
Ground No. 2 raised by the assessee challenging the action of CIT(A) in confirming the disallowance of depreciation on account of alleged inflated bills.
Heard both the parties and perused the material available on record. We note that the assessee claimed depreciation on inflated value of bills treating the same as capital receipt @ 15% on Rs.1,09,36,345/- which is the inflated value. Admittedly, the value of inflated bills is not forming the actual cost of plant and machinery and no depreciation can be claimed on the same. The CIT(A) rightly confirmed the order of AO in disallowing the depreciation of Rs.16,40,452/- as claimed by the assessee. Thus, the order of CIT(A) is justified and ground No. 2 raised by the assessee is dismissed.
In the result, the appeal of assessee is partly allowed.
5 ITA Nos.729, 730 & 731/PUN/2017, A.Ys. 2007-08, 2010-11 & 2011-12
ITA Nos. 730 & 731/PUN/2017 (A.Ys. 2010-11 & 2011-12)
We find that the sole issue raised in the appeals and the facts in ITA Nos. 730 & 731/PUN/2017 are identical to ground No. 2 in ITA No. 729/PUN/2017. Since, the facts in ITA Nos. 730 & 731/PUN/2017 are similar to ITA No. 729/PUN/2017, the findings given by us while deciding ground No. 2 of the appeal of assessee in ITA No. 729/PUN/2017 would mutatis mutandis apply to ITA Nos. 730 & 731/PUN/2017, as well. Accordingly, both the appeals of assessee are dismissed.
To sum up, the appeals of assessee in ITA No. 729/PUN/2017 is partly allowed and ITA Nos. 730 & 731/PUN/2017 are dismissed.
Order pronounced in the open court on 20th July, 2022.
Sd/- Sd/- (Inturi Rama Rao) (S.S. Viswanethra Ravi) JUDICIAL MEMBER ACCOUNTANT MEMBER पुणे / Pune; ददिांक / Dated : 20th July, 2022. रधव
आदेश की प्रधतधलधप अग्रेधर्त / Copy of the Order forwarded to : अपीलार्थी / The Appellant. 1. प्रत्यर्थी / The Respondent. 2. 3. The CIT(A)-7, Pune 4. The Pr. CIT-6, Pune धवभागीय प्रधतधिधि, आयकर अपीलीय अधिकरण, “बी” बेंच, 5. पुणे / DR, ITAT, “B” Bench, Pune. गार्ा फ़ाइल / Guard File. 6. //सत्याधपत प्रधत// True Copy// आदेशािुसार / BY ORDER,
वररष्ठ धिजी सधचव / Sr. Private Secretary आयकर अपीलीय अधिकरण ,पुणे / ITAT, Pune