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Income Tax Appellate Tribunal, “A” BENCH: KOLKATA
Before: Shri Rajesh Kumar & Shri Sonjoy Sarma]
ORDER / आदेश Per Rajesh Kumar, AM: This is the appeal preferred by the revenue against the order of the Ld. Commissioner of Income Tax (Appeals)-NFAC, Delhi (hereinafter referred to as the Ld. CIT(A)”] dated 09.11.2023 for the AY 2018-19.
The revenue has challenged the deletion of addition of Rs. 80,31,890/- on account of unaccounted purchases, the deletion of addition of Rs. 1,15,61,194/- made Assessment Year: 2018-19 Pravin Kumar Pawan Kumar by the AO on account of inflated purchases and deletion of Rs. 23,94,441/- by CIT(A) as made by the AO on account of difference in the value of purchases.
Facts in brief are that the assessee filed return of income on 28.09.2018 declaring total income of Rs. 7,99,823/- which was processed u/s 143(1) of the Act. The case was selected for scrutiny for examination of purchases which have apparently been made either from the non-filer or have filed non business ITRs or reflected substantially lower turnover in ITRs as compared to turnover shown in GST R-1 return. Accordingly, statutory notices were duly issued and served upon the assessee.The assessee replied these notices with evidences. The AO also called for information from the third parties to verify the transactions which were duly furnished by those parties. Upon comparison of the assessee’s reply and the information called for u/s 133(6) the AO found some discrepancies in sales shown by two parties in their GST Return against assessee’s PAN which are greater than purchases shown by the assessee. The two parties were Jayshree Tea Industries Ltd. and Kamal Tewari & Co. who have shown sales more than the purchases shown by the assessee and variance is to the tune of Rs. 80,31,890/- . the gave details in para 3 of the assessment order. Similarly the AO noted in para 4 that the assessee has shown excess purchases from the 11 parties to the tune of Rs. 1,51,61,194/- .The AO further noted that in the case of supplier namely M/s P. D. Bajoria Tea & Agro Produc. Pvt. Ltd., the assessee has shown purchases of Rs. 28,35,609/- however the party has confirmed to have been made sales to the tune of Rs. 4,41,168/- during the AY 2017-18. Therefore, the difference of Rs. 23,94,441/-. The added all the above three discrepancies to the income of the assessee in the assessment framed u/s 143(3) read with Section 144D vide order dated 23.04.2021.
In the appellate proceedings, the assessee preferred an appeal before the Ld. CIT(A) who deleted the addition made by the AO. After taking into consideration the reply of the assessee and necessary reconciliation and also the facts available on record deleted the addition by observing and holding as under:
Assessment Year: 2018-19 Pravin Kumar Pawan Kumar 5. Decision:-It could be seen from the facts that in this appeal that Ground No 1 to 7pertains to the single issue of addition of Rs.2,19,87,525/- on account of disallowance of purchase expenses and the same is adjudicated as under:- 5.1. The appellant is a firm and filed its return of income for the AY 2018-19on 28/09/2018 declaring total income of Rs.7,99,823/-. This case was selected for Complete Scrutiny under the E-assessment Scheme, 2019to verify the issue of business purchases. Accordingly, the AO issued notice u/s 143(2) of the Act to the appellant firm and called for details of purchases made during the year under consideration. In response the appellant made written submission before the AO. Also the AO issued notices u/s 133(6) of the Act to the purchase parties.
The AO added the difference amount of Rs.80,31,890/- on account of uncounted purchases to the total income of the appellant firm for the year under consideration. During the appellate proceedings, the appellant filed the written submissions and contended that M/s Jay Shree Tea & Industries Ltd while filing its GST return had by mistake included two bills under appellant’s GST number and the same were not related to the appellant. Due to lapse of three year, the GST return could not be rectified but the appellant filed confirmation letter from Jay Shree Tea & Industries Ltd wherein the said fact is admitted by the party. Also Jay Shree Tea & Industries Ltd filed the copy of ledger account wherein it is seen that the appellant made purchases of Rs.19,16,341/- only during the year under consideration from the party. In respect of the purchases made from Kamal Tewari & Co., the appellant claimed that the AO had mistakenly considered the purchase amount of some other person having PAN ABIPT3563C, instead of purchases from Kamal Tewari & Co. (PAN-ABQPT4103L). Also Kamal Tewari & Co.filed the copy of ledger account wherein it is seen that the appellant made purchases of Rs.42,64,350/- only during the year under consideration from the party. In view of the facts narrated above, the appellant firm proved that it had not made any uncounted purchases and the purchases made have been duly recorded in its books of accounts. Accordingly, the AO is directed to delete the addition of Rs.80,31,890/- on account of uncounted purchases. 5.3. The AO further noted that below mentioned parties had shown less sales to the appellant in their GST returns as compared to purchases shown by the appellant in its accounts.
In view of this difference in purchase amounts, the AO treated the same as inflated purchases and added an amount of Rs.1,15,61,194/- to the total income of the appellant firm for the year under consideration.
Assessment Year: 2018-19 Pravin Kumar Pawan Kumar During the appellate proceedings, the appellant contended that the AO considered only the Taxable value of purchases whereas the appellant submitted the details of Invoice Value/Transaction Value inclusive of GST/VAT/CST etc. Further the appellant claimed that GST was implemented with effect from 01.07.2017 and the AO did not take into account the purchases made by it during the Pre-GST period of the Financial Year i.e. from 01.04.2017 to 30.06.2017. In support of his contention, the appellant filed ledger copy of the above mentioned parties. The ledger copy filed by the purchase parties was perused and found that there was no difference of purchases as reported by the appellant and as confirmed by the purchase parties. Also the fact is very much clear that the GST was implemented nationwide from 01.07.2017. But the AO relied only upon GST returns filed by the purchase parties and did not take into account the purchases made during the Pre-GST period. Were the AO took those purchases into account, the said difference would not have been noticed. In view of submissions made it is clear that the appellant did not inflate its purchases in any way and had declared the actual purchases made from various parties. Accordingly, the AO is directed to delete the addition of Rs.1,15,61,194/- made on account of inflated purchases. 5.4. During the assessment proceedings, the AO noted that one of the supplier M/s P.D. Bajoria & Sons Tea Company Pvt. Ltd. confirmed to have made sales of Rs.4,41,168/- only to the appellant whereas the appellant claimed to have made purchases of Rs.28,35,609/- from the party during the FY 2017-18. Therefore the AO added the difference amount of Rs.23,94,441/- to the total income of the appellant. During the appellate proceedings, the appellant claimed that it had made purchases of Rs.23,94,441/-from M/s P.D. Bajoria Tea & Agro Prod Pvt. Ltd. (PANAAFCP4216P) and Rs.4,41,168/- from M/s P.D. Bajoria & Sons Tea Company Pvt. Ltd. (PAN-AAFCP5124L). However the appellant included both the amounts in single ledger account of M/s P.D. Bajoria & Sons Tea Company Pvt. Ltd. Due to their similar names. The AO perused the GST return and confirmation of M/s P.D. Bajoria & Sons Tea Company Pvt. Ltd. And concluded that there was difference of purchases amounting to Rs.23,94,441/-. In support of its claim, the appellant filed the ledger account of M/s P.D. Bajoria Tea & Agro Prod Pvt. Ltd and M/s P.D. Bajoria & Sons Tea Company Pvt. Ltd. Wherein it is noted that the appellant had made purchases of Rs.23,94,441/- and Rs.4,41,168/- from these two respective parties. In view of the facts narrated above, the contention of the appellant firm is accepted and the AO is directed to delete the addition of Rs.23,94,441/- on account of difference in purchases. Accordingly, Ground No. 1 to 7 are allowed. 5.5 Ground No. 8 pertains to addition or amendment of grounds of appeal at the time of hearing. Since the appellant did not exercise its right to addition or amendment of grounds of appeal at the time of hearing, this ground does not require any adjudication. Accordingly, Ground No. 8 is dismissed.”
5. After hearing the rival contentions and perusing the material on record, we find that in this case, the AO has made the addition by misunderstanding the facts available on record and thus made addition which were factually incorrect and wrong. The Ld. CIT(A) after taking consideration of the reply by the assessee and also reconciliation filed, recorded a very detailed and comprehensive findings from para 5 to 5.4 of the appellate order by observing that there was no discrepancies in the purchases and sales Assessment Year: 2018-19 Pravin Kumar Pawan Kumar recorded by the assessee. We note that the Ld. CIT(A) has dealt with the issues in a very comprehensive manner discussing how the difference made by the AO are not sustainable. So far as the addition of Rs. 80,31,901/- is concerned the AO has added the same on unaccounted purchases not shown by the assessee. The Ld. CIT(A) has noted that one supplier M/s Jayshree Tea & Company Pvt. Ltd. while filing the return in GST return has wrongly included tow bills against assessee’s GST No. and the same were not related to the assessee. The assessee has filed a confirmation letter from M/S M/s Jayshree Tea & Company Pvt. Ltd. to this effect and confirmed the purchases made by the assessee of Rs.19,16,341/-. In respect of the second purchases party M/S Kamal Tiwari & Co. , the CIT(A) the AO by mistake has taken the purchase amount of some other person having different PAN instead purchases from Kamal Tiwari & Co having PAN No. ABQPT4103L which was confirmed by the supplier that the assessee had made purchase of Rs. 42,64,350/-during the year under consideration.
5.1. So far as the difference of Rs. 1,15,61,194 is concerned ,the ld CIT(A) noted that the AO has considered the taxable value of purchases whereas the assessee furnished details of invoice value/transaction value inclusive of GST/VAT/CST. Ld CIT(A) also noted that GST was implemented from 01.07.2017 and the AO did not take into account purchases made by the assessee prior to that i.e from 1.4.2017 to 30.06.2017 as evidenced by the ledger copies of the above parties.
5.2. As regards the third discrepancy, the ld CIT(A) noted that the assessee has made purchases from two parties namely M/S P.D. Bajoria Tea & Agro Pvt Ltd. with PAN AAFCP4216P Rs. 23,94,441/- and M/S P.D. Bajoria & Sons Tea Company Pvt Ltd with PAN AAFCP5124L Rs. 4,41,168/-. However the assessee clubbed both the purchases in one account i.e. M/S P.D. Bajoria & Sons Tea Company Pvt Ltd and the AO concluded on the basis of purchases as per GST return and confirmation of M/S P.D. Bajoria & Sons Tea Company Pvt Ltd.that the assessee not accounted for the purchases to the tune of Rs. 23,94,441/-.
Assessment Year: 2018-19 Pravin Kumar Pawan Kumar 5.3. Therefore in view of the above we do not find any infirmity in the order of ld CIT(A) which is otherwise a reasoned and speaking one, we are inclined to dismiss the appeal of the revenue by upholding the appellate order.
In the result, the appeal of the revenue is dismissed. Order is pronounced in the open court on 2nd January, 2025 (Sonjoy Sarma /संजय शमा�) (Rajesh Kumar/राजेश कुमार) Judicial Member/�या�यक सद�य Accountant Member/लेखा सद�य Dated: 2nd January, 2025 SM, Sr. PS Copy of the order forwarded to: 1. Appellant- ITO, Ward-36(1), Kolkata 2. Respondent – Pravin Kumar Pawan Kumar, 29/1, 1st Floor, Armenian Street, Burrabazar, Kolkata-700001 3. Ld. CIT(A)- NFAC, Delhi 4. DR, Kolkata Benches, Kolkata (sent through e-mail)