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Income Tax Appellate Tribunal, AHMEDABAD “SMC” BENCH
Before: SHRI N.K. BILLAIYA & SHRI S. S. GODARA
PER N.K. BILLAIYA, ACCOUNTANT MEMBER:
ITA Nos. 1090/Ahd/2013 & ITA 861/Ahd/2016 are two separate appeals by the Assessee preferred against two separate orders of the Ld. CIT(A)-III, Baroda for A.Y. 2005-06.
ITA No. 1090/Ahd/13 & 861/Ahd/2016 2 . A.Y.1995-96 2. The first appeal relates to the additions made in the assessment proceedings and second appeal relates to the penalty levied on such additions. We will first take up ITA No. 1090/Ahd/2013.
The only grievance of the assessee is that the ld. CIT(A) erred in confirming the addition of Rs. 26,42,350/- on account of unexplained purchase of used transformer oil.
We find that this is the second round of litigation, in the first round of litigation, the assessment was framed u/s. 143(3) of the Act vide order dated 16.03.1998 on a total income of Rs. 1,51,73,935/-. The matter travelled up to the Tribunal and the Tribunal vide order dated 15.09.2006 in ITA No. 1433/Ahd/1999 has restored one issue for fresh adjudication which related to the addition of Rs. 26,42,350/-.
The facts show that the assessee had claimed to have purchased transformer oil from various parties. The assessee had furnished the details of vehicles by which the transformer oil was transported. On verification of those vehicles, the A.O. found that the vehicles were not capable of transporting the transformer oil. The A.O. doubted the genuineness of the purchases and sought explanation for the assessee in the light of the directions given by the Tribunal.
The assessee once again furnished the same explanation which was given in the first round of litigation. After considering the submissions of the assessee, the A.O. concluded by holding that the assessee had failed to prove that transformer oil can be transported through the open body tankers. The A.O.
ITA No. 1090/Ahd/13 & 861/Ahd/2016 3 . A.Y.1995-96 treated the purchase of Rs. 26,42,350/- as unexplained purchases and made the addition of the same.
Assessee agitated the matter before the ld. CIT(A) but without any success.
Before us, the ld. counsel for the assessee brought to our notice, the decision of the Co-ordinate Bench in the case of the assessee in earlier assessment years. It is the say of the ld. counsel that in earlier assessment years by a consolidated order, the Tribunal has disposed of the appeals pertaining to A.Y. 1989 -1990 to A.Y. 1994-95. The ld. counsel stated that in all the earlier years, the assessee and the revenue have accepted that a disallowance of 25% of the disputed purchases should only be made. In support, the ld. counsel further relied upon the decision of the Hon’ble High Court of Gujarat in the case of Vijay Proteins Ltd. 58 taxmann.com 44.
Per contra, the ld. D.R. stated that the facts of earlier years are different from the facts of the year under consideration and supported the findings of the ld. CIT(A).
We have carefully considered the orders of the authorities below. The entire dispute revolves around the genuineness of the purchases of transformer oil amounting to Rs. 26,42,350/-. We find that a similar issue was in dispute before the Tribunal in assessment year 1989-90 to A.Y. 1994-95 and the Tribunal by a consolidated order has disposed the appeal and the relevant findings read as under:- 13. So far as issue relates to addition on account of bogus purchases involved in ground no. 2 is concerned, the CIT(Appeals) confirmed the action of the Assessing Officer, whereby an addition of Rs. 28,09,012/- was made. The relevant part of
ITA No. 1090/Ahd/13 & 861/Ahd/2016 4 . A.Y.1995-96 the order of the CIT(Appeals) as contained in paragraph No. 2.2 of the appellate order, which reads as under:- "2.2. I have considered the various submissions made on behalf of the appellant. It is observed, that the appellant provided the addresses of various parties from whom the purchases were, made. The letters addressed by the Assessing Officer to the above parties remained unserved. In some of the bills, sales tax number shown was found to be bogus. The transporters who were claimed to have supplied the goods were found to be nonexistent. The payments to the above parties through cheques were discounted by the employees of the appellant, and in their statements such employees admitted that, after the discounting the cash was given back to Shri C.K.Gandhi, the Managing Director of the appellant company. In view of above overwhelming evidence, the Assessing Officer treated the entire purchases as bogus. Regarding the question of proper opportunity and facility of cross-examination, it is seen that the copy of the original statement recorded was made available to the appellant and the appellant was offered facility of cross examination, which was declined. During the course of reassessment proceedings, except for the various repetitive arguments, the appellant has not adduced any further evidence to prove that the purchases were genuine. In the facts of the case, I am unable to interfere with the finding of the Assessing Officer.”
In view of the agreement arrived between the parties (supra), we restrict the addition to the extent of 25% of such bogus purchases and, therefore, assessee’s ground of appeal is partly allowed.
Since in all the previous years, the dispute related to the bogus purchases and the dispute in the appeal in hand also relates to the bogus purchases, we do not find any reason to take a different view from what has already been taken by the Co-ordinate Bench.
Respectfully following the findings of the Co-ordinate Bench (supra), we direct the A.O. to restrict the addition to the extent of 25% of such bogus purchases. Appeal filed by the Assessee is partly allowed.
ITA No. 1090/Ahd/13 & 861/Ahd/2016 5 . A.Y.1995-96 ITA No. 861/Ah/2016 for A.Y. 1995-96
The only grievance of the assessee relates to the levy of penalty u/s. 271(1)(c) of the act on the additions made in the assessment on account of bogus purchases of Rs. 26,42,350/-.
While deciding the appeal relating to the addition of bogus purchases in ITA NO. 1090/Ahd/2013 (supra), we have directed the A.O. to restrict the addition to 25% of the purchases.
Be that as it may, the present appeal relates to the levy of penalty u/s. 271(1)(c) of the Act. Facts on record show that though the A.O. has disputed the purchases amounting to Rs. 26,42,350/- but at the same time, the corresponding sales have been accepted by the A.O. These facts are self contradictory and therefore it cannot be said that the assessee has filed inaccurate particulars of income or has concealed its income. 16. In our considered opinion, this is not a fit case for the levy of penalty u/s. 271(1)(c) of the Act. We accordingly direct the A.O. to delete the penalty of Rs. 12,15,500/-.
Appeal filed by the Assessee is allowed.
Order pronounced in Open Court on 17 - 11- 2017
Sd/- Sd/- (S. S. GODARA) (N. K. BILLAIYA) JUDICIAL MEMBER True Copy ACCOUNTANT MEMBER Ahmedabad: Dated 17 /11/2017