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Income Tax Appellate Tribunal, RAIPUR BENCH, RAIPUR
Before: SHRI RAVISH SOOD & SHRI ARUN KHODPIA
आदेश / ORDER
PER RAVISH SOOD, JM:
The present appeal filed by the department is directed against the order passed by the CIT(Appeals)-I, Raipur dated 20.11.2019, which in turn arises from the order passed by the A.O under Sec.143(3) r.w.s. 147 of the Income-Tax Act, 1961 (for short ‘the Act’) dated 26.10.2017 for assessment year 2010-11. Before us the department has assailed the impugned order on the following grounds of appeal: “1. Whether on the facts of the cases and in law, the CIT(A) is justified in deleting the addition of Rs.2,57,370/- on account of bogus purchase thereby ignoring the fact that the case was reopened for scrutiny on the basis of information received from Commercial Tax Department?
2. Whether on the facts of the cases and in law, the CIT(A) is justified in deleting the addition of Rs.2,57,370/- on account of bogus purchase thereby ignoring the fact that the AO has made the addition by relying on the decisions pronounced in the various case laws mentioned in the assessment order.
3. Whether on the facts of the cases and in law, the CIT(A) is justified in deleting the addition of Rs.2,57,370/- on account of bogus purchase thereby ignoring the fact that the AO has made the addition by relying on the decisions pronounced in the various case laws mentioned in the assessment order.
4. The order of Ld. CIT(A) is erroneous both in law and facts. 5. Any other ground that may be adduced at the time of hearing.” 3 ACIT, Circle-1(1) Vs. Shri Anup Kumar Agrawal
Succinctly stated, the assessee who is engaged in the business of manufacturing and trading of tractor trolley and agricultural equipment’s had on 12.10.2010 e-filed his return of income for the assessment year 2010-11, declaring an income of Rs.23,33,036/- Subsequently, the case of the assessee was reopened by the A.O u/s.147 of the Act. Notice u/s.148 was issued to the assessee on 31.03.2017. In reply it was submitted by the assessee that its original return of income filed u/s.139(1) of the Act on 12.10.2010 may be treated as a return filed in response to the aforesaid notice. Accepting the request of the assessee the A.O thereafter proceeded with and issued notices u/s. 143(2) & 142(1) of the Act.
During the course of the assessment proceedings, it was observed by the A.O that the assessee had claimed to have purchased iron and steel of Rs.10,29,475/- from a tainted party, viz. M/s. Prateek Sales, Badhaipara. It was observed by the A.O that investigations conducted by the Commercial Tax Department, Raipur had revealed that though the aforesaid concern i.e. M/s. Prateek Sales had collected VAT on sale of goods during the year under consideration but had not deposited the same with the department. It was further noticed by him that in the backdrop of the aforesaid
4 ACIT, Circle-1(1) Vs. Shri Anup Kumar Agrawal facts the Commercial Tax Department had declared the aforesaid firm i.e M/s Prateek Sales as a bogus concern and had cancelled its TIN-22941205078. Considering the aforesaid information which was received from the Commercial Tax Department, the A.O called upon the assessee to substantiate the authenticity of its aforesaid claim of purchases of Rs.10,29,475/- (supra). Also, the A.O in order to verify the authenticity of the aforesaid purchase transaction issued summons u/s. 131(1) of the Act to Shri Prasant Kumar Sharma, Prop. of M/s. Prateek Sales, Raipur. However, it was intimated to the A.O by Smt. Sunita Sharma W/o. Shri Prashant Kumar Sharma that as her husband was under police custody, therefore, recording of his statement on oath was not possible. Thereafter, the A.O issued letters u/s.133(6) of the Act to the Bank of Baroda, Raipur and Nagpur Nagrik Sahakari Bank, Raipur where the bank accounts of the assessee and Shri Prashant Kumar Sharma were maintained. It was gathered by the A.O that the assessee though had made payments towards the impugned purchases to M/s. Prateek Sales, Raipur by two cheques of Rs.5,20,161/- and Rs.5,09,314/-, but the same respective amounts were thereafter immediately withdrawn in cash on the same date by Shri Prashant Kumar Sharma. Considering
5 ACIT, Circle-1(1) Vs. Shri Anup Kumar Agrawal the aforesaid facts the A.O carried serious doubts as regards the authenticity of the purchases that were claimed to have been made by the assessee from M/s. Prateek Sales. As the assessee could not substantiate the authenticity of the purchase transactions in question to the satisfaction of the A.O, therefore, he held the same as bogus purchase and disallowed 25% of the value of the same. Accordingly, the A.O on the basis of his aforesaid deliberations worked out a disallowance of Rs.2,57,370/- vide his order passed u/s.143(3) r.w.s.147, dated 26.10.2017 and determined the income of the assessee at Rs.25,90,410/-.
Aggrieved, the assessee carried the matter in appeal before the CIT(Appeals). In so far the validity of the jurisdiction that was assumed by the A.O for reopening the case of the assessee was concerned, the CIT(Appeals) not finding favour with the contentions advanced by the assessee upheld the same. Adverting to the dubbing of the impugned purchases that were claimed by the assessee to have been made from M/s Prateek Sales, as bogus by the AO on the basis of the information received from Commercial Tax Department, the CIT(Appeals) found favour with the contentions advanced by the assessee and was of the view that on the basis of his books of 6 ACIT, Circle-1(1) Vs. Shri Anup Kumar Agrawal account, audited financial statement, complete bills and vouchers, bank statement, delivery challan and vouchers which were produced before the A.O had in the course of the assessment proceedings, the assessee had substantiated the authenticity of the purchases in question. It was observed by the CIT(Appeals) that there was no justification on the part of the AO in treating the purchase transactions under consideration as bogus. Accordingly, the CIT(Appeals) on the basis of his aforesaid deliberations allowed the appeal of the assessee and vacated the addition made by the A.O.
The Revenue being aggrieved with the order of the CIT(Appeals) has carried the matter in appeal before us. As the assessee respondent despite having been intimated about the hearing of appeal had failed to put up an appearance before us, therefore, we are constrained to proceed with and dispose off the appeal as per Rule 25 of the Appellate Tribunal Rules, 1963, i.e, after hearing the appellant revenue and perusing the orders of the lower authorities.
We have heard the Ld. Departmental Representative (for short ‘DR’) and perused the orders of the lower authorities and considered the material available on record. Admittedly, it is a matter of fact
7 ACIT, Circle-1(1) Vs. Shri Anup Kumar Agrawal borne from record that the assessee had claimed to have made the impugned purchases of Rs.10,29,475/- from a tainted party, viz. M/s. Prateek Sales, Raipur. In fact, the case of the assessee was reopened u/s.147 of the Act on the basis of information received by the A.O from the Commercial Tax Department as regards the impugned purchases which were made by the assessee from the aforesaid tainted party. It is a matter of fact borne from record that the assessee had made payments towards purchase consideration vide two cheques amounting to Rs.5,20,161/- and Rs.5,09,314/- to the aforementioned concern, viz. M/s. Prateek Sales. Although, the A.O had rejected the books of account of the assessee by triggering the provisions of section 145(3) of the Act but had after treating the impugned purchase as bogus restricted the addition to 25% of the value of the same.
Apropos, the aforesaid purchases in question, it transpires that the assessee in the course of the assessment proceedings had on the basis of supporting documentary evidences i.e. books of account a/w. audited financial statement, complete purchase bills and vouchers, bank statement, delivery challan and vouchers etc. duly substantiated his claim of having made genuine purchases from the 8 ACIT, Circle-1(1) Vs. Shri Anup Kumar Agrawal aforementioned party i.e. M/s. Prateek Sales, Raipur. As observed by the CIT(Appeals), the A.O had not drawn any adverse inferences as regards the aforesaid documentary evidences that were filed by the assessee in the course of the reassessment proceeding before him. As observed by the CIT(Appeals) and, rightly so, now when the assessee had furnished details of purchases which contained information of the seller, viz. email, address, TIN No., description of quantity, rate, total value of goods sold, amount of VAT, lorry number, vehicles which had delivered the goods, therefore, there was no justification on the part of the A.O to have held the same as bogus purchase. On the contrary, it transpires that no material had been placed on record by the A.O which would evidence that the assessee had made ingenuine purchase from the aforesaid party. In fact, as observed by the CIT(Appeals), the A.O had drawn adverse inferences only on the basis of information that was received by him from the Commercial Tax Department as regards M/s. Prateek Sales from whom the assessee had claimed to have made purchases. On a careful perusal of the reasons leading to the dubbing of M/s. Prateek Sales as tainted party, we find the same was because the latter had after collecting VAT failed to deposit the same with the Commercial Tax
9 ACIT, Circle-1(1) Vs. Shri Anup Kumar Agrawal Department. In our considered view, the aforesaid reasons which had led the Commercial Tax Department to hold the aforesaid seller concern, viz. M/s. Prateek Sales, Raipur as a bogus concern, on such standalone basis can by no means justify the dubbing of the purchases claimed by the assessee to have been made from the said concern as bogus. On the basis of our aforesaid observations, we concur with the view taken by the CIT(Appeals) who had rightly held that the impugned purchase could not have been held to be bogus. We, thus, finding no infirmity in the view taken by the CIT(Appeals), uphold the same. Thus, the Grounds of appeal No.(s) 1, 2 &3 raised by the Revenue are dismissed in terms of our aforesaid observations.
Grounds of appeal No.(s) 4 & 5 being general in nature are 8. dismissed as not pressed.
Resultantly, the appeal of the revenue is dismissed in terms of our aforesaid observations.
10 ACIT, Circle-1(1) Vs. Shri Anup Kumar Agrawal Order pronounced under rule 34(4) of the Appellate Tribunal Rules, 1963, by placing the details on the notice board.