Mrs. Pradeep Kumar Jain HUF, New Delhi v. ITO, New Delhi

ITA 1716/DEL/2011 | 2007-2008
Pronouncement Date: 30-11-2011 | Result: Allowed

Appeal Details

RSA Number 171620114 RSA 2011
Assessee PAN AAAHP3353H
Bench Delhi
Appeal Number ITA 1716/DEL/2011
Duration Of Justice 7 month(s) 22 day(s)
Appellant Mrs. Pradeep Kumar Jain HUF, New Delhi
Respondent ITO, New Delhi
Appeal Type Income Tax Appeal
Pronouncement Date 30-11-2011
Appeal Filed By Assessee
Order Result Allowed
Bench Allotted F
Tribunal Order Date 30-11-2011
Date Of Final Hearing 08-06-2011
Next Hearing Date 08-06-2011
Assessment Year 2007-2008
Appeal Filed On 08-04-2011
Judgment Text
IN THE INCOME TAX APPELLATE TRIBUNAL DELHI BENCH: F NEW DELHI BEFORE SHRI RAJPAL YADAV JUDICIAL MEMBER AND SHRI K.D. RANJAN ACCOUNTANT MEMBER I.T.A NO. 1716/DEL/11 ASSTT. YEAR 2007-08 PRADEEP KUMAR JAIN HUF PROP. PEARLS OVERSEAS 7/25 ANSARI ROAD DARYA GANJ NEW DELHI 110 002. AAAHP3353H VS. ITO WARD 30 (2) NEW DELHI. (APPELLANT) (RESPONDENT) APPELLANT BY: SHRI VED JAIN & MRS. RANI JAIN C.AS RESPONDENT BY: SHRI B. KISHORE SR. DR ORDER PER RAJPAL YADAV JM: THE ASSESSEE IS IN APPEAL BEFORE US AGAINST THE ORD ER OF LD. CIT(A) DATED 8 TH FEBRUARY 2011 PASSED FOR ASSTT. YEAR 2007- 08. THE GROUNDS OF APPEAL TAKEN BY THE ASSESSEE ARE NOT IN CONSONANCE WITH RULE 8 OF ITAT RULES. THEY ARE DESC RIPTIVE AND ARGUMENTATIVE IN NATURE. IN BRIEF THE GRIEVANCE OF ASSESSEE ITA NO. 1716/DEL/11 ASSTT. YEAR 2007-08 2 REVOLVES AROUND A SINGLE ISSUE WHEREIN IT IS IMPUG NING CONFIRMATION OF ADDITION OF ` 30 33 350/- AND ` 22 750/- WHICH WAS ADDED BY THE AO BY TREATING THE PURCHASES TO TH IS EXTENT AS BOGUS PURCHASES AND ESTIMATING THE EXPENSES FOR ARRANGING SUCH ENTRY OF BOGUS PURCHASES AT `.22 750/-. 2. THE BRIEF FACTS OF THE CASE ARE THAT ASSESSEE HA S FILED ITS RETURN OF INCOME ON 29.10.2007 DECLARING INCOME OF `. 8 710/-. THE AO HAS OBSERVED THAT DIT (INVESTIGATION) CHAND IGARH HAS TRANSMITTED AN INFORMATION THAT DIT HAS CARRIED OUT A SURVEY ON THE PREMISES OF M/S. VINOD PARASHAR & ASSOCIATES ON 14 TH SEPTEMBER 2007. THE ASSESSEE S PROPRIETORSHIP OF M/S. PEARL OVERSEAS HAS MADE PURCHASES OF ` 30 33 350/- FROM M /S. VIKAS ENTERPRISES. DURING THE COURSE OF SURVEY THIS ENTE RPRISE HAS ADMITTED THAT IT HAS NOT SOLD ANYTHING RATHER IT W AS IN THE BUSINESS OF PROVIDING ACCOMMODATION ENTRIES. ON THE BASIS OF THIS INFORMATION LD. AO SELECTED THE CASE OF ASSES SEE FOR SCRUTINY AND A NOTICE U/S 143(2) WAS ISSUED ON 3 RD JULY 2008. THIS NOTICE WAS DULY SERVED UPON ASSESSEE. THE LD. AO HAD ISSUED A DETAILED QUESTIONNAIRE U/S 142 (1) ALONGWI TH THE NOTICE ISSUED U/S 143(2) ON 10.11.2009. A COPY OF THE QUES TIONNAIRE IS ITA NO. 1716/DEL/11 ASSTT. YEAR 2007-08 3 AVAILABLE AT PAGES NO. 36 & 37 OF THE PAPER BOOK. L D. AO HAD CALLED UPON INFORMATION ON 22 COUNTS. HE DIRECTED T HE ASSESSEE TO GIVE COMPLETE ADDRESS OF ALL THE BUSINESS PREMIS ES INCLUDING FACTORY AND SALE OUTLET INVENTORY OF OPENING AND C LOSING STOCK QUALITY AND QUANTITYWISE ALONG WITH THEIR VALUATION DETAILS OF PURCHASE AND SALES MONTHWISE AND PARTYWISE. CONFIRM ED COPIES OF ACCOUNTS OF PERSONS FROM WHOM / TO WHOM P URCHASES / SALES HAVE BEEN MADE OF AN AMOUNT OF `. 1 LAC AND ABOVE. THE ASSESSEE HAS SUBMITTED DETAILS IN RESPECT OF QUERIE S RAISED IN THE QUESTIONNAIRE. THE CASE OF THE AO IS THAT SHRI VINOD PARASHAR HAS DISCLOSED THAT HE HAS FLOATED VIKAS EN ERPRISES UNDER THE PROPRIETORSHIP OF SMT. SEEMA DEVI AND SHR I PAWAN PARASHER. HE HAS NOT SUPPLIED ANY GOODS TO ANY CONC ERN RATHER ONLY PROVIDED BILLS TO VARIOUS BENEFICIARIES IN LIE U OF COMMISSION RANGING FROM 0.50% TO 0.75% OF THE BILL AMOUNT. HIS STATEMENT WAS RECORDED BY THE DIT (INVESTIGATION) CHANDIGARH ON OATH ON 17 TH SEPTEMBER 2007. IN HIS STATEMENT HE HAS ADMITTED THAT HE HAD OPENED VARIOUS BANK ACCOUNTS IN THE NAME OF DIFFERENT BOGUS CONCERN OPERATED AND CONTROLLED BY HIM AND T HESE CONCERNS WERE EXCLUSIVELY FOR THE PURPOSE OF BOGUS SALE BILLS ITA NO. 1716/DEL/11 ASSTT. YEAR 2007-08 4 WHICH WERE ISSUED TO THE CONCERN DESIROUS OF OBTAIN ING BOGUS PURCHASE BILLS. THE INVESTIGATION WING WAS ABLE TO LAY ITS HANDS ON THREE BILLS BEARING NO. 1552 1559 1627 WHICH W ERE RAISED ON 26.12.2006 26.12.2006 AND 12.1.2007. THE ASSESS EE HAS MADE THE PAYMENTS OF THESE BILLS THROUGH ACCOUNT PA YEE CHEQUE. THE DETAILS OF THE PAYMENTS HAVE BEEN NOTIC ED BY THE AO AS UNDER :- 1. 26.12.2006 BILL NO 1552 10 17 758/- 2. 28.12.2006 BILL NO.1559 9 84.954/- 3. 12.1.2007 BILL NO. 10 30 638/- __________________ 30 41 350/- __________________ 3. WHEN ASSESSEE WAS CONFRONTED WITH THIS MATERIAL IT HAS SUBMITTED CONFIRMATION OF SHRI VINOD PARASHER. THE AO SENT AN INSPECTOR ON THE ADDRESS GIVEN IN THE CONFIRMATIONS AND IT WAS FOUND THAT SHRI VINOD PARASHER WAS NOT TRACEABLE ON THAT ADDRESS. THE AO THEREAFTER DIRECTED THE ASSESSEE T O PRODUCE SHRI VINOD PARASHAR. IN RESPONSE TO THIS SHOW CAUSE NOTICE ASSESSEE HAS SUBMITTED THAT IT HAS ENTERED A GENUIN E BUSINESS TRANSACTION. SHRI PARASHER IS A WITNESS OF THE DEPA RTMENT WHOSE STATEMENT IT RECORDED FROM THE BANK OF ASSESSEE WHI CH IS BEING USED AGAINST THE ASSESSEE . THEREFORE HE SHOULD BE CALLED ITA NO. 1716/DEL/11 ASSTT. YEAR 2007-08 5 UPON BY EXERCISING THE POWERS U/S 131 AND ASSESSEE BE GIVEN AN OPPORTUNITY TO CROSS EXAMINE HIM. LD. AO REJECTE D THIS CONTENTION OF ASSESSEE ON THE GROUND THAT ASSESSEE CANNOT SHIFT THE ONUS UPON THE DEPARTMENT OF PRODUCING THE PERSON FROM WHOM ASSESSEE HAS FILED CONFIRMATION OF THE TR ANSACTION ENTERED WITH HIM. 4. APART FROM THE ABOVE THE ASSESSEE HAS SUBMITTED THAT IT HAS MADE PURCHASES FROM NUMBERS OF CONCERNS. THE IT EM IN WHICH IT IS DEALING IS SUBJECT TO CENTRAL EXCISE. I T IS REGISTERED UNDER VAT AS WELL AS SALES TAX. IN THE LETTER DATE D 15 TH APRIL 2008 ASSESSEE HAS SUBMITTED PHOTO COPY OF CENTRAL EXCISE REGISTRATION CERTIFICATE VAT REGISTRATION CERTIFIC ATE PURCHASE INVOICES SALE BILLS EXCISE REGISTER AND COMPLETE L EDGER AND BOOKS OF ACCOUNTS FOR VERIFICATION. IT HAS SUBMITTE D THE LIST OF PERSONS FROM WHOM IT HAS MADE PURCHASES. THE LOCAL PURCHASES WERE MADE FROM 11 PARTIES. WHEREAS THE IM PORT WAS MADE FROM THREE PARTIES. THESE WERE FROM UK AND BEL GUIM. SIMILARLY ASSESSEE HAS SOLD THE METAL TO 12 PARTIE S. IT HAS SUBMITTED THE DETAILS OF ALL THESE PARTIES. THE ASS ESSEE FURTHER POINTED OUT THAT IT HAS ENTERED IN THE METAL SCRAP BUSINESS IN ITA NO. 1716/DEL/11 ASSTT. YEAR 2007-08 6 THE MONTH OF OCTOBER 2006. DURING THE YEAR IT HAS MADE TOTAL PURCHASES OF ` 10 49 84 573/-. ITS SALES ARE AT `. 9 88 78 896/-. THE COMPLETE LEDGER ACCOUNT AND THE BOOKS IN ORIGIN AL EXHIBITING THE COMPLETE QUANTITATIVE DETAILS WERE P RODUCED BEFORE THE AO . IT HAS ALSO PRODUCED THE ASSTT. ORD ER UNDER THE HARYANA VALUE ADDED TAX ACT 2003. THE ASSESSEE FURT HER POINTED OUT THAT IN THE PERIOD BETWEEN 1 ST APRIL 2006 TO 31 ST MARCH 2007 IT HAS PURCHASED 549930.30 KG OF ALUMI NUM SCRAP FROM 7 PARTIES WHOSE VALUE IS `.55923674.25. THE AVERAGE RATE OF THE TOTAL PURCHASES IS `. 101.69 PE R KG. OUT OF THIS HUGE QUANTITY ONLY A QUANTITY OF 27960 KG WAS PURCHASED FROM M/S. VIKAS ENTERPRISES @104.16 PER KG. IT HAS SOLD 525655.30 KG OF SCRAP FOR A SUM OF `.54896656/-. TH E AVERAGE SALE PRICE COMES TO 104.43 KG. OUT OF THIS TOTAL SA LES THE CASH SALE IS OF 25.30 KG. THESE SALES WERE MADE MAINLY T O THREE CONCERNS. ON THE STRENGTH OF THESE DETAILS IT WAS SUBMITTED BY THE ASSESSEE THAT ALL ITS ACCOUNTS ARE MAINTAINED I N ACCORDANCE WITH LAW. THERE IS NO DEFECT IN THEM AND ONLY ON T HE BASIS OF STATEMENT GIVEN BY ONE OF THE SELLER THE PURCHASE CONSIDERATION CANNOT BE ADDED IN THE HANDS OF THE A SSESSEE. ITA NO. 1716/DEL/11 ASSTT. YEAR 2007-08 7 LD. AO DID NOT FIND FORCE IN THE CONTENTION OF ASSE SSEE. HE EVEN DID NOT REFER ALL THESE DETAILS AND DID NOT BOTHER TO DEAL WITH THESE DETAILS. HE MADE THE ADDITION ON THE GROUND T HAT ASSESSEE FAILED TO PROVE ITS PURCHASES. ON THE OTHE R HAND DEPARTMENT WAS ABLE TO LAY ITS HANDS ON THE MATERIA L EXHIBITING THAT M/S. VIKAS ENTERPRISES WAS INVOLVED IN PROVIDI NG ACCOMMODATION ENTRIES. 5. APPEAL TO THE LD. CIT(A) DID NOT BRING ANY RELIE F TO THE ASSESSEE. LD. FIRST APPELLATE AUTHORITY HAS OBSERVE D THAT PAYMENT THROUGH CHEQUE SHOULD NOT BE CONSTRUED AS SYNONYMOUS OF GENUINENESS OF ANY TRANSACTION. HE MA DE REFERENCE TO THE CASES OF BIG SCAMS HARSHAD MEHATA KETAN PAREKH SATYAM COMPUTER AND OBSERVED THAT PAYMENTS IN ALL THESE CONCERNS WAS THROUGH BANKING CHANNEL ONLY. HE MADE REFERENCE TO THE DECISION OF HONBLE SUPREME COURT IN THE CASE OF SUMATI DAYAL VS. CIT 214 ITR 801 AND OBSERVED T HAT FACTS SHOULD BE EXAMINED WITH THE ANGLE OF HUMAN PROBABIL ITIES . 6. LD. COUNSEL FOR THE ASSESSEE WHILE IMPUGNING THE ADDITION MADE BY THE LD. REVENUE AUTHORITIES SUBMITTED THAT ASSESSEE HAS FILED PAPER BOOK CONTAINING 414 PAGES WHEREIN I T HAS ITA NO. 1716/DEL/11 ASSTT. YEAR 2007-08 8 PLACED ON RECORD ALL THESE DETAILS I.E. STATEMENT O F SHRI VIKAS PARASHER CONFIRMATION GIVEN BY HIM BILLS AND INVOI CES DETAILS OF ALL THE PURCHASES DETAILS OF VATS PAID BY ASSESSEE DETAILS OF TRANSPORT BILLS DEMONSTRATING THE TRANSPORTATION OF GOODS DETAILS OF CLOSING STOCK VIS A VIS PURCHASES PART ICULARLY MADE REFERENCE TO PAGES NO. 28 46 50 56 59 60 AND THE ST ATEMENT OF SHRI VINOD PARASHER AVAILABLE AT PAGE NO. 402 TO 40 5 OF THE PAPER BOOK. ALTERNATIVELY HE SUBMITTED THAT ONCE A O WAS UNABLE TO POINT OUT ANY DEFECTS IN THE QUANTITATIVE DETAILS MAINTAINED BY THE ASSESSEE THEN IT SHOULD BE CONST RUED THAT ASSESSEE HAS THE GOODS WHICH WAS SOLD BY IT MEANI NG THEREBY THE GOODS MUST HAVE BEEN PROCURED FROM ANY OTHER CO NCERN IF NOT FROM VIKAS ENTERPRISES. IN SUCH SITUATION ONLY THE GP IN THE SHAPE OF STATUTORY LEVY OUGHT TO BE ADDED NOT THE V ALUE OF WHOLE PURCHASE CAN BE DISALLOWED TO THE ASSESSEE. 7. LD. DR ON THE OTHER HAND RELIED UPON THE ORDER OF THE REVENUE AUTHORITIES BELOW. HE POINTED OUT THAT IT I S THE ASSESSEE WHO HAS TO PROVE ITS PURCHASES. IF IT WAS UNABLE TO PROVE THE PURCHASES MADE FROM M/S. VIKAS ENTERPRISES THEN AO ITA NO. 1716/DEL/11 ASSTT. YEAR 2007-08 9 HAS TO DEAL SUCH PURCHASES. THE ASSESSEE FAILED TO PROVE ITS PURCHASES AND THEREFORE ADDITION HAS RIGHTLY BEEN MADE. 8. WE HAVE DULY CONSIDERED THE RIVAL CONTENTION AND GONE THOUGH THE RECORD CAREFULLY. IN ORDER TO CLAIM ANY EXPENDITURE NOT BEING EXPENSES DESCRIBED IN SECTION 30 TO 36 AN D NOT BEING IN THE NATURE OF CAPITAL EXPENSES OR PERSONAL EXPEN SES LAID OUT AND SPENT WHOLLY AND EXCLUSIVELY FOR THE PURPOSE OF BUSINESS ONES CLAIM HAS TO BE EXAMINED UNDER THE RESIDUARY PROVISION OF SECTION 37. HENCE IN ORDER TO BE ELIGIBLE FOR EXPENSES UNDER THIS SECTION ONE HAS TO FULFILL THE CONDITIONS (I ) THE EXPENDITURE MUST NOT BE GOVERNED BY THE PROVISIONS OF SECTION 3 0 TO 36 (II) EXPENDITURE MUST HAVE BEEN LAID OUT WHOLLY AND EXCL USIVELY FOR THE PURPOSE OF THE BUSINESS OF THE ASSESSEE (III) THE EXPENDITURE MUST NOT BE PERSONAL IN NATURE (IV) TH E EXPENDITURE MUST NOT BE CAPITAL IN NATURE. THE EXPR ESSION WHOLLY EMPLOYED IN SECTION 37 REFERS TO THE QUANT UM OF EXPENDITURE WHILE THE WORD EXCLUSIVELY REFERS TO THE MOTIVE OBJECTIVE AND PURPOSE OF THE EXPENDITURE. ITA NO. 1716/DEL/11 ASSTT. YEAR 2007-08 10 9. BEFORE US THERE ARE TWO SETS OF FACTS. ACCORDIN G TO THE ASSESSEE IT HAS ENTERED INTO A GENUINE BUSINESS TR ANSACTION. IN SUPPORT OF ITS CLAIM IT HAS FILED CONFIRMATION FRO M THE SELLER. IT HAS FILED EVIDENCE EXHIBITING THE PAYMENT MADE THRO UGH ACCOUNT PAYEE CHEQUE. THE SELLER IS AN INCOME TAX A SSESSEE AND HAVING PERMANENT ACCOUNT NUMBER. ON THE OTHER H AND THE DEPARTMENT IS POSSESSING STATEMENT OF THE SELLER RE CORDED BY THE INVESTIGATION WING WHEREIN HE HAS DISCLOSED TH AT NO SALE WAS MADE BUT ONLY ACCOMMODATION ENTRY WAS GIVEN. WE ARE REQUIRED TO EVALUATE THE EVIDENTIARY VALUE OF THIS STATEMENT. WHETHER IT CAN BE CONSIDERED AS A GOSPEL TRUTH AND ASSESSEE CAN BE BURDENED WITH THE TAX LIABILITY ? THIS STATE MENT WAS RECORDED FROM THE BACK OF THE ASSESSEE. IT WAS NOT GIVEN AN OPPORTUNITY TO CROSS EXAMINE HIM. PROBABLY IF CASE WAS TO BE DECIDED ONLY ON THIS STATEMENT WE WOULD HAVE REMIT TED THE MATTER TO THE AO FOR READJUDICATION AFTER PROVIDING THE OPPORTUNITY OF CROSS EXAMINATION BUT FOR THE SAKE OF ARGUMENTS EVEN IF WE TAKE THIS STATEMENT AS ADMISS IBLE UNDER ITA NO. 1716/DEL/11 ASSTT. YEAR 2007-08 11 LAW THEN ALSO SOLELY ON THE BASIS OF THIS STATEMENT THE OTHER EVIDENCE PRODUCED BY THE ASSESSEE CANNOT BE IGNORED . MR. VIKAS PARASHER MIGHT BE MAKING THIS STATEMENT FALSE LY OR ALLEGING SUCH TYPE OF SITUATION IN ORDER TO SAVE H IS OWN SKIN. THE ASSESSEE HAS PRODUCED COMPLETE VOUCHERS OF PURC HASES AND SALES AO DID NOT FIND DEFECT. IT HAS PURCHASED GOODS OF MORE THAN ` 10 CRORE. IT HAS SOLD GOODS OF MORE THA N `9 88 00 000/-. THE PURCHASES FORM M/S. VIKAS ENTER PRISES IS OF ONLY ROUGHLY `. 30 LACS. IN TERMS OF PERCENTAGE IT IS NOT MORE THAN 5%. THE AO HAS ACCEPTED THE SALES DISCLOSED BY THE ASSESSEE. HE HAS ACCEPTED ALL MAJOR PURCHASES AND S ALES. THE ASSESSEE IS IN THE BUSINESS OF SUCH AN ITEM WHICH I S SUBJECT TO CENTRAL EXCISE. THE CENTRAL EXCISE AUTHORITIES HAVE NOT DISBELIEVED THESE BOOKS OF ACCOUNTS OR BILL OR VOUC HERS SUBMITTED BY IT. IN SUCH SITUATION THE SOLE STATEM ENT OF SHRI VIKAS PARASHER CAN BE A STARTING POINT OF INVESTIGA TION BUT CANNOT BE A CONCLUSIVE EVIDENCE TO DISBELIEVE THE P URCHASES MADE BY THE ASSESSEE. THE AO OUGHT TO HAVE COLLECTE D MORE CORROBORATIVE EVIDENCE. HE HAS ISSUED NOTICE U/S 14 3(2) FOR THE ITA NO. 1716/DEL/11 ASSTT. YEAR 2007-08 12 FIRST TIME ON 3 RD JULY 2008 BUT COULD TAKE UP THE PROCEEDINGS SERIOUSLY ON 10.11.2009. WHEN HE ISSUED A QUESTION NAIRE IN DETAIL HE PASSED THE ASSTT. ORDER ON 29.12.2009 WI THOUT CONDUCTING THE INQUIRY. RATHER IN OTHER WORDS WITHI N ONE AND A HALF MONTHS HE CONCLUDED THE PROCEEDING RELIED UPON THE STATEMENT OF A PERSON RECORDED FROM THE BACK OF THE ASSESSEE AND DISALLOWED THE PURCHASES. HE EVEN DID NOT TOUCH THE OTHER MATERIAL SUBMITTED BY THE ASSESSEE. THUS TAKING IN TO CONSIDERATION THE DETAILS OF PURCHASES DETAILS OF S ALES DETAILS OF OTHER PARTIES AND ALL OTHER EVIDENCE PLACED ON THE RECORD WE ARE OF THE OPINION THAT AO FAILED TO COLLECT CONCLU SIVE EVIDENCE ON THE RECORD TO SAY THAT PURCHASES WERE BOGUS. THE SOLE STATEMENT OF SHRI VINOD PARASHER DOES NOT INSPIRE C ONFIDENCE TO US TO IGNORE THE ACCOUNTS OF THE ASSESSEE ACCEPTED BY THE CENTRAL EXCISE AUTHORITIES MORE PARTICULARLY WHEN MORE THAN 95% OF ITS PURCHASES WERE FOUND TOBE IN ORDER. THE PURCHASES FROM M/S. VIKAS ENTERPRISES WERE NOT AT SUCH A HIGH RATES WHICH COULD ENABLE THE ASSESSEE TO INFLATE ITS EXPENSES. THE AVERAGE PURCHASE PRICE IS 101.69 PER KG AND AVERAGE SALE PR ICE IS 104.43 IT HAS PURCHASED THE GOODS FROM M/S. VIKAS E NTERPRISES ITA NO. 1716/DEL/11 ASSTT. YEAR 2007-08 13 @ 104.16. IN THIS SITUATION HOW IT WILL HELP THE A SSESSEE TO INFLATE ITS EXPENSES IS NOT DISCERNABLE. THE SPECIF IC DETAILS IN THIS REGARD ARE AVAILABLE ON PAGES 59 AND 60 OF THE PAPER BOOK. THUS CONSIDERING ALL THESE ASPECTS WE ALLOW THE A PPEAL OF ASSESSEE AND DELETE THE ADDITIONS. ORDER PRONOUNCED IN THE OPEN COURT ON 30 TH NOVEMBER 2011. SD/- SD/- [K.D. RANJAN] [RAJPAL YADAV] ACCOUNTANT MEMBER JUDICIAL MEMBER DATED: 30.11.2011 VEENA COPY FORWARDED TO: - 1. APPELLANT 2. RESPONDENT 3. CIT 4. CIT (A) 5. DR ITAT TRUE COPY BY ORDER DEPUTY REGISTRAR ITAT