Income Tax Appellate Tribunal - Ahmedabad
Simit P.Sheth L/H Of Late Pankaj ... vs Assessee on 12 December, 2012
IN THE INCOME TAX APPELLATE TRIBUNAL
AT AHMEDABAD "B" BENCH
Before: Shri Mukul Kr. Shrawat Judicial Member and
Shri T.R. Meena, Accountant Member
ITA No. 2060/Ahd/2010
A.Y.:-2005-06
Simit Pankaj Sheth Income Tax Officer Ward
L/H of Late Pankaj J. Sheth 2(2) Baroda
755/G, Gore Complex Vs.
GIDC Estate
Makarpura, Baroda
PAN No. ADBPS9145C
(Appellant) (Respondent)
Revenue by : Sri Y.P. Verma, Sr. D.R.
Assessee by : Ms. Urvashi Shodhan, A.R.
Date of hearing : 12-12-2012
Date of pronouncement : 28-12-2012
आदे श/ORDER
PER : MUKUL KR. SHRAWAT, JUDICIAL MEMBER:-
This is an appeal filed by the assessee arising from the order of Ld. CIT(A)-III Baroda dated 15-04-2010 and the grounds raised are hereby reproduced as follows:-
ITA No.2060 /Ahd/2010 A.Y. 2005-06 Page No 2 Simit Pankaj Sheth L/H of Late Pankj J.Sheth Vs. ITO
"1. The Ld. Commissioner of Income Tax (A) has erred in law and on facts of the appellant's case in upholding the order passed by the Ld. A.O. u/s 143(3) r.w.s. 147 of the Act as legal and valid.
The appellant's most humbly submits that the order passed by the Ld. A.O. u/s 143(3) r.w.s 147 of the Act is bad in law and prays that Hon'ble Tribunal be pleased to hold so now.
2. The Ld. Commissioner of Income Tax (A) has erred in law and on the facts of the appellant's case in confirming the addition of Rs. 11,16,383/- made by the Ld. A.O. as bogus purchases.
The appellant most humbly submits that on the facts ad circumstances of his case and in law no part of purchases made in bogus and prays that Hon'ble Tribunal be pleased to hold so now.
3. The Ld. Commissioner of Income Tax (A) has erred in law and on the facts of the appellant's case in upholding the disallowance made by the Ld. A.O. of Rs. 78, 713/- being loss due to fire on the erroneous plea that it is not revenue expenditure.
The appellant most humbly submits that on the facts and circumstances of his case and in law suffered by the appellant is allowable as deduction and prays that Hon'ble Tribunal be pleased to hold so now.
4. The appellant craves leave to add, to alter and / or amend the grounds hereinabove taken."
2. At the outset Ld. A.R. Ms. Urvashi Shodhan has expressed not to press ground 1, 3 and 4. In the light of the statement of Ld. A.R. these grounds are hereby dismissed being not pressed. Now, we are left with only ground No. 2.
ITA No.2060 /Ahd/2010 A.Y. 2005-06 Page No 3 Simit Pankaj Sheth L/H of Late Pankj J.Sheth Vs. ITO
3. Facts in brief as emerged from the corresponding assessment order passed u/s 143(3) r.w.s. 147 order dated 31-12-2008 that the assessee in individual capacity is a proprietor of Parswanath Steel Corporation and engaged in the business of trading in steel on wholesale basis. For the year under consideration, the assessee had shown gross profit of Rs. 4,40,197/- @ 3.56% on sales of Rs.1,23,28,671/- as compared to gross profit of Rs.3,74,714/- @ 3.25 % on sales of Rs.1,15,28,279/- for the immediate last year. On investigation being made by the Revenue Department and after recording certain statements of few parties; it was found that those parties have not actually made any sales to the assessee. It was intimated that those parties have merely issued sales bills and received, Dalali. On the basis of those statements it was found that one of such party had issued bogus sale bills to the assessee amounting to Rs.6,37,025/- and likewise another such party had confessed to have issued bogus bill to the assessee amounting to Rs.4,79,358/-. Sine total amount of such bogus bills of Rs.11,16, 383/- was detected on investigation, therefore, the Revenue has held that the assessee had escaped assessment within the meaning of Section 147 of the I.T. Act. Hence, show cause was issued as to why purchases from the said two parties totaling Rs.11,16,383/- be not treated as bogus purchases and to be added in the taxable income of the assessee. The assessee's main contention was that the quantitative details of opening stock, purchases made through-out the year, sales made through the year and the quantitative details of the closing stock were maintained by the assessee on day to day basis as per the regular books of accounts. After detailed discussion and considering the statements of those parties and the transaction in the bank, the AO has held that the ITA No.2060 /Ahd/2010 A.Y. 2005-06 Page No 4 Simit Pankaj Sheth L/H of Late Pankj J.Sheth Vs. ITO amount of bogus purchases was the escaped income of the assessee, hence taxed accordingly.
3.1 The matter was carried before the first Appellate Authority who has confirmed the action of the AO following his own view taken in assessee's own case for A.Y. 06-07. With this brief factual background, we have been informed that in assessee's own case A.Y. 06-07 ITAT "B" Bench Ahmedabad ITA No. 3238 and 3293/Ahd/2009 vide an order dated 24-02- 2012 has held as under:
"4. Facts in brief as emerged from the corresponding assessment order passed u/s.143 r.w.s. 147 of the I.T. Act dated 31-12-2008 were that assessee individual is in the business of trading in steel on wholesale basis. It may not be out of place to mention that Gross Profit of Rs.7,42,524/- on sale of Rs.3,04,52,701/- was declared having GP rate at 2.43% as against the GP of the immediate past year at 3.56%. An intimation was received by the Assessing Officer from DDIT (Inv.)-I, Baroda. According to the said intimation, during the course of verification of banking transactions in the case of Shri Amratbhai Poonambhai Prajapati, Prop of Bhavna Trading Co. & Bhagyodaya Enterprises, Shri Kantilal Mangilal Shaarma, Prop of Miakshi Enterprises and Shri Jayantilal Mangilal Sharma, Prop of Arun Industrial Corporation and as per the admission in their statements recorded on oath, it was found that no sales were made by them to any party. It was intimated that those parties were simply issuing sale bills against those sales bills they were receiving "dalali". The modus operandi was that on issuance of sales bills the amount of cheque was received and on encashment of the said cheque after deducting "dalali" the balance amount was withdrawn in cash and returned to the respective parties. Therefore, the issuance of bogus sale bills was confirmed by those parties. On the basis of these facts, the Assessing Officer has held that barring invoices and delivery challans, there was no other document to prove that the purchases have actually been made by the assessee. There was no lorry receipt, transportation details, number of weighment, excise gate pass etc., no document was produced during the assessment proceedings. After examining the bank accounts and other ITA No.2060 /Ahd/2010 A.Y. 2005-06 Page No 5 Simit Pankaj Sheth L/H of Late Pankj J.Sheth Vs. ITO evidences AO has held that alleged purchases from Bhavna Trading Co., Minaxi Enterprise and Arun Ind. Corporation was not genuine purchase and therefore the said amount of bogus purchases of Rs41,04,903/- was taxed in the hands of the assessee. It may not be out of place to mention that books of account u/s.145(3) of the Act was rejected and profit of the assessee was estimated at Rs.5 lakh. Both the additions were contested before the Ld. CIT(A).
6. Ld. AR Mr. Soparkar has contested that the assessee has maintained the quantitative details of purchases and sale of steel. He has pleaded that the auditor has given the quantitative details as per the Special Auditor which confirms the maintenance of quantitative record. It was enquired from the Bench that whether the stock register and quantity-wise purchases and sales are available on record, however, the answer is negative. Further, it has also been enquired that whether the weighment details, excise gate pas, transportation details etc., are on record and again the answer was a negative. The Ld. AR has informed that almost in identical situation in the case of ACIT v. M/s Kulubi Steel .
7. Having heard the submissions of both sides, we have been informed that the malpractice of bogus purchase is mainly to save 10% sales tax etc. It has also been informed that in this industry about 2.5% is the profit margin. Therefore, respectfully following the decisions of the co-ordinate bench pronounced on identical circumstances, we hereby direct that the disallowance is required to be sustained at 12.5% of the purchases from those parties. With these directions, we hereby decide. The grounds of the rival parties which are partly allowed."
4. Since on identical facts, a view has already been taken in assessee's own case by the Respected Co-ordinate Bench, therefore, after hearing submissions of both sides, we hereby hold that in identical manner for the year under consideration the assessee shall be liable to tax on the percentage as settled hereinabove. We direct accordingly. Hence, in the result, ground of the assessee is partly allowed.
ITA No.2060 /Ahd/2010 A.Y. 2005-06 Page No 6Simit Pankaj Sheth L/H of Late Pankj J.Sheth Vs. ITO
5. In the result, the appeal of the Assessee is partly allowed.
Sd/- Sd/-
(T.R. MEENA) (MUKUL KR. SHRAWAT)
ACCOUNTANT MEMBER JUDICIAL MEMBER
Ahmedabad : Dated 28/ 12 /2012
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आदे श कȧ ूितिलǒप अमेǒषत / Copy of Order Forwarded to:-
1. अपीलाथȸ / Appellant
2. ू×यथȸ / Respondent
3. संबंिधत आयकर आयुƠ / Concerned CIT
4. आयकर आयुƠ- अपील / CIT (A)-III, Baroda
5. ǒवभागीय ूितिनिध, आयकर अपीलीय अिधकरण, अहमदाबाद / DR, ITAT, Ahmedabad
6. गाड[ फाइल / Guard file.
By order/आदे श से, उप/सहायक पंजीकार आयकर अपीलीय अिधकरण, अहमदाबा