Gujarat High Court
Commissioner Of Income Tax Iii vs Sathyanarayan P on 28 January, 2013
Author: Akil Kureshi
Bench: Akil Kureshi
COMMISSIONER OF INCOME TAX III....Appellant(s)V/SSATHYANARAYAN P RATHI....Opponent(s) O/TAXAP/605/2012 ORDER IN THE HIGH COURT OF GUJARAT AT AHMEDABAD TAX APPEAL NO. 605 of 2012 =========================================================== COMMISSIONER OF INCOME TAX III....Appellant(s) Versus SATHYANARAYAN P RATHI....Opponent(s) ================================================================ Appearance: MR KM PARIKH, ADVOCATE for the Appellant(s) No. 1 ================================================================ CORAM: HONOURABLE MR.JUSTICE AKIL KURESHI and HONOURABLE MS JUSTICE SONIA GOKANI Date : 28/01/2013 ORAL ORDER
(PER : HONOURABLE MS JUSTICE SONIA GOKANI)
1. By way of present Tax Appeal preferred under Section 260A of the Income-tax Act, 1961 (For short, hereinafter referred to as IT Act ), Revenue has challenged the order dated 10.02.2012 passed by the Income Tax Appellate Tribunal, proposing following substantial question of law for our consideration:
Whether, on the facts and in the circumstances of the case, the Tribunal was right in law in restricting the disallowance to the extent of 12.5% of the addition on account of bogus purchase, without appreciating the factual aspect and by ignoring the manifest evidence relied upon by the Assessing Officer and overlooking the ratio laid down by the Hon'ble High Court in the case of Pawanraj B. Bokadia in Tax Appeal No.3245 of 2009 dated 29/09/2011?
2. We heard learned counsel Mr. K.M. Parikh for the revenue. The facts in the instant case lies in a very narrow compass. The assessee, who is in the business of iron and steel, was allegedly shown to have made certain bogus purchases during the year under consideration i.e. Assessment Year 2004-2005 and therefore, the assessment was reopened, making addition of Rs. 6,90,469/- on account of such bogus purchases by the Assessing Officer.
3. Assessee, being aggrieved by such addition, challenged the same before the CIT(Appeals) who sustained a sum of Rs.2,07,140/- being 30% of the total addition and thus, partly allowed the appeal. The CIT(Appeals) relied upon the decision of the Tribunal rendered in the case of M/s. Vijay Proteins Ltd. reported in 58 ITD 528. Assessee further challenged the same before the Tribunal and the Tribunal restricted the said addition to the tune of 12.5% of the total bogus purchase.
4. Aggrieved by such decision of the Tribunal, the present Tax Appeal is preferred, raising aforementioned question of law.
5. It is fervently submitted by the learned counsel Mr. K.M. Parikh for the revenue that in the assessment order, the suppliers had clearly accepted the whole modus operandi of the business of issuance of bogus bills and creditors have already been paid-up out of undisclosed income of the assessee and therefore, the assessee was liable to tax. He further urged that the Tribunal wrongly relied upon the decision in the case of M/s. Vijay Proteins Ltd., instead it ought to have relied upon the decision rendered in the case of Pawankumar B. Bokadia delivered in Tax Appeal No.3245 of 2009. As such, allowing disallowance of 25% of bogus purchases would amount to endorsing outrightly conduct of illegality.
6. On due consideration of the factual matrix and considering the submissions made by the learned counsel, for the reasons to be followed hereinafter, we do not see any merit in this Tax Appeal.
a) It can be noted from the order of the Tribunal as also from other material taken into consideration that the assessee was maintaining cash book, purchase register, sale register, ledger register etc. The Tribunal, therefore, equated the case of the present applicant with the decision of the Tribunal rendered in the case of M/s.
Shanket Steel Traders. The Tribunal also referred to the case of M/s. Vijay Proteins Ltd., where the disallowance of bogus purchase at 25% was sustained. In the case of M/s. Shanket Steel Traders, the assessee had maintained qualitative details in respect of the material purchased and sold & the Tribunal in that case, had therefore, sustained addition at 12.5%.
b) In the instant case also, as noted hereinabove, the assessee is found to have maintained requisite evidence & hence, no wrong is committed by the Tribunal in sustaining addition from 30% to 12.5%. The Tribunal appears to have noted voluminous paper books and entire case record and having been convinced of the substantiating documents presented before it, it rightly deemed it fit to sustain the disallowance to the extent of 12.5%.
In view of above reasonings, we find no ground to intervene. The case is based essentially and predominantly on facts, there being no question of law arising in the matter much less substantial question of law, the Tax Appeal is dismissed.
(AKIL KURESHI, J.) (MS SONIA GOKANI, J.) chandrashekhar* Page 3 of 3