Income Tax Appellate Tribunal - Ahmedabad
Rekha Anil Duggad, , Ahmedabad vs Acit, Circle-12, , Ahmedabad on 26 April, 2017
IN THE INCOME TAX APPELLATE TRIBUNAL
AHMEDABAD "SMC" BENCH AHMEDABAD
BEFORE SHRI PRAMOD KUMAR, ACCOUNTANT MEMBER,
AND SHRI S. S. GODARA, JUDICIAL MEMBER.
ITA No. 882/Ahd/2014
(Assessment Year: 2009-10)
Anil Gaherilal Duggad
Prop. M/s. Jash Trading Co.
A/1/1, Jagannath Estate, Gujarat
Bottling Road, Rakhial, Ahmedabad Appellant
Vs.
The Asstt. Commissioner of Income Tax,
Circle-12, 1st Floor, Narayan Chambers,
Ashram Road, Ahmedabad - 380009 Respondent
PAN: AELPD5832J
&
ITA No. 883/Ahd/2014
(Assessment Year: 2009-10)
Rekha Anil Duggad
Prop. M/s. Copper King,
A/1/1, Jagannath Estate, Gujarat
Bottling Road, Rakhial, Ahmedabad Appellant
Vs.
The Asstt. Commissioner of Income Tax,
Circle-12, 1st Floor, Narayan Chambers,
Ashram Road, Ahmedabad - 380009 Respondent
PAN: AHSPD6134B
ITA Nos. 882 & 883/Ahd/2014 (Anil & Rekha Duggad vs. ACIT)
A.Y. 2009-10 -2-
आवेदक क ओर से/By Assessee : Shri Gyan Pipara, A.R.
राज व क ओर से/By Revenue : Mr. A. Tirkey, Sr. D.R.
सन
ु वाई क तार ख/Date of Hearing : 20.04.2017
घोषणा क तार ख/Date of
Pronouncement : 26.04.2017
ORDER
PER S. S. GODARA, JUDICIAL MEMBER
These two assessees have filed their respective instant appeals for assessment year 2009-10, against the CIT(A)-XX, Ahmedabad's separate orders; both dated 20.01.2014 in case nos. CIT(A)-XX/424 & 423/11-12, confirming Assessing Officer's action disallowing purchases of Rs.38lacs and Rs.65,01,101/- in assessment orders dated 26.12.2011, in proceedings u/s.143(3) of the Income Tax Act, 1961; in short "the Act".
Heard both sides. Case files perused.
2. Learned counsel informs us at the outset that both these appeals challenge correctness of the above purchases disallowances in respect of separate assessees /appellants wherein the lower authorities treat the same as bogus. Shri Pipara states that the sole issue herein involves identical factual backdrop. We thus treat former appeal ITA No.882/Ahd/2014 in respect of the former assessee Shri Anil Gaherilal Duggad as the lead case.
3. We advert to relevant facts. This assessee trades in brass metal in the name and style of M/s. Just trading company. It claimed to have purchased the said metal from various parties. Page 2 of assessment order states seven such suppliers. The instant list pertains to only two of them i.e. Mahavir ITA Nos. 882 & 883/Ahd/2014 (Anil & Rekha Duggad vs. ACIT) A.Y. 2009-10 -3- Enterprise and Shreenath Enterprise involving purchase sums of Rs.4.7lacs and 33.24lacs; totaling to Rs.38lacs. The Assessing Officer was not able to serve these parties u/s. 133(6) of the Act. He thus issued a show cause notice dated 21.12.2011 seeking to disallow the above purchases. The assessee filed reply thereto wherein it claimed to have recorded all purchases and quantity details in books of accounts, stock ledger wherein the corresponding sales had been assessed without disturbing the relevant books results. The Assessing Officer specifically quoted its failure in not even filing confirmation from the end of the above two purchasers so as to discharge primary onus. He alleged in assessment order dated 26.12.2011 that the assessee had booked bogus purchases in order to reduce his trading profits. He therefore treated the above gross purchases of Rs.38lacs as bogus in nature resulting in the impugned disallowance.
4. The CIT(A) confirms Assessing Officer's action. We further notice that the assessee made all attempts to get only the profit element taxed in respect of its purchase disallowance amounts. Learned CIT(A) however declines this latter plea as well.
5. We have heard both the parties. Learned counsel representing assessee refers to its paper book indicating copy of audited accounts, taxed audit report of the above trading concern, copy of accounts of the two payee enterprises for financial years 2008-09 to 2012-13 in former payee's case and from financial years 2007-08 to 2012-13 in latter party's case along with bank statement evidence to buttress the first substantive argument seeking to prove genuineness of the purchases in question. Shri Pipara however fails to dispute the fact that the said two payees are not traceable till date. We therefore find no merit in this genuineness aspect of assessee's argument as it was all the more reason for him to have at least filed the said two parties' ITA Nos. 882 & 883/Ahd/2014 (Anil & Rekha Duggad vs. ACIT) A.Y. 2009-10 -4- confirmations and more so in view of the fact that he had been having business relations for above long period of time. We thus affirm CIT(A)'s conclusion in principle that the assessee has not been able to prove genuineness of the above purchases.
6. Learned counsel then raises an equally significant plea that both the lower authorities ought to have disallowed / added only the profit element embedded in the above purchases in question. The Revenue fails to dispute the fact that the lower authorities have disallowed those purchases whose sales have been accepted as genuine standing assessed as such without rejection of books. We are therefore of the opinion that the learned Assessing Officer ought to have disallowed only the profit element instead of the entire purchases. We notice from the case file that the assessee had quoted umpteen number of judicial precedents in this regard. Hon'ble jurisdictional high court's decision in Sanjay Oil Cake Industries (2009) 316 ITR 274 (Guj) supports this latter plea. We are therefore of the view that larger interest of justice would be served in case only the profit element @15% in the above bogus purchases is disallowed/added rather than the entire amount. Whilst concluding so, it is made clear that we have duly taken into account the fact that the assessee is a trader than manufacturer so as to arrive at the above disallowance percentage. We accordingly direct the Assessing Officer to restrict the impugned disallowance @15%. It is made clear that our instant adjudication shall not be treated as a precedent in any preceding or succeeding assessment year. Learned Assessing Officer shall frame consequential assessment accordingly. ITA No.882/Ahd/2014 is partly allowed.
6. We come to latter assessee's appeal ITA No.883/Ahd/2014 involving similar issue of purchases disallowance of Rs.65,05,101/- in respect of copper purchases in trading business. Both the learned representatives agree ITA Nos. 882 & 883/Ahd/2014 (Anil & Rekha Duggad vs. ACIT) A.Y. 2009-10 -5- that our above discussion in former assessee's case applies in toto herein as well. We thus direct the Assessing Officer to restrict the impugned disallowance @15% in the instant appeal as well with all our stipulations in the preceding paragraph. ITA No.883/Ahd/2014 is also partly accepted.
5. These two assessees partly succeed in their respective appeals.
[Pronounced in the open Court on this the 26th day of April, 2017.] Sd/- Sd/-
(PRAMOD KUMAR) (S. S. GODARA)
ACCOUNTANT MEMBER JUDICIAL MEMBER
Ahmedabad: Dated 26/04/2017
True Copy
S.K.SINHA
आदे श क त ल
प अ े
षत / Copy of Order Forwarded to:-
1. राज व / Revenue
2. आवेदक / Assessee
3. संबं धत आयकर आयु!त / Concerned CIT
4. आयकर आयु!त- अपील / CIT (A)
5. )वभागीय ,-त-न ध, आयकर अपील य अ धकरण, अहमदाबाद /
DR, ITAT, Ahmedabad
6. गाड3 फाइल / Guard file.
By order/आदे श से,
उप/सहायक पंजीकार
आयकर अपील य अ धकरण, अहमदाबाद ।