TMI Blog2019 (11) TMI 1008X X X X Extracts X X X X X X X X Extracts X X X X ..... mpany to its Directors has been allowed for five continuous assessment years. Nothing has been pointed out to show that the position has changed in the year under consideration. Under the circumstances, the Tribunal was wholly justified in allowing the ground of appeal. The said ground of appeal, therefore, does not give rise to any question of law, much less, a substantial question of law, warranting interference. Bogus purchases - HELD THAT:- This court concurred with the findings of the Commissioner (Appeals) and the Tribunal and held that the estimate made by the two appellate authorities did not warrant interference as, even otherwise, whether the estimate should be at a particular sum or at a different sum, can never be an issue of law. This court is in agreement with the concurrent findings recorded by the Tribunal and the Commissioner (Appeals), namely, that the assessee had shown purchases as well as sales. If the sales were accepted, the Assessing Officer could not have rejected the purchases. Once the purchases are accepted, the difference between the inflated and actual price of purchases would be required to be disallowed and as to what would be the extent of d ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... hereinafter referred to as the Tribunal ) in I.T.A. No.1, 2 3/SRT/2018 and involve common questions and hence, the same were taken up for hearing together and are decided by this common judgment. 2. The appellant has challenged the impugned order passed by the Tribunal by proposing the following questions, stated to be substantial questions of law: TAX APPEAL NO.72 OF 2019: 1. Whether on the facts and in circumstance of the case, the Hon ble ITAT erred in deleting the addition u/s.36(i)(ii) of ₹ 3,28,36,400/ , without considering the judgment of Special Bench of the Hon ble ITAT in the case of Dalal Broacha Stock Broking Pvt. Ltd. v. Addl. CIT, Ranger 4(1), Mumbai, 131 ITD 36 (Mumbai) (SB)? 2. Whether on the facts and in circumstance of the case, the order of the Hon ble ITAT is correct as the Hon ble ITAT has erred in reducing the addition of bogus purchase to 3% despite the dissimilarities between the bills of purchase submitted by the assessee and those submitted by the vendors to the assessee? TAX APPEAL No.73 OF 2019: 1. Whether on the facts and in circumstance of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the said commission would have been payable to the Directors as dividend and accordingly, disallowed the same and added it to the total income of the assessee by following the decision of the Special Bench of the ITAT in case of Dalal Broacha Stock Broking (P) Ltd. v. Additional Commissioner of Income tax Range 4(1), Mumbai, (2011)10 ITR(T) 357 (Mumbai) (SB). 3.2 Being aggrieved, the assessee went in appeal before the Commissioner of Income tax (Appeals), who dismissed the said ground of appeal. 3.3 The assessee carried the matter in further appeal before the Tribunal, which allowed the ground of appeal. 3.4 Mr. Nikunt Raval, learned advocate for the appellant, invited the attention of the court to the decision of the ITAT, Mumbai Bench in case of Dalal Broacha Stock Broking (P) Ltd. v. Additional Commissioner of Income tax Range 4(1), Mumbai (supra) to submit that the Tribunal has failed to consider the said decision while deciding the issue in favour of the respondent assessee. It was submitted that, therefore, the matter requires consideration and the appeal deserves to be admitted on this question. 3.5 On the other han ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... st time, a dispute was raised by the Assessing Officer in assessment year 2011 12 by way of initiating re assessment proceedings and that too without specifically alleging or mentioning or stating about the escapement of income regarding payment of commission or additional remuneration in the reasons recorded for reopening of the assessment. The Tribunal has observed that it is a well accepted principle of tax jurisprudence that the principle of res judicata does not apply to tax cases, but rule of consistency has to be respected by the tax authorities. The Tribunal, after referring to various decisions of the Supreme Court in this regard, has held that the rule of consistency also supports the case of the assessee as the facts and circumstances of the present case are quite similar and identical in the present assessment year 2011 12 and it is not the case of the Assessing Officer that there was any difference in the facts and circumstances of the present assessment year as compared to the immediately preceding years. 3.7 At this juncture it may be apposite to refer to the decision of the Supreme Court in the case of Radhasoami Satsang, Saomi Bagh, Agra v. CIT, (199 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... in issue. 15. This Court in Parashuram Pottery Works Co. Ltd. v. ITO, (1977) 106 ITR 1, stated: At the same time, we have to bear in mind that the policy of law is that there must be a point of finality in all legal proceedings, that stale issues should not be reactivated beyond a particular stage and that lapse of time must induce repose in and set at rest judicial and quasi judicial controversies as it must in other spheres of human activity. Assessments are certainly quasi judicial and these observations equally apply. 16. We are aware of the fact that strictly speaking res judicata does not apply to income tax proceedings. Again, each assessment year being a unit, what is decided in one year may not apply in the following year but where a fundamental aspect permeating through the different assessment years has been found as a fact one way or the other and parties have allowed that position to be sustained by not challenging the order, it would not be at all appropriate to allow the position to be changed in a subsequent year. 17. On these reasonings in the absence of any material change just ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... us purchases from the Bhanvarlal Jain Group of hawala concerns. The Assessing Officer framed assessment under section 143(3) read with section 147 of the Act, inter alia making an addition of ₹ 1,90,28,960/ on account of bogus purchases. 4.1 The assessee carried the matter in appeal before the Commissioner of Income Tax (Appeals), who observed that in the reassessment proceedings, the assessee had explained the purchases of polished diamonds on the basis of its audited books of account along with quantitative record of items purchased and other evidences of material receipt register, etc. On behalf of the assessee it was contended that the payments for purchases were made through account payee cheques, the goods were reflected in the stock statement, and, therefore, the purchases should not be disallowed merely on the statement of a third party. The assessee had also shown from its books of account that the sale of diamond jewellery shown in the Profit and Loss account could not have been made without the purchases of the polished diamonds. The Commissioner (Appeals) observed that this led to a situation where the suppliers, that is, M/s. A2 Jewels and M/s. Am ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 4.2 The Revenue carried the matter in appeal before the Tribunal, which confirmed the view of the Commissioner (Appeals) and dismissed the ground of appeal. 4.3 Mr. Nikunt Raval, learned advocate for the appellant, submitted that the impugned order passed by the Tribunal, confirming the order of the Commissioner (Appeals), whereby he has reduced the extent of disallowance of bogus purchases to 3% of the total bogus purchases, is against the decision of this court in case of N.K. Proteins Limited v. Deputy Commissioner of Income tax, (2017)2 92 CTR 354. It was submitted that the reasoning applied by the High Court in the above case is squarely applicable to the present case inasmuch as the purchases claimed to have been made by the assessee were held to be bogus purchases by the Assessing Officer and that, once the purchases are held to be bogus, then disallowing a part of such purchases is against the principles of sections 68 and 69C of the Act. It was submitted that therefore, the Tribunal was not justified in confirming the order passed by the Commissioner of Income Tax (Appeals) restricting the bogus purchases to 3% only. It was, accordingly, urged that ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... irming 25% of the amount claimed as fair and reasonable. The Tribunal found that the parties from whom the purchases were shown to have been made were perhaps a creation of the assessee itself for the purpose of banking purchases into the books of account because the purchases with bills were not feasible. Thus, the said parties become conduit pipes between the assessee firm and the sellers of raw materials. Under the circumstances, it was not impossible for the assessee to inflate the prices of raw materials. The Tribunal, accordingly, held that an addition of 25% for extra price paid by the assessee, over and above the prevalent price, is fair and reasonable and accordingly, confirmed the findings of the Commissioner of Income tax (Appeals). 4.7 This court concurred with the findings of the Commissioner (Appeals) and the Tribunal and held that the estimate made by the two appellate authorities did not warrant interference as, even otherwise, whether the estimate should be at a particular sum or at a different sum, can never be an issue of law. 4.8 This court is in agreement with the concurrent findings recorded by the Tribunal and the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... etc. and that such expenditure has to be incurred regularly every year by the owner of the car. The Tribunal was of the opinion that insurance premium paid by the assessee on the purchase of an old or new car is an expenditure of revenue nature, which should be allowed in the year when it has been incurred and that under the provisions of section 31(ii) of the Act, any premium paid in respect of any insurance against the risk of damage or destruction to machinery, plant or furniture, which includes car, is allowable as revenue expenditure and accordingly, held that the disallowance of insurance expense by the Assessing Officer and Commissioner (Appeals) is against the mandate of the section. The Tribunal, accordingly, allowed the ground of appeal. This court is in total agreement with the view adopted by the Tribunal, namely, that insurance premium paid by the assessee towards purchase of new car is revenue in nature, which should be allowed in the year in which it is incurred. Under the circumstances, the said ground of appeal also does not give rise to any question of law. 7. In the light of the above discussion, it cannot be said that the impugned o ..... X X X X Extracts X X X X X X X X Extracts X X X X
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