9911796707
TMI Blog2024 (5) TMI 24X X X X Extracts X X X X X X X X Extracts X X X X ..... s. Accordingly, we take up the appeal of the assessee and Revenue for assessment year 2013-14 for adjudication. The grounds raised by the assessee in its appeal for assessment year 2013-14 are reproduced as under: "1. On the facts and in the circumstances of the case and law on the subject, the learned Income Tax officer erred in making addition of Rs. 9,90,97,267/- being alleged bogus purchase of fuel/diesel & the learned CIT (Appeal) erred in confirming / upholding the disallowance of Rs. 99,09,726/- being 10 % of purchases of alleged bogus fuel/diesel of Rs. 9,90,97,267/- In view of the facts and circumstances of the case and law on the subject, the same may be deleted. 2. On the facts and in the circumstances of the case and law on the subject, the learned assessing officer erred in making additions of Rs. 29,54,983/- on account of alleged bogus tyre purchase bills & the learned CIT (Appeal) erred in upholding the addition of Rs. 29,54,983/- on account of alleged bogus tyre purchase bills without correct appreciation of facts and law on the subject. In view of the facts and circumstances of the case and law on the subject, the same may be deleted. 3. On the facts and ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... herein they admitted of recording of entry of bogus bills of fuel diesel expenses and other expenses etc in books of accounts. In view of the information of entry of bogus expenses booked by the assessee, received from the Investigation Wing, the Assessing Officer reopened the assessment by way of issue of notice u/s 148 of the Act dated 01.02.2021. In responses to the same, the assessee filed return of income on 20.02.2021 and thereafter statutory notices were issued by the Assessing Officer, which were complied with by the assessee. The Assessing Officer completed the assessment u/s 147 of the Act on 26.07.2021 wherein he made various additions to the returned income. The computation of the assessed income is reproduced as under: "14. Subject to the above discussion, considering the submissions made and information available on record, the total income of the assessee for Assessment year 2013-14 is computed as under.- Particulars Rs. Rs. Total Income from Business and Profession (As per assessment order u/s. 143(3) r.w.s. 147 dated 27.12.2016 and ROI filed u/s 147 of the Income tax Act, 1961) 10,35,40,8141/- Add : Addition on account of bogus fuel/diesel bills ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... be relied upon. Further, it was submitted that all those persons had filed affidavit retracting the statement which were recorded u/s 133A/131 of the Act during survey proceedings. Further, it was submitted that statement recorded during survey was not having evidentiary value in view of the decision of the Hon'ble Supreme High Court in the case of S. Khader Khan Son (2012) 25 taxmann.com 413 (SC) confirming CIT v. S. Khader Khan Son 300 ITR 157 (Madras). It was contended by the assessee that all the documents including bills, vouchers, bank payment were submitted before the Assessing Officer. The relevant supplier parties also complied the notices issued u/s 133(6) of the Act. Regarding the 'Emist' accounting software, it was submitted that same was implemented on trial basis during that period so certain entries could not be done on that software. During appellate proceedings before the Ld. CIT(A), the assessee filed further additional evidences, which were forwarded to the Assessing Officer calling for a remand report. In the remand report, the Assessing Officer admitted the fact that consumption of diesel/fuel cannot be considered excessive as the vehicles cannot run without di ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... has total running of transportation of 76,92,475 km and total purchase of diesel/ fuel of 38,57,021 litres making an average of 1.99 kms/litre. According to the AO the quantity of diesel/fuel, as disallowed in the assessment order is 19,41,595 litres which works out to 50.34% of the total diesel purchases in Mumbai region in F.Y. 2012-13. The AO has also stated that out of 38,57,021 litres of diesel, as much as 50.34% has been purchased from the three parties, i.e. M/s. Shri Ambaji Petroleum, M/s. Uganda Service Station and M/s. K.M. Suchak & Co. In the opinion of the AO, it is unlikely that purchase of 50.34% of diesel purchases are bogus which appears to be impossible for running such a huge fleet of trucks and heavy vehicles. In para 5.2 of the remand report the AO has mentioned that in order to verify the details of such transactions, notices u/s. 133(6) of the I.T. Act were issued to the three parties, entire purchase from which are considered as bogus in the assessment order. All these parties submitted their reply along with supporting documents. These were also verified by the AO and found in order. 14.7. It is also reported by the AO in the remand report that on analysi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... learly stated that against the cheque payment cash was returned back to the employees of the assessee. He submitted that retraction affidavits have been submitted after substantial delay and therefore, no cognizance should be given to those. 6.3 We have heard rival submission of the parties on the issue in dispute and perused the relevant material on record. The dispute is regarding the genuineness of the bills of fuel/diesel issued by three parties, which the AO disallowed 100 percentile but the ld CIT(A) restricted to 10 percentile on ad-hoc basis, relying on the report of the AO in remand proceedings. During survey, statements of three persons of the assessee company were recorded including Sh Mandik Vishal Yashwant ( person claimed to be engaged in purchase of diesel); Sh Ram Sajjwan Tiwari ( claimed to be cashier of assessee company) and sh mahendra Gangan ( claimed to be engaged in data entry). Those three persons explained their individual role in the process of bogus billing. In view of the statements of those three persons, the director of the assessee company accepted the fact of bogus bills obtained from those three parties. In the period post survey at the premises of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of the presumption, cannot be upheld and accordingly, we set aside the finding of the Ld. CIT(A) on the issue in dispute and delete the addition sustained by him. The ground No. 1 of the appeal of the assessee is accordingly allowed. 7. The ground No. 2 of the appeal relates to disallowance of Rs. 29,54,983/- on account of alleged bogus tyre purchase bills sustained by the Ld. CIT(A). 7.1 Briefly stated facts qua the issue in dispute are that during the survey proceedings, survey party noticed two set of bills for purchase of tyres from supplier namely M/s Om Shree Siddhivinayak tyres. The Assessing Officer in the impugned assessment order has noted that fictitious bills could be differentiated from the genuine once as they did not contain basic information such as description of tyres, tyre number, size etc. He further recorded that in view of factual observation during the course of survey Shri Satish Mandhania, Director of the assessee company voluntarily offered the entire amount of purchases of Rs. 99,09,726/- made from M/s Om Shree Siddhivinayak tyres as his income for financial year 2012-13 to assessment year 2015-16. Further, the Assessing Officer observed that during the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... supporting documents such as delivery challans including description of tyre no. and bills etc. Finally, the AO has come to the conclusion that 10% of the purchases made during the year is certainly non-genuine and accordingly added to the total income of the appellant. 16.1 In reply, the appellant has stated that M/S. Om Shree Siddhivinayak Tyres is a reputed dealer having distributorship of renowned tyre manufacturer M/S Birla Tyre Limited. They are the vendors of the company for last 20 years. According to the appellant various details, i.e. Ledger Confirmations, Bank statements, invoice & delivery challans were submitted to the AO. The notice u/s. 133(6) was also issued to the supplier which has been duly responded to. All the payments were made through proper banking channel. According to the appellant when complete details are filed no disallowance should be made by the AO. 16.2 In my considered view, the AO has brought out differentiation between the genuine bills as well as bogus bills issued by this vendor (M/s. Om Shree Siddhivinayak Tyres). In the bogus bills, there are omission of certain basic details viz, description of tyres, tyre no, size etc which were not reco ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ccordingly, we uphold the finding of the Ld. CIT(A) on the issue in dispute and dismiss the ground No. 2 of the appeal of the assessee. 8. The ground No. 3 of the appeal of the assessee relates to disallowance of Rs. 5,31,951/- sustained by the ld CIT(A), out of disallowance for unsubstantiated expenses of Rs. 53,19,316/- made by the Assessing Officer. The ground No. 2 of the appeal of the Revenue relates to the relief of Rs. 47,87,385/- given to the assessee by the Ld. CIT(A) on this issue. 8.1 The facts qua the issue in dispute are that during the course of assessment proceedings, the Assessing Officer shortlisted expenses claimed in respect of six parties and issued summons for verification and genuineness of expenses. Out of six parties, summons were not complied by two parties namely S.V. Takwale & Sons for expenses of Rs. 44,15,958/- and Shivaji Maruti Jhambulkar for expenses of Rs. 9,03,358/-, totaling to Rs. 53,19,660/-. The Assessing Officer observed that S.V. Takwale & Sons had not filed return of income for AY 2013-14 and 2014-15. Further, he noted that Shivaji Maruti Jhambulkar had not shown the amount received from the assessee as his income in the return of income. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... tificate from banks. On careful consideration full relief with respect to disallowance of Rs. 53,19,316/- cannot be given as existence of these parties have not been fully established. However, at the same time, the genuineness of the transaction has not been denied. There are sufficient documentary evidences produced by the appellant to establish that payments have been made with respect to rent paid for RMC plant and labour supplied at Pune site. Once AO has not doubted that rent has been paid for RMC plant or labour has been supplied at the Pune project, 100% disallowance is not feasible. No lacuna or defect has been found in the documentary evidences filed during assessment proceedings. Considering the totality of the facts and circumstances and keeping a consistent stand, 10% of the expenses, ie. Rs. 5,31,931/-is confirmed while the balance amount of Rs. 47,87,385/- is deleted. The AO is directed accordingly. Thus, ground of appeal no. 4 is partly allowed." 8.2 We have heard rival submission of the parties and perused the relevant material on record. We find that in respect of Shivaji Maruti Jhambulkar, before the Assessing Officer, the assessee claimed that rent of Rs. 4,51, ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ount of Rs. 5,69,535/- has been sustained by the Ld. CIT(A). This ground of appeal was not pressed before us and therefore, same dismissed as infructuous. 10. Now we take up the ground No. 1 of the appeal of the Revenue, wherein the Revenue has challenged the deletion of the addition for the share application money amounting to Rs. 11,85,74,000/- u/s 68 of the Act. The facts in brief qua the issue in dispute are that during the year under consideration the assessee had received share application money of Rs. 11,85,74,000/- from M/s Dhanteras Agency Pvt. Ltd. The Assessing Officer rejected the contention of the assessee in support of onus u/s 68 of the Act and made addition in the hand of the assessee treating money received from M/s Dhanteras Agency Pvt. Ltd. as not genuine. In the course of appellate proceedings before the Ld. CIT(A) the assessee filed certain additional evidences which were forwarded to the Assessing Officer for his comment. The Ld. CIT(A) has reproduced the contents of the remand report sent by the Assessing Officer on page 63 of the of the impugned order. The Ld. CIT(A) deleted the addition observing as under: "32.4 During the course of present appellate pro ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ny, which is strike off, the assessee cannot be held liable for the same. 32.6 On careful consideration I find that no adverse comment has been given by the AO in the remand report with respect to evidences produced at the time of remand proceedings. It is a fact that share application money received in F.Y. 2012-13 was repaid back in F.Y .2013-14. All these transactions reflect in the bank statement furnished during the remand proceedings as well as before the undersigned. The AO in the remand proceedings has also examined the financial statement of M/s. Dhanteras Agency Pvt. Ltd. and found that total reserve and surplus of Rs. 13,59,22,291/- was much higher than the share application money given to the appellant i.e. Rs. 11,85,74,000/- The AO has also highlighted that since M/s. Dhanteras Agency Pvt. Ltd. was strike off by ROC no reply was received from this company and hence no adverse view should be taken on this count. In this regard, I find merit in the above submission of the appellant. 32.7 As far as the argument of the AO that one of the Directors is a nonfiler and another one files return of income below exemption limit cannot be factor for the impugned disallowance w ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ion money given to the assessee Rs. 11,85,74,000/-. The basis for the Assessing Officer in the original assessment proceedings for making addition was firstly, that M/s M/s Dhanteras Agency Pvt. Ltd. did not respond to the notices issued u/s 133(6) of the Act. For which the assessee has submitted during the appellate proceedings that said company has been stricken off by the Registrar of Companies (ROC) ,therefore, no reply was received. The Ld. CIT(A) is justified in accepting this explanation of the assessee and therefore, no adverse view could be taken on this account. Secondly, the Ld. CIT(A) has further rejected the argument of the Assessing Officer in the original assessment order that director of the assessee was a non-filer. In our opinion the status of the director of company as non-filer is not relevant while deciding the identity, creditworthiness and genuineness of the transaction of a company. Thirdly, the AO in assessment order mentioned that cash deposits were made in bank account of said party, however, the ld CIT(A) has pointed out that not a single instance has been brought on record by the AO. Before us also no such instance has been brought by the ld Departmenta ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ed by the assessee with regard to the alleged parties? 2. ii. "Whether on the facts and in the circumstances of the case and in law, the Ld. CIT (A) is justified in deleting the disallowance of unsubstantiated, expenses without appreciating the facts that the identity, creditworthiness and genuineness was not established by the assessee with regard to the alleged parties?" 3. Whether on the facts and in the circumstances of the case and in law, the Ld. CIT (A) is justified in deleting the disallowance of depreciation on unaccounted sales of old vehicles without appreciating the facts that the genuineness of the purchaser of old vehicles was not established by the assessee? 12. The ground Nos. 1 to 3 of the appeal of the assessee and ground No. 2 of the appeal of the Revenue is identical to the ground Nos. 1 to 3 raised by the assessee and ground No. 2 raised by the Revenue in assessment year 2013-14 except change of the amount. Therefore, facts and circumstances being similar the ground Nos. 1 to 3 of the appeal of the assessee and ground No. 2 of the appeal of the Revenue are accordingly decided mutatis mutandis. 19. The ground No. 1 of the appeal of the Revenue relate to de ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ndersigned are also submitted. Thus, it is claimed that not only the identity of the creditor but creditworthiness and genuineness have been fully established and hence no disallowance is called for. The appellant has also relied on certain judicial decisions. 38.3 On careful consideration of the submission of the appellant as well as various details brought on record, I find that identity of M/s Kasturi is never doubted by the AO. There is no doubt that share application money has been received through banking channels as copy of bank statements have been verified and found in order. Moreover, the shares were also allotted on 28.03.2022. As far as creditworthiness of M/s Kasturi is concerned that is also not doubted by the AO as he himself has stated that the source of share application money is out of money received from various entities which are listed in Page 61 of the assessment order. To further establish the creditworthiness, the assessee has submitted the copy of TR, audited accounts, balance sheet and P&L a/c. In my considered view what has been doubted is the share application money received from different entities by M/s Kasturi and not the share application money rec ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... AO with respect to old vehicle sold during the year. On the basis of Annexure RM-1 found during the course of survey, the Assessing Officer noted that assessee company had unaccounted sales of vehicles during the assessment year 2018-19. On the basis of such unaccounted sales corresponding to assessment year 2018-19, the Assessing Officer was of the view that in all the probability assessee had received unaccounted sale of old vehicles in other years including the assessment year under consideration. He estimated unaccounted sales of Rs. 1,50,000/- per vehicle and accordingly disallowed the depreciation amounting to Rs. 6,75,000/-. 13.1 On further appeal the Ld. CIT(A) deleted the addition observing as under: 37. In ground of appeal No.5, the appellant is against the disallowance of depreciation of Rs. 6,75,000/- with respect to old vehicles sold during the year. The AO has stated that during the survey proceedings statement of Shri Ravi Shankar M. Patel was recorded u/s.131 of the IT. Act wherein he submitted details of old vehicles sold during F. Yrs 2017-18 and 2018-19. According to the AO, on perusal of the statement, it was seen that assessee company had sold old vehicles ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the AO for the year under consideration, work and extrapolation of figures related to subsequent years. He has clearly mentioned that "Assessee has sold vehicle and by extrapolating the findings in F.Y. 2017-18 and 2018-19 in these years, the unaccounted sales on vehicle sold in year under consideration has been determined." 37.3 Thus, it is apparent that no evidence of any unaccounted sales of vehicle has been found for F.Y. 2013-14 relevant to A.Y. 2014-15. Moreover, no statement was recorded indicating unaccounted sales during the year. Hence, the disallowance of depreciation of sale of old vehicle is unjustified and deserves to be deleted. Thus, the addition of Rs. 6,75,000/- is deleted. The ground of appeal no.5 is allowed." 13.2 We have heard rival submission of the parties on the issue in dispute and perused the relevant material on record. We find that only evidence of unaccounted sale of old vehicles has been found in respect of assessment year 2018-19 and no documentary evidences have been found for the year under consideration. The Assessing Officer has merely extrapolated such unaccounted sale on the basis of presumption that assessee would have earned unaccounted ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... decided mutatis mutandis. ITA No. 3234/Mum/2023 15. Now, we take up the appeal of the assessee for assessment year 2016-17. The grounds raised by the assessee are reproduced as under: 1. On the facts and in the circumstances of the case and law on the subject, the learned Income Tax officer erred in making addition of Rs. 9,75,79,573/- being alleged bogus purchase of fuel / diesel & the learned CIT (Appeal) erred in confirming the disallowance of Rs. 97,57,957/- being 10 % of Rs. 9,75,79,573/-purchases of alleged bogus fuel/ diesel. In view of the facts and circumstances of the case and law on the subject, the same may be deleted. 2. On the facts and in the circumstances of the case and law on the subject, the learned assessing officer erred in making additions of Rs. 24,14,200/- on account of alleged bogus tyre purchase bills & the learned CIT (Appeal) erred in upholding the addition of Rs. 24,14,200/- on account of alleged bogus tyre purchase bills without correct appreciation of facts and law on the subject. In view of the facts and circumstances of the case and law on the subject, the same may be deleted. 3. On the facts and in the circumstances of the case and law ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... cal to grounds raised by the assessee in assessment year 2013-14 ,therefore, following our finding in assessment year 2013-14, the ground Nos. 1 to 3 of the appeal of the assessee for the year under consideration are decided mutatis mutandis. ITA No. 3232/Mum/2023 and ITA No. 3028/Mum/2023 17. Now we take up the appeal of the assessee and Revenue for assessment year 2018-19. The grounds of appeal of the assessee are reproduced as under: 1. On the facts and in the circumstances of the case and law on the subject, the learned Income Tax officer erred in making addition of Rs. 10,02,72,170/- being alleged bogus purchase of fuel / diesel & the learned CIT (Appeal) erred in confirming the disallowance of Rs. 1,00,27,217/- being 10 % of Rs. 10,02,72,170/-purchases of alleged bogus fuel/ diesel. In view of the facts and circumstances of the case and law on the subject, the same may be deleted. 2. On the facts and in the circumstances of the case and law on the subject, the learned assessing officer erred in making additions of Rs. 34,58,483/- on account of alleged bogus tyre purchase bills & the learned CIT (Appeal) erred in upholding the addition of Rs. 34,58,483/- on account of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... d bank statement of assessee also submitted along with other documentary evidence to establish identity & creditworthiness of those two concerns and genuineness of the transactions. However, the Assessing Officer was not satisfied with the contention of the assessee. According to him the shareholders of those two concerns were found to be dummy directors controlled by accommodation entry provider Sh Prakash Jajodia. The Assessing Officer referred to the statement of Shri Prakash Jadodia recorded u/s 131 of the Act dated 26.08.2014, the statement of Shri Diparkar Roy, director of M/s Metropolitan Distributors Pvt. Ltd. recorded u/s 131 dated 07.08.2014 and statement of Shri Dilip Bey, director of M/s Triumph Trexim Pvt. Ltd. recorded u/s 131 of the Act dated 07.08.2014. Based on those statements, the Assessing Officer held that both the concerns were accommodation entry providers and accordingly he treated the credit totaling to Rs. 2,83,45,000/- received from these two concerns as unexplained cash credit and further interest paid on loans/deposits amounting to amounting to Rs. 17,37,390/- was also disallowed. The Ld. CIT(A) however deleted the additions observing as under: 61.3 D ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... expressed his doubt about the genuineness of such shareholders. Thus, the ground of appeal no. 6 is Allowed." 18.3 Before us, the Ld. Departmental Representative (DR) submitted that assessee has failed in discharging its onus u/s 68 of the Act and therefore, the Ld. Assessing Officer is justified in making additions u/s 68 of the Act in view of the statements of the director of the said concerns. 18.4 On the other hand, the Ld. Counsel for the assessee submitted that in respect of both the parties, copy of the income tax return, financial statement and confirmation of the account along with the bank statement and distribution agreement have already been filed before the Assessing Officer. He further submitted notices issued to the above parties u/s 133(6) of the Act were already complied by those parties and therefore, the assessee has discharged its onus u/s 68 of the Act. The Ld. counsel further relied on the decision of the jurisdictional high court in the case of PCIT v. Ami Industries (India) Pvt. Ltd. (2020) 424 ITR 219 (Bombay) wherein, the appeal of the Revenue was dismissed for the reason that assessee had furnished the copy of the income-tax return as well as copies of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ey proceedings statement of oath of Shri Ravishankar M Patel was recorded. He stated that it relates to sale of old vehicles where cash was received to the extent of Rs. 43,10,002/- This amount was not accounted for during the year under consideration. This statement was further confirmed by Shri Satish Mandhania, Director of the company. It is further stated by the AO in para 8.9 that the assessee company had given details of only 24 vehicles which were sold during the year. Hence, according to the AO even cheque containing sales of remaining 6 vehicles were not accounted for by the assessee company. Thus, the total consideration of these 6 vehicles in cheque was Rs. 1,50,000/-. Finally, the AO has computed the total sales receipts from old vehicles which are not accounted for in the books of account at Rs. 44,60,002/-. The AO has also stated that notice u/s.133(6) issued to various parties were not complied with. Taking into account these unaccounted sales of old vehicles, the depreciation of Rs. 29,30,168/- has been disallowed and added back to the income of the appellant. 59.1 During the appellate proceedings the appellant has stated that the company has sold 24 vehicles only ..... X X X X Extracts X X X X X X X X Extracts X X X X
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