Supertech Forgings (India) Pvt. Ltd. Vs DCIT (ITAT Amritsar)Vs DCIT (ITAT Amritsar)
Conclusion: Additions made for alleged bogus purchase bills by AO was not justified as AO had not applied his mind to the information received from the Investigating Wing and he had not provided the opportunity to cross examine a person whose statement was recorded by the investigating wing and relied upon by AO itself was a also reason to quash the entire assessment.
Held: Assessee-company was engaged in the business of manufacturing of Aluminum conductor steel reinforced (ACSR Conductors), DPC Wire Strips (double paper covered wire), steel wire ropes, PVC Cables and besides trading of M.S Pipes, aluminum wire and allied products. AO reopened the case u/s 147 on the basis of the information received from the investigation wing in the form of statement recorded in the case of Sh Madan Lal. In the reasons recorded, AO had mentioned that the purchases made from certain parties were bogus and as such there was escapement of income to the tune of Rs. 4.26 Cr. It was held that AO had merely relied upon the report of the investigating wing. Further, AO had not provided a copy of the statement of Shri Madan Lal recorded to assessee. Once AO of Shri Madan Lal had accepted the sales made to the Assessee in the Assessment Order passed under Section 143(3) read with 147, then the said purchases (sale of Shri Madan Lal) could not be disputed by AO of assessee. The above said fact was brought to the notice of AO. However, neither AO nor CIT (A) had considered the abovesaid fact. Further, both the Lower Authorities had not disputed that the purchases were made by assessee from the same parties in subsequent assessment years i.e. 2011-12 & 2012-13 and the assessment Orders were provided to the Lower Authorities. Assessee had requested for cross-examination of Shri Madan Lal and the same was not provided to assessee and therefore for not providing the opportunity to cross examine a person whose statement was recorded by the investigating wing and relied upon by AO itself was a reason to quash the entire assessment.
FULL TEXT OF THE ORDER OF ITAT AMRITSAR
This appeal has been filed by the assessee against the order of the ld. Commissioner of Income Tax(Appeals)-2, Jalandhar, dated 16.10.2018, in respect of Assessment Year 2011- 12.
2. The assessee has taken following Grounds
“1. That the ld.CIT(A) has grossly misdirected himself in law and on facts, in upholding the validity of reopening of the case u/s.147/148, by not appreciating the assessee’s contentions in correct perspective. His reliance on a few judicial authorities, not relevant to the facts of this case, is also misplaced.
2. That the ld.CIT(A), swayed by the so-called prevailing menace of bogus bills, misconstrued the facts and the legal position of this case, to uphold the addition of Rs.4,26,93,470/-, as made by the ld.AO, alleging that the purchases made by assessee of the said value, were bogus.
3. That the ld.CIT(A) was wholly unjustified in holding that the assessee failed to produce one Mr Madan Lal Pahuja, the supplier, whose statement, recorded by ADIT, (Inv), Ludhiana, not witnessed by anyone else, was the sole basis to initiate proceedings u/s.147/148.
4. That Mr Madan Lal Pahuja, being the sole witness of revenue, ought to have been allowed cross examination by the assessee, which having not been allowed by the AO even when asked for, rendered the impugned assessment illegal, being in gross violation of sacred principles of natural justice. The ld.CIT(A), not only erred in not holding the impugned order bad on this score, but also committed a grave legal error to shift the onus on assessee to produce the said person.
5. That when neither the stock tally, nor the sales made were disputed, holding the purchases bogus was prime facie uncalled for, which the ld.CIT(A) ought to have appreciated to delete the addition made by ld.AO.
6. That the revenue itself having taken a contrary stand in the reassessment proceedings of Mr Madan Lal Pahuja, wherein the same very sales made by him were held to be his business turnover in his assessment for AY 2010-11, the ld.CIT(A) committed a grave error in ignoring this contention, to uphold the addition made by ld.AO.
7. That the ld.CIT(A) was not justified in just brushing aside various judicial decisions, relied upon by assessee, squarely applicable to the facts of this, case by wrongly holding the same as distinguishable on facts.
8. That the orders of the authorities below are against law and facts of the case.
9. That the assessee reserves the right to amend, alter or raise an additional ground of appeal before the disposal of this appeal.”
3. Briefly, the facts on record are that the appellant company is engaged in the business of manufacturing of ACSR Conductors (Aluminum conductor steel reinforce),DPC Wire Strips (double paper covered wire), steel wire ropes,PVC Cables and besides trading of M.S Pipes, aluminum wire and allied products.
3.1 Primarily, the assessment has been framed u/s 143(3) on 12.06.2012 and the trading results were accepted by the department during complete scrutiny. However, certain other additions were made by the AO and later on the assessee approached CIT(A) who had provided part relief of Rs. 3.50 L out of the total additions. Neither the department nor the appellant had filed appeal against the order of the CIT (A).
3.2 The case was reopened u/s 147 on 30.03.2017 on the basis of the information received by the AO from the investigation wing in the form of statement recorded in the case of Sh Madan Lal Pahuja.
3.3 In the reasons recorded, the AO has mentioned that the purchases made from Madan lalPahuja M/S Shiv bholeKirpa Traders Rs. 1.05 Cr, Lovy Steel and Allied Industries Rs. 0.17 Cr and Jatinder kumar prop. Shree Nath Ispatudhyog Rs. 2.06 Cr are bogus and as such there is escapement of income to the tune of Rs. 4.26 Cr: –
3.4 In the reasons to believe dated, 22 March 2017 it was mentioned as under:-
As per the information received from the Investigation Wing, Ludhiana, it has been found that the assessee company had taken bogus purchase bills from the concerns owned by Sh. Madan Lal Pahuja and Sh. Jatinder Kumar during the F.Y.2009-10 as per the details given below: –
