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2016 DIGILAW 1136 (GUJ)

Helly Healthcare Pvt. Ltd. v. Income Tax Officer

2016-06-20

G.R.UDHWANI, K.S.JHAVERI

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JUDGMENT : K.S. Jhaveri, J. 1. By way of this appeal, the assessee has challenged the judgment and order passed by the ITAT whereby the ITAT has partly confirmed the order passed by the Assessing Officer as well as order passed by the CIT (Appeals) and has held that the AO and CIT (Appeals) have not justified in making the disallowance of Rs. 44,250/- on proportionate basis and thereby deleted the disallowance. 2. While admitting this matter, the Court has framed the following question of law:- "Whether, in the facts and circumstances of the case the ITAT was right in law in confirming the addition of profit margins on alleged unaccounted sales when such sales are already reflecting in the profit and loss account of the appellant?" 3. Learned Counsel for the appellant has contended that the ITAT has seriously committed an error on accounting profit on the unaccounted sales which has already been reflected in the books of accounts. 4. This matter was adjourned time and again to enable the learned Counsel for the appellant to produce on record any document to support his above referred contention. However, the appellant has not given any document so far and therefore today he has shown his inability to produce the same on record. Today, also a request is made to adjourn the matter. 5. On the other hand, learned Counsel for the respondent has contended that the issue involved in the matter is squarely covered by a decision of this Hon'ble Court in case of Sanjay Oil Cake Industries v. Commissioner of Income-tax as reported in (2009) 316 ITR 274 (Guj) and submitted that the said view may be adopted. 6. Having heard the learned Counsel for the parties and having considered the decision in case of Sanjay Oil Cake Industries (supra) where a similar issue has arisen and this Court has answered the said question in favour of Department and against the assessee. Relevant observations made therein reads thus: "7 The assessee carried the matter in Appeal before the Commissioner (Appeals). Relevant observations made therein reads thus: "7 The assessee carried the matter in Appeal before the Commissioner (Appeals). The Appellate Authority considered the evidence produced before him and came to the conclusion that the purchases shown by the assessee were genuine in as much as the details furnished by the assessee establish the vehicles in which the goods were brought to the premises of the assessee, the total quantity of the goods received by the assessee, the consumption of such goods by the assessee after reflecting the same in the stock book production of oil and sales thereof, and accounting of the profits in the Books of Accounts regularly maintained by the assessee. However, the Commissioner (Appeals) accepted the finding of the Assessing Officer to the extent that the four parties for A.Y. 1984-85 and six parties for A.Y. 1985-86 from whom the goods were shown to have been purchased were not traceable and hence, admittedly, the goods in the form of raw materials were purchased at a price which was lower than the market price, that no purchase bills at the said price were available, and accordingly, apparent sellers were providing accommodation entries to the assessee so as to enable the assessee to enter the goods purchased from third parties in the regular Books of Account. Accordingly, Commissioner (Appeals) came to the conclusion that 25% of the value of the purchase price could not be treated as genuine, or in other words, the purchase price to the extent of 25% was inflated and hence the addition made by the Assessing Officer was accordingly restricted to 25% of the amount paid to the parties from whom the Assessing Officer had disallowed the entire purchases. 8. Being aggrieved with the order made by Commissioner (Appeals) both the Revenue and the assessee approached the Tribunal with cross Appeals. The Tribunal after hearing both the sides confirmed the order made by Commissioner (Appeals). The assessee, feeling aggrieved moved the Tribunal by way of Miscellaneous Application seeking recall/modification of the order made by the Tribunal on the ground that the Tribunal had failed to consider various pieces of evidence enumerated in the application moved by the assessee. The Tribunal vide its order dated 29.09.1994 rejected the application moved by the assessee holding that there was no apparent error on record which would permit the Tribunal to undertake review of its own order. The Tribunal vide its order dated 29.09.1994 rejected the application moved by the assessee holding that there was no apparent error on record which would permit the Tribunal to undertake review of its own order. That in fact, the Tribunal had duly considered all the papers/documents filed before the Tribunal both by revenue and the assessee and the Tribunal was not in a position to discuss each and every line of the Paper Book in the body of the order. 9. Mrs. Swati Soparkar, learned Advocate appearing on behalf of the assessee submitted that various pieces of documentary evidence on which reliance had been placed and which were forming part of the Paper Book filed before the Tribunal were not considered in proper perspective by the Tribunal. That there was no material before the Tribunal for upholding the addition to the extent of 25% of the value of the purchases, considering the evidence in form of comparative charts filed by the assessee wherein it was shown that the assessee had received similar raw materials in similar manner from other parties and had paid the same purchase price; secondly the charts also reflected purchases by persons other than the assessee from third parties engaged in similar line of business reflecting the same purchase price. It was contended that on the basis of the aforesaid pieces of evidence no ground was made out for retention of addition to the extent of 25% of the value of purchase. That once the Tribunal had found that purchases were genuine, goods had been received by the assessee, consumed and sale price recorded in books there was no occasion to make any addition on an assumption. That in fact there was no evidence before the Tribunal to uphold the findings of Commissioner (Appeals) that 25% of the total purchase price was inflated purchase price in light of the evidence produced by the assessee. The learned Advocate also referred to various pieces of evidence to show that the sellers had obtained sales tax registration number, payment had been made by A/c. Payee Cheques by the assessee etc., to submit that not a single piece of evidence had been considered or found to be false by the Tribunal so as to warrant any addition. 10. Mr. B.B. Naik, learned Standing Counsel appearing for Revenue submitted that the order made by the Assessing Officer was a detailed order. 10. Mr. B.B. Naik, learned Standing Counsel appearing for Revenue submitted that the order made by the Assessing Officer was a detailed order. That for the reasons assigned by the Assessing Officer the Tribunal was not justified in holding the purchases to be genuine and granting relief to the extent of 75% without any basis. 11. Having heard the learned Advocates appearing for the respective parties it is apparent that no interference is called for in the impugned order of Tribunal dated 29.04.1994 read with order dated 29.09.1994 made in Miscellaneous Application. In the principal order the Tribunal has recorded following findings: S8.3. We have considered the rival submissions and perused the facts on record. In our opinion the action of the CIT(A) confirming 25% of the amounts claimed is fair and reasonable and no interference is called for. The CIT(A) has gone through the purchase prices of the raw material prevalent at the time and rightly came to the conclusion that the disallowance to the extent of 25% was called for. It is established that the parties were not traceable; they opened the bank accounts in which the cheques were credited but soon thereafter the amounts were withdrawn by bearer cheques. That fairly leads to the conclusion that these parties were perhaps creation of the assessee itself for the purpose of banking purchases into books of accounts because the purchases with bills were not feasible. Thus the above noted parties become conduit pipes between the assessee firm and the sellers of the raw materials. Under the circumstances, it was not impossible for the assessee to inflate the prices of raw materials. Accordingly an addition at the rate of 25% for extra price paid by the assessee than over and above the prevalent price is fair and reasonable and we accordingly confirm the finding of CIT(A). 12. Thus, it is apparent that both Commissioner (Appeals) and the Tribunal have concurrently accepted the finding of the Assessing Officer that the apparent sellers who had issued sale bills were not traceable. That goods were received from the parties other than the persons who had issued bills for such goods. 12. Thus, it is apparent that both Commissioner (Appeals) and the Tribunal have concurrently accepted the finding of the Assessing Officer that the apparent sellers who had issued sale bills were not traceable. That goods were received from the parties other than the persons who had issued bills for such goods. Though the purchases are shown to have been made by making payment thereof by Account Payee Cheques, the cheques have been deposited in Bank Accounts ostensibly in the name of the apparent sellers, thereafter entire amounts have been withdrawn by bearer cheques and there is no trace or identity of the person withdrawing the amount from the bank Accounts. In light of the aforesaid nature of evidence it is not possible to record a different conclusion, different from one recorded by Commissioner (Appeals) and the Tribunal concurrently holding that the apparent sellers were not genuine, or were acting as conduit between the assessee firm and the actual sellers of the raw materials. Both Commissioner (Appeals) and the Tribunal have therefore come to the conclusion that in such circumstances, the likelihood of purchase price being inflated cannot be ruled out and there is no material to dislodge such finding. The issue is not whether the purchase price reflected in the Books of Accounts matches the purchase price stated to have been paid to other persons. The issue is whether the purchase price paid by the assessee is reflected as receipts by the recipients. The assessee has, by state of evidence available on record, made it possible for the recipients not being traceable for the purpose of inquiry as to whether the payments made by the assessee have been actually received by the apparent sellers. Hence, the estimate made by the two Appellate Authorities does not warrant interference. Even otherwise, whether the estimate should be at a particular sum or at a different sum, can never be an issue of law. 13. In the aforesaid set of facts and circumstances of the case, the impugned order of the Tribunal is an order which is made in accordance with law and does not require any interference. Even otherwise, whether the estimate should be at a particular sum or at a different sum, can never be an issue of law. 13. In the aforesaid set of facts and circumstances of the case, the impugned order of the Tribunal is an order which is made in accordance with law and does not require any interference. The questions referred at the instance of the assessee as well as revenue are therefore answered in the affirmative i.e. in favour of the revenue and against the assessee in relation to the questions at the instance of the assessee, and in favour of the assessee and against the revenue in relation to the questions at the instance of the revenue." 7. This Court is also in agreement with the aforesaid conclusion and thereby answer this question in favour of Department and against the assessee. Accordingly, the appeal is dismissed.