Rinki Petrochem Pvt.Ltd.,, Baroda vs Assessee

1. आयकर अपील सं./I.T.A. No.3447/Ahd/1995 - A.Y. 1991-92 2. आयकर अपील सं./I.T.A. No.325/Ahd/2009 - A.Y. 1988-89

Rinki Petrochem Pvt.Ltd. बनाम/ The ACIT Motorol House Vs. Circle-3 Nr.Bombay Shopping Baroda/ Centre The DCIT,Circle-4, R.C.Road, Baroda Baroda-390 007 थायी ले खा सं . /जीआइआर सं . / PAN/GIR No. : 31-044-CZ-6122 (अपीलाथ /Appellant) .. ( यथ / Respondent)

अपीलाथ ओर से / Appellant by : Shri J.P.Shah, A.R. यथ क ओर से/Respondent by : Shri B.L.Yadav, Sr.DR

ु वाई क तार ख / सन Date of Hearing 13/03/2015 घोषणा क तार ख /Date of Pronounce ment 27/03/2015

आदे श / O R D E R

PER SHAILENDRA KUMAR YADAV, JM :

Both these appeals filed by the Assessee are directed against the separate orders of the ld.CIT(A)-IV/III, Baroda dated 21/3/1995 and dated 04/11/2008 for Assessment Years 1991-92 & 1988-99 respectively.

2. Assessee's appeal in ITA No.3447Ahd/1995 for AY 1991-92 is arising out of the recalled matter and the only issue which reads as under:-

ITA No.3447/Ahd/1995 -AY 1991-92 and ITA No.325/Ahd/2009 - AY 1988-99 Rinki Petrochem Pvt.Ltd. vs. CIT

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"4. BOGUS PURCHASES:-

4.1. The learned CIT(Appeals) has erred in law and facts in confirming the action of the learned Assessing Officer in treating the purchases of Used Transformer Oil amounting to Rs.23,11,500 made by your appellant from Sejal Sales as bogus."

2.1. The Assessing Officer made an addition of Rs.23,11,500/- being bogus purchases from M/s.Sejal Sales as per para-9 of the assessment order. The facts of the case are that the Assessing Officer conducted enquiries on the address of M/s.Sejal Sales, provided by the assessee but no such concern was found at the above address. The Assessing Officer required the assessee to produce the party along with the books of accounts, purchase bill, sales bills, etc. and a show cause notice was issued by the Assessing Officer. After the show cause notice, the assessee provided another address to the Assessing Officer regarding the above concern M/s.Sejal Sales. Further enquiries were conducted by the Assessing Officer on the second address provided by the assessee, and it was found that even the above address was bogus, and no such concern existed on said address. Accordingly, another show-cause notice was issued to the assessee. The assessee contended before the Assessing Officer that M/s.Sejal Sales has already furnished the confirmation regarding the transactions and thus, the assessee has already discharged its onus. The Assessing Officer treated the purchases from M/s.Sejal Sales as bogus and added the same to the income of the assessee. As per discussion in para-9 of the assessment order, the Assessing Officer further observed that many of the tankers which transported the supposed purchases of goods from M/s.Sejal Sales, had undertaken at least 3 trips ITA No.3447/Ahd/1995 -AY 1991-92 and ITA No.325/Ahd/2009 - AY 1988-99 Rinki Petrochem Pvt.Ltd. vs. CIT

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in a single day, which were not possible. No transportation charge were paid by the assessee and no transport vouchers or L.R. were produced before him to identify the transporter. Accordingly, the Assessing Officer made an addition of Rs.23,11,500/- being bogus purchases from M/s.Sejal Sales. Matter was carried before the first appellate authority, wherein various contentions were raised in this regard and having considering the same, the ld.CIT(A) confirmed the order of the Assessing Officer.

2.2. Before us, the ld.counsel for the assessee pointed out that a similar issue arose in assessee's own case for AY 1988-89 in ITA No.505/Ahd/1993, wherein the Tribunal (ITAT 'B' Bench Ahmedabad) vide para-6.1. of its order dated 20/06/2008, held as under:-

"6. So far as issue relates to addition on account of bogus purchases involved in ground No.3 is concerned, the CIT(Appeals) has set aside the same for re-consideration at the end of the Assessing Officer as per his findings contained at page Nos.14, 15 & 16 of the appellate order, but since the parties at the end had agreed for sustenance of an addition of to the extent of 25% of such purchases, we direct the Assessing Officer to compute the addition @ 25% of such bogus purchases."

2.3. Facts being similar, so without prejudice to merit of issue, following the same reasoning, we direct the Assessing Officer to compute the addition @25% of such bogus purchases. It is pertinent to mention here that each case is decided in its facts and circumstances.

ITA No.3447/Ahd/1995 -AY 1991-92 and ITA No.325/Ahd/2009 - AY 1988-99 Rinki Petrochem Pvt.Ltd. vs. CIT

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3. As a result, appeal of the assessee, i.e. ITA No.3447/Ahd/1995 for AY 1991-92 is partly allowed.

4. Now, we take up assessee's appeal in ITA No.325/Ahd/2009 for AY 1988-89, wherein the assessee has raised the following grounds:-

1. On the facts and in the circumstances of the case, the learned CIT(A) erred in law and on facts in confirming the penalty u/s.271(1)(c) partly.

The CIT(A) has failed appreciate the facts of the case and also failed to appreciate the explanations and information furnished, to the learned A.O. consequently arriving wrongly at conclusion that inaccurate particulars of income were furnished. There is no concealment of any income.

Your appellant therefore prays that the penalty levied by the A.O. be deleted in the interest of justice.

Your appellant craves leave to add, to alter, to amend to substitute or to modify all are any of the grounds of appeal.

4.1. The Assessing Officer made various additions in assessee's case, among one of them was addition on account of disallowance of depreciation of Rs.3,06,800/-. The ITAT confirmed this addition since the assessee was not able to prove that equipments were actually purchased from M/s. Toshniwal Instruments on which depreciation was claimed. In absence of any evidence, in second appeal, the ITAT held that the claim of depreciation on research equipments amounting to ITA No.3447/Ahd/1995 -AY 1991-92 and ITA No.325/Ahd/2009 - AY 1988-99 Rinki Petrochem Pvt.Ltd. vs. CIT

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Rs.3,06,800/- is without any basis. Considering this addition involved furnishing of inaccurate particulars of income and penalty was levied by the Assessing Officer which was upheld by the CIT(A). Same has been opposed before us. The learned counsel on behalf of the assessee before us contended that the CIT(A) was not justified in confirming the penalty u/s.271(1)(c) of the Act. On the other hand, the ld.Sr.DR supported the orders of the authorities below with regard to penalty u/s.271(1)(c) of the Act.

4.2. After going through the rival submissions and having gone through the materials available on record, we find that the penalty in question is arising from disallowance of depreciation of Rs.3,06,800/- which has been confirmed by ITAT, Ahmedabad in second appeal by observing that the assessee was not able to establish that equipments in question were actually purchased from M/s.Toshniwal Instruments on which depreciation was claimed. The Tribunal further held that claim of depreciation on research equipments amounting to Rs.3,06,800/- is without any basis. In view of above addition involved furnishing of inaccurate particulars of income, the Assessing Officer was justified in levying the penalty and the same has been rightly been upheld by the CIT(A). Therefore, we uphold this reason factual and legal finding of CIT(A).

4.3. As a result, the appeal of the assessee in ITA No.325/Ahd/2009 for AY 1988-89 is dismissed.

ITA No.3447/Ahd/1995 -AY 1991-92 and ITA No.325/Ahd/2009 - AY 1988-99 Rinki Petrochem Pvt.Ltd. vs. CIT

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5. In the result, the appeal of the assessee in ITA No.3447/Ahd/1995 for AY 1991-92 is partly allowed, whereas appeal of the assessee in ITA No.325/Ahd/2009 for AY 1988-89 is dismissed.

Order pronounced in the Court on 27/3/15 at Ahmedabad.

Sd/- Sd/- ( N.S. SAINI ) (SHAILENDRA KUMAR YADAV) ACCOUNTANT MEMBER JUDICIAL MEMBER

Ahmedabad; Dated 27/ 03 /2015

ट .सी.नायर, व.(न.स./T.C. NAIR, Sr. PS

आदे श क त ल!प अ"े!षत/Copy of the Order forwarded to : 1. अपीलाथ / The Appellant 2. यथ / The Respondent. 3. संबं*धत आयकर आयु,त / Concerned CIT 4. आयकर आय, ु त(अपील) / The CIT(A)-III/IV, Baroda

5. /वभागीय (त(न*ध, आयकर अपील य अ*धकरण, अहमदाबाद / DR, ITAT, Ahmedabad

6. गाड5 फाईल / Guard file.

आदे शानुसार/ BY ORDER,

स या/पत (त //True Copy// उप/सहायक पंजीकार (Dy./Asstt.Registrar) आयकर अपील य अ धकरण, अहमदाबाद / ITAT, Ahmedabad

1. Date of dictation .. 13.3.15 (dictation-pad 10- pages attached at the end of this File)

2. Date on which the typed draft is placed before the Dictating Member ...13.3.15/24.3.15

3. Other Member...

4. Date on which the approved draft comes to the Sr.P.S./P.S.................

5. Date on which the fair order is placed before the Dictating Member for pronouncement......

6. Date on which the fair order comes back to the Sr.P.S./P.S.......27.3.15

7. Date on which the file goes to the Bench Clerk.....................27.3.15

8. Date on which the file goes to the Head Clerk..........................................

9. The date on which the file goes to the Assistant Registrar for signature on the order..........................

10. Date of Despatch of the Order..................