$~96
* IN THE HIGH COURT OF DELHI AT NEW DELHI
% Date of Decision : 11th February, 2019
+ ITA No.140/2019 & CM No.6355/2019
THE PR. COMMISSIONER OF INCOME TAX -7 .. Appellant
Through : Mr. Ruchir Bhatia, Sr. Standing
Counsel.
versus
PADMINI VNA MECHATRONICS PVT. LTD. ... Respondent
Through : None.
CORAM:
HON'BLE MR. JUSTICE S. RAVINDRA BHAT
HON'BLE MR. JUSTICE PRATEEK JALAN
S. RAVINDRA BHAT, J. (ORAL)
1. The Revenue in this appeal under Section 260A is aggrieved by
the ITAT's order, which had affirmed the Appellate Commissioner's
decision, setting aside a reassessment order.
2. The substantial question of law raised is that the lower appellate
authorities have returned unreasonable and perverse findings on
merits. For Assessments Year 2008-09, reassessment notices were
issued to the assessee, on the ground that the latter had made bogus
purchases. The assessee manufactured various kinds of automobile
parts and electronic parts. The precise complaint was that the two
concerns, M/s Om Industrial Corporation (OIC) and M/s Techno
Enterprises were shown as sellers of raw material in respect of the
ITA No.140/2019 Page 1 of 5
substantial quantities. The Revenue alleged that the purchases
reflected from these sources were bogus. The Revenue relied upon the
survey proceedings under Section 133 as well as the statements made
under Section 133A. It further relied upon the statement made
allegedly by bogus entry providers, who stated that the amounts
claimed by the asessee as expenditure were of fictitious and bogus
nature. The AO acted upon these and disallowed the expenditure to
the tune of 60,61,4801.
3. Upon appeal the CIT(A) considered the explanation and also
various documentary evidence on record. These included the forms
evidencing deposit of VAT dues; the D-3 Transit/Transport challan,
stock register maintained at the asseessee's factory premises, the
relevant central excise gate passes/records of purchases in the
statutory register RG-1 etc. After recording these submissions, the
CIT(A) held that the issues in the relevant assessment year were
squarely covered by his orders for A.Y. 2006-07 and 2007-08. In
those orders, the CIT(A) was of the opinion that even though initiation
of re-assessment was justified, the addition made in the reassessment
proceedings, was not justified. The CIT(A)'s reasoning in those
orders was as follows:
"The AO has also made a reference to the bank
Accounts of these concerns showing cash withdrawal for
returning the money to the beneficiaries. In view of these
broad findings, the AO reached to the conclusion that the
purchases made from these parties are not genuine. The
AO however, could not point out any discrepancy in the
documents and records, including stock register
produced before him. In this case, I find that all the,
ITA No.140/2019 Page 2 of 5
purchases are evidences by purchase invoices. All the 3
parties are registered with VAT and having TIN nos. as
mentioned in the invoices. All the 3 parties are at
Faridabad / Haryana. The purchases are made by the
appellant at it's Gurgaon factory. For every sale from
Faridabad / Haryana to Gurgaon, the seller party has to
obtain advance D - 3 Vat Form from Faridabad VAT
Deptt. This form is to be accompanied with the purchase
invoice during transportation of goods from the seller to
the buyer. The purchase invoice, D - 3 VAT form and the
physical goods transported are inter - sea matched by the
Vat Deptt. at the border. The VAT Deptt. after
verification, put it's seal on the D - 3 form In this case,
for all the 3 parties all such documents have been
produced by the appellant. It un- doubtedly shows the
movement of goods from Haryana to Gurgaon. On
receipt of goods, it receipt is entered in the gate entry
register by the Security guard on the gate who after
physical verification of the goods put a seal on the back
of the invoice. This seal mentions the particulars of gate
entry no., date and initial of security guard. Then, the
goods are received in store where it's receipts are entered
in the stock register. Then the movement of goods from
the stores to production Deptt. is also recorded in the
Stock Register. The copies of relevant stock records
showing this movement has also been produced before
AO wherein no discrepancy has been noticed. The unit is
cover under the Excise Act. The production, and it's sale
is recorded in the Excise records. All these records were
produced and filed before the AO wherein, again no
discrepancy has been noticed. All these documents shows
the movement of goods from Haryana to Gurgaon factory
of the appellant and thereafter issuance for production
and ultimately culminating into sales. The Excise records
are audited periodically by the Excise Deptt. Purchase
also needs to be reported to the VAT Deptt. through VAT
returns. The purchases from these parties also stood
declared to the VAT Deptt. which after verification,
ITA No.140/2019 Page 3 of 5
accepted the same. The appellant also filed a certificate
from the Production manager alongwith details of
production wise clearance which clearly shows that these
items were used and consumed by the Production Deptt.
As explained by the appellant, these purchases constitutes
the raw material for manufacturing "valves" which is the
end product of the appellant which valves are sold to
Original Equipment Manufacturing companies like
Maruti, Mahindra, Tata etc., etc., wherein this item is
being used as a motor part. In this case, complete
documentary evidences have been filed before the AO
wherein no discrepancy has been pointed out. The
payment for purchases had been made through cheques.
4. The Revenue's appeals for those assessment years having been
dismissed, it approached this Court in ITA Nos.111/2019 and
112/2019, which have been dismissed by our order dated 04.02.2019
with the following observations :
"3. On the basis of the above reasoning, the CIT set aside
the final reassessment order which had disallowed the
expenditure. The Revenue's appeal before ITAT was
unsuccessful. On behalf of the Revenue, it is urged that the
findings of the Appellate Commissioner and ITAT cannot be
sustained because they did not give any credence to the
statements recorded under Section 133A. It is further stated
that mere deposit of amounts to D-3 challan, did not signify
that the goods were actually purchased or had been
consumed as alleged by the assessee.
4. This Court is of the opinion that the assessee did not
rely merely upon the deposit of the amount but rather
movement of the goods, which is borne out by the VAT
authorities' stamp on transit challan i.e. chungi, at the
border.
5. Furthermore, other evidence such as the stock
register, factory certifying the receipt of the goods as and
when they were moved into the premises; clearly recorded in
ITA No.140/2019 Page 4 of 5
the statutory central excise registers RG-1 etc., were
sufficient proof to show that the purchases were not bogus.
Moreover, the CIT(A) re-apprised all the evidence, unlike
the AO, who was largely influenced by the so-called credit
entry providers.
6. This Court is of the opinion that having regard to the
detailed analysis of the CIT(A), with which the ITAT's
finding concurred, no question of law arises."
5. The present appeal raises similar grounds and is covered by our
order dated 04.02.2019. No substantial question of law arises. The
appeal is, therefore, dismissed.
S. RAVINDRA BHAT, J
PRATEEK JALAN, J
FEBRUARY 11, 2019
aj
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