Commissioner Of [Income ]Tax v. Victoria Foods [Pvt. ]Ltd

?' * IN THE HIGH COURT OF + ITA No.5!- of 2O11ITA No.75 of 2O11 o/o Decision Delivered On: [19th ][AUGUST. ][2011] + ITA No.61l2O11 COMMISSIONER OF TAX ' ' ' [Appellant] VERSUS VICTORIA FOODS [PVT. ]LTD. ' 'Respondent + ITA No.75l2O11 COMMISSIONER OF ' ' ' [Appellant] VERSUS VICTORIA FOODS PVT. LTD ' 'Respondent counsel for the Revenue: counsel for the Assessee: Mr. Sanjeev Rajpal, [sr.]Standing Counsel. Mr. [' ]Saubhagya [Aggarwal,]Advocate. a.- Y T CORAM :-HON'BLE MR. JUSTICE [A.K. ] HON'BLE MR. JUSTICE [J.R. MIDHA] 1. Whether Reporters of [Local ][newspapers ][may ][be allowed] to see the Judgment? 2. To be referred to the Reporter [or ][not?] 3. Whether the Judgment [should be reported in ][the ][Digest?] A.K. SrKRr. J. [(ORAL)] 1. These two appeals relate to [the ][Assessment Years 2005-2006] and 2006-07, The assessee [as ][well ][as issue ][raised is ][common] ITA Nos.61/2071 & 76/2OtL Page 1 of 5 .l t\ in both the appeals. The assessee is a [company running flour]mill where it is [producing ]wheat flour [choker, ][suji, ][maida, ][etc.]It is also trading in these items. In [the ][return ][filed ][for]Assessment Year 2005-06, the respondent-assessee [had ][shown]to have purchased fixed assets for [a ][value of 74,94,94,852[-.]The AO wanted to investigate into [the ][genuineness ][of ][the]aforesaid addition to the fixed [assets ][and thus, ][asked ][the]assessee to file the details of [additions ][made ][to ][the ][fixed]assets, source of investment [and ][the ][documents ][in ][support ][of]the purchase of these assets. In [response ][to ][it, ][the ][aSSeSSee]filed along with letter dated 19.07.2007, [supporting bills ][and]vouchers of various assets [purchased ][during ][the ][year. lt ][was]further stated that for [procuring these ][assets, ][the ][assessee ][had]obtained a term loan of 74.94 [Crores ][from ][State ][Bank ][of]Mysore, Naya Bazar, Delhi. The AO randomly [picked ]three [suppliers ][from ][whom ][the]assessee had [purchased ]various [types ][of ][steel ][sheets,]machinery and electrical installations. [On ][the ][bills ][and]vouchers issued by these three concerns, [the ] [found that]these bills did not bear telephone number [and ][even ][the ][sales]tax was not charged. He nurtured [doubts ][about ][the]genuineness of purchases from these [persons ]and [thus,]deputed one Income Tax Inspector to carry out spot 3. ITA Nos.61/20tI & 76/20II l inspection. The Inspector reported that these [concerns ][did ][not]exist on the given addresses. On this [basis, ][the ] [disbelieved]the purchases made from these concern, [which had ][supplied]capital assets to the extent of t30,62,82,34U-. [He held ][the]purchases of assets to that extent as bogus and also disallowedthe depreciation @ 25% claimed by the [assessee ][on ][these]assets amounting to <57,42,7941- in. the [Assessment ][Years]2005-06 and 2006-07. Likewise, interest [paid ][on ][the term ][loan]to the on the aforesaid [purchases ]was [also ][disallowed.] Aggrieved by the aforesaid order of [the ][AO, ][the ][assessee ][went]in appeal before the CIT [(Appeals) ][where ][the ][appeal ][of ][the]assessee was, however, allowed. Against the order of the CIT [(A), ]the [Revenue ][preferred ][appeal]before the Income Tax Appellate [Tribunal (hereinafter ][referred]to as 'the Tribunal'). ln respect of Assessment [Year ][2005-06,]the appeal was dismissed by the [Tribunal ][vide ][orders ][dated]26.02.2010. Following that order, another appeal [pertaining ][to]Assessment Year 2006-07 had also been dismissed [vide ][orders]dated 14.05.2010. The perusal of the order of the Tribunal would [show ][that ][the]two authorities below accepted the [genuineness ]of [the]purchases and addition to fixed assets keeping in mind thefollowing material on records: 6, ITA Nos.61/2OIt & 76/2OtL I /tl q Against the order of the CIT [(A), ]the [Revenue ][preferred ][appeal]before the Income Tax Appellate [Tribunal (hereinafter ][referred]to as 'the Tribunal'). ln respect of Assessment [Year ][2005-06,]the appeal was dismissed by the [Tribunal ][vide ][orders ][dated]26.02.2010. Following that order, another appeal [pertaining ][to]Assessment Year 2006-07 had also been dismissed [vide ][orders]dated 14.05.2010. The perusal of the order of the Tribunal would [show ][that ][the]two authorities below accepted the [genuineness ]of [the]purchases and addition to fixed assets keeping in mind thefollowing material on records: 6, ITA Nos.61/2OIt & 76/2OtL I /tl q (i) The assets were duly reflected in the auditedaccounts. They were existing at [the premises. ][In ][fact,]the assessee had requested the to [verify ][the]assets physically or depute an [lnspector ][in its ][letter]dated 27.12,2003. However,.instead [of ][doing ][so, the]AO deputed the lnspector to [visit ][the ][place ][of]manufacturers.accounts. They were existing at [the premises. ][In ][fact,]the assessee had requested the to [verify ][the]assets physically or depute an [lnspector ][in its ][letter]dated 27.12,2003. However,.instead [of ][doing ][so, the]AO deputed the lnspector to [visit ][the ][place ][of]manufacturers. (ii) Ledger account of the three parties whose expenseswere doubted by the AO was [produced ][by ][the]ASSCSSCC.were doubted by the AO was [produced ][by ][the]ASSCSSCC. (iii) The assessee was able to demonstrate that after [the]addition of the aforesaid [fixed/capital assets, ][the]production of the assessee had increased [from ][100]tonnes to 400 tonnes. Likewise, [sales had gone ][up]from {41 Crores to 86 Crores [in ][the ][Assessment ][Year]2005-06. In a similar manner, [there was ][enhanced]electric load.addition of the aforesaid [fixed/capital assets, ][the]production of the assessee had increased [from ][100]tonnes to 400 tonnes. Likewise, [sales had gone ][up]from {41 Crores to 86 Crores [in ][the ][Assessment ][Year]2005-06. In a similar manner, [there was ][enhanced]electric load. The veracity of the report of the [Inspector ][stating ][that ][the]parties were not available at the [given ]addresses, [was doubted]who purportedly visited all the three [places ][on ][same ][date,]though they we.re located at [places ][far ][away ][from ][each other.]The Inspector had not even recorded the [statement ][of]neighbours or collected any material. [Moreso, ][the ][payments ][to]the said three parties were made through [banking ][channels,]parties were not available at the [given ]addresses, [was doubted]who purportedly visited all the three [places ][on ][same ][date,]though they we.re located at [places ][far ][away ][from ][each other.]The Inspector had not even recorded the [statement ][of]neighbours or collected any material. [Moreso, ][the ][payments ][to]the said three parties were made through [banking ][channels,] 7. ITA Nos.61 lzolt &. 7 6/2OIL 1: , not only this the payment was made by the banking [directly ][to] the suppliers. It is clear from the above that the Tribunal has weighed [the]circumstances and material on record by the [assessee ][and the]material produced by the AO, we are of [the ][view ][that the ][scale]would tilt in favour of the assessee. The material [placed ][by ][the]assessee cumulatively shows that tl" [purchases ][were ][not]bogus. Therefore, we are of the opinion that [these ][are ][pure]findings of fact arrived at by the Tribunal [on ][the ][analysis ][of]evidence produced on record, No [question ][of ][law ][arises. ][These]appeals are accordingly dismissed. B. | .-,,f'tqol 'tY2t-[l ]['t>'^](A.K. SrKRr)JU,BGE JU,BGEciff AUGUST Lgt zOtL0mc ITA Nos.61 /20tt &. 7 6/2011