Commissionerofincometax...appeant v. Victoria Foods Pvt' Ltd'

'.-' r - i * * IN THE HIGH COURT + ITA No.51 of 2O11ITA No.76 of 2O11 o/o Decision Delivered On: [19th ][AUGUST, ][2011] + ITA No.61/2O11 CoMMISSIoNERoFINcoMETAX...Appe||ant VERSUS VICTORIA FOODS PVT' LTD' ' ' 'Respondent + ITA No.76l2O11 GoMMISSIONER OF TAX . . . Appellant VERSUS VICTORIA FOODS PVT. LTD. ' ' 'Respondent Mr. Sanjeev Rajpal, [Sr']Standing Counsel. Counsel for the Revenue: Counsel for the Assessee: Mr. ' Saubhagya Aggarwal,Advocate. coRAM :-HON'BLE MR. JUSTICE A.K. HON'BLE MR. JUSTTCE J.R. [MrDHA] 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?]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] Page 1 of 5 ITA Nos.61/207I & 76/207L r .t in both the appeals. The assessee is a company [ru.nning ][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 va'lue ][of ][74,94,94,8521-.]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 ][bssets, ][the ][assessee ][had]obtained a term loan of t4.94 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 AO found thatthese 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/ZOIL & 76/2OLL a -t inspection. The Inspector reported that these concerns did [not]exist on the given addresses. On this basis, the disbelievedthe purchases made from these concern, which had [supplied]capital assets to the extent of [t30,62 ],82,3411-. [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. 4. Against the order of the CIT [(A), ]the Revenue [preferred ][appeal]before the Income Tax Appellate Tribunal [(hereinafter ][referred]to as 'the Tribunal'). In respect of [As5essment ][Year ][2005-06,]the appeal was dismissed by the Tribunal vide orders dated26.02.2010. Following that order, another appeal [pertaining ][to]Assessment Year 2006-07 had [also been dismissed ][vide ][orders]dated 14.05.2010. 5. 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 l2OIL &.76/2017 a i I ! 4. Against the order of the CIT [(A), ]the Revenue [preferred ][appeal]before the Income Tax Appellate Tribunal [(hereinafter ][referred]to as 'the Tribunal'). In respect of [As5essment ][Year ][2005-06,]the appeal was dismissed by the Tribunal vide orders dated26.02.2010. Following that order, another appeal [pertaining ][to]Assessment Year 2006-07 had [also been dismissed ][vide ][orders]dated 14.05.2010. 5. 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 l2OIL &.76/2017 a i I ! (i) The assets were duly reflected in the auditedaccounts. They were existing at the [premises. ][In ][fact,]the assessee had requested the AO to verify theassets physically or depute an Inspector in its letterdated 27.12.2003. However,'instead of doing so, [the]AO deputed the Inspector to visit the [place ][of]manufacturers.accounts. They were existing at the [premises. ][In ][fact,]the assessee had requested the AO to verify theassets physically or depute an Inspector in its letterdated 27.12.2003. However,'instead of doing so, [the]AO deputed the Inspector 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 theaddition of the aforesaid fixed/capital assets, [the]production of the assessee had increased from 100tonnes to 400 tonnes. Likewise, sales had [gone ]upfrom t41 Crores to 86 Crores in the Assessment Year2005-06. In a similar manner, there [was ][enhanced]electric load.addition of the aforesaid fixed/capital assets, [the]production of the assessee had increased from 100tonnes to 400 tonnes. Likewise, sales had [gone ]upfrom t41 Crores to 86 Crores in the Assessment Year2005-06. In a similar manner, there [was ][enhanced]electric load. 7. The veracity of the report of the Inspector [stating ][that ][the]parties were not available at the given addresses, was doubtedwho purportedly visited all the three places on same date,though they were located at [places ]far away [from ][each ][other.]The lnspector had not even recorded the statement ofneighbours or collected any material. Moreso, the payments tothe said three parties were made through banking [channels,]parties were not available at the given addresses, was doubtedwho purportedly visited all the three places on same date,though they were located at [places ]far away [from ][each ][other.]The lnspector had not even recorded the statement ofneighbours or collected any material. Moreso, the payments tothe said three parties were made through banking [channels,] ITA Nos.61 /201I e. 76/2011 tt .,t 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 ][the ][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 frrf'(4.K. SrKRr)SrKRr) (4.K. SrKRr)SrKRr)JUDGE AUGUST Lgt 2OLLomc ITA Nos.61 /20II & 76/2OIt