2014 (9) TMI 17 - HC - Income Tax

Bogus purchase - documentation for showing import - the main focus and contention of the appellant-assessee is that once invoice dated 3rd July, 1981 was accepted and no addition was made, then no addition was justified in respect of the invoice dated 3rd June, 1981. Held that - In respect of the consignment covered by the second invoice, no addition has been made by the AO primarily for the reason that M/s. Asia Transport Company had confirmed having sent the lorry receipt for transportation of goods along with their bill to UET- the assessee was given benefit and no addition was made in respect of this invoice - there was no evidence or material whatsoever - the statement of accounts furnished by M/s. H.M. Doyal & Co. did now show any opening balance as on 10th September, 1981 - G. Kapoor, in his statement recorded on oath under Section 131 of the Act, had stated that they were purely a trading concern and had dealings with four companies - They used to make local purchases at a petty scale - they purchased imported material for their manufacturing operations - They had procured import licences upto 1970-71 but thereafter no licences had been procured by them - Their firm had not purchased any import licence after 1970-71 up till 1982-83, but some persons had approached him for signatures, as actual user for importing goods under the licences, and he had received, commission @ 2% in cash on the goods imported, but he had never used the said goods and did not even know what goods were imported. The Assessing Officer was rather liberal in accepting the case of the appellant-assessee in respect of the invoice dated 3rd July, 1981 and this cannot be a ground or justification for not making any addition in respect of the invoice dated 3rd June, 1981. thus, the order of the Tribunal is upheld Decided against Assessee.

Issues Involved:
1. Justification for sustaining the addition of Rs. 1,99,000/- and Rs. 49,750/- by the Assessing Officer and CIT (Appeals).

Issue-wise Detailed Analysis:

1. Justification for Sustaining the Addition:
The primary issue in this case is whether the Tribunal was justified in sustaining the addition of Rs. 1,99,000/- and Rs. 49,750/- made by the Assessing Officer and confirmed by the CIT (Appeals).

Background:
The assessment for the year 1982-83 was initially completed under Section 143 of the Income Tax Act, 1961, and later reopened under Section 148 read with Section 147. The reopening was based on appellate orders from the assessment year 1985-86. The appellant-assessee, an exporter, was issued an import license valued at Rs. 5,00,000/-. The appellant claimed to have assigned this license to M/s. United Engineers & Traders (Regd.) (UET) for a premium of Rs. 37,500/-. However, the appellant failed to file necessary documentation with the Chief Controller of Imports and Exports, leading the Assessing Officer to believe that the appellant had sold the imported goods in the open market, resulting in unaccounted income.

Findings of the Assessing Officer:
The Assessing Officer made the additions based on the inability of the appellant to show that the goods were imported and utilized by UET. The officer relied on statements from Joginder Singh, a partner of UET, and G. Kapoor, a partner of M/s. H.M. Doyal & Co., who purportedly acted as an agent of UET. Joginder Singh denied any import under the said license, and G. Kapoor's statements indicated no genuine business relationship with the appellant.

Confirmation by CIT (Appeals) and Tribunal:
The CIT (Appeals) and the Tribunal upheld the additions, noting discrepancies in the appellant's documentation and the statements from involved parties. The Tribunal specifically referenced the affidavit of Joginder Singh, which denied any import activity under the license in question.

Appellant's Arguments:
The appellant argued that the findings were perverse and contrary to the material on record. They highlighted that the Assessing Officer had accepted the genuineness of invoices under the same import license for a different consignment. The appellant also contended that they were not given an opportunity to cross-examine Joginder Singh and G. Kapoor.

Court's Analysis:
The court noted that the appellant did not raise the issue of cross-examination before the Tribunal. Furthermore, the court found that the acceptance of one invoice (dated 3rd July 1981) did not automatically validate the other invoice (dated 3rd June 1981). The court emphasized that the statements from Joginder Singh and G. Kapoor, along with the lack of documentation, supported the additions made by the Assessing Officer.

Conclusion:
The court concluded that the Tribunal's order was not perverse and was based on substantial evidence. The question of law was answered against the appellant-assessee, and the appeal was dismissed with no order as to costs.

Summary:
The High Court upheld the Tribunal's decision to sustain the additions of Rs. 1,99,000/- and Rs. 49,750/-. The court found that the appellant-assessee failed to provide adequate documentation and evidence to refute the claims of unaccounted income from the sale of imported goods. The statements from Joginder Singh and G. Kapoor were deemed credible, and the appellant's failure to raise the issue of cross-examination earlier weakened their case. The court dismissed the appeal, affirming the decisions of the lower authorities.

← Previous Next →