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TMI Blog2024 (2) TMI 931X X X X Extracts X X X X X X X X Extracts X X X X ..... .2020 conducted by the Company Secretary appointed as Insolvency Resolution Professional who was later appointed as the liquidator of the said Company by the National Company Law Tribunal (in short, NCLT), Chennai, by its order dated 25.10.2019. As noticed that the petitioner has attached sample invoice issued by the Company Secretary in Practice and Insolvency Professional who was appointed as the liquidator of the said company. However, before this Court the petitioner has filed copies of invoice for a sum of Rs.127,35,78,406/-. There is no clarity on the same. The explanation of the petitioner has not been accepted by the AO. Although, during the period dispute, the movement of jewellery items including bullion are not required to accompany e-way bill in terms of Rule 138 (4)(a) of the GST Rule 2017, as amended by Notification No.12/2018 Central Tax with effect from 01.04.2018, GST Returns of the supplier and GST Returns of the petitioner would have registered the transaction of gold, the petitioner ought to have filed the GST Returns in Form GST 2A before the respondent. These documents have not been furnished by the petitioner. Also the other issues regarding payment of commis ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... o agents and also provideda ledger counter signed by certain agents. These confirmation letters provided by the assessee company have only confirmed that certain amount has been paid as commission on various dates to certain parties. There is no mention whatsoever of services that were actually provided by the agents. 4.4.2 The assessee company has also failed to provide any documents (Copy of agreement between assessee company and agents, any correspondence or Copy of email communication done with agents regarding rendering of services) showing that the agents have actually rendered commission services to either improve the latest design of jewellery or helped in procuring customers for the company. 4.4.3 Without documentary proof of services rendered by the agents, the commission paid by the assessee company cannot be confirmed to be legitimate. In absence of any documentary proof of services rendered agents within India, commission payment of Rs.81,00,000- is hereby disallowed and added back to the income of the assessee company. Penalty proceedings u/s 270A(8) of the 1.T. Act, 1961 for mis- reporting of income are also separately initiated (Addition: Disallowance of commission ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... entary proof, the entire amount of Rs. 234,15,30,188/-claimed as expenditure on purchase of raw material from parties mentioned above is held to be non-genuine and is added to the income of the assessee. Penalty proceedings u/s 270A(8) of the I.T. Ac, 1961 for misreporting of income are also separately initiated (Addition: Disallowance of expenditure on purchase of raw material amounting to Rs.234,15,30,188/-) 4. In W.P.No.20853 of 2023, the petitioner has challenged the impugned Order bearing DIN:ITBA/PNL/F/270A/2023-24/1054027163(1) for the Assessment Year 2021-2022 dated 28.06.2023, passed by the respondent under Section 270A of the Income Tax Act, 1961. 5. By the impugned Assessment Order dated 28.12.2022, the assessing officer has disallowed the commission paid to the Foreign Company and Local Agents/Parties and has also disallowed expenses incurred by the petitioner on account of purchase of bullion from the following three entities:- Sr. No. Name of the seller Amount 1. Shiv Sahai Sons (India) Pvt.Ltd 29,01,84,599/- 2. Diamond India Limited 81,38,45,590/- 3. M/s.Surana Corporation Limited 123,74,99,999/- Total 234,15,30,188/- 6. Impugned Assessment Order dated 28.12.2022 cha ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... at were issued under Section 143(2) and Section 142(1) of the Income Tax Act, 1961, on various dates and there was no notice calling upon the petitioner to furnish e-way bills and lorry receipts which accompanied purchase invoice and the gold bullion from the above three mentioned Sellers. 12. It is submitted that the impugned order proceeds on a wrong assumption that the petitioner has not produced any e-way bill or lorry receipts and therefore, in absence of the above documents, the mere production of GST returns, Bank Statements and the Ledgers maintained by the petitioner regarding confirmation of the sale by the above three mentioned dealers cannot be allowed as expenses. 13. It is submitted that the petitioner is not required to furnish e-way bills and LR receipts as there is an exemption under Notification No.27/2017- Central Tax issued under respective GST Enactments for movement of Gold Bullion and Jewellery. 14. In this connection, learned Senior Counsel for the petitioner has made a specific reference to paragraph 14(a) of Notification No.27/2017-Central Tax dated 30.08.2017 read with Sl.No.151 which reads as under:- 14. Notwithstanding anything contained in this rule, n ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... tion Limited is concerned, it is submitted that the said Company was under liquidation and the purchase was not directly from M/s.Surana Corporation Limited but made during a public auction by the Insolvency Resolution Professional (IRP) who was appointed as the liquidator by the National Company Law Tribunal (in short, NCLT), Chennai, by its order dated 25.10.2019. 22. Hence, it is submitted that the question of disallowing the expenses incurred in connection with the purchase of the bullion vide Impugned Order has to go and at best the case has to be remanded back. 23. The learned Senior Counsel for the petitioner had also relied on the following decisions of Delhi and Bombay High Courts:- i. DJ Surfactants Vs. National E-Assessment Centre, Income Tax Department, New Delhi and others in W.P.(C). No.4814 of 2021 dated 02.06.2021. ii. Sonu Malik Vs. The Assessing Officer, Ward 59(6), Delhi and another in W.P.(C).No.1911 of 2023 dated 14.02.2023. iii.Principal Commissioner of Income Tax-1 Vs. Nitin Ramdeoji Lohia in I.T.A.Nos.673 750 of 2018 dated 21.10.2022. iv. Principal Commissioner of Income Tax-17 Vs. Mohammad Haji Adam Co. in I.T.A.Nos.1004 of 2016 etc batch dated 11.02.2019. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... k for transportation of gold was provided by the petitioner to show that indeed gold was purchased from the above said three persons. 30. It is submitted that since the petitioner failed to produce any evidence regarding movement of the goods, namely, 296 Kgs of gold and jewellery items as claimed by the petitioner, the question of allowing the amount towards expenses cannot be countenanced. 31. In the counter affidavit, it has been stated that it is the matter of great disbelief that such steep amounts totalling to Rs.234 Crores worth of Gold was transported without any documents such as e-way bills/lorry receipts etc, by the petitioner. 32. It is submitted that the petitioner was asked to produce details of goods movement like e-way bills and LR receipts etc. however, the petitioner did produce a single document to prove the actual movement and transportation of goods nor the petitioner was able to prove that the payments to the sellers were made during the year from their Bank accounts. 33. The learned Senior Standing Counsel for the respondent submits that despite issuing notice under 142(1) of the IT Act on 29.11.2022 and a Show Cause Notice on 12.12.2022 to provide confirmati ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... titioner has not filed and must not be admitted in the writ petition. 40. The learned Senior Standing Counsel further would submit that the petitioner could not even once during the entire course of scrutiny proceedings, provide or submit any proof or explain how that the disallowed purchases were put to use or converted to items for sales. 41. It is further submitted that it is only after failed attempts of the petitioner and after providing sufficient opportunities that the final assessment order was passed. It is submitted that there are no further details forthcoming and therefore, the petitioner should workout, the remedy if any, before the Appellate Authority viz., the Commissioner of Income Tax(Appeals). 42. By way of rejoinder the learned Senior Counsel for the petitioner submitted that the petitioner provided the copies of ledger accounts and parties confirmation in respect of M/s.Shiv Sahai Sons (India) Pvt.Ltd., and M/s.Diamond India Limited. It is further submitted that in respect of M/s.Surana Corporation Ltd., the petitioner filed all the documents relating to the procurement of goods through the auction by the Liquidator as per the orders of National Company Law Trib ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the Income Tax Act, 1961. 50. The petitioner appears to be the company which was incorporated only in the year 2019. The petitioner had filed return of Income under Section 139 of the Income Tax Act, 1961 on 15.03.2022. After the return was filed, the petitioner was called upon to furnish the details of the purchases made by the petitioner from various dealers particularly three dealers mentioned above. 51. There is a huge purchase quantum of bullion/ jewellery from there sellers namely M/s.Shiv Sahai Sons (India) Pvt.Ltd, M/s.Diamond India Limited and M/s.Surana Corporation Limited for a sum of Rs.234,15,30,188/-. The petitioner was called upon to furnish the details of purchase from these sellers. 52. M/s.Surana Corporation Limited was under liquidation and has apparently sold jewellery to the petitioner on 20.07.2020 pursuant to an auction notice dated 12.07.2020 conducted by the Company Secretary appointed as Insolvency Resolution Professional who was later appointed as the liquidator of the said Company by the National Company Law Tribunal (in short, NCLT), Chennai, by its order dated 25.10.2019. 53. It is noticed that the petitioner has attached sample invoice dated 21.07.20 ..... X X X X Extracts X X X X X X X X Extracts X X X X
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