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Paramount Propbuild Pvt. Ltd., 208, Savita Vihar, Sikka Mansion, LSC, 2nd Floor, Delhi. vs. DCIT, Circle-18, New Delhi.
April, 18th 2019
                 In the Income-Tax Appellate Tribunal,
                        Delhi Bench `F', New Delhi

             Before : Shri Amit Shukla, Judicial Member And
                      Shri L.P. Sahu, Accountant Member

                 ITA Nos. 4981, 4982 & 4983/Del/2014
             Assessment Years: 2009-10, 2010-11 & 2011-12

         Paramount Propbuild Pvt. Ltd.,      vs. DCIT, Circle-18,
         208, Savita Vihar, Sikka Mansion,       New Delhi.
         LSC, 2nd Floor, Delhi.
         PAN ­ AADCP 5228P
         (Appellant)                             (Respondent)

                    ITA Nos. 6100 & 6101/Del/2014
                 Assessment Years: 2010-11 & 2011-12

         DCIT, Circle-18,   vs. Paramount Propbuild Pvt. Ltd.,
         New Delhi.             208, Savita Vihar, Sikka Mansion,
                                LSC, 2nd Floor, Delhi.
         (Appellant)            (Respondent)

              Assessee by       Dr. Rakesh Gupta, Advocate &
                                Sh. Somil Aggarwal, Advocate
              Respondent by     Smt. Sulekha Verma, CIT(DR)

                 Date of Hearing             26.02.2019
                 Date of Pronouncement       16.04.2019

                                 ORDER
Per Bench:
     Out of above appeals, former three appeals have been filed by the
assessee and later two appeal by Revenue against separate orders of
                               ITA Nos. 4981, 4982, 4983, 6100 & 6101/Del/2014   2


ld.CIT(A)-3, New Delhi dated 11.08.20114, 12.08.2014 & 12.08.2014
respectively for the assessment years 2009-10, 2010-11 and 2011-12.


2.   The solitary issue involved in all these appeals is with respect to
additions made on account of unverifiable purchases. Since the issue, grounds
of appeals and the facts involved in these appeals are identical barring the
amounts of additions, all these appeals were heard together and are, thus
being disposed of by this consolidated order for the sake of convenience and
brevity. Both the parties agreed that the decision in appeal for A.Y. 2009-10
would be equally applicable to other appeals. We, therefore, take up the
appeal of assessee for A.Y. 2009-10. The grounds raised in this appeal are as
under :


     1.    That the Learned Commissioner of Income Tax (Appeals) - III erred
     on facts as well as in law, in confirming an addition of Rs. 22,03,491/- on
     account of unverifiable Purchases, out of such total addition of Rs.
     88,13,962/-

     2.    That the Learned Commissioner of Income Tax (Appeals) - III erred
     on facts as well in law, in not properly appreciating the various
     submissions, arguments & documentary evidences filed, in support of our
     contentions.

     3.    That the Learned Commissioner of Income Tax (Appeals)- III erred
     on facts as well as in law, in relying merely on circumstantial evidence/s,
     without any concrete & specific adverse evidence/s, on which to base his
     finding/s and conclusion/s.

     That the above grounds of appeal; are without prejudice to each other.
                                ITA Nos. 4981, 4982, 4983, 6100 & 6101/Del/2014   3


3.    The assessee had also filed additional grounds of appeal by application
dated 16.10.2017, which was not pressed during the course of hearing by the
ld. AR of the assessee. Therefore, this additional ground stands rejected as not
pressed.







4.    The brief facts of the case are that a search and seizure action u/s. 132
of the IT Act was carried out on 11.03.2011 in M/s. Paramount, Gulshan and
Ajnara group of cases. The case of the assessee was also covered u/s. 132(1)
of the Act. The assessee company belongs to Paramount Group companies
which is engaged in the business of residential and commercial projects in
Uttar Pradesh. The assessee was issued notice u/s. 153A on 06.03.2012. In
response, the assessee filed return declaring income at Rs.1,27,21,436/- on
20.12.2012. In response to the questionnaire issued, the assessee filed
information. It was noticed by the Assessing Officer that the assessee had
made purchases of material from following parties :


      (i).    M/s. Shyamji Traders                 Rs. 1,01,712/-
      (ii).   U-Tek Sales Corporation              Rs.87,72,250/-


In the course of search proceedings, it was noticed by the Investigation Wing
that these parties were not in existence at the addresses mentioned on the
bills and could not be found in the field enquiries also. In order to ascertain
the genuineness of the purchases, the Assessing Officer issued summons u/s.
131 of the IT Act. The summons were received back un-served from the postal
authorities. The AR of the assessee was asked many a times to produce these
                                ITA Nos. 4981, 4982, 4983, 6100 & 6101/Del/2014   4


parties for verification. However, the assessee failed to produce the above
parties for verification of alleged purchases. The AR filed written submissions,
which has been incorporated in the assessment order by the Assessing Officer.
The Assessing Officer was not satisfied from the submissions made. In all
these existing facts, the Assessing Officer doubted the purchases made from
the above parties and added the entire purchases to the income of the
assessee as unverifiable. In appeal before the ld. CIT(A) and filed detailed
written synopsis before him. The remand report was also called from the
Assessing Officer and rejoinder was also filed by the assessee. The ld. CIT(A)
while examining the remand report and written synopsis and rejoinder of the
assessee, observed many drawbacks for proving the genuineness of the
purchases made from the above two parties. Accordingly, he partly allowed
the appeal of the assessee sustaining the addition to the extent of 25%.


5.    The ld. AR of the assessee reiterating the submissions made before the
ld. CIT(A), submitted that the co-ordinate Bench of Tribunal in cross appeals
of other group case of assessee, namely, Paramount Residency Pvt. Ltd. vs.
DCIT (ITA No. 4907/Del/2014 and 6102/Del/2014- A.Y. 2010-11). He further
submitted that in the assessment proceedings as well as remand proceedings
several evidence was provided to the Assessing Officer, viz., VAT registration,
PAN, TIN, purchase bills, confirmation of accounts, GR notes, stock register
etc. No any discrepancy has been noted by the Assessing Officer. Payments
were made through banking channels. There was no any instance pointed out
by the Assessing Officer that any cash transaction was made or any cash was
received back from the suppliers of goods. The Revenue also referred the case
                                  ITA Nos. 4981, 4982, 4983, 6100 & 6101/Del/2014   5


to the valuation officer and the report of the DVO was accepted to the
Revenue.


6.    On the other hand, the ld. DR relied on the order of the Assessing Officer
and submitted that the parties were not found at the addresses given on the
bills as well as post search enquiry. The Assessing Officer also made separate
enquiry and 131 notices issued were returned back un-served. The bank
statement obtained by the Assessing Officer from the bank clearly showed
that after receiving the payment from the assessee, the cash had been
immediately withdrawn. The ld. CIT(A) has examined the issue in detail. Many
discrepancies have been noted by the ld. CIT(A) too and that there is huge gap
between the date of invoices and the date of GRs (Good Receipts), which
creates grave doubt on the genuineness of the purchase. The case laws relied
by the AR are not applicable to the present facts of the case, once the parties
are found fake. She has also relied upon following decisions :


      (i).     N.K. Proteins Ltd. vs. CIT(2017-TIOL-23-SC-IT)
      (ii).    N.K. Proteins Ltd. vs. CIT 292 CTR 354 (Gujrat HC)
      (iii).   CIT vs. Arun Malhotra 47 taxmann.com 385(Delhi)
      (iv).    CIT vs. La Medica, 250 ITR 575 (Del)

7.    We have heard the rival submissions and have gone through the entire
material available on record and the case laws cited by parties and we find
that the issue involved in this appeal is squarely covered by the decision of
Hon'ble Co-ordinate Bench of Tribunal in group case of the assessee (ITA Nos.
4907 and 6102/Del/2014 ­ A.Y. 2010-11) dated 13.08.2018, whereby in the
                               ITA Nos. 4981, 4982, 4983, 6100 & 6101/Del/2014   6


identical facts, circumstances, grounds of appeal, common search, the issue
has been decided in favour of the assessee observing as under :


      14. We have given thoughtful consideration to the orders of the
      authorities below. The facts on record show that a search and seizure
      operation was carried out in the appellant's group on 11.3.2011. It is
      pertinent to mention here that no incriminating material was found
      during the course of search proceedings. The AO chose four parties from
      whom building construction materials were purchased. It would not be
      out of place to mention that the fair market value of the project situated
      at Paramount Symphony, NH ­ 24, Ghaziabad is at Rs. 3,29,82,68,526/-
      which was estimated by the Valuation Cell of the Income-tax Department
      at Rs. 3,53,47,33,961/-. This means that the Valuation Cell of the I.T.
      Department has estimated the fair market value of the said project much
      higher than the value declared by the assessee. Further, on a project of
      more than 300 crores, the AO has doubted the genuineness of purchases
      only to the extent of Rs. 7.86 crores, which is about 2.52%.


      15. The lower authorities have harped upon the fact that the parties were
      not produced for verification. While doing so, both the lower authorities
      have ignored the conclusive direct evidences brought on record, namely,
      PAN details, VTA details, TIN Numbers, confirmations and bank
      statements. There is no dispute that all the payments have been made by
      account payee cheques. The lower authorities have taken an adverse view
      because they found that the payees have withdrawn cash on the same or
      succeeding day. There is not an iota of evidence whatsoever to show that
      the cash has reached back to the assessee.


      16. The Hon'ble Calcutta High Court in the case of CIT Vs. Dataware
      Private Limited in Tax Appeal No. 263 of 2011 & GA No. 2856 of 2011 in
      its order dated 21.09.2011 has observed as under:
                          ITA Nos. 4981, 4982, 4983, 6100 & 6101/Del/2014   7


      "In our opinion, in such circumstances, the Assessing officer of the
      assessee cannot take the burden of assessing the profit and loss
      account of the creditor when admittedly the creditor himself is an
      income tax assessee. After getting the PAN number and getting the
      information that the creditor is assessed under the Act, the
      Assessing officer should enquire from the Assessing Officer of the
      creditor as to the genuineness of the transaction and whether such
      transaction has been accepted by the Assessing officer of the
      creditor but instead of adopting such course, the Assessing officer
      himself could not enter into the return of the creditor and brand the
      same as unworthy of credence"


17. The Hon'ble Supreme Court in the case of Tejua Rohit Kumar Kapadia
94 Taxmann.com 325 has declined to allow the SLP against the judgment
of the Hon'ble Gujarat High Court wherein the Hon'ble High Court has
held that purchases made by the assessee - trader were duly supported by
bills and payments were made by account payee cheque and the seller also
confirmed the transaction and there was no evidence to show that the
amount was recycled back to the assessee and, accordingly, held that
addition was not called for. In that case also, the AO had disallowed some
expenditure treating the purchases as bogus and made the addition.







18. The ld. DR has strongly relied upon the judgment of the Hon'ble
Gujarat High Court in the case of N.K. Proteins Ltd 2016-TIOL-3165- AHM-
IT wherein the facts show that during the course of search proceedings at
the office premises of NKPL, blank signed cheque books and vouchers of
number of concerns were found. Further, endorsed blank cheques of NKPL
by these concerns were also found wherein the endorsement was on the
back of the cheques. Accordingly, the purchases made from these concerns
were treated as bogus purchases by the AO.


19. The facts of the case in hand are clearly distinguishable from the facts
of this case in as much as there was nothing of such documents, as
referred, were found from the possession of the assessee even during the
                                ITA Nos. 4981, 4982, 4983, 6100 & 6101/Del/2014   8


      course of search and seizure operation. The ld. DR has also placed reliance
      on some other judicial decisions, but the facts are totally different from
      the facts of the case in hand.


      20. As mentioned elsewhere, total estimated value of the project for the
      year under consideration is more than Rs. 300 crores. Therefore, it would
      be a futile exercise to doubt the genuineness of a meagre amount of Rs.
      7.86 crores. Moreover, as mentioned elsewhere, the purchases were duly
      supported by bills and vouchers. The payments have been made through
      account payee cheques. The payments are reflected in the bank statement
      of the payer and the payee. We, therefore, do not find any reason for
      doubting the genuineness of these purchases. While restricting the
      disallowance to Rs. 1,96,55,330/-, the reasoning given by the first
      appellate authority is not only absurd, but illogical. The first appellate
      authority has heavily relied upon the decision in the case of Vijay Proteins
      Ltd 55 TTJ [Ahd] 76. Considering the facts of the case in totality, as
      discussed hereinabove, we are of the considered view that that entire
      addition deserves to be deleted. We, accordingly, set aside the findings of
      the CIT(A) and direct the AO to delete the entire addition of Rs.
      7,86,21,320/-."


Respectfully following the above decision of co-ordinate Bench in the identical
facts and circumstances of the case, we do not find any justification to sustain
25% of the addition by the ld. CIT(A). The decisions relie by the ld. DR are
distinguishable on facts. Accordingly, the appeal of the assessee deserves to be
allowed.



8.    As already noted, the issue and facts involved in appeals for the
assessment years 2010-11 and 2011-12 are verbatim to the appeal for A.Y.
2009-10. Therefore, our decision in appeal for A.Y. 2009-10 would equally
                                      ITA Nos. 4981, 4982, 4983, 6100 & 6101/Del/2014        9


apply to the appeals of the assessee and the Revenue for A.Yrs. 2010-11 and
2011-12. Accordingly, the appeals of assessee for A.Y. 2010-11 and 2011-12
are also allowed and those of Revenue are dismissed.



9.      In the result, all the three appeals of the assessee are allowed and those
of the Revenue are dismissed.

        Order pronounced in the open court on 16.04.2019.
               Sd/-                                                 Sd/-
         (Amit Shukla)                                      (L.P. Sahu)
        Judicial member                                  Accountant Member

Dated: 16.04.2019
*aks*
Copy of order forwarded to:
(1)     The appellant                      (2)    The respondent
(3)     Commissioner                       (4)    CIT(A)
(5)     Departmental Representative        (6)    Guard File
                                                                                        By order

                                                                              Assistant Registrar
                                                                   Income Tax Appellate Tribunal
                                                                        Delhi Benches, New Delhi

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