Principal Commissioner of Income Tax (Central)-3 v. M/S GTM Builder and Promoters Pvt. Ltd.

1. The present appeal has been filed challenging the order dated 08.02.2021 passed by the learned Income Tax Appellate Tribunal, New Delhi, Delhi Bench „C‟ (hereinafter referred to as the „ITAT‟) in 2022:DHC:196-DB ITA No. 3982/DEL/2015 dismissing the appeal of the Revenue against the order dated 25.032015 passed by the Commissioner of Income Tax (Appeals) [hereinafter referred to as the „CIT(A)‟].

2. It is the case of the appellant that a search and seizure operation under Section 132 of the Income Tax Act, 1961 (in short, the „Act‟) was carried out in the case of the respondent-assessee along with other companies which were controlled by the respondent‟s Directors on 12.12.2006. On the basis of the said search and seizure operation conducted, the respondent-assessee‟s case was selected for scrutiny and a notice under Section 143(2) of the Act was issued for AY 2009-

10.

3. Vide assessment order dated 29.12.2011, the Assessing Officer made additions of Rs. 3,35,87,118/- (Rupees three crore thirty-five lakh eighty seven thousand one hundred eighteen only) on the ground that the same were bogus purchases made by the respondent-assessee from various sham entities. The Assessing Officer computed the total income of the respondent-assessee at Rs. 3,66,68,990/- (Rupees three crore sixty-six lakh sixty-eight thousand nine hundred ninety only) along with interest under Sections 234A, 234B and 234C of the Act.

4. The assessment order was challenged in appeal by the respondent-assessee, being Appeal No. 504/14-15. The same was allowed by the CIT(A) vide order dated 25.03.2015, on the ground that the respondent-assessee did not have an occasion to contravene the materials gathered by the Assessing Officer. The learned CIT(A) held that the Assessing Officer had failed to consider the fact that the respondent-assessee had been regularly recognizing revenue by adopting the ‘construction-linked percentage completion method’ in accordance with the mandatory Accounting Standard AS-7 and in the event the purchases made by the respondent-assessee would be considered bogus, then even the revenue based thereupon will have to be reduced, affecting the profitability of the respondent-assessee.

5. Aggrieved by the above order, the appellant preferred an appeal before the learned ITAT, being ITA No. 3982/DEL/2015, which has been dismissed by the impugned order observing as under:

6. The learned counsel for the appellant submits that the learned ITAT as well as the learned CIT(A) failed to consider the material gathered by the Assessing Officer to determine that the respondentassessee was involved in sham and bogus transactions. The learned counsel for the appellant further submits that both authorities did not appreciate the fact that the respondent-assessee failed to discharge their burden of proof with respect to the genuineness, identity and credit-worthiness of the parties from whom the alleged purchases were so made.

7. We have considered the submissions made by the learned counsel for the appellant, however, find no merit in the same.

8. In the present case, both the learned ITAT as well as the learned CIT(A) have placed reliance on and upheld the adoption of the Accounting Standard AS-7 by the respondent-assessee for determination of its revenue. The learned counsel for the appellant does not deny that incase the case of the Revenue is to be accepted, it will also impact the revenue determination for the respondent-assessee and its profits. In any case, the dispute involved is factual in nature and no substantial question of law arises for consideration in the present appeal.

9. Consequently, this Court finds that there is no perversity in the findings of the learned CIT(A) as well as the learned ITAT. Accordingly, the present appeal is dismissed.

NAVIN CHAWLA, J MANMOHAN, J JANUARY 12, 2022