Appeal Details
Counselvise Citation
[2020] 110 COUNSELVISE.COM (IT) 1044 (ITAT-INDORE)
Assessee PAN
Bench
Appeal Number
CRN Number
Duration Of Justice
2 month(s) 4 day(s)
Appellant
Respondent
Appeal Type
Cross Objection
Pronouncement Date
13-11-2020
Appeal Filed By
Assessee
Order Result
Partly Allowed
Bench Allotted
DB
Assessment Year
2014-2015
Appeal Filed On
08-09-2020
Judgement Text
, , IN THE INCOME TAX APPELLATE TRIBUNAL, INDORE BENCH, INDORE BEFORE HONBLE KUL BHARAT, JUDICIAL MEMBER AND HONBLE MANISH BORAD, ACCOUNTANT MEMBER ITA.NO.330/IND/2018 ASSESSMENT YEAR 2014-15 M/S. AGRAWAL FUEL CORPORATION PVT. LTD, 5, AGRAWAL HOUSE, YASHWANT NIWAS ROAD, INDORE PAN : AAACE3916A : APPELLANT V/S DEPUTY COMMISSIONER OF INCOME TAX 1(1), INDORE : REVENUE ITA NO.421/IND/2018 ASSESSMENT YEAR 2014-15 DEPUTY COMMISSIONER OF INCOME TAX 1(1), INDORE : REVENUE V/S M/S. AGRAWAL FUEL CORPORATION PVT. LTD, 5, AGRAWAL HOUSE, YASHWANT NIWAS ROAD, INDORE PAN : AAACE3916A : APPELLANT AGRAWAL FUEL CORPORATION (P) LTD & OTHER ITA NOS. 330 & 421/IND/2018, 959/IND/2019 & C.O 13/ IND/2020 2 REVENUE BY SMT. ASHIMA GUPTA, CIT ASSESSEE BY S/ SHRI AJAY TULSIYAN & KA P IL SHAH, CAS DATE OF HEARING 15.10 .2020 DATE OF PRONOUNCEMENT 1 3 . 1 1 . 2020 ITA NO.959/IND/2019 ASSESSMENT YEAR 2014-15 DEPUTY COMMISSIONER OF INCOME TAX 1(1), INDORE : REVENUE V/S M/S. ADMANUM FINANCE LTD, 5, AGRAWAL HOUSE, Y.N ROAD, INDORE PAN : AABCA4980F : APPELLANT C.O.NO.13/IND/2020 ASSESSMENT YEAR 2014-15 M/S. ADMANUM FINANCE LTD, 5, AGRAWAL HOUSE, Y.N ROAD, INDORE PAN : AABCA4980F : APPELLANT V/S DEPUTY COMMISSIONER OF INCOME TAX 1(1), INDORE : RESPONDENT AGRAWAL FUEL CORPORATION (P) LTD & OTHER ITA NOS. 330 & 421/IND/2018, 959/IND/2019 & C.O 13/ IND/2020 3 REVENUE BY SHRI R.P. MOURYA, SR.DR ASSESSEE BY S/SHRI AJAY TULSIYAN & KAPIL SHAH, CAS DATE OF HEARING 15.10.2020 DATE OF PRONOUNCEMENT 1 3 .1 1 .2020 O R D E R PER MANISH BORAD, A.M BY WAY OF ABOVE CAPTIONED APPEALS RELATING TO ASSE SSMENT YEAR 2014-15, IN THE CASE OF M/S. AGRAWAL FUEL CORP ORATION PVT. LTD BOTH THE ASSESSEE AND REVENUE ARE IN APPEAL CHALLEN GING THE ORDER OF LD. CIT(A)-I (IN SHORT LD.CIT(A)], INDORE DATE D 20.02.2018 AND IN THE CASE OF ANOTHER ASSESSEE M/S. ADMANUM FINANCE L IMITED REVENUE IS IN APPEAL AND THE ASSESSEE HAS FILED CRO SS OBJECTION AGAINST THE ORDER OF LD. CIT(A)-I DATED 12.09.2019. BOTH THE ORDERS OF LD. C)-I DATED 20.02.2018 AND 12.09.2019 ARE ARI SING OUT OF THE ORDER U/S 143(3) OF THE INCOME TAX ACT 1961(IN SHOR T THE ACT) COMMONLY DATED 14.12.2016 FRAMED BY DCIT-1(1), INDO RE. ITA NO.330/IND/2018 ASSESSMENT YEAR 2014-15 AGRAWAL FUEL CORPORATION PVT. LTD 2. ASSESSEE HAS RAISED FOLLOWING GROUNDS OF APPEAL; AGRAWAL FUEL CORPORATION (P) LTD & OTHER ITA NOS. 330 & 421/IND/2018, 959/IND/2019 & C.O 13/ IND/2020 4 1. THAT THE LEARNED CIT(A) ERRED IN UPHOLDING THE ACTI ON OF THE AO OF MAKING ADDITION OF RS. 3,30,08,800/- U/S 68 ON ACCO UNT OF SHARE APITAL AND SECURITY PREMIUM RECEIVED FROM M/S CHAMAK TREXI M PVT. LTD. AGAINST ALLOTMENT OF SHARES. THAT ON THE FACTS AND IN THE C IRCUMSTANCES OF THE CASE, THE ADDITION MADE IS WRONG AND BAD IN LAW AND IT IS PRAYED THAT THE SAME MAY VERY KINDLY BE DELETED NOW. 2. THAT THE APPELLANT CRAVES LEAVE TO ADD, TO ALTER, A MEND, MODIFY, SUBSTITUTE, DELETE AND/OR RESCIND ALL OR ANY OF THE GROUNDS OF APPEAL ON OR BEFORE FINAL HEARING, IF NECESSITY SO ARISES. ASSESSEE HAS ALSO RAISED FOLLOWING ADDITIONAL GROUN DS OF APPEAL: 1.THAT ON THE FACTS AND IN CIRCUMSTANCES OF THE CAS E AND IN LAW THE APPELLANT IS ENTITLED TO CESS OF RS.10,29,182/- INC URRED DURING THE YEAR UNDER CONSIDERATION WHICH IS PRAYED TO BE NOW ALLOW ED. 3. THE REVENUE HAS RAISED FOLLOWING GROUNDS OF APPE AL; ITA NO.421/IND/2018 ASSESSMENT YEAR 2014-15 AGRAWAL FUEL CORPORATION PVT. LTD 1. ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE A ND IN THE LAW, THE ID. CIT(A) HAS ERRED IN DELETING ADDITION ON ACCOU NT OF ESTIMATION OF G.P OF RS. 1,27,40,400/- BY IGNORING VARIOUS FACTUAL & CATEGORICAL FINDINGS GIVEN BY THE AO. 2. ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE A ND IN THE LAW, WHETHER THE ID. CIT(A) IS JUSTIFIED IN IGNORING THE FACT THAT ASSESSEE HAD NOT PRODUCED A SINGLE INVOICE/BILL IN RESPECT OF PURCHA SE OF COAL BY THE COMPANY DESPITE BEING SPECIFICALLY ASKED TO DO SO D URING ASSESSMENT PROCEEDINGS. AGRAWAL FUEL CORPORATION (P) LTD & OTHER ITA NOS. 330 & 421/IND/2018, 959/IND/2019 & C.O 13/ IND/2020 5 3. ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE A ND IN THE LAW, WHETHER THE ID. CIT (A) IS JUSTIFIED IN IGNORING T HE FACT THAT ASSESSEE HAS NOT FURNISHED DETAILS IN RESPECT OF SHORTAGE OF QUANTITY; SOLD AND QUANTITY PURCHASED OF COAL DURING ASSESSMENT PROCEE DINGS. 4. ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE A ND IN THE LAW, WHETHER THE ID. CIT (A) IS JUSTIFIED IN IGNORING TH E FACT THAT ASSESSEE HAS NOT PRODUCED CONFIRMATION FROM DAY TO DAY CREDITORS WHOM THE PAYMENTS WERE MADE. 5. ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CAS E AND IN THE LAW, WHETHER THE ID. CIT (A) IS JUSTIFIED IN IGNORING TH E FACT THAT ASSESSEE HAS NOT PRODUCED EVEN SINGLE DOCUMENT TO ASCERTAIN ACTU AL UNIT RATE FOR PURCHASE OF COAL. 6. ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CAS E AND IN THE LAW, WHETHER THE ID. CIT (A) IS JUSTIFIED IN IGNORING TH E FACT THAT AO HAS AFTER MAKING PROPER INQUIRY AND GIVING SUFFICIENT OPPORTU NITIES RIGHTLY REJECTED THE BOOKS OF ACCOUNTS OF ASSESSEE U/S 145(3) OF THE INCOME TAX ACT, 1961. 7. ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE A ND IN THE LAW, WHETHER THE ID. CIT(A) IS JUSTIFIED IN DELETING ADD ITION OF RS. 24,89,528/- ON ACCOUNT OF DISALLOWANCE U/S 14A R.W.S 8D OF THE ACT ITA NO.959/IND/2019 ASSESSMENT YEAR 2014-15 M/S ADMANUM FINANCE LTD. 4. THE REVENUE HAS RAISED FOLLOWING GROUNDS OF APPE AL; 1.WHETHER ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE AND IN LAW, THE LD. CIT(A) IS JUSTIFIED IN ALLOWING THE CLAIM O F DEDUCTION OF RS.55,83,836/- U/S 80IA(4) OF THE ACT, WHICH WAS RE JECTED BY THE AO ON THE GROUND THAT ASSESSEE HAS CLAIMED DEDUCTION WITH OUT FILING REVISED RETURN. AGRAWAL FUEL CORPORATION (P) LTD & OTHER ITA NOS. 330 & 421/IND/2018, 959/IND/2019 & C.O 13/ IND/2020 6 2. WHETHER ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE, THE LD. CIT(A) IS JUSTIFIED IN DELETING THE DISALLOWANCE OF RS.3, 66,511/- MADE U/S 14A OF THE ACT. 3. WHETHER ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE AND IN LAW, THE LD. CIT(A) IS JUSTIFIED IN DELETING THE ADDITIO N MADE ON ACCOUNT OF UNSECURED LOAN WITH INTEREST AMOUNTING TO RS.81,55, 000/- EVEN WHEN THE ASSESSEE COULD NOT ESTABLISH GENUINENESS OF TRANSAC TIONS AND CREDITWORTHINESS OF LENDER AS MENTIONED IN ASSESSME NT ORDER. 5. ASSESSEE HAS RAISED FOLLOWING GROUNDS OF CROSS OBJECTIONS:- 1. THAT ON THE FACTS AND IN THE CIRCUMSTANCES OF TH E CASE AND IN LAW THE APPELLANT IS ENTITLED TO DEDUCTION OF CESS OF RS. 8,40,007/- INCURRED DURING THE YEAR UNDER CONSIDERATION WHICH IS PRAY ED TO BE NOW ALLOWED. 2. THAT THE LD. CIT(A) ERRED IN CONFIRMING THE DIS ALLOWANCE OF RS.1,00,000/- OUT OF TOTAL DISALLOWANCE OF RS.4,00 ,000/- MADE BY THE LD. A.O ON ESTIMATED BASIS ON ACCOUNT OF VARIOUS EXPEN SES INCURRED WHOLLY AND EXCLUSIVELY FOR THE PURPOSE OF BUSINESS OF THE APPELLANT. THAT ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE, THE DI SALLOWANCE OF RS.1,00,000/- SUSTAINED BY THE CIT(A) IS WRONG AND IS PRAYED TO BE DELETED. 3. THAT THE APPELLANT CRAVES LEAVE TO ADD, TO ALTE R, AMEND, MODIFY, SUBSTITUTE, DELETE AND/OR RESCIND ALL OR ANY OF TH E GROUNDS OF APPEAL. 6. AS THE ISSUES RAISED IN THESE APPEALS ARE COMMON AND RELATES TO THE ASSESSE(S) OF SAME BUSINESS GROUP THEY WERE HEARD TOGETHER AND BEING DISPOSED OFF BY THIS COMMON ORDER FOR THE SAKE OF CONVENIENCE AND BREVITY. AGRAWAL FUEL CORPORATION (P) LTD & OTHER ITA NOS. 330 & 421/IND/2018, 959/IND/2019 & C.O 13/ IND/2020 7 7. WE WILL FIRST TAKE UP GROUND NO.1 OF ASSESSEES APPEAL NAMELY M/S AGRAWAL FUEL CORPORATION PVT. LTD (IN SHORT AF CPL) VIDE ITA NO.330/IND/2018 AND GROUND NO.3 OF REVENUES APPEAL IN THE CASE OF M/S ADMANUM FINANCE LTD (IN SHORT AFL) VIDE IT A NO.959/IND/2019. FOR SAKE OF CONVENIENCE THE GROUN DS ARE AGAIN REPRODUCED BELOW:- AGRAWAL FUEL CORPORATION PVT. LTD ITA NO.330/IND/2018 ASSESSMENT YEAR 2014-15 1. THAT THE LEARNED CIT(A) ERRED IN UPHOLDING THE ACTI ON OF THE AO OF MAKING ADDITION OF RS. 3,30,08,800/- U/S 68 ON ACCO UNT OF SHARE CAPITAL AND SECURITY PREMIUM RECEIVED FROM M/S CHAMAK TREXI M PVT. LTD. AGAINST ALLOTMENT OF SHARES. THAT ON THE FACTS AND IN THE C IRCUMSTANCES OF THE CASE, THE ADDITION MADE IS WRONG AND BAD IN LAW AND IT IS PRAYED THAT THE SAME MAY VERY KINDLY BE DELETED NOW. M/S ADMANUM FINANCE LTD, ITA NO.959/IND/2019 ASSESSMENT YEAR 2014-15 3. WHETHER ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE AND IN LAW, THE LD. CIT(A) IS JUSTIFIED IN DELETING THE ADDITIO N MADE ON ACCOUNT OF UNSECURED LOAN WITH INTEREST AMOUNTING TO RS.81,55, 000/- EVEN WHEN THE ASSESSEE COULD NOT ESTABLISH GENUINENESS OF TRANSAC TIONS AND CREDITWORTHINESS OF LENDER AS MENTIONED IN ASSESSME NT ORDER. 8. BRIEF FACTS RELATING TO THE ABOVE ISSUES ARE AS FOLLOWS:- (1) IN THE CASE OF AFCPL IS WITH REGARD TO THE S HARE APPLICATION MONEY OF RS.3,30,08,800/- WHICH WAS RE CEIVED AGRAWAL FUEL CORPORATION (P) LTD & OTHER ITA NOS. 330 & 421/IND/2018, 959/IND/2019 & C.O 13/ IND/2020 8 FROM M/S CHAMAK TREXIM PVT. LTD (IN SHORT CTPL) TOWARDS SHARE CAPITAL AND SHARE PREMIUM. ASSESSEE COMPANY ALLOTTED EQUITY SHARES. IN THE ASSESSMENT PROCEEDINGS ASS ESSEE WAS ASKED TO PROVE THE IDENTITY, GENUINENESS AND CREDI TWORTHINESS OF THE SHARE HOLDER NAMELY CTPL. SUBMISSIONS MADE BY THE ASSESSEE WERE NOT FOUND ACCEPTABLE AS THE LD. A.O WAS NOT SATISFIED WITH THE GENUINENESS AND CREDITWORTHINES S OF THE SHARE CAPITAL AND SHARE PREMIUM RECEIVED FROM CTP AND THUS MADE ADDITION U/S 68 OF THE ACT FOR UNEXPLAINED CA SH CREDIT. THE ASSESSEES APPEAL BEFORE LD. CIT(A) AGAINST TH IS ADDITION DID NOT FIND ANY RELIEF AND NOW THE ASSESSEE IS I N APPEAL BEFORE THE TRIBUNAL. (2) AS REGARDS OTHER ASSESSEE NAMELY M/S ADMANUM F INANCE LTD, THE FACTS ARE THAT ANOTHER SISTER CONCERN OF THE ASSESSEE NAMELY M/S AVAILABLE FINANCE LTD TOOK LOAN OF RS. 69,00,000/- FROM M/S. CHAMAK TREXIM PVT. LTD AND M/S AEREO DEA LCOMM PVT. LTD. ON ACCOUNT OF SEARCH CONDUCTED U/S 132 OF THE ACT ON 04.09.2015 ON MR. DEEPAK KALANI AND DRAWING SUP PORT FROM THE ASSESSMENT ORDER BASED ON THE ASSESSEES OWN CASE FOR ASSESSMENT YEAR 2009-10, ADDITIONS ON SUBSTAN TIVE BASIS AGRAWAL FUEL CORPORATION (P) LTD & OTHER ITA NOS. 330 & 421/IND/2018, 959/IND/2019 & C.O 13/ IND/2020 9 WERE MADE IN THE HANDS OF M/S AVAILABLE FINANCE L TD FOR ASSESSMENT YEAR 2014-15. IN THE CASE OF THE ASSES SEE FOR THE YEAR UNDER APPEAL LOAN WAS TAKEN FROM M/S AVAILABL E FINANCE LTD. THEREFORE SINCE THE ADDITION ON SUBSTANTIVE BASIS WAS MADE IN THE CASE OF M/S AVAILABLE FINANCE LTD, PR OTECTIVE ADDITION OF RS. 69,00,000/- AND SUBSTANTIVE ADDITI ON OF RS. 1,00,000/- WAS MADE FOR THE ALLEGED LOAN INDIRECT LY RECEIVED FROM M/S. CHAMAK TREXIM PVT. LTD AND M/S AEREO DEA LCOMM PVT. LTD. DISALLOWANCE OF INTEREST AT RS. 11,55,0 00/- WAS ALSO CALCULATED ON THE ALLEGED CASH CREDIT WAS MADE BY LD. A.O WHILE COMPLETING THE ASSESSMENT. THESE TWO ADDITIO NS WERE CHALLENGED BY THE ASSESSEE BEFORE LD. CIT(A) AND S UCCEEDED. THE ALLEGED ADDITION OF RS.70,00,000/- AND RS.11,5 5,000/- WERE DELETED BY LD. CIT(A) BY TAKING SUPPORT FROM THE DECISIONS RENDERED IN FAVOUR OF THE ASSESSEE BY TH E CO- ORDINATE BENCH, INDORE. NOW THE REVENUE IS IN AP PEAL BEFORE THE TRIBUNAL. 9. FROM PERUSAL OF THE ABOVE FACTS, WE OBSERVE THAT IN THE CASE OF AFCPL THE ASSESSEE HAS CHALLENGED THE ADDITION CONF IRMED BY LD. CIT(A) U/S 68 OF THE ACT FOR THE SHARE APPLICATION MONEY AT RS. AGRAWAL FUEL CORPORATION (P) LTD & OTHER ITA NOS. 330 & 421/IND/2018, 959/IND/2019 & C.O 13/ IND/2020 10 3,30,08,800/- RECEIVED FROM M/S. CHAMAK TREXIM PVT. LTD WHEREAS IN THE CASE OF M/S. ADMANUM FINANCE LTD REVENUE HAS CHALLENGED THE FINDING OF LD. CIT(A) DELETING THE ADDITION MAD E FOR UNEXPLAINED CASH CREDIT RECEIVED FROM M/S. CHAMAK TREXIM PVT. L TD AND M/S AEREO DEALCOMM PVT. LTD AND ALSO DISALLOWANCE OF IN TEREST OF RS. 11,55,000/- WHICH HAS BEEN DELETED BY LD. CIT(A). THE COMMON OBSERVATION OF THE LD. A.O IN BOTH THESE CASES OF T HE ASSESSEES NAMELY AFCPL AND AFL FAILED TO PROVE THE CREDITWORT HINESS OF THE SHARE APPLICATION/LOAN FROM THE COMPANY NAMELY M/S. CHAMAK TREXIM PVT. LTD AND M/S AEREO DEALCOMM PVT. LTD AND ALSO FAILEDTO PROVE THE GENUINENESS OF THE TRANSACTIONS ENTERED W ITH THESE TWO CONCERNS. 10. AT THE OUTSET LD. COUNSEL FOR THE ASSESSEE SUBM ITTED THAT THE ISSUE RELATING TO IDENTITY, CREDITWORTHINESS AND GE NUINENESS OF THE SHARE APPLICATION/LOAN PROVIDER COMPANIES NAMELY M/ S. CHAMAK TREXIM PVT. LTD AND M/S AEREO DEALCOMM PVT. LTD CAM E UP BEFORE THE HON'BLE INDORE TRIBUNAL IN ASSESSEES ANOTHER S ISTER CONCERN M/S AGRAWAL TRANSPORT CORPORATION PVT. LTD AND AVAI LABLE FINANCE LTD (SUPRA) IN ITA NOS. 651, 331/IND/2018 & 895/IND/20 19 WHICH WAS PRONOUNCED ON 14.10.2020 WHEREIN THE HON'BLE TR IBUNAL WAS AGRAWAL FUEL CORPORATION (P) LTD & OTHER ITA NOS. 330 & 421/IND/2018, 959/IND/2019 & C.O 13/ IND/2020 11 SATISFIED WITH THE IDENTITY AND CREDITWORTHINESS OF THE COMPANIES NAMELY M/S. CHAMAK TREXIM PVT. LTD AND M/S AEREO DE ALCOMM PVT. LTD AND ALSO SATISFIED WITH THE GENUINENESS OF THE TRANSACTIONS OF ASSESSEE(S) GROUP CONCERNS WITH BOTH THESE COMPA NIES. LD. COUNSEL FOR THE ASSESSEE FURTHER PRAYED THAT SINCE THE ISSUE IS SQUARELY COVERED IN FAVOUR OF THE ASSESSEE GROUND N O.1 OF THE ASSESSEES APPEAL IN CASE OF M/S AFCPL MAY BE ALLOW ED AND GROUND NO.3 OF REVENUES APPEAL IN THE CASE OF M/S ADMANUM FINANCE LTD MAY BE DISMISSED. 11. PER CONTRA LD. DEPARTMENTAL REPRESENTATIVE VEHE MENTLY ARGUED SUPPORTING THE ORDER OF LD. CIT(A) IN THE CA SE OF AFCPL AND ORDER OF LD. A.O BUT COULD NOT CONTROVERT THE FACT THAT THE IDENTITY, GENUINENESS AND CREDITWORTHINESS OF THE CREDITORS N AMELY M/S. CHAMAK TREXIM PVT. LTD AND M/S AEREO DEALCOMM PVT. LTD HAVE BEEN ACCEPTED BY THE INDORE TRIBUNAL IN ASSESSEES OWN CASE AS WELL AS OTHER SISTER CONCERN(S). 12. WE HAVE HEARD RIVAL CONTENTIONS AND PERUSED THE RECORDS PLACED BEFORE US AND CAREFULLY GONE THROUGH THE SUB MISSIONS MADE BY BOTH THE PARTIES. THROUGH GROUND NO.1 OF M/S AF CPL IN APPEAL NO.ITA/330/IND/2018 RAISED BY THE ASSESSEE AND IN T HE CASE OF AGRAWAL FUEL CORPORATION (P) LTD & OTHER ITA NOS. 330 & 421/IND/2018, 959/IND/2019 & C.O 13/ IND/2020 12 GROUND NO.3 OF M/S. ADMANUM FINANCE LTD APPEAL NO.ITA/959/IND/2019 RAISED BY THE REVENUE THE SHORT ISSUE RELATES TO ADDITION MADE U/S 68 OF THE ACT AND INTEREST DIS ALLOWANCE ON LOANS TAKEN DIRECTLY/INDIRECTLY FROM THE PARTIES NA MELY M/S. CHAMAK TREXIM PVT. LTD AND M/S AEREO DEALCOMM PVT. LTD. THE ADDITION MADE BY LD. A.O AT RS. 3,30,08,800/- IN TH E CASE OF M/S AFCPL, PROTECTIVE ADDITION OF RS.69,00,000/- AND SU BSTANTIVE ADDITION OF RS.1,00,000/- IN THE CASE OF M/S ADMANU M FINANCE LTD AND ALSO INTEREST DISALLOWANCE OF RS.11,55,000/- IN THE CASE OF M/S ADMANUM FINANCE LTD ARE ON THE BASIS OF THE OBSERVA TION THAT THE ASSESSEE FAILED TO PROVE THE CREDITWORTHINESS OF TH E CREDITORS NAMELY M/S. CHAMAK TREXIM PVT. LTD AND M/S AEREO DEALCOMM PVT. LTD AND ALSO FAILED TO PROVE THE GENUINENESS OF THE TRA NSACTIONS WITH BOTH THESE COMPANIES. 13. WE OBSERVE THAT THE ISSUE OF CREDITWORTHINESS O F THE CASH CREDITORS NAMELY M/S. CHAMAK TREXIM PVT. LTD AND M/ S AEREO DEALCOMM PVT. LTD AND GENUINENESS OF THEIR TRANSACT IONS WITH THE ASSESSEE AND OTHER GROUP SISTER CONCERN HAS CAME UP BEFORE THIS TRIBUNAL AND HAS DEALT WITH THE SAME ISSUE IN ITA NOS. 651, 331/ IND/2018 & 895/ IND/2019 IN THE CASE OF AGRAWAL FUEL CORPORATION (P) LTD & OTHER ITA NOS. 330 & 421/IND/2018, 959/IND/2019 & C.O 13/ IND/2020 13 M/S AGRAWAL TRANSPORT CORPORATION PVT. LTD & OTHER S (SUPRA) ORDER DATED 14.10.2020 AND HAVE ELABORATELY DEALT WITH T HIS ISSUE DECIDING AS FOLLOWS (RELEVANT EXTRACT) :- 21. FROM PERUSAL OF THE ABOVE FINDING OF CO-ORDIN ATE BENCH IN THE CASE OF ANOTHER GROUP CONCERN OF ASSESSEE(S) NAMELY AGAR WAL COAL CORPORATION PVT. LTD WHEREIN ALSO UNSECURED LOAN TAKEN FROM M/S ADPL AND M/S CTPL WERE IN DISPUTE. WE FIND THAT HONBLE TRIBUNAL AFT ER CONSIDERING ALL THE RELEVANT FACTS AND MATERIAL; ON RECORD DECIDED IN FAVOUR OF THE ASSESSEE THEREBY CONFIRMING THE FINDING OF LD. CIT(A) HOLDIN G THAT THE ASSESSEE HAS DULY PROVED THE IDENTITY OF THE CASH CREDITORS, GEN UINENESS OF THE TRANSACTION AND PROVED CREDITWORTHINESS OF THE LEND ER COMPANIES WHICH THUS DO NOT CALL FOR ANY ADDITION U/S 68 OF THE ACT AND THE INTEREST PAID ON SUCH LOANS SHOULD BE ALLOWED. 22. WE ALSO FIND THAT ASSESSMENT PROCEEDINGS OF THE ALLEGED LENDER COMPANIES NAMELY M/S ADPL & M/S CTPL HAVE BEEN CARR IED OUT FOR MULTIPLE ASSESSMENT YEARS U/S 143(3)/147 OF THE ACT BUT NO ADVERSE INFERENCE OR ACTION HAS BEEN TAKEN BY THE REVENUE A UTHORITIES AND THUS ACCEPTING THAT THE BUSINESS CARRIED OUT BY THESE CO MPANIES ARE GENUINE AND ARE NOT BOGUS COMPANIES INDULGED IN PROVIDING A CCOMMODATION ENTRIES. DETAIL OF SUCH ASSESSMENTS CARRIED OUT IN THE CASE OF TWO LENDER COMPANIES ARE SUMMARISED IN THE FOLLOWING CHART:- ASSESSMENT DETAILS OF M/S CHAMAK TEXIM PVT. LTD S. NO AY DATE OF ORDER PASSED U/S INCOME ASSESSED PAGE NO. PB-B-I REMARKS 1 2004 - 05 31.05.06 143(3) 40,050 49 - 59 LAST SHARE CAPITAL AND PREMIUM RECEIVED IS AGRAWAL FUEL CORPORATION (P) LTD & OTHER ITA NOS. 330 & 421/IND/2018, 959/IND/2019 & C.O 13/ IND/2020 14 ASSESSED AND ACCEPTED 2 2009 - 10 30.12.16 148/147 11,67,510 61 - 65 REGULAR REOPENING ON OTHER ISSUES 3 2010 - 11 29.12.16 148/147 17,40,714 51 - 55 CASES REOPENED ON INFORMATION OF DDIT(INV), INDORE ON THE BASIS OF SEARCH ON MR. DEEPAK KALANI 4 2011 - 12 29.12.16 148/147 NIL 56 - 60 5 2011 - 12 05.12.18 143(3)/147 - 7,44,953 66 - 70 6 2012 - 13 16.12.18 143(3)/147 38,65,530 71 - 75 ASSESSMENT DETAILS OF M/S AEREO DEALCOMM PVT. LTD S. NO AY DATE OF ORDER PASSED U/S INCOME ASSESSED PAGE NO. PB-B-I REMARKS 1 2003 - 04 28.06.07 147/143(3) 32,240 142 - 143 LAST SHARE CAPITAL ASSESSED WAS ACCEPTED 2 2009 - 10 30.12.16 147/143(3) 18,42,160 144 - 148 CASES CONCLUDED AFTER SEARCHING OF DDIT(INV), INDORE AND NO ADVERSE OPINION WAS FORMED 23. IT IS ALSO NOTEWORTHY THAT THE LOANS TAKEN BY M /S AGRAWAL COAL CORPORATION PVT. LTD FROM TWO LENDER COMPANIES NAME LY M/S ADCPL & M/S CTPL WHICH WERE HELD TO BE GENUINE BY THE CO-OR DINATE BENCH WERE REPAID BACK AND ON THE VERY SAME DAY OF RECEIVING T HE LOAN WHICH REPAID BY M/S AGRAWAL COAL CORPORATION PVT. LTD THE LENDE R COMPANIES HAVE USED THE SAME FUND FOR ADVANCING LOAN TO M/S AGRAWA L TRANSPORT CORPORATION PVT. LTD. WE HAVE VERIFIED THIS FACT AN D FOUND THAT ON AGRAWAL FUEL CORPORATION (P) LTD & OTHER ITA NOS. 330 & 421/IND/2018, 959/IND/2019 & C.O 13/ IND/2020 15 23.02.2010 SUM OF RS.2,68,40,000/- WAS REPAID BY M/ S AGRAWAL COAL CORPORATION PVT. LTD TO M/S AEREO DEAL COM PVT. LTD . THIS SUM WAS RECEIVED IN UCO BANK ACCOUNT IN CASE OF M/S AEREO DEAL COM PVT. LTD AND ON THE VERY SAME DAY, THROUGH CHEQUE NO. 111017 SUM OF RS.2,68,00,000/- WAS GIVEN AS LOAN TO M/S. AGRAWAL TRANSPORT CORPORATION PVT. LTD. SIMILARLY IN THE CASE OF M/S CHAMAK TRAXIM PVT. LTD LOAN OF RS.3,42,55,000/-WAS REPAID BY M/S AGRAWAL C OAL CORPORATION PVT. LTD ON 23.02.2010 WHICH WAS ALSO CREDITED IN UCO BA NK ACCOUNT HELD BY M/S CTPL AND ON THE VERY SAME DAY THROUGH CHEQUE N O.679523 LOAN OF RS.3,42,00,000/- WAS GIVEN TO M/S AGRAWAL TRANSPORT CORPORATION PVT. LTD. SO THE SOURCE OF SOURCE OF ALLEGED LOANS TAKE N FROM TWO LENDER COMPANIES IS PROVED BEYOND DOUBT. IT FURTHER STREN GTHENS THE FINDING OF LD. CIT(A) THAT BOTH THE LENDER NON BANKING FINANCE ARE GENUINE HAVING REGULAR BUSINESS OF FINANCE AND HAVE SUFFICIENT FUN DS FOR PROVIDING LOANS TO VARIOUS BORROWERS FOR EARNING INTEREST AND ONCE THE IDENTITY, GENUINENESS AND CREDITWORTHINESS OF THE COMPANY FOR THE TRANSAC TION CARRIED OUT BY GROUP COMPANIES IS PROVED BEYOND DOUBT AND DULY ACC EPTED BY THE TRIBUNAL THERE HARDLY REMAIN ANY SCOPE TO QUESTION IT AGAIN IN THE CASE OF OTHER CONCERNS WHERE SUCH TYPE OF UNSECURED LOANS A RE RECEIVED FROM THE SAME LENDER COMPANIES. THUS THE DECISION OF THE CO -ORDINATE BENCH IN THE CASE OF M/S AGRAWAL COAL CORPORATION PVT. LTD (SUPR A) IS SQUARELY APPLICABLE ON THE FACTS OF THE INSTANT CASE AND THU S WE HOLD THAT THE LOAN RECEIVED FROM M/S AEREO DEALCOMM PVT. LTD AND M/S C HAMAK TREXIM PVT. LTD BY M/S AGRAWAL TRANSPORT CORPORATION PVT. LTD, ADMANUM FINANCE LTD AND AVAILABLE FINANCE LTD ARE GENUINE AND DULY EXPLAINED BY THE ASSESSEE(S) AND THE INTEREST PAID THEREON AS PROVID ED IN THE CHART IN THE PRECEDING PARAS IS GENUINE BUSINESS EXPENDITURE AND THE ASSESSEE(S) HAVE DULY EXPLAINED THE TRANSACTION OF LOAN TAKEN AND AL SO PROVED THE IDENTITY, GENUINENESS AND CREDITWORTHINESS OF THE LOAN CREDIT ORS. WE THUS ARE OF THE VIEW THAT RESPECTIVE ASSESSING OFFICERS OF THE THRE E ASSESSEE(S) IN APPEAL BEFORE US ERRED IN TREATING THE LOANS TAKEN FROM M/ S AEREO DEALCOMM PVT. AGRAWAL FUEL CORPORATION (P) LTD & OTHER ITA NOS. 330 & 421/IND/2018, 959/IND/2019 & C.O 13/ IND/2020 16 LTD AND M/S. CHAMAK TREXIM PVT. LTD HAS UNEXPLAINED CASH CREDIT U/S 68 OF THE ACT AND FURTHER ERRED IN DISALLOWING THE INT EREST PAID ON SAID LOANS. WE THUS, CONFIRM THE FINDING OF LD. CIT(A) IN THE C ASE OF M/S. AGRAWAL TRANSPORT CORPORATION PVT. LTD DELETING THE ADDITIO N U/S 68 OF THE ACT AT RS. 6,10,00,000/- AND ALSO DELETING THE DISALLOWANC E OF INTEREST AT RS. 8,39,425/-. WE ALSO CONFIRM THE FINDING OF LD. CIT( A) IN THE CASE OF M/S AVAILABLE FINANCE LTD DELETING THE ADDITION FOR UNE XPLAINED CASH CREDIT U/S 68 OF THE ACT AT RS. 69,00,000/- AND DELETING THE D ISALLOWANCE OF INTEREST PAID ON SUCH UNSECURED LOANS AT RS.51,93,162/-. WE ALSO SET ASIDE THE FINDING OF LD. CIT(A) IN THE CASE OF M/S ADMANUM FI NANCE LTD AND DELETE THE ADDITION OF UNEXPLAINED CASH CREDIT U/S 68 OF T HE ACT FOR THE UNSECURED LOAN TAKEN FROM THE ABOVE REFERRED TWO LENDER COMPA NIES TOTALLING TO RS. 1,44,75,000/- AND WE ALSO DIRECT THE REVENUE AUTHOR ITIES TO ALLOW THE CLAIM OF INTEREST EXPENDITURE OF RS.61,58,897/-. W E THUS DISMISS GROUND NO. 1 & 2 OF REVENUES APPEAL IN THE CASE OF M/S AG RAWAL TRANSPORT CORPORATION PVT. LTD FOR ASSESSMENT YEAR 2010-11 AL LOW GROUND NO. 2 & 3 OF THE ASSESSEES APPEAL IN CASE OF M/S ADMANUM FIN ANCE LTD FOR ASSESSMENT YEAR 2009-10 AND DISMISS GROUND NO.2 OF REVENUES APPEAL IN THE CASE OF M/S AVAILABLE FINANCE LTD FOR ASSESS MENT YEAR 2014-15. 14. LD. DEPARTMENTAL REPRESENTATIVE FAILED TO REBUT THE ABOVE STATED FINDINGS BY PLACING ANY OTHER MATERIAL IN IT S SUPPORT. 15. WE THUS RESPECTFULLY FOLLOWING OUR ABOVE REFERR ED FINDINGS AND IN THE GIVEN FACTS AND CIRCUMSTANCES OF THE CASE AR E SATISFIED WITH THE IDENTITY AND CREDITWORTHINESS OF THESE COMPANIE S AND ALSO SATISFIED WITH THE GENUINENESS OF THE TRANSACTIONS ENTERED BY M/S. CHAMAK TREXIM PVT. LTD AND M/S AEREO DEALCOMM PVT. LTD WITH THE AGRAWAL FUEL CORPORATION (P) LTD & OTHER ITA NOS. 330 & 421/IND/2018, 959/IND/2019 & C.O 13/ IND/2020 17 ASSESSEE IN THE INSTANT APPEAL NAMELY M/S AGRAWAL F UEL CORPORATION PVT. LTD AND M/S ADMANUM FINANCE LTD AN D WE THEREFORE DELETE THE ADDITION MADE U/S 68 AT RS.3,3 0,08,800/- MADE BY THE LD. A.O FOR THE SHARE APPLICATION MONEY RECEIVED FROM M/S. CHAMAK TREXIM PVT. LTD FOR ALLOTMENT OF SHARES BY M/S AGRAWAL FUEL CORPORATION PVT. LTD THEREBY ALLOWED G ROUND NO.1 OF APPEAL NO.330/IND/2018 AND DISMISS GROUND NO.3 OF R EVENUES APPEAL IN THE CASE OF M/S ADMANUM FINANCE LTD IN AP PEAL NO.ITA/959/IND/2019 THEREBY CONFIRMING THE FINDING OF LD. CIT(A) DELETING THE ADDITION FOR UNEXPLAINED UNSECURED LOA N OF RS. 70,00,000/- AND DELETING THE DISALLOWANCE OF INTERE ST AT RS. 11,55,000/-. 16. NOW WE TAKE UP THE NEXT COMMON ISSUE RAISED THR OUGH ADDITIONAL GROUND OF APPEAL BY THE ASSESSEE IN ITA NO.330/IND/2018 OF AGRAWAL FUEL CORPORATION PVT. LT D AND THROUGH GROUND NO.1 RAISED IN CROSS OBJECTION NO.13/IND/201 9 BY ADMANUM FINANCE LTD CLAIMING THAT EDUCATION CESS SH OULD BE ALLOWED AS AN EXPENDITURE U/S 37 OF THE ACT. BRIEF FACTS ARE THAT EDUCATION CESS OF RS.10,29,182/- AND RS.8,40,007/- PAID DURING THE YEAR BY THE ASSESSEE NAMELY AFCPL AND AFL WERE INCLUDED IN AGRAWAL FUEL CORPORATION (P) LTD & OTHER ITA NOS. 330 & 421/IND/2018, 959/IND/2019 & C.O 13/ IND/2020 18 THE LIST OF DISALLOWANCE U/S 40(1)(II) OF THE ACT W HILE FILING RETURN OF INCOME U/S 139 OF THE ACT. LATER ON SUBSEQUENT TO THE JUDGMENT OF HON'BLE HIGH COURT OF RAJASTHAN IN THE CASE OF CIT V/S CHAMBAL FERTILIZERS AND CHEMICALS LIMITED (SUPRA) IT NO.52/2018 ORDER DATED 31.7.2018 WHEREIN IT WAS HELD THAT EDUCATION CESS IS NOT A DISALLOWABLE EXPENDITURE U/S 40(A) OF THE ACT, THE RESPECTIVE ASSESSEES HAVE RAISED THE GROUND BEFORE US. 17. AT THE OUTSET LD. COUNSEL FOR THE ASSESSEE SUBM ITTED THAT THE ISSUE IS SQUARELY COVERED IN FAVOUR OF THE ASSESSEE BY THE JUDGMENT OF HON'BLE RAJASTHAN HIGH COURT IN THE CASE OF CHAMBAL FERTILIZERS AND CHEMICALS LIMITED (SUPRA) HOLDING THAT THE EDUCATION CESS IS NOT AN EXPENDITURE DISALLOWABLE U/S 40(A) OF THE ACT. HE ALSO SUBMITTED THAT THE CO-ORDINATE BENCH VIDE ITA NO.778/IND/18 D ATED 28.11.2019 IN THE CASE OF ASSESSEES SISTER CONCERN NAMELY M/S AGRAWAL COAL CORPORATION PVT. LTD (SUPRA) HAS ALLOWED THE CLAIM OF EDUCATION CESS AS AN EXPENDITURE U/S 37 OF THE ACT. 18. PER CONTRA LD. DEPARTMENTAL REPRESENTATIVE VEHE MENTLY ARGUED SUPPORTING THE ORDER OF LD. A.O. 19. WE HAVE HEARD RIVAL CONTENTIONS AND PERUSED THE RECORDS PLACED BEFORE US AND CAREFULLY GONE THROUGH THE JUD GMENTS AND AGRAWAL FUEL CORPORATION (P) LTD & OTHER ITA NOS. 330 & 421/IND/2018, 959/IND/2019 & C.O 13/ IND/2020 19 DECISIONS RELIED AND REFERRED BY THE ASSESSEE. THE COMMON ISSUE RAISED IN ADDITIONAL GROUND OF THE ASSESSEES APPEA L VIDE NO.330/IND/2018 AND GROUND NO.1 IN CROSS OBJECTION NO.13/1ND/2019 IS THAT EDUCATION CESS SHOULD BE ALL OWED AS AN EXPENDITURE U/S 37 OF THE ACT IN VIEW OF THE JUDGME NT OF HON'BLE RAJASTHAN HIGH COURT IN THE CASE OF CHAMBAL FERTILIZERS AND CHEMICALS LIMITED (SUPRA). 20. WE OBSERVE THAT THE ISSUE WHETHER THE EDUCATION CES S SHOULD BE CLAIMED AS AN EXPENDITURE U/S 37 OF THE ACT CAME FOR ADJUDICATION BEFORE THIS TRIBUNAL IN THE CASE OF A SSESSEES SISTER CONCERN NAMELY M/S AGRAWAL COAL CORPORATION PVT. LTD (SUPRA) ITA NO.778/IND/2018 ORDER DATED 28.11.2019 AND WAS DECI DED BY US OBSERVING AS FOLLOWS:- 38. WE HAVE HEARD RIVAL CONTENTIONS AND PERUSED TH E RECORDS PLACED EFORE US AND CAREFULLY GONE THROUGH THE JUDGMENTS RELIED BY THE LD. COUNSEL FOR THE ASSESSEE. THE OTHER ISSUE COMMONLY RAISED BY THE ASSESSEE FOR ASSESSMENT YEAR 2013- 14 IS THAT WHETHER THE EDUCAT ION CESS PAID BY THE ASSESSEE ALONG WITH THE INCOME TAX AND SURCHARGE IS DEDUCTIBLE AS EXPENDITURE U/S 37 OR IT IS NOT DEDUCTIBLE AS PER P ROVISIONS OF SECTION 40(A)(II) OF THE ACT WHICH REFERS TO THE AMOUNT NO T DEDUCTIBLE. 39. WE OBSERVE THAT SIMILAR ISSUE CAME UP BEFORE TH E HON'BLE HIGH COURT OF RAJASTHAN IN THE CASE OF CHAMBAL FERTILIZERS AND CHEMICALS LIMITED (SUPRA) WHEREIN HON'BLE HIGH COURT REFERRED TO CIR CULAR NO. NO.91/58/ AGRAWAL FUEL CORPORATION (P) LTD & OTHER ITA NOS. 330 & 421/IND/2018, 959/IND/2019 & C.O 13/ IND/2020 20 66-ITJ(19) DATED 18.5.1967 AND ALSO VARIOUS JUDGMEN TS. THE RELEVANT EXTRACT OF THE JUDGMENT OF THE HONBLE HIGH COURT I N THIS CASE IS MENTIONED BELOW:- (I) HONBLE HIGH COURT OF JUDICATURE FOR RAJASTHAN BENCH, JAIPUR IN THE CASE OF CIT, KOTA V/S CHAMBAL FERTILIZERS AND CHEMI CALS LTD, KOTA D.B. IT NO.52/2018 ORDER DATED 31.7.2018 RAISED FOLLOWING S UBSTANTIAL QUESTION OF LAW:- 3.WHETHER UNDER THE FACTS AND CIRCUMSTANCES OF THE CASE THE LD. ITAT HAS NOT ERRED IN HOLDING THAT THE EDUCATION CE SS IS A DISALLOWABLE EXPENDITURE U/S 40(A)(II) OF THE ACT? REGARDING QUESTION NO.3, MR. JHANWAR HAS TAKEN US TO THE ORDER OF CIT(A) AND TRIBUNAL AND STRONGLY RELIED UPON THE CI RCULAR DT. 18.5.1967 WHICH READS AS UNDER:- CTR ENCYCLOPAEDIA ON INDIAN TAX LAWS CIRCULAR F.NO. 91/58/66-ITJ(19) DT. 18 TH MAY, 1967 BUSINESS EXPENDITURE SECTION 40(A)(II) RECENTLY A CASE HAS COME TO THE NOTICE OF THE BOARD WHERE THE ITO HAS DISALLOWED THE CESS PAID BY THE ASSESSEE ON THE G ROUND THAT THERE HAS BEEN NO MATERIAL CHANGE IN THE PROVISIONS OF S. 10( 4) OF THE OLD ACT AND S.40(A)(II) OF THE NEW ACT. 2.THE VIEW OF THE ITO IS NOT CORRECT. CLAUSE 40(A) (II) OF THE IT BILL, 1961 AS INTRODUCED IN THE PARLIAMENT STOOD AS UNDER: AGRAWAL FUEL CORPORATION (P) LTD & OTHER ITA NOS. 330 & 421/IND/2018, 959/IND/2019 & C.O 13/ IND/2020 21 (II) ANY SUM PAID ON ACCOUNT OF ANY CESS, RATE OR TAX LEVIED ON THE PROFITS OR GAINS OF ANY BUSINESS OR PROFESSION OR ASSESSED AT A PROPORTION OF, OR OTHERWISE ON THE BASIS OF, ANY SUCH PROFITS OR GAIN S. WHEN THE MATTER CAME UP BEFORE THE SELECT COMMITTEE , IT WAS DECIDED TO OMIT THE WORD CESS FROM THE CLAUSE. THE EFFECT O F THE OMISSION OF THE WORD CESS IS THAT ONLY TAXES PAID ARE TO BE DISAL LOWED IN THE ASSESSMENTS FOR THE YEAR 1962-63 AND ONWARDS. 3.THE BOARD DESIRE THAT THE CHANGED POSITION MAY PL EASE BE BROUGHT TO THE NOTICE OF ALL THE ITOS SO THAT FURTHER LITIGATION O N THIS ACCOUNT MAY BE AVOIDED. RELIANCE WERE PLACED BY THE LD. COUNSEL FOR THE ASS ESSEE ON THE FOLLOWING JUDGMENTS; IN INSTALMENT SUPPLY (P) LTD & ORS VS/ UNION OF IND IA & ORS (1962) 2 SCR 644, IT HAS BEEN HELD AS UNDER:- 19. THERE IS ANOTHER ANSWER TO THE POINT OF RES JU DICATA RAISED ON BEHALF OF THE PETITIONERS, RELYING UPON THE DECISION OF TH E PUNJAB HIGH COURT IN INSTALLMENT SUPPLY LTD, NEW DELHI V STATE OF DELHI MANU/PH/0068/1956. IT IS WELL SETTLED THAT IN MATTERS OF TAXATION THER E IS NO QUESTION OF RES JUDICATA BECAUSE SUCH YEARS ASSESSMENT IS FINAL ON LY FOR THAT YEAR AND DOES NOT GOVERN LATER YEARS, BECAUSE IT DETERMINES ONLY THE TAX FOR A PARTICULAR PERIOD. (SEE THE DECISION IN THE HOUSE O F LORDS IN SOCIETY OF MEDICAL OFFICERS OF HEALTH V. HOPE (VALUATION OFFIC ER) (1960) A.C. 551 APPROVING AND FOLLOWING THE DECISION OF THE PRIVY C OUNCIL IN BROKEN HILL PROPRIETARY COMPANY LIMITED V MUNICIPAL COUNCIL OF BROKEN HILL (1925) A.C. 94. IN GODREJ & BOYCE MANUFACTURING COMPANY LTD VS. DY. COMMISSIONER OF INCOME TAX & ORS (2017) 247 TAXMAN 361 (SC), IT HAS BEEN HELD AS UNDER:- AGRAWAL FUEL CORPORATION (P) LTD & OTHER ITA NOS. 330 & 421/IND/2018, 959/IND/2019 & C.O 13/ IND/2020 22 33.WHILE ANSWERING THE SAID QUESTION THIS COURT CO NSIDERED THE OBJECT OF INSERTION OF SECTION 14A IN THE INCOME TAX ACT BY F INANCE ACT, 2001, DETAILS OF WHICH HAVE ALREADY BEEN NOTICED. NOTICI NG THE OBJECTS AND REASONS BEHIND INTRODUCTION OF SECTION 14A OF THE A CT THIS COURT HELD THAT: EXPENSES ALLOWED CAN ONLY BE IN RESPECT OF EARNING OF TAXABLE INCOME. IN PARAGRAPH 17, THIS COURT WENT ON TO OBSERVE THAT : THEREFORE, ONE NEEDS TO READ THE WORDS EXPENDITURE INCURRED IN SECTION 14A IN THE CONTEXT OF THE SCHEME OF THE ACT AND, IF SO READ, IT IS CLEAR THAT IT DISALLOWS CERTAIN EXPENDITURE INCURRED TO EARN EXEM PT INCOME FROM BEING DEDUCTED FROM OTHER INCOME WHICH IS INCLUDIBLE IN T HE TOTAL INCOME FOR THE PURPOSE OF CHARGEABILITY TO TAX. THE VIEWS EXPRESSED IN WALFORT SHARE AND STOCK BROK ERS P.LTD (SUPRA), IN OUR CONSIDERED OPINION, YEAR AGAIN MILITATE AGAINST THE PLEA URGED ON BEHALF OF THE ASSESSEE. 34. FOR THE AFORESAID REASONS, THE FIRST QUESTION F ORMULATED IN THE APPEAL HAS TO BE ANSWERED AGAINST THE APPELLANT-ASSESSEE B Y HOLDING THAT SECTION 14A OF THE ACT WOULD APPLY TO DIVIDEND INCO ME ON WHICH TAX IS PAYABLE UNDER SECTION 115-0 OF THE ACT. THE HONBLE HIGH COURT DECIDED THE ISSUE HOLDING TH AT; 12. WE HAVE HEARD COUNSEL FOR THE PARTIES. 13. ON THE THIRD ISSUE IN APPEAL NO.52/2018, IN VIE W OF THE CIRCULAR OF CBDT WHERE WORD CESS IS DELETED, IN OUR CONSIDERE D OPINION, THE TRIBUNAL HAS COMMITTED AN ERROR IN NOT ACCEPTING THE CONTENT ION OF THE ASSESSEE. APART FROM THE SUPREME COURT DECISION REFERRED THAT ASSESSMENT YEAR IS INDEPENDENT AND WORD CESS HAS BEEN RIGHTLY INTERPRE TED BY THE SUPREME COURT THAT THE CESS IS NOT TAX IN THAT VIEW OF THE MATTER, WE ARE OF THE AGRAWAL FUEL CORPORATION (P) LTD & OTHER ITA NOS. 330 & 421/IND/2018, 959/IND/2019 & C.O 13/ IND/2020 23 CONSIDERED OPINION THAT THE VIEW TAKEN BY THE TRIBU NAL ON ISSUE NO.3 IS REQUIRED TO BE REVERSED AND THE SAID ISSUE IS ANSWE RED IN FAVOUR OF THE ASSESSEE 40. WE, THEREFORE RESPECTFULLY FOLLOWING THE JUDGME NT OF HONBLE RAJASTHAN HIGH COURT IN THE CASE OF CIT, KOTA V/S C HAMBAL FERTILIZERS AND CHEMICALS LIMITED (SUPRA) FIND THAT THE FACTS OF TH E CASE ARE IDENTICAL TO THE FACTS OF THE CASE IN APPEAL BEFORE US AND THUS ARE INCLINED TO HOLD THAT THE EDUCATION CESS IS NOT A TAX AND THUS IS AN EXPENDI TURE U/S 37 OF THE ACT WHICH CANNOT BE CLAIMED AGAINST THE PROFITS AND GAI NS OF THE BUSINESS CARRIED OUT BY THE ASSESSEE. THUS FINDING OF LD. C IT(A) IS REVERSED. THE ADDITIONAL GROUND NO.3 RAISED BY THE ASSESSEE FOR A SSESSMENT YEAR 2012- 13 AND GROUND NO.1 OF CROSS OBJECTION NOS. 23 & 34/ IND/2019 FOR A.Y. 2013-14 & 2014-15 STANDS ALLOWED. 21. SUBSEQUENT TO THE ABOVE DECISION REVENUE HAS FA ILED TO PLACE ANY OTHER JUDGMENT OR DECISION FAVOURING THE REVENU E AND WE THUS RESPECTFULLY FOLLOWING THE JUDGMENT OF HONBLE RAJA STHAN HIGH COURT IN THE CASE OF CIT, KOTA V/S CHAMBAL FERTILIZERS AND CHEMICALS LIMITED (SUPRA) AND FOLLOWING OUR OWN DECISION IN THE CASE OF M/S AGRAWAL COAL CORPORATION PVT. LTD (SUPRA) ARE INCLINED TO HOLD THAT THE ASSESSEE SHOULD BE ALLOWED THE DEDUCTION FOR ED UCATION CESS OF RS.10,29,182/- AND RS.8,40,007/- U/S 37 OF THE ACT AS AN ELIGIBLE EXPENDITURE IN THE CASE OF AGRAWAL FUEL CORPORATION PVT. LTD AND ADMANUM FINANCE LIMITED RESPECTIVELY. THUS THE ADD ITIONAL AGRAWAL FUEL CORPORATION (P) LTD & OTHER ITA NOS. 330 & 421/IND/2018, 959/IND/2019 & C.O 13/ IND/2020 24 GROUNDS RAISED IN ITA NO.330/IND/2018 AND GROUND NO .1 OF THE C.O.NO.13/IND/2019 ARE ALLOWED. 22. NOW WE TAKE UP THE COMMON ISSUE RELATING TO DIS ALLOWANCE U/S 14A OF THE ACT RAISED BY THE REVENUE THROUGH GR OUND NO.7 IN ITA NO.421/IND/2018 IN THE CASE OF AGRAWAL FUEL COR PORATION PVT. LTD AND THROUGH GROUND NO.2 IN ITA NO.959/IND/2019 IN THE CASE OF ADMANUM FINANCE LIMITED PERTAINING TO ASSESSMENT YEAR 2014- 15. 23. THE FACTS IN BRIEF ARE THAT IN THE CASE OF AFCP L ASSESSEE MADE A SUO MOTO DISALLOWANCE OF RS.40,063/-. LD. A.O WHILE CONCLU DING THE ASSESSMENT U/S 143(3) OF THE ACT COMPUTED THE D ISALLOWANCE AT RS.25,29,591/- WHICH INCLUDED INTEREST DISALLOWANCE AT RS.23,83,866/- WORKED OUT UNDER RULE 8D(2)(II) AND OF RS. 1,45,725/- FOR OTHER EXPENSES WORKED OUT UNDER RULE 8D 2(III). THE ASSESSEE CHALLENGED THE DISALLOWANCE BEFORE LD. CIT (A) AND SUCCEEDED AS THE ADDITIONAL DISALLOWANCE OF RS.24,8 9,528/- MADE BY THE LD. A.O WAS DELETED. REVENUE IS NOW IN APPE AL BEFORE THE TRIBUNAL. 24. BRIEF FACTS RELATING TO DISALLOWANCE U/S 14A OF THE ACT IN THE CASE OF M/S. ADMANUM FINANCE LTD ARE THAT SUO MOTO DISALLOWANCE AGRAWAL FUEL CORPORATION (P) LTD & OTHER ITA NOS. 330 & 421/IND/2018, 959/IND/2019 & C.O 13/ IND/2020 25 BY THE ASSESSEE WAS MADE AT RS. 22,356/-, LD. A.O I N HIS ASSESSMENT PROCEEDINGS MADE FURTHER DISALLOWANCE OF RS.3,66,511/- WHICH INCLUDED INTEREST DISALLOWANCE OF RS.3,43,305/- AND RS.23,206/- WORKED OUT UNDER RUL E 8D 2(II) AND 8D 2(III) RESPECTIVELY. THIS ACTION OF THE LD. A.O WAS CHALLENGED BEFORE LD. CIT(A) AND ASSESSEE SUCCEEDED, AS THE DI SALLOWANCE MADE BY THE LD. A.O WAS DELETED AGAINST WHICH THE REVEN UE IS IN APPEAL BEFORE US. 25. LD. DEPARTMENTAL REPRESENTATIVE VEHEMENTLY ARGU ED SUPPORTING THE ORDERS OF LD. A.O. 26. PER CONTRA LD. COUNSEL FOR THE ASSESSEE MADE TW O FOLD SUBMISSIONS; (I) NO DISALLOWANCE SHOULD HAVE BEEN MADE FOR THE INTEREST EXPENDITURE SINCE THE INTEREST FREE FUNDS IN THE F ORM OF EQUITY CAPITAL AND RESERVES AND SURPLUS AT THE DISPOSAL OF BOTH THE ASSESSEE(S) WERE SUFFICIENT ENOUGH TO COVER UP THE INVESTMENTS MADE, IN VIEW OF JUDGMENT OF HON'BLE BOMBAY HIGH COURT IN THE CASE OF CIT V/S RELIANCE UTILITIES & POWER LTD (SUPRA) 313 ITR 340 AND ALSO ON THE DECISION OF CO-ORDINATE BENCH, INDORE AGRAWAL FUEL CORPORATION (P) LTD & OTHER ITA NOS. 330 & 421/IND/2018, 959/IND/2019 & C.O 13/ IND/2020 26 IN ASSESSEES OWN CASE VIDE ITA NO.807 & 808/IND /2014 DATED 27.6.2016. (II) FOR THE PURPOSE OF CALCULATING 0.5% OF THE AVERAGE INVESTMENTS AS PROVIDED IN RULE 8D 2(III) OF I.T. RULES IN THE CASE OF M/S AGRAWAL FUEL CORPORATION PVT. LTD OUT OF THE TOTAL INVESTMENT OF RS.2,91,45,016/- MAJOR INVESTM ENT AMOUNTING TO RS.2,62,36,518/- HAS BEEN MADE IN OVE RSEAS ASSOCIATE COMPANIES M/S AGRAWAL COAL CORPORATION(S) PTE. LTD, SINGAPORE WHICH IS A FOREIGN COMPANY AND DIVIDEND RECEIVABLE ON SUCH INVESTMENT IS NOT EXEM PT AND THEREFORE THE DISALLOWANCE COMPUTED UNDER RULE 8D 2(III) SHOULD BE ON THE REMAINING AMOUNT OF INVESTMENTS O F RS.29,08,498/-. 27. WE HAVE HEARD RIVAL CONTENTIONS AND PERUSED THE RECORDS PLACED BEFORE US AND CAREFULLY GONE THROUGH THE DEC ISION RELIED BY LD. COUNSEL FOR THE ASSESSEE. REVENUE HAS CHALLENG ED THE ACTION OF LD. CIT(A) DELETING THE DISALLOWANCE U/S 14A OF THE ACT AT RS.24,89,528/- AND RS.3,66,511/- IN THE CASE OF ASS ESSEE(S) NAMELY M/S AGRAWAL FUEL CORPORATION PVT. LTD AND M/S ADMAN UM FINANCE LTD RESPECTIVELY. WE OBSERVE THAT THE DISALLOWANCE U/S 14A OF THE AGRAWAL FUEL CORPORATION (P) LTD & OTHER ITA NOS. 330 & 421/IND/2018, 959/IND/2019 & C.O 13/ IND/2020 27 ACT AT RS.40,063/- AND RS.23,256/- WERE SUO MOTO MADE BY THE ASSESSEE(S) NAMELY M/S AGRAWAL FUEL CORPORATION PVT . LTD AND M/S ADMANUM FINANCE LTD RESPECTIVELY. DISALLOWANCE COM PUTED BY LD.A.O FOR ASSESSMENT YEAR 2014-15 IN CASE OF BOTH THE COMPANIES ARE AS FOLLOWS:- PARTICULARS AFCPL AFL INTEREST DISALLOWANCE COMPUTED AS PER RULE 8D2(II) RS.23,83,866/ - RS.3,43,305/ - OTHER EXPENSES AS PER RULE 8D2(III) RS.1,45,725/ - RS.23,206/ - TOTAL DISALLOWANCE RS.25,29,591/ - RS.3,66,511/ - 28. AS REGARDS THE INTEREST DISALLOWANCE LD. COUNSE L FOR THE ASSESSEE HAS REFERRED TO THE JUDGMENT OF HON'BLE BO MBAY HIGH COURT IN THE CASE OF CIT V/S RELIANCE UTILITIES & POWER LTD (SUPRA). IN THIS JUDGMENT THE PRINCIPLE LAID DOWN BY THE HO N'BLE BOMBAY HIGH COURT IS THAT IF THERE ARE FUNDS AVAILABLE BOTH INTEREST FREE AND OVER DRAFT/LOANS TAKEN, THEN THE TRANSACTION AS ARISE WITH INVESTMENT WOULD BE OUT OF THE INTEREST FREE FUND G ENERATED OR AVAILABLE WITH THE COMPANY, IF THE INTEREST FREE FUNDS WERE SUFFICIENT TO MEET THE INVESTMENTS . ON EXAMINING THE FACTS OF THE INSTANT CASE AND IN LIGHT OF ABOVE JUDGMENT WE OBSERVE THAT; AGRAWAL FUEL CORPORATION (P) LTD & OTHER ITA NOS. 330 & 421/IND/2018, 959/IND/2019 & C.O 13/ IND/2020 28 (A) IN THE CASE OF M/S AFCPL THE INTEREST FREE OWN CAPITAL AND RESERVE AND SURPLUS AT THE CLOSE OF THE YEAR ARE R S.36.43 CRORES AGAINST WHICH THE TOTAL INVESTMENT IS ONLY RS.2.91 CRORES WHICH SHOWS THAT THE ASSESSEE HAS SUFFICIEN T INTEREST FREE FUNDS AND THUS DO NOT CALL FOR ANY INTEREST D ISALLOWANCE UNDER RULE 8D 2(II) OF I.T. RULES. (B) IN THE CASE OF M/S AFL WE OBSERVE THAT AT THE CLOSE OF THE YEAR ASSESSEE POSSESSED INTEREST FREE FUNDS IN THE FORM OF SHARE CAPITAL AND RESERVE AND SURPLUS AT RS. 44.3 8 CRORES AS ON 31.3.2014 WHEREAS THE AVERAGE INVESTMENTS FOR T HE YEAR ARE ONLY RS.47.37 LAKHS. SO THERE IS NO DISPUTE TO THE FACT THAT ASSESSEE HAS SUFFICIENT INTEREST FREE FUNDS TO BE APPLIED FOR MAKING INVESTMENTS FETCHING TAX FREE INCOME. THU S IN THIS CASE ALSO NO INTEREST DISALLOWANCE U/S 14A OF THE ACT WAS CALLED FOR. 29. NOW COMING TO THE PORTION OF THE OTHER EXPENSES WHICH IS CALCULATED AS PER THE METHOD PROVIDED UNDER RULE 8D 2(III) OF I.T RULES @0.5% OF THE AVERAGE INVESTMENTS. IN THE CASE OF M/S AFCPL ON PERUSAL OF THE RECORDS WE OBSERVE THAT OUT OF TH E TOTAL INVESTMENTS OF RS.2,91,45,016/- THE MAJOR PORTION O F INVESTMENT OF AGRAWAL FUEL CORPORATION (P) LTD & OTHER ITA NOS. 330 & 421/IND/2018, 959/IND/2019 & C.O 13/ IND/2020 29 RS.2,62,36,518/- IS MADE IN OVERSEAS ASSOCIATE COMP ANY AT SINGAPORE AND THE DIVIDEND INCOME (IF ANY) IS LIABL E TO BE TAXED IN INDIA. THUS THE INVESTMENT WHICH CAN FETCH TAX FRE E INCOME ARE ONLY AT RS.29,08,498/- AND 0.5% OF THIS AMOUNT COME S TO RS.14,542/- WHICH IS LESS THAN THE SUO MOTO DISALLOWANCE OF RS.40,063/- MADE BY THE ASSESSEE IN THE RETURN OF I NCOME. AS REGARDS M/S AFL THE AVERAGE INVESTMENTS ARE RS.46,4 1,134/- AND 0.5% OF THE SAME COMES TO RS.23,205/- WHEREAS THE D ISALLOWANCE OFFERED BY THE ASSESSEE IN THE RETURN OF INCOME IS RS.23,256/-. 30. WE THEREFORE IN THE ABOVE GIVEN FACTS AND CIRCU MSTANCES OF THE CASE ARE OF THE CONSIDERED VIEW THAT LD. CIT(A) HAS RIGHTLY APPRECIATED THE FACTS AND THE ESTABLISHED JUDICIAL PRINCIPLES APPLICABLE ON THE FACTS OF THE CASE SO AS TO DELETE THE DISALLOWANCE MADE U/S 14A OF THE ACT MADE BY LD. A.O. WE THEREF ORE CONFIRM THE FINDING OF LD. CIT(A) DELETING DISALLOWANCE U/S 14A AT RS.24,89,528/- IN THE CASE OF M/S AFCPL AND DISALLO WANCE U/S 14A AT RS.3,66,511/- IN THE CASE OF M/S. AFL AND THUS D ISMISS GROUND NO.7 OF REVENUE IN APPEAL NO.421/IND/2018 IN THE CA SE OF M/S AFCPL AND GROUND NO.2 OF THE REVENUE IN APPEAL NO. 959/IND/2019 IN THE CASE OF M/S. AFL. AGRAWAL FUEL CORPORATION (P) LTD & OTHER ITA NOS. 330 & 421/IND/2018, 959/IND/2019 & C.O 13/ IND/2020 30 31. NOW WE TAKE UP GROUND NO.1 TO 6 RAISED BY REVEN UE IN APPEAL NO.421/IND/2018 FOR ASSESSMENT YEAR 2014-15 IN THE CASE OF M/S AFCPL RELATING TO DELETION OF ADDITION ON ACCOUNT O F ESTIMATION OF GROSS PROFIT AT RS.1,27,40,400/- CONTENDING THAT LD . CIT(A) FAILED TO APPRECIATE THE FACT THAT ASSESSEE HAS NOT PRODUCED INVOICES/BILLS FOR PURCHASE OF COAL, ASSESSEE HAS NOT FURNISHED DETAIL S IN RESPECT OF SHORTAGE OF QUANTITY SOLD AND PURCHASED,ASSESSEE HA S NOT PRODUCED CONFIRMATION FROM THE CREDITORS, NO DOCUMENT WAS PR ODUCED TO SHOW THE ACTUAL UNIT RATE FOR PURCHASE OF COAL AND LD. CIT(A) HAS THUS BEEN ERRED IN SETTING ASIDE THE ACTION OF LD. A.O REJECTING THE BOOK RESULTS OF JOGIGHOPA BRANCH U/S 145(3) OF THE ACT. 32. BRIEF FACTS RELATING TO THIS ISSUE ON ESTIMATIO N OF GROSS PROFIT BY LD. A.O ARE THAT DURING THE COURSE OF ASSESSMENT PROCEEDINGS LD. A.O ON THE BASIS OF INFORMATION RECEIVED FROM I TO, INVESTIGATION NOTICED THAT THERE WERE HUGE CASH WITHDRAWALS FROM THE UCO BANK, BONGAIGAON BRANCH. HE FURTHER OBSERVED THAT COAL MI NING OPERATION WERE CARRIED OUT BY THE ASSESSEE IN NORTH EAST INDI A, CASH WITHDRAWALS WERE CLAIMED TO HAVE BEEN MADE AND UTIL IZED FOR PURCHASE OF COAL, PAYMENT OF TRANSPORTATION CHARGES AND OTHER INCIDENTAL EXPENSES INCLUDING TAXES. VARIOUS SUBMI SSIONS WERE AGRAWAL FUEL CORPORATION (P) LTD & OTHER ITA NOS. 330 & 421/IND/2018, 959/IND/2019 & C.O 13/ IND/2020 31 FILED BY THE ASSESSEE WHICH HOWEVER WERE NOT ENOUGH TO SATISFY THE LD. A.O. AS PER LD. A.O THE ASSESSEE HAD NOT PRODU CED PROPER DOCUMENTS AND RECORDS FOR THE PURCHASE OF COAL AN D THE ASSESSEE HAS NOT GIVEN QUALITATIVE DETAILS OF COAL PURCHASE AND SALES TAX CHALLANS ONLY PROVE THE SALES OF COAL BUT SATISFACT ORY PROOFS OF PURCHASE OF COAL/UNIT PRICE OF COAL WAS NOT APPEARI NG IN ANY OF THE DOCUMENTS. FURTHER SINCE THE PAYMENTS FOR PURCHASE AND TRANSPORTATION OF COAL WERE MADE IN CASH, LD. A.O D OUBTED THE GENUINENESS OF THE CLAIM OF EXPENDITURE AND CONCLU DED THAT THE ASSESSEE HAS SUPPRESSED THE GROSS PROFIT. HE ACCOR DINGLY REJECTED THE BOOK RESULTS U/S 145(3) OF THE ACT WITH RESPECT TO BOOK RESULTS AND GROSS PROFIT OF JOGIGHOPA BRANCH AND ESTIMATED THE GROSS PROFIT RATE AT 6.69% OF THE GROSS TURNOVER AND MADE ADDITION FOR SUPPRESSED GROSS PROFIT AT RS.1,27,40,400/-. 33. THIS ACTION OF LD. A.O WAS CHALLENGED BY THE AS SESSEE MAKING DETAILED SUBMISSIONS WITH RELEVANT DOCUMENTS IN SUP PORT OF THE CONTENTION THAT BOOKS OF ACCOUNTS ARE REGULARLY MAI NTAINED WHICH ARE AUDITED AND THE ADDITION MADE BY THE LD. A.O AR E PURELY ON SURMISES AND CONJECTURES THEREBY CREATING A MOUNTAI N OF IMAGINATION WITH OWN PERCEPTIONS AND SELF INFERENCE S AND WRONGLY AGRAWAL FUEL CORPORATION (P) LTD & OTHER ITA NOS. 330 & 421/IND/2018, 959/IND/2019 & C.O 13/ IND/2020 32 REJECTING THE BOOK RESULTS. THIS SUBMISSION OF THE ASSESSEE WERE SUPPORTED BY JUDICIAL PRONOUNCEMENTS. IN THE LIGHT OF THE SAME LD. CIT(A) DELETED THE ADDITION OF RS.1,27,40,400/-. 34. AGGRIEVED REVENUE IS NOW IN APPEAL BEFORE THE T RIBUNAL. 35. LD. DEPARTMENTAL REPRESENTATIVE VEHEMENTLY ARGU ED SUPPORTING THE ORDERS OF LD. A.O AND CLAIMED THAT N ECESSARY DOCUMENTS WERE NOT PROVIDED FOR VERIFICATION TO THE LD. A.O IN SUPPORT OF THE COAL PURCHASED AND TRANSPORTATION CH ARGES. 36. PER CONTRA LD. COUNSEL FOR THE ASSESSEE ARGUED AND REFERRED TO THE FOLLOWING WRITTEN SUBMISSIONS; 1. GROUND NO.1-ADDITION OF ESTIMATED GP OF RS. 1,27,40,400/- (I) THE ISSUE IS DISCUSSED BY THE AO IN PARA 4 TO 4.5 ON INTERNAL PAGE 2 TO 33 OF THE ASSESSMENT ORDER. THE ADDITION MADE BY THE AO IS ON THE BASIS OF THE REPORT RECEIVED FROM THE ITO INVESTIGATION AS ABSTRACTED IN PARA 4.1 OF THE ASSE SSMENT ORDER AND ALSO DRAWING SUPPORT FROM THE SIMILAR ADDITION MADE IN AY 2009-10 IN THE ORDER PASSED U/S 147 R.W.S. 143(3) A S DISCUSSED AND ABSTRACTED IN PARA 4.4 (ON INTERNAL PAGE 9 OF T HE ASSESSMENT ORDER). (II) THE ADDITION STAND DELETED BY THE LEARNED CIT (A) AS DISCUSSED IN PARA 4.1 OF HIS ORDER. AGRAWAL FUEL CORPORATION (P) LTD & OTHER ITA NOS. 330 & 421/IND/2018, 959/IND/2019 & C.O 13/ IND/2020 33 (III) IT IS SUBMITTED THAT THE ADDITION WAS MADE ME RELY ON SURMISES AND CONJECTURES ON THE BASIS OF THE REPORT OF THE ITO INVESTIGATION WHILE ENQUIRING THE ISSUE OF CASH WITHD RAWALS FROM THE BANK ACCOUNT OF THE ASSESSEE SITUATED AT BONGAIGA ON ASSAM. THE SAID REPORT IS ABSTRACTED IN PARA 4.1 OF THE AS SESSMENT ORDER AND A PERUSAL OF THE SAME CLEARLY BRINGS OUT THAT T HE OBSERVATIONS ARE MERELY UNSUBSTANTIATED ALLEGATION WITHOUT ANY COGENT ADVERSE MATERIAL ON RECORD. THE PRESUMPTIONS DRAWN ARE WITHOUT ANY BASIS AND MERELY ON OWN FANCIES AND WHI MS OF THE OFFICER. (IV) THE ASSESSEE EXPLAINED THAT CONSIDERING THE D IFFICULT BUSINESS CONDITIONS IN NORTH EAST AND CONSIDERING T HE FACT THAT COAL WAS PURCHASED FROM INDIGENOUS TRUCK OWNERS / LO CAL DIGGERS, PAYMENTS TO THEM WERE MADE IN CASH FOR WHI CH CASH WITHDRAWALS WERE MADE FROM THE LOCAL BANK ACCOUNT S ITUATED IN THAT AREA. IT IS ALSO SUBMITTED THAT THE ASSESSEE, IN AN ATTEMPT TO MAKE AVAILABLE ALL TYPES AND CATEGORIES OF COAL FOR I TS CUSTOMERS, OUT OF COMMERCIAL EXPEDIENCY OPTED TO OPE RATE IN AN UNORGANIZED SECTOR AND TERRITORIAL REGION, WHICH WAS ALSO MUCH DISTURBED PART OF THE COUNTRY. (V) THE ASSESSEE EXPLAINED AT LENGTH THE MODUS OPE RANDI OF COAL MINING IN NORTH EASTERN INDIA AND ALSO SUBMITTED (REF PARA 4.5 ON PAGE 3 OF THE ASSESSMENT ORDER). (A) THE COPIES OF AUDIT REPORTS UNDER THE ASSAM VAL UE ADDED TAX RULES, 2005 (B) SALE TAX ASSESSMENT ORDERS PASSED BY THE SUPDT. OF TAXES, KABAITARY CHECK POST JOGIGHOPA, AGRAWAL FUEL CORPORATION (P) LTD & OTHER ITA NOS. 330 & 421/IND/2018, 959/IND/2019 & C.O 13/ IND/2020 34 (C) STOCK REGISTERS, (D) PURCHASE AND SALE ACCOUNT OF THE SAID BRANCH, (E) COPIES OF ACCOUNTS OF PERSONS TO WHOM COAL WAS S OLD FROM THE SAID BRANCH, (F) RAILWAY RECEIPTS (RR) IN RESPECT OF GOODS TRANSPORTE D THROUGH INDIAN RAILWAYS FROM JOGIGHOPA, (G) DAILY COAL PURCHASE LIST ALONG WITH TRUCK NUMBERS. (H) ALL THE PAYMENT VOUCHERS WERE ALSO PRODUCED. NO DEFECT POINTED OUT BY THE AO IN THESE DOCUMENTS. (VI) THE COAL PURCHASED AT JOGIGHOPA BRANCH WAS FUR THER SOLD AND WAS TRANSPORTED THROUGH INDIAN RAILWAYS AND PAY MENTS WERE RECEIVED THROUGH BANKING CHANNELS, WHICH LEG O F THE TRANSACTIONS HAS BEEN ACCEPTED IN ITS ENTIRETY BY T HE AO. THERE IS NO CONTRARY MATERIAL ON RECORD WHICH SHOWS THAT ANY OTHER PURCHASES WERE MADE APART FROM THE MECHANISM ON RECOR D FOR MAKING SUPPLIES FROM JOGIGHOPA BRANCH TO OTHER PART O F COUNTRY. (VII) IT IS STATED BY THE ITO INVESTIGATION THAT S INCE THE ASSESSEE HAS MADE CASH PURCHASES OF COAL FROM JOGIGOP HA, THE NATURAL PRESUMPTION IS THAT THE CASH WITHDRAWALS MIGHT BE FOR DIVERSION OF FUNDS. THE LANGUAGE ITSELF SUGGEST THAT IT IS ONLY A FARFETCHED ASSUMPTION AS NO PERSON WOULD RESORT TO DIVERSION OF FUNDS AT SUCH A REMOTE PLACE OF NORTH EAST, WHER E THE LAW AND ORDER SITUATION WAS NOT CONDUCIVE AND THERE IS N O UTILIZATION OF SUCH FUNDS IN THAT REGION. AGRAWAL FUEL CORPORATION (P) LTD & OTHER ITA NOS. 330 & 421/IND/2018, 959/IND/2019 & C.O 13/ IND/2020 35 THE SAID BRANCH HAS EARNED HIGHER PROFITS ALSO IN S OME YEARS (VIII) A VERY IMPORTANT PIECE OF EVIDENCE TO NEGATE THE ALLEGATION AND THE THEORY PROPOUNDED BY THE AO IS THE COMPARAT IVE CHART OF GROSS PROFIT OF JOGIGHOPA BRANCH V/S OTHER BRANC HES OF THE ASSESSEE ABSTRACTED ON INTERNAL PAGE 4 OF THE ASSESSMENT ORDER, FROM WHERE IT IS EVIDENT THAT OUT OF THE SIX YEARS, IN TWO YEARS I.E. AY 2010-11 AND AY 2013-14 THE GP RATE OF JOGIGHOPA WAS MUCH BETTER THAN THE COMPARATIVE GP R ATE OF ALL OTHER BRANCHES. IN AY 2013-14 THE STAND ALONE GP RA TE OF JOGIGHOPA WAS 9.75 AS AGAINST 5.01 OF OTHER BRANCHE S. SIMILARLY THE GP RATE OF JOGIGHOPA IN AY 2010-11 WA S 5.78 VIS 4.83 OF OTHER BRANCHES. THIS FACT DEFIES ALL THE AP PREHENSIONS AND ASSUMPTIONS OF THE AO THAT SOMETHING WRONG OR F ISHY WAS HAPPENING AT THIS BRANCH. PROFITS CANNOT BE CONSTANT IN ALL THE ALL THE BRANCHES SITUATED AT DIFFERENT ART OF T HE COUNT (IX) THE GP CHART ALSO SHOWS THAT IN SOME OF THE YE ARS THE ASSESSEE HAS SUFFERED LOSSES AT JOGIGHOPA BRANC H AND IN SOME YEARS THE GP WAS LESS THAN THE GP EARNED BY OT HER BRANCHES. THIS FACT IS ALSO IMPORTANT AS VARIATION IN PROFIT RATIOS IS A VERY NATURAL AND NORMAL PHENOMENA IN AN Y LINE OF TRADE. SIMILAR VARIATION CAN BE OBSERVED IN THE OVE RALL GP RATE OF THE ASSESSEE IN ALL THE YEARS AS ALSO OBSERVED B Y THE AO IN PARA 5.4 ON INTERNAL PAGE 5 OF THE ASSESSMENT ORDER . FURTHER THE PROFITS OR LOSSES CANNOT BE CONSTANT AND IDENTI CAL ACROSS ALL THE BRANCHES ARID ALL THE YEARS. THIS IS WHAT BUSIN ESS IS, WHICH SIMPLE FUNDAMENTAL WAS NOT RIGHTLY APPRECIATED BY T HE LEARNED AO. AGRAWAL FUEL CORPORATION (P) LTD & OTHER ITA NOS. 330 & 421/IND/2018, 959/IND/2019 & C.O 13/ IND/2020 36 (X) IT IS SUBMITTED THAT THE LEARNED AO FAILED TO APPRECIATE THE CARDINAL PRINCIPAL OF BUSINESS AND ALSO OF TAXA TION THAT THE MERE FACT THAT THE PERCENTAGE OF PROFIT OR LOSS IS HIGH OR LOW IN A PARTICULAR REGION OR IN A PARTICULAR YEAR DOES NO T NECESSARILY LEAD TO ADVERSE INFERENCES. SUFFERING OF LOSSES OR EARNING LOWER PROFITS IS NEITHER A CIRCUMSTANCE NOR A MATERIAL TO JUSTIFY THE ADDITION OF PROFITS. THE AO IS REQUIRED TO BRING CO GENT EVIDENCE ON RECORD RATHER MERELY EXPRESSING SUSPICION TO SUP PORT THE ADDITION AS DONE IN THE INSTANT CASE. WHILE MAKING THE ASSESSMENT THE AO MUST TAKE INTO CONSIDERATION THE LOCAL INFORMATION, FACTORS AND CIRCUMSTANCES AND OTHER RE LEVANT MATERIAL IN ORDER TO ADJUDGE THE RESULTS OF THE ASS ESSEE. THE AO COMPARED TWO INCOMPARABLE (XI) IT IS SUBMITTED THAT IF THE LEARNED AO HAD ANY DOUBTS, NO EFFORTS WHATSOEVER WERE MADE BY HIM OF CONDUCTING ANY DIRECT / INDEPENDENT ENQUIRY WITH REGARD TO HIS DO UBTS, BE IT WITH REGARD TO THE PURCHASE RATE OR BUSINESS MODUS OPERANDI PREVAILING IN THAT PART OF THE COUN TRY. THE AO COMPARED TWO INCOMPARABLE. IT IS SUBMITTED THAT CONSIDERING THE OVERALL SCENARIO IN THE NORT H EAST INDIA THE OPERATIONAL RESULTS OF JOGIGHOPA BRANCH OUGHT NOT TO HAVE BEEN COMPARED WITH THE OTHER BRANCHES OF THE ASSESSEE. NO EFFORT WAS MADE BY TH E AO TO BRING ON RECORD THE COMPARABLE WORKING OF OTHER ASSESSEES OPERATING IN NORTH EAST INDIA. BOOKS OF ACCOUNTS ARE DEFECT PER SE WAS POINTED OUT (XII] THE BOOKS OF ACCOUNTS AND THE SYSTEM OF ACCOU NTING ADOPTED BY THE ASSESSEE CANNOT BE REJECTED MERELY ON THE AGRAWAL FUEL CORPORATION (P) LTD & OTHER ITA NOS. 330 & 421/IND/2018, 959/IND/2019 & C.O 13/ IND/2020 37 GROUND THAT THE GROSS PROFITS OF PARTICULAR BRANCH WERE LOW AND COMPARED UNFAVORABLE WITH THE PROFITS OF OTHER BRANCHES. THE BOOKS OF ACCOUNTS ARE PROPERLY MAINTAINED AND ARE DULY AUDITED BOTH UNDER THE COMPANIES ACT AS WELL AS THE INCOME TAX ACT WITHOUT ANY ADVERSE COMMENT. SUCH BOOKS OF ACCOUNTS AND STO CK RECORDS ARE CONSISTENTLY MAINTAINED BY THE ASSESSEE IN THE SIMILAR FASHION. IT IS WELL SETTLED PRINCIPAL T HAT BEFORE REJECTING THE BOOK RESULTS, PROPER AND COGENT DISCREPANCIES SHOULD BE POINTED OUT IN THE REGULAR BOOKS OF ACCOUNTS BY THE AO, IN THE ABSENCE OF WHICH THE ADDITION FOR LOW GROSS PROFIT BY REJECTING THE BOOK RESULTS IS DEVOID OF MERIT AND IS UNCALLED FOR. FOR THIS PR OPOSITION THE ASSESSEE PLACES RELIANCE ON THE DECISION OF THE HONOURABLE JURISDICTIONAL ITAT IN THE CASE OF DCIT V /S M/S MCS TRADING CO. PVT. LTD. IN ITA NO. 353/IND/20 17 FOR AY 2012-13 DATED 09.04.2019 COPY ENCLOSED AT PA GE NO. 541 TO 570 OF THE CASE LAW PAPER BOOK. [XIII] FOR THE ABOVE PROPOSITIONS THE ASSESSEE ALSO PLACES RELIANCE ON THE DECISION OF THE HONOURABLE GAUHATI HIGH COURT IN THE CASE OF MADNANI CONSTRUCTION V /S CIT (2008) 296 ITR 45 GAUHATI . IMPORTANTLY IN THIS CASE THE HONOURABLE HIGH COURT HAD AN OCCASION TO OBSERVE THE PREVAILING BUSINESS CONDITION IN THE JOGIGHOPA SECT OR OF NORTH EAST INDIA AS DISCUSSED IN PARA 5 AND PARA 7 OF THE SAID JUDGEMENT. THE FACTS OF THE CASE BEFORE YOUR HONOUR SO FAR AS THE WORKING CONDITIONS IN NORTH EA ST REGION OF INDIA, ARE IDENTICAL TO THE CASE BEFORE T HE HONOURABLE HIGH COURT, WHEREIN ALSO THE ASSESSEE HA S PURCHASED VARIOUS RAW MATERIAL IN CASH ONLY AFTER AGRAWAL FUEL CORPORATION (P) LTD & OTHER ITA NOS. 330 & 421/IND/2018, 959/IND/2019 & C.O 13/ IND/2020 38 OBTAINING THE SIGNATURES OF THE PARTIES WITHOUT REC ORDING THEIR OTHER CREDENTIAL. COPY OF THIS JUDGMENT IS EN CLOSED AT PAGE NO. 571 TO 574 OF CASE LAW PAPER BOOK. HOWEVER, IN THE INSTANT CASE BEFORE YOUR HONOURS THE FACTS ARE ON A BETTER FOOTING AS COMPLETE DETAILS OF TRANSPORTATIO N ALONG WITH TRUCK NUMBER ETC AS WELL AS COMPLETE VOUCHERS OF PAYMENTS MADE AGAINST PURCHASES ARE MAINTAINED BY T HE ASSESSEE WHICH WERE ALSO PRODUCED. (XIV) IT IS SUBMITTED THAT THE MERE FACT THAT A MI NISCULE PURCHASES WERE MADE BY THE ASSESSEE IN CASH CONSIDE RING THE OVERALL SIZE OF ITS BUSINESS, THAT TOO DUE TO C OMPELLING BUSINESS CONDITIONS, IS NOT SUFFICIENT TO REJECT TH E BOOK RESULTS U/S 145(3) FOR THE LIMITED PURPOSE OF ESTIM ATING THE PROFIT OF A PARTICULAR BRANCH. NO DEFECT WHATSOEVER HAS BEEN POINTED OUT BY THE AO WHILE APPLYING THE STRIN GENT PROVISIONS OF SECTION 145(3) IN AN ARBITRARY MANNER . THE ASSESSEE HAS MAINTAINED ITS BOOKS OF ACCOUNTS ACCOR DING TO THE METHOD REGULARLY EMPLOYED BY IT AND THE PROF IT AND GAINS OF THE BUSINESS CAN BE PROPERLY COMPUTED FROM SUCH ACCOUNTS. IN THESE CIRCUMSTANCES THE REJECTION OF B OOK RESULT AND ADOPTION OF ESTIMATED PROFIT OF ONE OF T HE BRANCH WAS NOT AT ALL JUSTIFIED. FOR THIS PROPOSITI ON RELIANCE IS PLACED ON THE DECISION OF KERALA HIGH C OURT IN THE CASE OF M. DURAI RAJ V / S CIT 38 ITR 484 (KER) COPY ENCLOSED AT PAGE NO. 575 TO 582 OF THE CASE LAW PAPER BOOK. ADDITION DELETED IN AY 2009-10 BY THE LD. CIT(A} (XV) WHILE MAKING THE ADDITION THE AO HAS RELIED UPON AN D ALSO ABSTRACTED THE ASSESSMENT ORDER FOR AY 2009-10 (REF AGRAWAL FUEL CORPORATION (P) LTD & OTHER ITA NOS. 330 & 421/IND/2018, 959/IND/2019 & C.O 13/ IND/2020 39 PARA 4.4 ON PAGE 9) AND ALSO (PARA 4.5.13 ON PAGE 3 2). IT IS SUBMITTED THAT THE ADDITION MADE IN THE ASSESSMENT YEAR 2009-10 STAND DELETED BY THE FIRST APPELLATE AUTHOR ITY AND NO SECOND APPEAL HAS BEEN FILED, MAY BE DUE TO LOW TAX EFFECT. NEVERTHELESS THE FACT REMAINS THAT THE ADDI TION MADE IN AY 2009-10, ON WHICH THE AO HAS PLACED HEAV Y RELIANCE STAND DELETED. IN VIEW OF THE ABOVE THE ASSESSEE MOST RESPECTFULLY SUBMITS THAT THE ADDITION MADE BY THE A.O IS WRONG AND UNCALLED FOR AND HAS RIGHTLY BEEN DELETED BY THE LEARNED CIT(A). 37. LD. COUNSEL FOR THE ASSESSEE HAS ALSO RELIED ON FOLLOWING JUDGMENTS; (I) DCIT V/S M/S MCS TRADING CO PVT. LTD ITA NO.3 53 /IND /2017 ORDER DATED 09.04.2019. (II) MADANI CONSTRUCTION V/S CIT (2008) 296 ITR 45 GAUHATI (III) M. DURAI RAJ V/S CIT 38 ITR 484 (KER) 38. WE HAVE HEARD RIVAL CONTENTIONS AND PERUSED THE RECORDS PLACED BEFORE US AND CAREFULLY GONE THROUGH THE JUD GMENTS REFERRED AND RELIED BY THE LD. COUNSEL FOR THE ASSESSEE. TH ROUGH THIS GROUND NO.1 IN THE CASE OF AGRAWAL FUEL CORPORATION (P) LTD (ASSESSMENT YEAR 2014-15) REVENUE HAS CHALLENGED T HE FINDING OF LD. CIT(A) DELETING THE ADDITION FOR ESTIMATED GROS S PROFIT OF RS. AGRAWAL FUEL CORPORATION (P) LTD & OTHER ITA NOS. 330 & 421/IND/2018, 959/IND/2019 & C.O 13/ IND/2020 40 1,27,40,400/- MADE BY THE LD. A.O WITH REGARD TO TH E TURNOVER CARRIED OUT AT JOGIGHOPA BRANCH, NORTH EAST INDIA, ASSAM. 39. WE OBSERVE THAT THE ASSESSEE IS INTO THE COAL B USINESS. TURNOVER OF THE COMPANY FOR FINANCIAL YEAR 2013-14 IS SHOWN AT RS.380.86 CRORES AND PROFIT BEFORE TAX IS 10.09 CRO RES. FOR THE IMMEDIATELY PRECEDING FINANCIAL YEAR I.E. F.Y 2012- 13 THE GROSS TURNOVER IS RS.356.79 CRORES AND PROFIT BEFORE TAX IS 9 CRORES. ASSESSEE HAS VARIOUS BRANCHES TO RUN ITS BUSINESS. ASSESSEE ALSO RUN A BRANCH AT ASSAM AT JOGIGHOPA. TURNOVER OF TH IS BRANCH IS RS.3,35,12,565/- WHICH IN PERCENTAGE TERMS IS LESS THAN 1% OF THE TOTAL TURNOVER OF THE ASSESSEE COMPANY FOR THE YEAR . 40. DURING THE COURSE OF ASSESSMENT PROCEEDINGS LD. A.O ON THE BASIS OF INVESTIGATION REPORT SHOWING CASH WITHDRAW ALS FROM THE BANK ACCOUNT FOR PAYMENT OF PURCHASE OF COAL AND TR ANSPORTATION CHARGES PERTAINING TO JOGIGHOPA BRANCH, NORTH EAST INDIA, ASSAM OBSERVED THAT THE COAL PURCHASED HAVE BEEN PAID IN CASH. SIMILARLY TRANSPORT CHARGES WERE ALSO BEEN PAID IN CASH WITH A GAP OF FEW DAYS. LD. A.O CALLED FOR THE PURCHASE BILLS AND OT HER RELEVANT DETAILS TO EXAMINE THE GENUINENESS OF THE PURCHASES . THESE INFORMATION WERE CALLED SINCE THE ASSESSEE HAD SHOW N THE GROSS LOSS AGRAWAL FUEL CORPORATION (P) LTD & OTHER ITA NOS. 330 & 421/IND/2018, 959/IND/2019 & C.O 13/ IND/2020 41 IN THE TRADING ACCOUNT OF JOGIGHOPA BRANCH WHEREAS AT OTHER BRANCHES THE GROSS PROFIT RATE WERE SHOWN WHICH WER E COMMENSURATE WITH THE OVER ALL GROSS PROFIT OF OTHE R BRANCHES. IN REPLY TO THE INFORMATION CALLED FOR BY LD. A.O ASSE SSEE DULY SUPPLIED THE QUANTITATIVE DETAILS OF THE COAL PURCHASED AND SOLD, SALES BILLS, PURCHASE LEDGER ACCOUNT, RAILWAY RECEIPTS IN SUPPOR T OF GOODS TRANSPORTED THROUGH INDIAN RAILWAYS, DAILY COAL PUR CHASE LIST AND PAYMENT VOUCHERS AND VALUE ADDED TAX, ANNUAL REPORT AND ASSESSMENT ORDER. HOWEVER LD. A.O WAS NOT SATISFIE D SINCE HE WAS NOT ABLE TO EXAMINE THE PRICE PER UNIT OF COAL PURC HASED AND HIS DOUBT WAS MAINLY OF ACCOUNT OF CASH PAYMENT FOR PUR CHASES AND TRANSPORT EXPENDITURE. LD. A.O HAS NOT DOUBTED THE SALES MADE BY THE ASSESSEE AT JOGIGHOPA BRANCH. LD. A.O ACCORDIN GLY APPLIED GROSS PROFIT RATE OF THE COMPANY FOR OTHER BRANCHES I.E.6.69% ON THE TURNOVER OF JOGIGHOPA BRANCH, NORTH EAST INDIA, ASS AM AND MADE ADDITION FOR RS.1,27,40,400/-. 41. WHEN THE MATTER CAME UP BEFORE LD. CIT(A) HE DE LETED THE ADDITION OBSERVING AS FOLLOWS:- 4.1 GROUND NO.I : THROUGH THIS GROUND OF THE APPEAL. THE APPELLANT H AS CHALLENGED THE ADDITION OF RS. I ,27,40,400/-- ON A CCOUNT OF LOW GROSS PROFIT. THE AGRAWAL FUEL CORPORATION (P) LTD & OTHER ITA NOS. 330 & 421/IND/2018, 959/IND/2019 & C.O 13/ IND/2020 42 AO HAS MADE THE ADDITION AFTER ADOPTING 6.69 GROSS PROFIT IN RESPECT OF JOGIGOPHA BRANCH. THE APPELLANT IS ENGAGED IN THE COAL TRADIN G WORK. THE APPELLANT BOOKED THE EXPENDITURES WHICH ARE INTEGRAL PART OR THE BUSINESS. THE APPELLANT'S BOOKS OF ACCOUNT ARC AUDITED U/S 44AB OF THE IT ACT. ALL THE EXPENSES ARC DULY RECORDED AND ENTERED. THE AO HAS NOT POINTED OUT ANY SPECIFI C DEFECTS IN THE HOOKS OF ACCOUNTS. THE AO CITED THE REASONS THAT NO CORROBOR ATIVE EVIDENCES ALONG WITH VOUCHERS FOR EXPENDITURE WERE PRODUCED. THE ABOVE DEFECTS ARE GENERAL IN NATURE. THE APPELLANT BOOKS ARC AUDITED U/S 44AB OF THE L.T. ACT. THE APPELLANT NEED NOT RO MAINTAIN SEPARATE BOOKS FOR EACH AND EVERY SITE, THE APPELLANT IS MAKING CASH PAYMENT ON SELF-MADE VOUCHERS AND DOES N01 EXCE ED THE LIMIT OR RS.20,OOOI- WHICH IS AS PER JAW. THE PAYMENT FOR EXPENSES AND MATERIAL PURCHASES WERE DULY RECORDED IN THE BOOKS OF ACCOUNT AND THE AO HAS NOT. POINTED OUT WHICH PAYMENT AND MATERIAL PURCHASES WERE BOGUS. THE AO IS NOT JUSTIFIED IN MAKING THE ESTIMATION OF THE INCOME WITHOUT ANY REASON. 4.1.1 THE AO HAS NOT BROUGHT OUT ANY MATERIAL ON RECORD WHIC H SUGGESTS THAT THE APPELLANT IS DOING ANY BUSINESS OTHER THAN WHAT IS RECORDED IN T HE BOOKS OF ACCOUNT. IN THE CASE OF INTERNATIONAL FOREST CO. VS. CIT (1975) 101 ITR 721 (J&K) IT IS HELD THAT AO CANNOT PROCEED TO MAKE AN ARBITRARY ADDITION AND BASE HIS CONCLUSION PURELY ON GUESS WORK. HE OUGHT TO HAVE RELATED HIS ESTIMATE TO SOME EVIDENCE OR MATERIAL O N THE RECORD AS IT IS NOW WELL SETTLED THAT IF THE PROFITS SHOWN BY THE APPELLANT IN HIS RETURN ARE NOT ACCEPTED, IT IS FOR THE TAXING AUTHORITIES TO PROVE THAT THE APPELLANT HAS MADE MORE PROFITS THAN RETURNED. HERE THE AO FAILED TO BRING ON RECORD ANYTHING WHICH SHOWS THAT APPELLANT HAS EARNED MORE PROFIT OTHER THEM WHAT HAS SHOWN IN THE BOOKS OF ACCOUNT. THE AO HAS NOT MADE ANY ENQUIRY AND ARBITRARILY MADE THE ADDITION. THE AO IN THE ASSESSMENT YEARS 2010-11 & 2013-14 ACCEPTED THE BOOK RESULT OF {HE APPELLANT IN RESPECT OF JOGIGOPHA BRA NCH. THEREFORE, THE AO IS NOT JUSTIFIED IN ENHANCING THE G. P. @ 6.69% WITHOUT ANY REASON DURING THE YEAR UNDER CONSIDERATION. THEREFORE, THE ADDITION MADE BY THE AO AMOUNTING TO RS.L,27,40,400/-- IS DE1ETED. THEREFORE, THE APPEAL ON THIS GROUND IS ALLOWED. AGRAWAL FUEL CORPORATION (P) LTD & OTHER ITA NOS. 330 & 421/IND/2018, 959/IND/2019 & C.O 13/ IND/2020 43 42. BEFORE US THE LD. COUNSEL FOR THE ASSESSEE SUBM ITTED THAT THE ASSESSEE EXPLAINED AT LENGTH THE MODUS OPERANDI OF COALS MINING AT NORTH EASTERN INDIA WHEREIN VARIOUS DIFFICULTIES AR E FACED ON DAY TO DAY BASIS AND THE FLOW OF THE BUSINESS IS NOT SO RE GULAR IN TERMS OF COAL PURCHASE AND TRANSPORTATION CHARGES AS THE ASS ESSEE WITNESSED IN OTHER PARTS OF THE COUNTRY. WE ALSO O BSERVE THAT LD. COUNSEL FOR THE ASSESSEE HAS SUBMITTED FOLLOWING DOCUMENTS/DETAILS BEFORE THE LOWER AUTHORITIES:- (A) THE COPIES OF AUDIT REPORTS UNDER THE ASSAM VALUE ADDED TAX RULES, 2005 (B) SALE TAX ASSESSMENT ORDERS PASSED BY THE SUPDT. OF TAXES, KABAITARY CHECK POST JOGIGHOPA, (C) STOCK REGISTERS, (D) PURCHASE AND SALE ACCOUNT OF THE SAID BRANCH, (E) COPIES OF ACCOUNTS OF PERSONS TO WHOM COAL WAS SOLD FROM THE SAID BRANCH, (F) RAILWAY RECEIPTS (RR) IN RESPECT OF GOODS TRANSPORTED THROUGH INDIAN RAILWAYS FROM JOGIGHOPA, (G) DAILY COAL PURCHASE LIST ALONG WITH TRUCK AGRAWAL FUEL CORPORATION (P) LTD & OTHER ITA NOS. 330 & 421/IND/2018, 959/IND/2019 & C.O 13/ IND/2020 44 NUMBERS. (H) ALL THE PAYMENT VOUCHERS WERE ALSO PRODUCED. 43. IT IS ALSO NOT DOUBTED THAT THE BOOKS OF THE AC COUNTS OF THE ASSESSEE WERE REGULARLY AUDITED. LD. A.O HAS RAISE D NO DOUBT ON THE REMAINING BOOKS RESULTS OF THE ASSESSEE COMPANY AND HAS ADOPTED THE SAME GROSS PROFIT RATE AS SHOWN BY THE ASSESSEE. NOW THE QUESTION REMAINS IS WHETHER THE BOOK RESULTS SH OWN BY THE ASSESSEE FOR JOGIGHOPA BRANCH ARE CORRECT. THE ASS ESSEE HAD PLACED LOT OF DOCUMENTARY EVIDENCES IN THE FORM OF AUDIT REPORT, AUDIT REPORT UNDER THE ASSAM VALUE ADDED TAX RULES, STOCK REGISTERS, COAL PURCHASES ACCOUNT, PAYMENT VOUCHERS AND STOCK RECORDS. WHEREAS LD. A.O IS FOCUSING ON QUALITATIV E DETAILS OF COAL PURCHASED AND PAYMENT IN CASH FOR PURCHASE AND EXPE NDITURE. RECORDS SHOWS THAT THE ASSESSEE TRIED TO SATISFY TH E LD. A.O WITH ALL THE DETAILS HE POSSESSED TO EXPLAIN THE GENUINENESS OF PURCHASE AND EXPENSES OF JOGIGHOPA BRANCH BUT LD. A.O HAD NO T MADE ANY OTHER EFFORTS TO ENQUIRE ABOUT THE COAL PRICE SHOWN BY THE OTHER ASSESSEE(S) IN THAT REGION. IT IS ONLY BECAUSE THE PAYMENTS WERE MADE IN CASH FOR PURCHASE AND EXPENDITURE WHICH INS TIGATED THE AGRAWAL FUEL CORPORATION (P) LTD & OTHER ITA NOS. 330 & 421/IND/2018, 959/IND/2019 & C.O 13/ IND/2020 45 LD. A.O TO QUESTION THE BOOK RESULTS WHICH IN ITSEL F IS NOT A VALID GROUND FOR RAISING DOUBTS. 44. WE ALSO OBSERVE THAT THE ASSESSEE HAD NOT SHOWN GROSS LOSS AT JOGIGHOPA BRANCH CONSISTENTLY IN THE PAST. IT IS E VIDENT THAT OUT OF THE SIX ASSESSMENT YEARS I.E. FROM 2008-09 TO ASSES SMENT YEAR 2013-14 DURING ASSESSMENT YEAR 2010-11 AND ASSESSME NT YEAR 2013-14 THE GROSS PROFIT RATE OF JOGIGHOPA BRANCH W AS MUCH BETTER THAN THAT OF OTHER BRANCHES. IN ASSESSMENT YEAR 20 13-14 THE GROSS PROFIT RATE OF JOGIGHOPA BRANCH WAS 9.75%. THIS F ACTS SUPPORTS THE CONTENTION OF THE LD. COUNSEL FOR THE ASSESSEE THAT DUE TO CHANGE OF BUSINESS ENVIRONMENT WHICH HAPPENS FROM TIME TO TIM E THE PROFITS AND LOSSES ALSO CHANGE. 45. WE ARE CONSCIOUS OF THE FACT THAT PROFITS OF A BUSINESS CANNOT BE CONSTANT IN ALL THE YEARS AND SIMILARLY PROFITS CANNOT BE THE SAME FOR VARIOUS BRANCHES OF A COMPANY RUNNING IN DIFFER ENT PARTS OF THE COUNTRY. SUFFERING OF LOSS OR EARNING LOWER PROFIT S OR VARIATION IN THE GROSS PROFIT ON YEAR TO YEAR AND PLACE TO PLACE BASIS IS PART OF A BUSINESS AND CANNOT BE THE SOLE BASIS TO JUSTIFY TH E ADDITIONS BY THE REVENUE AUTHORITIES. IF THE LD. A.O HAD A SUSPICIO N TO THE TRANSACTIONS CARRIED OUT BY THE ASSESSEE HE/SHE IS REQUIRED TO BRING AGRAWAL FUEL CORPORATION (P) LTD & OTHER ITA NOS. 330 & 421/IND/2018, 959/IND/2019 & C.O 13/ IND/2020 46 COGENT EVIDENCE ON RECORD TAKING INTO CONSIDERATION THE LOCAL INFORMATION ABOUT ITEMS DEALT BY THE ASSESSEE AND O THER CIRCUMSTANCES AND RELEVANT MATERIAL SO AS TO JUDGE THE RESULTS SHOWN BY THE COMPANY. WE FIND THAT LD. A.O HAS NOT MADE ANY EFFORTS BY WAY OF INITIATING ANY INDEPENDENT ENQUIR Y WITH REGARD TO HIS DOUBTS ABOUT THE ALLEGED ESCALATED PURCHASE PRI CE OF COAL AND GENUINENESS OF TRANSPORTATION CHARGES INCURRED IN C ASH BY THE ASSESSEE AT JOGIGHOPA BRANCH. 46. WE OBSERVE THAT THE LD. A.O FAILED TO APPRECIAT E AN IMPORTANT FACT WHICH HE HIMSELF HAS OBSERVED IN HIS ASSESSMEN T ORDER THAT FROM ASSESSMENT YEAR 2008-09 TO ASSESSMENT YEAR 201 3-14 THE GROSS PROFIT OF ALL BRANCHES EXCLUDING JOGIGHOPA BR ANCH HAS REMAINED POSITIVE AND IS BETWEEN 3.47% TO 5.01% WHE REAS IN THE CASE OF JOGIGHOPA BRANCH IT IS NOT SO BECAUSE THE G ROSS PROFIT RATE SHOWN FROM ASSESSMENT YEAR 2008-09 TO ASSESSMENT YE AR 2013-14 IS 1.46%, (-) 1.79%, 5.78%, (-) 0.69%, 2.82% AND 9. 75% RESPECTIVELY. THIS FACT SHOWS THAT GROSS PROFIT RAT E IS UNEVEN AT JOGIGHOPA BRANCH. FOR ASSESSMENT YEAR 2009-10 SIMI LAR TYPE OF ADDITION WERE MADE BY THE LD. A.O FOR LOW PROFITS B UT WERE DELETED BY LD. CIT(A). AGRAWAL FUEL CORPORATION (P) LTD & OTHER ITA NOS. 330 & 421/IND/2018, 959/IND/2019 & C.O 13/ IND/2020 47 47. IT IS ALSO NOTEWORTHY THAT LOOKING TO THE MAGNI TUDE OF THE TOTAL SALE TURNOVER OF THE ASSESSEE COMPANY WHICH FOR THE YEAR UNDER APPEAL IS RS.380.56 CRORES AND THE TOTAL TURNOVER O F JOGIGHOPA BRANCH, ASSAM IS 0.88% OF THE TOTAL TURNOVER I.E. R S.3.35 CRORES ONLY. WHEN THE BOOK RESULTS OF THE COMPANY EXCEPT THE JOGIGHOPA BRANCH STANDS ACCEPTED, LD. A.O QUESTIONING THE GRO SS PROFIT RATE OF 0.88% OF THE TOTAL TURNOVER THAT TOO WITHOUT PLACIN G ANY RELEVANT MATERIAL ON RECORD SEEMS HARD TO STAND FOR. IN THE SIMILAR CIRCUMSTANCES WHERE THE PROFIT /LOSS SHOWN BY THE A SSESSEE ARE QUESTIONED WITHOUT POINTING OUT SPECIFIC ERROR IN T HE BOOKS OF ACCOUNTS AND RELEVANT MATERIAL, THE ACTION OF THE L D. A.O OF ESTIMATING HIGHER PROFIT HAS NOT BEEN HELD JUSTIFIE D BY THE HON'BLE COURTS AND CO-ORDINATE BENCHES. CO-ORDINATE BENCH, INDORE IN THE CASE OF DCIT V/S M/S MCS TRADING CO. PVT. LTD (SUPRA) VIDE ITA NO.353/IND/2017 ORDER DATED 09.04.2019 ADJUDICATING SIMILAR ISSUE OBSERVED AS U NDER :- 23. WE THEREFORE IN THE GIVEN FACTS AND CIRCUMSTANCES OF THE CASE AND RESPECTFULLY FOLLOWING THE DECISION OF THE CO-ORDIN ATE BENCH IN ASSESSEES OWN CASE FOR ASSESSMENT YEAR 2010-11 FIND THAT THE FACTS OF THE CASE ARE SIMILAR. BOOKS OF ACCOUNTS AND STOCK RECORDS ARE C ONSISTENTLY BEEN MAINTAINED BY THE ASSESSEE IN THE SIMILAR FASHION. AUDITED REPORTS BY THE AUDITOR UNDER THE COMPANIES ACTS AND INCOME TAX ACT ARE PLACED ON AGRAWAL FUEL CORPORATION (P) LTD & OTHER ITA NOS. 330 & 421/IND/2018, 959/IND/2019 & C.O 13/ IND/2020 48 RECORDS. NO ERROR IS POINTED OUT BY THE AUDITORS. LD. A.O HAS MADE A GENERAL OBSERVATION THAT THE ASSESSEE IS HAVING HUG E AMOUNT OF CASH PURCHASES AND CASH SALES BUT HAS NOT PLACED OR REFE RRED TO ANY EVIDENCE ON RECORD TO PROVE THAT THE ASSESSEE IS INDULGED IN TO UNACCOUNTED SALES AND PURCHASES. ALL THE EXPENSE ARE VOUCHED. LD. A .O HAS MERELY FOLLOWED THE ORDER OF HIS PREDECESSOR OF PREVIOUS YEARS FOR MAKING THE IMPUGNED ADDITION. IT IS WELL SETTLED PRINCIPAL THAT BEFORE REJECTING THE BOOK RESULTS, DISCREPANCIES SHOULD BE POINTED OUT IN THE REGULAR BOOKS OF ACCOUNTS BY THE ASSESSING OFFICER. 24. THEREFORE RESPECTFULLY FOLLOWING THE DECISION OF T HE CO-ORDINATE BENCH REFERRED ABOVE AND IN THE GIVEN FACTS AND CI RCUMSTANCES IN THE INSTANT APPEAL, WE ARE OF THE CONSIDERED VIEW THAT LD. CIT(A) HAS CORRECTLY ALLOWED THE ASSESSEES APPEAL BY HOLDING THAT THE BOOK RESULTS SHOULD BE ACCEPTED AND THAT THE ACTION OF THE LD. A.O REJECTI NG BOOKS OF ACCOUNTS AND MAKING THE ADDITION FOR LOW GROSS PROFIT ON SALE OF GOLD BAR AND SALE OF SILVER BAR IS DEVOID OF ANY MERIT AND UNCALLED FOR. WE THEREFORE FIND NO INCONSISTENCY IN THE FINDING OF LD. CIT(A) AND THE SAME DESERVES TO BE CONFIRMED. ACCORDINGLY GROUNDS 1 & 2 OF THE REVEN UES APPEAL FOR ASSESSMENT YEAR 2012-13 STANDS DISMISSED 48. SIMILAR VIEW WAS ALSO TAKEN BY HON'BLE GAUHATI HIGH COURT IN THE CASE OF MADANI CONSTRUCTIO0N V/S CIT (SUPRA) 296 ITR 45 (GAUHATI). RELEVANT EXTRACT IS REPRODUCED BELOW:- 9. 'WE HAVE ALSO CONSIDERED THE JUDGMENTS IN CIT V. BRITISH PAINTS INDIA LTD. : CHHABILDAS TRIBHUVANDAS SHAH V. CIT AND S.N. VADHYAR AND SONS V. CIT [1990] 183 ITR 550 (KER), RELIED UPON BY MR. U. BHUYAN, LEARNED AGRAWAL FUEL CORPORATION (P) LTD & OTHER ITA NOS. 330 & 421/IND/2018, 959/IND/2019 & C.O 13/ IND/2020 49 COUNSEL FOR THE REVENUE. THE ISSUES DECIDED IN THES E JUDGMENTS ARE NOT BASED ON IDENTICAL FACT. IN THE INSTANT CASE, THE Q UESTION IS WHETHER THE REJECTION OF THE BOOKS OF ACCOUNT BY THE ASSESSING OFFICER AND COMPUTATION OF NET PROFIT AS PER BEST JUDGMENT IS IN TUNE WITH THE PRINCIPLES OF BEST JUDGMENT ASSESSMENT. IN THE INSTANT CASE, AS HAS BE EN POINTED OUT HEREINABOVE, THE ASSESSING OFFICER ABRUPTLY CAME TO A CONCLUSION THAT THE ACCOUNTS DO NOT DISCLOSE CORRECTLY THE TRANSACTIONS IN RESPECT OF PURCHASE OF RAW MATERIALS WITHOUT ANY ENQUIRY AS TO WHETHER SUCH MATERIALS COMMENSURATE WITH THE VOLUME OF THE WORKS DONE. FAI LURE OF THE ASSESSEE TO GIVE DETAILS OF THE SUNDRY CREDITORS MAY BE A GR OUND FOR RAISING SUSPICION, BUT SUSPICION ALONE IS NOT ENOUGH FOR IN VOKING THE POWERS OF BEST JUDGMENT ASSESSMENT WITHOUT THE SUPPORT OF THE MATERIALS. THE ASSESSING OFFICER RELIED UPON A PART OF A TRANSACTI ON FOR THE PRECEDING YEAR WHILE REJECTING THE OTHER. THIS IS NOT PERMISSIBLE IN LAW. WITHOUT POINTING OUT ANY ERROR IN THE PROFIT AND LOSS ACCOUNT AND TH E AUDITED REPORT, THE POWERS OF BEST JUDGMENT ASSESSMENT COULD NOT BE INV OKED. THE PRINCIPLES OF BEST JUDGMENT ASSESSMENT DO NOT APPEAR TO HAVE B EEN FOLLOWED BY THE ASSESSING OFFICER. THE LEARNED' TRIBUNAL REDUCED TH E RATE OF PROFIT FROM 8 PER CENT, TO 6 PER CENT MERELY ON SUSPICION. IN' T HE GIVEN CIRCUMSTANCES; THE QUESTION FORMULATED HAS TO BE REGARDED AS A QUE STION OF LAW. 49. SIMILAR VIEW WAS ALSO TAKEN IN FAVOUR OF THE AS SESSEE BY HON'BLE KERALA HIGH COURT IN THE CASE OF M. DURAI RAJ V/S CIT (SUPRA) 38 ITR 484 (KER) OBSERVING S FOLLOWS:- WHETHER THE ACCOUNTS OF THE ASSESSEE ARE MAINTAINE D ACCORDING TO THE METHOD REGULARLY EMPLOYED BY HIM WHETHER THEY ARE C ORRECT AND COMPLETE, AND WHETHER THE INCOME CAN BE PROPERLY CO MPUTED FROM THE ACCOUNTS ARE ALL PURE QUESTIONS OF FACT. THE APPELL ATE TRIBUNALS FINDING ON AGRAWAL FUEL CORPORATION (P) LTD & OTHER ITA NOS. 330 & 421/IND/2018, 959/IND/2019 & C.O 13/ IND/2020 50 THESE MATTERS ARE NOT LIABLE TO ATTACK FOR WANT OF SUFFICIENCY OF MATERIALS. BUT IF THE FINDINGS ARE NOT SUPPORTED BY ANY MATERI ALS OR IF THE MATERIALS RELIED ON ARE IRRELEVANT OR THEY ARE SUCH THAT NO T RIBUNAL ON REASONABLY COME TO SUCH FINDINGS ON THE SAID MATERIALS, THEN A QUESTION OF LAW SHOULD ARISE, AND THE HIGH COURT WOULD BE JUSTIFIED IN HOL DING THAT THE FINDINGS CANNOT BE SUSTAINED ON ANY MATERIALS. IN THE INSTAN T CASE, THE APPELLATE TRIBUNAL HAS FOUND THAT THE PROFITS DISCLOSED BY TH E ASSESSEE WERE LOW WHEN COMPARED TO OTHER SIMILAR TRADERS. THE ASSESSE E GAVE AN EXPLANATION FOR THE SAME. THE TRIBUNAL HAS NOT FOUN D THAT THE EXPLANATION WAS NOT TRUE; AND ALL THAT IT HELD WAS THAT IS CORR ECTNESS COULD NOT BE VERIFIED. REGARDING THE NON-MAINTENANCE OF STOCK RE GISTER, THE ASSESSEES CASE IS THAT HE BUYS PRICE IN TERMS OF THE NUMBER O F BAGS SOLD. THIS CASE HAS BEEN APPARENTLY ACCEPTED BY THE APPELLATE TRIBU NALS AND THE SUBORDINATE AUTHORITIES. THERE IS NO CASE THAT THE STOCK REGISTER IS, THEREFORE, MAINTAINED IN TERMS OF THE NUMBER OF BAG S PURCHASED AND THE NUMBER OF BAGS SOLD. THIS CASE HAS BEEN APPARENTLY ACCEPTED BY THE APPELLATE TRIBUNAL AND THE SUBORDINATE AUTHORITIES. THERE IS NO CASE THAT THE ASSESSEE WHO BUYS AND SELLS IN TERMS OF THE NUM BER OF BAGS, MAINTENANCE OF A STOCK REGISTER IN TERMS OF WEIGHT IS A VERY LABORIOUS PROCESS. AS OBSERVED IN THE BOMBAY HIGH COURT IN R. B. JESSARAM FATEHCHAND V. COMMISSIONER OF INCOME-TAX, THERE IS NO NEED TO HAVE COMPLETE PARTICULARS OF THE NAMES AND ADDRESSES OF CUSTOMERS IN THE CASE OF CASH TRANSACTIONS, AND THE ABSENCE OF SUCH PARTI CULARS IN THE SALE BILLS WOULD NOT BE A GROUND FOR NOT ACCEPTING THE BOOKS O F ACCOUNT OF AN ASSESSEE. AS ALREADY STATED, THE ASSESSEE HAS ADMIT TEDLY MAINTAINED HIS ACCOUNTS ACCORDING TO THE METHOD REGULARLY EMPLOYED BY HIM, AND THE PROFITS AND GAINS OF THE BUSINESS CAN BE PROPERLY C OMPUTED FROM HIS ACCOUNTS. THE ONLY QUESTION IS WHETHER THE ACCOUNT ARE CORRECT AND COMPLETE. THERE IS NO FINDING THAT THE PURCHASES HA VE BEEN EXAGGERATED OR THE SALES HAVE BEEN SUPPRESSED, OR THAT ANY TRAN SACTION HAS NOT COME INTO THE ACCOUNTS. IN THESE CIRCUMSTANCES, THE GROU ND STATED BY THE AGRAWAL FUEL CORPORATION (P) LTD & OTHER ITA NOS. 330 & 421/IND/2018, 959/IND/2019 & C.O 13/ IND/2020 51 APPELLATE TRIBUNAL ARE NEITHER VALID NOR RELEVANT I N REJECTING THE ACCOUNTS OF THE ASSESSEE. QUESTION NO. 1 IN THE REFERENCE IS, THEREFORE, ANSWERED IN THE NEGATIVE AND IN FAVOUR OF THE ASSESSEE. 50. IN THE LIGHT OF THE ABOVE JUDGMENTS AND DECISIO NS SQUARELY APPLICABLE ON THE FACTS OF THE ASSESSEE IN THE INST ANT APPEAL BEFORE US AND IN THE GIVEN FACTS AND CIRCUMSTANCES OF THE CASE THE COAL PURCHASE AND TRANSPORT EXPENDITURE OF JOGIGHOPA BRA NCH CANNOT BE DOUBTED JUST FOR THE REASON THAT THEY WERE INCURRED IN CASH WITHOUT DISBELIEVING THE OTHER DOCUMENTARY EVIDENCES FILED BY THE ASSESSEE IN THE NATURE OF VALUE ADDED TAX AUDIT REPORT, SALE S TAX ASSESSMENT ORDERS, STOCK REGISTER, RAILWAY RECEIPTS, DAILY COA L PURCHASE LIST, PAYMENT VOUCHERS AND MOST IMPORTANTLY PAST TRACK RE CORD OF THE JOGIGHOPA BRANCH SHOWING BOTH PROFIT AND LOSS AND O VER ALL BOOK RESULTS OF THE COMPANY HAVING BEEN ACCEPTED BY THE LD. A.O, WE FIND NO INCONSISTENCY IN THE FINDING OF LD. CIT(A) DELETING THE ADDITION FOR ESTIMATED GROSS PROFIT AT RS.1,27,40,4 00/- WHICH SEEMS TO HAVE BEEN MADE MERELY ON PRESUMPTION AND SURMISE S BY THE LD. ASSESSING OFFICER. GROUND NO.1 TO 6 RAISED BY THE REVENUE IN THE CASE OF M/S AGRAWAL FUEL CORPORATION PVT. LTD VIDE ITA NO.421/IND/2018 STANDS DISMISSED. AGRAWAL FUEL CORPORATION (P) LTD & OTHER ITA NOS. 330 & 421/IND/2018, 959/IND/2019 & C.O 13/ IND/2020 52 51. NOW WE TAKE UP GROUND NO.1 OF REVENUES APPEAL IN THE CASE OF ADMANUM FINANCE LTD VIDE ITA NO.959/IND/2019 WHE REIN THE REVENUE IS AGGRIEVED WITH THE FINDING OF LD. CIT(A) ALLOWING THE CLAIM OF DEDUCTION AT RS.55,83,836/- U/S 80IA(4) OF THE ACT WHICH WAS REJECTED BY LD. A.O ON THE GROUND THAT ASSESSEE HAS CLAIMED DEDUCTION WITHOUT FILING REVISED RETURN. 52. BRIEF FACTS RELATING TO THIS GROUND IS THAT THE ASSESSEE CLAIMED DEDUCTION U/S 80IA(4) OF THE ACT AT RS.43,48,484/- IN THE RETURN OF INCOME FILED U/S 139(1) OF THE ACT. THIS CLAIM WAS REVISED DURING THE ASSESSMENT PROCEEDINGS CARRIED OUT BY THE LD. A .O AND WITH THE SUPPORT OF REVISED AUDIT REPORT ON FORM 10CCB OF TH E I.T RULES THE REVISED CLAIM FOR DEDUCTION U/S 80IA(4) OF THE ACT WAS MADE BY ASSESSEE OF RS.99,32,320/- BY WAY OF FILING REVISED COMPUTATION OF INCOME. LD. A.O REJECTED THE CLAIM ONLY FOR THE RE ASON THAT THE ASSESSEE HAS NOT REVISED THE RETURN AND SUCH CLAIM BY WAY OF REVISED COMPUTATION OF INCOME DURING ASSESSMENT PRO CEEDINGS CANNOT BE ACCEPTED. AGGRIEVED WITH THE ACTION OF LD. A.O ASSESSEE PREFERRED APPEAL BEFORE LD. CIT(A) AND SUCCEEDED. N OW THE REVENUE IS IN APPEAL BEFORE THE TRIBUNAL. AGRAWAL FUEL CORPORATION (P) LTD & OTHER ITA NOS. 330 & 421/IND/2018, 959/IND/2019 & C.O 13/ IND/2020 53 53. LD. DEPARTMENTAL REPRESENTATIVE VEHEMENTLY ARGU ED SUPPORTING THE ORDER OF LD. A.O AND RELIED ON THE J UDGMENT OF HON'BLE SUPREME COURT IN THE CASE OF GOETZ INDIA LTD 284 ITR 323 . 54. LD. COUNSEL FOR THE ASSESSEE SUBMITTED THAT THE ISSUE STANDS SQUARELY COVERED BY THE DECISION OF THE HON'BLE I.T .A.T. INDORE BENCH IN ASSESSEES OWN CASE FOR ASSESSMENT YEAR 20 11-12 VIDE ITA NO.808/IND/2014 DATED 27.06.2016 WHEREIN IT WAS HEL D THAT THE LEGITIMATE CLAIM OF THE ASSESSEE SHOULD BE ALLOWED EVEN IF RAISED DURING THE ASSESSMENT PROCEEDINGS. RELIANCE WAS ALSO PLACED ON THE DECISION OF CO-ORDINATE BENCH OF INDORE IN THE CASE OF AGRAWAL COAL CORPORATION PVT. LTD (SISTER CONCERN OF THE AS SESSEE) VIDE ITA NO.778/IND/2018 ORDER DATED 28.11.2019 FOR ASSESSME NT YEAR 2012-13 WHEREIN THE TRIBUNAL HELD THAT LEGITIMATE CLAIMS MADE BY THE ASSESSEE DURING ASSESSMENT PROCEEDINGS SHOULD B E ALLOWED SO AS TO ARRIVE AT THE CORRECT INCOME OF THE ASSESSEE . 55. WE HAVE HEARD RIVAL CONTENTIONS AND PERUSED THE RECORDS PLACED BEFORE US AND CAREFULLY GONE THROUGH THE DEC ISIONS REFERRED AND RELIED BY THE LD. COUNSEL FOR THE ASSESSEE. RE VENUE IS AGGRIEVED WITH THE FINDING OF LD. CIT(A) ALLOWING T HE ASSESSEES CLAIM OF DEDUCTION U/S 80IA(4) AT RS.55,83,836/-. W E FIND THAT IN AGRAWAL FUEL CORPORATION (P) LTD & OTHER ITA NOS. 330 & 421/IND/2018, 959/IND/2019 & C.O 13/ IND/2020 54 THE ORIGINAL RETURN OF INCOME ASSESSEE HAD MADE THE CLAIM U/S 80IA(4) AT RS.43,48,484/-. THOUGH THE ASSESSEE HAS NOT REVISED THE RETURN OF INCOME BUT DURING THE ASSESSMENT PROCEEDI NGS REVISED COMPUTATION OF INCOME WAS FILED WITH THE REVISED CL AIM OF DEDUCTION U/S 80IA(4) AT RS.99,32,320/-. ASSESSEE ALSO FILED REVISED AUDIT REPORT IN FORM 10CCB IN SUPPORT OF THE DEDUCTION MA DE. LD. A.O HAS NOT QUESTIONED THE QUANTUM OF DEDUCTION MADE BY THE ASSESSEE NOR THE ELIGIBILITY OF THE ASSESSEE TO CLAIM THE DE DUCTION U/S 80IA(4) OF THE ACT. THE CLAIM OF THE ASSESSEE FOR THE REVI SED DEDUCTION U/S 80IA(4) WAS REJECTED ONLY ON THE GROUND THAT REVISE D RETURN OF INCOME WAS NOT FILED. WE FIND THAT LD. CIT(A) ELAB ORATELY DEALT WITH THIS ISSUE RELYING ON THE DECISION OF CO-ORDINATE B ENCH, INDORE IN THE ASSESSEES OWN CASE FOR ASSESSMENT YEAR 2010-11 WHEREIN THE FRESH CLAIM OF BAD DEBTS WAS ALLOWED DURING THE COU RSE OF ASSESSMENT PROCEEDINGS. THE FINDING OF LD. CIT(A) IS REPRODUCED BELOW:- 4. GROUND NO.L: THIS GROUND OF APPEAL HAS BEEN RAISED AGAINST NOT ALLOWING THE CLAIM OF ADDITIONAL DEDUCTION U/S 801A(4) OF RS. 55,83,836/- BY THE AO WHICH WAS MADE BY THE APPELLA NT DURING THE COURSE OF ASSESSMENT PROCEEDINGS. IN THE RETURN OF INCOME FILED US/ 139(1) THE APPELLANT HAS CLAIMED A 'DEDUCTION OF RS. AGRAWAL FUEL CORPORATION (P) LTD & OTHER ITA NOS. 330 & 421/IND/2018, 959/IND/2019 & C.O 13/ IND/2020 55 43,48,484/- VI] S 801A(4) IN RESPECT OF THE PROFITS OF ITS BUSINESS OF GENERATION OF POWER, THE SAID CLAIM WAS REVISED TO RS. 99,32,320/-. DURING THE COURSE OF ASSESSMENT PROCEEDINGS THEREBY MAKING A CLAIM OF ADDITIONAL DEDUCTION OF R S. 55,83,836/ -. THE APPELLANT ALSO FILED A REVISED CE RTIFICATE IN FORM NO, 10CCB AND ALSO THE COPIES OF AUDITED BALANCE SHEET AND PROFIT AND LOSS ACCOUNT OF WIND MILL UNIT TO SU BSTANTIATE ITS CLAIM DURING THE ASSESSMENT PROCEEDINGS. 4.1 HOWEVER, REFERRING TO THE DECISION OF HONOURABLE SU PREME COURT IN THE CASE OF GOETZ INDIA LTD. 284 ITR 323, THE SAID ADDITIONAL CLAIM WAS NOT ALLOWED BY THE AO STATING THAT THE SAME WAS NOT MADE BY FILING A REVISE RETURN AND FUR THER STATING THAT AS PER SECTION 80AC NO DEDUCTION IS ALLOWABLE UNLESS THE ASSESSEE FURNISHES THE RETURN ON OR BEFORE THE DUE DATE SPECIFIED U/S 139(1). 4.2 DURING THE APPELLATE PROCEEDINGS THE APPELLANT HAS REITERATED THE SUBMISSION MADE BEFORE THE AO AND EMPHASIZED TH AT IT HAS NOT MADE AN ALTOGETHER FRESH OR NEW CLAIM DURING TH E ASSESSMENT PROCEEDINGS, BUT THE CLAIM ALREADY MADE THROUGH THE RETURN FILED U/S 139(1) WAS REVISED TO WHICH THE APPELLANT IS ENTITLED TO. THE APPELLANT HAS ALSO PLACED RELIANCE ON VARIOUS CASE LAWS, WHICH HAVE ALREADY BEEN ABSTRACTED IN TH E SUBMISSIONS ABOVE. THE APPELLANT ALSO CONTENDED THA T ONLY LEGITIMATED TAX CAN BE COLLECTED AND THE AO WAS FOU ND TO ASSESS THE CORRECT INCOME OF THE APPELLANT. 4.3 THE APPELLANT ALSO STATED THAT ADDITIONAL CLAIM MADE DURING THE ASSESSMENT PROCEEDINGS STAND ALLOWED TO IT IN I TS OWN CASE BY THE HONOURABLE ITAT INDORE BENCH FOR AY 2010-11 WHERE THE APPELLANT MADE A CLAIM OF BAD DEBTS DURING THE COUR SE OF AGRAWAL FUEL CORPORATION (P) LTD & OTHER ITA NOS. 330 & 421/IND/2018, 959/IND/2019 & C.O 13/ IND/2020 56 ASSESSMENT PROCEEDINGS, WHICH WAS NOT ALLOWED BY TH E AO CITING IDENTICAL REASON THAT THE CLAIM WAS NOT MADE BY REVI SING THE RETURN AND ALSO TAKING SHELTER OF THE CASE OF GOETZ INDIA. IT IS ALSO, CONTENDED: THAT AN IDENTICAL CLAIM; OF ADDITIONAL DEDUCTION U/ S 80LA MADE .DURING THE ASSESSMENT PROCEEDINGS, WHICH WAS DISALLOWED .BY THE AO FOR IDENTICAL REASONS, WAS ALLOWED, TO IT IN.THE IMMEDIATELY PRECEDING YEAR .I.E. AY 201 1- 14 B Y THE CIT(A) - ILL INDORE IN THE APPELLANT'S OWN CASE. ' 4.4. AFTER CONSIDERING THE OBSERVATIONS OF THE AO MADE IN THE' ASSESSMENT ORDER AND. ALSO VARIOUS CONTENTIONS OF THE APPELLANT, IT IS FOUND THAT THE APPELLANT .HAS NOT MADE ANY FRESH . NEW CLAIM DURING THE ASSESSMENT PROCEEDINGS BUT HAS ONLY REVISED ,ITS EXISTING CLAIM ALREADY MADE IN THE RETURN FILED U/S 139(1). THE, DEDUCTION CLAIMED U ] S 80IA(4) OF RS. 43,48,484/- IN THE RETURN FILED U/ S 139(1) WAS REVISED TO RS. 99,32,320/DURING THE ASSESSMENT P ROCEEDINGS. THE SAID CLAIM OF ADDITIONAL DEDUCTION WAS NOT ENTERTAINED BY THE AO FOR WHICH HE HAS RELIED UPON THE DECISION OF HONOUR ABLE SUPREME COURT IN THE CASE OF GOETZ INDIA LTD. 284 ITR 323 AN D ALSO ON SECTION 80AC. I FIND THAT THE HONOURABLE JURISDICTI ONAL ITAT IN THE APPELLANT)' OWN G:LSC FOR AY 2010-11 HAS ALLOWED A FRESH CLAIM OF BAD DEBTS MADE DURING THE COURSE OF ASSESSMENT PROCEE DINGS, WHICH WAS NOT ALLOWED BY THE AO RELYING UPON THE DECISION IN THE CASE OF GOETZ INDIA LTD. (SUPRA). THE COPY OF THE DEC ISION OF THE HONOURABLE ITAT IN THE APPELLANT'S OWN CASE IS FILE D AT PAGE 684 TO 697 OF-THE PAPER BOOK. THE HONOURABLE ITAT WHILE ALLOWING THE DEDUCTION HELD IN PARA 129 AS UNDER:- 129. WE FIND THAT IT HAS BEEN TIME AND AGAIN HELD BY VARIOUS COURTS THAT LEGITIMATE CLAIMS OF THE ASSESSEE SHOULD BE A LLOWED EVEN IF RAISED DURING THE ASSESSMENT PROCEEDINGS. IN THE CA SE OJ ERR VS. RAMCO INTEMATIONAL IN (2011) 332 ITR 306 THE HON'BLE PUNJAB AND HARYANA HIGH COURT HAS HELD THAT- . AGRAWAL FUEL CORPORATION (P) LTD & OTHER ITA NOS. 330 & 421/IND/2018, 959/IND/2019 & C.O 13/ IND/2020 57 'DEDUCTION UNDER SECTION 80-1B-ALLOWABILITY-CLAIM NOT MADE IN RETURN - ASSESSEE HAVING DULY FURNISHED THE DOCUME NTS AND SUBMITTED FORM NO. 10CCB DURING ASSESSMENTT PROCEE DINGS, CLAIM FOR DEDUCTION UNDER SECTION 80IB BY WAY OF AN APPL ICATION WAS ADMISSIBLE- THERE WAS NO REQUIREMENT FOR FILING AN Y REVISED RETURN - NO SUBSTANTIAL QUESTION OF LAW ARISES - GOETZE IND IA LTD. VS. CIT (2006) 201 CTR (SC) 182 : (2006) 284 I TR 323 (SC) DISTINGUISHED.' 130. IN VIEW OF THE ABOVE DISCUSSION AND ALSO CONS IDERING THE UNCONTROVERTED FINDING OF THE CIT'(A) THAT. THE SIMILAR CLAIM OF BAD DEBTS MADE BY FILING THE REVISED RETURN FOR IMMEDI ATELY SUCCEEDING YEAR I.E. AY 201.1-2012 HAS BEEN ACCEPTED IN THE A SSESSMENT PROCEEDINGS FOR THAT YEAR AND ALSO CONSIDERING THE LEGAL POSITION, WE HOLD THAT THE CIT(A) HAS RIGHTLY ALLOWED THE S AID CLAIM OF RS. 11,90,575/- . 131. THIS GROUND OF APPEAL OF THE REVENUE FAILS.' 4.5 IT IS ALSO SEEN THAT THE IDENTICAL CLAIM OF ADDITIONAL DEDUCTION U/ S 8 OLA(4) STAND ALLOWED TO THE APPELLANT FOR THE IMMEDIATELY PRECEDING YEAR I.E AY 2013-14 BY CIT(A) - ILL, LNDORE, WHICH WAS ALSO MADE DURING THE ASSESSMENT PROCEEDINGS AND WAS DISALLOWED BY THE AO ON IDENTICAL GROUND. THE C !T(A) 1II, INDORE IN THE APPELLANT'S OWN CASE HAS HELD AS UNDE R:- '3.4 IT IS SEEN THAT DURING THE ASSESSMENT PROCEEDINGS THE DOCUMENTS WERE FILED IN SUPPORT OF THE REVISED CLAIM WHICH WERE PERUSED PLACED ON RECORD AND NO DEFECT! DISCREPANCY WAS POINTED OUT BY THE ASSESSING OFFICER.3.5 IN VIEW OF THE DECISIONS CITED ABOVE AND THE FACT THAT THE CLAIM MADE BY THE APPELLANT IS A LEGITIMATE CLAIM AND THE ASSESSING OFFICER IS BOUND TO ASSESS THE CORRECT INCOME, THE APPELLANT'S CLAIM OF ADDIT IONAL DEDUCTION U/S 80IA(4) IS ALLOWED. GROUND NO. 1 IS ALLOWED.' 4.6 THE APPELLANT ALSO GETS SUPPORT FROM THE DECISION O F HONOURABLE !TAT MUMBAI BENCH IN THE CASE OF CHICAGO PNEUMATIC INDIA LIMITED 1 5 SOT 252 [2007] 26 CCH 0180 (MUM) IN CONTEXT OF ALLOWABILITY OF NEW CLAIMS DURING THE ASSESSMENT PROCEEDINGS WITHOUT HAVING RECOURSE TO REVISED RETU RN, WHEREIN PLACING RELIANCE ON PRINCIPLE EMBEDDED IN ARTICLE 2 65 OF INDIAN AGRAWAL FUEL CORPORATION (P) LTD & OTHER ITA NOS. 330 & 421/IND/2018, 959/IND/2019 & C.O 13/ IND/2020 58 CONSTITUTION (NO TAX CAN BE COLLECTED EXCEPT BY THE AUTHORITY OF LAW) AND CBDT CIRCULAR NO. 14 DATED 11 APRIL 1955 A ND ALSO AFTER DISTINGUISHING GOETZ RULING OF HONOURABLE SUP REME COURT (SUPRA), THE HONOURABLE !TAT HAS CATEGORICALLY HELD THAT THE ASSESSEE HAS THE RIGHT TO MAKE NEW CLAIMS DURING AS SESSMENT PROCEEDINGS WITHOUT RECOURSE TO REVISED RETURN. 4.7 FURTHER THE REFERENCE OF SECTION 80AC MADE BY THE A O) IS MISPLACED AS THE SAID SECTION DOES NOT DEBAR THE AS SESSEE FROM CLAIMING ADDITIONAL DEDUCTION DURING THE COURSE OF ASSESSMENT PROCEEDINGS. THE ONLY CONDITION FOR ALLOWING DEDUCT IONS SPECIFIED IN SECTION 80AC IS OF FILING OF THE RETUR N ON OR BEFORE THE DUE DATE SPECIFIED UNDER SECTION 139(1). THEREFORE, IF THE ASSESSEE FURNISHES HIS RETURN U / S 139( 1), HE IS ELIGIBLE TO CLAIM DEDUCTION U/ S 80LA OR 80LB OR 80LE ETC, WHIC H CONDITION HAS BEEN DULY MET BY THE APPELLANT IN THE INSTANT C ASE WHICH IS ALSO SUBSTANTIATED BY THE FACT THAT THE DEDUCTION C LAIMED U/S 80LA(4) IN THE RETURN FILED U/S 139(1) BY THE APPEL LANT HAS ALREADY BEEN ALLOWED BY THE AO HIMSELF. THE APPELLA NT CLAIMED A DEDUCTION IX] S 80LA(4) OF RS. 43,48,484/- IN THE RETURN FILED BY IT U/S 139(1) WHICH STAND ALLOWED BY THE AO, IMPLYING THEREBY THA T DEDUCTION U/S 80LA(4) WAS 'PROPER AND ALLOWABLE TO ME APPELLANT.' 8RT THESE FACTS ME CONDITION OF-SECTION 80AC ARE DULY FULFILLED AND ME T BY THE APPELLANT. 4.8. THEREFORE, CONSIDERING THE ABOVE DISCUSSIONS, IT IS HELD THAT THE CLAIM OF ADDITIONAL DEDUCTION MADE BY THE APPELLANT DURIN G' THE ASSESSMENT PROCEEDINGS IS ALLOWABLE TO IT AND, THER EFORE THE AO IS DIRECTED. TO ALLOW THE ADDITIONAL CLAIM OF DEDUCTIO N OF RS. 55,83,836/- U/S 80IA(4), WHICH WAS DENIED BY HIM AND THIS GROUND OF APPEAL IS ALLOWED. AGRAWAL FUEL CORPORATION (P) LTD & OTHER ITA NOS. 330 & 421/IND/2018, 959/IND/2019 & C.O 13/ IND/2020 59 56. WE ALSO OBSERVE THAT WE THE UNDERSIGNED HAS DEA LT THE SIMILAR ISSUE OF THE SISTER CONCERN OF THE ASSESSEE NAMELY AGRAWAL COAL CORPORATION PVT. LTD (SUPRA) BY THIS TRIBUNAL IN ITA NO.778/IND/2018 ORDER DATED 28.11.2019 OBSERVING AS UNDER:- 32. WE THEREFORE RESPECTFULLY FOLLOWING THE ABOVE J UDICIAL PRONOUNCEMENTS AND IN THE GIVEN FACTS AND CIRCUMSTA NCES OF THE CASE ARE OF THE CONSIDERED VIEW THAT LD. A.O SHOULD HAVE ACC EPTED THE LEGITIMATE CLAIM MADE BY THE ASSESSEE CLAIMING DEDUCTION U/S 8 0IA(4) OF THE ACT, FOR THE ELIGIBLE UNDERTAKING NAMELY WIND MILL AT JODHA, RAJASTHAN AND ALSO ACCEPTED THE AUDIT REPORT FILED FOR MAKING SUCH CLA IM DURING THE COURSE OF ASSESSMENT PROCEEEINGS. FURTHER SINCE THE ASSESSEE OPTED CLAIM U/S 80IA(4) OF THE ACT FOR ONLY JODHA UNIT, THE LOSS OF OTHER TWO ELIGIBLE UNDERTAKINGS WERE NOT REQUIRED TO BE SET OFF AGAIN ST THE PROFITS OF JODHA UNIT SINCE ASSESSEE HAD OPTED ASSESSMENT YEAR 2012- 13 AS INITIAL ASSESSMENT YEAR FOR CLAIMING DEDUCTION U/S 80IA(4) OF THE ACT ONLY FOR JODHA UNIT AND NOT FOR OTHER TWO UNITS AT SHAJAPUR (M.P.). LD. A.O IS THEREFORE DIRECTED TO ALLOW THE DEDUCTION U/S 80IA( 4) OF THE ACT AT RS.64,62,398/-. ACCORDINGLY GROUND NO.1 RAISED BY THE ASSESSEE FOR ASSESSMENT YEAR 2012-13 IS ALLOWED. 57. WE THEREFORE RESPECTFULLY FOLLOWING THE ABOVE R EFERRED DECISIONS WHICH ARE SQUARELY APPLICABLE ON THE FACTS AND ISSU ES RAISED IN THIS CASE OF THE ASSESSEE, FIND NO REASON TO INTERFERE I N THE FINDING OF LD. CIT(A) ALLOWING THE REVISED CLAIM OF DEDUCTION U/S 80IA(4) OF THE ACT AT RS.99,32,320/- MADE BY THE ASSESSEE DULY SUPPORT ED BY REVISED AGRAWAL FUEL CORPORATION (P) LTD & OTHER ITA NOS. 330 & 421/IND/2018, 959/IND/2019 & C.O 13/ IND/2020 60 AUDIT REPORT. THUS LD. CIT(A) HAS RIGHTLY ALLOWED T HE ADDITIONAL DEDUCTION MADE U/S 80IA(4) AT RS.55,83,836/-. IN T HE RESULT GROUND NO.1 OF THE REVENUE IN THE CASE OF ADMANUM F INANCE LTD VIDE ITA NO.959/IND/2019 IS DISMISSED. 58. NOW THE LAST GROUND NO.2 RAISED BY THE ASSESSEE IN CROSS OBJECTION NO.13/IND/2019 IN THE CASE OF ADMANUM FIN ANCE LTD FOR ASSESSMENT YEAR 2014-15 IS RELATING TO DISALLOWANCE OF RS.1,00,000/- CONFIRMED BY LD. CIT(A) OUT OF THE TO TAL DISALLOWANCE OF RS.4,00,000/- MADE BY THE LD. A.O ON ESTIMATED B ASIS. 59. AT THE OUTSET LD. COUNSEL FOR THE ASSESSEE REQU ESTED FOR NOT PRESSING THIS GROUND. LD. DEPARTMENTAL REPRESENTATI VE DID NOT OPPOSED. WE, THEREFORE DISMISS GROUND NO.2 OF C.O.N O. 13/IND/2019 AS NOT PRESSED. 60. GROUND NO.3 OF ASSESSEE RAISED THROUGH C.O.NO.1 3/IND/2019 ARE GENERAL IN NATURE WHICH NEEDS NO ADJUDICATION. 61. IN THE RESULT APPEAL OF ASSESSEE NAMELY M/S. AG RAWAL FUEL CORPORATION PVT. LTD FOR ASSESSMENT YEAR 2014-15 RA ISED VIDE ITA NO.330/IND/2018 IS ALLOWED AND THAT OF REVENUE IN I TA NO.421/IND/2018 IS DISMISSED. APPEAL OF REVENUE IN THE CASE OF M/S ADMANUM FINANCE LTD FOR ASSESSMENT YEAR 2014-15 VIDE ITA AGRAWAL FUEL CORPORATION (P) LTD & OTHER ITA NOS. 330 & 421/IND/2018, 959/IND/2019 & C.O 13/ IND/2020 61 NO.959/IND/2019 IS DISMISSED AND CROSS OBJECTION OF THE ASSESSEE VIDE C.O.NO.13/IND/2019 IS PARTLY ALLOWED. THE ORDER PRONOUNCED IN THE OPEN COURT ON 13.11.2 020. SD/- SD/- ( KUL BHARAT) (MANI SH BORAD) JUDICIAL MEMBER ACCOUNTANT MEMBER / DATED : 13 NOVEMBER, 2020 /DEV COPY TO: THE APPELLANT/RESPONDENT/CIT CONCERNED/CIT (A) CONCERNED/ DR, ITAT, INDORE/GUARD FILE. BY ORDER, ASSTT.REGISTRAR, I.T.A.T., INDORE
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