M/s. Aahar Products Pvt.Ltd., Ahmedabad V. The Dy.CIT.,Circle-1, Ahmedabad

CO 198/AHD/2012

• Counselvise Citation: [2015] 123 COUNSELVISE.COM (IT) 0204 (ITAT-AHMEDABAD)
• Duration Of Justice: 2 year(s) 3 month(s) 1 day(s)
• Appeal Type: Cross Objection
• Pronouncement Date: 23-01-2015
• Appeal Filed By: Assessee
• Order Result: Dismissed
• Bench Allotted: A
• Next Hearing Date: 06-01-2015
• Assessment Year: 2008-2009
• Appeal Filed On: 22-10-2012
• Result in Favour of: Revenue
• Court: TRIBUNAL
• Keywords: Unexplained cash credit; Rejection of books of accounts; Additional evidence; Corroborative evidences
• Section: 142(1); 68

Judgement Text

, , IN THE INCOME TAX APPELLATE TRIBUNAL A BENCH, AHMEDABAD .., , BEFORE SHRI N.S. SAINI, ACCOUNTANT MEMBER AND SHRI KUL BHARAT, JUDICIAL MEMBER ./ I.T.A. NO.1350/AHD/2012 ( / ASSESSMENT YEAR : 2008-09) THE DCIT CIRCLE-1 AHMEDABAD / VS. M/S.AAHAR PRODUCTS PVT.LTD. (NOW KNOWN AS ANIL NUTRIENTS LTD.) 301, ANIKET BUILDING CG ROAD, NAVRANGPURA AHMEDABAD-380 009 ./ ./ PAN/GIR NO. : AAGCS 5565 F ( ' / APPELLANT ) .. ( #$' / RESPONDENT ) AND CO NO.198/AHD/2012 FOR AY 2008-09 (IN ITA NO.1350/AHD/2012 FOR AY 2008-09) M/S.AAHAR PRODUCTS PVT.LTD. VS. THE DCIT AHMEDABAD AHME DABAD (CROSS OBJECTOR .... (RESPO NDENT) REVENUE BY : SHRI SUBHASH BAINS, CIT-DR ASSESSEE BY : SHRI S.N. SOPARKAR, AR %&'( / DATE OF HEARING 06/01/2015 )*+,'( / DATE OF PRONOUNCEMENT 23/01/2015 / O R D E R PER SHRI KUL BHARAT, JUDICIAL MEMBER : THIS APPEAL BY THE REVENUE AND THE CROSS-OBJECTION BY THE ASSESSEE ARE DIRECTED AGAINST THE ORDER OF THE COMM ISSIONER OF INCOME- TAX (APPEALS)-6, AHMEDABAD (CIT(A) IN SHORT) DATE D 18/04/2012 PASSED FOR ASST.YEAR 2008-09. BOTH THE APPEAL AND THE CROSS OBJECTION ITA NO. 1350/AHD/2012 (BY REVENUE) AND CO NO.198/AHD/2012 (BY ASSESSEE) DCIT VS. M/S.AAHAR PRODUCTS PVT.LTD. ASST.YEAR 2008-09 - 2 - ARE TAKEN UP TOGETHER AND ARE BEING DISPOSED OF BY THIS CONSOLIDATED ORDER FOR THE SAKE OF CONVENIENCE. 2. FIRST, WE TAKE UP THE APPEAL FILED BY THE REVENU E, I.E. ITA NO.1350/AHD/2012 FOR AY 2008-09. THE REVENUE HAS R AISED THE FOLLOWING GROUNDS OF APPEAL:- 1. THE LD.CIT(A) ERRED IN LAW AND ON FACTS IN ADMI TTING THE ADDITIONAL EVIDENCE PRODUCED BY THE ASSESSEE AT APPELLATE STAG E, WHILE THE ASSESSEE HAS NOT COMPLIED TO ANY OF THE NOTICES DURING THE A SSESSMENT LET ALONE PRODUCTION OF SPECIFIC INFORMATION ASKED FOR. 2. THE LD.CIT(A) ERRED IN LAW AND ON FACTS IN ACCE PTING THE REASONS GIVEN BY THE ASSESSEE FOR NOT FILING THE INFORMATIO N BEFORE THE A.O., WITHOUT VERIFYING THE VERACITY OF THE REASON GIVEN. IF THE ACCOUNTANT HAS RESIGNED FROM THE COMPANY, THE SAME CANNOT PREVENT THE DIRECTOR OF THE CA FROM ATTENDING THE REGULAR NOTICES OF HEARING AN D FILING OF INFORMATION. 3. THE LD.CIT(A) ERRED IN LAW AND ON FACTS IN NOT TAKING NOTE OF THE DESIGN OF THE ASSESSEE IN NOT ATTENDING BEFORE THE A.O., BUT FILING SOME INFORMATION BEFORE THE LD.CIT(A). THIS ACTION OF T HE ASSESSEE PREVENTED THE A.O. FROM DETAILED INVESTIGATION DURING THE SCR UTINY. 4. THE LD.CIT(A) ERRED IN LAW AND ON FACTS IN DELE TING THE ADDITION OF RS.39,43,083/- BEING UNSECURED LOANS, ACCEPTING THE UNVERIFIED CONFIRMATIONS FILED BEFORE HIM. 5. THE LD.CIT(A) ERRED IN LAW AND ON FACTS IN DELE TING THE ADDITION OF RS.4,10,72,257/- BEING THE BOGUS SUNDRY CREDITORS A FTER ACCEPTING THE UNVERIFIED CONFIRMATIONS FILED BEFORE HIM. 6. THE LD.CIT(A) ERRED IN LAW AND ON FACTS IN REDU CING THE ESTIMATION MADE, AFTER UPHOLDING THE REJECTION OF BOOKS BY THE A.O. ITA NO. 1350/AHD/2012 (BY REVENUE) AND CO NO.198/AHD/2012 (BY ASSESSEE) DCIT VS. M/S.AAHAR PRODUCTS PVT.LTD. ASST.YEAR 2008-09 - 3 - ON THE FACT AND IN THE CIRCUMSTANCES OF THE CASE AN D IN LAW, THE LD.CIT(A) OUGHT TO HAVE UPHELD THE ORDER OF THE ASS ESSING OFFICER TO THE EXTENT MENTIONED ABOVE SINCE THE ASSESSEE HAS FAILE D TO DISCLOSE HIS TRUE INCOME/BOOK PROFIT. THE APPELLANT PRAYS THAT THE ORDER OF LD.CIT(A) ON THE ABOVE GROUNDS BE SET ASIDE AND THAT OF THE ASSESSING OFFICER BE REST ORED TO THE ABOVE EXTENT. THE APPELLANT CRAVES, TO LEAVE, TO AMEND O R ALTER ANY GROUND OR ADD A NEW GROUND WHICH MAY BE NECESSARY. 2.1. BRIEFLY STATED FACTS ARE THAT THE CASE OF THE ASSESSEE WAS PICKED UP FOR SCRUTINY ASSESSMENT AND THE ASSESSMENT U/S.144 OF THE INCOME TAX ACT,1961 (HEREINAFTER REFERRED TO AS THE ACT) WAS FRAMED VIDE ORDER DATED 14/12/2010, THEREBY THE ASSESSING OFFICER (AO IN SHORT) MADE ADDITION OF RS.39,43,083/- ON ACCOUNT OF UNSECURED LOANS BY INVOKING THE PROVISIONS OF SECTION 68 OF THE ACT. THE AO ALSO M ADE AN ADDITION OF RS.4,10,72,257/- ON ACCOUNT OF SUNDRY CREDITORS BY INVOKING THE PROVISIONS OF SECTION 68 OF THE ACT. FURTHER, THE AO REJECTED THE BOOKS OF ACCOUNTS OF THE ASSESSEE AND COMPUTED THE PROFIT @2.74% AS AGAINST THE GROSS LOSS OF (-)7.24%, THEREBY MAKING AN ADDIT ION OF RS.4,30,19,408/-. AGAINST THIS, THE ASSESSEE FILED AN APPEAL BEFORE THE LD.CIT(A) AND LD.CIT(A) PARTLY ALLOWED THE APPEAL. WHILE PARTLY ALLOWING THE APPEAL, THE LD.CIT(A) DELETED THE ADDI TION MADE ON ACCOUNT OF UNSECURED LOAN, SUNDRY CREDITORS AND DIRECTED TH E AO TO RESTRICT THE ADDITION BY WORKING OUT THE GROSS PROFIT ON THE BAS IS OF THE AVERAGE GROSS PROFIT OF THE ANNAM FEEDS LTD., KAPILA KRISHI UDYOG LTD. AND SHALIMAR PELLET FEEDS LTD. ITA NO. 1350/AHD/2012 (BY REVENUE) AND CO NO.198/AHD/2012 (BY ASSESSEE) DCIT VS. M/S.AAHAR PRODUCTS PVT.LTD. ASST.YEAR 2008-09 - 4 - 3. GROUND NOS.1, 2 & 3 OF REVENUES APPEAL ARE AGAI NST IN ALLOWING THE ASSESSEE TO FILE THE ADDITIONAL EVIDENCES. THE LD.CIT-DR SUBMITTED THAT THE LD.CIT(A) WAS NOT JUSTIFIED IN CONSIDERING THE ADDITIONAL EVIDENCES. HE SUBMITTED THAT THE ASSESSEE WAS GIVE N SUFFICIENT OPPORTUNITY BY THE AO TO PRODUCE THE RELEVANT EVIDE NCES DURING THE ASSESSMENT PROCEEDINGS. HE SUBMITTED THAT THE EXPL ANATION GIVEN BY THE ASSESSEE BEFORE THE LD.CIT(A) THAT THE ACCOUNTANT O F THE ASSESSEE- COMPANY RESIGNED, CANNOT BE TREATED AS SUFFICIENT C AUSE FOR ALLOWING THE ASSESSEE TO FILE THE ADDITIONAL EVIDENCES. 3.1. ON THE CONTRARY, THE LD.SR.COUNSEL FOR THE ASS ESSEE SHRI S.N. SOPARKAR SUPPORTED THE ORDER OF THE LD.CIT(A). HE SUBMITTED THAT THE AO FAILED TO TAKE NOTE OF THE FACT THAT DURING THAT PE RIOD, THE STAFF OF THE APPELLANT-COMPANY WAS BUSY IN PREPARATION OF ANNUAL REPORT & TAX AUDIT REPORT AND RETURN OF INCOME. HE SUBMITTED TH AT IN THE MONTH OF AUGUST-2010, DEPUTY MANAGER OF APPELLANT-COMPANY HA D RESIGNED FROM THE SERVICES OF THE COMPANY. THEREFORE, THE ASSESS EE WAS PREVENTED BY SUFFICIENT CAUSE FOR NOT FILING THE DETAILS BEFORE THE AO. HE SUBMITTED THAT EVEN OTHERWISE ALSO, IN THE INTEREST OF NATURA L JUSTICE, THE AO OUGHT TO HAVE GIVEN OPPORTUNITY TO THE ASSESSEE FOR FILING T HE REQUISITE DETAILS. HE SUBMITTED THAT THERE IS NO ILLEGALITY INTO THE ORDE R OF LD.CIT(A) FOR ADMITTING ADDITIONAL EVIDENCE AS A REMAND REPORT SO UGHT FROM AO. ITA NO. 1350/AHD/2012 (BY REVENUE) AND CO NO.198/AHD/2012 (BY ASSESSEE) DCIT VS. M/S.AAHAR PRODUCTS PVT.LTD. ASST.YEAR 2008-09 - 5 - 4. WE HAVE HEARD THE RIVAL SUBMISSIONS, PERUSE D THE MATERIAL AVAILABLE ON RECORD AND GONE THROUGH THE ORDERS OF THE AUTHOR ITIES BELOW. WE FIND THAT THE LD.CIT(A) HAS CONSIDERED THE SUBMISSIONS O F THE ASSESSEE AND AFTER CONSIDERING THE SUBMISSIONS OF THE ASSESSEE, HE HAS GIVEN A FINDING THAT THE REASON FOR NOT SUBMITTING THE ADDITIONAL E VIDENCES DURING THE COURSE OF ASSESSMENT PROCEEDINGS WAS THAT THE APPEL LANT-COMPANYS ACCOUNTANTS RESIGNED FROM THE SERVICE DISRUPTING TH E WORK OF SUBMITTING DETAILS TO THE AO APART FROM SERIOUS ILLNESS OF FAM ILY HEAD OF DIRECTORS ENGAGING KEY MANAGEMENT PEOPLE AWAY FROM DAY-TO-DAY WORK. HE DIED ON 26/12/2010. THE APPELLANT SUBMITTED NECESSARY E VIDENCES IN SUPPORT OF THESE CLAIMS. ADDITIONAL EVIDENCES RECEIVED FRO M THE APPELLANT WERE FORWARDED TO AO FOR COMMENT ON ADMISSION THEREOF AN D SUBMISSION OF REMAND REPORT. AFTER CONSIDERING THE REMAND REPO RT AND THE OBJECTIONS OF THE AO, THE LD.CIT(A) ADMITTED THE ADDITIONAL EV IDENCES. AFTER CONSIDERING THE FACTS AND THE FINDINGS OF THE LD.CI T(A) WE DO NOT FIND ANY INFIRMITY IN THE ORDER OF THE LD.CIT(A) SINCE T HE AO WAS GIVEN SUFFICIENT OPPORTUNITY TO SUBMIT THE REMAND REPORT ON THE ADDITIONAL EVIDENCES. THEREFORE, THESE GROUNDS OF THE REVENUE S APPEAL ARE REJECTED. 5. GROUND NO.4 IS AGAINST THE DELETION OF ADDITION OF RS.39,43,083/- BEING UNSECURED LOANS, ACCEPTING THE UNVERIFIED CON FIRMATIONS FILED BEFORE HIM. THE LD.CIT-DR SUBMITTED THAT THE LD. CIT(A) WAS NOT JUSTIFIED IN DELETING THE ADDITION. HE SUBMITTED T HAT IN THE REMAND REPORT, ITA NO. 1350/AHD/2012 (BY REVENUE) AND CO NO.198/AHD/2012 (BY ASSESSEE) DCIT VS. M/S.AAHAR PRODUCTS PVT.LTD. ASST.YEAR 2008-09 - 6 - THE AO HAS CATEGORICALLY SUBMITTED THAT THE ASSESSE E FAILED TO SUBMIT CONFIRMATION IN THE CASE OF M/S.ABLOOM INVESTMENTS PVT.LTD. WHO IS ASSOCIATED-COMPANY OF THE ASSESSEE. IT IS SUBMITTE D BY THE AO THAT IN THE CASE ABLOOM INVESTMENTS PVT.LTD., THE ASSESSEE HAS NOT ESTABLISHED GENUINENESS, IDENTITY AND CREDITWORTHINESS SINCE TH E ASSESSEE HAS NOT FILED THE RETURN OF INCOME. 5.1. ON THE CONTRARY, THE LD.SR.COUNSEL FOR THE ASS ESSEE SUPPORTED THE ORDER OF LD.CIT(A) AND SUBMITTED THAT IT IS RECORDE D BY THE LD.CIT(A) THAT THERE WAS NO TRANSACTIONS IN RESPECT OF THIS LENDER DURING THE YEAR EXCEPT IN THE CASE OF M/S.ABLOOM INVESTMENTS PVT.LTD. HE SUBMITTED THAT THE LD.CIT(A) HAS FOLLOWED THE JUDGEMENT OF HONBLE RAJ ASTHAN HIGH COURT RENDERED IN THE CASE OF CIT VS. PRAMESHWAR BOHRA R EPORTED AT (2008) 301 ITR 404(RAJ.). THE LD.SR.COUNSEL FOR THE ASSES SEE SUBMITTED THAT THIS AMOUNT WAS FOR THE EARLIER YEAR AND DID NOT PERTAIN TO THE YEAR UNDER CONSIDERATION. 6. WE HAVE HEARD THE RIVAL SUBMISSIONS, PERUSED THE MATERIAL AVAILABLE ON RECORD AND GONE THROUGH THE ORDERS OF THE AUTHORITIES BELOW. THE LD.CIT(A) HAS GIVEN A FINDING ON FACT THAT THER E WAS NO TRANSACTION IN RESPECT OF THIS LENDER DURING THE YEAR EXCEPT IN TH E CASE OF M/S.ABLOOM INVESTMENTS PVT.LTD. SINCE THE OPENING BALANCE IS ALSO THE CLOSING BALANCE, THERE WAS NO NEW CREDIT RECEIVED DURING TH E YEAR EXCEPT IN THE CASE OF M/S.ABLOOM INVESTMENTS PVT.LTD. THE LD.CIT (A) HAS FOLLOWED ITA NO. 1350/AHD/2012 (BY REVENUE) AND CO NO.198/AHD/2012 (BY ASSESSEE) DCIT VS. M/S.AAHAR PRODUCTS PVT.LTD. ASST.YEAR 2008-09 - 7 - THE JUDGEMENT OF HONBLE RAJASTHAN HIGH COURT IN TH E CASE OF CIT VS. PRAMESHWAR BOHRA(SUPRA), WHEREIN THE HONBLE RAJAST HAN HIGH COURT HAS HELD THAT IT DOES NOT REQUIRE ANY ELABORATE ARG UMENT THAT THE CARRIED FORWARD AMOUNT OF THE PREVIOUS YEAR DID NOT BECOME AN INVESTMENT OR CASH CREDIT GENERATED DURING THE RELEVANT YEAR 1993 -94. THIS ALONE WAS SUFFICIENT TO SUSTAIN THE ORDER OF THE TRIBUNAL IN DELETING THE AMOUNT OF RS.1,55,316/- FROM THE ASSESSMENT FOR THE ASSESSMEN T YEAR 1993-94. THE REVENUE HAS NOT BROUGHT ANY CONTRARY JUDGEMENT OF T HE HONBLE JURISDICTIONAL HIGH COURT OR THE HONBLE APEX COURT , THEREFORE WE DO NOT FIND ANY INFIRMITY IN THE ORDER OF THE LD.CIT(A), S AME IS HEREBY UPHELD. THUS, THIS GROUND OF REVENUES APPEAL IS REJECTED. 7. GROUND NO.5 IS AGAINST THE DELETION OF ADDITI ON OF RS.4,10,72,257/- BEING THE BOGUS SUNDRY CREDITORS. THE LD.CIT-DR SU BMITTED THAT THE LD.CIT(A) WAS NOT JUSTIFIED IN DELETING THE ADDITIO N. HE SUBMITTED THAT BEFORE THE AO THE ASSESSEE FAILED TO GIVE THE REQUI SITE DETAILS. HE SUBMITTED THAT SUFFICIENT OPPORTUNITY WAS GRANTED T O THE ASSESSEE. HE SUBMITTED THAT THE ASSESSEE HAS ONLY FURNISHED THE CONFIRMATION AT THE APPELLATE STAGE. 7.1. ON THE CONTRARY, LD.SR.COUNSEL FOR THE ASSESSE E SUBMITTED THAT THE ASSESSEE FURNISHED EACH AND EVERY CONFIRMATION. HE DREW OUR ATTENTION TOWARDS THE CONFIRMATIONS PLACED AT THE PAPER-BOOK OF THE SUNDRY CREDITORS IN PAGE NOS.141 TO 194. HE SUBMITTED THA T UNDISPUTEDLY THE AO HAS MADE ADDITION BY INVOKING THE PROVISIONS OF SEC TION 68 OF THE ACT ON ITA NO. 1350/AHD/2012 (BY REVENUE) AND CO NO.198/AHD/2012 (BY ASSESSEE) DCIT VS. M/S.AAHAR PRODUCTS PVT.LTD. ASST.YEAR 2008-09 - 8 - THE BASIS OF ESTIMATION. HE SUBMITTED THAT SUCH AC TION OF THE AO IS NOT PERMISSIBLE UNDER THE LAW. HE SUPPORTED THE ORDER OF THE LD.CIT(A). 8. WE HAVE HEARD THE RIVAL SUBMISSIONS, PERUSED THE MATERIAL AVAILABLE ON RECORD AND GONE THROUGH THE ORDERS OF THE AUTHOR ITIES BELOW. THE AO IN PARA-2 OF HIS ORDER HAS OBSERVED AS UNDER:- 2. SUNDRY CREDITORS :- THE SUNDRY CREDITORS OF THE ASSESSEE-COMPANY DURING THE YEAR INCREASED FORM RS.4,17,53,051/- TO RS.10,37,01,834/ -. IT IS WORTHWHILE TO NOTE THAT THE TURNOVER OF THE ASSESSE E-COMPANY DURING THE YEAR INCREASED BY 17% AND THERE IS EQUIV ALENT INCREASE IN MATERIALS CONSUMED AND PURCHASES FOR TRADING ACT IVITY. HOWEVER, THE SUNDRY CREDITORS OF THE ASSESSEE HAVE INCREASED DISPROPORTIONATELY REGISTERING AN INCREASE OF 148.6 8%. ACCORDINGLY, THE ASSESSEE VIDE NOTICE ISSUED UNDER SECTION 142(1) OF THE ACT DTD. 18/08/2010 WAS REQUESTED TO PROVIDE THE COMPLETE DETAILS OF THE CREDITORS OF THE COMPANY FOR THE REL EVANT PREVIOUS YEAR AND THE PRECEDING TWO PREVIOUS YEARS ALONG WIT H THEIR NAMES ADDRESSED AND PAN. HOWEVER, THE ASSESSEE HAS FAILE D TO PROVIDE THE SAME IN SPITE OF REPEATED NOTICES ISSUED TO THE ASSESSEE, AS NOTED ABOVE. THUS, THE DISPROPORTIONATE INCREASE IN THE CREDITOR S COULD NTO BE VERIFIED. IN A NORMAL COURSE OF BUSINESS, THERE IS A DIRECT CORRELATION BETWEEN THE TURNOVER AND PURCHASES AND THE GENUINENESS OF ANY ANOMALY IS DOUBTFUL UNLESS SUBST ANTIATED BY FACTS. IN THE PRESENT CASE, THE ASSESSEE HAS FAILE D TO PROVIDE THE DETAILS OF THE CREDITORS IN SPITE OF BEING PROVIDED NUMEROUS OPPORTUNITY AS NOTED ABOVE, THUS, AS PER MY JUDGMEN T, THE INCREASE IN THE CREDITORS IN PROPORTION TO INCREASE IN THE T URNOVER CAN ONLY BE CONSIDERED TO BE GENUINE. HOWEVER, TAKING A LEN IENT VIEW A 50% INCREASE IN THE CREDITORS AGAINST 17% INCREASE IN THE TURNOVER ITA NO. 1350/AHD/2012 (BY REVENUE) AND CO NO.198/AHD/2012 (BY ASSESSEE) DCIT VS. M/S.AAHAR PRODUCTS PVT.LTD. ASST.YEAR 2008-09 - 9 - IS CONSIDERED TO BE GENUINE. THUS, CREDITORS IN EX CESS OF RS.6,26,29,577/- AMOUNTING TO RS.4,10,72,257/- AS P ER DETAIL BELOW ARE CONSIDERED TO BE UNEXPLAINED AS GENUINENESS, ID ENTITY AND CREDIT-WORTHINESS COULD NOT BE PROVED. A.Y. 2008-09 AY 2007-08 % INCREASE TURNOVER 431230951 368709205 17% CREDITORS 103701834 41753051 148% CREDITORS AS ON 31/03/2007 CREDITORS AS ON 31/03/2008 CREDITORS AFTER CONSIDERING 50% UNEXPLAINED CREDITORS 41753051 103701834 62629577 41072257 IN VIEW OF THE ABOVE, CREDITORS AMOUNTING TO RS.4,1 0,72,257/- IS ADDED TO THE TOTAL INCOME OF THE ASSESSEE AS PER TH E PROVISIONS OF SECTION 68 OF THE ACT. (ADDITION OF RS.4,10,72,257/-) 8.1. FROM THE ORDER OF THE AO, IT IS EVIDENT THAT T HE AO HAS MADE ADDITION MERELY ON THE BASIS OF ESTIMATION. HOWEVE R, THE LD.CIT(A) DELETED THE ADDITION, BY OBSERVING AS UNDER:- 4.5. I HAVE CONSIDERED THE FACTS OF THE CASE; ASSE SSMENT ORDER, AOS REMAND REPORT AND APPELLANTS WRITTEN SUBMISSI ON. THERE WAS ABNORMAL INCREASE IN SUNDRY CREDITORS DURING TH E YEAR AND THEREFORE ASSESSING OFFICER ASKED FOR CONFIRMATION FROM SUNDRY CREDITORS AND REASONS FOR SUCH RISE. APPELLANT DID NOT SUBMIT THE INFORMATIONS DURING ASSESSMENT PROCEEDINGS THEREFOR E ASSESSING OFFICER TREATED PART OF THE SUNDRY CREDITORS AS UNE XPLAINED. HOWEVER APPELLANT SUBMITTED CONFIRMATIONS FROM ALL SUNDRY CREDITORS WITH THEIR PAN AND ALSO EXPLAINED THE REA SONS FOR INCREASE IN SUNDRY CREDITORS IN APPEAL. IN REMAND REPORT, ASSESSING OFFICER ACCEPTED THAT APPELLANT SUBMITTED CONFIRMATIONS WITH PAN BUT STILL HELD THAT CREDITWORTHINESS AND I DENTITY WAS NOT ITA NO. 1350/AHD/2012 (BY REVENUE) AND CO NO.198/AHD/2012 (BY ASSESSEE) DCIT VS. M/S.AAHAR PRODUCTS PVT.LTD. ASST.YEAR 2008-09 - 10 - PROVED. APPELLANT SUBMITTED THAT, IT HAS DISCHARGE D ONUS BY SUBMITTING CONFIRMATIONS WITH PAN OF ALL THE CREDIT ORS AND THEREFORE THESE CREDITORS CANNOT BE TREATED AS UNEX PLAINED. IF ASSESSING OFFICER FOUND ANY CREDITOR NON-GENUINE, A PPELLANT COULD BE CONTORTED WITH THE SAME. HOWEVER WITHOUT FINDIN G ANY DEFECT IN THE CONFIRMATIONS SUBMITTED, ASSESSING OFFICER CANN OT HOLD THAT IDENTITY AND CREDITWORTHINESS WERE NOT PROVED. IT IS NOW SETTLED WITH SEVERAL JUDICIAL DECISION THAT PRIMARY ONUS OF THE APPELLANT GETS DISCHARGED WITH THE FILLING OF CONFIRMATION WI TH PAN OF THE CREDITORS. THEREAFTER ONUS SHIFTS TO THE DEPARTMEN T TO FIND ANYTHING WRONG IN THE CONFIRMATIONS. IN ABSENCE OF IT, IT CANNOT BE HELD THAT CREDITS ARE UNEXPLAINED. CONSIDERING THE SE FACTS IT IS CLEAR THAT APPELLANT DISCHARGED ITS ONUS AND EXPLAI NED THE SUNDRY CREDITORS. ASSESSING OFFICER FURTHER HELD THAT APPELLANT FAILE D TO JUSTIFY THE INCREASE IN CREDITORS IN PROPORTION TO INCREASE IN TURNOVER. THE DISPROPORTIONATE INCREASE OF SUNDRY CREDITORS CANNO T LEAD TO ANY ADDITION. IF ASSESSING OFFICER SUSPECTED ANY CREDI TOR TO BE BOGUS, ONUS IS ON ASSESSING OFFICER TO EXAMINE THE CREDITO RS AND FIND ANYTHING WRONG. IN THE ABSENCE OF ANY FINDING OF B OGUS CREDITORS, ADDITION CANNOT BE MADE JUST ON THE BASIS OF INCREA SE IN SUNDRY CREDITORS. ANY ABNORMALITY IN THE BALANCE SHEET IT EM CAN LEAD TO INVESTIGATION BUT THE SAME CANNOT BE USED FOR MAKIN G ADDITION JUST LIKE THAT. SINCE ASSESSING OFFICER DID NOT FIND AN Y CREDITOR BOGUS OR NOT GENUINE AND APPELLANT DISCHARGED ITS ONUS BY SU BMITTING CONFIRMATIONS WITH PAN OF ALL THE CREDITORS, THERE IS NO BASIS FOR TREATING PART OF SUNDRY CREDITORS AS UNEXPLAINED UN DER SECTION 68 OF IT ACT. ACCORDINGLY THE ADDITION MADE BY THE AS SESSING OFFICER IS DELETED. 8.2. THE ABOVE FINDING OF THE LD.CIT(A) IS NOT CONT ROVERTED BY THE REVENUE BY PLACING ANY MATERIAL ON RECORD SUGGESTI NG THAT THE CONFIRMATIONS AS FURNISHED BY THE ASSESSEE WERE BOG US. MOREOVER, THE ITA NO. 1350/AHD/2012 (BY REVENUE) AND CO NO.198/AHD/2012 (BY ASSESSEE) DCIT VS. M/S.AAHAR PRODUCTS PVT.LTD. ASST.YEAR 2008-09 - 11 - AO COULD HAVE MADE ENQUIRY IN RESPECT OF THE GENUIN ENESS OF THE TRANSACTIONS. THE ASSESSEE HAD FURNISHED CONFIRMAT IONS FROM THE SUNDRY CREDITORS ENCLOSED AT PAGE NOS.141 TO 194 OF THE PA PER-BOOK. IN THE MAJORITY OF CONFIRMATIONS, THE ASSESSEE HAS ALSO FU RNISHED THE PANS OF THE CONCERNED CREDITORS. THE AO CHOSE NOT TO MAKE FURTHER ENQUIRY TO ASCERTAIN THE CORRECTNESS OF CONFIRMATION. THEREFO RE, WE ARE IN AGREEMENT WITH THE LD.CIT(A) THAT THERE IS NO BASIS FOR TREATING PART OF SUNDRY CREDITORS AS UNEXPLAINED U/S.68 OF THE ACT. AS PER SECTION 68 OF THE ACT, THE AO IS REQUIRED TO GIVE A CLEAR FINDING IN RESPECT OF THE CREDIT ENTRY WHICH IS NOT EXPLAINED BY THE ASSESSEE. HOWE VER, IN THE INSTANT CASE, THE ASSESSEE HAS FURNISHED CONFIRMATIONS ALON G WITH PANS OF THE SUNDRY CREDITORS. THE AO HAS NOT MADE ANY ENQUIRY WHETHER SUCH CREDITORS WERE GENUINE OR BOGUS. STRANGELY, THE AO, AT ONE HAND, INVOKED THE PROVISIONS OF SECTION 68 OF THE ACT AND ON THE OTHER HAND PROCEEDED TO MAKE ADDITION ON THE BASIS OF ESTIMATION (CONJEC TURES AND SURMISES). THE ADDITION U/S.68 OF THE ACT MERELY ON THE BASIS OF ESTIMATION IS NOT PERMISSIBLE UNDER THE LAW. HENCE, THIS GROUND OF R EVENUES APPEAL IS REJECTED BEING DEVOID OF ANY MERIT. 9. GROUND NO.6 OF REVENUES APPEAL IS AGAINST REDUC ING THE ESTIMATION MADE BY THE AO. LD.CIT-DR SHRI SUBHASH BAINS VEHEMENTLY ARGUED THAT THE LD.CIT(A) WAS NOT JUSTIF IED IN REDUCING THE ESTIMATION MADE BY THE AO. HE SUBMITTED THAT THE A O NOTICED THAT THE ASSESSEE-COMPANY HAS DECLARED (-)7.24% OF THE GP, W HEREAS THE ITA NO. 1350/AHD/2012 (BY REVENUE) AND CO NO.198/AHD/2012 (BY ASSESSEE) DCIT VS. M/S.AAHAR PRODUCTS PVT.LTD. ASST.YEAR 2008-09 - 12 - ASSESSEE IN A SIMILAR BUSINESS HAVE DECLARED GP VAR IED FROM 1.52% TO 5.78%. THE AO ADOPTED THE MEAN OPERATING PROFIT OF THE SIMILARLY SITUATED ASSESSEES CASE AT 2.74%. HE SUBMITTED TH AT BEFORE THE AO, THE ASSESSEE DID NOT SUBMIT ANY DETAILS IN SUPPORT OF I TS CLAIM OF GROSS LOSS AT (-)7.24%. IN THE ABSENCE OF THE REQUISITE DETAILS, THE AO WAS JUSTIFIED IN ESTIMATING THE GROSS PROFIT. 9.1. ON THE CONTRARY, THE LD.SR.COUNSEL FOR THE ASS ESSEE SUBMITTED THAT THE ASSESSEE HAS CHALLENGED THE ACTION OF THE LD.CI T(A) BY FILING SEPARATE CROSS-OBJECTION FOR NOT ACCEPTING THE BOOK RESULTS. HE SUBMITTED THAT THE COMPANY HAS BEEN SHOWING INCURRING LOSS FROM ITS RE GULAR BUSINESS TRANSACTIONS. HE SUBMITTED THAT THE COMPARABLES AD OPTED BY THE AO WAS NOT EVEN IN THE SAME BUSINESS. HE SUBMITTED THAT THE ASSESSEE HAS BEEN MAINTAINING THE BOOKS OF ACCOUNTS AS PER SCHEDULE-6 OF THE COMPANIES ACT, 1956 AND THE BOOKS OF ACCOUNTS OF THE ASSESSE E MAINTAINED AS PER INCOME TAX ACT, 1961. HE SUBMITTED THAT THE BOOKS OF ACCOUNTS MAINTAINED BY THE ASSESSEE WAS SO TRUE AND FAIR VIE WS. HE SUBMITTED THAT THE AO HAS PROCEEDED TO ASSUME THE LOSS OF RS.312.0 3 LACS AND AS ENTIRE BASE FOR MAKING THE ADDITION WAS NOWHERE NEAR TO A CTUAL FACTS. HE SUBMITTED THAT BOTH THE AUTHORITIES WERE NOT JUSTIF IED IN REJECTING THE BOOKS OF ACCOUNTS. HE FURTHER SUBMITTED THAT THE C OMPARABLES ADOPTED BY THE AO ARE NOT CORRECT. 10. WE HAVE HEARD THE RIVAL SUBMISSIONS, PERUS ED THE MATERIAL AVAILABLE ON RECORD AND GONE THROUGH THE ORDERS OF THE AUTHORITIES BELOW. ITA NO. 1350/AHD/2012 (BY REVENUE) AND CO NO.198/AHD/2012 (BY ASSESSEE) DCIT VS. M/S.AAHAR PRODUCTS PVT.LTD. ASST.YEAR 2008-09 - 13 - WE FIND THAT THE AO HAS GIVEN A FINDING ON FACT THA T VARIOUS NOTICES WERE ISSUED TO THE ASSESSEE TO FILE THE REQUISITE INFORM ATION IN SUPPORT OF THE ACCOUNTS AND TO VERIFY THE VERACITY OF THE ACCOUNTS . THE LD.CIT(A) AFFIRMED THE VIEW OF THE AO FOR REJECTING THE BOOKS OF ACCOUNTS. THE LD.CIT(A) HAS GIVEN A FINDING ON FACT THAT NO BOOKS OF ACCOUNTS AND OTHER EVIDENCE WERE PLACED BEFORE THE AO TO VERIFY THE VE RACITY OF THE ACCOUNTS, HENCE IT WAS HELD THAT THE ACCOUNTS WERE RIGHTLY REJECTED BY THE LD.CIT(A). IT IS ALSO POINTED OUT BY THE LD.CIT(A) THAT IN THE REMAND PROCEEDINGS AS WELL THE ASSESSEE DID NOT PRODUCE TH E BOOKS OF ACCOUNTS TO THE AO. THE CONTENTION OF THE ASSESSEE IS THAT HE WAS NEVER ASKED BY THE AO TO PRODUCED THE BOOKS OF ACCOUNTS. HOWEVER, THE BOOKS OF ACCOUNTS WERE PRODUCED BEFORE THE LD.CIT(A). THEREFORE, W E ARE OF THE CONSIDERED VIEW THAT IT WAS INCUMBENT UPON THE ASSE SSEE TO PRODUCE THE BOOKS OF ACCOUNTS IN SUPPORT OF ITS CLAIM OF SUFFER ING LOSS, BUT THE ASSESSEE FAILED TO FURNISH THE BOOKS OF ACCOUNTS AN D SUPPORTING EVIDENCES BEFORE THE AO, THEREFORE THE LD.CIT(A) WAS JUSTIFIE D IN CONFIRMING THE ACTION OF THE AO FOR REJECTING THE BOOKS OF ACCOUNT S. FURTHER, WE FIND THAT THE LD.CIT(A) HAS OBSERVED THAT THE AO COMPARE D WITH APPELLANTS GROSS PROFIT WITH FOUR DIFFERENT TURNOVER. IT IS S EEN THAT THE TURNOVER OF SNAM VIJAYA FEEDS LTD. (1995 HYDERABAD ANDRA PRADES H) FOR MANUFACTURING FEED FOR LABORATORY ANIMALS IS RS.1.8 3 CRORES AS AGAINST APPELLANT-COMPANY IS RS.43.12 CRORES. THE OTHERS T HREE FIRMS TURNOVERS ARE RS.19.14 CRORES (ANNAM FEEDS LTD.), RS.40.74 CRROES (KAPILA KRISHI UDYOG LTD.) AND RS.96.9 CRORES (SHALIMAR FEEDS LTD. ). THEREFORE, THESE ITA NO. 1350/AHD/2012 (BY REVENUE) AND CO NO.198/AHD/2012 (BY ASSESSEE) DCIT VS. M/S.AAHAR PRODUCTS PVT.LTD. ASST.YEAR 2008-09 - 14 - ARE COMPARABLE CASES TO THE APPELLANT-COMPANY AND THEY ARE ALSO IN THE SIMILAR LINE OF BUSINESS. THIS FINDING OF FACT IS NOT CONTROVERTED BY THE REVENUE, THEREFORE WE DO NOT FIND ANY REASON TO INT ERFERE WITH THE ORDER OF THE LD.CIT(A), SAME IS HEREBY UPHELD. THUS, THI S GROUND OF REVENUES APPEAL IS REJECTED. AS A RESULT, REVENUES APPEAL IS DISMISSED. 11. NOW, WE TAKE UP THE ASSESSEES CROSS OBJECTION NO.198/AHD/2012 FOR AY 2008-09. THE ASSESSEE HAS RAISED THE ONLY E FFECTIVE GROUND IS AGAINST PARTLY SUSTAINING THE GP ADDITION MADE BY T HE AO. THE CONTENTION OF THE ASSESSEE IS THAT IN SIMILAR FACT S AND CIRCUMSTANCES TRADING RESULTS IN THE EARLIER AND THE SUBSEQUENT YEARS HAVE BEEN ACCEPTED BY THE DEPARTMENT EVEN THOUGH THERE WERE LOSSES AND , THEREFORE, THERE IS NO JUSTIFICATION FOR THE GP ADDITION PARTLY SUSTAIN ED BY THE LD.CIT(A). THE LD.COUNSEL FOR THE ASSESSEE SUBMITTED THAT THE RETURN OF INCOME WAS APPENDED BY THE AUDITORS REPORT AND RETURN WERE FIL ED BY THE ASSESSEE IN THE PRESCRIBED PROFORMA. HE SUBMITTED THAT THE BOO KS OF ACCOUNT WAS DULY SUPPORTED BY VOUCHERS AND STOCK DETAILS. 11.1 ON THE CONTRARY, THE LD.CIT-DR SUBMITTED THAT THE ASSESSEE WAS NOT PREVENTED TO PRODUCE THE REQUITE DETAILS IN SUPPORT OF ITS CLAIM. ITA NO. 1350/AHD/2012 (BY REVENUE) AND CO NO.198/AHD/2012 (BY ASSESSEE) DCIT VS. M/S.AAHAR PRODUCTS PVT.LTD. ASST.YEAR 2008-09 - 15 - 12. WE HAVE HEARD THE RIVAL SUBMISSIONS, PERUS ED THE MATERIAL AVAILABLE ON RECORD AND GONE THROUGH THE ORDERS OF THE AUTHORITIES BELOW. IN REVENUES APPEAL BEARING ITA NO.1350/AHD/2012(SU PRA), WE HAVE AFFIRMED THE VIEW OF LD.CIT(A) FOR CONFIRMING THE R EJECTION OF BOOKS OF ACCOUNTS AND ADOPTING THE GROSS PROFIT. FOR THE SA ME REASONING, WE DO NOT FIND ANY MERIT IN THE CONTENTION OF THE ASSESSE E, THEREFORE THE CROSS- OBJECTION FILED BY THE ASSESSEE IS REJECTED. 13. IN THE COMBINED RESULT, THE APPEAL OF THE REVEN UE AS WELL AS CROSS OBJECTION FILED BY THE ASSESSEE BOTH ARE DISM ISSED. ORDER PRONOUNCED IN THE COURT ON FRIDAY, THE 23 RD OF JANUARY, 2015 AT AHMEDABAD. SD/- SD/- ( .. ) ( ) ( N.S. SAINI ) ( KUL BHARAT ) ACCOUNTANT MEMBER JUDICIAL MEMBER AHMEDABAD; DATED 23/ 01 /2015 1(..,%.../ T.C. NAIR, SR. PS !'#$%&%# / COPY OF THE ORDER FORWARDED TO : 1. ' / THE APPELLANT 2. #$' / THE RESPONDENT. 3. 234 5 / CONCERNED CIT 4. 5 ( ) / THE CIT(A)-6, AHMEDABAD 5. 6%7#34 , (34, , 2 / DR, ITAT, AHMEDABAD 6. 79:;& / GUARD FILE. / BY ORDER, $6# //TRUE COPY// / ( DY./ASSTT.REGISTRAR) , / ITAT, AHMEDABAD