M/S Jiwan Agricutural Implements Workshop, V. ITO, Patiala

CO 47/CHANDI/2014

• Counselvise Citation: [2016] 123 COUNSELVISE.COM (IT) 1910 (ITAT-CHANDIGARH)
• Duration Of Justice: 1 year(s) 1 month(s) 14 day(s)
• Appeal Type: Cross Objection
• Pronouncement Date: 18-01-2016
• Appeal Filed By: Assessee
• Order Result: Dismissed
• Bench Allotted: A
• Next Hearing Date: 15-12-2015
• Assessment Year: 2010-2011
• Appeal Filed On: 04-12-2014
• Result in Favour of: Revenue
• Court: TRIBUNAL
• Assessee Lawyers: MRS RAJINDER KAUR
• Keywords: Gross profit estimation
• Section: 133(6); 131; 68

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL CHANDIGARH BENCHES, CHANDIGARH BEFORE SHRI H.L.KARWA, HON'BLE VICE PRESIDENT & MS. ANNAPURNA MEHROTRA, ACCOUNTANT MEMBER ITA NO. 892/CHD/2014 (ASSESSMENT YEAR : 2010-11) THE ITO, WARD-2, VS. M/S JIWAN AGRICULTURAL IMPL EMENTS PATIALA WORKSHOP CO-OPERATIVE INDUSTRIAL SOCIETY LTD, PATIALA PAN NO. AAAAJ069L C.NO. 47/CHD/2014 ( IN ITA NO. 892/CHD/2014) (ASSESSMENT YEAR : 2010-11) M/S JIWAN AGRICULTURAL IMPLEMENTS VS. THE ITO, WAR D-2, WORKSHOP CO-OPERATIVE INDUSTRIAL PATIALA SOCIETY LTD, PATIALA PAN NO. AAAAJ069L (APPELLANT) (RESPONDENT) APPELLANT BY : MRS RAJINDER KAUR RESPONDENT BY : SH. TEJ MOHAN SINGH DATE OF HEARING : 15.12.2015 DATE OF PRONOUNCEMENT : 18.01.2016 . ORDER PER H.L.KARWA, VP THE APPEAL FILED BY THE REVENUE AND CROSS OBJECTION BY THE ASSESSEE ARE DIRECTED AGAINST THE ORDER OF CIT(A), PATIALA DATED 22.8.2014 RELATING TO ASSESSMENT YEAR 2010-11. GROUND NO.1 OF THE APPEAL READS AS UNDER:- 2 1. IN THE FACTS AND CIRCUMSTANCES OF THE CASE, LD. CIT(A) HAS ERRED IN ESTIMATING G.P. AT 12.05% AS A MEASURE OF FAIR ESTIMATION WITHOUT ANY BASIS AFTER IGNORING THE FAC T THAT THE AO HAD ESTIMATED G.P. AT 13.50% ON THE BASIS OF COMPARABLE CASES, WITHOUT APPRECIATING THAT OTHER F ACTORS BEING SAME, THE G.P. RATE OF COMPARABLE BUSINESSES HAVING HIGHER TURNOVER WOULD NORMALLY BE EXPECTED TO BE LO WER THAN BUSINESSES HAVING LOWER TURNOVER ON ACCOUNT OF PRESSURE ON MARGINS TO INCREASE SALES. 2. GROUND NOS. 1 & 2 OF THE CROSS OBJECTIONS ARE AS UNDER:- 1. THAT THE LD. COMMISSIONER OF INCOME TAX (APPEALS ) HAS ERRED IN LAW AS WELL AS ON FACTS IN UPHOLDING T HE REJECTION OF BOOKS OF ACCOUNT WHICH IS ILLEGAL, ARBITRARY AND UNJUSTIFIED. 2. THAT WITHOUT PREJUDICE TO THE ABOVE, THE LD. COMMISSIONER OF INCOME TAX (APPEALS) HAS FURTHER ER RED IN SUSTAINING THE ADDITION OF RS. 5,72,457/- OUT OF TO TAL ADDITION OF RS. 14,01,480/- MADE BY THE ASSESSING OFFICER AP PLYING GP RATE OF 13.5% AS WHICH IS ARBITRARY AND UNJUSTIFIED . THE REVENUE IS IN APPEAL AGAINST THE ORDER OF CIT(A ) IN REDUCING THE GP RATE FROM 13.50% TO 12.O5% AND THE ASSESSEE IS AGGRIEVED WITH THE ADDITION OF RS. 5,72,457/- SUSTAINED BY THE CIT(A). THE ASSESSEE IS ENGAGED IN THE MANUFACTURING OF HARVESTER COMBINES AND AGRICULTURA L IMPLEMENTS AND SALES THEREOF. THE ASSESSING OFFICER WHILE EXAMINING THE BOOKS OF ACCOUNT AND CORRESPONDING DOCUMENTS PRODUCED BY THE ASSESSEE NO TICED SEVERAL DISCREPANCIES WHICH ARE MENTIONED IN PARA 2A OF THE ASSESSMENT OR DER. IN VIEW OF THE DEFECTS NOTICED B IN THE BOOKS OF ACCOUNT, THE ASSESSING OF FICER REQUIRED THE ASSESSEE TO GIVE REASONS AS TO WHY ITS BOOKS OF ACCOUNT SHOULD NOT BE REJECTED BY APPLYING 3 THE PROVISIONS OF SECTION 145(3) OF THE INCOME-TAX ACT, 1961 (IN SHORT 'THE ACT'). IN RESPONSE TO THE QUESTIONNAIRE ISSUED BY THE ASSE SSING OFFICER, THE ASSESSEE SUBMITTED ITS REPLY ON 14.12.2012. THE ASSESSING O FFICER DID NOT FIND ANY FORCE IN THE SUBMISSIONS MADE BY THE ASSESSEE. THE ASSESS ING OFFICER CAME TO THE CONCLUSION THAT BOOKS OF ACCOUNT MAINTAINED BY THE ASSESSEE WERE NOT RELIABLE AND TRUE INCOME COULD NOT BE DEDUCED THEREFROM FOR THE FOLLOWING REASONS: - (I) NO QUANTITATIVE DETAILS OF THE OPENING STOCK OF GOO DS AS ON 01-4-2009 WAS FURNISHED BY THE ASSESSEE EVEN THE ME THOD OF VALUATION OF OPENING STOCK WAS ALSO NOT FURNISHED O N THE PLEA THAT THE ASSESSEE HAD NOT MAINTAINING QUANTITATIVE DETAILS OF THE NUMBER OF ITEMS USED TO THE MANUFACTURING OF HA RVESTER COMBINES AND ITS PARTS ARE LARGE. (II) NO QUANTITATIVE DETAILS OF THE CLOSING STOCK OF GOO DS AS ON 31/03/2010 WAS FURNISHED BY THE ASSESSEE EVEN THE M ETHOD OF VALUATION OF OPENING STOCK WAS ALSO NOT FURNISHED O N THE PLEA THAT THE ASSESSEE HAD NOT MAINTAINING QUANTITATIVE DETAILS OF THE NUMBER OF ITEMS USED TO THE MANUFACTURING OF HA RVESTER COMBINES AND ITS PARTS ARE LARGE. IN VIEW OF THE ABOVE REASONS, THE ASSESSING OFFICER REJECTED THE BOOKS OF ACCOUNT OF THE ASSESSEE U/S 145(3) OF THE ACT. THE ASSESSING OFFICER MADE THE ADDITION ON ACCOUNT OF LOW GP RATE. THE ASSESSEE HA D SHOWN TOTAL TURN OVER OF RS. 5,71,74,095/- DECLARING GP OF RS. 63,17,011/-. THE GP RATE DECLARED BY THE ASSESSEE WAS AT 11.05% OF THE GROSS TURN OVER. TH US, THE GP RATE OF 11.05% DECLARED BY THE ASSESSEE WAS ON LOWER SIDE AS COMPA RED TO OTHER MANUFACTURER OF THE HARVESTER COMBINES. THE ASSESSING OFFICER PROPO SED TO APPLY GP RATE OF 14.21% WHICH WAS DECLARED BY THE M/S STANDARD CORPO RATION OF INDIA BARNALA. AFTER CONSIDERING THE ASSESSEES REPLY, THE ASSESSI NG OFFICER ESTIMATED THE GP RATE OF 13.5% ON THE TURNOVER OF RS. 5,71,74,000/- BY TAKING INTO CONSIDERATION THE REPLY OF THE ASSESSEE. BY APPLYING THE ABOVE R ATIO, THE GP CAME TO RS. 4 77,18,490/- AS AGAINST GP OF RS. 63,17,010/- DISCLO SED BY THE ASSESSEE. THUS, THERE WAS A DIFFERENCE OF RS. 14,01,480/-, WHICH WA S ADDED TO THE RETURNED INCOME OF THE ASSESSEE. 3. ON APPEAL, THE CIT(A) UPHELD THE ORDER OF THE AS SESSING OFFICER AS FAR AS REJECTION OF BOOKS OF ACCOUNT ARE CONCERNED. IN THI S REGARD, THE LD. CIT(A) HAS OBSERVED AS UNDER:- 5.3HOWEVER, THE ACTUAL CONSUMPTION OF THE MATER IAL FOR THE PRODUCTION OF COMBINES COULD NOT BE AUTHENT ICATED BY THE APPELLANT IN ABSENCE OF ANY INPUT OR OUTPUT STA TEMENT OF RAW MATERIALS. RATHER, IT IS SUBMITTED THAT THE RAW MATERIALS ARE ISSUED IN BULK TO THE SHOP FLOOR AND THE CLOSIN G STOCK IS PHYSICALLY VERIFIED AT THE END OF THE YEAR. THE WEI GHT OF THE COMBINES MANUFACTURED IS ALSO NOT GIVEN TO CO-RELAT E THE CONSUMPTION OF RAW MATERIAL AND GENERATION OF SCRAP . THUS, THE CONSUMPTION OF RAW MATERIAL & GENERATION OF SCR AP COULD NOT BE QUALIFIED IN TERM OF QUANTITY / WEIGHT ETC. BY WAY OF ANY COGENT EVIDENCE OR DOCUMENT / REPORT ETC. THERE FORE, IN VIEW OF THIS DEFICIENCY, I AM OF THE OPINION THAT T HE BOOKS OF ACCOUNTS ARE RIGHTLY REJECTED BY THE A.O. AS REGARDS THE GP RATE, THE LD. CIT(A) HAS ESTIMATE D THE SAME AT 12.05% AS AGAINST 13.50% APPLIED BY THE ASSESSING OFFICER, OB SERVING AS UNDER:- AS REGARDS, ESTIMATION OF GP, IT IS SUBMITTED BY T HE APPELLANT BOTH DURING THE ASSESSMENT PROCEEDINGS AN D THE APPELLATE PROCEEDINGS THAT THE ACTUAL GP IN THIS YE AR IS 12.99% COMPARED TO 12.46% IN A.Y. 2008-09 AND 12.35 % IN A.Y. 2009-10. THE GP SHOWN AT 11.05% IN THIS YEAR W AS ACTUALLY DUE TO DIFFERENT ACCOUNTING TREATMENT GIVE N TO CERTAIN EXPENSES IN THIS YEAR IN COMPARISON TO EARL IER TWO YEARS. DURING THIS YEAR, THE CONSUMABLE EXPENSES OF RS. 4,79,491/-, OIL AND LUBRICANT OF RS. 3,68,640/- AND TOLL ACCESSORIES RS. 2,60,430/- WERE CHARGED TO MANUFACT URING 5 ACCOUNT INSTEAD OF P&L A/C AS DONE IN THE PROCEEDIN G YEARS RESULTING IN DECREASE IN GP RATE BY 1.94%. THE CONT ENTION IS NOT REBUTTED BY THE A.O. THUS, IT IS NOTED THAT THE GP IS ACTUALLY PROGRESSIVE WITH RESPECT TO THE TWO EARLIE R YEARS. THE A.O. HAS HOWEVER CONTENDED THAT AS PER CORRECT ACCOUNTING SYSTEM, CONSUMABLE EXPENSES ETC SHOULD B E DEBITED IN MANUFACTURING ACCOUNT AND, THEREFORE, TH E ACTUAL GP IN THIS CASE IS 11.4%. THE A.O. HAS FURTHER SELE CTED AVERAGE RATE OF 13.5% ON THE BASIS OF GP RATE DECLA RED BY M/S STANDARD CORP. INDIA AT 14.21% AND M/S PREET AG RO INDUSTRIES AT 12.72%. THUS, THE FACTS OF THE CASE S HOWS THAT THOUGH THE GP IS PROGRESSIVE VIS--VIS EARLIER YEAR ON THE BASIS OF SAME ACCOUNTING SYSTEM, YET IT IS LOW COMP ARED TO THE TWO COMPARABLE CASES TAKEN BY THE A.O. IN THIS CONN ECTION, THE APPELLANT HAS FURTHER CONTENDED THAT THE TURNOV ER IN THESE TWO COMPARABLE CASES ARE VERY HIGH COMPARED TO THE CASE OF THE APPELLANT. IT IS NOTED THAT THE TURNOVER IN THE SE CASES ARE IN THE VICINITY OF 100 CRORE IN COMPARISON TO 5.72 CRORES FOR THE ASSESSEE AS CONTENDED IN THE SUBMISSION BY THE APPELLANT. LOOKING INTO THE TOTALITY OF THE CASE, IN MY OPINIO N, IT WILL BE FAIR TO INCREASE THE GP BY 1% OVER AND ABOVE GP RAT E OF 11.05% DECLARED BY THE APPELLANT. THUS, THE ADDITIO N TO THIS EXTENT IS CONFIRMED AND THE BALANCE ADDITION IS HER EBY DELETED. ACCORDINGLY, THE GROSS PROFIT WILL COME TO RS. 68,89,467/- COMPARED TO RS. 63,17,010/- DECLARED BY THE APPELLANT AND THE ADDITION SUSTAINED, THEREFORE, IS RS. 5,72,457/-. 4. WE HAVE HEARD THE RIVAL SUBMISSIONS AND HAVE ALS O PERUSED THE MATERIALS AVAILABLE ON RECORD. MS. RAJINDER KAUR, LD. DR HEAV ILY RELIED ON THE ORDER OF THE ASSESSING OFFICER IN SUPPORT OF REVENUES CASE. SHRI TEJ MOHAN SINGH, LD. COUNSEL FOR THE ASSESSEE, ON THE OTHER HAND, REITER ATED THE SUBMISSIONS MADE BEFORE THE AUTHORITIES BELOW. AFTER PERUSING THE OR DERS OF THE LOWER AUTHORITIES AND CONSIDERING THE ENTIRE FACTS AND CIRCUMSTANCES OF THE PRESENT CASE, WE ARE OF THE VIEW THAT ASSESSING OFFICER HAS CORRECTLY REJEC TED THE BOOKS OF ACCOUNT OF 6 THE ASSESSEE. IN OUR VIEW, THE LD. CIT(A) HAS RIGHT LY UPHELD THE ACTION OF THE ASSESSING OFFICER AS REGARDS THE REJECTION OF BOOKS OF ACCOUNT. WE FULLY AGREE WITH THIS OBSERVATION OF THE ASSESSING OFFICER THAT IN VIEW OF THE DEFICIENCIES POINTED OUT IN BOOKS OF ACCOUNT MAINTAINED BY THE A SSESSEE, IT CAN SAFELY BE HELD THAT THE SAME ARE NOT RELIABLE AND TRUE INCOME COU LD NOT BE DEDUCED THEREFROM. ADMITTEDLY, THE ASSESSEE HAD NO RECORDS REGARDING T HE ANNUAL CONSUMPTION OF THE MATERIAL FOR THE PRODUCTION OF COMBINES. FURTHE R, THERE WERE NO RECORDS OF RAW MATERIAL CONSUMED. RATHER, IT IS CLAIMED THAT T HE RAW MATERIALS WERE BEING ISSUED IN BULK TO THE SHOP FLOOR AND THE CLOSING ST OCK WAS BEING PHYSICALLY VERIFIED AT THE END OF THE YEAR. THE AUTHORITIES BE LOW HAVE ALSO POINTED OUT THAT THE WEIGHT OF THE COMBINES MANUFACTURED WAS ALSO N OT PROVIDED TO CO-RELATE THE CONSUMPTION OF RAW MATERIAL AND GENERATION OF SCRAP . ADMITTEDLY, EVEN THE GP DECLARED BY THE ASSESSEE WAS ON LOWER SIDE AND NO P LAUSIBLE EXPLANATION HAS BEEN GIVEN BY THE ASSESSEE IN THIS REGARD. TAKING I NTO CONSIDERATION THE ENTIRE FACTS AND CIRCUMSTANCES OF THE PRESENT CASE, WE UPH OLD THE ORDER OF CIT(A) REGARDING REJECTION OF BOOKS OF ACCOUNT. 5. AS REGARDS, ESTIMATION OF GP ALSO, WE DO NOT FIN D ANY INFIRMITY IN THE ORDER OF THE CIT(A). IN THIS CASE THE ASSESSING OFF ICER HAS CITED TWO COMPARABLE CASES WHERE GP RATE DECLARED BY THE SAID CONCERNS W AS 14.21% AND 12.72%. HOWEVER, THE CONTENTION OF THE ASSESSEE WAS THAT TH E TURNOVER IN THESE TWO COMPARABLE CASES WERE VERY HIGH AS COMPARED WITH T HE CASE OF THE ASSESSEE. ACCORDING TO THE ASSESSEE, THE TURNOVER IN THESE CA SES WAS IN THE VICINITY OF 100 CRORES IN COMPARISON TO 5.72 CRORES IN THE CASE OF ASSESSEE. ADMITTEDLY, THE ASSESSEE HAS DECLARED GP RATE OF 11.05% FOR THE YEA R UNDER CONSIDERATION WHICH CANNOT BE ACCEPTED IN VIEW OF THE SEVERAL DISCREPAN CIES NOTICED IN THE BOOKS OF ACCOUNT. IN OUR OPINION, THE CIT(A) WAS FAIR ENOUG H TO INCREASE THE GP BY 1% OVER AND ABOVE THE GP RATE OF 11.05% DECLARED BY TH E ASSESSEE. WE OBSERVE THAT 7 THE LD. CIT(A) HAS APPLIED GP RATE OF 12.05% AFTER TAKING INTO CONSIDERATION THE NATURE OF ASSESSEES BUSINESS AND RELEVANT FACTS O F THE PRESENT CASE. THEREFORE, WE DO NOT SEE ANY VALID GROUND IN INTERFERING WITH THE ORDER OF CIT(A) ON THIS ISSUE. CONSEQUENTLY, WE DISMISS GROUND NO.1 OF THE REVENUES APPEAL AND GROUND NOS. 1 & 2 OF THE CROSS OBJECTIONS PREFERRED BY THE ASSESSEE. 6. GROUND NO.2 OF THE APPEAL READS AS UNDER:- 2. IN THE FACTS AND CIRCUMSTANCES OF THE CASE, LD. CIT(A) HAS ERRED IN DELETING THE ADDITION OF RS. 30,39,00 0/- MADE BY THE AO WITHOUT APPRECIATING THAT THE ASSESSEE HA D FAILED TO DISCHARGE ITS ONUS IN RESPECT OF AMOUNTS CLAIMED TO BE RECEIVED AS TRADE ADVANCES, ESPECIALLY WHEN THE AO HAD MADE EFFORTS TO INDEPENDENTLY EXAMINE THE EXPLANATI ON OF THE ASSESSEE REGARDING THE NATURE AND SOURCE OF THE CREDITS. 7. THE ASSESSING OFFICER OBSERVED THAT AS PER THE B ALANCE SHEET THE ASSESSEE HAD SHOWN ADVANCES FROM CUSTOMERS TO THE TUNE OF RS . 30,39,000/-. THE ASSESSING OFFICER REQUIRED THE ASSESSEE TO PROVE TH E GENUINENESS OF THE ADVANCES AS THE ONUS OF PROVING SOURCE OF AMOUNT CREDITED IN ITS BOOKS OF ACCOUNT IN THE FORM OF ADVANCES FROM CUSTOMERS WAS ON THE ASSESSEE . IN RESPONSE TO THE SAID QUERY, THE ASSESSEE SUBMITTED THAT THE SALES OF COM BINES WERE MADE DURING THE NEXT YEAR TO ALL THE CUSTOMERS FROM WHOM ADVANCES W ERE RECEIVED. THE PARTICULARS OF BILLS ISSUED AND THE COPIES OF THE B ILLS ARE AS UNDER:- SR. NO. NAME OF THE CUSTOMER OUTSTANDING AS ON 31/03/2010 BILL NO. AND DATE BILL AMOUNT IN RS. 1 AJMER SINGH 14,20,000/- 052 DATED 02/04/2010 1420,000.00 2 HALESHWAR KUMAR 5,19,000/- 085 DATED 07/03/2011 1430,000.00 8 3 KULDEEP SINGH 10,30,000/- 051 DATED 02/04/2010 1350,000.00 4 RAM NIWAS YADAV 20,000/- 053 DATED 06/04/2012 1480,000.00 5 SHARVAN KUMAR 50,000/- 355 DATED 17/04/2010 116,050.00 TOTAL 30,39,000/ THE ASSESSING OFFICER REJECTED THE REPLY OF THE ASS ESSEE FOR THE REASONS SATED AT PAGES 33 & 34 OF THE ASSESSMENT ORDER AND MADE THE ADDITION OF RS. 30,39,000/- U/S 68 OF THE ACT. 8. ON APPEAL, THE CIT(A) DELETED THE ADDITION STATI NG THAT THE ASSESSEE HAD FURNISHED THE NAMES AND COMPLETE ADDRESSES OF THE C USTOMERS, COPIES OF THE ACCOUNT AND COPIES OF THE SALE BILLS COUNTERSIGNED BY THE CUSTOMERS DURING ASSESSMENT PROCEEDINGS. THE LD. CIT(A) FURTHER OBS ERVED THAT ASSESSING OFFICER NEVER DESIRED THE COPIES OF THE REGISTRATIO N CERTIFICATES AND TEMPORARY NUMBER OF MACHINES SOLD BY THE ASSESSEE. THE LD. C IT(A) ALSO STATED THAT FOR NON-COMPLIANCE OF NOTICES U/S 131 AND 133(6) OF THE ACT, BY TRADE CUSTOMERS, THE ASSESSEE COULD NOT BE HELD RESPONSIBLE. THE LD. CIT(A) HAS CATEGORICALLY STATED THAT THE ASSESSING OFFICER MADE THE ADDITION U/S 68 ON THE GROUND THAT SOURCE OF THE CREDITS IS NOT EXPLAINED AND ON THE P RESUMPTION THAT IF ADVANCE IS TAKEN IN THIS YEAR THEN THE SALES SHOULD ALSO BE EX ECUTED IN THIS YEAR. ACCORDING TO THE CIT(A) NO DEFECT IN THE SALE BILLS / BOOKS R EGARDING EXECUTION OF SALE SUBSEQUENTLY WAS POINTED OUT BY THE ASSESSING OFFIC ER. ACCORDINGLY, THE CIT(A) HELD THAT THERE WAS NO JUSTIFICATION IN MAKING THE ADDITION U/S 68 OF THE ACT,. 9. WE HAVE HEARD THE RIVAL SUBMISSIONS. SHRI TEJ M OHAN SINGH, LD. COUNSEL FOR THE ASSESSEE POINTED OUT THAT THE AMOUNT IN Q UESTION WAS RECEIVED IN 9 NORMAL COURSE OF BUSINESS. THESE ARE TRADE ADVANCES / DEPOSITS AND NOT IN THE NATURE OF A LOAN / BORROWING AND CASH CREDITS. HE F URTHER POINTED OUT THAT THE ASSESSING OFFICER WAS INFORMED THAT THESE ADVANCES WERE ADJUSTED AGAINST SALE OF GOODS MADE IN THE NEXT FINANCIAL YEAR. THE ASSES SEE DULY FURNISHED NAMES / COMPLETE ADDRESSES OF CUSTOMERS, THEIR RESPECTIVE C OPIES OF ACCOUNTS AS PER BOOKS OF ACCOUNT AND COPIES OF THE SALE BILLS COUNT ERSIGNED BY CUSTOMERS. IT IS APPARENT FROM THE RECORDS THAT THE ASSESSEE HAD SOL D GOODS TO THE CUSTOMERS AND SALE BILLS WERE PRODUCED BEFORE THE LOWER AUTHORITI ES. THE ASSESSEE HAD ALSO FURNISHED NAMES / COMPLETE ADDRESSES OF CUSTOMERS A ND THEIR RESPECTIVE COPIES OF ACCOUNT AS PER BOOKS OF ACCOUNT AND COPIES OF T HE SALE BILLS COUNTERSIGNED BY THE CUSTOMERS. THUS, THE ASSESSEE HAS ESTABLISHED T HE IDENTITY OF CUSTOMERS AND ALSO THE GENUINENESS OF THE TRANSACTIONS. COPIES OF ACCOUNT OF AFORESAID FIVE PARTIES FOR THE ASSESSMENT YEAR 2011-12 AS PER THE BOOKS OF ACCOUNT SHOWING THAT HARVEST COMBINES HAVE BEEN SUPPLIED BY SALE PA YMENTS AND ADJUSTMENTS OF ADVANCES DURING THE YEAR UNDER APPEAL. THESE DOCUME NTS ARE AVAILABLE AT PAGES 28 TO 44 OF THE ASSESSEES COMPILATION. IT IS ALSO APPARENT FROM THE RECORDS THAT IN TWO CASES NAMELY S. AJMER SINGH AND RAM NIWAS YA DAV, THE ASSESSEE RECEIVED 100% ADVANCE IN MARCH, 2010 BUT VEHICLES W ERE DELIVERED IN APRIL 2010 AND ACCORDINGLY BOOKED SALES IN BOOKS OF ACCOU NT. THUS, THERE WAS NO JUSTIFICATION IN REJECTING THE EXPLANATION OF THE A SSESSEE. WE MAY ALSO OBSERVE HERE THAT THE ASSESSING OFFICER WAS NOT JUSTIFIED I N INVOKING THE PROVISIONS OF SECTION 68 OF THE ACT IN THIS CASE BECAUSE SECTION 68 IS NOT APPLICABLE TO ADVANCE DEPOSIT RECEIVED FROM DEBTORS AGAINST FUTURE SALES. IN A SALE OF GOODS TRANSACTION, THE SELLER HAS NO BUSINESS TO VERIFY / ESTABLISH CREDITWORTHINESS OF THE CUSTOMERS. THE FACTS OF THE PRESENT CASE ARE CL EAR THAT THE AMOUNTS RECEIVED BY THE ASSESSEE FROM TRADE CREDITORS DURING THE COU RSE OF BUSINESS CANNOT BE CONSIDERED LOAN OR CASH CREDIT FOR THE PURPOSES OF SECTION 68 OF THE ACT. THUS, CONSIDERING THE ENTIRE FACTS AND CIRCUMSTANCES OF T HE PRESENT CASE, WE DECLINE TO 10 INTERFERE WITH THE FINDINGS OF CIT(A) ON THIS ISSUE . ACCORDINGLY, WE UPHOLD THE ORDER OF CIT(A). CONSEQUENTLY, WE REJECT GROUND NO .2 OF THE REVENUES APPEAL. 10. IN THE RESULT, THE APPEAL OF THE REVENUE AND TH E CROSS OBJECTIONS BY THE ASSESSEE ARE DISMISSED. ORDER PRONOUNCED IN THE OPEN COURT ON 18.01.2016 SD/- SD/- (ANNAPURNA MEHROTRA) (H.L.KARWA) ACCOUNTANT MEMBER VICE PRESIDENT DATED 18 TH JANUARY, 2016 RKK COPY TO: 1. THE APPELLANT 2. THE RESPONDENT 3. THE CIT 4. THE CIT(A) 5. THE DR