I.T.O. Ward 1, AMRAVATI V. Shri ANIL hARICHANDRA aGRAWAL, AMRAVATI

ITA 107/NAG/2015

• Counselvise Citation: [2016] 131 COUNSELVISE.COM (IT) 1336 (ITAT-NAGPUR)
• Duration Of Justice: 1 year(s) 4 month(s) 15 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 23-08-2016
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: SMC
• Assessment Year: 2008-2009
• Appeal Filed On: 07-04-2015
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: A R NINAWE
• Keywords: Unexplained cash credit; Depreciation; Additional evidence
• Section: 133(6); 131; 68; 69

Judgement Text

1 ITA NO. 1 07/NAG/2015. IN THE INCOME TAX APPELLATE TRIBUNAL, NAGPUR BENCH, NAGPUR BEFORE SHRI SHAMIM YAHYA, ACCOUNTANT MEMBER. (S.M.C.) I.T.A. NO. 107/NAG/2015. ASSESSMENT YEAR : 2008 - 09 THE INCOME - TAX OFFICER, SHRI ANIL HARICHANDRA AGRAWAL, WARD - 1, AMRAVATI. VS. CHANDUR RLY, DIST. AMRAVATI. PAN AASPA7092G. APPELLANT. RESPONDENT. APPELLANT BY : SHRI A.R. NINAWE. RESPONDE NT BY : SHRI K.P. DEWANI. DATE OF HEARING : 09 - 08 - 2016. DATE OF PRONOUNCEMENT : 23 RD AUGUST, 2016 O R D E R THIS APPEAL BY THE REVENUE IS DIRECTED AGAINST THE ORDER OF LEARNED CIT(APPEALS) - I, NAGPUR DATED 19 - 01 - 2015 AND PERTAINS TO ASSESSMENT YEAR 2008 - 09. THE GROUNDS OF APPEAL READ AS UNDER : 1. ON THE FACTS AND CIRCUMSTANCES OF THE CASE, THE LD. CIT(APPEALS) HAS ERRED IN DELETING THE ADDITION OF RS.27,08,040/ - MADE BY THE ASSESSING OFFICER BEING UNEXPLAINED CASH CREDITS U/S 68 OF THE INCOME - TAX ACT DISREGARDING THE FINDINGS IN THIS BEHALF RECORDED BY THE ASSESSING OFFICER IN THE ASSESSMENT ORDER AND THE REMAND REPORT DATED 14 - 03 - 2013. 2. ON THE FACTS AND CIRCUMSTANCES OF THE CASE, THE LD. CIT(APPEALS) HAS ERRED IN DELETING THE ADDITION OF RS.5,58,276/ - MADE IN RESPECT OF ESTIMATED INCOME ON CONTRACT RECEIPTS OF TRANSPORTATION DISREGARDING THE FACTS RECORDED IN THE ASSESSMENT ORDER. 3. ON THE FACTS AND CIRCUMSTANCES OF THE CASE, THE ORDER OF THE LD. CIT(APPEALS) IS PERVERSE IN AS MUCH AS THE ADDITION MADE BY THE ASSESSING OFFICER OF RS.3,72,869/ - BEING PURCHASES INFLATED HAS BEEN 2 ITA NO. 1 07/NAG/2015. DELETED BY THE LD. CIT(APPEALS) IN A SUMMARY MANNER AND THE FINDINGS RECORDED ARE NON - SPEAKING. 2. APROPOS GROUND NO.1: BRIEF FACTS ON THIS ISSUE ARE AS UNDER : THE ASSESSEE IS ENG AGED IN THE BUSINESS OF TRADING IN PETROL, DIESEL & OIL. THE ASSESSEE IS ALSO TRANSPORTING GOODS OF M/S INDIAN OIL CORPORATION LTD. THE AO IN THE COURSE OF ASSESSMENT PROCEEDINGS OBSERVED THAT THE ASSESSEE HAS NOT FURNISHED THE COMPLETE ADDRESSES OF SOME O F THE CREDITORS. THE AO, THEREFORE, CALLED FOR THE CONFIRMATION LETTERS VIDE QUESTIONNAIRE DATED 21 - 01 - 2010. THE TOTAL 45 CREDITORS WERE TO THE TUNE OF RS.72,66,329/ - . THE ASSESSEE FURNISHED THE LIST OF 20 SUNDRY CREDITORS HAVING CREDIT BALANCES OF RS. 1 L AKH AND ABOVE ALONG WITH THEIR PAN NUMBER AND ADDRESSES. THE COUNSEL OF THE ASSESSEE EXPLAINED THAT OUT OF THE TOTAL CREDITORS, SOME ARE TRADE CREDITORS AND OTHERS ARE THOSE FROM WHOM ADVANCES HAVE BEEN RECEIVED BY THE ASSESSEE AGAINST THE FUTURE SALE OF P ETROL AND DIESEL BY SUCH REGULAR PURCHASERS MAINLY BEING THE CIVIL CONTRACTORS AND THE JCB AND TRUCK OWNERS WHO GET THE FUEL FROM THE PETROL PUMP OF THE ASSESSEE ON REGULAR BASIS. ON VERIFICATION, THE AO FOUND THAT THE CREDITORS APPEARING AT SL. NO. 21 TO 43 OF THE LIST OF CREDITORS HAVE DEPOSITED CASH AND SUCH AMOUNT IS TO THE TUNE OF RS.27,08,040/ - . THUS, THE AO ASKED THE ASSESSEE TO EXPLAIN THE CASH DEPOSITS PERTAINING TO SUCH CREDITORS. THE COUNSEL EXPLAINED THAT THE MAJOR CREDITORS ARE NOT ACCEPTED FOR SUPPLY OF DIESEL, AND THEREFORE, CASH DEPOSITS WERE TAKEN FOR FUTURE SALE OF DIESEL AND OIL TO SUCH CIVIL CONTRACTORS, TRUCKS & JCB OWNERS OPERATING MAINLY IN THE RURAL AREAS. THE AO RECORDED THE STATEMENTS OF 4 PARTIES U/S 131. THE RELEVANT FINDINGS HAV E BEEN RECORDED BY AO ON PAGE NO. 3 OF THE ASSESSMENT ORDER. THE AO FOUND THAT OUT OF THE 4 PARTIES EXAMINED, ONE SHRI NARESH RAMDHAN MANTRI WAS A RETAIL DEALER IN DIESEL AND SHRI S.N. THAKUR, WAS MATERIAL SUPPLIER OWNING 2 TRUCKS. THE REMAINING 2 PARTIES WERE FARMERS WHO OWNED TRACTORS. THE AO HAS RECORDED A FINDING THAT OUT OF 20 PARTIES, 4 HAVE APPEARED BUT THE REMAINING 16 DID NOT 3 ITA NO. 1 07/NAG/2015. APPEAR DUE TO THEIR PRE - OCCUPATION OR BUSINESS EXIGENCIES ON THE SAID DATE. THUS, BASED ON THESE FINDINGS, THE AO DISCARDED THE CONTENTION OF THE ASSESSEE THAT THESE PARTIES ARE TRADE CREDITORS FOR FUTURE SALES FROM WHOM ADVANCES HAVE BEEN OBTAINED. THE AO, THUS DECLINED TO AGREE WITH THE CONTENTIONS OF THE ASSESSEE AND TREATED THE SUM OF RS.27,08,040/ - AS UNEXPLAINED CASH CRED ITS U/S 68 OF THE ACT. 3. UPON ASSESSEES APPEAL, LEARNED CIT(APPEALS) CONSIDERED THE ISSUE AND ALSO OBTAINED A REMAND REPORT AND ALSO CONSIDERED THE ASSESSEES REJOINDER THERETO. LEARNED CIT(APPEALS) HELD AS UNDER : 8.1 OUT OF THE TOTAL CREDITORS, THE AO HAS PICKED UP THE CREDITORS WHO HAD PAID CASH TO THE APPELLANT AGAINST THE FUTURE PURCHASE OF THE DIESEL AND OIL. THE APPELLANT HAS SUBMITTED THE COMPLETE ADDRESSES IN RESPECT OF ALL THE 20 CREDITOR PARTIES FROM WHOM THE APPELLANT HAS RECEIVED THE CASH AG AINST FUTURE SALE OF DIESEL. THE AO HAS RECORDED A FINDING THAT OUT OF 20 PARTIES TO WHOM SUMMONS WERE ISSUED; ONLY 04 PARTIES HAD ATTENDED IN RESPONSE TO THE SUMMONS ISSUED. THE AO HAS EXAMINED SUCH PARTIES, BUT NO ADVERSE INFERENCE HAS BEEN DRAWN IN RESP ECT OF THESE 04 PARTIES . THE AO HAS RECORDED A FINDING ON PAGE NO. 3 OF THE ASSESSMENT ORDER THAT 01 PARTY IS A CIVIL CONTRACTOR AND ANOTHER IS A RETAIL DEALER OF DIESEL & OILS AND REMAINING TWO PARTIES ARE FARMERS WHO OWNED TRACTORS FOR WHICH DIESEL IS P URCHASED ON REGULAR BASIS. HENCE, THERE IS NO DISPUTE REGARDING THE IDENTITY, GENUINENESS OF THE TRANSACTIONS AND CREDIT WORTHINESS OF THESE PARTIES EXAMINED BY THE AO. THE AO, HOWEVER, HAS ADDED THE BALANCES OF THESE 04 PARTIES ALSO WITHOUT POINTING OUT A NY INFIRMITY IN THE TRANSACTIONS WITH THESE PARTIES IN THE LIST OF SUNDRY CREDITORS. AS FAR AS THE REMAINING 16 PARTIES ARE CONCERNED, IT IS NOT A CASE THAT SUCH PARTIES DO NOT EXIST BUT THEY COULD NOT ATTEND ON THE SPECIFIED DATE DUE TO THEIR PRE - OCCUPATI ON AND BUSINESS EXIGENCIES AS POINTED OUT BY THE AR, THEREFORE, DRAWING ANY INFERENCE AS REGARDS TO THE IDENTITY, CREDIT WORTHINESS AND GENUINENESS OF THE TRANSACTION IN THE ABSENCE OF ANY MATERIAL CONTRARY TO THE RECORD IS NOT JUSTIFIED; MORE PARTICULARLY WHEN NO INFIRMITY COULD BE NOTICED BY THE AO IN RESPECT OF THE 04 PARTIES DULY EXAMINED BY HIM OUT OF SUCH 20 PARTIES. THEREFORE, THE INFERENCE DRAWN BY THE LD. AO IS DEVOID OF ANY MERITS. FURTHER, THAT IT IS A USUAL PRACTICE FOR THE DEALERS OF PETROLEUM, DIESEL AND OIL THAT SUPPLY IS MADE TO THE REGULAR CUSTOMERS ON CREDIT BASIS . IN THE CASE OF THE PRESENT APPELLANT, THE APPELLANT HAS RECEIVED THE ADVANCES FROM THE PROSPECTIVE PURCHASERS OF 4 ITA NO. 1 07/NAG/2015. THE DIESEL & OIL WHO HAPPENED TO BE THE REGULAR CUSTOMERS OF THE APPELLANT. ON RANDOM VERIFICATION OF THESE FOUR PARTIES, IT IS ESTABLISHED THAT THEY WERE ENGAGED IN THE BUSINESS WHICH REQUIRED DIESEL & OIL ON REGULAR BASIS. THEREFORE, DRAWING AN INFERENCE MERELY ON THE GROUND THAT SOME OF THE CREDITORS WERE AGRICULTURI STS IS NOT BASED ON SOUND FOOTING. 8.2 A REMAND REPORT IN THIS CASE WAS CALLED FOR FROM THE AO. THE AO SUBMITTED HIS REMAND REPORT DATED 14.03.2013. THE AO IN HIS REMAND REPORT HAS MAINLY REPEATED THE SAME ARGUMENTS GIVEN IN THE ASSESSMENT ORDER, STATING T HAT ASSESSEE HAS NOT BROUGHT ANY ADDITIONAL EVIDENCE ON RECORD. THE AR OF THE APPELLANT HAS FILED A REJOINDER TO THE REMAND REPORT OF THE AO, WHEREIN THE AR HAS GIVEN REBUTTAL TO THE FINDINGS OF THE AO AND HAS PLACED RELIANCE ON THE RELEVANT JUDICIAL DECIS IONS. - - - - - - - - -- - - - - - - - - - - - - - - - - - - - - - - - - - 9. ON CAREFUL EXAMINATION OF THE MATERIAL FACTS BROUGHT OUT BY THE AR OF THE APPELLANT AND THE JUDICIAL DECISIONS RELIED UPON BY THE AR, IT IS SEEN THAT THERE IS SUBSTANTIAL FORCE I N THE SUBMISSION FILED BY THE AR OF THE APPELLANT. THE BOOKS OF ACCOUNT OF THE APPELLANT ARE DULY AUDITED AND SUCH AUDIT REPORT HAS BEEN FILED BY THE APPELLANT ALONG WITH THE RETURN OF INCOME FILED. THE AO HAS EXAMINED THE BOOKS OF ACCOUNTS DURING THE COUR SE OF ASSESSMENT PROCEEDINGS AND ACCEPTED THE SAME WITHOUT POINTING OUT TO ANY INFIRMITY. THEREFORE, THE ADDITION MADE BY THE AO OF RS.27,08,040/ - U/S 68 OF THE ACT IS NOT JUSTIFIED IN VIEW OF THE DETAILED FINDING GIVEN IN THE FOREGOING PARAS OF THIS ORDER AND FOR WANT OF ANY MATERIAL CONTRARY ON RECORD. HENCE, THESE GROUNDS ARE ALLOWED. 4. AGAINST THE ABOVE ORDER, REVENUE IS IN APPEAL BEFORE THE ITAT. 5. I HAVE HEARD BOTH THE COUNSEL AND PERUSED THE RECORDS. LEARNED D.R. RELIED UPON THE ORDER OF THE AO. 6. PER CONTRA LEARNED COUNSEL OF THE ASSESSEE SUBMITTED AS UNDER : A) THE ASSESSEE HAS MAINTAINED REGULAR BOOKS OF ACCOUNTS IN RESPECT TO ACTIVITIES OF BUSINESS OF PETROLEUM. THE BOOKS OF ACCOUNT ARE AUDITED AND FINANCIAL STATEMENTS ARE SUBMITTED ALONG WITH THE RETURN OF INCOME. THE BOOKS OF ACCOUNT HAVE NOT BEEN REJECTED. THE TRADE ADVANCES FOR SUPPLY OF GOODS AT RS.27,08,040/ - ARE ADDED TO TOTAL INCOME U/S 68 OF I.T. ACT, 1961. 5 ITA NO. 1 07/NAG/2015. B) THE TRADE ADVANCES HAVE BEEN SHOWN BY ASSESSEE AS SALES IN THE SUBSEQUEN T ASSESSMENT YEAR AND SAME HAVE BEEN ACCEPTED BY THE A O ON SALES. THE AFORESAID SUM HAS ALREADY BEEN CONSIDERED AS SALES IN ASSESSMENT YEAR 2009 - 10 AND, THEREFORE, SAME COULD NOT BE ASSESSED U/S 68 OF I.T. ACT, 1061 IN ASSESSMENT YEAR 2008 - 09. C) THE AO HA S EXAMINED SOME CREDITORS BY ISSUING SUMMON U/S 131. THE CREDITORS HAVE CONFIRMED THE ADVANCE GIVEN BY THEM FOR PURCHASE OF GOODS. THE ASSESSEE PRODUCED CONFIRMATION IN RESPECT TO SUNDRY CREDITORS FOR WHICH ADDITION IS MADE. THE PARTIES HAVE ADMITTED HAVIN G GIVEN ADVANCE FOR PURCHASE OF DIESEL AND SAME IS OUTSTANDING AS ON 31 - 03 - 2008. D) THE ASSESSEE HAS PLACED ON RECORDS AFFIDAVITS AFFIRMING AMOUNT RECEIVED BY THE ASSESSEE AS ADVANCE TOWARDS PURCHASE OF MATERIAL AND IS OUTSTANDING AS AT 31 - 03 - 2008. THE AO HAS NOT BROUGHT ANY SHRED OF EVIDENCE TO DISCREDIT THE AVERMENTS IN THE AFFIDAVITS CONFIRMING THE AMOUNTS OF ADVANCE GIVEN. IN VIEW OF ABOVE LEGAL EVIDENCE ADDITION MADE BY THE AO IS UNJUSTIFIED AND UNSUSTAINABLE. E) MERELY BECAUSE SUMMON ISSUED TO SOME CR EDITORS COULD NOT BE SERVED OR THEY FAILED TO ATTEND BEFORE THE AO IT CANNOT BE GROUND TO TREAT THE LOAN TAKEN FROM THOSE CREDITORS AS NON - GENUINE. RELIANCE WAS PLACED ON THE FOLLOWING DECISIONS : I) DCIT VS. ROHINI BUILDERS 256 ITR 360 (GUJ.). II) SPL DISMISSED BY APEX COURT IN THE CASE OF M/S ROHINI BUILDERS REPORTED AT 254 ITR (ST) 275. F) SECTION 68 AND 69 ARE NOT MANDATORY. EXPLANATION GIVEN BY THE ASSESSEE IS REASONABLE AND PLAUSIBLE. CIT(APPEALS) HAS CORRECTLY DELETED THE ADDITION. RELIANCE WAS PLACED ON TH E DECISION OF HONBLE APEX COURT IN THE CASE OF CIT VS. SMT. P.K. NOORJAHAN 237 ITR 570. 6 ITA NO. 1 07/NAG/2015. 7. UPON CAREFUL CONSIDERATION I FIND THAT THE ISSUE INVOLVED IN THIS CASE IS ADDITION OF RS.27,08,040/ - WHICH HAS BEEN CLAIMED AS TRADE ADVANCE FOR SUPPLY OF GOODS BY THE ASSESSEE. THE ASSESSEES BOOKS OF ACCOUNTS HAVE BEEN EXAMINED BY THE AO AND NO DEFECT HAS BEEN FOUND. THE AO HAS EXAMINED SOME OF THE CREDITORS BY ISSUING SUMMONS U/S 131. SOME OF THE CREDITORS WHO APPEARED HAVE CONFIRMED THE ADVANCES. OTHERS HAVE NOT APPEARED BECAUSE OF THEIR PREOCCUPATION WITH OTHER BUSINESS. NO CASE HAS BEEN MADE OUT BY THE AO THAT ANY OF THE CREDITORS HAVE DENIED THE TRANSACTION OR THAT THE ADDRESS, PAN NO. ETC. GIVEN BY THE ASSESSEE ARE BOGUS. NO OTHER CONTRARY EVIDENCE HAS BEEN B ROUGHT ON RECORD BY THE AO. IN THESE CIRCUMSTANCES I AM OF THE CONSIDERED OPINION THAT FINDING OF THE LEARNED CIT(APPEALS) IN THIS REGARD IS QUITE CORRECT THAT DEHORSE BRINGING ANY ADVERSE MATERIAL ON RECORD THE AO COULD NOT HAVE ADDED THE SAID ADVANCE OF RS. 2 7,08,040 / - . ACCORDINGLY I UPHOLD THE ORDER OF THE LEARNED CIT(APPEALS) ON THIS ISSUE. 8. APROPOS GROUND NO. 2: ON THIS ISSUE THE AO MADE THE ADDITION HOLDING AS UNDER : 4. DURING THE COURSE OF ASSESSMENT PROCEEDINGS ON 14 - 12 - 2010, THE ASSESSEE WAS FURTHER ASKED HOW MUCH W AS THE AMOUNT OF TRANSPORTATION CONTRACT OF PETROLEUM PRODUCTS AND LPG GAS CYLINDERS. THE ASSESSEE REPLIES TOTAL CONTRACT RECEIPTS WERE : FOR 1) DETTAPUT SERVO PETROLEUM RS. 50,58,357 & FOR 2) SUNIL TRADERS RS. 9,54,223 TOTAL RS. 60,12,580 WHEN THE ASSESSEE WAS POINTED OUT THAT, AS PER HIS REPLY DATED 30 - 08 - 2010, HE HAS GIVEN THE FIGURE OF TOTAL CONTRACT RECEIPTS AT RS.1,11,65,523/ - ONLY. IN EXPLA I N ING, THE ASSESSEE SAID THAT REMAINING CONTRACTORS WERE GIVEN BY THE INDIAN OIL CORPORATION TO THE FOLLOWING PARTIES , VIZ : 7 ITA NO. 1 07/NAG/2015. 1) AGRAWAL SAW MILL RS. 35,76,013 KEROSENE. 2) AGRAWAL KRUSHI KENDRA RS. 8,10,579 LPG CYLINDER 3) AGRAWAL KRUSHI KENDRA RS. 7,66,351 TANK ER RENT TOTAL RS. 51,52,943 THUS, THE TOTAL CONTRACT WAS FOR RS.1,11,65,523/ - ONLY. 4.1 SUMMONS U/S 131 OF THE IT ACT, WERE ISSUED TO (1) SHRI SUNIL HARISHCHANDRA AGRAWAL, PROP. OF AGRAWAL KRISHI KENDRA, CHANDUR RLY. (2) SAU. SHASHIPRABHA HARISHCHANDRA AGRAWAL AND (3) SHRI HARISHCHANDRA NATHMALJI AGRAWAL, PARTNER OF M/S AGRAWAL SAW MILL, CHANDUR RLY. ALL OF THEM WERE CALLED AS WITNESSES IN THE CASE. THEIR STATEMENTS WERE RECORDED ON 01/2/2010 & 03/12/2010. SHRI SUNIL AND SAU. SHASHIPRABHAU DENIED OF HAVING ANY TRUCK OR TANKER POSSESSED BY THEM. SHRI HARISHCHANDRAJI IN HIS STATEMENT SAID THAT, THEY ARE HOLDING TWO TANKERS AND TWO TRUCKS IN THE NAME OF THE FIRM, M/S AGRAWAL SAW MILL A PARTNERSHIP FIRM. THE TANKERS ARE E XCLUSIVELY USE FOR TRANSPORTATION OF KEROSENE OF HIS BUSINESS ONLY. ONLY TWO TRUCKS WERE GIVEN ON RENT TO DATTAPUR SERVO FOR TRANSPORTATION OF LPG GAS CYLINDERS. HE FURTHER STATED THAT, SHRI ANIL AGRAWAL RECEIVES THE CONTRACT AND I LENT HIM THE FIRMS TR UCKS TO HIM ON RENT. HE PAYS ME RENT FOR THE TRUCKS. WHEN CAUGHT, THE ASSESSEE SAID THAT DATTAPUR SERVO PETROLEUM IS THE REGISTERED CONTRACTOR AND HE OBTAINS THE CONTRACT AND NET RENT IS TRANSFERRED TO THE RESPECTIVE FAMILY MEMBERS ACCO RDING TO THEIR OWNE RSHIP OF THE VEHICLES. ALL CONTRACT RECEIPTS ARE RECEIVED BY THE FIRM DATTAPUR SERVO PETROLEUM AND T.D.S. ALSO CLAIMED IN THE RETURN BY THE SAID FIRM ONLY. IN HIS STATEMENT RECORDED ON 27 - 12 - 2010, THE ASSESSEE WAS STICK UP TO HIS STATEMENT. HE SAID, HE OBTAINS THE CONTRACT FOR TRANSPORTATION. TANKER AND TRUCKS OWNED BY HIS FAMILY MEMBERS ARE USED IN THE PERFORMANCE OF THE SAID CONTRACT AND ACCORDING TO THE RATIO OF TANKERS AND TRUCKS THEY OWNED, THE CONTRACT RECEIPTS ARE DIVIDED AMONGST THEMSELVES. 4.2 AS DISCUSSED IN PARA 4.1 ABOVE, TOTAL CONTRACT FOR TRANSPORTATION OF PETROLEUM PRODUCTS IN TANKERS AND L.P.G. GAS CYLINDERS IN TRUCKS WAS OBTAINED BY THE DATTAPUR SERVO PETROLEUM ITSELF, AT HIS OWN. ALL THE CONTRACT RECEIPTS WERE RECEIVED BY THE SAID FIRM. ALL T.D.S. CERTIFICATED WERE ALSO CLAIMED BY THE SAID FIRM. AND AFTERWARDS SPLITTING UP OF THE CONTRACT RECEIPTS AMONGST HIS FAMILY MEMBER,, WHO DID NOT OWN TANKERS OR TRUCK, (EXCEPT TWO TRUCK OF PARTNERSHIP FIRM M/S AGRAWAL SAY MILL, 8 ITA NO. 1 07/NAG/2015. CHANDUR RLY WHICH W ERE HIRED FOR TRANSPORTATION OF GAS CYLINDERS), IS A COLORABLE DEVICE INVENTED BY THE ASSESSEE, TO AVOID TAXATION. SO MANY DEFECTS IN THE BOOKS OF ACCOUNTS, WERE POINTED OUT IN THE PRECEDING PARAS. I, THEREFORE, LEFT WITH NO OPTION EXCEPT TO REJECT THE RES ULTS OF BOOKS OF ACCOUNTS AND ADOPT 5% AS NET PROFIT (INCLUDING DEPRECIATION ON TRUCKS AND TANKERS) FROM THE TRANSPORTATION CONTRACT. TOTAL CONTRACT RECEIPTS ARE OF RS.1,11,65,523/ - . NET PROFIT ESTIMATED AT 5% OF RS.1,11,65,523/ - WHICH WORKS OUT TO RS.5,58,276/ - / - . ADDITION ON THIS POINT IS OF RS.5,58,276/ - . 9. UPON ASSESSEES APPEAL, LEARNED CIT(APPEALS) DELETED THE ADDITION HOLDING AS UNDER : ON CAREFUL EXAMINATION OF THE FACTS, IT IS SEEN THAT ASSESSEE HAS BEEN RECEIVING CONTRACT RECEIPTS FROM TRANSPORTATION OF PETROLEUM PRODUCTS FOR INDIAN OIL CORPORATION LTD. (IOCL). THE TRANSPORTATION ACTIVITY IS CARRIED ON BY THE APPELLANT ALONG WITH HIS SISTER CONCERNS AND BOTH THE ASSESSEE AND ITS SISTER CONCERNS UNDISPUTEDLY, ARE OWNERS OF VEHICLES U SED FOR TRANSPORTATION OF PETROLEUM PRODUCTS. THE BIFURCATION OF RECEIPTS SHOWN BY THE ASSESSEE AND ITS SISTER CONCERNS ASSESSED AT AMRAVATI WAS DULY FURNISHED IN THE COURSE OF ASSESSMENT PROCEEDINGS. THE AO, HAS ALSO EXAMINED ONE OF THE PARTIES SHRI HARIS HCHANDRA AGRAWAL, WHO CONFIRMED THAT HIS FIRM OWNS TRUCKS & TANKERS. THE AO, HOWEVER, REJECTED THE CONTENTION WITHOUT ANY BASIS. THE APPELLANT HAS MAINTAINED REGULAR BOOKS OF ACCOUNT AND RECEIPTS AND PAYMENTS ARE DULY VOUCHED. THE LD. AO HAS ACCEPTED THE A UDITED BOOKS OF ACCOUNT WITHOUT POINTING OUT ANY INFIRMITY IN THE SAME. FURTHER, THAT THE ASSOCIATE CONCERNS OF THE APPELLANT HAVE ALREADY FILED THEIR RETURNS OF INCOME AND DECLARED THEIR RESPECTIVE RECEIPTS IN THE RETURNS FILED. THE AO, THEREFORE, IS NOT JUSTIFIED IN TREATING THE RECEIPTS OF SISTER CONCERNS IN THE HANDS OF THE APPELLANT WITHOUT ANY CONCLUSIVE FINDING IN THIS REGARD.. THEREFORE, THE ADDITION IS DIRECTED TO BE DELETED. HENCE, THESE GROUNDS ARE ALLOWED. 10. AGAINST THE ABOVE ORDER, REVENUE IS IN APPEAL BEFORE THE ITAT. 11. LEARNED D.R. PLACED RELIANCE UPON THE ORDER OF THE AO. 12. PER CONTRA LEARNED COUNSEL OF THE ASSESSEE SUBMITTED AS UNDER : 9 ITA NO. 1 07/NAG/2015. A) ASSESSEE IS RECEIVING CONTRACT RECEIPTS FROM TRANSPORTATION OF PETROLEUM PRODUCT FOR INDIAN OIL CORPORATION. THE ACTIVITY OF TRANSPORT IS CARRIED OUT BY ASSESSEE ALONG WITH ASSOCIATE CONCERNS. THE A.O. HAS MADE THE ESTIMATED ADDITION AT 5% OF TOTAL CONTRACT RECEIPTS OF RS.1,11,65,523/ - . B) A.O. HAS NOT FOUND ANY DEFECT OR MISTAKE IN BOOKS OF ACCOUNT S MAINTAINED BY ASSESSEE, THE A.O. WAS NOT JUSTIFIED IN REJECTING THE BOOKS OF ACCOUNTS AND MAKING ESTIMATED ADDITION IN HANDS OF ASSESSEE. C) THE CONTRACT RECEIPTS ARE BIFURCATED ACCORDING TO OWNERSHIP OF VEHICLES USED IN TRANSPORTING THE PETROLEUM PRODUC T AMONGST ASSOCIATES. D) A.O. HAS SUMMONED THE PARTNERS OF ASSOCIATE CONCERN M/S AGRAWAL SAW MILL. HE HAS ACCEPTED OWNERSHIP OF TRUCKS AND TANKERS USED FOR TRANSPORTING OF KEROSENE THROUGH SHRI ANIL AGRAWAL. E) ASSESSEE AT THE TIME OF ASSESSMENT HAS SUBMIT TED BIFURCATION OF RECEIPTS SHOWN BY ASSESSEE AND ASSOCIATED CONCERN WHICH ARE ASSESSED TO TAX BY SAME A.O. THE ASSOCIATE CONCERN HAVE ALREADY DECLARED RECEIPTS OF TRANSPORTATION IN RESPECTIVE RETURN AND CONSIDERED BY SAME A.O. IN DETERMINING TOTAL INCOME. THERE IS NO JUSTIFICATION FOR MAKING ADDITION AT THE HANDS OF ASSESSEE. F) RECEIPTS DECLARED IN RETURN BY RESPECTIVE RECIPIENTS: I) M/S AGRAWAL SAW MILL. II) M/S AGRAWAL KRUSHI KENDRA. III) M/S AGRAWAL KRUSHI KENDRA. 13. UPON CAREFUL CO NSIDERATION I FIND THAT THE AO IN THIS CASE HAS PROCEEDED TO REJECT THE BOOKS OF ACCOUNTS WITHOUT POINTING OUT ANY COGENT 10 ITA NO. 1 07/NAG/2015. DEFECT. THE ONLY CASE MADE OUT BY THE AO IS THAT THE ASSESSEE HAD PAID SOME OF THE CONTRACT AMOUNT RECEIVED TO SOME OF HIS ASSOCIATE C ONCERNS/FAMILY MEMBERS WHO HAD SUPPOSEDLY PROVIDED THE TRUCKS/VEHICLES. THESE ASSOCIATE CONCERNS/FAMILY MEMBERS HAVE CLEARLY SHOWN THE RECEIPTS IN THEIR RETURNS OF INCOME WHICH HAS BEEN ACCEPTED BY THE REVENUE. SO IF THE AO WAS DOUBTFUL ABOUT THE PAYMENT S MADE ACTUALLY TO THESE CONCERNS, HE COULD HAVE DISALLOWED THE DISALLOWANCE OF THESE PAYMENTS . THIS DOES NOT MAKE ANY BASIS TO REJEC T THE BOOKS OF ACCOUNTS. IN THESE CIRCUMSTANCES, SINCE THE RECIPIENTS HAVE SHOWN THE INCOME IN THEIR RETURNS OF INCOME WH ICH HAS BEEN ACCEPTED BY THE REVENUE AND THE AO HAS NOT DISALLOWED THOSE PAYMENTS BY HOLDING THEM TO BE BOGUS , T HERE D OES NOT REMAIN ANY COGENT REASON FOR REJECTING THE BOOKS OF ACCOUNTS. IN THESE CIRCUMSTANCES I DO NOT FIND ANY INFIRMITY IN THE ORDER OF LEARNED CIT(APPEALS). ACCORDINGLY I UPHOLD THE SAME. 14. APROPOS GROUND NO. 3: ON THIS ISSUE THE AO MADE THE ADDITION HOLDING AS UNDER : INFORMATION WAS SOUGHT FROM INDIAN OIL CORPORATION U/S 133(6) OF THE INCOME - TAX ACT, REGARDING DATE WISE SUPPLY OF PETROLEUM PRODUCT, CONSIDERATION THEREOF, MODE OF PAYMENT AND WAS ALSO REQUESTED TO FURNISH LEDGER ACCOUNT OF THE ASSESSEE. THE COMPANY IN REPLY TO SAID LETTER FURNISHED THE REQUIRED INFORMATION, VIDE THEIR REF. NO. AK1/FIN/2010 DATED 1 7 TH APRIL, 2010. ACCORDING TO THE LEDGER A/C THE PURCHASES DURING THE YEAR WAS WORKED OUT AT RS.9,12,86,585/ - , AS AGAINST THE PURCHASES DEBITED TO THE TRADING ACCOUNT AT RS.8,89,88,746/ - . THE ASSESSEE WAS ASKED TO RECONCILE THE DIFFERENCE OF RS.22,97,839/ - VIDE THIS OFFICE LETTER NO. 301(1)/SCR.ASSTT/AAH/2010 - 11 DATED 12 TH AUGUST, 2010. THE ASSESSEE SUBMITTED HIS REPLY VIDE LETTER DATED 30/08/2010, AS UNDER : PURCHASE AS PER STATEMENT OF INDIAN OIL CORPN. RS.9,12,86,587 LESS: CONTRA ENTRIES, CHEQUE COL LECTION CHARGES ETC. RS. 15,04,897 LESS: FLIT PUMP TRANSACTION DEBITED RS. 16,39,000 ------------------- PURCHASES OF PETROL & DIESEL AS PER TRADING A /S. RS.8,81,42,690 11 ITA NO. 1 07/NAG/2015. IN ANOTHER REPLY RECEIVED ON 21/12/2010 THE ASSESSEE RECONCILE THE FIGURES AS UNDER : DEBIT SIDE TOTAL AS PER IOC A/C, STATEMENT RS .9,12,86,587 LESS: FLIT CARD TRANSACTION DEBITED RS. 22,38,800 CONTRA ENTRIES RS. 8,87,531 CHARGES RS. 17,567 RS. 31,43,898 -------------------- DIESEL & PETROL PURCHASES RS.8,81,42,689 ------------------- FINALLY THE LEDGER ACCOUNT FURNISHED BY THE IOC WAS VERIFIED AND FOUND THAT THERE ARE SOME ENTRIES REVERSED, CREDIT NOTE, DEBIT NOTE, CHARGES ETC. AFTER EXCLUDING ALL THE ENTRIES NET PURCHASE PRICE WAS WORKED OUT AT RS.8,86,15,877/ - . THE ASSESSEE DEBITED RS. 8,89,88,746/ - TO THE TRADING A/C AS PURCHASES. THUS, THERE IS A DIFFERENCE OF RS.3,72,869/ - , WHICH WAS DEBITED TO THE TRADING A/C IN EXCESS. THE SAME IS ADDED BACK FOR INFLATING THE PURCHASES. ADDITION ON THIS POINT IS OF RS. 3,72,869/ - . 15. UPON ASSESSEES APPEAL, LEARNED CIT(APPEALS) DELETED THE ADDITION HOLDING AS UNDER : I HAVE CONSIDERED THE SUBMISSIONS OF THE AR OF THE APPELLANT. THE AO HAS MADE THE ADDITION AS INFLATED PURCHASES IN RESPECT OF PURCHASES MADE BY THE APPELLANT FROM M/S INDIAN OIL CORPORATION LTD. THE AO DURING THE ASSESSMENT PROCEEDINGS HAS CALLED FOR THE INFORMATION U/S 133(6) FROM IOCL AS REGARDS TO THE PETROLEUM PRODUCTS. THE COMPANY SUPPLIED THE INFORMATION VIDE LETTER DATED 17.04.2010 ALONG WITH THE LEDGER ACCOUNT EXTRACT FOR PURCHASES MADE BY THE APPELLANT. THE ASSESSEE FILED A RECONCILIATION WHICH IS REPRODUCED IN PARA 5 OF THE ASSESSMENT ORDER. HOWEVER, THE AO MADE THE ADDITION OF RS.3,72,869/ - . THE AR OF THE APPELLANT HAS ENCLOSED THE LEDGER ACCOUNT EXTRACT FROM M/S INDIAN OIL CORPORATION ALONG WITH THE RECONCILIATION, ACCORDING TO WHICH THERE EXISTS NO DIFFERENCE. THER EFORE, THE DIFFERENCE ADOPTED BY THE AO WITHOUT TAKING INTO CONSIDERATION THE ENTRIES REVERSED, CREDIT AND 12 ITA NO. 1 07/NAG/2015. DEBIT NOTE CHARGES ETC. IS NOT JUSTIFIED. THERE IS NO CASE OF INFLATION OF PURCHASE BY THE APPELLANT; THEREFORE THE ADDITION IS DIRECTED TO BE DELETE D. HENCE, THESE GROUNDS ARE ALLOWED. 16. AGAINST THE ABOVE ORDER, REVENUE IS IN APPEAL BEFORE THE ITAT. 17. LEARNED D.R. RELIED UPON THE ORDER OF THE AO. 18. PER CONTRA LEARNED COUNSEL OF THE ASSESSEE MADE THE FOLLOWING SUBMISSIONS: ASSESSEE MAKES PUR CHASES FROM INDIAN OIL CORPORATION AND ENTIRE PURCHASE ARE DULY RECORDED IN BOOKS OF ACCOUNTS. THE ASSESSEE SUBMITTED THE D ETAIL OF PURCHASES FROM M/S INDIAN OIL CORPORATION, RECONCILIATION STATEMENT AND LEDGERS OF ASSESSEE IN BOOKS OF M/S INDIAN OIL CORP ORATION LTD. THE DIFFERENCE IS DUE TO FLEET CARD TRANSACTION, CONTRA ENTRIES AND CHARGES DEBITED BY INDIAN OIL CORPORATION, THUS ADDITION MADE BY THE A.O. IS UNJUSTIFIED AND EXCESSIVE. 19. UPON CAREFUL CONSIDERATION I FIND THAT THE AO HAS HELD THAT THERE I S INFLATION OF PURCHASE BY THE ASSESSEE FROM INDIAN OIL CORPORATION TO THE EXTENT OF RS.3,72,869/ - . THIS HE HAS CONCLUDED ON THE BASIS OF RECONCILIATION STATEMENT PRODUCED. FROM THE RECONCILIATION THE AO WITHOUT BRINGING ANY COGENT REASON HAS EXCLUDED THE ENTRIES REVERSED, CREDIT AND DEBIT NOTE CHARGES ETC. LEARNED CIT(APPEALS) HAS RIGHTLY HELD THAT THE DIFFERENCE HAS BEEN ADOPTED BY THE AO WHICH IS BECAUSE OF NOT TAKING INTO CONSIDERATION THE ENTRIES REVERSED , CREDIT AND DE BIT NOTE CHARGES ETC. THE AO HAS NOT BROUGHT ON RECORD ANY JUSTIFICATION FOR THIS ACTION. IN THESE CIRCUMSTANCES IN MY CONSIDERED OPINION THERE IS NO INFIRMITY IN THE ORDER OF LEARNED CIT(APPEALS). ACCORDINGLY I UPHOLD THE SAME. 13 ITA NO. 1 07/NAG/2015. 20. IN THE RESULT, THIS APP EAL FILED BY THE REVENUE STANDS DISMISSED. ORDER PRONOUNCED IN THE OPEN COURT ON THIS 23 RD DAY OF AUGUST,2016. SD/ - ( SHAMIM YAHYA) ACCOUNTANT MEMBER. NAGPUR, DATED: 23 RD AUGUST, 2016. COPY FORWARDED TO : 1. SHRI ANIL HARICHANDRA AGRAWAL, PROP. DATTAPUR SERVO PETROLEAM AND M/S SUNIL TRADERS, NEAR OLD MUNICIPAL HOSPITAL, CHANDUR RLY., DIST. AMRAVATI - 444904. 2. I.T.O., WARD - 1, AMRAVATI. 3. C.I.T. - I, NAGPUR. 4. CIT(APPEALS), - I, NAGPUR. 5. D.R., ITAT, NAGPUR. 6. GUARD FILE TRUE COPY BY ORDER ASSISTANT REGISTRAR, INCOME TAX APPELLATE TRIBUNAL, NAGPUR BENCH, NAGPUR. WAKODE.