M/s. Gokul Overseas Ltd., Patan V. The Income tax Officer,Ward-2, Patan

ITA 1149/AHD/2013

• Counselvise Citation: [2016] 132 COUNSELVISE.COM (IT) 0136 (ITAT-AHMEDABAD)
• Duration Of Justice: 3 year(s) 6 month(s) 5 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 28-10-2016
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: D
• Next Hearing Date: 08-09-2016
• Assessment Year: 2007-2008
• Appeal Filed On: 23-04-2013
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Keywords: Bogus purchase; Business income; Income from undisclosed sources; Principle of natural justice; Revised return
• Section: 143(3); 10AA; 234B; 37(1); 131

Judgement Text

, IN THE INCOME TAX APPELLATE TRIBUNAL D BENCH, AHMEDABAD BEFORE SHRI PRAMOD KUMAR, ACCOUNTANT MEMBER AND SHRI MAHAVIR PRASAD, JUDICIAL MEMBER ./ ITA NO. 1149/AHD/2013 / ASSESSMENT YEAR : 2007-08 M/S. GOKUL OVERSEAS, 29, AMBICA NAGAR CO-OP. SOCIETY, OPP. GEB, HIGHWAY ROAD, SIDDHPUR PAN : AACFG 9539 L VS ITO, WARD 2, PATAN / (APPELLANT) / (RESPONDENT) ASSESSEE BY : SHRI TUSHAR HEMANI, AR REVENUE BY : SHRI KAMLESH MAKWANA, SR DR / DATE OF HEARING : 09/09/2016 / DATE OF PRONOUNCEMENT: 28/10/2016 / O R D E R PER MAHAVIR PRASAD, JUDICIAL MEMBER:- THIS APPEAL BY THE ASSESSEE IS DIRECTED AGAINST THE ORDER OF THE COMMISSIONER OF INCOME-TAX (APPEALS), GANDHINAGAR, AHMEDABAD DATED 28.02.2013 FOR AY 2007-08. 1. THE LEARNED CIT(A) HAS ERRED BOTH IN LAW AND ON THE FACTS OF THE CASE IN CONFIRMING THE ACTION OF AO IN REJECTING THE APPELL ANT'S BOOKS OF ACCOUNTS WITHOUT THERE BEING ANY MATERIAL DEFECTS IN THE SAM E. 2. THE LEARNED CIT(A) HAS ERRED BOTH IN LAW AND ON THE FACTS OF THE CASE IN CONFIRMING THE DISALLOWANCE OF RS.2,27,00,125/- BY TREATING ENTIRE PURCHASES MADE FROM M/S. J. RAJ & SONS AS BOGUS PURCHASES. 3. ALTERNATIVELY AND WITHOUT PREJUDICE, A TOKEN OR SMA LL PART OF SUCH PURCHASES CAN BE DISALLOWED AND NOT THE WHOLE OF SUCH PURCHAS ES. 4. THE LEARNED CIT(A) HAS ERRED BOTH IN LAW AND ON THE FACTS OF THE CASE IN CONFIRMING THE ACTION OF AO IN TREATING THE ADDITIO N OF RS.2,27,00,125/-AS INCOME UNDER THE HEAD INCOME FROM OTHER SOURCES. ITA NO. 1149/AHD/2013 M/S. GOKUL OVERSEAS VS. ITO AY : 2007-08 2 5. THE LEARNED CIT(A) HAS ERRED BOTH IN LAW AND ON THE FACTS OF THE CASE IN CONFIRMING THE ACTION OF AO IN NOT ALLOWING DEDUCTI ON U/S 10AA ON INCOME ENHANCED CONSEQUENT TO SUCH ADDITION. 6. BOTH THE LOWER AUTHORITIES HAVE PASSED THE ORDERS W ITHOUT PROPERLY APPRECIATING THE FACT AND THAT THEY FURTHER ERRED I N GROSSLY IGNORING VARIOUS SUBMISSIONS, EXPLANATIONS AND INFORMATION SUBMITTED BY THE APPELLANT FROM TIME TO TIME WHICH OUGHT TO HAVE BEEN CONSIDERED BE FORE PASSING THE IMPUGNED ORDER. THIS ACTION OF THE LOWER AUTHORITIE S IS IN CLEAR BREACH OF LAW AND PRINCIPLES OF NATURAL JUSTICE AND THEREFORE DES ERVES TO BE QUASHED. 7. THE LEARNED CIT(A) HAS ERRED IN LAW AND ON FACTS OF THE CASE IN CONFIRMING ACTION OF THE LD. AO IN LEVYING INTEREST U/S 234A/B /C OF THE ACT. 8. THE LEARNED CIT(A) HAS ERRED IN LAW AND ON FACTS OF THE CASE IN CONFIRMING ACTION OF THE LD. AO IN INITIATING PENALTY U/S 271( 1)(C) OF THE ACT. 3. THE BRIEF FACTS OF THE CASE ARE THAT THE ASSESSE E IS A PARTNERSHIP FIRM CARRYING ON MANUFACTURING AND TRADING BUSINESS IN E DIBLE, NON-EDIBLE OIL, DE-OIL AND AGRO PRODUCTS, BASED AT KANDLA IN SEZ HA VING ITS HEAD OFFICE AT SIDHPUR. FOR THE YEAR UNDER CONSIDERATION, THE ASSE SSEE-FIRM FILED ITS RETURN OF INCOME ON 06.11.2007 DECLARING NET LOSS OF RS. 1 6,22,357/- AFTER ADJUSTMENT OF EXEMPTION U/S. 10AA OF RS. 2,26,73,07 0/-. REGULAR BOOKS OF ACCOUNTS ARE MAINTAINED BY THE ASSESSEE WHICH ARE D ULY AUDITED U/S. 44AB OF THE I.T. ACT. THE TOTAL SALES FOR YEAR UNDER CON SIDERATION WAS RS.2,04,96,93,064/- AS AGAINST THE PURCHASES OF MAT ERIAL CONSUMED RS.1,66,74,04,405/-. THE ASSESSEE HAS MAINTAINED QU ANTITY RECORD OF THE MATERIAL PURCHASED, ITS CONSUMPTION FOR THE MANUFAC TURING, ITS YIELD AND SALES OF THE FINISHED PRODUCT. ALL SALES AND PURCHA SES WERE SUPPORTED BY BILLS AND VOUCHERS AND COMPLETE RECORD OF GOODS REC EIVED AND DISPATCHED WERE MAINTAINED. AS THE MANUFACTURING UNIT IS ESTAB LISHED IN KANDLA SEZ, THE REQUISITE RECORD OF GATE PASS OF ENTRY WAS ALSO MAINTAINED. THE ASSESSEE HAS MADE PURCHASES FROM VARIOUS SUPPLIERS/SELLERS A ND ONE OF SUCH SELLERS WAS J. RAJ & SONS. FOR THE YEAR UNDER CONSIDERATION , THE ASSESSEE HAD ALLEGEDLY PURCHASED GOODS WORTH RS.2,27,00,125/- FR OM THE SAID SELLER J. RAJ & SONS, FOR WHICH SHRI IBRAHIM J. CHAROLIA, MAIN PA RTNER OF THE SAID SELLER ITA NO. 1149/AHD/2013 M/S. GOKUL OVERSEAS VS. ITO AY : 2007-08 3 HAD GIVEN STATEMENT THAT THE SALES MADE TO THE ASSE SSEE WAS NOT GENUINE. SUBSEQUENTLY, A SHOW CAUSE NOTICE WAS ISSUED TO THE ASSESSEE ON 19.12.2011 ASKING THAT AS TO WHY THE ENTIRE AMOUNT OF BOGUS PU RCHASES MADE FROM M/S. J. RAJ & SONS MAY NOT BE TREATED AS ASSESSEES INCOME. IN RESPONSE TO THE SAID SHOW-CAUSE NOTICE, ASSESSEE SUBMITTED REPL Y VIDE LETTERS DATED 22.12.2011 AND 28.12.2011; HOWEVER, THE EXPLANATION OF THE ASSESSEE WAS NOT FOUND ACCEPTABLE TO THE ASSESSING OFFICER FOR THE F OLLOWING REASONS:- 7.1. NO ULTERIOR MOTIVE CAN BE IMPUTED TO THE STAT EMENT OF SHRI IBRAHIM J. CHAROLIA, PARTNER OF M/S.J. RAJ & SONS AS ALLEGED B Y ASSESSEE. NO EVIDENCE HAS BEEN GIVEN TO PROVE THIS ALLEGATION. HOW CAN BE IT BE SO ALLEGED WITHOUT ANY EVIDENCE THAT SHRI IBRAHIM J. CHAROLIA HAS BEEN BENEFITED IN ANY WAY BY GIVING THE AFORESAID STATEMENTS. 7.2. PLEASE LIKE CHARGING OF VAT ON ALLEGED PURCHAS ES, PAYMENT THROUGH A/C PAYEE CHEQUES IN THIS REGARD CANNOT MAKE A SHAM TRA NSACTION GENUINE. IT IS A WELL KNOWN FACT THAT WHENEVER A COLORABLE DEVICE IS ADOPTED TO DEFRAUD THE REVENUE ALL OSTENSIBLE CARE IS TAKEN IN THIS REGARD BY THE CONCERNED PERSON. HENCE, MERE PAYMENT OF VAT & PAYMENT OF THE A/C PAY EE CHEQUE IS NOT SUFFICIENT TO PROVE THAT IMPUGNED TRANSACTIONS WERE GENUINE IF THESE COLORABLE TRANSACTIONS ARE SEEN IN THE LIGHT OF THE STATEMENT OF SHRI. IBRAHIM J. CHAROLIA. 7.3 DOCUMENTS LIKE WEIGHBRIDGE SLIP, GATE PASSES ET C PREPARED BY THE ASSESSEE HAVE ALSO NOT BEEN FOUND RELIABLE BECAUSE OF SEVERA L DEFICIENCIES NOTED IN THEM BY THE ADIT (INNV.), MEHSANA. HENCE, PLEA OF ASSESS EE THAT THESE DOCUMENTS PROVE IMPUGNED TRANSACTIONS WITH J. RAJ & SONS CANN OT BE ACCEPTED IN ABSENCE OF ANY CONCRETE EVIDENCES TO PROVE THAT FIN DING OF ADIT ARE INCORRECT. THUS, THE ASSESSING OFFICER CONCLUDED THAT THE ADD ITION OF RS.2,27,00,125/- MADE ON ACCOUNT OF BOGUS PURCHASES WAS ACTUALLY MADE AS ITS INCOME FROM UNDISCLOSED SOURCES, UNDER THE HEAD INCOME FROM OTHER SOURCE. THEREFORE, HE WAS OF THE OPINION THAT THE SAME COULD NOT BE CLAIMED TO BE THE AMOUNT OF PROFITS & GAINS DERIVED BY THE ASSESSEE FROM EXPORT OF ITS GOODS FROM SEZ AND ACCORDINGLY HE HELD THAT ASS ESSEE IS NOT ELIGIBLE FOR EXEMPTION U/S 10AA OF THE ACT. THE LD. AO, THUS, RE JECTED THE CLAIM OF THE ITA NO. 1149/AHD/2013 M/S. GOKUL OVERSEAS VS. ITO AY : 2007-08 4 ASSESSEE U/S 10AA OF THE ACT AND FRAMED THE ASSESSM ENT U/S 143(3) R.W.S. 148 OF THE ACT ON 29.12.2011, ADDING THE SAID AMOUN T OF RS.2,27,00,125/- TO THE TOTAL INCOME OF THE ASSESSEE DUE TO INFLATED PU RCHASES AS DISCUSSED ABOVE. 4. AGGRIEVED BY THE AFORESAID ORDER OF THE LD. AO, THE ASSESSEE PREFERRED FIRST APPEAL, WHERE THE LD. CIT(A) DISMISSED THE AP PEAL OF THE ASSESSEE, BY FOLLOWING OBSERVATIONS:- 4.3 I HAVE GONE THROUGH THE ENTIRE FACTS OF THE CA SE CAREFULLY. THE IMPORTANT FACTS AND OBSERVATION ARE CULLED OUT AS UNDER:- I) THE ROOT OF THE ISSUE LIES IN AN INFORMATION RECEI VED FROM FINANCIAL INTELLIGENCE UNIT THAT THERE HAVE BEEN SUBSTANTIAL DEPOSITS BY CHEQUES FOLLOWED BY CASH WITHDRAWALS IN THE BANK ACCOUNT OF M/S. J. RAJ & SONS.J. RAJ & SONS. MOST OF THESE CHEQUES WERE FOUND PERTAINING TO M/S. GOKUL REFOILS AND SOLVENTS LTD I.E. THE APPELL ANT. II) THE INVESTIGATION WING ISSUED A NOTICE U/S 131 AND RECORDED THE STATEMENT OF SHRI IBRAHIM J. CHAROLIA, ONE OF THE P ARTNERS. THE RELEVANT ASSERTIONS MADE BY THE PARTNER ARE AS FOLLOWS: A) HE WORKED AS PURCHASE MANAGER OF GOKUL GROUP DUR ING THE PERIOD 1/3/2006 TO 28/2/2008 (THIS INCLUDES SUBSTANTIAL PE RIOD OF THE CURRENT ASSESSMENT YEAR). B) DUE TO HIS STATUS OF EMPLOYEE, HE WAS FORCED TO ISSUE BOGUS BILLS TO THE CONCERNS OF THE GROUP. C) HE WENT ON TO GIVE THE DETAILS, ACCORDING TO HIM , OF THE BILLS ISSUED TO THE CONCERNS OF GOKUL GROUP IN DIFFERENT YEARS. THI S INCLUDED PURCHASES OF RS.2,27,00,125/- IN THE CASE OF THE AP PELLANT FOR THE ASSESSMENT YEAR UNDER APPEAL. D) HE CLAIMED THAT HE WAS PAID RS.50,000/- TO RS.60 ,000/- PER YEAR ADDITIONAL, BESIDES HIS REGULAR SALARY. III) WHEN THE STATEMENT WAS CONFRONTED, THE PRINCIPAL OF FICER OF THE CONCERNS OF THE GROUP SUBMITTED BEFORE THE ADIT LETTER DATED 30/3/2009. THE CONTENTS OF THE LETTER ARE SUMMED UP AS FOLLOWS: ITA NO. 1149/AHD/2013 M/S. GOKUL OVERSEAS VS. ITO AY : 2007-08 5 A) THE PURCHASES WERE CLAIMED GENUINE, SUPPORTED BY BILLS, PAYMENT OF VAT AND PAYMENTS ARE BY CHEQUES. THE PUR CHASES ARE SUPPORTED BY WEIGH BRIDGE SLIPS, GATE-PASS, QUALITY TEST REPORTS, WHEN DIFFERENCE IN QUALITY STANDARD IS THERE-THE CORRESP ONDING AMOUNT IS DEDUCTED FROM THE PAYMENT. (B)FOR SOME UNFORESEEN REASONS M/S. J RAJ & SONS HA S COME OUT WITH SUCH STATEMENT WITH WHICH THEY DO NOT AGREE TO. HOW EVER, WITHOUT PREJUDICE TO THE ABOVE SUBMISSION WITH A PURPORTED VIEW TO AVOID UNDRAWN LITIGATION AND TO BUY PEACE AND CO-OPERATE WITH THE DEPARTMENT, THEY VOLUNTARILY AGREED TO DISALLOWANCE OF 25% OF AMOUNT REFERRED TO EARLIER AS UNDER FROM J. RAJ & S ONS, SIDHPUR FOR FY 2007-08 & 2008-09 INCOME IN THE OTHER GROUP CASE I.E., GOKUL REFOILS AND SOLVENT LTD AS UNDER: RS. 1,07,62,140/- - 25% OF RS.4,30,48,562/- F OR FY 2007-08 AND TO GIVE EFFECT TO THIS DISALLOWANCE THEY WILL FILE REVISED RETURN FOR THE FY 2007-08 (AY 2008-09) AND ALSO PAY TAX DUE THEREON. RS.41,27,552/- 25% OF RS.1,65,10,209/- (AY 2009-10) WHICH THEY WILL DISALLOW WHILE FILING THE RETURN OF INCOME FOR THE AY 2009-10 IV)FROM THE ASSESSMENT ORDER IT IS APPARENT THAT TH E OFFER OF 25% OF PURCHASES AS INCOME IN THE OTHER GROUP CASE I.E., G OKUL REFOILS AND SOLVENT LTD WAS MADE BY THE APPELLANT, BEFORE THE A DIT ON THE BASIS OF THE JUDGMENT OF HON'BLE GUJARAT HIGH COURT IN TH E CASE OF SANJAY OIL CAKE INDUSTRIES 10 DTR 153. THE COPY OF THE JUD GMENT WAS ALSO PRODUCED BY THE APPELLANT BEFORE THE ADIT [REFER TO FIRST SUB PARAGRAPH 7) ON PAGE 4 OF THE ASSESSMENT ORDER], V)THE AO ASKED THE APPELLANT TO SHOW CAUSE WHY THE ADDITION BE NOT MADE EQUIVALENT TO THE ENTIRE PURCHASES FROM M/S J. RAJ & SONS; WHEREAS IN THIS PARTICULAR CASE NO ADDITIONAL INCOM E ON THIS BASIS HAS BEEN OFFERED BY THE APPELLANT. IN RESPONSE THE APPE LLANT REITERATED THAT ITS PURCHASES WERE GENUINE AND RELIED ON EVIDE NCES/RECORD REFERRED TO IN III)(A) ABOVE WHICH WAS TAKEN BEFO RE THE ADIT WHILE MAKING THE OFFER OF ADDITIONAL INCOME FOR TAXATION. IT ALSO REQUESTED THE AO FOR CROSS EXAMINATION OF SHRI IBRAHIM J. CHA ROLIA. NOTICE WAS ISSUED BY THE AO TO THE WITNESS AND THE APPELLANT W AS INFORMED OF OPPORTUNITY FOR CROSS EXAMINATION. THE WITNESS COUL D NOT TURN UP ON THE APPOINTED DATE. ITA NO. 1149/AHD/2013 M/S. GOKUL OVERSEAS VS. ITO AY : 2007-08 6 WHEN ALL THE ABOVE, FACTS AND CIRCUMSTANCES ARE CON SIDERED, THE BASIC DISPUTE BETWEEN THE APPELLANT AND THE REVENUE IS AR ISING OUT OF INCOME THAT NEEDS TO BE TAXED BASED ON THE IMPUGNED PURCHASES B EING CONSIDERED NON- GENUINE. THE VERY FACT THAT WHEN THE APPELLANT WAS CONFRONTED THE STATEMENT OF THE PARTNER OF THE CLAIMED SELLER FIRM, IT AGREE D FOR REVISING ITS INCOME UPWARDS IN OTHER GROUP CONCERN BASED ON THE PURCHAS ES FROM THE CONCERN; SHOWS ITS READINESS TO BE ASSESSED BASED ON THIS PR EMISES. ONCE THE APPELLANT GROUP HAS EVEN REVISED ITS RETUR N IN OTHER CASE AND PAID TAXES THEREON; ON THE VERY BASIS, NATURALLY TH E DEPARTMENT STOPPED SUBSEQUENT ENQUIRIES. NOW TO ATTEMPT TO GO BACK AND CHALLENGE IT CANNOT BE ALLOWED JUST BECAUSE THERE IS A DISPUTE OVER THE QU ANTUM; WHICH IS ONLY A CONSEQUENCE. NOW, THE QUESTION IS, IN CASE OF BOGUS OR TOTALLY U NVERIFIABLE PURCHASES;; WHAT SHOULD BE THE QUANTUM OF ADDITION. I HAVE RESP ECTFULLY NOTED THAT THE HON'BLE JURISDICTIONAL GUJARAT HIGH COURT IN THE CA SE OF DOLAT PROTEINS, TAX APPEAL NO.561 OF 2010 DATED 13/12/2011 HAS GUID ED US TO TAKE EACH CASE ON THE FACTS AND CIRCUMSTANCES OF THAT PARTICULAR C ASE AND COMMENTED THAT THE ESTIMATE IN THE CASE OF SANJAY OIL CAKE INDUSTR IES IS NOT UNIVERSALLY APPLICABLE. I HUMBLY AGREE AS DISCUSSED ABOVE THAT THE ADDITION REQUIRED CAN BE LOWER AND HIGHER THAN 25%, DEPENDING ON THE PART ICULAR FACTS. IN MY CONSIDERED VIEW IT WOULD DEPEND ON THE FACTS OF THE PARTICULAR CASE AND NO UNIVERSAL FORMULA CAN BE GIVEN. THE FACTORS WHICH NEED CONSIDERATION INCLUDE NATURE OF BUSINESS, THE MARKET CIRCUMSTANCE S, MODUS OPERANDI OF BUSINESS AND THE PROBABLE MOTIVE; ETC. NOW, WE WOULD CONSIDER THE FACTS OF THIS CASE. THE TOTAL TURNOVER OF THE UNIT IN WHICH THESE BOGUS PURCHASES HAVE BEEN SHOWN TO HAVE BEEN UTILIZED ARE RS. 198.65 CRORE. THE RAW MATERIAL CONSUMED SHO WN IS RS.160.98 CRORE. THE QUANTUM OF ALLEGED BOGUS PURCHASES IS RS.2.27 C RORE ONLY. THIS IS MERELY JUST ABOUT 1% OF THE TOTAL RAW MATERIAL CONSUMPTION SHOWN. THE PURCHASES IN QUANTUM AS A RATIO ARE SO LOW THAT THIS CAN BE H IDDEN IN THE VARIATIONS IN PRODUCTION QUANTITIES PARTICULARLY, WHERE THE RAW M ATERIAL AND PRODUCE IS RELATED TO AGRICULTURAL COMMODITY WHERE EXACT QUANT IFICATION IS NOT POSSIBLE. BUT, WE HAVE TO LOOK FOR THE REAL MOTIVE OF THE APP ELLANT, BASED ON THE FACTS AND CIRCUMSTANCES OF THE CASE. I AGREE WITH T HE AO THAT THE REAL MOTIVE WAS TO HAVE UNDISCLOSED AND UNACCOUNTED MONEY IN HA ND. WHETHER IT WAS USED FOR ILLEGAL PAYMENTS WHICH ARE DISALLOWABLE UN DER EXPLANATION TO SECTION 37(1) OR RETAINED AS UNACCOUNTED MONEY IS N OT FOR THE DEPARTMENT TO PROVE. THE MONEY SO TAKEN OUT HAS LOST ITS CONNECTI ON TO THE BUSINESS OF THE APPELLANT. SUCH UNACCOUNTED MONEY KEPT OUT OF THE B OOKS OF ACCOUNT IS TO BE ITA NO. 1149/AHD/2013 M/S. GOKUL OVERSEAS VS. ITO AY : 2007-08 7 TAXED SEPARATELY AS PER THE SPIRIT OF CHAPTER VI OF THE ACT. AGREEING WITH THE AO, THE ADDITION MADE BY HIM IS CONFIRMED. THERE IS NO QUESTION OF ANY DEDUCTION AVAILABLE U/S 10AA ON THIS ENHANCED INCOM E. ALL THE 10 GROUNDS OF APPEAL ARE DISMISSED. 5. THE LAST GROUND OF APPEAL IS AGAINST CHARGING OF INTEREST U/S 234B OF THE ACT. THE CHARGING OF INTEREST UNDER THE SECTION IS MANDATORY AND AS THE APPELLANT HAS GOT NO RELIEF ON THE ASSESSED INCOME AND TAX PAYABLE; THE INTEREST CHARGED WOULD REMAIN THE SAME. THE GROUND OF APPEAL IS DISMISSED. 6. IN THE RESULT, THE APPEAL IS DISMISSED. 5. BEING AGGRIEVED BY THE ORDER OF THE LD. CIT(A), THE ASSESSEE IS NOW IN APPEAL BEFORE US. 6. BEFORE US, THE LD. COUNSEL FOR THE ASSESSEE, AT THE OUTSET, CONTENDED THAT THE LD. CIT(A) WAS UNJUSTIFIED IN CONFIRMING T HE ACTION OF ASSESSING OFFICER IN REJECTING THE BOOKS OF ACCOUNTS OF THE A SSESSEE WITHOUT POINTING OUT ANY DEFECTS IN THE ACCOUNTS AND MOREOVER, THE S AID BOOKS OF ACCOUNTS ARE DULY AUDITED. NO SPECIFIC DEFECTS HAVE BEEN POINTE D OUT EITHER IN THE METHOD OF ACCOUNTING OR IN THE AUDITED BOOKS OF ACC OUNTS. IN ABSENCE OF ANY SUCH SPECIFIC DEFECT, REJECTION OF BOOKS IS UNJUSTI FIED. REGARDING THE ADDITION OF RS.2,27,00,125/- MADE IN RESPECT OF ALLEGED BOGU S PURCHASES, LD. COUNSEL FOR THE ASSESSEE CONTENDED THAT THE ADDITION WAS MA DE MERELY ON THE BASIS OF STATEMENT OF A THIRD PARTY NAMELY SHRI IBRAHIM J . CHAROLIA THAT THE PURCHASES FROM THE PARTY I.E. J. RAJ & SONS WERE BO GUS; HOWEVER, NO OPPORTUNITY OF CROSS-EXAMINATION HAS BEEN AFFORDED EITHER BEFORE THE LD. AO OR BEFORE THE LD. CIT(A). IN THIS REGARD, RELIANCE IS PLACED ON THE HONBLE GUJARAT HIGH COURT JUDGMENT IN THE CASE OF PR. CIT VS. CHARTERED SPEED PVT LTD IN TAX APPEAL NO.126 & 127 OF 2015 AND HONBLE APEX COURT JUDGMENT IN THE CASE OF ANDAMAN TIMBER INDUSTRIES VS. CCE, R EPORTED IN (2015) 62 TAXMANN.COM 3 (SC). HE ALSO ARGUED THAT, IN THE PR ECEDING YEAR, THE SAID SHRI IBRAHIM CHAROLIA HAD STATED THAT SALES TO THE ASSESSEE WERE GENUINE AND ITA NO. 1149/AHD/2013 M/S. GOKUL OVERSEAS VS. ITO AY : 2007-08 8 THE SAME STATEMENT WAS ACCEPTED BY THE LD. CIT(A) I N AY 2006-07 FOR WHICH THE ASSESSEE WAS PLACED ON RECORD SOME ADDITIONAL E VIDENCES LIKE STATEMENT OF IBRAHIM CHAROLIA RECORDED ON 02.07.2014, HIS CRO SS EXAMINATION STATEMENT DATED 02.07.2014, ASSESSMENT ORDER FOR AY 2006-07 I N CASE OF GOKUL REFOILS & SOLVENTS LTD AND CIT(A)S ORDER FOR AY 2006-07 IN CASE OF GOKUL REFOILS & SOLVENTS LTD. ALTERNATIVELY, IT IS PLEADED THAT IF AT ALL THE DISALLOWANCE IS TO BE CONFIRMED, THE SAME MAY BE RESTRICTED TO 25% INS TEAD OF DISALLOWING THE ENTIRE PURCHASES IN THE LARGER INTEREST OF JUSTICE AND IN VIEW OF HONBLE GUJARAT HIGH COURT JUDGMENT IN THE CASE OF SANJAY O IL CAKES, 316 ITR 274 (GUJ.). 7. L. DR, ON THE OTHER HAND, SUPPORTED THE ORDERS O F THE LOWER AUTHORITIES. 8. WE HAVE HEARD THE RIVAL CONTENTIONS, PERUSED THE MATERIAL AVAILABLE ON RECORD AND GONE THROUGH THE ORDERS OF THE AUTHOR ITIES BELOW. IN OUR CONSIDERED OPINION, THE PRESENT APPEAL IS SQUARELY COVERED WITH THE ORDER OF JURISDICTIONAL HIGH COURT IN THE CASE OF PR. CIT VS . CHARTERED SPEED PVT LTD IN TAX APPEAL NO.126 & 127 OF 2015. THEREFORE, RES PECTFULLY FOLLOWING THE SAME, WE ALLOW THE APPEAL OF THE ASSESSEE. 9. IN THE RESULT, THE APPEAL OF THE ASSESSEE IS ALL OWED. ORDER PRONOUNCED IN THE COURT ON 28 TH OCTOBER, 2016 AT AHMEDABAD. SD/- SD/- PRAMOD KUMAR (ACCOUNTANT MEMBER) MAHAVIR PRASAD (JUDICIAL MEMBER) AHMEDABAD; DATED 28/20/2016 ITA NO. 1149/AHD/2013 M/S. GOKUL OVERSEAS VS. ITO AY : 2007-08 9 / COPY OF THE ORDER FORWARDED TO : 1. / THE APPELLANT 2. / THE RESPONDENT. 3. / CONCERNED CIT 4. ( ) / THE CIT(A) 5. , , / DR, ITAT, AHMEDABAD 6. / GUARD FILE . / BY ORDER, TRUE COPY / ( DY./ASSTT.REGISTRAR) , / ITAT, AHMEDABAD