Jagjiwan Lal, Dhuri V. ITO, Malerkotla

ITA 1177/CHANDI/2011

AI Insights

The case involves appeals by Jagjiwan Lal, the proprietor of Shiva Plastic Industries, against the orders of the Income Tax Officer (ITO) for the Assessment Years 2003-04 and 2004-05. The appeals were initially dismissed due to non-prosecution but were later restored and heard afresh. The main issues in the appeals were the additions made by the ITO under section 69C of the Income Tax Act, which pertained to unexplained investments and profits from unaccounted sales. The Tribunal found that the additions were not substantiated by cogent evidence and were based on surmises and conjectures. The Tribunal also noted that similar cases involving other firms from the same group had been decided in favor of the assessee, leading to the deletion of similar additions.

• Counselvise Citation: [2023] 140 COUNSELVISE.COM (IT) 135481 (ITAT-CHANDIGARH)
• Duration Of Justice: 11 year(s) 9 month(s) 7 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 11-09-2023
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: A
• Next Hearing Date: 14-06-2023
• Assessment Year: 2004-2005
• Appeal Filed On: 04-12-2011
• Other Referred Cases: M/s Hindustan Plastics, Dhuri vs. ITA No. 743, 744 & 586/Chd/2008, K.C. Builders vs. ACIT, CIT vs. Reliance Petro products (P.) Ltd., CIT vs. M.M. Rice Mills, CIT vs. Garg Traders, CIT vs. Ravail Singh & Co.
• Laws Referred To: Income Tax Act, 1961
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Keywords: Unexplained investment; Income from undisclosed sources; Search and seizure; Peak credit; Question of law; Initiation of penalty proceedings; Condonation of delay
• Section: 271(1)(c); 154; 69C; 143(3); 274; 191; 13

Judgement Text

आयकर अपीलीय अिधकरण,च᭛डीगढ़ ᭠यायपीठ “ए” , च᭛डीगढ़ IN THE INCOME TAX APPELLATE TRIBUNAL, CHANDIGARH BENCH “A”, CHANDIGARH ᮰ी आकाश दीप जैन, उपा᭟यᭃ एवं ᮰ी िवᮓम ᳲसह यादव, लेखा सद᭭य BEFORE: SHRI. AAKASH DEEP JAIN, VP & SHRI. VIKRAM SINGH YADAV, AM आयकर अपील सं./ ITA NO. 1177/Chd/2011 िनधाᭅरण वषᭅ / Assessment Year : 2004-05 Jagjiwan Lal Proprietor of Shiva Plastic Industries Dhuri बनाम The ITO IV(3), Malerkotla ̾थायी लेखा सं./PAN NO: ABWPL5266A अपीलाथᱮ/Appellant ᮧ᭜यथᱮ/Respondent आयकर अपील सं./ ITA NO. 850/Chd/2008 िनधाᭅरण वषᭅ / Assessment Year : 2003-04 Jagjiwan Lal Proprietor of Shiva Plastic Industries Dhuri बनाम The ITO IV(3), Malerkotla ̾थायी लेखा सं./PAN NO: ABWPL5266A अपीलाथᱮ/Appellant ᮧ᭜यथᱮ/Respondent िनधाᭅᳯरती कᳱ ओर से/Assessee by : Shri Vibhor Garg, C.A राज᭭व कᳱ ओर से/ Revenue by : Smt. Amanpreet Kaur, Sr. DR सुनवाई कᳱ तारीख/Date of Hearing : 15/06/2023 उदघोषणा कᳱ तारीख/Date of Pronouncement : 12/09/2023 आदेश/Order PER VIKRAM SINGH YADAV, A.M. : The above appeals were filed by the Assessee against the respective orders of the Ld. CIT(A)-II, Ludhiana dt. 27/09/2011 & 27/08/2008 pertaining to Assessment Years 2004-05 and 2003-04 respectively. 2. At the outset, it is noted that both the above appeals of the assessee were dismissed by the Coordinate Bench vide its order dt. 13/05/2019 on account of non- prosecution. Subsequently, the assessee moved miscellaneous applications in both the above appeals which were disposed off by the Coordinate Bench vide its order dt. 17/01/2020 wherein the earlier order was recalled and restored to its original position to be heard afresh in regular course. Thereafter, the matter has been adjourned from time to time and it has come up for hearing before us on 15/06/2023, where the arguments were finally heard and the matter was reserved for judgment. 2 3. With the consent of both the parties, firstly we shall deal with the appeal of the assessee in ITA No. 1177/Chd/2011 pertaining to Assessment Year 2004-05, wherein the Assessee has raised the following grounds of appeal: 1. Because the action for upholding the assessment order is being challenged on facts & law, by invoking the provisions of section 69C for an estimated addition of Rs. 9,08,800/- whereas the onus by proving 'material facts & material particulars' stands un- discharged by the three parties & the Department to prove the 'charges leveled' against assessee in the 'case proceedings'. Even the quantum of additions are being challenged. 2. Because the action for an estimated addition of Rs. 5,45,280/- is being challenged on facts and law, being without setting up the constructive basis for arriving at such a finding. Even the Quantum of Additions and the applicability of the rate is being challenged 4. The relevant facts of the case and the findings of the Ld. CIT(A) which are under challenge read as under: “4. Facts of the case are that the Sales Tax Department conducted inspections on this firm, which appeared as a news item in the daily "The Tribune". It was alleged that the assessee along with some other firms have made a group concern and were suppressing the sales. The Assessing Officer collected information from the Sales Tax Department which reflected unaccounted purchases made by the assessee from M/s Indian Petro Chemicals Limited, Ludhiana (for short IPCL). The Assessing Officer further collected information from office of the Director General, Intelligence Wing of Central Excise, who had also conducted searches on the factory premises of assessee on 11.12.2003. The A.O. requisitioned various documents from the office of the DG, Central Excise and also from the Sales Tax Department The Assessing Officer collected information from IPCL about the purchases made by the assessee, and he found that the total such sales made to the assessee were to the tune of Rs.25,92,020/-. For the reasons discussed in detail in the assessment order the A.O. concluded that the above stated unaccounted purchases of raw material had been made by the appellant and unaccounted investment had been made in cash through various bank accounts for making payments for these purchases. In the absence of necessary details the A.O. determined the peak payments made by the appellant on the basis of payments received and submitted by IPCL. The payment cycle of two days was considered by him in view of the pattern of payments made for arriving at the peak of cash credits. The peak credit came to Rs.9,08,800/- for payments made on 11.04.2003. This was considered as unaccounted investment and added to the income of the appellant u/s 69C of the Act. The A.O. further, for the reasons discussed in the assessment order which is under appeal, considered GP of 6% to be reasonable in this case. He applied this GP rate in respect of the unaccounted sale corresponding to unaccounted purchases found to have been made from IPCL amounting to Rs.25,92,020/-. This gave selling price at Rs.31,37,300/-. Profit on these sales@ 6% came to Rs.5,45,280/- which was added to the total income of the appellant. 5. I have carefully considered the contention of the Ld. Counsel and perused the relevant record. The appellant's counsel contended that all relevant documents/details has been furnished before the AO during assessment proceedings and also no opportunity for cross examining the witnesses provided to the appellant. Therefore, keeping in view the above contention of the appellant, the case remanded back to the AO u/s 250(4) of the Income Tax Act, 1961 and a detailed report in this regard called for. The concerned AO i.e. Income Tax Officer-IV(3), Malerkotla vide her letter dated 26.11.2010 submitted report through Range Head, which is reproduced as under:- 3 "In this connection it is submitted that vide this office letter dated 22.09.2010 the assesse was given an opportunity to attend this office on 28.09.2010. He was also given an opportunity to produce the evidence as well as the persons as alleged by his in appeal for the Asstt. Year 2004-05. In response to this letter Shri Jagjiwan Lal Prop. M/s Shiva Plastic Industries, Dhuri attended this office on 29.09.2010. It was stated by him that he has nothing to say in this matter except what is mentioned in the appeal filed by him before your Honour. He has also stated that he has neither to produce any evidence nor any person for verification. Hence, the appeal may kindly be decided on the basis of order u/s 143(3) dated 24.12.2007 passed by the then AO." 6. From the abovesaid position of the case, it is clear that the appellant has no material in the shape of documents/details in the support of his contention, therefore, with this contention of the appellant that no suitable opportunity provided during assessment proceedings stands disposed of. 7. The bulky assessment order is mostly a reproduction of various statements and cross- examinations of various witnesses. However, the fact is that the Assessing Officer has made almost a foolproof case, the denial by the Ld. Counsel notwithstanding. It came to the knowledge of the Assessing Officer that certain firms of Dhuri were making unaccounted purchases and sales. This information he gathered from the Excise Authorities and further made inquiries in this regard. He recorded the statements of various people connected with the sale-purchase, payments and transportation of the PVC resin which were purchased out of books and sold out of books, mostly without being used in the concern. From the facts of the case the story can now be fairly constructed that the appellant firm along with other group firms namely M/s Hindustan Plastics, M/s S.R. Plastic and M/s Mayur Plastic formed a cartel, opened fictitious bank account through fictitious means in order not to leave any trail for its discovery and through this bank account No.75280 with SBI, Miller Ganj, Ludhiana most of the payments were made to IPCL directly or through its DCA M/s AEL. In this fictitious bank account the source of money was cash and the A.O. has narrated the whole story as to how the cash used to be deposited by various people in this bank account. It is also a fact that the transporters, in their statement categorically stated that they have lifted PVC material from IPCL godown and delivered at the addresses of these parties including the appellant. They stood by their statement even during their cross- examination. 8. In view of the facts as discussed above, I am agree with the conclusion drawn by the A.O. that the appellant firm made purchases from unaccounted sources to the tune of Rs.25,92,020/-. The A.O. has rightly arrived at the peak credit of Rs.9,08,800/- and rightly treated it as unexplained investment. Further, 6% of GP has been rightly applied because the assessee not only has not shown the actual profit by suppressing his sales. 9. To sum up, the additions made by the Assessing Officer does not require any interference and the additions made u/s 69C (9,08,800/-), and on account of G.P. (5,45,280/-) on sales kept outside the books are sustained and all grounds of appeal of the appellant firm fail and, therefore, dismissed. 5. During the course of hearing, the Ld. AR submitted that the matter is squarely covered in favour of appellant by the decision of the Tribunal in ITA No. 743, 744 & 586/Chand/2008 for AY 2003-04 dated 27/02/2009, in the case of M/s Hindustan Plastics, Dhuri, (ii) S.R.Plastics, Dhuri (iii) Mayur Plastic Industries who allegedly made purchases out of books along with the appellant as per the Ld. AO and made sales out of books. Further, in the above mentioned three cases in AY 2004-05, the ld. CIT(A) deleted the 4 addition vide order dated 20.08.2009, following the order of Tribunal in AY 2003-04. Further Tribunal dismissed the department appeal for AY 2004-05, vide order dated 30.04.2020, following the ratio laid down by the Coordinate Bench of the Tribunal in AY 2003-04. 6. It was submitted that basic issue involved in all the four cases is same as the assessment proceedings were initiated in all the cases after a news item appeared in a leading newspaper. To verify how these cases are interlinked and identical to be treated as covered matter, reference was drawn to Assessment order for AY 2004- 05 at Page 16- 142 of Appeal paperbook: - Relevant AB Page no. 17 - Para A-Brief History of the case - Relevant AB Page no. 23 - Traced Account holders - Relevant AB Page no. 24 - constitution of Group Companies - Relevant AB Page No. 139 - conclusion drawn by AO in assessment order. 7. It was submitted that the appellant is alleged to be part of the four Dhuri Group firms as referred to by the AO in his assessment order. So the outcome of appeals cannot be different in three cases and in the appellant's case. It was submitted that as mentioned above, the Co-ordinate Bench of this Tribunal has already ruled in favour of three Dhuri concerns and have already deleted the additions. The case of the appellant being out of the same league of cases, be given the same treatment and the addition and the consequent demand be deleted. 8. It was submitted that the ld CIT(A) vide order dated 27.09.2011, for AY 20004-05 in appellant's case confirmed the additions after ignoring the decision of the Tribunal and reference was drawn to 1 st para in CIT(A) order, where Tribunal order is referred to by the appellant. The Ld. CIT(A) has observed in para of 5 of his order on page 10 of the AB and has confirmed the additions without discussing / commenting on the order of the Tribunal and has merely upheld the additions. It was accordingly submitted that in light of the Tribunal order, the appellant’s case be treated as covered in favour of appellant and additions be deleted. 5 9. The Ld. DR has relied on the order of the lower authorities and our reference was drawn to the findings of the ld CIT(A) which we have already take note of supra and have not been repeated for sake of brevity. 10. We have heard the rival contentions and purused the material available on record. The Coordinate Chandigarh Bench in case of three Dhuri firms namely M/s Hindustan Plastics, M/s S.R Plastics and M/s Mayur Plastics (Supra) has examined the matter at length and has given its detailed findings and we deem it appropriate to refer to the same which reads as under: “15. In the argument advanced by the respective counsel is examined, the main dispute is that the Assessees have made purchases from M/s IPCL, which have not been declared in the books of accounts. Before we answer the dispute, we are supposed to peruse the assessment order, CIT(Appeals)'s order and other materials which have been relied upon by the rival parties. In this connection, we noted that the Assessing Officer has referred to various materials and inquiries which are as under:- i) Indian Petrochemical Corporation Ltd, Ludhiana ii)M/s Alpine Enterprises Ltd, Cheema Chowk, Ludhiana Del Credre Agent of IPCL iii)Municipal Corporation, Ludhiana iv)Municipal Committee, Dhuri v) Municipal Committee, Malerkotla vi) Excise and Taxation Officer, Dhuri vii) Central Excise Department, Sarabha Nagar, Ludhiana viii) State Bank Of India, Miller Ganj, Ludhiana ix) Syndicate Bank, Clock Tower, Ludhiana x) Punjab National Bank, Dhuri xi) UTI Bank, Surya Tower, The Mall, Ludhiana xi) xii) Bank Of Punjab, Kalsi Nagar, Ludhiana xiii) Punjab National Bank, MICR Centre, Clearing House, Bhagar Nagar, Chowk, Ludhiana xiv) State Bank Of India, Civil Lines, Ludhiana xv) State Bank Of Hyderabad, Ludhiana xvi) Shri Khushi Ram, Transporter, Prop M/s S D Transport co Ludhiana xvii) S.D.O. Punjab State Eelctricity Board, Dhuri xviii) Industrial Development Bank Of India, Ludhiana 16. First of all, we must examine the stand of the Assessing Officer that the goods moved from M/s IPCL to the premises of the Assessee. At this point, we may consider the specific case of M/s Hindustan Plastics. The facts are same in all the cases M/s Hindustan Plastics is a partnership firm, a manufacturer of PVC goods and the raw-materials for its activities are 6 PVC resin, calcium carbonate and other chemicals. The firm converts the PVC resin into PVC pipes of various sizes. The Sales-tax Dept conducted inspection on this firm. The Assessing Officer collected information from the Sales tax Deptt which reflected unaccounted purchases made by the firm from M/s IPCL. The Assessing Officer has stated that the Assessee, M/s Hindustan Plastics alongwith three other firms, M/s SR Plastic Industries, M/s Mayur Plastic Industries and M/s Shiva Plastics, altogether four, made a syndicate of group concerns of Dhuri companies and made purchases from M/s IPCL Out of the four concerns, three are Appellants before us. The Assessing Officer concluded that the four concerns have been treated as a group by the IPCL. The other factor stated by the Assessing Officer is that the purchases have been made by the four concerns through a concern M/s Alpine Enterprises Limited, Ludhiana, who are the Del Credre agents of IPCL. The plea of learned Assessing Officer is that the purchases have been made by the Assessee because the goods have been transported from the godown of M/s IPCL, Ludhiana to the premises of the firm. The Assessing Officer made inquires from Transporter. Mr Khushi Ram, Manager of the transporter company was examined by the Assessing Officer who confirmed that goods were lifted from the depot of M/s IPCL, Ludhiana and transported to the premises of the Assessee. He also stated that one Mr Sanjeev Mittal used to contact him for delivery of goods. The transporter produced before the Assessing Officer his GR book containing data, weight and freight details, etc The Transporter also produced some of the truck drivers whose statement were recorded by the Assessing Officer. The Assessing Officer also collected information from IPCL in this regard which confirmed the stand of the transporter. The statement of the transporter alongwith other above stated materials in possession with Assessing Officer with regard to the delivery of goods to the Assessee's premises was confronted to the Assessee during the assessment proceedings. The Assessee was allowed opportunities to cross-examine the representatives of the transporter. The assesee was also allowed opportunities to cross-examine the officials of M/s IPCL who were examined by the Assessing Officer. The Assessee denied having received the material alleged to have been sold by IPCL to the Assessee. The invoices of the materials were furnished by the IPCL showing the sale of material to the Assessee. The Assessee explained that no material was indeed received. In the cross- examinations the assessee inquired that the authority letter etc. produced by the transporter did not bear the date or signatures of Sh Sanjeev Mittal who was claimed by the transporter to have acted on behalf of the Assessee. The transporter, in reply to question No. 1 in the cross examination dated 20.02.06 admitted that he could not confirm that the authority letter was signed by Sh Sanjeev Mittal. From the examination of the transporter by the Assessing Officer and the cross-examination and other material, there is no conclusive evidence that the delivery of goods was indeed made at the premises of the Appellant or that the Assesee had acknowledged the receipt of goods at any place. In fact the Assessee brought before the Assessing Officer certificate from the Municipal Authority that the trucks stated to have been used by the transporter to deliver the goods at Dhuri premises never entered the Municipal limits of Dhuri. The Assessing Officer was also confronted with the fact that even inspection by the Sales-tax authorities and Excise authorities on the premises of the Assessee also showed that the material alleged to have been purchased from M/s IPCL has not been consumed in the manufacturing process undertaken by the Assessee. At this point, it would be of relevance to keep in mind that the purchases in question are stated to have been purchased through Del Credre agent M/s Alpine Enterprises Limited and the payments have also been made through said concern. Considering the entire evidence revolving around, the movement of goods from the depot of M/s IPCL, the Assessing Officer himself came to the following conclusion:- “Certain facts during investigation pointed that material may not have reached at factory premises of these Dhurii Group parties. Further no records of unaccounted production or unaccounted stock have been fond during the course of inspection/search by sales Tax Authorities/Central Excise Authorities. However, the facts conclude that material has been lifted from IPCL by these Dhuri parties. In view of these facts it is presumed that unaccounted material purchased by these Dhuri Parties has been sold unprocessed" 7 17. If the above observation of learned Assessing Officer is analysed, it is clear that the Assessing Officer himself was not conclusively satisfied that the material in question had ultimately reached the factory premises of the Assessee. Even as per the material brought on record except the assertion by the transporter of having lifted the material from M/s IPCL godown, the receipt of the claim of having delivered the goods to the assessee at Dhuri premises and that too, as per the authority letter of Sh Sanjeev Mittal after acting on behalf of the Assessee, are not supported by any material. In fact there is no material to indicate that ultimately the goods were received by the Assessee either at Dhuri premises or elsewhere, especially in view of the certificate of the Municipal Authorities and also the undisputed observations of the Excise Authorities that material in question has not been used in the manufacturing process of the Assessee at its factory premises. Therefore, the Assessing Officer concluded that the material having been lifted from M/s IPCL is "presumed" to have been sold unprocessed. So, however, this itself is enough to dislodge the claim of the Department that the Assessee received the goods in question. Therefore, in so far as delivery of goods to the Assessee is concerned, having referred to the aforesaid discussions, we conclude that the Assessing Officer has not been able to make out a proper case, 18 In fact, the Assessing Officer also because of the above reasons appears to have admitted to examine the position from M/s Alpine Enterprises Limited, Ludhiana, the Del Credre agent involved in the transactions. From the discussions made in the assessment order, it appears that the said concern was requisitioned alongwith their books of accounts, etc. M/s Alpine Enterprises Limited did not produce any documents/books of accounts, as there were claimed to have been burnt in fire. The Assessing Officer thereafter observed that, in the face of inability of Alpine Enterprises Limited to produce their records, the Assessing Officer decided that the "focus of investigation has to be shifted to fund flow finally reaching to IPCL". This is the second important factor which led the Assessing Officer to hold the case against the Assessee. We, therefore, examine the same a bit in detail. 19. In this connection, the Assessing Officer made inquires through banks and analyzed the various bank accounts used for making payments to IPCL. A chart showing the payments has been prepared by the Assessing Officer in the assessment order as per Table-2 annexed to page 13 of the assessment order. The details of this inquiry have been made from page Nos. 132 to 140 of the assessment order. The Assessing Officer has observed that various payments were made directly to IPCL by M/s Alpine Enterprises Limited. The Assessing Officer also notes that the Assessee alongwith other concerns made payments directly to IPCL The Assessing Officer has concluded that the Assessee made payments to IPCL and to M/s Alpine Enterprises Limited on the basis of payments made from a bank account No. 1050075280 maintained with State Bank of India, Ludhiana. This bank account is stated to be in the name of M/s Mayur Plastic Industries (Prop Ajay Kumar Bansal). The Assessing Officer notes that from this account, a sum of Rs. 5.09.64,200/- was transferred to Account of M/s Alpine Enterprises Limited maintained with State bank of India, Miller Ganj, Ludhiana. The Assessing Officer examined Shri Ajay Kumar Bansal. It is worth mentioning that Shri Ajay Kumar Bansal is the partner of Mayur Plastic Industries which is a partnership concern and is one the appellant before us. The Assessing Officer observed that, although the account number 1050075280 in the name of Mayur Plastic Industries with State bank of India, Ludhiana was a proprietorship concern of Mr. Ajay Kumar Bansal, evidently the account maintained with State Bank of India was not the account of the partnership firm of M/s Mayur Plastic Industries which is an appellant before us. The Assessing Officer still considers that the said account maintained in the name of Mr Ajay Kumar Bansal as a proprietor of M/s Mayur Plastic Industries is attributable to the alleged purchases made by the appellants before us. The reasons weighing with the Assessing Officer was that payments were made from this account to M/s Alpine Enterprises Limited. Secondly, the Director of M/s Alpine Enterprises Limited, Mr Vinod Kumar Gupta stated that the amount transferred from the said bank account was adjusted against the purchases made by appellants Thirdly, the Assessing Officer referred to the cheques issued from this bank account in favour of M/s Alpine Enterprises Limited to Government examiner of questioned 8 documents, Dte of Forensic Sciences, Govt of India, Chandigarh. The said report was considered by the Assessing Officer to conclude that the account was opened and maintained by Shri Ajay Kumar Bansal 20 In this background, the Assessing Officer recorded the statement of Mr Ajay Kumar Bansal. The said person accepted that the Account No. 75280 with State bank of India, Ludhiana was opened and operated by him as Prop of M/s Mayur Plastic Industries. Ludhiana. This statement was made on 28.01 04 by Shri Ajay Kumar Bansal before the Central Excise Authorities u/s 14 of the Central Excise Act. 1944. Shri Ajay Kumar Bansal again made a statement on 19.12.05 before the Excise Authorities. In the said statement Shri Ajay Kumar Bansal again admitted that the particulars in the bank account were his but he stated that this account did not pertain to him. Secondly, the Assessing Officer recorded the statement of Shri Ajay Kumar Bansal on 16.05.2005. During the course of this statement Shri Ajay Kumar Bansal submitted that he had not operated this account and neither deposited any cash nor made any withdrawal. He further stated that deposits and withdrawal in the bank account have been made by one Mr Munish Kumar. Question Nos. 22 and 23 of this statement are relevant which are reproduced as under- Q 21. I show you Account Opening from vide which you have opened an account No. 010500 75280 in State Bank of India. Miller Ganj, Ludhiana what explanation you have about this? Ans. I went to Ludhiana for opening an account in the SBI Miller Ganj Ludhiana for the purpose of making payments through cheques to M/s Raj Plastics Cheema Chowk Ludhiana (near Cancer Hospital). The bank authorities had required to give introducer and PAN which I did not have and thus the bank refused to open my account. Mr. Mnish Kumar of M/s Alpine Enterprises Limited Ludhiana had come to me at Dhuri for supply of raw material (PP from Ludhiana and thus he was known to me at the time of opening the account Mr Munish Kumar of M/s Alpine enterprises had accompanied me to bank. These papers for opening of account were left by me with Mr Munish Kumar after putting my signature the photo affixed on the form is of mine and the signature were also put by me on these papers. Since the bank authorities had refused to open my account the paper were left by me with Mr Munish in good faith and I did not have any knowledge of opening the account. To known about my opening of account n SBI only after a raid was conducted at our factory premises in Nov. 2003 and the Excise department informed me that a bank account is being maintained in my name as prop of M/s Mayur Plastic Dhuri in the month of Jan-Feb 2004. The bank Authorities informed me that this account is being operated by Mr Munish Kumar of M/s Alpine Enterprises Ltd and thus they did not give me the copy of account however the signature on the account "opening form and other documents and photograph on the account opening form are mine. Q 23 I show you bank statement of M/s Mayur Plastics Inds. For the period 01/04/02 to 31/03/05 (Account No. 75280) in this account there are the various credits by way of cash deposits and debits by transferred of cheques. Ans. As stated above I have not operated this account never deposited any cash in this nor any w y withdrawal were made. These deposits and withdrawal by transfer of cheques have been made by Mr Munish Kumar., as Mr Munish Kumar operating this account as per the version the bank authorities". 21. Further, the said Shri Ajay Kumar furnished an affidavit dated 20.9.05 before the Assessing Officer and the relevant paragraph Nos. 6 & 7 are reproduced hereinafter:- "6. I have gone to Ludhiana for opening A/c in SBI Miller Ganj Ludhiana for the purpose of making payments through cheques to M/s Raj Plastics Cheema Chowk Ludhiana (near Cancer Hospital). The bank authorities had required to give introducer and PAN which I did not have and thus the bank refused to open my account. Mr Mnish Kumar of M/s Alpine Enterprises Limited Ludhiana had come to me at Dhuri for supply of raw material 9 (PP) from Ludhiana and thus he was known to me. At the time of opening the account Mr Munish Kumar of M/s Alpine enterprises had accompanied me to bank. These papers bearing my signatures and photo, for opening of bank account were left by me with Mr Munish. Since the bank authorities had refused to open my account the paper were left by me with Mr Munish in good faith as I intended to come back to complete the formalities of bank. Later on I had dropped for opening the bank a/c. I only come to know the bank account in the name of our firm in SBI Bank only after a raid was conducted at our factory premises in Nov 2003 and the Sales tax Authorities had inquired about the bank account in my name as prop of M/s Mayur Plastic Industries. Dhuri. Thereafter I have approached the bank authorities to supply me copy of A/c opened/maintained in my name as pro. Of M/s Mayur Plastic Industries, Dhuri in the month of Jan-Feb 2004. The bank Authorities informed that this account is being operated by Mr Munish Kumar of M/s Alpine Enterprises Ltd hence bank authorities did not give me the copy of account 7. That I have never operated this A/c. I have never deposited any cash in this A/c nor have withdrawn from this bank account. The deposits and withdrawals in this bank account have been made by Mr Manish Kumar, as Mr Manish Kumar has been operating this A/c as per the version of the bank authorities. 22. From the aforesaid, the claim of the Assessee is that the bank account in question is not of the assessee i.e. M/s Mayur Plastic Industries, the appellant before us because admittedly the bank account in question is standing in the name of Prop Shri Ajay Kumar Bansal and not of partnership firm. Secondly, it is claimed that Shri Ajay Kumar Bansal has denied having operated or beneficially owned the said bank account. Before us the appellant vehemently pointed out that the report given by the Government examiner dated 31.08.2005 in fact supports the version of the assessee. Shri Ajay Kumar Bansal had pointed out that pay-in-slip found from the bank officials revealed that the transactions were conducted by one Mr Manish Kumar Gupta and pay-in-slip also contains PAN No. of the said person. The learned Counsel pointed out that a total of 29 cheques issued from the said bank accounts were sent for examination of the Govt examiner by the Assessing Officer. In the report dated 31-08-2005, it was stated that out of 29 cheques 07 cheques appear to have been signed by Sh Ajay Kumar Bansal whereas in the rest of the cases there was no similarity in the writing habits between the questioned and the standard signatures. The claim of the appellant is that, this supports the stand of Shri Ajay Kumar Bansal that the said bank accounts was not operated by him for his own benefit or for the benefit of any of the appellants before us. In this connection, the statement of Shri Munish Kumar Gupta recorded u/s 14 of the Central Excise Act, 1944 on 01-03-2006, which has been referred to by the Assessing Officer is also relevant. The said Munish Kmar Gupta appears to be an employee of M/s Alpine Enterprises Limited and admitted before the Excise Authorities to have worked as the authorized signatory of M/s Alpine Enterprises Limited. In this statement with regard to bank account No. 75280 Shri Munish Kumar Gupta admitted of having helped Shri Ajay Kumar Bansal in opening the account and also admitted that the account was introduced by Smt Alka Aggawal w/o Shri Arun Kumar who herself was a Director of M/s Alpine Enterprises Limited. On this basis the explanation of Shri Ajay Kumar Bansal is that it is indeed Mr Manish Kumar Gupta who operated and maintained the bank account No. 75280 for the benefit of M/s Alpine Enterprises Limited and not the appellant in question. 23. We have carefully examined the rival contention on this aspect. One fact is oozing out from that the bank account in question is that the said bank account is in the name of a proprietary concern of Mr Ajay Kumar Bansal whereas the Appellant before us is a partnership firm, though of a same name. The second features which is clear from the entire material is that in so far as appellants are concerned there is no material even allegations by the Assessing Officer that any money either from the bank account No. 75280 has been received by the appellants or that any money from bank account No. 75280 has gone to the bank accounts of the appellants. The third features which is oozing out is that there is no payment from the bank account of the appellant either to IPCL or to M/s Alpine Enterprises Limited. In fact, the only way to establish that the money which 10 have gone from account No. 75280 to M/s Alpine Enterprises Limited is attributable to the appellants is on the basis of establishing connection between the bank account No.75280 and the appellant Due to the above noted features, we do not find that such nexus can be established. This leaves us to deal with the reasoning of the Assessing Officer that the Director of M/s Alpine Enterprises Limited, Mr Vinod Kumar Gupta stated that the payments received from account no. 75280 has been adjusted against the purchases allegedly made by the appellants before us from IPCL. In this connection, we find that Assessing Officer required Mr Vinod Kmar Gupta to substantiate the same from the books of accounts or such other documents. Clearly there was no support available on record. Shri Vinod Kumar Gupta expressed his inability to produce any documents because the same having been burnt in fire. We are unable to appreciate the acceptance of this version of the Assessing Officer without any further inquiry or investigation. We say so because at that situation it was crucial for the Assessing Officer to ascertain the authenticity of the version of Mr Vinod Kumar Gupta because he has already concluded that the possibility of the material not having reached the premises of Dhuri parties. Therefore, independent evidence was required to be inquired by Assessing Officer to the version of Mr Vinod Kumar Gupta on this aspect. The examination of Shri Vinod Kumar Gupta was carried out by the Assessing Officer on more than one occasion. He has also been subject to the cross examination by the appellant before the Assessing Officer. We have perused the statement of Shri VK Gupta in this regard. A feature, which is apparent, is that Sh Vinod Kumar Gupta stated that, on behalf of the appellants, it was one Shri Sanjeev Kumar Mittal who used to visit his company for purchase of raw- material and it was only Shri Sanjeev Mittal who used to hand over the cheques on behalf of M/s Hindustan Plastics, M/S SR Plastic Industries and M/s Mayur Plastic Industries, all the three appellants before us. The relationship of Shri Munish Kumar Gupta has also been explained by Shri Vinod Kumar Gupta. He admits that Shri Maish Kumar Gupta was employee of his company. It is further explained by him that the invoices for this material are raised by IPCL. The said Shri Vinod Kumar Gupta was shown the ledger account of the appellant as appearing in the books of IPCL which contained markings done against the payments received, etc. The statement revealed cheques of different banks were given by the stated parties Shri Vinod Kumar Gupta was asked that some of the cheques were in favour of Mis Alpine Enterprises Limited whereas the statement showed that the same were effected to IPCL on behalf of alleged purchaser. In reply Shri VK Gupta stated that this could only be explained by IPCL. Regarding books of account he again submitted that the same were unavailable on account of fire. On being asked as to whether he was personally known to any of the partners of the appellant he stated 'No' xcept Shri Sanjeev Mittal. In fact the said Shri Vinod Kumar Gupta also expressed his inability to produce the bank statement in the relevant period. This aspect, in our view, is inescapable because even if the books of accounts have been destroyed in fire but the bank statement can always be procured from bank. In the entire evidence gathered from Shri VK Gupta, there is no clinching evidence coming out to show that there was any authority with M/s Alpine Enterprises Limited to effect purchases for and on behalf of the Appellants before us, or there is flow of money from the appellants to M/s Alpine Enterprises Limited at any stage. Secondly, a related practical phenomenon has been argued and pointed out by counsel for the appellant. It is submitted that as a Del Credre agent. M/s Alpine Enterprises Limited advises IPCL to effect the sales to different parties. In this arrangement the collection of sale proceeds is done by the Del Credre agent and the payment, in turn, was passed on to the principal seller i.e. IPCL. On receipt of the payment and the advice of the Del Credre agent IPCL raises the invoice and effects sale of goods in favour of the parties as advised by the Del Credre agent. It was claimed that at the time of transmitting payments to the IPCL, the Del Credre agent sends the payment on behalf of the ultimate purchaser. The payment instrument of the buyer of goods is accompanied by a cheque of like amount by the Del Credre agent from his own account as a guarantee for the payment. This modus operandi has been accepted even by IPCL officials and factually the same has been carried out in this case also, involving IPCL as Principal and Alpine Enterprises as is Del Credre agent It is pointed out by the Learned Counsel that the guarantee cheques in the case of the appellants have effected by the issue of M/s Alpine Enterprises Limited from their account. However, even the cheques for purchase consideration, which were to be issued by the ultimate 11 buyers, have also been issued form the bank account of M/s Alpine Enterprises Limited. Under normal circumstances the cheques for purchase of goods are to be transmitted by the ultimate buyer and the Del Credre agent encloses its own cheque for transmission to the principal only as a guarantor. It is canvassed that this factum of M/s Alpine Enterprises Limited submitted both cheques from its own bank account normally shows that even beneficial purchaser was M/s Alpine Enterprises Limited and not the appellants in question. 24 The other important aspect of the whole controversy is with regard to Mr Sanjeev Mittal. Shri Sanjeev Mittal is partner in M/S SR Plastics and his wife Mrs Monica Mittal is partner in Hindustan Plastics. The Assessing Officer regards Shri Sanjeev Mittal as the key man for the alleged purchases made by appellants from the IPCL either directly or through Alpine Enterprises Limited. The Assessing Officer also collected information with regard to communications made by Shri Sanjeev Mittal through his mobile telephone Number. The details in this regard show mobile conversation with different officials of IPCL and M/s Alpine Enterprises Limited have been given by the Assessing Officer at pages 122 to 128 of the assessment order. The assessee also explains the position that mobile telephone number was owned by a concern M/s Dhuri Polymets and the said concern had also made purchases of PVC resin from IPCL. The Assessing Officer, on the basis of inquiry concluded that Shri Sanjeev Mittal was talking to the representatives of IPCL or of Alpine Enterprises Limited and even Alpine Enterprises Limited confirmed that they were dealing with Sh Sanjeev Mittal and none else. The stands of the Assessees in this regard have been that there was no material or evidence to show that Shri Sanjeev Mittal had acted on behalf of the appellants. In so far as, M/s SR Plastics and Hindustan Plastics in which he and his wife respectively were partners, there is no material to show that apart from the telephone conversation of Shri Sanjeev Mittal, there is any evidence of the said firms having made any purchases in question Mere use of the telephone with the officials of the IPCL and with M/s Alpine Enterprises Limited does not establish transactions of business. Therefore, the plea of the revenue set up on the basis of record of telephonic conversation does not evidence transactions of purchases. 25. In conclusion, we may observe that the Assessing Officer after making a very detailed discussion running into 170 pages has made the following 07 conclusions which are reproduced as under:- (1) Shri Sanjeev Mittal was the main person having decision making power with respect to all Dhuri Group concerns. (ii) He was consistently in touch with IPCL & AEL as is evident from the analysis of his Mobile Calls. (iii) The statements of IPCL officials, Transporters, persons making draft on behalf of Dhuri Group concerns. Ex partner Shri Ramesh Kumar and the Manager of M/s Hindustan Plastic, proves that the material has been purchased by the assessee. (iv) A few purchases have been made through M/s Karan & company, Ludhiana (Another distributor of IPCL) which have been confirmed by M/s Karn & Co to be made by Dhuri Parties. Same modus of payment has been used. (v) The bank account in which cash has been deposited and major payments have been made belongs to Shri Ajay Kumar, who is one of the partners in Dhuri Group Companies. He has tried to mislead various authorities by changing his statements from time to time. (vi) The police investigation report signed by DIG Police Ludhiana, on the FIR lodged by Shri Ramesh Kumar, received in this office vide letter dated 27.3.2006 implicates S/s Gian Chand, Ajay Kumar, Rakesh Kumar & Sanjeev Kumar for forging the documents and buying material from IPCL, Ludhiana out of their books. A copy of Police report is appended as Annexure- to the assessment order. 12 (vii) Certain facts during investigation pointed that material may not have reached at factory premises of these Dhuri Group parties. Further no records of unaccounted production or unaccounted stock have been found during the course of inspection/search by Sales Tax Authorities/Central Excise Authorities. However, the facts conclude that material has been lifted from IPCL by these Dhuri parties. In view of these facts it is presumed that unaccounted material purchased by these Dhuri Parties has been sold unprocessed. \U «G## 26. All these aforesaid points have been discussed by us in the aforesaid paragraphs and in our considered view, having regard to the material and evidence brought on record the Assessing Officer has not been successful in sustaining the aforesaid conclusions on the basis of any cogent and independent evidence. As correctly brought out by the Ld, counsel of the Appellants, CIT(Appeals) in our view also have committed the same error when he records that "From the facts of the case the story can now be fairly constructed that the appellant firm along with other group firms, formed a cartel opened fictitious bank account through fictitious means in order not to leave any trail for its discovery and through this bank account N. 75280 with SBI, Miller Ganj, Ludhiana most of the payments were made to IPCL directly r through its DCA M/S AEL" The Income -Tax Authorities have founded their conclusion on surmises and conjectures in so far as the case of the appellant is concerned. No doubt, the goods have been transacted in as much as the IPCL has sold the goods However, the issue qua the appellants was as to whether the appellant firms has purchased any goods from IPCL. For such a conclusion, there is no cogent evidence with Revenue Authorities. The objective of the exercise, that we have carried out in the aforesaid paragraphs is not to identify the buyer for the mandate of the Tribunal is only to address the controversy before it. The controversy before us is as to whether on facts and circumstances of the case can it be said that the appellant firms have made purchases from IPCL through the aegis of M/s Alpine Enterprises Limited the Del Creder agent of IPCL. Our inference in this regard, on the basis of the aforesaid discussions is that the case made out by the Assessing Officer against the appellant assessee is not justified. Hence the appeal of the Assessee is allowed. Since the facts are identical in all the appeals before us, therefore, our aforesaid conclusion will hold good for the impugned appeals. In the result these appeals of the assessee are allowed.” 11. During the course of hearing, it has been contended by the ld AR that the appellant is alleged to be part of the four Dhuri Group firms as referred to by the AO in the assessment order and assessment proceedings were initiated in all four cases after a news item appeared in a leading newspaper and facts and circumstances of all these cases are interlinked and identical. It was submitted that in all these cases, investment in unaccounted purchases from M/s IPCL and profit on unaccounted sales have been made by the AO and the matter has been examined at length by the Coordinate Bench and the additions have been deleted in three cases and following the same, the additions in the hands of the assessee be deleted. 12. The ld DR has drawn our reference to the findings of the AO and the ld CIT(A), however, nothing has been brought to our notice distinguishing the case of the assessee with three cases already decided by the Coordinate Bench. 13 13. In fact, we find merit in the contention of the ld AR that the facts of the case are pari-materia with the facts of the case before the Coordinate Bench from the very findings of the ld CIT(A), which are not disputed by the Revenue, where he states that the story can now be fairly constructed that the appellant firm along with other group firms namely M/s Hindustan Plastics, M/s S.R. Plastic and M/s Mayur Plastic formed a cartel, that they opened a fictitious bank account through fictitious means and through the said bank account most of the payments were made to IPCL directly or through its DCA M/s AEL, that the transporters, in their statement categorically stated that they have lifted PVC material from IPCL godown and delivered at the addresses of these parties including the appellant and in view of the same, he agreed with the conclusion drawn by the A.O. that the appellant firm made purchases from unaccounted sources to the tune of Rs.25,92,020/- and has rightly arrived at the peak credit of Rs.9,08,800/- and rightly treated it as unexplained investment. Further, ld CIT(A) has confirmed the findings of the AO where he applied 6% of GP on suppressed sales. We find that similar facts and circumstances of the case in respect of other three firms were considered by the Coordinate Bench and the decision of the Coordinate Bench was brought to the notice of the ld CIT(A). No reasons has been stated by the ld CIT(A) as to why the decision of the Coordinate Bench has not been considered and followed by him thus violating the judicial discipline of not following the decision of the higher judicial authority. Given the identical set of facts and circumstances of the present case as in aforesaid three cases, we don’t find any justifiable reason to deviate from the view already taken by the Coordinate Bench where the proceedings in all four cases are emanating from the same investigation and similar findings have been recorded by the AO and the ld CIT(A) and which have been duly considered by the Coordinate Bench and the addition has been deleted. The said decision stand as of today and nothing has been brought to our notice by the Revenue where the said decision has either been challenged before the higher authority or has been stayed/over-ruled. In the result, following the order of the Coordinate Bench, we set-aside the orders of the lowers authorities and the additions so made on account of investment in unaccounted purchases amounting to Rs 9,08,800/- and profit on suppressed sales 14 amounting to Rs 5,45,280/- are hereby deleted. The appeal is accordingly decided in favour of the assessee. 14. In ITA No. 850/Chd/2008 pertaining to Assessment Year 2003-04, the Assessee has raised the following grounds of appeal: 1) That the penalty order passed by the learned Income Tax Officer, Ward IV(3). Malerkotla as well as confirmed by the Commissioner of Income Tax (Appeals)-II, Ludhiana is illegal, unjust and uncalled for. 2) That the penalty imposed u/s 271(1)(c) to the tune of Rs. 16,71,460/- (confirmed by the Commissioner of Income Tax (Appeals)-II, Ludhiana) is illegal, unjust and uncalled for. 3) That the penalty imposed u/s 271(1)(c) (confirmed by the Commissioner of Income Tax (Appeals)-II, Ludhiana) is illegal, unjust and against the actual facts of the case on the file. 4) That the appeal filed is within limitations. 5) That the appellant may further craves to leave, to add or amend the grounds of appeal. 15. The relevant facts and the findings of the Ld. CIT(A) which are under challenge read as under: “3. The brief facts of the case are that assessment u/s 143(3) in this case was completed vide order dated 31.3.2006 at an income of Rs. 27,39,788/- as against the returned income of Rs. 35,315/-. Following additions were made at the time of completion of assessment:- a. Addition of Rs. 15,54,600/- made by taking the peak credit determined for payments made on 26.3.2003 and 27.3.2003 considering as unexplained investment u/s 69C of the Act. b. Addition of Rs. 11,85,188/- on account of GP by applying GP of 6%. 3.1 During the course of assessment proceedings, penalty proceedings u/s 271(1)(c) were also initiated on account of the additions as above. Vide order dated 10.5.2007 in appeal No. 15/IT/CIT(A)-II/Ldh/06-07 my predecessor dismissed the appeal of the appellant and, therefore, the additions stood confirmed. The A.O., therefore, proceeded to finalise the penalty proceedings on receipt of the appellate order. 3.2 In the penalty order the A.O. discussed the brief history of the case. It has been explained as to how it was reported in the newspaper 'The Tribune dated November 11, 2003' that an inspection was made by the Sales Tax Department on 10.11.2003 at the factory premises of the appellant and that there was suppression of sales by some Dhuri firms including that of the appellant. According to the information collected from Sales Tax Department, unaccounted purchases were found to be made by the appellant from IPCL, Ludhiana. It was further found that Director General Intelligence Wing of Central Excise Ludhiana searched the factory premises of the appellant on 11.12.2003. The documents in possession of these Departments were inspected and relevant documents were also requisitioned. As per the information received from Indian Petro Chemical Corporation Limited (hereinafter referred to as 'IPCL) the appellant had made unaccounted purchases of Rs.1,97,53,128/- from IPCL as a party of Dhuri group of concerns through its Del Credre Agent M/s Alpine Enterprises Limited, Ludhiana (hereinafter referred to as AEL). The appellant was found to have not accounted the purchases found to be made from IPCL. The A.O. made various queries. He made inquiries from IPCL and M/s AEL etc. As per the 15 information collected IPCL had done transactions with the appellant along with three other Duri concerns namely M/s Hindustan Plastics, M/s Mayur Plastics and M/s S.K. Plastic Industry as four group concerns as per the undertaking given by these parties. The payments in respect of the purchases made by the group from IPCL were found to be made partly directly through Pos/DDs and other payments were received through account of M/s AEL. Total payments of Rs.12,98,28,916/- were found to have been made through various bank accounts directly or routed through the account of M/s AEL. One such major account was of Mr. Ajay Kumar Bansal with State Bank of India, Miller Ganj, Ludhiana opened as proprietor of M/s Mayur Plastic Industry. M/s Mayur Plastic Industry was a registered firm with three partners including Mr. Ajay Kumar Bansal whereas the above mentioned bank account was found to have been opened by him as proprietor of M/s Mayur Plastic Industries. Payments of Rs.11,26,11,700/- were found to have been routed through various accounts. All these facts have been discussed in detail in the respective assessment orders of all these four concerns. 3.3 The A.O. also made investigations from the transporters and Municipal Authorities. All these inquiries confirmed that the appellant along with the three concerns mentioned above made purchases from M/s CL and which were not accounted for in their respective books of accounts. In their respective assessment orders the flow of money through various entries has been brought out in table 1 and table 2 of the respective orders. The documents and the evidence on the basis of which the four concerns including the appellant were held to have formed a group for making purchases from IPCL as above has also been discussed in the respective orders. The inquiries made from IPCL and M/S AEL and which are also discussed in detail in the respective orders of the four concerns and also brought out in the penalty order in appeal clearly pointed out in the direction of the appellant in association with the three other concerns mentioned above making unaccounted purchases from IPCL. 3.4 In the penalty order the A.O. has also discussed about the affidavit of one Sri A.S. Kundan of IPCL wherein he had categorically stated that as a part of the corporate practice he visited the factory premises of he appellant and the other three concerns at Dhuri on 12.9.2002 and 13.11.2002. The statements of Shri Aditya Mathur, Dy. Manager, IPCL recorded on 17.3.2004 and 28.1.2006 also confirmed the same position. Shri Aditya Mathur, Dy. Manager, IPCL, Shri P.V. Shuh, Sr. Sales Manager and Shri A.S. Kundan Prob. Manager are stated to have visited and inspected the business premises of the appellant and the other three concerns at Dhuri on the dates mentioned on page 6 and 7 of the penalty order itself. The inquiries made from Shri V.K. Gupta, Director of M/s AEL also confirmed the same position. The A.O. further made inquiries from Shri Khushi Ram, transporter. His statement was recoded and his cross examination was also done. Similarly, statements of Truck Drivers were also recorded and the GP books produced by Shri Khushi Ram were examined. These inquiries, as brought out in the penalty order and also the respective orders of these concerns, revealed that the resin lifted from the godowns of IPCL/RIL was transported to the factory premises of the four concerns including the appellant. Sri Sanjeev Mittal was found to have contacted on telephone and he was also given authority letters on the letter-pads of all these concerns which are stated to have been duly signed by their Managing Partners/Proprietors. 3.5 From the inquiries made from Commissioner Municipal Corporation, Ludhiana 83 transit slips were found to have been issued and out of the same only vehicles Nos. of 21 were tallied with the transit slips in respect of octroi post, Jalandhar Bye-pass, Dhuri. 3.6 Analysis of call data record of mobile No.98140-42638 belonging to M/s Dhuri Polymers but used by Shri Sanjeev Mittal was also made and which is discussed in detail in the respective assessment orders. This is discussed in para 2.4 of the penalty order also, which is under appeal. This analysis revealed that Shri Sanjeev Mittal had made conversations with different officers/officials of IPCL and M/s AEL. The results of all these inquiries were confronted to the appellant during the assessment proceedings. Taking into account the explanations what-so-ever of the appellant and rebutting the same it was, however, 16 concluded on the basis of the evidence gathered and which has been discussed above that the appellant had made purchases from IPCL, processed the same and sold the same in the open market. From the inquiries made us above the A.O. observed that the following conclusions emerged: - i. Shri Sanjeev Mittal was the main person having decision making power with respect to all Dhuri Group concerns. ii. He was consistently in touch with IPCL & AEL as is evident from the analysis of his Mobile Calls. iii. The statements of IPCL officials, transporter, persons making draft on behalf of Dhuri Group concerns and the Manager of M/s Hindustan Plastic, proved that the material had been purchased by the assessee. iv. The bank account in which cash has been deposited and major payments have been made belonged to Shri Ajay Kumar, who is one of the partners in Dhuri Group Companies. v) The police investigation report signed by DIG Police Ludhiana, on the FIR lodged by Shri Ramesh Kumar, received in this office vide letter dated 27.3.2006 implicated S/Shri Gian Chand, Ajay Kumar, Rakesh Kumar and Sanjeev Kumar for forging the documents and buying material from IPCL, Ludhiana out of their books. vi) Certain facts during investigation pointed that material may not have reached at factory premises of these Dhuri group parties. Further no records of unaccounted production or unaccounted stock have been found during the course of Inspection/search by the Sales Tax Authorities/Central Excise Authorities. However, the facts conclude that material has been lifted from IPCI.. In view of these facts it is presumed that unaccounted material purchased by these Dhuri Parties has been sold unprocessed. 3.7 In view of the above the A.O. held that unaccounted purchases of raw material had been made by the appellant and unexplained investments was made in cash through various bank accounts for making payments to these parties. The A.O., therefore, determined peak on the basis of payments received and submitted by the IPCL as indicated in the assessment order. Further in the assessment order payment cycle of two days was considered in view of the pattern of payment made for arriving at the peak of the cash credits. Peak credit of Rs.15,54,600/- determined for payments made on 26.3.2003 and 27.3.2003 considering the regular rotation of funds within two days was accordingly considered as unexplained investment and added back u/s 69C of the Act. 3.8 Further for the reasons discussed in detail in the order GP of 6% was considered reasonable in the facts & circumstances of appellant's case. For the purchases of Rs.1,97,53,128/- made by the appellant from IPCL and considering the GP of 6% the selling price worked out at Rs.2,09,38,316/- thereby giving the figure of suppression of profit of Rs.11,85,188/-. Addition of Rs.11,85,188/- was accordingly further made to the total income of the appellant. The A.O. observed that the additions made as above had been confirmed by the Ld. CIT(A) in as much as the appeal filed by the appellant has been dismissed. The A.O., therefore, held that the appellant had shown inaccurate particulars of income of Rs.27,39,788/- and that there was mens-rea on the part of the appellant in doing so. Penalty of 311 Rs.16,71,460/- @ 200% of tax sought to be evaded was, therefore, levied u/s 271(1)(c) of the Act in the order under appeal. 4. Shri B.B. Bansal, Advocate, the Ld. Counsel for the appellant vehemently contended in appeal that the levy of penalty u/s 271(1)(c) of the far Act in the facts & circumstances of appellant's case is not justified and that the same should be deleted. It is submitted that conclusions drawn by the A.O. on page 11 and 12 of the penalty order are not justified. The main argument of the ld. Counsel is that the inquiries made by the A.O. 17 revealed that Shri Sanjiv Mittal was the main person having decision making power with respect to Dhuri Group concerns. As per the Ld. Counsel the appellant is a petty manufacturer of PVC pipes and neither any purchases were made from the company IPCL or any order or authority letter regarding transporting the goods was issued to anyone by the appellant. It is also contended that none of the payments were found to have been made by the appellant and that no bank account of the appellant was involved. The appellant is stated to have no financial capacity as well as installed capacity to consume the raw material in his factory on a large scale. 4.1 It is further explained during appeal proceedings that the appellant had approached the SSP, Sangrur for registration of case against the persons who had wrongly mis-used the name of the appellant firm and put the signatures of the appellant and which signatures were found to be fake and which are not resembling with the signatures of the appellant in any manner. A copy of the Investigation conducted by the police in FIR No.102 dated 12.5.2004 has been filed during appeal proceedings. It is explained that as per this copy entire goods are stated to have been purchased by M/s Hindustan Plastic Dhuri along with their sister concerns and not by the appellant as the appellant was not in a position to purchase the raw material on a large scale. Copy of inquiry report conducted by S.P. Mohali in FIR No.102 is also filed. during appeal proceedings. As per the Ld. Counsel Shri Sanjeev Mittal is neither any relative nor have any business relation and that the appellant had never joined the Dhuri Group of concerns mentioned above. 4.2 Again it is submitted that none of the payments had been deposited in any bank account or the bank account of Stiri Ajay Kumar by the appellant. It is the contention that no stock/record has been received from the appellant at the time of inspection to confirm that any purchases/sales had been made by the appellant. The assessment made and the penalty imposed is stated to be merely on presumption and without putting any document or material to show that the appellant was guilty of concealing the particulars of income. It is the submission of the Ld. Counsel that the penalty imposed on the income determined u/s 69C merely on presumption and without putting any material or producing any record relating to the appellant and further on the income by estimating the G.P. rate is without any basis. Reliance has been placed on the decision of the Hon'ble Punjab & High Court in the case of CIT vs. M.M. Rice Mills 253 ITR 17 (P&H), CIT vs. Garg Traders 253 ITR 737 (P&H) and CIT vs. Ravail Singh & Co. 254 ITR 191 (P&H). It is, therefore, contended that in view of the contentions and legal position as above penalty proceeding imposed worth Rs.16,71,460/- should be quashed. 5. I have carefully considered the contention of the Ld. Counsel for the appellant and perused the relevant record. For imposing the penalty in this case the A.O. has discussed in the penalty order the same facts & circumstances as brought out in the detailed discussions in assessment orders of the appellant and the three concerns mentioned above. The arguments of the Ld. Counsel as made during the present appeal proceedings are also the same as made during assessment proceedings. The crux of these arguments is that the addition made in this case is not justified. However, the issue with regard to the additions made have already been discussed in detail in the appeal orders of the four concerns including that of the appellant in appeal Nos.45/CIT(A)-II/Ldh/06-07, 46/CT(A)-II/Ld/06-07 & 73/CIT(A)- 11/Ldh/06-07 in the cases of M/s Hindustan Plastic, M/s S.R. Plastic & M/s Mayur Plastic Industry respectively. In view of the detailed discussions and reasons given in these appellate orders the action of the A.O. in making additions was confirmed. The arguments against the additions what-so-ever made during appeal proceedings have been duly discussed in detail in these respective appellate orders. It was only after taking into account the similar arguments of the appellant as duly brought out in these appellate orders that the additions were confirmed. Therefore, the same arguments taken up by the appellant now to contend that the additions made are not justified, for the same reasons as discussed in these appellate orders cannot be accepted. Therefore, the arguments of the Ld. Counsel against the additions made in the assessment order are rejected. 18 5.1 Coming to the other arguments of the Ld. Counsel, it is contended that in the FIR No.102 dated 12.5.2004 and the inquiry report conducted by S.P. Mohali dated 14.5.2004 it has been brought out that the goods in question had been purchased by M/s Hindustan Plastic, Dhuri along with their sister concerns and not by the appellant. However, again these observations made in the inquiry report etc. would not conclusively prove that the appellant was not involved in the purchases made by the group from IPCL as discussed above Rather, the inquiry report of the SSP, Ludhiana, a copy of which has been led during appeal proceedings, clearly show that inquiries made by the four companies, formed a group to make purchases from IPCL at concessional rates. Admittedly, the appellant is one of these four concerns.[ Further, the complaint with the Police having been filed by the appellant, apparently no adverse observations could be made as far as the appellant is concerned. The inquiries made by the police are just the inquiries and it is not the final findings of a Court where the issue could have been examined and concluded. Therefore, no conclusion can be drawn just on the basis of such inquiry report. The appellant cannot be given any benefit of such an inquiry particularly in the face of detailed inquiries made by the A.O. and the reasoning given both in the assessment orders and the appellant orders pertaining to all the four concerns which had formed the group including the appellant. 5.2 Coming to the ratio of various decisions of the Hon'ble Punjab & Ryana High Court relied upon by the Ld. Counsel, as brought out in the inspective assessment orders of the concerns, the four concerns including the appellant formed a group to make purchases from IPCL through AEL. The inquiries made by the A.O. from so many angles including the various officers of IPCL, AEL, Municipal Corporation, Transporters and drivers etc. and further the inquiries made from the bank accounts conclusively prove that the group made purchases from IPCL worth Rs.12,98,28,916/-. It is further clear from the inquiries of the A.O. that these transactions, major part of which were routed through the bank account opened in the name of Shri Ajay Kumar of Mayur Plastic Industry, Dhuri, which is one of the four concerns which formed the group as above, were not accounted for in the regular books of accounts of the respective concerns. In view of the above, I am inclined to agree with the A.O. that the appellant along with the four concerns systematically acted to not to disclose the income in respect of these transactions and that the appellant had shown inaccurate particulars of income and further that there was mens-rea on the part of the appellant in doing so. 5.3 In view of the detailed discussions in the respective assessment orders and appellate orders and also the penalty order, which is under appeal the ratio of these decisions of the Hon'ble Jurisdictional High Court would not go to help the case of the appellant in any manner. The results of the inquiries do indicate that there was material to show that the appellant purchased the material from IPCL outside the books of accounts. Even the payments in respect of these purchases are proved from the inquiries made by the A.O. in respect of the bank accounts involved including the bank account of Shri Ajay Kumar mentioned above. Therefore, there is enough evidence against the appellant as far as his earning of unaccounted income. from the sale etc. of material purchased from IPCL is concerned. The ratio of the decisions of the Hon'ble Punjab & Haryana High Court relied upon by the Ld. Counsel, therefore, is not applicable in the facts & circumstances of appellant's case. 5.4 The A.O. has already not levied maximum penalty under the provisions of Section 271(1)(c) of the Act in this case and the penalty has been levied @ 200% of the tax sought to be evaded. The penalty levied as above is, therefore, confirmed.” 16. During the course of hearing, the Ld. AR submitted that in this case, the penalty order has been passed by the AO u/s 271(1)(C) allegedly on account of showing 19 inaccurate particulars of income whereby he has levied a penalty of Rs 16,71,460 @ 200% of the tax amount. 17. It was submitted that as far as quantum proceedings are concerned, the quantum proceedings have not been decided on merits neither by the CIT(A) nor by the Tribunal however the matter has attained finality. In this regard, it was submitted that the Appellant filed appeal before CIT(A) on 31.03.2006 but withdrew the same to file writ before Hon'ble P&H High Court. Thereafter, the ld. CIT(A) dismissed the appeal as withdrawn vide order dated 04.09.2006. The Appellant thereafter filed writ before Hon'ble P&H High Court (CWP No. 16097-2006) later on, that was also withdrawn. The Appellant thereafter filed rectification application u/s 154 before CIT(A) for rectification of order dt 04.09.2006 at PB Page 37-43 to consider the issue on merits, however, the CIT(A) vide order dated 10.05.2007 dismissed the rectification u/s 154 i.e. plea of the assessee. Thereafter, the quantum appeal was filed before the Tribunal along with application for condoning delay of 196 days along with affidavit of appellant. The Tribunal however dismissed the appeal on condonation of delay and did not entertain the appeal on merits vide order dated 28.03.2008. The Appellant then challenged the Tribunal order dated 28.03.2008 before Hon'ble P&H High Court in ITA 855/2008, wherein the substantial question of law was admitted on 06.08.2009. Recently the Hon'ble High Court has dismissed the writ vide order dated 11.04.2023. It was submitted that to sum up the issue, the present status of the case is that the appellant has not approached the Hon'ble Apex Court against the order of Hon'ble High Court till date i.e. 14.06.2023 or sought any other legal remedy and as of now final position is that quantum case has been dismissed on technical grounds without any appellate order on merits. 18. It was submitted that although the appellant has lost his quantum case without any appellate order discussing the case on merits, it is also a fact that the quantum case of the appellant is squarely covered in favour of appellant by the decision of the Tribunal in ITA No. 743, 744 & 586 /Chd/2008 in the case of M/s Hindustan Plastics, Dhuri, (ii) S.R.Plastics, Dhuri (iii) Mayur Plastic Industries who were allegedly involved in making 20 purchases out of books along with appellant. It was submitted that similar facts and circumstances of the case are prevalent in assessee’s own case for A.Y 2004-05 in ITA No. 1177/Chd/2011. 19. It was submitted that the basic issue involved in all the four cases is same as the assessment proceedings were initiated in all the cases after a news item in a leading newspaper. • Kindly refer AO's observation/conclusion drawn at page 11, last para of the penalty order. • Kindly refer to Assessment order dated 31.03.2006 at PB Page 68-189. - Relevant PB Page no. 68 - Last Line onwards - Relevant PB Page no. 75 - constitution of Group Companies - Relevant PB Page no.79 & 80 - Table 1 & Table 2. - Relevant PB Page No. 186 - conclusion drawn by AO in assessment order. 20. It was submitted that the appellant is part of the Dhuri Group of firms as referred to by the AO in his assessment order and also in penalty order who were allegedly involved in making purchases out of the books. So the outcome of appeals cannot be different in three cases and in the appellant's case. As mentioned above, the Co- ordinate Bench of this Tribunal has already ruled in favour of three Dhuri concerns and have already deleted the additions and as a result, penalties are also not levied on those three firms. The case of the appellant being out of the same league of cases should be given the same treatment and penalty levied on the appellant is liable to be deleted. 21. It was further submitted that the ld CIT(A) and AO has not appreciated the material on record in its true spirit. It was submitted that enquiries revealed that Sh Sanjeev Mittal was the main person having decision making power w.r.t. Dhuri Group concerns as alleged by the AO. Appellant is a petty manufacturer of PVC pipes and neither any purchases were made from the company IPCL nor any order or authority letter regarding transporting the goods were issued to anyone by the Appellant. None 21 of the payments were found to have been made by the appellant and that no bank account of appellant was involved in these transactions. None of the payments had been deposited by the appellant in any bank account or in the bank account of Sh Ajay Kumar. No stock/record or document has been retrieved or recovered from the appellant at the time of inspection by indirect tax authorities of state and centre, to confirm that any purchase/sales had been made by the appellant. There is nothing at all against the appellant. 22. It was submitted that it is an accepted position under the Income-tax law that though the findings rendered in assessment proceedings constitute good evidence, they do not constitute conclusive evidence in penalty proceedings [Vijay Power Generators Ltd. vs. ITO [2009] 180 Taxman 102 (Delhi) (Trib.)]. Moreover, in the case of appellant merits were never decided on any appellate forums. Further, demand and penalty was dropped in identical cases. 23. It was submitted that the Hon’ble Supreme Court has unequivocally held in CIT vs. Reliance Petro products (P.) Ltd. [2010] 322 ITR 158 (SC) that merely because an assessee has made a particular claim, which was not accepted by the Revenue, that, by itself, would not attract imposition of penalty under section 271(1)(c) of the Act. Further reliance was placed on the decision in case of Hon’ble Supreme Court in case of K.C. Builders vs. ACIT[2004] 165 ITR 562 (SC) wherein it was held that deletion of quantum addition would obviously result in deletion of penalty. However, in many cases, the Tribunal and the higher Courts have, notwithstanding the findings in assessment proceedings, deleted the penalty even though the quantum additions have been sustained. 24. The Ld. DR was heard who has relied on the order of the lower authorities. It was submitted that the quantum proceedings have attained finality against the assessee. It was further submitted that it is a clear case of unaccounted purchases and unaccounted sales and the penalty has been rightly levied by the AO and confirmed by the ld CIT(A). 22 25. We have heard the rival contentions and purused the material available on record. We find that the assessment proceedings were completed in this case by passing of assessment order u/s 143(3) dated 31/03/2006 wherein the AO had made an addition of Rs 15,54,600/- towards investment in unaccounted purchases as unexplained investment u/s 69C and Rs 11,85,188/- on account of profit on unaccounted sales and the penalty proceedings were separately initiated by issuance of notice u/s 274 r/w 271(1)(C) of the Act. The AO thereafter by order passed u/s 271(1)(c) dated 17/12/2007 levied the penalty @ 200% of tax sought to be evaded for furnishing inaccurate particulars of income and which has been confirmed by the ld CIT(A) and against which the assessee is in appeal before us. 26. The condition for imposition of penalty u/s 271(1)(C) is that the Assessing officer during the course of proceedings under the Act should be satisfied that the assessee has concealed the particulars of his income or has furnished inaccurate particulars of his income. In terms of sub-section (IB) to section 271(1)(c) where any amount is added in computing the total income of the assessee for the relevant assessment year by an order of assessment and such order contains a direction for initiation of penalty proceedings, such an order of assessment shall be deemed to constitute satisfaction of the AO for initiation of penalty proceedings. The said provisions had come up for consideration before the Hon’ble Delhi High Court in case of Madhushree Gupta vs UOI reported in 317 ITR 107 wherein it was held that even after the amendment, satisfaction regarding initiation of penalty proceedings should be arrived at during the course of assessment and must be clearly discernable from the assessment order itself. In the instant case, we find that though there is no specific satisfaction which has been recorded by the AO for initiation of penalty proceedings, however, on reading of the assessment order in totality and in view of detail findings of the AO regarding unaccounted purchases and unaccounted sales, it is clearly discernable that the AO was satisfied that it was a fit case for initiation of penalty proceedings and towards the end of the assessment order, he has stated that “ the penalty proceedings u/s 271(1)(c) are initiated.” Therefore, as far as recording of satisfaction for initiation of penalty proceedings is concerned, we find that the same has been duly satisfied in the instant case. 23 27. Now, coming to the penalty order passed u/s 271(1)(C), we find that the AO has merely reproduced the findings as recorded in the assessment order and the fact that the ld CIT(A) has dismissed the appeal of the assessee and basis thereof has held that the assessee has shown inaccurate particulars of income of Rs 27,39,788/- and there was mensrea on part of the assessee in doing so and levied penalty of Rs 16,71,460/- @ 200% of tax sought to be evaded in view of the gravity of default committed by the assessee. The assessment and penalty proceedings are two separate and distinct proceedings. The fact that certain additions were made in the assessment proceedings and which has attained finality would not automatically justify the AO to impose penalty under section 271(1)(c) of the Act. The considerations that arise in penalty proceedings are different from those in the assessment proceedings and as such, the findings in the assessment proceedings, though relevant and admissible material in penalty proceedings, the same cannot operate as res judicata. The AO has to record his satisfaction as to how the charge of furnishing inaccurate particulars of income is satisfied and thus fastened on the assessee in the present facts and circumstances of the case. The charge of “furnishing inaccurate particulars of income” and “concealment of particulars of income” though lead to same end result, however, they are specific charges and not inter-changeable and therefore, have to be satisfied before the penalty is fastened on the assessee. In the instant case, though no findings have been recorded in the penalty order except the findings in the quantum proceedings and even if we were to look at the findings of the AO in the quantum proceedings, the same relates to assessee entering into transactions of unaccounted purchases and which are subsequently sold out of books and basis thereof, the additions have been made towards investment in unaccounted purchases and profit on unaccounted sales. Therefore, given the said facts of the case, it would, if at all, be a case of particulars of income which have been concealed and not furnished as part of regular return filing by the assessee before the Revenue authorities rather than that of furnishing inaccurate particulars of income. However, while dealing with the assessee’s appeal in 1177/Chd/2011, for A.Y. 2004-05 in para 3 to 13 of this order, we have deleted the addition. The facts for the two years, as will be presently seen, are exactly similar. Further, being civil proceedings, the requirement of mensrea is not there as has been 24 held by the Courts from time to time. Thus, we find that the very basis of levy of penalty and the charge of furnishing inaccurate particulars of income is not satisfied and not emanating either from the penalty order or from the assessment proceedings and thus, the very foundation for levy of penalty is shaken in the instant case. 28. Now, coming to the specific plea of the ld AR wherein he has stated that although the appellant has lost his quantum case without any appellate order discussing the case on merits, it is also a fact that the quantum case of the appellant is squarely covered in favour of appellant by the decision of the Tribunal in the case of M/s Hindustan Plastics, Dhuri, (ii) S.R.Plastics, Dhuri (iii) Mayur Plastic Industries who were allegedly involved in making purchases out of books along with appellant. It was submitted that similar facts and circumstances of the case are prevalent in assessee’s own case for A.Y 2004-05 in ITA No. 1177/Chd/2011. It was submitted that the appellant is alleged to be part of the four Dhuri Group firms as referred to by the AO in the assessment order and assessment proceedings were initiated in all four cases after a news item appeared in a leading newspaper and facts and circumstances of all these cases are interlinked and identical. It was submitted that in all these cases, investment in unaccounted purchases from M/s IPCL and profit on unaccounted sales have been made by the AO and the matter has been examined at length by the Coordinate Bench and the additions have been deleted in three cases and following the same, the penalty proceedings have also been dropped. 29. It is a settled proposition that the assessment order is not the final word upon the pleas which can be taken at the penalty stage. The assessee is entitled to show-cause in the penalty proceedings and to establish by relevant facts and evidence that penalty is not leviable whether he had adduced the said material during the assessment proceedings or not. He cannot be debarred from taking appropriate new pleas simply on the ground that such a plea was not taken in the regular assessment proceedings. 30. In the instant case, we find that the facts of the assessee’s present case for A.Y 2003-04 are pari-materia with assessee’s own case for A.Y 2004-05 (supra) and the facts 25 of both these cases are pari-materia with the facts of the case before the Coordinate Bench. 31. As we have discussed in assessee’s own case for A.Y 2004-05 (para 13 supra) that the assessee firm along with other group firms namely M/s Hindustan Plastics, M/s S.R. Plastic and M/s Mayur Plastic formed a cartel and the case in respect of other three firms were considered by the Coordinate Bench and given the identical set of facts and circumstances of the present case as in aforesaid three cases, we don’t find any justifiable reason to deviate from the view already taken by the Coordinate Bench where the proceedings in all four cases are emanating from the same investigation and similar findings have been recorded by the AO and the ld CIT(A) and which have been duly considered by the Coordinate Bench and the addition has been deleted. The said decision stand as of today and nothing has been brought to our notice by the Revenue where the said decision has either been challenged before the higher authority or has been stayed/over-ruled. In the result, following the order of the Coordinate Bench, we have set-aside the orders of the lowers authorities and the additions so made on account of investment in unaccounted purchases and profit on suppressed sales have been deleted. 32. Further, the Coordinate Bench in its order referred supra in case of other three firms has clearly held that no cogent and independent evidence has been brought on record to sustain the addition by the AO and the conclusions have been drawn on surmises and conjunctures and there is no cogent evidence on record that the appellant firms have purchased any goods from IPCL and the additions have accordingly been deleted. 33. We find that the order and findings of the Coordinate Bench support the case of the assessee who is alleged to be part of the Dhuri Firms that no case is made out by the Revenue that the assessee has made any purchases from IPCL and such purchases have remain unaccounted and sold out of books. Even though the quantum proceedings have attained finality, the assessee is entitled to take support from the findings of the Coordinate Bench in other group firms and which have been followed by us in assessee’s own case for A.Y 2004-05 (supra). 26 34. In view of the aforesaid discussions and in the entirety of facts and circumstances of the case, we hereby direct the deletion of penalty u/s 271(1)(C) of Rs 16,71,460/-. In the result, the appeal of the assessee is allowed. 35. In the result, both the appeals of the assessee are disposed off in light of aforesaid directions. Order pronounced in the open Court on 12/09/2023 Sd/- Sd/- आकाश दीप जैन िवᮓम ᳲसह यादव (AAKASH DEEP JAIN) ( VIKRAM SINGH YADAV) उपा᭟यᭃ / VICE PRESIDENT लेखा सद᭭य/ ACCOUNTANT MEMBER AG Date: 12/09/2023 आदेश कᳱ ᮧितिलिप अᮕेिषत/ Copy of the order forwarded to : 1. अपीलाथᱮ/ The Appellant 2. ᮧ᭜यथᱮ/ The Respondent 3. आयकर आयुᲦ/ CIT 4. आयकर आयुᲦ (अपील)/ The CIT(A) 5. िवभागीय ᮧितिनिध, आयकर अपीलीय आिधकरण, च᭛डीगढ़/ DR, ITAT, CHANDIGARH 6. गाडᭅ फाईल/ Guard File आदेशानुसार/ By order, सहायक पंजीकार/ Assistant Registrar