ITO, Wd.-1(2), Nashik V. Shri Chaudhari Iftekhar Ahmad Ramzanali, Nashik

ITA 1190/PUN/2011

• Counselvise Citation: 119024514 RSA 2011
• Duration Of Justice: 1 year(s) 11 month(s) 26 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 18-09-2013
• Appeal Filed By: Department
• Order Result: Partly Allowed
• Bench Allotted: A
• Next Hearing Date: 21-11-2012
• Assessment Year: 2004-2005
• Appeal Filed On: 22-09-2011
• Result in Favour of: Partly Allowed
• Court: TRIBUNAL
• Keywords: Unexplained cash credit; Business income; Reason to believe
• Section: 147; 148

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL PUNE BENCH B, PUNE BEFORE SHRI SHAILENDRA KUMAR YADAV, JUDICIAL MEMBER AND SHRI R.K. PANDA, ACCOUNTANT MEMBER ITA NO. 1056/PN/2011 AND ITA NO.1190/PN/2011 (ASSESSMENT YEARS 2005-06 AND 2004-05) ITO, WARD-1(2), KENDRIYA RAJASWA BHAVAN, GADKARI CHOWK, OLD AGRA ROAD, NASHIK .. APPELLANT VS. CHAUDHARI IFTEKHAR AHMAD RAMZANALI, BILAL STEEL, LINK ROAD, VIRAT NAGAR, AMBAD, NASHIK-422010 PAN NO. AANPG 0463H .. RESPONDENT APPELLANT BY : SHRI RAJESH DAMOR RESPONDENT BY : SHRI NIKHIL PATHAK DATE OF HEARING : 17-09-2013 DATE OF PRONOUNCEMENT : 18-09-2013 ORDER PER R.K. PANDA, AM : THE ABOVE 2 APPEALS FILED BY THE REVENUE ARE DIRECT ED AGAINST THE SEPARATE ORDERS DATED 14-06-2011 & 15-07-2011 OF TH E CIT(A)-I, NASHIK RELATING TO ASSESSMENT YEARS 2005-06 AND 2004-05 RE SPECTIVELY. SINCE IDENTICAL GROUNDS HAVE BEEN TAKEN BY THE REVENUE IN BOTH THE APPEALS, THEREFORE, THESE WERE HEARD TOGETHER AND ARE BEING DISPOSED OF BY THIS COMMON ORDER. ITA NO.1056/PN/2011 (A.Y. 2005-06) : 2. FACTS OF THE CASE, IN BRIEF, ARE THAT THE ASSESS EE IS AN INDIVIDUAL AND IS ENGAGED IN THE BUSINESS OF TRADING IN SCRAP MATE RIAL OF IRON AND STEEL. HE FILED HIS RETURN OF INCOME ON 31-10-2005 DECLARI NG TOTAL INCOME AT 2 RS.2,20,180/- WHICH WAS ACCEPTED U/S.143(1) OF THE INCOME TAX ACT. SUBSEQUENTLY, THE ASSESSING OFFICER INITIATED PROC EEDINGS U/S.147 OF THE ACT AFTER RECORDING THE FOLLOWING REASONS : DURING THE COURSE OF ASSESSMENT PROCEEDINGS IN THE CASE OF ASSESSEE FOR A. Y. 2007-08 ENQUIRIES WERE CONDUCTED INTO THE GENUINENESS OF CREDITORS APPEARING IN THE BALANCE S HEET OF ASSESSEE AS AT 31.03.2007. THE FOLLOWING PARTIES AGAINST WHI CH OPENING BALANCE OF THE AMOUNTS WERE SHOWN ARE FOUND TO BE N ON EXISTING PARTIES. THUS, THE ABOVE NAMED CREDITORS APPEARED IN THE BOO KS OF ASSESSEE FOR THE FIRST TIME DURING F. Y. 2004-05. THEREFORE, THE ACT ION AS PER LAW IS WARRANTED TO BE TAKEN IN A. Y. 2005-06. SUMMONS HAVE BEEN ISSUED TO ALL THE PARTIES. ON ENQUIR IES WITH THE CREDITORS ON THE GIVEN ADDRESSES, IT WAS FOUND THAT A LL THE ABOVE PARTIES ARE NON EXISTING PARTIES. ON CONFRONTATION, ASSESSEE HAS SUBMITTED THE BILLS OF SOME OF THE CREDITORS. IT IS SEEN THAT THESE B ILLS ARE PRIMA-FACIE NON GENUINE. ACCORDINGLY, COMMISSION WAS ISSUED TO A DIT (INV,), UNIT- III(3), SCINDIA HOUSE, MUMBAI. IN RESPONSE, HE HAS SUBMITTED A REPORT AND REPORTED THAT ALL OF THE PARTIES ARE NON EXISTING A ND ADDRESSES ARE ALSO NONEXISTENT. AS THESE CREDITORS WERE OPENING BALA NCES AS AT 01.04.2006, IT WAS NECESSARY TO TRACE THE CREDITORS BAC KWARDS AND FIND OUT WHEN DID IT APPEAR FOR THE FIRST TIME. IT IS SEEN TH AT ABOVE CREDITORS HAVE APPEARED FOR THE FIRST TIME IN F. Y. 2004-05 & A. Y. 2005-06. IN VIEW OF THE ABOVE DISCUSSION, I HAVE THE REASON TO BELIEVE THAT INCOME TO THE TUNE OF RS.72,55,461/- HAS ESCAPED ASSE SSMENT WITHIN THE MEANING OF EXPLANATION 2(C)(I) TO SECTION 147 O F THE ACT. ISSUE NOTICE U/S. 148 OF THE ACT. SD/- ACIT, CIR-1, NASHIK SR. NO. NAME AMOUNT AS AT 31.03.2005 AMOUNT AS AT 31.03.2007 1 AMUL STEEL TRADERS RS. 20, 42, 5 10 / - RS.17,97,51 0/ - 2 OM TRADERS RS. 1 4,98,952/ - RS.12,48,952/ - 3 GINNI MECANTILE PVT. LTD. RS. 15,64,325/ - RS.13,19,325/ - 4 HEMA ENTERPRISES RS. 21,49,674/ - RS.18,79,32 5/ - TOTAL RS, 72,55,46I/ - 3 2.1 IN RESPONSE TO NOTICE U/S.148 THE ASSESSEE INIT IALLY DID NOT COMPLY BUT LATER ON APPEARED BEFORE THE ASSESSING OFFICER. DURING THE COURSE OF ASSESSMENT PROCEEDINGS THE ASSESSING OFFICER ASKED THE ASSESSEE TO FURNISH THE CONFIRMATIONS IN RESPECT OF SPECIFIC CR EDITORS APART FROM OTHER DETAILS. THE ASSESSEE PRODUCED BOOKS OF ACCOUNTS S UCH AS CASH BOOK, LEDGER, PURCHASE AND SALES RECORDS AND EXPENSES REC ORD FOR VERIFICATION. AS REGARDS THE DETAILS OF THE CREDITORS IT WAS SUBM ITTED THAT THE CREDITORS COULD NOT BE TRACED. HOWEVER, THE ASSESSEE PROVIDE D A LIST OF CREDITORS ALONG WITH THEIR DETAILED ADDRESSES. RELYING ON TH E ORDER FOR A.Y. 2007- 08 WHEREIN IT WAS HELD THAT THE BURDEN OF PROVING T HE CREDITORS IS ON THE ASSESSEE, THE ASSESSING OFFICER HELD THAT THE CONTE NTION FOR ACCEPTING THE CREDITORS AS GENUINE CANNOT BE ACCEPTED SINCE THE A SSESSEE DID NOT DISCHARGE THE BURDEN CAST ON HIM. SINCE THE ASSESS EE COULD NOT OBTAIN CONFIRMATIONS FROM THE SAID CREDITORS THE ASSESSING OFFICER HELD THAT THE CREDITORS APPEARING IN THE BALANCE SHEET OF THE ASS ESSEE ARE FICTITIOUS AND BOGUS CREDITORS COMPRISING OF UNDISCLOSED INCOME OF THE ASSESSEE. THE ASSESSING OFFICER ACCORDINGLY MADE ADDITION OF RS.7 2,55,461/-. 3. BEFORE THE CIT(A) IT WAS SUBMITTED THAT THE ASSE SSEE REGULARLY MAINTAINS BOOKS OF ACCOUNTS WHICH ARE DULY AUDITED. THE ASSESSEE ALSO MAINTAINS QUANTITATIVE TALLY OF PURCHASES AND SALES WHICH IS REFLECTED IN THE TAX AUDIT REPORT. THE ASSESSING OFFICER HAS AC CEPTED THE PURCHASES, SALES AND BOOKS RESULTS. IT WAS ARGUED THAT IN ABS ENCE OF THE SAID CREDIT PURCHASES THERE CANNOT BE ANY SALES OR PROFIT. REL YING ON THE DECISION OF HONBLE ALLAHABAD HIGH COURT IN THE CASE OF CIT VS. PANCHAM DASS JAIN REPORTED IN 205 CTR 444 IT WAS SUBMITTED THAT NO ADDITION TOWARDS ALLEGED FICTITIOUS CREDITORS CAN BE MADE U/S.68 OF THE INCOME TAX ACT. IT 4 WAS FURTHER SUBMITTED THAT THE ASSESSING OFFICER HA S RE-OPENED THE ASSESSMENT FOR A.Y. 2004-05, 2005-06 AND 2006-07 WH EREAS THE SCRUTINY ASSESSMENT WAS CONDUCTED AT THE END OF THE YEAR 201 0, I.E. AFTER ABOUT 5 TO 7 YEARS. THE ASSESSEE HAS ALREADY REPAID THE OU TSTANDING BALANCES OF THE SUPPLIERS AND HAS NO BUSINESS TRANSACTIONS WITH THE SAID SUPPLIERS. DUE TO PASSAGE OF TIME ALSO THE ASSESSEE COULD NOT FILE CONFIRMATIONS OF THE CREDITORS AND COULD NOT PRODUCE THEM. REFERRIN G TO THE DECISION OF THE HONBLE MADRAS HIGH COURT IN THE CASE OF HASTIM AL VS. CIT REPORTED IN 49 ITR 273 IT WAS SUBMITTED THAT AFTER LAPSE OF SUBSTANTIAL PERIOD, IF THE DEPARTMENT COULD NOT FIND OUT THE CREDITORS, AD DITION CANNOT BE MADE TOWARDS UNEXPLAINED CREDIT. IT WAS SUBMITTED THAT THE ASSESSEE CANNOT EARN THIS MUCH PROFIT WHICH THE ASSESSING OFFICER H AS DETERMINED AND THIS IS NOT POSSIBLE IN SUCH TYPE OF BUSINESS. 4. BASED ON THE ARGUMENTS ADVANCED BY THE ASSESSEE THE LD.CIT(A) DELETED THE ADDITION MADE BY THE ASSESSING OFFICER PRESUMABLY U/S.68 OF THE INCOME TAX ACT. WHILE DOING SO, HE OBSERVED TH AT THE ASSESSEE, IN THE INSTANT CASE, HAS PURCHASED GOODS ON CREDIT FOR HIS TRADING BUSINESS AND PART OF SUCH CREDITS WERE OUTSTANDING AT THE EN D OF THE YEAR. THE SAID CREDITORS FOR PURCHASES WERE PAID IN SUBSEQUENT YEA RS. HE FOUND MERIT IN THE SUBMISSION OF THE LD.COUNSEL FOR THE ASSESSEE T HAT DUE TO PASSAGE OF SUBSTANTIAL TIME THE ASSESSEE COULD NOT FILE THE CO NFIRMATIONS OF THE CREDITORS OR PRODUCE THE SAME. HE OBSERVED THAT SI NCE THE ASSESSEE HAS REPAID THE CREDITORS SUBSEQUENTLY AND HAS NO BUSINE SS TRANSACTIONS WITH THE SAID SUPPLIERS, THEREFORE, IN VIEW OF THE DECIS ION OF THE HONBLE MADRAS HIGH COURT IN THE CASE OF HASTIMAL (SUPRA) A DDITION TOWARDS FICTITIOUS CREDITORS CANNOT BE JUSTIFIED AFTER LAPS E OF SUBSTANTIAL PERIOD IF 5 THE DEPARTMENT COULD NOT FIND THE CREDITORS. HE AL SO FOUND MERIT IN THE SUBMISSION OF THE LD. COUNSEL FOR THE ASSESSEE THAT IT IS IMPOSSIBLE THAT THE ASSESSEE COULD HAVE EARNED SUCH HUGE ADDITIONAL INCOME AS DETERMINED BY THE ASSESSING OFFICER BY TREATING THE CREDITORS AS BOGUS. RELYING ON VARIOUS DECISIONS CITED BEFORE HIM THE LD.CIT(A) DELETED THE ADDITION MADE BY THE ASSESSING OFFICER. 5. AGGRIEVED WITH SUCH ORDER OF THE CIT(A) THE REVE NUE IS IN APPEAL BEFORE US WITH THE FOLLOWING GROUNDS : 1. IN THE FACTS AND CIRCUMSTANCES OF THE CASE THE ID. CIT(A) HAS ERRED IN DELETING THE ADDITION MADE BY THE AO O F RS.72,55,461/-. 2. THE ID. CIT(A) HAS ERRED IN THE FACTS & CI RCUMSTANCES OF THE CASE & IN LAW IN HOLDING THAT THE IMPUGNED ADDITION MADE BY THE AO IS CONTRARY TO THE PROVISIONS OF SEC.68 OF THE A CT. 3. ON THE FACTS & CIRCUMSTANCES OF THE CASE THE ID. CIT(A) ERRED IN ALLOWING THE ASSESSEE'S CLAIM ESPECIALLY AS THE ASSESSEE DID NOT PROVE DURING THE COURSE OF ASSESSMENT PROCEEDINGS T HAT THE CREDITORS WERE NOT FICTITIOUS. THE ID. CIT(A) FAILED TO APPRE CIATE THAT THE ASSESSEE WAS UNABLE TO PROVE THE GENUINENESS OF THE CREDITORS EVEN DURING THE ASSESSMENT PROCEEDINGS FOR A Y 2007-08 W HEN THESE CREDITORS WERE STILL OUTSTANDING. 4. IN THE FACTS AND THE CIRCUMSTANCES OF THE CA SE THE ID. CIT(A) HAS ERRED IN ACCEPTING THAT THE EXPLANATION FILED B Y THE ASSESSEE IN RESPECT OF THE (FICTITIOUS) CREDITS WAS SATISFACTOR Y. 5. THE ORDER OF THE ID. CIT(A) BE CANCELLED AND THAT OF THE A.O BE RESTORED. 6. THE APPELLANT REQUESTS LEAVE TO ADD/ALTER/ AMEND THE GROUNDS OF APPEAL. 6. THE LD. DEPARTMENTAL REPRESENTATIVE HEAVILY RELI ED ON THE ORDER OF THE ASSESSING OFFICER. HE SUBMITTED THAT THE CR EDITORS APPEARED FOR THE FIRST TIME IN A.Y. 2005-06 AND HENCE THESE WERE DISALLOWED. HE SUBMITTED THAT THE LD.CIT(A) DELETED THE ADDITION P RESUMING THAT THE SAME HAS BEEN ADDED U/S.68 WHEREAS THE ASSESSING OF FICER HAS ADDED THE 6 SAME ON THE GROUND THAT THE CREDITORS ARE BOGUS AND ARE COVERED U/S.41 OF THE INCOME TAX ACT. HE FURTHER SUBMITTED THAT THE VARIOUS DECISIONS CITED BY THE ASSESSEE BEFORE THE CIT(A) ARE NOT APP LICABLE TO THE FACTS OF THE PRESENT CASE SINCE IN THOSE CASES THE CREDITORS ARE MORE THAN 10 YEARS OLD WHEREAS IN THE PRESENT CASE THE MATTER WAS 4 TO 5 YEARS OLD. HE SUBMITTED THAT THE ONUS WAS ON THE ASSESSEE TO PROV E THAT THE CREDITORS ARE GENUINE. HE SUBMITTED THAT IF THE ASSESSEE WAS MAKING PAYMENTS TO THE CREDITORS IN THE SUBSEQUENT PERIOD THEN THE ASS ESSEE WOULD BE IN CONTACT WITH THE CREDITORS AND COULD HAVE FURNISHED THE CONFIRMATION LETTERS FROM THE CREDITORS DURING ASSESSMENT PROCEE DINGS FOR A.Y. 2007- 08. HE SUBMITTED THAT THE ORDER OF THE LD.CIT(A) I S NOT PROPER AND HENCE THE SAME SHOULD BE REVERSED AND THAT OF THE A SSESSING OFFICER BE RESTORED. 7. THE LD. COUNSEL FOR THE ASSESSEE ON THE OTHER HA ND HEAVILY RELIED ON THE ORDER OF THE CIT(A). REFERRING TO PAPER BOO K PAGES 6 AND 7 HE DREW THE ATTENTION OF THE BENCH TO THE TRADING ACCO UNT FOR THE YEAR ENDING 31-03-2004 AND 31-03-2005 WHICH GIVE THE QUANTITATI VE DETAILS OF PURCHASES AND SALES AS WELL AS OPENING AND CLOSING STOCK. REFERRING TO THE TRADING ACCOUNT FOR THE YEAR ENDING 2004-05, I. E. A.Y. 2005-06 HE SUBMITTED THAT THE TOTAL SALES DURING THE YEAR IS 1 1,17,805.40 KGS. THE TOTAL PURCHASES EXCLUDING THE PURCHASES FROM 5 CRED ITORS IS 0937.302.50 KGS WHEREAS THE PURCHASES FROM THE ALLEGED CREDITOR S IS 166950 KGS. HE SUBMITTED THAT THE ASSESSEE COULD NOT HAVE MADE THE SALES WITHOUT THE PURCHASES FROM THE ABOVE PARTIES. HE SUBMITTED THA T IF THE CREDITORS ARE TREATED AS BOGUS THEN IN THAT CASE THE GROSS PROFIT COMES TO RS.81,22,505/- ON A TURNOVER OF RS.3.9 CRORES WHICH IS MORE THAN 20.54% 7 AND THIS IS NOT POSSIBLE IN THIS TYPE OF TRADE. RE FERRING TO THE COPY OF THE ASSESSMENT ORDER FOR A.Y. 2007-08 HE SUBMITTED THAT THE ASSESSING OFFICER HAS ACCEPTED THE BOOK RESULTS AND NO ADDITI ON ON ACCOUNT OF CREDITORS ETC. HAVE BEEN MADE AND THE RETURNED INCO ME HAS BEEN ACCEPTED. REFERRING TO COPY OF THE ASSESSMENT ORDE R FOR A.Y. 2006-07 HE SUBMITTED THAT ALTHOUGH AN ADDITION OF RS.4,66,270/ - WAS MADE BY THE ASSESSING OFFICER ON ACCOUNT OF DISALLOWANCE OF CRE DITORS THE REVENUE HAS NOT FILED ANY APPEAL AGAINST THE ORDER OF THE C IT(A) DELETING THE ADDITION. REFERRING TO THE DECISION OF THE PUNE BE NCH OF THE TRIBUNAL IN THE CASE OF ACIT VS. VIKAS PURUSHOTTAMLAL GUPTA VID E ITA NO.588 TO 590/PN/2011 FOR A.Y. 2004-05 TO 2006-07 ORDER DATED 28-08-2012 HE SUBMITTED THAT UNDER IDENTICAL FACTS AND CIRCUMSTAN CES THE TRIBUNAL HAD DIRECTED THE ASSESSING OFFICER TO ADOPT 1% NET PROF IT OF THE TURNOVER INSTEAD OF ADDING THE ENTIRE SUNDRY CREDITORS. 8. WE HAVE CONSIDERED THE RIVAL ARGUMENTS MADE BY B OTH THE SIDES, PERUSED THE ORDERS OF THE ASSESSING OFFICER AND THE CIT(A) AND THE PAPER BOOK FILED ON BEHALF OF THE ASSESSEE. WE HAV E ALSO CONSIDERED THE VARIOUS DECISIONS CITED BEFORE US. THERE IS NO DIS PUTE TO THE FACT THAT DURING THE COURSE OF ASSESSMENT PROCEEDINGS THE ASS ESSEE COULD NEITHER PRODUCE THE CREDITORS NOR FURNISHED THE CONFIRMATIO N LETTERS FROM THE SUNDRY CREDITORS FOR WHICH THE ASSESSING OFFICER MA DE ADDITION OF RS.72,55,461/- ON ACCOUNT OF BOGUS/FICTITIOUS SUNDR Y CREDITORS. WE FIND THE LD.CIT(A) DELETED THE ADDITION ON THE GROUND TH AT THERE IS SUBSTANTIAL LAPSE OF TIME BETWEEN THE ASSESSMENT YEAR AND YEAR OF COMPLETION OF ASSESSMENT. FURTHER, THE ASSESSEE HAS ALREADY REPA ID THE OUTSTANDING BALANCES AND HAD NO BUSINESS TRANSACTIONS WITH THE SAID SUPPLIERS. THE 8 LD.CIT(A) FURTHER OBSERVED THAT ADDITION OF SUCH HU GE INCOME GIVES AN ABSURD RESULT AND IT IS IMPOSSIBLE THAT THE ASSESSE E COULD HAVE EARNED SUCH HUGE INCOME. IT IS THE CASE OF THE REVENUE TH AT THE ONUS WAS ON THE ASSESSEE TO PROVE TO THE SATISFACTION OF THE ASSESS ING OFFICER REGARDING THE GENUINENESS OF SUCH SUNDRY CREDITORS. IT IS TH E CASE OF THE ASSESSEE THAT SINE HE HAS REPAID THE CREDITORS AND THERE IS LAPSE OF TIME, THEREFORE, IT WAS NOT POSSIBLE TO EITHER PRODUCE THEM OR OBTAI N CONFIRMATION LETTERS FROM THE CREDITORS. IT IS ALSO THE CASE OF THE LD. COUNSEL FOR THE ASSESSEE THAT WITHOUT CREDIT PURCHASES THERE CANNOT BE ANY S ALES AND THE ASSESSING OFFICER HAS NOT DISTURBED EITHER THE PURCHASES OR S ALES OR THE BOOK PROFIT. 8.1 IN THE INSTANT CASE, WE FIND THE ASSESSEE FOR W HATEVER REASONS NEITHER COULD PRODUCE THE CREDITORS BEFORE THE ASSE SSING OFFICER FOR HIS EXAMINATION NOR OBTAINED THE CONFIRMATION LETTERS F ROM THOSE CREDITORS. SINCE THE ONUS WAS ON THE ASSESSEE TO PROVE TO THE SATISFACTION OF THE ASSESSING OFFICER REGARDING THE GENUINENESS OF THE SUNDRY CREDITORS APPEARING IN THE BALANCE SHEET, THEREFORE, UNDER TH E PECULIAR FACTS AND CIRCUMSTANCES OF THE CASE THE CREDITORS CANNOT BE A CCEPTED AS GENUINE AND ADDITION HAS TO BE MADE. AT THE SAME TIME, ADD ING OF THE TOTAL SUNDRY CREDITORS TO THE INCOME OF THE ASSESSEE WILL GIVE AN ABSURD PROFIT PERCENTAGE IN THE INSTANT CASE WHICH IS NOT POSSIBL E, ESPECIALLY WHEN THE ASSESSING OFFICER HAS ACCEPTED THE PURCHASES AND SA LES AS GENUINE AND THE SAME HAS NOT BEEN DISTURBED. 8.2 WE FIND THE PUNE BENCH OF THE TRIBUNAL IN THE C ASE OF VIKAS PURUSHOTTAMLAL GUPTA (SUPRA) UNDER IDENTICAL CIRCUM STANCES HAS DIRECTED THE ASSESSING OFFICER TO ADOPT NET PROFIT OF 1% OF THE TURNOVER. THE RELEVANT OBSERVATION OF THE TRIBUNAL IS AS UNDER : 9 11. WE HAVE CONSIDERED THE RIVAL ARGUMENTS MADE BY BOTH THE SIDES, PERUSED THE ORDERS OF THE AO AND THE CIT(A) AND THE PAPER BOOK FILED ON BEHALF OF THE ASSESSEE. THERE IS NO DISPUTE TO THE FACT THAT DURING THE COURSE OF SEARCH IN THE CASE OF SATISH S. LUTHRA CERTAIN B OOKS OF ACCOUNT BELONGING TO THE ASSESSEE WERE FOUND. THERE IS ALSO NO DISPUTE TO THE FACT THAT EXAMINATION OF THE SEIZED MATERIALS SHOW THAT BLANK BILLS/VOUCH ERS PERTAINING TO SOME OF THE PARTIES APPEARING AS SUNDRY CREDITORS IN THE BO OKS OF THE ASSESSEE WERE RECOVERED DURING SEARCH ACTION U/S.132 PERTAINS TO SRI VIKAS P. GUPTHA, I.E. ASSESSEE. THERE IS ALSO NO DISPUTE TO THE FACT THA T DESPITE SUFFICIENT OPPORTUNITIES GIVEN, THE ASSESSEE COULD NOT PROVE T O THE SATISFACTION OF THE AO REGARDING THE GENUINENESS OF THE SUNDRY CREDITORS A PPEARING IN THE BALANCE SHEET AS AT 31-03-2004, 31-03-2005 AND 31-03-2006. THEREFORE, THE SUNDRY CREDITORS APPEARING IN THE BOOKS OF ACCOUNT, UNDER THE PECULIAR FACTS AND CIRCUMSTANCES OF THE CASE CANNOT BE ACCEPTED AS GEN UINE AND SOME ADDITION HAS TO BE MADE. AT THE SAME TIME WE FIND THE AO HA S ACCEPTED THE SALES AS GENUINE AND THE SAME HAS NOT BEEN DISTURBED. IT IS ALSO A FACT THAT THE AO HAS NOT DISTURBED THE PURCHASE FIGURES AND HE HAS PROCE EDED TO ADD THE SUNDRY CREDITORS APPEARING IN THE BALANCE SHEET AS UNPROVE D LIABILITY U/S.68 OF THE INCOME TAX ACT. IN OUR OPINION ADDITION OF THE TOT AL SUNDRY CREDITORS UNDER THE FACTS AND CIRCUMSTANCES OF THE CASE WILL GIVE A BSURD RESULT WHICH IS NOT POSSIBLE IN THE TYPE OF TRADE THE ASSESSEE IS ENGAG ED IN. AT THE SAME TIME WE ALSO DO NOT FIND THE ARGUMENT OF THE LEARNED COUNSE L FOR THE ASSESSEE THAT 3% PROFIT MAY BE DETERMINED ON THE UNPROVED TRADE CRED ITORS. IN OUR OPINION, UNDER THE FACTS AND CIRCUMSTANCES OF THE CASE, THIS IS A FIT CASE FOR REJECTION OF THE BOOK RESULTS AND GOING FOR ESTIMATED ADDITION. 12. FROM THE VARIOUS DETAILS FURNISHED BY THE ASSES SEE IN THE PAPER BOOK WE FIND THE ASSESSEE HAS DECLARED THE FOLLOWING TUR NOVER AND PROFIT : FINANCIAL YEAR ASSESSMENT YEAR TURNOVER PROFIT/LOSS 2003-04 2004-05 11,73,44,843 2,12,902 2004-05 2005-06 6,39,87,383 1,45,729.81 2005-06 2006-07 4,99,59,187 (3,74,790.34) 13. UNDER SIMILAR FACTS AND CIRCUMSTANCES VARIOUS B ENCHES OF THE TRIBUNAL ARE ADOPTING NET PROFIT RATE OF 1% OF THE TURNOVER. CONSIDERING THE TOTALITY OF THE FACTS AND CIRCUMSTANCES OF THE CASE WE ARE OF THE CONSIDERED OPINION THAT ADOPTION OF 1% NET PROFIT ON THE TURNO VER FOR VARIOUS ASSESSMENT YEARS WILL BE REASONABLE AND WILL MEET THE ENDS OF JUSTICE. WE ACCORDINGLY DIRECT THE AO TO ADOPT NET PROFIT RATE OF 1% ON THE TURNOVER DECLARED BY THE ASSESSEE FOR THE RESPECTIVE ASSESSMENT YEARS. THE GROUNDS RAISED BY THE REVENUE ARE PARTLY ALLOWED AND THE COS FILED BY THE ASSESSEE ARE DISMISSED. 8.3 SINCE THE FACTS IN THE INSTANT CASE ARE IDENTIC AL TO THE CASE CITED (SUPRA), THEREFORE, WE DIRECT THE ASSESSING OFFICER TO ADOPT 1% NET PROFIT ON THE TURNOVER OF RS.3,97,83,455.35 FOR THE IMPUGN ED ASSESSMENT YEAR. WE HOLD AND DIRECT ACCORDINGLY. THE GROUNDS RAISED BY THE REVENUE ARE ACCORDINGLY PARTLY ALLOWED. 10 ITA NO.1190/PN/2011 (A.Y. 2004-05) : 9. AFTER HEARING BOTH THE SIDES WE FIND THE GROUNDS RAISED BY THE REVENUE ARE IDENTICAL TO THE GROUNDS OF APPEAL IN I TA NO.1056/PN/2011. WE HAVE ALREADY DECIDE THE ISSUE AND DIRECTED THE A SSESSING OFFICER TO ADOPT NET PROFIT OF 1% OF THE TURNOVER. FOLLOWING THE SAME REASONING, WE DIRECT THE ASSESSING OFFICER TO ADOPT NET PROFIT OF 1% ON THE TURNOVER FOR THE IMPUGNED ASSESSMENT YEAR. GROUNDS RAISED B Y THE REVENUE ARE ACCORDINGLY PARTLY ALLOWED. 10. IN THE RESULT, BOTH THE APPEALS FILED BY THE RE VENUE ARE PARTLY ALLOWED. PRONOUNCED IN THE OPEN COURT ON THIS THE 18 TH DAY OF SEPTEMBER 2013 SD/- SD/- (SHAILENDRA KUMAR YADAV) (R.K. PANDA) JUDICIAL MEMBER ACCOUNTAN T MEMBER PUNE DATED: 18 TH SEPTEMBER 2013 SATISH COPY OF THE ORDER FORWARDED TO : 1. ASSESSEE 2. DEPARTMENT 3. CIT(A)-I, NASHIK 4 CIT-I, NASHIK 5. THE D.R, B PUNE BENCH 6. GUARD FILE BY ORDER // TRUE COPY // SENIOR PRIVATE SECRETARY ITAT, PUNE BENCHES, PUNE