DCIT, New Delhi V. M/s Northern Strips Ltd., New Delhi

ITA 1271/DEL/2013

• Counselvise Citation: 127120114 RSA 2013
• Duration Of Justice: 1 year(s) 6 month(s) 19 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 23-09-2014
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: E
• Next Hearing Date: 09-07-2014
• Assessment Year: 2007-2008
• Appeal Filed On: 05-03-2013
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: GUNJAN P RASAD
• Assessee Lawyers: VED JAIN CA MS RANO JAIN; V CHAUR ASIYA
• Keywords: Unexplained cash credit; Business income; Search and seizure; Salary income; Peak credit; Deemed to accrue or arise in india; Accommodation entries
• Section: 131; 148; 132; 143(3); 153A

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL DELHI BENCHES : E NEW DELHI BEFORE SMT. DIVA SINGH, JM AND SHRI B.C.MEENA, AM ITA NOS. 1269, 1270 AND 1271/DEL/2013 ASSESSMENT YEARS : 2006/07, 2007- 08 AND 2008-09 DCIT, CC 13, ROOM NO.332 VS. NORTHERN STRIPS LTD. ARA CENTRE, JHADEWALAN EXTN. 1, CENTRAL MARKET, WE ST PUNJABI BAGH NEW DELHI NEW DELHI PAN: AAACN 0642 C (APPELLANT) (RESPONDENT) ASSESSEE BY:- SH. VED JAIN, C.A. MS.RANO JAIN, ADV. & SH.V.CHAUR ASIYA, ADV. DEPARTMENT BY:- SH.GUNJAN PRASAD, CIT, D.R. O R D E R PER BENCH THESE THREE APPEALS FILED BY THE REVENUE HAVE BEE N FILED AGAINST THE SEPARATE ORDERS PASSED BY THE LD.CIT(APPEALS)-I, NE W DELHI DATED 14.12.2012 PERTAINING TO THE ASSESSMENT YEARS 2006-07, 2007-08 AND 2008-09. IT WAS A COMMON STAND OF THE PARTIES BEFORE THE BENCH THAT T HE ARGUMENTS ADVANCED FOR GROUND 2 IN ITA 1269/DEL/2013 WOULD APPLY TO GROUND NO. 3 IN THE SAME APPEAL AND WOULD ALSO FULLY APPLY ON ACCOUNT OF SIMILARITY OF FACTS TO THE GROUNDS RAISED IN THE REMAINING TWO YEARS ALSO AS FACTS AND CIRCUM STANCES REMAIN IDENTICAL ON THE ISSUE INVOLVED. IT WAS CLARIFIED THAT APART FR OM THE DIFFERENCE IN AMOUNTS MENTIONED AND THE NAMES OF THE CONCERNS, THE FACTS, CIRCUMSTANCES AND CONSEQUENTLY THE SUBMISSIONS ON FACTS AND LAW ON TH E PART OF THE PARTIES WOULD REMAIN THE SAME. 2. IN VIEW OF THE ABOVE WE FIRST DEEM IT APPROPRIAT E TO REPRODUCE THE GROUNDS RAISED IN ITA 1269/DEL/2013: 1. THE ORDER OF THE LD.CIT(APPEALS) IS NOT CORREC T IN LAW AND FACTS. ITA NOS. 1269, 1270 & 1271/DEL/2013 ASSESSMENT YEAR: 2006-07, 2007-08 AND 2008-09 NORTHERN STRIPS LTD., NEW DELHI PAGE 2 OF 22 2. ON THE FACTS AND IN CIRCUMSTANCES OF THE CASE TH E LD.CIT(APPEALS) HAS ERRED IN DELETING THE ADDITION OF RS.1,17,12,111/- ON ACCOUNT OF CREDITS AGAINST NONE XISTENT SALES WITHOUT APPRECIATING THE FACT THAT ASSESSEE HAS SHO WN SALES TO M/S R.V.TRADERS PROPRIETARY CONCERN OF SHRI RAVINDE R YADAV HAS PROVIDED ACCOMMODATION ENTRIES AND HAS NOT DONE ANY GENUINE BUSINESS. 3. ON THE FACTS AND IN CIRCUMSTANCES OF THE CASE TH E LD.CIT(APPEALS) HAS ERRED IN DELETING THE ADDITION OF RS.2,82,92,872/- ON ACCOUNT OF CREDITS AGAINST NONE XISTENT/NON GENUINE SALES TO M/S SWASTIK PACKAGING WITHOUT5 APP RECIATING THE FACT THAT ASSESSEEE COULD NOT FURNISH ANY EVIDE NCE IN ORDER TO PROVE THE GENUINENESS OF SALES. 4. THE APPELLANT CRAVES LEAVE TO ADD, AMEND ANY/ALL THE GROUNDS OF APPEAL BEFORE OR DURING THE COURSE OF HE ARING OF THE APPEAL. 3. A PERUSAL OF THE ABOVE GROUNDS SHOWS THAT GROUND NO.1 IS GENERAL AS SUCH REQUIRES NO ADJUDICATION, QUA GROUND NO.4 WHICH WAS A RESIDUAL GROUND THE SAME IS DISMISSED AS NO ARGUMENTS WERE ADVANCED IN RESP ECT OF THE SAME. 4. THE PARTIES BEFORE US HAVE ARGUED GROUND NUMBER 2 STATING THAT THESE ARGUMENTS WOULD APPLY TO GROUND NUMBER 3 ALSO. ACC ORDINGLY WE FIRST ADDRESS THE FACTS AS BROUGHT OUT IN THE ASSESSMENT ORDER. 4.1 THE RELEVANT FACTS OF THE CASE ARE THAT SEARCH AND SEIZURE ACTION U/S 132 OF THE INCOME TAX ACT,1961 (THE ACT) AS PER THE A SSESSMENT ORDER WAS CARRIED OUT IN M/S SWASTIK PIPES GROUP OF CASES ON 28.08.2 008 AND THE PREMISES BELONGING TO THE ASSESSEE WERE ALSO COVERED. THE C ASE OF THE ASSESSEE WAS CENTRALIZED BY THE CIT, DELHI V, NEW DELHI VIDE HIS ORDER U/S 127(2) OF THE ACT AND NOTICE U/S 153A OF THE ACT WAS ISSUED AND SERVE D UPON THE ASSESSEE ON 30 TH DECEMBER,2009. IN RESPONSE THERETO THE ASSESSEE FI LED A RETURN OF INCOME DECLARING A TOTAL INCOME OF RS.68,60,683/- ON 28.0 1.2010 FROM BUSINESS AND PROFESSION. THE REDEEMED INCOME WAS IDENTICAL TO T HE ORIGINAL RETURN FILED ON 30 TH NOVEMBER,2006. THE AO THEREAFTER ISSUE NOTICE U/S 143(2) AND 141(2) ALONG WITH QUESTIONNAIRE ETC.. 4.2 THE CIRCUMSTANCES WHICH LEAD TO THE SEARCH HAVE BEEN SET OUT IN PARA 3 OF THE ASSESSMENT ORDER, WHICH ARE EXTRACTED HEREUN DER FOR READY REFERENCE: ITA NOS. 1269, 1270 & 1271/DEL/2013 ASSESSMENT YEAR: 2006-07, 2007-08 AND 2008-09 NORTHERN STRIPS LTD., NEW DELHI PAGE 3 OF 22 3. BEFORE DISCUSSING THE ADDITIONS IN THE CASE OF M/S NORTHERN STRIPS PVT.LTD., IT IS RELEVANT TO TAKE NOTE OF THE CIRCUMSTANCES LEADING TO THE SEARCH. INFORMATION WAS RECEIVED FROM FINAN CIAL INTELLIGENCE UNIT OF THE MINISTRY OF FINANCE IN THE CASE OF ONE SH. RAVINDER YADAV OF MADIPUR VILLAGE, NEW DELHI, IN RESPECT OF HIGH V OLUME CASH TRANSACTIONS IN HIS BANK ACCOUNT NUMBER 01150003107 MAINTAINED BY HIM IN THE NAME OF M/S RAVINDER & CO., NEW DELHI. I T WAS REPORTED THAT DURING THE FINANCIAL YEAR 2006-07, THERE WERE DEBITS AND CREDITS TO THE TUNE OF RS.677.28 LAKHS AND RS.677.14 LAKHS RESPECTIVELY. IT WAS ALSO INFORMED THAT ANOTHER ACCOUNT NUMBER 01550 5002098 WAS ALSO MAINTAINED IN THE NAME OF RAVINDER & CO. AS PE R THE INFORMATION DURING THE MONTH OF DECEMBER, 2006, CASH AMOUNTING TO RS.50,49,3001- WA S DEPOSITED BY SH. RAVINDER YADAV IN ONE OF HIS ACCOUNTS. 4.3 A PERUSAL OF THE ASSESSMENT ORDER FURTHER SHOW S THAT AFTER RECEIPT OF THE INFORMATION, SUMMONS U/S 131 OF THE ACT WERE ISSUED AND SERVED UPON SHRI RAVINDER YADAV, WHO INITIALLY DENIED HAVING MAINTAI NED THE SPECIFIC BANK ACCOUNTS WITH ICICI BANK AND OWNED MAINTAINING ONLY ONE ACCOUNT. HOWEVER, THE AO HAD RECEIVED THE INFORMATION THAT MR. YADAV WAS HAVING THE FOLLOWING BANK ACCOUNTS IN WHICH HUGE CASH WAS FOUND AND HAVE BEEN DEPOSITED IN DIFFERENT DATES AND WITHDRAWN IN THE SHAPE OF DRAFT S AND PAY ORDERS IN THE NAME OF DIFFERENT PARTIES MR. YADAV WAS CONFRONTED WITH THE SAME: NAME OF THE BANK ACCOUNT NUMBER --------------------------------------------------- ICICI BANK 015505004043 ICICI BANK 015505004182 ICICI BANK 08805002694 HSBC 140003757001 STANDARD CHARTERED 5451038013 --------------------------------------------------- - 4.4 ACCORDINGLY SUMMONS U/S 131 OF THE ACT WERE ISS UED TO SHRI RAVINDER YADAV AGAIN ON 28.01.2008 WHO WAS CONFRONTED WITH T HE INFORMATION OBTAINED AND HIS STATEMENT WAS RECORDED ON 08.05.2008. SHRI RAVINDER YADAV AFTER INITIAL DENIAL ADMITTED OPENING THESE ACCOUNTS. HE ACCEPTE D TO HAVE CHARGED MINOR COMMISSIONING FOR THE SAME, HOWEVER, HE STATED THAT HE COULD NOT RECOLLECT THE NAMES OF THE PARTIES TO WHOM THE DRAFTS OR PAY ORDE RS WERE ISSUED, EXCEPT, HE SPECIFICALLY NAMED THE ASSESSEE AS ONE OF THE BENEF ICIARIES OF DRAFTS/PAY ORDERS. ITA NOS. 1269, 1270 & 1271/DEL/2013 ASSESSMENT YEAR: 2006-07, 2007-08 AND 2008-09 NORTHERN STRIPS LTD., NEW DELHI PAGE 4 OF 22 THESE FACTS ARE FOUND RECORDED IN PARA 3.4 OF THE A SSESSMENT ORDER. IT WOULD BE APPROPRIATE AT THIS STAGE TO EXTRACT ALSO PARA 3.5 FROM THE ASSESSMENT ORDER HEREUNDER: 3.5 DETAILS WERE CALLED FOR FROM THE ICICI BANK, PUNJABI BAGH BRANCH, IN RESPECT OF DRAFTS AND PAY ORDERS REVEALE D M/S NORTHERN STRIPS LIMITED AS ONE OF THE MAJOR BENEFICIARIES OF THE DR AFTS AND PAY ORDER. NAMES OF BENEFICIARIES NAMELY, M/S SWASTIK PACKAGIN G, M/S SWASTIK PIPES LIMITED AND M/S SUPER PLASTIC COATS PRIVATE L IMITED CAME TO NOTICE DURING THE COURSE OF SUBSEQUENT ENQUIRIES. I NTERESTINGLY, OUT OF THE ABOVE MENTIONED CONCERNS, M/S NORTHERN STRIPS L IMITED, M/S SWASTIK PIPES LIMITED AND M/S SUPER PLASTIC COATS P RIVATE LIMITED ARE CONCERNS OF THE FAMILY OF ONE SH DEVKI NANDAN BANS AL, PUNJABI BAGH, NEW DELHI. THE FLAGSHIP CONCERN OF THIS FAMILY IS M /S SWASTIK PIPES LTD. THE OTHER COMPANIES RUN BY THE FAMILY INCLUDE M/S N ORTHERN STRIPS PVT. LTD. AND M/S SUPER PLASTIC COATS PVT. LTD. A TOTAL AMOUNT OF ABOUT RS.L0.39 CRORES WAS CREDITED TO THE BANK ACCOUNTS O F CONCERNS OF THE BANSAL GROUP. M/S SUPER PLASTIC COATS PVT. LTD IS R UN BY THE ELDER SON OF SH. DEVKI NANDAN BANSAL I.E SH. PRAVEEN BANSAL. THE OTHER DIRECTOR IN THE COMPANY IS THE WIFE OF SH. PRAVEEN BANSAL I.E S MT. SEEMA DEVI BANSAL. SUBSEQUENTLY, A SEARCH WAS CONDUCTED ON THE VARIOUS INDIVIDUALS AND COMPANIES OF THE BANSAL GROUP (ALSO SHOWN AS THE SWASTIK GROUP). THE PREMISES 1 CENTRAL MARKET PUNJA BI BAGH(W), NEW DELHI BELONGING TO ASSESSEE WAS ALSO COVERED. 4.5 RELYING ON THE STATEMENT OF SHRI RAVINDER YADAV DURING THE COURSE OF SEARCH AT 4 A, LIG FLATS, GROUND FLOOR, MADIPUR, NEW DELHI THE AO CONCLUDED THAT SH. RAVINDER YADAV HAD NOT DONE ANY GENUINE BU SINESS AND HAD MERELY PROVIDED ACCOMMODATION ENTRIES TO DIFFERENT PARTIES . THE STATEMENT EXTRACTED IN THE ASSESSMENT ORDER RELIED UPON BY THE AO IS EXTRA CTED FOR READY REFERENCE: 'Q.1 PLEASE IDENTIFY YOURSELF? ANS. I AM RAVINDER YADAV S/O SH. CS. YADAV RIO WZ- 245, MADIPUR VILL. AGED 36 YEARS ..... Q.2 WHAT IS SOURCE OF YOUR INCOME? ANS. PRESENTLY, I AM DOING BUSINESS OF CORROBORATE D BOARDS ON COMMISSION BASIS AND I AM EARNING RS.10 T O 15,000/- P.M. THIS BUSINESS I AM DOING FOR THE LAST 8 MONTHS. PRIOR TO THAT I USED TO WORK FOR SWASTIK PI PES LTD. GROUP WHICH INCLUDES SWASTIK PIPES LTD., NORTHERN S TRIPS LTD., AND SUPER PLASTIC COATS LTD. IN THEIR FOLD. I WAS MAINLY ITA NOS. 1269, 1270 & 1271/DEL/2013 ASSESSMENT YEAR: 2006-07, 2007-08 AND 2008-09 NORTHERN STRIPS LTD., NEW DELHI PAGE 5 OF 22 PROVIDING ACCOMMODATION ENTRIES IN THE FORM OF BANK DRAFTS/DEMAND DRAFTS AGAINST WHICH I AM RECEIVING C ASH PLUS COMMISSION @ RS.250/- PER LAC RUPEES. Q.3 SINCE, WHEN YOU ARE GIVING THIS ACCOMMODATION ENTRIES TO SWASTIK PIPES GROUPS COMPANIES AND WHO INTRODUCED YOU WITH THEM FOR CARRYING OUT THIS BUSI NESS PROVIDING ACCOMMODATION ENTRIES? ANS. I AM DOING THIS BUSINESS WITH THE SAME GROUP OF COMPANIES FOR THE PERIOD STARTING EARLY 2006 AND EN DING 2007. I DID BUSINESS WITH THIS GROUP FOR ABOUT TWO YEARS. I AM INTRODUCED BY ONE SH. CP AGGARWAL WHO USED TO B E ONE TENANT AT WZ-245 MADIPUR VILLAGE, NEW DELHI WITH ON E MR. MOHAN KUMAR, THE EMPLOYEE OF ONE OF THE GROUP COMPANIES. THIS BUSINESS OF PROVIDING ENTRIES WAS DISCONTINUED AS SOON AS I RECEIVED SUMMONS FROM INC OME TAX DEPARTMENT WITH REGARD TO QUERRIES ON MY BUSINE SS ACTIVITIES IN THE MONTH OF DECEMBER, 2007. Q.4 HO W MUCH WAS THE GROSS PROFIT FROM THE SAID BUSINESS DU RING WHICH IT WAS OPERATIONAL? ANS. THE GROSS RECEIPTS OF COMMISSION OF THE SAME BUSINESS WERE RS. 50,000/- APPROX. PER QUARTER. AFT ER MEETING MY EXPENSES, I USED TO FILE INCOME TAX RETU RN FOR THE NET PROFIT EARNED. Q.5 WHAT WAS THE CHANNEL OF RECEIPT OF CASH FOR WH ICH YOU WERE PROVIDING THE BANK DRAFT/DEMAND DRAFT/PAY ORDERS TO SAID GROUP COS. ANS. I USED TO RECEIVE CASH FROM THE EMPLOYEES NAM ELY SANJAY, TRISHUL, ABHAY, GHANSHYAM AND MOHAN KUMAR O R SAID GROUP OF COM PANES WHICH WAS DEPOSITED IN THE ICICI BANK PUNJABI BAGH, HSBC PUNJABI BAGH, STANDARD CHAR TERED BANK, PUBJABI BAGH AND PNB, GHAZIABAD AND ACCORDING LY PAY ORDER/DEMAND DRAFTS WERE GOT PREPARED BY MY SAI D BANK ACCOUNTS IN THE NAME OF M/S NORTHERN STRIPS LT D., SUPER PLASTIC COATS LTD. AND SWASTIK PACKAGING OR A NY OTHER COMPANIES AS PER THEIR DIRECTIONS. Q. 7 PLEASE GIVE DETAILS OF ALL THE BANK ACCOUNTS FROM WHICH YOU HAVE ROUTED THE ACCOMMODATION ENTRIES? ANS. MY ALE NOS. ARE 0155505224043, 31074142 AND I N 1C1C1 BANK PUNJABI BAGH. IN HSBC BANK, I HOLD BANK, I HOLD BANK ALE NO.4043 AND IN STANDARD CHARTERED BAN K, PUNJABI BAGH. I HAVE SAVING BANK ALE NO. 545- . 1-0 34554- 1 AND I HAVE BANK ALE IN PNB DAYAL NAGAR, GHAZIABAD . THE ALE NO. OF WHICH IS 394800872501. Q.9 ARE YOU ALSO CARRYING OUT SUCH ENTRIES BUSINES S FOR OTHER ENTITIES OTHER THAN THE SAID GROUP OF COMPANI ES? ITA NOS. 1269, 1270 & 1271/DEL/2013 ASSESSMENT YEAR: 2006-07, 2007-08 AND 2008-09 NORTHERN STRIPS LTD., NEW DELHI PAGE 6 OF 22 ANS. EXCEPT SAID GROUP OF COMPANIES NAMELY NORTHER N STRIPS LTD., M/S. SUPER PLASTIC COATS P LTD. AND SW ASTIK PACKAGING, I HAVE NOT DONE ANY BUSINESS OF ENTRY PR OVIDING WITH ANY OTHER ENTITY EXCEPT JINDAL POLYFILMS LTD. Q.L0 ARE YOU SURE THAT SWASTIK PACKAGING ALSO BELO NGS TO THE SAID GROUP (DEVKI NANDAN BANSAL)? ANS. YES, SWASTIK PACKAGING IS ALSO OWNED BY THE PROMOTERS OF NORTHERN STRIPS LTD. GROUP. Q.LL I AM SHOWING YOU A LEDGER (MARKED NEEL GAGAN) WHICH IS IN RED COLOURED MARKED BY OUR TEAM AS ANNE XURE A-I. IN THIS LEDGER, SO MANY ENTRIES HAVE BEEN DONE IN DIFFERENT NAMES. FOR EXAMPLE ON PAGE 14, YOU HAVE W RITTEN THE NAME OF PARTIES UNDER WHICH NAME AND STYLE YOU ARE CARRYING YOUR BUSINESS OF PROVIDING ACCOMMODATION E NTRIES FOR ANY OTHER BUSINESS STARTING FROM ASTHA ENTERPRI SES AND ENDING WITH BHAWANI FOODS AGAINST WHICH HUGE AMOUNT S (IN LACS) HAVE BEEN MENTIONED. PLEASE EXPLAIN THE NATUR E OF THESE ENTRIES? ANS. AS EXPLAINED ABOVE, I USED TO RECEIVE CASH FR OM THE EMPLOYEES OF NORTHERN STRIPS LTD. AND OTHER GROUP COMPANIES FOR MAKING PAY ORDERS FOR THEM' (GROUP OF COMPANIES) FROM MY BANK ACCOUNTS BUT THESE BANK DRA FTS WERE ADJUSTED BY THE SAME COMPANIES AGAINST THESE P ARTIES WHICH HAVE BEEN MENTIONED IN THIS LEDGER. AFTER PRE PARING THE PAY ORDER/BANK DRAFT, THE NAME OF THE PARTY WAS WRITTEN BY ME AT THE BACK OF THE PAY ORDER AGAINST WHICH THE AMOUNT OF THE PAY ORDER/DEMAND DRAFT WAS TO BE ADJUSTED. THESE CASH BY THE EMPLOYEES OF THE SAID COMPANIES TO ME FOR PREPARATION OF PAY ORDER THAT W HICH PAY ORDER TO BE ADJUSTED/ACCOUNTED FOR AGAINST WHIC H PARTY BY THE SAID COMPANIES. Q.13 DO YOU MAINTAIN REGULAR BOOKS OF ACCOUNTS? ANS. I HAVE NEVER MAINTAINED PROPER/REGULAR BOOKS OF ACCOUNTS FOR THE SAID ENTRY BUSINESS AS WELL AS MY OTHER BUSINESS. I AM FILING MY RETURN ON ESTIMATED BASIS. Q.14 UNDER WHICH NAME AND STYLE YOU ARE CARRYING Y OUR BUSINESS OF PROVIDING ACCOMMODATION ENTRIES FOR ANY OTHER BUSINESS? ANS. I AM DOING BUSINESS UNDER THE NAME & STYLE O F A1IS RAVINDER & CO. AND R. V TRADERS HAVING BOTHER OFFIC E AT 4- A, LIG FLATS, MADHUBAN ENCLAVE, ROHTAK ROAD, NEW DE LHI. Q.15 COULD YOU STATE THE AMOUNT FOR WHICH YOU HAVE MADE PAY ORDER/BANK DRAFT FOR THE ABOVE SAID COMPAN IES AFTER RECEIVING CASH FROM THEM DURING THE YEAR 2006 & 2007. ITA NOS. 1269, 1270 & 1271/DEL/2013 ASSESSMENT YEAR: 2006-07, 2007-08 AND 2008-09 NORTHERN STRIPS LTD., NEW DELHI PAGE 7 OF 22 ANS. AS FAR I REMEMBER THE AMOUNT FOR WHICH 1 MADE PAY ORDER/DEMAND DRAFT COULD BE RS.20 CRORES (APPROX) F OR TWO YEARS I.E. 2006 & 2007. Q.19 IT IS SEEN FROM THE PAPERS AVAILABLE IN YOUR PREMISES THAT A RESIDENTIAL PLOT NO.A-60 (MEASURING 200 SQ. YARDS) SHANKAR GARDEN NEW DELHI ALSO BELONGS TO YOU BUT YO U HAVE FAILED TO DISCLOSED THE SAME WHEN ASKED IN THE SAID STATEMENT ABOVE? ANS. THIS PROPERTY WAS PURCHASED ABOUT 18 YEARS BA CK FOR RS. 6500/- ON POWER OF ATTORNEY BUT THE PAPERS HAVE BEEN REGISTERED IN 2005 BUT THIS PROPERTY HAS BEEN ILLEGALLY POSSESSED BY ONE MR. MADAN LAL MARWAH AGAINST WHICH A SUIT HAS BEEN FILED IN HIGH COURT BY ME. THE PROPER TY BEING DISPUTED WAS NOT DISCLOSED IN STATEMENT ABOVE. Q.23 HAVE YOU FILED YOUR INCOME TAX RETURN OF INCO ME FOR ASSESSMENT YEAR 2007-08? ANS. YES I HAVE FILED MY RETURN OF INCOME VIDE REC EIPT NO.12554 DATED 26.03.2008 IN WARD 25(3) DECLARING INCOME AT RS.L,1 5,270/- Q.24. DO YOU WANT TO STATE ANYTHING ELSE? ANS. I DO NOT WANT TO STATE ANYTHING ELSE. ' 4.6 IN THE COURSE OF ASSESSMENT PROCEEDINGS THE DET AILS OF MONEY TRANSFERRED FROM THE BANK ACCOUNT OF SHRI RAVINDER YADAV TO THE BANK ACCOUNTS OF THE ASSESSEE WAS OBTAINED. THE ASSESSEE WAS REQUIRED T O FURNISH THE DETAILS OF TREATMENT OF RECEIPTS IN HIS REGULAR BOOKS OF ACCOU NTS. IN RESPONSE THERETO THE ASSESSEE AS PER THE ASSESSMENT ORDER VIDE ITS ORDER DT. 9.10.2010, 14.10.2010 SUBMITTED THAT THE AMOUNTS RECEIVED FROM THE BANK A CCOUNTS OF SHRI RAVINDER YADAV HAD BEEN ADJUSTED AGAINST THE SALES TO VARIOU S PARTIES. THE DETAILS OF THE MONEY TRANSFERRED FROM THE BANK ACCOUNT OF SHRI RAV INDER YADAV TO THE BANK ACCOUNTS OF THE ASSESSEE COMPANY AND THE PARTIES AG AINST WHOSE ACCOUNTS THE PAYMENTS HAD BEEN ADJUSTED HAVE BEEN EXTRACTED IN P ARA 4.1 OF THE ASSESSMENT ORDER AT PAGES 7.8 AND 9 AND THESE ARE REPRODUCED H EREUNDER FOR READY REFERENCE. 4.1. THE ASSESSEE VIDE ITS LETTERS DATED 9.12.2010 AND 14.12.2010 SUBMITTED THAT THE AMOUNTS RECEIVED FROM THE BANK ACCOUNTS OF SHRI RAVINDER YADAV HAS BEEN ADJUSTED A GAINST THE SALES TO VARIOUS PARTIES. A. Y. 2006-07 ANNEXURE-L PAY ORDER ISSUED BY THE HSBC BANK STATE D TO BE ON THE REQUEST OF ACCOUNT NO 140003757001 HE LD IN THE ITA NOS. 1269, 1270 & 1271/DEL/2013 ASSESSMENT YEAR: 2006-07, 2007-08 AND 2008-09 NORTHERN STRIPS LTD., NEW DELHI PAGE 8 OF 22 NAME OF M/S R V TRADERS IN FAVOR OF NORTHERN STRIP S LIMITED AND PARTICULARS OF AMOUNT RECEIVED BY NORTHERN STRI PS LIMITED ON ACCOUNT OF PARTIES. SRNO. DATE AMOUNT PO/TRANSFER DDNO. PARTY NAME 1 1114/2006 RS.200000/- DD 85511742 HARIOM TR ADERS 2 1114/2006 RS.200000/- DD 85511743 MANU PACK AGING 3 1114/2006 RS.300000/- DD 85511744 SHANKER P OLY PACK 4 IIL7/2006 RS.220000/- DD 85511766 SWASTIC P ACKAGING 5 111712006 RS.155000/- DD 85511767 SWASTIC P ACKAGING 6. 1117/2006 RS.125000/- DD 85511768 SWASTIC PACKAGING 7 1120/2006 RS.246510/- DD 85511787 NIKITA EN TERPRISES 8 1120/2006 RS.147502/- DD 85511788 NIKITA EN TERPRISES 9 1127/2006 RS.100000/- DD 85511836 PREM PACK ERS 10 1/3112006 RS.137934/- DD 85511884 ARVIND P OLY PLAST 11 1/3112006 RS.254914/- DD 85511885 SWASTIC PACKAGING 12 1131/2006 RS.2516651- DD 85511886 ARVIND P OLY PLAST 13 113112006 RS.180487/- DD 85511887 SWASTIC PACKAGING 14 113112006 RS. I 76452/- DD 85511888 SWETA ENTERPRISES 15 113112006 RS.201596/- DD 85511889 SWETA EN TERPRISES 16 113112006 RS.236987/- DD 85511890 SHREE SA I POLY PACK 17 113112006 RS.1599651- DD 85511891 SHREE SA I POLY PACK 18 2/20/2006 RS.1076451- DD 118097 CHOPRA LAM INATORS 19 3/3/2006 RS.2,23,682/- DD 118695 ARNRIT IN DUSTRIES 20 3/17/2006 RS.34,460/- PO 119039 SHUSH ANT JAIN 21 3/27/2006 RS.L,05,869/- DD 85512534 SAPANA PACKAGING 22 3/27/2006 RS.I,95,894/- DD 85512535 SAPANA PACKAGING 23 3/27/2006 RS.2,18,560/- DD 85512536 SAPANA PACKAGING 24 3/27/2006 RS.3,29,677/- DD 85512537 SAPANA PACKAGING 25 3/2712006 RS.20,000/- DD 119476 SHANTA KUM AR 26 3/28/2006 RS.3,96,461/- DD 85512556 SAPANA PACKAGING TOTAL RS.49,26,260/- A.Y.2006-07 ANN.I: PAY ORDER ISSUED BY THE HSBC BANK ON THE R EQUEST OF ACCOUNT NO. 140003757001 HELD IN THE NAME OF M/S RV. TRADERS I N FAVOR OF NORTHERN STRIPS PVT. LTD. AND PARTICULARS OF AMOUNT RECEIVE D BY NORTHERN STRIPS PVT. LTD. ON ACCOUNT OF PARTIES. SR NO. DATE DDNO. AMOUNT PARTY NAME 1 2/312006 557990 RS.L,23,951/- SRI PACKWELL INDUSTRIES 2 2/3/2006 557991 RS.I ,21 ,944/- SRI PACKWELL INDUSTRIES 3 2115/2006 001291 RS.2, I 0,000/- GOE L TRADERS 4 2115/2006 001292 RS.90,000/- GOEL TRA DERS 5 2/22/2006 001366 RS.I,68,970/- GOEL TR ADERS 6 3/9/2006 001541 RS.20,400/- SALE OF OLD SCRAP TYRES 7 3/1112006 001575 RS.85,280/- GOEL TRADERS TOTAL RS.8,20,545/- A.Y.2006-07 PAY ORDER ISSUED BY THE PUNJAB NATIONAL BANK ON TH E REQUEST OF ACCOUNT 00.3948008700000250 HELD IN THE NAME OF M/S RV. TR ADERS IN FAVOR OF NORTHERN STRIPS PVT. LTD. AND PARTICULARS OF AMOUN T RECEIVED BY NORTHERN STRIPS PVT. LTD. ON ACCOUNT OF PARTIES. SR.NO. DATE AMOUNT PO/TRANSFER PA RTY NAME 1 02104/2006 RS.L ,20,027/- DD SHIVAM POLY PACK ADHESIVES 2 02/04/2006 RS.7,56,705/- DD SHIVAM POLY PAC K ADHESIVES TOTAL RS.8,76,732/- A. Y .2006-07 ITA NOS. 1269, 1270 & 1271/DEL/2013 ASSESSMENT YEAR: 2006-07, 2007-08 AND 2008-09 NORTHERN STRIPS LTD., NEW DELHI PAGE 9 OF 22 ANNEXURE-2 PAY ORDER ISSUED BY THE ICICI BANK STAT ED TO BE ON THE REQUEST OF ACCOUNT NO 015505001820 HELD IN THE NAM E OF M/S RV. TRADERS IN FAVOR OF NORTHERN STRIPS LIMITED AND PAR TICULARS OF AMOUNT RECEIVED BY NORTHERN STRIPS LIMITED ON ACCOUNT OF P ARTIES. SRNO. DATE AMOUNT PO/TRANSFER DDNO. PARTY NAME 1 04.07.2005 7,00,000/- DO 91559369 SHVAM POL Y PLAST 2 04.07.2005 2,50,000/- DO 91559376 SHYAM POL Y PLAST 3 05.07.2005 4,00,000/- DO 91559393 AERO PLAS TIC 4 03.09.2005 4,00,000/- DD 91559996 SUDHIR EN TERPRISES 03.08.2005 2,50,000/- DO 91559997 GULATI & C O. 6 05.09.2005 4,00,000/- DD 85510004 JANISH TR ADERS 7 05.09.2005 4,00,000/- DD 85510005 JANISH TR ADERS 8 04.10.2005 2,00,000/- DD 85510419 CHETAN PA CKAGING 9 04.10.2005 1,00,000/- DD 85510420 CHETAN PA CKAGING 10 14.01.2006 50,000/- DD 117735 VERMA LAMINA TES 11 14.01.2006 37,826/- DD 117736 VERMA LAMINA TES 12 14.01.2006 41,227/- DD 117737 RAM KISHORE C HOPRA & CO. 13 14.01.2006 90,000/- DD 117738 RAM KISHORE C HOPRA & CO. 14 14.01.2006 1,00,000/- DD 85511739 GAURAV E NTERPRISES 15 14.01.2006 1,63,533/- DD 85511740 GAURAV E NTERPRISES ]6 20.01.2006 3,46,723/- DD 85511790 NIKITA E NTERPRISES 17 20.01.2006 2,59,265/- DD 85511791 NIKITA E NTERPRISES 18 27.01.2006 1,58,000/- DD 85511837 ROZY WELL PACK ENTERPRISES 19 27.01.2006 1,76,000/- DD 85511838 ROZY WELL PACK ENTERPRISES 20 27.01.2006 2,66,000/- DD 85511839 ROZY WELL PACK ENTERPRISES 21 27.01.2006 1,32,000/- DD 85511842 ARUN POL Y PLAST 22 27.01.2006 1,68,000/- DD 85511843 ARUN POL Y PLAST TOTAL RS.50,88,574/- 4.7 ACCORDINGLY CONSIDERING THE FACT THAT A TOTAL A MOUNT OF RS.1,17,12,111/- WAS RECEIVED BY THE ASSESSEE FROM THE BANK ACCOUNTS OF SHRI RAVINDER YADAV. THE ASSESSING OFFICER REQUIRED THE ASSESSEE TO FURN ISH EVIDENCES IN ORDER TO PROVE THE GENUINENESS OF THE SALES TO THESE PARTIES VIDE ORDER SHEET ENTRY DT. 9.10.2010. IN RESPONSE TO THE SAID QUERY THE ASSE SSEE FILED ITS DETAILED REPLY VIDE LETTER DT. 10.12.2010 WHICH HAS BEEN EXTRACTED IN THE ASSESSMENT ORDER AT PAGES 9 AND 10, WHICH IS EXTRACTED FOR READY REFERE NCE. 4.2 .. '1. WITH REFERENCE TO YOUR QUERY WITH REGARD TO PA RTICULARS TOWARDS DELIVERY CHALLAN, OCTROI RECEIPT IN RESPECT OF THE SALES MADE, WE HAVE TO SUBMIT THAT WHEN EVER THE SALE IS MADE FOR BASIS THE COMPLETE PARTICULARS WITH REGARD TO RR / MR IS BEING KEPT BY THE ASSESSEE. HOWEVER, IN CASE THE GOODS ARE BEING SOLD EX FACTOR Y/ EX OFFICE THE DELIVERY OF THE GOODS IS BEING TAKEN BY THE CUSTOME RS THEMSELVES FROM THE BUSINESS PREMISES AND AS SUCH THE SELLER D OES NOT HAVE ANY RECORD OF DISPATCH. SINCE, IT IS UP TO THE CUSTOMER S IN WHICH MANNER HE TRANSPORT THE GOODS. IN VIEW OF THE ABOVE FACTS THE ASSESSEE HAVE MAINTAINED THE COMPLETE RECORD OF DELIVERY PARTICU LARS WHEN THE GOODS ARE SOLD ON FOR BASIS AND THE SAME COULD BE VERIFIED. 2. MOREOVER, THE ASSESSEE IS MAINTAINING COMPLETE QUANTITATIVE RECORD OF THE GOODS PURCHASED AS WELL AS SOLD AS IS BEING REFLECTED IN THE TAX AUDIT REPORT AS WELL AS IN THE ANNUAL ACCOU NTS BEING FILED BY ITA NOS. 1269, 1270 & 1271/DEL/2013 ASSESSMENT YEAR: 2006-07, 2007-08 AND 2008-09 NORTHERN STRIPS LTD., NEW DELHI PAGE 10 OF 22 THE ASSESSEE ALONG WITH THE RETURN OF INCOME AND TH US, ALL THE SALES AND PURCHASES ARE FULLY VOUCHED AND VERIFIABLE FROM THE STOCK RECORD MAINTAINED THE ASSESSEE. 3. . WE ARE ALSO FILLING HEREWITH THE QUANTITY WISE DETAILS OF PURCHASES MADE FROM THE DIFFERENT PARTIES AS WELL AS THE QUAN TITY WISE SALES MADE TO THE DIFFERENT PARTIES DURING THE YEAR UNDER CONSIDERATION TO SUBSTANTIATE THAT NO PURCHASES / SALES HAVE BEEN MA DE OUT OF THE BOOKS OF ACCOUNTS. 4. THAT YOUR GOOD-SELF HAVE POINTED OUT THAT CERTAI N PAYMENTS RECEIVED BY THE ASSESSEE FROM DIFFERENT PARTIES WAS OUT OF THE DD'S MADE FROM MR. RAVINDER YADAV AND HIS CONCERNS. IN THIS REGARD, WE HAVE TO STATE THAT AS A POLICY MATTER THE ASSESSEE DOES NOT SELL GOODS AGAINST CASH & INSIST THE CUSTOMERS TO MADE PAYMENT THROUGH BANKING CHANNELS ONLY. IT IS POSSIBLE THAT SOME OF THE CUSTOMERS RIGHT HAVE ARRANGED DD FROM HIM. SO FAR AS THE ASSESSEE I S CONCERNED THEY HAVE SOLD THE GOODS TO THE PARTIES WHO HAVE MADE PA YMENT THROUGH BANKING CHANNELS OUT OF THE STOCK IN TRADE DULY REC ORDED IN THE BOOKS OF ACCOUNTS AT SIMILAR MARKET RATES WITHOUT REGARD TO THE FACT THAT THE PURCHASER HAVE MADE PAYMENT BY CHEQUES, BANK DRAFT, DEMAND DRAFT, MANGE R'S CHEQUE ETC. 5. THAT THE ASSESSEE HAS ALREADY FILED THE DETAIL OF PURCHASES MADE AGAINST 'C' FORM FROM JINDAL POLYMERS LTD AS WELL A S THE GOODS COVERED UNDER VAT CHARGED BY THEM. 6. WE ARE ALSO ENCLOSING HEREWITH THE COPIES OF S ALES TAX RETURN FILED TO SUBSTANTIATE THAT ALL THE SALES MADE HAVE DULY BEEN FURNISHED WITH THE SALES TAX DEPARTMENT ALSO. 7. THAT THERE IS NO BAR IN SELLING THE GOODS IN C ASH AND EVEN IN RECORDING THE COMPLETE NAME & ADDRESS OF THE PERSON WHO PURCHASES THE GOODS BY PAYING CASH AND AS SUCH NON RECORDING OF ADDRESS OF THE PERSONS WHO HAVE PURCHASED THE GOODS DOES NOT I N ANY CASE VIOLATES THE PROVISIONS OF INCOME TAX ACT. IN-FACT IN THOSE CASES WHERE A PART OF SALES COULD NOT BE VERIFIED FROM TH E PERSONS, WHO HAVE PURCHASED THE GOODS. THE ONLY MATTER FOR CONSI DERATION IN THOSE CASES WHETHER THE SALES MADE TO THOSE PERSONS IS BE LOW THE PRICE WHICH HAS BEEN CHARGED FROM OTHER PERSONS WHOSE SAL ES ARE VERIFIABLE. 8. IN VIEW OF THE ABOVE FACTS NO WRONG INFERENCE CO ULD BE DRAWN WITH REGARD TO THE SALES MADE TO THE PARTIES WHO HAVE PU RCHASED GOODS BY FURNISHING DD OBTAINED FROM MR. RAVINDER YADAV O R HIS FIRM. ' 4.8 CONSIDERING THE ABOVE, THE ASSESSING OFFICER PR OCEEDED TO MAKE AN ADDITION OF RS.1,17,12,101/- ON THE FOLLOWING REASO NS. 4.3 IN THIS CONTEXT, IT IS ALSO RELEVANT TO NOTIC E THE CONDUCT OF THE ASSESSEE DURING THE POST SEARCH PROCEEDINGS. THE SEARCH IN THE CASE OF THE ASSESSEE WAS CONDUCTED ON THE BASIS OF THE INFORMATION THAT THE ASSESSEE COMPANY AND THE ASSOCIATED CONCERNS HAVE ITA NOS. 1269, 1270 & 1271/DEL/2013 ASSESSMENT YEAR: 2006-07, 2007-08 AND 2008-09 NORTHERN STRIPS LTD., NEW DELHI PAGE 11 OF 22 BEEN TAKING ACCOMMODATION ENTRIES FROM SH. RAVINDER YADAV. IN ORDER TO VERIFY, THESE ALLEGATIONS THE ADIT(INV.), UNIT-IH(3), NEW DELHI H AD ISSUED DETAILED QUESTIONNAIRE TO THE ASSESSEE COMPA NY VIDE LETTER DATED 11.11.2008. FURTHER, OPPORTUNITY LETTERS WERE SENT ON 17.11.2008. ANOTHER QUESTIONNA IRE DATED 28.11.2008 WAS SENT TO THE ASSESSEE BY AD IT (INV), UNIT-HI (3), NEW DELHI. HOWEVER, THE ASSESSE E DID NOT RESPOND TO ANY OF THE QUERIES IN ORDER TO PREVE NT ANY FURTHER INVESTIGATION BY THE INCOME TAX DEPARTMENT. 4.4 THE ASSESSEE HAS BEEN UNABLE TO FURNISH ANY PROOF TO ESTABLISH THE PHYSICAL SALES OF GOODS TO T HE PARTIES CONCERNED. NO, DETAILS REGARDING THE TRANSPORTATION AND DELIVERY CHALLANS HAVE BEEN FILE D. THE CLAIM OF THE ASSESSEE THAT SOME ITS CUSTOMERS MIGHT HAVE ARRANGED THE DRAFTS AND PAY ORDERS FROM SH. RAVINDER YADAV ARE WITHOUT ANY BASIS. IT CAN NO T BE A MERE A COINCIDENCE THAT CRORES OF RUPEES FROM SEVERAL PARTIES WOULD BE ROUTED THROUGH THE BANK ACCOUNTS OF SH. RAVINDER YADAV TO REACH THE ASSESSE E AND THE OTHER CONCERNS OF THE FAMILY MEMBERS OF THE PROMOTERS OF THE ASSESSEE COMPANY. FURTHER, SH. RAVINDER YADAV HAS CATEGORICALLY STATED THAT HE USE D TO MAKE THE BANK DRAFTS OUT OF THE CASH RECEIVED FR OM THE EMPLOYEES OF THE CONCERNS RUN BY THE FAMILY MEMBERS OF THE PROMOTERS OF THE ASSESSEE COMPANY. 4.5 IN VIEW OF THE ABOVE FACTS IT IS CLEAR THAT TH E RECEIPTS FROM THE BANK ACCOUNTS OF SH. RAVINDER YAD AV ARE UNEXPLAINED AND NOT AGAINST GENUINE SALES. THES E RECEIPTS ARE TREATED AS CREDITS INTO THE ACCOUNT OF THE ASSESSEE AGAINST NON EXISTENT SALES. THUS THE TOTAL RECEIPTS ARE ADDED TO THE TAXABLE INCOME OF THE ASSESSEE UNDER THE HEAD 'INCOME FROM OTHER SOURCES. ' PENALTY PROCEEDINGS U/S 271 (1)( C) OF THE INCOME T AX ACT, 1961 ARE SEPARATELY INITIATED. (ADDITION OF RS.L,17,12,111/-) 5. AGGRIEVED BY THIS, THE ASSESSEE WENT IN APPEAL B EFORE THE LD.CIT(APPEALS) WHO SUMMARIZED THE FACTS AS UNDER: - 1. THIS APPEAL HAS BEEN FILED AGAINST THE ORDER DT . 30.12.2010 U/S 143(3) R.W.S. 153A PASSED BY THE ACI T, CC 13, NEW DELHI. INVESTIGATION REVEALED THAT ONE SHRI RAVINDER YADAV WAS MAINTAINING SEVERAL BANK ACCOUNT S AND DEPOSITING HUGE AMOUNTS OF CASH THEREIN. DETAI LS ITA NOS. 1269, 1270 & 1271/DEL/2013 ASSESSMENT YEAR: 2006-07, 2007-08 AND 2008-09 NORTHERN STRIPS LTD., NEW DELHI PAGE 12 OF 22 COLLECTED FROM THE BANK IN RESPECT OF DRAFT AND PAY ORDERS ISSUED FROM THE BANK ACCOUNTS OF SHRI YADAV REVEALE D THE FOLLOWING BENEFICIARIES NAMELY M/S NORTHERN STRIPS LTD., M/S SWASTIK PACKAGING AND M/S SUPER PLASTIC COATS PVT.LTD. OUT OF THESE M/S NORTHERN STRIPS LTD., M /S SWASTIK PIPES LIMITED AND M/S SUPER PLASTIC COATS PVT. LIMITED BELONGED TO THE FAMILY OR ONE SH DEVKI NAND AN BANSAL OF PUNJABI 8AGH. NEW DELHI. THE FLAGSHIP CON CERN OR THIS FAMILY IS M/S SWASTIK PIPES LTD. OTHER COMP ANIES RUN BY THE FAMILY INCLUDE M/S NORTHERN STRIPS PVT. LTD. AND M/S SUPER PLASTIC COATS PVT. LTD. A TOTAL AMOUNT OF ABOUT RS.L0.39 CRORE WAS FOUND TO BE CREDITED TO THE BAN K ACCOUNTS OR DIFFERENT CONCERNS OF THE BANSAL GROUP. SUBSEQUENTLY A SEARCH WAS CONDUCTED ON THE VARIOUS INDIVIDUALS AND COMPANIES OF THE BANSAL GROUP (ALSO KNOWN AS THE SWASIIK PIPES GROUP). THE PREMISES A T I, CENTRAL MARKET, PUNJABI BAGH (W), NEW DELHI BELON GING TO APPELLANT WAS ALSO COVERED. NOTICE U/S 153A WAS ISS UED ON 30.12.2009. LN RESPONSE TO THE NOTICE THE APPE LLANT FILED RETURN OR INCOME DECLARING TOTAL INCOME OR RS.68.60.683/- ON 28.1.2010. NOTICE U/S 143(2) WAS ISSUED ON 10.2.2010 CALLING FOR DETAILS. NOTICE U/S 142( I) ALONG WITH QUESTIONNAIRE WAS ISSUED ON 12.8.2010. THESE NOTICES WERE DULY COMPLIED WITH AND NECESSAR Y DETAILS FILED. THE CASE WAS ASSESSED AT AN INCOME O F RS.5,07,08,428/- AFTER MAKING CERTAIN ADDITIONS AND DISALLOWANCES INCLUDING UNEXPLAINED CREDITS AMOUNT ING TO RS. 1,17,12,111/- & RS.2,82,92,872/- AND UNRECONCI LED PURCHASES AMOUNTING TO RS.37,56,398/-. THE APPELLAN T IS IN APPEAL AGAINST THIS ORDER. 3.1 . FACTS OF THE CASE ARC THAT SH RAVINDER Y ADAV GAVE A STATEMENT U/S 132(4) THAT HE WAS EARLIER WORKIN G FOR SWASTIK PIPES GROUP AND MAINLY PROVIDING ACCOMMODAT ION ENTRIES IN THE FORM OF DEMAND DRAFTS/ PAY ORDERS AG AINST CASH AND RECEIVING COMMISSION OF RS.250 PER LAKH TH EREON. 'THE BENEFICIARIES OF THESE DEMAND DRAFTS / PAY ORD ERS PURCHASED BY SH RAVINDER YADAV WERE THE APPELLANT M /S NORTHERN STRIPS LTD., M/S SUPER PLASTIC COATS PVT . LTD. AND A CONCERN BY THE NAME AND STYLE OF M/S SWASTIK PACKAGING WHOSE PROPRIETOR WAS ONE SH LALIT B. SHAR MA, AN EMPLOYEE OR SWASTIK PIPES GROUP. IN THE SAME STATEMENT SH. YADAV ALSO CLAIMED THAT THE REAL BENE FICIARY OF M/S SWASTIK PACKAGING WAS SWASTIK PIPES GROUP IT SELF. SH YADAV FURTHER STATED THAT HE WAS PREPARING THE DEMAND DRAFTS/PAY ORDERS AT THE INSTRUCTION OF THE BENEFICIARIES AGAINST CASH RECEIVED FROM THEIR EMP LOYEES AND ALSO WRITING THE NAMES OF DIFFERENT PARTIES AT THE BACK ITA NOS. 1269, 1270 & 1271/DEL/2013 ASSESSMENT YEAR: 2006-07, 2007-08 AND 2008-09 NORTHERN STRIPS LTD., NEW DELHI PAGE 13 OF 22 OR THE INSTRUMENT AND MAKING ENTRIES IN THE LEDGER ACCOUNT. SH. YADAV ALSO ADMITTED TO DOING BUSINESS UNDER THE NAME AND STYLE OF M/S YADAV & CO. AND M/S R V TRADERS BUT DID NOT MAINTAIN PROPER OR REGULAR BOO KS OF ACCOUNTS FOR SUCH BUSINESS. THE TOTAL DEMAND DRAFTS / PAY ORDERS PURCHASED ON BEHALF OF SWASTIK PIPES GROUP WAS ABOUT RS.20 CRORE IN FY 2006 AND 2007. ON THE OTHER HAND SH PRAVEEN KUMAR BANSAL, DIRECTOR OF THE APPELLANT COMPANY IN HIS STATEMENT U/S 132(4) SAID THAT HE W AS NOT ABLE TO RECOLLECT THE NAME SH RAVINDER YADAV AND AL SO DID NOT RECOLLECT THE TRANSACTIONS. HE FURTHER SAID T HAT M/S SWASTIK PACKAGING COULD BE ONE OF THE PARTIES TO WH OM SALES OF POLYFILMS MADE. 3.2 THE APPELLANT CLAIMED DURING THE ASSESSMENT PROCEEDINGS THAT THE DEMAND DRAFTS/ PAY ORDERS RECE IVED FROM SH RAVINDER YADAV WAS AGAINST CASH SALES TO VARIOUS PARTIES. THE CASH RECEIVED FROM VARIOUS PAR TIES AGAINST SALES WAS GIVEN TO RAVINDER YADAV FOR MAKIN G DEMAND DRAFTS/ PAY ORDER WHICH WERE DEPOSITED IN TH E BANK ACCOUNT OF THE APPELLANT COMPANY. ALL SUCH REC EIPTS ARE DULY RECORDED IN THE BOOKS OR ACCOUNTS AS SALES AND OFFERED TO TAX AS PART OR THE SALES ALREADY DISCLOS ED IN THE AUDITED P & L ACCOUNT. THESE SALES WERE ALSO DULY VOUCHED AND DETAILS AVAILABLE IN THE STOCK RECORDS. THE APPELLANT FILED DETAILS OF PURCHASES AND SALES FRO M/TO DIFFERENT PARTIES DURING THE COURSE OF ASSESSMENT, COPIES 0 F SALES TAX RETURNS AND OTHER RECORDS, ETC. 3.3 DURING ASSESSMENTS, IT WAS HELD BY THE REVEN UE THAT PHYSICAL SALES OF THE GOODS COULD NOT BE ESTABLISHE D AND, THEREFORE THE RECEIPTS WERE UNEXPLAINED DEPOSITS AN D NOT AGAINST THE SALES AS CLAIMED BY THE APPELLANT. IT W AS ALSO HELD BY THE REVENUE THAT M/S SWASTIK PACKAGING WAS A BENAMI CONCERN FLOATED BY THE SWASTIK GROUP TO ROUT E BOGUS TRANSACTIONS AND GOODS CLAIMED TO BE SOLD TO M/S SWASTIK PACKAGING WERE NEVER ACTUALLY SOLD OR DELIV ERED. 5.1 THE ASSESSEE BEFORE THE LD.CIT(APPEALS) FILED W RITTEN SUBMISSIONS ALONG WITH DETAILS OF THE TRANSACTIONS PERTAINING TO SHRI RAVINDER YADAV. THESE DETAILS AND ARGUMENTS WERE SENT TO THE ASSESSING OFFICER FO R COMMENTS ON 3.1.2012 AND IN RESPONSE THERETO THE ASSESSING OFFICER VIDE HIS REPORT DT. 5.3.2012 STATED THAT THERE WAS NOTHING NEW IN THE SUBMISSIONS OF T HE ASSESSEE AS THEY HAD ALREADY BEEN CONSIDERED AT THE TIME OF THE ASSESSME NT PROCEEDINGS. 5.2 THE CIT(A) CONSIDERING THE REMAND REPORT AND THE REPLY OF THE ASSESSEE DISMISSED GROUND NOS. 1 TO 7 RAISED WHEREBY THE VAL IDITY OF THE PROCEEDINGS ITA NOS. 1269, 1270 & 1271/DEL/2013 ASSESSMENT YEAR: 2006-07, 2007-08 AND 2008-09 NORTHERN STRIPS LTD., NEW DELHI PAGE 14 OF 22 BEFORE THE LD.CIT(APPEALS) WERE CHALLENGED IN APPEA L. HOWEVER CONSIDERING THE SUBMISSIONS ADVANCED ON BEHALF OF THE ASSESSEE QUA GROUND NO. 9 THE CIT(A) DELETED THE ADDITION MADE ON MERIT AND ACCEPTED THE EXPLANATION OF THE ASSESSEE. 6. AGGRIEVED BY WHICH THE REVENUE IS IN APPEAL BEFO RE US. 7. SHRI GUNJAN PRASAD, LD.CIT, D.R. VEHEMENTLY RELY ING UPON THE ASSESSMENT ORDER AND THE STATEMENT RECORDED OF SHRI RAVINDER Y ADAV CONTENDED THAT IN THE PECULIAR FACTS AND CIRCUMSTANCES WHERE THE ASSESSIN G OFFICER MADE THE ADDITION THE SAME DESERVES TO BE UPHELD AND THE IMPUGNED ORD ER ACCORDINGLY BE SET ASIDE AS SHRI RAVINDER YADAV HAS SPECIFICALLY NAMED THE ASSESSEE COMPANY AS A BENEFICIARY FOR WHOSE BENEFIT HE WAS DEPOSITING AN D GETTING DEMAND DRAFTS/BANK DRAFTS FOR WHICH HE WAS RECEIVING COMMI SSION. 8. SHRI VED JAIN, THE LD.COUNSEL FOR THE ASSESSEE H EAVILY RELYING UPON THE IMPUGNED ORDER SUBMITTED THAT THE DEPARTMENTAL APPE AL DESERVES TO BE DISMISSED. INVITING ATTENTION TO THE IMPUGNED ORDE R IT WAS SUBMITTED THAT THE FINDINGS ON FACTS HAVE NOT BEEN REBUTTED BY THE REV ENUE. REFERRING TO THE SAME IT WAS CONTENDED THAT IN FACT ALL THE DOUBTS OF THE AO HAVE BEEN FULLY ADDRESSED IN THE IMPUGNED ORDER. INVITING ATTENTION TO THE E XPLANATION OFFERED BEFORE THE AO IN THE ASSESSMENT PROCEEDINGS AND THE SUBMISSION S BEFORE THE CIT(A) ON WHICH REMAND REPORT WAS AVAILABLE IT WAS HIS ARGUME NT THAT EVEN THE AO HAS SAID THAT NOTHING NEW HAS BEEN ARGUED. APART FROM THE ARGUMENT THAT ON THE SAME FACTS VIEW TAKEN BY A HIGHER FORUM WHERE THERE IS NO REBUTTAL ON FACTS SHOULD BE FOLLOWED IT WAS ALSO SUBMITTED THAT CONS IDER THE FACTS EVEN IF THE WORST CONCLUSIONS AGAINST THE ASSESSEE ARE DRAWN, I N SUCH A SITUATION ALSO AT BEST IT CAN BE CONCLUDED THAT SH. RAVINDER YADAV WA S ACCEPTING CASH ON BEHALF OF THE ASSESSEE AND DEPOSITING THE SAME IN HIS BANK ACCOUNT AND THE SAID CASH WAS BEING USED FOR GETTING BANK DRAFT/DEMAND DRAFTS MADE. THESE FACTS ARE ACCEPTED BY THE ASSESSEE AND HAVE BEEN FOUND TO HAV E BEEN RECORDED AND ACCEPTED IN THE BOOKS OF ACCOUNTS OF THE ASSESSEE A S THESE WERE AS A RESULT OF SALES MADE BY THE ASSESSEE WHO WAS UNDER THE MISGUI DED BELIEF THAT EVEN FOR ITA NOS. 1269, 1270 & 1271/DEL/2013 ASSESSMENT YEAR: 2006-07, 2007-08 AND 2008-09 NORTHERN STRIPS LTD., NEW DELHI PAGE 15 OF 22 SALES THE LAW FORBADE HIM TO ACCEPT CASH AND THE MO NEY HAD TO BE RECEIVED ONLY THROUGH THE BANKING CHANNELS. CARRYING US THROUGH THE ASSESSMENT ORDER IT WAS HIS SUBMISSION THAT IN THE STATEMENT RECORDED BY TH E ASSESSING OFFICER EXTRACTED IN THE IMPUGNED ORDER THE ACCEPTANCE OF THE DRAFTS FOR SALES AFFECTED IS ACCEPTED BY THE ASSESSEE AND REFLECTED BY THE ASSESSEE IN HI S BOOKS OF ACCOUNTS. ACCORDINGLY NOTHING TURNS ON THE STATEMENT RECORDED AS THE ASSESSEE ACCEPTS IT. SPECIFIC ATTENTION WAS INVITED TO PAGE 6, PARA 4 OF THE ASSESSMENT ORDER, WHEREIN, THIS FACT HAS BEEN ACCEPTED BY THE ASSESSE E BEFORE THE ASSESSING OFFICER ALSO AND IN FACT THIS IS RECORDED THEREIN T HAT THE ASSESSEE HAS ACCEPTED THAT THE AMOUNTS HAVE BEEN ADJUSTED AGAINST SALES T O VARIOUS PARTIES. FOR READY REFERENCE THE SAME IS EXTRACTED HEREUNDER FROM THE ASSESSMENT ORDER: 4. DURING THE COURSE OF ASSESSMENT PROCEEDINGS THE DETAILS OF MONEY TRANSFERRED FROM THE BANK ACCOUNT OF SHRI RAV INDER YADAV TO THE BANK ACCOUNTS OF THE ASSESSEE WAS OBTAINED. THE ASSESSEE WAS ASKED TO FURNISH THE DETAILS OF TREATMENT OF TH E RECEIPTS IN HIS REGULAR BOOKS OF ACCOUNTS. THE ASSESSEE VIDE ITS LETTERS DT. 9.12.2010 AND 14.12.2010 SUBMITTED THAT THE AMOUNTS RECEIVED FROM THE BANK ACCOUNTS OF SHRI RAVINDER YA DAV HAVE BEEN ADJUSTED AGAINST THE SALES TO VARIOUS PAR TIES. ( EMPHASIS OURS). 8.1 THE EXPLANATION OFFERED TO THE ASSESSING OFFICE R VIDE LETTER DATED 9.12.2010 AND 14.12.2010 REFERRED TO BY THE ASSESSE E WHICH HAS BEEN EXTRACTED IN PARA 4 OF THE ASSESSMENT ORDER WHEN JUXTAPOSED W ITH THE EXPLANATION OFFERED IN LETTER DT. 10.12.2010 ALSO EXTRACTED BY THE ASSE SSING OFFICER IN PARA 4.2 OF HIS ORDER IT WAS SUBMITTED FULLY MET THE OBJECTIONS OF THE AO. IT WAS HIS SUBMISSION THAT DESPITE RECORDING THESE THE AO HAS IGNORED THE M WHILE DRAWING A CONCLUSION AGAINST THE ASSESSEE. HEAVILY RELYING U PON THE SUBMISSIONS ADVANCED BEFORE THE AO AND THE CIT(APPEALS) IT WAS SUBMITTED THAT THE IMPUGNED ORDER DESERVES TO BE UPHELD. REFERRING TO THE SAME IT WA S SUBMITTED THAT THE AO HAS EXTRACTED CERTAIN PORTIONS IN THE IMPUGNED ORDER AN D THE COMPLETE FACTS AND EVIDENCES WHICH WERE RELIED UPON BEFORE THE AO AND THE EVIDENCES WHICH WERE FILED BEFORE THE CIT(A) CONFRONTED IN THE REMAND RE PORT ARE AVAILABLE AT PAGES ITA NOS. 1269, 1270 & 1271/DEL/2013 ASSESSMENT YEAR: 2006-07, 2007-08 AND 2008-09 NORTHERN STRIPS LTD., NEW DELHI PAGE 16 OF 22 370 TO 392 WERE HEAVILY RELIED UPON. ATTENTION WAS INVITED TO THE COPY OF THE REMAND REPORT AVAILABLE AT PAGES 393 TO 403 AND THE REJOINDER TO REMAND REPORT AT PAGES 404 TO 406 ALSO WHERE CONSIDERED REFERRED TO BY HIM. IT WAS REITERATED THAT EVEN THE AO IN THE REMAND REPORT HAS MERELY ST ATED THAT THE ASSESSEE HAS SAID NOTHING NEW BEFORE THE CIT(A) APART FROM WHAT WAS STATED BEFORE HIM IN THE COURSE OF ASSESSMENT PROCEEDINGS. IN THE FACE OF THE CLEAR STAND IT WAS HIS SUBMISSION THAT IN THE FACTS OF THE PRESENT CASE IN FACT THE ASSESSEE HAS BEEN OVERCAUTIOUS AND HAS BEEN UNDER THE MISTAKEN BELIEF THAT UNDER THE LAW HE COULD NOT MAKE CASH SALES AND GETTING CONFUSED WITH THE PROVISIONS OF S.40A(3) WHICH FROWNS UPON CASH PURCHASES IF THE AMOUNT EXCE EDS RS.20,000/- HE GOT THE CASH RECEIVED FROM SALES DEPOSITED IN THE BANK AND THEN RECORDED IN HIS BOOKS OF ACCOUNTS AS RECEIPT OF DRAFTS/DEMAND ORDERS ETC. AG AINST SALES MADE. IT WAS SUBMITTED THAT THE FACT THAT THE TRANSACTIONS ARE G ENUINE AND HAVE NOT BEEN DOUBTED IS BORNE OUT FROM THE FACT THAT THE TRADING A/C IT WAS SUBMITTED HAS NOT BEEN TINKERED WITH. THE QUANTITATIVE DETAILS AND T HE TRADING A/C ALSO IT WAS SUBMITTED HAS NOT BEEN TINKERED WITH. IN THESE PEC ULIAR FACTS AND CIRCUMSTANCES IT WAS HIS SUBMISSION THAT THE FINDING OF FACT ARRI VED AT IN THE IMPUGNED ORDER DESERVES TO BE UPHELD. 8.2 IN REPLY THE LD.CIT, D.R. REITERATED HIS STAND THAT THE IMPUGNED ORDER BE SET ASIDE AND THE ISSUE RESTORED TO THE AO FOR CONS IDERING THE ISSUE IN THE ALTERNATIVE THE ASSESSMENT ORDER BE UPHELD. 9. WE HAVE HEARD THE RIVAL CONTENTIONS AND PERUSED THE MATERIAL AVAILABLE ON RECORD. IT IS SEEN THAT THE FINDING ARRIVED AT HAS NOT BEEN REBUTTED ON FACTS AS NOTHING HAS BEEN PLACED BEFORE US TO SHOW THAT T HE FACTS AS CONSIDERED BY THE CIT(A) ARE INCORRECTLY CONSIDERED. IT IS FURTH ER SEEN THAT EVEN FOR THE PRAYER OF REMANDING THE MATTER BACK TO THE AO NO ARGUMENT WARRANTING SUCH AN ACTION HAS BEEN ADVANCED BEFORE US. ON FACTS IT IS SEEN T HAT THE CIT(A) HAS CONSIDERED THE ISSUE IN THE FOLLOWING MANNER: SHRI RAVINDER HADAV HAS BEEN HELD TO BE THE BENEFI CIAL OWNER OF THE TRANSACTIONS ROUTED IN HIS VARIOUS BANK ACCOUNT S AND THE PEAK CREDIT IN THE BANK ACCOUNTS, ALONG WITH THE PR OFITS OF THE ITA NOS. 1269, 1270 & 1271/DEL/2013 ASSESSMENT YEAR: 2006-07, 2007-08 AND 2008-09 NORTHERN STRIPS LTD., NEW DELHI PAGE 17 OF 22 BUSINESS AND THE ACCRUALS TO/INCREASES IN THE BALAN CE SHEET OF M/S R.V.TRADERS, WAS BROUGHT TO TAX IN HIS HANDS. IN THE APPEAL FOR ASSESSMENT YEAR 2004-05 IN THE CASE OF SHRI RAV INDER YADAV (APPEAL NO.130/11-12), THE CIT(APPEALS) HAS ISSUED DIRECTIONS TO THE ASSESSING OFFICER TO REOPEN THE ASSESSMENT AND TAX THE CLOSING BALANCE OF THE BALANCE SHEET AT RS.33,71,71 0/- AS ON 31.3.2003 AND PROFIT AT RS.1,48,257/- OF M/S R.V.TR ADERS IN ASSESSMENT YEAR 2003-04 AS THIS WAS NOT DISCLOSED B Y SHRI YADAV IN THE RETURN OF INCOME. THUS, THE ENTIRE TR ANSACTIONS RELATING TO THE DEMAND DRAFTS/PAY ORDERS AND TRANSA CTIONS OF M/S R.V.TRADERS WITH THE APPELLANT COMPANY AS WELL AS O THER GROUP CONCERNS STANDS FULLY TAXED IN THE HANDS OF SHRI RA VINDER YADAV. IT WAS NOT PROPER FOR THE SAME ASSESSING OFFICER TO TAX THE SAME AMOUNTS IN THE HANDS OF SHRI RAVINDER YADAV AS WELL AS OTHER GROUP CONCERNS. THE SALES TO DIFFERENT PARTIES PER TAINING TO THE DEMAND DRAFTS/PAY ORDERS, AS ALSO TO M/S R.V.TRADER S, ARE UNDISPUTEDLY ALREADY RECORDED IN THE BOOKS OF ACCOU NT AND CREDITED TO THE P&L ACCOUNT DULY AUDITED AND FILED WITH IT RETURNS FOR THE RESPECTIVE YEARS IN THE CASE OF THE APPELLANT. THE UNDISCLOSED INCOME AND ASSETS GENERATED FROM THESE TRANSACTIONS STANDS ALREADY TAXED IN THE HANDS OF S HRI RAVINDER YADAV, AND THE AMOUNT SO TAXED IN HIS HANDS DURING THIS ASSESSMENT YEAR IS RS.60,09,074/-. THE ADDITION OF ENTIRE BANK CREDITS OF RS.1,17,12,111/- CANNOT BE SUSTAINED IN THE HANDS OF THE APPELLANT COMPANY AND IS, ACCORDINGLY, DELETED. THIS GROUND OF APPEAL IS ALLOWED. APPELLANT GETS RELIEF OF RS. 1,17,12,111/-. 9.1 SINCE NOTHING HAS BEEN PLACED BEFORE US TO CONT ROVERT THE ABOVE FACTS WE ON CONSIDERATION OF THE PECULIAR FACTS AND CIRCUMST ANCES OF THE CASE FIND OURSELVES UNABLE TO COME TO A CONTRARY FINDING. BE ING SATISFIED BY THE REASONING AND FINDING ARRIVED AT THEREIN, THE DEPARTMENTAL GR OUND IS DISMISSED. WHILE COMING TO THE SAID CONCLUSION WE HAVE TAKE INTO CON SIDERATION THE EXPLANATION OFFERED BY THE ASSESSEE AT THE ASSESSMENT STAGE AND THE FACT THAT IT WAS SIMILARLY ARGUED BEFORE THE CIT(A). THE EXPLANATIO N ALONG WITH EVIDENCES HAVE BEEN CONFRONTED TO THE AO WHO ALSO AGREES THAT NOTH ING NEW IS BEING SAID. THE FACT REMAINS THAT GENUINENESS OF THE TRANSACTION ST ANDS UN-ASSAILED ON RECORD. THE DRAFTS/PAY ORDERS RECEIVED AGAINST SALES MADE S TANDS CONSISTENTLY ACCEPTED BY THE ASSESSEE. IN THESE PECULIAR FACTS AND CIRCU MSTANCES OF THE CASE WHERE THE CIT(A) GIVES A FINDING THAT THESE TRANSACTIONS STAND ALREADY TAXED IN THE HANDS OF THE RAVINDER YADAV WHICH FACT REMAINS UN-A SSAILED ON RECORD. IN THESE ITA NOS. 1269, 1270 & 1271/DEL/2013 ASSESSMENT YEAR: 2006-07, 2007-08 AND 2008-09 NORTHERN STRIPS LTD., NEW DELHI PAGE 18 OF 22 PECULIAR FACTS AND CIRCUMSTANCES WE FIND NO INFIRMI TY ARRIVED AT IN THE IMPUGNED ORDER. THE DEPARTMENTAL GROUND IS ACCORDINGLY DISM ISSED. 10. THE FACTS QUA THE SECOND ISSUE ADDRESSED VIDE G ROUND NO. 3 BY THE REVENUE, ARE FOUND DISCUSSED IN PARAS 5 TO 5.12 OF THE ASSESSMENT ORDER, A PERUSAL OF THE SAME SHOWS THAT ON ANALYZING THE BAN K TRANSACTIONS EXTRACTED IN THE IMPUGNED ORDER IT WAS NOTICED THAT ANOTHER MAJO R BENEFICIARY OF THE BANK DRAFT MADE AFTER ADJUSTING CASH IN THE BANK ACCOUNT S EXTRACTED IN THE IMPUGNED ORDER WAS SWASTIK PACKAGING. THE AO RECORDS THAT I N THE SEARCH INVESTIGATION M/S SWASTIK PACKAGING COULD NOT BE TRACED. RELYING ON THE STATEMENTS RECORDED AND EXTRACTED IN THE IMPUGNED ORDER IT WAS SEEN THA T IT WAS FINALLY ADMITTED THAT M/S SWASTIK PACKAGING WAS OWNED BY THE PROMOTERS OF M/S NORTHERN STRIPS LTD. OF THE ASSESSEE. REFERRING TO THE FACTS EXTRACTED IN THE IMPUGNED ORDER WHICH CLEARLY STATED THAT THE DRAFTS AND PAY ORDERS WERE ISSUED AT THE INSTANCE OF BANSAL GROUP AND THE FACT THAT THE ASSESSEE HAD MAD E SUBSTANTIAL TRANSACTIONS WITH M/S SWASTIK PACKAGING AND HUGE AMOUNTS WERE TR ANSFERRED FROM THE BANK ACCOUNTS OF M/S SWASTIK PACKAGING TO THE ACCOUNTS O F THE ASSESSEE AND TAKING INTO CONSIDERATION THAT THE DIRECTOR OF THE ASSESSE E SH. P.V. BANSAL HAD GIVEN AN EVASIVE AND NONCOMMITTAL REPLY QUA THE SAID CONCERN DESPITE THE FACT THAT HIS COMPANY HAD BENEFITED TO THE EXTENT OF CRORES OF RU PEES FROM THE TRANSACTIONS WITH SWASTIK PACKAGING JUXTAPOSED WITH THE STATEMEN T OF EXTRACTED IN THE IMPUGNED ORDER THAT M/S SWASTIK PACKAGING WAS ALSO ONE OF THE GROUP CONCERN OF THE PROMOTERS OF M/S NORTHERN STRIPS LTD. GROUP. ACCORDINGLY TAKING INTO CONSIDERATION THE VARIOUS FACTS ON RECORD THE AO WA S OF THE BELIEF THAT M/S SWASTIK PACKAGING IS A NON EXISTENT ENTITY FLOATED FOR THE BENEFIT OF THE ASSESSEE AND THE NORTHERN GROUP. THE REASONS FOR COMING TO SUCH A CONCLUSION ARE SET OUT IN PARA 5.3 OF THE ORDER OF LD. CIT(APPEALS) WH ICH IS EXTRACTED HEREUNDER FOR READY REFERENCE: 5.3. IN VIEW OF THE ABOVE DETAILS OF TRANSACTIONS OF THE APPELLANT COMPANY WITH M/S JINDAL POLY FILMS LTD., THE DISALLOWANCE DURING THE PRESENT ASSESSMENT YEAR 200 6-07 ON ACCOUNT OF UNRECONCILED PURCHASES WORKS OUT TO RS.26,83,093/-. IN MY CONSIDERED VIEW, THIS AMOUNT IS TO BE ITA NOS. 1269, 1270 & 1271/DEL/2013 ASSESSMENT YEAR: 2006-07, 2007-08 AND 2008-09 NORTHERN STRIPS LTD., NEW DELHI PAGE 19 OF 22 TREATED AS UNRECONCILED PURCHASES RESULTING IN EQUI VALENT UNDERSTATEMENT OF PROFIT DURING THE ASSESSMENT YEAR AND TO BE ADDED TO THE INCOME OF THE APPELLANT COMPANY. I , THEREFORE, PARTLY ALLOW THIS GROUND OF THE APPELLAN T AND DIRECT THE ASSESSING OFFICER TO RESTRICT THE ADDITION TO R S.26,83,093/-. APPELLANT GETS RELIEF OF RS.10,73,305/-. 10.1 TAKING INTO CONSIDERATION THE REPLY OF THE ASS ESSEE DT. 28.10.2010 WHICH SHOWED THAT THE ASSESSEE HAD SHOWN SALES OF RS.2.82 CRORES TO M/S SWASTIK PACKAGING THE ASSESSING OFFICER FURTHER REQUIRED TH E ASSESSEE TO FURNISH EVIDENCE IN SUPPORT OF THE SALES TO M/S SWASTIK PAC KAGING BEING GENUINE BY WAY OF DELIVERY RECIPTS/CHALLANS AND TRANSPORTATION DETAILS. IN RESPONSE THERETO THE ASSESSEE IS FOUND TO HAVE MADE THE FOLLOWING R EPLY IN HIS LETTER DT. 10.12.2010 WHICH IS EXTRACTED IN PARA 5.9 OF THE AS SESSMENT ORDER WHICH IS EXTRACTED FOR READY REFERENCE: UNDER THE INSTRUCTION FROM THE CLIENT WE ARE ENCLO SING HEREWITH COPY OF ACCOUNT OF M/S SWASTIK PACKAGING NASIK, MAH ARASTHRA FOR THE PERIOD OF 1.4.2005 TO 31.3.2006 RELEVANT TO ASSESSMENT YEAR 2006-07 IN THE BOOKS OF ACCOUNTS OF NORTHERN S TRIPS LTD. DULY CONFIRMED BY LALIT SHARMA PROPRIETORS OF THE F IRM ALONG WITH PROOF FOR FILING RETURN OF INCOME BY HIM WITH HIS INCOME TAX OFFICER AT NASI (MAHARASHTRA) FOR THE RELEVANT ASSE SSMENT YEAR. 10.2 REGARDING THE DELIVERY OF GOODS AS PER PARA 5.10 OF THE ASSESSMENT ORDER THE ASSESSEE VIDE ITS LETTER DT. 10.12.2010 I S FOUND TO HAVE STATED THAT IT DID NOT MAINTAIN ANY RECORD FOR THE SALES WHICH HAD TAKEN PLACE FROM THE OFFICE OR GODOWN OF THE ASSESSEE. IN VIEW OF THE ABOVE TH E ASSESSING OFFICER PROCEEDED TO MAKE AN ADDITION OF RS.2,82,92,872/- O BSERVING AS UNDER: 5.11 THUS, THE ASSESSEE HAS BEEN UNABLE TO FURNIS H ANY EVIDENCE IN ORDER TO PROVE THE GENUINENESS OF SALES. FURTHER, THE COPY OF THE INCOME TAX RETURN O F SH. LALIT B. SHARMA FURNISHED BY THE ASSESSEE IS NOT LEGIBLE. IT IS NOTICED THAT THE RETURN FILED IS ONL Y OF RS.95,2001- FOR THE ASSESSMENT YEAR 2006-07. RS.66,348/- IS SHOWN AS SALARY INCOME. THUS, THE BUSINESS INCOME SHOWN BY SH. LALIT B. SHARMA IS TO THE TUNE OF RS.29,000/- ONLY. IT IS IMPOSSIBLE TO IMAGINE THAT A PERSON TRADING IN COMMODITIES WORTH OVER RS.2.82 CRORES WOULD BE SHOWING A BUSINESS ITA NOS. 1269, 1270 & 1271/DEL/2013 ASSESSMENT YEAR: 2006-07, 2007-08 AND 2008-09 NORTHERN STRIPS LTD., NEW DELHI PAGE 20 OF 22 INCOME OF ONLY RS.29,000/-. FURTHER IT IS TO BE NOT ED THAT THE ADIT(INV.), NASIK HAD REPORTED THAT NO RET URN OF INCOME COULD BE TRACED IN THE CASE OF SH. LALIT B. SHARMA. SINCE, THE DATE OF FILING OF THIS RETURN IS NOT LEGIBLE, IT IS QUITE LIKELY THAT THE RETURN WOULD HAVE BEEN FILED AFTER THE DATE OF SEARCH I.E. 28.08.2008 AS IS THE CASE FOR ASSESSMENT YEAR 2007-08. 5.12 IN VIEW OF THE DISCUSSION ABOVE, IT IS CLEAR THAT THE SALES TO M/S SWASTIK PACKAGING BY THE ASSESSEE COMPANY OF RS.2,82,92,872/- ARE NOT GENUINE. HENCE THE RECEIPTS FROM M/S. SWASTIK PACKAGING ARE TREATE D AS CREDIT AGAINST NON EXISTENT SALES. THE RECEIPTS ARE RS.2,82,92,872/- UNEXPLAINED CREDITS INTO THE BOOKS OF THE COMPANY AND ADDED TO THE INCOME FROM OTHER SOURCES. PENALTY PROCEEDINGS U/S 271(1)(C ) OF TH E INCOME TAX ACT, 1961 ARE SEPARATELY INITIATED. 11. IN APPEAL BEFORE THE FIRST APPELLATE AUTHORITY THE ADDITION WAS ASSAILED BY WAY OF GROUND NO.10 AND THE ACTION OF THE ASSESSING OFFICER WAS ASSAILED, THE ARGUMENT TAKEN INTO CONSIDERATION BY THE LD.CIT(APP EALS) IS EXTRACTED FOR READY REFERENCE. DURING THE YEAR UNDER CONSIDERATION THE APPELLANT MADE SALES OF RS.2,82,92,872/- TO M/S SWASTIK PACKAGING. THE SAI D AMOUNT WAS DULY RECORDED IN THE SALES AND WAS CREDITED TO PROF IT AND LOSS ACCOUNT. THE LD.AO HAS ADDED AN AMOUNT OF RS.2,82, 92,872/- TO THE GROSS TOTAL INCOME OF THE ASSESSEE BY STATING T HAT THE EXISTENCE OF THE SAID PARTY IS DOUBTED. IN THIS RESPECT IT I S SUBMITTED THAT THE RETURNS FILED BY THE SAID PARTY FOR THE YEAR UNDER CONSIDERATION WERE FILED BEFORE THE ASSESSING OFFICER. ALSO, THE SAID PARTY SI BEING ASSESSED BEFORE THE SAME ASSESSING OFFICER. NOTICE S SAID PARTY IS BEING ASSESSED BEFORE THE SAME ASSESSING OFFICER. ALSO THE SAID PARTY IS BEING ASSESSED BEFORE THE SAME ASSESSING O FFICER. NOTICES U/S 148 OF THE ACT HAVE BEEN ISSUED FOR THE ASSESSM ENT YEAR 2006- 07 TO 2008-09 AND THE ASSESSMENT ORDERS HAVE BEEN P ASSED. THE SAID PARTY IS REGULARLY APPEARING BEFORE THE ASSESS ING OFFICER ON TIME TO TIME. THUS THE ALLEGATION OF THE ASSESSING OFFICER THAT THE WHEREABOUTS OF THE SAID PARTY ARE UNKNOWN IS BAD ON THE FACTS OF THE CASE. ALSO DURING THE COURSE OF HEARING BEFORE THE ASSESSING OFFICER THE DULY CONFIRMED ACCOUNTS OF M/S SWASTIK PACKAGING WERE FILED BEFORE THE ASSESSING OFFICER. FURTHER IT IS IMPORTANT TO STATE THAT ONCE THE AMOUNT RECEIVED FROM M/S SWASTIK PACK AGING HAS BEEN RECORDED IN THE SALES THEN THE ADDITION MADE B Y THE ASSESSING OFFICER TANTAMOUNT TO DOUBLE ADDITION. THUS IT IS PRAYED TO DELETE THE ADDITION AS THE SAME HAS BEEN MADE AGAINST THE FACTS OF THE CASE. ITA NOS. 1269, 1270 & 1271/DEL/2013 ASSESSMENT YEAR: 2006-07, 2007-08 AND 2008-09 NORTHERN STRIPS LTD., NEW DELHI PAGE 21 OF 22 12. CONSIDERING THE SAME THE LD.CIT(APPEALS) CAME T O THE FOLLOWING CONCLUSION BY WHICH THE REVENUE IS AGGRIEVED: - THE VIEW TAKEN BY THE REVENUE IS THAT AS THE DELIV ERY OF THE GOODS TO M/S SWASTIK PACKAGING COULD NOT BE ESTABLI SHED, THE SALES ARE NOT GENUINE. FIRSTLY, THE SALES TO SWAST IK PACKAGING ARE UNDISPUTEDLY ALREADY RECORDED IN THE BOOKS OF A CCOUNTS AND CREDITED TO THE P&L ACCOUNT DULY AUDITED AND FILED WITH IT RETURNS FOR THE RESPECTIVE YEARS IN CASE OF THE APP ELLANT. THEREFORE, THE INCOME ARISING FROM THE SALES ALREAD Y STANDS TAXED. SECONDLY, THE EVIDENCE RELIED UPON TO MAKE THE ADDITION IS THE SALES A/C OF SWASTIK PACKAGING AS APPEARING IN THE BOOKS OF THE APPELLANT COMPANY. IT CANNOT BE SAID THAT T HE SALES ARE NOT GENUINE AND ALSO RELY ON THE SAME SALES/ACCOUNT S TO MAKE THE ADDITION. THIRDLY, THERE IS NO EVIDENCE WHATSO EVER FOR THE REVENUE TO CONCLUDE THAT THE SALE ARE NOT GENUINE. THE PURCHASES OF THE APPELLANT COMPANY HAS NOT BEEN CHA LLENGED (EXCEPT FOR UNRECONCILED A/C WITH JPL), AND THE ACC OUNTS HAVE NOT BEEN REJECTED. IN THIS BACKGROUND, THE ONUS DO ES NOT LIE ON THE APPELLANT BUT SHIFTS TO THE REVENUE TO ADDUCE E VIDENCE TO PROVE THAT THE RECEIPTS CLAIMED AGAINST SALES ARE A CTUALLY NOT SALES AND SOMETHING ELSE. HAVING SEARCHED THE AP PELLANT, AND NOT HAVING DISCOVERED ANY ADVERSE EVIDENCE, ANY SUC H CONCLUSION WOULD BE LEGALLY UNSUSTAINABLE. IN ANY CASE, THE SALE HAVING ALREADY BEEN CREDITED TO THE P&L ACCOUN T OF THE APPELLANT COMPANY AND ALREADY TAXED IN THE RESPECTI VE YEARS, MAKING AY ADDITION BASED ON THE SAME AMOUNTS WOULD CLEARLY TANTAMOUNT TO DOUBLE TAXATION. THIS IS NOT PERMISS IBLE UNDER THE LAW. ACCORDINGLY THIS GROUND OF APPEAL IS ALLO WED. APPELLANT GETS RELIEF OF RS.2,82,92,872/-. 13. NO SPECIFIC ARGUMENTS QUA THE SAID GROUND WAS A DVANCED BY THE REVENUE OR BY THE ASSESSEE AS THE STAND HAS BEEN THAT THE A RGUMENTS ADVANCED FOR GROUND NO. 2 WOULD BE SUFFICIENT TO ADDRESS THEIR R ESPECTIVE STANDS. ACCORDINGLY, IN THE ABSENCE OF ANY INFIRMITY POINTED OUT BY THE LD. CIT(DR) AND CONSIDERING THE ARGUMENTS OF THE ASSESSEE THAT THE TRANSACTION IS GENUINE AND RECORDED IN ASSESSEES BOOKS OF ACCOUNTS WHICH HAVE NOT BEEN DI SPUTED THE DEPARTMENTS GROUND ON SIMILARITY OF REASONS AS CONSIDERED IN GR OUND NO. 2 FALLS. 14. IN THE RESULT, THE APPEAL OF THE REVENUE IS DIS MISSED. ITA NOS. 1269, 1270 & 1271/DEL/2013 ASSESSMENT YEAR: 2006-07, 2007-08 AND 2008-09 NORTHERN STRIPS LTD., NEW DELHI PAGE 22 OF 22 15. QUA THE ISSUES IN ITA 1270 & 1271 NO SPECIFIC S EPARATE ARGUMENTS HAVE BEEN ADVANCED BY THE PARTIES BEFORE THE BENCH WHO H AVE MAINTAINED THAT THE ARGUMENTS ADVANCED GROUND NO. 2 ITA 1269/D/2013 W OULD ADDRESS THESE APPEALS AND THERE IS NO DIFFERENCE IN REGARD TO THE REASONS FOR MAKING THE ADDITIONS OR DELETING THE SAME AND THE STAND TAKEN ON SIMILARITY OF ISSUES IN GROUND 2 OF ITA 1209/D/2013 WOULD ADDRESS THE ISSUE S HEREIN ALSO. ACCORDINGLY MAINTAINING CONSISTENCY ON THE ISSUES IN THE LIGHT OF THE SUBMISSIONS OF THE PARTIES THE REMAINING TWO DEPARTMENTAL APPEALS ARE ALSO DISMISSED. 16. IN THE RESULT THE APPEALS OF THE REVENUE ARE DI SMISSED. ORDER PRONOUNCED IN THE OPEN COURT ON 23 RD SEPTEMBER, 2014 SD/- SD/- (B.C.MEENA) (DIVA SI NGH) ACCOUNTANT MEMBER JUDICIAL M EMBER DATED: 23/09/2014 *MANGA, SR. P.S. *KAVITA, P.S. COPY OF THE ORDER FORWARDED TO: 1.APPELLANT; 2.RESPONDENT; 3.CIT; 4.CIT(A); 5.DR; TRUE COPY BY ORDER ASSISTANT REGISTRAR