Pardeep Kumar Aggarwal, Delhi V. ITO, Ward-63(3), New Delhi

ITA 1340/DEL/2018

• Counselvise Citation: [2019] 112 COUNSELVISE.COM (IT) 2331 (ITAT-DELHI)
• Duration Of Justice: 1 year(s) 9 month(s) 8 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 06-12-2019
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: SMC
• Assessment Year: 2007-2008
• Appeal Filed On: 26-02-2018
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Assessee Lawyers: GIRISH KUMAR SHUKLA
• Keywords: Bogus purchase; Opportunity of cross examination; Rule of consistency; Accommodation entries
• Section: 69C; 40A(3); 143(1); 147; 131; 148; 132

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL DELHI BENCH: SMC NEW DELHI BEFORE SHRI H. S. SIDHU, JUDICIAL MEMBER I.T.A. NO. 1340/DEL/2018 ASSESSMENT YEAR: 2007-08 PRADEEP KUMAR AGGARWAL, VS. ITO, WARD-63(3), PROP. M/S TARA METAL UDYOG, CIVIC CENTRE, 5893, BASTI HARPHOOL SINGH, NEW DELHI 110 002 SADAR BAZAR, DELHI 110 006 (PAN: AADPA2313D) (ASSESSEE) (RESPONDENT) ASSESSEE BY : SH. GIRISH KUMAR SHUKLA, ADVOCATE REVENUE BY : SH. PRADEEP SINGH GAUTAM, SR. DR. ORDER THIS APPEAL IS FILED BY ASSESSEE AGAINST THE ORDER DATED 28.12.2017 PASSED BY THE LD. CIT(A)-18, NEW DELHI RELATING TO ASSESSMENT YEAR 2007-08. 2. THE BRIEF FACTS OF THE CASE ARE THAT THE ASSESSE E FILED THE RETURN OF INCOME ON 29.10.2017 AT A TOTAL INCOME OF RS. 3,14, 860/-. SUBSEQUENTLY, THE AO RECEIVED AN INFORMATION FROM THE INVESTIGATI ON WING THROUGH CIT(CENTRAL), NEW DELHI AS PER WHICH THE ASSESSEE H AS OBTAINED ACCOMMODATION ENTRIES IN THE FORM OF BOGUS PURCHASE S THROUGH VARIOUS PERSONS NAMELY, SH. RAKESH GUPTA, SH. VISHESH GUPTA , SH. NAVNEET JAIN AND SH. VAIBHAV JAIN. BASED ON THE INFORMATION, THE AO REOPENED ASSESSMENT U/S 147 OF THE INCOME TAX ACT, 1961 (IN SHORT ACT) AND ISSUED NOTICE U/S 148 OF THE ACT ON 14.03.2014. DUR ING THE COURSE OF ASSESSMENT PROCEEDINGS, THE AO ISSUED A DETAILED SH OW CAUSE NOTICE TO THE ASSESSEE ON 20.02.2015 IN WHICH THE DETAILS OF THE ACCOMMODATION ENTRIES AMOUNTING TO RS.20,72,820/- OBTAINED BY TH E ASSESSEE IN THE NAME OF ITS PROPRIETORSHIP CONCERN TARA METAL UDYOG FROM TWO CONCERNS 2 NAMELY, SHREE BANKEY BIHARI TRADING CO. AND SHREE G OVERDHAN INTERNATIONAL WAS FURNISHED TO THE ASSESSE AND IT W AS ALSO STATED THAT SH. RAKESH GUPTA AND SH. VISHESH GUPTA HAVE ADMITTED TO HAVE PROVIDED ACCOMMODATION ENTRIES IN THEIR STATEMENTS RECORDED DURING THE COURSE OF SEARCH PROCEEDINGS U/S 132 OF THE ACT AND THEREAFTE R IN THE STATEMENTS RECORDED BY ACIT, CENTRAL CIRCLE-10, NEW DELHI ON 1 2.02.2013 AND 04.02.2013 RESPECTIVELY. IT WAS ALSO STATED THAT TH ESE PERSONS HAVE ALSO FILED AFFIDAVITS IN WHICH THEY HAVE CONFIRMED THAT THEY WERE NOT MAKING ANY ACTUAL SALES BUT WERE ISSUING BOGUS PURCHASE BI LLS TO PROVIDE ACCOMMODATION ENTRIES. THE ASSESSEE WAS ASKED TO SH OW CAUSE WHY THESE PURCHASES BOOKED BY THE APPELLANT AMOUNTING T O RS.20,72,820/- BE NOT TREATED AS BOGUS PURCHASES AND BE NOT ADDED TO THE TOTAL INCOME. THE AO HAD ALSO ISSUED SUMMONS U/S 131 OF THE ACT T O SH. RAKESH GUPTA AND SH. VISHESH GUPTA DURING THE COURSE OF ASSESSME NT PROCEEDINGS IN OTHER CASES PENDING BEFORE HIM AND HAS RECORDED THE STATEMENTS IN WHICH THEY HAVE RECONFIRMED THE FACT THAT THEY ARE PROVID ING ACCOMMODATION ENTRIES AND ARE NOT ENGAGED IN ANY ACTUAL SALE. THE APPELLANT ALSO FAILED TO FURNISH THE BOOKS OF ACCOUNTS BEFORE THE AO. TH E AO WAS ALSO NOT SATISFIED WITH THE REPLY OF THE ASSESSEE AND THEREF ORE, THE AO HAS TREATED THESE PURCHASES OF RS.20,72,820/- AS BOGUS PURCHAS ES AND HAS TREATED THE SAME AS INCOME OF THE APPELLANT U/S 69C OF THE ACT AND ASSESSED THE INCOME OF THE ASSESSEE AT RS. 23,87,680/- VIDE ORDE R DATED 18.03.2015 PASSED U/S. 143(3)/147 OF THE ACT. AGAINST THE ASSE SSMENT ORDER DATED 18.03.2015, ASSESSEE APPEALED BEFORE THE LD. CIT(A) , WHO VIDE HIS IMPUGNED ORDER DATED 28.12.2017 HAS PARTLY ALLOWED THE APPEAL OF THE ASSESSEE. AGGRIEVED WITH THE IMPUGNED ORDER DATED 28.12.2017, ASSESSEE IS IN APPEAL BEFORE THE TRIBUNAL. 3. AT THE TIME OF HEARING, LD. COUNSEL FOR THE ASSE SSEE STATED THAT THE ISSUE IN DISPUTE HAS BEEN ADJUDICATED AND DECIDED B Y THE VARIOUS BENCHES OF THE ITAT WHEREIN THE TRIBUNAL HAS DELETED THE A DDITION IN ALL THE CASES. IN SUPPORT OF HIS CONTENTION, HE FILED THE COPY OF THE ORDER DATED 31.10.2018 PASSED IN ITA NO. 2862/DEL/2016 (AY 200 6-07) IN THE CASE 3 OF METAL INDIA VS. ITO, WARD 39(2), NEW DELHI WHERE IN ON EXACTLY SIMILAR ISSUE, THE ADDITION WAS DELETED. HE HAS ALSO FILED A PAPER BOOK CONTAINING PAGES 1-68 IN WHICH VARIOUS COPY OF THE DECISION WERE ATTACHED I.E. M/S UNIQUE METAL INDUSTRIES (PAGE 1-37); M/S R ADHEY SHYAM & CO. (PAGE 38-46); M/S KARSHNI METAL STORE & OTHERS (PAG E 47-55); M/S METAL INDIA (PAGE 56-66); CIT VS. M/S ODEAN BUILDERS PVT. OTD. (2019) 105 CCHO 392 ISCC (SC) (PAGE 67-68) AND VARIOUS OTHER D ECISIONS ON THE RULE OF CONSISTENCY WHICH INCLUDES THE FAMOUS CASE OF RADHASOAMI SATSANG (1992) 193 ITR 321 (SC). LD. COUNSEL FOR TH E ASSESSEE ALSO FILED 02 OTHER PAPER BOOKS CONTAINING PAGES 57-90 IN WHIC H ASSESSEE HAS FILED 04 CASES AND IN ANOTHER PAPER BOOK WHICH CONTAIN PA GES 1-58 IN WHICH THE ASSESSEE HAS FILED THE WRITTEN SUBMISSIONS BEFO RE THE ITAT AND WRITTEN SUBMISSIONS BEFORE THE LD. CIT(A) ALONGWITH VARIOUS OTHER DOCUMENTARY EVIDENCES FOR SUBSTANTIATING THE CLAIM OF THE ASSESSEE AND REQUESTED THAT BY FOLLOWING THE RULE OF CONSISTENCY AND IN VIEW OF THE VARIOUS DECISIONS ON THE SIMILAR FACTS AND CIRCUMST ANCES OF THE CASE OF THE ASSESSEE THE ADDITION IN DISPUTE MAY BE DELETED BY ALLOWING THE APPEAL OF THE ASSESSEE. 4. ON THE CONTRARY, LD. DR RELIED UPON THE ORDERS P ASSED BY THE REVENUE AUTHORITIES. HE HAS ALSO FILED THE 04 PAGES WRITTEN SUBMISSIONS IN WHICH HE SUPPORTS THE ORDER OF THE LD. CIT(A) ON THE ISSUE OF REOPENING OF THE CASE OF THE ASSESSEE U/S. 147 OF THE ACT. 5. I HAVE HEARD BOTH THE PARTIES AND PERUSED THE R ECORDS, ESPECIALLY THE ORDERS OF THE REVENUE AUTHORITIES ALONGWITH THE ORDERS PASSED BY THE ITAT, HONBLE HIGH COURTS AND THE HONBLE SUPREME C OURT OF INDIA ON THE ISSUE IN DISPUTE. I AM OF THE CONSIDERED VIEW THAT THE ASSESSEE HAS FILED HIS ORIGINAL RETURN OF INCOME FOR THE ASSESSMENT YE AR IN DISPUTE ON 29.10.2007 BY DECLARING TOTAL INCOME OF RS. 3,14,8 60/-. THE RETURN OF THE ASSESSEE WAS PROCESSED BY THE ASSESSING OFFICE R U/S. 143(1) OF THE ACT. LATER ON, INFORMATION FROM THE ACIT, CENTRAL CIRCLE-X, JHANDEWALA EXTENSION, NEW DELHI VIDE LETTER DATED 13.3.2013 FO RWARDED THROUGH CIT, CENTRAL CIRCLE-II, NEW DELHI AND CCIT, DELHI-I VID E LETTER DATED 19.3.2013 4 AND 26.3.2013 RESPECTIVELY WHEREIN PROVIDING A CD C ONTAINING DETAILS OF ALL PARTIES TO WHOM THE BOGUS PURCHASES/ BOGUS EN TRIES PROVIDED BY S/SH. RAKESH GUPTA, VISHESH GUPTA, VINEET JAIN AND NAVNEET JAIN WERE APPEARING. AFTER GOING THROUGH THE MATERIAL THE A O MADE THE ADDITION OF RS. 20,72,820/- ON ACCOUNT OF ALLEGED BOGUS PURCHA SES AND COMPLETED ASSESSMENT OF INCOME ON RS. 23,87,680/- ON 18.03.20 15. AGGRIEVED WITH THE ASSESSMENT ORDER, ASSESSEE APPEALED BEFORE THE LD. CIT(A), WHO VIDE HIS IMPUGNED ORDER 28.12.2017 RESTRICTED THE ADDIT ION TO 25% OF THE TOTAL BOGUS PURCHASES OF RS. 20,72,820/- I.E. THE A DDITION WAS RESTRICTED TO RS. 5,18,205/- AND THE BALANCE ADDITION OF RS. 1 5,54,215/- WAS DELETED. 5.1 AT THE TIME OF HEARING, LD. COUNSEL FOR THE ASS ESSEE STATED THAT EXACTLY IDENTICAL INFORMATION ORIGINATING FROM THE VERY SAME ACIT, CENTRAL CIRCLE-10 VIDE HIS VERY COMMUNICATION DATED 13.3.20 13 OVER 12 ASSESSMENTS WERE REOPENED INCLUDING THE CASE OF M/ S UNIQUE METAL INDUSTRIES FOR THE ASSESSMENT YEAR 2006-07. THE AB OVE NAMED BUSINESS HAD MADE PURCHASES FROM THREE OUT OF THE 11 CONCERN S FOUND TO BE MANAGED AND CONTROLLED BY SH. RAKESH GUPTA, INCLUD ING M/S SHREE BAKEY BEHARI TRADING COMPANY, FROM WHICH THE ASSESSEE TOO HAS MADE PURCHASES IN THE INSTANT YEAR AMOUNTING TO RS. 10,0 5,231/-. BESIDES, IN THE CURRENT YEAR, ASSESSEE HAD MADE PURCHASES WORTH RS. 10,67,589/- FROM M/S SHREE GOVERDHAN INTERNATIONAL, ONE OF THE 11 CONCERNS, CONSIDERED TO BE MANAGED BY SH. RAKESH GUPTA. THE COMPLETE LIST OF 11 CONCERNS CONSIDERED TO BE MANAGED BY SH. RAKESH GUP TA IS GIVEN IN PARA 12 OF THE ASSESSMENT ORDER PASSED ON 18.3.2015. THE TOTAL VALUE OF PURCHASES MADE BY THE ASSESSEE FROM ABOVE SUPPLIER S COME TO RS. 20,72,820/-. IT WAS FURTHER SUBMITTED THAT THE AO , WITHOUT ANY MATERIAL, BASIS OR DETAILS CONCLUDED THAT PURCHASES WORTH RS . 20,72,820/- FROM THE ABOVE MENTIONED PARTIES WERE BOGUS AND HIS ENTIRE D ISALLOWANCE OF CLAIM OF PURCHASES MADE FROM M/S SHREE BAKEY BEHARI TRADI NG COMPANY AND M/S SHREE GOVERDHAN INTERNATIONAL WAS BASED ON A TH IRD PARTY INFORMATION. HE FURTHER STATED THAT THE STATEMENT OF SH. RAKESH GUPTA 5 HAS BEEN TAKEN BEHIND THE BACK OF THE ASSESSEE, HAV E NOT BEEN INDEPENDENTLY PUT TO FURTHER VERIFICATION BY THE AO AND HE HAS ALSO NOT MADE STATEMENTS OF SH. RAKESH GUPTA AND OTHERS AVAI LABLE TO THE ASSESEE FOR CONSIDERATION AND PROCEEDED TO FINALIS E ASSESSMENT BY DENYING OPPORTUNITY FOR CROSS EXAMINATION, WHO HAD DISCHARGED BURDEN OF SUBSTANTIATING THE PURCHASES THROUGH VARIOUS DOCUME NTS INCLUDING PURCHASE BILLS, CONFIRMED COPIES OF ACCOUNTS OF THE PARTIES, BANK ACCOUNT TO SHOW PAYMENTS BY CHEQUES, PARTICULARS OF VAT RE GISTRATION OF THE SELLERS, STOCK REGISTER, COPY OF CARTAGE ACCOUNT, A UDITED ACCOUNTS ETC. AO HAS NOT POINTED ANY DEFECT IN THE DOCUMENTARY EVID ENCE FILED BY THE ASSESSE IN THE APPEAL FILED BY THE ASSESSEE. HE SUB MITTED THAT THE LD. CIT(A) HAS WRONGLY SUSTAINED THE ADDITION OF RS. 5, 18,205/- BEING 25% OF DISALLOWANCE OF RS. 20,72,820/- MADE BY THE AO. 5.2 AS ARGUED BY THE LD. COUNSEL FOR THE ASSESEE TH AT SIMILAR ADDITIONS ON THE SAME SET OF FACTS AND IN OTHER CASES HAD COM E UP FOR CONSIDERATION BEFORE THE ITAT, SMC-2 BENCH, NEW DELHI, WHO DELIVE RED ITS DECISION DATED 28.10.2015 IN THE CASE OF UNIQUE METAL INDUS TRIES VS. ITO IN ITA NO. 1372/DEL/2015 BY DELETING THE ADDITIONS SUSTAIN ED BY THE LD. CIT(A) AT 20% AGAINST DISALLOWANCE OF AMOUNT MADE BY THE A O AND DECIDED THE ISSUE IN FAVOUR OF THE ASSESSEE. IN SUPPORT OF HIS CONTENTION, HE FURTHER RELIED UPON THE FOLLOWING CASE LAWS IN WHICH EXACTL Y ON SIMILAR FACTS AND CIRCUMSTANCES, THE SIMILAR ADDITIONS WERE DELETED. M/S RADHEYSHYAM& CO. VS ITO, ITA NO.1429/DEL/2015, DATED 30.11.2015, SMC-1 BENCH-DEL HI ITAT M/S KISHANLALGAMBHIR& SONS VS ITO, ITA NO.1516/DEL/2015, DATED 02.12.2015, F BENCH-DELHI ITAT M/S PUNJAB METAL STORE VS ITO, ITA NO.1512/DEL/2015, DATED .2.12.2015, F BENCH-DELHI ITAT M/S KAKKARBARTAN STORE VS ITO, ITA NO. 1380/DEL/2015 DATED. 23.3.2016 6 M/S KRISHANLAL& SONS VS ITO, ITA NO. 1379/DEL/2015 DATED. 23.3.2016 M/S LAXMIDHATUBHANDARVS ITO, ITA NO. 1369/DEL/2015 DATED. 23.3.2016 M/S KARSHNI METAL STORE VS ITO, ITA NO. 1365/DEL/2015 DATED. 23.3.2016 M/S KASHMIR METALS VS ITO, ITA NO. 1366/DEL/2015 DATED. 23.3.2016 M/S BHARDWAJ METAL (INDIA) VS ITO, ITA NO. 1370/DEL/2015 DATED. 23.3.2016 M/S NAYAR METAL CO. VS ITO ITA NO. 1374/DEL/2015 DATED. 31/03/2016 5.3 I HAVE ALSO GONE THROUGH THE DECISIONS CITED BY THE LD. COUNSEL FOR THE ASSESSEE FILED IN THE SHAPE OF PAPER BOOK INCL UDING ONE I.E. TRIBUNALS ORDER DATED 31.10.2018 PASSED IN ITA NO . 2862/DEL/2016 (AY 2006-07) IN THE CASE OF METAL INDIA VS. ITO, WARD 39(2), NEW DELHI, WHEREIN THE TRIBUNAL HAS HELD AS UNDER:- 5. WE HAVE HEARD BOTH THE PARTIES, PERUSED, AND CONSIDERED THE RELEVANT RECORDS AVAILABLE WITH US SPECIALLY THE IMPUGNED ORDERS PASSED BY REVENUE AUTHORITIES AND COPY OF THE TRIBUNALS ORDER DATED 28/10/2015 PASSED IN THE CASE OF UNIQUE METAL INDUSTRIES VS. ITO IN ITA NO. 1372/DEL/2015. 5.1 ON PERUSING THE ASSESSMENT ORDER WE NOTE THAT THE ADDITIONS HAVE BEEN MADE ON THE ALLEGATION THAT ASSESSEE HAS MADE BOGUS PURCHASES FROM THE FOLLOWING CONCERNS: SL. NO. ACCOMMODATION ENTRY PROVIDED BY NAME OF PARTY TO WHOM ACCOMMODATION ENTRY IS PROVIDED AMOUNT OF ACCOMMODATION ENTRY 1 SHREE SHYAM TRADING CO. M/S METAL INDIA RS. 275258 3/- 2 VISHU TRADING CO. M/S METAL INDIA RS. 125268/ - 3 SHREE BANKEYBIHARI M/S METAL INDIA RS. 2821468/- 7 4 OM AGENCIES M/S METAL INDIA RS. 2287549/- TOTAL AMOUNT OF ENTRIES RS. 7986868/- 5.2 THE LD. CIT(A) HAS CONFIRMED THE ORDER OF THE AO AND HAS FURTHER ADDED 20% OF THE PURCHASES I.E. RS. 15,97,431/- AS PROFIT EARNED ON SUCH PURCHASES A SUM OF RS. 3,93,705/- ON ACCOUNT OF COMMISSION, THE ASSESSEE WOULD HAVE PAID ON SUCH PURCHASES. WE HAVE ALSO PERUSED THE ORDER PASSED BY THE ITAT IN THE CASE OF UNIQUE METAL INDUSTRIES VS. ITO IN ITA NO. 1372/DEL/2015 DT. 28 TH OCTOBER, 2015. IN THIS CASE ALSO, THE ISSUE WAS EXACTLY THE SAME. IN FACT, THE NAME OF THE PARTIES FROM WHOM THE ALLEGATION IS OF BOGUS PURCHASES ARE ALSO THE SAME. THE ITAT IN THIS ORDER AFTER EXAMINATION OF ALL THE FACTS HAS DELETED THE ADDITION. THE RELEVANT FINDINGS OF THIS ORDER READS AS UNDER: 24. NOW THE ISSUE IS WHETHER ON THE FACTS AND CIRCUMSTANCES OF THE CASE IT CAN BE SAID THAT THE PURCHASES ARE BOGUS. THE ASSESSING OFFICER HAS PLACED RELIANCE ON THE STATEMENT OF SH. RAKESH GUPTA AND SH. VISHESH GUPTA AND SH. NAVEENET JAIN & SH. VAIBHAV JAIN. ADMITTEDLY THESE STATEMENTS WERE RECORDED AT THE BACK OF THE ASSESSEE. THOUGH THE COPY OF THE SAME WAS PROVIDED TO THE ASSESSEE BUT AN OPPORTUNITY OF CROSS EXAMINATION HAS NOT BEEN ALLOWED TO THE ASSESSEE. THE ASSESSING OFFICER IN THIS REGARD HAS STATED THAT HE HAS ISSUED SUMMONS TO THESE PERSONS REPEATEDLY BUT THESE PERSONS HAVE NOT APPEARED NOR HAS FILED THE DESIRED DETAILS AND DOCUMENTS. IN THE ABSENCE OF THEIR CROSS EXAMINATION AND ALSO IN THE ABSENCE OF FURNISHING DESIRED DETAILS AND THE DOCUMENTS IT WILL NOT BE APPROPRIATE TO SUBSTANTIATE THE ADDITION ON THE BASIS OF THE STATEMENT. ON EXAMINATION OF FACTS IT ALSO TRANSPIRES THAT THESE PERSONS WERE IN THE TRADE OF SCRAP, THE SAME 8 BUSINESS IN WHICH THE ASSESSEE IS ENGAGED. A SURVEY WAS CARRIED OUT ON THESE PERSONS AND DURING THE COURSE OF SURVEY IT IS NOT THE CASE OF THE DEPARTMENT THAT THEY WERE NOT FOUND NOT CARRYING ON THE SAME BUSINESS. ON THE CONTRARY THERE IS EVIDENCE ON RECORD THAT THESE PERSONS WERE NOT ONLY IN THE BUSINESS OF SCRAP BUT ALSO STOCK OF SCRAP WAS ALSO FOUND WITH THEM. 25. THE DEPARTMENT HAS ALSO MADE ASSESSMENT OF THESE PERSONS IN RESPECT OF THE BUSINESS OF SCRAP CARRIED ON BY THEM. THE REVENUE IS DOUBTING THE PURCHASES OF THE ASSESSEE ON THE BASIS THAT THESE PERSONS HAVE MADE A STATEMENT THAT THEY HAVE ISSUED ACCOMMODATION BILLS AND HAVE NOT MADE ACTUAL SALES TO THE ASSESSEE. CAN SUCH STATEMENTS BE TAKEN AT ITS FACE VALUE? IF THESE PEOPLE WERE ENGAGED IN THE SCRAP TRADE AS CONTENDED BY THE LEARNED AR THEN THERE IS EVERY POSSIBILITY THAT THESE PERSONS WOULD HAVE COLLECTED THE SCRAP FOR WHICH THEY WERE NOT HAVING ANY INVOICES OR SOURCE OF SUPPLY AND HAVE SOLD THE SAME TO THE ASSESSEE AND TO VARIOUS OTHER PARTIES. ON BEING CAUGHT AT WRONG FOOT THESE PERSONS HAVE TAKEN THE DEFENCE THAT THE SALES MADE BY THEM ARE NOT GENUINE AND THEY HAVE ISSUED ACCOMMODATION BILLS. IN THE PRESENT CASE THE ASSESSEE HAD MADE PURCHASES AND THERE ARE CORRESPONDING SALES. THESE SALES ARE NOT BEING DOUBTED. IF SALES ARE NOT BEING DOUBTED, THEN OBVIOUSLY PURCHASING WOULD BE THERE. NOW THE LEARNED CIT(A) HELD THAT PURCHASES MADE BY THE ASSESSEE ARE NOT GENUINE AND THE ASSESSEE WOULD HAVE MADE PURCHASES FROM SOME OTHER PERSON. THE CASE OF THE ASSESSEE IS THAT IT HAS MADE PURCHASES FROM THESE VERY PERSONS AND HAVING MADE THE PAYMENT BY ACCOUNT PAYEE CHEQUE AND THERE BEING NOTHING ADVERSE IN THE TRANSACTION, IT IS FOR THE SUPPLIER I.E. SO CALLED PEOPLE TO EXPLAIN THEIR SOURCE OF PURCHASES AND NOT THE ASSESSEE. THE REVENUE IS TRYING TO SHIFT THE ONUS ON THE ASSESSEE BY MAKING PRESUMPTION THAT THE PURCHASES MADE BY IT ARE NOT GENUINE DESPITE ACCEPTING THE SAME. IN MY OPINION SHIFTING OF THIS ONUS AND THE ASSUMPTION BEING MADE THAT THE PURCHASES ARE NOT GENUINE IN THE PRESENT SET OF FACTS IS NOT CORRECT. THERE WOULD HAVE BEEN SOME LOGIC, HAD THESE PEOPLE WOULD NOT HAVE BEEN IN THE SAME TRADE AND HAD THERE BEEN SOME OTHER 9 CIRCUMSTANCES LEADING TO THE CONCLUSION THAT THE SO CALLED PURCHASES UNDER NO CIRCUMSTANCES CAN BE FROM THESE PERSONS. ADVERSE INFERENCE CANNOT BE DRAWN AGAINST A PERSON MERELY ON THE BASIS OF DOUBT. DOUBT HOWSOEVER STRONG CANNOT PAR-TAKE THE CHARACTER OF LEGAL PROOF. IN THE PRESENT CASES THERE IS A COMPLETE TRAIL OF THE PURCHASES AND SALES SO FAR AS ASSESSEE IS CONCERNED. THE ASSESSEE HAS BEEN ABLE TO CORRELATE EACH TRANSACTION OF PURCHASE WITH SALE AS IS EVIDENT FROM THE SUBMISSION BEFORE THE LEARNED CIT(A). 26. THERE IS A COMPLETE CO-RELATION BETWEEN THE PURCHASES AND THE SALES AND THE SAME IS FULLY DOCUMENTED. THUS THE AO AS WELL AS LEANED CIT(A) WAS NOT CORRECT IN DRAWING ADVERSE INFERENCE AGAINST THE ASSESSEE ON THIS ACCOUNT. IF FURTHER NOTE THAT THE LEANED CIT(A) WHILE GIVING A FINDING THAT THE PURCHASES ARE BOGUS HAS PLACED MUCH RELIANCE ON THE STATEMENT OF THESE PERSONS. AS DISCUSSED HEREINABOVE THE STATEMENT OF THESE PERSONS CANNOT BE TAKEN ON THE FACT OF IT IN VIEW OF THE SURROUNDING FACTS. THESE PERSONS WERE DEFINITELY IN THE TRADE. THESE PERSONS HAVE NOT APPEARED BEFORE THE ASSESSING OFFICER DESPITE REPEATED SUMMONS BEING ISSUED. HAD THESE PERSONS WERE CLEAN AND WANTED TO STAND BY THEIR STATEMENT GIVEN BEFORE THE ASSESSING OFFICER AND THE AFFIDAVIT FILED, THERE WAS NO REASONS FOR THESE PERSONS TO NOT TO APPEAR AND TO STAND BY THEIR STATEMENT. I AM ALSO OF THE VIEW THAT THE CIT(A) WAS NOT JUSTIFIED IN DRAWING ADVERSE INFERENCE ON THE BASIS OF THE TRANSPORTATION. AS RIGHTLY POINTED BY THE LEARNED AR THAT THESE WERE LOCAL MOVEMENTS. THE PURCHASES AND SALES WERE WITHIN THE WALLED CITY OF DELHI WERE THE TRANSPORTATION IS BY MANUAL DRIVEN CARTS AND THE CHARGES FOR THE SAME ARE DEBITED UNDER THE HEAD CARTAGE. FURTHER WHEN SALES ARE ACCEPTED AS GENUINE, THEN DEFINITELY THE TRANSACTIONS HAVE OCCURRED AND MOVEMENTS OF GOODS HAVE TAKEN PLACE. IT IS ALSO NOT THE CASE OF THE LEARNED CIT(A) THAT TRANSACTIONS HAS NOT HAPPENED. THUS TRANSACTION ON SUCH FACTS CANNOT BE A BASIS TO DRAW ADVERSE INFERENCE AGAINST THE ASSESSEE. I FURTHER NOTE THAT THE LEARNED CIT(A) HAS UPHELD THE ALLEGATION OF THE ASSES SING OFFICER OF THE BOGUS PURCHASES BY MAKING AN OBSERVATION THAT THE APPELLANTS DEALING WITH THESE PARTIES IS NOT FREE FROM ANY 10 DOUBT. IT IS A SETTLED LAW THAT DOUBT CANNOT BE A BASIS FOR SUSTAINING THE ALLEGATION. ON THE CONTRARY THE ASSESSEE HAD LEAD SUFFICIENT EVIDENCES IN SUPPORT OF ITS PURCHASES WHICH THE ASSESSING OFFICER IN MY VIEW HAS NOT BEEN ABLE TO REBUT. ACCORDINGLY I AM OF THE VIEW THAT IN THE FACTS AND CIRCUMSTANCES OF THE CASE IT CANNOT BE SAID THAT THE PURCHASES MADE BY THE ASSESSEE ARE BOGUS. 27. AS REGARDS THE ADDITIONOF20% SUSTAINED BY THE LEARNED CIT(A) I AM OF THE VIEW THAT SINCE PURCHASES ARE NOT BOGUS THE ADDITION ON THIS ACCOUNT CANNOT BE SUSTAINED. EVEN OTHERWISE THE ADDITION OF 20% ON THE FACTS AND CIRCUMSTANCES IS APPARENTLY TOO HIGH. THE LEARNED CIT(A) HAVING HELD THAT TAX HAS TO BE LEVIED ON REAL INCOME AND THE PROFIT CANNOT BE ASCERTAINED WITHOUT DEDUCTING THE COST OF PURCHASES FROM THE SALES AS OTHERWISE IT AMOUNT TO LEVY OF TAX ON GROSS RECEIPT, SHE OUGHT TO HAVE APPLIED' PROFIT RATE IN THIS NATURE O F TRADE. ESTIMATING PROFIT AT THE RATE OF 20% BY TAKING INTO CONSIDERATION THE OR VISIONS OF SECTION 40A(3) WILL NOT LEAD TO DETERMINATION OF CORRECT REAL INCOME. SECTION 40A(3) IS MEANT FOR A DIFFERENT PURPOSE WHEN THE ASSESSEE HAS MADE PURCHASES IN CASH. THIS PROVISION CANNOT BE APPLIED IN SUCH CASES. ONCE THE PURCHASES ARE HELD TO BE BOGUS THEN THE TRADING RESULTS DECLARED BY THE ASSESSEE CANNOT BE ACCEPTED AND RIGHT COURSE IN SUCH CASE IS TO REJECT BOOKS OF ACCOUNTS AND PROFIT HAS TO BE ESTIMATED BY APPLYING A COMPARATIVE PROFIT RATE IN THE SAME TRADE. THOUGH THERE CAN BE A LITTLE GUESS WORK IN ESTIMATING PROFIT RATE BUT SUCH PROFIT RATE CANNOT BE PUNITIVE . 28. IN VIEW OF THE ABOVE, THE ADDITION SUSTAINED BY THE LEARNED CIT(A) IS DIRECTED TO BE DELETED AND GROUNDS NO. 4 TO 11 ARE ALLOWED 5.3.1.1 THE ABOVE ORDER HAS BEEN FOLLOWED IN THE FOLLOWING CASES: UNIQUE METAL INDUSTRIES VS ITO ITA NO. 1372/DEL/2015 DATED. 28.10.2015 11 M/S RADHEYSHYAM& CO. VS ITO, ITA NO.1429/DEL/2015, DATED 30.11.2015, SMC-1 BENCH-DEL HI ITAT M/S KISHANLALGAMBHIR& SONS VS ITO, ITA NO.1516/DEL/2015, DATED 02.12.2015, F BENCH-DELHI ITAT M/S PUNJAB METAL STORE VS ITO, ITA NO.1512/DEL/2015, DATED .2.12.2015, F BENCH-DELHI ITAT M/S KAKKARBARTAN STORE VS ITO, ITA NO. 1380/DEL/2015 DATED. 23.3.2016 M/S KRISHANLAL& SONS VS ITO, ITA NO. 1379/DEL/2015 DATED. 23.3.2016 M/S LAXMIDHATUBHANDARVS ITO, ITA NO. 1369/DEL/2015 DATED. 23.3.2016 M/S KARSHNI METAL STORE VS ITO, ITA NO. 1365/DEL/2015 DATED. 23.3.2016 M/S KASHMIR METALS VS ITO, ITA NO. 1366/DEL/2015 DATED. 23.3.2016 M/S BHARDWAJ METAL (INDIA) VS ITO, ITA NO. 1370/DEL/2015 DATED. 23.3.2016 M/S NAYAR METAL CO. VS ITO ITA NO. 1374/DEL/2015 DATED. 31/03/2016 5.4 THE FACTS OF THE PRESENT CASE ARE EXACTLY IDENTICAL TO THE FACTS OF THE ABOVE CASES DECIDED B Y THE ITAT. THE LD. DR DURING THE COURSE OF THE HEARING AL SO COULD NOT BRING TO OUR NOTICE ANY MATERIAL EVIDENCE OR FACTS WHICH COULD LEAD US TO NOT TO FOLLOW THE DECISION O F THE COORDINATE BENCHES OF THE TRIBUNAL. WE THEREFORE, RESPECTFULLY FOLLOWING THE DECISION OF TRIBUNAL IN THE ABOVE CASES AND ACCORDINGLY WE HOLD THAT THE ADDITION MA DE BY THE AO AND THE ENHANCEMENT MADE BY THE LD. CIT(A) A RE UNSUSTAINABLE AND ACCORDINGLY WE DIRECT THE AO TO DE LETE 12 THE ENTIRE ADDITIONS. ACCORDINGLY, GROUND NO. 4 TO 11 ARE ALLOWED. 6. IN THE RESULT, APPEAL OF THE ASSESSEE STAND ALLO WED. 5.4 KEEPING IN VIEW OF THE FACTS AND CIRCUMSTANCES OF THE PRESENT CASE AND RESPECTFULLY FOLLOWING THE PRECEDENTS AS AFORES AID, THE ADDITION IN DISPUTE IS DELETED AND APPEAL OF THE ASSESSEE IS ALLOWED. 6. IN THE RESULT, THE APPEAL FILED BY THE ASSESSEE STANDS ALLOWED. ORDER PRONOUNCED ON 06/12/2019. SD/- [H.S. SIDHU] JUDICIAL MEMBER DATE 06/12/2019 SRB COPY FORWARDED TO: - 1. APPELLANT - 2. RESPONDENT - 3. CIT 4. CIT (A) 5. DR, ITAT TRUE COPY BY ORDER, ASSISTANT REGISTRAR, ITAT, DELHI BENCHES