SHRI ARVIND KUMAR JAIN, TONK V. ITO, TONK

ITA 1392/JPR/2010

• Counselvise Citation: 139223114 RSA 2010
• Duration Of Justice: 6 month(s) 18 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 24-06-2011
• Appeal Filed By: Assessee
• Order Result: Partly Allowed
• Bench Allotted: B
• Assessment Year: 2006-2007
• Appeal Filed On: 06-12-2010
• Result in Favour of: Partly Allowed
• Court: TRIBUNAL
• Department Lawyers: G R PAREEK
• Keywords: Additional evidence; Retraction
• Section: 40A(3); 133A; 195; 131

Judgement Text

1 ITA 1392-10 IN THE INCOME TAX APPELLATE TRIBUNAL JAIPUR BENCH B JAIPUR BEFORE SHRI R.K. GUPTA AND SHRI N.L. KALRA ITA NO. 1392/JP/2010 ASSTT. YEAR : 2006-07. SHRI ARVIND KUMAR JAIN, VS. THE INCOME-TAX OFFICE R, PROP.ANNAPURNA TRADING CO., TONK. VILL. PACHEWAR, TEHSIL, MALPURA, DISTT. TONK. (APPELLANT) (RESPONDENT) APPELLANT BY : SHRI RAJEEV SOGANI RESPONDENT BY : SHRI G.R. PAREEK ORDER DATE OF ORDER : 24/06/2011. PER R.K. GUPTA, J.M. THIS IS AN APPEAL BY ASSESSEE AGAINST THE ORDER OF LD. CIT (A) RELATING TO ASSESSMENT YEAR 2006-07. 2. THE ASSESSEE HAS OBJECTED CONFIRMATION OF INVOKI NG PROVISIONS OF SECTION 145(3) AND CONFIRMING THE ADDITION OF RS.10,62,467/- TREAT ING THE PURCHASES MADE BY ASSESSEE AS BOGUS. 3. THE BRIEF FACTS OF THE CASE ARE THAT THE ASSESSE E IS PROPRIETOR OF M/S. ANNAPURNA TRADING COMPANY AND STARTED BUSINESS OF TRADING OF AGRICULTURAL PRODUCE AFTER OBTAINING SALES-TAX REGISTRATION AND GETTING HIMSELF REGISTER ED WITH KRISHI UPAJ MANDI SAMITI. THE INVESTIGATION WING HAS COLLECTED INFORMATION FROM B CTT WING AND NOTICED THAT LARGE AMOUNT IS WITHDRAWN IN CASH FROM BANK ACCOUNT OF TH E ASSESSEE. IN ORDER TO MAKE FURTHER 2 VERIFICATION, SURVEY UNDER SECTION 133A WAS CARRIED OUT ON 10.8.2006 AT THE PREMISES OF THE ASSESSEE. THE ASSESSEE FILED RETURN DECLARING INCOME OF RS. 1,51,929/- AND ASSESSMENT WAS COMPLETED ON A TOTAL INCOME OF RS. 10,92,260/-. DURING THE COURSE OF SURVEY NO BOOKS OF ACCOUNT LIKE CASH BOOK, SALE BOOK, PURCHAS E BOOK AND LEDGER ETC. WERE FOUND AT THE BUSINESS PREMISES. HE COULD NOT PRODUCE ANY BOO KS OF ACCOUNT OF M/S. ANNAPURNA TRADING CO. AND ACCEPTED THAT NO BOOKS OF ACCOUNT H AVE BEEN PREPARED BY HIM. IT WAS ALSO ADMITTED THAT THE TRANSACTION WITH BANK ACCOUN T IN IDBI ARE RELATED TO HIS BUSINESS OF ISSUING BOGUS SALE BILLS AND ADMITTED THAT HE HAD P ROVIDED BOGUS SALE BILLS TO DIFFERENT PARTIES AS PER THEIR REQUIREMENTS AND NO ACTUAL DEL IVERY OF GOODS WAS MADE AGAINST THOSE BILLS ISSUED. HE RECEIVED CHEQUES OF AMOUNT EQUAL TO THE AMOUNT OF BOGUS SALE BILLS FROM THE CONCERNED PARTIES. THE CHEQUES WERE DEPOSITED BY HIM IN HIS BANK ACCOUNT AND THEN AMOUNT WAS WITHDRAWN BY HIM IN CASH. IT WAS ALSO A DMITTED THAT CASH WAS GIVEN TO CONCERNED PARTIES AND RECEIVED 1% COMMISSION FOR PR OVIDING THOSE BOGUS SALE BILLS ISSUED. HE ACCEPTED THAT THE SALES SHOWN IN HIS INC OME TAX RETURNS ARE MAINLY RELATED TO BOGUS SALE BILLS ISSUED BY HIM. IN POST SURVEY PRO CEEDINGS, THE ASSESSEE VIDE HIS LETTER DATED 17.08.2006 STATED THAT BOOKS OF ACCOUNT OF M/ S. ANNAPURNA TRADING COMPANY FOR THE FINANCIAL YEAR 2004-05 WERE MISPLACED AT THE TI ME OF BRINGING THOSE BOOKS FROM PACHEWAR TO JAIPUR FOR SUBMITTING THE SAME BEFORE D DIT. THE CASE WAS SELECTED FOR SCRUTINY AND ASSESSEE WAS ISSUED NOTICE UNDER SECTI ON 143(2). DURING THE ASSESSMENT PROCEEDINGS, THE ASSESSEE WAS SPECIFICALLY TO PRODU CE STOCK REGISTER MAINTAINED ON DAY- TO-DAY BASIS CONTAINING DETAILS OF TRADED ITEMS AND MONTH-WISE DETAILS OF SALE & PURCHASE IN TERM OF QUALITY AND QUANTITY-WISE. THE ASSESS EE FURNISHED DETAILS OF SALES AND PURCHASE ONLY IN VALUE-WISE NOT IN TERMS OF QUANTIT Y AND QUALITY-WISE AND NOT PRODUCED 3 STOCK REGISTER FOR VERIFICATION. IN ABSENCE OF STO CK REGISTER, DAY TO DAY SALE AND PURCHASE COULD NOT BE VERIFIED. THEREFORE, THE AO REJECTED THE BOOKS OF ACCOUNT BY INVOKING PROVISIONS OF SECTION 145(3). THE SURVEY REPORT WA S ALSO TAKEN INTO CONSIDERATION BY THE AO WHILE REJECTING THE BOOKS OF ACCOUNT. THEREAFTE R THE AO NOTICED THAT ASSESSEE HAS SHOWN G.P. OF RS. 15,78,666/- ON TOTAL SALE OF RS. 12.49 CRORES OR ODD AS AGAINST PURCHASE OF RS. 11.62 CRORES OR ODD. THE PURCHASES OF RS. 7 .31 CRORES OR ODD WERE SHOWN HAVING PURCHASED FROM FARMERS AND REMAINING PURCHASES OF R S. 4.31 CRORES OR ODD WERE SHOWN FROM TRADERS WHICH GAVE G.P. RATE OF 1.26%. NET PR OFIT HAS BEEN SHOWN @ 0.16%. IN THE IMMEDIATELY PRECEDING YEAR THE NET PROFIT RATE WAS SHOWN AT 0.75% BY THE ASSESSEE. THE AO ALSO NOTED THAT CAPITAL EMPLOYED BY ASSESSEE IN ALL THE YEARS WAS VERY MEAGER I.E. RS. 3,00,000/- OR ODD. THE AO ALSO NOTED THAT ON COMPA RISON OF TURNOVER OF EARLIER YEAR, THE TURNOVER IN THIS YEAR HAS SUBSTANTIALLY INCREASED B Y 1200 TIMES AS COMPARED TO EARLIER YEAR. LOOKING TO THE ABNORMAL INCREASE IN TURNOVER AS COMPARED TO EARLIER YEAR AND MEAGER CAPITAL EMPLOYED AROUND RS. 3,00,000/-, THE AO OBSERVED THAT IT IS NOT POSSIBLE FOR ANY ONE TO RUN BUSINESS AT LARGE SCALE AS SHOWN FOR THE YEAR UNDER CONSIDERATION. IN VIEW OF THESE FACTS AND CIRCUMSTANCES, THE AO HAS I NFERRED THAT ASSESSEE IS NOT MAKING ANY PURCHASE OR SALE GENUINELY BUT PROVIDING ACCOMM ODATION ENTRIES TO VARIOUS PARTIES BY ISSUING BOGUS BILLS AND ON 1% COMMISSION ON BOGUS B ILLING. THE ASSESSEE WAS REQUIRED TO EXPLAIN ALL THESE DISCREPANCIES NOTED BY AO AND AFFIDAVIT WAS FILED RETRACTING FROM HIS STATEMENT. THEREAFTER, THE ASSESSEE WAS REQUIRED T O FILE NAMES, ADDRESSES OF THE AGRICULTURISTS/FARMERS ALONG WITH ALL THE DETAILS W ITH KRISHI UPAJ MANDI SLIPS (VIKRAY PURCHI) FROM WHOM ALLEGED CASH PURCHASE OF RS. 7.31 CRORES OR ODD HAVE BEEN SHOWN AND SIMILAR DETAILS WERE ALSO ASKED FOR PURCHASES MADE FROM TRADERS. VIDE LETTER DATED 4 10.12.2008 ASSESSEE PROVIDED ADDRESSES OF 26 FARMER S AND FURNISHED 152 KRISHI UPAJ MANDI SLIPS FOR ALLEGED CASH PURCHASES OUT OF 255 F ARMERS MENTIONED IN THE INFORMATION LIST. SINCE COMPLETE LIST OF FARMERS WAS NOT FILED , THEREFORE, THE ASSESSEE WAS GIVEN A SHOW CAUSE NOTICE AGAIN BY INFORMING THAT AS PER IN FORMATION HE HAS PURCHASED GOODS FROM 255 FARMERS, THEREFORE, HE WAS REQUIRED TO GIV E FULL DETAILS. IT WAS ALSO REQUIRED TO PRODUCE THE FARMERS. HOWEVER, FARMERS WERE NOT PROD UCED EXCEPT 8 FARMERS UNDER THE PRETEXT THAT IT IS NOT POSSIBLE FOR HIM TO PRODUCE ALL THE FARMERS FOR EXAMINATION AND GIVE ADDRESSES OF FARMERS WHICH IS PLACED ON FILE. SOME OF THE FARMERS WHOSE ADDRESSES WERE GIVEN WERE GOT VERIFIED THROUGH INSPECTOR. HOWEVER, INSPECTOR REPORTED THAT NO SUCH FARMERS WAS FOUND AT THE GIVEN ADDRESS. ENQUIRY WA S MADE FROM TRANSPORTERS ALSO THROUGH WHOM THE GOODS WERE TRANSPORTED. HOWEVER, T HE SAME REMAINED UNVERIFIED. ALL THESE FACTS HAVE BEEN DISCUSSED IN THE ORDER OF AO IN DETAIL AND THEREAFTER THE AO CONCLUDED THAT ASSESSEE HAS NOT PURCHASED ANY MATER IAL. IN FACT, HE HAS ISSUED ONLY BOGUS SALE BILLS BY SHOWING PURCHASES IN THE NAME OF BOGU S FARMERS AND, THEREFORE, AO REJECTED THE CLAIM OF THE ASSESSEE OF MAKING PURCHASES FROM VARIOUS PARTIES AND ON THE SALES SHOWN BY ASSESSEE, THE INCOME WAS COMPUTED @ 1% AS COMMISSION WHICH RESULTED IN AN ADDITION OF RS. 10,62,467/- AND THE SAME WAS ADDED TO THE INCOME OF THE ASSESSEE. FURTHER, ADDITION OF RS. 42,249/- WAS MADE ON ACCOU NT OF LOW HOUSEHOLD WITHDRAWALS. TOTAL INCOME WAS COMPUTED AT RS. 10,92,260/- AGAINS T THE RETURNED INCOME OF RS. 1,51,929/-. 4. ASSESSEE PREFERRED APPEAL BEFORE LD. CIT (A) WHO ALSO CONFIRMED THE ACTION OF THE AO IN MAKING THE ADDITION OF RS. 10,62,467/- INCLUD ING THE ACTION OF THE AO REJECTING THE BOOKS OF ACCOUNT UNDER SECTION 145(3). 5 5. NOW THE ASSESSEE IS IN APPEAL HERE BEFORE THE TR IBUNAL. 6. DETAILED WRITTEN SUBMISSIONS WERE FILED. AN APPL ICATION UNDER RULE 29 OF ITAT RULES FOR ADMITTING THE ADDITIONAL EVIDENCE WAS ALS O FILED. THESE ADDITIONAL EVIDENCES ARE AFFIDAVIT OF FARMERS IN CASE OF CASH PURCHASE, DETAILS OF PURCHASES FROM NAFED, DETAILS OF TRANSPORTERS THROUGH WHOM THE MATERIAL W AS SUPPLIED TO THE RESPECTIVE BUYERS, COPY OF PERMIT AND INSURANCE COVER NOTE OF VEHICLES THROUGH WHOM THE GOODS WERE SUPPLIED, COPY OF RETURN OF M/S. SANMATI ENTERPRISE S, COPY OF ORDER OF TRIBUNAL IN CASE OF M/S. UMA ENTERPRISES, REPLY UNDER SECTION 131 FROM M/S.UMA ENTERPRISES, LETTER OF ITO JAIPUR FOR COPY OF STATEMENT AND LETTER TO ITO TONK ASKING REPLY OF KRISHI UPAJ MANDI SAMITI CREDITORS CONFIRMATION, LETTER IN CASE OF SA BOO FOODS PROCESSING LTD. ARE ENCLOSED ALONG WITH THE AFFIDAVIT OF THE ASSESSEE WITH THE A PPLICATION UNDER RULE 29 OF ITAT RULES. IT WAS RECORDED THAT THESE DETAILS COULD NOT BE GAT HERED EARLIER AND NOW THEY HAVE BEEN OBTAINED FROM ALMOST ALL THE FARMERS FROM WHOM THE PURCHASES WERE MADE. THE DETAILS HAVE BEEN COLLECTED FROM THE RESPECTIVE TRANSPORTER S AS ON EARLIER OCCASION COULD NOT BE GATHERED. IT WAS SUBMITTED THAT KRISHI UPAJ MANDI SAMITI IS A LOCAL BODY AND THEY HAVE VERIFIED HAVING SALES MADE BY ASSESSEE TO VARIOUS P ARTIES AND NOW CERTIFICATE HAS BEEN OBTAINED FROM THE KRISHI UPAJ MANDI SAMITI WHICH SU PPORT ;THE CONTENTION OF THE ASSESSEE THAT HE WAS INVOLVED GENUINELY IN PURCHASE AND SALE OF AGRICULTURAL PRODUCE. IT WAS REQUESTED THAT ALL THESE DETAILS GO TO THE ROOT OF THE CASE, THEREFORE, THEY SHOULD BE ADMITTED. DETAILED WRITTEN SUBMISSIONS WERE FILED W HICH ARE PLACED ON RECORD. 7. ON THE OTHER HAND, THE LD. D/R FIRSTLY PLACED RE LIANCE ON THE ORDERS OF THE AO AND LD. CIT (A) WHO HAVE GIVEN DETAILED REASONING FOR M AKING THE ADDITION. IT WAS FURTHER SUBMITTED THAT NOW THE ASSESSEE HAS FILED VARIOUS A DDITIONAL EVIDENCES WHICH WERE NOT 6 BEFORE THE AO AND LD. CIT (A) AND IF THEY ARE ADMIT TED THEN MATTER SHOULD BE REMANDED TO THE FILE OF AO TO EXAMINE ALL THOSE DETAILS. IT WAS FURTHER SUBMITTED THAT THERE IS NO EVIDENCE THAT THE STATEMENT OF THE ASSESSEE WAS TAK EN FORCIBLY AS THE STATEMENT WAS RECORDED IN NORMAL ATMOSPHERE AND ASSESSEE HAS VOLU NTARILY ADMITTED THAT HE IS INVOLVED IN ISSUING BOGUS BILLS IN LIEU OF COMMISSION @ 1%. 8. WE HAVE HEARD RIVAL SUBMISSIONS AND CONSIDERED T HEM CAREFULLY. AFTER CONSIDERING THE SUBMISSIONS AND PERUSING MATERIAL O N RECORD, WE FIND THAT ASSESSEE DESERVES TO SUCCEED IN THIS GROUND IN PART. THE FO LLOWING SUBMISSIONS HAVE BEEN MADE THROUGH WRITTEN SUBMISSIONS BY THE LD. COUNSEL OF T HE ASSESSEE DURING THE APPELLATE PROCEEDINGS :- 1. FACTS AS ON THE DATE OF SURVEY 1.1 PURCHASES FROM NAFED IT IS SUBMITTED THAT THE ALLEGATION OF THE DEPARTME NT THAT THE ASSESSEE IS ENGAGED IN ISSUING BOGUS BILLS IS B ASELESS AND THE STATEMENTS RECORDED DURING SURVEY PROCEEDINGS W ERE EXTRACTED BY THE DEPARTMENT BY PUTTING UNDUE PRESSU RE. THE ASSESSEE WAS AT THAT TIME INVOLVED IN PURCHASES FRO M NAFED (NATIONAL AGRICULTURAL CO-OPERATIVE MARKETING FEDER ATION OF INDIA LIMITED), A GOVERNMENT BODY WHICH FACT WAS CO NVENIENTLY IGNORED BY THE SURVEY TEAM. THE RELEVANT FACTS ARE AS UNDER:- PURCHASE DATE (FROM NAFED) 27.07.06 (BILL NO: 1295) (ADDITIONAL EVIDENCES PB NO. 9- 12) SURVEY DATE 10.08.06 7 RETRACTION DATE 20.09.07 PAYMENT DETAILS : DATE CHEQUE NO. AMOUNT IN (RS.) 22/07/2006 258770 2,00,00 0/- (PB-II PAGE 93) 26/07/2006 258772 6,06,00 0/- (PB-II PAGE 93) THE PAYMENTS FOR ABOVE PURCHASES FROM NAFED WERE MA DE FROM ACCOUNT NO. 17064 OF IDBI BANK. THIS IS THE ACCOUNT WHICH HAS BEEN MADE THE BASIS OF THE STORY BUILT BY THE DEPAR TMENT. 1.2 BANK ACCOUNT NO. 17064 WITH IDBI WAS RECORDED. IN THE STATEMENTS RECORDED DURING SURVEY PROCEEDING S IN ANSWER TO QUESTION NUMBER 25 (CIT(A) ORDER PAGE NO. 6), THE ASSESSEE HAD MENTIONED THAT HIS ACCOUNT NUMBER 1706 4 WITH IDBI WAS UNDISCLOSED, WHEREAS THE FACT IS THAT THE BALANCE OF THE SAID ACCOUNT WAS DULY REFLECTED IN THE AUDITED FINANCIAL STATEMENTS OF FY. 2004-05 (PB-II PAGE15) . THIS GOES TO PROVE THAT THERE WAS NO AUTHENTICITY OF THE STATEMENTS RE CORDED AND THOSE STATEMENTS WERE NOT CORROBORATED BY EVIDENCES . IT MAY ALSO BE NOTED THAT CHEQUES WERE ISSUED FROM THIS VE RY BANK ACCOUNT FOR PURCHASES FROM DEALERS. DETAILS OF THES E ARE AS UNDER:- S. NO. DATE PARTY NAME AMOUNT PB-II PAGE NO. 1. 12.04.2005 DHARIWAL & COMPANY 1.84.117/- 65 2. 03.06.2005 DHARIWAL & COMPANY 2,00,220/- 66 3. 14.06.2005 DHARIWAL & COMPANY 28,520/- 66 4. 27.06.2005 MAHAWEER OIL MILLS 2,52,857/- 67 5. 27.06.2005 RAKESH OIL MILLS 2,14,016/- 67 6. 07.07.2005 MAHAWEER OIL MILLS 2,77,715/- 68 7. 09.07.2005 DHARIWAL & COMPANY 1,89,145/- 68 8 8. 11.07.2005 DEVI SHANKAR GHANSHYAM JANWAR 92,150/- 68 9. 13.07.2005 TARACHAND RAMSWAROOP 1,25,031/- 69 10. 13.07.2005 MAHAWEER OIL MILLS 2,66,711/- 69 11. 28.07.2005 ANIL KUMAR & COMPANY 5,00,000/- 70 12. 29.07.2005 CHANDMAL KAILASHCHAND JAIN 2,60,179/- 70 13. 05.08.2005 CHANDMAL KAILASHCHAND JAIN 68,495/- 70 14. 24.08.2005 JULALAL TRADERS 18,640/- 71 15. 01.09.2005 MAHAWEER OIL MILLS 2,90,320/- 72 16. 08.09.2005 SUSHIL TRADERS 1,96,693/- 72 17. 08.09.2005 RAM DAS BABU LAL AGARWAL 46,054/- 72 18. 10.09.2005 VARDHMAN TRADERS 2,00,000/- 72 19. 15.09.2005 VIJAY LAXMI DALL MILLS 1,70,187/- 72 20. 15.09.2005 SATISH CHAND SHIV DAYAL 43,314/- 72 21. 22.09.2005 BHAGCHAND LALCHAND & COMPANY 2,29,143/- 72 22. 24.09.2005 MAHAWEER OIL MILLS 2,00,220/- 73 23. 08.10.2005 MAHAWEER OIL MILLS 50,360/- 73 24. 14.10.2005 KHANDELWAL ENTERPRISES 2,635/- 74 25. 14.10.2005 SURESH KUMAR NARENDRA KUMAR 20,840/- 74 26. 22.10.2005 PRAVEEN ENTERPRISES 3,30,330/- 74 27. 27.10.2005 DANALAL NEMICHAND JAIN 1,24,599/- 75 28. 27.10.2005 JANKILAL BODULAL JAIN 1,52,688/- 75 29. 14.11.2005 PRAVEEN ENTERPRISES 4,60,460/- 75 30. 14.11.2005 PRAVEEN ENTERPRISES 5,95,595/- 75 31. 23.11.2005 VARDHMAN TRADERS 1,50,000/- 76 32. 03.12.2005 PRAVEEN ENTERPRISES 5,25,525/- 76 33. 08.12.2005 SURESH KUMAR NARENDRA KUMAR 30,180/- 77 34. 08.12.2005 JANKILAL BODULAL JAIN 1,69,006/- 77 35. 15.12.2005 PRAVEEN ENTERPRISES 3,50,350/- 77 36. 16.12.2005 PRAVEEN ENTERPRISES 5,70,570/- 77 37. 23.12.2005 SURESH KUMAR NARENDRA KUMAR 20,620/- 78 38. 22.12.2005 MANOJ TRADERS 3,00,331/- 78 39. 23.12.2005 MANOJ TRADERS 10,01,102/- 78 9 40. 27.12.2005 MANOJ TRADERS 1,19,634/- 78 41. 27.12.2005 MITHAN LAL OM PRAKASH JAIN 2,31,293/- 78 42. 28.12.2005 MANOJ TRADERS 2,00,220/- 78 43. 30.12.2005 MANOJ TRADERS 2,75,303/- 78 44. 31.12.2005 MANOJ TRADERS 2,25,248/- 79 45. 02.01.2006 MANOJ TRADERS 4,50,496/- 79 46. 17.01.2006 MANOJ TRADERS 8,50,937/- 80 47. 17.01.2006 MANOJ TRADERS 8,50,937/- 80 48. 18.01.2006 MANOJ TRADERS 4,00,441/- 80 49. 19.01.2006 MANOJ TRADERS 7,10,782/- 80 50. 20.01.2006 MANOJ TRADERS 1,17,765/- 80 51. 21.01.2006 RAM VILAS SHIV KUMAR 1,39,815/- 81 52. 21.01.2006 SH. RAM KRISHAN OIL MILLS 3,40,770/- 81 53. 21.01.2006 SURESH KUMAR NARENDRA KUMAR 37,354/- 81 54. 24.01.2006 RAMPAL RAM PRAKASH MAHIYA 2,02,425/- 81 55. 25.01.2006 MANOJ TRADERS 5,80,639/- 81 56. 28.01.2006 LADU LAL MUKESH KUMAR SHARMA 20,360/-/- 81 57. 28.01.2006 BHAWAR LAL RAMESHWAR PRASHAD 3,04,286/- 81 58. 01.02.2006 MANOJ TRADERS 7,50,827/- 82 59. 01.02.2006 GRIRAJ OIL INDUSTRIES 2,39,479/- 82 60. 02.02.2006 MANOJ TRADERS 10,26,130/- 82 61. 06.02.2006 MANOJ TRADERS 2,25,248/- 82 62. 08.02.2006 MANOJ TRADERS 8,60,000/- 82 63. 11.02.2006 MANOJ TRADERS 11,10,000/- 82 64. 13.02.2006 MANOJ TRADERS 18,66,865/- 82 65. 20.02.2006 MANGILAL BAJARANGLAL 2,65,544/- 83 66. 27.02.2006 MANOJ TRADERS 12,00,000/- 83 67. 01.03.2006 MANOJ TRADERS 3,00,000/- 83 68. 03.03.2006 MANOJ TRADERS 3,00,000/- 83 69. 04.03.2006 MANOJ TRADERS 5,00,000/- 84 70. 06.03.2006 MANOJ TRADERS 2,40,000/- 84 71. 08.03.2006 MANOJ TRADERS 6,00,000/- 84 72. 09.03.2006 MANOJ TRADERS 10,20,000/- 84 73. 11.03.2006 LADULAL MODULAL 1,75,193/- 84 10 74. 11.03.2006 SINHAL TRADING COMPANY 2,20,271/- 84 75. 13.03.2006 MANOJ TRADERS 4,57,000/- 84 76. 13.03.2006 ASHOK KUMAR SUNIL KUMAR SARRAF 1,69,966/- 84 77. 14.03.2006 MANOJ TRADERS 2,10,000/- 84 78. 20.03.2006 JANKILAL BODULAL JAIN 1,58,558/-/- 85 79. 20.03.2006 PADMAVATI TRADERS 1,39,927/- 85 80. 20.03.2006 LADULAL MODULAL 3,84,185/- 85 81. 22.03.2006 MANOJ TRADERS 14,00,000/- 85 82. 22.03.2006 S.S. ENTERPRISES 2,59,074/- 85 83. 23.03.2006 MANOJ TRADERS 2,40,000/- 85 84. 24.03.2006 MANOJ TRADERS 3,51,482/- 85 85. 25.03.2006 RAMPRASAD RAMPAL MUNDRA 2,29,334/- 85 86. 25.03.2006 RAMAVTAR LAKHOTIYA 3,49,214/-/- 85 87. 25.03.2006 LADULAL MODULAL 29,326/- 85 88. 27.03.2006 BIHARI LAL BANSHI LAL 2,13,262/- 85 89. 28.03.2006 KHANDELWAL ENTERPRISES 4,440/- 85 90. 30.03.2006 SURESH KUMAR NARENDRA KUMAR 25,125/- 86 91. 19.04.2006 LADULAL MODULAL 55,863/- 87 92. 19.04.2006 RAJENDRA KUMAR RAMESH CHAND 1,81,974/- 87 93. 21.04.2006 RAMESH CHAND MOTI LAL JAIN 1,06,297/- 87 94. 24.04.2006 VIKAS TRADERS 2,45,776/- 87 95. 24.05.2006 BADRIPRASHAD JAJANTPRASHAD 1,67,177/- 89 96. 24.05.2006 LAKHMI CHAND LADULAL KAGLA 1,96,475/- 89 97. 26.05.2006 RAMESH CHAND MOTI LAL JAIN 3,10,582/- 90 98. 13.06.2006 BIRDHACHAND PADAMKUMAR JAIN 2,36,513/- 91 99. 03.07.2006 DHANNALAL NEMICHAND 50,060/- 92 100. 10.07.2006 GOYAL TRADING COMPANY 2,69,115/- 92 101. 11.07.2006 BIRDHACHAND PADAMKUMAR JAIN 2,31,434/- 92 102. 18.07.2006 DHANNALAL NEMICHAND 1,33,785/- 93 103. 24.07.2006 HIRALAL KALURAM & CO. 2,43,903/- 93 104. 24.07.2006 PREMCHAND MAHAVIR PRASAD 2,38,143/- 93 105. 31.07.2006 ROHAN TRADING COMPANY 3,55,795/- 94 106. 05.08.2006 LAXMI TRADING COMPANY 1,37,798/- 94 11 THIS IS FURTHER SUBMITTED THAT THE PAYMENTS WERE AL SO MADE THROUGH SBBJ MALPURA A/C NO. 51066002128 TO THE DEAL ERS. (PB-II PAGE 97-106) 1.3 PURCHASES AND SALES FULLY EVIDENCED IT IS ALSO IMPORTANT TO NOTE THAT ALTHOUGH MUCH CRE DENCE IS GIVEN BY THE LOWER AUTHORITIES TO THE FACT OF THE N ON AVAILABILITY OF BOOKS OF ACCOUNTS, YET THE FOLLOWING NEED CONSID ERATION WHICH HAS BEEN TOTALLY IGNORED BY THE LOWER AUTHORITIES:- BILLS AMOUNTING TO RS. 4,31,44,102/- OF REGISTERED DEALERS ARE NOT AFTER THOUGHT OR SUBSEQUENT MANIPULATION. PAYMENTS TO THE SUPPLIERS THROUGH ACCOUNT PAYEE CHEQUES ARE ALSO NOT AFTER THOUGHT OR SUBSEQUENT MANIPULATION. KRISHI UPAJ MANDI SLIPS REGARDING CASH PURCHASES FR OM 152 FARMERS ARE ALSO NOT AFTER THOUGHT OR SUBSEQUEN T MANIPULATION. 1.4. NO DIARY OR LOOSE SLIPS FOUND THE LOWER AUTHORITIES HAVE NO CORROBORATIVE EVIDENC E IN SUPPORT OF THE SO CALLED ADMISSION BY THE ASSESSEE. IF ANY PERSON IS INVOLVED IN ISSUE OF BOGUS BILLS WHEREBY CASH IS RE TURNED AFTER RETAINING HIS COMMISSION, THEN SOME RECORD MUST HAV E BEEN FOUND DURING SURVEY IN THE FORM OF DIARY OR KUCHHA SLIPS, WHEREIN DATES ETC OF RETURNING THE CASH AND THE CAL CULATION OF 12 COMMISSION SHOULD HAVE BEEN RECORDED. NOT EVEN AN I OTA OF SUCH EVIDENCE WAS FOUND. THE PURPOSE OF SURVEY IS TO COLLECT E VIDENCE AND NOT TO EXTRACT STATEMENTS CONFESSING CERTAIN THINGS . 2. RETRACTION 2.1. IT IS IMPORTANT TO NOTE THAT THESE STATEMENTS WERE RETRACTED BY WAY OF AN AFFIDAVIT FILED BEFORE THE L D. AO. THE RETRACTION WAS DULY SUPPORTED WITH BY EVIDENCES SUCH AS PURCHASE BILLS MANDI SLIPS WEIGHBRIDGE SLIPS (PB-II PAGE 19-50) TRANSPORT BILLS MANDI SAMITI RECEIPTS SALE BILLS (PB-II PAGE 51-61) 2.2 CONFESSIONAL STATEMENTS ALONE CAN NOT BE THE BASIS FOR TAXING INCOME: IT IS ALSO SUBMITTED THAT THE INCOME SHOULD NOT BE TAXED ON THE BASIS OF STATEMENTS ALONE RECORDED DUR ING SURVEY PROCEEDINGS. IT MUST BE CORROBORATED BY THE REQUISITE EVIDENCES. IT CANNOT BE BASED MERELY ON T HE CONFESSIONAL STATEMENTS, WHICH ARE EXTRACTED BY THE DEPARTMENT BY PUTTING UNDUE PRESSURE DURING THE COU RSE OF SURVEY PROCEEDINGS. THE HONBLE FINANCE MINISTER HAS 13 ACCEPTED THIS FACT ON THE FLOOR OF THE PARLIAMENT. THE CBDT HAS ISSUED CIRCULAR F.NO. 286/2/2003- IT (INV) DATED 11.03.2003 IN THIS REGARD WHICH IS BINDING ON THE A SSESSING OFFICERS, THE SAME IS AS FOLLOWS: INSTANCES HAVE COME TO THE NOTICE OF THE BOARD WHE RE ASSESSEE HAS CLAIMED THAT THEY HAVE BEEN FORCED TO CONFESS THE U NDISCLOSED INCOME DURING THE COURSE OF SEARCH & SEIZURE AND SU RVEY OPERATIONS. SUCH CONFESSION IS NOT BASED UPON RELIA BLE EVIDENCES AND NOT CONSIDERED BY THE CONCERNED ASSESSEE WHILE FILING RETURN OF INCOME. IN THESE CIRCUMSTANCES ON CONFESSION DURING THE COURSE OF SEARCH & SEIZURE AND SURVEY OPERATIONS DO NOT SERVE ANY USEFUL PURPOSE. IT IS THEREFORE, ADVISED THAT THERE SHOULD BE FOCUS AND CONCENTRATION ON COLLECTION OF EVIDENCE OF INCOME W HICH LEAD TO INFORMATION ON WHAT HAS NOT BEEN DISCLOSED OR IS NO T LIKELY TO BE DISCLOSED BEFORE THE INCOME TAX DEPARTMENT, SIMILARL Y, WHILE RECORDING STATEMENT DURING THE COURSE OF SEARCH & S EIZURE AND SURVEY OPERATIONS NO ATTEMPT SHOULD BE MADE TO BE O BTAIN CONFESSION AS TO THE UNDISCLOSED INCOME. ANY ACTION ON THE CONTRARY SHALL BE VIEWED ADVERSELY. FURTHER IN RESPECT OF PENDING ASSESSMENT PROCEEDING S ALSO, ASSESSING OFFICER SHOULD RELY UPON THE EVIDENCE/ MA TERIALS GATHERED DURING THE COURSE OF SEARCH/ SURVEY OPERAT ION OR THEREAFTER WHILE FRAMING THE RELEVANT ASSESSMENT OR DERS. 14 THE HONBLE ITAT, JAIPUR BENCH IN THE CASE OF ITO V S. SURESH CHAND KOOLWAL (ITA NO.- 795/JP/2003, AY 2000-01) HAS HELD AS UNDER:- THE PREVALENCE OF FORCED CONFESSION HAS NOT BEEN R ECOGNIZED BY THE FINANCE MINISTER HIMSELF IN THE COURSE OF HIS BUDGE T SPEECH, 2003 AND FOLLOWED BY A BOARD CIRCULAR NO. 286/2/2003- IT ( INV), DATED MARCH 10, 2003 REQUIRING THE ASSESSING OFFICERS TO AVOID SUCH COMPULSION. THE PRIVY COUNCIL IN BHUBONI SAHU VS. THE KING, AIR 1949 PC 1257, HAD POINTED OUT TO THIS TENDENC Y ON THE PART OF OFFICIALS TO EXTORT CONFESSION BY INTIMIDAT ION AND COERCION AND REQUIRED INDEPENDENT CORROBORATION OF SUCH CONF ESSION, A VIEW WHICH HAS BEEN ENDORSED BY THE SUPREME COURT IN KAS HINDRA SINGH VS. STATE OF MP, AITR 1952 SC 159. IT WAS HELD BY THE HONBLE APEX COURT IN THE CASE OF PULLANGODE RUBBER PRODUCE CO. LTD. VS. STATE OF KERALA & ANOTHER, 91-ITR-18 SC TH AT IT IS OPEN TO THE ASSESSEE WHO MADE THE ADMISSION TO SHOW THAT IT WAS INCORRECT. 3. REJECTION OF BOOKS 3.1 THE LD. AO HAS REJECTED THE BOOKS FOR THE REASO NS THAT THE STOCK RECORDS WERE NOT MAINTAINED, QUANTITATIVE TAL LY WAS NOT MADE AVAILABLE, CLOSING STOCK VALUATION WAS NOT PRO VIDED AND EXPENSES WERE NOT PROPERLY SUPPORTED. 3.2 THE ALLEGATIONS OF THE LD. AO ARE BASELESS AND CONTRARY TO FACTS ON RECORD. THE TAX AUDIT REPORT FILLED ALONG WITH THE RETURN OF INCOME CONTAINED CONFIRMATION FROM THE AUDITOR T HAT STOCK 15 RECORDS WERE MAINTAINED (PB PAGE 200) , THE QUANTITATIVE TALLY WAS ALSO FORMING PART OF TAX AUDIT REPORT (PB PAGE 209) , THE MEAGER EXPENSES WERE ALSO APPROPRIATELY SUPPORTED. LD. AO HAS NOT GIVEN ANY INSTANCES OF INADEQUATE SUPPORTINGS. IN VIEW OF THE ABOVE, REJECTION OF BOOKS IS ILLEGAL AND DESERVES TO BE QUASHED. 4. PURCHASES 4.1 THE ASSESSEE APPELLANT IS ENGAGED IN THE TRADI NG OF AGRICULTURAL PRODUCE. DURING THE YEAR UNDER APP EAL. HIS TOTAL PURCHASES AMOUNTED TO RS. 11,62,92,593/-.DETAILS OF WHICH ARE AS UNDER: PURCHASES FROM FARMERS IN CASH 7,31,48,491 PURCHASES FROM TRADERS THROUGH A/C PAYEE CHEQUES 4,31,44,102 TOTAL 11,62,92,593 4.2. PURCHASES FROM TRADERS PURCHASES FROM TRADERS WERE THROUGH PUCCA BILLS AND PAYMENTS WERE MADE THROUGH ACCOUNT PAYEE CHEQUES. THE ASSESSEE HAS NOW OBTAINED CONFIRMATIONS FROM TH E THREE CREDITORS WHICH HE COULD NOT OBTAIN DURING THE ASSE SSMENT PROCEEDINGS AND WHICH ARE DISCUSSED AND ADVERSELY C ONCLUDED BY THE LD. AO IN HIS ASSESSMENT ORDER. (AO PAGE 22 & 23, ADDITIONAL EVIDENCES PB PAGE 149-151) 4.3 PURCHASES FROM FARMERS 16 ASSESSEE IS INVOLVED IN TRADING OF AGRICULTURAL PRO DUCE. THE LAW I.E. SECTION 40A(3) / RULE 6DD PROVIDES EXCEPTION FO R MAKING CASH PAYMENTS FOR PURCHASE OF AGRICULTURAL PRODUCE. THIS EXCEPTION IS BASED ON THE REALITY THAT FARMERS DO N OT HAVE BANK ACCOUNTS AND, THEREFORE, PURCHASES FROM THEM ARE AL LOWED IN CASH. ACCORDINGLY, THE ASSESSEE PURCHASED GOODS WOR TH RS. 7.31 CRORES FROM THE FARMERS IN CASH. TO PROVE THESE PUR CHASES, COMPLETE DETAILS OF 255 FARMERS ALONG WITH THEIR AD DRESSES WERE FURNISHED DURING THE COURSE OF ASSESSMENT PROCEEDIN GS. THIS FACT IS DULY ACKNOWLEDGED BY THE LD. AO IN HIS ASSE SSMENT ORDER AT PAGE 8. NOT ONLY THIS, 152 KRISHI UPAJ MANDI SLI PS WERE ALSO FURNISHED. FURTHER, JAMA BANDI DETAILS OF LAND HOLD INGS OF THE FARMERS IN 60 CASES WERE FURNISHED. 8 FARMERS WERE PRODUCED FOR EXPLANATION BEFORE THE LD. AO WHO ALL CONFIRMED THE TRANSACTIONS WHICH FACT THE LD. AO HAS CONVENIENTLY IGNORED. THE LD. AO IS SAID TO HAVE MADE ENQUIRIES FROM SOME OF THE FARMERS WHO, AS PER LD. AO, HAVE DENIED ANY TRANSAC TIONS WITH THE ASSESSEE. THE LD. AO HAS MISDIRECTED HIS ENQUIRY TOWARDS WRON G PERSONS. THIS FACT WAS CONVEYED TO THE LD. AO DURING THE COU RSE OF ASSESSMENT PROCEEDINGS WHICH REPLY IS REPRODUCED BY THE LD. AO IN HIS ORDER AT PAGES 15 & 16 . AS A FURTHER EVIDENCE, AFFIDAVITS OF FOLLOWING FARMERS ARE OBTAINED TO PROVE THE WRON G ENQUIRY BEING CONDUCTED BY THE LD. AO:- S.NO . NAME OF FARMER ENQUIRY CONDUCTED REAL NATIVE OF AFFIDAVITS AT AO ORDER PAGE NO. 17 AT ADDITIONAL PAPER BOOK PAGE NO. 1. RAMDHAN JAT KACHOLIYA BAPDUNDA 4 & 5 15 2. SHABUDDIN RAJPURA RAJPURA BAAS 6 & 7 16 FOLLOWING FARMERS, ON AFFIDAVITS HAVE CONFIRMED THE SALE TO THE ASSESSEE: S. NO. NAME OF FARMER AFFIDAVITS AT ADDITIONAL PAPER BOOK PAGE NO. AO ORDER PAGE NO. 1. PAPPU LAL JAT 1 15 2. RAMNARAYAN JAT 2 & 3 15 4.4 VEHICLE VERIFICATION THE CONTENTION OF THE LOWER AUTHORITIES THAT THE TR ANSPORTERS ARE NOT GENUINE AND THE PRODUCES HAVE NOT BEEN TRAN SPORTED THROUGH TRUCKS IS NOT CORRECT. THE AO IN HIS ORDER (AO PAGE 11 & 20) HAS DISCUSSED THAT THE VEHICLES AS MENTIONED ARE EITHER NOT REGISTERED WITH THE DTO OR REGISTERED IN THE NAME OF GOVERNMENT DEPARTMENT OR TOTALLY NOT IN EXISTENC E. THE FACT IS THAT CORRECT VEHICLE NUMBERS WERE NOT C ONVEYED TO THE DTO WHICH LED TO INCORRECT REPORT FROM THE DTO. THE LIST OF CORRECT NUMBERS IS PRODUCED (PB PAGE 125 & 126) . ALSO THE EVIDENCES OF GENUINENESS OF THE TRANSPORTERS AR E SUBMITTED 18 AS ADDITIONAL EVIDENCES WHICH WERE SUBSEQUENTLY OBT AINED IN THE CASE OF TWO TRANSPORTERS:- NAME OF TRANSPORTER VEHICLE NO. ADDITIONAL EVIDENCE PB NO M/S SONU TRANSPORT COMPANY RJ 14 2G-4831 78-93 SANJAY KUMAR RJ 14 G-5537 94-98 THE BILLS FOR SALE AND PURCHASE FOR THESE TWO TRANS PORTERS WERE BEFORE THE LD. AO. DETAILS OF WHICH ARE AS UNDER:- DETAILS OF SALE BILLS- VEHICLE NO. RJ 14 2G 4831 S.NO. DATE OF BILL BILL S.NO. NAME OF PARTY PB-II PAGE NO. 1. 07.04.2005 022 MAHAVEER MILLS 111 2. 09.04.2005 024 DINESH DAL MILLS 3. 12.04.2005 027 S. K. INDUSTRIES 4. 28.04.2005 037 R. S. INDUSTRIES 5. 30.04.2005 038 SABOO INDUSTRIES 6. 01.05.2005 040 AGARWAL DAL AND OIL MILLS 7. 07.05.2005 041 K. M. INDUSTRIES 8. 08.05.2005 042 UMA ENTERPRISES PRIVATE LIMITED 9. 13.05.2005 045 BALAJI INDUSTRIES 10. 15.05.2005 046 UMA ENTERPRISES PRIVATE LIMITED 11. 16.05.2005 047 LAXMI UDYOG 112 12. 16.05.2005 048 M. P. INDUSTRIES 13. 01.06.2005 051 RAM SAHAY GHANSHYAM SAHAY VIJAY 14. 02.06.2005 052 SUNRISE SPICES LIMITED 15. 10.06.2005 058 BANSAL OIL MILLS 16. 21.06.2005 071 UMA ENTERPRISES PRIVATE LIMITED 17. 23.06.2005 076 BANSAL OIL MILLS 19 18. 28.06.2005 086 BANSAL OIL MILLS 19. 30.06.2005 092 UMA ENTERPRISES PRIVATE LIMITED 20. 02.07.2005 095 UMA ENTERPRISES PRIVATE LIMITED 21. 10.07.2005 115 SABOO INDUSTRIES 22. 11.07.2005 118 SABOO INDUSTRIES 23. 11.07.2005 119 HARIRAJ PULSES PRIVATE LIMITED 24. 21.07.2005 133 MANI SHANKAR OILS PRIVATE LIMITED 25. 28.07.2005 138 ADNI VILIMARS PRIVATE LIMITED 26. 06.08.2005 144 UMA ENTERPRISES PRIVATE LIMITED 27. 09.08.2005 148 UMA ENTERPRISES PRIVATE LIMITED 28. 17.08.2005 150 UMA ENTERPRISES PRIVATE LIMITED 29. 22.08.2005 151 RICON OIL INDUSTRIES 30. 26.08.2005 158 RICON OIL INDUSTRIES 31. 28.08.2005 164 AGARWAL DAL AND OIL MILLS 32. 04.09.2005 170 MANI SHANKAR OILS PRIVATE LIMITED 33. 09.09.2005 175 HARIRAJ PULSES PRIVATE LIMITED 34. 13.09.2005 176 RAJASTHAN ROLLER FLOOR MILLS 35. 14.09.2005 179 SHYAM PULSES PRIVATE LIMITED 36. 20.09.2005 181 SHRI SINCO LIMITED 37. 21.09.2005 183 BAJRANG DAL MILLS 38. 30.09.2005 193 UMA ENTERPRISES PRIVATE LIMITED 39. 02.10.2005 195 SHRI SINCO LIMITED 40. 18.10.2005 199 SHRI SINCO LIMITED 41. 20.10.2005 203 ASO GAM PRIVATE LIMITED 42. 22.10.2005 208 RAJASTHAN ROLLER FLOOR MILLS 43. 23.10.2005 209 MANI SHANKAR OILS PRIVATE LIMITED 44. 27.10.2005 212 SHRI KRISHNA OIL MILS 45. 30.10.2005 213 BAJRANG DAL MILLS 46. 02.11.2005 215 SABOO FOOD PROCESSING PRIVATE LIMITED 47. 06.11.2005 220 SANMATI EDIBLE OILS PRIVATE LIMITED 48. 08.11.2005 225 SANMATI EDIBLE OILS PRIVATE 20 LIMITED 49. 10.11.2005 229 ARADHANA DAL MILL PRIVATE LIMITED 113 50. 13.11.2005 233 RAJASTHAN ROLER FLOOR MILLS 51. 14.11.2005 235 RICON OIL INDUSTRIES 52. 16.11.2005 237 AGARWAL DAL AND OIL MILLS 53. 16.11.2005 238 MANI SHANKAR OILS PRIVATE LIMITED 54. 22.11.2005 242 RAJASTHAN ROLLER FLOOR MILLS 55. 23.11.2005 243 RICON OIL INDUSTRIES 56. 25.11.2005 246 SHRI KRISHNA OIL MILS 57. 14.12.2005 268 BAJRANG DAL MILLS 58. 17.12.2005 269 BALAJI INDUSTRIES 59. 17.12.2005 270 SHYAM PULSES PRIVATE LIMITED 114 60. 20.12.2005 272 MANI SHANKAR OILS PRIVATE LIMITED 61. 25.12.2005 278 SABOO FOOD PROCESSING PRIVATE LIMITED 62. 26.12.2005 280 MANI SHANKAR OILS PRIVATE LIMITED 63. 02.01.2006 294 RISHABH S 64. 05.01.2006 300 MANI SHANKAR OILS PRIVATE LIMITED 65. 05.01.2006 303 MAHAVEER MILLS 66. 12.01.2006 317 RAJASTHAN ROLLER FLOOR MILLS 67. 13.01.2006 319 RAJASTHAN ROLLER FLOOR MILLS 68. 15.01.2006 322 S. K. SOLVES PRIVATE LIMITED 69. 16.01.2006 325 SUNRISE SPICES LIMITED 70. 17.01.2006 329 S. K. SOLVES PRIVATE LIMITED 71. 18.01.2006 332 RICON OIL INDUSTRIES 115 72. 20.01.2006 337 S. K. SOLVES PRIVATE LIMITED 73. 21.01.2006 341 AGARWAL DAL AND OIL MILLS 74. 24.01.2006 350 UMA ENTERPRISES PRIVATE LIMITED 75. 26.01.2006 352 RISHABH S 76. 28.01.2006 358 RAJASTHAN ROLLER FLOOR MILLS 77. 29.01.2006 359 RAJASTHAN ROLLER FLOOR MILLS 116 78. 30.01.2006 361 S. K. SOLVES PRIVATE LIMITED 79. 31.01.2006 363 RAJASTHAN ROLLER FLOOR MILLS 80. 01.02.2006 365 BANSAL OIL MILLS 81. 02.02.2006 367 RISHABH S 82. 03.02.2006 370 SHRI BHAGWATI UDYOG 21 83. 07.02.2006 373 AGARWAL DAL AND OIL MILLS 84. 08.02.2006 376 UMA ENTERPRISES PRIVATE LIMITED 85. 10.02.2006 378 RICONOIL INDUSTRIES 86. 16.02.2006 386 J. B. OIL INDUSTRIES 117 87. 19.02.2006 389 SABOO DAL MILL PRIVATE LIMITED 88. 21.02.2006 392 SHRI SINCO LIMITED 89. 26.02.2006 393 S. K. SOLVES PRIVATE LIMITED 90. 27.02.2006 394 SABOO FOOD PROCESSING PRIVATE LIMITED 91. 28.02.2006 395 K. M. INDUSTRIES 92. 28.02.2006 396 SABOO FOOD PROCESSING PRIVATE LIMITED 93. 03.03.2006 399 S. K. SOLVES PRIVATE LIMITED 94. 04.03.2006 401 BANSAL OIL MILLS 118 95. 06.03.2006 403 HARIRAJ PULSES PRIVATE LIMITED 96. 07.03.2006 406 SABOO FOOD PROCESSING PRIVATE LIMITED 97. 08.03.2006 408 MANI SHANKAR OILS PRIVATE LIMITED 98. 10.03.2006 409 UMA ENTERPRISES PRIVATE LIMITED 119 99. 12.03.2006 411 ASO GAM PRIVATE LIMITED 100. 13.03.2006 413 HARIRAJ PULSES PRIVATE LIMITED 101. 13.03.2006 414 BALAJI INDUSTRIES 102. 16.03.2006 417 HARIRAJ PULSES PRIVATE LIMITED 103. 18.03.2006 421 MAHAVEER MILLS 104. 19.03.2006 422 RAJASTHAN ROLLER FLOOR MILLS 105. 20.03.2006 423 K. M. INDUSTRIES 120 106. 20.03.2006 424 MANI SHANKAR OILS PRIVATE LIMITED 107. 23.03.2006 425 RICON OIL INDUSTRIES 108. 24.03.2006 426 SHRI SINCO LIMITED 109. 25.03.2006 428 ROHAN TRADING COMPANY 110. 26.03.2006 429 UMA ENTERPRISES PRIVATE LIMITED 111. 28.03.2006 430 GIRDHAR OILS PRIVATE LIMITED 112. 30.03.2006 433 SHRI KRISHNA OIL MILLS 113. 31.03.2006 435 AGARWAL DAL AND OIL MILLS DETAILS OF PURCHASE BILLS - VEHICLE NO. RJ 14 2G 48 31 22 S. NO. DATE OF BILL BILL S.NO. NAME OF PARTY PB-II PAGE NO. 1. 03.09.2005 359 MANISH OIL MILL 161-163 2. 19.11.2005 2024 GAURAV ENTERPRISES 159-160 3. 19.11.2005 204 RAMCHANDRA AND COMOPANY 158 4. 21.11.2005 5440 JANKILAL BODULAL JAIN 156-157 5. 25.11.2005 1576 MEETHANLAL OMPRAKASH JAIN 154-155 6. 20.12.2005 2952 MANOJ TRADERS 151-153 7. 27.12.2005 5116 LADU LAL AJMERA 149-150 8. 22.01.2006 61 GIRRAJ OIL INDUSTRIES 147-148 9. 22.01.2006 5117 LADU LAL AJMERA 145-146 10. 28.01.2006 2047 BALURAM RAMDHAN CHOUDHARY 141-144 11. 05.02.2006 1069 VARDHMAN PASHU AHAR UDYOG 138-140 12. 18.02.2006 1936 RATANLAL TARACHAND JAIN 136-137 13. 26.02.2006 639 LAXMI TRADING COMPANY 133-135 14. 03.03.2006 1262 SINGHAL TRADING COMPANY 131-132 15. 10.03.2006 5451 JANKILAL BODULAL JAIN 128-130 16. 20.03.2006 9431 RAMAVTAR LAKHOTIYA 126-127 17. 20.03.2006 9432 RAMAVTAR LAKHOTIYA 124-125 18. 23.03.2006 87 BIHARILAL BANSILAL 121-123 DETAILS OF SALES BILLS- VEHICLE NO. RJ 14 G 5537 S.NO. DATE OF BILL BILL S.NO. NAME OF PARTY PB-II PAGE NO. 1. 03.04.2005 007 MAHAVEER MILLS 165 2. 04.04.2005 012 RAM INDUSTRIES 3. 08.04.2005 023 MAHAVEER MILLS 166 4. 10.04.2005 025 SHAH INDUSTRIES 5. 14.04.2005 031 RAMNIWAS JAGVINE OIL MILLS 167 6. 16.04.2005 032 ADANI VILIMARS PRIVATE LIMITED 7. 19.04.2005 033 AGNI VILIMARS PRIVATE LIMITED 8. 22.04.2005 035 UMA ENTERPRISES PRIVATE LIMITED 9. 07.06.2005 057 UMA ENTERPRISES PRIVATE 23 LIMITED 10. 19.06.2005 067 SHRI KRISHNA OIL MILS 168 11. 23.06.2005 074 UMA ENTERPRISES PRIVATE LIMITED 12. 28.06.2005 087 K. S. INDUSTRIES 13. 04.07.2005 098 SABOO INDUSTRIES 169 14. 07.07.2005 110 SHRI SINCO LIMITED 170 15. 11.07.2005 116 HARIRAJ PULSES PRIVATE LIMITED 171 16. 13.07.2005 122 UMA ENTERPRISES PRIVATE LIMITED 172 17. 15.07.2005 126 RICON OIL INDUSTRIES 173 18. 24.07.2005 136 SHRI KRISHNA OIL MILS 19. 09.01.2006 310 SHRI SINCO LIMITED 174 20. 12.01.2006 314 UMA ENTERPRISES PRIVATE LIMITED 21. 13.01.2006 320 UMA ENTERPRISES PRIVATE LIMITED DETAILS OF PURCHASE BILL - VEHICLE NO. RJ 14 G 5537 S.NO. DATE OF BILL BILL S.NO. NAME OF PARTY PB-II P AGE NO. 1. 20.12.2005 2953 MANOJ TRADERS 175-177 [ THE LIST OF CORRECT NUMBERS VIS-A-VIS NUMBERS ENQUI RED BY THE LD. AO IS PRODUCED HERE BELOW:- VEHICLE NO. DETAILS AS PER AO AS PER BILL PARTICULARS ENCLOSURES PB PAGE NO. RJ30G4008 RJ13G4008 BILL NO. 3070 BILL DATE 10/01/2006 PARTY-PURCHASE FROM MANOJ TRADERS, NOHAR AMOUNT RS.- PURCHASE BILL TRANSPORT COMPANY RECEIPT KRISHI SAMITI RECEIPT 127-129 24 2,80,962/- RJ031G0952 RJ31G0952 BILL NO. 153 BILL DATE 28/10/2005 PARTY-PURCHASE FROM HISSARIA FOOD PRODUCT, KOTA AMOUNT - RS.- 3,48,500/- PURCHASE BILL 130 RJ192G5537 RJ14G5537 BILL NO. 131 BILL DATE 30/06/2005 PARTY- PURCHASE FROM HISSARIA FOOD PRODUCT, KOTA AMOUNT - RS.- 4,76,765.80/- PURCHASE BILL TRANSPORT COMPANY RECEIPT 131-132 RJ26G0363 RJ26G0763 BILL NO. 162 BILL DATE 29/08/2005 PARTY- SALES TO BHANSALI INDUSTRIES AMOUNT - RS.- 3,00,875/- SALES BILL PURCHASE RECEIPT (ACKNOWLEDGE MENT) OF BHANSALI INDUSTRIES RECEIPT OF KRISHNA DHARMA KANTA, BROKERS COVERING LETTER(FOR PAYMENT) 133-136 RJ26G1304 RJ26G1204 BILL NO. 174 BILL DATE 09/09/2005 PARTY- SALES TO HARI RAJ PULSES PVT. LTD. SALES BILL 137 25 AMOUNT - RS.- 22,197/- RJ26G1313 RJ25G1313 BILL NO. 70 BILL DATE 21/06/2005 PARTY- SALE TO SHREE SECO PVT LTD. JAIPUR AMOUNT - RS.- 3,04,513.75/- PURCHASE RECEIPT (ACKNOWLEDGE MENT) OF SHRI SECO PVT LTD. SALES BILL 138-139 RJ26G1495 RJ01G1194 BILL NO. 302 BILL DATE 05/01/2006 PARTY- SALE TO MAHAVEER MILL, JAIPUR AMOUNT - RS.- 3,85,710/- SALES BILL 140 RJ26G6460 RJ26G0460 BILL NO. 2964 BILL DATE 29/12/2006 PARTY- - PURCHASE FROM RAM AVATAR SUBHASH CHOUDHARY AMOUNT - RS.- 1,47,030/- PURCHASE BILL KRISHI MANDI GATE PASS, 141-142 RJ31GA6645 RJ31G6645 BILL NO. 3181 BILL DATE 01/02/2006 PARTY- PURCHASE FROM MANOJ TRADERS, NOHAR AMOUNT - RS.- 2,93,706/- PURCHASE BILL KRISHI MANDI RECEIPT TRANSPORT COMPANY RECEIPT 143-145 RJ31GA4711 RJ31G4711 BILL NO. 3182 BILL DATE 01/02/2006 PARTY- PURCHASE PURCHASE BILL KRISHI MANDI RECEIPT TRANSPORT 146-148 26 FROM MANOJ TRADERS, NOHAR AMOUNT - RS.- 2,94,102.90/- COMPANY RECEIPT RJ31GA5945 RJ31G5945 BILL NO. 3179 BILL DATE 01/02/2006 PARTY- PURCHASE FROM MANOJ TRADERS, NOHAR AMOUNT - RS.- 2,93,188/- PURCHASE BILL KRISHI MANDI RECEIPT TRANSPORT COMPANY RECEIPT 149-151 RJ31GA4189 RJ31G4188 BILL NO. 3133 BILL DATE 21/01/2006 PARTY- PURCHASE FROM MANOJ TRADERS, NOHAR AMOUNT - RS.- 2,80,016/- PURCHASE BILL KRISHI MANDI RECEIPT TRANSPORT COMPANY RECEIPT 152-154 RJ31GA5145 RJ31G5445 BILL NO. 3097 BILL DATE 16/01/2006 PARTY- PURCHASE FROM MANOJ TRADERS, NOHAR AMOUNT - RS.- 2,94,030/- PURCHASE BILL KRISHI MANDI RECEIPT TRANSPORT COMPANY RECEIPT 155-157 4.5 NO ENQUIRY FROM THE CUSTOMERS OF THE ASSE SSEE THERE IS AN ALLEGATION BY THE LOWER AUTHORITIES THA T ASSESSEE IS INVOLVED IN ISSUE OF BOGUS BILLS. THE LOWER AUTHORI TIES HAVE DELIBERATELY NOT CONDUCTED ANY ENQUIRY FROM THE CUS TOMERS OF THE ASSESSEE TO ASCERTAIN THE CORRECT FACTS. IN THE FOLLOWING CASES, THE HONBLE TRIBUNAL HAS HELD THAT M/S ANNAPUR NA 27 TRADING COMPANY IS A GENUINE PARTY AND PURCHASES FR OM ANNAPURNA TRADING COMPANY ARE GENUINE:- 1. UMA ENTERPRISES AY (2005-06) ITA NO.1394/JP/2008 2. UMA ENTERPRISES AY (2006-07) ITA NO.449/JP/2009 3. K. M. INDUSTRIES AY (2006-07) ITA NO.522/JP/2009 4.6 CONFIRMATION FROM KRISHI UPAJ MANDI IN RESPECT OF KRISHI UPAJ MANDI, THE CONCLUSIONS DR AWN ARE NOT TENABLE. THE RECORDS OF KRISHI UPAJ MANDI ARE NOT A T ALL MAINTAINED IN A SYSTEMATIC MANNER. THE MANUALLY KEP T RECORDS MAY NOT FACILITATE READY CROSS REFERENCES. THE ENQU IRY ALSO CONDUCTED AFTER A LAPSE OF 2 YEARS. IT IS MOST IMPO RTANT TO NOTE THAT THE KRISHI UPAJ MANDI HAD ISSUED THE BOOKS TO THE ASSESSEE WHICH ARE PRENUMBERED AND DULY AUTHENTICATED BY KRI SHI UPAJ MANDI. THESE, IN ORIGINAL, WERE PRODUCED BEFORE THE LD. AO. 4.7 PURCHASES FROM NAFED PURCHASES FROM NAFED AS DETAILED ABOVE AT PARA 1.1 GO TO PROVE THE GENUINENESS OF THE TRADING ACTIVITIES OF THE AP PELLANT. 4.8 GODOWN RENT THE ASSESSEE IS A TRADER OF AGRICULTURE PRODUCE AND IS INVOLVED IN ACTUAL TRANSACTION OF SALE AND PURCHASE. IT IS EVID ENT FROM THE FACT THAT HE HAS TWO GODOWNS WHICH WERE SUFFICIENT TO ACCOMMODATE THE PRODUCE. THE RENT OF THE GODOWNS WA S RS. 5,000/- P.M., PAID TO SMT LADHI DEVI. THE GODOWN RE NT IS DEBITED IN THE PROFIT & LOSS ACCOUNT SUBMITTED WITH THE RET URN OF INCOME. 28 THE DETAILS OF THESE GODOWNS ARE AS UNDER:- S. NO. ADDRESS CAPACITY AREA (SQ. FEET) 1. DEVI NAGAR, OPP. PACHEWAR THANA 4000 BAGS 45 X 85 2. NEAR BUS STAND, DUDU ROAD 4000 BAGS 25 X 80 5. SALES 5.1. THE LOWER AUTHORITIES HAVE ABSOLUTELY NO BASIS FOR THEIR ASSUMPTION OF THE ASSESSEE BEING INVOLVED IN ISSUING BOGUS BILLS. THIS THEORY HAS ONLY ONE EVIDENCE THAT IS IN THE FORM OF STATEMENTS RECORDED DURING THE COURSE OF SURVEY PROCEEDINGS. 5.2. ENTIRE SALES ARE THROUGH PUCCA BILLS AND SOLD TO REGISTERED DEALERS. ENTIRE SALE PROCEEDS ARE RECEIVED THROUGH ACCOUNT PAYEE CHEQUES. IT IS STRANGE THAT THE LD. AO HAS NOT MADE ANY ENQUIRY FROM ANY OF THESE PERSONS TO ASCERTAIN THE TRUTH. A S AGAINST THIS, ASSESSEE HAS PERSONALLY APPEARED IN THE ASSESSMENT OF SOME OF HIS CUSTOMERS AND HAS PRODUCED ALL DOCUMENTS TO SUBSTANTIATE THE TRANSACTIONS. 6. CAPITAL V/S TURNOVER 6.1 IN CASE OF PURCHASES FROM TRADERS, THERE IS ALS O TIME LAG BETWEEN THE PURCHASE DATE AND PAYMENT, WHICH ALLOWS THE ASS ESSEE TO USE 29 THAT AMOUNT FOR HIS BUSINESS. THE FOLLOWING ARE SOM E INSTANCES OF CREDIT ALLOWED FOR LONGER PERIOD:- S.NO. PARTY NAME DATE OF PURCHASE DATE OF PAYMENT CREDIT PERIOD (IN DAYS) 1. PRAVEEN ENTERPRISES 07.06.2005 22.10.2005 137 2. AMER CHAND & CO. 02.06.2005 30.06.2005 28 3. MAHAVEER OIL MILLS 07.07.2005 01.09.2005 56 4. RAMPAL RAMPRAKASH MAHIYA 27.12.2005 24.01.2006 28 5. LADULAL AJMERA 27.12.2005 15.02.2006 50 6. LAXMI TRADING CO. 09.09.2005 05.10.2005 26 6.2 THE ASSESSEE IS PARTLY A TRADER AND ALSO ADATIY A. IT IS AN ESTABLISHED PRACTICE THAT FARMERS IN VILLAGES LEAVE THEIR PRODUCE WITH THE ADATIYA AND WHENEVER NEEDED TAKE THE MONEY IN INSTALLMENTS. THE CONTENTION OF THE AO THAT WITH TH E MEAGER CAPITAL EMPLOYED OF RS. 3 LACS SUCH A HUGE TURNOVER IS NOT POSSIBLE IS THUS NOT VALID. 6.3 AS AGAINST THE ADEQUATE CREDIT PERIOD AVAILED F ROM SUPPLIERS, THE PAYMENT FROM DEBTORS FOR SALE WAS REALISED IN MUCH SHORTER TIME:- S.NO PARTY NAME DATE OF SALE DATE OF RECEIPT CREDIT PERIOD 30 ALLOWED 1. SHRI SICCO LTD 01.04.2005 06.04.2005 5 2. BALAJI INDUSTRIES 13.05.2005 17.05.2005 4 3. BANSAL OIL MILLS 06.04.2005 07.04.2005 1 4. MP INDUSTRIES 16.05.2005 18.05.2005 2 5. SABU DALL MILL 19.02.2006 21.02.2006 2 6.4 THE ABOVE ILLUSTRATES HOW WITH SMALL CAPITAL H IGH TURNOVER COULD BE ACHIEVED. THUS ANY ADVERSE INFERENCE IN THIS REG ARD IS ILLEGAL. 7. APPARENT IS REAL 7.1 THE TRADING TRANSACTIONS ARE DULY REFLECTED BY THE FOLLOWING UNDISPUTED EVIDENCES:- PUCCA BILLS FROM DEALERS IN RESPECT OF PURCHASES TO THE TUNE OF RS. 4,31,44,102/- (BEING 37 %). SALES ARE THROUGH PUCCA BILLS. ENTIRE SALES CONSIDERATION ARE RECEIVED THROUGH ACC OUNT PAYEE CHEQUES. PURCHASE CONSIDERATION TO THE TUNE OF RS. 4,31,44,1 02/- IS PAID THROUGH ACCOUNT PAYEE CHEQUES. CASH PURCHASES FROM FARMERS ARE SUPPORTED BY THE FOLLOWING TOTAL CASH PURCHASES INVOLVING DIFFERENT FARMERS 255 AO PAGE NO.17 PB PAGE 175-183 COMPLETE ADDRESSES PROVIDED 255 AO PAGE NO.8 PB PAGE 175-183 KRISHI UPAJ MANDI SLIPS PROVIDED 152 AO PAGE NO.17 PB PAGE 74-123 JAMABANDI DETAILS PROVIDED 60 AO PAGE NO.16 PB PAGE 14-73 FARMERS PERSONALLY APPEARED AND 8 AO PAGE 31 CONFIRMED THE TRANSACTIONS NO.8 KRISHI UPAJ MANDI SLIPS ARE THIRD PARTY EVIDENCES W HICH ARE SUPPORTING THE TRANSACTIONS. 7.2 THE LD. AO, INSPITE OF THE ABOVE, IS ALLEGING T HE TRANSACTIONS TO BE BOGUS. VERY HEAVY BURDEN LIES ON THE LD. AO TO PROV E THE TRANSACTIONS TO BE BOGUS WHICH ONUS HE HAS NOT BEEN ABLE TO DISCHARGE. RELIANCE IS PLACED ON THE FOLLOWING PRONO UNCEMENT:- CIT VS. DAULAT RAM RAWATMULL (1973) 87 ITR 349 (SC) WHEREIN THE HONBLE APEX COURT HAS HELD THAT THE ONU S OF PROVING THAT THE APPARENT WAS NOT REAL WAS ON THE P ARTY WHO CLAIMED IT TO BE SO. THE LD. AO HAS MISERABLY FAILE D IN DISCHARGING HIS ONUS. 8. IT IS ALSO IMPORTANT TO NOTE THAT THE EVIDE NCES COLLECTED BY THE LD. AO WERE NOT AVAILABLE FOR ASSESSEE FOR APPR OPRIATE REBUTTAL. ANY RELIANCE ON SUCH EVIDENCES BY THE LD. AO IS TOTALLY ILLEGAL AND AGAINST THE PRINCIPLE OF NATURAL JUSTIC E BECAUSE THE ASSESSEE WAS NEVER CONFRONTED WITH THESE MATERIAL. IN VIEW OF THE ABOVE SUBMISSIONS, HUMBLE PRAYER IS MADE FOR QUASHING THE ORDER OF THE CIT (A) AND INCOME BE ASS ESSED AS DISCLOSED IN THE BOOKS OF ACCOUNT OF ASSESSEE AND T HE BASELESS THEORY OF ISSUING BOGUS BILLS BE QUASHED. 9. AFTER GOING THROUGH THE ABOVE SUBMISSIONS OF THE LD. A/R AND THE ORDERS OF THE AUTHORITIES BELOW, IT IS SEEN THAT THERE ARE AMPLE EVIDENCE TO PROVE THAT ASSESSEE WAS 32 DOING ACTUAL PURCHASE AND SALE OF AGRICULTURAL PROD UCE. THE PURCHASES FROM REGISTERED DEALERS WERE MADE THROUGH ACCOUNT PAYEE CHEQUE TO T HE TUNE OF RS. 4.31 CRORES OR ODD AND THE REMAINING PURCHASES OF ABOUT RS. 7.31 CRORE S OR ODD WERE MADE FROM FARMERS IN CASH. NO ENQUIRY WHATSOEVER WAS MADE BY THE AO FRO M THE REGISTERED DEALERS FROM WHOM THE ASSESSEE HAD MADE PURCHASES. THE PARTIES ARE INVOLVED AS NAFED WHICH IS A CENTRAL GOVERNMENT BODY. PAYMENTS HAVE BEEN MADE TH ROUGH ACCOUNT PAYEE CHEQUE, THEREFORE, IT CANNOT BE SAID THAT THESE PURCHASES W ERE BOGUS. KRISHI UPAJ MANDI SAMITI WHICH IS A LOCAL BODY HAS ISSUED REGISTRATION CERTI FICATE TO THE ASSESSEE AND HAS ISSUED A BOOK NUMBERING AND STAMPING SLIPS. 152 SLIPS WERE OBTAINED FROM THE KRISHI UPAJ MANDI SAMITI ON ACCOUNT OF PURCHASES MADE FROM FARMERS AN D TO THIS EXTENT IT CANNOT BE SAID THAT THE ASSESSEE HAD NOT INVOLVED IN THE ACTUAL PU RCHASE. NO DOUBT, THE AO HAS MADE ENQUIRIES AND SOME OF THE FARMERS HAVE DENIED BUT A GAIN THE FACT REMAINS THAT ENQUIRY WAS MADE FROM WRONG PERSONS. AFFIDAVITS OF THOSE PE RSONS ARE PLACED ON RECORD. ASSESSEE HAS REQUESTED TO ADMIT THESE ADDITIONAL EV IDENCES. NO DOUBT, THESE ADDITIONAL EVIDENCES ARE FILED NOW ONLY AS THEY COULD NOT BE O BTAINED EARLIER AND WE FEEL THAT NO USEFUL PURCHASE WILL BE SERVED IF THE MATTER IS RES TORED BACK TO THE FILE OF AO AS ABOUT 40% OF THE PURCHASES ARE FROM REGISTERED DEALERS AN D REMAINING PURCHASES ARE FROM FARMERS. ABOUT 40% OF PURCHASES ARE FROM FARMERS HA VE BEEN VERIFIED BY THE KRISHI UPAJ MANDI SAMITI WHO HAVE ISSUED 152 SLIPS. ONE OF THE TRANSPORTERS, WAS ALSO PRODUCED DURING THE APPELLATE PROCEEDINGS WHO HAS CONFIRMED HAVING TRANSPORTED THE MATERIAL ON BEHALF OF THE ASSESSEE. THE ENTIRE SALES HAVE BEEN MADE BY THE ASSESSEE TO THE REGISTERED DEALERS THROUGH PUCCA BILLS AND PAYMENTS HAVE BEEN RECEIVED THROUGH ACCOUNT PAYEE CHEQUES WHICH ARE CREDITED IN THE ACCOUNT OF THE AS SESSEES. THEREFORE, IT CANNOT BE SAID 33 THAT THESE SALES WERE NOT GENUINE AND ONLY BILLS WE RE ISSUED BY THE ASSESSEE. IT IS FURTHER SEEN THAT IN CASES OF M/S. UMA ENTERPRISES AND M/S. K.M. INDUSTRIES, GENUINENESS OF THE ASSESSEE FIRM WAS EXAMINED AND WAS FOUND THAT THE A SSESSEE HAS ISSUED GENUINE BILLS. COPY OF THE ORDER OF THE TRIBUNAL IS PLACED ON RECO RD.. 9.1. THE AO HAS MADE OBSERVATION IN HIS ORDER THAT KRISHI UPAJ MANDI SAMITI HAVE NOT CONFIRMED THE PURCHASES MADE ON BEHALF OF THE A SSESSEE. IT IS SEEN THAT ENQUIRIES WERE CONDUCTED AFTER LAPSE OF TWO YEARS AND KRISHI UPAJ MANDI SAMITI HAD ISSUED BOOKS TO THE ASSESSEE WHICH ARE PRE-NUMBERED AND DULY AUT HENTICATED BY THE KRISHI UPAJ MANDI SAMITI. THERE MAY BE POSSIBILITY OF NOT CONFIRMING THE PURCHASES AS THE RECORDS OF KRISHI UPAJ MANDI SAMITI ARE NOT MAINTAINED IN SYSTEMATIC MANNER AS MANUALLY RECORDS ARE KEPT THAT MAY NOT FACILITATE READY REFERENCE. 10. IT IS FURTHER SEEN THAT PAYMENTS ON ACCOUNT SAL ES ARE RECEIVED IN SHORT INTERVALS WHEREAS THE ASSESSEE HAS MADE PAYMENTS TO THE FARME RS AFTER GAP OF EVEN FEW MONTHS. THEREFORE, FOR THIS REASON, FOR LESSER CAPITAL EMPL OYED BY THE ASSESSEE THE BUSINESS OF PURCHASE AND SALE OF AGRICULTURAL PRODUCE ARE DONE BY THE ASSESSEE. IT CANNOT BE DOUBTED THAT WITH A SMALL CAPITAL NO SUCH HUGE BUSINESS ACT IVITIES ARE DONE. IT IS ALSO A MATTER OF FACT THAT ASSESSEE HAS TWO GODOWNS ON RENT WHICH AR E CAPABLE FOR STORING ABOUT 8000 BAGS AT A TIME. THE RENT IS PAID EVERY MONTH WHICH IS RE CORDED IN THE BOOKS OF ACCOUNT. SOMEWHERE IT IS SEEN THAT IN THE SURVEY PROCEEDINGS THE ASSESSEE DENIED HAVING ANY ACCOUNT WITH IDBI BANK, BUT THE FACT REMAINS THAT A LL THE TRANSACTIONS ARE DONE THROUGH IDBI BANK. PAYMENT HAS BEEN MADE THROUGH IDBI BANK AND RECEIPTS HAVE ALSO BEEN CREDITED IN THE IDBI BANK ON ACCOUNT OF SALES MADE BY ASSESSEE. THE RECEIPTS THROUGH IDBI ARE DULY RECORDED IN THE BOOKS OF ACCOUNT WHIC H ARE AUDITED. THEREFORE, IT SEEMS 34 THAT THE STATEMENT RECORDED DURING THE YEAR WAS NOT IN NORMAL CIRCUMSTANCES. THERE MAY BE SO MANY REASONS THAT WHY ASSESSEE HAS STATED THA T HE HAS ISSUED ONLY BILLS IN LIEU OF 1% COMMISSION. THIS STATEMENT OF THE ASSESSEE IS NOT CORROBORATED WITH ANY EVIDENCE NEITHER ANY DIARY WAS FOUND NOR ANY OTHER EVIDENCE WAS FOUND TO ESTABLISH THAT ASSESSEE IS INDULGING IN ISSUING BOGUS SALE BILLS ONLY. ON THE CONTRARY, THE BOOKS OF ACCOUNTS ARE MAINTAINED AND PURCHASES AND SALES HAVE BEEN MADE T HROUGH PROPER BANKING CHANNEL FROM THE REGISTERED DEALERS AND TO THE REGISTERED D EALERS. CASH PURCHASES ARE MADE FROM FARMERS ONLY WHICH IS ALLOWABLE AS PER PROVISIONS O F SECTION 40A(3) READ WITH RULE 6DD OF THE IT RULES. IN VIEW OF THESE FACTS AND CIRCUM STANCES AND IN VIEW OF THE DETAILED WRITTEN SUBMISSIONS WHICH IS REPRODUCED SOMEWHERE A BOVE IN THIS ORDER, WE ARE OF THE VIEW THAT ASSESSEE IS ABLE TO ESTABLISH THAT HE HAS MADE GENUINE PURCHASES AND HAVE EFFECTED SALES AGAINST PURCHASES MADE BY HIM. HOWE VER, WE FIND THAT THERE ARE SO MANY DEFECTS IN MAINTAINING BOOKS OF ACCOUNT AS STOCK RE CORD WERE NOT MAINTAINED, QUANTITATIVE TALLY WAS ALSO NOT AVAILABLE, CLOSING STOCK VALUATI ON WAS ALSO NOT PROVIDED AND VARIOUS EXPENSES CLAIMED BY ASSESSEE WERE NOT SUPPORTED OR WERE MADE THROUGH SELF MADE VOUCHERS. THEREFORE, INVOCATION OF PROVISIONS OF SE CTION 145(3) WAS CORRECT. ACCORDINGLY WE CONFIRM THE INVOCATION OF PROVISIONS OF SECTION 145(3). 11. AS STATED ABOVE, THE PURCHASES AND SALES ARE GE NUINE, THEREFORE, IF ANY ADDITION CAN BE MADE THAT CAN BE MADE ON ACCOUNT OF G.P. RAT E SHOWN BY ASSESSEE OR TAKING INTO CONSIDERATION THE VARIOUS DISCREPANCIES NOTED BY AO FOR REJECTING THE BOOKS OF ACCOUNT. DURING THE YEAR UNDER CONSIDERATION, G.P. IS SHOWN AT 1.26% AS COMPARED TO G.P. RATE OF 2.35% SHOWN IN EARLIER YEAR. HOWEVER, THERE ARE SO MANY DISCREPANCIES, THEREFORE, WE ARE OF THE VIEW THAT IF A LUMP SUM ADDITION OF RS. 2.50 LACS IS MADE AGAINST THE ADDITION OF 35 RS. 10,00,000/- OR ODD MADE BY THE AO ON ACCOUNT OF 1% ALLEGED COMMISSION RECEIVED BY ASSESSEE THAT WILL MEET THE ENDS OF JUSTICE. FO R TAKING THIS VIEW THERE IS REASON BEHIND THAT THERE IS NO EVIDENCE BEFORE THE AO THAT ASSESS EE HAS ISSUED BILLS WITHOUT SUPPLYING MATERIAL AND HAS CHARGED 1% COMMISSION OF THE AMOUN T OF THE BILL ISSUED EXCEPT THE STATEMENT OF THE ASSESSEE. IT IS WELL SETTLED POSI TION IN LAW THAT THERE SHOULD BE CORROBORATIVE EVIDENCE. UNDOUBTEDLY THERE IS NO C ORROBORATIVE EVIDENCE TO PROVE THAT THE ASSESSEE IS ISSUING BOGUS BILLS AND HAVE EARNED COMMISSION @ 1%. ALL THE PARTIES ARE REGISTERED TO WHOM SALES ARE MADE AND NO ENQUIRY WH ATSOEVER HAS BEEN MADE BY THE AO FROM THESE PARTIES. IT IS ALSO A MATTER OF FACT TH AT ASSESSEE HAS CHARGED SALES TAX WHERE IT IS APPLICABLE AND HAS BEEN PAID TO THE GOVERNMENT A CCOUNT. BILLS SHOWING SALES TAX CHARGED WAS ALSO PRODUCED DURING THE APPELLATE PROC EEDINGS. WE ORDER ACCORDINGLY. 12. IN THE RESULT, APPEAL OF THE ASSESSEE IS ALLOWE D PARTLY. 13. THE ORDER IS PRONOUNCED IN THE OPEN COURT ON 24 .6.2011. SD/- SD/- ( N.L. KALRA ) ( R.K. GUPTA ) ACCOUNTANT MEMBER JUDICIAL MEMBER JAIPUR, D/- COPY FORWARDED TO :- SHRI ARVIND KUMAR JAIN, TONK. THE ITO TONK. THE CIT (A) THE CIT THE D/R GUARD FILE (ITA NO. 1392/JP/2010) BY ORDER, AR ITAT JAIPUR. 36