ACIT, CIR-3, MALDA, Malda V. Shri Prosen Chowdhury, Malda

ITA 1416/KOL/2015

• Counselvise Citation: [2017] 127 COUNSELVISE.COM (IT) 0600 (ITAT-KOLKATA)
• Duration Of Justice: 2 year(s) 26 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 22-12-2017
• Appeal Filed By: Department
• Order Result: Partly Allowed
• Bench Allotted: A
• Assessment Year: 2011-2012
• Appeal Filed On: 26-11-2015
• Result in Favour of: Partly Allowed
• Court: TRIBUNAL
• Department Lawyers: PINAKI MUKHERJEE
• Keywords: Bogus purchase; Principle of natural justice
• Section: 133(6)

Judgement Text

1 ITA NO. 1416/KOL/2015 ASSESSMENT YEAR: 2011-2012 IN THE INCOME TAX APPELLATE TRIBUNAL, KOLKATA A BENCH, KOLKATA BEFORE SHRI P.M. JAGTAP, ACCOUNTANT MEMBER AND SHRI A.T. VARKEY, JUDICIAL MEMBER I.T.A. NO. 1416/KOL./2015 ASSESSMENT YEAR: 2011-2012 ASSISTANT COMMISSIONER OF INCOME TAX,.............. .........APPELLANT CIRCLE-3, MALDA, NETAJI MARKET (1 ST FLOOR), RATHBARI, MALDA-732 101 -VS.- PROSEN CHOWDHURY,.................................. .........................RESPONDENT PROP. OF DAS & CHOWDHURY INTERNATIONAL, VILL. MALIHAT, P.O. JOTE BASANTA, KOTOWALI, DIST. MALDA-732 128 [PAN: ACRPC 2978 G] APPEARANCES BY: SHRI PINAKI MUKHERJEE, ADDL. CIT, D.R., FOR THE DEP ARTMENT MS. SWATI BAID, C.A., FOR THE ASSESSEE DATE OF CONCLUDING THE HEARING : DECEMBER 18, 2017 DATE OF PRONOUNCING THE ORDER : DECEMBER 22, 2017 O R D E R PER SHRI P.M. JAGTAP, ACCOUNTANT MEMBER : THIS APPEAL IS PREFERRED BY THE REVENUE AGAINST THE ORDER OF LD. COMMISSIONER OF INCOME TAX (APPEALS), JALPAIGURI DA TED 03.09.2015. 2. AT THE OUTSET, IT IS NOTED THAT THERE IS A DELAY OF TWELVE DAYS ON THE PART OF THE REVENUE IN FILING THIS APPEAL BEFORE TH E TRIBUNAL. IN THIS REGARD, THE REVENUE HAS FILED AN APPLICATION SEEKIN G CONDONATION OF THE SAID DELAY ON THE FOLLOWING GROUNDS:- MALDA INCOME TAX OFFICE IS SITUATED AT A FAR FLUN G DISTANCE OF ABOUT 270 KM FROM THE CIT OFFICE AT JAL PAIGURI AND THERE IS NO REGULAR POSTING OF JT. CIT AT RANGE -3, MALDA ALSO. THE JT. CIT, RANGE-2, JALPAIGURI IS HOL DING THE ADDITIONAL CHARGE OF MALDA RANGE AND IT IS NOT POSS IBLE FOR HIM TO ATTEND MALDA OFFICE REGULARLY FOR WHICH WE HAVE TO MOVE TO JALPAIGURI WITH RECORDS FROM TIME T O TIME. MOREOVER, DURING THIS PERIOD THERE WAS DURGA PUJA A ND KALIPUJA/DIWALI ETC. AND MANY OF THE STAFF WERE ON LEAVES 2 ITA NO. 1416/KOL/2015 ASSESSMENT YEAR: 2011-2012 ALSO. THUS, IT GOT DELAYED IN PROCESSING THE CASE A ND COULD NOT BE FILED WITHIN THE DUE TIME. KEEPING IN VIEW THE SUBMISSION MADE BY THE REVENUE AS ABOVE, WE ARE SATISFIED THAT THERE WAS A SUFFICIENT CAUSE FOR THE DELAY OF TWELVE DAYS ON THE PART OF THE REVENUE IN FILING THIS APPEAL BEFOR E THE TRIBUNAL. EVEN THE LD. COUNSEL FOR THE ASSESSEE HAS ALSO NOT RAISED AN Y OBJECTION IN THIS REGARD. THE SAID DELAY IS, THEREFORE, CONDONED AND THIS APPEAL OF THE REVENUE IS BEING DISPOSED OF ON MERIT. 3. THE ISSUE RAISED IN GROUND NO. 1 RELATES TO THE DELETION BY THE LD. CIT(APPEALS) OF THE ADDITION OF RS.32,72,600/- MADE BY THE ASSESSING OFFICER ON ACCOUNT OF BOGUS LIABILITIES. 4. THE ASSESSEE IN THE PRESENT CASE IS AN INDIVIDUA L, WHO IS ENGAGED IN THE BUSINESS OF EXPORT OF AGRICULTURAL COMMODITIES UNDER THE NAME AND STYLE OF HIS PROPRIETARY CONCERN M/S. DAS & CHOWDHU RY INTERNATIONAL. THE RETURN OF INCOME FOR THE YEAR UNDER CONSIDERATION W AS FILED BY HIM ON 30.09.2011 DECLARING A LOSS OF RS.99,21,796/-. DURI NG THE COURSE OF ASSESSMENT PROCEEDINGS, LETTERS UNDER SECTION 133(6 ) WERE ISSUED BY THE ASSESSING OFFICER TO VERIFY THE SUNDRY CREDITORS SH OWN BY THE ASSESSEE. ONE OF SUCH CREDITORS, NAMELY SUBIR SHELLAC ENTERPR ISE CONFIRMED ONLY THE AMOUNT OF SALES OF RS.28,07,000/- MADE TO THE ASSES SEE IN REPLY TO THE LETTER UNDER SECTION 133(6) FILED WITH THE ASSESSIN G OFFICER. WHEN THIS POSITION WAS CONFRONTED BY THE ASSESSING OFFICER TO THE ASSESSEE, THE LATTER EXPLAINED THAT OUT OF THE CLOSING BALANCE OF RS.32,72,600/- APPEARING IN THE NAME OF SUBIR SHELLAC ENTERPRISE, A SUM OF RS.32,80,600/- WAS BROUGHT FORWARD FROM THE EARLIER YEAR. NOT SATISFIED WITH THIS EXPLANATION OF THE ASSESSEE, THE ASSESSIN G OFFICER TREATED THE CREDIT BALANCE OF RS.32,72,600/- SHOWN BY THE ASSES SEE AS PAYABLE TO SUBIR SHELLAC ENTERPRISE AS A BOGUS LIABILITY AND A DDED THE SAME TO THE TOTAL INCOME OF THE ASSESSEE. 3 ITA NO. 1416/KOL/2015 ASSESSMENT YEAR: 2011-2012 5. THE ADDITION OF RS.32,72,600/- MADE BY THE ASSES SING OFFICER ON ACCOUNT OF THE ALLEGED BOGUS LIABILITY IN THE NAME OF SUBIR SHELLAC ENTERPRISE WAS DISPUTED BY THE ASSESSEE IN THE APPE AL FILED BEFORE THE LD. CIT(APPEALS) AND AFTER CONSIDERING THE SUBMISSION M ADE BY THE ASSESSEE AS WELL AS THE MATERIAL AVAILABLE ON RECORD, THE LD . CIT(APPEALS) DELETED THE SAID ADDITION FOR THE FOLLOWING REASONS GIVEN I N PARAGRAPH NO. 4.2 OF HIS IMPUGNED ORDER:- 4.2. I HAVE DULY CONSIDERED THE SUBMISSION OF THE APPELLANT. IT APPEARS FROM THE RECORDS THAT IN RESP ONSE TO THE NOTICE ISSUED BY THE AO U/S. 133(6) OF THE ACT, THE CREDITOR FOR PURCHASES OF LAC NAMELY, SUBIR SHELLAC ENTERPRISES HAD CONFIRMED THE PURCHASES BUT DID NOT SAY ANYTHING AB OUT THE CLOSING BALANCE. BEING CONFRONTED BY THE AO APPELLA NT PRODUCED HIS PURCHASE LEDGER FOR THE SAID PARTY, SHOWING OPE NING BALANCE OF RS.32,80,600/-, PURCHASES DURING THE YEAR OF RS. 28,07,000/-, PAYMENTS MADE DURING THE YEAR OF RS.28,15,000/- AND CLOSING BALANCE OF RS.32,72,600/-. THE AO ACCEPTED THE PURC HASES ON THE BASIS OF REPLY OF SUBIR SHELLAC ENTERPRISES, BU T NOT THE OUTSTANDING LIABILITIES. FROM THE COPY OF REPLY SEN T BY SUBIR SHELLAC ENTERPRISES TO THE AO, IT IS SEEN THAT HE D ID NOT MENTION APPELLANTS OVERALL ACCOUNT AS PER HIS BOOKS BUT SI MPLY CONFIRMED ABOUT THE SALES MADE TO THE APPELLANT DUR ING THE YEAR. IN OTHER WORDS, HE DID NOT MENTION ABOUT THE OPENING AND CLOSING BALANCE AS WELL AS PAYMENTS RECEIVED FROM T HE APPELLANT DURING THE YEAR. ONCE THE AO ACCEPTED THE OPENING BALANCE, PURCHASES AND PAYMENTS MADE DURING THE YEA R, HE OUGHT TO HAVE ACCEPTED THE CLOSING BALANCE ESPECIAL LY WHEN THE APPELLANT PRODUCED EVIDENCES OF PAYMENTS OF DUES BY CHEQUES IN THE NEXT YEAR, WHICH AO HAS NOT DOUBTED. IN ANY CAS E, WHEN THE AO DOUBTED THE CLOSING BALANCE, HE OUGHT TO HAVE CL ARIFIED IT FROM SUBIR SHELLAC ENTERPRISES BY SENDING ANOTHER NOTICE/LETTER. THE ADDITION MADE IN HASTE, ON APPRE HENSION, SUMMARILY REJECTING THE CLARIFICATION AND DOCUMENTA RY EVIDENCES FILED BY THE APPELLANT IS AGAINST THE PRI NCIPLE OF NATURAL JUSTICE AND NOT MAINTAINABLE. ON THE CONTRA RY, APPELLANT PRODUCED EVIDENCES OF REPAYMENT OF DUES T OWARDS OUTSTANDING LIABILITIES IN THE NEXT YEAR THROUGH BA NKING CHANNEL. IN VIEW OF SUCH, ADDITION OF RS.32,72,600/ - IS DELETED. 6. WE HAVE HEARD THE ARGUMENTS OF BOTH THE SIDES AN D ALSO PERUSED THE RELEVANT MATERIAL AVAILABLE ON RECORD. THE LD. D.R. HAS CONTENDED THAT COPY OF ACCOUNT OF SUBIR SHELLAC ENTERPRISE FOR THE YEAR UNDER CONSIDERATION WAS NEVER FILED BY THE ASSESSEE EITHE R BEFORE THE ASSESSING OFFICER OR BEFORE THE LD. CIT(APPEALS) TO SHOW THE EXISTENCE OF OPENING AND CREDIT BALANCE AND THE RELIEF WAS GIVEN BY THE LD. CIT(APPEALS) ON THIS 4 ITA NO. 1416/KOL/2015 ASSESSMENT YEAR: 2011-2012 ISSUE TO THE ASSESSEE BY RELYING ON THE ACCOUNT OF THE SAID PARTY FILED BY THE ASSESSEE FOR THE IMMEDIATELY SUCCEEDING YEAR SH OWING SOME PAYMENTS MADE AGAINST THE CLOSING BALANCE. HE CONTENDED THE EXISTENCE OF THE LIABILITY THUS WAS NOT ESTABLISHED BY THE ASSESSEE ON EVIDENCE AND KEEPING IN VIEW THAT THE SAME WAS NOT EVEN CONFIRME D BY THE CONCERNED CREDITOR IN REPLY TO THE LETTER ISSUED BY THE ASSES SING OFFICER UNDER SECTION 133(6), THE LD. CIT(APPEALS) WAS NOT JUSTIF IED IN DELETING THE ADDITION MADE BY THE ASSESSING OFFICER ON THIS ISSU E BY TREATING THE SAID CREDITOR AS A BOGUS LIABILITY. THE LD. COUNSEL FOR THE ASSESSEE, ON THE OTHER HAND, HAS SUBMITTED THAT THE COPY OF THE ACCOUNT OF THE CONCERNED CREDITOR FOR THE YEAR UNDER CONSIDERATION, DULY CON FIRMED BY THE SAID PARTY WAS FILED BY THE ASSESSEE EVEN DURING THE COU RSE OF ASSESSMENT PROCEEDINGS BEFORE THE ASSESSING OFFICER. SHE HAS I NVITED OUR ATTENTION TO THE COPY OF THE SAME PLACED AT PAGE NO. 30 OF THE P APER BOOK WHICH CLEARLY SHOWS THAT THERE WAS AN OPENING CREDIT BALA NCE OF RS.32,80,600/- IN THE ACCOUNT OF THE SAID PARTY AND AFTER MAKING P URCHASES OF RS.28,07,000/- AND PAYMENTS OF RS.28,15,000/- DURIN G THE YEAR UNDER CONSIDERATION, THE CLOSING CREDIT BALANCE WAS RS.32 ,72,600/-. THE SAID CLOSING BALANCE WAS DULY CARRIED FORWARD BY THE ASS ESSEE TO THE NEXT YEAR AS IS EVIDENT FROM THE COPY OF THE RELEVANT LEDGER EXTRACT PLACED AT PAGE NO. 31 OF THE PAPER BOOK AND PAYMENTS AGAINST THE S AME WERE MADE BY THE ASSESSEE ON DIFFERENT DATES AGGREGATING TO RS.2 7,05,500/- THROUGH CHEQUES. THE EXISTENCE OF THE LIABILITY APPEARING I N THE NAME OF M/S. SUBIR SHELLAC ENTERPRISE THUS WAS DULY ESTABLISHED BY THE ASSESSEE BY FILING THE RELEVANT DOCUMENTARY EVIDENCE AND THE AD DITION MADE BY THE ASSESSING OFFICER BY TREATING THE SAME AS BOGUS LIA BILITY MERELY ON THE BASIS OF REPLY RECEIVED FROM THE SAID PARTY IN RESP ONSE TO THE LETTER ISSUED UNDER SECTION 133(6), WHEREIN THE AMOUNT OF PURCHASES ALONE WAS CONFIRMED IN THE SAID PARTY, IN OUR OPINION, WAS RI GHTLY DELETED BY THE LD. CIT(APPEALS). WE, THEREFORE, UPHOLD THE IMPUGNED OR DER OF THE LD. CIT(APPEALS) GIVING RELIEF TO THE ASSESSEE ON THIS ISSUE AND DISMISS GROUND NO. 1 OF THE REVENUES APPEAL. 5 ITA NO. 1416/KOL/2015 ASSESSMENT YEAR: 2011-2012 7. THE ISSUE RAISED IN GROUND NO. 2 RELATES TO THE DELETION BY THE LD. CIT(APPEALS) OF THE ADDITION OF RS.20,00,000/- MADE BY THE ASSESSING OFFICER BY WAY OF DISALLOWANCE OF ALLEGED CASH PURC HASES. 8. FROM THE CONFIRMATION RECEIVED FROM ANOTHER CRED ITOR M/S. SHANKAR PRASAD GUPTA & CO. IN REPLY TO THE LETTER ISSUED UN DER SECTION 133(6), THE ASSESSING OFFICER NOTICED THAT AGAINST THE TOTAL PU RCHASES OF RS.1,04,00,000/- MADE BY THE ASSESSEE FROM THE SAID PARTY, A SUM OF RS.84,00,000/- WAS PAID BY CHEQUE WHILE THE REMAINI NG AMOUNT OF RS.20,00,000/- WAS PAID IN CASH. ACCORDING TO THE A SSESSING OFFICER, WHEN THE ASSESSEE WAS ASKED TO PROVE THE CASH PURCHASES OF RS.20,00,000/-, HE FILED ONLY THE LEDGER ACCOUNT OF THE CONCERNED PART Y, WHICH WAS NOT SUFFICIENT TO ESTABLISH THE GENUINENESS OF THE CASH PURCHASES. HE ACCORDINGLY DISALLOWED THE CASH PURCHASES OF RS.20, 00,000/- CLAIMED TO BE MADE BY THE ASSESEE FROM M/S. SHANKAR PRASAD GUP TA & CO. 9. THE ADDITION OF RS.20,00,000/- MADE BY THE ASSES SING OFFICER ON ACCOUNT OF CASH PURCHASES BY TREATING THE SAME AS U NPROVED WAS CHALLENGED BY THE ASSESSEE IN THE APPEAL FILED BEFO RE THE LD. CIT(APPEALS) AND AFTER CONSIDERING THE SUBMISSIONS MADE BY THE A SSESSEE AS WELL AS THE MATERIAL AVAILABLE ON RECORD, THE LD. CIT(APPEALS) DELETED THE SAID ADDITION FOR THE FOLLOWING REASONS GIVEN IN PARAGRA PH NO. 5.2 AND 5.2.1 OF HIS IMPUGNED ORDER:- 5.2. THE SUBMISSION OF THE LD. AR HAS BEEN CONSIDE RED IN THE LIGHT OF DOCUMENTS SUBMITTED AND THE CASE LAWS CITE D. IN THIS CASE, APPELLANT PURCHASED ONIONS FROM SHANKAR PRASA D GUPTA & CO. AS PER THE LEDGER OF THE APPELLANT, HE WAS HAVI NG OPENING LIABILITY OF RS.73,72,277/- TO THE PARTY. DURING TH E YEAR HE PURCHASED ONIONS OF RS.54,35,476/- AND MADE PAYMENT S OF RS.1,04,00,000/- [84.00 LACS BY CHEQUE AND RS.20.00 LACS BY CASH], LEAVING OUTSTANDING LIABILITY OF RS.24,07,75 3/-. THE AO ISSUED NOTICE U/S. 133(6) OF THE ACT, SEEKING CONFI RMATION OF ACCOUNT OF THE APPELLANT. THE PARTY DID NOT RESPOND . THUS, THE AO DISALLOWED CASH PURCHASES OF RS.20.00 LACS. HE ALSO ADDED BACK THE CLOSING BALANCE OF RS.24,07,753/- AS BOGUS LIAB ILITY. 5.2.1. SO FAR AS ADDITION OF RS.20.00 LACS IS CONC ERNED, I DO NOT FIND MUCH MERIT IN AO'S ACTION. THERE WERE AS SUCH NO SEPARATE CASH PURCHASES, BUT CASH PAYMENTS WERE MADE TO SAME SHANKAR 6 ITA NO. 1416/KOL/2015 ASSESSMENT YEAR: 2011-2012 PRASAD GUPTA & CO AGAINST PURCHASES, TO WHOM CHEQUE PAYMENTS OF RS.84.00 WERE ALSO MADE. THE AO ACCEPTED THE OPE NING LIABILITY OF RS.73,72,277/-, PURCHASES OF RS.54,35, 476/- AND CHEQUE PAYMENTS OF RS.84.00 LACS DURING THE YEAR, B UT DID NOT ACCEPT CASH PAYMENTS MADE TO THE SAME PARTY. THE AP PELLANT SUBMITTED DETAILS OF SUCH CASH PAYMENTS NOT EXCEEDI NG RS.20,000/- EACH IN A SINGLE DAY BEFORE THE AO. HE DID NOT POINT OUT ANY DISCREPANCY IN APPELLANTS BOOKS, BUT DISAL LOWED CASH PAYMENTS ARBITRARILY, WITHOUT ASSIGNING ANY VALID R EASON. THIS ADDITION OF RS.20.00 LACS IS NOT MAINTAINABLE HENCE , DELETED. 10. WE HAVE HEARD THE ARGUMENTS OF BOTH THE SIDES O N THIS ISSUE AND ALSO PERUSED THE RELEVANT MATERIAL AVAILABLE ON REC ORD. AS FOUND BY THE LD. CIT(APPEALS) FROM THE LEDGER ACCOUNT OF M/S. SHANKA R PRASAD GUPTA & CO. MAINTAINED IN THE BOOKS OF ACCOUNT OF THE ASSESSEE, THERE WERE NO SUCH CASH PURCHASES OF RS.20,00,000/- MADE SEPARATELY BY THE ASSESSEE FROM THE SAID PARTY. THERE WAS AN OPENING BALANCE OF RS. 73,72,277/-, WHICH WAS INCREASED DURING THE YEAR UNDER CONSIDERATION O N ACCOUNT OF PURCHASES OF RS.54,35,476/- MADE BY THE ASSESSEE FR OM THE SAID PARTY AND AGAINST THIS TOTAL AMOUNT, A SUM OF RS.84,00,000/- WAS PAID BY THE ASSESSEE BY CHEQUE AND A SUM OF RS.20,00,000/- WAS PAID IN CASH. AS FURTHER FOUND BY THE LD. CIT(APPEALS) FROM THE RELE VANT DETAILS FURNISHED BY THE ASSESSEE BEFORE THE ASSESSING OFFICER, SUCH CASH PAYMENTS MADE BY THE ASSESSEE DID NOT EXCEED RS.20,000/- EACH IN A S INGLE DAY. KEEPING IN VIEW ALL THESE FACTS OF THE CASES AS WELL AS THE FA CT THAT NO DISCREPANCY WHATSOEVER WAS POINTED OUT BY THE ASSESSING OFFICER IN THE BOOKS OF ACCOUNT OF THE ASSESSEE, THE LD. CIT(APPEALS) DELET ED THE ADDITION OF RS.20,00,000/- MADE BY THE ASSESSING OFFICER BY WAY OF DISALLOWANCE OF CASH PURCHASES HOLDING THE SAME TO BE NOT MAINTAINA BLE. AT THE TIME OF HEARING BEFORE US, THE LD. D.R. HAS NOT BEEN ABLE T O REBUT OR CONTROVERT THE FINDINGS OF FACT RECORDED BY THE LD. CIT(APPEALS) W HILE GIVING RELIEF TO THE ASSESSEE ON THIS ISSUE. WE, THEREFORE, FIND NO JUST IFIABLE REASON TO INTERFERE WITH THE IMPUGNED ORDER OF THE LD. CIT(AP PEALS) GIVING RELIEF TO THE ASSESSEE ON THIS ISSUE AND UPHOLDING THE SAME, WE DISMISS GROUND NO. 2 OF THE REVENUES APPEAL. 7 ITA NO. 1416/KOL/2015 ASSESSMENT YEAR: 2011-2012 11. THE ISSUE RAISED IN GROUND NO. 3 RELATES TO THE DELETION BY THE LD. CIT(APPEALS) OF THE ADDITION OF RS.90,60,200/- MADE BY THE ASSESSING OFFICER ON ACCOUNT OF BOGUS PURCHASES. 12. DURING THE COURSE OF ASSESSMENT PROCEEDINGS, PU RCHASES CLAIMED BY THE ASSESSEE WERE VERIFIED BY THE ASSESSING OFFICER . ON SUCH VERIFICATION, HE FOUND CERTAIN DISCREPANCIES AND ANOMALIES IN THE FOLLOWING THREE PURCHASE BILLS:- NAME OF THE PARTY BILL NO. DATE AMOUNT (RS.) 1. SHIVA EXPORTS SE/001/2010 - 11 01.01.2011 31,93,400/ - 2. SHALIM TRADERS ST/001/2010 - 11 15.09.2010 30,65,800/ - 3. LOTUS BIO GREEN LBG/001/2010- 11 01.12.2010 28,01,000/ - TOTAL AMOUNT 90,60,200/ - 13. THE DISCREPANCIES AND ANOMALIES POINTED OUT BY THE ASSESSING OFFICER IN THE ABOVE THREE BILLS WERE AS UNDER:- (1) SERIAL NUMBERS ARE IDENTICAL. (2) FORMATS ARE SYNONYMOUS. (3) NUMBER IN BILLS INDICATE THAT SELLING PARTY HA D MADE ONLY SINGLE TRANSITION IN WHOLE AND WITH ONLY ONE PURC HASER THAT IS ASSESSEE. (4) NO SEAL STAMP IS USED. (5) SIGNATURES WERE TAKEN BY SINGLE PERSON BECAUSE ALPHABETS WERE SIMILAR. 14. ON THE BASIS OF THE ABOVE ANOMALIES AND DISCREP ANCIES, THE GENUINENESS OF THE AFORESAID THREE PURCHASE BILLS W AS FOUND TO BE DOUBTFUL BY THE ASSESSING OFFICER. HE, THEREFORE, R EQUIRED THE ASSESSEE TO FURNISH THE FOLLOWING DETAILS AND DOCUMENTS IN ORDE R TO PROVE THE GENUINENESS OF THE SAID BILLS:- (A) PURCHASE ORDER; (B) ORDER CONFIRMATION; 8 ITA NO. 1416/KOL/2015 ASSESSMENT YEAR: 2011-2012 (C) ROAD CHALLANS; (D) GOODS DELIVERY PROOF; (E) TRANSPORT BILLS; (F) ORIGINAL TAX INVOICE; (G) FULL ADDRESS OF THE PARTY WITH PHONE & E-MAIL ID; (H) TIN/VAT/CST DETAILS OF PARTY; (I) PAN OF THE PARTY ALONG WITH LAST FILED ITR; (J) PROOF OF THE ESTABLISHMENT (I.E. MUNICIPAL LI CENSE, ADDRESS PROOF). THE ASSESSEE, HOWEVER, FAILED TO FURNISH THE ABOVE DETAILS AND DOCUMENTS REQUIRED BY THE ASSESSING OFFICER AND FILED ONLY TH E COPIES OF PURCHASE ORDERS. KEEPING IN VIEW THIS FAILURE OF THE ASSESSE E, THE ASSESSING OFFICER TREATED THE PURCHASES OF RS.90,60,200/- AS BOGUS AN D DISALLOWED THE SAME. 15. THE DISALLOWANCE OF RS.90,60,200/- MADE BY THE ASSESSING OFFICER ON ACCOUNT OF THE ALLEGED BOGUS PURCHASES WAS CHALL ENGED BY THE ASSESSEE IN THE APPEAL FILED BEFORE THE LD. CIT(APPEALS) AND AFTER CONSIDERING THE SUBMISSIONS MADE BY THE ASSESSEE AS WELL AS THE MAT ERIAL AVAILABLE ON RECORD, THE LD. CIT(APPEALS) DELETED THE SAID ADDIT ION MADE BY THE ASSESSING OFFICER FOR THE FOLLOWING REASONS GIVEN I N PARAGRAPH NO. 6.3 & 6.3.1 OF HIS IMPUGNED ORDER:- 6.3. I HAVE CAREFULLY CONSIDERED THE FINDINGS OF T HE A.O. IN THE ASSESSMENT ORDER AS WELL AS APPELLANT'S SUBMISSION. THE AO DOUBTED APPELLANT'S PURCHASES FROM THREE PARTIES NA MELY, (I) SHIVA EXPORTS OF RS.31 ,93,4001-, (II) SHALIM TRADE RS OF RS.30,65,8001- AND (III) LOTUS BIO GREEN OF RS.28,0 1,000/- AS THOUGH THE PARTIES WERE LOCATED IN DIFFERENT PLACES OF WEST BENGAL BUT THE BILLS LOOKED ALIKE. THE AO ALSO POIN TED OUT CERTAIN GLARING DEFECTS IN THE BILLS AS DISCUSSED IN PARAGR APH 6.1. ABOVE. SO, THE AO ASKED THE APPELLANT TO PRODUCE CERTAIN D OCUMENTS TO PROVE THE GENUINENESS OF PURCHASES FROM THOSE THREE PARTIES. AS IT APPEARS FROM THE RECORD THAT THE APPELLANT, VIDE REPLY DATED 25/03/2014, STATED THAT LAC BUTTONS WERE PURCHASED FROM THOSE PARTIES AND SAME ITEMS WERE EXPORTED TO BANGLADESH THROUGH PETRAPOLE CHECK-POST IN THE SAME YEAR AND NEXT YEAR . IT IS SEEN FROM THE RECORDS THAT THE APPELLANT HAD PRODUCED FO LLOWING DOCUMENTS FOR AO'S CONSIDERATION: (A) PURCHASE INVOICE DULY CONFIRMED BY PARTIES. (B) PAYMENTS AGAINST PURCHASES THROUGH BANKING CH ANNEL. 9 ITA NO. 1416/KOL/2015 ASSESSMENT YEAR: 2011-2012 (C) PURCHASE ORDERS INDICATING DELIVERY AT PETRAP OLE, LCS (WEST BENGAL). {D) COMMERCIAL INVOICE, BILL OF EXPORT AND EXCHAN GE CONTROL DECLARATION FORM IN RESPECT OF SALE IN A. Y .2012 -13. (E} SALES OF THE ITEMS SO PURCHASED IN THE YEAR U NDER CONSIDERATION AND 12.00 MT IN SUBSEQUENT YEAR. (F) REALIZATION OF SALE PROCEEDS IN THE YEAR UNDER CONSIDERATION AND IN SUBSEQUENT YEAR THROUGH BANKING CHANNEL. 6.3.1. GOING BY THE EVIDENCES ON RECORD, EXPORTS OF LAC BUTTONS CANNOT BE HELD AS INGENUINE. THE SAME GOODS WERE EX PORTED TO BANGLADESH. THE APPELLANT PAID THOSE THREE PARTIES THROUGH BANKING CHANNEL. HE ALSO RECEIVED THE SALE PROCEEDS THROUGH BANKING CHANNEL. THE GOODS WERE EXPORTED THROUGH PE TRAPOLE CHECK-POST AS CAN BE SEEN FROM BILL OF EXPORT AND E XCHANGE CONTROL DECLARATION. THUS, ONCE THE SALES WERE GENU INE THERE OUGHT TO HAVE PURCHASED. THE AO SIMPLY MISSED THIS BASIC PRINCIPLE. AFTER RECEIVING THE REPLY OF THE APPELLA NT, THE ONLY ISSUE IN THE HANDS OF THE AO WAS TO EXAMINE THE RAT E OF PURCHASES, ESPECIALLY WHEN THE APPELLANT SOLD THE G OODS IN ALMOST IDENTICAL RATES. THOSE PURCHASES MIGHT HAVE BEEN MADE. THE AO DID NOT POINT OUT ANY DISCREPANCY IN THE EVI DENCES PRODUCED BY THE APPELLANT BUT DISALLOWED THE ENTIRE PURCHASES FROM UNREGISTERED SELLERS. THOUGH THE APPELLANT ASS ERTED THAT TRADING LOSSES WERE INCURRED MAINLY FROM ONION TRAD ES AND DUE TO ADVERSE FOREIGN EXCHANGE FLUCTUATIONS, BUT THE S AME SHOULD HAVE BEEN EXAMINED IN RIGHT EARNEST. INSTEAD, AO DI SALLOWED THE ENTIRE PURCHASES OF LAC BUTTONS ARBITRARILY, WHICH IS BAD IN LAW AND NOT MAINTAINABLE. THE ADDITION OF RS.90,60,200/ - IS THEREFORE, DELETED. 16. WE HAVE HEARD THE ARGUMENTS OF BOTH THE SIDES O N THIS ISSUE AND ALSO PERUSED THE RELEVANT MATERIAL AVAILABLE ON REC ORD. IT IS OBSERVED THAT IT WAS DULY ESTABLISHED BY THE ASSESSEE ON EVIDENCE BEFORE THE LD. CIT(APPEALS) THAT THE GOODS PURCHASED UNDER THREE B ILLS WERE DULY EXPORTED OUTSIDE INDIA. AS RIGHTLY HELD BY THE LD. CIT(APPEALS), THE ASSESSING OFFICER, THEREFORE, WAS NOT JUSTIFIED IN TREATING THE ENTIRE PURCHASES AS BOGUS ON THE BASIC PRINCIPLE THAT THER E COULD NOT BE A SALE WITHOUT PURCHASE. HOWEVER, KEEPING IN VIEW THE SPEC IFIC DISCREPANCIES AND ANOMALIES POINTED OUT BY THE ASSESSING OFFICER IN THE RELEVANT THREE PURCHASE BILLS, WHICH THE ASSESSEE FAILED TO EXPLAI N SATISFACTORILY EITHER BEFORE THE AUTHORITIES BELOW OR EVEN BEFORE US, WE ARE OF THE VIEW THAT THE CLAIM OF THE ASSESSEE OF PURCHASES AMOUNTING TO RS.90,60,200/- WAS NOT FULLY VERIFIABLE FROM THE SAID BILLS. EVEN THE LD. CIT(APPEALS) IN HIS IMPUGNED ORDER HAS IMPLIEDLY ACCEPTED THIS POSITION WHILE OBSERVING THAT 10 ITA NO. 1416/KOL/2015 ASSESSMENT YEAR: 2011-2012 THE ONLY ISSUE IN THE HANDS OF THE ASSESSING OFFICE R AFTER RECEIVING THE REPLY OF THE ASSESSEE WAS TO EXAMINE THE RATE OF PU RCHASES. HAVING REGARD TO ALL THESE FACTS OF THE CASE, WE ARE OF THE VIEW THAT SOME DISALLOWANCE ON ESTIMATED BASIS IS REQUIRED TO BE MADE ON ACCOUN T OF THE SAID PURCHASES FOR THE UNVERIFIABLE ELEMENT INVOLVED THE REIN. HAVING REGARD TO ALL THE RELEVANT FACTS OF THE CASE INCLUDING THE FA CT THAT THE GOODS PURCHASED BY THE ASSESSEE ARE IN THE NATURE OF FORE ST PRODUCE AND THE ASSESSEE HAS FINALLY DECLARED SUBSTANTIAL LOSS, WE ARE OF THE VIEW THAT IT WOULD BE FAIR AND REASONABLE TO MAKE SUCH DISALLOWA NCE TO THE EXTENT OF 10% OF THE PURCHASES. WE ACCORDINGLY MODIFY THE IMP UGNED ORDER OF THE LD. CIT(APPEALS) ON THIS ISSUE AND SUSTAIN THE DISA LLOWANCE OF RS.90,60,200/- MADE BY THE ASSESSING OFFICER TO THE EXTENT OF RS.9,06,020/-. GROUND NO. 3 OF THE REVENUES APPEAL IS THUS PARTLY ALLOWED. 17. IN THE RESULT, THE APPEAL OF THE REVENUE IS PAR TLY ALLOWED. ORDER PRONOUNCED IN THE OPEN COURT ON 22 ND DAY OF DECEMBER, 2017. SD/- SD/- (A.T. VARKEY) (P.M. JAGTAP) JUDICIAL MEMBER ACCOUNTANT MEMBER KOLKATA, THE 22 ND DAY OF DECEMBER, 2017 COPIES TO : (1) ASSISTANT COMMISSIONER OF INCOME TAX, CIRCLE-3, MALDA, NETAJI MARKET (1 ST FLOOR), RATHBARI, MALDA-732 101 2) SHRI PROSEN CHOWDHURY, PROP. OF DAS & CHOWDHURY INTERNATIONAL, VILL. MALIHAT, P.O. JOTE BASANTA, KOTOWALI, DIST. MALDA-732 128 (3) CIT(APPEALS), JALPAIGURI, (4) CIT- , KOLKATA, (5) THE DEPARTMENTAL REPRESENTATIVE (6) GUARD FILE TRUE COPY BY ORDER SENIOR PRIVATE SECRETARY, HEAD OF OFFICE/DDO, INCOME TAX APPELLATE TRIBUNAL KOLKATA BENCHES, KOLKATA LAHA/SR. P.S.