VIDEOCON INDUSTRIES LTD, MUMBAI V. DCIT RG 3(3)(2), MUMBAI

ITA 149/MUM/2017

• Counselvise Citation: [2017] 127 COUNSELVISE.COM (IT) 9829 (ITAT-MUMBAI)
• Duration Of Justice: 6 month(s) 20 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 26-07-2017
• Appeal Filed By: Assessee
• Order Result: Partly Allowed
• Bench Allotted: Not Allotted
• Assessment Year: 2012-2013
• Appeal Filed On: 06-01-2017
• Result in Favour of: Partly Allowed
• Court: TRIBUNAL
• Department Lawyers: PIYUSH SONKAR
• Assessee Lawyers: SHAILESH S SHAH
• Keywords: Bogus purchase; Depreciation; Transfer pricing; International transaction; Earning of tax free income; Accommodation entries
• Section: 14A

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL K BENCH, MUMBAI BEFORE SHRI R. C. SHARMA , ACCOUNTANT MEMBER AND SHRI SANDEEP GOSAIN, JUDICIAL MEMBER ./ I.T.A. NO. 149/MUM/2017 ( / ASSESS MENT YEAR: 2012 - 13 ) VIDEOCON INDUSTRIES LTD. 171 - C, MITTAL COURT, NARIMAN POINT, MUMBAI - 400 021 / VS. DY. CIT - TAX, RANGE 3(3)(2), AAYAKAR BHAVAN, M. K. ROAD, MUMBAI - 400 020 ./ ./ PAN/GIR NO. AABCV 4012 H ( / AP PELLANT ) : ( / RESPONDENT ) / APPELLANT BY : SHRI SHAILESH S. SHAH / RESPONDENT BY : SHRI PIYUSH SONKAR / DATE OF HEARING : 19 / 6 / 2017 / DATE OF PRONOUNCEMENT : 26 / 07 / 2017 / O R D E R PER R. C. SHARMA, A. M.: THIS IS AN APPEAL FILED BY THE ASSESSEE AGAINST THE ORDER PASSED BY AO U/S.143(3) R.W.S. 144C (13) OF IT ACT, 1961, PURSUANT TO THE DIRECTION ISSUED BY DRP, U/S.14 4C ( 5 ) OF THE INCOME TAX ACT, 1961 FOR THE ASSESSMENT YEAR (A.Y.) 2012 - 13 . 2 . RIVAL CONTENTIONS HAVE BEEN HEARD AND RECORD PERUSED. FACTS IN BRIEF ARE THAT THE ASSESSEE IS ENGAGED IN MANUFACTURING AND TRADING OF CONSUMER ELECTRONICS AND HOME APPLIANCES, EXPLORATION OF CRUDE OIL AND GAS, INVESTMENT IN 2 ITA NO. 149/MUM/2017 (A.Y. 2012 - 13) VIDEOCON INDUSTRIES LTD. VS. DY. CIT SHARES, SECURITIES AND PROPERTIES, LEASE AND FINANCE AND OTHER INCIDENTAL ACTIVITIES. DURING THE COURSE OF SCRUTINY ASSESSMENT TPO MADE UPWARD TP ADJUSTMENT IN RESPECT OF GUARANTEE COMMISSION AND FEE FOR LETTER OF COMFORT FOR CREDIT FACILITIES. THE ISSUE HAS BEEN DEALT BY THE TPO AT PAGE 2 TO 1 4 OF HIS ORDER WHEREIN THE LD. TPO HAS MADE AN UPWARD TP ADJUSTMENT OF RS.14,62,62,878/ - IN RESPECT OF GUARANTEE COMMISSION FROM VENUS CORPORATION LTD. BY APPLYING GUARANTEE COMMISSION RATE OF 3 % P.A. AND UPWARD TP ADJUSTMENT OF RS.26,36,02,329/ - IN RESPECT OF FEE FOR LETTER OF COMFORT FROM VHHL BY APPLYING RATE OF 1.5% P.A. 3. BY THE IMPUGNED ORDER, THE DRP CONFIRMED THE ACTION OF THE TPO BY OBSERVING THAT THE TPO DETERMINED ALP AFTER EVALUAT ING THE ASPECTS SUCH AS TERMS AND CONDITIONS ON WHICH LOANS HAS BEEN GIVEN, RISK UNDERTAKEN, RELATIONSHIP BETWEEN THE BANK AND THE CLIENT AND ECONOMIC AND BUSINESS INTEREST, ETC. AND HENCE THE DRP UPHELD THE CONTENTION OF THE TPO. 4 . AT THE OUTSET, IT WA S SUBMITTED BY THE LD. AR THAT THE ISSUE IS COVERED BY THE DECISION OF HONBLE TRIBUNAL IN THE ASSESSEES OWN CASE FOR THE IMMEDIATELY PRECEDING A.Y. 2011 - 12. IT HAS BEEN HELD BY TRIBUNAL THAT SINCE SBI HAS CHARGED BANK GUARANTEE COMMISSION TO ASSESSEE BY GIVING 50% CONCESSION ON THE RATE OF 1.75% WHICH WORKS OUT TO APPROXIMATELY 0.875%, CONSIDERING FACTORS AND RISK LIKE COUNTRY RISK, CURRENCY RISK AND ENTITY RISK ETC., GUARANTEE COMMISSION WOULD FALL DOWN BELOW 0.5%. THIS CONSTITUTES KIND OF INTERNAL CUP. MOREOVER, THERE ARE CATENA OF DECISIONS WHEREIN THE TRIBUNAL HAS HELD THAT CORPORATE GUARANTEE COMMISSION AROUND 0.50% CAN BE ACCEPTED AS ALP. THE ITAT RESTRICTED THE TP ADJUSTMENT TO 0.5% P.A. 5. WE HAVE CAREFULLY GONE THROUGH THE ORDER OF THE TRIBUNAL DATED 24.2.2017 IN ITA NO. 1310/M/2016 FOR AY 2011 - 12, WHEREIN AT PG. 11, THE TRIBUNAL OBSERVED AS UNDER: 3 ITA NO. 149/MUM/2017 (A.Y. 2012 - 13) VIDEOCON INDUSTRIES LTD. VS. DY. CIT 11. AFTER CONSIDERING THE RIVAL SUBMISSIONS AND ON PERUSAL OF THE IMPUGNED ORDERS, WE FIND THAT IT IS AN UNDISPUTED FACT THAT THE ASSESSEE HAS GIVEN CORPORATE GUARANTEES TO FINANCIAL INSTITUTION/BANKS IN RESPECT OF LOAN OR CREDIT FACILITIES EXTENDED TO ITS TWO AES AND LETTER OF UNDERTAKING TO THE LENDERS IN THE CASE OF ANOTHER AE. FOR PROVIDING SUCH CORPORATE GUARANTEE IT HAS RECOVERED 0.25% AS GUARANT EE COMMISSION. IN SUPPORT OF CHARGING OF 0.25%, THE ASSESSEE, FIRST OF ALL, CONTENDED THAT THE LOANS FOR WHICH THE ASSESSEE HAS GIVEN GUARANTEE ARE PRIMARILY COVERED BY PLEDGED SECURITIES, HYPOTHECATION OF DEBTORS' BALANCES AND OTHER ASSETS OF THE AE, THER EFORE, IT CANNOT BE SAID THAT THE ENTIRE SECURITY OF THE LOAN WAS BASED ON CORPORATE GUARANTEE GIVEN BY THE ASSESSEE. THE DETAILS OF LOANS VIS - - VIS THE SECURITY THEREOF HAD ALREADY BEEN REPRODUCED ABOVE. IT HAS ALSO BEEN BROUGHT ON RECORD THAT STATE BANK OF INDIA HAS CHARGED BANK GUARANTEE COMMISSION TO ASSESSEE BY GIVING 50% CONCESSION ON THE RATE OF 1.75% WHICH WORKS OUT TO APPROXIMATELY 0.875%. IF VARIOUS FACTORS AND RISK INVOLVED ARE EVALUATED WHICH IS QUITE NORMAL UNDER THE FOREIGN GUARANTEE LIKE, CO UNTRY RISK, CURRENCY RISK AND ENTITY RISK ETC., THEN CHARGING OF CORPORATE GUARANTEE COMMISSION WOULD FALL DOWN BELOW 0.5%. THUS, THIS CONSTITUTES A KIND OF INTERNAL CUP AVAILABLE TO THE ASSESSEE TO BENCHMARK THE TRANSACTION OF GIVING CORPORATE GUARANTEE/L ETTER OF UNDERTAKING. MOREOVER, THERE ARE CATENA OF DECISIONS WHEREIN THIS TRIBUNAL HAS HELD THAT CORPORATE GUARANTEE COMMISSION AROUND 0.50% CAN BE ACCEPTED AS ALP. ACCORDINGLY, WE HOLD THAT THE CORPORATE GUARANTEE COMMISSION FEE WHICH IS TO BE RECOVERED FROM AE SHOULD BE 0.50% WHICH WOULD MEET THE ARMS LENGTH REQUIREMENT. THUS, UNDER THE FACTS AND CIRCUMSTANCES OF THE CASE, WE DIRECT THE TPO/ASSESSING OFFICER TO TAKE THE CORPORATE GUARANTEE FEE @ 0.50% AND MAKE THE ADJUSTMENT ACCORDINGLY. THUS, THE ISSUE OF CORPORATE GUARANTEE AS RAISED VIDE GROUND NOS. 1.1 TO 1.5 IS TREATED AS PARTLY ALLOWED. AS STATED ABOVE, WE ARE NOT DECIDING THE ISSUE, WHETHER THE TRANSACTION OF CORPORATE GUARANTEE IS AN 'INTERNATIONAL TRANSACTION' OR NOT BECAUSE THE LD. COUNSEL FOR T HE ASSESSEE HAD ONLY HARPED UPON THE ISSUE ON MERITS AND HENCE THE VARIOUS CONTENTIONS RAISED BY THE CIT DR ARE LEFT OPEN. 6. WE HAVE CAREFULLY GONE THROUGH THE ORDER OF THE TRIBUNAL AND FOUND THAT EXACT LY SIMILAR ISSUE HAD BEEN DEALT BY THE TRIBUNAL AND GUARANTEE COMMISSION HAS BEEN RESTRICTED TO 0.50%. ACCORDINGLY, RESPECTFULLY FOLLOWING THE ORDER OF THE TRIBUNAL, WE DIRECT THE A.O. TO RESTRICT THE TP ADJUSTMENT TO 0.5% P.A. WE DIRECT 4 ITA NO. 149/MUM/2017 (A.Y. 2012 - 13) VIDEOCON INDUSTRIES LTD. VS. DY. CIT ACCORDINGLY. IT IS PERTINENT TO MENTION THAT NO NEW GUARANTEE WERE GI VEN TO NEW AE DURING THE YEAR AND THE GUARANTEE DURING THE YEAR WAS IN CONTINUATION OF THE OLD GUARANTEE ONLY. THE LD. DR ALSO FAIRLY CONCEDED THAT THE ISSUE IS COVERED BY THE ORDER OF THE TRIBUNAL DATED 24.2.2012. 7. GRIEVANCE OF THE ASSESSEE ALSO RELATE S TO THE DISA LLOWANCE OF RS.1,65,49,73,234/ - U/S.14A R.W.R. 8D. 8. WE HAVE GONE THROUGH THE ORDERS OF THE AUTHORITIES BELOW AND FOUND THAT THE LD. AO MADE DISALLOWANCE U/S. 14A R.W.R. 8D AS FOLLOWS: DIRECT EXPENSES RS. NIL INTEREST RS.1,48,17,64,776 ADM INISTRATIVE EXPENSES RS.17,74,39,093 RS.1,65,92,03,869 LESS: SUO - MOTO DISALLOWED BY THE ASSESSEE RS.42,30,635/ - DISALLOWANCE U/S. 14A R.W.R. 8D RS.1,65,49,73,234 9. DRP RELYING ON THE EARLIER YEAR DIRECTION UPHELD THE ADDITIONS MADE BY THE LD. AO. 10. THE LD. AR PLACED ON RECORD THE ORDER OF THE TRIBUNAL DATED 24.4.2017 FOR THE A.Y. 2011 - 12, WHEREIN THE ISSUE HAS BEEN DEALT BY THE TRIBUNAL AT PGS. 17 AND 18 AS UNDER: 17. AFTER CONSIDERING THE RIVAL SUBMISSIONS AND ON PERUSAL OF THE RELEVANT MATERIA L PLACED ON RECORD AS WELL AS THE FINDING GIVEN IN THE IMPUGNED ORDER, AT THE OUTSET WE ARE OF THE OPINION THAT THE BASIC PREMISE ON WHICH THE DISALLOWANCE UNDER SEC. 14A GETS TRIGGERED IS THAT, THERE HAS TO BE AN INCOME TO THE ASSESSEE WHICH DOES NOT FORM PART OF THE TOTAL INCOME AND ASSESSEE CLAIMS ANY DEDUCTION IN RESPECT OF EXPENDITURE ATTRIBUTABLE TO EARNING OF SUCH INCOME. IF ASSESSEE HAS NOT CLAIMED ANY EXEMPT INCOME OR HAS MADE IT PART OF TOTAL INCOME LIABLE FOR TAX, THEN PROVISIONS OF SEC 14A DOES NOT GET TRIGGERED. THIS BASIC POSTULATE IS NOT SATISFIED IN THE PRESENT CASE, BECAUSE NEITHER THE ASSESSEE HAS CLAIMED IT AS 5 ITA NO. 149/MUM/2017 (A.Y. 2012 - 13) VIDEOCON INDUSTRIES LTD. VS. DY. CIT EXEMPT INCOME NOR ASSESSING OFFICER HAS ALLOWED ANY EXEMPT INCOME WHICH WAS IN THE FORM OF DIVIDEND INCOME OF RS.49,14,724/ - . ONCE THE REVENUE ITSELF HAS TREATED THE EXEMPT INCOME AS PART OF THE TOTAL INCOME WHICH HAS BEEN HELD TO BE TAXABLE, THEN THE DISALLOWANCE OF EXPENDITURE UNDER SEC. 14A DOES NOT GETS TRIGGERED, ESPECIALLY IN LIGHT OF THE JUDGMENTS OF VARIOUS HIGH COURTS AS REFE RRED TO ABOVE ESPECIALLY IN THE CASE OF CHEMINVEST LTD, (SUPRA); CORRTECH ENERGY (P.) LTD, (SUPRA); CIT V. SHIVAM MOTORS (P.) LTD, (SUPRA); LAKHANI MARKETING LNC, (SUPRA); AND HOLCIM INDIA PRIVATE LIMITED, (SUPRA). EVEN IF WE IGNORE THIS PROPOSITION COMPLE TELY, ON MERITS ALSO, AS POINTED BY THE LD. COUNSEL FOR THE ASSESSEE HERE IN THIS CASE NO DISALLOWANCE OF INTEREST EXPENDITURE U/R 8D(2)(II) CAN BE MADE BECAUSE, ASSESSEE HAD HUGE SURPLUS FUNDS OF MORE THAN RS.8313 CRORES IN THE FORM OF 'RESERVES & SURPLUS ' AND 'SHARE CAPITAL' AS COMPARED TO INVESTMENT OF RS.3966 CRORES MADE BY THE ASSESSEE. THE RATIO AND THE PRINCIPLE LAID DOWN BY THE HON'BLE BOMBAY HIGH COURT IN THE CASE OF RELIANCE UTILITIES LTD., (SUPRA) AND HDFC BANK, (SUPRA) ARE CLEARLY APPLICABLE, WH EREIN THEIR LORDSHIPS HAVE REITERATED SEVERAL TIMES THAT IF THE ASSESSEE HAS SURPLUS FUNDS IN THE FORM OF RESERVES & SURPLUS OR SHARE CAPITAL, THEN PRESUMPTION IS THAT INVESTMENT WOULD HAVE BEEN MADE FROM SURPLUS FUNDS/INTEREST FREE FUNDS AND NOT FROM THE BORROWED FUNDS. ACCORDINGLY, WE DIRECT THE AO TO DELETE THE DISALLOWANCE OF INTEREST EXPENDITURE AS WORKED OUT UNDER RULE 8D (2)(II). NOW COMING TO ISSUE OF DISALLOWANCE OF INDIRECT EXPENDITURE U/R 8D (2)(III), WE AGREE WITH LD. COUNSEL THAT THE INVESTMENT S FROM WHERE INCOME IS TAXABLE OR THE INVESTMENTS WHICH ARE FOR BUSINESS OR STRATEGIC REASONS NEED TO BE REMOVED FROM THE WORKING OF THE AVERAGE VALUE OF INVESTMENTS AS CONTEMPLATED IN RULE 8D(2)(III). THE LATER PROPOSITION HAS BEEN CONSISTENTLY HELD IN CA TENA OF CASES BY THIS TRIBUNAL AS REFERRED TO BY LD. COUNSEL BEFORE US. THUS, RESPECTFULLY FOLLOWING THE RATIO WE ALSO HOLD ACCORDINGLY. FURTHER LD. COUNSEL HAS GIVEN THE WORKING OF DISALLOWANCE UNDER RULE 8D (2)(III) IN LIGHT OF VARIOUS JUDICIAL DECISIONS AND PROPOSITIONS WHICH NEEDS VERIFICATION. ACCORDINGLY, WE DIRECT THE AO TO EXAMINE THE SAME AND COMPUTE THE DISALLOWANCE OF INDIRECT EXPENDITURE. SINCE OUR DECISION ON DISALLOWANCE OF INTEREST IS BASED ON DIRECT JURISDICTIONAL HIGH COURT DECISIONS, THERE FORE, WE DO NOT DEEM FIT TO GO INTO THE VARIOUS PROPOSITIONS MADE BY THE LD. CIT, DR IN HIS WRITTEN NOTES WHICH IS MORE ON INTENTION AND PURPOSE FOR INSERTION OF SECTION 14A. ON THE ISSUE OF INDIRECT EXPENDITURE ALSO, WE ARE FOLLOWING THE DECISIONS OF THE COORDINATE DECISIONS AS RELIED UPON BEFORE US. ACCORDINGLY, GROUND NO. 2.1 TO 2.5 IS TREATED AS ALLOWED. THE 6 ITA NO. 149/MUM/2017 (A.Y. 2012 - 13) VIDEOCON INDUSTRIES LTD. VS. DY. CIT ALTERNATIVE GROUNDS TAKEN VIDE GROUND NOS. 2.4 AND 2.5 HAVE BECOME PURELY ACADEMIC AND THEREFORE, NO SEPARATE ADJUDICATION IS REQUIRED. 18. AS RE GARDS THE ISSUE RAISED IN GROUND NOS. 3.1 AND 3.2 THAT DISALLOWANCE U/S. 14A SHOULD BE ADDED AS PART OF THE BOOK PROFIT, THE SAME TOO IS NOW A SETTLED PROPOSITION THAT IF ANY DISALLOWANCE UNDER SEC. 14A IS MADE IN THE NORMAL COMPUTATION, THEN THE SAME WOUL D BE ADDED TO THE BOOK PROFIT U/S. 115 JB. ACCORDINGLY, WE ORDER THAT, WHATEVER DISALLOWANCE IS MADE UNDER RULE 8D, THE SAME SHOULD BE ADDED TO THE BOOK PROFIT. 11. WE HAVE CAREFULLY GONE THROUGH THE ORDER OF THE TRIBUNAL WHEREIN ISSUE WITH REGARD TO THE DISALLOWANCE U/S.14A WAS DEALT WITH. INTEREST DISALLOWANCE WAS DELETED ON THE PLEA THAT THE ASSESSEE WAS HAVING SUFFICIENT INTEREST FREE FUNDS AVAILABLE WITH IT. THE TRIBUNAL HAVE HELD THAT NO DISALLOWANCE OF INTEREST EXPENDITURE U/R 8D(2)(II) CAN BE MADE BECAUSE OWN FUNDS OF THE ASSESSEE ARE MORE THAN THE INVESTMENTS MADE BY THE ASSESSEE RELYING ON BOMBAY HC IN RELIANCE UTILITIES (313 ITR 340) AND HDFC BANK V. CIT (366 ITR 505). 12. FROM THE RECORD, WE FOUND THAT I N THE CURRENT YEAR ALSO I.E. AS ON 31.3 .2012, OWN FUNDS AMOUNTED TO RS.9595.60 CORES AS COMPARED TO INVESTMENTS OF RS.3146.76 CRORES IN TERMS OF THE BALANCE SHEET OF ASSESSEE PLACED AT PG. 11 OF THE PAPER BOOK. WE, THEREFORE, DIRECT THE AO TO DELETE DISALLOWANCE OF INTEREST. 13. WE ALSO FOUND T HAT DURING THE YEAR UNDER CONSIDERATION THERE IS A DECREASE IN INVESTMENT AS PER THE AUDITED BALANCE SHEET PLACED ON RECORD. INVESTMENT AS ON 31.3.2011 WAS RS.39.66 CRORES, WHEREAS AS ON 31.3.2011 IT WAS RS.31.46 CRORES. HOWEVER, THERE IS INCREASE IN CAPIT AL AND FREE RESERVE AS ON 31.3.2012 AS COMPARED TO CAPITAL RESERVES ON 31.3.2011. UNDER THESE FACTS AND CIRCUMSTANCES, RELYING ON THE DECISION OF THE HONBLE JURISDICTIONAL HIGH COURT IN THE CASE OF RELIANCE UTILITIES, WE CAN REASONABLY PRESUME THAT INVEST MENT WAS OUT OF OWN FUNDS AND NO DISALLOWANCE OF INTEREST IS WARRANTED. 7 ITA NO. 149/MUM/2017 (A.Y. 2012 - 13) VIDEOCON INDUSTRIES LTD. VS. DY. CIT 1 4 . REGARDING DISALLOWANCE OF ADMINISTRATIVE EXPENSES U/S. 14A R.W.R. 8D (2) (III), THE HONBLE ITAT HAS SET - ASIDE THE MATTER TO LD. AO WITH THE DIRECTIONS TO EXCLUDE INVESTMENTS GIVING TAXABLE INCOME AND STRATEGIC INVESTMENTS AND ALSO TO VERIFY THE WORKING OF DISALLOWANCE UNDER RULE 8D (2) (III) IN LIGHT OF VARIOUS JUDICIAL PROPOSITIONS. 1 5 . RESPECTFULLY FOLLOWING THE ORDER OF THE TRIBUNAL AND THE FACTS AND FIGURES OBSERVED BY US, WE DE LETE THE DISALLOWANCE MADE ON ACCOUNT OF INTEREST. DISALLOWANCE OF ADMINISTRATIVE EXPENSES IS RESTORED BACK TO THE FILE OF THE AO FOR DECIDING AFRESH IN TERMS OF THE DIRECTION GIVEN BY T HE TRIBUNAL IN ORDER DATED 24.02 .2017. WE DIRECT ACCORDINGLY. 16 . TH E ADDITION OF AMOUNT DISALLOWED U/S. 14A TO THE BOOK PROFIT U/S.115J B IS CONSEQUENTIAL TO GROUND OF APPEAL NO. 2. SIMILAR GROUNDS HAVE BEEN DEALT BY THE TRIBUNAL IN PARA 18 ON PAGE 18. RESPECTFULLY FOLLOWING THE SAME WE DIRECT THE AO TO RESTRICT THE ADDITI ON U/S.15JB TO THE EXTENT OF DISALLOWANCE OF ADMINISTRATIVE EXPENSES WORKED OUT IN TERMS OF DIRECTION GIVEN BY THE TRIBUNAL IN ITS ORDER DATED 24.2 . 2017 . W E DIRECT ACCORDINGLY . 1 7 . NEXT GRIEVANCE OF ASSESSEE RELATE S TO THE ADDITION ON ACCOUNT OF BOGUS PU RCHASES . 1 8 . WE HAVE CONSIDERED RIVAL CONTENTIONS AND FOUND THAT THE LD. AO MADE ADDITIONS ON ACCOUNT OF PURCHASES FROM SUSPICIOUS PARTIES BASED ON ACCOUNTING OF PURCHASES IN THE BOOKS: (A) DISALLOWANCE OF RS.4,60,97,102/ - BEING DEPRECIATION ON ADDITIONS TO PLANT AND MACHINERY AND MOULDS (PARA 32, PAGE 64 OF THE ASSESSMENT ORDER) (B) CONSEQUENTLY LD. AO REDUCED THE WDV OF PLANT AND MACHINERY AND MOULDS BY RS.14,73,76,300/ - . (C) REDUCTION OF THE BOOK VALUE OF CWIP BY RS.20,30,26,020/ - BY HOLDING THE PURCHASES AS BOGU S. 8 ITA NO. 149/MUM/2017 (A.Y. 2012 - 13) VIDEOCON INDUSTRIES LTD. VS. DY. CIT (D) REDUCTION OF THE VALUE OF INVENTORY BY RS.18,97,44,527/ - . (E) ADDITION OF RS.3,34,25,609/ - ON ACCOUNT OF PURCHASES OF RAW MATERIAL AND CONSUMABLES. 19 . BY THE IMPUGNED ORDER THE DRP HAS CONFIRMED THE ACTION OF THE A.O. BY OBSERVING THAT AO HAS GIVEN DETA ILED FINDING ON THE ISSUE WITH A REASONABLE LOGIC. 20 . WE HAVE CAREFULLY GONE THROUGH THE ORDER OF THE AUTHORITIES BELOW AS WELL AS THE ORDER OF THE TRIBUNAL DATED 24.2 .2017. THE ISSUE IS COVERED BY THE ORDER OF THE HONBLE ITAT IN THE ASSESSEES OWN CASE IN A.Y. 2011 - 12. IT HAS BEEN HELD THAT SURESH A. PAREKH DULY CONFIRMED THAT PHYSICAL GOODS WERE ACTUALLY SUPPLIED TO THE ASSESSEE VIDE AFFIDAVIT DATED 08.03.2013 AND OTHER IN HIS STATEMENT BEFORE THE AO ON 12.3.2015. T HE ASSESSEE HAD GIVEN THE ITEM WISE D ETAILS AND UTILIZATION OF SUCH MATERIALS IN THE MANUFACTURING AND HOW THE SAME HAS BEEN INVENTORISED AND ACCOUNTED FOR IN THE BOOKS OF ACCOUNT. 2 1 . THE TRIBUNAL HAVE DEALT WITH THE ISSUE AT PG. 40 TO 47. THE OBSERVATION OF THE TRIBUNAL WAS AS UNDER: 28. WE HAVE CAREFULLY CONSIDERED THE ENTIRE GAMUT OF FACTS, PERUSED THE RELEVANT FINDING GIVEN IN THE IMPUGNED ORDERS AS WELL AS THE RIVALSUBMISSIONS MADE BY THE PARTIES BEFORE US VIS - A - VIS THE MATERIAL PLACED ON RECORD. THE ASSESSEE COMPANY IS ONE OF THE LEAD ING MANUFACTURING AND TRADING COMPANY OF CONSUMER ELECTRONICS, HOME APPLIANCES AND OTHER WHITE GOODS ETC. DURING THE FY 2010 - 11 THE ASSESSEE HAD MADE PURCHASES TO THE TUNE OF APPROXIMATELY RS. 8000 CRORES. OUT OF WHICH PURCHASES AGGREGATING TO RS.63.07 CRO RES HAVE BEEN ADDED BY THE AO ON THE GROUND THAT THESE ARE BOGUS PURCHASES MADE FROM HAWALA DEALERS ESPECIALLY FROM SURESH A. PAREKH. IT IS AN ADMITTED FACT, WHICH IS BORNE OUT FROM THE VARIOUS INVOICES AND INFORMATION RECEIVED THAT SHRI SURESH A. PAREKH A LONG WITH HIS FAMILY MEMBERS HAD MADE VARIOUS ENTITIES THROUGH WHICH HE IS PROVIDING ACCOMMODATION BILLS. DURING THE COURSE OF INITIAL INVESTIGATION BY THE SALES TAX DEPARTMENT AS WELL AS BY THE INVESTIGATION WING OF THE INCOME - TAX DEPARTMENT, HE HAD ADMIT TED THAT HE IS PROVIDING BOGUS BILLS AND ACCOMMODATION ENTRIES FOR PURCHASE OF VARIOUS MATERIALS AND ALSO EXPLAINED THE MODUS OPERANDI OF HIS BUSINESS TRANSACTION. SINCE 9 ITA NO. 149/MUM/2017 (A.Y. 2012 - 13) VIDEOCON INDUSTRIES LTD. VS. DY. CIT THE STATEMENT WAS TAKEN ON THE BACK OF THE ASSESSEE, THE TRIBUNAL HAD DIRECTED THE DEP ARTMENT/AO TO RECORD FRESH STATEMENT OF SHRI SURESH A. PAREKH WHEREIN HE WAS GIVEN OPPORTUNITY TO BE CROSS EXAMINED BY THE ASSESSEE. DURING THE COURSE OF FRESH STATEMENT/CROSS EXAMINATION BY THE AO IN THE IMPUGNED ASSESSMENT PROCEEDINGS AS DISCUSSED ABOVE, SHRI SURESH A. PAREKH HAD CATEGORICALLY CONFIRMED THAT HE DEALS IN VARIOUS ELECTRONIC ITEMS IN BULK AND THAT THERE IS HUGE DEMAND IN THE MARKET FOR SUPPLY OF THE AFORESAID ITEMS. HE HAD ALSO GIVEN THE NAME OF CONCERNS THROUGH WHICH HE HAD SUPPLIED VARIOUS ITEMS TO VARIOUS CORPORATE HOUSES INCLUDING M/S. VIDEOCON INDUSTRIES LTD., AURANGABAD. IN HIS STATEMENT, HE HAS STATED THAT ON TELEPHONIC OR ORAL ORDERS HE USED TO SOURCE THE SUPPLIERS IN THE GREY MARKET AS PER THE SPECIFICATION OF THE PRODUCTS AND DIRECT ION OF THE PURCHASE DEPARTMENT OF THE ASSESSEE COMPANY AND THE SUPPLIERS FROM THE GREY MARKET SUPPLIED THESE ITEMS DIRECTLY TO THE ASSESSEE COMPANY. SINCE THESE SUPPLIERS OPERATE IN GREY MARKET, THEREFORE, TO REGULARIZE THE SAME, HE USED TO GIVE SALE BILLS TO THE ASSESSEE COMPANY BY RAISING INVOICES THROUGH HIS CONCERNS AGAINST WHICH THE PAYMENT WAS RECEIVED BY HIM AND THE SAME HAS BEEN DISTRIBUTED TO THE SUPPLIERS OF THE MATERIAL IN THE GREY MARKET. IN HIS CROSS EXAMINATION HE HAS ALSO EXPLAINED AND CLARIF IED HIS EARLIER STATEMENT AND ADMITTED THAT WHAT HAS BEEN SAID IS CORRECT BUT HE ADMITTED AND CLARIFIED THAT MATERIAL HAS BEEN ACTUALLY PROCURED AND DELIVERED FROM THE GREY MARKET TO THE ASSESSEE COMPANY. IN THE EARLIER STATEMENT ALSO HE HAS CONFIRMED THE SUPPLY OF MATERIAL IN HIS SWORN AFFIDAVIT DATED 08.01.2013 FILED BEFORE ADIT, KOLHAPUR. HE HAS ALSO ADMITTED TO DEAL IN NUMBER OF CORPORATE HOUSES AND HE IS IN THE BUSINESS OF SUPPLY OF ELECTRONIC ITEMS AND MATERIAL FOR SEVERAL YEARS. HOWEVER, WHEN CONFRON TED TO SPECIFIC SUPPLIES MADE TO VIDEOCON INDUSTRIES GROUP, HE DULY CONFIRMED THAT PHYSICAL GOODS WERE ACTUALLY SUPPLIED WHICH WERE PROCURED FROM GREY MARKET AND BILLS FOR PURCHASES OTHER THAN ACTUAL SUPPLIERS WERE GIVEN TO THE ASSESSEE. THIS ASPECT OF THE MATTER HAS BEEN CONFIRMED BY HIM TWICE, ONCE IN HIS AFFIDAVIT DATED 08.03.2013 AND OTHER IN HIS STATEMENT BEFORE THE AO ON 12.03.2015. THE ASSESSEE TO PROVE THE GENUINENESS OF THE PURCHASES, THAT IS, THE PURCHASE OF MATERIALS HAVE ACTUALLY BEEN SUPPLIED T O THE ASSESSEE HAD GIVEN THE ITEM WISE DETAILS AND UTILISATION OF SUCH MATERIALS IN THE MANUFACTURING AND HOW THE SAME HAS BEEN INVENTORISED IN THE BOOKS OF ACCOUNT. IT HAS BEEN POINTED OUT THAT THE ASSESSEE HAD ALSO MADE PURCHASES BASED ON ORAL ORDERS FRO M OTHER PARTIES ALSO AND WHEN MATERIAL HAS BEEN RECEIVED AND ONCE THE MATERIAL 10 ITA NO. 149/MUM/2017 (A.Y. 2012 - 13) VIDEOCON INDUSTRIES LTD. VS. DY. CIT PURCHASED FROM ANY SUPPLIER ENTERS THE GATE PREMISE OF THE FACTORY, GATE PASS IS PREPARED AND ENTRIES IN REGULAR BOOKS OF ACCOUNT HAVE BEEN MADE. MR. SURESH A. PARIKH HAS ALSO A DMITTED THAT THE TRANSPORTATION GOODS AND OTHER RELATED EXPENDITURE FOR DELIVERING THE GOODS AT DELIVERY SITE HAS BEEN DRAWN BY THE SUPPLIERS AS THE ORDER IS PLACED AT A FIXED RATE WHICH IS EVIDENT FROM THE BILLS, COPY OF INVOICES SUPPLIED BY SHRI SURESH A . PAREKH. THE MATERIAL PROOF FOR SUPPLY OF MATERIAL IS BY REFERENCE TO COPY OF INVOICES WHICH MENTIONS DELIVERY CHALLANS AND THEN THERE IS GATE PASS STAMP WHEN IT ENTERS THE FACTORY PREMISES AND THIS GATE PASS STAMP HAS BEEN IMPOUNDED BY THE SURVEY PARTY W HICH HAS BEEN REFERRED TO BY THE AO. IT HAS ALSO BEEN BROUGHT ON RECORD THAT MORE THAN ONCE, STAMP ON DIFFERENT BILLS ON DIFFERENT DATES HAS BEEN PLACED WHICH IS NORMAL PRACTICE AND NO ADVERSE INFERENCE CAN BE MADE THAT THESE PURCHASES ARE BOGUS QUA THE AS SESSEE. APART FROM THAT, THE ASSESSEE HAS GIVEN THE DETAILS OF NATURE OF MATERIAL PURCHASED, COPY OF LEDGER ACCOUNT, PAYMENT DETAILS, MATERIAL UTILISATION OF THE ITEM WISE DETAILS OF PURCHASES MADE FROM THE CONCERNS OF SHRI SURESH A. PAREKH. THE REVENUE IS HARPING GREATLY ON THE FIRST STATEMENT OF SHRI SURESH A. PAREKH WHEREIN HE HAS ADMITTED THAT HE IS PROVIDING ACCOMMODATION BILLS AND CHARGING COMMISSION ON THEM WITHOUT ACTUALSUPPLY OF GOODS; AND NEITHER SHRI SURESH A. PAREKH NOR THE ASSESSEE COULD ADDUCE ANY EVIDENCE THAT ACTUALLY MATERIAL HAS BEEN SUPPLIED TO THE ASSESSEE. FROM THE RECORDS AS WELL AS THE HEADS UNDER WHICH ADDITION HAS BEEN MADE BY THE AO IT IS SEEN THAT THE ADDITION ON ACCOUNT OF ALLEGED BOGUS PURCHASES HAS BEEN MADE ON THE UTILISATION O F FOLLOWING MATERIALS AND THE TREATMENT IN ACCOUNTS: UTILIZATION OF MATERIAL AS - AMOUNT (RS.) TREATMENT IN ACCOUNTS PLANT & MACHINERY/MOULDS 23,79,82,268 ADDITION TO PLANT AND MACHINERY TRAIL RUN 13,94,92,838 CHARGED TO CAPITAL WIP ACCOUNT TRAIL PRODUCTION 6,83,99,170 CHARGED TO CAPITAL WIP ACCOUNT MACHINERY SPARES 14,97,74,663 SHOWN AS INVENTORY IN BALANCE SHEET RAW MATERIAL & CONSUMABLES 3,50,24,425 CHARGED TO PROFIT AND LOSS ACCOUNT TOTAL 63,06,73,365 29. FROM THE AFORESAID ADDITIONS IT IS QUITE OSTENSIB LE THAT FIRSTLY IT HAS BEEN ACCOUNTED FOR IN THE BOOKS OF ACCOUNT AND MAJORITY OF THE MATERIAL PURCHASED ARE EITHER PART OF ADDITION TO THE PLANT AND MACHINERY OR IT HAS BEEN CHARGED TO CAPITAL WIP ACCOUNT OR SHOWN AS INVENTORY IN THE BALANCE SHEET. THERE IS NO IMMEDIATE EFFECT ON INFLATION OF EXPENDITURE WHICH CAN LEAD TO AN IMPRESSION THAT ASSESSEE HAS TRIED TO SUPPRESS ITS PROFIT BY ENTERING INTO ALLEGED BOGUS TRANSACTIONS WITH HAWALA DEALERS, WHICH IS GENERALLY RESORTED TO BY TRADERS AND SUCH SUPPRESSIO N OF PROFIT IS OFTEN OFFSET BY 11 ITA NO. 149/MUM/2017 (A.Y. 2012 - 13) VIDEOCON INDUSTRIES LTD. VS. DY. CIT APPLYING SOME GP RATE TO FACTOR IN THE PROFIT ELEMENT. THE REVENUE CANNOT RESORT TO APPROBATE AND REPROBATE ON THE STATEMENT OF SHRI SURESH A. PAREKH, THAT IS, IT CANNOT CHOSE TO RELY UPON THE FIRST SET OF STATEMENTS RECORDED IN THE YEAR 2013/2014 AND IGNORED HIS SWORN AFFIDAVIT AND THE SECOND STATEMENT ON OATH WHICH WAS RECORDED POST DIRECTION OF THE TRIBUNAL AND CROSS EXAMINATION CONDUCTED BY THE AO HIMSELF IN THE COURSE OF THE ASSESSMENT PROCEEDINGS. EVEN IF WE AGREE THAT P URCHASES HAVE BEEN MADE BY THE ASSESSEE THROUGH SHRI SURESH A. PAREKH WHO HAS ARRANGED THE SUPPLY OF MATERIAL FROM GREY MARKET AND HAVE ISSUED ACCOMMODATION BILL, BUT IN THAT CASE ALSO SO FAR AS THE ASSESSEE IS CONCERNED, THE PURCHASES CANNOT BE TREATED AS BOGUS, BECAUSE THE ASSESSEE HAD MADE THE PAYMENT THROUGH CHEQUES IN LIEU OF WHICH MATERIAL HAS BEEN SUPPLIED TO THE ASSESSEE. THE SUPPLY OF MATERIAL IS EVIDENCED FIRSTLY, FROM THE INVOICES/BILLS AND STAMPED GATE PASSES AND SECONDLY, WHICH IS MOST IMPORTAN T THAT THE MANUFACTURING AND CONSUMPTION DETAILS OF THE ITEM WISE MATERIAL PURCHASED FROM SHRI SURESH A. PAREKH HAVE BEEN DULY ENTERED IN THE BOOKS OF ACCOUNT AND CONSUMPTION OF THE SAME HAS NEITHER BEEN DISTURBED NOR DOUBTED. THERE COULD BE SOME DISCREPAN CY ABOUT THE TRANSPORTATION BILLS FROM THE SUPPLIERS OF GREY MARKET OR TRANSPORTATION CANNOT BE PROVED BY DOCUMENTARY EVIDENCE BY SHRI SURESH A. PAREKH, HOWEVER, THE OTHER EVIDENCES SHOWING THE MATERIAL PURCHASED HAS BEEN DULY RECORDED IN THE BOOKS OF ACCO UNT AND ALSO THE DETAILS OF MATERIAL UTILISATION USED FOR MANUFACTURING, PLANT AND MACHINERY AND INVENTORY ETC. HAS NOT BE DISCARDED OR DOUBTED, ONLY GOES TO SHOW THAT MATERIAL HAS BEEN PURCHASED AND UTILIZED, ALBEIT THROUGH ROTATION MODE DONE BY SHRI SURE SH A. PAREKH. HE HAS CATEGORICALLY STATED IN HIS STATEMENT THAT EXPENDITURE ON DELIVERING OF GOODS ARE BORNE BY THE ACTUAL SUPPLIERS IN GREY MARKET THEN ONUS IS NOT ON THE ASSESSEE, BECAUSE, WHEN THE MATERIAL PURCHASED HAS BEEN RECORDED BY THE ASSESSEE IT ITS BOOKS OF ACCOUNT AND NEITHER THE MANUFACTURING ACCOUNT NOR THE OTHER ENTRIES MADE IN THE BOOKS OF ACCOUNT HAVE NOT BEEN REJECTED, THEN THESE ITEMS SHOWN IN THE BOOKS OF ACCOUNT CANNOT BE DISCARDED. AO HAS NOT BROUGHT ON RECORD THAT THE DETAILS OF ITEMS PURCHASED FROM SHRI SURESH A. PAREKH IS NOT APPEARING IN THE BOOKS OF ACCOUNT WHEN THE ASSESSEE HAS SPECIFICALLY RAISED THIS ISSUE BEFORE THE AO. EITHER THE ENTIRE STATEMENT OF SHRI SURESH A. PAREKH SHOULD BE ACCEPTED OR IT SHOULD BE DISCARDED IN ITS ENTI RETY. ONLY ONE PART OF THE STATEMENT GIVEN AT INITIAL STAGE CANNOT BE SOLELY RELIED UPON FOR MAKING THE ADDITION AND THE SECOND PART OF THE STATEMENT WHICH HAS BEEN MADE BEFORE THE AO HIMSELF DURING 12 ITA NO. 149/MUM/2017 (A.Y. 2012 - 13) VIDEOCON INDUSTRIES LTD. VS. DY. CIT THE COURSE OF THE ASSESSMENT PROCEEDINGS WHEN IT WAS SUBJ ECT TO CROSS EXAMINATION CANNOT BE DISREGARDED OR REJECTED BY THE REVENUE. AS STATED EARLIER, HERE, IN THIS CASE, UNLIKE IN THE OTHER CASES OF BOGUS PURCHASES THE ASSESSEE'S TRADING ACCOUNT IS NOT AFFECTED DIRECTLY BECAUSE THE MATERIAL PURCHASED HAVE BEEN UTILISED FOR ADDITION TO THE PLANT AND MACHINERY AND HAS BEEN CHARGED TO CAPITAL WIP ACCOUNT AND ONLY A PART OF IT HAS BEEN SHOWN AS INVENTORY IN THE BALANCE SHEET AND RAW MATERIAL CONSUMABLES WHICH HAS BEEN CHARGED TO THE P&L ACCOUNT. THERE IS NO DIRECT I MPACT OF SUPPRESSION OF PROFIT, AT LEAST ON THE AMOUNT WHICH HAS BEEN CHARGED TO CAPITAL WIP ACCOUNT OR ADDITION MADE TO PLANT AND MACHINERY. THUS, WE ARE OF THE OPINION THAT THE ENTIRE PURCHASE CANNOT BE DISALLOWED BY THE DEPARTMENT SOLELY ON THE BASIS OF FIRST STATEMENT OF SHRI SURESH A. PAREKH. AS REGARDS THE SUBMISSION AND CONTENTION OF THE LD. CIT, DR THAT THERE IS LACK OF DOCUMENTATION IN RESPECT OF PURCHASES MADE FROM THE HAWALA OPERATORS BECAUSE SUPPLY OF GOODS COULD NOT BE PROVED, IN THIS REGARD, O NE HAS TO SEE THE OTHER ATTENDED FACTS AND CIRCUMSTANCES ALSO WHICH ARE THAT, THE PURCHASE OF MATERIALS ARE BACKED BY FIRSTLY, ENTRY IN THE GATE PASS AT FACTORY PREMISES; AND SECONDLY, ENTRY IN THE BOOKS OF ACCOUNT AND MANUFACTURING ACCOUNT SHOWING ITEM WI SE MATERIAL PURCHASE, MATERIAL CONSUMED, ADDITION IN THE PLANT AND MACHINERY, INVENTORY OF PARTS ETC. ONCE THE FACTUM OF MATERIAL CONSUMED IN THE MANUFACTURING OR INVENTORY IS NOT DISPUTED THEN NO ADDITION OF PURCHASES CAN BE MADE EVEN IF THE MATERIAL HAVE BEEN PURCHASED THROUGH THE HAWALA OPERATOR. THE CRUCIAL POINT TO SEE HERE IS THAT, THE SOURCE OF PURCHASES HAVE GONE THROUGH BOOKS OF ACCOUNT AND IN LIEU OF PAYMENTS MADE MATERIAL HAS BEEN PURCHASED WHICH ARE PROVEN FROM ITEM WISE INVENTORY PREPARED AND E NTERED IN THE BOOKS OF ACCOUNT AND IS REFLECTED FROM MATERIAL CONSUMED IN MANUFACTURING OR CREDITED TO CAPITAL WIP, ETC.,( WHICH STANDS UNREBUTTED OR UNDISPUTED), THEN NO ADVERSE INFERENCE QUA THE PURCHASES CAN BE MADE, BECAUSE INSTEAD OF REGISTERED DEALER S ASSESSEE HAS MADE PURCHASE FROM GREY MARKET. 30. AS REGARD THE OTHER DISCREPANCIES AS HIGHLIGHTED BY LD. CIT DR BY REFERRING TO AO'S ORDER QUA THE DELIVERY PART, THE SAME LOSES ITS CREDIBILITY WHENCE IT HAS BEEN SHOWN THAT MATERIAL PURCHASES ARE APPEARIN G IN THE BOOKS OF ACCOUNT AND CONSUMPTION OF THE SAME HAS NOT BEEN DOUBTED. AO SHOULD HAVE CARRIED FURTHER THIS INFORMATION TO EXAMINE THE ENTRIES IN THE BOOKS OF ACCOUNT AND THE CONSUMPTION DETAILS. AS REITERATED ABOVE AT VARIOUS PLACES, THE FACTUM OF PUR CHASE SO FAR AS THE ASSESSEE IS CONCERNED CANNOT BE DISPUTED WHEN THE HAWALA PERSON HIMSELF HAD ADMITTED THAT HE HAD ARRANGED 13 ITA NO. 149/MUM/2017 (A.Y. 2012 - 13) VIDEOCON INDUSTRIES LTD. VS. DY. CIT THE PURCHASES FROM GREY MARKET AND GOT THEM SUPPLIED. THIS STATEMENT BEFORE THE AO CANNOT BE DISCARDED AT ALL. THUS, IN THE TOTALI TY OF THE FACTS AND CIRCUMSTANCES OF THE CASE, WE HOLD THAT THE ADDITION ON ACCOUNT OF SO CALLED ALLEGED BOGUS PURCHASES CANNOT BE ADDED AS INCOME OF THE ASSESSEE AND THE SAME AS DIRECTED TO BE DELETED. 2 2 . WE HAVE CAREFULLY GONE THROUGH THE ORDER OF THE TRIBUNAL AND FOUND THAT SHRI SURESH A PAREKH HAD ADMITTED THAT TRANSPORTATION OF GOODS AND OTHER RELATE D EXPENDITURE FOR DELIVER ING THE GOODS AT DELIVERY SITE HAS BEEN DRAWN BY THE SUPPLIER S AS THE ORDER IS PLACED AT FIXED RATE WHICH IS EVIDENT FROM THE BI LL S, COPY OF INVOICES SUPPLIED BY S HRI S URESH A. PAREKH. 2 3 . IT WAS CONTENTED BY THE LD. AR THAT THE REVENUE CANNOT RESORT TO APPROBATE AND REPROBATE ON THE STATEMENT OF SHRI SURESH A. PAREKH, THAT IS, IT CANNOT CHOSE TO RELY UPON THE FIRST SET OF STATEM ENTS RECORDED IN THE YEAR 2013 - 14 AND IGNORE HIS SWORN AFFIDAVIT AND THE SECOND STATEMENT ON OATH WHICH WAS RECORDED POST DIRECTION OF THE TRIBUNAL AND CROSS EXAMINATION CONDUCTED BY THE AO HIMSELF IN THE COURSE OF THE ASSESSMENT PROCEEDINGS. IN HIS CROSS EXAMINATION, SHRI SURESH A. PAREKH HAS ALSO EXPLAINED AND CLARIFIED HIS EARLIER STATEMENT AND ADMITTED THAT WHAT HAS BEEN SAID IS CORRECT AND HE ADMITTED AND CLARIFIED THAT MATERIAL HAS BEEN ACTUALLY PROCURED AND DELIVERED FROM THE GREY MARKET TO THE ASSES SEE COMPANY. 2 4 . ON THE OTHER HAND, CONTENTION OF THE LD. DR WAS THAT THE TRIBUNAL HAS EXAMINED THE PURCHAS ES MADE DURING THE A.Y. 2011 - 12, THEREFORE, PURCHASES MADE DURING THE ASSESSMENT YEAR UNDER CONSIDER ATION, I.E., A.Y. 2012 - 13 HAVE TO BE EXAMINED SEPARATELY. ON PERUSAL OF THE RECORD, WE FOUND THAT SHRI SURESH A. PAREKH HAS CONFIRMED THAT HE HAD PROCURED MATERIALS FOR VIDEOCON INDUSTRIES LTD. AND DELIVERED THE SAME AT 14, KM AURANGABAD. THIS CONFIRMATION WAS FOR THE FINANCIAL YEAR S 2008 - 09 TO 2011 - 1 2. THE FACTS AND FIGURES GIVEN FOR FY 2011 - 12 AMOUNTING TO RS.59,09,78,823/ - ARE PERTAINING TO THE ISSUE, I.E., AY 2012 - 13. WE 14 ITA NO. 149/MUM/2017 (A.Y. 2012 - 13) VIDEOCON INDUSTRIES LTD. VS. DY. CIT FURTHER FOUND THAT AN AFFIDAVIT WAS ALSO GIVEN BY SHRI SURESH A. PAREKH FOR FYS 2008 - 09 TO 2011 - 12. ALL THESE WERE EXAMINED BY TH E TRIBUNAL AND THEREAFTER REACHED TO THE CONCLUSION AS REPRODUCED ABOVE. UNDER THESE FACTS AND CIRCUMSTANCES, WE CAN REASONABLY FOLLOW THE DECISION OF THE TRIBUNAL FOR DELETING THE ADDITION MADE ON ACCOUNT OF BOGUS PURCHASES. 25. IN THE RESULT, THE APPEA L IS ALLOWED IN PART IN TERMS INDICATED HEREIN ABOVE. ORDER PRONOUNCED IN THE OPEN COURT ON 26 / 07 / 201 7 SD/ - SD/ - ( SANDEEP GOSAIN ) ( R. C. SHARMA ) JUDICIAL MEMBER ACCOUNTANT MEM BER / MUMBAI ; / DATED : 26 / 07 / 201 7 ROSHANI / KARUNA SR. PS / COPY OF THE ORDER FORWARDED TO : 1. / THE APPELLANT 2. / THE RESPONDENT 3. ( ) / THE CIT(A) 4. / CIT - CONCERNED 5. , , / DR, ITAT, MUMBAI 6. / GUARD F ILE / BY ORDER, / (DY./ASSTT. REGISTRAR) , / ITAT, MUMBAI