M/s Narayana Reddy Enterprises, Mandapeta V. THE ITO., WARD-1, Kakinada

ITA 149/VIZ/2013

• Counselvise Citation: [2017] 126 COUNSELVISE.COM (IT) 6770 (ITAT-VISAKHAPATNAM)
• Duration Of Justice: 4 year(s) 5 month(s) 4 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 18-08-2017
• Appeal Filed By: Assessee
• Order Result: Dismissed
• Bench Allotted: DB
• Next Hearing Date: 17-12-2015
• Assessment Year: 2009-2010
• Appeal Filed On: 14-03-2013
• Result in Favour of: Revenue
• Court: TRIBUNAL
• Department Lawyers: D J P ANAND
• Keywords: Bogus purchase; Unexplained cash credit
• Section: 40A(3)

Judgement Text

ITA NO.149/VIZAG/2013 NARAYANA REDDY ENTERPRISES, MANDAPETA 1 , , IN THE INCOME TAX APPELLATE TRIBUNAL, VISAKHAPATNAM BENCH, VISAKHAPATNAM . , . . ' , % BEFORE SHRI V. DURGA RAO, JUDICIAL MEMBER & SHRI D.S. SUNDER SINGH, ACCOUNTANT MEMBER ./I.T.A.NO.149/VIZAG/2013 ( / ASSESSMENT YEAR: 2009-10) NARAYANA REDDY ENTERPRISES, MANDAPETA ITO, WARD - 1, KAKINADA [PAN NO. AABFN8259K ] ( ' / APPELLANT) ( ()' / RESPONDENT) / APPELLANT BY : SHRI G.V.N. HARI, AR / RESPONDENT BY : SHRI D.J.P. ANAND, DR / DATE OF HEARING : 08.08.2017 / DATE OF PRONOUNCEMENT : 18.08.2017 / O R D E R PER D.S. SUNDER SINGH, ACCOUNTANT MEMBER: THIS APPEAL FILED BY THE ASSESSEE IS DIRECTED AGAI NST ORDER OF THE COMMISSIONER OF INCOME TAX (APPEALS)-11 {CIT(A)}, M UMBAI, CAMP AT VISAKHAPATNAM VIDE ITA NO.389/11-12/ITO, WARD-1/KKD /12-13 DATED 10.1.2013 FOR THE ASSESSMENT YEAR 2009-10. ITA NO.149/VIZAG/2013 NARAYANA REDDY ENTERPRISES, MANDAPETA 2 2. THE ASSESSEE RAISED THE FIVE GROUNDS IN THE ORIG INAL APPEAL DOCUMENT AND SUBSEQUENTLY, REVISED GROUNDS OF APPEA L VIDE PETITION DATED 22.6.2007 AS UNDER: 1. THE ORDER OF THE LD. CIT(A) IS CONTRARY TO THE FAC TS OF THE CASE AND ALSO THE LAW APPLICABLE TO THE FACTS OF THE CASE. 2. THE LD. CIT(A) IS NOT JUSTIFIED IN SUSTAINING THE A DDITION OF ` 31,36,743/- MADE BY THE ASSESSING OFFICER BY ERRONE OUSLY OBSERVING THAT THE APPELLANT WITHDREW THE GROUND RAISED AGAIN ST THIS ADDITION. 3. THE LD. CIT(A) OUGHT TO HAVE CONSIDERED THAT THE SA LES WITH REGARD TO ALLEGED INFLATED PURCHASES HAVING BEEN ASSESSED, TH E DISALLOWANCE OF ENTIRE AMOUNT OF ALLEGED INFLATED PURCHASE IS NOT J USTIFIED. 4. THE LD. CIT(A) IS NOT JUSTIFIED IN SUSTAINING THE A DDITION OF ` 64,06,615/- MADE BY THE ASSESSING OFFICER TOWARDS A LLEGED UNEXPLAINED CREDITORS. 5. ANY OTHER GROUND THAT MAY BE URGED AT THE TIME OF A PPEAL HEARING. 3. GROUND NOS.1 & 5 ARE GENERAL IN NATURE, WHICH DO NOT REQUIRE ADJUDICATION. 4.0 GROUND NOS.2 & 3 ARE RELATED TO THE ADDITION OF ` 31,36,743/- WHICH WAS CONFIRMED BY THE CIT(A). DURING THE ASSESSMENT PROCEEDINGS, THE A.O. FOUND THAT THERE WAS A DISCREPANCY IN THE ACCO UNTS OF THE SUNDRY CREDITORS IN THE ACCOUNT OF M/S. S.R.K.R. POULTRIES , DUPPALAPUDI AND M/S. VENKATESWARA POULTRY FARMS, DWARAPUDI. THE A.O. CO LLECTED THE LEDGER ACCOUNTS OF THE ABOVE TWO FIRMS AND VERIFIED WITH T HE BOOKS OF ACCOUNTS MAINTAINED BY THE ASSESSEE. ON EXAMINATION, THE A. O. FOUND THAT THE ASSESSEE HAD INFLATED THE PURCHASES TO THE TUNE OF ` 14,68,627/- IN THE CASE OF M/S. S.R.K.R. POULTRIES AND ` 16,68,116/- IN THE CASE OF M/S. ITA NO.149/VIZAG/2013 NARAYANA REDDY ENTERPRISES, MANDAPETA 3 VENKATESWARA POULTRY FARMS. THE A.O. CALLED FOR TH E EXPLANATION FROM THE ASSESSEE AND THE ASSESSEE DID NOT PRODUCE ANY E VIDENCE TO SHOW THAT THE PURCHASES WERE MADE IN RESPECT OF THE ABOV E DISCREPANCIES AND THE ASSESSEE FAILED TO RECONCILE THE DIFFERENCE OF ` 31,36,743/-. THEREFORE, THE A.O. TREATED THE DIFFERENCE AMOUNT O F ` 31,36,743/- AS BOGUS PURCHASES AND ADDED BACK TO THE INCOME. 4.1 THE ASSESSEE WENT ON APPEAL BEFORE T HE LD. CIT(A) AND THE CIT(A) CONFIRMED THE ADDITION MADE BY THE A.O. THE LD. CIT(A) IN PARA NO.4.1 STATED THAT THE GROUND AGAINST ADDITION OF ` 31,36,743/- WAS IN EFFECT WITHDRAWN. FURTHER, THE LD. CIT(A) STATED T HAT DURING THE APPEAL PROCEEDINGS, NO SUBMISSION HAS BEEN MADE BY THE LD. A.R. WITH REGARD TO THE ADDITION OF ` 31,36,743/-. IN PARA 4.4, THE LD. CIT(A) STATED T HAT IN THE REVISED GROUNDS OF APPEAL, THE ASSESSEE HAS NOT TAKEN ANY GROUND AGAINST THE ADDITION OF ` 31,36,743/- FOR THE SAKE OF CLARIFY AND CONVENIENCE, WE EXTRACT PARA NOS.4, 4.1 & 4.4 OF TH E CIT(A)S ORDER AS UNDER: 4. GROUNDS NO.1&5 ARE GENERAL IN NATURE AND THEY A RE DISMISSED AS SUCH. VIDE GROUNDS NO.2&3, ADDITION OF RS.31,36,742/- TOWARD INFLATION OF PURCHASES WAS CO NTESTED WHEREAS VIDE GROUND NO.4, ADDITION OF RS.64,06,615/ - WAS CONTESTED. SUBSEQUENTLY THE AR HAS FILED REVISED GR OUNDS OF APPEAL WHICH ARE AS UNDER: I. THE ASSESSING OFFICER FAILED TO POINT OUT SINGLE INSTANCE OF COMMISSION OR COMMISSION OF PURCHASE OR SALES IN GUNNIES TO PROVE THAT SUCH SUPPRESSED PROF ITS ITA NO.149/VIZAG/2013 NARAYANA REDDY ENTERPRISES, MANDAPETA 4 WERE SHOWN AS PURCHASES OF EGGS; II. THE ASSESSING OFFICER SHOULD HAVE CONSIDERED THE FA CT THAT ALL THE PURCHASES OF EGGS AND SATES OF EGGS HA VE QUANTITATIVE DETAILS AND AS SUCH IF ANY INFLATED PU RCHASES WERE ASSUMED TO BE INTRODUCED HE SHOULD HAVE CONSIDERED THE FACT THAT CORRESPONDING SALES HAVE B EEN ALSO RECORDED. 4.1 THUS THE GROUND AGAINST ADDITION OF RS.31,36,74 2/- HAS BEEN IN EFFECT WITHDRAWN. DURING HEARING ALSO NO SUBMIS SION HAS BEEN MADE ON THE SAID GROUND. IN EFFECT THE LD. AR HAS TA KEN ONLY ONE GROUND AGAINST THE ADDITION OF RS.64,06,615/-. 4.4 IT IS ALSO NOTED THAT AO HAS ALSO ADDED BOGUS PU RCHASES OF ` 31,36,743/- AGAINST WHICH THE APPELLANT HAD TAKEN A GROUND ORIGINALLY AT THE TIME OF FILING OF APPEAL BUT NO G ROUND HAS BEEN TAKEN AGAINST THIS ADDITION IN THE REVISED GROUNDS OF APPEAL. EVEN DURING THE COURSE OF HEARING NO SUBMISSION HAS BEEN MADE ON THIS GROUND. 5. AGGRIEVED BY THE ORDER OF THE LD. CIT(A), THE AS SESSEE IS IN APPEAL BEFORE THIS TRIBUNAL. APPEARING FOR THE ASSESSEE, THE LD. A.R. ARGUED THAT THERE WAS A DIFFERENCE OF ` 31,36,743/- WITH REGARD TO THE PURCHASES MADE FROM M/S. S.R.K.R. POULTRIES TO THE TUNE OF ` 14,68,627/- AND IN RESPECT OF M/S. VENKATESWARA POU LTRY FARMS TO THE TUNE OF ` 16,68,116/- AGGREGATING TO ` 31,36,743/-. THE LD. CIT(A) MISUNDERSTOOD THAT THE GROUND OF APPEAL ON THE ADDI TION OF ` 31.36 LAKHS AS WITHDRAWN. IN FACT THE ASSESSEE HAS RAISE D THE ABOVE GROUND BUT THE CIT(A) HAS NOT ADJUDICATED THE GROUND. THE RE WAS NO DISPUTE REGARDING THE DIFFERENCE OF ` 31.36 LAKHS. THE LD. A.R FURTHER ARGUED THAT THE ASSESSEE IS MAINTAINING REGULAR BOOKS OF A CCOUNTS HENCE THE ITA NO.149/VIZAG/2013 NARAYANA REDDY ENTERPRISES, MANDAPETA 5 ENTIRE PURCHASES CANNOT BE MADE THE ADDITION, ONLY THE GROSS PROFIT REQUIRED TO BE ADDED BACK TO THE INCOME. THE LD. A .R. RELIED ON THE ORDER OF THE HONBLE ITAT MUMBAI BENCHES B , MUMB AI VIDE ITA NO.1950/MUM/2009 DATED 23.2.2010 IN THE CASE OF SHR I MADHUKANT B. GANDHI VS. ITO WARD-25(1)(3). THE LD. A.R. ALSO RE LIED ON THE DECISION OF HONBLE HIGH COURT OF GUJARAT IN THE CASE OF CIT VS. BHOLANATH POLY FAB PVT. LTD. 355 ITR 290. 6. ON THE OTHER HAND, THE LD. D.R. ARGUED THAT, THE ASSESSEE HAS NOT CANVASSED THIS GROUND BEFORE THE CIT(A) AND HENCE B ARRED FROM RAISING THIS GROUND. IN THE REVISED GROUNDS ALSO, THE ASSE SSEE HAS NOT RAISED THIS GROUND AGAINST THE ADDITION MADE BY THE A.O. THE LD. CIT(A) HAS CATEGORICALLY STATED THAT THE GROUND WITH REGARD TO THE ADDITION OF ` 31.36 LAKHS STANDS WITHDRAWN IN THE APPELLATE ORDE R. THE ARGUMENT OF THE LD. A.R. THAT THE GROSS PROFIT ALONE SHOULD BE ADDED TO THE RETURNED INCOME BUT NOT THE ENTIRE UNACCOUNTED PURCHASES LAC KS MERIT. IN THIS CASE, THE ASSESSEE HAS INFLATED THE PURCHASES TO TH E EXTENT OF ` 31.36 LAKHS BUT NO RECONCILIATION WAS MADE BY THE ASSESSE E EITHER BEFORE THE A.O. OR BEFORE THE ASSESSMENT PROCEEDINGS WITH THE OPENING STOCK, PURCHASES, UNACCOUNTED PURCHASES AND SALES. THE IS SUE OF GROSS PROFIT COMES INTO PLAY ONLY WHEN THE ASSESSEE MAINTAINS TH E STOCK REGISTER FOR BOTH THE PURCHASES, SALES AND THE STOCK ARE PROPERL Y ITA NO.149/VIZAG/2013 NARAYANA REDDY ENTERPRISES, MANDAPETA 6 MAINTAINED. IN THE INSTANT CASE, THE ASSESSEE HAS NOT FURNISHED THE QUANTITATIVE PURCHASES AND SALES EITHER BEFORE THE A.O. OR BEFORE THE CIT(A) OR AT THE TIME OF APPEAL BEFORE THE ITAT. E VEN IF THE CONTENTION OF THE ASSESSEE THAT HE HAS MADE UNACCOUNTED PURCHA SES AND EFFECTED THE SALES, THE ASSESSEE IS REQUIRED TO EXPLAIN THE SOURCE FOR PAYMENT OF UNACCOUNTED PURCHASES AND NAMES AND ADDRESSES OF TH E VENDORS OF UNACCOUNTED PURCHASES. FAILING WHICH, THE VENDORS WOULD ESCAPE FROM THE TAX BECAUSE OF THE ASSESSEE. SINCE ASSESSEE FA ILED TO EXPLAIN THE SOURCE FOR PAYMENT OF UNACCOUNTED PURCHASES THE SOU RCE AND THE GROSS PROFIT WOULD CONSTITUTE THE INCOME. THIS ISSUE HAS NOT BEEN CONSIDERED BY THE ITAT MUMBAI BENCHES AND HONBLE GUJARAT HIGH COURT CITED (SUPRA) AND THE CASES ARE CLEARLY DISTINGUISHABLE. HENCE, THE LD. D.R. ARGUED THAT THE ADDITION MADE BY THE A.O. IS REQUIR ED TO BE CONFIRMED AND NO INTERFERENCE IS CALLED FOR. 7. WE HAVE HEARD BOTH THE PARTIES, PERUSED THE MATER IALS AVAILABLE ON RECORD. WE HAVE ALSO GONE THROUGH THE DECISIONS R ELIED BY THE ASSESSEE. IN THE INSTANT CASE, THE ASSESSEE HAS IN FLATED PURCHASES IN THE CASE OF TWO PARTIES I.E. M/S. S.R.K.R. POULTRIE S AND M/S. VENKATESWARA POULTRY FARMS LIMITED. THE ASSESSEE S TATED TO HAVE MADE THE PURCHASES FROM THE ABOVE TWO PARTIES BUT I N FACT HE DID NOT MAKE THE PURCHASES. IN THE CASE OF M/S. S.R.K.R. PO ULTRIES, THE ASSESSEE ITA NO.149/VIZAG/2013 NARAYANA REDDY ENTERPRISES, MANDAPETA 7 DECLARED PURCHASES OF ` 14,07,557/- ON 1.4.2008 WHEN THE A.O. CONFRONTED WITH THE CREDITOR, THE CREDITOR HAS DENI ED THE SALES. THE CREDITOR HAS ASSERTED THAT THERE WERE NO SALES BEYO ND ` 3 LAKHS ON ANY GIVEN DATE. THE MANAGING PARTNER OF THE ASSESSEE F IRM WAS ALSO EXAMINED BY THE A.O. AND THE ASSESSEE COULD NOT REC ONCILE THE DIFFERENCE. THEREFORE, THERE IS NO DOUBT THAT THER E WAS A DIFFERENCE OF ` 31,36,000/- IN THE ACCOUNTS OF CREDITORS AND THE AS SESSEE, WHICH COULD NOT BE EXPLAINED. IT WAS CLEAR THAT THE ASSESSEE H AS INFLATED THE PURCHASES TO THE TUNE OF ` 31,36,000/-. THE CIT(A) DISMISSED THE APPEAL ON THE GROUND THAT THE ASSESSEE HAS NOT RAIS ED APPEAL AGAINST THE ADDITION OF ` 31,36,000/- AND CONCLUDED THAT THE GROUND AGAINST ADDITION OF ` 31,36,000/- WAS WITHDRAWN. THE LD. A.R. ARGUED FO R ESTIMATION OF GROSS PROFIT ON UNACCOUNTED PURCHASES AND RELIED ON THE DECISIONS CITED (SUPRA). IN THE CASE OF HONBLE IT AT MUMBAI, IT WAS OBSERVED BY THE HONBLE ITAT THAT THE ASSESSEE PURC HASED SOME GOODS, WHICH WERE SUBSEQUENTLY SOLD, BUT FOR INCLUSION OF SUCH QUANTITY PURCHASES THE SALE OF THE QUANTITY DECLARED WAS NOT POSSIBLE. FURTHER, HONBLE ITAT OBSERVED THAT THE ASSESSEE MADE ENTRIE S FOR BOGUS PURCHASES AT INFLATED RATES WHILE KEEPING THE ACTUA L PURCHASES AT LOWER RATES OUTSIDE THE BOOKS OF ACCOUNTS. THEREFORE, HO NBLE ITAT DIRECTED THE A.O. TO ESTIMATE THE GROSS PROFIT INSTEAD OF MA KING THE ENTIRE ITA NO.149/VIZAG/2013 NARAYANA REDDY ENTERPRISES, MANDAPETA 8 ADDITION. FROM THE ABOVE, IT IS CLEAR THAT THE ASS ESSEES PURCHASES AND SALES, OPENING STOCK & CLOSING STOCK WAS VERIFIED. IN THE CASE OF HONBLE GUJARAT HIGH COURT DECISION RELIED UPON BY THE ASSE SSEE, IT WAS OBSERVED THAT PURCHASES MIGHT HAVE BEEN MADE FROM BOGUS PART IES AND THE ENTIRE DATA ON PURCHASES, SALES, OPENING STOCK & CLOSING S TOCK WAS AVAILABLE IN QUANTITIES. THEREFORE, THE HONBLE GUJARAT HIGH CO URT HAS HELD THE ISSUE IN FAVOUR OF THE ASSESSEE STATING THAT ONLY THE MAR GIN REQUIRED TO BE BROUGHT TO TAX. IN THE INSTANT CASE, THE ASSESSEE NEITHER AT THE LEVEL OF A.O. NOR BEFORE THE CIT(A) HAS DEMONSTRATED THE OPE NING STOCK, PURCHASES, SALES AND CLOSING STOCK IN QUANTITATIVE TERMS INCLUSIVE OF INFLATED PURCHASES. EVEN BEFORE US ALSO THE ASSESS EE HAS NOT FURNISHED RECONCILIATION OF DATA. FOR ESTIMATION OF THE NET P ROFIT/GROSS PROFIT OUT OF INFLATED PURCHASES THE ASSESSEE MUST DEMONSTRATE TH E MATCHING SALES. IN THE ABSENCE OF MATCHING SALES AND PURCHASES, THE ESTIMATION OF NET PROFIT/GROSS PROFIT IS INCORRECT PROPOSITION. THE A SSESSEE ALSO SHOULD EXPLAIN THE SOURCE FOR PAYMENT FOR UNACCOUNTED PURC HASES. THE UNACCOUNTED PURCHASES WOULD CONSTITUTE THE UNACCOUN TED SALES OF THE VENDOR. HENCE WITHOUT MARSHALLING THE FACTS PROPERL Y IF THE GROSS PROFIT IS TAXED WE WOULD BE DOING INJUSTICE AND INDIRECTLY ASSISTING THE VENDOR AND THE ASSESSEE TO EVADE THE TAX IN RESPECT OF SOU RCES FOR PURCHASES MADE OUTSIDE THE BOOKS OF ACCOUNTS. IN THE INSTANT CASE, ASSESSEE HAS ITA NO.149/VIZAG/2013 NARAYANA REDDY ENTERPRISES, MANDAPETA 9 INFLATED THE PURCHASES THEREBY REDUCED THE PROFIT AND CASE LAWS RELIED UPON BY THE LD. A.R. ARE NOT APPLICABLE IN THE ASSE SSEES CASE. EVEN OTHERWISE ALSO, IF THE ASSESSEE HAD PURCHASED THE A BOVE GOODS, THE ASSESSEE REQUIRED TO EXPLAIN THE SOURCE FOR PAYMENT OF THE SAME. IF THE PAYMENT IS MADE OUTSIDE THE BOOKS OF ACCOUNTS, THEN AGAIN THE SAME IS REQUIRED TO BE TAXED IN THE HANDS OF THE ASSESSEE. IN THE INSTANT CASE, THE ASSESSEE DID NOT RECONCILE INFLATED PURCHASES A ND THE SOURCES OF PAYMENT, THEREFORE, WE HOLD THAT THE A.O. HAS RIGHT LY MADE ADDITION AND THE SAME IS RIGHTLY CONFIRMED BY THE CIT(A). THE A PPEAL OF THE ASSESSEE ON THIS GROUND IS DISMISSED. 8. GROUND NO.4 IS RELATED TO THE ADDITION OF ` 64,06,615/-. DURING THE ASSESSMENT PROCEEDINGS, THE A.O. FOUND THE FOLL OWING OUTSTANDING IN THE NAMES OF THE SUNDRY CREDITORS BUT NOT ESTABLISH ED THE GENUINESS. S.NO NAME OF THE SUNDRY CREDITOR DATE OF PURCHASE AMOUNT (RS.) 1 SRI CHEBROLU VASU 15-03-2009 5,71,379 2 SRI GUDIPUDI NAGESWARA RAO 18-03-2009 6,12,880 3 GUNNAM SATYAM 13-03-2009 5,64,000 4 MD. SAYADH ANWAR 16-03-2009 8,37,370 5 P.PRAVEEN KUMAR REDDY 18-03-2009 5,64,000 6 S.SYAMSUNDAR 15-03-2009 7,52,000 7 THOTAVELA APPA RAO 16-03-2009 8,44,872 8 VATHALA CHANDRA RAO 15-03-2009 7,86,930 9 VYTLA BHASKARA CHOWDARY 18 - 03 - 2009 4,02,019 10 VUNDAVALLI SURYA RAO 09-03-2009 4,71,165 TOTAL SUNDRY CREDITORS OF RS.4 LAKHS & ABOVE 64,06,615 9. IT WAS ALSO OBSERVED BY THE A.O. THAT THE ABOVE PURCHASES WERE MADE ON A SINGLE DAY AS PER THE DETAILS MENTIO NED AGAINST THE ITA NO.149/VIZAG/2013 NARAYANA REDDY ENTERPRISES, MANDAPETA 10 NAMES. THE A.O. CALLED FOR THE DETAILS. THE ASSES SEE FAILED TO FURNISH ANY OF THE DETAILS. THE A.O. DEPUTED THE INSPECTOR TO CAUSE ENQUIRIES WITH REGARD TO THE GENUINENESS OF THE ABOVE INDIVID UAL CREDITORS AND ALSO GENUINENESS OF THE OUTSTANDING CREDIT BALANCES. IN THE COURSE OF ENQUIRIES, IT CAME TO THE NOTICE OF THE A.O. THAT N O SUCH INDIVIDUAL PERSONS ARE TRACEABLE IN CONNECTION WITH THE EGG TR ADE. THE ASSESSEE FAILED EVEN TO FURNISH THE NAMES AND ADDRESSES OF T HE PERSONS FROM WHOM THE PURCHASES WERE MADE AND NAMES AND ADDRESSE S OF THE CREDITORS. THEREFORE, THE A.O. TREATED THE ENTIRE OUTSTANDING BALANCE IN THE NAMES OF THE ABOVE CREDITORS AS BOGUS AND BROUG HT TO TAX. AGGRIEVED BY THE ORDER OF THE A.O., THE ASSESSEE WE NT ON APPEAL BEFORE THE CIT(A) AND THE LD. CIT(A) SENT THE ISSUE BACK TO THE A.O. FOR SUBMISSION OF REMAND REPORT AND DURING THE REMAND S TAGE ALSO, THE ASSESSEE COULD NOT ESTABLISH THE IDENTITY & GENUINE NESS OF THE CREDITORS. BEFORE THE LD. CIT(A), THE LD. A.R. OF THE ASSESSEE HAS MADE THE FOLLOWING SUBMISSIONS: 6. DURING THE HEARING, THE LD. AR HAS SUBMITTED THAT SUBSEQUENTLY THESE CREDITORS ARE REPAID BY THE APPELLANT BUT REP AYMENT HAS BEEN MADE IN CASH AND SUCH REPAYMENT ALSO IS NOT VERIFIA BLE. LD. AR HAS ALSO SUBMITTED THAT THEY ARE NOT ABLE TO SUBMIT ANY BILLS/VOUCHERS FOR PURCHASE OF EGGS FROM THESE CREDITORS. HOWEVER, THE LD. AR HAS RELIED UPON THE APPELLATE ORDERS IN ITA NOS.70 & 75/W2- KKD/C1T(A), RJY/10-11 DTD.23.01.2012 OF CIT(A), VIS AKHAPATNAM IN THE CASES OF KODANGI VIJAYKUMAR AND SRI KODANGI AJAY KUMAR IN WHICH UNDER THE SIMILAR CIRCUMSTANCES IT IS HELD TH AT THERE IS NO NEED TO MAKE AN ADDITION ON ACCOUNT OF BOGUS CREDIT ORS IN THE ITA NO.149/VIZAG/2013 NARAYANA REDDY ENTERPRISES, MANDAPETA 11 HANDS OF A COMMISSION AGENT SINCE NO PURCHASES OR S ALES ARE MADE BY SUCH COMMISSION AGENT. IN THAT CASE THE CRE DITORS WERE ADDED WITHOUT DISALLOWING THE PURCHASES AND IT WAS HELD THAT ADDING PURCHASES WITHOUT DISALLOWING THE SALES WOUL D BE ANOMALOUS. 10. THE LD. CIT(A) CONFIRMED THE ADDITION HOLDING T HAT THE ASSESSEE HAS NOT FURNISHED ANY DETAILS SUCH AS IDENTITY OF T HE CREDITOR, GENUINENESS OF THE TRANSACTIONS AND CREDITWORTHINES S OF THE CREDITOR. FOR THE SAKE OF CLARIFY AND CONVENIENCE, WE EXTRACT THE RELEVANT PART OF THE CIT(A) ORDER PARA NOS. 6.1 AND 6.2 WHICH READS AS UNDER: 6.1 HOWEVER, THE ISSUE OF THAT CASE CANNOT BE APPL IED TO THE PRESENT CASE FOR THE REASONS THAT IN CASE OF A CRED IT ENTRY TO BE GENUINE, THE FOLLOWING MUST BE ESTABLISHED BEYOND DOUBT. (I) IDENTITY OF THE CREDITOR; (II) GENUINENESS OF TRANSACTION; AND (III) CREDITWORTHINESS OF THE CREDITOR. 6.2 HOWEVER, IN THE PRESENT CASE ASSESSEE HAS NOT ABLE TO FURNISH EVEN THE ADDRESSES OF THE CREDITORS IN SUPP ORT OF THE IDENTITY. ANY BILL FROM THE SUPPLIER IN SUPPORT OF GENUINENESS OF THE PURCHASE OR TRANSACTION AND NO EVIDENCE HAS BEEN PRODUCED IN SU PPORT OF CREDITWORTHINESS OF THE CREDITOR. IN ABSENCE OF SU BSTANTIATION OF ALL THE THREE INGREDIENTS NECESSARY FOR ACCEPTANCE OF A CRE DIT AS GENUINE, THE ORDER OF THE AO IS UPHELD. 11. APPEARING FOR THE ASSESSEE, THE LD. A.R. REITE RATED THE SUBMISSIONS MADE BEFORE THE LD. CIT(A) AND ARGUED T HAT IT IS UNJUSTIFIED TO MAKE THE ENTIRE OUTSTANDING SUNDRY CREDITORS AS ADDITION AND ONLY THE GROSS PROFIT REQUIRED TO BE ADDED TO THE RETURNED I NCOME. 12. ON THE OTHER HAND, THE LD. D.R. RELIED ON THE O RDERS OF THE CIT(A). ITA NO.149/VIZAG/2013 NARAYANA REDDY ENTERPRISES, MANDAPETA 12 13. WE HAVE HEARD BOTH THE PARTIES, PERUSED THE MAT ERIALS AVAILABLE ON RECORD AND GONE THROUGH THE ORDERS OF THE AUTHOR ITIES BELOW. IN THIS CASE, THE ASSESSEE HAS SHOWN THE PURCHASES OF ` 64,06,615/- ON VARIOUS DATES AND THE NAMES OF THE PERSONS MENTIONED. BUT THE ASSESSEE FAILED TO FURNISH THE NAMES AND ADDRESSES OF THE PERSONS F ROM WHOM THE PURCHASES WERE MADE AND TO WHOM THE AMOUNTS ARE PAY ABLE. THE ASSESSEE FAILED TO FURNISH EVEN THE IDENTITY OF THE CREDITORS. THEREFORE, THE GENUINENESS OF THE OUTSTANDING BALANCE AS AT TH E END OF THE YEAR IS BOGUS. EITHER THE ASSESSEE MIGHT HAVE MADE THE PAY MENT OUTSIDE THE BOOKS OF ACCOUNTS OR THE PURCHASES MAY BE BOGUS. T HE A.O. HAS GIVEN SUFFICIENT OPPORTUNITIES TO PROVE THE GENUINENESS O F THE CREDIT. THE LD. A.R. RELIED ON THE ORDERS OF THIS TRIBUNAL IN THE C ASE OF ITO WARD-1(2), VIJAYAWADA VS. JAYANAGA ANITA, VIJAYAWADA IN ITA NO .506 TO 510/VIZAG/2013 DATED 31.3.2016. IN THE ABOVE CITED CASE, THE ASSESSEE HAS FURNISHED THE ADDRESSES AND THE A.O. HAS CAUSED THE ENQUIRIES. THOUGH THE BILLS AND VOUCHERS COULD NOT BE PRODUCED BY THE ASSESSEE, THE ADDRESSES WERE AVAILABLE. IN THE INSTANT CASE, THE ASSESSEE HAS NOT EVEN FURNISHED THE NAMES AND ADDRESSES. FURTHER, F OR A QUERY FROM THE BENCH, THE LD. A.R. REPLIED THAT SUBSEQUENTLY, THE PAYMENT TO THE CREDITORS WAS PAID IN CASH BUT NOT IN CHEQUE. THE QUESTION OF THE ASSESSEES ARGUMENTS TO ASSESS THE GROSS PROFIT MAR GIN IS ACCEPTABLE ITA NO.149/VIZAG/2013 NARAYANA REDDY ENTERPRISES, MANDAPETA 13 ONLY, IF THE ASSESSEE CAN ESTABLISH THE QUANTITATIV E PURCHASES AND SALES AND THE PAYMENT BY CROSSED CHEQUE. IN THE INSTANT CASE, THE ASSESSEE DID NOT FURNISH THE QUANTITATIVE DETAILS OF PURCHAS ES AND SALES, OPENING STOCK AND CLOSING STOCK IN QUANTITATIVE TERMS AND T HE PAYMENT WAS MADE BY CASH. EVEN IF THE PURCHASES ARE ACCEPTED, THE ASSESSEE REQUIRED TO EXPLAIN THE SOURCE OF PAYMENT TO PURCHA SES. THE SAME HAS NOT BEEN EXPLAINED BY THE ASSESSEE. FURTHER IN ALL THE CASES THE OUTSTANDING AMOUNT WAS MORE THAT RS.20000/- AND AS PER THE PROVISIONS OF SECTION 40A(3) OF THE ACT PAYMENT IN EXCESS OF R S.20000/- REQUIRED TO BE BROUGHT TO TAX IF THE SAME IS PAID IN CASH. TH EREFORE, WE HOLD THAT THE LD. CIT(A) HAS RIGHTLY UPHELD THE ORDER OF THE A.O. AND WE DO NOT FIND ANY REASON TO INTERFERE IN THE SAME. ACCORDIN GLY, THE GROUND RAISED BY THE ASSESSEE IS DISMISSED. 14. IN THE RESULT, THE APPEAL FILED BY THE ASSESSEE IS DISMISSED. THE ABOVE ORDER WAS PRONOUNCED IN THE OPEN COURT O N 18 TH AUG17. SD/- SD/- ( . ) ( . . ' ) (V. DURGA RAO) (D.S. SUNDER SINGH) /JUDICIAL MEMBER /ACCOUNTANT MEMBER # /VISAKHAPATNAM: ' /DATED : 18.08.2017 VG/SPS ITA NO.149/VIZAG/2013 NARAYANA REDDY ENTERPRISES, MANDAPETA 14 )# *# /COPY OF THE ORDER FORWARDED TO:- 1. / THE APPELLANT M/S. NARAYANA REDDY ENTERPRISES, CINEMA ROAD, MANDAPETA, EAST GODAVARI DISTRICT. 2. / THE RESPONDENT THE ITO, WARD-1, KAKINADA 3. + / THE CIT, RAJAHMUDRY 4. + ( ) / THE CIT (A)-11, MUMBAI, CAMP AT VISAKHAPATNAM 5. THE PRINCIPAL CIT-2, VISAKHAPATNAM 6. # . , . , # / DR, ITAT, VISAKHAPATNAM 7 . / GUARD FILE / BY ORDER // TRUE COPY // SR. PRIVATE SECRETARY ITAT, VISAKHAPATNAM