M/s. Om Shree Nagraj Ginning Factory, Patan V. The ACIT.,Cent.Circle-1(1), Ahmedabad

ITA 1500/AHD/2012

• Counselvise Citation: [2017] 128 COUNSELVISE.COM (IT) 6198 (ITAT-AHMEDABAD)
• Duration Of Justice: 4 year(s) 9 month(s) 12 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 18-04-2017
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: A
• Next Hearing Date: 08-02-2017
• Assessment Year: 2009-2010
• Appeal Filed On: 06-07-2012
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Keywords: Bogus purchase; Unexplained cash credit; Principle of natural justice
• Section: 142(1); 133A; 131; 68

Judgement Text

, IN THE INCOME TAX APPELLATE TRIBUNAL A BENCH, AHMEDABAD IZEKSN DQEKJ IZEKSN DQEKJ IZEKSN DQEKJ IZEKSN DQEKJ BEFORE SHRI PRAMOD KUMAR, ACCOUNTANT MEMBER AND SHRI MAHAVIR PRASAD, JUDICIAL MEMBER (1). . I.T.A. NO.1345/AHD/2012 FOR A.Y. 2008-09 (2). . I.T.A. NO.1489/AHD/2012 FOR A.Y. 2009-10 (3). . I.T.A. NO.1499/AHD/2012 FOR A.Y. 2008-09 (4). . I.T.A. NO.1500/AHD/2012 FOR A.Y. 2009-10 (1-2). ACIT CENTRAL CIRCLE1(1), AHMEDABAD (3-4). M/S. OM SHREE NAGRAJ GINNING FACTORY, PROP: RAMESHCHANDRA G. MISTRY, VAGHEL ROAD, AT & POST HARIJ, DIST. PATAN -384240 VS. (1-2).M/S. OM SHREE NAGRAJ GINNING FACTORY, PROP: RAMESHCHANDRA G. MISTRY, VAGHEL ROAD, AT & POST HARIJ, DIST. PATAN -384240 (3-4) ACIT CENTRAL CIRCLE1(1), AHMEDABAD ./ ./ PAN/GIR NO. : AJMPM 8245 N ( ! / APPELLANTS ) .. ( '! / RESPONDENTS ) ASSESSEE BY : SHRI. KISHAN VYAS, CIT-DR REVENUE BY : SHRI. TUSHAR P. HEMANI, AR # $ % & ' ( / DATE OF HEARING 08/02/2017 )*+, & ' ( / DATE OF PRONOUNCEMENT 18/04/2017 - / O R D E R PER SHRI MAHAVIR PRASAD, JUDICIAL MEMBER : THESE CROSS APPEALS HAVE BEEN FILED BY THE REVEN UE/DEPARTMENT AND ASSESSEE/APPELLANT IS DIRECTED AGAINST THE ORDE R OF THE COMMISSIONER ITA NO.1345, 1489, 1499 & 1500/AHD/2012 M/S. OM SHREE NAGRAJ GINNING FACTROY VS.ACIT ASST.YEAR 2008-09 & 2009-10 - 2 - OF INCOME TAX(APPEALS)-I, AHMEDABAD, DATED 30/04/20 12 & 16/05/2012 FOR THE ASSESSMENT YEAR (AY)2008-09 & 2009-10. 2. FIRST WE TAKE UP THE REVENUES APPEAL IN ITA NO. 1345/AHD/2012 FOR A.Y.2008-09 & ITA NO.1489/AHD/2012 FOR A.Y.2009 -10. THE REVENUE HAS TAKEN FOLLOWING GROUNDS OF APPEAL:- (I) THE LD.CIT(A) HAS ERRED IN LAW AND ON FACTS IN DEL ETING THE ADDITION OF RS.4,16,31,731/-(FOR A.Y.2008-09) & RS. 2,27,47,964/- (FOR A.Y. 2009-10) OUT OF TOTAL ADDITION OF RS.5,55 ,08,975/-(FOR A.Y.2008-09) & RS.3,03,30,619/-(FOR A.Y. 2009-10) MADE ON ACCOUNT OF BOGUS PURCHASES. (II) ON FACTS AND IN THE CIRCUMSTANCES OF THE CASE AND IN LAW, THE CIT(A) OUGHT TO HAVE UPHELD THE ENTIRE ADDITION OF RS.5,55,08,975/-(FOR A.Y.2008-09) & RS.3,03,30,619/ -(FOR A.Y. 2009-10) MADE ON ACCOUNT OF BOGUS PURCHASES. (III) IT IS, THEREFORE, PRAYED THAT THE ORDER OF TH E CIT(A) BE SET ASIDE AND THAT OF THE AO BE RESTORED TO THE ABOVE EXTENT. 3. NOW WE TAKE UP THE ASSESSEES APPEAL IN ITA NO.1 499/AHD/2012 FOR THE A.Y.2008-09 & ITA NO.1500/AHD/2012 FOR THE A.Y.2009-10. THE ASSESSEE HAS TAKEN FOLLOWING GROUNDS OF APPEAL: - (I). THE ID. CIT(A) HAS ERRED BOTH IN LAW AND ON FACTS OF THE CASE IN CONFIRMING THE ACTION OF LD. AO IN TREATING THE PU RCHASES MADE FROM M/S VISHAL TRADERS AS BOGUS PURCHASES AND HAS FURTHER ERRED IN CONFIRMING THE DISALLOWANCE OF RS.25,85,930/-(FOR A .Y. 2008-09) & RS.19,75,000/-,BEING 25% OUT OF THE TOTAL PURCHASES OF RS. 1,03,43,718/-(FOR A.Y.2008-09) & RS. 75,0,00 0/- (FOR A.Y.2009-10) DISALLOWED BY THE AO. (II). THE LD. CIT(A) ERRED ON FACTS IN NOT APPRECIA TING THAT NO PURCHASES HAD BEEN MADE FROM M/S. VISHAL TRADERS DU RING THE YEAR UNDER CONSIDERATION. IN FACT THIS FACT IS ALSO ADMITTED BY LD AO IN HIS REMAND REPORT PLACED BEFORE LD CIT(A). UN DER THE CIRCUMSTANCES, DISALLOWANCES CONFIRMED BY LD CIT(A) MAY KINDLY BE DELETED. ITA NO.1345, 1489, 1499 & 1500/AHD/2012 M/S. OM SHREE NAGRAJ GINNING FACTROY VS.ACIT ASST.YEAR 2008-09 & 2009-10 - 3 - (III). THE LD. CIT(A) HAS FURTHER ERRED BOTH IN LAW AND ON FACTS OF THE CASE IN CONFIRMING THE ACTION OF LD. AO IN TREATING THE PURCHASES MADE FROM M/S NAGRAJ TRADERS AS BOGUS PURCHASES AND HAS FURTHER ERRED IN CONFIRMING THE DISALLOWANCE OF RS. 1,12,91,314/- (FOR A.Y. 2008-09) & RS. 56,07,655/-(FOR A.Y.2009-1 0) BEING 25% OUT OF THE TOTAL PURCHASES OF RS.4,51,65,257/-(FOR A.Y. 2008- 09)& 2,24,30,619/- (FOR A.Y.2009-10)DISALLOWED BY T HE AO. (IV). THE LD. CIT(A) HAS FURTHER ERRED ON FACTS IN ERRONEOUSLY HOLDING THAT TOTAL PURCHASES MADE FROM M/S NAGRAJ TRADERS W ERE RS.4,51,65,257/-(FOR A.Y. 2008-09) & RS.2,24,30,619 /- (FOR A.Y.2009-10) AS AGAINST THE ACTUAL PURCHASES OF RS. 4,16,53,209/- (FOR A.Y 2008-09) & 1,96,94,424/-(FOR A.Y. 2009-10. (V). BOTH THE LOWER AUTHORITIES HAVE FAILED TO APP RECIATE THAT GOODS HAVE AS A MATTER OF FACT BEEN PURCHASED, DELIVERED AND USED BY THE APPELLANT FOR ONWARD PROCESSING AND/OR TRADING AND THEREFORE ALSO NO PART OF THE PURCHASES OUGHT TO HAVE BEEN DI SALLOWED. (VI). THE LD. CIT(A) HAS ERRED BOTH, IN LAW AND ON FACTS OF THE CASE IN CONFIRMING THE ADDITION OF UNEXPLAINED CASH CREDIT IN THE BANK ACCOUNTS TO THE EXTENT OF RS.22,27,000/-(FOR A.Y. 2 008-09) & RS.5,33,724/-(FOR A.Y.2009-10) OUT OF TOTAL ADDITIO N OF RS.3,95,28,000/-(FOR A.Y. 2008-09) & 4,52,75,028/- (FOR A.Y. 2009-10) MADE BY THE LD. AO. (VII). THE ID. CIT(A) HAS FURTHER ERRED IN LAW I N NOT APPRECIATING THE FACTS THAT THE ENTIRE IMPUGNED UNEXPLAINED CASH CRE DIT OF RS.3,95,28,000/-(FOR A.Y. 2008-09) & RS.4,52,75,028 /-(FOR A.Y.2009-10) HAS BEEN DEPOSITED INTO BANK ACCOUNT O UT OF CASH PROCEEDS AVAILABLE IN THE CASH BOOK AND ACCORDINGLY IT STANDS DULY EXPLAINED AND THEREFORE INSTEAD OF TELESCOPING THE SAME AGAINST BOGUS PURCHASES, THE ENTIRE ADDITION OUGHT TO HAVE BEEN DELETED ON THE BASIS OF EXPLANATION GIVEN WITH REGA RD TO CASH DEPOSITED IN BANK ACCOUNT. (VIII). ALTERNATIVELY AND WITHOUT PREJUDICE TO ABO VE, LD. CIT(A) OUGHT TO HAVE GRANTED BENEFIT OF TELESCOPING TO AN AMOUNT OF RS.22,27,000/-(FOR A.Y. 2008-09) & RS.5,33,724/-(FO R A.Y. 2009- 10) ALSO AGAINST THE ALLEGED BOGUS PURCHASES AS ALR EADY GIVEN BY THE LD.CIT(A) WITH REGARD TO BALANCE AMOUNT OF ADDI TION OF CASH CREDIT. ITA NO.1345, 1489, 1499 & 1500/AHD/2012 M/S. OM SHREE NAGRAJ GINNING FACTROY VS.ACIT ASST.YEAR 2008-09 & 2009-10 - 4 - (IX). BOTH THE LOWER AUTHORITIES HAVE PASSED THE OR DERS WITHOUT PROPERLY APPRECIATING THE FACT AND THAT THEY FURTHE R ERRED IN GROSSLY IGNORING VARIOUS SUBMISSIONS, EXPLANATIONS AND INFORMATION SUBMITTED BY THE APPELLANT FROM TIME TO TIME WHICH OUGHT TO HAVE BEEN CONSIDERED BE FORE PASSING THE IMPUGNED ORDER. THIS ACTION OF THE LOWER AUTHORITIE S IS IN CLEAR BREACH OF LAW AND PRINCIPLES OF NATURAL JUSTICE AND THEREFORE DESERVES TO BE QUASHED. (X). THE LD. CIT(A) HAS ERRED IN LAW AND ON FACTS O F THE CASE IN CONFIRMING ACTION OF THE LD AO IN LEVYING INTEREST U/S. 234A/B/C/D OF THE ACT. (XI). THE LD. CIT(A) HAS ERRED IN LAW AND ON FACTS OF THE CASE IN CONFIRMING ACTION OF THE LD. AO IN INITIATING PENAL TY U/S. 271(1)(C) OF THE ACT. 4. THE RELEVANT FACTS AS CULLED OUT FROM THE MATERI ALS ON RECORD ARE AS UNDER:- IN THIS CASE, A SEARCH AND SURVEY ACTION UNDER THE INCOME TAX ACT, 1961 TOOK PLACE AT THE PREMISES OF EDIBLE OIL MILLS GROU P OF PATAN DISTRICT AND AGENTS/BROKERS OF MEHSANA AND SABARKANTHA DISTRICT OF GUJARAT ON 01/09/2008 AND SUBSEQUENT DATES. SURVEY ACTION U/S. 133A OF THE INCOME TAX ACT, 1961 WAS ALSO CARRIED OUT IN THE CASE OF M /S. OM SHRI NAGRAJ GINNING FACTORY, PROP: RAMESHCHARNDRA GANPATBHAI MI STRY. THE ASSESSEE FILED RETURN OF INCOME OF A.Y. 2008-09 ON 30/09/2009 DECLARING TOTAL INCOME AT RS.3,40,250/-. SUBSEQUENTLY THE CAS E WAS SELECTED FOR SCRUTINY BY ISSUING NOTICE U/S. 143(2) OF THE ACT A ND U/S. 142(1) WAS ISSUED. ITA NO.1345, 1489, 1499 & 1500/AHD/2012 M/S. OM SHREE NAGRAJ GINNING FACTROY VS.ACIT ASST.YEAR 2008-09 & 2009-10 - 5 - 5. SAME WAS COMPLIED WITH DURING THE COURSE OF SEAR CH AND SURVEY PROCEEDINGS IN THE CASE OF EDIBLE OIL MILL GROUP, I T WAS NOTICED THAT M/S. VISHAL TRADERS, VIRPUR, DIST. KHEDA HAS ISSUED BOGU S/ADJUSTMENTS BILLS TO A LARGE NUMBER OF CONCERNS OF MEHSANA AND PATAN DIS TRICTS OF GUJARAT DURING FINANCIAL YEAR 2006-07 ONWARDS. IN VIEW OF T HIS A STATEMENT OF SHRI DHARMENDRA J. PANDYA, PROP. OF M/S. VISHAL TRA DERS, VIRPUR WAS RECORDED. IN HIS STATEMENT U/S. 131 OF THE IT ACT, 1961 HE ADMITTED THAT M/S. VISHAL TRADERS, 532, MARKET YARD, VIRPUR, DIST . KHEDA WAS NOT IN EXISTENCE SINCE THE LAST TWO YEARS AND THE BILLS IS SUED WERE BOGUS/ADJUSTMENTS BILLS ONLY. IT WAS FURTHER ADMITT ED THAT HE HAD NOT DELIVERED ANY GOODS LIKE OIL SEEDS, OIL CAKES OR AN Y OTHER ITEM MENTIONED IN THE BILL AND THE VEHICLE NO. WRITTEN, IF ANY, IN THE BILL, WAS ALSO FICTITIOUS. HE FURTHER STATED THAT SHRI MADANLAL L. SHAH (CHANDAK) HAD INTRODUCED ALL THE PARTIES TO HIM. ON HIS BEHEST HE HAD OPENED BANK ACCOUNTS IN THE FOLLOWING BANKS. (I) HARIJ NAGARIK SAHAKARI BANK LTD., HARIJ A/C NO. 477 5 (II) MEHSANA NAGARIK SAHAKARI BANK LTD., MEHSANA A/C NO. 06577 (III) KALUPUR COMMERCIAL CO.OP. BANK LTD., KALUPUR A/C NO . 0120114293 (IV) DENA GUJARAT GRAMIN BANK, GANDHINAGAR, A/C NO.639 SHRI DHARMENDRA J. PANDYA FURTHER ADMITTED THAT HE HAD GIVEN BOGUS/ADJUSTMENT BILLS TO VARIOUS CONCERNS FOR WHIC H HE USED TO GET COMMISSION AT RS. 1 PER BAG ON GRAIN/RS. 0.25 PER B AG ON RAYDO, CASTER, COTTON AND COTTON SEEDS. ITA NO.1345, 1489, 1499 & 1500/AHD/2012 M/S. OM SHREE NAGRAJ GINNING FACTROY VS.ACIT ASST.YEAR 2008-09 & 2009-10 - 6 - 6. ON PERUSAL OF THE DETAILS SUBMITTED DURING THE C OURSE OF ASSESSMENT PROCEEDINGS IT IS SEEN THAT THE ASSESSEE (M/S OM SH RI NAGRAJ GINNING FACTORY) HAS SHOWN PURCHASE OF RS. 1,03,43,718/- FR OM M/S. VISHAL TRADERS DURING A.Y. 2008-09. IT IS FURTHER NOTICED THAT THE ASSESSEE HAS ALSO SHOWN PURCHASES OF RS. 4,65,62,830/- FROM M/S. NAGRAJ TRADERS, WAGHEL ROAD, HARIJ, WHOSE PURCHASE IS ALSO FOUND TO BE MADE FROM M/S VISHAL TRADERS OF VIRPUR. SO AS PER THE AO, IT IS C LEAR THAT THE CLAIM OF PURCHASES MADE FROM M/S VISHAL TRADERS AND M/S NAGR AJ TRADERS ARE BOGUS AND THE SAME NEEDS TO BE DISALLOWED. 7. THEREAFTER, NOTICE WAS ISSUED TO THE ASSESSEE AN D WAS ASKED TO FURNISH DETAILS ABOUT THE ABOVE SAID. 8. ASSESSEE FILED ITS REPLY BUT SAME WAS NOT TENABL E IN THE EYES OF THE LD. AO AND DURING THE COURSE OF SEARCH AND SURVEY P ROCEEDINGS AS WELL AS ASSESSMENT PROCEEDINGS, THE ASSESSEE WAS GIVEN REPE ATED OPPORTUNITY TO SUBSTANTIATE THE CLAIM OF PURCHASE BY PRODUCING GAT E PASS, L.R. RECEIPTS, CHALLANS, VOUCHERS ETC., IN SUPPORT OF THE CLAIM OF PURCHASE MADE FROM M/S. VISHAL TRADERS AND M/S NAGRAJ TRADERS. FURTHER , VIDE LETTER DATED 08/10/2010 THE ASSESSEE WAS ASKED TO PRODUCE SUPPLI ERS AND TRANSPORTERS. THE ASSESSEE WAS ALSO ASKED TO ESTABLISH THE QUANTI TATIVE CORRELATION BETWEEN THE PURCHASE AND SALES IN VIEW OF THE MANUF ACTURING PROCESS FLOW CHART, YIELD PERCENTAGE, WASTAGE RATIO AND POW ER CONSUMPTION. HOWEVER, DESPITE BEING GIVEN REPEATED OPPORTUNITIES DURING THE COURSE OF ASSESSMENT PROCEEDINGS THE ASSESSEE HAS NOT PRODUCE D ANY EVIDENCE TO SUBSTANTIATE ITS CLAIM OF PURCHASE FROM M/S VISHAL TRADERS AND M/S ITA NO.1345, 1489, 1499 & 1500/AHD/2012 M/S. OM SHREE NAGRAJ GINNING FACTROY VS.ACIT ASST.YEAR 2008-09 & 2009-10 - 7 - NAGRAJ TRADERS EXCEPT THE LEDGER ACCOUNTS FROM ITS BOOKS OF ACCOUNTS. AS REGARDS THE PURCHASES OF RS.4,65,62,830/- FROM NAGR AJ TRADERS, HARIJ, THE SAID PARTY HAS SHOWN ITS PURCHASES FROM M/S VISHAL TRADERS. SINCE THE ENTIRE SALES MADE BY M/S VISHAL TRADERS ITSELF ARE ADMITTEDLY BOGUS AS DISCUSSED ABOVE. THE PURCHASES SHOWN TO HAVE MADE B Y THE ASSESSEE FROM NAGRAJ TRADERS IS ALSO BOGUS. FURTHER, APART F ROM THE STATEMENTS OF SHRI DHARMENDRA J PANDYA AND SHRI MADANLAL L. SHAH, THERE IS CORROBORATING EVIDENCE IN THE FORM OF CONTINUOUS PA TTERN OF DEPOSIT AND IMMEDIATE CASH WITHDRAWAL IN THE BANK ACCOUNTS OPEN ED BY SHRI DHARMENDRA J. PANDYA, PROP. OF M/S VISHAL TRADERS, VIRPUR. IN VIEW OF THESE FACTS AND CIRCUMSTANCES IT IS ESTABLISHED BEY OND DOUBT THAT THE CLAIM OF PURCHASES MADE FROM M/S VISHAL TRADERS AND NAGRAJ TRADERS, HARIJ ARE BOGUS AND THE ASSESSEE HAS USED THE SAME TO INFLATE THE EXPENSES IN THE BOOKS OF ACCOUNTS TO SUPPRESS THE PROFIT EAR NED FROM THE BUSINESS. 9. IN VIEW OF THE FACTS AND CIRCUMSTANCES DISCUSSED ABOVE, THE PURCHASE CLAIMED TO HAVE BEEN MADE FROM M/S VISHAL TRADERS AND NAGRAJ TRADERS, HARIJ DURING THE A.Y. 2008-09 OF RS. 5,69, 06,548/- WAS DISALLOWED. 10. THEREAFTER, A NOTICE U/S 142(1) OF THE ACT DATE D 13/08/2010, WAS ISSUED TO THE ASSESSEE AND HE WAS ASKED TO EXPLAIN THE SOURCE OF CASH DEPOSITS IN THE BANK ACCOUNTS. ON VERIFICATION OF T HE COPY OF BANK ACCOUNTS SUBMITTED BY THE ASSESSEE, IT IS NOTICED T HAT THE ASSESSEE HAS MADE HUGE CASH DEPOSITS IN THE BANK ACCOUNTS AS UND ER: ITA NO.1345, 1489, 1499 & 1500/AHD/2012 M/S. OM SHREE NAGRAJ GINNING FACTROY VS.ACIT ASST.YEAR 2008-09 & 2009-10 - 8 - NAME OF BANK BANK A/C NO. CASH DEPOSITS DENA BANK HARIJ 139 24,25,000 HARIJ NAGRIK SAHAKARI BANK 4843 3,34,46,000 AXIS BANK 247010200 007665 24,00,000 ICIC BANK, MEHSANA 025705000 773 12,36,000 ICIC SB A/C, MEHSANA 21,000 TOTAL 3,95,28,000 11. VIDE SUBMISSION DATED 20/10/2010, THE ASSESSEE FURNISHED COPY OF BANK STATEMENTS. HOWEVER, THE ASSESSEE DID NOT FURN ISH EXPLANATION OF SOURCE OF CASH DEPOSITS INTO THESE BANK ACCOUNTS. A LSO, THE ASSESSEE DID NOT FURNISH CASH BANK. THEREFORE, SUMMON U/S. 131 O F THE INCOME-TAX ACT, 1961 WAS ISSUED ON 01/11/2010 AND THE ASSESSEE WAS ASKED TO ATTEND THE OFFICE ON 11/11/2010 ALONG WITH EXPLANATION OF SOURCE OF ALL CASH DEPOSITS IN THE BANK ACCOUNT ALONG WITH DOCUMENTARY EVIDENCES. 12. BUT ON DUE DATE ASSESSEE FAILED TO FURNISH EXPL ANATION AND EVIDENCES TO PROVE THE SOURCE OF CASH DEPOSITS INTO THE ABOVE-MENTIONED BANK ACCOUNTS AGGREGATING TO RS. 3,95,28,000/-. THE REFORE, THE SAME WAS TREATED AS UNEXPLAINED DEPOSITS AND ADDED TO THE TO TAL INCOME OF THE ASSESSEE. PENALTY PROCEEDINGS U/S 271(1)(C) OF THE ACT IS INITIATED FOR FURNISHING INACCURATE PARTICULARS OF INCOME. ITA NO.1345, 1489, 1499 & 1500/AHD/2012 M/S. OM SHREE NAGRAJ GINNING FACTROY VS.ACIT ASST.YEAR 2008-09 & 2009-10 - 9 - 13. AGAINST THE SAID ORDER ASSESSEE PREFERRED FIRST STATUTORY APPEAL BEFORE THE LD. CIT(A), WHO PARTLY ALLOWED THE APPEA L OF THE ASSESSEE. 14. NOW DEPARTMENT HAS FILED APPEALS NOS.1345/AHD/2 012 & 1489/AHD/2012 AGAINST THE ORDER OF THE CIT(A) AND A SSESSEE ALSO FILED CROSS APPEALS NOS.1499/AHD/2012 & 1500/AHD/2012. 15. WE HAVE GONE THROUGH THE RELEVANT RECORD AND PA PER BOOK FILED BY THE LD. AR AND SAME HAS BEEN DEALT IN UNDER RULE 18 (6). BROADLY, CIT(A) HAS RESTRICTED THE IMPUGNED ADDITION TO 25% OF SUCH ALLEGED BOGUS PURCHASES (PARA 14 & 15, PGS. 30-32 OF CIT(A) S ORDER). PRIOR TO THAT, CIT(A) HAS REDUCED THE AMOUNT OF PURCHASES MA DE FROM M/S. NAGRAJ TRADERS FROM RS.4,65,62,830/- TO RS.4,51,65, 257/- RESULTING INTO DELETION OF ADDITION OF RS.13,97,573/- (I.E. RS. 4, 65,62,830 - RS. 4,51,65,257) (PARA 11, PGS.9-11 OF CIT(A)S ORDER). 16. IT IS ALSO BEING CLARIFIED THAT PURCHASES FROM M/S. NAGRAJ TRADERS AGGREGATE TO RS. 4,16,53,209/- AND NOT RS.4,65,62,8 30/-. THIS FACT HAS BEEN ADMITTED BY AO VIDE REMAND REPORT DATED 16/04/ 2012 (PGS. 304-306 @ 304 OF P/B). HOWEVER, CIT(A) HAS TAKEN AN AMOUNT OF RS.4,51,65,257/- AS PURCHASES FROM NAGRAJ TRADERS B ASED ON TOTAL PAYMENTS MADE TO NAGRAJ TRADERS. CIT(A) OUGHT TO HAVE APPRECIATED THAT AMOUNT OF PURCHASES CANNOT BE TAKEN BASED ON PAYMENT. HENCE, THE CORRECT AMOUNT OF PURCHASES OUGHT TO HAVE BEEN RS.4,16,53,209/- AND THE ADDITION OVER AND ABOVE THAT [I.E. RS.49,09,621 /- (RS.4,65,62,830 RS. 4,16,53,209) DESERVES TO BE DELETED. ITA NO.1345, 1489, 1499 & 1500/AHD/2012 M/S. OM SHREE NAGRAJ GINNING FACTROY VS.ACIT ASST.YEAR 2008-09 & 2009-10 - 10 - 17. AS REGARDS THE CONCERNED PURCHASES, ASSESSEE, V IDE ANSWERS TO QUESTION NO. 22 & 23 OF HIS STATEMENT DATED 01/09/2 008, REITERATED THAT PURCHASES HAVE BEEN MADE AND SAME IS PART OF CIT(A) IN PARA 3, PG.13 OF CIT(A)S ORDER. 18. IN SUPPORT OF ITS CONTENTION, ASSESSEE HAS FILE D FOLLOWING DOCUMENTARY EVIDENCES: DETAILS OF PURCHASES FROM M/S. NAGRAJ TRADERS AND M/S. VISHAL TRADERS PGS. 167-205 OF PAPER BOOK. RELEVANT EXTRACT OF BANK STATEMENTS PGS.206-225 O F PAPER BOOK. QUANTITATIVE DETAILS PGS. 14-27 OF PAPER BOOK. TAX AUDIT REPORT WITH QUANTITATIVE DETAILS PGS. 2 8-47 @ 41 OF PAPER BOOK. 19. IN FACT, AO HAS NOT EVEN DISPUTED THE FOLLOWING AT THE REMAND STAGE: SALES PG.27 OF CIT(A)S ORDER; CLOSING STOCK PG. 27 OF CIT(A)S ORDER; CONSUMPTION DETAILS PG.28 OF CIT(A)S ORDER; 20. BECAUSE ASSESSEE HAS FILED AFORESAID DOCUMENTS, SO IT BECOMES CRYSTAL CLEAR THAT PURCHASES WERE ACTUALLY MADE BY THE ASSESSEE AND SUCH ITEMS WERE CONSUMED IN DUE COURSE AND ALSO SOLD TO VARIOUS PARTIES. HAD IT BEEN THE CASE THAT THE CONCERNED PURCHASES WERE BOGUS THEN IT WOULD ITA NO.1345, 1489, 1499 & 1500/AHD/2012 M/S. OM SHREE NAGRAJ GINNING FACTROY VS.ACIT ASST.YEAR 2008-09 & 2009-10 - 11 - NOT HAVE BEEN POSSIBLE FOR THE ASSESSEE TO CONSUME THE SAME AND ALSO SELL THE SAME IN TURN. 21. THE ASSESSEE HAS DECLARED GP RATE @ 8.59% AND N P RATE 0.39% AS IS EVIDENT FROM THE TAX AUDIT REPORT. 22. RAMESH MISTRY I.E. PROPRIETOR OF THE ASSESSEE, VIDE LETTER DATED 13/03/2012 ADDRESSED TO CIT(A) [ANNEXURE-7 TO CIT (A)S ORDER], STATED THAT PURCHASES HAVE ACTUALLY BEEN MADE BUT T HE DEPARTMENT IS NOT CONVINCED WITH THE DOCUMENTARY EVIDENCES FURNISHED BY THE ASSESSEE. HE FURTHER STATED THAT PURCHASES HAVE ACTUALLY BEEN MA DE, IF NOT FROM THE RELEVANT TWO CONCERNS, THEN FROM AGRICULTURISTS/FAR MERS/CULTIVATORS WHO DO NOT ISSUE BILLS. HENCE, HIS ACCOUNTANT MIGHT HAV E OBTAINED BILLS FROM VISHAL TRADERS AND NAGRAJ TRADERS MERELY TO REGULAR IZE SUCH PURCHASES. THE SAID FACT HAS BEEN APPRECIATED BY CIT(A)[PARA 1 4, PG.30 OF CIT(A)S ORDER]. 23. IT HAS BEEN HELD IN THE CASE OF CIT VS. GUJARA T AMBUJA EXPORT LTD. TAX APPEAL NO. 840 OF 2013 (ANNEXURE A) W HEREIN PURCHASES MADE FROM THIS VERY VISHAL TRADERS WERE DOUBTED, TA KEN A VIEW THAT ESTIMATE AT 5% OF SUCH ALLEGED BOGUS PURCHASES WOUL D MEET THE ENDS OF JUSTICE. 24. AO MADE ADDITION OF RS.3,95,28,000/- U/S.68 IN RESPECT OF CASH DEPOSITED IN THE BANK ACCOUNT TREATING THE SAME AS UNEXPLAINED. ITA NO.1345, 1489, 1499 & 1500/AHD/2012 M/S. OM SHREE NAGRAJ GINNING FACTROY VS.ACIT ASST.YEAR 2008-09 & 2009-10 - 12 - 25. CIT(A) RESTRICTED THE IMPUGNED ADDITION TO RS.2 2,27,000/- ON THE COUNT THAT AS PER REMAND REPORT DATED 16/04/2012 (P GS.304-306 OF PAPER BOOK-II), CASH DEPOSITS TO THAT EXTENT WERE N OT REFLECTED IN THE IMPOUNDED E-CASH BOOK. BALANCE ADDITION OF RS.3,73, 01,000/- (I.E. RS.3,95,28,000 RS. 22,27,000) CAME TO BE DELETED AFTER GIVING BENEFIT OF TELESCOPING AGAINST ADDITION IN RESPECT OF BOGUS PURCHASES (PARA 17, PGS.33-35 OF CIT(A)S ORDER). 26. ASSESSEE, VIDE REJOINDER FILED ON 20/04/2012, S UBMITTED BEFORE CIT(A) THAT AO HAS, PRIOR TO FURNISHING REMAND REPO RT DATED 16/04/2012, REFRAINED DATED 13/03/2012, WHEREIN IT WAS EXPLAINE D THAT SUCH CASH DEPOSITED WERE MADE OUT OF AVAILABLE CASH BALANCE O N THE GIVEN DATE AND HENCE, NO SUCH DEPOSITS CANNOT BE TREATED AS UNEXPL AINED. 27. IT WAS SUBMITTED THAT WHILE PREPARING RECONCILI ATION OF BANK ACCOUNTS WITH THE CASH BOOK AND WHILE FINALIZING TH E BOOKS POST IMPOUNDMENT OF HARD-DISK, IT CAME TO THE KNOWLEDGE OF THE ASSESSEE THAT SUCH CASH DEPOSITS HAVE NOT BEEN RECORDED IN BOOKS. 28. ACCORDINGLY, SUCH ENTRIES WERE PROPERLY RECORDE D IN THE CASH BOOK PLACED AT PGS.48-107 OF PAPER BOOK -1. 29. ONCE COMPLETE CASH-BOOK IS FURNISHED AND AO DOE SNT PINPOINT ANY DEFECT IN THE SAME, IT IS NOT OPEN FOR THE DEPA RTMENT NOT TO ACCEPT THE SAME. RELIANCE IS PLACED ON PIYUSHKUMAR O DESAI VS . CIT-247 ITR 568 (GUJ). ITA NO.1345, 1489, 1499 & 1500/AHD/2012 M/S. OM SHREE NAGRAJ GINNING FACTROY VS.ACIT ASST.YEAR 2008-09 & 2009-10 - 13 - 30. A TABLE SHOWING BREAK-UP OF RS. 22,27,000/- ALO NG WITH REFERENCE TO RELEVANT PAGES WHERE SUCH CASH DEPOSITS APPEAR I N THE SAID CASH BOOK FORMS PART OF THE REJOINDER DATED 13/03/2012. 31. CLOSING CASH BALANCE OF RS.36,55,514/-(PGS.48-1 07 @ 107 OF PAPER BOOK-II) IS ALSO REFLECTED IN THE BALANCE-SHE ET FORMING PART OF AUDITED ANNUAL ACCOUNTS. 32. IT IS PERTINENT TO MENTION HERE NEITHER THE AUD ITORS NOR THE AO HAS FOUND ANY DEFECTS IN THE SAME. 33. THE VERY FACT THAT AO HAS NOT COMMENTED ON THE SAID SUBMISSION WHILE PREPARING REMAND REPORT DATED 16/04/2012 MAKE S IT CRYSTAL CLEAR THAT AO HAS NOTHING ADVERSE TO COMMENT ON SUCH SUBM ISSIONS. 34. ONCE ASSESSEE HAS SUFFICIENT CASH BALANCE ON HA ND WHICH IS RECORDED IN THE ANNUAL BOOKS OF ACCOUNT, DULY AUDIT ED, AND ASSESSEE DEPOSITS ANY PART OF SUCH CASH IN HIS BANK ACCOUNT, THE SAME CANNOT BE TREATED AS UNEXPLAINED SO AS TO MAKE ADDITION U/S. 68 IN RESPECT OF THE SAME. 35. AFTER FOREGOING OBSERVATIONS, WE DISMISS THE AP PEALS OF THE DEPARTMENT AND ALLOW THE APPEALS OF THE ASSESSEE. ITA NO.1345, 1489, 1499 & 1500/AHD/2012 M/S. OM SHREE NAGRAJ GINNING FACTROY VS.ACIT ASST.YEAR 2008-09 & 2009-10 - 14 - 36. IN THE RESULT, APPEALS FILED BY THE DEPARTMENT IN ITA NOS.1345 & 1489/AHD/2012 ARE DISMISSED AND APPEALS FILED BY TH E ASSESSEE IN ITA NOS. 1499 & 1500/AHD/2012 ARE ALLOWED FOR STATISTIC AL PURPOSES. THIS ORDER PRONOUNCED IN OPEN COURT ON 18/04/2017 SD/- SD/- IKZEKSN DQEKJ IKZEKSN DQEKJ IKZEKSN DQEKJ IKZEKSN DQEKJ EGKOHJ IZLKN EGKOHJ IZLKN EGKOHJ IZLKN EGKOHJ IZLKN ( ) . / (PRAMOD KUMAR) (MAHAVIR PRASA D) ACCOUNTANT MEMBER JUDICIAL MEMBER AHMEDABAD; DATED 18/04/2017 PRITI YADAV, SR. PS ! '!# COPY OF THE ORDER FORWARDED TO : 1. ! / THE APPELLANT 2. '! / THE RESPONDENT. 3. 012' # 3' / CONCERNED CIT 4. # 3' ./ / THE CIT(A)-I, AHMEDABAD. 5. 45 6'$12 (12, 0 / DR, ITAT, AHMEDABAD 6. 6 78 % GUARD FILE. $ % / BY ORDER, ' 4'' //TRUE COPY// &/% '( ( DY./ASSTT.REGISTRAR) , / ITAT, AHMEDABAD TRUE COPY