The DCIT, Central Circle-3, Surat V. M/s. Veekay Prints Pvt. ltd., Surat

ITA 1579/AHD/2007

• Counselvise Citation: [2010] 136 COUNSELVISE.COM (IT) 6158 (ITAT-AHMEDABAD)
• Duration Of Justice: 3 year(s) 1 month(s) 13 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 03-06-2010
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: D
• Next Hearing Date: 03-06-2010
• Assessment Year: 2003-2004
• Appeal Filed On: 20-04-2007
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: C K MISHRA SRDR
• Keywords: Bogus purchase; Gross profit estimation; Rejection of books of accounts; Unexplained expenditure; Question of law
• Section: 145

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL AHMEDABAD BENCH D AHMEDABAD BEFORE SHRI N.S.SAINI, ACCOUNTANT MEMBER AND SHRI MAHAVIR SINGH, JUDICIAL MEMBER ITA NO.1579 & 2070/AHD/2007 ASSESSMENT YEAR: 2003-04 DATE OF HEARING:3.6.10 DRAFTED:4.6.10 DY. COMMISSIONER OF INCOME-TAX, CENTRAL CIRCLE-3, AAYAKAR BHAWAN, MAJURA GATE, SURAT M/S. VEEKAY PRINTERS PVT. BLOCK NO.210, NR. MAHALAXMI DYEING, SURAT PAN NO.AAACV9663K V/S . V/S . M/S. VEEKAY PRINTERS PVT. BLOCK NO.210, NR. MAHALAXMI DYEING, SURAT PAN NO.AAACV9663K ASSTT. COMMISSIONER OF INCOME-TAX, CENTRAL CIRCLE-3, SURAT (APPELLANT) .. (RESPONDENT) ITA NO.230/AHD/2008 ASSESSMENT YEAR: 2004-05 DY. COMMISSIONER OF INCOME-TAX, CENTRAL CIRCLE-3, AAYAKAR BHAWAN, MAJUIRA GATE, SURAT V/S . M/S. VEEKAY PRINTERS PVT. BLOCK NO.210, NR. MAHALAXMI DYEING, SURAT PAN NO.AAACV9663K (APPELLANT) .. (RESPONDENT) ASSESSEE BY :- SHRI HARDIK VORA, AR REVENUE BY:- SHRI C.K. MISHRA, SR-DR O R D E R PER MAHAVIR SINGH JUDICIAL MEMBER:- ITA NO.1579 & 2070/AHD/2007 AND 230/AHD/2008 A.Y.S 03-04 & 04-05 DCIT CC-3 SRT V. M/S. VEEKAY PRINTERS PVT. LTD. PAGE 2 OUT OF THESE THREE APPEALS TWO BY REVENUE AND AN OTHER BY THE ASSESSEE ARE ARISING OUT OF ORDERS OF THE COMMISSIONER OF IN COME-TAX (APPEALS)-II, AHMEDABAD IN APPEAL NOS. CIT[A]-II/CC.3/224 & 775/0 6-07 OF DIFFERENT DATES 01-02- 2007 AND 01-10-2007. THE ASSESSMENTS WERE FRAMED A CIT & DCIT, CENTRAL CIRCLE- 3, SURAT U/S.143(3) OF THE INCOME-TAX ACT, 1961 (HE REINAFTER REFERRED TO AS THE ACT) VIDE ORDER DATED 10-03-2006 AND 18-12-2006 FOR THE ASSESSMENT YEARS 2003-04 AND 2004-05 RESPECTIVELY. 2. THE ONLY ISSUE IN THESE APPEALS OF THE REVENUE A ND THE ASSESSEE IS AS REGARDS TO THE ADDITION OF UNVERIFIABLE PURCHASES O F COLOUR & CHEMICALS FROM SHRI ROHIT PANWALA. FOR THIS, REVENUE IN BOTH YEARS I.E . ASSESSMENT YEAR 2003-04 AND 2004-05 HAS RAISED THE FOLLOWING GROUNDS:- ASSESSMENT YEAR 2003-04 1. THE CIT(A) HAS ERRED IN LAW AND ON FACTS IN DIR ECTING TO DELETE THE ADDITION OF RS.4,36,270/- MADE ON ACCOUNT OF UNVERIFIABLE PU RCHASES OF COLOUR & CHEMICALS, IGNORING THE AFFIDAVIT OF ROHIT PANWALA CONFIRMING THAT HE HAS ISSUED ONLY BILLS & NO MATERIAL WAS SUPPLIED. ASSESSMENT YEAR 2004-05 1. THE CIT(A) HAS ERRED IN LAW AND ON FACTS IN DEL ETING THE ADDITION OF RS.27,32,750/- MADE BY THE A.O. ON ACCOUNT OF UNVER IFIABLE PURCHASES. 3. THE BRIEF FACTS ARE THAT THE ASSESSING OFFICER O N ACCOUNT OF BOGUS PURCHASES FROM POOJA DYE CHEM, ABHI DYE CHEM AND NEHA DYE CHE M, THE FICTITIOUS CONCERNS OF ROHIT PANWALA GROUP IGNORING THE MATERIAL EVIDEN CES IN THE FORM OF STATEMENT ON OATH DEPOSED BY SHRI ROHIT PANWALA DURING THE COURS E OF SEARCH AT HIS RESIDENTIAL PREMISES. IN THE ASSESSMENT ORDER, THE A.O. HAS STA TED THAT DURING THE COURSE OF SEARCH PROCEEDINGS AT THE RESIDENCE OF SHRI ROHIT P ANWALA, IT WAS FOUND THAT HE WAS INVOLVED IN THE BUSINESS OF ISSUE OF BOGUS SALE BIL LS IN RESPECT OF COLOUR & CHEMICALS. DURING THE COURSE OF STATEMENT RECORDED U/S,L31, SH RI ROHIT PANWALA ADMITTED THAT HE HAD NOT SUPPLIED THE GOODS AS PER THE BILLS ISSU ED BY HIM AND THE PAYMENT RECEIVED AGAINST BILLS WERE CREDITED TO THE BANK AC COUNTS OF THE BOGUS CONCERNS. SUBSEQUENTLY, SUCH AMOUNT WAS WITHDRAWN BY HIM IN C ASH AND WAS GIVEN BACK TO THE CONCERNED PARTIES AFTER DEDUCTING HIS COMMISSIO N, WHICH RANGED FROM 0.15% TO ITA NO.1579 & 2070/AHD/2007 AND 230/AHD/2008 A.Y.S 03-04 & 04-05 DCIT CC-3 SRT V. M/S. VEEKAY PRINTERS PVT. LTD. PAGE 3 0,25% OF THE BILL AMOUNT. THE PROPRIETOR OF THE ABO VE MENTIONED CONCERNS ADMITTED IN SEPARATE AFFIDAVITS BEFORE THE INVESTIGATION WIN G THAT THE SALE BILLS ISSUED FROM THE ABOVE CONCERNS WERE BOGUS AND NO SUPPLIES AGAINST T HOSE BILLS HAD ACTUALLY BEEN MADE. THE A.O. ISSUED A SHOW-CAUSE NOTICE TO THE AS SESSEE AS TO WHY THE PURCHASE MADE BY THE ASSESSEE BE NOT ADDED TO THE TOTAL INCO ME U/S.69. THE ASSESSEE REPLIED THAT THEY HAVE NOT MADE ANY BOGUS PURCHASE FROM ANY PARTY. THEY DO NOT KNOW SHRI ROHIT PANWALA NOR HIS CONCERNS. A PERSON HAD COME TO THE FACTORY AND INFORMED THAT HE WAS DEALING IN COLOUR & CHEMICALS AND SHOWN SOME SAMPLES. CONSIDERING HIS RATES AND QUALITY, THE COLOUR FOR C HEMICALS WERE PURCHASED. THESE WERE DELIVERED AT THE FACTORY ALONG WITH RESPECTIVE BILLS. WHEN THE GOODS SUPPLIED WERE FOUND TO BE OK CHEQUES WERE ISSUED IN FAVOUR O F THE RESPECTIVE PARTIES. THE ASSESSEE SUBMITTED COPIES OF CHEQUES AS WELL AS BIL LS IN THIS REGARD. THEY ALSO SUBMITTED THE COPIES OF LEDGER ACCOUNTS OF THESE CO NCERNS. THE A.O, DID NOT FIND THIS EXPLANATION SATISFACTORY AND STATED THAT THE REQUES T OF THE ASSESSEE TO ALLOW CROSS- EXAMINATION OF SHRI ROHIT PANWALA WAS CONSIDERED, A SUMMON U/S.131 WAS ISSUED TO SHRI ROHIT PANWALA. SHRI ROHIT PANWALA DID NOT A TTEND ON THE APPOINTED DATE, BUT FILED A LETTER THAT ALL THE DETAILS AND MODUS OPERA NDI OF THE TRANSACTIONS HAVE ALREADY BEEN EXPLAINED BY SHRI ROHIT PANWALA IN HIS STATEME NT AND HE CANNOT BE PRESENT EVERY TIME. THE A.O., THEREFORE, STATED THAT THE SA LIENT FEATURE OF THE STATEMENT OF SHRI ROHIT PANWALA IS AS UNDER:- I. SHRI ROHIT PANWALA IS AT PRESENT ENGAGED IN CHEQ UE DISCOUNTING BUSINESS RUN IN THE NAME OF HIS OWN PROPRIETARY CON CERNS, ABHI CORPORATION. II. HE HAD, IN EARLIER YEARS BEEN ENGAGED IN THE BU SINESS OF ISSUING BOGUS BILLS IN RESPECT OF COLOUR CHEMICALS AND YAM IN THE NAMES OF VARIOUS CONCERNS FLOATED BY HIM IN THE NAMES OF HIS RELATIV ES AND HE WAS EARNING COMMISSION FROM THIS BUSINESS, WHICH RANGED FROM 1.15% TO 0.25% OF THE BILL AMOUNT. III. HE GAVE COMPLETE DETAILS OF SUCH BENAMI CONCER NS FLOATED BY HIM INCLUDING NAME OF THE PROPRIETOR OF EACH CONCERNS, HIS RELATIONSHIP WITH THE PROPRIETOR AND ALSO DETAILS OF THE BANK ACCOUNT OF EACH CONCERN. IV. HE HAD NOT BEEN MAINTAINING DUPLICATE COPIES OF BILLS BOOKS IN RESPECT OF BOGUS BILL ISSUED BY HIM AND HE ALSO HAD TO MAIN TAIN ANY BOOKS OF ACCOUNTS IN RESPECT OF THE BUSINESS. V. HE HAD NOT SUPPLIED THE GOODS AS PER THE BILLS I SSUED BY HIM FROM HIS BENAMI CONCERNS AND PAYMENTS RECEIVED AGAINST BILLS WERE CREDITED TO THE BANK ACCOUNT OF THE BOGUS CONCERNS. SUCH AMOUNT S WERE SUBSEQUENTLY WERE WITHDRAWN BY HIM IN CASH AFTER CL EARANCE OF THE CHEQUES AND CASH WAS GIVEN BACK AFTER DEDUCTING HIM COMMISSION, ITA NO.1579 & 2070/AHD/2007 AND 230/AHD/2008 A.Y.S 03-04 & 04-05 DCIT CC-3 SRT V. M/S. VEEKAY PRINTERS PVT. LTD. PAGE 4 VI. HE GAVE A LIST OF 45 PROCESS/DYEING HOUSES OF S URAT TO WHOM SUCH BOGUS BILLS WERE GIVEN BY HIM.' 4. IN VIEW OF THE ABOVE, THE A,O. CAME TO THE FOLLO WING CONCLUSION:- (I) THE ASSESSES HAS ALLEGEDLY PURCHASED COLOUR & C HEMICALS FROM THE ABOVE THREE CONCERNS. (II) THE PROPRIETOR/ OWNER OF THESE CONCERNS HAVE A DMITTED IN SEPARATE AFFIDAVITS THAT THE SAFE BILLS ISSUED FROM THESE CO NCERNS WERE BOGUS AND THE SUPPLIES AGAINST THOSE BILLS HAD NEVER BEEN ACTUALLY (III) COPIES OF CHEQUES ISSUED TO THOSE CONCERNS AN D COPIES OF THEIR ACCOUNTS PRODUCED BY THE ASSESSES CANNOT BE CONSTIT UTED AS EVIDENCE FOR THE PURCHASE OF COLOUR 8 CHEMICALS BECAUSE THE BILLS OF COLOUR SI CHEMICALS ARE BOGUS ARID THE PAYMENT MADE TO ALLEGE D SUPPLIER IS RECEIVED BACK IN THE FORM OF CASH. THIS FACT HAS BE EN AMPLY PROVED BEYOND DOUBT IN THE STATEMENT OF SHRI ROHIT PANWALA RECORDED BY THE DDIT (INV.), SURAT. (IV) THE ASSESSEE HAS FAILED TO ADDUCE ANY EVIDENCE VIZ. TRANSPORTATION RECEIPT, STOCK REGISTER ETC. WHICH MAY SUBSTANTIATE ITS CLAIM FOR THE SO CALLED PURCHASES. 5. THE ASSESSING OFFICER THEREFORE, DISALLOWED THE BOGUS PURCHASE AND ADDED THE UNEXPLAINED EXPENDITURE OF COMMISSION AT 0.2% P AID BY THE ASSESSEE TO SHRI ROHIT PANWALA, IN VIEW OF THE STATEMENT OF SHRI ROH IT PANWALA. 6. IN APPEAL BEFORE THE COMMISSIONER OF INCOME TAX( APPEALS), THE ASSESSEE STATED THAT THE ASSESSEE HAS FILED COMPLETE DETAILS OF PURCHASE MADE FROM THESE PARTIES. THE AFFIDAVIT OF SHRI ROHIT PANWALA CANNOT BE MADE AS THE SOLE BASIS FOR MAKING ANY ADDITION IN THIS REGARD. THE ASSESSEE HA D PLACED ORDERS AFTER VERIFYING THE SAMPLES AND CONSIDERING THE RATES QUOTED BY THE PARTY. WHEN GOODS SUPPLIED BY HIM FOUND TO BE PROPER, THE PAYMENT WAS MADE BY CHE QUE. THE ASSESSEE HAS NOTHING TO DO WITH THE MANNER IN WHICH AFFAIRS OF B USINESS MANAGED BY SHRI ROHIT PANWALA. THE PURCHASE IN THE HANDS OF THE ASSESSEE CANNOT AT ALL BE DOUBTED IN VIEW OF THE DECISION OF THE HON'BLE GUJARAT HIGH CO URT IN THE CASE OF CIT VS. M.K. BROTHERS (163-ITR-249) WHEREIN THE HON'BLE HIGH COU RT STATED THAT THE PURCHASE CANNOT BE DISALLOWED IF THE PAYMENTS WERE MADE THRO UGH CHEQUES EVEN WHEN THE SELLERS WERE HELD TO BE BOGUS BY THE SALES-TAX AUTH ORITIES. THE ASSESSEE STATED THAT THE QUANTITY PURCHASED FROM THESE ENTITIES HAVE ALR EADY BEEN GONE INTO THE PRODUCTION AND, THEREFORE, STANDS INCLUDED IN THE F IGURES OF SALES AND CLOSING STOCK. THE ASSESSEE FURTHER STATED THAT IT IS RELYING ON T HE DECISION OF THE I.T,A.T., ITA NO.1579 & 2070/AHD/2007 AND 230/AHD/2008 A.Y.S 03-04 & 04-05 DCIT CC-3 SRT V. M/S. VEEKAY PRINTERS PVT. LTD. PAGE 5 AHMEDABAD IN THE CASE OF AKRUTI DYEING & PRINTING M ILLS PVT. LTD., VIDE ITS ORDER DATED 26.10,2007 IN ITA NO.2551/AHD/2QC6 FOR A.Y. 2 003-04 AND ON THE DECISION OF THE I.T.A.T., AHMEDABAD BENCH IN THE CASE OF SHALU DYEING & PRINTING MILLS PVT. LTD., VIDE ITS ORDER DATED 11.07.2008 IN ITA NO.1491 & 14 92/AHD/2008 FOR ASSESSMENT YEARS 2001-02 & 2002-03. THE ASSESSEE STATED THAT ON THE FACTS IN THE CASE OF THE ASSESSEE IS EXACTLY THE SAME AS IN THE CASE OF SHAL U DYEING & PRINTING MILLS PVT. LTD, (SUPRA) AND, THEREFORE, THE DISALLOWANCE SHOUL D BE DELETED. 7. THE COMMISSIONER OF INCOME TAX(APPEALS) AFTER CO NSIDERING THE SUBMISSIONS OF THE ASSESSEE DELETED THE ADDITIONS FOLLOWING THE ORDERS OF THE TRIBUNAL IN THE CASE OF AKRUTI DYG. & PTG. MILLS, ITA NO.2551/AHD/2006 AND NO,2752/AHD/2006 AS WELL AS IN THE CASE OF SHALU DYG, & PTG, MILLS PVT LTD., 1T A NO,1491 & 1492/AHD/2008, THE I.T.A.T. AHMEDABAD IN ITS ORDER DATED 11.07.2008. 8. THE LEARNED DEPARTMENTAL REPRESENTATIVE SUPPORTE D THE ORDER OF THE ASSESSING OFFICER WHEREAS THE LEARNED AUTHORISED RE PRESENTATIVE OF THE ASSESSEE SUPPORTED THE ORDER OF THE LEARNED COMMISSIONER OF INCOME TAX(APPEALS). 9. WE HAVE HEARD THE RIVAL SUBMISSIONS AND PERUSED THE ORDERS OF THE LOWER AUTHORITIES AND THE MATERIALS AVAILABLE ON RECORD. IN THE INSTANT CASE THE ASSESSING OFFICER DISALLOWED PURCHASES FROM POOJA DYE CHEM, A BHI DYE CHEM AND NEHA DYE CHEM. THE ASSESSING OFFICER DISALLOWED THE CLAIM ON THE BASIS OF STATEMENT OF RECORDED IN PURSUANCE TO THE SEARCH IN THE GROUP OF SRI ROHIT PANWALA. SRI ROHIT PANWALA IN THE ALLEGED STATEMENT ACCORDING TO THE A SSESSING OFFICER STATED TO HAVE ISSUED ACCOMMODATION BILLS BY CHARGING COMMISSION. ON APPEAL COMMISSIONER OF INCOME TAX(APPEALS) DELETED THE ADDITION BY OBSERVI NG AS UNDER: 2.3 I HAVE CONSIDERED THE SUBMISSION MADE BY THE A PPELLANT AND THE OBSERVATION OF THE A.O. THE HON'BLE I.T.A.T. HAS CO NSIDERED THIS ISSUE OF BOGUS PURCHASE FROM THE FIRMS OF SHRI ROHIT PANWALA IN THE CASE OF AKRUTI DYG. & PTG. MILLS, ITA NO.2551/AHD/2006 AND NO,2752 /AHD/20Q6 AS WELL AS IN THE CASE OF SHALU DYG, & PTG, MILLS PVT LTD., 1TA N O,1491 & 1492/AHD/2Q08, THE HON'BLE I.T.A.T. AHMEDABAD IN ITS ORDER DATED 11,07.2008 IN THE CASE OF SHALU DYG. & PTG. MILLS PVT. LTD. HAS DELETED THE D ISALLOWANCE SAYING THAT THE REVENUE HAS BROUGHT NO MATERIAL ON RECORD TO SHOW T HAT THE PURCHASE SHOWN BY THE ASSESSEE FROM THE PARTIES WERE NOT GENUINE A ND WERE ACCOMMODATION/FAKE BILLS. NO STATEMENT RECORDED FRO M THE SELLER PARTIES BY ITA NO.1579 & 2070/AHD/2007 AND 230/AHD/2008 A.Y.S 03-04 & 04-05 DCIT CC-3 SRT V. M/S. VEEKAY PRINTERS PVT. LTD. PAGE 6 THE REVENUE WERE BROUGHT ON RECORD. THE HON'BLE I.T .A.T, STATED THAT THERE IS NO MATERIAL ON THE BASIS OF WHICH IT CAN BE ALLEGED THAT THE SELLER PARTIES ADMITTED THAT THE BILLS RAISED BY THEM AGAINST THE APPELLANT WERE MERELY ACCOMMODATION BILLS. IN VIEW OF THESE FACTS AND THE FACT THAT THE ASSESSEE HAS MADE PAYMENT THROUGH ACCOUNT PAVES CHEQUE AND NO EV IDENCE WAS BROUGHT ON RECORD BY THE A.O. THAT THE ASSESSEE HAS RECEIVE D BACK THE CASH FROM THIS PARTY, THE HON'BLE I.T.A.T, DELETED THE DISALLOWANC E. THE FACTS ARE EXACTLY THE SAME IN THE CASE OF THE PRESENT CASE AND HENCE THE HON'BLE JURISDICTIONAL I.T,A.T. HAS DELETED THE SAME ON SIMILAR FACTS RESP ECTFULLY FOLLOWING THE CASE OF SHALU DYG. & PTG, MILLS PVT. LTD., ITA NO,149L & 1492/AHD/2QQ8 DATED 11.07.3008. THE DISALLOWANCE MADE BY THE A.O, IS, T HEREFORE, DELETED. HENCE, THIS GROUND OF APPEAL IS ALLOWED. 10. WE FIND THAT, IN THE INSTANT CASE REVENUE HAS B ROUGHT NO MATERIAL ON RECORD TO SHOW THAT THE NAME OF THE ASSESSEE WAS APPEARING IN ANY OF THE ALLEGED STATEMENT RECORDED BY THE DEPARTMENT. THE ASSESSEE CLAIMED S INCE BEGINNING THAT IT ACTUALLY RECEIVED THE GOODS WHICH WAS DELIVERED TO ITS PREMI SES AND AFTER INSPECTING THE GOODS PAYMENTS WERE MADE TO THE PERSONS WHO BROUGHT THE GOODS BY ISSUING ACCOUNT PAY CHEQUES IN THE NAME IN WHICH THE INVOIC E WAS GIVEN TO IT. WE FIND THAT NO MATERIAL COULD BE BROUGHT ON RECORD BY THE REVEN UE TO SHOW THAT THE ASSESSEE RECEIVED CASH BACK AFTER ISSUING CHEQUES. A PLAUSI BLE EXPLANATION GIVEN BY THE ASSESSEE CANNOT BE REJECTED MERELY ON THE ASSUMPTIO N OR CAPRICE WITHOUT BRINGING ANY MATERIAL TO SHOW THAT EXPLANATION WAS INCORRECT . FURTHER, THE ALLEGED MAKER OF STATEMENTS WAS NOT ALLOWED TO BE CROSS EXAMINED BY THE ASSESSEE IN SPITE OF SPECIFIC REQUEST BY THE ASSESSEE. IN THE ABOVE CIR CUMSTANCES, IN OUR CONSIDERED VIEW, THE COMMISSIONER OF INCOME TAX(APPEALS) WAS F ULLY JUSTIFIED IN DELETING THE DISALLOWANCES WHICH WERE MADE ON SURMISES AND CONJE CTURES ALONE. THIS OUR VIEW IS ALSO SUPPORTED BY THE DECISION OF HONBLE JURISDICT IONAL HIGH COURT IN THE CASE OF ACIT V. AKRUTI DYEING & PRINTING MILLS PVT. LTD. IN TAX APPEAL NO.997 OF 2008 DATED 27-01-2009, WHEREIN EXACTLY THE SAME ISSUE, WENT BE FORE HONBLE HIGH COURT AND IT IS CONFIRMED BY HOLDING AS UNDER:- THUS IT IS APPARENT THAT SO CALLED STATEMENT OF SH RI ROHIT PANWALA WAS RECORDED IN SEARCH PROCEEDINGS CONDUCTED AT PREMISE S OF SHRI ROHIT PANWALA. IT IS NOT EVEN THE CASE OF THE ASSESSING OFFICER TH AT IN THE SAID STATEMENT SHRI ROHIT PNANWALA HAD ACCEPTED HAT HE HAD ISSUED FAKE/ COMMISSION BILLS TO THE ASSESSEE. THE EXTRACTED PORTION REPRODUCED HEREINBE FORE FROM THE ASSESSMENT ORDER INDICATES THAT ON THE BASIS OF GEN ERAL STATEMENT AN INFERENCE HAS BEEN DRAWN BY THE ASSESSING OFFICER B ECAUSE POSSIBLY THE THREE CONCERNS FROM WHOM PURCHASES HAVE BEEN MADE B Y THE ASSESSEE WERE ITA NO.1579 & 2070/AHD/2007 AND 230/AHD/2008 A.Y.S 03-04 & 04-05 DCIT CC-3 SRT V. M/S. VEEKAY PRINTERS PVT. LTD. PAGE 7 MENTIONED BY SHRI PANWALA IN THE COURSE OF HIS STAT EMENT. THE TRIBUNAL HAS IN THIS CONTEXT RIGHTLY FOUND THAT THE SAID THREE P ARTIES HAVE NOT BEEN EXAMINED, AND IF EXAMINED, THE STATEMENTS HAVE NOT BEEN BROUGHT ON RECORD. THE TRIBUNAL HAS FURTHER FOUND THAT PAYMENTS WERE M ADE BY ACCOUNT PAYEE CHEQUES AND AGAINST RECEIPT OF GOODS. IT IS IN THIS CONTEXT THAT THE TRIBUNAL HAS RECORDED THAT THERE WAS NO MATERIAL ON THE BASI S OF WHICH IT COULD BE ALLEGED THAT THE THREE PARTIES HAD ADMITTED THAT TH E BILLS RAISED BY THE SAID THREE PARTIES AGAINST THE ASSESSEE WERE MERELY ACCO MMODATION BILLS. 5. IN LIGHT OF THE AFORESAID FINDINGS OF FACT RECOR DED BY THE TRIBUNAL UPON APPRECIATION OF EVIDENCE AVAILABLE ON RECORD IT IS NOT POSSIBLE TO ACCEPT THE CONTENTION OF THE APPELLANT THAT THE IMPUGNED ORDER OF TRIBUNAL SUFFERS FROM VICE OF PERVERSITY SO AS TO GIVE RISE TO A SUBSTANT IAL QUESTION OF LAW. ADMITTEDLY, THE ORIGINALLY PROPOSED QUESTION DOES N OT ARISE FROM THE IMPUGNED ORDER OF THE TRIBUNAL. RESPECTFULLY FOLLOWING THE DECISION OF HONBLE JURI SDICTIONAL HIGH COURT AND THE FACTS OF THE CASE AS DISCUSSED ABOVE, WE DISMISS THESE AP PEALS OF THE REVENUE. COMING TO ASSESSEES APPEAL IN ITA NO.2070/AHD/2007 . 12. THE ASSESSEE HAS RAISED THE FOLLOWING GROUND:- ASSESSMENT YEAR 2003-04. ON THE FACTS AND IN CIRCUMSTANCES OF THE CASE AS W ELL AS LAW ON THE SUBJECT, THE LEARNED CIT(APPEALS) HAS ERRED IN CONFIRMING TH E ACTION OF THE ASSESSING OFFICER IN MAKING ADDITION OF RS.6,63,409/- ON ACCO UNT OF ESTIMATED GROSS PROFIT. 13. AFTER HEARING THE RIVAL CONTENTIONS AND GOING T HROUGH THE FACTS OF THE CASE, THE ASSESSING OFFICER HAS APPLIED THE GP RATE ONLY ON T HE BASIS THAT THERE IS INCREASED IN LABAOUR CHARGES AT RS.1,85,19,546/- AS AGAINST AT R S.1,39,71,162/- IN THE IMMEDIATE PREVIOUS YEAR. IT WAS ALSO THE CONTENTION OF THE A O THAT THE GP RATE IS LOW AND THE ASSESSEE COULD NOT OFFER ANY REASON FOR LOW GP RATE , ACCORDINGLY HE ESTIMATED THE GP RATE AT 14.90%. THE ASSESSING OFFICER HAS NOT RE JECTED THE BOOK RESULTS AND WITHOUT REJECTING THE SAME APPLIED A HIGHER GP RATE . THERE IS NO WHISPER IN THE ASSESSMENT ORDER ABOUT THE REJECTION OF BOOK RESULT S, DESPITE THE ASSESSEE HAS PRODUCED THE BOOKS OF ACCOUNT. WE FIND THAT THIS IS SUE IS ALSO COVERED BY THE DECISION OF HONBLE JURISDICTIONAL HIGH COURT IN TH E CASE OF CIT-IV V. SURESH SCRAP INDUSTRIES LTD. IN TAX APPEAL NO.1878 OF 2008 DATED 02-03-2010, WHEREIN THE HONBLE HIGH COURT OBSERVED AS UNDER:- ITA NO.1579 & 2070/AHD/2007 AND 230/AHD/2008 A.Y.S 03-04 & 04-05 DCIT CC-3 SRT V. M/S. VEEKAY PRINTERS PVT. LTD. PAGE 8 6. THE ENTIRE APPEAL PROCEEDS ON A MISCONCEPTION. EXERCISE OF POWERS UNDER SECTION 145 OF THE ACT CANNOT BE AN ASPECT OF GROSS PROFIT ADDITION BUT IT IS THE OTHER WAY ROUND. ONLY AFTER BOOKS OF ACCOUNTS H AVE BEEN REJECTED FOR ANY OF THE REASONS PROVIDED BY SECTION 145 OF THE ACT W OULD BY THE ASSESSING OFFICER BE ABLE TO MAKE ESTIMATE OF PROFITS. EVEN O N FACTS, WHEN ONE CONSIDERS THE SUBMISSIONS MADE BY THE DEPARTMENTAL REPRESENTA TIVE BEFORE TRIBUNAL, AS RECORDED IN PARAGRAPH NO.3 OF THE IMPUGNED ORDER DA TED 02 ND MAY, 2008, IT BECOMES CLEAR THAT AT NO STAGE WAS IT EVER URGED TH AT COMMISSIONER (APPEALS) HAD WRONGLY CANCELLED REJECTION OF BOOKS OF ACCOUNTS. IN VIEW OF THE ABOVE FACTS THAT NO BOOKS OF ACCOUNT S WERE REJECTED IN THE PRESENT CASE BY THE ASSESSING OFFICER AND APPLIED HIGHER GP RATE WITHOUT ANY BASIS. ACCORDINGLY, THE ORDERS OF THE LOWER AUTHORITIES CA NNOT WITHSTAND AND DESERVES TO BE REVERSED. THIS ISSUE OF THE ASSESSEES APPEAL IS A LLOWED. 14. IN THE RESULT, BOTH THE APPEALS OF REVENUE ARE DISM ISSED AND THAT OF THE ASSESSEE IS ALLOWED. ORDER PRONOUNCED IN OPEN COURT ON 03/06/2010 SD/- SD/- (N.S.SAINI) (MAHAVIR SINGH) ACCOUNTANT MEMBER JUDICIAL MEMBER AHMEDABAD, DATED : 03/06/2010 *DKP COPY OF THE ORDER FORWARDED TO : 1. THE APPELLANT. 2. THE RESPONDENT. 3. THE CIT(APPEALS)-II, AHMEDABAD 4. THE CIT CONCERNS. 5. THE DR, ITAT, AHMEDABAD 6. GUARD FILE. BY ORDER, /TRUE COPY/ DEPUTY / ASSTT.REGISTRAR ITAT, AHMEDABAD