ITO, Ward-3(2),Kolkata, Kolkata V. M/s Super Stahl India pvt. Ltd., Kolkata

ITA 170/KOL/2017

• Counselvise Citation: [2019] 117 COUNSELVISE.COM (IT) 7879 (ITAT-KOLKATA)
• Duration Of Justice: 2 year(s) 2 month(s) 20 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 23-04-2019
• Appeal Filed By: Assessee
• Order Result: Dismissed
• Bench Allotted: A
• Assessment Year: 2009-2010
• Appeal Filed On: 02-02-2017
• Result in Favour of: Revenue
• Court: TRIBUNAL
• Department Lawyers: C J SINGH JCITSRDR
• Assessee Lawyers: S M SURANA
• Keywords: Bogus purchase; Unexplained expenditure; Business expenditure; Corroborative evidences; TDS; Set aside
• Section: 69C; 143(3); 148

Judgement Text

, A , IN THE INCOME TAX APPELLATE TRIBUNAL KOLKATA BENCH A KOLKATA BEFORE SHRI J.SUDHAKAR REDDY, ACCOUNTANT MEMBER AND SHRI S.S.GODARA, JUDICIAL MEMBER ITA NO.170-171/KOL/2017 ASSESSMENT YEARS: 2009-10 & 2010-11 INCOME TAX OFFICER, WARD- 3(2), AAYKAR BHAWAN, 4 TH FLOOR, R. NO. 17, P-7, CHOWRINGHEE SQUARE, KOLKATA-69 / V/S . M/S SUPER STAHL INDIA PVT. LTD., 2, N.C. DUTTA SARANI, 7 TH FLOOR, R. NO. 7A, KOLKATA-700001 [ PAN NO.AAICS 7531 F ] /APPELLANT .. /RESPONDENT /BY ASSESSEE SHRI S.M. SURANA, ADVOCATE ! /BY REVENUE SHRI C.J.SINGH, JCIT-SR-DR /DATE OF HEARING 24-01-2019 /DATE OF PRONOUNCEMENT 23-04-2019 /O R D E R PER S.S.GODARA, JUDICIAL MEMBER:- THESE TWO REVENUES APPEALS FOR ASSESSMENT YEARS 2 009-10 & 2010-11 ARISE AGAINST THE COMMISSIONER OF INCOME TAX (APPEALS)-I, KOLKATAS SEPARATE ORDERS BOTH DATED 03.11.2016 PASSED IN CASE NO.1102/CIT(A)-1/WA RD.3(2)/2014-15; RESPECTIVELY INVOLVING PROCEEDINGS U/S 143(3) R.W.S. 147 OF THE INCOME TAX ACT, 1961; IN SHORT THE ACT. HEARD BOTH THE PARTIES. CASE FILE(S) AS WELL AS ASS ESSEES DETAILED PAPER BOOK COMPRISING OF ITS PROFIT AND LOSS ACCOUNT, BALANCE -SHEET, TAX AUDIT REPORT, QUANTITATIVE DETAILS OF BOTH THE IMPUGNED ASSESSMEN T YEARS, PURCHASE BILLS, DELIVERY, CHALLANS, WEIGHMENT SLIPS, TRANSPORT VEHI CLES VOUCHERS, TRANSPORTATION ITA NO.170-171/KOL/2017 A.YS 09-10 & 10-11 ITO WD-3(2), KOL. VS M/S SUPER STAHL INDIA P VT. LTD. PAGE 2 CHARGES, BANK STATEMENTS IN RESPECT OF SUPPLIER PAR TIES SEC. 148 RE-ASSESSMENT ITS REPLIES, COMPARATIVE STAT OF NET AND GROSS PROF ITS AS WELL AS REMAND REPORT; STAND PERUSED. 2. WE ADVERT TO REVENUES SOLE SUBSTANTIVE GRIEVAN CE IN FORMER AND THIRD IDENTICAL GROUND RAISED IN LATTER APPEAL SEEKING TO REVERSE C IT(A)S ACTION DELETING BOGUS PURCHASES DISALLOWANCES / ADDITION(S) OF 73,35,068/- AND 46,56,078/-; RESPECTIVELY. THERE IS NO DISPUTE THAT THE ASSESSING OFFICER HAD TAKEN RECOURSE TO THE IMPUGNED DISALLOWANCE(S) AFTER GETTING INFORMATION THAT THE FIVE PAYEE PARTIES M/S SAMPARK STEEL, PRAYAN TRADING CO, BHAGWATI TRADING CO, SRIJ I TRADERS & VITRAG TRADING CO, IN FORMER AND VATS CORPORATION AND BHAGWATI TRADING CO IN LATTER ASSESSMENT YEAR; RESPECTIVELY HAD PROVIDED PURCHASE ENTRIES TO THIS TAXPAYER. THE SAID INFORMATION HAD COME TO THE ASSESSING OFFICER ON THE BASIS OF INVES TIGATION CONDUCTED BY MAHARASHTRA STATE SALES TAX DEPARTMENT/VAT. HE DISALLOWED THE I MPUGNED PURCHASES THEREFORE ON THE GROUND THAT THE ASSESSEE HAD FAILED TO PROVE GENUINENESS THEREOF DURING THE COURSE OF ASSESSMENT(S) IN ISSUE. THE CIT(A) HAS RE VERSED THE SAME IN HIS IDENTICAL LOWER APPELLATE DISCUSSION AS FOLLOWS:- I HAVE CONSIDERED THE MATERIAL BEFORE ME. THE A.O RECEIVED INFORMATION FROM THE DGIT(INV.), MUMBAI THAT THE ASSESSEE HAD MADE BOGUS PURCHASES FROM SARNPARK STEEI .RS.12048401-, PRAYAN TRADING CO.- RS. 1506960, BHA GWATI TRADING CO.-RS. 1291680, SRIJI TRADERS-RS. 1543828/-, AND VITRAAG T RADING CO. FOR RS 17,97.760, RESPECTIVELY ON ACCOUNT OF ADMISSION BY THE AFORESA ID PARTIES TO THEIR SALES TAX DEPARTMENT AT MUMBAI, WHICH WAS CONFRONTED TO THE A PPELLANT. THE APPELLANT IN HIS REPLY TO THE A.O DENIED THE ALLEGATION REGARDING MA KING THE SAID BOGUS PURCHASES. IT WAS ARGUED THAT THE PURCHASES ARE GENUINELY MADE BY HIM AND ALL PAYMENTS HAVE BEEN MADE BY A/C PAYEE CHEQUES, AND CORRESPONDING SALES HAVE BEEN SHOWN. IT WAS ALSO ARGUED THAT THERE CANNOT BE SALES UNLESS PURCHASES. FURTHER, THE APPELLANT OFFERED TO FURNISH FURTHER INFORMATION, IF ANY REQUIRED. HOWEV ER, THE A.O COMPLETED THE ASSESSMENT WITHOUT ALLOWING ANY FURTHER OPPORTUNITY TO THE APPELLANT, AND DISALLOWED A SUM OF RS. 73,35,068/- , ON ACCOUNT OF ALLEGED ' BOGUS PURCHASE ', WHICH WAS ADDED TO THE TOTAL INCOME. THE APPELLANT'S A.R HAS MAINLY REITERATED THE SUBMI SSIONS MADE BEFORE THE A.O THAT PURCHASES ARE SUPPORTED BY THE FOLLOWING DOCUMENTS WITH DETAILED STATEMENTS WERE ALSO PRODUCED TO SUBSTANTIATE ITS CLAIM OF GENUINE PURCHASES FROM THE ABOVE - MENTIONED FIVE PARTIES. A. PURCHASE BILLS; B DELIVERY CHALLANS C. DETAILS OF VEHICLE WHICH CARRIED THE GOOD. ITA NO.170-171/KOL/2017 A.YS 09-10 & 10-11 ITO WD-3(2), KOL. VS M/S SUPER STAHL INDIA P VT. LTD. PAGE 3 D WEIGHMENT CERTIFICATE ISSUED BY THE WEIGH BRIDGE ESTABLISHMENT TO CONFIRM WEIGHT OF THE GOODS. E. BANK STATEMENT SHOWING PAYMENT TO THE SUPPLIER B Y A/C PAYEE CHEQUES. F. TRANSPORTER'S BILL FOR FREIGHT CHARGES OF THE VE HICLE ABOVE REFERRED G. PAYMENT OF FREIGHT CHARGES TO THE TRANSPORTER BY A/C PAYEE CHEQUE. H TDS DEDUCTION FROM THE FREIGHT CHARGES, AS APPLIC ABLE AND DEPOSITING TDS AMOUNT I . STOCK REGISTER - SHOWING INCOMING, OUTGOING AND DAILY STOCK IT WAS ARGUED THAT ALL THE ABOVE MENTIONED EVIDENCE S ESTABLISHED THAT THE APPELLANT'S PURCHASES WERE GENUINE. IT WAS ALSO CONTENDED THAT ALL THE PURCHASE HAVE BEEN RECORDED IN THE BOOKS OF ACCOUNT AND THEIR PAYMENTS MADE BY ACCOUNT PAYEE CHEQUES. FURTHER, THAT THE GOODS WERE ENTERED IN THE DAILY S TOCK REGISTER, CORRESPONDING SALES HAVE BEEN MADE. IN ADDITION, THERE CANNOT BE SALES WITHOUT PURCHASES AND THAT THE APPELLANT'S TRADING RESULTS HAVE BEEN ACCEPTED BY T HE A.O. IF THE PURCHASES ARE NOT CONSIDERED, THE GROSS PROFIT WILL SHOOT UP UN-BELIE VABLY HIGH, WHICH IS NOT POSSIBLE IN THIS TRADE. IT WAS ALSO AVERRED THAT THE SALES TAX DEPARTMENT AT MUMBAI HAD STARTED A DRIVE TO COLLECT SALES TAX FROM THE DEFAULTING PART IES, WHEREIN ABOVE PARTIES HAD DENIED THE TRANSACTIONS ALTOGETHER TO AVOID SALES TAX PAYM ENT. THE SALES TAX DEPARTMENT PREPARED A LIST OF SUCH PARTIES ALONG WITH THE PART IES WHO MADE PURCHASES FROM THEM TO THE INCOME TAX DEPARTMENT, WHICH WAS THE SOLE BA SIS FOR THE IMPUGNED DISALLOWANCE AS BOGUS PURCHASE AMOUNTING TO RS.73,3 5,068/-, AS UNEXPLAINED EXPENDITURE U/S 69C OF THE IT. ACT. IT WAS FURTHER AVERRED THAT THE ITAT, MUMBAI ON SIM ILAR FACTS HAD DELETED THE ADDITIONS MADE IN THE CASES OF THE SELLERS MUMBAI B ENCH-C. IN THE CASE OF ITO VS. PARESH ARVIND GANDHI ITA NO.5706/MUM/2013, VIDE ORD ER DATED 13.05.2015 HAS DISMISSED THE DEPARTMENT APPEAL IN RESPECT OF THE P URCHASES MADE BY THE ASSESSEE FROM THE PARTIES, VIZ. BHAGWATI TRADING COMPANY, ON E OF THE TRADERS, WHOSE NAMES APPEARED IN THE LIST OF ALLEGED ' SUSPICIOUS DEALERS ' PREPARED BY THE SALES TAX DEPARTMENT, MUMBAI FOR THE A.Y 2010-11 UNDER CONSID ERATION, WHEREIN THE PURCHASES MADE FROM SAID BHAGWATI TRADING CO, HAVE BEEN ACCEP TED AS GENUINE BY THE HON'BLE ITAT, WHICH HELD AS UNDER. ' WE FIND THAT THE AO HAS NOT DOUBTED THE GENUINENE SS OF THE PURCHASE BUT MADE ME DISALLOWANCE OF RS.1,37 CRORES BY INVOKING THE PROVISIONS OF 69C OF THE, ACT. WE FIND THAT IN SIMILAR CIRCUMSTANCES THE TRIBUNAL HAD DELETED THE ADDITION MADE BY THE AO IN THE CASES RELIED UPON BY THE AR OF THE ASSESSEE. IN THE CASE OF RAJIV G . KALATHIL (SUPRA) TO WHICH ONE US WAS PARTY IDENTICAL ISSUE HAS BEEN DECIDED AS UNDER: 2.4 WE HAVE HEARD THE RIVAL SUBMISSIONS AND PERUSE D THE MATERIAL BEFORE US. WE FIND THAT AO HAD MADE THE ADDITION AS ONE OF THE SUPPLIER WAS DECLARED A HAWALA DEALER BY THE VAT DE PARTMENT. WE AGREE THAT IT WAS A GOOD STARTING POINT FOR MAKING FURTHER INVESTIGATION AND TAKE IT TO LOGICAL END. BUT HE LEFT THE JOB AT INITIAL POINT ITSELF. SUSPICION OF HIGHEST DEGREE CANNOT TAKE PLACE OF EV IDENCE. HE COULD HAVE CALLED FOR THE DETAILS OF THE BANK ACCOUNTS OF F THE SUPPLIERS TO FIND OUT AS TO WHETHER THERE WAS ANY IMMEDIATE CASH WITH DRAWAL FROM THEIR ACCOUNT. WE FIND THAT NO SUCH EXERCISE WAS DONE. TR ANSPORTATION OF GOOD TO THE SITES ONE OF THE DECIDING FACTOR TO BE CONSIDERED BEFORE RESOLVING THE ISSUE. THE FAA HAS GIVEN A FINDING OF FACT THAT PART OF THE GOODS RECEIVED BY THE ASSESSEE WAS FORMING PART OF CLOSING STOCK. ITA NO.170-171/KOL/2017 A.YS 09-10 & 10-11 ITO WD-3(2), KOL. VS M/S SUPER STAHL INDIA P VT. LTD. PAGE 4 THEREFORE, CONSIDERING THE PECULIAR FACTS AND CIRCU MSTANCES OF THE CASE UNDER APPEAL. WE ARE OF THE OPINION THAT THE ORDER OF THE FAA DOES NOT SUFFER FROM ANY LEGAL INFIRMITY AND THERE ARE NOT S UFFICIENT EVIDENCE ON FILE TO ENDORSE THE VIEW TAKEN BY THE AO. SO, CONFI RMING THE ORDER THE FAA, WE DECIDE GROUND NO. 1 AGAINST THE A.O. THE A,R HAS ALSO RELIED UPON THE DECISION OF THE IT AT,B-BENCH, MUMBEI IN ITS ORDER DATED 28.11.2014 IN ITA NO. 2959/MUM/2014 IN THE CA SE OF RAMESH KUMAR & CO. VS ACIT, WHEREIN IT WAS HELD: IN OUR CONSIDERED OPINION, THE PURCHASES ARE SUPPO RTED BY PROPER INVOICES DULY REFLECTED IN THE BOOKS OF ACCOUNT. THE PAYMENT S HAVE BEEN MADE BY ACCOUNT PAYEE CHEQUES WHICH ARE DULY REFLECTED IN T HE BANK STATEMENT OF THE ASSESSEE. THERE IS NO EVIDENCE TO SHOW THAT THE ASS ESSEE HAD RECEIVED CASH BACK FROM THE SUPPLIERS. THE ADDITIONS HAVE BEEN MA DE MERELY ON THE REPORT OF THE SALE TAX DEPARTMENT BUT AT THE SAME TIME CANNOT BE SAID THAT PURCHASES ARE BOGUS. WE THEREFORE SET ASIDE THE FINDINGS OF T HE LD. CIT(A) AND DIRECT THE AO TO DELETE THE ADDITION OF, 4,98,80,892/- IN VIEW OF THE ABOVE DISCUSSION AND CONSIDERING THE RATIO OF THE CITED CASE LAWS, I FIND THERE IS MERIT IN THE SUBMISSIONS OF THE A.R. THAT THE A.O HAS MADE THE IMPUGNED ADDITION OF RS. 73,35,068/- MERELY ON THE BASIS OF INFORMATION FROM THE DGIT(INV), WITHOUT BRINGING ON RECORD ANY DOCUMENTARY EVIDENCE OR ADVERSE FINDING BASED ON MATERIAL ON RECORD TO CORROBORATE THE ALLEGATION OF HAVING MADE ' BOGUS PURCHASES ' FROM THE ABOVE-MENTIONED FIVE PARTIES, AGGREGATING RS. 73,35,068/-. ALTHOUGH THE APPELLANT HAD ADDUCED SUFFICIENT DOCUMENTARY EVIDEN CES BEFORE THE A.O TO DISCHARGE ITS INITIAL ONUS IN THE FORM OF PURCHASE BILLS, DEL IVERY CHALLANS, DETAILS OF VEHICLE WHICH CARRIED THE GOOD, WEIGHMENT CERTIFICATE ISSUE D BY TILE WEIGH BRIDGE ESTABLISHMENT TO CONFIRM WEIGHT OF THE GOODS, BANK STATEMENT SHOWING PAYMENT TO THE SUPPLIER BY A/E PAYEE CHEQUES. TRANSPORTERS BI LL FOR FREIGHT CHARGES FOR VEHICLES, PAYMENT OF FREIGHT CHARGES TO THE TRANSPORTER BY A/ C PAYEE CHEQUE; TDS DEDUCTION FROM THE FREIGHT CHARGES AS APPLICABLE, AND DEPOSIT ING TDS AMOUNT, AND STOCK THE ONUS HAVING SHIFTED TO THE AO HE FAILED TO BRING AN Y ADVERSE EVIDENCE ON RECORD TO REBUT THE PRESUMPTION OF THE OF THE PURCHASES BEING GENUINE UNLESS ESTABLISHED OTHERWISE. FURTHER, THE AO HAD NOT FIND ANY PATENT DEFECTS IN THE BOOKS OF ACCOUNTS NOR REJECTED THE BOOK RESULTS WHICH WERE BASED ON A UDITED ACCOUNTS. THEREFORE, THE FACTS OF THE APPELLANTS CASE ARE FOUND TO BE COVER ED BY THE RATIO OF THE ITAT, MUMBAIS DECISIONS IN THE CASE OF ITO VS. PARESH AR VIND GANDHI (SUPRA). IN VIEW THEREOF, I AM OF THE VIEW THAT THE A.O WAS NOT JUST IFIED IN TREATING THE IMPUGNED AMOUNT OF RS. 73,35,068/- AS BOGUS PURCHASES. THE A .O IS DIRECTED TO DELETE THE ADDITION OF RS. 73,35,068/-. THESE GROUNDS ARE ALLO WED. 3. WE HAVE GIVEN OUR THOUGHTFUL CONSIDERATION TO RI VAL CONTENTIONS. THE REVENUE VEHEMENTLY CONTENDS DURING THE COURSE OF HEARING TH AT THE CIT(A) HAS ERRED IN LAW AS WELL AS ON FACTS IN TREATING BOGUS PURCHASE DISALLO WANCE(S) IN ISSUE AS GENUINE IN BOTH THE IMPUGNED ASSESSMENT YEARS. IT STRONGLY EMPHASIZ ES THE FACT THAT THE MAHARASHTRA STATE SALES TAX / VAT DEPARTMENT HAD FOUND ALL THE PARTIES IN ISSUE TO HAVE BEEN ENGAGED IN GIVING PURCHASE ENTRIES TO THEIR RESPECT IVE SUPPLIERS. WE FIND NO MERIT IN ITA NO.170-171/KOL/2017 A.YS 09-10 & 10-11 ITO WD-3(2), KOL. VS M/S SUPER STAHL INDIA P VT. LTD. PAGE 5 REVENUES INSTANT ARGUMENTS. THIS TRIBUNALS CO-ORD INATE BENCHS DECISION IN ITO VS. PARESH ARVIND GANDHI IN ITA NO.5706/MUM/2013 (SUPRA) HOLDS PURCHASE MADE FROM MOST OF THE PARTIES IN ISSUE AS GENUINE IN VIE W OF THE CORRESPONDING DETAILS SUBMITTED AT THE CONCERNED ASSESSEES BEHEST. CASE FILE(S) SUGGEST THAT THE DEPARTMENT HAS ALSO NOT FURNISHED THE RELEVANT MATERIALS INFOR MATION AS WELL AS THE ALLEGED ADMISSIONS IF ANY OF THE PARTY IN ISSUE TO THE ASSE SSEE. WE FURTHER NOTICE THAT THIS ASSESSEE IS ENGAGED IN IRON AND STEEL TRADE BUSINES S. IT HAS FILED ALL THE RELEVANT EVIDENCE(S) IN THE NATURE OF PURCHASE BILLS, DELIVE RY CHALLEN, WEIGH BRIDGE CERTIFICATES, TRANSPORTATION DETAILS, CHEQUE PAYMENTS TO SUPPLIER S AS WELL AS TRANSPORTERS, TDS DEDUCTION CERTIFICATES, STOCK REGISTER, STEEL BILLS AND BANK STATEMENT (SUPRA) IN SUPPORT OF THE IMPUGNED PURCHASES CLAIMS RIGHT FROM ASSESSM ENT TILL THE INSTANT SECOND APPEAL PROCEEDINGS. ALL THE SAID DETAILS HAVE NOWHERE BEEN REBUTTED AT THE ASSESSING OFFICERS END. THE REVENUE FAILS TO DISPUTE THE CLI NCHING FACT THAT THE ASSESSEES CORRESPONDING SALES HAVE ALREADY BEEN ACCEPTED AS C ORRECT. WE THEREFORE SEE NO REASON TO RESTORE THE IMPUGNED BOGUS PURCHASE DISALLOWANCE CANVASSED IN REVENUES FORMER APPEAL IN ITA NO.170/KOL/2017 AND THIRD SUBSTANTIVE GROUND IN LATTER APPEAL (SUPRA). ITS FORMER APPEAL ITA NO.170/KOL/2017 RAISING THE I NSTANT SOLE ISSUE FAILS THEREFORE. 4. WE NOW COME TO REVENUES FIRST SUBSTANTIVE GROUN D IN ITS LATTER APPEAL ITA NO.171/KOL/2017 SEEKING TO REVIVE IMPORT DIRECT EXP ENSES DISALLOWANCE(S) OF 13,36,322/-. THE CIT(A)S FINDINGS UNDER CHALLENGE QUA THE INSTANT ISSUE READ AS FOLLOWS:- GROUND NO. 4: THIS GROUND RELATES TO THE DISALLOWAN CE BY THE A.O ON ESTIMATE OF A SUM OF RS.13,36,322/-,BEING 10% OF THE EXPENSES INC URRED UNDER THE HEAD 'IMPORT DIRECT EXPENSES'. HE HAS MADE THE DISALLOWANCE WITH A BIASED APPROACH ALLEGING THE SAME AS 'BOGUS EXPENSES. ' THIS ISSUE IS DEALT BY THE A.O. IN THE ASSESSMENT O RDER AS UNDER:- 'AS PER TAX AUDIT REPORT THE ASSESSEE COMPANY DEALS IN IRON & ALLOYS STEEL. TOTAL TURNOVER DURING THE YEAR WAS 32,13,84,266/-, MARGINALLY INCREASED COMPARE TO PRECEDING YEAR I.E. RS.28,15,61,922/-. A S PER SCHEDULE 15 OF THE BALANCE SHEET ASSESSEE CLAIMED IMPORT DIRECT EXPENS ES OF RS.1,33,63,218/-, WHEREAS IN THE PRECEDING YEAR IT WAS ONLY RS.62,620 40/-. THE ASSESSEE WAS REQUESTED VIDE SNOW CAUSE NOTICE DATE 13.12.13 TO S UBSTANTIATE THE CLAIM. IT APPEARS THAT THE ASSESSEE CLAIMED EXPENSES UNDER NE W HEADS AS PER SCHEDULE OF DIRECT EXPENSES THOUGH NATURE OF BUSINESS WAS REMAI NED SAME. THE ASSESSEE CLAIMED EXPENSES UNDER NEW HEADS LIKE CLEARING CHAR GES 94615/-, COMPUTER REPAIR 69431/- CARRIAGE INWARD 137373/-, CENTURY PL Y BOARD 54358/-, CONTAINER ITA NO.170-171/KOL/2017 A.YS 09-10 & 10-11 ITO WD-3(2), KOL. VS M/S SUPER STAHL INDIA P VT. LTD. PAGE 6 RENT 49771/-, CUSTOM DUTY RS.4022884/-, CWC CHARGES 157188/-, DEPB PREMIUM RS.1940228/-, DOCK CLEARING CHARGES 86569/- , INTEREST PAID (IMP PURCHASE) RS.11 0590/-, SERVICE CHARGES. 116750/-, TESTING CHARGES 129243/-, THC RS.454749/-, TRANSPORTATION CHARGES 2954418/- E TC. THERE WAS NO CLAIM UNDER THESE HEADS IN EARLIER YEAR. EVEN THE ASSESSE E CLAIMED EXPENSES UNDER VARIOUS HEADS WHICH ARE NOT CONSISTENCE WITH PRECED ING YEAR. IN ITS REPLY BY LETTER DATED24.02.2014 THE A.R. STATED THAT CUSTOM DUTY, & FREIGHT, HAVE BEEN INCREASED DUE TO INCREASE IN IMPORT & INTERSTATE PU RCHASE. IT APPEARS FROM THE SUBMISSION THAT ASSESSEE'S IMPORT WAS INCREASED BY 156% WHEREAS EXPENSES CLAIMED HIGHER THAN PRECEDING YEAR BY 213% ONUS WAS ON THE ASSESSEE TO PROVE GENUINENESS OF THE CLAIM OF SUCH EXPENSES WIT H SUPPORTING EVIDENCES. SINCE THE ASSESSEE FAILED TO DISCHARGE ITS ONUS THA T THE EXPENSES WERE GENUINE AND INCURRED FOR THE PURPOSE OF THE BUSINESS, 10% O F TOTAL IMPORT DIRECT EXPENSES OF RS.13363218/- I.E. RS.13,36,322/- IS AD DED BACK AS BOGUS EXPENSES. THE A.R. OF THE APPELLANT HAS FILED WRITTEN SUBMISS ION AS UNDER :- 'THE LEARNED AO HAS DISALLOWED ON ESTIMATE 10% OF T HE BUSINESS EXPENDITURE INCURRED VIDE SCH. 15 OF THE BALANCE SHEET UNDER TH E HEAD ' INDIRECT IMPORT EXPENSES '. HE HAS MADE THE DISALLOWANCE ON THE ALLEGED GROU ND OF ' EXCESSIVE EXPENSES ' IN COMPARISON TO THE LAST YEAR. IT IS SUBMITTED T HAT THE EXPENSES HAVE BEEN INCURRED WHOLLY AND EXCLUSIVELY FOR THE PURPOS E OF BUSINESS. ALL EXPENSES ARE SUPPORTED BY BILLS AND VOUCHERS AND PA YMENTS HAVE BEEN MADE BY CHEQUE. I AM ENCLOSING THE DETAILS OF ALL SUCH E XPENSES. BESIDES, THERE HAD BEEN RE-GROUPING AND A DIFFERENT PRESENTATION OF TH E EXPENSES IN THE BALANCE SHEET THIS YEAR IN COMPARISON TO LAST YEAR. A COPY OF THE BALANCE SHEET SHOWING THE FIGURE FOR THE CURRENT YEAR AND PRECEDI NG YEAR IS ENCLOSED. IF THE EXPENSES ARE COMPARED IN TOTALITY, AFTER CONSOLIDAT ION, IT WOULD BE SEEN THAT THE EXPENSES INCURRED ARE NOT DISPROPORTIONATELY EX CESSIVE. MOREOVER, THERE WAS INCREASE IN THE RATE OF CUSTOM DUTY FROM 5% LAS T YEAR TO 10% THIS YEAR. RATES OF OTHER GOVERNMENT LEVIES ALSO INCREASED. IT WILL NOT BE OUT PLACE TO MENTION THAT IN COMPARISON TO LAST YEAR THE TURNOVE R HAS INCREASED (FROM 28.15 CRORES TO 32.13 CRORES), AMOUNT- OF NET PROFI T HAS INCREASED (FROM 6.86 LACS TO 25.54 LACS) AND RATE OF N.P. HAS ALSO INCR EASED (FROM 0.24% TO 0.79%). A COMPARATIVE CHART IS ENCLOSED. WHILE MAKI NG THE ESTIMATED DISALLOWANCE, THE LEARNED AO HAS FAILED TO TAKE THE SE FACTORS INTO CONSIDERATION. THE DISALLOWANCE HAS BEEN MADE ARBIT RARILY ON GUESS AND IS LIABLE TO BE DELETED. ' I HAVE CAREFULLY CONSIDERED THE MATERIAL BEFORE ME, THE A.O. OBSERVED THAT THE TOTAL TURNOVER OF THE COMPANY HAD MARGINALLY INCREASED FR OM RS.32.13 CRORES IN THE PRECEDING YEAR TO RS.28.15 CRORES IN A. Y. 2010-11 THAT HAD CLAIMED THAT HIGHER IMPORT DIRECT EXPENSES OF RS.1336218/- IS COMPARED TO RS.62,62,040/- IN THE PRECEDING YEAR. ON EXAMINING THE APPELLANT'S REPLY THE A.O. OBSERVED THAT THE SEVERAL HEADS OF EXPENDITURE LIKE CLEARING CHARGES, COMPUTE R REPAIR, CONTAINER RENT , CUSTOM DUTY, EWE CHARGE, DEPB PREMIUM, DOC CLEARING CHARGE S, INTEREST PAID, SERVICE AND TESTING CHARGES AND TSC, TRANSPORTATION CHARGES, WE RE CLAIMED DURING THE CURRENT A.Y. WHICH WERE NOT THERE IN THE PRECEDING YEAR. TH E A.O. REJECTED THE EXPLANATION THAT CUSTOM DUTY AND FREIGHT HAS BEEN INCREASED DUE TO INCREASE IN IMPORT AND INTERSTATE PURCHASE BY HOLDING THAT THE APPELLANT H AD FAILED TO DISCHARGED THE ONUS OF ITA NO.170-171/KOL/2017 A.YS 09-10 & 10-11 ITO WD-3(2), KOL. VS M/S SUPER STAHL INDIA P VT. LTD. PAGE 7 HAVING INCURRED THE EXPENSES FOR PURPOSE OF BUSINES S AND DISALLOWED 10% OF THE EXPENSES AMOUNTING TO RS.1336322/- AS BOGUS EXPENSE S. THE APPELLANT'S A.R. HAS ARGUED TO THE WRITTEN SUBMISSION THAT THE EXPENDITU RE CLAIMED WERE INCURRED WHOLLY AND EXCLUSIVELY FOR THE PURPOSE OF BUSINESS AND ALL EXPENSES WERE SUPPORTED BY BILLS AND VOUCHERS AND WERE PAID THROUGH CHEQUES. FURTHER , IT WAS STATED THAT DUE TO REGROUPING AND DIFFERENT PRESENTATION OF EXPENSES I N THE BALANCE SHEET AS COMPARED TO PRECEDING YEAR LET TO THE ERRONEOUS OBSERVATION BY THE A.O. OF DISPROPORTIONATE INCREASE IN THE EXPENDITURE UNDER THE HEAD OF INDIR ECT EXPENSES. AFTER CAREFUL CONSIDERATION IT IS OBSERVED THAT THE RE IS SUBSTANCE IN THE ARGUMENT IN THE APPELLANT'S A.R. DUE TO REGROUPING OF VARIOUS H EAD OF EXPENSES UNDER THE HEAD ' INDIRECT IMPORT EXPENSES ' RESULTED IN THE SUSPICION OF THE A.O. OF DISPROPO RTIONATE INCREASE IN EXPENDITURE AS COMPARED TO THE PRECEDIN G YEAR BY 213%. IT IS FOUND THAT THE A.O. HAS NOT POINTED OUT ANY SPECIFIC DEFECTS I N ANY ITEM OF EXPENDITURE DEBITED AND HAS MADE THE DISALLOWANCE AT THE RATE OF 10% ME RELY ON ESTIMATE BASIS. IN VIEW THEREOF, IT IS HELD THAT THE A.O. WAS NOT JUSTIFIED MAKING THE DISALLOWANCE OF RS.13,36,322/-, WHICH IS DIRECTED TO BE DELETED. TH IS GROUND IS ALLOWED. 5. WE HAVE HEARD RIVAL CONTENTIONS IN SUPPORT AND A GAINST THE IMPUGNED IMPORT DIRECT EXPENDITURE DISALLOWANCE. THERE IS NO DISPUT E THAT THE ASSESSING OFFICER TOOK RECOURSE TO THE IMPUGNED 10% AD HOC ESTIMATED DISALLOWANCE BY COMPARING THE CORRESPONDING FIGURES OF THE IMPUGNED ASSESSMENT YE AR VIS-A-VIS PRECEDING ASSESSMENT YEAR. WE AFFORDED AMPLE OPPORTUNITIES TO THE LEARNED DEPARTMENTAL REPRESENTATIVE FOR PIN-POINTING ANY SPECIFIC DEFECT ; HEAD-WISE IN THE IMPUGNED CLAIMS COMPRISING OF CLEARING CHARGES, COMPUTER REPAIR, CO NTAINER RENT, CUSTOM DUTY, CWC CHARGE, DEPB PREMIUM, DOC CLEARING CHARGES, INTERES T PAID, SERVICE AND TESTING CHARGES AND TDSC TRANSPORTATION CHARGES ALONGWITH O THER HEADS. THERE IS NO SUCH DISCUSSION ON THE ASSESSMENT ORDER POINTING OUT ANY SUCH DEFECT IN ALL THESE SPECIFIC HEADS. THE ASSESSING OFFICER HAD NOT PUT EVEN A SIN GLE HEAD TO FACTUAL VERIFICATION FROM RECIPIENT SIDE AS WELL. WE CONCLUDE IN THESE F ACTS THAT THE CIT(A) HAS RIGHTLY CONCLUDED THAT THE IMPUGNED DISALLOWANCE MERELY BAS ED ON COMPARISON OF RELEVANT FIGURES IN THE TWO ASSESSMENT YEARS IS NOT SUSTAINA BLE. THIS FIRST SUBSTANTIVE GROUND FAILS IN REVENUES LATTER APPEAL FAILS THEREFORE. 6. NEXT COMES UNEXPLAINED CASH DEPOSITS ADDITION IS SUE RAISED IN REVENUES SECOND SUBSTANTIVE GROUND AMOUNTING TO 13.10 LAC. THE CIT(A)S FINDINGS IN HIS ORDER UNDER CHALLENGE HOLD THAT THE ASSESSEE HAD FI LED ITS LEDGER ACCOUNT AS WELL AS CASH FLOW STATEMENT INDICATING RE-DEPOSIT OF CASH S UMS ALREADY WITHDRAWN. ITS PAPER ITA NO.170-171/KOL/2017 A.YS 09-10 & 10-11 ITO WD-3(2), KOL. VS M/S SUPER STAHL INDIA P VT. LTD. PAGE 8 BOOK PAGES 161 TO 163 CONTAIN THE ASSESSING OFFICER S REMAND REPORT AS WELL NOT DISPUTING ALL THESE CLINCHING SUPPORTING EVIDENCE. WE THEREFORE REJECT REVENUES INSTANT SECOND SUBSTANTIVE GROUND AS WELL AS THE LA TTER MAIN APPEAL ITA NO.171/KOL/2017 . WE MAKE IT CLEAR BEFORE PARTING THAT ASSESSEE HAD S UBMITTED DETAILED EVIDENCE REGARDING AS ALL THREE THEE ISSUES BEFORE ASSESSING OFFICER REMAND PROCEEDINGS DIRECTED BY CIT(A). THIS REMAND REPORT DATED 11.06. 2015 FORMING PART OF CASE RECORDS BEFORE US NOWHERE DISPUTED ASSESSEES VOLUM INOUS DOCUMENTARY EVIDENCE REGARDING THE THREE ISSUES RAISED IN BOTH ASSESSMENT YEARS. WE ACCORDINGLY AFFIRM THE CIT(A)S FINDINGS UNDER CHAL LENGE. 7. BOTH THE REVENUES APPEALS ARE DISMISSED. ORDER PRONOUNCED IN OPEN COURT ON 23/04/2019 SD/- SD/- ( !) () !) (J.SUDHAKAR REDDY) (S.S.GODARA) ACCOUNTANT MEMBER JUDICIAL MEMBER *DKP-SR.PS * - 23/04/2019 / KOLKATA / COPY OF ORDER FORWARDED TO:- 1. /ASSESSEE-M/S SUPER STAHL INDIA PVT. 2, N.C. DUTT A SARANI, 7 TH FLOOR, ROOM NO.7A, KOLKATA-700 001 2. ! /REVENUE-ITO WD-3(2), AAYKAR BHAWAN, 4 TH FLOOR, ROOM NO. 17, P-7, CHOWRINGHEE SQUARE, KOLKAT-69 3. - . / CONCERNED CIT 4. . - / CIT (A) 5. / ))- , - /DR, ITAT, KOLKATA 6. 3 / GUARD FILE. BY ORD ER/ , /TRUE COPY/ -,