THE DY. CIT-1(1), RAIPUR (CG) V. M/S. VANDANA VIDHYUT LTD., RAIPUR (CG)

ITA 171/BIL/2013

• Counselvise Citation: [2017] 127 COUNSELVISE.COM (IT) 9097 (ITAT-RAIPUR)
• Duration Of Justice: 3 year(s) 5 month(s) 27 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 11-05-2017
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: DB
• Assessment Year: 2008-2009
• Appeal Filed On: 14-11-2013
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: R K SINGH
• Assessee Lawyers: R B DOSHI
• Keywords: Unexplained expenditure
• Section: 69C; 133(6)

Judgement Text

1 B IN THE INCOME TAX APPELLATE TRIBUNAL, RAIPUR BENCH, RAIPUR BEFORE S/SHRI N.S SAINI, ACCOUNTANT MEMBER AND GEORGE GEORGE K, JUDICIAL MEMBER ITA NO.171, 172, 173 & 174 /RPR /201 3 ASSESSMENT YEAR S : 2008 - 2009,2009 - 2010, 2010 - 2011 AND 2011 - 12 DCIT, 1(1), RAIPUR VS. M/S. VANDANA VIDHYUT LTD., VANDANA BUILDING, M.G.ROAD, RAIPUR PAN/GIR NO. AAACV 7850 L (APPELLANT ) .. ( RESPONDENT ) ASSESSEE BY : SHRI R.B.DOSHI, AR REVENUE BY : SHRI R.K.SINGH, CIT DR DATE OF HEARING : 8 /05 / 2017 DATE OF PRONOUNCEMENT : 11 /05 / 2017 O R D E R PER N.S.SAINI, AM THESE ARE APPEAL S FILED BY THE REVENUE AGA INST THE SEPARATE ORDER S OF CIT(A) - RAIPUR , ALL DATED 16.8.2013 , FOR THE ASSESSMENT YEAR S 2008 - 09, 2009 - 10, 2010 - 11 & 2011 - 12, RESPECTIVELY. 2. THE SOLE ISSUE INVOLVED IN THESE APPEALS IS THAT THE CIT (A) ERRED IN HOLDING THAT THE ASSESSEE HAS FURNISHED THE RECONCILIATION AND EXPLAINED THE REASONS FOR DIFFERENCE IN THE QUANTITY OF COAL SHOWN AS PURCHASE BY THE 2 ASSESSEE AND SALES SHOWN BY SECL AND DELETING THE ADDITION OF RS.2,97,23,609/ - FOR THE ASSESSMENT YEAR 2008 - 09, RS. 2,43,67,682/ - F OR THE ASSESSMENT YEAR 2009 - 10, RS.58,24,905.90 / - FOR THE ASSESSMENT YEAR 2010 - 2011 AND RS. 48,29,018/ - F OR THE ASSESSMENT YEAR 2011 - 12 MADE BY THE ASSESSING OFFICE R ON ACCOUNT OF DIFFERENCE IN QUANTITY OF COAL. 3. AS THE FACTS AND ISSUE INVOLVED IN ALL THESE APPEALS ARE COMMON, THEREFORE, ALL THE APPEALS OF THE REVENUE ARE DISPOSED OF TOGETHER AS UNDER. 4. THE BRIEF FACTS OF THE CASE FOR THE ASSESSMENT YEAR 2008 - 09 ARE THAT THE ASSESSING OFFICER OBSERVED THAT TO VERIFY THE GENUINENESS OF COAL PURCHASES, A LETTER U/S.133( 6) OF THE I.T.ACT, 1961 WAS ISSUED TO SOUTH EASTERN COALFIELDS LIMITED (SECL), BILASPUR ON 8.9.2012 AND WAS ASKED TO PROVIDE DETAILS OF COALS SOLD BY SECL, BILASPUR TO THE ASSESSEE COMPANY FOR FINANCIAL YEAR 2004 - 05 TO FINANCIAL YEAR 2010 - 2011 MENTIONING THE QUANTITY OF COAL AND THE AMOUN T INVOLVED IN THE TRANSACTION. FURTHER, SUMMON U/S.131 WAS ISSUED TO THE GENERAL M ANAGER (S&M),SECL, BILASPUR ON 26.12.2012 TO SUBMIT THE DETAILS AS MENTIONED IN THE EARLIER LETTER AND IN RESPONSE TO THIS, SECL, BILASPUR FILED MONTHLY DETAILS OF COAL PURCHASE, PURCHASE BILLS, STATEMENT OF COAL SOLD TO THE ASSESSEE COMPANY DURING THE FINA NCIAL YEAR 2004 - 0 5 TO FINANCIAL YEAR 2010 - 2011. ON INSPECTION OF THE STATEMENT OF SECL, IT WAS FOUND THAT THE COAL PURCHASED BY THE ASSESSEE FROM SECL DURING FINANCIAL YEAR 2007 - 08 WAS 25714.85 MT BUT THE ASSESSEE HAS SHOWN PURCHASE OF COAL DURING THE YEAR WAS 13457.013 MT. THUS, THE 3 ASSESSING OFFICER FOUND THAT THERE WAS HUGE DIFFERENCE OF 14057.837 MT IN THE FIGURE OF COAL PURCHASE SHOWN BY THE ASSESSEE COMPANY FROM SECL FOR FINANCIAL YEAR 2007 - 08. THEREFORE, THE ASSESSING OFFICER OBSERVED THAT THE EXPLA NATION OF THE ASSESSEE WAS NOT ACCEPTABLE AS THE QUANTITY OF COAL SHOWN IN THE AUDIT REPORT BY THE ASSESSEE WAS WAY BELOW THAN WHAT WAS REPORTED BY SECL IN ITS STATEMENT. HE OBSERVED THAT EVEN IF TRANSIT LOSS IS CONSIDERED THEN THE SAME WOULD HA VE BEEN REPORTED BY THE AUDITOR IN HIS AUDIT REPORT & SAME WOULD HAVE BEEN DEBITED TO THE CONCERNED TRANSPORTERS ACCO UNT WHICH HAS NOT HAPPENED IN THIS CASE. IN THE INSTANT CASE, THE ASSESSEE HAS INCURRED AN EXPENDITURE IN THE FORM OF COAL PURCHASE WHICH HAS NOT BEEN FULLY DISCLOSED IN THE BOOKS OF ACCOUNT & NO SATISFACTORY REPLY IN THIS REGARD WAS RECEIVED FROM THE ASSESSEE. THEREFORE, HE VALUED THE DIFFERENCE AMOUNT OF COAL AT 14057.837 MT AT THE AVERAGE R A TE WORKED O UT BY HIM AT 2,114.38 AND MADE ADDITION OF RS.2,97,23,609/ - U/S.69C OF THE ACT. 5. SIMILARLY, FOR THE ASSESSMENT YEAR 2009 - 10, ASSESSING OFFICER OBSERVED THAT TO VERIFY THE GENUINENESS OF COAL PURCHASES, A LETTER U/S.133(6) OF THE I.T.ACT, 1961 WAS ISSUED TO SOUTH EASTERN COALFIELDS LIMITED (SECL), BILASPUR ON 8.9.2012 AND WAS ASKED TO PROVIDE DETAILS OF COALS SOLD BY SECL, BILASPUR TO THE ASSESSEE COMPANY FOR FINANCIAL YEAR 2004 - 05 TO FINANCIAL YEAR 2010 - 2011 MENTIONING THE QUANTITY OF AND THE AMOUNT INVO LVED IN THE TRANSACTION. FURTHER, SUMMON U/S.131 WAS ISSUED TO 4 THE GENERAL MANAGER (S&M), SECL, BILASPUR ON 26.12.2012 TO SUBMIT THE DETAILS AS MENTIONED IN THE EARLIER LETTERS AND IN RESPONSE TO THIS, SECL, BILASPUR FILED MONTHLY DETAILS OF COAL PURCHASE , PURCHASE BILLS, STATEMENT OF COAL SOLD TO THE ASSESSEE COMPANY DURING THE FINANCIAL YEAR 2004 - 05 TO FINANCIAL YEAR 2010 - 2011. ON INSPECTION OF THE STATEMENT OF SECL, IT WAS FOUND THAT THE COAL PURCHASED BY THE ASSESSEE FROM SECL DURING FINANCIAL YEAR 20 08 - 09 WAS 26271.58 MT BUT THE ASSESSEE HAS SHOWN PURCHASE OF CO AL DURING THE YEAR WAS 13286.771 MT S . THUS, THE ASSESSING OFFICER FOUND THAT THERE WAS HUGE DIFFERENCE OF 12984.809 MT IN THE FIGURE OF COAL PURCHASED SHOWN BY THE ASSESSEE COMPANY F ROM SECL F OR FINANCIAL YEAR 2008 - 09 . THEREFORE, THE ASSESSING OFFICER OBSERVED THAT THE EXPLANATION OF THE ASSESSEE WAS NOT ACCEPTABLE AS THE QUANTITY OF COAL SHOWN IN THE AUDIT REPORT BY THE ASSESSEE WAS WAY BELOW THAN WHAT WAS REPORTED BY SECL IN ITS STATEMENT. HE OBSERVED THAT EVEN IF TRANSIT LOSS IS CONSIDERED THEN THE SAME WOULD HAVE BEEN REPORTED BY THE REPORTER IN HIS AUDIT REPORT & SAME WOULD HAVE BEEN DEBITED TO THE CONCERNED TRANSPORTERS ACCOUNT WHICH HAS NOT HAPPENED IN THIS CASE. IN THE INSTANT CASE , THE ASSESSEE HAS INCURRED AN EXPENDITURE IN THE FORM OF COAL PURCHASE WHICH HAS NOT BEEN FULLY DISCLOSED IN THE BOOKS OF ACCOUNT & NO SATISFACTORY REPLY IN THIS REGARD WAS RECEIVED FROM THE ASSESSEE. THEREFORE, HE VALUED THE DIFFER ENCE AMOUNT OF COAL AT 12984.809 MT AT THE AVERAGE R TE WORKED OUT BY HIM AT 1,876.63 AND MADE ADDITION OF RS.2,43,67,682 / - U/S.69C OF THE ACT. 5 6. SIMILARLY, FOR THE ASSESSMENT YEAR 2010 - 2011, ASSESSING OFFICER OBSERVED THAT TO VERIFY THE GENUINENESS OF COAL PURCHASES, A LETTER U/S.133(6) OF THE I.T.ACT, 1961 WAS ISSUED TO SOUTH EASTERN COALFIELDS LIMITED (SECL), BILASPUR ON 8.9.2012 AND WAS ASKED TO PROVIDE DETAILS OF COALS SOLD BY SECL, BILAS PUR TO THE ASSESSEE COMPANY FOR FINANCIAL YEAR 2004 - 05 TO FINANCIAL YEAR 2010 - 2011 MENTIONING THE QUANTITY OF AND THE AMOUNT INVOLVED IN THE TRANSACTION. FURTHER, SUMMON U/S.131 WAS ISSUED TO THE GENERAL MANAGER (S&M), SECL, BILASPUR ON 26.12.2012 TO SUB MIT THE DETAILS AS MENTIONED IN THE EARLIER LETTERS AND IN RESPONSE TO THIS, SECL, BILASPUR FILED MONTHLY DETAILS OF COAL PURCHASE, PURCHASE BILLS, STATEMENT OF COAL SOLD TO THE ASSESSEE COMPANY DURING THE FINANCIAL YEAR 2004 - 05 TO FINANCIAL YEAR 2010 - 2011 . ON INSPECTION OF THE STATEMENT OF SECL, IT WAS FOUND THAT THE COAL PURCHASED BY THE ASSESSEE FROM SECL DURING FINANCIAL YEAR 2009 - 10 WAS 28100.61 MT BUT THE ASSESSEE HAS SHOWN PURCHASE OF COAL DURING T HE YEAR WAS 21177,078 MT. THUS, THE ASSESSING OFFIC ER FOUND THAT THERE WAS HUGE DIFFERENCE OF 6923.532 MT IN THE FIGURE OF COAL PURCHASED SHOWN BY THE ASSESSEE COMPANY F ROM SECL FOR FINANCIAL YEAR 2009 - 10 . THEREFORE, THE ASSESSING OFFICER OBSERVED THAT THE EXPLANATION OF THE ASSESSEE WAS NOT ACCEPTABLE A S THE QUANTITY OF COAL SHOWN IN THE AUDIT REPORT BY THE ASSESSEE WAS WAY BELOW THAN WHAT WAS REPORTED BY SECL IN ITS STATEMENT. HE OBSERVED THAT EVEN IF TRANSIT LOSS IS CONSIDERED THEN THE SAME WOULD HAVE BEEN REPORTED BY THE REPORTER IN HIS AUDIT REPO RT & SAME 6 WOULD HAVE BEEN DEBITED TO THE CONCERNED TRANSPORTERS ACCOUNT WHICH HAS NOT HAPPENED IN THIS CASE. IN THE INSTANT CASE, THE ASSESSEE HAS INCURRED AN EXPENDITURE IN THE FORM OF COAL PURCHASE WHICH HAS NOT BEEN FULLY DISCLOSED IN THE BOOKS OF ACCO UNT & NO SATISFACTORY REPLY IN THIS REGARD WAS RECEIVED FROM THE ASSESSEE. THEREFORE, HE VALUED THE DIFFER ENCE AMOUNT OF COAL AT 6923.532 MT AT THE AVERAGE R A TE WORKED OUT BY HIM AT 841.32 AND MADE ADD ITION OF RS.58,24,905.90 / - U/S.69C OF THE ACT. 7. SIMI LARLY, F OR THE ASSESSMENT YEAR 2011 - 12, THE ASSESSING OFFICER OBSERVED THAT TO VERIFY THE GENUINENESS OF COAL PURCHASES, A LETTER U/S.133(6) OF THE I.T.ACT, 1961 WAS ISSUED TO SOUTH EASTERN COALFIELDS LIMITED (SECL), BILASPUR ON 8.9.2012 AND WAS ASKED TO PROVIDE DETAILS OF COALS SOLD BY SECL, BILASPUR TO THE ASSESSEE COMPANY FOR FINANCIAL YEAR 2004 - 05 TO FINANCIAL YEAR 2010 - 2011 MENTIONING THE QUANTITY OF AND THE AMOUNT INVOLVED IN THE TRANSACTION. FURTHER, SUMMON U/S.131 WA S ISSUED TO THE GENERAL MANAGER (S&M), SECL, BILASPUR ON 26.12.2012 TO SUBMIT THE DETAILS AS MENTIONED IN THE EARLIER LETTERS AND IN RESPONSE TO THIS, SECL, BILASPUR FILED MONTHLY DETAILS OF COAL PURCHASE, PURCHASE BILLS, STATEMENT OF COAL SOLD TO THE ASSE SSEE COMPANY DURING THE FINANCIAL YEAR 2004 - 05 TO FINANCIAL YEAR 2010 - 2011. ON INSPECTION OF THE STATEMENT OF SECL, IT WAS FOUND THAT THE COAL PURCHASED BY THE ASSESSEE FROM SE CL DURING FINANCIAL YEAR 2010 - 11 WAS 31208.80 MT BUT THE ASSESSEE HAS SHOWN PUR CHASE OF CO AL DURING THE YEAR WAS 27293.750 MT. THUS, THE ASSESSING OFFICER FOUND 7 THAT THERE WAS HUGE DIFFERENCE OF 3915.05 MT IN THE FIGURE OF COAL PURCHASED SHOWN BY THE ASSESSEE COMPANY FROM SECL FOR FINANCIAL YEAR 2010 - 11 . THEREFORE, THE ASSESSING OF FICER OBSERVED THAT THE EXPLANATION OF THE ASSESSEE WAS NOT ACCEPTABLE AS THE QUANTITY OF COAL SHOWN IN THE AUDIT REPORT BY THE ASSESSEE WAS WAY BELOW THAN WHAT WAS REPORTED BY SECL IN ITS STATEMENT. HE OBSERVED THAT EVEN IF TRANSIT LOSS IS CONSIDERED THEN THE SAME WOULD HAVE BEEN REPORTED BY THE REPORTER IN HIS AUDIT REPORT & SAME WOULD HAVE BEEN DEBITED TO THE CONCERNED TRANSPORTERS ACCOUNT WHICH HAS NOT HAPPENED IN THIS CASE. IN THE INSTANT CASE, THE ASSESSEE HAS INCURRED AN EXPENDITURE IN THE FORM OF COAL PURCHASE WHICH HAS NOT BEEN FULLY DISCLOSED IN THE BOOKS OF ACCOUNT & NO SATISFACTORY REPLY IN THIS REGARD WAS RECEIVED FROM THE ASSESSEE. THEREFORE, HE VALUED THE DIFFER ENCE AMOUNT OF COAL AT 28231.18 MT AT THE AVERAGE R A TE W ORKED OUT BY HIM AT R S.1233.45 AND MADE ADDITION OF RS.48,29,018 / - U/S.69C OF THE ACT. 8. BEING AGGRIEVED BY THE ORDER OF THE ASSESSING OFFICER, THE ASSESSEE FILED APPEAL BEFORE THE CIT(A) AND SUBMITTED AS UNDER: 5. THE APPELLANT HAS SUBMITTED THAT THE APPELLANT COMPANY OWNS A POWER GENERATION PLANT AT SIRGITTI INDUSTRIAL AREA, SECTOR - B, BILASPUR; THAT THE APPELLANT IS MAINTAINING REGULAR AND PROPER BOOKS OF ACCOUNTS; THAT ALL THE INCOMES, RECEIPTS, PURCHASES AND EXPE NSES ARE FULLY SUPPORTED AND VOUCHED; THAT THE BOOKS OF ACCOUNTS ARE GOT AUDITED IN VIEW OF THE PROVISIONS OF COMPANIES ACT AND IT ACT, 1961 AND AUDITORS HAVE NOT POINTED OUT ANY DEFECTS OR IRREGULARITIES IN THE OF ACCOUNTS; THAT FOR GENERATION OF ELECTRIC ITY, THE MAIN RAW MATERIAL IS RICE HUSK AND COAL; THAT RICE HUSK IS PURCHASED FROM RICE MILLERS AND TRADERS; THAT FOR THE PURCHASE OF COAL THE APPELLANT COMPANY ENTERED INTO AGREEMENT WITH SOUTH EASTERN COAL FIELD LIMITED (SECL), AS PER WHICH EVERY YEAR 30 000 MT OF COAL IS TO BE SUPPLIED BY THE SECL; THAT THE APPELLANT SUBMIT HEREWITH A PROCEDURE FOR COAL PROCUREMENT FROM SECL AGAINST COAL LINKAGE; THAT FIRST STAGE IS WE HAVE TO APPLY TO COAL INDIA LTD (CIL) AS WELL AS MINISTRY OF COAL (MOC) FOR COAL ALLOTM ENT 8 THROUGH LINKAGE FOR OUR CAPTIVE CONSUMPTION AS PER REQUIREMENT ANNUALLY; THAT AFTER CLEARANCE AND APPROVAL FROM MINISTRY OF COAL AGAINST OUR APPLIED QUANTITY OF COAL REQUIREMENT, MOC WILL SEND A CONFIRMATION LETTER TO CIL TO ISSUE AND SIGN THE LETTER O F ALLOTMENT (LOA) / FUEL SUPPLY AGREEMENT (FSA) TO THE APPLICANT THROUGH SECL FOR THE PARTICULAR PERIOD; THAT THE APPELLANT COMPANY WILL SIGN THE FSA AND THE SAME TO BE SUBMITTED TO SECL AND COPY TO CIL & MOC; THAT MOC WILL ISSUE A LETTER OF CONFIRMATION O F THE QUANTITY ALLOTMENT OF COAL AGAINST OUR APPLIED QUANTITY WITH MENTIONING THE PERIOD; THAT THE QUANTITY WILL BE ALLOTTED ANNUALLY; THAT SECL WILL ISSUE A PRICE LIST, GRADE WISE, COLLIERY WISE, OF COAL FOR LINKAGE; THAT AS PER FSA WE WILL MAKE THE ADVAN CE PAYMENT EVERY MONTH AS PER THE LAST DATE OF SUBMISSION OF PAYMENT GIVEN BY SECL AND WILL APPLIED FOR COAL DELIVERY ORDER AS PER THEIR OFFER NOTICE OF PRESCRIBED MINES WISE ON FIFO BASIS; THAT AFTER SUBMISSION OF APPLICATION WITHIN 5 - 6 DAYS WE WILL RECEI VE THE DELIVERY ORDER FROM SECL H.O - BILASPUR; THAT AFTER THAT WE WILL HAND OVER THE DELIVERY ORDER TO OUR TRANSPORTER TO WHOM WE HAVE AWARDED THE WORK ORDER FOR TRANSPORTATION FROM VARIOUS MINES OF SECL TO OUR PLANT; THAT AFTER THAT THE LIFTING WILL BE S TARTED WITHIN 3 - 4 DAYS, THE TRANSPORTER WILL ISSUE A CHALLAN CUM BILTY TO THE TRUCK DRIVERS AS WELL AS A TRANSIT PASS WILL BE ISSUED BY THE SECL WITH MENTIONING OF D.O NO. MINES NAME, QUANTITY DETAILS; THAT THE TRUCK DRIVER WILL COMPLETE THEIR JOURNEY FROM MINES TO OUR PLANT; THAT THE APPELLANT COMPANY RECEIVE THE COAL AT OUR PLANT ON THE BASIS OF THE TRANSIT PASS OF SECL & CHALLAN; THAT APPELLANT COMPANY HAS TO ISSUE THE MATERIAL RECEIPT COPY WITH THE WEIGH RECEIPT TO THE TRUCK DRIVER FOR FREIGHT PAYMENT P URPOSE; THAT AFTER COMPLETION OF RECEIPT OF MATERIAL AGAINST THE D.O WE WILL PREPARE A MATERIAL RECEIPT NOTE FOR PASSING THE BILL OF TRANSPORTER AS WELL AS THE SECL BILL ALSO; THAT AS PER GRADATION OF COAL DECIDED BY THE SECL, WE MENTIONED THE QUALITY PARA METERS IN WORK ORDER OF TRANSPORTER AND DAY TO DAY BASIS TRUCK WISE WE HAVE INSPECT & SAMPLING OF THE RECEIPT COAL AND ISSUED THE LAB REPORT THE CONCERN DEPARTMENT FOR DEDUCTION OF POOR QUALITY COAL TRANSPORTED BY THE TRANSPORTER OF WORK ORDER PARAMETERS; THAT A DEDUCTION SHEET WILL BE MADE BY THE ACCOUNT DEPARTMENT AND ON THE BASIS OF THAT THEY WILL PASSED THE BILLS OF TRANSPORTERS AND RELEASED THE PAYMENT; THAT THIS IS THE COMPLETE PROCESS OF COAL PROCUREMENT THROUGH LINKAGE; THAT AFTER VERIFICATION OF TH E QUALITY OF COAL MANY TIMES SOME QUANTITY OF COAL IS SEND DIRECTLY FROM THE COAL FIELD AREA TO THE COAL WASHERY; THAT IN THE WASHERY THE COAL IS WASHED AND THE UNWANTED MATERIAL LIKE DUST, STONES, SHELL AND OTHER MATERIALS ARE SORTED OUT AND WASHED COAL I S SUPPLIED TO THE APPELLANT COMPANY; THAT THERE IS A SHORTAGE OF ABOUT 30% IN WASHING PROCESS; THAT IN THIS CASE THE QUANTITY OF COAL RECEIVED IN THE FACTORY PREMISES AFTER WASHING IN ENTERED IN THE STOCK REGISTER WHICH RESULTED DIFFERENCE IN QUANTITY OF C OAL SUPPLIED BY THE SECL AND ENTER IN THE BOOKS OF ACCOUNT; THAT DURING THE COURSE OF TRANSPORTATION OF COAL FROM THE SITE OF COAL MINES TO THE FACTORY SITE THERE IS A LOSS IN TRANSPORTATION WHICH IS ABOUT 5%; THAT IN CASE OF LOSS OF MORE THAN 5% THE EXCES S LOSS IS RECOVERED FROM THE CONCERNED TRANSPORTER; THAT RECOVERY OF SUCH AMOUNT IS CREDITED IN THE TRANSPORTATION CHARGES ACCOUNT; THAT HOWEVER IN THE CASE OF STOCK REGISTER THE ACTUAL QUANTITY RECEIVED IS ENTERED WHICH RESULTED IN SHORT QUANTITY IN THE B OOKS OF ACCOUNT THAN THE QUANTITY SUPPLIED BY SECL; THAT THE QUALITY OF THE COAL PURCHASED IS OF INFERIOR QUALITY, AND TO MAKE IT USEABLE IN POWER PLANT SORTING OF UNWANTED MATERIAL LIKE STONE, MUD, SHELL ETC. IS CARRIED OUT AND MATERIALS LIKE STONE, MUD, SHELL ETC. IS SORTED OUT MANUALLY; THAT THE QUANTITY OF SUCH UNWANTED MATERIAL IS SEPARATELY ENTERED IN THE STOCK REGISTER; THAT THESE UNWANTED MATERIALS LIKE STONE ETC. WERE USED IN FILING THE FACTORY AREA; THAT A RECONCILIATION STATEMENT OF QUANTITY OF C OAL AND AMOUNT FOR THE F.Y. 2007 - 08 IS ENCLOSED, FROM WHICH IT CAN BE NOTED THAT QUANTITY OF COAL PURCHASED AS PER STATEMENT ISSUED BY SECL IS IN AGREEMENT WITH 9 THE QUANTITY AS PER BOOKS OF ACCOUNTS; THAT IN THE SAME WAY THE AMOUNT PAID TO SECL FOR PURCHAS E OF COAL IS IN AGREEMENT WITH THE PURCHASE AMOUNT AS PER BOOKS OF ACCOUNTS; THAT IN THE POINT NO. 24 OF SCHEDULE U TO THE BALANCE SHEET (PHOTOCOPY ENCLOSED) THE QUANTITY OF COAL PURCHASED HAS BEEN SHOWN AT 13547.013 MT AFTER DEDUCTING THE QUANTITY OF 1354 7.017 MT OF STONE, SHELL ETC. SEPARATED OUT OF TOTAL PURCHASED QUANTITY OF 27094.030 MT; THAT THIS QUANTITY IS RECONCILED WITH THE QUANTITY OF THE SALE AS PER STATEMENT ISSUED BY SECL; THAT UP TO A.Y 2007 - 08, THE QUANTITY OF COAL PURCHASED, IN QUANTITATIVE DETAILS TO THE BALANCE SHEET, HAS BEEN SHOWN AT GROSS QUANTITY OF PURCHASED AS PER BOOKS OF ACCOUNTS I.E. INCLUSIVE OF QUANTITY OF STONE, SHELL ETC; THAT HOWEVER FROM A.Y 2008 - 09 THE QUANTITY OF PURCHASED HAS BEEN SHOWN AT NET WEIGHT I.E. AFTER DEDUCTING THE STONE, SHELL ETC; THA T THE A.O DID NOT CONSIDER THE FACT OF CHANGE IN PRESENTATION OF PURCHASED OF COAL IN BALANCE SHEET FROM GROSS QUANTITY TO NET QUANTITY; THAT IF AS PER PRACTICE IN THE PREVIOUS YEAR, IF THE A.O CONSIDERED THE GROSS QUANTITY OF COAL PURCHASED AT 27094.030 MT THEN THE DIFFERENCE BETWEEN QUANTITY AS PER SECL AND QUANTITY PURCHASED WOULD HAVE BEEN ONLY OF 420.82 MT WHICH HAS ALSO BEEN RECONCILED. SIMILAR SUBMISSIONS MADE BEFORE THE CIT(A) BY THE ASSESSEE EXCEPT THE DIFFERENCE IN QUANT ITY AND AMOUNT OF ADDITION FOR THE OTHER ASSESSMENT YEARS I.E. 2009 - 10 TO 2011 - 12. 9. THE CIT(A) AFTER CONSIDERING THE SUBMISSION OF THE ASSESSEE DELETED THE ADDITION FOR ALL THE ASSESSMENT YEARS UNDER APPEAL, OBSERVING AS UNDER: 6. I HAVE CAREFULLY GONE THROUGH THE ASSESSMENT ORDER AND WRITTEN SUBMISSIONS OF THE APPELLANT. IT IS SEEN THAT THE A.O HAS MADE THE ADDITION BY INVOKING THE PROVISIONS OF SECTION 69C WHICH ARE EXTRACTED HEREUNDER: 'UNEXPLAINED EXPENDITURE, ETC. - WHERE IN ANY FINANCIAL YEAR AN ASS ESSEE HAS INCURRED ANY EXPENDITURE AND HE OFFERS NO EXPLANATION ABOUT THE SOURCE OF SUCH EXPENDITURE OR PART THEREOF, OR THE EXPLANATION, IF ANY, OFFERED BY HIM IS NOT, IN THE OPINION OF THE ASSESSING OFFICER, SATISFACTORY, THE AMOUNT COVERED BY SUCH EXPEN DITURE OR PART THEREOF, AS THE CASE MAY BE, MAY BE DEEMED TO BE THE INCOME OF THE ASSESSEE FOR SUCH FINANCIAL YEAR: PROVIDED THAT, NOTWITHSTANDING ANYTHING CONTAINED IN ANY OTHER PROVISION OF THIS ACT, SUCH UNEXPLAINED EXPENDITURE WHICH IS DEEMED TO BE THE INCOME OF THE ASSESSEE SHALL NOT BE ALLOWED AS A DEDUCTION UNDER ANY HEAD OF INCOME.' 7. IT TRANSPIRES THAT SECTION 69C IS APPLICABLE (I) WHERE THE ASSESSEE HAS INCURRED ANY EXPENDITURE, AND (II) HE OFFERS NO EXPLANATION OR THE EXPLANATION TENDERED AS TO THE SOURCE IS NOT SATISFACTORY AS REGARDS THE WHOLE OR PART THEREOF. THE WHOLE OR PART OF SUCH UNEXPLAINED EXPENDITURE WOULD BE CONSTRUED AS ASSESSEE'S INCOME OF THE FINANCIAL YEAR IN WHICH THE EXPENDITURE HAS BEEN INCURRED. 8. IN THE INSTANT CASE, THE A.O HAS DRAWN INFERENCE AGAINST THE APPELLANT FOR THE REASON THAT THERE WAS DIFFERENCE IN THE QUANTITY OF COAL THAT HAD BEEN SHOWN BY THE APPELLANT AS ITS PURCHASES AND THAT SHOWN BY SECL AS SALES TO THE APPELLANT, I FIND 10 THAT THERE IS NO ALLEGATION OF THE A. O THAT THE APPELLANT HAD MADE MORE PAYMENT THAN THAT SHOWN IN THE AUDITED FINANCIAL STATEMENTS. THE PRIMARY ISSUE OF PAYMENTS HAVING BEEN ACTUALLY MADE BY THE APPELLANT WAS CROSS VERIFIED BY CA LLING INFORMATION U/S 133(6) OF THE ACT FROM SECL. THE INFORMAT ION WAS RECEIVED FROM SECL VIDE LETTER DATED 27 - 07 - 2013 RECEIVED ON 29 - 07 - 2013. IN THE SAID LETTER, SECL CONFIRMED THAT THE APPELLANT HAD PURCHASED COAL DIRECTLY FROM SECL. THIS ASSERTION OF SECL RULES OUT THE INTERVENTION OF ANY BROKER, THAT IS TO SAY, TH E ENTIRE PAYMENT HAS BEEN MADE BY THE APPELLANT DIRECTLY TO SECL AND NOT THROUGH ANY BROKER. I HAVE CAREFULLY GONE THROUGH THE SUBMISSIONS OF THE APPELLANT EXPLAINING THE PROCEDURE FOLLOWED IN PURCHASE OF COAL FROM SECL. IT IS A MATTER OF COMMON KNOWLEDGE THAT COAL IS A CONTROLLED COMMODITY AND ITS USE IS REGULATED BY T H E MINISTRY OF COAL, THROUGH COAL INDIA LIMITED AND ITS SUBSIDIARIES ONE OF WHICH IS SECL. FROM THE PERUSAL OF DETAILS OF PAYMENTS FURNISHED BY SECL VIDE SAID LETTER I.E. PAYMENTS MADE BY APP ELLANT AND RECEIVED BY SECL, IT IS SEEN THAT THE APPELLANT HAS ALSO SHOWN SAME AMOUNT AS PAYMENT TO SECL. THUS, NO DISCREPANCY HAS BEEN NOTICED IN THE PAYMENTS AGAINST SUPPLY OF COAL WHICH COULD HAVE POSSIBLY LAID THE FOUNDATION FOR TAKING ACTION U/S 69C. IN MY CONSIDERED VIEW, MERE DIFFERENCE IN THE QUANTITY OF COAL IS NOT SUFFICIENT TO HOLD ADVERSITY AGAINST THE APPELLANT. EVEN OTHERWISE, THE APPELLANT HAS FURNISHED THE RECONCILIATION AND EXPLAINED THE REASONS FOR DIFFERENCE IN THE QUANTITY OF COAL SHOWN AS PURCHASES BY THE APPELLANT AND SALES AS SHOWN BY SECL. THE A.O HAS NOT REBUTTED THE EXPLANATION FURNISHED BY THE APPELLANT NOR POINTED OUT ANY DISCREPANCY IN THE RECONCILIATION FURNISHED BY THE APPELLANT. I AM CONVINCED WITH THE RECONCILIATION AND EXPLA NATION FURNISHED BY THE APPELLANT FOR DIFFERENCE IN THE QUANTITY OF COAL. IN MY CONSIDERED VIEW, IF THE APPELLANT HAS SHOWN LESSER QUANTITY OF COAL I N ITS BOOKS OF ACCOUNTS AS PURCHASES, GIVEN THE FACT THAT THE PAYMENTS AR E TALLYING WHICH HAVE ALL BEEN MAD E THROUGH BANKING CHANNEL, A REASONABLE INFERENCE THAT CAN BE DRAWN IS THAT THE YIELD OF THE APPELLANT WOULD BE COMPARATIVELY HIGHER. IN THE FACTS OF THE INSTANT CASE, I FIND NO MERIT IN THE ACTION OF THE A.O TREATING THE DIFFERENCE IN QUANTITY AS UNDISCLO SED INCOME OF THE APPELLANT USED FOR INCURRING UNEXPLAINED EXPENDITURE, PARTICULARLY, WHEN THERE IS NO DIFFERENCE IN THE AMOUNT OF PAYMENT WHICH IS THE PREREQUISITE FOR INVOKING THE PROVISIONS OF SECTION 69C, AND ALSO FOR THE REASON THAT THE A.O HAS NOT BR OUGHT ON RECORD ANY INCRIMINATING DOCUMENT INDICATING PAYMENTS HAVING BEEN MADE BY THE APPELLANT OVER AND ABOVE THAT APPEARING IN THE AUDITED FINANCIAL STATEMENTS. IN MY CONSIDERED VIEW, A PERSON MAY BE TEMPTED TO MAKE PAYMENTS AGAINST EXPENSES OR PURCHASE S THE BOOKS WHEN THERE IS LIKELIHOOD OF KEEPING THE REVENUES ALSO OUTSIDE THE BOOKS, IN THE INSTANT CASE, THE APPELLANT IS DERIVING INCOME FROM GENERATION OF ELECTRICITY AND IT CANNOT BE EXPECTED TO SELL POWER OUTSIDE THE BOOKS. THUS , THE ACTION OF THE AO DEFIES ALL LOGICS. LOOKING TO THE FACTS AND CIRCUMSTANCES OF THE CASE, THE ADDITION MADE BY THE AO IS DELETED. 10. LD D R .RELIED ON THE ORDER OF THE ASSESSING OFFICER. 11. LD A.R. SUPPORTED THE ORDER OF THE CIT(A). HE FURTHER SUBMITTED THAT THE ASSESSING OFFICER HAS MADE ADDITION U/S.69C OF THE ACT . HE SUBMITTED THAT SECTION 69C PROVIDES THAT W HERE IN ANY FINANCIAL YEAR AN ASSESSEE HAS 11 INCURRED ANY EXPENDITURE AND HE OFFERS NO EXPLANATION ABOUT THE SOURCE OF SUCH EXPENDITURE OR PART THEREOF, OR THE EXPLANATION, IF ANY, OFFERED BY HIM IS NOT, IN THE OPINION OF THE ASSESSING OFFICER, SATISFACTORY, THE AMOUNT COVERED BY SUCH EXPENDITURE OR PART THEREOF, AS THE CASE MAY BE, MAY BE DEEMED TO BE THE INCOME OF THE ASSESSEE FOR SUCH FINANCIAL YEAR . HE ARGUED THAT WHATEVER PURCHASE HAS BEEN MADE BY THE ASSESSEE, THE PAYMENT HAS BEEN MADE T H ROUGH ACCOUNT PAYEE CHEQUES. THE TOTAL PAYMENTS FOR PURCHASE MADE BY THE ASSESSEE TO SECL ARE REFLECTED IN THE ACCOUNT OF SECL. THERE IS NO DIFFERENCE IN THE AMOUNT. THE ONLY DIFFERENCE IS IN THE QUANTITY OF COAL PURCHASE D. HE ARGUED THAT THE DIFFERENCE WAS ON ACCOUNT OF QUANTITY OF COAL IMPURITY LOSS AND TRANSIT LOSS, ETC. THE ASSESSEE HAS SHOWN QUANTITY OF ACTUAL COAL AFTER REMOVAL OF IMPURITY, WASHING, ETC . HE FURTHER SUBMITTED THAT THERE IS NO EVIDENCE BROUGHT ON RECORD BY THE ASSESSING OFFICER THAT THE ASSESSEE HAS MADE PAYMENT OF EVEN A SINGLE RUPEE OVER AND ABOVE THE AMOUNT SHOWN BY THE ASSESSEE TO SECL. THEREFORE, IT WAS HIS SUBMISSION THAT NO ADDITION U/S .69C OF THE ACT CAN BE MADE. 12. IN THE REJOINDER TO THE ABOVE SUBMISSION OF LD A.R, LD D.R. SUB MITTED THAT SECTION 292B OF THE ACT PROVIDES THAT NO RETURN OF INCOME, ASSESSMENT, NOTICE, SUMMONS OR OTHER PROCEEDING, FURNISHED OR MADE OR ISSUED OR TAKEN OR PURPORTED TO HAVE BEEN FURNISHED OR MADE OR ISSUED OR TAKEN IN PURSUANCE OF ANY OF THE PROVISIONS OF THIS ACT SHALL BE INVALID OR SHALL BE DEEMED TO BE INVALID MERELY BY REASON OF ANY MISTAKE, DEFECT OR OMISSION IN 12 SUCH RETURN OF INCOME, ASSESSMENT, NOTIC E, SUMMONS OR OTHER PROCEEDING IF SUCH RETURN OF INCOME, ASSESSMENT, NOTICE, SUMMONS OR OTHER PROCEEDING IS IN SUBSTANCE AND EFFECT IN CONFORMITY WITH OR ACCORDING TO THE INTENT AND PURPOSE OF THIS ACT . THEREFORE, HE SUBMITTED THAT IF WRONG SECTION HAS B EEN MENTIONED BY THE ASSESSING OFFICER THEN THE ADDITION MADE CANNOT BE DELETED BECAUSE THE ASS ESSING OFFICER WILL BE COVERED BY THE PROVISIONS OF SECTION 292 B OF THE ACT. HE SUBMITTED THAT THE ASSESSING OFFICER IN FACT HAS MADE ADDI TION FOR THE SHORTA GE OF COAL SHOWN BY THE ASSESSEE AND, THEREFORE, IF THE ADDITION CANNOT BE SUSTAINED U/S.69C OF THE ACT, THEN IT SHOULD BE SUSTAINED ON ACCOUNT OF EXCESS SHORTAGE OF COAL SHOWN BY THE ASSESSEE. 13. WE HAVE HEARD THE RIVAL SUBMISSIONS AND PERUSED THE ORDERS OF LOWER AUTHORITIES AND MATERIALS AVAILABLE ON RECORD. IN THE INSTANT CASE, THE ASSESSEE IS ENGAGED IN GENERATION OF ELECTRICITY FROM COAL DURING THE YEAR UNDER CONSIDERATION. THE ASSESSING OFFICER OBSERVED TH A T THE ASSESSEE HAS CLAIMED TO HAVE P URCHASED COAL OF 13457.013 MT IN THE ASSESSMENT YEAR 2008 - 09, 13286.771 MT IN THE ASSESSMENT YEAR 2009 - 10, 21177.078 MT IN THE ASSESSMENT YEAR 2010 - 11 AND 27293.750 MT IN THE ASSESSMENT YEAR 2011 - 12. ON VERIFICATION FROM SECL, ASSESSING OFFICER FOUND THAT ALTHOUGH THE AMOUNT WAS CORRECT BUT SECL INFORMED THAT FOR THE SAME AMOUNT, IT HAS SOLD 25714.85 MT IN THE ASSESSMENT YEAR 2008 - 09, 26271.58 MT IN THE ASSESSMENT YEAR 2009 - 10, 28100.61 MT IN THE ASSESSMENT YEAR 2010 - 11, 13 31208.80 MT IN THE ASSESSMENT YEAR 2011 - 12 OF COAL TO THE ASSESSEE BUT IN THE AUDITED FINAL STATEMENT OF THE ASSESSEE, THE COAL PURCHASED WAS LESS OF 14057.837 MT IN ASSESSMENT YEAR 2008 - 09, 12984.809 MT IN ASSESSMENT YEAR 2009 - 10, 6923.532 MT IN ASSESSMENT YEAR 2010 - 11 AND 3915.05 MT IN A SSESSMENT YEAR 2011 - 12. THE ASSESSEE FILED RECONCILIATION OF ABOVE DIFFERENCE IN THE QUANTITY AND EXPLAINED THAT THE COAL WHICH IT PURCHASED FROM SECL CONTAINED VARIOUS IMPURITIES LIKE MUD, ETC AND THE ASSESSEE AFTER RECEIVING COAL USED TO PROCESS THE SAM E BY WASHING THE COAL AND AFTER THAT THE NET QUANTITY WHICH COULD BE CONSUMED BY THE ASSESSEE IN THE PRODUCTION OF ELECTRICITY WAS ONLY SHOWN AS PURCHASES IN THE AUDITED ACCOUNTS. THE ASSESSING OFFICER HAS NOT ACCEPTED THE ABOVE EXPLANATION OF THE ASSESSE E AND HELD THAT THE ASSESSEE MADE INVESTMENT IN PURCHASE OF COALS WHICH WERE NOT RECORDED IN THE BOOKS OF ACCOUNT AND CONSEQUENTLY MADE ADDITION OF RS.2,97,23,609/ - FOR THE ASSESSMENT YEAR 2008 - 09, RS.2,43,67,682/ - FOR THE ASSESSMENT YEAR 2009 - 10, RS.58,24,905.9 0 / - FOR THE ASSESSMENT YEAR 2010 - 2011 AND RS.48,29,018/ - FOR THE ASSESSMENT YEAR 2011 - 12 BY INVOKING PROVISIONS OF SECTION 69C OF THE ACT. 14. ON APPEAL, THE CIT(A) FINDING THAT NO INVESTMENT IN COAL WAS MADE BY THE ASSESSEE, WHICH WAS NOT R ECORDED IN THE BOOKS OF ACCOUNT, DELETED THE ADDITION MADE BY THE ASSESSING OFFICER. 15. WE FIND THAT THE REVENUE HAS BROUGHT NO MATERIAL BEFORE US TO SHOW THAT THE ASSESSEE AS MADE ANY PAYMENT FOR PURCHASE OF COAL WHICH WAS NOT 14 RECORDED IN THE BOOKS OF AC COUNT OR OF WHICH SOURCE COULD NOT BE EXPLAINED BY THE ASSESSEE. THEREFORE, THE ACTION OF THE ASSESSING OFFICER OF MAKING ADDITION BY INVOKING THE PROVISIONS OF SECTION 69C IS CLEARLY UNSUSTAINABLE. 16. FURTHER, NO MATERIAL HAS BEEN BROUGHT ON RECORD BY THE ASSESSING OFFICER TO SHOW THAT ANY UNDISCLOSED SALE WAS MADE BY THE ASSESSEE. NO DEFECT IN THE RECONCILIATION STATEMENT OF QUANTITATIVE DETAILS OF COAL PURCHASED FILED BEFORE THE ASSESSING OFFICER CO ULD BE POINTED OUT BY THE ASSESSING OFFICER. IN THE ABOVE CIRCUMSTANCES, IN OUR CONSIDERED VIEW, THE CIT(A) HAS PROPERLY APPRECIATED THE FACTS OF THE INSTANT CASE. NO SPECIFIC ERROR IN THE ORDER OF THE CIT(A) COULD BE POINTED OUT BY THE REVENUE. IN ABSE NCE OF THE SAME, WE DO NOT FIND ANY GOOD AND JUSTIFIABLE REASON TO INTERFERE WITH THE ORDER OF THE CIT(A). HENCE, THE GROUND OF APPEAL RAISED BY THE REVENUE IN ALL THESE APPEALS IS DISMISSED. 17 . IN THE RESULT, THE APPEAL S F ILED BY THE REVENUE ARE DISMISS ED. ORDER PRONOUNCE D IN THE OPEN COURT ON 11 /05 /2017 IN THE PRESENCE OF PARTIES. SD/ - SD/ - (GEORGE GEORGE K ) ( N.S SAINI) JUDICIAL MEMBER A CCOUNTANT MEMBER RAIPUR ; DATED 11 /05 /2017 B.K.PARIDA, SPS 15 COPY OF THE ORDER FORWARDED TO : BY ORDER, SR.PRIVATE SECRETARY 1. THE APPELLANT : DCIT, 1(1), RAIPUR 2. THE RESPONDENT. M/S. VANDANA VIDHYUT LTD., VANDANA BUILDING, M.G.ROAD, RAIPUR 3. THE CIT(A) RAIPUR 4. PR.CIT , RAIPUR 5. DR, ITAT, RAIPUR 6. GUARD FILE. //TRUE COPY//