Hinafil India Ltd., Vapi V. The ACIT.,Vapi Circle, Vapi

ITA 1742/AHD/2010

• Counselvise Citation: [2015] 140 COUNSELVISE.COM (IT) 85608 (ITAT-AHMEDABAD)
• Duration Of Justice: 4 year(s) 8 month(s) 6 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 30-01-2015
• Appeal Filed By: Assessee
• Order Result: Partly Allowed
• Bench Allotted: C
• Next Hearing Date: 13-01-2015
• Assessment Year: 2005-2006
• Appeal Filed On: 24-05-2010
• Result in Favour of: Partly Allowed
• Court: TRIBUNAL
• Department Lawyers: MK SINGH
• Keywords: Bogus purchase

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL C BENCH, AHMEDABAD BEFORE SHRI MUKUL KR. SHRAWAT, JUDICIAL MEMBER AND SHRI ANIL CHATURVEDI ACCOUNTANT MEMBER ITA NO . 1 74 2 & 1743 /AHD/20 1 0 A. Y. 200 5 - 0 6 HINAFIL INDIA LTD. PLOT NO.1786/2, 20 SHED AREA, GIDC, VAPI. PAN: AAACH 6063K VS ACIT, VAPI CIRCLE, VAPI (APPELLANT) (RESPONDENT) REVENUE BY : SHRI M.K. SINGH , SR. D.R. ASSESSEE(S) BY : SHRI MEHUL SHAH , A.R. / DATE OF HEARING : 1 3 / 01 /201 5 / DATE OF PRONOUNCEMENT: 30 / 01 /201 5 / O R D E R PER MUKUL KUMAR SHRAWAT, JUDICIAL MEMBER THESE TWO APPEALS HAVE BEEN FILED BY THE ASSESSEE, ONE IN RESPECT OF QUA NTUM ADDITIONS AND THE OTHER IN RESPECT OF LEVY OF PENALTY U/S.271(1)(C) ARISING FROM THE ORDERS OF LEARNED CIT(A), VALSAD, GUJARAT BOTH DATED 11.01.2010. A. ITA NO.1742/AHD/2010, A.Y.2005 - 06 2. GROUND NO.1 IS REPRODUCED BELOW: 1. ON THE FACTS AND IN T HE CIRCUMSTANCES OF THE CASE AS WELL AS LAW ON THE SUBJECT, THE LEARNED CIT(A) HAS ERRED IN CONFIRMING THE ACTION OF THE ASSESSING OFFICER IN MAKING ADDITION OF RS.66,14,400 / - ON ACCOUNT OF BOGUS PURCHASES. 2.1 FACTS IN BRIEF AS EMERGED FROM THE CORRESP ONDING ASSESSMENT ORDER PASSED U/S.143(3) DATED 27.12.2007 WERE THAT THE ASSESSEE HAD DECLARED A ITA NO. 1742 & 1743 /AHD/201 0 HINAFIL INDIA LTD. VS. ACIT, VAPI CIRCLE, VAPI FOR A.Y. 200 5 - 0 6 - 2 - LOSS AT RS.82,93,500/ - . THE ASSESSEE IS IN THE BUSINESS OF MANUFACTURING OF NYLON MONO FILAMENT. IT WAS NOTED THAT THE GOODS PURCHASED FROM PIRTH TRADE LINK WA S AT RS.33,69,600/ - AND PURCHASES FROM SYDNEY SALES CORPORATION WAS RS.32,44,800/ - . THOSE PURCHASES WERE MADE IN THE MONTH OF SEPTEMBER, 2004. IT WAS INFORMED THAT A FIRE TOOK PLACE AT THE FACTORY PREMISES ON 13.10.2004. THE ASSESSEE HAS CLAIMED LOSS OF TH E SAID MATERIAL PURCHASED , DUE TO FIRE. THE AO HAS CONDUCTED AN INQUIRY TO CONFIRM THE GENUINENESS OF THE PURCHASES. ON INQUIRY, ACCORDING TO AO, IT WAS INFORMED BY THOSE PARTIES THAT THE ASSESSEE HAD NEVER PURCHASED THE GOODS FROM THOSE PARTIES EITHER BEF ORE SEPTEMBER OR AFTER SEPTEMBER, 2004. THE AO HAS ALSO NOTED THAT THE ASSESSEE WAS NOT ABLE TO CO - RELATE TRANSPORTATION CHARGES IN RESPECT OF PURCHASES. THE AO HAS NOTED SOME DISCREPANCY IN RESPECT OF BILLS SUBMITTED BY THOSE TRANSPORTERS. HE HAS NOTED TH AT NO AMOUNT WAS PAID IN RESPECT OF THOSE PURCHASES UPTO 31 ST MARCH, 2005. ACCORDING TO AO, THE PAYMENT WAS MADE ONLY IN THE MONTH OF MARCH, 2006. THE CHEQUE ISSUED TOWARDS PAYMENT OF PURCHASES TO M/S. SYDNEY SALES CORPORATION WAS ALSO DOUBTED BY THE AO . I N RESPECT OF PURCHASES SHOWN FROM PIRTH TRADE LINK , I T WAS COMMENTED BY THE AO THAT THERE WERE FREQUENT WITHDRAWAL OF CASH. FINALLY, IT WAS HELD THAT THE PURCHASES WERE NOT GENUINE OF THE TOTAL AMOUNT OF RS.66,14,400/ - . 3. WHEN THE MATTER WAS CARRIED BEFO RE THE FIRST APPELLATE AUTHORITY, THE ISSUE WAS DECIDED AGAINST THE ASSESSEE IN THE FOLLOWING MANNER: 2 . DURING THE COURSE O THE SCRUTINY PROCEEDINGS, THE A.O. NOTICED THAT, THE APPELLANT HAS PURCHASED GOODS WORTH RS. 33,69,6 00 / - AND RS. 32,44,800 / - FROM PIRTH TRADE LINK AND SYDNEY SALES CORPORATION RESPECTIVELY. THE APPELLANT HAS PURCHASED THE G O ODS IN THE MONTH OF SEPTEMBER, 2004. THE F IRE WAS TOOK PLACE IN THE FACTORY PREMISES OF THE APPELLANT COMPANY ON 13/10/2004 AND THE APPELLANT HAS CLAIMED, LOSS DU E TO FIRE OF THE MATERIAL PURCHASED FROM THE ABOVE PARTIES. IN ENQUIRY FROM CONCERNED PARTIES IT IS OBSERVED THAT THE ASSESSEE HAS NEVER PURCHASED THE GOODS, FROM THESE PARTIES ITA NO. 1742 & 1743 /AHD/201 0 HINAFIL INDIA LTD. VS. ACIT, VAPI CIRCLE, VAPI FOR A.Y. 200 5 - 0 6 - 3 - EITHER BEFORE SEPTEMBER OR AFTER SEPTEMBER 2004. THE APPELLANT HAS NOT BEEN ABL E TO CORRELATE TRANSPORTATION CHARGES PAID BY THEM, ON THE ABOVE MENTIONED PURCHASES WITH THE TRANSPORT CHARGES RECORDED IN THE BOOKS OF ACCOUNTS. THE BILLS SUBMITTED BY THE TRANSPORTERS ARE SERIALLY NUMBERED THOUGH THE GOODS HAVE BEEN PURCHASED THROUGHOUT THE MONTH OF SEPTEMBER 2004. THE TRANSPORTATION CHARGES CLAIMED TO HAVE BEEN PAID IN CASH. NO AMOUNT WAS PAID AGAINST THE PURCHASES TILL 31.03.2005. IN FACT, THE ASSESSEE HAS MADE THE PAYMENTS IN MONTH OF MARC H 2 006. HOWEVER, THE VERIFICATION OF THE CHEQU ES ISSUED TO SYDNEY S ALES CORPORATION SHOWS THAT, THE CHEQUES WERE CREDITED IN THE NAME OF O SWAL TRADERS'. WHEN BEING ASKED TO EXPLAIN, ASSESSEE COMPANY COULD NOT EXPLAIN THE SAME WHY THE CHEQUES WERE ISSUED TO OSWAL TRADERS. VERIFICATION OF BANK ACCOUNT OF PIRTH TRADE LINK FOR THE F.Y. 2004 - 05 SHOWS THAT NO MAJOR PAYMENT WAS MADE BY PIRTH TRADE LINK FOR THE PURCHASES OF GOODS EITHER DURING THE MONTH OF AUGUST OR IN THE MONTH OF SEPTEMBER AND IN THE WHOLE FINANCIAL YEAR. THE BANK ACCOUNT OF PIRTH TRADE LIN K S HOWS THAT THE AMOUNT WAS FREQUENTLY WITHDRAWN BY CASH. THE COPIES OF BILLS OF PIRTH T RADE LINK AND SYDNEY SALES CORPORATION SHOW THAT BOTH THE TRANSACTIONS ARE RELATED TO THE SAME PAR T Y. IN VIEW OF THE FACTS MENTIONED ABOVE, THE PURCHASES COULD NOT BE P ROVED BY THE APPELLANT. THEREFORE, AMOUNT OF R S . 66,14,400 / - ADDED TO THE INCOME OF THE APPELLANT COMPANY. BEFORE ME, THE LD. A.R. SUBMITTED FIVE COPIES EACH OF TRANSPORT BILLS F ROM PANCHMAHAL TRANSPORT COMPANY, CHINCH BUNDER, OPP. KESAR BAUG, MUMBAI - 400009 IN THE NAME OF M/S. PITH LINK AND M/S. SYDNEY SALES CORPORATION OF BHIVANDI. ON A CLOSURE LOOK TO THE COPIES OF THE TRANSPORT B ILLS PLACED ON RECORD, IT WAS NOTICED THAT, THE CONSIGNOR WAS PITH LINK AND NOT THE PITH TRADE LINK FROM WHOM THE MATERIA L WAS PURCHASED BY THE A PPELLANT. PANCHMAHAL TRANSPORT COMPANY APPEARS TO BE REASONABLY A BIG TRANSPORTER BY VIRTUE OF OFFICES / BRANCHES IN MANY PLACES IN MAHARASHRA A ND GUJARAT. HOWEVER, THE TRANSPORT BILL SUBMITTED SHOWS THAT, BETWEEN 7.09.2004 TO 26.09 .2004, THE TRANSPORTER HAD TRANSPORTED GOODS ONLY FOR TH E APPELLANT WHICH IS APPARENT FROM THE BILL NO. ISSUED SERIALLY FROM 151502 TO 151511. THE TRIP MADE IN BETWEEN THIS TWO BILL DATES VARIES FROM 2 TO 4 DAYS. THE LD. A.R. HAD NOT FURNISHED ANY OTHER D ETAILS TO SUPPORT THE CASE OF THE APPELLANT MORE PARTICULARLY THE ISSUES RAISED BY THE ASSESSING OFFICER IN THE ASSESSMENT ORDER. THE ASSESSING OFFICER HAS MADE NECESSARY ENQUIRY AND COME TO THE CONCLUSION THAT THE PURCHASES FROM THESES TWO PARTIES NAMELY M/S. PITH LINK AND M/S. SYDNEY SALES CORPORATION ARE BOGUS. I AM INCLINED TO AGREE WITH THE FINDING OF THE A.O. IN THE ABSENCE OF ANY COGENT EVIDENCE SUBMITTED BY THE APPELLANT. IN THIS CIRCUMSTANCE, I DO NOT CONSIDER IT NECESSARY TO INTERFERE IN THE ACTIO N OF THE A.O. HENCE, THIS GROUND OF APPEAL IS DISMISSED. 4. FROM THE SIDE OF THE ASSESSEE, LEARNED AR, MR. MEHUL SHAH APPEARED AND AT THE OUTSET INFORMED THAT DUE TO FIRE THERE WAS A LOSS ITA NO. 1742 & 1743 /AHD/201 0 HINAFIL INDIA LTD. VS. ACIT, VAPI CIRCLE, VAPI FOR A.Y. 200 5 - 0 6 - 4 - DURING THE YEAR BUT OTHERWISE THE ASSESSEE HAD SHOWN GOOD PROFIT I N THE PAST. A CHART IS FURNISHED AS FOLLOWS: A.Y. TURNOVER GROSS PROFIT G.P. RATIO 2005 - 06 53,448,613 (8,639,269) - 16.16 2006 - 07 58,666,583 9,703,422 16.53 2007 - 08 35,185,350 4,260,973 12.11 2008 - 09 8,830,202 (1,930,631) - 21.86 5. LEARNED AR HAS ARG UED THAT THE ADMITTED FACTUAL POSITION WAS THAT THE PAYMENTS TO THOSE PARTIES WERE MADE THROUGH ACCOUNT PAYEE CHEQUE S. IN THIS SITUATION , IT WAS HELD BY HON BLE GUJARAT HIGH COURT IN THE CASE OF CIT VS. NAGALI FABRICS, 40 TAXMAN.COM 206 (GUJ.), IF PAYMENTS ARE MADE THROUGH ACCOUNT PAYEE CHEQUES THEN SUCH PAYMENTS COULD NOT BE HELD TO BE BOGUS. AN ALTERNATE ARGUMENT HAS ALSO BEEN RAISED BY LEARNED AR THAT THE ENTIRE PURCHASES SHOULD NOT BE TAXED IN THE HANDS OF THE ASSESSEE BUT ONLY A COMPONENT OF PROFIT SHO ULD BE TAXED. IN RESPECT OF THIS CONTENTION AN ITAT D BENCH DECISION PRONOUNCED IN THE CASE OF M/S. BALDIWALA BROTHERS VS. ITO, WARD - 5(I), BARODA, BEARING ITA NO. 2451 & 2452/AHD/2012 DATED 19 TH JULY, 2013 IS PLACED BEFORE US. 6. FROM THE SIDE OF THE RE VENUE, LEARNED SR.D.R. HAS PLACED RELIANCE ON THE VIEW GIVEN BY LEARNED CIT(A) AND PLEADED THAT THE ASSESSEE WAS NOT ABLE TO CO - RELATE THE TRANSPORTATION CHARGES, THEREFORE, THE GENUINENESS OF THE PURCHASES WERE SERIOUSLY DOUBTED BY THE AO. EVEN, THE PURCH ASE BILLS REMAINED PENDING FOR A LONG PERIOD SO IT WAS DOUBTFUL WHETHER THE PURCHASES WERE ACTUALLY MADE AND WHY THE SAID CREDITOR HAS NOT DEMANDED FOR THE AMOUNT DUE. EVEN THE CHEQUES WERE ISSUED IN THE NAME OF SOME OTHER PARTY AND THE ASSESSEE WAS NOT AB LE TO GIVE A REASONABLE ITA NO. 1742 & 1743 /AHD/201 0 HINAFIL INDIA LTD. VS. ACIT, VAPI CIRCLE, VAPI FOR A.Y. 200 5 - 0 6 - 5 - EXPLANATION ; HENCE THE ADDITION WAS RIGHTLY CONFIRMED BY LEARNED CIT(A). 7. HAVING HEARD THE SUBMISSION OF BOTH THE SIDES AND AFTER CONSIDERING THE FACTS AND CIRCUMSTANCES OF THE CASE, WE ARE OF THE VIEW THAT THE FACT OF DAMAGE OF GOODS BY FIRE WAS NOT DENIED IN THIS CASE. THAT LOSS WAS STATED TO BE THE REASON OF BIG FINANCIAL LOSS SUFFERED BY THE ASSESSEE. ALTHOUGH , THIS SHOULD NOT BE THE REASON FOR PROVING THE GENUINENESS OF THE PURCHASES BUT LOSS DUE TO FIRE COULD LEAD TO ONE POS SIBLE CONCLUSION THAT THE ASSESSEE WAS NOT HAVING SUFFICIENT EVIDENCE TO SUPPORT ITS CLAIM OF PURCHASES. UNDISPUTEDLY , HE WAS GOING THROUGH HARDSHIP AND THEREFORE THE CORRECT FACTUAL POSITION COULD NOT BE DEMONSTRATED. IN THE COMPILATION , THE ASSESSEE HAS PLACED BEFORE US THE PURCHASE BILLS OF PIRTH TRADE LINK ALONG WITH DELIVERY CHALLANS. THE COMPILATION ALSO CONSIST THE PURCHASE BILLS OF SYDNEY SALES CORPORATION ALONG WITH THE DELIVERY CHALLANS. THE ASSESSEE HAS ALSO PLACED ON RECORD THE EVIDENCE OF TRANS PORTATION OF GOODS FROM PANCH MAHAL TRANSPORT COMPANY. ALL THESE DOCUMENTS WERE S TATED TO BE FILED BEFORE THE AO AS WELL. IN ADDITION TO THESE EVIDENCES , THE ASSESSEE HAS ALSO PLACED ON RECORD THE AUDITED FINANCIAL STATEMENT FOR THE YEAR UNDER CONSIDERATIO N TO DEMONSTRATE THAT WITHOUT THESE PURCHASES THERE WAS NO POSSIBILITY TO EXECUTE THE SALES. THERE WAS NO ALLEGATION OF THE REVENUE DEPARTMENT THAT THE SALES HAVE ALSO NOT TALLIED WITH THE CORRESPONDING PURCHASES AS SHOWN BY THE ASSESSEE. HOWEVER CONTRARY TO THIS; PAYMENTS HAVE BEEN SERIOUSLY DOUB T ED, ALTHOUGH IT WAS MADE THROUGH CHEQUES BUT TO SOME OTHER PARTY. IT IS ALSO HELD BY SEVERAL COURTS THAT MERE PAYMENT BY CHEQUE DO NOT ESTABLISH GENUINENESS IF NOT CORROBORATED. BE THAT AS IT WAS, AS ALSO ITA NO. 1742 & 1743 /AHD/201 0 HINAFIL INDIA LTD. VS. ACIT, VAPI CIRCLE, VAPI FOR A.Y. 200 5 - 0 6 - 6 - TO SETTL E THE ISSUES ; WE HEREBY ACCEPT THE ALTERNATE SUBMISSION OF LEARNED AR NOT TO ASSESS THE ENTIRE PURCHASES BUT TO ASSESS A REASONABLE AMOUNT OF PROFIT EARNED FROM THOSE PURCHASES. FOR THIS REASON, WE HEREBY FOLLOW THE DECISION OF THE RESPECTED CO - ORDINATE BE NCH PRONOUNCED IN THE CASE OF M/S. BALDIWALA BROTHERS (SUPRA) WHEREIN THE PROFIT @ 12.5% WAS DIRECTED TO BE ASSESSED IN RESPECT OF ALLEGED BOGUS PURCHASES. WE DIRECT ACCORDINGLY. THE AO SHALL THEREFORE RE - COMPUTE THE ASSESSED INCOME BY APPLYING 12.5% PROFI T ON THE IMPUGNED PURCHASES AND TAX ACCORDINGLY. RESULTANTLY, THIS GROUND IS PARTLY ALLOWED. 8. GROUND NO.2 IS REPRODUCED BELOW: 2 . ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE AS WELL AS LAW ON THE SUBJECT, THE LEARNED CIT(A) HAS ERRED IN CONFIRMIN G THE ACTION OF THE ASSESSING OFFICER IN MAKING ADDITION OF RS.14, 66,0 00 / - ON ACCOUNT OF EXCESS CLAIM OF LOSS OF GOODS DUE TO FIRE . 9. THE AO HAS HELD THAT THERE WAS EXCESS CLAIM OF STOCK DAMAGE UNDER FIRE BY PASSING A CRYPTIC ORDER AS UNDER: THE ASSESS EE HAS CLAIMED FINISHED ST O CK LOSS OF RS . 59.85 LACS @165/ - PER KG. ON 36.27 TONS. THE ASSESSEE IS ALSO USING WASTE FOR ITS MANUFACTURING PROCESS, THE ASSESSEE HAS SOLD FINISHED GOODS DURING THE YEAR TILL SEPTEMBER AT THE RATE O F RS.178/ - PER KG. THE ASSESS E E HAS SHOWN THE GROSS PROFIT OF 30% IN THE LAST YEAR. THEREFORE THE VALUATION OF CL OSING STOCK OF FINISHED GOODS AT COST, WHICH IS DAMAGED IN FIRE, COMES TO RS.45 . 19 LACS. THEREFORE EXCESS CLAIM OF RS. 14 . 66 L AC S IS DISALLOWED AND ADDED TO THE INCOME OF T HE ASSESSEE. 10. WHEN THE MATTER WAS CARRIED BEFORE THE FIRST APPELLATE AUTHORITY, LEARNED CIT(A) HAS APPROVED THE ACTION OF THE AO AS UNDER: 7. THE APPELLANT HAS CLAIMED FINISHED STOCK LOSS OF RS. 59.85 LACS @ 165 / - PER KG. ON 36.27 TONS. THE APPELLANT IS ALSO USING WASTE FOR ITS MANUFACTURING PROCESS. THE APPELLANT HAD SOLD FINISHED GOODS DURING THE YEAR TILL SEPTEMBER AT THE RATE OF RS. 17 8/ - PER KG. THE APPELLANT H AS SHOWN THE GROSS PROFIT OF 30 % IN THE LAST YEAR. THEREFORE THE VALUATION OF C LOSING ST OCK OF FINISHED GO O DS AT COST, WHICH IS DAMAGED IN FIRE, COMES T O RS.45.19 LACS. THEREFORE EXCESS CLAIM OF RS.14.66 LACS IS ALLOWED AND ADDED TO THE INCOME OF THE APPELLANT. THE LD. A.R. HAS NOT SUBMITTED ANY EXPLANATION WITH REGARD TO THE ITA NO. 1742 & 1743 /AHD/201 0 HINAFIL INDIA LTD. VS. ACIT, VAPI CIRCLE, VAPI FOR A.Y. 200 5 - 0 6 - 7 - ADDITION MADE BY THE A.O. IN THIS GROUND OF APPEAL DURING THE APPELLATE PROCEEDINGS. IN THE ABSENCE OF ANY REASONS AND EXPLANATIONS, I AM CONSTRAINED TO UPHOLD THE DECISION O F A.O. ACCORDINGLY THIS GROUND OF APPEAL IS DISMISSED. 11. HAVING HEARD THE SUBMISSION OF BOTH T HE SIDES, WE ARE OF THE VIEW THAT BOTH THE LOWER AUTHORITIES HAVE MERELY ADOPTED AN ESTIMATED FIGURE OF VALUE OF THE STOCK. THE AO W AS EXPECTED TO ARRIVE AT THE JUSTIFIED CONCLUSION OF VALUING THE COST OF CLOSING STOCK. MERELY BY APPLYING A GROSS PROFIT RA TE, THE AO HAS ADOPTED AN ESTIMATED FIGURE OF COST OF CLOSING STOCK WHICH CANNOT BE APPROVED IN THE EYES OF LAW. WE, THEREFORE, HOLD THAT IN THE ABSENCE OF ANY CORROBORATIVE EVIDENCE PLACED FROM THE SIDE OF THE REVENUE TO JUSTIFY THE CHANGE IN THE VALUATIO N OF THE CLOSING STOCK WE HEREBY DISMISS SUCH ESTIMATION . I N THE RESULT THE ADDITION MADE MERELY ON SUSPICION IS HEREBY REVERSED. THIS GROUND OF THE ASSESSEE IS ALLOWED. 12. IN THE RESULT, THE ASSESSEE S APPEAL IS PARTLY ALLOWED. B. ITA NO.1743/AHD/2010 , A.Y. 2005 - 06 13. THE ASSESSEE HAS CHALLENGED THE LEVY OF PENALTY U/S.271(1)(C) OF RS.24,20,374/ - ARISING FROM THE ORDER OF LEARNED CIT(A), VALSAD DATED 11.01.2010. 15.1 IN THE PENALTY ORDER PASSED U/S.271(1)(C) DATED 17 TH OF JUNE, 2008 , IT WAS HELD THAT THE ASSESSEE HAD CONCEALED AS ALSO FURNISHED INACCURATE PARTICULARS IN RESPECT OF THE PURCHASES TO THE TUNE OF RS.16,14,400/ - . AFTER NARRATING THE FACTS AS MENTIONED IN THE ASSESSMENT ORDER, A PENALTY OF RS.24,20,374/ - WAS LEVIED. ITA NO. 1742 & 1743 /AHD/201 0 HINAFIL INDIA LTD. VS. ACIT, VAPI CIRCLE, VAPI FOR A.Y. 200 5 - 0 6 - 8 - 16. WHEN THE MATTER WAS CARRIED BEFORE THE FIRST APPELLATE AUTHORITY, LEARNED CIT(A) HAS CONFIRMED THE PENALTY BY CRYPTIC ORDER AS UNDER: THE A.O. HAS GIVEN DETAILED REASONING IN THE PENALTY O RDER OR LEVYING PENALTY IN THE INSTANT CASE. IN THE QUANTUM APPEAL, I HAVE CO N FIRMED T HE ADDITION MADE BY THE A.O. HAVING SATISFIED THAT, THE APPELLANT FAILED TO SUBMIT COGENT EVIDENCE IN FAVOUR OF THE APPELLANT. THE PR OV ISION U/S. 271( 1 )(C) IS ATTRACTED FOR CONCEALMENT OF INCOME OR FOR FURNISHING INACCURATE PARTICULARS OF INCOME OR IN BOTH THE SITUATION. THE A.O. WAS SATISFIED THAT THE ASSESSEE HAS CONCE A LED INCOME A N D F U RNISHED INACCURATE PARTICULARS OF INCOME TO THE TUNE OF RS .66,14,400 / - . I AM CONVINCED THAT, THE APPELLANT HAD FURNISHED INACCURATE PARTICULARS OF INCOME AND AT THE SAME TI ME, FAILED AUGMENT ITS CASE WHY PENALTY SHOULD NOT BE LEVIED. IN THIS CIRCUMSTANCE I AM CONSTRAINED TO UPHELD THE PENALTY LEVIED BY THE A.O. ACCORDINGLY THIS GROUND OF APPEAL IS DISMISSED. 17. WE HAVE HEARD BOTH THE SIDES. ON PERUSAL OF THE ORDERS OF THE AUTHORITIES BELOW, WE HAVE NOTED THAT THE ASSESSEE HAS FURNISHED THE BOOKS OF ACCOUNTS AND RELEVANT DETAILS. THE FACT ABOUT THE PURCHASES FROM THOSE TWO CONCERNS WAS DULY DISCLOSED. ON THE BASIS OF THOSE FACTS AND THE INFORMATION AVAILABLE ON RECORD , THE AO HAS INITIATED CERTAIN INQUIRIES. THEREFORE, IT IS NOT A CASE THAT THE FACT S ABOUT THE PURCHASE S W ERE CONCEALED BY THE ASSESSEE. HOWEVER, THE QUESTION STILL TO BE EXAMINED THAT WHETHER THESE FACTS WERE TRUE OR NOT? AS FAR AS THE ASSESSEE IS CONCERN , HE H AS EXPLAINED THAT THE PURCHASES WERE MADE FROM THOSE PARTIES IN THE REGULAR COURSE OF BUSINESS AS IS PROVED BY PRODUCING DELIVERY CHALLANS AND CONFIRMATION OF TRANSPORTERS FOR TRANSPORTATION OF GOODS. IT HAS ALSO BEEN PLEADED THAT THE ACCOUNTS WERE DULY AU DITED AND THERE WAS NO ADVERSE REMARK BY THE AUDITOR. IT HAS ALSO BEEN PLEADED THAT THE SALES WERE DULY RECORDED IN THE BOOKS OF ACCOUNTS WHICH WERE NOT DISTURBED BY THE AO. THEREFORE, THE ARGUMENT WAS THAT THERE WAS NO POSSIBILITY OF EXECUTION OF SALES IF THE CORRESPONDING PURCHASES HAVE NOT BEEN MADE. IN ADDITION TO THESE FACTS , ONE MORE ASPECT IS THAT WE HAVE ITA NO. 1742 & 1743 /AHD/201 0 HINAFIL INDIA LTD. VS. ACIT, VAPI CIRCLE, VAPI FOR A.Y. 200 5 - 0 6 - 9 - NOW DIRECTED TO ASSESS THE INCOME BY APPLYING 12.5% OF PROFIT. MEANING THEREBY THE TOTAL PURCHASES AMOUNT HAS NOT BEEN ADDED BUT AN ESTIMATED FIGUR E OF PROFIT IS NOW TO BE ASSESSED IN THE HANDS OF THE ASSESSEE. IN SUCH SITUATION, WHEN AN ESTIMATION IS MADE BY THIS COURT THEN THE ISSUE OF CONCEALMENT HAS COME UNDER THE CLOUD OF SUSPICION. MERELY ON THE GROUND OF SUSPICION AS ALSO CONSIDERING THE TOTAL FACTS IT IS HEREBY HELD THAT CONCEALMENT PENALTY NEED NOT TO BE LEVIED. WE, THEREFORE, DIRECT TO DELETE THE PENALTY. RESULTANTLY, THE GROUND IS ALLOWED. 1 7.1 IN THE RESULT, THE APPEAL IS ALLOWED. 18. RESULTANTLY, ITA 1742/AHD/2010 IS PARTLY ALLOWED & IT A 1747/AHD/2010 IS ALLOWED. SD/ - SD/ - (ANIL CHATURVEDI ) ( MUKUL KR. SHRAWAT ) ACCOUNTANT MEMBER JUDICIAL MEMBER AHMEDABAD; DATED 30 / 01 / 20 1 5 PRABHAT KR. KESARWANI , SR. P . S . / COPY OF THE ORDER FORWARDED TO : 1. / THE APPELLANT 2. / THE RESPONDENT. 3. / CONCERNED CIT 4. ( ) / THE CIT(A) - III, AHMEDABAD 5. , , / DR, ITAT, AHMEDABAD 6. / GUARD FILE . / BY ORDER, / ( DY./ASSTT.REGISTRAR) , / ITAT, AHMEDABAD