G.T Batliwala &Company, Pune V. ITO wd-5[4] Pune, Pune

ITA 1757/PUN/2012

• Counselvise Citation: [2015] 121 COUNSELVISE.COM (IT) 1079 (ITAT-PUNE)
• Duration Of Justice: 2 year(s) 10 month(s) 20 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 20-07-2015
• Appeal Filed By: Assessee
• Order Result: Dismissed
• Bench Allotted: B
• Next Hearing Date: 20-05-2015
• Assessment Year: 2008-2009
• Appeal Filed On: 31-08-2012
• Result in Favour of: Revenue
• Court: TRIBUNAL
• Department Lawyers: B C MALAKAR
• Keywords: Additional evidence; Reasonable cause
• Section: 40A(3); 133A; 131

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL B BENCH, PUN E , , !'#$ BEFORE SHRI R.K. PANDA, AM AND SHRI VIKAS AWASTHY, JM / ITA NO. 1757/PN/2012 #% & '& / ASSESSMENT YEAR : 2008-09 G. T. BATLIWALA AND COMPANY, 675, BUDHWAR PETH, OPP. JOGESHWARI TEMPLE, PUNE 411002 . / APPELLANT PAN : AABFG0781B (% V/S. INCOME TAX OFFICER, WARD 5(4), PUNE . / RESPONDENT / ITA NO. 1758/PN/2012 #% & '& / ASSESSMENT YEAR : 2008-09 NANDKUMAR BOTTLE TRADING COMPANY, 644, BUDHWAR PETH, OPP. JOGESHWARI TEMPLE, PUNE 411002 . / APPELLANT PAN : AAAHN5623C (% V/S. INCOME TAX OFFICER, WARD 5(4), PUNE . / RESPONDENT 2 ITA NOS. 1757, 1758 & 1759/PN/2012, A.Y. 2008-09 / ITA NO. 1759/PN/2012 #% & '& / ASSESSMENT YEAR : 2008-09 POONA BOTTLE TRADING COMPANY, 644-A, BUDHWAR PETH, OPP. JOGESHWARI TEMPLE, PUNE 411002 . / APPELLANT PAN : AABFP4663K (% V/S. INCOME TAX OFFICER, WARD 5(4), PUNE . / RESPONDENT / APPELLANT BY : SHRI NIKHIL PATHAK / DEPARTMENT BY : SHRI B.C. MALAKAR ) DATE OF HEARING :20-05-2015 / DATE OF PRONOUNCEMENT :20-07-2015 *) ORDER PER VIKAS AWASTHY, JM : THE APPEALS HAVE BEEN FILED BY THE ASSESSEES IMPUGNED T HE ORDER OF COMMISSIONER OF INCOME TAX (APPEALS)-III, PUNE FOR THE ASS ESSMENT YEAR 2008-09 IN THEIR RESPECTIVE CASES. ALL THE IMPUGNED ORDE RS ARE DATED 22-02-2012. 2. IN APPEALS, THE ASSESSEES HAVE ASSAILED THE CONFIRMING OF DISALLOWANCE RS.96,35,820/- U/S. 40A(3) OF THE INCOME TAX ACT , 1961 (HEREINAFTER REFERRED TO AS THE ACT) IN EACH CASE. SINC E, ALL THE APPEALS ARE BY THE ASSESSEES FROM SAME GROUP, HAVING IDENTICAL FA CTS THE APPEALS ARE TAKEN UP TOGETHER FOR ADJUDICATION. 3 ITA NOS. 1757, 1758 & 1759/PN/2012, A.Y. 2008-09 3. THE BRIEF FACTS OF THE CASE AS EMANATING FROM RECORDS ARE : A SURVEY ACTION U/S. 133A OF THE ACT WAS CARRIED OUT ON THE GRO UP CONCERNS I.E. M/S. G.T. BATLIWALA AND COMPANY, M/S. NANDKUMAR BOTTLE TRA DING COMPANY AND M/S. POONA BOTTLE TRADING COMPANY ON 14-03 -2008. DURING THE COURSE OF SURVEY PROCEEDINGS TWO NOTE BOOK S WERE IMPOUNDED BY THE DEPARTMENT. STATEMENTS OF SHRI NANDKUMAR GANPA T SHEWALE, KARTA OF HUF, SHRI RAJENDRA GANPAT SHEWALE, PARTNER IN M/ S. G.T. BATLIWALA AND COMPANY AND SHRI MUKUND GANPAT SHEWALE, PA RTNER IN M/S. POONA BOTTLE TRADING COMPANY WERE RECORDED ON 14- 03-2008. THE MAIN ISSUE RAISED AT THE TIME OF SURVEY AND DURING THE CO URSE OF SCRUTINY ASSESSMENT WAS THE CASH PAYMENTS MADE BY THE GROUP CONCERNS IN EXCESS OF RS.20,000/- FOR PURCHASING EMPTY BOTTLES. 3.1 THE ASSESSEES ARE ENGAGED IN THE BUSINESS OF TRADIN G IN EMPTY SECOND HAND LIQUOR BOTTLES. THE ASSESSEES PURCHASED BO TTLES FROM HAWKERS AND SELL THE SAME AFTER SORTING AND WASHING TO T HE BREWERIES ON WHOLESALE BASIS. THE ASSESSEES PURCHASED BOTTLES FROM HA WKERS AGAINST CASH PAYMENTS. DURING THE COURSE OF SURVEY PROCEEDINGS , TWO NOTE BOOKS WERE IMPOUNDED. THE EXAMINATION OF NOTE BOOKS REVEALED THAT THE ASSESSEES HAD MADE CASH PAYMENTS TO VARIOUS PERSONS ON SEVERAL OCCASIONS IN EXCESS OF RS.20,000/-. THE ASSESSEES EXPLAIN ED THAT THE NOTINGS RECORDED IN THE BOOKS ARE ROUGH NOTINGS THAT H AVE NO CONCERN WITH DAY-TO-DAY TRANSACTIONS. THE NOTINGS REPRESENT LIK ELY PURCHASES IN THE FUTURE FROM A PARTICULAR VENDOR AND NOT THE ACTUAL P AYMENTS. THE ASSESSING OFFICER DID NOT ACCEPT THE CONTENTIONS OF THE AS SESSEES AND MADE DISALLOWANCE OF RS.96,35,820/- IN THE HANDS OF EACH ASSESSEE. AGGRIEVED BY THE ASSESSMENT ORDERS, THE ASSESSEES FILED APPEALS BEFORE THE COMMISSIONER OF INCOME TAX (APPEALS). THE COMMIS SIONER OF 4 ITA NOS. 1757, 1758 & 1759/PN/2012, A.Y. 2008-09 INCOME TAX (APPEALS) DISMISSED THE APPEALS OF THE ASSESSEE S VIDE SEPARATE ORDERS OF EVEN DATE. NOW, THE ASSESSEES HAVE COME IN APPEAL ASSAILING THE FINDIN GS OF THE FIRST APPELLATE AUTHORITY. SINCE, THE FACTS IN ALL THE C ASES ARE SIMILAR, IDENTICAL GROUNDS HAVE BEEN RAISED BY THE ASSESSEES IN T HEIR RESPECTIVE APPEALS, WHICH ARE AS UNDER: 1) THE LEARNED CIT(A) ERRED IN CONFIRMING THE DISALLOW ANCE OF RS.96,35,820/- U/S. 40A(3) MADE BY THE A.O. 2) THE LEARNED CIT(A) ERRED IN HOLDING THAT THE ASSESS EE HAD MADE CASH PURCHASES WHICH WERE EVIDENT FROM THE NOTE BOOKS FO UND DURING THE COURSE OF SURVEY AND THEREFORE, THE DISALLOWANCE U/S 40A(3 ) IS REQUIRED TO BE MADE. 3) THE LEARNED CIT(A) FAILED TO APPRECIATE THAT THE AS SESSEE HAD NOT MADE ANY PURCHASES IN CASH IN EXCESS OF RS.20,000/- AND THER EFORE, THERE WAS NO QUESTION OF MAKING ANY DISALLOWANCE U/S 40A(3). 4) THE LEARNED CIT(A) ERRED IN NOT ADMITTING THE ADDIT IONAL EVIDENCE IN THE FORM OF CONFIRMATIONS FROM THE GROUP LEADERS OF THE HAWKERS DURING THE' APPELLATE PROCEEDINGS WITHOUT APPRECIATING THAT THE RE WAS REASONABLE CAUSE ON THE PART OF THE APPELLANT IN NOT SUBMITTIN G THESE EVIDENCES DURING THE ASST. PROCEEDINGS. 5) THE LEARNED CIT(A) ERRED IN HOLDING THAT A. THE ENTRIES IN THE IMPOUNDED NOTE BOOKS WERE ACTUAL CASH PURCHASES MADE BY THE ASSESSEE. B. THE ENTRIES MADE IN THE BOOKS SHOW THAT THE PAYMENT S WERE MADE DIRECTLY TO THE PERSONS WHOSE NAMES APPEAR IN THE B OOKS AND NOT TO THE INDIVIDUAL HAWKERS. C. THE PERSONS WHOSE NAMES APPEARED IN THE IMPOUNDED N OTE BOOKS WERE THEMSELVES TRADERS IN BOTTLES AND HENCE, THE A SSESSEE HAD MADE THE CASH PAYMENT DIRECTLY TO THE SAID PERSONS A ND NOT TO INDIVIDUAL HAWKERS. D. THE ASSESSEE HAD BEEN OFFERED AMPLE OPPORTUNITY TO SUBSTANTIATE HIS CLAIM DURING THE ASST, PROCEEDINGS AND HENCE, THE A DMISSION OF ADDITIONAL EVIDENCE DURING THE APPELLATE PROCEEDING S WAS INVALID. 6) THE LEARNED CIT(A) ERRED IN NOT APPRECIATING THAT 5 ITA NOS. 1757, 1758 & 1759/PN/2012, A.Y. 2008-09 A. THE FIGURES NOTED IN THE NOTE BOOKS FOUND DURING TH E COURSE OF SURVEY DID NOT INDICATE ACTUAL PAYMENTS MADE TO THE HAWKER S BUT WERE THE TENTATIVE FIGURES REQUIRED FOR MAKING THE PURCHASES AND HENCE, THERE WAS NO QUESTION OF MAKING ANY ADDITION ON THE BASIS OF THE NOTINGS MADE IN THE NOTE BOOKS FOUND DURING THE COURSE OF S URVEY. B. THE NAMES NOTED IN THE NOTE BOOKS WERE NOT OF THE H AWKERS BUT OF THE GROUP LEADERS WHO ARRANGED THE HAWKERS AND THE ACTU AL PAYMENTS ARE MADE BY THE ASSESSEE DIRECTLY TO THE HAWKERS WHICH ARE ALWAYS LESS THAN RS.20,000/-. C. THE ENTRIES IN THE BOOKS OF ACCOUNTS CLEARLY INDICA TED THAT EACH PAYMENT TO INDIVIDUAL HAWKER WAS LESS THAN RS.20,000/- AND ACCORDINGLY, THE DISALLOWANCE MADE U/S 40A(3) IS NOT JUSTIFIED. D. THE ASSESSEE WAS NOT AFFORDED A REASONABLE OPPORTUN ITY TO PRODUCE THE EVIDENCE IN THE FORM OF CONFIRMATIONS OF THE GROUP LEADERS DURING THE ASST. PROCEEDINGS AND HENCE, THE SAME SHOULD HAVE B EEN ADMITTED AS ADDITIONAL EVIDENCE TO PROMOTE THE CAUSE OF JUSTICE . 4. SHRI NIKHIL PATHAK APPEARING ON BEHALF OF THE ASSESSEE S UBMITTED THAT THE ASSESSEES ARE IN THE BUSINESS OF PURCHASING OLD LIQUOR BOTTLES FROM SMALL AND PETTY HAWKERS. THESE HAWKERS ARE MOSTLY ILLITERATE AND DO NOT HAVE BANK ACCOUNTS. THESE HAWKERS ARE WORKING IN AN UNORGANIZED SECTOR, THEREFORE, IT IS DIFFICULT TO TRACK OR TRACE THEM. TH E PURCHASES MADE FROM THESE HAWKERS ARE ALWAYS BELOW THE THRESHOLD LIMIT OF RS.20,000/- AND ALL THE PURCHASES MADE FROM THEM ARE SU PPORTED BY VOUCHERS. THE AMOUNTS MENTIONED IN THE NOTE BOOKS WHIC H WERE IMPOUNDED DURING SURVEY PROCEEDINGS ARE DULLY ACCOUNTED IN THE BOOKS OF ACCOUNT OF THE ASSESSEES. THE REVENUE AUTHORITIES HAVE DISBELIEVED THE CONTENTIONS OF THE ASSESSEES WITHOUT PROPERLY APPRECIAT ING THE FACTS. THE LD. AR OF THE ASSESSEES REFERRED TO THE PHOTOCOPY OF MA HALAXMI NOTE BOOK AT PAGES 5 TO 88 OF THE PAPER BOOK. THE LD. AR POINTED OUT THAT A PERUSAL OF NOTE BOOK SHOWS THAT ALL THE PAYMENTS ARE MADE IN RO UND FIGURES. THE LD. AR FURTHER SUBMITTED THAT THE ASSESSEES HAD OBTAINED CONFIRMATION LETTERS FROM SOME OF THE PERSONS THROUGH WHOM THESE SE COND HAND LIQUOR BOTTLES WERE PURCHASED BUT THE AUTHORITIES BELOW DID NOT CONSIDER THE SAME AND MADE NO EFFORT TO VERIFY THE FACT FROM THE PERS ONS GIVING 6 ITA NOS. 1757, 1758 & 1759/PN/2012, A.Y. 2008-09 CONFIRMATION LETTERS. THE ASSESSMENT ORDER HAS BEEN PA SSED ON ASSUMPTIONS AND PRESUMPTIONS. THE LD. AR PRAYED FOR DELET ING DISALLOWANCE MADE U/S. 40A(3) OF THE ACT. 5. ON THE OTHER HAND SHRI B.C. MALAKAR REPRESENTING THE D EPARTMENT VEHEMENTLY SUPPORTED THE IMPUGNED ORDERS OF COMMISSIONE R OF INCOME TAX (APPEALS) IN THE CASES OF RESPECTIVE ASSESSEES. THE LD. DR SUBMITTED THAT IN THE IMPOUNDED NOTE BOOKS, THE ASSESSEES HAVE R ECORDED EXACT FIGURES OF THE PAYMENTS MADE IN CASH FOR PURCHASING SECON D HAND BOTTLES. THE STAND OF THE ASSESSEES BEFORE THE AUTHORITIES BELOW IS THAT THE FIGURES REPRESENT LIKELY PURCHASES. THE LD. DR FURTHER SUBMITTED THAT IT IS HIGHLY IMPROBABLE THAT SOMEBODY WILL MAKE NOTINGS OF LIKELY PURCHA SES THAT TO IN ODD FIGURES AND WITH PARTICULAR DATES. THE LD. DR REFERRE D TO THE STATEMENTS RECORDED DURING SURVEY PROCEEDINGS U/S. 133 A. THE LD. DR REFERRED TO Q. NOS. 15 AND 16 WHEREIN THE ASSESSEES HA VE ADMITTED THAT NO PAYMENTS WERE MADE TO ANY TRADER ABOVE RS.20,000/- IN A DAY. THE ASSESSEES HAVE FURTHER ADMITTED THE FACT THAT NOTE BOO KS NOS. 1 AND 2 CONTAIN ROUGH NOTINGS WHICH HAVE NO CONCERN TO THE DAY -TO-DAY TRANSACTIONS. THE LD. DR POINTED OUT THAT A BARE READING OF THE STATEMENT AND THE STAND TAKEN BY THE ASSESSEES BEFORE THE AUTH ORITIES BELOW SHOW THAT THEY ARE NOT IN HARMONY. THE ASSESSEES HAVE BEE N CHANGING STAND. INITIALLY THE ASSESSEES SUBMITTED THAT NOTINGS MADE IN N OTE BOOKS ARE ROUGH. SUBSEQUENTLY, THE ASSESSEES ADMITTED THAT THES E ARE THE PURCHASES WHICH ARE DULLY RECORDED IN THE BOOKS OF ACCO UNT. THE LD. DR PRAYED FOR DISMISSING THE APPEALS OF THE ASSESSEES AND CO NFIRMING THE ORDER OF COMMISSIONER OF INCOME TAX (APPEALS). 6. WE HAVE HEARD THE SUBMISSIONS MADE BY THE REPRESENT ATIVES OF RIVAL SIDES AND HAVE PERUSED THE ORDERS OF THE AUTHORITIES BE LOW. WE HAVE ALSO 7 ITA NOS. 1757, 1758 & 1759/PN/2012, A.Y. 2008-09 EXAMINED THE DOCUMENTS PLACED ON RECORD BY THE LD. AR O F THE ASSESSEE IN THE FORM OF PAPER BOOK AND RELIED UPON DURING THE COURSE OF HEARING. IT IS AN UNDISPUTED FACT THAT THE ASSESSEES HAVE BEEN PURCH ASING SECOND HAND BOTTLS FROM HAWKERS AGAINST CASH PAYMENTS. IT IS ALSO AN UNDISPUTED FACT THAT THE HAWKERS THROUGH WHOM THE ASSESSEES ARE PUR CHASING OLD BOTTLES ARE WORKING IN AN UNORGANIZED SECTOR. DURING THE COURSE OF SEARCH TWO NOTE BOOKS WERE IMPOUNDED BY THE DEPARTMENT. AN EXAM INATION OF THESE NOTE BOOKS REVEALED THAT IN SOME OF THE CASES THE PAYM ENT MADE BY THE ASSESSEES TO A SINGLE PERSON ON A DAY EXCEEDED RS.20,00 0/-. THE ASSESSEES REFUTED THE STAND OF THE DEPARTMENT THAT SU CH AMOUNT REPRESENTS CASH PURCHASES. THE STAND OF THE ASSESSEE S IS THAT THE FIGURES POINTED OUT BY THE DEPARTMENT ARE LIKELY PURCHASES A ND DO NOT REFLECT ACTUAL CASH PURCHASES. THE ASSESSING OFFICER REJECTED TH E CONTENTIONS OF THE ASSESSEES AND MADE DISALLOWANCE OF RS.2,89,07,460/- U/S . 40A(3), (RS.96,35,820/- IN THE CASE OF EACH ASSESSEE BEING 1/3 RD SHARE). 7. A PERUSAL OF STATEMENT OF SHRI NANDKUMAR GANPAT SHEWA LE, KARTA OF HUF RECORDED U/S. 131 ON 14-03-2008 SHOWS THAT IN R EPLY TO Q. NO. 4 HE HAS ADMITTED THAT THE PAYMENTS ARE MADE IN CASH TO THE TRADERS FROM WHOM THE BOTTLES ARE PURCHASED. FURTHER, IN REPLY TO Q . NO. 15 HE HAS STATED THAT NO PAYMENTS ABOVE RS.20,000/- HAS BEEN MA DE TO ANY TRADER ON A SINGLE DAY. IN REPLY TO Q. NO. 16 HE HAS ADMITTED T HAT NOTINGS IN NOTE BOOKS NO. 1 AND 2 CONTAIN ROUGH NOTINGS AND HAS N O CONCERN WITH THE DAY-TO-DAY TRANSACTIONS. THE RELEVANT EXTRACT OF T HE STATEMENT OF SHRI NANDKUMAR GANPAT SHEWALE IS REPRODUCED HERE-IN-BELOW: Q. 15 HAVE YOU PURCHASED EMPTY BOTTLES COSTING R S.20,000/- AT ONE STROKE IN A SINGLE DAY? OR HAVE YOU PAID ABOVE RS. 20,000/- IN ONE DAY TO A TRADER? ANS. NO, WE HAVE NOT MADE ANY PAYMENT ABOVE RS.20 ,000/- IN ANY TRADER. 8 ITA NOS. 1757, 1758 & 1759/PN/2012, A.Y. 2008-09 Q. 16 DURING THE COURSE OF SURVEY PROCEEDINGS AT YOUR PREMISES, 2 NOTEBOOKS WERE FOUND AND IMPOUNDED. YOU ARE REQUES TED TO GO THROUGH THE SAME AND EXPLAIN THE CONTENTS OF THE SAME. ANS. NOTEBOOKS NO.-1 CONTAINS ROUGH NOTING WHICH HAS NO CONCERN TO THE DAY-TO-DAY TRANSACTIONS. NOTEBOOK NO.-2 ALSO CONTA INS AS IN NOTEBOOK NO.-1. XXXXXXXXXX Q. 19 IT IS MENTIONED IN YOUR ANSWER TO Q. NO.-15 THAT YOU HAVE PURCHASED EMPTY BOTTLES COSTING LESS THAN RS.20,000 /- AT A TIME, WHEREAS, THE NOTEBOOKS IMPOUNDED SHOWS THAT YOU HAVE PAID AM OUNT EXCEEDING RS.20,000/- MANY A TIMES, WHAT YOU HAVE TO SAY IN T HIS REGARD? ANS. THESE NOTING ARE NOTING BUT LIKELY PURCHASES WHICH ARE TO BE MADE FROM DIFFERENT PARTIES. Q. 20 SINCE MANY ENTRIES ARE IN ODD FIGURES. DO YOU AGREE THAT THESE ARE PURCHASES TO BE MADE IN FUTURE? ANS. YES, THESE ARE LIKELY PURCHASES FROM THE ABO VE PARTIES. XXXXXXXXXX Q. 26 IN PAGE NO.-3, YOU HAVE WRITTEN RS.1,20,000 /- AGAINST BAGNIKAR, RS.60,000/- AGAINST RAMA, RS.1,20,000/- AGAINST D. GUPTA, RS.80,000/- AGAINST ATTAR CAN YOU IDENTIFY THESE PARTIES? ANS. NO, I CANT IDENTIFY THESE PARTIES. XXXXXXXXXX Q. 34 IS IT CORRECT THAT YOU HAVE SPLIT THE ABOVE TRANSACTIONS BELOW RS.20,000/- TO CIRCUMVENT THE PROVISIONS OF SEC. 40 A(3). ANS.- AS I SAID EARLIER THESE ARE NOT PERTAINING T O MY NORMAL TRANSACTIONS, I HAVE NOT ENTERED THESE TRANSACTIONS IN MY REGULAR B OOKS OF ACCOUNTS. STATEMENTS OF SHRI MUKUND GANPTAT SHEWALE AND SHRI RAJE NDRA GANPTAT SHEWALE WERE ALSO RECORDED ON 14-03-2008. THEIR ANS WERS TO THE QUERIES RAISED BY THE DEPARTMENT WERE ON IDENTICAL LINES. 9 ITA NOS. 1757, 1758 & 1759/PN/2012, A.Y. 2008-09 8. THE STAND OF THE ASSESSEES BEFORE THE AUTHORITIES BELO W IS THAT THE NOTINGS IN THE NOTE BOOKS IMPOUNDED DURING SURVEY ARE R OUGH NOTINGS WHICH HAVE NO CONCERN WITH DAY-TO-DAY TRANSACTIONS. A PERUSAL OF ANSWERS TO Q. NO. 34 SHOWS THAT THE ASSESSEE HAS ADMIT TED THAT THE TRANSACTIONS RECORDED IN BOOKS DOES NOT PERTAIN TO NOR MAL TRANSACTIONS AND HAVE NOT BEEN ENTERED IN THE REGULAR BOOKS OF ACCO UNT. HOWEVER, WE FIND THAT THE ASSESSEES HAVE BEEN TAKING CONTRADICTORY STAND. ON THE ONE HAND THE ASSESSEES ARE TRYING TO RUN AWAY FROM THE NO TINGS MADE IN THE IMPOUNDED NOTE BOOKS BY STATING THAT THEY HAVE NO CON CERN WITH THE DAY- TO-DAY TRANSACTIONS, ON THE OTHER HAND, THE ASSESSEES ARE REFERRING TO VARIOUS TRANSACTIONS RECORDED IN THE SAME NOTE BOOKS A ND ADMITTING THAT THE TRANSACTIONS ARE FULLY ACCOUNTED IN THE BOOKS OF ACC OUNT OF THE ASSESSEES. THE ASSESSEES CANNOT BE ALLOWED TO APPRO BATE AND REPROBATE ON THE NOTINGS MADE IN THE IMPOUNDED NOTE BOOKS. 9. THE LD. AR OF THE ASSESSEES HAS REITERATED BEFORE US T HAT THE PAYMENTS IN CASH ARE MADE TO SMALL TIMES HAWKERS WHO AR E IN UNORGANIZED SECTOR. MOST OF THEM LIVE IN SLUMS AND DO NOT HAVE ANY BANK ACCOUNT. THEY MOSTLY WORK IN GROUPS AND THE DEALS ARE FINALIZED THROUGH THEIR GROUP LEADERS BUT THE PAYMENTS ARE MADE TO THE INDIVIDUAL HAWKERS. THE AMOUNTS RECORDED IN ODD FIGURES IN THE SEIZED NOTE B OOKS ARE LIKELY PURCHASES FROM THE HAWKERS. HOWEVER, ON EXAMINATION OF TH E DOCUMENTS ON RECORD, THE SUBMISSIONS MADE BY THE ASSESSEES FAIL TO INSPIRE CONFIDENCE. THE COMMISSIONER OF INCOME TAX (APPEALS) HAS G IVEN CATEGORIC FINDINGS THAT THE NOTE BOOKS SEIZED CONTAINS E NTRIES WITH RESPECT TO REGULAR BANKING TRANSACTIONS ALONG WITH THE LIKELY PUR CHASES AS PURPORTED BY THE ASSESSEES. THE BANKING TRANSACTIONS RECORDED IN THE NOTE BOOKS CORROBORATE WITH REGULAR BOOKS OF ACCOUNT O F THE ASSESSEES. 10 ITA NOS. 1757, 1758 & 1759/PN/2012, A.Y. 2008-09 WHEN THE ASSESSEES ARE RECORDING BANKING TRANSACTIONS IN THE NOTE BOOKS ON ACTUAL BASIS THERE IS NO REASON FOR RECORDING LIKELY P URCHASES/FUTURE PURCHASES IN THE SAME NOTE BOOKS THAT TOO IN ODD FIGUR ES. THUS, THE CONTENTION OF THE ASSESSEES THAT THE NOTE BOOKS DOES NOT CONTAIN ACTUAL TRANSACTIONS IS NOT TENABLE. 10. IN ORDER TO SUBSTANTIATE ITS CLAIM, THE ASSESSEE PLAC ED ON RECORD PURCHASE BILLS AND VOUCHERS IN THE NAME OF 35 TRADERS/HA WKERS. THE ASSESSING OFFICER OBSERVED THAT THERE ARE NO SIGNATURES OR STAMP ON THOSE VOUCHERS. EVEN THE NARRATIONS IN ALL THE 35 VOUCHERS AR E EXACTLY THE SAME. THE ASSESSING OFFICER FURTHER OBSERVED THAT IT IS S URPRISING THAT THIRTY-FIVE PEOPLE I.E. SMALL TRADERS / HAWKERS APPROACHED T HE ASSESSEES ON THE SAME DAY AND ALL OF THEM BROUGHT SAME TYPE OF EM PTY BOTTLES 180 ML FOR SALE AND NOT A SINGLE BOTTLE OUT OF 32,250 BOTTLES WA S OF ANY OTHER TYPE / QUALITY. ALL THE PAYMENTS VOUCHERS RANGE BETWE EN RS.14,980 TO RS.19,980/-. THIS CLEARLY SHOWS THAT THE VOUCHERS WERE DELIBERATELY MADE WITHIN THE THRESHOLD LIMIT OF RS.20,000/- TO CIRCUMVENT THE PROVISIONS OF THE ACT. 11. THE COMMISSIONER OF INCOME TAX (APPEALS) WHILE DISMISSING THE APPEALS OF THE ASSESSEES OBSERVED AS UNDER: 3.3.4 EVEN OTHERWISE, AS ALREADY DISCUSSED, THE EV IDENCES FOUND DURING THE SURVEY CLEARLY SHOW THAT THE PAYMENTS WERE MADE TO THE PERSONS, WHOSE NAMES FIGURE IN THE NOTE BOOKS, TOWARDS ACTUA L PURCHASES OF EMPTY BOTTLES FROM THEM AND NOT TO THE INDIVIDUAL HAWKERS DIRECTLY. WHEN SUCH CLINCHING EVIDENCES WERE FOUND DURING THE SURVEY IN DICATING CASH PURCHASES EXCEEDING RS.20,000/- IN EACH CASE, IT GO ES WITHOUT SAYING THAT MERE PRODUCTION OF CONFIRMATION LETTERS DOES NOT DI SCHARGE THE LIABILITY OF THE APPELLANT TO SUBSTANTIATE ITS CLAIM OF LIKELY PURCH ASES OR PAYMENTS DIRECTLY TO HAWKERS. THE ONUS OF VERY HIGH DEGREE IS ON THE APPELLANT TO PRODUCE COGENT AND RELIABLE EVIDENCE TO DEMONSTRATE THAT TH E APPARENT IN THE IMPOUNDED NOTE BOOKS IS NOT THE REAL. BUT THE APPEL LANT, EXCEPT FILING FOUR SELF-SERVING CONFIRMATIONS, FAILED TO DEMONSTRATE W ITH RELIABLE EVIDENCE THAT THE APPARENT IN THE IMPOUNDED NOTE BOOKS IS NOT THE REAL. ADMITTEDLY, THE APPELLANT NEITHER MAINTAINED QUANTITATIVE DETAILS O F STOCK NOR PARTY WISE PURCHASES IN THE REGULAR BOOKS OF ACCOUNT. IN SUCH A SITUATION, WHEN THE 11 ITA NOS. 1757, 1758 & 1759/PN/2012, A.Y. 2008-09 OTHER MATERIALS AND DOCUMENTS PRODUCED BY THE APPEL LANT DO NOT LEAD TO A PROPER, REASONABLE OR ACCEPTABLE EXPLANATION AS REG ARDS THE NATURE OF ENTRIES IN THE NOTE BOOKS, THE ASSESSING OFFICER IS PERFECTLY ENTITLED TO CONSIDER THE NATURE OF THE ENTRIES AS THEY APPEAR I N THE NOTE BOOKS. FURTHER, WHEN THERE IS NO AMBIGUITY IN THE ENTRIES RECORDED IN THE NOTE BOOKS THAT THEY REPRESENT ACTUAL CASH PURCHASES MADE BY THE AP PELLANT AND ITS ASSOCIATE CONCERNS, NO PURPOSE WOULD BE SERVED BY E XAMINING THE PERSONS, WHOSE NAMES APPEAR IN THE IMPOUNDED NOTE BOOKS. EV EN PRESUMING FOR A WHILE THAT THE AMOUNTS WERE DIRECTLY PAID TO THE IN DIVIDUAL HAWKERS AND THE GROUP LEADERS ARE ONLY FACILITATORS IN THE PROC ESS OF MAKING PURCHASES OF EMPTY BOTTLES AND SCRAP BY THE APPELLANT AS CLAIMED , THE PERSONS ARE NORMALLY COMPENSATED FOR THE ALLEGED SERV ICES. BUT SURPRISINGLY, AS MENTIONED IN THE CONFIRMATION LETTERS, NO COMMIS SION OR BROKERAGE OR INCENTIVE WAS PAID BY THE APPELLANT TO THE GROUP LE ADERS FOR THE ALLEGED SERVICES. ON THE CONTRARY, THE CLAIM OF THE GROUP L EADERS IN THE CONFIRMATIONS IS THAT THEY RECEIVED COMMISSION FROM HAWKERS AND SCRAP LEADERS AFTER FINALIZING THE 'DEAL' WITH THE APPELL ANT. FIRSTLY, NO EVIDENCE WHATSOEVER WAS PRODUCED BY THE GROUP LEADERS TO SHO W THAT THEY RECEIVED COMMISSION FROM HAWKERS AND SCRAP DEALERS. SECONDLY , IT DOES NOT STAND TO REASON THAT THE SAID PERSONS RECEIVED COMMISSION FR OM HAWKERS, WHO ARE PERSONS OF SMALL MEANS AND NOT FROM THE APPELLANT G ROUP, FOR THE ALLEGED SERVICES RENDERED TO THE APPELLANT GROUP, AS POINTE D OUT BY THE ASSESSING OFFICER, IT WOULD APPEAR FROM THE ENTRIES IN THE NOTE BOOKS, THE PERSONS, WHOSE NAMES APPEAR IN THE IMPOUNDED NOTE B OOKS, WERE ALSO CARRYING ON TRADING OF EMPTY LIQUOR BOTTLES TRADING AND THEY WERE BUYING THE EMPTY LIQUOR BOTTLES FROM PETTY HAWKERS OR SMAL L TRADERS AND SELLING IN- TURN TO THE APPELLANT AND EARNING SOME PROFIT. THUS , THE SUBSEQUENT CONFIRMATIONS OF GROUP LEADERS, NOW SOUGHT TO BE AD MITTED BY THE APPELLANT AS ADDITIONAL EVIDENCE, ARE ONLY SELF-SERVING AND A N AFTERTHOUGHT IN ORDER TO ESCAPE THE CONSEQUENCES OF SEC. 40A (3) AND NO CRED ENCE CAN BE GIVEN TO SUCH SELF-SERVING CONFIRMATIONS. THE DECISIONS RELI ED UPON BY THE APPELLANT WERE RENDERED IN A DIFFERENT FACTUAL CONTEXT AND TH E SAME CANNOT BE APPLIED TO THE FACTS OF THE PRESENT CASE. THIS IS A CASE WHERE PAYMENTS WERE MADE FOR PURCHASES EXCEEDING RS.20,000/- IN EA CH CASE IN FLAGRANT VIOLATION OF PROVISIONS OF SEC. 40A (3). 3.3.5 TO SUM UP, THE APPELLANT COULD NOT SUBSTANTIA TE ITS CLAIM THAT THE ENTRIES IN THE TWO IMPOUNDED NOTEBOOKS ARE NOT THE ACTUAL PURCHASES MADE BY THE GROUP BUT ARE THE 'LIKELY PURCHASES'. THE AP PELLANT, EXCEPT FILING SELF- MADE VOUCHERS AND SELF-SERVING CONFIRMATIONS, COULD NOT PROVE WITH INDEPENDENT AND RELIABLE EVIDENCE THAT THE PAYMENTS FOR PURCHASES OF EMPTY BOTTLES WERE MADE TO THE HAWKERS DIRECTLY AND NOT TO THE PERSONS MENTIONED IN THE NOTE BOOKS. IN SUCH A SCENARIO, TH E ASSESSING OFFICER IS PERFECTLY JUSTIFIED IN HOLDING THAT THE ENTRIES IN THE IMPOUNDED NOTE BOOKS REPRESENT THE ACTUAL PURCHASES MADE BY THE APPELLAN T AND ITS SISTER CONCERNS DURING THE YEAR UNDER CONSIDERATION. SINCE THE AMOUNT PAID IN EACH CASE EXCEEDED RS. 20,0007- AS CLEARLY RECORDED IN THE NOTE BOOKS, THE PROVISIONS OF SEC. 40A (3) OF THE I. T. ACT ARE ATT RACTED TO THE IMPUGNED PAYMENTS. ACCORDINGLY, THE ADDITION OF RS.96,35,820 /- MADE BY THE ASSESSING OFFICER ON ACCOUNT OF DISALLOWANCE OF IMP UGNED EXPENDITURE UNDER SEC. 40A(3), BEING 1/3 OF AGGREGATE CASH PAYM ENTS EXCEEDING RS. 20,000/- IN EACH CASE, DOES NOT CALL FOR ANY INTERF ERENCE AND THE SAME IS UPHELD. 12 ITA NOS. 1757, 1758 & 1759/PN/2012, A.Y. 2008-09 12. THE LD. AR HAS NOT BEEN ABLE TO CONTROVERT THE ABO VE FINDINGS OF THE COMMISSIONER OF INCOME TAX (APPEALS). THE CONTENTIONS OF T HE ASSESSEES THAT THE COMMISSIONER OF INCOME TAX (APPEALS) HAS NOT CON SIDERED THE CONFIRMATIONS FILED ARE ALSO FALLACIOUS. THE COMMISSIONER OF INCO ME TAX (APPEALS) HAS CONSIDERED THE SAME AND HAS THEREAFTER RE JECTED THE SAME BEING SELF SERVING IN NATURE. THE ORDERS OF COMMISSIONER OF INCOME TAX (APPEALS) ARE WELL REASONED AND DETAILED. WE DO NOT FIND AN Y REASON TO DISTURB THE SAME. THE IMPUGNED ORDERS ARE CONFIRMED AND THE APPEALS OF THE ASSESSEES ARE DISMISSED BEING DEVOID OF ANY MERIT. ORDER PRONOUNCED ON MONDAY, THE 20 TH DAY OF JULY, 2015 AT PUNE SD/- SD/- ( ! / R.K. PANDA) ( ' # / VIKAS AWASTHY) ACCOUNTANT MEMBER JUDICIAL MEMBER $ PUNE; %& /DATED : 20 TH JULY, 2015 RK/PS *+,#-. / '- $ COPY OF THE ORDER FORWARDED TO : 1. / THE APPELLANT 2. / THE RESPONDENT. 3. ' ( ) / THE CIT(A)-III, PUNE 4. ' /THE CIT-III, PUNE 5. '*+ ,,-. , -. , / 0 12 , $ DR, ITAT, B BENCH, PUNE 6. +!3 4 $ GUARD FILE. // ' , //TRUE COPY// *% / BY ORDER, #%0 1) PRIVATE SECRETARY, ' /ITAT, PUNE