DCIT, CC-XIII, Kolkata, Kolkata V. M/s. Jai Balaji Sponge Limited, Kolkata

ITA 1882/KOL/2010

• Counselvise Citation: [2012] 140 COUNSELVISE.COM (IT) 62090 (ITAT-KOLKATA)
• Duration Of Justice: 1 year(s) 6 month(s) 6 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 13-04-2012
• Appeal Filed By: Department
• Bench Allotted: C
• Assessment Year: 2006-2007
• Appeal Filed On: 07-10-2010
• Court: TRIBUNAL
• Department Lawyers: D J MEHTA; L K S DAHIYA
• Assessee Lawyers: A K TULSYAN ITA
• Keywords: Bogus purchase; Gross profit estimation; Opportunity of cross examination; Retrospective amendment; Accommodation entries
• Section: 143(3); 133A; 234B; 115JB; 131; 145

Judgement Text

, , IN THE INCOME TAX APPELLATE TRIBUNAL C BENCH: KOL KATA () BEFORE , /AND . . , !' ) [BEFORE SRI MAHAVIR SINGH, JM & SHRI C. D. RAO, AM] # # # # / I.T.A NO. 1880/KOL/2010 $% &' $% &' $% &' $% &'/ // / ASSESSMENT YEAR: 2007-08 DEPUTY COMMISSIONER OF INCOME-TAX, VS. M/S. JAI BA LAJI JYOTI STEELS LTD. CENTRAL CIRCLE-XIII, KOLKATA. (PAN:AABCJ 2488 H ) ()* /APPELLANT ) (+,)*/ RESPONDENT ) & # # # # / I.T.A NO. 1881/KOL/2010 $% &' $% &' $% &' $% &'/ // / ASSESSMENT YEAR: 2006-07 DEPUTY COMMISSIONER OF INCOME-TAX, VS. M/S. JAI SA LASAR BALAJI INDUSTRIES PVT. LTD. CENTRAL CIRCLE-XIII, KOLKATA. (PAN:AAACJ 6970D) ()* /APPELLANT ) (+,)*/ RESPONDENT ) & # # # # / I.T.A NO. 1882/KOL/2010 $% &' $% &' $% &' $% &'/ // / ASSESSMENT YEAR: 2006-07 DEPUTY COMMISSIONER OF INCOME-TAX, VS. M/S. JAI BA LAJI SPONGE LTD. CENTRAL CIRCLE-XIII, KOLKATA. (PAN:AAACJ 7961J) ()* /APPELLANT ) (+,)*/ RESPONDENT ) & # # # # / I.T.A NO. 1029/KOL/2010 $% &' $% &' $% &' $% &'/ // / ASSESSMENT YEAR: 2006-07 M/S. JAI BALAJI JYOTI STEELS LTD. VS. DEPUTY COMM ISSIONER OF INCOME-TAX, CENTRAL CIRCLE-XIII, KOLKATA. ()* /APPELLANT ) (+,)*/ RESPONDENT ) & # # # # / I.T.A NO. 1301/KOL/2010 $% &' $% &' $% &' $% &'/ // / ASSESSMENT YEAR: 2006-07 DEPUTY COMMISSIONER OF INCOME-TAX, VS. M/S. JAI BA LAJI JYOTI STEELS LTD. CENTRAL CIRCLE-XIII, KOLKATA. ()* /APPELLANT ) (+,)*/ RESPONDENT ) DATE OF HEARING: 13.03.2012 DATE OF PRONOUNCEMENT: 13.04.2012 FOR THE REVENUE: S/SHRI L.K.S. DAHIYA & D. J. MEHTA FOR THE RESPONDENT: SHRI A. K. TULSYAN 2 ITA 1880, 1881, 1882,1029 & 1301/K/2010 A.Y. 07-08 & 06-07 !- / ORDER PER MAHAVIR SINGH, JM ( , , , , ) ALL THESE 4 APPEALS BY REVENUE AND 1 CROSS APPEAL B Y ASSESSEE ARE ARISING OUT OF SEPARATE ORDERS OF CIT(A), CENTRAL-II, KOLKATA IN APPEAL NOS .149,148,153/CC-XIII/CIT(A)-C- II/KOL/09-10 DATED 02.07.2010 AND APPEAL NO. 129/CC -XIII/CIT(A)-C-II/KOL/08-09 DATED 19.03.2010. ASSESSMENTS WERE FRAMED BY DCIT, C.C-XI II, KOLKATA U/S.143(3) OF THE INCOME TAX ACT, 1961 (HEREINAFTER REFERRED TO AS THE ACT ) FOR ASSESSMENT YEARS 2007-08 AND 2006- 07 VIDE HIS SEPARATE ORDERS DATED 31.12.2009 AND 30 .12.2008. 2. FIRST, WE ARE DEALING WITH ITA NO.1029/K/2010 F ILED BY ASSESSEE. THE ONLY ISSUE IN THIS APPEAL OF ASSESSEE IS AGAINST THE ORDER OF CIT (A) DELETING THE LEVY OF INTEREST BY ASSESSING OFFICER U/S. 234B AND 234C OF THE ACT WHILE DETERMI NING INCOME U/S. 115JB OF THE ACT. FOR THIS, ASSESSEE HAS RAISED FOLLOWING GROUND: 1. THAT THE LD. CIT(A) ERRED IN UPHOLDING THE LEVY OF INTEREST U/S. 234B AND 234C OF THE I. TAX ACT ON THE TAX DETERMINED U/S. 115JB OF THE I. TAX ACT DISREGARDING THE HONBLE ITAT, KOLKATA AND HONBLE SUPREME COURT DECISION. THE LE VY OF INTEREST U/S. 234B AND 234C OF THE I. TAX ACT ON THE BOOK PROFIT IS WRONG AND NEED TO BE DELETED. 3. BRIEF FACTS ARISING OUT OF THE ABOVE ISSUE ARE T HAT THE ASSESSING OFFICER CHARGED INTEREST U/S. 234B AND C OF THE ACT ON THE BASIS OF TAX LEVI ED U/S. 115JB OF THE ACT AFTER ADJUSTMENT OF DEFERRED TAX AS PROVIDED UNDER EXPLANATION (I)(H) O F SECTION 115JB(2) OF THE ACT. ASSESSEE COMPANY FILED ITS RETURN OF INCOME ON 29.11.2006 DE CLARING A LOSS OF RS.4,76,03,153/- AS AGAINST THE SAME ASSESSING OFFICER COMPLETED ASSESS MENT U/S. 143(3) OF THE ACT ON 30.12.2008 REDUCING THE LOSS TO RS.3,65,53,680/-. THE ASSESSI NG OFFICER, HOWEVER, COMPUTED THE BOOK PROFIT AT RS.12,24,442/- U/S. 115JB OF THE ACT AFTE R MAKING ADJUSTMENT OF DEFERRED TAX OF RS.10,34,37,589/- IN VIEW OF THE EXPLANATION (I)(H) OF SECTION 115JB(2) OF THE ACT AS AMENDED BY FINANCE ACT, 2008 W.E.F. 01.04.2001 WHICH GOT PR ESIDENTS ASSENT ONLY ON 10.05.2008. THE RELEVANT ASSESSMENT YEAR INVOLVED IS 2006-07 AND RE TURN WAS FILED ON 29.11.2006 PRIOR TO THE INTRODUCTION OF THE AMENDMENT IN THE FINANCE BILL. ACCORDING TO ASSESSEE, THIS AMENDMENT BY THE FINANCE ACT, 2008 IS NOT CLARIFICATORY BUT IT B RINGS INTO A PROCEDURE FOR DETERMINATION OF MAT TAX AFTER ADJUSTMENT OF NEW ITEM I.E. DEFERRED TAX. HOWEVER, ASSESSING OFFICER WAS OF THE VIEW THAT IN VIEW OF THE ABOVE AMENDMENT INTEREST U /S. 234B AND C OF THE ACT IS TO BE CHARGED. AGGRIEVED, ASSESSEE PREFERRED APPEAL BEFORE CIT(A), WHO ALSO CONFIRMED THE ACTION OF AO. AGGRIEVED, NOW ASSESSEE IS IN APPEAL BEFORE US. 3 ITA 1880, 1881, 1882,1029 & 1301/K/2010 A.Y. 07-08 & 06-07 4. WE HAVE HEARD RIVAL SUBMISSIONS AND GONE THROUGH FACTS AND CIRCUMSTANCES OF THE CASE. WE FIND THAT THE ASSESSING OFFICER CHARGED INTEREST U/S. 234B AND 234C OF THE ACT ON THE BASIS OF AMENDMENT MADE IN 2008 FINANCE BILL BY VIRTUE OF WHICH EXPLANATION (I)(H) OF SECTION 115JB(2) OF THE ACT WAS INTRODUCED AND AMENDMENT WA S MADE BY FINANCE ACT 2008 W.E.F. 01.04.2001 I.E. RETROSPECTIVE AMENDMENT. THE ASSES SMENT YEAR INVOLVED IS 2006-07 AND ASSESSEE FILED ITS RETURN OF INCOME ON 29.11.2006, AT THAT POINT OF TIME THIS AMENDMENT WAS NOT IN THE STATUTE BOOK. WE FIND THAT THE ADJUSTMENT O F DEFERRED TAX OF RS.10,34,37,589/- WAS ADJUSTED BY ASSESSING OFFICER FOR ARRIVING AT BOOK PROFIT AS PER THE PROVISIONS OF EXPLANATION (I)(H) OF SECTION 115JB(2) OF THE ACT AS BROUGHT OU T IN THE STATUTE BOOK BY THE FINANCE ACT, 2008 RETROSPECTIVELY W.E.F. 01.04.2001. IN VIEW OF THE ABOVE AMENDMENT VIDE FINANCE ACT, 2008 WITH RETROSPECTIVE EFFECT FROM 01.04.2001 THE ISSUE IS COVERED AGAINST THE ASSESSEE AND IT IS NOT ENTITLED FOR DEDUCTION OF THE SAME AGAINST B OOK PROFIT AND ASSESSING OFFICER HAS RIGHTLY MADE ADJUSTMENT. BUT THE CLAIM MADE BY ASSESSEE WH ILE FILING THE RETURN OF INCOME WAS CORRECT AS PER THE PROVISIONS PREVALENT AT THAT TIME AND DU E TO SUBSEQUENT AMENDMENT I.E. RETROSPECTIVE AMENDMENT THIS ADDITION WAS MADE AND INTEREST U/S. 234B AND 234C WAS ALSO CHARGED BY AO. NOW THE QUESTION ARISES WHETHER INTEREST U/S. 234B AND 234C OF THE ACT CAN BE LEVIED WHERE TAX LIABILITY HAS ARISEN DUE TO RETROSPECTIVE AMENDMENT . THIS ISSUE IS NOW COVERED BY THE CASE LAW OF HONBLE CALCUTTA HIGH COURT IN THE CASE OF EMAMI LTD. VS. CIT (2011) 337 ITR 470 (CAL) WHEREIN TWO SUBSTANTIAL QUESTIONS OF LAW WERE FRAME D BY HONBLE HIGH COURT WHICH ARE AS UNDER: (A) WHETHER ON A TRUE AND PROPER INTERPRETATION OF THE RELEVANT PROVISIONS OF THE INCOME TAX ACT, 1961, THE PROVISIONS RELATING TO PAYMENT O F ADVANCE TAX ARE APPLICABLE IN A CASE WHERE THE BOOK PROFIT IS DEEMED TO BE THE TOTAL INC OME UNDER SECTION 115JB? (B) WHETHER AND IN ANY EVENT, ON A TRUE AND PROPER INTERPRETATION OF THE RELEVANT PROVISIONS OF THE INCOME TAX ACT, 1961, THE PROVISI ONS OF SECTIONS 234B AND 234C ARE ATTRACTED IN A CASE WHERE THERE WAS NO LIABILITY TO PAY ANY ADVANCE TAX UNDER SECTION 208 ON ANY OF THE DUE DATES FOR PAYMENT OF THE ADVANCE TAX INSTALMENTS AND THERE IS RETROSPECTIVE AMENDMENT OF THE LAW LONG AFTER THE C LOSE OF THE FINANCIAL YEAR IMPOSING LIABILITY FOR TAX? 5. FURTHER, LD. COUNSEL FOR THE ASSESSEE HAS ALSO R ELIED ON THE DECISION OF HONBLE SUPREME COURT IN THE CASE OF JCIT VS. ROLTA INDIA L TD. (2011) 330 ITR 470 (SC) WHEREIN HONBLE SUPREME COURT VIDE PARA 11 HELD AS UNDER: 11. A MERE READING OF THOSE PROVISIONS LEAVES NO D OUBT THAT THE ADVANCE TAX IS AN AMOUNT PAYABLE IN ADVANCE DURING ANY FINANCIAL YEAR IN ACC ORDANCE WITH THE PROVISIONS OF THE ACT IN RESPECT OF THE TOTAL INCOME OF THE ASSESSEE WHIC H WOULD BE CHARGEABLE TO TAX FOR THE ASSESSMENT YEAR IMMEDIATELY FOLLOWING THAT FINANCIA L YEAR. THUS, IN ORDER TO HOLD AN ASSESSEE LIABLE FOR PAYMENT OF ADVANCE TAX, THE LIA BILITY TO PAY SUCH TAX MUST EXIST ON THE LAST DATE OF PAYMENT OF ADVANCE TAX AS PROVIDED UN DER THE ACT OR AT LEAST ON THE LAST DATE OF 4 ITA 1880, 1881, 1882,1029 & 1301/K/2010 A.Y. 07-08 & 06-07 THE FINANCIAL YEAR PRECEDING THE ASSESSMENT YEAR IN QUESTION. IF SUCH LIABILITY ARISES SUBSEQUENTLY WHEN THE LAST DATE OF PAYMENT OF ADVAN CE TAX OR EVEN THE LAST DATE OF THE FINANCIAL YEAR PRECEDING THE ASSESSMENT YEAR IS OVE R, IT IS INAPPROPRIATE TO SUGGEST THAT STILL THE ASSESSEE HAD THE LIABILITY TO PAY ADVANCE TAX WITHIN THE MEANING OF THE ACT. 6. WE FIND FROM THE ABOVE RULINGS OF HONBLE SUPREM E COURT AND HONBLE CALCUTTA HIGH COURT THAT THERE IS NO DISPUTE ABOUT THE PROPOSITIO N THAT ASSESSEE WAS LIABLE TO PAY ADVANCE TAX ON INCOME DETERMINED IN ACCORDANCE WITH THE PROVISI ONS OF SECTION 115JB OF THE ACT. HOWEVER, WHETHER THERE IS ANY LIABILITY TO PAY INTE REST U/S. 234B AND 234C OF THE ACT WILL DEPEND UPON THE POSITION OF LAW IN REGARD TO A PART ICULAR ISSUE AS PREVAILING ON THE DATE AND FILING OF RETURN OF INCOME AND NOT ON THE BASIS OF SUBSEQUENT EVENT I.E. RETROSPECTIVE AMENDMENT BY VIRTUE OF FINANCE ACT, 2008 W.E.F. 01.04.2001. THE ASSESSEE CANNOT BE ASKED TO DO IMPOSSIBLE. HERE, IN THE PRESENT, THE RELEVANT AS SESSMENT YEAR IS 2006-07 AND ASSESSEE FILED ITS RETURN OF INCOME ON 29.11.2006 I.E. MUCH PRIOR TO T HE AMENDMENT BROUGHT OUT BY FINANCE ACT, 2008 RETROSPECTIVELY W.E.F. 01.04.2001 BRINGING INT O A PROCEDURE FOR DETERMINATION OF MAT TAX AFTER ADJUSTMENT OF NEW ITEM I.E. DEFERRED TAX PROV ISION. ACCORDINGLY, WE ARE OF THE VIEW THAT HONBLE CALCUTTA HIGH COURT HAS ANSWERED THIS QUEST ION BY HOLDING THAT AN ASSESSEE IS LIABLE FOR PAYMENT OF ADVANCE TAX IF THE LIABILITY TO PAY SUCH TAX EXISTS ON THE LAST DATE OF PAYMENT OF ADVANCE TAX AS PROVIDED UNDER THE ACT OR AT LEAST O N THE LAST DATE OF FINANCIAL YEAR PRECEDING THE ASSESSMENT YEAR IN QUESTION. ACCORDING TO HONBLE H IGH COURT IF SUCH A LIABILITY ARISES SUBSEQUENTLY WHEN THE LAST DATE FOR PAYMENT OF ADVA NCE TAX OR EVEN THE LAST DATE OF FINANCIAL YEAR PRECEDING THE ASSESSMENT YEAR IS OVER, ASSESSE E HAS NO LIABILITY TO PAY ADVANCE TAX. WHERE THIS IS THE POSITION, INTEREST U/S. 234B AND 234C C ANNOT BE CHARGED IN THIS CASE. WE ALLOW THIS ISSUE OF ASSESSEES APPEAL. 7. NOW, WE TAKE UP ITAT NO. 1301/K/2010 (REVENUES APPEAL). THE ONLY ISSUE IN THIS APPEAL OF REVENUE IS AGAINST THE ORDER OF CIT(A) DE LETING THE ADDITION MADE BY ASSESSING OFFICER BY ESTIMATING GP AFTER REJECTING BOOKS OF A CCOUNT ON THE BASIS OF STATEMENT OF SHRI VIKASH AGARWAL. FOR THIS, REVENUE HAS RAISED FOLLO WING THREE GROUNDS: 1. THAT IN THE FACTS AND CIRCUMSTANCES OF THE CASE AND IN LAW, THE LD. CIT( A) HAS ERRED IN LAW IN DELETING THE ADDITION OF RS.1,09,20 ,000/- ON ACCOUNT OF ESTIMATED G.P. MADE AFTER REJECTING THE BOOKS OF ACCOUNT OF THE AS SESSEE ON THE BASIS OF STATEMENT OF SHRI VIKASH AGARWAL, WHO CATEGORICALLY ADMITTED THA T ALL THE ALLEGED PURCHASES MADE BY THE ASSESSEE FROM M/S. VIKASH IRON STEEL PVT. LT D AND OTHER CONCERNS WERE NOT GENUINE AND WERE WITHOUT ACTUAL MOVEMENT OF GOODS A ND FOR WHICH FAKE BILLS WERE ISSUED BY THE SAID SHRI VIKASH ARAGWAL. 2. THAT IN THE FACTS AND CIRCUMSTANCES OF THE CASE AND IN LAW, THE LD. CIT(A) HAS ERRED IN LAW IN HOLDING THAT THE STATEMENT OF SHRI VIKASH AGARWAL WAS NOT RELIABLE AND REJECTION OF ACCOUNTS OF THE ASSESSEE U/S 145 OF TH E ACT BY THE A.O. WAS INCORRECT, 5 ITA 1880, 1881, 1882,1029 & 1301/K/2010 A.Y. 07-08 & 06-07 PARTICULARLY WHEN THE ASSESSEE FAILED TO PRODUCE AN Y EVIDENCE TO ESTABLISH THAT PURCHASES MADE FROM THE CONCERNS OF SHRI VIKASH AGA RWAL WERE GENUINE AND ALSO FAILED TO REBUT THE STATEMENT OF SHRI AGARWAL. 3. THAT IN THE FACTS AND CIRCUMSTANCES OF THE CASE AND IN LAW, THE LD. CIT( A) HAS ERRED IN LAW IN DELETING THE ADDITION ON THE BASIS OF SUC H EVIDENCES COLLECTED BY THE A.O. DURING THE ASSESSMENT PROCEEDINGS OF A.Y. 2007-08 I N ASSESSEES OWN CASE WITHOUT APPRECIATING THAT THE PRINCIPLE OF RE-JUDICATA IS N OT APPLICABLE TO INCOME TAX PROCEEDING AS ASSESSMENT OF EVERY YEAR IS DIFFERENT AND WITHOUT APPRECIATING THAT ADDITION WAS ALSO MADE BY THE A.O. IN A.Y. 2007-08. 8. BRIEF FACTS LEADING TO THE ABOVE ISSUE ARE THAT THE ASSESSEE IS ENGAGED IN THE BUSINESS OF MANUFACTURING AS WELL AS TRADING IN MAIN RAW MATERI AL OF IRON ORE, COAL AND DOLOMITE AND ALSO PRODUCTION OF SPONGE IRON. THE ASSESSEE ALSO START ED PRODUCTION OF M.S INGOTS DURING THE FY RELEVANT TO THIS ASSESSMENT YEAR AND ALSO STARTED T RADING IN IRON AND STEEL. THE ASSESSEE FILED ITS E-RETURN ON 29.11.2006 AND THIS RETURN WAS PROCESSE D U/S. 143(1) OF THE ACT ON 22.09.2007. SUBSEQUENTLY, TO FRAME ASSESSMENT NOTICE U/S. 143(2 ) OF THE ACT WAS ISSUED ON 11.10.2007. AS PER THE ASSESSMENT ORDER ASSESSEE STARTED TRADING I N IRON AND STEEL GOODS ON 7.3.2006 AND ALSO MADE PURCHASES FROM VIKASH IRON STEEL PVT. LTD. (IN SHORT VISPL) FOR TRADING IN THESE ITEMS. THE ASSESSING OFFICER OF THIS ASSESSEE RECEIVED INF ORMATION FROM ASSESSING OFFICER OF VISPL THAT A SURVEY WAS CONDUCTED ON THE BUSINESS PREMISE S OF VISPL ON 26.02.2008 U/S. 133A OF THE ACT. ACCORDING TO ASSESSING OFFICER OF VISPL, SHRI VIKASH AGARWAL, DIRECTOR OF VISPL ON 05.03.2008 U/S. 131 OF THE ACT, DEPOSED BEFORE ASSE SSING OFFICER THAT CERTAIN SALE BILLS ISSUED BY VISPL AND IMPOUNDED DURING THE COURSE OF SURVEY ARE ONLY PAPER BILLS/ACCOMMODATION ENTRIES AND THERE IS NO ACTUAL TRANSACTION OF GOODS OR ACTUAL MOVEMENT OF GOODS. ACCORDING TO ASSESSING OFFICER, THESE BILLS INCLUDING THE SALES MADE BY VISPL TO ASSESSEE ARE IRON AND STEEL. ACCORDINGLY, ASSESSING OFFICER ISSUED NOTICE U/S. 1 33(6) OF THE ACT TO VISPL DURING ASSESSMENT PROCEEDINGS BUT THERE IS NO RESPONSE OF THE SAME. THE ASSESSING OFFICER RELYING ON THE STATEMENT OF SHRI VIKASH AGARWAL, DIRECTOR OF V ISPL HAS GIVEN TO THE ASSESSING OFFICER OF VISPL COMPUTED THE INCOME FROM TRADING OF BUSINESS OF IRON AND STEEL. ACCORDING TO ASSESSING OFFICER, IN THE TRADING BUSINESS OF IRON AND STEEL GOODS THE QUANTITY OF IRON AND STEEL GOODS PURCHASED BY ASSESSEE WERE SOLD IN IDENTICAL MANNER WITHIN 2/3 DAYS OF PURCHASE AND ON THE BASIS OF THE SAME STATEMENT OF SHRI VIKASH AGAR WAL TREATED THESE TRANSACTIONS ENTERED AS JAMA KHARCHI OR ACCOMMODATION ENTRY. ACCORDING LY, ASSESSING OFFICER REJECTED THE BOOK RESULTS AND APPLIED GP AT 10.07% ON A TOTAL TURNOVE R OF RS.86.838 CR. ACCORDINGLY, THE ASSESSING OFFICER WORKED OUT THE GROSS PROFIT AT RS .1,09,20,000/- AND ADDED TO THE RETURNED INCOME OF THE ASSESSEE. AGGRIEVED, ASSESSEE PREFER RED APPEAL BEFORE CIT(A), WHO DELETED THE ADDITION BY GIVING FOLLOWING FINDING IN PARA 4 OF H IS ORDER: 6 ITA 1880, 1881, 1882,1029 & 1301/K/2010 A.Y. 07-08 & 06-07 4. I HAVE GONE THROUGH THE ASSESSMENT ORDER, SUBMI SSIONS OF APPELLANT AND ASSESSING OFFICER. I HAVE ALSO GONE THROUGH THE ASSESSMENT O RDER OF ASSESSMENT YEAR 2007-08 IN APPELLANTS OWN CASE ON THE SAME ISSUE WHERE FURTHER EVIDENCES WERE COLLECTED BY THE ASSESSING OFFICER DURING THE COURSE OF ASSESSMENT P ROCEEDINGS. ASSESSING OFFICER HAS PRACTICALLY REJECTED THE SAME STATEMENT OF SHRI VIK ASH AGARWAL WHICH IS THE SUBJECT MATTER OF DISPUTE IN THE ASSESSMENT YEAR UNDER APPE AL IN THE ASSESSMENT OF ASSESSMENT YEAR 2007-08 IN APPELLANTS OWN CASE BECAUSE SHRI V IKASH AGARWAL DID NOT APPEAR FOR CROSS EXAMINATION BEFORE THE ASSESSING OFFICER. ASS ESSING OFFICER EXAMINED THE BANK ACCOUNTS OF OTHER GROUP CONCERNS OF SHRI VIKASH AGA RWAL, NAMELY, TRADEWEL CONCERN AND S.P. ENTERPRISE IN THE ASSESSMENT OF ASSESSMENT YEAR 2007-08 AND FOUND THAT THOUGH THE CHEQUES ISSUED BY APPELLANT TO THESE CONCERNS I N ASSESSMENT YEAR 2007-08 WERE DEPOSITED IN THESE BANK ACCOUNTS, NO CASH WAS WITHD RAWN TO BE RETURNED TO APPELLANT AS CLAIMED BY SHRI VIKASH AGARWAL AND AS HAPPENS IN CA SE OF PAPER BILLS WITHOUT THE MOVEMENT OF STOCK. SHRI VIKASH AGARWAL HAD THEREFOR E STATED INCORRECTLY IN HIS STATEMENT DATED 05.03.2007 THAT AMOUNT IS WITHDRAWN TO BE GIV EN BACK TO THE APPELLANT FROM THE BANK ACCOUNTS OF TRADEWEL CONCERN AND S.P. ENTERPRI SE AS PER THE FINDINGS OF ASSESSING OFFICER IN ASSESSMENT YEAR 2007-08. THE TRANSPORT B ILLS OF TRADED IRON & STEEL GOODS WERE ALSO VERIFIED BY THE ASSESSING OFFICER IN THE ASSESSMENT OF ASSESSMENT YEAR 2007- 08 AND FOUND THAT THE SAME IN ORDER. THEREFORE THE STATEMENT OF SHRI VIKASH AGARWAL DATED 05.03.2007 THAT THE PAPER BILLS WERE DRAWN WI THOUT MOVEMENT OF GOODS IS ALSO PROVED INCORRECT. THE PURCHASES OF IRON & STEEL GOO DS FROM VISPL ARE DULY REFLECTED BY APPELLANT IN ITS BOOKS OF ACCOUNTS AND ARE DULY AUD ITED WHEREAS VISPL CATEGORICALLY DENIED PRODUCING ITS AUDITED BOOKS OF ACCOUNTS BEFO RE ITS OWN ASSESSING OFFICER FOR VERIFICATION OF THE CORRESPONDING SALES TO APPELLAN T AS MENTIONED IN THE REMAND REPORT OF THE ASSESSING OFFICER. IN VIEW OF SUCH OBSERVATION OF ASSESSING OFFICER IN HIS REMAND REPORT AND SUCH EVIDENCES COLLECTED BY ASSESSING OF FICER DURING THE ASSESSMENT PROCEEDINGS OF ASSESSMENT YEAR 2007-08, IT IS CONCL USIVELY PROVED THAT SHRI VIKASH AGARWAL HAD MADE A WRONG STATEMENT ON 05.03.2007 BE FORE THE ASSESSING OFFICER OF VISPL. I FIND THAT THE STATEMENT OF VIKASH AGARWAL IS NOT RELIABLE AND DESERVES TO BE IGNORED. I FIND THAT ASSESSING OFFICER HAS NO OTHER EVIDENCE TO PROVE THAT THE ACCOUNTS OF APPELLANT ARE INCORRECT AND THEREFORE THE REJECTION OF THE ACCOUNTS OF APPELLANT BY ASSESSING OFFICER IS ALSO HELD TO BE INCORRECT. IF THE BOOKS OF ACCOUNTS OF APPELLANT CANNOT BE REJECTED U/S 145 OF THE I. T. ACT, THE QUESTION OF ANY ESTIMATION OF INCOME DOES NOT ARISE. I THEREFORE DELETE THE ADDITIONAL ESTIMATION OF INCOME OF RS 1,09,20,000/- MADE BY THE ASSESSING OFFICER OVER AND ABOVE THE INCOME DUL Y REFLECTED IN THE AUDITED BOOKS OF ACCOUNTS OF APPELLANT AND DIRECT THE ASSESSING OFFI CER TO REDUCE THE TOTAL INCOME ACCORDINGLY. AGGRIEVED, NOW REVENUE IS IN APPEAL BEFORE US. 9. WE HAVE HEARD RIVAL SUBMISSIONS AND GONE THROUGH FACTS AND CIRCUMSTANCES OF THE CASE. WE FIND THAT THE ASSESSING OFFICER HAS REJECTED THE BOOKS OF ACCOUNT ONLY ON ONE PREMISE THAT SHRI VIKASH AGARWAL OF VISPL HAS GIVEN A STATEMENT DURING THE COURSE OF SURVEY ON THE PREMISE OF VISPL ON 05.03.2008 THAT THE IMPOUNDED B ILLS OF SALE OF VISPL INDICATES THAT THESE ARE ONLY PAPER BILLS/ACCOMMODATION ENTRIES WITHOUT ACTUAL ENTERING INTO TRANSACTIONS AND ON THAT BASIS THE ENTIRE TRANSACTION ENTERED INTO BY ASSESS EE WITH VISPL WAS TREATED AS ACCOMMODATION ENTRIES AND ESTIMATED THE TURNOVER AT RS.86.838 CR. AND MADE ADDITION OF GP AT RS.1,09,20,000/- ASSESSEES CONTENTION FROM THE VERY BEGINNING WAS T HAT ALL THE TRANSACTIONS OF MANUFACTURING AND TRADING IS SUPPORTED BY BILLS AND VOUCHERS AND THESE PURCHASES AND SALES ARE MADE BY WAY 7 ITA 1880, 1881, 1882,1029 & 1301/K/2010 A.Y. 07-08 & 06-07 OF ACCOUNT PAYEE CHEQUES, BILLS AND VOUCHERS, BANK STATEMENTS AND OTHER DOCUMENTARY EVIDENCES BEFORE THE ASSESSING OFFICER. EVEN THE A SSESSEE PRODUCED COMPLETE EXPENSES VOUCHERS BEFORE THE ASSESSING OFFICER. ACCORDING T O ASSESSEE, AS PER ACCOUNTS AUDITED THERE IS INCREASE IN TURNOVER IN COMPARISON TO LAST YEAR AND THIS IS AN ADMITTED FACT THAT THE TURNOVER IN THE PRESENT CASE IS MUCH HIGHER. WE FIND THAT THE ASSESSING OFFICER HAS NOTED ON THE BASIS OF DEPOSITION MADE BY SHRI VIKASH AGARWAL OF VISPL GIV EN DURING THE COURSE OF SURVEY ON VISPL THAT THESE ENTRIES OR SALE BILLS ARE JUST ENT RIES OR ACCOMMODATION ENTRIES. WE FIND THAT AO NEVER ALLOWED OPPORTUNITY TO ASSESSEE TO EXAMINE SHRI VIKASH AGARWAL BEFORE MAKING ADDITION. IT IS ALSO A FACT THAT SHRI VIKASH AGARW AL IS ABSCONDING AFTER SURVEY IN HIS COMPANY VISPL AND ASSESSING OFFICER USED THE DEPOSITION MAD E BY SHRI VIKASH AGARWAL WHEREIN HE ADMITTED THAT THE BILLS RAISED IN FAVOUR OF ASSESSE E IS FAKE AND ASSESSING OFFICER ACCEPTED THE STATEMENT AND HELD THE TRANSACTIONS ENTERED INTO AS BOGUS PURCHASE. EVEN IT IS ALSO A FACT THAT ASSESSEE WAS NOT PROVIDED WITH COPY OF STATEMENT OF SHRI VIKASH AGARWAL. WE FIND THAT APART FROM VIKASH AGARWALS STATEMENT THERE IS NOTHING ON RECORD OR NO INCRIMINATING MATERIAL WAS FOUND OR POINTED OUT WHICH WOULD PROBABLY COULD LEA D TO SUCH ADMISSION. WE FIND THAT IN THE PRESENT CASE ASSESSEE HAS MAINTAINED PROPER BOOKS O F ACCOUNT SUPPORTED BY BILLS AND VOUCHERS AND THESE BOOKS OF ACCOUNT INCLUDING BILLS AND VOUC HERS ARE AUDITED. ANOTHER FACTOR IS THAT OUT OF THE ABOVE PURCHASES FROM VISPL ASSESSEE HAS ALSO MADE SALES TO VARIOUS PERSONS AND EARNED SUBSTANTIAL PROFITS. IT IS ALSO A FACT THAT GENUIN ENESS OF SUCH SALES HAS NOT BEEN DOUBTED BY THE REVENUE. IT IS ALSO A FACT THAT THE ASSESSEE HAS M ADE THESE SALES THROUGH BANKING CHANNEL AND THERE ARE PROPER ENTRY OF EVERY PURCHASE AND SALE R ECORDED IN ASSESSEES BOOKS OF ACCOUNT. THE ASSESSEE BEFORE US FILED DETAILS AND QUANTITY AND V ALUE OF PURCHASES FROM VISPL AND CORRESPONDING TRADING SALES WITH NAME OF PARTY, THE DATE, QUANTITY AND VALUE WHICH IS GIVEN AT ASSESSEES PAPER BOOK. FROM THE PAPER BOOK WE FIND THAT 2370.41 MT GOODS FOR A SUM OF RS.4,55,97,434/- WERE PURCHASED FROM VISPL AND THIS MATERIAL WAS SOLD TO EIGHT PARTIES AT A SUM OF RS.6,01,65,630/-. IT IS CLEAR FROM THE ABOV E THAT FROM THE TRADING PURCHASES FROM VISPL ASSESSEE HAS EARNED GP OF RS.1,45,68,196/- AT THE P ROFIT RATE OF 24.2%. THE ASSESSEE HAS ENCLOSED ALL THE PURCHASES AND SALES BILLS AND CHAL LANS AND FILED COPIES WITH ASSESSING OFFICER ALSO. FROM THE DETAILS AND DOCUMENTS FILED IN THE ASSESSEES PAPER BOOK IT IS CLEAR THAT ENTIRE PURCHASE AND SALE ARE SUPPORTED WITH PROPER DOCUMEN TS AND ASSESSEE HAS EARNED SUBSTANTIAL PROFITS ON ITS TRADING ACTIVITIES INCLUDING SALES M ADE OUT OF PURCHASE OF GOODS FROM VISPL. WE FIND THAT THE ONLY DOCUMENT WITH THE REVENUE IS ORA L STATEMENT OF SHRI VIKASH AGARWAL, WHICH IS THE ONLY EVIDENCE USED AGAINST THE ASSESSEE FOR MAKING SUCH HUGE ADDITION. AGAIN NO OPPORTUNITY OF CROSS EXAMINATION OF SHRI VIKASH AGA RWAL WAS MADE AVAILABLE TO THE ASSESSEE. IN SUCH CIRCUMSTANCES, WHETHER THE ASSESSING OFFICE R CAN REJECT THE BOOKS OF ACCOUNT AND APPLY 8 ITA 1880, 1881, 1882,1029 & 1301/K/2010 A.Y. 07-08 & 06-07 GP RATE. IN OUR VIEW THE AO CANNOT REJECT THE BOOKS OF ACCOUNT BECAUSE THERE IS NO DEFECT POINTED OUT AND EVEN THERE IS NO SURVEY ON THE BUSI NESS PREMISES OF THE ASSESSEE. EVEN THERE IS NO INCRIMINATING MATERIAL FOUND WHICH SHOWS THAT TH E ASSESSEE HAS MADE MORE PURCHASES THAN RECORDED IN THE BOOKS OF ACCOUNT. EVEN ALL THE PUR CHASES ARE MADE THROUGH BANKING CHANNELS. IN SUCH CIRCUMSTANCES, REJECTION OF BOOKS OF ACCOUN T AND APPLICATION OF HIGHER GP IS WITHOUT ANY BASIS AND CIT(A) HAS RIGHTLY DELETED THE SAME. WE CONFIRM THE SAME. THIS ISSUE OF REVENUES APPEAL IS DISMISSED. 10. NOW, WE TAKE UP ITA NO.1880, 1881 & 1882/K/2010 FILED BY REVENUE. THE ONE COMMON ISSUE IN THESE APPEALS OF REVENUE IS AGAINST THE ORDER OF CIT(A) DELETING THE ADDITION MADE BY ASSESSING OFFICER BY ESTIMATING GP AFTER RE JECTING BOOKS OF ACCOUNT ON THE BASIS OF STATEMENT OF SHRI VIKASH AGARWAL. FOR THIS, REVENU E HAS RAISED FOLLOWING GROUND IN ITA NO. 1880/K/2010: 1. THAT ON THE FACTS AND IN THE CIRCUMSTANCES OF T HE CASE AND IN LAW THE LD. CIT(A) HAS ERRED IN DELETING ADDITION OF RS.10,00,000/- MADE O N ACCOUNT OF LOW GROSS PROFIT IN RESPECT OF TRADED GOODS PURCHASED FROM M/S. VIKASH IRON & STEEL (P) LTD, M/S. TRADEWEL CONCERN AND M/S. S.P. ENTERPRISES, BY HOLDING THAT REJECTION OF ACCOUNTS OF THE ASSESSEE WAS INCORRECT, WITHOUT APPRECIATING THE FACT THAT A NOTHER COMPANY UNDER THE SAME MANAGEMENT AND CONTROL HAS SHOWN HIGHER GROSS PROFI T IN RESPECT OF TRADED GOODS PURCHASED FROM ABOVE MENTIONED CONCERNS. IN ITA NOS. 1881&1882/K/2010 THE REVENUE ALSO RAISE D FOLLOWING COMMON GROUND EXCEPT VARIANCE IN AMOUNT: 1.THAT ON THE FACTS AND IN THE CIRCUMSTANCES OF TH E CASE AND IN LAW THE LD. CIT(A) HAS ERRED IN DELETING ADDITION OF RS.59,07,014/- MADE O N ACCOUNT OF LOW GROSS PROFIT IN RESPECT OF TRADED GOODS PURCHASED FROM M/S. VIKASH IRON & STEEL (P) LTD., M/S. TRADEWEL CONCERN AND M/S. S.P. ENTERPRISES, BY HOLDING THAT REJECTION OF ACCOUNTS OF THE ASSESSEE WAS INCORRECT, WITHOUT APPRECIATING THE FACT THAT A NOTHER COMPANY UNDER THE SAME MANAGEMENT AND CONTROL HAS SHOWN HIGHER GROSS PROFI T IN RESPECT OF TRADED GOODS PURCHASED FROM ABOVE MENTIONED CONCERNS. SINCE ISSUE IS IDENTICAL AND WE HAVE DECIDED THE SA ME AGAINST THE REVENUE AND IN FAVOUR OF ASSESSEE IN ITA NO.1301/K/2010, IN THESE APPEALS AL SO WE DISMISS THIS GROUND OF APPEAL OF REVENUE ON SIMILAR REASONINGS. 11. NOW, WE WILL TAKE UP ITA NO.1880/K/2010 (REVENU ES APPEAL), IN WHICH THE ISSUE IS RETARDING CHARGING OF INTEREST U/S. 234B AND 234C O F THE ACT. FOR THIS, REVENUE HAS RAISED FOLLOWING TWO GROUNDS: 2. THAT ON THE FACTS AND IN THE CIRCUMSTANCES OF TH E CASE AND IN LAW THE LD. CIT(A) HAS ERRED IN DELETING THE INTEREST UNDER SECTIONS 234B AND 234C ON THE INCOME COMPUTED UNDER SECTION 115JB OF THE INCOME TAX ACT, 9 ITA 1880, 1881, 1882,1029 & 1301/K/2010 A.Y. 07-08 & 06-07 3. THAT ON THE FACTS AND IN THE CIRCUMSTANCES OF TH E CASE AND IN LAW THE LD. CIT(A) HAS ERRED IN HOLDING THAT NO METHOD OF COMPUTATION OF A DVANCE TAX ON FICTIONAL INCOME IS PROVIDED IN SECTION 115J AND 115JA ON 115JB WHEREAS PROVISIONS OF SECTION 115JB(5) PROVIDES THAT SAVE AS OTHERWISE PROVIDED IN THIS SE CTION, ALL PROVISIONS OF THE ACT SHALL APPLY TO THE ASSESSEE BEING A COMPANY MENTIONED IN THE SAID SECTION AND ACCORDINGLY THE PROVISION OF SECTION 208 OF THE ACT REGARDING ADVAN CE TAX LIABILITY IS ALSO APPLICABLE IN THE INSTANT CASE. 12. SINCE IDENTICAL ISSUE, WE HAVE ALREADY DECIDED AGAINST THE REVENUE IN ITA NO.1029/K/2010 FILED BY ASSESSEE IN FAVOUR OF ASSES SEE, HENCE, WE DISMISS THIS APPEAL OF REVENUE ON SIMILAR REASONING. 13. IN THE RESULT, APPEALS OF REVENUE ARE DISMISSED AND THAT OF ASSESSEE IS ALLOWED. 14. ORDER PRONOUNCED IN OPEN COURT ON 13.04.2012 SD/- SD/- . . , !' , (C. D. RAO) (MAHAVIR SINGH) ACCOUNTANT MEMBER JUDICIAL MEMBER ( ' ' ' ') )) ) DATED : 13 TH APRIL, 2012 ./ $01 2 JD.(SR.P.S.) !- 3 +4 5!4&6- COPY OF THE ORDER FORWARDED TO: 1 . )* / APPELLANT DCIT, C.C. XIII, KOLKATA. 2 +,)* / RESPONDENT M/S. JAI BALAJI JYOTI STEELS LTD., J AI SALASAR BALAJI INDUSTRIES PVT. LTD. & JAI BALAJI SPONGE LTD.5, BEN TINCK STREET, KOLKATA-700 001. 3 . -$ ( )/ THE CIT(A), KOLKATA 4. -$ / CIT, KOLKATA 5 . => +$ / DR, KOLKATA BENCHES, KOLKATA ,4 +/ TRUE COPY, !-$?/ BY ORDER, 1 /ASSTT. REGISTRAR . 10 ITA 1880, 1881, 1882,1029 & 1301/K/2010 A.Y. 07-08 & 06-07