ASHIANA ISPAT LTD., Alwar V. ACIT, Alwar

ITA 191/JPR/2014

• Counselvise Citation: 19123114 RSA 2014
• Duration Of Justice: 9 month(s) 7 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 19-12-2014
• Appeal Filed By: Assessee
• Order Result: Partly Allowed
• Bench Allotted: A
• Assessment Year: 2003-2004
• Appeal Filed On: 12-03-2014
• Result in Favour of: Partly Allowed
• Court: TRIBUNAL
• Department Lawyers: ROLEE AGARWAL
• Assessee Lawyers: P K MISHRA
• Keywords: Unexplained investment; Depreciation; Income from undisclosed sources; Rectification of order; Search and seizure; Opportunity of being heard; Additional evidence; Documents seized
• Section: 143(3); 142(1); 153A; 133(6); 37(1); 12; 154

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL JAIPUR BENCH: JAIPUR (BEFORE SHRI R.P. TOLANI AND SHRI T.R. MEENA) I.T.A. NO. 191/JP/2014 ASSTT. YEAR- 2003-04 PAN NO. AACCA 8749 B M/S ASHIANA ISPAT LIMITED THE A.C.I.T., A-1116, RIICO INDUSTRIAL AREA, VRS. CENTRAL CIRCL E, PHASE-III, BHIWADI, ALWAR (RAJ.). ALWAR. (APPELLANT) (RESPONDENT) I.T.A. NO. 472/JP/2012 ASSTT. YEAR- 2004-05 PAN NO. AACCA 8749 B M/S ASHIANA ISPAT LIMITED THE A.C.I.T., A-1116, RIICO INDUSTRIAL AREA, VRS. CENTRAL CIRCL E, PHASE-III, BHIWADI, ALWAR (RAJ.). ALWAR. (APPELLANT) (RESPONDENT) I.T.A. NO. 601/JP/2012 ASSTT. YEAR- 2004-05 PAN NO. AACCA 8749 B THE D.C.I.T., M/S ASHIANA ISPAT LIMITED CENTRAL CIRCLE, VRS. A-1116, RIICO INDUSTRIAL AR EA, ALWAR. PHASE-III, BHIWADI, ALWAR (RAJ.). (APPELLANT) (RESPONDENT) ITA 191/JP/2014 & 472 TO 477/JP/2012 ASHIANA ISPAT LTD. VS. ACIT 2 I.T.A. NO. 473/JP/2012 ASSTT. YEAR- 2005-06 PAN NO. AACCA 8749 B M/S ASHIANA ISPAT LIMITED THE A.C.I.T., A-1116, RIICO INDUSTRIAL AREA, VRS. CENTRAL CIRCL E, PHASE-III, BHIWADI, ALWAR (RAJ.). ALWAR. (APPELLANT) (RESPONDENT) I.T.A. NO. 602/JP/2012 ASSTT. YEAR- 2005-06 PAN NO. AACCA 8749 B THE D.C.I.T., M/S ASHIANA ISPAT LIMITED CENTRAL CIRCLE, VRS. A-1116, RIICO INDUSTRIAL AR EA, ALWAR. PHASE-III, BHIWADI, ALWAR (RAJ.). (APPELLANT) (RESPONDENT) I.T.A. NO. 474/JP/2012 ASSTT. YEAR- 2006-07 PAN NO. AACCA 8749 B M/S ASHIANA ISPAT LIMITED THE A.C.I.T., A-1116, RIICO INDUSTRIAL AREA, VRS. CENTRAL CIRCL E, PHASE-III, BHIWADI, ALWAR (RAJ.). ALWAR. (APPELLANT) (RESPONDENT) I.T.A. NO. 603/JP/2012 ASSTT. YEAR- 2006-07 PAN NO. AACCA 8749 B THE D.C.I.T., M/S ASHIANA ISPAT LIMITED CENTRAL CIRCLE, VRS. A-1116, RIICO INDUSTRIAL AR EA, ALWAR. PHASE-III, BHIWADI, ALWAR (RAJ.). (APPELLANT) (RESPONDENT) ITA 191/JP/2014 & 472 TO 477/JP/2012 ASHIANA ISPAT LTD. VS. ACIT 3 I.T.A. NO. 475/JP/2012 ASSTT. YEAR- 2007-08 PAN NO. AACCA 8749 B M/S ASHIANA ISPAT LIMITED THE A.C.I.T., A-1116, RIICO INDUSTRIAL AREA, VRS. CENTRAL CIRCL E, PHASE-III, BHIWADI, ALWAR (RAJ.). ALWAR. (APPELLANT) (RESPONDENT) I.T.A. NO. 604/JP/2012 ASSTT. YEAR- 2007-08 PAN NO. AACCA 8749 B THE D.C.I.T., M/S ASHIANA ISPAT LIMITED CENTRAL CIRCLE, VS. A-1116, RIICO INDUSTRIAL ARE A, ALWAR. PHASE-III, BHIWADI, ALWAR (RAJ.). (APPELLANT) (RESPONDENT) I.T.A. NO. 476/JP/2012 ASSTT. YEAR- 2008-09 PAN NO. AACCA 8749 B M/S ASHIANA ISPAT LIMITED THE A.C.I.T., A-1116, RIICO INDUSTRIAL AREA, VRS. CENTRAL CIRCL E, PHASE-III, BHIWADI, ALWAR (RAJ.). ALWAR. (APPELLANT) (RESPONDENT) I.T.A. NO. 605/JP/2012 ASSTT. YEAR- 2008-09 PAN NO. AACCA 8749 B THE D.C.I.T., M/S ASHIANA ISPAT LIMITED CENTRAL CIRCLE, VS. A-1116, RIICO INDUSTRIAL ARE A, ALWAR. PHASE-III, BHIWADI, ALWAR (RAJ.). (APPELLANT) (RESPONDENT) ITA 191/JP/2014 & 472 TO 477/JP/2012 ASHIANA ISPAT LTD. VS. ACIT 4 I.T.A. NO. 477/JP/2012 ASSTT. YEAR- 2009-10 PAN NO. AACCA 8749 B M/S ASHIANA ISPAT LIMITED THE A.C.I.T., A-1116, RIICO INDUSTRIAL AREA, VRS. CENTRAL CIRCL E, PHASE-III, BHIWADI, ALWAR (RAJ.). ALWAR. (APPELLANT) (RESPONDENT) I.T.A. NO. 608/JP/2012 ASSTT. YEAR- 2009-10 PAN NO. AACCA 8749 B THE D.C.I.T., M/S ASHIANA ISPAT LIMITED CENTRAL CIRCLE, VS. A-1116, RIICO INDUSTRIAL ARE A, ALWAR. PHASE-III, BHIWADI, ALWAR (RAJ.). (APPELLANT) (RESPONDENT) ASSESSEE BY :- SHRI NEERAJ JAIN & SHRI P.K. MISHRA (C.A.) DEPARTMENT BY :- SMT. ROLEE AGARWAL (CIT) DATE OF HEARING : 25/11/2014 DATE OF PRONOUNCEMENT : 19/12/2014 O R D E R PER: BENCH THE PRESENT GROUP OF SEVEN CASES FILED BY THE ASSES SEE AND IN SIX CASES, CROSS APPEALS FILED BY THE REVENUE ARE AGAIN ST THE ORDERS DATED 22/01/2014 FOR THE A.Y. 2003-04, 16/03/2012 FOR A. YS. 2004-05, 2005- 06 AND 2006-07 AND DATED 15/03/2012 FOR A.YS. 2007- 08, 2008-09 AND ITA 191/JP/2014 & 472 TO 477/JP/2012 ASHIANA ISPAT LTD. VS. ACIT 5 2009-10. ORDER DATED 22/01/2014 FOR A.Y. 2003-04 WAS PASSED BY THE LEARNED CIT(A), ALWAR AND FOR OTHER A.YS. I.E. FROM 2004-05 TO 2009-10 BY THE LEARNED C.I.T.(A)-CENTRAL, JAIPUR. THE EFFECTI VE GROUNDS OF ALL THE APPEALS FILED BY THE ASSESSEE AS WELL AS CROSS APPEA LS BY THE DEPARTMENT ARE AS UNDER:- GROUNDS OF ITA NO. 191/JP/2014 (A.Y. 2003-04)(ASSE SSEE) 1. THAT THE ORDER OF LEARNED COMMISSIONER OF INCOME -TAX (APPEALS) IS BAD IN LAW AND ON FACTS OF THE CASE. 2. THAT THE LEARNED COMMISSIONER OF INCOME-TAX (APPEALS) HAS ERRED IN SUSTAINING THE ADDITION TO T HE EXTENT OF RS. 5,98,323/- OUT OF DISALLOWANCE OF RS. 10,61,432/- MADE UNDER SECTION 37(1) OF THE INCOME TAX ACT, 1961 BY ASSESSING OFFICER IN THE ASSESSMENT ORDER ON ACCOUNT OF COMMISSION PAID TO SALES BY THE ASSESSEE. 3. THAT THE LEARNED COMMISSIONER OF INCOME-TAX (APPEALS) HAS ERRED IN SUSTAINING THE DISALLOWANCE WITHOUT APPRECIATING THE FACT THAT THE DISALLOWANCE WAS MADE WITHOUT ALLOWING AN OPPORTUNITY OF CONFRONTING THE MATERIAL GATHERED AT THE BACK OF TH E ASSESSEE. 4. THAT THE LEARNED COMMISSIONER OF INCOME-TAX (APPEALS) HAS ERRED IN SUSTAINING THE ADDITIONS ON ACCOUNT OF DISALLOWANCE MADE IN THE ACCOUNT OF COMMISSION PAID ON SALES BY THE ASSESSEE IN PROCEEDINGS UNDER SECTION 153A WITHOUT THERE BEING ANY MATERIAL FOUND IN THE COURSE OF SEARCH FROM THE ITA 191/JP/2014 & 472 TO 477/JP/2012 ASHIANA ISPAT LTD. VS. ACIT 6 PREMISES OF THE ASSESSEE AND ITS DIRECTORS CONTRARY TO THE CLAIM MADE BY THE ASSESSEE. 5. THAT THE LEARNED COMMISSIONER OF INCOME-TAX (APPEALS) HAS ERRED IN STATING IN ORDER THAT THE A. R. OF APPELLANT HAS AGREED TO THE DISALLOWANCE OF RS. 5,98,323/-. 6. THE ABOVE GROUNDS OF APPEAL ARE WITHOUT PREJUDICE TO EACH OTHER. 7. THAT THE APPELLANT CRAVES LEAVE TO ADD, ALTER AME ND AND/OR MODIFY THE ABOVE GROUNDS OF APPEAL. GROUNDS OF ITA NO. 472/JP/2012 (A.Y. 2004-05) (ASS ESSEE) 1. THAT THE ORDER OF LEARNED COMMISSIONER OF INCOME -TAX (APPEALS) IS BAD IN LAW AND ON FACTS OF THE CASE. 2. THAT THE LEARNED COMMISSIONER OF INCOME-TAX (APPEALS) HAS ERRED IN SUSTAINING THE ADDITION TO T HE EXTENT OF RS. 20,58,554/- OUT OF DISALLOWANCE OF RS. 26,40,346/- MADE UNDER SECTION 37(1) OF THE INCOME TAX ACT, 1961 BY ASSESSING OFFICER IN THE ASSESSMENT ORDER ON ACCOUNT OF COMMISSION PAID TO SALES BY THE ASSESSEE. 3. THAT THE LEARNED COMMISSIONER OF INCOME-TAX (APPEALS) HAS ERRED IN SUSTAINING THE ADDITION OF R S. 47,92,383/- MADE UNDER SECTION 37(1) OF THE INCOME TAX ACT, 1961 BY ASSESSING OFFICER IN THE ASSESSMENT ORDER ON ACCOUNT OF COMMISSION PAID ON PURCHASES MADE BY THE ASSESSEE. ITA 191/JP/2014 & 472 TO 477/JP/2012 ASHIANA ISPAT LTD. VS. ACIT 7 4. THAT THE LEARNED COMMISSIONER OF INCOME-TAX (APPEALS) HAS ERRED IN SUSTAINING THE DISALLOWANCE WITHOUT APPRECIATING THE FACT THAT THE DISALLOWANCE WAS MADE WITHOUT ALLOWING AN OPPORTUNITY OF CONFRONTING THE MATERIAL GATHERED AT THE BACK OF TH E ASSESSEE. 5. THAT THE LEARNED COMMISSIONER OF INCOME-TAX (APPEALS) HAS ERRED IN SUSTAINING THE ADDITIONS ON ACCOUNT OF DISALLOWANCE MADE IN THE ACCOUNT OF COMMISSION PAID ON SALES AND COMMISSION PAID ON PURCHASES BY THE ASSESSEE IN PROCEEDINGS UNDER SECTION 153A WITHOUT THERE BEING ANY MATERIAL FOUND IN THE COURSE OF SEARCH FROM THE PREMISES OF THE ASSESSEE AND ITS DIRECTORS CONTRARY TO THE CLAIM MA DE BY THE ASSESSEE. 6. THE ABOVE GROUNDS OF APPEAL ARE WITHOUT PREJUDICE TO EACH OTHER. 7. THAT THE APPELLANT CRAVES LEAVE TO ADD, ALTER AME ND AND/OR MODIFY THE ABOVE GROUNDS OF APPEAL. GROUNDS OF REVENUES CROSS APPEAL I.E. I.T.A. 601/JP /2012 (A.Y. 2004-05) 1(I) WHETHER ON THE FACTS AND CIRCUMSTANCES OF THE CASE, CIT(A)(CENTRAL), JAIPUR HAS ERRED IN LAW AND ON FACTS IN DELETING THE DISALLOWANCE OF RS. 5,81,792/- OUT OF T HE TOTAL DISALLOWANCE OF RS. 26,40,346/- MADE BY THE A. O. IN RESPECT OF THE COMMISSION EXPENSES CLAIMED ON SALE. 1(II) WHETHER ON THE FACTS AND CIRCUMSTANCES OF THE CASE, THE CIT(A) (CENTRAL), JAIPUR HAS ERRED IN LAW AND ON ITA 191/JP/2014 & 472 TO 477/JP/2012 ASHIANA ISPAT LTD. VS. ACIT 8 FACTS IN DELETING THE PART OF THE DISALLOWANCE MADE BY THE A.O. IN RESPECT OF THE COMMISSION EXPENSES CLAIMED ON SALE EVEN THOUGH THE ASSESSEE COULD NOT PROVE THE GENUINENESS OF THE EXPENSES CLAIMED AS SUCH THESE EXPENSES DID NOT FULFILL THE CONDITIONS LAID DOWN IN SEC. 37(1) AS THEY WERE NOT WHOLLY AND EXCLUSIVELY FOR THE PURPOSE OF THE BUSINESS. 2. THE APPELLANT CRAVES THE RIGHT TO AMEND ALTER OR ADD TO ANY OF THE GROUNDS OF APPEAL GIVEN ABOVE. GROUNDS OF ITA NO. 473/JP/2012 (A.Y. 2005-06) (ASSE SSEE) 1. THAT THE ORDER OF LEARNED COMMISSIONER OF INCOME -TAX (APPEALS) IS BAD IN LAW AND ON FACTS OF THE CASE. 2. THAT THE LEARNED COMMISSIONER OF INCOME-TAX (APPEALS) HAS ERRED IN SUSTAINING THE ADDITION TO T HE EXTENT OF RS. 16,27,750/- OUT OF DISALLOWANCE OF RS. 22,09,955/- MADE UNDER SECTION 37(1) OF THE INCOME TAX ACT, 1961 BY ASSESSING OFFICER IN THE ASSESSMEN T ORDER ON ACCOUNT OF COMMISSION PAID ON SALES BY THE ASSESSEE. 3. THAT THE LEARNED COMMISSIONER OF INCOME-TAX (APPEALS) HAS ERRED IN SUSTAINING THE ADDITION OF R S. 29,13,655/- MADE UNDER SECTION 37(1) OF THE INCOME TAX ACT, 1961 BY ASSESSING OFFICER IN THE ASSESSMENT ORDER ON ACCOUNT OF COMMISSION PAID ON PURCHASES MADE BY THE ASSESSEE. 4. THAT THE LEARNED COMMISSIONER OF INCOME-TAX (APPEALS) HAS ERRED IN SUSTAINING THE DISALLOWANCE WITHOUT APPRECIATING THE FACT THAT THE DISALLOWANCE ITA 191/JP/2014 & 472 TO 477/JP/2012 ASHIANA ISPAT LTD. VS. ACIT 9 WAS MADE WITHOUT ALLOWING AN OPPORTUNITY OF CONFRONTING THE MATERIAL GATHERED AT THE BACK OF TH E ASSESSEE. 5. THAT THE LEARNED COMMISSIONER OF INCOME-TAX (APPEALS) HAS ERRED IN SUSTAINING THE ADDITIONS ON ACCOUNT OF DISALLOWANCE MADE IN THE ACCOUNT OF COMMISSION PAID ON SALES AND COMMISSION PAID ON PURCHASES BY THE ASSESSEE IN PROCEEDINGS UNDER SECTION 153A WITHOUT THERE BEING ANY MATERIAL FOUND IN THE COURSE OF SEARCH FROM THE PREMISES OF THE ASSESSEE AND ITS DIRECTORS CONTRARY TO THE CLAIM MA DE BY THE ASSESSEE. 6. THE ABOVE GROUNDS OF APPEAL ARE WITHOUT PREJUDICE TO EACH OTHER. 7. THAT THE APPELLANT CRAVES LEAVE TO ADD, ALTER AME ND AND/OR MODIFY THE ABOVE GROUNDS OF APPEAL. GROUNDS OF REVENUES CROSS APPEAL I.E. I.T.A. 602/JP /2012 (A.Y. 2005-06) 1(I) WHETHER ON THE FACTS AND CIRCUMSTANCES OF THE CASE, THE CIT(A)(CENTRAL), JAIPUR HAS ERRED IN LAW AND ON FACTS IN DELETING THE DISALLOWANCE OF RS. 5,82,205/- OUT OF THE TOTAL DISALLOWANCE OF RS. 22,09,955/- MADE B Y THE A.O. IN RESPECT OF THE COMMISSION EXPENSES CLAIMED ON SALE. 1(II) WHETHER ON THE FACTS AND CIRCUMSTANCES OF THE CASE, THE CIT(A) (CENTRAL), JAIPUR HAS ERRED IN LAW AND ON FACTS IN DELETING THE PART OF THE DISALLOWANCE MADE BY THE A.O. IN RESPECT OF THE COMMISSION EXPENSES CLAIMED ON SALE EVEN THOUGH THE ASSESSEE COULD NOT ITA 191/JP/2014 & 472 TO 477/JP/2012 ASHIANA ISPAT LTD. VS. ACIT 10 PROVE THE GENUINENESS OF THE EXPENSES CLAIMED AS SUCH THESE EXPENSES DID NOT FULFILL THE CONDITIONS LAID DOWN IN SEC. 37(1) AS THEY WERE NOT WHOLLY AND EXCLUSIVELY FOR THE PURPOSE OF THE BUSINESS. 2. THE APPELLANT CRAVES THE RIGHT TO AMEND ALTER OR ADD TO ANY OF THE GROUNDS OF APPEAL GIVEN ABOVE. GROUNDS OF ITA NO. 474/JP/2012 (A.Y. 2006-07) (ASSE SSEE) 1. THAT THE ORDER OF LEARNED COMMISSIONER OF INCOME -TAX (APPEALS) IS BAD IN LAW AND ON FACTS OF THE CASE. 2. THAT THE LEARNED COMMISSIONER OF INCOME-TAX (APPEALS) HAS ERRED IN SUSTAINING THE ADDITION TO T HE EXTENT OF RS. 23,80,561/- OUT OF DISALLOWANCE OF RS. 33,34,321/- MADE UNDER SECTION 37(1) OF THE INCOME TAX ACT, 1961 BY ASSESSING OFFICER IN THE ASSESSMENT ORDER ON ACCOUNT OF COMMISSION PAID ON SALES BY THE ASSESSEE. 3. THAT THE LEARNED COMMISSIONER OF INCOME-TAX (APPEALS) HAS ERRED IN SUSTAINING THE ADDITION OF R S. 9,27,758/- MADE UNDER SECTION 37(1) OF THE INCOME TAX ACT, 1961 BY ASSESSING OFFICER IN THE ASSESSMENT ORDER ON ACCOUNT OF COMMISSION PAID ON PURCHASES MADE BY THE ASSESSEE. 4. THAT THE LEARNED COMMISSIONER OF INCOME-TAX (APPEALS) HAS ERRED IN SUSTAINING THE DISALLOWANCE WITHOUT APPRECIATING THE FACT THAT THE DISALLOWANCE WAS MADE WITHOUT ALLOWING AN OPPORTUNITY OF CONFRONTING THE MATERIAL GATHERED AT THE BACK OF TH E ASSESSEE. ITA 191/JP/2014 & 472 TO 477/JP/2012 ASHIANA ISPAT LTD. VS. ACIT 11 5. THAT THE LEARNED COMMISSIONER OF INCOME-TAX (APPEALS) HAS ERRED IN SUSTAINING THE ADDITIONS ON ACCOUNT OF DISALLOWANCE MADE IN THE ACCOUNT OF COMMISSION PAID ON SALES AND COMMISSION PAID ON PURCHASES BY THE ASSESSEE IN PROCEEDINGS UNDER SECTION 153A WITHOUT THERE BEING ANY MATERIAL FOUND IN THE COURSE OF SEARCH FROM THE PREMISES OF THE ASSESSEE AND ITS DIRECTORS CONTRARY TO THE CLAIM MA DE BY THE ASSESSEE. 6. THE ABOVE GROUNDS OF APPEAL ARE WITHOUT PREJUDICE TO EACH OTHER. 7. THAT THE APPELLANT CRAVES LEAVE TO ADD, ALTER AME ND AND/OR MODIFY THE ABOVE GROUNDS OF APPEAL. GROUNDS OF REVENUES CROSS APPEAL I.E. I.T.A. 603/JP /2012 (A.Y. 2006-07) 1(I) WHETHER ON THE FACTS AND CIRCUMSTANCES OF THE CASE, THE CIT(A)(CENTRAL), JAIPUR HAS ERRED IN LAW AND ON FACTS IN DELETING THE DISALLOWANCE OF RS. 9,53,760/- OUT OF THE TOTAL DISALLOWANCE OF RS. 33,34,321/- MADE B Y THE A.O. IN RESPECT OF THE COMMISSION EXPENSES CLAIMED ON SALE. 1(II) WHETHER ON THE FACTS AND CIRCUMSTANCES OF THE CASE, THE CIT(A) (CENTRAL), JAIPUR HAS ERRED IN LAW AND ON FACTS IN DELETING THE PART OF THE DISALLOWANCE MADE BY THE A.O. IN RESPECT OF THE COMMISSION EXPENSES CLAIMED ON SALE EVEN THOUGH THE ASSESSEE COULD NOT PROVE THE GENUINENESS OF THE EXPENSES CLAIMED AS SUCH THESE EXPENSES DID NOT FULFILL THE CONDITIONS LAID ITA 191/JP/2014 & 472 TO 477/JP/2012 ASHIANA ISPAT LTD. VS. ACIT 12 DOWN IN SEC. 37(1) AS THEY WERE NOT WHOLLY AND EXCLUSIVELY FOR THE PURPOSE OF THE BUSINESS. 2. THE APPELLANT CRAVES THE RIGHT TO AMEND ALTER OR ADD TO ANY OF THE GROUNDS OF APPEAL GIVEN ABOVE. GROUNDS OF ITA NO. 475/JP/2012 (A.Y. 2007-08) (ASSE SSEE) 1. THAT THE ORDER OF LEARNED COMMISSIONER OF INCOME -TAX (APPEALS) IS BAD IN LAW AND ON FACTS OF THE CASE. 2. THAT THE LEARNED COMMISSIONER OF INCOME-TAX (APPEALS) HAS ERRED IN SUSTAINING THE ADDITION TO T HE EXTENT OF RS. 75,48,294/- OUT OF DISALLOWANCE OF RS. 1,11,65,217/- MADE UNDER SECTION 37(1) OF THE INCOM E TAX ACT, 1961 BY ASSESSING OFFICER IN THE ASSESSMENT ORDER ON ACCOUNT OF COMMISSION PAID ON SALES BY THE ASSESSEE. 3. THAT THE LEARNED COMMISSIONER OF INCOME-TAX (APPEALS) HAS ERRED IN SUSTAINING THE ADDITION OF R S. 2,21,61,513/- OUT OF DISALLOWANCE OF RS. 3,35,85,302 /- MADE UNDER SECTION 37(1) OF THE INCOME TAX ACT, 1961 BY ASSESSING OFFICER IN THE ASSESSMENT ORDER O N ACCOUNT OF COMMISSION PAID ON PURCHASES MADE BY THE ASSESSEE. 4. THAT THE LEARNED COMMISSIONER OF INCOME-TAX (APPEALS) HAS ERRED IN SUSTAINING THE DISALLOWANCE WITHOUT APPRECIATING THE FACT THAT THE DISALLOWANCE WAS MADE WITHOUT ALLOWING AN OPPORTUNITY OF CONFRONTING THE MATERIAL GATHERED AT THE BACK OF TH E ASSESSEE. ITA 191/JP/2014 & 472 TO 477/JP/2012 ASHIANA ISPAT LTD. VS. ACIT 13 5. THAT THE LEARNED COMMISSIONER OF INCOME-TAX (APPEALS) HAS ERRED IN SUSTAINING THE ADDITIONS ON ACCOUNT OF DISALLOWANCE MADE IN THE ACCOUNT OF COMMISSION PAID ON SALES AND COMMISSION PAID ON PURCHASES BY THE ASSESSEE IN PROCEEDINGS UNDER SECTION 153A WITHOUT THERE BEING ANY MATERIAL FOUND IN THE COURSE OF SEARCH FROM THE PREMISES OF THE ASSESSEE AND ITS DIRECTORS CONTRARY TO THE CLAIM MA DE BY THE ASSESSEE. 6. THE ABOVE GROUNDS OF APPEAL ARE WITHOUT PREJUDICE TO EACH OTHER. 7. THAT THE APPELLANT CRAVES LEAVE TO ADD, ALTER AME ND AND/OR MODIFY THE ABOVE GROUNDS OF APPEAL. GROUNDS OF REVENUES CROSS APPEAL I.E. I.T.A. 604/JP /2012 (A.Y. 2007-08) 1(I) WHETHER ON THE FACTS AND CIRCUMSTANCES OF THE CASE, THE CIT(A)(CENTRAL), JAIPUR HAS ERRED IN LAW AND ON FACTS IN DELETING THE DISALLOWANCE OF RS. 36,16,923/ - OUT OF THE TOTAL DISALLOWANCE OF RS. 1,11,65,917/- MADE BY THE A.O. IN RESPECT OF THE COMMISSION EXPENSES CLAIMED ON SALE. 1(II) WHETHER ON THE FACTS AND CIRCUMSTANCES OF THE CASE, THE CIT(A) (CENTRAL), JAIPUR HAS ERRED IN LAW AND ON FACTS IN DELETING THE PART OF THE DISALLOWANCE MADE BY THE A.O. IN RESPECT OF THE COMMISSION EXPENSES CLAIMED ON SALE EVEN THOUGH THE ASSESSEE COULD NOT PROVE THE GENUINENESS OF THE EXPENSES CLAIMED AS SUCH THESE EXPENSES DID NOT FULFILL THE CONDITIONS LAID DOWN IN SEC. 37(1) AS THEY WERE NOT WHOLLY AND EXCLUSIVELY FOR THE PURPOSE OF THE BUSINESS. ITA 191/JP/2014 & 472 TO 477/JP/2012 ASHIANA ISPAT LTD. VS. ACIT 14 2(I) WHETHER ON THE FACTS AND CIRCUMSTANCES OF THE CASE, THE LEARNED CIT(A)(CENTRAL), JAIPUR HAS ERRED IN LA W AND ON FACTS IN DELETING THE DISALLOWANCE OF RS. 1,14,23,789/- OUT OF THE TOTAL DISALLOWANCE OF RS. 3,35,85,302/- MADE BY THE A.O. IN RESPECT OF THE COMMISSION EXPENSES CLAIMED ON PURCHASES. 2(II) WHETHER ON THE FACTS AND CIRCUMSTANCES OF THE CASE, THE LEARNED CIT(A) (CENTRAL), JAIPUR HAS ERRED IN LA W AND ON FACTS IN DELETING THE PART OF THE DISALLOWANC E MADE BY THE A.O. IN RESPECT OF THE COMMISSION EXPENSES CLAIMED ON PURCHASE EVEN THOUGH THE ASSESSEE COULD NOT PROVE THE GENUINENESS OF THE EXPENSES CLAIMED AS SUCH THESE EXPENSES DID NOT FUL FILL THE CONDITIONS LAID DOWN IN SEC. 37(1) AS THEY WERE NOT WHOLLY AND EXCLUSIVELY FOR THE PURPOSE OF THE BUSINESS. 3. THE APPELLANT CRAVES THE RIGHT TO AMEND ALTER OR ADD TO ANY OF THE GROUNDS OF APPEAL GIVEN ABOVE. GROUNDS OF ITA NO. 476/JP/2012 (A.Y. 2008-09) (ASSE SSEE) 1. THAT THE ORDER OF LEARNED COMMISSIONER OF INCOME -TAX (APPEALS) IS BAD IN LAW AND ON FACTS OF THE CASE. 2. THAT THE LEARNED COMMISSIONER OF INCOME-TAX (APPEALS) HAS ERRED IN SUSTAINING THE ADDITION TO T HE EXTENT OF RS. 61,36,535/- OUT OF DISALLOWANCE OF RS. 1,16,81,231/- MADE UNDER SECTION 37(1) OF THE INCOM E TAX ACT, 1961 BY ASSESSING OFFICER IN THE ASSESSMENT ITA 191/JP/2014 & 472 TO 477/JP/2012 ASHIANA ISPAT LTD. VS. ACIT 15 ORDER ON ACCOUNT OF COMMISSION PAID ON SALES BY THE ASSESSEE. 3. THAT THE LEARNED COMMISSIONER OF INCOME-TAX (APPEALS) HAS ERRED IN SUSTAINING THE ADDITION OF R S. 4,01,02,215/- OUT OF DISALLOWANCE OF RS. 6,02,47,957 /- MADE UNDER SECTION 37(1) OF THE INCOME TAX ACT, 1961 BY ASSESSING OFFICER IN THE ASSESSMENT ORDER O N ACCOUNT OF COMMISSION PAID ON PURCHASES MADE BY THE ASSESSEE. 4. THAT THE LEARNED COMMISSIONER OF INCOME-TAX (APPEALS) HAS ERRED IN SUSTAINING THE DISALLOWANCE WITHOUT APPRECIATING THE FACT THAT THE DISALLOWANCE WAS MADE WITHOUT ALLOWING AN OPPORTUNITY OF CONFRONTING THE MATERIAL GATHERED AT THE BACK OF TH E ASSESSEE. 5. THAT THE LEARNED COMMISSIONER OF INCOME-TAX (APPEALS) HAS ERRED IN SUSTAINING THE ADDITIONS ON ACCOUNT OF DISALLOWANCE MADE IN THE ACCOUNT OF COMMISSION PAID ON SALES AND COMMISSION PAID ON PURCHASES BY THE ASSESSEE IN PROCEEDINGS UNDER SECTION 153A WITHOUT THERE BEING ANY MATERIAL FOUND IN THE COURSE OF SEARCH FROM THE PREMISES OF THE ASSESSEE AND ITS DIRECTORS CONTRARY TO THE CLAIM MA DE BY THE ASSESSEE. 6. THE ABOVE GROUNDS OF APPEAL ARE WITHOUT PREJUDICE TO EACH OTHER. 7. THAT THE APPELLANT CRAVES LEAVE TO ADD, ALTER AME ND AND/OR MODIFY THE ABOVE GROUNDS OF APPEAL. ITA 191/JP/2014 & 472 TO 477/JP/2012 ASHIANA ISPAT LTD. VS. ACIT 16 GROUNDS OF REVENUES CROSS APPEAL I.E. I.T.A. 605/JP /2012 (A.Y. 2008-09) 1(I) WHETHER ON THE FACTS AND CIRCUMSTANCES OF THE CASE, THE CIT(A)(CENTRAL), JAIPUR HAS ERRED IN LAW AND ON FACTS IN DELETING THE DISALLOWANCE OF RS. 55,44,696/ - OUT OF THE TOTAL DISALLOWANCE OF RS. 1,16,81,213/- MADE BY THE A.O. IN RESPECT OF THE COMMISSION EXPENSES CLAIMED ON SALE. 1(II) WHETHER ON THE FACTS AND CIRCUMSTANCES OF THE CASE, THE CIT(A) (CENTRAL), JAIPUR HAS ERRED IN LAW AND ON FACTS IN DELETING THE PART OF THE DISALLOWANCE MADE BY THE A.O. IN RESPECT OF THE COMMISSION EXPENSES CLAIMED ON SALE EVEN THOUGH THE ASSESSEE COULD NOT PROVE THE GENUINENESS OF THE EXPENSES CLAIMED AS SUCH THESE EXPENSES DID NOT FULFILL THE CONDITIONS LAID DOWN IN SEC. 37(1) AS THEY WERE NOT WHOLLY AND EXCLUSIVELY FOR THE PURPOSE OF THE BUSINESS. 2(I) WHETHER ON THE FACTS AND CIRCUMSTANCES OF THE CASE, THE LEARNED CIT(A)(CENTRAL), JAIPUR HAS ERRED IN LA W AND ON FACTS IN DELETING THE DISALLOWANCE OF RS. 2,01,45,742/- OUT OF THE TOTAL DISALLOWANCE OF RS. 6,02,47,957/- MADE BY THE A.O. IN RESPECT OF THE COMMISSION EXPENSES CLAIMED ON PURCHASES. 2(II) WHETHER ON THE FACTS AND CIRCUMSTANCES OF THE CASE, THE LEARNED CIT(A) (CENTRAL), JAIPUR HAS ERRED IN LA W AND ON FACTS IN DELETING THE PART OF THE DISALLOWANC E MADE BY THE A.O. IN RESPECT OF THE COMMISSION EXPENSES CLAIMED ON PURCHASE EVEN THOUGH THE ASSESSEE COULD NOT PROVE THE GENUINENESS OF THE EXPENSES CLAIMED AS SUCH THESE EXPENSES DID NOT FUL FILL THE CONDITIONS LAID DOWN IN SEC. 37(1) AS THEY WERE ITA 191/JP/2014 & 472 TO 477/JP/2012 ASHIANA ISPAT LTD. VS. ACIT 17 NOT WHOLLY AND EXCLUSIVELY FOR THE PURPOSE OF THE BUSINESS. 3. THE APPELLANT CRAVES THE RIGHT TO AMEND ALTER OR ADD TO ANY OF THE GROUNDS OF APPEAL GIVEN ABOVE. GROUNDS OF ITA NO. 477/JP/2012 (A.Y. 2009-10) (ASSE SSEE) 1. THAT THE ORDER OF LEARNED COMMISSIONER OF INCOME -TAX (APPEALS) IS BAD IN LAW AND ON FACTS OF THE CASE. 2. THAT THE LEARNED COMMISSIONER OF INCOME-TAX (APPEALS) HAS ERRED IN SUSTAINING THE ADDITION TO T HE EXTENT OF RS. 38,01,833/- OUT OF DISALLOWANCE OF RS. 1,50,55,500/- MADE UNDER SECTION 37(1) OF THE INCOM E TAX ACT, 1961 BY ASSESSING OFFICER IN THE ASSESSMENT ORDER ON ACCOUNT OF COMMISSION PAID ON SALES BY THE ASSESSEE. 3. THAT THE LEARNED COMMISSIONER OF INCOME-TAX (APPEALS) HAS ERRED IN SUSTAINING THE UNDISCLOSED ADDITION OF RS. 1,31,33,368/- ON ACCOUNT OF UNEXPLAINED INVESTMENT IN EXCESS STOCK REJECTING TH E DOCUMENTS AND EXPLANATIONS FILED BY THE ASSESSEE DU LY EXPLAINING THE DIFFERENCE AND GROSSLY IGNORING THE FACT THAT THE BOOKS OF ACCOUNT OF THE ASSESSEE HAVE NOT BEEN REJECTED. 4. THAT THE LEARNED COMMISSIONER OF INCOME-TAX (APPEALS) HAS ERRED IN SUSTAINING THE DISALLOWANCE WITHOUT APPRECIATING THE FACT THAT THE DISALLOWANCE WAS MADE WITHOUT ALLOWING AN OPPORTUNITY OF CONFRONTING THE MATERIAL GATHERED AT THE BACK OF TH E ASSESSEE. ITA 191/JP/2014 & 472 TO 477/JP/2012 ASHIANA ISPAT LTD. VS. ACIT 18 5. THAT THE LEARNED COMMISSIONER OF INCOME-TAX (APPEALS) HAS ERRED IN SUSTAINING THE ADDITIONS ON ACCOUNT OF DISALLOWANCE MADE IN THE ACCOUNT OF COMMISSION PAID ON SALES BY THE ASSESSEE IN PROCEEDINGS UNDER SECTION 153A WITHOUT THERE BEING ANY MATERIAL FOUND IN THE COURSE OF SEARCH FROM THE PREMISES OF THE ASSESSEE AND ITS DIRECTORS CONTRARY TO THE CLAIM MADE BY THE ASSESSEE. 6. THE ABOVE GROUNDS OF APPEAL ARE WITHOUT PREJUDICE TO EACH OTHER. 7. THAT THE APPELLANT CRAVES LEAVE TO ADD, ALTER AME ND AND/OR MODIFY THE ABOVE GROUNDS OF APPEAL. GROUNDS OF REVENUES CROSS APPEAL I.E. I.T.A. 608/JP /2012 (A.Y. 2009-10) 1(I) WHETHER ON THE FACTS AND CIRCUMSTANCES OF THE CASE, THE CIT(A)(CENTRAL), JAIPUR HAS ERRED IN LAW AND ON FACTS IN DELETING THE DISALLOWANCE OF RS. 1,12,53,66 7/- OUT OF THE TOTAL DISALLOWANCE OF RS. 1,50,55,500/- MADE BY THE A.O. IN RESPECT OF THE COMMISSION EXPENSES CLAIMED ON SALE. 1(II) WHETHER ON THE FACTS AND CIRCUMSTANCES OF THE CASE, THE CIT(A) (CENTRAL), JAIPUR HAS ERRED IN LAW AND ON FACTS IN DELETING THE PART OF THE DISALLOWANCE MADE BY THE A.O. IN RESPECT OF THE COMMISSION EXPENSES CLAIMED ON SALE EVEN THOUGH THE ASSESSEE COULD NOT PROVE THE GENUINENESS OF THE EXPENSES CLAIMED AS SUCH THESE EXPENSES DID NOT FULFILL THE CONDITIONS LAID DOWN IN SEC. 37(1) AS THEY WERE NOT WHOLLY AND EXCLUSIVELY FOR THE PURPOSE OF THE BUSINESS. ITA 191/JP/2014 & 472 TO 477/JP/2012 ASHIANA ISPAT LTD. VS. ACIT 19 2. THE APPELLANT CRAVES THE RIGHT TO AMEND ALTER OR ADD TO ANY OF THE GROUNDS OF APPEAL GIVEN ABOVE. 2. ALL THE GROUNDS OF ALL THE APPEALS ARE REVOLVING AROUND THE PAYMENT OF COMMISSION EITHER ON SALE OR PURCHASE AND CHALLE NGING THE VALIDITY OF ORDER PASSED U/S 153A OF THE INCOME TAX ACT, 1961 (H EREINAFTER REFERRED AS THE ACT). THE LEARNED ASSESSING OFFICER OBSERVED THAT A SEARCH OPERATION WAS CONDUCTED ON 17/9/2008 IN KAMDHENU GRO UP OF CASES. M/S ASHIANA ISPAT LTD. IS THE FLAGSHIP COMPANY OF THE A SHIANA SUB-GROUP. DURING THE COURSE OF SEARCH PROCEEDINGS, SHRI PUNEE T JAIN, DIRECTOR OF THE COMPANY SURRENDERED A SUM OF RS. 7 LACS AS UNDISCLO SED INCOME OF THE ASSESSEE COMPANY ON ACCOUNT OF EXCESS CASH FOUND, WH ICH HAD NOT BEEN INCLUDED IN THE RETURN OF INCOME FILED FOR THE A.Y. 2009-10. HOWEVER, SHRI PUNEET JAIN HAD DISCLOSED AN ADDITIONAL INCOME OF R S. 15.50 LACS IN HIS RETURN OF INCOME FOR THE A.Y. 2009-10 ON ACCOUNT OF EXCESS CASH FOUND AT THE PREMISES OF THE COMPANY AND AT HIS RESIDENCE AN D THE SAID DISCLOSURE INCLUDES THE CASH OF RS. 7 LACS SURRENDERED DURING THE COURSE OF SEARCH IN THE HANDS OF THE COMPANY. AS SUCH DURING THE YEAR U NDER CONSIDERATION, NO ADDITIONAL INCOME HAD BEEN DECLARED ON ACCOUNT O F UNDISCLOSED/ UNACCOUNTED INCOME. THE ASSESSEE COMPANY IS A PUBLIC LIMITED COMPANY HAVING ITS REGISTERED OFFICE AT A-1116, RICCO INDUS TRIAL AREA, PHASE-III, ITA 191/JP/2014 & 472 TO 477/JP/2012 ASHIANA ISPAT LTD. VS. ACIT 20 BHIWADI, ALWAR, RAJASTHAN. THE APPELLANT HAS A FACTORY FOR MANUFACTURING TMT/CTD BARS (SARIA). THE ASSESSEE FILED RETURN OF INC OME FOR A.Y. 2003- 04 ON 18/05/2009 DECLARING INCOME AT RS. 26,85,860/ - IN PURSUANT TO NOTICE DATED 15/4/2009 U/S 153A OF THE ACT. HE ALSO FILED RETURN OF INCOME FOR OTHER ASSESSMENT YEARS I.E. FOR A.Y. 200 4-05 ON 18/05/2009 DECLARING INCOME AT RS. 48,73,410/-, FOR A.Y. 2005- 06 ON 18/05/2009 DECLARING INCOME AT RS. 25,39,256/-, FOR A.Y. 2006- 07 ON 18/05/2009 DECLARING INCOME AT RS. 70,36,062/-, FOR A.Y. 2007- 08 ON 15/05/2009 DECLARING INCOME AT RS. 2,77,05,681/-, FOR A.Y. 200 8-09 ON 15/05/2009 DECLARING INCOME AT RS. 2,47,11,467/- AND FOR A.Y. 2009-10 ON 28/07/2010 DECLARING INCOME AT RS. 2,98,21,410/-. S HOW CAUSE NOTICES WERE ISSUED BY THE ASSESSING OFFICER ON VARIOUS DATE S FOR RESPECTIVE ASSESSMENT ORDERS, WHICH WERE ALSO REPLIED BY THE ASS ESSEE. THE ASSESSING OFFICER FOUND THAT THE ASSESSEE HAD MADE COMMISSION PAYMENT ON SALE AMOUNTING TO RS. 16,33,208/- IN A.Y. 2003-0 4. HE BIFURCATED THIS TOTAL COMMISSION ON SALE UNDER TWO HEADS, COMMISSION PAID ON CONSIGNMENT SALE AT RS. 5,71,776/- AND COMMISSION P AID ON CTD SALES AT RS. 10,61,432/-. HE FURTHER OBSERVED THAT AS PER DE TAILS OF COMMISSION FILED BY THE ASSESSEE, IT APPEARS THAT THE COMMISSI ON ON CTD SALES FOR RS. 10,61,432/- HAD BEEN PAID TO 17 PARTIES AND ALL THE PARTIES MENTIONED IN ITA 191/JP/2014 & 472 TO 477/JP/2012 ASHIANA ISPAT LTD. VS. ACIT 21 THE ACCOUNT TO WHOM COMMISSION ON SALES WERE PAID HA D RAISED BILL ON 31/3/2003 AND ACCORDINGLY THE ASSESSEE COMPANY HAD DEBITED THE LEDGER COMMISSION ON SALES. VERY FACT THAT THE BILLS HAV E BEEN RAISED ON 31/3/2003 AND NO PAYMENT WHAT SO EVER HAD BEEN MADE TO THESE PARTIES DURING THE YEAR CREATED DOUBT THE CREDIBILITY OF TH E ACCOUNT. THE LEARNED ASSESSING OFFICER ISSUED NOTICED U/S 133(6) OF THE ACT TO THE BROKERS NAMELY M/S AJAY TRADERS, SHRI VIKRANT MAHAJAN, SHRI SUBHASH CHAND GARG, SHRI SANJAY GUPTA, M/S RAJENDRA STEELS, M/S G ARG STEEL CORPORATION, SHRI NARESH GARG, SHRI NARENDER GOYAL, SHRI MAMAN CHAND GOYAL, SHRI KAMLESH KUMAR HUF, SHRI GULSHAN GUPTA, SHRI DHARAMPAL, SHRI ANIL MAHAJAN, SHRI ANIL SHARDA, SHRI CHANDER S HEKHAR GOYAL, SHRI AMIT GOYAL AND SHRI VIPUL BIYANI TO PROVIDE DETAILS AS UNDER:- 1. FILE DULY ACKNOWLEDGED COPY OF YOUR INCOME TAX RETUR N FOR THE ASSESSMENT YEAR 2003-04 ALONGWITH COMPUTATION OF INCOME. 2. FILE COPY OF THE BILL SUBMITTED BY YOU TO M/S ASHIA NA ISPAT LTD. IN RESPECT OF THE SALES ARRANGED DURING THE RE LEVANT FINANCIAL YEAR AGAINST WHICH COMMISSION PAYMENTS WERE RECEIVED BY YOU. 3. FILE COMPLETE NAME AND ADDRESSES OF THE PARTIES TO WHOM SALES WERE MADE BY M/S ASHIANA ISPAT LTD. WHICH WERE ARRANGED BY YOU DURING THE RELEVANT FINANCIAL YEAR. ITA 191/JP/2014 & 472 TO 477/JP/2012 ASHIANA ISPAT LTD. VS. ACIT 22 4. FILE DETAILS REGARDING MODUS OF OPERATION, I.E. AS TO HOW YOU KNOW AND CONTACT THE PARTIES AND ARRANGE AND EXECUTE THE SALES ON WHICH COMMISSION HAS BEEN EARNED BY YOU. 5. FOR THE RELEVANT FINANCIAL YEAR, FILE COPIES OF BOO KING FORMS RECEIVED FROM THE CUSTOMERS FOR WHOM SALES WERE ARRA NGED BY YOU AND COPIES OF BOOKING FORMS SUBMITTED BY YOU TO M/S ASHIANA ISPAT LTD. FOR ARRANGING THE SALES ON WHICH COMMISSION HAS BEEN EARNED. 6. FILE DETAILS, AS TO IF DURING THE RELEVANT ASSESSME NT YEAR YOU HAVE RECEIVED COMMISSION FROM ANY OTHER PERSON OR COMPANY OTHER THAN M/S ASHIANA ISPAT LTD. FOR ARRAN GING THE SALES OR PURCHASES. IF YES, PLEASE FILE COPY OF LED GER A/C OF ALL SUCH PERSONS FROM WHOM COMMISSION PAYMENTS WERE RECEIVED BY YOU DURING THE RELEVANT FINANCIAL YEARS . 7. WHAT WAS THE NATURE OF BUSINESS OR PROFESSION CARRIE D OUT BY YOU DURING THE RELEVANT FINANCIAL YEAR? 8. DURING THE RELEVANT FINANCIAL YEAR, HAVE YOU CARRIE D OUT ANY ACTIVITIES OTHER THAN ARRANGING SALES FOR M/S ASHIA NA ISPAT LTD. 9. FILE COPY OF LEDGER ACCOUNT OF M/S ASHIANA ISPAT LT D. IN YOUR BOOKS OF ACCOUNT FOR THE RELEVANT FINANCIAL YEAR. 10. FILE COPIES OF BANK ACCOUNT STATEMENTS SHOWING THE R ECEIPT OF PAYMENTS FROM M/S ASHIANA ISPAT LTD. FOR SERVICE S PROVIDED BY YOU DURING THE AFORESAID PERIOD. PLEASE NOTE THAT THE BANK ACCOUNT STATEMENT(S) IS (ARE) REQUIRED TO BE ITA 191/JP/2014 & 472 TO 477/JP/2012 ASHIANA ISPAT LTD. VS. ACIT 23 SUBMITTED FOR THE COMPLETE FINANCIAL YEAR DURING WH ICH SUCH PAYMENTS HAVE BEEN RECEIVED BY YOU. OUT OF THE ABOVE MENTIONED 17 SO CLAIMED BROKERS TO WHOM NOTICE U/S 133(6) OF THE ACT HAD BEEN ISSUED, ONLY SHRI VIKRAN T MAHAJAN, SHRI SANJAY GUPTA, SHRI MAMAN CHAND GOYAL, SHRI ANIL KUMAR MAHA JAN, SHRI CHANDRA SHEKHAR GOYAL AND SHRI VIPUL BIYANI REPLIED. HE FUR THER HELD THAT EVEN AFTER TAKING MORE THAN REQUIRED TIME TO COMPLY, SO CLAIMED BROKERS ONLY GIVEN NAMES OF THE PARTIES TO WHOM SALES WERE MADE BY M/S ASHIANA ISPAT LTD. THROUGH THEM DURING THE YEAR BUT NOT THE ADDRESSES AND TELEPHONE NUMBER. THIS INFORMATION MUST BE WITH THESE SO CLAIMED BROKERS IF THEY REALLY HAD DONE SOME DEALING WITH SU CH PARTIES BECAUSE FOR MANY OF THEM COMMISSION INCOME FROM THE ASSESSE E IS THE ONLY SOURCE OF INCOME OR MAJOR SOURCE OF INCOME AS HAS B EEN REVEALED FROM THE DETAILS OF INCOME FILED BY THEM. THESE BROKERS WERE ALSO ASKED TO FILE COPIES OF BOOKING FORMS RECEIVED FROM THE CUSTOMERS FROM WHOM SALES WERE ARRANGED BY THEM AND COPIES OF BOOKING FORMS SU BMITTED BY THEM TO M/S ASHIANA ISPAT LTD. FOR ARRANGING THE SALES O N WHICH COMMISSION HAS BEEN EARNED. TO THIS QUERY, MOST OF THEM HAD STA TED THAT THE BUSINESS HAD BEEN CONDUCTED OVER TELEPHONE OR BY PE RSONAL VISIT AND THEY DO NOT FOLLOW THE SYSTEM OF BOOKING FORMS, OR H AD SIMPLY REMAINED ITA 191/JP/2014 & 472 TO 477/JP/2012 ASHIANA ISPAT LTD. VS. ACIT 24 SILENT ON THIS ISSUE. IF THESE SO CLAIMED BROKERS, HAD DONE ANY DEALING OVER TELEPHONE WITH SO CLAIMED CUSTOMERS THEY COULD HAVE EASILY GOT COMPLETE POSTAL ADDRESSES OF THE PARTIES OVER TELEP HONE OR BY PERSONAL VISIT EVEN AFTER THE NOTICE U/S 133(6) HAD BEEN ISS UED TO THEM, IF IT WAS NOT READILY AVAILABLE, AND WOULD HAVE PASSED ON THE SAME TO THE UNDERSIGNED. IN VIEW OF INABILITY OF THESE SO CLAIME D BROKERS TO PROVIDE THE ADDRESSES AND TELEPHONE NUMBERS OF THE CUSTOMER S FOR SALE, HE CONSIDERED THAT THE REASONS FOR NOT SUPPLYING ADDRE SSES AND TELEPHONE NUMBERS OF THESE PARTIES WAS THAT THEY DO NOT KNOW TH EM AND HAD NOT DONE ANY TRANSACTION WITH THEM. HAD THEY KNOWN THEM A ND HAD DONE SOME TRANSACTION WITH THEM, THEY COULD HAVE EASILY P ROVIDED THE DESIRED INFORMATION. IT PROVED THAT NO SERVICES HAVE BEEN P ROVIDED BY THESE SO CLAIMED BROKERS TO THE ASSESSEE COMPANY TO EARN COM MISSION. HE FURTHER OBSERVED THAT IN ALMOST ALL THE CASES T O WHOM SUCH COMMISSION PAYMENTS HAD BEEN MADE BY THE ASSESSEE C OMPANY, IT IS OBSERVED THAT THE RESPECTIVE ACCOUNTS OF THE BROKER S HAD BEEN CREDITED BY THEM BROKERAGE AMOUNT ON THE LAST DAY OF THE ACC OUNTING YEAR AND THE PAYMENTS HAD BEEN MADE IN THE NEXT YEAR. IN ADD ITION, THE BILLS RAISED BY ALL THESE SAID BROKERS MOSTLY HAD BEEN RA ISED ON THE LAST DAY OF THE ACCOUNTING YEAR OR IN THE LAST MONTH OF THE ACC OUNTING YEAR. NORMAL ITA 191/JP/2014 & 472 TO 477/JP/2012 ASHIANA ISPAT LTD. VS. ACIT 25 PRACTICE OF THE BUSINESS REQUIRED A BILL TO BE RAIS ED AS AND WHEN IT BECOMES DUE. RAISING OF BILLS BY ALMOST ALL THE BRO KERS ON THE LAST DAY OR LAST MONTH OF THE ACCOUNTING YEAR GIVEN THE IMPRESS ION THAT THE BILLS WERE ISSUED AT THE INSISTENCE OF THE ASSESSEE AS PER ITS REQUIREMENT TO MAKE ADJUSTMENT IN THE P&L ACCOUNT TO BRING DOWN THE PROF IT TO THE DESIRED LEVEL OF THE ASSESSEE. IT WAS SURPRISING TO NOTE THA T THESE SO CALLED BROKERS PROVIDED SERVICE IN A YEAR AND SILENTLY WAIT FOR NEXT 6 MONTHS OR MORE TO RECEIVE PAYMENT AGAINST THE SERVICE PROVIDE D. NO PRUDENT PERSON WOULD LIKE TO DO A JOB AND DEMAND REMUNERATION AGAIN ST IT AFTER 6 MONTHS OR A YEAR. LEARNED ASSESSING OFFICER FURTHER HELD THAT WHOLE G AMUT OF RAISING BILL FOR COMMISSION AT THE FAG END OF THE YEAR AND RECEIVING CHEQUES FROM THE ASSESSEE COMPANY FOR COMMISSION IN THE NEXT YEA R, WAS A MAKE BELIEVE ARRANGEMENT BETWEEN THE ASSESSEE COMPANY AND THESE SO CLAIMED BROKERS TO SIPHON OFF THE PROFIT TO EVADE T AX. THE BILLS ARE RAISED AT THE FAG END OF THE YEAR AFTER CALCULATING THE AD JUSTMENT TO BE MADE IN THE P&L ACCOUNT TO REDUCE THE PROFIT. HE ALSO RELIE D ON THE FOLLOWING CASE LAWS:- (I) NIEMLA TEXTILES FINISHING MILLS PVT. LTD. VS. CIT 100 ITR 611 (P&H). ITA 191/JP/2014 & 472 TO 477/JP/2012 ASHIANA ISPAT LTD. VS. ACIT 26 (II) PRECISION INSTRUMENT MANUFACTURING CO. VS. CI T 137 ITR 5 (DELHI). (III) VISHNU COTTON MILLS LTD. VS. CIT 117 ITR 754 ( CALCUTTA). HE FINALLY CONCLUDED THAT THAT IN THE CASE OF THE A SSESSEE TOO, THERE ARE AGREEMENTS OF BROKER APPOINTMENT WITH A FEW BUT IT IS NOT THE CONCLUSIVE PROOF THAT THESE BROKERS HAVE REALLY RENDERED SOME SERVICE TO THE ASSESSEE COMPANY, SINCE THE BROKERS HAVE FAILED TO GIVE COMPLETE POSTAL ADDRESS, TELEPHONE NUMBERS OF THE CUSTOMERS CLAIMED TO BE PROVIDED BY THEM TO THE ASSESSEE. NEITHER THE ASSESSEE NOR THE BROKERS COULD PROVIDE ANY EVIDENCE OF CORRESPONDENCE BETWEEN THEM EXCEPT A GREEMENT OF APPOINTMENT IN FEW CASES AND ONE BILL RAISED AT THE FAG END OF THE YEAR FOR COMMISSION. FACTS IN THE CASES MENTIONED ABOVE ARE VERY MUCH SIMILAR TO THE FACTS OF THE CASE UNDER CONSIDERATIO N AS DISCUSSED ABOVE, TO DISALLOW COMMISSION PAID ON SALES. THE ASSESSING OFFI CER CONCLUDED THAT NO SERVICES HAD BEEN RENDERED BY THE SO CLAIMED BRO KERS TO WARRANT ANY COMMISSION. THE COMMISSION PAID CLAIMED BY THE ASSES SEE IS NOT WHOLLY AND EXCLUSIVELY FOR THE PURPOSES OF BUSINESS. HE RE LIED ON THE DECISION IN THE CASE OF ASSAM PESTICIDES AND AGRO CHEMICALS VS. CIT 227 ITR 846 FOR DISCOUNT AND COMMISSION PAID WITHOUT ANY COMMERCIAL CONSIDERATION. THE ASSESSEE HAS NOT PROVIDED THE ADDRESSES OF THE CUST OMERS, ADDRESSES OF THE BROKERS, COPY OF ORDER BOOKING FORMS ETC., WHICH LEADS TO THE ITA 191/JP/2014 & 472 TO 477/JP/2012 ASHIANA ISPAT LTD. VS. ACIT 27 CONCLUSION THAT COMMISSION PAID BY THE ASSESSEE WAS WITHOUT ANY COMMERCIAL CONSIDERATION OR BUSINESS EXPEDIENCY AND WITHOUT ANY SERVICE RENDERED BY THEM, THESE TRANSACTIONS ARE SHAM AND O NLY A DEVICE TO REDUCE THE INCOME OF THE ASSESSEE COMPANY. THEREFORE , HE MADE ADDITION OF RS. 10,61,432/- IN A.Y. 2003-04. 3. FOR A.Y. 2004-05 , THE LEARNED ASSESSING OFFICER RAISED THE QUERY ON SIMILAR NINE POINTS, WHICH WAS REPLIED BY THE ASSE SSEE. IT IS OBSERVED THAT THE REASONS OF RAISING THESE QUERIES FROM THE ASSESSEE WERE TWO PAPERS I.E. PAGE NO 65 OF ANNEXURE A/5 AND PAGE NO. 32 OF ANNEXURE- A/5 SEIZED FROM THE GROUP OFFICE OF THE ASSESSEE CO MPANY AT C-9/25, SECTOR-8, ROHINI, NEW DELHI. THE CONTENTS OF PAGE NO. 65 OF ANNEXURE- A/5 WAS DISCUSSED BY THE ASSESSING OFFICER IN PARA ( A) AND THE CONTENTS OF PAGE NO. 32 OF ANNEXURE-A/5 WAS DISCUSSED IN PAR A (B) OF THE ASSESSMENT ORDER IN A.Y. 2004-05. THE CONTENTS OF PA GE NO. 65 OF ANNEXURE-A/5 IS AS UNDER:- LN THE CASE OF THE ASSESSEE A LIST OF BROKERS AS PE R PAGE NO. 65 OF ANNEXURE A/5 WAS SEIZED FROM OFFICE OF THE GRO UP COMPANIES AT C-9/25, SECTOR-8, ROHINI. THIS PAGE IS A LIST CONTAINING DETAILS OF THE BROKERS TO WHOM COMMISSION ON SALES HAS BEEN PAID BY THE COMPANY FOR THE ASSESSME NT YEAR 2008-09. LT IS A LIST OF 61 PERSONS AND AGAINS T EACH ITA 191/JP/2014 & 472 TO 477/JP/2012 ASHIANA ISPAT LTD. VS. ACIT 28 PERSON THE AMOUNT OF COMMISSION IS ALSO MENTIONED. AGAINST THE NAMES APPEARING IN THE LIST OTHER NAMES SUCH AS MAMMANJEE, AG, VIVEK AGG, ALOK GOENKA, MANISH GOENK A, GOELJEE, T.C. KANSAL, BSC AND AG ARE WRITTEN WITH PEN. AS PER REPLY TO QUESTION NO. 7 BY SH. SURESH CHAND, EM PLOYEE OF THE ASSESSEE RECORDED DURING THE COURSE OF SEARC H AT THE AFORESAID OFFICE IT WAS SUBMITTED BY HIM THAT THESE NAMES HAVE BEEN WRITTEN BY ME AND THESE ARE THE PERSONS TO WHOM BROKERAGE CHEQUES OF VARIOUS PARTIES ARE SENT'. LN VIEW OF ABOVE STATEMENT OF SH. SURESH CHAND, ASSESSE E COMPANY WAS REQUIRED TO EXPLAIN VIDE NOTICE DATED 20.09.2010 IN THE A.Y. 2008-09 WHICH IS ALSO UNDER S CRUTINY ASSESSMENT ALONG WITH OTHER ASSESSMENT YEARS OF THE ASSESSEE COMPANY, AS TO WHY THE PAYMENTS WERE NOT MAD E DIRECTLY TO THE BROKERS BUT THROUGH PERSONS WHO NEIT HER APPEAR IN THE LIST OF BROKERS UNDER CONSIDERATION N OR THERE IS ANY DOCUMENTARY EVIDENCE THAT THESE PERSONS HAVE BE EN AUTHORIZED BY THE BROKERS TO RECEIVE PAYMENT ON THE IR BEHALF WHEN THESE BROKERS HAVE BEEN APPOINTED BY TH E COMPANY ITSELF. THE LEARNED ASSESSING OFFICER GAVE REASONABLE OPPORT UNITY OF BEING HEARD ON THIS ISSUE, WHICH WAS REPLIED BY THE ASSESSE E. THE LEARNED ASSESSING OFFICER CONCLUDED THAT THE ASSESSEE HAD N OT BEEN ABLE TO EXPLAIN WITH COGENT REASONS THAT WHEN THE BROKERS WERE APPOINTED BY THE ASSESSEE ITSELF THEN WHAT PREVENTED THE ASSESSEE TO HANDOVER THE ITA 191/JP/2014 & 472 TO 477/JP/2012 ASHIANA ISPAT LTD. VS. ACIT 29 CHEQUES DIRECTLY TO THESE BROKERS RATHER THAN ROUTI NG THE SAME THROUGH OTHER PERSONS. THOUGH, THE DOCUMENT UNDER CONSIDERAT ION PERTAINED TO A.Y. 2008-09 BUT STILL THE PAPER IN QUESTION EXPLAI NED THE MODUS OPERANDI OF THE ASSESSEE, WHICH WAS EQUALLY APPLICABLE IN THE ASSESSMENT YEARS 2003-04 TO 2009-10, WHICH WERE UNDER SCRUTINY ASSESSM ENT AS PER THE PROVISIONS OF SECTION 153A READ WITH SECTION 143(3) OF THE ACT AND PROVED THE NEXUS BETWEEN THE ASSESSEE COMPANY AND TH E SO CLAIMED BROKERS TO BRING DOWN ITS PROFIT TO REDUCE ITS TAX L IABILITY. DURING THE A.Y. 2004-05, THE ASSESSEE HAD CLAIMED COMMISSION PAID O N SALE WAS RS. 28,73,276/- WHICH HAD BEEN BIFURCATED COMMISSION PAI D ON CONSIGNMENT SALE AT RS. 2,32,930/- AND COMMISSION PAID ON CTD SA LES AT RS. 26,40,346/-. IT IS FURTHER OBSERVED THAT SIMILAR TO OTHER YEARS, THE ASSESSEE RAISED THE COMMISSION BILLS ON 31/3/2004. THE ASSESSING OFFICER ASSESSING OFFICER ISSUED NOTICE U/S 133(6) OF THE A CT TO 12 BROKERS NAMELY SHRI ABHISHEK GARG, SHRI KAMLESH KUMAR, SHRI ASHOK KUMAR DANG, SHRI GULSHAN GUPTA, M/S KAMLESH KUMAR HUF, SH RI MAMAN CHAND GOEL, SHRI NARESH KUMAR GARG, SHRI SANJEEV KUMAR DA NG, SMT. SHASHI BALA GARG, SMT. SASHI GOEL, SHRI SUMIT GOEL AND SHR I VIPUL BIYANI AND RAISED THE QUERY SIMILAR TO A.Y. 2003-04 AND OTHER YEARS ON 10 POINTS. IN RESPONSE TO NOTICE U/S 133(6) OF THE ACT, ONLY SHRI ASHOK KUMAR DANG, ITA 191/JP/2014 & 472 TO 477/JP/2012 ASHIANA ISPAT LTD. VS. ACIT 30 SHRI MAMAN CHAND GOEL, SHRI NARESH KUMAR GARG, SHRI SANJEEV KUMAR DANG, SMT. SASHI GOEL, , SHRI SUMIT GOEL AND SHRI V IPUL BIYANI REPLIED. THESE PARTIES HAD SUBMITTED ONLY NAME OF THE PARTIES TO WHOM SALES WERE MADE BY THE ASSESSEE THROUGH THEM DURING THE YE AR BUT NOT THE ADDRESS AND TELEPHONE NUMBERS. THE REMAINING FINDING S WERE IDENTICAL ON THIS ISSUE TO A.Y. 2003-04. THE LEARNED ASSESSIN G OFFICER RELIED UPON THE SAME CASE LAWS REFERRED IN A.Y. 2003-04 AND HEL D THAT THE BROKERS HAD NOT PROVIDED THE ADDRESSES OF THE CUSTOMERS, CO PY OF ORDER BOOKING FORM ETC. AND LEAD TO THE CONCLUSION THAT COMMISSI ON PAID BY THE ASSESSEE WAS WITHOUT ANY COMMERCIAL CONSIDERATION OR BUSINESS EXPEDIENCY AND WITHOUT ANY SERVICES RENDERED, WERE S HAM AND ONLY A DEVICE TO REDUCE THE INCOME OF THE ASSESSEE COMPANY AND COMMISSION CLAIMED AT RS. 26,40,346/- WERE NOT INCURRED WHOLLY A ND EXCLUSIVELY FOR THE PURPOSE OF BUSINESS. ACCORDINGLY, HE MADE ADDIT ION OF RS. 26,40,346/- UNDER THE HEAD COMMISSION ON SALE IN A .Y. 2004-05. 4. COMMISSION ON PURCHASES: THE ASSESSEE HAD ALSO CLAIMED COMMISSION PAID ON PURCHASES AT RS. 47,92,383/-. IT IS OBSERVED BY THE ASSESSING OFFICER THAT ON GOING THROUGH THE DETAILS OF P&L ACCOUNT, BALANCE SHEET AND OTHER ANNEXURE ENCLOSED WITH THE R ETURN OF INCOME, NO COMMISSION ON PURCHASES WAS EVIDENT WHEREAS COMMISSI ON ON SALE WAS ITA 191/JP/2014 & 472 TO 477/JP/2012 ASHIANA ISPAT LTD. VS. ACIT 31 SEPARATELY MENTIONED IN THE SCHEDULE FOR SELLING AN D DISTRIBUTION EXPENSES. ON THIS ISSUE, THE LEARNED ASSESSING OFF ICER GAVE REASONABLE OPPORTUNITY OF BEING HEARD, WHICH WAS RESPONDED BY TH E ASSESSEE AND FILED DETAILS IN RESPECT OF 12 PERSONS TO WHOM COMM ISSION PAYMENT ON PURCHASES AMOUNTING TO RS. 44,74,638/- HAD BEEN MAD E BY THE ASSESSEE BUT TOTAL COMMISSION DEBITED WAS RS. 47,92,383/-. THE BILLS FOR COMMISSION PAID ON PURCHASES WAS RAISED ON 31/3/2004 AND NO PAYMENTS HAD BEEN MADE DURING THE YEAR. THEREFORE, T HE LEARNED ASSESSING OFFICER VERIFIED THE GENUINENESS OF EXPEN DITURE CLAIMED BY THE ASSESSEE BY ISSUING NOTICE U/S 133(6) OF THE ACT TO THE BROKERS. SOME OF THE BROKERS FILED REPLY AND CLAIMED THAT THEY HAD C ARRIED OUT THE NECESSARY TRANSACTION THROUGH TELEPHONE AND THAT NO ORDER BOOKING FORMS EITHER FROM/TO THE ASSESSEE COMPANY OR FROM/TO THE RAW MATERIAL SUPPLIER HAD EVER BEEN PREPARED BY THEM. THE PAYMENTS OF BROK ERAGE COMMISSION WERE MADE IN SUBSEQUENT YEARS. THE OTHER F INDINGS OF ASSESSING OFFICER WERE IDENTICAL TO FINDING GIVEN IN COMMISSION PAID ON SALE. HE AGAIN ANALYSED THE DOCUMENTS SEIZED AS PER ANNEXURE-A/5 FROM OFFICE AT ROHINI, DELHI AND CONCLUDED THAT THIS IS A DEVICE TO REDUCE THE TAX LIABILITY OF THE COMPANY. AS PER THE ASSESSEE, THE PAGE NO. 32 OF ANNEXURE-A/5 WAS A ROUGH PAPER AND ROUGH PROJECTION OF PROFITABILITY OF ITA 191/JP/2014 & 472 TO 477/JP/2012 ASHIANA ISPAT LTD. VS. ACIT 32 THE COMPANY BEFORE COMMISSIONS. THE BOOKS OF ACCOUN T WERE NOT FINALIZED AS FINANCIAL YEAR HAD NOT BEEN ENDED. THER EFORE, IT WAS A PROJECTION OF THE FINANCIAL RESULT. THE SUBMISSION OF ASSESSEE IS REPRODUCED AS UNDER:- THE SAID PAGE 32 OF ANNEXURE A-5 IS A ROUGH PAPER A S POINTED OUT BY YOUR GOODSELF FOR AND UP TO 29/03/2008. THE S AID ROUGH PROJECTION OF THE PROFITABILITY OF THE COMPANY BEFO RE COMMISSIONS. SINCE THE BOOKS WERE NOT FINAL AND YEAR HAS NOT BEEN ENDED HERE FOR ONLY A PROJECTION WAS MADE AND ONE HAD TO TRY TO KNOW THE SITUATION, IN WHICH POSITION WE WOULD BETTER SO AS TO MAKE THE ARRANGEMENT OF NEXT YEAR AS THE NEXT YEAR WAS NEARES T, WHETHER IT WOULD BE NEAREST ON PERCENTAGE OR PER MT BASIS. SO TH IS CALCULATION WAS MADE TO KNOW IN WHICH SITUATION WE DO B ETTER FOR YOU COMPANY BY SAVING THE OVERALL COST OF PRODUCT M ANUFACTURED BY US AND TO INCREASE OUR PROFITABILITY BY ANALYSIS OF CURRENT YEAR AS WELL AS KEEPING IN VIEW THE PROBABLE MARKET CONDIT IONS OF NEXT YEAR. WITHOUT ANY CALCULATION OR PROJECTION ONE CA NNOT KNOW THE POSITION OF PROFITABILITY OF THE BUSINESS. COMMISSI ON ON INGOT AND THE COMMISSION ON CTD IS PAID AS PER THE AGREEMENT E NTERED INTO WITH THE BROKERS/AGENTS MUCH BEFORE THE COMMISSION I S PAID ALMOST ONE YEAR BEFORE, WHICH ITSELF SHOWS THAT WHOLE COMMISSION WAS PAID IN REALITY THROUGH PROPER BANKING CHANNELS AND FULLY SUPPORTED BY THE AGREEMENTS SO COMMISSION HAVE NOT BEEN DEVISED AT FAG END BECAUSE ONE CANNOT KNOW THE FIGUR E OF COMMISSION IN SO MUCH BEFORE ALMOST ONE YEAR BEFORE . THE ITA 191/JP/2014 & 472 TO 477/JP/2012 ASHIANA ISPAT LTD. VS. ACIT 33 SALES/PURCHASE ARE MADE THROUGHOUT THE YEAR, THOUGH THE CALCULATION OF COMMISSION IS DONE ON 31 ST MARCH AND THEREFORE, WHILE COMPUTING THE PROJECTED INCOME THE EXPENDITURE ACCOUNT EXPENSES FOR COMMISSION HAS NECESSARY TO BE TAKEN I NTO ACCOUNT OTHERWISE IT WOULD GIVE INCORRECT RESULTS. TO ALLEGED THAT THE COMMISSION PAYMENT HAVE BEEN DEVISED AT THE FAG END OF THE YEAR TO REDUCE THE TAX LIABILITY OF THE COMPANY IS TOTALLY INCORRECT PROPOSITION BECAUSE SALES/PURCHASES CANNOT BE AFFEC TED WITHOUT THE HELP OF COMMISSION AGENT. IT IS A MARKET PRACTI CE AND A PRECONDITION OF AGREEMENT OF BROKERS/AGENTS TO COMP UTE THE COMMISSION AT THE END OF THE YEAR. THE EXPLANATION OFFERED BY THE ASSESSEE WAS NOT FOUN D TO BE SATISFACTORY, IN VIEW OF THE FACT THAT NOWHERE THE D OCUMENT HAS BEEN REFERRED TO AS ROUGH PAPER BY THE UNDERSIGNED AS HAS BEEN ALLEGED BY THE ASSESSEE IN ITS REPLY. THOUGH THE ASS ESSEE HAS CLAIMED IT TO BE FOR THE PURPOSE OF MAKING CALCULAT ION OF PAYMENT OF COMMISSION ON MT BASIS OR PERCENTAGE BASIS FOR TH E NEXT YEAR BUT FROM THE DETAILS OF THE COMMISSION FILED BY THE ASSESSEE AS WELL AS THE SO CLAIMED BROKERS, IT IA APPARENT THAT SUCH PAYMENTS HAVE ALWAYS BEEN MADE ON PER MT BASIS ONLY. FURTHER, THE PLEA OF THE ASSESSEE THAT AS ON 29/03/2008, IT WAS TRYING TO MAKE PROJECTION FOR NEXT YEAR IS ALSO FOUND NON-TENABLE SINCE NORMALLY AT THE END OF THE YEAR AN ASSESSEE CARRIES OUT ACCO UNTS COMPILATION EXERCISES AND NOT PROJECTION FOR THE NE XT YEAR, WHICH IS NORMALLY TAKEN AFTER THE MORE IMPORTANT JOB OF C OMPILATION OF ITA 191/JP/2014 & 472 TO 477/JP/2012 ASHIANA ISPAT LTD. VS. ACIT 34 ACCOUNTS IS OVER. HAD IT BEEN SO THE ASSESSEE WOULD NOT HAVE ADOPTED THE FIGURE OF TURNOVER AT RS. 194.00 CR. AN D EXCISE DULY AT RS. 26.41 CR., WHICH ARE NOTHING BUT MORE OR LESS TH E SAME AS PER P&L ACCOUNT AS ON 31/3/2008 WHEREIN THE FIGURE OF TU RNOVER AND EXCISE DUTY ARE FOUND TO BE REPORTED AT RS. 196.05 CR. AND RS. 26.71 CR. RESPECTIVELY. AS SUCH, THE ONLY PLAUSIBLE EXPLANATION CAN BE THAT THE SAME WAS DONE BY THE ASSESSEE TO ARRIVE AT THE DESIRED PROFITS AFTER MANIPULATION OF THE FIGURES O F COMMISSION. THUS, THE ASSESSEES PLEA THAT THE SAME WAS A PROJECT ION FOR NEXT YEAR IS NOT TRUE. FURTHER, THAT THE PAPER SEIZED AT S.NO. 32 OF ANNEXURE-A-5 SEIZED FROM C-9/25, SECTOR-8, ROHINI, NEW DELHI IN ITSELF IS AN INDICATOR, RATHER IT IS A SPEAKING EVI DENCE THAT THE COMMISSION PAYMENTS HAVE BEEN DEVISED BY THE ASSESS EE AT THE FAG END OF THE YEAR ONLY TO REDUCE ITS TAX LIABILIT Y. THOUGH THE DOCUMENT UNDER CONSIDERATION PERTAINS TO A.Y. 2008- 09 BUT STILL THE PAPER IN QUESTION EXPLAINS THE MODUS OPERANDI O F THE ASSESSEE WHICH IS EQUALLY APPLICABLE IN THE ASSESSMENT YEARS 2003-04 TO 2009-10 WHICH ARE UNDER SCRUTINY ASSESSMENT AS PER T HE PROVISIONS OF SECTION 153A R.W.S. 143(3) OF THE ACT AND PROVES THE NEXUS BETWEEN THE ASSESSEE COMPANY AND THE SO CLAIME D BROKERS TO REDUCE ITS TAX LIABILITY AT THE FAG END OF THE Y EAR. THE ASSESSEE FILED FURTHER REPLY ON 16/12/2010 FOR A .Y. 2004-05, WHICH WAS ALSO NOT FOUND SATISFACTORY TO THE ASSESSING OFF ICER ON THE BASIS OF FOLLOWING REASONS: ITA 191/JP/2014 & 472 TO 477/JP/2012 ASHIANA ISPAT LTD. VS. ACIT 35 I HAVE CONSIDERED THE REPLY OF THE ASSESSEE AND TH E SAME IS NOT FOUND SATISFACTORY IN VIEW OF THE REASONS GIVEN HERE IN UNDER: (I) IT IS NOT A MATTER OF NORMS OF MARKET REGARDING PAYMENT OF COMMISSION BUT THE MOOT POINT IS WHETHER THE COMMISS ION CLAIMED TO BE PAID BY THE ASSESSEE HAS BEEN EXPENDE D FOR THE PURPOSE OF BUSINESS, WHETHER ANY SERVICES HAVE B EEN PROVIDED BY THE SO CLAIMED BROKERS. (II) PLEA OF THE ASSESSEE THAT WE ARE GROWING BETTER AND OUR SALES HAVE ENHANCED DOES NOT CONFIRM IN ANY WAY THAT THESE ARE ON ACCOUNT OF COMMISSION PAID BECAUSE AS HAS BE EN FOUND IN THE CASE OF COMMISSION ON SALES DISCUSSED IN PRECEDING PARAS, IN THE CASE OF COMMISSION ON SALES . SIMILAR FACTS HAVE BEEN NOTICED FROM THE REPLIES OF THE SO CLAIMED BROKERS AND THE DOCUMENTS FILED BY THE ASSESSEE THA T NO SERVICE HAS BEEN PROVIDED BY THE SO CLAIMED BROKERS IN PROCURING RAW MATERIAL FOR THE ASSESSEE COMPANY. 4.1 THE LEARNED ASSESSING OFFICER HELD THAT THE COMM ISSION PAID ON PURCHASES IS A MAKE BELIEVE ARRANGEMENT TO SIPHON O FF PROFIT TO EVADE TAX. HE FURTHER RELIED UPON THE FOLLOWING CASE LAWS: (I) NIEMLA TEXTILES FINISHING MILLS PVT. LTD. VS. CIT 100 ITR 611 (P&H). (II) PRECISION INSTRUMENT MANUFACTURING CO. VS. CI T 137 ITR 5 (DELHI). (III) VISHNU COTTON MILLS LTD. VS. CIT 117 ITR 754 ( CALCUTTA). ITA 191/JP/2014 & 472 TO 477/JP/2012 ASHIANA ISPAT LTD. VS. ACIT 36 THE LEARNED ASSESSING OFFICER FURTHER HELD THAT THE COMMISSION PAID ON PURCHASE BY THE ASSESSEE WITHOUT ANY COMMERCIAL CONS IDERATION OR BUSINESS EXPEDIENCY AND WITHOUT ANY SERVICE RENDERED BY THE SO CLAIMED BROKERS AND THE AND THE AGREEMENTS WITH SO CLAIMED B ROKERS SUBMITTED IN FEW CASES WERE SHAM AND ONLY A DEVICE TO REDUCE TH E INCOME OF THE ASSESSEE COMPANY. THUS, HE HELD THAT COMMISSION PAID ON PURCHASES AT RS. 47,92,383/- WAS NOT INCURRED WHOLLY AND EXCLUSIVE LY FOR THE BUSINESS PURPOSES. 5. FOR A.Y. 2005-06 :- THE LEARNED ASSESSING OFFICER ASKED TO FILE REQUIRED DETAILS IN RESPECT OF THE COMMISSION PAID ON 9 POINTS, WHICH WERE IDENTICAL TO OTHER YEARS. DURING THE YEAR, THE ASSESSEE HAD CLAIMED COMMISSION PAID ON SALES AT RS. 22,11,799, WHICH WAS BIFURCATED THIS TOTAL COMMISSION PAID ON CONSIGNMENT SALE AT RS. 18 44/- AND COMMISSION PAID ON CTD SALES AT RS. 22,09,955/-. THE BILLS FOR COMMISSION ON SALE WAS RAISED ON 31/3/2005. THE LEARNED ASSESSING OFFICE R ISSUED NOTICED U/S 133(6) OF THE ACT TO VERIFY THE GENUINENESS OF THE EXPENDITURE CLAIMED BY THE ASSESSEE TO 19 BROKERS NAMELY SHRI N ARESH GARG, SHRI ANIL KUMAR MAHAJAN, SHRI VIKRANT MAHAJAN, SHRI RAJEEV KU MAR HUF, SHRI RAJEEV KUMAR GARG, SHRI MAMAN CHAND GOYAL, SMT. SHA SHI BALA GARG, SHRI DHARAMPAL KHERA, SHRI ARUN KANSAL, SHRI MANISH GAUTAM, SMT. ITA 191/JP/2014 & 472 TO 477/JP/2012 ASHIANA ISPAT LTD. VS. ACIT 37 SANDHYA GUPTA, SMT. SHIMLA AGARWAL, SHRI PADAM KUMAR AGARWAL, SMT. USHA AGARWAL, SHRI NAND LAL GUPTA HUF, SHRI VIVEK AG ARWAL HUF, SMT. SUNITA ARORA, SHRI SHAILENDRA KUMAR ARORA & SONS HU F, SMT. MANJU GOEL ON 10 POINTS, WHICH WAS IDENTICAL TO THE OTHER YEARS. ONLY SMT. MANJU GOYAL, SHRI NAND LAL GUPTA HUF, SHRI PADAM KUMAR AG ARWAL, SMT. SHIMLA AGARWAL, SMT. SANDHYA GUPTA, SHRI MANISH GAUTAM, SHR I DHARAMPAL KHERA, SMT. SHASHI BALA GARG, SHRI MAMAN CHAND GOYA L, SHRI VIKRANT MAHAJAN, SHRI ANIL KUMAR MAHAJAN AND SHRI NARESH KU MAR GARG REPLIED. THE OTHER FINDINGS OF THE LEARNED ASSESSING OFFICER WAS IDENTICAL TO A.Y. 2003-04. HE ALSO RELIED UPON THE SAME CASE LAWS, WHIC H WAS REFERRED IN A.Y. 2003-04. THE ASSESSEE HAS NOT PROVIDED THE ADDR ESSES OF THE CUSTOMERS, ADDRESSES OF THE BROKERS, COPY OF ORDER BOOKING FORMS ETC., WHICH LEADS TO THE CONCLUSION THAT COMMISSION PAID B Y THE ASSESSEE WAS WITHOUT ANY COMMERCIAL CONSIDERATION OR BUSINESS EXP EDIENCY AND WITHOUT ANY SERVICE RENDERED BY THEM, THESE TRANSACT IONS ARE SHAM AND ONLY A DEVICE TO REDUCE THE INCOME OF THE ASSESSEE COMPANY AND CONCLUDED THAT THE COMMISSION PAID ON SALE AT RS. 2 2,09,955/- WAS NOT INCURRED WHOLLY AND EXCLUSIVELY FOR THE BUSINESS PUR POSES. 5.1 DURING THE YEAR UNDER CONSIDERATION, THE ASSESS EE HAD CLAIMED COMMISSION PAID ON PURCHASE AT RS. 29,13,655/-. THE ASSESSEE WAS ITA 191/JP/2014 & 472 TO 477/JP/2012 ASHIANA ISPAT LTD. VS. ACIT 38 ASKED TO FURNISH BY THE ASSESSING OFFICER, THE DETA ILS BUT IT SUBMITTED ONLY DETAILS WITH RESPECT TO 11 PARTIES TO WHOM COMMISSIO N ON PURCHASES AMOUNTING TO RS. 10,16,407/- HAD BEEN CLAIMED BY TH E ASSESSEE. THE OTHER FINDINGS THAT BILLS RAISED BY THE ASSESSEE ON 31/3/2005 AND NO PAYMENTS WERE MADE DURING THE YEAR BUT MADE PAYMENTS IN SUBSEQUENT YEAR ARE SIMILAR TO OTHER YEARS. THE OTHER FINDINGS ON SEIZED MATERIAL ANNEXIRE-A-5 ARE IDENTICAL TO OTHER YEARS AND EXPLA NATION OF THE ASSESSEE HAS BEEN REPRODUCED BY THE LEARNED ASSESSING OFFIC ER AND ALSO HE RELIED UPON THE SAME CASE LAWS IN THE YEAR UNDER CONSIDERAT ION AND HELD THAT THE COMMISSION PAID ON PURCHASES AT RS. 29,13,655/- WAS NOT INCURRED WHOLLY AND EXCLUSIVELY FOR THE BUSINESS PURPOSES. 6. FOR A.Y. 2006-07 :- THE LEARNED ASSESSING OFFICER RAISED QUERY ON COMMISSION PAYMENT ON 9 POINTS, WHICH WAS REPLIED BY THE ASSESSEE. DURING THE YEAR, THE ASSESSEE HAD CLAIMED COMMISSIO N PAID ON SALES AT RS. 33,47,376, WHICH HAD BEEN BIFURCATED UNDER TWO HE ADS I.E. COMMISSION PAID ON CONSIGNMENT SALE AT RS. 13,155/- AND COMMISSION PAID ON CTD SALES AT RS. 33,34,321/-. THE LEARNED ASS ESSING OFFICER ISSUED NOTICED U/S 133(6) OF THE ACT TO VERIFY THE GENUINENESS OF THE EXPENDITURE CLAIMED BY THE ASSESSEE TO 10 BROKERS N AMELY SHRI VIKRANT MAHAJAN, SMT. SHASHI GOYAL, SMT. NEELAM KHURANA, SH RI NARESH KUMAR ITA 191/JP/2014 & 472 TO 477/JP/2012 ASHIANA ISPAT LTD. VS. ACIT 39 GARG, SHRI ANIL KUMAR MAHAJAN, SHRI MAMAN CHAND GOY AL, SHRI PANKAJ GARG, SMT. SHASHI BALA GARG, SHRI GULSHAN GUPTA AND SHRI ANIL SHARDA AND ASKED TO REPLY ON 10 POINTS, WHICH WERE IDENTICA L TO OTHER YEARS. OUT OF NOTICE ISSUED TO 10 BROKERS U/S 133(6) OF THE AC T, SOME HAD REPLIED. THE OTHER FINDINGS ARE IDENTICAL TO THE OTHER YEARS ALSO. HE FURTHER OBSERVED THAT OUT OF SO CLAIMED BROKERS, FIVE BROKE RS NAMELY SHRI MAMAN CHAND GOYAL, SHRI NARESH KUMAR GARG, SHRI PANKAJ GA RG, SMT. SHASHI BALA GARG AND SMT. SHASHI GOYAL ARE RESIDING AT A C OMMON ADDRESS I.E. A-2, JANHIT APARTMENT, SECTOR-9, ROHINI, DELHI AND IT DID NOT REFLECT THE PRUDENCE OF THE ASSESSEE COMPANY TO APPOINT 5 BROKE RS IN THE SAME LOCALITY AND THAT TOO RESIDING IN THE SAME HOUSE BU T RATHER REFLECTS THAT THE SAME WAS NOTHING BUT AN ARRANGEMENT BETWEEN THE A SSESSEE COMPANY AND THE SO CLAIMED BROKERS. THE OTHER FINDIN GS WERE SIMILAR TO OTHER YEARS THAT COMMISSION WAS CREDITED ON THE LAST DAY OF THE FINANCIAL YEAR AND NO PAYMENT HAD BEEN MADE DURING THE YEAR U NDER CONSIDERATION BUT PAID IN SUBSEQUENT YEAR. IT IS FU RTHER OBSERVED THAT THE COMMISSION HAD BEEN PAID TO SOME LADIES ALSO, WHO HA PPENED TO BE THE RELATIVES OR WIVES OF THE BROKERS, THEREFORE, THESE LADIES APPEARED TO THE ASSESSING OFFICER TO BE JUST NAME LENDERS AND HE FO UND THAT THE COMMISSION PAID ON SALE OR PURCHASE MADE WAS A MAKE BELIEVE ITA 191/JP/2014 & 472 TO 477/JP/2012 ASHIANA ISPAT LTD. VS. ACIT 40 ARRANGEMENT BETWEEN THE ASSESSEE AND SO CLAIMED BROK ERS TO SIPHON OFF THE PROFIT TO EVADE TAX. HE RELIED UPON THE SAME CA SE LAWS IN THE YEAR UNDER CONSIDERATION AND HELD THAT THE COMMISSION PA ID ON SALE WAS NOT INCURRED WHOLLY AND EXCLUSIVELY FOR THE BUSINESS PUR POSES. THUS, HE MADE ADDITION OF RS. 33,34,221/- IN THE INCOME OF THE AS SESSEE (IN COMPUTATION IT IS RS. 33,34,321/-). 6.1 COMMISSION PAID ON PURCHASE:- DURING THE YEAR UNDER CONSIDERATION, THE ASSESSEE HAD CLAIMED COMMISSION PAID ON PURCHASES AT RS. 9,27,758/-. THE ASSESSEE WAS ASKED TO FURNISH TH E DETAILS BY THE ASSESSING OFFICER, BUT IT SUBMITTED ONLY DETAILS WIT H RESPECT TO 2 PARTIES TO WHOM COMMISSION ON PURCHASES AMOUNTING TO RS. 6,04,9 35/- HAD BEEN SHOWN BY THE ASSESSEE. THE OTHER FINDINGS THAT BILLS RAISED BY THE ASSESSEE ON 31/3/2006 AND NO PAYMENTS WERE MADE DURI NG THE YEAR BUT MADE PAYMENTS IN SUBSEQUENT YEAR, IT WAS NOT FOUND P RACTICABLE BY THE ASSESSING OFFICER IN THE LINE OF BUSINESS. HE FURTH ER ANALYSED THE SEIZED MATERIAL IDENTICAL TO THE OTHER YEARS ON PAGE 10 AN D 11 OF THE ASSESSMENT ORDER. HE FOUND THAT THE COMMISSION PAYM ENT A MAKE BELIEVE ARRANGEMENT BETWEEN THE ASSESSEE AND SO CLAI MED BROKERS SIPHON OFF THE PROFIT TO EVADE TAX. HE RELIED UPON THE SAME CASE LAWS IN THE YEAR UNDER CONSIDERATION AS RELIED UPON IN OTHE R YEARS. HE FINALLY HELD ITA 191/JP/2014 & 472 TO 477/JP/2012 ASHIANA ISPAT LTD. VS. ACIT 41 THAT THE COMMISSION PAID ON PURCHASES AT RS. 9,27,7 58/- WERE NOT INCURRED WHOLLY AND EXCLUSIVELY FOR THE BUSINESS PUR POSES. THUS, HE MADE ADDITION. 7. FOR A.Y. 2007-08 :- THE LEARNED ASSESSING OFFICER RAISED TO THE ASSESSEE QUERY ON COMMISSION PAYMENT ON 7 POINTS, W HICH WAS REPLIED BY THE ASSESSEE. DURING THE YEAR, THE ASSESSEE HAD CLAIMED COMMISSION PAID ON SALES AT RS. 1,12,12,736/-, WHICH HAD BEEN BIFURCATED UNDER TWO HEADS I.E. COMMISSION PAID ON CONSIGNMENT SALE AT R S. 47,519/- AND COMMISSION PAID ON CTD SALES TO BROKERS AT RS. 1,11, 65,217/-. THE LEARNED ASSESSING OFFICER ISSUED NOTICE U/S 133(6) OF THE ACT TO VERIFY THE GENUINENESS OF THE EXPENDITURE CLAIMED BY THE ASSES SEE TO SOME BROKERS AND ASKED TO REPLY ON 10 POINTS, WHICH WAS IDENTICAL TO OTHER YEARS. OUT OF NOTICE ISSUED TO SOME BROKERS U/S 133(6) OF THE ACT, SOME HAD REPLIED. THE OTHER FINDINGS ARE IDENTICAL TO THE OTHER YEARS ALSO. THE OTHER FINDINGS WERE SIMILAR TO OTHER YEARS THAT COMMISSION WAS CREDITED ON THE LAST DAY OF THE FINANCIAL YEAR AND NO PAYMENT HAD B EEN MADE DURING THE YEAR UNDER CONSIDERATION BUT PAID IN SUBSEQUENT YEA R. IT IS FURTHER OBSERVED THAT THE COMMISSION HAD BEEN PAID TO SOME LADIES ALSO, WHO HAPPENED TO BE THE RELATIVES OR WIVES OF THE BROKERS , THEREFORE, THESE LADIES APPEARED TO THE ASSESSING OFFICER TO BE JUST NAME LENDERS AND HE ITA 191/JP/2014 & 472 TO 477/JP/2012 ASHIANA ISPAT LTD. VS. ACIT 42 FOUND THAT THE COMMISSION PAID ON SALE OR PURCHASE MADE WAS A MAKE BELIEVE ARRANGEMENT BETWEEN THE ASSESSEE AND SO CLAI MED BROKERS TO SIPHON OFF THE PROFIT TO EVADE TAX. HE RELIED UPON THE SAME CASE LAWS IN THE YEAR UNDER CONSIDERATION AND HELD THAT THE COMM ISSION PAID ON SALE WAS NOT INCURRED WHOLLY AND EXCLUSIVELY FOR THE BUSIN ESS PURPOSES. THUS, HE MADE ADDITION OF RS. 1,11,65,217/- IN THE INCOME OF THE ASSESSEE. 7.1 COMMISSION PAID ON PURCHASE:- THE LEARNED ASSESSING OFFICER OBSERVED THAT ON GOING THROUGH THE DETAILS OF P&L, BALANCE SHEET AND OTHER ANNEXURE ENCLOSED WITH THE RETURN OF INCOME, N O COMMISSION ON PURCHASES WAS EVIDENT WHEREAS COMMISSION ON SALE WAS S EPARATELY MENTIONED IN THE SCHEDULE FOR SELLING AND DISTRIBUT ION EXPENSES. IN ORDER TO VERIFY WHETHER ANY PAYMENT OF COMMISSION ON PURCH ASES HAS BEEN PAID, THE ASSESSEE WAS ASKED TO FILE DETAILS OF COMM ISSION PAID ON PURCHASES. IN RESPONSE THEREOF, THE ASSESSEE HAD FI LED DETAILS IN RESPECT OF FOUR PERSONS TO WHOM COMMISSION PAYMENT ON PURCH ASES AMOUNTING TO RS. 3,35,85,302 HAD BEEN MADE BY THE ASSESSEE. O N PERUSAL OF REPLY FILED BY SOME OF THESE SO CLAIMED BROKERS, REVEALED THAT SO CLAIMED BROKERS HAD STATED TO HAVE CARRIED OUT THE NECESSAR Y TRANSACTIONS THROUGH TELEPHONE AND THAT NO ORDER BOOKING FORMS E ITHER FROM/TO THE ASSESSEE COMPANY OR FROM/TO THE RAW MATERIAL SUPPLIE R HAVE EVER BEEN ITA 191/JP/2014 & 472 TO 477/JP/2012 ASHIANA ISPAT LTD. VS. ACIT 43 PREPARED BY THEM. ON THE BASIS OF THE INFORMATION R ECEIVED FROM THESE BROKERS, NOTICES U/S 133(6) WERE ISSUED TO SOME OF T HE RAW MATERIAL SUPPLIERS, FOR WHICH, THEY HAVE REPLIED AS UNDER:- RAW MATERIAL SUPPLIER REPLY OF RAW MATERIAL SUPPLIER M/S HALDIA STEELS LTD. AS THERE IS NO INFORMATION F OR ANY INTERMEDIARY/ BROKER, SO THE TRANSACTION MAY BE CONSIDERED AS DIRECT SALES TO THE PARTY. M/S UDAY VIJAY STEEL PVT. LTD. THE SALES WERE MADE BY US DURING THE RELEVANT F.Y. TO M/S ASHIANA ISPAT LTD., BHIWADI WERE MADE DIRECTLY TO THE COMPANY. THE SALES WERE MADE DIRECTLY TO THE COMPANY, SO THERE WERE NO INTERMEDIARY/BROKER NOR ANY FORMS/ AGREEMENTS OR ANY COMMISSION PAID TO THEM BY US. M/S JAI BALAJI SPONGE LTD. WE HAVE MADE SALES DIRECTLY TO THE PARTY. M/S SHRI RAMRUPAI BALAJI STEELS LTD. WE HAVE MADE SALES DIRECTLY TO THE PARTY. HE FURTHER OBSERVED THAT THE OTHER FINDINGS THAT BI LLS RAISED BY THE ASSESSEE ON 31/3/2006 AND NO PAYMENTS WERE MADE DURI NG THE YEAR BUT MADE PAYMENTS IN SUBSEQUENT YEAR, IT WAS NOT FOUND P RACTICABLE BY THE ASSESSING OFFICER IN THE LINE OF BUSINESS. HE FURTH ER ANALYSED THE SEIZED MATERIAL IDENTICAL TO THE OTHER YEARS OF ITS ASSESS MENT ORDER. HE FOUND THAT THE COMMISSION PAYMENT A MAKE BELIEVE ARRANGEM ENT BETWEEN THE ASSESSEE AND SO CLAIMED BROKERS SIPHON OFF THE PROF IT TO EVADE TAX. HE ITA 191/JP/2014 & 472 TO 477/JP/2012 ASHIANA ISPAT LTD. VS. ACIT 44 RELIED UPON THE SAME CASE LAWS IN THE YEAR UNDER CON SIDERATION AS RELIED UPON IN OTHER YEARS. HE FINALLY HELD THAT THE COMMI SSION PAID ON PURCHASES AT RS. 3,35,85,302/- WERE NOT INCURRED WHO LLY AND EXCLUSIVELY FOR THE BUSINESS PURPOSES. THUS, HE MADE ADDITION. 8. FOR A.Y. 2008-09 :- THE LEARNED ASSESSING OFFICER RAISED QUERY ON COMMISSION PAYMENT ON 4 POINTS, WHICH WAS REPLIED BY THE ASSESSEE. DURING THE YEAR, THE ASSESSEE HAD CLAIMED COMMISSIO N PAID ON SALES AT RS. 1,16,86,473/-, WHICH HAD BEEN BIFURCATED UNDER T WO HEADS I.E. COMMISSION PAID ON CONSIGNMENT SALE AT RS. 5,242/- AND COMMISSION PAID ON CTD SALES TO BROKERS AT RS. 1,16,81,231/-. THE LE ARNED ASSESSING OFFICER ISSUED NOTICE U/S 133(6) OF THE ACT TO VERI FY THE GENUINENESS OF THE EXPENDITURE CLAIMED BY THE ASSESSEE TO SOME BRO KERS AND ASKED TO REPLY ON 10 POINTS, WHICH WERE IDENTICAL TO OTHER YE ARS. OUT OF NOTICE ISSUED TO SOME BROKERS U/S 133(6) OF THE ACT, SOME HAD REPLIED. THE OTHER FINDINGS ARE IDENTICAL TO THE OTHER YEARS ALS O. THE OTHER FINDINGS WERE SIMILAR TO OTHER YEARS THAT COMMISSION WAS CREDI TED ON THE LAST DAY OF THE FINANCIAL YEAR AND NO PAYMENT HAD BEEN MADE DURING THE YEAR UNDER CONSIDERATION BUT PAID IN SUBSEQUENT YEAR. IT IS FURTHER OBSERVED THAT THE COMMISSION HAD BEEN PAID TO SOME LADIES AL SO, WHO HAPPENED TO BE THE RELATIVES OR WIVES OF THE BROKERS, THEREFORE , THESE LADIES APPEARED ITA 191/JP/2014 & 472 TO 477/JP/2012 ASHIANA ISPAT LTD. VS. ACIT 45 TO THE ASSESSING OFFICER TO BE JUST NAME LENDERS AN D HE FOUND THAT THE COMMISSION PAID ON SALE OR PURCHASE MADE WAS A MAKE BELIEVE ARRANGEMENT BETWEEN THE ASSESSEE AND SO CLAIMED BROK ERS TO SIPHON OFF THE PROFIT TO EVADE TAX. HE RELIED UPON THE SAME CA SE LAWS IN THE YEAR UNDER CONSIDERATION AND HELD THAT THE COMMISSION PA ID ON SALE WAS NOT INCORRECT WHOLLY AND EXCLUSIVELY FOR THE BUSINESS PU RPOSES. THUS, HE MADE ADDITION OF RS. 1,16,81,231/- IN THE INCOME OF THE ASSESSEE. 8.1 COMMISSION PAID ON PURCHASE:- DURING THE YEAR UNDER CONSIDERATION, THE ASSESSEE HAD CLAIMED COMMISSION PAID ON PURCHASES AT RS. 6,02,47,957/-. THE ASSESSEE WAS ASKED TO FURNISH THE DETAILS BUT IT SUBMITTED ONLY DETAILS WITH RESPECT TO 5 PARTIES TO WHOM COMMISSION ON PURCHASES AMOUNTING TO RS. 6,02,47,957/- HAD BEEN M ADE BY THE ASSESSEE. THE OTHER FINDINGS THAT BILLS RAISED BY TH E ASSESSEE ON 31/3/2008 AND NO PAYMENTS WERE MADE DURING THE YEAR BUT MADE PAYMENTS IN SUBSEQUENT YEAR, IT WAS NOT FOUND PRACTI CABLE BY THE ASSESSING OFFICER IN THE LINE OF BUSINESS. HE FURTH ER ANALYSED THE SEIZED MATERIAL IDENTICAL TO THE OTHER YEARS OF ITS ASSESS MENT ORDER. HE FOUND THAT THE COMMISSION PAYMENT A MAKE BELIEVE ARRANGEM ENT BETWEEN THE ASSESSEE AND SO CLAIMED BROKERS SIPHON OFF THE PROF IT TO EVADE TAX. HE RELIED UPON THE SAME CASE LAWS IN THE YEAR UNDER CON SIDERATION AS RELIED ITA 191/JP/2014 & 472 TO 477/JP/2012 ASHIANA ISPAT LTD. VS. ACIT 46 UPON IN OTHER YEARS. HE FINALLY HELD THAT THE COMMI SSION PAID ON PURCHASES AT RS. 6,02,47,957/- WERE NOT INCURRED WHO LLY AND EXCLUSIVELY FOR THE BUSINESS PURPOSES. THUS, HE MADE ADDITION. 9. FOR A.Y. 2009-10:- THE ASSESSING OFFICER FOUND THAT THE ASSESSEE HAD MADE COMMISSION PAYMENT ON SALE AMOUNT ING TO RS. 1,50,55,500/-. THE LEARNED ASSESSING OFFICER ISSUED NOTICE U/S 133(6) OF THE ACT TO VERIFY THE GENUINENESS OF THE EXPENDITUR E CLAIMED BY THE ASSESSEE TO SOME BROKERS AND ASKED TO REPLY ON 10 P OINTS, WHICH WAS IDENTICAL TO OTHER YEARS. OUT OF NOTICE ISSUED TO S OME BROKERS U/S 133(6) OF THE ACT, SOME HAD REPLIED. THE OTHER FINDINGS ARE IDENTICAL TO THE OTHER YEARS ALSO. THE OTHER FINDINGS WERE SIMILAR TO OTHER YEARS THAT COMMISSION WAS CREDITED ON THE LAST DAY OF THE FINAN CIAL YEAR AND NO PAYMENT HAD BEEN MADE DURING THE YEAR UNDER CONSIDE RATION BUT PAID IN SUBSEQUENT YEAR. IT IS FURTHER OBSERVED THAT THE CO MMISSION HAD BEEN PAID TO SOME LADIES ALSO, WHO HAPPENED TO BE THE REL ATIVES OR WIVES OF THE BROKERS, THEREFORE, THESE LADIES APPEARED TO TH E ASSESSING OFFICER TO BE JUST NAME LENDERS AND HE FOUND THAT THE COMMISSI ON PAID ON SALE OR PURCHASE MADE WAS A MAKE BELIEVE ARRANGEMENT BETWEEN THE ASSESSEE AND SO CLAIMED BROKERS TO SIPHON OFF THE PROFIT TO EVADE TAX. HE RELIED UPON THE SAME CASE LAWS IN THE YEAR UNDER CONSIDERA TION AND HELD THAT ITA 191/JP/2014 & 472 TO 477/JP/2012 ASHIANA ISPAT LTD. VS. ACIT 47 THE COMMISSION PAID ON SALE WAS NOT INCURRED WHOLLY A ND EXCLUSIVELY FOR THE BUSINESS PURPOSES. THUS, HE MADE ADDITION OF RS. 1,50,55,500/- IN THE INCOME OF THE ASSESSEE. 10. BEING AGGRIEVED BY THE ORDERS OF THE ASSESSING OFFICER, THE ASSESSEE CARRIED THE MATTER BEFORE THE LEARNED CIT( A), WHO HAD DECIDED THE APPEALS FOR A.Y. 2007-08, 2008-09 AND 2009-10 I N A CONSOLIDATED ORDER DATED 15/3/2012, FOR A.YS. 2004-05, 2005-06 A ND 2006-07, IN A CONSOLIDATED ORDER DATED 16/3/2012 AND FOR A.Y. 200 3-04 VIDE ORDER DATED 22/1/2014. THE LEARNED CIT(A) IN A.Y. 2003-04 HAD CONSIDERED T HE ASSESSEES REPLY ALONGWITH LIST OF BROKERS SUBMITTED BEFORE HIM . THE ASSESSEE SUBMITTED THAT THE BROKERS WERE WORKING WITH IT REGULA RLY, PAYMENTS MADE TO THE BROKERS THROUGH ACCOUNT PAYEE CHEQUES. THE ASSESSEE IS A LIMITED COMPANY. THERE IS NO RELATION WITH THE BROKER S. THE RECIPIENTS OF COMMISSION ARE ASSESSED TO TAX. THE PERCENTAGE OF CO MMISSION, BROKERS HAD DULY CONFIRMED THE COMMISSION AND SERVICE PROVI DED IN THEIR REPLY SENT TO THE LEARNED ASSESSING OFFICER U/S 133(6) WI TH THE DETAIL OF PARTIES TO WHOM SALES MADE THROUGH THEM WITH QUANTITY SOLD, P ARTIES TO WHOM SOLD, PLACE FROM WHICH PARTY BELONGED ETC.. ADDRESS ES TO THE BROKERS, PAN NUMBERS, QUANTITY SOLD WITH NAME OF THE PARTIES , AMOUNT OF ITA 191/JP/2014 & 472 TO 477/JP/2012 ASHIANA ISPAT LTD. VS. ACIT 48 COMMISSION GIVEN TO THEM AND COPY OF BANK STATEMENT SUBMITTED BEFORE THE ASSESSING OFFICER, SUFFICIENT TIME HAS NOT BEEN PROVIDED BY THE LEARNED ASSESSING OFFICER TO SUBMIT THE REQUIRED IN FORMATION. THERE IS NO CONTRADICTORY EVIDENCE WITH ASSESSING OFFICER, COPY OF ITR AND BANK STATEMENT OF BROKERS. IN PAST, COMMISSION PAYMENT H AS BEEN ACCEPTED BY THE DEPARTMENT. HE ALSO RELIED ON THE VARIOUS CA SE LAWS BEFORE THE LEARNED CIT(A), WHICH HAS BEEN NARRATED ON PAGE NOS. 12 TO 14 OF THE CIT(A) ORDER. THE LEARNED CIT(A) HAS FURTHER HELD AS U NDER:- 5.3 I HAVE CAREFULLY CONSIDERED THE SUBMISSIONS OF THE APPELLANT ALONGWITH JUDICIAL CITATION GIVEN THEREIN, ORDER OF THE A.O. AND FIND THAT THIS ISSUE STANDS COVERED (AS HAS BEEN ADMITTE D BY THE APPELLANT IN THE WRITTEN SUBMISSIONS, SUPRA) BY THE ORDER OF THE LEARNED CIT(A) (CENTRAL), JAIPUR DATED 16/03/2012 I N THE CASE OF THE APPELLANT FOR A.Y. 2004-05 TO 2006-07 IN APPEAL NO. 710, 711 AND 712/2010-11. IT IS STATED THAT THERE IS NO CHAN GE IN THE FACTS IN THIS YEAR AS REGARDS THE ISSUE OF PAYMENT OF COMMIS SION TO BROKERS BY THE ASSESSEE COMPANY IS CONCERNED. IT IS ALSO ST ATED THAT PAYMENTS MADE TO THE SAME BROKERS WHICH HAVE BEEN AL LOWED BY THE LEARNED CIT(A)(CENTRAL) AS GENUINE PAYMENTS IN THE APPELLATE ORDER FOR SUBSEQUENT YEARS MAY ALSO BE ALLOWED AS A DEDUCTION IN THE CURRENT YEAR. A LIST OF SUCH BROKERS (6 PERSONS ) HAS BEEN FILED BY THE APPELLANT TO WHOM COMMISSION TOTALING TO RS. 4,63,109/- HAS BEEN PAID BY THE COMPANY IN THE PERIOD UNDER CO NSIDERATION. ITA 191/JP/2014 & 472 TO 477/JP/2012 ASHIANA ISPAT LTD. VS. ACIT 49 5.4 HAVING CONSIDERED THE SUBMISSIONS MADE, I FIND NO REASON TO DEVIATE FROM THE STAND TAKEN BY LEARNED CIT(A) (CENT RAL), JAIPUR AND ACCORDINGLY ALLOW THE PAYMENTS MADE TO THE BROKE RS, WHO HAVE BEEN HELD TO BE GENUINE IN THE SUBSEQUENT YEAR S. ACCORDINGLY, THE PAYMENT MADE TO SUCH BROKERS AMOUN TING TO RS. 4,63,109/- ARE ALLOWED AND AS REGARDS THE REMAINING PAYMENTS OF RS. 5,98,323/- ARE CONCERNED, THE AR OF THE APPELLA NT HAS AGREED THAT THE SAME MAY BE DISALLOWED. THUS, THE BALANCE AD DITION OF RS. 5,98,323/- MADE BY THE A.O. ON ACCOUNT OF COMMISSIO N PAYMENTS IS CONFIRMED. THE LEARNED CIT(A) RECTIFIED THE REMARKS MADE IN OR DER DATED 22/1/2014 IN A.Y. 2003-04 THAT THE APPELLANT HAS AGREED TO DI SALLOW THE SAME VIDE HIS RECTIFICATION ORDER DATED 05/6/2014 AND RECTIFI ED AS UNDER:- THE AR OF THE APPELLANT HAS STATED THAT THESE PAYM ENTS PERTAIN TO THE BROKERS, WHOSE PAYMENTS WERE DISALLOWED IN THE EAR LIER YEARS, IN PLACE OF THE AR OF THE APPELLANT HAS AGREED THA T THE SAME MAY BE DISALLOWED. 10.1 FOR A.YS. 2004-05 TO 2006-07, THE LEARNED CIT( A) OBSERVED THAT: 3.1 THIS ISSUE CAME UP FOR CONSIDERATION IN THE APP EAL FOR A.Y. 2007-08 TO A.Y. 2009-10 IN APPEAL NO. 713 TO 715/10 -11, WHEREIN VIDE COMMON APPEAL ORDER DATED 15/03/2012, AFTER CO NSIDERING THE OBSERVATIONS/ARGUMENTS OF BOTH THE SIDES I.E. A .O./A.R. AND DISCUSSING THE MATTER IN DETAIL, I HAD HELD THAT TH E BROKERS WHICH ITA 191/JP/2014 & 472 TO 477/JP/2012 ASHIANA ISPAT LTD. VS. ACIT 50 HAVE BEEN CONTINUING FROM EARLIER YEARS OUT OF THE 44 AND 14 BROKERS, WHO HAD DULY EXECUTED THE AGREEMENT ON STAM P PAPER IN A.Y. 2009-10 AND IN A.Y. 2008-09 RESPECTIVELY THOUG H IN EARLIER YEARS THE AGREEMENT WAS ON LETTERHEAD, CAN BE CONSID ERED TO BE GENUINE AND HAD BEEN PAID COMMISSION FOR THE PURPOS E OF AFFECTING THE SALES. DETAILS OF SUCH BROKERS IN A.Y . 2004-05 ARE AS BELOW:- S.NO. BROKER NAME COMMISSION PAYMENT DURING THE YEAR PAGE NO. OF P.B. A.Y. 1. ANIL SHARDA 54,846.00 53,016.00 140 2009-10 2 GULSHAN GUPTA 168,331.00 153,759.00 153 2009-10 3. MAMAN CHAND GOEL 83,298.00 79,581.00 161 2009-10 4. NARESH KUMAR GARG 69,252.00 63,809.00 165 2009-10 5. SHASHI BALA GARG 80,763.00 - - 2009-10 6. SUMIT GOEL 39,180.00 37,155.00 180 2009-10 7. SHASHI GOYAL 86,122.00 - - 2008-09 TOTAL 581,792.00 387,320.00 INCIDENTALLY, BROKERS AT SR. NO. 3,4,6, AND 7 HAVE ALSO REPLIED DIRECTLY TO THE A.O. IN RESPONSE TO NOTICE U/S 133( 6). 3.1.1 ACCORDINGLY, ADDITION TO THIS EXTENT OF RS. 5,81,792/- IS DELETED AND BALANCE ADDITION OF RS. 20,58,554/- IS HEREBY CONFIRMED IN A.Y 2004-05. 3.2 IN A.Y 2005-06, SUCH LIST OF BROKER AND COMMIS SION AMOUNT PAID TO THEM IS AS BELOW:- ITA 191/JP/2014 & 472 TO 477/JP/2012 ASHIANA ISPAT LTD. VS. ACIT 51 S. NO. BROKER NAME COMMISSION A.Y. 1. ANIL SHARDA 153,567.00 2009-10 2 ARUN KANSAL 49,916.00 2009-10 3. GULSHAN GUPTA 40,616.00 2009-10 4. MAMAN CHAND GOEL 46,438.00 2009-10 5. MANISH GOTAM 65,699.00 2009-10 6. NARESH KUMAR GARG 74,999.00 2009-10 7. SHAHSIH BALA GARG 50,620.00 2009-10 8. SHIMLA AGARWAL 100,350.00 2009-10 TOTAL 582,350.00 3.2.1 ACCORDINGLY, ADDITION TO THIS EXTENT OF RS. 5,82,205/- IS DELETED AND BALANCE ADDITION OF RS. 16,27,750/- IS HEREBY CONFIRMED IN A.Y. 2005-06. 3.3 IN A.Y. 2006-07 SUCH LIST OF BROKER AND COMMISS ION AMOUNT PAID TO THEM IS AS BELOW:- SL. NO. BROKER NAME COMMISSION PAYMENT DURING THE YEAR PAGE NO. OF P.B. A.Y. 1. ANIL SHARDA 99,982.00 99,982.00 25 2009-10 2 GULSHAN GUPTA 99,989.00 99,989.00 30 2009-10 3. MAMAN CHAND GOEL 99,998.00 99,998.00 35 2009-10 4. NARESH KUMAR GARG 99,872.00 99,872.00 40 2009-10 5. PANKAJ GARG 69,988.00 69,988.00 49 2009-10 6. RAJENDRA KUMAR ARORA & SONS 74,962.00 74,962.00 2009-10 7. SAMEER KATARIA (HUF) 59,918.00 59,918.00 2008-09 8. SHASHI BALA GARG 49,985.00 49,985.00 54 2009-10 9. SHIMLA AGARWAL 74,316.00 74,136.00 10. SUMIT GOEL 49,986.00 49.986.00 2009-10 11. SUMIT KATARIA (HUF) 49,993.00 49,993.00 2009-10 12. VINOD KATARIA & SONS (HUF) 74,774.00 74,774.00 2009-10 13. SHASHI GOYAL 49,997.00 49,997.00 2008-09 TOTAL 953,760.00 953,580.00 ITA 191/JP/2014 & 472 TO 477/JP/2012 ASHIANA ISPAT LTD. VS. ACIT 52 3.3.1 ACCORDINGLY, ADDITION TO THIS EXTENT OF RS. 9,53,760/- IS DELETED AND BALANCE ADDITION OF RS. 23,80,561/- IS HEREBY CONFIRMED IN A.Y 2006-07. FINDING OF LD. CIT(A) ON COMMISSION PAID ON PURCHASES ARE AS UNDER:- 4. GROUND NO.7 & 8 IN A.Y 2004-05,2005-06 & A.Y. 2 006-07 RELATES TO ADDITION ON ACCOUNT OF COMMISSION ON PUR CHASE OF RAW MATERIAL AMOUNTING TO RS 47,92,383/-, RS. 29,13,655 /- & RS. 9,27,758/- RESPECTIVELY. 4.1 I HAVE CONSIDERED THE SUBMISSION OF LD. A.R AN D HAVE PERUSED THE MATERIAL ON RECORD. AFTER CONSIDERING T HE RIVAL SUBMISSION, IT IS UNDISPUTED THAT THE APPELLANT HAS FAILED TO FILE ANY DIRECT EVIDENCE OF SERVICES BEING RENDERED BY THESE PARTIES, AS HAS BEEN ELABORATELY DISCUSSED BY THE A.O. IN THE ASSES SMENT ORDER. NOW COMING TO THE ISSUE WHETHER THERE IS ANY CIRCUMST ANTIAL EVIDENCE SO FILED BY THE APPELLANT TO PROVE ITS CAS E, LET ME DISCUSS THE FACTS RELATED TO SOME OF THE BROKER'S PARTIES. IT IS NOTICED THAT OUT OF TOTAL COMMISSION OF RS. 47.92 LAKHS, COMMISS ION AMOUNTING TO RS.34,85,767/- HAS BEEN SHOWN TO BE PAID TO ONE C ONCERN NAMELY BIHAR RAFIA INDUSTRIES LTD, CALCUTTA. THE APP ELLANT HAS FAILED TO FILE ANY EVIDENCE SO AS TO PROVE THAT THI S CONCERN HAS ANY EXPERIENCE IN DEALING WITH IRON AND STEEL MATERIAL A ND HAS ACTUALLY PROVIDED SERVICES TO THE APPELLANT BY WAY OF ARRANGI NG PURCHASES OF INGOTS EXCEPT THE COPY OF BILL AND CONFIRMATION FROM THE PARTY. IN VIEW OF THESE FACTS AND CIRCUMSTANCES, I SEE NO REASON TO ITA 191/JP/2014 & 472 TO 477/JP/2012 ASHIANA ISPAT LTD. VS. ACIT 53 INTERFERE IN THE FINDING OF THE A.O. AND ADDITION O F RS. 34,85,767 IS HEREBY CONFIRMED. NEXT BIGGER AMOUNTS ARE COMMISSIO N PAID TO SH. MAHENDRA GOYANKA, SH. JAIBHAGWAN GOYAL AND SMT. NEELAM KHURANA AND SH. SUNIL KUMAR. THE FACTS RELATED TO TH ESE PARTIES' ARE ALSO SIMILAR. IN BRIEF, NEITHER THERE IS ANY DI RECT EVIDENCE OF RENDERING SERVICES BY THESE PARTIES AND NOR ANY CIR CUMSTANTIAL EVIDENCE THAT THESE PERSONS ARE HAVING EXPERTISE AN D EXPERIENCE IN DEALING IN COMMISSION FOR ARRANGING THE PURCHASE S OF INGOTS THAT TOO FROM THE PARTIES SITUATED IN IRON AND STEE L PRODUCING BELT, WHICH IS GEOGRAPHICALLY FAR AWAY FROM THEIR USUAL PLA CE OF BUSINESS. SIMILAR IS THE POSITION WITH OTHER PARTIES ALSO. IT MAY BE ADDED THAT THE ARGUMENT OF TRADE PRACTICE OF PURCHA SE AND SALE BEING MADE THROUGH BROKERS SO TAKEN BY THE A.R. MAY BE TRUE WITH REFERENCE TO SALES OF THE IRON STEEL PRODUCTS B UT THIS ARGUMENT IS NOT VALID IN RESPECT OF PURCHASE OF M.S . INGOT ETC. ACCORDINGLY, ENTIRE ADDITION OF RS. 47,92,383/- IS HEREBY CONFIRMED IN A.Y 2004-05. 4.2 AS REGARDS A.Y 2005-06 IS CONCERNED, IN THE AS SESSMENT PROCEEDINGS, THE A.R. FILED DETAILS IN RESPECT OF 1 1 PERSONS TO WHOM COMMISSION PAYMENT ON PURCHASES TOTALING TO RS. 10,16,407/- HAS BEEN PAID. THE A.R. FILED THE DETAIL S IN RESPECT OF REMAINING 7 BROKERS IN THE APPELLATE PROCEEDINGS, WH EREIN TOTAL COMMISSION PAYMENT IS RS. 18,97,248/-. ON PERUSAL O F THE DETAILS, IT WAS NOTICED BY THE UNDERSIGNED THAT MAJOR PAYMEN T OF RS. 10,60,201- IS TO A CONCERN NAMELY M/S SAND CHEM (I) LTD. HAVING ADDRESS OF PUNJABI BAGH, NEW DELHI. THE APPELLANT H AS FAILED TO ITA 191/JP/2014 & 472 TO 477/JP/2012 ASHIANA ISPAT LTD. VS. ACIT 54 FILE ANY EVIDENCE SO AS TO PROVE THAT THIS CONCERN HAS ANY EXPERIENCE IN DEALING WITH IRON AND STEEL MATERIAL A ND HAS ACTUALLY PROVIDED SERVICES TO THE APPELLANT BY WAY OF ARRANGI NG PURCHASES OF INGOTS EXCEPT THE COPY OF BILL AND CONFIRMATION FROM THE PARTY. IN ABSENCE OF ANY DIRECT EVIDENCE ABOUT THE SERVICE S RENDERED, EVEN NO EVIDENCE HAS BEEN FILED TO PROVE OR AT LEAS T REFLECT AS TO HOW THE CONCERN HAVING USUAL PLACE OF BUSINESS AT DE LHI KNEW OR HAD BUSINESS RELATIONSHIP WITH THE M.S. INGOT SUPPLI ER PARTIES THAT TOO AS MUCH AS L7 IN NUMBER AND SITUATED IN DURGAPU R, RAIPUR, ORISSA, BURDWAN ETC. IN VIEW OF THESE FACTS AND CIRCU MSTANCES, I SEE NO REASON TO INTERFERE IN THE FINDING OF THE A. O. AND ADDITION OF RS. 10,60,201/- IS HEREBY CONFIRMED. NEXT BIGGER AMOUNTS ARE COMMISSION PAID TO SH. MAHENDRA GOYANKA, SH. RAJEEV KUMAR HUF, M/S VANI IMPEX, ALL HAVING ADDRESS OF DELHI. THE FACTS RELATED TO THESE PARTIES ARE ALSO SIMILAR. IN BRIEF , NEITHER THERE IS ANY DIRECT EVIDENCE OF RENDERING SERVICES BY THESE PARTIES AND NOR ANY CIRCUMSTANTIAL EVIDENCE THAT THESE PERSONS ARE HAVING EXPERTISE AND EXPERIENCE IN DEALING IN COMMISSION F OR ARRANGING THE PURCHASES OF INGOTS THAT TOO FROM THE PARTIES S ITUATED IN IRON AND STEEL PRODUCING BELT, WHICH IS GEOGRAPHICALLY FA R AWAY FROM THEIR USUAL PLACE OF BUSINESS. SIMILAR IS THE POSIT ION WITH OTHER PARTIES ALSO. ACCORDINGLY, ENTIRE ADDITION OF RS. 2 9,13,655/- IS HEREBY CONFIRMED. 4.3 AS REGARDS A.Y 2006-07, IS CONCERNED, IN THE A SSESSMENT PROCEEDINGS, THE A.R. FILED DETAILS IN RESPECT OF 2 PERSONS ONLY TO WHOM COMMISSION TOTALING RS. 6,04,935/- HAS BEEN PAI D. DURING ITA 191/JP/2014 & 472 TO 477/JP/2012 ASHIANA ISPAT LTD. VS. ACIT 55 APPELLATE PROCEEDINGS, THE A.R. FILED FURTHER DETAI LS OF TWO MORE BROKERS TO WHOM COMMISSION OF RS. 3,22,823/- HAS BEE N SHOWN. THE FACTS RELATED TO THESE PARTIES ARE ALSO SAME AS IN A.Y. 2004-05 AND A.Y 2005-06, IN AS MUCH AS THAT THE APPELLANT H AS FAILED TO FURNISH ANY DIRECT EVIDENCE TO PROVE THAT THESE PER SONS HAVE PROVIDED SERVICES FOR PURCHASING THE M.S. INGOT AND MOREOVER, EVEN THE CIRCUMSTANTIAL EVIDENCE ARE AGAINST THE AP PELLANT. ACCORDINGLY, ADDITION OF RS. 9,27,758/- SO MADE BY THE A.O. IS HEREBY CONFIRMED. 11. FOR A.YS. 2007-08 TO 2009-10 , THE LEARNED CIT(A) CONSIDERED THE ASSESSEES REPLY, WHICH HAS BEEN REPRODUCED ON P AGE NO. 6 TO 21. THE REPLY OF THE ASSESSEE WAS IDENTICAL TO A.Y. 2003- 04 ALONGWITH EVIDENCES. AFTER CONSIDERING THE ASSESSEES SUBMISS ION, THE LEARNED CIT(A) HELD THAT IN A.Y. 2009-10, THE LEARNED ASSESS ING OFFICER DISALLOWED TOTAL COMMISSION ON SALE AT RS. 1,50,55,500/-. SIMI LARLY IN OTHER TWO YEARS ALSO, THE ENTIRE COMMISSION ON SALE HAS BEEN DISALLOWED BY THE ASSESSING OFFICER. IN A.Y. 2009-10, THE COMMISSION PAYMENT SHOWN TO 62 PERSONS, THE LEARNED ASSESSING OFFICER HAD DISBELIE VED COMMISSION PAID TO ALL THE PARTIES IN SPITE OF THE FACT THAT SOME O F THEM HAVE REPLIED DIRECTLY TO THE ASSESSING OFFICER POSITIVELY IN RES PONSE TO NOTICE U/S 133(6) OF THE ACT SENT BY THE ASSESSING OFFICER. THE ASSESSING OFFICER ALSO HELD THAT HE FOUND COMMISSION ON SALE NOT GENU INE ON THE GROUND ITA 191/JP/2014 & 472 TO 477/JP/2012 ASHIANA ISPAT LTD. VS. ACIT 56 THAT SOME OF THE BROKERS WERE HAVING COMMON ADDRESSE S AND BELONGED TO THE SAME FAMILY. ACCORDING TO HIM, IT WAS AN ARRA NGEMENT BETWEEN THE ASSESSEE AND THE BROKERS. THE LEARNED CIT(A) REITERA TED THE ARGUMENTS GIVEN BY THE ASSESSING OFFICER IN THE ASSESSMENT OR DER ON PAGE 22 FOR WHICH THE ASSESSEE HAS SUBMITTED REPLY BEFORE HIM TH AT SMT. SHASHI GOYAL AND SHRI SUMIT GOYAL ARE RESPECTIVELY WIFE AND SON OF MUMMAN GOYAL. SHRI NARESH GARG, SHRI PANKAJ GARG AND SMT. SHASHIBALA GARG ARE THE RELATIVE OF SHRI MUMMAN GOYAL AND ARE RESIDING NEARBY. ACCORDINGLY, THE CHEQUES OF COMMISSION RELATED TO THESE FIVE PER SONS WERE ALSO SENT/GIVEN TO SHRI MUMMON GOYAL ALONGWITH HIS OWN CH EQUE AND AS ALL THESE CHEQUES WERE ACCOUNT PAYEE CHEQUES, THERE WAS N O QUESTION OF ANY MISAPPROPRIATION OR AMOUNT NOT REACHING IN CORR ECT HAND. IT IS NOT UNUSUAL TO HANDOVER THE CHEQUE OF RELATIVES OR KNOWN PERSONS TO ONE PERSON. THE LEARNED A.R. HAD ALSO FILED THE CONFIRMA TION FROM ALL THESE BROKERS AND HAD FILED COPY OF INCOME TAX RETURN OF MOST OF THESE BROKERS, WHEREIN THEY HAVE SHOWN THE CORRESPONDING INCOME. THE LEARNED ASSESSING OFFICERS OBJECTION THAT THE ASSESSEE HAS ISSUED THE BILLS OF BROKERAGE ON LAST DATE OF THE FINANCIAL YEAR AND PA YMENTS WERE MADE IN SUBSEQUENT YEARS, WAS REPLIED BY THE A.R. BEFORE TH E LEARNED CIT(A) AND CLAIMED THAT IN ALL THE THREE YEARS, THE ASSESSEE H AD MADE PAYMENT ITA 191/JP/2014 & 472 TO 477/JP/2012 ASHIANA ISPAT LTD. VS. ACIT 57 DURING THE YEAR ITSELF CONSIDERING THE DETAILS OF S ALES MADE BY THE BROKERS DURING THE YEAR, THOUGH THE FINAL BILL WAS GIVEN BY THE BROKER ON LAST DATE OF EACH YEAR. THE LEARNED AR ALSO FILED THE COPY OF LEDGER ACCOUNT OF ALL THE BROKERS, ON THIS BASIS, THE LEARNED CIT(A) CON CLUDED THAT THE ASSESSEES CLAIM WAS FOUND CORRECT AT LEAST IN RESPE CT OF 44 PARTIES AS PER CHART GIVEN BY THE ASSESSEE DURING THE APPELLATE PR OCEEDINGS. THE ASSESSING OFFICERS OBSERVATION WAS FOUND INCORRECT BY THE LEARNED CIT(A). THE LEARNED A.R. FURTHER ARGUED BEFORE HIM T HAT IN THE LINE OF BUSINESS OF IRON AND STEEL MOST OF THE SALES ARE MA DE THROUGH BROKERS AS THIS TRADE PRACTICE PREVALENT IN THE MARKET. THE LEA RNED AR ALSO CLARIFIED IN THE APPELLATE PROCEEDINGS THAT SOME OF THE BROKE RS NOT ONLY WAS RECEIVING COMMISSION ON SALE FROM THE ASSESSEE BUT OTHER COMPANY ALSO. THE LEARNED CIT(A) HELD THAT AS REGARD RENDERING OF S ERVICE WAS CONCERNED, IT WAS CLEAR THAT THE APPELLANT HAD NOT B EEN ABLE TO PROVE THE ASPECT BY FILING THE EVIDENCE BUT THE A.R. ARGUED T HAT THE CIRCUMSTANTIAL EVIDENCE WHEREIN THE BROKERS HAD CONFIRMED THE COMMI SSION, HAD SHOWN COMMISSION IN THEIR RETURN OF INCOME AND THERE IS F ORMAL AGREEMENT WITH THESE BROKERS, CLEARLY INFER THAT COMMISSION HAS BE EN PAID FOR THE SERVICES RENDERED BY THE BROKERS. THE LEARNED CIT(A) FURTHER HELD AS UNDER:- ITA 191/JP/2014 & 472 TO 477/JP/2012 ASHIANA ISPAT LTD. VS. ACIT 58 THE A.R. HAS ALSO BROUGHT TO MY NOTICE THAT THE APP ELLANT COMPANY HAS NOT KEPT ANY SALES AND MARKETING NETWORK AND EXPENDITURE ON SALES AND SERVICES IS NOT AT ALL INC URRED EXCEPT THIS COMMISSION ON SALES. AFTER CONSIDERING THE AFORESAI D FACTS AND CIRCUMSTANCES, IT CANNOT BE SAID THAT WHOLE OF THE COMMISSION SO DEBITED BY THE APPELLANT COMPANY IS BOGUS OR IS AN AFTERTHOUGHT ARRANGEMENT TO REDUCE PROFIT. ON THE OTHER HAND, IT IS ALSO EVIDENT THAT WHOLE OF THE COMMISSION IS NOT ALLOWABLE TO THE APPELLANT COMPANY IN VIEW OF THE VARIOUS DEFECTS WHICH ARE STIL L NOT MET AS DISCUSSED ABOVE. IT IS INFERRED THAT IN SOME OF THE CASES, THE APPELLANT HAS PAID COMMISSION GENUINELY FOR THE SER VICES RENDERED BY THE BROKERS AND IN SOME OTHER CASES IT IS JUST A N AFTERTHOUGHT ARRANGEMENT. FOR THIS PURPOSE, THE UNDERSIGNED SEGR EGATED THESE BROKERS WHERE THE APPELLANT HAS MADE PROPER AGREEMEN T WITH THE BROKER DULY ON STAMP PAPER AT THE START OF THE FINA NCIAL YEAR AND OTHER CASES, WHEREIN SO CALLED AGREEMENT WAS ON JUST LETTERHEAD OF THE APPELLANT COMPANY AND THUS CANNOT BE SAID TO HA VE BEEN POSITIVELY ENTERED INTO ON THE CONTENDED DATE MENTI ONED ON THE LETTERHEAD AND THEREFORE ARE THUS BROADLY PART OF T HE ARRANGEMENT. SUCH LISTS OF BROKER ARE 44 IN NUMBER, WHEREIN THE A GREEMENT IS DULY ON THE STAMP PAPER IN A.Y. 2009-10. AS REGARDS SOME LADIES INCLUDED IN THIS LIST, IT IS A KNOWN FACT THAT MALE MEMBER IN THE FAMILY HELPS OR RATHER WORKS FOR AN ON BEHALF OF LAD Y MEMBER AND THIS CANNOT BE THE GROUND FOR TREATING THE COMMISSI ON PAYMENT AS BOGUS. IT IS FURTHER NOTICED BY THE UNDERSIGNED THA T OUT OF TOTAL COMMISSION PAYMENT OF RS. 1,12,53,667/- TO THESE 44 BROKERS, THE ITA 191/JP/2014 & 472 TO 477/JP/2012 ASHIANA ISPAT LTD. VS. ACIT 59 AMOUNT AS MUCH AS RS. 1,12,44,748/- HAVE BEEN PAID DURING THE YEAR ITSELF. THIS FACT FURTHER GIVES CREDENCE TO MY FINDING THAT PAYMENT MADE TO 44 BROKERS IS GENUINE AND FOR THE P URPOSE OF BUSINESS OF THE APPELLANT COMPANY. ACCORDINGLY, ADD ITION OF RS. 1,12,53,667/- IS HEREBY DELETED AND BALANCE ADDITIO N OF RS. 38,01,833/- IS HEREBY CONFIRMED IN A.Y. 2009-10. THE LEARNED CIT(A) FURTHER HELD THAT NOW COMING TO A. Y. 2008-09, IT IS SEEN THAT OUT OF THE TOTAL 62 BROKER S THE AGREEMENT DULY EXECUTED ON STAMP PAPER AT THE STARTING OF THE FINANCIAL YEAR IS IN CASE OF 15 BROKERS. BESIDES ABOVE, THE A.R. H AS FURTHER ARGUED THAT SOME OF THE BROKERS HAVE BEEN WORKING FOR THE A PPELLANT COMPANY FOR LAST 4-5 YEARS AND ACCORDINGLY IN ANY C ASE, THOSE CANNOT BE CONSIDERED TO BE NON-GENUINE AND THEY HAV E REALLY RENDERED SERVICES. IT WAS FURTHER ARGUED THAT AT LEA ST THOSE PARTIES TO WHICH COMMISSION HAS BEEN CONSIDERED GENUINE IN A .Y. 2009-10 AND WHO HAD BEEN CONTINUING TO PROVIDE SERVICES FOR SALES IN EARLIER YEARS ALSO, THERE SHOULD NOT BE ANY IOTA OF DOUBT. I AGREE WITH THE ARGUMENT OF THE A.R. TO THIS EXTENT. ON CAREFUL PER USAL OF DETAILS, IT IS NOTICED BY THE UNDERSIGNED THAT AROUND 13 PARTIE S OUT OF THE LIST OF THESE 44 PARTIES OF A.Y. 2009-10 HAVE BEEN CONTI NUOUSLY WORKING AS SALES BROKER FROM A.Y. 2006-07 ONWARD AND 7-8 PARTIES HAD BEEN WORKING AS SALES BROKER EVEN AS BACK AS FRO M A.Y. 2004- 05 ONWARD. THOUGH AGREEMENT WITH THESE PARTIES IS ONLY ON LETTERHEAD OF THE APPELLANT COMPANY IN THESE EARLIE R YEARS BUT THE FACT CANNOT BE DENIES THAT FOR INCREASING THE SALE, THE APPELLANT HAS TO INCUR SOME EXPENSES ON COMMISSION TO THE SALES B ROKERS AND ITA 191/JP/2014 & 472 TO 477/JP/2012 ASHIANA ISPAT LTD. VS. ACIT 60 THEREFORE, THE ENTIRE COMMISSION CANNOT BE CONSIDER ED TO BE BOGUS OR NON-GENUINE IN EARLIER YEARS ALSO. IT WILL BE UN JUSTIFIED TO DISALLOW THE ENTIRE COMMISSION AS HAS BEEN DONE BY A .O. IN ALL THE YEARS. PARTICULARLY, IT WILL BE UNREASONABLE TO DISA LLOW ENTIRE COMMISSION IN A.Y. 2007-08 AND IN EARLIER YEARS IN THE PRESENT APPEAL ORDER ON THE GROUND THAT IN A.Y. 2007-08 AND EARLIER YEARS THERE IS NO FORMAL AGREEMENT DULY EXECUTED ON STAMP PAPER AND THE AGREEMENT IS ONLY ON LETTERHEAD, AS THIS WOULD A LSO BE CONTRARY TO THE GENERALLY ACCEPTED TRADE PRACTICE THAT SALES ARE NORMALLY BEING MADE THROUGH BROKER, WHICH HAS ALSO RESULTED I NTO INCREASE IN THE SALE YEAR TO YEAR AND MOREOVER, CONSIDERING THE FACT THAT APPELLANT DOES NOT HAVE FULL FLEDGED SALES AND MARK ETING TEAM. ACCORDINGLY, A BALANCED APPROACHED HAS TO BE ADOPTE D WHILE CONFIRMING DISALLOWANCE CONSIDERING THE OVERALL FACT S AND CIRCUMSTANCES FOR THE EARLIER YEARS ALSO. IT WILL BE REASONABLE TO INFER THAT THESE 44 PARTIES WITH WHOM THE APPELLANT HAS GOT DULY EXECUTED AGREEMENT ON STAMP PAPER AT THE STARTING O F THE YEAR ITSELF IN A.Y. 2009-10 HAVE BEEN GENUINELY WORKING A S SALES BROKER EVEN IN THE EARLIER YEARS. IT IS SEEN THAT APART FROM 15 BROKERS WITH WHOM AGR EEMENT TO SALE DULY EXECUTED ON STAMP PAPER IN THE STARTIN G OF F.Y. 2007- 08, THERE ARE 10 BROKERS IN F.Y. 2007-08 OUT OF THE LIST OF 44 BROKERS OF F.Y. 2008-09 (SERVICES OF WHICH HAVE BEEN TREATED FOR BUSINESS PURPOSE). THE TOTAL COMMISSION DEBITED IN F .Y. 2007-08 RELEVANT TO A.Y. 2008-09 IN THE NAME OF THESE 25 BR OKERS IS RS. 55,44,696/- (DETAILS OF THESE ARE MENTIONED BELOW), WHICH CAN BE ITA 191/JP/2014 & 472 TO 477/JP/2012 ASHIANA ISPAT LTD. VS. ACIT 61 CONSIDERED GENUINE AND FOR BUSINESS PURPOSE. IT WAS FURTHER NOTICED THAT ALMOST ALL THE PAYMENTS TO ALL THESE 2 5 BROKERS HAVE BEEN MADE DURING THE YEAR ITSELF, AS SALES THROUGH THESE BROKERS DURING THE YEAR ARE BROADLY KNOWN NOT AT THE YEAREND BUT EARLIER, THOUGH FINAL BILLS ARE SUBMITTED AT YEAR END. ACCOR DINGLY, ADDITION OF RS. 55,44,696/- IS DELETED AND BALANCE ADDITION OF RS. 61,36,535/- IS HEREBY CONFIRMED. HE FURTHER HELD THAT ON THE SAME LINES, PAYMENT OF SALES COMMISSION MADE TO FOLLOWING 26 BROKERS IN A.Y. 2007 -08 IS TREATED TO HAVE BEEN MADE FOR THE PURPOSE OF BUSINE SS, AS THESE ARE AMONG THE BROKERS FOR WHICH PAYMENT HAS BEEN CON SIDERED FOR THE PURPOSE OF BUSINESS IN A.Y. 2009-10 AND/OR A.Y. 2008-09 ON THE BASIS THAT THERE IS DULY EXECUTED AGREEMENT ON STAMP PAPER AT THE STARTING OF THE RESPECTIVE FINANCIAL YEAR. IT M AY BE FURTHER BE ADDED THAT OUT OF TOTAL AMOUNT OF RS. 36,16,923/- D EBITED TO THESE 26 BROKERS AMOUNT AS MUCH AS RS. 34,64,323/- HAS BE EN PAID DURING THE YEAR ITSELF CONSIDERING THE SALES AFFECT ED THROUGH THESE BROKERS WHICH WERE BROADLY KNOWN EARLIER, THOUGH THE F INAL BILL WAS SUBMITTED BY THESE BROKERS AT THE YEAREND. ACCORDIN GLY, ADDITION TO THE EXTENT OF RS. 36,16,923/- IS DELETED AND REMAIN ING ADDITION OF RS. 75,48,294/- IS HEREBY CONFIRMED. 11.1 FOR COMMISSION ON PURCHASES, THE LEARNED CIT( A) HAS HELD AS UNDER:- 5 I HAVE CONSIDERED THE SUBMISSION OF LEARNED A.R. AND HAVE PERUSED THE MATERIAL ON RECORD. AS REGARDS FOR A.Y. 2008-09, IT IS SEEN THAT A.O. HAS GIVEN DETAILED REASONING DISALLO WING THE ITA 191/JP/2014 & 472 TO 477/JP/2012 ASHIANA ISPAT LTD. VS. ACIT 62 COMMISSION SHOWN TO BE PAID BY THE APPELLANT ON PURC HASES OF M.S. INGOT MADE FROM OUTSIDE RAJASTHAN. MOREOVER, T HE A.R. HAS EQUALLY SUBMITTED DETAILED REPLY COVERING BROADLY E ACH AND EVERY REASONING GIVEN BY THE A.O.. NOW BOTH THESE RIVAL SU BMISSIONS HAVE TO BE APPRAISED BY ME CONSIDERING THE ENTIRE F ACTS AND CIRCUMSTANCES RELEVANT TO THE ISSUE UNDER CONSIDERA TION. COMING TO THE FIRSTLY THE CASE OF COMMISSION SHOWN TO BE PAID TO SHRI RUCHIRARAJ, IT IS SEEN FROM THE COPY OF THE BILL OF SHRI RUCHIRARAJ GIVEN TO THE APPELLANT COMPANY FOR THE SO CALLED CO MMISSION ON PURCHASES THAT HE IS BASICALLY CONSULTANT AND CONTR ACTOR AND IS HAVING OFFICE AT DLF KUTUB ENCLAVE, GURGAON. NO EVI DENCE HAS BEEN FILED BY THE APPELLANT EITHER BEFORE THE A.O. OR EVEN IN THE APPEAL PROCEEDINGS BY WAY OF ADDITIONAL EVIDENCE TO PROVE THAT HE HAS BEEN HAVING DEALINGS WITH AS MUCH AS 33 COMPANIE S FROM WHOM THE PURCHASES HAVE BEEN CLAIMED TO BE ARRANGED BY HIM. THE APPELLANT WAS WELL AWARE THAT A.O. HAS TAKEN THE AD VERSE VIEW AND HAS DISALLOWED THE COMMISSION. THEN IT BECOMES AL L THE MORE IMPORTANT ON THE PART OF APPELLANT TO FILE VARIOUS DOCUMENTARY EVIDENCES SO AS TO PROVE ITS CLAIM. ACCORDINGLY, IN ABSENCE OF ANY PROOF SO SUBMITTED FROM THE SIDE OF THE APPELLANT A ND FROM THE AVAILABLE DETAILS LIKE THE BILL OF SHRI RUCHIRARAJ, IT IS SEEN THAT HE IS JUST CONSULTANTS AND CONTRACTORS, IT SIGNIFIES TH AT HE DOES NOT HAVE ANY EXPERTISE OR EXPERIENCE IN DEALING IN THE PURCH ASE OF INGOT. MOREOVER, IT IS ALSO NOTICED THAT DURING THE WHOLE YEAR HE HAS JUST ISSUED 4 OR MAY BE ONE OR TWO MORE INVOICES, AS IS E VIDENT FROM THE FACT THAT INVOICE DATED 31/3/2008 (LAST DAY OF FINANCIAL YEAR) ITA 191/JP/2014 & 472 TO 477/JP/2012 ASHIANA ISPAT LTD. VS. ACIT 63 ISSUED TO THE APPELLANT IS HAVING INVOICE NO. 4. IT IS ALSO NOT KNOWN AS TO HOW HE WAS HAVING BUSINESS RELATIONSHIP WITH AS MANY AS 33 SUPPLIERS OF INGOTS, WHICH ARE MAINLY IN THE IRON-ST EEL PRODUCING BELTS GEOGRAPHICALLY FAR AWAY FROM HIS NORMAL PLACE OF BUSINESS. ACCORDINGLY, THE PAYMENT SHOWN TO BE MADE TO SHRI RU CHIRARAJ AMOUNTING TO R. 1,39,94,122/- IN THE FORM OF COMMIS SION IS HELD TO BE NOT AT ALL FOR THE BUSINESS PURPOSE OF THE APPEL LANT COMPANY AND IS RATHER AN ACCOMMODATION ENTRY IN ORDER TO RE DUCE PROFIT. 5.1 SIMILAR TO THE POSITION IN THE CASE OF M/S SIDH BALI PAPER MILLS LTD. IN SHORT, THE APPELLANT HAS FAILED TO FILE ANY EVIDENCE TO SUPPORT THAT THE AFORESAID CONCERN IS ACTUALLY DEAL ING AND HAVING SOME EXPERTISE OR BUSINESS RELATIONSHIP WITH IRON AN D STEEL SUPPLIERS. ON THE OTHER HAND, ON PERUSAL OF MEMORAN DUM AND ARTICLES OF ASSOCIATION, IT IS SEEN THAT THE MAIN O BJECT OF THE COMPANY IS DEALING IN MANUFACTURING ETC. OF PAPER O R PAPER RELATED ITEMS. NEITHER IN THE MAIN OBJECT, NOR IN THE INCID ENTAL OR ANCILLARY OBJECTS, THERE IS ANY MENTION OF DEALING IN THE IRO N AND STEEL. THOUGH, THE A.R. HAS FILED THE COPY OF P&L ACCOUNT S HOWING COMMISSION RECEIVED BUT IT IS SEEN THAT THE ONLY CO MMISSION SHOWN TO BE RECEIVED IS FROM APPELLANT COMPANY AND CONSID ERING THE FACTS AND CIRCUMSTANCES AS DISCUSSED HEREINABOVE AND AS A LSO DISCUSSED BY THE A.O., IT IS HELD THAT THE AFORESAID CONCERN HAS NOT RENDERED ANY SERVICES AND PAYMENT OF COMMISSION SO SHOWN IS CERTAINLY NOT FOR THE PURPOSE OF BUSINESS AND IS RATHER THE ARRAN GEMENT TO REDUCE PROFIT, AS EVEN AFTER INCLUDING SUCH HEAVY C ONTENDED ITA 191/JP/2014 & 472 TO 477/JP/2012 ASHIANA ISPAT LTD. VS. ACIT 64 COMMISSION INCOME OF AS MUCH AS RS. 2.31 CRORES, TH E MAJOR PART OF IT GOT ADJUSTED AGAINST THE LOSS INCURRED BY THE COMPANY IN ITS NORMAL BUSINESS, LEADING TO MEAGER PROFIT OF RS. 15 .94 LAKHS AS PER THE P&L ACCOUNT AND EVEN THIS PROFIT MAY NOT BE ULT IMATELY TAXABLE CONSIDERING THAT NORMALLY THE DEPRECIATION CLAIMED UNDER I.T. ACT IS QUITE MORE THAN THE DEPRECIATION AS PER THE COMPANI ES ACCOUNT. THEREFORE, DISALLOWED/ADDITION RELATED TO M/S SIDHABA LI PAPER MILLS LTD. AMOUNTING TO RS. 2,31,41,467/- IS HEREBY CONFI RMED. 5.2 BROADLY SIMILAR IS THE POSITION IN RELATION TO M/S MARUTI PAPER LTD. AS WAS IN THE CASE OF M/S SHRI SIDHBHAI PAPER M ILLS LTD.. HOWEVER, A.R. HAS DRAWN MY ATTENTION TO THE FACT THAT THREE SUPPLIERS OF M.S. INGOTS HAVE DIRECTLY CONFIRMED T O THE A.O. IN RESPONSE TO NOTICE U/S 133(6) THAT PANKAJ AGARWAL/AT UL BANSAL HAVE CONTACTED THEM FOR SALE OF THEIR INGOTS TO APP ELLANT COMPANY. THE A.R. HAS FURNISHED THE DETAILS OF THE COMPANY M/ S MARUTI PAPER LTD. INFLECTING THAT SH. PANKAJ AGARWAL AND SH . ATUL BANSAL IS DIRECTOR OF THE COMPANY. IN FACT M/S VSP UDYOG PVT. LTD. HAS ITSELF MENTIONED THAT MR. ATUL BANSAL, DIRECTOR OF M/S MAR UTI PAPER LTD. HAS WORKED AS INTERMEDIARY ON BEHALF OF APPELLANT C OMPANY. THE PURCHASES MADE BY THE APPELLANT COMPANY FROM THESE THREE CONCERNS NAMELY M/S VSP UDYOG PVT. LTD. AMOUNTING T O RS. 1,61,62,567/- AND FROM M/S YASH ALLOYS PVT. LTD. AM OUNTING TO RS. 2,35,01,449/- AND FROM KOHINOOR STEEL PVT. LTD. AMO UNTING TO RS. 56,58,723/- WAS THROUGH THE BROKER M/S MARUTI PAPER LTD.. IT WILL NOT BE PROPER TO SUSTAIN THE ADDITION OF COMMISSION AMOUNT PAID ITA 191/JP/2014 & 472 TO 477/JP/2012 ASHIANA ISPAT LTD. VS. ACIT 65 ON THESE PURCHASES TOTALING TO RS. 36,25,819/- FOR WHICH THE PARTIES HAVE DIRECTLY CONFIRMED TO THE A.O. AND ACC ORDINGLY ADDITION TO THIS EXTENT IS DELETED. HOWEVER, ADDITION OF BALA NCE COMMISSION SO SHOWN TO BE PAID TO M/S MARUTI PAPER LTD. AMOUNTI NG TO RS. 29,66,626/- IS UPHELD IN VIEW OF THE FACTS AND CIRCU MSTANCES MENTIONED HEREINABOVE AND ALSO CONSIDERING THAT ONE SUPPLIER HAS DENIED INVOLVEMENT OF ANY BROKER FROM THE SIDE OF T HE APPELLANT COMPANY. 5.3 NOW COMING TO M/S PASHUPATI CASTING LTD., IT IS SEEN THAT A.R. HAS FILED BALANCE SHEET AND P&L ACCOUNT OF M/S PASHUPATI CASTING LTD. DURING THE APPELLANT PROCEEDINGS, WHERE IN AS PER SCHEDULE-2 OF THE BALANCE SHEET, THE SAID CONCERN H AS SHOWN, COMMISSION RECEIVED AMOUNTING TO RS. 2,60,50,428/-, WHEREAS COMMISSION PAID BY APPELLANT IS RS. 1,29,92,844/-, WHICH REFLECTS THAT THE SAID CONCERN IS DOING COMMISSION WORK FOR O THER PARTIES ALSO. MOREOVER, THIS CONCERN HAS ALSO SHOWN COMMISSI ON RECEIVED IN THE PRECEDING YEAR AMOUNTING TO RS. 2,48,60,746/ -. THE A.R. HAS DRAWN MY ATTENTION TO THE MEMORANDUM AND ARTICLES OF THE ASSOCIATION OF THE COMPANY, WHEREIN ACTIVITY OF SALE , PURCHASE OF STEEL AND ALLOYS ALSO ON COMMISSION BASIS IS MENTIO NED IN THE MAIN OBJECT. A.R. HAS ALSO SUBMITTED THAT NONE OF THE SU PPLIER PARTIES HAS DENIED THE INVOLVEMENT OF M/S PASHUPATI CASTING LTD.. MOREOVER, A.R. HAS FURNISHED THE COPY OF SHORT DEDU CTION TDS CERTIFICATE ISSUED BY THE I.T. DEPARTMENT TO M/S PAS HUPATI CASTING LTD., WHEREIN THE A.O. OF THE SAID CONCERN HAS DIREC TED SPECIFICALLY ITA 191/JP/2014 & 472 TO 477/JP/2012 ASHIANA ISPAT LTD. VS. ACIT 66 THE M/S ASHIANA ISPAT LTD. I.E. THE APPELLANT COMPA NY TO DEDUCT TDS ON THE COMMISSION PAYABLE TO THE SAID CONCERNS A T THE LOWER RATE. CONSIDERING ALL THESE FACTS AND CIRCUMSTANCES , IT WILL NOT BE PROPER TO SUSTAIN THE ADDITION RELATED TO THIS CONC ERN AND HENCE, THE ADDITION OF RS. 1,29,92,844/- IS HEREBY DELETED . 5.4 SIMILAR IS THE POSITION RELATED TO M/S DEV CONC AST PVT. LTD., INASMUCH AS THE COMMISSION BUSINESS IS MENTIONED IN THE MAIN OBJECT OF THE MEMORANDUM AND ARTICLES OF ASSOCIATIO N OF THE SAID CONCERN. MOREOVER, IN THIS CASE ALSO, THE INCOME TAX DEPARTMENT I.E. THE CONCERNED ASSESSING OFFICER OF THE SAID CO NCERN HAS ISSUED CERTIFICATE FOR LOWER DEDUCTION OF TDS ON THE COMMISS ION INCOME RECEIVABLE SPECIFICALLY FROM ASHIANA ISPAT LTD. I.E . THE APPELLANT COMPANY IN THE MONTH OF JULY ITSELF I.E. ON 18/07/2 007. IT GIVES CREDENCE TO THE INFERENCE THAT PAYMENT MADE TO M/S DEV CONCAST PVT. LTD. CANNOT BE AN AFTERTHOUGHT AND IS THUS NOT NON-GENUINE AND IS CONSIDERED FOR BUSINESS PURPOSE. THEREFORE, A DDITION OF RS. 35,27,079/- IS DELETED. 5.5 IN BRIEF ADDITION TO THE EXTENT OF RS. 4,01,02, 215/- IS CONFIRMED AND BALANCE ADDITION OF RS. 2,01,45,742/- IS HEREBY DELETED FOR A.Y. 2008-09. 6. NOW COMING TO A.Y. 2007-08, THE FACTS RELATED TO M/S BALAJI CELLULOSE PRODUCT LTD. ARE MORE OR LESS SAME AS IN THE CASE OF M/S SIDHABALI PAPER LTD, I.E. THE COMPANY IS BASICALLY DEALING IN ITA 191/JP/2014 & 472 TO 477/JP/2012 ASHIANA ISPAT LTD. VS. ACIT 67 CELLULOSE PULP, PAPER AND BOARDS AND OTHER PACKING MATERIAL. FURTHER NEITHER IN THE MAIN CLAUSE NOR IN THE INCID ENTAL OR ANCILLARY CLAUSE OF THE MEMORANDUM AND ARTICLES OF ASSOCIATIO N OF THE COMPANY, THERE IS ANY MENTION OF DEALING IN IRON OR STEEL PRODUCTS THAT TOO ON COMMISSION BASIS. HENCE ENTIRE COMMISSI ON IS DISALLOWABLE SUBJECT TO THE OBSERVATION GIVEN IN FOR EGOING SENTENCES. A.R. HAS BROUGHT ON RECORD THAT IN THIS CASE ALSO, TWO SUPPLIERS NAMELY M/S T&T METALS PVT. LTD. AND M/S SUR YA ALLOYS INDS. LTD. HAVE DIRECTLY CONFIRMED TO THE A.O.IN RE SPONSE TO NOTICE U/S 133(6). HOWEVER, ON PERUSAL OF THESE LETTERS BY THE UNDERSIGNED, IT WAS NOTICED THAT ONLY M/S T&T METALS P VT. LTD. HAS MENTIONED THAT THEY HAVE DEALT THROUGH PANKAJ RAJWAN SHI (PB PAGE 138) THE DIRECTOR M/S BALAJI CELLULOSE LTD.. B UT IN THE CASE OF M/S SURYA ALLOYS INDS. LTD., THE LETTER DOES NOT IN DICATE THAT THE AFORESAID PARTIES HAVE DEALING WITH M/S ASHIANA ISPA T LTD. THROUGH BROKER OF THE APPELLANT COMPANY. IN VIEW OF THESE FA CTS ONLY COMMISSION PAID ON PURCHASES FROM M/S T&T METALS PVT. LTD. AMOUNTING TO RS. 54,300/- CAN AT BEST BE ALLOWED. HO WEVER, ADDITION OF THE REMAINING COMMISSION SHOWN TO BE PAI D M/S BALAJI CELLULOSE PRODUCT LTD. AMOUNTING TO RS. 1,20,98,806 /- IS SUSTAINED. 6.1 FACTS RELATED TO BHRIGU ALLOYS & STEEL PVT. LTD . ARE MORE OR LESS SIMILAR TO M/S PASHUPATI CASTING LTD. AS DISCU SSED IN A.Y. 2008-09 INASMUCH AS THAT DEALING IN IRON AND STEEL IS PART OF THE INCIDENTAL OR ANCILLARY OBJECT OF MEMORANDUM AND AR TICLE OF ASSOCIATION OF THE COMPANY. THE COMMISSION RECEIVED HAS ALSO ITA 191/JP/2014 & 472 TO 477/JP/2012 ASHIANA ISPAT LTD. VS. ACIT 68 BEEN SHOWN IN SCHEDULE 12 OF P&L ACCOUNT. ACCORDING LY, IT WILL NOT BE JUSTIFIED TO SUSTAIN THE ADDITION OF COMMISSION PAID TO BHRIGU ALLOYS & STEEL PVT. LTD. ALSO AS WAS OBSERVED IN THE CASE OF M/S PASHUPATI CASTING LTD. IN A.Y. 2008-09. THEREFORE, A DDITION OF COMMISSION PAYMENT OF RS. 50,68,906/- TO THE AFORES AID PARTY APART FROM ADDITION OF COMMISSION OF RS. 31,99,025/ - PAID TO M/S PASHUPATI CASTING LTD. DURING A.Y. 2007-08 AR ALSO DELETED. 6.2 IN RESPECT OF BABA ALLOYS PVT. LTD., THE FACTS ARE BROADLY SIMILAR AS IN THE CASE OF AFORESAID TWO CONCERNS NAM ELY BHRIGU ALLOYS & STEEL PVT. LTD. AND M/S PASHUPATI CASTING LTD., AS FAR AS OBJECT CLAUSE IS CONCERNED INASMUCH AS THAT DEALING IN IRON STEEL PRODUCT ON COMMISSION BASIS IS MENTIONED IN THE MAI N OBJECT OF THE MEMORANDUM AND ARTICLE OF ASSOCIATION OF THE CO MPANY. HOWEVER, IT IS NOTICED BY THE UNDERSIGNED THAT THREE SUPPLIERS HAVE DENIED HAVING DEALT THROUGH THE BROKER. TWO OF THEM N AMELY M/S JAI BALAJI INDS. LTD. AND M/S UDAY VIJAY STEEL PVT. LTD. RATHER HAVE STATED THAT THEY HAVE DIRECTLY DEALT WITH APPELLANT COMPANY. THIRD PARTY NAMELY M/S HALDIA STEELS HAS STATED THAT THER E IS NO INFORMATION ON RECORD AND THEREFORE, TRANSACTION MA Y BE TREATED TO HAVE BEEN DONE DIRECTLY. ACCORDINGLY, COMMISSION SH OWN TO BE PAID ON PURCHASES FROM THESE THREE PARTIES TOTALING TO R S. 17,62,051/- IS STRAIGHTWAY DISALLOWABLE AND THEREFORE THE ADDITION T O THIS EXTENT IS CONFIRMED. A.R. HAS ARGUED THAT IN ONE CASE NAMELY BDG METAL AND POWER LTD., (FORMERLY KNOWN AS BISHAN DAYAL GOYAL & S ONS PVT. LTD.) THERE IS POSITIVE REPLY (P.B. PAGE 146). ACCO RDINGLY, ITA 191/JP/2014 & 472 TO 477/JP/2012 ASHIANA ISPAT LTD. VS. ACIT 69 COMMISSION PAID ON PURCHASE FROM THIS PARTY AMOUNTI NG TO RS. 3,34,638/- IS ALLOWABLE. IN RESPECT OF REMAINING AMO UNT OF COMMISSION OF RS. 1,10,67,542/-, IT WILL BE APPROPRI ATE TO CONFIRM THE ADDITION TO THE EXTENT OF 3/4 TH AND GIVE RELIEF TO THE EXTENT OF 1/4 TH IN ABSENCE OF ANY SPECIFIC REPLY EITHER WAY FROM TH E REMAINING SUPPLIERS AND CONSIDERING THAT REPLIES RECEIVED FRO M THREE SUPPLIERS WERE NEGATIVE AND ONLY ONE SUPPLIER WAS POSITIVE. THER EFORE, OUT OF THE AFORESAID REMAIING AMOUNT, ADDITION OF RS. 83,0 0,656/- IS CONFIRMED AND BALANCE AMOUNT OF RS. 27,66,886/- IS HEREBY DELETED. IN BRIEF THE RELIEF IS ALLOWED TO THE EXTEN T OF RS. 31,01,524/- AND ADDITION TO THE EXTENT OF RS. 1,00, 62,707/- IS CONFIRMED. 6.3 THEREFORE, OUT OF TOTAL COMMISSION OF RS. 3,35,8 5,302/- DEBITED IN A.Y. 2007-08 AND FULLY DISALLOWED BY THE A.O., ADDITION OF RS. 2,21,61,513/- IS HEREBY CONFIRMED AND BALANC E ADDITION OF RS. 1,14,23,789/- IS HEREBY DELETED. 12. NOW THE ASSESSEE AS WELL AS THE REVENUE ARE IN AP PEALS BEFORE US. 13. THE LEARNED A.R. FOR THE ASSESSEE SUBMITTED THAT IN THE ASSESSMENTS FRAMED AFTER SEARCH ADDITIONS IN RESPEC T OF COMMISSION PAYMENTS ON SALES AND PURCHASES BY THE APPELLANT WER E MADE BY THE ASSESSING OFFICER. THE ASSESSEE CHALLENGED THE ADDIT ION BEFORE THE LEARNED CIT(A), WHO HAD ALLOWED THE APPEAL PARTLY IN F AVOUR OF THE ITA 191/JP/2014 & 472 TO 477/JP/2012 ASHIANA ISPAT LTD. VS. ACIT 70 ASSESSEE. BEFORE THE LEARNED CIT(A), THE APPELLANT H AD FILED A DETAILED PAPER BOOK FOR EACH OF THE ASSESSMENT YEAR. COPIES OF WHICH HAS BEEN SEPARATELY FILED BEFORE THE HONBLE BENCH. FURTHER ADDITIONAL EVIDENCES WERE FILED BEFORE THE LEARNED CIT(A), COPY OF WHICH H AS BEEN ALSO FILED SEPARATELY. THE LEARNED CIT(A) CALLED FOR A REMAND R EPORT FROM THE LEARNED ASSESSING OFFICER, COPIES OF WHICH HAS ALSO SEPARATELY FILED. THE APPELLANT HAS FILED A REJOINDER TO THE REMAND REPOR T BEFORE THE LEARNED CIT(A), COPY OF WHICH IS ALSO FILED SEPARATELY. THE L EARNED CIT(A) PASSED COMMON ORDER IN RESPECT OF ASSESSMENT YEARS 2007-08 TO 2009-10 VIDE ORDER DATED 15/03/2012. SUBSEQUENTLY, THE LEARNED C IT(A) PASSED ANOTHER COMMON ORDER FOR ASSESSMENT YEARS 2004-05 T O 2006-07 DATED 16/3/2012 IN WHICH HE PLACED RELIANCE ON THE ORDER FRAMED BY HIM ON 15/3/2012. A SEPARATE ORDER HAS BEEN, SUBSEQUENTLY, PASSED BY THE LEARNED CIT(A) FOR A.Y. 2003-04 ON 22/1/2014 IN RES PECT OF WHICH, THE ASSESSEE COMPANY HAS FILED THE APPEAL BEFORE THE HO NBLE BENCH. THE ISSUE IN ALL THE APPEALS ARE SIMILAR AND IDENTICAL, THEREFORE, THE LEARNED COUNSEL HAS SUMMED UP THE ADDITIONS MADE IN ALL THE YEARS UNDER THREE HEADS, (I) ADDITIONS SUSTAINED ON COMMISSION ON SAL ES, (II) ADDITIONS SUSTAINED ON COMMISSION ON PURCHASES AND (III) ADDI TIONS ON ACCOUNT OF UNEXPLAINED INVESTMENT IN EXCESS STOCK ONLY IN A.Y. 2009-10. THE A.R. ITA 191/JP/2014 & 472 TO 477/JP/2012 ASHIANA ISPAT LTD. VS. ACIT 71 FURTHER SUBMITTED THAT FOLLOWING UNDISPUTED FACTS AR E IN THE ASSESSEES CASE, WHICH ARE REPRODUCED AS UNDER:- I. A SEARCH AND SEIZURE OPERATION WAS CONDUCTED BY T HE INCOME TAX DEPARTMENT ON 17/09/2008. II. ALL PAYMENTS FOR COMMISSION PAYABLE AGAINST SAL ES AND PURCHASES HAVE BEEN MADE BY ACCOUNT PAYEE CHEQUES. III. DURING THE COURSE OF SEARCH, NO SEIZURE HAS BE EN MADE OF ANY SUCH DOCUMENT SHOWING ANY COMPENSATORY RECEIPT O F MONEY AGAINST THE CHEQUES ISSUED FOR PAYMENTS TOWARD S COMMISSION ON SALES/PURCHASES. IV. NONE OF THE PARTIES TO WHOM COMMISSION HAS BEEN PAID TOWARDS SALES/PURCHASES ARE IN ANY WAY RELATED TO TH E DIRECTORS OF THE APPELLANT COMPANY. V. THERE IS NO ALLEGATION THAT THE PAYMENTS HAVE BEE N MADE TO ANY ENTRY OPERATOR. VI. THERE ARE NO DIRECT OR INDIRECT EXPENSES DEBITED TO THE P&L ACCOUNT IN RESPECT OF EXPENSES FOR MARKETING OF FIN ISHED GOODS AND/OR PROCUREMENT OF RAW MATERIAL. VII. ALL THE PARTIES TO WHOM COMMISSION HAS BEEN PAI D ARE SEPARATE INCOME TAX ASSESSEES AND THEIR PARTICULARS HAVE BEEN FILED BEFORE THE LEARNED A.O. VIII. TDS HAS BEEN DEDUCTED BY THE APPELLANT ASSESSE E IN RESPECT OF COMMISSION PAID TO BROKERS FOR SALES AND PURCHAS ES IN ALL THE CASES. ITA 191/JP/2014 & 472 TO 477/JP/2012 ASHIANA ISPAT LTD. VS. ACIT 72 THE LEARNED CIT(A) HAS CONFIRMED THE COMMISSION ON SALES IN A.Y. 2003- 04 TO 2009-10. THE LEARNED ASSESSING OFFICER ISSUED NOTICE U/S 133(6) OF THE ACT TO VERIFY THE COMMISSION PAID ON SALES TO T HE BROKERS. SOME OF THE BROKERS HAVE DIRECTLY FILED THE REPLY WHICH HAS BEEN NARRATED BY THE LEARNED ASSESSING OFFICER AND CONFIRMED THE RECEIPT S OF COMMISSION. THIS ASPECT HAS NOT BEEN DISPUTED BY THE REVENUE. THE ALL EGATION MADE BY THE LEARNED ASSESSING OFFICER THAT THE RECIPIENTS WE RE HAVING COMMON ADDRESSES. IT IS CONTENDED BY THE LEARNED AR THAT I T IS IRRELEVANT FACTOR THAT THE BROKERS ARE HAVING COMMON ADDRESSES WHEN IT IS ESTABLISHED THAT THEY ARE SEPARATE ASSESSEES HAVING THEIR OWN SE PARATE BUSINESS. VARIOUS DISCREPANCIES WERE POINTED OUT BY THE LEARNE D ASSESSING OFFICER IN THE ASSESSMENT ORDERS, WHICH HAS BEEN NARRATED IN THE EARLIER PARAS OF THIS ORDER, HAS BEEN ADDRESSED BY THE LEARNED AR. TH E LEARNED AR SUBMITTED HIS ARGUMENT ON THE BASIS OF LEARNED CIT( A)S CONFIRMATION. THE SALES AND PURCHASES IN THE FERROUS METAL MARKET ARE AFFECTED THROUGH THE BROKERS AND THIS IS A COMMON PRACTICE. THE BROKE RS ACT BY WORD OF MOUTH AND COMMUNICATE THROUGH TELEPHONE. IT IS NOT A COMMON PRACTICE TO MAINTAIN BUSINESS ORDER FORMS IN THIS TRADE. IT IS NOT UNUSUAL THAT A PERSON ACTS AS A COURIER FOR OTHER PERSON IN THE NE ARBY AREA. THE CHEQUES HAVE BEEN RECEIVED BY THE PERSONS IN WHOSE NAMES THE Y WERE ISSUED AND ITA 191/JP/2014 & 472 TO 477/JP/2012 ASHIANA ISPAT LTD. VS. ACIT 73 THIS FACT IS NOT IN DISPUTE MEANING THEREBY THAT TH E PAYMENT HAS BEEN MADE TO THE RESPECTIVE BROKERS AND NOT TO THE COURI ER. THE LEARNED CIT(A) HAS ACCEPTED THAT MOST OF THE PAYMENTS WERE DU RING THE YEAR ITSELF THOUGH THE FINAL PAYMENTS HAVE BEEN RECEIVED ON THE LAST DATE OF THE YEAR, TO THAT EXTENT THE ASSESSING OFFICERS OB SERVATIONS WERE NOT CORRECT. IT IS FURTHER OBSERVED BY THE LEARNED CIT(A ) THAT NONE OF THE BROKERS ARE RELATIVES OF THE DIRECTOR AND PROMOTER OF THE APPELLANT COMPANY. THE BROKERS NAMELY SHRI BALAJI STEEL & CEME NT COMPANY, SHRI SHAKTI STEEL AND CEMENT COMPANY, COMMISSION HAS NOT ONLY RECEIVED BY THEM FROM THE APPELLANT BUT ALSO FROM RATHI STEEL D ARSHAN LTD.. ABOUT RENDERING THE SERVICES, THE LEARNED CIT(A) ACCEPTED THE CIRCUMSTANTIAL EVIDENCES TO PROVE THE SERVICES RENDERED BY THE BRO KERS. IT IS FURTHER SUBMITTED THAT IN THE FERROUS METAL TRADE BROKERS A RE FREELANCE BROKERS AND THE BUSINESS IS DONE BY THEM ON THE BASIS OF CO NTACTS, INFORMATION ABOUT THE DEMAND AND SUPPLY OF MATERIAL AND THEY ST AND GUARANTEE FOR THE PAYMENTS BEING ESTABLISHED PARTIES IN THE MARKE T. UNDER SUCH CIRCUMSTANCES, THERE CAN BE NO DIRECT EVIDENCE WITH REGARD TO THE RENDERING OF SERVICES BECAUSE THERE IS NO DOCUMENTA RY TRAIL LEFT BEHIND IN THE CONDUCT OF THE SERVICES BY THESE PEOPLE. THE LEA RNED CIT(A) HAS WRONGLY CONCLUDED IN THE CASE OF BROKERS WHERE AGREEM ENT ARE NOT ON ITA 191/JP/2014 & 472 TO 477/JP/2012 ASHIANA ISPAT LTD. VS. ACIT 74 STAMP PAPER THAT IT CANNOT BE POSITIVELY HELD THAT THE AGREEMENT HAS BEEN ENTERED INTO ON THE CONTENDED DATE MENTIONED O N THE AGREEMENT AND THEREFORE THE SAME IS PART OF AN AFTERTHOUGHT A RRANGEMENT. THE AGREEMENTS WERE BETWEEN TWO PARTIES WHICH HAS BEEN DUL Y SIGNED AND EXECUTED BY THEM AND A COPY OF THE SAME HAS BEEN FO UND DURING THE COURSE OF SEARCH AND THERE IS NOTHING TO THE CONTRA RY. THE HONBLE ITAT IN THE CASE OF CHICAGO PNEUMATIC INDIA LTD. VS. DCI T (2007) 15 SOT 252 (MUM.) HAS HELD THAT WE ALSO DO NOT FIND ANY SUBSTANCE IN THE CONTENTION OF REVENUE THAT AGREEMENTS OF APPOINTMEN T OF COMMISSION AGENTS SHOULD HAVE BEEN EXECUTED ON LEGAL DOCUMENTS INSTEAD OF LETTER FORM BECAUSE THIS NOT SO REQUIRED UNDER ANY LAW . THEREFORE, THE LEARNED CIT(A)S FINDING IS AGAINST THE LAW AND WITHOU T ANY BASIS. IN A.Y. 2009-10 TO ALL THE 62 BROKERS, PAYMENTS WERE MADE AT RS. 1,50,49,643/- AS AGAINST THE DEBIT OF RS. 1,50,55,500/-, THEREFOR E, HE REQUESTED TO ALLOW THE ENTIRE COMMISSION DEBITED BY THE APPELLANT IN P&L ACCOUNT ON SALE. 13.1 COMMISSION PAID ON PURCHASES :- THE LEARNED AR FOR THE ASSESSEE SUBMITTED THAT POSITION WITH REGARD TO COMM ISSION ON PURCHASES WHICH ARE MADE THROUGH THE BROKERS FROM VARIOUS PART IES ACCROSS THE COUNTRY IS SIMILAR TO COMMISSION PAID ON SALES., WHI CH HAS BEEN FACILITATED ITA 191/JP/2014 & 472 TO 477/JP/2012 ASHIANA ISPAT LTD. VS. ACIT 75 THROUGH THE BROKERS, PAID COMMISSION ON PURCHASES. THESE ARE THE PEOPLE WHO INFORM THE APPELLANT COMPANY ABOUT THE QU ALITY OF THE RAW MATERIAL AND THE PRICE RANGE AND ITS AVAILABILITY. FOR THESE SERVICES, THEY CHARGED COMMISSION. IT IS THROUGH THE VERBAL GUARAN TEE OF THE BROKERS THAT THE RAW MATERIAL IS AVAILABLE FROM UNKNOWN PARTI ES TO THE APPELLANT COMPANY ON CREDIT. IF THE RAW MATERIAL IS NOT PURCHA SED THROUGH BROKERS THE APPELLANT COMPANY WOULD HAVE HAD TO HAVE ITS OWN MARKET SURVEY AND IT WOULD BECOME VERY DIFFICULT FOR THE APPELLANT COMPANY TO OBTAIN GOODS ON CREDIT FROM UNKNOWN PARTIES. THE APPELLANT COMPANY ENGAGED BROKERS FOR THE PURCHASE MADE FROM OUTSIDE STATE OF RAJASTHAN. FROM WITHIN THE STATE THE PURCHASES ARE MADE DIRECTLY FRO M THE PARTIES. THE LEARNED AR FURTHER SUBMITTED THAT THE PURCHASES MAD E BY THE COMPANY WAS MORE EXPENSIVE THAN THE PURCHASE MADE THROUGH TH E BROKERS ON THE BASIS OF THE FACTS AND FIGURES OF THE PURCHASES. AS FAR AS COMMISSION PAID TO RUCHIRARAJ, THE LEARN ED CIT(A) HELD THAT HE IS BASICALLY CONSULTANT AND CONTRACTOR AND IS HAVING OFFICE AT DLF, QUTUB ENCLAVE, GURGAON, BUT IT IS SUBMITTED THAT TH E APPELLANT HAD SUBMITTED COMPLETE COPY OF AGREEMENT, BILL, LEDGER ACCOUNT AND PAYMENTS HAVE BEEN MADE THROUGH ACCOUNT PAYEE CHEQU ES. FROM PERUSAL OF BILL RAISED BY THE PARTY, IT IS CLEAR TH AT THE PARTY HAD CHARGED ITA 191/JP/2014 & 472 TO 477/JP/2012 ASHIANA ISPAT LTD. VS. ACIT 76 SERVICE TAX AND ASSESSED TO TAX. THE OBJECTION MADE BY THE LEARNED CIT(A) THAT RUCHIRARAJ HAS NO CAPACITY TO DEAL WITH THE 33 COMPANIES. IT IS ARGUED THAT RUCHIRARAJ IS A CONTRACTOR AND IN HI S LINE OF BUSINESS, IT CANNOT BE SAID THAT HE WOULD NOT KNOW INGOTS SUPPLIE RS. FURTHER AS FAR AS THE RUCHIRARAJ WAS FOUND BY THE LEARNED CIT(A) AS CO NSULTANT AND CONTRACTOR, WHICH DID NOT HAVE ANY EXPERTISE OR EXPE RIENCE IN THIS LINE OF BUSINESS, IT IS SUBMITTED THAT IN THIS LINE OF TRAD E, ONLY INFORMATION ABOUT THE RAW MATERIAL AND QUALITY IS REQUIRED AND ALSO TO KNOW THE DEMAND AND SUPPLY POSITION OF INGOTS. IT IS CLAIMED THAT T ODAY, TELECOMMUNICATION AND INTERNET SERVICES ARE AVAILABLE AND THERE ARE N O GEOGRAPHICAL LIMITS. EVEN BY USING THESE FACILITIES, THE PEOPLE ARE DOIN G BUSINESS ON COMMISSION BASIS EVEN WITH OVERSEAS PARTIES WHILE SIT TING AT HOME, BASED ON INFORMATION GATHERED ON TELEPHONE AND INTERNET. THEREFORE, CONFIRMED ADDITION ON ACCOUNT OF COMMISSION PAID TO RUCHIRARA J AT RS. 1,39,94,122/- IS ALLOWABLE. 13.2 FOR A.Y. 2008-09, SIMILAR OBJECTIONS HAD BEEN RAISED BY THE LEARNED CIT(A) ON COMMISSION PAID TO SIDHBHAI PAPER MILL LTD. AT RS. 2,31,41,467/-. THE LEARNED CIT(A) REFERRED THE MEMOR ANDUM AND ARTICLES OF ASSOCIATION AND HELD THAT THERE IS MENTION IN IT THAT THE ASSESSEE WAS MANUFACTURING OF PAPER AND PAPER RELATED ITEMS, BUT IT IS SUBMITTED THAT ITA 191/JP/2014 & 472 TO 477/JP/2012 ASHIANA ISPAT LTD. VS. ACIT 77 THE RECIPIENT WAS COMMISSION AGENT WHO HAD ARRANGED T HE MATERIAL FOR THE APPELLANT AND ISSUED THE COMMISSION BILL ON WHIC H SERVICE TAX HAS BEEN CHARGED BY THE RECIPIENT. AS FAR AS COMMISSION PAID TO M/S SIDHBHAI PAPER MILL LTD. LAWS AS NO BEARING ON COMMISSION PAI D ON PURCHASES AS THERE IS NO CONTROL ON THE BUSINESS OF THE RECIPIEN T OF THE APPELLANT, THE COMMISSION BILL WAS RAISED AFTER CHARGING OF SERVICE TAX BY IT. M/S SIDHBHAI PAPER MILL LTD. HAS ALSO APPLIED FOR LOWER DEDUCTION OF TAX BEFORE THE ASSESSING OFFICER, WHICH HAS BEEN IGNORED BY THE LEARNED CIT(A) WHILE PASSING THE APPELLATE ORDER. THUS, HE REQUESTED TO ALLOW THE COMMISSION PAID ON PURCHASE TO M/S SIDHBHAI PAPER M ILL LTD. AT RS. 2,31,41,467/-. 13.3 SIMILARLY, THE ASSESSEE HAD PAID COMMISSION O N PURCHASED AT RS. 65,92,445/- TO M/S MARUTI PAPER LTD.. THE LEARNE D CIT(A) HAD GIVEN THE SIMILAR FINDINGS TO M/S SIDHBHAI PAPER LTD.. LE ARNED CIT(A) FURTHER HELD THAT IN THIS CASE THREE OF THE SUPPLIERS NAMEL Y VSP UDYOG PVT. LTD, M/S YASH ALLOYS PVT. LTD. AND M/S KOHINOOR STEEL PV T. LTD. HAD CONFIRMED THE SUPPLY THROUGH ITS DIRECTOR, THEREFORE, HE DELE TED THE ADDITION ON ACCOUNT OF COMMISSION PAID ON PURCHASE AT RS. 36,25 ,819/- AND REMAINING AMOUNT OF RS. 29,66,626/- WAS CONFIRMED. THE LEARNED AR SUBMITTED THAT THE LEARNED CIT(A) ASSUMED SAME PART Y GENUINE BROKER ITA 191/JP/2014 & 472 TO 477/JP/2012 ASHIANA ISPAT LTD. VS. ACIT 78 BUT NOT GENUINE IN OTHER CASES. THE LEARNED CIT(A) HA S NOT NEGLECTED THE EVIDENCE SUBMITTED BEFORE HIM. 13.4 FOR A.Y. 2007-08 IN CASE OF BROKERAGE PAID TO BALAJI CELLULOSE PRODUCT LTD. AT RS. 1,21,53,106/-, IT IS SUBMITTED THAT THE ASSESSEE PURCHASED THE RAW MATERIAL FROM M/S T&T METALS PVT. L TD. THROUGH BALAJI CELLULOSE PRODUCT LTD., FOR WHICH THE APPELLANT HAD PAID COMMISSION, WHICH HAS BEEN CONFIRMED BY THE RECIPIENT ON WHICH T HE RECIPIENT HAD CHARGED SERVICE TAX, WHICH SHOWS THAT IT IS A GENUINE PARTY. IN CASE OF BABA ALLOYS PVT. LTD. FOR COMMISSION PAYMENT OF RS. 1,31,64,231/-, THE LEARNED CIT(A) ACCEPTED TO PURCHASE MADE FROM JAI B ALAJI INDUSTRIES AND M/S UDAY VIJAY STEEL PVT. LTD., WHO HAS DENIED HAVIN G DEALT THROUGH THE BROKER AND THE THIRD PARTY NAMELY M/S HALDIA STEEL LTD. STATED THAT THERE IS NO INFORMATION ON THEIR RECORD ABOUT THE BROKERA GE. IT IS SUBMITTED THAT M/S BABA ALLOYS PVT. LTD. IS AGENT FOR PURCHASE OF MATERIAL UNDER AN AGREEMENT WITH THE APPELLANT COMPANY AND NOT THE BRO KERS FOR THE SUPPLIER COMPANIES, THEREFORE, SO FAR AS THE SUPPL IER COMPANIES ARE CONCERNED, IT WOULD NOT FIGURE IN THEIR RECORDS AS T HEIR AGENTS. THE FACT THAT THE LEARNED CIT(A) HAS ACCEPTED M/S BABA ALLOY S PVT. LTD. HAVING ACTED AS COMMISSION AGENT FOR THE APPELLANT AND IT HAVING CONFIRMED THE TRANSACTION WITH THE APPELLANT. THERE IS NO REASON TO DISBELIEVE THAT M/S ITA 191/JP/2014 & 472 TO 477/JP/2012 ASHIANA ISPAT LTD. VS. ACIT 79 BABA ALLOYS PVT. LTD. HAS NOT ACTED AS THE COMMISSI ON AGENT SIMPLY BECAUSE THE THIRD PARTIES HAVE STATED THAT HE WAS NO T THEIR AGENT. IN THIS CASE ALSO, THE COMMISSION BILL WAS INCLUSIVE WITH SER VICE TAX CHARGED ON BROKERAGE, THEREFORE, 3/4 TH COMMISSION CONFIRMED BY THE LEARNED CIT(A) IS NOT JUSTIFIED AND WITHOUT ANY BASIS. 13.5 FOR A.Y. 2004-05, THE APPELLANT PAID COMMISSI ON ON PURCHASE TO BIHAR RAFIA INDUSTRIES LTD. CALCUTTA, A MOUNTING TO RS. 34,85,767/-. THE LEARNED CIT(A) CONFIRMED THE ADDITI ON IN ABSENCE OF ANY EXPERIENCE OF BROKER IN THIS LINE OF BUSINESS A ND ACTUALLY PROVIDED ANY SERVICE TO THE APPELLANT BY WAY OF ARRANGING PUR CHASE OF INGOTS EXCEPT COPY OF BILL AND CONFIRMATION FROM THE PARTI ES. IT IS SUBMITTED THAT THE SUPPLIER HAD SHOWN THE NAME OF THE PARTY AS A BR OKER IN THE BILL ITSELF AND IT HAD ACTED AS AGENT OF THE APPELLANT AND THES E FACTS HAVE BEEN CONFIRMED BY IT SEPARATELY. IT IS FURTHER ARGUED TH AT ONLY IN THIS LINE OF BUSINESS, THE KNOWLEDGE OF THE MARKET, KNOWLEDGE OF D EMAND AND SUPPLY AND MATERIAL AVAILABLE, ARE REQUIRED TO EXECUTE THE ORDER. THE REMAINING COMMISSION ALSO CONFIRMED BY THE LEARNED CIT(A) ON ACCOUNT OF NO EXPERIENCE FOR WHICH THE APPELLANT RELIED UPON SAME ARGUMENT AS GIVEN IN THE CASE OF BIHAR RAFIA INDUSTRIES LTD. CALCUTTA . ITA 191/JP/2014 & 472 TO 477/JP/2012 ASHIANA ISPAT LTD. VS. ACIT 80 13.6 FOR A.Y. 2005-06, THE ASSESSEE HAS CLAIMED CO MMISSION ON PURCHASE AT RS. 10,60,201/- PAID TO M/S SAND CHEM ( I) LTD.. THE LEARNED CIT(A) GAVE THE IDENTICAL FINDINGS THAT THE ASSESSEE ACTUALLY HAD NOT RENDERED ANY SERVICE, NO EXPERIENCE IN THE LINE OF BUSINESS BY WAY OF ARRANGING PURCHASES OF INGOTS EXCEPT COPY OF BILL A ND CONFIRMATION FROM PARTY. IT IS SUBMITTED BY THE AR THAT BILL OF THE SUPPLIER ITSELF SHOWED THAT THESE PURCHASES WERE MADE THROUGH BROKER NAMELY M/S SAND CHEM (I) LTD., WHICH HAS BEEN CONFIRMED SEPARATELY. THE OTHER ALLEGATIONS MADE BY THE LEARNED CIT(A) ARE NOT RELEVANT TO CONFIRM T HE ADDITION. AS ALREADY ARGUED, IN THIS LINE OF BUSINESS ONLY KNOWLEDGE OF MARKET, KNOWLEDGE OF DEMAND AND SUPPLY, QUALITY AND AVAILABILITY ARE REQ UIRED TO ARRANGE THE GOODS. THE LEARNED CIT(A) SIMILARLY CONFIRMED THE RE MAINING COMMISSION ON PURCHASES AT RS. 18,53,454/- ON THE BASIS OF SAM E ARGUMENT AS GIVEN IN CASE OF M/S SAND CHEM (I) LTD.. THEREFORE, HE REQ UESTED THAT THE ASSESSEE HAD PROVIDED ALL THE EVIDENCES DIRECTLY OR INDIRECTLY BEFORE THE ASSESSING OFFICER OR BEFORE THE LEARNED CIT(A). 13.7 FOR A.Y. 2006-07, THE ASSESSEE HAD CLAIMED CO MMISSION ON PURCHASE AT RS. 9,27,758/-. IT IS SUBMITTED THAT TH E LEARNED CIT(A) HAD GIVEN IDENTICAL FINDINGS WITH A.Y. 2004-05 AND 2005- 06 I.E. THE APPELLANT HAS FAILED TO FURNISH THAT THESE PERSONS HAVE PROVI DED SERVICES FOR ITA 191/JP/2014 & 472 TO 477/JP/2012 ASHIANA ISPAT LTD. VS. ACIT 81 PURCHASING THE M.S. INGOTS AND CIRCUMSTANTIAL EVIDE NCE IS AGAINST THE APPELLANT. THE APPELLANT ALSO SUBMITTED THAT THE ARG UMENTS SUBMITTED IN A.Y. 2004-05 AND 2005-06 ARE TO BE CONSIDERED ON TH IS POINT AND ACCORDINGLY PRAYED TO DELETE THE ADDITION CONFIRMED BY THE LEARNED CIT(A). 14. AT THE OUTSET, THE LEARNED CIT D.R. CONTENDED TH AT A SEARCH AND SEIZURE OPERATION WAS CARRIED OUT IN THIS CASE AT THE BUSINESS PREMISES OF THE APPELLANT ON 17/09/2008. DURING THE COURSE O F SEARCH, BOOKS OF ACCOUNTS AS PER ANNEXURE-A/5 AND A/3 WERE SEIZED. FR OM PERUSAL OF WHICH, IT REVEALED THAT THE NAME OF BROKERS, FOR THE M, DETAILS OF CHEQUES MENTIONED ON IT. THESE PAPERS INDICATE THAT THE ASS ESSEE INFLATE THE COMMISSION EXPENSES BY PLANNING IN ADVANCE. THE LEAR NED ASSESSING OFFICER SENT NOTICE U/S 133(6) OF THE ACT TO ALL TH E BROKERS IN ALL THE YEARS BUT IT REVEALED FROM THE ASSESSMENT ORDER THAT MOST OF BROKERS HAD NOT CONFIRMED BROKERAGE RECEIPTS IN RESPONSE TO THE NOT ICE ISSUED BY THE ASSESSING OFFICER. THE ASSESSMENT ORDER SHOWED THAT T HE BROKERS WERE PAID FAMILY MEMBERS RESIDING IN THE SAME PREMISES, THEY DO NOT MAINTAIN ANY CORRESPONDENCE MADE WITH THE SUPPLIERS AS WELL AS THE APPELLANT. THEY WERE UNABLE TO ESTABLISH THE SERVICE RENDERED BY THEM FOR GETTING THE COMMISSION. IN THE YEAR 2008-09, SOME OF THE PA RTIES, WHO HAD PAID ITA 191/JP/2014 & 472 TO 477/JP/2012 ASHIANA ISPAT LTD. VS. ACIT 82 BROKERAGE, WERE NOT DEALING DIRECTLY IN THE SUPPLY O F INGOTS/BILLETS EITHER THEY WERE CONTRACTOR OR CONSULTANT. IN SOME OF THE C ASES EITHER BROKERS MAIN BUSINESS WAS PAPER BUSINESS OR IN SOME OTHER CA SES, THERE WAS NO MAIN OBJECT MENTIONED IN THE MEMORANDUM OF ARTICLE AND ASSOCIATION THAT THE ASSESSEE WAS DEALING IN THE IRON AND STEEL MATERIAL. EVEN IN THE ANCILLARY OBJECT, THIS WAS NOT OBJECT OF COMPANY. THE LEARNED CIT(A) HEAVILY RELIED UPON THE ORDER OF THE LEARNED ASSESS ING OFFICER AND PARTLY LEARNED CIT(A). THE LEARNED CIT(A) HAS THOROUGHLY EX AMINED THIS ISSUE, HE HAS CONFIRMED THE ADDITION ON THE BASIS OF FACT AND EVIDENCE PRODUCED BY THE ASSESSEE OF EACH BROKERS. THEREFORE, SHE PRAY ED TO CONFIRM THE ORDER OF THE ASSESSING OFFICER. SHE FURTHER REITERA TED THE FINDINGS GIVEN BY THE ASSESSING OFFICER THAT TO DO THIS BUSINESS, THE TELEPHONE IS NOT SUFFICIENT. THE INCOME DISCLOSED BY THE BROKERS IN EVERY CASE WAS MARGINAL. PARTICULARLY SHE HAS ALSO DRAWN OUR ATTENT ION ON PAPER BOOK PAGE NOS. 401 AND 360 FOR A.Y. 2009-10. IN A.Y. 20 07-08, THE LEARNED ASSESSING OFFICER CALLED ON ONE OF THE SUPPLIER WHO HAD DENIED SERVICES OF ANY BROKERS IN ITS TRANSACTION. NO RECORD HAD BE EN MAINTAINED BY THE BROKERS IN FORM OF BOOKING OF ORDER AND SUPPLY OF G OODS EVEN SALES/PURCHASES BILLS DOES NOT INDICATE ANY MIDDLE MAN TO MATERIALIZE THE TRANSACTION AND PAID THEM TO AS A BROKERAGE. ITA 191/JP/2014 & 472 TO 477/JP/2012 ASHIANA ISPAT LTD. VS. ACIT 83 15. WE HAVE HEARD THE RIVAL CONTENTIONS OF BOTH THE PARTIES AND PERUSED THE MATERIAL ON RECORD. THE ASSESSEE HAS FI LED CONFIRMATION EITHER BEFORE THE ASSESSING OFFICER OR BEFORE THE C IT(A). THE LEARNED CIT(A) HAD CALLED REMAND REPORT ON ADDITIONAL EVIDE NCE FURNISHED BEFORE HIM. BESIDES CONFIRMATION, THE APPELLANT ALSO SUBMI TTED PAN NUMBER OF THE RECIPIENTS AND COPY OF RETURN AND ALSO DEDUCTED THE TDS ON IT. SERVICE TAX CHARGED ON THE COMMISSION BILL BY THE R ECIPIENTS. THE PAYMENTS WERE MADE TO THESE BROKERS THROUGH BANKING CHANNELS. IT IS TRUE THAT THE APPELLANT AS WELL AS SUPPLIERS HAS NOT MENTIONED IN BILL THE NAME OF THE BROKERS THROUGH WHOM SALES OR PURCHASES HAVE BEEN MADE. IT IS A FACT THAT IN THE LINE OF BUSINESS, MOST GOO DS IS BEING SOLD THROUGH BROKERS, ON WHICH, COMMISSION IS PAID. THE PURCHASE I S ALSO MADE THROUGH BROKERS, THEREFORE, IT REQUIRES TO PAID COM MISSION TO MIDDLE MAN WHO MAKE AVAILABLE OF GOODS FROM THE MARKET AND ALSO GUARANTEED THE AMOUNT IS TO BE RECOVERED AND PAID. THIS BENCH HAD D ECIDED IN THE CASE OF M/S KAMDHENU ISPAT LIMITED VS. ACIT IN ITA NOS. 662 TO 668/JP/2012 FOR A.Y. 2003-04 TO 2009-10 ORDER DATED 21/11/2014 WHEREIN IDENTICAL AND SIMILAR ADDITIONS WERE MADE BY THE LEARNED ASSE SSING OFFICER AND PARTLY CONFIRMED BY THE LEARNED CIT(A). THE MODUS OP ERANDI OF BOTH THE ASSESSEES ARE SAME. BOTH ARE PAYING COMMISSION ON S ALES AS WELL AS ON ITA 191/JP/2014 & 472 TO 477/JP/2012 ASHIANA ISPAT LTD. VS. ACIT 84 PURCHASES. IT IS NOTICED FROM THE ORDER OF KAMDHENU ISPAT LTD. (SUPRA) THAT FOLLOWING PARTIES NAME WERE FIGURED IN COMMISSIO N PAYMENT LIST, WHICH HAS BEEN ACCEPTED BY THE LEARNED CIT(A) AS GEN UINE AND ALLOWED THE APPEAL OF M/S KAMDHENU ISPAT LTD. WHERE NO SECO ND APPEAL HAS BEEN FILED BY THE ASSESSING OFFICER. NAMES OF BROKERS AS PER ASSESSMENT YEARS WISE, M/S KAMDHENU ISPAT LTD. HAD PAID COMMISSION A RE AS UNDER:- A.Y. 2003-04 A.Y. 2004-05 PARTYS NAME PARTYS NAME 1. AJAY TRADERS 1. SH. MAMAN CHAND GOYAL 2. SH. VIKRANT MAHAJAN 2. SH. NARESH GARG 3. SH. GULSHAN GUPTA. 3. SH. VIKRANT MAHAJAN 4. SH. DHARMPAL KHERA 4. AJAY TRADERS 5. SH. MAMAN CHAND GOYAL 6. SH. SANJAY GUPTA 7. SH. NARESH GARG 8. SH. ANIL KUMAR 9. RAJIV GARG (HUF) A.Y. 2005-06 A.Y. 2006-07 PARTYS NAME PARTYS NAME 1. AJAY TRADERS 1. AJAY TRADERS 2. SH. NARESH GARG 2. SH. ANIL KUMAR 3. AMAN STEEL. 3. SH. JAGDISH MANCHANDA 4. SH. CHANDRASHEKHAR STEEL 4. SH. NARESH KUMAR GA RG 5. SH. JAGDISH MANCHAND 5. SH. RAJIV GARG (HUF) 6. SH. KANTA MODI 6. SMT.SHARDA MANCHANDA 7. SH. MAMAN CHAND GOYAL 7. SMT. SHASHI BALA GARG . 8. PROJECT CONSULTANT 8. SH. VIKRANT MAHAJAN. 9. SMT. SHARDA MANCHANDA 10. SH. VIKRANT MAHAJAN. ITA 191/JP/2014 & 472 TO 477/JP/2012 ASHIANA ISPAT LTD. VS. ACIT 85 A.Y. 2007-08 A.Y. 2008-09 PARTYS NAME PARTYS NAME 1. SH. JAGDISH MANCHAND 1. AGARWAL STEEL CORP. 2. AJAY TRADERS 2. SH. ANIL KUMAR 3. SH. GULSHAN GUPTA 3. SH. ANIL KISHARA 4. SH. DHARMPAL KHERA 4. SH. ANKIT GARG 5. M/S GARG STEEL 5. SH.ASHOKA KR.DANG & SONS 6. SH. MANCHAND GUPTA 6. SH. DEEPAK MITTAL 7. SH. SANJAY GUPTA 7. SH. DHARAMPAL KHERA 8. SH. VIKRANT MAHAJAN 8. GANPATI STEEL CORP. 9. GARG STEEL 10. SH. GULSHAN GUPTA 11. SMT. KIRTIKA JAIN 12. SH. MANCHAND GOYAL 13. SH. MAMAN JAIN 14. SH. NARESH KR. GARG 15. SH. NEERAJ JAIN 16. SH.NEERAJ JAIN & SONS HUF 17. SH. PURSHOTAM KR. GOYAL 18. SH. ROSHAN LAL GUPTA 19. SANGAM BUILDWAY 20. SANGAM IRON & STEEL CO. 21. SH. SANJAY GUPTA 22. SH. SANJAY MITTAL 23. SH. SANJAY DANG & SONS HUF 24. SH. SARTHAK GUPTA 25. SH. UMESH KUMAR HUF 26. SMT. VANDANA JAIN 27. SH. VIKRAM MAHAJAN. 28. SH. VIKRANT MAHAJAN. ITA 191/JP/2014 & 472 TO 477/JP/2012 ASHIANA ISPAT LTD. VS. ACIT 86 A.Y. 2009-10 PARTYS NAME 1. SH. ANIL KR. MAHAJAN (HUF) 2. BHAWAN STEEL 3. SH. DINESH GUPTA 4. ESS ENN ENTERPRISES 5. SH. NARESH GARG 6. PARASH CEMENT, IRON & STEEL CO. 7. SH. ROSHAN KUMAR DUA 8. SH. RAJENDRA GARG 9. SH. SACHIN GUPTA HUF HOWEVER, IN APPELLANTS CASE, THE COMMISSION PAID TO THE ABOVE PARTIES HAVE BEEN CHALLENGED BY THE DEPARTMENT BEFORE US. I T IS TOTAL CONTRADICTORY ON PART OF THE REVENUE THAT IN ONE CA SE, THEY ARE ACCEPTING THESE ABOVE PARTIES AS GENUINE AND IN ANOTHER NON-G ENUINE. EVEN WE HAVE GONE THROUGH THE EVIDENCE FURNISHED BY THE APP ELLANT BEFORE THE ASSESSING OFFICER AS WELL AS THE LEARNED CIT(A), WHI CH SHOWED THE ASSESSEE HAD DISCHARGED HIS ONUS CAST UPON IT. THE L EARNED CIT(A) ALSO SPECIFICALLY CONFIRMED THE ADDITION IN CASE OF RUCH IRARAJ IN A.Y. 2008-09 UNDER THE HEAD COMMISSION PAID ON PURCHASE, SIDHBAL I PAPER MILL LTD., MARUTI PAPER LTD. AND IN A.Y. 2007-08 IN THE NAME O F BALAJI CELLULOSE PRODUCT LTD., BABA ALLOYS PVT. LTD. AND IN A.Y. 200 4-05 IN THE NAME OF BIHAR RAFIA INDUSTRIES LTD., CULCUTTA, IN A.Y. 2005 -06 IN THE NAME OF M/S SAND CHEM (I) LTD. WHEREIN THE LEARNED CIT(A) CONFIRM ED THE ADDITION ON ITA 191/JP/2014 & 472 TO 477/JP/2012 ASHIANA ISPAT LTD. VS. ACIT 87 THE BASIS OF PARTIES WERE NOT DEALING IN THE ITEM ON WHICH COMMISSION PAID BY THE APPELLANT AND THEIR MAIN OBJECT OF MEMO RANDUM OF ARTICLE AS WELL AS ANCILLARY OBJECT HAVE NOT BEEN ALLOWED TO DEA L IN SUCH ITEMS. THE APPELLANTS ARGUMENTS THAT FOR COMMISSION BUSINESS NO SPECIFIC OBJECT IS TO BE PROVIDED IN THE MEMORANDUM OF ARTICLES BUT AL L THE COMPANIES ARE ALLOWED UNDER THE COMPANIES LAW TO DO MISCELLANEOUS BUSINESS EITHER IN FORM OF COMMISSION OR ANY OTHER INCOME. FURTHER COM MISSION PAID TO RUCHIRARAJ IS GIVEN FOR SUPPLY OF GOODS, WHICH HAS B EEN ARRANGED BY THE BROKERS, IS NO BAR UNDER THE LAW THAT A CONTRACTOR O R CONSULTANT CANNOT SUPPLY THE GOODS ON COMMISSION BASIS. IT HAS BEEN C LAIMED BY THE APPELLANT THAT SHRI RUCHIRARAJ HAS INFORMATION ABOU T SUPPLY AND DEMAND OF THE MATERIAL. THE APPELLANT HAD MADE AGREEMENT WIT H HIM. THE ASSESSEE HAS FILED COPY OF BILL AND LEDGER AND PAYM ENTS HAVE BEEN MADE THROUGH ACCOUNT PAYEE CHEQUES TO HIM (PAGE NO. 58 O F PAPER BOOK OF A.Y. 2008-09), IN WHICH, THE RECIPIENT CHARGED SERVI CE TAX, WHICH PROVES THAT HE HAS RENDERED SERVICE FOR THE APPELLANT. IT IS FURTHER FOUND THAT IN THE ASSESSEES GROUP, SEARCH SEIZURE OPERATION HAD CARRIED OUT BY THE DEPARTMENT BUT NO INCRIMINATING DOCUMENTS FOUND ON ACCOUNT OF COMMISSION PAYMENT. THE ASSESSEE HAD SHOWN TURNOVER I N A.Y. 2003-04 AT RS. 57.04 CRORES, IN A.Y. 2004-05 RS. 73.11 CROR ES, IN 2005-06 RS. ITA 191/JP/2014 & 472 TO 477/JP/2012 ASHIANA ISPAT LTD. VS. ACIT 88 99.45 CRORES, IN A.Y. 2006-07 RS. 117.75 CRORES, IN 2007-08 RS. 170.02 CRORES, IN A.Y. 2008-09 RS. 196.05 CRORES AND IN A. Y. 2009-10 RS. 234.44 CRORES. THE ASSESSEE HAS DISCHARGED PRIMARY ONUS CAS T UPON IT. THERE IS NO MATERIAL WITH THE ASSESSING OFFICER TO DISPUTE TH E EVIDENCES SUCH AS CONFIRMATION, COPY OF PAN, COPY OF RETURN, TDS CERTI FICATE, COPY OF BANK ACCOUNT ETC. FILED BY THE ASSESSEE. IN CASE OF COMM ISSION PAID TO M/S SIDHBALI PAPER MILL LTD., THE ASSESSEE HAD DRAWN OUR ATTENTION ON PAGE NO. 451 OF PAPER BOOK AND MARUTI PAPER LTD. ON PAGE NO. 455 OF PAPER BOOK FOR A.Y. 2008-09. FOR BALAJI CELLULOSE PRODUCT LTD. PAGE NO. 176 OF PAPER BOOK AND BABA ALLOYS PVT. LTD. PAGE NO. 153 O F PAPER BOOK OF A.Y. 2007-08. FOR BIHAR RAFIA INDUSTRIES LTD. CALCUTTA P AGE NO. 307 OF PAPER BOOK OF A.Y. 2004-05 AND FOR SEND CHEM (I) LTD. PAG E NO. 82 TO 85 OF PAPER BOOK OF A.Y. 2005-06, WHICH SHOWED THAT THE AS SESSEE HAD DEDUCTED TDS, PAYMENTS WERE MADE THROUGH ACCOUNT PAYE E CHEQUES, GIVEN PAN NUMBER OF THE PARTIES AND CONFIRMED THE C OMMISSION PAYMENT. THE LAW DOES NOT REQUIRE FROM THE ASSESSEE TO ENTER I N AGREEMENT ON STAMP PAPER FOR CLAIMING COMMISSION AS HELD IN THE CASE OF CHICAGO PNEUMATIC INDIA LTD. VS. DY.CIT (2007) 15 SOT 252 (MU M.). THE BOOKS OF ACCOUNT ARE AUDITED WHICH HAS BEEN ACCEPTED BY TH E ASSESSING OFFICER, SALE AND PURCHASE HAVE BEEN TREATED GENUINE, BUT DO UBTED THE ITA 191/JP/2014 & 472 TO 477/JP/2012 ASHIANA ISPAT LTD. VS. ACIT 89 COMMISSION PAYMENT AND THE LEARNED ASSESSING OFFICE R MADE ADDITION ON SURMISES AND CONJECTURES. THEREFORE, WE ARE OF THE C ONSIDERED VIEW THAT COMMISSION PAID BY THE ASSESSEE EITHER ON SALE AND PURCHASE ARE ALLOWABLE AS THE EXPENSES INCURRED WHOLLY AND EXCLUSI VELY FOR THE PURPOSE OF BUSINESS U/S 37 OF THE ACT. 16. THE THIRD GROUND OF ASSESSEES APPEAL IN A.Y. 20 09-10 IS AGAINST SUSTAINING THE UNDISCLOSED ADDITION OF RS. 1,31,33, 368/- ON ACCOUNT OF UNEXPLAINED INVESTMENT IN EXCESS STOCK. THE LEARNED ASSESSING OFFICER OBSERVED THAT DURING THE COURSE OF SEARCH PROCEEDIN GS, EXCESS STOCK WAS FOUND AT THE FACTORY PREMISES AT BHIWADI. THE POSITIO N OF STOCK WAS COMPUTED BY THE EMPLOYEE OF THE ASSESSEE COMPANY NA MELY SHRI ANIL SINGH, WHO WAS THE AUTHORIZED PERSON TO KEEP THE TAL LY OF STOCK FOR THE PURPOSES OF EXCISE AND MAINTAINS ALL THE RECORDS AN D REGISTERS IN RESPECT OF THE STOCK TRANSACTIONS WHICH HAD BEEN ACCEPTED BY SHRI ANIL SINGH IN REPLY TO QUESTION NO.1 OF HIS STATEMENT RECORDED U/ S 132(4) DURING THE COURSE OF SEARCH PROCEEDINGS. FURTHER IN REPLY TO Q UESTION NO. 6, SHRI ANIL SINGH HAD SUBMITTED THE STOCK POSITION AS PER BOOKS OF ACCOUNT AS UNDER: (I) INGOT/BILLETS :- 3576.755 MT (II) CTD/TMT BAR :- 1242.100 MT (III) WASTER/SCRAP :- 931.600 MT ITA 191/JP/2014 & 472 TO 477/JP/2012 ASHIANA ISPAT LTD. VS. ACIT 90 THE ABOVE STOCK POSITION WAS ALSO AGREED TO BY THE DI RECTORS OF THE COMPANY NAMELY SH. PUNEET JAIN AND SH. SANJAY JAIN BY PUTTING THEIR SIGNATURES ON THE STOCK POSITION AS STATED BY THEIR EMPLOYEE SH. ANIL SINGH. THE POSITION AS PER BOOKS OF ACCOUNT WAS ALSO CONFIRMED BY SH. PUNEET JAIN IN REPLY TO QUESTION NO. 19 OF HIS STAT EMENT RECORDED U/S 132(4) OF THE ACT. FURTHER, IN REPLY TO QUESTION NO . 26 OF HIS STATEMENT RECORDED U/S 132(4), SH. PUNEET JAIN, DIRECTOR OF T HE COMPANY HAD EXPRESSED HIS INABILITY TO COMMENT ON THE DIFFERENC E IN STOCK I.E. DIFFERENCE IN STOCK AS PER BOOKS OF ACCOUNT AND STO CK FOUND PHYSICALLY, STATING THAT THE SAME SHALL BE REPLIED LATER ON. TH E ASSESSING OFFICER GAVE REASONABLE OPPORTUNITY OF BEING HEARD ON THIS ISSUE DURING THE COURSE OF ASSESSMENT PROCEEDINGS. IN RESPONSE TO TH IS, THE ASSESSEE FILED REPLY VIDE LETTER DATED 30/09/2010 AND 03/12/2010, IT WAS SUBMITTED THAT THE STOCK WAS LAYING AT STRETCH OF FACTORY PREMISES OF THE ASSESSEE IN THOUSANDS OF BUNDLES/BUNCHES/ROWS. THE OFFICERS CONDU CTING THE SEARCH DID NOT CARRY OUT THE EXERCISE OF ACTUAL WEIGHMENT OF GOODS. THE WEIGHT IN THE STOCK INVENTORY WAS TAKEN ON ESTIMATE BASIS B Y COUNTING OF BUNCH AND ROWS AND THEN MULTIPLYING THE SAME WITH THE AVERA GE WEIGHT OF A PIECE, THAT TOO OF BUNDLES. THE ASSESSEE MAINTAINS S TOCK ON THE BASIS OF ACTUAL WEIGHMENT AND NOT ON THE BASIS OF COUNTING TH E PIECE AND ROWS ITA 191/JP/2014 & 472 TO 477/JP/2012 ASHIANA ISPAT LTD. VS. ACIT 91 AND MULTIPLYING THE ESTIMATED WEIGHT. THE APPELLANT WA S MAINTAINED STOCK REGISTERS ACCORDING TO COMPLYING WITH THE APP LICABLE PROVISIONS OF EXCISE RULES AND REGULATIONS AND REGULAR AUDITS WERE CONDUCTED BY EXCISE AUTHORITIES. NO DISCREPANCIES WERE REPORTED BY THE E XCISE TEAM SO FAR. FURTHER THE STOCK WAS NOT TAKEN IN THE PRESENCE OF ANY INDEPENDENT WITNESS. NO PROPER WEIGHT WAS TAKEN AS THE SHEET PREP ARED BY THE SEARCH TEAM DULY REFLECTED THAT THEY HAVE TAKEN ALL THE ST OCK ON THE BASIS OF ESTIMATED WEIGHT OF A PIECE AND FOR A PARTICULAR SI ZE ETC., WHICH WAS NOT CORRECT BECAUSE THERE WAS A LOSS OF DIFFERENCE IN EV ERY PIECE AND THE SIZE OF PIECE. FURTHER THE STOCK WAS ALSO MIXED IN SIZES. NOT A SINGLE WEIGHMENT WAS TAKEN BECAUSE NO PROOF OF WEIGHMENT I.E . KANTA RECEIPT ETC. ARE PROVIDED TO US FOR ACTUAL WEIGHMENT OF STOC K AND ALL COUNTING WERE IN PRESSURE. WEIGHT OF INGOT/CTD IS DIFFERING P ER BUNDLE AND PER PIECE, THUS, THE STOCK WAS VALUED WRONGLY. FURTHER TH E AUTHORIZED OFFICER HAS TAKEN STOCK OF KUNDAS ABOUT 27,170 KGS, WHICH WAS NOT PART OF RAW MATERIAL BUT PART OF PACKAGING MATERIAL. FURTHER TH ERE WAS ALSO A DIFFERENCE IN CALCULATION IN WHICH STOCK AS PER BOOK S AND AS PER CALCULATION OF SEARCH TEAM. THERE WAS NO COGENT EVIDE NCE OF ANY UNDISCLOSED INCOME, THEREFORE, PROCEEDING U/S 153A IS LIABLE TO BE QUASHED. HE FURTHER RELIED UPON THE DECISIONS REPOR TED IN 247 ITR 448 ITA 191/JP/2014 & 472 TO 477/JP/2012 ASHIANA ISPAT LTD. VS. ACIT 92 (BOM), 248 ITR 350 (RAJ.), 250 ITR 141 (DEL.) AND TRI BUNALS DECISIONS REPORTED IN 73 ITD 208 (MUM), 74 TTJ 60 (DEL.), 81 IT D 242 (COCHIN) AND 250. AFTER CONSIDERING THE ASSESSEES REPLY, TH E LEARNED ASSESSING OFFICER OBSERVED AS UNDER:- (I) NO SUCH OBJECTION WAS RAISED BY THE ASSESSEE DUR ING THE COURSE OF SEARCH PROCEEDINGS. (II) NO SUCH CLAIM WAS MADE BY THE ASSESSEE TILL THE DATE 16/12/2010 I.E. THE DATE WHEN THE ASSESSEE HAS COME UP WITH THIS REPLY ALTHOUGH THE QUESTION IN ISSUE WAS PU T TO IT DURING THE SEARCH PROCEEDINGS AND FURTHER VIDE NOTI CES U/S 142(1) DATED 25/08/2010, 16/11/2010 AND NOTE SHEET ENTRY DATED 07/12/2010 RESPECTIVELY. (III) IT IS SURPRISING TO NOTICE THAT WHAT PREVENTED THE ASSESSEE DURING THE PERIOD 17/09/2008 TO 15/12/2010 I.E. A P ERIOD OF ABOUT 28 LONG MONTHS TO COME UP WITH THE OBJECTION WH ICH IS BEING RAISED NOW. IN VIEW OF THE FACT THAT NO SUCH OB JECTION WAS RAISED DURING THE COURSE OF SEARCH PROCEEDINGS N OR EVEN AFTERWARDS TILL PASSING OF 28 MONTHS, THE OBJECTION NOW RAISED IS NOT ACCEPTABLE. (IV) FURTHER, DURING THE COURSE OF SEARCH PROCEEDIN GS, THE STOCK INVENTORY WAS PREPARED IN THE PRESENCE OF TWO INDEPEN DENT WITNESSES WHO WERE PROVIDED BY THE ASSESSEE AND WHO HAV E CONFIRMED THE SAME BY PUTTING THEIR SIGNATURES ON T HE INVENTORY AND THE DIRECTORS OF THE COMPANY NAMELY S H. PUNEET JAIN AND SH. SANJAY JAIN HAVE ALSO ACCEPTED THE ITA 191/JP/2014 & 472 TO 477/JP/2012 ASHIANA ISPAT LTD. VS. ACIT 93 INVENTORY OF STOCK BY PUTTING IN THEIR SIGNATURES O N THE LISTS PREPARED DURING THE COURSE OF SEARCH. NORMALLY, IN INCOME TAX SEARCH OPERATIONS THE WITNESSES ARE THE PREROGAT IVE OF THE ASSESSEE. HE FURTHER OBSERVED THAT THE ASSESSEE DID NOT MAKE ANY OBJECTION BEFORE THE AUTHORIZED OFFICER. THE SEARCH PANCHNAMA WAS SIGN ED BY THE DIRECTOR ALONGWITH TWO INDEPENDENT WITNESSES TO PROVE THAT THE INVENTORY OF STOCK WAS DRAWN CORRECTLY AND METHOD ADOPTED FOR DRAWING TH E INVENTORY OF THE STOCK WAS ACCEPTABLE TO THE REPRESENTATIVE OF TH E ASSESSEE COMPANY WHO WERE PRESENT DURING THE SEARCH. THE LEARNED ASSES SING OFFICER FURTHER RELIED UPON THE DECISIONS OF THE HON'BLE SU PREME COURT IN THE CASE OF SURJEET SINGH CHHABRA VS. UNION OF INDIA & ORS. SPECIAL LEAVE PETITION (C) NO. 14028 OF 1996 ORDER DATED 25/10/19 96, HONBLE PUNJAB & HARYANA HIGH COURTS DECISION IN THE CASE OF RAKE SH MAHAJAN VS. CIT TAX APPEAL NO. 642 OF 2007 (TAXPERT) AND 214 CTR 218 A ND HONBLE KERALA HIGH COURT DECISION IN THE CASE OF V. KUNHAM BU AND SONS VS. CIT (219 ITR 235 TO 243) AND HELD THAT DIRECTOR OF THE C OMPANY HAD ADMITTED THE INVENTORY OF STOCK, WHICH HAS BEEN DUL Y SIGNED BY THEM AND NO OBJECTION WAS RAISED ABOUT ITS AUTHENTICITY AT TH E TIME OF SEARCH AND ALSO THE EMPLOYEE OF THE COMPANY HAD CONFESSED U/S 132(4) OF THE ACT, WHICH IS BINDING ON THE ASSESSEE COMPANY. THE LEARNED ASSESSING OFFICER ITA 191/JP/2014 & 472 TO 477/JP/2012 ASHIANA ISPAT LTD. VS. ACIT 94 ALSO ANALYSED THE SPECIFIC DEFECTS MENTIONED BY THE ASSESSEE IN INGOT/BILLERS AND TMT/CTD SARIA OR SCRAP WASTE IN HI S ASSESSMENT ORDER. AFTER CONSIDERING ALL THE SUBMISSIONS OF THE ASSESS EE, THE LEARNED ASSESSING OFFICER CONCLUDED THAT THE ASSESSEE HAD U NDISCLOSED STOCK OF RS. 1,31,33,368/-, ACCORDINGLY HE MADE ADDITION. 17. BEING AGGRIEVED BY THE ORDER OF THE ASSESSING OFFICER, THE ASSESSEE CARRIED THE MATTER BEFORE THE LEARNED CIT(A), WHO HA D CONFIRMED THE ADDITION BY OBSERVING AS UNDER:- 8. I HAVE CONSIDERED THE SUBMISSION OF LEARNED A.R . AND HAVE PERUSED THE MATERIAL ON RECORD. THE A.R. HAS TAKEN M AIN OBJECTION THAT HE PHYSICAL STOCK WAS NOT WEIGHED AND THEREFORE IT WAS TAKEN ON ESTIMATE BASIS. IT MAY BE MENTIONED THA T THE STOCK AS PER BOOKS OF ONLY ONE ITEM I.E. M.S. INGOT IS AS HIGH AS 3572.255 MT AND PHYSICAL STOCK OF M.S. INGOT FOUND WA S 3917.729 MT. COMING TO THE ISSUE OF STOCK BEING NOT WEIGHED, IT IS VERY WELL KNOWN THAT THE STOCK TAKING WAS DONE WITH THE ASSISTANCE AND RATHER THE GUIDANCE OF THE CONCERNED STAFF AS WELL AS DIRECTORS OF THE APPELLANT COMPANY, BECAUSE AS S UCH THE AUTHORIZED OFFICER AND HIS TEAM IS NOT AN EXPERT IN TAKING PHYSICAL INVENTORY OF M.S. INGOT AND OTHER STEEL ITEM. IT IS FURTHER NOTICED BY THE UNDERSIGNED THAT THE SIZE OF M.S. INGOT HAS BEEN INVENTORISED AND NUMBER OF PIECES HAS ALSO BEEN COU NTED. THE M.S. INGOT HAS GOT A FIXED DENSITY AND ACCORDINGLY AND AFTER KNOWING THE VOLUME, THE WEIGHT MAY BE VERY WELL ARRIVE D BY THE ITA 191/JP/2014 & 472 TO 477/JP/2012 ASHIANA ISPAT LTD. VS. ACIT 95 CONCERNED PERSON DEALING IN THIS FIELD. OBVIOUSLY T HE STAFF AND DIRECTIONS SH. PUNEET JAIN AND SH. SANJAY JAIN WERE NOT ONLY PRESENT BUT THE WEIGHT OF THE VARIOUS M.S. INGOTS WER E TAKEN AT THE INSTANCE AND ADVICE OF THESE EXPERIENCED PERSON S IN THIS FIELD. ACCORDINGLY, THE CLAIM OF THE APPELLANT THAT WEIGHT HAS BEEN TAKEN ON ESTIMATED BASIS IS TOTALLY LACKING MERIT A ND IS REJECTED. 8.1 WITHOUT PREJUDICE TO THE ABOVE SAID FINDING, IT MAY BE FURTHER ADDED THAT IN ANY CASE FOR WEIGHMENT OF ABOU T 3572-3917 MT OF M.S. INGOT 238 TO 264 TRUCKS HAVING AVERAGE CA PACITY OF 15 TONNE WOULD HAVE BEEN REQUIRED. IT TRANSPIRED THAT T HE APPELLANT COMPANY HAS ONLY ONE WEIGHING MACHINE. ACCORDINGLY, THIS EXERCISE OF LOADING AND UNLOADING OF M.S. INGOT IN ABOUT 260 TRUCKS FOR WEIGHMENT PURPOSE WOULD HAVE CONTINUED FOR DAY TOGETHER OR EVEN WOULD HAVE TAKEN A WEEK OR MORE THUS DISRUPTING NORMAL USUAL BUSINESS OF THE COMPANY, WHI CH WOULD NOT AT ALL BE IN THE INTEREST OF THE APPELLANT COMP ANY, MORE PARTICULARLY WHEN THE WEIGHT OF THE PARTICULAR SIZE O F INGOT HAS BEEN VERY SCIENTIFICALLY ARRIVED AT BY THE CONCERNE D STAFF UNDER THE GUIDANCE OF DIRECTORS BY TAKING THE STANDARD WID TH AND THICKNESS OF DIFFERENT INGOTS AS WELL AS THE LENGTH AND THEN CONVERTING THE VOLUME INTO WEIGHT. 8.2 IT MAY BE FURTHER ADDED THAT THE APPELLANT HAS COMPLETELY FAILED TO FURNISH THE SPECIFIC DEFECTS/DISCREPANCY BEFORE THE A.O. DURING ASSESSMENT PROCEEDINGS. ACCORDINGLY, PRIMA F ACIE, IT ITA 191/JP/2014 & 472 TO 477/JP/2012 ASHIANA ISPAT LTD. VS. ACIT 96 APPEARS THAT NOW THE SO CALLED DEFECT HAVE BEEN CITE D BEFORE ME ONLY WITH A VIEW TO TRY TO TAKE A CHANCE. 8.3 WITHOUT PREJUDICE TO ABOVE, EVEN CONSIDERING TH E SPECIFIC CONTENDED DEFECTS, THE APPELLANT HAS MENTIONED THAT FROM SR. NO. 25 TO 31, THE INGOT SIZE HAS BEEN SHOWN AS 4.5 X 4. 5, BUT THIS SIZE OF M.S. INGOT WAS NEVER PURCHASED. NOR THE SAME IS ANYWHERE REFLECTED IN THE STOCK REGISTER. I HAVE PER USED THE RELEVANT PAGE OF INVENTORY. IT IS SEEN THAT IN THE PHYSICAL STOCK SO FOUND FROM SR. NO. 25 TO 31 M.S. INGOT HAVING SIZE 4.5 X 4.5 IS MENTIONED. AT SR. NO. 25, THERE WAS AS MANY AS 385 P IECES OF 49 INCH LENGTH. AT SR. NO. 26, THERE ARE AS HIGH AS 40 3 PIECES OF 56 INCH LENGTH. AT SR. NO. 27, THERE ARE AS HIGH AS 57 7 PIECES OF 52 INCH LENGTH. SIMILAR IS THE POSITION AT SR. NO. 28, 29 AND 30. AT SR. NO. 31, THERE ARE AS HIGH AS 1074 PIECES OF 54 INCH LENGTH. IT IS IMPOSSIBLE TO PRESUME THAT THE CONCERNED STAFF OF T HTE APPELLANT COMPANY AND EVEN THE DIRECTORS HAD MADE MISTAKE WHI LE TELLING/SPECIFYING THE SIZE OF THESE INGOTS AS 4.5 X 4.5 AND IT IS FURTHER IMPOSSIBLE TO PRESUME THAT SUCH MISTAKE OCC URRED IN NOT ONLY FEW PIECES NAMELY 10,20, OR 100 BUT HAS OCCURRE D IS NO MANY NUMBER OF PIECES WHICH ARE RUNNING INTO MANY H UNDREDS AND TOTALING TO THOUSANDS, AS MENTIONED ABOVE. IT I S FURTHER TO BE ADDED THAT THIS INVENTORY IS DULY SIGNED BY BOTH TH E DIRECTORS NAMELY SH. SANJAY JAIN AND SH. PUNEET JAIN. IF THIS PHYSICAL STOCK SO FOUND IS NOT MENTIONED IN THE STOCK REGISTER, AS CLAIMED BY THE A.R., THEN OBVIOUSLY IT IS THE STOCK OUTSIDE THE BO OKS OF ACCOUNT, ITA 191/JP/2014 & 472 TO 477/JP/2012 ASHIANA ISPAT LTD. VS. ACIT 97 HENCE THIS ARGUMENT THAT THE M.S. INGOT OF THIS SIZ E IS NOT OFFICIALLY PURCHASED AND NOT AVAILABLE IN STOCK REG ISTER, IS OF NO AVAIL. 8.3.1 NOW COMING TO THE SECOND CONTENDED DEFECT THAT FROM SR. NO. 12 TO 18 AND 22 TO 23 THE WEIGHT PER PIECE O F 4X4 INGOT SHOWN AS PER THE INVENTORY GIVES CALCULATION OF AVER AGE WEIGHT PER INCH LENGTH AT 2 KG, WHEREAS ITEM AT SR. NO. 19 TO 21 THOUGH HAVING SAME SIZE, I.E. 4.5X3.5 BUT AVERAGE WEIGHT PER INCH OF LENGTH IS TAKEN AT 1.92 OR 2.01 OR 2.18. I HAVE CON SIDERED THIS ARGUMENT. FIRSTLY, IT IS VERY MUCH CLEAR THAT WEIGHT PER PIECE OF 4X4 INCH INGOT HAS BEEN TAKEN CONSISTENTLY AT 2KG PER INCH LENGTH AND THUS THERE IS NO MISTAKE OR DISCREPANCY IN THESE ITEMS. IT WAS MADE CLEAR TO THE A.R. THAT WEIGHT PER INCH LE NGTH OF 4.5X3.5 SIZE INGOT WOULD CERTAINLY BE SLIGHTLY DI FFERENT AS THE AREA OF 4X4 COMES TO 16 SQ. INCH, WHEREAS AREA OF 4.5X3.5 COMES TO 15.75 SQ. INCH. ACCORDINGLY, THIS ARGUMENT OF THE APPELLANT IS REJECTED HAVING NO MERIT. DURING APPEL LATE PROCEEDINGS, THE A.R. TRIED TO FURTHER ARGUE AND CL ARIFY THAT HE IS REFERRING TO THE DIFFERENCE OF PER INCH LENGTH WEIGH T TAKEN WITHIN THE INGOT OF 4.5X3.5 SIZE AND THUS THE METHOD SO TAKEN IS NOT SCIENTIFIC. EVEN CONSIDERING THIS NEW ARGUMENT OF T HE A.R., IF WE TAKE ALL THE THREE ITEMS TOGETHER I.E. 57 INCH + 52 INCH + 54INCH= 163 AND SIMULTANEOUSLY THEIR WEIGHT PER PIECE WHICH I S TAKEN AS 110+105+96=311, THE AVERAGE WEIGHT PER INCH OF LENGT H COMES TO 1.91 KG. CONSIDERING THAT AREA OF 4.5X3.5 IS 1 5.75 SQ. INCH, ITA 191/JP/2014 & 472 TO 477/JP/2012 ASHIANA ISPAT LTD. VS. ACIT 98 THE WEIGHT PER INCH LENGTH TAKEN ON THE BASIS OF 4X 4 INCH INGOT HAVING 2 KG PER INCH LENGTH WILL COME TO 1.96 KG. THU S THE WEIGHT SO TAKEN IN THE CASE OF 4.5X3.5 INCH INGOT IS MOR E OR LESS SAME (TAKEN ON AVERAGE BASIS) AND RATHER IS SLIGHTLY LES S, WHICH IS RATHER BENEFICIAL TO THE APPELLANT AND THEREFORE IN VIEW OF THE ABOVE, APPELLANT SHOULD NOT HAVE ANY GRIEVANCE. 8.4 IN RESPECT OF TMT BAR, THE DISCREPANCY IS VERY M INOR, WHEREIN A.R. HAS POINTED OUT ABOUT 97.2 KG AT SR. NO . 2 OF PAGE 7 AND 97 KG AT SR. NO. 34 OF PAGE 8. IT IS A CASE IS JUST IGNORING THE FIGURE AFTER DECIMAL. AS REGARDS DIFFERENCE IN THE WEIGHT OF 16 MM X 40 FT TMT BAR TAKEN AT SR. NO. 18 AND 55 OF PAG E NO. 8 HAVING AVERAGE WEIGHT 94 KG AND AT SR. NO. 59, 74 AN D 80 OF PAGE NO. 9 HAVING AVERAGE WEIGHT OF 98 KG, IT TRANSPIRED THAT WEIGHT OF BUNDLES MAY VARY BETWEEN 3 TO 4 KG. ACCORDINGLY, IT CANNOT BE SAID TO BE A MISTAKE, MORE PARTICULARLY WHEN THE SEA RCH TEAM HAS WRITTEN THIS WEIGHT AT THE INSTANCE AND ADVISE OF CON CERNED EXPERIENCES STAFF OF THE APPELLANT. OTHER CONTENDED DEFECTS ARE IN FACT NO DEFECTS, IN VIEW OF THE FACT THAT THESE WEIGH TS HAVE NOT BEEN TAKEN BY THE SEARCH TEAM ON ITS OWN BUT HAVE BE EN TAKEN AT THE INSTANCE AND ADVISE OF THE EXPERIENCED STAFF OF THE COMPANY, WHICH HAS BEEN SEEN/CHECKED AND DULY SIGNED BY BOTH THE DIRECTORS OF APPELLANT COMPANY. 8.5 HENCE THE VARIOUS ARGUMENTS TAKEN BY THE A.R. A RE REJECTED AND ADDITION ON ACCOUNT OF UNEXPLAINED INVESTMENT I N EXCESS ITA 191/JP/2014 & 472 TO 477/JP/2012 ASHIANA ISPAT LTD. VS. ACIT 99 STOCK OF VARIOUS ITEMS AS WORKED OUT BY THE A.O., TO TALING TO RS. 1,31,33,368/- IS HEREBY SUSTAINED. 18. NOW THE ASSESSEE IS IN APPEAL BEFORE US. THE LEA RNED AR FOR THE ASSESSEE CONTENDED THAT IT HAS MAINTAINED/RECORDED/ RECEIVED/ISSUED THE STOCK OF RAW MATERIAL BY WEIGHT AND THERE IS NO CONCE PT OF PER PIECE OR STANDARD/AVERAGING OF WEIGHT PER PIECE. THE BOOKS ARE MAINTAINED ON THE BASIS OF ACTUAL WEIGHT BASIS. THE AUTHORIZED OFFICER INVENTORISED THE STOCK DURING THE COURSE OF SEARCH IN HAND ON A PHYSICAL C OUNT BASIS. THE HUGE STOCK WAS LYING AT FACTORY PREMISES OF THE ASSESSEE IN THOUSANDS OF BUNDLES/COILS/PIECES IN ROWS. THE AUTHORIZED OFFICER HAD NOT CONDUCTED ACTUAL WEIGHMENT OF THE GOODS. THEY HAD COUNTED AND T HE WEIGHT OF THE STOCK WAS CALCULATED BY APPLYING THE STANDARD I.E. WE IGHT PER INCH. THE DIFFERENCES OF EXCESS STOCK AS ARRIVED ON ESTIMATE BASIS AND NOT ON ACTUAL WEIGHMENT. THE DISCREPANCIES CREPT IN THE INVENTORY D UE TO METHOD OF STOCK TAKING ADOPTED BY THE SEARCH PARTY IN THE CAS E OF FINISHED STOCK AND RAW MATERIAL. IN PRODUCT, THERE IS NEITHER STANDARD SIZE NOR ANY STANDARD WEIGHT PER UNIT OF LENGTH. THE APPELLANT COMPANY PRO CURED RAW MATERIAL FROM NON-PRIMARY SOURCES I.E. MATERIAL MADE OUT OF SCRAP AND NOT FROM VIRGIN METAL AND THEREFORE THE SAME IS NOT AS PER T HE STANDARDS. THE METHOD OF STOCK TAKEN ADOPTED BY THE SEARCH PARTY WA S EYE ESTIMATION ITA 191/JP/2014 & 472 TO 477/JP/2012 ASHIANA ISPAT LTD. VS. ACIT 100 COUNTING OF BUNDLES IN ROWS AND THEN MULTIPLYING THE SAME WITH THE STANDARD WEIGHT OF A BUNDLE IN SCISSOR OF BUNDLES. EVEN PHYSICAL COUNTING DONE BY THE AUTHORIZED OFFICER WAS NOT CORRECT AS IT WAS NOT POSSIBLE TO COUNT THE STOCK, WHICH WAS LYING IN ROWS WITHIN FEW HOUR S. THE INGOTS/BILLETS/SCRAP/SPONGE IRON, THE SAME WERE HEAV Y AND COULD NOT BE EASILY HANDLED MANUALLY WITHOUT THE HELP OF A CRANE. SAME ERROR WAS MADE IN COUNTING OF SARIA/TMT BARS, WHICH ARE NO UNIFO RM WEIGHT PER BUNDLE OF TMT AND PER PIECE OF INGOT/BILLETS. THE ASS ESSEE HAS BEEN MAINTAINED STOCK REGISTER ON THE BASIS OF WEIGHT ONL Y. THE FACTS CAN BE VERIFIED FROM THE PANCHNAMA THAT AUTHORIZED OFFICER HAS COUNTED THE CLOSING STOCK IN VERY SHORT TIME AND IN HURRIED MAN NER WITH THE HELP OF UNSKILLED EMPLOYEE OF THE COMPANY. THE ALLEGED EXCES S STOCK WAS CREATION OF FAULTY PROCESS OF STOCK TAKING ADOPTED BY THE SEARCH PARTY AND DID NOT EXIST IN REALITY. IN THIS CONNECTION RELIA NCE IS PLACED ON THE DECISION OF ITAT CUTTAK (TM) IN THE CASE OF UTKAL ST EELS LTD. VS DY.CIT, 82 ITD 120 WHEREIN RELYING UPON THE JUDGMENT OF HON BLE ORISSA HIGH COURT IN THE CASE OF HARIBHAGAT AGARWALLA VS. STATE OF ORISSA, 51 STC 355 (ORR). IT WAS HELD THAT NO ADDITION COULD BE MADE ON THE BASIS OF DIFFERENCE OF STOCK ARRIVED AT BY SAMPLING METHOD. IT WAS HELD IN THAT CASE THAT ASSESSING AUTHORITIES WERE NOT JUSTIFIED I N ESTIMATING THE VALUE ITA 191/JP/2014 & 472 TO 477/JP/2012 ASHIANA ISPAT LTD. VS. ACIT 101 OF STOCK WITHOUT PHYSICALLY WEIGHING THEM, PARTICULAR LY WHEN THE ASSESSEE MAINTAINED REGULAR BOOKS OF ACCOUNTS WHICH WERE CHECK ED BY THE CENTRAL EXCISE AUTHORITIES FROM TIME TO TIME. IT IS FURTHE R CONTENDED THAT IN THE STOCK LIST B AT SERIAL NO. 9 AND 10 THE PHYSICAL COUNT IS NOT MENTIONED AND THE WEIGHT IS WRITTEN AT 40000 KG AND 10000 KG R ESPECTIVELY. THIS GOES TO SHOW THE CASUAL APPROACH ADOPTED BY THE DEPA RTMENT IN STOCK TAKING. THE BOOKS OF ACCOUNT ARE ACCEPTED AS SUCH AN D STOCK IS SUBJECT TO VERIFICATION BY THE EXCISE AUTHORITIES. IN A.Y. 200 3-04, 2004-05, THE SCRUTINY ASSESSMENT WAS MADE U/S 143(3) AND NO ADDIT ION HAS BEEN MADE AGAINST THE STOCK. THE ALLEGED VARIATION IN THE WEIGHT OF STOCK IS LESS THAN 10%, WHICH IS ATTRIBUTABLE TO THE EYE EST IMATE BY THE DEPARTMENT, THEREFORE, HE PRAYED THAT THE ADDITION MADE BY THE ASSESSING OFFICER AND CONFIRMED BY THE LEARNED CIT( A) LEADING TO DISCREPANCIES IN STOCK DESERVES TO BE DELETED. 19. THE LEARNED CIT DR CONTENDED THAT DURING THE SEA RCH PROCEEDING, THE INVENTORY OF STOCK GOT PREPARED WITH THE HELP OF EMPLOYEE OF THE ASSESSEE COMPANY NAMELY SHRI ANIL SINGH, WHO HAD CE RTIFIED THE STOCK INVENTORY AS ON DATE OF SEARCH. THE PHYSICAL STOCK WAS VERIFIED IN THE PRESENCE OF ASSESSEES EMPLOYEE WITH TWO INDEPENDENT WITNESSES, ON WHICH, THEY HAD MADE SIGNATURES. DURING THE COURSE O F SEARCH AS WELL AS ITA 191/JP/2014 & 472 TO 477/JP/2012 ASHIANA ISPAT LTD. VS. ACIT 102 AFTER THE SEARCH, NO DISCREPANCIES HAVE BEEN POINTE D OUT BY THE APPELLANT. WHATEVER OBJECTION RAISED BY THE APPELLA NT WERE MADE BEFORE THE ASSESSING OFFICER DURING THE COURSE OF ASSESSME NT PROCEEDINGS. SHE FURTHER DRAWN OUR ATTENTION ON STATEMENT RECORDED U /S 132(4) OF THE ACT OF SHRI ANIL SINGH, PAGE 22 OF PAPER BOOK, IN REPLY TO QUESTION NO. 6, SHOWED THAT HE HAD COMPUTED OPENING BALANCE AS ON 17 /09/2008 OF ROLLING DIVISION, FURNACE DIVISION AFTER ADJUSTMENT THE CERTAIN BILL, FINALLY STOCK POSITION WAS ADMITTED AS ON 18/09/2008 AS UNDE R:- (A) (I) INGOTS/BILLETS (ROLLING) 3404.635 M.T. (II) INGOTS (FURNACE) 172.120 M.T. TOTAL 3576.155 M.T. (B) (I) CTD/TMT BAR 9242.100 M.T. IT HAS BEEN CERTIFIED BY SHRI ANIL SINGH IN PRESENC E OF THE WITNESSES THAT STOCK POSITION PREPARED ON THE BASIS OF BOOK AND IS CORRECT. SHE FURTHER DRAWN OUR ATTENTION ON PAGE NO. 46 OF PAPER BOOK IN QUESTION NO. 26 WHEREIN THE AUTHORIZED OFFICER ASKED TO CLARIFY THE DISCREPANCIES FOUND BETWEEN THE STOCK INVENTORY PREPARED AND STOCK SHOWN IN THE BOOKS OF ACCOUNT, WHICH HAS NOT BEEN REPLIED BY SHRI PUNEET JAIN ON 18/09/2008 DURING THE COURSE OF SEARCH PROCEEDING. THE LEARNED AR RAISED A TECHNICAL REASON BEFORE THE LEARNED ASSESSING OFFICER THAT TH E STOCK WAS TAKEN ON THE BASIS OF ESTIMATION BY COUNTING OF THE NUMBER O F M.S. ITA 191/JP/2014 & 472 TO 477/JP/2012 ASHIANA ISPAT LTD. VS. ACIT 103 INGOTS/BUNDLES/BUNCHES/ROWS BY MULTIPLYING IT, WHICH IS A SCIENTIFIC METHOD FOR VERIFYING THE CLOSING STOCK IN CASE OF M ANUFACTURING OF SARIA/TMT BARS. SHE FURTHER RELIED IN THE ORDER OF T HE LEARNED CIT(A) AND ARGUED THAT THE LEARNED CIT(A) HAD GIVEN DETAILED FI NDINGS ON VALUATION OF CLOSING STOCK OF M.S. INGOTS ON PAGE 62 OF HIS O RDER THAT IT CAN BE WEIGHTED ON THE BASIS OF DENSITY AND VOLUME. DURING THE COURSE OF SEARCH, WEIGHT OF VARIOUS M.S. INGOTS WERE TAKEN AT T HE INSTANCE OF THE STAFF AS WELL AS DIRECTOR TO ARRIVE THE ACTUAL WEIGHT . THE APPELLANT HAD ONLY ONE WEIGHING MACHINE AND FOR WEIGHING 3572-3917 M.T. OF M.S. INGOTS WAS REQUIRED TO MORE THAN WEEKS TIME. THE LEAR NED CIT(A) ALSO VERIFIED THE SIZE OF PHYSICAL STOCK OF M.S. INGOTS WITH THE INVENTORY PREPARED WITH PURCHASE BILL. SHE FURTHER ARGUED THAT IF THIS PHYSICAL STOCK SO FOUND IS NOT MENTIONED IN THE STOCK REGISTER, AS CLAIMED BY THE A.R. THEN OBVIOUSLY IT IS THE STOCK OUTSIDE THE BOOKS OF ACCOUNT. HENCE THIS ARGUMENT THAT M.S. INGOTS OF THIS SIZE WAS NOT OFFI CIALLY PURCHASED AND WAS NOT AVAILABLE IN THE STOCK REGISTER. THEREFORE, T HE SAME MAY BE CONFIRMED. 20. WE HAVE HEARD THE RIVAL CONTENTIONS OF BOTH TH E PARTIES AND PERUSED THE MATERIAL AVAILABLE ON THE RECORD. THE AU THORIZED OFFICER GAVE THE COPY OF PANCHNAMA AT THE END OF SEARCH, BUT NO COPY OF STATEMENT ITA 191/JP/2014 & 472 TO 477/JP/2012 ASHIANA ISPAT LTD. VS. ACIT 104 AND COPY OF STOCK INVENTORY TAKEN AT THE TIME OF SE ARCH, WHICH WAS ASKED TO SUPPLY BY THE APPELLANT ON 06/9/2010. WHEN THE S CRUTINY ASSESSMENT PROCEEDINGS WERE STARTED BY THE ASSESSING OFFICER, H E SUPPLIED THE COPY OF STATEMENT ALONGWITH COPY OF INVENTORY AND COPY OF STATEMENT OF VARIOUS PERSONS ON 13/09/2010 TO THE APPELLANT. THER EAFTER, THE APPELLANT FILED REPLY BEFORE THE ASSESSING OFFICER ON 16/12/2 010 AND MADE OBJECTIONS BEFORE HIM THAT STOCK TAKEN AT THE TIME OF SEARCH OPERATION WAS ON THE BASIS OF ESTIMATION BY COUNTING THE ROWS AND NUMBER OF PIECES OF M.S. INGOTS/BILLETS/TMT SARIA. THE LEARNED ASSESSING OFFICER AS WELL AS LEARNED CIT(A) HAS CONSIDERED THE ASSESSEES REPLY BUT WHICH WAS NOT FOUND CONVINCING TO THEM. IT IS ALSO DIFFICULT FOR THE AUTHORIZED OFFICER TO WEIGH THE STOCK LYING IN THE FACTORY PREMISES ON WEIGHING MACHINE BUT IT IS UNDISPUTED FACT THAT THE ITEM IS EXCISABLE AN D IS REQUIRED TO BE INSPECTED SPONTANEOUSLY BY THE EXCISE AUTHORITY WHE N ENTRY OF THE RAW MATERIAL IN THE FACTORY AND DISPATCH OF THE FINAL P RODUCT FROM THE FACTORY PREMISES. FURTHER THE DIRECTOR OF THE COMPANY HAS N OT ABLE TO EXPLAIN THE DIFFERENCE DURING THE COURSE OF RECORDING OF STATEM ENT U/S 132(4) OF THE ACT AND STATED THAT HE WOULD EXPLAIN THE DIFFERENCE LATER ON. IT IS ALSO UNDISPUTED THAT AUTHORISED OFFICER HAS TAKEN CLOSI NG STOCK ON THE BASIS OF COUNTING OF M.S. INGOTS/TMT SARIA/CTD ON THE BASIS OF ROWS AND PIECES. ITA 191/JP/2014 & 472 TO 477/JP/2012 ASHIANA ISPAT LTD. VS. ACIT 105 THE SIZE OF THE INGOTS ALSO WAS NOT SAME OF EVERY PIE CE. THE ASSESSEE PURCHASED THE RAW MATERIAL FROM THE PRIMARY SOURCE I .E. MATERIAL MADE OUT OF SCRAP AND NOT FROM THE VIRGIN METAL AND THER EFORE, THE STANDARD OF M.S. INGOTS IS NOT SAME IN FORM OF SIZE AND VOLUME. THE METHOD OF THE STOCK TAKING ADOPTED BY THE SEARCH PARTY WAS EYE EST IMATION COUNTING BUNDLES IN ROWS AND THEN MULTIPLYING THE SAME WITH TH E STANDARD WEIGHT OF A BUNDLE IN SCISSORS OF BUNDLES. THESE ITEMS OF STOCK ARE HEAVY IN WEIGHT AND IT CAN BE DISPLACED WITH THE HELP OF CRANE . THE TOTAL STOCK FOUND DURING THE COURSE OF SEARCH WAS ALSO IN VOLUME AND IN SIZE, THE TIME TAKEN BY THE AUTHORIZED OFFICER FOR VERIFYING THE CLOSING STOCK WAS VERY SHORT AS SEARCH WAS CONCLUDED ON 18/09/2008 I.E . SECOND DAY OF SEARCH. DURING THE COURSE OF SEARCH, NO INCRIMINATI NG DOCUMENTS REGARDING PURCHASE OF RAW MATERIAL AND SALES OF GOOD S OUTSIDE THE BOOK WAS FOUND AND SEIZED BY THE AUTHORIZED OFFICER, WHICH SUPPORTS THE ASSESSEES CLAIM THAT WEIGHMENT DONE BY THE AUTHORIZ ED OFFICER WAS NOT SCIENTIFIC TO ARRIVE THE CORRECT DISCREPANCY IN THE STOCK OF THE APPELLANT COMPANY. THE CASE LAW RELIED ON BY THE APPELLANT I.E. UTKAL STEELS LTD. VS DY.CIT (SUPRA) ARE SQUARELY APPLICABLE IN THE CAS E OF THE ASSESSEE BEING DEICED ON IDENTICAL AND SIMILAR FACTS OF THE CASE AND ADDITION IN THE STOCK ON THE BASIS OF SAMPLING METHOD WITHOUT PHYSIC ALLY WEIGHING. THE ITA 191/JP/2014 & 472 TO 477/JP/2012 ASHIANA ISPAT LTD. VS. ACIT 106 LEARNED ASSESSING OFFICER WAS NOT JUSTIFIED IN MAKIN G ADDITION ON ACCOUNT OF EXCESS STOCK AS STOCKS WERE CHECKED BY THE CENTRA L EXCISE AUTHORITIES FROM TIME TO TIME. FURTHER WE FIND THAT EVEN WE ACCEP T THE STAND OF THE REVENUE THAT THERE WAS EXCESS STOCK, WHICH IS ADDED D URING THE YEAR UNDER CONSIDERATION, WOULD AUTOMATICALLY BECOME OPEN ING STOCK OF THE SUBSEQUENT YEAR. THEREFORE, THERE IS NO REVENUE LOS S AS SUCH EXCEPT SHIFTING OF THE REVENUE FROM YEAR UNDER CONSIDERATI ON TO SUBSEQUENT YEAR. THUS, WE ARE OF THE CONSIDERED VIEW THAT VALUATI ON MADE BY THE AUTHORIZED OFFICER WAS NOT SCIENTIFIC AND HAD NOT AR RIVED AT RIGHT CONCLUSION, ACCORDINGLY, WE DELETE THE ADDITION CONF IRMED BY THE LEARNED CIT(A). 21. THE ASSESSEES GROUND NO. 4 IN A.YS. 2005-06 TO 2009-10 IS AGAINST SUSTAINING THE DISALLOWANCE BY LEARNED CIT(A) WITHOUT APPRECIATING THE FACT THAT THE DISALLOWANCE WAS MADE WITHOUT ALLOWING OP PORTUNITY OF BEING CONFRONTING THE MATERIAL GATHERED AT THE BACK OF THE ASSESSEE. THE LEARNED A.R. FOR THE ASSESSEE HAD NOT PRESSED T HIS GROUND IN ALL THE YEARS, THEREFORE, WE DISMISS THE SAME AS NOT PRE SSED. 22. GROUND NO. 5 OF THE ASSESSEES APPEAL IN A.Y. 2003-04 IS AGAINST FINDING GIVEN BY THE LEARNED CIT(A) THAT THE APPE LLANT HAD AGREED TO DISALLOWANCE OF RS. 5,98,323/-. THE LEARNED CIT(A) HA S RECTIFIED HIS ORDER ITA 191/JP/2014 & 472 TO 477/JP/2012 ASHIANA ISPAT LTD. VS. ACIT 107 U/S 154 OF THE ACT ON 05/06/2014, THEREFORE, THERE IS NO GRIEVANCE OF THE ASSESSEE IN THIS REGARD. 23. A TECHNICAL GROUND TAKEN BY THE APPELLANT IN A LL THE ASSESSMENT YEARS THAT THE LEARNED CIT(A) SUSTAINED ADDITION ON ACCOUNT OF DISALLOWANCE MADE ON ACCOUNT OF COMMISSION PAID ON S ALES/PURCHASES IN THE PROCEEDING U/S 153A OF THE ACT WITHOUT THERE BEI NG ANY MATERIAL FOUND IN THE COURSE OF SEARCH FROM THE PREMISES OF THE ASSESSEE AND ITS DIRECTIONS CONTRARY TO THE CLAIM MADE BY THE ASSESS EE. THE LEARNED A.R. FOR THE ASSESSEE HAS ALSO NOT PRES SED THIS GROUND IN ALL THE ASSESSMENT YEARS, THEREFORE, WE DISMISS THE ASSESSEES APPEAL ON THIS GROUND AS NOT PRESSED. 24. IN THE RESULT THE ASSESSEES APPEALS FOR ALL T HE YEARS ARE PARTLY ALLOWED AND CROSS APPEALS OF THE REVENUE ARE DISMISS ED. ORDER PRONOUNCED IN THE OPEN COURT ON 19/12/2014. SD/- SD/- (R.P. TOLANI) (T.R. MEENA) JUDICIAL MEMBER ACCOUNTANT MEMBER JAIPUR, DATED : 19 TH DECEMBER, 2014 * RANJAN COPY FORWARDED TO :- 1. M/S ASHIANA ISPAT LTD, BHIWADI, ALWAR. ITA 191/JP/2014 & 472 TO 477/JP/2012 ASHIANA ISPAT LTD. VS. ACIT 108 2. THE A.C.I.T., CENTRAL CIRCLE, ALWAR. 3. THE CIT (A) 4. THE CIT 5. THE D/R GUARD FILE (I.T.A. NOS. 191/JP/2014 & 472 TO 477/JP/ 2012) BY ORDER, AR ITAT JAIPUR.