ACIT Central Circle 3 , Coimbatore V. Sakthi Masala Pvt. Ltd. , Erode

ITA 1992/CHNY/2017

• Counselvise Citation: [2017] 127 COUNSELVISE.COM (IT) 5709 (ITAT-CHENNAI)
• Duration Of Justice: 3 month(s) 26 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 12-12-2017
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: B
• Assessment Year: 2008-2009
• Appeal Filed On: 17-08-2017
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: S BHARATH
• Assessee Lawyers: S SRIDHAR
• Keywords: Bogus purchase
• Section: 143(3)

Judgement Text

, , IN THE INCOME TAX APPELLATE TRIBUNAL B BENCH : CHENNAI . , , BEFORE SHRI ABRAHAM P.GEORGE, ACCOUNTANT MEMBER AND SHRI GEORGE MATHAN, JUDICIAL MEMBER ./I.T.A. NO.1992/MDS/2017 / ASSESSMENT YEAR : 2008-2009 THE ASSISTANT COMMISSIONER OF INCOME TAX, CENTRAL CIRCLE 3, COIMBATORE. VS. M/S. SAKTHI MASALA PRIVATE LTD, NO.6, MAMARATHUPALAYAM, ERODE 638 004. [PAN AADCS 3130R] ( / APPELLANT) ( /RESPONDENT) ! ' # / APPELLANT BY : SHRI. S. BHARATH, CIT $%! ' # /RESPONDENT BY : SHRI S. SRIDHAR, ADVOCATE & ' ' () /DATE OF HEARING : 28-11-2017 *+ ' () /DATE OF PRONOUNCEMENT : 12-12-2017 / O R D E R PER ABRAHAM P. GEORGE, ACCOUNTANT MEMBER: THIS APPEAL FILED BY THE REVENUE IS DIRECTED AGAIN ST AN ORDER DATED 01.05.2017 OF LD. COMMISSIONER OF INCOME TAX (APPEALS)-18, CHENNAI FOR THE IMPUGNED ASSESSMENT YEAR. 2. DEPARTMENT HAS FILED THIS APPEAL WITH A DELAY OF TWO DAYS. CONDONATION PETITION HAS BEEN FILED. REASON SHOWN FOR THE DELAY ITA NO.1992/MDS/2017 :- 2 -: SEEMS TO BE JUSTIFIED. LD. AUTHORISED REPRESENTATIV E DID NOT RAISE ANY SERIOUS OBJECTION. DELAY IS CONDONED. APPEAL IS A DMITTED . 3. REVENUE THROUGH ITS THIRTEEN GROUNDS, ASSAIL DELET ION OF AN ADDITION OF RS.2,01,74,275/- MADE BY THE LD. ASSESS ING OFFICER TOWARDS INFLATION IN PURCHASE OF TURMERIC. 4. FACTS APROPOS ARE THAT ASSESSEE, IN THE BUSINESS OF MANUFACTURING AND TRADING MASALA POWDER AND SPICES, HAD FILED ITS RETURN OF INCOME FOR THE IMPUGNED ASSESSMENT YEAR D ISCLOSING INCOME OF RS.16,18,41,130/-. THERE WAS A SEARCH CONDUCT ED IN THE PREMISES OF THE ASSESSEE IN 12.09.2014. DURING THE COURSE O F SEARCH, PURCHASE REPORT FOR THE PERIOD COVERING 2001 TO 2014 REFLEC TING PURCHASES OF VARIOUS RAW MATERIALS WAS FOUND. LD. ASSESSING OF FICER CONDUCTED A VERIFICATION OF FIGURES MENTIONED IN SUCH PURCHASE REPORT WITH THE BOOKS OF ACCOUNTS OF THE ASSESSEE. AS PER LD. ASSE SSING OFFICER THERE WAS DIFFERENCE IN THE TURMERIC PURCHASE. IT SEEMS TURMERIC PURCHASE DURING THE PERIOD 01.11.2007 TO 31.03.2008 WAS REC ORDED IN SUCH REPORT AT RS.4,98,23,804/- AGAINST WHICH PURCHASE R ECORDED IN THE BOOKS OF ACCOUNTS WAS RS.6,99,98,079/-. AS PER THE LD. ASSESSING OFFICER THERE WAS A DIFFERENCE OF A2,01,74,275/-. 5. LD. ASSESSING OFFICER ALSO VERIFIED THE PROCESS OF RECORDING PURCHASES, FOLLOWED BY THE ASSESSEE. ACCORDING TO HIM, WHEN RAW ITA NO.1992/MDS/2017 :- 3 -: MATERIALS WERE PURCHASED, PURCHASE DETAILS INCLUDI NG SUPPLIER NAME, QUANTITY AND PRICE WERE MANUALLY ENTERED IN A PURCH ASE REGISTER. EACH RAW MATERIAL PURCHASED WAS AGGREGATED ON A MONTHLY BASIS AND AVERAGE PURCHASE PRICE FOR EACH OF THE RAW MATERIAL WAS COMPUTED MANUALLY AND ENTERED IN SUCH REGISTER. AS PER THE LD. ASSESSING OFFICER, FIGURES OF QUANTITIES PURCHASED AND AVERA GE PRICE, EXTRACTED FROM SUCH REGISTER WERE TABULATED IN THE PURCHASE REPORT FOUND AT THE TIME OF SEARCH. SUCH DETAILS AS PER LD. ASSESSING OFFICER TALLIED WITH THE PURCHASE REGISTER EXCEPT FOR TURMERIC. ACCORDIN G TO THE LD. ASSESSING OFFICER THE PURCHASE REGISTER DID NOT COR RECTLY RECORD DETAILS REGARDING PURCHASE OF TURMERIC. FURTHER, AS PER LD . ASSESSING OFFICER PURCHASE OF TURMERIC WAS BY PAYMENT OF CASH. ACCOR DING TO HIM, PURCHASES OF TURMERIC RECORDED IN THE PURCHASE REPO RT WHEN CROSS VERIFIED WHAT WAS ENTERED BY THE ASSESSEE IN THE AC COUNTS MAINTAINED ON COMPUTER SYSTEM, BROUGHT OUT HUGE INFLATION IN TURMERIC PURCHASE FOR THE PERIOD OF 01.11.2007 TO 31.03.2014. AS PER LD. ASSESSING OFFICER, INFLATION OF TURMERIC PURCHASE DURING THE PERIOD CAME TO RS.59,75,91,224/-. IT SEEMS THIS AMOUNT INCLUDED T HE DIFFERENCE OF A2,01,74,275/- FOR THE PERIOD 1.11.2007 TO 31.03.20 08 MENTIONED IN THE PRECEDING PARA. ITA NO.1992/MDS/2017 :- 4 -: 6. LD. ASSESSING OFFICER ALSO REFERRED TO A SWORN STAT EMENT RECORDED FROM ONE SHRI. P.C. DURAISAMY, MANAGING DI RECTOR OF THE ASSESSEE COMPANY AT THE TIME OF SEARCH. AS PER THE LD. ASSESSING OFFICER SHRI. P.C. DURAISAMY COULD NOT SUBSTANTIATE THE DIFFERENCE IN TURMERIC PURCHASE AND HAD OFFERED INCOME OF RS.29, 40,00,000/-. FURTHER AS PER LD. ASSESSING OFFICER BOTH SHRI. P.C . DURAISAMY AS WELL AS ONE OF THE EMPLOYEES OF THE ASSESSEE NAMED SHRI. P.P. SAMPATH HAD GIVEN VAGUE REPLIES REGARDING MISMATCH OF TURM ERIC PURCHASES BETWEEN WHAT WAS GIVEN IN THE PURCHASE REPORT AND WHAT WAS RECORDED IN THE ACCOUNTS. IT IS TO BE NOTED THAT S HRI. SAMPATH HAD CONFIRMED THE PURCHASE REPORT TO HAVE BEEN PREPARED BY HIM AND REPRESENTED TRUE PURCHASES. FURTHER, HE ALSO MENT IONED THAT WITH REGARD TO TURMERIC PURCHASES, HE WAS NOT MAINTAININ G ANY REGISTER. IN OTHER WORDS ACCORDING TO SHRI. SAMPATH, HE HAD NO D ATA WITH REGARD TO TURMERIC PURCHASES. LD. ASSESSING OFFICER NOTED TH AT ASSESSEE CLAIMED PURCHASE OF SUBSTANTIAL PART OF THE TURMERIC DIREC TLY FROM THE FARMERS BY MAKING PAYMENT IN CASH. IN SUPPORT OF THE PURCH ASES ASSESSEE HAD CESS BILL GIVEN BY THE ERODE MARKETING COMMITTEE. HOWEVER, AS PER THE LD. ASSESSING OFFICER SUCH CELL BILLS COULD NO T BE ACCEPTED AS EVIDENCE FOR PURCHASE OF TURMERIC SINCE IT CONTAINE D NO DETAILS. 7. ASSESSEE WAS PUT ON NOTICE ON THE ABOVE DISPARITIES . REPLY OF THE ASSESSEE WAS THAT TURMERIC PURCHASES WERE CORRECTLY ENTERED ITA NO.1992/MDS/2017 :- 5 -: IN THE COMPUTER SYSTEM. ACCORDING TO THE ASSESSEE TURMERIC WAS PURCHASED FROM REGULATED MARKETS AND THE VARIOUS MA RKETING COMMITTEE HAD ISSUED WEIGHMENT SLIPS WHICH RECORDE D QUANTITY AND CESS AMOUNT. AS PER THE ASSESSEE PAYMENTS HAD TO B E MADE IN CASH WHEN TURMERIC WAS BROUGHT DIRECTLY FROM THE AGRICUL TURISTS AND FOR THIS BOUGHT NOTE WAS PREPARED AND KEPT. ANOTHER C ONTENTION OF THE ASSESSEE IN ITS REPLY WAS THAT PURCHASE REPORT WAS PREPARED ONLY IN THE MONTH OF JULY, 2014 AND THIS WAS CONFIRMED BY SHRI. SAMPATH IN THE SWORN STATEMENT RECORDED FROM HIM. AS PER THE ASSE SSEE, PURCHASE REPORT WAS PREPARED ONLY FOR FINDING THE AVERAGE PRICE OF THE RAW MATERIALS AND IT WAS NOT AUTHENTIC RECORD OF THE A CTUAL TRANSACTIONS UNDERTAKEN. ASSESSEE ALSO FURNISHED COMPARATIVE ST UDY OF QUANTITY OF TURMERIC AS PER PURCHASE REPORT AND AS RECORDED IN THE BOOKS OF ACCOUNTS AND THIS STUDY READ AS UNDER:- TURMERIC PURCHASES MONTH ACTUAL QUANTITY AS PER BOOKS OF ACCOUNTS (IN KGS) QUANTITY AS PER INCRIMINATING AND ALLEGED SEIZED MATERIAL (PURCHASE REPORT) (IN KGS) DIFFERENCE (IN KGS.) APRIL 2007 15,38,104.75 15,38,105.00 -0.25 MAY 2007 7,18,033.75 7,18,033.00 0.75 JUNE 2007 2,78,938.75 2,78,938.00 0.75 JULY 2007 1,34,553.00 1,34,553.00 0.00 ITA NO.1992/MDS/2017 :- 6 -: AUGUST 2007 1,92,668.25 1,92,668.00 0.25 SEPT 2007 1,37,733.50 1,37,733.00 0.50 OCT 2007 77,847.75 77,847.00 -0.25 NOV 2007 51,085.50 51,085.00 0.50 DEC 2007 7,81,999.25 7,96,108.00 -14,109.75 JAN 2008 2,11,407.00 2,11,407.00 0.00 FEB 2008 2,95,912.00 2,95,912.00 0.00 MARCH 2008 9,16,944.75 3,07,460.00 6,09,484.75 TOTAL 53,35,228.25 47,39,851.00 5,95,377.25 AS PER ASSESSEE, ALL PURCHASES WERE INCLUDED IN TH E CLOSING STOCK AS ON 31.03.2008. 8. HOWEVER, LD. ASSESSING OFFICER DID NOT ACCEPT THE A BOVE REPLY. ACCORDING TO HIM, PURCHASE REPORT FOUND AT THE TIME OF SEARCH PROVED THAT ASSESSEE WAS MANIPULATING PURCHASES OF TURMERIC. ACCORDING TO HIM, PURCHASE REPORT WAS A GENUINE DO CUMENT SINCE DETAILS OF ALL RAW MATERIAL, OTHER THAN TURMERIC RE CORDED IN SUCH PURCHASE REPORT TALLIED WITH THE BOOKS OF ACCOUNTS. THUS, ACCORDING TO HIM, ASSESSEE HAD INDULGED IN BOGUS PURCHASE OF TU RMERIC. PURCHASE REPORT AS PER LD. ASSESSING OFFICER REFLECTED MUCH LESS PURCHASE DURING MARCH, 2008 THAN THE ACTUAL PURCHASE CLAIMED BY THE ASSESSEE. HE HELD THAT ASSESSEE HAD ACTUALLY PURCHASED TURMERIC WORTH ITA NO.1992/MDS/2017 :- 7 -: RS.4,98,23,804/- ONLY DURING THE PERIOD 1.11.2007 T O 31.03.2008 AGAINST ACCOUNTED PURCHASE OF RS.6,99,98,079/-. AN ADDITION OF RS.2,01,74,275/- WAS MADE FOR THE IMPUGNED ASSESSME NT YEAR FOR INFLATION IN PURCHASE OF TURMERIC. 9. AGGRIEVED, ASSESSEE MOVED IN APPEAL BEFORE LD. COMMISSIONER OF INCOME TAX (APPEALS). CONTENTION OF THE ASSESSEE BEFORE LD. COMMISSIONER OF INCOME TAX (APPEALS) WAS THAT PURCHASE REPORT PREPARED DURING JULY 2014 WAS BASED ON FIGU RES AVAILABLE IN BOOKS OF ACCOUNTS AND IT CONSIDERED ONLY ESTIMATES FOR WORKING OUT AVERAGE COST. ACCORDING TO THE ASSESSEE, WHAT WAS AVAILABLE IN THE COMPUTER SYSTEM ALONE GAVE THE CORRECT DETAILS OF T HE PURCHASES. FURTHER, AS PER ASSESSEE, IF THE PURCHASES OF TURME RIC AS PER PURCHASE REPORT WAS CONSIDERED, IT RESULTED IN NEGATIVE SOCK . FOR SUBSTANTIATING THIS ARGUMENT A WORK OUT WAS FURNISHED AS UNDER:- ASST. YEAR OPENING STOCK PURCHASES CONSUMPTION CLOSING STOCK PRODUCTION 2009 - 10 694729 2216926 4862940 - 1951284 4679595 2010 - 11 ( - )1951284 4930420 6500127 - 3520991 5489508 2011 - 12 ( - )3520991 5136457 6438894 - 4823428 5336850 2012 - 13 ( - )4823428 7137171 6752850 - 4439107 5946431 2013 - 14 ( - )4439107 6781556 7416915 - 5074466 6460421 2014 - 15 ( - )5074466 6939116 8250676 - 6386026 6805379 ITA NO.1992/MDS/2017 :- 8 -: ASSESSEE ALSO RELIED ON ASSESSMENT ORDERS PASSED BY THE LD. ASSESSING OFFICER FOR ASSESSMENT YEARS 2009-2010 TO 2015-16 U /S.153A R.W.S.143(3) OF THE ACT. AS PER THE ASSESSEE IN SU CH ASSESSMENTS, LD. ASSESSING OFFICER HAD GAVE A CLEAR FINDING THAT P URCHASE OF TURMERIC AS PER BOOKS OF ACCOUNTS REFLECTED THE ACTUAL PURCH ASE. FURTHER, AS PER THE ASSESSEE IN THE STATEMENT RECORDED FROM SH RI. P.C. DURAISAMY U/S.132(4) OF THE ACT, HE HAD SPECIFICALLY MENTION ED THAT DETAILS FOUND IN THE PURCHASE REPORT WERE NOT RELIABLE AND THE ACTUAL PURCHASES WERE RECORDED IN THE BOOKS OF ACCOUNTS MA INTAINED IN THE COMPUTER SYSTEM. CONTENTION OF THE ASSESSEE WAS TH AT PURCHASE REPORT WAS PREPARED ONLY FOR ITS GUIDANCES AND FI GURES THEREIN COULD NOT BE CONSIDERED AS VERIFIED AND CORRECT. LD. COM MISSIONER OF INCOME TAX (APPEALS) AFTER CONSIDERING THE SUBMISSI ON OF THE ASSESSEE AND ALSO THE RECORDS RELIED ON BY THE LD . ASSESSING OFFICER, CAME TO A CONCLUSION THAT PURCHASE REPORT DID NOT H AVE IN IT ANY RELIABLE FIGURES. ACCORDING TO HIM, IF THE PURCHAS E REPORT WAS ADOPTED AS CORRECT IT WOULD RESULT IN NEGATIVE STOCK. FURT HER AS PER LD. ASSESSING OFFICER IN THE ASSESSMENT ORDERS FOR THE ASSESSMENT YEARS 2009-2010 TO 2015-16, LD. ASSESSING OFFICER HIMSELF HAD CONFIRMED PURCHASE OF TURMERIC AS RECORDED IN THE BOOKS OF AC COUNTS MAINTAINED IN THE COMPUTER SYSTEM OF THE ASSESSEE AS THE ACTUA L PURCHASE. AGAIN, ACCORDING TO HIM, IF THERE WAS INFLATION IN PURCHA SE IN TURMERIC AS ITA NO.1992/MDS/2017 :- 9 -: CONCLUDED BY THE LD. ASSESSING OFFICER THEN THERE W OULD HAVE BEEN SOME DIFFERENCE IN PHYSICAL STOCK WHEN THE SEARCH WAS CONDUCTED. THUS, ACCORDING TO HIM, ADDITION MADE BY THE LD. A SSESSING OFFICER, SOLELY BASED ON THE PURCHASE REPORT COULD NOT BE S USTAINED. HE DELETED THE ADDITION MADE BY THE LD. ASSESSING OFFI CER. 10. NOW BEFORE US, LD. DEPARTMENTAL REPRESENTATIVE STR ONGLY ASSAILING THE ORDER OF THE LD. COMMISSIONER OF INCO ME TAX (APPEALS) SUBMITTED THAT EXCEPT FOR TURMERIC ALL OTHER ITEMS IN PURCHASE REPORT TALLIED WITH THE BOOKS OF ACCOUNTS. ACCORDING TO H IM, PURCHASE REPORT WAS A RELIABLE DOCUMENT, SINCE ALL FIGURES THEREIN , EXCEPT THESE FOR TURMERIC WERE CORRECT. ONLY POSSIBLE CONCLUSION AC CORDING TO HIM IS WHAT WAS RECORDED WITH REGARD TO TURMERIC WAS ALSO CORRECT. PURCHASE OF TURMERIC SHOWN BY THE ASSESSEE FOR THE MONTH OF MARCH, 2008 WAS MUCH LESS THAN WHAT WAS RECORDED IN THE BOOKS. ACCO RDING TO HIM, BY ASSESSEES OWN ADMISSION THE PURCHASE REPORT WAS PR EPARED FOR WORKING OUT THE AVERAGE COST AND THEREFORE ASSESSEE WOULD NOT HAVE RELIED ON INCORRECT DATA FOR SUCH WORK OUT. FURTHE R, AS PER LD. DEPARTMENTAL REPRESENTATIVE, LD. COMMISSIONER OF IN COME TAX (APPEALS) PLACED UNDUE RELIANCE ON ASSESSMENT ORDER S FOR ASSESSMENT YEARS 2009-10 TO 2015-2016. CONTENTION OF THE LD. DEPARTMENTAL REPRESENTATIVE WAS THAT DURING THE SAID PERIOD THE PURCHASE REPORT ITA NO.1992/MDS/2017 :- 10 -: MIGHT HAVE TALLIED WITH THE BOOKS OF ACCOUNTS BUT T HAT DID NOT MEAN THAT FIGURES FOR THE IMPUGNED ASSESSMENT YEAR ALSO TALLIED. LD. DEPARTMENTAL REPRESENTATIVE ALSO MADE SUBMISSIONS ON EACH OF THE SUPPORTING GROUNDS 3 TO 12 OF THE APPEAL, REGARDING CONFIDENTIAL NATURE OF PURCHASE REPORT, STATEMENTS OF SHRI SAMPA TH, DISCLOSURE MADE BY ASSESSEE DURING COURSE OF SEARCH, ABSENCE O F PURCHASE BILLS FOR TURMERIC, RELIABILITY OF THE STATEMENT OF ACCOU NTANT SHRI. D. SELVAKUMAR IN RESPECT OF BOUGHT NOTE, ON THE STATE MENT RECORDED FROM SHRI. P.C. DURAISAMY DISPUTING THE FIGURES IN BROUGHT NOTE AND ON EXCEPTIONALLY HIGH PROCESS LOSS CLAIMED BY THE ASSESSEE. THUS, ACCORDING TO HIM, ADDITION MADE BY THE LD. ASSESSIN G OFFICER WERE DELETED BY THE LD. COMMISSIONER OF INCOME TAX (APP EALS) WITHOUT ANY GOOD REASONS. 11. PER CONTRA, LD. AUTHORISED REPRESENTATIVE SUBMITTED THAT IMPUGNED ASSESSMENT ORDER WAS DONE AFTER REOPENING. AS PER LD. AUTHORISED REPRESENTATIVE EVEN DURING THE SCRUTINY OF ORIGINAL RETURN NO DEFECT WAS FOUND IN THE BOOKS OF ACCOUNTS. FURT HER, AS PER LD. AUTHORISED REPRESENTATIVE PURCHASE REPORT ON WHICH RELIANCE WAS PLACED BY THE LD. ASSESSING OFFICER WAS PREPARED IN JULY, 2014 AND NOT A CONTEMPORANEOUS DOCUMENT. THUS, ACCORDING TO HIM , LD. COMMISSIONER OF INCOME TAX (APPEALS) WAS JUSTIFIED IN DELETING THE ITA NO.1992/MDS/2017 :- 11 -: ADDITION, CONSIDERING THE ASSESSMENT DONE FOR T HE SUBSEQUENT YEARS. 12. WE HAVE CONSIDERED THE RIVAL CONTENTIONS AND PERUSE D THE ORDERS OF THE AUTHORITIES BELOW. QUESTION BEFORE US IS WHETHER THE PURCHASE REPORT COULD BE CONSIDERED AS AUTHENTIC WITH REGARD TO QUANTITY AND VALUE OF TURMERIC PURCHASED BY THE AS SESSEE. ASSESSEE SAYS IT IS ONLY A REPORT FOR REFERENCE AND WHAT COU LD BE RELIED ON WAS ONLY THE FIGURES RECORDED IN ITS BOOKS. LD. COMMIS SIONER OF INCOME TAX (APPEALS) HAS GIVEN A CLEAR FINDING THAT IF TU RMERIC PURCHASE AS PER THE PURCHASE REPORT IS ADOPTED, IT WOULD RESUL T IN NEGATIVE STOCK AS PER THE TABLE REPRODUCED IN PARA 9 ABOVE. AS AGA INST THIS LD. ASSESSING OFFICER WAS OF THE VIEW THAT DATA IN THE PURCHASE REPORT TALLIED WITH WHAT WAS IN THE COMPUTER SYSTEM EXCEPT FOR TURMERIC. WHAT WE FIND IS THAT THE PURCHASE REPORT IS ADMITT ED TO BE IN THE HANDWRITING OF SHRI. SAMPATH AN EMPLOYEE OF THE AS SESSEE. THERE WAS A STATEMENT RECORDED FROM SHRI. SAMPATH ON 04 .12.2014 U/S.131(1A) OF THE ACT. QUESTIONS 11, 13 AND 15 PO SED TO SHRI.SAMPATH AND HIS ANSWERS TO THE ARE RELEVANT F OR ADJUDICATION THE ISSUE AND THESE ARE REPRODUCED HEREUNDER:- 11: IN YOUR ANSWER TO EARLIER QUESTIONS, YOU HAD DEPOSED THAT YOU HAD PREPARED THE ITA NO.1992/MDS/2017 :- 12 -: PURCHASE REPORTS AND HANDED OVER TO THE MD SHRI.P.C.DURAISAMY. THE AFORESAID PURCHASE REPORT CONTAIN THE DETAILS OF TURMERIC PURCHASE ALSO. IF IT IS SO; HOW YOU HAVE EXTRACTED THE DATA FOR THE PURCHASE OF TURMERIC AND PROVIDE THE DETAILS TO YOUR MD SHRI P.C.DURAISAMY. ANS: FOR TURMERIC PURCHASE I HAVE NO DATA WITH ME AND HENCE, I COLLECT THE DETAILS OF STOCK DETAILS FROM THE SYSTEM AND ON THE BASIS OF THAT I PREPARED THE PURCHASE REPORT IN RESPECT OF TURMERIC. Q.13: NOW, I AM SHOWING THE SUMMARY OF TURMERIC PURCHASE BY M/S.SAKTHI MASALA PRIVATE LTD. WHICH WAS PROVIDED AT THE TIME OF SEARCH U/S.132 ON 12.09.2014 REGARDING THE TURMERIC CORIANDER AND OTHER RAW MATERIALS THE FIGURES MENTIONED IN THOSE REGISTERS ARE PERFECTLY MATCHING WITH THE PURCHASE REPORT WHY THE FIGURES IN THE PURCHASE SUMMARY OF TURMERIC DOES NOT MATCH WITH THE FIGURES REFLECTED IN THE PURCHASE REPORT? FURTHER, YOU HAD DEPOSED IN. YOUR ANSWER TO Q.NO.11 THAT YOU HAD GIVEN THE FIGURE BASED ON THE STOCK SUMMARY. IN THAT CASE, THE SUMMARY REPORT PROVIDED AT THE TIME OF SEARCH DOES NOT MATCH WITH YOUR PURCHASE REPORT. PLEASE EXPLAIN THE REASONS IN DETAIL? ANS: I HAVE SEEN THE SUMMARY OF TURMERIC PURCHASE SHOWN BY YOU. I ALSO ACCEPT THAT IN MY EARLIER ANSWER TO Q.NO.11 I HAD DEPOSED THAT I HAD PREPARED THE PURCHASE REPORT BASED ON THE STOCK SUMMARY DETAILS. NOW, I CLARIFY THAT I HAD NOT TAKEN THE FIGURES REFLECTED IN THE STOCK SUMMARY FOR PREPARING THE PURCHASE REPORT. I TAKE THE STOCK SUMMARY AS A BASE AND GIVE THE FIGURES ON MY OWN. HENCE, THE TURMERIC PURCHASE IS NOT MATCHING WITH THE FIGURES IN THE PURCHASE REPORT. SINCE THE TURMERIC PURCHASES ARE LOCAL PURCHASES AND IT IS LOOKING AFTER BY THE MD HIMSELF THE QUESTION CAN BE ANSWERED BY HIM ONLY. ITA NO.1992/MDS/2017 :- 13 -: Q .15: PLEASE STATE HOW THIS PURCHASE REPORT IS PREPARED AND WHEN IT IS PREPARED? ANS: THE-PURCHASE REPORT IS PREPARED BASED ON THE REGISTERS MAINTAINED FOR EACH PURCHASE AND IT REPRESENT THE TRUE PURCHASES. THIS PURCHASE REPORT WAS PREPARED DURING THE MONTH OF JULY, 2014. AFTER PREPARING THIS REPORT AND AFTER TAKING PRINTOUT I HAVE DELETED ALL THE DATA RELATING TO PURCHASE REPORT. THERE IS ALSO A STATEMENT RECORDED FROM SHRI. D. S ELVAKUMAR, ACCOUNTANT OF THE ASSESSEE ON 04.12.2014. QUESTION NOS.10 & 11 POSED TO HIM ARE ALSO RELEVANT. THESE QUESTION AN D THE REPLY GIVEN BY HIM ARE REPRODUCED HEREUNDER:- Q.I0: ARE YOU MAINTAINING ANY MANUAL PURCHASE REGISTER FOR TURMERIC PURCHASED BY THE COMPANY? ANS: NO SIR, I AM NOT MAINTAINING ANY MANUAL PURCHASE REGISTER FOR TURMERIC PURCHASED BY THE COMPANY. Q. 11. IS THERE ANY MANUAL PURCHASE REGISTER AVAILABLE IN THE COMPANY TOWARDS PURCHASE OF TURMERIC AND WHETHER ANY OTHER PERSON IN THE COMPANY IS MAINTAINING MANUAL PURCHASE REGISTER FOR THE TURMERIC PURCHASE? ANS: NO SIR WE ARE NOT MAINTAINING OR RECORDING ANY PURCHASES RELATED TO TURMERIC MANUALLY IN ANY FORM OF REGISTER. NO OTHER PERSON IN THE COMPANY IS ALSO MAINTAINING AND RECORDING IN THE MANUAL PURCHASE REGISTER WITH REGARD TO PURCHASE OF TURMERIC. ITA NO.1992/MDS/2017 :- 14 -: WHAT WE DISCERN FROM THE ABOVE IS THAT, SHRI. SAMPA TH THOUGH HE ORIGINALLY STATED THAT THE PURCHASE REPORT WAS BAS ED ON ACTUAL PURCHASES, HAD AT A LATER STAGE RETRACTED FROM SUC H STATEMENT, IN SO FAR AS TURMERIC WAS CONCERNED. THAT THERE WAS NO MA NUAL PURCHASE REGISTER MAINTAINED FOR TURMERIC WAS CONFIRMED BY SHRI. D. SELVAKUMAR, ACCOUNTANT OF THE ASSESSEE ALSO. IN TH E STATEMENT RECORDED FROM SHRI. P.C. DURAISAMY, MANAGING DIRECT OR U/S.132(4) OF THE ACT ON 12.09.2014, A QUESTION WAS POSED ON PUR CHASES OF TURMERIC AND THIS QUESTION AND HIS ANSWER ARE REPRO DUCED HEREUNDER:- Q.12: PLEASE GO THROUGH THE PURCHASE REPORT FOR THE PERIOD FROM 2001-2014 AND ALSO GO THROUGH THE PURCHASES RECORDED IN YOUR SOFTWARE FOR THE PERIOD FROM 01.11.2007 TO 31.03.2014 IN RESPECT OF TURMERIC. AS PER THE PURCHASE REPORT, THE TOTAL VALUE OF PURCHASES IS RS.239,23,32, 102/ - WHEREAS THE PURCHASES RECORDED AND CLAIMED IN THE BOOKS OF ACCOUNTS IS TO THE TUNE OF RS.298,99,23,326/-. THUS, THE PURCHASES ARE OVERSTATED TO THE TUNE OF RS.59,75,91,224/-. PLEASE STATE AS TO WHY THE ABOVE MENTIONED RS.59,75,91,224/- SHOULD NOT BE TREATED AS CORRESPONDING OVER STATEMENT OF EXPENDITURE IN THE BOOKS OF ACCOUNTS OF THE COMPANY M/S. SAKTHI MASALA PVT. LTD.? ANS: I HAVE GONE THROUGH THE PURCHASE REPORT AND ALSO THE EXTRACTS OBTAINED FROM THE SYSTEM MARKED AS ANNEXURE-ILL & IV RESPECTIVELY AND ALSO I HEREBY AFFIX MY SIGNATURE FOR HAVING GONE THROUGH THE SAME. I WOULD LIKE TO CLARIFY THAT THE DETAILS FOUND IN THE SYSTEM ALONE REPRESENT THE ACTUAL PURCHASES AND THE DETAILS FOUND IN THE ITA NO.1992/MDS/2017 :- 15 -: PURCHASE REPORT ARE NOT RELIABLE BECAUSE THE SAME WERE NOT SUPPORTED BY FURTHER DETAILS AND THEREFORE, I AM NOT IN A POSITION TO SUBSTANTIATE THE DETAILS COMPILED IN THE PURCHASE REPORT. FURTHER, I WOULD LIKE TO STATE THAT THE FIGURES WERE COMPILED ON APPROXIMATION BASIS FOR DETERMINING AVERAGE PRICE AT WHICH WE CAN BUY FROM THE MARKET YARD IN ERODE. THEREFORE, I REQUEST YOU TO NOT CONSIDER THE SAID WORKING OF DIFFERENCE IN PURCHASES SHOWN IN PURCHASE REPORT AND PURCHASES RECORDED IN SYSTEM WHERE BOOKS OF ACCOUNTS ARE MAINTAINED REGULARLY WHEREIN QUANTITATIVE DETAILS ARE AVAILABLE DATEWISE AND BILL WISE, WHICH CAN BE SUBJECTED TO FURTHER VERIFICATION. ONLY CONCLUSION THAT CAN BE REACHED FROM ALL THE AB OVE IS THAT AUTHENTICITY OF THE FIGURES IN THE PURCHASE REPORT WAS DOUBTFUL. LD. ASSESSING OFFICER IN ASSESSMENT ORDERS FOR ASSESSM ENT YEARS 2009-10 TO 2015-16, BASED ON PROCEEDINGS INITIATED ON THE ASSESSEE U/S.153A R.W.S. 143(3) OF THE ACT, SUBSEQUENT TO THE SEARCH HAD OBSERVED AS UNDER:- 'OTHER THAN THE 'PURCHASE REPORT' SEIZED FROM THE PREMISE OF THE ASSESSEE, THERE IS NO OTHER EVIDENCE TO SUBSTANTIATE THAT THE PURCHASE OF TURMERIC AS PER T HE BOOKS OF ACCOUNT IS AN INFLATED FIGURE. THE ABOVE ANALYSIS LOGICALLY AND FACTUALLY AFFIRMS THE ARGUME NT OF THE ASSESSEE THAT THE PURCHASE OF TURMERIC AS PER THE BOOKS OF ACCOUNT MAINTAINED IN THE SYSTEM IS THE A CTUAL PURCHASE. BOOKS OF ACCOUNT FOR ALL THE YEARS INVOLVED WERE FI LED ALONG WITH ALL SCHEDULES, QUANTITATIVE DETAILS OF PURCHASES, SALES, OPENING AND CLOSING STOCK ETC. CO PY OF RETURNS FILED WITH SALES TAX AUTHORITIES, WHEREI N ITA NO.1992/MDS/2017 :- 16 -: QUANTITATIVE DETAILS OF MONTH WISE PURCHASE AND SAL ES RECORDED WERE ALSO SUBMITTED. QUANTITATIVE DETAILS OF RECEIPTS AND ISSUES OF EACH RAW MATERIALS FINISHED GOODS AND THAT HAD BEEN SOLD OFF WERE ALSO SUBMITTE D, VERIFIED AND RECONCILED WITH THE BOOKS OF ACCOUNT . THUS, FOR ALL SUBSEQUENT YEARS LD. ASSESSING OFFICE R HAD ACCEPTED THE CONTENTION OF THE ASSESSEE THAT PURCHASE REPORT SEI ZED FROM THE PREMISES OF THE ASSESSEE COULD NOT BE RELIED UPON AND PURCHASE OF TURMERIC AS PER BOOKS MAINTAINED IN THE SYSTEM REF LECTED THE ACTUAL PURCHASE. AS ALREADY MENTIONED BY US THE DIFFERENC E OF A2,01,74,275/- COMPUTED FOR THE PERIOD 1.11.2007 TO 31.03.2008 WAS THE PART OF A LARGER DIFFERENCE OF A59,75,91,224/- FOR THE PERIOD 1.11.2007 TO 31.03.2014 ORIGINALLY ALLEGED BY THE R EVENUE. WHEN FOR SUBSEQUENT YEARS IT WAS FOUND THAT NO SUCH DIFFERE NCE WERE ACTUALLY THERE, WE CANNOT FATHOM HOW SUCH DIFFERENCE COULD B E PRESUMED FOR IMPUGNED ASSESSMENT YEAR ALONE. IN OUR OPINION A DIFFERENT CONCLUSION COULD NOT HAVE BEEN REACHED FOR THE IMP UGNED ASSESSMENT YEAR BASED ON THE VERY SAME EVIDENCE CONSIDERED FOR THE SUBSEQUENT YEARS. ASSESSEE WAS ABLE TO SHOW THAT THE PURCHASE REPORT DID NOT HAVE IN IT CORRECT DATA WITH REGARD TO TURMERIC. LD . COMMISSIONER OF INCOME TAX (APPEALS) IN OUR OPINION WAS THEREFORE JUSTIFIED IN DELETING THE ADDITION. WE DO NOT FIND ANY REASON TO INTERFERE WITH THE ITA NO.1992/MDS/2017 :- 17 -: ORDER OF THE LD. COMMISSIONER OF INCOME TAX (APPEA LS). 13. IN THE RESULT, THE APPEAL OF THE REVENUE STANDS DI SMISSED. ORDER PRONOUNCED ON TUESDAY, THE 12TH DAY OF DECEMB ER, 2017, AT CHENNAI. SD/- ( ) (GEORGE MATHAN) /JUDICIAL MEMBER SD/- ( . ! ' ) (ABRAHAM P. GEORGE) $ %& / ACCOUNTANT MEMBER - ' / CHENNAI . / DATED:12 TH DECEMBER, 2017. KV / ' $(0 1 2 1 ( / COPY TO: 1 . ! / APPELLANT 3. & 3( ( ) / CIT(A) 5. 167 $(8 / DR 2. $%! / RESPONDENT 4. & 3( / CIT 6. 79 :' / GF