Shri Tejus Rohitkumar Kapadia, Surat V. The ACIT.,Circle-3, Surat

ITA 1994/AHD/2010

• Counselvise Citation: [2017] 130 COUNSELVISE.COM (IT) 9416 (ITAT-AHMEDABAD)
• Duration Of Justice: 6 year(s) 7 month(s) 8 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 16-01-2017
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: D
• Next Hearing Date: 11-01-2017
• Assessment Year: 2006-2007
• Appeal Filed On: 08-06-2010
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Assessee Lawyers: RASHESH SHAH
• Keywords: Bogus purchase; Unexplained investment
• Section: 131

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL AHMEDABAD D BENCH (BEFORE SHRI N.K. BILLAIYA, ACCOUNTANT MEMBER & SHRI MAHAVIR PRASAD, JUDICIAL MEMBER) ITA. NOS: 1994, 1990 & 2095/AHD/2010 (ASSESSMENT YEARS: 2006-07 & 2007-08) TEJUS ROHITKUMAR KAPADIA PROP. M/S. TEJUS 28, NEHRU NAGAR SOCIETY, UMRA JAKAT NAKA, SURAT ACIT, CIRCLE-3, SURAT V/S V/S ACIT, CIRCLE-3, SURAT TEJUS ROHITKUMAR KAPADIA PROP. M/S. TEJUS 28, NEHRU NAGAR SOCIETY, UMRA JAKAT NAKA, SURAT (APPELLANT) (RESPONDENT) PAN: ABGPK3824M APPELLANT BY : SHRI RASHESH SHAH, AR RESPONDENT BY : SHRI DHARMVIR D. YADAV, SR. D.R. ( )/ ORDER DATE OF HEARING : 11 -01-201 7 DATE OF PRONOUNCEMENT : 16 -01-2017 PER N.K. BILLAIYA, ACCOUNTANT MEMBER: ITA NOS. 199 4, 1990 & 2095/AHD/2010 . A.YS. 2006- 07 & 2007-08 2 1. ITA NOS. 1994 & 1990/AHD/2010 ARE APPEALS BY THE AS SESSEE PREFERRED AGAINST TWO SEPARATE ORDERS OF THE LD. CIT(A)-II, S URAT DATED 31.03.2010 PERTAINING TO A.Y. 2006-07 & 2007-08 RESPECTIVELY A ND ITA NO. 2095/AHD/2010 IS THE CROSS APPEAL BY THE REVENUE PR EFERRED AGAINST THE ORDER OF THE LD. CIT(A)-II, SURAT 31.03.2010 PERTAI NING TO A.Y. 2007-08. 2. ALL THESE APPEALS WERE HEARD TOGETHER AND ARE DISPO SED OF BY THIS COMMON ORDER FOR THE SAKE OF CONVENIENCE. ITA NO. 1994/AHD/2010 FOR A.Y. 2006-07 ASSESSEES A PPEAL 3. THE ASSESSEE HAS RAISED TWO SUBSTANTIVE GROUNDS OF APPEAL. GROUND NO. 1 RELATES TO THE ADDITION OF RS. 8,18,683/- BEING MAD E ON ACCOUNT OF G.P. ADDITION AND THE SECOND GRIEVANCE RELATES TO THE AD DITION OF RS. 5,68,610/- BEING MADE ON ACCOUNT OF ALLEGED PEAK OF UNACCOUNTE D INVESTMENT MADE IN PURCHASES. 4. THE ASSESSEE IS ENGAGED IN THE BUSINESS OF MANUFACT URING OF YARN, TRADING OF YARN AND GREY CLOTH AND HIGH SEA SALES IN THE NA ME OF M/S. TEJUS 5. A SEARCH OPERATION WAS CONDUCTED BY DEPARTMENT OF R EVENUE INTELLIGENCE (DRI), SURAT AT THE BUSINESS PREMISES OF THE ASSESS EE. TAKING A LEAF OUT OF THE PROCEEDINGS OF THE DRI AND THE SUBSEQUENT REPOR T OF THE DRI, THE A.O. ISSUED SHOW CAUSE NOTICE TO THE ASSESSEE TO EXPLAIN THE INVOICES AND THE NOTINGS ON THE BACK SIDE OF THE INVOICES AS ALLEGED BY THE DRI. ASSESSEE FILED ITA NOS. 199 4, 1990 & 2095/AHD/2010 . A.YS. 2006- 07 & 2007-08 3 A DETAILED REPLY EXPLAINING EACH AND EVERY INVOICE AND THE NOTINGS ON THE SAID INVOICES. 6. IT WAS EXPLAINED THAT THE VARIATION IN THE PURCHASE PRICE OF YARN IS ON ACCOUNT OF DIFFERENCE IN QUALITY OF YARN PURCHASED. IT WAS EXPLAINED THAT 60 DENIER YARN IS COSTLIER THAN 80 DENIER YARN. IT WAS POINTED OUT THAT THE COMPARABLE CASE OF M/S. REVA EXPORT IS IN FACT NOT COMPARABLE BECAUSE THE INVOICE DOES NOT MENTION ANYWHERE THE QUALITY OF TH E YARN. IT WAS FURTHER POINTED OUT THAT THE INVOICE ISSUED BY M/S. S. K. F IBERS, INDONESIA WAS INADVERTENTLY REFERRED TO USD 1.92 PER KG INSTEAD O F 1.40 PER KG. IT WAS FOR THIS REASON; TWO INVOICES WERE FOUND BY THE DRI WIT H DIFFERENT RATES. 7. THE DETAILED SUBMISSIONS OF THE ASSESSEE COULD NOT IMPRESS THE A.O. WHO WAS OF THE FIRM BELIEF THAT THE ASSESSEE HAS IMPORT ED GOODS WHICH WERE NOT RECORDED IN THE BOOKS OF ACCOUNTS AND THE ASSESSEE IS INDULGED IN UNDER VALUATION OF IMPORTS NAME. THE A.O. COMPUTED THE DI FFERENTIAL AMOUNT INVESTED IN UNACCOUNTED PURCHASES OF MATERIALS AT R S. 2,20,66,914/- AND APPLYING G.P. RATE OF 3.71% MADE AN ADDITION OF RS. 8,18,683/-. PROCEEDING FURTHER, THE A.O. WAS OF THE VIEW THAT THE TRANSACT IONS IN WHICH UNDER VALUATION TOOK PLACE, THE ASSESSEE MUST HAVE INVEST ED IN THE PURCHASE OF YARN AND REPORTED LESSER AMOUNT OF INVESTMENT IN TH E PURCHASE OF SAID YARN. THE A.O. COMPUTED THE PEAK OF UNACCOUNTED INV ESTMENT AT RS. 5,68,810/- WHICH WAS BASED ON INVOICE NO. E 2511026 OF M/S. S.K. KERIS AND MADE THE ADDITION OF RS. 5,68,810/-. ITA NOS. 199 4, 1990 & 2095/AHD/2010 . A.YS. 2006- 07 & 2007-08 4 8. AGGRIEVED BY THIS, THE ASSESSEE CARRIED THE MATTER BEFORE THE LD. CIT(A) BUT WITHOUT ANY SUCCESS. 9. BEFORE US, THE LD. COUNSEL FOR THE ASSESSEE REITERA TED WHAT HAS BEEN STATED BEFORE THE LOWER AUTHORITIES. PER CONTRA, THE LD. D .R. STRONGLY SUPPORTED THE FINDINGS OF THE REVENUE AUTHORITIES. 10. WE HAVE GIVEN A THOUGHTFUL CONSIDERATION TO THE ORD ERS OF THE AUTHORITIES BELOW AND HAVE CAREFULLY PERUSED THE RELATED DOCUME NTARY EVIDENCES PLACED BEFORE US IN THE FORM A PAPER BOOK. 11. A PERUSAL OF THE RECORD SHOWS THAT A PREVENTIVE ACT ION WAS CONDUCTED BY THE DRI ON 09.03.2007. A PERUSAL OF THE ASSESSMENT ORDER SHOWS THAT THE ASSESSING OFFICER HAS BASED HIS FINDINGS TOTALLY ON THE BASIS OF THE SHOW CAUSE NOTICE ISSUED BY THE DRI. WE FIND THAT THE T WO INVOICES REFERRED TO BY THE DRI/A.O. BEARING NO. E-11067-2A AND E-11067- 2B ARE DATED 22.11.2006. IT CAN BE SEEN THAT THESE INVOICES PERT AINED TO F.Y. 2006-07 PERTAINING TO A.Y. 2007-08. 12. BE THAT AS IT MAY, IT IS TRUE THAT THE PURCHASE PRI CE OF YARN VARIES WITH THE QUALITY I.E. DENIER OF YARN. WE FIND THAT THE ASSES SEE HAS IMPORTED THE YARN POLYESTER FILAMENT YARN (PFY) FROM M/S. S.K. KERIS AND M/S. S.K. FIBRES, INDONESIA HAD DIFFERENT VALUES RANGING FROM USD 1.1 4 TO USD 2.00 PER KG. THIS VARIATION IN PRICE IS ON ACCOUNT OF DIFFERENCE IN THE QUALITY OF YARN IMPORTED. ITA NOS. 199 4, 1990 & 2095/AHD/2010 . A.YS. 2006- 07 & 2007-08 5 13. WE FIND THAT THE A.O. HAS REFERRED TO A COMPARABLE CASE OF M/S. REVA EXPORT WHO DECLARED THE VALUE OF YARN BEFORE THE CU STOMS AUTHORITY IS USD 1.95 PER KG. BUT IT IS NOT KNOWN WHAT QUALITY OF YA RN HAS BEEN IMPORTED BY M/S. REVA EXPORT @ USD 1.92 PER KG. FURTHER, THE PR ICE DIFFERENCE IN ONE BILL OF COMPETITOR CANNOT BE A BENCH MARK AND APPLI ED TO THE ENTIRE QUANTITY OF THE APPELLANT. 14. WE FIND THAT THE LOWER AUTHORITIES HAVE REFERRED TO TWO INVOICES BEARING SIMILAR NUMBERS DATED 22.11.2006 ISSUED BY S.K. FIB RES, INDONESIA. A PERUSAL OF THE SALE CONTRACT ENTERED INTO WITH M/S. S.K. FIBRES, INDONESIA SHOWS THAT IT WAS FOR PURCHASES OF 80/48 SDAA GRADE YARN @ USD 1.40 PER KG AND FOR WHICH THE ASSESSEE HAD OPENED A BANK LC ON 30.10.2006 @ USD 1.40 PER KG. THE SALE CONTRACT IS EXHIBITED AT PAGE S 25 OF THE PAPER BOOK AND AT PAGE 26 OF THE PAPER BOOK S.K. FIBRES, INDON ESIA HAS CLARIFIED THAT INADVERTENTLY THEY HAVE MENTIONED THE RATE AS USD 1 .92 PER KG. IN STEAD OF AGREED RATE OF USD 1.40 PER KG. IT IS ALSO CLARIFIE D BY S.K. FIBERS, INDONESIA THEY HAVE IMMEDIATELY SENT ANOTHER COMMERCIAL INVOI CE BEARING SAME NUMBER, DATE, QUALITY AND QUANTITY AND ONLY THE RAT E THEREIN HAS BEEN RECTIFIED. WE HAVE ALSO PERUSED THE LC OF BANK OF A MERICA EXHIBITED AT PAGES 27 TO 29 OF THE PAPER BOOK WHEREIN WE FIND TH AT THE LC IS FOR USD 1.40 KG. 15. THE A.O. HAS ALSO BASED HIS FINDING ON THE NOTINGS FOUND ON THE REVERSE SIDE OF A PERFORMA INVOICE WHICH IS AS UNDER:- ITA NOS. 199 4, 1990 & 2095/AHD/2010 . A.YS. 2006- 07 & 2007-08 6 1.85 1.14 0.71 19968 14177.28 16. WE FIND THAT THE DRI HAS INTERPRETED THE AFOREMENTI ONED WORKING AS USD 1.85 AS ACTUAL PURCHASE PRICE OF THE GOODS AND ASSU MED THAT THE INVOICE HAS BEEN PREPARED AT USD 1.14 AND TREATED THE DIFFE RENTIAL AMOUNT OF USD 0.71 AS THE AMOUNT PAYABLE TO THE FOREIGN SUPPLIER AND MULTIPLIED THE SAME WITH THE QUANTITY OF 19968 KGS TO WORK OUT TH E ALLEGED SUPPRESSED AMOUNT AT USD 14,177.28. 17. THE ASSESSING OFFICER HAS BASED HIS FINDINGS INFLUE NCED BY THE AFOREMENTIONED ASSUMPTION OF THE DRI. THERE IS NO E VIDENCE WHATSOEVER BROUGHT ON RECORD WHICH COULD SUGGEST THAT THE ASSE SSEE HAS ACTUALLY PAID THE DIFFERENTIAL AMOUNT AS CALCULATED HEREINABOVE. ALTHOUGH, A REFERENCE IS MADE TO THE STATEMENT GIVEN BEFORE THE DRI BUT NO C OGNIZANCE HAS BEEN TAKEN FOR THE AFFIDAVIT OF THE ASSESSEE BY WHICH HE HAS RETRACTED FROM THE STATEMENT GIVEN BEFORE THE DRI. THE AFFIDAVITS ARE EXHIBITED AT PAGES 33 TO 36 OF THE PAPER BOOK. 18. IN OUR CONSIDERED OPINION IN THE ABSENCE OF ANY DOC UMENTARY EVIDENCE, THE IMPUGNED ADDITIONS CANNOT BE MADE SOLELY BASED ON T HE ACTION OF THE THIRD ITA NOS. 199 4, 1990 & 2095/AHD/2010 . A.YS. 2006- 07 & 2007-08 7 PERSON THAT IS THE DRI ON THE ALLEGATION THAT THE A SSESSEE HAS UNDER-VALUED ITS IMPORT OF PFY AND HAS MADE PAYMENTS BY UNDER IN VOICING. 19. IT WOULD BE PERTINENT TO REFER TO THE DECISION OF T HE CO-ORDINATE BENCH IN THE CASE OF ITO VS. PUKHRAJ N. JAIN 99 TTJ (MUMBAI) 364 WHEREIN THE RELEVANT FINDINGS READ AS UNDER:- .... THE CONTENTION OF THE DEPARTMENTAL REPRESENTATIVE T HAT THE CUSTOMS COLLECTOR HAVING HAD CONDUCTED THE INQUIRY AND HAVI NG MARSHALLED / ASCERTAINED THE FACTS AND THEN HAVING PASSED HIS ORDER UNDER TH E CUSTOMS ACT, THE AO, FOR FRAMING ASSESSMENT UNDER IT ACT AND, FOR THAT PURPO SE, FOR MAKING AN ADDITION U/S. 69A IN THE HANDS OF THE ASSESSEE IN RESPECT OF THE VALUE OF GOLD SEIZED FROM KNJ BY CUSTOMS OFFICIALS WAS NOT REQUIRED TO MAKE A NY INQUIRY, SEEMS TO BE MISPLACED / FALLACIOUS, REFLECTIVE OF A NON-UNDERST ANDING OR MISUNDERSTANDING OF THE VERY BASIC CONCEPT OF JUDICIAL / QUASI-JUDICIAL ADJUDICATION BY A JUDICIAL OR QUASI-JUDICIAL AUTHORITY. IT MAY BE OF SOME BENEFIT TO OBSERVE HERE THAT ALTH OUGH AN AO, WHILE MAKING AN ASSESSMENT, DOES NOT STRICTLY ACT AS A THE PROCEEDI NGS BEFORE THE AO ARE, IN GENERAL, IN THE NATURE OF QUASI-JUDICIAL THOUGH FOR SPECIFIC PURPOSE, THE SAME ARE DEEMED JUDICIAL PROCEEDINGS AS PROVIDED IN SECTION 136. AN AO, BEING A QUASI-JUDICIAL AUTHORITY, HAS, WHILE FRAMING ASSESSMENT, TO DISCHARGE HIS DUTY / FUNCTION JUDICIALLY AND IN THA T PROCESS THE AO HAS TO APPLY HIS OWN MIND INDEPENDENTLY TO THE FACTS OF THE CASE, AS CERTAINED BY HIM AND THEN TO DRAW HIS OWN CONCLUSION / DECISION ON THE FINDING O F ANY AUTHORITY UNDER ANY OTHER ACT / LAW, AND THUS ADOPT THE FINDING / CONCL USION OF THAT AUTHORITY. ITA NOS. 199 4, 1990 & 2095/AHD/2010 . A.YS. 2006- 07 & 2007-08 8 THE DECISION TO BE DRAWN BY THE AO HAS TO BE HIS OW N AND INDEPENDENT ONE. AO CANNOT BASE HIS DECISION ON THE FINDING / CONCLUSIONS OF CUSTOMS COLLECTOR DRAWN IN THE, ORDER OF CUSTOMS CO/LECTOR UNDER THE CUSTOMS ACT ......' 20. IT WOULD BE FURTHER RELEVANT TO REFER TO ANOTHER DE CISION OF THE CO-ORDINATE BENCH IN THE CASE OF KIRTILAL KALIDAS & CO. 1999 64 TTJ (MAD) 77. THE RELEVANT OBSERVATIONS READ AS UNDER:- ....THE INQUIRIES BY THE AO FOR MAKING THE ASSESSM ENT OF INCOME ARE QUASI- JUDICIAL PROCEEDINGS AND THE ACT OF FRAMING THE ASS ESSMENT IS QUASI-JUDICIAL ACT. IT IS A TRITE LAW THAT A JUDICIAL OR QUASI-JUDICIAL AU THORITY SHOULD ACT INDEPENDENTLY AND THAT THERE SHALL NOT BE ANY INTERFERENCE, NOR A NY ADVICE, OPINION, INSTRUCTIONS, DIRECTIONS, DIRECTION CAN BE GIVEN TO ANY IT AUTHOR ITY IN SUCH PROCEEDINGS, ETC. BY ANY STRANGER/OUTSIDER EVEN IF SUCH STRANGER/OUTSIDE R IS HIGHER OR HIGHEST AUTHORITY IN THE HIERARCHY OF THE DEPARTMENT. IF AN ORDER IS PASSED OR A DECISION IS RENDERED BY AN IT AUTHORITY IN SUCH QUASI JUDICIAL PROCEEDING AT THE BEHEST OF A OR UPON THE DIRECTIONS OF INSTRUCTIONS, OF ANY SUPERIOR OFFICER OR AUTHORITY THEN SUCH AN ORDE R/DECISION IS ILLEGAL AND A NULLITY IN LAW BECAUSE IT SHALL DEEMED IN LAW THAT SUCH AN ORDER/DECISION IS NOT OF THAT QUASI JUDICIAL AUTHORITY BUT SOME OTHER AUTHOR ITY WHO DIRECTED OR ISSUED ORDERS/INSTRUCTIONS TO THE LOWER AUTHORITY TO ACT A ND THEREAFTER PASS AN ORDER/DECISION IN A PARTICULAR MANNER. 21. CONSIDERING THE TOTALITY OF THE FACTS, IN THE LIGHT OF OUR OBSERVATIONS MENTIONED HEREINABOVE AND CONSIDERING THE RELEVANT OBSERVATIONS OF THE CO-ORDINATE BENCH ON THE POINTS IN ISSUE, IN OUR CO NSIDERED OPINION, THE IMPUGNED ADDITIONS DO NOT HOLD ANY WATER. WE, ACCO RDINGLY, SET ASIDE THE FINDINGS OF THE LD. CIT(A) AND DIRECT THE A.O. TO D ELETE THE ADDITION OF RS. ITA NOS. 199 4, 1990 & 2095/AHD/2010 . A.YS. 2006- 07 & 2007-08 9 8,18,683/- ON ACCOUNT OF G.P. ADDITION AND RS. 5,68 ,610/- ON ACCOUNT OF ALLEGED PEAK OF UNACCOUNTED INVESTMENT MADE IN PURC HASES. BOTH THE GROUNDS ARE ALLOWED AND IN THE RESULT, THE APPEAL F ILED BY THE ASSESSEE IS ALLOWED. ITA NO. 1990/AHD/2010 A.Y. 2007-08 ASSESSEES APPEA L 22. THE ASSESSEE HAS RAISED TWO SUBSTANTIVE GROUNDS OF APPEAL. GROUND NO. 1 RELATES TO THE ADDITION OF RS. 6,32,055/- ON ACCOUN T OF G.P. ADDITION AND RS. 8,15,791/- ON ACCOUNT OF ALLEGED PEAK OF UNACCOUNTE D INVESTMENT MADE IN PURCHASES. 23. THE IMPUGNED ADDITIONS ARE MADE ON THE IDENTICAL SE T OF FACTS WHICH HAVE BEEN CONSIDERED BY US IN ITA NO. 1994/AHD/2010 (SUP RA). FOR OUR DETAILED DISCUSSION THEREIN AND FOLLOWING OUR OWN FINDINGS, WE DIRECT THE A.O. TO DELETE THE IMPUGNED ADDITIONS. APPEAL FILED BY THE ASSESSEE IS ALLOWED. ITA NO. 2095/AHD/2010 REVENUES APPEAL FOR A.Y. 200 7-08 24. THE GRIEVANCE OF THE REVENUE IS TWOFOLD. FIRSTLY, T HE REVENUE IS AGGRIEVED BY THE DELETION OF THE ADDITION OF RS. 5,19,86,585/- O N ACCOUNT OF BOGUS PURCHASES AND IS FURTHER AGGRIEVED BY THE DELETION OF THE ADDITION OF RS. 5,00,000/- ON ACCOUNT OF ESTIMATION OF OIL GAIN. ITA NOS. 199 4, 1990 & 2095/AHD/2010 . A.YS. 2006- 07 & 2007-08 10 25. BRIEFLY STATED THE FACTS OF THE CASE ARE THAT ON TH E BASIS OF A REPORT OF THE ADIT(INVESTIGATION)-III,SURAT AND ON THE BASIS OF I NFORMATION WITH REGARD TO BANKING CASH TRANSACTION TAX (BCTT) IN THE CASE OF M/S. SAI CORPORATION AND M/S. SAI ENTERPRISES WHO WERE OPERATING AS SHRO FFS, THE A.O. CAME TO KNOW THAT THE PROPRIETOR OF THE AFOREMENTIONED TWO FIRMS SHRI KULWANT SINGH YADAV IN HIS STATEMENT RECORDED U/S. 131 OF T HE ACT HAD APPARENTLY STATED THAT AS A PRACTICE HE NOTED THE NAMES OF THE BENEFICIARIES ON THE REVERSE OF THE CHEQUES AND ALSO ISSUED A SLIP OF AC KNOWLEDGEMENT. HE DELIVERED THE CASH ON PRODUCTION OF THE ACKNOWLEDGE MENT SLIP. THE A.O. FOUND THAT ONE OF THE BENEFICIARIES OF THE CHEQUES DISCOUNTED BY SHRI KULWANT SINGH YADAV WAS THE ASSESSEE. 26. ON PERUSAL OF THE BANK ACCOUNTS OF M/S. SAI CORPORA TION AND M/S. SAI ENTERPRISES REVEALED THAT SUBSTANTIAL TRANSACTIONS WERE DONE WITH BANK ACCOUNT NO. CA2024 WITH SARVODAYA BANK LTD., SURAT WHICH WAS HELD BY M/S. RAJ IMPEX. ON FURTHER VERIFICATION, THE A.O. F OUND THAT MOST OF THE CREDIT ENTRIES WERE FROM THE PROP. CONCERN M/S. TEJ US. THE ADIT MADE FURTHER INVESTIGATION AND FOUND THAT THE CHEQUE BOO K OF RAJ IMPEX WAS IN THE POSSESSION OF THE ASSESSEE AND HIS FATHER. 27. ON THE BASIS OF SUCH REPORT OF THE ADIT, THE A.O. W AS OF THE OPINION THAT THE TRANSACTIONS WITH RAJ IMPEX WERE FOUND TO BE BOGUS AND CAME TO THE CONCLUSION THAT THE PURCHASES TOTALING TO RS. 5,19, 86,585/- SHOWN TO HAVE ITA NOS. 199 4, 1990 & 2095/AHD/2010 . A.YS. 2006- 07 & 2007-08 11 MADE FROM M/S. RAJ IMPEX WAS COMPLETELY BOGUS AND A CCORDINGLY MADE THE ADDITIONS. 28. ASSESSEE CARRIED THE MATTER BEFORE THE LD. CIT(A) A ND STRONGLY SUBMITTED THAT THE A.O. HAS GROSSLY ERRED IN TREATING THE TRA NSACTIONS WITH M/S. RAJ IMPEX AS BOGUS. CONFIRMATIONS OF M/S. RAJ IMPEX ALO NG WITH PAN DETAILS WERE FILED. I.T. RETURNS OF M/S. RAJ IMPEX FOR THE YEAR UNDER CONSIDERATION WAS FILED ALONG WITH AUDITED STATEMENT OF ACCOUNTS OF M/S. RAJ IMPEX. THE ASSESSEE ALSO FILED THE BANK STATEMENTS SHOWING PAY MENT OF PURCHASES BY ACCOUNT PAYEE CHEQUES ALONG WITH THE COPIES OF THE BILLS OF M/S. RAJ IMPEX. 29. AFTER CONSIDERING THE FACTS AND THE SUBMISSIONS, TH E LD. CIT(A) FOUND THAT WHAT HAS BEEN DISALLOWED ARE THE PURCHASES CLAIMED TO HAVE BEEN MADE BY THE ASSESSEE FROM M/S. RAJ IMPEX. THE LD. CIT(A) FU RTHER FOUND THAT ALL THE PAYMENTS MADE BY THE ASSESSEE WERE BY ACCOUNT PAYEE CHEQUES TO M/S. RAJ IMPEX. THE LD. CIT(A) FURTHER OBSERVED THAT SIN CE THE ASSESSEE WAS A TRADER, THEREFORE THE PURCHASES MADE FROM M/S. RAJ IMPEX HAVE BEEN FOUND TO BE SOLD AND THE SALES HAVE BEEN ACCEPTED B Y THE A.O. THE LD. CIT(A) CONCLUDED BY HOLDING THAT THERE WAS NO BASIS OR EVIDENCE TO TREAT THE PURCHASES FROM M/S. RAJ IMPEX AS BOGUS AND ACCO RDINGLY DIRECTED THE A.O. TO DELETE THE ADDITION OF RS. 51,98,656/-. 30. AGGRIEVED BY THIS, THE REVENUE IS BEFORE US. THE L D. D.R. STRONGLY SUPPORTED THE FINDINGS OF THE A.O. THE LD. COUNSEL FOR THE AS SESSEE REITERATED WHAT HAS BEEN STATED BEFORE THE LOWER AUTHORITIES. ITA NOS. 199 4, 1990 & 2095/AHD/2010 . A.YS. 2006- 07 & 2007-08 12 31. WE HAVE GIVEN A THOUGHTFUL CONSIDERATION TO THE ORD ERS OF THE AUTHORITIES BELOW. THERE IS NO DISPUTE THAT THE PURCHASES MADE FROM M/S. RAJ IMPEX WERE DULY SUPPORTED BY BILLS AND ALL THE PAYMENTS H AVE BEEN MADE BY ACCOUNT PAYEE CHEQUES. THERE IS ALSO NO DISPUTE THA T M/S. RAJ IMPEX HAVE CONFIRMED ALL THE TRANSACTIONS. THERE IS NO EVIDENC E TO DRAW THE CONCLUSION THAT THE ENTIRE PURCHASE CONSIDERATION WHICH THE AS SESSEE HAD PAID TO M/S. RAJ IMPEX HAD COME BACK TO THE ASSESSEE IN CASH. 32. IT IS ALSO TRUE THAT NO ADVERSE INFERENCE HAS BEEN DRAWN SO FAR AS THE SALES MADE BY THE ASSESSEE IS CONCERNED. WE ALSO FIND THA T THE ENTIRE PURCHASES MADE BY THE ASSESSEE FROM M/S. RAJ IMPEX HAVE BEEN ACCOUNTED BY RAJ IMPEX AND HAVE PAID THE TAXES ACCORDINGLY. CONSIDER ING THE FACTS IN TOTALITY WELL APPRECIATED BY THE FIRST APPELLATE AUTHORITY, WE DO NOT FIND ANY ERROR OR INFIRMITY IN THE FINDINGS OF THE FIRST APPELLATE AUTHORITY. GROUND NO. 1 IS ACCORDINGLY DISMISSED. 33. THE SECOND GRIEVANCE RELATES TO THE DELETION OF THE ADDITION OF RS. 5,00,000/- 34. DURING THE COURSE OF THE SCRUTINY ASSESSMENT PROCEE DINGS, THE A.O. FOUND THAT THE ASSESSEE HAS SHOWN YIELD OF 7,59,905.90 KG S OF CRIMPED YARN ON THE CONSUMPTION OF THE SAME QUANTITY OF POY. THE A. O. FURTHER FOUND THAT IN F.Y. 2004-05, THE ASSESSEE HAS SHOWN OIL GAIN OF 1.63%. TAKING A LEAF OUT OF THE FINDINGS OF THE A.O. ESTIMATED THE OIL GAIN T RS. 5,00,000/- AND MADE THE IMPUGNED ADDITION. ITA NOS. 199 4, 1990 & 2095/AHD/2010 . A.YS. 2006- 07 & 2007-08 13 35. BEFORE THE LD. CIT(A), IT WAS BROUGHT TO THE NOTICE OF THE LD. CIT(A) THAT THE IMPUGNED ADDITIONS MADE IN 2004-05 WERE DELETED BY THE FIRST APPELLATE AUTHORITY AND THE REVENUE HAS NOT PREFERRED ANY FUR THER APPEAL. 36. IT WAS FURTHER EXPLAINED THAT DURING THE YEAR UNDER CONSIDERATION, THE ASSESSEE HAS PRODUCED CRIMPED YARN AND NOT TEXTURIS ED YARN AND, THEREFORE, THERE WAS NO OIL GAIN. 37. AFTER CONSIDERING THE FACTS AND THE SUBMISSIONS, TH E LD. CIT(A) FOUND THAT THE A.O. HAS MADE THE IMPUGNED ADDITIONS ONLY ON TH E BASIS OF THE FINDINGS GIVEN BY HIS PREDECESSOR. THE LD. CIT(A) WAS CONVIN CED THAT THERE IS NO EVIDENCE FOR THE YEAR UNDER CONSIDERATION FOR MAKIN G THE IMPUGNED ADDITION AND ACCORDINGLY DIRECTED THE A.O. TO DELET E THE SAME. 38. BEFORE US, THE LD. D.R. STRONGLY RELIED UPON THE FI NDINGS OF THE A.O. PER CONTRA, THE LD. COUNSEL FOR THE ASSESSEE REITERATED WHAT HAS BEEN STATED BEFORE THE LOWER AUTHORITIES. 39. IT IS TRUE THAT THE A.O. HAS MADE THE ADDITIONS TAK ING A LEAF OUT OF THE FINDINGS GIVEN IN A.Y. 2004-05. EXCEPT FOR THIS, TH ERE IS NOTHING ON RECORD WHICH COULD SUGGEST THAT THE ASSESSEE HAS MADE OIL GAIN DURING THE YEAR UNDER CONSIDERATION. IN THE ABSENCE OF ANY CORROBO RATIVE EVIDENCE, WE DECLINE TO INTERFERE WITH THE FINDINGS OF THE LD. C IT(A). GROUND NO. 2 IS ACCORDINGLY DISMISSED. ITA NOS. 199 4, 1990 & 2095/AHD/2010 . A.YS. 2006- 07 & 2007-08 14 40. IN THE RESULT, THE APPEAL FILED BY THE REVENUE IS D ISMISSED. ORDER PRONOUNCED IN OPEN COURT ON 16 - 01- 20 17 SD/- SD/- (MAHAVIR PRASAD) (N. K. BILLAIYA) JUDICIAL MEMBER TRUE COPY ACCOUNTANT MEMBER AHMEDABAD: DATED 16 /01/2017 RAJESH COPY OF THE ORDER FORWARDED TO: - 1. THE APPELLANT. 2. THE RESPONDENT. 3. THE CIT (APPEALS) 4. THE CIT CONCERNED. 5. THE DR., ITAT, AHMEDABAD. 6. GUARD FILE. BY ORDER DEPUTY/ASSTT.REGISTRAR ITAT,AHME DABAD