Assistant Commissioner of Income Tax, Circle - 1, Guwahati V. Shri Sanwarmal Agarwal, Guwahati

ITA 207/GTY/2017

• Counselvise Citation: [2019] 116 COUNSELVISE.COM (IT) 8763 (ITAT-GUWAHATI)
• Duration Of Justice: 1 year(s) 8 month(s) 3 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 12-07-2019
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: DB
• Assessment Year: 2009-2010
• Appeal Filed On: 09-11-2017

Judgement Text

\ ' \ ' ' ' ' @ IN THE INCOME TAX APPELLATE TRIBUNAL GUWAHATI BENCH, GUWAHATI . . , ' . . ' @ BEFORE SRI S.S.GODARA , JM AND DR. A.L.SAINI , AM AAYAKRAPILA SAM . /ITANO. 207/GAU/2017 ( INAQA-ARNA BAYA- / ASSESSMENT YEAR2009-10) THE ASST. COMMISSIONER OF INCOME TAX, CIRCLE-1, GAUWAHATI ROOM NO. 613, 6 TH FLOOR, AAYAKAR BHAWAN, G.S. ROAD, GUWAHATI-781005 VS. SHRI SANWARMALAGARWAL SOHEL NIEWAS (3 RD FLOOR) CHATRIBARI ROAD, GUWAHATI-781001 ( APILAAQAI - / APPELLANT) .. ( P`%YAQAAI- / ASSESSEE) ./ PAN NO. ABVPA6563A ' M . / CO NO.06/GAU/2017 (ARISINGIN ITA NO. 207/MUM/2017FORAY2009-10) SHRI SANWARMALAGARWAL SOHEL NIEWAS (3 RD FLOOR) CHATRIBARI ROAD, GUWAHATI-781001 VS. THE ASST. COMMISSIONER OF INCOMETAX, CIRCLE-1, GAUWAHATI ROOM NO. 613, 6 TH FLOOR, AAYAKARBHAWAN,G.S.ROAD, GUWAHATI-781005 ( APILAAQAI - / APPELLANT) .. ( P`%YAQAAI- / ASSESSEE) \ ' / APPELLANTBY : SHRI SANDEEP SENGUPTA ,JCIT / ASSESSEE BY : SHRI SOMNATHGHOSH,ADVOCATE / DATEOFHEARING: 03.07.2019 / DATEOFPRONOUNCEMENT: 12.07.2019 AADOSA / OR D E R PER BENCH , THE CAPTIONED APPEAL FILEDBYTHE REVENUE AND THE CROSS OBJECTIONFILED BY THE ASSESSEE, PERTAINING TO AY 2009-10 ARE DIRECTED AGAINST THE ORDER PASSED BY THE COMMISSIONER OF INCOME TAX(APPEALS)-1 [IN SHORT CIT(A)-2], GUWAHATI, WHICH IN TURN ARISES OUT OF AN ASSESSMENT ORDER PASSED BY THE AO UNDER SECTION 153C/143 (3) OF THE INCOME TAX, ACT, 1961(HEREINAFTER REFERRED TOTHE ACT) . 2 SHRI SANWARMALAGARWAL ITA NO.207/GAU/2017 CO. NO.06/GAU/2017 2. THE GROUNDSOF APPEAL RAISED BYTHE REVENUE ARE AS FOLLOWS:- 1.ADDITION MADEON THEISSUEOF UNEXPLAINED SUNDRYCREDITOR: THE ASSESSEE HAD SHOWN A CURRENT LIABILITY OF RS.1,70,73,828/- UNDER THE HEAD 'CURRENT LIABILITIES AND PROVISION' OF THE BALANCE SHEET OF HIS PROPRIETORSHIP CONCERN I.E. S.M. ENTERPRISE. ON BEING CONFRONTED, AT THE TIME OF ASSESSMENT PROCEEDINGS THE ASSESSEE COULD NOT FURNISH THE DETAILS OF THE CREDITOR AND FAILED TO DISCHARGE HIS ONUS TO PROVE THE GENUINENESS OF THE SUNDRY CREDITOR. THE ASSESSEE HAVING FAILED TO DISCHARGE HIS ONUS OF PROVING THE GENUINENESS OF THE LIABILITY, THESAID AMOUNTWAS ADDED BYTHEASSESSING OFFICER. 2. ADDITION MADEON THEISSUEOF UNEXPLAINED LOAN: A LOAN OF RS.11,00,772/- FROM HIMMATSINGHA AUTO FINANCE HAD BEEN SHOWN AS A LIABILITY OF THE BALANCE SHEET OF HIS PROPRIETORSHIP CONCERN I.E. S.M. ENTERPRISE. ON BEING CONFRONTED, AT THE TIME OF ASSESSMENT PROCEEDINGS THE ASSESSEE COULD NOT FURNISH ANY EVIDENCE IN SUPPORT OF THIS AND FAILED TO DISCHARGE HIS ONUS TO PROVE THE GENUINENESS OF THE LOAN. ACCORDINGLY, RS.11,00,772/- WAS TREATED AS UNDISCLOSED INVESTMENT OF THE ASSESSEE AND ADDED BACK TO THE TOTAL INCOME BY THE AO. 3. GROUND NO. 1 AND 2 RAISED BY THE REVENUE RELATES TO ADDITION OF RS.1,70,73,828/- UNDER THE HEARD OF CURRENT LIABILITIES AND RS.11,00,772/- ON ACCOUNTOF UNEXPLAINED LOAN. 4. ASSESSING OFFICER MADE THE IMPUGNED ADDITION BASED ON PREPONDERANCE OF PROBABILITY'. IN THIS REGARD THE RELEVANT EXTRACT OF THE ASSESSMENT ORDER CONTAINING THE REASONS OF THE AO FOR MAKING THE ABOVE ADDITIONISREPRODUCEDBELOW: IN THE BALANCE SHEET OF SM ENTERPRISE THE ASSESSEE'S CURRENT LIABILITIES & PROVISIONS HAS BEEN SHOWN AT RS. 1,70,73,828. ON BEING ASKED THE A/R OF THE ASSESSEE STATED THAT THIS REPRESENTS SUNDRY CREDITOR BUT HOWEVER FAILED TOFURNISH THE DETAILS.THE A/REVEN FAILEDTOFURNISHTHE DETAILSOFPURCHASE MADE FROM OR PAYMENTS MADE TO THE SAID SUNDRY CREDITORS. [ORDER SHEET NOTINGDATED 16.12.2010. IT IS AN AMAZING TO NOTE THE ASSESSEE WHO CLAIMED TO HAVE MADE PURCHASES ON CREDIT AND MADES SUBSEQUENTLY PAYMENT DOES NOT HAVE ANY DETAILS, THE BASIC INGREDIENTS OF ANY SUNDRY CREDITOR IS MISSING. OBVIOUS QUESTION ARISES THEN ON PAYMENTS WERE MADE - IN ABSENCE OF DETAILS NO REPLY CAN COME FORWARD. ANY PERSON SHALL HAVE HIS OWN RECORD FOR MAKING PAYMENT TO SOMEONE, NOT TO SPEAK OF RS. 1.7 CRORE AROUND - WHETHER BOOKS OF ACCOUNTS ARE MAINTAINED OR OTHERWISE. THE ASSESSEE FAILED TO DISCHARGE 3 SHRI SANWARMALAGARWAL ITA NO.207/GAU/2017 CO. NO.06/GAU/2017 HIS ONUS TO PROVE THAT THE SUNDRY CREDITOR CLAIMED BY HIM IS GENUINE. KEEPING IN VIEW THE ABOVE FACTS AND THE PRINCIPLE OF PREPONDERANCE OF PROBABILITY - ONLY ONE CONCLUSION CAN BE. DRAWN WITHOUT AN IOTA OF DOUBT THAT WHOLE AMOUNT OF SUNDRY CREDITOR IS NOTHING BUT ASSESSEE'S OWN INVESTMENT IN THE BUSINESS- BROUGHT IN DISGUISE OF SUNDRY CREDITOR. AND ACCORDINGLY, RS.1,70,73,828 IS TREATED AS UNDISCLOSED INVESTMENT OF THE ASSESSEE ANDADDEDTOTHE TOTALINCOME. 5. THE AO ALSO ADDED BACK OF RS.11,00,772/- AS INCOME OF THE ASSESSEE ON ACCOUNTOF UNEXPLAINEDLOAN. IN THIS REGARD THE RELEVANT EXTRACT OF THE ASSESSMENT ORDER CONTAINING THE REASONS OF THE AO FOR MAKINGTHE ABOVE ADDITIONISREPRODUCED BELOW: IN THE BALANCE SHEET OF M/S SM ENTERPRISE, SECURED LOAN FROM HIMMATSINGHA AUTO FINANCE OF RS.11,00,772 HAS BEEN SHOWN AS LIABILITY. NO DOCUMENTARY EVIDENCE COULD BE FURNISHED BY THE ASSESSEE [AS EVIDENT FROM THE ORDER SHEET NOTING DATED 20.12.2010]. IT IS AMAZING TO NOTE THAT THE ASSESSEE DOES NOT EVEN HAVE THE BASIC THING OF ANY LOAN I.E. DOCUMENTS FOR LOAN SANCTIONED. SINCE THE ASSESSEE FAILED TO DISCHARGE HIS ONUS TO PROVE THAT THE AMOUNT CREDITED IN HIS ACCOUNT IS GENUINE AND KEEPING IN VIEW THE PRINCIPLE OF PREPONDERANCE OF PROBABILITY, THE SAID AMOUNT OF RS. L1,00,772 CAN BE CONCLUDED TO BE ASSESSEE'S UNDISCLOSED INVESTMENT AND ACCORDINGLY RS, 1100722 IS ADDED TO THE TOTAL INCOME. 6.. AGGRIEVED, BY THE ORDER OF THE AO, THE ASSESSEE CARRIED THE MATTER IN APPEAL BEFORE THE LEARNED CIT(A), WHO HAS DELETED THE ADDITION MADE BY AO OBSERVING THE FOLLOWING: 4.2. IN APPEAL BEFORE ME THE APPELLANT HAS SUBMITTED THAT THE CURRENT LIABILITIES AND PROVISIONS [SUNDRY CREDITOR] ARE GENUINE. THE AO CANNOT MAKE ADDITION OF THE ENTIRE SUNDRY CREDITORS ONLY BECAUSE THE APPELLANT COULD NOT FURNISH DETAILS ON THEDATEOF HEARING. 4.3. ON CONSIDERATION OF THE MATTER, I FIND THAT THE AO HAS ADDED BACK THE ENTIRE CURRENT LIABILITIES AND PROVISIONS [SUNDRY CREDITOR] OF THE APPELLANT ONLY BECAUSE THE APPELLANT COULD NOT PRODUCE THE NECESSARY DETAILS. THEREFORE, ON THE BASIS OF 'PREPONDERANCE OF PROBABILITY' HE HAS TREATED THE ENTIRE AMOUNT OF CURRENT LIABILITIES AND PROVISIONS [SUNDRY CREDITOR] AS THE OWN INVESTMENT OF THE APPELLANT. IN MY OPINION JUST BECAUSE DETAILS ARE NOT PRODUCED THE CURRENT LIABILITIES AND PROVISIONS [SUNDRY CREDITOR] OF THE APPELLANT CANNOT TRANSFORM INTO THE OWN INVESTMENT OF THE APPELLANT. IN MY OPINION NON SUBMISSION OF DETAILS IS NOT SUFFICIENT ENOUGH TO TILT THE SCALE OF 'PREPONDERANCE OF PROBABILITY' 4 SHRI SANWARMALAGARWAL ITA NO.207/GAU/2017 CO. NO.06/GAU/2017 AGAINST THE APPELLANT AND IN FAVOUR OF THE AO. THEAO WAS REQUIRED TO TAKE MORE AFFIRMATIVEACTION TO SUBSTANTIATEHIS CLAIM. 4.4. IN VIEW THEREOF I AM OF THE OPINION THAT THE ADDITION OF SUNDRY CREDITORS AS INCOME OF THE APPELLANT IS NOT JUSTIFIED AND ACCORDINGLY THE ADDITION OF RS.1,70,73,828/-IS HEREBYDELETED. THE LD CIT(A) ALSO DELETED THE ADDITION OF RS.11,00,772/- ON ACCOUNT OF UNEXPLAINED LOAN. 7. AGGRIEVED BY THE ORDER OF THE CIT(A), THE REVENUE IS IN APPEAL BEFORE US . THE LEARNED DR FOR THE REVENUE HAS PRIMARILY REITERATED THE STAND TAKEN BY THE AO WHICH WE HAVE ALREADY NOTED IN OUR EARLIER PARA AND IS NOT BEING REPEATED FOR THE SAKE OF BREVITY. ON THE OTHER HAND, THE LEARNED COUNSEL FOR THE ASSESSEE REITERATED THE SUBMISSIONS MADE BEFORE THE AUTHORITIESBELOW. 8. WE HAVE HEARD BOTH THE PARTIES AND PERUSED THE MATERIAL AVAILABLE ON RECORD, WE NOTE THAT ASSESSEE IS MAINLY ENGAGED IN THE BUSINESS OF DEALING IN COAL UNDER THE TRADE NAME AND STYLE OF 'S.M. ENTERPRISES'. A SEARCH & SEIZURE OPERATION U/S. 132 OF THE INCOME TAX ACT,1961 WAS CONDUCTED ON 28-03-2008 TO 23-05-2008 AT THE RESIDENTIAL AS WELL AS THE BUSINESS PREMISES OF SHRI LALCHAND AGARWAL, SHRI MANOJ AGARWAL AND SHRI SANOJ AGARWAL AT GUWAHATI. DURING THE COURSE OF SEARCH U/S. 132 OF THE INCOME TAX ACT, 1961 IT WAS FOUND THAT SOME TRANSACTIONS NOTED IN VARIOUS SEIZED DOCUMENTS ALLEGEDLY RELATED TO THE ASSESSEE AND THE HANDING OVER OF SUCH DOCUMENTS HAD TAKEN PLACE IN THE IMPUGNED ASSESSMENT YEAR, A NOTICE UNDER SECTION 142(1) OF THE INCOME TAX ACT, 1961 WAS ISSUED BY THE LD. ASSESSING OFFICER FOR FILING OF A RETURN OF INCOME. IN COMPLIANCE, THE ASSESSEE HAD FILED HIS RETURN OF INCOME DISCLOSING A TOTAL INCOME OF 12,51,720/- ON 25-10-2010. IN COURSE OF THE IMPUGNED ASSESSMENT PROCEEDINGS, THE ASSESSEE WAS ASKED TO FURNISH THE DETAILS OF THE CURRENT LIABILITIES OF RS.1,70,73,828/- AND SECURED LOAN FROM HIMMATSINGHA AUTO FINANCE OF RS.11,00,772/- SHOWN INTHE BALANCE SHEET OF 'S.M.ENTERPRISE'.SINCE, ACCORDING TO THE LD. ASSESSING OFFICER, THE ASSESSEE FAILED TO COMPLY WITH SUCH 5 SHRI SANWARMALAGARWAL ITA NO.207/GAU/2017 CO. NO.06/GAU/2017 REQUIREMENTSON THE ISSUES, HE HASTILYCONSTRUEDSUCH AMOUNTSOF RS.1,70,73,828/- AND RS.11,00,772/- TO BE THE UNDISCLOSED INVESTMENTSOF THE ASSESSEE. THE INSTANT APPEAL BY THE REVENUE AND THE CROSS OBJECTION FILED BY THE ASSESSEE ARISE OUT OF THE APPELLATE ORDER DATED 09-06-2017 PASSED BY THE LD. COMMISSIONER OF INCOME TAX (APPEALS)-1, GUWAHATI WHO REVERSED THE ACTION OF THE LD. ASSESSING OFFICER, THE ADDITIONS MADE IN RESPECT OF CURRENT LIABILITIES AND SECURED LOAN FROM HIMMATSINGHA AUTO FINANCE. IT IS AN ADMITTED FACT THAT IN PURSUANCE OF HIS TRADING TRANSACTIONS IN COAL UNDER THE NAME AND STYLE OF 'S.M. ENTERPRISE', THE ASSESSEE HAD DISCLOSED AMOUNTS IN THE SUM OF RS. 1,70,73,828/- UNDER THE HEAD 'CURRENT LIABILITIES' WHICH COMPRISED OF RS. 1,10,513.55 FROM HIND MARKETING CORPORATION, RS. 85,66,900/- ON ACCOUNT OF LOADING & UNLOADING EXPENSES ON PURCHASE, RS. 83,47,532/- ON ACCOUNT OF TRUCK FREIGHT PAYABLE AND TDS PAYABLE OF RS. 15,175/- IN THE FINAL ACCOUNTS WHICH WAS CONSTRUED AS UNDISCLOSED INVESTMENT BY THE LD. ASSESSING OFFICER. THE LEARNED COUNSEL STATED THAT IT IS AN ADMITTED FACT THAT THE BIFURCATION OF SUCH OUTSTANDING LIABILITIES WAS PROVIDED IN SCHEDULE F OF THE AUDITED ACCOUNTS FILED BEFORE THE LD. ASSESSING OFFICER. IT WAS ALSO EXPLAINED THAT THERE WAS A DEBTOR AMOUNT OF RS. 2,46,51,199/- WHICH IS OUTSTANDING ON THIS ACCOUNT AND IS THE SOURCE OF THIS LIABILITY. IT IS NOT IN DISPUTE THAT IN THE INSTANT CASE, THE LEDGER ACCOUNTS ON THESE ACCOUNTS WERE PROVIDED TO THE LD. ASSESSING OFFICER, HOWEVER, THE LD. ASSESSING OFFICER HAD BRUSH ASIDE SUCH LEDGER ACCOUNT ON THE GROUND THE ENTIRE BOOKS COULD NOT BE PRODUCED DURING THE COURSE OF ASSESSMENT PROCEEDINGS. THE PROVISIONS OF SECTION 69 OF THE INCOME TAX ACT, 1961 ARE ATTRACTED WHERE THE ASSESSING AUTHORITY FINDS THAT AN INVESTMENT IS UNRECORDED IN THE BOOKS AND THE TAXPAYER OFFERS NO EXPLANATION AS TO THE NATURE AND SOURCE THEREOF OR THE EXPLANATION OFFEREDISNOT SATISFACTORYIN HIS OPINIONTHENTHE VALUE OF SUCH INVESTMENT MAYBE DEEMED TO BE THE INCOME OF THE TAXPAYER FOR THE CORRESPONDING ASSESSMENT YEAR. IN OTHER WORDS, THE PROVISION IS ATTRACTED IN CASE OF AN INVESTMENT WHICH IS UNRECORDED INTHE BOOKSOF ACCOUNTS. 6 SHRI SANWARMALAGARWAL ITA NO.207/GAU/2017 CO. NO.06/GAU/2017 9. WE NOTE THAT IN THE INSTANT CASE, THE ITEM 'CURRENT LIABILITIES' APPEARS ON THE LIABILITY SIDE OF THE BALANCE SHEET. THE LD. ASSESSING OFFICER FAILED TO CONSIDER THAT THE LIABILITIES CANNOT PARTAKE THE CHARACTER OF AN ASSET AND AS A RESULT, THE PROVISIONS OF SECTION 69 OF THE ACT BECOME REDUNDANT IN THE CIRCUMSTANCES. THERE IS NO DOUBT OR DISPUTETHAT THE ADDITION OF RS.1,70,73,828/- UNDER THE HEADS 'CURRENT LIABILITIES' IS IN THE NATURE OF TRADING LIABILITIES ON ACCOUNT OF THE ACTIVITIES IN COAL. IT IS ALSO NOT IN DISPUTE THAT THE ASSESSEE HAD REGULAR BUSINESS TRANSACTIONS WITH THE LABOURS AND TRUCK OWNERS SINCE THEY WERE A PART AND PARCEL OF HIS ACTIVITY SINCE THE INCEPTION OF HIS BUSINESS ABOUT A DECADE. THE OUTSTANDING LIABILITYWAS NOT A NEW FEATURE DURING THE PREVIOUS YEAR RELEVANT TO THE ASSESSMENT YEAR UNDER DISPUTE AND HAD OCCURRED IN THE PAST AS WELL AS IN THE FUTURE AS WELL AND NO ADVERSE INFERENCE WAS DRAWN ON THIS ACCOUNT. IN ANY CASE, THE 'UNDISCLOSED INVESTMENT' AS CONCEIVED WITHIN THE SCOPE OF SECTION 69 OF THE ACT DOES NOT ARISE FROM A TRADING TRANSACTION. IN THE INSTANT CASE, THE ITEM 'CURRENT LIABILITIES' REPRESENTS LIABILITIES MAINLY ON ACCOUNT OF LABOUR AND TRANSIT ON ACCOUNT OF PURCHASE OF COAL. THE LD. ASSESSING OFFICER DID NOT APPLY HIS MIND TO THE EXPLANATION OF THE ASSESSEE AS REGARDS THE NATURE OF THE ITEMS SUBSUMED UNDER THE HEAD 'CURRENT LIABILITIES' WITH THAT OF 'SUNDRY DEBTORS' AND REACHED THE SPECIOUS CONCLUSION IN EXTREME HASTE SACRIFICING THE PARAMETERS WHICH HE OUGHT TO HAVE CONSIDERED AND COMMITTED AN UNREDEEMABLE DEFAULT. IN PURSUANCE OF HIS ACTIVITIES, THE ASSESSEE HAD INCURRED LIABILITIES ON ACCOUNT OF LABOUR AND TRUCK PAYMENTS ON ACCOUNT OF PURCHASE IN THE NATURE OF 'CURRENT LIABILITIES' ON PURELY BUSINESS CONSIDERATIONS AND MADE PAYMENTS SUBSEQUENTLY AND AT THE END OF THE 31ST DAY OF MARCH, 2009, SUCH AMOUNTS AS SHOWN IN THE FINAL ACCOUNTS REMAINED OUTSTANDING. THIS IS NOT A UNIQUE FEATURE OF THE BUSINESS OF THE ASSESSEE FOR THE INSTANT ASSESSMENT YEAR. HE HOWEVER NEVERTHELESS CONCEIVED THAT GENUINENESS OF THE 'CURRENT LIABILITIES' COULD NOT BE ESTABLISHED ON CONSIDERATIONS NOT GERMANE TO THE ISSUE IN DISPUTE. THIS IS A MISNOMER IN THE CIRCUMSTANCES OF THE CASE. FURTHER, THE AMOUNT OF RS. 1,70,73,828/- DISCLOSED ON ACCOUNT OF 'CURRENT LIABILITIES' BY THE ASSESSEE WERE ACTUALLY AN OUTSTANDING AMOUNT TO BE PAID ON 7 SHRI SANWARMALAGARWAL ITA NO.207/GAU/2017 CO. NO.06/GAU/2017 ACCOUNT OF LABOUR AND TRUCK OWNERS AND WERE PAID SUBSEQUENTLY. AS THE SAID SUM OF RS.1,70,73,828/- WAS A MERE OUTSTANDING AMOUNT AGAINST PURCHASE AND HENCE, PROVISIONS OF SECTION 69 OF THE ACT DO NOT COME INTO PLAY, INASMUCH AS THE PURCHASE RECORDED IN THE ACCOUNTS WERE NOT DISPUTED. THE AMOUNTS OUTSTANDING WERE SHOWN IN THE BALANCE SHEET AS 'CURRENT LIABILITIES' AS ON 31-03-2009. THEREFORE, THE SAID AMOUNT DID NOT FORM PART OF THE CAPITAL OF THE ASSESSEE. WHERE THE TRIBUNAL HADRECORDED A CATEGORICAL FINDING BASED ONAPPRECIATION OF MATERIALS AND EVIDENCE ON RECORD THAT THE AMOUNTS APPEARING AS DEPOSITS IN THE BOOKS REPRESENTED PURCHASES MADE BY THE ASSESSEE ON CREDIT AND, THEREFORE, THE PROVISIONS OF SECTION 68 COULD NOT BE ATTRACTED IN THE INSTANT CASE [C.I.T. -VS- PANCHAM DASS JAIN (2006) 156 TAXMAN 507 (ALL)]. FURTHER, WHERE ASSESSING OFFICER HAD DRAWN AN ADVERSE CONCLUSION ONLY ON ACCOUNT OF NON- VERIFIABILITYOF CURRENT LIABILITIES BUT THERE BEING NO DISPUTE AS REGARDS PURCHASES, AND TRADING RESULTS HAVING BEEN ACCEPTED, ADDITION MADE UNDER SECTION 68 WAS NOT SUSTAINABLE [LT.O. -VS- ZAZSONS EXPORTS LTD. (2015) 153 ITD 1 (LUCK) (TM)]. 10. WE NOTE THAT THE PROVISIONS OF SECTION 69 OF THE ACT HAVE NO APPLICATION TO THE CIRCUMSTANCES OF THE INSTANT CASE AS THE CONDITIONS PRECEDENT FOR ASSUMING JURISDICTION THERE UNDER DO NOT EXIST. FURTHER, WHEN THE LEDGER ACCOUNT OF THE LOADING & UNLOADING EXPENSES ON PURCHASE AND TRUCK FREIGHT ON PURCHASE WERE PRODUCED WHICH SHOWED THAT THE ENTIRE SERIES OF TRANSACTIONS WERE GENUINE SINCE WITHOUT THESE EXPENSES THE PURCHASES COULD NOT HAVE MATERIALIZED AND THE SUBSEQUENT SALES COULD NOT HAVE TAKEN PLACE. HOWEVER, THE LD. ASSESSING OFFICER DID NOT MAKE ANY ENQUIRY IN RESPECT OF THE INFORMATION PROVIDED TO HIM AND ACCORDINGLY, HIS FINDING IN THIS RESPECT IS TOTALLY WITHOUT ANY BASIS. THE ONUS WAS ON AO TO DISPROVE THE PATENTLY STATED POSITION OF THE ASSESSEE AND HE WANTONLY ABDICATED HIS RESPONSIBILITY TO DO SO. THE LD. ASSESSING OFFICER IS HIMSELF EMPOWERED WITH THE ARSENAL OF POWERS TO MAKE ENQUIRIES BY ISSUING SUMMONS U/S. 131 OF THE ACT AND/OR NOTICE U/S. 133(6) OF THE ACT TO SUCH SUPPLIERS AND/OR MAKE ENQUIRY THROUGH HIS INSPECTOR. IT IS ALSO AN UNDISPUTED FACT THAT THE ASSESSEE 8 SHRI SANWARMALAGARWAL ITA NO.207/GAU/2017 CO. NO.06/GAU/2017 HAD DULY FILED THE LEDGER ACCOUNTS ON THIS ACCOUNT. HOWEVER, THE LD. ASSESSING OFFICER CHOSE NOT TO PURSUE THE ISSUE FURTHER TO ITS LOGICAL CONCLUSION. IT IS SETTLED THAT THE ASSESSEE WILL BE DEEMED TO HAVE DISCHARGED HIS BURDEN WHEN ALL INFORMATION WERE SUPPLIED TO THE ASSESSING AUTHORITY WHO HAD NOT PURSUED THE MATTER [C.I.T. -VS- ORISSA CORPORATION LTD. (1986) 159 ITR 78 (SC)]. HOWEVER, THE LD. ASSESSING OFFICER CHOSE TO IGNORE HIS STATUTORY RESPONSIBILITY ON THIS BEHALF. THEREFORE, WHEN THE LD. ASSESSING OFFICER HAD NOT POINTED OUT ANY FLAW IN THE TRANSACTIONS MADE DURING THE RELEVANT PREVIOUS YEAR, THEN THERE WAS NO SCOPE AS PER IMMUTABLE ACCOUNTANCY PRINCIPLE TO DISBELIEVE THE CLOSING BALANCE ARRIVED AT. IN THE CIRCUMSTANCES, THE CONCLUSION REACHED BY THE LD. ASSESSING OFFICER WAS BASED ON SUBJECTIVE PERCEPTIONS OF CONJECTURE AND SURMISE AND THE OBSERVATIONS MADE WERE NOT IN CONSONANCE WITH THE FACTS OF THE CASE AND THUS, BY RESORTING TO SUCH ADDITION WITHOUT DISPUTING THE GENUINITY OF THE TRANSACTIONS, HE ACTED PREJUDICIALLY IN TERMS CONTRARY TO LAW. IN THE INSTANT CASE, THEREFORE THE IMPUGNED ADDITION OF RS. 1,70,73,828/- MADE UNDER THE HEAD 'CURRENT LIABILITIES' BY THE LD. ASSESSING OFFICER HAS BEEN RIGHTLY DELETED BY LD CIT(A). AS A RESULT, THE ADDITION MADE IN THE PRESENT CONTEXT IN THE SUM OF RS. 1,70,73,828/- HAS NO LEGS TO STAND UPON. THAT BEING SO, WE DECLINE TO INTERFERE WITH THE ORDER OF ID. C.I T.(A) DELETING THE AFORESAID ADDITION. HIS ORDER ON THIS ADDITION IS, THEREFORE, UPHELD AND THE GROUNDS OF APPEALOF THE REVENUE ARE DISMISSED. 11. WE NOTE THAT ASSESSEE HAD RECEIVED SECURED LOANS FROM HIMMATSINGHA AUTO FINANCE WHEREIN THE OUTSTANDING BALANCE IN THE SUM OF RS.11,00,772/- WAS DISCLOSED IN ITS BALANCE SHEET AS ON 31-03-2009. IT WAS THE CASE OF THE LD. ASSESSING OFFICER THAT SINCE THE ASSESSEE HAS ALLEGEDLY FAILED TO SUBMIT THE STATEMENTS IN RESPECT OF SUCH LENDER, THE OUTSTANDING BALANCES DISCLOSED IN THE BALANCE SHEET AS ON 31-03-2009 WERE ADDED AS UNDISCLOSED INVESTMENT. THERE IS NO DOUBT OR DISPUTE THAT THE CREDITOR IN THIS CASE IS A CREDIT INSTITUTION AND THE GENUINENESS OF THE TRANSACTIONS UNDERTAKEN WITH THEM THROUGH THE BANKING, CHANNEL IS BEYOND ANY SHADOW OF DOUBT. HOWEVER, THE LD. ASSESSING OFFICER DISBELIEVED SUCH GENUINE TRANSACTION ON THE GROUND THAT THE ASSESSEE FAILED TO 9 SHRI SANWARMALAGARWAL ITA NO.207/GAU/2017 CO. NO.06/GAU/2017 PROVE THE GENUINENESS OF TRANSACTIONS. THE STATUTE HAD EMPOWERED THE ASSESSING AUTHORITY WITH DUAL FUNCTIONS. FIRSTLY, HE IS THE INVESTIGATOR AND SECONDLY, HE IS THE AUTHORITYFOR FRAMING AN ASSESSMENT ORDER. THUS, HE WAS AMPLYEMPOWERED TO MAKE AN ENQUIRY IN RESPECT OF THE SECURED LOAN FROM THE CREDIT INSTITUTION ITSELF SINCE ITS ADDRESS IS AVAILABLE. THE LD. ASSESSING OFFICER SIMPLY ABDICATED HIS POWERS TO MAKE ENQUIRIES. THERE IS NOTHING TO DISBELIEVE ABOUT A SECURED LOAN SOLELY ON THE JUSTIFICATION THAT THE RELEVANT STATEMENTS OF THE BANK ACCOUNTS WERE NOT PROVIDED BY THE ASSESSEE. THE CONCLUSION OF THE LD. ASSESSING OFFICER IS THOROUGHLY BIASED SINCE HE NEVER WANTED TO VERIFY THE TRANSACTIONS WHICH HE EASILY COULD HAVE DONE. THEREFORE, THE ADDITION IN THE SUM OF RS. 11,00,772/- MADE IN THIS RESPECT DOES NOT STAND THE TEST OF JUDICIAL SCRUTINY. THE CIRCUMSTANCES OF THE INSTANT CASE OF THE ASSESSEE DO NOT COME WITHIN THE SCOPE OF SECTION 69 OF THE ACT SINCE THE LOAN WAS RECEIVED FROM A CREDIT INSTITUTION AND THUS ESTABLISHING THE IDENTITY, CREDITWORTHINESS AND GENUINENESS OF THE TRANSACTIONS WITH SUCH BANK IS NOT THE INTENTION OF THE LEGISLATURE. THUS, THE ARBITRARY AND CAPRICIOUS ASSUMPTION OF THE LD. ASSESSING OFFICER IN THE INSTANT CASE DOES NOT HAVE ANY LEGS TO STAND UPON IN THE TEETH OF THE ADMISSION THAT HE FAILED TO MAKE ANY ENQUIRY IN RESPECT OF THE GENUINENESS OF THE SECURED LOANS. IN THE INSTANT CASE, THE LD. ASSESSING OFFICER COULD NOT BRING ON RECORD ANY CONCLUSIVE EVIDENCE, EXCEPT HAZARDING THE OBSERVATION THAT THE ASSESSEE WAS UNABLE TO PROVIDE THE STATEMENT OF THE SECURED LOAN TRANSACTIONS TO BRING IN THE CHARGE OF UNDISCLOSED INVESTMENT. IN THE PRESENT CONTEXT, THE ASSESSEE HAS NAMED THE CREDIT INSTITUTIONS WHEREFROM HE RECEIVED SUCH LOANS TO STAND TESTIMONY TO THEIR IRREFUTABLE AND IMPECCABLE CHARACTER. IN THE CIRCUMSTANCES, THE CONCLUSION REACHED BY THE LD. ASSESSING OFFICER WAS BASED ON SUBJECTIVE PERCEPTIONS OF SURMISE AND CONJECTURE AND THE FINDINGS RENDERED THEREIN AND WERE NOT IN CONSONANCE WITH THE FACTS AND THE LD. COMMISSIONER (APPEALS) ACTED APTLY BY CONSIDERING APPROPRIATE FACTORS ABSOLUTELY GERMANE TO THE ISSUE IN APPLYING THE SETTLED PARAMETER BY DELETING THE IMPUGNED ADDITION. THAT BEING SO, WE DECLINE TO 10 SHRI SANWARMALAGARWAL ITA NO.207/GAU/2017 CO. NO.06/GAU/2017 INTERFERE THE ORDER PASSED BY THE LEARNED CIT(A), HENCE, HIS ORDER ON THIS ISSUE IS HEREBYUPHELDAND THE GROUNDSOF APPEALRAISEDBYTHE REVENUE ISDISMISSED. 12. NOW WE SHALL TAKE CROSS OBJECTION FILED BY THE ASSESSEE WHICH RELATES TO ADDITIONBASED ONESTIMATINGTHE NET PROFIT@ 1% TOTHE TUNE OF RS.8,41,663/- 13. WE HAVE HEARD BOTH THE PARTIES AND PERUSED THE MATERIAL AVAILABLE ON RECORD, WE NOTE THAT LD CIT(A) HAS PASSED THE ORDER ESTIMATING THE NET PROFIT @ 1% TOTHE TUNE OF RS.8,41,663/- THE APPELLANT HAD ADMITTED A TURNOVER OF RS.21,71,66,250/- ON WHICH HE ADMITTED NET PROFIT OF RS. 13,30,000. THE NET PROFIT RATE OF THE APPELLANT WORKS OUT TO 0.61%. THE AO OPINED THAT THE NET PROFIT RATE ADMITTED BY THE APPELLANT WAS LOW AND THEREFORE HE ENHANCED THE NET PROFIT RATE OF THE APPELLANT TO 1.00%. THUS, THE NET PROFIT OF THE APPELLANT WAS INCREASED TO RS.21,71,663 AND THE DIFFERENCE OF RS.8,41,663 WAS ADDED BACK BY THE AO TOTHE INCOME OFTHE APPELLANT. BEFORE US, THE LEARNED DR FOR THE REVENUE HAS PRIMARILY REITERATED THE STAND TAKEN BY THE AO WHICH WE HAVE ALREADYNOTED IN OUR EARLIER PARA AND IS NOT BEING REPEATED FOR THE SAKE OF BREVITY. ON THE OTHER HAND, THE LEARNED COUNSEL FOR THE ASSESSEE REITERATED THE SUBMISSIONS MADE BEFORE THE AUTHORITIESBELOW. 14. WE NOTE THAT THE SAID ISSUE IS SQUARELY COVERED BY THE ASSESSEES OWN CASE IN ITA NO. 267/GAU/2017 FOR AY 2008-09, VIDE ORDER DATED 31.10.2018, WHEREIN THIS TRIBUNAL HAS DELETED THE ADDITION BASED ON THE SIMILAR FACTS AND CIRCUMSTANCESBYOBSERVINGAS UNDER: - 6. BRIEF FACTS OF THIS ISSUE IS THAT THE ASSESSEE ADMITTEDLY DID NOT PRODUCE BOOKS OF ACCOUNTS BEFORE THE ID. AO TO JUSTIFY HIS BOOK RESULTS. THE TOTAL TURNOVER DISCLOSED BY THE ASSESSEE IS RS.13,22,13,676/-. THE ADMITTED UNDISCLOSED TURNOVER AS PER THE SEIZED DOCUMENTS IS RS. 74,83,269/-. HENCE THE TOTAL TURNOVER WORKS TO RS.13,96,96,945/-. THEASSESSEEHAS DISCLOSED NET PROFIT OF RS.9,91,605/- IN RESPECT OF HIS PROPRIETARY CONCERN M/S S.M. ENTERPRISES AT 0.75% OF TURNOVER. THE ID. AO RESORTED TO ESTIMATE THE NET PROFIT AT 1% OF TOTAL TURNOVER AND ARRIVED AT A REVISED NET PROFIT OF RS.13,96,969/-. FROM THE SAID FIGURE, HE REDUCED THE NET PROFIT ALREADY DISCLOSED BY THE ASSESSEE IN THE SUM OF RS. 9,91,605/- AND MADE AN ADDITION OF RS.4,05,364/- BEING THE REMAINING SUM, AS UNDISCLOSED INCOME OF THE ASSESSEE. THIS ACTION OF THE ID. AO WAS UPHELD BY THE LD. CIT(A). AGGRIEVED, THE ASSESSEEIS IN APPEAL BEFOREUS. 11 SHRI SANWARMALAGARWAL ITA NO.207/GAU/2017 CO. NO.06/GAU/2017 7. WE HAVE HEARD THE RIVAL SUBMISSIONS. WE FIND THAT SIMILAR ISSUE OF ESTIMATION OF NET PROFIT IN THE GROUP CASE OF ASSESSEE IN THE CASE OF M/S FUEL SALES CORPORATION IN I.T.A. NOS. 46 TO 50/GAU/2012 DATED 24.05.2017 WAS THE SUBJECT MATTER OF ADJUDICATION BY THIS TRIBUNAL, WHEREIN, FOR PERSONS ENGAGED IN THE SIMILAR LINE OF BUSINESS UNDER SIMILAR CIRCUMSTANCES, THIS TRIBUNAL HAD ESTIMATED THE NET PROFIT AT 0.80%. RESPECTFULLY FOLLOWING THE SAID DECISION, WE DIRECT THE ID. AO TO DETERMINE THE NET PROFIT OF THE ASSESSEE FROM M/S S.M .ENTERPRISES AT 0.80% AND REWORK THE TAXABLE NET PROFIT ACCORDINGLY. HENCE THE GROUND NOS. 3 AND 4 RAISED BYTHEASSESSEEAREPARTLYALLOWED. 15. THEREFORE, RESPECTFULLY FOLLOWING THE JUDGMENT OF THE COORDINATE BENCH IN THE ASSESSEE`S OWN CASE (SUPRA), WE DIRECT THE ID. AO TO DETERMINE THE NET PROFIT OF THE ASSESSEE FROM M/S S.M .ENTERPRISES AT 0.80% AND REWORK THE TAXABLE NET PROFITACCORDINGLY. 16. IN THE RESULT, THE APPEAL OF THE REVENUE IS DISMISSED AND CROSS OBJECTION FILEDBYTHE ASSESSEE IS PARTLYALLOWED. ORDER PRONOUNCED INTHE OPEN COURT ON12-07-2019. SD/- SD/- ( . . / S.S. GODARA ) ( . . / DR.A.L. SAINI ) ( ' / JUDICIAL MEMBER) ( ' / ACCOUNTANT MEMBER) ' , ' ' / GUWAHATI, DATED:12-07-2019 ' ' , . ' / SUDIP SARKAR, SR.PS ' \ / COPYOF THE ORDER FORWARDED TO : 1. \ ' / THEAPPELLANT 2. / THEASSESSEE. 3. ] ( ) / THECIT(A) 4. ] / CIT 5. ' ' ' , \ ' \ ' , /DR,ITAT,MUMBAI 6. ' [ / GUARD FILE. / BY ORDER, ' //TRUECOPY// . ' / SR.PRIVATESECRETARY(ON TOUR) \ ' \ ' , ' / ITAT,GUWAHATI