Appeal Details
Counselvise Citation
[2018] 124 COUNSELVISE.COM (IT) 9713 (ITAT-MUMBAI)
Assessee PAN
Bench
Appeal Number
CRN Number
Duration Of Justice
2 year(s) 5 month(s) 12 day(s)
Appellant
Respondent
Appeal Type
Income Tax Appeal
Pronouncement Date
25-09-2018
Appeal Filed By
Assessee
Order Result
Dismissed
Bench Allotted
Not Allotted
Assessment Year
2009-2010
Appeal Filed On
12-04-2016
Judgement Text
, , , IN THE INCOME TAX APPELLATE TRIBUNAL MUMBAI BENCHES A, MUMBAI , . , , BEFORE SHRI JOGINDER SINGH, JUDICIAL MEMBER, AND SHRI G. MANJUNATHA, ACCOUNTANT MEMBER ITA NO.3236/MUM/2016 ASSESSMENT YEAR: 2009-10 INCOME TAX OFFICER 6(3)(2), R NO.503, 5 TH FLOOR, AAYAKAR BHAVAN, M.K.ROAD, MUMBAI 400 020 / VS. JAYDEEP PROFILES P. LTD., 142/7 LAKDI BUNDER ROAD, DARUKHANA, REAY ROAD, MUMBAI 400 086 ( / REVENUE) ( ! ' /ASSESSEE) P.A. NO. AAACJ8998B ITA NO.2698/MUM/2016 ASSESSMENT YEAR: 2009-10 JAYDEEP PROFILES P. LTD., 142/7 LAKDI BUNDER ROAD, DARUKHANA, REAY ROAD, MUMBAI 400 086 / VS. INCOME TAX OFFICER 6(3)(2), R NO.503, 5 TH FLOOR, AAYAKAR BHAVAN, M.K.ROAD, MUMBAI 400 020 ( ! ' /ASSESSEE) ( / REVENUE) P.A. NO. AAACJ8998B ITA NO.3236/MUM/2016 & 2698/MUM/2016 JAYDEEP PROFILES P.LTD 2 ! ' / ASSESSEE BY SHRI V D PARMAR / REVENUE BY SHRI SATISHCHANDRA RAJORE # $ % ' & / DATE OF HEARING : 25/09/2018 % ' & / DATE OF PRONOUNCEMENT 25/09/2018 / O R D E R PER JOGINDER SINGH (JUDICIAL MEMBER) THE ASSESSEE AS WELL AS THE REVENUE ARE AGGRIEVED B Y THE IMPUGNED ORDER DATED 25/02/2016 OF THE LD. COMMISSIONER OF INCOME TAX (APPEAL). FIRST WE SHAL L TAKE UP THE APPEAL OF THE ASSESSEE (ITA NO.2698/MUM/2016 ), WHEREIN GROUND NOS. 1 TO 3 PERTAIN TO UPHOLDING RE- OPENING OF THE CASE UNDER SECTION. 147 /148 OF THE ACT ON G ENERAL AND VAGUE INFORMATION AND WITHOUT APPRECIATING THE FACTUAL MATRIX AND THE OBJECTIONS RAISED BY THE ASSESSEE. 2. DURING HEARING, THE LEARNED COUNSEL FOR THE ASSE SSEE SHRI V D PARMAR, ADVANCED ARGUMENTS WHICH IS IDENTI CAL TO THE GROUND RAISED BY CONTENDING THAT RE-OPENING OF ASSESSMENT WAS DONE BY THE ASSESSING OFFICER ON THE BASIS OF GENERAL, VAGUE AND UNTESTED INFORMATION AND FURT HER THE ITA NO.3236/MUM/2016 & 2698/MUM/2016 JAYDEEP PROFILES P.LTD 3 OBJECTIONS RAISED BY THE ASSESSEE FOR RE-OPENING TH E CASE UNDER SECTION 147 WERE IGNORED. 3. ON THE OTHER HAND, THE LEARNED DR SHRI SATISHCHANDRA RAJORE DEFENDED THE REOPENING OF ASSESSMENT BY SUBMITTING THAT THE ASSESSEE MADE PURCHASES FROM HAWALA PARTIES AND THE NOTICES ISSUE D UNDER SECTION 133(6) OF THE ACT WERE NEVER SERVED U PON THEM AS THE ADDRESSES WERE FICTITIOUS AND THE PARTI ES NEVER APPEARED BEFORE THE LEARNED ASSESSING OFFICER. AT THIS STAGE, THE BENCH ASKED THE ASSESSEE WHETHER THE CON CERNED PARTIES CAN BE PRODUCED BEFORE THE LEARNED ASSESSIN G OFFICER, THE LEARNED COUNSEL FOR THE ASSESSEE CONTE NDED THAT HE IS UNABLE TO PRODUCE THE PARTIES. AT THIS STAGE , THE LEARNED DR ALSO CONTENDED THAT NO CORROBORATIVE EVI DENCE RELATING TO TRANSACTION OF GOODS AND GENUINENESS OF PURCHASES WERE EVER FILED BY THE ASSESSEE. 4. WE HAVE CONSIDERED THE RIVAL SUBMISSIONS AND PERUSED THE MATERIAL AVAILABLE ON RECORD. SO FAR AS , RE- OPENING OF ASSESSMENT U/S 147/148 OF THE ACT ON THE PLEA THAT THE LD. ASSESSING OFFICER IGNORED THE FACT THA T THERE ITA NO.3236/MUM/2016 & 2698/MUM/2016 JAYDEEP PROFILES P.LTD 4 WAS NO REASON TO BELIEVE THAT INCOME HAS ESCAPED ASSESSMENT AS THERE WAS NO TANGIBLE MATERIAL WITH T HE ASSESSING OFFICER AND INDEPENDENT APPLICATION OF MI ND IS CONCERNED, WE FIND THAT THERE WAS INFORMATION WITH THE ASSESSING OFFICER THAT ASSESSEE MADE BOGUS PURCHASE S FROM THE HAWALA PARTIES AND THE NOTICES SENT U/S.13 3(6) WERE RETURNED BACK UNSERVED BY THE POSTAL DEPARTMEN T, IN THIS BACKGROUND, WE SHALL ANALYZE WHETHER THE LD. ASSESSING OFFICER WAS RIGHT IN RE-OPENING THE ASSE SSMENT U/S.147 OF THE ACT. 4.1. IN THE LIGHT OF THE FOREGOING DISCUSSIONS, IT IS OU R BOUNDED DUTY TO EXAMINE THE VALIDITY OF REOPENING U /S 147 R.W.S 148 OF THE ACT, THEREFORE, BEFORE ADVERTING FURTHER WE ARE REPRODUCING HEREUNDER THE RELEVANT PROVISION OF SECTION 147 OF THE ACT FOR READY REFERENCE AND ANALYSIS:- . IF THE ASSESSING OFFICER HAS REASON TO BELIEVE THA T ANY INCOME CHARGEABLE TO TAX HAS ESCAPED ASSESSMENT FOR ANY AS SESSMENT YEAR, HE MAY, SUBJECT TO THE PROVISIONS OF SECTIONS 148 T O 153, ASSESS OR REASSESS SUCH INCOME AND ALSO ANY OTHER INCOME CHAR GEABLE TO TAX WHICH HAS ESCAPED ASSESSMENT AND WHICH COMES TO HIS NOTICE SUBSEQUENTLY IN THE COURSE OF THE PROCEEDINGS UNDER THIS SECTION, OR RECOMPUTE THE LOSS OR THE DEPRECIATION ALLOWANCE OR ANY OTHER ALLOWANCE, AS THE CASE MAY BE, FOR THE ASSESSMENT Y EAR CONCERNED (HEREAFTER IN THIS SECTION AND IN SECTIONS 148 TO 1 53 REFERRED TO AS THE RELEVANT ASSESSMENT YEAR) : ITA NO.3236/MUM/2016 & 2698/MUM/2016 JAYDEEP PROFILES P.LTD 5 PROVIDED THAT WHERE AN ASSESSMENT UNDER SUB-SECTION (3) OF SECTION 143 OR THIS SECTION HAS BEEN MADE FOR TH E RELEVANT ASSESSMENT YEAR, NO ACTION SHALL BE TAKEN UNDER THI S SECTION AFTER THE EXPIRY OF FOUR YEARS FROM THE END OF THE RELEVA NT ASSESSMENT YEAR, UNLESS ANY INCOME CHARGEABLE TO TAX HAS ESCAP ED ASSESSMENT FOR SUCH ASSESSMENT YEAR BY REASON OF THE FAILURE O N THE PART OF THE ASSESSEE TO MAKE A RETURN UNDER SECTION 139 OR IN R ESPONSE TO A NOTICE ISSUED UNDER SUB-SECTION (1) OF SECTION 142 OR SECTION 148 OR TO DISCLOSE FULLY AND TRULY ALL MATERIAL FACTS NECE SSARY FOR HIS ASSESSMENT, FOR THAT ASSESSMENT YEAR: PROVIDED FURTHER THAT NOTHING CONTAINED IN THE FIRST PROVISO SHALL APPLY IN A CASE WHERE ANY INCOME IN RELATION TO ANY ASSET (INCLUDING FINANCIAL INTEREST IN ANY ENTITY) LOCATE D OUTSIDE INDIA, CHARGEABLE TO TAX, HAS ESCAPED ASSESSMENT FOR ANY A SSESSMENT YEAR: PROVIDED ALSO THAT THE ASSESSING OFFICER MAY ASSESS OR REASSESS SUCH INCOME, OTHER THAN THE INCOME INVOLVING MATTER S WHICH ARE THE SUBJECT MATTERS OF ANY APPEAL, REFERENCE OR REV ISION, WHICH IS CHARGEABLE TO TAX AND HAS ESCAPED ASSESSMENT. EXPLANATION 1.PRODUCTION BEFORE THE ASSESSING OFFI CER OF ACCOUNT BOOKS OR OTHER EVIDENCE FROM WHICH MATERIAL EVIDENC E COULD WITH DUE DILIGENCE HAVE BEEN DISCOVERED BY THE ASSESSING OFFICER WILL NOT NECESSARILY AMOUNT TO DISCLOSURE WITHIN THE MEANING OF THE FOREGOING PROVISO. EXPLANATION 2.FOR THE PURPOSES OF THIS SECTION, TH E FOLLOWING SHALL ALSO BE DEEMED TO BE CASES WHERE INCOME CHARG EABLE TO TAX HAS ESCAPED ASSESSMENT, NAMELY : (A) WHERE NO RETURN OF INCOME HAS BEEN FURNISHED BY THE ASSESSEE ALTHOUGH HIS TOTAL INCOME OR THE TOTAL INCOME OF AN Y OTHER PERSON IN RESPECT OF WHICH HE IS ASSESSABLE UNDER THIS ACT DURING THE PREVIOUS YEAR EXCEEDED THE MAXIMUM AMOUNT WHICH IS NOT CHARGEABLE TO INCOME-TAX ; (B) WHERE A RETURN OF INCOME HAS BEEN FURNISHED BY THE ASSESSEE BUT NO ASSESSMENT HAS BEEN MADE AND IT IS NOTICED BY THE A SSESSING OFFICER THAT THE ASSESSEE HAS UNDERSTATED THE INCOME OR HAS CLAIMED EXCESSIVE LOSS, DEDUCTION, ALLOWANCE OR RELIEF IN T HE RETURN ; (BA) WHERE THE ASSESSEE HAS FAILED TO FURNISH A REP ORT IN RESPECT OF ANY INTERNATIONAL TRANSACTION WHICH HE WAS SO REQUIRED UNDER SECTION 92E; (C) WHERE AN ASSESSMENT HAS BEEN MADE, BUT (I) INCOME CHARGEABLE TO TAX HAS BEEN UNDERASSESS ED ; OR (II) SUCH INCOME HAS BEEN ASSESSED AT TOO LOW A RA TE ; OR ITA NO.3236/MUM/2016 & 2698/MUM/2016 JAYDEEP PROFILES P.LTD 6 (III) SUCH INCOME HAS BEEN MADE THE SUBJECT OF EXCE SSIVE RELIEF UNDER THIS ACT ; OR (IV) EXCESSIVE LOSS OR DEPRECIATION ALLOWANCE OR AN Y OTHER ALLOWANCE UNDER THIS ACT HAS BEEN COMPUTED; (D) WHERE A PERSON IS FOUND TO HAVE ANY ASSET (INC LUDING FINANCIAL INTEREST IN ANY ENTITY) LOCATED OUTSIDE INDIA. EXPLANATION 3.FOR THE PURPOSE OF ASSESSMENT OR REA SSESSMENT UNDER THIS SECTION, THE ASSESSING OFFICER MAY ASSES S OR REASSESS THE INCOME IN RESPECT OF ANY ISSUE, WHICH HAS ESCAPED A SSESSMENT, AND SUCH ISSUE COMES TO HIS NOTICE SUBSEQUENTLY IN THE COURSE OF THE PROCEEDINGS UNDER THIS SECTION, NOTWITHSTANDING THA T THE REASONS FOR SUCH ISSUE HAVE NOT BEEN INCLUDED IN THE REASON S RECORDED UNDER SUB-SECTION (2) OF SECTION 148. EXPLANATION 4.FOR THE REMOVAL OF DOUBTS, IT IS HER EBY CLARIFIED THAT THE PROVISIONS OF THIS SECTION, AS AMENDED BY THE FINANCE ACT, 2012, SHALL ALSO BE APPLICABLE FOR ANY ASSESSMENT Y EAR BEGINNING ON OR BEFORE THE 1ST DAY OF APRIL, 2012. 4.2. IF THE AFORESAID PROVISION OF THE ACT IS ANAL YZED, WE FIND THAT AFTER INSERTION OF EXPLANATION -3 TO S ECTION 147 OF THE ACT BY THE FINANCE (NO.2) ACT OF 2009 WITH E FFECT FROM 01/04/1989 SECTION 147 HAS AN EFFECT THAT ASSESSING OFFICER HAS TO ASSESS OR REASSESS INCOME (SUCH INCO ME) WHICH HAS ESCAPED ASSESSMENT AND WHICH WAS BASIS OF FORMATION OF BELIEF AND, IF HE DOES SO, HE CAN ALSO ASSESS OR REASSESS ANY OTHER INCOME WHICH HAS ESCAPED ASSESSM ENT AND WHICH CAME TO THE NOTICE DURING THE COURSE OF PROCEEDINGS. IDENTICAL RATIO WAS LAID DOWN BY HON BLE JURISDICTIONAL HIGH COURT IN CIT VS JET AIRWAYS IND IA PVT. LTD. (2010) 195 TAXMAN 117 (MUM.) AND THE FULL BENC H ITA NO.3236/MUM/2016 & 2698/MUM/2016 JAYDEEP PROFILES P.LTD 7 DECISION FROM HONBLE KERALA HIGH COURT IN CIT VS B EST WOOD INDUSTRIES AND SAW MILLS (2011) 11 TAXMAN.COM 278 (KERALA)(FB). A PLAIN READING OF EXPLANATION-3 TO SECTION 147 CLEARLY DEPICTS THAT THE ASSESSING OFFICER HAS POWER TO MAKE ADDITION, WHERE HE ARRIVED TO A CONCLUSION THA T INCOME HAS ESCAPED ASSESSMENT WHICH CAME TO HIS NOT ICE DURING THE COURSE OF PROCEEDINGS OF REASSESSMENT U/ S 148. OUR VIEW IS FORTIFIED BY THE DECISION IN MAJINDER S INGH KANG VS CIT (2012) 25 TAXMAN.COM 124/344 ITR 358 (P & H) AND JAY BHARAT MARUTI LTD. VS CIT (2010) TAX LR 476 (DE L.) AND V. LAKSHMI REDDY VS ITO (2011) 196 TAXMAN 78 (MAD.) . THE PROVISION OF THE ACT IS VERY MUCH CLEAR AS WITH EFFECT FROM 01/04/1989, THE ASSESSING OFFICER HAS WIDE POW ERS TO INITIATE PROCEEDINGS OF REOPENING. THE HONBLE KER ALA HIGH COURT IN CIT VS ABDUL KHADAR AHMAD (2006) 156 TAXMA N 206 (KERALA) EVEN WENT TO THE EXTENT SO LONG AS THE AO HAS INDEPENDENTLY APPLIED HIS MIND TO ALL THE RELEVANT ASPECT AND HAS ARRIVED TO A BELIEF THE REOPENING CANNOT BE SAID TO BE INVALID. 4.3. WE ARE AWARE THAT MERE CHANGE OF OPINION CANNOT FORM THE BASIS OF REOPENING WHEN THE NECESSA RY ITA NO.3236/MUM/2016 & 2698/MUM/2016 JAYDEEP PROFILES P.LTD 8 FACTS WERE FULLY AND TRULY DISCLOSED BY THE ASSESSE E IN THAT SITUATION, THE ITO IS NOT ENTITLED TO REOPEN THE AS SESSMENT MERELY ON THE BASIS OF CHANGE OF OPINION. HOWEVER, POWERS UNDER AMENDED PROVISION ARE WIDE ENOUGH WHERE THERE IS A REASONABLE BELIEF WITH THE ASSESSING OFFICER, THAT INCOME HAS ESCAPED ASSESSMENT, BECAUSE THE POWERS WITH EFF ECT FROM 01/04/1989 ARE CONTEXTUALLY DIFFERENT AND THE CUMULATIVE CONDITIONS SPELT OUT IN CLAUSES (A) AND (B) OF SECTION 147, PRIOR TO ITS AMENDMENT ARE NOT PRESENT IN THE AMENDED PROVISION. THE ONLY CONDITION FOR ACTION I S THAT THE ASSESSING OFFICER SHOULD HAVE REASON TO BELIEV E THAT INCOME CHARGEABLE TO TAX HAS ESCAPED ASSESSMENT. S UCH BELIEF CAN BE REACHED IN ANY MANNER AND IS NOT QUAL IFIED BY A PRE-CONDITION OF FAITH AND TRUE DISCLOSURE OF MAT ERIAL FACTS BY AN ASSESSEE AS CONTEMPLATED IN PRE-AMENDED SECTI ON 147. VIEWED IN THAT ANGLE, POWER TO REOPEN ASSESSM ENT IS MUCH WIDER UNDER THE AMENDED PROVISION. OUR VIEW I S FORTIFIED BY THE DECISION FROM HONBLE DELHI HIGH C OURT IN BAWA ABHAI SINGH VS DCIT (2001) 117 TAXMAN 12 AND RAKESH AGARWAL VS ACIT (1996) 87 TAXMAN 306 (DEL.). THE HONBLE APEX COURT IN CIT VS SUN ENGINEERING WORKS PVT. ITA NO.3236/MUM/2016 & 2698/MUM/2016 JAYDEEP PROFILES P.LTD 9 LTD. 198 ITR 297 (SC) CLEARLY HELD THAT PROCEEDINGS U/S 147 ARE FOR THE BENEFIT FOR THE REVENUE, WHICH ARE AIMED AT GATHERING THE ESCAPED INCOME. AT THE SAME TIME, WE ARE AWARE THAT POWERS U/S 147 AND 148 OF THE ACT ARE NO T UNBRIDLED ONE AS IT IS HEDGED WITH SEVERAL SAFEGUAR DS CONCEIVED IN THE INTEREST OF ELIMINATING ROOM FOR A BUSE OF THIS POWER BY THE AO. HOWEVER, THE MATERIAL AVAILA BLE ON RECORD, CLEARLY INDICATES THAT INCOME CHARGEABLE TO TAX HAD ESCAPED ASSESSMENT, THEREFORE, THE LD. ASSESSING OF FICER WAS WITHIN HIS JURISDICTION TO REOPEN THE ASSESSMEN T. THE HONBLE APEX COURT IN ESS ESS KAY ENGINEERING CO. PVT. LTD. (2001) 247 ITR 818 (SC) HELD THAT MERELY BECAU SE THE CASE OF THE ASSESSEE WAS CORRECT IN ORIGINAL ASSESS MENT FOR THE RELEVANT ASSESSMENT YEAR, IT DOES NOT PRECLUDE THE ITO TO REOPEN THE ASSESSMENT OF AN EARLIER YEAR ON THE BASIS OF FINDING OF HIS FACT THAT FRESH MATERIAL CAME TO HIS KNOWLEDGE. 4.4. UNDER SECTION 147, AS SUBSTITUTED WITH EFFECT FROM 01/04/1989, THE SCOPE OF REASSESSMENT HAS BEEN WIDENED. AFTER SUCH SUBSTITUTION, THE ONLY RESTRICT ION, PUT IN THAT SECTION IS THAT REASON TO BELIEVE. THAT R EASON HAS ITA NO.3236/MUM/2016 & 2698/MUM/2016 JAYDEEP PROFILES P.LTD 10 TO BE A REASON OF A PRUDENT PERSON WHICH SHOULD BE FAIR AND NOT NECESSARILY DUE TO FAILURE OF THE ASSESSEE TO DISCLOSE FULLY AND PARTIALLY SOME MATERIAL FACTS RE LEVANT FOR ASSESSMENT (DR. AMINS PATHOLOGY LABORATORY VS JCIT (2001) 252 ITR 673, 682 (BOM.) IDENTICAL RATIO WAS LAID DOWN BY HONBLE DELHI HIGH COURT IN UNITED ELECTRIC AL COMPANY PVT. LTD. VS CIT (2002) 258 ITR 317, 322 (D EL.) AND PRAFULL CHUNNILAL PATEL VS ACIT 236 ITR 832, 83 8 (GUJ.). THE ESSENTIAL REQUIREMENT FOR INITIATING REASSESSMENT PROCEEDING U/S 147 R.W.S 148 OF THE AC T IS THAT THE LD. ASSESSING OFFICER MUST HAVE REASON TO BELIEVE THAT ANY INCOME CHARGEABLE TO TAX HAS ESCAPED ASSES SMENT FOR ANY ASSESSMENT YEAR. THE HONBLE GUJARAT HIGH C OURT IN PRAFULL CHUNNILAL PATEL VS ACIT (SUPRA) EVEN WEN T TO THE EXTENT THAT AT THE INITIATION STAGE FORMATION OF RE ASONABLE BELIEF IS NEEDED AND NOT A CONCLUSIVE FINDING OF FA CTS. IDENTICAL RATIO WAS LAID DOWN IN BRIJMOHAN AGRAWAL VS ACIT (2004) 268 ITR 400, 405 (ALL.) AND RATNACHUDAM ANI S. UTNAL VS ITO (2004) 269 ITR 272, 277 (KARNATAKA) APPLYING SOWDAGAR AHMED KHAN VS ITO (1968) 70 ITR 79(SC). ITA NO.3236/MUM/2016 & 2698/MUM/2016 JAYDEEP PROFILES P.LTD 11 4.5 SO FAR AS, THE MEANING OF EXPRESSION, REASON TO BELIEVE IS CONCERNED, IT REFERS TO BELIEF WHICH PR OMPTS THE ASSESSING OFFICER TO APPLY SECTION 147 TO A PARTICU LAR CASE. IT DEPEND UPON THE FACTS OF EACH CASE. THE BELIEF M UST BE OF AN HONEST AND REASONABLE PERSON BASED ON REASONABLE GROUNDS. THE ASSESSING OFFICER IS REQUIRED TO ACT, NOT ON MERE SUSPICION, BUT ON DIRECT OR CIRCUMSTANTIAL EVI DENCE. OUR VIEW FIND SUPPORT FROM THE RATIO LAID DOWN IN F OLLOWING CASES:- I. EPICA LABORATORIES LTD. VS DCIT 251 ITR 420, 425-426 (BOM.), II. VISHNU BOREWELL VS ITO (2002) 257 ITR 512 (ORISSA), III. CENTRAL INDIA ELECTRIC SUPPLY COMPANY LTD. VS ITO (201 1) 333 ITR 237 (DEL.), IV. V.J. SERVICES COMPANY MIDDLE EAST LTD. VS DCIT (2011) 339 ITR 169 (UTTRAKHAND), V. CIT VS ABHYUDAYA BUILDERS (P. ) LTD. (2012) 340 ITR 310 (ALL.), VI. CIT VS DR. DEVENDRA GUPTA (2011) 336 ITR 59 (RAJ.), VII. EMIRATES SHIPPING LINE FZE VS ASST. DIT (2012) 349 I TR 493 (DEL.). VIII. REFERENCE MAY ALSO MADE TO FOLLOWING JUDICIAL DECISI ONS:- IX. SAFETAG INTERNATIONAL INDIA P. LTD. (2011) 332 ITR 622 (DEL.), X. CIT VS ORIENT CRAFT LTD. (2013) 354 ITR 536 (DEL.) XI. ACORUS UNITECH WIRELSS PVT. LTD. VS ACIT (2014) 362 I TR 417 (DEL.). ITA NO.3236/MUM/2016 & 2698/MUM/2016 JAYDEEP PROFILES P.LTD 12 XII. PRAFUL CHUNILAL PATEL: VASANT CHUNILAL PATEL VS ASST. CIT (1999) 832, 843-44, 844-45 (GUJ.), XIII. VENUS INDUSTRIAL CORPORATION VS ASST. CIT (1999) 236 I TR 742, 746 (PUNJ.), XIV. SRICHAND LALCHAND TALREJA VS ASST. CIT (1998) 98 TAXM AN 14, 19 (BOM.), XV. USHA BELTRON LTD. VS JCIT (1999) 240 ITR 728, 736-37, 739 (PAT.) XVI. KAPOOR BROTHERS VS UNION OF INDIA (2001) 247 ITR 32 4, 331, 332-33 XVII. VIPPY PROCESSORS PVT. LTD. VS CIT (2001) 249 ITR 7, 8 (MP) 4.6. IN DILIP S. DAHANUKAR VS ASST. CIT (2001) 248 ITR 147, 150-51 (BOM.). THE HONBLE JURISDICTIONAL HIGH COURT HELD AS UNDER:- HELD, THAT THERE WAS MATERIAL ON RECORD ON THE BASIS OF SURVEY AND STATEMENT OF PERSON TO SHOW THAT THE ASSESSEE HAD WRONGFULLY CLAIM DEDUCTION U/S 80IA. THEREFORE, THE ASSESSING OFFICER HAD REASON TO BELIEVE THAT INCOME HAD ESCAPED ASSESSMENT FOR ASSESSMENT YEAR 1994- 95. IDENTICALLY IN THE CASE OF SRICHAND LALCHAND TALREJ A V. ASST. CIT, (1998) 98 TAXMAN 14, 19 (BOM), WHERE THE INFORMATION REGARDING ACQUISITION OF THE ASSET WAS NOT AVAILABLE WITH THE ASSESSING OFFICER DURING THE REL EVANT ASSESSMENT YEAR 1992-93 AND SUCH INFORMATION WAS ITA NO.3236/MUM/2016 & 2698/MUM/2016 JAYDEEP PROFILES P.LTD 13 DISCLOSED IN THE RETURN FOR THE ASSESSMENT YEAR 199 5- 96, THE HONBLE JURISDICTIONAL HIGH COURT HELD THAT THE ASSESSING OFFICER CAN FORM A BONA FIDE BELIEF THAT THERE WAS ESCAPEMENT OF INCOME IN RELATION TO ASSESSMENT YEAR 1992-93 . 4.7. THE HONBLE JURISDICTIONAL HIGH COURT IN EXP ORT CREDIT GUARANTEE CORPORATION OF INDIA LTD. V. ADDL. CIT, (2013) 350 ITR 651 (BOM), WHERE THERE HAD BEEN NO APPLICATION OF MIND TO THE RELEVANT FACTS DURING TH E COURSE OF THE ASSESSMENT PROCEEDINGS BY THE ASSESSING OFFI CER, THE REOPENING OF THE ASSESSMENT WAS HELD TO BE VALID. 4.8. THE HONBLE JURISDICTIONAL HIGH COURT IN GIRILAL & CO. V. S.L. MEENA, ITO, (2008) 300 ITR 43 2 (BOM), HELD THAT IN ORDER TO INVOKE THE EXTRAORDIN ARY JURISDICTION OF THE COURT THE PETITIONER MUST ALSO MAKE OUT A CASE THAT NO PART OF THE RELEVANT MATERIAL HA D BEEN KEPT OUT FROM THE ASSESSING OFFICER). THE INFORMATION WAS IN THE ANNEXURES AND CONSEQUENTLY EXPLANATION 2(C)(IV) OF SECTION 147 WOULD APPLY. TH E REASSESSMENT PROCEEDINGS AFTER FOUR YEARS WERE VALI D. ITA NO.3236/MUM/2016 & 2698/MUM/2016 JAYDEEP PROFILES P.LTD 14 4.9. IN THE CASE OF DEPUTY CIT V. GOPAL RAMNARAYAN KASAT, (2010) 328 ITR 556 (BOM), IT WAS NOT THE CAS E OF THE ASSESSEE THAT THE NOTICE ISSUED WAS AFTER THE EXPIR Y OF THE TIME LIMIT PROVIDED IN SECTION 153(2). THE REASSESS MENT PROCEEDINGS WERE HELD TO BE VALID. IN INDIAN HUME PIPE CO. LTD. V. ASST. CIT, (2012) 348 ITR 439 (BOM), BOTH I N THE COMPUTATION OF TAXABLE LONG-TERM CAPITAL GAINS IN T HE ORIGINAL RETURN OF INCOME AND IN THE COMPUTATION TH AT WAS SUBMITTED IN RESPONSE TO THE QUERY OF THE ASSESSING OFFICER THERE WAS A COMPLETE SILENCE IN REGARD TO THE DATES ON WHICH THE AMOUNTS WERE INVESTED, AS SUCH THERE BEIN G A FAILURE TO DISCLOSE FULLY AND TRULY MATERIAL FACTS NECESSARY FOR ASSESSMENT. THE REASSESSMENT PROCEEDINGS WERE H ELD TO BE VALID. THIS VIEW WAS ALSO CONFIRMED IN FOLLOWING CASES:- A. DALMIA P. LTD. V. CIT, (2012) 348 ITR 469 (DEL); B. CIT V. K. MOHAN & CO. (EXPORTS), (2012) 349 ITR 653 (BOM); C. REMFRY & SAGAR V. CIT, (2013) 351 ITR 75 (DEL); D. OPG METALS & FINSEC LTD. V. CIT, (2013) 358 ITR 144 (DEL). 4.10. IN THE CASE OF VENUS INDUSTRIAL CORPORATION V. ASST. CIT, (1999) 236 ITR 742, 746 (P & H) [WHERE I NITIATION ITA NO.3236/MUM/2016 & 2698/MUM/2016 JAYDEEP PROFILES P.LTD 15 WAS STARTED WITHIN FOUR YEARS FOR RE-EXAMINING THE DEDUCTION UNDER SECTION 80HHC, WAS HELD TO BE WRONG LY ALLOWED IN THE ORIGINAL ASSESSMENT. IDENTICALLY, IN THE CASE OF HAPPY FORGING LTD. V. CIT, (2002) 253 ITR 413,41 6-17 (P & H), WHERE EXCISE DUTY PAID IN ADVANCE WAS SHOWN A S AN ASSET IN THE BALANCE SHEET AND WAS ALLOWED AS A DED UCTION, REASSESSMENT NOTICE ON THE GROUND THAT EXCISE DUTY WAS SHOWN AS AN ASSET IN THE BALANCE SHEET AND WAS NOT ROUTED THROUGH THE PROFIT AND LOSS ACCOUNT. THE REOPENING AT THIS STAGE WAS HELD TO BE VALID. IN THE CASE OF VIPAN K HANNA V. CIT, (2002) 255 ITR 220, 230 (P & H), WHERE FROM THE FACTS IT WAS CLEAR THAT THE ASSESSEE HAD CLAIMED DEPRECIATION IN THE RETURN AT THE RATE OF 50 PER CE NT AND HE HAD NOWHERE DISPUTED THE FACT THAT THE ADMISSIBLE R ATE OF DEPRECIATION TO HIM WAS 40 PER CENT., SUCH FACT ALO NE WAS SUFFICIENT TO INITIATE REASSESSMENT PROCEEDINGS UND ER SECTION 147 AND, THEREFORE, SUCH INITIATION WAS SUS TAINED. THE HONBLE PUNJAB & HARYANA HIGH COURT IN MRS. RAM A SINHA V. CIT, (2002) 256 ITR 481, 483, 486, WHERE T HE REASSESSMENT NOTICE HAS BEEN ISSUED ON THE BASIS OF DEFINITE INFORMATION FROM CBI REGARDING INVESTMENTS BY THE ITA NO.3236/MUM/2016 & 2698/MUM/2016 JAYDEEP PROFILES P.LTD 16 ASSESSEE WHICH HAD NOT BEEN DISCLOSED DURING THE OR IGINAL ASSESSMENT PROCEEDINGS, SUCH INITIATION HAS BEEN UP HELD. 4.11. IN THE CASE OF PAL JAIN V. ITO, (2004) 267 I TR 540, 544-45, 548, 549 (P & H), APPLYING PHOOL CHAND BAJRANG LAL V. ITO, (1993) 203 ITR 456 (SC), ALTHOU GH THE TRANSACTION OF SALE OF SHARES WAS DISCLOSED AND ACC EPTED IN THE ORIGINAL ASSESSMENT, BUT THE SUBSEQUENT DISCOVE RY BY THE DDI (INVESTIGATION) REVEALED THAT THE TRANSACTI ON WAS NOT GENUINE, A REASSESSMENT NOTICE AFTER FOUR YEARS HAS BEEN HELD TO BE VALID BECAUSE THERE WAS NO TRUE DIS CLOSURE OF THE MATERIAL FACTS. IN THIS REGARD, THE PETITION ER-ASSESSEE CANNOT DRAW ANY SUPPORT FROM THE STATEMENT FOR CHALLENGING THE VALIDITY OF THE NOTICE FOR REASSESS MENT. IT GOES WITHOUT SAYING THAT FOR THE PURPOSE OF MAKING THE ASSESSMENT, THE ASSESSING OFFICER SHALL HAVE TO CON FRONT THE PETITIONER WITH THE ENTIRE MATERIAL IN HIS POSSESSI ON ON THE BASIS OF WHICH HE PROPOSES TO MAKE THE ADDITIONS. I N PUNJAB LEASING PVT. LTD. V. ASST. CIT, (2004) 267 I TR 779, 781-82 (P & H), WHERE DEPRECIATION WAS ALLOWED TO T HE ASSESSEE, WHO WAS ENGAGED IN THE BUSINESS OF FINANC ING OF ITA NO.3236/MUM/2016 & 2698/MUM/2016 JAYDEEP PROFILES P.LTD 17 VEHICLES AND CONSUMER DURABLES ON 'HIRE-PURCHASE BA SIS' AS WELL AS ON 'LEASE/RENT BASIS', A REASSESSMENT NOTIC E ISSUED AFTER FOUR YEARS HAS BEEN HELD NOT TO SUFFER FROM A NY ILLEGALITY AS THE SAME WAS BASED ON THE BONA FIDE A CTION OF THE COMPETENT AUTHORITY TO DETERMINE WHETHER OR NOT THE VEHICLES IN RESPECT OF WHICH THE PETITIONER HAD BEE N CLAIMING DEPRECIATION, WERE ACTUALLY OWNED BY IT. 4.12. IN JAWAND SONS V. CIT(A), (2010) 326 ITR 39 (P & H), IN THE INITIAL ASSESSMENT, THE BENEFIT OF DEDUC TION OF THE DUTY DRAWBACK AND DEPB UNDER SECTION 80-IB WAS WRON GLY GRANTED TO THE ASSESSEE, FOR WHICH IT WAS NOT ENTIT LED. THEREFORE, REASSESSMENT PROCEEDINGS TO WITHDRAW THE DEDUCTION WERE HELD TO BE VALID. LIKEWISE, IN CIT V. HINDUSTAN TOOLS & FORGINGS P. LTD., (2008) 306 ITR 209 (P & H), WHERE, THE ASSESSEE IN THE REGULAR ASSESSMENT HAD BEEN ALLOWED DEDUCTION MORE THAN ACTUALLY ALLOWABLE UNDER SECTION 80HHC. THEREFORE, THE ACTION INITIATED BY T HE AO FOR REASSESSMENT UNDER SECTION 147(B) COULD NOT BE HELD TO BE INVALID. ITA NO.3236/MUM/2016 & 2698/MUM/2016 JAYDEEP PROFILES P.LTD 18 4.13. IN THE CASE OF MARKANDA VANASPATI MILLS LTD. V. CIT, (2006) 280 ITR 503 (P & H), WHEREIN, THE INFOR MATION FURNISHED BY THE ASSESSEE GAVE NO CLUE TO THE PAYME NT OF LIABILITY IN REGARD OF THE SALES TAX COLLECTED IN E XCESS. THE ASSESSING OFFICER WAS HELD TO BE VALIDLY INITIATED THE REASSESSMENT PROCEEDINGS UNDER SECTION 147 FOR BOTH THE YEARS UNDER CONSIDERATION. IN THE CASE OF SAT NAR AIN V. CIT, (2010) 320 ITR 448 (P & H), THE DOCUMENT DID N OT FORM THE SOLE BASIS FOR THE ASSESSING OFFICER TO INITIA TE REASSESSMENT PROCEEDING BUT HE ALSO TOOK INTO CONSIDERATION THE LETTER WRITTEN BY THE ASSISTANT COMMISSIONER AS WELL AS THE FACT THAT NO RETURN HAD BEEN FILED BY THE ASSESSEE FOR ASSESSMENT YEAR 1995-96. THUS, IT WAS HELD THAT THE ASSESSING OFFICER HAD RIGHTLY INV OKED THE JURISDICTION TO INITIATE THE REASSESSMENT PROCEEDIN GS UNDER SECTION 147. IN THE CASE OF CIT V. HUKAM SINGH, (2 005) 276 ITR 347 (P & H), IT WAS HELD THAT THE RESPONDEN TS DID NOT HAVE THE LOCUS STANDI TO QUESTION THE ORDERS OF REASSESSMENT ON THE GROUND OF LACK OF NOTICE. NON-I SSUANCE OF NOTICE TO SOME OF THE LEGAL HEIRS OF THE LATE P WAS MERELY AN IRREGULARITY AND THE SAME DID NOT AFFECT THE VAL IDITY OF ITA NO.3236/MUM/2016 & 2698/MUM/2016 JAYDEEP PROFILES P.LTD 19 THE REASSESSMENT ORDERS. LIKEWISE, IN TILAK RAJ BE DI V. JOINT CIT, (2009) 319 ITR 385 (P & H), WHEREIN, FAC TS COMING TO LIGHT IN A SUBSEQUENT ASSESSMENT YEAR COU LD VALIDLY FORM THE BASIS FOR INITIATING REASSESSMENT PROCEEDINGS, IN VIEW OF EXPLANATION 2 TO SECTION 14 7. THE ACTION OF THE INCOME TAX AUTHORITIES IN REOPENING T HE ASSESSMENT OF THE ASSESSEE AND RESTRICTING THE DEDU CTION UNDER SECTION 80-IB WAS HELD TO BE VALID. 4.14. IN THE CASE OF SMT. USHA RANI V. CIT, (2008) 301 ITR 121 (P & H), THERE WAS NOTHING ON RECORD TO SHO W THE RELATIONSHIP BETWEEN THE DONOR AND THE DONEE, CAPAC ITY OF THE DONOR TO MAKE GIFTS AND THE OCCASION THEREFORE. THE ASSESSEE HAD FAILED TO DISCHARGE THE ONUS TO PROVE THE GIFTS. THE REASSESSMENT PROCEEDINGS WERE HELD TO BE VALID. IN THE CASE OF USHA BELTRON LTD. V. JOINT CIT, (1999) 240 ITR 728, 736-37, 739 (PAT), WHERE THE INVESTIGATION REPORT I NDICATED THAT THE OFFICER HAD REASON TO BELIEVE THAT ON ACCO UNT OF FAILURE ON THE PART OF THE PETITIONER-ASSESSEE TO D ISCLOSE TRUE AND FULL FACTS, INCOME HAD BEEN GROSSLY UNDER ASSESSED, REASSESSMENT PROCEEDINGS WERE HELD VALIDL Y INITIATED. ITA NO.3236/MUM/2016 & 2698/MUM/2016 JAYDEEP PROFILES P.LTD 20 4.15. IN THE CASE OF KAPOOR BROTHERS V. UNION OF I NDIA, (2001) 247 ITR 324, 331, 332-33 (PAT), WHERE THE MA TERIAL EVIDENCE FOR THE PURPOSE OF REOPENING OF THE ASSESS MENT ALREADY COMPLETED HAS BEEN BROUGHT TO THE NOTICE OF THE AUTHORITY DURING THE COURSE OF ENQUIRY. THE NOTICE WAS HELD TO BE VALID BY THE HONBLE HIGH COURT. IN THE CASE OF VIPPY PROCESSORS PVT. LTD. V. CIT, (2001) 249 ITR 7, 8 (M P), WHERE THE NEED TO ISSUE NOTICE AROSE DUE TO NOTICING OF V AST DIFFERENCE IN VALUE OF PROPERTIES DISCLOSED BY THE ASSESSEE AND THAT OF THE REPORT OF THE VALUATION OFFICER AND THE REASONS THAT LED TO THE ISSUE OF THE NOTICE WERE DU LY RECORDED AND THE SAME WERE ALSO ADEQUATE AND BASED ON RELEVANT FACTS AND MATERIAL, INITIATION WAS UPHELD. IN TRIPLE A TRADING & INVESTMENT PVT. LTD. V. ASST. CIT, (200 1) 249 ITR 109, 110-11 (MP), WHERE THE NOTICE WAS ISSUED A FTER RECORDING REASONS IN THAT REGARD, INITIATION WAS UP HELD. 4.16. LIKEWISE, HONBLE GUJARAT HIGH COURT IN GARD EN FINANCE LTD. V. ADD/. CIT, (2002) 257 ITR 481, 489, 494- 95, SPECIAL LEAVE PETITION DISMISSED BY THE SUPREME COURT: ITA NO.3236/MUM/2016 & 2698/MUM/2016 JAYDEEP PROFILES P.LTD 21 (2002) 255 ITR (ST.) 7-8 (SC), WHERE THE ASSESSEE W AS HOLDING SHARES IN AN AMALGAMATING COMPANY AND HE WA S ALLOTTED SHARES IN THE AMALGAMATED COMPANY AND SUCH SHARES WERE SOLD BY HIM AND HE HAS DISCLOSED THE MA RKET PRICE OF SUCH SHARES AS ON THE DATE OF AMALGAMATION AS THE COST OF ACQUISITION OF SUCH SHARES AND HAS NOT DISC LOSED THE COST OF ACQUISITION OF SHARES IN THE AMALGAMATING C OMPANY IN ACCORDANCE WITH SECTION 49(2) READ WITH SECTION 47(VII), INITIATION OF REASSESSMENT PROCEEDINGS AFTER FOUR Y EARS HAS BEEN SUSTAINED BECAUSE THERE WAS FAILURE ON THE PAR T OF THE ASSESSEE TO DISCLOSE MATERIAL FACTS NECESSARY FOR ASSESSMENT. LIKEWISE, IN SUMAN STEELS V. UNION OF INDIA, (2004) 269 ITR 412,418-19 (RAJ), WHERE THE RETURN O F THE ASSESSEE FOR ASSESSMENT YEAR 1995-96 WAS PROCESSED UNDER SECTION 143(1)(A) ACCEPTING THE NET PROFIT RATE DEC LARED BY THE ASSESSEE, WHO CARRIED ON CON- TRACT BUSINESS, I NITIATION OF REASSESSMENT PROCEEDINGS BY ISSUING A NOTICE DAT ED 15- 5-2001 PROPOSING TO REASSESS PETITIONER-ASSESSEE AT HIGHER RATE IN VIEW OF THE PRESUMPTIVE RATE PRESCRIBED UND ER SECTION 44AD HAS BEEN SUSTAINED. IN THE CASE OF D R. SAHIB RAM GIRI V. ITO, (2008) 301 ITR 294 (RAJ), THE ITA NO.3236/MUM/2016 & 2698/MUM/2016 JAYDEEP PROFILES P.LTD 22 REASSESSMENT PROCEEDINGS WERE INITIATED AFTER RECOR DING REASONS IN WRITING BY THE AO. THE NON-AVAILABILITY OF A FEW DOCUMENTS DEMANDED BY THE ASSESSEE WOULD NOT MAKE T HE REASSESSMENT PROCEEDINGS INITIATED FOR THE REASONS RECORDED IN DETAIL ILLEGAL. 4.17. IN THE CASE OF DESH RAJ UDYOG : CHAMAN UDYOG V. ITO, (2009) 318 ITR 6 (ALL), IN THE ASSESSMENT Y EARS IN QUESTION, THE MATTER WAS STILL TO BE DECIDED FINALL Y BY THE ASSESSING AUTHORITY WHETHER THE INCOME SHOULD BE TR EATED UNDER THE HEAD 'BUSINESS INCOME' OR 'PROPERTY INCOM E'. THE ASSESSEE WOULD GET OPPORTUNITY TO SHOW SUFFICIENT C AUSE TO THE ASSESSING AUTHORITY DURING THE COURSE OF ASSESS MENT. THUS, IT COULD NOT BE SAID THAT THERE WAS NO RELEVA NT MATERIAL TO INITIATE PROCEEDINGS UNDER SECTION 147. IN THE CASE OF KARTIKEYA INTERNATIONAL V. CIT, (2010) 329 ITR 539 (ALL), IN VIEW OF THE MATTER, THE PETITIONER WAS NO T ENTITLED FOR THE DEDUCTION ON THE DUTY DRAWBACK AMOUNT UNDER SECTION 80-IB AND SINCE IT HAD BEEN ALLOWED IN THE ASSESSMENT ORDER PASSED UNDER SECTION 143(1), IT HA D ESCAPED ASSESSMENT. ON THESE FACTS THE INITIATION O F THE ITA NO.3236/MUM/2016 & 2698/MUM/2016 JAYDEEP PROFILES P.LTD 23 PROCEEDINGS UNDER SECTION 147 READ WITH SECTION 148 FOR ASSESSMENT YEARS 2005-06 AND 2006-07 WAS LEGAL AND IN ACCORDANCE WITH LAW. 4.18. LIKEWISE, IN THE CASE OF SUNIL KUMAR LAIN: S URESH CHANDRA LAIN V. ITO, (2006) 284 ITR 626 (ALL), NOTWITHSTANDING THE FACT THAT THE AMOUNT HAD BEEN ASSESSED TO TAX IN THE HANDS OF P, HE HAD TAKEN A S TAND THAT THE AMOUNT DID NOT BELONG TO HIM AND INSTEAD BELONGED TO S. THUS, IT WAS NOT CLEAR AS TO IN WHOS E HANDS THE AMOUNT IN QUESTION HAD TO BE ASSESSED. THE ITO WAS JUSTIFIED IN TAKING PROCEEDINGS UNDER SECTION 147 F OR ASSESSING THE AMOUNTS IN THE HANDS OF THE PETITIONE RS ACCORDING TO THE CLAIM MADE BY THE PETITIONERS. LI KEWISE, HONBLE KERALA HIGH COURT IN CIT V. DR. SADIQUE UMM ER, (2010) 322 ITR 602 (KER), WHERE, THE ASSESSING OFFI CER COLLECTED FURTHER INFORMATION TO COMPLETE THE REASS ESSMENTS WHICH WAS ALSO PERMISSIBLE UNDER THE ACT. THE FINDI NG OF THE FIRST APPELLATE AUTHORITY AS WELL AS THE TRIBUN AL, THAT THE ASSESSING OFFICER HAD NO MATERIAL TO BELIEVE TH AT THE INCOME HAD ESCAPED ASSESSMENT WAS WRONG AND CONTRAR Y TO ITA NO.3236/MUM/2016 & 2698/MUM/2016 JAYDEEP PROFILES P.LTD 24 FACTS. THE ASSESSEE HAD NOT MAINTAINED ANY BOOKS OF ACCOUNT. THEREFORE, THE REOPENING OF ASSESSMENTS WA S HELD TO BE VALID AND WITHIN TIME. IN THE CASE OF CIT V . UTTAM CHAND NAHAR, (2007) 295 ITR 403 (RAJ), THE NOTICE REQUIRING THE ASSESSEE TO FILE THE RETURN WITHIN 30 DAYS WAS IN ACCORDANCE WITH SECTION 148 AS IT MUST BE DEEMED TO BE IN FORCE WITH EFFECT FROM 1-4-1989, AND IN FORCE AS ON THE DATE NOTICE WAS ISSUED. THERE WAS NO VIOLATION OF S ECTION 148 IN RESPECT OF THE SPECIFIED PERIOD WITHIN WHICH THE RETURN IS TO BE SUBMITTED. THE REASSESSMENT PROCEED INGS WERE HELD TO BE VALID. 4.19. IN THE CASE OF CIT V. C. V. LAYACHANDRAN, (2 010) 322 ITR 520 (KER), WHERE, THE ASSESSEE DID NOT CONC EDE THE INCOME ON CAPITAL GAIN EITHER UNDER THE UN-AMENDED PROVISION OR UN-DER THE AMENDED PROVISION, THE RECO URSE OPEN TO THE DEPARTMENT WAS TO BRING TO TAX INCOME ESCAPING ASSESSMENT UNDER SECTION 147 WHICH WAS NOT TIME BARRED OR OTHERWISE INVALID. LIKEWISE, IN ATUL TR ADERS V. ITO, (2006) 282 ITR 536 (ALL), THE ACCOUNT BOOKS OR RECORD AND OTHER MATERIAL WERE ALL COMMON WHICH WERE BEING ITA NO.3236/MUM/2016 & 2698/MUM/2016 JAYDEEP PROFILES P.LTD 25 CONSIDERED BY THE CIT(A) IN THE PROCEEDINGS RELATIN G TO THREE APPEALS. THE PETITIONER HAD NOTICE AND OPPORT UNITY OF BEING HEARD. THE REASSESSMENT PROCEEDINGS WERE HELD TO BE VALIDLY INITIATED. IN THE CASE OF INDUCTOTHERM (IN DIA) P. LTD. V. LAMES KURIAN, ASST. CIT, (2007) 294 ITR 341 (GUJ ), THE ASSESSING OFFICER HAD FOUND THAT THERE WERE ERRORS IN THE COMPUTATION OF ALLOWANCES. THE REASSESSMENT PROCEED INGS WERE HELD TO BE VALID. IN THE CASE OF PAPAYA FARMS PVT. LTD. VS. DCIT, (2010) 323 ITR 60 (MAD), WHERE THE ASSESS EE HAD FURNISHED INCORRECT PARTICULARS AND THEREFORE, THE REOPENING OF THE ASSESSMENT WAS HELD TO BE JUSTIFIED. 4.20. IN THE CASE OF CIT V. KERALA STATE CASHEW DEVELOPMENT CORPORATION LTD., (2006) 286 ITR 553 (K ER), WHEREIN, THE ASSESSEE WAS FOLLOWING THE MERCANTILE SYSTEM OF ACCOUNTING SHOULD NOT HAVE CLAIMED DEDUCTION OF PENAL INTEREST WHICH HAD ACCRUED NOT IN THE PREVIOUS YEAR RELEVANT TO THE ASSESSMENT YEAR BUT IN EARLIER YEAR S. THIS THE ASSESSEE HAD NOT DISCLOSED. THE REASSESSMENT WA S HELD TO BE VALID. LIKEWISE, IN KUSUM INDUSTRIES P. LTD. V. CIT, (2008) 296 ITR 242 (ALL), AS THE AWARD HAD BECOME F INAL IT ITA NO.3236/MUM/2016 & 2698/MUM/2016 JAYDEEP PROFILES P.LTD 26 WOULD BE TAKEN THAT THE DIRECTORS OF THE ASSESSEE H AD ACCEPTED THE FACTUM OF EARNING OF SECRET PROFIT NOT REFLECTED IN THE BOOKS OF ACCOUNT, WHICH WAS ALSO BINDING ON THE COMPANY. THE NON-APPEARANCE OF ONE OF THE ARBITRATO RS AND ONE OF THE DIRECTORS IN RESPECT OF THE SUMMON ISSUE D UNDER SECTION 131 WOULD NOT MAKE THE REASSESSMENT INVALID . THE HONBLE KERALA HIGH COURT IN CIT V. INDO MARINE AGE NCIES (KERALA) P. LTD., (2005) 279 ITR 372 (KER), HELD TH AT THE ENTRY WOULD AMOUNT TO AN ORDER UNDER SECTION 144. T HE MERE FACT THAT IT WAS NOT COMMUNICATED TO THE ASSES SEE WOULD NOT MAKE SUCH AN ASSESSMENT RECORDED IN THE O RDER SHEET ILLEGAL AND THAT WOULD NOT BAR FURTHER PROCEE DINGS UNDER SECTION 147. THUS, THE ASSESSMENT WAS HELD TO BE VALIDLY REOPENED UNDER EXPLANATION 2(C) TO SECTION 147. LIKEWISE, IN CIT V. N. JAYAPRAKASH, (2006) 285 ITR 369 (KER), WHERE, THE ASSESSEE COULD NOT, AFTER HAVING PERSUADED THE ASSESSING AUTHORITY TO WITHDRAW THE N OTICE DATED 1-10-1993, POINTING OUT THAT IT WAS NOT IN CO NFORMITY WITH LAW, BE ALLOWED TO CONTEND THAT THE NOTICE WAS VALID DUE TO THE OMISSION OF THE TIME-LIMIT BY THE FINANC E (NO.2) ACT, 1996, WITH EFFECT FROM 1-4-1989. IN THE ABSENC E OF ITA NO.3236/MUM/2016 & 2698/MUM/2016 JAYDEEP PROFILES P.LTD 27 SPECIFIC PROVISION IN THE FINANCE (NO. 2) ACT, 1996 , INVALIDATING PROCEEDINGS INITIATED BY THE INCOME-TA X OFFICER, THE ACTION TAKEN BY HIM APPLYING THE THEN EXISTING LAW COULD NOT BE SAID TO BE INVALID. 4.21. LIKEWISE, IN CIT V. S.R. TALWAR, (2008) 305 ITR 286 (ALL), THE FACTUM OF TAKING ADVANCES OR LOAN FR OM T AND K, IN WHICH THE ASSESSEE WAS ONE OF THE DIRECTORS H AD NOT BEEN DISCLOSED NOR A COPY OF THE LEDGER ACCOUNT OF THE ASSESSEE MAINTAINED BY THE COMPANY FILED. IN VIEW O F THE ABSENCE OF THESE DETAILS, THE ASSESSING OFFICER CO ULD NOT EXAMINE THE TAXABILITY OF ADVANCES OR LOAN RAISED B Y THE ASSESSEE. THERE WAS FAILURE TO DISCLOSE MATERIAL FA CTS NECESSARY FOR ASSESSMENT. THE REASSESSMENT PROCEEDI NGS WERE HELD TO BE VALID. IN ANOTHER CASE, THE HONBL E ALLAHABAD HIGH COURT IN CHANDRA PRAKASH AGRAWAL V. ASST. CIT, (2006) 287 ITR 172 (ALL), WHEREIN, THE INCOME- TAX DEPARTMENT HAD SENT A REQUISITION ON 27-3-2002, UND ER SECTION 132A REQUISITIONING THE BOOKS OF ACCOUNT AN D OTHER DOCUMENTS SEIZED BY THE CENTRAL EXCISE DEPARTMENT. THE RECORD OF THE PROCEEDING DATED 18-4-2002, SHOWED TH AT THE ITA NO.3236/MUM/2016 & 2698/MUM/2016 JAYDEEP PROFILES P.LTD 28 REQUISITION WAS NOT FULLY EXECUTED AS ALL THE BOOKS OF ACCOUNT AND OTHER DOCUMENTS HAD NOT BEEN DELIVERED TO THE REQUISITIONING AUTHORITY. THE PROCEEDINGS INITIATED UNDER SECTION 147 WAS HELD TO BE VALID. 4.22. IN RAMILABEN RATILAL SHAH V. CIT, (2006) 282 ITR 176 (GUJ), HELD THAT THE NOTING IN THE DIARY CONSTITUTED SUFFICIENT INFORMATION FOR THE ESCAPEME NT OF INCOME BY EITHER NON-DECLARATION OF CORRECT SALE CONSIDERATION OR FURNISHING OF INACCURATE PARTICULA RS AS REGARDS SALE CONSIDERATION. THUS, THE TRIBUNAL WAS JUSTIFIED IN HOLDING THAT THE ASSESSEE HAD FAILED T O DISCLOSE FULLY AND TRULY ALL MATERIAL FACTS NECESSA RY FOR THE ASSESSMENT OF THE RELEVANT ASSESSMENT YEAR. THE REASSESSMENT PROCEEDINGS HAD BEEN VALIDLY INITIATED . 4.23. LIKEWISE, IN CIT V. ABDUL KHADER AHAMED, (2006) 285 ITR 57 (KER), IT WAS CLEAR FROM THE REAS ONS RECORDED BY THE DEPUTY CIT THAT HE PRIMA FACIE HAD REASON TO BELIEVE THAT THE ASSESSEE HAD OMITTED TO DISCLOS E FULLY AND TRULY THE MATERIAL FACTS AND THAT AS A CONSEQUE NCE INCOME HAD ESCAPED ASSESSMENT. THE REASSESSMENT WAS ITA NO.3236/MUM/2016 & 2698/MUM/2016 JAYDEEP PROFILES P.LTD 29 HELD TO BE VALID. IN THE CASE OF U.P. STATE BRASSW ARE CORPORATION LTD. V. CIT, (2005) 277 ITR 40 (ALL), T HE PRINCIPLES LAID DOWN BY THE CALCUTTA HIGH COURT IN CIT V. NEW CENTRAL JUTE MILLS CO. LTD. : (1979) 118 ITR 10 05 (CAL) DID CONSTITUTE INFORMATION ON A POINT OF LAW WHICH SHOULD BE TAKEN INTO CONSIDERATION BY THE ITO IN FORMING H IS BELIEF THAT THE INCOME TO THAT EXTENT HAD ESCAPED ASSESSME NT TO TAX AND, THE REASSESSMENT WAS HELD TO BE VALID. IN SUNDER CARPET INDUSTRIES V. ITO, (2010) 324 ITR 417 (ALL), HELD THAT THE DEPARTMENTAL VALUER'S REPORT CONSTITUTED MATERI AL FOR ENTERTAINING A BELIEF OF ESCAPED INCOME IN THE YEAR S UNDER CONSIDERATION. THE REASSESSMENT PROCEEDING WAS HELD TO BE VALID. 4.24. IN AUROBINDO SANITARY STORES V. CIT, (2005) 276 ITR 549 (ORI), THERE BEING A SUBSTANTIAL DIFFERENCE BETWEEN THE FIGURES OF LIABILITIES TOWARDS SUNDRY CREDITORS IN THE PARTY LEDGERS OF THE ASSESSEE-FIRM AND THE FIGURES OF LIABILITIES TOWARDS SUNDRY CREDITORS IN THE BALANCE -SHEET OF THE ASSESSEE-FIRM FOR THE PREVIOUS YEAR RELEVANT TO THE ASSESSMENT YEAR 1989-90. THESE MATERIALS HAD A DIRE CT LINK ITA NO.3236/MUM/2016 & 2698/MUM/2016 JAYDEEP PROFILES P.LTD 30 AND NEXUS FOR FORMATION OF A BELIEF BY THE ASSESSIN G OFFICER THAT INCOME OF THE ASSESSEE-FIRM HAD ESCAPED ASSESS MENT BECAUSE OF FAILURE OF THE ASSESSEE TO DISCLOSE FULL Y AND TRULY ALL MATERIAL FACTS NECESSARY FOR THE ASSESSMENT. I N THE CASE OF CIT V. BEST WOOD INDUSTRIES & SAW MILLS, (2011) 331 ITR 63 (KER), THE ASSESSEE CHALLENGED THE VALIDITY OF T HE REASSESSMENT ON THE GROUND THAT THE AO HAD EXCEEDED HIS JURISDICTION UNDER SECTION 147 AND BOTH THE FIRST A PPELLATE AUTHORITY AS WELL AS THE TRIBUNAL ACCEPTED THE CONT ENTION OF THE ASSESSEE HOLDING THAT SO FAR AS THE REASSESSMEN TS RELATED TO ASSESSMENT OF UNEXPLAINED TRADE CREDITS, THEY WERE INVALID. ON APPEAL, IT HAS BEEN HELD THAT THE REASSESSMENTS WERE TO BE VALID. IN HONDA SIEL POWE R PRODUCTS LTD. V. DEPUTY CIT, (2012) 340 ITR 53 (DEL ), THERE BEING OMISSION AND FAILURE ON THE PART OF THE ASSES SEE TO DISCLOSE FULLY AND TRULY MATERIAL FACTS THUS REASSE SSMENT PROCEEDINGS WERE HELD TO BE VALID. 4.25. IN ATMA RAM PROPERTIES PRIVATE LTD. V. DEPUT Y CIT, (2012) 343 ITR 141 (DEL), AS THE BOOKS OF ACCO UNT AND OTHER MATERIAL WERE NOT PRODUCED AND NO LETTER WAS FILED, ITA NO.3236/MUM/2016 & 2698/MUM/2016 JAYDEEP PROFILES P.LTD 31 THE ORDER PASSED BY THE COMMISSIONER (APPEALS) IN T HE ASSESSMENT YEAR 2001-02 WOULD CONSTITUTE 'INFORMATI ON' OR MATERIAL FROM ANY EXTERNAL SOURCE AND, AS SUCH, THE REASSESSMENT PROCEEDINGS FOR THE ASSESSMENT YEAR 20 00-01 WERE HELD TO BE VALID. LIKEWISE, IN THE CASE OF C IT V. SMT. R. SUNANDA BAI, (2012) 344 ITR 271 (KER), THE REASSESSMENT IN QUESTION WERE HELD TO BE VALID ON T HE FACT THAT THE ASSESSEE CLAIMED AND WAS GIVEN RELIEF UNDE R SECTION 80HHA FOR THE THREE PRECEDING YEAR WHICH DISENTITLED HER FOR DEDUCTION UNDER SECTION 80HH FO R THE ASSESSMENT YEARS 1992-93 AND 1993-94. 4.26. IN THE CASE OF AQUAGEL CHEMICALS P. LTD. V. ASST. CIT, (2013) 353 ITR 131 (GUJ), SINCE THERE BEING SU FFICIENT MATERIAL ON RECORD FOR THE ASSESSING OFFICER TO FOR M A BELIEF AS REGARDS THE ESCAPEMENT OF INCOME IN RELATION TO THE CLAIM OF DEPRECIATION IN RESPECT OF THE BUILDING OF COAL FIRE BOILER, THE REASSESSMENT WAS HELD TO BE VALID. IN THE CASE OF CONVERGYS CUSTOMER MANAGEMENT V. ASST. DIT, (201 3) 357 ITR 177 (DEL), WHERE THERE BEING PRIMA FACIE MA TERIAL IN THE POSSESSION OF THE ASSESSING OFFICER TO FORM A T ENTATIVE ITA NO.3236/MUM/2016 & 2698/MUM/2016 JAYDEEP PROFILES P.LTD 32 BELIEF THAT SECTION 9(1)(I) HELD ATTRACTED, SAID RE ASON BY ITSELF CONSTITUTED A RELEVANT GROUND TO REOPEN THE ASSESSM ENT OF THE ASSESSEE. REFERENCE MAY ALSO BE MADE TO I. AJAI VERMA V. CIT [(2008) 304 ITR 30 (ALL)]; II. ASHOK ARORA V. CIT [(2010) 321 ITR 171 (DEL)]; III. CIT V. CHANDRASEKHAR BALAGOPAL [(2010) 328 ITR 619 (KER)]; IV. JAYARAM PAPER MILLS LTD. V. CIT [(2010) 321 ITR 56 ( MAD)]; V. KERALA FINANCIAL CORPORATION V. JOINT CIT [(2009) 30 8 ITR 434 (KER)]; VI. MAVIS SATCOM LTD. V. DEPUTY CIT [(2010) 325 ITR 428 (MAD)]; VII. CIT V. MADHYA BHARAT ENERGY CORPORATION LTD. [(2011) 337 ITR 389 (DEL)]; VIII. KONE ELEVATOR INDIA P. LTD. V. ITO [(2012) 340 ITR 45 4 (MAD)]; IX. VIJAY KUMAR SABOO V. ASST. CIT [(2012) 340 ITR 382 (KARN)]; X. SIEMENS INFORMATION SYSTEMS LTD. V. ASST. CIT [(2012) 3 43 ITR 188 (BOM)]; XI. I.P. PATEL & CO. V. DEPUTY CIT [(2012) 346 ITR 207 (GUJ)]; XII. DISHMAN PHARMACEUTICALS & CHEMICALS LTD. V. DEPUTY CI T [(2012) 346 ITR 228 (GUJ)]; XIII. VIDEO ELECTRONICS LTD. V. JOINT CIT [(2013) 353 ITR 7 3 (DEL)]; XIV. A G GROUP CORPORATION V. HARSH PRAKASH [(2013) 353 I TR 158 (GUJ)]; ITA NO.3236/MUM/2016 & 2698/MUM/2016 JAYDEEP PROFILES P.LTD 33 XV. INDUCTOTHERM (INDIA) P. LTD. V. M. GOPALAN, DEPUTY CIT [(2013) 356 ITR 481 (GUJ)]; CIT V. DHANALEKSHMI BAN K LTD. [(2013) 357 ITR 448 (KER)]; XVI. SITARA DIAMOND PVT. LTD. V. ITO [(2013) 358 ITR 424 (BOM)]; XVII. RAYALA CORPORATION P. LTD. V. ASST. CIT [(2014) 363 IT R 630 (MAD)]. 4.27. SO FAR AS, THE DECISION IN THE CASE OF CIT V S KELVINATOR OF INDIA LTD. (2010) 320 ITR 561 (SC) IS CONCERNED, THE HONBLE APEX COURT, WHILE COMING TO A PARTICULAR CONCLUSION, ONLY IN A SITUATION, WHEN NO T A SINGLE PIECE OF PAPER OR DOCUMENT WAS RECOVERED, THEREFORE , THE HONBLE COURT HELD THAT SINCE THERE WAS NO TANGIBLE MATERIAL FOUND AND THE ADDITION WAS MERELY ON THE B ASIS OF STATEMENT ONLY THEN REOPENING OF ASSESSMENT U/S 147 OF THE ACT WAS NOT PERMISSIBLE. LIKEWISE, IN THE CASE OF CIT VS S. KHADER KHAN SON (2012) 254 CTR 228 (SC), AFFIRMI NG THE DECISION OF MADRAS HIGH COURT IN (2008) 300 ITR 157 (MAD.), THE WHOLE ADDITION WAS MADE SOLELY ON THE B ASIS OF STATEMENT U/S 133A AND NO OTHER MATERIAL WAS FOUND, IN THAT SITUATION, IT WAS HELD THAT THE SUCH STATEMENT HAS NO EVIDENTIARY VALUE. ITA NO.3236/MUM/2016 & 2698/MUM/2016 JAYDEEP PROFILES P.LTD 34 4.28. IN THE CASE OF ARADHNA ESTATE PVT. LTD. VS D CIT (2018) 91 TAXMANN.COM 119 (GUJARAT), THE HON'BLE HI GH COURT OBSERVED/HELD AS UNDER:- IN REASONS RECORDED BY THE ASSESSING OFFICER FOR R EOPENING THE ASSESSMENT. HE POINTED OUT THAT THE INFORMATION WAS RECEIVED FROM THE INVESTIGATION WING OF THE DEPARTMENT AT CALCUTTA RE GARDING SHELL COMPANIES WHICH HAD GIVEN ACCOMMODATION ENTRIES FOR SHARE PREMIUM TO SURAT BASED COMPANIES. A LIST OF 114 CALCUTTA BASED COMPANIES WAS PROVIDED WHICH HAD GIVEN ACCOMMODATION ENTRIES TO S UCH SURAT BASED COMPANIES. STATEMENTS OF MANY ENTRY OPERATORS AND D UMMY DIRECTORS RECORDED DURING VARIOUS SEARCH AND SEIZURE OPERATIO N, SURVEY OPERATION AND INVESTIGATION WERE CHECKED. THE ASSESSING OFFIC ER THEREUPON PROCEEDED TO RECORD THAT 'ON PERUSAL OF DATA SO PRO VIDED BY THE DEPUTY DIRECTOR (INVESTIGATION), IT IS NOTICED THAT DURING THE PERIOD UNDER CONSIDERATION, THE ASSESSEE COMPANY HAS ACCEPTED SH ARE CAPITAL/SHARE PREMIUM FROM THE FOLLOWING ENTRIES/PARTIES WHICH HA VE BEEN PROVED TO BE SHELL COMPANIES BASED ON THE INVESTIGATION CONDUCTE D BY THE DEPUTY DIRECTOR (INVESTIGATION). UNDERNEATH, HE PROVIDED A LIST OF 17 COMPANIES WHO HAD TRANSACTED WITH THE ASSESSEE COMPANY DURING THE YEAR UNDER CONSIDERATION AND WERE ALLOTED EQUITY SHARES BY PUR PORTED INVESTMENT OF SIZEABLE SHARE CAPITAL AND SHARE PREMIUM AMOUNTS. O N VERIFICATION OF SUCH MATERIALS, THE ASSESSING OFFICER NOTED THAT TH E ASSESSEE HAD RECEIVED SHARE CAPITAL/SHARE PREMIUM AMOUNT, SINCE THE INVESTOR COMPANIES WERE FOUND TO BE SHELL COMPANIES INDULGIN G IN PROVIDING ACCOMMODATION ENTRIES, THE ASSESSING OFFICER WAS OF THE OPINION THAT THE SHARE CAPITAL/SHARE PREMIUM CLAIMED TO HAVE BEEN RE CEIVED FROM THE COMPANY BY THE ASSESSEE WAS NOT GENUINE. AMOUNT IS NOTHING BUT ASSESSEE'S OWN MONEY INTRODUCED IN THE GARB OF SHAR E CAPITAL/SHARE PREMIUM FROM THE SHELL COMPANIES AND THEREFORE, SUC H AMOUNT IS LIABLE TO BE TAXED UNDER SECTION 68. HE THEREFORE, RECORDE D HIS SATISFACTION THAT THE INCOME HAD ESCAPED ASSESSMENT AND THAT THIS WAS DUE TO THE ASSESSEE HAVING FAILED TO DISCLOSE TRULY AND FULLY ALL FACTS . [PARA 7] SECTION 147 PROVIDES INTER ALIA THAT IF THE ASSESSING OFFICER HAS THE REASON TO BELIEVE THAT ANY INCOME CHARGEABLE TO TAX HAS ESCAPED ASSESSMENT, HE MAY SUBJECT TO THE PROVISIONS OF SEC TIONS 148 TO 153, ASSESS OR REASSESS SUCH INCOME. PROVISO TO SECTION 147 OF COURSE REQUIRES THAT WHERE THE ASSESSMENT UNDER SUB-SECTION (3) OF SECTION 143 HAS BEEN MADE FOR THE RELEVANT ASSESSMENT YEAR, NO ACTION SH ALL BE TAKEN UNDER THIS SECTION AFTER THE EXPIRY OF THE FOUR YEARS FRO M THE END OF THE RELEVANT ASSESSMENT YEAR, UNLESS ANY INCOME CHARGEABLE TO TA X HAS ESCAPED ASSESSMENT BY REASON OF THE FAILURE ON PART OF THE ASSESSEE TO MAKE RETURN UNDER SECTION 139 OR IN RESPONSE TO A NOTICE ISSUED UNDER SUB-SECTION (1) OF SECTION 142 OR 148 OR TO DISCLOSE FULLY AND TRUL Y ALL MATERIAL FACTS NECESSARY FOR HIS ASSESSMENT FOR THAT ASSESSMENT YE AR. IN THIS CONTEXT, IT ITA NO.3236/MUM/2016 & 2698/MUM/2016 JAYDEEP PROFILES P.LTD 35 IS WELL SETTLED THAT THE REQUIREMENT OF FULL AND TR UE DISCLOSURE ON PART OF THE ASSESSEE IS NOT CONFINED TO FILING OF RETURN AL ONE BUT WOULD CONTINUE ALL THROUGHOUT DURING THE ASSESSMENT PROCEEDINGS AL SO. IN THIS CONTEXT, THE MATERIALS ON RECORD WOULD SUGGEST THAT THE ASSE SSING OFFICER HAD RECEIVED FRESH INFORMATION AFTER THE ASSESSMENT WAS OVER PRIMA FACIE SUGGESTING THAT SIZEABLE AMOUNT OF INCOME CHARGEAB LE TO TAX IN CASE OF THE ASSESSEE HAD ESCAPED ASSESSMENT AND THAT SUC H ESCAPEMENT WAS ON ACCOUNT OF FAILURE ON PART OF THE ASSESSEE TO DISCL OSE TRULY AND FULLY ALL MATERIAL FACTS. THE ASSESSING OFFICER FORMED SUCH A BELIEF ON THE BASIS OF SUCH MATERIALS PLACED BEFORE HIM AND UPON PERUSAL O F SUCH MATERIAL. THIS IS NOT A CASE WHERE THE ASSESSING OFFICER WAS REEXAMINING THE MATERIALS AND THE DOCUMENTS ALREADY ON RECORD FILED BY THE ASSESSEE ALONG WITH THE RETURN OR SUBSEQUENTLY, BROUGHT ON R ECORD DURING THE ASSESSMENT PROCEEDINGS. IT WAS A CASE WHERE ENTIREL Y NEW SET OF DOCUMENTS AND MATERIALS WAS PLACED FOR HIS CONSIDER ATION COMPILED IN THE FORM OF REPORT RECEIVED FROM THE INVESTIGATION WING. SUCH MATERIAL WAS PERUSED BY THE ASSESSING OFFICER AND UPON EXAMI NATION THEREOF, HE FORMED A BELIEF THAT THE ASSESSEE COMPANY HAD RECEI VED SHARE APPLICATION AND SHARE PREMIUM MONEY FROM AS MANY AS 20 DIFFEREN T INVESTOR COMPANIES WHO WERE FOUND TO BE SHELL COMPANIES AND INDULGING IN GIVING ACCOMMODATION ENTRIES. FROM THIS VIEW POINT, SINCE THE ASSESSING OFFICER HAD SUFFICIENT MATERIAL AT HIS COMMAND TO FORM SUCH A BELIEF. SUCH MATERIALS DID NOT FORM PART OF THE ORIGINAL ASSESSM ENT PROCEEDINGS AND WAS PLACED BEFORE THE ASSESSING OFFICER ONLY AFTER THE ASSESSMENT WAS COMPLETED. SINCE ON THE BASIS OF SUCH MATERIALS, AS SESSING OFFICER, CAME TO A REASONABLE BELIEF THAT INCOME CHARGEABLE TO TA X HAD ESCAPED ASSESSMENT, MERELY BECAUSE THESE TRANSACTIONS WERE SCRUTINISED BY THE ASSESSING OFFICER DURING THE ORIGINAL ASSESSMENT AL SO WOULD NOT PRECLUDE HIM FROM REOPENING THE ASSESSMENT. HIS SCRUTINY DUR ING THE ASSESSMENT WILL NECESSARILY BE ON THE BASIS OF THE DISCLOSURES MADE BY THE ASSESSEE. [PARA 8] THE CONTENTION THAT THERE WAS NO FAILURE ON PART OF THE ASSESSEE TO DISCLOSE TRULY AND FULLY FACTS CANNOT BE ACCEPTED. THE ASSESSING OFFICER, AS NOTED, RECEIVED FRESH MATERIAL AFTER THE ASSESSM ENT WAS OVER, PRIMA FACIE , SUGGESTING THAT THE ASSESSEE COMPANY HAD RECEIVED BOGUS SHARE APPLICATION/PREMIUM MONEY FROM NUMBER OF SHELL COMP ANIES. [PARA 10] MERELY BECAUSE THE TRANSACTIONS IN QUESTION WERE EX AMINED BY THE ASSESSING OFFICER DURING THE ORIGINAL ASSESSMENT WO ULD NOT MAKE ANY DIFFERENCE. THE SCRUTINY WAS ON THE BASIS OF DISCLO SURES MADE AND MATERIALS SUPPLIED BY THE ASSESSEE. SUCH MATERIAL I S FOUND TO BE PRIMA FACIE UNTRUE AND DISCLOSURES NOT TRUTHFUL. EARLIER SCRUT INY OR EXAMINATION ON THE BASIS OF SUCH DISCLOSURES OR MATERIALS WOULD NOT DEBAR A FRESH ASSESSMENT. EACH INDIVIDUAL CASE OF THIS NATURE IS BOUND TO HAVE SLIGHT DIFFERENCE IN FACTS. [PARA 11] THE NEXT CONTENTION THAT THE ASSESSING OFFICER DID NOT DEMONSTRATE ANY MATERIAL ENABLING HIM TO FORM A BELIEF THAT INCOME CHARGEABLE TO TAX HAS ESCAPED ASSESSMENT IS FALLACIOUS. THE ASSESSING OFF ICER RECORDED ITA NO.3236/MUM/2016 & 2698/MUM/2016 JAYDEEP PROFILES P.LTD 36 DETAILED REASONS POINTING OUT THE MATERIAL AVAILABL E WHICH HAD A LIVE LINK WITH FORMATION OF BELIEF THAT THE INCOME CHARGEABLE TO TAX HAD ESCAPED ASSESSMENT. AT THIS STAGE, AS IS OFTEN REPEATED, ON E WOULD NOT GO INTO SUFFICIENCY OF SUCH REASONS. [PARA 13] SECTION 68 AS IS WELL KNOWN, PROVIDES THAT WHERE AN Y SUM IS FOUND CREDITED IN THE BOOKS OF AN ASSESSEE MAINTAINED FOR ANY PREVIOUS YEAR, AND THE ASSESSEE OFFERS NO EXPLANATION ABOUT THE NA TURE AND SOURCE THEREOF OR THE EXPLANATION OFFERED BY HIM IS NOT, I N THE OPINION OF THE ASSESSING OFFICER, SATISFACTORY, THE SUM SO CREDITE D MAY BE CHARGED TO INCOME TAX AS THE INCOME OF THE ASSESSEE OF THAT PR EVIOUS YEAR. THAT THE SHARE APPLICATION MONEY RECEIVED BY THE ASSESSEE FR OM ABOVE-NOTED COMPANIES WAS ONLY BY NATURE OF ACCOMMODATION ENTRI ES AND IN REALITY, IT WAS THE FUNDS OF THE ASSESSEE WHICH WAS BEING RE-RO UTED. UNDOUBTEDLY. SECTION 68 WOULD HAVE APPLICABILITY. PROVISO ADDED BY THE FINANCE ACT, 2012 WITH EFFECT FROM 1-4-2013, DOES NOT CHANGE THI S POSITION. [PARA 14] AS PER THIS PROVISO, WHERE THE ASSESSEE IS A COMPAN Y AND THE SUM SO CREDITED CONSISTS OF SHARE APPLICATION MONEY, SHARE CAPITAL, SHARE PREMIUM OR ANY SUCH AMOUNT BY WHATEVER NAME CALLED, EXPLANATION OFFERED BY THE ASSESSEE COMPANY SHALL BE DEEMED TO BE NOT SATISFACTORY, UNLESS THE PERSON IN WHOSE NAME SUCH CREDIT IS RECO RDED IN THE BOOKS OF THE COMPANY ALSO OFFERS AN EXPLANATION ABOUT THE NA TURE AND SOURCE OF SUM SO CREDITED AND SUCH EXPLANATION IN THE OPINION OF THE ASSESSING OFFICER HAS BEEN FOUND TO BE SATISFACTORY. ESSENTIA LLY, THIS PROVISO EASES THE BURDEN OF PROOF ON THE REVENUE WHILE MAKING ADD ITION UNDER SECTION 168 WITH RESPECT TO NON GENUINE SHARE APPLICATION M ONEY OF THE COMPANIES. EVEN IN ABSENCE OF SUCH PROVISO AS WAS T HE CASE GOVERNING THE PERIODS WITH WHICH WE ARE CONCERNED IN THE PRES ENT CASE, IF FACTS NOTED BY THE ASSESSING OFFICER AND RECORDED IN REAS ONS ARE ULTIMATELY ESTABLISHED, INVOCATION OF SECTION 68 WOULD BE CALL ED FOR. [PARA 15] THE CONTENTION THAT THE ASSESSING OFFICER HAD MEREL Y AND MECHANICALLY ACTED ON THE REPORT OF THE INVESTIGATION WING ALSO CANNOT BE ACCEPTED. ONE HAS REPRODUCED THE REASONS RECORDED BY THE ASSE SSING OFFICER AND NOTED THE GIST OF HIS REASONS FOR RESORTING TO REOP ENING OF THE ASSESSMENT. THE ASSESSING OFFICER HAD PERUSED THE MATERIALS PLA CED FOR HIS CONSIDERATION AND THEREUPON, UPON EXAMINATION OF SU CH MATERIALS FORMED A BELIEF THAT INCOME CHARGEABLE TO TAX HAD ESCAPED ASSESSMENT. [PARA 16] IN THE RESULT, PETITION IS DISMISSED. [PARA 17] 4.29. THE HON'BLE GUJARAT HIGH COURT WHILE VALIDAT ING THE REOPENING OF ASSESSMENT UNDER SECTION 147/148 O F THE ACT IN A LATER ORDER (AFORESAID) DATED 20/02/2018 O N THE ITA NO.3236/MUM/2016 & 2698/MUM/2016 JAYDEEP PROFILES P.LTD 37 ISSUE OF CASH CREDIT (SHARE APPLICATION MONEY) DULY CONSIDERED THE ARGUMENTS OF BOTH SIDES AND FOLLOWED THE FOLLOWING THE DECISIONS I. JAYANT SECURITY AND FINANCE LTD. V. ASSTT. CIT [SPECIAL CIVIL APPLICATION NO. 18921 OF 2017, DATED 12-2-2018] (PA RA 12); II. RAYMOND WOOLEN MILLS LTD. V. ITO [1999] 236 ITR 34 (SC) (PARA 13); III. CIT V. RAJESH JHAVERI STOCK BROKERS (P.) LTD. [2007] 291 ITR 500/161 TAXMAN 316 (SC) (PARA 13) IV. PR. CIT V. GOKUL CERAMICS [2016] 241 TAXMAN 1/71 TAXMANN.COM 341 (GUJ.) (PARA 16) AND DISTINGUISHED THE FOLLOWING DECISIONS I. ALLIED STRIPS LTD. V. ASSTT. CIT [2016] 384 ITR 424/69 TAXMANN.COM 444 (DELHI) (PARA 11) AND II. YOGENDRAKUMAR GUPTA V. ITO [2014] 366 ITR 186/46 TAXMANN.COM 56 (GUJ.) (PARA 11) THE HON'BLE HIGH COURT WHILE UPHOLDING THE VALIDITY OF REOPENING ALSO CONSIDERED FOLLOWING DECISION, WHICH WERE REFERRED BY BOTH SIDES- I. ALLIED STRIPS LTD. V. ASSTT. CIT [2016] 384 ITR 424/69 TAXMANN.COM 444 (DELHI) (PARA 5), II. HARIKRISHAN SUNDERLAL VIRMANI V. DY. CIT [2017] 394 ITR 146 (GUJ.) (PARA 5), III. RAYMOND WOOLEN MILLS LTD.V. ITO [1999] 236 ITR 34 (SC) (PARA 6), ITA NO.3236/MUM/2016 & 2698/MUM/2016 JAYDEEP PROFILES P.LTD 38 IV. YOGENDRAKUMAR GUPTA V. ITO [2014] 366 ITR 186/46 TAXMANN.COM 56 (GUJ.) (PARA 6), V. AASPAS MULTIMEDIA LTD. V. DY. CIT [2017] 83 TAXMANN.COM 82/249 TAXMAN 568 (GUJ.) (PARA 6), VI. JAYANT SECURITY & FINANCE LTD. V. ASSTT. CIT [SP. CIVIL APPLICATION NO. 18921 OF 2017, DATED 12-2-2018] (PARA 12), VII. ASSTT. CIT V. RAJESH JHAVERI STOCK BROKERS (P.) LTD. [2007] 291 ITR 500/161 TAXMAN 316 (SC) (PARA 13) AND VIII. PR. CIT V. GOKUL CERAMICS [2016] 241 TAXMAN 1/71 TAXMANN.COM 341 (GUJ.) (PARA 16). 4.30. THE SUM AND SUBSTANCE OF THE AFORESAID DECIS ION WAS THAT SINCE THE ASSESSING OFFICER WAS HAVING SUF FICIENT MATERIAL AT HIS COMMAND TO FORM A REASONABLE BELIEF THAT INCOME CHARGEABLE TO TAX HAD ESCAPED ASSESSMENT, ME RELY BECAUSE THIS TRANSACTIONS WERE SCRUTINIZE BY THE AS SESSING OFFICER DURING THE ORIGINAL ASSESSMENT, WOULD NOT P RECLUDE HIM FROM REOPENING ASSESSMENT. THUS, THE ASSESSMENT NOTICE WAS HELD TO BE JUSTIFIED. IN THE APPEAL BEFO RE US, THE LD. ASSESSING OFFICER RECEIVED INFORMATION DATED 12/03/2014, THEREFORE, THE LD. ASSESSING OFFICER WA S UNDER A REASONABLE BELIEF THAT INCOME CHARGEABLE TO TAX HAS ESCAPED ASSESSMENT AS THE LD. ASSESSING OFFICER HAD NOT FORMED ANY OPINION AND THIS INFORMATION WAS RECEIVE D AT THE LATER STAGE, WHICH IN OUR OPINION WAS SUFFICIEN T TO ITA NO.3236/MUM/2016 & 2698/MUM/2016 JAYDEEP PROFILES P.LTD 39 INITIATE REASSESSMENT PROCEEDINGS. EXPLANATION-1 TO SECTION 147 OF THE ACT SUPPORTS OUR VIEW. REFERRING TO THE SAID EXPLANATION IN CONSOLIDATED PHOTO & FINVEST LTD. (2 006) 281 ITR 394 (DEL.), HON'BLE HIGH COURT OBSERVED AS UNDER:- 8. IT IS CLEAR FROM THE ABOVE THAT THE TWO CRITICAL A SPECTS WHICH NEED TO BE ADDRESSED IN ANY ACTION UNDER SECTION 147 ARE WHETHER THE ASSESSING OFFICER HAS 'REASON TO BELIEVE' THAT ANY INCOME CHARGEABLE TO TAX HAS ESCAPED ASSESSMENT AND WHETHER THE PROPO SED REASSESSMENT IS WITHIN THE PERIOD OF LIMITATION PRESCRIBED UNDER THE PROVISO TO SECTION 147. EXPLANATION (1 ) TO THE SAID PROVISION MAKES IT CLEAR THAT PRODUCTION OF ACCOUNT BOOKS OR OTHER EVIDENCE FROM WHICH THE ASSESSING OFFICER COULD WITH DUE DILIGENCE DISCOVER MATERIAL EVIDENCE WOULD NOT NECESSARILY AMOUNT TO DISCLOSURE WITHIN T HE MEANING OF THE PROVISO THAT STIPULATES AN EXTENDED PERIOD OF LIMIT ATION FOR ACTION IN CASES WHERE THE ESCAPEMENT ARISES OUT OF THE FAILUR E ON THE PART OF THE ASSESSEE TO DISCLOSE FULLY AND TRULY ALL MATERIAL F ACTS NECESSARY FOR ASSESSMENT. 4.31. THE FORMATION OF OPINION BY THE ASSESSING OF FICER HAS TO BE CONSIDERED ON THE TOUCH STONE WHETHER THE RE WAS REASONABLE BELIEF THAT INCOME CHARGEABLE TO TAX HAD ESCAPED ASSESSMENT AND FOR THAT PURPOSE, THE HON'BL E APEX COURT IN RAYMOND WOOLEN MILLS LTD. VS INCOME TAX OF FICER THROWS LIGHT ON THE ISSUE AND FURTHER BY HON'BLE JURISDICTIONAL HIGH COURT IN M/S GIRILAL & COMPANY VS INCOME TAX OFFICER 300 ITR 432 (BOM.). IT IS ALSO N OTED THAT ORIGINALLY THE ASSESSEE DECLARED INCOME OF RS. 4,23 ,760/- IN ITS RETURN FILED ON 29.09.2009 AND SCRUTINY ASSESSM ENT UNDER SECTION. 143(3) WAS NOT DONE ORIGINALLY. ITA NO.3236/MUM/2016 & 2698/MUM/2016 JAYDEEP PROFILES P.LTD 40 SUBSEQUENTLY, THE CASE WAS REOPENED UNDER SECTION 1 47 AS THERE WAS INFORMATION FROM THE INVESTIGATION WING A ND SALES TAX DEPARTMENT THAT THE ASSESSEE OBTAINED ACCOMMODATION BILLS IN RESPECT OF PURCHASES MADE FR OM HAWALA PARTIES AMOUNTING TO RS. 3,14,51,949/-. NOT ICE UNDER SECTION 148 DATED 14 TH MARCH 2014, WAS SERVED UPON THE ASSESSEE ALONG WITH THE REASONS OF REOPENING. THEREAFTER, NOTICE UNDER SECTION 142(1) AND 143(2) WERE ISSUED AND SERVED UPON THE ASSESSEE. ANOTHER NOTIC E UNDER SECTION 142(1) DATED 24.11.2014, WAS SERVED U PON THE ASSESSEE CALLING FOR SPECIFIC DETAILS. AS PER THE REVENUE, ASSESSEE COULD NOT SUBMIT THE DOCUMENTARY EVIDENCE TO PROVE THE GENUINENESS OF THE TRANSACTION/PURCHASES OF THE SAID PARTIES. EVEN NO CONFIRMATION FROM THE PARTIES WAS SUBMITTED. EVEN THE ADDRESSES OF THE PARTIES WERE NOT FURNISHED BY THE ASSESSEE. THUS, WE FOUND THAT THERE WAS FRESH INFO RMATION WITH THE ASSESSING OFFICER, WHICH IN OUR VIEW, ENTI TLE THE ASSESSING OFFICER TO HAVE PRIMA FACIE REASON TO BEL IEVE THAT INCOME CHARGEABLE TO TAX HAD ESCAPED ASSESSMENT. TH E RATIO LAID DOWN BY HON'BLE APEX COURT IN CLAGGETT B RACHI ITA NO.3236/MUM/2016 & 2698/MUM/2016 JAYDEEP PROFILES P.LTD 41 COMPANY LTD. VS CIT 177 ITR 409 (SUPREME COURT), HON'BLE BOMBAY HIGH COURT IN ANUSANDHAN INVESTMENT LTD. VS DCIT 287 ITR 482 AND PIAGGIO VHICLES PVT. L TD. VS DCIT 290 ITR 377 (BOM.) HELD THAT IN A CASE OF REOP ENING AFTER FOUR YEARS SUBSEQUENT TO SCRUTINY ASSESSMENT, CONTRADICTION WAS RECOVERED BY BETWEEN TAX AUDIT RE PORT AND RETURN OF INCOME, IT WAS A CASE OF OMISSIONS AN D/OR FAILURE ON THE PART OF THE ASSESSEE TO DISCLOSE FUL LY AND TRULY ALL FACTS FOR COMPUTATION OF INCOME, THEREFORE, RES PECTFULLY FOLLOWING THE AFORESAID DECISIONS AND THE FACTUAL M ATRIX NARRATED BEFORE US, WE FIND NO INFIRMITY IN THE CON CLUSION OF THE LD. COMMISSIONER OF INCOME TAX (APPEAL), THEREF ORE, THE ON THE IMPUGNED ISSUE OF VALIDITY OF REOPENING, WE UPHOLD THE SAME, RESULTING IN TO, DISMISSAL OF THE GROUND RAISED BY THE ASSESSEE. 5. THE NEXT GROUND I.E. GROUND NOS. 4 TO 6 PERTAINS TO ADDITION OF RS. 39,31,494/- WITH RESPECT TO PURCHASES/SALES FROM SIX PARTIES. THE LEARNED COUNS EL FOR THE ASSESSEE CONTENDED THAT THE PURCHASES SO MADE A RE MADE THROUGH ACCOUNT PAYEE CHEQUE, THE DETAILS OF W HICH WERE SUBMITTED BY THE ASSESSEE. THEREFORE, THESE C ANNOT ITA NO.3236/MUM/2016 & 2698/MUM/2016 JAYDEEP PROFILES P.LTD 42 BE BOGUS AND THE CASE OF THE ASSESSEE IS COVERED BY THE DECISION IN THE CASE OF INCOME TAX OFFICER VS. DEEP AK POPATLAL GALA (ITA NO.2826/MUM/2013, ORDER DATED 5.11.2014)AND ANOTHER DECISION IN SMT. NEETA SANJAY SHAH VS. INCOME TAX OFFICER (ITA NO.6700/MUM/2017, ORDER DATED 20.07.2018). ON THE OTHER HAND, THE LEARNED DR STRONGLY DEFENDED THE ASSESSMENT ORDER BY PLACING R ELIANCE UPON THE DECISION IN THE CASE OF N K PROTEINS FROM HON'BLE APEX COURT. 6. WE HAVE CONSIDERED THE RIVAL SUBMISSIONS AND PERUSED THE MATERIAL AVAILABLE ON RECORD. WE NOTE T HAT THE LEARNED ASSESSING OFFICER MADE THE ADDITION @100% O F SUCH BOGUS PURCHASES, WHICH WAS REDUCED TO 12.5% BY THE LEARNED CIT(A). THE ASSESSEE HAS CHALLENGED THE RE TENTION OF ADDITION TO THE EXTENT OF 12.5% WHEREAS THE REVE NUE IS AGGRIEVED TO THE REDUCTION TO 12.5% BY CLAIMING THA T THE ADDITION MADE BY THE LEARNED ASSESSING OFFICER MAY BE SUSTAINED. 7. BEFORE ADVERTING FURTHER, WE DEEM IT APPROPRIAT E TO CONSIDER VARIOUS DECISIONS FROM HON'BLE HIGH ITA NO.3236/MUM/2016 & 2698/MUM/2016 JAYDEEP PROFILES P.LTD 43 COURTS/HON'BLE APEX COURT, SO THAT WE CAN REACH TO A PROPER CONCLUSION. THE HON'BLE GUJARAT HIGH COURT I N SANJAY OILCAKES INDUSTRIES VS CIT (2009) 316 ITR 27 4 (GUJ.) HELD AS UNDER:- 11. HAVING HEARD THE LEARNED ADVOCATES APPEARING FOR THE RESPECTIVE PARTIES, IT IS APPARENT THAT NO INTERFERENCE IS CALLED FOR IN THE IMPUGNED ORDER OF THE TRIBUNAL DATED APRIL 29, 1994, READ WITH THE ORDER DATED SEPTEMBER 29, 1994, MADE IN MISCELLANEOUS APPLICATION. IN THE PRINCIPAL ORDER T HE TRIBUNAL HAS RECORDED THE FOLLOWING FINDINGS : '8.3. WE HAVE CONSIDERED THE RIVAL SUBMISSIONS AND PERUSED THE FACTS ON RECORD. IN OUR OPINION, THE ACTION OF THE COMMISSIONER OF INCOME-TAX (APPEALS) CONFIRMING 25 PER CENT. OF THE AMOUNTS CLAIMED IS FAIR AND REASONABLE AND NO INTERFERENCE IS CALLED FOR. THE COMMIS SIONER OF INCOME-TAX (APPEALS) HAS GONE THROUGH THE PURCHASE PRICES OF THE RAW MATERIAL PREVALENT AT THE TIME AND RIGHTLY CAME TO THE CON CLUSION THAT THE DISALLOWANCE TO THE EXTENT OF 25 PER CENT. WAS CALLED FOR. IT IS ESTABLISHED THAT THE PARTIES WERE NOT TRACEABLE ; THEY OPENED THE BANK ACCOUNTS IN WHICH THE CHEQUES WERE CREDITED BUT SOON THEREAFTER THE AMOUNTS WERE WITHDRAWN BY BEARER CHEQUES. THAT FAIRLY LEADS TO THE CONCLUSION THAT THESE PARTIES WERE PERHAPS CREATION OF THE ASSESSEE ITSELF FOR THE PURPOSE OF BANKING PURCHASES INTO BOOKS OF ACCOUNT BECAUSE THE PURCHASES WITH BILLS WERE NOT FEASIBLE. THUS, THE ABOVENOTED PARTIES BECOME CONDUIT PIPES BETWEEN THE ASSESSEE- FIRM AND THE SELLERS OF THE RAW MATERIALS. UNDER THE CIRCUMSTANCES, IT WAS NOT ITA NO.3236/MUM/2016 & 2698/MUM/2016 JAYDEEP PROFILES P.LTD 44 IMPOSSIBLE FOR THE ASSESSEE TO INFLATE THE PRICES OF RAW MATERIALS. ACCORDINGLY, AN ADDITION AT THE RATE OF 25 PER CENT. FOR EXTRA PRICE PAID BY THE ASSESSEE THAN OVER AND ABOVE THE PREVALENT PRICE IS FAIR AND REASONABLE AND WE ACCORDINGLY CONFIRM THE FINDING OF THE COMMIS SIONER OF INCOME-TAX (APPEALS).' 12. THUS, IT IS APPARENT THAT BOTH THE COMMISSIONER (APPEALS) AND THE TRIBUNAL HAVE CONCURRENTLY ACCEPTED THE FINDING OF THE ASSESSING OFFICER THAT THE APPARENT SELLERS WHO HAD ISSUED SALE BILLS WERE NOT TRACEABLE. THAT GOODS WERE RECEIVED FROM THE PARTIES OTHER THAN THE PERSONS WHO HAD ISSUED BILLS FOR SUCH GOODS. THOUGH THE PURCHASES ARE SHOWN TO HAVE BEEN MADE BY MAKING PAYMENT THEREOF BY ACCOUNT PAYEE CHEQUES, THE CHEQUES HAVE BEEN DEPOSITED IN BANK ACCOUNTS OSTENSIBLY IN THE NAME OF THE APPARENT SELLERS, THEREAFTER THE ENTIRE AMOUNTS HAVE BEEN WITHDRAWN BY BEARER CHEQUES AND THERE IS NO TRACE OR IDENTITY OF THE PERSON WITHDRAWING THE AMOUNT FROM THE BANK ACCOUNTS. IN THE LIGHT OF THE AFORESAID NATURE OF EVIDENCE IT IS NOT POSSIBLE TO RECORD A DIFFERENT CONCLUSION, DIFFERENT FROM THE ONE RECORDED BY THE COMMISSIONER (APPEALS) AND THE TRIBUNAL CONCURRENTLY HOLDING THAT THE APPARENT SELLERS WERE NOT GENUINE, OR WERE ACTING AS CONDUIT BETWEEN THE ASSESSEE-FIRM AND THE ACTUAL SELLERS OF THE RAW MATERIALS. BOTH THE COMMISSIONER (APPEALS) AND THE TRIBUNAL HAVE, THEREFORE, COME TO THE CONCLUSION THAT IN SUCH CIRCUMSTANCES, THE LIKELIHOOD OF THE PURCHASE PRICE BEING INFLATED CANNOT BE RULED OUT AND THERE IS NO MATERIAL TO DISLODGE SUCH FINDING. THE ISSUE IS NOT WHETHER THE PURCHASE PRICE REFLECTED IN THE BOOKS OF ACCOUNT MATCHES THE PURCHASE PRICE STATED TO HAVE BEEN PAID TO OTHER PERSONS. THE ISSUE IS WHETHER THE PURCHASE PRICE PAID BY THE ASSESSEE IS REFLECTED AS RECEIPTS BY THE ITA NO.3236/MUM/2016 & 2698/MUM/2016 JAYDEEP PROFILES P.LTD 45 RECIPIENTS. THE ASSESSEE HAS, BY SET OF EVIDENCE AVAILABLE ON RECORD, MADE IT POSSIBLE FOR THE RECIPIENTS NOT BEING TRACEABLE FOR THE PURPOSE OF INQUIRY AS TO WHETHER THE PAYMENTS MADE BY THE ASSESSEE HAVE BEEN ACTUALLY RECEIVED BY THE APPARENT SELLERS. HENCE, THE ESTIMATE MADE BY THE TWO APPELLATE AUTHORITIES DOES NOT WARRANT INTERFERENCE. EVEN OTHERWISE, WHETHER THE ESTIMATE SHOULD BE AT A PARTICULAR SUM OR AT A DIFFERENT SUM, CAN NEVER BE AN ISSUE OF LAW. 7.1 IN THE AFORESAID CASE, THE HON'BLE HIGH COURT A CCEPTED THAT THE APPARENT SELLERS, WHO ISSUED THE SAID BILL S WERE NOT TRACEABLE AND THE GOODS RECEIVED FROM PARTIES OTHER THAN THE PERSONS, WHO HAD ISSUED THE BILLS FOR SUCH GOOD S. THE PURCHASES WERE SHOWN TO HAVE BEEN MADE BY MAKING PAYMENTS, THROUGH BANKING CHANNEL AND THUS THE APPA RENT SELLERS WERE NOT GENUINE OR WERE ACTING AS CONDUIT BETWEEN THE ASSESSEE AND THE ACTUAL SELLER. IN SUCH A SITUA TION, THE CONCLUSION DRAWN BY THE LD. COMMISSIONER OF INCOME TAX (APPEAL) AS WELL AS BY THE TRIBUNAL WAS AFFIRMED. HON'BLE APEX COURT IN KACHWALA GEMS VS JCIT (2007) 158 TAXM AN 71 OBSERVED THAT AN ELEMENT OF GUESSWORK IS INEVITA BLE IN CASES, WHERE ESTIMATION OF INCOME IS WARRANTED. ITA NO.3236/MUM/2016 & 2698/MUM/2016 JAYDEEP PROFILES P.LTD 46 7.2. THE HON'BLE GUJARAT HIGH COURT IN CIT VS BHOLANATH POLY FAB. PVT. LTD. (2013) 355 ITR 290 (G UJ.) HELD/OBSERVED AS UNDER:- 5. HAVING COME TO SUCH A CONCLUSION, HOWEVER, THE TRIBUNAL WAS OF THE OPINION THAT THE PURCHASES MAY HAVE BEEN MADE FROM BOGUS PARTIES, NEVERTHELESS, THE PURCHASES THEMSELVES WERE NOT BOGUS. THE TRIBUNAL ADVERTED TO THE FACTS AND DATA ON RECORD AND CAME TO THE CONCLUSION THAT THE ENTIRE QUANTITY OF OPENING STOCK, PURCHASES AND THE QUANTITY MANUFACTURED DURING THE YEAR UNDER CONSIDERATION WERE SOLD BY THE ASSESSEE. THEREFORE, THE PURCHASES OF THE ENTIRE 1,02,514 METRES OF CLOTH WERE SOLD DURING THE YEAR UNDER CONSIDERATION. THE TRIBUNAL, THEREFORE, ACCEPTED THE ASSESSEE'S CONTENTION THAT THE FINISHED GOODS WERE PURCHASED BY THE ASSESSEE, MAY BE NOT FROM THE PARTIES SHOWN IN THE ACCOUNTS, BUT FROM OTHER SOURCES. IN THAT VIEW OF THE MATTER, THE TRIBUNAL WAS OF THE OPINION THAT NOT THE ENTIRE AMOUNT, BUT THE PROFIT MARGIN EMBEDDED IN SUCH AMOUNT WOULD BE SUBJECTED TO TAX. THE TRIBUNAL RELIED ON ITS EARLIE R DECISION IN THE CASE OF SANKET STEEL TRADERS AND ALSO MADE REFERENCE TO THE TRIBUNAL'S DECISION IN THE CASE OF VIJAY PROTEINS LTD. V. ASST. CIT [1996] 58 ITD 428 (AHD). 6. WE ARE OF THE OPINION THAT THE TRIBUNAL COMMITTED NO ERROR. WHETHER THE PURCHASES THEMSELVES WERE BOGUS OR WHETHER THE PARTIES FROM WHOM SUCH PURCHASES WERE ALLEGEDLY MADE WERE BOGUS IS ESSENTIALLY A QUESTION OF FACT. THE TRIBUN AL HAVING EXAMINED THE EVIDENCE ON RECORD CAME TO THE CONCLUSION THAT THE ASSESSEE DID PURCHASE THE ITA NO.3236/MUM/2016 & 2698/MUM/2016 JAYDEEP PROFILES P.LTD 47 CLOTH AND SELL THE FINISHED GOODS. IN THAT VIEW OF THE MATTER, AS NATURAL COROLLARY, NOT THE ENTIRE AMOUNT COVERED UNDER SUCH PURCHASE, BUT THE PROFIT ELEMENT EMBEDDED THEREIN WOULD BE SUBJECT TO TAX. THIS WAS THE VIEW OF THIS COURT IN THE CASE OF SANJAY OILCAKE INDUSTRIES V. CIT [2009] 316 ITR 274 (GUJ). SUCH DECISION IS ALSO FOLLOWED BY THIS COURT IN A JUDGMENT DATED AUGUST 16, 2011, IN TAX APPEAL NO. 679 OF 2010 IN THE CASE OF CIT V. KISHOR AMRUTLAL PATEL. IN THE RESULT, TAX APPEAL IS DISMISSED. 7.3. LIKEWISE, THE HON'BLE GUJARAT HIGH COURT IN C IT VS VIJAY M. MISTRY CONSTRUCTION LTD. (2013) 355 ITR 498 (GUJ.) HELD/OBSERVED AS UNDER:- 6. AS IS APPARENT FROM THE FACTS NOTED HEREINABOVE, THE COMMISSIONER (APPEALS) AFTER APPRECIATING THE EVIDENCE ON RECORD HAS FOUND THAT THE ASSESSEE HAD IN FACT MADE THE PURCHASES AND, HENCE, THE ASSESSING OFFICER WAS NOT JUSTIFIED IN DISALLOWING THE ENTIRE AMOUNT. HE, HOWEVER, WAS OF THE VIEW THAT THE ASSESSEE HAD INFLATED THE PURCHASES AND, ACCORDINGLY, BY PLACING RELIANCE ON THE DECISION OF THE TRIBUNAL IN THE CASE OF VIJAY PROTEINS (SUPRA) RESTRICTED THE DISALLOWANCE TO 20 PER CENT. THE TRIBUNAL IN THE IMPUGNED ORDER HAS FOLLOWED ITS EARLIER ORDER IN THE CASE OF VIJAY PROTEINS TO THE LETTER AND ENHANCED THE DISALLOWANCE TO 25 PER CENT. THUS, IN BOTH CASES, THE DECISION OF THE COMMISSIONER (APPEALS) AS WELL AS THAT OF THE TRIBUNAL IS BASED ON ESTIMATE. THIS HIGH COURT IN THE CASE OF SANJAY OIL CAKE [2009] 316 ITR 274 (GUJ) HAS HELD THAT WHETHER AN ESTIMATE SHOULD BE AT A PARTICULAR SUM OR AT A DIFFERENT SUM CAN NEVER BE A QUESTION OF LAW. ITA NO.3236/MUM/2016 & 2698/MUM/2016 JAYDEEP PROFILES P.LTD 48 7. THE APEX COURT IN THE CASE OF KACHWALA GEMS [2007] 288 ITR 10 (SC) HAS HELD THAT IN A BEST JUDGMENT ASSESSMENT THERE IS ALWAYS A CERTAIN DEGREE OF GUESS WORK. NO DOUBT, THE AUTHORITIES SHOULD TRY TO MAKE AN HONEST AND FAIR ESTIMATE OF THE INCOME EVEN IN A BEST JUDGMENT ASSESSMENT AND SHOULD NOT ACT TOTALLY ARBITRARILY BUT THERE IS NECESSARILY SOME AMOUNT OF GUESS WORK INVOLVED IN A BEST JUDGMENT ASSESSMENT. 8. EXAMINING THE FACTS OF THE PRESENT CASE IN THE LIGHT OF THE AFORESAID DECISIONS, THE DECISION OF T HE TRIBUNAL, BEING BASED ON AN ESTIMATE, DOES NOT GIVE RISE TO ANY QUESTION OF LAW SO AS TO WARRANT INTERFERENCE. 9. IN SO FAR AS THE PROPOSED QUESTIONS (C), (D) AND (E) ARE CONCERNED, THE SAME ARE SIMILAR TO THE PROPOSED QUESTION (A) WHEREIN THE TRIBUNAL HAS RESTRICTED THE ADDITION TO 25 PER CENT. ON SIMILAR FACTS. IN THE CIRCUMSTANCES, FOR THE REASONS STATED HEREINABOVE, THE SAID GROUNDS OF APPEAL DO NOT GIVE RISE TO ANY QUESTION OF LAW. 10. AS REGARDS THE PROPOSED QUESTION (B) WHICH PERTAINS TO THE DELETION OF ADDITION OF RS. 7,88,59 0 MADE ON ACCOUNT OF INFLATION OF EXPENSES PAID TO METAL AND MACHINE TRADING CO. (MMTC), THE ASSESSING OFFICER HAS FOUND THAT MMTC WAS A PARTNERSHIP FIRM OF SHRI NITIN GAJJAR ALONG WITH HI S FATHER AND BROTHER OPERATING FROM BHAVNAGAR. A PERUSAL OF THEIR TRANSACTIONS WITH THE ASSESSEE INDICATED THAT THERE IS SOME INFLATION OF EXPENSES AS DETAILED IN PARAGRAPH 6.1 OF THE ASSESSMENT ORDER. AFTER CONSIDERING THE EVIDENCE ON RECORD, TH E ASSESSING OFFICER DISALLOWED THE AMOUNT RS. 7,88,590 ON ACCOUNT OF PAYMENT MADE TO MMTC. 11. THE ASSESSEE PREFERRED AN APPEAL BEFORE THE COMMISSIONER (APPEALS), WHO UPON APPRECIATION OF THE EVIDENCE ON RECORD FOUND THAT THE ASSESSING OFFICER HAD NOT REJECTED THE GENUINENESS OF THE PURCHASES MADE FROM MMTC WHILE MAKING THE ITA NO.3236/MUM/2016 & 2698/MUM/2016 JAYDEEP PROFILES P.LTD 49 DISALLOWANCE. HIS OBSERVATIONS WERE BASED ON INFLATION OF RATES WHICH WERE BEING CHARGED FROM THE ASSESSEE. ACCORDING TO THE COMMISSIONER (APPEALS), THOUGH MMTC IN SOME RESPECT COULD BE ATTRIBUTED TO BE ASSOCIATED WITH THE ASSESSEE- COMPANY, STILL IT COULD NOT BE EXPECTED THAT MMTC WAS CARRYING OUT ITS BUSINESS WITHOUT ANY MOTIVE OR PROFIT. ACCORDING TO THE COMMISSIONER (APPEALS), IT WAS PROVED BY THE ASSESSEE THAT THE RATES CHARGED BY MMTC WERE COMPARABLE WITH THE PREVAILING MARKET RATES, NO SUCH ADDITION CAN STAND. THE COMMISSIONER (APPEALS) TOOK NOTE OF THE FACT THAT IT WAS NOT THE CASE OF THE ASSESSING OFFICER THAT THE PURCHASES HAD BEEN DIRECTLY EFFECTED FROM THIRD PARTIES AND NOT DIRECTLY FROM MMTC ; THE DIFFERENCE COULD NOT BE THE NET PROFIT I N THE HANDS OF MMTC ; AND THAT WHILE CONDUCTING THE ENTIRE EXERCISE MMTC WOULD HAVE TO INCUR CERTAIN EXPENDITURE IN TRANSPORTATION, IN ENGAGING PERSONNEL IN THE OFFICE AND OTHER OPERATIONS AND WAS ACCORDINGLY OF THE VIEW THAT THERE WAS NO CASE OF ACTUAL INFLATION OF RATES AND DELETED THE ADDITI ON. 12. THE TRIBUNAL, IN THE IMPUGNED ORDER, HAS CONCURRED WITH THE FINDINGS RECORDED BY THE COMMISSIONER (APPEALS) AND HAS FOUND THAT THE ASSESSEE HAD MADE PURCHASES FROM MMTC AT THE PREVAILING MARKET RATES AND THAT MMTC HAD INCURRED CERTAIN EXPENDITURE IN ENGAGING PERSONNEL IN THE OFFICE AND OTHER OPERATIONS AND WOULD MAKE SOME INCOME FROM THE ENTIRE EXERCISE. IN THE CIRCUMSTANCES, THE PURCHASES MADE BY THE ASSESSEE FROM MMTC WOULD NOT BE HIT BY THE PROVISIONS OF SECTION 40A(2) OF THE ACT. 13. THUS, THE CONCLUSION ARRIVED AT BY THE TRIBUNAL IS BASED ON CONCURRENT FINDINGS OF FACT RECORDED BY THE COMMISSIONER (APPEALS) AS WELL AS THE TRIBUNAL. IT IS NOT THE CASE OF THE REVENUE THAT TH E TRIBUNAL HAS TAKEN INTO ACCOUNT ANY IRRELEVANT MATERIAL OR THAT ANY RELEVANT MATERIAL HAS NOT BEEN TAKEN INTO CONSIDERATION. IN THE ABSENCE OF ANY ITA NO.3236/MUM/2016 & 2698/MUM/2016 JAYDEEP PROFILES P.LTD 50 MATERIAL TO THE CONTRARY BEING POINTED OUT ON BEHAL F OF THE REVENUE, THE IMPUGNED ORDER BEING BASED ON CONCURRENT FINDINGS OF FACT RECORDED BY THE TRIBUNA L UPON APPRECIATION OF THE EVIDENCE ON RECORD, DOES NOT GIVE RISE TO ANY QUESTION OF LAW IN SO FAR AS T HE PRESENT GROUND OF APPEAL IS CONCERNED. 14. IN RELATION TO THE PROPOSED QUESTION (F) WHICH RELATES TO THE DELETION OF ADDITION OF RS. 44,54,42 6 MADE ON ACCOUNT OF PURCHASE OF CRANE AND ALLOWING DEPRECIATION ON THE SAME, THE ASSESSING OFFICER OBSERVED THAT THE ASSESSEE HAD PURCHASED A CRAWLER CRANE FOR AN AMOUNT OF RS. 24,61,000 EXCLUDING THE COST OF SPARE PARTS OF RS. 14,98,490. THE ASSESSING OFFICER AFTER EXAMINING THE EVIDENCE ON RECORD AND CONSIDERING THE EXPLANATION GIVEN BY THE ASSESSEE, MADE ADDITION OF RS. 44,54,426, RS. 39,59,490 BEING THE PURCHASE PRICE OF THE CRANE ALONG WITH ITS SPARE PARTS AND RS. 4,94,936 BEING DEPRECIATION CLAIMED BY THE ASSESSEE. THE COMMISSIONER (APPEALS), UPON APPRECIATION OF EVIDENCE ON RECORD, WAS OF THE VIEW THAT THE ASSESSING OFFICER HAS NOT APPRECIATED THE FACTS OF THE CASE PROPERLY AND HAD MADE DISALLOWANCE WHICH WAS NOT PERMITTED BY THE INCOME-TAX ACT. IT WAS HELD THAT DISALLOWANCE COULD ONLY HAVE BEEN MADE IN RESPECT OF EXPENSES DEBITED TO THE PROFIT AND LOSS ACCOUNT WHEREAS IN THE PRESENT CASE THE PURCHASE OF CRANE AND SPARE PARTS OF THE CRANE AND OTHER MACHINERIES WERE IN THE NATURE OF ACQUISITION OF CAPITAL ASSET. ACCORDING TO THE COMMISSIONER (APPEALS), THE DISALLOWANCE COULD HAVE BEEN MADE ON DEPRECIATION ONLY IF AT ALL THE ASSESSING OFFICE R CONCLUSIVELY PROVED THAT THE PURCHASES OF CRANE AND OTHER PARTS ARE BOGUS. UPON APPRECIATION OF THE MATERIAL ON RECORD THE COMMISSIONER (APPEALS) FOUND THAT THE ASSESSING OFFICER HAS SIMPLY BRUSHED ASIDE ALL THE EVIDENCE ON ACCOUNT OF TECHNICAL INFIRMITIES AND THAT THE EVIDENCE SUCH AS OCTROI RECEIPT ; HYPOTHECATION OF THE CRANE TO THE BANK; EXISTENCE OF THE CRANE EVEN TILL DATE WITH TH E ASSESSEE CONCLUSIVELY PROVED THAT THE CRANE WAS ITA NO.3236/MUM/2016 & 2698/MUM/2016 JAYDEEP PROFILES P.LTD 51 PURCHASED AND IT WAS IN USE EVEN AS ON DATE WITH THE ASSESSEE. THE COMMISSIONER (APPEALS) ACCORDINGLY FOUND THAT THERE WAS NO SCOPE FOR ANY DISALLOWANCE AND ACCORDINGLY DELETED THE DISALLOWANCE MADE ON ACCOUNT OF PURCHASE OF CRANE AND ALLOWED THE DEPRECIATION AS CLAIMED BY THE ASSESSEE. 15. THE TRIBUNAL, IN THE IMPUGNED ORDER, HAS NOTED THAT THE COST OF CRANE WAS NEVER CLAIMED BY THE ASSESSEE IN THE RETURN OF INCOME. BEFORE THE TRIBUNAL, THE ASSESSEE PRODUCED THE EVIDENCE THAT THE CRANE IN QUESTION WAS REGISTERED WITH THE RTO AND THE SAME WAS WHOLLY AND EXCLUSIVELY USED FOR THE PURPOSES OF ITS BUSINESS. THE TRIBUNAL, THEREFORE, HELD THAT THE COMMISSIONER (APPEALS) WAS LEGALLY AND FACTUALLY CORRECT IN DELETING THE DISALLOWANCE OF COST OF CRANE AS WELL AS DEPRECIATION THEREON. 16. FROM THE FACTS EMERGING FROM THE RECORD, IT IS APPARENT THAT THE ASSESSEE HAD NEVER CLAIMED THE COST OF THE CRANE IN THE RETURN NOR HAD IT DEBITED THE EXPENSES TO THE PROFIT AND LOSS ACCOUNT, AND AS SUCH THE QUESTION OF DISALLOWING THE SAME AND ADDING THE SAME TO THE INCOME WOULD NOT ARISE. MOREOVER, IN THE ABSENCE OF ANY EVIDENCE TO INDICATE THAT THE PURCHASE WAS BOGUS OR THAT THE CRANE IN FACT DID NOT EXIST, THE QUESTION OF DISALLOWING THE DEPRECATION IN RESPECT OF THE SAME ALSO WOULD NOT ARISE. WHEN THE ASSESSEE HAD CONCLUSIVELY PROVED THE PURCHASE AND EXISTENCE OF THE CRANE, AND HAD NOT DEBITED THE EXPENSES TO THE PROFIT AND LOSS ACCOUNT, NO ADDITION COULD HAVE BEEN MADE IN RESPECT OF THE PURCHASE PRICE NOR COULD HAVE DEPRECIATION BEEN DISALLOWED IN RESPECT THEREOF. THE TRIBUNAL WAS, THEREFORE, JUSTIFIED IN DELETING THE ADDITION AS WELL AS DISALLOWANCE OF DEPRECIATION. 17. IN THE LIGHT OF THE AFORESAID DISCUSSION, IT IS NOT POSSIBLE TO STATE THAT THERE IS ANY LEGAL INFIRMITY IN ITA NO.3236/MUM/2016 & 2698/MUM/2016 JAYDEEP PROFILES P.LTD 52 THE IMPUGNED ORDER MADE BY THE TRIBUNAL SO AS TO WARRANT INTERFERENCE. IN THE ABSENCE OF ANY QUESTION OF LAW, MUCH LESS, A SUBSTANTIAL QUESTION OF LAW, THE APPEAL IS DISMISSED. 7.4. THE HON'BLE JURISDICTIONAL HIGH COURT IN THE CASE OF CIT VS ASHISH INTERNATIONAL LTD. (ITA NO.4299/20 09) ORDER DATED 22/02/2011, OBSERVED/HELD AS UNDER:- THE QUESTION RAISED IN THIS APPEAL IS, WHETHER THE TRIBUNAL WAS JUSTIFIED IN DELETING THE ADDITION ON ACCOUNT OF BOGUS PURCHASES ALLEGEDLY MADE BY THE ASSESSEE FROM M/S. THAKKAR AGRO INDUSTRIAL CHEM SUPPLIES P. LTD. ACCORDING TO THE REVENUE, THE DIRECTOR OF M/S. THAKKAR AGRO INDUSTRIAL CHEM SUPPLIES P. LTD. IN HIS STATEMENT HAD STATED THAT THERE WERE NO SALES / PURCHASES BUT THE TRANSACTIONS WERE ONLY ACCOMMODATION BILLS NOT INVOLVING ANY TRANSACTIONS. THE TRIBUNAL HAS RECORDED A FINDING OF FACT THAT THE ASSESSEE HAD DISPUTED THE CORRECTNESS OF THE ABOVE STATEMENT AND ADMITTEDLY THE ASSESSEE WAS NOT GIVEN ANY OPPORTUNITY TO CROSS EXAMINE THE CONCERNED DIRECTOR OF M/S. THAKKAR AGRO INDUSTRIAL CHEM SUPPLIES P. LTD. WHO HAD MADE THE ABOVE STATEMENT. THE APPELLATE AUTHORITY HAD SOUGHT REMAND REPORT AND EVEN AT THAT STAGE THE GENUINENESS OF THE STATEMENT HAS NOT BEEN ESTABLISHED BY ALLOWING CROSS EXAMINATION OF THE PERSON WHOSE STATEMENT WAS RELIED UPON BY THE REVENUE. IN THESE CIRCUMSTANCES, THE DECISION OF THE TRIBUNAL BEING BASED ON THE FACT, NO SUBSTANTIAL QUESTION OF LAW CAN BE SAID TO ARISE FROM THE ORDER OF THE TRIBUNAL. THE APPEAL IS DISMISSED WITH NO ORDER AS TO COSTS. ITA NO.3236/MUM/2016 & 2698/MUM/2016 JAYDEEP PROFILES P.LTD 53 7.5. THE HON'BLE GUJARAT HIGH COURT IN CIT VS M.K. BROTHERS (163 ITR 249) HELD/OBSERVED AS UNDER:- BEING AGGRIEVED BY THE AFORESAID ORDER, THE ASSESSEE WENT IN SECOND APPEAL BEFORE THE TRIBUNAL. IT WAS URGED ON BEHALF OF THE ASSESSEE THAT THE TRANSACTIONS IN QUESTION WERE NORMAL BUSINESS TRANSACTIONS AND THE ASSESSEE HAD MADE PAYMENTS BY CHEQUES. THE PARTIES DID NOT COME FORWARD AND IF THEY DID NOT COME, THE ASSESSEE SHOULD NOT SUFFER. HOWEVER, ON BEHALF OF THE REVENUE, IT WAS URGED THA T DETAILED INQUIRIES WERE MADE AND THEREAFTER THE CONCLUSION WAS REACHED. THE TRIBUNAL FOUND THAT THERE WAS NO EVIDENCE ANYWHERE THAT THESE CONCERNS GAVE BOGUS VOUCHERS TO THE ASSESSEE. NO DOUBT, THER E WERE CERTAIN DOUBTFUL FEATURES, BUT THE EVIDENCE WA S NOT ADEQUATE TO CONCLUDE THAT THE PURCHASES MADE BY THE ASSESSEE FROM THE SAID PARTIES WERE BOGUS. THE TRIBUNAL ACCORDINGLY, DID NOT SUSTAIN THE ADDITION RETAINED BY THE APPELLATE ASSISTANT COMMISSIONER. HENCE, AT THE INSTANCE OF THE REVENUE, THE AFORESAI D QUESTION HAS BEEN REFERRED TO THIS COURT FOR OPINIO N. ON A PERUSAL OF THE ORDER OF THE TRIBUNAL, IT CLEAR LY APPEARS THAT WHETHER THE SAID TRANSACTIONS WERE BOGUS OR NOT WAS A QUESTION OF FACT. THE TRIBUNAL H AS ALSO POINTED OUT THAT NOTHING IS SHOWN TO INDICATE THAT ANY PART OF THE FUND GIVEN BY THE ASSESSEE TO THESE PARTIES CAME BACK TO THE ASSESSEE IN ANY FORM . IT IS FURTHER OBSERVED BY THE TRIBUNAL THAT THERE I S NO EVIDENCE ANYWHERE THAT THESE CONCERNS GAVE VOUCHERS TO THE ASSESSEE. EVEN THE TWO STATEMENTS DO NOT IMPLICATE THE TRANSACTIONS WITH THE ASSESSEE IN ANY WAY. WITH THESE OBSERVATIONS, THE TRIBUNAL ULTIMATELY HAS OBSERVED THAT THERE ARE CERTAIN DOUBTFUL FEATURES, BUT THE EVIDENCE IS NOT ADEQUATE TO CONCLUDE THAT THE PURCHASES MADE BY THE ASSESSEE FROM THESE PARTIES WERE BOGUS. IT MAY BE STATED THA T ITA NO.3236/MUM/2016 & 2698/MUM/2016 JAYDEEP PROFILES P.LTD 54 THE ASSESSEE WAS GIVEN CREDIT FACILITIES FOR A SHOR T DURATION AND THE PAYMENTS WERE GIVEN BY CHEQUES. WHEN THAT IS SO, IT CANNOT BE SAID THAT THE ENTRIES FOR THE PURCHASES OF THE GOODS MADE IN THE BOOKS OF ACCOUNT WERE BOGUS ENTRIES. WE, THEREFORE, DO NOT F IND THAT THE CONCLUSION ARRIVED AT BY THE TRIBUNAL IS AGAINST THE WEIGHT OF EVIDENCE. IN THAT VIEW OF THE MATTER, WE ANSWER THE QUESTION IN THE AFFIRMATIVE, THAT IS, IN FAVOUR OF THE ASSESSEE AND AGAINST THE REVENUE. ACCORDINGLY, THE REFERENCE STANDS DISPOSED OF WITH NO ORDER AS TO COSTS. 7.6. THE MUMBAI BENCH OF THE TRIBUNAL IN THE CASE OF DCIT VS RAJEEV G. KALATHIL (2015) 67 SOT 52 (MUM. TRIB.)(URO), IDENTICALLY, HELD AS UNDER:- 2.2.AGGRIEVED BY THE ORDER OF THE AO, ASSESSEE PREFERRED AN APPEAL BEFORE THE FIRST APPELLATE AUTHORITY(FAA).BEFORE HIM IT WAS ARGUED THAT ASSESSEE HAD FILED COPIES OF BILLS OF PURCHASE FROM DKE AND NBE, THAT BOTH THE SUPPLIERS WERE REGISTERED DEALERS AND WERE CARRYING PROPER VAT AND REGISTRATION NO.S, THAT LEDGER ACCOUNTS OF THE PART IES IN ASSESSEE'S BOOKS SHOWED BILLS ACCOUNTED FOR, THA T PAYMENT WAS MADE BY CHEQUES, THAT A CERTIFICATE FROM THE BANKER GIVING DETAILS OF CHEQUE PAYMENT TO THE SAID PARTIES WAS ALSO FURNISHED. COPIES OF THE CONSIGNMENT, RECEIVED FROM THE GOVERNMENT APPROVED TRANSPORT CONTRACTORS SHOWING THAT MATERIAL PURCHASED WAS ACTUALLY DELIVERED AT THE SITE WAS FURNISHED BEFORE THE AO. IT WAS ALSO ARGUED THAT SOME OF THE MATERIAL PURCHASED FROM THE SAID PARTIE S WERE LYING PART OF CLOSING STOCK AS ON 31.03.2009 A S PER THE STATEMENT SUBMITTED ON RECORD. AFTER CONSIDERING THE ASSESSMENT ORDER AND THE SUBMISSIONS MADE BY THE ASSESSEE, FAA HELD THAT THE TRANSACTIONS WERE SUPPORTED BY PROPER DOCUMENTARY EVIDENCES, THAT THE PAYMENTS MADE TO ITA NO.3236/MUM/2016 & 2698/MUM/2016 JAYDEEP PROFILES P.LTD 55 THE PARTIES BY THE ASSESSEE WERE IN CONFIRMATION WI TH BANK CERTIFICATE,T HAT THE SUPPLIERS WAS SHOWN AS DEFAULT UNDER THE MAHARASHTRA VAT ACT COULD NOT BE SUFFICIENT EVIDENCES TO HOLD THAT THE PURCHASES WER E NON-GENUINE, THAT THE AO HAD NOT BROUGHT ANY INDEPENDENT AND RELIABLE EVIDENCES AGAINST THE ASSESSEE TO PROVE THE NON-GENUINENESS OF THE PURCHASES, THAT THERE WAS NO EVIDENCE REGARDING CASH RECEIVED BACK FROM THE SUPPLIERS. FINALLY, HE DELETED THE ADDITION MADE BY THE AO . 2.3.BEFORE US, DEPARTMENTAL REPRESENTATIVE ARGUED THAT BOTH THE SUPPLIERS WERE NOT PRODUCED BEFORE TH E AO BY THE ASSESSEE, THAT ONE OF THEM WAS DECLARED HAWALA DEALER BY VAT DEPARTMENT, THAT BECAUSE OF CHEQUE PAYMENT MADE TO THE SUPPLIER TRANSACTION CANNOT BE TAKEN AS GENUINE. HE RELIED UPON THE ORDER OF THE G BENCH OF MUMBAI TRIBUNAL DELIVERED IN THE CASE OF WESTERN EXTRUSION INDUSTRIES. (ITA/6579/MUM/2010-DATED 13.11.2013). AUTHRORISED REPRESENTATIVE (AR) CONTENDED THAT PAYMENTS MADE BY THE ASSESSEE WERE SUPPORTED BY THE BANKERS STATEMENT, THAT GOODS RECEIVED BY THE ASSESSEE FROM THE SUPPLIE WAS PART OF CLOSING STOCK,THAT THE TRANSPORTER HAD ADMITTED THE TRANSPORTATION OF GOODS TO THE SITE.HE RELIED UPON THE CASE OF BABULA BORANA (282 ITR251), NIKUNJ EXIMP ENTERPRISES (P) LTD. (216TAXMAN171)DELIVERED BY THE HONBLE BOMBAY HIGH COURT. 2.4.WE HAVE HEARD THE RIVAL SUBMISSIONS AND PERUSED THE MATERIAL BEFORE US. WE FIND THAT AO HAD MADE THE ADDITION AS ONE OF THE SUPPLIER WAS DECLARED A HAWALA DEALER BY THE VAT DEPARTMENT. WE AGREE THAT IT WAS A GOOD STARTING POINT FOR MAKING FURTHER INVESTIGATION AND TAKE IT TO LOGICAL END. BUT, HE LEFT THE JOB AT INITIAL POINT ITSELF. SUSPICION OF HIGHEST DEGREE CANNOT TAKE PLACE OF EVIDENCE. HE COULD HAVE CALLED FOR THE DETAILS OF T HE BANK ACCOUNTS OF THE SUPPLIERS TO FIND OUT AS WHETHER THERE WAS ANY IMMEDIATE CASH WITHDRAWAL FROM THEIR ACCOUNT. WE FIND THAT NO SUCH EXERCISE WAS DONE. TRANSPORTATION OF GOOD TO THE SITE IS ONE ITA NO.3236/MUM/2016 & 2698/MUM/2016 JAYDEEP PROFILES P.LTD 56 OF THE DECIDING FACTOR TO BE CONSIDERED FOR RESOLVI NG THE ISSUE. THE FAA HAS GIVEN A FINDING OF FACT THAT PART OF THE GOODS RECEIVED BY THE ASSESSEE WAS FORMING PART OF CLOSING STOCK. AS FAR AS THE CASE O F WESTERN EXTRUSION INDUSTRIES. (SUPRA)IS CONCERNED, WE FIND THAT IN THAT MATTER CASH WAS IMMEDIATELY WITHDRAWN BY THE SUPPLIER AND THERE WAS NO EVIDENCE OF MOVEMENT OF GOODS. BUT, IN THE CASE BEFORE US, THERE IS NOTHING, IN THE ORDER OF THE AO , ABOUT THE CASH TRAIAL. SECONDLY, PROOF OF MOVEMENT OF GOODS IS NOT IN DOUBT. THERERFORE, CONSIDERING T HE PECULIAR FACTS AND CIRCUMSTANCES OF THE CASE UNDER APPEAL, WE ARE OF THE OPINION THAT THE ORDER OF THE FAA DOES NOT SUFFER FROM ANY LEGAL INFIRMITY AND THERE ARE NOT SUFFICIENT EVIDENCE ON FILE TO ENDORS E THE VIEW TAKEN BY THE AO. SO, CONFIRMING THE ORDER OF THE FAA, WE DECIDE GROUND NO.1 AGAINST THE AO . 7.7. THE RATIO LAID DOWN IN THE CASE OF M/S NEETA TEXTILES VS INCOME TAX OFFICER 6138/MUM/2013, ORDER DATED 27/05/2013, SHRI JIGAR V. SHAH VS INCOME TAX OFFICER (ITA NO.1223/M/2014) ORDER DATED 22/01/2016 , M/S IMPERIAL IMP. & EXP. VS INCOME TAX OFFICER ITA NO.5427/MUM/2015, ORDER DATED 18/03/2016 SUPPORTS THE CASE OF THE ASSESSEE AND THE CONCLUSION DRAWN I N THE IMPUGNED ORDER. HOWEVER, AS RELIED BY THE LD. DR, T HE HON'BLE GUJARAT HIGH COURT IN THE CASE OF N.K. INDU STRIES LTD.,ETC VS DCIT (SUPRA) CONSIDERING VARIOUS DECISI ONS DECIDED THE ISSUE IN FAVOUR OF THE REVENUE AND THE HON'BLE APEX COURT DISMISSED THE SLP VIDE ORDER DATED ITA NO.3236/MUM/2016 & 2698/MUM/2016 JAYDEEP PROFILES P.LTD 57 16/01/2017 (SLP NO.(C) 769 OF 2017). WE FIND THAT I N THAT CASE, DURING SEARCH PROCEEDINGS, CERTAIN BLANK SIGN ED CHEQUE BOOKS AND VOUCHERS WERE FOUND AND THUS THE PURCHASES MADE FROM THESE CONCERNS, WERE TREATED AS BOGUS BY THE ASSESSING OFFICER. 7.8. THE HON'BLE GUJARAT HIGH COURT IN N.K. INDUSTRIES LTD. VS DCIT (IT APPEAL NO.240, 261, 242 , 260 AND 241 OF 2003), VIDE ORDER DATED 20/06/2016 CONSI DERED THE DECISION OF THE TRIBUNAL AND VARIOUS JUDICIAL D ECISIONS INCLUDING THE CASE OF VIJAY PROTEINS AND SANJAY OIL CAKES INDUSTRIES LTD., M/S WOOLEN CARPET FACTORY VS ITAT (2002) 178 CTR 420 (RAJ.), THE TRIBUNAL WAS HELD TO BE JUS TIFIED IN DECIDING THE CASE AGAINST THE ASSESSEE. THE HON'BL E APEX COURT CONFIRMED THE DECISION OF THE HIGH COURT FOR ADDING THE ENTIRE INCOME ON ACCOUNT OF BOGUS PURCHASES (SL P (C) NOS. 769 OF 2017, ORDER DATED 16/01/2017. 7.9. IN SUCH TYPE OF CASES, BROADLY, THE LD. COMMISSIONER OF INCOME TAX (APPEAL) AS WELL AS THIS TRIBUNAL HAS FOLLOWED THE DECISIONS FROM HON'BLE GU JARAT HIGH COURT IN THE CASE OF SIMIT P. SETH (2013) 356 ITR 451 ITA NO.3236/MUM/2016 & 2698/MUM/2016 JAYDEEP PROFILES P.LTD 58 (GUJ.), CIT VS VIJAY M. MISTRY CONSTRUCTION LTD. (2 013) 355 ITR 498 (GUJ.), CIT VS BHOLA NATH POLY FAB. (P.) LT D. (2013) 355 ITR 290 (GUJ.) AND VARIOUS OTHER DECISIONS OF T HE TRIBUNAL AND THE DECISION OF M/S NIKUNJ EXIMP(SUPRA ) FROM HON'BLE JURISDICTIONAL HIGH COURT, WHEREIN, THE AGG REGATE DISALLOWANCE WAS RESTRICTED TO 12.5%. ADMITTEDLY, T HERE CANNOT BE SALE WITHOUT PURCHASES. THE CASE OF THE REVENUE IS THAT THERE IS BOGUS NATURE OF PURCHASES MADE FRO M SUPPLIERS AND THE PARTIES WERE NOT FOUND EXISTING A T THE GIVEN ADDRESSES. 7.10. THE AHMEDABAD BENCH OF THE TRIBUNAL IN THE C ASE OF N K PROTEINS LTD. VS. DCIT (2004) 83 TTJ AHD 904 MA DE AN ELABORATE DISCUSSION WITH RESPECT TO THE ISSUE ON B OGUS PURCHASES, THE RELEVANT PORTION FROM THE ORDER IS REPRODUCED HERE UNDER: 49. WE WILL NOW DEAL WITH THE MAIN GROUND RAISED B Y THE ASSESSEE IN RELATION TO ADDITION OF RS. 11.99 CRORE S MADE IN RESPECT OF BOGUS PURCHASES. WE HAVE CAREFULLY CONSI DERED THE ELABORATE ARGUMENTS MADE BY THE LEARNED REPRESENTATIVES OF BOTH SIDES. WE HAVE ALSO CAREFUL LY GONE THROUGH THE ORDERS OF THE LEARNED DEPARTMENTAL AUTHORITIES AS WELL AS ALL OTHER DOCUMENTS SUBMITTE D IN THE VARIOUS PAPER BOOKS SUBMITTED BY THE LEARNED REPRESENTATIVES OF BOTH SIDES, TO WHICH OUR ATTENTI ON WAS DRAWN DURING THE COURSE OF HEARING. WE HAVE ALSO ITA NO.3236/MUM/2016 & 2698/MUM/2016 JAYDEEP PROFILES P.LTD 59 CAREFULLY GONE THROUGH ALL THE JUDGMENTS CITED BY T HE LEARNED REPRESENTATIVES. 50. ONE OF THE MAIN ARGUMENTS ADVANCED ON BEHALF OF THE ASSESSEE WAS THAT THE PURCHASES MADE FROM FIVE SUPP LIERS IN QUESTION WERE DULY RECORDED IN THE REGULAR BOOKS OF ACCOUNTS IN THE NORMAL COURSE. THE IT RETURN FOR AS ST. YR. 1998-99 HAD BEEN SUBMITTED ON 30TH NOV., 1998 I.E. BEFORE THE DATE OF SEARCH ON 24TH FEB., 1999 ON THE BASIS OF SUCH REGULAR BOOKS OF ACCOUNTS WHICH INCLUDE ALL THE TRANSACTIONS OF PURCHASES MADE FROM THEM. LIKEWISE THE TRANSACTIONS OF PURCHASES MADE FROM THESE PARTIES W ERE RECORDED IN THE REGULAR BOOKS OF ACCOUNTS TILL THE DATE OF SEARCH IN THE NORMAL MANNER. THEREFORE, THE QUESTIO N RELATING TO ADDITION IN RESPECT OF PURCHASES MADE F ROM THESE SUPPLIERS DOES NOT COME WITHIN THE AMBIT OF B LOCK ASSESSMENT. HEAVY RELIANCE WAS PLACED ON THE JUDGME NT OF THE HON'BLE GUJARAT HIGH COURT IN THE CASE OF CIT V. N.R. PAPER & BOARDS LTD . (SUPRA) AND OTHER SUCH DECISIONS. 51. BEFORE WE GO THROUGH THE RATIO OF JUDGMENT OF T HE HON'BLE GUJARAT HIGH COURT IN THE CASE OF NR PAPER & BOARDS LTD. (SUPRA), IT WOULD BE RELEVANT HERE TO R EFER TO THE DECISION OF THE HON'BLE SUPREME COURT IN THE CA SE OF CIT V. SUN ENGINEERING WORKS (P) LTD . (1992) 198 ITR 297 (SC). THE HON'BLE SUPREME COURT HAS OBSERVED AS UNDER AT P. 320 OF 198 ITR; 'SUCH AN INTERPRETATION WOULD BE READING THAT JUDGM ENT TOTALLY OUT OF CONTEXT IN WHICH THE QUESTIONS AROSE FOR DECISION IN THAT CASE. IT IS NEITHER DESIRABLE NOR PERMISSIBLE TO PICK OUT A WORD OR A SENTENCE FROM T HE JUDGMENT OF THIS COURT, DIVORCED FROM THE CONTEXT O F THE QUESTION UNDER CONSIDERATION AND TREAT IT TO BE THE COMPLETE 'LAW' DECLARED BY THIS COURT. THE JUDGMENT MUST BE READ AS A WHOLE AND THE OBSERVATIONS FROM THE JUDGMENT HAVE TO BE CONSIDERED IN THE LIGHT OF THE QUESTIONS WHICH WERE BEFORE THIS COURT. A DECISION OF THIS COURT TAKES ITS COLOUR FROM THE QUESTIONS INVOLVED IN THE CASE IN WHICH IT IS RENDERED AND, WHILE APPLYING TH E DECISION TO A LATER CASE, THE COURTS MUST CAREFULLY TRY TO ASCERTAIN THE TRUE PRINCIPLE LAID DOWN BY THE DECIS ION OF THIS COURT AND NOT TO PICK OUT WORDS OR SENTENCES F ROM THE JUDGMENT, DIVORCED FROM THE CONTEXT OF THE QUESTION S ITA NO.3236/MUM/2016 & 2698/MUM/2016 JAYDEEP PROFILES P.LTD 60 UNDER CONSIDERATION BY THIS COURT, TO SUPPORT THEIR REASONINGS. IN MADHAV RAO JIVAJI RAO SCINDIA BAHADUR V. UNION OF INDIA (1971) 3 SCR 9 : AIR 1971 SC 530, THIS COURT CAUTIONED (AT P. 578 OF AIR 1971 SC): 'IT IS NOT PROPER TO REGARD A WORD, A CLAUSE OR A S ENTENCE OCCURRING IN A JUDGMENT OF THE SUPREME COURT, DIVOR CED FROM ITS CONTEXT, AS CONTAINING A FULL EXPOSITION O F THE LAW ON A QUESTION WHEN THE QUESTION DID NOT EVEN FALL T O BE ANSWERED IN THAT JUDGMENT'.' 52. A USEFUL REFERENCE MAY BE MADE TO THE JUDGMENT OF THE HON'BLE GUJARAT HIGH COURT IN THE CASE OF GUJARAT STATE CO-OPERATIVE BANK LTD. V. CIT (2001) 250 ITR 229 (GUJ). AT P. 265, THE HON'BLE HIGH COURT HAS OBSERVED AS U NDER: 'AS PER THE SETTLED LEGAL POSITION, A DECISION IS A N AUTHORITY FOR WHAT IT ACTUALLY DECIDES AND NOT NECESSARILY FO R WHAT LOGICALLY FOLLOWS FROM IT. EQUALLY WELL SETTLED IS THE PRINCIPLE THAT A DECISION TO BE LAW UNDER ARTICLE 141 MUST NOT BE A MERE CONCLUSION BY WHICH THE CASE IS DISPO SED OF. BECAUSE, A CONCLUSION, A MERE CONCLUSION, MAY BE ON FACTS, IT MAY NOT AND DOES NOT NECESSARILY INVOLVE CONSIDE RATION OF LAW. IT IS WELL SETTLED THAT AN. 141 WILL NOT BE ATTRACTED IF LAW IS NOT DECLARED OR STATED VOCALLY TO SUPPORT TH E CONCLUSION REACHED FOR DECIDING THE LIS. A MUTE DEC LARATION OF THE MERE CONCLUSION IS NOT CONTEMPLATED UNDER ARTICLE 141. (VIDE MANAGER, PANJARAPOLE, DEODAR V. C.M. NAT (1997) 2 GLR 1321, 1325).' 53. LET US NOW REFER TO THE DECISION OF THE HON'BLE GUJARAT HIGH COURT IN THE CASE OF N.R. PAPER & BOARDS LTD. (SUPRA) KEEPING IN VIEW THE PRINCIPLES LAID DOWN IN THE AFORESAID JUDGMENTS OF THE HON'BLE APEX COURT AND T HE HON'BLE GUJARAT HIGH COURT. THE HON'BLE GUJARAT HIG H COURT IN THE CASE OF N.R. PAPER BOARDS LTD. (SUPRA) WAS DEALING WITH THE REFERENCE APPLICATION UNDER SECTION 256(2) SUBMITTED BY THE CIT. IT HAS BEEN OBSERVED IN THE SAID JUDGMENT AT PP. 529 AND 530 AS UNDER: 'EARLIER THE ASSESSEE INVOKED THE WRIT JURISDICTION OF THIS COURT SEEKING TO CHALLENGE THE NOTICES ISSUED TO TH EM UNDER SECTION 143(2) OF THE ACT BY WHICH THE ASSESSEES WERE REQUIRED TO ATTEND THE OFFICE OF THE REVENUE I N CONNECTION WITH THE RETURN OF INCOME SUBMITTED BY T HEM ITA NO.3236/MUM/2016 & 2698/MUM/2016 JAYDEEP PROFILES P.LTD 61 FOR THE ASST. YR. 1995-96. THE ASSESSEE POINTED OUT THAT THE SEARCH AND SEIZURE OPERATION CARRIED OUT ON 1ST DEC ., 1995, WAS CONCLUDED ON 6TH JAN., 1996. THEIR BLOCK ASSESS MENT UNDER CHAPTER XIV-B OF THE ACT WAS MADE FOR THE BLO CK PERIOD FROM 1ST APRIL, 1985 TO 6TH JAN., 1996. IN ACCORDANCE WITH THE PROVISIONS OF SECTION 158BB OF THE ACT, THE TOTAL INCOME WAS WORKED OUT AFTER GIVING C REDIT FOR THE AMOUNT DISCLOSED. THE ASSESSEE POINTED OUT THAT THE INCOME FOR THE ASST. YR. 1995-96 WAS ALREADY COMPUT ED IN THE ASSESSMENT FOR THE BLOCK PERIOD. HENCE, THERE W AS NO QUESTION OF PROCEEDING WITH THE REGULAR ASSESSMENT FOR THE ASST. YR. 1995-96. IT WAS FURTHER SUBMITTED THAT IN ANY EVENT NO ADDITION COULD BE MADE TO THE TOTAL INCOME DISCLOSED IN THE SAID RETURNS IN VIEW OF THE BLOCK ASSESSMENT MADE FOR THE PERIOD WHICH INCLUDED THE S AID ASST. YR. 1995-96. THE DIVISION BENCH OF THIS COURT IN THE CASE OF N.R. PAPER & BOARDS LTD. V. DY. CIT (1998) 234 ITR 733 (GUJ) CONSIDERED THE PROVISIONS IN DETAIL. THE COURT POINTED OUT THAT THE BLOCK ASSESSMENT OF UNDI SCLOSED INCOME TO BE CHARGED AT A HIGHER RATE OF TAX PRESCR IBED WAS INDEPENDENT OF THE PENDING REGULAR ASSESSMENTS AND IT OPERATED IN A DIFFERENT FIELD FROM THE ASSESSMEN T OF UNDISCLOSED INCOME WHICH WAS NOT AND WOULD NOT HAVE BEEN DISCLOSED FOR THE PURPOSE OF THE ACT. UNDISCLO SED INCOME, BY CHAPTER XIV-B, IS CLASSIFIED SEPARATELY FOR THE PURPOSES OF ASSESSMENT AND IS REQUIRED TO BE WORKED OUT IN THE MANNER PRESCRIBED THEREIN AND TREATED TO A H IGHER RATE OF TAX. THIS PROCESS DID NOT DISTURB THE ASSES SMENTS ALREADY MADE, OF THE PREVIOUS YEARS, AND WAS ONLY INTENDED TO SNIFF OUT WHAT HAD REMAINED HIDDEN AND NOT DISCLOSED BY THE ASSESSEE. THERE WOULD, THEREFORE, BE NO OVERLAPPING IN THE NATURE OF THE ASSESSMENT MADE UN DER THIS CHAPTER OF UNDISCLOSED INCOME AND THE REGULAR ASSESSMENT MADE UNDER SECTION 143(3) . THE POWERS OF REGULAR ASSESSMENT ARE KEPT INTACT AND SO ARE ALL T HE APPELLATE, REVISIONAL AND OTHER POWERS AFFECTING SU CH REGULAR ASSESSMENT AND ALL THE STATUTORY CONSEQUENC ES FLOWING FROM THE EXERCISE OF SUCH POWERS WOULD FOLL OW ALONG SIDE OF THIS SPECIAL ASSESSMENT PROCEDURE DEV ISED FOR DEALING WITH UNDISCLOSED INCOME AS A RESULT OF SEAR CH. IT, THEREFORE, FOLLOWS THAT THE INQUIRY UNDER SECTION 143(3) FOR REGULAR ASSESSMENT WHICH WAS PENDING WHEN THE BLOCK ASSESSMENT WAS MADE, THE AO WHO COMES ACROSS EVIDEN CE AND MATERIAL WHICH WAS NOT FOUND OR MADE AVAILABLE IN ITA NO.3236/MUM/2016 & 2698/MUM/2016 JAYDEEP PROFILES P.LTD 62 THE PROCESS OF BLOCK ASSESSMENT, CANNOT IGNORE THE SAME AND HE WILL BE DUTY-BOUND TO MAKE THE REGULAR ASSES SMENT TAKING INTO ACCOUNT SUCH EVIDENCE AND MATERIAL GATH ERED IN THE ENQUIRY UNDER SECTION 143(3) TO ENSURE THAT PROPER ASSESSMENT OF TOTAL INCOME IS MADE AND TAX IS DETER MINED ON THE BASIS OF SUCH ASSESSMENT.' 54. THE HON'BLE HIGH COURT IN THIS JUDGMENT WHILE DECLINING TO CALL FOR REFERENCE OF VARIOUS QUESTION S PROPOSED IN THE SAID REFERENCE APPLICATION, RELIED UPON ITS JUDGMENT IN THE CASE OF N.R. PAPER & BOARDS LTD. (S UPRA). IT MAY ALSO BE RELEVANT HERE TO REPRODUCE THE RELEV ANT EXTRACTS FROM THE SAID JUDGMENT APPEARING AT PP. 74 1 AND 742 : 'THE DEFINITION OF 'UNDISCLOSED INCOME' IN SECTION 158B(B) INCLUDES ANY MONEY, BULLION, JEWELLERY OR OTHER VALUABLE ARTICLE OR THING OR ANY INCOME BASED ON AN Y ENTRY IN THE BOOKS OF ACCOUNT OR OTHER DOCUMENTS OR TRANSACTION, WHERE SUCH ASSET, ENTRY OR OTHER DOCUM ENT OR TRANSACTION REPRESENTING WHOLLY OR PARTLY INCOME OR PROPERTY WHICH HAS NOT BEEN OR WOULD NOT HAVE BEEN DISCLOSED FOR THE PURPOSES OF THE ACT. IT, THEREFOR E, FOLLOWS THAT WHAT THE ASSESSEE HAD ALREADY DISCLOSED OR WOU LD HAVE DISCLOSED IS NOT TO BE TREATED AS UNDISCLOSED INCOME. FROM THE PROVISIONS OF SECTION 158BA(1) , IT WOULD APPEAR THAT THE AO CAN PROCEED TO ASSESS THE UNDISCLOSED I NCOME ONLY IF A SEARCH IS INITIATED UNDER SECTION 132 OF THE ACT BY THE AUTHORISED OFFICER. THE TOTAL UNDISCLOSED INCOM E RELATING TO THE BLOCK PERIOD IS TO BE CHARGED TO TA X AT THE HIGHER RATE OF 60 PER CENT PRESENTLY SPECIFIED IN SECTION 113 OF THE ACT AFTER SUCH UNDISCLOSED INCOME IS ASSESS ED IN ACCORDANCE WITH THE PROVISIONS OF THIS CHAPTER BY T HE AO AS INCOME OF THE 'BLOCK PERIOD' AS DEFINED IN SECTION 158B(A) OF THE ACT. THIS HAS TO BE DONE 'IRRESPECTIVE OF T HE PREVIOUS YEAR OR YEARS TO WHICH SUCH INCOME RELATES AND IRRESPECTIVE OF THE FACT WHETHER REGULAR ASSESSMENT FOR ANY ONE OR MORE OF THE RELEVANT ASSESSMENT YEARS IS PENDING OR NOT' AS PROVIDED IN SUB-SECTION (2) OF SECTION 158BA . THIS EXPRESSION CLEARLY INDICATES THAT THE BLOCK ASSESSMENT OF UNDISCLOSED INCOME AND ITS BEING CHAR GED TO A HIGHER RATE OF TAX PRESCRIBED, WAS INDEPENDENT OF THE PENDING REGULAR ASSESSMENTS AND IT OPERATED IN A DI FFERENT FIELD FROM THE ASSESSMENT OF UNDISCLOSED INCOME WHI CH ITA NO.3236/MUM/2016 & 2698/MUM/2016 JAYDEEP PROFILES P.LTD 63 WAS NOT AND WOULD NOT HAVE BEEN DISCLOSED FOR THE PURPOSES OF THE ACT. UNDISCLOSED INCOME, BY THIS CH APTER, IS CLASSIFIED SEPARATELY FOR THE PURPOSES OF ASSESS MENT AND IS REQUIRED TO BE WORKED OUT IN THE MANNER PRESCRIB ED THEREIN AND TREATED TO A HIGHER RATE OF TAX. THIS P ROCESS DID NOT DISTURB THE ASSESSMENTS ALREADY MADE, OF TH E PREVIOUS YEARS, AND WAS ONLY INTENDED TO SNIFF OUT WHAT HAD REMAINED HIDDEN AND WOULD NOT HAVE BEEN DISCLOS ED BY THE ASSESSEE. THERE WOULD, THEREFORE, BE NO OVER LAPPING IN THE NATURE OF THE ASSESSMENT MADE UNDER CHAPTER OF UNDISCLOSED INCOME AND THE REGULAR ASSESSMENT MADE UNDER SECTION 143(3) OF THE ACT. IF THE PENDING REGULAR ASSESSMENT PROCEEDINGS WERE TO BE FROZEN AND GOT SUBSTITUTED BY THE ASSESSMENT OF THE UNDISCLOSED INCOME OF THE BLOCK PERIOD, THE LEGISLA TURE WOULD HAVE BEEN SPECIFIC ON THAT ASPECT AND WOULD H AVE MADE IT CLEAR THAT THE PENDING REGULAR ASSESSMENT PROCEEDINGS SHOULD BE DROPPED. THE PROVISIONS OF TH IS CHAPTER DO NOT EITHER EXPRESSLY OR BY NECESSARY IMPLICATION EVEN REMOTELY INDICATE THAT THE REGULAR ASSESSMENT PROCEEDINGS OF A PREVIOUS YEAR COVERED I N THE BLOCK PERIOD, WERE REQUIRED TO BE STAYED OR DROPPED OR SUBSTITUTED BY THE PROCEEDINGS OF THIS CHAPTER. UNDER SUB-SECTION (3) OF SECTION 158BA , WHERE THE DATE OF FILING THE RETURN OF INCOME UNDER SECTION 139(1) FOR ANY PREVIOUS YEAR HAS NOT EXPIRED, AND THE INCOME OF TH AT PREVIOUS YEAR OR THE TRANSACTIONS RELATING TO SUCH INCOME ARE DULY RECORDED, THEN SUCH INCOME IS NOT REQUIRED TO BE INCLUDED IN THE BLOCK PERIOD. THIS OBVIOUSLY MEANS THAT THE REGULAR ASSESSMENT OF THAT PREVIOUS YEAR WHICH HAS REMAINED PENDING, WILL PROCEED NOTWITHSTANDING THAT IT WAS FALLING IN THE BLOCK PERIOD. THE SAME WOULD BE THE CASE WHERE THE BLOCK PERIOD INCLUDES ONLY A PART OF THE PREVIOUS YEAR OF WHICH THE RETURN IS FILED FOR REGU LAR ASSESSMENT, AND THE REGULAR ASSESSMENT CAN PROCEED NOTWITHSTANDING THAT THE UNDISCLOSED INCOME FOR A P ART OF THAT PREVIOUS YEAR WAS WITHIN THE BLOCK PERIOD.' 55. IT IS APPARENT FROM A PLAIN READING OF THE AFOR ESAID DECISIONS OF THE HON'BLE GUJARAT HIGH COURT IN THE CASE OF N.R. PAPER & BOARDS LTD. (SUPRA) THAT THE ISSUE DEC IDED IS AS TO WHETHER AFTER MAKING OF BLOCK ASSESSMENT, REG ULAR ASSESSMENT IS BARRED OR PROHIBITED BY LAW. THE HON' BLE ITA NO.3236/MUM/2016 & 2698/MUM/2016 JAYDEEP PROFILES P.LTD 64 HIGH COURT HAS HELD THAT THERE WOULD BE NO OVERLAPP ING IN THE NATURE OF ASSESSMENT MADE UNDER THIS CHAPTER OF UNDISCLOSED INCOME AND THE REGULAR ASSESSMENT MADE UNDER SECTION 143(3) . THE POWERS OF REGULAR ASSESSMENT ARE KEPT INTACT. ALL THE PROVISIONS AFFECTING SUCH REGULAR ASSESSMENTS AND ALL THE STATUTORY CONSEQUENCES FLOW ING FROM EXERCISE OF SUCH POWERS WOULD FOLLOW ALONG WIT H THIS SPECIAL ASSESSMENT PROCEDURE DEVISED FOR DEALING WI TH UNDISCLOSED INCOME AS A RESULT OF SEARCH. 56. THE LEGISLATURE THOUGHT IT FIT TO INSERT AN EXP LANATION TO SECTION 158BA BY THE FINANCE (NO. 2) ACT, 1998 WITH RETROSPECTIVE EFFECT FROM 1ST JULY, 1995 TO EXPLAIN AND DECLARE THAT THE ASSESSMENT MADE UNDER CHAPTER XIV- B OF THE ACT SHALL BE IN ADDITION TO THE REGULAR ASSESSM ENT IN RESPECT OF EACH PREVIOUS YEAR INCLUDED IN THE BLOCK PERIOD, AND THE TOTAL UNDISCLOSED INCOME RELATING TO THE BL OCK PERIOD SHALL NOT INCLUDE THE INCOME ASSESSED IN ANY REGULAR ASSESSMENT AS INCOME OF SUCH BLOCK PERIOD. IT FURTHER PROVIDES THAT THE INCOME ASSESSED IN THIS C HAPTER SHALL NOT BE INCLUDED IN THE REGULAR ASSESSMENT OF ANY PREVIOUS YEAR INCLUDED IN THE BLOCK PERIOD. THE MER E FACT THAT THE AO IS EMPOWERED TO ASSESS THE CONCEALED IN COME IN REGULAR ASSESSMENT DOES NOT LEAD TO THE CONCLUSI ON THAT WHAT THE ITO CAN ASSESS IN REGULAR ASSESSMENT CANNO T BE ASSESSED IN BLOCK ASSESSMENT. THE HON'BLE GUJARAT H IGH COURT WHILE DEALING WITH THE REFERENCE APPLICATION UNDER SECTION 256(2) HAS DECLINED TO REFER THE VARIOUS QUESTIONS SUGGESTED BY THE CIT MAINLY ON THE GROUND THAT THE QUESTIONS PROPOSED BY THE REVENUE DID NOT RAISE ANY QUESTION OF LAW AND IT HAS ALSO BEEN OBSERVED THAT WHERE THE ASSESSEE HAS DISCLOSED THE PARTICULARS OF INCOM E OR EXPENDITURE IN THE RETURN/BOOKS OF ACCOUNTS, THE AO CANNOT TAKE A DIFFERENT VIEW ON THE BASIS OF 'SAME MATERIAL'. SUCH OBSERVATIONS HAVE BEEN MADE BY FOLLOWING THE JUDGMENT REPORTED IN (1998) 234 ITR 7 33 (GUJ) (SUPRA). THE JUDGMENT OF THE HON'BLE GUJARAT HIGH COURT IN THE CASE OF N.R. PAPER & BOARDS LTD., IF R EAD IN THE CONTEXT OF QUESTIONS RAISED BEFORE THE COURT, C ANNOT BE READ AS HAVING HELD THAT EVEN IF THE MATERIAL FOUND DURING THE COURSE OF SEARCH EXPOSES THE FALSITY OF THE ENT RIES MADE IN THE REGULAR BOOKS OF ACCOUNTS, THE CONSEQUENT CO NCEALED INCOME CANNOT BE ASSESSED AS UNDISCLOSED INCOME IN BLOCK ASSESSMENT UNDER CHAPTER XIV-B. IN THE PRESENT CASE THE ADDITION IN RESPECT OF PURCHASES MADE FROM THE ALLE GED ITA NO.3236/MUM/2016 & 2698/MUM/2016 JAYDEEP PROFILES P.LTD 65 BOGUS SUPPLIERS HAS ORIGINATED ON THE BASIS OF MATE RIAL FOUND AND SEIZED DURING THE SEARCH. CERTAIN BLANK B ILL BOOKS, SIGNED CHEQUE BOOKS AND OTHER DOCUMENTS OF VARIOUS PARTIES INCLUDING THESE FIVE SUPPLIER CONCE RNS WERE FOUND AND SEIZED FROM THE OFFICE PREMISES OF T HE ASSESSEE DURING THE SEARCH. THE POST-SEARCH INVESTI GATION CLEARLY INDICATES THAT THESE FIVE PARTIES DID NOT I N FACT SUPPLY ANY MATERIAL TO THE ASSESSEE BUT THEY WERE O NLY ISSUING FICTITIOUS BILLS. THEY MAY BE CALLED 'BILLI NG AGENTS' OR 'NAME LENDERS'. WHETHER THEY ACTED AS BILLING AGENTS/NAME LENDERS FOR AND ON BEHALF OF THE ASSESS EE AS WELL AS FOR AND ON BEHALF OF VARIOUS OTHER PARTIES, IS A DIFFERENT QUESTION BUT AMPLE MATERIAL HAS BEEN BROU GHT ON RECORD TO ADEQUATELY PROVE THAT THESE FIVE PARTIES FROM WHOM THE ASSESSEE CLAIMED TO HAVE MADE PURCHASES OF WASH COTTON SEED OIL WERE NOT THE REAL SUPPLIERS OF SUCH MATERIAL BUT THEY WERE ONLY ISSUING FICTITIOUS BILL S. THE FALSITY OF THE CLAIM FOR PURCHASES SHOWN AS PURCHAS ES MADE FROM THESE BILLING AGENTS/NAME LENDERS RESULTI NG IN ADDITION ON ACCOUNT OF EITHER BOGUS PURCHASES OR IN FLATED PURCHASES WILL SURELY COME WITHIN THE AMBIT OF UNDISCLOSED INCOME AS DEFINED IN SECTION 158B(B) AS AMENDED BY THE FINANCE ACT , 2002 WITH RETROSPECTIVE EFFECT FROM 1ST JULY, 1995. THE SAID PROVISION IS R EPRODUCED BELOW: '158B--IN THIS CHAPTER, UNLESS THE CONTEXT OTHERWIS E REQUIRES,-- (A)......:.... (B) 'UNDISCLOSED INCOME' INCLUDES ANY MONEY, BULLIO N, JEWELLERY OR OTHER VALUABLE ARTICLE OR THING OR ANY INCOME BASED ON ANY ENTRY IN THE BOOKS OF ACCOUNT OR OTHER DOCUMENTS OR TRANSACTIONS, WHERE SUCH MONEY, BULLIO N, JEWELLERY, VALUABLE ARTICLE, THING, ENTRY IN THE BO OKS OF ACCOUNT OR OTHER DOCUMENT OR TRANSACTION REPRESENTS WHOLLY OR PARTLY INCOME OR PROPERTY WHICH HAS NOT B EEN OR WOULD NOT HAVE BEEN DISCLOSED FOR THE PURPOSES O F THIS ACT OR ANY EXPENSE, DEDUCTION OR ALLOWANCE CLAIMED UNDER THIS ACT WHICH IS FOUND TO BE FALSE.' IT MAY ALSO BE RELEVANT HERE TO REPRODUCE SECTION 158BB(1) : ITA NO.3236/MUM/2016 & 2698/MUM/2016 JAYDEEP PROFILES P.LTD 66 '158BB(1).--THE UNDISCLOSED INCOME OF THE BLOCK PER IOD SHALL BE THE AGGREGATE OF THE TOTAL INCOME OF THE P REVIOUS YEARS FALLING WITHIN THE BLOCK PERIOD COMPUTED IN ACCORDANCE WITH THE PROVISIONS OF THIS ACT, ON THE BASIS OF EVIDENCE FOUND AS A RESULT OF SEARCH OR REQUISITION OF BOOKS OF ACCOUNT OR OTHER DOCUMENTS AND SUCH OTHER MATERI ALS OR INFORMATION AS ARE AVAILABLE WITH THE AO AND REL ATABLE TO SUCH EVIDENCE, AS REDUCED BY THE AGGREGATE OF TH E TOTAL INCOME, OR AS THE CASE MAY BE, AS INCREASED BY THE AGGREGATE OF THE LOSSES OF SUCH PREVIOUS YEARS, DETERMINED......' 57. A PLAIN READING OF SECTION 158B(B) CLEARLY INDICATES THAT ANY EXPENSE, DEDUCTION OR ALLOWANCE CLAIMED UN DER THIS CHAPTER WHICH IS FOUND TO BE FALSE AS A RESULT OF SEARCH WILL COME WITHIN THE AMBIT OF UNDISCLOSED INCOME UN DER CHAPTER XIV-B. THE EXPRESSIONS 'ON THE BASIS OF EVI DENCE FOUND AS A RESULT OF SEARCH' OR 'OTHER DOCUMENTS AN D SUCH OTHER MATERIALS OF INFORMATION AS ARE AVAILABLE WIT H THE AO AND RELATABLE TO SUCH EVIDENCE, THE UNDISCLOSED INCOME SO DETECTED AS A RESULT OF SEARCH AND/OR AS A RESUL T OF OTHER MATERIAL OR INFORMATION AS ARE AVAILABLE WITH THE A O, WILL BE ASSESSABLE AS UNDISCLOSED INCOME IN ASSESSMENT F OR THE BLOCK PERIOD. IT MAY BE RELEVANT HERE TO MENTION TH AT SUCH OTHER MATERIAL OR INFORMATION AS ARE AVAILABLE WITH THE AO USED IN SECTION 158BB(1) WOULD INCLUDE MATERIAL, INFORMATION AND EVIDENCE GATHERED AS A RESULT OF PO ST- SEARCH INVESTIGATION ON THE BASIS OF EVIDENCE FOUND DURING THE SEARCH OR FOUND AS A RESULT OF SEARCH. SUCH INF ORMATION AS WOULD BE AVAILABLE WITH THE AO CAN BE MADE THE B ASE FOR COMPUTATION OF UNDISCLOSED INCOME OF THE BLOCK PERIOD. THE TERM, THE AO USED IN SECTION 158BB(1) , IS DISTINCT FROM AUTHORISED OFFICERS WHO CONDUCTED THE SEARCH. IT, THEREFORE, CLEARLY INDICATES THAT THE POST-SEARCH INVESTIGATION MADE BY THE DY. DIT/ADDL. DIT AND BY THE AO IN FURTHERANCE TO THE EVIDENCE FOUND DURING THE SEARCH CAN BE VALIDLY TAKEN INTO CONSIDERATION, IF SUCH MA TERIAL AVAILABLE WITH THE AO EXPOSES THE FALSITY OF THE EN TRIES RECORDED IN THE REGULAR BOOKS OF ACCOUNTS IN NORMAL COURSE. 58. IT MAY ALSO BE RELEVANT HERE TO ADD THAT THE RE GULAR ASSESSMENTS FOR ASST. YRS. 1998-99 AND 1999-2000 HA VE ALREADY BEEN COMPLETED BY THE AO VIDE ORDERS DT. 28 TH MARCH, 2001 AND 27TH MARCH, 2002. THE AO HAS NOT MA DE ITA NO.3236/MUM/2016 & 2698/MUM/2016 JAYDEEP PROFILES P.LTD 67 ANY ADDITION IN RESPECT OF SUCH BOGUS BILLS OBTAINE D BY THE ASSESSEE FROM THESE BILLING AGENTS/NAME LENDERS. TH E ADDITION OF ONLY RS. 1,18,13,717 HAS BEEN MADE IN R ESPECT OF ALLEGED UNACCOUNTED PAYMENTS TO KRISHNA INDUSTRIES AND VIMAL INDUSTRIES, WHICH PERHAPS REPRESENT PAYMENTS DEPOSITED IN THE BANK ACCOUNTS OF THESE TWO BILLING AGENTS NAME LENDERS AFTER THE DATE OF SEARCH. IT IS NOT KN OWN WHAT HAS BEEN DECIDED IN FURTHER APPEAL, IF ANY, MA DE BEFORE THE CIT(A) FOR ASST. YR. 1999-2000. THIS CLE ARLY SHOWS THAT THE ASSESSEE AS WELL AS THE AO BOTH HAD UNDERSTOOD THE RELEVANT PROVISIONS IN THE SAME MANN ER, NAMELY, THAT THE ADDITION, IF ANY, IS REQUIRED TO B E MADE IN RESPECT OF ALLEGED BOGUS PURCHASES OR INFLATED PURC HASES MADE FROM THESE FIVE SUPPLIERS, IT IS TO BE MADE IN THE BLOCK ASSESSMENT AND NOT NECESSARILY IN THE REGULAR ASSESSMENT. IF THIS POINT IS NOT CONSIDERED IN BLOC K ASSESSMENT, IT WILL ESCAPE TAX ALTOGETHER, AS REGUL AR ASSESSMENTS HAVE ALREADY BEEN MADE, IN WHICH NO SUC H ADDITIONS HAVE BEEN MADE. IN VIEW OF THE AFORESAID FACTS AND DISCUSSIONS, WE ARE OF THE VIEW THAT THE QUESTI ON RELATING TO ADDITION OF PURCHASES MADE, FROM THESE BOGUS SUPPLIERS OR ADDITION IN RESPECT OF INFLATED PURCHA SE PRICE SHOWN AS PAID TO THESE BOGUS SUPPLIERS COMES WITHIN THE AMBIT OF BLOCK ASSESSMENT UNDER CHAPTER XIV-B. 59. THE OTHER MAIN ARGUMENT ADVANCED BY THE LEARNED COUNSEL WAS THAT THE IMPUGNED ASSESSMENT MADE BY TH E AO FOR THE BLOCK PERIOD IS SOLELY BASED ON ENQUIRIE S MADE BY THE ADDL. DIT/DY. DIT AND ON THE APPRAISAL REPOR T SENT BY THEM. ALL THE AFFIDAVITS/STATEMENTS ON WHICH THE AO HAS PLACED RELIANCE WERE OBTAINED BY THE INVESTIGAT ION WING. THE AO HAS SIMPLY RELIED ON THE APPRAISAL REP ORT. THE LEARNED COUNSEL HAS VEHEMENTLY ARGUED THAT THE ADDL. DIT/DY. DIT HAVE NO POWER TO CONDUCT ENQUIRY AFTER THE SEARCH. THE CIT(A) HAS PLACED RELIANCE ON THE JUDGM ENT OF THE HON'BLE GUJARAT HIGH COURT IN THE CASE OF ARTI GASES V. DY. DIT (SUPRA). THE HON'BLE GUJARAT HIGH COURT IN THAT CASE AT P. 63 HAS OBSERVED AS UNDER: 'WE ARE OF THE VIEW THAT THE NOTICES UNDER SECTION 131(1A) CAN ALSO BE ISSUED AFTER COMPLETION OF THE SEARCH UNDERTAKEN UNDER THE PROVISIONS OF SECTION 132 OF THE ACT. IN OUR OPINION, IT WOULD BE ABSOLUTELY LOGICAL TO C ALL FOR INFORMATION SO AS TO HAVE BETTER PARTICULARS OR TO HAVE A COMPLETE IDEA ABOUT THE MATERIAL SEIZED DURING THE SEARCH. ITA NO.3236/MUM/2016 & 2698/MUM/2016 JAYDEEP PROFILES P.LTD 68 IF SOME MATERIAL IS SEIZED AT THE TIME OF THE SEARC H AND THE AUTHORISED OFFICER WANTS TO HAVE SOME DETAILS SO AS TO UNDERSTAND THE NATURE OF THE DOCUMENTS, HE MAY ISSU E NOTICE UNDER SECTION 131(1A) OF THE ACT. IN OUR OPINION, IN A GIVEN CASE SUCH A NOTICE CANNOT ONLY HELP THE DEPAR TMENT BUT CAN ALSO HELP THE ASSESSEE. IF THE ASSESSEE IS IN A POSITION TO GIVE MORE EXPLANATION SO AS TO SATISFY THE AUTHORISED OFFICER THAT THE DOCUMENTS SEIZED BY HIM DO NOT REVEAL ANY UNDISCLOSED INCOME, BUT THE INCOME OR TRANSACTIONS REFERRED TO IN THE DOCUMENTS HAD BEEN DULY SHOWN BY HIM IN HIS BOOKS OF ACCOUNT OR IF THE ASSE SSEE GIVES ANY INFORMATION TO THE EFFECT THAT THE FIRST IMPRESSION OF THE AUTHORISED OFFICER WITH REGARD TO THE NATURE OF THE DOCUMENTS WAS NOT CORRECT, WE ARE SUR E THAT SUCH A NOTICE WOULD HELP THE ASSESSEE HIMSELF. IF T HE ASSESSEE IS CALLED UPON TO GIVE SOME INFORMATION OR TO EXPLAIN CERTAIN DOCUMENTS OR WRITINGS SEIZED DURING THE PROCESS OF SEARCH, IN OUR OPINION, NO HARM CAN BE C AUSED TO THE ASSESSEE AND AS STATED HEREINABOVE, SUCH PARTICULARS CAN BE HELPFUL NOT ONLY TO THE DEPARTME NT BUT TO THE ASSESSEE ALSO. WE, THEREFORE, DO NOT AGREE W ITH THE SUBMISSIONS MADE BY THE LEARNED ADVOCATE, SHRI PUJ, THAT SUCH A NOTICE CAN BE ISSUED ONLY BEFORE INTIMATION OF PROCEEDINGS UNDER SECTION 132 OF THE ACT. MOREOVER, EVEN UNDER THE PROVISIONS OF SECTION 133 OF THE ACT, THE AO OR THE OFFICERS REFERRED TO IN THE SAID SECTION ARE HA VING POWER TO CALL FOR INFORMATION. SO ISSUANCE OF SUCH A NOTICE DURING OR AFTER THE SEARCH CANNOT BE SAID TO BE BAD IN LAW.' 60. RELIANCE PLACED BY THE LEARNED COUNSEL ON THE JUDGMENTS OF THE HON'BLE SUPREME COURT IN THE CASES OF CIT V. PLANTATION CORPORATION OF KERALA (SUPRA) AND ANDHRA PRADESH CHAMBERS V. STATE OF AP AND ORS . (2001) 247 ITR 36 (SC) HOLDING THAT RESORT TO ANY INTERPRETATIVE PROCESS TO UNFOLD LEGISLATIVE INTENT IN A CASE WHERE STATUTORY LANGUAGE IS CLEAR, IS IMPERMISSIBLE , IS MISPLACED, AS THE JUDGMENT OF THE HON'BLE GUJARAT H IGH COURT IN THE CASE OF ARTI GASES (SUPRA) IS A DIRECT DECISION INVOLVING INTERPRETATION OF THE RELEVANT PROVISIONS CONTAINED IN THE IT ACT , 1961. FURTHERMORE, THERE IS NO MERIT IN THE AFORESAID SUBMISSIONS OF THE 4EARNED C OUNSEL AS THE AO HAS PROVIDED ADEQUATE AND REASONABLE OPPORTUNITY TO THE ASSESSEE IN RESPECT OF ALL SUCH MATERIAL, AFFIDAVITS, STATEMENTS OBTAINED BY THE DY. DIT/ADDL . DIT ITA NO.3236/MUM/2016 & 2698/MUM/2016 JAYDEEP PROFILES P.LTD 69 IN THE COURSE OF ASSESSMENT PROCEEDINGS FOR THE BLO CK PERIOD. A PERUSAL OF THE ASSESSMENT ORDER AT P. 2 S HOWS THAT THE AO GAVE COMPLETE DETAILS ABOUT SUCH INQUIR IES, AFFIDAVITS/STATEMENTS ALONG WITH THE LETTER DT. 4TH DEC., 2000. THEREAFTER, THE AO GAVE SEVERAL OPPORTUNITIES TO THE ASSESSEE IN RESPECT OF ALL SUCH MATERIAL GATHERED B Y THE ADDL. DIT/DY. DIT BEFORE USING THE SAME AGAINST THE ASSESSEE IN THE ASSESSMENT ORDER. THE AO HAS THUS F ULLY COMPLIED WITH THE RELEVANT PROVISIONS OF LAW AND TH E PRINCIPLES OF NATURAL JUSTICE BEFORE USING THE MATE RIAL AGAINST THE ASSESSEE. THIS CONTENTION OF THE LEARNE D COUNSEL ALSO, THEREFORE, HAS NO MERIT. 61. WE HAVE CAREFULLY GONE THROUGH ALL THE DECISION S CITED BY THE LEARNED REPRESENTATIVES OF THE PARTIES. IT I S WELL SETTLED LAW THAT EACH CASE WILL DEPEND ON THE FACTS AND CIRCUMSTANCES OF THAT CASE. THE DECISION IN EVERY C ASE HAS TO BE ARRIVED AT ON THE BASIS OF APPRECIATION OF FA CTS, MATERIAL AND EVIDENCE EXISTING ON RECORDS. HOWEVER, SUCH EVIDENCE EXISTING ON RECORDS SHOULD BE APPRECIATED AND EVALUATED ON THE BASIS OF PRINCIPLES OF LAW EMERGIN G FROM VARIOUS DECISIONS CITED BY THE LEARNED REPRESENTATI VES. WE HAVE ALSO INDICATED HEREINBEFORE AS TO HOW THE FACT S OF VARIOUS CASES RELIED UPON BY THE LEARNED COUNSEL AR E DIFFERENT AND DISTINGUISHABLE FROM THE FACTS OF THE PRESENT CASE. WE WILL HOWEVER BEAR IN MIND THE VARIOUS PRIN CIPLES LAID DOWN BY THE HON'BLE COURTS WHILE CONSIDERING T HE FACTS AND MATERIAL RELATING TO THE PRESENT CASE. 62. THE MOST IMPORTANT PRINCIPLE OF LAW EMERGING FR OM THE VARIOUS DECISIONS CITED BY THE LEARNED COUNSEL IS THAT THE BURDEN OF ESTABLISHING THAT THESE FIVE SUPPLIER S WERE BOGUS SUPPLIERS OR THAT THEY WERE BENAMIS OF THE AS SESSEE, LIES ON THE DEPARTMENT. SUCH SERIOUS NATURE OF ALLE GATION DEMANDS A CREDIBLE PROOF OF A HIGH ORDER TO SUPPORT SUCH ALLEGATIONS. THE BURDEN OF ESTABLISHING MALA FIDES THEREFORE CLEARLY LIES ON THE REVENUE. EQUALLY WELL SETTLED PRINCIPLE OF LAW EMERGING FROM THE VARIOUS DECISION S CITED BY THE LEARNED REPRESENTATIVES OF BOTH SIDES, IS TH AT THE ONUS LIES ON THE ASSESSEE TO PROVE THE GENUINENESS OF ANY EXPENDITURE, WHICH IS CLAIMED AS DEDUCTION IN COMPU TING ITS TAXABLE INCOME. THEREFORE, THE ONUS IN THE INST ANT CASE, SQUARELY LIES ON THE ASSESSEE TO PROVE THE GENUINEN ESS OF PURCHASES OF COTTON SEED OIL SAID TO HAVE BEEN PURC HASED FROM THESE FIVE PARTIES, WHICH HAVE BEEN HELD TO BE BOGUS ITA NO.3236/MUM/2016 & 2698/MUM/2016 JAYDEEP PROFILES P.LTD 70 PARTIES BY THE DEPARTMENTAL AUTHORITIES. IT IS INCU MBENT ON THE ASSESSEE TO PROVE THAT THE SUPPLIERS WERE GE NUINE SUPPLIERS OF COTTON SEED OIL AND THEY REALLY SUPPLI ED THE RAW MATERIAL TO THE ASSESSEE. SUCH A BURDEN HAD TO BE DISCHARGED BY THE ASSESSEE WITH VERY STRONG, COGENT AND CLINCHING EVIDENCE IN VIEW OF BLATANT DENIAL BY ALL THE FIVE PARTIES COUPLED WITH THE VARIOUS OTHER CIRCUMSTANTI AL EVIDENCE REFERRED TO IN THE ASSESSMENT ORDER. 63. LET US EXAMINE THE FACTS RELATING TO THESE FIVE PARTIES FROM WHOM THE ASSESSEE CLAIMED TO HAVE MADE PURCHAS ES OF WASH COTTON SEED OIL AGGREGATING TO RS. 11.99 CR ORES. THE DETAILED FACTS STATED BY THE AO IN THE ASSESSME NT ORDER IN RELATION TO ALL THESE FIVE PARTIES VIZ. AD INATH CORPORATION, TIRUPATI CORPORATION, M/S KRISHNA INDUSTRIES, M/S KARNAVATI INDUSTRIES AND M/S VIMAL INDUSTRIES, CLEARLY INDICATE THE FOLLOWING FACTS AN D FEATURES: (A) CERTAIN BLANK BILL BOOKS, BLANK SIGNED CHEQUE B OOKS, LETTER HEADS AND VOUCHERS OF THESE CONCERNS WERE FO UND FROM THE BUSINESS PREMISES OF THE ASSESSEE DURING T HE COURSE OF SEARCH CONDUCTED ON 24TH FEB., 1999. (B)(I) THERE ARE VARIOUS SIMILAR FEATURES IN RELATI ON TO BANK ACCOUNTS OF ALL THESE SUPPLIERS. FOR INSTANCE, THE BANK ACCOUNT OF ADINATH CORPORATION WAS OPENED ON 1 7TH APRIL, 1998 BY DEPOSITING RS. 1,000 IN CASH ON THAT DATE DURING THE BLOCK PERIOD FROM 17TH APRIL, 1998 TO 7T H JULY, 1998. THE TOTAL DEPOSITS IN THEIR BANK ACCOUNT WAS RS. 2,10,54,076.50. WHENEVER ANY CHEQUE GIVEN BY THE ASSESSEE TOWARDS PAYMENT OF PURCHASE PRICE TO THIS PARTY WAS CREDITED IN THEIR BANK ACCOUNT, ON THAT VERY DA Y, ON MOST OF THE OCCASIONS, AN EQUIVALENT AMOUNT HAD BEE N WITHDRAWN BY A SELF CHEQUE. FOR INSTANCE, CHEQUE OF RS. 3,69,857 WAS CREDITED IN THEIR BANK ACCOUNT ON 23RD APRIL, 1998 AND THERE IS A CASH WITHDRAWAL OF AN EQUIVALEN T AMOUNT ON THAT VERY DAY. MOST OF THE TIMES, THERE I S A WITHDRAWAL OF AN EQUIVALENT AMOUNT BY SELF CHEQUE O N THE DATE OF DEPOSIT OF THE CHEQUE ON THEIR ACCOUNT. THI S BANK ACCOUNT WAS INTRODUCED BY SHRI NILESHBHAI K. PATEL, AS DIRECTOR OF THE APPELLANT-COMPANY. THE BALANCE IN T HIS BANK ACCOUNT AFTER SUCH WITHDRAWAL SOON AFTER THE D EPOSIT OF THE CHEQUE MOSTLY REMAINED AT THE SAME FIGURE OF RS. 5041. THE LEARNED DEPARTMENTAL REPRESENTATIVE HAS ITA NO.3236/MUM/2016 & 2698/MUM/2016 JAYDEEP PROFILES P.LTD 71 SUBMITTED A COPY OF LETTER DT. 20TH MARCH, 2001 FRO M MEHSANA URBAN CO-OP. BANK LTD. STATING THAT AS PER THE STATEMENT OF ACCOUNT OF ADINATH CORPORATION ACCOUNT NO. 531, ALL CREDIT ENTRIES BY TRANSFER DURING THE PERI OD FROM 17TH APRIL, 1998 TO 7TH JULY, 1998 ARE FROM NKPL. I T CLEARLY SHOWS THAT SO FAR IN BANK ACCOUNT OF ADINAT H CORPORATION IS CONCERNED, THE ENTIRE CHEQUES DEPOSI TED IN THIS BANK ACCOUNT WERE GIVEN BY THE APPELLANT-COMPA NY TOWARDS PAYMENTS OF PURCHASE BILLS OBTAINED FROM TH EM. THE CORRESPONDING DEBITS IN THE BANK ACCOUNT IN THE NORMAL COURSE SHOULD HAVE BEEN GIVEN BY WAY OF CHEQ UES TO THOSE MILLS FROM WHOM M/S ADINATH CORPORATION PURCHASED THE WASH COTTON SEED OIL AND SUPPLIED THE SAME TO THE ASSESSEE. HOWEVER, WE DO NOT FIND ANY MENTIO N IN THIS BANK ACCOUNT SHOWING ANY CHEQUE ISSUED TO ANY PARTY. ALL THE WITHDRAWALS ARE BY WAY OF SELF CASH CHEQUES. IT IS TRUE THAT THE BANK ACCOUNTS OF OTHER PARTIES WERE NOT INTRODUCED BY SHRI NILESHBHAI K. PATEL AS IN THE CASE OF ADINATH CORPORATION BUT THERE IS SOME INTER - CONNECTION OF THIS CONCERN WITH THE OTHERS. M/S TIR UPATI CORPORATION IS OWNED BY THE SAME PERSON, NAMELY, SH RI J.J. DOSHI. FOR EXAMPLE, THE FOLLOWING THREE CHEQUE S HAVE BEEN DEBITED IN THE ACCOUNT OF M/S ADINATH CORPORAT ION AS PER THE COPY PLACED AT P. 37 OF THE PAPER BOOK DT. 21ST OCT., 2002 SUBMITTED BY THE DEPARTMENT: DATE CHEQUE NO. AMOUNT 15-4-1998 942352 2,59,429 15-4-1998 942358 2,82,945 17-4-1998 942369 3,97,792 THESE AMOUNTS HAVE BEEN CREDITED IN THE BANK ACCOUN T OF M/S TIRUPATI CORPORATION WITH VISNAGAR NAGRIK SAHAK ARI BANK LTD. A COPY OF ACCOUNT OF TIRUPATI CORPORATION IN THE BOOKS OF THE ASSESSEE HAS ALSO BEEN PLACED AT P. 42 TO 45 OF THE SAID PAPER BOOK, WHICH SHOWS THAT THE PURCHASE BILLS WERE OBTAINED FROM TIRUPATI CORPORATION ONLY UPTO 1 3TH FEB., 1998. THEREAFTER, THAT ACCOUNT WAS DISCONTINU ED AND PURCHASE BILLS WERE OBTAINED FROM ADINATH CORPORATI ON FROM 8TH APRIL, 1998 TO 7TH JULY, 1998. LIKEWISE, C HEQUE ITA NO.3236/MUM/2016 & 2698/MUM/2016 JAYDEEP PROFILES P.LTD 72 NO. 79489 DT. 7TH JULY, 1998 FOR RS. 3,79,967 DEBIT ED IN THE ACCOUNT OF KRISHNA INDUSTRIES IN THE BOOKS OF THE A SSESSEE HAS BEEN DEPOSITED IN THE BANK ACCOUNT NO. 531 WITH MEHSANA URBAN CO-OP. BANK LTD. IN THE NAME OF M/S ADINATH CORPORATION. IT MAY ALSO BE RELEVANT HERE T O MENTION THAT THE TOTAL PURCHASES CLAIMED TO HAVE BE EN MADE BY THE ASSESSEE FROM M/S ADINATH CORPORATION DURING THE PERIOD FROM 8TH APRIL, 1998 TO 7TH JULY, 1998 WAS RS. 2,16,13,276 OUT OF WHICH DEPOSITS IN THEIR BANK ACCOUNT WERE ONLY RS. 2,10,54,076. THIS IMPLIES THA T REMAINING CHEQUES MUST HAVE BEEN DEPOSITED BY M/S ADINATH CORPORATION IN SOME OTHER BANK ACCOUNTS. (B)(II) THE BANK ACCOUNT OF M/S TIRUPATI CORPORATIO N WAS ALSO OPENED WITH AN INITIAL DEPOSIT OF RS. 1,000 ON 29TH SEPT., 1997. THE CHEQUES DEPOSITED IN THIS ACCOUNT WHICH ARE MOSTLY FROM NKPL (ASSESSEE-COMPANY) ARE ALSO FOLLOWED BY IMMEDIATE WITHDRAWAL OF AN EQUIVALENT AMOUNT ON MOST OF THE OCCASIONS LEAVING A BALANCE O F RS. 7,616 ON MOST OF THE DAYS. MOST OF THE CHEQUES ARE EITHER CASH WITHDRAWN OR HAVE BEEN ISSUED IN FAVOUR OF TRI VENI CORPORATION, AS IS APPARENT FROM THE NARRATION GIVE N IN THE COPY OF BANK STATEMENT PLACED AT PP. 67 AND 68 OF THE PAPER BOOK DT. 1ST JULY, 2002 SUBMITTED BY THE ASSE SSEE. (B)(III) THE BANK ACCOUNT OF M/E VIMAL INDUSTRIES W AS ALSO OPENED WITH AN INITIAL DEPOSIT OF RS. 1,000 ON 18TH JUNE, 1998. THE TRANSACTIONS OF PURCHASE BILLS OBTA INED FROM THIS PARTY PERTAINED TO THE PERIOD FROM JULY, 1998 TO DECEMBER, 1998. M/S VIMAL INDUSTRIES HAD ALSO WITHDRAWN THE AMOUNTS FROM TIME TO TIME BY WAY OF S ELF CHEQUES SOON AFTER THE RESPECTIVE CHEQUES FROM VARI OUS PARTIES WERE CREDITED. IT IS TRUE THAT THE TOTAL DE POSITS IN THE ACCOUNT OF M/S VIMAL INDUSTRIES WITH MEHSANA UR BAN CO-OP. BANK LTD. ACCOUNT NO. 1117 AS PER THE ASSESS MENT ORDER FOR THE PERIOD FROM 18TH JUNE, 1998 TO 19TH A PRIL, 1999 IS RS. 10,50,05,834 AND PURCHASES MADE BY THE ASSESSEE FROM THIS PARTY HAS BEEN SHOWN AT RS. 11,48,34,121 ONLY, WHICH INDICATES THAT M/S VIMAL INDUSTRIES HAVE RECEIVED REMAINING CHEQUES FROM VAR IOUS OTHER PARTIES AND THE DEPARTMENT HAS NOT BEEN ABLE TO ASCERTAIN AS TO WHICH OTHER PARTIES HAVE MADE PAYME NTS BY CHEQUES TO M/S VIMAL INDUSTRIES. A PERUSAL OF BA NK ACCOUNT OF M/S VIMAL INDUSTRIES SUBMITTED AT PP. 69 TO 78 INDICATES THAT SUBSTANTIAL TRANSACTIONS HAVE ALSO ITA NO.3236/MUM/2016 & 2698/MUM/2016 JAYDEEP PROFILES P.LTD 73 CONTINUED IN THIS ACCOUNT EVEN AFTER DECEMBER, 1998 , WHEN THE PURCHASES BY THE ASSESSEE FROM THIS PARTY HAD DISCONTINUED. AFTER DECEMBER, 1998, MOST OF THE WITHDRAWALS IN THE BANK ACCOUNT OF M/S VIMAL INDUST RIES ARE BY WAY OF CHEQUES AGAINST WHICH THE EXPRESSION 'SELF' HAS NOT BEEN MENTIONED IN THE COPIES OF BANK STATEM ENTS. THIS ACCOUNT HAS BEEN FINALLY CLOSED ON 12TH MAY, 1 999. NO INQUIRY HAS ALSO BEEN MADE BY THE DEPARTMENT ABOUT DESTINATION OF WITHDRAWALS MADE BY CHEQUES FROM THI S BANK ACCOUNT. BUT THE PRACTICE OF WITHDRAWING SUBST ANTIAL AMOUNTS TILL THE PURCHASES BY THE ASSESSEE FROM M/S VIMAL INDUSTRIES CONTINUED TO APPLY IN THE CASE OF M/S VI MAL INDUSTRIES, THOUGH VARIOUS PAYMENTS EVEN PRIOR TO DECEMBER, 1998 HAVE BEEN MADE BY CHEQUES OTHER THAN THE CHEQUES MARKED AS 'SELF' CHEQUES. (B)(IV) KRISHNA INDUSTRIES : THEY OPENED BANK ACCOU NT NO. 4203 WITH VISNAGAR NAGRIK SAHAKARI BANK LTD. USMANPURA BRANCH ON 30TH JUNE, 1998 WITH AN INITIAL DEPOSIT OF RS. 1,100. THE TOTAL DEPOSITS IN THIS BA NK ACCOUNT FOR THE PERIOD FROM 30TH JUNE, 1998 TO 21ST JULY, 1998 WERE RS. 29,93,310 AS MENTIONED AT P. 20 OF TH E ASSESSMENT ORDER WHICH TALLIES WITH COPIES OF BANK STATEMENT FURNISHED AT P. 79 OF THE PAPER BOOK DT. 1ST JULY, 2002. THE ASSESSEE IN THE PAPER BOOK HAS ALSO SUBMI TTED COPY OF BANK STATEMENT OF KRISHNA INDUSTRIES WITH MEHSANA URBAN CO-OP. BANK ACCOUNT NO. 1130. THIS ACCOUNT WAS OPENED WITH AN INITIAL DEPOSIT OF RS. 1 ,000 ON 2ND JULY, 1998. THE TOTAL PURCHASES CLAIMED TO HAVE BEEN MADE BY THE ASSESSEE FROM THIS PARTY WERE OF RS. 3,19,56,782. THE TOTAL DEPOSITS CREDITED IN THE BAN K ACCOUNTS OF KRISHNA INDUSTRIES AS MENTIONED AT P. 3 4 OF THE ASSESSMENT ORDER IN RS. 2,79,01,621. THE DEPOSI TS IN BANK ACCOUNT NO. 4203 WITH VISNAGAR NAGRIK SAHAKARI BANK WERE FOLLOWED BY WITHDRAWAL OF AN EQUIVALENT AMOUNT ON THE SAME DAY WHEN THE CHEQUES WERE CREDIT ED. HOWEVER, MOST OF THE WITHDRAWALS IN OTHER BANK ACCO UNT NO. 1130 WITH MEHSANA URBAN CO-OP. BANK ARE ALSO BY WAY OF SELF CHEQUES BUT THERE ARE OTHER FEW WITHDRA WALS BY WAY OF CHEQUES/DDS. FOR EXAMPLE THERE IS A DEBIT OF RS. 6,50,100 BY WAY OF DEMAND DRAFT DT. 28TH JULY, 1998. LIKEWISE, THERE ARE SOME WITHDRAWALS BY CHEQUES ALS O. BUT MOST OF THE WITHDRAWALS FROM THIS BANK ACCOUNT ARE BY WAY OF SELF CHEQUES OF SUBSTANTIAL AMOUNTS WITHD RAWN ITA NO.3236/MUM/2016 & 2698/MUM/2016 JAYDEEP PROFILES P.LTD 74 ALMOST ON THE SAME DAY WHEN CORRESPONDING CHEQUES WERE CREDITED IN THE SAID BANK ACCOUNT. (B)(V) KARNAVATI INDUSTRIES : THEY ALSO OPENED THEI R ACCOUNT ON 29TH DEC., 1997 WITH INITIAL DEPOSIT OF RS. 1,000. THE TOTAL DEPOSITS IN THE SAID ACCOUNT FROM 29TH DEC., 1997 TO 29TH DEC., 1998 ARE RS. 12,30,13,608 AS PER COPY OF BANK STATEMENT SUBMITTED AT PP. 87 TO 101 O F THE SAID PAPER BOOK. THE TOTAL PURCHASE BILLS OBTAINED BY THE ASSESSEE FROM THIS PARTY WERE ONLY OF RS. 38,10,000 , A COPY OF ACCOUNT OF KARNAVATI INDUSTRIES IN THE BOOK S OF ASSESSEE SUBMITTED AT PP. 57 TO 59 SHOWS THE TOTAL DEBITS IN THIS ACCOUNT TO THE TUNE OF RS. 2,28,77,001. THE TO TAL CREDITS HAVE BEEN SHOWN AT RS. 2,26,14,069 FOR THE PERIOD FROM 18TH JUNE, 1998 TO 31ST MARCH, 1999. THERE IS A CLOSING BALANCE OF RS. 2,62,932 AS ON 31ST MARCH, 1 999. THE NATURE OF DEBITS IN THIS ACCOUNTS HAVE NOT BEEN DISCUSSED. THERE ARE VARIOUS CREDITS IN THIS ACCOUN T WITH THE NARRATION THAT THE 'AMOUNT RECEIVED FROM VIMAL INDUSTRIES ON THEIR BEHALF'. THE DEBITS ARE MOSTLY SUPPORTED BY NARRATION SUCH AS GJ-3T-2492 ON 9TH JU LY, 1998 FOR RS. 35,12,040. A PERUSAL OF THE BANK ACCOU NT SHOWS THAT INSPITE OF TRANSACTIONS RUNNING INTO MOR E THAN RS. 12 CRORES IN THIS BANK ACCOUNT, THE BALANCE AT THE END OF MOST OF THE DAYS THROUGHOUT THE PERIOD WAS RANGI NG BETWEEN RS. 1,000 TO RS. 6,000. (B)(VI) THESE ARE SOME OF THE UNUSUAL FEATURES PERT AINING TO THE BANK ACCOUNTS OF THESE BOGUS SUPPLIERS. IF T HEY WOULD HAVE BEEN GENUINE SUPPLIERS CAPABLE OF SUPPLY ING WASH COTTON SEED OIL TO THE TUNE OF SEVERAL LACS/CR ORES IN A SHORT PERIOD LIKE IN THE PRESENT CASE, THEY WOULD S URELY INVEST ADEQUATE CAPITAL OF THEIR OWN, WHICH IN THE PRESENT CASE, IS NOT EVIDENT FROM THEIR BANK ACCOUNTS WHICH SHOWS THAT ALL THESE ACCOUNTS WERE OPENED WITH INITIAL AM OUNT OF RS. 1000 OR RS. 1100 AND BALANCE IN ALL THESE ACCOU NTS FOR MOST OF THE TIMES RANGED BETWEEN SMALL FIGURES OF R S. 1000 TO RS. 10,000. HAD THEY REALLY SUPPLIED THE GO ODS ON CREDIT OF SUCH LARGE MAGNITUDE TO THE ASSESSEE, AS CLAIMED BY THE ASSESSEE, THEY WILL HAVE SOME EVIDENCE OF SUBSTANTIAL CONTRIBUTION OF CAPITAL AND/OR SUBSTANT IAL CREDIT PURCHASES MADE FROM VARIOUS MILLS/BIG TRADER S. THE DEBITS IN THEIR BANK ACCOUNTS WOULD HAVE MOSTLY BEEN BY WAY OF CROSSED/ACCOUNT PAYEE CHEQUES ISSUED IN F AVOUR OF THOSE OIL MILLS/BIG TRADERS FROM WHOM THEY HAVE ITA NO.3236/MUM/2016 & 2698/MUM/2016 JAYDEEP PROFILES P.LTD 75 PURCHASED SUCH MATERIAL AND IN TURN SUPPLIED TO THE ASSESSEE. THE MAJOR WITHDRAWALS BY SELF CHEQUES IMMEDIATELY WHEN THE CHEQUES IN THEIR BANK ACCOUNTS WERE CREDITED EXPOSES THE IMPOSSIBILITY OF THEIR HA VING SUPPLIED SUCH MATERIAL OF LACS/CRORES OF RUPEES ON CREDIT TO THE ASSESSEE. (C) THE ITO MADE INQUIRIES FROM SALES-TAX AUTHORITI ES IN RESPECT OF SOME OF THESE SUPPLIERS. THOSE INQUIRIES REVEALED THAT THE COPIES OF RATION CARDS GIVEN BY T HESE NAME LENDERS TO SALES-TAX DEPARTMENT WERE FOUND TO BE FAKE, COPIES OF ELECTRICITY BILLS DID NOT PERTAIN T O THE ADDRESSES GIVEN. ALSO THE RESIDENTIAL ADDRESSES OF OWNERS GIVEN TO THE SALES-TAX AUTHORITIES WERE NOT CORRECT . (D) THE NOTICE SENT BY THE IT AUTHORITIES TO THESE SUPPLIERS AT THE ADDRESSES GIVEN TO THE BANKS WERE RETURNED B ACK. THE INQUIRIES CONDUCTED THROUGH THE INSPECTOR REVEA LED THAT NONE OF THEM EXISTED AT THE GIVEN ADDRESSES. (E) MOST VITAL AND SIGNIFICANT EVIDENCE BROUGHT ON RECORDS BY THE IT AUTHORITIES IS CLEAR AND CATEGORICAL ADMI SSION BY ALL THESE PARTIES IN THE FORM OF AFFIDAVITS/STATEME NTS. COPIES OF AFFIDAVITS/STATEMENTS GIVEN BY ALL THESE SUPPLIER CONCERNS REFERRED TO IN THE ASSESSMENT ORDERS CLEAR LY INDICATE THAT ALL OF THEM HAVE CLEARLY DENIED HAVIN G SUPPLIED ANY MATERIAL TO THE ASSESSEE, THEY ALSO ST ATED THAT THEY WERE BEING PAID PETTY MONTHLY AMOUNTS BY SHRI NILESH K. PATEL FOR SIGNING CHEQUES, BILLS AND OTHE R DOCUMENTS IN THE NAMES OF THESE BOGUS CONCERNS. THE ASSESSEE CONTENDED, THAT NO RELIANCE ON THESE AFFIDAVITS/STATEMENTS OBTAINED BY THE DY. DIT/ADDL. DIT BEHIND BACK OF THE ASSESSEE, SHOULD BE PLACED, AS T HEY WERE NOT EXAMINED IN THE PRESENCE OF THE ASSESSEE NOR TH E ASSESSEE WAS ALLOWED TO CROSS-EXAMINE THEM. IT IS PERTINENT TO MENTION HERE THAT THE AO VIDE VERY FIR ST QUESTIONNAIRE DT. 4TH DEC., 2000 WHICH IS REPRODUCE D AT P. 2 AND 3 OF THE ASSESSMENT ORDER GAVE COMPLETE GIST OF INQUIRIES CONDUCTED IN RESPECT OF PURCHASES MADE FR OM THESE PARTIES. COPIES OF ALL RELEVANT STATEMENTS/AF FIDAVITS GIVEN BY THE OWNERS OF THESE SUPPLIER CONCERNS HAD ALSO BEEN PROVIDED, AS IS EVIDENT FROM PARA 9 OF THE SAI D LETTER DT. 4TH DEC., 2000. THE ASSESSEE FURNISHED REPLY DT . 26TH DEC., 2000. COPY OF THIS LETTER HAS BEEN PLACED ON PP. 10 TO 13 OF THE PAPER BOOK SUBMITTED BY THE DEPARTMENT ON 21ST ITA NO.3236/MUM/2016 & 2698/MUM/2016 JAYDEEP PROFILES P.LTD 76 OCT., 2002. THE ASSESSEE IN THIS LETTER HAS SUBMITT ED IN PARA 8.1 THAT COPIES OF ACCOUNTS OF ALL THESE FIVE PARTIES FROM THE BOOKS OF ACCOUNTS OF THE ASSESSEE ARE FURN ISHED. IN PARA 9 IT HAS, INTER ALIA, BEEN STATED AS UNDER: 'IT MAY PLEASE FURTHER BE NOTED THAT CERTAIN AFFIDA VITS ARE THERE AND CERTAIN OTHER EVIDENCES WERE ALSO FOUND D URING SEARCH BUT SINCE THE TRANSACTIONS RECORDED IN THE B OOKS OF ACCOUNT IN THE NORMAL COURSE AND THEREFORE IT DOES NOT FALL WITHIN THE PURVIEW OF BLOCK ASSESSMENT.' IT IS APPARENT FROM THE AFORESAID LETTER THAT EVEN AFTER RECEIVING THE COPIES OF AFFIDAVITS/STATEMENTS AND O THER DOCUMENTS ON THE BASIS OF WHICH THE AO SUSPECTED TH E GENUINENESS OF THESE PURCHASES, THE ASSESSEE DID NO T ASK THE ITO TO PRODUCE THESE SUPPLIERS AND BROKERS FOR THEIR CROSS-EXAMINATION NOR ANY MATERIAL IN REBUTTAL OF S UCH CLINCHING AND CATEGORICAL DENIAL BY THE SUPPLIERS A ND BROKERS, WAS FURNISHED. THE AO THEREAFTER ONCE AGAI N GAVE A SHOW-CAUSE NOTICE DT. 8TH JAN., 2001 WHICH H AS BEEN REPRODUCED AT P. 28 OF THE ASSESSMENT ORDER. T HE AO CLEARLY STATED THAT THE PURCHASES MADE FROM ALL THE SE PARTIES ARE BOGUS IN NATURE. THE GIST OF INQUIRIES CONDUCTED BY THE DEPARTMENT ALONG WITH THE COPIES O F STATEMENTS/AFFIDAVITS HAVE ALREADY BEEN GIVEN TO TH E ASSESSEE ALONG WITH THE LETTER DT. 4TH DEC., 2000, THE ASSESSEE WAS GIVEN ONE MORE OPPORTUNITY TO EXPLAIN THE SAME. 64. THE ASSESSEE SUBMITTED A REPLY DT. 22ND JAN., 2 001 WHICH HAS BEEN REPRODUCED AT PP. 28 AND 29 OF THE ASSESSMENT ORDER. IN THIS LETTER THE ASSESSEE HAS I NTER ALIA, SIMPLY STATED AS UNDER: 'YOU HAVE BASED YOUR SUCH OPINION ON THE BASIS OF STATEMENTS AND AFFIDAVITS OF CERTAIN PARTIES. IN THIS CONNECTION, IT MAY PLEASE BE NOTED THAT AS FAR AS THE COMPANY IS CONCERNED, THE COMPANY HAS PURCHASED THE GOODS FROM THESE PARTIES AND HAS MADE THE PAYMENT THROUGH A/C PAYEE CHEQUE WHICH IS NOT DISPUTED BY A NY OF THE ABOVE REFERRED PARTIES. FURTHER, IT MAY PLEASE BE NOTED THAT STATEMENTS AND AFFIDAVITS APPEARS TO BE SIMILAR. IF THE STATEMENTS ARE ITA NO.3236/MUM/2016 & 2698/MUM/2016 JAYDEEP PROFILES P.LTD 77 RECORDED FROM DIFFERENT PARTIES, CONTENTS ARE BOUND TO BE DIFFERENT.' THE ASSESSEE DID NOT ASK THE AO EVEN AT THIS STAGE TO EXAMINE OR CROSS-EXAMINE THE SUPPLIERS AND THE BROK ERS IN THEIR PRESENCE. THE ASSESSEE ONLY REPEATED THE ARGU MENTS THAT MATERIAL HAD REALLY BEEN RECEIVED AND THE PAYM ENTS HAD BEEN MADE BY ACCOUNT PAYEE CHEQUES. IT WAS ALSO STATED THAT SINCE THESE TRANSACTIONS ARE RECORDED I N THE REGULAR BOOKS OF ACCOUNTS, THEREFORE, THE QUESTION OF CONSIDERING THE SAME IN BLOCK ASSESSMENT DOES NOT A RISE. 65. THEREAFTER, IT APPEARS THAT THE AFFIDAVITS OF S OME OF THESE SUPPLIERS RETRACTING FROM THEIR EARLIER AFFID AVITS GIVEN TO DY. DIT, WERE FURNISHED IN THE COURSE OF ASSESSMENT PROCEEDINGS IN THE CASE OF SHRI NILESH K . PATEL. A COPY OF LETTER DT. 23RD FEB., 2001 FROM SHRI NILE SHBHAI PATEL TO THE DY. CIT HAS BEEN PLACED AT PP. 30 TO 3 2 OF THE DEPARTMENT'S PAPER BOOK. IN THIS LETTER IT HAS BEEN STATED THAT THE ORIGINAL AFFIDAVITS OF PROPRIETORS OF EIGH T CONCERNS INCLUDING ALL THESE FIVE PARTIES IN QUESTION IN THE PRESENT CASE ARE ENCLOSED HEREWITH. THE AFFIDAVIT OF SHRI J .J. DOSHI, PROPRIETOR OF M/S ADINATH CORPORATION AND M/ S TIRUPATI CORPORATION, THOUGH SPECIFICALLY STATED AS HAVING BEEN ENCLOSED WITH THIS LETTER DT. 23RD FEB., 2001 WAS NOT SUBMITTED WITH THE SAID LETTER. ONLY FOUR AFFIDAVIT S APPEAR TO HAVE BEEN SUBMITTED ALONG WITH THE SAID LETTER D T. 23RD FEB., 2001 IN THE ASSESSMENT PROCEEDINGS IN THE CAS E OF SHRI NILESHBHAI K. PATEL. THE LEARNED SENIOR DEPART MENTAL REPRESENTATIVE SUBMITTED THAT THESE AFFIDAVITS WERE SUBMITTED AT THE FAG END OF THE PERIOD OF LIMITATIO N IN THE CASE OF SHRI NILESH K. PATEL. THE AFFIDAVIT OF SHRI J.J. DOSHI, WHO IS PROPRIETOR OF TWO PARTIES, NAMELY, M/ S ADINATH CORPORATION AND M/S TIRUPATI CORPORATION WA S SUBMITTED TO THE AO ALONG WITH THE LETTER DT. 20TH APRIL, 2001. COPY OF THE LETTER HAS BEEN PLACED AT P. 29 O F THE DEPARTMENTAL PAPER BOOK. IT WAS POINTED OUT BY THE LEARNED SENIOR DEPARTMENTAL REPRESENTATIVE THAT 20T H APRIL, 2001 WAS FRIDAY. THE NEXT TWO DAYS WERE HOLI DAYS BEING SATURDAY AND SUNDAY. ONE MORE HOLIDAY WAS THE RE ON 27TH APRIL, 2001 ON ACCOUNT OF MAHAVIR JAYANTI. THE CASE WAS GOING TO BE BARRED BY LIMITATION OF TIME O N 30TH APRIL, 2001. THE ASSESSEE PRODUCED ALL THESE AFFIDA VITS AT THE FAG END OF THE ASSESSMENT PROCEEDINGS, WHEN IT WAS SOON GOING TO BE BARRED BY LIMITATION OF TIME. NO R EQUEST ITA NO.3236/MUM/2016 & 2698/MUM/2016 JAYDEEP PROFILES P.LTD 78 FOR CROSS-EXAMINATION OF THESE SUPPLIERS OR BROKERS WAS MADE BY THE ASSESSEE IN ANY OF THE LETTERS SUBMITTE D TO THE AO DURING THE COURSE OF ASSESSMENT PROCEEDINGS. 66. THE BURDEN LIES ON THE ASSESSEE TO PROVE THAT T HE SUPPLIERS WERE GENUINE SUPPLIERS AND THEY REALLY HA D CAPACITY TO SUPPLY WASH COTTON SEED OIL OF SUCH LAR GE MAGNITUDE COSTING SEVERAL LAKHS/CRORES WITHIN SUCH SHORT PERIOD AND THEY IN FACT HAD SUPPLIED SUCH MATERIAL TO THE ASSESSEE. IN THE NORMAL COURSE, IF THESE PURCHASES OF RS. 11.99 CRORES WOULD HAVE REALLY AND GENUINELY BEEN M ADE FROM THESE PARTIES, AS CLAIMED BY THE ASSESSEE, THE ASSESSEE WOULD AT ONCE RAISE A STRONG PROTEST AFTER RECEIVIN G THE COPIES OF STATEMENTS OF THOSE SUPPLIERS/BROKERS EXP LICITLY AND EMPHATICALLY DENYING SUCH TRANSACTIONS AND THE ASSESSEE WOULD HAVE SUBMITTED IN THE VERY FIRST REP LY TO SHOW-CAUSE NOTICE DT. 4TH DEC., 2000 THAT THEIR AFF IDAVITS ARE BLATANTLY FALSE AND ALL THESE PERSONS SHOULD BE EXAMINED IN THEIR PRESENCE. THE ASSESSEE SHOULD HAV E HIMSELF PRODUCED ALL THESE SUPPLIERS/BROKERS SOON A FTER THE RECEIPT OF FIRST SHOW-CAUSE NOTICE OR WELL BEFO RE THE COMPLETION OF THE BLOCK ASSESSMENT BEFORE THE AO TO ACQUAINT HIM WITH THE REALITY IN REBUTTAL OF THOSE AFFIDAVITS/STATEMENTS OBTAINED BEHIND HIS BACK BY T HE DY. DIT. THE ASSESSEE SIMPLY SUBMITTED THE AFFIDAVITS O F THESE SUPPLIERS AT THE FAG END OF THE ASSESSMENT PROCEEDI NGS AND DID NOT PRODUCE THESE SUPPLIERS BEFORE THE AO ALONG WITH THEIR BOOKS OF ACCOUNTS AND RECORDS FROM WHICH THE CAPACITY OF THE SUPPLIERS AND THE REALITY AND GENUI NENESS OF CREDIT SALES OF SUCH LARGE MAGNITUDE MADE BY THE M TO THE ASSESSEE COULD HAVE BEEN VERIFIED. THE ASSESSEE ALSO DID NOT PRODUCE THE BROKERS THROUGH WHOM IT WAS STA TED BY SHRI NILESHBHAI PATEL THAT THE PURCHASES FROM TH ESE PARTIES WERE MADE THROUGH THEM. THE SUPPLIERS WHO C OULD GIVE THEIR AFFIDAVITS SUBSEQUENTLY IN WHICH THEY HA VE RETRACTED FROM THEIR EARLIER AFFIDAVITS/STATEMENTS TO DY. DIT, WERE THEREFORE FULLY CO-OPERATING WITH THE ASS ESSEE AND THERE IS NO REASON AS TO WHY THE ASSESSEE DID N OT OR COULD NOT PRODUCE THEM BEFORE THE AO FOR THEIR EXAMINATION ALONG WITH THE RELEVANT RECORDS. 67. IN THE INTEREST OF FAIR PLAY AND JUSTICE, A SPE CIFIC OPPORTUNITY WAS GIVEN TO THE LEARNED COUNSEL APPEAR ING FOR THE ASSESSEE DURING THE COURSE OF HEARING BEFOR E US, TO PRODUCE ALL THESE SUPPLIERS ALONG WITH THEIR RECORD S BEFORE ITA NO.3236/MUM/2016 & 2698/MUM/2016 JAYDEEP PROFILES P.LTD 79 THE TRIBUNAL. THE LEARNED COUNSEL AFTER A DEEP CONSIDERATION SUBMITTED A REPLY ON THE NEXT DATE OF HEARING THAT THE ASSESSEE CANNOT PRODUCE ANY OF THO SE SUPPLIERS BEFORE THE TRIBUNAL, AS THEY ARE NOT UNDE R THE CONTROL OF THE ASSESSEE. IT IS WELL SETTLED LAW THA T ONUS LIES ON THE ASSESSEE TO SUPPORT ITS CLAIM FOR GRANT OF D EDUCTION OF ANY EXPENDITURE. THEREFORE THE ONUS TO PROVE THE GENUINENESS OF PURCHASES FROM THESE PARTIES LIES ON THE ASSESSEE. SUCH A BURDEN, IN THE INSTANT CASE, WAS V ERY HEAVY IN VIEW OF CLEAR AND UNEQUIVOCAL AFFIDAVITS/STATEMENTS GIVEN BY SUPPLIERS. IT IS EQU ALLY WELL SETTLED LAW THAT AN ADMISSION MADE BY THE CONCERNED PERSONS IS AN EXTREMELY IMPORTANT PIECE OF EVIDENCE . IT IS TRUE THAT IT CANNOT BE SAID TO BE CONCLUSIVE. THE P ARTY WHO WANTS TO RETRACT FROM AN EARLIER ADMISSION CAN SHOW THAT IT WAS OBTAINED UNDER COERCION AND IT IS INCORRECT. HOWEVER ALLEGATION OF COERCION CANNOT BE ACCEPTED O N A MERE STATEMENT; IT IS TO BE SUPPORTED BY POSITIVE E VIDENCE. LIKEWISE THE INCORRECTNESS OF EARLIER ADMISSION ALS O HAS TO BE PROVED BY PRODUCING COGENT MATERIAL AND EVIDENCE . THE ASSESSEE RESTED WITH SUBMISSION OF SUBSEQUENT AFFIDAVITS OF SUPPLIERS. THE LEAST, IN REBUTTAL OF EARLIER AFFIDAVITS/STATEMENTS, WHICH THE ASSESSEE SHOULD HA VE DONE, IN ADDITION TO SUBMISSION OF THEIR AFFIDAVITS , IS TO PRODUCE ALL THOSE SUPPLIERS AND BROKERS ALONG WITH THE BOOKS OF ACCOUNTS, PURCHASE VOUCHERS AND EVIDENCE T O SHOW THEIR CAPACITY TO SUPPLY GOODS WORTH SEVERAL LAKHS/CRORES IN SUCH SHORT PERIOD. THE ASSESSEE OBT AINED THOSE SUBSEQUENT SELF-SERVING AFFIDAVITS FROM THE SUPPLIERS. THEREFORE, THE ONUS LIES UPON THE ASSESS EE TO PRODUCE THOSE PERSONS ALONG WITH THEIR RECORDS, TO PROVE THAT EARLIER AFFIDAVITS DO NOT CONTAIN TRUE AND COR RECT FACTS AND WERE OBTAINED UNDER COERCION. THE ASSESSEE FAIL ED TO PRODUCE THEM BEFORE THE AO. THEY HAVE ALSO FAILED T O PRODUCE THEM BEFORE THE TRIBUNAL ALONG WITH THEIR RELEVANT RECORDS, THOUGH A SPECIFIC OPPORTUNITY WAS GRANTED TO THEM DURING HEARING. ALL THESE FACTS PRO VE BEYOND DOUBT THAT ALL THE FIVE SUPPLIER CONCERNS WE RE CREATED/FLOATED ONLY FOR THE PURPOSES OF ISSUING FAKE/FICTITIOUS BILLS. THEY HAD NO CAPACITY TO SUPP LY WASH COTTON SEED OIL OF SUCH LARGE MAGNITUDE TO THE ASSE SSEE. THEY ALSO DID NOT HAVE ADEQUATE CAPITAL AND INFRASTRUCTURE FOR CARRYING OUT BUSINESS OF SUCH LA RGE SCALE. NONE OF THEM APPEAR TO BE EXISTING INCOME-TA X ITA NO.3236/MUM/2016 & 2698/MUM/2016 JAYDEEP PROFILES P.LTD 80 ASSESSEE AS GIR NUMBER/PAN NUMBER AND WARD, ETC. AR E NOT STATED IN ANY OF THEIR AFFIDAVITS. WE THEREFORE AGREE WITH THE FINDINGS OF THE LEARNED DEPARTMENTAL AUTHO RITIES THAT ALL THESE SUPPLIERS WERE ONLY NAME LENDERS/BIL LING AGENTS. THE PURCHASES CLAIMED TO HAVE BEEN MADE BY THE ASSESSEE FROM THEM DO NOT REPRESENT GENUINE PURCHAS ES MADE FROM THOSE PARTIES. 68. THE QUESTION STILL REMAINS TO BE CONSIDERED IS AS TO WHETHER THE ASSESSEE HAD IN FACT RECEIVED THE MATER IAL IN QUESTION WHICH WAS CLAIMED AS ALLEGEDLY PURCHASED F ROM THESE NAME LENDERS/BILLING AGENTS. THE EVIDENCE EXI STING ON RECORDS, WHICH WILL BE DISCUSSED IN DETAILS HERE INAFTER, INDICATES THAT THE MATERIAL IN QUESTION 'WASH COTTO N SEED OIL' SHOWN AS PURCHASED THROUGH SUCH FICTITIOUS INV OICES OBTAINED IN THE NAMES OF FIVE BOGUS PARTIES, APPEAR TO HAVE REALLY BEEN RECEIVED. SUCH EVIDENCE ON RECORDS ARE BRIEFLY AS FOLLOWS: (A) VARIOUS RECORDS OF CONTEMPORARY PERIOD INCLUDIN G GENERAL INWARD REGISTER, DAILY GATE OUTWARD REGISTE R WERE FOUND AND SEIZED DURING THE COURSE OF SEARCH. GATE OUTWARD REGISTER WAS MAINTAINED BY SECURITY STAFF O F THE FACTORY OF NKPL. IN THE ASSESSMENT ORDER, THE AO WH ILE PLACING RELIANCE ON THE STATEMENT OF SHRI KAMLESH L . PATEL HAS OBSERVED THAT CERTAIN PURCHASES ARE NOT FOUND I N THE INWARD REGISTER, WHICH IS MOST RELIABLE AND AUTHENT IC REGISTER. THE ASSESSEE GAVE EXPLANATION VIDE LETTER DT. 22ND JAN., 2001 AND STATED THAT ALL THE PURCHASES F ROM THESE PARTIES HAVE DULY BEEN RECORDED IN THE SEIZED INWARD REGISTER AND THE SAME ARE VERIFIABLE FROM THE REGUL AR BOOKS OF ACCOUNTS AS WELL AS INWARD REGISTER, STOCK REGISTER LYING SEIZED WITH THE DEPARTMENT. THE AO H AS NOT ADVERSELY COMMENTED ON THE AFORESAID SUBMISSIONS MA DE ON BEHALF OF THE ASSESSEE DURING THE COURSE OF ASSE SSMENT PROCEEDINGS. (B) THE TRIBUNAL REQUIRED THE LEARNED SENIOR DEPARTMENTAL REPRESENTATIVE TO VERIFY FROM THE SEIZ ED INWARD REGISTER/DAILY GATE OUTWARD REGISTER LYING S EIZED WITH THE DEPARTMENT, THE FACT WHETHER ENTRIES IN RE SPECT OF RECEIPT OF MATERIAL REPRESENTED BY THESE FICTITIOUS INVOICES ARE RECORDED IN SUCH DAILY GATE OUTWARD REGISTER/IN WARD REGISTER. THE LEARNED SENIOR DEPARTMENTAL REPRESENT ATIVE VIDE PARA 3.12 OF HIS WRITTEN SUBMISSIONS HAS ADMIT TED ITA NO.3236/MUM/2016 & 2698/MUM/2016 JAYDEEP PROFILES P.LTD 81 THAT ALL THE ENTRIES OF SUCH PURCHASES MADE FROM BO GUS PARTIES ARE APPEARING IN THE INWARD REGISTER BUT HE HAS POINTED OUT CERTAIN STRANGE COINCIDENCE IN RELATION TO THOSE ENTRIES. FOR INSTANCE, HE HAS POINTED OUT THA T NINE TRUCKS SHOWN AS PER INWARD REGISTER 2311 TO 2319 HA VE BEEN SHOWN AS RECEIVED ON 16TH NOV., 1997 FROM M/S TIRUPATI CORPORATION. ALL SUCH NINE TRUCKS HAVE BEE N EMPTIED WITHIN ONE HOUR AND 15 MINUTES AS PER INWAR D AND OUTWARD TIME RECORDED IN THE SAID REGISTER. IT HAS BEEN POINTED OUT THAT THE TANKERS RECEIVED FROM OTH ER REGULAR DEALERS HAVE TAKEN MORE THAN 4 TO 5 HOURS I N CARRYING OUT THE ENTIRE PROCESS OF UNLOADING WHICH INCLUDES WEIGHMENT, TAKING SAMPLE FROM THE TANKER F OR THE PURPOSE OF CHECKING THE QUALITY, COLOUR AND ODO UR AND THEN AFTER OBTAINING LAB REPORT IT HAS TO BE EMPTIE D IN THE ASSESSEE'S TANKS. THE ASSESSEE IN THE REJOINDER HAS REPLIED THAT THEY HAD ADEQUATE CAPACITY TO UNLOAD 10 TO 12 TANKERS AT THEIR UNLOADING STATION. IT HAS ALSO BEEN SUBMIT TED THAT THERE ARE OTHER INSTANCES WHERE THIRD PARTIES HAVE UNLOADED THEIR TANKERS WITHIN SUCH SHORT TIME. THE DAY-TO- DAY STOCK RECORDS ARE PREPARED ON THE BASIS OF RAW MATERIAL ENTERED INTO THE SAID INWARD REGISTER. THE RECEIPT OF MATERIAL IS ALSO CORROBORATED BY VARIOUS OTHER DOCUMENTS OF CONTEMPORARY PERIOD SUCH AS WEIGHMENT OF THE MATERIAL INWARD RECEIPTS AND ANALYSIS REPORTS E TC. ALL THESE DOCUMENTS WERE FURNISHED TO THE AO TO PROVE T HE FACT OF REAL RECEIPT OF MATERIAL SHOWN AS PURCHASED THROUGH SUCH FICTITIOUS INVOICES. (C) THE LEARNED CIT(A) CALLED FOR A REMAND REPORT F ROM THE AO DURING THE COURSE OF APPELLATE PROCEEDINGS B EFORE HIM. AS ALREADY STATED HEREINBEFORE, THE AO IN HIS REMAND REPORT DT. 26TH DEC., 2001 HAS CLEARLY STATED THAT THE TEST CHECK OF THE PURCHASE BILLS AND OTHER SUPPORTING DOCUMENTS WITH REFERENCE TO INWARD REGISTER, STOCK REGISTER ETC. HAVE BEEN MADE AND IT IS FOUND THAT T HE ENTRIES IN RESPECT OF PURCHASES MADE FROM THE ABOVE PARTIES ARE ENTERED AND CONSUMED. THIS REMAND REPOR T GIVEN BY THE AO AFTER VERIFYING THE RELEVANT FACTS STATED IN THE DOCUMENTS PRODUCED BY THE ASSESSEE WITH THE CON TENTS OF SEIZED REGISTERS, PROVIDE A CLINCHING PROOF IN F AVOUR OF THE ASSESSEE'S CONTENTION THAT THE MATERIAL IN QUES TION HAD REALLY BEEN RECEIVED AND USED IN THE PROCESS OF PRO DUCTION. ITA NO.3236/MUM/2016 & 2698/MUM/2016 JAYDEEP PROFILES P.LTD 82 (D) ONE MORE VITAL EVIDENCE WHICH SUPPORTS THE ASSE SSEE'S CONTENTION ABOUT REAL RECEIPT OF MATERIAL IN QUESTI ON IS THAT A DETAILED STOCK INVENTORY WAS PREPARED BY THE AUTHORISED OFFICERS OF THE DEPARTMENT AT THE TIME O F CONDUCTING THE SEARCH ON 24TH FEB., 1999 AND 29TH F EB., 1999. THE AO REQUIRED THE ASSESSEE TO RECONCILE THE STOCKS FOUND DURING THE COURSE OF SEARCH WITH THE STOCK RE CORDS AND FINANCIAL BOOKS OF ACCOUNTS. THE ASSESSEE SUBMI TTED A REPLY VIDE LETTER DT. 14TH MARCH, 2001 IN WHICH IT WAS STATED THAT COMPLETE RECONCILIATION OF STOCK FOUND DURING THE COURSE OF SEARCH AND AS PER BOOKS OF ACCOUNTS I S ENCLOSED FROM WHICH IT WOULD BE SEEN THAT ALL THE I TEMS FOUND AS PER THE STOCK INVENTORY PREPARED AT THE TI ME OF SEARCH ARE FULLY VERIFIABLE AS PER THE STOCK RECORD S MAINTAINED BY THE ASSESSEE-COMPANY. THE AO ACCEPTED THIS EXPLANATION AFTER DETAILED VERIFICATION AND NO ADDITION HAS BEEN MADE IN THE ASSESSMENT ORDER IN RELATION TO ANY UNEXPLAINED STOCKS FOUND DURING THE COURSE OF SEARCH. THIS ALSO PROVES THE FACT THAT TH E MATERIAL IN QUESTION HAD REALLY BEEN RECEIVED. 69. NOW LET US CONSIDER THE ASSESSEE'S SUBMISSIONS THAT ASSUMING THAT THE PURCHASE INVOICES WERE OBTAINED F ROM NAME LENDERS/BILLING AGENTS BUT THE MATERIAL HAS RE ALLY BEEN RECEIVED/PURCHASED, THE ASSESSEE IS ENTITLED T O DEDUCTION OF REASONABLE PRICE IN RESPECT OF SUCH MA TERIAL PURCHASED AND CONSUMED. THE AO HAS ALSO REPORTED IN THE REMAND REPORT SUBMITTED TO THE CIT(A) THAT SUCH PURCHASES HAVE BEEN MADE ALMOST AT THE PREVAILING MARKET RATE/PRICE CHARGED BY OTHER REGULAR DEALERS. THEREFORE NO DISALLOWANCE OF ANY PART AMOUNT WOULD BE JUSTIFIED IN THE PRESENT CASE, AS WAS DONE IN THE C ASE OF VIJAY PROTEINS LTD. (1996) 55 TTJ (AHD) 76 : (1996) 58 ITD 428 (AHD) OR IN SOME OTHER CASES. HE ALSO POINTED O UT THAT PART DISALLOWANCES MADE IN RESPECT OF INFLATION OF PURCHASE PRICE MADE IN THE CASES OF ADINATH INDUSTR IES AND ARUN INDUSTRIES HAVE BEEN DELETED BY THE TRIBUN AL AND THOSE ORDERS OF THE TRIBUNAL HAVE BEEN CONFIRME D BY THE HON'BLE GUJARAT HIGH COURT. THE JUDGMENT OF THE HON'BLE GUJARAT HIGH COURT IS BINDING, SAYS THE LEA RNED COUNSEL. WE HAVE ALREADY INDICATED WHILE DISCUSSING THE RATIO OF PRINCIPLES LAID DOWN BY THE HON'BLE GUJARA T HIGH COURT IN THESE TWO CASES THAT THE FACTS OF THE PRES ENT CASE ARE TOTALLY DIFFERENT. IN THE PRESENT CASE THERE IS AN UNEQUIVOCAL, CLEAR AND EMPHETIC DENIAL BY THESE SUP PLIERS ITA NO.3236/MUM/2016 & 2698/MUM/2016 JAYDEEP PROFILES P.LTD 83 AS WELL AS BROKERS IN THEIR FIRST AFFIDAVITS/STATEM ENTS SUBMITTED TO THE DY. DIT. THE ASSESSEE HAS NOT PROD UCED THOSE SUPPLIERS/BROKERS BEFORE THE AO ALONG WITH TH E RELEVANT RECORDS. THE TRIBUNAL ALSO GAVE THE ASSESS EE A SPECIFIC OPPORTUNITY TO PRODUCE THOSE SUPPLIERS/BRO KERS ALONG WITH THEIR BOOKS OF ACCOUNTS AND OTHER RELEVA NT RECORDS. THE ASSESSEE HAS EXPRESSED THEIR INABILITY TO PRODUCE THEM BEFORE THE TRIBUNAL. THE FACTS OF THOS E TWO CASES ARE THEREFORE TOTALLY DISTINGUISHABLE AS IN T HOSE CASES THERE WAS NO SUCH CLEAR BUT CATEGORICAL DENIA L BY THE BROKERS/SUPPLIERS. THE ASSESSEE MUST HAVE OBTAINED FICTITIOUS BILLS FROM SUCH BILLING AGENTS/NAME LEND ERS WITH A VIEW TO DERIVE SOME DEFINITE GAIN. IT IS TRUE THA T THE MATERIAL IN QUESTION WAS RECEIVED BY THE ASSESSEE B UT THOSE MATERIALS WERE NOT RECEIVED FROM THESE BILLIN G AGENTS/NAME LENDERS' BUT WERE RECEIVED FROM UNDISCL OSED SOURCES OR FROM UNKNOWN PARTIES, WHICH WAS WITHIN SPECIAL AND EXCLUSIVE KNOWLEDGE OF THE ASSESSEE AND THE ASSESSEE IS NOT WILLING TO DISCLOSE THE TRUE FACTS TO THE DEPARTMENT. IT IS WELL KNOWN THAT UNACCOUNTED MATER IAL MAY BE AVAILABLE IN THE MARKET AT MUCH LOWER PRICE AS COMPARED TO THE PURCHASES MADE FROM GENUINE DEALERS ON THE STRENGTH OF GENUINE BILLS. THE REAL SUPPLIERS M AY BE WILLING TO SELL THOSE PRODUCTS AT A MUCH LOWER RATE IN VIEW OF MANIFOLD REASONS. THERE MAY BE SAVING ON ACCOUNT OF EXCISE DUTY, SALES-TAX OR OTHER TAXES WHICH MAY BE LEVIABLE IN RESPECT OF MANUFACTURE AND SALE OF SUCH GOODS. T HE REAL SUPPLIERS OR THE OIL MILLS MAY DERIVE SUBSTANTIAL S AVING OF INCOME-TAX IN RESPECT OF INCOME FROM SALE OF UNACCO UNTED GOODS PRODUCED AND SOLD BY THEM. THERE MAY BE VARIO US FACTORS DUE TO WHICH SELLERS MAY BE WILLING TO CHAR GE LOWER RATES FOR UNACCOUNTED GOODS AS COMPARED TO ACCOUNTED GOODS. THE ASSESSEE IS ENGAGED IN THE BUS INESS WHICH IS SUBJECT TO FREQUENT CHECKING BY CIVIL SUPP LY DEPARTMENT OF THE STATE GOVERNMENT. THE REGULAR CHE CKS ARE MADE AT THE FACTORY PREMISES IN ORDER TO VERIFY WHETHER HOARDING IS DONE OR NOT. THUS, THERE IS EFF ECTIVE CHECK BY FOOD AND CIVIL SUPPLIES DEPARTMENT OF THE STATE GOVERNMENT SO FAR AS QUANTITATIVE DETAILS ARE CONCE RNED. THE MAIN AREA LEFT WITH THE CONCERNS LIKE THE ASSES SEE WOULD, THEREFORE, BE SUPPRESSION OF INCOME BY INFLA TING THE PURCHASE PRICE OF RAW MATERIAL. SUCH MATERIAL RECEIVED BY THE ASSESSEE FROM UNKNOWN SUPPLIERS OR FROM UNDISCLOSED SOURCES ALSO ENABLE THE ASSESSEE TO UTI LISE THEIR ITA NO.3236/MUM/2016 & 2698/MUM/2016 JAYDEEP PROFILES P.LTD 84 BLACK MONEY/UNACCOUNTED FUNDS FOR MAKING PURCHASES OF SUCH RAW MATERIAL IN CASH FROM OPEN MARKET. THE ASS ESSEE HAS SHOWN CREDIT PURCHASES FROM THESE NAME LENDERS/BILLING AGENTS. A STATEMENT OF PEAK HAS BEE N REPRODUCED IN EARLIER PART OF THIS ORDER WHICH SHOW S THAT THE PEAK AMOUNT CREDITED IN THE ACCOUNT OF ONE OF T HESE NAME LENDERS/BILLING AGENTS RELATING TO CREDIT SALE S ALLEGED TO HAVE BEEN MADE BY THEM TO THE ASSESSEE I S RS. 1,54,14,534. THIS ONLY GIVES AN IDEA OF THE LARGE A MOUNT OF BLACK MONEY KEPT UTILISED BY THE ASSESSEE FOR MAKIN G UNACCOUNTED PURCHASES FROM OPEN MARKET IN CASH AND OBTAINING THE BILLS FROM BILLING AGENTS/NAME LENDER S TO RECORD SUCH QUANTITY OF MATERIAL PURCHASED IN THEIR STOCK REGISTERS, TO MEET THE EFFECTIVE CHECKING DONE BY T HE CIVIL SUPPLY DEPARTMENT AND BY OTHER DEPARTMENTS. THE ASSESSEE HAS NOT ONLY DERIVED THE BENEFIT OF CIRCUL ATION OF LARGE BLACK MONEY FOR PURCHASES OF SUCH UNACCOUNTED MATERIAL FROM OPEN MARKET BUT HAS ALSO DERIVED EXTR A PROFIT BY PURCHASING THEM AT A MUCH LOWER RATE FROM THE REAL SUPPLIERS/MILLS, WHO HAD REALLY SUPPLIED THE M ATERIAL IN QUESTION TO THE ASSESSEE. THEREFORE WHAT WAS ACT UAL PROFIT DERIVED BY THE ASSESSEE FROM SUCH DEVICE/PRA CTICE ADOPTED BY THEM IS EXCLUSIVELY KNOWN TO THE ASSESSE E, THE ASSESSEE DOES NOT WANT TO TELL THE TRUTH BUT SIMPLY WANTS TO HAVE TOTAL DELETION ON TECHNICAL AND LEGAL GROUN DS WHICH HAVE NO VALID BASE WHATSOEVER. 70. THE QUESTION WHICH NOW ARISES FOR OUR CONSIDERA TION IS AS TO WHETHER THE ENTIRE AMOUNT OF THE SAID BOGUS PURCHASES SHOULD BE DISALLOWED OR THE ASSESSEE SHOU LD BE HELD TO BE ELIGIBLE FOR GRANT OF DEDUCTION OF A REA SONABLE AMOUNT OF PURCHASE PRICE OF WASH COTTON SEED OIL WH ICH IN FACT HAD REALLY BEEN RECEIVED BY THE ASSESSEE BUT W AS SOUGHT TO BE SUPPORTED BY FICTITIOUS INVOICES OBTAI NED FROM BILLING AGENTS/NAME LENDERS. IT IS WELL SETTLED LAW THAT TAX CAN BE LEVIED ONLY ON REAL INCOME. IT IS AN ELEMENT ARY RULE OF ACCOUNTANCY AS WELL AS OF TAXATION LAWS THAT PRO FIT CANNOT BE ASCERTAINED WITHOUT DEDUCTING COST OF PUR CHASES FROM SALES, OTHERWISE IT WOULD AMOUNT TO LEVY OF IN COME- TAX ON GROSS RECEIPTS OR ON SALES. SUCH RECOURSE IS NOT PERMISSIBLE UNDER ANY PROVISIONS CONTAINED IN THE IT ACT . THE FACTS AND DISCUSSION MADE HEREINABOVE SHOW THAT THE PURCHASE INVOICES OBTAINED FROM FIVE NAME LENDERS/B ILLING AGENTS ARE FICTITIOUS. THE MATERIAL AND EVIDENCE FO UND DURING THE COURSE OF SEARCH AND POST-SEARCH INVESTI GATION ITA NO.3236/MUM/2016 & 2698/MUM/2016 JAYDEEP PROFILES P.LTD 85 CONDUCTED BY THE OFFICERS OF THE DEPARTMENT HAVE ADEQUATELY EXPOSED THE FALSITY OF SUCH ENTRIES OF P URCHASES MADE IN THE REGULAR BOOKS OF ACCOUNTS. THE UNDISCLO SED INCOME DERIVED BY THE ASSESSEE OUT OF PURCHASES AGGREGATING TO RS. 11.99 CRORES SHOWN AS HAVING BEE N PURCHASED FROM THESE BILLING AGENTS/NAME LENDERS WI LL, THEREFORE, HAVE TO BE ESTIMATED ON A REASONABLE AND RATIONAL BASIS SO AS TO DETERMINE THE FIGURE OF UND ISCLOSED INCOME LIABLE TO TAX IN THE BLOCK ASSESSMENT UNDER CHAPTER XIV-B. THE ENTIRE AMOUNT OF BOGUS PURCHASES CANNOT BE TREATED AS UNDISCLOSED INCOME/CONCEALED INCOME, BEC AUSE MATERIAL IN QUESTION HAD REALLY BEEN RECEIVED. THE INFLATED PORTION OF PURCHASE PRICE MENTIONED IN THE FICTITIO US INVOICES ARE WITHIN EXCLUSIVE KNOWLEDGE OF THE ASSE SSEE. THE ASSESSEE IS NOT WILLING TO TELL THE TRUTH. THER EFORE, THE ESTIMATE OF SUCH UNDISCLOSED INCOME LIABLE TO TAX I N BLOCK ASSESSMENT IN RELATION TO SUCH BOGUS PURCHASES OF R S. 11.99 CRORES WILL HAVE TO BE MADE. AS ALREADY STATE D HEREINBEFORE, THE REAL MILLS/WHOLESALE DEALERS GENU INELY ENGAGED IN SALE AND SUPPLY OF SUCH MATERIAL MAY BE WILLING TO SELL SUCH UNACCOUNTED GOODS AT A MUCH LO WER RATES IN VIEW OF VARIOUS MANIFOLD ADVANTAGES, SUCH AS SAVINGS IN ALL KINDS OF TAXES, DUTIES, UTILISATION OF BLACK MONEY AND VARIOUS OTHER FACTORS, THE LEGISLATURE IN ITS WISDOM HAS AMENDED SECTION 40A(3) BY THE FINANCE ACT , 1995 W.E.F. 1ST APRIL, 1996 WHICH PROVIDES FOR DISA LLOWANCE OF 20 PER CENT OF SUCH EXPENDITURE INCURRED OTHERWI SE THAN BY CROSSED OR ACCOUNT PAYEE CHEQUES. THIS FIGURE OF 20 PER CENT MUST HAVE BEEN ARRIVED AT BY TAKING INTO CONSIDERATION ALL THE RELEVANT FACTS. THIS 20 PER C ENT DISALLOWANCE IS CONTEMPLATED IN CASES WHERE BLACK M ONEY IS NOT EMPLOYED IN RESPECT OF SUCH UNACCOUNTED PURC HASES. IT IS APPLICABLE ONLY IN CASES WHERE THE PAYMENT OF EXPENDITURE EXCEEDING RS. 20,000 IS MADE OTHERWISE THAN BY A CROSSED CHEQUE OR CROSSED DEMAND DRAFT. HERE I S A CASE WHERE NOT ONLY THE BENEFIT BY WAY OF AVOIDANCE OF VARIOUS KINDS OF TAXES SUCH AS EXCISE DUTY, SALES-T AX AT VARIOUS STAGES OF INPUTS ARE THERE BUT IT IS A CASE WHERE SUCH PURCHASES ON THE STRENGTH OF FICTITIOUS INVOIC ES GIVEN BY THE BILLING AGENTS/NAME LENDERS ARE TREATED AS C REDIT PURCHASES. THEREFORE, WHILE ESTIMATING THE AMOUNT L IABLE TO BE TREATED AS UNDISCLOSED INCOME IN RELATION TO SUCH PURCHASES AGGREGATING TO RS. 11.99 CRORES, THE QUES TION RELATING TO UNEXPLAINED NON-GENUINE CREDIT SHOWN IN THE ITA NO.3236/MUM/2016 & 2698/MUM/2016 JAYDEEP PROFILES P.LTD 86 ACCOUNTS OF THESE NAME LENDERS/BILLING AGENTS WILL HAVE TO BE KEPT IN MIND. THE ASSESSEE'S COUNSEL CONTENDED T HAT NO SUCH ADDITION WAS MADE BY THE AO UNDER SECTION 68 NOR SECTION 68 APPLIES IN RELATION TO SUCH CREDIT PURCHASES. ALL THESE FACTS AND DECISIONS SUBMITTED BY THE LEARNED COUNSEL ARE NOT RELEVANT BECAUSE WE ARE NOT MAKING ANY FRESH ADDITION IN RESPECT OF ANY UNEXPLA INED CASH CREDIT BUT THIS VITAL FACTOR IS BEING TAKEN IN TO CONSIDERATION WHILE ESTIMATING THE AMOUNT OF UNDISC LOSED INCOME LIABLE TO TAX IN THE BLOCK ASSESSMENT IN REL ATION TO SUCH PURCHASES OF RS. 11.99 CRORES. THE PEAK CREDIT AS ON ANY ONE DATE IN THE ACCOUNT OF ONE OF THESE BILLING AGENTS/NAME LENDERS IS RS. 1,54,14,534. THIS CHART WAS SUBMITTED BY THE LEARNED SENIOR DEPARTMENTAL REPRESENTATIVE AND COPIES WERE GIVEN TO THE LEARNED COUNSEL FOR THE ASSESSEE. NO MISTAKE IN THE SAID PE AK STATEMENTS WERE POINTED OUT BY THE LEARNED COUNSEL. THE ADDITION IN RESPECT OF SUCH UNEXPLAINED PART CREDIT IN THE ACCOUNTS OF BOGUS SUPPLIERS CAN BE MADE UNDER SECTION 68 OR 69C IN VIEW OF DECISIONS IN THE CASES OF VIJAY PROTEINS LTD. (SUPRA) AND IS ALSO SUPPORTED BY JUDG MENT OF HON'BLE RAJASTHAN HIGH COURT IN THE CASE OF INDIAN WOOLLEN CARPET FACTORY V. ITAT. NO SEPARATE OR FRES H ADDITION IS BEING MADE BY US BUT THIS IMPORTANT FAC TOR IS TAKEN INTO CONSIDERATION AS TO HOW MUCH ADDITION OU T OF ADDITION OF RS. 11.99 CRORES SHOULD BE SUSTAINED. A PART FROM THIS THE ESTIMATE OF 25 PER CENT DISALLOWANCE MADE IN THE CASE OF VIJAY PROTEINS (SUPRA) IS ALSO RELEVANT AS THAT CASE RELATES TO A CONCERN ENGAGED IN THE SIMILAR NA TURE OF BUSINESS AND THERE ALSO PURCHASE INVOICES WERE OBTA INED FROM BILLING AGENTS/NAME LENDERS BUT MATERIAL IN FA CT HAD BEEN RECEIVED FROM UNKNOWN SOURCES. THE TRIBUNAL AF TER A CAREFUL CONSIDERATION IN THAT CASE CONFIRMED THE DISALLOWANCE OF 25 PER CENT OUT OF TOTAL AMOUNT OF SUCH BOGUS PURCHASES. NO SEPARATE ADDITION WAS MADE IN RESPECT OF PEAK CREDIT IN THE ACCOUNTS OF THOSE BOG US SUPPLIERS AS THE AMOUNT OF DISALLOWANCE MADE AT THE RATE OF 25 PER CENT ADEQUATELY COVERED THE AMOUNT OF UNEXPLAINED PEAK CREDIT. ONE OF US (AM) WAS A PARTY TO THE SAID DECISION IN THE CASE OF VIJAY PROTEINS LTD . (SUPRA). 71. ON A CAREFUL CONSIDERATION OF THE ENTIRE RELEVA NT FACTS, WE ARE OF THE OPINION THAT IT WOULD BE JUST AND PRO PER TO DIRECT THE AO TO RESTRICT THE ADDITION ON ACCOUNT O F INFLATED PURCHASES TO 25 PER CENT I.E. RS. 3 CRORES WHICH IS ITA NO.3236/MUM/2016 & 2698/MUM/2016 JAYDEEP PROFILES P.LTD 87 APPROXIMATELY EQUAL TO 25 PER CENT OF RS. 11.99 CRO RES SHOWN TO HAVE BEEN PURCHASED FROM THESE FIVE BOGUS SUPPLIERS. 72. NOW WE WILL DEAL WITH GROUND NO. 4 RAISED IN NK PL'S APPEAL. THE ASSESSEE HAS CHALLENGED THE CONFIRMATIO N OF AN ADDITION OF RS. 3,86,968 BEING THE PROFIT ON ALL EGED SALES MADE BY THE COMPANY. THE AO HAS DEALT WITH TH IS ISSUE IN PARA 8 ON P. 35 AND ONWARDS OF THE ASSESSM ENT ORDER. DURING THE COURSE OF SEARCH, ONE LOOSE PAPER FILE WAS SEIZED FROM THE PREMISES OF NKPL, WHICH IS MARK ED AS ANNEX. A-G OF PANCHNAMA PREPARED AT THE TIME OF SEARCH. IN THIS FILE, CERTAIN SALE BILLS OF NKIL IN RESPECT OF SALES MADE TO NKPL WERE FOUND. THE SAID FILE ALSO CONTAINED CERTAIN SALE BILLS ISSUED BY NKPL IN RESP ECT OF SALES MADE TO TRIVENI CORPORATION AND TIRUPATI CORPORATION. THESE BILLS OF PURCHASES AND SALES FOU ND FROM THE SAID SEIZED FILE WERE NOT ACCOUNTED FOR IN THE BOOKS OF ACCOUNTS OF THE ASSESSEE AS WELL AS IN THE BOOKS OF NKIL. BEFORE THE AO, IT WAS SUBMITTED ON BEHALF OF THE ASSESSEE THAT THE ASSESSEE-COMPANY RAISED CERTAIN S ALE BILLS IN FAVOUR OF TRIVENI CORPORATION AND TIRUPATI CORPORATION IN ANTICIPATION OF GOODS TO BE PURCHASE D FROM NKIL. FINALLY, NKIL COULD NOT DELIVER THE GOODS AND THEREFORE, THE COMPANY ALSO DID NOT GIVE DELIVERY T O TRIVENI CORPORATION AND TIRUPATI CORPORATION. THERE FORE ALL THESE PURCHASE AND SALE BILLS ARE CANCELLED BIL LS. NO ACTUAL PURCHASE OF GOODS OR SALE OF GOODS WAS MADE BY THE ASSESSEE. THE DELIVERY OF THE GOODS WAS ALSO NOT EF FECTED. THIS FACT WAS VERIFIABLE FROM THE INWARD REGISTER L YING SEIZED WITH THE DEPARTMENT IN WHICH SUCH TRANSACTIO NS ARE NOT RECORDED. THE ASSESSEE-COMPANY HAS ALSO NOT REC EIVED ANY PAYMENT FROM TRIVENI CORPORATION AND TIRUPATI CORPORATION IN RESPECT OF THESE SALE BILLS WHICH CA N BE VERIFIED FROM THEIR BANK STATEMENTS AVAILABLE WITH THE IT DEPARTMENT. THE COMPANY ALSO PASSED A BOARD RESOLUT ION FOR CANCELLATION OF THE BILLS IN RESPECT OF ABOVERE FERRED TRANSACTIONS. A COPY OF BOARD RESOLUTION WAS ALSO SUBMITTED TO THE AO. THE AO CONSIDERED THE SUBMISSI ONS MADE ON BEHALF OF THE ASSESSEE. IT WAS FOUND THAT T HE SEIZED BILLS BEAR THE GATE ENTRY NUMBERS AT THE FAC TORY PREMISES OF NKPL. THEREFORE, THERE IS NO DOUBT THAT THE ASSESSEE MADE PURCHASES FROM NKIL AND ALSO SOLD THE GOODS TO TRIVENI CORPORATION AND TIRUPATI CORPORATI ON AS PER PURCHASE BILLS AND SALE BILLS FOUND AND SEIZED IN THE FILE ITA NO.3236/MUM/2016 & 2698/MUM/2016 JAYDEEP PROFILES P.LTD 88 MARKED AS ANNEX. A-6. THE AO THEREFORE MADE AN ADDITION OF RS. 2,01,99,793 IN RESPECT OF UNACCOUNT ED PURCHASES FROM NKIL FOR THE BLOCK PERIOD FOR ASST. YR. 1998-99. THE AO ALSO MADE SEPARATE ADDITION IN RESP ECT OF UNACCOUNTED SALES SO MADE TO TRIVENI CORPORATION AN D TIRUPATI CORPORATION ON THE BASIS OF SALE INVOICES FOUND AND SEIZED IN FILE MARKED AS ANNEX. A-6. THE ADDITI ON IN RESPECT OF UNACCOUNTED SALES WAS MADE TO THE TUNE O F RS. 2,05,86,761. 73. THE LEARNED CIT(A) HAS DEALT WITH THIS ISSUE IN PARAS 8 TO 8.2 ON PP. 24 AND 25 OF HIS ORDER. THE LEARNED C IT(A) HAS OBSERVED THAT SINCE BOTH THE CONCERNS, VIZ. NKP L AND NKIL BELONG TO THE SAME GROUP AND ADDITION ON ACCOU NT OF UNACCOUNTED SALES HAS ALREADY BEEN CONFIRMED BY HIM IN THE CASE OF NKIL, NO FURTHER ADDITION CAN BE MAD E IN RESPECT OF UNEXPLAINED PURCHASES IN THE HANDS OF TH E APPELLANT. SINCE WHAT CAN BE TAXED IS ONLY THE PROF IT ON THE AFORESAID SALES OF RS. 2,05,86,761, AFTER REDUCING RS. 2,01,99,793 BEING THE COST OF PURCHASES MADE BY THE ASSESSEE FROM NKIL, ADDITION SHOULD BE SUSTAINED ON LY TO THE TUNE OF RS. 3,86,968 IN SUBSTITUTION OF BOTH TH E AFORESAID ADDITIONS MADE BY THE AO. THE CIT(A) ACCORDINGLY SUSTAINED THE ADDITION OF RS. 3,86,968. 74. THE LEARNED COUNSEL APPEARING ON BEHALF OF THE ASSESSEE REITERATED HIS ARGUMENTS AS WERE MADE BEFO RE THE LEARNED DEPARTMENTAL AUTHORITIES, IN THE WRITTEN SUBMISSIONS SUBMITTED BEFORE THE CIT(A), IT WAS SUB MITTED VIDE PARAS 4.2 TO 4.4 THAT THESE TRANSACTIONS HAD N OT ACTUALLY TAKEN PLACE. IT WAS ADMITTED THAT THERE WA S A SEAL OF SALE ENTRY ON THE BILLS OF NKIL BUT THE TRANSACT IONS DID NOT FINALLY TAKE PLACE. THIS CAN BE VERIFIED FROM T HE DAY- TO-DAY STOCK REGISTER MAINTAINED BY NKIL AND NKPL. NO EVIDENCE WHATSOEVER HAS BEEN ADDUCED BY THE AO TO P ROVE THAT THE ASSESSEE HAS IN FACT PURCHASED AND SOLD WA SH COTTON SEED OIL. THE ADDITION CANNOT BE MADE MERELY ON THE BASIS OF CERTAIN LOOSE PAPERS FOUND DURING THE SEARCH. COPY OF BOARD'S RESOLUTION CONFIRMING THE CANCELLAT ION OF THESE BILLS WAS ALSO FURNISHED AT THE TIME OF ASSES SMENT. AN ALTERNATIVE PRAYER WAS ALSO MADE BEFORE THE CIT(A) THAT IF THE ASSESSEE'S CONTENTION IS NOT ACCEPTED, THEN ONL Y PROFIT ON SUCH SALES AMOUNTING TO RS. 3,86,968 CAN BE TAXE D. THE CIT(A) AFTER CONSIDERING THESE SUBMISSIONS CONFIRME D THE ADDITION TO THE EXTENT OF RS. 3,86,968. THE LEARNED COUNSEL ITA NO.3236/MUM/2016 & 2698/MUM/2016 JAYDEEP PROFILES P.LTD 89 ON THE STRENGTH OF SIMILAR ARGUMENTS URGED THAT THE ADDITION OF RS. 3,86,968 SHOULD BE CANCELLED. 75. THE LEARNED SENIOR DEPARTMENTAL REPRESENTATIVE, ON THE OTHER HAND, VEHEMENTLY CONTENDED THAT THE CIT(A ) HAS ERRED IN DELETING THE ADDITION OF RS. 2,01,99,793 B EING PURCHASES MADE FROM NKIL, WHICH ARE PROVED BEYOND DOUBTS FROM THE SALES INVOICES ISSUED BY NKIL IN FA VOUR OF NKPL, WHICH WERE FOUND AND SEIZED FROM THE BUSINESS PREMISES OF NKPL. THOSE SALE BILLS BEAR THE GATE EN TRY NUMBER. IT ALSO CONTAINS ALL OTHER PARTICULARS SUCH AS TRUCK NUMBER ETC. A SUBSEQUENT RESOLUTION OF THE BO ARD CANNOT NULLIFY THE FACTS SO CLEARLY REVEALED FROM T HE DOCUMENTS FOUND AND SEIZED DURING THE COURSE OF SEA RCH. THE CIT(A) HAS GROSSLY ERRED IN DIRECTING THE AO TO RESTRICT THE ADDITION TO RS. 3,86,968. THE LEARNED SENIOR DEPARTMENTAL REPRESENTATIVE MADE ELABORATE ARGUMENT S IN THIS REGARD IN PARA 3.12 OF HIS WRITTEN SUBMISSI ONS DT. 29TH OCT., 2002 WHICH HAVE BEEN REPRODUCED HEREINBE FORE. IT HAS BEEN MENTIONED IN THE SAID LETTER THAT WHAT WAS PURCHASED BY THE ASSESSEE FROM NKIL THROUGH SUCH SA LE BILLS ISSUED BY NKIL WAS WASH COTTON SEED OIL. HOWE VER, COPIES OF SALE BILLS ISSUED BY NKPL (THE ASSESSEE) TO TRIVENI CORPORATION AND TIRUPATI CORPORATION ARE FOR SALE O F SOYABEAN OIL. HOW CAN A PERSON SELL SOYABEAN OIL OU T OF PURCHASE OF WASH COTTON SEED OIL, THE LEARNED SENIO R DEPARTMENTAL REPRESENTATIVE HAS ALSO POINTED OUT TH AT THERE ARE SOME ENTRIES IN THE INWARD REGISTER IN TH E NAME OF M/S KOTHARI GLOBAL WHICH BEAR THE SAME TRUCK NUM BERS AND SAME WEIGHT, QUANTITY OF WASH COTTON SEED OIL W HICH ARE MENTIONED IN THE SALE BILLS ISSUED BY NKIL IN F AVOUR OF NKPL, LYING AMONGST SEIZED SALE BILLS FILE. THE ASS ESSEE HAS NOT GIVEN ANY SPECIFIC REPLY TO THE AFORESAID SUBMI SSIONS MADE IN THE WRITTEN SUBMISSIONS GIVEN BY THE LEARNE D SENIOR DEPARTMENTAL REPRESENTATIVE THAT WHAT WAS PURCHASED THROUGH THESE SALE INVOICES ISSUED BY NKI L TO NKPL WAS WASH COTTON SEED OIL AND WHAT WAS SOLD BY THE ASSESSEE TO TRIVENI CORPORATION AND TIRUPATI CORPOR ATION WAS SOYABEAN OIL. COPIES OF SOME RELEVANT SEIZED DOCUMENTS HAVE BEEN SUBMITTED BY THE DEPARTMENT IN THEIR PAPER BOOK DT. 22ND OCT., 2002. COPIES OF BIL LS ISSUED BY NKIL TO NKPL INCLUDED IN ANNEX. A-6 CLEARLY SHOW S THAT THE SALE INVOICES WERE ISSUED BY THEM FOR WASH COTTON SEED OIL. IT ALSO BEARS TRUCK NUMBERS, DELIVERY CHA LLAN NUMBERS AND INWARD DATE AND NUMBER AND DATE ON THE ITA NO.3236/MUM/2016 & 2698/MUM/2016 JAYDEEP PROFILES P.LTD 90 SEAL OF NKPL. THE SALE INVOICES ISSUED BY NKPL IN F AVOUR OF TRIVENI CORPORATION AND TIRUPATI CORPORATION ARE FOR 'EXP. SOYABEAN OIL'. THESE BILLS ALSO CONTAIN TRUCK NUMBERS AND DELIVERY CHALLAN NUMBERS, ETC. 76. THE ASSESSEE IN THE REJOINDER HAS SIMPLY STATED IN PARA 13.1 THAT THE ALLEGATION OF THE LEARNED SENIOR DEPARTMENTAL REPRESENTATIVE THAT THE SUPPLIES BY M/ S KOTHARI GLOBAL IS NOT CORRECT SINCE KOTHARI GLOBAL HAS SUPPLIED FROM SOME TRADERS OR MANUFACTURERS NEARBY AHMEDABAD. THE SUPPLY WAS IN DECEMBER, 1997. THE OL D RECORDS ARE NOT AVAILABLE. FURTHER IT WAS ALSO MENT IONED THAT SUCH EVIDENCE IS BEING PRODUCED FOR THE FIRST TIME BEFORE THE TRIBUNAL. SUCH OBJECTION WAS NOT RAISED BY THE ADDL. DIT OR BY THE AO OR CIT(A). THE SAME CANNOT THEREFORE BE RAISED FOR THE TIME BEFORE THE TRIBUNA L. 77. WE HAVE CONSIDERED THE SUBMISSIONS MADE BY THE LEARNED REPRESENTATIVES OF BOTH SIDES AND HAVE GONE THROUGH THE ORDERS OF THE LEARNED DEPARTMENTAL AUTHORITIES. THE CONTENTION OF THE ASSESSEE THAT SUBMISSIONS MADE WITH REFERENCE TO ENTRIES OF MATER IAL RECEIVED FROM KOTHARI GLOBAL CONSTITUTE ADDITIONAL EVIDENCE, IS NOT CORRECT. SUCH A SUBMISSION HAS BEE N MADE ON THE BASIS OF SEIZED INWARD REGISTER OF NKPL LYIN G SEIZED WITH THE DEPARTMENT. THE ASSESSEE HAS HIMSELF HEAVI LY RELIED UPON THE ENTRIES OF THE SAID REGISTER WHILE DEALING WITH THE MAIN GROUND OF ADDITION RELATING TO RECEIP T OF MATERIAL PURCHASED FROM BOGUS SUPPLIERS. IT IS EVID ENT FROM THE PHOTO COPIES OF SALE INVOICES ISSUED BY NK IL TO NKPL AND FROM COPIES OF SALE BASIS ISSUED BY NKPL T O TRIVENI CORPORATION AND TIRUPATI CORPORATION THAT W HAT WAS PURCHASED BY THE ASSESSEE FROM NKIL WAS WASH COTTON SEED OIL AND WHAT WAS SOLD BY THE ASSESSEE T O TRIVENI CORPORATION AND TIRUPATI CORPORATION WAS SOYABEAN OIL. THESE TWO ITEMS OF PURCHASE AND SALE REFLECTED FROM THE SEIZED INVOICES HAVE NO NEXUS WI TH EACH OTHER. THE ENTRIES IN THE SEIZED INWARD REGISTER AN D OUTWARD REGISTER ARE ALSO REQUIRED TO BE THOROUGHLY CHECKED WITH REFERENCE TO THE QUANTITY WEIGHT AND T RUCK NUMBERS MENTIONED IN THESE INVOICES FORMING PART OF A-6 IN THE LIGHT OF SIMILAR MATERIAL CLAIMED TO HAVE BE EN RECORDED AS RECEIVED FROM KOTHARI GLOBAL. NATURE OF PURCHASES FROM KOTHARI GLOBAL HAVE TO BE EXAMINED W ITH ITA NO.3236/MUM/2016 & 2698/MUM/2016 JAYDEEP PROFILES P.LTD 91 REFERENCE TO THEIR INVOICES AND ITS COMPARISON WITH SEIZED INVOICES. 78. ON A CAREFUL CONSIDERATION OF THE ENTIRE RELEVA NT FACTS, WE ARE OF THE CONSIDERED OPINION THAT THE ORDERS PA SSED BY THE CIT(A) AND THE AO IN RELATION TO THIS GROUND SH OULD BE SET ASIDE AND THE MATTER SHOULD BE RESTORED BACK TO THE AO WITH A DIRECTION TO DECIDE THE SAME AFTER CONDUCTIN G A DEEP INVESTIGATION. THE AO SHOULD EXAMINE EACH INVO ICE OF SALE AND PURCHASE FOUND AND SEIZED AS PER ANNEX. A- 6 AND VERIFY THE SAME WITH THE ENTRIES OF RELEVANT DATES IN THE SEIZED INWARD AND OUTWARD REGISTERS. HE SHOULD ALSO EXAMINE THE ORIGINAL MINUTE BOOK. IN CASE HE CONSID ERS IT NECESSARY HE MAY EXAMINE THE CONCERNED PERSONS OF T HE RESPECTIVE CONCERNS WHO PREPARED THESE SALE AND PUR CHASE INVOICES/BILLS WHICH WERE FOUND AND SEIZED DURING T HE COURSE OF SEARCH AND WHICH ACCORDING TO THE ASSESSE E DID NOT REPRESENT REAL TRANSACTIONS. THE AO WILL PASS F RESH ORDER AFTER CONDUCTING PROPER INVESTIGATION IN ACCO RDANCE WITH THE PROVISIONS OF LAW AND AFTER PROVIDING ADEQ UATE AND REASONABLE OPPORTUNITY TO THE ASSESSEE. 79. GROUND NO. (6) RELATES TO LEVY OF INTEREST UNDE R SECTION 158BFA(1) . NO ARGUMENTS WERE ADVANCED BY THE LEARNED REPRESENTATIVES OF BOTH SIDES IN RELATION TO THIS P OINT. THE AO IS DIRECTED TO GRANT CONSEQUENTIAL RELIEF. 80. GROUND NO. (7) RELATES TO INITIATION OF PENALTY PROCEEDINGS UNDER SECTION 271(1)(C) . NO SUCH GROUND CAN BE RAISED IN AN APPEAL AGAINST THE ASSESSMENT ORDER . SEPARATE APPEAL WILL LIE AGAINST ANY SUCH PENALTY, IF AND WHEN LEVIED. THIS GROUND IS THEREFORE INFRUCTUOUS A ND IS REJECTED ACCORDINGLY. IT(SS)A NO. 41/AHD/2002 IN THE CASE OF N.K. PROTEIN S LTD. : 81. WE WILL NOW DEAL WITH THE CROSS APPEAL SUBMITTE D BY THE REVENUE IN THE CASE OF N.K. PROTEINS LTD. BEING IT (SS) A NO. 41/AHD/2002. THE REVENUE HAS RAISED THE FOLLO WING TWO GROUNDS IN THIS APPEAL: '1. THE LEARNED CIT(A) HAS ERRED IN LAW AND ON FACT S IN DELETING THE ADDITION OF RS. 31,48,13,392 MADE ON A /C OF UNEXPLAINED INVESTMENTS. ITA NO.3236/MUM/2016 & 2698/MUM/2016 JAYDEEP PROFILES P.LTD 92 2. THE LEARNED CIT(A) HAS ERRED IN LAW AND ON FACTS IN DELETING THE ADDITION OF RS. 2,01,99,792 MADE ON A/ C OF UNEXPLAINED PURCHASES.' 82. THE AO HAS DISCUSSED THIS POINT IN PARA 7 ON PP . 34 AND 35 OF THE ASSESSMENT ORDER WHICH IS REPRODUCED AS UNDER: '7. UNACCOUNTED PAYMENTS: AS ALREADY DISCUSSED IN THE PRECEDING PARAS, CERTAI N BANK ACCOUNTS WERE FOUND DURING THE COURSE OF SEARCH OF DIFFERENT CONCERNS. AFTER INQUIRIES IT WAS HELD THA T THESE CONCERNS ARE BOGUS AND PURCHASES MADE BY THE ASSESS EE FROM THESE CONCERNS ARE ADDED AS BOGUS PURCHASES. F ROM THE PERUSAL OF THESE BANK ACCOUNTS, IT IS NOTICED T HAT THESE ARE IN FOLLOWING NAMES : RS. 1. ADINATH CORPORATION 2,10,54,076 2. TIRUPATI CORPORATION 3,33,07,324 3. VIMAL INDUSTRIES 7,26,74,355 4. KARNAVATI INDUSTRIES 12,34,73,600 5. KRISHNA INDUSTRIES 2,79,01,621 6. TRIVENI CORPORATION 3,64,01,356 --------- ------- TOTAL 31,48,12,332 --------- ------ ITA NO.3236/MUM/2016 & 2698/MUM/2016 JAYDEEP PROFILES P.LTD 93 THESE ALSO REPRESENT PAYMENTS MADE BY ASSESSEE GROU P CONCERNS FOR PURCHASES AND OTHER EXPENSES. INQUIRIE S ARE BEING CONDUCTED FROM BANKS TO FIND OUT THE CONCERNS WHICH MADE THESE PAYMENTS FOR PURCHASES AND OTHER EXPENSES. SUBSTANTIVE DISALLOWANCE WILL BE MADE IN THESE CONCERNS AFTER CONCLUSION OF INQUIRIES. HOWEVER, PROTECTIVELY THE ADDITION IS MADE IN THE CASE OF TH E ASSESSEE BEING UNACCOUNTED PAYMENTS IN ASST. YR. 19 99- 2000. (EMPHASIS, ITALICIZED IN PRINT, SUPPLIED BY US) THE REFORE TOTAL AMOUNT OF RS. 31,48,12,332 IS ADDED AS UNACCO UNTED PAYMENTS FOR THE BLOCK PERIOD IN RESPECTIVE ASSESSM ENT YEARS AS UNDER: ASST YR. AMOUNT 1998-99 RS. 2,12,73,188 1999-2000 RS. 29,35,39,144 (UNACCOUNTED PAYMENTS RS. 31,48,12,332)' 83. THE ADDITION OF SIMILAR NATURE WAS IN THE CASE OF NKIL WHICH IS SUBJECT-MATTER OF REVENUE'S APPEAL IN IT(S S)A NO. 38/AHD/2002. GROUND NO. (2) OF REVENUE'S APPEAL IN IT(SS)A NO. 38/AHD/2002 IN THE CASE OF NKIL RELATES TO DELETION OF ADDITION OF RS. 6,63,19,496 MADE IN RES PECT OF ALLEGED UNEXPLAINED DEPOSITS IN THE ACCOUNTS OF BOG US SUPPLIERS. THE SAID POINT HAS BEEN DISCUSSED IN PAR A 13 OF ASSESSMENT ORDER PASSED IN THE CASE OF NKIL WHICH I S REPRODUCED BELOW: '13. UNACCOUNTED PAYMENTS: AS ALREADY DISCUSSED IN THE PRECEDING PARAS, CERTAI N BANK ACCOUNTS WERE FOUND DURING THE COURSE OF SEARCH OF DIFFERENT CONCERNS. AFTER INQUIRIES IT WAS HELD THA T' THESE CONCERNS ARE BOGUS AND PURCHASES MADE BY THE ASSESS EE TO THESE CONCERNS ARE ADDED AS BOGUS PURCHASES. FROM T HE PERUSAL OF THESE BANK ACCOUNTS, IT IS NOTICED THAT IN THE BANK ACCOUNT OF KRISHNA MARKETING, TOTAL AMOUNT OF RS. 2,47,14,062 IS DEPOSITED DURING THE FINANCIAL YEAR 1998- ITA NO.3236/MUM/2016 & 2698/MUM/2016 JAYDEEP PROFILES P.LTD 94 99. IN THE BANK ACCOUNT OF SOMNATH INDUSTRIES TOTAL DEPOSITS MADE IS AMOUNTING TO RS. 3,24,57,568 DURIN G THE FINANCIAL YEAR 1998-99. THESE ALSO REPRESENT PAYMEN TS MADE BY ASSESSEE GROUP CONCERNS FOR PURCHASES AND O THER EXPENSES. INQUIRIES ARE BEING CONDUCTED FROM BANKS TO FIND THE CONCERNS WHICH MADE THESE PAYMENTS FOR PURCHASES AND OTHER EXPENSES. SUBSTANTIVE DISALLOWA NCE WILL BE MADE IN THESE CONCERNS AFTER CONCLUSION OF INQUIRIES, HOWEVER, PROTECTIVELY THE ADDITION IS MA DE IN THE CASE OF THE ASSESSEE BEING UNACCOUNTED PAYMENTS IN ASST. YR. 1999-2000. IN THE BANK ACCOUNT OF SEJAL ENTERPRISES, TOTAL DEP OSIT IS MADE AMOUNTING TO RS. 91,47,866 BY THE ASSESSEE FOR WHICH NO EXPLANATION WAS FURNISHED BY THE ASSESSEE. THEREFORE, AMOUNT OF RS. 91,47,866 IS ADDED AS UNACCOUNTED PAYMENTS IN THE HANDS OF THE ASSESSEE F OR THE BLOCK PERIOD IN THE ASST. YR. 1999-2000. (UNACCOUNTED DEPOSIT RS. 91,47,866) (UNACCOUNTED PAYMENTS RS. 5,71,71,630)' 84. THE ADDITIONS IN RESPECT OF DEPOSITS IN THE ACC OUNTS OF THESE ALLEGED BOGUS SUPPLIERS HAVE ALSO BEEN MADE I N THE CASE OF SHRI NILESHBHAI K. PATEL ON SUBSTANTIVE BAS IS. A SHOW-CAUSE NOTICE WAS ISSUED BY THE AO ON 18TH JAN. , 2001 TO SHRI NILESHBHAI K. PATEL IN WHICH IT WAS ST ATED THAT SEVERAL BLANK CHEQUE BOOKS AND VOUCHERS OF NUM BER OF CONCERNS WERE FOUND AND SEIZED AT THE OFFICE PRE MISES OF NKPL. THE AFFIDAVITS WERE FILED BY THE OWNERS OF TH OSE CONCERNS. FROM ALL THESE AFFIDAVITS IT IS CLEAR THA T THESE ARE BOGUS CONCERNS CREATED BY YOU. THE BUSINESS OF THES E CONCERNS WERE TOTALLY MANAGED BY YOU. THE BANK ACCO UNTS RELATING TO THOSE CONCERNS WERE ALSO MANAGED BY YOU AS STATED BY SO-CALLED PROPRIETORS OF THESE CONCERNS. THE AO, THEREFORE, REQUIRED THE ASSESSEE TO EXPLAIN AS TO W HY THE AMOUNTS DEPOSITED IN THE BANK ACCOUNTS OF THESE SUP PLIERS BE NOT TREATED AS UNACCOUNTED INCOME OF THE ASSESSE E. THE DETAILS OF AMOUNTS DEPOSITED IN THESE BANK ACCOUNTS WERE GIVEN IN THE AFORESAID SHOW-CAUSE NOTICE AS UNDER; NO. NAME OF THE HOLDER AMOUNT CREDITED ITA NO.3236/MUM/2016 & 2698/MUM/2016 JAYDEEP PROFILES P.LTD 95 1. KRISHNA INDUSTRIES 29,93,310 2. TRIVENI CORPORATION 3,64,01,356 3. KARNAVATI INDUSTRIES 12,30,13,600 4. ADINATH CORPORATION 2,10,54,076 5. TIRUPATI CORPORATION 3,33,37,324 6. VIMAL INDUSTRIES 10,50,05,834 7. KRISHNA INDUSTRIES 6,52,08,617 8. SOMNATH INDUSTRIES 3,25,77,224 9. KRISHNA MARKETING 2,47,14,062 ------------- TOTAL 44,43,05,403 -------------- IT APPEARS THAT THESE DEPOSITS IN THE BANK ACCOUNTS OF THESE SUPPLIERS ARE FOR THE PERIOD UPTO THE DATE WHEN COPIES OF THEIR BANK ACCOUNTS WERE OBTAINED BY THE DY. DIT/ADDL. DIT. HOWEVER, DETAILS IN RESPECT OF DEPOSITS IN THEIR BANK ACCOUNTS UPTO THE DATE OF SEARCH I.E. 24TH FEB., 1999 HAVE BEEN GIVEN IN PARA 10 ON P. 33 OF THE ASSESSMENT ORDER, WHICH ARE AS UNDER: .. 85. THE AO RELYING UPON THE AFFIDAVITS OF THOSE SUPPLIERS OBTAINED BY THE DY. DIT, WHICH HAVE BEEN DISCUSSED WHILE DEALING WITH THE ISSUE RELATING TO BOGUS PURCHASES, MADE AN ADDITION OF RS. 37,19,85,062 WHICH WAS BIFURCATED IN TWO YEARS FALLING IN THE BLOCK PERIOD AS UNDER: . .. ITA NO.3236/MUM/2016 & 2698/MUM/2016 JAYDEEP PROFILES P.LTD 96 THE AO HAS BRIEFLY DISCUSSED THE EVIDENCE AGAINST T HE ASSESSEE IN RELATION TO SUCH BOGUS SUPPLIERS WHICH, INTER ALIA, INCLUDE THE AFFIDAVITS/STATEMENTS GIVEN BY TH E SUPPLIERS DENYING HAVING SUPPLIED ANY GOODS TO NKPL AND NKIL AND STATEMENTS OF BROKERS AND OTHER FACTS DISCUSSED IN THE ASSESSMENT ORDERS PASSED IN THE CA SE OF NKPL AND NKIL. THE AO HAS ALSO DISCUSSED VARIOUS REPLIES AND AFFIDAVITS OF SUPPLIERS SUBMITTED ON BE HALF OF THE ASSESSEE IN REBUTTAL OF THE EARLIER AFFIDAVITS. THE AO THUS MADE AN ADDITION IN RESPECT OF ENTIRE AMOUNT F OUND CREDITED IN THE BANK ACCOUNTS OF THESE SO-CALLED BO GUS SUPPLIERS AGGREGATING TO RS. 37,19,85,062 IN THE HA NDS OF SHRI NILESHBHAI K. PATEL ON SUBSTANTIVE BASIS, 86. BEFORE THE CIT(A) THE ASSESSEE PREPARED AND COM PILED THE DETAILS FROM COPIES OF BANK ACCOUNTS OF THESE S UPPLIERS SUPPLIED BY THE DEPARTMENT TO THE ASSESSEE AND FURN ISHED THE FOLLOWING SUMMARISED DETAILS. 'THE DETAILS OF DEPOSITS OF CHEQUES IN THE BANK ACC OUNT FROM THE ABOVE REFERRED COMPANIES AND OUTSIDERS ARE GIVEN BELOW : NAME OF SUPPLIERS AMOUNT RECEIVED BY CHEQUE FROM NK PL AMOUNT RECEIVED BY CHEQUE FROM OUTSIDERS TOTAL AMOU NT RECEIVED SOMNATH INDUSTRIES 1,05,26,152 2,19,31,416 3,24,57,568 KRISHNA MARKETING 51,67,228 1,95,46,834 2,47,14,062 SEJAL ENTERPRISES 1,26,48,060 FROM NKPL 2,83,41,440 4,14,78,250 5,71,71,630 VIMAL INDUSTRIE S 1,48,34,121 5,78,40,234 7,26,74,355 KARNAVATI INDUS TRIES 38,10,000 11,96,63,600 12,34,73,600 ADINATH CORPORA TION 2,16,13276 2,10,54076 TIRUPATI CORPORATION 4,76,93, 575 3,33,07,324 KRISHNA INDUSTRIES 31,95,67,82 27902721 11,99,07,754 17,75,03834 27,84,12,076 TRIVENI CORPORATION(GOODS ARE SOLD BY NKPLAND SALE PROCEEDS AREACCOUNTED FOR IN THEBOOKS) 3,64,01,316 TOTAL 14,82,49,194 21,89,82,084 37,19,85,062 87. IT WAS SUBMITTED BEFORE THE CIT(A) THAT SO FAR AS PAYMENTS AGGREGATING TO RS. 2,83,41,440 AND RS. ITA NO.3236/MUM/2016 & 2698/MUM/2016 JAYDEEP PROFILES P.LTD 97 11,99,07,754 MENTIONED IN THE AFORESAID CHART ARE CONCERNED, THESE PAYMENTS WERE MADE BY NKIL AND NKP L RESPECTIVELY TO THESE SUPPLIERS BY CHEQUES. HENCE D EPOSITS IN THE BANK ACCOUNTS OF THESE SUPPLIERS TO THE EXTE NT THE DEPOSITS REPRESENTING CHEQUES RECEIVED FROM NKIL AN D NKPL, CANNOT BE TREATED AS UNEXPLAINED DEPOSITS. TH E ISSUE RELATING TO ALLEGED BOGUS PURCHASES MADE BY N KPL AND NKIL FROM THESE CONCERNS HAS BEEN DEALT WITH SEPARATELY IN THE RESPECTIVE ASSESSMENT ORDERS BUT THOSE PAYMENTS MADE BY CHEQUES BY NKIL AND NKPL BY NO STRETCH OF IMAGINATION BE TREATED AS UNEXPLAINED DE POSITS IN THE BANK ACCOUNTS OF THOSE BOGUS SUPPLIERS. THE SAME ADDITION CANNOT BE MADE IN THE HANDS OF EITHER NKIL OR NKPL, NOR IN THE CASE OF SHRI NILESHBHAI K. PATEL. AS REGARDS THE DEPOSITS AGGREGATING TO RS. 21,89,82,08 4 ARE CONCERNED, IT WAS CONTENDED THAT ALL THESE DEPOSITS IN THE BANK ACCOUNTS OF VARIOUS SUPPLIERS HAVE BEEN RECEIV ED BY CHEQUES FROM OTHER PARTIES. THE AO HAS BROUGHT NO MATERIAL ON RECORD TO SHOW THAT SUCH UNDISCLOSED DE POSITS IN THE BANK ACCOUNTS OF THESE SUPPLIERS WERE MADE B Y NKIL OR BY SHRI NILESHBHAI K. PATEL, ON THE OTHER H AND, THE AO, WHILE PASSING THE ASSESSMENT ORDERS IN THE CASES OF NKIL AND NKPL, HAD OBSERVED THAT THE INQUIRIES WOUL D BE MADE IN RELATION TO THOSE DEPOSITS BY CHEQUES IN TH E ACCOUNTS OF THESE SUPPLIERS TO FIND OUT WHICH OTHER CONCERNS HAVE MADE PAYMENTS BY CHEQUES TO THESE SUPPLIERS AND SUBSTANTIVE ADDITIONS WILL BE MADE IN THE HANDS OF THOSE CONCERNS AFTER NECESSARY INQUIRIES A ND INVESTIGATION. THE ASSESSEE HAS PLACED RELIANCE ON THE FOLLOWING JUDGMENTS BEFORE THE CIT(A): (I) CIT V. DAULATRAM RAWATMAL (1973) 87 ITR 349 (SC) (II) PARAKH FOODS LTD. V. DY. CIT (1998) 64 ITD 396 (PUNE) (III) OMKARMAL GAURISHANKAR V. ITO (1991) 39 TTJ 22 3 (AHD) (IV) DIMCO SILK MILLS V. ITO (1999) 107 TAXMAN 41 (MAG) 88. THE CIT(A) AFTER CONSIDERING THE ENTIRE RELEVAN T FACTS AND MATERIAL GAVE THE FOLLOWING FINDINGS IN PARA 4. 8 OF HIS APPELLATE ORDER IN THE CASE OF SHRI NILESHBHAI K. P ATEL. ITA NO.3236/MUM/2016 & 2698/MUM/2016 JAYDEEP PROFILES P.LTD 98 '4.8 I HAVE CAREFULLY CONSIDERED THE SUBMISSIONS MA DE BY THE APPELLANT'S COUNSEL, SHRI ASHWINI SHAH AND HAVE ALSO PERUSED THE FACTS OF THE CASE LAWS CITED AND ALSO T HE MATERIALS WHICH WAS FOUND DURING THE COURSE OF SEAR CH AND ALSO FURTHER INQUIRIES CONDUCTED BY THE AO DURI NG THE COURSE OF ASSESSMENT. AFTER PERUSING THE SAID MATER IALS AND RECORDS, I HAVE NO HESITATION IN HOLDING THAT T HE INFERENCE DRAWN THAT THE MONEYS DEPOSITED IN THE SA ID ACCOUNTS BELONG TO THE APPELLANT IS NOT SUPPORTED B Y SUFFICIENT EVIDENCE FOR THE FOLLOWING REASONS: (A) THE APPEAL IN RESPECT OF NKIL HAS BEEN DISPOSED OF BY THE UNDERSIGNED AS PER ORDER DT. 16TH JAN., 2001 WH ILE APPEAL IN RESPECT OF NKPL HAS BEEN DISPOSED OF BY T HE UNDERSIGNED AS PER ORDER DT, 21ST JAN., 2002. FOR T HE SAKE OF CONVENIENCE, THE VARIOUS CONTENTS AND FACTS RELA TING TO THE STATEMENTS AND EVIDENCES DISCUSSED BY THE AO IN THE BLOCK ASSESSMENT ORDER OF THE APPELLANT, ARE NOT DI SCUSSED AGAIN. THE SAME HAVE BEEN ELABORATELY DISCUSSED THE REIN. IN THE CASE OF SEJAL ENTERPRISES, ADDITION OF RS. 1,26,48,060 WAS UPHELD ON ACCOUNT OF BOGUS PURCHASE S IN THE CASE OF NKIL WHEREAS FINDING WAS GIVEN THAT, IN RESPECT OF SOMNATH INDUSTRIES AND KRISHNA MARKETING , THERE WAS NO MATERIAL FOR CONSIDERING THE ADDITIONS UNDER SECTION 158BC , IN THE ABSENCE OF ANY MATERIAL DISCOVERED DURING THE COURSE OF SEARCH. SIMILARLY, IN RESPECT OF BOGUS PURCHASES RELATING TO VIMAL INDUST RIES, KARNAVATI INDUSTRIES, ADINATH CORPORATION, TIRUPATI CORPORATION, KRISHNA INDUSTRIES TOTALLING RS. 11,99 ,07,754 WAS UPHELD IN THE ORDERS OF NKPL AS DISCUSSED ABOVE . IT WAS NOTED THAT THE SAID PAYMENTS ORIGINATED IN THE BOOKS OF NKIL AND NKPL AND WERE THROUGH CHEQUE PAYMENTS AND THE TRANSACTIONS HAVE BEEN DULY REFLECTED IN TH E BOOKS OF NKIL AND NKPL. THUS, THE SOURCE OF THE SAID DEPO SITS STANDS ESTABLISHED. (B) IN RESPECT OF DEPOSITS OF RS. 21,89,82,084, THE AMOUNT IS STATED TO BE RECEIVED FROM OUTSIDERS I.E. OTHER THAN NKIL AND NKPL. THE AO HAS NOT BROUGHT ANY EVIDENCE IN TH IS RESPECT THAT THE APPELLANT WAS BENAMIDAR OF SUCH PA RTIES. AS A MATTER OF FACT, EVEN THE NAMES OF PARTIES FROM WHOM SUCH AMOUNTS HAVE BEEN RECEIVED AND DEPOSITED IN TH E SAID BANK ACCOUNTS HAVE NOT BEEN DISCUSSED ANYWHERE IN THE ASSESSMENT ORDER. THE ONLY REFERENCE MADE BY TH E AO IS AT P. 39 OF THE ORDER IN THE CASE OF NKIL AND AT P. 35 OF ITA NO.3236/MUM/2016 & 2698/MUM/2016 JAYDEEP PROFILES P.LTD 99 THE ORDER IN THE CASE OF NKPL, IN WHICH THE AO HAD OBSERVED THAT INQUIRIES WILL BE MADE IN RESPECT OF THOSE CONCERNS AND SUBSTANTIVE ADDITION MADE IN THOSE CAS ES. IN VIEW OF THESE FACTS, THERE IS NO JUSTIFICATION FOR TREATING THE SAME AS UNDISCLOSED INCOME OF THE APPELLANT AND THA T TOO WITHOUT ANY FINDING OR SUPPORTING EVIDENCE EMERGING OUT OF SEARCH ACTION UNDER SECTION 132 IN THE CASE OF APPELLANT. (C) IN RESPECT OF THE AMOUNT OF RS. 3,64,01,316 AS STATED IN THE WRITTEN SUBMISSIONS BEFORE ME, THE AMOUNT IS REPRESENTED TOWARDS SALE BY NKPL AND THE TRANSACTIO NS ARE DULY RECORDED IN THE BOOKS OF ACCOUNT. THERE IS NO FINDING THAT THE SOURCE OF THE SAME IS THE APPELLAN T OR THAT IT IS BASED ON ANY MATERIAL DISCOVERED AS A RESULT OF SEARCH. (D) THE APPELLANT HAS STRONGLY SUBMITTED THAT THE TRANSACTIONS BETWEEN THE ACCOUNT HOLDERS AND THE APPELLANT ARE ONLY IN THE CAPACITY OF HIS BEING MD OF NKIL AND NKPL AND THAT HE HAS NEVER DONE ANY BUSINESS IN HIS INDIVIDUAL CAPACITY. IT IS FURTHER SUBMITTED THAT N O ADVERSE INFERENCE CAN BE DRAWN FOR MERE INTRODUCTIO N TO THE PROPRIETOR OF THE CONCERN FOR OPENING A BANK AC COUNT. RELIANCE IS PLACED ON THE DECISION OF TRIBUNAL, AHM EDABAD IN THE CASE OF DIMCO SILK MILLS V. ITO (SUPRA) WHICH IS RELIED UPON AS MENTIONED EARLIER IN THIS ORDER. IT IS SUBMITTED THAT THE ONUS IS ON THE AO TO HOLD THAT T HE SAID DEPOSITS ARE ON ACCOUNT OF UNDISCLOSED INCOME OF TH E APPELLANT AND THIS VIEW IS CORRECT IN VIEW OF THE D ECISION OF THE SUPREME COURT IN THE CASE OF CIT V. DAULATRAM RAWATMAL (SUPRA). (E) IT IS FURTHER SUBMITTED THAT AS DISCUSSED BY TH E AO HIMSELF IN THE ORDERS OF NKIL AND NKPL, NO CHEQUE B OOKS WERE FOUND FROM THE RESIDENTIAL PREMISES OF THE APP ELLANT IN RESPECT OF ANY OF THE ABOVE ACCOUNT HOLDERS RELA TING TO THE ABOVEMENTIONED CONCERNS. THIS IS FOUND TO BE CO RRECT SINCE THE SAME WERE FOUND FROM THE RESIDENCE OF KAMLESHBHAI PATEL. AS SUCH, ADDITION MADE BY THE AO OF RS. 37,19,85,062 CANNOT BE SUSTAINED AND THEREFORE DIRECTED TO BE DELETED.' 89. THE CIT(A) GAVE THE FOLLOWING FINDINGS IN RELAT ION TO THIS GROUND RAISED IN THE REVENUE'S APPEAL IN THE C ASE OF NKPL IN PARA 7.4 ON PP. 23 AND 24 OF HIS ORDER: ITA NO.3236/MUM/2016 & 2698/MUM/2016 JAYDEEP PROFILES P.LTD 100 '7.4 I HAVE CONSIDERED THE SUBMISSIONS MADE AND ALS O PERUSED THE FACTS. IT IS NOTED THAT THE AO HAS TREA TED THE TOTAL OF DEPOSITS APPEARING IN THE BANK ACCOUNTS OF THE SAID 5 PARTIES POINTED OUT BY THE APPELLANT IN PARA 3.2 OF THE SUBMISSIONS. IT IS SUBMITTED THAT PURCHASES FRO M THE APPELLANT RECORDED ONLY FOR RS. 11.99 CRORES AND TH E REST IS FROM THE OUTSIDE PARTIES FOR WHICH NO FINDINGS HAVE BEEN GIVEN BY THE AO. IN RESPECT OF THE AMOUNT OF RS. 3,64,01,316, NO FINDING HAS BEEN GIVEN BY THE AO AN D THE TRANSACTION HAS ALREADY BEEN CONSIDERED IN THE CASE OF NKIL. IT IS NOTED THAT THE CONTENTION OF THE APPELL ANT ARE CORRECT AND THE APPEAL OF NKIL BEARING APPEAL NO. CIT(A)-VI (NOW III)/CC2/54/01-02 HAS ALREADY BEEN DISPOSED OF AS PER ORDER DT. 16TH JAN., 2002. AFTER PERUSING THE POINTS MADE BY THE APPELLANT, I FIND T HAT THERE IS NO JUSTIFICATION IN MAKING DOUBLE ADDITION FIRST BY WAY OF TREATING THE SAME AS BOGUS PURCHASES AND THA N CONSIDERING THE SAME AS UNEXPLAINED DEPOSITS IN THE BANK ACCOUNTS OF THE PROPRIETORS/CONCERNS. IT IS RELEVAN T TO NOTE THAT IT IS OBSERVED BY THE AO THAT WITHDRAWALS MADE RELATING TO PURCHASES OF NKPL HAVE BEEN USED BY THE APPELLANT ITSELF. 7.5 IN VIEW OF THE ABOVE FACTS, I DO NOT SEE ANY JU STIFICATION IN MAKING FURTHER ADDITION ON THE BASIS OF DEPOSITS IN THE SAID ACCOUNTS WITHOUT ANY BASIS. THE ADDITION MADE ON THIS ACCOUNT ON PROTECTIVE BASIS, THEREFORE, CANNOT BE SUSTAINED AND DIRECTED TO BE DELETED.' 90. THE CIT(A) IN THE CASE OF NKIL HAS CONSIDERED T HIS ISSUE IN PARA 6 TO 6.2 ON PP. 12 TO 14 OF HIS ORDER AS UNDER: '6. THIS RELATES TO ADDITION OF RS. 5,71,71,630 IN RESPECT OF DEPOSITS IN THE BANK ACCOUNT OF THE SAID SUPPLIERS AND RS. 91,47,866 ON ACCOUNT OF UNDISCLOSED DEPOSITS IN THE SAID BANK ACCOUNT. THIS HAS BEEN DISCUSSED AND REFERRED BY THE APPELLANT IN PARA 2.2 OF ITS WRITTEN SUBMISSIONS REPRODUCED ABOVE. THE SAID ADDITIONS HAVE BEEN MADE ON PROTECTIVE BASIS. IT IS PLEADED BY THE APPELLANT IN THE WRITTEN SUBMISSIONS AS PER PARA 10 AS UNDER: '10, UNACCOUNTED PAYMENT OF RS. 5.71 CRORES (PARA 1 3PAGE NO. 38 AND 39): ITA NO.3236/MUM/2016 & 2698/MUM/2016 JAYDEEP PROFILES P.LTD 101 10.1 THE LEARNED AO HAS MADE ADDITION OF RS. 5.71 C RORES AS UNACCOUNTED PAYMENTS. 10.2 THE ASSESSEE MADE PURCHASES WHICH IS CONSIDERE D AS BOGUS AND THE ASSESSEE ALSO MADE PAYMENT FOR SUCH PURCHASES BY CHEQUES. THE LEARNED AO OBTAINED BANK STATEMENT OF THE SAID SUPPLIERS AND THE TOTAL DEPOS ITS MADE IN THE SAID ACCOUNTS BY THE ASSESSEE-COMPANY AND OUTSIDERS ARE CONSIDERED AS PAYMENT MADE BY THE ASSESSEE-COMPANY AND IS ALSO CONSIDERED AS UNACCOUN TED PAYMENTS. THEREFORE, THE LEARNED AO HAS MADE ADDITI ON OF RS. 5.71 CRORES AS UNACCOUNTED PAYMENTS ON PROTECTI VE BASIS. THE DETAILS OF SUCH UNACCOUNTED PAYMENTS AND PURCHASES ARE GIVEN BELOW: PURCHASES CONSIDERED AS BOGUS IN THE CASE OF NKIL: RS. SOMNATH INDUSTRIES 1,14,78,000 KRISHNA MARKETING 51,67,228 SEJAL ENTERPRISES 1,26,48,060 ------------- 2,92,93,288 ------------- THE DETAILS OF DEPOSIT OF CHEQUES IN THE BANK ACCOUNT FROM THE ABOVE REFERRED COMPANIES AND OUTSIDERS ARE AS UNDER: 10.3 FROM THE ABOVE, IT MAY PLEASE BE SEEN THAT THE TOTAL DEPOSITS FROM THE ACCOUNTS IS RS. 5.71 CRORES WHERE AS THE TOTAL PURCHASES FROM THE THREE CONCERNS ARE RS. 2.9 2 CRORES. IN OTHER WORDS, THE SAID CONCERNS ARE ALSO DEALING WITH OUTSIDERS WHICH PROVES THAT THE SAID CONCERNS ARE NOT BENAMIDAR. EVEN THE PAYMENT BY THE OUTSIDERS ARE CONSIDERED PAYMENT MADE BY THE COMPANY WITHOUT ANY BASIS AND EVIDENCES. FURTHER, THE PAYMENT FOR PURCH ASES IS ITA NO.3236/MUM/2016 & 2698/MUM/2016 JAYDEEP PROFILES P.LTD 102 BY CHEQUES AND THEY ARE REFLECTED IN THE ACCOUNTS REGULARLY MAINTAINED BY THE COMPANY AND, THEREFORE, SUCH PAYMENT FOR PURCHASES IS ACCOUNTED PAYMENT AND CANN OT BE CONSIDERED AS UNACCOUNTED PAYMENTS. 10.4 EVEN IF IT IS CONSIDERED AS UNACCOUNTED PAYMEN T, THE ADDITION IS ALREADY MADE FOR PURCHASES AND, THEREFO RE, THERE IS NO QUESTION OF MAKING FOR FURTHER ADDITION FOR UNACCOUNTED PAYMENTS, IF SO MADE, IT IS DOUBLE ADDI TION. 10.5 THE PROTECTIVE ASSESSMENT IS NORMALLY MADE, IF THE DEPARTMENT IS IN DOUBT ABOUT THE PERSON IN WHOSE HA NDS THE INCOME IS TAXABLE. THE LEARNED AO HAS ALSO STAT ED THAT THE INQUIRIES WOULD BE MADE IN THE HANDS OF THE SAI D SUPPLIERS AND, THEREFORE, THE SUBSTANTIVE ADDITION WOULD BE MADE IN THE HANDS OF THE SUPPLIERS. NOW, THE SAI D CONCERNS ARE TREATED AS BENAMIDAR AND THE DEPOSITS IN THE ACCOUNTS OF SUPPLIERS OF NKIL AND NKPL IS TREATED A S UNDISCLOSED INCOME IN THE CASE OF NILESH K. PATEL A ND THEREFORE, THE QUESTION OF TREATING ANY SUCH PAYMEN TS AS UNACCOUNTED IN THE CASE OF NKIL EVEN ON PROTECTIVE BASIS DOES NOT ARISE.' 6.1 SIMILARLY, IN RESPECT OF ADDITION OF RS. 91.47 LAKHS, IT HAS BEEN SUBMITTED AS UNDER AS PER PARA 11 OF THE W RITTEN SUBMISSIONS AS UNDER: 11. UNACCOUNTED DEPOSIT OF RS. 91.47 LAKHS (PARA 13 PAGE NO. 39) : 11.1 THE LEARNED AO HAS MADE ADDITION OF RS. 91.47 LAKHS AS UNEXPLAINED DEPOSIT SINCE IT IS ARGUED THAT THE COMPANY HAS MADE SUCH DEPOSITS IN THE ACCOUNT OF SEJAL ENTE RPRISES. IN OTHER WORDS, SEJAL ENTERPRISES IS TREATED AS BEN AMIDAR OF NKIL. THERE IS NO EVIDENCE WHATSOEVER ADDUCED BY THE LEARNED AO FOR HOLDING SEJAL ENTERPRISES AS BENAMID AR OF THE COMPANY. IN FACT, THE COMPANY HAS MADE DEPOSIT SINCE IT IS ARGUED THAT THE COMPANY HAS MADE SUCH DEPOSIT S IN THE ACCOUNT OF SEJAL ENTERPRISES. 11.2 IN OTHER WORDS, SEJAL ENTERPRISES IS TREATED A S BENAMIDAR OF NKIL. THERE IS NO EVIDENCE WHATSOEVER ADDUCED BY THE LEARNED AO FOR HOLDING SEJAL ENTERPR ISES AS BENAMIDAR OF THE COMPANY. IN FACT, THE COMPANY H AS MADE PURCHASES FROM SEJAL ENTERPRISES TO THE EXTENT OF RS. ITA NO.3236/MUM/2016 & 2698/MUM/2016 JAYDEEP PROFILES P.LTD 103 1,26,48,060 AND SUCH PURCHASES ARE CONSIDERED AS BO GUS AND THE ADDITION IS ALREADY MADE IN THE CASE OF NKI L WHICH IS BEING CONTESTED. THEREFORE, THE QUESTION O F MAKING ANY ADDITION AS UNEXPLAINED DEPOSIT IN THE C ASE OF ASSESSEE-COMPANY DOES NOT ARISE.' 6.2 I HAVE CAREFULLY CONSIDERED THE SAME AND IN VIE W OF MY FINDINGS GIVEN IN RESPECT OF KRISHNA MARKETING AND SOMNATH INDUSTRIES, THERE IS NO JUSTIFICATION FOR T REATING THE SAME AS INCOME OF THE APPELLANT IN THE BLOCK ASSESSMENT. IN RESPECT OF THE ADDITION OF RS. 91,47 ,866, ADDITION OF RS. 1,26,48,060 HAS ALREADY BEEN CONFIR MED AND THERE IS NO BASIS FOR MAKING FURTHER ADDITION I N THE ABSENCE OF ANY ADDITIONAL EVIDENCE THAT THE SAME IS CO- RELATED WITH PURCHASES OUT OF UNEXPLAINED MONIES. T HIS WOULD AMOUNT TO DOUBLE TAXATION. IN VIEW OF THE ABO VE FACTS, THESE 2 ADDITIONS ARE DIRECTED TO BE DELETED .' 91. THE LEARNED SENIOR DEPARTMENTAL REPRESENTATIVE RELIED UPON THE REASONS MENTIONED IN THE ASSESSMENT ORDERS. THE BENCH PERSISTENTLY REQUIRED THE LEARNED SENIOR DEPARTMENTAL REPRESENTATIVE TO FURNISH THE DETAILS OF INQUIRIES MADE SUBSEQUENT TO THE COMPLETION OF THES E ASSESSMENTS, AS INDICATED IN THE ASSESSMENT ORDER O F NKIL AND NKPL THAT INQUIRIES WILL BE MADE AS TO WHICH OT HER CONCERNS HAVE GIVEN CHEQUES TO THESE BILLING AGENTS /NAME LENDERS WHICH HAVE BEEN DEPOSITED IN THEIR BANK ACC OUNTS AND ADDITIONS ON SUBSTANTIVE BASIS WILL BE MADE AFT ER COMPLETING THOSE INQUIRIES IN THE CASES OF SUCH OTH ER CONCERNS WHO GAVE THOSE CHEQUES. THE LEARNED SENIOR DEPARTMENTAL REPRESENTATIVE SUBMITTED A LETTER DT. 18TH DEC., 2002. THE RELEVANT EXTRACTS OF THE SAID LETTE R ARE REPRODUCED AS BELOW: 'AS DIRECTED DURING THE COURSE OF HEARING BY YOUR H ONOUR, I AM SUBMITTING HEREWITH DETAILS OF BANK ENQUIRIES CARRIED OUT IN THE GROUP CASES OF N.K. CONCERNS. IT IS SUBM ITTED THAT THERE ARE LARGE NUMBER OF CHEQUES AND BANKS AR E INVOLVED DUE TO WHICH ENQUIRIES HAVE NOT CONDUCTED YET. THERE ARE PRACTICAL DIFFICULTIES ALSO DUE TO WHICH ENQUIRIES HAVE NOT REACHED ITS CONCLUSION. KINDLY SEE THE PAG E NO. 6 OF THE ENCLOSURE WHICH IS THE REPLY FROM THE MEHSAN A URBAN CO-OP. BANK LTD. THE BANK HAS SUBMITTED AS FOLLOWS: ITA NO.3236/MUM/2016 & 2698/MUM/2016 JAYDEEP PROFILES P.LTD 104 'YOU ARE REQUESTED TO NOTE THAT WE PRESENT ALL OUR BANK CLEARING IN COMPUTERISED FLOPPY AND MAINTAIN OUR AL L RECORDS IN COMPUTERS. YOU ARE REQUESTED TO NOTE THA T WE HAVE THE RECORD OF THE NAME OF THE BRANCH THROUGH W HICH THE INSTRUMENTS WERE PRESENTED BY OUR BANK. MOREOVE R, ALL ORIGINAL INSTRUMENTS ARE PRESENTED TO THE CONCE RNED BRANCH OF THE BANK. THEREFORE IT IS NOT POSSIBLE TO FURNISH THE DATA AS PER YOUR REQUIREMENTS.' 2. PAGE NO. 40 TO 49 ALL THE DETAILS FURNISHED BY T HE MEHSANA URBAN CO-OP. BANK LTD. IN THE DETAILS FILED BY THE BANK, THE CHEQUE NUMBER AND NAME OF THE BANK MENTIONED. THEY HAVE NOT MENTIONED THE BRANCH OF TH E BANK. KINDLY SEE THE PAGE NO. 39 WHEREIN THE REPLY THE BANK HAS WRITTEN THAT WE DON'T HAVE RECORDS OF THE BANK BRANCH FROM WHICH THESE INSTRUMENTS WERE PRESENTED. KINDLY SEE THE PAGE NO. 1 IN WHICH CO-OPERATIVE BAN K OF AHMEDABAD LTD. HAS STATED THAT THE CHEQUE NO. 44156 AS MENTIONED IS NOT CLEAR FROM THIS BRANCH AND SO WE A RE UNABLE TO FURNISH FURTHER DETAILS AS REQUIRED BY YO U. THE KALUPUR COMMERCIAL CO-OP. BANK LTD. HAS STATED AS APPEARED AT PAGE NO. 4 THAT FURNISH THE NAME OF THE COMPANY UNDER N.K. GROUP AND THE DATE OF CLEARANCE OF CHEQUE. ON PAGE NO. 50, THE SABARMATI CO-OP. BANK L TD. HAS STATED DUE TO SHIFTING PROCESS OUR RECORDS RELA TED TO OUR BRANCH WE ARE UNABLE TO SUBMIT ALL SUCH DATA IN TIME. 3. KINDLY SEE THE PAGE NO. 20 OF WHICH THE BANK HAS GIVEN A/C NO. 4002, THIS BANK A/C IS IN THE NAME OF SWAST IK OVERSEAS LTD. FROM THE BANK A/C OPENING FOUND WHICH IS ON PAGE NO. 37, IT IS SEEN THAT THIS A/C IS INTRODU CED BY N.K. INDUSTRIES LTD. KINDLY SEE PAGE NO. 34 WHICH I S THE ACCOUNT OPENING FORM OF ISSAN OVERSEAS LTD. THIS AC COUNT IS ALSO INTRODUCED BY N.K. INDUSTRIES LTD. 4. KINDLY SEE THE PAGE NO. 38 IN WHICH THE MEHSANA URBAN CO-OP. BANK LTD. HAS STATED THAT AS PER STATEMENT O F A/C OF ADINATH CORPORATION A/C NO. 531 OF CREDIT ENTRIES B Y TRANSFER IN THE PERIOD FROM 17TH APRIL, 1998 TO 7TH JULY, 1998 FROM N.K. PROTEINS LTD. AHMEDABAD.' 92. THE VARIOUS CORRESPONDENCE EXCHANGED BY THE AO WITH THE CONCERNED BANKS ARE ONLY UPTO MAY, 2001, THE LE ARNED SENIOR DEPARTMENTAL REPRESENTATIVE SUBMITTED THAT I N VIEW OF THE DIFFICULTIES INDICATED IN THE AFORESAID LETTERS, IT ITA NO.3236/MUM/2016 & 2698/MUM/2016 JAYDEEP PROFILES P.LTD 105 HAS NOT BEEN POSSIBLE TO CONDUCT FURTHER ENQUIRIES. IN REPLY TO A SPECIFIC QUERY FROM THE BENCH, THE LEARN ED SENIOR DEPARTMENTAL REPRESENTATIVE CANDIDLY ADMITTE D THAT NO FURTHER ENQUIRIES WERE MADE AFTER MAY, 2001 . THE DEPARTMENT HAS ALSO NOT PRODUCED ANY EVIDENCE TO SH OW THAT THEY CONDUCTED ANY FURTHER INVESTIGATION TO FI ND OUT AS TO WHICH OTHER PARTIES HAVE GIVEN CHEQUES TO THE SE BOGUS SUPPLIERS IN WHOSE BANK ACCOUNTS SUCH CHEQUES AGGREGATING TO SEVERAL CRORES OF RUPEES HAVE BEEN DEPOSITED. OUR ATTENTION HAS BEEN INVITED TOWARDS BANK ACCOUNT OPENING FORM IN RESPECT OF ACCOUNT NO. 4002 IN THE NAME OF SWASTIK OVERSEAS LTD. PLACED AT P. 37 OF THE DOC UMENTS SUBMITTED ALONG WITH THE LETTER DT. 18TH DEC., 2002 . THIS ACCOUNT WAS INTRODUCED BY N.K. INDUSTRIES. THE PERS ONS AUTHORISED TO OPERATE THE BANK ACCOUNT IN THE NAME OF SWASTIK OVERSEAS LTD. IS SHRI R.B. MEHTA AND ONE OT HER MEHTA. THE LEARNED SENIOR DEPARTMENTAL REPRESENTATI VE WAS REQUESTED TO SHOW THE PHOTO COPY OF THE STATEME NT OF RAJESH MEHTA-BROKER WITH A VIEW TO FIND OUT WHETHER THE SIGNATURE ON THIS BANK ACCOUNT OPENING FORM TALLIES WITH THE SIGNATURE OF THE SAID BROKER. IT WAS FOUND THAT SIGNATURE ON THIS BANK ACCOUNT OPENING FORM APPEARS TO BE OF THE SAME PERSON VIZ. SHRI RAJESH MEHTA-BROKER . THE BENCH REQUIRED THE LEARNED SENIOR DEPARTMENTAL REPRESENTATIVE TO STATE AS TO WHETHER SHRI RAJESH M EHTA- BROKER HAS BEEN INTERROGATED IN RELATION TO TRANSAC TIONS CARRIED OUT IN THE NAME OF SWASTIK OVERSEAS LTD. TH E LEARNED SENIOR DEPARTMENTAL REPRESENTATIVE ADMITTED THAT NO SUCH INTERROGATION OF SHRI RAJESH MEHTA WAS MADE. THE EXTRACTS FROM THE STATEMENT OF SHRI RAJES H MEHTA REPRODUCED ON P. 10 OF THE ASSESSMENT ORDER I N THE CASE OF NKPL SHOWS THAT NOT A SINGLE QUESTION WAS P UT BY THE AO OR ADDL. DIT TO SHRI RAJESH MEHTA ABOUT SWAS TIK OVERSEAS LTD. 93. LIKEWISE, THE LEARNED SENIOR DEPARTMENTAL REPRESENTATIVE HAS ALSO DRAWN OUR ATTENTION TO THE BANK ACCOUNT OPENING FORM OF ISSAN OVERSEAS LTD. PLACED AT P. 34 OF THE SAID PAPER BOOK. ONE OF THE PERSONS AUTHO RISED TO OPERATE THE BANK ACCOUNT ON BEHALF OF ISSAN OVERSEA S LTD. IS SHRI RAJESH MEHTA, THE SAME PERSON WHO CLAIMED T O HAVE ACTED AS BROKER ON BEHALF OF THE ASSESSEE. NOT A SINGLE QUESTION WAS PUT TO SHRI RAJESH MEHTA-BROKER IN THE SAID ITA NO.3236/MUM/2016 & 2698/MUM/2016 JAYDEEP PROFILES P.LTD 106 STATEMENT REPRODUCED AT P. 10 OF THE ASSESSMENT ORD ER IN THE CASE OF NKPL AND AT P. 9 OF THE ASSESSMENT ORDE R IN THE CASE OF NKIL. THERE IS NO DISCUSSION ABOUT ANY TRANSACTION CARRIED OUT BY THE ASSESSEE WITH SWASTI K OVERSEAS LTD. AND ISSAN OVERSEAS LTD. IN THE ASSESS MENT ORDER. COPY OF BANK ACCOUNT OF TIRUPATI CORPORATION SUBMITTED AT P. 20 OF THE SAID SUBMISSIONS BY THE DEPARTMENT SHOWS THAT THE CHEQUES GIVEN BY M/S SWAS TIK OVERSEAS AND ISSAN OVERSEAS WERE ALSO DEPOSITED IN THE BANK ACCOUNT OF TIRUPATI CORPORATION. NO EVIDENCE H AS BEEN BROUGHT ON RECORD TO SHOW THAT SWASTIK OVERSEA S AND ISSAN OVERSEAS WERE BENAMIDARS OF THE ASSESSEE OR CHEQUES GIVEN BY SWASTIK/ISSAN OVERSEAS CAME OUT OF THE FUNDS BELONGING TO THE PERSONS OR CONCERNS OF NK GR OUP. THESE CHEQUES OF SWASTIK/ISSAN OVERSEAS CONSTITUTE A SMALL FIGURE OF ABOUT RS. 10 LAKHS WHICH IS A SMALL FRACTION OF THE TOTAL DEPOSITS AGGREGATING TO MORE THAN RS. 44 CRORES DEPOSITED IN THE BANK ACCOUNTS OF SUCH BOGUS SUPPLIERS/NAME LENDERS/BILLING AGENTS. THE DEPARTME NT HAS NOT EVEN EXAMINED THE PARTNERS/PROPRIETORS/DIRE CTORS OF SWASTIK OVERSEAS LTD. AND ISSAN OVERSEAS LTD. TH E DEPARTMENT HAS NOT MADE ANY SERIOUS EFFORTS TO FIND OUT THE COMPLETE NAMES, ADDRESSES OF VARIOUS OTHER CONC ERNS WHICH GAVE CHEQUES TO ALL THESE BOGUS SUPPLIERS, WH ICH HAVE BEEN CREDITED IN THEIR RESPECTIVE BANK ACCOUNT S. THE CONCERNED IT AUTHORITIES HAVING VAST POWERS VESTED UPON THEM UNDER THE PROVISIONS OF THE ACT COULD VERY EAS ILY OBTAIN COMPLETE DETAILS OF ALL THE PERSONS WHO GAVE THESE CHEQUES TO THESE BOGUS SUPPLIERS. THEY COULD ALSO F IND OUT VARIOUS WITHDRAWALS MADE FROM THESE BANK ACCOUNTS O F VARIOUS BOGUS SUPPLIERS AND ASCERTAIN THE DESTINATI ON OF THOSE AMOUNTS WITHDRAWN BY VARIOUS CHEQUES OTHER TH AN SELF CHEQUES DEBITED IN THOSE BANK ACCOUNTS. NO SER IOUS EFFORTS HAVE BEEN MADE FOR FINDING OUT THE COMPLETE PARTICULARS OF VARIOUS DEBITS AND CREDITS IN THE BA NK ACCOUNTS OF ALL SUCH BOGUS SUPPLIERS EXCEPT LOCATIN G DETAILS OF CHEQUES GIVEN BY NKPL AND NKIL AS PER BOOKS OF ACCOUNTS OF THESE TWO CONCERNS. THE LEARNED SENIOR DEPARTMENTAL REPRESENTATIVE SIMPLY RELIED UPON THE REASONS MENTIONED IN THE ASSESSMENT ORDERS TO SUPPO RT SUCH A GROUND RAISED IN ALL THE AFORESAID THREE APP EALS BY THE REVENUE; ONE IN THE CASE OF NKPL; NKIL AND SHRI NILESHBHAI K. PATEL. THE LEARNED SENIOR DEPARTMENTA L REPRESENTATIVE ALSO DREW OUR ATTENTION TO LETTER DT . 23RD ITA NO.3236/MUM/2016 & 2698/MUM/2016 JAYDEEP PROFILES P.LTD 107 MAY, 2001 SENT BY MADHAVPURA MERCANTILE CO-OP. BANK LTD. TO THE AO INFORMING THEM THAT CHEQUE NO. 16282 4 AND 162854 WERE ISSUED BY M/S MADHUKANT AGROTECH (P) LT D. IN FAVOUR OF KARNAVATI INDUSTRIES. COPY OF CURRENT ACCOUNT CARD WAS ALSO ANNEXED WITH THIS LETTER WHIC H SHOWS DETAILS OF A/C NO. 362 IN THE NAME OF M/S MADHUKANT AGROTECH (P) LTD. THE ADDRESS OF M/S MADHUKANT AGROTECH (P) LTD. AS GIVEN IN THE ACCOUNT OPENING FORM IS AS UNDER: MADHUKANT AGROTECH (P) LTD. AAROHI, NR VIJAY RESTAURANT, UNIVERSITY ROAD, NAVRANGPURA, AHMEDABAD. 94. THE PERSONS AUTHORISED TO OPERATE THE SAID BANK ACCOUNT ARE SHRI KIRITBHAI K. SHAH AND SHRI MAULIK K, SHAH. THE ACCOUNT WAS INTRODUCED BY GIRIRAJ TRADING CO., GIRISHKUMAR K. SHAH-HUF. COPY OF RESOLUTION PASSED FOR OPENING OF THE SAID BANK ACCOUNT BY MADHUKANT AGROT ECH (P) LTD. WAS ALSO SUPPLIED BY THE SAID BANKERS TO T HE AO. THE BENCH REQUIRED THE LEARNED SENIOR DEPARTMENTAL REPRESENTATIVE TO STATE AS TO WHETHER ANY FURTHER INVESTIGATION WAS MADE FROM M/S MADHUKANT AGROTECH (P) LTD. TO SHOW AS TO WHETHER THEY HAD ANY DIRECT OR INDIRECT CONNECTION WITH ANY OF THE PERSONS OR CONC ERNS OF N.K. GROUP. THE LEARNED SENIOR DEPARTMENTAL REPRESENTATIVE ADMITTED THAT NO FURTHER ENQUIRIES W ERE MADE FROM MADHUKANT AGROTECH (P) LTD. THE LEARNED SENIOR DEPARTMENTAL REPRESENTATIVE ALSO TRIED TO EX PLAIN THAT THE BANKERS HAVE INDICATED THAT THEY DID NOT H AVE THE RECORDS OF BANK BRANCHES FROM WHICH VARIOUS INSTRUM ENTS RELATING TO SUCH BANK ACCOUNTS WERE PRESENTED. FOR EXAMPLE, ATTENTION WAS INVITED TOWARDS LETTER DT. 2 0TH MARCH, 2001 OF MEHSANA URBAN CO-OP. BANK LTD. P. 39 OF THIS PAPER BOOK IN WHICH THEY HAVE INDICATED THAT T HE AO SHOULD CONTACT SERVICE BRANCH/HEAD OFFICE OF RESPEC TIVE BANKS FOR THE REQUIRED DETAILS. HOWEVER ALL THESE I NQUIRIES CONTINUED ONLY UPTO MAY, 2001. THE ASSESSMENT IN TH E CASE OF NKPL AND NKIL WERE MADE ON 30TH APRIL, 2001 . THE ASSESSMENT IN THE CASE OF NILESHBHAI PATEL WAS COMPLETED ON 28TH FEB., 2001. NO EFFECTIVE EFFORTS WERE MADE BY THE OFFICERS OF THE DEPARTMENT FOR FURTHER INVESTIGATION IN THIS REGARD. THE AO ON P. 35 IN TH E CASE OF NKPL AND ON P. 39 OF THE ASSESSMENT ORDER IN THE CA SE OF ITA NO.3236/MUM/2016 & 2698/MUM/2016 JAYDEEP PROFILES P.LTD 108 NKIL HAS OBSERVED THAT THE INQUIRIES ARE BEING COND UCTED FROM THE BANKS TO FIND OUT THE NAMES AND PARTICULAR S OF OTHER, CONCERNS WHICH MADE THESE PAYMENTS FOR PURCH ASES AND OTHER EXPENSES. SUBSTANTIVE DISALLOWANCES WILL BE MADE IN THE CASES OF THOSE CONCERNS AFTER CONCLUSIO N OF ENQUIRIES. THE ADDITIONS WERE PROTECTIVELY MADE IN THE CASES OF NKIL AND NKPL SUBJECT TO FURTHER INVESTIGA TION SO THAT APPROPRIATE ADDITIONS CAN BE MADE IN THE HA NDS OF THE CONCERNS WHO GAVE SUCH CHEQUES TO THESE BOGUS SUPPLIERS. HOWEVER, NO FURTHER INQUIRIES HAVE BEEN MADE AND NO ADDITIONS HAVE BEEN MADE IN THE CASES OF ANY SUCH OTHER CONCERNS WHO REALLY GAVE CHEQUES TO THESE BOG US SUPPLIERS. 95. THE LEARNED COUNSEL APPEARING FOR THE ASSESSEE SUBMITTED THAT THE RESULTS OF SEARCH CONDUCTED ON A LL THE PERSONS AND CONCERNS BELONGING TO THIS GROUP SHOW T HAT NO UNACCOUNTED MONEY, BULLION, JEWELLERY, STOCK OR ANY OTHER VALUABLE ASSETS WERE FOUND FROM ANY OF THE PE RSONS OR CONCERNS EXCEPT MEAGRE QUANTITY OF JEWELLERY AND CASH ETC. THE UNEXPLAINED JEWELLERY WAS DISCLOSED BY THE ASSESSEES OF THIS GROUP IN THE BLOCK RETURN WHICH H AVE BEEN ACCEPTED BY THE DEPARTMENT, THE ADDITION MADE ON ACCOUNT OF UNEXPLAINED CASH IN THE HANDS OF DIFFERE NT PERSONS OF THIS GROUP WAS MADE BY THE AO BUT SAME W AS DELETED BY THE CIT(A) AND NO FURTHER APPEAL HAS BEE N PREFERRED BY THE REVENUE IN RELATION TO SUCH DELETI ON. THIS CLEARLY PROVES THAT THE ASSESSEE, DID NOT OWN ANY O THER UNACCOUNTED ASSETS OR DEPOSITS WHATSOEVER. THE LEAR NED COUNSEL CONTENDED THAT NO ADDITION COULD BE VALIDLY MADE IN THE HANDS OF SHRI NILESH K. PATEL AS HE WAS NOT CARRYING ON ANY PERSONAL BUSINESS. THE ENTIRE EVIDENCE WHICH CONTAINS REFERENCE OF HIS NAME IS IN HIS CAPACITY A S MD/DIRECTOR IN NKPL AND NKIL. THERE IS NO MATERIAL OR EVIDENCE ON RECORD THAT ANY FUNDS WERE PROVIDED BY SHRI NILESHBHAI PATEL FOR DEPOSITS IN ALL OR ANY OF THES E BANK ACCOUNTS. SHRI NILESHBHAI PATEL HAD NO TRANSACTIONS WITH ANY OF THESE SUPPLIERS. MERE INTRODUCTION OF SOME B ANK ACCOUNTS CANNOT LEAD TO THE CONCLUSION THAT THE ASS ESSEE WERE THE REAL OWNERS OF THE AMOUNTS CREDITED IN THE BANK ACCOUNTS OF SUCH SUPPLIERS PARTICULARLY WHEN ALL SU CH CREDITS IN THE BANK ACCOUNTS OF THOSE SUPPLIERS ARE BY WAY OF CHEQUES DEPOSITED IN THESE ACCOUNTS. SUCH CHEQUE S OTHER THAN CHEQUES GIVEN BY NKPL AND NKIL TOWARDS PURCHAS E INVOICES WERE GIVEN BY OUTSIDE PARTIES/THIRD PARTIE S WITH ITA NO.3236/MUM/2016 & 2698/MUM/2016 JAYDEEP PROFILES P.LTD 109 WHOM NEITHER SHRI NILESHBHAI PATEL, NOR NKPL NOR NK IL HAD ANY CONNECTION WHATSOEVER. THE BURDEN SQUARELY LIES UPON THE REVENUE TO PROVE THAT SUCH CHEQUES WERE DEPOSITED BY THESE ASSESSEES. THE LEARNED COUNSEL R ELIED UPON THE JUDGMENT OF THE HON'BLE SUPREME COURT IN T HE CASE OF CIT V. DAULATRAM RAWATMAL (SUPRA); AND THE DECISION OF TRIBUNAL IN THE CASE OF PARAKH FOODS LTD. V. DY. CIT (SUPRA) AND VARIOUS OTHER DECISIONS REFERRED TO IN PARA 4.7 OF THE ORDER OF CIT(A) IN THE CASE OF SHRI NILESHBHAI PATEL. THE LEARNED COUNSEL FURTHER POINT ED OUT THAT NO NOTICE UNDER SECTION 158BD HAD BEEN ISSUED TO ANY OTHER CONCERNS WHO GAVE SUCH CHEQUES TO THESE SUPPL IERS. RELIANCE WAS ALSO PLACED ON THE DECISION IN THE CAS E REPORTED IN 68 ITD 273 (SIC). THE LEARNED COUNSEL CONTENDED THAT THE DOCUMENTS SUBMITTED ALONG WITH L ETTER DT. 18TH DEC., 2002 BY THE LEARNED SENIOR DEPARTMEN TAL REPRESENTATIVE FURTHER SUPPORTS THE ASSESSEE'S CONT ENTION. FOR EXAMPLE, CHEQUES OF MADHUKANT AGROTECH (P) LTD. WERE CREDITED IN THE BANK ACCOUNT OF KARNAVATI INDU STRIES. M/S MADHUKANT AGROTECH HAVE NO CONNECTION WHATSOEVE R WITH THE ASSESSEE. THIS STRONGLY SUPPORTS THE VIEW THAT KARNAVATI INDUSTRIES, IF THEY ARE TREATED AS BOGUS SUPPLIERS/BILLING AGENTS/NAME LENDERS, THEY ARE ACT ING AS SUCH ON BEHALF OF OTHER PARTIES. SIMILAR INFERENCE CAN BE DRAWN FROM THE BANK OPENING FORMS OF SWASTIK OVERSE AS LTD. AND ISSAN OVERSEAS LTD. THE DEPARTMENT OUGHT T O HAVE EXAMINED SHRI RAJESH B. MEHTA AND OTHER DIRECTORS/OWNERS OF THOSE CONCERNS TO FIND OUT AS T O WHO WERE REAL PERSONS WHO GAVE SUCH CHEQUES TO THESE BO GUS SUPPLIERS. THE LEARNED COUNSEL DREW OUR ATTENTION T O THE COPIES OF BANK STATEMENTS SUBMITTED BY THE LEARNED SENIOR DEPARTMENTAL REPRESENTATIVE ALONG WITH THE LETTER D T. 18TH DEC., 2002. IN THOSE BANK STATEMENTS THE BANKERS AP PEAR TO HAVE GIVEN HAND-WRITTEN NARRATION SUCH AS KCC, P NB, MANEKCHOWK, AMCO ETC. THE ASSESSEE HAD NO BANK ACCOUNT WITH PNB, KCC OR ANY OF THESE PLACES WHICH ARE HAND WRITTEN AND WHICH HAVE BEEN HIGHLIGHTED IN THE COPIES OF THOSE BANK STATEMENTS SUBMITTED BY THE LE ARNED SENIOR DEPARTMENTAL REPRESENTATIVE. THE DEPARTMENT HAS MISERABLY FAILED TO BRING ANY EVIDENCE ON RECORD TO SHOW THAT ANY OF THE CHEQUES OF OUTSIDE PARTIES/THIRD PA RTIES WERE IN ANY WAY CONNECTED WITH ANY OF THE PERSONS O R CONCERNS OF N.K. GROUP. THE LEARNED COUNSEL STRONGL Y ITA NO.3236/MUM/2016 & 2698/MUM/2016 JAYDEEP PROFILES P.LTD 110 SUPPORTED THE ORDERS OF THE CIT(A) IN ALL THESE THR EE CASES IN RELATION TO THE AFORESAID COMMON GROUND. 96. WE HAVE CAREFULLY CONSIDERED THE SUBMISSIONS MA DE BY THE LEARNED REPRESENTATIVES OF THE PARTIES AND HAVE GONE THROUGH THE ORDERS OF THE LEARNED DEPARTMENTAL AUTHORITIES AND ALL OTHER DOCUMENTS SUBMITTED IN TH E COMPILATION TO WHICH OUR ATTENTION WAS DRAWN DURING THE HEARING. IT IS EVIDENT FROM THE FACTS DISCUSSED HER EINBEFORE THAT THE ADDITION IN RESPECT OF UNEXPLAINED DEPOSIT S IN THE BANK ACCOUNTS OF VARIOUS SUPPLIERS WERE MADE IN THE CASES OF NKPL AND NKIL ON PROTECTIVE BASIS WITH THE OBSERVATION THAT FURTHER INQUIRIES WILL BE MADE FRO M VARIOUS BRANCHES OF BANKS TO ASCERTAIN THAT WHICH O THER CONCERNS HAVE GIVEN SUCH CHEQUES WHICH HAVE BEEN DEPOSITED IN THE BANK ACCOUNTS OF THESE BOGUS SUPPL IERS. IT IS ALSO CLEAR FROM THE FACTS DISCUSSED ABOVE THAT T HE DEPARTMENT DID NOT MAKE ANY SERIOUS EFFORTS TO MAKE EFFECTIVE INVESTIGATION OR DEEP FURTHER PROBE IN TH IS REGARD AFTER COMPLETION OF THE ASSESSMENTS ON 30TH APRIL, 2001. SOME LETTERS WERE SENT TO THE BANKERS IN THE MONTH OF MARCH TO MAY, 2001 AND THEREAFTER THE MATTER WAS NO T PURSUED. 97. THE DEPOSITS IN THE BANK ACCOUNTS OF THESE BOGU S SUPPLIERS CAN BE VALIDLY ADDED IN THE HANDS OF ANY OF THESE ASSESSEES ONLY IF THE DEPARTMENT DISCHARGES THE BUR DEN OF PROVING THAT THESE SUPPLIERS WERE BENAMIDARS OF ANY ONE OF THESE THREE ASSESSEES OF N.K. GROUP AND THE DEPA RTMENT HAS TO FURTHER DISCHARGE THE BURDEN OF PROOF THAT T HE DEPOSITS IN THESE BANK ACCOUNTS BY WAY OF CHEQUES W ERE MADE OUT OF FUNDS PROVIDED BY THESE PERSONS OR CONC ERNS OF N.K. GROUP. SUCH A BURDEN HAS TO BE DISCHARGED B Y THE REVENUE BY BRINGING POSITIVE AND CLINCHING EVIDENCE ON RECORD. NO SUCH EVIDENCE HAS BEEN BROUGHT ON RECORD BY THE DEPARTMENT TO PROVE THAT THE CHEQUES OF THIRD P ARTIES DEPOSITED IN THE BANK ACCOUNTS OF THESE SUPPLIERS W ERE OUT OF FUNDS PROVIDED BY ANY OF THESE THREE ASSESSEES. IN ORDER TO PROVE THAT THE BANK ACCOUNTS IN THE NAMES OF THE SE SUPPLIERS ARE BENAMI ACCOUNTS OR THAT THE SUPPLIERS ARE BENAMIDAR PERSONS/CONCERNS, THE FOLLOWING TESTS ARE VERY VITAL AND SIGNIFICANT: (I) WHO PROVIDED THE FUNDS FOR DEPOSIT ITA NO.3236/MUM/2016 & 2698/MUM/2016 JAYDEEP PROFILES P.LTD 111 (II) WHO ENJOYED THESE FUNDS (III) WHAT IS ULTIMATE DESTINATION OF THESE FUNDS. 98. THE DEPARTMENT HAS TO PROVE BY BRINGING ON RECO RD DEFINITE, POSITIVE AND CLINCHING EVIDENCE ON ALL TH ESE THREE ASPECTS TO SUPPORT THEIR CONCLUSION THAT THESE BANK ACCOUNTS ARE BENAMI ACCOUNTS AND DEPOSITS IN THESE BANK ACCOUNTS IN THE NAMES OF SUPPLIERS REALLY BELONG TO NKPL OR NKIL OR SHRI NILESHBHAI PATEL AND THEY WERE THE PERSONS WHO ENJOYED THESE FUNDS AND THE ENTIRE FUND S HAVE DIRECTLY OR INDIRECTLY FLOWN BACK IN THEIR FAV OUR. THE DEGREE OF PROOF FOR PROVING THE CONCEPT OF BENAMI B ANK ACCOUNTS/BENAMI PERSONS IS VERY STRONGER AND THAT H AS TO BE DISCHARGED BY BRINGING POSITIVE MATERIAL ON RECO RD. SUCH CONCLUSION CANNOT BE DERIVED ON THE BASIS OF M ERE SUSPICION AND SURMISES. IT MAY BE RELEVANT HERE TO REPEAT ONCE AGAIN THAT SO FAR AS PURCHASES CLAIMED TO HAVE BEEN MADE BY NKPL AND NKIL FROM THESE CONCERNS ARE CONCERNED, THE BURDEN WAS ON THE ASSESSEES TO PROVE GENUINENESS OF PURCHASES BUT THE SAME PRINCIPLE WOU LD NOT APPLY WHEN THE DEPARTMENT WANTS TO TREAT THE EN TIRE DEPOSITS IN THESE BANK ACCOUNTS IN THE NAMES OF VAR IOUS SUPPLIERS AS BENAMI DEPOSITS/BENAMI ACCOUNTS OF THE SE ASSESSEES. THE HON'BLE SUPREME COURT IN THE CASE OF DAULATRAM RAWATMAL (SUPRA) HAS OBSERVED AT P. 360 A S UNDER: 'THE ONUS TO PROVE THAT THE APPARENT IS NOT THE REA L IS ON THE PARTY WHO CLAIMS IT TO BE SO. AS IT WAS THE DEP ARTMENT WHICH CLAIMED THAT THE AMOUNT OF FIXED DEPOSIT RECE IPT BELONGED TO THE RESPONDENT-FIRM EVEN THOUGH THE REC EIPT HAD BEEN ISSUED IN THE NAME OF BISWANATH, THE BURDE N LAY ON THE DEPARTMENT TO PROVE THAT THE RESPONDENT WAS THE OWNER OF THE AMOUNT DESPITE THE FACT THAT THE RECEI PT WAS IN THE NAME OF BISWANATH. A SIMPLE WAY OF DISCHARGI NG THE ONUS AND RESOLVING THE CONTROVERSY WAS TO TRACE THE SOURCE AND ORIGIN OF THE AMOUNT AND FIND OUT ITS UL TIMATE DESTINATION. SO FAR AS THE SOURCE IS CONCERNED, THE RE IS NO MATERIAL ON THE RECORD TO SHOW THAT THE AMOUNT CAME FROM THE COFFERS OF THE RESPONDENT-FIRM OR THAT IT WAS TENDERED IN BURRABAZAR CALCUTTA BRANCH OF THE CENTR AL BANK, ON 15TH NOV., 1944, ON BEHALF OF THE RESPONDE NT. AS REGARDS THE DESTINATION OF THE AMOUNT, IT HAS ALREA DY BEEN MENTIONED THAT THERE IS NOTHING TO SHOW THAT IT WEN T TO THE ITA NO.3236/MUM/2016 & 2698/MUM/2016 JAYDEEP PROFILES P.LTD 112 COFFERS OF THE RESPONDENT. ON THE CONTRARY, THERE I S POSITIVE EVIDENCE THAT THE AMOUNT WAS RECEIVED BY BISWANATH ON 22ND JAN., 1946. IT WOULD THUS FOLLOW THAT BOTH AS REGARDS THE SOURCE AS WELL AS THE DESTINATION OF THE AMOUNT , THE MATERIAL ON THE RECORD GIVES NO SUPPORT TO THE CLAI M OF THE DEPARTMENT.' 99. IN THE PRESENT CASE THE DEPARTMENT HAS NOT EVEN FOUND OUT THE NAMES OF THE CONCERNS/PARTIES WHO GAVE CHEQ UES TO THESE BOGUS SUPPLIERS AGGREGATING TO RS. 21,89,8 2,084 UPTO THE DATE OF SEARCH AND FURTHER AMOUNT DEPOSITE D IN THEIR BANK ACCOUNT EVEN AFTER THE DATE OF SEARCH UP TO THE TIME WHEN DY. DIT/ADDL. DIT HAD OBTAINED COPIES OF BANK ACCOUNTS OF THESE SUPPLIERS FROM RESPECTIVE BANKS. IT WILL BE WORTHWHILE TO REPEAT THAT AS PER CHART GIVEN IN PARA 86 TOTAL DEPOSITS IN THE BANK ACCOUNTS OF THOSE BOGUS SUPPLIERS AS PER SHOW-CAUSE NOTICE DT. 18TH JAN., 2 001 ISSUED BY THE AO TO SHRI NILESHBHAI PATEL, WAS RS. 44,43,05,403 OUT OF WHICH THE TOTAL DEPOSITS IN THE IR BANK ACCOUNTS UPTO THE DATE OF SEARCH WAS ONLY RS. 37,19,85,062. OUT OF THIS, THE PAYMENT MADE BY NKIL AND NKPL TOWARDS PURCHASE INVOICES SUPPLIED BY THESE BO GUS SUPPLIERS WERE TO THE TUNE OF RS: 14,82,49,194. IN ADDITION TO THIS, A CHEQUE OF RS. 3,64,01,316 WAS GIVEN BY T RIVENI TOWARDS GOODS SOLD BY NKPL. THIS LEFT THE BALANCE D EPOSIT AGGREGATING TO RS. 21,89,82,084 RECEIVED BY BOGUS SUPPLIERS/BILLING AGENTS FROM OTHER PARTIES/THIRD P ARTIES WITH WHICH IT IS CONTENDED THAT THE PERSONS OR CONC ERNS OF NX GROUP HAD NO CONNECTION WHATSOEVER. THE NAMES AN D PARTICULARS OF PARTIES WHO DEPOSITED THE CHEQUES IN THE BANK ACCOUNTS OF THESE SUPPLIERS AFTER THE SEARCH H AVE ALSO NOT BEEN BROUGHT ON RECORD, IT WAS PRIMARY DUTY OF THE DEPARTMENT TO FIND OUT AS TO WHICH OTHER PARTIES/CO NCERNS HAVE GIVEN THESE CHEQUES WHICH HAVE BEEN DEPOSITED IN THE BANK ACCOUNTS OF THESE BOGUS PARTIES. THE DEPARTMEN T HAS COMPLETELY FAILED TO DISCHARGE SUCH BURDEN, WHICH H EAVILY LIES ON THEM TO SUPPORT THEIR CONCLUSION THAT ANY O F THESE THREE ASSESSEES WERE REAL OWNERS OF CHEQUES OF ALL SUCH OTHER CONCERNS/THIRD PARTIES DEPOSITED IN THE BANK ACCOUNTS OF THESE BOGUS SUPPLIERS. THE DEPARTMENT H AS ALSO NOT MADE ANY INVESTIGATION TO PROVE DESTINATIO N OF THE FUNDS WITHDRAWN BY SELF CHEQUES AND BY OTHER CH EQUES GIVEN TO OTHER PARTIES. THE DEPARTMENT HAS THUS FAI LED TO DISCHARGE THE BURDEN OF PROVING THAT THE ORIGIN AND DESTINATION OF THESE FUNDS WERE THESE ASSESSEES AND NONE ITA NO.3236/MUM/2016 & 2698/MUM/2016 JAYDEEP PROFILES P.LTD 113 ELSE. THE CIT(A), IN OUR VIEW, HAS RIGHTLY DELETED THE ADDITIONS SO MADE BY THE AO IN ALL THESE THREE CASE S UNDER CONSIDERATION. 100. WE WILL, HOWEVER, LIKE TO OBSERVE THAT THE OFF ICERS OF THE DEPARTMENT CANNOT LEAVE THE INVESTIGATION OF SU CH AN IMPORTANT MATTER IN A LAMENTABLE AND INCOMPLETE POS ITION LIKE THIS. THE DEPARTMENT HAS VAST POWERS UNDER SECTION 131(1A) OR SECTION 133 AND OTHER RELEVANT PROVISIONS BY WHICH THEY CAN COMPELL THE CONCERNED BANKS TO GIVE THEM COMPLETE DETAILS OF THE CONCERNS/PERSONS WHOSE CHEQ UES HAVE BEEN DEPOSITED IN THE BANK ACCOUNTS OF ALL THE SE BOGUS SUPPLIERS/BILLING AGENTS/NAME LENDERS. THE DEPARTMENT CAN ALSO FIND OUT THE DETAILS OF AMOUNTS WITHDRAWN FROM THESE BANK ACCOUNTS OF BOGUS SUPPLIE RS OTHERWISE THAN BY WAY OF SELF CHEQUES. THE NAMES AN D ADDRESSES OF THE PARTIES TO WHOM SUCH CHEQUES/DEMAN D DRAFTS HAVE BEEN GIVEN CAN BE OBTAINED FROM THE RESPECTIVE BRANCH OF THE CONCERNED BANKS. THE DEPARTMENT CAN ALSO OBTAIN PHOTO COPIES OF SELF CHE QUES BY WHICH THE NAMES OF THE PERSONS WHO HAVE WITHDRAW N SUCH CASH CAN BE FOUND OUT BY INTERROGATION OF CONC ERNED PERSONS INCLUDING BOGUS SUPPLIERS/CONCERNED EMPLOYE ES OF THE BANKS AND CONCERNED EMPLOYEES OF THE CONCERN S OF ASSESSEE GROUP AND OTHER CONCERNS WHO GAVE SUCH CHEQUES. THE TOTAL DEPOSITS IN THE BANK ACCOUNT OF THESE BOGUS SUPPLIERS/BILLING AGENTS/NAME LENDERS IS MORE THAN RS. 44 CRORES. THE DEPARTMENT HAS ONLY FOUND OUT TH E DETAILS OF CHEQUES GIVEN BY NKIL AND NKPL WHICH IS ONLY A SMALL PORTION THEREOF. THE DETAILS OF MAJOR CREDI TS IN ALL THESE ACCOUNTS HAVE NOT YET BEEN FOUND OUT BY THE DEPARTMENT. IT IS INCUMBENT ON THE PART OF THE DEPARTMENT TO FIND OUT COMPLETE DETAILS OF ALL OTHE R CONCERNS WHO GAVE SUCH CHEQUES TO THESE BOGUS SUPPL IERS. THOSE OTHER CONCERNS MIGHT ALSO HAVE TAKEN FICTITIO US PURCHASE INVOICES FROM THESE BOGUS SUPPLIERS. THEY MAY NOT HAVE EVEN RECEIVED THE MATERIAL SOUGHT TO HAVE BEEN SUPPLIED TO THOSE OTHER CONCERNS THROUGH SUCH FICTI TIOUS INVOICES ISSUED BY SUCH BILLING AGENTS. AFTER CARRY ING OUT NECESSARY INVESTIGATION AND FINDING OUT THE NAMES A ND ADDRESSES OF OTHER PERSONS AND CONCERNS, WHOSE CHEQ UES HAVE BEEN CREDITED IN THE BANK ACCOUNTS OF THESE BO GUS SUPPLIERS, NECESSARY ACTION AGAINST THOSE CONCERNS/PERSONS SHOULD BE INITIATED UNDER SECTION 158BD OR UNDER SECTION 147 OR ANY OTHER RELEVANT ITA NO.3236/MUM/2016 & 2698/MUM/2016 JAYDEEP PROFILES P.LTD 114 PROVISIONS OF THE IT ACT . THE DEPARTMENT CANNOT EXONERATE SUCH 'OTHER CONCERNS' BY LEAVING INVESTIG ATION AT INCOMPLETE STAGE LIKE THIS. IT WOULD BE IMPERATI VE TO MENTION THAT THE TIME LIMIT FOR INITIATING ACTION UNDER SECTION 147 HAS BEEN REDUCED TO ONLY SIX YEARS IN SECTION 149 . THE TIME LEFT WITH THE OFFICERS OF THE DEPARTMENT NOW IS VERY SHORT. IT IS, THEREFORE, NEC ESSARY TO STRIVE THE BEST POSSIBLE TIME-BOUND PROGRAMME FO R ASCERTAINING THE FULL PARTICULARS VIZ. NAMES AND AD DRESSES OF ALL OTHER CONCERNS/PARTIES/PERSONS WHOSE CHEQUES HAVE BEEN DEPOSITED IN THE BANK ACCOUNTS OF THESE BOGUS SUPPLIERS, SO THAT TIMELY ACTION CAN BE INITIATED A GAINST ALL SUCH OTHER PERSONS/CONCERNS/PARTIES. IF, AS A RESUL T OF FURTHER INVESTIGATION, IT COMES TO THE NOTICE OF TH E DEPARTMENT THAT THOSE OTHER CONCERNS/THIRD PARTIES ARE BENAMIS OF THE PERSONS AND CONCERNS OF ASSESSEE'S G ROUP, THE DEPARTMENT WILL BE ENTITLED TO TAKE NECESSARY A CTION UNDER SECTION 147 , IF THEY HAVE IN THEIR POSSESSION ADEQUATE MATERIAL TO JUSTIFY FORMATION OF REASONABL E BELIEF WHICH SHOULD BE MUCH MORE STRONGER THAN THE REASONS TO SUSPECT, IF THE AO COMES ACROSS EVIDENCE AND MATERI AL WHICH WERE NOT FOUND OR MADE AVAILABLE IN THE PROCE SS OF BLOCK ASSESSMENT BUT ARE DISCOVERED AS A RESULT OF POST- SEARCH INVESTIGATION, HE CAN CERTAINLY USE SUCH INFORMATION FOR MAKING REGULAR ASSESSMENT UNDER SECTION 143(3) WHICH ALSO INCLUDES REASSESSMENT UNDER SECTION 147 SUBJECT TO FULFILMENT OF CONDITIONS PRECEDENT MENTIONED IN THE OTHER PROVISIONS OF THE ACT. IT WI LL BE THE DUTY OF THE LEARNED SENIOR DEPARTMENTAL REPRESENTAT IVE WHO REPRESENTED THIS CASE BEFORE US TO BRING THIS F ACT TO THE NOTICE OF THE LEARNED CHIEF CIT, LEARNED CIT, A ND LEARNED DG (INVESTIGATION) SO THAT FURTHER INVESTIG ATION IN THIS REGARD MAY RECEIVE SERIOUS ATTENTION, WHICH IT DESERVES, AND TIMELY ACTION CAN BE INITIATED AGAINS T SUCH OTHER CONCERNS/PERSONS UNDER SECTIONS 147 , 158BD OR OTHER RELEVANT PROVISIONS. 101. NOW WE WILL DEAL WITH GROUND NO. (2) IN REVENU E'S APPEAL IN THE CASE OF NKPL [IT (SS) A NO. 41/A/2002 ]. THIS GROUND RELATES TO DELETION OF ADDITION OF RS. 2,01,99,792 MADE ON ACCOUNT OF UNACCOUNTED PURCHASE . AS ALREADY STATED HEREINBEFORE, THIS ADDITION WAS MADE ON THE BASIS OF INVOICES FOUND IN ANNEX. A-6 DURING TH E SEARCH. CERTAIN SALE BILLS ISSUED BY NKIL IN RESPEC T OF SALES MADE TO NKPL WERE FOUND AND SEIZED DURING THE SEARC H. ITA NO.3236/MUM/2016 & 2698/MUM/2016 JAYDEEP PROFILES P.LTD 115 THESE INVOICES WERE NOT ACCOUNTED FOR IN THE BOOKS OF ACCOUNTS OF THE ASSESSEE AS WELL IN THE BOOKS OF NK IL. WE HAVE ALREADY DEALT WITH THIS ISSUE WHILE DEALING WI TH THE CONNECTED GROUND RAISED IN THIS REGARD IN ASSESSEE' S APPEAL. AFTER CONSIDERATION OF THE ENTIRE RELEVANT FACTS, WE CONSIDER IT JUST AND PROPER TO SET ASIDE THE ORDERS OF THE CIT(A) AND THE AO IN RELATION TO THIS GROUND AND RE STORE THE MATTER BACK TO THE AO FOR CONDUCTING FURTHER PR OBE AND DECIDE THIS ISSUE IN ACCORDANCE WITH THE PROVIS IONS OF LAW AND AFTER PROVIDING REASONABLE OPPORTUNITY TO T HE ASSESSEE. IT (SS) A NO. 16/AHD/2002 FILED BY ASSESSEE IN THE CASE OF NKIL: 102. NOW WE WILL DEAL WITH ASSESSEE'S APPEAL IN THE CASE OF NKIL IN IT (SS) A NO. 16/AHD/2002. THE ASSESSEE HAS RAISED THE FOLLOWING GROUNDS IN THIS APPEAL: 1. THE LEARNED CIT(A) HAS ERRED IN REJECTING THE CO NTENTION THAT BLOCK ASSESSMENT IS VOID AB INITIO SINCE THE N OTICE ISSUED UNDER SECTION 158BC DOES NOT MENTION THE STATUS OF THE ASSESSEE AND DOES NOT MENTION CORRECT BLOCK PER IOD AND THEREFORE THE NOTICE ISSUED IS INVALID. 2.1 THE LEARNED CIT(A) HAS ERRED IN HOLDING THAT TH E PURCHASES MADE FROM SEJAL ENTERPRISES AMOUNTING TO RS. 2,50,427 FOR ASST. YR. 1995-96, RS. 62,75,837 FOR A SST. YR. 1998-99 AND RS. 61,21,796 FOR ASST. YR. 1999-2000 AMOUNTING IN ALL TO RS. 1,26,48,060 ARE BOGUS AND T HEREBY HAS ERRED IN CONFIRMING ADDITION OF RS. 1,26,48,060 AS UNDISCLOSED INCOME. 2.2 THE APPELLANT SAYS AND SUBMITS THAT THE PURCHAS ES OF RS. 2,50,427 FOR ASST. YR. 1995-96 AND RS. 62,75,83 5 FOR ASST. YR. 1998-99 IS RECORDED IN THE BOOKS OF ACCOU NTS AND THAT THE INCOME-TAX RETURN FOR ASST. YR. 1995-96 AN D ASST. YR. 1998-99 WERE SUBMITTED PRIOR TO THE DATE OF SEA RCH AND PURCHASES OF RS. 61,21,796 FOR ASST. YR. 1999-2000 HAVE BEEN RECORDED IN THE NORMAL MANNER IN BOOKS OF ACCO UNTS PRIOR TO THE DATE OF SEARCH I.E. 24TH FEB., 1999 AN D, THEREFORE, SUCH TRANSACTIONS ARE NOT CONSIDERED AS UNDISCLOSED INCOME AS PROVIDED IN SECTION 158BA(3) . ITA NO.3236/MUM/2016 & 2698/MUM/2016 JAYDEEP PROFILES P.LTD 116 2.3 THE APPELLANT FURTHER SAYS AND SUBMITS THAT THE LEARNED CIT(A) HAS ERRED IN PLACING RELIANCE ON FIN DING BASED ON INQUIRY MADE BY ADDL. DPT UNDER SECTION 131(1A) AND THAT THE LEARNED DY. CIT HAS NOT MADE ANY INDEPENDENT INQUIRY AND THEREFORE, THE ADDITION MAD E ON THE BASIS OF INQUIRY MADE BY LEARNED ADDL. DIT UNDER SECTION 131(1A) IS ILLEGAL AND NOT WARRANTED SINCE THE LEARNED ADDL. DIT ALSO CANNOT MAKE INQUIRY UNDER SECTION 131(1A) AFTER THE CONCLUSION OF SEARCH. 2.4 THE LEARNED CIT(A) HAS ERRED IN CONFIRMING THE FINDING OF THE DY. CIT AS STATED ON FROM PAGE NO. 6 TO 16 OF THE ASSESSMENT ORDER WHICH IS NOTHING BUT REPROD UCTION OF APPRAISAL REPORT AND THAT THE AO HAS NOT MADE AN Y INDEPENDENT INQUIRY WHATSOEVER. THE AO HAS RELIED O NLY ON THE FINDING GIVEN BY THE ADDL. DIT AND THAT THE AO HAS ALSO NOT EXAMINED THE SUPPLIER. 2.5 THE APPELLANT FURTHER SAYS AND SUBMITS THAT THE LEARNED ADDL. DIT HAS OBTAINED AFFIDAVIT FROM THE PROPRIETOR OF SEJAL ENTERPRISES BEHIND THE BACK OF THE ASSESSEE AND THAT THE LEARNED DY. CIT HAS PLACED TH E RELIANCE ON SUCH AFFIDAVIT. 2.6 THE APPELLANT FURTHER SAYS AND SUBMITS THAT THE AFFIDAVIT OBTAINED BY THE LEARNED ADDL. DIT IS SIMI LAR IN CONTENTS WITH THE AFFIDAVITS AND STATEMENTS OBTAINE D IN THE CASE OF N.K. PROTEINS LTD. AND THEREFORE, IT APPEAR S THAT SUCH AFFIDAVIT IS OBTAINED UNDER UNDUE INFLUENCE, THEREFORE, ANY FINDING BASED ON SUCH AFFIDAVIT CANN OT BE RELIED UPON. 2.7 THE APPELLANT FURTHER SAYS AND SUBMITS THAT THE LEARNED DY. CIT OUGHT TO HAVE SUMMONED THE SAID PER SONS AND SHOULD HAVE FOUND OUT THE TRUTH AND THAT THE OPPORTUNITY TO CROSS-EXAMINE THE SAID PERSONS SHOUL D HAVE BEEN GIVEN. 2.8 THE APPELLANT FURTHER SAYS AND SUBMITS THAT THE ASSESSEE-COMPANY HAS IN FACT, MADE PURCHASES AND HA S FURNISHED THE EVIDENCES AT THE TIME OF ASSESSMENT B Y GIVING THE DETAILS SUCH AS DATE OF INWARD, QUANTITY RECEIVED, MRS NO., REPORT NO. ALONG WITH THE XEROX COPY OF PURCHASE BILL, WEIGHMENT SLIP, MATERIAL INWARD R ECEIPT, TRANSPORTER'S LR, ANALYSIS REPORT WITH REFERENCE TO INWARD ITA NO.3236/MUM/2016 & 2698/MUM/2016 JAYDEEP PROFILES P.LTD 117 AND STOCK REGISTER AND THAT THE ASSESSEE HAS ALSO S TATED THAT IF THE PURCHASES ARE IGNORED THE PRODUCTION IS MORE THAN THE CONSUMPTION OF RAW MATERIAL. THE APPELLANT SUBMITS THAT THE CIT(A) CALLED FOR THE REMAND REPOR T AND THE AO SUBMITTED REMAND REPORT DT. 26TH DEC., 2001 CONFIRMING THE RECEIPT OF MATERIAL AND THE CONSUMPT ION THEREOF AND ABOUT THE YIELD. HOWEVER, THE LEARNED C IT(A) HAS IGNORED THE FACTS OF THE MATERIAL RECEIVED AND IGNORED THE REMAND REPORT AND SUBMISSIONS OF THE ASSESSEE. 2.9 THE APPELLANT FURTHER SAYS AND SUBMITS THAT THE PURCHASES WERE AT THE MARKET RATE WHICH IS CONFIRME D BY THE LEARNED DY. CIT IN THE REMAND REPORT DT. 26TH D EC., 2001 AND THEREFORE, IT IS CLEAR THAT THE PURCHASES WERE NOT MADE TO DEFLATE THE PROFIT. 2.10 THE APPELLANT FURTHER SAYS AND SUBMITS THAT TH E ASSESSEE-COMPANY HAS MADE THE PAYMENT OF THE ENTIRE PURCHASES BY CHEQUES TO THE SUPPLIERS WHICH IS NOT DISPUTED. 3. THE LEARNED CIT(A) HAS ERRED IN PLACING RELIANCE ON FINDING GIVEN BY ADDL. DIT IN HIS APPRAISAL REPORT AND HAS ERRED IN IGNORING THE OTHER SUBMISSIONS REGARDING F ACTUM OF PURCHASES AND REGARDING THE RECORDING OF PURCHAS ES IN THE BOOKS OF ACCOUNTS IN THE NORMAL MANNER. 4.1 THE LEARNED CIT(A) HAS ERRED IN CONFIRMING THE ADDITION OF RS. 2,01,99,793 BEING ALLEGED SALES MAD E BY THE COMPANY INASMUCH AS THE TRANSACTION HAVE NEVER TAKEN PLACE. 4.2 THE APPELLANT FURTHER SAYS AND SUBMITS THAT, ALTERNATIVELY, ONLY PROFIT OF THE SALES AMOUNT CAN BE TAXED AND NOT THE ENTIRE GROSS AMOUNT. 5.1 THE LEARNED CIT(A) HAS ERRED IN CONFIRMING THE ADDITION TO THE EXTENT OF RS. 19 LAKHS AS UNACCOUNT ED DEPOSIT WITH PARI L T SHROFF INASMUCH AS NO EVIDENC ES WERE ADDUCED BY THE LEARNED DY. CIT AS UNDISCLOSED INCOME OF THE APPELLANT. 5.2 THE APPELLANT FURTHER SAYS AND SUBMITS THAT THE DISCLOSURE UNDER VDIS SCHEME WAS MADE BY THE APPELL ANT ON THE BASIS OF THE NOTICE ISSUED BY THE DEPARTMENT . NOW, ITA NO.3236/MUM/2016 & 2698/MUM/2016 JAYDEEP PROFILES P.LTD 118 DEPARTMENT CANNOT CHANGE THE STAND AND IS PERMITTED TO STATE THAT THE AMOUNT WAS MORE THAN DISCLOSED UNDER VDIS SCHEME. 6.1 THE ORDER OF BLOCK ASSESSMENT IS BAD IN LAW AND ILLEGAL INASMUCH AS THE APPROVAL OF JT, CIT IS GRANTED UNDER SECTION 158BG WITHOUT GIVING ANY OPPORTUNITY TO THE ASSESSEE OF BEING HEARD. THE POWER TO GRANT APP ROVAL IS QUASI-JUDICIAL AND NOT ADMINISTRATIVE AND THEREF ORE, THERE HAS TO BE A JUDICIAL APPROACH ON ENTIRE FACTS , MATERIAL AND EVIDENCE (KIRTILAL KALIDAS & CO. (1999 ) 64 TTJ (MAD) 77 : (1998) 67 ITD 573 (MAD). THE JT. CIT HAS A SUPERVISORY ROLE AND THEREFORE, APPROVAL GRANTED IS ADMINISTRATIVE IN NATURE IN THE NORMAL COURSE BUT I N BLOCK ASSESSMENT IN CHAPTER XIV-B A SPECIFIC PROVISION IS MADE UNDER SECTION 158BG FOR GRANTING APPROVAL. IT MEANS THAT THE POWER IS QUASI-JUDICIAL AND NOT OF ADMINISTRATI VE NATURE. 6.2 THE APPELLANT SAYS AND SUBMITS THAT THE APPROVA L GRANTED BY THE JT. CIT APPEARS TO BE MECHANICAL WIT HOUT APPLICATION OF MIND INASMUCH AS THE APPROVAL IS GRA NTED ON 30TH APRIL, 2001, I.E., DATE OF PASSING OF THE O RDER AND THE DATE OF SERVICE OF THE ORDER. 7. THE INTEREST UNDER SECTION 158BFA(1) IS WRONGLY CHARGED. 8. THE PROCEEDINGS UNDER SECTION 271(1)(C) R/W SECTION 158BFA(2) IS WRONGLY INITIATED. 103. GROUND NO. 1 RAISED IN THIS APPEAL IS SIMILAR TO GROUND NO. 1 RAISED IN THE APPEAL OF NKPL. THE FACT S ARE SIMILAR. IN VIEW OF THE REASONS GIVEN IN OUR ORDER IN THE CASE OF NKPL IN RELATION TO THIS GROUND, WE HOLD TH AT THIS GROUND IS DEVOID OF ANY MERIT AND IS ACCORDINGLY RE JECTED. 104. GROUND NO. 2 RELATES TO CONFIRMATION OF ADDITI ON OF BOGUS PURCHASES MADE FROM SEJAL ENTERPRISES AMOUNTI NG TO RS. 2,50,427 FOR ASST. YR. 1995-96, RS. 62,75,83 7 FOR ASST. YR. 1998-99 AND RS. 61,21,796 FOR ASST, YR. 1999-20 00 AMOUNTING IN ALL TO RS. 1,26,48,060. GROUND NOS. 2. 1 TO 2.10 AND GROUND NO. 3 RELATING TO THE AFORESAID ADD ITIONS OF RS. 1,26,48,060 MADE IN RESPECT OF BOGUS PURCHAS ES ARE ALMOST SIMILAR AS RAISED IN GROUND NOS. 2.1 TO 2.10 AND ITA NO.3236/MUM/2016 & 2698/MUM/2016 JAYDEEP PROFILES P.LTD 119 GROUND NO. 3, IN THE CASE OF NKPL RELATING TO ADDIT ION OF RS. 11.99 CRORES MADE IN RESPECT OF BOGUS PURCHASES IN THAT CASE. 105. THE REVENUE HAS RAISED THE GROUND RELATING TO DELETION OF THE DISALLOWANCE OF RS. 1,66,45,228 MAD E BY THE AO ON ACCOUNT OF BOGUS PURCHASES. IT WILL BE APPROPRIATE TO DEAL WITH GROUND NOS. 2 AND 3 OF ASS ESSEE'S APPEAL ALONG WITH GROUND NO. 1 OF APPEAL FILED BY T HE REVENUE IN THE CASE OF NKIL (IT (SS) A NO. 38/AHD/2 002), ALL OF WHICH DEAL WITH THE ISSUE RELATING TO BOGUS PURCHASES MADE FROM BOGUS SUPPLIERS. THE AO MADE AN ADDITION OF RS. 2,92,93,288 IN RESPECT OF PURCHASES MADE FROM THE FOLLOWING THREE ALLEGED BOGUS SUPPLIERS : -------------- 106. THE AO HAS DISCUSSED THE FACTS RELATING TO THE SE BOGUS CONCERNS IN PARA 6 ON PP. 6 TO 16 OF THE ASSESSMENT ORDER. THE FACTS PERTAINING TO PURCHASES MADE FROM SOMNATH INDUSTRIES HAVE BEEN DISCUSSED ON PP. 7 TO 9 OF THE ASSESSMENT ORDER. THE AO HAS OBSERVED THAT DURING T HE INVESTIGATION, IT WAS FOUND THAT NKIL HAS SHOWN PURCHASES, INTER ALIA, FROM SOMNATH INDUSTRIES. THE RESULTS OF INVESTIGATION REVEALED THAT THIS CONCERN WAS OWNED BY ONE SHRI K.R. SONI. HE WAS SUMMONED UNDER SECTION 131(1A) AND HIS STATEMENT WAS RECORDED ON 7TH JUNE, 1999. THE RELEVANT PORTION OF HIS STATEME NT HAS BEEN EXTRACTED ON PP. 7 AND 8 OF THE ASSESSMENT ORD ER. SHRI K.R. SONI HAS CATEGORICALLY DENIED HAVING SUPP LIED ANY SUCH MATERIAL. HE ADMITTED THAT HE WAS SIGNING BILL BOOKS, BLANK CHEQUE BOOKS, APPLICATION FOR REGISTRA TION OF SALES-TAX IN THE NAME OF SOMNATH INDUSTRIES AT THE INSTANCE OF SHRI NILESHBHAI PATEL WHO USED TO GIVE HIM RS. 2000 P.M. FOR ALL THIS WORK. THE BANK ACCOUNT OF SO MNATH INDUSTRIES WAS OPENED ON 24TH AUG., 1998 WITH INITI AL DEPOSIT OF RS. 1,000 IN CASH. IT HAS BEEN CLOSED ON 12TH MAY, 1999. ONE MORE BANK ACCOUNT OF SOMNATH INDUSTR IES WAS ALSO OPENED. THE TOTAL AMOUNT OF DEPOSIT IN THE SE TWO BANK ACCOUNTS UPTO THE DATE OF SEARCH WAS RS. 2,24, 57,568 AS MENTIONED ON P. 9 OF THE ASSESSMENT ORDER. THE A O HAS ALSO OBSERVED THAT IN ALMOST ALL CASES, THE DEPOSIT S AND ITA NO.3236/MUM/2016 & 2698/MUM/2016 JAYDEEP PROFILES P.LTD 120 WITHDRAWALS ARE ON THE SAME DAY. THE AO ON THE BASI S OF AFORESAID EVIDENCE GAVE SIMILAR FINDINGS THAT SOMNA TH INDUSTRIES IS FICTITIOUS ENTITY AND PURCHASES SHOWN BY NKIL FROM THEM REPRESENTED BOGUS PURCHASES. THE FINDINGS SO GIVEN ARE RECORDED ON P. 9 OF THE ASSES SMENT ORDER. 107. THE FACTS RELATING TO KRISHNA MARKETING HAVE B EEN DISCUSSED ON PP. 9 AND 10 OF THE ASSESSMENT ORDER. THEY OPENED THEIR BANK ACCOUNT ON 18TH JUNE, 1998 WITH SABARMATI CO-OP. BANK LTD. ON 18TH JUNE, 1998 WITH INITIAL DEPOSIT OF RS. 1,100, THE PROPRIETOR OF THI S CONCERN IS SHRI RAJESH P. DOSHI. THE NATURE OF THIS BANK AC COUNT IS EXACTLY SIMILAR TO THE OTHER BANK ACCOUNTS OF OTHER ALLEGED BOGUS SUPPLIERS. THE ADDRESS GIVEN BY SHRI R.P. DOS HI TO THE BANK WAS ALSO FICTITIOUS. SHRI R.P. DOSHI FILED AN AFFIDAVIT BEFORE THE IT AUTHORITIES IN WHICH IT WAS STATED BY HIM THAT THE WHOLE BUSINESS IS CONTROLLED BY SHR I NILESHBHAI PATEL WHO IS THE MAIN PERSON HANDLING AL L THE DAY-TO-DAY ACTIVITIES OF THE ASSESSEE-COMPANY. THE AO ARRIVED AT SIMILAR CONCLUSION IN RELATION TO PURCHA SES SHOWN TO HAVE BEEN MADE BY NKIL FROM THIS FICTITIOU S ENTITY. 108. THE FACTS RELATING TO SEJAL ENTERPRISES HAVE B EEN DISCUSSED BY THE AO ON PP. 10 AND 11 OF THE ASSESSM ENT ORDER. THE SUMMONS WERE ISSUED TO PROPRIETOR OF SEJ AL ENTERPRISES ON THE ADDRESS GIVEN TO THE BANK BUT TH OSE WERE RETURNED BACK AS THE PARTY WAS NOT AVAILABLE A T THE GIVEN ADDRESS. THE AO OBSERVED THAT THE FACTS IN TH E CASE OF SEJAL ENTERPRISES ARE SIMILAR AND HE TREATED THE SE PURCHASES SHOWN TO HAVE BEEN MADE FROM SEJAL ENTERPRISES AS ALSO BOGUS PURCHASES. 109. THE AO THEREAFTER GAVE A NOTICE DT. 4TH DEC., 2000 IN WHICH ENTIRE MATERIAL GATHERED BEHIND BACK OF THE ASSESSEE IN RELATION TO SUCH BOGUS PURCHASES WAS SU PPLIED AND THE ASSESSEE WAS REQUIRED TO EXPLAIN AS TO WHY PURCHASES MADE FROM THESE CONCERNS SHOULD NOT BE DISALLOWED. THE ASSESSEE FILED REPLY DT. 15TH DEC., 2000 STATING THAT THE ENTIRE PURCHASES ARE RECORDED IN T HE BOOKS OF ACCOUNTS IN THE NORMAL COURSE BEFORE THE DATE OF SEARCH AND THEREFORE IT DOES NOT FALL WITHIN THE PURVIEW O F BLOCK ASSESSMENT. THE AO HAS THEREAFTER DISCUSSED THE VAR IOUS SHOW-CAUSE NOTICES GIVEN BY HIM AND THE REPLIES REC EIVED ITA NO.3236/MUM/2016 & 2698/MUM/2016 JAYDEEP PROFILES P.LTD 121 FROM THE ASSESSEE IN THIS REGARD. THE SHOW-CAUSE NO TICES AND THE REPLIES WERE ALSO ALMOST AS THAT IN THE CAS E OF NKPL. THE AO ARRIVED AT THE CONCLUSION THAT ALL SUC H PURCHASES MADE FROM THESE THREE PARTIES ARE BOGUS PURCHASES AND HE DISALLOWED THE TOTAL PURCHASES OF RS. 2,92,93,288 MADE FROM THEM. 110. THE LEARNED CIT(A) HAS DEALT WITH THIS ISSUE I N PARA 5 ON PP. 4 TO 11 OF HIS ORDER. THE CIT(A) HAS OBSERVE D IN PARA 5.5 OF HIS ORDER THAT EXCEPT 2 BLANK SALE BILL S IN RESPECT OF SEJAL ENTERPRISES APPEARING AT ANNEX. A- 88/2 AND A/88/5, NO OTHER BLANK BILL OR VOUCHER WAS FOUN D DURING THE COURSE OF SEARCH. THE CIT(A) ASKED THE A O TO VERIFY THIS FACT VIDE LETTER DT. 4TH JAN., 2002. TH E AO IN REPLY TO THE SAID LETTER SUBMITTED THAT NO BLANK BI LLS OR CHEQUES WERE FOUND AND SEIZED IN RESPECT OF M/S SOM NATH INDUSTRIES AND KRISHNA MARKETING. THE CIT(A) FOLLOW ING THE JUDGMENT OF THE HON'BLE GUJARAT HIGH COURT IN T HE CASE OF N.R. PAPER & BOARDS (SUPRA) AND ALSO THE FA CT THAT NO STATEMENT UNDER SECTION 132(4) DURING THE SEARCH IN RESPECT OF THESE PURCHASES WAS RECORDED, HE DELETED THE ADDITION MADE BY THE AO IN RESPECT OF PURCHASES MAD E FROM SOMNATH INDUSTRIES AND KRISHNA MARKETING AMOUNTING TO RS. 1,14,78,000 AND RS. 51,67,228 RESPECTIVELY. THE CIT(A) HOWEVER CONFIRMED THE ADDI TION IN RESPECT OF PURCHASES OF RS. 1,26,48,060 MADE FRO M SEJAL ENTERPRISES. THE CIT(A) HAS OBSERVED THAT TWO BLANK BILLS OF SEJAL ENTERPRISES WERE FOUND DURING THE SEARCH. THE AO ISSUED SUMMONS AT THE ADDRESS GIVEN ON THE SAID BIL LS BUT THE SAME WERE RETURNED BACK. THE ENTIRE DEPOSITS MA DE IN THE BANK ACCOUNT OF THIS CONCERN WAS BY WAY OF TRAN SFER ENTRIES FROM THE APPELLANT AND MONEYS WERE IMMEDIAT ELY WITHDRAWN FROM THE SAID BANK ACCOUNT. THE CIT(A) AL SO RELIED UPON THE JUDGMENT OF THE HON'BLE DELHI HIGH COURT IN THE CASE REPORTED IN CIT V. LA MEDICA (2001) 250 ITR 575 (DEL). THE CIT(A) ALSO OBSERVED THAT SINCE NO A FFIDAVIT HAS BEEN SUBMITTED IN RESPECT OF SEJAL ENTERPRISES, THE SUBMISSIONS MADE RELATING TO AFFIDAVIT OF OTHER PAR TIES ARE NOT RELEVANT. IT IS ALSO FOUND FROM THE ORDERS OF T HE AO AND THE CIT(A) THAT THE ASSESSEE HAD, INTER ALIA, SUBMI TTED THE AFFIDAVIT OF SHRI KAUSHIK R. SURTI, PROPRIETOR, M/S SOMNATH INDUSTRIES. THE AO HAS REJECTED THE SAID AF FIDAVIT AS THE SIGNATURE THEREON DID NOT TALLY WITH THE SIG NATURE ON HIS AFFIDAVIT FILED BEFORE THE DY. DIT. ITA NO.3236/MUM/2016 & 2698/MUM/2016 JAYDEEP PROFILES P.LTD 122 111. THE LEARNED COUNSEL MADE ORAL ARGUMENTS AND AL SO SUBMITTED WRITTEN ARGUMENTS WITH THE HEADING 'NOTES '. THE SUBMISSIONS MADE BY THE LEARNED COUNSEL ARE ALM OST SIMILAR AS WERE MADE IN THE CASE OF NKPL. RELIANCE HAS BEEN PLACED ON SIMILAR SET OF JUDGMENTS IN THIS CAS E ALSO. IT HAS BEEN ARGUED THAT EVEN IF IT IS ASSUMED THAT THE SE CONCERNS WERE BOGUS CONCERNS, SO FAR AS THE ASSESSE E IS CONCERNED, THE MATERIAL WAS ACTUALLY RECEIVED. THE RECEIPT OF MATERIAL IS SUPPORTED BY SEIZED RECORDS. THIS HA S ALSO BEEN CONFIRMED BY THE AO IN THE REMAND REPORT SUBMI TTED BEFORE THE CIT(A). ON THE STRENGTH OF SIMILAR ARGUM ENTS AS WERE MADE IN THE CASE OF NKPL, THE LEARNED COUNSEL CONTENDED THAT THE ADDITION OF RS. 1,26,48,060 IN R ESPECT OF PURCHASES MADE FROM SEJAL ENTERPRISES SHOULD BE DELETED. 112. ON THE OTHER HAND, THE LEARNED SENIOR DEPARTME NTAL REPRESENTATIVE RELIED UPON SIMILAR ARGUMENTS AND CONTENDED THAT ALL THESE THREE PARTIES ARE BOGUS PA RTIES. THEY HAD NO CAPACITY TO SUPPLY RAW MATERIAL OF SUCH LARGE MAGNITUDE. THE BANK ACCOUNTS WERE OPENED AND OPERAT ED IN SIMILAR MANNER AS IN THE CASE OF NKPL. 113. DURING THE COURSE OF HEARING, THE BENCH SPECIF ICALLY REQUIRED THE ASSESSEE TO PRODUCE ALL THESE THREE PA RTIES ALONG WITH THEIR RECORDS. THE LEARNED COUNSEL CONTE NDED THAT THE ASSESSEE CANNOT PRODUCE THEM ALONG WITH TH EIR RECORDS AS THEY ARE NOT UNDER THE CONTROL OF THE AS SESSEE. THE ASSESSEE HAS THUS REFUSED TO PRODUCE THESE THRE E SUPPLIERS ALONG WITH THEIR RELEVANT RECORDS BEFORE THE TRIBUNAL INSPITE OF SPECIFIC OPPORTUNITY GRANTED TO THEM. 114. WE HAVE CAREFULLY CONSIDERED THE SUBMISSIONS M ADE BY THE LEARNED REPRESENTATIVES. IN OUR VIEW, THE OR DER PASSED BY THE LEARNED CIT(A) DELETING THE ADDITION OF RS. 1,14,78,000 AND RS. 51,67,228 IN RESPECT OF PURCHAS ES MADE FROM SOMNATH INDUSTRIES AND KRISHNA MARKETING, IS NOT JUSTIFIED, THE CIT(A) RELYING UPON THE JUDGMENT OF THE HON'BLE GUJARAT HIGH COURT IN THE CASE OF N.R. PAPE R & BOARDS (SUPRA) HAS AGREED WITH THE ASSESSEE'S CONTE NTION THAT SO FAR AS PURCHASES FROM THESE TWO CONCERNS AR E CONCERNED, THEY CANNOT BE CONSIDERED IN THE BLOCK ASSESSMENT UNDER CHAPTER XIV-B FOR THE BLOCK PERIOD BECAUSE NO DOCUMENTS RELATING TO THOSE TWO PARTIES WERE FOUND DURING THE COURSE OF SEARCH. THE JUDGMENT OF THE ITA NO.3236/MUM/2016 & 2698/MUM/2016 JAYDEEP PROFILES P.LTD 123 HON'BLE GUJARAT HIGH COURT IN THE CASE OF N.R. PAPE R & BOARDS HAS BEEN READ BY THE CIT(A) OUT OF CONTEXT. WE HAVE ALREADY DISCUSSED THIS ISSUE WHILE DEALING WIT H THE SIMILAR GROUNDS IN THE CASE OF NKPL. THE JUDGMENT O F THE HON'BLE GUJARAT HIGH COURT IN THE CASE OF N.R. PAPE R AND BOARDS IF READ IN THE LIGHT OF CONTEXT AND THE QUES TION DECIDED BY THE HON'BLE GUJARAT HIGH COURT, IT WOULD BE AMPLY CLEAR THAT THE RATIO OF THE HON'BLE GUJARAT H IGH COURT LAID DOWN IN THOSE CASES DOES NOT IN ANY MANN ER SUPPORT THE VIEW SO TAKEN BY THE CIT(A). THE BASIC FACTS THAT THE CONCERNS OF N.K. GROUP VIZ. NKPL AND NKIL ARE RESORTING TO THE DEVICE OF OBTAINING FICTITIOUS PUR CHASE INVOICES FROM THE BOGUS SUPPLIERS CAME TO THE KNOWL EDGE OF THE AUTHORISED OFFICERS, DY. DIT/ADDL. DIT AS A RESULT OF SEARCH. THE RESULT OF SEARCH CLEARLY DEMONSTRATED T HAT THE ASSESSES IS CLAIMING DEDUCTION IN RESPECT OF INFLAT ED PURCHASES, BY DEBITING BOGUS PURCHASES OR MAY BE BY INFLATING THE PURCHASE PRICE BY OBTAINING THE PURCH ASE INVOICES FROM NAME LENDERS/BILLING AGENTS. IT MAY A LSO BE RELEVANT HERE TO ONCE AGAIN REFER TO THE AMENDED DEFINITION 'UNDISCLOSED INCOME' GIVEN IN SECTION 158B(B) WHICH, INTER AHA, INCLUDES ANY EXPENSES, DEDUCTION OR ALLOWANCE CLAIMED UNDER THIS ACT, WHIC H IS FOUND TO BE FALSE. THIS DETECTION OF FALSITY OF PUR CHASES MADE FROM ALL THESE PARTIES WAS MADE BY THE DEPARTM ENT ONLY AS A RESULT OF SEARCH. IF SEARCH WOULD NOT HAV E BEEN CONDUCTED, THE DEPARTMENT WOULD HAVE NEVER COME TO KNOW OF SUCH A DEVICE ADOPTED BY THE ASSESSEE. WE A RE THEREFORE OF THE CONSIDERED OPINION THAT THE ORDER PASSED BY THE CIT(A) OF DELETING SUCH ADDITIONS IS NOT VAL ID AND JUSTIFIED ON THE FACTS OF THE PRESENT CASE. VARIOUS OTHER FACTS AND CIRCUMSTANCES RELATING TO ALL THE THREE P ARTIES VIZ. SOMNATH INDUSTRIES, KRISHNA MARKETING AND SEJA L ENTERPRISES ARE SIMILAR AS THAT IN THE CASE OF NKPL IN RELATION TO PURCHASES OF RS. 11.99 CRORES MADE BY T HEM FROM VARIOUS SUCH BOGUS SUPPLIERS. THE FACTS AND CIRCUMSTANCES ARE ABSOLUTELY SIMILAR. 115. IN VIEW OF THE AFORESAID FACTS AND CIRCUMSTANCES, WE HOLD THAT ALL THE THREE PARTIES FROM WHOM THE ASSESSEE CLAIMED TO HAVE PURCHASED MATERIAL TO THE TUNE OF RS. 2.92 CRORES ARE MERELY NAME LENDERS/BILLING AGENTS AND THE SALE INVOICES ISSUED BY THEM IN THE NAME OF NKIL ARE FICTITIOUS INVOICES. THE BURDEN LIES ON THE ITA NO.3236/MUM/2016 & 2698/MUM/2016 JAYDEEP PROFILES P.LTD 124 ASSESSEE TO SUPPORT ANY CLAIM FOR DEDUCTION MADE BY THEM. IN THE PRESENT CASE SUCH BURDEN SHOULD HAVE BEEN DISCHARGED BY THE ASSESSEE ONLY BY PRODUCING THOSE THREE SUPPLIERS ALONG WITH THEIR RECORDS SO THAT THE GENUINENESS OF THEIR PURCHASES, SALES, FINANCIAL CAPACITY AND ALL OTHER RELEVANT FACTS COULD BE EXAMINED. THE ASSESSEE HAS NOT PRODUCED THEM BEFORE THE AO. WE GAVE A SPECIFIC OPPORTUNITY TO THE ASSESSEE TO PRODUCE ALL OF THEM BEFORE THE TRIBUNAL ALONG WITH THEIR RECORDS. THE ASSESSEE HAS EXPRESSED THEIR INABILITY TO PRODUCE THEM BEFORE THE TRIBUNAL. HOWEVER, IT IS ALSO TRUE THAT THE RECEIPT OF MATERIAL SHOWN TO HAVE BEEN PURCHASED FROM THESE THREE PARTIES HAD REALLY BEEN RECEIVED AS PER FACTS AND EVIDENCE BROUGHT ON RECORD, WHICH ARE SIMILAR AS IN THE CASE OF NKPL. 116. IT MAY ALSO BE RELEVANT HERE TO MENTION THAT T HE BENCH REQUIRED THE LEARNED SENIOR DEPARTMENTAL REPRESENTA TIVE TO SUBMIT A PEAK STATEMENT IN RELATION TO THE AMOUN TS OF THESE THREE PARTIES. THE LEARNED SENIOR DEPARTMENTA L REPRESENTATIVE SUBMITTED COPIES OF THOSE STATEMENTS WHICH SHOW THAT THE TRANSACTIONS IN THE ACCOUNTS OF SOMNATH INDUSTRIES COVER THE PERIOD FROM 26TH AUG., 1998 TO 1ST JAN., 1999. THE PEAK CREDIT IN THESE ACCOUNT S AS ON 27TH SEPT., 1998 WAS RS. 47,33,270. THE PEAK CREDIT S IN THE ACCOUNTS OF KRISHNA MARKETING COVERS PERIOD FROM 27 TH AUG., 1998 TO 22ND SEPT., 1998. THE PEAK CREDIT IN THIS ACCOUNT AS ON 10TH SEPT., 1998 WAS RS. 33,26,780, T HE ENTRIES IN THE ACCOUNT OF SEJAL ENTERPRISES COVERS THE PERIOD FROM 19TH DEC., 1997 TO 13TH NOV., 1998 IN T HE AFORESAID PEAK STATEMENT SUBMITTED BY THE DEPARTMEN T. THE PEAK BALANCE IN THIS ACCOUNT IS RS. 11,77,456 A S ON 1ST MAY, 1998. THESE FIGURES HAVE BEEN GIVEN JUST WITH A VIEW TO SHOW THAT CREDIT PURCHASES WERE SHOWN AS HAVING BEEN MADE FROM THESE BILLING AGENTS/NAME LENDERS TO AFOR ESAID EXTENT WHICH PROVES THAT THE ASSESSEE USED BLACK MO NEY FOR PURCHASE OF RAW MATERIAL FROM UNDISCLOSED SOURC ES WHICH ARE WITHIN THE EXCLUSIVE KNOWLEDGE OF THE ASS ESSEE. 117. ON A CAREFUL CONSIDERATION OF THE ENTIRE RELEV ANT FACTS, WE ARE OF THE VIEW THAT IT WOULD BE JUST AND PROPER TO DIRECT THE AO TO RESTRICT THE ADDITION IN RESPECT O F UNDISCLOSED INCOME RELATING TO PURCHASES SHOWN AS H AVING ITA NO.3236/MUM/2016 & 2698/MUM/2016 JAYDEEP PROFILES P.LTD 125 BEEN MADE FROM THESE THREE BILLING AGENTS/NAME LEND ERS, TO ONLY 25 PER CENT OF TOTAL PURCHASES CLAIMED TO H AVE BEEN MADE FROM THESE THREE PARTIES I.E. 25 PER CENT OF R S. 2,92,93,288 WHICH COMES TO RS. 73,23,322. THE BASIS OF ADOPTING 25 PER CENT OF SUCH PURCHASES IS SAME AS DISCUSSED IN DETAIL WHILE UPHOLDING THE ADDITION OF 25 PER CENT IN THE CASE OF NKPL IN RELATION TO SIMILAR GRO UNDS. 7.11. IT IS WORTH MENTIONING HON'BLE APEX COURT IN N K PROTEINS LTD. VS. DCIT (2017) 250 TAXMAN 22 ON THE ISSUE OF INCOME FROM UNDISCLOSED SOURCES AND BOGUS PURCHA SES SHOWN ON THE BASIS OF FICTITIOUS INVOICES WHERE THE ASSESSEE FILED SLP AGAINST THE DECISION OF HON'BLE GUJARAT H IGH COURT IN N K INDUSTRIES LTD. VS. DCIT (2016) 292 CTR 354 (GUJ), WHEREIN IT WAS HELD THAT ADDITION ON THE BASIS OF UNDISCLOSED INCOME COULD NOT BE RESTRICTED TO CERTA IN PERCENTAGE WHEN THE ENTIRE TRANSACTION WAS FOUND TO BE BOGUS, THE HON'BLE APEX COURT DISMISSED THE SLP AND CONFIRMED THE DECISION OF HON'BLE GUJARAT HIGH COUR T. 7.12. ADMITTEDLY, IN SUCH TYPE OF CASES, THERE IS NO OPTION BUT TO ESTIMATE THE PROFIT WHICH DEPENDS UPO N THE SUBJECTIVE APPROACH OF AN INDIVIDUAL AND THE MATERI AL FACTS AVAILABLE ON RECORD AND ALSO CONSIDERING THE FACT W HETHER THE ASSESSEE IS A MANUFACTURER OR A TRADER OR BOTH. IN THE ITA NO.3236/MUM/2016 & 2698/MUM/2016 JAYDEEP PROFILES P.LTD 126 PRESENT APPEAL, UNDISPUTEDLY THE NOTICE ISSUED U/S 133(6) OF THE ACT WAS NEVER REPLIED BY THE CONCERNED PARTY . IT IS WORTH MENTIONING THAT EVEN BEFORE THIS TRIBUNAL THE ASSESSEE WAS ASKED TO PRODUCE THIS PARTY SO THAT TH E GENUINENESS OF THE TRANSACTION CAN BE EXPLAINED BUT THE LEARNED COUNSEL FOR THE ASSESSEE EXPRESSED HIS INAB ILITY TO PRODUCE THE PARTY, WHICH CLEARLY ESTABLISHES THAT T HE GENUINENESS OF THE TRANSACTION IS UNDER DOUBT OR IT CAN BE SAID NOT ESTABLISHED BY THE ASSESSEE OR REMAINED TO BE ESTABLISHED. SO FAR AS THE DECISION RELIED UPON BY THE ASSESSEE IN THE CASE OF NIKUNJ EXIM ENTERPRISES PVT . LTD. IS CONCERNED, WE ARE OF THE VIEW THAT IN THE PRESENT A PPEAL THE ASSESSEE IS A MANUFACTURER/TRADER/BOTH (WHICH IS TO BE ESTABLISHED BY THE ASSESSEE), THEREFORE, THE ASSESS EE IS DIRECTED TO ESTABLISH THE GENUINENESS OF THE TRANSA CTIONS, WHICH HAS NOT BEEN DONE BY THE ASSESSEE. THE OBSER VATION OF THE LEARNED CIT(A) THAT IT WAS A CASE OF NON-COM PLIANCE TO THE NOTICE ISSUED U/S. 133(6) IS CONCERNED, ITSE LF IS AN ADMISSION THAT THE PARTY EITHER DID NOT RESPOND OR WAS NOT AVAILABLE AT THE GIVEN ADDRESS. UNDER SECTION 68 O F THE ACT OR UNDER SECTION 69C OF THE ACT, THE ASSESSEE IS EX PECTED TO ITA NO.3236/MUM/2016 & 2698/MUM/2016 JAYDEEP PROFILES P.LTD 127 SATISFY THE CONDITIONS LAID DOWN THEREIN. U/S. 69C WHERE THE ASSESSEE INCURRED ANY EXPENDITURE AND OFFERS NO EXPLANATION ABOUT THE SOURCE OF SUCH EXPENDITURE OR PART THEREOF OR EXPLANATION, IF ANY, OFFERED BY THE ASSE SSEE, IN THE OPINION OF THE ASSESSING OFFICER IS NOT FOUND SATISFACTORY THEN SUCH EXPENDITURE MAY BE DEEMED TO BE THE INCOME OF THE ASSESSEE AND SUCH INCOME SHALL NO T BE ALLOWED AS DEDUCTION. THE LEARNED CIT(A) DID NOT CONTROVERT THE FACTUAL FINDING RECORDED IN THE ASSE SSMENT ORDER AND MERELY GRANTED RELIEF TO THE ASSESSEE. E VEN RIGHT FROM THE ASSESSMENT STAGE TILL THE STAGE OF THIS TR IBUNAL, THE ASSESSEE DID NOT PRODUCE THE PARTY. BEFORE US, THE STAND OF THE REVENUE WAS THAT THE ASSESSEE IS A MANUFACTURER WHEREAS THE STAND OF THE ASSESSEE IS T HAT THE ASSESSEE IS A MANUFACTURE AS WELL AS TRADER. EVEN AS PER MANDATE OF ARTICLE 265 OF CONSTITUTION OF INDIA ONL Y DUE TAXES HAS TO BE LEVIED/COLLECTED. THEREFORE, IN TH E INTEREST OF JUSTICE AND FAIR PLAY, WE DEEM IT APPROPRIATE TO DIRECT THE ASSESSEE TO PRODUCE THE CONCERNED PARTY BEFORE THE LEARNED ASSESSING OFFICER ALONG WITH NECESSARY EVIDENCE IN SUPPORT OF ITS CLAIM. THE LEARNED ASSESSING OFFICER IS ALS O DIRECTED ITA NO.3236/MUM/2016 & 2698/MUM/2016 JAYDEEP PROFILES P.LTD 128 TO EXAMINE THE FACTUAL MATRIX AND ALSO RECORD A FIN DING WHETHER THE ASSESSEE IS A MANUFACTURER/TRADER OR BO TH AND THEN DECIDE IN ACCORDANCE WITH LAW CONSIDERING THE AFOREMENTIONED DECISIONS ALONG WITH THE DECISIONS I N THE CASE OF N K PROTEINS LTD (SUPRA). WE HAVE ALSO PER USED THE ORDERS RELIED UPON BOTH SIDES AND ARE OF THE VIEW T HAT THERE CANNOT BE ANY SALE WITHOUT PURCHASES AND ONLY PROFI T EMBEDDED THEREIN CAN BE CONSIDERED. IN THE PRESENT APPEAL, EVEN THE LEARNED COUNSEL FOR THE ASSESSEE W AS ASKED TO PRODUCE THE PARTIES BEFORE LEARNED ASSESSI NG OFFICER. HOWEVER, THE LEARNED COUNSEL SHOWED HIS I NABILITY TO PRODUCE THE PARTIES. AT THIS STAGE, THE LEARNED COUNSEL FOR THE ASSESSEE AGREED THAT THE ADDITION MAY BE RE STRICTED TO 12.5% AS DONE BY THE LEARNED CIT(A). IN SUCH A SITUATION THE FACT REMAINS THAT THE GENUINENESS OF THE TRANSACTIONS REMAINED TO THE PROVED WITH POSITIVE M ATERIAL. SO FAR AS THE CASES RELIED UPON BY THE ASSESSEE LIK E SMT NEETA SANJAY SHAH VS. INCOME TAX OFFICER (SUPRA), M /S. GEOLIFE ORGANICS VS. ACIT (ITA NO.3699/MUM/2016) INCOME TAX OFFICER VS. DEEPAK POPATLAL GALA ETC., A RE CONCERNED THE CONCLUSION IN THESE CASES WAS ARRIVED AT TO ITA NO.3236/MUM/2016 & 2698/MUM/2016 JAYDEEP PROFILES P.LTD 129 THE PECULIAR FACTS OF THOSE CASES, THUS, BLINDLY CA NNOT BE APPLIED TO THE FACTS OF THE PRESENT APPEALS. IN TH E PRESENT APPEALS, IT IS NOTICED THAT THE NOTICES ISSUED UNDE R SECTION. 133(6) WERE NOT COMPLIED WITH AND THE ASSESSEE DID NOT PRODUCE THE PARTIES BEFORE THE LEARNED ASSESSING OF FICER TO PROVE THE GENUINENESS OF THE TRANSACTIONS. EVEN TH E NEW ADDRESSES, IF ANY, OF THESE PARTIES WERE NEVER SUPP LIED BY THE ASSESSEE TO THE LEARNED ASSESSING OFFICER SO TH AT THE NOTICED COULD BE ISSUED TO SUCH PARTIES AT THE NEW ADDRESSES. THE GENUINENESS OF THE TRANSACTIONS THU S, COULD NOT BE ESTABLISHED BY THE ASSESSEE. THEREFOR E, CONSIDERING THE TOTALITY OF FACTS, CASES RELIED UPO N BY BOTH SIDES, DISCUSSION MADE HEREINABOVE, TO PLUG THE LEA KAGE OF REVENUE, WE ARE OF THE VIEW THAT THE LEARNED CIT(A) HAS TAKEN ONE OF THE BEST POSSIBLE VIEW TO ESTIMATE THE PROFIT @12.5%. THUS, THE STAND TAKEN BY THE LEARNED CIT(A ) IS AFFIRMED. 7.13. SINCE WE HAVE AFFIRMED THE STAND OF THE LEAR NED CIT(A), THE APPEAL OF THE REVENUE IS AUTOMATICALLY DISPOSED ITA NO.3236/MUM/2016 & 2698/MUM/2016 JAYDEEP PROFILES P.LTD 130 OF. THEREFORE, THE APPEALS OF THE ASSESSEE AS WELL AS THE REVENUE ARE DISMISSED. 7.14 FINALLY, THE APPEALS OF THE REVENUE AS WELL A S THE ASSESSEE ARE DISMISSED. THIS ORDER WAS PRONOUNCED IN THE OPEN COURT IN THE PRESENCE OF LD. REPRESENTATIVES FROM BOTH SIDES AT THE CONCLUSION OF THE HEARING ON 25/09/2018. SD/- (G. MANJUNATHA) SD/- (JOGINDER SINGH) ' # / ACCOUNTANT MEMBER $ # / JUDICIAL MEMBER MUMBAI; + DATED : 25/09/2018 F{X~{T? P.S/. .. , !%$&'()(*& / COPY OF THE ORDER FORWARDED TO : 1. ,-./ / THE APPELLANT 2. 01./ / THE RESPONDENT. 3. 2 2 3' , ( ,- ) / THE CIT, MUMBAI. 4. 2 2 3' / CIT(A)- , MUMBAI 5. 560' , 2 ,-&, ) , / DR, ITAT, MUMBAI 6. 7 8 / GUARD FILE. ! / BY ORDER, / (DY./ASSTT. REGISTRAR) , / ITAT, MUMBAI
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