Asst. Commissioner of Income tax Cent Cir. 1, Belgaum V. Sri. K. Aslam Khan, Belgaum

ITA 310/PAN/2013

• Counselvise Citation: 31024114 RSA 2013
• Duration Of Justice: 1 year(s) 2 month(s) 9 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 19-12-2014
• Appeal Filed By: Department
• Order Result: Partly Allowed
• Bench Allotted: DB
• Next Hearing Date: 16-12-2014
• Assessment Year: 2008-2009
• Appeal Filed On: 10-10-2013
• Result in Favour of: Partly Allowed
• Court: TRIBUNAL
• Department Lawyers: B BARTHAKUR
• Keywords: Bogus purchase; Unexplained investment; Cost of acquisition
• Section: 37(1); 132; 28; 144; 10

Judgement Text

1 IN THE INCOME TAX APPELLATE TRIBUNAL PANAJI BENCH, PANAJI BEFORE SHRI P. K. BABNSAL, HONBLE ACCOUNTANT MEMBER AND SHRI D.T. GARASIA, HONBLE JUDICIAL MEMBER ITA NO. 310 /PNJ/2013 (ASST. YEAR : 200 8 - 0 9 ) ACIT, CENTRAL CIRCLE - 1, BELGAUM . VS. SRI K. ASLAM KHAN, PROP. M/S. GULAB SHAH TRADERS, 3/224/A, COLLEGE ROAD, HOSPET . PAN NO. AHOPK 9678 F (APPELLANT) (RESPONDENT) ASSESSEE BY : SHRI SANDIP BHANDARE - AR DEPARTMENT BY : SHRI B. BARTHAKUR - D.R. DATE OF HEARING : 16 / 12 /2014 . DATE OF PRONOUNCEMENT : 1 9 / 12 /201 4 . O R D E R PER D.T. GARASIA , J .M THIS IS AN APPEAL BY THE DEPARTMENT AGAINST THE ORDER OF LD. CIT (A) - VI , BANGALORE , DATED 18 /0 7 /201 3 FOR THE A.Y. 200 8 - 0 9 . 2. THE FOLLOWING GROUNDS ARE RAISED BY THE DEPARTMENT : - 1. WHETHER THE LEARNED CIT(A) IS JUSTIFIED IN DELETING AN AMOUNT OF RS. 4,25,57,580/ - ADDED BY THE ASSESSING OFFICER FOR THE A.Y. 2008 - 09 TOWARDS UNEXPLAINED INVESTMENT IN RESPECT OF UNACCOUNTED PURCHASES MADE BY THE ASSESSEE? 2 2. WHETHER THE LEARNED CIT(A) IS JUSTIFIED IN DELETING AN AMOUNT OF RS. 22,34,272/ - ADDED BY THE ASSESSING OFFICER FOR THE A.Y. 2008 - 09 TOWARDS PROFIT ELEMENT ON UNACCOUNTED PURCHASES? 3. BRIEF FACTS OF THE CASE ARE THAT A SEARCH U/S. 132 OF THE INCOME TAX ACT, 1961 (HEREINAFTER REFERRED TO AS THE 'ACT', FOR SHORT) WAS CARRIED OUT ON 25/03/2008 IN THE GROUP CASES OF SRI B.P. ANAND KUMAR AND SRI MANOJ KUMAR JAIN OF HOSPET . ON THE BASIS OF CERTAIN PAPERS AND DOCUMENTS BELON GING TO THE ABOVE ASSESSEE SEIZED FROM THE PREMISES OF SRI MANOJ KUMAR JAIN. THE CASE OF THE ASSESSEE WAS TAKEN UP FOR PROCEEDINGS U/S. 153C OF THE ACT. DURING THE COURSE OF ENQUIRY CONDUCTED AT THE OFFICE OF HOSPET, IT WAS ASCERTAINED THAT WHERE ABOUTS OF THIS FIRM ARE NOT KNOWN. THEREFORE, AFTER ASCERTAINING THE TAX CONSULTANT, WHO PREPARED THE VAT RETURN, SRI RAGHUNANDAN, C.A. WAS APPROACHED WHO STATED THAT HE HAS NOT ASSISTED NOR PREPARED ANY BOOKS OF ACCOUNTS WITH RESPECT TO TRANSACTIONS MADE BY THE ABOVE PERSON WITH M/S. GRMTC. DURING THE COURSE OF INVESTIGATION, IT WAS REVEALED THAT THE ASSESSEE M/S. GULAB SHAH TRADERS HAS BEEN REGISTERED FOR VAT AND THE TIN NO. IS 29710768104 AND AS PER INFORMATION FURNISHED BY THE ASSISTANT COMMISSIONER OF COMMERCIAL TAXES, HOSPET , THERE ARE PURCHASES OF RS. 4,25,57,580/ - FOR THE A.Y. 2008 - 09 . DURING THE COURSE OF INVEST IGATION, IT HAS BEEN SEEN FROM THE SEIZED BOOKS OF ACCOUNTS OF M/S. GRMTC THAT THERE ARE IRON ORE 3 PURCHASES OF RS. 4,26,36,830/ - FROM M/S. GULAB SHAH TRADERS, HOSPET FOR THE A.Y. 2008 - 09. IT HAS BEEN SEEN FROM THE DOCUMENT MARKED AS A/MJ/45, NUMBER OF CONCERNS INCLUDING M/S. GULAB SHAH TRADERS WERE OPERATED FROM THE OFFICE OF MR. MANOJ KUMAR JAIN, WHO HAD ISSUED LETTERS TO ING VYSYA BANK, HOSPET INTIMATING THAT THE CHEQUES ISSUED TO CERTAIN PARTIES ARE MEANT FOR BUSINESS PURPOSE. ON VERIFICATION OF DOC UMENT MARKED AS A/MJ/45, IT WAS NOTICED THAT NUMBER OF CONCERNS HAD ISSUED LETTERS TO ING VYSYS BANK, HOSPET, INTIMATING THAT THEY HAD ISSUED CERTAIN CHEQUES TO CERTAIN PARTIES FOR BUSINESS PURPOSE. CASH DEPOSITED IN THE BANK WAS WITHDRAWN BY EMPLOYEES OF SRI MANOJ KUMAR JAIN ONLY. THE ASSESSING OFFICER COULD NOT TRACE OUT WHEREABOUTS M/S. GULAB SHAH TRADERS, T HEREFORE, HE HAS MADE THE ASSESSMENT IN THE HANDS OF THE ASSESSEE AND ALSO MADE THE ASSESSMENT U/S. 144 OF THE ACT AND TREATED UNDISCLOSED INCOME A S UNEXPLAINED INVESTMENT MADE IN PURCHASES OF RS. 4,25,57,580/ - AND ADDED THE PROFIT ON THE ABOVE SALES OF RS. 22,34,272/ - . 4 . THE MATTER WAS CARRIED TO THE CIT(A) AND CIT(A) HAS DELETED THE ADDITION BY OBSERVING AS UNDER: - DURING THE COURSE OF APPELLATE PROCEEDINGS, THE APPELLANTS COUNSEL HAS NOT BEEN ABLE TO GIVE ANY DETAILS REGARDING ANY PURCHASES MADE BY HIM WHICH COULD SUBSTANTIATE THE SALES OF 4,25,57,598/ - MADE TO MIS GRMTC AS CLAIMED BY SRI MANOJ KUMAR JA IN , PROP. M/S GRMTC. THE ONLY ARGUMENT RAI SED BY THE APPELLANT IS PLACING RELIANCE ON THE FINDINGS GIVEN 4 BY THE CIT(A) IN ORDER IN TA NOS.4291429A1428!427142614251DC1T,CC 1, BELGAUM / CLT(A)VL/BLORE/2009 - 2010 DATED 13TH MAY 2013, IN THE CASE OF SRI MANO J KUMAR J A IN WHEREIN THE TRANSACTIONS OF PURCHA SES SHOWN IN THE HANDS OF SRI MANOJ KUMAR JAIN FROM THE APPELLANTS CONCERN AND OTHER SIMILAR CONCERNS HAVE BEEN HELD TO BE BOGUS AND MAKE - BELIEVE TRANSACTIONS AND THE PURCHASES S H OWN BY SRI MANOJ KUMAR JAIN IN NAME OF THE APPELLANT HAVE BEEN ADDED AS INCOME OF SRI MANOJ KUMAR JAIN HIMSELF. ON THIS BASIS, THE APPELLANT HAS SOUGHT RELIEF IN HIS CASE. IT IS ON RECORD THAT NO EVIDENCE WHAT SO EVER HAS BEEN PRODUCED BEFORE ME OR BEFORE THE ASSESSING OFFICER TO SHOW THAT THE APPELLANT CONCERN ACTUALLY CARRIED OUT IRON ORE TRADING OR THAT THE APPELLANT WAS A PERSON OF MEANS. THE APPELLANT HIMSELF HAS NOT BEEN ABLE TO CONTRADICT THE FINDINGS OF THE ASSESSING OFFICER. ON THE BASIS OF EVIDENCE ON RECORD AND AS ALSO E XAMINED IN THE CASE OF SRI MANOJ KUMAR JAIN IN TA NOS.429/429A/428/427/426/425/DCIT,CC 1, BEIGAUM / CLT(A) - VI/BLORE/2009 - 2010 DATED 13TH MAY 2013, HOLD THAT THE TRANSACTION OF SALES SHOWN IN THE HANDS OF THE APPELLANT MR K ASLAM KHAN TO SRI MANOJ KUMAR JAIN , PROP. M /S GRMTC IS NOT A GENUINE TRANSACTION. MERE REGISTRATION WITH THE COMMERCIAL TAX DEPARTMENT AND FI LI NG SELF DECLARATION THIS WILL NOT MAKE A TRANSACTION OF PURCHASE AND SALES A GENUINE TRANSACTION IN ABSENCE OF BASIC EVIDENCES TO SUPPORT THE SAME WHICH ARE ABSENT IN THE CASE APPELLANT. ON THIS ASPECT, I AGREE WITH THE FINDINGS OF THE ASSESSING OFFICER. HOWEVER, IN MY VIEW, SINCE THE PURCHASE AND SALES IF ANY SHOWN BY THE ARE BOGUS, MAKE BELIEVE AND ON - PAPER ONLY, NO ADDITION ON ACCOUNT INVE STMENT IN PURCHASES OR PROFIT THEREOF NEEDS TO BE MADE IN THE HANDS OF A PPELLANT WHO IS APPARENTLY A PERSON WITHOUT MEANS AND A MERE NAME LEN DER TO SRI MANOJ KUMAR JAIN . IT HAS ALSO BEEN HELD BY ME THAT THESE TR AN S ACTIONS SHOWN IN THE NAMES OF THE APPELLANT MR K ASLAM KHAN AND OTHER SKNILAR PERSONS WERE SHOWN ONLY TO GIVE A SOURCE TO THE IRON ORE SOLD BY SRI HANOI KUMAR JAM REFERRED TO IN ITA NOS.429 / 429A / 428 / 427 / 426 / 425 / DC1T, CC 1 , BELGAUM/CIT(A) - VI/BLORE/2OO92O1O DATED 13TH MAY 2013 I N THE CASE OF SRI MANOJ KUM AR JAM. THEREFORE, THE ADDITION MADE IN THE HANDS OF THE APPELLANT ON PROTECTIVE BASIS IS HEREBY DELETED WITH THE ABOVE FINDINGS. 5. DURING THE COURSE OF ASSESSMENT PROCEEDINGS, LEARNED DR SUBMITTED BEFORE US THAT THE ISSUE IN CONTROVERSY IS COVERED BY THE 5 COMMON ORDER OF THIS BENCH OF THE TRIBUNAL IN THE CASE OF ACIT VS. SHRI G. CHANDRASHEKHAR AND OTHERS IN ITA NOS. 345, 293 TO 302, 307 & 311/PNJ/2013, WHEREIN THIS TRIBUNAL HAS ALLOWED THE DEPARTMENTAL APPEAL AND DIRECTED TO CALCULATE THE PROFIT @ 4% ON THE PURCHASES. 6. WE HAVE HEARD RIVAL CONTENTIONS OF BOTH THE PARTIES. LOOKING TO THE FACTS AND CIRCUMSTANCES OF THE CASE, WE FIND THAT THE ISSUE IN CONTROVERSY IS COVERED BY THE CASE OF SRI G. CHANDRASHEKHAR (SUPRA) , WHEREIN THIS TRIBUNAL HAS TAKEN A DECISION THAT ALL THE ORDERS INCLUDING SRI G. CHANDRASHEKHAR ARE TO BE TAXED @ 4% ON THE PURCHASES. WE HAVE ALREADY DEALT WITH THIS ISSUE IN DETAIL WHICH READS AS UNDER: - 19. WE HAVE HEARD THE RIVAL CONTENTION OF BOTH THE PARTIES. LOOKING TO THE FACT S AND CIRCUMSTANCES OF THE CASE, WE FIND THAT THE ISSUE IN CONTROVERSY IS COVERED BY DECISION OF HONBLE INCOME TAX APPELLATE TRIBUNAL, PANAJI BENCH, IN THE CASE OF SRI MANOJ KUMAR JAIN, ITA NO. 179 TO 184/PNJ/2013. WE ARE OF THE VIEW THAT TRIBUNAL IN HI S ORDER HAS DISPOSED THE APPEALS OF THE MANOJ KUMAR JAIN BY OBSERVING AS UNDER: WE HAVE HEARD THE RIVAL SUBMISSIONS AND CAREFULLY CONSIDERED THE SAME. THE QUESTION ARISES FOR OUR CONSIDERATION OUT OF THE FACTS RELATING TO GROUND NO. 9 IN THE A. Y. 2007 - 08 AND ROUND NO. 8 IN A. Y 2008 - 09 IS WHETHER THE PURCHASES MADE BY THE ASSESSEE CAN BE DISALLOWED WHEN THE SALES MADE BY THE ASSESSEE HAS DULY BEEN ACCEPTED IT IS NOT DENIED FROM THE ORDER OF THE AUTHORITIES BELOW ON THE BASIS OF THE DOCUMENTS FOUND DURING THE COURSE OF THE SEARCH THAT THE ASSESSEE WAS ENGAGED IN THE TRADING OF THE IRON ORE. DURING THE COURSE OF CARRYING OUT THE TRADING IN IRON ORE THE ASSESSEE HAS ACCOMMODATED SHRI ANIL IL LAD AND MIS. VSL AND SONS FOR SELLING IRON ORE PROCURED BY THEM THRO UGH ILLEGAL MINING CARRIED OUT IN THEIR MINING THUS, THE PURCHASES MADE BY THE ASSESSEE FROM THESE FIRMS WHICH WERE WITHOUT BILLS WERE SHOWN BY THE ASSESSEE IN HIS BOOKS OF ACCOUNTS AS IF THE ASSESSEE HAS MADE PURCHASES FROM 6 VARIOUS PARTIES SO THAT IT MAY APPEAR THAT THE ASSESSEE HAS MADE THE PURCHASES FOR THESE PARTIES. IT IS ALSO UNCONTROVERTED FACT THAT THE ASSESSEE DID NOT OWN ANY MINE AND WAS ENGAGED ONLY IN TRADING OF IRON ORE THROUGH ITS PROPRIETORSHIP CONCERN. THE SALES MADE BY THE ASSESSEE WERE DUL Y ACCEPTED BY THE REVENUE. WE HAVE GONE THROUGH THE DECISION OF THE HONBLE SUPREME COURT IN CIVIL APPEALS NOS. 4540 - 4548 OF 2000 IN THE CASE OF THREESIAMMA JACOB & ORS V/S GEOLOGISTS, D E PTT. C/MINING & GEOLOGY & ORS IN WHICH HONBLE SUPREME COURT VIDE ORD ER DATED 8 JULY, 2013 HONBLE SUPREME COURT HELD UNDER PARA 57 OF ITS ORDER THAT OWNERSHIP OF SUB - SOIL/MINERAL WEALTH SHOULD NORMALLY FOLLOW THE OWNERSHIP OF THE LAND, UNLESS THE OWNER OF THE LAND IS DEPRIVED OF THE SAME BY SONIC VA/ID PROCESS. EVEN IN TH IS CASE THE HONBLE SUPREME COURT WAS OF THE OPINION THAT THERE IS NOTHING IN LAW WHICH DECLARES THAT ALL MINERAL WEALTH SUBSOIL RIGHTS VEST IN THE STATE. ON THE BASIS OF THE DICTUM OF LAW PRONOUNCED BY THE HONBLE SUPREME COURT THE IRON ORE ILLEGALLY EXTR ACTED FROM THE MINES OF SHRI ANIL H LAD AND THE FARM OWNED BY HIM BELONG TO SHRI ANIL II LAD NOT TO THE ASSESSEE. THERE ARE ALSO EVIDENCES FOUND DURING THE COURSE OF SEARCH THAT THE ASSESSEE MADE CASH PAYMENTS TO SHRI ANIL H. LAD AND THE IRON ORE SO EXTRAC TED ROUTED TO THE PROPRIETORSHIP CONCERN OF THE ASSESSEE. IT CANNOT BE SAID THAT WHATEVER IRON ORE ILLEGALLY EXTRACTED FROM THE MINING BELONGING TO M/S. VSL AND SONS, A FIRM OF SHRI ANIL H LAD, WAS GIVEN BY SHRI ANIL H. LAD TO THE ASSESSEE WITHOUT CHARGING ANY COST. THE ASSESSEE HAS SUBMITTED QUANTITATIVE RECONCILIATION SHOWING THE QUANTITY OF THE MATERIAL PURCHASED AS WELL AS MATERIAL SOLD. THE ASSESSEE HAS BOTH ACCOUNTED AS WELL AS UNACCOUNTED SALES. SO FAR AS THE UNACCOUNTED SALES ARE CONCERNED, THE SAME HAS BEEN DEALT WITH SEPARATELY IN THE PRECEDING PARAGRAPHS. HERE, WE ARE CONCERNED WITH THE ACCOUNTED SALES AND ACCOUNTED PURCHASE BILLS. ON THE BASIS OF THE SEIZED MATERIAL THE AO CAME TO THE CONCLUSION THAT THE ASSESSEE HAS PROCURED THE BILLS FOR THE IR ON ORE AND ACCOUNTED FOR THESE BILLS IN HIS BOOKS OF ACCOUNTS. SOME OF THE CONCERNS ARE OWNED BY SOME OF THE EMPLOYEES OF THE ASSESSEE WHILE OTHER CONCERNS ARE OWNED BY THIRD PARTIES. ALL THESE CONCERNS, EXCEPT 2 - 3, WERE DULY REGISTERED WITH THE SALES TAX AUTHORITIES. ALL WERE HAVING FAN AS WELL AS TIN. ALL THESE CONCERNS WERE HAVING BANK ACCOUNTS ALTHOUGH IN 3 CASES THE BANK ACCOUNTS WERE INTRODUCED BY THE ASSESSEE. IT IS NOT DENIED BY THE ASSESSEE ALSO THAT THE ASSESSEE HAS SHOWN PURCHASES FROM THESE CONC ERNS AND THE PAYMENTS WERE 7 ALSO I MADE TO THESE CONCERNS. THE AO DISALLOWED THESE PURCHASES TREATING THEM TO BE BOGUS PURCHASES WHICH WAS CONFIRMED BY THE CIT(A). WE MAY MENTION HERE THAT THE ASSESSEE WHO IS ENGAGED IN TRADING BUSINESS CANNOT SELL THE GOOD S WITHOUT BUYING IT. THE ASSESSEE MIGHT HAVE BOUGHT IT FROM ONE PARTY WITHOUT BILLS BUT MIGHT HAVE PROCURED THE BILLS FROM OTHER PARTIES. THE ASSESSEE IN HIS STATEMENT WHICH WAS RECORDED BY THE REVENUE POST - SEARCH HAS CATEGORICALLY ACCEPTED THAT HE HAS PAI D COMMISSION CHARGES FOR PROCURING THE BILLS @4% THIS MAY MAKE THE BILLS TO BE BOGUS BUT WE: CANNOT CONCLUDE THAT THE ASSESSEE HAS NOT MADE THE PURCHASES. IT IS NOT A CASE WHERE THE ASSESSEE HAS INFLATED THE PURCHASES I.E., THE QUANTITY OF THE PURCHASES AR E MUCH MORE THAN THE QUANTITY OF THE IRON ORE SOLD. THE AO IN HIS REMAND REPORT HAS CATEGORICALLY ACCEPTED THE FACT THAT THE ASSESSEE WAS WORKING ON BEHALF OF SHRI ANIL H LAD WHO WANT OWNED THE MINES AND HAS EXTRACTED IRON ORE ILLEGALLY MUCH MORE THAN PERM ISSIBLE. TO COVER UP THE QUANTITIES OF PURCHASE MADE FROM SHRI ANIL H LAD CONCERN MIS. VSL & SONS, THE ASSESSEE HAD TO PROCURE THE PURCHASE BILLS. IT IS NOT THE CASE OF THE REVENUE THAT THE IRON ORE PURCHASES AND SALES MADE BY THE ASSESSEE ARE NOT RECONCIL ABLE. THE ASSESSEE HAS SUBMITTED THE QUANTITATIVE RECONCILIATION STATEMENT WHICH I HAS BEEN REFERRED TO BY THE AO IN HIS REMAND REPORT. THE SALES ACCOUNTED FOR AND MADE BY THE ASSESSEE HAVE NOT BEEN DISPUTED BY THE REVENUE. AT THE MOST, IN OUR OPINION, WHE RE THE ASSESSEE HAD SAVED ANY TAX IN PROCURING THE BOGUS BILLS, THE ASSESSEE COULD HAVE MADE MORE PROFIT BUT THE PURCHASES MADE BY THE ASSESSEE CANNOT BE DISALLOWED THERE ARE EVIDENCES THAT THESE FIRMS WERE DULY REGISTERED WITH THE INCOME TAX AS WELL AS SA LE TAR AUTHORITIES. THE VAT HAS DULY BEEN PAID ON THE PURCHASES MADE BY THE ASSESSEE. THESE CONCERNS FILED THEIR INCOME TAX RETURN PRIOR TO THE NOTICE ISSUED U/S.153C EVEN VAT RETURN WAS DULY FILED. THESE CONCERN MADE THE SALES TO THE PROPRIETORSHIP CONCER N OF THE ASSESSEE TO THE EXTENT OF RS.50,33,07,161/ - IN BOTH THE YEARS AS PER THE DETAILS GIVEN AT PAGE 146 OF THE PAPER BOOK. THESE CONCERNS HAVE INTER SALES ALSO TO THE EXTENT OF RS. 33,75,75,865/ - IN BOTH THE YEARS. WE NOTED THAT DURING THE YEAR ENDED 3 1.3.2007 THE PURCHASES WERE DISALLOWED BY THE A. 0 TO THE EXTENT OF RS. 17,72,99,484 / - AND DURING THE YEAR ENDED 31.3.2008, THE PURCHASES DISALLOWED WERE RS. 23,26,29,989/ - . THE GROSS PROFITS AS PER THE BOO/CC OF ASSESSEE WERE 16,35% AND 6.06% FOR THE ASSE SSMENT YEAR 2007 - 08 AND 2008 - 09 RESPECTIVELY. WE DO AGREE WITH THE LEARNED A.R THAT ONCE 8 THE PURCHASES ARE DISALLOWED THE GROSS PROFIT WILL INCREASE TO 50.9% AND 90.7% FOR THE ASSESSMENT YEAR 2007 - 08 AND 2008 - 09 RESPECTIVELY. NO MATERIAL OR EVIDENCE WHATSO EVER SHOWING THE COMPARATIVE INSTANCE WAS PRODUCED BEFORE US TO JUSTIFY SUCH A HIGH GROSS PROFIT. UNDER THESE FACTS IN OUR OPINION NO ADDITION ON ACCOUNT OF BOGUS IRON ORE PURCHASES CAN BE MADE AS WITHOUT PROCURING THE IRON ORE BY INCURRING THE COST IN OUR OPINION THE ASSESSEE CANNOT SELL THE IRON ORE. AT THE MOST THE REVENUE COULD HAVE ADDED THE PROFIT ON SUCH PURCHASES @ 4% AS HAS BEEN HELD BY US IN THE PRECEDING PARAGRAPH AS THE ASSESSEE CATEGORICALLY STATED THAT HE WAS CARRYING OUT THE SALES ON BEHALF O F SHRI ANIL H. LAD ON COMMISSION BASIS AND THE EVIDENCES FOUND DURING THE COURSE OF SEARCH AND SURVEY ALSO PROVE THAT THE ASSESSEE IS BEING USED AS CONDUIT TO SIPHON OFF IRON ORE WHICH WAS ILLEGALLY MINED BY M/S. VSL & SONS FIRM OF SHRI ANTI LAD. WE NOTED THAT CIT(A) HAS DELETED THE ADDITION MADE BY THE A. 0 ON ACCOUNT OF PROFIT ESTIMATED ON SUCH SALES THE REVENUE HAS NOT COME IN APPEAL BEFORE US IN THIS REGARD IN THE ABSENCE OF THE GROUND OF APPEAL BEFORE US WE CANNOT DIRECT THE A.O TO ESTIMATE PROFIT @ 4% ON SUCH PURCHASES. WE ALSO NOTED THAT THE ASSESSEE HAS MADE SURRENDER BY WAY OF UNDISCLOSED STOCK BEING THE INVESTMENT OF THE INCOME EARNED BY THE ASSESSEE. THE SURRENDER SO MADE IN ANY CASE SINCE MORE THAN 4% ON SUCH PROFIT WHICH THE ASSESSEE WOULD HAVE EARNED OTHERWISE TAKES CARE OF ADDITION OF SUCH ESTIMATED PROFITS. BEFORE CONCLUDING OUR FINDING ON THIS ISSUE WE MAY MENTION THAT THE ASSESSING OFFICER HAD DISALLOWED THE EXPENSES INCURRED BY THE ASSESSEE FOR THE PURCHASES U/S 37(1) OF THE INCOME TAX ACT. WE, THEREFORE, IN VIEW OF OUR AFORESAID DISCUSSION DELETED THE ADDITION MADE ON ACCOUNT OF BOGUS PURCHASES. THE PURCHASE COST IN THE CASE OF A TRADER IN OUR OPINION IS ALLOWED AS DEDUCTION U/S. 28 ITSELF AS U/S. 28 IS ONLY THE PROFIT AND GAINS OF ANY BUSI NESS OR PROFESSION WHICH ARE CHARGEABLE TO INC. THE CONSIDERATION RECEIVED BY THE ASSESSEE ON THE SALES CANNOT BE REGARDED TO BE THE PROFIT AND GAINS OF THE PROFESSION. SECTION 28(1) DOES NOT MAKE TOTAL REVENUE RECEIPT TO BE CHARGEABLE TO INCOME TAX ACT. O N THIS BASIS ALSO THE ORDER OF THE CIT (A) CANNOT BE SUSTAINED IN OUR OPINION ON THIS ISSUE. IN VIEW OF OUR AFORESAID DISCUSSION WE DELETE THE ADDITION MADE ON ACCOUNT OF BOGUS PURCHASES MADE BY A0 AND SUSTAINED BY THE CIT(A). IN BOTH THE ASSESSMENT YEARS THUS THE GROUND NO. 9 IN ASSESSMENT YEAR 2007 - 08 AND GROUND NO. 8 IN ASSESSMENT YEAR 2008 - 09 ARE ALLOWED. 9 ON GOING THROUGH THE DECISION OF TRIBUNAL, WE FIND THAT WE HAVE ALREADY HELD THAT MR. MANOJ KUMAR JAIN PURCHASED MATERIAL FOR WHICH THEY HAVE CONFI RMED THE SALES BY SRI MANOJ KUMAR JAIN. WE FIND THAT IN THIS ORDER WE HAVE ALREADY HELD THAT THERE IS NO MATERIAL OR EVIDENCE WHATSOEVER SHOWING THE COMPARATIVE INSTANCE WAS PRODUCED BEFORE US TO JUSTIFY SUCH A HIGHER GROSS PROFIT. WE HAVE ALREADY HELD THA T REVENUE CAN ADD A PROFIT ON SUCH PURCHASES @ 4% AS HAS BEEN HELD BY US IN THE TRIBUNAL ORDERS. 19.1. WE HAVE ALREADY HELD THAT ASSESSEE HAS MADE SURRENDER BY WAY OF UNDISCLOSED STOCK BEING INVESTMENT OF INCOME EARNED BY THE ASSESSEE. THE SURRENDER SO MAD E IN ANY CASE SINCE MORE THAN 4% ON SUCH PROFIT WHICH THE ASSESSEE WOULD HAVE EARNED OTHERWISE TAKES CARE OF ADDITION OF SUCH ESTIMATED PROFIT. THE PURCHASE COSTS IN CASE OF TRADER IS ALLOWED AS DEDUCTION UNDER SECTION 28 ITSELF. THE CONSIDERATION RECEIVE D BY THE ASSESSEE ON THE SALES CANNOT BE REGARDED TO BE THE PROFIT AND GAINS OF THE PROFESSION. WE ARE OF THE VIEW THAT CIT(A) IS JUSTIFIED IN DELETING THE ADDITION MADE ON ACCOUNT OF INVESTMENT. THE CIT(A) HAS HELD THAT THE INVESTMENT IS MADE BY MANOJ KU MAR JAIN, THEREFORE, HE HAS CONFIRMED THE ADDITION IN THE CASE OF MANOJ KUMAR JAIN AND DELETED THE ADDITION IN HANDS OF EACH ASSESSEE. WE HAVE ALREADY HELD IN MANOJ KUMAR JAIN CASE THAT SOME OF THE CONCERNS ARE OWNED BY SOME OF THE EMPLOYEES OF THE ASSESS EE WHILE OTHER CONCERNS ARE OWNED BY THIRD PARTIES. ALL THESE CONCERNS, EXCEPT 2 - 3 WERE DULY REGISTERED WITH THE SALES TAX AUTHORITIES. ALL WERE HAVING PAN AS WELL AS TIN. ALL THESE CONCERNS WERE HAVING BANK ACCOUNTS ALTHOUGH IN 3 CASES THE BANK ACCOUNTS W ERE INTRODUCED BY THE MANOJ KUMAR JAIN. THE ASSESSING OFFICER HAS TREATED THIS INVESTMENT IN PURCHASE AS INVESTMENT IS MADE BY HIMSELF BUT WE HAVE ALREADY HELD THAT MR. MANOJ KUMR JAIN HAS CATEGORICALLY ACCEPTED THAT HE HAS PAID COMMISSION CHARGES FOR PRO CURING THE BILLS @4%. THIS MAY MAKE THE BILLS TO BE BOGUS BUT WE CANNOT CONCLUDE THAT THE ASSESSEE HAS NOT MADE ANY PURCHASE. 19.2 AS WE HAVE HELD THAT NO ADDITION ON ACCOUNT BOGUS IRON ORE PURCHASE CAN BE MADE WITHOUT PROCURING THE IRON ORE BY INCURRI NG THE COST IN OUR OPINION THE ASSESSEE CANNOT SELL THE IRON ORE. AT THE MOST THE REVENUE ADDED THE PROFIT ON SUCH PURCHASE @ 4% AS HAS BEEN HELD BY US IN THAT ASSESSEE WAS CARRYING OUT THE SALES ON BEHALF OF SHRI ANIL H. LAD. THE CIT(A) HAS DELETED THE AD DITION ON ACCOUNT OF PROFIT ESTIMATED ON SUCH SALES. THE REVENUE HAS NOT COME IN APPEAL BEFORE US IN THIS REGARDS. THE ASSESSEE HAS MADE SURRENDER BY WAY OF UNDISCLOSED STOCK BEING THE INVESTMENT OF THE INCOME EARNED BY THE ASSESSEE. THE SURRENDER SO MADE 10 IN ANY CASE SINCE MORE THAN 4% ON SUCH PROFIT WHICH WOULD HAVE EARNED OTHERWISE TAKES CARE OF ADDITION OF SUCH ESTIMATED PROFITS. THE PURCHASE COST IN THE CASE OF A TRADER IN OUR OPINION IS ALLOWED AS DEDUCTION U/S. 28 ITSELF AS U/S. 28 IT IS ONLY THE PR OFIT AND GAINS OF ANY BUSINESS AND PROFESSION WHICH ARE CHARGEABLE TO TAX. THE CONSIDERATION RECEIVED BY THE ASSESSEE ON THE SALES CANNOT BE REGARDED AS PROFIT AND GAINS OF THE PROFESSION AND IT IS NOT CHARGEABLE TO TAX. THEREFORE, IN OUR OPINION, THE CIT (A) IS JUSTIFIED IN DELETING THE ADDITION ON ACCOUNT OF INVESTMENT BUT WE ARE OF THE VIEW THAT CIT(A) IS NOT JUSTIFIED IN DELETING THE ADDITION ON ACCOUNT OF PROFIT ON SALES. THEREFORE, WE MODIFY THE ORDER OF CIT(A) AND WE DIRECT THE AO TO TAKE 4% OF THE S ALES TO BE BROUGHT TO TAX AS HELD IN THE CASE OF SRI MANOJ KUMAR JAIN. WE THEREFORE, ALLOW THE APPEALS OF THE DEPARTMENT. WE HOLD THAT CIT(A) IS JUSTIFIED IN DELETING THE ADDITION ON ACCOUNT OF INVESTMENT. WE THEREFORE, DIRECTED THE AO TO CALCULATE THE PRO FIT @ 4% AFTER GIVING DUE OPPORTUNITY OF HEARING TO THE ASSESSEE AS DISCUSSED IN THE CASE OF SRI MANOJ KUMAR JAIN IN ITA NO. 179 TO 184/PNJ/2013. SO, RESPECTFULLY FOLLOWING THE AFORESAID ORDER, WE MODIFY THE ORDER OF THE CIT(A) AND DIRECT THE ASSESSI NG OFFICER TO CALCULATE PROFIT @ 4% ON PURCHASES AFTER GIVING DUE OPPORTUNITY OF HEARING TO THE ASSESSEE AS DISCUSSED IN THE CASE OF SRI MANOJ KUMAR JAIN IN I.T.A.NO. 184/PNJ/2013. 7 . IN THE RESULT, APPEAL OF THE DEPARTMENT IS ALLOWED PARTLY. ( ORDER PRONOUNCED IN THE OPEN COURT ON 1 9 T H DECEMBER , 201 4 ) S D / - S D / - (P.K. BANSAL) (D.T. GARASIA) ACCOUNTANT MEMBER JUDICIAL MEMBER DATED : 1 9 T H DECEMBER , 201 4 . VR/ - 11 COPY TO: 1 . THE APPELLANT 2 . THE RESPONDENT 3 . THE LD. CIT 4 . THE CIT(A) 5 . THE D.R 6 . GUARD FILE. BY ORDER ASSISTANT REGISTRAR I.T.A.T., PANAJI