The ACIT, Circle-5, Surat V. Shri Shankar U.Jetwani, Surat

ITA 3168/AHD/2008

• Counselvise Citation: [2016] 133 COUNSELVISE.COM (IT) 9935 (ITAT-AHMEDABAD)
• Duration Of Justice: 7 year(s) 3 month(s) 23 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 01-01-2016
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: A
• Next Hearing Date: 16-12-2015
• Assessment Year: 2005-2006
• Appeal Filed On: 08-09-2008
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: DINESH SINGH
• Assessee Lawyers: M K PATEL
• Keywords: Bogus purchase; Deemed to accrue or arise in india
• Section: 143(3); 133(6); 68; 145

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL AHMEDABAD A BENCH (BEFORE SHRI ANIL CHATURVEDI, ACCOUNTANT MEMBER & SHRI KUL BHARAT, JUDICIAL MEMBER) ITA NO: 3168/AHD/2008 (ASSESSMENT YEAR: 2005-06) THE ACIT, CIRCLE-5, SURAT V/S SHRI SHANKAR U. JATWANI PROP. OF M/S. AMAR COAL TRADERS. 10 SWATI SOCIETY, KADAMPALLI TIMALIYAWAD. NANPURA., SURAT (APPELLANT) (RESPONDENT) PAN: AASPJ 1198C APPELLANT BY : SHRI DINESH SINGH, SR. D.R . RESPONDENT BY : SHRI M.K. PATEL, A.R. ( )/ ORDER DATE OF HEARING : 15-12-201 5 DATE OF PRONOUNCEMENT : 01-01-2016 PER ANIL CHATURVEDI, ACCOUNTANT MEMBER 1. THIS APPEAL FILED BY THE REVENUE IS AGAINST THE ORD ER OF CIT(A)-III, SURAT DATED 11.07.2008 FOR A.Y. 2005-06. ITA NO. 3168 /AHD/2008 . A.Y. 2005-0 6 2 2. THE RELEVANT FACTS AS CULLED OUT FROM THE MATERIAL ON RECORD ARE AS UNDER. 3. ASSESSEE IS AN INDIVIDUAL STATED TO BE ENGAGED IN T HE BUSINESS OF TRADING OF COAL AND TRANSPORTATION OF LIGNITE THROUGH HIS PROP RIETARY CONCERNS. ASSESSEE FILED HIS RETURN OF INCOME FOR A.Y. 2005-06 DECLARI NG TOTAL INCOME AT RS. 22,19,880/-. THE CASE WAS SELECTED FOR SCRUTINY AND THEREAFTER THE ASSESSMENT WAS FRAMED UNDER SECTION 143(3) VIDE ORDER DATED 26 .11.2007 AND THE TOTAL INCOME WAS DETERMINED AT RS. 2,23,63,240/-. AGGRIE VED BY THE ORDER OF A.O., ASSESSEE CARRIED THE MATTER BEFORE LD. CIT(A) WHO VIDE ORDER DATED 11.07.2008 GRANTED SUBSTANTIAL RELIEF TO THE ASSES SEE. AGGRIEVED BY THE AFORESAID ORDER OF LD. CIT(A), REVENUE IS NOW IN A PPEAL BEFORE US AND HAS RAISED THE FOLLOWING GROUNDS:- 1. ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE A ND IN LAW, THE LD.CIT(A)-III, SURAT HAS ERRED IN DELETING THE ADDITION OF RS.1,87,46,519/- MADE BY THE ASSESSING OFFICER ON ACCOUNT OF BOGUS/ NON-EXISTENT LIABILITY. 2. ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE A ND IN LAW, THE LD.CIT(A)-III,SURAT HAS ERRED IN RESTRICTING THE ADDITION OF RS.3,62,87 5/- TO RS. 1,00,000/- MADE BY THE ASSESSING OFFICER ON ACCOUNT OF DISALLOWED CARTING EXPANSES. 3. ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE AND IN LAW, THE LD.CIT(A)- III,SURAT HAS ERRED IN DELETING THE ADDITION OF RS. 2,39,958/- MADE BY THE ASSESSING OFFICER ON ACCOUNT OF BOGUS/ PURCHASES. 4. ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE A ND IN LAW, THE LD.CIT(A)-III,SURAT HAS ERRED IN DELETING THE ADDITION OF RS.7,94, 011/- MADE BY THE ASSESSING OFFICER ON ACCOUNT OF DIFFERENCE IN THE BALANCE. 1 ST GROUND IS WITH RESPECT TO DELETION OF ADDITION ON ACCOUNT OF BOGUS/NON EXISTING LIABILITIES. ITA NO. 3168 /AHD/2008 . A.Y. 2005-0 6 3 4. ON PERUSING THE BALANCE SHEET OF NEW AMAR LIGNITE AND AMAR ENTERPRISES, THE PROPRIETARY CONCERNS OF ASSESSEE, A.O NOTICED T HAT ASSESSEE HAD SHOWN LIABILITY OF RS. 74,46,993/- AND RS. 1,12,99,526/- RESPECTIVELY UNDER THE HEAD TRUCK RENT PAYABLE. HE ALSO NOTICED THAT FOR THE YEAR UNDER CONSIDERATION THE TRUCK RENT DEBITED TO THE PROFIT AND LOSS ACCOU NT OF THE TWO CONCERNS WAS RS. 44,02,485/- AND RS. 1,13,11,871/- RESPECTIVELY. THE ASSESSEE WAS ASKED TO PROVE THE GENUINENESS OF LIABILITY. THE SUBMISSI ONS OF THE ASSESSEE WERE NOT FOUND ACCEPTABLE TO THE A.O IN VIEW OF THE FACT THAT ASSESSEE DID NOT PROVIDE CONFIRMATION LETTERS, INABILITY OF THE ASSE SSEE TO FURNISH THE ADDRESS OR TELEPHONE NUMBERS OF THE PERSONS TO WHOM THE TRU CK RENT WAS PAYABLE AND BY DISBELIEVING THE SUBMISSION OF THE ASSESSEE OF H AVING PAID THE TRUCK RENT IN SUBSEQUENT YEAR. HE ACCORDINGLY CONSIDERED THE A GGREGATE LIABILITY OF RS. 1,87,46,519 SHOWN UNDER THE HEAD TRUCK RENT PAYABL E IN RESPECT OF AMAR LIGNITE AND AMAR ENTERPRISES TO BE BOGUS AND NON EX ISTENT LIABILITY AND MADE ITS ADDITION. AGGRIEVED BY THE ORDER OF A.O., ASSESSEE CARRIED THE MATTER BEFORE LD. CIT(A) WHO AFTER CONSIDERING THE SUBMISSIONS OF THE ASSESSEE DELETED THE ADDITION BY HOLDING AS UNDER:- I HAVE CONSIDERED THE SUBMISSIONS AND GONE THROUGH THE DETAILS. THE APPELLANT IS ENGAGED IN THE BUSINESS OF TRANSPORTATION OF GOODS AND I FI ND THAT THE OUT OF THE TOTAL LIABILITY OF RS.1,87,46,519/- WHICH HAS BEEN TREATED AS NON EXIS TENT/BOGUS BY THE AO, AN AMOUNT OF RS.92,58,149/- IS ACCEPTED LIABILITY OF THE EARLIER YEARS. THE APPELLANT DERIVES INCOME FROM TRANSPORTATION CHARGES RECEIVED FROM ATUL LTD. , AND GARDEN SILK MILLS AND THE INCOME RELATING TO THE LIABILITIES HAS ALREADY BEEN TAXED SINCE IT HAS BEEN CREDITED TO THE P&L ACCOUNT. THE AO HAS ALSO NOT DISTURBED THE TRUC K EXPENSES CLAIMED BY THE APPELLANT AND HAS ONLY MADE AN ADDITION OF THE OUTSTANDING CL OSING BALANCE. I ALSO FIND THAT THE AO HAS NOT SPECIFIED AS TO UNDER WHICH PROVISION OF TH E ACT, THE ADDITION IS BEING MADE. SUCH AN ADDITION CAN BE MADE EITHER U/S 68 OF THE I T ACT OR U/S 41(1) OF THE ACT. THE PROVISIONS OF SECTION 68 OF THE ACT ARE NOT APPLICA BLE HERE SINCE THE LIABILITY IS NOT A CASH ITA NO. 3168 /AHD/2008 . A.Y. 2005-0 6 4 CREDIT BUT PERTAINING TO THE TRANSPORTATION BUSINES S OF THE APPELLANT. IT IS ALSO SEEN THAT THE AO HAS ACCEPTED THE BOOK RESULT SINCE PROVISION S OF SECTION 145 OF THE ACT HAVE NOT BEEN INVOKED. FURTHER, SECTION 41(1) OF THE ACT IS ALSO NOT APPLICABLE IN THIS CASE MERELY BECAUSE NO DETAILS WERE FILED BY THE APPELLANT OR T HE LIABILITY IS BEING CARRIED FORWARD FROM YEAR TO YEAR. HOWEVER, THE QUANTUM OF LIABILIT Y IS NOT THE SAME EVERY YEAR AND PART OF IT IS BEING PAID EVERY YEAR AND FRESH LIABILITY GETS ADDED TO THE OUTSTANDING ONE. I ALSO FIND THAT THE AO'S OBSERVATION THAT HUNDREDS OF PERSONS WERE PAID ON A SINGLE DAY WHICH COULD NOT BE POSSIBLE CONSIDERING TH E INFRASTRUCTURE AVAILABLE WITH THE APPELLANT, IS ALSO MISCONSTRUED. THE APPELLANT EXPLAINED THAT THIS IMP RESSION AROSE BECAUSE A SINGLE ENTRY WAS PASSED IN THE BOOKS OF A CCOUNTS IN RESPECT OF A LARGE NUMBER OF PERSONS BUT THOSE PERSONS WERE NOT PAID DIRECTLY BY THE APPELLANT BUT THE COLLECTIVE AMOUNT WOULD BE GIVEN TO THE MANAGER OF THE APPELLA NT WHO WOULD MAKE THE PAYMENT TO VARIOUS PERSONS ON DIFFERENT DATES. I HAVE ALSO GON E THROUGH THE COPIES OF TRUCK RENT PAYMENT AND FIND THAT IT MENTIONS THE NAMES OF THE PERSONS, TRUCK NUMBERS, WEIGHT OF MATERIAL, AMOUNT PAID TO THE SAID PERSONS AND COMPL ETE DETAILS ARE AVAILABLE IN THIS CASE. IT IS ALSO SEEN THAT THE APPELLANT WAS HAVING BUSIN ESS WITH BARODA RAYON CORPORATION SUPPLYING COAL AND TRANSPORT SERVICES TO THE COMPAN Y. THE FINANCIAL CONDITION OF THE COMPANY BECAME WEAK AND THE COMPANY COULD NOT MAKE PAYMENT TO A NUMBER OF CREDITORS. THIS ISSUE OF OUTSTANDING TRUCK RENT WAS ALSO CONSIDERED IN PROCEEDINGS FOR AY 2003-04 AND THE APPELLANT'S EXPLANATION WAS CONSIDE RED AND ACCEPTED. I AM ALSO INCLINED TO AGREE WITH THE APPELLANT THAT IF THE OUTSTANDING LIABILITIES ARE CONSIDERED AS BOGUS THE GP WOULD INCREASE TO 163% WHICH IS UNIMAGINABLE. TH EREFORE ON THIS GROUND ALSO THE LIABILITIES CANNOT BE ADDED TO THE TOTAL INCOME. I HAVE ALSO GONE THROUGH THE COMPLETE DETAILS AND F IND THAT THE APPELLANT HAD MAINTAINED SUFFICIENT PRIMARY AND SECONDARY RECORDS LIKE LR RE GISTER, VOUCHERS LRS, ETC. CONTAINING NUMBER OF TRUCKS, DATE, PARTY TO WHOM MATERIAL SUPP LIED ETC. THE LR REGISTER ARE MADE ON DAY TO DAY BASIS AND THIS METHOD HAS BEEN REGULARLY FOLLOWED AND HAS ALSO BEEN ACCEPTED BY THE DEPARTMENT IN EARLIER YEARS. THE AO WAS NOT JUSTIFIED IN ASKING FOR CONFIRMATIONS OF BALANCES FROM INDIVIDUAL TRUCK OWNERS OR THEIR P AN WHICH WOULD BE IMPOSSIBLE TO COMPLY WITH SINCE THE TRUCK OWNERS WOULD BE SCATTER ED ALL OVER THE COUNTRY AND WOULD NOT BE HAVING ANY PAN ETC. I ALSO FIND THAT ALL THE LRS ARE DULY STAMPED AND ACKNOWLEDGED ITA NO. 3168 /AHD/2008 . A.Y. 2005-0 6 5 BY THE BUYERS OF MATERIAL TRANSPORTED BY THE APPELL ANT AND VOUCHERS HAVE BEEN MAINTAINED IN RESPECT OF PAYMENT TO RESPECTIVE TRUC K OWNERS WHEREIN DETAILS LIKE NAME OF THE PERSON, TRUCK NUMBER, RATE OF TRANSPORT CHARGES , QUANTITY TRANSPORTED ETC. HAS BEEN MENTIONED AND THESE VOUCHERS ARE SERIALLY NUMBERED . NO DEFECTS WERE OBSERVED BY THE AO IN THESE VOUCHERS NOT WERE ANY DEFECTS POINTED O UT IN THE BOOKS OF ACCOUNTS. IT IS ALSO SEEN THAT THE APPELLANT HAS MADE PROFIT IN BOTH OF ITS CONCERNS WHICH WOULD NOT HAVE BEEN POSSIBLE UNLESS THE TRUCKS WERE HIRED BY HIM AND TH E FREIGHT PAYMENT WAS MADE FROM OUT OF THE FREIGHT RECEIPTS OF RS.30,88,659/- AND RS.L 6,76,016/- FROM GARDEN SILK MILLS AND ATUL PRODUCTS, RESPECTIVELY. IN VIEW OF THE ABOVE D ISCUSSIONS, I AM OF THE CONSIDERED VIEW THAT THE LIABILITIES CLAIMED BY THE APPELLANT IN RE SPECT OF FREIGHT CHARGES IS GENUINE AND ADDITION MADE ON THIS ACCOUNT BY TREATING THE SAME AS NON EXISTENT/BOGUS IS DIRECTED TO BE DELETED. 5. AGGRIEVED BY THE ORDER OF LD. CIT(A), REVENUE IS N OW IN APPEAL BEFORE US. 6. BEFORE US, LD. D.R. POINTED TO THE VARIOUS OBSERVAT IONS OF THE A.O AND THUS STRONGLY SUPPORTED THE ORDER OF A.O. HE FURTHER SUB MITTED THAT BEFORE A.O, ASSESSEE DID NOT FURNISH THE DETAILS CALLED FOR BY THE A.O NOR FILED THE DETAILS ABOUT THE TRUCK THEIR L.R. NUMBERS AND OTHER PROOF OF HAVING INCURRED THE EXPENDITURE. HE THEREFORE SUBMITTED THAT IN SUCH A SITUATION THE A.O WAS FULLY JUSTIFIED IN TREATING THE LIABILITY AS NON EX ISTENT. HE THUS SUPPORTED THE ORDER OF A.O. THE LD. A.R. ON THE OTHER HAND REITER ATED THE SUBMISSIONS MADE BEFORE A.O AND LD. CIT(A) AND FURTHER RELIED O N THE DECISION OF HONBLE GUJARAT HIGH COURT IN THE CASE OF CIT VS. B HOGILAL RAMJIBHAI ATARA TAX APPEAL NO. 588 OF 2013 ORDER DATED 04.02.2014. HE ALSO PLACED ON RECORD THE COPY OF THE AFORESAID DECISION. HE THUS SUPPORTED THE ORDER OF LD. CIT(A). ITA NO. 3168 /AHD/2008 . A.Y. 2005-0 6 6 7. WE HAVE HEARD THE RIVAL SUBMISSIONS AND PERUSED THE MATERIAL ON RECORD. THE ISSUE IN THE PRESENT CASE IS ABOUT MAKING ADDIT ION OF ON ACCOUNT OF NON EXISTING LIABILITY. WE FIND THAT LD. CIT(A) WHI LE DELETING THE ADDITION HAS NOTED THAT HE HAS GONE THROUGH THE COPIES OF TR UCK RENT PAYMENT AND IT MENTIONED THE NAME OF THE PERSONS, TRUCK NUMBERS, W EIGHT OF MATERIAL, AMOUNT PAID TO SUCH PERSONS AND THE COMPLETE DETAIL S. HE HAS ALSO GIVEN A FINDING THAT ON THE VERIFICATION OF THE LRS, HE FOU ND THEM IT TO BE DULY STAMPED AND ACKNOWLEDGED BY THE BUYERS OF THE MATER IAL TRANSPORTED BY THE ASSESSEE AND VOUCHERS WERE MAINTAINED IN RESPEC T OF PAYMENT TO RESPECTIVE TRUCK OWNERS. HE HAS FURTHER GIVEN A FIN DING THAT THE ADDITION COULD NOT HAVE BEEN MADE EITHER U/S. 68 OR SECTION 41(1) OF THE ACT AS THE PROVISIONS OF THOSE SECTIONS WERE NOT APPLICABLE TO THE FACTS OF THE CASE. BEFORE US, REVENUE COULD NOT CONTROVERT THE FINDING S OF LD. CIT(A). WE FURTHER FIND THAT HONBLE GUJARAT HIGH COURT IN THE CASE OF CIT VS. BHOGILAL RAMJIBHAI ATARA (SUPRA) HAS OBSERVED AS UN DER:- WE ARE IN AGREEMENT WITH THE VIEW OF THE TRIBUNAL SECTION 41(1) OF THE ACT AS DISCUSSED IN THE ABOVE THREE DECISIONS WOULD APPLY IN A CASE WHERE THERE HAS BEEN REMISSION OR CESSATION OF LIABILITY DURING THE YEAR UNDER CONSID ERATION SUBJECT TO THE CONDITIONS CONTAINED IN THE STATUTE BEING FULFILLED. ADDITIONA LLY, SUCH CESSATION OR REMISSION HAS TO BE DURING THE PREVIOUS YEAR RELEVANT TO THE ASSESSM ENT YEAR UNDER CONSIDERATION. IN THE PRESENT CASE, BOTH ELEMENTS ARE MISSING. THERE WAS NOTHING ON RECORD TO SUGGEST THERE WAS REMISSION OR CESSATION OF LIABILITY THAT TOO DU RING THE PREVIOUS YEAR RELEVANT TO THE ASSESSMENT YEAR 2007-08 WHICH WAS THE YEAR UNDER CO NSIDERATION. IT IS UNDOUBTEDLY A CURIOUS CASE. EVEN THE LIABILITY ITSELF SEEMS UNDER SERIOUS DOUBT. THE ASSESSING OFFICER UNDERTOOK THE EXERCISE TO VERIFY THE RECORDS OF THE SO CALLED CREDITORS. MANY OF THEM WERE NOT FOUND AT ALL IN THE GIVEN ADDRESS. SOME OF THEM STATED THAT THEY HAD NO DEALING WITH THE ASSESSEE. IN ONE OR TWO CASES, THE RESPONSE WAS THAT THEY HAD NO DEALING WITH THE ASSESSEE NOR DID THEY KNOW HIM. OF COURSE, THESE IN QUIRIES WERE MADE EX PARTE AND IN ITA NO. 3168 /AHD/2008 . A.Y. 2005-0 6 7 THAT VIEW OF THE MATTER, THE ASSESSEE WOULD BE ALLO WED TO CONTEST SUCH FINDINGS. NEVERTHELESS, EVEN IF SUCH FACTS WERE ESTABLISHED T HROUGH BI-PARTE INQUIRIES, THE LIABILITY AS IT STANDS PERHAPS HOLDS THAT THERE WAS NO CESSAT ION OR REMISSION OF LIABILITY AND THAT THEREFORE, THE AMOUNT IN QUESTION CANNOT BE ADDED B ACK AS A DEEMED INCOME UNDER SECTION 41(1) OF THE ACT. THIS IS ONE OF THE STRANG E CASES WHERE EVEN IF THE DEBT ITSELF IS FOUND TO BE NON-GENUINE FROM THE VERY INCEPTION, AT LEAST IN TERMS OF SECTION 41(1) OF THE ACT THERE IS NO CURE FOR IT. BE THAT AS IT MAY, INS OFAR AS THE ORDERS OF THE REVENUE AUTHORITIES ARE CONCERNED, THE TRIBUNAL NOT HAVING MADE ANY ERROR, THIS TAX APPEAL IS DISMISSED. 8. CONSIDERING THE FINDINGS OF LD. CIT(A) AND THE DECI SION OF HONBLE GUJARAT HIGH COURT CITED HEREINABOVE, WE FIND NO RE ASON TO INTERFERE WITH THE ORDER OF LD. CIT(A) AND THUS THE GROUND OF REVE NUE IS DISMISSED. 2 ND GROUND IS WITH RESPECT TO RESTRICTING THE ADDITION OF CARTING EXPENSES. 9. A.O NOTICED THAT ASSESSEE HAD DEBITED RS. 14,51,500 /- UNDER THE HEAD CARTING EXPENSES IN THE BOOKS OF AMAR ENTERPRISES. A.O ASKED THE ASSESSEE TO FURNISH THE NAMES AND ADDRESS OF THE RE CIPIENTS OF CARTING EXPENSES AND THEIR CONFIRMATION LETTERS. A.O NOTED THAT ASSESSEE DID NOT FILE THE CONFIRMATION LETTERS NOR PROVIDED THEIR AD DRESSES. HE THEREFORE CONSIDERED THE CARTING EXPENSES TO BE NON VERIFIABL E AND ACCORDINGLY DISALLOWED 25% OF EXPENDITURE AMOUNTING TO RS. 3,62 ,875/-. AGGRIEVED BY THE ORDER OF A.O., ASSESSEE CARRIED THE MATTER B EFORE LD. CIT(A) WHO RESTRICTING THE DISALLOWANCE TO RS. 1 LAC BY HOLDIN G AS UNDER:- BEFORE ME, THE ID. AR SUBMITTED THAT THE APPELLANT INCURRED CARTING EXPENSES IN M/S AMAR ENTERPRISE FOR RS. 14,51,500/- IN RESPECT OF UNLOAD ING OF COAL FROM THE TRUCKS AT THE SITE OF THE CUSTOMER NAMELY BRC. PAID TO UNSKILLED LABOURS AS SOON AS WORK OF UNLOADING IS ITA NO. 3168 /AHD/2008 . A.Y. 2005-0 6 8 FINISHED BY THEM AT SITE. ENTIRE EXPENSES WERE SUPP ORTED BY VOUCHERS. THE APPELLANT PAID UNLOADING MAJURI TO LABORS @ RS. 450/- PER TRUCK. I HAVE GONE THROUGH THE DETAILS. I FIND THAT THE CA RTING EXPENSES ARE IN RESPECT OF LOADING AN UNLOADING OF COAL TRANSPORTED BY THE APPELLANT A ND THE LABOR ENGAGED FOR THE PROCESS WOULD HAVE TO BE PAID IN CASH AND NAMES AND ADDRESS ES OR CONFIRMATIONS FROM THEM CANNOT BE EXPECTED TO BE FURNISHED BY THE APPELLANT . THIS EXPENDITURE IS ESSENTIAL FOR THE NORMAL BUSINESS ACTIVITY OF THE APPELLANT AND THE A O'S ACTION IN DISALLOWING 25% OF THE SAME IS NOT IN ORDER. HOWEVER, IT WOULD BE REASONAB LE IF A LUMP SUM DISALLOWANCE OF RS. 1 LAC IS MADE FOR POSSIBLE INFLATION OF THE CLAIM. THE APPELLANT GETS A RELIEF OF RS.2,62,785/- ON THIS ACCOUNT. 10. AGGRIEVED BY THE ORDER OF LD. CIT(A), REVENUE IS NOW IN APPEAL BEFORE US. 11. BEFORE US, LD. D.R. SUPPORTED THE ORDER OF A.O. ON THE OTHER HAND LD. A.R. REITERATED THE SUBMISSIONS MADE BEFORE A.O AND LD. CIT(A). 12. WE HAVE HEARD THE RIVAL SUBMISSIONS AND PERUSED THE MATERIAL ON RECORD. WE FIND THAT LD. CIT(A) WHILE GRANTING RELIEF HAS N OTED THE EXPENDITURE TO BE ESSENTIAL FOR THE NORMAL BUSINESS ACTIVITY OF TH E ASSESSEE AND THAT THE LABOUR ENGAGED IN THE PROCESS NEEDS TO BE PAID IN C ASH AND THEIR NAMES ADDRESS AND CONFIRMATIONS FOR THE ENTIRE EXPENDITUR E CANNOT BE EXPECTED FROM THE ASSESSEE. HE ACCORDINGLY RESTRICTED THE DI SALLOWANCE TO RS. 1 LAC AS AGAINST 3,62,785/- MADE BY THE A.O. BEFORE US, N O FALLACY HAS BEEN POINTED OUT IN THE FINDINGS OF LD. CIT(A). IN VIEW OF THESE FACTS, WE FIND NO REASON TO INTERFERE WITH THE ORDER OF LD. CIT(A) AND THUS THE GROUNDS OF REVENUE IS DISMISSED. ITA NO. 3168 /AHD/2008 . A.Y. 2005-0 6 9 3 RD GROUND IS WITH RESPECT TO DELETING THE ADDITION ON ACCOUNT OF BOGUS PURCHASES. 13. A.O NOTICED THAT ASSESSEE HAS CLAIMED TO HAVE MADE PURCHASES OF COAL FROM VARIOUS PARTIES. HE ISSUED NOTICE U/S. 133(6) OF THE ACT TO SOME OF THE PARTIES. THE NOTICE ISSUED TO M/S. KHWAJ TRADER S & GUPTA COAL INDIA LTD. WERE RETURNED UNSERVED BY THE POSTAL AUTHORITI ES. THE ASSESSEE COULD NOT FURNISH THEIR NEW POSTAL ADDRESSES NOR CONFIRMA TION LETTERS FROM THOSE TWO PARTIES. A.O ACCORDINGLY CONSIDERED THE AGGREGA TE PURCHASE OF RS. 2,39,958/- (PURCHASES OF RS. 1,32,701/- FROM KHWAJ TRADERS AND OF RS. 1,07,257/- FROM GUPTA COAL INDIA LTD.) AS BOGUS PUR CHASES AND DISALLOWED THE SAME. AGGRIEVED BY THE ORDER OF A.O., ASSESSEE CARRIED TH E MATTER BEFORE LD. CIT(A) WHO DELETED THE ADDITION B Y HOLDING AS UNDER:- BEFORE ME, THE ID. AR SUBMITTED THAT THE APPELLANT MADE PURCHASES FROM M/S KHWAJA TRADE FOR RS. 1,32,701/- AND FROM GUPTA COAL (I) LT D. FOR RS. 1,07,257/-. THE APPELLANT SUPPLIED COPY PURCHASE BILLS, DETAILS OF PAYMENT, C OPY OF ACCOUNT OF BOTH THESE PARTIES AND DETAILS OF SALES MADE AGAINST SUCH PURCHASES. P AYMENT TO BOTH THESE PARTIES WAS BY CHEQUE AND SALES AGAINST PURCHASE FROM THESE PARTIE S WERE NOT DISPUTED AND BOTH ACCOUNTS WERE SQUARED UP. I HAVE CONSIDERED THE SUBMISSIONS. IT IS SEEN THAT THE APPELLANT HAD FURNISHED COPY OF PURCHASE BILL AND DETAILS OF PAYMENTS MADE TO THE T WO PARTIES AND SALES HAVE ALSO BEEN MADE AGAINST THE SAID PURCHASES. MERELY, BECAUSE NO TICE U/S 133(6) OF THE ACT WAS NOT SERVED ON THESE TWO PARTIES WOULD NOT MAKE THE ENTI RE PURCHASES BOGUS. THERE IS NO EVIDENCE TO SUGGEST THAT THE PAYMENT MADE REVERTED BACK TO THE APPELLANT AND THEREFORE ADDITION ON THIS ACCOUNT IS DIRECTED TO BE DELETED. 14. AGGRIEVED BY THE ORDER OF LD. CIT(A), REVENUE IS N OW IN APPEAL BEFORE US. ITA NO. 3168 /AHD/2008 . A.Y. 2005-0 6 10 15. BEFORE US, LD. D.R. SUPPORTED THE ORDER OF A.O. ON THE OTHER HAND LD. A.R. REITERATED THE SUBMISSIONS MADE BEFORE A.O AND LD. CIT(A). 16. WE HAVE HEARD THE RIVAL SUBMISSIONS AND PERUSED THE MATERIAL ON RECORD. WE FIND THAT LD. CIT(A) WHILE DELETING THE ADDITION HAS NOTED THAT ASSESSEE HAD FURNISHED THE COPY OF PURCHASE BILLS, THE DETAILS OF PAYMENT MADE TO THOSE PARTIES AND SALES BEING MADE OUT OF T HE SAID PURCHASES. HE HAS ALSO NOTED THAT THERE IS NO EVIDENCE TO SUGGEST THAT THE PAYMENTS MADE WERE REVERTED BACK TO THE ASSESSEE. HE ACCORDINGLY DELETED THE ADDITION. BEFORE US, NO FALLACY HAS BEEN POINTED OUT IN THE O RDER OF LD. CIT(A). WE THEREFORE FIND NO REASON TO INTERFERE WITH THE ORDE R OF LD. CIT(A) AND THUS THE GROUNDS OF REVENUE IS DISMISSED. 4 TH GROUND IS WITH RESPECT TO DELETION MADE ON ACCOUNT OF DIFFERENCE IN THE BALANCES. 17. A.O NOTICED THAT ASSESSEE HAS CLAIMED TO HAVE MADE PAYMENT OF TRANSPORTATION CHARGES OF RS. 9,13,931/- TO AGRAWAL TRANSPORT CORPORATION. FROM THE COPY OF THE REPLY RECEIVED FROM AGRAWAL TR ANSPORT CORPORATION AND WHEN IT WAS COMPARED WITH THE INFORMATION FURNI SHED BY THE ASSESSEE, A.O NOTICED THAT ASSESSEE HAD DEBITED EXCESS TRANSP ORTATION CHARGES OF RS. 539. SIMILARLY ON THE BASIS OF REPLY RECEIVED FROM ATUL LTD. AND WHEN COMPARED WITH THE INFORMATION FURNISHED BY THE ASSE SSEE, A.O NOTICED THAT ASSESSEE HAD SHOWN NIL BALANCE IN THE ACCOUNT OF AT UL LTD. IN THE BOOKS OF NEW AMAR LIGNITE WHEREAS ATUL LTD. HAD SHOWN A SUM OF RS. 7,93,472/- AS PAYABLE TO ASSESSEE. IN THE ABSENCE OF RECONCILIATI ON, A.O MADE ADDITION OF ITA NO. 3168 /AHD/2008 . A.Y. 2005-0 6 11 RS. 7,93,472/- BY TREATING IT AS UNACCOUNTED DIFFER ENCE. AGGRIEVED BY THE ORDER OF A.O., ASSESSEE CARRIED THE MATTER BEFORE L D. CIT(A) WHO DELETED THE ADDITION BY HOLDING AS UNDER:- I HAVE CONSIDERED THE SUBMISSIONS. IT IS SEEN THAT ATUL LTD. IS A DEBTOR OF THE APPELLANT AND THE A.O HAS CONSIDERED ITS COPY OF ACCOUNT AS C ORRECT. AS STATED BY THE APPELLANT, THE DIFFERENCE AROSE BECAUSE OF PROBLEM WITH THE ACCOUN TS DEPARTMENT OF THE COMPANY. IN ANY CASE, THE SAID CONCERN IS C DEBTOR AND NOT A CREDIT OR AND THEREFORE, EVEN IF THERE IS A DIFFERENCE, IT CANNOT RESULT IN ADDITION TO THE INC OME OF THE APPELLANT MERELY BECAUSE THERE IS A DIFFERENCE BETWEEN THE ACCOUNTS OF THE T WO CONCERNS. IN THE CASE OF AGARWAL TRANSPORT, THE DIFFERENCE IS SO SMALL THAT IT SHOUL D NOT HAVE BEEN TAKEN INTO ACCOUNT AT ALL. THEREFORE, THE ADDITION MADE ON THIS ACCOUNT IS ALS O DIRECTED TO BE DELETED. 18. AGGRIEVED BY THE ORDER OF LD. CIT(A), REVENUE IS N OW IN APPEAL BEFORE US. 19. BEFORE US, LD. D.R. SUPPORTED THE ORDER OF A.O. ON THE OTHER HAND LD. A.R. REITERATED THE SUBMISSIONS MADE BEFORE A.O AND LD. CIT(A). 20. WE HAVE HEARD THE RIVAL SUBMISSIONS AND PERUSED THE MATERIAL ON RECORD. WE FIND THAT LD. CIT(A) WHILE DELETING THE ADDITION HAS NOTED THAT ATUL LTD. IS A DEBTOR AND NOT A CREDITORS IN THE BOOKS O F ASSESSEE AND THEREFORE NO ADDITION COULD BE MADE MERELY BECAUSE THERE WAS A DIFFERENCE BETWEEN THE ACCOUNT OF TWO CONCERNS. BEFORE US, REVENUE HAS NOT POINTED OUT ANY FALLACY IN THE ORDER OF LD CIT(A). IN VIEW OF THESE FACTS, WE FIND NO REASON TO INTERFERE WITH THE ORDER OF LD. CIT(A) AND THUS THE GROUNDS OF REVENUE IS DISMISSED. ITA NO. 3168 /AHD/2008 . A.Y. 2005-0 6 12 21. IN THE RESULT, THE APPEAL OF REVENUE IS DISMISSED. ORDER PRONOUNCED IN OPEN COURT ON 01 - 01 - 2016. SD/- SD/- (KUL BHARAT) (ANIL CHATURVEDI) JUDICIAL MEMBER ACCOUNTANT MEMBER AHMEDABAD: TRUE COPY RAJESH COPY OF THE ORDER FORWARDED TO: - 1. THE APPELLANT. 2. THE RESPONDENT. 3. THE CIT (APPEALS) 4. THE CIT CONCERNED. 5. THE DR., ITAT, AHMEDABAD. 6. GUARD FILE. BY ORDER DEPUTY/ASSTT.REGISTRAR ITAT,AHM EDABAD