M/s Fattu Dhinga Rice Mills, Kapurthala V. The Dy. Commissioner of Income Tax, Jalandhar

ITA 330/ASR/2016

• Counselvise Citation: [2017] 130 COUNSELVISE.COM (IT) 8685 (ITAT-AMRITSAR)
• Duration Of Justice: 9 month(s) 23 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 27-03-2017
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: SMC
• Next Hearing Date: 18-01-2017
• Assessment Year: 2001-2002
• Appeal Filed On: 03-06-2016
• Result in Favour of: Partly Allowed
• Court: TRIBUNAL
• Department Lawyers: BHAWANI SHANKAR
• Keywords: Rejection of books of accounts; Carry forward of business losses; Opportunity of being heard; Tax effect; Set aside
• Section: 32; 147; 131; 68; 246; 69; 145; 27; 148; 54; 37; 6; 56; 263; 63; 132; 12; 28; 144; 10; 90; 154; 2; 11; 15; 271(1)(b); 139; 143(3); 92; 13

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL AMRITSAR BENCH; AMRITSAR (CAMP AT JALANDH AR ) BEFORE SH. A.D.JAIN, JUDICIAL MEMBER AND SH. T.S. KAPOOR, ACCOUNTANT MEMBER I.T.A NO.330(ASR)/2016 ASSESSMENT YEAR: 2001-02 M/S. FATTU DHINGA RICE MILLS, V & PO FATTU DHINGA, DIST: KAPURTHALA. PAN:AAAFF-4122C VS. DY. CIT, RANGE, IV, JALANDHAR. (APPELLANT) (RESPONDENT) APPELLANT BY: SH. J.S.BHASIN (ADV.) RESPONDENT BY: SH. BHAWANI SHANKAR (DR.) DATE OF HEARING: 18.01.2017 DATE OF PRONOUNCEMENT: 27.03.20 17 ORDER PER T. S. KAPOOR (AM): THIS IS AN APPEAL FILED BY ASSESSEE AGAINST THE ORD ER OF LD. CIT(A), JALANDHAR, DATED 18.04.2016, FOR ASST. YEAR: 2001-0 2. 2. THE GROUNDS OF APPEAL HAS BEEN TAKEN BY ASSESSEE ARE REPRODUCED BELOW. I) THAT THE PRESENT APPELLATE PROCEEDINGS HAVING ORIGI NATED FROM THE DEPARTMENTAL APPEAL MADE BEFORE THE HON'BLE HIGH CO URT, WHEN THE FIRST TWO APPEALS WERE DECIDED IN ASSESSEE'S FAVOUR, THE SAME WERE COVERED BY THE CBDT CIRCULAR NO.21/2015 F NO.279/MISC DATED 10 TH DECEMBER 2015, THE TAX EFFECT BEING JUST RS.1,90,360/- INCLUSIVE O F INTEREST U/S 234. THE LD. CIT(A) WAS NOT JUSTIFIED IN REMAINING SILENT ON THI S ISSUE, EVEN WHEN IT WAS TAKEN UP IN THE REJOINDER FILED BY ASSESSEE. II) THAT ID. CIT(A) WAS NOT JUSTIFIED IN SUSTAINING THE TRADING ADDITION OF RS.20,00,000/- AS MADE BY ID. AO ON WHOLLY ERRONEOU S AND INSUFFICIENT ITA NO.33 0(ASR)/2016 ASST. YEARS: 2001-02 2 GROUNDS AND WITHOUT APPRECIATING THE ASSESSEE'S EXP LANATION SUPPORTED BY COGENT EVIDENCE, IN CORRECT PERSPECTIVE. III). THAT THE ID. CIT(A) OUGHT TO HAVE APPRECIA TED THAT WHEN SALES OF RICE MADE BY ASSESSEE, AGAINST THE PURCHASES DOUBTED BY THE AO, WERE NOT DISBELIEVED, THERE COULD BE NO CASE TO DISPUTE THE PURCHASES AS SUCH. IV) THAT THE ORDERS OF THE AUTHORITIES BELOW, TO THE EXTENT DISPUTED HEREIN, IS AGAINST LAW AND FACTS OF THE CASE. 3. THE BRIEF FACTS OF THE CASE AS NOTED IN THE ASSE SSMENT ORDER ARE THAT THE ASSESSEE FIRM WAS RUNNING A RICE SHELLER A ND HAD FILED ITS RETURN OF INCOME FOR THE YEAR UNDER CONSIDERATION DECLARIN G NIL INCOME AFTER SETTING OFF OF LOSS OF EARLIER YEARS. WHILE FILING RETURN OF INCOME, THE FIRM HAD CLAIMED CARRY FORWARD OF BUSINESS LOSSES OF EAR LIER YEARS TO THE EXTENT OF RS.18,64,940/-. THE ASSESSMENT IN THIS CASE WAS COMPLETED BY ASSESSING OFFICER U/S 143(3) ON 31.03.2011 AT AN AS SESSED INCOME OF RS.3,91,596/- WHICH WAS ARRIVED AT AFTER SETTING OF F OF THE ENTIRE BROUGHT FORWARD BUSINESS LOSSES. WHILE COMPLETING THE ASSES SMENT, THE ASSESSING OFFICER HAD MADE DISALLOWANCE OF RS.20 LACS ON ACCO UNT OF DISALLOWANCE OUT OF TRADING LOSS CLAIMED BY ASSESSEE ON THE PURC HASE AND SALE OF RICE. 4. AGGRIEVED WITH THE ORDER, THE ASSESSEE HAD FILED AN APPEAL BEFORE LD. CIT(A), WHO HAD DELETED THE ADDITION OF RS.20,0 0,000/-. 5. AGGRIEVED WITH THE ORDER OF LD. CIT(A), THE DEPA RTMENT PREFERRED APPEAL BEFORE THE ITAT AMRITSAR BENCH, AMRITSAR AND CHALLENGED THE ACTION OF THE LD. CIT(A) IN DELETING THE ADDITION O F RS,20,00,000/-. THE HONBLE ITAT VIDE ORDER DATED 06.01.2006 UPHELD THE VIEW OF THE LD. CIT(A), AND DISMISSED THE APPEAL FIELD BY THE DEPAR TMENT. ITA NO.33 0(ASR)/2016 ASST. YEARS: 2001-02 3 6. AGGRIEVED WITH THE ORDER OF HON,BLE ITAT, AMRITS AR BENCH, THE DEPARTMENT FILED APPEAL BEFORE THE HONBLE PUNJAB & HARYANA HIGH COURT VIDE IT ORDER IN ITA NO.402 OF 2006 DATED 16. 02.2011 ALLOWED THE APPEAL OF THE DEPARTMENT AND SET ASIDE THE ORDERS T O THE LD. CIT(A). THE HONBLE PUNJAB & HARYANA HIGH COURT RESTORED THE MA TTER BACK TO FILE OF LD. CIT(A) WITH DIRECTIONS TO DECIDE THE MATTER AFR ESH IN ACCORDANCE WITH LAW. THE HONBLE HIGH IN PARA 5 & 6 HAD OBSERVED AS UNDER: 5. THE CIT(A) AND THE TRIBUNAL HAD REVERSED THE SA ID FINDING WITHOUT REFERRING TO ANY MATERIAL RELATING TO THE IDENTITY OF THE AFORESAID SELLERS. THE CIT(A) AS WELL AS THE TRIBUNAL HAD NOTICED THAT THE PURCHASE AND SALES BILLS HAD BEEN PRODUCED BY THE ASSESSEE TO ESTABLIS H THE SAME, BUT A PERUSAL OF THE SAID ORDERS CLEARLY SHOWS THAT THERE IS NO DISCUSSIONS WITH REGARD TO THE SALES AND PURCHASE BILLS ALLEGED TO H AVE BEEN PRODUCED BY THE ASSESSEE. ACCORDINGLY, THE FINDING RECORDED BY THE CIT (A) AND AFFIRMED BY THE TRIBUNAL ARE VITIATED AND CANNOT BE SUSTAINE D. FINALLY, IN PARA 6, THE DIRECTIONS OF THE HIGH COU RT READ THUS: 6. IN VIEW OF THE ABOVE, THE PRESENT APPEAL IS ALLO WED AND HE ORDERS OF THE CIT(A) AND THE TRIBUNAL ARE SET ASIDE. THE MATTER IS REMITTED TO THE CIT(A) TO DECIDE THE MATTER AFRESH IN ACCORDANCE WITH LAW. IN VIEW OF THE ABOVE DIRECTIONS OF HONBLE PUNJAB & HARYANA HIGH COURT, THE ASSESSEE APPEARED BEFORE THE LD. CIT(A) AND FILED DETAILED SUBMISSIONS AS CONTAINED IN ITS LETTER DATED 08.08 .2011. THE ASSESSEE ALSO FILED CERTAIN PURCHASE BILLS & EXPRESSED ITS INABILITY TO FILE THE REMAINING BILLS IN VIEW OF LONG PERIOD OF TIME BETW EEN THE DATES OF TRANSACTION AND APPELLATE PROCEEDINGS. FOR THE SAKE OF COMPLETENESS THE DETAILED SUBMISSIONS OF ASSESSEE ARE REPRODUCED BEL OW. IN RE: I T APPEAL IN THE CASE OF M/S FATHU DHINGA RICE MILLS, KAPURTHALA FOR ASSESSMENT YEAR 2001-02. WRITTEN SUBMISSIONS OF ASSESSEE RESPECTFULLY SHEWETH: ITA NO.33 0(ASR)/2016 ASST. YEARS: 2001-02 4 A. THAT THE PRESENT APPELLATE PROCEEDINGS, AS YOUR HON OUR IS KINDLY AWARE, EMANATE FROM THE ORDER OF HON'BLE HIGH COURT DATED 15.02.2011 IN ITA NO.402 OF 2006, RESTORING THE MAT TER BACK TO CIT(A) FOR FRESH ADJUDICATION, WHILE REVERSING THE EARLIER ORDERS OF CIT(A) AND THAT OF TRI JUNAL, BY MAKING OBSERVATION S IN PARA 5 THUS: 5. THE CTT(A) AND THE TRIBUNAL HAD REVERSED TH E SAID FINDING WITHOUT REFERRING TO ANY MATERIAL RELATING TO THE I DENTITY OF THE AFORESAID SELLERS. THE CIT(A) AS WELL AS THE TRIBUNAL HAD NOT ICED THAT THE PURCHASES AND SALES BILLS HAD BEEN PRODUCED BY THE ASSESSEE TO ESTABLISH THE SAME, BUT A PERUSAL OF THE SAID ORDER S CLEARLY SHOWS THAT THERE IS NO DISCUSSION WITH REGARD TO THE SALES AND PURCHASES BILLS ALLEGED TO HAVE BEEN PRODUCED BY THE ASSESSEE. ACCO RDINGLY, THE FINDINGS RECORDED BY THE CIT(A) AND AFFIRMED BY THE TRIBUNAL ARE VITIATED AND CAN NOT BE SUSTAINED.' FINALLY, IN PARA 6, THE DIRECTIONS OF THE HIGH COUR T READ THUS: 6. IN VIEW OF THE ABOVE, THE PRESENT APPEAL IS A LLOWED OND'HE ORDERS OF THE CIT(A) AND THE TRIBUNAL ARE SET ASIDE. THE M ATTER IS REMITTED TO THE CIT(A) TO DECIDE THE MATTER AFRESH IN ACCORDANCE WITH LAW. B. NOW IN THE BACKDROP OF ABOVE OBSERVATIONS AND DIREC TIONS OF THE BENCH, THE ASSESSEE HUMBLY SEEKS TO SUBMIT AS FOLLO WS FOR FRESH ADJUDICATION OF THE MATTER IN ACCORDANCE WITH LAW: I.) FILING OF RETURN SHOWING NIL INCOME, WHEN IN SU RVEY CONDUCTED ON 19.10.2000, A SURRENDER OF RS.17 LACS HAD BEEN MADE , WAS THE CYNOSURE OF WHOLE CONTROVERSY, WHICH HEAVILY PERSUADED THE I D. AO TO INTER ALIA DISALLOW LOSS OFRS.20 LACS BY ALLEGING THE SAME TO HAVE BEEN PURCHASED TO SUIT ITS TAX MATTERS. BUT THE IRONY OF THE MATTER I S THAT DESPITE HAVING SAID AND DONE SO, THE INCOME STILL CAME TO BE ASSESSED A T A FIGURE OF RS.3,91,596/- , APPARENTLY FAR BELOW THE OFFER MADE IN SURRENDER. T HERE IS THUS, AN OBVIOUS CONTRADICTION IN THE FINDING AND W ORKING OF THE AO WHICH, IT IS URGED, BE NOT KINDLY LOST SIGHT OF WHILE RE- DECIDING THE MATTER. THIS ALSO TAKES AWAY THE CHARGE OF ANY MALAFIDES ON ASSE SSEES PART AS ATTRIBUTED BY THE ID. AO. II) WITH ABOVE HINDSIGHT IN MIND, THE ID AO FOCUSED ON TRADING IN CEREALS, WITH TRADING IN RICE, CATCHING HIS MARVEL EYE IN PA RTICULAR. BASED ON DATA CULLED OUT FROM THE INFORMATION PROVIDED BY ASSESSE E, HE FIRSTLY TOOK NOTE OF THE ASSESSEES CLAIM, ON PAGE 4 OF HIS ORDER, TH AT IN TRADING OF RICE ALONE, ASSESSEE SUSTAINED A LOSS OF RS. 22,51,432/-. THEN HE CONTRIVED OF HIS OWN, ON PAGE 5 OF HIS ORDER, WITH FACTS AND FIGURES NOT WELL NOTICED, TO INFER THAT EVEN BEFORE THE START OF NEW PRODUCTION UPTO 1 5.10.2000, THE ASSESSEE HAD SUFFERED LOSS OF RS.23,42,684/-, WHICH BELIED A SSESSEES CONTENTION THAT THE BETTER QUALITY RICE WAS PURCHASED TO MIX I T WITH POOR QUALITY SELF PRODUCED RICE FROM INFERIOR QUALITY PADDY. SINCE TH IS FIGURE OF RS.23.42 LACS WAS FOUND TO BE IN THE PROXIMITY OF LOSS OF RS.22.5 1 LACS SHOWN BY ASSESSEE, IT APPEARED TO BE A SOUND REASONING TO DI SENTITLE THE ASSESSEE OF THE ALLEGED MANIPULATED LOSS OF RS.20 LACS. ITA NO.33 0(ASR)/2016 ASST. YEARS: 2001-02 5 III) WHILE COMING TO ABOVE CONCLUSIONS, THE ID. AO TOOK EXCEPTION TO NON PRODUCTION OF PURCHASE BILLS OF RICE, BESIDES NOTIN G THAT COMPLETE IDENTITY OF THE PARTIES WAS ALSO WITHHELD. THE ASSESSEES CONTENTIO N THAT PURCHASE BILLS WERE IMPOUNDED BY THE D. C. KAPURTHALA, WAS IGNORED, WHE N NOT SUPPORTED BY ANY EVIDENCE. IV) NOW FIRSTLY DEALING WITH THE CORE ISSUE OF PU RCHASE BILLS, IT IS REITERATED THAT THE SAME WERE NOT AVAILABLE WITH THE ASSESSEE AT THE TIME OF FRAMING OF ASSESSEE. DURING THE RELEVANT PERIOD, RECORDS OF A FEW RICE SHELTERS WERE SUDDENLY IMPOUNDED BY THE DISTRICT AUTHORITIES, FOL LOWING COMPLAINTS OF EXCESSIVE SALE OF LEVY RICE TO GOVERNMENT AGENCIES, WHEN THE QUALITY OF PADDY HAD SUFFERED A SERIOUS SET BACK AFTER A HEAVY DOWN POUR IN THE REGION. HIGH MOISTURE IN PADDY, WAS A MATTER OF SERIOUS CONCERN, AFFECTING PRODUCTION OF RICE, WHICH WAS ADDRESSED BY VARIOUS HIGH OFFICIALS OF THE FCI AND THE DISTRICT AUTHORITIES. BEING AN IMPORTANT ISSUE, IT GOT PROMI NENT COVERAGE BY THE ELECTRONIC AND PRINT MEDIA. QUITE A FEW PRESS CLIPP INGS, OF THE RELEVANT PERIOD REPORTING THE ISSUE, WITH PHOTOGRAPHS OF HIGH OFFIC IALS OF FCI AND OTHERS, VISITING THE MANDIS AND THEIR REDRESSING ANNOUNCEME NTS, ARE ENCLOSED AT PAGE 11-14 FOR KIND SELF PERUSAL. THE ASSESSEE 'S RECORD S IMPOUNDED BY THE DISTT AUTHORITIES, WERE LATER RELEASED BY THE SDM KAPURTH ALA, VIDE HIS OFFICE ORDERS DATED 16.09.2004. A COPY OF THIS ORDER IS APPENDED AT PG. 15, WHICH SUBSTANTIATES THE REASON ORIGINALLY CITED BEFORE TH E AO, FOR NON PRODUCTION OF PURCHASE BILLS, BUT SUMMARILY REJECTED BY HIM. V) THE PURCHASE BILLS WHEN BECAME HANDY AFTER THE ASSESSMENT, THE SAME WERE DULY PRODUCED BEFORE THE ID. CIT(A), ALONGSIDE COMPLETE DETAILS OF RICE PURCHASED FROM ALL SUCH PARTIES AND SALE THEREOF TO VARIOUS OTHER PARTIES. THIS FACT STANDS NARRATED IN THE APPELLATE ORDER, FIRSTL Y IN ASSESSEE SUBMISSIONS NOTED IN OPENING PARA ON PAGE 3 AND AGAIN ON PAGE 4. WHEREIN THE AO WAS ASKED TO GO THROUGH THE PURCHASE BILLS PRODUCED DUR ING APPELLATE PROCEEDINGS. BUT, THE ID. AO, AS NOTED ON PAGE 4 OF CIT(A) S ORDER, WITH EFFORTLESS EASE, PREFERRED TO RELY UPON HIS FINDINGS AS GIVEN IN ASS ESSMENT ORDER, WITH THE PLEA THAT COMMUNICATION SENT THROUGH POST ON ONE PARTY R EMAINED UN- SERVED, BEING NOT AVAILABLE AT THE GIVEN ADDRESS. HOWEVER, THE ID. CIT(A), FULLY CONVINCED, NOT ONLY WITH PURCHASE BILLS BUT ALSO WI TH THE CORRESPONDING SALES MADE, WHICH REMAINED UNIMPEACHED BY AO, AND PAYMENT S BY MADE BANKING CHANNELS, ALLOWED THE ASSESSEE'S APPEAL. HE ALSO DI SCUSSED THE FACTUM OF AVAILABILITY OF PURCHASE BILLS, ALONG SIDE OTHER FA CTS AND FIGURES OF THE CASE, IN HIS FINDINGS GIVEN ON PAGE 5 OF THE APPELLATE ORDER . VI) THE ABOVE SEQUENCE OF EVENTS, THUS AMPLY DEMO NSTRATES THE FACT OF ACTUAL PURCHASES OF RICE MADE BY ASSESSEE, BACKED BY PROPE R PURCHASE BILLS, WHICH THOUGH NOT PRODUCED BEFORE THE AO FOR VALID REASONS , WERE DULY PRODUCED BEFORE THE CIT(A) AND WERE EVEN OFFERED FOR VERIFIC ATION BEFORE THE AO, THROUGH THE OFFICE OF C1T(A), WHICH OFFER, THE ID. AO CHOSE TO DECLINE. VII) THE FIRST APPEAL HAVING BEEN ALLOWED, THE SEC OND APPEAL FILED BY THE REVENUE ALSO CAME TO BE DISMISSED BY THE TRIBUNAL V IDE ITS ORDER IN 1TA NO.365(ASR)/2005 DATED 06.01.2006. ITA NO.33 0(ASR)/2016 ASST. YEARS: 2001-02 6 VIII) HAVING SUCCEED IN TWO APPEALS, AS PER THE NOR MAL HUMAN BEHAVIOR, THE ASSESSEE SAFELY ASSUMED, THAT THE MATTER HAD ATTAIN ED FINALITY. HENCE, HE FELL OFF THE VIGOUR TO ENSURE ALL THE RECORDS TO BE KEPT IN TACT , BEING CLUELESS OF ANY FUTURE BATTLE ON THE ISSUE. THE PUR CHASE BILLS AND OTHER RELEVANT DETAILS, AS WERE PROVIDED TO ITS THEN COUN SEL SHRI RAKESH SHARMA, TO PLEAD HIS CASES IN TWO APPEALS, REMAINED TO BE B ROUGHT BACK FROM HIS OFFICE. UNFORTUNATELY, SHRI. RAKESH SHARMA, SUDDENL Y DIED SOMETIME IN LAST YEAR. BUT TILL SUCH TIME, THE ASSESSEE CAME TO KNOW OF THE REVENUES APPEAL FIXED FOR HEARING BEFORE THE HIGH COURT THIS YEAR IN FEBRUARY, 2011, IT NEVER OCCURRED TO HIM TO BRING BACK ALL THE RELE VANT RECORDS FROM HIS COUNSEL LATE MR. SHARMA. BY THE TIME THE NECESSITY TO HAVE ACCESS TO SUCH RECORD AROSE, IT WAS TOO LATE, AS NOTHING OF THE SO RT COULD BE LOCATED FROM THE OFFICE OF THE DECEASED COUNSEL. THUS, THE ASSES SEE IS ONCE AGAIN CAUGHT WITH THE SAME SITUATION OF DOING SOMETHING, THE PER FORMANCE OF WHICH IS EXCEEDINGLY DIFFICULT. WITH THE EFFLUX OF TIME, OF WELL OVER A DECADE, THE CONCERNED SUPPLIERS ARE ALSO OFF THEIR DOORS. EITHE R WAY, UNDER SUCH CIRCUMSTANCES, IT WOULD BE EXPECTING THE ASSESSEE T O PERFORM SOMETHING IMPOSSIBLE. THUS, THE DOCTRINE OF IMPOSSIBILITY OFP ERFORMANCE APPLIES IN ALL FOURS TO THE FACTS OF THIS CASE. IT IS WELL SETTLED THAT THE LAW CANNOT COMPEL A MAN TO DO WHAT HE CANNOT POSSIBLY PERFORM, AND TH US THE OBLIGATION GETS DISCHARGED DUE TO IMPOSSIBILITY OF PERFORMANCE. WHI LE RELYING UPON THE APEX COURT DECISION IN KRISHNASWAMY S PD & ANR V UO I (2006) 281 ITR 305(SC), A RECENT DECISION OF ITAT MUMBAI BENCH IN (2011) 53 DTR (TRIB) 379 IS ALSO GAINFULLY EMPLOYED TO AVAIL OF THE SAID LEGAL PROPOSITION. C. NOW IN THE BACKDROP OF ABOVE PECULIAR CIRCUMSTANCES , WHEN THE ORIGINAL PURCHASE BILLS COULD NOT BE PRODUCED BEFORE THE AO, WHICH ASPECT ONLY APPEARS TO HAVE MOVED THE HON 'BLE HIGH COURT NOT T O ENDORSE THE TWO APPELLATE ORDERS, THE PRESENT DAY POSITION, CAUSED BY UNTIMELY DEATH OF THE ASSESSEES THEN COUNSEL, IS AGAIN NO BETTER, AND TH EREFORE, THE ASSESSEE IS CONSTRAINED TO ADVANCE ITS CASE, IN ENSUING PARAS, BY RELYING MORE ON SURROUNDING FACTS AND CIRCUMSTANCES, WITH WHATEVER LITTLE EVIDENCE IT COULD GATHER FROM THE SALVAGE HERE AND THERE, SO AS TO HA VE A FAIR OUTCOME OF THE CONTROVERSY, AS PER LAW, WHICH WOULD BE CONSISTENT WITH THE DIRECTIONS OF THE HIGH COURT ALSO THE LD. CIT(A) AFTER CONSIDERING THE SUBMISSIONS OF ASSESSEE ALONGWITH REMAND REPORT OF ASSESSING OFFICER UPHELD THE ADDIT ION OF RS.20,00,000/- BY OBSERVING AS UNDER: 4.4 I HAVE CONSIDERED THE OBSERVATIONS OF THE ASSESSING OFFICER AS MADE BY HIM/HER IN THE ASSESSMENT ORDER AS WELL AS THE REMAND REPORT. I HAVE ALSO CONSIDERED THE WRITTEN SUBMISSIONS FILED BY THE ASSESSEE DURING SET ASIDE PROCEEDINGS VIDE LETTER DATED 08.08.2011 AS WELL AS HIS COUNTER COMMENTS ON THE REPORT OF THE ASSESSING OFFICER. I HAVE FURTHER CONSIDERED OTHER MATERIAL BROUGHT BY THE ASSESSEE ON RECORD IN CLUDING PURCHASE AND SALE BILLS. ON CAREFUL CONSIDERATION OF THE RIVAL C ONTENTIONS AS WELL AS THE ITA NO.33 0(ASR)/2016 ASST. YEARS: 2001-02 7 MATERIAL PLACED ON RECORD, IT HAS BEEN NOTICED THAT THE ASSESSEE HAS PRODUCED FOLLOWING BILLS DURING SET ASIDE APPELLATE PROCEEDINGS TO PROVE ITS CONTENTION THAT THE PURCHASES HAVE NOT BEEN MANIPUL ATED AND ARE GENUINE:- BILL NO. & DATE NAME OF ISSUING PARTY QUANTITY STATEC TO BE SOLD IN QUINTALS NAME OF PARTY TO WHOM BILL HAS BEEN ISSUED RATE PER QUINTAL AMOUNT OF BILL REMARKS 369/11.03.1999 M/S OBERAI ENTERPRISES, AMRITSAR 175 M/S GOYAL AGRO INDUSTRIES RS.450/ - RS.78,750/ - BILL RELATES TO F.Y. 1998 -99 AND IS IN THE NAME OF THIRD PARTY AND NOT 370/11.03.1999 M/S OBERAI ENTERPRISES, AMRITSAR 175 M/S GOYAL AGRO INDUSTRIES RS.450/ - RS.78,750/ - BILL RELATES TO F.Y. 1998 -99 AND IS IN THE NAME OF THIRD PARTY AND NOT 371/11.03.1999 M/S OBERAI ENTERPRI SES, AMRITSAR 175 M/S GOYAL AGRO INDUSTRIES RS.450/ - RS.78,750/ - BILL RELATES TO F.Y. 1998 -99 AND IS IN THE NAME OF THIRD PARTY AND NOT ASSESSEE 372/12.03.1999 M/S OBERAI ENTERPRISES, AMRITSAR 175 M/S GOYAL AGRO INDUSTRIES RS.450/ - RS.78,750/ - BILL RELATE S TO F.Y. 1998 -99 AND IS IN THE NAME OF THIRD PARTY AND NOT ASSESSEE 373/15.03.1999 M/S OBERAI ENTERPRISES, AMRITSAR 150 M/S GOYAL AGRO INDUSTRIES RS.450/ - RS.67,550/ - BILL RELATES TO F.Y. 1998 -99 AND IS IN THE NAME OF THIRD PARTY AND NOT ASSESSEE 374/15.03.1999 M/S OBERAI ENTERPRISES, AMRITSAR 150 M/S GOYAL AGRO INDUSTRIES RS.450/- RS.67,550/ - BILL RELATES TO F.Y. 1998 -99 AND IS IN THE NAME OF THIRD TOTAL RS.450000/ - 2185/01.09.2000 M/S GAURI SHANKAR RICE & GENERAL MIL LS, FATTU DHINGA 159.80 ASSESSEE RS.830/ - RS. 1,32,634/ - 2186/01.09.2000 -DO- 140.00 ASSESSEE RS.830/ - RS. 1,16,200/ - - 2187/01.09.2000 -DO- 139.90 ASSESSEE RS.830/ - RS.1,16,117/ - - 2188/02.09.2000 -DO- 159.60 ASSESSEE RS.830/ - RS. 1,32,468/ - - 2189/02.09.2000 -DO- 159.90 ASSESSEE RS.830/ - RS. 1,32,717/ - - 2190/02.09.2000 -DO- 140.00 ASSESSEE RS.840/ - RS. 1,17,600/ - - 830/21.08.2000 M/SNAMDHARI RICE & GENERAL MILLS, FATTU DHINGA 150.00 ASSESSEE RS.800/ - RS. 1,20,000/ - 831/21.08.2000 M/S NAMDHARI RI CE & GENERAL MILLS, FATTU DHINGA 150.00 ASSESSEE RS.800/ - RS. 1,20,000/ - ITA NO.33 0(ASR)/2016 ASST. YEARS: 2001-02 8 832/22.08.2000 M/S NAMDHARI RICE & GENERAL MILLS, FATTU DHINGA 150.00 ASSESSEE RS.830/ - RS. 1,24,500/ - 833/22.08.2000 M/S NAMDHARI RICE & GENERAL MILLS, FATTU DHINGA 150.00 ASSESS EE RS.830/ - RS. 1,24,500/ - 19/21.06.2000 M/S DOABA TRADING CO., FATTU DHINGA 119.90 ASSESSEE RS.893/ - RS. 107070.70 29/07.02.2001 M/S G.J. AGRO INDUSTRIES 499.50 ASSESSEE RS.945/ - RS.472027.50 1359.40 QTLS. TOTAL RS.1815834.2 0 HOWEVER, FROM THE ABOVE DETAILS, IT CAN BE SEEN THA T THE ASSESSEE HAS PRODUCED ONLY 12 BILLS FROM FOUR PARTIES VIDE WHICH A PURCHASE OF 1359.40 QTLS. OF RICE VALUING RS. 18,15,834.20 HAS BEEN MAD E AS AGAINST TOTAL PURCHASES MADE DURING THE YEAR AT 45827.71 QUINTALS VALUING RS.4,15,10,031/-. IT MEANS, BILLS IN RESPECT OF PUR CHASES OF 4.37% HAVE ONLY BEEN PRODUCED WHICH IS NOT SUFFICIENT TO CONCL UDE THAT THE ASSESSEE HAS SHOWN CORRECT TRADING RESULTS AND HAS NOT MANIP ULATED THE PURCHASES AND SALES. ALL THE BILLS IN RESPECT OF PURCHASES HA VE NOT BEEN PRODUCED FOR VERIFICATION EVEN DURING APPELLATE PROCEEDINGS FOR THE REASONS BEST KNOWN TO THE ASSESSEE. I AM, THEREFORE, OF THE OPINION TH AT MAJORITY OF THE PURCHASES IN RESPECT OF RICE AND PADDY MADE BY THE ASSESSEE ARE NOT VERIFIABLE AS THE ASSESSEE FAILED TO PRODUCE DOCUME NTARY EVIDENCE IN THE FORM OF PURCHASES BILLS TO PROVE THE GENUINENESS OF PURCHASES. IF IN THE OPINION OF THE ASSESSEE THAT THE PARTIES FROM WHOM PURCHASES OF RICE AND PADDY HAVE BEEN MADE ARE GENUINE, T:P ASSESSEE COU LD HAVE EASILY OBTAINED HIS COPY OF ACCOUNT IN THEIR BOOKS OF ACCO UNT AS WELL AS DUPLICATE COPIES OF BILLS FROM THOSE PARTIES TO PROVE ITS CON TENTION THAT THE PURCHASES ARE VERIFIABLE AND ARE GENUINE. HOWEVER, THE ASSESS EE HAS ABSOLUTELY FAILED IN THIS REGARD EVEN DURING FRESH APPELLATE P ROCEEDINGS. UNDER SUCH CIRCUMSTANCES, THE TRADING RESULTS DECLARED BY THE ASSESSEE CANNOT BE TREATED AS TRUE AND CORRECT AND WERE LIABLE TO BE R EJECTED. I AM ALSO OF THE CONSIDERED OPINION THAT THE TRADING RESULTS HAVE CO RRECTLY BEEN REJECTED BY THE ASSESSING OFFICER. I AM FURTHER OF THE OPINION THAT THE ADDITION MADE BY THE ASSESSING OFFICER AT RS.20,00,000/- ON ACCOUNT OF DISALLOWANCE OUT OF TRADING LOSS CLAIMED BY THE ASSESSEE IS ALSO VERY R EASONABLE AND CANNOT BE SAID TO BE EXCESSIVE LOOKING TO OVERALL FACTS AN D CIRCUMSTANCES OF THE CASE. IN VIEW OF THESE FACTS AND IN THE CIRCUMSTANC ES OF THE CASE, THE ACTION OF THE ASSESSING OFFICER IN MAKING ADDITION OF RS.2 0,00,000/- IN THIS CASE CANNOT BE SAID TO BE UNJUSTIFIED. THE ADDITION OF R S.20,00,000/- MADE BY THE ASSESSING OFFICER IN THIS CASE ON ACCOUNT OF DI SALLOWANCE OUT TRADING LOSS CLAIM IS, THEREFORE, UPHELD. IN THE RESULT, TH E SET ASIDE ISSUE IS DECIDED IN FAVOUR OF REVENUE AND THE APPEAL OF THE ASSESSEE ON THE ISSUE UNDER REFERENCE IS REJECTED. 7. AGGRIEVED THE ASSESSEE IS IN APPEAL BEFORE US. 8. AT THE OUTSET, THE LD. AR SUBMITTED THAT IN SECO ND ROUND, THE WHOLE MATTER WAS ARGUED AFRESH, BY FURNISHING ALL P OSSIBLE DETAILS/BILLS. ITA NO.33 0(ASR)/2016 ASST. YEARS: 2001-02 9 HOWEVER, THE ORIGINAL BILLS AND OTHER RECORDS, AS W ERE PRODUCED BEFORE THE LD. CIT(A) IN FIRST ROUND, AFTER THEIR RELEASE BY SDM KAPURTHALA, WHICH WERE ACCEPTED BY CIT(A), WERE LEFT WITH THE T HEN COUNSEL MR. RAKESH SHARMA, AS THE DEPARTMENT HAD PREFERRED SECO ND APPEAL. UNFORTUNATELY, MR. SHARMA DIED OF HEART ATTACK SOME TIME IN MID 2000 AND AS SUCH, THE SAID DOCUMENTS COULD NOT BE RETRIE VED, ALSO BECAUSE THE ASSESSEE WAS UNAWARE OF THE DEPARTMENTS APPEAL FIL ED BEFORE THE HIGH COURT, WHICH CAME UP FOR HEARING AFTER FIVE YEARS, IN FEB.2011. IT WAS SUBMITTED THAT STILL, DETAILED SUBMISSIONS WERE FIL ED BEFORE THE LD. CIT(A) TOGETHER WITH SDM KAPURTHALA LETTER DATED 16.09.200 4 AND COPIES OF FEW BILLS OF RICE PURCHASE/SALE, AND COPIES OF PURCHASE /SALE ACCOUNTS. IT WAS SUBMITTED THAT IN RESPECT OF MAJOR SUPPLIER M/S OBE RIO ENTERPRISES, AMRITSAR, SINCE OWN PURCHASE BILLS WERE NOT AVAILAB LE, A FEW BILLS WITH TRANSPORT GRS OF ANOTHER RICE SHELLERS OF THE SAME AREA, WHO HAD PURCHASED RICE FROM THE SAID PARTY DURING THE PERIO D, WERE FILED TO ESTABLISH THE IDENTITY OF THE SAID SUPPLIER. THE LD . AR ARGUED THAT PURCHASES WERE MADE THROUGH BANKING CHANNELS, AND S ALES WERE NOT DISPUTED, THEREFORE, THERE IS NO QUESTION OF DOUBTI NG THE GENUINENESS OF PURCHASES. IT WAS SUBMITTED THAT LD. CIT(A) REJECTE D THE ASSESSEES CONTENTION ON THE PLEA THAT PURCHASE BILLS OF ONLY 4.37% OF PURCHASES WERE PRODUCED WHICH WERE INSUFFICIENT TO ACCEPT THE TRADING RESULTS AS CORRECT. IT WAS SUBMITTED THAT THE REMAND REPORT SU BMITTED BY ASSESSING OFFICER WAS NOTHING BUT A REPEAT OF ASSESSMENT ORDE R AND NONE OF THE CONTENTIONS FILED BY ASSESSEE BEFORE LD. CIT(A) VID E LETTER DATED ITA NO.33 0(ASR)/2016 ASST. YEARS: 2001-02 10 08.08.2011 WERE REBUTTED OR DEALT WITH. THEREFORE, LD. CIT(A)S ORDER PASSED ON THE BASIS OF SUCH REPORT WAS NOT JUSTIFIE D. THE LD. AR SUBMITTED THAT REASON FOR NON PRODUCTI ON OF PURCHASE BILLS BEFORE THE AO WAS THAT THE SAME WERE IMPOUNDE D BY DC KAPURTHALA, AS SUBSTANTIATED BY DC KAPURTHALAS LET TER DATED 14.09.2014 AND THEREAFTER, IT WERE PRODUCED BEFORE LD. CIT(A) WHO HAD SENT IT TO AO, BUT THE LATTER DID NOT VERIFY THE SA ME AND IN THE SECOND ROUND, THESE BILLS COULD NOT BE PRODUCED, WHICH WER E LEFT WITH EX- COUNSEL, WHO REPRESENTED BEFORE CIT(A), AND ITAT, A ND COULD NOT BE RETRIEVED WHEN HE SUDDENLY DIED OF HEART ATTACK IN MID 2000 WHEREAS THE APPEAL BEFORE HIGH COURT WAS HEARD IN FE.2011. IT W AS SUBMITTED THAT HUGE TIME GAP LEAD TO FAILURE TO PRODUCE ALL BILLS IN THE SECOND ROUND, BUT IT WAS DEVOID OF ANY MALAFIDE. THE LD. AR SUBMITTED THAT ASSESSEE HAD GIVEN A MOST PLAUSIBLE EXPLANATION, SUPPORTED BY PR ESS CUTTINGS THAT THE CURRENT PADDY CROP HAD BEEN DAMAGED BY HEAVY RAINS AND ASSESSEE HAD TO PURCHASE SOME FINE PADDY AT HIGHER COSTS, BUT DU E TO SUDDEN RELEASE OF PADDY BY EXPORTERS IN MARKET, THE RATES SLASHED DOWN, RESULTING INTO LOSS. STILL TO PROVE THE GENUINENESS OF THE SUPPLIE RS, QUITE A FEW PURCHASE BILLS OF OBEROI ENTERPRISES, AMRITSAR, OF ADJOINING RICE SHELLER WERE PRODUCED, BESIDES A FEW BILLS OF ASSESSEE S OWN PU RCHASES. BUT LD. CIT(A) REJECTED THE SAME, BEING 3 RD PARTY BILLS. IT WAS SUBMITTED THAT LD. CIT(A) FAILED TO UNDERSTAND THAT THE SAID BILLS WER E PRODUCED, WHEN THE ASSESSEE WAS NOT POSSESSED ITS OWN BILLS, TO ESTABL ISH THE IDENTITY OF THE SAID SUPPLER, IN LINE WITH THE OBSERVATION OF THE H ONBLE HIGH COURT ITA NO.33 0(ASR)/2016 ASST. YEARS: 2001-02 11 ABOUT THE IDENTITY OF THE SUPPLER. IT WAS FURTHER S UBMITTED THAT THE PURCHASES WERE MADE THROUGH BANKING CHANNELS AND SA LES WERE NOT DOUBTED AND THEREFORE, IT IS WRONG ON THE PART OF L D. CIT(A) TO REJECT THE PURCHASES WITHOUT REJECTING SALES AND WITHOUT FINDI NG ANY DISCREPANCY IN OPENING AND CLOSING STOCK. THE LD. AR SUBMITTED THA T WITHOUT PURCHASES, SALES COULD NOT HAVE BEEN BOOKED IN ACCO UNTS. AT THE MOST THE LD. CIT(A) SHOULD HAVE HELD THE PURCHASES AS U NVOUCHED AND SHOULD HAVE REJECTED THE BOOKS OF ACCOUNTS AND SHOULD HAVE APPLIED G.P/NP RATE. THE LD. AR FURTHER SUBMITTED THAT HUGE TIME L AG INVOLVED IN THIS CASE, MADE IT IMPOSSIBLE TO GATHER AND PRODUCE ALL THE BILLS BECAUSE OF REASONS BEYOND ITS CONTROL. HENCE, DOCTRINE OF IMP OSSIBILITY OF PERFORMANCE APPLIED. IT WAS SUBMITTED THAT LAW CANN OT COMPEL A MAN TO DO WHAT HE CANNOT POSSIBILITY PERFORM AND THUS OBLI GATION GETS DISCHARGED DUE TO IMPOSSIBILITY OF PERFORMANCE AND RELIANCE IN THIS RESPECT WAS PLACED ON A DECISION OF HONBLE HIGH AP EX COURT IN THE CASE OF KRISHNASWAMY S PD & ANOR. VS. UOI (2006) 281 ITR 305(SC), AND ITAT MUMBAI BENCH IN (2011) 53 DTR (TRIB) 379. 9. WITHOUT PREJUDICE THE LD. AR ARGUING ON GROUND NO.1 SUBMITTED THAT CBDT CIRCULAR NO.21/2015 DATED 10 TH DECEMBER, 2015, DIRECTS THAT DEPARTMENT SHALL NOT PURSUE ITS APPEALS BEFORE THE ITAT WHERE THE TAX EFFECT IS LESS THAN RS.10 LACS AND BEFORE THE HIGH COURT, IF THE TAX EFFECT IS BELOW RS.20 LACS AND THEREFORE, IT WAS SUBMITTED TH AT SINCE PRESENT APPEAL PROCEEDINGS ARE OFFSHOOT OF THE REVENUES AP PEAL BEFORE THE ITAT ITA NO.33 0(ASR)/2016 ASST. YEARS: 2001-02 12 AND THE HIGH COURT, AS THE ASSESSEE HAD SUCCEEDED I N FIRST APPEAL IN ORIGINAL ROUND, THE SAME DESERVES TO BE DISMISSED A S NOT MAINTAINABLE IN VIEW OF THE ABOVE CIRCULAR OF CBDT. THEREFORE, IT W AS SUBMITTED THAT APPEAL OF THE ASSESSEE MAY BE ALLOWED ON THIS GROUN D ITSELF. 10. THE LD. DR, ON THE OTHER HAND, HEAVILY PLACED H IS RELIANCE ON THE ORDER OF LD. CIT(A). 11. WE HAVE HEARD THE RIVAL PARTIES AND HAVE GONE T HROUGH THE MATERIAL PLACED ON RECORD. AS REGARDS THE FIRST GRO UND OF APPEAL THAT SINCE THE PRESENT APPEAL WAS OFFSHOOT OF THE REVENU ES APPEAL WHICH WAS DISMISSED BY LD. CIT(A) AND THEREFORE, IS COVERED B Y CBDT CIRCULAR NO.21/2015 DATED 10 TH DEC. 2015 IS NOT CORRECT AS WE ARE CONSIDERING THE PRESENT APPEAL ONLY AND THE PRESENT APPEAL HAS BEEN FILED BY ASSESSEE AND NOT BY THE DEPARTMENT, THEREFORE, CIRC ULAR NO.21/2015 IS NOT APPLICABLE AND THEREFORE, GROUND NO.1 OF THE AP PEAL IS DISMISSED. NOW COMING TO GROUND NO.2 & 3 WHICH ARE ON MERITS OF THE CASE, WE FIND THAT ASSESSEE HAD FILED DETAILED SUBMISSION S TO LD. CIT(A) VIDE LETTER DATED 08.08.2011 AND WHEREIN IT HAD STATED T HAT THE PURCHASE BILLS CANNOT BE SUBMITTED BECAUSE OF LONG TIME GAP. IT WA S ALSO SUBMITTED IN THE SAID SUBMISSIONS THAT IN THE ORIGINAL ROUND, TH E SAME WERE PRODUCED BEFORE LD. CIT(A) AND WHICH LD. CIT(A) HAD NOTED IN HIS ORDER. THE LD. CIT(A) REMITTED THE WRITTEN SUBMISSIONS RUNNING INT O 10 PAGES AND INVITED THE COMMENTS OF ASSESSING OFFICER. THE ASSE SSING OFFICER INSTEAD ITA NO.33 0(ASR)/2016 ASST. YEARS: 2001-02 13 OF COMMENTING ON THE WRITTEN SUBMISSIONS OF ASSESSE E REPRODUCED THE ASSESSMENT ORDER IN HIS REMAND REPORT AND DID NOT R EBUT OR REPLY ANY OF THE CONTENTION RAISED BY ASSESSEE. THEREFORE, WE DE EM IT APPROPRIATE TO REMIT THE MATTER BACK TO THE ASSESSING OFFICER WHO SHOULD EXAMINE THE ISSUE AFRESH KEEPING IN VIEW THE FACTS AND CIRCUMST ANCES OF THE CASE AND KEEPING IN VIEW OF THE WRITTEN SUBMISSIONS FILED BY ASSESSEE AS REPRODUCED IN OUR ORDER. NEEDLESS TO SAY THAT ASSESSEE WILL BE PROVIDED SUF FICIENT OPPORTUNITY OF BEING HEARD. 12. IN VIEW OF THE ABOVE, THE APPEAL FILED BY ASSES SEE IS ALLOWED FOR STATISTICAL PURPOSES. ORDER PRONOUNCED IN THE OPEN COURT ON 27 .03. 2017. SD/- SD/- (A.D. JAIN) (T. S. KAPOOR) JUDICIAL MEMBER ACCOUNTANT MEMBER DATED: 27.03.2017. /PK/ PS. COPY OF THE ORDER FORWARDED TO: (1) THE ASSESSEE: (2) THE (3) THE CIT(A), (4) THE CIT, (5) THE SR DR, I.T.A.T., TRUE COPY BY ORDER