SURENDRA CHHAJER, MUMBAI V. ITO 20(3)(3), MUMBAI

ITA 3312/MUM/2012

• Counselvise Citation: [2016] 133 COUNSELVISE.COM (IT) 3443 (ITAT-MUMBAI)
• Duration Of Justice: 3 year(s) 10 month(s) 7 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 18-03-2016
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: E
• Next Hearing Date: 25-05-2015
• Assessment Year: 2005-2006
• Appeal Filed On: 11-05-2012
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: VIVEK OJHA
• Assessee Lawyers: RADHEYSHYAM FALOD
• Keywords: Unexplained investment; Unexplained expenditure
• Section: 69C; 68; 69

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL E BENCH, MUM BAI BEFORE SHRI R.C. SHARMA, AM AND SHRI SANDEEP GOSAIN , JM ./ I.T.A. NO. 3312/MUM/2012 ( / ASSESSMENT YEAR: 2005-06) SHRI SURENDRA CHHAJER , 605, PEARL APARTMENT, 2 ND CROSS LANE, LOKHANDWALA COMPLEX, ANDHERI(W), MUMBAI-400 053. / VS. ITO 20(3)(3), ROOM NO.521, PIRAMAL CHAMBERS, LALBAUG, MUMBAI-400 012. ./ ./PAN/GIR NO. ACWPC 3640C ( /APPELLANT ) : ( / RESPONDENT ) / APPELLANT BY : SHRI RADHEYSHYAM FALOD / RESPONDENT BY : SHRI VIVEK OJHA / DATE OF HEARING : 29/12/2015 !'# / DATE OF PRONOUNCEMENT : 18/03/2016 $% / O R D E R PER SANDEEP GOSAIN, J. M.: THE PRESENT APPEAL FILED BY THE ASSESSEE IS AGAINST THE ORDER OF THE CIT(A)-31 DATED 16.02.2012 THEREBY PARTLY ALLOWING THE APPEA L OF THE ASSESSEE FILED AGAINST THE ORDER OF THE AO DATED 31.12.2007 ON THE FOLLOWI NG GROUNDS. 2 ITA NO. 3312/MUM/2012 (A.Y. 2005-06) SHRI SURENDRA CHHAJER ,VS.ITO 1. THAT ON THE FACTS AND CIRCUMSTANCES OF THE CASE, T HE LEARNED COMMISSIONER OF INCOME TAX (APPEALS) ERRED IN ADDING RS.2,524,60 0/- AS UNEXPLAINED INVESTMENT U/S 68 FOR PURCHASE OF SUPARI. 2. THAT ON THE FACTS AND CIRCUMSTANCES OF THE CASE, TH E LEARNED COMMISSIONER OF INCOME TAX (APPEALS) ERRED IN ADDING RS.11,680/- ON ACCOUNT OF UNACCOUNTED EXPENSES INCURRED FOR PROCURING BOGUS B ILLS. 3. THE APPELLANT CRAVES LEAVE TO ADD FURTHER GROUNDS O R TO AMEND OR ALTER THE EXISTING GROUND ON OR BEFORE THE DATE OF HEARING. 2. THE BRIEF FACTS OF THE CASE ARE THAT THE ASSESSEE F ILED HIS RETURN OF INCOME ON 7/11/06 DECLARING A TOTAL INCOME AT RS.7,743/-. THE RETURN OF INCOME WAS PROCESSED U/S 143(1) ACCEPTING THE TOTAL INCOME RETURNED. THE CASE WAS SELECTED FOR SCRUTINY AND STATUTORY NOTICES WERE ISSUED AND SERVED UPON T HE ASSESSEE AND THEREAFTER ASSESSEE FURNISH THE DETAILS BEFORE THE AO. IN THE PRESENT CASE THE INFORMATION WAS RECEIVED FROM THE OFFICE OF THE COMMISSIONER OF CEN TRAL EXCISE AND CUSTOMS, VAPI STATING THAT THERE WAS A SEARCH ON THE FACTORY PREM ISE OF THE ASESSEE AT 59, GOVERNMENT INDUSTRIAL ESTATE, MASAT, SILVASSA ON 19 .01.2005, WHEREIN, ILLICIT REMOVAL OF GOODS WITHOUT THE COVER OF THE CENTRAL E XCISE INVOICES AND WITHOUT PAYMENT OF DUTY UNDER THE FAKE INVOICE OF DUMMY TRA DING COMPANY AND FAKE LORRY RECEIPTS WERE REVEALED. THE ENTIRE INFORMATION REC EIVED FROM CENTRAL EXCISE AND CUSTOMS FORMED PART OF RECORDS AND THEREFORE DURING THE COURSE OF ASSESSMENT 3 ITA NO. 3312/MUM/2012 (A.Y. 2005-06) SHRI SURENDRA CHHAJER ,VS.ITO PROCEEDING, THE ASESEE WAS ASKED TO SUBMIT HIS EXPL ANATION ON THE SHOW CAUSE NOTICE ISSUED TO THE ASSESSEE WHEREIN, CENTRAL EXCI SE DUTY EVASION OF RS.46,49,615/- WAS DEMANDED FROM THE ASSESSEE. THE ASSESSEE SUBMIT TED THE REPLY WHICH WAS CONSIDERED BY THE AO BUT THE AO WAS NOT IN AGREEMEN T WITH THE SAME THEREFORE, THE AO ADDED BACK SUM OF RS.36,54,043/- TO THE TOTA L INCOME OF THE ASSESSEE U/S69 AS UNEXPLAINED INVESTMENT. THE AO FURTHER HELD THAT AS PER THE TAX AUDIT REPORT, THE GP RATIO DECLARED BY THE ASSESSEE IS 23.35% WAS TREATED AS THE PROFIT EARNED OUT OF THE SALES MADE OUTSIDE THE BOOKS OF ACCOUNTS AND WHILE CALCULATING THE SAME A SUM OF RS.8,53,219/- WAS TREATED AS THE INCOME OF T HE ASSESSEE FOR THE YEAR UNDER CONSIDERATION AND ADDED BACK TO THE TOTAL INCOME. F URTHER THE AO ALSO FOUND THE PURCHASES PURPORTED TO BE MADE FROM SUPPLIERS OF SU PARI VIZ M/S BARAK ENTERPRISES, M/S SHIV TRADING CO., M/S INTERNATIONA L TRADERS, ALL FROM ASSAM AS BOGUS. HENCE PURCHASES MADE FROM THESE PARTIES OF R S.23,33,600/- WAS TREATED AS UNEXPLAINED EXPENDITURE U/S 69 OF THE I.T. ACT AND HENCE THE SAID AMOUNT WAS ALSO TREATED BACK TO THE TOTAL INCOME OF THE ASSESSEE. 3. AGGRIEVED BY THE ORDER OF THE AO, THE ASSESSEE F ILED AN APPEAL BEFORE THE CIT(A) AND THE CIT(A) PARTLY ALLOWED THE APPEAL OF THE ASSESSEE BUT UPHELD WHILE RESTRICTING THE ADDITIONS OF RS.26,41,280/- MADE BY THE AO VIDE ORDER DATED 31.12.2007. 4 ITA NO. 3312/MUM/2012 (A.Y. 2005-06) SHRI SURENDRA CHHAJER ,VS.ITO 3.1 AGGRIEVED BY THE ORDER OF THE CIT(A), THE ASSES SEE FILED THE PRESENT APPEAL BEFORE US ON THE GROUNDS MENTIONED HEREINABOVE. GROUND NO. 1&2 SINCE BOTH THE GROUNDS ARE INTER-CONNECTED AND INT ER-RELATED THEREFORE WE THOUGHT IT FIT TO DISPOSE OFF THE SAME THROUGH PRES ENT ORDER. 4. LD. AR APPEARING ON BEHALF OF ASSESSEE SUBMITTED THAT THE AO WAS NOT JUSTIFIED IN MAKING ADDITIONS ON ACCOUNT OF UNEXPLA INED INVESTMENT AND UNEXPLAINED EXPENDITURE, BASED ON SHOW CAUSE NOTICE ISSUED BY CENTRAL EXCISE DEPARTMENT. LD. AR FURTHER SUBMITTED THAT NO SEPARA TE ENQUIRIES OR INVESTIGATIONS WERE CARRIED OUT BY THE AO TO ARRIVE AT A CONCLUSIO N OF THE WORKING OUT OF UNEXPLAINED INVESTMENT AND UNEXPLAINED EXPENDITURE. LD. AR SUBMITTED THAT THE ENTIRE ADDITION MADE BY THE AO AND CONFIRMED BY THE CIT(A) IS BASED ON THE SHOW CAUSE NOTICE ISSUED BY CENTRAL EXCISE DEPARTMENT WI THOUT BRINGING ANY INDEPENDENT EVIDENCE OR DETAILS ON RECORDS BY THE A O. IT WAS FURTHER SUBMITTED THAT NO SUCH UNACCOUNTED INVESTMENT IS FOUND BELONGING T O THE ASSESSEE NOT RECORDED IN ITS BOOKS OF ACCOUNTS AND IF AT ALL THE AO HAD TO M AKE THE ADDITION, IT SHOULD HAVE BEEN BASED ON THE GROSS PROFIT RATIO DISCLOSED BY T HE ASSESSEE. IT WAS SUBMITTED THAT MANUFACTURING OF GUTKA ALWAYS REQUIRES EXPENSE S ON ACCOUNT OF SUPARI, LABOUR 5 ITA NO. 3312/MUM/2012 (A.Y. 2005-06) SHRI SURENDRA CHHAJER ,VS.ITO CHARGES, CATECHU, LAMINATION PACKING MATERIAL, ELE CTRICITY EXPENSES ETC., FURTHER THE AO HAS IGNORED ALL THESE RELEVANT FACTORS AND SIMIL ARLY HAS ALSO NOT CONSIDERED THE FACTS AND ITS FINDING ARE ONLY BASED ON THE SHOW CA USE NOTICE ISSUED BY CENTRAL EXCISE DEPARTMENT. 4.1 LD. AR RELIED UPON THE SUBMISSION RECORDED IN T HE ORDERS OF CIT(A). LASTLY IT WAS SUBMITTED THAT THE SHOW CAUSE NOTICE ISSUED BY CENTRAL EXCISE DEPARTMENT WAS CHALLENGED BY ASSESSEE BEFORE THE CUSTOMS EXCISE AN D SERVICE TAX APPELLATE TRIBUNAL AND THE THIRD MEMBER BENCH WAS CONSTITUTED AS PER THE DECISION RENDERED BY THIRD MEMBER BENCH DATED 03.04.2012 WHEREIN IT H AS BEEN CATEGORICALLY HELD THAT THE ENTIRE PROCEEDING CARRIED OUT BY CENTRAL E XCISE DEPARTMENT WAS BASED ON PRESUMPTION AND ASSUMPTION AND UNACCOUNTED REMOVALS HAVE IN ANY CASE NOT BEEN ESTABLISHED. LASTLY LD. AR REQUESTED TO ACCEPT THE APPEAL. ON THE OTHER HAND LD. DR RELIED UPON THE ORDERS PASSED BY THE REVENUE AUTHOR ITIES. 5. WE HAVE HEARD THE COUNSELS OF BOTH THE PARTIES A ND WE HAVE ALSO PERUSED THE MATERIAL PLACED ON RECORD AS WELL AS THE ORDERS PAS SED BY THE REVENUE AUTHORITIES. WE HAVE NOTICED THAT THE ENTIRE FINDINGS RECORDED B Y THE AO ARE BASED ON THE INFORMATION RECEIVED FROM THE OFFICE OF CENTRAL EXC ISE CUSTOMS REGARDING THE ILLICIT REMOVAL OF GOODS WITHOUT THE COVER OF CENTRAL EXCIS E INVOICES AND WITHOUT PAYMENT 6 ITA NO. 3312/MUM/2012 (A.Y. 2005-06) SHRI SURENDRA CHHAJER ,VS.ITO OF DUTY UNDER THE FAKE INVOICE OF DUMMY TRADING COM PANY AND FAKE LORRY RECEIPTS. IN ADDITION AO HAS ALSO RELIED UPON THE SHOW CAUSE NOTICE ISSUED TO THE ASSESSEE WHEREIN CENTRAL EXCISE DUTY EVASION OF RS.46,49,615 /- WAS DEMANDED FROM THE ASSESSEE. IN THIS RESPECT WE HAVE NOTICED THAT ULTI MATELY THE SHOW CAUSE NOTICE ISSUED BY THE CENTRAL EXCISE DEPARTMENT WAS CHALLEN GED BEFORE THE COMPETENT AUTHORITIES I.E. CUSTOMS EXCISE AND SERVICE TAX APP ELLATE TRIBUNAL AND THIRD MEMBER HAS DECIDED THE CASE IN FAVOUR OF THE ASSESS EE, THE OPERATIVE PARA OF TRIBUNAL IS MENTIONED HERE IN BELOW. I ALSO FIND THAT THE RATIO OF THE JUDGEMENT IN THE CASE OF TEJ DYE STUFF INDUSTRIES (SUPRA), AS UPHELD BY HONBLE HIGH COURT OF GUJARAT ALSO HOLDING THE VIEW THAT THE DEMAND OF DUTY CANNOT BE BASED ON ASSUMPTIONS AND PRESUMPTIONS. I DO NOT FIND ANY RELIABLE EVIDENCE OF THE ACTUAL P URCHASES OF HUGE QUANTITIES OF MAIN INPUT VIZ. SUPARI AND CONFIRMATI ON OF AUTHORIZED PAYMENT TOWARDS UNACCOUNTED PURCHASE OF GOODS AND U TILIZATION THEREOF IN THE MANUFACTURE. THERE WAS NO RECOVERY O F ANY ACCOUNTED SALES PROCEEDS IN SUBSTANTIAL CASH FROM THE FACTORY OR OFFICE PREMISES OR ANYWHERE ELSE IN THE CONTROL OF THE APPELLANT CO MPANY, BACKED BY ANY CONFIRMATION ORAL OR WRITTEN FROM THE PERSON GI VING SUCH CASH AGAINST GOODS REMOVED IN CLANDESTINE MANNER WITHOUT PAYMENT OF DUTY FROM THE FACTORY OF APPELLANT COMPANY. I FIND THAT IN THE PECULIAR FACTS OF THIS CASE, FOR CONFIRMING THE CHARGES AND FOR ACCEPTING THE EVIDENCE ADDUCED, A SERIES OF ASSUMPTIONS AND PRESUMPTIONS ARE TO BE MADE VIZ- 7 ITA NO. 3312/MUM/2012 (A.Y. 2005-06) SHRI SURENDRA CHHAJER ,VS.ITO THE TOTAL NUMBER OF MACHINES INSTALLED WAS HAVING T HE CAPACITY TO MANUFACTURE THE FINAL GOODS HELD BEING CLANDESTINEL Y REMOVED AND THERE IS NO EVIDENCE OF WORKING FOR MORE THAN ONE S HIFT A DAY .AS PER THE APPELLANT, THE PRODUCTION CAPACITY WITH SUCH MA CHINES; IN ONE SHIFT, IS NOT SUFFICIENT. TO MANUFACTURE THE ALLEGED HUGE QUANTITY ALLEGED TO BE REMOVED IN CLANDESTINE MANNER, AND MOREOVER, THE DU TY FIXED BY THE. BOARD PER MACHINE, IF TAKEN INTO ACCOUNT WOULD ALSO INDICATE MUCH LESS PRODUCTION THAN ALLEGED IN THE NOTICE. AS RIGHTLY O BSERVED BY THE HONBLE MMEBER (J), THE WORKING OF THE MACHINES IN THE APPELLANT'S FACTORY WAS' NOT TESTED OR CERTIFIED TO ASCERTAIN T HE PRODUCTION CAPACITY OF THE MACHINES INSTALLED. EVEN NUMBER OF MACHINES INSTALLED IN WORKING CONDITION WAS NOT RECORDED IN PANCHNAMA DRAWN AT FA CTORY. THERE IS NO RECORD TO SHOW THAT THE APPELLANTS WERE WORKING FOR THREE SHIFTS. THERE IS NO EVIDENCE OF ADDITIONAL EMPLOYEES HAVING BEEN EMP LOYED TO ENHANCE THE PRODUCTION NOR IS THERE ANY EVIDENCE OF EXCESS WAGES HAVING BEEN PAID TO THE EXISTING EMPLOYEES. HOWEVER, IT IS TO B E ASSUMED THAT THE FACTORY WAS CONTINUOUSLY RUNNING FOR THREE SHIFTS, MORE MACHINES THAN DECLARED WERE INSTALLED, AND THAT THE ACTUAL PRODUC TION WAS GROSSLY SUPPRESSED. ALLEGEDLY THE CASE IS ON A PRESUMPTION THAT THE APP ELLANT HAS RECORDED EXCESS CONSUMPTION OF RAW MATERIALS LIKE BETAL NUTS ETC AND CLANDESTINELY MANUFACTURED THE GOODS AND CLEARED THE SAME WHILE T HERE IS NO EVIDENCE OF PURCHASE OF MAIN RAW MATERIALS BETAL NUTS ( WH ICH CONSTITUTES 85% OF THE RAW MATERIALS), CATECHU, PERFUME AND LIME, I T IS TO BE ASSUMED THAT ALL THESE RAW MATERIALS WERE PURCHASED IN CASH , BROUGHT TO FACTORY, AND USED IN UNACCOUNTED MANUFACTURE OF PAN MASALA/ GUTHKA IN THE 8 ITA NO. 3312/MUM/2012 (A.Y. 2005-06) SHRI SURENDRA CHHAJER ,VS.ITO FACTOR PREMISES, THERE BEING NO FURTHER INVESTIGATI ON OF UNACCOUNTED PURCHASES OF SUPARI, MAIN INGREDIENT. IT IS TO BE ASSUMED THAT THE ANALYSIS OF THE SAMPLE OF APPELLANTS FINAL PRODUCT CONTAINED EXCESS QUANTITY OF VARIOUS INPUTS AS COMPARED TO OTHER BRANDED PRODUCTS, WILL LEAD TO WILLFUL OVER-S TATEMENT OF CONSUMPTION OF INPUTS FOR MANUFACTURE OF CLANDESTIN ELY REMOVED GOODS. IT IS TO BE ASSUMED THAT THE ENTIRE MAIN GRADIENT I .E. SUPARI WAS PURCHASED IN CASH, WHILE THERE IS NO INVESTIGATION ON THAT FRONT. THAT THE CONTRADICTORY FINDINGS OF THE ADJUDICATING AUTHORIT Y AS TO UNDER- STATEMENT AND OVER-STATEMENT OF CONSUMPTION OF MAIN INGREDIENT VIZ. SUPARI, IN FACT, PROVES THAT THE APPELLANT WAS INVO LVED IN CLANDESTINE ACTIVITIES. THAT THE QUANTITY OF THE FINISHED GOODS IN PURCHAS ES CLEARED CONTAINED EXCESS QUANTITY AND THENCE THERE WAS CLANDESTINE RE MOVAL, EVEN IF THE FINISHED PRODUCT WAS COVERED UNDER THE PROVISIONS O F SECTION 4A OF CENTRAL EXCISE ACT, 1944, HENCE THERE WAS SHORT PAY MENT OF DUTY. THAT THERE WAS NO RECORD OF THE ELECTRICITY CONSUMP TION AND UNACCOUNTED PURCHASES OF FUEL FOR OPERATING DG SET FOR GENERATI ON OF ELECTRICITY FOR UTILIZATION IN RUNNING THE GUTKHA MACHINERY. THERE IS NO DISPUTE ON THE FACT THAT IN ADJUDICATIO N PROCEEDINGS, THE CHARGE OF CLANDESTINE REMOVAL AND UNDER-VALUATION I S DEFINITELY TO BE ESTABLISHED ON THE BASIS OF PREPONDERANCE OF PROBAB ILITIES, HOWEVER, IT CANNOT BE MERELY ON THE BASIS OF PRESUMPTIONS AND A SSUMPTIONS. SUSPICION HOWEVER GRAVE CANNOT REPLACE THE PROOF. A S RIGHTLY POINTED OUT BY THE HONBLE MEMBER(J) WITH DETAILED FINDINGS , THE LINK BETWEEN THE DOCUMENTS RECOVERED IN SEARCH AND THE ACTIVITIE S OF THE APPELLANTS IN THEIR FACTORY IS REQUIRED TO BE PROVED. HOWEVER, I FIND THAT DUE TO VARIOUS REASONS, THE REVENUE HAS FILED TO PROVE THE SAME. 9 ITA NO. 3312/MUM/2012 (A.Y. 2005-06) SHRI SURENDRA CHHAJER ,VS.ITO I FIND THAT THE ENTIRE CASE PROCEEDED ON THE FOOTIN G THAT THE APPELLANT HAS UNDER-STATED THE CONSUMPTION OF MAIN RAW MATERIALS AND CONFIRMED BY SIIR, WHICH IS AGAIN NOT FREE FROM DOUBT. I FIND TH AT FOR CONSIDERING THE SAME AS RELEVANT AND CREDIBLE MATERIAL, ON ONE HAND A SERIES OF ASSUMPTIONS AND PRESUMPTIONS ARE TO BE MADE, AN ON THE OTHER HAND VARIOUS FATAL INFIRMITIES AS TO EQUATING APPELLANT S PRODUCTS WITH BRANDED PRODUCTS CONTENTS OF RAW MATERIAL, NO EVIDE NCE OF PURCHASE OF SUPARI AN TOBACCO, AS CORRECTLY RECORDED IN THE DET AILED FINDINGS OF THE HONBLE MEMBER (J) ARE TO BE ACCEPTED. I AGREE WITH THE REASONS AND FINDINGS RECORDED BY THE HONBLE MEMBER (J) THAT EN TIRE PROCEEDINGS ARE BASED ON PRESUMPTIONS AND ASSUMPTIONS AND SERIOUS D OUBT ARISES ABOUT THE CORROBORATIVE EVIDENCE OF THE MATERIALS STATED TO HAVE BEEN COLLECTED IN THE COURSE OF SUCH PROCEEDINGS. THEREFORE, IT WO ULD NOT BE JUSTIFIED TO RELY ON THESE RECORDS TO FASTEN THE DUTY AND.. AND THE APPELLANTS EVEN APPLYING THE PRINCIPLES OF PREPONDERANCE OF PROBABI LITY. I FIND THAT THE REVENUE FAILED TO SUBSTANTIATE THE FINDINGS RECORDED IN THE IMPUGNED ORDER REGARDING PRODUCTION CAPACITY, TO PE RSUADE ME TO REJECT THE CONTENTION OF THE APPELLANT THAT THERE I S FAILURE ON THE PART OF RESPONDENT TO COLLECT ANY EVIDENCE IN RELATION TO E ITHER PROCUREMENT OF RAW MATERIALS BY THE APPELLANT OR PRODUCTION OF HUG E QUANTITY OF FINAL GOODS ALLEGED AS REMOVED CLANDESTINELY TO SUSTAIN T HE CHARGE OF CLANDESTINE REMOVAL. ONCE UNACCOUNTED PRODUCTION IS NOT ESTABLISHED, EVEN OTHERWISE THERE CAN BE NO CLANDESTINE REMOVAL THEREOF. UNACCOUNTED REMOVALS HAVE IN ANY CASE NOT BEEN ESTA BLISHED ON THE BASIS OF THE EVIDENCE AVAILABLE ON RECORD. THE RATIO LAID DOWN BY THE HONBLE APEX COURT IN OU DH SUGAR MILLS LTD. VS UNION OF INDIA, 1978 (2)ELT J172 (SC), IS CLEARL Y APPLICABLE IN THE PECULIAR FACTS OF THE INSTANT CASE INASMUCH AS THE DEMAND CANNOT BE 10 ITA NO. 3312/MUM/2012 (A.Y. 2005-06) SHRI SURENDRA CHHAJER ,VS.ITO SUSTAINED WITHOUT ANY TANGIBLE EVIDENCE, BASED ONLY ON INFERENCES INVOLVING UNWARRANTED ASSUMPTIONS. 6. FROM THE CUMULATIVE READING OF THE JUDGEMENT PAS SED BY THIRD MEMBER, WE FOUND THAT THE THIRD MEMBER IS CONCURRED WITH THE V IEW TAKEN BY HONBLE MEMBER (JUDICIAL) AND ALLOWED THE APPEAL AND IT WAS CATEGO RICALLY MENTIONED IN THE JUDGEMENT THAT ENTIRE PROCEEDINGS AGAINST ASSESSEE WERE BASED ON ASSUMPTION AND PRESUMPTION AND THEREFORE IT WAS HELD THAT THE DEMA ND CANNOT BE SUSTAINED AGAINST THE ASSESSEE WITHOUT ANY TANGIBLE EVIDENCES. 6.1 THE AFORE MENTIONED FINDINGS RECORDED BY THE HO NBLE TRIBUNAL GOES TO SHOW THAT THE BASIS OF AO TO MAKE ADDITION HAS BEEN SET ASIDE BY THE HONBLE TRIBUNAL AND SINCE THE HONBLE CUSTOMS EXCISE AND S ERVICE TAX APPELLATE TRIBUNAL HAS ALREADY ACCEPTED THE APPEAL THEREFORE ANY ADDIT IONS MADE BY AO ONLY ON THE BASIS OF SHOW CAUSE NOTICE ISSUE BY THE DEPARTMENT IS NOT SUSTAINABLE IN THE EYES OF LAW. WE ALSO REFERRED THE JUDGEMENT OF CO-ORDINATE BENCH OF ITAT MUMBAI IN CASE OF SANKET FOOD PRODUCTS PVT. LTD. VS. ACIT THE OP ERATIVE PARA OF THE SAME ARE REPRODUCED BELOW: WE HAVE HEARD THE RIVAL SUBMISSION AND CONSIDERED THEM CAREFULLY. AFTER CONSIDERING THE SUBMISSION AND PERUSING THE M ATERIAL ON RECORD ALONG WITH VARIOUS CASE LAWS, WE FOUND THAT THE ADD ITION MADE BY THE 11 ITA NO. 3312/MUM/2012 (A.Y. 2005-06) SHRI SURENDRA CHHAJER ,VS.ITO AO, WHICH IS CONFIRMED BY THE LEARNED CIT(A), IS NO T JUSTIFIED. FIRSTLY THERE IS INCRIMINATING MATERIAL WAS FOUND DURING TH E COURSE OF SEARCH CONDUCTED BY THE ASSESSEE, NEITHER ANY ADDITION HAS BEEN MADE ON THE BASIS OF ANY INCRIMINATING MATERIAL FOUND. 6.2 IN ADDITION WE HAVE ALSO RELIED UPON THE JUDGEM ENT RENDERED BY CO-ORDINATE BENCH OF ITAT MUMBAI IN CASE TITLED ITO VS. SHRI. PARESH ARVIND GANDHI IN ITA NO. 5706/MUM/2013. THE OPERATIVE PARA IS MENTIO NED HEREIN BELOW: WE HAVE HEARD THE RIVAL SUBMISSIONS AND PERUSED TH E MATERIAL BEFORE US. WE FIND THAT THE AO HAD NOT DOUBTED THE GENUINE NESS OF THE PURCHASES BUT HAD MADE THE DISALLOWANCE OF RS.1.37 CRORES INVOKING THE PROVISIONS OF 69C OF THE ACT. WE FIND THAT IN SIMIL AR CIRCUMSTANCES THE TRIBUNAL HAD DELETED THE ADDITION MADE BY THE AO IN THE CASES RELIED UPON BY THE AR OF THE ASESSEE. IN THE CASE OF RAJIV G KALATHIL (SUPRA), TO WHICH ONE OF US WAS PARTY IDENTICAL ISSUE HAS BEEN DECIDED AS UNDER:- BEFORE US, DEPARTMENTAL REPRESENTATIVE ARGUED THAT BOTH THE SUPPLIERS WERE NOT PRODUCED BEFORE HT AO BY THE ASSESSEE, THA T ONE OF THEM WAS DECLARED HAWALA DEALER BY VAT DEPARTMENT THAT BECAU SE OF CHEQUE PAYMENT MADE TO THE SUPPLIER TRANSACTION CANNOT BE TAKEN AS GENUINE. HE RELIED UPON THE ORDER OF THE G BENCH OF MUMBAI T RIBUNAL DELIVERED IN THE CASE OF WESTERN EXTRUSION INDUSTRIES (ITA/65 79/MUM/2010-DATED 13.11.2013). AUTHORIZED REPRESENTATIVE (AR) CONTEND ED 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 TRANSP ORTATION OF GOODS TO THE SITE. HE RELIED UPON THE CASE OF BABULA BORANA (282 ITR25/),NIKUNJ 12 ITA NO. 3312/MUM/2012 (A.Y. 2005-06) SHRI SURENDRA CHHAJER ,VS.ITO EXIMP ENTERPRISES (P) LTD (216TAXMANJ7I)DELTVERED B Y THE HON'BLE BOMBAY HIGH COURT. 2.4. WE HAVE HEARD THE RIVAL SUBMISSIONS AND PERUSE D 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 INVEST IGATION 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 THE BANK ACCOUNTS OF THE SUPPLIERS TO FI ND OUT AS WHETHER THERE WAS ANY IMMEDIATE CASH WITHDRAWAL FROM THEIR ACCOUN T. WE FIND THAT NO SUCH EXERCISE WAS DONE. TRANSPORTATION OF GOOD TO T HE SITE IS 'ONE OF THE DECIDING FACTOR TO BE CONSIDERED FOR RESOLVING THE ISSUE. THE FAA HAS GIVEN A FINDING OF FACT THAT PART OF THE GOODS RECE IVED BY THE ASSESSEE WAS FORMING PART OF CLOSING STOCK.AS FAR AS THE CAS E OF 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 BEF ORE US, THERE IS NOTHING, IN THE ORDER OF THE AO, ABOUT THE CASH TRA IAL. SECONDLY, PROOF OF MOVEMENT OF GOODS IS NOT IN DOUBT. THEREFORE, CONSI DERING THE PECULIAR FACTS AND CIRCUMSTANCES OF THE CASE UNDER APPEAL, W E 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. I AGAINST THE AO. RESPECTFULLY FOLLOWING THE ABOVE AND CONSIDERING TH E FACTS AND CIRCUMSTANCES EFFECTIVE GOA IS DECIDED AGAINST THE AO. 13 ITA NO. 3312/MUM/2012 (A.Y. 2005-06) SHRI SURENDRA CHHAJER ,VS.ITO 6.3 FROM THE CO-JOINT READING OF THE ABOVE MENTIONE D JUDGEMENTS WE HOLD THAT SIMILAR ISSUE WAS INVOLVED IN THE AFORE MENTIONED C ASES AND ADHERING TO THE PRINCIPLES OF JUDICIAL CONSISTENCY AND RESPECTFULLY FOLLOWING THE JUDGEMENTS PASSED BY THE CO-ORDINATE BENCH AND KEEPING IN VIEW THE FA CTS OF THE PRESENT CASE AND WHILE RELYING UPON THE JUDGEMENTS PASSED IN ASSESSE ES OWN CASE BY CUSTOMS EXCISE DUTY AND SERVICE TAX APPELLATE TRIBUNAL, WE ACCEPT THE GROUND OF APPEAL AND SET ASIDE THE ADDITIONS MADE BY THE AO. 7. IN THE RESULT, THE ASSESSEES APPEAL IS ALLOWED. ORDER PRONOUNCED IN THE OPEN COURT ON 18TH MARCH , 2016 SD/- SD/- (R.C. SHARMA) (SANDEEP GOSAIN) $ / ACCOUNTANT MEMBER &' $ / JUDICIAL MEMBER ( ) MUMBAI; *$ DATED :18.03.2016 PS. ASHWINI / COPY OF THE ORDER FORWARDED TO : 1. / THE APPELLANT 2. / THE RESPONDENT 3. + ( ) / THE CIT(A) 4. + / CIT - CONCERNED 5. ./0 ''12 , 12# , ( ) / DR, ITAT, MUMBAI 6. 045 6 / GUARD FILE / BY ORDER, / !'# (DY./ASSTT. REGISTRAR) #$ %, ( ) / ITAT, MUMBAI