The ACIT, 1(1), Ujjain V. M/s Dewas Soya Ltd., Dewas

ITA 336/IND/2012

• Counselvise Citation: 33622714 RSA 2012
• Duration Of Justice: 4 month(s) 24 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 31-10-2012
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: DB
• Assessment Year: 2008-2009
• Appeal Filed On: 06-06-2012
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: DARSHAN SINGH
• Assessee Lawyers: P D NAGAR
• Keywords: Unexplained cash credit; Rejection of books of accounts; Business income; Additional evidence
• Section: 40A(3); 133(6); 12AA; 131; 145; 68

Judgement Text

1 IN THE INCOME TAX APPELLATE TRIBUNAL INDORE BENCH, INDORE BEFORE SHRI JOGINDER SINGH, JUDICIAL MEMBER AND SHRI R.C. SHARMA, ACCOUNTANT MEMBER ITA NO. 336/IND/2012 A.Y. 2008-09 ASSISTANT COMMISSIONER OF INCOME TAX 1(1), UJJAIN :: APPELLANT VS DEWAS SOYA LIMITED DEWAS PAN AAACD 8647F :: RESPONDENT APPELLANT BY SHRI DARSHAN SINGH RESPONDENT BY SHRI P.D. NAGAR DATE OF HEARING 11.10.2012 DATE OF PRONOUNCEMENT 31.10.2012 O R D E R PER JOGINDER SINGH , JUDICIAL MEMBER THE REVENUE IS AGGRIEVED BY THE IMPUGNED ORDER DAT ED 30 TH MARCH, 2012 PASSED BY THE LEARNED FIRST APPELLATE A UTHORITY, UJJAIN. 2 2. DURING HEARING OF THIS APPEAL, WE HAVE HEARD SHR I DARSHAN SINGH, LEARNED CIT DR AND SHRI P.D. NAGAR, LEARNED COUNSEL FOR THE ASSESSEE. THE FIRST GROUND RAISED BY THE REVEN UE IS THAT THE LEARNED CIT(A) ERRED ON FACTS AND IN LAW IN DELETIN G THE ADDITION OF RS.6,47,03,548/- MADE U/S 68 OF THE ACT. THE CRU X OF ARGUMENTS ON BEHALF OF THE REVENUE IS IDENTICAL WIT H THE GROUND RAISED BY FURTHER SUBMITTING THAT THE ADDITION MADE BY THE ASSESSING OFFICER IS QUITE JUSTIFIED AND FURTHER ER RED IN ADMITTING THE ADDITIONAL EVIDENCE FILED BEFORE HIM WHICH IS V IOLATION OF RULE 46A OF IT RULES AND THUS THE LEARNED FIRST APPELLAT E AUTHORITY SHOULD NOT HAVE ACCEPTED THE SALES MADE BY CERTAIN PARTIES WHICH WERE NEITHER TRACEABLE AT THE GIVEN ADDRESSES NOR W ERE HAVING VALID TAN NUMBERS. IT WAS ALSO PLEADED THAT THE IM PUGNED ORDER IS AGAINST THE RATIO LAID DOWN BY THE TRIBUNAL IN T HE CASE OF M/S AGRAWAL COAL CORPORATION LIMITED. A PLEA WAS ALSO RAISED THAT ALL THE INGREDIENTS OF SECTION 68 WERE NOT FULFILLE D BY THE ASSESSEE. IT WAS EMPHATICALLY CONTENDED THAT M/S A.K. INTEX A ND OTHER PARTIES WERE NOT TRACEABLE AT THE GIVEN ADDRESSES I N SPITE OF DETAILED INQUIRIES MADE BY THE ASSESSING OFFICER TO WHOM SUBSTANTIAL SALES WERE CLAIMED TO BE EFFECTED BY TH E ASSESSEE. THE 3 GENUINENESS OF SALES ALONG WITH THE IDENTITY OF THE BUYERS WAS ARGUED TO BE IN DISPUTE. 2.1 ON THE OTHER HAND, THE LEARNED COUNSEL FOR THE ASSESSEE DEFENDED THE IMPUGNED ORDER BY SUBMITTING THAT REGU LAR BOOKS OF ACCOUNTS ARE MAINTAINED BY THE ASSESSEE AND THE SAM E WERE PRODUCED FOR VERIFICATION. IT WAS ALSO CLAIMED THA T SUCH BOOKS ARE SUPPORTED BY PURCHASE/SALE INVOICES ALONG WITH STOCK REGISTER OF RAW MATERIAL, CONSUMPTION, PRODUCTION OF FINISHE D GOODS, AUDIT REPORT. IT WAS SUBMITTED THAT THE TOTAL TURNOVER O F REFINED OIL WAS RS.67.63 CRORES ON WHICH VAT AND CENTRAL SALES TAX WAS DEPOSITED. A PLEA WAS RAISED THAT SALE OF OIL WAS AGAINST ADVANCE PAYMENT AND THE AMOUNTS WERE RECEIVED IN CASH/DEMAN D DRAFT/RTGS. ON THE ISSUE OF NON-TRACEABILITY OF TH E PARTIES, IT WAS CONTENDED BY THE LEARNED COUNSEL THAT OUT OF 73 DEALERS OF THE STATE ABOUT 50% REMITTED THE AMOUNTS IN CASH AN D 2 DEALERS OUTSIDE THE STATE OF MADHYA PRADESH ALSO DEPOSITED THE AMOUNTS IN CASH. ON THE IDENTITY OF M/S A.K. IMPEX IT WAS CLAIMED THAT THE AMOUNTS WERE RECEIVED IN ADVANCE AGAINST SALES AND INITIALLY SUCH FIRM WAS REGISTERED UNDER DELHI VAT ACT. ON T HE ISSUE OF PAYMENT OF VAT AND SALESTAX IT WAS CONTENDED BY THE LEARNED CIT DR THAT SUCH AUTHORITIES NEVER ASKED FOR IDENTITY O F THE PARTIES TO 4 WHOM SALES WERE EFFECTED AND ONLY ON THE BASIS OF S TATEMENT OF THE ASSESSEE, THE TAX WAS DEPOSITED. 3. WE HAVE CONSIDERED THE RIVAL SUBMISSIONS AND PER USED THE MATERIAL AVAILABLE ON RECORD. THE FACTS, IN BRIEF, ARE THAT THE ASSESSEE IS ENGAGED IN MANUFACTURING OF REFINED SOY ABEAN OIL AND DOC FROM SOYABEAN SEEDS. THE TURNOVER OF THE ASSESS EE DURING THE YEAR, UNDER CONSIDERATION, WAS RS. 149.58 CRORE S ON WHICH A GP OF 11.59% WAS SHOWN. BEFORE COMING TO ANY CONCL USION, WE ARE REPRODUCING HEREUNDER THE RELEVANT PORTION FROM THE IMPUGNED ORDER :- IN THE GROUNDS OF APPEAL BEARING FROM NO. 1 TO 10 , THE APPELLANT HAS CHALLENGED THE ADDITIONS MADE U/S 68 OF THE ACT AS UNEXPLAINED CASH CREDITS AT RS. 6,47,03,548/ - BEING SALE PROCEEDS REALISED BY THE APPELLANT FROM FOUR DEBTORS AFTER DEDUCTING AN AMOUNT EQUAL TO 11.59% TOWARDS GROSS PROFIT ON SUCH SALES. 2. THE FACTS OF THE CASE ARE THAT THE APPELLANT COM PANY IS ENGAGED IN MANUFACTURING OF SOYA OIL AND DE-OILED C AKE FROM SOYA SEED IN ITS SOLVENT EXTRACTION PLANT LOCA TED AT DEWAS SINCE 1994. THE CASE WAS SELECTED FOR THE SCR UTINY. ASSESSEE HAS SHOWN SALES OF SOYABEEN REFINED EDIBLE OIL TO ONE MIS A.K. IMPEX, NEW DELHI AND THREE OTHER PARTIES M/S PRAVEEN TRADING COMPAN Y , SARANGPUR, M/S MAA JPAGWATI TRADERS, AGAR (MALWA) AND M/S MOHAN TRADERS NALKHEDA. THE AO MADE DETAILED INQUIRIES IN RESPECT OF ABOVE FOUR PARTIES TO WHOM THE ASSESSEE HAS EFFECTE D SALES AT RS. 7,31,78,455/- (1471.87 METRIC TONES). AFTER MAKING ENQUIRIES THE AO HAS TREATED THESE SALES AS UNEXPLAINED CREDITS AND ADDITION TO TOTAL INCOME HA S BEEN MADE AT RS. 6,47,03,548/- BY DEDUCTING AN AMOUNT EQ UAL 5 TO 11.59% TOWARDS GROSS PROFIT ON SUCH SALES I.E, R S. 84,74,907/- . AGAINST THIS ORDER THE ASSESSEE HAS PREFERRED THIS APPEAL. 3. DURING THE COURSE OF APPELLATE PROCEEDINGS THE APPELLANT HAD FILED ITS WRITTEN SUBMISSIONS ON 02/09/2011, WH ICH IS REPRODUCED AS BELOW : '01) THE APPELLANT COMPANY IS ENGAGED IN MANUFACTUR ING OF SOYA OIL AND DE-OILED CAKE FROM SOYA SEED IN ITS SO LVENT EXTRACTION PLANT LOCATED AT DEWAS SINCE 1994 . REGULAR BOOKS OF ACCOUNTS HAVE BEEN MAINTAINED WHICH ARE QUANTITA TIVE AND SUPPORTED BY PURCHASE AND SALE INVOICES, VOUCHERS, TAX AUDIT REPORT U/S 44AB OF INCOME TAX ACT AND ANNUAL REPORT UNDER COMPANIES ACT. 02) SALES OF D-OILED CAKE IS EFFECTED OUTSIDE INDI A WHEREAS SALES OF REFINED OIL IS EFFECTED WITHIN MP AS WELL AS OUTSID E MP. PAST HISTORY OF THE APPELLANT PROVES BEYOND DOUBT THAT A CCOUNTS OF THE COMPANY HAVE BEEN ACCEPTED BY THE DEPARTMENT AL L ALONG. THE OWNERS OF THE COMPANY ARE KNOWN FOR THEIR LOYAL TY AND HONESTY. DURING THE YEAR TOTAL TURNOVER WAS RS. 149 .58 CRORES WHREAS SALES OF SOYA REFINED OIL WAS RS. 67. 63 CRORES LIABLE TO VAT AND CENTRAL SALES TAX. 03 COMMON PRACTICE PREVAILING IN THE STATE REGARDING SALES OF SOYA OIL BY SOLVENT EXTRACTION PLANTS IS A S UNDER :- A) SALE ARE BEING MADE THROUGH BROKERS AND RARELY A S DIRECT SALE. BROKERAGE IS BEING PAID TO THE BROKERS BY ALC PAYEE CHEQUES AFTER DEDUCTION OF TAX AT SOURCE. B) ENQUIRY IS MADE BY THE BROKERS REGARDING AVAILAB ILITY OF STOCK AND RATES AND THEREAFTER ORDERS ARE PLACED TELEPHONICAL LY BY GIVING FURTHER DETAILS RELATING TO NAME AND ADDRESS OF THE BUYER, QUANTITY, RATE AND MODE OF DELIVERY ETC. C) SALES ARE NORMALLY MADE AGAINST IMMEDIATE OR ADV ANCE PAYMENT. ON CONFIRMATION, AMOUNT IS RECEIVED BY THE APPELLAN T EITHER IN CASH/DD/PAY ORDER/CHEQUE/RTGS. D) DELIVERY OF REFINED OIL IS GIVEN TO THE BUYERS I N OIL TANKERS ARRANGED BY THEM IN CASE OF SPOT DELIVERY AT FACTOR Y SITE. 04 INITIALLY SALES EFFECTED TO SIX PARTIES WERE SUS PECTED BY ASSESSING AUTHORITY BECAUSE PAYMENTS WERE RECEIVED IN CASH/DD /PAY ORDER/CHEQUE/RTGS FROM BUYERS AGAINST ORDERS IN ADV ANCE. 6 FOLLOWING DETAILS WERE SUBMITTED BEFORE THE AO IN S UPPORT OF SALES EFFECTED TO SUCH PARTIES AGAINST WHICH AMOUNTS WERE RECEIVED - I) COPIES OF ACCOUNTS OF BUYERS IN THE BOOKS OF THE AP PELLANT; II) COPIES OF ALL SALES INVOICES ISSUED BY THE APPELLANT TO SAID BUYER. III) COPIES OF THE CASH RECEIPTS ISSUED TO THE PARTIES. IV) COPIES OF BANK SLIPS RELATING TO CHEQUES RECEIV ED. V) COPIES OF BANK STATEMENTS OF THE APPELLANT. VI) STOCK REGISTER MAINTAINED BY THE APPELLANT. VII ) LETTER FROM BROKERS CONFIRMING TRANSACTIONS. / VIII) BROKERAGE BILLS ISSUED BY THE BROKERS OF SAID BUYERS. IX) WEIGHMENT SLIPS ISSUED AT THE TIME OF DISPATCHE S. X) DESCRIPTION REGARDING TRUCK/TANKERS NO, DO NO. E TC. 05. SUBMISSIONS IN DETAIL WERE MADE BY THE APPELLA NT FROM TIME TO TIME, THE ASSESSING AUTHORITY DID NOT ACCEPT THE GE NUINENESS OF SALES EFFECTED TO FOUR PARTIES OUT OF SIX PARTIES (ONE FROM DELHI & THREE DEALERS OF MP). ENQUIRIES WERE MADE BY THE ASSESSING AUTHORITY BASE D ON WHICH THE INFERENCE WAS DRAWN THAT SUCH PARTIES WERE NON-EXIST. HE, THE REFORE, CONCLUDED THAT THE APPELLANT (SELLING DEALER) INTRODUCED CASH IN ITS B OOKS OF ACCOUNTS AS SALE PROCEEDS OF GOODS. HE THEREFORE, REJECTED THE BOOKS OF ACCOUNTS U/S 145 OF THE ACT AND ASSESSED ADDITIONAL INCOME AS CASH CREDIT U/S 68 OF THE ACT BY ACCEPTING SALES DISCLOSED AS PER BOOKS OF ACCOUNT IN FOLLOWIN G MANNER :- A) SALES EFFECTED TO M/S.A.K. IMPEX, DELHI RS.5, 16, 04, 000/- B) SALES EFFECTED TO THREE PARTIES OF MP AT RS.2,15, 74,455 RS. 7,31, 78,455/- C) GROSS PROFIT ON ABOVE DEDUCTED @ 11.59% (RS.59,81,306/- + RS.24,93,601/-) = (-) RS. 84,74,907/- D) NET SALES AFTER DEDUCTING ABOVE GROSS PROFIT TREATED AS CASH CREDIT U/S 680FL TACT RS. 6, 47, 03,548/- . ADDITION SO MADE U/S 68 OF THE ACT IS CHALLENGED BEFORE YOUR HONOUR ON MERITS AS WELL AS ON LEGAL GROUNDS AS UNDER:- 7 ON MERITS:- 01) GENUINENESS OF SALE VERSUS IDENTITY OFBUVER: 1.1 THE ASSESSING AUTHORITY DOUBTED UPON THE IDENTITY O F THE DEBTOR VIZ. MIS. A.K. IMPEX, DELHI WHO HAD PURCHASED THE GOODS FROM THE APPELLANT DUE TO FOLLOWING REASONS :- A) NOTICE ISSUED U/S 133(6) OF THE ACT AT THE ADDRESS OF MIS. A.K. IMPEX, DELHI WAS RETURNED UN-SERVED WITH THE REMARK S UNO SUCH FORM AT THIS ADDRESS'. THE DEBTOR MIS. A.K. IMPEX, WAS NOT AVAILABLE AT THE ADDRESS GIVEN BY APPEL/ANT OR THE DEBTOR HIMSELF OR OTHERWISE AND THE SAME WAS FOUND INCORRECT AS PER D EPARTMENTAL ENQUIRY. B) PAN GIVEN BY MIS. A.K IMPEX, BELONGS TO SHRI ASH OK KUMAR OF DELHI WHO DID NOT FILE THE RETURN OF INCOME. SUMMON U/S 131 COULD NOT BE SERVED UPON MR. ASHOK KUMAR BECAUSE THE ADDRESS OF MR. ASHOK KUMAR AS PER PAN WAS NOT CORRECT ADDRESS. C) COMMERCIAL TAX AUTHORITY AT NEW DELHI INFORMED T HAT THOUGH MIS. A.K. IMPEX WAS DULY REGISTERED VIDE TIN: 0797032212 4 BUT SUCH TIN WAS CANCELLED W.E.F 14.03.2007, BECAUSE THE SAID FI RM DID NOT CARRY ON THE BUSINESS AT GIVEN ADDRESS. THE TIN OF THE PARTY WAS CANCELLED PRIOR TO 01.04.2007 WHICH MEANS THE PARTY WAS NOT D OING GENUINE BUSINESS THEREAFTER. D) 'C' FORMS ISSUED BY M/S. A.K. IMPEX TO THE APPELLANT WE RE IN FACT ISSUED TO OTHER PARTIES VIZ. MIS. S.S. ENTERPRISES AND M/S. CONTINENTAL PIPE & FITTING. E) THE BROKER WAS NOT AWARE OF THE EXISTENCE OF M/S . 1.K. IMPEX BECAUSE COMMISSION WAS NOT RECEIVED BY HIM FROM THE BUYER. HE WAS ALSO NOT AWARE ABOUT THE DDS ISSUED BY M/S. A.K. IM PEX TO THE APPELLANT BECAUSE' HE WAS NOT RESPONSIBLE TO COLLEC T THE PAYMENT. F) THERE WAS NO PROOF OF TRANSPORTATION OF GOODS TO MI S. A.K. IMPEX. G) ON ENQUIRY FROM THE BANK, AMOUNTS WERE RECEIVED THROUGH RTGS ON BEHALF OF MIS. A.K IMPEX WHICH WERE REMITTED BY OTHER PARTIES. SUCH PARTIES WERE NOT DEALERS IN EDIBLE OIL. NOTICE S ISSUED U/S 133(6) OF THE ACT TO SOME OF THE PARTIES, WHO REMIT TED THE AMOUNT ON BEHALF OF MIS. A.K. IMPEX, WERE RETURNED UN-SERV ED. ON ENQUIRY THOROUGH INVESTIGATION WING, NEW DELHI, IT WAS REPO RTED THAT SUCH 8 FIRMS DID NOT EXIST AT THE ADDRESSES GIVEN. H) THE BROKER MIS. RAJESH KUMAR ARUN KUMAR, GWALIOR CONFIRMED THE DEALINGS BETWEEN MIS. A.K. IMPEX AND THE APPELL ANT THROUGH HIM AND HE ALSO PROVIDED MOBILE NUMBER OF MIS. A.K IMPEX. I) MOBILE NO. WAS PROVIDED BY THE BROKER AND THE IN SPECTER OF RANGE-I, GWALIOR TALKED TO MIS. A.K. IMPEX ON PHONE . THE DEBTOR ALSO CONFIRMED THE ADDRESS BUT ON VERIFICATION BY I NVESTIGATION WING , DELHI, SUCH ADDRESS WAS AGAIN FOUND INCORRECT. J) THE APPELLANT REMITTED EXCESS PAYMENT RECEIVED O VER AND ABOVE THE SALES AT RS.31,5281- BY ALC PAYEE CHEQUE TO MIS . A.K. IMPEX, WHICH WAS CREDITED IN ITS BANK ACCOUNT IN PUNJAB NA TIONAL BANK, NEW DELHI. ADDRESS IN THE BANK ACCOUNT WAS THE SAME AS WAS SUPPLIED BY THE DEBTOR. ACCORDING TO A. O. SUCH ACC OUNT WAS OPERATED AS HAWALA ACCOUNT K) SINCE THE ACCOUNT OF THE DEBTOR WAS MAINTAINED B Y THE APPELLANT, THE SALES CANNOT BE COVERED WITHIN THE MEANING OF ' COUNTER SALE'. THE AD, THEREAFTER, CONCLUDED THAT BECAUSE EXISTENC E OF MIS. A.K. IMPEX WAS NOT PROVED AS CONFIRMED BY DDIT & ITI AS WELL VAT AUTHORITIES OF DELHI, SALES EFFECTED BY THE APPELLA NT TO MIS. A.K. IMPEX WERE NOT GENUINE. ACCORDING TO THE AD, ASSESS EE DID NOT DISCHARGE THE BURDEN CASTED UPON HIM TO PROVE THE NATURE AND SOURCE OF ANY SUM CREDITED IN THE BOOKS OF ACCOUNTS , WHETHER IT IS ON ACCOUNT OF SALE CONSIDERATION OR OTHERWISE, WAS NOT DISCHARGED. FOR THIS PURPOSE HE RELIED UPON THE OBSERVATIONS IN THE CASE OF CIT VS. SOPHIA FINANCE LTD 2005 ITR DELHI BY DISTINGUISHING THE SA ME FROM THE OBSERVATIONS MADE IN CIT VS. LOVELY EXPORTS PVT LTD 216 CTR 195 AND CIT VS. STELLER INVESTMENT LTD 251 ITR 263 (SC). 1.2 SALES WERE ALSO EFFECTED TO THREE DEALERS OF MP WHO WERE ALSO FOUND TO BE NON-EXIST AT THE ADDRESSES GIVEN BY THEM. THE COMMERCIAL TAX DEPARTMENT, MP. REPORTED THAT AFORESAID PARTIES ARE NOT REGISTERED UNDER MP VAT ACT. THE BROKER, HOWEVER, CONFIRMED THAT COM MISSION WAS RECEIVED FROM THE APPELLANT AGAINST SALES TO SUCH P ARTIES BUT DID NOT PROVIDE THE ADDRESS OF THE PARTIES OR THEIR WHERE-A BOUTS. ONE DD & TWO PAY ORDERS OF RS. 80, 000/- EACH WERE CREDITED IN T HE ACCOUNT OF M/S. PRAVEEN TRADING COMPANY (ONE BUYER) WHICH WERE ISSU ED FROM UP. REST OF THE PAYMENTS FROM THREE PARTIES WERE RECEIVED BY THE APPELLANT IN CASH. 1.3 ACCORDING TO A.D., THE APPELLANT DID NOT ESTABL ISH THE NEXUS BETWEEN THE CREDITS APPEARING IN THE ACCOUNTS OF MIS. A.K. IMPEX AGAINST SALE PROCEEDS SHOWN IN ITS BOOKS OF ACCOUNTS. SALES REAL IZATION OF RS.5,16,07,472/- WAS, THEREFORE, TREATED AS UNEXPLA INED CASH CREDIT AFTER DEDUCTING GROSS PROFIT @ 11.59%. ON SAME FOOTING SALES EFFECTS TO THREE 9 BUYERS OF MP. WERE ALSO TAXED. THUS, ADDITION U/S 68 OF THE ACT HAS BEEN MADE SOLELY ON THE GROUND THAT IDENTITY OF THE DEBT ORS AND THE PERSONS FROM WHOM MONIES WERE RECEIVED AND CREDITED AGAINST SALES IN THE ACCOUNT OF MIS. A.K IMPEX WAS NOT PROVED. THE AD RE LIED UPON THE RATIO OF JUDGMENT IN THE CASE OF CIT VS. MADHAVNAGA R COTTON MILLS LTD 104 ITR 493 (BOM) WHICH IS DISTINGUISHABLE ON F ACTS. 1.6 EVIDENCES FURNISHED DURING THE COURSE OF APPELL ATE PROCEEDINGS WERE FORWARDED TO THE AO ALONG WITH WRITTEN SUBMISS IONS OF THE APPELLANT FOR COMMENTS, WHO OBJECTED FOR ADMISSION OF ANY NEW EVIDENCE. COPY OF THE COMMENTS RECEIVED WERE GIVEN TO THE APPELLANT. REGARDING ADMISSIBILITY OF EVIDENCES, TH E APPELLANT CLAIMED THAT NO NEW EVIDENCE WERE FURNISHED AND SUP PORTING DOCUMENTS WHICH ALREADY FORMS PART OF RECORD OR ORI GINALS OF WHICH WERE PRODUCED DURING THE COURSE OF ASSESSMENT WERE SUBMITTED AT THE APPELLATE STAGE. 02) IN WRITTEN SUBMISSIONS DATED 02/09/2011, ADDITI ONS MADE BY THE A.O. HAVE BEEN CHALLENGED BY THE APPELLANT ON MERIT S AS WELL AS ON LEGAL GROUNDS WHICH ARE REPRODUCED HERE UNDER:- REGARDING SALES TO A.I(. IMPEX, DELHI & 3 BUYERS OFM.P. 2.1 IT IS WELL KNOWN FACT THAT PARTIES ARE CARRYING ON TRADING ACTIVITIES OUTSIDE THE BOOKS EITHER BY MAINTAINING VARIOUS BANK ACCOUNTS OR BY CHANGING THEIR ADDRESSES QUITE OFTEN . SUCH TRADERS NOT ONLY AVOID PAYMENT OF INCOME TAX ON THE EARNING S BUT ALSO VAT, CENTRAL SALES TAX OR ENTRY TAX. THEY ARE NOT P URCHASING THE GOODS DIRECTLY FROM MANUFACTURER. SUCH BUSINESS IS CARRIED ON THROUGH BROKERS WHO ARE ALSO HIDING THE FACT FOR TH EIR VESTED INTEREST BECAUSE THEY ARE GETTING COMMISSION FROM T HE APPELLANT ON SALES EFFECTED THROUGH THEM. SUCH PARTIES DO MAN AGE 'C' FORM BOOKS IN AN UNAUTHORIZED MANNER SO THAT THE TRANSAC TIONS ARE NOT DISCLOSED TO THE VAT DEPARTMENT. SUCH BUYERS ALWAYS TAKE DELIVERY AT FACTORY BY DEPOSITING SALE PRICE IN CAS H OR BY PAY ORDER OR THROUGH RTGS. THEY DO NOT DISCLOSE SUCH TU RNOVER IN THEIR BOOKS OF ACCOUNTS JUST TO FACILITATE EVASION OF VAT/ENTRY TAX/INCOME TAX ON SUCH TRADING TRANSACTIONS. IT IS 9, MATTER OF GREAT STRANGE THAT SUCH NON-COMPLIANCE OF STATUTORY REQUIREMENTS BY THE BUYERS HAS BEEN PRESUMED AGAINST THE APPELLANT COMPANY SO AS TO TREAT THE SALES AS NON-GENUINE. 2.2 IT APPEARS THAT THE BUYER MIS. A.K. IMPEX HAD M ELAFIDE INTENTION SINCE BEGINNING TO AVOID THE PAYMENT OF D UE TAXES AS 10 EVIDENT FROM THE ENQUIRIES MADE BY THE AD:- A) WRONG ADDRESS WAS GIVEN BY THE BUYER; B) 'C' FOR M BOOKS OBTAINED IN AN UNAUTHORIZED MANNER; C) ADDRESS ON T HE PAN WAS DIFFERENT THAN THE BUSINESS ADDRESS; D) IN BANK ACC OUNT, ADDRESS WAS THE SAME AND SUCH BANK ACCOUNT WAS OPERATED ALS O BUT PROBABLY NOT DISCLOSED IN THE BOOKS; E) REMITTANCES WERE MADE DIRECTLY AS WELL AS THROUGH OTHER PARTIES WHO WERE ALSO PROBABLY INVOLVED IN SUCH TRANSACTIONS AND THEIR ADDRESS WER E ALSO FOUND TO BE INCORRECT. NORMAL TRADE PRACTICE ADOPTED BY SUCH DEALERS SUCH AS INCORRECT ADDRESS, CANCELLATION OF TIN AND AMOUN T RECEIVED FROM THIRD PARTIES ON BEHALF OF MIS. A.K. IMPEX WAS IGNO RED BY AD. THE MATERIAL FACT REGARDING ADVANCE RECEIPT OF MONEY IM MEDIATELY BEFORE SALE PROVES THE GENUINENESS OF SALE BEYOND D OUBT. 2.3 FURNISHING OF FALSE OR FAKE 'C' FORM :- IT IS SETTLED LAW THAT THE SELLING DEALER CANNOT BE PENALIZED EVEN IF IT IS PROVED THAT THE 'C' FORMS ISSUED BY THE BUYERS W ERE FALSE OR BOGUS UNLESS THERE IS ANY MATERIAL TO SHOW THAT THERE WAS ANY COLLUSION BETWEEN THE SELLER AND PURCHASING DEALER, AS HELD I N THE CASE OF ACTO VS. WHITE MARBLE HOUSE (2006) 148 STC 14 (RAJ). IN THE CASE OF STAR PAPER MILLS VS. CST (2005) 139 STC 245 (ALL), IT WAS HELD THAT HREGISTRATION CERTIFICATE OF BUYER WAS CANCELLED STILL HE ISSUED DECLARATION FORMS. THE SELLING DEAL ER WAS NOT AWARE AND BONAFIDELY SOLD THE GOODS AGAINST THE FORM. TAX CANNOT BE RECOVERED FROM SELLING DEALER'. IT IS, THEREFORE, SUBMITTED THAT THE APPELLANT CANN OT BE PENALIZED IN ANY MANNER IF THE PURCHASING DEALERS DID NOT ACCOUNT FOR THE TRANSACTIONS IN THEIR BOOKS OF ACCOUNT AND 'MADE THE PAYMENT IN CASH AGAINST SALES EFFECTED TO THEM. REL IANCE IS ALSO PLACED ON FOLLOWING JUDGMENTS :_. PLESTAR ELECTRONIC VS. A CST (1978) 41 STC 409 (SC) STATE OF MADRAS VS. RADIO & ELECTRICALS LTD. (1996) 18 STC 222 (SC) DY. CSTVS. BHARAT REFINERIES (1978) 41 STC 409 (KERALA - DB) STATE OF A.P. VS. ASKIN FABS (1999) 112 STC 550 (AP-DB) STATE OF ORISSA VS .BHARAT PETROLEUM (2001) 122 STC 11 559 (ORISSA _ DB) AGFA-GAVERT INDIA LTD. VS. STATE OF TAMIL NADU (2001) 123 STC 108 (MADRAS-DB) 2.4 BONOFIDES OF THE APPELLANT:- GENUINENESS OF SALES TO M/S. A.K. IMPEX WAS PROVED FROM FOLLOWING DOCUMENTS (COPIES OF WHICH WERE NOT ALLOWED TO BE S UBMITTED BY THE A.O):- A) SALE, EFFECTED WERE PROPERLY RECORDED AND VAT WAS DEPOSITED ON ENTIRE SALES @ 4% AND CST PAYABLE ON SUCH SALES WAS DEPOSITED @ 2%; B) B) QUANTITATIVE RECORDS OF PURCHASE & CONSUMPTION OF SOYA SEED, PRODUCTION OF CRUDE OIL, REFINED OIL & CAKE, SALES OF MANUFACTURED GOODS & STOCK WAS MAINTAINED ON DAY TO DAY BASIS; C) C) REMITTANCES ARE SUPPORTED BY COVERING LETTERS FROM THE BUYER AS AND WHEN THEY WERE RECEIVED; D) D) MTRS PROVING THE DISPATCH OF GOODS TO M/S. A.K. IMPEX ARE AVAILABLE. E) ) LETTERS ISSUED BY THE BROKER REGARDING REMITTANCE MADE IN SUPPORT OF THE FACT THAT THE BROKER WAS ALSO AWARE OF SUCH TRANSACTIONS; F) COPY OF ACCOUNT OF M/S. A.K. IMPEX PROVES BEYOND DO UBT THAT AMOUNTS WERE RECEIVED IN ADVANCE AGAINST SALES ; G) G) EXCESS RECEIPT OF RS. 31, 526/- WAS REMITTED BACK TO THE DEBTOR BY A/C PAYEE CHEQUE. IT IS SUBMITTED THAT WHEN THE AMOUNTS ARE RECEIVE D IN ADVANCE BEFORE DISPATCH, THE APPELLANT WAS NOT UNDER ANY OB LIGATION TO MAKE AN ENQUIRY FROM THE BUYER REGARDING SOURCE OF DEPOS ITING THE AMOUNT. NEITHER THE SUPREME COURT (72 ITR 194) NOR THE BOMBAY HIGH COURT IN 104 ITR 493 HAVE HELD THAT IN CASE THE AMOUNTS ARE RECEIVED AS ADVANCE TOWARDS SALE PROCEEDS, THE ASSE SSEE HAS TO PROVE THE SOURCE OF AMOUNT DEPOSITED BY BUYER. 2.5 BURDEN DISCHARGED BV APPELLANT :_ ON ONE HAND, THE A.O RECOGNIZED THE FACT THAT BANK ACCOUNT OF M/S. A.K IMPEX, IN PUNJAB NATIONAL BANK WAS HAVING SAME ADDRESS AS REPORTED BY THE APPELLANT. HE ALSO CONSIDERED TH AT SUCH ACCOUNT WAS BEING OPERATED BY MIS. A.K. IMPEX AS HAWALA ACC OUNT YET THE BURDEN HAS BEEN SHIFTED ON THE APPELLANT TO PROVE T HE GENUINENESS OF SALES. THE FACT THAT THE AMOUNT WAS ADJUSTED AGA INST SALE INVOICE 12 ISSUED TO THE PARTY IMMEDIATELY ON DISPATCH OF GOOD S, THE BURDEN ON THE PART OF THE APPELLANT REGARDING CREDIT ENTRY IN THE BOOKS OF ACCOUNTS STANDS DISCHARGED. THE NEXUS OF SUCH CREDI T ENTRY WAS NOTHING ELSE THAN THE SALES EFFECTED TO THE PARTY. IT MAY NOT BE IN THE SHAPE OF 'COUNTER SALE' LIKE SALE EFFECTED BY A JEW ELLER IN HIS SHOP, BUT THE NEXUS OF RECEIPT WAS PROVED BEYOND DOUBT FR OM THE ENTRIES IN THE BOOKS OF ACCOUNTS. SUCH AMOUNTS WERE RECEIVE D IN ADVANCE BY CHEQUE/RTGS, CREDIT ENTRIES WERE MADE IN THE ACC OUNT OF MIS. A.K. IMPEX AND DEBIT ENTRY WAS MADE ON THE BASIS OF SALE INVOICE ISSUED TO HIM AT THE TIME OF DISPATCHES WHICH WERE EFFECTED ON NEXT DAY OR WITHIN A WEEK THERE WAS NO OPTION LEFT WITH THE APPELLANT EXCEPT TO PASS SUCH ENTRIES IN THE BOOKS WHEN REGUL AR BOOKS OF ACCOUNT ARE MAINTAINED. AS REGARDS, TRANSPORTATION OF GOODS, IT WAS EVIDENT FROM THE SALE INVOICES ITSELF THAT THE GOOD S IN FACT MOVED FROM THE FACTORY AND THE TANKER NO. WAS STATED ON E VERY INVOICE BY WHICH THE GOODS WERE LIFTED BY THE BUYER. THE AMOUNT REMITTED BY VARIOUS PARTIES ON BEHALF OF MIS. A.K. IMPEX WAS ALSO PROVED BECAUSE THE APPELLANT WAS IN POSSESSION OF LETTERS FROM SUCH PARTIES WHENEVER THE REMITTANCE W ERE MADE BY THEM AND COPIES OF SUCH LETTERS WERE ALSO PRODUCED BEFORE THE A 0 IN SUPPORT OF THE CLAIM THAT SUCH PARTIES HAD REMIT TED THE AMOUNT ON BEHALF OF MIS. A.K IMPEX. HOWEVER, THESE LETTERS WE RE NOT TAKEN ON RECORD BY THE A 0 FOR THE REASONS BEST KNOWN TO HIM. COPIES OF SUCH LETTERS AND CERTIFICATE FROM TRANSPORTER WHO DELIVE R THE GOODS TO MIS. A.K. IMPEX ARE ANNEXED FOR KIND PERUSAL IN SUP PORT OF SUBMISSIONS MADE ABOVE WITH A REQUEST TO KINDLY CON SIDER THE SAME BECAUSE THEY SUPPORT THE EXISTENCE OF THE BUYER. 2.6 SALES TOBUVERS IN MP :- IT IS SUBMITTED THAT THE INTENTION OF THREE PARTIES OF MP ALSO APPEARS AS .>~, MELAFIDE BECAUSE:- A) IN SPITE OF HAVING HUGE PURCHASES EFFECTED BY TH EM, THEY WERE NOT REGISTERED DEALERS UNDER MP VAT ACT: B) ENTIRE PURCHASES WERE EFFECTED BY THEM IN CASH W HICH IS IN CONTRAVENTION OF PROVISIONS OF SEC. 40A(3) OF THE A CT. C)TIN INFORMED TO THE APPELLANT WERE FOUND TO BE IN CORRECT; D)THE APPELLANT IS UNDER NO OBLIGATION TO EFFECT SA LES ONLY TO REGD. DEALERS UNDER MP. VAT ACT AND SUCH SALES CAN BE EFF ECTED TO ANY PERSON OR TO CONSUMER. E) DETAILS OF SALES EFFECTED TO THESE DEALERS WERE SUBMITTED ALONG WITH COPIES OF INYOI~ES AND CA SH RECEIPTS 13 ISSUED TO THEM. F) SUCH SALES WERE SPOT DELIVERY SALE G)THE AMOUNT WAS RECEIVED IN CASH AT THE TIME OF TA KING DELIVERY OF GOODS. H) SUCH RECEIPTS WERE NOT IN THE FORM OF ADVANCES EVEN FOR A DAY. I) SUCH RECEIPTS NOT LIKE AMOUNT RECEIVED FROM DELHI P ARTY ., . J) THE GOODS WER.E DELIVERED AGAINST CASH AND ON THE RECEIPT ISSUED TO THE PARTY, INVOICE NO. AND DATE WAS ALSO STATED. THUS SALES TO ALL THREE PARTIES WERE IN THE NATURE OF 'COUNTER SALE' ONLY THROUGH BROKER AND THE BUYER TOOK THE DELIVERY ON THE SPOT BY DEPOSITING CASH WITH THE CASHIER AFTER WEIGHMENT OF GOODS AT FACTORY PREMISES OF THE APPELLANT. ' 03) VALIDITY O FAPPLICABILITV OF SECTION 68 OF THE ACT AS SUBMITTED ABOVE, THE NEXUS OF SALE PROCEEDS AND THE AMOUNT RECEIVED IN ADVANCE FROM ALL THE PARTIES WAS PROVED BEYOND DOUBT AS EVIDENT FROM THE BOOKS OF ACCOUNTS. THE ASSESSIN G AUTHORITY STATED THAT THE NEXUS WAS NOT PROVED WITHOUT GIVING ANY JUSTIFICATION I THEREOF IN CASE, THE AMOUNTS ARE REMITTED BY THE BU Y~R THROUGH ANY OTHER PARTIES, IT CANNOT BE DENIED BY THE SELLER BE CAUSE SUCH AMOUNTS WERE CREDITED DIRECTLY IN THE BANK ACCOUNT OF THE APPELLANT. THE PARTIES WHO REMITTED THE AMOUNT WERE UNKNOWN TO THE APPELLANT BUT SUCH AMOUNTS WERE REMITTED ON BEHALF OF M/S. A.K. IMPEX ALONG WITH COVERING LETTERS OR EVEN BY INFORM ING THROUGH BROKER, HENCE CREDIT WAS GIVEN TO THAT ACCOUNT IN T HE BOOKS AND THEREAFTER SALE INVOICE WAS ISSUED ON DISPATCH OF G OODS. HOW IT CAN BE CONCLUDED THAT THERE WAS NO NEXUS OF SALE PROCEE DS AND THE REMITTANCE RECEIVED WITHOUT PROVING THE SAME OTHERW ISE ? IF SUCH SALE PROCEEDS ARE PERMITTED TO TAX U/S 68 8 OF THE ACT ALL TRANSACTIONS WHERE ADVANCES ARE RECEIVED AGAINST SALE, WILL BE T AXED AND WILL RESULT INTO ABSURDITY. , IT IS, THEREFORE, SUBMITTED THAT SALE PROCEEDS CANN OT BE TAXED U/S 68 OF THE ACT. THE DEPOSITS FROM THE PARTIES WERE NOT IN THE FORM OF CREDITS OR LOAN AT ANY GIVEN POINT OF TIME. SUCH DE POSITS WERE IN THE NATURE OF ADVANCES AGAINST WHICH GOODS WERE DISPATC HED IMMEDIATELY AND SUCH SALES WERE ALSO RECORDED PROPE RLY IN THE BOOKS OF ACCOUNTS. THERE MAY BE TEMPORARY CREDIT BA LANCE IN THE 14 ACCOUNT OF THE DEBTOR FOR A NOMINAL PERIOD OF A DAY OR TWO BUT IT CANNOT BE TERMED AS 'CASH CREDIT' WITHIN THE MEANIN G OF SECTION 68 OF THE ACT. JUST BECAUSE THE AMOUNTS WERE RECEIVED FROM THE BUYERS IN CASH, THE APPELLANT CANNOT BE PENALIZED BECAUSE THE RESTRICTION PLACED FOR PAYMENT U/S 40A(3) OF THE ACT APPLIES TO BUYER AND NOT THE SELLER. THERE BEING NO RESTRICTION UNDER THE AC T TO ACCEPT CASH AGAINST SALES, THE APPELLANT COMPANY CANNOT BE PENA LIZED. THE AO RELIED UPON CERTAIN JUDGMENTS FOR THE PURPOSE OF MA KING ADDITION U/S 68 OF THE ACT WHICH ARE NOT RELEVANT AT ALL BEC AUSE THEY RELATED TO AMOUNT RECEIVED AS SHARE APPLICATION MONEY OR SH ARE CAPITAL FROM THE SHAREHOLDERS. THE QUESTION FOR KIND CONSIDERATION IS WHETHER ADVA NCES RECEIVED IN CASH AGAINST SALE CAN BE TREATED AS UN-EXPLAINED CA SH-CREDIT? SIMILAR ISSUE HAS BEEN DECIDED BY HON'BLE TRIBUNAL IN FOLLOWING CASES:- 1) HEERA STEEL LTD VS. ITO (2005) 4 ITJ 437 (NAGPUR BENCH) HELD THAT 'BOTH THE LOWER AUTHORITIES FAILED TO APP RECIATE THE CASE OF THE ASSESSEE THAT THESE WERE TRADE ADVANCES AND NOT CASH CREDITS AND AGAINST SUCH ADVANCES, THE ASSESSEE HAS SUPPLIE D THE MATERIAL IN DUE TIME AS PER DETAILS AVAILABLE ON RECORD. IN VIEW OF THE ABOVE, THERE IS NO JUSTIFICATION FOR THE REVENUE AUTHORITI ES TO TREAT THESE CASH ADVANCES AS UNEXPLAINED CASH CREDITS UNDER SEC TION 68 - ADDITION DELETED. ' OTHER JUDGMENTS RELIED UPON BY THE APPELLANT ARE :- A) ASSTT. CIT VS. SHRI RAM NUTRIENTS LTD (2010) 14 ITJ 219 (INDORE BENCH) B) DY. CIT VS. A.S.N. AGRI GENETIC PVT LTD (2010) 1 5 ITJ 160 (INDORE BENCH) 3.2 THE APPELLANT VIDE ITS SUBMISSION DATED 17/10 /2011 FURTHER SUBMITTED AS UNDER:- 'REQUEST FOR ADMISSION OF ADDITIONAL EVIDENCES UNDE R RULE 46A OF INCOME TAX RULES IN CONTINUATION TO SUBMISSIONS MADE EARLIER REGARDI NG GENUINENESS OF SALES OF OIL EFFECTED BY THE APPELLANT TO VARIOU S PARTIES, WE SUBMIT THAT VARIOUS DOCUMENTS WERE PRODUCED BEFORE THE ASS ESSING AUTHORITY BUT ADDITION HAS BEEN MADE U/S 68 OF THE ACT CONSIDERING 15 THE AMOUNT SALE PROCEEDS OF REFINED OIL TO FOUR PAR TIES AS UNEXPLAINED CREDITS. AS SUBMITTED EARLIER REFINED O IL IS BEING PURCHASED BY MANY DEALERS BY OBTAINING ITS DELIVERY AT FACTORY SITE AND SALE PROCEEDS ARE BEING DEPOSITED IN ADVAN CE THROUGH RTGSIDDSLPAY ORDERS. SOME DEALERS ARE ALSO DEPOSITI NG THE AMOUNT IN CASH AGAINST WHICH DELIVERY WAS GIVEN ON SAME DAY. IN SUPPORT OF AFORESAID NORMAL PRACTICE ADOPTED BY THE BUYER AND TO SUBSTANTIATE THE CLAIM OF THE APPELLANT REGARDING N ORMAL TRADE PRACTICE WE REQUEST YOUR HONOUR TO CONSIDER CERTAIN DETAILS AND DOCUMENTARY EVIDENCES AND IN CASE THEY ARE CONSIDER ED AS ADDITIONAL EVIDENCE, THE SAME MAY PLEASE BEFORWARDE D TO THE ASSESSING AUTHORITY:- 1) THE COMPANY EFFECTED SALES OF OIL IN TANKERS TO 79 DEALERS OF MP AND OUTSIDE STATE. TOTAL TURNOVER TO SUCH DEALERS W AS RS. 67. 63 CRORES AS PER STATEMENT ANNEXED GIVING COMPLETE NAM ES, ADDRESSES, TIN, AMOUNT OF SALES EFFECTED AND MODE OF REALIZATI ON. ON PERUSAL OF THE STATEMENT, IT IS EVIDENT THAT SALES WERE EFF ECTED TO 73 DEALERS OF MP AND 6 DEALERS OUTSIDE MP, WHO REMITTED THE AMOUNT IN CASH AS WELL BY PAY ORDERS, DD, RTGS AND BY CHEQUES. NAT URE OF SALES TRANSACTIONS WERE SIMILAR FOR SUCH DEALERS AND THE DELIVERY WAS ALSO GIVEN AT SITE. OUT OF'73 DEALERS OF THE STATE ABOUT 50% DEALERS I.E. 33 DEALERS REMITTED THE AMOUNT IN CASH. SIMILA RLY TWO DEALERS OUTSIDE MP ALSO DEPOSITED THE AMOUNT IN CASH. THIS ITSELF PROVES THAT THE FACT THAT MANY DEALERS CARRYING ON THE BUS INESS IN OILS USE TO DEPOSIT THE AMOUNT IN CASH WITH THE APPELLANT. 2) IT IS PERTINENT TO NOTE THAT OUT OF SUCH 33 PARTIES OF MP, WHO HAD DEPOSITED THE AMOUNT IN CASH, THE ASSESSING AUTHORI TY HAD SELECTED 3 PARTIES ONLY WHO HAD PURCHASED THE GOODS FROM THE A PPELLANT AND TAXED THE AMOUNT DEPOSITED IN CASH U/S 68 OF THE ACT. MANY DEALERS (20) REMITTED THE .AMOUNT BY DD AND RTGS WHICH WAS NOT D OUBTED UPON BY THE AO EXCEPT THE REMITTANCES MADE BY MIS. A.K. IMPEX, DEL HI. BREAK-UP OF SALES REALIZATION FROM THE DEALERS IS AS UNDER :- A)REMITTANCES IN CASH RS. 6,36,31,328/- B)BY PAY ORDERS RS. 7,43,14,326/- C)REMITTANCES THROUGH DD/RTGS RS.13,83,04,831/- D) REMITTANCES BY CHEQUES RS. 30, 49, 07, 455/- E)REMITTANCES BY D/D RS. 3,56,11,450/- J) REMITTANCESTHROUGH NBOT RS.5,95,70,137/- 16 TOTAL RS.67,63,39,527/- COPIES OF ACCOUNTS OF VARIOUS PARTIES TO WHOM SALES WERE EFFECTED OVER RS.15 LACS ARE ENCLOSED INDICATING COMPLETE DETAILS SUCH AS INVOICE NO., DATE OF INVOICE, AMOUNT OF INVOICE AND MODE OF PAYM ENT ETC. IT IS THEREFORE, SUBMITTED THAT THE TRANSACTION OF SALES EFFECTED BY THE APPELLANT WERE GENUINE AND ITS RECEIPT BY CHEQUE, C ASH OR RTGS WAS NORMAL FEATURE IN THIS LINE OF TRADE. AS SUBMITTED EARLIER, THE DEALERS MAY BE INVOLVED IN THE TRADING ACTIVITIES OUTSIDE T HE BOOKS OF ACCOUNTS FOR WHICH THE APPELLANT CANNOT BE HELD RESPONSIBLE. TRANSACTIONS OF CASH DEPOSIT WAS IN THE NATURE OF COUNTER SALE ONLY AND THE DELIVERY WAS GIVEN ON SAME DAY WHEREAS DD / RTGS WERE RECEIVED IN ADVANCE DIRECTLY OR THROUGH BROKERS AGAINST SUPPLIES WHICH WERE EFFECTED WITHIN A WEEKS TIME. IT IS AGAIN SUBMITTED THAT SUCH EVIDENCES ARE NOT A DDITIONAL EVIDENCE IN ANY MANNER BUT IT IS IN THE FORM OF BREAK-UP OF SALES AND MODE OF RECEIPT JUST TO PROVE THE FACT THAT THE AD CHOOSED ONLY 4 PARTIES OUT OF 79 DEALERS HAVING SIMILAR TRANSACTIONS AND ASSESSED TH E REMITTANCE RECEIVED BY THE APPELLANT TOWARDS SALES OF REFINED OIL U/S 68 OF THE ACT. UNDER THE CIRCUMSTANCES, THE ACTION OF THE ASSESSIN G AUTHORITY TO TAX THE AMOUNT RECEIVED IN ADVANCE AGAINST SALES U/S 68 OF THE ACT IS BASED ON PRESUMPTIONS AND SURMISES AND THE SAME DESERVES TO BE QUASHED. ' 3.3 REMAND REPORT UNDER RULE 46A OF THE IT RULES WA S CALLED FROM THE AO ON THE BASIS OF THE WRITTEN SUBMISSIONS AND THE EVI DENCES FURNISHED BY THE APPELLANT VIDE LETTER DATED 24/01/ 2012. THE AO SUBMITTED HIS REPORT ON 09/02/2012 REQUESTING NOT T O ADMIT ADDITIONAL EVIDENCE AND REITERATED THE SAME FACTS AS WERE MENT IONED IN THE ASSESSMENT ORDER. THE APPELLANT IN ITS REJOINDER DA TED 16/02/2012 SUBMITTED AS UNDER : 'RE : ADDITIONAL EVIDENCE UNDER RULE 46A OF INCOME TAX RULES AND COMMENTS OF AD APPEAL PERTAINING TO A. 1': 2008-09 --------------------------------------------------- ---------------------- WITH REFERENCE TO COMMENTS MADE BY THE ASSTT. COMMI SSIONER OF INCOME TAX - 1(1), UJJAIN REGARDING ADMISSION OF ADDITIONAL EVIDENCE BESIDES COMMENTS ON SUBMISSIONS MADE BEFORE YOUR HO NOUR DURING APPELLATE PROCEEDINGS, WE SUBMIT THE FOLLOWING FOR KIND CONSIDERATION :- 1) ADDITIONAL EVIDENCE :- AT THE OUTSET, WE SUBMIT THAT ALL DOCUMENTS WERE FU RNISHED BEFORE AO DURING THE COURSE OF ASSESSMENT PROCEEDINGS SO AS T O PROVE THAT SALES EFFECTED TO MIS. A.K. IMPEX, DELHI AND THREE LOCAL PARTIES OF SHAJAPUR IN NORMAL COURSE OF BUSINESS WERE GENUINE SALES. THESE SALES WERE DOUBTED 17 ONLY ON THE GROUND THAT THE BUYERS COULD NOT BE TRA CED BY THE DEPARTMENT. THE EXISTENCE OF THE BUYERS VIZ. M/S. A.K. IMPEX, D ELHI WAS OTHERWISE PROVED FROM VARIOUS DOCUMENTARY EVIDENCES. IN SUPPO RT OF THE FACT THAT SALES WERE MADE TO EXISTING PARTIES FURTHER EVIDENC ES WERE PLACED ON RECORD IN THE FORM OF COPY OF CASH RECEIPTS ISSUED TO THEM AND CORRESPONDENCE IN THE FORM OF LETTERS RECEIVED FROM M/S. A.K. IMPEX, DELHI. SUCH CORRESPONDENCE AND CASH RECEIPTS WERE S UPPORTING EVIDENCE ONLY AND THEY WERE IN FACT PRODUCED BEFORE A O IN O RIGINAL AT THE TIME OF ASSESSMENT. ON RECEIPT OF ASSESSMENT ORDER, IT WAS FOUND THAT THE FACT STATED AT PAGE 14 (PARA 6.4) BY THE AD WAS NOT CORRECT HENCE SUCH CORRESPONDENCE FROM M/S. A.K. IMPEX, DELHI WERE SUB MITTED AT APPELLATE STAGE. SIMILARLY, AT PARA 6.6 OF PAGE 14 OF THE ORDER, CLAIM OF THE ASSESSEE THAT SALES WERE MADE OVER THE COUNTER WAS DISBELIEV ED HENCE CASH RECEIPTS WERE FILED AT APPELLATE STAGE. EXCEPT FILI NG OF PHOTO COPIES OF THE DOCUMENTS PRODUCED EARLIER (BUT NOT TAKEN ON RECORD ) NO NEW EVIDENCE WAS SUBMITTED AT THE APPELLATE STAGE. SUCH EVIDENCE S WERE NEITHER OBTAINED SUBSEQUENT TO THE ASSESSMENT ORDER PASSED BY THE AD NOR THEY ARE IN THE NATURE OF ADDITIONAL EVIDENCE BUT IT BEC AME NECESSARY TO BE PRODUCED TO REBUT THE OBSERVATIONS MADE IN THE ASSE SSMENT ORDER. ACCORDING TO THE APPELLANT, THEY ARE NOT IN THE FOR M OF ADDITIONAL EVIDENCE YET AT THE INSTANCE OF THE THEN COMMISSIONER OF IN COME TAX (APPEALS), REQUEST WAS MADE UNDER RULE 46A OF THE ACT VIDE LET TER DATED 17.10.2011 SO THAT IT CAN BE EXAMINED BY THE AO. 2) OPPORTUNITY TO THE APPELLANT :- AS REGARDS, COMMENTS MADE IN PARA 3 TO 5 OF THE LETTER, WE SUBMIT THAT ON PERUSAL OF CASE RECORDS IT IS EVIDENT THAT VOLUMINO US DETAILS WERE SUBMITTED BY THE APPELLANT AS AND WHEN CALLED FOR A ND THE APPELLANT ATTENDED THE PROCEEDINGS ALONG WITH REGULAR BOOKS O F ACCOUNTS, SALE INVOICES, VOUCHERS, RECEIPT BOOKS ETC. THEREFORE, I T HAS BEEN CLAIMED BEFORE YOUR HONOUR THAT OBSERVATIONS MADE IN THE AS SESSMENT ORDER ARE BASED ON PRESUMPTION SOLELY ON THE GROUND THAT THE BUYERS COULD NOT BE TRACED BECAUSE OF THE REASONS WELL EXPLAINED IN EAR LIER SUBMISSION. 3) PARTY-WISE DETAILS OF SALES HAVE BEEN SUBMITTED BECAUSE THE SAME WAS ENQUIRED BY THE THEN COMMISSIONER OF INCOME TAX (A) SO THAT THE NORMAL PRACTICE PREVAILING IN OIL TRADE CAN BE VIEWED. SUC H DETAILS SUPPORTS TO THE CLAIM OF THE APPELLANT THAT CERTAIN PARTIES ARE CARRYING ON THE BUSINESS OUTSIDE THE BOOKS (IN CASH) IN CONTRAVENTION TO THE PROVISIONS OF SECTION 40A(3) OF THE ACT WITH THE ULTERIOR MOTIVES FOR WHI CH THE APPELLANT (THE SELLER) CANNOT BE PENALIZED. 3.4 AS REGARDS DISCHARGING OF BURDEN AS TO CREDITS APPEARING AGAINST 18 SALE PROCEEDS ONLY, THE APPELLANT FURTHER SUBMITTED VIDE LETTER DATE 16/02/2012 AS UNDER:- 3) ONUS UPON THE ASSESSEE U/S 68 OF THE ACT ADMITTEDLY, SECTION 68 OF THE ACT THE OBLIGATION IS CASTED UPON THE ASSESSEE TO EXPLAIN THE CREDITS IN THE BOOKS. AT TH E OUTSET, SECTION 68 IS NOT APPLICABLE TO THE APPELLANT'S CASE BECAUSE NO CREDI TS WERE APPEARING IN THE BOOKS OF THE ASSESSEE AT ANY GIVEN POINT OF TIM E IN THE ACCOUNTS OF THREE BUYERS OF MP WHICH CAN BE TERMED AS CASH CRED ITS. AS EVIDENT FROM THE BOOKS, AMOUNT WAS DEPOSITED BY THEM ON THE SAME DAY ON WHICH SALES WERE EFFECTED. NOT A SINGLE DAY ANY CREDIT WAS LYIN G IN THE BOOKS OF THE ASSESSEE OF SUCH PARTIES HENCE BY ANY STRETCH OF IM AGINATION PAYMENTS RECEIVED FROM THREE PARTIES CAN NOT BE COVERED WITH IN THE MEANING OF CREDITS IN THE BOOKS OF THE ASSESSEE. SIMILARLY, AM OUNT RECEIVED FROM MIS. A.K. IMPEX, DELHI WERE ADVANCE AGAINST ORDERS PLACE D BY IT AND IMMEDIATELY ON RECEIPT OF ADVANCE, THROUGH BROKERS DULY SUPPORTED BY COVERING LETTERS FROM MIS. A.K. IMPEX, DELHI, DETAI LED CONFIRMATION OF ACCOUNT RECEIVED IN NORMAL COURSE OF BUSINESS, SALE S WERE EFFECTED WITHIN A WEEKS TIME. SUCH ADVANCE RECEIPT AGAINST SALE WHI CH WERE EXCLUSIVELY ADJUSTED AGAINST SALE BILLS RAISED TO SAID PARTY CA NNOT BE TERMED AS 'CASH CREDITS' WITHIN THE MEANING OF SECTION 68 OF THE ACT. JUST BECAUSE THE PARTY COULD NOT BE TRACED AFTER TWO YEARS, THE APPE LLANT CANNOT BE HELD RESPONSIBLE TO LOCATE THE PARTY, AS EXPECTED BY AO. 4) THE APPELLANT MADE ALLEGATION IN ITS LETTER DATED 0 2.09.2011 WITH REGARD TO MELAFIDE INTENTION OF THE BUYERS BUT IN P ARA 9 OF THE LETTER, THE AD HAS TREATED THE SAME AS ASSERTIONS ON THE PART O F THE ASSESSEE. THE MANNER IN WHICH THE TRADE IS BEING CARRIED OUT IN V ARIOUS COMMODITIES IN THE COUNTRY WAS EXPLAINED BY THE APPELLANT JUST TO APPRAISE OF THE CORRECTNESS OF FACTS. INSTEAD OF APPRECIATING' THE FACT, THE AD HAS CASTED ADDITIONAL DUTY ON THE APPELLANT TO HELP THE DEPART MENT TO IDENTIFY SUCH BUYERS WITH WHOM THE APPELLANT HAD DEALT IN. IF SUC H DUTY IS CASTED UPON THE SELLER, ALL RETAIL STORES AND SPECIALLY THAT OF BULLION AND JEWELLERY WILL NOT ISSUE ANY SALE INVOICE BECAUSE IDENTITY OF THE BUYERS, WHO PURCHASE SUCH COMMODITY AGAINST CASH PAYMENT CANNOT BE PROVE D BY THE SELLER. 4) THE DECISIONS OF HON 'BLE ITAT, INDORE BENCH, IN DORE HAVE BEEN QUOTED IN SUPPORT OF THE CLAIM THAT SALES EFFECTED BY AN ASSESSEE CANNOT BE TREATED AS CASH CREDITS U/S 68 OF THE ACT BECAUSE SALE CONSIDERATION WAS DULY ENTERED IN THE BOOKS OF ACCOUNTS. 5) AS REGARDS DOUBLE TAXATION, THE COMMENT OF THE A D THAT 19 GROSS PROFIT DECLARED WAS REDUCED FROM SUCH RECEIPT S IS IN FACT A MISLEADING STATEMENT BECAUSE TO THE EXTENT O F THE VALUE OF GOODS (AFTER DEDUCTION OFGP), THE DOUBLE T AXATION DID OCCUR WHICH CAN BE EXPLAINED BY AN EXAMPLE AS UNDER:- TRADING ACCOUNT (RS.IN CRORES) OPENING STOCK 1.00 SALES 53.00 PURCHASES 50.00 CLOSING STOCK 2.00 DIRECT EXPENSES 0.50 GROSS PROFIT 3.50 TOTAL 55.00 55.00 GROSS PROFIT AS ABOVE RS. 3.50 CRORE LESS : GROSS PROFIT ON SALES TO UNIDENTIFIED BUYERS WORTH RS. 7 CRORES (-) RS 0.46 CRORES 3.04 CRORE ADD : SALE PROCEEDS TREATED AS CASH CREDITS RS. 7.00 CRORE TOTAL RS. 10.04 CRORE THUS, ON ONE HAND COST OF SALES HAS BEEN ADDED AND ON THE OTHER HAND SALE PROCEEDS HAVE BEEN TAXED WITHOUT AL LOWING ANY DEDUCTION TOWARDS COST OF GOODS WHICH RESULTED INTO DOUBLE TAXATION. JUDGMENTS CITED IN RELATION TO DOU BLE TAXATION ON PAGE 11 AND 12 OF THE SUBMISSIONS MADE EARLIER ARE, THEREFORE, RELEVANT FOR KIND CONSIDERATION. 20 WE ALSO SUBMIT THAT PRINCIPAL LAID DOWN IN THE JUDG MENT OF APEX COURT (291 ITR 278) SQUARELY APPLIES TO THE CASE OF THE ASSESSEE THOUGH IT WAS DECIDED AGAINST THE ASSESSEE . IT WAS HELD THAT THE ASSESSING OFFICER SHOULD FORM THE OPINION OBJECTIVELY WITH REFERENCE TO MATERIALS ON RECORD WHEREAS IN THE INS TANT CASE, THE AO MADE THE ADDITION SOLELY ON THE GROUND THAT THE BUYER COULD NOT BE TRACED. HAD IT BEEN A CASE OF CREDITS APPEARING AT THE CLOSE OF THE YEAR IN THE ACCOUNT OF THE BUYER BY WAY OF ADVA NCE AGAINST SALE AND IF THE BUYER WHO COULD NOT BE TRACED, THE ADDITION WOU LD HAVE BEEN JUSTIFIED BUT THERE BEING NO CREDITS IN THE BA LANCE SHEET OF THE ASSESSEE AND ENTIRE COLLECTION FORMS PART OF THE SA LES APPEARING TO THE CREDIT OF PROFIT AND LOSS ACCOUNT DULY CONFIRME D BY THE BUYER. AT VARIOUS STAGES, THE A 0 DID NOT APPRECIATE THE MATERIAL FACTS OF THE BUSINESS ACTIVITY AS A WHOLE NOR HE CONSIDERED-SHE REGULAR QUANTITATIVE BOOKS OF ACCOUNTS FOR THE PURPOSE OF FORMING THE OPINION. THE APPELLANT HAS OFFERED PROPER EXPLANATI ON REGARDING COLLECTION OF SALE PROCEEDS AND THE BURDEN REGARDIN G NATURE OF SUCH RECEIPT WAS PROVED BEYOND DOUBT BY VARIOUS DOCUMENT S. ',' IT IS, THEREFORE, SUBMITTED THAT THE ADDITION SO MA DE U/S 68 OF THE ACT EQUAL TO THE AMOUNT OF SALE PROCEEDS ALREADY CREDIT ED TO PROFIT AND LOSS ACCOUNT DESERVES TO BE QUASHED. ' 4. THE ADDITIONS MADE HAVE ALSO BEEN CHALLENGED ON THE GROUND THAT THE AMOUNT RECEIVED FORM PART OF SALE PROCEEDS CRED ITED IN THE PROFIT & LOSS ACCOUNT HENCE IT AMOUNTED TO DOUBLE TAXATION OF SAME INCOME WHICH IS NOT PERMISSIBLE UNDER THE LAW. THE SUBMISSIONS MADE VIDE LETTER DATED 02/09/2011, IN THIS CONNECTI ON ARE REPRODUCED HEREUNDER :- 'WE FURTHER SUBMIT THAT ADDITIONS MADE ALSO DESERVE S TO BE QUASHED ON THE GROUND THAT IT RESULTED INTO DOUBLE TAXATION. ON ONE HAND, NET SALES (AFTER DEDUCTING GROSS PROFIT) CRED ITED IN THE BOOKS AND APPEARING ON CREDIT SIDE OF PROFIT AND LOSS ACCOUN T HAS BEEN ASSESSED TO TAX AND ON THE OTHER HAND SAME AMOUNT HAS BEEN A SSESSED U/S 68 OF THE ACT. AS SUBMITTED ABOVE, SALE PROCEEDS CANNOT B E TREATED AS CASH CREDIT BY. ANY STRETCH OF IMAGINATION. SUCH RECEIPTS WERE ADJUSTED AGAINST THE SALE OF GOODS CREDITED TO PROFIT AND LOSS ACCOUNT AND IT AMOUNTED TO DOUBLE TAXATION OF THE SAME AMOUNT WHICH IS UNWARRANTED AN D UNAUTHORIZED BY LAW AS HELD IN FOLLOWING JUDGMENTS: I- I) NAMRA MAHILA EVAM BAL KALYAN SAMITI VS. ACIT (2 010) 15 ITJ 581 (INDORE BENCH) : IN THIS CASE DONATIONS WERE RECEIVED BY A SOCIETY W HO WAS GRANTED REGISTRATION U/S 12AA OF THE ACT AND IT WAS ALSO APPROVED U/S 80G. 21 DONATIONS WERE RECEIVED BY THE SOCIETY IN CASH AND SAME WERE DEPOSITED IN BANK WITHIN A ' SHORT SPAN OF TIME WHICH WERE TREATED AS BOGUS HENCE ADDITION WAS MADE U/S 68 OF THE ACT. THE HON 'BLE TRIBUNAL HELD THAT DONATIONS RECEIVED IS TAXABLE AS INCOME U/S 2(24) O FT HE ACT AND THE SAME HAS ALSO BEEN OFFERED FOR TAX HENCE PROVISIONS OF SECTION 68 CANNOT BE APPLIED. II) BHIMSEN KHOSLA VS. CIT NEW DELHI (1982) 133 ITR 619 (DELHI). THE COURT HAD OCCASION TO CONSIDER THE POINT OF DOU BLE TAXATION AND HELD AS UNDER .'- 'HOWEVER WE SHOULD LIKE TO SAY THAT THE DEPARTMENT CAN NOT SEEK TO MAINTAIN THE ASSESSMENT OF THE SAME INCOME IN BOTH SETS OF YEARS. CONSEQUENT ON OUR DECISION THAT IT WAS RIGHTLY INCL UDIBLE IN THE ASSESSMENT YEAR 1961-62, IT IS NECESSARY THAT THE DEPARTMENT SHOULD TAKE IMMEDIATE STEPS TO EXCLUDE THE INCOME FROM PUR VIEW OF THE ASSESSMENT FOR 1957-58 TO 1960-61. WE ARE QUITE SURE THAT THE DEPARTMENT WILL TAKE NECESSARY ADMINISTRATIVE ACTIO N TO SEE THAT THE DOUBLE TAXATION IS NOT MAINTAINED BY GIVING THE ASS ESSEE APPROPRIATE RELIEF IN REGARD TO THE EARLIER YEARS.' III) SIMILARLY DOUBLE TAXATION ON SAME AMOUNT HAS B EEN DIS-APPROVED IN FOLLOWING CASES ALSO :- A) LAXMIPAT SINGHANIA VS. CIT (1969) 72 ITR 291 (SC) B) JOTIPRASAD AGRAWAL & OTHERS VS. ITO (1959) 37ITR 107 (ALL) C)CIT MPVS. MRS. BANNOE. COWASJI (1984) 147ITR 744 (MP) THE APEX COURT IN THE CASE OF CIT VS. P. MOHANKALA (2007) 291 ITR 278 (SC) HAD LAID DOWN THE PRINCIPAL REGARDING THE EXPRESSION APPEARING IN SECTION 68 OF THE ACT I. E. 'THE ASSES SEE OFFERS NO EXPLANATION MEANS WHERE THE ASSESSEE OFFERS NO PROP ER, REASONABLE AND ACCEPTABLE EXPLANATION AS REGARDS THE SUMS FOUN D CREDITED IN THE BOOKS MAINTAINED BY THE ASSESSEE. THE OPINION OF TH E ASSESSING OFFICER FOR NOT ACCEPTING THE EXPLANATION OFFERED B Y THE ASSESSEE AS NOT SATISFACTORY IS REQUIRED TO BE BASED ON PROPER APPRECIATION OF MATERIAL AND OTHER ATTENDING CIRCUMSTANCES AVAILABL E ON RECORD. THE OPINION OF THE ASSESSING OFFICER IS REQUIRED TO BE FORMED OBJECTIVELY WITH REFERENCE TO THE MATERIAL ON RECOR D. APPLICATION OF MIND IS THE SINE QUA NON FOR FORMING THE OPINION '. IN THE CASE OF CIT VS. DEVI PRASAD VISHWANATH PRASA D (1969) 72ITR 194 (SC) IT WAS HELD THAT 'IT IS FOR THE ASSE SSEE TO PROVE THAT EVEN IF THE CASH CREDIT REPRESENTS INCOME, IT IS IN COME FROM A SOURCE WHICH HAS ALREADY BEEN TAXED'. 05) SPECIFIC QUERRY WAS RAISED DURING THE COURSE OF APPELLATE PROCEEDINGS REGARDING MODE OF TRANSPORTATION OF GOO DS SOLD TO M/S.A.K. IMPEX, DELHI AND THREE TRADERS OF SHAJAPUR (MP) WHICH WAS 22 SUSPECTED BY THE A.D. AND TO FURNISH DOCUMENTARY EVIDENCE THERE AGAINST. THE APPELLANT EXPLAINED THE SAME VIDE SUBM ISSION DATED 16/02/2012 AS UNDER:- 'AS EVIDENT FROM COPIES OF SALE INVOICES ALREADY PL ACED ON RECORD, SALES OF OIL WAS EFFECTED TO MIS. A.K. IMPEX, DELHI IN OIL TANKERS WHEREAS SALES TO LOCAL PARTIES OF SHAJAPUR DISTT. W ERE EFFECTED IN OIL DRUMS, HENCE THEY WERE TRANSPORTED BY TRUCKS. SUCH TANKER/TRUCKS WERE ARRANGED BY THE BUYERS ONLY AND THE COMPANY DI D NOT MAKE ANY PAYMENT OF FREIGHT TO THE TRANSPORTERS. TANKER/ TRUCK NUMBER BY WHICH GOODS WERE TRANSPORTED HAVE BEEN INVARIABLY M ENTIONED ON ALL SALE INVOICES, AS A REGULAR SYSTEM FOLLOWED WHI LE DISPATCHING THE GOODS ALONG-WITH ENTRIES RECORDED AT THE FACTORY GA TE. M/S. A.K. IMPEX, DELHI ARRANGED THE OIL TANKERS THR OUGH ITS TRANSPORTER VIZ. M/S. H. G. OIL CARRIERS, 79, TRANSPORT CENTER, ROHTAK ROAD, NEW DELHI. A LIST CONTAINING COMPLETE DETAILS OF SALES WITH RESPECTIVE TANKER NUMBERS. IS ENCLOSED FOR KING PERUSAL ALONG WITH THE CERTIFICATE OF THE TRANSPORTER STATING THE TANKER NUMBERS, DATE AS WELL THE GROSS WEIGHT OF OIL TRANSPORTED. IT HAS FURTHER BEEN CERTIFIED BY THE TRANSPORTER THAT THE FREIGHT WAS PAID BY MLS.A.K. I MPEX ONLY. AS REGARDS SALES EFFECTED TO THREE PARTIES OF SHAJA PUR DISTT. (MP.) FOLLOWING DETAILS ARE ENCLOSED:- A)M/S. MOHAN TRADERS ARRANGED TRUCK BEARING NO. MP- 09-GE-1651 TO CARRY THE GOODS FROM FACTORY SITE AGAINST CASH P AYMENT. THE REGISTRATION COPY OF VEHICLE DOWNLOADED FROM THE WE BSITE OF TRANSPORT DEPARTMENT OF MP. IS ANNEXED FROM WHICH IT IS EVIDE NT THAT THE VEHICLE WAS DULY REGISTERED AS PICK-UP VAN BY WHICH OIL DRU MS WERE TRANSPORTED BY THE BUYER. B) IN CASE OFM/S. MAA BHAGWATI TRADERS, REGISTRATIO N CERTIFICATES OF ALL TRUCKS (ELEVEN) DOWNLOADED FROM THE WEBSITE OF TRANSPORT DEPARTMENT OF MP. BY WHICH GOODS WERE TRANSPORTED I N OIL DRUMS BY THE BUYER ARE ENCLOSED ALONG WITH COMPLETE DETAILS OF SALES EFFECTED TO SAID PARTY. C) IN CASE OF M/S PRAVIN TRADING COMPANY, REGISTRAT ION CERTIFICATES OF ALL TRUCKS (SEVENTEEN) DOWNLOADED FROM THE WEBSITE OF TRANSPORT DEPARTMENT OF MP. BY WHICH GOODS WERE TRANSPORTED B Y THE BUYERS IN OIL DRUMS ARE ENCLOSED ALONG WITH COMPLETE DETAILS OF SALES EFFECTED TO SAID PARTY. SUCH CERTIFICATES OF THE VEHICLE REGISTRATION SUPPO RT THE FACT THAT THE TRUCK NUMBERS STATED ON THE SALE INVOICES ARE G ENUINE AND GOODS SOLD TO THESE PARTIES AGAINST PAYMENT WERE IN FACT TRANSPORTED TO THEM. ' 23 5.1 THE ASSESSEE HAD FURTHER RELIED ON CERTAIN CASE LAWS IN WHICH THE COURTS HAVE HELD THAT THE ADVANCES AND RECEIPTS AGA INST SALE OF THE GOODS, CANNOT BE ASSESSED TO TAX U/S 68 OF THE IT A CT. THE WRITTEN SUBMISSION OF THE APPELLANT DATED 20103/2012 IS REPRODUCED AS UNDER:- 'IN CONTINUATION TO SUBMISSIONS MADE EARLIER REGARD ING SALE PROCEEDS ASSESSED TO TAX U/S. 68 OF THE ACT, WE INVITE YOUR KIND ATTENTION TO IDENTICAL JUDGMENTS WHEREIN ADVANCES W ERE RECEIVED FROM THE CUSTOMERS AGAINST SALE OF FINISHED GOODS, SUPPLIES OF WHICH WAS MADE AFTER FEW DAYS. THE COURTS HAVE HELD THAT SUCH ADVANCES WERE ULTIMATELY ADJUSTED AGAINST SALE OF GOODS, CAN NOT BE ASSESSED TO TAX U/S. 68 OF THE' ACT. THE GIST OF THE JUDGMENTS ARE REPRODUC ED HEREUNDER:- 1)ITO VS. SURANA TRADERS 93 TTJ 875 (MUM.) HELD - 'MERELY BECAUSE FOR HE REASONS THAT THE PURCHASE PA RTIES WERE NOT TRACEABLE, THE ASSESSEE COULD NOT BE PENAL IZED. IN THE SALE DOCUMENTS THE ASSESSEE HAS MADE AVAILABLE ALL NECES SARY DETAILS I. E. THE TOTAL WEIGHT SOLD AS WELL AS THE RATE PER KILOG RAM. UNDISPUTEDLY, THE ASSESSEE HAS MAINTAINED COMPLETED BOOKS OF ACCO UNTS ALONGWITH DAY TO DAY AND KILOGRAM TO KILOGRAM STOCK REGISTER AND ALSO SUBMITTED STOCK TALLY SHEET ALONGWITH THE AUDITED ACCOUNTS ..........THE ASSESSEE CAN NOT BE PUT TO PROVE A NEGATIVE. IT WAS FOR THE DEPARTMENT TO SUBSTANTIATE AND PROVE TH E ALLEGATION BEING LEVELED BY IT. THIS, HOWEVER, HAS NOT BEEN DONE. EV EN IN THE REMAND REPORT, THE AO HAS STATED THAT THE SALES WERE DULY VERIFIED AND FOUND TO BE GENUINE. SINCE THE PURCHASES HAS BEEN HELD TO BE GENUINE, ,THE CORRESPONDING SALES CANNOT, BY ANY STRETCH OF IMAGI NATION BE TERMED AS HAWALA TRANSACTIONS. ' 2)ITO VS. SUPER CHEMICALS DISTRIBUTORS (2005) 1 SOT 102 (DEL.) HELD - 'IT WAS INCUMBENT UPON THE ASSESSING OFFICER TO FOU ND OUT ACTUAL LOCATION AND PRESENT WERE ABOUT OF THE FIRM 'A' AND TO VERIFY THE FACT, AND THAT SIMPLY BECAUSE INSPECTOR WAS UNABLE TO LOCATE FIRM 'A' , THE A. O. COULD NOT JUMP TO CONCLUSION THAT THIS WAS A BOGUS CREDITORS AND TREAT THE SAME AS CASH CREDITS U/S. 68 OF THE ACT. ' 3)SMT. HARSHILA CHORDIA VS. ITO (2007) 208 CTR 208 (RAJ) HELD - 'CASH CREDIT - CASH RECEIVED FROM CUSTOMERS - TRIBUNAL HAS FOUND AS A FACT THAT THE ASSESSEE WAS RECEIVING MON EY FROM THE CUSTOMERS AGAINST WHICH DELIVERY OF VEHICLES WAS MA DE - SUCH CASH 24 DEPOSITS ARE SELF EXPLANATORY AND WOULD NOT ATTRACT SEC. 68 - THEREFORE, NO ADDITION COULD BE MADE. ' IT IS SUBMITTED THAT THE FACTS OF THE CASE BEFORE I TA T, MUMBAI, DELHI BENCH AND RAJASTHAN HIGH COURT ARE NOT ONLY SIMILAR TO THE FACTS OF THE PRESENT CASE BUT MORE STRONGER BECAUSE THERE WA S NO OUTSTANDING FOR A SINGLE DAY IN CASE OF LOCAL PARTIES AND FOR M ORE THAN A WEEK'S TIME IN CASE OF A.K IMPEX, DELHI. ' 5.2 FURTHER REMAND REPORT WAS CALLED FOR FROM THE A O U/S 250(4) VIDE LETTER DATED 15/03/2012 FOR MAKING NECE SSARY ENQUIRIES AND COMMENTS ON THE EVIDENCES SUBMITTED B Y THE ASSESSEE IN RESPECT OF THE TRANSPORTATION OF GOODS TO THESE BUYERS AND QUANTITATIVE STOCK TALLY MAINTAINED BY T HE ASSESSEE, AS IN THE REMAND REPORT SUBMITTED BY THE AO VIDE LETTER DATED 09/02/2012 THERE WERE NO COMMENTS ON T HESE FACTS AND ALSO ON THE ADDITIONAL EVIDENCE IN THE NA TURE OF CERTIFICATE DATED 23/08/2011 FROM THE TRANSPORTER M/S H.G. OIL CARRIER, NEW DELHI CONFIRMING LOADING AND DELIV ERY OF THE OIL TO M/S A.K. IMPEX. THIS WAS SUBMITTED BY THE APPELLANT DURING THE COURSE OF APPELLATE PROCEEDINGS. A.O. AG AIN IN HIS REMAND REPORT DATED 26/03/2012 REQUESTED TO CONFIRM THE ADDITIONS MADE BY THE THEN ASSESSING OFFICER WITHOU T ADMITTING ANY ADDITIONAL EVIDENCE. THE APPELLANT IN ITS REJOINDER DATED 27/03/2012 SUBMITTED AS UNDER: 'THIS HAS A REFERENCE TO THE REMAND REPORT SUBMITTE D BY THE ASSTT. COMMISSIONER OF INCOME TAX 1(1), UJJAIN VIDE HIS LE TTER DTD. 26.03.2012 COPY OF WHICH WAS GIVEN TO THE APPELLANT FOR ITS COMMENT. IN THIS CONNECTION WE SUBMIT THAT DURING T HE COURSE OF APPELLATE PROCEEDINGS CERTIFICATE REGARDING TRANSPO RTATION OF GOODS SOLD TO M/S. A.K. IMPEX, DELHI WAS SUBMITTED BY WAY OF DOCUMENTARY EVIDENCE. IN REPLY TO REMAND REPORT WE SUBMIT AS UNDER: 1)THE COPIES OF SALE INVOICES WERE ALREADY PLACED O N RECORD, FROM WHICH IT WAS EVIDENT THAT SALES OF OIL WAS EFFECTED TO M/S. A.K. IMPEX, DELHI IN OIL TANKERS. ON EVERY SALE INVOICE OIL TANKER NO. WAS SPECIFICALLY MENTIONED FROM IT WHICH WAS PROVED BEY OND DOUBT THAT TRANSPORTATION WAS INFACT CARRIED OUT. IN THE BODY OF THE ASSESSMENT ORDER IT WAS STATED THAT PROOF WAS TRANSPORTATION W AS NOT SUBMITTED THEREFORE IT BECAME NECESSARY TO SUBMIT THE CERTIFI CATE OF THE TRANSPORTER BEFORE YOUR HONOUR. NEITHER ANY QUERRY WAS RAISED TO 25 SUBMIT SUCH CERTIFICATE NOR ANY OPPORTUNITY WAS GIV EN TO PROVE THE TRANSPORTATION OF GOODS. THEREFORE THE QUESTION OF NON SUBMISSION OF THE CERTIFICATE AT THE TIME OF ASSESSMENT STAGE DID NOT ARISE. IT IS CLAIMED THAT SUCH CERTIFICATE IS NOT ADDITIONAL EVI DENCE BUT IT IS A SUPPORTING DOCUMENT TO PROVE THE SALES EFFECTED TO MIS A. K. IMPEX, DELHI. THE APPELLANT IS THEREFORE NOT REQUIRED TO E XPLAIN THE CIRCUMSTANCES AS TO EXCEPTIONS PROVIDED UNDER CLAUS ES (A), (B), (C) OR (D) TO RULE 46A (1) OF THE RULES. 2) THE APPELLANT HAD CLEARLY STATED AT THE TIME OF ASS ESSMENT PROCEEDINGS THAT THE BUYER NAMELY MS A.K. IMPEX ARR ANGED THE TANKERS AT ITS OWN BECAUSE THE DELIVERY OF OIL WAS GIVEN AT FACTORY. HAD THE ASSESSING OFFICER DOUBTED UPON THE TANKER N UMBERS MENTIONED ON THE SALE INVOICES, THE APPELLANT WOULD HAVE SUBMITTED THE CERTIFICATE AT THAT STAGE ITSELF SUCH TANKER WE RE ARRANGED BY THE BUYERS ONLY AND THE COMPANY DID NOT MAKE ANY PAYMEN T OF FREIGHT TO THE TRANSPORTERS. TANKER NUMBER BY WHICH GOODS WERE TRANSPORTED HAVE BEEN INVARIABLY MENTIONED ON ALL SALE INVOICES , AS A REGULAR SYSTEM FOLLOWED WHILE DISPATCHING THE GOODS ALONG-W ITH ENTRIES RECORDED AT THE FACTORY GATE. 3) MIS. A.K. IMPEX, DELHI ARRANGED THE OIL TANKERS THROUGH ITS TRANSPORTER VIZ. MIS. H. G. OIL CARRIERS, 79, TRANSPORT CENTER, ROHTAK ROAD, NEW DELHI. A LIST CONTAINING COMPLETE DETAILS OF SALES WITH RESPECTIVE TANKER NUMBERS' WAS THEREFORE SUBMITTED FOR KIND PERUSAL ALONG WITH THE CERTIFICATE OF THE TRANSPORTER STATI NG THE TANKER NUMBERS, DATE AS WELL THE GROSS WEIGHT OF OIL TRANS PORTED. IT HAS FURTHER BEEN CERTIFIED BY THE TRANSPORTER THAT THE FREIGHT WAS PAID BY MLS.A.K. IMPEX ONLY. IN VIEW OF ABOVE FACTS THE SUBMITTED THE REMAND REP ORT SUBMITTED BY THE A. O. IS CONTRARY TO THE FACTS AND EVIDENCE SUBMITTED IN SUPPORT OF TRANSPORTATION OF GOODS TO MIS A.K. IMPEX, DELHI MAY KINDLY BE ADMITTED. ' 6. AFTER TAKING INTO CONSIDERATION THE AO'S FINDIN GS AND THE REMAND REPORTS CALLED DURING THE COURSE OF APPELLAT E PROCEEDINGS FROM THE AO, APPELLANT'S ORAL AND WRITTEN SUBMISSIO N MADE IN THE COURSE OF HEARING AS WELL AS THE FACTS OF THE CASE, DECISIONS ON VARIOUS GROUNDS ARE MADE HERE UNDER :- 6.1 GROUND NO.I TO GROUND NO. 10:- THE APPELLANT HA S CHALLENGED THE ADDITIONS MADE BY THE AO U/S 68 OF THE ACT AS U NEXPLAINED CASH CREDITS AT RS.6,47,03,548/- BEING SALE PROCEEDS REA LIZED BY THE APPELLANT FROM FOUR SALE PARTIES AFTER DEDUCTING AN AMOUNT EQUAL TO 26 11.59% TOWARDS GROSS PROFIT ON SUCH SALES. 6.2 THE AO SUSPECTED :THE AMOUNT RECEIVED AGAINST S ALES EFFECTED TO M/S. A.K. IMPEX, DELHI IN THE FORM OFCHEQUELDD/RTGS AND THE AMOUNTS FROM THREE PARTIES OF SHAJAPUR DISTT. (MP) NAMELY MIS PRAVEEN TRADING CO., MIS MOHAN TRADERS AND MIS MAA BHAGWATI TRADERS IN CASH ON SAME DAY WHEN THE SALES WERE EFF ECTED. THE AO HAS MADE THE ADDITION U/S 68 OF THE ACT BECAUSE THE AMOUNTS WERE RECEIVED IN CASH FROM THE THREE PARTIES OF MP AND T HE COMMERCIAL TAX DEPARTMENT CONFIRMED THAT THE TIN INFORMED BY T HESE PARTIES WERE NOT CORRECT AND THEY ARE NOT TRACEABLE ATTHE G IVEN ADDRESSES. THE NOTICES SENT U/S 133(6) WERE RETURNED BACK UN-S ERVED WITH THE REMARKS 'INCOMPLETE ADDRESS', 'NOT FOUND AND 'NO SU CH NAME'. THE AO MADE THE ENQUIRIES THROUGH ITO SHAJAPUR UNDER WH OSE JURISDICTION THE ADDRESSES OF THESE PARTIES FALL. S IMILARLY A. K. IMPEX WAS ALSO NOT FOUND EXISTED AT THE GIVEN ADDRE SS AFTER MAKING ENQUIRIES. ALL THESE PARTIES WERE NOT FOUND IN EXIS TENCE AT THE ADDRESSES SUPPLIED BY THE ASSESSEE. ACCORDING TO TH E AO, BASED ON THE ENQUIRIES MADE, THE APPELLANT FAILED TO ESTABLI SH THE IDENTITY OF THE BUYERS TO WHOM SUCH SALES WERE EFFECTED. THE AS SESSEE DID NOT DISCHARGE THE BURDEN CASTED UPON HIM TO PROVE THE N ATURE AND SOURCE OF ANY SUM CREDITED IN THE BOOKS OF ACCOUNTS AS TO WHETHER SUCH RECEIPTS WERE ON ACCOUNT OF SALE CONSIDERATION OR OTHERWISE. 6.3 FOR THIS PURPOSE THE, A.O. RELIED UPON THE OBSE RVATIONS IN THE CASE OF CIT VS. SOPHIA FINANCE LTD 2005 ITR DELHI B Y DISTINGUISHING THE SAME FROM THE OBSERVATIONS MADE IN CIT V S. LOVELY EXPORTS PVT LTD 216 CTR 195 AND CIT V S. STE LLER INVESTMENT LTD 251 ITR 263 (SC). RELYING UPON THE R ATIO OF JUDGMENT IN THE CASE OF CIT VS. MADHAVNAGAR COTTON MILLS LTD 104 ITR 493 (BORN) HE REJECTED THE BOOKS OF ACCOUNTS U/ S 145 OF THE ACT AND ASSESSED ADDITIONAL INCOME AS CASH CREDIT U/S 68 OF THE ACT BY ACCEPTING SALES DISCLOSED AS PER BOOKS OF ACCOUNT I N FOLLOWING MANNER :- A)SALES EFFECTED TO M/S. A.K. IMPEX, DELHI RS.5,1 6,04,0001-. B)SALES EFFECTED TO THREE PARTIES OF MP AT RS.2,1 5,74,455 RS. 7 ,31,78,455/- C) GROSS PROFIT ON ABOVE DEDUCTED @ 11.59% (RS.59,81,306/- + RS.24,93,60L/-) (-) RS. 84,74,907/- D)NET SALES AFTER DEDUCTING ABOVE GROSS PROFIT TREATED AS CASH CREDIT U/S 68 OF I T ACT RS.6,47,03,548/- . 27 6.14 AS REGARDS SALES EFFECTED TO THREE PARTIES OF SHAJAPUR DISTT. NAMELY MIS PRAVEEN TRADING CO., MIS MOHAN TRADERS AND MIS MAA BHAGWATI TRADERS, THE BASIS OF MAKING ADDITION U/S 68 OF THE ACT WAS :- A)THE AMOUNTS WERE RECEIVED IN CASH; B)THE COMMERCIAL TAX DEPARTMENT CONFIRMED THAT THE TIN INFORMED BY THESE PARTIES WERE NOT CORRECT. C)THE PARTIES ARE NOT FOUND IN EXISTENCE AT THE ADD RESS SUPPLIED BY THE APPELLANT. 6.15 THE AMOUNTS WERE RECEIVED IN CASH! DDS FROM TH ESE THREE BUYERS OF M.P. THE APPELLANT HAS MADE THE DELIVERY OF THE GOODS ON THE SAME DAY AND SALE INVOICE WAS ISSUED. CASH RECE IPTS AND SALE INVOICES ISSUED TO SUCH PARTIES ON THE SAME DAY QUO TING CROSS NUMBERS PROVE THE FACT THAT SUCH RECEIPTS WERE NOTH ING ELSE THAN THE SALE PROCEEDS CREDITED TO THE PROFIT & LOSS ACCOUNT OF THE APPELLANT. NONE OF THE AMOUNTS FROM THESE THREE PARTIES WERE R ECEIVED AS ADVANCE FOR A SINGLE DAY. THE AO OVER-LOOKED THESE IMPORTANT FACTORS AND SALES TO SUCH PARTIES HAVE BEEN DISBELI EVED. 6.16 AS DEMONSTRATED BY THE APPELLANT BY FILING COP IES OF CASH RECEIPTS, SALE INVOICES AS WELL PROOF OF DISPATCH O F GOODS ON THE SAME DAY AND ENTRIES IN THE STOCK REGISTER REGARDIN G SALE, SUCH SALES WERE IN THE NATURE OF COUNTER SALES ONLY TO A LL THE THREE PARTIES. CLAIM OF COUNTER SALES HAS BEEN NEGATIVED BY THE AO ONLY ON THE GROUND THAT 'IN CASE OF COUNTER SALES THE BU SINESS MAN DOES NOT MAINTAIN LEDGER ACCOUNTS OF CLIENTS TO WHOM THE GOODS ARE SOLD. THE SALES ARE SHOWN ENTIRELY IN CASH AND IN THE BOO KS THE INDIVIDUAL LEDGER ACCOUNTS OF THE CLIENTS ARE NOT MAINTAINED, WHILE IN 'THE ASSESSEE'S CASE, IT HAS MAINTAINED INDIVIDUAL LEDGE R ACCOUNTS OF CLIENTS'. 6.17 AFORESAID OBSERVATIONS OF THE AO TO DISBELIEVE COUNTER SALES EFFECTED BY THE APPELLANT IS UNSOUNDED AND UNREASON ABLE FOR THE REASON THAT THE METHOD OF ACCOUNT FOLLOWED BY THE APPELLAN T WAS MORE TRANSPARENT AND CANNOT BE COMPARED WITH THE COUNTER SALE OF ANY KIRANA DEALER WHO NEITHER MAINTAINS QUANTITATIVE RECORDS N OR PARTY WISE DETAILS. SALES WERE EFFECTED TO ABOVE THREE PARTIES OF MP TH ROUGH BROKERS TO WHOM BROKERAGE WAS PAID AFTER DEDUCTION OF TAX AT S OURCE. SUCH BROKERS ALSO CONFIRMED SALES EFFECTED TO THESE PARTIES. FOR MAKING PAYMENT OF BROKERAGE ALSO, MAINTENANCE OF INDIVIDUAL PARTY LED GER IS NECESSARY. 6.18 DURING THE APPELLATE PROCEEDINGS THE APPELLANT SUBMITTED THAT THE COMPANY HAD EFFECTED SALES OF OIL IN TANKERS TO 79 DEALERS OF M.P. AND OUTSIDE STATE. A STATEMENT WAS FILED BY THE APP ELLANT WHICH SHOWS THAT TOTAL TURNOVER TO SUCH DEALERS WAS 67.63 CRORE S. OUT OF THESE THE 28 SALES WERE EFFECTED TO 73 DEALERS OF M.P. AND 6 DEA LERS OUTSIDE M.P., WHO REMITTED THE AMOUNT IN CASH AS WELL AS PAY ORDE RS DD, RTGS AND BY CHEQUES. LIKE THE ABOVE FOUR PARTIES, THE DELIVE RIES WERE ALSO GIVEN AT SITE TO ALL THESE DEALERS. OUT OF THOSE 73 DEALE RS OF M.P. 33 DEALERS REMITTED THE AMOUNT IN CASH. THE A.O. HAS DOUBTED T HE GENUINENESS OF THE SALES MADE TO ABOVE FOUR PARTIES ONLY, IN RESPE CT OF WHICH HE HAS MADE THE ENQUIRY AND NOT FOUND EXISTED AT THE GIVEN ADDRESS. TRANSACTION OF CASH DEPOSIT WAS IN THE NATURE OF CO UNTER SALE ONLY AND THE DELIVERY WAS GIVEN ON THE SAME DAY WHEREAS, DD/ RTGS WERE RECEIVED IN ADVANCE DIRECTLY OR THROUGH BROKERS AGA INST SUPPLIES WHICH WERE EFFECTED WITHIN A WEEKS TIME. 6.19 THE APPELLANT IS MAINTAINING SALES REGISTER AN D STOCK REGISTER DAY TO DAY BASIS CONTAINING REQUISITE DETAILS FOR THE WHOL E YEAR, WHICH WERE PRODUCED BY THE APPELLANT DURING THE APPELLATE PROCEEDINGS ALSO. IT WAS OBSERVED THAT APPELLANT IS MAINTAINING COMPLETE QUANTITATIVE RECORDS RELATING TO PURCHASE, PRODUCTION AND SALES AND SALES WERE PROPERLY ACCOUNTED FOR IN THE SALES REGISTER AND SA ME WERE REDUCED FROM THE STOCK REGISTER. 6.20 THE CLAIM OF THE APPELLANT THAT SUCH ADDITION RESULTED INTO DOUBLE TAXATION OF THE SAME INCOME IN THE SAME YEAR IS ALSO ACCEPTABLE BECAUSE ON ONE HAND COST OF THE SALES HA S BEEN TAXED (AFTER DEDUCTING GROSS PROFIT FROM SAME PRICE ULTIM ATELY CREDITED TO PROFIT & LOSS ACCOUNT) AND ON THE OTHER HAND AMOUNTS RECEIVE D FROM ABOVE PARTIES HAS ALSO BEEN ADDED U/S. 68 OF THE ACT. 6.21 THIS VIEW HAS BEEN HELD BY THE HON 'BLE SUPREM E COURT IN THE CASE OF CIT VS DEVI PRASAD VISHWNATH PRASAD (1969) 72ITR194 (SC) THAT 'IT IS FOR THE ASSESSEE TO PROVE THAT EVE N IF THE CASH CREDIT REPRESENTS INCOME, IT IS INCOME FROM A SOURCE, WHIC H HAS ALREADY BEEN TAXED'. THE ASSESSEE HAS ALREADY OFFERED THE S ALES FOR TAXATION HENCE THE ONUS HAS BEEN DISCHARGED BY IT AND THE SA ME INCOME CANNOT BE TAXED AGAIN. RELIANCE IS ALSO PLACED ON T HE DECISION OFHON'BLE SUPREME COURT IN THE CASE OF CIT VS DURGA PRASAD MORE (1969) 72ITR807 (SC) IN WHICH IT WAS HELD 'IF THE A MOUNT REPRESENTED THE INCOME OF THE ASSESSEE OF THE PREVI OUS YEAR, IT WAS LIABLE TO BE INCLUDED IN THE TOTAL INCOME AND AN EN QUIRY WHETHER FOR THE PURPOSE OF BRINGING THE AMOUNT TO TAX IT WAS FR OM A BUSINESS ACTIVITY OR FROM SOME OTHER SOURCE WAS NOT RELEVANT '. 6.22 RELIANCE IS FURTHER PLACED ON THE DECISION OF HON 'BLE RAJASTHAN HIGH COURT IN THE CASE OF SMT. HARSHILA C HORDIA VS ITO (2008) 298 ITR 349 IN WHICH IT WAS HELD THAT 'ADDIT ION ULS 68 COULD NOT BE MADE IN RESPECT OF THE AMOUNT WHICH WAS FOUN D TO BE CASH RECEIPTS FROM THE CUSTOMERS AGAINST WHICH DELIVERY OF GOODS WAS 29 MADE TO THEM'. ALSO ON THE DECISION OF HON'BLE ITAT , NAGPUR BENCH IN THE CASE OF MIS HEERA STEEL LIMITED VS ITO (2005 ) 4 IT J 437 IN WHICH IT WAS HELD THAT 'BOTH THE LOWER AUTHO RITIES FAILED TO APPRECIATE THE CASE OF THE ASSESSEE THAT THESE WERE THE TRADE ADVANCES AND NOT CASH CREDITS AND AGAINST SUCH ADVANCE, THE ASSESSEE HAS SUPPLIED THE MATERIAL IN DUE TIME AS PER DETAILS AV AILABLE ON RECORD. IN VIEW OF THE ABOVE, THERE IS NO JUSTIFICATION FOR THE REVENUE AUTHRORITIES TO TREAT THESE CASH ADVANCES AS UNEXPL AINED CASH CREDIT ULS 68'. AGAIN THE RELIANCE IS PLACED ON THE DECISI ON OF HON'BLE M.P. HIGH COURT IN THE CASE OF ADDL. CIT VS. GHAI LIME S TONE CO. (1983) 144 ITR 140(MP).IT IS EVIDENT FROM THESE JUDICIAL R ULINGS THAT TRADE ADVANCES OR CASH RECEIVED AGAINST WHICH GOODS IS SU PPLIED SUBSEQUENTLY IS NOT A CASH CREDIT AS CONTEMPLATED B Y SECTION 68. 6.23 RELIANCE IS FURTHER PLACED ON THE DECISION OF THE ITAT, MUMBAI BENCH IN THE CASE OF ITO VS. SURANA TRADERS, (2005) 93 TTJ 875: (2005)92 ITD 212, THE RELEVANT OBSERVATION OF THE M UMBAI BENCH WERE AS UNDER :_ ' SO MERELY BECAUSE FOR THE REASONS THAT THE PURCH ASER PARTIES WERE NOT TRACEABLE, THE ASSESSEE COULD NOT BE PENAL IZED. IN THE SALES DOCUMENTS, THE ASSESSEE HAS MADE AVAILABLE ALL NECE SSARY DETAILS, I.E. THE TOTAL WEIGHT SOLD AS WELL AS THE RATE PER KILOGRAM. UNDISPUTEDLY, THE ASSESSEE HAS MAINTAINED COMPLETE BOOKS OF ACCOUNTS ALONGWITH DAY TO DAY AND KILOGRAM TO KILOGRAM STOCK REGISTER. THESE WERE PRO DUCED BEFORE THE A 0 BY THE ASSESSEE. THE ASSESSEE ALSO SUBMITTED STOCK TAL LY SHEET ALONG WITH THE AUDITED ACCOUNTS. THE AUDIT REPORT OF THE ASSESSEE ALSO BEARS AMPLE TESTIMONY IN FAVOUR OF THE ASSESSEE. THE FACTUM OF THE ASSESSEE HAVING MAINTAINED STOCK REGISTER AND QUANTITATIVE DETAILS HAVE BEEN MENTIONED BY THE A 0 IN THE ASSESSMENT ORDER. NO MISTAKE WERE PO INTED OUT BY THE AO IN THESE RECORDS MAINTAINED BY THE ASSESSEE----SINCE T HE PURCHASES HAVE BEEN HELD TO BE GENUINE, THE CORRESPONDING SALES CANNOT, BY ANY STRETCH OF IMAGINATION BE TERMED AS HAWALA TRANSACTION-------- --- IT IS THE BURDEN OF THE DEPARTMENT TO PROVE THE CORRECTNESS OF SUCH ADDITIO NS. WHEN, IN SUCH LIKE CASES, A QUANTITATIVE TALLY IS FURNISHED, EVEN IF PURCHASES ARE NOT AVAILABLE NO ADDITION IS CALLED FOR. ' 7. IN VIEW OF AFORESAID DISCUSSIONS, THE ADDITIONS MADE BY THE A.O. U/S. 68 OF THE ACT AT RS, 6,47,03,548/- BY CONSIDER ING THE SALE PROCEEDS AS CASH CREDITS, CANNOT BE SUSTAINED AND THE SAME IS DELETED IN FULL. 30 8. IN THE RESULT THE APPEAL IS ALLOWED. 4. IF THE OBSERVATIONS MADE IN THE ASSESSMENT ORDER, CONCLUSION DRAWN IN THE IMPUGNED ORDER, ASSERTION M ADE BY THE LEARNED RESPECTIVE COUNSEL AND ALSO IN THE ABSENCE OF ANY POSITIVE MATERIAL BROUGHT ON RECORD BY THE REVENUE IN SUPPOR T OF ITS CLAIM ARE KEPT IN JUXTAPOSITION, WE FIND THAT THE LEARNED CIT(A) HAS EXHAUSTIVELY DEALT WITH THE ISSUE BY FOLLOWING VARI OUS DECISIONS FROM VARIOUS JUDICIAL FORUMS RIGHT FROM THE HONBLE APEX COURT, HONBLE HIGH COURTS AND THE TRIBUNAL. THE MAIN GROU ND FOR REJECTING THE CLAIM OF THE ASSESSEE IS WITH RESPECT OF M/S A.K. IMPEX, DELHI. THERE IS A FINDING IN THE IMPUGNED OR DER THAT NECESSARY EVIDENCE WITH THE HELP OF VARIOUS DOCUMEN TS REGARDING EXISTENCE OF THE BUYERS LIKE COPY OF BANK ACCOUNT O F THE BUYER, TIN OF SALES TAX DEPARTMENT, CONFIRMATION OF BROKER , CORRESPONDENCE REGARDING RECEIPT/REMITTANCE OF DD/R TGS, DETAILED COPY OF ACCOUNT APPEARING IN ITS BOOKS, SA LE INVOICES AND CONFIRMATION CERTIFICATE OF THE TRANSPORTER WITH TA NKER NUMBERS, WHO DELIVERED THE OIL TO M/S A.K. IMPEX AGAINST PAY MENT OF FREIGHT WERE FILED. IN THE STATEMENT OF BANK ACCOUN T OF M/S A.K. IMPEX, REFLECTING PAYMENT OF FREIGHT. THE RELEVANT PORTION FROM THE CONCLUSION OF THE LEARNED CIT(A) IS REPRODUCED HEREUNDER :- 31 6.4 AS REGARD M/S. A.K. IMPEX, DELHI, THE APPELLAN T FURNISHED THE EVIDENCES REGARDING THE EXISTENCE OF THE BUYER BY FILING VARIOUS DOCUMENTS. IT HAS FURNISHED THE C OPY OF THE BANK ACCOUNT OF THE BUYER, TIN OF SALES TAX DEPARTM ENT, DELHI, CONFIRMATION OF BROKER, VARIOUS CORRESPONDEN CES RECEIVED WHILE REMITTING THE DD/R TGS, DETAILED COP Y OF ACCOUNT AS APPEARING IN ITS BOOKS, SALE INVOICES & CONFIRMATION CERTIFICATE OF TRANSPORTER WITH TANKER S NUMBERS WHO DELIVERED THE OIL TO MIS. A.P. IMPEX AGAINST PA YMENT OF FREIGHT. THE STATEMENT OF THE BANK ACCOUNT OF MIS. A.K. IMPEX, DELHI REFLECTS ENCASHMENT OF THE CHEQUE OF R S. 31,528/REMITTED BY THE APPELLANT. 6.5 THE APPELLANT'S CONTENTION THAT MIS. A.K. IMPEX , DELHI WAS ALSO CARRYING ON THE BUSINESS WITH ULTERIOR MOT IVES SHOULD BE CONSIDERED IN ITS REAL PROSPECTIVE. ON PE RUSAL OF DETAILS OF AMOUNTS RECEIVED FROM M/S . A.K. IMPEX, DELHI AND SALES EFFECTED TO IT, THE FACT REMAINS THAT SUCH SA LES WERE EFFECTED IMMEDIATELY WITHIN A PERIOD OF 3 TO 5 DAYS AND THE AMOUNTS WERE ADJUSTED AGAINST SALE PROCEEDS ONLY. THE BUYER BEING A NEW PARTY, INTRODUCED DURING THE YEAR BY THE BROKER, INSISTENCE FOR REMITTING MONEY BEFORE DISPA TCHING OF GOODS BY THE APPELLANT CANNOT BE ADVERSELY VIEWED J UST TO INVOKE PROVISIONS OF SECTION 68 OF THE ACT. IT CAN BE APPLIED WERE SUCH CREDITS : ARE LYING IN THE BOOKS FOR CONS IDERABLE TIME TO THE CREDIT OF A PERSON WHOSE IDENTITY, CRED ITWORTHINESS AND GENUINENESS OF THE TRANSACTION IS NOT PROVED. I N THE CASE OF MIS. A.K. IMPEX, DELHI THE IDENTITY WAS RATHER PROVED FR OM FACTS STATED ABOVE EXCEPT THAT HE COULD NOT BE TRAC ED AT GIVEN ADDRESS AFTER TIME GAP OF 2 YEARS. 6.6 THE PAN OF SHRI ASHOK KUMAR CANNOT BE DOUBTED U PON JUST BECAUSE IT WAS NOT IN THE NAME OF M/S . A.K. IMPEX, DELHI OR BECAUSE HE WAS NOT FILING THE RETURN OF INCOME. ENTIRE MODUS OPERANDI AND THE CONDUCT OF PROPRIETOR OF MIS. A.K. IMPEX, DELHI PROVES BEYOND DOUBT THAT HE WAS CARRYI NG ON THE BUSINESS OUTSIDE THE BOOKS AND ACCORDINGLY MANA GED REMITTANCES AS WELL AS 'C' FORMS. IT IS SETTLED LAW AS HELD IN THE JUDGMENTS CITED ABOVE BY THE APPELLANT, FOR SUC H AN ACT OF THE BUYER, THE APPELLANT (SELLING DEALER) CANNOT BE PENALIZED IN ANY MANNER. 32 6.7 THE ASSESSEE IS MAINTAINING THE QUANTITATIVE ST OCK DETAILS. IT HAS ALSO FURNISHED THE DETAILS OF DDS, R TGS, CH EQUES ETC. RECEIVED FROM MIS A.K. IMPEX, DELHI, WHICH WERE CREDITED IN THE ACCOUNTS OF THE ASSESSEE. IT HAS FILED THE COPY OF THE ACCOUNTS OF THE BROKER M/S RAJENDRA KUMAR ARUN KUMAR, GWALIOR THROUGH WHOM IT HAD AFFECTED THE SALES TO MIS A.K. IMPEX, DELHI. THE APPELLANT ALSO FILED THE CERTIFIC ATE FROM THE TRANSPORTER M/S H.G. OIL CARRIERS, 79, TRANSPORT CENTRE, ROHTAK ROAD, NEW DELHI. IT WAS CERTIFIED BY THE TRA NSPORTER THAT IT HAD LOADED THE SOYA REFINED OIL FROM THE WO RKS OF MIS DEWAS SOYA LIMITED, 96-97, INDUSTRIAL AREA, 3 A.B. ROAD, DEWAS DURING THE YEAR 2007-08. THE DETAILS OF TANKE R NOS. WEIGHT-OF THE OIL AND DATES OF DISPATCH WERE ALSO P ROVIDED. PERUSAL OF THE SALE INVOICES SHOWS THAT THE ASSESSE E HAS MAINTAINED COMPLETE DETAILS OF TANKERS, BROKERS AND ALSO WHO ARRANGED THE TANKERS BY CLEARLY MENTIONING IN THE S ALE INVOICES. 6.8 A.O. IN HIS ORDER HAS MENTIONED THAT APPELLA NT HAS NOT FURNISHED ANY PROOF OF TRANSPORTATION AS IT IS NOT HAVING LORRY RECEIPTS OR DELIVERY CHALLANS AS PROOF OF TRANSPORTATION. APPELLANT HAS EFFECTED THE SALES OF OIL TO M/S A.K. IMPEX, DELHI IN OIL TANKERS AND ON EVERY S ALE INVOICE OIL TANKER NO. WAS SPECIFICALLY MENTIONED. A.O. HAS NOT MADE ANY' INVESTIGATION IN RESPECT OF TRANS PORTATION OF GOODS. THEREFORE, APPELLANT DID NOT FURNISH ANY CERTIFICATE FROM THE TRANSPORTER DURING THE ASSESSMENT PROCEEDI NGS. M/S A.K. IMPEX, DELHI ARRANGED THE TANKERS AT ITS OWN B ECAUSE THE DELIVERY OF OIL WAS GIVEN AT FACTORY. IN THE CA SE OF APPELLANT TANKERS WERE ARRANGED BY THE BUYERS ONLY AND IT DID NOT MAKE ANY PAYMENT OF FREIGHT TO THE TRANSPOR TER. DISPATCH OF THE GOODS THROUGH TANKERS MENTIONING TH E TANKERS NUMBER WERE RECORDED IN SALE INVOICES ALONG WITH THE ENTRIES RECORDED AT THE FACTORY GATE. IT WAS CERTIF IED BY THE TRANSPORTER ALSO THAT THE FREIGHT WAS PAID BY MIS A.K. IMPEX, DELHI ONLY. 6.9 AS FAR AS ADMISSION OF ADDITIONAL EVIDENCE IS C ONCERNED, THE ASSESSEE HAD MADE A REQUEST FOR ADMITTING ADDIT IONAL EVIDENCES. IT IS OBSERVED THAT MOST OF THE EVIDENCE S W.R.T. THE EFFECTING OF SALES TO THE PARTIES, WHOSE SALES WERE TREATED AS CASH CREDIT U/S 68, WERE FURNISHED BY THE APPELLANT BEFORE THE A.O. APPELLANT HAS FURNISHED A CERTIFICATE OF THE TRANSP ORTER 33 DURING THE APPELLATE PROCEEDINGS WHICH IS ONLY SUPP ORTING IN NATURE. BESIDES, THE APPELLANT HAS FURNISHED COPIES OF SALE INVOICES, MTR, STOCK REGISTER, BROKER DETAILS AND T ANKER NO. ETC., WHICH WERE BEFORE THE A.O. DURING THE ASSESSMENT PROCEEDINGS. HOWEVER, THE REMAND REPORTS UNDER RULE 46A AND U/S 250(4) WERE ALSO CALLED FOR FROM THE A.O. A ND DULY CONSIDERED. 6.10 THESE EVIDENCES CANNOT BE IGNORED EITHER ON TH E GROUND THAT THE TIN OF M/S . A.K. IMPEX, DELHI WAS CANCELLED BY SALES TAX DEPARTMENT AND DURING ASSESSMENT YEAR UND ER APPEAL A.K. IMPEX COULD NOT BE TRACED. THE ALLEGATI ON OF THE APPELLANT AGAINST THE BUYERS THAT MANY PARTIES ARE CARRYING ON THE TRADE OUTSIDE THE BOOKS AND CHANGE THEIR TRA DE NAME OR PLACE OF BUSINESS AFTER SHORT INTERVAL TO AVOID DUE TAXES HAS MORE SUBSTANCE. THE FACT THAT 'C' FORMS ISSUED BY M/S . A.K. IMPEX, DELHI WERE ALSO FOUND TO BE NON-GENUINE RATHER SUPPORTS THE CLAIM OF THE APPELLANT. 6.11 THE CONCLUSION OF THE A.O. BECAUSE EXISTENCE O F M/S . A.K. IMPEX WAS NOT PROVED (AS REPORTED BY DDIT & ITI) SALES EFFECTED BY THE APPELLANT TO M/S A.K. IMPEX WERE NOT GENUINE IS DEVOID OF MERITS. ACCORDING TO THE AO, A SSESSEE DID NOT DISCHARGE THE BURDEN CASTED UPON HIM TO PRO VE THE NATURE AND SOURCE OF ANY SUM CREDITED IN THE BOOKS OF ACCOUNTS AS TO WHETHER SUCH RECEIPTS WERE ON ACCOUN T OF SALE CONSIDERATION OR OTHERWISE IS INCORRECT. ON PERUSAL OF DAY TO DAY COMMODITY WISE QUANTITATIVE RECORDS MAINTAINED BY THE APPELLANT AND ITS VERIFICATION FROM SALE INVOICES I SSUED TO ABOVE PARTIES, IT IS EVIDENT THAT SUCH RECEIPTS WER E AGAINST SALE PROCEEDS ONLY. 6.12 THE A.O HAS REJECTED THE BOOKS OF ACCOUNTS ULS 145 ON ACCOUNT OF NON EXISTENCE OF THE PARTIES AFTER 2 YEARS, WHO PURCHASES FROM. THE APPELLANT AND PAYMENTS MADE BY HIM HAS BEEN TREATED AS CASH CREDIT ULS 68 OF THE IT ACT'61 . THE APPELLANT IS MAINTAINING THE QUANTITATIVE STOCK REC ORDS AND THE RECORDS SHOW THAT THE SALES WERE EFFECTED TO TH E PARTY AND GOODS WERE ACTUALLY LOADED AND DELIVERED ON THE TAN KERS ARRANGED BY THE BUYER PARTY. THIS FACT IS EVIDENT F ROM THE SALES BILLS ON WHICH DETAILS OF TANKERS NOS., BROKE R NAME AND THE PERSON WHO HAS ARRANGED THE TRANSPORT HAVE BEEN 34 MENTIONED. THE A.O. HAS NOT MADE ANY ENQUIRY FROM T HE TRANSPORTER, WHO TRANSPORTED THE GOODS FOR THE BUYE R PARTY. THE A.O. HAS ALSO NOT GIVEN ANY FINDING ON THE QUAN TITATIVE STOCK RECORD MAINTAINED BY THE ASSESSEE. IF THE A.O . HAS DOUBTED THE SALES MADE BY THE APPELLANT. THEN HE WA S REQUIRED TO GIVE EFFECT TO THE CLOSING STOCK TALLY SHOWN BY IT IN THE TRADING ACCOUNT. THE A.O. HAS NOT DOUBTED THE GENUINENESS OF THE PURCHASES MADE BY THE APPELLANT. IF THE STOCK TALLY HAS BEEN ACCEPTABLE TO THE A.O. THEN DO UBTING THE SALES CANNOT BE JUSTIFIED ON THE GROUND THAT THE PA RTY WAS NOT TRACEABLE AT THE TIME OF FRAMING THE ASSESSMENT. WH EN SALES MADE TO THE PARTY IS TO BE TREATED AS CASH CREDIT T HEN A.A. HAS TO GIVE EFFECT TO THE PURCHASES ACCORDINGLY BY WAY OF INCREASING THE CLOSING STOCK, WHICH HAS NOT BEEN DO NE. THE BROKER MIS RAJENDRAKUMAR ARUNKUMAR, GWALIOR WHO ARRANGED THE TRANSACTION WITH THE SAID PARTY HAS AL SO CONFIRMED IN HIS STATEMENT BEFORE ADDL, CIT, RANGE- I, GWALIOR ULS 131 THAT HE HAD DONE THE DEAL OF MIS A.K. IMPEX WITH THE APPELLANT. IT IS ALSO OBSERVED THAT THE AP PELLANT HAS RECORDED THESE SALES IN ITS REGULAR BOOKS OF ACCOUN T. TAXING THESE SALES AGAIN TANTAMOUNT TO DOUBLE TAXATION. 6.13 APPELLANT HAD SUPPLIED THE GOODS TO THE PARTIE S AFTER RECEIVING ADVANCE PAYMENTS, WHICH WERE CREDITED IN THE CORE BANKING ACCOUNT THROUGH CHEQUES/DDLPAYORDERSLR TGS AND AFTER VERIFICATION OF RECEIPT OF PAYMENTS, THE APPE LLANT HAD DELIVERED THE REFINED OIL TO THE PARTY THROUGH THE TANKER ARRANGED BY HIM. THE APPELLANT IS MAKING NECESSARY ENTRIES IN ITS REGULAR BOOKS OF ACCOUNTS AND IN THE STOCK R EGISTER. APPELLANT HAS FURNISHED THE EVIDENCES IN SUPPORT OF ITS CONTENTIONS AND ESTABLISHED THE GENUINENESS OF THE TRANSACTION AND NATURE AND SOURCE OF THE RECIEPTS. THUS APPLICATION OF SECTION 68 BY THE A.O. ON THOSE RECEIPTS IS NOT JUSTIFIED. IN VIEW OF THE ABOVE UNCONTROVERTED FINDING MORE SP ECIFICALLY WHEN THE ASSESSING OFFICER HAS NOT DOUBTED THE GENU INENESS OF THE PURCHASES AND WHEN THE STOCKS TALLY HAS BEEN AC CEPTED BY THE ASSESSING OFFICER THEN THERE IS NO REASON TO DO UBT THE SALES. 35 THE BROKER FROM GWALIOR WHO ARRANGED THE SALES WITH THE SAID PARTY ALSO CONFIRMED IN HIS STATEMENT RECORDED BY T HE DEPARTMENT CONFIRMING THAT HE MADE THE DEALING WITH M/S A.K. I MPEX AND CONSEQUENTLY THE ASSESSEE RECORDED THE SALES IN ITS REGULAR BOOKS OF ACCOUNTS. EVEN OTHERWISE, THE GOODS WERE SUPPLIE D TO THE PARTIES AFTER RECEIVING THE ADVANCE PAYMENTS WHICH WERE CREDITED THROUGH CHEQUES/DDS/RTGS, ETC. THEREFORE, WE HOLD T HAT THE CIT(A) HAS RIGHTLY COME TO THE CONCLUSION THAT THE ADDITION MADE BY THE ASSESSING OFFICER U/S 68 OF THE ACT BY CONSI DERING THE SALE PROCEEDS AS CASH CREDITS CANNOT BE SUSTAINED. LIKE WISE, THE LEARNED CIT(A) VERY ELABORATELY DEALT WITH THE ISSU E WITH REGARD TO OTHER PARTIES LIKE M/S PRAVIN TRADING CO., M/S MOHA N TRADERS AND MAA BHAGWATI TRADERS, ETC. WHEREIN THE GOODS WE RE DELIVERED ON THE SAME DAY AND SALE INVOICES WERE ISSUED QUOTI NG CROSS- NUMBERS EVIDENCING THAT SUCH RECEIPTS WERE SALE PRO CEEDS CREDITED TO THE PROFIT AND LOSS ACCOUNT OF THE ASSE SSEE. THE ENTRIES WERE MADE IN THE STOCK REGISTER REGARDING S ALES WHICH WERE IN THE NATURE OF COUNTER SALES TO THESE PARTIE S AND SUCH COUNTER SALES WERE DOUBTED BY THE ASSESSING OFFICER WITHOUT BRINGING ANY EVIDENCE ON RECORD. UNCONTROVERTEDLY, THE BROKERS TO WHOM BROKERAGE WAS PAID AFTER DEDUCTION OF TDS HAVE ALSO 36 CONFIRMED SALE EFFECTED TO THESE PARTIES WHILE RECO RDING THEIR STATEMENT BEFORE THE DEPARTMENT. THERE IS A FURTHER FINDING IN THE IMPUGNED ORDER THAT THE ASSESSEE EFFECTED SALES OF OIL IN TANKERS 279 DEALERS SHOWING TURNOVER TO THE TUNE OF RS. 67. 63 CRORES OUT OF WHICH 6 DEALERS WERE OUT OF THE STATE OF MADHYA PRADESH. THE TRANSACTION OF CASH DEPOSIT WAS IN THE NATURE OF CO UNTER SALE AND DELIVERY WAS GIVEN ON THE SAME DAY WHEREAS DD/RTGS WERE RECEIVED IN ADVANCE EITHER DIRECTLY OR THROUGH BROK ERS AGAINST SUPPLIES WHICH WERE EFFECTED WITHIN A WEEKS TIME. UNCONTROVERTEDLY THE ASSESSEE WAS MAINTAINING SALE/ STOCK REGISTER ON DAY TO DAY BASIS CONTAINING DETAILS OF WHOLE YEAR WHICH WERE PLACED BEFORE THE LEARNED CIT(A). IT HA S BEEN SPECIFICALLY OBSERVED BY THE LEARNED FIRST APPELLAT E AUTHORITY THAT THE ASSESSEE WAS MAINTAINING COMPLETE QUANTITATIVE RECORDS RELATING TO PURCHASE, PRODUCTION AND SALE WHICH WER E PROPERLY ACCOUNTED FOR. SO FAR AS CANCELLATION OF TIN BY THE COMMERCIAL TAX AUTHORITY IS CONCERNED, IT WAS NEITHER INFORMED BY THE AUTHORITIES TO THE ASSESSEE NOR BY THE PURCHASER HI MSELF, THEREFORE, AT THE LATER STAGE, THE ASSESSEE CANNOT BE PUNISHED FOR THE DEEDS OF SOMEBODY. LIKEWISE, C-FORMS WERE ISSUE D AND GIVEN TO THE ASSESSEE. THE SALE OF SUCH MAGNITUDE IS NOR MALLY POSSIBLE 37 THROUGH BROKERS AND EVEN OTHERWISE SO FAR AS DOING THE BUSINESS IS CONCERNED, IT IS UP TO THE ASSESSEE. IT IS PERT INENT TO MENTION HERE THAT EVIDENCE IS FURNISHED DURING FIRST APPELL ATE STAGE BY THE ASSESSEE WAS FORWARDED TO THE ASSESSING OFFICER ALO NG WITH THE WRITTEN SUBMISSIONS AND THE COPIES OF THE COMMENTS OF THE ASSESSING OFFICER WERE GIVEN TO THE ASSESSEE, THERE FORE, IT CANNOT BE SAID THAT THE ASSESSING OFFICER WAS NOT PROVIDED ANY OPPORTUNITY. ONLY AFTER CALLING REMAND REPORT THE C IT(A) HAS DECIDED THE ISSUE ON MERITS. UNDER THESE CIRCUMSTAN CES THERE IS NO MERIT IN THE GROUND TAKEN BY REVENUE WITH REGARD TO VIOLATION OF RULE 46A. IF THE PURCHASING DEALERS DID NOT ACCO UNT FOR THE TRANSACTION IN THEIR BOOKS, THE ASSESSEE CANNOT BE PENALISED. THE LEARNED CIT(A) HAS ALREADY DEALT WITH THE ISSUE BY FOLLOWING VARIOUS PRONOUNCEMENTS WHICH ARE AVAILABLE AT PAGE 10 OF THE IMPUGNED ORDER WHICH HAS BEEN REPRODUCED ABOVE. THE HONBLE APEX COURT IN THE CASE OF LAXMICHAND BAIJNATH V. CI T; 35 ITR 416 HELD THAT AMOUNT CREDITED IN BUSINESS BOOKS CAN NORMALLY BE PRESUMED AS BUSINESS RECEIPTS. THE HONBLE PATNA HIGH COURT IN BAHRI BROTHERS (154 ITR 244) HELD THAT IDENTITY OF CREDITORS IS NOT RELEVANT FOR CHEQUE TRANSACTIONS. IN SUCH A SIT UATION, IF PART PAYMENT THROUGH CHEQUE/RTGS FROM THE SAME PARTY IS ACCEPTED, 38 HOW THE CASH SALE WHICH HAS BEEN DULY RECORDED CAN BE DOUBTED UNLESS AND UNTIL CONTRARY MATERIAL IS BROUGHT ON RE CORD. SO FAR AS THE MEANING OF EXPRESSION BOOKS WITH RESPECT TO S ECTION 68 IS CONCERNED, THE HONBLE PUNJAB & HARYANA HIGH COURT IN THE CASE OF SMT. SHANTADEVI; 171 ITR 532 HELD THAT SUCH BOOK S DENOTES BOOKS OF ASSESSEE HIMSELF AND NOT OF OTHER ASSESSEE , THEREFORE, THE ASSESSEE IS RESPONSIBLE FOR HIS BOOKS ONLY AND NOT OF THE BOOKS OF OTHER PARTIES. DETAILED FINDINGS RECORDED BY CIT(A) IS AS PER MATERIAL ON RECORD, THEREFORE, DO NOT WARRANT A NY INTERFERENCE. IN THIS VIEW OF THE MATTER, WE FIND N O INFIRMITY IN THE ORDER OF THE LEARNED CIT(A) AND ACCORDINGLY AFFIRM THE SAME. IN THE RESULT, THE APPEAL OF THE REVENUE STANDS DI SMISSED. THIS ORDER WAS PRONOUNCED IN THE OPEN COURT ON 31 ST OCTOBER, 2012. SD SD ( R.C.SHARMA) (JOGINDER SINGH) ACCOUNTANT MEMBER JUDICIAL ME MBER DATED: 31 ST OCTOBER, 2012 COPY TO: APPELLANT, RESPONDENT, CIT, CIT(A), DR, GU ARD FILE DN/-30.30.31