M/s Shahnawaj Quereshi, Meerut V. ACIT, Meerut

ITA 3454/DEL/2017

• Counselvise Citation: [2019] 118 COUNSELVISE.COM (IT) 5659 (ITAT-DELHI)
• Duration Of Justice: 1 year(s) 8 month(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 31-01-2019
• Appeal Filed By: Assessee
• Order Result: Partly Allowed
• Bench Allotted: G
• Assessment Year: 2013-2014
• Appeal Filed On: 31-05-2017
• Result in Favour of: Partly Allowed
• Court: TRIBUNAL
• Department Lawyers: S S RANA; YOGESH SHARMA
• Assessee Lawyers: RAJIV SINGHAL
• Keywords: Bogus purchase
• Section: 143(3); 131; 144

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL DELHI BENCHES CAMP AT MEERUT BEFORE SHRI N. S. SAINI , ACCOUNTANT MEMBER AND SHRI KULDIP SINGH , JUDICIAL MEMBER ITA NO . 3454 / DEL / 20 1 7 ASSESSMENT YEAR 20 1 3 - 1 4 M/S. SHAHNAWAJ QUERESHI, M/S. GMC INTERNATIONAL, H. NO.123, POCKET A, SAMAR GARDEN, FATHOULLAPUR ROAD, MEERUT. VS ASST. CIT, CIRCLE - 2, MEERUT. (APPELLANT) (RESPONDENT) APPELLANT BY : SHRI RAJIV SINGHAL, ADV. & SHRI RAMIT KAKKAR, ADV. RESPONDENT BY : SHRI S.S. RANA, CIT & SHRI YOGESH SHARMA, SR.D.R. / DATE OF HEARING : 0 8 / 01 /201 9 / DATE OF PRONOUNCEMENT: 31 / 01 / 201 9 ORDER PER N.S. SAINI , A . M. THIS IS AN APPEAL FILED BY THE ASSESSEE AGAINST THE IMPUGNED ORDER OF L EARNED CIT(A) , MEERUT DATED 24.0 3 .201 7 FOR THE ASSESSMENT YEAR 20 1 3 - 1 4 . THE SOLE GROUND OF APPEAL TAKEN BY THE ASSESSEE IN THIS APPEAL READS AS UNDER. 1. THE LD. CIT(A) HAS ERRED IN SUSTAINING DISALLOWANCE OF ALLEGED BOGUS PURCHASE OF RS.5,20,15,994/ - . OBSERVATION MADE, INFERENCES DRAWN AND FINDINGS RECORDED ARE AGAINST THE FACTS AND CIRCUMSTANCES OF THE CASE. 2. THE ASSESSING OFFICER OBSERVED IN HIS ORDER THAT ASSESSEE HAS MADE PURC HASE OF RAW MEAT FROM 15 PARTIES AS UNDER. ITA NO.3454/DEL/2017 2 1. MOHD. CHAND RS.18,90,000/ - 2. MOHD. ASHRAF RS.18,90,000/ - 3. BABU JI AAFTAB RS. 19,04,000/ - 4. RAJU S/O KALAVA RS.18,90,000/ - 5. IRFAN QURESHI RS. 26,25,000/ - 6. AIJAJ AHMAD RS.18,90,000/ - 7. SHAHIN RS.18,90,000/ - 8. MOHD. MANSOOR RS.18,90,000/ - 9. MOHD. NAZIM RS.18,20,000/ - 10. MO HD. YASIN RS.14,27,744/ - 11. MOHD. SAZID RS.1,04,79,000/ - 12. MOHD. RAIS RS.1,78,64,000/ - 13. MOHD. DEEDAR RS.18,48,000/ - 14. SUFIYAN RS.14,85,000/ - 15. VALIL URF VAKILUDDIN RS.12,23,250/ - TOTAL RS.5,20,15,994/ - 3. T HE ASSESSING OFFICER OBSERVED THAT THE ASSESSEE FILED AFFIDAVIT OF THE ABOVE 15 PARTIES . THE ASSESSING OFFICER OBSERVE D THAT 6 PARTIES TO WHOM SUMMONS ISSUED U/S. 131 OF THE ACT W ERE SERVED UPON, BUT THEY DID NOT APPEAR BEFORE HIM FOR RECORDING THEIR STATEMENTS , THEY ARE AS UNDER. ( I ) MOHD NAZIM S/O MOHD. KASIM ID GIVEN 1820000/ - (II) BABU JI S/O SH. MOHD. SADDIQUE NO ID 1904000/ - (III) IRFAN QUE RESHI S/O SH . SAEED QUERESHI NO ID 2625000/ - (IV) MOHD ASHRAF S/O SHRI ABDUL MAJID ID GIVEN 1890000/ - (V) CHAND S/O SH. AIZAZ AHMAD ID GIVEN 1890000/ - (VI) RAJU S/O SH. KALWA 18 90000/ - 3.1 THE ASSESSING OFFICER FURTHER OBSERVED THAT IN THE FOLLOWING CASES , SUMMONS ISSUED UNDER SECTION 131 WERE RECEIVED BACK UNSERVED. S. NO. NAME OF PARTY ID TRANSACTION AMOUNT REMARKS 01 SH. SHAHIN S/O SH. BUNDU BLURRED ID RS.1890000 BAR BAR TALASH KARNE PAR PATA NAHI CHALA ATH VAPAS. 02 MOHD. MANSOOR S/O SH. ABID ALI NO ID RS.1890000 KAFI TALASH KIYA PAR KOI PATA NAHI CHALA ITA NO.3454/DEL/2017 3 KATH VAPAS 3. MOHD. RAIS NO ID RS.17864000 KAFI TALASH KIYA PAR KOI PATA NAHI CHALA ATH VAPAS. 3.2 HE ALSO OBSERVED THAT THE ASSESSEE FAILED TO PRODUCE THE PARTIES FOR RECORDING THEIR STATEMENT. 3.3 T HE ASSESSING OFFICER HAS ALSO OBSERVED IN HIS ORDER THAT ASSESSEE PRODUCED BOOKS OF ACCOUNT ALONG WITH SELF MADE BILLS AND VOUCHERS FOR VERIFICATION AND ON VERIFICATION SEVERAL DISCREPANCIES WERE FOUND . F OR THE ABOVE PARTIES NOT A SINGLE BILL WAS SIGNED BY THE SELLER , ALL WERE SELF MADE AND ASSESSEE FAILED TO PROVIDE EVEN A SINGLE DOCUMENTARY EVIDENCE TO PROVE THAT ALL PURCHASES WERE MADE FROM THESE PARTIES WHICH FACT WAS ACCEPTED BY THE COUNSEL OF THE ASSESSEE AS WELL AS ACCOUNTANT OF THE ASSESSEE V IDE ORDER ENTRY DATED 28 .0 2 . 2016 . C ONSIDERING THE FACTS , A DETAILED S HOW CAUSE WAS ISSUED TO THE ASSESSEE AS TO WHY PURCHASE FROM TH ESE PARTIES SHOULD NOT BE TREATED AS BOGUS AND ADDED TO THE INCOME OF THE ASSESSEE . I N REPLY TO THE SHOW CAUSE NOTICE , THE ASSESSEE SUBMITTED THAT THE ASSESSEE WAS VERY OLD IN THIS LINE OF BUSINESS WITH VAST EXPERIENCE . ALL THE SUPPLIERS ARE REAL MEAT SUPPLIER S. A S PER TREND IN THIS LINE OF BUSINESS WEIGHMENT SL IPS ARE ENCLOSED WITH THE PURCHASE VOUCHERS AND BILLS WITH IDENTIFIED TRANSACTIONS ARE GENUINE AS THEY ARE SUPPORTED WITH WEIGHMENT SL IPS . ALL SUPPLIERS HAD GIVEN AFFIDAVIT AS PROOF OF GENUINENESS O F TRANSACTIONS . I T WAS SUBMITTED THAT THE SUPPLIERS COLLECTED OLD AND USELESS BUFFALOES FROM FARMERS AND GE T THE M SLAUGHT E RE D AND SUPPLIE D RAW MEAT . T HIS IS NORMAL BUSINESS AND NO AMOUNT IS OUTSTANDING FOR PAYMENT TO THE SUPPLIERS . T HEY WERE PAID DURING THE SAME FINANCIAL YEAR . I N NUMBER OF CASES PAYMENTS HAVE BEEN MADE THROUGH BANKING CHANNEL . I T WAS SUBMITTED THAT THE ITA NO.3454/DEL/2017 4 COMPANY TOOK POS SESSION OF THE GOODS AT MUDRA COLD S TORAGE AT GARH ROAD, M EERUT AND ASSESSEE HAS NOT PAID ANY TRANSPORTATION CHARGES , THEREFORE , ALL THE PURCHASES ARE GENUINE AND ESTABLISHED A S WITHOUT PURCHASES THERE CANNOT BE ANY SALE . T HE ASSESSEE HAS MADE PAYMENT TO PARTIES IN CASH INSTALMENT S OF RS. 20 , 000 / - AND RECORDED THE SAME IN HIS BOOKS OF ACCOUNT . A LL THE PARTIES HAVE CONFIRM ED THE SAME . A S THEY MIGHT HAVE FACE D SUCH TYPE OF ATMOSPHERE FIRST TIME , AND THEREFORE, FELT PRESSURE AND BY MISTAKE GAVE MISSTATEMENT S . T HEY HAVE GIVEN AN AFFIDAVIT WHICH IS A PROOF OF GENUINENESS OF TRANSACTION S. NONE OF THE PART IES ARE BOGUS . I T WAS FURTHER SUBMITTED THAT THE ASSESSEE HAS TAKEN CC LIMIT FROM PUNJAB NATIONAL BANK E.K ROAD, M EERU T IN FINANCIAL YEAR 2012 - 13 . BANK OFFICIAL HAS CERTIFIED THAT THEY VISITED ON MONTHLY BASIS TO CHECK THE STOCK AND B OOK DE BTS AND CREDITORS REPORTS AND NO MATERIAL DIFFERENCE WAS NOTICED BY THEM AT THAT TIME AND TILL DATE THERE IS NO INSPECTION IRREGULARIT Y OF BRANCH OUT STANDING REGARDING THE ASSESSEE S ACCOUNT. 3.4 T HE ASSESSING OFFICER OBSERVED THAT THE REPLY OF THE ASSESSEE IS NOT ACCEPTABLE AS THE SAME IS WITHOUT ANY SUBSTANCE . M ERE SUBMISSION OF AFFIDAVIT COULD NOT PROVE GENUINENESS OF TRANSACTION. EVEN IN BUSINESS OF PROCURING CA TTLE FROM FARMERS , NO ONE G AVE CA TTLE TO BUYERS ON CREDIT BASIS. I T IS NOT POSSIBLE FOR ABOVE PARTIES TO PROCURE CATTLE O N CONSECUTIVE DAYS FOR LARGE NUMBER OF CATTLES. I T IS OUT OF IMAGINATION THAT A PERSON WHO NEITHER CARR IED OUT THIS BUSINESS IN PAST AND NO R AFTER TH ESE TRANSACTIONS AND ONLY FOR 3 TO 4 DAYS IN A YEAR AND FOR ONLY SINGLE PARTY M / S . GMC INTERNATIONAL , CLEARLY PROVE S THAT TH ESE PARTIES ARE BOGUS AND CRE ATED FOR INTRODUCING BOGUS PURCHASES IN ORDER TO REDUCE T HE PROFIT OF ASSESSEE S BUSINESS. D URING THE ASSESSMENT PROCEEDINGS , ONE PARTY , RAJU S / O K AL A V A ATTENDED BEFORE HIM IN COMPLIANCE OF SUMMONS U / S 131 OF THE ACT AND HIS STATEMENT WAS ITA NO.3454/DEL/2017 5 RECORDED ON OATH. THE SAID PARTY ADMITTED THAT NEITHER HE KNOWS THE ASSESSEE NOR HE WAS INVOLVED EVER IN ANY BUSINESS TRANSACTION WITH THE ASSESSEE. H E FURTHER STATED THAT THE ASSESSEE WAS INVOLVED IN BUSINESS OF LABOUR OF MARBLE IMPLEMENTATION AND WAS NEVER INVOLVED IN SALE/PURCHASE OF RAW MEAT. H E ALSO STATED THAT HE HAS NOT GIVEN ANY AFFIDAVIT WHICH WAS FILED BY THE ASSESSEE DATED 20.02. 2016. T HE PARTY ADMITTED THAT PHOTO ID , I.E., VOTER ID CARD GIVEN BY THE ASSESSEE IS HIS OWN BUT NEITHER HE SIGNED ANY AFFIDAVIT NOR HE PROVIDED OR GIVEN HIS ID TO THE ASSESSEE . FROM THI S , THE ASSESSING OFFICER CONCLUDED THAT THE ASSESSEE FILED FORGED AFFIDAVIT OF THE PARTY AND ABUSED THE PROCEEDINGS UNDER I NCOME T AX A CT. THE ASSESSEE WAS SHOW CAUSE D ON 25 .02. 2016 FOR LAUNCHING OF PROSECUTION UNDER SECTION 277 OF THE I NCOME TAX A CT , 19 6 1. ASSESSEE SUPPLIED COPY OF STATEMENT RECORDED ALONG WITH ID PROVIDED BY THE PARTY. THE ASSESSEE WAS REQUIRED TO EXPLAIN THE SAME WITH SUPPORTI VE EVIDENCE AND SHOW CAUSED WHY THE SAME MAY NOT BE APPLIED FOR OTHER AFFIDAVITS FILED BY THE ASSESSEE AND CASE WA S FIXED FOR HEARING ON 26 .02. 2016. O N THAT DAY , ASSESSEE SEN T A REQUEST LETTER FOR ADJOURNMENT AND DID NOT ATTEND HIS OFFICE FOR NEXT 4 DAYS. D URING THIS PERIOD , MR RAJU S /O SHRI KA LAV A ATTEND ED BEFORE HIM AND INFORMED THAT ASSESSEE IS PRESSURING HIM TO CHANGE HIS STATEMENT AND ALSO FILED WRITTEN S UBMISSION REGARDING AFFIDAVIT WHICH THE ASSESSING OFFICER HAS QUOTED IN HIS ORDER , THEREFORE , THE ASSESSING OFFICER IN VIEW OF THE NON COOPERATIVE BEHAVIOUR OF THE ASSESSEE ISSUED NOTICE U / S 144 OF THE INCOME T A X A CT ON 0 2 . 0 3 . 2016 WHICH WAS S ERVED THROUGH N OTICE SERVER AS WELL AS E - MAIL, TO MAKE COMPLI A N CE ON 0 4 . 0 3 . 2016. ON 0 4 . 0 3 . 2016 , ASSESSEE ALONG WITH HIS COUN SEL ATTENDED BEFORE THE ASSESSING OFFICER AND FILE D WRITTEN SUBMISSION WHEREIN ASSESSEE WAS ASKED TO IDENTIFY THE PARTIES WHOSE AFFIDAVIT WAS FILED BEFORE HIM , HE DENIED FOR THE SAME AND REPLIED THAT ALL TH ESE PARTIES ARE KNOWN BY THE ACCOUNTANT ONLY WHICH CLEARLY SHOWS UNCERTAINTY ON ITA NO.3454/DEL/2017 6 THE PART OF THE ASSESSEE TO O, THEREFORE , HE H ELD THAT THE AFFIDAVIT S FILED BY THE ASSESSEE CANNOT BE RELIED UPON AND ARE FOR GED ONE , AND THEREFORE , THE PURCHASES CHECK ED AND EXAMINED WERE FOUND BOGUS AND A D DED RS. 5 , 20 , 15 , 994 / - TO THE INCOME OF THE ASSESSEE AS BOGUS PURCHASES. 4. ON APPEAL , LD. CIT(A) REJECTED THE APPEAL O F THE ASSESSEE. H E OBSERVED THAT THE PRINCIPAL ARGUMENT OF THE A UTHORISED R EPRESENTATIVE OF THE ASSESSEE WAS THAT WITHOUT PURCHASE S THERE COULD BE NO EXPORT SALE WHICH HAS NOT BE EN QUESTIONED BY THE ASSESSING OFFICER. HE OBSERVE D THAT THE ASSESSING OFFICER HAS NOT DISALLOWED THE ENTIRE PURCHASE S . T HE TOTAL PURCHASE S W ERE R S . 45.19 CRORES AND ASSESSING OFFICER HAS DISALLOWED ONLY RS. 5.20 CRORE WORTH OF PURCHASES AFTER VERIFICATION FR O M 16 PARTIES. 4.1 H E FURTHER OBSERVED THAT ANOTHER ARGUMENT O F THE A UTHORISED R EPRESENTATIVE WAS THAT AS A M EASURE OF PRACTICE IN TRADE , WHICH HAS ALL LONG BEEN ACCEPTED BY THE D EPARTMENT ALSO , THE PERSON S FROM WHOM THE ASSESSEE PURCHASES ARE GENERALLY PE TTY TRADERS WHO OPERATED VERY CRUDELY AND WHO ARE GENERALLY NOT REQUIRED TO MAINTAIN AN Y ACCOUNT . IT IS WELL KNOWN FACT THAT THEY ARE SMALL TIME OPERATORS FROM MINORITY COMMUNITY MAJORITY OF WHOM ARE MOSTLY ILLITERATE AND ARE VERY HESITANT TO COME TO I NCOME T AX D EPARTMENT AS THEY HOLD THEM IN FEAR . T HE VOUCHERS ARE SELF MADE WHICH THE ASSESSING OFFICER HAS VERY SUMMARILY DISBELIEVED . H OWEVER , THIS WAS THE TRADE PRACTICE WHICH HAS BEEN FOLLOWED ALL ALONG AND IS CUSTOMARY TO THE TRADE WHICH HAS BEEN ACCEPTED BY THE D EPARTMENT ALL THESE YEARS , AS HAS ALSO BEEN HELD BY THE JURISDICTIONAL H IGH COURT IN THE CASE OF NISAR BIDI SIKKA NO.1 V /S. CIT 174 TAXMANN 51 (ALLD). T HE LD. CIT(A) OBSERVED THAT THE AR OF THE ASSESSEE HAS MADE A GENERALIZED STATEMENT BUT ITA NO.3454/DEL/2017 7 AFTER DETAILED AND SPECIFIC EXERCISE OF VERIFICATION OF PARTIES W HICH THE ASSESSING OFFICER HAS DONE IN A PAINSTAKING MANNER IT HAS BEEN BROUGHT ON RECORD THAT THESE 16 PARTIES WHICH THE ASSESSING OFFICER VERIFIED AND CH ECKED DURING THE ASSESSMENT PROCEEDINGS , T HE PURCHASES MADE FROM TH ESE PARTIES BY THE ASSESSEE RUN INTO LACS OF RUPEES IN EACH CASE AND IN TWO CASES THEY ARE INTO CRORE S . THUS, THE WHOLE ARGUMENT OF TRAD E PRACTICE, SMALL TRADERS ETC. IS COMPLETELY BASELESS AND CARRIES NO W EIGHT . H E FURTHER OBSERVE D THAT THE DECISION OF HON'BLE A LLAHABAD H IGH COURT I N THE CASE OF NISAR BIDI SIKKA (SUPRA) IS IN COMPLETE CONTRAST IN FACT WITH THE FACTS OF THE PRESENT CASE . I N THAT CASE THE ASSESSING OFFICER REJECTED BOOKS OF ACCOUNT DRAWING ADVERSE INFERENCE FROM PAYMENTS MADE TO ILLITERATE LABOURERS WHEREAS IN THE PRES ENT CASE THE BOOKS OF ACCOUNT HAVE NOT BEEN REJECTED AT ALL BY THE ASSESSING OFFICER A S A MATTER OF FACT IN THE ORAL ARGUMENT OF THE AR HAS ARGUED THAT BY ACCEPTING SALE OF THE ASSESSEE AND B Y NOT REJECTING THE BOOKS, T HE ASSESSING OFFICER HA S NOT MADE OUT CASE FOR PROPER AD DITION . H E OBSERVED THAT FROM THE AUDIT REPORT SUBMITTED BY THE ASSESSEE IN COLUMN 9 (B) WITH REGARD TO MAINTENANCE OF BOOKS OF ACCOUNT IT HAS BEEN STATED BY THE AUDITOR THAT ASSESSEE MAINTAI NS ONLY CASH BOOK , LEDGER , SALES AND PURCHASE B ILLS, EXPENSES VOUCHERS ONLY . H E OBSERVED THAT IT IS NOT UNDERSTOOD THAT WHEN THE ASSESSEE IS TRADING IN MEAT WHY HE COULD NOT MAINTAIN A QUANTIT Y BASED STOCK REGISTER WHICH COULD HA VE MADE THE ARGUMENT OF THE LD. AR MORE APPROPRIATE . DESPITE DEALING IN RA W MEAT AND MAKING PURCHASES IN KILOGRAMS AND SELLING IN KILOGRAMS NO STOCK REGISTER HAS BEEN MAINTAINED . THE P ERSONS FROM WHOM PURCHASES WHOSE VALUE IS IN L ACS AND CRORE S HAVE BEEN MADE AND THESE PERSONS D O NOT HAVE ANY PROPER SALE BILL TO OFFER AS EVIDENC E . A CCORDINGLY FILING THEIR LEDGER ACCOUNTS IN THE BOOKS OF ACCOUNT OF ASSESSEE OR IN SOME CASES AFFIDAVIT OR CERTAIN CREDENTIALS LIKE PAN DOES NOT RESCUE THE ASSESSEE S CASE AS THERE IS NO ITA NO.3454/DEL/2017 8 INDEPENDENT RELIABLE EVIDENCE THAT COULD SUBSTANTIATE THE PURCHASE TRANSACTIONS FROM EACH OF THE PARTIES . H E OBSERVED THAT THE ONLY EVIDENCE WHICH THE AUTHORISED REPRESENTATIVE CLAIM ED TO BE RELIABLE IS A DHARAM KANTA RECEIPT . H E OBSERVED THAT IF DHARAM KANTA RECEIPT WAS RELIABLE EVIDENCE THEN WHY IS IT THAT A PERSON PUR CHASING AND SELLING RAW ME A T COULD NOT MAINTAIN TH E STOCK REGISTER . I N THIS CASE , QUANTITY PURCHASE D IS RAW MEAT AND THE SAME IS SOLD AS SUCH . SO, W HEN THERE IS NO VALUE ADDITION IN THE PRODUCT AND THE PURCHASE AND SALE IN KILOGRAMS , I N SUCH CIRCUMSTANCES , IT IS VERY EASY TO MAINTAIN QUA NTITATIVE STOCK TALLY OR A STOCK REGISTER . HAD ASSESSEE MAINTAIN ED PROPER STOCK REGISTER OR QUANTITATIVE STOCK TALLY AND HAD HE BEEN ABLE TO RELATE THE STOCK VALUE S WITH THE DHARM KANTA RECEIPT S HE WOULD HAVE HAD A VERY GOOD CASE FOR PROPER PURCHASE VERIFICATION . I N ABSENCE OF QUANTITATIVE STOCK TALLY THE RANDOM USE OF DHARM KANTA RECEIPTS REALLY DID NOT HELP THE ASSESSEE S CASE OF PROVIDING CREDIBLE EVIDENCE AND PROVING TH AT PURCHASE A RE GENUINE . I N ABSENCE O F QUANTITATIVE STOCK TALLY NO CASE IS MADE OUT BY THE COUN SEL OF ASSESSEE WITH REGARD TO HIS ARGUMENT THAT PURCHASE COULD NOT BE DIS ALLOWED WITHOUT DISTURBING THE SA LES . HE FURTHER OBSERVED THAT THE ARGUMENT OF THE AUTHORISED R EPRESENTATIVE OF ASSESSEE TO COMPARE GROSS PROFIT RATE WITH OTHER SUCH CONCERN S IS OF LITTLE EVIDENTIARY VALUE IN SO FAR AS THE ASSESSING OFFICER HAS NOT REJECTED THE BOOKS OF ACCOUNT AND HAS ONLY DISALLOWED PURCHASE AFTER VERIFICATION OF BILLS OF CERTAIN PARTIES. 4.2 THE OTHER ARGUMENT OF THE AR WAS THAT CERTAIN PURCHASES DISALLOWED , THE ASSESSEE HAS MADE PAYMENT S THROUGH BANK. THE LD. CIT(A) OBSERVED THAT THE AUDITOR IN HIS REPORT HAS STATED THAT THE PAYMENTS IN EXCESS OF RS. 20,000/ - WERE MADE BY CHEQUE OR DRAFT . H OWEVER , IT I S NOT POSSIBLE FOR HIM TO VERIFY WHETHER THE PAYMENT S IN EXCESS OF RS. 20,000 / - HAVE BEEN MADE OTHERWISE THAN BY A CROSS ED ITA NO.3454/DEL/2017 9 CHEQUE/BANK DRAFT , SINCE THE NECESSARY EVIDENCE WAS NOT IN POS SESSION OF THE ASSESSEE. FURTHER, THE LD. CIT(A) OBSERVED THAT CERTAIN PAYMENTS WERE MADE BY CHEQUE WILL NOT HOLD ANY GROUND WHEN AUDITOR IS QUALIFYING THAT THERE IS NO EVIDENCE IN THE POSSESSION OF ASSESSEE THAT C OULD ESTABLISH THAT THESE PAYMENTS WERE MADE BY CROSS ACCOUNT PAYEE CHEQUE OR BANK DRAFT THAT COULD HAVE FORM ED S OME KIND OF INDEPENDENT RELIABLE EVIDENCE. IN APPEAL PROCEEDINGS, AR DID NOT LEAD ANY SUCH EVIDENCE THAT COULD HAVE BEEN PROCURED FROM THE ASSESSEE S BANK THAT COULD ESTABLISH THE GENUINE NESS OF THE PURCHASE S BY VERIFICATION OF PAYMENT S FROM THE BANK AT LE AST TO THE EXTENT OF CHEQUE PAYMENT S MADE. THE AR DESPITE MAKING ARGUMENTS AND RELYING UPON THE PLETHORA OF CASE LAW S, WHICH IN ANY CASE ARE DISTINGUISHABLE ON FACT S, COULD NOT REBUT THE FINDINGS OF THE ASSESSING OFFICER WITH REGARD TO DISALLOWANCE OF PURC HASES DONE . HENCE , HE CONFIRMED THE ORDER OF THE ASSESSING OFFICER. 5. WE HAVE HEARD THE RIVAL SUBMISSIONS AND PERUSED THE ORDERS OF THE LOWER AUTHORITIES AND MATERIAL AVAILABLE ON RECORD. THE ASSESSEE IS ENGAGED IN THE BUSINESS OF EXPORT OF MEAT. DURING THE COURSE OF ASSESSMENT PROCEEDINGS, THE ASSESSING OFFICER ISSUED NOTICE U/S 131 OF THE ACT TO 15 PERSONS FROM WHOM THE ASSESSEE CLAIMED TO HAVE MADE PURCHASES OF MEAT. OUT OF 15 NOTICES, 3 NOTICES RETURNED UNSERVED AND OUT OF BALANCE 1 2 NOTICES ONLY ONE NOTICEE RESPONDED. IN RESPONSE TO THAT NOTICE SH. RAJU S/O SH. KALWA APPEARED AND IN HIS STATEMENT HE DENIED MAKING OF ANY SALE TO THE ASSESSEE. THE PAYMENTS TO ALL THESE PARTIES WERE MADE IN CASH. FROM THIS, THE ASSESSING OFFICER INFERRED THAT AGGREGATE P URCHASE OF RS.5,20,15,994/ - MADE FROM THESE 15 PARTIES WERE BOGUS AND HE, THEREFORE, ADDED THE SAME TO THE INCOME OF THE ASSESSEE. ITA NO.3454/DEL/2017 10 6. ON APPEAL, THE CIT(A) CONFIRMED THE ACTION OF THE ASSESSING OFFICER. 7. BEFORE US, THE AR OF THE ASSESSEE EXPLAINED THAT THE ASSESSEE FOR ITS EXPORT OF MEAT WAS REQUIRED TO PURCHASE RAW MEAT. MOSTLY, THE SUPPLIERS OF RAW MEAT ARE ILLITERATE AND SMALL PERSONS. THEY PURCHASE USELESS LIVE STOCK FROM FARMERS AND GET THE SA ME BUTCHERED AND THEREAFTER SUPPLIED THE SAME TO THE ASS ESSEE. OUT OF THE FEA R OF INCOME TAX DEPARTMENT, THEY MAY NOT HAVE RESPONDED TO THE NOTICE OF THE INCOME TAX DEPARTMENT. 8. HE, FURTHER, SUBMITTED THAT FOR DISALLOWANCE OF RS.5,20,15,994/ - , THE INCOME OF THE ASSESSEE WAS ASSESSED AT RS.5,30,73,994/ - WHICH ON THE BACKGROUND OF T URNOVER OF THE ASSESSEE OF RS.43 ,01,72,740/ - WORKS OUT TO 12.33% OF THE TURNOVER. HE ARGUED THAT IT WAS NOT PRACTICALLY POSSIBLE TO ACHIEVE SUCH HUGE PROFIT PERCENTAGE. HE PLACED BEFORE US THE FOLLOWING COMPARABLE CASES WHEREIN FOR T HE ASSESSMENT YEAR 2013 - 14, THE ASSESSED INCOME AND TURNOVER AND PROFIT PERCENTAGE ARE AS UNDER: NAME OF THE ASSESSEE TURNOVER INCOME ASSESSED NET INCOME PERCENTAGE ASSESSED U/S MOHD MEHRAJ 1,01,53,78,273 12,45,190 0.122 ---- AL - SAD TRADING CO. (FIRM PARTNERSHIP) 67,14,70,744 6,23,890 0.09 143(3) MOHD NAWAZUDDHIN HAZI 1,82,52,436 8,96,561 0.49 143(3) 9. WE FIND THAT IT IS NOT IN DISPUTE THAT THE PURCHASES OF THE ASSESSEE ARE NOT FULLY VERIFIABLE. IN THESE CIRCUMSTANCES, THE BOOK RESULT OF THE ASSESSEE IS NOT RELIABLE AND THEREFORE, THE LOWER AUTHORITIES WERE JUSTIFIED IN REJECTING THE BOOK RESULT OF THE A SSESSEE. HOWEVER, KEEPING IN VIEW THE ABOVE COMPARABLE CASES WHICH WERE ASSESSED BY THE DEPARTMENT, IT IS EQUALLY DIFFICULT TO SUSTAIN THE ASSESSMENT MADE BY THE REVENUE. ITA NO.3454/DEL/2017 11 10. THE DR COULD NOT DISPUTE THE FACT THAT THE ABOVE NAMED PERSONS WERE ENGAGED IN SAME LINE OF BUSINESS IN WHICH THE ASSESSEE WAS ENGAGED IN. THEREFORE, GOING BY THE PERCENTAGE OF INCOME ASSESSED IN THEIR CASE RANGING FROM 0.12% TO 0.49%, IT CANNOT BE BELIEVE D WITHOUT COGENT MATERIAL THAT THE ASSESSEE COULD HAVE EARNED INCOME OF 12.33% OF ITS TURNOVER. WE, THEREFORE, SET ASIDE THE ORDERS OF THE LOWER AUTHORITIES. WE FIND THAT THE HIGHEST RATE OF NET PROFIT ASSESSED IN COMPARABLE CASE FOR THE YEAR UNDER CONSIDE RATION IS 0.49% OF THE TURNOVER. THEREFORE, IN ORDER TO CONSIDERED OPINION IT SHALL BE FAIR AND IN THE INTEREST OF JUSTICE THAT THE ASSESSING OFFICER IS DIRECTED TO TAKE ASSESSEE S NET INCOME AT 0.49% OF ITS TURNOVER. WE, ACCORDINGLY, DIRECT THE ASSESSING OFFICER TO RECOMPU TE THE ASSESSEE S INCOME. THUS, THIS GROUND OF APPEAL OF THE ASSESSEE IS PARTLY ALLOWED. 11. IN THE RESULT, THE APPEAL OF THE ASSESSEE IS PARTLY ALLOWED. (ORDER PRONOUNCED IN THE OPEN COURT ON 31 /01/2019) SD/ - SD/ - ( KULDIP SINGH ) ( N. S. SAINI ) JUDICIAL MEMBER ACCOUNTANT MEMBE R DATED: 31 / 0 1 / 201 9 PRABHAT KUMAR KESARWANI, SR.P.S. COPY FORWARDED TO: 1 . APPELLANT 2 . RESPONDENT 3 . CIT 4 . CIT(APPEALS) 5 . DR: ITAT ASSISTANT REGISTRAR