M/s JVR Forging Limited, Ludhiana V. The Addl Commissioner of Income Tax, Ludhiana

ITA 350/CHANDI/2016

• Counselvise Citation: [2016] 131 COUNSELVISE.COM (IT) 8923 (ITAT-CHANDIGARH)
• Duration Of Justice: 7 month(s) 26 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 07-12-2016
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: Not Allotted
• Assessment Year: 2011-2012
• Appeal Filed On: 11-04-2016
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Assessee Lawyers: ADITYA KUMAR; SSH ASHWANI KUMAR
• Keywords: Business income; Depreciation; Rule of consistency; Deemed to accrue or arise in india; Unabsorbed depreciation
• Section: 143(3); 68; 56; 263

Judgement Text

1 IN THE INCOME TAX APPELLATE TRIBUNAL DIVISION BENCH, CHANDIGARH BEFORE SHRI BHAVNESH SAINI, JUDICIAL MEMBER AND MS. ANNAPURNA GUPTA, ACCOUNTANT MEMBER ITA NO.350/CHD/2016 ASSESSMENT YEAR: 2011-12 M/S JVR FORGING LIMITED, VS. THE ACIT, CIRCLE V, LUDHIANA LUDHIANA PAN NO. AAACJ4111C (APPELLANT) (RESPONDENT) APPELLANT BY : S/SH. ASHWANI KUMAR & ADITYA KUMAR RESPONDENT BY : SH. SUSHIL KUMAR DATE OF HEARING : 16.11.2016 DATE OF PRONOUNCEMENT : 07.12.2016 ORDER PER BHAVNESH SAINI, JM THIS APPEAL BY THE ASSESSEE HAS BEEN DIRECTED AGAI NST THE ORDER OF LD. CIT(A)-2, LUDHIANA DATED 10.2.2016 FOR ASSESSME NT YEAR 2011-12 ON THE FOLLOWING GROUNDS:- I) THAT THE LEARNED COMMISSIONER OF INCOME TAX (APPEALS-LL) LUDHIANA HAS ERRED IN CONFIRMING THE ADDITION OF 4,37,47,870/- UNDER SECTION 68 OF THE INCOME TAX ACT 1961 AS DEEMED INCOME ON ACCOUNT OF PROFIT EARNED ON PURCHASE/SALE OF COMMODITIES 2 ALREADY SHOWN AS BUSINESS INCOME AND NOT ASSESSING THE DEEMED INCOME U/S 68 UNDER HEAD 'INCOME FROM OTHER SOURCES' IGNORING THE INSTRUCTIONS OF INCOME TAX DEPTT. ON FILING OF ITR6 AND LEGAL AS WELL AS FACTUAL POSITION OF THE CASE AND WITHOUT CONSIDERIN G THE VARIOUS JUDGMENTS ON THE SAME ISSUE. II) THAT IT IS PRAYED THAT THE ORDER OF THE LEARNE D COMMISSIONER OF INCOME TAX (APPEAL) LUDHIANA, MAY KINDLY BE SET ASIDE AND BENEFIT OF SET OFF LOSSES A ND DEPRECIATION MAY KINDLY BE ALLOWED AGAINST THE ADDITION SO MADE U/S 68 OF THE IT ACT 1961 . 2. WE HAVE HEARD THE LD. REPRESENTATIVES OF BOTH TH E PARTIES AND PERUSED THE MATERIAL ON RECORD. BRIEFLY STATED, TH E FACTS OF THE CASE ARE THAT ASSESSEE IS A COMPANY ENGAGED IN FORGINGS OF AUTO PARTS, HARDWARE AND RAILWAY PARTS, SCAFFOLDING ITEMS ETC, TRADING OF CLOTH ETC. AND TRADING IN COMMODITIES. THE ASSESSING OFFICER NOTED THAT ASSESSEE IN RESPONSE TO THE QUESTIONNAIRE ATTENDED THE ASSES SMENT PROCEEDINGS FROM TIME TO TIME AND FURNISHED INFORMATION AS CALL ED FOR. THE BOOKS OF ACCOUNT ALONG WITH RELEVANT DOCUMENTS WERE ALSO PRODUCED WHICH WERE EXAMINED AND TEST CHECKED. THE ASSESSEE DISCLO SED NIL INCOME. SCHEDULE-10 OF THE AUDIT REPORT SHOWS OTHER INCOME OF RS. 6,21,63,739/- WHICH INCLUDES RS. 4,37,47,870/- AS C OMMODITY INCOME. DURING THE COURSE OF ASSESSMENT PROCEEDINGS, DETAIL S REGARDING THE GENUINENESS OF THE SAID COMMODITY INCOME WERE CALLE D FOR. THE ASSESSING OFFICER NOTED THAT ASSESSEE HAS NOT BEEN ABLE TO PROVE THE BONA FIDE OF THE SAID TRANSACTIONS AND, THEREFORE, ALLEGED INCOME FROM 3 COMMODITIES IS WITHOUT ANY EVIDENCE. A SHOW CAUSE N OTICE WAS ISSUED TO THE ASSESSEE AS TO WHY THE INCOME RECEIVED FROM TRADING OF COMMODITIES MAY NOT BE TREATED AS INCOME U/S 68 OF THE INCOME-TAX ACT, 1961. 3. THE ASSESSEE FILED A REPLY BEFORE THE ASSESSING OFFICER AND SUBMITTED THAT FOR THE PURPOSE OF CHARGING OF INCOM E TAX, ANY INCOME EARNED BY THE ASSESSEE SHOULD FALL IN ANY ONE OF TH E HEADS OF THE INCOME. THE PROFIT EARNED BY THE ASSESSEE COMPANY O N ACCOUNT OF PURCHASE / SALE OF COMMODITIES FALLS UNDER THE HEAD BUSINESS INCOME AS SHOWN IN THE COMPUTATION OF THE TAXABLE INCOME. THE ORDER OF THE ITAT CHENNAI BENCH IN THE CASE OF SHRI P. SUBRAMANI AN VS. ITO FOLLOWING THE DECISION OF THE HON'BLE SUPREME COURT IN THE CASE OF CIT VS. D.P. SANDHU BROS, CHEMBUR WAS RELIED UPON. THE ASSESSING OFFICER HOWEVER, DO NOT ACCEPT THE CONTENTION OF TH E ASSESSEE AND NOTED THAT IN THE PRESENT CASE, THE NATURE AND SOUR CE OF INCOME FROM TRADING OF COMMODITIES REMAIN UNEXPLAINED AND THE E NTIRE TRANSACTION IS SHAM AS THE ASSESSEE HAS NOT BEEN ABLE TO GIVE A CREDIBLE EVIDENCE TO PROVE SOURCE OF RS. 4.37 CRORES. THE ASSESSING O FFICER ALSO REFERRED TO THE DECISION OF THE HON'BLE PUNJAB & HARYANA HIG H COURT IN THE CASE OF DULARI DIGITAL PHOTO SERVICES VS CIT, LUDHI ANA DATED 10.12.2013 IN WHICH IT WAS HELD THE EXPRESSION INC OME FROM OTHER SOURCES WOULD COME INTO PLAY ONLY WHEN INCOME IS R ELATABLE TO A KNOWN SOURCE. WHERE, THE INCOME IS NOT RELATABLE TO ANY KNOWN OR ANY BONA FIDE SOURCE; IT WOULD NECESSARILY BE BROUGHT T O TAX OR CONSIDERED 4 AS INCOME OF THE ASSESSEE U/S 68 OF THE I.T. ACT. THE ASSESSING OFFICER, THEREFORE, NOTED THAT THE INCOME FROM COMM ODITIES SALES / PURCHASE AS SHOWN BY THE ASSESSEE IS NOT RELATABLE TO ANY KNOWN OR BONA FIDE SOURCES; THEREFORE, THE SAME WAS BROUGHT TO TAX U/S 68 OF THE ACT. THE ASSESSING OFFICER MADE ADDITION OF RS. 4,3 7,47,870/- U/S 68 OF THE ACT. 4. THE SAID ADDITION WAS CHALLENGED BEFORE THE LD. CIT(A) AND WRITTEN SUBMISSIONS OF THE ASSESSEE ARE REPRODUCED IN THE IMPUGNED ORDER IN WHICH ASSESSEE REITERATED THE SAME SUBMISS IONS AS WERE MADE BEFORE THE ASSESSING OFFICER AND ALSO EXPLAINED THA T COMPLETE DETAILS AND EVIDENCES ALONGWITH CONFIRMED COPIES OF ACCOUNT FROM BOOK OF LUDHIANA COMFIN SERVICES, CONTRACT NOTE AND BANK AC COUNTS OF LUDHIANA COMFIN SERVICES LUDHIANA WERE PRODUCED BEF ORE THE ASSESSING OFFICER, THEREFORE, THERE IS NO QUESTION OF NOT PRODUCING OF ANY CREDIBLE EVIDENCE. PAN NUMBER OF RAKESH KUMAR P ROP. OF M/S LUDHIANA COMFIN SERVICES WAS ALSO PRODUCED AND SINC E HE HAS SHIFTED TO FOREIGN COUNTRY AND HE IS NOT COOPERATING WITH T HE ASSESSEE IN FURNISHING INFORMATION, THEREFORE, SUMMONS CAN BE I SSUED AGAINST HIM. ULTIMATELY, AS PER REMAND REPORT OF THE ASSESSING O FFICER, SHRI RAKESH KUMAR WAS NOT TRACEABLE AND WAS NOT PRODUCED BEFORE THE ASSESSING OFFICER IN THE REMAND PROCEEDINGS. THE LD. CIT(A) T HEREFORE, CONFIRMED THE ORDER OF THE ASSESSING OFFICER HOLDIN G THAT ABOVE AMOUNT TO BE UNACCOUNTED MONEY OF THE ASSESSEE SINC E THE ASSESSEE FAILED TO PRODUCE PROPRIETOR OF M/S LUDHIANA COMFI N SERVICES BEFORE 5 THE ASSESSING OFFICER. THE LD. CIT(A) ALSO RELIED UPON HIS ORDER IN THE CASE OF SH JAWAHAR LAL PROP. M/S SAHI RAM JAWAH AR LAL, IN WHICH ON IDENTICAL FACTS, THE ISSUE WAS DECIDED AGAINST T HE ASSESSEE. THE LD. CIT(A) ACCORDINGLY DISMISSED THE APPEAL OF THE ASSE SSEE . 5. THE LD. COUNSEL FOR THE ASSESSEE REITERATED THE SUBMISSIONS MADE BEFORE THE AUTHORITIES BELOW AND REFERRED TO PB-34 TO SHOW THAT OTHER INCOME EARNED BY THE ASSESSEE INCLUDES INCOME FROM COMMODITIES PURCHASE / SALES OF THE IMPUGNED AMOUNT. HE HAS ALS O SUBMITTED THAT IN PRECEDING ASSESSMENT YEAR IN 2010-11 ALSO, THE ASSE SSEE HAD SIMILAR INCOME FROM COMMODITIES PURCHASE / SALES, DETAILS O F SAME ARE FILED IN THE PAPER BOOK, WHICH IS COPY OF THE AUDIT REPORT, BALANCE SHEET AND PROFIT AND LOSS ACCOUNT FOR PRECEDING ASSESSMENT YE AR 2010-11 ALONG WITH COPY OF ACCOUNT OF RUPICA COMMODITIES SERVICE IN THE BOOKS OF THE ASSESSEE AND COPY OF THE OTHER BUSINESS INCOME IN PRECEDING ASSESSMENT YEAR. HE HAS SUBMITTED THAT IN PRECEDING ASSESSMENT YEAR 2010-11, THE ASSESSING OFFICER PASSED ORDER U/S 143 (3) DATED 28.12.2012 AND SIMILAR SOURCE OF INCOME HAVE BEEN A CCEPTED BY THE ASSESSING OFFICER. THEREFORE, ASSESSING OFFICER SHO ULD NOT TAKE A DIFFERENT VIEW IN SUBSEQUENT ASSESSMENT YEAR UNDER APPEAL. THE RULE OF CONSISTENCY APPLIES TO THE INCOME TAX PROCEEDING S. HE HAS SUBMITTED THAT BOOKS OF ACCOUNT HAVE NOT BEEN REJEC TED. COPIES OF THE BILLS OF THE BROKER SHOWING PROFIT ALONG WITH DETAI LS OF CONTRACT NOTE HAVE BEEN FILED BEFORE THE AUTHORITIES BELOW AT THE TIME OF ASSESSMENT PROCEEDINGS, THE APPELLATE PROCEEDINGS AND REMAND P ROCEEDINGS TO 6 SHOW THAT ASSESSEE FILED THE DOCUMENTARY EVIDENCE B EFORE THE AUTHORITIES BELOW, PROVES GENUINE SOURCE OF INCOME. HE HAS SUBMITTED THAT ONCE ON ACCOUNT OF SALE / PURCHASE OF COMMODIT IES, DEPARTMENT HAS ACCEPTED THE SAME SOURCE OF INCOME AS BUSINESS INCOME OF THE ASSESSEE, THEREFORE, IT COULD NOT BE TREATED AS INC OME FROM OTHER SOURCES U/S 68 OF THE I.T. ACT. HE HAS RELIED ON TH E DECISION OF THE HON'BLE SUPREME COURT IN THE CASE CIT VS. D.P. SAH DU BROS. CHEMBUR P. LTD (2005) 273 ITR (SC) 1, IN WHICH IT WAS HELD AS UNDER:- SECTION 56 PROVIDES FOR THE CHARGEABILITY OF INCOM E OF EVERY KIND WHICH HAS NOT TO BE EXCLUDED FROM THE TOTAL INCOME UNDER THE ACT, ONLY IF IT IS NOT CHARG EABLE TO INCOME-TAX UNDER ANY OF THE HEADS SPECIFIED IN SECTION 14, ITEMS A TO E. THEREFORE, IF THE INCOME IS INCLUDED UNDER ANY ONE OF THE HEADS, IT CANNOT BE BROUGHT TO TAX UNDER THE RESIDUARY PROVISIONS OF SECTION 56. 6. HE HAS REFERRED TO PB-11 WHICH IS REMAND REPORT FILED BY THE ASSESSING OFFICER IN WHICH NO ADVERSE INTERFERENCE HAVE BEEN DRAWN AGAINST THE ASSESSEE ON FILING THE DOCUMENTARY EVI DENCE. HE HAS SUBMITTED THAT SINCE RAKESH KUMAR, PROPRIETOR OF M/ S LUDHIANA COMFIN SERVICES LUDHIANA HAVE GONE ABROAD, HE COULD NOT BE PRODUCED AT THE REMAND PROCEEDINGS. HE HAS SUBMITTED THAT C IT(A) RELIED UPON HIS ORDER IN THE CASE OF SH JAWAHAR LAL PROP. M/S S AHI RAM JAWAHAR LAL, (SUPRA) WHICH HAVE BEEN SET ASIDE BY THE ITAT CHANDIGARH BENCH IN THE MATTER OF JAWAHAR LAL VS. ITO IN ITA NO. 75 /CHD/2012 DATED 7 29.5.2014 AND IN THE MATTER OF JAWAHAR LAL VS. ITO IN ITA NO. 785/CHD/2015 (ASSESSMENT YEAR 2011-12) DATED 19.7.2 016, THEREFORE, ORDER OF CIT(A) IS LIABLE TO BE SET ASIDE. HE HAS S UBMITTED THAT SECTION 115 BBE HAVE BEEN INSERTED IN TO THE INCOME TAX W.E .F. 1.4.2013 TO SAY THAT ADDITION U/S 68 WOULD BE ON ACCOUNT OF DEE MED INCOME AND FLAT RATE OF TAX WOULD BE CHARGED, THEREFORE, IT WO ULD NOT APPLY TO THE ASSESSMENT YEAR UNDER APPEAL I.E. 2011-12. THE LD. COUNSEL FOR THE ASSESSEE, THEREFORE, SUBMITTED THAT ADDITION IS LIA BLE TO BE DELETED. HE HAS STATED THAT GROUND NO.2 IS CONSEQUENTIAL IN NAT URE. 7. ON THE OTHER HAND, LD. DR RELIED UPON THE ORDERS OF THE AUTHORITIES BELOW AND REFERRED TO THE ASSESSEES R EPLY BEFORE LD. CIT(A) (PAGES 11 TO 14) IN WHICH ASSESSEES SUBMISS IONS WAS THAT UNABSORBED DEPRECIATION AND CURRENT YEAR DEPRECIATI ON MAY KINDLY BE ADJUSTED AGAINST THE INCOME ASSESSED U/S 68 OF THE I.T. ACT. HE HAD SUBMITTED THAT IN THE CASE OF JAWAHAR LAL (SUPRA), PARTY WAS PRODUCED AND TRANSACTION WAS NOT DOUBTED BY THE ASSESSING OF FICER, THEREFORE, THIS ORDER WOULD NOT SUPPORT THE CASE OF THE ASSESS EE. 8. WE HAVE CONSIDERED THE RIVAL SUBMISSIONS. THE AS SESSEE IS A COMPANY AND IS ENGAGED IN TRADING OF COMMODITIES. L D. COUNSEL FOR THE ASSESSEE REFERRED TO VARIOUS REPLIES FILED BEFO RE THE AUTHORITIES BELOW AT DIFFERENT STAGES, COPIES OF WHICH ARE FILE D IN THE PAPER BOOK TO SHOW THAT ASSESSEE HAS FILED DOCUMENTARY EVIDEN CES BEFORE THE AUTHORITIES BELOW IN SUPPORT OF GENUINENESS OF THE TRANSACTION OF SALE 8 AND PURCHASE OF COMMODITIES. THE ASSESSEE FILED CON FIRMED COPIES OF ACCOUNTS FROM BOOKS OF ACCOUNT OF M/S LUDHIANA COMF IN SERVICES ALONG WITH PHOTOCOPIES OF CONTRACT NOTES AND BANK A CCOUNT VIDE WHICH ASSESSEE COMPANY RECEIVED THE DIFFERENCE OF PURCHAS E / SALES OF COMMODITIES, PROFITS DURING THE FINANCIAL YEAR RELE VANT TO ASSESSMENT YEAR UNDER APPEAL. THE ASSESSEE ALSO FILED COPIES OF BANK STATEMENTS OF M/S LUDHIANA COMFIN SERVICES, LUDHIANA WHICH SHOW THAT AMOUNT OF PROFITS EARNED BY THE ASSESSEE COMPANY ON ACCOUNT OF DIFFERENCE OF PURCHASE / SALES OF VARIOUS COMMODITI ES DURING FINANCIAL YEAR UNDER APPEAL. THE ASSESSEE ALSO FILED COMPLETE CHART ALONGWITH LEDGER ACCOUNT OF SUNDRY DEBTOR AS DESIRED BY THE A SSESSING OFFICER. THE ASSESSEE HAS ALSO EXPLAINED AT THE REMAND PROCE EDINGS THAT AS PER INFORMATION RECEIVED BY THE ASSESSEE COMPANY, SHRI RAKESH KUMAR, PROPRIETOR OF M/S LUDHIANA COMFIN SERVICES HAS SINC E SHIFTED TO FOREIGN COUNTRY AND THE PRESENT ADDRESS IS NOT AVAI LABLE WITH THE ASSESSEE COMPANY, THEREFORE, HE COULD NOT BE PRODUC ED AT THE REMAND PROCEEDINGS. COPIES OF THE REMAND REPORT IS FIELD AT PAGE 11 OF THE PAPER BOOK IN WHICH ON THE DOCUMENTARY EVIDENCE NO ADVERSE INFERENCE HAS BEEN DRAWN BY THE ASSESSING OFFICER. THE ASSESSEE ALSO SUBMITTED BEFORE ASSESSING OFFICER IN THE REMAND PR OCEEDINGS THAT SHRI RAKESH KUMAR, PROPRIETOR TO M/S LUDHIANA COMFIN SER VICES IS MEMBER OF K & A SECURITIES (P) LTD WITH I.D. AND PA N NUMBER. THUS, THE ASSESSEE PRODUCED SUFFICIENT EVIDENCE BEFORE T HE AUTHORITIES BELOW TO PROVE THAT ASSESSEE HAS GENUINELY ENTERED INTO S ALE AND PURCHASE OF COMMODITIES SO AS TO EARN PROFIT. 9 9. THE ASSESSING OFFICER SPECIFICALLY NOTED IN THE ASSESSMENT ORDER THAT DETAILED QUESTIONNAIRE HAVE BEEN ISSUED AND AS SESSEE FURNISHED INFORMATION AS CALLED FOR. THE ASSESSING OFFICER AL SO EXAMINED THE BOOKS OF ACCOUNT AND RELEVANT DOCUMENTS AT ASSESSME NT STAGE. THEREFORE, ASSESSEE FILED THE RELEVANT AND REQUISIT E DOCUMENTARY EVIDENCE BEFORE THE AUTHORITIES BELOW TO PROVE THAT ASSESSEE GENUINELY ENTERED INTO THE TRANSACTION OF SALE AND PURCHASE O F COMMODITIES. THE ASSESSEE HAS KNOWN SOURCE OF INCOME FROM SALE / PUR CHASE OF COMMODITIES. THE ASSESSEE HAS FILED COPIES OF THE A UDITED ACCOUNTS IN THE PAPER BOOK AND IN SCHEDULE 10 OF OTHER INCOME AS MENTIONED WHICH INCLUDE RS. 4,37,47,870/- AS INCOME FROM COM MODITIES PURCHASE / SALE. IN THE PRECEDING ASSESSMENT YEAR 2 010-11, THE ASSESSEE HAS SHOWN RS. 84,14,930/- ON ACCOUNT OF IN COME FORM COMMODITIES PURCHASE AND SALES. THE ASSESSEE ALSO F ILED AUDITED ACCOUNTS OF THE PRECEDING ASSESSMENT YEAR 2010-11 A LONG WITH COMPUTATION OF INCOME AND ACKNOWLEDGMENT OF RETURN OF INCOME. THE ASSESSEE ALSO FILED COPY OF THE ASSESSMENT ORDER U/ S 143(3) FOR ASSESSMENT YEAR 2010-11 DATED 28.12.2012 IN WHICH T HE SIMILAR NATURE OF SOURCE OF INCOME FROM COMMODITIES PURCHASE / SA LES HAVE NOT BEEN DISPUTED BY THE ASSESSING OFFICER AND INCOME FROM T HE SAME SOURCE HAVE BEEN ACCEPTED BY THE ASSESSING OFFICER AS INCO ME FROM BUSINESS. SINCE THE SAME SOURCE OF INCOME HAVE BEEN ACCEPTED IN PRECEDING ASSESSMENT YEAR, THEREFORE, NATURE OF SAME BUSINESS INCOME COULD NOT BE TREATED DIFFERENTLY IN ASSESSMENT YEAR UNDER APP EAL. 10 10. IT MAY ALSO BE NOTED HERE THAT ASSESSING OFFICE R EXCEPT CALLED FOR INFORMATION FROM THE ASSESSEE DID NOT ASK THE ASSES SEE TO PRODUCE SHRI RAKESH KUMAR, PROPRIETOR OF M/S LUDHIANA COMFIN SE RVICES FOR EXAMINATION AT ASSESSMENT STAGE. NO FURTHER ENQUIR Y OR INVESTIGATION HAS BEEN CARRIED OUT AT THE ASSESSMENT STAGE. THERE FORE, IF SH. RAKESH KUMAR SHIFTED ABROAD AT LATER STAGE AND WAS NOT PR ODUCED AT REMAND PROCEEDINGS, NO ADVERSE VIEW SHOULD BE TAKEN AGAINS T THE ASSESSEE. THE HON'BLE PUNJAB & HARYANA HIGH COURT IN THE CAS E OF CIT VS. VIKAS CHEMI GUM INDIA (2005) 276 ITR 32 (P&H) HELD THAT ADDITION OF INCOME FROM PARTICULAR SOURCE DELETED IN ASSES SMENT YEAR 1986-87, ORDER NOT CHALLENGED DEPARTMENT NOT ENTITLED TO C HALLENGE ADDITION FROM SAME COURSE IN ASSESSMENT YEAR 1988-89 UNDER A PPEAL. IT WAS FURTHER HELD: - THAT SINCE THE APPELLANT DID NOT CHALLENGE THE ORDE R PASSED BY THE TRIBUNAL IN RELATION TO THE ASSESSMEN T YEAR 1986-87 BY WHICH IT CONFIRMED THE ORDER OF THE COMMISSIONER (APPEALS) DELETING THE ADDITION MADE BY THE ASSESSING OFFICER ON ACCOUNT OF VALUE OF BARDANA USED FOR STORING CHURI AND KORMA, IT COULD NOT CHALLENGE A SIMILAR ORDER PASSED IN RELAT ION TO THE ASSESSMENT YEAR 1988-89. 11. THE HON'BLE DELHI HIGH COURT IN THE CASE OF CIT V ESCORTS LTD. IN (2011) 338 ITR 435 (DELHI) HELD THAT WHEN TRANS ACTIONS OF PURCHASE AND SALE OF UNITS FOR MANY YEARS CONSIDERE D TO BE GENUINE IN 11 PRIOR AND SUBSEQUENT ASSESSMENT YEAR REVISION PRO CEEDING ON GROUND THAT TRANSACTIONS PERTAINING TO RELEVANT ASS ESSMENT YEAR WERE SPECULATIVE NOT PERMISSIBLE. IT WAS FURTHER HELD A S UNDER:- WHERE A FUNDAMENTAL ASPECT OF A TRANSACTION IS FOUND TO HAVE PERMEATED THROUGH DIFFERENT ASSESSMEN T YEARS AND THIS FUNDAMENTAL ASPECT HAS STOOD UNCONTESTED THEN THE REVENUE CANNOT BE ALLOWED TO CHANGE ITS VIEW TAKEN IN EARLIER ASSESSMENT YEARS UNLESS IT IS ABLE TO DEMONSTRATE A CHANGE IN CIRCUMSTANCES IN THE SUBSEQUENT ASSESSMENT YEAR. HELD, THAT THE COMMISSIONERS ORDER DID NOT CONTAIN A FINDING TO THE EFFECT THAT THE STAND TAKEN BY THE ASSESSEE THAT THE UNITS PURCHASED FROM THE UNIT TRU ST OF INDIA HAD ACTUALLY BEEN PHYSICALLY DELIVERED ALO NG WITH EXECUTED TRANSFER DEED WAS FALSE. WITHOUT SUCH A FINDING THE ALLEGATION THAT THE TRANSACTIONS WERE SPECULATIVE COULD NOT BE SUSTAINED. THE FUNDAMENTAL NATURE OF THE TRANSACTIONS WAS EXAMINED YEAR AFTER YEAR MORE IMPORTANTLY IN THE ASSESSMENT YEAR 1986-87 IT WAS SPECIFICALLY CONSIDERED BY THE COMMISSIONER (APPEALS) AND IT REMAINED THE SAME. GIVEN THE FACT THAT THE ASSESSEE HAD BEEN ENGAGED IN THESE TRANSACTIONS IN THE PRECEDING ASSESSMENT YEARS, THE COMMISSIONER COULD HAVE HAD NO OCCASION TO HAVE RECOURSE TO THE REVISIONAL POWERS UNDER SECTION 263 OF THE ACT ON THE FUNDAMENTAL ASPECTS OF THE TRANSACTI ONS IN ISSUE ON WHICH A VIEW HAD BEEN TAKEN AND NOT SHOWN TO HAVE BEEN CHALLENGED. 12 12. CONSIDERING THE ABOVE DISCUSSION, EVIDENCES AND MATERIAL ON RECORD, IT IS CLEAR THAT ASSESSEE HAS DECLARED BUSI NESS INCOME ON ACCOUNT OF PURCHASE / SALE OF COMMODITIES IN EARLIE R YEARS WHICH HAVE BEEN ACCEPTED BY THE REVENUE DEPARTMENT. THE RULE O F CONSISTENCY DO APPLIES TO THE INCOME TAX PROCEEDINGS. THEREFORE, O N THE SAME SOURCE OF INCOME, REVENUE SHOULD NOT DOUBT THE TRANSACTION CARRIED OUT BY THE ASSESSEE ON ACCOUNT OF COMMODITIES PURCHASE AND SAL ES IN ASSESSMENT YEAR UNDER APPEAL. THE ASSESSEE HAS KNOWN SOURCE OF THESE TRANSACTIONS AS BUSINESS INCOME, THEREFORE, THE SAM E CANNOT BE BROUGHT TO TAX UNDER THE HEAD INCOME FROM OTHER SOURCES O R DEEMED INCOME AS IS HELD BY HON'BLE SUPREME COURT IN THE CASE OF CIT VS. D.P. SANDHU BROS, CHEMBUR (SUPRA). THEREFORE, SECTION 68 WOULD NOT APPLY TO THE FACTS AND CIRCUMSTANCES OF THE CASE. IT MAY ALSO NOTED HERE THAT LD. CIT(A) FOLLOWED HIS ORDER IN THE CASE OF SH JA WAHAR LAL PROP. M/S SAHI RAM JAWAHAR LAL, (SUPRA) IN WHICH LD. CIT( A) DECIDED THE IDENTICAL ISSUE AGAINST THE ASSESSEE FOR THE PURPOS E OF DISMISSING THE APPEAL OF THE ASSESSEE. THE LD. COUNSEL FOR THE ASS ESSEE RIGHTLY CONTENDED THAT ORDER OF THE CIT(A) IN THE CASE OF J AWAHAR LAL (SUPRA) HAVE BEEN SET ASIDE BY THE ITAT CHANDIGARH BENCH V IDE ORDERS DATED 29.5.2014 I DATED 19.7.2016 (SUPRA). THEREFORE, SAI D DECISION WOULD NOT SUPPORT THE CASE OF THE REVENUE. IT, THEREFORE, APPEARS THAT ASSESSING OFFICER WITHOUT MAKING PROPER ENQUIRIES A ND WITHOUT ANY BASIS CONSIDERED THE TRANSACTION OF SALE AND PURCHA SE OF COMMODITIES AS SHAM TRANSACTION. THE AUTHORITIES BELOW WERE NOT JUSTIFIED IN HOLDING THAT NO CREDIBLE EVIDENCE HAS BEEN FILED ON RECORD TO PROVE 13 GENUINENESS OF THE TRANSACTIONS IN THE MATTER. THE AUTHORITIES BELOW ARE ALSO NOT JUSTIFIED IN HOLDING THAT NO KNOWN OR BOANFIDE SOURCE OF THE TRANSACTION HAVE BEEN PROVED. CONSIDERING THE TOTALITY OF FACTS AND CIRCUMSTANCES AND THE FACT THAT THE NATURE OF THE I NCOME AND SOURCE ON THE IDENTICAL TRANSACTION HAVE BEEN ACCEPTED BY THE DEPARTMENT IN PRECEDING ASSESSMENT YEAR, AUTHORITIES BELOW WERE N OT JUSTIFIED IN HOLDING THE INCOME OF THE ASSESSEE FROM UNEXPLAINED SOURCES U/S 68 OF THE I.T. ACT. WE ACCORDINGLY SET ASIDE THE ORDE RS OF THE AUTHORITIES BELOW AND DELETE THE ADDITION OF RS. 4,37,47,870/- U/S 68 OF THE I.T. ACT. THE APPEAL OF THE ASSESSEE ON GROUND NO.1 IS A CCORDINGLY ALLOWED. 13. IN VIEW OF THE ABOVE FINDINGS, SINCE GROUND NO. 2 IS CONSEQUENTIAL, THEREFORE, THE SAME NEED NOT BE ADJU DICATED. 14. IN THE RESULT, THE APPEAL OF THE ASSESSEE IS AL LOWED. ORDER PRONOUNCED IN THE OPEN COURT. SD/- SD/- (ANNAPURNA GUPTA) (BHAVNESH SAI NI) ACCOUNTANT MEMBER JUDICIAL MEMBER DATED : 7 TH DECEMBER, 2016 RKK COPY TO: 1. THE APPELLANT 2. THE RESPONDENT 3. THE CIT 4. THE CIT(A) 5. THE DR 14