TITIAN LABORATORIES P.LTD, MUMBAI V. DCIT CIR 10(2), MUMBAI

ITA 3768/MUM/2014

• Counselvise Citation: [2018] 126 COUNSELVISE.COM (IT) 0025 (ITAT-MUMBAI)
• Duration Of Justice: 3 year(s) 9 month(s) 1 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 28-02-2018
• Appeal Filed By: Assessee
• Order Result: Partly Allowed
• Bench Allotted: E
• Assessment Year: 2010-2011
• Appeal Filed On: 27-05-2014
• Result in Favour of: Partly Allowed
• Court: TRIBUNAL
• Department Lawyers: V JUSTIN
• Assessee Lawyers: JIMIT R SHAH
• Keywords: Bogus purchase; Capital asset; Cost of acquisition; Accommodation entries; Retraction; Revenue expenditure
• Section: 69C; 142(1); 133A

Judgement Text

1 ITA 3768/MUM/2014 IN THE INCOME TAX APPELLATE TRIBUNAL MUMBAI BENCH E, MUMBAI BEFORE SHRI SAKTIJIT DEY (JUDICIAL MEMBER) AND SHRI G MANJUNATHA (ACCOUNTANT MEMBER) I.T.A NO.3768/MUM/2014 (ASSESSMENT YEAR: 2010-11) M/S TITAN LABORATORIES PVT LTD, 102, TITAN HOUSE, 60 FEET ROAD, OPP BANK OF MAHARASHTRA, GHATKOPAR (E), MUMBAI 400 077 PAN : AACCT0509Q VS DCIT, CIR.10(2), MUMBAI APPELLANT BY SHRI JIMIT R SHAH REVENUE BY SHRI V JUSTIN DATE OF HEARING 17 -01-2018 DATE OF PRONOUNCEMENT 28-02-2018 O R D E R PER G MANJUNATHA, AM : THIS APPEAL FILED BY THE ASSESSEE IS DIRECTED AGAI NST THE ORDER OF THE CIT(A)-22, MUMBAI DATED 18-03-2014 AND IT PERTAINS TO AY 2010-11. THE ASSESSEE HAS RAISED THE FOLLOWING GROUNDS OF AP PEAL:- THE LD. CIT(A) ERRED IN NOT ADJUDICATING THE FOLLOW ING ADDITIONAL GROUNDS OF APPEAL, RAISED DURING THE APPELLATE PROCEEDINGS : THE LD. A.O. ERRED IN ADDING AN AMOUNT OF RS.4,39,0 0,166/-, WHICH ALSO INCLUDED VAT PAYMENT OF RS. 16,14,268/-, TO THE INC OME OF THE APPELLANT WITHOUT CONSIDERING THE DETAILED EXPLANATION SUBMIT TED DURING THE COURSE OF ASSESSMENT ABOUT THE PURCHASES AND USE OF THE SAID MATERIALS. THE LD. A.O. WAS NOT JUSTIFIED IN INITIATING THE PE NALTY PROCEEDINGS DISREGARDING THE CONDITIONAL SURRENDER ON ASSURANCE THAT NO PENALTY SHALL BE LEVIED, IF ASSESSEE CO-OPERATES WITH THE DEPARTMENT IN ASSESSMENT PROCEEDINGS AND PAYMENT OF TAXES. THE LD. A.O. OUGHT TO HAVE AP PRECIATED THE FACT THAT THE ASSESSEE HAD SURRENDERED THE SAID AMOUNT WITHOUT RE FERENCE TO RECORDS, 2 ITA 3768/MUM/2014 STATEMENT OF THE SELLER OF GOODS OR THEIR CROSS EXA MINATION, ONLY ON CONDITION OF NO PENALTY. '''1 THE LD. CIT(A) ERRED IN CONFIRMING THE ADDITI ON OF PURCHASES MADE BY THE LD. A.O., MERELY ON THE BASIS OF STATEMENT RECORDED BY SALES TAX AUTHORITIES WITHOUT PROVIDING THE COPY OF THE SAID STATEMENTS T O THE APPELLANT AND ALSO OPPORTUNITY TO DEFEND. ''* THE LD. CIT(A) ERRED IN NOT APPLYING GROSS PROFIT R ATIO ON THE SAID PURCHASES, WHICH WERE UTILISED FOR TESTING, QUALITY CONTROL AND PRODUCTION OF END PRODUCTS, AS EXPLAINED IN DETAIL AS PER THEIR R EQUEST TO RE-EXAMINE THIS MATTER. THE LD. CIT(A) AS WELL AS LD. A.O. ERRED IN DISALLO WING THE ACTUAL LOSS ON FOREIGN CURRENCY TERM LOAN OF RS. 17,47,8997- INCUR RED DURING THE YEAR. FN THE LD. CIT(A) AS WELL AS LD. A.O. OUGHT TO HAVE AL LOWED THE DEDUCTION OF VAT PAYMENT OF RS. 16,14,2687- AS VAT AMOUNT WAS NO T CONSIDERED AS PART OF PURCHASE COST. THE LD. CIT(A) AS WELL AS LD. A.O. ALSO FAILED TO A PPRECIATE THE FACT THAT THE ADDITION OF AMOUNT OF VAT AMOUNTED TO DOUBLE ADDITI ON OF THE SAID AMOUNT OF RS. 16,14,2687- AS IT WAS NOT CLAIMED AS EXPENSES I N PROFIT AND LOSS ACCOUNT. THE LD. CIT(A) HAS ERRED IN NOT ALLOWING DEDUCTION OF VAT UNDER A SUSPICIOUS PRESUMPTION OF NON-PAYMENT BY SUPPLIER TO GOVERNMEN T. THE LD. CIT(A) ERRED IN CONFIRMING THE ADDITION OF RS. 19,11,0007- OUT OF OTHER PURCHASES AND THEREBY ADDING AN AMOUNT OF RS. 4,39,00,1667- AS THE INCOME OF THE APPELLANT AS AGAINST THE AMOUNT OF RS .4,19,89,1667- SURRENDERED BY THE APPELLANT. 2. THE BRIEF FACTS OF THE CASE ARE THAT THE ASSESSE E COMPANY IS ENGAGED IN THE BUSINESS OF MANUFACTURING AND TRADIN G IN DRUGS, PHARMACEUTICALS AND FORMULATIONS, FILED ITS RETURN OF INCOME FOR THE AY 2010-11 ON 11-09-2010 DECLARING TOTAL INCOME OF RS. 1,64,30,870/-. THE CASE HAS BEEN SELECTED FOR SCRUTINY AND NOTICES U/S 143(2) AND 142(1) ALONG WITH DETAILED QUESTIONNAIRE DATED 09-03-2012 WAS SERVED CALLING FOR VARIOUS DETAILS. IN RESPONSE TO NOTICES, THE A UTHORIZED REPRESENTATIVE OF THE ASSESSEE ATTENDED AND FILED DETAILS, AS CALL ED FOR. DURING THE COURSE OF ASSESSMENT PROCEEDINGS, THE AO OBSERVED T HAT INFORMATION RECEIVED FROM INVESTIGATION WING OF INCOME-TAX DEPA RTMENT, MUMBAI 3 ITA 3768/MUM/2014 REVEALED THAT THE ASSESSEE IS ONE OF THE BENEFICIAR IES OF BOGUS PURCHASE BILLS ISSUED BY VARIOUS HAWALA OPERATORS AS MENTION ED IN THE REPORT. THE AO FURTHER OBSERVED THAT THE SALES-TAX DEPARTMENT OF MAHARASHTRA HAD CARRIED OUT INVESTIGATION IN THOSE CASES WHERE THER E WERE DEFAULTS OF VAT SET OFF OF CREDITS. DURING THE COURSE OF INVESTIGA TION, IT WAS REVEALED THAT THOSE PARTIES WERE INVOLVED IN ISSUING BOGUS BILLS AS PER THE REQUIREMENT OF CUSTOMERS WITHOUT ACTUAL DELIVERY OF GOODS. DUR ING THE COURSE OF SURVEY OPERATIONS, THE MODUS OPERANDI OF THE HAWALA OPERATORS HAS BEEN EXPLAINED AS PER WHICH THEY HAVE ISSUED BOGUS BILLS AND TAKEN AMOUNT THROUGH BANKING CHANNELS AND AFTER REALIZATI ON OF CHEQUE, CASH HAS BEEN RETURNED TO THE PARTIES AFTER DEDUCTING TH EIR COMMON. IN VIEW OF THE ABOVE INFORMATION, A SURVEY U/S 133A OF THE ACT WAS CARRIED OUT ON 22-11-2012 IN THE BUSINESS PREMISES OF THE ASSESSEE COMPANY. DURING THE COURSE OF SURVEY, THE ASSESSEE DECLARED RS.9.27 CRORES AS ADDITIONAL INCOME ON ACCOUNT OF BOGUS PURCHASES FOR FINANCIAL YEAR 2008-09 TO 2011-12. FOR AY 2009-10, TOTAL DECLARATION MADE BY THE ASSESSEE IN THE FORM OF ADDITIONAL INCOME ON ACCOUNT OF BOGUS PURCH ASES WAS AT RS.4,39,00,166. BASED ON THE ABOVE INFORMATION, TH E ASSESSEE WAS CALLED UPON TO EXPLAIN AS TO WHY PURCHASES MADE FRO M SO-CALLED HAWALA OPERATORS SHALL NOT BE TREATED AS UNEXPLAINED EXPEN DITURE U/S 69C. IN RESPONSE TO SHOW CAUSE NOTICE, THE ASSESSEE FILED I TS SUBMISSION VIDE LETTER DATED 28-02-2013, ACCORDING TO WHICH IT HAS ADMITTED ADDITIONAL 4 ITA 3768/MUM/2014 INCOME DURING THE COURSE OF SEARCH TO BUY PEACE AND TO AVOID PROTRACTED LITIGATION. HOWEVER, THE FACTS REMAIN THAT PURCHAS ES FROM ABOVE PARTIES ARE SUPPORTED BY VALID DOCUMENTS, INCLUDING PURCHAS E BILLS AND PAYMENT OF SUCH PURCHASES HAD BEEN MADE THROUGH BANKING CHA NNELS. THE ASSESSEE FURTHER SUBMITTED THAT THOSE PURCHASES WER E USED FOR MANUFACTURING PROCESS; HOWEVER, IT IS DIFFICULT TO FURNISH QUANTITATIVE DETAILS IN RESPECT OF EACH ITEMS OF STOCK ISSUED TO ALLIED TESTING DEPARTMENTS WHERE IN VERY SMALL QUANTITY BUT INVOLV ED TOO MANY ENTRIES. THE ASSESSEE HAS MADE AN ALTERNATIVE SUBMISSION WIT HOUT PREJUDICE TO THE ABOVE TO ARGUE THAT AMOUNT DECLARED DURING THE COURSE OF SURVEY INCLUDES VAT PAYMENT OF RS.1,61,41,268 AND THE PURC HASES SHOWN IN THE P&L ACCOUNT IS NET OF VAT PAYMENT. THEREFORE, MAKING ADDITION TOWARDS VAT AMOUNTS TO DOUBLE TAXATION OF THE SAID AMOUNT AND, THEREFORE, REQUESTED FOR EXCLUSION OF VAT PAYMENT O F RS.1,61,41,268. 3. THE AO, AFTER CONSIDERING RELEVANT SUBMISSIONS O F THE ASSESSEE AND ALSO CONSIDERING THE FACT THAT THE ASSESSEE HAS ADM ITTED ADDITIONAL INCOME DURING THE COURSE OF SEARCH IN RESPECT OF AC COMMODATION ENTRIES OBTAINED FROM VARIOUS PARTIES OBSERVED THAT, THOUGH THE ASSESSEE HAS FURNISHED CERTAIN PRIMARY EVIDENCE TO JUSTIFY PURCH ASES, FAILED TO FURNISH FURTHER EVIDENCES INCLUDING STOCK DETAILS TO EXPLAI N, THE PURCHASES FROM THE ABOVE PARTIES AS GENUINE. THE ASSESSEE HAS NOT PRODUCED ANY PURCHASE ORDERS, VAJAN KHATA RECEIPTS OR TRANSPORTE RS BILL. THE 5 ITA 3768/MUM/2014 ASSESSEES CONTENTION THAT THE SALES FOR CORRESPOND ING BOGUS PURCHASE HAS BEEN REFLECTED IS NOT SUPPORTED BY ANY EVIDENCE . THE FACT BEING THAT THOSE PARTIES ARE HAWALA OPERATORS AND ALSO ADMISSI ON OF THE ASSESSEE DURING THE COURSE OF SURVEY HAS NOT BEEN NEGATED BY FILING NECESSARY EVIDENCE AND ACCORDINGLY OBSERVED THAT THE PAYMENT MADE BY CHEQUE TO HAWALA DEALERS DOES NOT PROVE THAT THE PURCHASES AR E GENUINE. IN VIEW OF THE FACT THAT THE HAWALA DEALER HIMSELF ADMITTED THAT HE HAS RECEIVED PAYMENT IN CHEQUE AND HE USED TO RETURN CASH AFTER DEDUCTING HIS COMMISSION PAYMENT BY CHEQUE DOES NOT PROVE THAT TH E PURCHASES ARE GENUINE. WITH THESE OBSERVATIONS, MADE ADDITION OF RS.4,39,00,166 U/S 69C OF THE ACT. 4. SIMILARLY, THE AO FURTHER NOTICED THAT THE ASSES SEE HAS DEBITED LOSS OF FOREIGN CURRENCY TERM LOAN (FCTL) OF RS.17,47,89 9 UNDER THE HEAD FINANCE CHARGES, THEREFORE, HE CALLED UPON THE AS SESSEE TO EXPLAIN THE NATURE OF LOSS INCURRED ON FOREIGN CURRENCY TERM LO AN AND HOW IT CAN BE ALLOWED AS DEDUCTION. IN RESPONSE TO NOTICE, THE A SSESSEE SUBMITTED THAT IT HAS TAKEN FOREIGN CURRENCY TERM LOAN FOR AC QUISITION OF FIXED ASSETS IN THE YEAR 2005 AND SUCH PLANT AND MACHINERY FOUND TO BE USED FROM 2007. AS PER RBI GUIDELINES IT WAS INFORMED THAT F CTL CANNOT BE CARRIED FORWARD FOR MORE THAN ONE YEAR; ACCORDINGL Y IT HAS CONVERTED ITS FCTL INTO RUPEE TERM LOAN AT THE PREVAILING RATE AS ON THAT DATE WHICH RESULTED INTO LOSS AND THE SAME HAS BEEN TREATED AS INTEREST EXPENDITURE. 6 ITA 3768/MUM/2014 THE AO, AFTER CONSIDERING RELEVANT SUBMISSION OF TH E ASSESSEE AND ALSO BY FOLLOWING THE STAND TAKEN BY THE AO IN EARLIER Y EAR DISALLOWED LOSS INCURRED ON FOREIGN CURRENCY TERM LOAN AND ADDED BA CK TO THE TOTAL INCOME. 5. AGGRIEVED BY THE ASSESSMENT ORDER, ASSESSEE PREF ERRED APPEAL BEFORE CIT(A). BEFORE THE CIT(A), ASSESSEE HAS REI TERATED ITS SUBMISSIONS MADE BEFORE THE AO. AS REGARDS PURCHAS ES FROM HAWALA OPERATORS, THE ASSESSEE HAS FILED ELABORATE WRITTEN SUBMISSIONS WHICH HAS BEEN REPRODUCED BY THE CIT(A) IN HIS ORDER. TH E SUM AND SUBSTANCE OF THE ARGUMENTS OF THE ASSESSEE ARE THAT MERELY BECAUSE HAWALA OPERATORS GAVE STATEMENTS BEFORE SALES-TAX D EPARTMENT THAT THEY HAVE ISSUED ACCOMMODATION ACCOMMODATION ENTRIES CAN NOT BE A SOLE REASON FOR MAKING ADDITION TOWARDS PURCHASES FROM A BOVE PARTIES WHEN SUCH PURCHASES HAVE BEEN FULLY SUPPORTED BY EVIDENC ES. THE ASSESSEE FURTHER CONTENDED THAT THOUGH IT HAS ACCEPTED ADDIT IONAL INCOME DURING SURVEY TO BUY PEACE AND TO AVOID PROTRACTED LITIGAT ION, SUCH ADMISSION CANNOT BE A GROUND TO TREAT THOSE PURCHASES ARE BOG US, WHEN THE ASSESSEE HAS FILED ELABORATE DETAILS TO PROVE THE P URCHASES. INSOFAR AS FOREIGN EXCHANGE LOSS, THE ASSESSEE HAS REITERATED ITS SUBMISSIONS MADE BEFORE THE AO AND ALSO RELIED UPON THE DECISIO N OF HONBLE SUPREME COURT IN THE CASE OF CIT VS WOODWARD GOVERN ER INDIA LTD 312 ITR 254 (SC). THE CIT(A), AFTER CONSIDERING RELEVA NT SUBMISSIONS OF THE 7 ITA 3768/MUM/2014 ASSESSEE AND ALSO RELIED UPON THE DECISION OF HONB LE SUPREME COURT IN THE CASE OF CIT VS WOODWARD GOVERNER INDIA LTD (SU PRA) DISMISSED APPEAL FILED BY THE ASSESSEE AND CONFIRMED ADDITION MADE TOWARDS BOGUS PURCHASES INCLUDING V AT PAYMENT ON THE GROUN D THAT THE ADMISSION OF THE ASSESSEE DURING THE COURSE OF SURV EY FURTHER COUPLED WITH REPORT OF MAHARASHTRA SALES-TAX DEPARTMENT CAT EGORICALLY PROVES THAT THOSE PURCHASES ARE BOGUS IN NATURE AND HENCE, THE AO WAS RIGHT IN MAKING ADDITION. INSOFAR AS FOREIGN EXCHANGE LOSS, THE CIT(A) OBSERVED THAT THE ASSESSEE HAS INCURRED FOREIGN EXCHANGE LOS S ON FOREIGN CURRENCY TERM LOAN WHICH WAS NOT HOLDING IN THE BUS INESS ON ACCOUNT OF REVENUE, ACCORDINGLY, FOREIGN EXCHANGE FLUCTUATION IS NOT ALLOWABLE AS TRADING LOSS ON ACCOUNT OF REVENUE. AGGRIEVED BY T HE ORDER OF CIT(A), ASSESSEE IS IN APPEAL BEFORE US. 6. THE FIRST ISSUE THAT CAME UP FOR OUR CONSIDERATI ON IS ADDITION TOWARDS BOGUS PURCHASES U/S 69C OF THE ACT. THE AO MADE A DDITION TOWARDS BOGUS PURCHASES U/S 69C, ON THE BASIS OF INFORMATIO N RECEIVED FROM INVESTIGATION WING WHICH IS FURTHER BASED ON THE R EPORT OF MAHARASHTRA SALES-TAX DEPARTMENT. THE AO ALSO TOOK INTO ACCOUN T THE SURVEY REPORT AS PER WHICH, THE ASSESSEE HAS ADMITTED ADDITIONAL INCOME IN RESPECT OF BOGUS PURCHASES ON THE BASIS OF REPORT OF INVESTIGA TION WING. THE AO OBSERVED THAT THE ASSESSEE HAS FAILED TO RECONCILE QUANTITATIVE DETAILS OF EACH ENTRY IN THE OPENING STOCK PURCHASES, SALES AN D CLOSING STOCK. THE 8 ITA 3768/MUM/2014 ASSESSEE ALSO FAILED TO FURNISH RECORDS MAINTAINED FOR RECEIPT AND DISPATCH OF GOODS AND CONSUMPTION AND PRODUCTION OF GOODS. THOUGH THE ASSESSEE HAS FURNISHED PURCHASE ORDERS AND PURC HASE BILLS ALONGWITH PAYMENT PROOF, FAILED TO FURNISH FURTHER EVIDENCES IN THE BACKDROP OF CLEAR FINDING FROM THE MAHARASHTRA SALE S-TAX DEPARTMENT THAT THE PARTIES HAVE ACCEPTED BY FILING AN AFFIDAV IT BEFORE THE AUTHORITIES THAT THEY HAVE ACCEPTED CHEQUE AND RETURNED CASH AF TER DEDUCTING THEIR COMMISSION. IT IS THE CONTENTION OF THE ASSESSEE T HAT ADMISSION DURING THE COURSE OF SEARCH WAS TO BUY PEACE AND AVOID PRO TRACTED LITIGATION ON MISCONCEPTION OF FACTS BUT FACTS REMAIN THAT PURCHA SES FROM THE ABOVE PARTIES ARE GENUINE WHICH ARE SUPPORTED BY EVIDENCE S. THE ASSESSEE HAS FILED VARIOUS DETAILS TO PROVE THE GENUINENESS OF PURCHASES INCLUDING STOCK DETAILS AND PAYMENT PROOF. THE AO HAS IGNORE D ALL EVIDENCES FILED ONLY ON THE BASIS OF ADMISSION DURING THE COURSE OF SURVEY AND ON THE BASIS OF INFORMATION RECEIVED FROM MAHARASHTRA SALE S-TAX DEPARTMENT TO MAKE ADDITION WHICH IS INCORRECT. THE ASSESSEE FUR THER SUBMITTED THAT IT IS ADMITTED AN AMOUNT OF RS.4,19,89,166, DURING THE COURSE OF SURVEY, WHEREAS THE AO HAS MADE ADDITION OF RS.4,39,00,166 EVEN THOUGH THE PURCHASES FROM SAG ENTERPRISES IS GENUINE AND THE P ARTYS NAME IS NOT APPEARING IN THE LIST PREPARED BY MAHARASHTRA SALES -TAX DEPARTMENT. THE ASSESSEE ALSO MADE AN ALTERNATIVE SUBMISSION IN ASMUCH AS THE AMOUNT OF VAT PAYMENT OF RS.16,14,268 HAS NOT BEEN INCLUDED IN 9 ITA 3768/MUM/2014 PURCHASE AMOUNT DEBITED TO P&L ACCOUNT AND, THEREFO RE, ANY ADDITION TOWARDS VAT PORTION AMOUNTS TO DOUBLE TAXATION OF T HE SAME AMOUNT. 7. WE HAVE HEARD BOTH THE PARTIES, PERUSED MATERIAL AVAILABLE ON RECORD AND GONE THROUGH THE ORDERS OF AUTHORITIES B ELOW. IT IS AN ADMITTED FACT THAT THE ASSESSEE HAS PURCHASED OR OB TAINED BILLS FROM CERTAIN PARTIES WHICH ARE APPEARING IN THE LIST PRE PARED BY MAHARASHTRA SALES-TAX DEPARTMENT AS SUSPICIOUS DEALERS / HAWALA OPERATORS. IT IS ALSO AN ADMITTED FACT THAT DURING THE COURSE OF SURVEY, THE ASSESSEE HAS ADMITTED THAT IT HAS OBTAINED BILLS FROM THOSE PART IES AND ALSO ADMITTED ADDITIONAL INCOME OF RS.4,39,00,166 IN RESPECT OF B OGUS PURCHASES. IT IS ALSO AN ADMITTED FACT THAT THE ASSESSEE HAS FAILED TO FURNISH NECESSARY EVIDENCES DURING THE COURSE OF ASSESSMENT PROCEEDIN GS TO JUSTIFY PURCHASES FROM ABOVE PARTIES EVEN THOUGH CERTAIN PR IMARY EVIDENCES INCLUDING PURCHASE BILLS AND PAYMENT PROOF HAS BEEN FURNISHED. THEREFORE, WE ARE OF THE CONSIDERED VIEW THAT THE A SSESSEE HAS FAILED TO JUSTIFY PURCHASES FROM THE ABOVE PARTIES IN THE BAC KDROP OF CLEAR FINDINGS OF MAHARASHTRA SALES-TAX DEPARTMENT AND ALSO ADMISS ION OF THE ASSESSEE DURING THE COURSE OF SURVEY. THE ASSESSEE , HAS FAILED TO NEGATE ANY OF THE OBSERVATIONS MADE BY THE AO DURIN G THE COURSE OF ASSESSMENT PROCEEDINGS. THE ASSESSEE NEITHER FURNI SHED QUANTITATIVE DETAILS NOR PRODUCED CONSUMPTION DETAILS OF RAW MAT ERIALS AND PRODUCTION OF FINISHED PRODUCTS. THE ASSESSEE ALL ALONG FURNISHED A 10 ITA 3768/MUM/2014 VAGUE REPLY INSOFAR AS QUANTITATIVE DETAILS AND PRO DUCTION OF FINISHED PRODUCTS. FROM THIS, IT IS ABUNDANTLY CLEAR THAT T HE PURCHASES FROM THE ABOVE PARTIES ARE BOGUS IN NATURE AND THE ASSESSEE HAS OBTAINED ACCOMMODATION BILLS SO AS TO SUPPRESS THE PROFIT. WE FURTHER NOTICE THAT ONCE THE ASSESSEE HAS ADMITTED THAT IT HAS OBTAINED ACCOMMODATION ENTRIES FROM THE ABOVE PARTIES AND DISCLOSED ADDITI ONAL INCOME DURING THE COURSE OF SURVEY, WITHOUT ANY CORROBORATIVE EVI DENCE CANNOT GO BACK FROM ITS ADMISSION. IN THIS CASE, THE ASSESSEE EVE N THOUGH ADMITTED ADDITIONAL INCOME DURING THE COURSE OF SURVEY FAILE D TO DISCLOSE THE SAME IN ITS RETURN OF INCOME WITHOUT ANY RETRACTION. TH OUGH THE ASSESSEE HAS TAKEN THE RATIO OF CERTAIN JUDICIAL PRECEDENTS INCL UDING THE DECISION OF HONBLE MADRAS HIGH COURT IN THE CASE OF S KADER KH AN & SONS LTD 300 ITR 157 (MAD), WE FIND THAT THE FACTS OF S KADER KH AN & SONS LTD (SUPRA) ARE ENTIRELY DIFFERENT WHERE THE COURT, AFT ER TAKING INTO ACCOUNT THE FACT THAT THE AOS ADDITION TOWARDS UNDISCLOSED INCOME IS ONLY ON THE BASIS OF STATEMENT RECORDED DURING THE COURSE OF SU RVEY HELD THAT ADDITION CANNOT BE MADE ONLY ON THE BASIS OF STATEM ENT MADE DURING THE COURSE OF SURVEY. IN THIS CASE, THE STATEMENT GIVE N DURING THE COURSE OF SURVEY IS FURTHER SUPPORTED BY THE REPORT OF INVEST IGATION WING AND LIST OF MAHARASHTRA SALES-TAX DEPARTMENT ON SUSPICIOUS / HA WALA DEALERS. THEREFORE, WE ARE OF THE VIEW THAT THE RATIOS OF TH E CASE LAWS RELIED UPON BY THE ASSESSEE ARE NOT APPLICABLE TO THE FACTS OF THE CASE. INSOFAR AS 11 ITA 3768/MUM/2014 OTHER DECISIONS RELIED UPON BY THE ASSESSEE, INCLUD ING HONBLE BOMBAY HIGH COURT IN THE CASE OF NIKUNJ EXIMP ENTERPRISES PVT LTD 35 TAXMANN.COM 384 (BOM), THE FACTS OF THIS CASE ARE E NTIRELY DIFFERENT FROM FACTS OF ASSESSEES CASE AND HENCE, NOT SPECIFICALL Y REFERRED. 8. IN THIS VIEW OF THE MATTER AND CONSIDERING THE F ACTS AND CIRCUMSTANCES OF THE CASE, WE ARE OF THE CONSIDERED VIEW THAT THE AO WAS RIGHT IN MAKING ADDITION TOWARDS PURCHASES FROM HAWALA / SUSPICIOUS DEALERS U/S 69C OF THE ACT. THE CIT(A), AFTER CONS IDERING RELEVANT SUBMISSIONS OF THE ASSESSEE HAS RIGHTLY UPHELD ADDI TION MADE BY THE AO. WE DO NOT FIND ANY ERROR IN THE ORDER OF THE C IT(A), HENCE, WE ARE INCLINED TO UPHOLD THE FINDINGS OF CIT(A) AND REJEC T GROUND RAISED BY THE ASSESSEE. 9. THE NEXT ISSUE THAT CAME UP FOR OUR CONSIDERATIO N IS ADDITION TOWARDS LOSS ON FOREIGN CURRENCY TERM LOAN. THE AO MADE ADDITION TOWARDS LOSS ON FOREIGN CURRENCY OF RS.17,47,899 ON THE GROUND THAT LOSS RELATES TO TERM LOAN WHICH IS ON ACCOUNT OF ACQUISI TION OF CAPITAL ASSET IN THE NATURE OF CAPITAL LOSS CANNOT BE ALLOWED AS DED UCTION. IT IS THE CONTENTION OF THE ASSESSEE THAT LOSS INCURRED ON FO REIGN CURRENCY LOAN IS ON ACCOUNT OF CONVERSION OF FOREIGN CURRENCY TERM L OAN INTO INDIAN RUPEE LOAN AS PER THE TERMS OF SANCTION AND ALSO GUIDELIN ES ISSUED BY RBI WHICH IS IN THE NATURE OF REVENUE EXPENDITURE LIKE INTEREST ON TERM LOAN ALLOWABLE AS REVENUE EXPENDITURE. 12 ITA 3768/MUM/2014 10. HAVING HEARD BOTH THE SIDES AND CONSIDERED MATE RIAL AVAILABLE ON RECORD, WE FIND MERITS IN THE ARGUMENTS OF THE ASSE SSEE FOR THE REASON THAT LOSS INCURRED ON FOREIGN CURRENCY TERM LOAN, A FTER CAPITALIZATION OF FIXED ASSET IS NOTHING BUT INTEREST ON TERM LOAN AL LOWABLE AS REVENUE EXPENDITURE. WE FURTHER OBSERVE THAT THE ASSESSEE HAS TAKEN FOREIGN CURRENCY TERM LOAN IN THE YEAR 2005 FOR ACQUISITION OF CAPITAL ASSET AND SUCH PLANT & MACHINERY HAS BEEN CAPITALIZED AND PUT TO USE IN THE FINANCIAL YEAR RELEVANT TO AY 2007-08. THE LOSS IN CURRED, IF ANY, ON FOREIGN CURRENCY TERM LOAN IS CAPITAL IN NATURE AND NEEDS TO BE CAPITALIZED TILL THE DATE THE ASSET IS CAPITALIZED AND PUT TO USE. ANY LOSS INCURRED AFTER THE DATE THE ASSET PUT TO USE IS IN THE NATURE OF INTEREST ON TERM LOAN NEEDS TO BE ALLOWED AS REVENUE EXPENDITUR E LIKE INTEREST ON TERM LOAN. THE LOWER AUTHORITIES WITHOUT APPRECIAT ING THE FACTS HAS MADE ADDITION TOWARDS LOSS ON FOREIGN CURRENCY TERM LOAN . HENCE, WE DIRECT THE AO TO DELETE ADDITION MADE TOWARDS LOSS ON FORE IGN CURRENCY TERM LOAN. 11. IN THE RESULT, THE APPEAL FILED BY THE ASSESSEE IS PARTLY ALLOWED. ORDER PRONOUNCED IN THE OPEN COURT ON 28 TH FEBRUARY, 2018. SD/- SD/- (SAKTIJIT DEY) (G MANJUNATHA) JUDICIAL MEMBER ACCOUNTANT MEMBER MUMBAI, DT : 28 TH FEBRUARY, 2018 PK/- COPY TO :