JT. CIT (OSD) CENTRAL CIR 5(1), MUMBAI V. M/s GANDHAR OIL REFINERY (I) LTD., MUMBAI

ITA 3888/MUM/2019

• Counselvise Citation: [2021] 107 COUNSELVISE.COM (IT) 5638 (ITAT-MUMBAI)
• Duration Of Justice: 2 year(s) 3 month(s) 17 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 17-09-2021
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: G
• Assessment Year: 2013-2014
• Appeal Filed On: 31-05-2019
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: AJAY PRATAP SINGH
• Assessee Lawyers: MAIN JAIN
• Keywords: Income from undisclosed sources; Search and seizure; Set aside
• Section: 143(3); 153A; 208; 64; 13; 22; 132

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL, MUMBAI BENCH G, MUMBAI BEFORE SHRI RAJESH KUMAR, ACCOUNTANT MEMBER AND SHRI AMARJIT SINGH, JUDICIAL MEMBER ITA NOS.3888, 3889 & 3890/M/2019 ASSESSMENT YEARS: 2013-14, 2014-15 & 2015-16 JT. CIT (OSD) CENTRAL CIRCLE-5(1), ROOM NO.1926, 19 TH FLOOR, AIR INDIA BUILDING, NARIMAN POINT, MUMBAI - 400021 VS. M/S. GANDHAR OIL REFINERY (I) LTD., 29/3 SEWREE PREMISES COOP. SOCIETY LTD., SEWREE BUNDER ROAD, SEWEREE (E), MUMBAI - 400015 PAN: AAACG3996J (APPELLANT) (RESPONDENT) ITA NO.3892/M/2019 ASSESSMENT YEAR: 2014-15 JT. CIT (OSD) CENTRAL CIRCLE-5(1), ROOM NO.1926, 19 TH FLOOR, AIR INDIA BUILDING, NARIMAN POINT, MUMBAI - 400021 VS. M/S. GANDHAR COAL AND MINES, 10001, 10 TH FLOOR, UNIQUE TOWERS, SV ROAD, GOREGAON WEST, MUMBAI - 400062 PAN: AAIFG4957E (APPELLANT) (R ESPONDENT) PRESENT FOR: ASSESSEE BY : SHRI MAIN JAIN, A.R. REVENUE BY : SHRI AJAY PRATAP SINGH, D.R. DATE OF HEARING : 06.07.2021 DATE OF PRONOUNCEMENT : 17.09.2021 O R D E R PER RAJESH KUMAR, ACCOUNTANT MEMBER: THE ABOVE TITLED APPEALS HAVE BEEN PREFERRED BY TH E REVENUE AGAINST THE ORDERS DATED 28.03.2019 OF THE COMMISSIONER OF INCOME TAX (APPEALS) [HEREINAFTER R EFERRED TO AS THE CIT(A)] RELEVANT TO ASSESSMENT YEARS 2013-14, 2 014-15 & ITA NOS.3888 & 3889/M/2019 & ORS M/S. GANDHAR OIL REFINERY (I) LTD. 2 2015-16. ALL THESE APPEALS HAVE COMMON ISSUE AND THEREFORE THESE ARE BEING DECIDED TOGETHER FOR THE SAKE OF BR EVITY AND CONVENIENCE. FIRST WE SHALL TAKE UP ASSESSMENT YEAR 2013-14 FOR ADJUDICATION. ITA NO.3888/M/2019 A.Y. 2013-14 2. THE REVENUE HAS RAISED THE FOLLOWING GROUNDS: I. 'WHETHER ON THE FACTS AND IN THE CIRCUMSTA NCES OF THE CASE AND IN LAW, THE ID. CIT(A) HAS ERRED IN ALLOWING THE APPEAL OF THE ASSE SSEE IN RESPECT OF THE ADDITIONS PERTAINING TO OVER INVOICING OF PURCHASES AND BOGUS EXPENSES OF RS. 11,88,27,650/- AND RS. 1,56,86,000/-RESPECTIVELY, BY QUESTIONING T HE GENUINENESS OF THE THREE INVOICES VIZ. M/S SANDY RESOURCES PTE. LTD. SINGAPO RE, INSPITE OF THE FACT THAT THE SAME WAS SHOWN TO THE PARTNER OF THE ASSESSEE FIRM MR. KUNAL PARKEH AT THE TIME OF RECORDING THE STATEMENT U/S 132(4) OF THE ACT WH O IN TURN HAS NOT RAISED ANY OBJECTION REGARDING THE GENUINENESS OF ABOVE INVOIC E?' II 'WHETHER ON THE FACTS AND IN THE CIRCUMSTANCES O F THE CASE AND IN LAW, THE ID. CIT(A) HAS ERRED IN ALLOWING THE APPEAL OF THE ASSE SSEE IN RESPECT OF THE ADDITION PERTAINING TO OVER INVOICING OF PURCHASE AND BOGUS EXPENSES OF RS. 11,88,27,650/- AND RS. 1,56,86,000/-RESPECTIVELY, BY IGNORING THE FACT THAT THE STATEMENT U/S 132(4) OF THE ACT, OF THE DIRECTOR OF THE ASSESSEE COMPANY MR. KUNAL PARKEH WAS RECORDED ON OATH AND ACKNOWLEDGED AS TRUE AND CORRE CT TO THE BEST OF THEIR KNOWLEDGE & BELIEVE, AND THAT THE SAID STATEMENT WA S GIVEN BY HIM VOLUNTARILY, WITHOUT ANY FORCE, THREAT, COERCION, ANY INDUCEMENT , PROMISE OR ANY OTHER UNDUE INFLUENCE?' III 'WHETHER ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE AND IN LAW, THE ID. CIT(A) HAS ERRED IN ALLOWING THE APPEAL OF THE ASSE SSEE IN RESPECT OF THE ADDITION PERTAINING TO OVER INVOICING OF PURCHASE AND BOGUS EXPENSES OF RS. 11,88,27,650/- AND RS. 1,56,86,000/-RESPECTIVELY, BY IGNORING THE FACT THAT THE STATEMENT U/S 132(4) OF THE ACT, OF THE DIRECTOR OF THE ASSESSEE COMPANY MR. KUNAL PARKEH WAS RECORDED ON OATH INSPITE OF THE FACT THAT THE STATEMENT BEING CONFIRMED BY SHRI RAMESH PARKEH IN CAPACITY OF CHAIRMAN OF GORIL AND SHRI SAURABH PARKEH BEING WORKING PARTNER OF GANDHAR COIL MINES.?' IV 'WHETHER ON THE FACTS AND IN THE CIRCUMSTANCES O F THE CASE AND IN LAW, THE ID. CIT(A) HAS ERRED IN ALLOWING THE APPEAL OF THE ASSE SSEE IN RESPECT OF THE ADDITIONS PERTAINING TO OVER INVOICING OF PURCHASES OF RS. 4, 63,19.046/- FROM P T ALMOUDI FOR SUPPLY OF INDONESIAN COAL HAVING SPECIFICATION OF G CV 5100-5200 KCAL/KG (ADB) WHICH IS CONTRARY TO COPY OF AGREEMENT FILED WITH T HE DEPARTMENT HAVING A DIFFERENT SPECIFICATION OF GCV 5600 KCAL/KG (ADB) B Y IGNORING THE FACT THAT SHRI KUNAL PAREKH DIRECTOR OF ASSESSEE COMPANY HAS ACCEP TED THE SAME IN THE STATEMENT RECORDED.?' V 'WHETHER ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE AND IN LAW, THE ID. CIT(A) HAS ERRED IN ALLOWING THE APPEAL OF THE ASSE SSEE IN RESPECT OF THE ADDITION PERTAINING TO OVER INVOICING OF PURCHASES OF RS. 4, 63,19,046/- FROM P T ALMOUDI, BY IGNORING THE FACT THAT THE STATEMENT U/S 132(4) OF THE ACT, OF THE DIRECTOR OF THE ASSESSEE COMPANY MR. KUNAL PARKEH WAS RECORDED ON O ATH AND ACKNOWLEDGED AS ITA NOS.3888 & 3889/M/2019 & ORS M/S. GANDHAR OIL REFINERY (I) LTD. 3 TRUE AND CORRECT TO THE BEST OF THEIR KNOWLEDGE & B ELIEVE, AND THAT THE SAID STATEMENT WAS GIVEN BY HIM VOLUNTARILY, WITHOUT ANY FORCE, THREAT, COERCION, ANY INDUCEMENT, PROMISE OR ANY OTHER UNDUE INFLUENCE?' VI 'WHETHER ON THE FACTS AND IN THE CIRCUMSTANCES O F THE CASE AND IN LAW, THE ID. CIT(A) HAS ERRED IN ALLOWING THE APPEAL OF THE ASSE SSEE IN RESPECT OF THE ADDITION PERTAINING TO OVER INVOICING OF PURCHASES OF RS. 4, 63,19,046/- FROM P T ALMOUDI, BY IGNORING THE FACT THAT THE STATEMENT U/S 132(4) OF THE ACT, OF THE DIRECTOR OF THE ASSESSEE COMPANY MR. KUNAL PARKEH WAS RECORDED ON O ATH INSPITE OF THE FACT THAT THE COPY OF INCRIMINATING (OVER INVOICING OF PURCHA SES PERSONALLY IN HER OWN HANDWRITING BY SMT. RIDDHI PUNIL SHAH) EMAIL SENT T O SAMSU HUSSAIN ON 15.01.2013 WHICH EVIDENCE WERE COLLECTED FROM THE RESIDENCE OF SMT. RIDDHI PUNIL SHAH EMPLOYEE OF THE COMPANY?' THE APPELLANT PRAYS THAT THE ORDER OF COMMISSIONER OF INCOME TAX (APPEAL) ON THE ABOVE GROUND BE SET ASIDE AND THAT THE JT. CIT(OSD) BE RESTORED. THE APPELLANT CRAVES, LEAVE TO AMEND OR ALTER ANY GROUNDS OR ADD A NEW GROUND, WHICH MAY BE NECESSARY. LAST DATE FOR FILING SECOND APPEAL IS O2 .06.2O19. HOWEVER, THE APPEAL SHOULD BE FILED IMMEDIATELY. 3. THE ISSUE RAISED IN GROUND NO.1, 2 & 3 IS AGAINS T THE ORDER OF LD. CIT(A) DELETING THE ADDITION ON ACCOUNT OF O VER INVOICING OF PURCHASES OF RS.11,88,27,650/- AND BOGUS EXPENSES O F RS.1,56,86,000/-. 4. THE FACTS IN BRIEF ARE THAT THE ASSESSEE FILED T HE ORIGINAL RETURN OF INCOME ON 30.11.2013 DECLARING TOTAL INCO ME OF RS.59,59,19,632/-. THE ASSESSEE IS ENGAGED IN THE IMPORT OF COAL AND SALE THEREOF IN THE DOMESTIC MARKET BESIDE S TRADING IN PETROLEUM PRODUCTS. A SEARCH AND SEIZURE ACTION UN DER SECTION 132(1) OF THE ACT WAS CONDUCTED ON THE ASSESSEE GRO UP ON 11.11.2014 AND NOTICE UNDER SECTION 153A OF THE ACT WAS ISSUED ON 21.01.2016 WHICH WAS DULY SERVED UPON THE ASSESS EE. THE ASSESSEE COMPLIED WITH THE NOTICE BY SUBMITTING THA T THE RETURN FILED ON 13.02.2016 MAY KINDLY BE TREATED AS RETURN FILED IN COMPLIANCE TO NOTICE UNDER SECTION 153A OF THE ACT. THEREAFTER, THE STATUTORY NOTICES WERE DULY ISSUED AND SERVED U PON THE ASSESSEE. DURING THE SEARCH ACTION IT WAS FOUND TH AT ASSESSEE IS ENGAGED IN OVER INVOICING OF COAL IMPORTS FROM DUBA I THROUGH ITA NOS.3888 & 3889/M/2019 & ORS M/S. GANDHAR OIL REFINERY (I) LTD. 4 TWO ENTITIES NAMELY M/S. GLOBAL PETROCHEM FZC AND M /S. GLAXO INTERNATIONAL FZC MANAGED AND CONTROLLED BY MR. ANK IT TANDON. DURING THE COURSE OF SEARCH PROCEEDINGS A STATEMENT UNDER SECTION 132(4) OF THE ACT WAS RECORDED OF SHRI KUNA L PAREKH (VICE PRESIDENT, IMPORTS), A DIRECTOR IN THE ASSESSEE COM PANY WHEREIN HE ACCEPTED THE FACT OF HAVING OVER INVOICED THE CO AL IMPORTS AND DECLARED A SUM OF RS.11,88,27,650/- AS ADDITIONAL I NCOME FOR THE YEAR UNDER CONSIDERATION. HOWEVER, WHILE FILIN G THE RETURN OF INCOME, THE ADDITIONAL INCOME AS SURRENDERED AT THE TIME OF SEARCH RS.11,88,27,650/- WAS NOT OFFERED TO TAX. A CCORDINGLY, A SHOW CAUSE NOTICE WAS ISSUED ON 08.11.2017 CALLING UPON THE ASSESSEE TO EXPLAIN THE TRANSACTIONS OF OVER INVOIC ING OF IMPORTED COAL OF INDONESIAN AS WELL AS OF SOUTH AFRICAN ORIG IN IMPORTED THROUGH TO FOREIGN ENTITIES M/S. GLAXO INTERNATIONA L FZC, UAE AND M/S. GLOBAL PETROCHEM FZC, UAE WHICH WERE ASSOC IATED ENTITIES TO THE ASSESSEE. THE SHOW CAUSE NOTICE AL SO REFERRED TO SEARCH ACTION AT THE RESIDENTIAL PREMISES OF MRS. R IDDHI SHAH AND EXCHANGE OF MESSAGE BETWEEN MRS. RIDDHI SHAH AN D MR. SOURABH PAREKH AND MR. KUNAL PAREKH (VICE PRESIDENT , IMPORTS), ON WHATSAPP ON QUALITY AND SPECIFICATION OF COAL AND ALSO REFERRED TO QUESTION NO.18, 19, 20, 21, 22 & 23 OF THE STATEMENT RECORDED UNDER SECTION 132(4) OF THE ACT. THE AO A LSO NOTED THAT DURING PRE-SEARCH ENQUIRY THREE INVOICES PERTA INING TO M/S. GLOBAL PETROCHEM FZC WERE COLLECTED BY THE DEPARTME NT WHICH INDICATED THE PRICE CHARGED BY SINGAPORE SUPPLIER F ROM DUBAI ENTITIES WAS MUCH LESSER THAN WHAT THE ASSESSEE PAI D TO DUBAI ENTITIES FOR COAL IMPORT. ACCORDING TO THE AO THIS HAS RESULTED INTO OVER INVOICING WHEREBY ENORMOUS PROFIT HAS BE EN SHIFTED TO AND ACCRUED IN THE HANDS OF DUBAI ENTITIES. THE AO NOTED THAT ITA NOS.3888 & 3889/M/2019 & ORS M/S. GANDHAR OIL REFINERY (I) LTD. 5 DURING THE COURSE OF SEARCH, A STATEMENT UNDER SECT ION 132(4) OF THE ACT WAS RECORDED OF SHRI KUNAL PAREKH (VICE PRE SIDENT, IMPORTS) WHO MADE A DISCLOSURE ON THE BASIS OF SAID INVOICES ON 13.11.2014. THE AO ALSO DISCUSSED IN PARA 4.1.4 T HE INTELLIGENCE GATHERED WITH REGARD TO MODUS OPERANDI OF THE GROUP QUA PURCHASE TRANSACTIONS. THE AO STATED THAT THE PURCHASE TRANSACTIONS WERE MADE THROUGH TWO OFFSHORE ENTITIE S FOR THE PURPOSE OF OVER INVOICING THOUGH THE CONSIGNMENTS O F COAL FROM FOREIGN BASED SUPPLIER WERE DIRECTLY DISPATCHED TO THE PORTS IN INDIA BUT THE BILLS WERE BEING ROUTED THROUGH THE O FFSHORE ENTITIES LOCATED IN DUBAI. IN RESPONSE THERETO SHR I KUNAL PAREKH (VICE PRESIDENT, IMPORTS) STATED THAT PURCHASE OF C OAL THROUGH BROKERS/TRADERS IS UNAVOIDABLE DUE TO NON AVAILABIL ITY OF SUFFICIENT CASH TO MEET THE PURCHASE VALUE AS THE M INERS REQUIRED ADVANCE PAYMENT AS AGAINST THE INTERMEDIAR Y TRADERS WHO PROVIDE 90 TO 180 DAYS OF CREDIT FACILITY. SHR I KUNAL PAREKH (VICE PRESIDENT, IMPORTS) ALSO STATED THAT IN THE P AST THE COAL WAS PROCURED DIRECTLY FROM THE MINER NAMELY OORJA RESOU RCES, INDONESIA WHICH RESULTED IN HUGE LOSS MAINLY DUE TO THE FACT THAT MINER TOOK ADVANTAGE OF HIS INADEQUATE EXPERIE NCE AND THUS JUSTIFIED THE PURCHASES THROUGH BROKERS. THE AO ALSO NOTED THAT BANK STATEMENT AND LEDGER OF DUBAI ENTIT IES WERE FOUND IN THE COMPUTER OF AN EMPLOYEE OF THE ASSESSE E WHICH INDICATED THAT DUBAI ENTITIES WERE CLOSELY ASSOCIAT ED WITH THE ASSESSEE GROUP AND STATIONERY AND STAMP PERTAINING TO FOREIGN ENTITIES WERE ALSO FOUND IN THE CAR AT THE RESIDENC E OF MRS. RIDDHI SHAH. IN THE FT & TR ENQUIRY, THE NAME OF T HE OWNER OF ONE OF THE DUBAI ENTITIES WAS MR. ARPIT TANDON INSTEAD OF MR. ANKIT TANDON STATED BY THE ASSESSEE. THEREFORE, ON THE BASIS OF ITA NOS.3888 & 3889/M/2019 & ORS M/S. GANDHAR OIL REFINERY (I) LTD. 6 DETAILED DISCUSSION AND FINDING IN THE ASSESSMENT O RDER, THE AO CAME TO THE CONCLUSION THAT THE EXCESSIVE PROFIT CH ARGED BY THE DUBAI ENTITIES ARE NOTHING BUT PASSING ON THE PROFI T OF THE ASSESSEE TO DUBAI ENTITIES AND CONSEQUENTLY THE AO DISALLOWED AND ADDED A SUM OF RS.11,88,27,650/- ON ACCOUNT OF OVER INVOICING OF PURCHASES FROM THESE ENTITIES. THE AO ALSO MADE ADDITION OF THE COMMISSION CHARGED BY THE DUBAI BAS ED ENTITIES OF RS.1,56,86,000/- ON THE GROUND OF BEING NON GENU INE AND BOGUS IN THE ASSESSMENT FRAMED UNDER SECTION 153A R EAD WITH SECTION 143(3) OF THE ACT VIDE ORDER DATED 29.12.20 17. 5. IN THE APPELLATE PROCEEDINGS, THE LD. CIT(A) DEL ETED THE ADDITION BY OBSERVING AND HOLDING AS UNDER: 20.4.4 I HAVE CONSIDERED THE SUBMISSIONS, FACTS O N RECORD AND DETAILS CALLED IN THE APPELLATE PROCEEDINGS CAREFULLY. IT IS NOTED THAT T HE MAIN BASIS FOR THE ADDITION MADE BY THE ASSESSING OFFICER IS THE STATEMENT RECO RDED OF SHRI KUNAL PAREKH TO WHOM THE COPY OF THREE INVOICES OF SUPPLY OF COAL B Y M/S SANDY RESOURCES PTE. LTD. TO M/S GLOBAL PETROCHEM FZC. THE RELEVANT Q AND ANSWERS ARE REPRODUCED BELOW FOR READY REFERENCE. Q.22 IN THIS BACKGROUND, I WISH TO INFORM YOU THAT INTELLIGENCE GATHERED BY THIS OFFICE SUGGESTS THAT THE PROCUREMENT OF COAL O F INDONESIAN ORIGIN WAS DONE PARTLY THROUGH M/S GLOBAL PETROCHEM (FZC), U AE AND GLAXO INTERNATIONAL (FZE), UAE, TWO OF THE DUBAI BASED EN TITIES CONTROLLED BY MR.ANKITTANDON AND THAT THE FINAL PRICE PAID BY YOUR GROUP AGAINST SUCH CONSIGNMENTS IS SIGNIFICANTLY HIGHER. FOR EXAM PLE, I AM SHOWING YOU COMMERCIAL INVOICE NO.SR-INV-13-002 DATED 17 TH JUNE, 2013 OF SANDY RESOURCES PTE LTD, SINGAPORE RAISED IN THE NAME OF M/S.GLOBAL PETROCHEM (FZC), UAE WHICH REFLECTS SHIPMENT OF 40,002 MTS O F LOW SULPHUR INDONESIAN STEAM COAL (NON COKING) IN BULK @ US$ 18.750 PER MT FOR A TOTAL BILLED AMOUNT OF US $ 750,037.50. SIMILARLY, I AM SHOWIN G YOU ANOTHER COMMERCIAL INVOICE NO. SR-INV-13-004 DATED 9 TH JULY, 2013 OF THE SAME COMPANY, SANDY RESOURCES PTE LTD, SINGAPORE RAISED IN THE NAME OF M/S.GLOBAL PETROCHEM (FZC), UAE WHICH DEPICTS SHIPM ENT OF 66,228.00 MTS OF LOW SULPHUR INDONESIAN STEAM COAL (NON COKING) I N BULK AT THE SAME RATE OF US$ 18.750 PER MT BILLED FOR A TOTAL AMOUNT OF U S $ 1,241,775.00. FURTHERMORE, I AM ALSO SHOWING YOU A SIMILAR OTHER PROFORMA INVOICE BEARING NO.SR-13-03 DATED 7 TH JUNE, 2013 OF THE SAME COMPANY, SANDY RESOURCES PTE LTD, SINGAPORE RAISED IN THE NAME OF AGAIN M/S. GLOBAL PETROCHEM (FZC), UAE FOR A SHIPMENT OF 41,615 MTS OF LOW SULPHUR IND ONESIAN STEAM COAL (NON COKING) IN BULK @ US$ 18.75 PER MT FOB IND ONESIA FOR A TOTAL BILLED ITA NOS.3888 & 3889/M/2019 & ORS M/S. GANDHAR OIL REFINERY (I) LTD. 7 AMOUNT OF US $ 789,375.00. LIKEWISE, I AM ALSO SH OWING YOU SIMILAR OTHER INSTANCES OF INVOICE BILLS OF SANDY RESOURCES PTE L TD RAISED IN THE NAME OF GLOBAL PETROCHEM (FZC), UAE AT THE SAME RATE FOR TH E SAME LOW SULPHUR INDONESIAN STEAL COAL (NON COKING). YOU ARE REQUE STED TO GO THROUGH THE SAME AND CONFIRM THE CONTENTS THEREOF. ANS. SIR, I CONFIRM HAVING SEEN THE ABOVE COMMERCIA L/PROFORMA INVOICES AS SHOWN TO ME. HOWEVER, I AM DEEPLY SHOCKED TO KNOW I F THE PRICES QUOTED IN THESE PROFORMA INVOICES WERE SHOWING THE CORRECT PR ICES CHARGED AGAINST THE RESPECTIVE CONSIGNMENTS BY THE MINERS. IF THE INFOR MATION BROUGHT TO MY NOTICE BY YOUR GOODSELFIS TRUE, I AM FEELING ACUTE PAID OF BEING CHEATED. Q.23 NOW, I AM SHOWING YOU THE CORRESPONDING COMM ERCIAL INVOICES RAISED BY GLOBAL PETROCHEM (FZC), UAE ON GORIL AS DETAILED BELOW: (I)(A)GPFZC/05A-2013-14 DATED 07.06.2013 16001 MTS@ US$59 (B)GPFZC/05B-2013-14 DATED 07.06.2013 24001 MTS @ US$ 59 TOTAL QUANTITY 40,002 MTS THE QUANTITY AND DESCRIPTION EVENTUALLY MATCHES/COR RESPONDS WITH COMMERCIAL INVOICE NO.SR-INV-13-002 DATED IT' 1 JUNE, 2013 OF SANDY RESOURCES PTE LTD, SINGAPORE RAISED IN THE NAME OF M/S.GLOBAL PETROCHE M (FZC), UAE FOR SHIPMENT OF 40,002 MTS @ US$ 18.75 PER MT AS SHOWN ABOVE. II) COMMERCIAL INVOICE GPFZC/08-2013-14 DATED 09.07.2013 FOR SUPPLY OF 66,228 MTS @US $ 59 PER MT WHICH MATCHES/ CORRESPONDS WITH COMMERCIAL INVOICE NO.SR- INV-13-004 DATED 9 TH JULY, 2013 OF THE SAME COMPANY, SANDY RESOURCES PT E LTD, SINGAPORE RAISED IN THE NAME OF M/S. GLOBAL PETROCH EM I ( FZC), UAE FOR SHIPMENT OF 66,228 MTS @18.75 PER MT AS SHOWN ABOVE; (III) COMMERCIAL INVOICE GPFZC/06-2013-14 DATE D 14.06.2013 FOR SUPPLY OF 41,615 MTS @ US $ 59.50 PER MT WHICH MATCHES/CORRESPONDS W ITH PROFORMA INVOICE BEARING NO.SR-13-03 DATED 7 TH JUNE, 2013 OF THE SAME COMPANY, SANDY RESOURCES PTE LTD, SINGAPORE RAISED IN THE NAME OF AGAIN M/S. GLOBAL PETROCHEM (FZC), UAE FOR A SHIPMENT OF 41,615 MTS @US$ 18.75 PER MT AS SHOWN ABOVE. ON GOING THROUGH THE ABOVE INSTANCES, IT IS APPARENTLY CLEAR THAT THE SIMILAR COAL OF LOW SULPHUR INDONESIAN STEAM COAL (NON-COKING), WHI CH HAS BEEN SUPPLIED TO GLOBAL PETROCHEM (FZC), UAE @ US$18.75 PER MTS BY SANDY SO URCES PTE LTD. SINGAPORE, HAS BEEN RECEIVED BY GORIL DIRECTLY AT ANY OF THE I NDIAN PORT, HOWEVER THE INVOICES WERE ROUTED THROUGH DUBAI BASED ENTITIES AT A MUCH HIGHER AVERAGE RATE OF US $ 59. IN THIS REGARD, YOU ARE REQUESTED TO GO THROUGH THE ABOVE INVOICES RAISED ON GORIL BY GLOBAL PETROCHEM (FZC), UAE AND INVOICES RAISED BY ACTUAL SUPPLIER IN THE NAME OF GLOBAL PETROCHEM (FZC), T JAB, AND OFFER YOUR DETAILED EXPLANATION ON THE ABO VE OBSERVATION. ANS. AFTER HAVING SEEN VARIOUS INVOICES/EVIDENC ES SHOWN TO ME. OF THE ORIGINAL SUPPLIERS, I AM VERY MUCH SHOCKED THAT THE PERSON W HOM WE TRUSTED BLINDLY HAS MISREPRESENTED THE FACTS FOR HIS PERSONAL UNETHICAL GAIN. HAD HE NOT BEEN A FRIEND FOR PAST 9-10 YEARS, I WOULD NOT HAVE TRUSTED HIM S O MUCH. THE VALUE QUOTED IN THE SAID INVOICES IN COMPARISON TO THE INVOICES RAISED ON US IS REALLY AN EYE-OPENER TO US. I DEEPLY FEEL THAT WE HAVE BEEN CHEATED BY THE SUPP LIER, WHO HAS BEEN A CLOSE FRIEND ITA NOS.3888 & 3889/M/2019 & ORS M/S. GANDHAR OIL REFINERY (I) LTD. 8 OF US SINCE PAST 10 YEARS. SIR, I WOULD LIKE TO REQUEST YOU TO PROVIDE PHOTOCOPIES OF ALL THESE CRUCIAL DOCUMENTS ON THE BASIS OF WHICH I WILL CONVERSE WITH MR.ANKITTANDON ON THE MATTER AND GET THE EXTRA AMOU NT REMITTED BACK SO THAT THE LAWFUL INCOME CAN BE PLOUGHED BACK IN THE BOOK S OF ACCOUNT OF GANDHAR GROUP. SIR, AS PER HIS ORAL ASSURANCE FROM TIME TO TIME, W E WERE UNDER THE IMPRESSION THAT HE IS CHARGING MARGIN AT MAX US $ 2 PER MT, THEREFORE, IN ONE OR OTHER WAY, YOUR SEARCH & SEIZURE ACTION HAS BEEN QUITE HELPFUL FOR THE FUTUR E GROWTH OF BUSINESS OF THE COMPANY. SIR, LET ME ESTIMATE THE EXTRA INCOME, WHICH WOULD HAVE BEEN AVAILABLE WITH US IF MRANKITTANDON HAD N OT MISREPRESENTED THE FACTS TAKING ADVANTAGE OF OUR INEXPERIENCE AND GOOD OLD R ELATIONS. I WOULD LIKE TO ASSURE YOU ON THE BASIS OF THE DOCUMENTARY EVIDENCE S PROVIDED BY YOU, WE WILL BE ABLE TO GET BACK THE EXTRA AMOUNT FROM THE DUBAI BA SED ENTITIES CONTROLLED MR.ANKITTANDON, IF NEED BE BY TAKING SHELTER OF LEG AL ACTION, AND THE RESPECTIVE AMOUNT WILL BE DUTY OFFERED FOR TAXATION AND WE UND ERTAKE TO PAY THE TAXES THEREON ACCORDINGLY. SIR, I NEED SOME TIME TO MAK E A REASONABLE ESTIMATE OF ADDITIONAL AMOUNT TAKEN IN THE GUISE OF PURCHASE VA LUE OF CARGO BY MR.ANKITTANDON SO THAT THE SAME MAY BE OF FERED FOR TAXATION FOR THE RESPECTIVE ASSESSMENT YEARS.' Q.24 PLEASE REFER TO YOUR STATEMENT RECORDED TILL N OW WHEREIN YOU HAVE SAID THAT YOU WERE UNAWARE OF THESE MANIPULATIVE TRANSACTIONS , WHICH RESULTED IN THAT THE ADDITIONAL INCOME ON ACCOUNT OF THE SAME REMAINED T O BE OFFERED FOR TAX. WHETHER YOU HAVE MADE ANY ESTIMATE OF SUCH ADDITIONAL INCOM E LIABLE TO BE BROUGHT TO TAX? ANS. YES, SIR. I AM SUBMITTING ASSESSMENT YEAR WISE DETAILS OF SUCH ADDITIONAL INCOME ON ESTIMATION BASIS. ON THE BASIS OF TH E SAMPLE OF COMMERCIAL INVOICES SHOWN BY YOU WHEREIN THE UNIT PRICE IS REFLECTED AT US$ 18.75 PER MT, I AM PRESUMING THAT THE ENTIRE MATERIAL SUPPLIED B Y MR. ANKIT TANDON IS OF THE SAME VALUE. FURTHER, I AM TAKING AN ESTIMATED FREIGHT O F US$ 14 PER MT FOR ALL CNF TRANSACTIONS AND MARGIN OF MR. ANKITTANDON AT A MAX IMUM OF US$ 2 PER MT. THEREAFTER, THE DIFFERENTIAL AMOUNT IS WORKED OUT T O ARRIVE AT A DISCLOSURE OF ADDITIONAL INCOME OF RS.98,53,75,297/- (RUPEES NINE TY EIGHT CRORES FIFTY THREE LAKHS SEVENTY FIVE THOUSAND TWO HUNDRED NINETY SEVE N ONLY) EQUIVALENT TO US$ 158,93,150 IN THE HANDS OF GANDHAR GROUP AS PER FOL LOWING DESCRIPTION: FINANCIAL YEAR ASSESSMENT YEAR AMOUNT (IN RS.) 2012-13 2013-14 11,88,27,650 2013-14 2014-15 86,65,47,647 TOTAL: 98,53,75,297 I AM SUBMITTING A DETAILED WORKING OF INVOICE-WISE TOTAL ESTIMATED ADDITIONAL INCOME SEPARATELY. HOWEVER, I WOULD LIKE TO ADD T HAT THIS EXERCISE HAS BEEN UNDERTAKEN BY ME TO BUY PEACE OF MIND AND TO AVOID PROTRACTED LITIGATION UNDER AN IMPRESSION THAT THE INFORMATION MADE AVAILABLE BY I T IS CORRECT AND THAT I HAVE BEEN CHEATED BY MY DUBAI BASED FRIEND.' ITA NOS.3888 & 3889/M/2019 & ORS M/S. GANDHAR OIL REFINERY (I) LTD. 9 PERUSAL OF THE STATEMENT, AND IN PARTICULAR THE POR TION IN BOLD, DOES SHOW THAT THE OFFER OF ADDITIONAL INCOME WAS CONDITIONAL ON THE F ACTS BEING TRUE AS ALLEGED AND ON SUCH AMOUNT BEING RECOVERED. THUS THERE IS MERIT IN THE CONTENTION OF THE APPELLANT THAT THEREWAS NO ADMISSION OF ANY WRONG D OING AND EARNING OF UNACCOUNTED INCOME. 20.4.5. IT IS FURTHER NOTED THAT THE ALLEGED INVOIC ES OF SUPPLY OF COAL BY M/S SANDY RESOURCES PTE. LTD. TO M/S GLOBAL PETROCHEM FZC IS ON FOB BASIS WHEREAS THE INVOICES RAISED M/S GLOBAL PETROCHEM FZC TO APPELLA NT IS ON CFR BASIS. THUS FREIGHT AND UAE ENTITY MARGIN HAS TO BE ADDED. SHRI KUNAL P AREKH : HAD MADE THE ESTIMATE OF OVER INVOICING BASED ON ADDING TRANSPORT AND SUP PLIERS MARGIN @ $14 AND $ 2 PER MT RESPECTIVELY TO THE FOB RATE OF $ 18.75 IN T HE INVOICE OF M/S SANDY RESOURCES PTE. LTD. WHICH WAS COMPARED WITH THE INVOICES OF M/S GLOBAL PETROCHEM FZC AND M/S GLAXO INTERNATIONAL FZE TO TH E APPELLANT COMPANY. THE EXCHANGE RATE HAS BEEN CONSIDERED AS RS 62 PER $. H E ARRIVED AT SUCH ESTIMATE AT RS 98,53,75,297. IT IS NOTED THAT THE ASSESSING OFFICE R HAS MADE THE COMPUTATION SOMEWHAT DIFFERENTLY. IN THE STATEMENT RECO RDED ESTIMATE WAS MADE BASED ON PURCHASES BY THE APPELLANT COMPANY AND A LSO PURCHASES BY M/S GANDHAR COAL AND MINES HAVE BEEN CONSIDERED FROM THE TWO UA E ENTITIES. ONE OF THE INVOICE FALLS IN AY 2015-16. HENCE ADDITIONS HAVE B EEN MADE FOR AY 2013-14, AY 2014-15 AND AY 2015-16 IN CASE OF APPELLANT COMPANY AND FOR AY 2014-15 IN CASE OF M/S GANDHAR COAL AND MINES. THE ASSESSING OFFICER H AS IN ADDITION TO THE ESTIMATE FURNISHED AT THE TIME OF THE RECORDING OF STATEMENT IN SEARCH, MADE FURTHER DISALLOWANCE OF $ 2 PER MT WHICH WAS THE MARGIN OF THE TWO UAE ENTITY CONSIDERED IN THE ESTIMATE BY SHRI KUNAL PAREKH THE ASSESSING OFFICER HAS DISALLOWED THIS MARGIN ALSO. AN EFFORT WAS MADE TO RECONCILE THE ES TIMATE PREPARED AT THE TIME OF RECORDING OF STATEMENT AND THAT COMPUTED IN THE ASS ESSMENT ORDER. THIS IS TABULATED BELOW. ASSESS EE OVER OMVPOCOMG AS PER STATEMENT AS PER DIFFEREN CE MARGIN BASED ON STATEME NT AS PER ASSESSM ENT ORDER DIFFERE NCE EOT ORDER GORIL 13-14 1188,27,650 1188,27,650 - 156,86,000 156,86,000 - GORIL 14-15 7064,12,857 7472,13,146 408,00,290 824,28,628 416,28,339 408,00,289 GORIL 15-16 605,12,000 605,12,000 - 79,36,000 79,36,000 - GCM 14- 15 996,22,790 588,22,500 408,00,290 114,06,016 522,06,306 408,00,290 ITA NOS.3888 & 3889/M/2019 & ORS M/S. GANDHAR OIL REFINERY (I) LTD. 10 TOTAL 9853,75,297 9853,75,296 1174,56,64 4 1174,56,645 AS CAN BE NOTICED FROM ABOVE, THE OVERALL FIGURES C ONSIDERED IN THE ASSESSMENT ORDER AND THAT AS PER STATEMENT IS SAME THOUGH IN S OME OF THE AY'S THE WORKING IN THE ASSESSMENT ORDER IS INCORRECT. THIS IS FOR AY 2 014-15 IN CASE OF GORIL WHERE THE OVER INVOICING IS OVERESTIMATED BY RS.4,08,00,290 A ND THE DIFFERENTIAL MARGIN DISALLOWED IS UNDERESTIMATED BY THE SAME AMOUNT. SI MILARLY FOR AY 2014-15 IN CASE OF GCM, THE OVER INVOICING IS UNDERESTIMATED BY RS. 4,08,00,290 AND THE DIFFERENTIAL MARGIN DISALLOWED IS OVERESTIMATED BY THE SAME AMOU NT. IN SHORT THE ASSESSING OFFICER HAS MADE ADDITION OF RS.98,53,75,297 AS WAS MENTIONED IN THE STATEMENT. HE HAS FURTHER DISALLOWED RS. 11,74,56,645 /-OF MAR GIN OF THE TWO DUBAI BASED ENTITY @ $2/ MT. IT IS ALSO NOTED THAT THE OVER INV OICING COMPUTED BY THE ASSESSING OFFICER AT RS 110 CRORES IS ABOUT 35% OF THE TOTAL PURCHASES OF RS.JJ4R2~CRORES FROM THE TWO UAE ENTITIES. 20.4.6. DETAILS WERE ALSO CALLED PARTY WISE IN RESP ECT OF ALL PURCHASES OF COAL AND SALE OF COAL RECONCILED WITH THE P 85 L ACCOUNT. IT IS NOTED THAT THE APPELLANT HAS MANUFACTURING AND TRADING OF LUBRICANT (GEAR OIL, T RANSFORMER OIL) OIL APART FROM TRADING IN COAL. THE PROFIT MARGINS FOR THE APPELLA NT OVERALL ARE TABULATED BELOW. ASSESSMENT YEAR AY:2009- 10 AY:2O1O- 11 AY:2011- 12 AY-2012- 13 AY:2O13- 14 AY:2014- 15 A.Y.:2013- 16 PARTICULARS AMOUN T AMOUNT AMOUN T AMOUN T AMOUNT AMOUNT AMOUNT SALES/TURN OVER 21025,2 0, 30698,33, 5 44623,1 9, 57922,8 4, 126196,4 0, 156121,2 6, 219728,81 , 413 62 502 664 298 208 954 PURCHAS ES 17967,8 9, 29047,64, 5 41093,3 3, 58386,6 5, 1031 15,49, 144083,7 6, 203087,66 , 328 02 345 199 563 386 684 GROSS PROFIT/LOSS 2633,99, 4 3574,13,5 9 4491,94, 8 5253,68, 2 13738,45, 6 15886,32, 1 25971,49, 6 ITA NOS.3888 & 3889/M/2019 & ORS M/S. GANDHAR OIL REFINERY (I) LTD. 11 87 1 24 92 01 23 64 NET PROFIT/LOSS 1 137,57,4 2161,12,0 0 1709,42, 8 2291,82, 8 6060,95,5 9 4696,00,3 0 3215,75,7 6 05 7 00 99 3 4 3 GP RATIO 12.53 11.64 10.07 9.07 10.89 10.18 11.82 NP RATIO 5.41 7.04 3.83 3.96 4.80 3.01 1.46 THIS SHOWS THAT REASONABLE PROFITS ARE SHOWN BY THE APPELLANT COMPANY. 20.4.7. THE TRADING IN COAL FOR AY 2013-14 TO AY 2015-16 IS TABULATED BELOW. RS/CRORES AY 2013- 14 2014-15 2015-16 TOTAL SALE 543.67 768.35 1379.89 2691.91 PURCHASES 423.66 719.56 1296.46 2439.68 IT IS NOTED THAT THERE ARE BOTH IMPORTS AND LOCAL P URCHASES OF COAL MADE BY THE APPELLANT. THE IMPORT OF COAL FROM THE TWO UAE ENTI TIES AS A % OF TOTAL COAL PURCHASES OF THE APPELLANT ARE 8% IN AY 2013-14, 32 % IN AY 2014-15 AND 4 % IN AY 2015-16. THERE IS A LOT OF VARIATION IN RATE OF PUR CHASE COMPUTED AS RS/ MT. HOWEVER THE RATE PER MT IN RESPECT OF IMPORTS FROM THE TWO UAE ENTITIES ARE WITHIN THE NORMAL RANGE OF ALL THE PURCHASES. FOR E.G. THE AVERAGE RATE OF PURCHASE COMES TO RS 2375/MT FOR IMPORT FROM GLOBAL PETROCHEM FZC IN AY 2013-14. THE PURCHASE PRICE RANGES FROM RS1042 TO RS.5229 PER MT. THE CO MPARISON OF IMPORT PRICES FOR DIFFERENT SUPPLIERS TO APPELLANT FOR AY 2013-14 IS TABULATED BELOW. PARTY NAME IMPORT PURCHASES QUANTITY (MT) INVOICE VALUE IN INR AVERAGE RATE PER MT ITA NOS.3888 & 3889/M/2019 & ORS M/S. GANDHAR OIL REFINERY (I) LTD. 12 BS GLOBAL R ESOURCES PTE LTD. 55,035 5,73,96,552 1,043 GANDHAR G LOBAL SI NGAPORE PTE PD 55,000 15,64,80,390 2,845 GLOBAL PETROCHEM(FZC) 1,26,5OO 30,04,88,985 2,375 M CS HOLDING PE.LTD 1,70,346 56,49,16,142 3,316 MCS HOLDING PTE. LTD-OTHER 59,356 16,36,25,254 2,757 PT. AL AMOUDI NATURAL RESOURCES TRADMIN 4,59,150 1,19,13,53,487 2,595 PT. SK STWORKS INDONESIA 42,008 10,57,22,441 2,517 SAEED PTE LTD 27,750 6,97,86,255 2,515 GRAND TOTAL 9,95,145 26O,97,69,5O6 THE PURCHASE PRICE FOR IMPORT FROM GLOBAL PETROCHEM FZC IN AY 2013-14 COMPARES FAVOURABLY WITH OTHER IMPORTS. THE IMPORTS OF COAL ARE ABOUT 70 % OF TOTAL COAL PURCHASES IN AY 2013-14. THE APPELLANT'S IMPORT FRO M UAE ENTITIES ARE 17 % OF TOTAL IMPORTS IN AY 2013-14. THE POSITION IS SIMILAR IN T HE OTHER TWO AY 2014-15 AND AY 2015-16. THE VARIATION IN PRICES ARE INFORMED BY TH E VARIATION IN CALORIFIC VALUE OF COAL, MOISTURE AND SULPHUR CONTENT AND IMPURITIES. THE RATE VARIES BASED ON THE GROSS CALORIFIC VALUE BASED ON AS DRIEA BASIS (ADB) . THE RATE IS LOWER WHEN COMPUTED ON AS RECEIVED BASIS (ARB) SINCE IT CONTAI NS MOISTURE BUT HIGHER ON ADB. A PERUSAL OF THE INVOICES, WHEN CONSIDERED WITH INF ORMATION BASED ON COAL QUALITY SPECIFICATIONS AND SURVEYORS REPORT, DOES NOT INDIC ATE ANY EVIDENCE OF OVER INVOICING. 20.4.8 THE APPELLANT HAS ALSO SUPPORTED ITS PRICES OF IMPORT FROM THE TWO UAE ENTITIES WITH RATES PUBLISHED BY ARGUS. IT IS FOUND FROM WEBSITE THAT ARGUS IS AN INDEPENDENT MEDIA ORGANISATION WITH ALMOST 950 STAF F. IT IS HEADQUARTERED IN LONDON AND HAS 21 OFFICES IN THE WORLD'S PRIN CIPAL COMMODITY TRADING AND PRODUCTION CENTRES. ARGUS PRODUCES PRICE ASSESSMENTS AND ANALYSIS OF ITA NOS.3888 & 3889/M/2019 & ORS M/S. GANDHAR OIL REFINERY (I) LTD. 13 INTERNATIONAL ENERGY AND OTHER COMMODITY MARKETS, AND OFFERS BESPOKE CONSULTING SERVICES AND INDUSTRY-LEADING CONF ERENCES. COMPANIES IN 140 COUNTRIES AROUND THE WORLD USE ARGUS DATA TO INDEX PHYSICAL TRADE AND AS BENCHMARKS IN FINANCIAL DERIVATIVE MARKETS AS WELL AS FOR ANALYSIS AND PLANNING PURPOSES. ARGUS WAS FOUNDED IN 1970 AND IS A PRIVAT ELY HELD UK-REGISTERED COMPANY. IT IS OWNED BY EMPLOYEE SHAREHOLDERS AND G LOBAL GROWTH EQUITY FIRM GENERAL ATLANTIC. THE EVIDENCE FILED BY APPELLANT T O SHOW THAT IMPORT PRICES ARE REASONABLE AS COMPARED WITH ARGUS DATA IS CREDIBLE AND THE ASSESSING OFFICER HAS IGNORED IT WITHOUT ANY BASIS. 20.4.9 THE IMPORTS FROM M/S GLOBAL PETROCHEM FZ C AND M/S GLAXO INTERNATIONAL FZE HAS BEEN SUPPLIED TO BHARAT OMAN REFINERIES LTD. THE BHARAT OMAN REFINERIES LIMITED (BORL) IS THE COMPANY THAT OWNS AND OPERATES BINA REFINERY, LOCATED AT BINA IN THE SAGAR DISTRICT OF THE STATE OF MADHYA PRADESH. BUILT AS A JOINT VENTURE BETWEEN INDIA'S BHARAT PETROLEUM CORPORATION (BPCL) AND OMAN'S OMAN OIL COMPANY, THE 6 MTPA REFINERY WAS CO MMISSIONED IN MAY 2011. THE DOCUMENTS FILED IN THE ASSESSMENT PROCEEDINGS S HOWED THAT THE APPELLANT COMPANY QUALIFIED TO SUPPLY COAL TO BORL BASED ON O PEN TENDERS. THE COAL HAS BEEN ACCEPTED BY BORL FOR WHICH CERTIFICATE WAS FUR NISHED IN THE ASSESSMENT PROCEEDINGS. THE APPELLANT HAD ALSO FURNISHED WORK ING TO SHOW THAT ITS SUPPLY TO BORL WAS PROFITABLE. FOR AY 2013-14 THE GROSS PROFI T ON SALE OF COAL IMPORTS FROM M/S GLOBAL PETROCHEM FZC AND M/S GLAXO INTERNATIONA L FZE WAS 26.75 % AS COMPARED WITH 19.49 % ON OTHER IMPORTS OF COAL. IT IS IMPROBABLE THAT CUSTOMERS WOULD ALLOW AND BIDDERS WOULD QUOTE PRICES SO HIGH AS THE OVER INVOICING OF 35% THAT IS COMPUTED BY THE ASSESSING OFFICER WAS TRUE. THIS AGAIN INDICATES THAT THERE WAS NO OVER INVOICING IN THE IMPORT OF COAL FROM TH E TWO ENTITIES. 20.4.10 THE ASSESSING OFFICER WAS ASKED TO INFORM W HETHER THERE WAS ANY ACTION OR INDICATION BY CUSTOM AUTHORITIES REGARDING OVER INV OICING OF COAL. NO REPLY WAS RECEIVED FROM THE ASSESSING OFFICER. IT STANDS TO R EASON THAT IF SUCH LARGE EXTENT OF OVER INVOICING WAS INVOLVED, THE CUSTOMS AUTHORITY WOULD HAVE RAISED RED FLAG OVER THE IMPORTS. 20.4.11. THE APPELLANT IS CORRECT IN CONTENDING THA T THE COPY OF INVOICES OF M/S SANDY RESOURCES PTE. LTD. REFERRED TO ARE NOT AUTHE NTICATED. THIS ENTITY IS BASED IN SINGAPORE. THESE INVOICES ARE NOT ORIGINALS AND HAV E NOT BEEN AUTHENTICATED BY THE SUPPLIER OR ANY OTHER AUTHORITY. FURTHER, THE APPEL LANT AGAIN HAS A VALID CONTENTION THAT BASED ON MERE 3 INVOICES, EXTRAPOLATION OF OVE R INVOICING IN RESPECT OF ALL PURCHASES IS NOT JUSTIFIED. EVEN AT BEST THE THREE INVOICES IN QUESTION RAISED BY M/S GLOBAL PETROCHEM FZC TOTALING TO USD 87,43,662 IS O NLY RS 54 CRORES AGAINST TOTAL IMPORTS OF OVER RS.300 CRORES OVER THE YEARS. THE OVER INVOICING AS COMPUTED BY THE ASSESSING OFFICER ON THESE THREE INVOICES IS AB OUT RS 22 CRORES OUT OF RS 98 CRORES ESTIMATED OVERALL. THE APPELLANT ALSO HAS ME RIT IN THE CONTENTION THAT THE ALLEGATION OF THE ASSESSING OFFICER COULD BE EQUALL Y COMPATIBLE WITH UNDER INVOICING BY THE SUPPLIER OF COAL TO M/S GLOBAL PETROCHEM FZC AND THE ALLEGATION THAT THERE WAS OVER INVOICING OF IMPORTS IS MERE PRESUMPTION. 20.4.12. SHRI TRIBHUVANDAS PAREKH IS AN ACCOUNT EXE CUTIVE OF THE APPELLANT. SOME INFORMATION RELATING TO TWO BANK ACCOUNTS AND LEDGE RS OF GLOBAL PETROCHEM FZG ITA NOS.3888 & 3889/M/2019 & ORS M/S. GANDHAR OIL REFINERY (I) LTD. 14 WERE FOUND FROM HIS COMPUTER. THIS HAS BEEN INTERPR ETED BY THE ASSESSING OFFICER AS INDICATING THAT THE APPELLANT HAD CONTROL OVER GLOB AL PETROCHEM FZC. IT IS NOTED THAT THE ENTRIES IN SUCH DATA PERTAINED TO PERIOD F Y 11-12. THE IMPUGNED PURCHASES OF THE APPELLANT ARE FOR AY 2013-14 ONWARDS AND NOT FOR THE PERIOD TO WHICH THE BANK STATEMENTS/ LEDGER PERTAINS. AS REGARDS THE ST ATIONARY AND STAMPS FOUND IN THE COURSE OF SEARCH, REFERRED TO IN THE ASSESSMENT ORDER, IT IS NOTED THAT IN THE COURSE OF SEARCH PROCEEDINGS, AT THE RESIDENT IAL PREMISE ADDRESS 101, ADARSH HARMONY APARTMENT, ADARSH DUGHDHALAYA COMPOUND, MALAD WEST, MUMBAI - 64 OF MRS. RIDDHI PUNIL SHAH AND SHRI PUNI L SHAH, A BAG WAS FOUND PLACED AT BOOT OF THEIR CAR BEARING NO.MH-02-CL-3509 PARKE D AT THE SAID PREMISES. WHEN QUESTIONED, IN RESPONSE, SHE REPLIED THAT THE SAME MIGHT BE LEFT OUT BAG BELONGED TO ONE MR. MIHIR PANCHAL WHO CAME TO MUMBAI 15/20 D AYS BACK FROM THE DATE OF SEARCH ACTION. MR. MIHIR PANCHAL RUNS M/S D SONS T RADERS DMCC. IT IS NOTED THAT THE OVER INVOICING ALLEGED IN THE ASSESSMENT ORDER IS NOT IN RESPECT OF M/S D SONS TRADERS DMCC. 20.4.13. THE ASSESSING OFFICER HAD REQUESTED FOR AN D OBTAINED INFORMATION FROM UAE UNDER EXCHANGE OF INFORMATION PROCEDURE. T HOUGH HE HAS MENTIONED THAT THE INFORMATION SHOWED THE DUBIOUS CREDENTIALS OF M /S GLOBAL PETROCHEM FZC AND M/S GLAXO INTERNATIONAL FZE, HE HAS NOT GIVEN ANY S PECIFIC DETAIL OTHER THAN TO SAY THAT M/S GLAXO INTERNATIONAL FZE IS OWNED BY ONE AR PIT TANDON AND NOT ANKIT TANDON. THIS ALONE CANNOT BE CONSTRUED AS INDICATIN G DUBIOUS CREDENTIALS. FURTHER THE APPELLANT HAS CONTENDED THAT THERE IS NO EVIDEN CE THAT IT WAS CONTROLLING THESE ENTITIES OR HAD RECEIVED ANY PAYMENTS FROM THESE EN TITIES TO SHOW THAT ALLEGED OVER INVOICING PROCEEDS WERE RECEIVED BY IT. THE INFORMA TION RECEIVED SHOWED THAT M/S GLOBAL PETROCHEM FZC AND M/S GLAXO INTERNATIONAL FZ E EARNED PROFITS OF ABOUT 6-7 % ON SALES. NO ABNORMAL PROFITS ARE INDICATED WHI CH SHOULD HAVE BEEN THERE IF THE PURCHASES WERE AT SUCH LOW RATES. 20.4.14. THE APPELLANT DID TAKE UP THE RECOVERY OF ALLEGED EXCESS CHARGED TO IT BY THE TWO UAE ENTITIES AFTER THE SEARCH ACTION BUT SH ORT OF LEGALLY ADMISSIBLE EVIDENCE COULD NOT EFFECT RECOVERY. 20.4.15 THUS BASED ON THE ABOVE DISCUSSION IT IS NO TED THAT I) THERE IS NO ADMISSION OF ANY OVER INVOICI NG BY SHRI KUNAL PAREKH AND THAT THE ESTIMATE GIVEN OF OVER INVOICING WAS CONDITIONAL TO FACTS ALLEGED BEING TRUE AND BASED ON CERTAIN ASSUMPTIONS REGARDING FRE IGHT AND EXCHANGE RATES. II) THE 3 INVOICES OF M/S SANDY RESOURCES PTE. LTD. SINGAPORE, ALLEGED TO INDICATE THAT OVER INVOICING WAS INVOLVED REMAINS U NAUTHENTICATED. THERE ARE NO ORIGINALS AVAILABLE. FURTHER, THE COPIES OF 3 INVOI CES REPRESENTING MERE 15% OF PURCHASES HAS BEEN USED TO EXTRAPOLATE THAT ALL PUR CHASES ARE OVER INVOICED. THIS IS NOT JUSTIFIED. III) THERE IS NO INDICATION THAT CUSTOMS AUTHOR ITY HAVE QUESTIONED THE VALUATION OF IMPORTS FROM THE TWO UAE ENTITIES. ITA NOS.3888 & 3889/M/2019 & ORS M/S. GANDHAR OIL REFINERY (I) LTD. 15 IV) THE RATES AT WHICH COAL WAS IMPORTED FROM T HE TWO UAE ENTITIES IS COMPARABLE WITH OTHER IMPORTS MADE BY THE COMPANY. IT IS ALSO SHOWN TO BE WITHIN THE RANGE OF ARGUS PRICES AT THE RELEVANT DATE FOR THE RELEVANT QUALITY OF COAL. V) THE APPELLANT HAS MAINLY SUPPLIED THE COAL IMPO RTED FROM TWO UAE ENTITIES TO BHARAT OMAN REFINERIES LTD. PROFITS HAVE BEEN EARNE D ON SUCH TRANSACTIONS WHICH ARE BETTER THAN THAT ON OTHER SIMILAR IMPORTS. THE APPELLANT WON THE BID TO SUPPLY TO BORL THROUGH TENDERS. THE CUSTOMER HAS ISSUED CE RTIFICATE THAT THE SUPPLY WAS AS PER SPECIFICATIONS. IT IS UNLIKELY THAT SUCH A L ARGE MARGIN AS INDICATED BY THE QUANTIFICATION DONE BY THE ASSESSING WOULD BE AVAIL ABLE WHEN BIDS ARE RECEIVED THROUGH TENDERING PROCESS. VI) THERE IS NO EVIDENCE OF ANY CASH/PROFITS COMING BACK TO APPELLANT OR ITS ENTITIES FROM ALLEGED OVER INVOICING OF IMPORT. NO EVIDENCE TO SUGGEST THIS WAS RECOVERED IN THE SEARCH ACTION. VII) COPY OF NOTICE ISSUED TO SUPPLIER AND ITS REPL Y IS FILED BY APPELLANT TO SHOW THAT EFFORT TO RECOVER MONEY WAS UNSUCCESSFUL SINCE LEGALLY VALID EVIDENCE WAS NOT AVAILABLE. THE MOST IMPORTANT FACTOR, WHICH TILTS THE CASE IN FAVOUR, OF THE APPELLANT, AND IS THE REASON FOR MY VIEW, IS THAT THE INVOICES CONSID ERED TO BE EVIDENCE OF PURCHASES BY M/S GLOBAL PETROCHEM FZC FROM M/S SANDY RESOURCE S PTE. LTD. SINGAPORE IS UNAUTHENTICATED AND THERE IS NO EVIDENCE THAT THE A PPELLANT RECEIVED ANY MONEY RESULTING FROM ALLEGED OVER INVOICING OF PURCHASES. THUS EVEN IF IT WERE CONSIDERED THAT THE APPELLANT HAD LINKS WITH THE TWO I SUPPLIE RS M/S GLOBAL PETROCHEM FZC AND M/S GLAXO INTERNATIONAL FZE, THE OVER INVOICING REM AINS UNPROVED AND THERE IS NO EVIDENCE OF THE APPELLANT EARNING OUT OF SUCH ALLEG ED OVER INVOICING. OF COURSE, THE APPELLANT HAS PRODUCED AMPLE EVIDENCE AND MADE OUT A CASE THAT ITS PRICE OF PURCHASES FROM THE TWO UAE ENTITIES ARE COMPARABLE WITH OTHER IMPORTS AND IS AT MARKET RATES, AND THAT IT HAS EARNED GOOD PROFITS O N SUCH IMPORTS. 20.4.16. IT IS THEREFORE HELD THAT THE ALLEGATION T HAT THERE IS OVER INVOICING OF IMPORT OF COAL FROM M/S GLOBAL PETROCHEM FZC AND M/S GLAXO INTERNATIONAL FZE IS NOT PROVED. SINCE IT IS HELD THAT THE OVER INVOICING IS NOT PROVED, THE DISALLOWANCE MADE IN RESPECT OF MARGIN OF $2 PER MT IS ALSO DELETED. FURTHER, THE CONTENTION OF THE APPELLANT THAT DEBIT/CREDIT NOTES IN RESPECT OF PUR CHASES SHOULD BE CONSIDERED INSTEAD OF THE ORIGINAL INVOICE VALUE, THOUGH MERIT ED, BECOMES INFRUCTUOUS SINCE THE ADDITION ON THE PREMISE OF OVER INVOICING IS NO T UPHELD. HENCE THE ADDITION OF RS.11,88,27,650/- AND RS. 1,56,86,OOO/- IS DELETED. GROUND OF APPEAL NO 2 AND 4 ARE ALLOWED. 6. THE LD. D.R. VEHEMENTLY SUBMITTED BEFORE US THAT THE ORDER PASSED BY THE LD. CIT(A) IGNORED ALL THE FACTS ON R ECORD AND THE INFORMATION COLLECTED, EVIDENCES FOUND AND CORRELA TED FROM THE STATEMENTS RECORDED DURING THE SEARCH UNDER SECTION 132(4) OF ITA NOS.3888 & 3889/M/2019 & ORS M/S. GANDHAR OIL REFINERY (I) LTD. 16 THE ACT. THE LD. D.R. SUBMITTED THAT DURING THE CO URSE OF SEARCH AND ALSO PRE-SEARCH ENQUIRY IT HAS BEEN FOUN D THAT ASSESSEE HAS INDULGED IN OVER INVOICING THE COAL IM PORTS FROM SINGAPORE SUPPLIER THROUGH DUBAI ENTITIES NAMELY M/ S. GLOBAL PETROCHEM FZC AND M/S. GLAXO INTERNATIONAL FZC. TH E LD. A.R. SUBMITTED THAT AS PER THE UNDERSTANDING BETWEEN THE ASSESSEE AND DUBAI BASED ENTITIES, THE COAL WAS TO BE PROCUR ED FROM THE SUPPLIER AT A MARGIN OF USD $ 2 PER METRIC TON. IT WAS ALSO DISCOVERED THAT THE PRICE CHARGED BY THE DUBAI BASE D ENTITY FROM THE ASSESSEE WAS MUCH HIGHER THAN THE PRICE CHARGED BY SINGAPORE SUPPLIER FROM DUBAI ENTITIES MEANING THER EBY THAT ENORMOUS PROFIT HAS ACCRUED IN THE HANDS OF DUBAI E NTITIES WHICH IS NOTHING BUT SHIFTING OF PROFITS FROM INDIA TO DUBAI. THE LD. D.R. ALSO REFERRED TO THE STATEMENT RECORDED UN DER SECTION 132(4) OF THE ACT OF SHRI KUNAL PAREKH VICE PRESIDE NT(IMPORTS) IN WHICH HE MADE DISCLOSURE ON ACCOUNT OF OVER INV OICING AND OFFERED THE ADDITIONAL INCOME FOR THE YEAR UNDER CO NSIDERATION OF RS.11,88,27,650/-. THE LD. D.R. ALSO TERMED AS RID ICULOUS AND ABSURD THE CONTENTION OF THE ASSESSEE THAT THE ASSE SSEE HAS BEEN CHEATED BY DUBAI BASED ENTITIES BY CHARGING EX ORBITANT PRICE FOR THE IMPORT OF THE COAL AND ALSO REFERRED TO THE ADMISSION OF THE ASSESSEE THAT THIS AMOUNT WOULD B E OFFERED TO TAX AFTER THE SAME IS RECEIVED FROM THE DUBAI BASE D ENTITIES. THE LD. D.R. ALSO ARGUED THAT ASSESSEE HAS NOT MADE ANY OFFER TO RECOVER THE AMOUNT AND IT WAS JUST AN EXCUSE TO CIR CUMVENT THE ACTION BY THE DEPARTMENT. THE LD. D.R. ALSO REFERR ED TO THE BANK STATEMENT AND LEDGER OF DUBAI BASED ENTITIES FOUND IN THE COMPUTER OF AN EMPLOYEE OF THE ASSESSEE WHICH REVEA LED THAT THESE DUBAI BASED ENTITIES ARE CLOSELY ASSOCIATED W ITH THE ITA NOS.3888 & 3889/M/2019 & ORS M/S. GANDHAR OIL REFINERY (I) LTD. 17 ASSESSEE GROUP AND ARE WORKING TOGETHER TO EVADE TA XES IN INDIA. THE LD. D.R. ALSO SUBMITTED THAT THERE WERE EXCHANG E OF WHATSAPP BETWEEN EMPLOYEE OF THE ASSESSEE MRS. RIDD HI SHAH AND SHRI KUNAL PAREKH (VICE PRESIDENT, IMPORTS) REG ARDING THE CHANGES IN SPECIFICATION OF COAL. THE LD. D.R. ALS O REFERRED TO THE STATIONERY AND STAMPS PERTAINING TO THESE FOREI GN ENTITIES FOUND FROM THE RESIDENCE OF MRS. RIDDHI SHAH. THE LD. D.R. SUBMITTED THAT KEEPING ALL THESE FACTS AS BROUGHT O UT BY SEARCH DURING ASSESSMENT PROCEEDINGS, THE ARRANGEMENT IS N OTHING BUT SHIFTING THE PROFIT FROM INDIA TO DUBAI AND THEREFO RE WAS RIGHTLY ADDED BY THE AO. THE LD. D.R. VEHEMENTLY ASSAILED THE ORDER OF LD. CIT(A) IGNORING ALL THESE FACTS AND PRAYED BEFO RE THE BENCH FOR THE REVERSAL OF THE SAME AND RESTORING THE ORDE R OF THE AO. 7. ON THE OTHER HAND, THE LD. A.R. RELIED HEAVILY O N THE ORDER OF LD. CIT(A) BY REFERRING TO THE ORDER OF LD. CIT( A) WHEREIN IT HAS BEEN CLEARLY MENTIONED THAT IN THE STATEMENT OF SHR I KUNAL PAREKH (VICE PRESIDENT, IMPORTS) NOWHERE ANY ADMISS ION HAS BEEN MADE QUA THE OVER INVOICING OF IMPORTS. THE L D. A.R. SUBMITTED THAT WHEN SHRI KUNAL PAREKH (VICE PRESIDE NT, IMPORTS) WAS CONFRONTED WITH THE INVOICES DURING THE SEARCH BY THE SEARCH TEAM AND HE EXPRESSED HIS SHOCK AND FELT CHE ATED BY THE DUBAI BASED MIDDLEMEN/BROKERS. THE LD. A.R. SUBMIT TED THAT ONLY UNDER THESE CIRCUMSTANCES SHRI KUNAL PAREKH (V ICE PRESIDENT, IMPORTS) ACCEPTED TO OFFER THE AMOUNT OF EXCESS PROFIT CHARGED BY DUBAI ENTITIES WHEN THE SAME WOULD BE RE COVERED FROM THEM. THE LD. A.R. REFERRED TO THE QUESTION N O.23 AND ANSWERED THERETO WHICH IS DEALT WITH BY THE LD. CIT (A) AT PAGE NO.45 TO 46. THE LD. A.R. SUBMITTED THAT DESPITE T HE BEST EFFORTS BY THE ASSESSEE THE AMOUNT COULD NOT BE RECOVERED A ND THEREFORE ITA NOS.3888 & 3889/M/2019 & ORS M/S. GANDHAR OIL REFINERY (I) LTD. 18 NO INCOME AROSE ON ACCOUNT OF THE OFFER MADE BY SHR I KUNAL PAREKH (VICE PRESIDENT, IMPORTS) IN THE STATEMENT R ECORDED UNDER SECTION 132(4) OF THE ACT. THE LD. A.R., ON THE IS SUE OF FINDING THE BANK STATEMENTS AND LEDGER ACCOUNTS OF THE DUBA I BASED ENTITIES WITH THE EMPLOYEE OF THE ASSESSEE, SUBMITT ED THAT THE SAME WERE RECEIVED FOR THE PURPOSE OF RECONCILIATIO N OF THE BOOKS OF ACCOUNTS AND CAN NOT BE ASSIGNED A DIFFERENT MEA NING. ON THE ISSUE OF WHATSAPP CHAT EXCHANGE BETWEEN MRS. RI DDHI SHAH AND OTHER DIRECTORS OF THE ASSESSEE, THE LD. A.R. S UBMITTED THAT MRS. RIDDHI SHAH HAS CLEARLY EXPLAINED IN THE STATE MENT RECORDED DURING THE COURSE OF SEARCH THAT SPECIFICA TION OF COAL WAS ASKED TO BE CHANGED SINCE THEY WERE NOT AS PER SPECIFICATIONS DECIDED IN THE CONTRACT. THE LD. A. R. ALSO SUBMITTED THAT IMPORT OF COAL IS SUBJECT TO STRICT SURVEILLANCE AND STRICT PROCEDURE OF CUSTOMS AUTHORITIES AND THEREFO RE IT IS NOT IN THE HANDS OF THE ASSESSEE TO CHANGE THE SPECIFICATI ON OF IMPORTS AS PER THEIR CONVENIENCES OR WHIMS AND FANCIES. TH E LD. COUNSEL OF THE ASSESSEE ALSO STATED THAT PRICING OF PURCHASES MADE FROM DUBAI ENTITIES WERE COMPARABLE WITH THE P RICES OF OTHER IMPORTS MADE BY THE ASSESSEE AND ALSO THE PRI CE OF IMPORTS OF DUBAI ENTITIES ARE COMPARABLE WITH THE I NTERNATIONAL COAL PRICES AND THEREFORE IT SHOWED THAT THERE WERE NO OVER INVOICING OF IMPORTS. THE LD. A.R. ALSO REFERRED T O THE GROSS PROFIT RETURNED BY THE ASSESSEE IN THE BOOKS OF ACC OUNTS FOR THE YEAR UNDER CONSIDERATION AND SUBMITTED THAT IT HAS OFFERED A REASONABLE PROFIT EVEN MORE PROFIT ON SALE OF COAL PURCHASED FROM THE DUBAI ENTITIES THEN SALE OF COAL PURCHASED FROM OTHER ENTITIES WHICH IS THE SUBSTANTIATION OF THE FACT TH AT THERE WERE NO OVER INVOICING OF IMPORTS. THE LD. A.R. ALSO HI GHLIGHTED THE ITA NOS.3888 & 3889/M/2019 & ORS M/S. GANDHAR OIL REFINERY (I) LTD. 19 FACT THAT THE MOST OF THE SALE HAS BEEN MADE TO GOV ERNMENT ORGANIZATIONS THROUGH TENDER PROCESSES WHICH ITSELF SHOWED THAT PRICE OF PURCHASES IS COMPETITIVE AND COMPARABLE. FURTHER, THE LD. A.R. SUBMITTED THAT EXCHANGE OF INFORMATION FRO M UAE REVEALED THAT PROFIT OFFERED BY DUBAI ENTITIES WAS MEAGER RANGING FROM 6% TO 7% WHICH CLEARLY CONTRADICTED AND DEMOLI SHED THE STAND OF THE AO. BESIDES THERE WAS NO DOCUMENT OR ANY REPORT WHICH SHOWED THAT ASSESSEE EXERCISED CONTROL OVER T HE DUBAI ENTITIES. IT IS ALSO STATED THAT THERE WAS NO PROO F THAT PROFIT/CASH RECEIVED BACK FROM DUBAI ENTITIES WERE FOUND IN THE SEARCH OPERATION. THE LD. A.R. ALSO SUBMITTED THAT INVOICES OBTAINED BY THE SEARCH TEAM WERE UNAUTHENTICATED AN D THEREFORE LACKED CREDENCE. THE LD. A.R. ALSO SUBMITTED THAT THE ENTIRE PURCHASES HAVE BEEN EXTRAPOLATED ON THE BASIS OF A FEW INVOICES BESIDE HIGHLIGHTING THE FACT THAT THERE WAS NO INV OICE RELATING TO M/S. GLAXO INTERNATIONAL FZC. THE LD. A.R. ALSO SU BMITTED THAT THE COMMISSION CHARGED BY DUBAI ENTITIES FOR THE AC TUAL SERVICES RENDERED WAS GENUINE AND THEREFORE ITS DISALLOWANCE IS UNJUSTIFIED AND WITHOUT ANY BASIS. FINALLY, THE LD A.R. PRAYED THAT THE ADDITION AS MADE BY THE AO ON ACCOUNT OF O VER INVOICING AND THE ALLEGATION OF BOGUS COMMISSION WERE WITHOU T ANY BASIS AND RIGHTLY DELETED BY THE LD CIT(A).THEREFORE THE ORDER OF LD CIT(A) DESERVED TO BE UPHELD. 8. WE HAVE HEARD THE RIVAL SUBMISSIONS OF BOTH THE PARTIES AND PERUSED THE MATERIAL ON RECORD INCLUDING THE IM PUGNED APPELLATE ORDER. THE UNDISPUTED FACTS ARE THAT THE ASSESSEE IS ENGAGED IN THE BUSINESS OF IMPORT OF COAL AND SALES THEREOF IN THE INDIAN MARKET BESIDES DEALING IN PETROLEUM PROD UCTS. WE NOTE THAT THE AO HAS MADE THE ADDITION ON ACCOUNT O F OVER ITA NOS.3888 & 3889/M/2019 & ORS M/S. GANDHAR OIL REFINERY (I) LTD. 20 INVOICING OF COAL IMPORTS FROM TWO DUBAI BASED ENTI TIES NAMELY M/S. GLOBAL PETROCHEM FZC AND M/S. GLAXO INTERNATIO NAL FZC. THESE TWO ENTITIES USED TO SUPPLY COAL WHICH WAS AR RANGED FROM SINGAPORE SUPPLIER. WE NOTE THAT DURING THE COURSE OF STATEMENTS RECORDED BY THE SEARCH TEAM U/S 132(4) O F THE ACT OF SHRI KUNAL PAREKH (VICE PRESIDENT, IMPORTS) AND OTH ER INDIVIDUALS THAT THERE WAS NO CLEAR CHAT AS TO OVE R INVOICING OF IMPORTS BUT CERTAINLY THERE WAS A CHAT AS TO THE CH ANGE OF SPECIFICATION OF COAL TO BE IMPORTED. UNDISPUTEDLY , SHRI KUNAL PAREKH (VICE PRESIDENT, IMPORTS) WHO IS ALSO A DIRE CTOR ON THE ASSESSEE OFFERED TO SURRENDER AN INCOME OF RS.11,88 ,27,650/- WHEN CONFRONTED WITH THE INVOICES STATED TO BE OVER INVOICED AND ALSO EXPRESSED HIS COMPLETE LACK OF KNOWLEDGE THAT THESE IMPORTS WERE OVER PRICED BY DUBAI ENTITY AND OFFERE D THAT SAME WOULD BE OFFERED TO TAX AS AND WHEN RECOVERED FROM DUBAI ENTITIES. WE FURTHER NOTE THAT THE PRICES OF COAL SUPPLIED BY THE DUBAI ENTITIES WITH THE ASSESSEE ARE COMPARABLE WIT H THE OTHER IMPORTS MADE BY THE ASSESSEE FROM VARIOUS OTHER ENT ITIES AND A FINDINGS OF FACTS TO THIS EFFECT HAVE BEEN RECORDED BY LD. CIT(A) IN PARA 20.4.7. THE LD. CIT(A) ALSO NOTED THAT THE AS SESSEE HAS OFFERED REASONABLE PROFIT DURING THE YEAR. THE LD. CIT(A) ALSO REFERRED TO THE PRICES OF COAL SUPPLIED BY DUBAI EN TITIES TO BE COMPARABLE WITH INTERNATIONAL PRICES AS PUBLISHED B Y ARGUS AN INTERNATIONAL ORGANIZATION IN PARA 20.4.8. BESIDES , WE NOTE THAT MOST OF THE PURCHASES MADE FROM UAE ENTITIES HAVE B EEN SUPPLIED TO GOVERNMENT ORGANIZATIONS SUCH AS M/S. BHARAT OMAN REFINERY LTD. THROUGH A COMPETITIVE BIDDING. THE ASSESSEE WOULD NOT HAVE BEEN GRANTED THE CONTRACT O N THE PRICES OF COAL WHICH WERE OVER INVOICED. THE LD. CIT(A) A LSO NOTED THAT ITA NOS.3888 & 3889/M/2019 & ORS M/S. GANDHAR OIL REFINERY (I) LTD. 21 IN THE EXCHANGE OF INFORMATION FROM UAE IT WAS REVE ALED THAT THE DUBAI BASED ENTITIES HAVE OFFERED A VERY MEAGER INC OME OF 6% TO 7%. THE LD. CIT(A) ALSO RECORDED A FINDING THAT T HE AO HAS EXTRAPOLATED THE OVER INVOICING ON THE ENTIRE PURCH ASES ON THE PRESUMPTION AND SURMISES WHICH IS INCORRECT AND CAN NOT BE ALLOWED BY GIVING A FINDING TO THIS EFFECT IN PARA 20.4.11. WE ALSO NOTE THAT THE OBSERVATIONS OF THE AO THAT STAT IONERY AND LEDGER ACCOUNTS OF THE DUBAI BASED ENTITIES WERE FO UND WITH THE ASSESSEES EMPLOYEES WHICH WERE DULY REPLIED AND AL SO NOTED BY LD. CIT(A) WHILE DELETING THE ADDITION THAT SAME WE RE FOR THE PURPOSE OF RECONCILING THE ACCOUNTS WITH THE OVERSE AS ENTITIES. THE LD. CIT(A) ALSO NOTED THAT THE DOCUMENTS FOUND WITH THE ASSESSEE WERE PERTAINING TO F.Y. 2011-12 AND NOT F OR THE YEAR UNDER CONSIDERATION. AS REGARDS THE STATIONERY AND STAMPS FOUND DURING THE COURSE OF SEARCH THE LD. CIT(A) GA VE A FINDING THAT THE SAID MATERIAL BELONGED TO MR. MIHIR PANCHA L WHO RUNS M/S. D SONS TRADERS DMCC IN DUBAI WHO HAD RECENTLY VISITED INDIA AND WAS NOT SUPPLIER OF ANY COAL TO THE ASSES SEE. WE ALSO NOTE THAT THE LD. CIT(A) DISCUSSED AND NOTED THAT ASSESSEE HAS MADE EFFORT TO RECOVER THE AMOUNT FROM DUBAI ENTITI ES BUT FOR THE WANT OF EVIDENCES NO RECOVERY COULD BE MADE. S IMILARLY, A FINDING IS GIVEN THAT NO CASH OR NO OTHER EVIDENCES OF HAVING RECEIVED THE MARGIN FROM DUBAI ENTITIES BACK IN IND IA WERE FOUND. CONSIDERING ALL THESE EVIDENCES AND FACTS O N RECORD, WE DO NOT FIND ANY INFIRMITY IN THE ORDER OF LD. CIT(A ) AND ACCORDINGLY THE GROUND NOS.1 TO 3 OF THE REVENUES APPEAL ARE DISMISSED BY UPHOLDING THE ORDER OF LD. CIT(A). 9. THE ISSUE RAISED IN GROUND NO.4 TO 6 IS AGAINST THE ORDER OF LD. CIT(A) WHEREBY THE LD. CIT(A) HAS ALLOWED THE A PPEAL OF THE ITA NOS.3888 & 3889/M/2019 & ORS M/S. GANDHAR OIL REFINERY (I) LTD. 22 ASSESSEE BY DELETING THE ADDITION PERTAINING TO OVE R INVOICING OF PURCHASE OF RS.4,63,19,046/- FROM P T ALMOUDI FOR S UPPLY OF INDONESIAN COAL BY IGNORING THE STATEMENT RECORDED UNDER SECTION 132 OF THE ACT OF MR. KUNAL PAREKH, DIRECTO R OF THE ASSESSEE COMPANY. 10. THE FACTS IN BRIEF ARE THAT DURING THE COURSE O F SEARCH ACTION, THE SEARCH TEAM FOUND AN EMAIL SENT BY MRS. RIDDHI PUNIL SHAH DATED 15.01.2013 IN HER EMAIL ID TO ONE MR. SAMSU HUSAIN WITH COPY MARKED TO MR. KUNAL PAREKH WITH AN ATTACHMENT WHICH WAS AN INVOICE FOR VESSEL MV STX CL OVER FOR 77556 MT RAISED AT US$ 57 WHEREIN THE TOTAL COLUMN OF THE INVOICE WAS CHANGED IN HANDWRITING. ACCORDINGLY, M RS. RIDDHI PUNIL SHAH WAS SHOWN AN AGREEMENT FOR SALE AND PURC HASE ENTERED INTO CO-SELLER PT ALMOUDI NATURAL RESOURCES TRADMIN AND THE CO-SELLER SAEED PTE. LTD. AND THE BUYER PT INFINITE MINING & ENERGY AND THE CO-BUYER THE ASSESSEE M/S. GANDHAR OIL REFINERY INDIA LTD. DATED 10.12.2012 WITH REGAR D TO THE VESSEL MV STX CLOVER. AS PER THE CONTRACT THE PRICE AGREED UPON WAS US $ 31 FOB + FREIGHT CHARGES AT ACTUAL PMT. SO THE SEARCH TEAM ASKED MRS. RIDDHI PUNIL SHAH THE REASON FOR CHANGING THE INVOICE WHEN THE AGREED PRICE WAS US $ 31, HOWEVER, SHE FAILED TO EXPLAIN WHY US $ 31 HAS BEEN CHANGED TO US $ 57 AND FURTHER SAID THAT THERE WAS DIFFERENCE IN THE RATE OF CONTRACT AND SHE CARRIED OUT THE CHANGES AT THE DI RECTION OF EITHER MR. KUNAL PAREKH OR MR. SOURABH PAREKH AND H AD NOTHING TO DO WITH THE ISSUING OF OVER INVOICING. THIS WAS REPLIED BY MRS. RIDDHI PUNIL SHAH BY WAY OF ANSWER TO QUEST ION NO.43 TO 52 WHICH IS REPRODUCED BY THE AO AT PAGE NO.19 & 20. THE SEARCH TEAM WHILE RECORDING THE STATEMENT OF MR. KU NAL PAREKH ITA NOS.3888 & 3889/M/2019 & ORS M/S. GANDHAR OIL REFINERY (I) LTD. 23 ON 14.11.2014 ASKED HIM ABOUT THE CHANGES IN THE IN VOICE MADE BY MRS. RIDDHI PUNIL SHAH TO US$ 57 AS AGAINST THE AGREED PRICE OF US$ 31 PER METRIC TON AND EXPLAINED THE DIFFERE NCE. HOWEVER, MR. KUNAL PAREKH COULD NOT JUSTIFY THE CH ANGE IN THE INVOICE VALUE AND ACCORDINGLY HE OFFERED THE DIFFER ENCE OF US$ 8,44,467.56 EQUIVALENT TO RS.4,63,19,046/- IN TERMS OF INDIAN CURRENCY AT THE EXCHANGE RATE OF RS. 54.85 PER US$ AND OFFERED THE SAME AS ADDITIONAL INCOME. HOWEVER, IN THE RET URN FILED THE ASSESSEE DID NOT OFFER THE SAME FOR TAXATION AND CO NSEQUENTLY AO ISSUED SHOW CAUSE NOTICE TO THE ASSESSEE CALLING UPON AS TO WHY THE SAME SHOULD NOT BE ADDED TO THE INCOME OF T HE ASSESSEE ON ACCOUNT OF MODIFICATION OF INVOICE PRICE FROM 31 US$ + FOB FREIGHT CHARGES AS AGREED BY AGREEMENT DATED 10.12. 2012 TO US$ 57 INCLUSIVE OF RATE. FINALLY, THE AO MADE THE ADD ITION TO THE INCOME OF THE ASSESSEE BY REJECTING THE REPLY OF TH E ASSESSEE THAT MR. KUNAL PAREKH, DIRECTOR OF THE ASSESSEE COMPANY DURING THE COURSE OF SEARCH PROCEEDINGS HAS FORGOTTEN AS TO WH Y THE CORRECTION IN THE INVOICES WERE CARRIED OUT AND WRO NGLY OFFERED THE SAME AS ADDITIONAL INCOME. HOWEVER, AS A MATTE R OF FACT, THE INVOICE IS REQUIRED TO BE CORRECTED DUE TO CHANGE OF QUALITY OF MATERIAL AS PER ADDENDUM MADE WITH THE SUPPLIER PT ALMOUDI NATURAL RESOURCES TRADMIN. 11. IN THE APPELLATE PROCEEDINGS, THE LD. CIT(A) AL LOWED THE APPEAL OF THE ASSESSEE BY OBSERVING AND HOLDING AS UNDER: 20.4.18. IN THE ASSESSMENT PROCEEDINGS THE APPELLA NT DID EXPLAIN THAT THE APPELLANT HAD ENTERED INTO CONTRACT WITH M/S. PT AL MOUDI NATURAL RESOURCES TRADMIN FOR SUPPLY OF INDONESIAN COAL HAVING THE SP ECIFICATION OF GCV 5100-5200 KCAL/KG (ADB). COPY OF THE AGREEMENT WAS FILED. IT WAS STATED THAT SUBSEQUENTLY IT WAS DECIDED THAT THE SP ECIFICATION OF THE COAL WOULD BE CHANGED TO GCV 5600 KCAL/KG (ADB) IN LIGHT OF THE USER REQUIREMENT. THIS CHANGE OF SPECIFICATION WAS BROUGHT ABOUT BY THE AD DENDUM AGREEMENT ENTERED INTO BETWEEN THE PARTIES DATED 18-12-2012. THIS AGR EEMENT WAS ALSO FILED. AS PER ITA NOS.3888 & 3889/M/2019 & ORS M/S. GANDHAR OIL REFINERY (I) LTD. 24 THE ADDENDUM, THE RATE OF COAL WAS CHANGED TO $ 57 PER TON ON CFR BASIS ($ 42.40 PLUS $14.60). THE APPELLANT SUBMITTED THE SUPPORTIN G DOCUMENT OF THE SAID PURCHASE WHICH INCLUDES COPY OF INVOICE RAISED BY S UPPLIER, COPY OF LOAD PORT TEST REPORT, COPY OF CERTIFICATE OF WEIGHT, COPY OF CERT IFICATE OF ORIGIN, COPY OF TEST REPORT FOR DISCHARGE PORT, COPY OF BILL OF LADING TO SUBST ANTIATE THE CHANGED SPECIFICATION OF THE COAL AT THE TIME OF LOADING. THE APPELLANT ALSO SUBMITTED THE DETAILS OF SUBSEQUENT SALE OF GOODS WHICH SHOWS THAT THE APPEL LANT HAD SOLD THE COAL IN LOCAL MARKET WITH A GOOD PROFIT MARGIN. FURTHER, THE APPE LLANT ALSO SUBMITTED THE COMPARISON OF THE FINAL RATE CHARGED BY M/S.PT ALMO UDI NATURAL RESOURCES TRADMIN WITH THE INTERNATIONAL COAL PRICES AS REFLECTED IN THE FORUM 'ARGUS'. IT WAS SUBMITTED THAT THE PRICE OF $ 57 PER TONNE CHARGED BY M/S. PT ALMOUDI NATURAL RESOURCES TRADMIN IS LOWER THAN THE INTERNATIONAL P RICE. THE ASSESSING OFFICER HAS TREATED THESE EXPLANATIONS AND DOCUMENTS AS AN AFTE RTHOUGHT. 20.4.19. I FIND THAT THE EARLIER AGREEMENT ENTERED INTO BY THE APPELLANT WITH M/S. PT ALMOUDI NATURAL RESOURCES TRADMIN, JAKARTA, INDONES IA SELLER AND THE APPELLANT, THE BUYER DATED 10.12.2012 WAS FOR STEAM COAL OF INDONE SIAN ORIGIN. THE SPECIFICATION OF COAL WAS GROSS CALORIFIC VALUE 5100-5200 KCAL / KG ON AIR DRIED BASIS. THE FOB PRICE WAS $31 PER MT. THERE IS AN ADDENDUM OF NOL DATED 1 8.12.2012. IN THIS ADDENDUM SPECIFICATION OF COAL WAS CHANGED TO GROSS CALORIFIC VALUE 5600 KCAL/KG. THE FOB RATE WAS FIXED @ $42.40/MT. FREIGHT WAS $14.60 PER MT. THE INVOICE DATED 31.12.2012 IS FOR 77556 MT @ CFR RATE OF $57 PER MT. BILL OF LADING IS DATED 6.1.2013. CERTIFICATE OF SAMPLING OF INSPECTION AGE NCY DATED 9.1.2013 STATES THAT THE GROSS CALORIFIC VALUE WAS 5682 KCAL/KG ON AIR D RIED BASIS. THUS THE DIFFERENCE IN FOB PRICE IS $11.40 PER MT. THERE APPEARS TO BE A MINOR ERROR IN COMPUTATION OF OVER INVOICING COMPUTED BY THE ASSESSING OFFICER IF THIS FIGURE IS CONSIDERED. DETAILS FOR OTHER AGREEMENTS WITH THIS PARTY WAS CALLED. WH EN ASKED FOR, THE APPELLANT HAS ALSO FURNISHED OTHER SIMILAR INSTANCES WHERE SIMILA R AGREEMENT WITH THIS PARTY WAS ENTERED AND LATER REVISED THROUGH ADDENDUM ENTER ED WITH IT. AN AGREEMENT DATED 12.10.2012 WAS FOR 165000 MT OF COAL WITH GCV AIR DRIED BASIS OF 5100-5200 KCAL / KG FOR FOB PRICE $30.75 /MT. AN ADDENDUM WAS ENTERED DATED 28.10.2012 FOR RATE BEING REVISED TO CFR $41.65 PER MT. SIMILA RLY ANOTHER AGREEMENT DATED 20.7.2012 WAS FOR 120000 MT OF COAL WITH GCV AIR DR IED BASIS OF 5100-5200 KCAL / KG FOR FOB PRICE $32.75 /MT. AN ADDENDUM WAS E NTERED DATED 23.7.2012 FOR SOME CLAUSES OF THE CONTRACT BEING MODIFIED. THIS D OES SUGGEST THAT ADDENDUMS WAS A NORMAL PRACTICE IN SUCH CONTRACTS. THUS THE A PPELLANT HAS GIVEN AN EXPLANATION FOR THE REVISION WHICH IS BASED ON CHAN GE IN SPECIFICATION OF COAL REQUIRED AND WHICH WAS SUPPLIED. IT CAN BE BELIEVED THAT A SPECIFIC INSTANCE OF PURCHASE MAY NOT HAVE BEEN RECOLLECTED BY SHRI KUNA L PAREKH WHEN HE WAS ASKED REGARDING THIS IN THE COURSE OF SEARCH, MORE SO WHE N THE MATTER WAS TWO YEAR OLD. HOWEVER, AT NO STAGE WAS ANY ADMISSION MADE THAT TH ERE WAS ANY OVER INVOICING/MANIPULATION. WHEN EVIDENCE HAS BEEN SUBM ITTED IN THE ASSESSMENT PROCEEDINGS, THE SAME CANNOT BE SUMMARILY REJECTED WITHOUT MAKING ANY INQUIRY. IT IS NOTED FROM WEB SEARCH THAT MOHAMMED HUSSEIN ALI AL-AMOUDI ISA SAUDI BILLIONAIRE BUSINESSMAN. IN 2016, HIS NET WORTH WAS ESTIMATED BY FORBES AT APPROXIMATELY $10.9 BILLION AND A RELATIVE FALL IN NET VALUE WAS LINKED TO THE GLOBAL FALL IN OIL AND GOLD PRICES AT THE TIME OF ESTIMATI ON. HE WAS ALSO LISTED AS ETHIOPIAS RICHEST MAN, THE SECOND RICHEST SAUDI ARABIAN CITIZ EN IN THE WORLD AND THE SECOND RICHEST BLACK PERSON IN THE WORLD. AL AMOUDI MADE H IS FORTUNE IN CONSTRUCTION AND ITA NOS.3888 & 3889/M/2019 & ORS M/S. GANDHAR OIL REFINERY (I) LTD. 25 REAL ESTATE BEFORE BRANCHING OUT TO BUY OIL REFINER IES IN SWEDEN AND MOROCCO. THUS THE ENTITY M/S. PT ALMOUDI NATURAL RESOURCES TRADMI N, JAKARTA, INDONESIA, OWNED BY MOHAMMED HUSSEIN ALI AL-AMOUDI IS A WELL KNOWN B USINESS ENTITY. THE ASSESSING OFFICER HAS NOT MADE ANY VERIFICATION TO SHOW THAT THE ADDENDUM WAS MANIPULATED BEFORE IMPLYING SO. THE REVISION IN PRICE IS JUSTIF IED AND SUBSTANTIATED WITH EVIDENCE BY THE APPELLANT. 20.4.20. IN LIGHT OF THE FACTS AND EVIDENCES ON RE CORD, I FIND THAT THE APPELLANT HAS BEEN ABLE TO SUBSTANTIATE THE CORRECTION IN INVOICE . THE ADDITION MADE OF RS.4,63,19,046/- IS THEREFORE DELETED. GROUN D OF APPEAL NO 3 IN ALLOWED. 12. AFTER HEARING BOTH THE PARTIES AND PERUSING THE MATERIAL ON RECORD, WE OBSERVE THAT THE AO MADE THE ADDITION ON THE BASIS OF STATEMENT OF THE DIRECTOR OF THE COMPANY MR. KUNAL PAREKH OF RS.4,63,19,046/- WHEREIN MR. KUNAL PAREKH STATED TH AT HE HAS FORGOTTEN AS TO WHY THE INVOICE FOR VESSEL MV STX C LOVER FOR 77556 MT WAS RAISED TO US $ 57 FROM US $ 31 FOB + F RIGHT CHARGES AT ACTUAL PMT IN TERMS OF AGREEMENT FOR SAL E AND PURCHASE DATED 10.12.2012. THIS WAS REVEALED BY AN EMAIL SENT BY AN EMPLOYEE OF THE ASSESSEE MRS. RIDDHI PUNIL SH AH TO MR. SAMSU HUSAIN WITH COPY MARKED TO MR. KUNAL PAREKH O N 15.01.2013. WE NOTE THAT LD. CIT(A) ALLOWED THE AP PEAL OF THE ASSESSEE ON THIS ISSUE ON THE GROUND THAT MR. KUNAL PAREKH NEVER ADMITTED TO OVER INVOICING AND EARNING OF UNA CCOUNTED INCOME AND IN THE STATEMENT RECORDED UNDER SECTION 132(4) THE INCOME WAS OFFERED AS ASSESSEE COULD NOT RECOLLECT THE REASON FOR LAST MINUTE RATE CHANGES MADE IN THE INVOICE. THE LD. CIT(A) WHILE ALLOWING THE APPEAL OF THE ASSESSEE ALSO NOTE D THAT THE ASSESSEE HAD ENTERED INTO CONTRACT WITH PT ALMOUDI NATURAL RESOURCES TRADMIN FOR SUPPLY OF INDONESIAN COAL HAV ING SPECIFICATION OF GCV 5100-5200 KCAL/KG VIDE AGREEME NT DATED 10.12.2012 AND SUBSEQUENTLY THE SPECIFICATION OF TH E COAL WAS CHANGED TO CGCV 5600 KCAL/KG, WHICH IS OF HIGHER QUA LITY AND DUE TO THE USER REQUIREMENT, BY AN ADDENDUM DATED ITA NOS.3888 & 3889/M/2019 & ORS M/S. GANDHAR OIL REFINERY (I) LTD. 26 18.12.2012. ACCORDINGLY, RATE IN THE INVOICE WAS C HANGED DUE TO CHANGE IN QUALITY OF COAL. WE ALSO FIND THAT SIMIL AR ADDENDUM WAS MADE FOR OTHER PURCHASES FROM PT ALMOUDI NATURA L RESOURCES TRADMIN WHICH HAVE NOT BEEN DOUBTED BY TH E AO. LD. CIT(A) HAS RECORDED HIS FINDING TO THIS EFFECT IN PARA 20.4.19 IN THE APPELLATE ORDER. BESIDES THE LD. CIT(A) ALSO RECORDED A FINDING OF FACT THAT THE REVISED RATE OF INVOICE WA S COMPARABLE WITH THE INTERNATIONAL RATE PUBLISHED BY ARGUS. IN VIEW OF THESE FACTS, WE DO NOT FIND ANY INFIRMITY IN THE ORDER OF LD. CIT(A) AND ACCORDINGLY SAME IS UPHELD BY DISMISSING THE GROUND NO.4 TO 6 OF THE REVENUES APPEAL. ITA NO.3889/M/2019 A.Y. 2014-15, ITA NOS.3890 & 3892/M/2019 A.YS 2015-16 & 2014-15 13. THE ISSUE INVOLVED IN THE PRESENT APPEAL IS IDE NTICAL TO THE ONES AS DECIDED BY US IN ITA NO.3888/M/2019 FOR A. Y. 2013- 14. THEREFORE, OUR FINDING/DECISION IN ITA NO.3888 /M/2019 FOR A.Y. 2013-14 WOULD, MUTATIS MUTANDIS, APPLY TO THES E APPEALS AS WELL. ACCORDINGLY, THE APPEALS OF THE REVENUE AR E DISMISSED. 14. IN THE RESULT, ALL THE APPEALS OF THE REVENUE A RE DISMISSED. ORDER PRONOUNCED IN THE OPEN COURT ON 17.09.2021. SD/- SD/- ( AMARJIT SINGH) (RAJESH KUMAR) JUDICIAL MEMBER ACCOUNTANT MEMBER MUMBAI, DATED: 17.09.2021. * KISHORE, SR. P.S. COPY TO: THE APPELLANT THE RESPONDENT THE CIT, CONCERNED, MUMBAI THE CIT (A) CONCERNED, MUMBAI THE DR CONCERNED BENCH //TRUE COPY// ITA NOS.3888 & 3889/M/2019 & ORS M/S. GANDHAR OIL REFINERY (I) LTD. 27 [ BY ORDER DY/ASS TT. REGISTRAR, ITAT, MUMBAI.