M/s. Pankaj Oil Mill, JAMNAGAR V. The Dy. Commr. of Income Tax, Cen. Cir.2, RAJKOT-GUJARAT

ITA 460/RJT/2015

• Counselvise Citation: [2015] 134 COUNSELVISE.COM (IT) 0470 (ITAT-RAJKOT)
• Duration Of Justice: 2 month(s) 16 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 23-12-2015
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: DB
• Assessment Year: 2006-2007
• Appeal Filed On: 07-10-2015
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Assessee Lawyers: HARISH RANPURA CA
• Keywords: Unexplained cash credit; Capital asset; Depreciation; Search and seizure; Cost of acquisition; Fair market value; Wrong claim; Unabsorbed depreciation
• Section: 40A(3); 143(3); 153A; 68; 132

Judgement Text

, , IN THE INCOME TAX APPELLATE TRIBUNAL RAJKOT BENCH, RAJKOT [ CONDUCTED THROUGH E-COURT AT AHMEDABAD ] , , ! BEFORE SHRI PRAMOD KUMAR, ACCOUNTANT MEMBER AND SHRI KUL BHARAT, JUDICIAL MEMBER ./ I.T.A. NOS.460, 461 AND 462/RJT/2015 ( / ASST.YEARS : 2006-07, 2007-08 & 2008-09 RESPECTIVELY ) 1-3.M/S.PANKAJ OIL MILL 1 ST FLOOR, ASHA CHAMBERS GRAIN MARKET, JAMNAGAR / VS. 1-3.THE DY.CIT CENTRAL CIRCLE-2 RAJKOT & ./ ./ PAN/GIR NO. AAEFP 1280 B ( &( / APPELLANT ) .. ( )&( / RESPONDENT ) &( * / APPELLANT BY : SHRI HARISH RANPURA, CA (AR) )&( + * / RESPONDENT BY : SHRI YOGESH PANDEY, CIT-DR ,-. + / DATE OF HEARING 09/12/2015 /0 + / DATE OF PRONOUNCEMENT 23/12/2015 / O R D E R PER BENCH: THESE THREE APPEALS BY THE ASSESSEE ARE DIRECTED AG AINST THE SEPARATE ORDERS OF THE LD.COMMISSIONER OF INCOME TA X(APPEALS)-11, AHMEDABAD [CIT(A) IN SHORT] DATED 02/07/2015, 02/07/2015 & 03/07/2015 PERTAINING TO ASSESSMENT YEARS (AYS) 200 6-07, 2007-08 & 2008-09 RESPECTIVELY. SINCE COMMON ISSUES AND FAC TS ARE INVOLVED IN ALL ITA NOS. 460,461 & 462/RJT/2 015 M/S.PANKAJ OIL MILL VS. DCIT AYS 2006-07, 2007-08 & 2008-09 RESPECTIVELY - 2 - THESE APPEALS, THESE WERE HEARD TOGETHER AND ARE BE ING DISPOSED OF BY WAY OF THIS CONSOLIDATED ORDER FOR THE SAKE OF CONV ENIENCE. 2. THE ASSESSEE HAS RAISED THE FOLLOWING COMMON AD DITIONAL GROUNDS OF APPEAL(S):- THE LD.AO/CIT(A) ERRED IN MAKING/CONFIRMING ADDITI ON IN THE COMPLETED ASSESSMENT FOR THE YEAR UNDER CONSIDERATI ON IN ABSENCE OF ANY INCRIMINATING MATERIALS. THE ADDITI ON MADE AND CONFIRMED ARE THEREFORE WITHOUT JURISDICTION, VOID AB IGNITION AND DESERVES TO BE DELETED AND ASSESSMENT BE QUASHED. 2.1. THE LD.COUNSEL FOR THE ASSESSEE SUBMITTED THAT THE ADDITIONAL GROUND MAY PLEASE BE DECIDED FIRST AS IT GOES TO VE RY JURISDICTION OF THE ASSESSING OFFICER, THEREFORE MAY BE ADMITTED FOR J URISDICTION. 3. FIRST, WE TAKE UP THE ASSESSEES APPEAL IN ITA N O.460/RJT/2015 FOR AY 2006-07 AS A LEAD CASE. AT THE OUTSET, TH E LD.COUNSEL FOR THE ASSESSEE SUBMITTED THAT WITHOUT GOING INTO THE MERI T OF THE CASE, THE ASSESSMENT ORDER DESERVES TO BE QUASHED. THE LD.CO UNSEL FOR THE ASSESSEE FILED WRITTEN SUBMISSIONS FOR AYS 2006-07, 2007-08 , & 2008-09. EXTRACTED FROM AY 2006-07:- 1.0 FACTS IN BRIEF; (A) THE APPELLANT, A PARTNERSHIP FIRM IS ASSESSED T O TAX BY THE DEPUTY COMMISSIONER OF INCOME -TAX, CENTRAL CIRCLE -2, RAJKOT (HEREINAF TER REFERRED TO AS THE 'AO'). IT IS ENGAGED IN THE BUSINESS OF MANUFACTURING OF EDIBLE OILS. REGULAR BOOKS OF ACCOUNT ARE MAINTAINED, WHICH ARE DULY AUDITED AS PER THE PROVI SION OF SECTION 44AB OF THE INCOME-TAX ACT, 1961 (HEREINAFTER REFERRED TO AS TH E ACT'). ITA NOS. 460,461 & 462/RJT/2 015 M/S.PANKAJ OIL MILL VS. DCIT AYS 2006-07, 2007-08 & 2008-09 RESPECTIVELY - 3 - (B) SEARCH AND SEIZURE ACTION U/S. 132 OF THE INCOM E TAX ACT, 1961 (HEREINAFTER REFERRED AS TO THE 'ACT') WAS CARRIED OUT AT THE PR EMISES OF THE APPELLANT ON 25.08.2011. THE AO ISSUED NOTICE U/S. 153A OF THE A CT DATED 12.03.2013 REQUIRING THE APPELLANT TO FILE RETURN OF INCOME. RETURN OF INCOM E U/S. 153A OF THE ACT WAS FILED-ON 12.08.2013 DECLARING TOTAL INCOME AT NIL AFTER ADJU STMENT OF UNABSORBED DEPRECIATION TO THE EXTENT OF RS.47,373/- AND CLAIM ING CARRY FORWARD OF UNABSORBED DEPRECIATION OF RS. 5,49,040/-. (C) THE AO, VIDE ORDER U/S. 153A R.W.S. 143(3) OF T HE ACT DATED 24.02.2014 ASSESSED THE TOTAL INCOME AT NIL AFTER ADJUSTMENT OF UNABSOR BED DEPRECIATION TO THE EXTENT OF RS. 4,13,485/- AND ALLOWING CARRY FORWARD OF UNABSO RBED DEPRECIATION OF RS. 73,493/-. THE AO HAD MADE FOLLOWING VARIATIONS TO THE RETURNED INCOME AND UNABSORBED DEPRECIATION. (I) AMOUNT OF BROUGHT FORWARD UNABSORBED DEPREC IATION OF A.Y. 2005-06 AT RS. 5,96,413/- HAS BEEN REDUCED TO RS.4,86,978/- ON ACCOUNT OF DISALLOWANCE OF DEPRECIATION ON LAND OF RS.1,09,435 CLAIMED IN A.Y. 2005-06. (II) DISALLOWED DEPRECIATION OF RS.1,07,217/- O N ACCOUNT OF WRONG CLAIM OF DEPRECIATION ON LAND. (III) ADDED RS.2,58,895/- ON ACCOUNT OF SHORT TE RM CAPITAL GAIN ON SALE OF LAND. 2.0 GROUND OF APPEAL RELATING TO THE ADDITION MADE OF RS.2,58,895/- ON ACCOUNT OF SHORT-TERM CAPITAL GAIN ON SALE OF LAND (A) BRIEF FACTS OF THE CASE IS THAT ONE OF THE PART NERS OF THE APPELLANT FIRM NAMELY SHRI PANKAJBHAI VALJIBHAI PATEL HAD BEEN ALLOTTED THE IN DUSTRIAL PLOT OF LAND NO. 2625 ADMEASURING 3936 SQUARE METERS AT GUJARAT INDUSTRIA L DEVELOPMENT CORPORATION ('G.I.D.C.), LODHIKA, DIST. RAJKOT IN THE FINANCIAL YEAR 1997-98. SINCE, THE PLOT WAS ALLOTTED ON LONG-LEASE BASIS, THERE WAS NO ANY FORM AL CONVEYANCE DEED EXECUTED BETWEEN THE G.I.D.C. AND SHRI PANKAJBHAI PATEL. (B) SUBSEQUENTLY, IN THE FINANCIAL YEAR 1998-99, TH E SAID PLOT WAS BROUGHT INTO THE APPELLANT FIRM AS THE CAPITAL CONTRIBUTION OF SHRI PANKAJBHAI PATEL AT THE VALUE OF RS.11,81,604/-. SINCE THEN, THE COST OF ACQUISITION OF THE INDUSTRIAL PLOT IS REFLECTED IN THE BOOKS OF ACCOUNT OF THE APPELLANT FIRM AT RS. 1 1,81 ,604/-. (C) DURING THE ASSESSMENT YEAR UNDER CONSIDERATION, THE APPELLANT FIRM HAS TRANSFERRED THE LEASE-RIGHTS IN SAID INDUSTRIAL PLO T IN FAVOR OF SHRI PRAGNESH S. ITA NOS. 460,461 & 462/RJT/2 015 M/S.PANKAJ OIL MILL VS. DCIT AYS 2006-07, 2007-08 & 2008-09 RESPECTIVELY - 4 - RAIYANI FOR TOTAL SALE CONSIDERATION OF RS.13,31,00 0/-. AGAIN, THE TRANSFER OF LEASE- RIGHTS WAS CARRIED OUT BY EXECUTING SIMPLE ASSIGNME NT DEED IN FAVOR OF SHRI PRAGNESH S.RAYANI AND TRANSFER ORDER WAS ISSUED IN FAVOR OF SHRI PRAGNESH S RAIYANI BY G.I.D.C. ON 05.05.2005. DATE OF ACQUISITION OF PLOT BY SHRI PANKAJBHAI PATEL AND DATE OF TRANSFER MAY BE VERIFIED FROM THE TRANSFER ORDER ISSUED BY G.I.D.C. ATTACHED AT PAGE-5. (D) THOUGH THE PLOT OF LAND WAS TRANSFERRED IN THE ASSESSMENT YEAR UNDER CONSIDERATION, CORRESPONDING ENTRY IN THE BOOKS OF ACCOUNT WAS REMAINED TO BE ENTERED AND CONSEQUENTLY, CAPITAL GAIN/LOSS ON TRAN SFER OF LAND WAS NOT SHOWN IN THE RETURN OF INCOME FILED. HOWEVER, AS SOON AS THE APP ELLANT CAME TO KNOW, THE ENTRY IN THE BOOKS OF ACCOUNT WAS PASSED IN THE FINANCIAL YE AR 2010-11 AND CAPITAL GAIN OF RS.1,49,956/- WAS SHOWN IN RETURN OF INCOME FILED F OR ASSESSMENT YEAR 2011-12 U/S.50 OF THE ACT. (E) IN CONNECTION WITH THE ABOVE, IT IS SUBMITTED T HAT THE APPELLANT FIRM HAD INADVERTENTLY CLAIMED THE DEPRECIATION ON THE SAID PLOT OF LAND AND THEREFORE, CONSIDERING THE DEPRECIABLE ASSET, RELEVANT CAPITAL GAIN WAS TREATED AS SHORT TERM CAPITAL GAIN AS PER PROVISION OF SECTION 50 OF THE ACT. (F) DURING THE COURSE OF ASSESSMENT PROCEEDINGS, TH E AO CONTENDED THAT THE PLOT OF LAND WAS TRANSFERRED ON 05.05.2005 AND THEREFORE, T HE CAPITAL GAIN IS TAXABLE IN THE ASSESSMENT YEAR 2006-07 AS AGAINST ASSESSMENT YEAR 2011-12. THE AO, FURTHER BY CONSIDERING THE COST OF ACQUISITION BEING WRITTEN D OWN VALUE ('WDV') AS ON 01.04.2005 AT RS.10,72,105/- WORKED OUT THE CAPITAL GAIN AT RS. 2,58,895 (13,31,000 - 10,72,105) U/S. 50 OF THE ACT AND ADDED THE SAME UN DER THE HEAD OF SHORT TERM CAPITAL GAIN. (G) IN CONNECTION WITH ABOVE, AT THE OUTSET IT IS S UBMITTED THAT THE AO HAS GROSSLY LI ERRED IN CONSIDERING THE CAPITAL ASSET BEING PLOT OF LAND AS DEPRECIABLE ASSET AND THEREBY, WORKED OUT THE SHORT TERM CAPITAL GAIN U/S . 50 OF THE ACT INSTEAD OF LONG TERM CAPITAL GAIN. AS SUBMITTED ABOVE, THE INDUSTRI AL PLOT OF LAND WAS ORIGINALLY ACQUIRED BY SHRI PANKAJBHAI V. PATEL AND SUBSEQUENT LY, THE SAME WAS BROUGHT IN THE BOOKS OF ACCOUNT OF THE APPELLANT FIRM AS CAPITAL C ONTRIBUTION AT THE VALUE OF RS.11,81,604/-. SINCE THEN, THE COST OF ACQUISITION OF THE INDUSTRIAL PLOT IS REFLECTED IN THE BOOKS OF ACCOUNT OF THE APPELLANT FIRM UNDER TH E HEAD 'FIXED ASSETS' AT RS.11,81,604/. HOWEVER, IN THE FINANCIAL YEAR 2004- 05 TO 2006-07, THE APPELLANT HAD INADVERTENTLY CLAIMED THE DEPRECIATION ON SAID LAND , WHICH HAS ALREADY BEEN DISALLOWED BY THE AO IN THE RESPECTIVE ASSESSMENT O RDERS. IN THIS CONNECTION, YOUR HONOUR'S KIND ATTENTION IS INVITED TO PARA 3 OF THE ASSESSMENT ORDER, WHEREIN, THE AO ITA NOS. 460,461 & 462/RJT/2 015 M/S.PANKAJ OIL MILL VS. DCIT AYS 2006-07, 2007-08 & 2008-09 RESPECTIVELY - 5 - SPECIFICALLY HAS MENTIONED THAT IN THE ASSESSMENT Y EAR-2005-06 (F.Y.2004-05), THE APPELLANT'S CLAIM OF DEPRECIATION ON IMPUGNED LAND WAS DISALLOWED. FURTHER, IN PARA 3.1 OF THE ORDER, THE AO MENTIONED THAT THE APPELLA NT HAS VOLUNTARILY SURRENDERED THE CLAIM OF DEPRECIATION ON LAND FOR THE ASSESSMENT YE AR 2006-07 (F.Y. 2005-06) BY FILING REVISED COMPUTATION OF INCOME. SIMILARLY, IN THE ASSESSMENT YEAR 2007-08 (F.Y. 2006-07), THE APPELLANT SUO-MOTO SURRENDERED THE ER RONEOUS CLAIM OF DEPRECIATION. ALL THIS FACT PROVES THAT THE CAPITAL ASSET BEING P LOT OF LAND WAS NON-DEPRECIABLE ASSET AND THEREFORE, NORMAL PROVISIONS OF CAPITAL GAIN SH OULD HAVE BEEN APPLIED. (H) IN VIEW OF THE ABOVE, EVEN THOUGH COST OF AC QUISITION OF THE PLOT OF LAND IS TAKEN AT RS. 10,72,105/- (AS AGAINST ACTUAL RS.11,8 1,604/-), THERE WOULD BE LONG TERM CAPITAL LOSS, WHICH IS WORKED OUT AS UNDER: COST OF ACQUISITION TAKEN BY THE AO 10,72,105 INDEXED COST OF ACQUISITION (497 / 331) 16,09,777 FULL VALUE OF CONSIDERATION 13,31,000 LONG TERM CAPITAL LOSS 2,78,777 (I) IN VIEW OF THE FACTS NARRATED ABOVE, THERE IS NO CASE OF MAKING ANY ADDITION UNDER THE HEAD OF SHORT TERM CAPITAL GAIN U/S.50 OF THE A CT AND THEREFORE, THE SAME MAY KINDLY BE DELETED. 3.1. THE LD.CIT-DR ALSO FILED WRITTEN SYNOPSIS FOR AYS 2006-07, 2007- 08 & 2008-09, WHICH ARE IN THE FOLLOWING TERMS:- FOR AY 2006-07 - GROUNDS OF APPEAL AO/CIT(A) TREATED GAIN REALIZED ON SALE OF INDUSTRI AL LAND AS SHORT TERM GAIN IN PLACE OF LONG TERM AND THEREBY MAKING /CONFIRMING A DDITION OF RS. 2,58,895/-. THIS IS COMPLETED ASSESSMENT; THEREFORE IN VIEW OF DECISION OF CONTINENTAL WAREHOUSING CORP. LTD. [2015] 58 TAXMANN.COM 78, IN ABSENCE OF ANY INCRIMINATING DOCUMENT, NO ADDITION CAN BE MADE. FACTS OF THE CASE I. FACTS: ITA NOS. 460,461 & 462/RJT/2 015 M/S.PANKAJ OIL MILL VS. DCIT AYS 2006-07, 2007-08 & 2008-09 RESPECTIVELY - 6 - SHRI PANKAJ V. PATEL, PARTNERS WAS ALLOTTED IN DUSTRIAL PLOT OF LAND FROM GIDC IN FY 1997-98, WHICH WAS BROUGHT IN AS CAPITAL CONTRIB UTION IN APPELLANT FIRM AT RS. 11,81,604/- IN FY 1998-99. SINCE THEN THE VALUE IS REFLECTED .IN THE BOOKS UNDER THE HEAD 'FIXED ASSETS' AT RS. 11,81,604/- TILL FINANCIAL YEAR 2003-04. INADVERTENTLY FROM THE FY 2004-05 TO 2006-07, DEPRECIATION WAS CL AIMED ON LAND, HOWEVER, SUCH CLAIM WAS VOLUNTARY WITHDRAWN FOR ALL SUCH YEARS VO LUNTARILY AND AO ALSO HAS DISALLOWED THE SAME IN ASSESSMENT ORDER. DURING THE FY 2005-06, APPELLANT FIRM TRANSFERRED OWNERSHIP OF PLOT FOR RS. 13,31,000/-. CONSIDERING, THE COST INFLATION INDEX, THERE WAS LO NG TERM CAPITAL LOSS. THE FACT THAT TRANSFER OF THE PLOT IS MADE DU RING THE YEAR UNDER CONSIDERATION IS REVEALED LATER ON, IN PROCEEDINGS U/S 153A, THE APP ELLANT EXPLAINED THAT LOOKING TO THE COST INFLATION INDEX, THERE WOULD NOT BE ANY TA XABLE GAIN AND TAX IMPLICATION. II. OBSERVATION OF THE AO - (PARA 5.2 7 PAGE 5 OF THE ASST. ORDER): (I) GAIN ARISING FROM THE CAPITAL ASSET OF THE FIRM HAS TO BE TREATED AS SHORT TERM CAPITAL GAIN, (II) APPELLANT HAS CLAIMED DEPRECIATI ON ON THE SAID ASSET AND (III) IN ABSENCE OF SALE DEED, IT IS NOT KNOWN WHETHER SAID LAND CONTAINED ANY TEMPORARY SHED OR NOT. III. FINDING OF ID. CIT(A) - (PARA 5 7 PAGE 4) OF T HE APPELLATE ORDER) APPELLANT DID NOT DISCLOSED INCOME FROM SALE O F PLOT OF LAND, THE APPELLANT ALSO ADMITS THIS FACT THEREFORE ACTION OF THE AO IS BASE D ON FACTS ON RECORD. IV. SUBMISSION OF THE APPELLANT IT IS UNDISPUTED FACT THAT LAND IN TRANSFERRED DURING THE YEARS. GAIN REALIZED ON SALE OF LAND CAN NEVER BE TAXED U/S 50 OF THE ACT A S DEPRECIATION CLAIMED WAS WITHDRAWN. FURTHER TO DETERMINE THE FMV OF GIDC LAN D, IN ABSENCE OF SALE DEED, AO INQUIRED FROM DIRECTOR OF GIDC AND CONFIRMED SAL E PRICE. UNDER SUCH CIRCUMSTANCE ASSUMPTION AS TO TEMPORARY STRUCTURE I S TOTALLY UNJUSTIFIED. THEREFORE, THE AO BE DIRECTED TO ACCEPT THE LTCL AS CLAIMED. FOR AY 2007-08 GROUNDS OF APPEAL: THE LD. CIT(A) ERRED ON FACTS AS ALSO IN LAW IN RET AINING ADDITION OF RS.3,00,000/- MADE ON ACCOUNT ALLEGED UNEXPLAINED CASH CREDIT U/S . 68 OF THE ACT. ITA NOS. 460,461 & 462/RJT/2 015 M/S.PANKAJ OIL MILL VS. DCIT AYS 2006-07, 2007-08 & 2008-09 RESPECTIVELY - 7 - THIS IS COMPLETED ASSESSMENT; THEREFORE IN VIEW OF DECISION OF CONTINENTAL WAREHOUSING CORP. LTD. [2015] 58 TAXMANN.COM 78, IN ABSENCE OF ANY INCRIMINATING DOCUMENT, NO ADDITION CAN BE MADE. I FACTS THE APPELLANT BORROWED RS. 3,00,000/- FROM SHRI SHA NTILAL G. SAMANI THROUGH ACCOUNT PAYEE CHEQUE AND REPAID THROUGH CHEQUE WITH IN 3 MONTHS. IN ASSESSMENT, COPY OF ACCOUNT WITH CONFIRMATION WAS FILED. II. OBSERVATION OF THE AO - (PARA 3.1 / PAGE 3 OF THE ASST. ORDER): APPELLANT HAS NOT FURNISHED PA NUMBER, ASSESSME NT DETAILS THEREFORE GENUINENESS OF TRANSACTIONS AND IDENTITY IS NOT PROVED AND THER EBY TREATED IT AS UNEXPLAINED U/S 68 OF THE ACT. III. FINDING OF ID. CIT(A) - (PARA 5 / PAGE 3 OF TH E APPELLATE ORDER) IN THE APPEAL PROCEEDINGS APPELLANT DID NOT FUR NISH ANY CONFIRMATION OF THE CREDITOR TO REBUT THE FINDING OF THE AO. IV. SUBMISSION OF THE APPELLANT AS THE DETAILS WERE OLD ONE, PAN AND ASSESSMENT DETAILS OF SHRI SHANTILAL G.|SAMANI, COULD NOT BE FURNISHED BEFORE THE AO. HO WEVER, ON GETTING THE SAME, THOSE WERE FURNISHED BEFORE THE CIT(A) AS IS APPA RENT FROM PAPER BOOK SUBMITTED BEFORE THE CIT(A), HOWEVER, THE SAME WERE IGNORED AND ADDITION HAS BEE N CONFIRMED, WHICH IS TOTALLY UNJUSTIFIED. IN VIEW OF THE ABOVE AS THE DETAILS SUBMITTED B EFORE THE CIT(A) WERE NOT BEFORE THE AO, SUCH SUPPORTIVE ADDITION MAY KINDLY BE CONSIDER ED AND DELETE THE ADDITION AND OBLIGE. AYS 2007-08 &2008-09 THE AO/ CIT(A) ERRED IN CONFIRMING THE DISALLOWANCE U/S. 40A(3) ON THE ALLEGED GROUND THAT THE PAYMENTS TO SUPPLIERS WERE MADE IN EXCESS OF THE RS. 20,000/-. THIS IS COMPLETED ASSESSMENT; THEREFORE IN VIEW OF DECISION OF CONTINENTAL WAREHOUSING CORP. LTD. [2015] 58 TAXMANN.COM 78, IN ABSENCE OF ANY INCRIMINATING DOCUMENT, NO ADDITION CAN BE MADE. ITA NOS. 460,461 & 462/RJT/2 015 M/S.PANKAJ OIL MILL VS. DCIT AYS 2006-07, 2007-08 & 2008-09 RESPECTIVELY - 8 - I. FACTS THE APPELLANT HAD MADE CERTAIN CASH PAYMENTS I N EXCESS OF RS. 20,000/- FOR THE PURCHASE OF COTTON SEED CAKE. II. OBSERVATION OF THE AO PAYMENT IN CASH IN EXCESS OF RS. 20.000/- IS I N CONTRAVENTION TO PROVISION OF SECTION 40A(3) OF THE ACT AND THEREFORE, DISALLOWED THE SUM OF RS. 79.581/- IN A.Y. 2007-08 AND RS. 1,27,288/- IN A.Y. 2008-09. III. FINDING OF ID. CIT(A) IT IS EVIDENT THAT THE ASSESSEE HAS VIOLATED T HE PROVISIONS OF SECTION 40A(3) OF THE ACT. IV SUBMISSION OF THE APPELLANT THE APPELLANT HAD PRODUCED BEFORE THE AO, ITS A UDITED BOOKS OF ACCOUNT ALONG WITH PURCHASE BILLS / VOUCHERS IN RESPECT OF URD PU RCHASE OF COTTON SEED CAKE. THE AO ACCEPTED THE BOOK RESULTS AND THEREBY, ACCEPTED THE GENUINENESS OF PURCHASES. PAYMENT IN CASH IN EXCESS OF RS. 20,000/- WAS M ADE TO SMALL TRADERS, WHO INSISTS IMMEDIATE PAYMENT AND DO NOT WANT TO INDULGE IN BAN KING FORMALITIES. IN A.Y. 2007- 08, OUT OF TOTAL PURCHASES OF RS. 21,02,445/-, PAYM ENT OF RS. 79,581/- WAS ONLY MADE IN CASH IN EXCESS OF RS. 20,000/- TO SUCH SMALL TRA DERS. SIMILARLY, IN A.Y. 2008-09, OUT OF TOTAL PURCHASES OF RS. 36,35,560/-, PAYMENT OF R S. 1,27,288/- WAS ONLY MADE IN CASH IN EXCESS OF RS. 20,000/-. IN VIEW OF THE ABOVE, PAYMENT IN CASH IN EXCES S OF RS. 20,000/- WAS MADE ONLY BECAUSE OF BUSINESS EXPEDIENCY SEAS TO HASSLE-FREE PROCUREMENT OF GOODS AND HENCE, NO DISALLOWANCE OF GENUINE PURCHASES U/S. 40A(3) OF THE ACT IS WARRANTED. RELIANCE IS PLACED ON FOLLOWING DECISIONS: (A) ATTAR SINGH GURMUKH SINGH V. ITO (1991) 191 ITR 667 (SUPREME COURT) (B) ANUPAM TELE SERVICES V. ITO (2014 336 ITR 122 ( GUJARAT HIGH COURT) (C) WALFORD TRANSPORT EASTERN INDIA V. CIT [1999] 2 40 ITR 902 (GAUHATI HIGH COURT) ITA NOS. 460,461 & 462/RJT/2 015 M/S.PANKAJ OIL MILL VS. DCIT AYS 2006-07, 2007-08 & 2008-09 RESPECTIVELY - 9 - (D) BHARAT KUMAR SEKHSARIA V. DCIT 82 ITD 512 (BOM) (ITAT, BOMBAY BENCH) : (E) KANTILAL PURSHOTTAM & CO. V CIT 155 ITR 519 (RA JASTHAN HIGH COURT) 3.2 BOTH THE REPRESENTATIVES OF THE PARTIES RELIED UPON THE WRITTEN SUBMISSIONS AND REITERATED THE CONTENTIONS THEREON. 4. WE HAVE HEARD THE RIVAL SUBMISSIONS, PERUSED THE MATERIAL AVAILABLE ON RECORD AND GONE THROUGH THE ORDERS OF THE AUTHORITIES BELOW. THE REVENUE HAS NOT DISPUTED THE FACT THAT THE ASSE SSMENT U/S.153A R.W.S.143(3) OF THE ACT WAS NOT FRAMED ON THE BASIS OF ANY INCRIMINATING MATERIAL. THE LD.CIT-DR HAS FAIRLY CONCEDED THAT T HERE ARE DIVERGENT VIEWS OF THE HONBLE HIGH COURTS ON THIS ISSUE. TH E LD.COUNSEL FOR THE ASSESSEE HAS RELIED UPON THE DECISION OF HONBLE BO MBAY HIGH COURT IN THE CASE OF CIT VS. CONTINENTAL WAREHOUSING CORPORA TION (NHAVA SHEVA) LTD. REPORTED AT (2015 58 TAXMANN.COM 78 (BOMBAY). FURTHER, LD.COUNSEL FOR THE ASSESSEE HAS RELIED ON THE JUDGEMENT OF H ONBLE SUPREME COURT IN THE CASE OF NATIONAL THERMAL POWER CO. LTD. VS. CIT REPORTED AT (1998) 229 ITR 383 (SC), JUDGEMENT OF HONBLE ALLAH ABAD HIGH COURT IN THE CASE OF CIT VS. B.HILL & CO.P.LTD. REPORTED AT (1983) 142 ITR 185 AND JUDGMENT OF HONBLE BOMBAY HIGH COURT IN THE CA SE OF CIT VS. D.S. SCREENS (P)LTD. 4.1. WE FIND THAT IN THE CASE OF CIT VS. CONTINENTA L WAREHOUSING CORPORATION (NHAVA SHEVA) LTD. [SUPRA], THE HONBLE BOMBAY HIGH COURT HELD THAT IN ABSENCE OF ANY INCRIMINATING DOC UMENT, NO ADDITION CAN BE MADE. ITA NOS. 460,461 & 462/RJT/2 015 M/S.PANKAJ OIL MILL VS. DCIT AYS 2006-07, 2007-08 & 2008-09 RESPECTIVELY - 10 - 4.2. WE FIND THAT THE DECISION OF THE HONBLE ITAT MUMBAI BENCH (SPECIAL BENCH) IN THE CASE OF ALL CARGO GLOBAL LOG ISTICS LTD. VS. DY.CIT, CENTRAL CIRCLE-44, REPORTED AT (2012) 23 TA XMANN.COM 103(MUM.)(SB)::137 ITD 287, DATED 06/07/2012, HAS BEEN AFFIRMED BY THE HONBLE BOMBAY HIGH COURT IN THE CASE OF CIT VS . CONTINENTAL WAREHOUSING CORPORATION (NHAVA SHEVA) LTD. REPORTED AT (2015) 58 TAXMANN.COM 78 (BOMBAY). 4.3. THE HONBLE ITAT MUMBAI BENCH (SPECIAL BENCH) IN THE CASE OF ALL CARGO GLOBAL LOGISTICS LTD.(SUPRA), AFTER EXAMI NING THE ENTIRE LAW, HELD AS UNDER:- 58. THUS, QUESTION NO.1 BEFORE US IS ANSWERED AS UNDER: (A) IN ASSESSMENTS THAT ARE ABATED, THE AO RETAINS THE ORIGINAL JURISDICTION AS WELL AS JURISDICTION CONFERRED ON H IM U/S.153A FOR WHICH ASSESSMENTS SHALL BE MADE FOR EACH OF THE SIX ASSESSMENT YEARS SEPARATELY; (B) IN OTHER CASES, THE ADDITION TO THE INCOME THAT HAS ALREADY BEEN ASSESSED, THE ASSESSMENT U/S.153A WILL BE MADE ON T HE BASIS OF INCRIMINATING MATERIAL, WHICH IN THE CONTEXT OF REL EVANT PROVISIONS MEANS (I) BOOKS OF ACCOUNT, OTHER DOCUMENTS, FOUN D IN THE COURSE OF SEARCH BUT NOT PRODUCED IN THE COURSE OF ORIGINA L ASSESSMENT, AND (II) UNDISCLOSED INCOME OR PROPERTY DISCOVERED IN T HE COURSE OF SEARCH. 4.4. IN THE PRESENT CASE, THE ASSESSMENT PERTAINING TO ASSESSMENT YEARS 2006-07, 2007-08 & 2009-10 HAD NOT BEEN ABATED. TH IS FACT IS NOT DISPUTED BY THE REVENUE BY PLACING ANY MATERIAL ON RECORD. THEREFORE, IN THESE YEARS, THE ASSESSMENT OUGHT TO HAVE BEEN M ADE ON THE BASIS OF INCRIMINATING MATERIAL AS PER THE DECISION OF THE H ONBLE SPECIAL BENCH ITA NOS. 460,461 & 462/RJT/2 015 M/S.PANKAJ OIL MILL VS. DCIT AYS 2006-07, 2007-08 & 2008-09 RESPECTIVELY - 11 - IN THE CASE OF ALL CARGO GLOBAL LOGISTICS LTD. VS. DY.CIT, CENTRAL CIRCLE- 44(SUPRA). THE REVENUE HAS NOT POINTED OUT WHAT WA S THE INCRIMINATING MATERIAL AVAILABLE ON THE BASIS OF WHICH THE IMPUG NED ASSESSMENT ORDERS HAD BEEN FRAMED. IN THE ABSENCE OF SUCH MATERIAL, WE CANNOT SUSTAIN THE IMPUGNED ASSESSMENT ORDER(S) IN VIEW OF THE BINDING PRECEDENT AS RELIED UPON BY THE ASSESSEE. RESPECTFULLY FOLLOWING THE D ECISION OF THE HONBLE SPECIAL BENCH OF THIS TRIBUNAL RENDERED IN THE CASE OF ALL CARGO GLOBAL LOGISTICS LTD. VS. DCIT(SUPRA) AND THE JUDGEMENT OF THE HONBLE HIGH COURT OF BOMBAY RENDERED IN THE CASE OF CIT VS. CO NTINENTAL WAREHOUSING CORPORATION LTD.(SUPRA), SINCE IT IS SE TTLED LAW THAT THE VIEW WHICH IS BENEFICIAL TO THE ASSESSEE SHOULD BE ADOPT ED. THEREFORE, WE HEREBY QUASH THE ASSESSMENT ORDERS PERTAINING TO AY S 2006-07, 2007-08 AND 2008-09 AS CHALLENGED BEFORE US IN THIS BUNCH O F APPEALS. THUS, ADDITIONAL GROUND OF ASSESSEES APPEAL(S) IS ALLOWE D. 5. IN THE RESULT, ALL THE THREE APPEALS FILED BY TH E ASSESSEE ARE ALLOWED. ORDER PRONOUNCED IN THE COURT ON WEDNESDAY, THE 2 3RD DAY OF DECEMBER, 2015 AT AHMEDABAD. SD/- SD/- ( ) ( ) ( PRAMOD KUMAR ) ( KUL BHARAT ) ACCOUNTANT MEMBER JUDICIAL MEMBER AHMEDABAD; DATED 23/ 12 /2015 ..,, -. ,../ T.C. NAIR, SR. PS ITA NOS. 460,461 & 462/RJT/2 015 M/S.PANKAJ OIL MILL VS. DCIT AYS 2006-07, 2007-08 & 2008-09 RESPECTIVELY - 12 - / COPY OF THE ORDER FORWARDED TO : 1. &( / THE APPELLANT 2. )&( / THE RESPONDENT. 3. 4 5 / CONCERNED CIT 4. 5 ( ) / THE CIT(A)-11, AHMEDABAD 5. 7-8 , , , /DR,ITAT, RAJKOT/AHMEDABAD 6. 8HI J. / GUARD FILE. / BY ORDER, )7 //TRUE COPY// / ( DY./ASSTT.REGISTRAR) & ' , / ITAT, RAJKOT 1. DATE OF DICTATION 9.12.15 (DICTATION-PAD 5- PAG E ATTACHED AT THE END OF THIS FILE) 2. DATE ON WHICH THE TYPED DRAFT IS PLACED BEFORE THE DICTATING MEMBER ..10.12.2015 3. OTHER MEMBER... 4. DATE ON WHICH THE APPROVED DRAFT COMES TO THE SR.P. S./P.S.. 5. DATE ON WHICH THE FAIR ORDER IS PLACED BEFORE THE D ICTATING MEMBER FOR PRONOUNCEMENT 6. DATE ON WHICH THE FAIR ORDER COMES BACK TO THE SR.P .S./P.S. 23.12.15 7. DATE ON WHICH THE FILE GOES TO THE BENCH CLERK 23.12.15 8. DATE ON WHICH THE FILE GOES TO THE HEAD CLERK ... 9. THE DATE ON WHICH THE FILE GOES TO THE ASSISTANT RE GISTRAR FOR SIGNATURE ON THE ORDER.. 10. DATE OF DESPATCH OF THE ORDER