THE DCIT, CIRCLE - 1(1), Vijayawada V. M/s Vijaya Agro Products Ltd., Edlapadu

ITA 508/VIZ/2014

• Counselvise Citation: [2016] 132 COUNSELVISE.COM (IT) 1043 (ITAT-VISAKHAPATNAM)
• Duration Of Justice: 1 year(s) 11 month(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 29-07-2016
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: DB
• Assessment Year: 2011-2012
• Appeal Filed On: 28-08-2014
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: T S N MURTHY
• Assessee Lawyers: A V RAGHURAM
• Keywords: Unexplained cash credit; Additional evidence
• Section: 142(1); 68

Judgement Text

ITA NO.508/VIZAG/2014 M/S. VIJAYA AGRO PRODUCTS LTD., VIJAYAWADA 1 , , IN THE INCOME TAX APPELLATE TRIBUNAL, VISAKHAPATNAM BENCH, VISAKHAPATNAM . , . , $ BEFORE SHRI V. DURGA RAO, JUDICIAL MEMBER & SHRI G. MANJUNATHA, ACCOUNTANT MEMBER ./I.T.A.NO.508/VIZAG/2014 ( / ASSESSMENT YEAR: 2011-12) DCIT, CIRCLE - 1(1), VIJAYAWADA VS. M/S. VIJAYA AGRO PRODUCTS LTD., VIJAYAWADA [PAN: AAACV7766M ] ( % / APPELLANT) ( &'% / RESPONDENT) / APPELLANT BY : SHRI T.S.N. MURTHY, DR / RESPONDENT BY : SHRI A .V. RAGHURAM, AR / DATE OF HEARING : 21.06.2016 / DATE OF PRONOUNCEMENT : 29.07.2016 / O R D E R PER G. MANJUNATHA, ACCOUNTANT MEMBER: THIS APPEAL FILED BY THE REVENUE IS DIRECTED AGAINS T THE ORDER OF CIT(A), VIJAYAWADA DATED 9.6.2014 AND IT PERTAINS T O THE ASSESSMENT YEAR 2011-12. ITA NO.508/VIZAG/2014 M/S. VIJAYA AGRO PRODUCTS LTD., VIJAYAWADA 2 2. THE BRIEF FACTS OF THE CASE ARE THAT THE ASSESSE E IS A PRIVATE LIMITED COMPANY, WHICH IS ENGAGED IN THE BUSINESS O F MANUFACTURING AND SALE OF RICE BRAN OIL, SOLVENT EXTRACTION AND P OWER GENERATION. THE ASSESSEE HAS FILED ITS RETURN OF INCOME FOR THE ASS ESSMENT YEAR 2011-12 ON 24.9.2011 DECLARING TOTAL INCOME OF RS.5,87,222/ -. THE CASE HAS BEEN SELECTED FOR SCRUTINY AND ACCORDINGLY, NOTICES U/S 143(2) & 142(1) OF THE INCOME TAX ACT, 1961 (HEREINAFTER CALLED AS THE ACT) WERE ISSUED. IN RESPONSE TO NOTICES, THE AUTHORIZED REPR ESENTATIVE OF THE ASSESSEE APPEARED FROM TIME TO TIME AND FURNISHED B OOKS OF ACCOUNTS, BILLS & VOUCHERS AND OTHER INFORMATION CALLED FOR. THE A.O. AFTER CONSIDERING THE INFORMATION FURNISHED BY THE ASSESS EE COMPLETED THE ASSESSMENT AND DETERMINED TOTAL INCOME OF RS.8,53,2 2,530/- BY MAKING FOLLOWING DISALLOWANCES. 1) ADDITIONS TOWARDS INFLATION OF PURCHASES RS.72,2 6,330/- 2) ADDITIONS TOWARDS SUPPRESSION OF SALES TURNOVER ON ACCOUNT OF LOW YIELD RS.4,24,61,798/-. 3) ADDITIONS TOWARDS UNEXPLAINED CREDITS U/S 68 OF THE ACT RS.2,97,62,203/- 3. AGGRIEVED BY THE ASSESSMENT ORDER, THE ASSESSEE PREFERRED AN APPEAL BEFORE THE CIT(A). BEFORE THE CIT(A), THE A SSESSEE HAS MADE ELABORATE WRITTEN SUBMISSIONS AND CONTENDED EACH AN D EVERY ITEM OF ADDITIONS MADE BY THE A.O. THE CIT(A), AFTER CONSID ERING THE SUBMISSIONS OF THE ASSESSEE DELETED THE ADDITIONS M ADE BY THE A.O. ITA NO.508/VIZAG/2014 M/S. VIJAYA AGRO PRODUCTS LTD., VIJAYAWADA 3 TOWARDS INFLATED PURCHASES, SUPPRESSED SALES TURNOV ER ON ACCOUNT OF LOW YIELD AND UNEXPLAINED CREDITS U/S 68 OF THE ACT. A GGRIEVED BY THE CIT(A) ORDER, THE REVENUE IS IN APPEAL BEFORE US. 4. THE FIRST ISSUE THAT CAME UP FOR OUR CONSIDERATI ON IS ADDITIONS TOWARDS INFLATION OF PURCHASES. DURING THE COURSE O F ASSESSMENT PROCEEDINGS, THE A.O. NOTICED THAT IN 7 CASES, THER E IS A DIFFERENCE BETWEEN PURCHASE VALUE AS PER PURCHASE BILLS AND AM OUNT RECORDED IN THE BOOKS OF ACCOUNTS OF THE ASSESSEE. THE A.O. OBS ERVED THAT THE ASSESSEE HAS INFLATED THE PURCHASE BY RECODING HIGH ER VALUE IN THE BOOKS OF ACCOUNTS. IT WAS FURTHER OBSERVED THAT THE PURCHASE VALUE AS PER THE INVOICES IS LESS THAN THE AMOUNT RECORDED I N THE BOOKS OF ACCOUNTS, THEREFORE, ISSUED A SHOW CAUSE NOTICE AND ASKED TO EXPLAIN THE REASONS FOR DIFFERENCE BETWEEN VALUE SHOWN IN T HE BOOKS OF ACCOUNTS AND PURCHASE BILLS. IN RESPONSE TO SHOW CA USE NOTICE, THE ASSESSEE SUBMITTED THAT DURING THE YEAR UNDER CONSI DERATION, IT HAS PURCHASED RAW MATERIALS BEING RICE BRAN FROM ORISSA AND WEST BENGAL BECAUSE OF SHORTAGE OF RAW MATERIALS IN THE LOCAL M ARKET. THE ASSESSEE FURTHER SUBMITTED THAT IT HAS PURCHASED MATERIAL TH ROUGH BROKERS, THE SUPPLIERS HAVE SUPPLIED THE GOODS ON PROVISIONAL IN VOICES WHICH WERE RAISED FOR THE PURPOSE OF MOVEMENT OF GOODS AND ONC E GOODS REACHED THE FACTORY, AFTER QUALITY ANALYSIS, THE PRICE WILL BE FIXED. IT WAS FURTHER ITA NO.508/VIZAG/2014 M/S. VIJAYA AGRO PRODUCTS LTD., VIJAYAWADA 4 SUBMITTED THAT ONCE FINAL PRICE IS DETERMINED, THE SUPPLIERS WILL ISSUE FINAL INVOICES AS PER WHICH THE PURCHASES ARE RECOR DED IN THE BOOKS OF ACCOUNTS, THEREFORE, THERE IS NO DIFFERENCE BETWEEN PURCHASE INVOICES AND AMOUNT RECORDED IN THE BOOKS OF ACCOUNTS. THE ASSESSEE FURTHER SUBMITTED THAT IT HAS MADE THE PAYMENT DIRECTLY TO THE SUPPLIERS BANK ACCOUNTS BY WAY OF ACCOUNT PAYEE CHEQUES OR ELECTRO NIC TRANSFER NAMELY RTGS AND THEREFORE, THE GENUINENESS OF THE PURCHASE PRICE PAID CANNOT BE DOUBTED. THE A.O. AFTER CONSIDERING THE EXPLANA TIONS FURNISHED BY THE ASSESSEE, HELD THAT THE ASSESSEE HAS INFLATED T HE PURCHASE PRICE WHICH IS EVIDENT FROM THE INVOICES. THE A.O. FURTH ER HELD THAT THE PURCHASE PRICE RECORDED IN THE BOOKS OF ACCOUNTS IS DIFFERENT FROM THE PURCHASE INVOICES. THOUGH ASSESSEE FURNISHED FINAL INVOICES, THE FINAL INVOICES ARE DATED PRIOR TO THE PROVISIONAL INVOICE S. WITH THESE OBSERVATIONS MADE ADDITIONS OF RS.72,26,313/-, BEIN G DIFFERENCE BETWEEN INVOICE VALUE AND AMOUNT RECORDED IN THE BO OKS OF ACCOUNTS. 5. THE LD. D.R. SUBMITTED THAT THE CIT(A) WITHOUT A PPRECIATING THE FACTS THAT THERE IS A DIFFERENCE BETWEEN AMOUNTS SH OWN IN THE BOOKS WHEN COMPARED TO THE INVOICES DELETED THE ADDITIONS BASED ON THE ADDITIONAL EVIDENCES SUBMITTED BY THE ASSESSEE IN T HE FORM OF C FORMS AND FINAL INVOICES, WITHOUT CHECKING THE CORRECTNES S OF FINAL INVOICES, IGNORING THE OBSERVATIONS OF THE A.O. REGARDING GEN UINENESS OF FINAL ITA NO.508/VIZAG/2014 M/S. VIJAYA AGRO PRODUCTS LTD., VIJAYAWADA 5 INVOICES. THE D.R. FURTHER SUBMITTED THAT THE A.O. HAS BROUGHT OUT CLEAR INSTANCES OF DIFFERENCE BETWEEN AMOUNTS SHOWN IN TH E BOOKS OF ACCOUNTS AND PURCHASE INVOICES IN CASE OF 7 PARTIES WHICH WAS NOT EXPLAINED WITH ANY EVIDENCES. THOUGH, IT HAS FILED FINAL INVOICES SHOWING THE CORRECT VALUE RECORDED IN THE BOOKS OF ACCOUNTS , THE INVOICES ARE DATED PRIOR TO THE PROVISIONAL INVOICES AND HENCE C ANNOT BE CONSIDERED AS EVIDENCE. 6. ON THE OTHER HAND, THE LD. A.R. FOR THE ASSESSEE STRONGLY SUPPORTED THE CIT(A) ORDER. THE A.R. FURTHER SUBMI TTED THAT IT IS THE USUAL PRACTICE IN THIS LINE OF BUSINESS THAT THE RI CE MILLERS WILL SUPPLY GOODS ON PROVISIONAL INVOICES BECAUSE OF PECULIAR F ACTS OF THE BUSINESS. THE A.R. FURTHER SUBMITTED THAT ASSESSEE HAS PURCHA SED GOODS FROM ORISSA AND WEST BENGAL THROUGH MIDDLEMEN WITHOUT KNO WING THE SUPPLIERS. THE GOODS HAVE BEEN SUPPLIED ON PROVISIO NAL INVOICES FOR MOVEMENT OF GOODS AND ONCE THE QUALITY OF THE GOODS HAS BEEN ACCEPTED BY THE ASSESSEE, THE FINAL PRICE HAS BEEN DETERMINED AND ACCORDINGLY, THE SUPPLIERS HAVE ISSUED FINAL SALE B ILLS. THE VALUE RECORDED IN THE BOOKS OF ACCOUNTS IS AS PER THE FINAL INVOIC ES ISSUED BY THE SUPPLIERS. THE A.R. FURTHER SUBMITTED THAT THE ASSE SSEE HAS MADE PAYMENT THROUGH BANKING CHANNEL BY WAY OF ACCOUNT P AYEE CHEQUES OR ITA NO.508/VIZAG/2014 M/S. VIJAYA AGRO PRODUCTS LTD., VIJAYAWADA 6 ELECTRONIC TRANSFER OF FUNDS AND ALSO ISSUED C FO RMS FOR THE VALUE SHOWN IN THE BOOKS OF ACCOUNTS. THEREFORE, THE A.O. WAS NOT CORRECT IN HOLDING THAT THERE IS A DIFFERENCE IN THE VALUE SHOWN IN TH E BOOKS OF ACCOUNTS WHEN COMPARED TO THE SALE INVOICES. 7. WE HAVE HEARD BOTH THE PARTIES, PERUSED THE MATER IALS AVAILABLE ON RECORD AND GONE THROUGH THE ORDERS OF THE AUTHOR ITIES BELOW. THE A.O. MADE ADDITIONS TOWARDS INFLATION OF PURCHASES FOR THE REASON THAT THERE IS A DIFFERENCE BETWEEN VALUE SHOWN IN THE IN VOICES AND AMOUNT RECORDED IN THE BOOKS OF ACCOUNTS. THE A.O. WAS OF THE OPINION THAT THE ASSESSEE HAS INFLATED PURCHASES BY RECORDING HIGHER VALUE IN THE BOOKS OF ACCOUNTS. IT IS THE CONTENTION OF THE ASSESSEE T HAT IT HAS PURCHASED GOODS FROM THE SUPPLIERS AND SUPPLIERS SUPPLY THE G OODS AND ISSUED PROPER INVOICES. THE FINAL PRICE OF THE PRODUCT IS DETERMINED AFTER ASCERTAINING THE QUALITY OF MATERIALS. THE SUPPLIE RS HAVE ISSUED FINAL SALE BILLS WHICH ARE MATCHING WITH THE AMOUNT RECOR DED IN THE BOOKS OF ACCOUNTS. IT IS FURTHER CONTENDED THAT PAYMENT HAS BEEN MADE BY WAY OF ACCOUNT PAYEE CHEQUE OR ELECTRONIC TRANSFER. WE FIND FORCE IN THE ARGUMENTS OF THE ASSESSEE FOR THE REASON THAT THOUG H THERE IS A DIFFERENCE BETWEEN VALUE RECORDED IN THE BOOKS OF A CCOUNTS AND PROVISIONAL INVOICES, THE ASSESSEE HAS EXPLAINED TH E DIFFERENCES WITH FINAL INVOICES WHICH IS MATCHING WITH THE AMOUNT RE CORDED IN THE BOOKS ITA NO.508/VIZAG/2014 M/S. VIJAYA AGRO PRODUCTS LTD., VIJAYAWADA 7 OF ACCOUNTS. IT IS ALSO AN ADMITTED FACT THAT THE ASSESSEE HAS MADE THE PAYMENT FOR THE AMOUNT RECORDED IN THE BOOKS OF ACC OUNTS BY WAY OF ACCOUNT PAYEE CHEQUES OR ELECTRONIC TRANSFERS. THE ASSESSEE ALSO ISSUED C FORM FOR THE VALUE SHOWN IN THE BOOKS OF ACCOUN TS. THEREFORE, WE ARE OF THE VIEW THAT THE A.O. WAS NOT CORRECT IN HOLDIN G THAT THERE IS A DIFFERENCE IN VALUE RECORDED IN THE BOOKS OF ACCOUN TS WHEN COMPARED TO THE INVOICES. THE CIT(A) AFTER CONSIDERING THE REL EVANT RECORDS DIRECTED THE A.O. TO DELETE THE ADDITIONS MADE TOWARDS INFLA TION OF PURCHASES. WE DO NOT SEE ANY ERROR OR INFIRMITY IN THE ORDER PA SSED BY THE LD. CIT(A). HENCE, WE INCLINED TO UPHOLD THE CIT(A) ORD ER AND REJECT THE GROUND RAISED BY THE REVENUE. 8. THE NEXT ISSUE THAT CAME UP FOR OUR CONSIDERATIO N IS ADDITION TOWARDS LOW YIELD OF RICE BRAN OIL. THE A.O. MADE A DDITIONS OF RS.4,24,61,798/- TOWARDS SUPPRESSED TURNOVER ON ACC OUNT OF LOW YIELD OF RICE BRAN OIL. THE A.O. OBSERVED THAT ON ANALYSIS OF THE DETAILS OF YIELD FROM RICE BRAN, IT WAS NOTICED THAT THERE IS A DECL INE IN THE RICE BRAN OIL YIELD WHEN COMPARED TO THE ASSESSMENT YEAR 2008-09 & 2009-10 AND ALSO TO ASSESSMENT YEAR 2011-12 AND 2012-13. ACCOR DING TO THE A.O., THE YIELD OF RICE BRAN OIL FOR THE ASSESSMENT YEAR 2008-09 & 2009-10 IS 20.83%, WHEREAS FOR THE YEAR UNDER CONSIDERATION, T HE YIELD IS AT 14.7%. THE A.O. FURTHER OBSERVED THAT THERE IS A D ECLINE IN YIELD OF RICE ITA NO.508/VIZAG/2014 M/S. VIJAYA AGRO PRODUCTS LTD., VIJAYAWADA 8 BRAN OIL AT 3.1% WHEN COMPARED TO AVERAGE YIELD FOR THE PREVIOUS PERIOD, THEREFORE, ISSUED A SHOW CAUSE NOTICE AND A SKED TO EXPLAIN THE REASONS FOR LOW YIELD OF RICE BRAN OIL. IN RESPONS E TO SHOW CAUSE NOTICE, THE ASSESSEE SUBMITTED THAT DURING THE YEAR UNDER C ONSIDERATION, BECAUSE OF RISE IN PRICE OF RAW MATERIALS IT HAS PU RCHASED MORE ROUGH BRAN OIL WHICH IS HAVING 6% YIELD. THE ASSESSEE FU RTHER SUBMITTED THAT THERE ARE 3 VARIETIES OF RICE BRAN OIL IN THE MARKE T. THE PRICE OF THE RICE BRAN IS FIXED ON THE BASIS OF PERCENTAGE OF YIELD O F RICE BRAN OIL. ACCORDINGLY, DURING THE YEAR UNDER CONSIDERATION TO REDUCE THE COST OF RAW MATERIALS, IT HAS PURCHASED MORE ROUGH RICE BRA N AND BECAUSE OF WHICH THE FINAL YIELD OF RICE BRAN OIL IS REDUCED. HOWEVER, THE AVERAGE YIELD OF RICE BRAN OIL AND RICE BRAN EXTRACTION PUT TOGETHER THERE IS NO DIFFERENCE WHEN COMPARED TO THE PREVIOUS FINANCIAL YEAR. THE A.O. AFTER CONSIDERING THE EXPLANATIONS FURNISHED BY THE ASSES SEE HELD THAT THERE IS A DIFFERENCE IN YIELD OF RICE BRAN OIL WHEN COMPARE D TO THE AVERAGE YIELD FOR THE PREVIOUS PERIOD. THE A.O. FURTHER OBSERVED THAT THE ASSESSEE PURPORTEDLY SUPPRESSED THE YIELD OF RICE BRAN OIL T O SHOW THE LESSER SALE PRICE. WITH THESE OBSERVATIONS, MADE ADDITIONS OF R S. 4,24,61,798/- TOWARDS SUPPRESSION OF SALES TURNOVER OF RICE BRAN OIL. 9. THE LD. D.R. SUBMITTED THAT THE CIT(A) OUGHT TO HAVE CONFIRMED THE ADDITIONS MADE BY THE A.O. TOWARDS LOW YIELD OF RICE BRAN OIL, AS ITA NO.508/VIZAG/2014 M/S. VIJAYA AGRO PRODUCTS LTD., VIJAYAWADA 9 THERE WAS SUPPRESSION OF TURNOVER OF RICE BRAN OIL BY WAY OF INCREASING THE YIELD OF RICE BRAN EXTRACTION, WHICH RESULTED I N SUPPRESSION OF TURNOVER TO THE EXTENT OF RS.4,24,61,798/-. THE D. R. FURTHER SUBMITTED THAT THE CIT(A) WITHOUT APPRECIATING THE FACTS, SIM PLY DELETED THE ADDITIONS IGNORING THE FACTUAL POSITION BROUGHT OUT BY THE A.O. IN THE ASSESSMENT ORDER. THE D.R. FURTHER SUBMITTED THAT THE A.O. WORKED OUT SUPPRESSION OF TURNOVER BASED ON THE AVERAGE YIELD OF EARLIER YEARS, THEREFORE, THE ASSESSMENT ORDER SHOULD BE UPHELD. 10. ON THE OTHER HAND, THE LD. A.R. FOR THE ASSESSE E, STRONGLY SUPPORTED THE ORDER OF LD. CIT(A). THE A.R. FURTHE R SUBMITTED THAT THE A.O. WAS ERRED IN ESTIMATING THE YIELD OF RICE BRAN OIL, COMPARING THE AVERAGE YIELD OF EARLIER YEAR IGNORING THE FACT THA T THERE IS A CLEAR DIFFERENCE BETWEEN INPUT RAW MATERIALS USED DURING THE YEAR UNDER CONSIDERATION WHICH RESULTED IN VARIATION IN YIELD OF RICE BRAN OIL AND RICE BRAN EXTRACTION. THE A.R. FURTHER SUBMITTED THAT BE CAUSE OF STEEP INCREASE IN RAW MATERIALS, THE ASSESSEE HAS PURCHAS ED MORE ROUGH RICE BRAN WHICH IS HAVING LESS OIL CONTENT BECAUSE OF WH ICH THE YIELD OF RICE BRAN OIL HAS COME DOWN. HOWEVER, THERE IS NO DIFFER ENCE IN THE TOTAL YIELD OF FINAL PRODUCTS BEING RICE BRAN OIL AND RIC E BRAN EXTRACTION PUT TOGETHER WHEN COMPARED TO THE PREVIOUS FINANCIAL YE AR. THE A.R. FURTHER SUBMITTED THAT THE A.O. ERRED IN MAKING THE YIELD A DDITION WITHOUT ITA NO.508/VIZAG/2014 M/S. VIJAYA AGRO PRODUCTS LTD., VIJAYAWADA 10 POINTING OUT ANY DEFECTS OR IRREGULARITIES IN THE M ANUFACTURING OR STOCK REGISTERS. THE A.O. DID NOT FIND ANY MISTAKES IN T HE BOOKS OF ACCOUNTS OR THERE IS A SUPPRESSION OF SALES TURNOVER ON ACCO UNT OF LOW YIELD OF RICE BRAN OIL, WITHOUT POINTING OUT ANY ERRORS IN THE BO OKS OF ACCOUNTS, SIMPLY MADE ADDITION BASED ON ESTIMATION OF YIELD TAKING A VERAGE YIELD OF PREVIOUS FINANCIAL YEARS WHICH IS NOT CORRECT. THE A.R. FURTHER SUBMITTED THAT THE A.O. MADE ADDITIONS ON THE BASIS OF COMPAR ISON OF TOTAL COST OF PURCHASE, BUT THE FACT IS THAT DURING THE YEAR UNDE R CONSIDERATION THE RAW MATERIAL COST HAS BEEN INCREASED, THEREFORE, TH OUGH ASSESSEE MATCHES THE TOTAL PURCHASES COST THERE IS A DIFFERE NCE IN QUALITY OF RAW MATERIALS PURCHASED BECAUSE OF WHICH THERE IS A VAR IATION IN THE FINAL YIELD. THEREFORE, THE A.O. WAS NOT CORRECT IN MAKI NG ADDITION BASED ON ESTIMATION OF YIELD AND THE ADDITION SHOULD BE DELE TED. 11. WE HAVE HEARD BOTH THE PARTIES, PERUSED THE MATE RIALS AVAILABLE ON RECORD AND GONE THROUGH THE ORDERS OF THE AUTHOR ITIES BELOW. THE A.O. MADE ADDITIONS TOWARDS LOW YIELD OF RICE BRAN OIL. THE A.O. WAS OF THE OPINION THAT THE ASSESSEE HAS SUPPRESSED SALES TURNOVER OF RICE BRAN OIL BECAUSE OF VARIATION IN PRICE. ACCORDING TO TH E A.O., THERE IS A DIFFERENCE IN PERCENTAGE OF YIELD WHEN COMPARED TO THE PREVIOUS FINANCIAL YEARS. THE A.O. OBSERVED THAT THE AVERAG E YIELD OF RICE BRAN OIL FOR ALL THESE YEARS IS AT 17.87%, WHEREAS THE YIELD OF RICE BRAN OIL FOR THE ITA NO.508/VIZAG/2014 M/S. VIJAYA AGRO PRODUCTS LTD., VIJAYAWADA 11 YEAR UNDER CONSIDERATION IS 14.7%. THEREFORE, OPIN ED THAT THE ASSESSEE HAS PURPORTEDLY SUPPRESSED THE TURNOVER BY MANIPULA TING THE YIELD OF RICE BRAN OIL SO AS TO REDUCE THE SALES. IT IS THE CONTENTION OF THE ASSESSEE THAT BECAUSE OF INCREASE IN RAW MATERIALS COST OF RICE BRAN IT HAS PURCHASED MORE ROUGH RICE BRAN BECAUSE OF WHICH THERE IS A REDUCTION IN THE YIELD PERCENTAGE OF RICE BRAN OIL. THE ASSESSEE FURTHER CONTENDED THAT WHILE MAKING THE YIELD ADDITION, THE A.O. HAS NOT POINTED OUT ANY MISTAKES OR IRREGULARITIES IN THE RELEVANT REGISTERS OR BOOKS OF ACCOUNTS. IT IS FURTHER CONTENDED THAT THE A.O. HA S NOT POINTED OUT ANY DISCREPANCIES IN THE MANUFACTURING OR STOCK REGISTE RS. THEREFORE, THE A.O. WAS NOT CORRECT IN QUANTIFYING THE SUPPRESSION OF SALES TURNOVER BASED ON PERCENTAGE OF YIELD IGNORING THE FACT THAT THERE IS A DIFFERENCE IN QUALITY OF RAW MATERIALS USED FOR THE PURPOSE OF EXTRACTION OF RICE BRAN OIL. 12. THE A.O. MADE ADDITIONS ON THE SOLE GROUND THAT THERE IS A DIFFERENCE IN PERCENTAGE OF YIELD OF RICE BRAN OIL. ACCORDING TO THE A.O., THE AVERAGE YIELD OF RICE BRAN OIL FOR THE EARLIER AND SUBSEQUENT PERIOD IS 17.87%, WHEREAS FOR THE YEAR UNDER CONSIDERATION, T HE YIELD OF RICE BRAN OIL IS AT 14.7%. THE A.O. FURTHER WAS OF THE OPINI ON THAT THE ASSESSEE HAS PURPORTEDLY MANIPULATED THE PERCENTAGE OF YIELD OF RICE BRAN OIL SO AS TO REDUCE THE SALES. WE DO NOT SEE ANY MERITS I N THE FINDINGS OF THE ITA NO.508/VIZAG/2014 M/S. VIJAYA AGRO PRODUCTS LTD., VIJAYAWADA 12 A.O. FOR THE REASON THAT BEFORE ESTIMATION OF SUPPR ESSED TURNOVER, THE A.O. HAS NOT POINTED OUT ANY IRREGULARITIES OR MIST AKES IN THE BOOKS OF ACCOUNTS. THE ASSESSEE HAS MAINTAINED PROPER MANUFA CTURING AND STOCK REGISTERS WHICH WAS PRODUCED BEFORE THE A.O., HOWEV ER, THE A.O. NEITHER POINTED OUT ANY MISTAKES IN THE BOOKS OF ACCOUNTS N OR NOTICED ANY SUPPRESSION OF TURNOVER. THE A.O. WITHOUT GOING IN TO THE QUANTITY OF 3 VARIETIES OF RICE BRAN PURCHASED FOR THE CURRENT YE AR COMPARED THE AVERAGE YIELD OF RICE BRAN OIL WHICH IS NOT CORRECT . WE FURTHER NOTICED THAT DURING THE YEAR UNDER CONSIDERATION, THE ASSES SEE HAS PURCHASED 3 VARIETIES OF RICE BRAN WHICH IS CONTAINING DIFFEREN T PERCENTAGE OF RICE BRAN OIL CONTENT. WE FURTHER OBSERVED THAT PURCHASE OF ROUGH RICE BRAN HAS BEEN DOUBLED WHEN COMPARED TO THE LAST FINANCIA L YEAR BECAUSE OF WHICH THERE IS A REDUCTION IN YIELD OF RICE BRAN OI L. BUT, THE OTHER FINAL PRODUCTS OF RICE BRAN OIL EXTRACTION IS INCREASED B ECAUSE OF LOW YIELD OF RICE BRAN OIL. THEREFORE, THE A.O. WAS NOT CORRECT IN HOLDING THAT THE ASSESSEE HAS SUPPRESSED SALES TURNOVER BY MANIPULAT ING YIELD OF RICE BRAN OIL AND RICE BRAN EXTRACTION. THE CIT(A) AFT ER CONSIDERING THE RELEVANT INFORMATION RIGHTLY DELETED THE ADDITIONS MADE BY THE A.O. THERE IS NO ERROR OR INFIRMITY IN THE ORDER PASSED BY THE LD. CIT(A). HENCE, WE INCLINED TO UPHOLD THE ORDER OF CIT(A) AN D REJECT THE GROUND RAISED BY THE REVENUE. ITA NO.508/VIZAG/2014 M/S. VIJAYA AGRO PRODUCTS LTD., VIJAYAWADA 13 13. THE NEXT ISSUE THAT CAME UP FOR OUR CONSIDERATI ON IS ADDITION TOWARDS UNEXPLAINED CREDITS U/S 68 OF THE ACT. THE A.O. MADE ADDITIONS OF RS.2,97,62,203/- TOWARDS TRADE CREDITORS U/S 68 OF THE ACT. THE A.O. WAS OF THE OPINION THAT THE ASSESSEE HAS FAILED TO PROVE THE GENUINENESS OF THE CREDITORS. THE A.O. FURTHER OBSERVED THAT OU T OF 771 TRADE CREDITORS, NONE OF THE CREDITORS HAVE CONFIRMED THE TRANSACTION WITH THE ASSESSEE. ALL THE LETTERS ISSUED TO THE CREDITORS HAVE BEEN RETURNED UN- SERVED OR NO SUCH ADDRESSES ARE FOUND, THEREFORE, O PINED THAT THE TRADE CREDITORS SHOWN BY THE ASSESSEE ARE UNEXPLAINED. I T IS THE CONTENTION OF THE ASSESSEE THAT ALL THE TRADE CREDITORS ARE AROUS ED FROM THE PURCHASE OF MATERIALS FROM THE SUPPLIERS. ALL THE TRADE CRE DITORS ACCOUNTS ARE RUNNING CURRENT ACCOUNTS AND ASSESSEE HAS MADE THE PAYMENTS IN THE SUBSEQUENT FINANCIAL YEARS. THE ASSESSEE FURTHER C ONTENDED THAT THE A.O. HAS MADE ADDITIONS JUST BECAUSE THE CREDITORS HAVE NOT CONFIRMED THE TRANSACTIONS. BUT, THE FACT IS THAT THE A.O. I SSUED LETTERS TO THE CREDITORS BY GIVING 5 DAYS TIME AND EXPECTS THEM TO SUBMIT THE STATEMENT OF ACCOUNTS WITHIN A SPAN OF 5 DAYS, WHIC H IS PRACTICALLY IMPOSSIBLE. THEREFORE, THE A.O. WAS NOT CORRECT IN MAKING ADDITIONS TOWARDS TRADE CREDITORS U/S 68 OF THE ACT, UNLESS HE DOUBTED THE GENUINENESS OF THE PURCHASES. ITA NO.508/VIZAG/2014 M/S. VIJAYA AGRO PRODUCTS LTD., VIJAYAWADA 14 14. WE HAVE HEARD BOTH THE PARTIES, PERUSED THE MATE RIALS AVAILABLE ON RECORD AND GONE THROUGH THE ORDERS OF THE AUTHOR ITIES BELOW. THE A.O. INVOKED THE PROVISIONS OF SECTION 68 OF THE AC T AND MADE ADDITIONS TOWARDS TRADE CREDITORS. THE A.O. WAS OF THE OPINI ON THAT THE ASSESSEE HAS FAILED TO FURNISH CONFIRMATION LETTERS FROM TRA DE CREDITORS AND ALSO THE LETTERS ISSUED TO THE TRADE CREDITORS HAVE BEEN RETURNED UN-SERVICED. THEREFORE, OPINED THAT THE ASSESSEE HAS FAILED TO D ISCHARGE INITIAL ONUS CAST UPON IT TO PROVE THE IDENTITY, GENUINENESS AND CREDITWORTHINESS OF THE TRANSACTIONS. ACCORDING TO THE A.O., OUT OF TO TAL 771 TRADE CREDITORS, NONE OF THE CREDITORS HAS CONFIRMED THE TRANSACTIO NS WITH THE ASSESSEE. IT IS THE CONTENTION OF THE ASSESSEE THAT THE A.O. HAS NOT GIVEN SUFFICIENT TIME TO THE CREDITORS TO CONFIRM TRANSACTIONS. THE A.O. ISSUED LETTERS ON 18.3.2014 GIVING THEM FIVE DAYS TO CONFIRM THE TRAN SACTIONS WITH THE ASSESSEE. THE ASSESSEE FURTHER CONTENDED THAT ALL THE CREDITORS BALANCES ARE RUNNING ACCOUNTS AND AROUSED TOWARDS S UPPLY OF RAW MATERIALS OR SERVICES WHICH WERE PAID DURING THE SU BSEQUENT FINANCIAL YEAR. IT IS FURTHER CONTENDED THAT THE A.O. HAS NE VER DOUBTED THE GENUINENESS OF THE PURCHASES. UNLESS THE PURCHASES ARE DOUBTED NO ADDITIONS CAN BE MADE TOWARDS TRADE CREDITORS U/S 68 OF THE ACT. 15. THE A.O. MADE ADDITIONS SOLELY ON THE GROUND TH AT THE TRADE CREDITORS ARE NOT CONFIRMED THE TRANSACTIONS. THE A .O. FURTHER STATED ITA NO.508/VIZAG/2014 M/S. VIJAYA AGRO PRODUCTS LTD., VIJAYAWADA 15 THAT THE LETTERS ISSUED TO THE CREDITORS HAVE BEEN RETURNED UNSERVICED, THEREFORE, HELD THAT THE CREDITORS ARE NOT GENUINE. WE DO NOT SEE ANY MERITS IN THE FINDINGS OF THE A.O., FOR THE REASON THAT WHEN PURCHASES ARE ACCEPTED AS GENUINE, HE CANNOT DOUBT TRADE CRED ITORS WHICH ARE AROUSED OUT OF CREDIT PURCHASES. WE FURTHER OBSERV ED THAT A.O. HAS ACCEPTED THE FINANCIAL STATEMENT FILED BY THE ASSES SEE AND ON THE BASIS OF SUCH FINANCIAL STATEMENT, THE NET PROFIT HAS BEE N TAXED. THIS IMPLIEDLY PROVES THAT THE A.O. HAS NOT DOUBTED THE FINANCIAL RESULTS DECLARED BY THE ASSESSEE. THEREFORE, WE ARE OF THE OPINION THA T WHEN THE PURCHASES HAVING BEEN ACCEPTED AS GENUINE, BALANCE REMAINING OUTSTANDING AT THE END OF THE YEAR AGAINST SUCH PURCHASES CANNOT BE TR EATED AS BOGUS AND ADDITIONS MADE ON THAT BASIS CANNOT BE SUSTAINED. 16. THE A.R. FURNISHED A PAPER BOOK CONTAINING FINA NCIAL STATEMENTS AND ALSO CONFIRMATION LETTERS OBTAINED FROM FEW TRA DE CREDITORS ALONG WITH BANK STATEMENTS. ON VERIFICATION OF THE FINAN CIAL STATEMENTS FILED BY THE ASSESSEE, WE FIND THAT BALANCE SHEET OF ASSE SSEE DOES NOT CONTAIN ANY ASSET OR LIABILITY OTHER THAN BUSINESS ASSET, STOCK IN TRADE & SUNDRY DEBTORS CORRESPONDING WITH SUNDRY DEBTORS. ON PERUSAL OF THE FINANCIAL FIGURES DECLARED BY THE ASSESSEE, WE NOTI CED THAT TRADE CREDITORS PAYABLE TO THE SUPPLIERS OF THE GOODS IS ALMOST EQUAL TO THE ITA NO.508/VIZAG/2014 M/S. VIJAYA AGRO PRODUCTS LTD., VIJAYAWADA 16 STOCK IN TRADE HELD BY THE ASSESSEE AND AMOUNT RECE IVABLE FROM THE DEBTORS. IT IS NOT A CASE OF A.O. THAT THERE IS INV ESTMENT IN PERSONAL ASSETS WHICH WAS EXPLAINED BY TRADE CREDITORS. UNDE R THESE CIRCUMSTANCES, THE A.O. WAS NOT CORRECT IN MAKING A DDITIONS TOWARDS TRADE CREDITORS BY INVOKING THE PROVISIONS OF SECTI ON 68 OF THE ACT. 17. IT IS PERTINENT TO DISCUSS THE CASE LAWS RELIED UPON BY THE ASSESSEE. THE ASSESSEE RELIED UPON THE DECISION OF HONBLE HIGH COURT OF ALLAHABAD IN THE CASE OF PANCHAMDAS JAIN (2006) 156 TAXMAN 507. THE HONBLE ALLAHABAD HIGH COURT, UNDER SIMILAR CIR CUMSTANCES HELD THAT ADDITIONS CANNOT BE MADE TOWARDS TRADE CREDITORS U /S 68 OF THE ACT AS UNEXPLAINED CREDITS, WHEN PURCHASES ARE ACCEPTED AS GENUINE. THE RELEVANT PORTION OF THE ORDER IS REPRODUCED HEREUND ER; THE TRIBUNAL HAS RECORDED A CATEGORICAL FINDING OF FACT BASED ON APPRECIATION OF MATERIALS AND EVIDENCE ON RECORD TH AT THE AO HAD ACCEPTED THE PURCHASES, SALES AS ALSO THE TRADING R ESULT DISCLOSED BY THE ASSESSEE. IT HAD RECORDED A FINDING THAT THE TW O AMOUNTS REPRESENTED THE PURCHASES MADE BY THE ASSESSEE ON C REDIT AND, THEREFORE, THE PROVISIONS OF S. 68 COULD NOT BE ATT RACTED IN THE PRESENT CASE. THE VIEW TAKEN BY THE TRIBUNAL ON THIS ISSUE IS SUSTAINABLE INASMUCH AS, ON THE BASIS OF THE FINDINGS RECORDED BY IT THAT THESE TWO AMOUNTS REPRESENTED PURCHASES MADE BY THE ASSESSEE ON CREDIT AND THE PURCHASES AND SALES HAVING BEEN ACCEPTED BY THE DEPARTMENT, THE QUESTION OF ADDITION OF THE SAID TWO AMOUNTS UNDER S. 68 DID NOT ARISE INASMUCH AS THE PROVISIONS OF S. 68 WOULD NOT BE AT TRACTED ON THE PURCHASES MADE ON CREDIT. ITA NO.508/VIZAG/2014 M/S. VIJAYA AGRO PRODUCTS LTD., VIJAYAWADA 17 18. THE ASSESSEE RELIED UPON THE DECISION OF THE CO ORDINATE BENCH OF ITAT, VISAKHAPATNAM IN THE CASE OF SURYA EARTH MOVI NG VS. ITO WARD-4, RAJAHMUNDRY IN ITA NO.316/VIZAG/2009 DATED 25.10.10 . THE COORDINATE BENCH OF THIS TRIBUNAL, UNDER SIMILAR CIRCUMSTANCES HELD THAT AMOUNT REPRESENTS PURCHASE ON CREDIT, PROVISIONS OF SECTIO N 68 OF THE ACT CANNOT BE APPLIED. THE RELEVANT PORTION OF THE ORDER IS R EPRODUCED HEREUNDER: WE HAVE HEARD THE RIVAL SUBMISSIONS AND CAREFULLY P ERUSED THE RECORD. THE MAIN OBJECTION OF THE ASSESSEE IS THAT THE TRAD E CREDITS CANNOT BE ADDED AS UNEXPLAINED CREDITS UNDER SECTION 68 OF TH E ACT. IN THIS REGARD, THE LEARNED AUTHORISED REPRESENTATIVES HAS RELIED U PON THE DECISION OF THIS BENCH IN THE CASE OF SAI CONCRETE PAVERS PVT. LTD., REFERRED (SUPRA). IN THAT CASE, THE OUTSTANDING CREDITORS FOR EXPENSES WERE DISALLOWED BY THE ASSESSING OFFICER. THE LEARNED CIT(A) DELETED THE ADDITION BY PLACING RELIANCE UPON THE DECISION OF HONBLE ALLAHABAD HIG H COURT IN THE CASE OF CIT V PANCHAMDAS JAIN (205 CTR 444), WHEREIN IT WAS HELD THAT THE PROVISIONS OF SECTION 68 ARE NOT ATTRACTED TO THE A MOUNTS REPRESENTING PURCHASES MADE ON CREDIT, WHEN THE ASSESSING OFFICE R HAS ACCEPTED THE PURCHASES AS GENUINE. THE BENCH ALSO NOTICED THAT THE OUTSTANDING AMOUNT HAD BEEN PAID IN THE SUBSEQUENT PERIOD. HEN CE THE BENCH DID NOT FIND ANY INFIRMITY IN THE DECISION OF THE LEARNED C IT(A). 19. THE ASSESSEE RELIED UPON THE DECISION OF ITAT, ALLAHABAD IN THE CASE OF JCIT VS. MATHURA DAS ASHOK KUMAR (2006) 101 TTJ 810. THE COORDINATE BENCH OF THIS TRIBUNAL, UNDER SIMILAR CI RCUMSTANCES HELD THAT ADDITIONS CANNOT BE MADE U/S 68 OF THE ACT TOWARDS TRADE CREDITORS. THE RELEVANT PORTION OF THE ORDER IS EXTRACTED AS U NDER: ALL THE PURCHASES MADE BY THE ASSESSEE WHEREVER THE SAME HAVE BEEN MADE FROM THE KARIGARS ARE SUPPORTED BY THE 'P URJAS' ISSUED BY IT. SUCH 'PURJAS' WERE FOUND TO BE DULY ENTERED IN 'JAMA JAKAR BAHI', WHICH IS A PART OF RECORDS KEPT BY THE ASSESSEE REG ULARLY TO RECORD ITS PURCHASES FROM KARIGARS. IN THE FINANCIAL RECORDS A LSO, ENTRIES OF THE ITA NO.508/VIZAG/2014 M/S. VIJAYA AGRO PRODUCTS LTD., VIJAYAWADA 18 PURCHASES OF SAREES HAVE DULY BEEN MADE ON THE BASI S OF PRIMARY RECORDS. THE PURCHASES RECORDED IN THIS MANNER HAVE BEEN ACCEPTED IN TOTO WITHOUT ANY KIND OF CONTROVERSY WHATSOEVER. AF TER THE PURCHASES OF SAREES SUPPORTED BY THE 'PURJAS' HAVE BEEN ACCEP TED, ANY FURTHER VERIFICATION ABOUT THE KARIGARS IN WHOSE FAVOUR SUC H PURJAS' HAVE BEEN ISSUED IS REALLY NOT NECESSARY; THE REASON BEING TH AT IT IS THE KARIGAR WHO COME TO THE SAREE DEALERS AND OFFERS HIS STOCK FOR BEING DEALT WITH BY THE SAME DEALERS. THE DEALERS ALSO HAVE NO OCCASION TO FEEL CONCERNED ABOUT THE NAMES AND ADDRESSES OF SUCH KAR IGARS AS PURCHASES FROM THEM ARE MADE ON 'CREDIT AND THAT TO O AFTER DUE APPROVAL OF THE SAME THROUGH INSPECTION AND OTHERWI SE. IN OTHER WORDS, IT IS ONLY THE VERIFICATION OF SAREES THAT A RE BROUGHT FOR SALE BY THE KARIGARS AT THE SHOP OF THE SAREE DEALERS WHICH IS RELEVANT AND NOT THE KARIGAR THEMSELVES. IT IS FOR THIS REASON THAT EVEN THE CBDT FELT THAT AFTER THE SALES (MADE OUT OF PURCHASES FROM KA RIGARS) ARE FOUND TO BE VERIFIABLE, IT IS NOT NECESSARY THAT THERE SH OULD BE AN INSISTENCE FOR PRODUCING THE KARIGARS. THE INSTRUCTIONS LIKE T HIS, ALTHOUGH MAY NOT BE CAPABLE OF BEING TREATED AS HAVING BINDING E FFECT, NONETHELESS THEY LAY DOWN NECESSARY GUIDELINES FOR COMPLETION O F ASSESSMENT IN A PARTICULAR LINE OF TRADE. THIS LOGIC IS APPLICABLE WITH ALL ITS FORCE IN THE PRESENT CASE. NECESSITY TO HAVE THE ADDRESSES OF TH E KARIGARS MAY ARISE ONLY FOR THE PURPOSES OF MAKING ENQUIRIES FRO M THE KARIGARS, SO FAR AS THE ASSESSMENT OF THE SAME DEALERS IS CONCER NED. IF SUCH A VERIFICATION IS NOT REQUIRED TO BE MADE, IN VIEW OF THE REGULAR SYSTEM OF ACCOUNTING FOLLOWED BY THE ASSESSEE AS PER THE P RACTICE PREVALENT IN THIS TRADE, ONE FAILS TO UNDERSTAND AS TO WHY NO N-FURNISHING OF ADDRESSES SHOULD BE MADE AN ISSUE BY THE AO FOR MAK ING ADDITION AND THAT TOO ON SELECTIVE BASIS. FURTHER, 15 PURJAS VAL UE OF WHICH HAS BEEN TREATED AS BOGUS LIABILITY, DO CONTAIN FULL PARTICU LARS OF THE KARIGARS. ANNEX. A ITSELF HAS GOT A COLUMN 'NAMES AND ADDRESS ES OF THE KARIGARS' AND AGAINST ALL THE 15 'PURJAS', NECESSAR Y INFORMATION IN THIS RESPECT HAS BEEN GIVEN. NATURALLY, IN THE RECORDS O F THE ASSESSEE, ONLY SUCH NAMES AND ADDRESSES WOULD BE FOUND RECORDED, A S TOLD TO IT BY THE KARIGAR THEMSELVES. BEYOND THIS, THE ASSESSEE I S NOT CONCERNED TO ASCERTAIN CORRECT OR FULL ADDRESSES OF THE KARIGARS AS THE PURCHASES HAVE BEEN MADE ON CREDIT. IT IS FOR THE KARIGARS CO NCERNED OR HIS NOMINEE AND/OR TRANSFEREE OF THE 'PURJA' TO COLLECT HIS PAYMENT FROM THE OFFICE OF THE SAREE DEALER. NOT THAT THE SAME D EALER ITSELF HAS TO APPROACH THE KARIGARS FOR MAKING PAYMENTS TO THEM. IT HAS, THEREFORE, TO BE HELD THAT EVEN IF THE ADDRESS IS INCOMPLETE O R EVEN IN AN EXTREME SITUATION, WHERE THE KARIGAR IS NOT FOUND A T THE ADDRESS AVAILABLE WITH THE ASSESSEE (AS WRITTEN IN THE PURJ A), NO ADVERSE INFERENCE CAN BE DRAWN IN THE ASSESSMENT OF THE SAM E DEALER OR ANY OF THE ASPECTS OF THE PURCHASES. THIS IS MORE SO IN A CASE LIKE THIS WHERE THE PURCHASES AND SALES HAVE BEEN DULY ACCEPT ED. THIS LEADS TO A CONCLUSION THAT PURJAS THEMSELVES AS ALSO CONTENT S THEREOF HAVE GOT GREAT EVIDENTIARY VALUE. IF PAYMENT AGAINST THE 'PU RJA' IS RECORDED IN THE BOOKS OF ACCOUNT, THEN THE LIABILITY IN RELATIO N TO SUCH 'PURJA' HAS ITA NO.508/VIZAG/2014 M/S. VIJAYA AGRO PRODUCTS LTD., VIJAYAWADA 19 TO BE TREATED AS GENUINE UNLESS OF COURSE SOME MATE RIAL IS BROUGHT ON RECORD THAT THE ASSESSEE HAS ACTUALLY MADE PAYMENT AGAINST THE SAME WHICH IS NOT RECORDED. IN THE PRESENT CASE, NO SUCH MATERIAL HAVING BEEN BROUGHT ON RECORD, IT COULD NOT BE SAID THAT T HE LIABILITY IS BOGUS. EVEN AT THE COST OF REPETITION, IT IS STATED THAT B OGUS LIABILITY PRE- SUPPOSES TWO THINGS, FIRSTLY, THERE IS A LIABILITY INCURRED AND SECONDLY SUCH LIABILITY HAS BEEN DISCHARGED WITHOUT BEING RE CORDED IN THE BOOKS OF ACCOUNT. AS NO SUCH MATERIAL IS AVAILABLE ON REC ORD, THE LIABILITY IN QUESTION CANNOT BE SAID TO BE BOGUS SO AS TO ATTRAC T ANY ADDITION ON THIS SCORE. IT ALSO APPEARS THAT THE AO HAS TREATED THE LIABILITY TO BE OF CASH CREDIT' IN NATURE AND THAT IS WHY HE FELT ANX IOUS TO HAVE THE IDENTITIES OF THE CREDITORS ESTABLISHED. IN THIS RE SPECT, FIRST OF ALL, CREDITS 'IN THE SUNDRY CREDITORS (UDHAR KHAREED) KH ATA' ARE REFERABLE TO THE PURCHASES OF SAREES MADE ON CREDIT BASIS. AS THE PURCHASES HAVE BEEN HELD TO BE GENUINE AND ACCEPTED AS SUCH, THE CREDITS THAT REMAINED OUTSTANDING IN SUCH ACCOUNT CANNOT BE TREA TED TO HAVE REMAINED UNEXPLAINED. THE BALANCE APPEARING IN THIS ACCOUNT, WHICH INCLUDED THE DISPUTED ADDITION ALSO IS THE SUM TOTA L OF PURCHASES THAT REMAINED UNPAID AT THE END OF THE YEAR. AS THE GENU INENESS OF SUCH PURCHASES HAS NOT BEEN DISPUTED, RATHER THE SAME HA S BEEN ACCEPTED, THE CREDITS STAND FULLY EXPLAINED AND NO ADVERSE IN FERENCE IS CALLED FOR EITHER ON FACTS OR IN LAW. THUS, ON A CONSIDERATION OF TOTALITY OF FACTS AND CIRCUMSTANCES OF THE CASE, AS HAVE BEEN DISCUSS ED ABOVE, THE LIABILITY AGGREGATING RS. 1,05,800 AS HAS BEEN SHOW N AGAINST 15 PURJAS/KARIGARS COULD NOT BE TREATED AS BOGUS LIABI LITY. THE CIT(A) HAS RIGHTLY DELETED THE ADDITION AND NO INTERFERENCE IN THE SAME IS CALLED FOR. 20. CONSIDERING THE FACTS AND CIRCUMSTANCES OF THIS CASE AND ALSO FOLLOWING CASE LAWS CITED ABOVE, WE ARE OF THE VIEW THAT NO ADDITIONS CAN BE MADE U/S 68 OF THE ACT, TOWARDS TRADE CREDIT ORS WHEN GENUINENESS OF THE PURCHASES ARE NOT DOUBTED. IN TH E PRESENT CASE ON HAND, THE A.O. HAS NOT DOUBTED THE GENUINENESS OF T HE PURCHASES. THE A.O. MADE ADDITIONS TOWARD TRADE CREDITORS FOR THE SIMPLE REASON THAT THE CREDITORS HAVE NOT CONFIRMED THE TRANSACTIONS W ITH THE ASSESSEE. THEREFORE, WE ARE OF THE VIEW THAT THE A.O. WAS NOT CORRECT IN MAKING ITA NO.508/VIZAG/2014 M/S. VIJAYA AGRO PRODUCTS LTD., VIJAYAWADA 20 ADDITIONS TOWARDS TRADE CREDITORS U/S 68 OF THE AC T FOR NON FURNISHING CONFIRMATION OF BALANCES BY THE CREDITORS. THE CIT (A) AFTER CONSIDERING RELEVANT DETAILS FILED BY THE ASSESSEE RIGHTLY DELE TED THE ADDITIONS. WE DO NOT SEE ANY REASON TO INTERFERE WITH THE ORDER B ASED BY THE CIT(A). HENCE, WE INCLINED TO UPHOLD THE CIT(A) ORDER AND R EJECT THE GROUND RAISED BY THE REVENUE. 21. IN THE RESULT, THE APPEAL FILED BY THE REVENUE IS DISMISSED. THE ABOVE ORDER WAS PRONOUNCED IN THE OPEN COURT ON 29 TH JUL16. SD/- SD/- ( . ) ( . ) (V. DURGA RAO) (G. MANJUNATHA) /JUDICIAL MEMBER /ACCOUNTANT MEMBER # /VISAKHAPATNAM: ' /DATED : 29.07.2016 VG/SPS )# *# /COPY OF THE ORDER FORWARDED TO:- 1. / THE APPELLANT THE DCIT, CIRCLE-1(1), VIJAYAWAD A 2. / THE RESPONDENT M/S. VIJAYA AGRO PRODUCTS LTD., DR.NO.2/1, ENIKEPADU, VIJAYAWADA RURAL, KRISHNA DISTRICT, EDLAPADU. 3. + / THE CIT, VIJAYAWADA 4. + ( ) / THE CIT (A), VIJAYAWADA 5. # . , . , # / DR, ITAT, VISAKHAPATNAM 6 . / GUARD FILE / BY ORDER // TRUE COPY // 12 . (SR.PRIVATE SECRETARY) . , # / ITAT, VISAKHAPATNAM