Ashwani Kumar Prop, V. ACIT Circle 39 (1),

ITA 535/DEL/2007

• Counselvise Citation: [2012] 140 COUNSELVISE.COM (IT) 61702 (ITAT-DELHI)
• Duration Of Justice: 5 year(s) 3 month(s) 13 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 18-05-2012
• Appeal Filed By: Assessee
• Order Result: Dismissed
• Bench Allotted: A
• Next Hearing Date: 25-04-2012
• Assessment Year: 2003-2004
• Appeal Filed On: 05-02-2007
• Result in Favour of: Revenue
• Court: TRIBUNAL
• Department Lawyers: MRS ANUSHA KHURANA
• Assessee Lawyers: M P RUSTOGI; DEEPAK MALIK S
• Keywords: Unexplained cash credit; Depreciation; Principle of natural justice
• Section: 133A; 133(6); 131; 68; 6

Judgement Text

ITA NOS. 535 & 1513/DEL/2007 1 IN THE INCOME TAX APPELLATE TRIBUNAL DELHI BENCH A NEW DELHI BEFORE SHRI RAJPAL YADAV, JUDICIAL MEMBER AND SHRI SHAMIM YAHYA, ACCOUNTANT MEMBER I.T.A. NO. 535/DEL/2007 A.Y. : 2003-04 SHRI ASHWANI KUMAR PROP. M/S SHUDH GARWAL PANEER NIRMATA SANGH, NO. 97-A, DDA FLATS (LIG), MOTIA KHAN, NEW DELHI (PAN : AGHPK5756G) VS. ASSTT. COMMISSIONER OF INCOME TAX, CIRCLE 39(1), NEW DELHI AND ITA NO. 1513 /DEL/2007 A.Y. 2003-04 DCIT, CIR., 39(1), VS. SH. ASHWANI KUMAR, ROOM NO. 222, CR BLDG., PROP. SHUDH GARDHWAL PAN EER NEW DELHI NIRMATA SANGTH, 97-A, DDA FLATS, (LIG), MOTIA KHAN, NEW DELHI (APPELLANTS ) (APPELLANTS ) (APPELLANTS ) (APPELLANTS ) (RESPONDENTS ) (RESPONDENTS ) (RESPONDENTS ) (RESPONDENTS ) ASSESSEE BY : SH. M.P. RUSTOGI & DEEPAK MALIK, ADVOCATES DEPARTMENT BY : MRS. ANUSHA KHURANA, SR. D.R. ORDER ORDER ORDER ORDER PER SHAMIM YAHYA : AM PER SHAMIM YAHYA : AM PER SHAMIM YAHYA : AM PER SHAMIM YAHYA : AM THESE CROSS APPEALS BY THE ASSESSEE AND THE REVEN UE EMANATE OUT OF ORDER OF THE LD. COMMISSIONER OF INCOME TAX ( APPEALS) DATED 29.12.2006 AND PERTAIN TO ASSESSMENT YEAR 2003-04. 2. THE GROUNDS RAISED IN THE REVENUES APPEAL READ AS UNDER:- ITA NOS. 535 & 1513/DEL/2007 2 THE LD. COMMISSIONER OF INCOME TAX (APPEALS) HAS ERRED IN DELETING THE ADDITION OF ` 11,84,861/- ON ACCOUNT OF UNDISCLOSED CLOSING STOCK OUT OF CONSIGNMENT PURCHASES, BY OBSERVING THAT THE ASSESSING OFFICER HAS NOT NOTED ANY MATERIAL OR DEF ECT IN THE ACCOUNT OF ASSESSEE AND ALSO NOTHING WAS FOU ND INCORRECT IN EXPLANATION FOR THE DISCREPANCY IN FIG URES AT THE ASSESSMENT STAGE. THE LD. COMMISSIONER OF INCOME TAX (APPEALS) HAS ERRED IN DELETING THE ADDITION OF ` 1,22,52,846/- ON ACCOUNT OF UNEXPLAINED CREDITORS IGNORING THE FACT THAT NONE OF THE CREDITORS EXAMINED AT THE STAGE OF ASSESSMENT PROCEEDINGS, COULD CONFIRM THE AMOUNT TO BE RECEIVED FROM THE ASSESSEE. EVEN AT THE STAGE OF REMAND REPORT, THE CREDITORS DID NOT ADDUCE ANY COGENT EVIDENCE EXCEPT STATING THAT THE MONEY DUE FROM THE ASSESSEE BELONGED TO THEIR RESPECTIVE NEIGHBORS / OTHER VILLAGERS. REVENUES APPEAL REVENUES APPEAL REVENUES APPEAL REVENUES APPEAL 3. APROPOS FIRST GROUND REGARDING DELETION OF ADDI TION OF ` 11,84,861/-. ON THIS ISSUE ASSESSING OFFICER NOT ED THAT ALLEGED CONSIGNMENT TRANSACTIONS ARE THE OWN TRADING OF ASS ESSEE. AND THE QUANTUM OF SUCH PURCHASE / SALE OF THESE CONSIGNMENT IS ACTUALLY IS ` ITA NOS. 535 & 1513/DEL/2007 3 3,49,90,459/- AND ` 3,38,05,598/- RESPECTIVELY. ASSESSING OFFICER INQUIRED AS TO WHY RESULTANT CLOSING STOCK OF GOODS RECEIVED ON ALLEGED CONSIGNMENT TRANSACTIONS WERE NOT REFLECTED IN THE CLOSING STOCK. ASSESSEE RESPONDED THAT THE DETAIL OF CLOSING STOCK FILED ON RECORD IS ONLY IN RESPECT OF OWN STOCK OF THE FIRM. DETAIL OF CONSIGNMENT STOCK IS ENCLOSED SEPARATELY. THE SAID STOCK WILL NOT REF LECT IN BALANCE SHEET, AS THE ASSESSEE IS PASSING ENTRY ONLY FOR THOSE SU PPLY WHICH HAS BEEN SOLD TO CUSTOMERS. THE CONSIGNMENT IS HELD ONLY I N TRUST. ASSESSING OFFICER WAS NOT SATISFIED WITH THE REPLY. HE HE LD THAT IT HAS BEEN CONCLUSIVELY PROVED AND ESTABLISHED THAT THE ALLEGE D CONSIGNMENT TRANSACTIONS WERE NOTHING BUT THE ASSESSEES OWN PU RCHASE / SALE INTRODUCED IN THE BOOKS UNDER THE GARB OF CONSIGNMEN T PURCHASE / SALE. ASSESSING OFFICER OPINED THAT THE SURPLUS OF PURCHASE OVER THE SALES IS NOTHING BUT THE CLOSING STOCK AND THIS FAC T IS ACCEPTED BY THE ASSESSEE. HOWEVER, SINCE SUCH CLOSING STOCK IS N OT DECLARED IN THE BOOKS, AN AMOUNT OF ` 11,84,861/- (` 3,49,90,459 MINU S ` 3,38,05,598/-) WAS ADDED TO THE TAXABLE INCOME ON A CCOUNT OF UNDISCLOSED CLOSING STOCK. 4. BEFORE THE LD. COMMISSIONER OF INCOME TAX (APPEALS ), IT WAS STATED THAT THE ACTUAL CONSIGNMENT PURCHASES AMOUNTE D TO ` 3,38,37,354/-. PARTY-WISE AND MONTH-WISE DETAILS OF THESE PURCHASE ITA NOS. 535 & 1513/DEL/2007 4 WERE FILED BEFORE THE ASSESSING OFFICER. IT WAS C ONTENDED THAT THE INCORRECT FIGURE OF ` 3,49,90,459/- IN RESPECT OF S UCH PURCHASES HAD BEEN GIVEN EARLIER BY INADVERTENTLY MIXING UP THE F IGURES OF MONTHLY SALES WITH MONTHLY PURCHASES IN SOME MONTHS OR BY MIXI NG UP OPENING OR CLOSING STOCK AT THE END OF THE MONTH WITH THE RE LEVANT MONTHLY PURCHASES. THE ACTUAL CLOSING STOCK OUT OF THE C ONSIGNMENT PURCHASES AMOUNTED TO ` 31,755/- AND THE SAME HAD BE EN DULY DISCLOSED IN THE BALANCE SHEET. IT WAS FURTHER S UBMITTED THAT THE OPENING STOCK FIGURES COULD NOT BE INCLUDED INADVE RTENTLY IN THE MONTHS OF JULY, OCTOBER TO MARCH, 2003 AND THIS FACT WAS EXPLAINED TO THE ASSESSING OFFICER VIDE LETTER DATED 15.2.2006 WHICH WAS SUBSEQUENTLY CORRECTED ON 22.3.2006 DURING THE COUR SE OF ASSESSMENT PROCEEDINGS ITSELF. IT WAS FURTHER SUBMITTED TH AT THE CORRECT FIGURES WERE DULY WITNESSED BY THE ASSESSING OFFICER IN H ER OWN HAND WRITING ACCEPTING THE TYPING ERRORS. IT WAS FURTHER ARGUED THAT THE ADDITION ON THIS ACCOUNT WAS ARBITRARY AND UNJUSTIFIED AND D ESERVED TO BE DELETED. CONSIDERING THE ABOVE LD. COMMISSIONER O F INCOME TAX (APPEALS) HELD THAT IT IS SEEN THAT THE BASIC PREMIS E ON WHICH THIS ADDITION HAS BEEN MADE IS AGAIN THE SAME I.E. THE CO NSIGNMENT SALES ARE, IN FACT, SALES MADE BY THE ASSESSEE ON HIS OW N ACCOUNT. HOWEVER, LD. COMMISSIONER OF INCOME TAX (APPEALS) NOT ED THAT HE HAS ITA NOS. 535 & 1513/DEL/2007 5 DISCUSSED IN PARA 9 AND 9.1 (INFRA), THIS PREMISE IS FACTUALLY NOT CORRECT. MOREOVER, NO MATERIAL DEFECT HAS BEEN NOTED IN THE A CCOUNTS MAINTAINED BY THE ASSESSEE. LD. COMMISSIONER OF INCOME TAX (APPEALS) FURTHER OBSERVE THAT THE DISCREPANCY IN T HE FIGURES HAS ALSO BEEN EXPLAINED BY THE ASSESSEE AT THE ASSESSMENT ST AGE ITSELF AND THIS EXPLANATION HAS NOT BEEN FOUND TO BE INCORRECT . ACCORDINGLY, HE HELD THAT THE ADDITION APPEARS TO BE UNCALLED FOR AND ACCORDINGLY DELETED. 5. AGAINST THE ABOVE ORDER THE REVENUE IS IN APPEAL BEFORE US. 6. WE HAVE HEARD THE RIVAL CONTENTIONS IN LIGHT OF THE MATERIAL PRODUCED AND PRECEDENT RELIED UPON. WE FIND THAT LD. COMMISSIONER OF INCOME TAX (APPEALS) HAS GIVEN A FINDING THAT TH E PREMISE OF THE ASSESSING OFFICER THE CONSIGNMENT SALES ARE, IN FAC T, SALES MADE BY THE ASSESSEE ON HIS OWN ACCOUNT IS FACTUALLY NOT CO RRECT. THE DISCREPANCY IN THE FIGURES HAS ALSO BEEN EXPLAINED BY THE ASSESSEE AT THE ASSESSMENT STAGE ITSELF AND THIS EXPLANATION H AS NOT BEEN FOUND TO BE INCORRECT. UNDER THE CIRCUMSTANCES, WE DO NOT FIND ANY INFIRMITY IN THE ORDER OF THE LD. COMMISSIONER OF INCOME TAX (AP PEALS) AND ACCORDINGLY, WE UPHOLD THE SAME. ITA NOS. 535 & 1513/DEL/2007 6 7. APROPOS SECOND ISSUE DELETING THE ADDITION OF ` 1,22,52,846/- ON ACCOUNT OF UNEXPLAINED CREDITORS. ON THIS ISSUE AS SESSING OFFICER HELD THAT IN VIEW OF THE DISCUSSIONS MADE IN THE FOREG OING PARAGRAPHS IT WAS CONCLUSIVELY PROVED THAT THE ALLEGED CONSIGNMEN T PURCHASES/ SALES WERE ACTUALLY THE ASSESSEES OWN TRADING OF MI LK AND PANEER AND OTHER PRODUCTS. THESE PRODUCTS WERE ACTUALLY PRO CURED IN CASH BY THE ASSESSEE. HOWEVER, BY PRESENTING THE ACCOUNTS IN A WISHY WASHY MANNER, THE ASSESSEE HAS SHOWN BOGUS CREDITORS AMOUN TING TO ` 1,02,72,113/-. THE IDENTITY / GENUINENESS / CREDI TWORTHINESS COULD NOT BE PROVED WHEN NOTICES U/S. 133(6) WERE ISSUED. MORESO, THE PERSON WHICH THE ASSESSEE HAS PRODUCED IN THE COURSE OF AS SESSMENT PROCEEDINGS FAILED TO PROVE THEIR IDENTITY /CREDITW ORTHINESS. AS FAR AS THE QUESTION OF GENUINENESS OF THE TRANSACTIONS WIT H THESE FOUR PERSONS IS CONCERNED, IN VIEW OF DISCUSSIONS MADE IN THE FOREGOING PARAGRAPHS THESE TRANSACTIONS CANNOT BE SAID TO BE GENUINE. ASSESSING OFFICER FURTHER POINTED OUT THAT WHEREAS THE COPY OF ACCOUNT OF HAZI NAZAR & CO. IS CONFIRMED BY ONE SHRI RAJES H IN THE CAPACITY OF PROPRIETOR OF THIS CONCERN, ON THE CONTRARY THE ASSE SSEE HAS PRODUCED ONE SHRI HAZI NAZAR FOR VERIFICATION WHO WAS TOTALL Y ILLITERATE. ASSESSING OFFICER FURTHER NOTED THE DISCREPANCIES IN THE STATEMENT OF OTHER PERSONS IN THIS REGARD. ULTIMATELY, ASSESSI NG OFFICER CONCLUDED ITA NOS. 535 & 1513/DEL/2007 7 THAT UNDER THE CIRCUMSTANCES AN AMOUNT OF ` 1,02,72,1 13/- WAS BEING ADDED TO THE TAXABLE INCOME U/S. 68 OF THE IT ACT O N ACCOUNT OF BOGUS CREDITORS SHOWN IN THE BOOKS UNDER THE GARB OF CONS IGNMENT VENDORS. ASSESSING OFFICER FURTHER HELD AS UNDER:- AS STATED ABOVE, NOTICES UNDER SECTION 133(6) WERE ISSUED TO VARIOUS PERSONS WHO ARE SHOWN AS CREDITORS AS ON 31.3.2003 IN THE BALANCE SHEET. BESIDES THE AFOREMENTIONED ALLEGED CONSIGNMENT VENDORS, NOTICES U/S. 133(6) WERE ALSO ISSUED TO THE FOLLOWING PERSONS WHICH ALSO CAME BACK UNSERVED AND THE ASSESSEE WAS APPRISED OF THIS FACT. THEIR RESPECTIVE BALANCES AS REFLECTED IN THE BALANCE SHEET IS ALSO MENTIONED AGAINST THEIR NAME. S.NO. NAME OF THE PARTY AMOUNT PAYABLE AS ON 31.3.2003. I) TIWARY DAIRY 478367 II) STANDARD DAIRY PRODUCTS 758882 III) BALAJI MILK PRODUCTS 743484 TOTAL 19,80,733/- ITA NOS. 535 & 1513/DEL/2007 8 NO EXPLANATION COULD BE OFFERED BY THE ASSESSEE IN THIS REGARD. AS SUCH CREDITORS TO THE EXTENT OF ` 19,80,733/- FURTHER REMAINS UNVERIFIED AND UNSUBSTANTIATED. AS SUCH, THESE CREDITORS ARE ALSO HELD TO BE BOGUS CREDITORS. ACCORDINGLY, AN AMOUNT OF ` 19,80,733/- IS ADDED TO THE TAXABLE INCOME OF THE ASSESSEE BEING BOGUS CREDITORS U/S. 68 OF THE IT AC T. NET ADDITION ON ACCOUNT OF BOGUS CREDITORS (ALLEGED CONSIGNMENT VENDORS AND AFORESTATED THREE VENDORS) THEREFORE WORKS OUT TO ` 1,22,52,846/- (` 10272113 + 1980733). 8. BEFORE THE LD. COMMISSIONER OF INCOME TAX (APPEALS) ASSESSEE SUBMITTED THAT THE MILK PURCHASES/ SALES WERE MADE DI RECTLY TO THE CONSUMERS ON CONSIGNMENT BASIS, THROUGH TRANSACTIONS RECORDED IN THE ACCOUNTS OF CONSIGNMENT PURCHASES/SALES. COMMISSION EARNED ON SUCH SALE IS ` 6,58,053/- WHICH HAS BEEN CREDITED S EPARATELY TO P&L A/C. IT WAS FURTHER SUBMITTED THAT THE ADVERSE INFERENCE HAS BEEN DRAWN IN THE MATTER OF 13 VENDORS. NOTICES ISSUED U/S. 133( 6) IN 6 CASES WERE RECEIVED BACK UNSERVED. OUT OF 13 VENDORS, FOUR, W HO WERE SERVED WITH NOTICES U/S. 133(6) OF IT ACT PRESENTED THEMSE LVES BEFORE THE ASSESSING OFFICER. ALL SUCH PERSONS HAVE STATED ON OATH IN THEIR RESPECTIVE STATEMENT THAT THEY HAVE DEALT WITH THE ASSESSEE IN MILK ITEMS. IT WAS STATED THAT THESE VENDORS GENERALLY COLLECT MILK DOOR TO ITA NOS. 535 & 1513/DEL/2007 9 DOOR FROM THE VILLAGERS ON CASH PAYMENT AND THEY HA D CONFIRMED MANUFACTURE OF MILK PRODUCTS AT THEIR RESPECTIVE VILL AGES/ PLACES. THEY HAVE ALSO CONFIRMED SUPPLY OF MILK PRODUCTS SUC H AS PANEER, GHEE, CREAM TO THE ASSESSEE FOR SALE ON COMMISSION BA SIS. ALL THESE PERSONS HAVE FURTHER CONFIRMED RECEIVABLES FROM THE ASSESSEE ON THE BASIS OF THEIR MEMORY AS THEY MAINTAINED TEMPORARY RECO RD OF SUCH TRANSACTIONS. REGARDING THE DENIAL OF DEALINGS BY ONE, THEKEDAR KHURSHID, IT WAS STATED THAT THE SUMMONS WERE ISSUED ON THE WRONG ADDRESS. THEREFORE, IN THIS REGARD, IT WAS OBSER VED THAT WRONG PERSON WAS SUMMONED FOR COLLECTING INFORMATION AGAINST THE ASSESSEE. THIS PERSON HAS RIGHTLY DENIED HAVING ANY DEALING WITH T HE ASSESSEE. LD. COMMISSIONER OF INCOME TAX (APPEALS) HELD THAT USE O F WRONG PERSON AGAINST THE ASSESSEE WITHOUT GIVING OPPORTUNITY TO REBUT OR CROSS EXAMINE HAS FURTHER DEPRIVED HIM OF NATURAL JUSTIC E. IT WAS ALSO CONTENDED THAT FROM THE ADDRESSES, IT WILL BE OBSERV ED THAT VENDORS BEING RESIDENT OF REMOTE AREAS OF GAJROLA, SAMBOLI, H ASANPUR IN UP AND NUH / FEROZEPUR JHIRKA, IN HARYANA WERE NOT SU MMONED U/S. 131 OF IT ACT TO ENSURE THEIR APPEARANCE. IT WAS SUBMI TTED THAT THE FACT REMAINS THAT THE ASSESSING OFFICER HAD FAILED TO MAK E ANY ATTEMPT TO USE CHANNEL AS PROVIDED IN LAW IN THE INTEREST OF N ATURAL JUSTICE. BESIDES, THE ASSESSEE SHOULD HAVE BEEN GIVEN AN O PPORTUNITY ITA NOS. 535 & 1513/DEL/2007 10 OF BEING HEARD AND A RIGHT TO QUESTION THE CORRECTN ESS OR THE RELEVANCE OF THE MATERIAL ON THE BASIS OF WHICH THE ASSESSING OFFICER ALLEGED THAT ALL CREDITORS WERE BOGUS. HENCE, IT WAS CONTENDE D THAT THE ADDITION MADE BY THE ASSESSING OFFICER WAS UNJUSTIFIED AND SHOULD BE DELETED. THEREAFTER, LD. COMMISSIONER OF INCOME TAX (APPEALS) NOTED THAT SINCE THE ASSESSEE HAD ALLEGED SUMMONING OF WRONG PER SON, DENIAL OF NATURAL JUSTICE AND LACK OF OPPORTUNITY, THE ASSESS ING OFFICER WAS REQUIRED TO CONDUCT AN INQUIRY AND SEND HIS REPORT. IN THIS REGARD, THE ASSESSING OFFICER HAS STATED THAT IN ORDER TO V ERIFY THE GENUINENESS OF THE CREDITORS NOTICES U/S. 133(6) /131 WERE SENT DURING THE REMAND STAGE. THE STATEMENT OF SEVERAL CREDITORS WERE RE CORDED ON OATH U/S. 131 OF THE IT ACT. AS A RESULT OF THE ABOVE INQU IRIES FROM THE CREDITORS, THE ASSESSING OFFICER HAS CONCLUDED THA T ALMOST ALL THE PURCHASES FROM THE ABOVE CREDITORS WERE DONE IN CASH AND THE ACCOUNTS WERE KEPT BY THE ASSESSEE ONLY, CREDITORS BEING ILLITERATE. IT WAS ALSO REPORTED THAT THEY HAVE CONFIRMED THE SUPP LIES MADE AND CREDIT BALANCES IN ROUND FIGURES. FURTHER, ONE OF THE CREDITORS VIZ. M/S JAI MATA PITHI CORNER AGAINST WHOM CASH BALANCE OF ` 2 233/- IS OUTSTANDING DID NOT RESPOND TO NOTICE U/S. 133(6) O F THE IT ACT. IN HIS REJOINDER THE ASSESSEE HAS STATED THAT THE VENDORS HAVE ACCEPTED HAVING SUPPLIED MILK AND MILK PRODUCTS DIRECTLY TO TH E CONSUMERS ON ITA NOS. 535 & 1513/DEL/2007 11 INSTRUCTIONS OF THE ASSESSEE AND ALSO TO THE ASSESS EE. THEY HAVE ALSO CONFIRMED THE OUTSTANDING AMOUNT. IT WAS ALSO STAT ED THAT THE IDENTITY OF THESE SUPPLIERS HAS BEEN ESTABLISHED A ND THEY HAVE ALSO ACCEPTED THE FACT THAT THEIR DUES WERE OUTSTANDING AGAINST THE ASSESSEE. HENCE, THE ADDITION MADE BY THE ASSESS ING OFFICER WAS REQUESTED TO BE DELETED. CONSIDERING THE ABOVE , LD. COMMISSIONER OF INCOME TAX (APPEALS) HELD AS UNDER:- 9. I HAVE CONSIDERED SUBMISSIONS OF THE APPELLANT, REPORT OF THE ASSESSING OFFICER AND HAVE ALSO GONE THROUGH THE ASSESSMENT ORDER. IT IS SEEN THAT THE ADDITION MADE BY THE ASSESSING OFFICER IS PRIMARILY BASED ON THE STATEMENTS RECORDED BY THE ASSESSING OFFICER U/S. 131 AND ALSO ON THE FACT THAT IN SOME CASES NOTICE U/S. 133(6) WAS RETURNED UNSERVED. THE ASSESSING OFFICER HAS, IN PARTICULAR, RELIED ON THE FACTS THAT SH. HAZI NAZAR WAS ILLITERATE AND THE COPY OF ACCOUNT WAS CONFIRMED BY ONE SH. RAJESH; COPY OF ACCOUNT IN THE CASE OF SH. INSAF ALI WAS AFFIRMED BY ONE SH. SHAUKAT AND THE APPELLANT HAD FAILED TO PRODUCE THE REMAINING CREDITORS U/S. 133(6). IT IS, ITA NOS. 535 & 1513/DEL/2007 12 HOWEVER, ALSO NOTED THAT THE APPELLANT WAS NEITHER CONFRONTED WITH THE STATEMENTS/ FACTS GATHERED IN THE COURSE OF ASSESSMENT PROCEEDINGS NOR WAS GIVEN AN OPPORTUNITY TO CROSS EXAMINE THE PERSON/ WHO HAD GIVEN STATEMENT BEFORE THE ASSESSING OFFICER. 9.1 NOW, IN THE COURSE OF REMAND PROCEEDINGS, THE ASSESSING OFFICER HAS AGAIN RECORDED STATEMENTS OF SOME OF THE SUPPLIERS AND ALSO GOT INFORMATION U/S. 133(6). IT IS ALSO SEEN THAT INSTEAD OF INCORRECT PERSON NAMED THEKEDAR KHURSHID, THIS TIME RIGHT PERSON WAS SUMMONED AND EXAMINED TIME. ALL THESE PERSONS HAVE CONFIRMED THE OUTSTANDING BALANCES. SOME OF THEM HAVE ACCEPTED HAVING SUPPLIED MILK/MILK PRODUCTS DIRECTLY TO THE CONSUMERS ON INSTRUCTIONS OF THE APPELLANT WHILE OTHERS HAVE ACCEPTED HAVING SUPPLIED THESE ITEMS DIRECTLY TO THE APPELLANT. IT, THEREFORE, WOULD NOT BE CORRECT TO SAY THAT THE SALES MADE BY THE APPELLANT WERE ON HIS OWN ACCOUNT OR THAT THE CREDITS SHOWN BY HIM WERE ITA NOS. 535 & 1513/DEL/2007 13 BOGUS. IDENTITIES AND CREDITWORTHINESS OF THESE SUPPLIERS HAVE NOT BEEN DOUBTED BY THE ASSESSING OFFICER IN HIS REPORT. SIMILARLY, THE GENUINENESS OF THE TRANSACTION IS ALSO NOT IN DOUBT AS THE CREDITORS HAVE ACCEPTED HAVING SUPPLIED MILK / MILK PRODUCTS TO THE APPELLANT / CONSUMERS. LACK OF RESPONSE TO LETTER U/S. 133(6) FROM JAI MATA PITHI CORNER, AS REPORTED BY THE ASSESSING OFFICER, WOULD NOT MAKE MUCH OF DIFFERENCE IN SUCH A SCENARIO. THE ADDITION MADE BY THE ASSESSING OFFICER TREATING THESE CREDITS AS BOGUS, THEREFORE, APPEARS TO BE UNJUSTIFIED AND IS, ACCORDINGLY, DELETED. 9. AGAINST THE ABOVE ORDER THE REVENUE IS IN APPEAL BEFORE US. 10. WE HAVE HEARD THE RIVAL CONTENTIONS IN LIGHT OF THE MATERIAL PRODUCED AND PRECEDENT RELIED UPON. WE FIND THAT LD. COMMISSIONER OF INCOME TAX (APPEALS) HAS GIVEN A FINDING THAT AD DITION MADE BY THE ASSESSING OFFICER IS PRIMARILY BASED ON THE STATEM ENTS RECORDED BY THE ASSESSING OFFICER U/S. 131 AND ALSO ON THE FACT T HAT IN SOME CASES NOTICE U/S. 133(6) WAS RETURNED UNSERVED. HE ALSO F OUND THAT ASSESSING OFFICER HAS NOTED PARTICULARLY SH. HAZI NAZAR WAS ILLITERATE AND THE ITA NOS. 535 & 1513/DEL/2007 14 COPY OF ACCOUNT WAS CONFIRMED BY ONE SH. RAJESH; CO PY OF ACCOUNT IN THE CASE OF SH. INSAF ALI WAS AFFIRMED BY ONE SH. SH AUKAT AND THE ASSESSEE HAD FAILED TO PRODUCE THE REMAINING CREDIT ORS U/S. 133(6). LD. COMMISSIONER OF INCOME TAX (APPEALS) IN THIS REGARD FURTHER NTOED THAT ASSESSEE WAS NEITHER CONFRONTED WITH THE STATEMENTS / FACTS GATHERED IN THE COURSE OF ASSESSMENT PROCEEDINGS NOR WAS GIV EN AN OPPORTUNITY TO CROSS EXAMINE THE PERSON/ WHO HAD GIVEN STATEMEN T BEFORE THE ASSESSING OFFICER. LD. COMMISSIONER OF INCOME TAX ( APPEALS) FURTHER FOUND THAT IN THE COURSE OF REMAND PROCEEDINGS, THE ASSESSING OFFICER HAS AGAIN RECORDED STATEMENTS OF SOME OF THE SUPPLIE RS AND ALSO GOT INFORMATION U/S. 133(6). IT WAS SEEN THAT INSTEAD OF INCORRECT PERSON NAMED THEKEDAR KHURSHID, THIS TIME RIGHT PERSON WAS SUMMONED AND EXAMINED. ALL THESE PERSONS HAVE CONFIRMED THE OUT STANDING BALANCES. SOME OF THEM HAVE ACCEPTED HAVING SUPPLIE D MILK/MILK PRODUCTS DIRECTLY TO THE CONSUMERS ON INSTRUCTIONS OF THE ASSESSEE WHILE OTHERS HAVE ACCEPTED HAVING SUPPLIED THESE IT EMS DIRECTLY TO THE ASSESSEE. THUS, LD. COMMISSIONER OF INCOME TAX (APPE ALS) NOTED THAT IT WAS NOT CORRECT TO SAY THAT THE SALES MADE BY THE ASSESSEE WERE ON HIS OWN ACCOUNT OR THAT THE CREDITS SHOWN BY HIM WE RE BOGUS. LD. COMMISSIONER OF INCOME TAX (APPEALS) FOUND THAT IDEN TITIES AND CREDITWORTHINESS OF THESE SUPPLIERS HAVE NOT BEEN D OUBTED BY THE ITA NOS. 535 & 1513/DEL/2007 15 ASSESSING OFFICER IN HIS REPORT. SIMILARLY, THE GENUINENESS OF THE TRANSACTION IS ALSO NOT IN DOUBT AS THE CREDITORS H AVE ACCEPTED HAVING SUPPLIED MILK / MILK PRODUCTS TO THE ASSESSEE / CONSU MERS. LD. COMMISSIONER OF INCOME TAX (APPEALS) FURTHER NOTED T HAT LACK OF RESPONSE TO LETTER U/S. 133(6) FROM JAI MATA PITHI CORN ER, AS REPORTED BY THE ASSESSING OFFICER, WOULD NOT MAKE MUCH OF DIFFE RENCE IN SUCH A SCENARIO. IN THESE BACKGROUND, THE ADDITION MADE B Y THE ASSESSING OFFICER TREATING THESE CREDITS AS BOGUS, IT WAS HEL D BY THE LD. COMMISSIONER OF INCOME TAX (APPEALS) TO BE UNJUSTIFI ED AND ACCORDINGLY DELETED. IN OUR CONSIDERED OPINION, WE FIND THAT LD. COMMISSIONER OF INCOME TAX (APPEALS) HAS TAKEN A COR RECT VIEW OF THE MATTER AND RIGHTLY DELETED THE ADDITION. ACCORDINGL Y, WE UPHOLD THE ORDER OF THE LD. COMMISSIONER OF INCOME TAX (APPEALS). ASSESSEES APPEAL ASSESSEES APPEAL ASSESSEES APPEAL ASSESSEES APPEAL 11. THE GROUNDS RAISED IN THE ASSESSEES APPEAL RE AD AS UNDER:- (1) THAT THE LD. COMMISSIONER OF INCOME TAX (APPEALS ) HAS ERRED IN LAW AND FACTS OF THE CASE WHILE ADOPTI NG THE SCALE OF MILK OF ` 12,21,082/- MADE TO APOLLO HOSPITAL THROUGH M/S DAILY FOODS ALLEGING NOT INCLUD ED IN P&L ACCOUNT CONSEQUENTLY CONCLUDED UNDERSTATED BY THE SAID AMOUNT OF ` 12,21,082/-. ITA NOS. 535 & 1513/DEL/2007 16 (2). THAT THE LD. COMMISSIONER OF INCOME TAX (APPEALS ) IS NOT JUSTIFIED TO ENHANCE THE INCOME BY MAKING ADDITION OF ` 1197,312/- [` 1221082 MINUS (-) ` 237 70 = ` 1197312] AFTER ALLOWING ADJUSTMENT OF COMMISSION. (3) THE LD. COMMISSIONER OF INCOME TAX (APPEALS) IS ALSO NOT JUSTIFIED TO DISALLOWANCES OUT OF FOLLOWING EXPENDITURE SPENT QUITE INCIDENTAL TO BUSINESS IN V IEW OF THE FACTS AND CIRCUMSTANCES OF THE CASE:- I) GAS CYLINDER - ` 207960 BEING 50% OF TOTAL EXPDR. OF ` 415920/-. II) DIESEL EXP. - ` 1,00,000/- - LUMP SUM AGAINST CLAIMED IN RESPECT OF:- I) VEHICLE REPAIR AND MAINT. ` 65959 II) VEHICLE INSURANCE ` 40923 III) PETROL ` 124437 TOTAL ` 231319 ________ (4) THAT LD. COMMISSIONER OF INCOME TAX (APPEALS) HA S FURTHER ERRED IN LAW AND FACTS OF THE CASE WHILE CONFIRMING ADDITION OF ` 317550/- ALLEGING UNACCOUNTED KHOYA PURCHASES, IN VIEW OF FACTS AND CIRCUMSTANCES OF THE CASE. ITA NOS. 535 & 1513/DEL/2007 17 (5) THAT THE APPELLANT CRAVE TO ADD, AMEND OR DELTE ANY GROUND OF APPEAL. 12. APROPOS GROUND NO. 1 & 2:- ON THIS ISSUE LD. COMMISSIONER OF INCOME TAX (APPEA LS) NOTICED THAT THE ASSESSEE HAS SUPPLIED MILK, PANEER ETC. WOR TH ` 21,65,485/- TO APOLLO HOSPITAL. HE HAS DEBITED THE PURCHASE OF MILK WORTH ` 11,43,016/- IN P&L ACCOUNT AS HIS OWN PURCHASE WHI LE SALE OF MILK HAS BEEN SHOWN AS CONSIGNMENT SALE TO APOLLO HOSPITAL. THE SALES HAVE, THUS, BEEN UNDERSTATED. LD. COMMISSIONER OF INCOME TAX (APPEALS) OBSERVED THAT WHILE THIS SINGLE DISCREPANCY WAS NOT SUFFICIENT TO REJECT THE BOOKS OF ACCOUNT COMPLETELY, IT CERTAINLY NEEDED FURTHER INQUIRIES. HENCE, ASSESSEE WAS GIVEN AN OPPORTUNITY TO EXPLAIN THIS DISCREPANCY. ASSESSEE ADMITTED THAT THE GROSS SALES OF MILK, PANEE R ETC. TO APOLLO HOSPITAL SHOWN IN THE CONSIGNMENT ACCOUNT WAS ` 21 ,65,485/-. SALE OF MILK AMOUNTING TO ` 12,21,082/-, WHICH WAS ON HIS OWN ACCOUNT HAS ALSO BEEN INCLUDED IN THE CONSIGNMENT SALE, INSTEA D OF THE P&L ACCOUNT. SALE OF PANEER ETC. WORTH ` 9,44,403/- WAS MADE ON CONSIGNMENT BASIS. PURCHASE OF MILK, SOLD TO APOLL O HOSPITAL WAS FROM M/S DAIRY FOODS AND THIS AMOUNT OF ` 11,43,016/- WAS INCLUDED IN THE P&L ACCOUNT. THE ASSESSEE ALSO FURNISHED A CHART SHOWING THE DETAILS AS UNDER:- GROSS SALES OF APOLLO HOSPITAL SHOWN IN CONSIGNMENT ACCOUNT ` 21,65,485/- SALE OF MILK MADE THROUGH DAILY FOODS ON CHALLANS ISSUED BY THE ASSESSEE (NOT INCLUDED IN THE P&L ACCOUNT) ` 12,21,082/- BALANCE BEING SALE OF PANEER /CREAM/ BUTTER ON CONSIGNMENT BASIS ` 9,44,403/- ITA NOS. 535 & 1513/DEL/2007 18 PURCHASE BOOKED FROM DAILY FOODS INCLUDED IN P&L ACCOUNT 1 11,43,016/- 12.1 FROM THE ABOVE, LD. COMMISSIONER OF INCOME TAX (A PPEALS) DEDUCED FROM THE ADMISSION OF THE ASSESSEE THAT SAL E OF MILK TO APOLLO HOSPITAL, WHICH ADMITTEDLY WAS ON ASSESSEES OWN A CCOUNT HAS NOT BEEN CREDITED TO THE P&L ACCOUNT BUT HAS BEEN TAKEN TO THE CONSIGNMENT ACCOUNT. LD. COMMISSIONER OF INCOME T AX (APPEALS) CONFIRMED THAT IT WAS ALSO CLEAR THAT THE PURCHASE O F THIS MILK SOLD TO APOLLO HOSPITAL HAS ALREADY BEEN DEBITED TO P&L ACC OUNT. THE ASSESSEE WAS ASKED AS TO WHY THE ADDITION OF ` 12, 21,082/- MAY NOT BE MADE. IN RESPONSE TO THIS QUERY, VIDE ORDER S HEET ENTRY OF EVEN DATE, IT WAS SUBMITTED THAT ADDITION OF PROFIT MAY BE MADE BY APPLYING A GP RATE OF 3.96% ON THE SALES OF ` 12,21,082/- MA DE TO APOLLO HOSPITAL. 12.1 CONSIDERING THE ABOVE LD. COMMISSIONER OF INCOM E TAX (APPEALS) HELD THAT IT IS AN ADMITTED FACT THAT THE SALES OF MI LK WORTH ` 12,21,082/- MADE TO APOLLO HOSPITAL HAVE NOT BEEN CR EDITED TO THE P&L ACCOUNT WHILE THE CORRESPONDING PURCHASE OF THIS MIL K HAS BEEN DEBITED. IT IS NOT A CASE WHERE BOTH THE SALES A ND PURCHASE HAVE NOT ENTERED THE P&L ACCOUNT. SINCE THE PURCHASES RELA TING TO SALES HAVE ALREADY BEEN DEBITED, IT IS THE WHOLE AMOUNT OF SALE S AND NOT ONLY ITA NOS. 535 & 1513/DEL/2007 19 PROFIT, WHICH HAS TO BE ADDED. HENCE, LD. COMMISS IONER OF INCOME TAX (APPEALS) FOUND THAT HE DID NOT FIND ANY MERIT IN THE CLAIM OF THE ASSESSEE THAT ONLY PROFIT BY APPLYING GP RATE SHOUL D BE ADDED. HE HELD THAT IN VIEW OF THESE FACTS IT IS OBVIOUS THAT THE SALES HAVE BEEN UNDERSTATED BY ` 12,21,082/-, WHILE CONSIGNMENT SAL E ON WHICH COMMISSION INCOME ` 1.94% HAS BEEN SHOWN, HAS BEEN OVERSTATED BY THIS AMOUNT. ACCORDINGLY, LD. COMMISSIONER OF INCOME TAX (APPEALS) HELD THAT THE COMMISSION INCOME SHALL ACCORDINGLY BE REDUCED BY 1.94% OF THIS AMOUNT WHILE SALES WOULD BE INCREASED BY THE SAME AMOUNT. THE NET EFFECT OF THIS ADJUSTMENT WOULD B E AN ADDITION OF ` 12,21,082 - ` 23,770 I.E. ` 11,97,312/-. 13. AGAINST THE ABOVE ORDER THE ASSESSEE IS IN APPE AL BEFORE US. 14 WE HAVE HEARD THE RIVAL CONTENTIONS IN LIGHT OF THE MATERIAL PRODUCED AND PRECEDENT RELIED UPON. WE FIND THAT L D. COMMISSIONER OF INCOME TAX (APPEALS) HAS GIVEN A FINDING THAT THE SALE OF MILK AMOUNTING TO ` 12,21,082/-, MADE TO APOLLO HOSPITAL HAVE NOT BEEN CREDITED TO THE P&L ACCOUNT WHILE THE CORRESPONDING PURCHASE OF THIS MILK HAS BEEN DEBITED. SINCE THE PURCHASES RELATI NG TO SALES HAVE ALREADY BEEN DEBITED, IT IS THE WHOLE AMOUNT OF SALE S AND NOT ONLY PROFIT, WHICH HAS TO BE ADDED. UNDER THE CIRCUMS TANCES, THE ENHANCEMENT/ADDITION MADE BY THE LD. COMMISSIONER OF I NCOME TAX ITA NOS. 535 & 1513/DEL/2007 20 (APPEALS) IS COGENT ONE AND BASED ON SOUND PRINCIPL ES. ACCORDINGLY, WE AFFIRM THE ORDER OF THE LD. COMMISSIONER OF INCOME TAX (APPEALS). 15. APROPOS GROUND NO. 3 ADDITION OF ` 2,07,960/- BEING 50% OF TOTAL EXPENDITURE OF ` 415920/- - GAS CYLINDER ON THIS ISSUE AN AMOUNT OF ` 4,15,920/- HAS BEEN CL AIMED UNDER THE HEAD GAS CYLINDER EXPENSES. ASSESSEE WAS ASK ED TO FURNISH THE SUPPORTING BILLS/ VOUCHERS OF THE EXPENSES CLUBBED UNDER THIS HEAD. IN RESPONSE TO THIS QUERY, ASSESSEE SUBMITTED THAT ONL Y COPY OF ACCOUNT AND COPIES OF SELF MADE PAYMENT VOUCHERS HAVE BEEN F URNISHED. WITH REGARD TO THE PURCHASE BILLS, THE ASSESSEE CHO SE TO REMAIN SILENT FOR THE REASONS BEST KNOWN TO IT. FROM THE COPY OF P AYMENT VOUCHERS IT WAS NOTICED THAT ALL THE PAYMENTS AS REFLECTED IN THESE VOUCHERS WERE MADE IN CASH AND ONE SINGLE VOUCHER WAS PASSED FOR EACH MONTH. HOWEVER, THE BASIC REQUIREMENT REMAINED TO BE FULFIL LED, I.E. NOT A SINGLE BILL WAS PRODUCED FOR VERIFICATION WHICH COU LD SUGGEST THAT THE CYLINDERS WERE INDEED PURCHASED FROM THE SAME PERSONS WHOSE NAMES ARE APPEARING ON THE COPIES OF VOUCHERS AS FURNISHE D IN THE COURSE OF ASSESSMENT PROCEEDINGS. UNDER THE CIRCUMSTANCES, ASSESSING OFFICER HELD THAT THE EXPENDITURE UNDER THIS HEAD REMAINED U NVERIFIED BEING NOT SUPPORTED BY THE RELEVANT BILLS. THE PAYME NT VOUCHERS ARE NOTHING BUT SELF SERVING DOCUMENTS AS THESE VOUCHE RS DO NOT REFLECT ITA NOS. 535 & 1513/DEL/2007 21 THE ENTIRE PICTURE OF THE PURCHASE OF CYLINDERS. HOWEVER, THE FACT WHICH CANNOT BE DENIED IS THAT CYLINDERS ARE INDEE D USED IN ASSESSEES LINE OF BUSINESS. ACCORDINGLY, CONSIDERING THE FACTS AND CIRCUMSTANCES OF THE CASE, 50% OF THE GAS CYLINDERS EXPENSES AMOUNTING TO ` 2,07,960/- WAS DISALLOWED ON ESTIMATE BASIS AS NOT INCURRED WHOLLY AND EXCLUSIVELY FOR ASSESSEES BUS INESS. 16. UPON ASSESSES APPEAL LD. COMMISSIONER OF INCOME TAX (APPEALS) NOTED THAT WITH REFERENCE TO THIS ADDITION ASSESSEE HAS NOT MADE ANY SPECIFIC SUBMISSION. LD. COMMISSIONER OF INCOME TA X (APPEALS) OBSERVED THAT ON PERUSAL OF THE ASSESSMENT ORDER SH OWS THAT THE ADDITION HAS BEEN MADE AS THE ASSESSEE HAD FAILED TO FURNISH SUPPORTING BILLS/ VOUCHERS OF THE EXPENSES CLUBBED UNDER THIS HEAD AND THE EXPENDITURE UNDER THIS HEAD REMAINED UNVERIFIED. LD. COMMISSIONER OF INCOME TAX (APPEALS) HELD THAT IN VI EW OF THESE FACTS, NO INTERFERENCE IS CALLED FOR SO FAR AS THIS DISALL OWANCE IS CONCERNED. 17. AGAINST THE ABOVE ORDER THE ASSESSEE IS IN APPE AL BEFORE US. 18. WE HAVE HEARD THE RIVAL CONTENTIONS IN LIGHT OF THE MATERIAL PRODUCED AND PRECEDENT RELIED UPON. WE FIND TH AT ADDITION HAS BEEN MADE BY THE ASSESSING OFFICER, AS THE ASSESSEE HAS NOT FURNISHED THE SUPPORTED BILLS/ VOUCHERS OF THESE EX PENSES. IN OUR ITA NOS. 535 & 1513/DEL/2007 22 CONSIDERED OPINION, LOWER AUTHORITIES HAVE TAKEN A REASONABLE VIEW IN THIS MATTER, WHICH DOES NOT NEED ANY INTERFERENCE O N OUR PART. ACCORDINGLY, WE UPHOLD ORDER OF THE LOWER AUTHORITI ES ON THIS ISSUE. 19. DIESEL EXPENSES OF ` 1,00,000/- LUMP SUM, AGAI NST CLAIMED IN RESPECT OF VEHICLE REPAIR AND MAINTENANCE, VEHICLE INSURANCE & PETROL EXPENSES AMOUNTING TO ` 231319/-. ON THIS ISSUE ASSESSING OFFICER NOTED THAT ASSESS EE COULD NOT BE ABLE TO EXPLAIN AS TO WHERE THE DIESEL EXPENSES IN CURRED FOR THE RUNNING OF TRUCK WERE BEING DEBITED AND REFLECTED IN THE ACCOUNTS. ASSESSING OFFICER HELD THAT ON THE FACTS OF THE CA SE, IT CANNOT BE SAID THAT THE TRUCK WAS NOT USED DURING THE YEAR SO THAT DEPRECIATION NEED TO BE DISALLOWED. RATHER, THIS IS A CASE WHERE TH E TRUCK WAS ACTUALLY AND UNDOUBTEDLY USED FOR THE BUSINESS PURPOSES, WI THOUT WHICH THE ASSESSEE COULD NOT ACHIEVE THE TURNOVER OF APPROXIMA TELY SEVEN CRORES. HOWEVER, THE CORRESPONDING EXPENSES ARE NOT REFLECTED IN THE ACCOUNTS MAINTAINED BY THE ASSESSEE. HENCE, ON THE F ACTS AND CIRCUMSTANCES OF THE CASE, TOTAL DIESEL EXPENSES OF THE YEAR WAS ESTIMATED AT ` 1.00 LAC AND WHICH WAS ADDED TO THE TAXABLE INCOME OF THE ASSESSEE. ITA NOS. 535 & 1513/DEL/2007 23 20. UPON ASSESSEES APPEAL LD. COMMISSIONER OF INCOME TAX (APPEALS) CONFIRMED THE ADDITION. 21. WE HAVE HEARD THE RIVAL CONTENTIONS IN LIGHT OF THE MATERIAL PRODUCED AND PRECEDENT RELIED UPON. WE FIND THAT THE LOWER AUTHORITIES HAVE GIVEN A FINDING THAT ASSESSEE HAD NOT SHOWN ANY EXPENDITURE OF DIESEL FOR RUNNING OF TRUCK. THE A SSESSEE COULD NOT HAVE RUN HIS BUSINESS WITHOUT THE USE OF THE TRUCK ON WHICH EVEN DEPRECIATION HAS BEEN CLAIMED. ACCORDINGLY, WE D O NOT FIND ANY INFIRMITY IN THE ADDITION MADE IN THIS REGARD. ACCOR DINGLY, WE UPHOLD THE SAME. 22. APROPOS THE ADDITION OF ` 3,17,550/- BEING UNA CCOUNTED KHOYA PURCHASES. ON THIS ISSUE ASSESSING OFFICER NOTED THAT A SUR VEY OPERATION U/S. 133A WAS CARRIED OUT BY THE INVESTIGATION WIN G, STATEMENT OF ONE SHRI ASHOK KUMAR WAS RECORDED. THIS PERSON WAS P RESENT AT THE TIME OF SURVEY OPERATION AT THE BUSINESS PREMISES OF THE ASSESSEE. IN HIS STATEMENT SHRI ASHOK KUMAR HAD GIVEN HIS IDENTITY A ND STATED BEFORE THE SURVEY TEAM THAT HE WAS DOING THE BUSINESS OF S UPPLY OF KHOYA. HIS ONLY CLIENT WAS THIS ASSESSEE, NAMELY SHRI ASWAN I KUMAR, PROP. SHUDH GARHWAL PANEER NIRMATA SANGH. SHRI ASHOK KUMA R FURTHER STATED THAT HE USED TO SUPPLY MAWA TO THE ASSESSEE O N DAILY BASIS AND THE QUANTUM OF SUPPLY WAS 15 KGS DAILY. HE USED TO PURCHASE KHOYA FROM THE MARKET @ `55/- PER KG. AND SUPPLIED THE SAM E TO THE ITA NOS. 535 & 1513/DEL/2007 24 ASSESSEE AT A MARGIN OF ` 3/- PER KG. IN RESPONSE TO THE QUERY BY THE SURVEY TEAM REGARDING THE MODE OF SALE AND MODE OF PA YMENT, SHRI ASHOK KUMAR CATEGORICALLY STATED ALL THE SUPPLY OF K HOYA WAS WITHOUT ANY BILLS AND HE USED TO RECEIVE PAYMENT IN CASH ONL Y. SHRI ASHOK KUMAR FAILED TO RESPOND TO THE NOTICES ISSUED BY TH E ASSESSING OFFICER. ASSESSING OFFICER NOTED THAT IN THE BOOKS OF ACCOU NTS OF THE ASSESSEE THERE IS NO MENTION OF ANY ACCOUNT IN THE NAME OF SH RI ASHOK KUMAR. UNDER THESE CIRCUMSTANCES, THE ADDITION OF ` 3,17,5 50/- WAS BEING MADE TO THE TAXABLE INCOME ON ACCOUNT OF UNACCOUNTED KHOYA PURCHASES NOT REFLECTED IN THE BOOKS OF ACCOUNTS. THIS ADDITION HAS BEEN WORKED OUT BY ADOPTING THE FIGURE OF DAILY P URCHASE OF 15 KG OF KHOYA @ `58/- PER KG (PURCHASE PRICE OF ` 55 PLUS M ARGIN OF PROFIT OF SHRI ASHOK KUMAR) FOR THE WHOLE OF THE YEAR (365 X 8 70) AND MADE ADDITION OF ` 3,17,550/- 23. UPON ASSESSEES APPEAL LD. COMMISSIONER OF INCOM E TAX (APPEALS) NOTED THAT A PERUSAL OF THE ASSESSMENT OR DER SHOWS THAT THIS ADDITION HAS BEEN MADE ON THE BASIS OF THE STATEMENT OF SHRI ASHOK KUMAR. IN THE COURSE OF THE ASSESSMENT PROCEEDINGS ALSO SUMMONS U/S. 131 WAS ISSUED TO SHRI ASHOK KUMAR WHO DID NOT APPEAR BEFORE THE ASSESSING OFFICER. ASSESSEE WAS CONFRONTED WITH TH E STATEMENT OF SHRI ASHOK KUMAR RECORDED AT THE TIME OF SURVEY. THE ASSE SSEE FAILED TO OFFER ANY EXPLANATION IN THIS REGARD. SH. ASHOK KUMAR HAD CATEGORICALLY STATED THAT ALL THE SUPPLY OF KHOYA T O THE ASSESSEE WAS WITHOUT ANY BILL AND HE USED TO RECEIVE PAYMENT IN CASH ONLY. THESE FACTS MENTIONED BY SH. ASHOK KUMAR HAVE NOT BEEN RE BUTTED BY THE ASSESSEE. HENCE, LD. COMMISSIONER OF INCOME TAX (APPEALS) HELD THAT PURCHASES OF ` 34260/- HAVE BEEN REFLECTED IN THE BOOKS DOES NOT MAKE ANY DIFFERENCE AS FIRST, THIS EXPLANATION WAS NOT FURNISHED ITA NOS. 535 & 1513/DEL/2007 25 BEFORE THE ASSESSING OFFICER AND SECONDLY THE ADDI TION ON ESTIMATE BASIS HAS BEEN MADE FOR UNACCOUNTED PURCHASES. TH IS ADDITION WAS, THEREFORE, CONFIRMED. 24. AGAINST THE ABOVE ORDER THE ASSESSEE IS IN APPE AL BEFORE US. 25. WE HAVE HEARD THE RIVAL CONTENTIONS IN LIGHT O F THE MATERIAL PRODUCED AND PRECEDENT RELIED UPON. WE FIND THAT ASSESSING OFFICER HAS MADE THE ADDITION BY REFERRING TO THE STATEMENT O F SHRI ASHOK KUMAR. LD. COMMISSIONER OF INCOME TAX (APPEALS) HA S GIVEN A FINDING THAT SUCH AGENTS ACT ON BEHALF OF KUCHA AR HATIA FROM THE WHOLE SALE MARKET AND THEY ACCEPT ONLY CASH PAYMENT AGAINST THEIR SALE AND DO NOT WANT TO COME ON RECORD. LD. COMMISS IONER OF INCOME TAX (APPEALS) FURTHER NOTED THAT ON PERUSAL OF THE ASSESSMENT ORDER SHOWS THAT THIS ADDITION HAS BEEN MADE ON THE BASIS OF THE STATEMENT OF SHRI ASHOK KUMAR. IN THE COURSE OF THE ASSESSMENT PROCEEDINGS ALSO SUMMONS U/S. 131 WAS ISSUED TO SHRI ASHOK KUMAR WHO DI D NOT APPEAR BEFORE THE ASSESSING OFFICER. ASSESSEE WAS CONFRON TED WITH THE STATEMENT OF SHRI ASHOK KUMAR RECORDED AT THE TIME OF SURVEY. THE ASSESSEE FAILED TO OFFER ANY EXPLANATION IN THIS RE GARD. IT IS NOTED THAT SH. ASHOK KUMAR IN HIS STATEMENT HAD CATEGORICA LLY STATED THAT ALL THE SUPPLY OF KHOYA TO THE ASSESSEE WAS WITHOUT ANY BILL AND HE USED TO RECEIVE PAYMENT IN CASH ONLY. LD. COMMISSIONER O F INCOME TAX ITA NOS. 535 & 1513/DEL/2007 26 (APPEALS) FURTHER OBSERVED THAT THESE FACTS MENTI ONED BY SH. ASHOK KUMAR HAVE NOT BEEN REBUTTED BY THE ASSESSEE. H ENCE, IN THESE CIRCUMSTANCES, THE ADDITION MADE BY THE ASSESSING O FFICER IS CORRECT. ACCORDINGLY, WE HOLD THAT THERE IS NO INFIRMITY IN THE ORDER OF THE LD. COMMISSIONER OF INCOME TAX (APPEALS), ACCORDINGLY, W E UPHOLD THE SAME. 26. IN THE RESULT, BOTH THE APPEALS FILED BY THE REVENUE AND ASSESSEE STAND DISMISSED. ORDER PRONOUNCED IN THE OPEN COURT ON 18/5/201 2. SD/ SD/ SD/ SD/- -- - SD/ SD/ SD/ SD/- -- - [RAJPAL YADAV] [RAJPAL YADAV] [RAJPAL YADAV] [RAJPAL YADAV] [SHAMIM YAHYA] [SHAMIM YAHYA] [SHAMIM YAHYA] [SHAMIM YAHYA] JUDICIAL MEMBER JUDICIAL MEMBER JUDICIAL MEMBER JUDICIAL MEMBER ACCOUNTANT MEMBER ACCOUNTANT MEMBER ACCOUNTANT MEMBER ACCOUNTANT MEMBER DATE: 18/5/2012 SRBHATNAGAR COPY FORWARDED TO: COPY FORWARDED TO: COPY FORWARDED TO: COPY FORWARDED TO: - -- - 1. APPELLANT 2. RESPONDENT 3. CIT 4. CIT(A) 5. DR,ITAT TRUE COPY BY ORDER, ASSISTANT REGISTRAR, ITAT, DELHI BENCHES