ITO, New Delhi V. M/s Ganpati Hydro Power Pvt. Ltd., New Delhi

ITA 5629/DEL/2012

• Counselvise Citation: [2017] 127 COUNSELVISE.COM (IT) 3242 (ITAT-DELHI)
• Duration Of Justice: 5 year(s) 23 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 30-11-2017
• Appeal Filed By: Department
• Order Result: Allowed
• Bench Allotted: C
• Next Hearing Date: 24-05-2017
• Assessment Year: 2009-2010
• Appeal Filed On: 07-11-2012
• Result in Favour of: Revenue
• Court: TRIBUNAL
• Department Lawyers: NAVEEN CHANDRA
• Keywords: Bogus purchase; Business income; Depreciation; Search and seizure; Rule of consistency; Period of limitation; Cost of acquisition; Accommodation entries; Onus to prove; Time period of passing order; Sham transactions
• Section: 143(3); 68; 263

Judgement Text

IN THE INCOME-TAX APPELLATE TRIBUNAL, DELHI BENCH C, NEW DELHI BEFORE : SHRI H.S. SIDHU, JUDICIAL MEMBER AND SHRI L.P. SAHU, ACCOUNTANT MEMBER ITA NO. 5629/DEL./2012 ASSESSMENT YEAR: 2009-10 INCOME - TAX OFFICER, WARD 12(1), NEW DELHI. (APPELLANT) VS. M/S. GANPATI HYDRO POWER PVT. LTD. (FORMERLY GANPATI RETAILS PVT. LTD.) 63, RING ROAD, LAJPAT NAGAR, NEW DELHI (PAN-AACCG9937F) (RESPONDENT) APPELLANT BY SHRI NAVEEN CHANDRA, SR. DR RESPONDENT BY SHRI SALIL KAPOOR, ADVOCATE ORDER PER L.P. SAHU, A.M.: THIS IS AN APPEAL FILED BY THE REVENUE AGAINST THE ORDER OF LD. CIT(A)XV, NEW DELHI DATED 03.09.2012 FOR THE ASSESSMENT YEAR 2009 -10 ON THE FOLLOWING GROUND : 1. ON THE FACTS AND CIRCUMSTANCES OF THE CASE AND IN LAW THE LD. CIT(A) HAS ERRED IN DELETING THE ADDITION OF RS.35,12,58,126/- MADE BY THE ASSESSING OFFICER BY HOLDING THAT UNDISCLOSED INCOME HAS BEEN INTRODUCED UNDER THE GARB OF SALES. 2. THE BRIEF FACTS OF THE CASE ARE THAT THE ASSESSE E FILED RETURN OF INCOME ON 24.10.2009 DECLARING PROFIT AT RS.13,090/-. THE CAS E WAS SELECTED FOR SCRUTINY AND NOTICE U/S. 143(2) WAS SERVED ON THE ASSESSEE WITHI N THE STIPULATED TIME. THE AR OF THE ASSESSEE APPEARED BEFORE THE AO AT THE FAG E ND OF THE LIMITATION DATE AND DATE OF HEARING 12.10.2017 DATE OF PRONOUNCEMENT 30 .11.2017 ITA NO. 5629/DEL./2012 2 FILED FEW DETAILS WHICH WERE KEPT ON RECORD BY THE AO. THERE WAS NO COMPLIANCE TILL 13.12.2011. THE FIRST COMPLIANCE WAS MADE ONLY ON 14.12.2011. DURING THE YEAR UNDER CONSIDERATION, THE ASSESSEE COMPANY DERI VED INCOME FROM PROPERTY DEVELOPMENT AND TRADING OF TEXTILE ITEMS. THE ASSES SING OFFICER OBSERVED FROM THE PROFIT AND LOSS ACCOUNT AND BALANCE SHEET THAT THE ASSESSEE HAS SHOWN FOLLOWING FIGURES : PURCHASE RS.35,11,19,546/- SALES RS.35,12,58,126/- SUNDRY CREDITORS RS.34,99,19,546/- LOANS AND ADVANCES GIVEN RS.35,00,00,000/- THERE WAS A MEAGER MARGIN OF RS.1.38 LACS APPROXIM ATELY FROM THE ABOVE TRADING ACTIVITIES. DURING THE COURSE OF ASSESSMENT PROCEED INGS, THE ASSESSING OFFICER ASKED THE ASSESSEE FOR DETAILS OF PURCHASE AND SALE S OF FABRICS, DETAILS OF SUNDRY CREDITORS AND THE PERSONS TO WHOM LOANS AND ADVANCE S WERE GIVEN BY THE ASSESSEE COMPANY. IN RESPONSE, THE ASSESSEE SUBMITTED THE DE TAILS OF THE PURCHASES WORTH RS.35,11,19,546/- FROM 37 PARTIES. THE ASSESSING OF FICER OBSERVED FROM THE PURCHASE LIST THAT MAJOR PURCHASES WERE MADE FROM F EW CREDITORS AND MAJOR SALES WERE MADE TO TWO PARTIES, NAMED ACTIF CORPORATION L TD. & ESKAY KNIT INDIA LTD FOR RS.14.00 CRS. EACH AND THE ADDRESS OF BOTH DEBTORS IS SAME. THE ADDRESS OF THE SELLER, M/S. KRISHNA KNITWEAR TECHNOLOGY LTD., FROM WHOM THE ASSESSEE MADE ITA NO. 5629/DEL./2012 3 PURCHASES OF RS.17,47,61,729/-, IS ALSO THE SAME. T HE ASSESSEE HAD GIVEN LOANS AND ADVANCES ONLY TO THREE PARTIES, WHICH IS AS UNDER : ACTIF CORPORATION LIMITED 14,00,00,000/- ESKAY KNIT (INDIA) LIMITED 14,00,00,000/- TAYAL ENERGY LIMITED 7,00,00,000/- THERE WAS NO ANY CASH / BANK TRANSACTION MADE DURIN G THE YEAR AND NO DIRECT OR INDIRECT EXPENSES WERE INCURRED BY THE ASSESSEE FOR DOING ITS BUSINESS. WHEN THESE FACTS WERE CONFRONTED TO THE ASSESSEE, IT WAS SUBM ITTED THAT FREIGHT IS DIRECTLY PAID BY THE SELLER OF GOODS TO THE ASSESSEE COMPANY AND IN RESPECT OF TRANSPORTATION CHARGES, HE SUBMITTED THAT THERE WAS NO COST INCURR ED BY THE ASSESSEE TOWARDS TRANSPORTATION AND NO GODOWN IS MAINTAINED BY THE C OMPANY. THE AO FURTHER OBSERVED THAT THE ASSESSEE HAS PASSED ENTRIES IN TH E BOOKS OF ACCOUNT IN THE NAME OF TAYAL ENERGY LTD. FOR RS.7.00 CRORES AND IT HAS BEEN SHOWN UNDER THE HEAD LOANS & ADVANCE WHEREAS THE ASSESSEE HAD SHOWN SAL ES IN HIS BOOKS OF ACCOUNT IN THE NAME OF OTHER COMPANIES. THE AO ALSO OBSERVED T HAT THE ASSESSEE COMPANY WAS INCORPORATED ON 20.08.2007 WITH REGISTERED CAPI TAL OF RS.1,00,000/- ONLY AND DURING THE F.Y. 2007-08 IT HAD VERY SMALL TRANSACTI ONS AND STARTED TRADING OF FABRICS DURING F.Y. 2008-09, WHICH IS UNDER APPEAL. THE AO THEREFORE, STATED THAT SUCH A HUGE TRANSACTIONS AT THE INITIAL STAGE OF ES TABLISHMENT IN THE FACTS AND CIRCUMSTANCES OF THE PRESENT CASE CANNOT BE GENERAL LY BELIEVED. THE ASSESSING OFFICER ISSUED LETTER ON 20.12.2011 AND SPECIFICALL Y ASKED AS UNDER : ITA NO. 5629/DEL./2012 4 A. BASED ON THE FACTS OF THE CASE, PLEASE EXPLAIN AS T O WHY THE PURCHASE/SALE TRANSACTIONS OF FABRIC NOT BE TREATED AS SHAM TRANS ACTION. B. AND WHY ON AMOUNT OF RS.35,12,28,126/- BE TREATED A S YOUR UNDISCLOSED INCOME INTRODUCED IN THE BOOKS OF ACCOUNT UNDER THE GARB OF FABRIC SALE. IN RESPONSE TO THE ABOVE QUERIES, THE ASSESSEE SUBM ITTED REPLY. HE SUBMITTED THAT A PURCHASE WORTH RS.15.00 CRORES HAS BEEN REVERSED IN THE NEXT YEAR. THE ASSESSING OFFICER OBSERVED THAT THE ASSESSEE HAD SU BMITTED REPLIES OF THE QUERIES AT THE FAG END OF THE YEAR WHERE EXAMINATION COULD NOT BE DONE BY THE ASSESSING OFFICER. HE ALSO NOTED THAT THE PURCHASE AND SALES INVOICES WERE THE SAME IN PATTERN AND THE CONFIRMATIONS FILED WERE SELF SERVI NG DOCUMENTS. THE AO RELYING ON SOME CASE LAWS, OBSERVED THAT THE TRANSACTIONS A RE NOT GENUINE BUSINESS TRANSACTIONS AND THE TRANSACTIONS WERE RATHER ENTER ED TO INTRODUCE UNACCOUNTED MONEY OF THE ASSESSEE COMPANY IN THE BOOKS OF ACCOU NT UNDER THE GARB OF PURCHASE/SALES OF FABRICS AND ITS SUBSEQUENT PASSIN G TO THE THREE COMPANIES AS LOANS AND ADVANCES AND THE PURCHASES AND SALES MA DE OF FABRICS BY THE ASSESSING OFFICER HAS BEEN TREATED AS SHAM TRANSACTIONS BY TH E ASSESSING OFFICER. THEREFORE, HE ASSESSED THE SALES OF RS.35,12,58,126/- AS UNDIS CLOSED INCOME OF THE ASSESSEE INTRODUCED IN THE BOOKS OF ACCOUNT IN THE GARB OF S ALE OF FABRICS. AGGRIEVED BY THE ABOVE ADDITIONS, THE ASSESSEE APPEALED BEFORE THE F IRST APPELLATE AUTHORITY, WHO ITA NO. 5629/DEL./2012 5 AFTER CONSIDERING THE SUBMISSIONS AND THE ORDER OF THE ASSESSING OFFICER, ALLOWED THE APPEAL OF THE ASSESSEE OBSERVING AS UNDER : 5. I HAVE GONE THROUGH THE APPELLANT'S SUBMISSIONS AND CONSIDERED THE FACTS AND EVIDENCES ON RECORD HAVE PERUSED THE AO'S ORDER . IT IS SEEN THAT THE AO HAS ADDED THE ENTIRE SALES AS UNDISCLOSED INCOME. HE HA S NOT CLEARLY SPELT OUT AS TO UNDER WHICH PROVISION OF LAW, THE AMOUNT OF SALES C AN BE ADDED AS INCOME WHEN THE SAME IS ALREADY OFFERED FOR INCOME IN THE PROFIT AND LOSS ACCOUNT. 5.1 IT IS ALSO SEEN FROM THE PERUSAL OF AO'S ORDER THAT IF IT IS ACCEPTED THAT BOTH THE PURCHASE AND SALES ARE BOGUS, THEN THE PRO FIT FROM THE SAME WILL ALSO BE BOGUS AND AS SUCH THERE WILL BE NO TAXABLE INCOM E. IT IS SEEN THAT AO HAS NOT POINTED OUT THE SOURCE FROM WHICH HE CAME TO THE CO NCLUSION THAT THE UNDISCLOSED INCOME HAS COME TO THE APPELLANT'S ACCO UNTS. 5.2 I FIND THAT THE AO HAS ADDED WHOLE OF THE AMOUN T OF SALES AS UNDISCLOSED INCOME TO THE RETURNED INCOME, WHEN THE RETURNED IN COME ITSELF IS BASED ON THE AUDITED ANNUAL ACCOUNTS OF THE APPELLANT AND THE NE T PROFIT IS ARRIVED AFTER CONSIDERING SALES, PURCHASES AND OTHER COSTS, IN TH AT EVENT IN MY HUMBLE VIEW THERE IS NO BASIS FOR ADDITION OF AMOUNT OF SALES A LL OVER AGAIN. IN COMING TO THIS CONCLUSION I RELY ON THE DECISION OF JHARKHAND HIGH COURT IN THE CASE OF AMITABH CONSTRUCTION PVT. LTD. (335 ITR 523). 5.3 WITH REGARD TO THE CONVERSION OF 'DEBTORS' TO 'LOAN AND ADVANCES' IT IS QUITE OBVIOUS THAT BOTH 'DEBTORS' AND 'LOAN AND ADV ANCES' APPEAR ON THE ASSET SIDE OF THE BALANCE SHEET AND THE MERE ACT OF SWITCHING OF THE SAME FROM CURRENT ASSETS TO LOANS AND ADVANCES CANNOT GIVE RI SE TO INCOME, MUCH LESS UNDISCLOSED INCOME. THESE ARE MERELY THE BOOK ENTRIE S AND NO NEW FUNDS OR ANY OTHER ASSET HAS BEEN INTRODUCED IN THE APPELLAN T'S ACCOUNTS WHICH COULD BE CONSIDERED AN ATTEMPT FOR LEGALIZING ITS UNDISCLOSE D INCOME. IN FACT, THE APPELLANT DID NOT HAVE A BANK ACCOUNT DURING THE YE AR UNDER CONSIDERATION. 5.4 IT IS QUITE STRANGE THAT AO ON ONE HAND IS TREA TING THE PURCHASES AND SALES ARE SHAM TRANSACTIONS BUT ON THE OTHER HAND T REATS THE LOANS AND ADVANCES AS GENUINE. AO THEREFORE HAS FAILED TO DIS CHARGE ONUS CAST ON HIM WHEN HE IS DISREGARDING AUDITED ACCOUNTS OF THE APP ELLANT, AS TO HOW THE VALUE IS PASSED ON TO THE PERSONS WHO ARE SHOWN TO HAVE B EEN GIVEN LOANS. ITA NO. 5629/DEL./2012 6 5.6 AS PER THE FINANCIAL ACCOUNTS IT IS SEEN THAT THE CAPITAL OF THE APPELLANT'S COMPANY IS MERELY RS. 1,00,000 AND HE HAS NOT BORRO WED ANY OTHER MONEYS IN FACT IN THE YEAR UNDER CONSIDERATION, NO BANK ACCOU NT IS BEING MAINTAINED BY THE APPELLANT. IN MY VIEW IN THE WHOLE MODUS OPERANDI, THERE IS NO MOVEMENT OF ANY FUNDS AT ALL AND MERE BOOKS ENTRIES ARE THERE. THEREFORE, IN THE FACTS OF THE CASE THERE IS NO COLORABLE DEVICE TO EVADE THE TAXES. HOWEVER, IN MY VIEW IT IS A FIT CASE TO INITIATE PROCEEDINGS UNDER SECTION 269 SS AND 269T IN RESPECT OF THE PARTIES WHERE BY MUTUAL AGREEMENT THE 'DEBTORS' HAVE BEEN C ONVERTED AS 'LOAN AND ADVANCE', 'CREDITORS FOR GOODS' HAVE BEEN TREATED A S 'UNSECURED LOAN' AS IT IS A CASE OF TAKING OR ACCEPTING LOANS AND DEPOSITS OTHE RWISE THAN BY AN ACCOUNT PAYEE CHEQUES / BANK DRAFTS. THE AO IN HIS ORDER VID E PARA 11 HAS GIVEN A FINDING TO THIS EFFECT AND THEREFORE HE IS AGAIN DI RECTED TO ENSURE THE COMPLIANCE OF SAME. IN VIEW OF THE ABOVE DISCUSSIONS, I AM OF VIEW THAT WHEN ON ONE HAND SALES ARE DULY BEEN REFLECTED IN BOOKS OF ACCOUNTS, THE ADDIT IONS OF THE LIKE AMOUNT CANNOT BE ADDED TO APPELLANT'S INCOME AS INCOME FRO M UNDISCLOSED SOURCES WHEN NO EVIDENCE IS AVAILABLE WITH THE AO. 6. IN THE RESULT, ADDITION MADE BY AO IS DELETED AN D IN THE RESULT APPEAL IS ALLOWED. 3. AGGRIEVED BY THE ORDER OF LD. CIT(A), THE REVENUE I S IN APPEAL BEFORE THE TRIBUNAL. 4. DURING THE COURSE OF HEARING, THE LD. DR RELIED ON THE ORDER OF THE ASSESSING OFFICER AND SUBMITTED A WRITTEN SYNOPSIS WHICH READ S AS UNDER : 1.1 IT IS UNDISPUTED THAT THE ASSESSEE JOINED THE ASSESSMENT PROCEEDINGS AT FAG END OF THE LIMITATION PERIOD. THE ASSESSEE NOT ONLY PRESEN TED A STORY WHICH CANNOT BE BELIEVED BUT DID NOT PRESENT ANY MATERIAL TO SUPPORT THE SAM E. 1.2. THE AO HAS NARRATED RELEVANT FACTS IN THE ASS ESSMENT ORDER (WHICH INTER-ALIA INCLUDE THE FACTS IN PARAS 3.1 TO 3.22). A TOTAL UN BELIEVABLE SITUATION HAS BEEN PRESENTED. ITA NO. 5629/DEL./2012 7 2.1 THE AO MIGHT NOT HAVE SAID IN SO MANY WORDS BUT IT IS CLEAR CASE OF DISALLOWANCES OF DEDUCTION CLAIMED IN RESPECT OF PURCHASES. 2.2 THERE IS AMPLE MATERIAL ON RECORD TO SHIFT ONU S ON ASSESSEE TO PROVE THE GENUINENESS OF PURCHASES WHICH ASSESSEE FAILED TO D ISCHARGE AND AO CAME TO THE CONCLUSION THAT THE PURCHASES ARE BOGUS. EVEN BEFOR E CIT(A) NO MATERIAL EVIDENCE HAS BEEN PLACED TO DISCHARGE THIS ONUS. 2.3 THE HON'BLE DELHI HIGH COURT WHILE DELIVERING J UDGMENT DATED 15 MARCH, 2001 IN CASE OF CIT VS. LA MEDICA VS. COMMISSIONER OF INCO ME-TAX (2001) 168 CTR DEL 314 HELD THAT THAT IT IS TO BE NOTED THAT ASSESSEES STAND W AS NOT THAT IT WAS NOT OPEN TO THE APPELLATE AUTHORITY TO MAKE OUT A THIRD CASE, WHICH WAS NOT EVEN THE CASE OF THE ASSESSEE, TO HOLD THAT THE TRANSACTIONS WERE REAL AND NOT FIC TITIOUS AS CLAIMED BY THE REVENUE. 2.4 THE RELEVANT PORTION OF THE JUDGMENT IS REPR ODUCED AS UNDER: '.. ...THE QUESTION WHETHER THE PURCHASES WERE MADE FROM SOME OTHER SOURCE OUGHT NOT TO HAVE WEIGHED WITH THE TRIBUNAL AS A FACTOR I N FAVOR OF THE ASSESSED. THE CONCLUSIONS OF THE TRIBUNAL ARE, THEREFORE, CLEARLY ERRONEOUS, CONTRARY TO MATERIALS ON RECORD AND HAVE BEEN ARRIVED AT WITHOUT TAKING I NTO CONSIDERATION RELEVANT MATERIAL AND PLACING RELIANCE ON IRRELEVANT MATERIA LS. IT IS TO BE NOTED THAT ASSESSEES STAND WAS NOT THAT IT HAD EFFECTED PURCH ASES FROM ANYBODY ELSE. ITS STAND THROUGHOUT WAS THAT IT HAD EFFECTED PURCHASES FROM M/S. KALPANA ENTERPRISES. IT WAS NOT OPEN TO THE TRIBUNAL TO MAK E OUT A THIRD CASE, WHICH WAS NOT EVEN THE CASE OF THE ASSESSED, TO HOLD THAT THE TRANSACTIONS WERE REAL AND NOT FICTITIOUS AS CLAIMED BY THE REVENUE.....' 2.5 IT IS ALSO A CASE WHERE APPARENTLY THE PURCHAS ES ARE NOT GENUINE. THE RATIO OF HON'BLE SC WHICH HAS BEEN LAID DOWN IN CASE OF DAUL AT RAM RAWATMULL 87 ITR 394(SC) IS CLEARLY APPLICABLE. 2.6 IT IS A SIMPLE MATTER OF ERROR ON PART OF CIT(A ) THAT THE CIT(A) DID NOT UNDERSTAND THE PREPOSITION THAT BY THE PURCHASES ARE BOGUS. 3.1 IT IS A SIMPLE MATTER OF ERROR ON PART OF CIT(A ) THAT THE CIT(A) DID NOT UNDERSTAND THE PREPOSITION THAT BY THE DEVICE ADOPTED BY THE A SSESSEE IT IS ABLE TO CREATE A SMOKE SCREEN TO SHOW THAT IT HAS ADVANCED LOAN OF RS. 35, 12,58,71,216/-. 3.2 IT IS A SIMPLE MATTER OF ERROR ON PART OF CIT(A ) THAT THE CIT(A) DID NOT CONSIDER THE MATTER IN LIGHT OF HUMAN PROBABILITIES. THE CIT(A) IGNORED SQUARELY APPLICABLE RATIO OF HON'BLE SC IN CASE OF SUMATI DAYAL VS. COMMISSIONER OF INCOME-TAX [1995] 80 TAXMAN 89 (SC) WHICH STATES AS UNDER : ITA NO. 5629/DEL./2012 8 '...THAT THE TAXING AUTHORITIES ARE ENTITLED TO LOO K INTO THE SURROUNDING CIRCUMSTANCES TO FIND OUT THE REALITY AND THE MATTE R HAS TO BE CONSIDERED BY APPLYING THE TEST OF HUMAN PROBABILITIES.....' 4. HON'BLE DELHI HIGH COURT IN CASE OF SIDDHO MAL & SONS VS. COMMISSIONER OF INCOME-TAX [1980] 3 TAXMAN 1 (DELHI) HELD THAT THE APPRECIATION OF EVIDENCE OF CIRCUMSTANCE, ATTACHING TO A TRANSACTION, IS WHOLLY A QUESTION OF FACT AND NOT OF LAW.(REF. PARA 21). 5.1. IT IS A SIMPLE MATTER OF ERROR ON PART OF CIT (A) THAT THE CIT(A) DID NOT UNDERSTAND THE PREPOSITION THAT BY THE AO HAS EFFECTIVELY USED SECTION 68. 5.2 THE HON'BLE HIGH COURT OF MADHYA PRADESH IN CA SE OF V.I.S.P. (P.) LTD. VS. CIT (2004) 136 TAXMAN 482 (MP) HAS HELD THAT BOGUS CRED IT ENTRY IN RESPECT OF PURCHASE CAN LEAD TO ADDITION TO THE INCOME. THE HON'BLE HIGH CO URT CONSIDERED AND REJECTED ARGUMENTS OF THE ASSSESSEE THAT SECTION 68 CAN BE I NVOKED ONLY WHEN BOOKS OF ACCOUNTS SHOW CASH ENTRY AND NOT OTHERWISE. PARAS 3 AND 4 OF THE JUDGMENT ARE REPRODUCED BELOW : '3. LEARNED COUNSEL, APPEARING FOR THE ASSESSEE PLA CING RELIANCE ON THE DECISION OF THE SUPREME COURT IN BALADIN RAM V. CIT (1969) 71 I TR 427 AND THE DECISIONS OF THE BOMBAY AND ALLAHABAD HIGH COURTS IN CIT V. BHA ICHAND H. GANDHI [1983] 141 ITR 671 AND SUNDAR LAL JAIN V. CIT [1979] 117 ITR 3 16, RESPECTIVELY, CONTENDED, THAT SECTION 68 OF THE ACT CAN BE INVOKED ONLY, WHE N, THE BOOKS OF ACCOUNT OF THE ASSESSEE SHOW THE CASH ENTRY AND NOT OTHERWISE. 4. WE ARE AFRAID, SUCH A NARROW AND RESTRICTED INTE RPRETATION OF THE PROVISIONS, CONTAINED IN SECTION 68 WAS ADVANCED BY LEARNED COUNSEL FOR THE APPELLANT/ASSESSEE, CANNOT BE ACCEPTED. IF THE LIAB ILITY SHOWN IN THE SAID ACCOUNT, WHICH, IS FOUND TO BE BOGUS AND IN THE ABSENCE OF A NY PLAUSIBLE AND REASONABLE EXPLANATION OFFERED BY THE ASSESSEE, THEN, CERTAINL Y, THE AMOUNT CAN BE ADDED TOWARDS THE INCOME OF ASSESSEE AND BROUGHT TO TAX I N THE HANDS OF THE ASSESSEE.' 5.3 HONBLE DELHI HIGH COURT IN CASE OF CIT VS. N.R . PORTFOLIO (P) LTD. [2014] 42 TAXMANN.COM 339 (DELHI) HAS HELD THAT CREATING PAPE RS IN ROUTINE COURSE CANNOT IN ALL CASES TANTAMOUNT TO SATISFACTORY DISCHARGE OF ONUS. 5.4 HON'BLE JURISDICTIONAL HIGH COURT, IN PARA 31 , HAS HELD AS UNDER: '31......... IDENTITY, CREDITWORTHINESS OR GENUINEN ESS OF THE TRANSACTION IS NOT ESTABLISHED BY MERELY SHOWING THAT THE TRANSACTION WAS THROUGH BANKING CHANNELS ITA NO. 5629/DEL./2012 9 OR BY ACCOUNT PAYEE INSTRUMENT. IT MAY, AS IN THE P RESENT CASE REQUIRED ENTAIL A DEEPER SCRUTINY. IT WOULD BE INCORRECT TO STATE THA T THE ONUS TO PROVE THE GENUINENESS OF THE TRANSACTION AND CREDITWORTHINESS OF THE CREDITOR STANDS DISCHARGED IN ALL CASES IF PAYMENT IS MADE THROUGH BANKING CHANNELS. WHETHER OR NOT ONUS IS DISCHARGED DEPENDS UPON FACTS OF EACH C ASE. IT DEPENDS ON WHETHER THE TWO PARTIES ARE RELATED OR KNOWN TO EACH; THE MANNE R OR MODE BY WHICH THE PARTIES APPROACHED EACH OTHER, WHETHER THE TRANSACT ION WAS ENTERED INTO THROUGH WRITTEN DOCUMENTATION TO PROTECT THE INVESTMENT, WH ETHER THE INVESTOR PROFESSES AND WAS AN ANGEL INVESTOR, THE QUANTUM OF MONEY, CR EDITWORTHINESS OF THE RECIPIENT, THE OBJECT AND PURPOSE FOR WHICH PAYMENT /INVESTMENT WAS MADE ETC. THESE FACTS ARE BASICALLY AND PRIMARILY IN KNOWLEDG E OF THE ASSESSEE AND IT IS DIFFICULT FOR REVENUE TO PROVE AND ESTABLISH THE NE GATIVE. CERTIFICATE OF INCORPORATION OF COMPANY, PAYMENT BY BANKING CHANNE L, ETC. CANNOT IN ALL CASES TANTAMOUNT TO SATISFACTORY DISCHARGE OF ONUS. THE F ACTS OF THE PRESENT CASE NOTICED ABOVE SPEAK AND ARE OBVIOUS. WHAT IS UNMISTAKABLY VISIBLE AND APPARENT, CANNOT BE SPURRED BY FORMAL BUT UNRELIABLE PALE EVI DENCE IGNORING THE PATENT AND WHAT IS PLAIN AND WRIT LARGE, '(EMPHASIS SUPPLIED). 6. THE CIT(A) HAS POINTED OUT VARIOUS MISTAKES OF T HE AO BUT DID PRECIOUS LITTLE TO BRING NECESSARY MATERIAL ON RECORD. THE CIT(A) HAS SAME P OWERS WHICH ARE AVAILABLE TO THE AO. THE CIT(A) BUT HAS VIOLATED THE SPIRIT OF JUDGMENT OF JURISDICTIONAL HIGH COURT IN CASE OF CIT VS. JANSAMPARK ADVERTISING & MARKETING (P.) LTD . [ 2015 ] 56 TAXMANN.COM 286 (DELHI). 5. ON THE OTHER HAND, THE LD. AR OF THE ASSESSEE RE LYING ON THE ORDER OF FIRST APPELLATE AUTHORITY, ALSO FILED A WRITTEN SYNOPSIS STATING AS UNDER : 1. THE PROFIT & LOSS ACCOUNT AND BALANCE SHEET OF THE ASSESSEE SHOWS PURCHASES OF RS. 35,11,19,5467- AND THE SAME GOODS HAVE BEEN SOLD FO R RS. 35,12,58,1267-.THE ASSESSING OFFICER ('AO') HAS ADDED TOTAL SALES OF RS. 35,12,5 8,126/- TO THE INCOME OF THE ASSESSEE. IT MAY BE POINTED OUT THAT NO ADDITION HAS BEEN MADE O N ACCOUNT OF PURCHASES MADE BY THE ASSESSEE. THE BOOKS OF ACCOUNT ARE NOT REJECTED, TH E ONLY OBSERVATION IN PARAGRAPH 10.1 OF THE ASSESSMENT ORDER IS THAT THE SALE AND PURCHASE TRANSACTIONS ARE SHAM AND CONSEQUENTLY TRADING RESULTS ARE REJECTED. WHEREAS THE AO HAS HIMSELF ASSESSED THE INCOME FROM SAID SALE AND PURCHASE, AFTER DEDUCTING THE EXPENSE AT RS. 13,090/-. 2. ON 05.12.2016, THE LD. DR HAS FILED WRITTEN SUB MISSION STATING THAT THE AO HAS NOT SAID SO IN CLEAR WORDS BUT ACTUALLY THE AO HAS DISALLOWE D THE PURCHASES. THIS IS FACTUALLY NOT TRUE AS IT IS CLEAR FROM ASSESSMENT ORDER THAT THE AO HAS MADE THE ADDITION OF TOTAL SALES. THIS FACT IS CLEARLY NOTED BY CIT(A) ALSO IN PARAGR APH 5 OF HIS FINDING AND CIT(A) HAS ALSO ITA NO. 5629/DEL./2012 10 RIGHTLY NOTED THAT THE AMOUNT OF SALE CANNOT BE ADD ED AS INCOME WHEN THE ASSESSEE HAS ALREADY CREDITED THE SAME IN THE PROFIT & LOSS ACCO UNT. 3. THE DR CANNOT MAKE A NEW CASE, WHICH IS NOT THE CASE OF THE AO. THE DR ONLY REPRESENTS THE AO, HIS SCOPE OF ARGUMENTS IS CONFIN ED TO SUPPORTING OR DEFENDING THE AO'S ORDER AND HE CANNOT SET UP ALTOGETHER A DIFFERENT C ASE. THE BENEFIT CONFERRED BY THE AO CANNOT BE TAKEN BACK BY THE TRIBUNAL. THIS PRINCIPL E HAS BEEN LAID DOWN BY THE HON'BLE SUPREME COURT IN MCORP GLOBAL (P.) LTD. [2009] 309 ITR 434 (SC) AND THE RELEVANT EXTRACT IS GIVEN BELOW: '6. IN THE CASE OF HUKUMCHAND MILLS LTD. V. CIT [1967] 63 ITR 232 THIS COURT HAS HELD THAT UNDER SECTION 33(4) OF THE INCOME-TAX ACT, 1922 [EQ UIVALENT TO SECTION 254(1) OF THE 1961 ACT], THE TRIBUNAL -WAS NOT AUTHORIZED TO TAKE BACK T HE BENEFIT GRANTED TO THE ASSESSEE BY THE ASSESSING OFFICER. THE TRIBUNAL HAS NO POWER TO ENHANCE THE ASSESSMENT . APPLYING THE RATIO OF THE SAID JUDGMENT TO THE PRESENT CASE, WE ARE OF THE VIEW THAT, IN THIS CASE, THE ASSESSING OFFICER HAD GRANTED DEPRECIATION IN RESPE CT OF 42,000 BOTTLES OUT OF THE TOTAL NUMBER OF BOTTLES (5,46,000), BY REASON OF THE IMPUGN ED JUDGMENT. THAT BENEFIT IS SOUGHT TO BE TAKEN AWAY BY THE DEPARTMENT, WHICH IS NOT PERMIS SIBLE IN LAW. THIS IS THE INFIRMITY IN THE IMPUGNED JUDGMENT OF THE HIGH COURT AND THE TRIBUNAL . ' 4. IT HAS BEEN HELD IN A NUMBER OF CASES THAT THE DR C ANNOT BE ALLOWED TO TAKE UP A NEW CONTENTION DE HORS THE VIEW TAKEN BY THE AO AS IT W OULD MEAN THAT DR IS STEPPING IN THE SHOES OF COMMISSIONER OF INCOME TAX EXERCISING JURI SDICTION U/S 263. AS SUCH THE DR CANNOT BE ALLOWED TO SAY THAT THE ADDITION SHOULD B E UPHELD ON ACCOUNT OF DISALLOWANCE OF PURCHASE, WHICH IS NOT THE CASE OF THE AO AS THE AO HAS ADDED THE SALES ALREADY DECLARED BY THE ASSESSEE. RELIANCE IS PLACED ON THE FOLLOWIN G DECISIONS: ACIT V. MS. AISHWARYA K. RAI [2010] 127 ITD 204 (MUMBAI), THE MUMBAI ITAT AT PARAGRAPH 4 HELD THE FOLLOWING: '4. ...IT IS NO DOUBT TRUE THAT THE LEARNED D.R. CAN MAK E ANY ARGUMENTS IN SUPPORT OF THE STAND TAKEN BY THE ASSESSING OFFICER BUT THERE ARE C ERTAIN INHERENT LIMITS OF HIS ARGUMENTS INASMUCH AS HE CANNOT TRANSGRESS THE BOUNDARIES MADE BY THE ASSESSING OFFICER. IN OTHER WORDS, THE LEARNED D.R. CAN SUPPORT THE ACTION OF T HE ASSESSING OFFICER WITH ANY ARGUMENTS, HE CAN RELY ON ANY CASE LAW IN SUPPORT OF THE ASSES SING OFFICER'S CASE, BUT HE CANNOT MAKE OUT ALTOGETHER A NEW CASE WHICH WAS NOT THE SUBJECT -MATTER OF CONSIDERATION BY THE ASSESSING OFFICER OR THE LEARNED FIRST APPELLATE AU THORITY. TO FIND FAULT IN THE ASSESSMENT ORDER IS OUTSIDE THE DOMAINS OF THE ARGUMENTS OF TH E LEARNED D.R. AS SUCH POWER VESTS WITH THE LEARNED CIT UNDER SECTION 263 FOR REVISING ANY ORDER WHICH IS ERRONEOUS AND PREJUDICIAL TO THE INTEREST OF THE REVENUE. WE ARE, THEREFORE, NOT INCLINED TO ACCEPT THESE GROUNDS AS THEY DO NOT EMANATE FROM THE ORDERS OF THE AUTHORITIES BE LOW... ' ERICSSON AB V. DEPUTY DIRECTOR OF INCOME TAX [2012] 25 TAXMANN.COM 466, THE DELHI ITAT AT PARAGRAPH 26 MADE THE FOLLOWING OBSERVATION : '26, EVEN OTHERWISE, THE LD. DEPARTMENTAL REPRESENT ATIVE CANNOT MAKE OUT A NEW CASE, WHICH IS NOT OF THE CASE OF THE ASSESSING OFFICER. THE MUMBAI BENCH OF THE TRIBUNAL IN ASSTT. CIT V. MS. AISHWARYA K. RAI [2010] 127ITD204 (MUM.) HELD THAT THE LEARNED D.R. CAN ITA NO. 5629/DEL./2012 11 SUPPORT THE ACTION OF THE A.O. WITH ANY ARGUMENTS A ND THAT HE CAN RELY ON ANY CASE LAW IN SUPPORT OF THE A.O'S CASE BUT HE CANNOT MAKE OUT ANY NEW CASE WHICH WAS NOT THE SUBJECT MATTER OF CONSIDERATION BY THE A. O. OR THE FIRST A PPELLATE AUTHORITY. IT FURTHER HELD THAT TO FIND FAULT IN THE ASSESSMENT ORDER IS OUTSIDE THE D OMAIN OF THE ARGUMENT OF THE LD. D.R. AS SUCH POWERS VESTS WITH THE COMMISSIONER U/S 263 FOR REVISING ANY ORDER WHICH IS ERRONEOUS AND PREJUDICIAL TO THE INTERESTS OF REVENUE. THE TR IBUNAL, PUNE BENCH IN ITO V. ANANT Y. CHAVAN [2009] 126 TTJ (PUNE) 984 HAS HELD AS FOLLOWS:- 'THE D.R. ONLY REPRESENTS TH E A.O. WHO CAN DO BETTER THAN TO JUSTIFY HIS OWN ACTION ON THE GROUNDS WHICH HAVE BEEN DISCUSSED IN THE ASSESSMENT ORDER OR PERHAPS EVEN ON EXTENDED GROUNDS. UNDOUBTEDLY, THERE CAN BE OCCASIONS WHEN AO FAILS TO BRING AN INCOME TO TAX OR GRANT EXCESSIVE DEDUCTION AND THE REMEDY FOR THESE LAPSES ARE PRESCRIBED BY THE PROVIS IONS OF S.I 47, 154 AND 263 ETC. BUT ALL THESE SECTIONS HAVE CERTAIN TIME LIMITS WITHIN WHIC H THESE SECTIONS CAN BE INVOKED WHETHER IT IS A RECTIFICATION OF A MISTAKE, OR INITIATION O F PROCEEDINGS FOR INCOME ESCAPING ASSESSMENT, OR EVEN A REVISION PROCEEDING EVERYTHING MUST BE COM PLETED WITHIN THE PRESCRIBED TIME LIMIT. TO SUGGEST THAT EVEN A PROCEEDING BEFORE THE TRIBUNAL IS A CONTINUATION OF ASSESSMENT PROCEEDINGS AND, THEREFORE, THE A.O. CAN BE ALLOWED TO MAKE UP FOR HIS DEFICIENCIES WILL AMOUNT TO RENDERING ALL THESE TIME LIMITS AS NUGATO RY AND REDUNDANT. IT IS INDEED NOT OPEN FOR THE TRIBUNAL TO TAKE AWAY THE BENEFIT GIVEN BY TH E A.O. WHEN THE AO DECIDED TO GRANT DEDUCTION U/S 80-113(10) IN RESPECT OF RESIDENTIAL UNITS IT WAS WELL CONSIDERED AND CONSCIOUS DECISION ON HIS PART TO HAVE GRANTED THE BENEFIT OF DEDUCTION. WITH THE BENEFIT OF HINDSIGHT THIS BENEFIT OF DEDUCTION MIGHT HAVE BEEN L ITTLE MORE GENEROUS THAN WHAT IS FOUND TO BE ADMISSIBLE BY THE TRIBUNAL, BUT THEN THE DECISION OF THE TRIBUNAL HAS NOT YET REACHED FINALITY AND IT IS NOT AN END OF THE ROUTE SO FAR A S LEGAL DEVELOPMENTS IN THAT REGARD ARE CONCERNED. IT IS NOT THE SCHEME OF THE ACT THAT ENT IRE ASSESSMENT IS OPEN BEFORE THE TRIBUNAL AND IT MUST CONSIDER THE SAME. GROUND WHICH WAS RAISED BY THE REVENUE WAS CONFINE D TO PROFITS RELATABLE TO COMMERCIAL UNITS AND THEREFORE, IT IS NOT REALLY OPEN TO THE TRIBUNAL TO GO BEYOND THE SAID GROUND. JEYPORE TIMBER & VENEER MI LLS (P.) LTD. V. CIT[1982] 137 ITR 415/[19831 12 TAXMAN 191 (GAU.) APPLIED; CIT V. ASS AM TRAVELS SHIPPING SERVICE [1993] 199 ITR I/ 67 TAXMAN 269 (SC) AND JT. CITV. SAKURA BANK LTD. [2006] 100ITD2 15/[20061 6 SOT 684 (MUMBAI) DISTINGUISHED; MCORP GLOBAL (P) LTD. V. CIT [2009] 309 ITR 434/ 178 TAXMAN 347 (SC) FOLLOWED'. MUMBAI SPECIAL BENCH OF THE TRIBUNAL IN MAHINDRA & MAHINDRA LTD, V. DV. CIT [20101 122 1TD 216 / 30 SOT 374 {MU M.) (SB), HELD AS FOLLOWS:-'IN OUR CONSIDERED OPINION THE ID. D.R. HAS NO JURISDICTION TO GO BEYOND THE ORDER PASSED BY THE A.O. HE CANNOT RAISE ANY POINT DIFFERENT FROM THAT CONSI DERED BY THE AO OR THE C1T(A). HIS SCOPE OF ARGUMENTS IS CONFINED TO SUPPORTING OR DEFENDING THE IMPUGNED ORDER. HE CANNOT SET UP AN ALTOGETHER DIFFERENT CASE. IF THE ID. D.R. IS AL LOWED TO TAKE UP A NEW CONTENTION DE HORS THE VIEW TAKEN BY THE AO THAT WOULD MEAN THE ID. D.R. S TEPPING INTO THE SHOES OF THE CIT EXERCISING JURISDICTION U/S 263. WE. THEREFORE, DO NOT PERMIT THE ID. D.R. TO TRANSGRESS THE BOUNDARIES OF HIS ARGUMENTS. SIMILAR VIEW HAS BEEN TA KEN BY THE JODHPUR BENCH OF THE TRIBUNAL IN THE CASE OF KWAL PRO EXPORTS V. ASSTT. CIT [20081 110 ITD 59 (JODH.1 THIS CONTENTION IS THEREFORE REPELLED AS DEVOID OF ANY M ERIT. 'THE HON'BLE S.C. IN MCORP GLOBAL (P.) LTD. (SUPRA) HAS HELD AS FOLLOWS:-'HELD, THAT U/S 254(1) OF THE ACT, THE APPELLATE TRIBUNAL HAD NO POWER TO TAKE BACK THE BENEFIT CONFERR ED BY THE A.O. OR ENHANCE THE ASSESSMENT. SINCE THE A.O. HAD GRANTED DEPRECIATION IN RESPECT OF 42,000 BOTTLES THAT BENEFIT COULD NOT BE WITHDRAWN.' ITA NO. 5629/DEL./2012 12 IN VIEW OF THE DISCUSSION, WE HOLD THAT THE LD. DEP ARTMENTAL REPRESENTATIVE CANNOT MAKE OUT AFRESH CASE FOR THE FIRST TIME DURING THE COURS E OF ARGUMENTS OF THE CASE. MAHINDRA & MAHINDRA LTD. V DY. CIT [2010] 122 ITD 126 (MUM.)(SB). ITO V. ANANT Y. CHAVAN [2009] 126 TTJ (PUNE) 98 4 KWAL PRO EXPORTS V. ASSTT. CIT [2008] 110 ITD 5 9 (JODHPUR) 5. WITHOUT PREJUDICE, THE AO HAS NOT MADE THE ADDI TION U/S 68 ON ACCOUNT OF SUNDRY CREDITORS. THE ADDITION IS MADE ON ACCOUNT OF SALE OF GOODS. IN THIS REGARD, RELIANCE IS PLACED ON ELAND INTERNATIONAL (P) LTD. V. DY. CIT ( 2009) 124 TTJ 0554 AND THE RELEVANT PARAGRAPH IS REPRODUCED: '5.4. WE HAVE CONSIDERED THE FACTS OF THE CASE AND RIVAL SUBMISSIONS. FROM THE SUBMISSIONS MADE BEFORE US, IT IS CLEAR THAT THE TRANSACTIONS OF PURCHASE AND SALE WERE RECORDED IN THE BOOKS OF ACCOUNT AND THESE TRANSACTIONS LED TO PROFI T TO THE ASSESSEE, WHICH WAS BROUGHT TO TAX. IF SALES HAVE BEEN EFFECTED OUT OF PURCHASES MA DE FROM THESE PARTIES, THEN, IT CANNOT BE SAID THAT THE PURCHASES WERE BOGUS. THE FINDING OF BOGUS SALE CAN ONLY LEAD TO THE INFERENCE THAT THE CORRESPONDING AMOUNT SHOULD BE DELETED FROM THE TURNOVER OF THE ASSESSEE. THE AO HAS ALSO NOT REJECTED THE BOOKS OF ACCOUNT TO ESTIMA TE PROFIT ON THESE TRANSACTIONS IN CASE IT WAS A FIRM FINDING THAT PURCHASES AND SALES WERE BOG US' 6. THE CIT(A) HAS RIGHTLY HELD THAT IF THE AO'S AP PROACH IS ACCEPTED THAT BOTH THE SALES AND PURCHASES ARE BOGUS THEN THERE WILL BE NO TAXAB LE INCOME OF THE ASSESSEE. NO AMOUNT IS PAID BY THE ASSESSEE DURING THE YEAR UNDER CONSI DERATION AND PART OF SUNDRY DEBTORS HAVE BEEN TREATED AS LOANS AND ADVANCES. NO FUNDS O R ASSETS HAVE BEEN INTRODUCED. THE CIT(A) IS RIGHT IN HOLDING THAT AO HAS FAILED TO DI SCHARGE THE ONUS CAST UPON HIM THAT WHERE HE IS DISREGARDING THE ACCOUNTS OF THE ASSESS EE THEN HOW THE VALUE IS PASSED ON TO THE PERSON TO WHOM THE SALES HAVE BEEN MADE AND TO WHOM THE LOAN HAVE BEEN SHOWN BY CONVERSION OF SUNDRY DEBTORS. THERE IS NO MOVEMENT OF ANY FUNDS AND THESE ARE ONLY BOOK ENTRIES. AS SUCH CIT(A) HAS RIGHTLY DELETED TH E ADDITION. 7. WITHOUT PREJUDICE, IT MAY BE SUBMITTED THAT THE AO HAS NOT ADDED THE AMOUNT OUTSTANDING IN THE LOANS AND ADVANCES ACCOUNT. THE CONFIRMATION OF SALES AND PURCHASE HAVE BEEN DULY FILED BEFORE THE AO AND THIS FACT IS NOTED BY THE LOWER AUTHORITIES. THE AO HAS ADDED THE SALES AMOUNT WHICH IS ALREADY SHOWN A S INCOME IN THE PROFIT & LOSS ACCOUNT. THE CIT(A) HAS RIGHTLY OBSERVED THAT THE L OAN/ADVANCE IS MERELY THE CONVERSION FROM THE ACCOUNT OF SUNDRY DEBTORS AND THERE IS NO MOVEMENT OF ANY CHEQUE OR CASH. 8. ON THE DATE OF HEARING ON 10.10.2017, THE DR HA S FILED A REPORT DATED 26.04.2016 OBTAINED FROM THE AO. THE FILING OF THE SAID REPORT AFTER THE ASSESSMENT PROCEEDINGS ARE OVER, IS OBJECTED. WITHOUT PREJUDICE TO THE SAME, I T IS SUBMITTED THAT THE REPORT HAS REFERRED TO THE ASSESSMENT PROCEEDINGS FOR A.Y. 201 0-11 AND A.Y. 2011-12 ON THE GROUND THAT THE FIGURES OF LOAN/ADVANCES HAVE GONE UP FROM THE FIGURES FOR A.Y. 2009-10. AS PER INSTRUCTION, ALL THE ACCOUNTS HAVE BEEN SQUARED UP IN A.Y. 2012-13. IT MAY BE SUBMITTED THAT THE ASSESSEE HAS BEEN REGULARLY FILING INCOME TAX RETURN AND THE CASES FOR A.Y. 2010- 11 AND A.Y. 2011-12 HAVE BEEN ACCEPTED BY THE INCOM E TAX DEPARTMENT. EVEN THE PROCEEDINGS FOR A.Y. 11-12 HAVE BEEN ACCEPTED U/S 1 43(3). THE PROOF OF FILING OF RETURNS ITA NO. 5629/DEL./2012 13 FOR A.Y. 2010-11 AND THE ASSESSMENT ORDER FOR A.Y. 2011-12 U/S 143(3) ARE ENCLOSED HEREWITH. IT MEANS THAT EVEN FOR LATER ASSESSMENT Y EARS, WHERE THE LOANS/ADVANCES HAVE INCREASED, THE POSITION IS ACCEPTED BY THE INCOME T AX DEPARTMENT. EVEN ON THE PRINCIPLE OF CONSISTENCY, THE ORDER OF THE CIT(A) IS LIABLE T O BE UPHELD. RELIANCE IS PLACED ON THE DECISION CIT V. NEO POLY PACK (P.) LTD. (2000) 245 ITR 492. 9. THE DR HAS FILED A COPY OF THE DECISION OF THE HON'BLE SUPREME COURT IN THE CASE OF N.K. PROTEINS V. DY. CIT [2017] 84 TAXMANN.COM 195 (SC) IN WHICH THE SPECIAL LEAVE PETITION (SLP) HAS BEEN DISMISSED. IN THIS CONTEXT, IT IS SU BMITTED AS UNDER: THE ABOVE NOTED DECISION IS NOT RELEVANT AT ALL BEC AUSE IN THE SAID CASE, THE ADDITION WAS MADE ON ACCOUNT OF ALLEGED BOGUS PURCHASES BECAUSE BLANK SIGNED CHEQUE-BOOKS AND OTHER MATERIAL WERE RECOVERED FROM THE PREMISES OF NK PL DURING THE COURSE OF SEARCH, WHICH PROVED THAT THE PURCHASES WERE BOGUS AND THE HON'BLE GUJARAT HIGH COURT IN THE CASE OF NK INDUSTRIES LTD. V. DCIT [2016] 72 TAXMAN N.COM 289 (GUJ) UPHELD THE ADDITION ON ACCOUNT OF BOGUS PURCHASES AND THE SLP AGAINST T HE SAME WAS DISMISSED BY THE SUPREME COURT. IN THIS RESPECT OUR SUBMISSION IS AS UNDER: A. IN THE CASE OF THE PRESENT ASSESSEE, NO ADDITI ON HAS BEEN MADE BY THE AO IN RESPECT OF THE PURCHASES MADE. THE ADDITION BY THE AO IS ON AC COUNT OF SALES MADE WHICH IS RIGHTLY DELETED BY THE CIT(A). THE BENEFIT GIVEN BY THE AO CANNOT BE TAKEN AWAY BY THE TRIBUNAL. B. WITHOUT PREJUDICE, THE JUDGMENT OF THE HON'BLE GUJARAT HIGH COURT IN THE CASE OF NK INDUSTRIES LTD. V. DCIT (SUPRA) IS BASED ON THE FACT THAT BLANK SIGNED CHEQUE BOOKS OF THE PURCHASING PARTIES, ENDORSED IN FAVOUR OF NKPL WERE FOUND DURING THE SEARCH ON NK GROUP OF CASES, WHEREAS IN THE CASE OF THE ASSESSEE , THE CONFIRMATION HAS BEEN FILED AND NO ADDITION HAS BEEN MADE BY THE AO ON ACCOUNT OF P URCHASES MADE BY THE ASSESSEE. THE JUDGMENT HAS TO BE READ AND UNDERSTOOD WITH REFEREN CE TO ISSUE INVOLVED IN THE CASE. NO SUCH MATERIAL HAS BEEN BROUGHT ON RECORD BY THE AO, IN FACT THAT IS NOT THE CASE OF THE AO IN THIS CASE. RELIANCE IS PLACED ON HON'BLE SUPREME COURT'S DECISION IN THE CASE OF SUN ENGINEERING WORKS (P) LTD. (1992) 198 ITR 297 (SC). C. IT IS NOT AS IF BY SIMPLE DISMISSAL OF THE SLP, THE HON'BLE SUPREME COURT HAS LAID DOWN ANY LAW. RELIANCE IS PLACED ON THE KUNHAYAMMED AND ORS. V. STATE OF KERALA & ORS. 245 ITR 360. A SIMILAR ARGUMENT WAS RAISED BY THE DR IN THE CASE OF DY. CIT V. SH. SUNIL KUMAR [ITA NO. 563/ASR/2016] AND THE SAID ARGUMENT WAS DI SMISSED BY THE ITAT AND RELIEF WAS GIVEN TO THE ASSESSEE FOLLOWING THE DECISION OF HON'BLE BOMBAY HIGH COURT IN THE CASE OF CIT V. NIKUNJ EXIMP ENTERPRISES PVT. LTD. [ 2013] 35 TAXMANN.COM 384. IN VIEW OF THE ABOVE NOTED SUBMISSIONS, THE APPEAL OF THE DEPARTMENT IS LIABLE TO BE DISMISSED. 6. WE HAVE CAREFULLY CONSIDERED THE RIVAL CONTENTIO N AND ALSO PERUSED THE ORDERS OF THE LOWER AUTHORITIES. IN BRIEF, FACTS OF THE CASE ARE THAT ASSESSEE IS A ITA NO. 5629/DEL./2012 14 COMPANY ALLEGEDLY ENGAGED IN THE BUSINESS OF PURCHA SE AND SALE OF FABRIC. DURING THE YEAR, THE LD. ASSESSING OFFICER NOTED THAT ASSE SSEE HAS MADE A PURCHASE OF RS. 35.11 CRORES AND HAS ALSO MADE SALES OF RS. 35.12 C RORES RESULTING IN SUNDRY CREDITORS OF RS. 34.99 CRORES ARISING OUT OF THE UN PAID PURCHASE CONSIDERATION AND LOANS AND ADVANCES OF RS. 35 CRORES ARISING AS A DE BTOR ON SALE OF GOODS CONVERTED INTO LOANS AND ADVANCES BY THE ASSESSEE. WHOLE TRAN SACTION OF PURCHASE AND SALES ENTERED INTO BY THE ASSESSEE WERE NOT SETTLED BY PA YMENT OF SALES CONSIDERATION TO THE SUPPLIERS WHO HAVE SUPPLIED THE FABRIC TO THE A SSESSEE AS WELL AS NO CONSIDERATION IS RECEIVED BY THE ASSESSEE FROM THE BUYER OF THE GOODS. THEREFORE IT IS APPARENT THAT THE TRANSACTIONS OF THE PURCHASES AND SALES REMAINED AS DEBTORS AND CREDITORS RESPECTIVELY FOR THE WHOLE YEAR. THE LD. ASSESSING OFFICER IN HIS LETTER NO. ITO/W-10(1)/2016-17 DATED 26.04.2016 SUBMITTED TO CIT/DR, ITAT, NEW DELHI, WHICH IS PLACED ON RECORD, STATED THAT THE I DENTICAL FACTS AND CIRCUMSTANCES WERE PREVAILING IN THE NEXT YEAR WHEREIN HE HAS STA TED THAT FOR ASSESSMENT YEAR 2010 11, THE QUANTUM OF LOANS AND ADVANCES HAVE I NCREASED TO RS. 68 CRORES AND TO RS. 72 CRORES IN ASSESSMENT YEAR 2011 12. IN A SSESSMENT YEAR 2010 11, THE PURCHASES ARE AROUND RS.33 CRORES AND THE CONSEQUEN T FIGURE OF LOANS AND ADVANCES IS RS. 68 CRORES. THEREFORE, FROM THE ABOV E FACTS IT IS CRYSTAL CLEAR THAT ASSESSEE IS ENGAGED IN BUYING OF GOODS WITHOUT PAYM ENT OF CONSIDERATION TO THE CREDITORS AS WELL AS NOT RECEIVING CONSIDERATION FR OM THE PARTIES TO WHOM THE ITA NO. 5629/DEL./2012 15 ALLEGED SALE OF FABRICS HAVE BEEN SHOWN, I.E., DEBT ORS. SURPRISINGLY, THE SALES RETURNED TO THE ASSESSEE ARE DIRECTLY DEBITED TO TH E ACCOUNT OF THE SUPPLIERS IN THE YEAR. ON EXAMINATION OF THE WHOLE TRANSACTION, THE LD. ASSESSING OFFICER WAS OF THE VIEW THAT ASSESSEE HAS NOT INCURRED ANY DIRECT OR I NDIRECT EXPENSES FOR ENTERING INTO THE TURNOVER OF THE PURCHASES AND SALES OF SUC H A HUGE MAGNITUDE. THE ASSESSEE STATED THAT THE FREIGHT IS DIRECTLY PAID B Y THE SELLER OF THE GOODS TO THE ASSESSEE COMPANY. HOWEVER, NO SUCH EVIDENCES WERE P RODUCED BEFORE THE ASSESSING OFFICER AS TO HOW THE GOODS HAVE TRAVELLE D EITHER TO THE GODOWN OF THE ASSESSEE OR STRAIGHTWAY TO THE BUYERS OF THE GOODS FROM THE ASSESSEE. THE MOVEMENT OF GOODS WAS DOUBTED BY THE LD. ASSESSING OFFICER. IT IS FURTHER STATED THAT NO GODOWN IS MAINTAINED BY THE ASSESSEE COMPAN Y. ALL THE PURCHASE BILLS SHOWN BY THE ASSESSEE ARE ALSO BEARING THE SIMILAR STYLE. ON REQUEST FOR THE EXAMINATION OF THE BUYER NONE OF THE BUYER/ DEBTORS APPEARED BEFORE THE LD. ASSESSING OFFICER. THE LD. ASSESSING OFFICER FURTHE R NOTED THAT NOT A SINGLE PARTY HAS MADE ANY PAYMENT TO THE ASSESSEE COMPANY IN RES PECT OF FABRIC PURCHASED FROM THE ASSESSEE COMPANY. BUT THEY ARE SHOWN AS A LOANS AND ADVANCES BY THE ASSESSEE. IT IS APPARENT THAT WHOLE TRANSACTION HA S BEEN CARRIED OUT BY THE ASSESSEE COMPANY AS A CONDUIT FOR THE COMPANIES WHO HAVE SHOWN THE LOANS AND ADVANCES FROM THE ASSESSEE AND ALSO GOT DEDUCTION O F THE PURCHASE COST. THEREFORE, SIMPLY THE AMOUNT OF ENTRY WAS PROVIDED BY THIS COM PANY TO THE BUYERS FROM THE ITA NO. 5629/DEL./2012 16 ASSESSEE FOR THE ABOVE SALES MADE BY THE ASSESSEE. FURTHER, THE LD. ASSESSING OFFICER ALSO NOTED THAT THE GOODS SOLD AND TRANSFER RED TO THE PARTIES, WERE SHOWN AS LOANS AND ADVANCES DURING THE YEAR UNDER CONSIDERAT ION IN THE BALANCE SHEET OF THE ASSESSEE. HOWEVER, THE AO FURTHER OBSERVED THAT THE PARTIES, TO WHOM THE GOODS WERE SOLD HAVE RETURNED THE PURCHASE WORTH RS.15.00 CRORES IN THE NEXT YEAR, BUT NO EVIDENCES OF TRANSPORTING GOODS FROM THE SELLER TO THE ORIGINAL BUYER OR TO THE ASSESSEE WAS SHOWN. NO MATERIAL IS PRODUCED EITHER BEFORE THE AO OR BEFORE US TO SHOW THE EFFECT OF THESE SALES RETURNED. THEREFORE , THE LD. ASSESSING OFFICER STATED THAT THE ABOVE TRANSACTION OF PURCHASE AND SALE OF FABRICS MADE BY THE ASSESSEE ARE NOT GENUINE BUSINESS TRANSACTIONS AS THESE TRANSACT IONS ARE RATHER AN EFFORT TO INTRODUCE THE UNACCOUNTED MONEY OF THE ASSESSEE COM PANY IN THE BOOKS OF ACCOUNTS UNDER THE GARB OF PURCHASE AND SALE OF FAB RICS. THEREFORE, THE LD. ASSESSING OFFICER MADE ADDITION OF THESE RS.35.12 C RORES OF THE SALES RECORDED BY THE ASSESSEE. ON APPEAL BY THE ASSESSEE, THE LD. CI T APPEAL DELETED THE ABOVE ADDITION. THE MAIN REASON FOR DELETION OF THE ABOVE ADDITION IS THAT SALES HAVE ALREADY BEEN OFFERED BY THE ASSESSEE AS INCOME IN T HE PROFIT AND LOSS ACCOUNT. THE LD. CIT (A) WAS ALSO OF THE VIEW THAT WHEN THE PURC HASES AND SALES ARE BOGUS, THEN RESULTANT PROFIT THERE FROM IS ALSO BOGUS AND THERE FORE NOT CHARGEABLE TO TAX. THE LD. CIT (A) ALSO WAS OF THE VIEW THAT WHEN THE BOOK S OF ACCOUNTS OF THE COMPANY ARE AUDITED AND THE NET PROFIT IS ARRIVED AFTER CON SIDERING THE SALE, PURCHASE AND ITA NO. 5629/DEL./2012 17 COST THEN NO ADDITION CAN BE MADE IN THE HANDS OF T HE ASSESSEE. THE LD. CIT (A) WAS ALSO OF THE OPINION THAT CONVERSION OF DEBTORS TO L OANS AND ADVANCES ALSO DOES NOT RESULT INTO ANY INCOME AND CANNOT BE CONSIDERED AS AN ABNORMAL TRANSACTION. THE LD. CIT (A) ALSO STATED THAT COMPANY DOES NOT MAINT AIN ANY BANK ACCOUNT AND THE COMPANY HAS SHARE CAPITAL OF MERELY RS. 1 LAKH AND THEREFORE THE PROVISIONS OF SECTION 269 SS AND 269T ALSO DO NOT APPLY TO THE FA CTS OF THE CASE. WE ARE OF THE CONSIDERED OPINION THAT THE LD. CIT (A) HAS MERELY BELIEVED THE SUBMISSION MADE BY THE ASSESSEE BEFORE HIM WITHOUT ANSWERING THE MA NY OF THE FINDINGS OF THE LD. ASSESSING OFFICER. THE LD. CIT (A) DID NOT ANSWER T HAT HOW IT IS POSSIBLE FOR A COMPANY WHICH IS HAVING A SHARE CAPITAL OF MEAGER S UM OF RS. 1 LAKH AND DOES NOT HAVE ANY BANK ACCOUNT, TO CLOCK THE TURNOVER OF RS. 35 CRORES CONSECUTIVELY FOR 3 TO 4 YEARS AND THAT TOO IN THE 2ND YEAR OF THE ESTABLI SHMENT OF THE COMPANY. FURTHER, THE LD. CIT (A) HAS ACCEPTED THE SUBMISSION OF THE ASSESSEE THAT SALES HAVE ALREADY BEEN RECORDED IN THE BOOKS OF ACCOUNTS IN THE PROFI T AND LOSS ACCOUNT AND THEREFORE THERE CANNOT BE ANY UNDISCLOSED INCOME. ACCORDING T O US, HE HAS FAILED TO UNDERSTAND THAT WHAT IS THE REGULAR SOURCE OF INCOM E AND WHAT IS THE UNKNOWN SOURCE OF INCOME. IN THE PRESENT CASE THE SALES REC ORDED BY THE ASSESSEE HAS BEEN SHOWN IN THE DISGUISED MANNER AS REGULAR INCOME OF THE ASSESSEE WHEREAS IT IS NOT SO, BECAUSE THE ASSESSEE HAS FAILED TO PROVE THE PU RCHASES OF THE GOODS. ON LOOKING AT THE WHOLE TRANSACTION, IT IS APPARENT THAT ASSES SEE IS SHOWING SALES TO SOME ITA NO. 5629/DEL./2012 18 PARTIES TO SUIT THEIR CONVENIENCE WITHOUT RECOVERIN G MONEY FROM THEM AND IN FACT THEY ARE SHOWING THE AMOUNT DUE TO ASSESSEE COMPANY AS LOANS AND ADVANCES. THEREFORE, IT AMOUNTS TO PROVIDING AN ACCOMMODATION ENTRY TO THOSE PARTIES AS LOANS AND ADVANCES IN THE GUISE OF PURCHASES BOOKED BY THEM. IT RESULTS INTO DEFLATING THE PROFIT OF THOSE PARTIES AS WELL AS TH E BOGUS PURCHASES IN THE HANDS OF THE ASSESSEE ON ACCOUNT OF SEVERAL PARTIES WHO ARE NOT TRACEABLE. MERELY BECAUSE THE BOOKS OF ACCOUNTS OF THE COMPANY ARE AUDITED, T HE LD. CIT (A) HAS ACCEPTED THEM, BUT HE HAS NOT LOOKED INTO THE FACTS OF THE C ASE THAT THE PURCHASES HAVE NEVER BEEN PAID, THE SALES HAVE NEVER BEEN REALIZED, THER E IS NO BANK ACCOUNT OF THE COMPANY, THERE ARE NO EXPENDITURE INCURRED BY THE A SSESSEE COMPANY FOR THE PURCHASES AND SALES ENTERED INTO, WHAT ARE THE MODU S OPERANDI ?, WHERE THE GOODS HAVE BEEN KEPT ? ETC. ALL THESE QUESTIONS RAISED BY THE LD. ASSESSING OFFICER REMAINED UNANSWERED AND UNVERIFIED IN THE ORDER OF THE LD. CIT (A ). FURTHERMORE NONE OF THE DEBTORS AS WELL AS THE CREDITORS COULD REMAIN PRESENT BEFORE THE ASSESSING OFFICER FOR THEIR EXAMINATION TO SHOW THA T HOW THEY HAVE PURCHASED AND SOLD FABRICS TO THE ASSESSEE. IN THESE PECULIAR CIR CUMSTANCES, THE DECISION OF HONBLE GUJARAT HIGH COURT IN CASE OF AMBUJA EXPORT S LTD VS DCIT, 86 TAXMANN.COM 69 IS APPLICABLE WHERE IN IT IS HELD TH AT WHERE PURCHASES MADE BY ASSESSEE FROM A PROPRIETARY CONCERN WERE BOGUS AND ENTRIES WERE IN NATURE OF ACCOMMODATION ENTRIES, MERELY BECAUSE ASSESSEE HAD DISCLOSED SUCH ENTRIES IN ITA NO. 5629/DEL./2012 19 RETURN FILED AND ALSO SHOWED SUCH PURCHASES IN BOOK S OF ACCOUNTS WOULD HARDLY BE SUFFICIENT TO ADVANCE ARGUMENTS OF FULL AND TRUE DI SCLOSURE BY ASSESSEE . THOUGH IT IS NOT THE CASE OF REOPENING BUT ASSESSMENT, HENCE THE HIGHER BURDEN LIES ON THE ASSESSEE TO PROVE GENUINENESS OF PURCHASE AND SALES . THEREFORE, MERELY BECAUSE THE PURCHASES AND SALES HAVE BEEN SHOWN IN THE BOOK S OF ACCOUNTS WHEN THEY ARE SHROUDED WITH THE NON-GENUINENESS DOES NOT HELP THE ASSESSEE. THE LD. CIT (DR) HAS ALSO RELIED UPON THE BINDING PRECEDENT IN CASE OF CIT VERSUS LA MEDICA (SUPRA) WHEREIN ON IDENTICAL FACTS AND CIRCUMSTANCES THE PU RCHASES HAVE BEEN TREATED AS INCOME FROM THE UNDISCLOSED SOURCES. FURTHERMORE, T HE LD. CIT (A) HAS ALSO NOT ANSWERED THE FACT THAT THE PARTIES WHO MADE PURCHAS ES OF RS. 20 CRORES ARE EXISTING AT THE ADDRESS OF THE ASSESSEE COMPANY AND THE PARTIES TO WHOM THE SALES HAVE BEEN RECORDED OF RS. 28 CRORES ALSO EXIST AT T HE ADDRESS OF THE COMPANY. THIS CREATES A DOUBT OVER THE GENUINENESS OF THE TRANSA CTION FOR THE REASONS THAT WHEN THE BUYER AND SELLER BOTH EXISTS AT THE SAME ADDRES S WHAT IS THE REASON OF ROUTING THE TRANSACTIONS THROUGH ASSESSEE OF SUCH A HUGE MA GNITUDE. IN VIEW OF THE ABOVE FACTS, THE LD. ASSESSING OFFICER HAS ALLEGED THAT A BOVE PURCHASE AND SALE TRANSACTIONS OF THE FABRICS ARE SHAM TRANSACTIONS, TO WHICH THE LD. CIT (A) HAS BRUSHED ASIDE BY HOLDING THAT THE BOOKS OF ACCOUNTS ARE AUDITED AND THE SALES HAVE BEEN SHOWN ON THE CREDIT SIDE OF THE PROFIT AND LOS S AND ALREADY SHOWN IN THE INCOME. WE ARE OF THE OPINION THAT LD. CIT (A) HAS MISERABLY FAILED TO LOOK INTO THE ITA NO. 5629/DEL./2012 20 VARIOUS ALLEGATIONS MADE BY THE LD. ASSESSING OFFIC ER WITH RESPECT TO THE VARIOUS TRANSACTIONS RECORDED BY THE ASSESSEE. FURTHERMORE, THE LD. ASSESSING OFFICER HAS ALSO MENTIONED IN PARA NO. 6.6 THAT THE DETAILS HAV E BEEN FILED BY THE ASSESSEE BEFORE HIM AT THE FAG END OF THE TIME LIMIT FOR COM PLETION OF ASSESSMENT WHEN PROPER ENQUIRY COULD NOT BE MADE BY HIM. IT WAS FUR THER STATED BY THE LD. ASSESSING OFFICER THAT ALL CONFIRMATION WITH RESPEC T TO THE REVERSAL OF THE SALE AND PURCHASES ARE JUST AN AFTERTHOUGHT WHEN DISCREPANCI ES DETECTED. WE COULD NOT FIND THAT HOW THE CIT (A) HAS DEALT WITH THESE ISSUES IN HIS ORDER. IN VIEW OF THE ABOVE FACTS, IN THE INTEREST OF JUSTICE, WE SET ASIDE THE WHOLE ISSUE BACK TO THE FILE OF THE LD. ASSESSING OFFICER WITH A DIRECTION TO THE ASSES SEE TO PRODUCE THE PURCHASERS OF GOODS FROM THE ASSESSEE I.E. BUYERS, THE SELLERS OF THE GOODS TO THE ASSESSEE, I.E. CREDITORS AND FURTHER TO ADDUCE EVIDENCES WITH RESP ECT TO THE MOVEMENT OF GOODS TO THE BUYERS FROM THE ASSESSEE AND THEN FROM SEL LERS OF GOODS TO THE ASSESSEE. IT IS ALSO NECESSARY TO EXAMINE IN THIS PARTICULAR NAT URE OF TRANSACTIONS THE REASONS THAT FOR CONSECUTIVE 3 YEARS WHETHER THERE IS ANY T RANSFER OF MATERIAL BETWEEN THE BUYER AND SELLER OR NOT, SO THAT THE LD. ASSESSING OFFICER MAY APPLY HIS MIND TO THIS ASPECT ALSO. IT IS ALSO INTERESTING TO NOTE THAT TH ERE IS NO TRANSACTION OF PAYMENT OF CONSIDERATION FOR SALE OF GOODS AS WELL AS FOR THE PURCHASE OF GOODS THROUGH CHEQUES AS ASSESSEE DOES NOT HAVE ANY BANK ACCOUNT AND MERELY THE SHARE CAPITAL OF RS. 1 LAKH. THEREFORE HOW THE WHOLE TRANSACTION S HAVE BEEN CARRIED ON BY THE ITA NO. 5629/DEL./2012 21 ASSESSEE OF SUCH A HUGE MAGNITUDE WITHOUT BANKING F ACILITIES IS ALSO REQUIRED TO BE EXAMINED. WE ARE CONSTRAINED TO STATE ON LOOKING AT THE NATURE OF THE TRANSACTIONS PLACED BEFORE US THAT THE ACTIVITIES OF THE ASSESSE E COMPANY IS NO LESS THAN THE ACTIVITIES OF A SHELL COMPANY. THIS COMPANY HAS BEEN USED AS A LAYER OF MONEY TO SAVE THE REAL BENEFICIARIES. IT IS A REVELATION THAT COMPANY WITHOUT HAVING ANY SUBSTANCES HAS GOT THE OUTSTANDING CREDIT OF RS 35 CRORES FOR PURCHASES. AS A FINAL FACT FINDING AUTHORITY WE CANNOT CLOSE OUR EYES TO THE STARTLING FACTS REVELED BEFORE US. THE LD AR HAS OBJECTED TO THE REPORT OF THE L D AO PLACED BEFORE US WHEREIN THE TRANSACTIONS OF THE ASSESSEE WERE DETAILED FOR LAST THREE YEARS. WE DO NOT HESITATE TO REJECT THE OBJECTION OF THE ASSESSEE. I N FACT THE REPORT OF THE LD AO HAS DEMONSTRATED THE MODUS OPERANDI OF THE ASSESSEE COM PANY PREVAILING FOR CONSECUTIVE THREE YEARS. WE ARE DUTY BOUND TO SET ASIDE THE WHOLE ISSUE BACK TO THE FILE OF THE ASSESSING OFFICER TO ASCERTAIN THE CORRECT AND GENUINE STATE OF AFFAIRS BY MAKING COMPLETE INQUIRY IN THE PECULIAR FACTS O F THE CASE TO ASCERTAIN GENUINENESS OF THE TRANSACTIONS, IF AT ALL IT EX ITS, OTHERWISE IT IS ALSO NECESSARY TO VERIFY HOW THE SELLERS TO THE ASSESSEE HAVE FINANC ED THEIR SALES WHEN NO MONEY IS PAID TO THEM FOR THREE TO FOUR YEARS AND WHO IS TH E BENEFICIARY OF THE WHOLE CHAIN OF TRANSACTIONS. FURTHER, LD. AO MAY ALSO EXAMINE T HAT HOW BUYERS OF THE FABRICS FROM ASSESSEE HAVE DEALT WITH THOSE GOODS. IN SHORT , THE LD. AO MAY EXAMINE THE WHOLE TRAIL OF THESE TRANSACTIONS OF PURCHASE AND S ALES AND FIND OUT THE REAL ITA NO. 5629/DEL./2012 22 BENEFICIARIES OF ALL THESE UNUSUAL TRANSACTIONS OF PURCHASE AND SALES ENTERED BY ASSESSEE WITHOUT FLOW OF CONSIDERATION. THEREFORE, THE LD. AO MAY TAKE A DECISION ABOUT THE REAL REVENUE FROM THESE TRANSACTIONS IN T HE HANDS OF THE ASSESSEE. NEEDLESS TO SAY, THAT THE ASSESSING OFFICER WILL GI VE PROPER OPPORTUNITY OF HEARING TO THE ASSESSEE BEFORE DECIDING THE ISSUE ON THE ME RITS. IN CASE IF THE ASSESSEE FAILS TO ADDUCE THE NECESSARY EVIDENCES AS DIRECTED TO HIS SATISFACTION, THE LD AO MAY PASS THE ASSESSMENT AS HE DEEMS FIT IN ACCORDANCE W ITH LAW AND ALSO RECOVER TAX FROM THE ASSESSEE OR THE BENEFICIARIES BY INVOKING THE PROVISIONS OF SECTION 226 OF THE ACT. IN THE RESULT THE GROUND NO. 1 OF THE APPE AL OF THE REVENUE IS ALLOWED WITH ABOVE DIRECTION. 7. IN THE RESULT APPEAL OF THE REVENUE IS ALLOWED F OR STATISTICAL PURPOSES. THE ORDER IS PRONOUNCED IN OPEN COURT ON 30.11.2017 . SD/- SD/- (H.S. SIDHU) (L.P. SAHU) JUDICIAL MEMBER ACCOUNTANT MEMBER DATED: 30.11.2017 *AKS* COPY OF ORDER FORWARDED TO: (1) THE APPELLANT (2) THE RESPONDENT (3) COMMISSIONER (4) CIT(A) (5) DEPARTMENTAL REPRESENTATIVE (6) GUARD FILE BY ORDER ASSISTANT REGISTRAR INCOME TAX APPELLATE TRIBUNAL DELHI BENCHES, NEW DELHI