M/s. Swastik Solvent Products (India) Ltd., New Delhi V. Addl CIT, New Delhi

ITA 570/DEL/2014

• Counselvise Citation: [2018] 126 COUNSELVISE.COM (IT) 4060 (ITAT-DELHI)
• Duration Of Justice: 3 year(s) 11 month(s) 22 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 22-01-2018
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: G
• Next Hearing Date: 25-05-2017
• Assessment Year: 2010-2011
• Appeal Filed On: 31-01-2014
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: A S WELL AS
• Assessee Lawyers: AGAINST IMPUGNED DATED D
• Keywords: Rejection of books of accounts; Additional evidence
• Section: 143(3); 133(6); 131

Judgement Text

INCOME TAX APPELLATE TRIBUNAL DELHI BENCH G: NEW DELHI BEFORE SHRI N.K. SAINI, ACCOUNTANT MEMBER AND SHRI AMIT SHUKLA, JUDICIAL MEMBER ITA NO.:- 980/DEL/2014 ASSESSMENT YEAR: 2010-11 DCIT CIRCLE-7(1) NEW DELHI. VS. SWASTIK SOLVENT PRODUCTS (INDIA) LTD. 2732, 1 ST FLOOR, NAYA BAZAR, NEW DELHI 110 006 PAN AAACS0054K (APPELLANT) (RESPONDENT) ITA NO.:- 570/DEL/2014 ASSESSMENT YEAR: 2010-11 SWASTIK SOLVENT PRODUCTS (INDIA) LTD. 2732, 1 ST FLOOR, NAYA BAZAR, NEW DELHI 110 006 PAN AAACS0054K VS. ADDL. CIT RANGE-7 NEW DELHI. (APPELLANT) (RESPONDENT) O R D E R PER AMIT SHUKLA, J.M. THE AFORESAID CROSS APPEALS HAVE BEEN FI LED BY THE REVENUE AS WELL AS BY THE ASSESSEE AGAINST IMPUGNED ORDER DATED 19.12.2013, DEPARTMENT BY: SMT. MANISHA KUMARI, SR.DR ASSESSEE BY : SHRI MANISH KUMAR , ADVOCATE DATE OF HEARING 15/01/2018 DATE OF PRONOUNCEMENT /01/2018 ITA NOS. 980, 570/DEL/2014 DCIT VS. SWASTIC SOLVENT PRODUCTS (INDIA ) LTD. & SWASTIC SOLVENT PRODUCTS (INDIA) LTD. VS. ACIT 2 PASSED BY LD. CIT (APPEALS) X DELHI FOR THE QUANTUM O F ASSESSMENT PASSED U/S 143(3) FOR THE ASSESSMENT YEAR 2010-11. 2. WE WILL FIRST TAKE UP THE REVENUES APPEAL, WHER EIN FOLLOWING GROUNDS HAVE BEEN RAISED:- 1. 'ON THE FACTS AND CIRCUMSTANCES OF THE CASE, THE LD . CIT(A) HAS ERRED IN LAW AND ON FACTS IN, RESTRICTING THE ADDITION T O RS 87,340/- INSTEAD OF RS 16,70,260/- MADE BY THE AO ON ACCOUNT OF COMMISSION EXPENSES' 2. 'ON THE FACTS AND CIRCUMSTANCES OF THE CASE, THE LD. CIT(A) HAS ERRED IN LAW AND ON FACTS IN RESTRICTING THE ADDITION TO RS 3,00,000/- INSTEAD OF RS 14,01,454/- MADE BY THE AO ON ACCOUN T OF POWER AND FUEL EXPENSES' 3. 'ON THE FACTS AND CIRCUMSTANCES OF THE CASE, THE LD. CIT(A) HAS ERRED IN LAW AND ON FACTS IN DELETING THE ADDITION TO RS 41,92,129/- MADE BY THE AO ON ACCOUNT OF UNVERIFIED PURCHASES. ' 3. THE BRIEF FACTS QUA THE FIRST ISSUE ARE THAT THE ASSESSEE COMPANY IS ENGAGED IN THE BUSINESS OF PRODUCT OF RICE BRAN AND RICE BRAN OIL NEAR RUDRAPUR IN STATE OF UP. THE AO NOTED THA T ASSESSEE HAS CLAIMED AN EXPENDITURE OF RS. 16,70,260/- OUT OF WHI CH SUM OF RS. 10,80,532/- WAS ON ACCOUNT OF COMMISSION IN RESPECT O F SALE OF ITS PRODUCTS; AND RS. 6,51,728/- WAS ON ACCOUNT OF COMM ISSION IN CONNECTION WITH PURCHASE OF RAW MATERIALS. THE AO HAD OBSERVED THAT ASSESSEE COULD NOT FILE ANY COPIES OF AGREEMENT FROM THE PARTIES TO WHOM COMMISSION HAS BEEN PAID NOR COULD IT FILE ANY CONFIRMATIONS FROM THE SAID PARTIES. ACCORDINGLY, HE DISALLOWED THE CLAIM OF COMMISSION PAYMENT OF RS. 16,70,260/-. 4. BEFORE THE LD. CIT (A) THE ASSESSEE SUBMITTED THAT DURING THE COURSE OF ASSESSMENT PROCEEDINGS THE AO HAD NOT GIVEN ANY ADEQUATE OPPORTUNITY TO FILE THE EVIDENCES AS THE QUERY WAS RAI SED AT THE FAG END ITA NOS. 980, 570/DEL/2014 DCIT VS. SWASTIC SOLVENT PRODUCTS (INDIA ) LTD. & SWASTIC SOLVENT PRODUCTS (INDIA) LTD. VS. ACIT 3 AND NO TIME WAS GIVEN BY THE AO. ACCORDINGLY, THE APP LICATION FOR ADMISSION OF ADDITIONAL EVIDENCES U/S 46A WAS FILED BEFORE THE LD. CIT (A) WHICH WERE FORWARDED BY HIM TO THE AO TO SUBMIT HIS REMAND REPORT. IN REMAND PROCEEDINGS, AO SENT NOTICES U/S 133 (6) TO THE PARTIES AND OUT OF THE 12 PARTIES TO WHOM COMMISSION WA S PAID, THE NAMES OF WHICH ARE AS UNDER:- (I) M/S. GOYAL ENTERPRISES (II) M/S. AGARWAL & CO. (III) M/S. SHRI GOVIND AGENCY (IV) M/S. MOOL CHAND GOEL AND SONS (V) M/S. CHOMUKHI ENTERPRISES (VI) M/S. DELHI TRADING CO. (VII) M/S. JAGDISH KHANDELWAL (VIII) M/S. DAULAT RAM GIYAMALANI (IX) RAJESH CHAND AGARWAL (X) M/S. ANKIT BROKER CO. (XI) SH. SHIV KUMAR (XII) SH. GHANSHYAM DASS; FOLLOWING SEVEN PARTIES HAD RESPONDED, WHO HAD SENT TH EIR CONFIRMATIONS, PAN DETAILS AND OTHER DOCUMENTS:- (I) M/S. AGARWAL & CO. (II) M/S. SHRI GOVIND AGENCY (III) M/S. MOOL CHAND GOEL AND SONS (IV) M/S. DELHI TRADING CO. (V) M/S. JAGDISH KHANDELWAL (VI) M/S. DAULAT RAM GIYAMALANI (VII) RAJESH CHAND AGARWAL ITA NOS. 980, 570/DEL/2014 DCIT VS. SWASTIC SOLVENT PRODUCTS (INDIA ) LTD. & SWASTIC SOLVENT PRODUCTS (INDIA) LTD. VS. ACIT 4 5. HOWEVER IN HIS REMAND REPORT, AO EVEN IN THE CASE OF THESE SEVEN PARTIES ALSO HAS CONTENDED THAT SINCE COPIES OF BILL BOOKS FOR COMMISSION RECEIPT AND LEDGER ACCOUNTS HAVE NOT BEEN F ILED BY THESE PARTIES, THEREFORE, THE COMMISSION PAID TO THEM CANNOT B E ACCEPTED. THE ASSESSEE BEFORE THE LD. CIT (A) AS WELL AS BEFOR E AO DURING REMAND HAD FILED NECESSARY EVIDENCES FOR VARIOUS PA RTIES, THE DETAILS OF WHICH HAVE BEEN INCORPORATED AND DEALT WITH LD. CIT ( A) FROM PAGES 5 TO 10 OF THE APPELLATE ORDER. THE RELEVANT SUBMISSION S AND DETAILS FOR THE SAKE OF READY REFERENCE AND APPRECIATION OF FACTS ARE REPRODUCED HEREUNDER:- 4. AGGARWAL & CO (COMMISSION PAYMENT OF RS 1,39,435/-) THE ASSESSEE ITSELF FURNISHED COPY OF CONFIRMATION WITH PAN (PAGE 65- 66 OF P.B). THERE IS NO COMMENT. CHART FOR LAST FOUR YEAR PAYMENT OF COMMISSION TO E STABLISH PARTY IS REGULAR PARTY (PAGE 115 AT SERIAL NO 2 OF P.B). IT WAS NOT EXAMINED AND THEREFORE NO COMMENTS BY THE A.O. FURTHER IN RESPONSE TO NOTICE U/S 133(6), THE PARTY COMPLIED BY SENDING FOLLOWING DOCUMENTS VIDE ITS LETTER DATED 11.10.201 3 (LETTER DT.11.10.2013 ENCLOSED WITH THE REMAND REPORT). (I) CONFIRMED COPY OF ACCOUNTS OF THE' APPELLANT FOR THE F. Y 2009- 10 (II) THE COPIES OF BILL BOOKS FOR COMMISSION. (III) THE COMPUTATION OF INCOME, BALANCE SHEET , PROFIT & LOSS ACCOUNT; AND (IV) ACKNOWLEDGEMENT OF RETURN OF THE PROPRIETOR FOR THE A. Y 2010-11. IN THE PROFIT & LOSS ACCOUNT THE PROPRIETOR HAS CAT EGORICALLY SHOWN DALALI RECEIPTS OF RS 6,13,290/- AS THE MAIN INCOME . 5. SHRI GOVIND AGENCIES (COMMISSION OF RS 85,635/-) THE ASSESSEE ITSELF FILED THE CONFIRMED COPY OF BIL L BOOK SHOWING COMPLETE DETAIL OF TRANSACTIONS. (PAGE 48-51 OF P.B). THERE IS NO COMMENT BY A.O. ITA NOS. 980, 570/DEL/2014 DCIT VS. SWASTIC SOLVENT PRODUCTS (INDIA ) LTD. & SWASTIC SOLVENT PRODUCTS (INDIA) LTD. VS. ACIT 5 CHART FOR LAST FOUR YEAR PAYMENT OF COMMISSION TO T HE SAME PARTY TO ESTABLISH PARTY IS REGULAR PARTY (RELEVANT PAGE 118 OF P.B AT SERIAL NO 24). IT WAS NOT EXAMINED AND THEREFORE NO COMMENTS BY THE LD. A.O. FURTHER IN RESPONSE TO NOTICE U/S 133(6), THE PART Y COMPLIED BY SENDING CONFIRMED COPY OF LEDGER WITH INCOME TAX RETURN AND PAN OF THE PROPRIETOR. THE NARRATION OF THE LEDGER DEARLY DEPI CTS BROKERAGE INCOME OF RS 85,635/- WITH DETAIL OF TDS. 6. MOOL CHAND GOEL & SONS THE ASSESSEE FILED CONFIRMATION FOR PAYMENT OF COMM ISSION WITH TDS (PAGE 88 OF P.B). THERE IS NO COMMENTS BY THE A.O. CHART FOR LAST FOUR YEAR PAYMENT OF COMMISSION TO T HE SAME PARTY TO ESTABLISH PARTY IS REGULAR PARTY (RELEVANT PAGE 117 OF P.B AT SERIAL NO 16), IT WAS NOT EXAMINED AND THEREFORE NO COMMENTS BY THE A.O FURTHER IN RESPONSE TO NOTICE U/S 133(6), THE PARTY COMPLIED BY SENDING FOLLOWING DOCUMENTS VIDE IT'S LETTER DATED 11.10.20 13. ( LETTER DT 11.10.2013 ENCLOSED WITH THE REMAND REPORT). (I) CONFIRMED COPY OF ACCOUNTS OF THE APPELLANT F OR THE F. Y 2009-10. (II) THE CERTIFIED COPIES OF BILL BOOKS FOR CO MMISSION. (III) THE COMPUTATION OF INCOME, BALANCE SHEET, PROFIT & LOSS ACCOUNT; AND (IV) ACKNOWLEDGMENT OF RETURN OF THE PROPRIETOR FO R THE A. Y 2010-11. IN THE PROFIT & LOSS ACCOUNT THE PROPRIETOR HAS SHO WN TOTAL BROKERAGE INCOME OF RS. 8,39,387/- APART FROM OTHER INCOME. 7. DELHI TRADING CO (COMMISSION PAYMENT OF RS 97,335/- ) THE ASSESSEE ITSELF FILED INVOICE WITH DETAIL OF TR ANSACTIONS (PAGE 55-57 OF P.B). THERE IS NO COMMENTS BY THE A.O. THE CONFIRMATION FOR TRANSACTIONS WITH COPY OF PAN (PAGE 77-78 OF P.B). THERE IS NO COMMENTS BY THE A. O. CHART FOR LAST FOUR YEAR PAYMENT OF COMMISSION TO T HE SAME PARTY TO ESTABLISH PARTY IS REGULAR PARTY ( RELEVANT PAGE 116 OF P.B AT SERIAL NO 10). IT WAS NOT EXAMINED AND THEREFORE NO COMMENTS BY THE A.O. FURTHER IN RESPONSE TO NOTICE U/S 133(6), THE PARTY COMPLIED BY SENDING FOLLOWING DOCUMENTS VIDE ITS LETTER DATED 07.10.2013 (LETTER DT. 07.10.2013 ENCLOSED WITH THE REMAND REPORT). ITA NOS. 980, 570/DEL/2014 DCIT VS. SWASTIC SOLVENT PRODUCTS (INDIA ) LTD. & SWASTIC SOLVENT PRODUCTS (INDIA) LTD. VS. ACIT 6 (I) CONFIRMED COPY OF ACCOUNTS OF THE APPELLANT FOR THE F. Y 2009-10 SHOWING TRANSACTION WITH ASSESSEE BY HIGHLIGHTING I TS NAME AND CREDIT OF SAME AMOUNT VIDE THEIR BANK STATEMENT OF STATE BANK OF INDORE BRANCH, CHANDINI CHOWK, DELHI. (II) BILL BOOK FOR COMMISSION RECEIVED WITH FORM 16A (TD S CERTIFICATE) ISSUED BY THE APPELLANT. (III) COMPLETE SET OF INCOME TAX RETURN WITH COMPU TATION AND ACKNOWLEDGEMENT, BALANCE SHEET, PROFIT & LOSS ACCOU NT OF THE PROPRIETOR FOR THE A. Y 2010-11. IN THE PROFIT & LOSS ACCOUNT THE PROPRIETOR HAS SHO WN TOTAL BROKERAGE INCOME OF 9,69,179/- APART FROM OTHER INCOME. 8. M/S JAGDISH KHANDELWAL (COMMISSION PAYMENT OF RS . 93,600/-) THE ASSESSEE ITSELF FILED INVOICE WITH DETAIL OF TR ANSACTIONS ( PAGE 45-47 OF P.B). THERE IS NO COMMENTS BY THE A.O. THE CONFIRMATION FOR TRANSACTIONS WITH COPY OF PAN (PAGE 84-85 PB). THERE IS NO COMMENTS BY THE A.O. FURTHER IN RESPONSE TO NOTICE U/S 133(6), THE PARTY COMPLIED BY SENDING FOLLOWING DOCUMENTS VIDE ITS LETTER DATED 04.10.201 3 (LETTER DT 04.10.2013 ENCLOSED WITH THE REMAND REPORT). (I) CONFIRMED COPY OF ACCOUNTS OF THE APPELLANT FO R THE F. Y 2009- 10 WITH COPY OF PAN OF THE PROPRIETOR. (II) FORM 16A ISSUED BY THE APPELLANT AS WELL AS 2 6AS SHOWING PAYMENT OF RS 93,600/- WITH DEDUCTION OF TDS .OF RS 9,360/- (III) CERTIFIED COPY OF BILL BOOK ISSUED TO THE AS SESSEE/APPELLANT. 9. M/S DAULAT RAM GIYAMALANI (COMMISSION PAYMENT OF RS 30,060/-) THE ASSESSEE FILED COPY OF CONFIRMATION WITH COPY O F PAN OF THE PROPRIETOR (PAGE 75-76 OF P.B). THERE IS NO COMMENT S BY THE A.O. CHART FOR LAST FOUR YEAR PAYMENT 'OF COMMISSION TO THE SAME PARTY TO ESTABLISH PARTY IS REGULAR PARTY (RELEVANT PAGE 116 OF P.B AT SERIAL NO 9), IT WAS NOT EXAMINED AND THEREFORE NO COMMENTS B Y THE LD. A.O. FURTHER IN RESPONSE TO NOTICE U/S 133(6), THE PARTY COMPLIED BY SENDING FOLLOWING DOCUMENTS VIDE ITS LETTER DATED 04.10.201 3. (LETTER DT 04.10.2013 ENCLOSED WITH THE REMAND REPORT). ITA NOS. 980, 570/DEL/2014 DCIT VS. SWASTIC SOLVENT PRODUCTS (INDIA ) LTD. & SWASTIC SOLVENT PRODUCTS (INDIA) LTD. VS. ACIT 7 (I) CONFIRMED COPY OF ACCOUNTS OF THE APPELLANT FO R THE F. Y 2009- 10 SHOWING BROKERAGE RECEIPT OF RS 30,060/- WITH TDS D ETAIL TOO. (II) BILL BOOK SUMMARY FOR ENTIRE COMMISSION RECEI VED. OUT OF THE TOTAL COMMISSION OF RS 4,24,060/-, COMMISSION OF RS 30,060/- HAS BEEN SHOWN FROM THE ASSESSEE. (III) BILL BOOK FOR COMMISSION RAISED TO THE ASSES SEE. (IV) TDS CERTIFICATE (FORM NO 16A) ISSUED BY THE A PPELLANT TO THE PARTY SHOWING BROKERAGE PAYMENT OF RS 30,060/- (V) ACKNOWLEDGED COPY OF RETURN WITH COMPUTATION O F INCOME AND BALANCE SHEET. IT IS PERTINENT TO MENTION HERE THAT IN THE COMPUTA TION OF INCOME, PARTY HAS CLAIMED TDS OF RS. 3,096/- RELATING TO THE ASSE SSEE M/S SWASTIK SOLVENTS PRODUCTS INDIA LIMITED. IN THE BALANCE SHE ET ALSO THE PARTY HAS SHOWN BROKERAGE INCOME OF RS 4,24,060/- 10. RAJESH CHAND AGARWAL (COMMISSION PAYMENT OF R S 72,954/-) THE ASSESSEE ITSELF FILED THE BROKERAGE BILL FOR RS 72,954/- (PAGE 63-64 OF P.B), IT WAS NOT EXAMINED AND THEREFORE NO COMME NTS BY THE A. O. CONFIRMED COPY OF ACCOUNT WITH COPY OF PAN OF THE P ROPRIETOR (PAGE 111-112 OF P .B). THERE IS NO COMMENTS BY THE A.O. CHART FOR LAST FOUR YEAR PAYMENT OF COMMISSION TO T HE SAME PARTY TO ESTABLISH PARTY IS REGULAR PARTY (RELEVANT PAGE 119 OF P.B AT SERIAL NO 5), IT WAS NOT EXAMINED AND THEREFORE NO COMMENTS B Y THE A.O. FURTHER IN RESPONSE TO NOTICE U/S 133(6), THE PARTY HAD COMPLIED BY SENDING THE CONFIRMED COPY OF LEDGER IN THEIR BOOKS . LASTLY WE WILL SUBMIT REGARDING THOSE PARTIES IN RE SPECT OF WHOM IT HAS BEEN ALLEGED BY THE LD A. 0 THAT NO RESPONSE WERE R ECEIVED PURSUANT TO NOTICE ISSUED U/S 133(6) OF THE ACT 1. ANKIT BROKER CO : IT IS SUBMITTED THAT THE NOTICE U/S 133(6) WAS SENT ON THE WRONG ADDRESS FROM THE OFFICE OF A.0., THEREFORE, NO QUESTION OF COMPLIANCES ARISES. CORRECT ADDRESS (SEE PAGE 19 OF P. B):- M/S ANKIT BROKER CO LALPUR-263148, U.S. NAGAR, UTTRAKHAND. IT IS SUBMITTED THAT DESPITE THE FACT THAT NOTICE W AS NOT SERVED TO THE PARTY FOR MISTAKE OF THE A. O'S OFFICE., THE ASSESS EE HAD ITSELF FILED AS ITA NOS. 980, 570/DEL/2014 DCIT VS. SWASTIC SOLVENT PRODUCTS (INDIA ) LTD. & SWASTIC SOLVENT PRODUCTS (INDIA) LTD. VS. ACIT 8 ADDITIONAL EVIDENCE THE COPY OR INVOICE (PAGE 61 OF P.B) ALONGWITH CONFIRMATION ALONG WITH PAN OF THE PROPRIETOR (PAGE 104-105 OF P.B). THE APPELLANT HAD ALSO FILED CHART FOR THE LAST FOU R YEAR PAYMENTS OF COMMISSION WITH A VIEW TO ESTABLISH REGULARITY. (SE E RELEVANT PAGE 119 OF P.B). NO EXAMINATION OF ALL THIS BY THE A.O BEFO RE ADVERSE COMMENTS. 2. GOYAL ENTERPRISES: WE ARE NOT IN A POSITION TO SAY WHETHER NOTICE WAS IN FACT SERVED ON THE PARTY. EVEN OTHERWISE THE ASSESSEE BY WAY OF ADDITIONAL EVIDENCE HAD ITSELF FILED COPY OF INVOIC E RAISED TO THE ASSESSEE (PAGE 52-54 OF P.B) & COPY OF CONFIRMATION WITH COPY OF PAN OF THE PROPRIETOR. (PAGE 80-81 OF THE P.B). THE APP ELLANT HAD ALSO FILED CHART FOR THE LAST FOUR YEAR PAYMENTS OF COMMISSION WITH A VIEW TO ESTABLISH REGULARITY. (SEE RELEVANT PAGE 116 OF P.B ). NO EXAMINATION OF ALL THIS BY THE A. O BEFORE ADVERSE COMMENTS. 3. M/S CHOMUKHI ENTERPRISES : WE ARE NOT IN A POSITION TO SAY WHETHER NOTICE WAS IN FACT SERVED ON THE PARTY. EVEN OTHERW ISE THE ASSESSEE BY WAY OF ADDITIONAL EVIDENCE HAD ITSELF FILED COPY OF INVOICE RAISED TO THE ASSESSEE (PAGE 58-60 OF P.B) & COPY OF CONFIRMATION (PAGE 72 OF THE P.B). THE APPELLANT HAD ALSO FILED CHART FOR THE LA ST FOUR YEAR PAYMENTS OF COMMISSION WITH A VIEW TO ESTABLISH REGULARITY. (SEE RELEVANT PAGE 115 OF P.B). NO EXAMINATION OF ALL THIS BY THE A. O BEFORE ADVERSE COMMENTS. 4. SH. SHIV KUMAR : WE ARE NOT IN A POSITION TO SAY WHETHER NOTICE WA S IN FACT SERVED ON THE PARTY. EVEN OTHERWISE THE ASS ESSEE BY WAY OF ADDITIONAL EVIDENCE HAD ITSELF FILED COPY OF CONFIR MATION WITH PAN OF THE RECIPIENT (PAGE 113-114 OF THE P.B). THE APPELL ANT HAD ALSO FILED CHART FOR THE LAST FOUR YEAR PAYMENTS OF COMMISSION WITH A VIEW TO ESTABLISH REGULARITY. (SEE RELEVANT PAGE 119 OF P.B ). NO EXAMINATION OF ALL THIS BY THE A.O BEFORE ADVERSE COMMENTS. 5. SH. GHANSHYAM DASS: WE ARE NOT IN A POSITION TO SAY WHETHER NOTICE WAS IN FACT SERVED ON THE PARTY. EVEN OTHERW ISE THE ASSESSEE BY WAY OF ADDITIONAL EVIDENCE HAD ITSELF FILED COPY OF INVOICE RAISED TO THE ASSESSEE (PAGE 62 OF P.B) & COPY OF CONFIRMATION WITH PAN (PAGE 106- 107 OF THE P.B). THE APPELLANT HAD ALSO FILED CHART FOR THE LAST FOUR YEAR PAYMENTS OF COMMISSION WITH A VIEW TO ESTABLISH REG ULARITY. (SEE RELEVANT PAGE 119 OF P.B). NO EXAMINATION OF ALL TH IS BY THE A. O BEFORE ADVERSE COMMENTS. 6. THE LD. CIT (A) FURTHER NOTED THAT:- ITA NOS. 980, 570/DEL/2014 DCIT VS. SWASTIC SOLVENT PRODUCTS (INDIA ) LTD. & SWASTIC SOLVENT PRODUCTS (INDIA) LTD. VS. ACIT 9 ON THE BASIS OF THESE SUBMISSIONS, THE A.R. HAS PRI MARILY ARGUED THAT WITH REGARD TO THE FOLLOWING PARTIES:- (I) M/S AGARWAL & CO. (II) M/S SHRI GOVIND AGENCY (III) M/S MOOL CHAND GOEL AND SONS (IV) M/S DELHI TRADING CO. (V) M/S JAGDISH KHANDELWAL (VI) M/S DAULAT RAM GIYAMALANI (VII) RAJESH CHAND AGARWAL IT IS CLEAR THAT THE PARTIES HAD COMPLIED WITH THE NOTICES U/S 133(6) AND THERE WAS NO ISSUE REGARDING NON-EXISTENCE OF THESE PARTIES OR ANY OTHER EVIDENCE BROUGHT ON RECORD BY THE A.O. TO DISPUTE T HE CLAIM OF THE APPELLANT. THE A.R. HAS EMPHASIZED THAT THE PAYMEN TS HAD BEEN MADE UNDER THE HEAD OF COMMISSION ALSO IN THE PAST SEVER AL YEARS, TDS HAS BEEN DEDUCTED IN MOST CASES AND THE A.O. HAS ONLY M ADE GENERAL OBSERVATIONS THAT THE BILL BOOKS AND BOOKS OF ACCOU NTS WERE NOT PRODUCED BY THESE PARTIES, WHILE AT THE 'SAME TIME ACCEPTING THAT SINCE THE PARTIES WERE OUT-STATION, IT WAS DIFFICULT TO E NSURE PRODUCTION OF BOOKS AND THEIR VERIFICATION. WITH REGARD TO THE OTHER 5 PARTIES I.E. ANKIT BROKE R CO., GOYAL ENTERPRISES, CHOMUKHI ENTERPRISES, SH. SHIV KUMAR & SH. GHANSHYAM DASS, THE A.R. HAS CONTENDED THAT WITH REGARD TO AN KIT BROKER CO., THE NOTICE U/5 133(6) HAD BEEN SENT AT A WRONG ADDRESS. WITH REGARD TO THE OTHER 4 PARTIES I.E. GOYAL ENTERPRISE, CHOMUKHI ENT ERPRISE, SHIV GOYAL AND GHANSHYAM DASS, THERE IS NO EVIDENCE BROUGHT ON RECORD BY THE A.O TO STATE THAT THE PARTIES DID NOT EXIST OR THE NOTICES WERE RETURNED BACK. THE A.R. EMPHASIZED THAT IN MOST CASES SIMILA R COMMISSIONS HAVE BEEN PAID IN THE LAST SEVERAL YEARS AND HAD AL SO BEEN ACCEPTED BY THE DEPARTMENT. 7. LD. CIT (A) AFTER CONSIDERING THE ENTIRE F ACTS AND MATERIAL PLACED ON RECORD HELD THAT, SO FAR AS THE SEVEN PARTIE S ARE CONCERNED WHO HAVE RESPONDED TO THE NOTICE U/S 133(6) HAVE GIVEN THE CONFIRMATIONS DIRECTLY TO THE AO AND ALSO SIMILAR COMMI SSION PAYMENTS HAD BEEN MADE TO THESE PARTIES IN THE EARLIER Y EARS. ONCE ITA NOS. 980, 570/DEL/2014 DCIT VS. SWASTIC SOLVENT PRODUCTS (INDIA ) LTD. & SWASTIC SOLVENT PRODUCTS (INDIA) LTD. VS. ACIT 10 THESE PARTIES HAVE CONFIRMED THE COMMISSION PAYMENT AN D ALSO RENDERED SIMILAR SERVICES AND PAYMENT WERE MADE IN TH E EARLIER YEARS, THEREFORE, DISALLOWANCE OF COMMISSION PAID TO THE SEV EN PARTIES, NAMELY, M/S. AGARWAL & CO., M/S. SHRI GOVIND AGENCY , M/S. MOOL CHAND GOEL AND SONS, M/S. DELHI TRADING CO., M/S. J AGDISH KHANDELWAL, M/S. DAULAT RAM GIYAMALANI, RAJESH CHAND AGARWAL, CANNOT BE DISALLOWED. WITH REGARD TO THE OTHER FIVE PAR TIES, THE ASSESSEES CONTENTION THAT THEY HAVE FILED THEIR CONFIRM ATION ALONGWITH THE PAN AND ALSO SIMILAR COMMISSION HAS BEEN PAID TO THESE PARTIES IN LAST FOUR YEARS ALSO, THE LD. CIT (A) ACCEPTED THE PA YMENT OF COMMISSION IN RESPECT OF THE FOUR PARTIES, NAMELY, M/S . ANKIT BROKER CO., M/S. GOYAL ENTERPRISES, M/S. CHOMUKHI ENTERPRIS ES AND SHRI GHANSHYAM DASS. THE LD. CIT (A) HAS DELETED THE DISA LLOWANCE MAINLY ON THE GROUND THAT THE ASSESSEE HAD FILED ALL THE SUPPO RTING DETAILS AND DOCUMENTS DURING THE REMAND PROCEEDINGS INCLUDIN G THE PAN NOS.; DETAILS OF THE COMMISSION PAID; AND ALSO THAT S IMILAR PAYMENTS HAVE BEEN MADE IN VARIOUS YEARS. HOWEVER, SO FAR AS IN THE CASE OF ONE PARTY, NAMELY, SHRI SHIV KUMAR, THE LD. CIT(A) HAS C ONFIRMED THE ADDITION ON THE GROUND THAT NO PAYMENTS HAVE BEEN MAD E TO SAID PERSON IN LAST TWO YEARS AND NO CONFIRMATION COULD BE RECEIVED BY THE AO IN RESPONSE TO NOTICE U/S 133(6). 8. BEFORE US, LD. SR. DR SUBMITTED THAT IN SOME CASES NOTICES WERE NOT RESPONDED TO AND IN CASES WHERE NOTICES WERE COMP LIED WITH, THE EVIDENCES PLACED ON RECORD WAS NOT UPTO THE SATISFACTIO N OF AO AS THE SAME COULD NOT BE CORROBORATED BY THE RESPECTIVE BOOKS OF ACCOUNT OF THE PARTIES. HENCE THE PAYMENTS MADE TO THESE PARTIES CANN OT BE HELD TO BE FULLY VERIFIABLE. ITA NOS. 980, 570/DEL/2014 DCIT VS. SWASTIC SOLVENT PRODUCTS (INDIA ) LTD. & SWASTIC SOLVENT PRODUCTS (INDIA) LTD. VS. ACIT 11 9. ON THE OTHER HAND, LD. COUNSEL FOR THE ASSESSE E SUBMITTED THAT WHEN IN THE INDEPENDENT ENQUIRY THE PARTIES HAVE DIREC TLY CONFIRMED THE TRANSACTION TO THE AO, THEN THERE CANNOT BE DOUBT FOR GE NUINENESS OF THE PAYMENT. BESIDES THAT ASSESSEE HAD SUBMITTED ALL T HE RELEVANT PROOF OF PAYMENT AND HAD ALSO EXPLAINED THAT IN ASSESS EES CASE RIGHT FROM THE INCEPTION OF THE BUSINESS DECADES BACK, THE AS SESSEE HAS BEEN MAKING SALES THROUGH COMMISSION AGENTS AND THESE WERE REGULAR AGENTS AND IN THE PAST THEY HAVE BEEN ACCEPTED. APART FR OM THAT ALL THE PAYMENTS HAVE BEEN MADE THROUGH CHEQUES AND NONE O F THEM ARE RELATED PARTIES. HE THUS, STRONGLY RELIED UPON THE ORDE R OF CIT (A). 10. AFTER HEARING BOTH THE PARTIES AND ON PERUSAL OF THE RELEVANT FINDING GIVEN IN THE IMPUGNED ORDERS AS WELL AS MATE RIAL PLACED ON RECORD, WE FIND THAT DURING THE COURSE OF THE ASSESSME NT PROCEEDINGS, NO SUFFICIENT OPPORTUNITY WAS GIVEN TO THE ASSESSEE BY THE AO TO PROVE THE GENUINENESS OF THE PAYMENT OF THE COMMISSION, BECA USE THE AO HAD ASKED THE VARIOUS DOCUMENTS IN THE LAST WEEK OF MAR CH, 2013 AND THE ORDER HAS BEEN PASSED BY THE AO ON 25 TH MARCH, 2013. IT IS FOR THIS REASON THE ASSESSEE HAD F ILED ADDITIONAL EVIDENCES, LIKE INVOICE FOR TRANSACTION RELATING TO CO MMISSION; CONFIRMATION OF ACCOUNT FROM THE PARTIES ALONGWITH THE IR PAN; AND CHART FOR PAYMENT OF COMMISSION TO SAME PARTIES IN THE LAST FOUR YEARS. AS STATED ABOVE THE ASSESSEE HAD MADE PAYMENT O F COMMISSION TO 12 PARTIES NAMELY, M/S. GOYAL ENTERPRISES, M/S. AGA RWAL & CO., M/S. SHRI GOVIND AGENCY, M/S. MOOL CHAND GOEL AND S ONS, M/S. CHOMUKHI ENTERPRISES, M/S. DELHI TRADING CO., M/S. JAGDISH KHANDELWAL, M/S. DAULAT RAM GIYAMALANI, RAJESH CHA ND AGARWAL, M/S. ANKIT BROKER CO., SH. SHIV KUMAR, SH. GHANSHYA M DASS. IN SUPPORT OF COMMISSION PAYMENT TO THESE PARTIES, THE ASS ESSEE BEFORE ITA NOS. 980, 570/DEL/2014 DCIT VS. SWASTIC SOLVENT PRODUCTS (INDIA ) LTD. & SWASTIC SOLVENT PRODUCTS (INDIA) LTD. VS. ACIT 12 THE LD. CIT (A) AND BEFORE THE AO IN THE COURSE OF RE MAND PROCEEDINGS HAD FILED THE CONFIRMATIONS OF THE PARTIES AND CONFIRM ED COPIES OF ACCOUNT ALONGWITH THEIR PAN NUMBERS. ALL THE COMMISSION S HAVE BEEN PAID THROUGH ACCOUNT PAYEE CHEQUES AND TDS HAVE ALSO BEEN DEDUCTED WHEREVER REQUIRED. IN THE REMAND PROCEEDING S THE AO HAD EVEN DISBELIEVED THE PAYMENTS MADE TO THE SEVEN PARTIES WHO HAVE DULY CONFIRMED THE PAYMENT OF COMMISSION DIRECTLY ON TH E GROUND THAT THEY COULD NOT PRODUCE THE BILL BOOK. SUCH AN OBSERVATI ON FOR DISCARDING THE INFORMATION RECEIVED FROM HIS OWN INQU IRY CANNOT BE UPHELD BECAUSE BILL BOOK FOR COMMISSION CANNOT BE RE CKONED AS SOLITARY PIECE OF EVIDENCE TO ACCEPT OR REJECT THE PAYM ENT OF COMMISSION. THE LD. COUNSEL FOR THE ASSESSEE HAD SUB MITTED BEFORE US THAT THE ASSESSEE WAS HAVING ITS REGISTERED OFFICE I N DELHI AND DO NOT HAVE ANY SALES OFFICE IN ANY PART OF THE COUNTRY N OR DID IT HAVE ANY EXECUTIVES FOR SALES PROMOTION. ALL THE PRODUCTS MANU FACTURED HAVE BEEN SOLD THROUGH AGENTS SINCE THE ESTABLISHMENT OF THE COMPANY IN THE YEAR 1977. THESE AGENTS USED TO PROCURE THE SALES F ROM VARIOUS BUYERS LOCATED AT VARIOUS PARTS OF COUNTRY AT RATES WHICH WERE NEGOTIATED WITH THE COMPANY AND THEREAFTER THE GOODS WER E DISPATCHED TO THE PARTIES IN ACCORDANCE WITH THE DETAILS GIVEN BY TH E AGENTS. HE FURTHER SUBMITTED THAT NO MARKETING AND SALES EXPENDITURE HAD BEEN DEBITED EXCEPT FOR COMMISSION PAYMENT WHICH IS A REGU LAR FEATURE. SUCH A CONTENTION OF THE LD. COUNSEL APPEARS TO BE CORR ECT ON THE FACE OF THE MATERIAL PLACED BEFORE US IN THE PAPER BOOK WH ICH SHOWS THAT IN THE EARLIER YEARS ALSO THE PAYMENT OF COMMISSION HAVE BEEN MADE TO VARIOUS COMMISSION AGENTS IN VARIOUS YEARS. THE DETAI L OF THESE CHART HAS BEEN GIVEN FROM PAGES 95 TO 99 OF THE PAPER BOOK. APART FROM THAT, THE ASSESSEE HAS ALSO GIVEN CONFIRMED COPIES OF LEDGER ACCOUNTS BY THESE PARTIES WHICH SHOWS THAT THERE ARE REGULAR TRAN SACTIONS ITA NOS. 980, 570/DEL/2014 DCIT VS. SWASTIC SOLVENT PRODUCTS (INDIA ) LTD. & SWASTIC SOLVENT PRODUCTS (INDIA) LTD. VS. ACIT 13 BETWEEN THE ASSESSEE AND COMMISSION AGENTS. LD. CIT ( A) AFTER APPRECIATING THE ENTIRE FACTS AND MATERIAL ON RECORD WHICH HAS BEEN REPRODUCED ABOVE IN THE FOREGOING PARAGRAPHS, HAS DE LETED THE SAID ADDITION AND WITHOUT THEIR BEING ANY CONTRARY MATERIAL B ROUGHT ON RECORD BY THE AO IN THE IMPUGNED REMAND REPORT WE DO N OT FIND ANY REASON TO DEVIATE FROM SUCH A FINDING OF FACT RECORD ED BY THE LD. CIT (A); AND ACCORDINGLY, THE DISALLOWANCE MADE BY THE AO HAS RIGHTLY BEEN DELETED BY THE LD. CIT (A) IN CASE OF THE 11 PAR TIES. 11. AT THIS POINT IT WOULD BE RELEVANT TO DEAL W ITH THE ASSESSEES GROUND NO. 1, 2 AND 3 WHICH DEALS WITH THE ADDITION O F RS. 87,340/- WHICH WAS THE COMMISSION PAID TO ONE OF THE PARTY, NA MELY, SHRI SHIV KUMAR WHICH HAS BEEN CONFIRMED BY THE LD. CIT (A). W ITH REGARD TO THE SAID PARTY THE LD. AR HAS POINTED OUT THAT THE PAYMEN T OF THE SAID PARTY HAS BEEN MADE THROUGH ACCOUNT PAYEE CHEQUE AND TDS HAS BEEN DEDUCTED AND THOUGH PAYMENTS HAVE NOT BEEN MADE TO HIM IN THE ASSESSMENT YEAR 2008-09 AND 2009-10, HOWEVER IN T HE ASSESSMENT YEAR 2007-08, PAYMENT OF RS. 56,328/- WAS MADE WHICH STANDS ACCEPTED. HE ALSO DREW OUR ATTENTION TO CONFIRME D COPY OF ACCOUNT APPEARING AT PAGE NO. 93 OF THE PAPER BOOK, WH EREIN THE SAID PERSON HAS GIVEN HIS PAN NUMBER AND ALSO CONFIRMED THE PAYMENT OF RS. 87,340/- INCLUDING THE TDS AMOUNT. THUS, THIS ADDI TION SHOULD CANNOT BE CONFIRMED SIMPLY ON THE GROUND THAT IN IMM EDIATELY PRECEDING TWO YEARS COMMISSION WAS NOT PAID, WHEN AL L THE OTHER EVIDENCE STRONGLY INDICATE THE GENUINENESS OF THE PAYME NT. ON THE OTHER HAND, LD. SR. DR HAD SUBMITTED THAT, FIRST OF AL L, THIS PARTY HAD NOT RESPONDED TO THE NOTICE SENT BY THE AO AND THEREFOR E, IT COULD NOT BE VERIFIED INDEPENDENTLY WHETHER ANY SUCH PAYMENT HAS BEEN MADE TO THE SAID PARTY AND MERELY BECAUSE PAYMENT HAS BEEN MADE THROUGH ITA NOS. 980, 570/DEL/2014 DCIT VS. SWASTIC SOLVENT PRODUCTS (INDIA ) LTD. & SWASTIC SOLVENT PRODUCTS (INDIA) LTD. VS. ACIT 14 CHEQUE DOES NOT MEAN THE COMMISSION PAYMENT HAS TO BE A LLOWED. WE FIND THAT LD. CIT (A) HAS DRAWN ADVERSE INFERENCE ON THE GROUND THAT FIRSTLY, HE HAS NOT CONFIRMED THE TRANSACTION IN RESP ONSE TO NOTICE U/S 133(6) AND IN THE IMMEDIATELY TWO PRECEDING ASSE SSMENT YEARS NO PAYMENTS HAVE BEEN MADE. HOWEVER NOWHERE IT HAS BEEN DENIED THAT ASSESSEE HAD FILED CONFIRMED COPY OF ACCOUNTS OF THE SAID PERSON ALONGWITH THE PAN AND ALSO THE PAYMENTS HAVE BEEN MAD E THROUGH ACCOUNT PAYEE CHEQUE ON WHICH TDS HAS BEEN DEDUCTED. THE PAYMENT OF CHEQUE ONLY REFLECTS THAT TRANSACTION IS GENUINE AND SO FAR AS WHETHER THE COMMISSION PAYMENT IS TO BE ALLOWED SAME HA S TO BE SEEN FROM THE FACT THAT IN CASE OF THE ASSESSEE, PAYMENT OF CO MMISSION IS A REGULAR FEATURE AND SAME HAS BEEN MADE FOR PROCURING SALES AND IN THIS PARTICULAR CASE IT IS SEEN THAT COMMISSION WAS PAID TO THE SAID PARTY IN THE ASSESSMENT YEAR 2007-08 AND WHEN IN EAR LY YEARS THIS PARTY WAS PAID THE COMMISSION WHICH APPEARS TO HAVE B EEN ACCEPTED, THEN MERELY BECAUSE IN IMMEDIATELY PRECEDING TWO YEA RS COMMISSION WAS NOT PAID CANNOT BE THE GROUND FOR ADVERSE INFEREN CE. IN THE CASE OF OTHER AGENTS ALSO SIMILAR NATURE OF EVIDENCE HAS B EEN APPRECIATED BY THE LD. CIT(A) AND ONE SUCH FACT WAS THAT, IN THOSE CASES PAYMENTS HAVE BEEN MADE IN THE EARLIER TWO ASSESSMENT YEARS AL SO. THE ASSESSEE HAD ALREADY EXPLAINED BEFORE THE AUTHORITIES BELOW AND BEFORE US THAT IN THE ASSESSEES CASE THE PAYMENT OF COMMISSION HAS B EEN A REGULAR FEATURE SINCE LAST SEVERAL DECADES AND IT IS THROUGH A GENTS ONLY THE ASSESSEE HAS BEEN SELLING ITS PRODUCTS ACROSS THE COU NTRY. THEREFORE, IT CANNOT BE HELD THAT PAYMENT OF COMMISSION PAID TO SHRI SHIV KUMAR IS EITHER FOR NON BUSINESS PURPOSE OR IS NOT GENUINE. ACCORDINGLY, WE HOLD THAT THE PAYMENT OF RS. 87,340/- PAID TO SHRI SHIV KUMAR AS COMMISSION IS TO BE ALLOWED. IN THE RESULT GROUND NO. 1 TO 3 OF THE ITA NOS. 980, 570/DEL/2014 DCIT VS. SWASTIC SOLVENT PRODUCTS (INDIA ) LTD. & SWASTIC SOLVENT PRODUCTS (INDIA) LTD. VS. ACIT 15 ASSESSEES APPEAL IS ALLOWED, WHEREAS GROUND NO. 1 OF THE REVENUE IS DISMISSED. 12. SO FAR AS THE ADHOC DISALLOWANCE OF RS. 3 LA CS OUT OF DISALLOWANCE OF RS. 14,01,454/- MADE BY THE AO ON AC COUNT OF POWER AND FUEL EXPENSES IS CONCERNED THE BRIEF FACTS ARE THA T THE ASSESSEE HAS CLAIMED AN EXPENDITURE OF RS. 2,15,88,454/- AS P OWER AND FUEL EXPENSES, OUT OF WHICH RS. 1,40,14,535/- HAS BEEN CL AIMED AS EXPENDITURE TOWARDS CONSUMPTION OF PADDY HUSK DURING T HE YEAR. THE AO HELD THAT THE ASSESSEE COULD NOT PROVIDE DAY TO DAY D ETAILS OF CONSUMPTION OF PADDY HUSK AND THEREFORE, HE PROCEEDED TO DISALLOW 10% OF THE TOTAL CLAIM RESULTING INTO ADDITION OF RS. 14, 01,454/-. BEFORE THE LD. CIT (A) THE ASSESSEE SUBMITTED THAT THE A O WAS NOT JUSTIFIED IN MAKING SUCH DISALLOWANCE, FIRSTLY BECAUS E, HE HAS NOT REJECTED THE BOOKS OF ACCOUNTS AND THE STOCK REGISTER; AND SECONDLY, IF FOR THE LAST FIVE YEARS THE CONSUMPTION OF PADDY HUSK ( BHUSI) IS TO BE SEEN THEN IT IS CLEAR THAT THE CONSUMPTION OF BHUSI IN T HIS YEAR IS LESS DESPITE PRODUCTION HAS INCREASED CONSISTENTLY. IN SUPP ORT, FOLLOWING CHART WAS SUBMITTED BEFORE THE LD. CIT (A):- PERCENTAGE OF BHUSI CONSUMED IN TERMS OF RICE BRAN PR OCESSED A.Y. OPENING STOCKS RS. PURCHASES RS. CLOSING STOCKS RS. NET CONSUMED RS. RICE BRAN PROCESSE D IN (MT) % 2 00 7 - 0 8 3 6 90 0 6844215 42750 6 838365 38466 0 . 56 2 0 08- 09 4 2 75 0 76 4 31 1 5 45 25 0 76406 1 5 39795 0 . 52 2009 - 10 45250 106 11 850 5 2000 10605100 46043 0 . 43 2010-11 520 00 14864 1 35 901 60 0 14 014535 47449 0 .34 20 1 1 - - 1 2 9 0160 0 1 75 3 7946 7 5 5000 17 6 84546 59528 0 . 34 ITA NOS. 980, 570/DEL/2014 DCIT VS. SWASTIC SOLVENT PRODUCTS (INDIA ) LTD. & SWASTIC SOLVENT PRODUCTS (INDIA) LTD. VS. ACIT 16 13. LD. CIT (A), HOWEVER HAS RESTRICTED THE DISAL LOWANCE TO RS. 3 LACS SIMPLY ON THE GROUND THAT THE ASSESSEE HAS NOT BE EN ABLE TO ESTABLISH THAT THERE WAS PROPER ACCOUNTING OF THESE EXPE NSES ON THE BASIS OF DAY TO DAY CONSUMPTION REGISTER AND THE CON TENTION OF THE AO CANNOT BE TOTALLY IGNORED. 14. BEFORE US LD. COUNSEL FOR ASSESSEE SUBMITTED THAT THE PADDY HUSK IS A BY-PRODUCT WHICH IS USED FOR FUEL IN THE BO ILER. THOUGH MANUFACTURING REGISTER AND OTHER DETAILS LIKE STOCK R EGISTER HAS BEEN MAINTAINED METICULOUSLY WHICH HAVE BEEN SUBJECT TO AUDI T ALSO BUT IT IS IMPOSSIBLE TO MAINTAIN DAY TO DAY STOCK REGISTER O F HEAPS OF PADDY HUSK LYING IN THE FACTORY PREMISES BECAUSE, THERE ARE CERTAIN WASTAGE ALSO. HE FURTHER SUBMITTED THAT ONCE ACCOUNTS HAVE BEEN A UDITED AND CONSUMPTION OF PADDY HUSK IS IN CONSONANCE WITH THE EA RLIER YEARS, THEN NO DISALLOWANCE AT ALL SHOULD BE MADE. ON THE OTHE R HAND THE LD. DR SUBMITTED THAT THERE IS NO REBUTTAL OF THE FINDING OF THE AO AND THE LD. CIT (A) THAT ASSESSEE HAS NOT MAINTAINED DAY TO DAY CONSUMPTION REGISTER OF PADDY HUSK AND THEREFORE, ENTIRE EXPENDIT URE CLAIMED CANNOT BE UPHELD. HE FURTHER SUBMITTED THAT THE DISALLOWA NCE WHICH HAS BEEN MADE BY THE AO @ 10% UNDER SUCH FACTS AND C IRCUMSTANCES IS QUITE REASONABLE. 15. WE HAVE HEARD THE RIVAL SUBMISSIONS AND ALSO PERUSED THE RELEVANT FINDING IN THE IMPUGNED ORDERS. IT IS AN UNDI SPUTED FACT THAT PADDY HUSK IS A USED AS A FUEL FOR THE BOILERS IN AS SESSEES OWN PRODUCTION. THE ASSESSEE HAS BEEN MAINTAINING THE DETA ILS OF PURCHASES, OPENING STOCK AND CLOSING STOCK OF THE PA DDY HUSK AND ALSO THE NET PADDY HUSK CONSUMED. IT HAD ALSO GIVEN THE DETAILS OF RICE BRAN PROCESSED AND THE PERCENTAGE OF SUCH CONSUMPTION IN VARIOUS YEARS AS HAS BEEN INCORPORATED ABOVE. FROM THE PERUSA L OF THE SAME, ITA NOS. 980, 570/DEL/2014 DCIT VS. SWASTIC SOLVENT PRODUCTS (INDIA ) LTD. & SWASTIC SOLVENT PRODUCTS (INDIA) LTD. VS. ACIT 17 IT IS SEEN THAT THE PERCENTAGE OF CONSUMPTION IS NOT ONLY IN CONSONANCE WITH THE EARLIER YEARS BUT IN FACT IT IS S LIGHTLY LOWER FROM THE EARLIER YEARS. MAINTAINING OF DAY TO DAY REGISTER F OR THE CONSUMPTION OF PADDY HUSK WOULD BE A VERY DIFFICULT PROPOSITION TO MEASURE QUANTITATIVELY DAILY FOR THE REASON THAT THE PADD Y HUSK ARE KEPT IN A HEAP OUTSIDE IN OPEN WHICH IS ALWAYS SUBJEC T TO RIGOURS OF WEATHER AND IS QUITE PRONE TO WASTAGE. IF THE OVERALL S TOCK AND NET CONSUMPTION HAS BEEN SHOWN ON WHICH NO DISCREPANCY H AS BEEN POINTED OUT, THEN SIMPLY BECAUSE DAY TO DAY REGISTER F OR CONSUMPTION HAS NOT BEEN MAINTAINED CANNOT BE A GROUND FOR MAKING ANY KIND OF DISALLOWANCE ON THE CONSUMPTION. THERE IS NO REASON FOR THE AO TO DRAW ADVERSE INFERENCE OR TAKE A DIFFERENT VIEW IN THI S YEAR WHEN THE PERCENTAGE OF CONSUMPTION IS LESS IN THIS YEAR IN COMP ARISON TO THE EARLIER YEARS. THEREFORE, ON THESE FACTS WE DO NOT FIN D ANY REASON TO SUSTAIN ANY KIND OF ADHOC DISALLOWANCE AND SAME IS D IRECTED TO BE DELETED. IN VIEW OF OUR FINDING GROUND NO. 2 RAISED BY THE REVENUE IS DISMISSED, WHEREAS GROUND NO. 4 TO 7 OF THE ASSESSEE IS ALLOWED. 16. LASTLY COMING TO THE ISSUE OF ADDITION OF RS. 4 1,92,129/- ON ACCOUNT OF UNVERIFIED PURCHASES, THE BRIEF FACTS ARE THAT AO HAD SENT NOTICES U/S 133(6) ON TEST CHECK BASIS TO SOME OF THE PARTIES AND IN CASE OF THREE PARTIES THE PURCHASES COULD NOT BE VERIF IED, THE DETAILS OF WHICH ARE AS UNDER :- I) M/S. S.R. INDUSTRIES RS. 12,6 5,085/- II) M/S. DIXIT RICE MILLS RS. 14, 55,372/- III) M/S. BHAGWATI AGRO MILLS RS. 14,71,6 72/- SINCE THE ASSESSEE COULD NOT PRODUCE THESE PARTIES, THE AO HAS CONFIRMED THE PURCHASES MADE FROM THESE PARTIES. BEFOR E THE LD. ITA NOS. 980, 570/DEL/2014 DCIT VS. SWASTIC SOLVENT PRODUCTS (INDIA ) LTD. & SWASTIC SOLVENT PRODUCTS (INDIA) LTD. VS. ACIT 18 CIT(A) THE ASSESSEE CONTENDED THAT, SINCE AO DID NOT GA VE PROPER OPPORTUNITY AND THAT MATTER WAS GETTING TIME BARRED, THE A O HAS MADE THE ADDITION WITHOUT GIVING ANY CHANCE TO REBUT THE AOS FINDING. ACCORDINGLY, ASSESSEE FILED ADDITIONAL EVIDENCES BEF ORE THE LD. CIT (A) WHICH WERE IN THE NATURE OF; I) CONFIRMATION OF ACCOUN TS BY THESE PARTIES; II) COMPARATIVE CHART OF LAST FOUR YEARS GIVI NG THE DETAILS OF THE TRANSACTION CARRIED OUT IN THE EARLIER YEARS FROM THE S AME PARTIES; III) BANK STATEMENT IN RESPECT OF PURCHASE TRANSACTION; AND IV ) BANK CERTIFICATE BY HDFC BANK AND PNB IN RESPECT OF CREDIT OF AMOUNT IN FAVOUR OF THE THREE PARTIES. THE LD. CIT (A) CALLED FO R THE REMAND REPORT ON THESE EVIDENCES FROM THE AO, WHO IN HIS REMAND RE PORT HAS SUBMITTED AS UNDER:- IT IS FURTHER SUBMITTED THAT NOTICE U/S 133(6) OF T HE I. T. ACT, WERE ALSO ISSUED TO THE FOLLOWING PARTIES NAMELY M/S S.R. IND USTRIES, SH. BHAGWATI AGRO MILLS AND M/S. DIXIT RICE MILL FROM W HOM THE ASSESSEE HAS CLAIMED TO HAVE MADE GENUINE PURCHASE, BUT THE SAME HAD BEEN TREATED AS BOGUS BY THE AO DURING THE COURSE OF ASS ESSMENT PROCEEDINGS. ALL THESE PARTIES BELOW WERE ASKED TO PRODUCE (I) LEDGER ACCOUNT OF M/S. SWASTIK SOLVENT IN THE BOOKS OF THE CONCERNED PARTY BELOW (II) TO PRODUCE SALE BOOKS FOR THE RELEVANT Y EAR FOR SALE MADE BY THE RELEVANT PARTY BELOW, (III) TO SUBMIT RELEVANT' SALE BILL OF M/S SWASTIK SOLVENT (IV) TO SUBMIT PARTY WISE PURCHASE & SALE I N THE PRESCRIBED FORMAT SEPARATELY FOR A. Y. 2010-11 (V) TO PRODUCE STOCK REGISTER. IN RESPONSE TO THE NOTICE U/S 133(6) OF THE I. T. ACT, CONFIRMATION IN THE CASE OF M/S DIXIT RICE MILLS HAVE BEEN RECEIVED ONL Y ON A HAND WRITTEN PAPER AND NEITHER BOOKS OF ACCOUNTS & SALE BOOKS NO R PARTY WISE PURCHASE & SALE IN THE PRESCRIBED FORMAT NOR DID ST OCK REGISTER HAVE BEEN PRODUCED BY THE UNDERSIGNED. SIMILARLY IN THE CASE OF M/S BHAGWATI AGRO MILLS IN RESPONSE TO THE NOTICE U/S 133(6) OF THE I. T. ACT, THE PARTY CONCERNED HAS ALSO SENT ONLY A HAND WRITT EN STATEMENT AND NO OTHER REQUIRED DOCUMENT HAVE BEEN SENT TO THE UN DERSIGNED. THEREFORE, IT IS FURTHER SUBMITTED THAT MOST OF THE PARTIES ARE AWAY FROM DELHI AND RESIDING NEAR ABOUT 250 KM AWAY, THEREFOR E, SUMMONS U/S 131 COULD NOT BE ISSUED AND COMPLIANCE SOUGHT THROU GH NOTICE/S 133(6) FROM THE PARTIES ABOVE. THUS, IN THE ABSENCE OF THE PROPER DOCUMENTS AND BOOKS OF ACCOUNT OF THE PARTIES, NO VIEW CAN BE TAKEN AND ONLY ITA NOS. 980, 570/DEL/2014 DCIT VS. SWASTIC SOLVENT PRODUCTS (INDIA ) LTD. & SWASTIC SOLVENT PRODUCTS (INDIA) LTD. VS. ACIT 19 HANDWRITTEN COPY OF ONLY LEDGER ACCOUNT OF THE PART IES CONCERNED HAVE BEEN SENT AND THUS, IT IS NOT POSSIBLE FOR THE UNDE RSIGNED TO TAKE A HOLISTIC VIEW OVER THE MATTER. COPIES OF NOTICE U/S 133(6) AND THEIR REPLY IS ENCLOSED FOR YOUR REFERENCE. 17. IN THE REJOINDER THE ASSESSEE WITH REGARD TO TH ESE PARTIES HAD SUBMITTED AS UNDER:- 1. S.R. INDUSTRIES (PURCHASE WORTH 12,65,085 WERE MADE .) THE ASSESSEE ITSELF FURNISHED COPY OF CONFIRMATION WITH PAN (PAGE 121- 124 OF P.B). THERE IS NO COMMENT BY THE A.O. BANK STATEMENT OF HDFC BANK RUDRAPUR SHOWING CLEARA NCE OF ALL THE CHEQUES IN FAVOUR OF S.R. INDUSTRIES (PAGE 134-152 OF P.B). THERE IS NO COMMENTS BY THE A.O THE BANK CERTIFICATE BY HDFC BANK (PAGE 179 OF P.B) , BUT THIS WAS NOT EXAMINED AND THEREFORE NO COMMENTS BY THE A.O. CHART FOR LAST FOUR YEAR PURCHASE WITH THE SAME PAR TY TO ESTABLISH PARTY IS REGULAR PARTY (PAGE 133 OF P.B). IT WAS NO T EXAMINED AND THEREFORE NO COMMENTS BY THE A.O FURTHER IN RESPONSE TO NOTICE U/S 133(6), THE PARTY COMPLIED BY SENDING CONFIRMED COPY OF ACCOUNT FROM THEIR BOOKS ALONG WI TH COPY OF ITS PAN. (THE ENCLOSURE ATTACHED WITH THE REMAND REPORT IS I NCOMPLETE AND THEREFORE COMPLETE CONFIRMED COPY OF ACCOUNT SENT B Y THE PARTY IS ENCLOSED FOR PERUSAL) 2. DIXIT RICE MILLS (PURCHASE WORTH 14,55,372/-) THE ASSESSEE ITSELF FURNISHED COPY OF CONFIRMATION WITH PAN (PAGE 128- 132 OF P.B). THERE IS NO COMMENT BY THE A.O. BANK STATEMENT OF HDFC BANK, RUDRAPUR & PUNJAB NATI ONAL BANK, RUDRAPUR SHOWING CLEARANCE OF ALL THE CHEQUES IN FA VOUR OF DIXIT RICE MILLS (PAGE 162-178 OF P.B). THERE IS NO COMMENTS B Y THE A.O THE BANK CERTIFICATE BY HDFC BANK & PUNJAB NATIONAL BANK (PAGE 181, & 182 OF PB), BUT THIS WAS NOT EXAMINED AND TH EREFORE NO COMMENTS BY THE A. O. CHART FOR LAST FOUR YEAR PURCHASE WITH THE SAME PAR TY TO ESTABLISH PARTY IS REGULAR PARTY (PAGE 133 OF P.B). IT WAS NO T EXAMINED AND THEREFORE NO COMMENTS BY THE A.O. ITA NOS. 980, 570/DEL/2014 DCIT VS. SWASTIC SOLVENT PRODUCTS (INDIA ) LTD. & SWASTIC SOLVENT PRODUCTS (INDIA) LTD. VS. ACIT 20 FURTHER IN RESPONSE TO NOTICE U/S 133(6), THE PARTY COMPLIED VIDE IT'S LETTER DATED 08.10.2013 BY FURNISHING FOLLOWING DOC UMENT IN SUPPORT OF TRANSACTION. (THE REPLY DT 08.10.2013 ENCLOSED WITH THE REMAND REPORT) (I) THE CONFIRMATION BY WAY OF LEDGER ACCOUNT OF M/ S SWASTIK SOLVENT PRODUCTS INDIA LIMITED FOR THE A. Y 2010-11. (II) THE PHOTO COPY OF SALE BILLS OF RICE POLISH. (III) DULY ATTESTED RELEVANT SALE BILL RELATING TO M/S SWASTIK SOLVENT PRODUCTS INDIA LIMITED. (IV) THE DETAILS OF SALE OF RICE POLISH TO VARIOUS PARTIES FOR THE YEAR UNDER CONSIDERATION WHICH INCLUDES THE APPELLANT TO O. (V) CERTIFIED PHOTO COPY OF THE STOCK REGISTER OF THE RICE POLISH. 3. M/S BHAGWATI AGRO MILLS (PURCHASE WITH RS 14,71,672 /-) THE ASSESSEE ITSELF FURNISHED COPY OF CONFIRMATION WITH PAN (PAGE 125- 127 OF P.B). THERE IS NO COMMENT BY THE A. O. BANK STATEMENT OF HDFC BANK, RUDRAPUR SHOWING CLEAR ANCE OF ALL THE CHEQUES IN FAVOUR OF BHAGWATI AGRO MILLS (PAGE 153- 161 OF P.B). THERE IS NO COMMENTS BY THE A. 0 THE BANK CERTIFICATE BY HDFC BANK (PAGE 180 OF P.B) , BUT THIS WAS NOT EXAMINED AND THEREFORE NO COMMENTS BY THE A. O. CHART FOR LAST FOUR YEAR PURCHASE WITH THE SAME PAR TY TO ESTABLISH PARTY IS REGULAR PARTY (PAGE 133 OF P.B). IT WAS NO T EXAMINED AND THEREFORE NO COMMENTS BY THE LD. A. 0 FURTHER IN RESPONSE TO NOTICE U/S 133(6), THE PARTY AGAIN COMPLIED VIDE IT'S LETTER DATED 07.10.2013 BY SENDING CONFIRMED C OPY OF ACCOUNTS WITH REGARD TO THE TRANSACTIONS WITH THE ASSESSEE. (THE REPLY DT 07.10.2013 ENCLOSED WITH THE REMAND REPORT).' 18. LD. CIT (A) AFTER CONSIDERING THE REMAND REP ORT AND SUBMISSIONS MADE BY THE ASSESSEE AS WELL AS THE MAT ERIAL PLACED ON RECORD NOTED THAT THESE PARTIES HAVE CONFIRMED THE PURCHA SES BEFORE THE AO IN RESPONSE TO THE NOTICES ISSUED U/S 133(6) AND SIMPLY BECAUSE THESE PARTIES HAVE NOT PRODUCED THEIR BOOKS OF ACCOUNT CANNOT BE THE GROUND TO DISBELIEVE THE PURCHASES. THE ASSESSEE HAS PRODUCED ALL THE RELEVANT DETAILS AND EVIDENCES REGARD ING THE PURCHASE ITA NOS. 980, 570/DEL/2014 DCIT VS. SWASTIC SOLVENT PRODUCTS (INDIA ) LTD. & SWASTIC SOLVENT PRODUCTS (INDIA) LTD. VS. ACIT 21 MADE FROM THESE PARTIES WHICH HAVE BEEN VERIFIED IN TH E REMAND PROCEEDINGS. THUS, THE ADDITIONS ON ACCOUNT OF PURCHAS ES FROM THESE THREE PARTIES CANNOT BE UPHELD. 19. LD. SR. DR SUBMITTED THAT AO HAS SPECIFICALLY ASKED VARIOUS DETAILS FROM THE PARTIES, WHICH COULD HAVE GONE TO ESTAB LISH THE PURCHASES MADE BY THE PARTIES, BUT THE REQUIRED DETAILS AS ASKED COULD NOT BE FURNISHED BY THE SAID PARTIES, HENCE PURC HASES COULD NOT BE FULLY ESTABLISHED. MERE CONFIRMATIONS AND EARLIER YEAR REFERENCE IS NOT SUFFICIENT AS THE TRANSACTION OF PURCHASE NEEDS TO BE VERIFIED. THUS, HE STRONGLY RELIED UPON THE REMAND REPORT OF THE AO. 20. THE LD. COUNSEL FOR THE ASSESSEE SUBMITTED THA T, THE PURCHASES WERE MADE THROUGH INVOICES WHICH CONTAINED ALL THE PA RTICULARS OF THE PARTIES AND NOT ONLY THAT, WHEN INDEPENDENTLY INQUIRED BY THE AO, THE PARTIES HAVE DIRECTLY CONFIRMED THE PURCHASES ALONG W ITH THEIR COPY OF ACCOUNTS. HENCE LD. CIT (A) HAS RIGHTLY DELETED THE A DDITION. 21. AFTER HEARING BOTH THE PARTIES AND ON PERUSAL OF THE RELEVANT MATERIAL PLACED ON RECORD, WE FIND THAT THESE PARTIES F ROM WHOM ASSESSEE HAD MADE PURCHASES OF RAW MATERIALS, IN THE REMAND PROCEEDINGS HAVE DULY RESPONDED TO THE NOTICES U/S 133 (6) ISSUED BY THE AO AND HAVE GIVEN THEIR CONFIRMATIONS BEFORE THE AO DULY ACKNOWLEDGING THE SALE MADE TO THE ASSESSEE. NOT ONLY THAT, THESE TRANSACTIONS ARE ALSO REFLECTED IN BILL BOOKS AND INV OICES OF PURCHASES, WHICH HAVE BEEN PLACED IN THE PAPER BOOK. CERTIFICATES FROM THE BANK OF THE ASSESSEE HAD BEEN SUBMITTED THAT THE AMOUNT OF PURC HASE HAS BEEN CLEARED IN FAVOUR OF THESE PARTIES IN THEIR RESP ECTIVE BANK ACCOUNTS. IT IS ALSO A MATTER OF RECORD THAT IN THE EARLI ER YEARS ALSO ASSESSEE HAS BEEN MAKING REGULAR PURCHASES WITH THESE PARTIES WHICH ITA NOS. 980, 570/DEL/2014 DCIT VS. SWASTIC SOLVENT PRODUCTS (INDIA ) LTD. & SWASTIC SOLVENT PRODUCTS (INDIA) LTD. VS. ACIT 22 HAVE BEEN NOT DISTURBED. IN THE WAKE OF THE EVIDENCES AS INCORPORATED ABOVE IT IS QUITE OSTENSIBLE THAT THESE PARTIES HAVE SOLD THE MATERIAL TO THE ASSESSEE AND HAVE ALSO CONFIRMED THE SAID TRANSACTI ON DIRECTLY TO THE AO. THE ONUS WHICH LIED UPON THE ASSESSEE TO PROV E THE TRANSACTION OF PURCHASES STANDS DULY DISCHARGED AND WE DO NOT FIND ANY REASON TO DEVIATE FROM THE OBSERVATION AND FINDING OF THE LD. CIT (A) WHILE DELETING THE SAID ADDITION. THE MAIN OBJECTIO N MADE BY THE LD. DR MADE BEFORE US WAS THAT THESE PARTIES HAVE GIVE N ONLY HAND WRITTEN CONFIRMATION AND IN ABSENCE OF THEIR BOOKS OF A CCOUNTS IT IS DIFFICULT TO ACCEPT THE PURCHASES ESPECIALLY WHEN SUMM ONS COULD NOT HAVE BEEN ISSUED TO THESE PARTIES AS THEY WERE LOCATED MORE THAN 250 KMS AWAY FROM DELHI. WE DO NOT FIND ANY MERIT IN SUCH A CONTENTION IN THE WAKE OF PLETHORA OF EVIDENCES WHICH INDEPENDE NTLY CONFIRM THE GENUINENESS OF THE PURCHASE, AS THESE PARTIES HAVE NOT ONLY GIVEN THE CONFIRMATION DIRECTLY BUT HAD ALSO GIVEN PHOTOCOPY OF TH E SALES BILLS, COPY OF THE ACCOUNT AND THE PURCHASE IS FURTHER CORROB ORATED BY THE CERTIFICATES ISSUED BY THE BANK. ONCE IT IS NOT DISPUTED THAT THE PURCHASES HAVE BEEN MADE THROUGH CHEQUES AND THE CHEQ UES HAVE BEEN CLEARED IN THEIR FAVOUR, THEN IT CANNOT BE HELD THAT THESE PAYMENTS HAVE BEEN MADE FOR SOME OTHER PURPOSES, ESPE CIALLY WHEN OVERALL QUANTITY OF PURCHASE, CONSUMPTION OF MATERIA L FOR MANUFACTURING AND SALES HAVE NOT BEEN DISPUTED OR ANY KIND OF DISCREPANCY HAVE BEEN FOUND IN THE BOOKS OF ACCOUNTS. IF THE SALES AND GROSS PROFIT ALONG WITH THE MANUFACTURING RESULTS HAVE BEEN ACCEPTED, THEN PURCHASES CANNOT BE DISALLOWED. THE SOURCE OF THE PURCHASES ARE DIRECTLY ROUTED THROUGH BOOKS AND IT CANNOT BE THE CASE OF PURCHASES BEING MADE OUTSIDE THE BOOKS OF ACCOUNT. THUS, WE UPHO LD THE DELETION OF ADDITION BY THE LD. CIT (A). ACCORDINGLY, GROUND NO. 3 RAISED BY THE REVENUE IS DISMISSED. ITA NOS. 980, 570/DEL/2014 DCIT VS. SWASTIC SOLVENT PRODUCTS (INDIA ) LTD. & SWASTIC SOLVENT PRODUCTS (INDIA) LTD. VS. ACIT 23 22. IN THE RESULT APPEAL OF THE ASSESSEE IS ALLO WED AND APPEAL OF THE REVENUE IS DISMISSED. ORDER PRONOUNCED IN THE OPEN COURT ON 22 ND JANUARY, 2018. SD/- SD/- ( N.K. SAINI) (AMIT SHUKLA) ACCOUNTANT MEMBER JUDICIAL MEMBER DATED: 22 ND JAN, 2018. VEENA COPY FORWARDED TO 1. APPLICANT 2. RESPONDENT 3. CIT 4. CIT (A) 5. DR:ITAT ASSISTANT REGISTRAR ITAT, NEW DELHI