M/s G. D. Enterprise, Kolkata V. ACIT, CIR-40, KOLKATA, Kolkata

ITA 585/KOL/2016

• Counselvise Citation: [2019] 118 COUNSELVISE.COM (IT) 1333 (ITAT-KOLKATA)
• Duration Of Justice: 2 year(s) 11 month(s) 10 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 15-03-2019
• Appeal Filed By: Assessee
• Order Result: Partly Allowed
• Bench Allotted: C
• Assessment Year: 2012-2013
• Appeal Filed On: 04-04-2016
• Result in Favour of: Partly Allowed
• Court: TRIBUNAL
• Department Lawyers: SOURAV KUMAR CITSRDR
• Assessee Lawyers: J M THARD
• Keywords: Bogus purchase; Unexplained cash credit; Unexplained expenditure; Income from undisclosed sources; Opportunity of cross examination; Peak credit; Source of fund; Question of law; Corroborative evidences; Accommodation entries
• Section: 69C; 143(3); 133(6); 250; 131; 148

Judgement Text

, C , IN THE INCOME TAX APPELLATE TRIBUNAL KOLKATA BENCH C KOLKATA BEFORE SHRI S.S.GODARA, JUDICIAL MEMBER AND DR. A.L. SAINI, ACCOUNTANT MEMBER ITA NO. 585 / KOL / 20 16 ASSESSMENT YEAR :2012-13 M/S G.D. ENTERPRISE 1/H/1, RAJA JANMENJOY ROAD, KOLKATA-700010 [ PAN NO.AACFG 4533 A ] V/S . ACIT, CIRCLE-40 3, GOVERNMENT PLACE (WEST), KOLKAT- 700001 /APPELLANT .. / RESPONDENT /BY APPELLANT SHRI J.M. THARD, ADVOCATE /BY RESPONDENT SHRI SOURAV KUMAR, ADDL. CIT-SR-DR /DATE OF HEARING 14-01-2019 /DATE OF PRONOUNCEMENT 15-03-2019 / O R D E R PER S.S.GODARA, JUDICIAL MEMBER:- THIS ASSESSEES APPEAL FOR ASSESSMENT YEAR 2012-13 ARISES AGAINST THE COMMISSIONER OF INCOME TAX (APPEALS)-13, KOLKATAS ORDER DATED 31.12.2015, PASSED IN CASE NO.1046/CIT(A)-13/KOL/CIR-45/2014-15 , INVOLVING PROCEEDINGS U/S 143(3) OF THE INCOME TAX ACT, 1961; IN SHORT T HE ACT. HEARD BOTH THE PARTIES CASE FILE PERUSED. 2. THE ASSESSEES SOLE SUBSTANTIVE GROUND SEEKS TO REVERSE BOTH THE LOWER AUTHORITIES ACTION TREATING ITS PURCHASES AM OUNTING TO 3,39,04,027/- AS BOGUS IN ASSESSMENT AS AFFIRMED IN LOWER APPELLATE PROCEEDINGS. THE CIT(A)S DETAILED DISCUSSION TO THIS EFFECT READS AS UNDER:- 5. DECISION 5.1 APPELLANT'S SUBMISSION AND FACTS AVAILABLE ON R ECORD IS CAREFULLY CONSIDERED. THE ASSESSEE HAS ARGUED THAT IT HAD MAD E ALL PAYMENTS THROUGH ACCOUNT PAYEE CHEQUE AND FROM YOUR PETITIONER SITE THERE IS NO MISTAKE AS PER LAW AND INCOME TAX ACT. SO THE DISALLOWANCE OF PURC HASE AGAINST PAYMENT THROUGH ACCOUNT PAYEE CHEQUE WOULD NOT BE FALSE AND IT MAY BE ACCEPTED ITA NO.585/KOL/2016 A.Y. 2012-13 M/S G.D. ENTERPRISE VS. ACIT, CIR-4 0,KOL. PAGE 2 AND DELETE THE ILLEGAL DEMAND OF TAX AND SUBMITTED THE PARTY INVOICE, LEDGER COPY WITH BANK STATEMENT. 5.2 WHILE MAKING THE ADDITION THE AO HAS BRING ON R ECORD FALLOWING POINTS:- 1. DURING THE PROCEEDINGS VIDE HEARING DATED 18-06- 2014, ASSESSE IT SELF ADMITTED THAT THE TRANSACTIONS ARE NOT VERIFIA BLE. IT WAS STATED BY THE AUTHORISED REPRESENTATIVE OF THE ASSESSEE THAT PURCHASES IN RESPECT OF AFORE SAID PARTIES ARE NOT VERIFIABLE AN D THIS PARTIES ARE NOT REGISTERED WITH STATE VAT AUTHORITIES AND CANNOT BE PRODUCED FOR VERIFICATION 2. ASSESSEE FAILED TO MAKE ANY EXPLANATION AS TO WH Y THE AMOUNT BE NOT ADDED TO INCOME AS UNVERIFIABLE AND BOGUS PURCH ASES EVEN AFTER GIVING SEVERAL OPPORTUNITIES ON 29-8-2014, 05-09-20 14, 09-09-2014 & 16-09-2014. 3. THE AO CONDUCTED INQUIRY AND FOUND THAT THE PURC HASE ARE NOT GENUINE PARTY WISE OBSERVATION IS GIVEN IN THE FORT H COMING PARA . 3.1 ON ENQUIRES MADE BY THE OFFICE ON 09-10-2014 MI 5 M.D LEATHER 15F PAYMENTAL GARDEN NO BUSINESS PREMISE, GODOWN AC TUAL EXISTENCE OF BUSINESS AND SUPPLY OF GOODS, ANY LEATHER GOODS (STOCK) FOUND AT ADDRESS GIVEN AS ABOVE AND PERSON LIVING IN A SLUM AREA IN AN UN- HYGIENIC CONDITION, HARDLY LIVING THEIR LIFE AND ST RUGGLE FOR EARNING THEIR LIVELIHOOD CANNOT DO SUCH HUGE TRANSACTION. IT IS F OUND VIDE DETAILED STATEMENT ON OATH DATED 09-10-2014 (ALSO CONFIRMED IN LOCAL BENGALI LANGUAGE) BY SH SITNGSHY DATTA AS UNDER THAT, HE WA S ASKED BY THE ASSESSEE TO WORK FOR HIS COMMISSION AGENT FOR MAKIN G TRANSACTION FOR ASSESSEE. ASSESSEE OPENED HIS BANK ACCOUNT IN THE U NITED BANK OF INDIA BALIAGATA BRANCH AND GOT ISSUED TO HIM CHEQUE BANK FROM THE BANK AND HE SIGNED THE CHEQUE BOOK AS DIRECTED BY A SSESSEE AND RECEIVED COMMISSION OF RS 500 TO 1000 IN CASH FOR S UCH TRANSACTION. HE IS NOT ASSESSED TO INCOME TAX/STATE VAT TAX AS I NCOME IS BELOW TAXABLE LIMITS AND NOT MAINTAINED ANY ACCOUNT BOOKS /RECORDS. HE NEVER SOLD ANY GOODS OTHER ASSESS M/S G.G ENTERPRISES, AN D HE IS SELLING SCRAP OF LEATHER FOR THE LAST 5 YEAR AND MONTHLY IN COME IS ABOUT 5000 PER MONTH.(AS PER BANK STATEMENT OF THE PARTY AMOUN T SHOWN RECEIVED BY THE PARTY AGAINST SALES WITHDRAWN IN CASH THROUG H CHEQUES AND AMOUNT RECEIVED BY THE ASSESSEE IN CASH SHOWN AGAIN ST PURCHASES BY THE ASSESSEE.) 3.2 ON ENQUIRIES MADE BY THE OFFICE ON 09-10-2014, M/S M.D ENTERPRISES 19/2/A SOUTH TOPSIA ROAD KOLKATA-46, NO BUSINESS PREMISE, GODOWN ACTUAL EXISTENCE OF BUSINESS AND SU PPLY OF GOODS, ANY LEATHER GOODS STOCK FOUND AT THE ANY OF THE ADD RESS GIVEN AS ABOVE. ALSO AS PER THE REPORT OF THE POSTAL AUTHORI TY FIRM NOT FOUND AT ADDRESS OF FIRM M/S M.O ENTERPRISES 19/2/A SOUTH TO PSIA ROAD KOLKATA-46, GIVEN BY THE ASSESSEE. THE PERSON FOUND AT GIVEN ADDRESS WAS AN ELECTRICAL MECHANIC AND HIS INCOME IS OR REP AIRING OF FANS, MOTORS ETC AS STATED TO THE INSPECTOR OF THIS OFFIC E BY HIS FATHER SH KRISHSANA CHANDRA DAS , HARDLY LIVING THEIR LIFE AN D STRUGGLE FOR EARNING ITA NO.585/KOL/2016 A.Y. 2012-13 M/S G.D. ENTERPRISE VS. ACIT, CIR-4 0,KOL. PAGE 3 THEIR LIVELIHOOD CANNOT DO SUCH HUGE TRANSACTION. A S PER STATEMENT ON OATH DATED 10-10-2014 (ALSO CONFIRMED IN LOCAL BANG LA LANGUAGE) BY SH MOLAY DAS THAT HE IS EARNING RS 3000 PER MONTH ONLY AND MADE SALES TO THE ASSESSEE OF RS. 30,000 DURING THE YEAR. HE H AD NO KNOWLEDGE OF ANY WHEREABOUTS AND NAME AND COMPLETE ADDRESSES ANY OF THE PURCHASES PARTIES, TRANSPORTERS AND VEHICLE N ETC F OR THE FINANCIAL YEAR 11-12 TO TILL DATE. NO ACCOUNT BOOKS/RECORDS SALE/P URCHASE/BILLS ETC AVAILABLE WITH THE HIM AS PER STATEMENT RECORDED AN D NEITHER PRODUCED ON 10-10-2014 IN RESPONSE TO SUMMONS U/S 131 AND AL SO AS PER ENQUIRIES MADE. AS STATED HE MADE SALES TO ASSESSEE (M/S G. D ENTERPRISES AT RS 30000 (THIRTY THOUSAND PER ANNUM) DURING THE RELEVANT PERIOD AND FOR THE LAST 4-5 YEARS. HE ALSO DENIED HAVING KNOWLEDGE OF THE ADDRESS OF THE ASSESSEE. 3.3 ON ENQUIRIES MADE BY THE OFFICE ON 09-10-2014, AT PREMISES OF M/S LOKNATH AT 43/H/19/25, ' CHAWAL PATTL ROAD, KOLKAAT A-700010, NOT FOUND AND PREMISES AT 43/H/12/2, CHAWAL PTI ROAD, K OLKATA-700010 VIDE DETAILED REPORT, PERSON FOUND TO BE A POOR LAB OURER IN THE FACTORY, NO BUSINESS PREMISE, GODOWN OR ACTUAL EXISTENCE OF BUSINESS, NO LEATHER GOODS (STOCK )NO MACHINERY, NO ACCOUNT RECO RDS, NO RECEIPT OR AND SUPPLY OF GOODS FOUND AT ADDRESS A ABOVE {ADDRE SS OF FIRM AT PREMISES OF M/S LOKNATH AT 43/H/19/25, , CHAWAL PAT TI ROAD, KOLKATA- 700010, NOT FOUND AND PREMISES AT 43/H/12/2, CHAWAL PTI ROAD, KOLKATA-700010 FOUND TOTALLY A RESIDENCE (SMALL ONE ROOM ONLY) AND SITUATED IN A SLUM AREA 3-4 FAMILY MEMBERS WERE LI VING THERE. PERSON SH DEBASISH SAHA FOUND TO BE WORKING AS LABOUR IN A LEATHER FACTORY (AS TOLD BY HIS MOTHER ALSO) HAVING NOT ANY BUSINES S TRANSACTION WITH ASSESSEE AND LIVING A SLUM AREA AND STRUGGLE FOR EA RNING THEIR LIVELIHOOD. NO ACCOUNT BOOKS/RECORDS OF SALE/PURCHA SE/BILLS ETC AVAILABLE WITH THE ABOVE PERSON AS PER ENQUIRIES AN D AS STATED BY THE PERSON AND NEITHER PRODUCED, IN RESPONSE TO SUMMONS U/S 131.STATE AT RETURNS ARE NOT FILLED. IN THE DETAILED STATEMEN T RECORDED ON 13-10- 2014 BY SH DEBASHISH SAHA (ALSO CONFIRMED IN LOCAL BANGAL LANGUAGE) THAT HE DOES NOT KNOW ANY OF THE PURCHASE PARTY, TR ANSPORTER OR VIDE NO ETC, NO ACCOUNTS/ RECORDS AND DOES NOT KNOW ANYTHIN G ABOUT RETURN OF INCOME AND ITS DETAILS ETC, AND DOES NOT HAVE ANY E XPLANATION AND KNOWLEDGE ABOUT THE AMOUNT WITHDRAWN FROM THE BANK IN CASH THROUGH CHEQUES AND AUDIT REPORT IS NOT BASED ON ACCOUNTS A ND DOCUMENTS AND HE DID NOT SUBMIT ANY RECORD BEFORE THE ACCOUNTANT AND THE AUDITOR AND SH UTTAM DASS ACCOUNTANT GOT THE REPORT FROM SH T.K PANDA AND CO, ON ENQUIRY IT WAS FOUND THAT SH UTTAM DASS ALSO FOU ND TO BE PART TIME ACCOUNTANT OF THE ASSESSEE IN THE PAST AS STATED HI M ON 16-10-2014 AND WHEN ASKED THAT AS STATED BY DEBASHISH SAHA ON 13-10-2014 THAT THE AUDIT REPORT IS NOT BASED ON ACCOUNTS AND DOCUM ENTS AND HE IS NOT PAYING ANY SALARIES, ETC, HE DIDN'T SUBMIT ANY RECORD BEFORE HIM AND AUDITOR AND HE (UTTAM DASS) GOT THE REPORT FROM M/S TK PANDA & CO.. PLEASE EXPLAIN AS TO WHY THE MATTER MAY NOT BE REFERRED TO HIGHER AUTHORITIES FOR NECESSARY ACTION AND ALSO AS PER TH E IT ACT. FOR PROSECUTION U/S 277 A AND 278, SH UTTAM DASS COULD NOT GIVE ANY SATISFACTORY EXPLANATION AND ONLY STATED THAT WITHO UT PAPERS, HE COULD ITA NO.585/KOL/2016 A.Y. 2012-13 M/S G.D. ENTERPRISE VS. ACIT, CIR-4 0,KOL. PAGE 4 NOT HAVE GOT THE AUDIT REPORT FROM M/S TK PANDA & C O. IT IS ALSO OBSERVED BY THE AO THAT THE ALLEGED SUPPLIER IS NOT HAVING ANY BUSINESS PREMISES AND ANY GODOWNS AND ONLY 2 ROOM R ESIDENCE AT ABOVE ADDRESS (TWO ROOMS EACH OF 8X9 SQ.FT) AND HAS FOUR MEMBERS IN HIS FAMILY AND PAYING RENT OF RS 200/-P.M. AS HOUSE RENT AND HAVE NOT ANY OTHER RESIDENCE. 3.4 ON ENQUIRIES MADE BY THE OFFICE ON 09-10-2014, NO BUSINESS PREMISE, GODOWN ACTUAL EXISTENCE OF BUSINESS AND SU PPLY OF GOODS FOUND AT ANY OF THE ADDRESS GIVEN AS ABOVE AND PERS ON FOUND TO BE HOUSE WIFE AND DID NOT ATTEND TO SUMMONS ISSUED U/S 131 FOR EXAMINATION ON OATH. HER HUSBAND SH RAJIB PODDAR, I NFORMED THAT HE IS NOT HAVING ANY BUSINESS PREMISES AND NOR ANY GOD OWNS, AND HE NEVER HAD ANY LINK OF RELATION AT ADDRESS OF THE FI RM GIVEN BY THE ASSESSEE AT 74 SOUTH TANGARA ROAD KOLKATA. DETAILED STATEMENT ON OATH DATED 10-10-2014 (ALSO CONFIRMED IN LOCAL BANG LE LANGUAGE) BY SH RAJIB PODDAR HUSBAND OF ABOVE THAT; HE HANDLES THE BUSINESS AND HAS NO RECORDS OF THE BUSINESS TRANSACTIONS INCLUDING S ALE-PURCHASE AND BILLS OF SALE-PURCHASE AND HENCE NOT PRODUCED. HE D OESN'T KNOW THE IDENTITY, WHEREABOUTS AND ADDRESS OF ANY OF THE PUR CHASE PARTIES. HE DOESN'T KNOW THE NAME & ADDRESS OR IDENTITY AND WHE REABOUTS OF THE TRANSPORTER FOR SUPPLY OF GOODS. HE IS NOT HAVING A NY BUSINESS PREMISES AN ANY GODOWNS; HE HAVE ONLY 3-ROOM RESIDE NTIAL HOUSE (TWO ROOMS EACH OF 12X12 SQ.FT AND ONE ROOM OF 9X7 SQ.FT ). THIS PROPERTY IS ANCESTRAL HOUSE OF FIVE MEMBERS OF MY FAMILY. HE IS NOT FILLING ANY STATE VAT RETURN AND HE DON'T KNOW THE BANK ACCOUNT NO OF HIS CONCERN. WHEN ASKED TO HER HUSBAND THAT AS PER THE ACCOUNT S TATEMENT IN THE BOOKS OF M/S GD ENTERPRISE FOR THE FY 2011-12, CONF IRMED BY HER, YOU HAVE RECEIVED AN AMOUNT OF RS.1,63,68,706/- IT IS S TATED THAT THE PAYMENT IS AGAINST SALE TO M/S GD ENTERPRISE. THE N AME AND IDENTITY AND ADDRESS OF ANY OF THE PARTIES (PERSON) TO WHOM PAYMENTS MADE AGAINST THIS AMOUNT IS NOT KNOWN TO THEM;. HER HUSB AND COULD NOT EXPLAIN AS WHY AMOUNTS HAS BEEN WITHDRAWN FROM THE BANK IN CASH THROUGH SELF-CHEQUE, HE COULD ALSO NOT INFORMED ABO UT RETURN OF INCOME FILLED, HE STATED THAT, HE ONLY KNEW THAT RETURN HA S BEEN FILLED, BUT DID NOT KNOW THE DETAILS OF THE RETURNS FILLED. EVEN WH EN THE PROPRIETOR COULD NOT ATTEND AND EXPLAIN ANYTHING GOING TO CONC LUDE THAT TRANSACTIONS AND BUSINESS NOT REAL AND NO ACTUAL SU PPLY OF GOODS TO THE ASSESSEE. 3.5 THE ASSESSEE DID NOT FURNISH ANY EXPLANATION AN D DENIED FOR CROSS EXAMINATION OF THE AFORESAID PARTIES AND THEIR STAT EMENT WAS NOT CONTROVERTED NEITHER FINDING OF THE AO WERE CONTROV ERTED. 4. THE ASSESSEE HAS SUBMITTED PHOTO COPY OF PURCHAS E BILLS AND INVOICES OF M/S S.R. ENTERPRISES, M/S B.D. ENTERPRISES, M/S LOK ENATH ENTERPRISES & M/S M.O. ENTERPRISES. I HAVE PERUSED THE BILLS & INVOIC ES OF ABOVE PARTIES SUBMITTED BY ASSESSEE DURING THE COURSE OF APPELLAT E PROCEEDINGS. THESE PURCHASE BILLS DO NOT HAVE ANY TELEPHONE NO. OR SAL E TAX REGISTRATION NO. THE SO CALLED CLAIMED BILLS ARE SHOWN TO BE RECEIVED FR OM DIFFERENT FOUR PARTIES ITA NO.585/KOL/2016 A.Y. 2012-13 M/S G.D. ENTERPRISE VS. ACIT, CIR-4 0,KOL. PAGE 5 NAMELY M/S S.R. ENTERPRISES, M/S B.O. ENTERPRISES, M/S LOKENATH ENTERPRISES & M/S M.O ENTERPRISES BUT THESE ALL BILLS AND CHALL ANS ARE HAVING SAME HANDWRITING, WHICH CLEARLY SHOWS THAT THESE BILLS A RE WRITTEN BY ONLY ONE PERSON. EVEN CHALLANS ARE ALSO WRITTEN BY THE SAME PERSON. THIS PECULIAR FEATURE OF THESE BILLS IS NOT POSSIBLE IN ORDINARY COURSE OF PURCHASE BECAUSE THE ADDRESS OF ALL THESE FOUR PARTIES ARE DIFFERENT AND DISTANTLY LOCATED. CLOSE PERUSAL OF THE BILLS OF M/S M.D ENTERPRISES AND M/S S.R. ENTERPRISES SHOWS THAT THE IR PRINTED PRO FORMA IS ALSO SAME. CONSIDERING THE SAME HANDWRITING, SAME P RO FORMA OF PURCHASE BILL AND INVOICES, WITHOUT ANY SALE TAX DETAIL OR T ELEPHONE NO. I DONT FIND ANY INFIRMITY WITH THE FINDING OF THE AO THAT THESE BIL LS ARE COOKED BY THE ASSESSEE WITHOUT ANY SUPPORTING EVIDENCE (SCAND COPY OF FOUR BILLS IN ORDER TO SHOW THE HANDWRITING AND PROVISION FORMA IS PLACED). 5. APPELLANT MAIN RELIANCE IS PAYMENT TO SUPPLIERS BY CBEQUES. IN THE CASE OF CIT V. PRECISION FINANCE (P) LTD. (1994) 208 ITR 46 5 HON'BLE CALCUTTA HIGH COURT HAS HELD THAT IT WAS FOR THE ASSESSEE TO PROV E THE IDENTITY OF THE CREDITORS, THEIR CREDITWORTHINESS AND THE GENUINENE SS OF THE TRANSACTIONS. ON THE FACTS OF THIS CASE, THE TRIBUNAL DID NOT TAKE I NTO ACCOUNT ALL THESE INGREDIENTS WHICH HAD TO BE SATISFIED BY THE ASSESS EE. MERE FURNISHING OF THE PARTICULARS WAS NOT ENOUGH. THE ENQUIRY OF THE ITO REVEALED THAT EITHER THE ASSESSEE WAS NOT TRACEABLE OR THERE WAS NO SUCH FIL E AND, ACCORDINGLY, THE FIRST INGREDIENT AS TO THE IDENTITY OF THE CREDITOR S HAD NOT BEEN ESTABLISHED. 1/ THE IDENTITY OF THE CREDITORS HAD NOT BEEN ESTABLIS HED, CONSEQUENTLY, THE QUESTION OF ESTABLISHMENT OF THE GENUINENESS OF THE TRANSACTIONS OR THE CREDITWORTHINESS OF THE CREDITORS DID NOT AND COULD NOT ARISE. THE TRIBUNAL DID NOT APPLY ITS MIND TO THE FACTS OF THIS PARTICULAR CASE AND PROCEEDED ON THE FOOTING THAT SINCE THE TRANSACTIONS WERE THROUGH TH E BANK ACCOUNT, IT WAS TO BE PRESUMED THAT THE TRANSACTIONS WERE GENUINE. IT WAS NOT FOR THE ITO TO FIND OUT BY MAKING INVESTIGATION FROM THE BANK ACCOUNTS UNLE SS THE ASSESSEE PROVED THE IDENTITY OF THE CREDITORS AND THEIR CREDITWORTH INESS. MERE PAYMENT BY ACCOUNT PAYEE CHEQUE WAS NOT SACROSANCT NOR COULD I T MAKE A NON- GENUINE TRANSACTION GENUINE. HENCE, THE TRIBUNAL WAS NOT JU STIFIED IN DELETING THE ADDITIONS OF UNEXPLAINED CASH CREDITS AND INTEREST THEREON .HENCE, APPELLANT ARGUMENT THAT PAYMENT IS MADE THROUGH BANK ACCOUNT DOES NOT MAKE IN GENUINE PURCHASE INTO GENUINE PURCHASE. 6. IN THE CASE OF LA MEDICA (2001) 250 ITR 575 HON' BLE DELHI HIGH COURT HAS HELD THAT THOUGH ESSENTIALLY THE CONCLUSIONS OF THE TRIBUNAL HAD THE COLOUR OF FACTUAL FINDINGS, STILL IT WAS FOUND THAT THE TRIBU NAL HAD NOT TAKEN INTO CONSIDERATION RELEVANT MATERIALS AND HAD ALSO ACTED ON IRRELEVANT MATERIALS. THE FACT THAT THE ALLEGED SELLERS HAD BEEN FOUND TO BE PERSONS WITH NO MEANS TO EFFECT PURCHASES OR TO CARRY ON BUSINESS WAS A F ACTOR WHICH DID NOT APPEAR TO HAVE BEEN CONSIDERED BY THE TRIBUNAL IN ITS PROP ER PERSPECTIVE. WHAT WAS UNDER CONSIDERATION WAS WHETHER THE PURCHASES WERE MADE FROM KE AS WAS CLAIMED BY THE ASSESSEE. AMPLE MATERIAL HAD BEEN BR -OUGHT ON RECORD BY THE REVENUE TO SHOW THAT THE PURCHASES WERE, IN FACT, N OT MADE FROM KE. THESE WERE SOME OF THE RELEVANT MATERIALS WHICH HAD NOT B EEN CONSIDERED BY THE TRIBUNAL. ONCE IT WAS ACCEPTED THAT THE SUPPLIES WE RE NOT MADE BY KE TO WHOM PAYMENTS WERE ALLEGED TO HAVE BEEN MADE, THE Q UESTION AS TO WHETHER ITA NO.585/KOL/2016 A.Y. 2012-13 M/S G.D. ENTERPRISE VS. ACIT, CIR-4 0,KOL. PAGE 6 THE PURCHASES WERE MADE FROM SOME OTHER SOURCE OUGH T NOT TO HAVE WEIGHED WITH THE TRIBUNAL AS A FACTOR IN FAVOUR OF THE ASSE SSEE. THE CONCLUSIONS OF THE TRIBUNAL WERE, THEREFORE, CLEARLY ERRONEOUS, CONTRA RY TO MATERIALS ON RECORD AND HAD BEEN ARRIVED AT WITHOUT TAKING INTO CONSIDE RATION RELEVANT MATERIAL AND PLACING RELIANCE ON IRRELEVANT MATERIALS. A QUESTION OF FACT BECOMES A QUESTION OF LAW IF THE FINDING IS NOT FOUNDED ON ANY EVIDENCE OR MATERIAL OR IF IT IS CONTRARY TO EV IDENCE. SIMILAR IS THE POSITION IF IT IS PERVERSE OR THERE IS NO DIRECT NEXUS OR LI NK BETWEEN CONCLUSION OF FACT AND THE PRIMARY FACT UPON WHICH THE CONCLUSION IS B ASED. WHERE THE TRIBUNAL HAS ACTED ON PARTLY RELEVANT AND PARTLY IRRELEVANT MATERIALS, AND IT IS NOT POSSIBLE TO SAY AS TO WHAT EXTENT LATTER HAS INFLUE NCED ITS MIND, THE FINDING IS VITIATED BECAUSE OF USE OF IRRELEVANT MATERIAL. THA T GIVES RISE TO A QUESTION OF LAW. HENCE, THE TRIBUNAL HAD NO MATERIAL TO COME TO THE CONCLUSION THAT THE IMPUGNED SUM COULD NOT BE TREATED AS THE ASSESSEE'S INCOME FROM UNDISCLOSED SOURCE. THE ABOVE OBSERVATIONS OF HON' BLE DELHI HIGH COURT IS CLEARLY APPLICABLE IN CASE OF ASSESSEE AS THE ABOVE PARTIES IN QUESTION W ERE MANS OF NO MEAN AND MERELY BOOKED ENTRY WAS MADE BY ASSESSEE IN ORDER T O REDUCE TO TAXABLE PROFIT. 7. FROM THE ABOVE FACTS AND LEGAL POSITIONS, IT IS AMPLE CLEAR THAT APPELLANT INFLATED HIS PURCHASES TO REDUCE HIS TAXABLE PROFIT S. IN SUPPORT OF HIS CLAIM HE FAILED TO PRODUCE ANY MATERIAL EXCEPT HIS OWN DOCUM ENTS AND BANK ACCOUNT. ASSESSING OFFICER MADE INQUIRIES AND GIVEN PROPER O PPORTUNITY TO EXPLAIN THE GENUINENESS OF THE PURCHASE, BUT ASSESSEE FAILED TO PRODUCE ANY MATERIAL OR CONTROVERT THE FINDING OF ASSESSING OFFICER. I NOT FIND ANY INFIRMITY IN THE ORDER OF ASSESSING OFFICER. HENCE, I CONFIRM THE ADDITION OF RS.3,39,04,027 MADE BY ASSESSING OFFICER. 3. WE HAVE GIVEN OUR THOUGHTFUL CONSIDERATION TO R IVAL CONTENTIONS. THE ASSESSEES DETAILED PAPER BOOK RUNNING INTO 122 PAG ES COMPRISING OF ACCOUNT COPIES OF M/S M.D, LEATHER, M.D. ENTERPRISES, LOKEN ATH ENTERPRISE AND S.R. ENTERPRISE, COPY OF STOCK REGISTER, FINISHED GOODS AND COPY OF TAX AUDIT REPORT U/S 44AB FOR THE IMPUGNED ASSESSMENT YEAR; STANDS P ERUSED. ITS LATTER PAPER BOOK IN VOLUME-2 PROVIDES DETAILS OF BANK STATEMENT S REGARDING THE SAID FOUR PARTIES LEDGER ACCOUNTS, AUDITED ACCOUNTS STATEMEN T GIVING PURCHASE RATE(S) OF FOUR PARTIES AND PROFIT PERCENTAGE FOR THREE YEA RS ALSO FORMS PART OF RECORD BEFORE US. THE SOLE ISSUE IN THE INSTANCE CASE IS T HAT OF GENUINENESS OF ASSESSEES PURCHASES CLAIMS AMOUNTING TO 3,39,04,027/- ON VARIOUS FACTS. THERE IS NO DISPUTE THAT THE ASSESSEE HAS PLACED ON RECORD ALL DOCUMENTARY ITA NO.585/KOL/2016 A.Y. 2012-13 M/S G.D. ENTERPRISE VS. ACIT, CIR-4 0,KOL. PAGE 7 PARTICULARS BEFORE THE LOWER AUTHORITIES WHO ARE OF THE VIEW THAT SAID PARTIES ARE NON-GENUINE ENGAGED IN BOGUS PURCHASE ENTRY PRO VIDING BUSINESS. WE FIND IN THIS BACKDROPS OF FACTS THAT THE TRIBUNALS CO-ORDINATE BENCHS DECISION IN ITA NO.4736 VIS-A-VIS 5207/MUM/2014 IN SHRI ASHWINI PURSHOTAMA BAJAJ VS.ITO DECIDED ON 14.12.2016 HOLDS THAT IT IS ONLY THE PROFIT COMPONENT IN CASE OF SUCH AN ISSUE WHAT REQUIRED TO BE ADDED AS UNDER:- 4. THE BRIEF FACTS OF THE CASE ARE THAT THE ASSESS EE IS AN INDIVIDUAL RUNNING A PROPRIETORSHIP FIRM NAMELY M/S THE SHOE BOX INC RET AIL STORE OF FOOTWEAR, BAGS, BELTS, WALLETS AND LEATHER GOODS, BOUTIQUE ETC. HAV ING SHOPS AT PUNE, AHMEDABAD, JALANDHAR AND OFFICE AT MUMBAI. IT WAS OBSERVED BY THE A.O. THAT THE ASSESSEE HAD INCURRED EXPENDITURE IN TERMS OF PURCHASES OF RS.4, 89,88,555.31 , OUT OF WHICH IT WAS ALLEGED BY THE AO THAT PURCHASES OF RS.1,13,44,77/- WAS MADE FROM THE ALLEGEDLY BOGUS PARTIES AS PER INFORMATION RECEIVED FROM SALE S TAX DEPARTMENT, GOVERNMENT OF MAHARASHTRA , WHO AS PER GOVERNMENT OF MAHARASHT RA WEB-SITE ARE SUSPICIOUS PARTIES PROVIDING ACCOMMODATION ENTRIES AND ARE THU S BOGUS BILL GIVING ENTITIES WITHOUT DOING ANY BUSINESS , AS DETAILED HEREUNDER: S NO. NAME OF PARTIES TIN FINANCIAL YEAR AMOUNT 1 ROHIT ENTERPRISES 27020680974V 2009-10 RS. 8,84,584 2 DEEP ENTERPRISES 27750595164V -DO- RS. 18,09,710 3 KWALITY ENTERPRISES 27790284742V -DO- RS. 60,33,496 4 V3 ENTERPRISES 27860613194V -DO- RS. 26,16,988 TOTAL RS.1,13,44,778/- THE SALES TAX DEPARTMENT CONDUCTED INDEPENDENT ENQU IRIES IN EACH OF THE ABOVE PARTIES AND CONCLUDED THAT THESE PARTIES WERE ENGAG ED IN THE BUSINESS OF PROVIDING ACCOMMODATION ENTRIES ONLY. THE NOTICES WERE ISSUED BY THE AO U/S 133(6) OF THE ACT TO THESE FOUR PARTIES WHICH RETURNED BACK UNSER VED. THE ASSESSEE WAS ASKED BY THE AO TO PRODUCE ALL THESE PARTIES. THE ASSESSEE F AILED TO PRODUCE THESE PARTIES BEFORE THE AO TO PROVE GENUINENESS OF THE CLAIM. TH E ASSESSEE SUBMITTED THAT THE PURCHASES WERE MADE THROUGH BROKERS WHO ARE NOW NOT CO-OPERATING WITH THE ASSESSEE. THE ASSESSEE REQUESTED THAT GP RATIO BE E STIMATED AT 46% ON THESE PURCHASES. THE ASSESSEE ALSO COULD NOT OFFER EXPLAN ATION REGARDING THE SOURCE OF THE SAID EXPENDITURE AS WELL THAT PURCHASES ARE GENUINE . THE AO OBSERVED THAT THESE PARTIES DENIED TO SUPPLYING GOODS AS BEING ACCOMMOD ATION ENTRIES, HENCE THE AO OBSERVED THAT THE HUMAN PROBABILITY IS THAT GOODS A S MENTIONED IN THE PAPER TRANSACTIONS HAVE BEEN PURCHASES BY THE ASSESSEE TH ROUGH AN UNDISCLOSED ENTITY, WHOSE IDENTITY THE ASSESSEE DOES NOT WISH TO DISCLO SED AND ALSO PURCHASES WERE MADE FROM UNDISCLOSED SOURCE OF INCOME. THE SAID UN EXPLAINED EXPENDITURE OF RS. 1,31,88,227/- (BEING MAXIMUM CREDIT BALANCE OUTSTAN DING IN THE LEDGER ACCOUNTS OF THE PARTIES, AS AGAINST PURCHASES OF RS.1,13,44,778 /- FROM THESE FOUR PARTIES) WAS DEEMED TO BE THE INCOME OF THE ASSESSEE AND WAS ADD ED TO THE INCOME OF THE ASSESSEE U/S 69C OF THE ACT WHICH WAS ALLEGED TO BE EXPENDED THROUGH AN UNDISCLOSED SOURCE OF INCOME TO CARRY OUT PURCHASE FROM AN UNDISCLOSED ENTITY, VIDE ASSESSMENT ORDER DATED 28-03-2013 PASSED BY THE AO U/S 143(3) OF THE ACT. 5. AGGRIEVED BY THE ASSESSMENT ORDER DATED 28.03.20 13 PASSED BY THE A.O. U/S 143(3) OF THE ACT, THE ASSESSEE FILED FIRST APPEAL BEFORE THE LD. CIT(A). 6. BEFORE THE LD. CIT(A), THE ASSESSEE HAS MADE TH E FOLLOWING SUBMISSIONS:- ITA NO.585/KOL/2016 A.Y. 2012-13 M/S G.D. ENTERPRISE VS. ACIT, CIR-4 0,KOL. PAGE 8 GROUND NO.1 TO 5 : ADDITION OF UNEXPLAINED EXPENDI TURE U/S.69C OF RS.1,31,88,2271- IS ERRONEOUS: THE APPELLANT HUMBLY SUBMITS THAT THE ADDITION MADE IN ASSESSMENT U/S.69C OF ALLEGED UNEX PLAINED EXPENDITURE OF PURCHASE MADE FROM 4 PARTIES NAMED M/S ROHIT ENTERP RISES, M/S DEEP ENTERPRISES, M/S KWALITY ENTERPRISES AND M/S V3 ENT ERPRISES OF RS.1,13,44,776/- AND OF THE OPENING BALANCE OF SUCH 4 PARTIES OF RS.18,43,451/- TOTALING TO RS.1,31,88,227/- IS ERRO NEOUS AND IS UNJUSTIFIED ON UNDERSTATED REASONS :- 1.1 THE ENTIRE ADDITION HAD BEEN MADE PURELY ON THE BASIS OF ASSUMPTION AND SURMISE. THERE IS ABSOLUTELY NO EVIDENCE OR MATERIA L ON RECORD TO JUSTIFY THAT THE APPELLANT HAD INCURRED ANY UNEXPLAINED EXPENDIT URE TO PURCHASE THE GOODS. THE LD. AO HAD NOT BROUGHT ANY EVIDENCE ON R ECORD THAT THE APPELLANT HAD MADE THE UNEXPLAINED PAYMENTS TO ANY UNIDENTIFI ED PARTIES, IN ABSENCE OF WHICH THE PROVISION OF SEC 69C CANNOT BE INVOKED . THE APPELLANT, DURING COURSE OF ASSESSMENT, FURNISHED VARIOUS DOCUMENTARY EVIDENCES SUCH AS PURCHASE AND SALE BILLS, CONFIRMATION OF ACCOUNT, P AN OF SUPPLIERS, DETAILS OF PURCHASE, PAYMENTS MADE TO THE SAID 4 PARTIES AND B ANK STATEMENTS TO JUSTIFY THE GENUINENESS OF THE RECORDED PURCHASE AND PAYMEN TS THEREON. THE APPELLANT ALSO FURNISHED A DETAILED STATEMENT DISPL AYING THE PURCHASE MADE FROM SUCH 4 PARTIES AND CORRESPONDING SALES MADE AG AINST SUCH PURCHASES AND PROFIT EARNED THEREON. THE LD. A.O, IGNORING TH E ABOVE STATED DOCUMENTS, ERRED SERIOUSLY IN HOLDING THAT THE APPELLANT'S PUR CHASE AS INGENUINE AND ASSUMED THAT THE APPELLANT WOULD HAVE INCURRED UNEX PLAINED PURCHASE EXPENDITURE TO SOURCE THE SALES; 1.2 THE LD. A.O IS NOT JUSTIFIED IN MAKING A HARSH PRESUMPTION THAT THE APPELLANT WOULD HAVE PROCURED THE GOODS FROM SOME U NIDENTIFIED SOURCES AND INCURRED UNEXPLAINED EXPENDITURE (PURCHASES) AGAINS T THE SALES ACCEPTED AS GENUINE. IN THIS CONTEXT, THE APPELLANT SUBMITS THA T ITS PURCHASES HAD BEEN MADE ONLY THROUGH BROKERS WHO SUPPLIED THE GOODS AT PREMISE (ON SITE) OF THE APPELLANT AND FURNISHED THE BILLS OF SUCH 4 PARTIES TO THE APPELLANT FOR MAKING THE PAYMENT AT AGREED TERMS. THE APPELLANT, AS DESI RED BY BROKERS, MADE ONLY THE CHEQUE PAYMENTS AGAINST THESE PURCHASE BIL LS AND APPELLANT HAD NOT MADE ANY UNACCOUNTED CASH PAYMENT FOR PURCHASE OF G OODS. THE APPELLANT ALTERNATIVELY SUBMITS THAT EVEN IT IS PRESUMED THAT THE APPELLANT HAD NOT MADE PURCHASES FROM SUCH 4 PARTIES, THEN IT IS POSSIBLE THAT SUCH BROKERS WOULD HAVE PROCURED THE GOODS FROM GREY (LOCAL) MARKET AN D HAD SUPPLIED THE PHYSICAL GOODS WITH ALLEGED INGENUINE BILLS. THE LD . A.O HAD NOT DENIED THE FACT THAT THE APPELLANT HAD ACTUALLY RECEIVED THE G OODS, THROUGH BROKERS, AT ITS SITE OFFICE AND SUCH GOODS HAD BEEN ACTUALLY SOLD B Y THE APPELLANT AT PROFIT MARGIN OF OVER 85 % ON PURCHASE (45.49% ON SALES). THE APPELLANT DOES NOT HAVE ANY SOURCE OF UNACCOUNTED INCOME, THUS THE POS SIBILITY OF UNEXPLAINED PAYMENT WOULD NOT ARISE. IN ANY CASE, LD. A.O DID N OT BRING ANY EVIDENCE ON RECORD TO JUSTIFY ANY SORT OF UNEXPLAINED PAYMENTS MADE TO THE ALLEGED UNIDENTIFIED PARTIES, ACCORDINGLY THE ADDITION U/S. 69C IS UNJUSTIFIED, (92 TTJ 1126 (AHD), 31 DTR 456 (JP), 147 TTJ 308 (DEL), 10 DTR 281 (JP); 1.3 THE LD. A.O HAD NOT REJECTED THE APPELLANT'S BO OKS OF ACCOUNTS U/S.145(3) OF THE ACT AND HAVING ACCEPTED THE BOOK RESULTS IS NOT JUSTIFIED IN INVOKING THE PROVISION OF SEC 69C OF THE ACT ON INCORRECTLY ASSU MING THAT THE APPELLANT HAD INCURRED UNEXPLAINED EXPENDITURE TO SOURCE THE PURC HASE MADE FROM UNKNOWN PARTIES; 1.4 THE APPELLANT ALSO SUBMITS THAT THE ADDITION OF ENTIRE PURCHASE IS UNJUSTIFIED AS IT WOULD LEAD TO A CASE OF TAXING TH E ENTIRE SALES WITHOUT ALLOWING ITA NO.585/KOL/2016 A.Y. 2012-13 M/S G.D. ENTERPRISE VS. ACIT, CIR-4 0,KOL. PAGE 9 THE DEDUCTION OF THE CORRESPONDING PURCHASE. THERE CANNOT BE A CASE OF ONLY SALES WITHOUT THE PURCHASES. IN SHORT, IF THERE IS A SALE, THEN IT IS REQUIRED TO THE PRESUMED THAT THERE IS A CORRESPONDING PURCHASE AGAINST EACH SUCH SALE AND MOREOVER, IN IMPUGNED CASE, THERE IS A DIRECT N EXUS OF SALES WITH THE PURCHASES. [38 TAXMANN.COM 385 (GUJ), 355 ITR 290 ( GUJ), 263 ITR 610 (MP), 304 ITR 52 (MP), 258 ITR 654 (GU)); AS PER COMPARATIVE CHART OF SALES VIS-A-VIS PURCHAS E (COPY ENCLOSED), IT IS EVIDENT THAT EACH PURCHASE CORRESPONDS TO THE SALES . FOR EXAMPLE : THE PURCHASE OF 257 PAIRS OF FOOTWEAR MADE VIDE BILL NO 16 ON 17TH SEPTEMBER, 2009 AGGREGATING TO RS. 126,333 FROM DEEP ENTERPRIS ES WERE SOLD ON 23RD SEPTEMBER, 2009 AT RS. 1,44,273/-. 1.5 THE APPELLANT IN AUDITED P&L ACCOUNT, DISCLOSED A HIGHER GROSS PROFIT @ 45.49 % ON SALES (85% ON PURCHASE) WHICH IS MOST RE ASONABLE IN TRADING ACTIVITY OF FOOTWEARS. IN RESPECT OF DISPUTED PURCH ASE MADE FROM THE 4 PARTIES, THE APPELLANT DISCLOSED THE GROSS PROFIT @ 41.75 % ON SALES, STATED AS UNDER :- PURCHASE FROM THE 4 PARTIES = RS. 1,13,44,778/- SALES CORRESPONDING TO ABOVE PURCHASES = RS. 1,93, 83,886/- CLOSING STOCK FROM ABOVE PURCHASE = RS. 5 2,882/- GROSS PROFIT =RS.80,91,990/-(41.75%) WITHOUT PREJUDICE, THE APPELLANT MAKES A PRAYER TO ADOPT THE CONCEPT OF REAL INCOME AND ESTIMATE THE TOTAL INCOME @ 45.49 % ON S ALES WHICH WOULD TAKE CARE OF THE INGENUINE PURCHASE. IT IS TO FURTHER SU BMIT THAT EVEN IN CASE OF BEST JUDGMENT ASSESSMENT IS PASSED , AFTER REJECTING THE BOOKS OF ACCOUNTS, THEN, IN SUCH CASE, THE TOTAL INCOME IS ESTIMATED, ON THE BASIS OF HONEST GUESS WORK AS PER THE NORMAL PROFIT IN THE INDUSTRY. [KACHWALA GEMS - 288 ITR 10(SC). THE APPELLANT MAKES A PRAYER TO ADOPT THE CONCEPT O F REAL INCOME AND ESTIMATE THE SUPPRESSED INCOME OF RS. 7,24,957/- (@ 45.'49% - 41.75% ON RS.1,93,83,886/-) THAT REASONABLY WOULD HAVE BEEN E ARNED IN SUCH TRADING ACTIVITY; 1.6 THE APPELLANT TO SUBSTANTIATE, THE GENUINENESS OF THE DISCLOSED PURCHASE AND CORRESPONDING SALES, RELIED UPON THE UNDERSTATE D DOCUMENTS AS UNDER:- ' A) DETAILS OF THE FOUR PURCHASES PARTIES ALONG W ITH THEIR ADDRESS AND PAN; B) A TABULAR CHART (QUANTITYWISE AND VALUEWISE) DIS PLAYING PURCHASE VIS-A-VIS SALES DISPLAYING THE BILL NUMBERS OF SUPPLIERS/CUST OMERS, QUANTITY AND AMOUNTS; C) BILL WISE AND QUANTITY WISE DETAILS OF PURCHASE MADE FROM SUCH 4 SUPPLIERS; D) DETAILS OF PAYMENTS MADE TO SUCH 4 PURCHASE PART IES BY A/C PAYEE CHEQUES AND BANK STATEMENTS; E) PURCHASE BILLS; THE APPELLANT ON FURNISHING THE ABOVESTATED DETAILS /DOCUMENTS HAD REASONABLY DISCHARGED HIS PRIMARY ONUS TO SUBSTANTI ATE THE GENUINENESS OF THE PURCHASE. HOWEVER, LD.AO HAD NOT DISCHARGED THE HEAVY ONUS CASTED UPON HIM TO PROVE CONTRARY THE FACTS AND HARSHLY MA DE THE ADDITION OF UNEXPLAINED EXPENDITURE U/S.69C OF THE ACT. [29 DTR 267 (PUNE), 10 SOT 319 (HYD) (TM)J. 1.7 THE APPELLANT SUBMITS THAT NO CONTRARY EVIDENCE HAD BEEN BROUGHT ON RECORD TO JUSTIFY THAT THE APPELLANT'S PURCHASES AR E INGENUINE. THE SAID 4 PURCHASE PARTIES IRRESPONSIBLY GAVE A GENERAL STATE MENT, WITHOUT STATING ITA NO.585/KOL/2016 A.Y. 2012-13 M/S G.D. ENTERPRISE VS. ACIT, CIR-4 0,KOL. PAGE 10 NAME OF THE APPELLANT, THAT IT HAD ISSUED ONLY ACCO MMODATION BILLS. SUCH GENERAL STATEMENT WAS RECORDED AT BACK OF THE APPEL LANT AND A COPY OF THE STATEMENT WAS NOT PROVIDED TO THE APPELLANT FOR CON FRONTATION AND EVEN NO OPPORTUNITY OF CROSS EXAMINATION WAS ALLOWED TO THE APPELLANT, THUS ADDITION U/S 69C ON THE BASIS OF MERE STATEMENT IS UNJUSTIFI ED AND MAY KINDLY BE DELETED (KISHINCHAND CHNELTEREM DECISION); 1.8 THE APPELLANT FURTHER SUBMITS THAT LD. AO IS NO T JUSTIFIED IN MAKING THE ADDITION OF THE OPENING BALANCE OF SUCH 4 PARTIES O F RS.18,43,451/-. THE APPELLANT HAD NOT CLAIMED THE PURCHASE EXPENSES OF RS.18.43,451/- IN IMPUGNED YEAR, THUS ADDITION OF SUCH PURCHASES (REL ATED TO EARLIER YEAR) CANNOT BE MADE IN IMPUGNED YEAR. FURTHER, LD. A.O. HAD ALREADY ISSUED THE NOTICE U/S 148 OF EARLIER YEAR VIZ. A.Y. 2009-10 AN D HAD PROPOSED TO MAKE THE ADDITION OF THE PURCHASE OF EARLIER YEAR VIZ. A. Y- 2009-10, THUS THE ADDITION OF PURCHASE MADE IN EARLIER YEAR WHOSE CLOSING BALANCE S ARE DISCLOSED AS OPENING BALANCE IN IMPUGNED YEAR IS UNJUSTIFIED. FU RTHER, THERE IS ABSOLUTELY NO EVIDENCE ON RECORD THAT THE OPENING BALANCE OF E ARLIER YEAR (PURCHASE OF LAST YEAR) WOULD HAVE BEEN PAID IN IMPUGNED YEAR OU T OF UNACCOUNTED SOURCE OF FUNDS, THUS ADDITION OF OPENING BALANCE OF RS. 1 8,43,451/- IS UNJUSTIFIED, THE APPELLANT RELIES ON UNDERSTATED DIRECT JUDICIAL DECISIONS :- ADDITION U/S. 69C CANNOT BE INVOKED IN ABSENCE OF THE FULL PROOF EVIDENCE . I) ITO VS. SUNSTEEL 92 TTJ 1126 (AHD-ITAT) II) NISRAJ REAL ESTATE & EXPORT(P) LTD VS. ACIT 31 DTR 456 (JP-ITAT) (TRIB) III) ACIT VS. KISHAN LAL JEWELS (P) LTD 147 TTJ 30 8(DEL-ITAT) IV) SHUBH LAXMI EXPORTS VS. ITO 10 DTR 281 (JP-ITA T) (TRIB) ONUS IS THE ON THE REVENUE TO PROVE THE PAYMENT TO INVOKE SEC.69C I) HIMALAYA DISTRIBUTORS VS. ITO 29 DTR 267 (PUNE-I TAT) II) M.P. MALLIWAL VS. JCIT 10 SOT 319 (HYD-ITA T) (TM) III) RAJMAL LEKNICNENC: VS. ACIT 791TD 84 (PUNE-IT A T) ONLY PROFIT EMBEDDED IN THE INGENUINE PURCHASE COUL D BE BROUGHT TO TAX . I) CIT VS. SIMIT P. SHETH 38 TAXMANN.COM 385 (GUJ-H C) II) CIT VS. BHOLANATH POLY FAB PVT LTD 355 ITR 290 (GUJ-HC) III) CIT VS. PRESIDENT INDUSTRIES 258 ITR 654 (GUJ -HC) IV) CIT VS. BALCHAND AJIT KUMER 263 ITR 610 (MP-HC) V) MAN MOHAN SADANI VS. CIT 304 ITR 152 (MP-HC) VI ) CIT VS. LEADERS VALVES (P) LTD 285 ITR 435 (P&H-HC) MERELY NON APPEARANCE OF SUPPLIERS WOULD NOT CONCLU DE THE PURCHASE AS INGENUINE I) CIT VS. NIKUNJ EXIMP ENTERPRISES (P) LTD 35 TAXM ANN.COM 384 (BOM-HC) IN VIEW OF THE ABOVE, A HUMBLE PRAYER IS MADE :-. A ) TO DELETE THE ADDITION U/S 69C OF RS 1,31,88,227/- OR ALTERNATIVELY, B) TO ADO PT THE CONCEPT OF REAL INCOME AND RESTRICT THE ADDITION ON ESTIMATING THE SUPPRESSED INCOME OF RS 7,24,957/- BEING 45.49% ON SALES CORRESPONDING TO A LLEGED INGENUINE PURCHASE (45.49% MINUS 41.75 % ON RS. 1,93,83,886) FOR WHICH THE APPELLANT SHALL EVER REMAIN GRATEFUL AND OBLIGE. THE LD. CIT(A) AFTER CONSIDERING THE SUBMISSIONS OF THE ASSESSEE CAME TO THE CONCLUSION THAT QUANTITATIVE DETAILS WERE MAINTAINE D AND THE ASSESSEE BEING ITA NO.585/KOL/2016 A.Y. 2012-13 M/S G.D. ENTERPRISE VS. ACIT, CIR-4 0,KOL. PAGE 11 A TRADER OF GOODS, THE A.O. HAS NOT DOUBTED THE GEN UINENESS OF SALES, COULD NOT HAVE GONE AHEAD AND MADE ADDITION IN RESPECT OF MAXIMUM CREDIT BALANCE OF PURCHASES ESPECIALLY WHEN THE A.O. HIMSE LF RECORDED A FINDING THAT THE ASSESSEE MADE THE PURCHASES FROM SOME OTHER PAR TY. THE LD. CIT(A) OBSERVED THAT THE ELEMENT OF PROFIT EMBEDDED IN BOG US PURCHASES WHICH THE ASSESSEE WOULD HAVE MADE FROM SOME UNKNOWN ENTITIES NEEDS TO BE COMPUTED. IT WAS OBSERVED BY LEARNED CIT(A) THAT TH E PURCHASES MADE FROM FOUR PARTIES DURING THE YEAR WAS RS. 1,13,44,778/- ON WHICH THE GP REFLECTED WAS 41% AS AGAINST 46% REFLECTED ON OVER ALL BASIS, HENCE, THERE WAS A SUPPRESSION OF GP RATIO TO THE TUNE OF 5%. THE LEAR NED CIT(A) OBSERVED THAT THE A.O. HAD HELD THAT THE ASSESSEE MUST HAVE PURCH ASED THE GOODS FROM SOMEONE ELSE AND NOT FROM THE FOUR PARTIES IN WHOSE NAMES THE BILLS WERE PROCURED AND HENCE, THE ONLY RECOURSE LEFT IS TO ES TIMATE THE PROFIT ELEMENT EMBEDDED IN THE PURCHASES MADE DURING THE YEAR OF R S. 1,13,44,778/- , RATHER THAN ON RS. 1,31,88,227/- (WHICH INCLUDED OP ENING BALANCE ADDED BY THE A.O.), WHICH WERE ESTIMATED BY LEARNED CIT(A) @ 12.5% OF THE PURCHASES MADE DURING THE YEAR OF RS.1,13,88,227/-. THE LD. C IT(A) ACCORDINGLY PARTLY ALLOWED THE APPEAL OF THE ASSESSEE VIDE APPELLATE O RDERS DATED 02-05-2014. 7.AGGRIEVED BY THE APPELLATE ORDERS DATED 02-05-201 4 PASSED BY THE LD. CIT(A) , BOTH THE ASSESSEE AND REVENUE ARE IN APPEA L BEFORE THE TRIBUNAL. 8. THE ASSESSEE IS CHALLENGING THE ADDITION MADE OF THE UNDISCLOSED PROFIT OF RS.14,18,097/- @12.5% ON PURCHASES OF RS.1,13,44,77 8/-, WHILE THE REVENUE IN ITS APPEAL IS CHALLENGING DELETION OF AD DITION MADE BY THE AO U/S 69C OF THE ACT TO THE TUNE OF RS.1,31,88,227/- WHIC H WAS RESTRICTED TO PROFIT ELEMENT EMBEDDED IN THE PURCHASES TO THE TUNE OF 12 .5% OF RS.1,13,44,778/. THE LD. COUNSEL FOR THE ASSESSEE SUBMITTED THAT THE FOLLOWING PARTIES WERE INCLUDED IN THE LIST OF BOGUS PARTIES BY SALES TAX DEPARTMENT OF GOVERNMENT OF MAHARASHTRA WITH WHOM THE ASSESSEE HAD MADE PURC HASES: S NO. NAME OF PARTIES TIN FINANCIAL YEAR AMOUNT 1 ROHIT ENTERPRISES 27020680974V 2009-10 RS. 8, 84,584 2 DEEP ENTERPRISES 27750595164V -DO- RS. 18,09, 710 3 KWALITY ENTERPRISES 27790284742V -DO- RS. 60,3 3,496 4 V3 ENTERPRISES 27860613194V -DO- RS. 26,16,988 TOTAL RS.1,13,44,778/- THE A.O. OBSERVED THAT THE ABOVE PARTIES ARE SUSPI CIOUS PARTIES WHO WERE PROVIDING ACCOMMODATION ENTRIES WITHOUT DOING ANY BUSINESS AS PER THE INFORMATION RECEIVED FROM SALES TAX DEPARTMENT, GOVERNMENT OF MAHARASHTR A AND THE ASSESSEE HAD MADE PURCHASES FROM THESE PARTIES WITHOUT ACTUAL SU PPLY OF GOODS. THE A.O. ALSO ISSUED NOTICE U/S 133(6) OF THE ACT ASKING TO FURNI SH CERTAIN DOCUMENTS OF THE ABOVE PARTIES BUT THE NOTICES WERE RETURNED BACK UNSERVED . THE ASSESSEE WAS ALSO ASKED TO PRODUCE THE PARTIES BUT THE ASSESSEE FAILED TO P RODUCE THE PARTIES. THE A.O. HAS MADE ADDITION U/S 69C OF THE ACT ON THE PEAK CREDIT OUTSTANDING IN THE BOOKS OF ACCOUNTS, WHEREBY ADDITION OF RS. 1,31,88,227/- WAS WRONGLY MADE , AS AGAINST TOTAL PURCHASES OF RS. 1,13,44,778/- MADE BY THE ASSESSEE FROM THESE 4 PARTIES. THE A.O. ADDED THE ENTIRE AMOUNT WHILE THE LD. CIT(A) HAS RE STRICTED THE ADDITION BY ESTIMATING GP RATIO OF 12.5% OF RS. 1,13,44,778/- BEING TOTAL PURCHASES MADE FROM THESE FOUR PARTIES. THE LD. COUNSEL FOR THE ASSESSEE SUBMITTED THAT THE SALES ARE NOT IN DOUBT WHICH IS ACCEPTED BY THE REVENUE. THE LD. COUNSEL A LSO DREW OUR ATTENTION TO THE ORDERS OF AUTHORITIES BELOW. WHILE, THE LD. D.R. RE LIED ON THE ORDER OF THE A.O. 9. WE HAVE CONSIDERED THE RIVAL CONTENTIONS AND ALS O PERUSED THE MATERIAL AVAILABLE ON RECORD. WE HAVE OBSERVED THAT THE ASSESSEE IS AN INDIVIDUAL RUNNING A ITA NO.585/KOL/2016 A.Y. 2012-13 M/S G.D. ENTERPRISE VS. ACIT, CIR-4 0,KOL. PAGE 12 PROPRIETORSHIP FIRM NAMELY M/S THE SHOE BOX INC RET AIL STORE OF FOOTWEAR, BAGS, BELTS, WALLETS AND LEATHER GOODS, BOUTIQUE ETC. HAV ING SHOPS AT DIFFERENT PLACES , AND OFFICE AT MUMBAI. INFORMATION WAS RECEIVED BY THE A O FROM THE SALES TAX AUTHORITIES, GOVERNMENT OF MAHARASHTRA THAT THE ASSESSEE HAS MAD E BOGUS PURCHASES TO THE TUNE OF RS. 1.13 CRORES FROM FOLLOWING FOUR PARTIES WHO ARE IN THE LIST OF HAWALA DEALERS GIVING ACCOMMODATION ENTRIES WITHOUT SUPPLY ING ANY GOODS:- S NO. NAME OF PARTIES TIN FINANCIAL YEAR AMOUNT 1 ROHIT ENTERPRISES 27020680974V 2009-10 RS. 8 ,84,584 2 DEEP ENTERPRISES 27750595164V -DO- RS. 18,09 ,710 3 KWALITY ENTERPRISES 27790284742V -DO- RS. 60 ,33,496 4 V3 ENTERPRISES 27860613194V -DO- RS. 26,16,9 88 TOTAL RS.1,13,44,778/- THE AO ISSUED NOTICES U/S 133(6) OF THE ACT TO THE ABOVE STATED PARTIES TO SEEK RELEVANT INFORMATION/DOCUMENTS BUT THE NOTICES WERE RETURNED UNSERVED. THE ASSESSEE WAS ASKED BY THE AO TO PRODUCE THESE FOUR PARTIES BUT THE ASSESSEE COULD NOT PRODUCE THE PARTIES FROM WHOM THE PURCHASES WER E MADE. THE AO MADE ADDITIONS U/S 69C OF THE ACT OF THE PEAK CREDIT OUT STANDING TO BE PAYABLE TO THESE FOUR PARTIES DURING THE YEAR TO THE TUNE OF RS.1,31,88,2 27/- AS AGAINST PURCHASES OF RS.1,13,44,778/-.THE CREDIT FOR PURCHASES FROM THES E FOUR PARTIES OF RS.1,13,44,778/- ARE APPEARING IN THE BOOKS OF ACCOUNTS OF THE ASSES SEE. THE ASSESSEE HAS TO DISCHARGE THE PRIMARY ONUS AS TO THE GENUINENESS AN D BONAFIDE OF THE TRANSACTION OF PURCHASE OF GOODS. IT IS OBSERVED THAT THE A.O. HAS MADE ADDITION OF THE ENTIRE PURCHASES AMOUNT TO RS.1.13 CRORES BY MAKING ADDITI ONS OF RS.1,31,88,227/- BEING PEAK CREDIT PAYABLE DURING THE YEAR FOR PURCHASES T O THESE PARTIES WHICH INCLUDED BALANCE OF RS.18,43,451/- FOR PURCHASES MADE IN THE EARLIER YEAR, WHILE THE AO HAS , HOWEVER , NOT DOUBTED THE SALES MADE BY THE ASSESSE E AGAINST THESE PURCHASES. THE ASSESSEE HAS RECONCILED THE QUANTITATIVE DETAIL S OF THE STOCK REFLECTED IN THESE PURCHASES WITH QUANTITATIVE DETAILS OF STOCK AS PER SALE INVOICES. THE A.O. HAS DOUBTED THE PURCHASES FROM THESE FOUR ALLEGED ACCOM MODATION ENTRY PROVIDERS BEING HAWALA DEALERS AS CONCLUDED BY SALES TAX DEPARTMENT OF GOVERNMENT OF MAHARASHTRA TO BE BOGUS PURCHASES, THAT THESE FOUR PARTIES ONLY PROVIDED ACCOMMODATION BILLS AND THE GOODS WERE NEVER SUPPLI ED BY THESE PARTIES AND THE ASSESSEE ALLEGEDLY MADE PURCHASES FROM SOME OTHER P ARTIES FOR WHICH PAYMENTS WERE MADE THROUGH UNDISCLOSED INCOME. THUS, THE A.O . OBSERVED THAT THE ASSESSEE HAS PURCHASED THE ITA 4736/MUM/2014 & ITA NO. 5207/ MUM/2014 13 MATERIAL FROM SOMEONE ELSE WHILE BOGUS BILLS WERE ORGANIZED BY TH ESE HAWALA DEALERS, HENCE, SECTION 69C OF THE ACT WAS INVOKED BY THE AO AND AD DITIONS WERE MADE BY THE AO. THE CONCLUSION OF THE LD. CIT(A) THAT THE ASSESSEE HAS PURCHASED MATERIAL FROM SOME OTHER DEALERS BUT QUANTITATIVE RECONCILIATION OF THE STOCK WAS DULY DONE BY THE ASSESSEE OF THE SALE AND PURCHASE AND HENCE THE PRO FIT ELEMENT IN THIS ACCOMMODATION ENTRIES ARE TO BE ADDED TO THE INCOME CANNOT BE FAULTED . THE LD. CIT(A) RESTRICTED THE ADDITION BY ESTIMATING GP RAT IO OF 12.5% OF RS.1,13,44,778/- BEING PURCHASES FROM THESE ALLEGED FOUR ACCOMMODATI ON ENTRY PROVIDERS. WE DO NOT FIND ANY INFIRMITY IN THE WELL REASONED ORDER OF TH E LD. CIT(A) WHEREBY NET PROFIT WAS ESTIMATED WHICH WAS A REASONABLE ESTIMATION MADE BY LEARNED CIT(A) AND WE SUSTAIN/AFFIRM THE ORDER OF LEARNED CIT(A). IN THE RESULT, WE DISMISS BOTH THE APPEAL OF THE ASSESSEE AS WELL OF REVENUE. WE ORDER ACCORDING LY. 4. WE ADOPT THE ABOVE DETAILED REASONING MUTATIS MU TANDIS AND MORE PARTICULARLY IN VIEW OF THE FACT THAT THE REVENUE H AS BEEN IN FAIR ENOUGH IN NOT ITA NO.585/KOL/2016 A.Y. 2012-13 M/S G.D. ENTERPRISE VS. ACIT, CIR-4 0,KOL. PAGE 13 DISPUTING THE ASSESSEES CORRESPONDING SALES CLAIM AS GENUINE. WE THEREFORE DIRECT THE ASSESSING OFFICER TO RESTRICT THE IMPUGN ED DISALLOWANCE @ 12.5% ONLY THEN THE ENTIRE PURCHASE SUMS IN ISSUE OF 339,04,027/- IN THE PECULIAR FACTS AND CIRCUMSTANCES OF THE CASE. IT IS MADE CLE AR THAT OUR INSTANT ESTIMATION SHALL NOT BE TAKEN AS A PRECEDENT IN ANY OTHER CASE OR ASSESSMENT YEAR; AS THE CASE MAY BE. 5. THIS ASSESSEES APPEAL IS PARTLY ALLOWED IN ABOV E TERMS. ORDER PRONOUNCED IN THE OPEN COURT 15/ 03/2019 SD/- SD/- ( %) (' %) (DR.A.L. SAINI) (S.S.GODARA) (ACCOUNTANT MEMBER) (JUDICIAL MEMBER) KOLKATA, *DKP, SR.P.S (- 15 / 03 /201 9 / COPY OF ORDER FORWARDED TO:- 1. /APPELLANT-M/S G.D.ENTERPRISE, 1/H/1, RAJA JANMENJO Y RD. KOLKAT-10 2. /RESPONDENT-ACIT, CIR-40, 3, GOVT. PLACE (WEST), KO LKAT-700001 3. 3 4 / CONCERNED CIT KOLKATA 4. 4- / CIT (A) KOLKATA 5. 7 ''3, 3, / DR, ITAT, KOLKATA 6. < / GUARD FILE. BY ORDER/ , /TRUE COPY/ / 3,