Vimal Alloys Pvt. Ltd., Mandi Gobindgarh V. Addl. CIT, Mandi Gobindgarh

ITA 605/CHANDI/2014

• Counselvise Citation: [2014] 140 COUNSELVISE.COM (IT) 80922 (ITAT-CHANDIGARH)
• Duration Of Justice: 4 month(s) 9 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 15-10-2014
• Appeal Filed By: Assessee
• Order Result: Partly Allowed
• Bench Allotted: B
• Next Hearing Date: 10-10-2014
• Assessment Year: 2008-2009
• Appeal Filed On: 05-06-2014
• Result in Favour of: Partly Allowed
• Court: TRIBUNAL
• Department Lawyers: J S NAGAR
• Assessee Lawyers: K P BAJAJ
• Keywords: Bogus purchase; Unexplained cash credit

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL CHANDIGARH BENCH B CHANDIGARH BEFORE SHRI BHAVNESH SAINI, JUDICIAL MEMBER AND SHRI T.R.SOOD, ACCOUNTANT MEMBER ITA NO. 605/CHD/2014 ASSESSMENT YEAR: 2008-09 M/S VIMAL ALLOYS PVT. LTD., VS THE ADDL. CI T, VILLAGE SAUNTI, RANGE AMLOH ROAD, MANDI GOBINDGARH. MANDI GOBINDGARH. PAN: AAACV7801M & ITA NO. 603/CHD/2014 ASSESSMENT YEAR: 2008-09 M/S JATIN ISPAT PVT.LTD., VS THE ACIT , WAZIRABAD VILLAGE AMBEY, CIRCLE, MAJRA ROAD, PATIALA. GOBINDGARH. PAN: AABCJ4358E (APPELLANT) (RESPONDENT) APPELLANT BY : SHRI K.P.BAJAJ RESPONDENT BY : SHRI J.S.NAGAR DATE OF HEARING : 10.10.2014 DATE OF PRONOUNCEMENT : . 15.10.2014 O R D E R PER BHAVNESH SAINI,JM BOTH THE APPEALS BY DIFFERENT ASSESSEES ARE DIRECTE D AGAINST THE ORDER OF LD. CIT(APPEALS) PATIALA DATED 25.03.2014 FOR ASSESSMENT YEAR 2008-09. 2 2. AS THE ISSUE IS SAME IN BOTH THE APPEALS, THEREF ORE FOR THE PURPOSE OF DISPOSAL OF BOTH THE APPEALS, WE DEC IDE THE APPEAL IN THE CASE OF M/S VIMAL ALLOYS PVT. LTD. IN ITA NO. 605/CHD/2014 AS UNDER. ITA NO. 605/CHD/2014 ( M/S VIMAL ALLOYS P.LTD.) 3. IN THIS APPEAL, THE ASSESSEE CHALLENGED THE REJE CTION OF THE BOOKS OF ACCOUNT ON ACCOUNT OF BOGUS PURCHASES MADE AND ADDITION OF RS. 4,50,000/- BY ENHANCING GP RATE. 4. BRIEFLY, THE FACTS OF THE CASE ARE THAT ASSESSEE COMPANY IS IN BUSINESS OF MANUFACTURING OF MS INGOTS AND TR ADING OF IRON AND STEEL. DURING THE YEAR UNDER CONSIDERATIO N, IT WAS SEEN THAT ASSESSEE MADE PURCHASES OF RS. 23,34,540/ - FROM M/S ROHIT ISPAT (INDIA), MANDI GOBINDGARH. THE PUR CHASE IS OF PIG IRON. IN THIS CONNECTION, ONE REPORT FROM C ENTRAL EXCISE AUTHORITY WAS RECEIVED BY ASSESSING OFFICER WHICH I S NOTED IN THE ASSESSMENT ORDER. IN SHORT, THE FACT IS THAT P ROPRIETOR OF M/S ROHIT ISPAT (INDIA) SHRI SURSH YADAV HAD OBTAIN ED THE CENTRAL EXCISE REGISTRATION FRAUDULENTLY. IT NEITHE R EXISTED OR CONDUCTED ANY BUSINESS FROM PREMISES AND DID NOT HA VE ANY GODOWN. IT WAS ISSUING INVOICES WITHOUT ACTUAL RECEIPT/SHORTAGE/DISCHARGE OF PIG IRON. THE REGIST RATION CERTIFICATE OF THIS CONCERN WAS CANCELLED RETROSPEC TIVELY W.E.F. 20.12.2006 BY THE EXCISE AUTHORITY. SHRI SURSH YAD AV HAD CONFESSED BEFORE EXCISE AUTHORITIES OF INDULGING IN PAPER TRANSACTION ONLY. IT WAS ALSO FOUND THAT PIG IRON WAS MOSTLY DELIVERED AT PLACES LIKE BATALA/DHANDARI KALAN WHIL E CENVATABLE INVOICES TO THE FURNACE UNITS OF MANDI G OBINDGARH 3 WERE ISSUED BY M/S ROHIT ISPAT (INDIA). IT WAS, TH EREFORE, NOT UNDERSTOOD AS TO WHY ONE SHOULD TAKE DELIVERY OF GO ODS AT BATALA AND INCUR EXPENSES FOR TRANSPORTATION OF THE CONSIGNMENT ALL THE WAY TO MANDI GOBINDGARH. BATALA IS A HUB OF FOUNDRY INDUSTRY. IT WAS, THEREFORE, FOUND THAT FAKE INVOICES WERE ISSUED AND THERE WERE NO ACTUAL DELIV ERY. IT WAS ALSO CONTENDED THAT IT APPEARS THAT THE FOUNDRY UNI T OF BATALA HAD RECEIVED AND CONSUMED THE CONSIGNMENT OF PIG IR ON WITHOUT ACCOUNTING IN THEIR RECORDS AND FINISHED GO ODS SO MANUFACTURED TOO HAVE BEEN CLEARED CLANDESTINELY BY THEM WITHOUT ACCOUNTING IN THE RECORDS ENABLING THEM TO REMAIN WITHIN THE CENTRAL EXCISE SSS EXEMPTION LIMIT. ON THE OTHER HAND, THE FURNACE UNITS REMAINS TO HAVE PROCURED NO N-DUTY PAID SCRAP FROM THE OPEN MARKET AND COVERED UP THE SAME BY RECEIVING CENVATABLE INVOICES FROM THE ROHIT ISPAT (INDIA) AND OTHER SIMILAR SOURCES. THIS SEEMS TO HAVE BEEN DON E DELIBERATELY TO AVOID DETECTION BY THE LAW ENFORCIN G AGENCIES AND APPEARS TO BE A MODUS OPERANDI FOR SUBSTITUTION OF PIG IRON WITH NON-DUTY PAID SCRAP, IN WHICH CENVATABLE INVOICES OF PIG IRON WERE OBTAINED FROM M/S ROHIT ISPAT (INDIA) BUT ACTUALLY NON-DUTY PAID SCRAP WAS CONSUMED AS DISCUS SED BY THE AUTHORITIES BELOW, PIG IRON APPEARS TO HAVE BEE N USED IN FOUNDRY INDUSTRY AT BATALA. 5. DURING THE ASSESSMENT PROCEEDINGS, THE ASSESSEE CLAIMED THE PURCHASES TO BE GENUINE AND SUBMITTED BEFORE AS SESSING OFFICER THAT THE CONCERN PERSON OF M/S ROHIT ISPAT (INDIA) IS NOT TRACEABLE AND CANNOT BE PRODUCED AND ALL THE PU RCHASES 4 MADE FROM THIS PARTY ARE DULY SUBMITTED BY BILLS IS SUED BY THEM. WHEN THE ASSESSEE PURCHASED GOODS FROM M/S R OHIT ISPAT (INDIA), THEY WERE HAVING FOLLOWED CENTRAL EX CISE REGISTRATION AND ALL THE PAYMENTS HAVE BEEN MADE TH ROUGH ACCOUNT PAYEE CHEQUES AND GOODS ARE ENTERED INTO ST OCK REGISTER. THEREFORE, THERE IS NO QUESTION OF DISAL LOWING THE SAME. THE ASSESSEE WAS NOT ALLOWED TO CROSS EXAMIN E THE CONCERN PARTY BY THE EXCISE AUTHORITIES OR BY THE I NCOME TAX AUTHORITIES. IT WAS, THEREFORE, SUBMITTED THAT PUR CHASES CANNOT BE HELD TO BE BOGUS. THE ASSESSING OFFICER, HOWEVER, DID NOT ACCEPT CONTENTION OF THE ASSESSEE DUE TO TH E REASONS MENTIONED ABOVE AND FOUND THE PURCHASES TO BE BOGUS . IT WAS ALSO FOUND THAT LOSS WAS CLAIMED BEYOND THE PERMISS IBLE LIMIT BUT THE ASSESSEE CLAIMED THAT BURNING LOSS HAS BEEN SUFFERED AT 8.56% AGAINST THE FIGURE OF 7.95% OF THE IMMEDIA TELY PRECEDING YEAR. IN THE SCRUTINY ASSESSMENT FOR ASS ESSMENT YEAR 2005-06, THE RATE OF BURNING LOSS AT 8.17 WAS ACCEPTED. THE ASSESSING OFFICER, AFTER CONSIDERING THE ISSUE IN DETAIL FOUND THE PURCHASES TO BE BOGUS AND CLAIM OF ASSESS EE NOT ACCEPTABLE. THEREFORE, BOOK RESULTS WERE REJECTED AND ESTIMATED THE GP FOR THE YEAR UNDER CONSIDERATION. THE ASSESSING OFFICER APPLIED GP RATE OF 6% ON THE TURN OVER OF RS. 89,45,81,087/- AGAINST THE DECLARED GP RATE OF 5.86 % FOR THIS YEAR AND MADE ADDITION OF RS. 12,15,180/-. HOWEVER , THE ADDITION ON ACCOUNT OF CENVAT, INFLATION IN PURCHAS ES AND SCRAP GENERATED WERE DEEMED TO BE INCLUDED IN THIS ADDITION. 5 6. THE ASSESSEE CHALLENGED THE ADDITION OF RS. 12,1 5,180/- BEFORE LD. CIT(APPEALS) AND REITERATED THE SAME SUB MISSIONS WHICH WERE RAISED BEFORE ASSESSING OFFICER. THE WR ITTEN SUBMISSION OF THE ASSESSEE IS REPRODUCED IN THE IMP UGNED ORDER. HOWEVER, LD. CIT(APPEALS) DID NOT ACCEPT CO NTENTION OF THE ASSESSEE AND CONSIDERING THE TOTALITY OF THE FA CTS AND CIRCUMSTANCES, RESTRICTED THE ADDITION TO RS. 4,50, 000/- AGAINST ADDITION OF RS. 12,15,180/-. THE FINDINGS O F LD. CIT(APPEALS) IN PARA 4.6 TO 5 ARE REPRODUCED AS UND ER : 4.6 I HAVE CONSIDERED THE SUBMISSIONS MADE. THERE IS A CLEAR CUT FINDING BY THE EXCISE AUTHORITY IN THIS YEA R THAT THE TRANSACTIONS WITH M/S ROHIT ISPAT ARE FAKE TRANSACT IONS. THE APPELLANT HAS ALSO REVERSED THE CENVAT CREDIT ON THIS ACCOUNT WHICH FARTHER ENDORSES THE FACT THAT THE ENT IRE TRANSACTION WAS FAKE AND WAS ONLY IN THE NATURE OF P APER TRANSACTIONS. DURING THE COURSE OF ASSESSMENT PROCE EDINGS, THE ASSESSEE WAS CONFRONTED WITH THE REPORT RECEIVED FROM THE EXCISE AUTHORITIES AND THE STATEMENTS O/SH. YADAU , SH. SUBHAS AND SH. MANU BANSAL, DIRECTOR OF THE COMPANY. T HE ASSESSEE WAS INFORMED ABOUT THE ENQUIRIES MADE BY THE DEPARTMENT ALSO WHICH REVEALED THAT M/S ROHIT ISPAT (INDIA) WAS NOT CARRYING OUT ANY ACTUAL BUSINESS AC TIVITY DURING THE YEAR UNDER CONSIDERATION. THE ASSESSEE IF AS ALSO ASKED TO PRODUCE THE PROPRIETOR OF M/S ROHIT ISPAT (IN DIA) WHICH COULD NOT BE COMPLIED WITH BY THE ASSESSEE. TH E ASSESSEE COULD NOT EVEN GET THE COPY OF ACCOUNTS WI TH M/S ROHIT ISPAT CONFIRMED. THEREFORE, LOOKING INTO THE FACT S OF THE CASE, IT CAN NOT BE SAID THAT THE A.O. HAS COMPLETED THE ASSESSMENT ONLY ON THE BASIS OF REPORT OF EXCISE AUT HORITY. ON THE OTHER HAND, THE APPELLANT FAILED TO DISCHARGE HIS ONUS. THE FACTS MARSHALED BY THE A.O. AMPLY SHOW TH AT THE TRANSACTIONS ARE BOGUS IN NATURE. AS REGARDS, T HE CONTENTION OF THE APPELLANT THAT NO OPPORTUNITY TO CR OSS- EXAMINE THE PARTY WAS GIVEN, I AM OF THE OPINION THAT IT WAS THE DUTY OF THE APPELLANT TO SUBSTANTIATE THE TRANSACTIONS PARTICULARLY LOOKING INTO THE CLINCHING REPORT OF THE EXCISE AUTHORITY AND THE VARIOUS STATEMENTS OF TH E PARTIES CONCERNED. THESE WERE DULY CONFRONTED TO THE APPELLANT AND HE WAS NOT PRECLUDED FROM PRODUCING T HE PERSONS WITH WHOM HE ENTERED INTO THE TRANSACTIONS. THE A.O. HAS DISCUSSED ALL THE ISSUES IN DETAILS AND CO MPLETED THE ASSESSMENT AFTER GIVING PROPER FINDING IN THE ASSESSMENT ORDER ON THE BASIS OF THE VARIOUS STATEMENTS AND CIRCUMSTANCES OF THE CASE. THE ASSESSEE WAS DULY CONFRONTED WITH THE FINDING OF TH E 6 EXCISE AUTHORITIES WHICH SHOWS THAT THE TRANSACTIONS AS FAKE. LOOKING INTO THE FACTS OF THE CASE, THEREFORE GROUND NO. 2 TO 4 ARE DISMISSED. AS REGARDS GROUND NO.S, IN MY OPINION, CENVAT RECEIV ABLE ON BOGUS PURCHASE IS POCKETED BY THE ASSESSEE AS SOON AS IT MANUFACTURES AND SELLS FINISHED GOODS AFTER BOOKING THE BOGUS PURCHASE. THE SUBSEQUENT REVERSAL, IF ANY CAN N OT BE ALLOWED AS EXPENDITURE AS IT IS NOT RELATED TO THE LE GITIMATE BUSINESS OF THE APPELLANT. THUS, THIS GROUND FAILS AN D CENVAT IS LIABLE TO BE ADDED AS INCOME OF THE APPELLANT. FURTHER AS REGARDS THE 6 TH GROUND OF APPEAL, LOOKING INTO THE ENTIRETY OF THE FACTS OF THE CASE, I AM OF THE OPINI ON THAT THE A.O. HAS RIGHTLY REJECTED THE BOOKS OF A/C. THE APPELL ANT FAILED TO JUSTIFY THE PURCHASES AS GENUINE AND DID N OT DISCHARGE HIS ONUS IN THIS RESPECT WHILE THE ENQUIRI ES CONDUCTED BY A.O. AND THE EXCISE AUTHORITIES CONCLUSI VELY PROVES THAT THE PURCHASES ARE FAKE. THE CASE LAWS CIT ED BY THE APPELLANT ARE THEREFORE DISTINGUISHABLE. THEREFOR E, THIS GROUND OF APPEAL ALSO FAIL. AS REGARDS, THE 7 TH GROUND OF APPEAL, IT IS NOTED THAT THE BURNING LOSS IN THIS CASE IS 8.56% COMPARED TO 8.17% DULY ACCEPTED BY A.O. IN SCRUTINY PROCEEDING OF A.Y. 2005-06 . THE BURNING LOSS VARIES DEPENDING UPON THE QUALITY OF RAW MATERIAL AS SUBMITTED BY THE APPELLANT WHICH IS NOT RE BUTTED BY THE A.O. REGARDING THE ISSUE OF INFLATION IN PURCH ASE, THE A.O. HAS ASSUMED THE PRICE OF NON-DUTY PAID SCRAP @ RS.I6,OOO/- PMT. HOWEVER, IT IS NOTED FROM OTHER SIMIL AR CASES, THAT THE A.O. HAS ADOPTED VARYING RATES FOR NONDUTY PAID SCRAP EVEN TO THE EXTENT OF RS.18,000/- PMT. THE A.O. HA S NOT GIVEN ANY BASIS FOR ADOPTION OF THE PURCHASE FIGURE OF NON- DUTY PAID SCRAP. FURTHER THE PURCHASE PRICE FROM M/S ROHIT ISPAT INCLUDES CENVAT WHICH IS HELD AS LIABLE TO BE ADDED AND, THEREFORE, EXCLUDING VAT THE AVERAGE PRICE WILL B E (233450 304813)109.50 = 18500/- PMT WHICH IN MY OPINION SHOULD AT BEST BE THE COMPARABLE FIGURE WITH NON DUTY PAID SCRAP. FURTHER, AS REGARDS THE GENERATION OF SC RAP, IT IS SEEN THAT THE A.O. HAS JUST PRESUMED 5% OF TOTAL MACH INERY REPAIR EXPENSES AS SCRAP WITHOUT ANY EVIDENCE ON REC ORD WHICH IN MY OPINION CAN NOT BE ACCEPTED. THEREFORE, ON E OF MAIN ISSUE INVOLVED IS CENVAT. FURTHER, IN THIS- CASE, T HE ISSUE IS SUBSTITUTION OF BOGUS PURCHASE BY PURCHASES MADE FROM GREY MARKET. THEREFORE, THERE IS A POSSIBILITY OF EARNING SOMETHING EXTRA OUT OF THERE TRANSACTIONS ALSO E.G. B Y INFLATION IN PRICE ETC. AS DISCUSSED ABOVE. WHILE ESTIMA TING THE GP, THE A.O. HAS NOT GIVEN ANY COMPARABLE CASE IN SUPPORT OF HIS OPINION. THE GP RATE IN THIS YEAR IS BETTER THAN PREVIOUS YEAR. THUS, LOOKING INTO THE ENTIRETY OF FA CTS OF THE CASE, I AM OF THE OPINION THAT THE NET ADDITION IN THIS CASE BE RESTRICTED TO RS.4,5O,OOO/- AGAINST ADDITION OF RS.I2,I5,I8O/- MADE BY THE A.O. 05. IN THE RESULT, THE APPEAL IS PARTLY ALLOWED. 7 7. WE HAVE CONSIDERED THE RIVAL SUBMISSIONS AND MAT ERIAL ON RECORD. THOUGH THE LD. COUNSEL FOR THE ASSESSEE REITERATED THE SUBMISSIONS MADE BEFORE AUTHORITIES BELOW, BUT ULTIMATELY RESTRICTED HIS ARGUMENTS TO THE FACT THAT ADDITION IS STILL ON EXCESSIVE SIDE AND RELIED UPON ORDER OF ITAT CHANDI GARH BENCH IN THE CASE OF M/S GIAN CASTINGS P.LTD. V DCI T IN ITA 451/CHD/2012 DATED 12.09.2012 AND SUBMITTED THAT IN THIS CASE, THE TOTAL BOGUS PURCHASES OF THE ASSESSEE WER E OF RS. 1.03 CR ON WHICH ASSESSING OFFICER MADE ADDITION OF RS. 29,20,176/- AND THE ITAT REVISED THE ADDITION TO RS . 4 LACS. HE HAS SUBMITTED THAT IN THE CASE OF THE ASSESSEE, THE TOTAL PURCHASES BOGUS FOUND TO BE OF RS. 23,34,540/-. TH EREFORE, ADDITION SUSTAINED BY LD. CIT(APPEALS) AT RS. 4,50, 000/- IS STILL ON EXCESSIVE SIDE. COPY OF THE ORDER IS PLAC ED ON RECORD. 8. THE LD. DR, HOWEVER, RELIED UPON ORDER OF THE LD . CIT(APPEALS). 9. IN VIEW OF THE SUBMISSIONS ABOVE AND CONSIDERING THE TOTALITY OF THE FACTS AND CIRCUMSTANCES NOTED ABOVE , IT IS CLEAR THAT THE EXCISE AUTHORITIES HAVE FOUND THAT TRANSAC TIONS CONDUCTED BY M/S ROHIT ISPAT (INDIA) ARE FAKE AND N O ACTUAL DELIVERY OF THE GOODS HAVE BEEN MADE. THESE WERE ON LY PAPER TRANSACTIONS AND ULTIMATELY REGISTRATION OF M/S ROH IT ISPAT (INDIA) WAS CANCELLED BY THE EXCISE AUTHORITIES. T HE DETAILED DISCUSSION MADE BY THE ASSESSING OFFICER AND LD. CI T(APPEALS) IN THE IMPUGNED ORDERS THUS, CLEARLY SUPPORT THE FA CT THAT BOOKS OF ACCOUNT OF THE ASSESSEE WERE NOT RELIABLE AND HAVE BEEN CORRECTLY REJECTED BY THE AUTHORITIES BELOW. T HE LD. 8 CIT(APPEALS) ALSO FOUND THAT THE GP RATE IN THE YEA R UNDER CONSIDERATION IS BETTER THAN THE PREVIOUS YEAR, THE REFORE REDUCED THE ADDITION TO RS. 4,50,000/-. HOWEVER, C ONSIDERING THE FACTS OF THE CASE IN THE LIGHT OF THE ORDER IN THE CASE OF M/S GIAN CASTINGS PVT. LTD. (SUPRA). IT IS CLEAR T HAT THE BOGUS PURCHASES IN THE CASE OF ASSESSEE ARE VERY LESSER A S COMPARED TO THE CASE OF M/S GIAN CASTINGS PVT. LTD. IN WHICH THE ITAT ULTIMATELY SUSTAINED THE ADDITION OF RS. 4 LACS ONL Y. THEREFORE, CONSIDERING THE HISTORY OF THE ASSESSEE THAT GP RATE WAS BETTER IN EARLIER YEAR AS NOTED BY LD. CIT(APPE ALS) AND COMPARING THE FACTS WITH THE CASE OF M/S GIAN CASTI NGS PVT. LTD. (SUPRA), WE ARE OF THE VIEW THAT IT WOULD BE R EASONABLE AND APPROPRIATE TO RESTRICT THE ADDITION TO RS. 2 L ACS AS AGAINST ADDITION SUSTAINED BY LD. CIT(APPEALS) IN A SUM OF RS. 4,50,000/-. THE ORDERS OF AUTHORITIES BELOW ARE TH EREFORE MODIFIED TO THAT EXTENT AND ADDITION IS RESTRICTED TO RS. 2 LACS ONLY AND ACCORDINGLY, ASSESSING OFFICER IS DIRECTED TO SUBSTITUTE THE ADDITION BY RS. 2 LACS. 10. IN THE RESULT, THE APPEAL OF THE ASSESSEE IS PA RTLY ALLOWED. ITA 603/CHD/2014 ( M/S JATIN ISPAT PVT. LTD. ) 11. IN THIS CASE, THE FACTS ARE SIMILAR AS HAVE BEE N CONSIDERED IN THE CASE OF ASSESSEE M/S VIMAL ALLOYS PVT. LTD. AND SIMILARLY IT WAS FOUND THAT ASSESSEE MADE BOGUS PURCHASES FROM M/S ROHIT ISPAT (INDIA) IN A SUM OF RS. 98,26,701/-. IN THIS CASE, THE ASSESSING OFFICER R EJECTED THE BOOK RESULTS AND ASSESSING OFFICER ESTIMATED THE GP AT 4.81% 9 AGAINST DECLARED GP OF 3.66% ON THE TOTAL TURNOVER OF RS. 26.20 CR AND ADDED RS. 30,13,777/- ON ACCOUNT OF EN HANCED GP. THE ASSESSEE SIMILARLY MADE THE SAME SUBMISSIO NS BEFORE LD. CIT(APPEALS) AND IT WAS POINTED OUT THAT IN THE PRECEDING ASSESSMENT YEAR 2006-07, THE GP RTE OF THE ASSESSEE WAS 2.44% AND IN ASSESSMENT YEAR 2007-08 THE GP RATE WA S 3.95%. IT WAS, THEREFORE, SUBMITTED THAT ADDITION IS STILL ON EXCESSIVE SIDE. THE LD. CIT(APPEALS) CONFIRMED THE REJECTION OF THE BOOKS OF ACCOUNT, HOWEVER, CONSIDERING THAT ASS ESSEE SUBSTITUTED THE BOGUS PURCHASES FROM THE GRAIN MARK ET, THEREFORE, MUST HAVE EARNED EXTRA PROFIT ON BOGUS T RANSACTION, RESTRICTED THE ADDITION TO RS. 16 LACS AGAINST ADDI TION OF RS. 30,13,777/-. THE ASSESSEE IS IN APPEAL CHALLENGING THE ADDITION OF RS. 16 LACS ON ACCOUNT OF ENHANCED GROS S PROFIT. 12. BOTH THE PARTIES STATED THAT ISSUE IS SAME, THE REFORE FOLLOWING THE REASONS FOR DECISION IN THE CASE OF M /S VIMAL ALLOYS PVT. LTD., WE CONFIRM REJECTION OF THE BOOKS OF ACCOUNT. HOWEVER, CONSIDERING THE HISTORY OF THE ASSESSEE IN WHICH ALMOST SIMILAR GP HAS BEEN DECLARED BY ASSESSEE AND EVEN IN ASSESSMENT YEAR 2006-07, LESS GP OF 2.44% HAVE BEEN DECLARED AND CONSIDERING THE PART ADDITION SUSTAINE D IN THE CASE OF M/S GIAN CASTINGS PVT. LTD. (SUPRA) BY ITAT , CHANDIGARH, IT WOULD BE REASONABLE AND PROPER TO RE STRICT THE ADDITION TO RS. 6 LACS AS AGAINST RS. 16 LACS MADE BY THE LD. CIT(APPEALS). THIS GROUND OF APPEAL OF THE SE IS P ARTLY ALLOWED. 10 13. THE ASSESSEE IN THIS APPEAL FURTHER CHALLENGED ADDITION OF RS. 24,43,885/- ON ACCOUNT OF UNEXPLAINED INVEST MENTS. IT WAS FOUND THAT THERE WAS A LIABILITY OF RS. 25,43,8 85/- AGAINST M/S ROHIT ISPAT (INDIA) IN THIS YEAR. TREATING THIS AS BOGUS LIABILITY, ASSESSING OFFICER MADE THE ADDITION ACCO RDINGLY. THE ASSESSEE SUBMITTED BEFORE LD. CIT(APPEALS) THAT ASS ESSING OFFICER WAS NOT JUSTIFIED IN MAKING THIS ADDITION O N ACCOUNT OF UNEXPLAINED CREDIT PERTAINING TO BALANCE OF M/S ROH IT ISPAT (INDIA) IGNORING THE SURRENDER OF RS. 2 CR AND FURT HER SURRENDER OF OUTSTANDING BALANCE OF THE PARTY AS IN COME OF THE NEXT YEAR UNDER THE HEAD UNCLAIMED CREDITOR. IT WAS SUBMITTED THAT WHATEVER WAS STATED BY M/S ROHIT ISP AT (INDIA) WAS NOT CONFRONTED TO THE ASSESSEE AND THE SAID AMO UNT WAS FORFEITED IN ASSESSMENT YEAR 2009-10 AND IN CASE TH E ADDITION WAS TO BE MADE BY ASSESSING OFFICER IN THIS YEAR, T HEN THE INCOME OF ASSESSMENT YEAR 2009-10 SHOULD HAVE REDUC ED ACCORDINGLY. THE COMMENTS OF THE ASSESSING OFFICER WERE ALSO CALLED FOR IN WHICH ASSESSING OFFICER EXPLAINED THA T THE AMOUNT WAS PERTAINING TO M/S ROHIT ISPAT (INDIA). THEREFORE, ADDITION IS JUSTIFIED. 14. THE LD. CIT(APPEALS) FOUND THE CONTENTION OF TH E ASSESSING OFFICER TO BE CORRECT BECAUSE IT WAS A FA CT THAT OUTSTANDING BALANCE WAS APPEARING IN THE YEAR UNDER CONSIDERATION ONLY AND THE ENTIRE TRANSACTION WAS E STABLISHED AS BOGUS. THEREFORE, LIABILITY IS NON-EXISTENT AND SHOULD HAVE TO BE TREATED AS INCOME OF THE ASSESSEE IN THE YEAR UNDER CONSIDERATION. THE ASSESSING OFFICER ALSO CONTENDE D THAT THE 11 SURRENDER MADE BY ASSESSEE WAS NOT IN RESPECT OF OU TSTANDING LIABILITY. THE ADDITION WAS, THEREFORE, CONFIRMED A ND APPEAL OF THE ASSESSEE WAS DISMISSED ON THIS GROUND. 15. THOUGH THE LD. COUNSEL FOR THE ASSESSEE DID NOT ARGUE THIS APPEAL BUT IN THE WRITTEN SYNOPSIS, IT IS STAT ED THAT AT THE TIME OF SURVEY, THE ASSESSEE MADE SURRENDER OF RS. 2 CR AND THE AMOUNT OF THE CREDIT BALANCE IS MUCH LESS THAN THE AMOUNT OF CREDIT WHICH WAS ALSO WRITTEN BACK IN SUB SEQUENT ASSESSMENT YEAR 2009-10. THEREFORE, ADDITION SHOUL D NOT BE MADE TWICE. 16. ON CONSIDERATION OF THE RIVAL SUBMISSIONS, WE D O NOT FIND ANY MERIT IN THIS GROUND OF APPEAL OF THE ASSESSEE. IT IS A FACT THAT THE OUTSTANDING BALANCE WAS APPEARING AGAINST M/S ROHIT ISPAT (INDIA) IN THE BOOKS OF ACCOUNT OF THE ASSESS EE IN THE YEAR UNDER CONSIDERATION ON 31.03.2008. THE TRANSA CTION WAS FOUND TO BE BOGUS AND WHEN ASSESSEE WAS CONFRONTED WITH THIS FACT, IT WAS STATED THAT THIS AMOUNT HAS ALREADY BE EN SURRENDERED AS INCOME IN THE NEXT YEAR ON ACCOUNT O F UNCLAIMED CREDITORS. IT WOULD PROVE THAT THE LIABI LITY WAS SHOWN IN THE BOOKS OF ACCOUNT AS BOGUS IN THE YEAR UNDER CONSIDERATION, THEREFORE, ADDITION SHALL HAVE TO BE NECESSARILY MADE IN THE YEAR UNDER CONSIDERATION ONLY. EVEN IF SOME SURRENDER IS MADE IN NEXT YEAR, WOULD NOT BE RELEVA NT THEREFORE, IN PRINCIPLE, AUTHORITIES BELOW WERE JUS TIFIED IN MAKING AND CONFIRMING ADDITION OF RS. 25,43,885/- O N ACCOUNT OF UNCLAIMED CASH CREDIT IN THE YEAR UNDER CONSIDER ATION. THIS GROUND IS, THEREFORE, DISMISSED. HOWEVER, ASSESSEE IS AT 12 LIBERTY TO TAKE ANY PLEA BEFORE REVENUE AUTHORITIES IN SUBSEQUENT ASSESSMENT YEAR 2009-10, FOR REDRESSAL O F HIS GRIEVANCE, IF ANY IN ACCORDANCE WITH LAW. WITH THE SE OBSERVATIONS, THIS GROUND OF APPEAL OF THE ASSESSEE IS DISMISSED. 17. IN THE RESULT, APPEAL OF THE ASSESSEE IS PARTL Y ALLOWED. 18. NO OTHER POINTS IN BOTH THE APPEALS HAVE BEEN A RGUED OR PRESSED. 19. IN THE RESULT, BOTH APPEALS OF THE ASSESSEE A RE PARTLY ALLOWED. ORDER PRONOUNCED IN THE OPEN COURT ON 15 TH OCTOBER,2014. SD/- SD/- (T.R.SOOD) (BHAVNESH SAINI ) ACCOUNTANT MEMBER JUDICIAL MEMBER DATED: 15 TH OCTOBER,2014. POONAM COPY TO: THE APPELLANT, THE RESPONDENT, THE CIT(A), THE CIT, DR ASSISTANT REGISTRAR, ITAT CHANDIGARH