ACIT, New Delhi V. M/s. Raqunak International Limited, New Delhi

ITA 6081/DEL/2014

• Counselvise Citation: [2018] 121 COUNSELVISE.COM (IT) 5682 (ITAT-DELHI)
• Duration Of Justice: 3 year(s) 7 month(s) 15 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 22-06-2018
• Appeal Filed By: Department
• Order Result: Allowed
• Bench Allotted: F
• Assessment Year: 2011-2012
• Appeal Filed On: 07-11-2014
• Result in Favour of: Revenue
• Court: TRIBUNAL
• Assessee Lawyers: M K MADAN
• Keywords: Bogus purchase; Opportunity of being heard; Revised return
• Section: 43B; 143(3); 14A; 133(6)

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL DELHI BENCH: F, NEW DELHI BEFORE SHRI AMIT SHUKLA, JUDICIAL MEMBER & SHRI O.P. KANT, ACCOUNTANT MEMBER ITA NO.- 5610/DEL/2014 ( ASSESSMENT YEAR: 2011-12) M/S RAUNAQ INTERNATIONAL LTD., 1009, SURYA KIRAN BUILDING, 19, K.G. MARG, CANNAUGHT PLACE, NEW DELHI-1. VS. DY. COMMISSIONER OF INCOME TAX, CENTRAL CIRCLE-II, NEW DELHI. PAN NO: AAACR5747C APPELLANT RESPONDENT ITA NO.- 6081/DEL/2014 ( ASSESSMENT YEAR: 2011-12) ASSTT. COMMISSIONER OF INCOME TAX, CENTRAL CIRCLE-11, NEW DELHI. VS. M/S RAUNAQ INTERNATIONAL LTD., 1009, SURYA KIRAN BUILDING, 19, K.G. MARG, CANNAUGHT PLACE, NEW DELHI- 1. PAN NO: AAACR5747C APPELLANT RESPONDENT ASSESSEE BY : SH. M.K. MADAN (ADV.) REVENUE BY : SH. ATIQ AHMED (SR. DR) 2 ITA NOS. 5610 & 6081/DEL/2014. RAUNAQ INTERNATIONAL LTD.,NEW DELHI. DATE OF HEARING : 14/05/2018 DATE OF PRONOUNCEMENT : 22/06/2018. ORDER PER : O.P.KANT, JM THESE CROSS APPEALS FILED BY THE REVENUE AND THE ASS ESSEE RESPECTIVELY ARE DIRECTED AGAINST ORDER DATED 29/08/2014 PASSED BY THE LD. COMMISSIONER OF INCOME-TAX (APPEALS)-XXXI, NEW DELHI [IN SHORT THE L D. CIT(A)] FOR ASSESSMENT YEAR 2011-12. AS BOTH THE APPEALS HAVE EMANATED FRO M THE SAME IMPUGNED ORDER, BOTH WERE HEARD TOGETHER AND DISPOSED OF BY WA Y OF THIS CONSOLIDATED ORDER FOR THE SAKE OF CONVENIENCE AND BREVITY. THE G ROUNDS OF APPEAL RAISED BY THE REVENUE IN ITA NO. 6081/DEL/2014 ARE REPRODUCED AS UNDER: 1. THE ORDER OF LD. CIT(A) IS NOT CORRECT IN LAW A ND FACTS. 2. ON THE FACTS AND CIRCUMSTANCE OF THE CASE THE L D. CIT(A) HAS ERRED IN DELETING ADDITION OF RS. 8759437/- MADE BY THE ASSE SSING OFFICER ON ACCOUNT UNVERIFIABLE PURCHASE MADE FROM M/S RELIANC E METAL INDIA. 3. THE APPELLANT CRAVES LEAVE TO ADD, AMEND ANY/AL L THE GROUNDS OF APPEAL BEFORE OF DURING THE COURSE OF HEARING OF THE APPEA L. 2. THE GROUNDS RAISED IN APPEAL BY THE ASSESSEE IN ITA NO. 5610/DEL/2014 ARE REPRODUCED AS UNDER: 1. THAT THE ORDER PASSED BY THE LD. CIT(A) XXXI IS BAD IN LAW & ON FACTS. 3 ITA NOS. 5610 & 6081/DEL/2014. RAUNAQ INTERNATIONAL LTD.,NEW DELHI. 2. THAT THE LD. CIT(A) HAS ERRED IN NOT ALLOWING T HE CLAIM OF RS. 15,66,869/- ON ACCOUNT OF LEAVE ENCASHMENT U/S 43B OF THE INCOM E TAX ACT, 1961. 3. THAT THE LD. CIT(A) HAS ERRED IN NOT ALLOWING WI THDRAWAL OF INTEREST DISALLOWANCE OF RS. 1,39,462/- U/S 14A READ WITH RU LE 8D OF THE INCOME TAX RULES 1962. 4. THAT THE ASSESSEE CRAVES, LEAVES TO ALTER, AMEND , VARY, ADD ANY GROUNDS OF APPEAL. 3. BRIEFLY STATED FACTS OF THE CASE ARE THAT THE AS SESSEE COMPANY FILED ITS RETURN OF INCOME FOR THE YEAR UNDER CONSIDERATION O N 20/09/2011 AT TOTAL INCOME OF RS. 9,36,19,769/-. THE CASE WAS SELECTED FOR A SCR UTINY AND NOTICE UNDER SECTION 143(2) OF THE INCOME-TAX ACT 1961 (IN SHORT TH ACT ) WAS ISSUED AND COMPLIED WITH. THE ASSESSMENT UNDER SECTION 143(3) OF THE ACT WAS COMPLETED ON 05/03/2014 AT TOTAL INCOME OF RS. 10,23,79,206/- AFTER MAKING FOLLOWING DISALLOWANCE : (I) DISALLOWANCE OF THE PURCHASES OF RS. 87,59,43 7/- MADE FROM RELIABLE METAL INDIA. (II) DISALLOWANCE OF RS. 15,66,869/- ON ACCOUNT OF LEAVE ENCASHMENT U/S 43B OF THE IT ACT. (III) DISALLOWANCE OF THE INTEREST OF RS. 1,39,462 /- U/S 14A R.W. RULE 8D OF THE IT ACT. 4. AGGRIEVED, THE ASSESSEE FILED APPEAL BEFORE THE LD. CIT(A), WHO DELETED THE DISALLOWANCE OF RS. 87,59,437 FOR PURCHASES FROM M/S RELIABLE METAL (INDIA), BUT UPHELD THE OTHER TWO DISALLOWANCES MADE UNDER SEC TION 43B AND SECTION 14A 4 ITA NOS. 5610 & 6081/DEL/2014. RAUNAQ INTERNATIONAL LTD.,NEW DELHI. OF THE ACT. AGGRIEVED WITH THE ORDER OF THE LD. CIT(A ), BOTH THE REVENUE AND THE ASSESSEE FILED APPEAL BEFORE THE TRIBUNAL RAISING T HE GROUNDS AS REPRODUCED ABOVE. 5. THE GROUND NOS. 1 AND 2 OF THE APPEAL OF THE REVENUE RELATE TO THE ADDITION OF RS. 87,59,437 DELETED BY THE LD. CIT(A), WHICH WAS MADE BY THE ASSESSING OFFICER ON ACCOUNT OF UNVERIFIABLE PURCHA SE MADE FROM M/S RELIABLE METAL (INDIA). 6. FACTS IN RESPECT OF THE ISSUE IN DISPUTE ARE THA T THE INFORMATION WAS RECEIVED BY THE ASSESSING OFFICER FROM THE MAHARASH TRA VAT DEPARTMENT THAT THE ASSESSEE RECEIVED NON GENUINE BILLS OR ACCOMMODATIO N BILLS AMOUNTING TO RS. 87,59,437 FROM M/S RELIABLE METAL (INDIA), CP TANK R OAD, MUMBAI. IN THE INFORMATION, THE VAT DEPARTMENT SENT AN AFFIDAVIT O F PROPRIETOR OF M/S RELIABLE METAL (INDIA), WHEREIN HE ADMITTED THAT HE HAD DONE BUSINESS OF ISSUING ONLY TAX INVOICES. IN THE SAID AFFIDAVIT, IT IS ALSO MENTION ED THAT SUBSEQUENTLY SH. PURUSHOTTAM KOTHARI WAS GIVEN POWER OF OPERATION OF A LL ACTIVITIES OF M/S RELIABLE METAL INDIA. THE ASSESSING OFFICER ISSUED LETTER DAT ED 04/07/2013 TO M/S RELIABLE METAL INDIA FOR VERIFICATION OF TRANSACTIONS. THE SA ID LETTER RETURNED BACK UNSERVED. THE LETTER DATED 10/10/2013 ISSUE BY THE A SSESSING OFFICER TO SH. 5 ITA NOS. 5610 & 6081/DEL/2014. RAUNAQ INTERNATIONAL LTD.,NEW DELHI. PURUSHOTTAM KOTHARI ALSO REMAINED UNSERVED. AFTER C ONSIDERING SUBMISSION OF THE ASSESSEE, THE ASSESSING OFFICER DISALLOWED THE P URCHASES WITH FOLLOWING OBSERVATIONS: I. THOUGH THE ASSESSEE HAS PRODUCED DETAILS IN RE SPECT OF PURCHASES & SALES, STOCK REGISTER AND CONFIRMATION OF THE PARTI ES TO WHOM THE SALES HAVE BEEN MADE AND HAS ALSO FURNISHED COPY OF CONFI RMATION DATED 25.04.2011 OF M/S RELIABLE METAL INDIA, HOWEVER, TH E FACTS REMAIN THAT THE ASSESSEE CANNOT PRODUCE MR. S.P. DEWASI PROP OF M/S RELIABLE METAL (INDIA) NOR COULD ASSESSEE FILE FRESH CONFIRMATION FROM THE RELIABLE METAL (INDIA). THE ASSESSEE HAS ALSO SUBMITTED COPY OF BANK ACCOU TNS AND DETAILS OF APYMENTS MADE THROUGH RTGS TO M/S REAINCE METAL (IN DIA). THE PAYMENTS MADE BY THE ASSESSEE ARE APPREAING IN THE BANK ACCOUNT OF M/S RELIABLE METAL (INDIA)., WHCH HAS BEEN OBTAINED FOR M THE BANK U/S 133(6) OF THE IT ACT. THE ASSESSEE HAS SUBMITTED THAT IT HAS MADE GENUINE PRUCHASE AND HAS MADE SALE OF THOSE GOODS AT A PROF IT OF RS. 2.99 LACSK. THE CONTENTION OF THE ASSESSEE IS NOT ACCEPTABLE I N VIEW OF THE FOLLOWING:- A. ASSESSEE HAS NOT FILED FRESH CONFIRMATION OF RELIAB LE METAL INDIA. B. ASSESSEE HAS NOT BEEN ABVLE TO PRODUCE THE SUPPLI ER C. THERE IS AN AFFIDAVIT FILED BYTHE SUPPLIER BEFORE V AT DEPARTMENT THAT HE HAS NOT MADE ANY TRANSACTIONS. VIEW OF ABOVE DISCUSSIION PURCHASES OF RS. 87,59,43 7/- MADE FROM RELIABLE METAL IS DISALLOWED AND ADDED TO ASSESSEE S DECLARED INCOME. THEREFORE, PROVISION OF SECTION 27191)(C) OF THE IT ACT ARE ATTRACTED. PENALTY PROCEEDINGS U/S 271(1)(C) HAVE BEEN INITIATED SEPER ATELY. 7. THE LD. CIT(A) HOWEVER, DELETED THE ADDITION RELYI NG ON THE DECISION OF THE HONBLE DELHI HIGH COURT IN THE CASE OF CIT VERSUS SUNRIZE TOOLING SYSTEMS PRIVATE LIMITED (2014) 361 ITR 206 (DELHI). THE LD. CIT(A) 6 ITA NOS. 5610 & 6081/DEL/2014. RAUNAQ INTERNATIONAL LTD.,NEW DELHI. CONCLUDED THAT ALL THE PRIMARY DOCUMENTS SUPPORTING THE PURCHASE WERE FILED BY THE ASSESSEE AND THEREFORE ASSESSEE DISCHARGED ITS ONUS TO SUBSTANTIATE THE PURCHASES, WHEREAS THE ASSESSING OFFICER HAS RELIED ONLY ON THE FINDING OF THE MAHARASHTRA VAT AUTHORITIES. THE RELEVANT FINDING OF THE LD. CIT(A) IS REPRODUCED AS UNDER: 4.2.11 DURING THE APPEAL PROCEEDINGS THE AR HAS MADE A DETAILED SUBMISSION WHICH HAS BEEN REPRODUCED AT PARA 3 ABOVE. HE HAS A LSO RELIED UPON ON THE DECISION OF HONBLE HIGH COURT OF DELHI IN THE CASE OF CIT VS. SUNRISE TOOLING SYSTEM PVT. LTD., (2014) 361 ITR 206 (DELHI) WHEREI N HONBLE HIGH COURT DISMISSED THE DEPARTMENTS APPEAL AGAINST ORDER OF HONBLE ITAT DELETING THE ADDITION MADE ON ACCOUNT OF CERTAIN PURCHASES ADMIT TED (LATER REITERATED) BY ONE OF THE DIRECTORS AS AN ACCOMMODATION TRANSACTION. 4.2.12 IT IS NOTED HERE THAT THE FACTS OF THE APPE LLANTS CASE ARE SIMILAR TO THOSE IN THE CASE OF CIT VS. SUNRISE TOOLING SYSTEMS PVT. LTD. (SUPRA). IN THE PRESENT CASE APPELLANT HAS MADE AVAILABLE THE DOCUM ENTARY EVIDENCES WHICH WERE IN ITS POSSESSION TO ESTABLISH THE GENUINENESS OF THE PURCHASE TRANSACTION. THE APPELLATE HAS PRODUCED COPY OF THE PURCHASE BILL, CONFIRMATION OF THE SUPPLIER WHO HAS DULY MENTIONED THE PAN IN I T. APPELLANT HAD ALSO SUPPLIED THE STATEMENT OF THE BANK ACCOUNT, EVIDENC ING THE PAYMENT AS WELL AS DETAILS OF THE RTGS PAYMENTS MADE INTO THE BANK ACCOUNT OF THE SUPPLIER MAINTAINED WITH ING VYSYA BANK, FORT, MUMBAI. THE A PPELLANT HAS ALSO SUBMITTED THE COPY OF THE VAT RETURN FILED BY IT WH EREIN IT HAS DECLARED THE PURCHASES MADE FROM THE SAID SUPPLIERS. THE APPELLA NT HAD ALSO SUBMITTED STOCK REGISTER AND STATEMENT OF PURCHASES AND SALE OF RAW MATERIAL QUANTITY WISE AND VALUE WISE FOR THE RELEVANT PERIOD WHICH H AS BEEN EXAMINED BY THE AO WITHOUT FINDING ANY MISTAKES IN SIMILAR CIRCUMST ANCES. IN THE CASE LAW CITED BY AR, HONBLE ITAT HAS HELD THAT AFTER THE PRIMARY EVIDENCES IN THE FORM OF RELEVANT DOCUMENTS WERE MADE AVAILABLE BY THE ASSES SEE IN SUPPORT OF THE GENUINENESS OF THE CLAIM PURCHASES, THE ONUS TO EST ABLISH THAT THE SAME WERE BOGUS SHIFTED TO THE DEPARTMENT. THE RELEVANT CONTE NTS OF ITATS ORDER INCORPORATED IN THE ORDER OF THE HONBLE HIGH COURT AT PAGE 208 & 209 ARE REPRODUCED BELOW FOR READY REFERENCE: 4.2.13 THE AR HAS SUBMITTED THAT THE AO WAS ASKING THE ASSESSEE TO DO SOMETHING WHICH WAS IMPOSSIBLE. HE HAS POINTED OUT THAT THE MAHARASHTRA VAT 7 ITA NOS. 5610 & 6081/DEL/2014. RAUNAQ INTERNATIONAL LTD.,NEW DELHI. AUTHORITIES HAD VISITED SUPPLIERS PREMISES AND FOU ND THEM TO BE CLOSED. THE AUTHORITIES HAD NOT BEEN ABLE TO RECORD THE SUPPLIE RS STATEMENT AND THAT THE AFFIDAVIT SENT BY HIM WAS MERELY A PHOTOCOPY. ON T HE BASIS OF THE FINDINGS OF HONBLE ITAT IN THE CASE OF SUNRISE TOOLING SYSTEMS PVT. LTD. (SUPRA), I HAVE TO HOLD THAT ON SUBMISSIONS OF PRIMARY DOCUMENTS THE O NUS OF THE ASSESSEE TO PROVE THE PURCHASES STOOD DISCHARGED. 4.2.14 NOW THE QUESTION IS WHETHER IN THE LIGHT OF FINDINGS OF MAHARASHTRA VAT AUTHORITIES THERE WAS EXTRA BURDEN ON THE ASSESSEE TO ESTABLISH THE GENUINENESS OF THE PURCHASES. IN THE CASE OF SUNRISE TOOLING SY STEMS PVT. LTD. ALSO (SUPRA) SIMILAR SITUATION AROSE IN VIEW OF THE STATEMENT OF THE DIRECTOR OF THE COMPANY. IN THAT CASE HONBLE ITAT NOTED THAT THE AO CANNOT DEN Y THE CLAIMED PURCHASES WHEN THE SALES MADE HAVE BEEN ACCEPTED. IT ALSO WEN T INTO THE TRADING RESULTS AND FOUND AS A MATTER OF FACT THAT THE TRADING RESU LTS WERE BETTER IN THE YEAR UNDER CONSIDERATION AS COMPARED TO THE EARLIER YEAR S. IN THE PRESENT CASE, THE AR HAS SUBMITTED THAT THE GOODS PURCHASED FROM RELI ABLE METAL (INDIA) WERE SOLD BY THE APPELLANT TO 4 PARTIES AS LISTED IN THE ASSE SSMENT ORDER ITSELF. HE HAS ALSO STRESSED THAT IN THE SAID TRANSACTION INVOLVING PUR CHASE OF GOODS FROM RELIABLE METAL (INDIA), THE APPELLANT HAS MADE A PROFIT OF R S. 2.99 LACS. THEREFORE, TO ASSUME THAT THE APPELLANT CONCEALED ANY PROFIT OR A NY INCOME BY ENTERING INTO BOGUS PURCHASE TRANSACTION INVOLVING RELIABLE METAL (INDIA) WAS BASELESS. 4.2.15 I NOTE THAT THE AO HAS EXAMINED THE STOCK R EGISTER. THE AR HAS FILED THE COPY OF THE SAME IN THE PAPER BOOK. THE SAID REGIST ER CONTAINS DETAILS OF THE SUPPLIER ALONGWITH QUANTITATIVE DETAILS OF THE MATE RIAL PURCHASED. THE REGISTER ALSO CONTAINS DETAILS OF THE CUSTOMERS TO WHOM SALE S HAVE BEEN MADE. THE REGISTER ALSO CONTAINS DETAILS OF THE QUANTITATIVE DETAILS OF THE MATERIAL WITH INVOICE NUMBER ETC. THESE FACTORS SHOW THAT THE APP ELLANT HAS TRIED TO DOUBLY ESTABLISH THE GENUINENESS OF THE PURCHASES IN THE B ACKGROUND OF THE FINDINGS OF THE MAHARASHTRA VAT AUTHORITIES. TO THAT EXTENT THE ONUS OF THE APPELLANT IN THIS REGARD HAS BEEN VERY WELL DISCHARGED. 4.2.16 ON THE OTHER HAND, AO HAS MERELY RELIED UPON THE FINDINGS OF THE MAHARASHTRA VAT AUTHORITIES WHICH ALSO IS NOT A COM PLETE ONE. NO ONE HAS BEEN ABLE TO RECORD THE STATEMENT OF THE SUPPLIER W HO IS SUPPOSED TO BE THE SOURCE OF ADVERSE EVIDENCE. THERE IS NO RECORDING O F THE STATEMENT OF THE SAID PARTY NOR CROSS EXAMINATION BY THE APPELLANT. I DO NOT FIND ANY MERIT, UNDER THESE CIRCUMSTANCES, IN THE ACTION OF THE AO WHO HA S CALLED FOR FRESH CONFIRMATION WITHOUT POINTING OUT ANY DISCREPANCIES IN THE STOCK REGISTER OR STATEMENT OF PURCHASE AND SALES BOTH QUANTITY WISE AND VALUE WISE. IN THE PRESENT CASE IF THE AO DISBELIEVES THE PURCHASE THE N THERE WOULD BE NO MERIT IN ACCEPTING SALES FIGURES ALSO. IN CASE THE AO HAD FO UND THAT THE APPELLANT HAD INCURRED ANY LOSS BY ACCOUNTING BOGUS PURCHASES, TH ERE COULD HAVE BEEN MERIT 8 ITA NOS. 5610 & 6081/DEL/2014. RAUNAQ INTERNATIONAL LTD.,NEW DELHI. IN THE DISALLOWANCE. IN THE INSTANT CASE THE APPELL ANT HAS BEEN ABLE TO SHOW ONE-TO-ONE RELATIONSHIP BETWEEN THE GOODS SOLD BY H IM TO 4 PARTIES WITH MATERIAL PROCURED FROM RELIABLE METAL (INDIA). IN VIEW OF TH IS, THERE IS NO MERIT IN THE ACTION OF THE AO. 4.2.17 IT IS NOTED HERE THAT, IT IS NOT AS IF THE SUPPLIER WAS NOT AT ALL IN EXISTENCE EVEN THE REPORT OF THE MAHARASHTRA VAT AUTHORITIES REPRODUCED IN THE ASSESSMENT ORDER INDICATE THAT THE SUPPLIER WAS OPE RATING FROM TWO PREMISES WHICH, HOWEVER, WERE FOUND CLOSED (OR LEFT BY THE P ARTY) DURING THE SUBSEQUENT FINANCIAL YEAR. THERE IS A FAILURE IN GETTING CLEAR AND UNAMBIGUOUS ADVERSE EVIDENCE AND ITS CONFRONTATION BEFORE THE APPELLANT . THE APPELLANT CANNOT BE HELD RESPONSIBLE FOR THE SAME. THIS IS NOT A CASE O F PURCHASES BEING SHOWN WITHOUT SALE OF GOODS. FURTHER, THE AO HAS EXAMINED THE STOCK REGISTER WHICH HAS ALL THE RELEVANT ENTRIES. THE AO HAS NOT FOUND ANY DISCREPANCIES IN THE SAME. IN VIEW OF THIS, IT HAS TO BE HELD THAT THE P URCHASES SHOWN IN THE NAME OF RELIABLE METAL (INDIA) CANNOT BE DISALLOWED. IT IS POSSIBLE THAT THE APPELLANT MIGHT HAVE TAKEN ONLY PURCHASE BILL FROM THE SAID P ARTY AND HAS OBTAINED THE GOODS FROM SOME OTHER SOURCE WHO DID NOT GIVE THE B ILL. (THIS FACT HOWEVER HAS NOT BEEN ESTABLISHED). IN SUCH SITUATION, IT IS NOT THE CASE OF ANY CONCEALMENT OF INCOME. THE AO, COULD HAVE RIGHTLY SUSPECTED THE VA LUE OF PURCHASE AND SALES. IN THE PRESENT CASE IT IS NOT POSSIBLE TO ENTERTAIN SUCH A THOUGHT AS IN THE WHOLE TRANSACTION THE APPELLANT HAS DECLARED A PROFIT OF ABOUT RS. 2.99 LACS. CONSIDERING ALL THESE FACTORS THE ADDITION OF RS. 8 7,59,437/- MADE BY THE AO IS HEREBY DELETED. 8. BEFORE US, THE LD. DR SUBMITTED THAT IN VIEW OF T HE AFFIDAVIT SUBMITTED BY MR. S.P. DEWASI, PROPRIETOR OF M/S RELIABLE METAL IN DIA THAT HE WAS ENGAGED IN ISSUING ONLY PAPER INVOICES (I.E. WITHOUT ACTUAL DEL IVERY OF GOODS), TO SUBSTANTIATE THE PURCHASES SHOWN FROM HIM, THE ONUS IS ON THE AS SESSEE TO SUBSTANTIATE THAT GOODS WERE ACTUALLY RECEIVED FROM M/S RELIABLE METAL INDIA. HE SUBMITTED THAT FROM THE DOCUMENTS FILED BY THE ASSESSEE, WHICH INCL UDED PURCHASE BILLS AND PAYMENT THROUGH BANKS, ONLY INDICATED PAPER TRAIL A ND NO EVIDENCE OF GOODS BEING DELIVERED PHYSICALLY TO THE ASSESSEE, HAS BE EN FILED BY ASSESSEE. ACCORDING 9 ITA NOS. 5610 & 6081/DEL/2014. RAUNAQ INTERNATIONAL LTD.,NEW DELHI. TO HIM, SALES SHOWN BY THE ASSESSEE OF CORRESPONDING AMOUNT OF GOODS AND CONFIRMATION OF THOSE PARTIES, MAY CONFIRM SALE OF GOODS BY THE ASSESSEE, BUT THAT CANNOT CONFIRM THAT THOSE GOODS WERE DELIVERED TO THE ASSESSEE BY M/S RELIABLE METAL INDIA, PARTICULARLY IN VIEW OF THE AF FIDAVIT OF THE PROPRIETOR OF SAID CONCERN, THAT HE WAS ENGAGED IN ISSUING PAPER BILLS ONLY. ACCORDING TO HIM, IN SUCH A SITUATION, THE LOGICAL CONCLUSION IS THAT TH E ASSESSEE HAS PURCHASED THOSE GOODS FROM ANOTHER PARTIES IN CASH AND SUPPLIED TO THE PARTIES, TO WHOM SALE BILLS HAVE BEEN ISSUED. HE SUBMITTED THAT THE LD. C IT(A) HAS ALSO EXPRESSED THIS KIND OF POSSIBILITY WHERE SALES RECORDED IN BOOKS A RE CONFIRMED BUT PURCHASE RECORDED IN BOOKS ARE NOT CONFIRMED. ACCORDINGLY, H E SUBMITTED THAT IN THIS KIND OF SITUATION ADDITION SHOULD HAVE BEEN MADE FOR UNE XPLAINED CASH UTILIZED FOR PURCHASE OF GOODS OUT OF BOOKS OF ACCOUNTS. 9. THE LD. COUNSEL OF THE ASSESSEE, FILED A PAPER BO OK CONTAINING PAGES 1 TO 72 AND SUBMITTED THAT THE ASSESSEE FURNISHED COPY O F RELEVANT BILLS OF PURCHASE, COPY OF CHALLANS, COPY OF BANK STATEMENT INDICATING PAYMENTS TO M/S RELIABLE METAL (INDIA), COPY OF VAT RETURNS INDICATING PURCH ASES, STOCK REGISTER INDICATING ENTRY OF SAID PURCHASES AND CORRESPONDING SALES TO THE PARTIES AND THEIR CONFIRMATION ETC. HE FURTHER SUBMITTED THAT THE ASS ESSING OFFICER HAS ALREADY VERIFIED PAYMENTS FROM THE SUPPLIERS BANK STATEMEN T ALSO. HE SUBMITTED THAT 10 ITA NOS. 5610 & 6081/DEL/2014. RAUNAQ INTERNATIONAL LTD.,NEW DELHI. ONLY GROUND FOR DISALLOWANCE OF THE SAID PURCHASES I S INABILITY OF THE ASSESSEE IN PRODUCING THE SAID SUPPLIER. ACCORDING TO HIM, THE SAID PROPRIETOR MR. S.P. DEWASI OF M/S RELIABLE METAL INDIA WAS EVEN COULD NOT BE TR ACED BY THE VAT DEPARTMENT, HOW IT WAS POSSIBLE FOR THE ASSESSEE TO PRODUCE HIM. THE ASSESSEE DISCHARGED HIS ONUS OF SUBSTANTIATING THE PURCHASES AND THEREFORE NO DISALLOWANCE COULD HAVE BEEN MADE IN THE CASE OF THE ASSESSEE. IN SUPPORT OF THE CONTENTION, HE RELIED ON THE ORDER OF THE LD. C IT(A). HE FURTHER SUBMITTED THAT IF THE PURCHASES OF THE ASSESSEE ARE NOT GENUI NE, IN THAT CASE CORRESPONDING SALES SHOULD ALSO BE REMOVED AND THE ASSESSEE SHOUL D BE GRANTED RELIEF ACCORDINGLY. ACCORDING TO HIM, THERE WAS NO LEAKAGE OF REVENUE AS THE SUPPLIER HAS RECORDED SALES IN ITS BOOKS OF ACCOUNTS AND THE ASSESSEE HAS RECORDED THE SAME AS PURCHASE AND OFFERED THE GROSS PROFIT OF RS . 2.99 LACS ON SAID PURCHASE TRANSACTIONS. 10. WE HAVE HEARD THE RIVAL SUBMISSIONS AND PERUSED THE RELEVANT METAL ON RECORD INCLUDING THE PAPER BOOK FILED BY THE ASSESS EE. IN THE CASE BEFORE US THE DISPUTE IS IN RESPECT OF PURCHASES OF RS. 87,59,437 /- SHOWN BY THE ASSESSEE IN ITS BOOKS OF ACCOUNTS FROM M/S RELIABLE METAL INDIA . A COPY OF ALL SUCH BILLS ISSUED AND COPY OF CORRESPONDING DELIVERY CHALLAN I SSUED BY M/S RELIABLE METAL 11 ITA NOS. 5610 & 6081/DEL/2014. RAUNAQ INTERNATIONAL LTD.,NEW DELHI. INDIA ARE AVAILABLE ON PAGE 51 TO 62 OF THE ASSESSE ES PAPER BOOK. WE HAVE OBSERVED FROM THESE DOCUMENTS THAT:- -IN THESE BILLS, SALES OF STAINLESS STEEL PIPES (SS PIPES) AND STAINLESS STEEL SHEETS/PLATES (SS SHEETS / PLATES) IS RECORDED. -IN THESE BILLS ONLY WEIGHT OF THE ITEMS IN KILOGRA MS, WHICH VARY FROM 2575 KGS TO 9225 KGS, HAS BEEN RECORDED AND NO DETAIL AS TO NUMBERS OR A SPECIFICATION OF THE ITEMS IS MENTIONED. -IN THE COLUMN FOR ORDER NUMBER ONLY, ORDER NUMBER ARE NOT MENTIONED AND ONLY WORD VERBAL IS RECORDED. -IN THESE BILLS, THE COLUMNS FOR DISPATCHED BY AND LORRY NUMBER/GOODS CARRIES NUMBER AND DATE ETC ARE LEFT BLANK. -IN THE DELIVERY CHALLANS ISSUED BY M/S RELIABLE M ETAL INDIA ALSO NO DETAIL OF TRUCK NUMBER OR ANY OTHER MODE OF THE TRANSPORT O R NUMBER OF ITEMS IS MENTIONED. 11. WE HAVE ALSO NOTED THAT IN CASE OF M/S RELIABLE METAL INDIA, THE MAHARASHTRA VAT DEPARTMENT CARRIED OUT ENQUIRIES FOR VERIFICATIONS OF SALES AND THE PROPRIETOR OF THE CONCERN SH. SP DEWASI, FAILED TO APPEAR BEFORE THE AUTHORITIES AND THE PREMISES WERE FOUND TO BE CLOSED . ON FURTHER ENQUIRIES BY THE MAHARASHTRA VAT DEPARTMENT, HE FILED AN AFFIDAV IT BEFORE THE VAT AUTHORITIES IN THE FORM OF A STATEMENT THAT THE BILLS ISSUED BY HIM WERE ONLY PAPER BILLS (I.E. NO GOODS WERE ACTUALLY SUPPLIED BY HIM). 12 ITA NOS. 5610 & 6081/DEL/2014. RAUNAQ INTERNATIONAL LTD.,NEW DELHI. 12. THE ASSESSEE HAS FILED BEFORE THE LOWER AUTHORITI ES PURCHASE BILLS AND CHALLANS TO SUBSTANTIATE PURCHASES FROM M/S RELIABL E METAL INDIA. THE ASSESSEE IS FURTHER CLAIMING THAT THE PURCHASES ARE GENUINE BEC AUSE THE PAYMENTS HAVE BEEN MADE TO M/S RELIABLE METAL INDIA THROUGH BANKI NG CHANNELS AND WHICH HAS BEEN CONFIRMED FROM THE BANK STATEMENT OF THE ASSES SEE AS WELL AS BANK STATEMENT OF M/S RELIABLE METAL INDIA. THE ASSESSEE IS ALSO CLAIMING THAT SAID PURCHASES ARE APPEARING IN THE VAT RETURN FILED BY T HE ASSESSEE 13. IN OUR OPINION, FILING OF COPY OF PURCHASE BILL S AND CHALLAN OR COPY OF VAT RETURN IN ITSELF, CANNOT ESTABLISH THAT GOODS HAVE BEEN ACTUALLY SUPPLIED BY THE SAID PARTY TO THE ASSESSEE, PARTICULARLY WHEN THE S UPPLIER HIMSELF IS DENYING THE FACT OF PHYSICAL DELIVERY OF GOODS. FURTHER, SHOWING THE PAYMENT THROUGH BANKING CHANNEL ALSO CANNOT ESTABLISH THE FACT OF PHYSICAL DELIVERY OF GOODS. 14. FURTHER, THE ASSESSEE CLAIMED THAT GOODS WERE SO LD TO THE PARTIES, WHO HAS CONFIRMED RECEIPT OF THE GOODS AND ENTRIES OF PURCH ASES AND SALES ARE ENTERED IN THE STOCK REGISTER, WHICH WAS DULY PRODUCED BEFORE T HE ASSESSING OFFICER. 15. REGARDING THE CONTENTION OF ENTRIES IN STOCK RE GISTER, BEFORE US, THE ASSESSEE SUBMITTED A STATEMENT OF PURCHASES AND SAL ES, WHICH IS AVAILABLE ON PAGE 1 TO 25 OF THE PAPER BOOK. THIS STATEMENT HAS B EEN CLAIMED AS STOCK 13 ITA NOS. 5610 & 6081/DEL/2014. RAUNAQ INTERNATIONAL LTD.,NEW DELHI. REGISTER. THIS REGISTER CONTAINS PARTY WISE PURCHASE BILL AND QUANTITY DETAILS AND CORRESPONDING SALES OF THE SAME ITEMS. WE HAVE OBSE RVED A UNIQUE FEATURE IN SAID REGISTER THAT EXACTLY IDENTICAL QUANTITY IS RE CORDED IN SALE BILL CORRESPONDING TO EACH PURCHASE BILL. FOR READY REFERENCE, WE ARE R EPRODUCING THE PURCHASE BILLS, ITEMS AND QUANTITY IN RESPECT OF PURCHASES MADE FRO M ONE OF THE PARTY, NAMELY ESSAR STEEL LIMITED AND CORRESPONDING SALES, WHICH A RE AVAILABLE ON PAGE 24 OF THE PAPER BOOK, AS UNDER: PU RCHASE INVOICE PURCHASE INVOICE DATE ITEM DESCRIPTION QTY UOM SALES INVOICE SALES INVOCIE DATE QTY UOM NAME OF THE PARTY 155542 04/01/2011 PLATES 4.92 MT 156/036 31-JAN- 11 4.92 MT 6.90 NTPC LTD. (RIHAND) 155540 04/01/2011 PLATES 4.93 MT 156/036 31-JAN- 11 4.93 MT 0.00 NTPC LTD. (RIHAND) 155541 04/01/2011 PLATES 5.01MT SITE FAB 5.01MT 0.00 NTPC LTD. (RIHAND) 177180 03/02/2011 PLATES 31.07MT SITE FAB 31.07MT 0.00 NTPC LTD. (RIHAND) 189249 17/02/2011 PLATES 7.16MT SITE FAB 7.16MT 0.00 NTPC LTD. (RIHAND) 189250 17/02/2011 PLATES 9.09MT 204/043 14-MAR- 11 9.09MT 6.30 NTPC LTD. (RIHAND) 146398 20/12/2010 PLATES 24.69MT 128/001 30-DEC- 10 24.69MT 17.73 POWERFEN INFRASTRUCTURE (L.L.C) FOHS 146545 20/12/2010 PLATES 14.71MT 128/001 30-DEC- 10 14.71MT 0.00 POWERFEN INFRASTRUCTURE (L.L.C) FOHS 153884 31/12/2010 PLATES 14.39MT 137/2&139/3 31-DEC- 10 14.39MT 36.76 POWERFEN INFRASTRUCTURE (L.L.C) FOHS 152792 30/12/2010 PLATES 9.48MT 137/2&139/3 31-DEC- 10 9.48MT 0.00 POWERFEN INFRASTRUCTURE (L.L.C) FOHS 152791 30/12/2010 PLATES 24.00MT 137/2&139/3 31-DEC- 10 24.00MT 0.00 POWERFEN INFRASTRUCTURE 14 ITA NOS. 5610 & 6081/DEL/2014. RAUNAQ INTERNATIONAL LTD.,NEW DELHI. (L.L.C) FOHS 153710 31/12/2010 PLATES 19.27MT 137/2&139/3 31-DEC- 10 19.27MT 0.00 POWERFEN INFRASTRUCTURE (L.L.C) FOHS 153752 31/12/2010 PLATES 4.93 MT 137/2&139/3 31-DEC- 10 4.93 MT 0.00 POWERFEN INFRASTRUCTURE (L.L.C) FOHS 153751 31/12/2010 PLATES 4.98 MT 137/2&139/3 31-DEC- 10 4.98 MT 0.00 POWERFEN INFRASTRUCTURE (L.L.C) FOHS 153750 31/12/2010 PLATES 4.93 MT 137/2&139/3 31-DEC- 10 4.93 MT 0.00 POWERFEN INFRASTRUCTURE (L.L.C) FOHS 155381 03/01/2011 PLATES 15.22 MT 144/04 13-JAN- 11 15.22 MT 6.70 POWERFEN INFRASTRUCTURE (L.L.C) FOHS 156215 05/01/2011 PLATES 13.39 MT 150/05 24-JAN- 11 13.39 MT 19.02 POWERFEN INFRASTRUCTURE (L.L.C) FOHS 157531 06/01/2011 PLATES 18.12 MT 150/05 24-JAN- 11 18.12 MT 0.00 POWERFEN INFRASTRUCTURE (L.L.C) FOHS 157588 07/01/2011 PLATES 18.28 MT 150/05 24-JAN- 11 18.28 MT 0.00 POWERFEN INFRASTRUCTURE (L.L.C) FOHS 154257 01/01/2011 PLATES 14.41 MT 152/006 28-JAN- 11 14.41 MT 6.48 POWERFEN INFRASTRUCTURE (L.L.C) FOHS 177641 03/02/2011 PLATES 17.50 MT 172/07 11-FEB-11 17.50 MT 7.88 POWERFEN INFRASTRUCTURE (L.L.C) FOHS 198294 27/02/2011 PLATES 9.04 MT NON BILLABLE 9.04 MT 0.00 POWERFEN INFRASTRUCTURE (L.L.C) FOHS 198295 27/02/2011 PLATES 6.69 MT NON BILLABLE 6.69 MT 0.00 POWERFEN INFRASTRUCTURE (L.L.C) FOHS SIMILAR DETAILS IN CASE OF PURCHASES FROM M/S RELIA BLE METAL INDIA ARE AVAILABLE ON PAGE 6 OF THE PAPER BOOK, WHICH ARE REPRODUCED AS UN DER FOR READY REFERENCE: PURCHASE INVOICE PURCHASE INVOICE DATE ITEM DESCRIPTIO N QTY. UOM PURCHASE AMOUNT SALES INVOICE SALES INVOICE DATE QTY.UOM CUSTO MER NAME RMI/152/10 25 - JUN - 10 S.S. SHEET/PLATE 8995 KGS 18.80 063/MH/063 25-JUN-10 8995 KGS 19.44 BALAJI ENTERPR ISE RMI/151/10 24 - JUN - 10 S.S. P IPE 5215 KGS 10.43 060/MH/060 24 - 52 5 1 KGS 10.69 15 ITA NOS. 5610 & 6081/DEL/2014. RAUNAQ INTERNATIONAL LTD.,NEW DELHI. JUN - 10 D.M.MET AL RMI/149/10 24 - JUN - 10 S.S. PIPE 2575 KGS 7.57 057/MH/057 24 - JUN - 10 2575KGS 7.85 SHAILES H METAL CORP. RMI/147/10 23 - JUN - 10 S.S. SHEET/ PLATE 9225 KGS 18.08 052/MH/052 23 - JUN-10 9225 KGS 18.91 BALAJI ENTERPR EISE RMI/144/10 22 - JUN - 10 S.S. P IPE 6470 KGS 12.75 046/MH/046 22 - JUN-10 6470 KGS 13.26 MAHALA XMI STEEL CENTRE RMI/141/10 21 - JUN - 10 S.S. PIPE 7410 KGS 16.60 039/MH/039 21 - JUN-10 7410 KGS 17.04 SHAILES H METAL CORP. 16. IN OUR OPINION THAT STATEMENT OF PURCHASES AND SALES FILED BY THE ASSESSEE, IS NOT A STOCK REGISTER MAINTAINED IN DAY-TO-DAY CO URSE OF THE BUSINESS AND IT HAS BEEN PREPARED SUBSEQUENTLY TO MATCH THE PARTY WISE P URCHASES AND CORRESPONDING SALES ONLY. 17. THE CONFIRMATION OF THE PARTIES TO WHOM GOODS HAV E BEEN SOLD AND THE STATEMENT OF PURCHASES AND SALES MAY ESTABLISH THE FACT THAT GOODS ARE SOLD AND DELIVERED TO THOSE PARTIES, HOWEVER THESE DOCUMENTS CANNOT ESTABLISH THAT THE ASSESSEE RECEIVED GOODS PHYSICALLY FROM M/S RELIABL E METAL INDIA. IN OUR OPINION, THE ASSESSEE DID NOT DISCHARGE ITS ONUS OF SUBSTANT IATING PHYSICAL DELIVERY OF GOODS TO THE ASSESSEE. THE ASSESSEE HAS NOT FURNISHE D ANY EVIDENCE AS HOW THE GOODS WERE TRANSPORTED TO THE ASSESSEE. THE ASSESSEE HAS NOT PROVIDED ANY EVIDENCE OF EXPENDITURE ON TRUCK OR ANY LORRY FOR T RANSPORT OF THESE HEAVY GOODS 16 ITA NOS. 5610 & 6081/DEL/2014. RAUNAQ INTERNATIONAL LTD.,NEW DELHI. WEIGHING IN TONS, FROM THE PREMISES OF M/S RELIABLE METAL (INDIA), EITHER BY THE ASSESSEE OR BY M/S RELIABLE METAL INDIA. FROM THE TAX INVOICES ISSUED BY THE ASSESSEE FOR SALE OF GOOD AVAILABLE IN PAGE 33 TO 3 8, IT IS EVIDENT THAT OFFICE OF THE ASSESSEE AT MUMBAI WAS LOCATED ON 14 TH FLOOR, HOECHET HOUSE, NARIMAN POINT, MUMBAI. IT IS NOT CLEAR, HOW & WHERE THE ASSE SSEE COULD HAVE STORED THE GOODS PURCHASED. THE ASSESSEE HAS ALSO NOT SHOWN BE FORE US LOADING AND UNLOADING EXPENSES INCURRED ON THE PURCHASE IN QUES TION. IN SUCH CIRCUMSTANCES, WHEN SALES HAVE NOT BEEN DOUBTED BY THE ASSESSING OFFICER, THE ONLY CONCLUSION WHICH COULD BE DRAWN IS THAT THE ASS ESSEE HAS PURCHASED GOODS IN CASH FROM OTHER PERSONS OR GREY MARKET AND SUPPL IED TO THE PARTIES TO WHOM THE GOODS WERE SOLD. 18. IN THE PARA 4.2.17 ABOVE , THE LD. CIT(A) HAS ME NTIONED THAT THE ASSESSEE HAS SHOWN SALES CORRESPONDING TO EACH OF THE PURCHA SES IN REFERENCE AND THUS IT WAS NOT A CASE OF PURCHASES BEING SHOWN WITHOUT SALE O F GOODS. HOWEVER HE HAS MENTIONED THAT IT IS POSSIBLE THAT THE APPELLANT MI GHT HAVE TAKEN ONLY PURCHASE BILL FROM THE SAID PARTY AND HAS OBTAINED THE GOODS FROM SOME OTHER SOURCE, WHO DID NOT GIVE THE BILL. 17 ITA NOS. 5610 & 6081/DEL/2014. RAUNAQ INTERNATIONAL LTD.,NEW DELHI. 19. WE AGREE WITH THE ABOVE OBSERVATION OF THE LD. C IT(A). IN THE CIRCUMSTANCES, WHERE SALES RECORDED IN BOOKS OF ACC OUNTS ARE CONFIRMED BUT THE PURCHASE ARE NOT GETTING CONFIRMED, THE ONLY POSSIB ILITY IS THAT THE ASSESSEE HAS PURCHASED GOODS IN CASH FROM GREY MARKET AND THE PA YMENT MADE SUBSEQUENTLY THROUGH CHEQUE OR RTGS ARE RECEIVED BACK IN CASH OR TRANSFERRED BY WAY OF CHEQUE OR RTGS TO OTHER RELATED CONCERNS. 20. IN THE INSTANT CASE GOODS HAVE BEEN SHOWN AS PUR CHASED BETWEEN 21/06/2010 TO 25/06/2010, WHEREAS PAYMENTS FOR THOSE PURCHASES HAVE BEEN SHOWN TO HAVE MADE FROM 21/10/2010 TO 10/02/2011. THE ASSESSEE HAS SHOWN PAYMENT TO M/S RELIABLE METAL INDIA THROUGH RTGS, DE TAILS OF WHICH, AVAILABLE ON PAGE 46 OF THE PAPER BOOK , ARE REPRODUCED AS UNDER: DETAILS OF AMOUNT TRNSFRD THRU RTGS PARTY AMOUNT BANK DTD CHEQUE NOS 1. RELIABLE METAL 1150000.00 ICICI 21/10/2010 535146 2 RELIABLE METAL 1500000.00 ICICI 25/10/2010 536276 3 RELIABLE METAL 455749.00 SBI 25/10/2010 069846 4 RELIABLE METAL 750000.00 ICICI 28/10/2010 536288 5 RELIABLE METAL 666064.00 ICICI 09/12/2012 550117 6 RELIABLE METAL 500000.00 SBI 18/01/2011 277332 7 RELIABLE METAL 1350000.00 SBI 31/01/2011 277360 8 RELIABLE METAL 1094038.00 SBI 07/02/2011 277375 18 ITA NOS. 5610 & 6081/DEL/2014. RAUNAQ INTERNATIONAL LTD.,NEW DELHI. 9 RELIABLE METAL 1293586.00 SBI 10/02/2011 277388 TOTAL 8759437.00 21. IN VIEW OF AFORESAID CIRCUMSTANCES, WE CAN SAFELY PRESUME THAT THE CASH CORRESPONDING TO THE RTGS PAYMENT MUST HAVE BEEN REC EIVED BACK BY THE ASSESSEE AFTER DATE OF PAYMENT I.E. AFTER 21/10/201 0 AND THEREFORE GOODS FOR SUPPLYING TO SALES PARTIES WERE PURCHASED (I.E. 21/6 /2010 TO 25/06/2010) FROM OTHER PERSONS, UTILIZING CASH. THE ONUS IS ON THE A SSESSEE TO EXPLAIN WHEN & HOW THE CASH HAS BEEN PAID FOR PURCHASE FROM GRAY MARKE T AND IT IS FOR THE ASSESSEE TO EXPLAIN AVAILABILITY OF CASH IN BOOKS OF ACCOUNT . IN SUCH CIRCUMSTANCES GENERALLY CASH PURCHASES ARE MADE AT LOWER PRICE THA N NORMAL, AND THE GROSS PROFIT OF THE TAXPAYER ALSO BECOMES HIGHER. 22. WE OBSERVE THAT THE ABOVE ISSUE OF CASH INVESTM ENT IN PURCHASES HAS NOT BEEN EXAMINED BY THE LD. ASSESSING OFFICER AND CONS EQUENTLY THE ASSESSEE ALSO DID NOT GET OPPORTUNITY TO EXPLAIN ITS STAND, WE FEE L IT APPROPRIATE TO RESTORE THE ISSUE OF UNVERIFIABLE PURCHASES TO THE FILE OF THE ASSESSING OFFICER FOR DECIDING AFRESH IN VIEW OF OUR OBSERVATIONS ABOVE AND IN ACC ORDANCE WITH LAW AFTER PROVIDING ADEQUATE OPPORTUNITY OF BEING HEARD TO TH E ASSESSEE ACCORDINGLY, THIS GROUND OF REVENUES APPEAL IS ALLOWED FOR STATISTICA L PURPOSES. 19 ITA NOS. 5610 & 6081/DEL/2014. RAUNAQ INTERNATIONAL LTD.,NEW DELHI. 23. THE GROUND NO. 1 OF THE APPEAL OF THE ASSESSEE IS GENERAL IN NATURE AND COVERED BY OTHER GROUNDS, AND THUS WE ARE NOT SPECIF ICALLY ADJUDICATING UPON THIS GROUND. 24. IN GROUND NO. 2 , THE ASSESSEE HAS CHALLENGED SUSTAINING OF DISALLO WANCE OF RS. 15,66,869/-ON ACCOUNT OF LEAVE ENCASHMENT UN DER SECTION 43B OF THE ACT. THE LD. CIT(A) REJECTED THE CLAIM OF THE ASSESSEE OBS ERVING AS UNDER: 4.3.1 IN THIS GROUND THE APPELLANT IS AGITATING AGAINST T HE AOS ACTION IN NOT ALLOWING THE APPELLANTS CLAIM FOR DEDUCTION OF PROVISION FOR LEAVE ENCASHMENT OF RS. 15.66,689/-. THE APPELLANT HAD S UBMITTED BEFORE THE AO THAT AS PER THE DIRECTION OF THE HONBLE SUPREME COURT IN THE CASE OF EXIDE I NDUSTRIES LTD., IT HAD MADE THE PAYMENT OF TAX ON THE SAID PR OVISION AND CLAIMED IT. THE AO, HOWEVER, DID NOT ACCEPT THE SAME AND REJECTED T HE APPELLANTS CLAIM MADE DURING THE ASSESSMENT PROCEEDINGS. HE HAS ALSO REFE RRED TO THE DECISION OF HONBLE SUPREME COURT IN THE CASE OF GOEGTZ (I) LTD . WHEREIN IT WAS HELD THAT THE AO CANNOT ENTERTAIN ANY CLAIM MADE WITHOUT REVISING THE RETURN OF INCOME. 4.3.2 DURING THE APPEAL PROCEEDINGS, THE AR HAS SU BMITTED THAT THE MATTER IS PENDING BEFORE HONBLE SUPREME COURT AND THAT A DIR ECTION MAY BE GIVEN TO THE AO TO ALLOW THE EXPENSES ON THE FINAL OUTCOME OF TH E MATTER PENDING BEFORE THE HONBLE SUPREME COURT. 4.3.3 IT IS NOTED THAT FOR THE PRESENT YEAR THE APP ELLANT HAS NOT MADE ANY CLAIM IN THE RETURN OF INCOME. THEREFORE, THE AO HAS RIGH TLY REJECTED THE CLAIM. MOREOVER, ON THE SAME ISSUE I HAVE ALREADY HELD IN THE APPELLANTS OWN CASE FOR A.Y. 2009-10 THAT THE APPELLANT WAS NOT ELIGIBLE FO R THE CLAIM AS THE WORDS IN SECTION 43B(F) OF THE IT ACT ARE VERY CLEAR AND NO CLAIM IS ENTERATINABLE UNLESS 20 ITA NOS. 5610 & 6081/DEL/2014. RAUNAQ INTERNATIONAL LTD.,NEW DELHI. THERE IS ACTUAL PAYMENT DURING THE YEAR. FOLLOWING MY ORDER DATED 09/12/2012 IN THE APPELLANTS OWN CASE FOR A.Y. 2009-10 AND FOR T HE SAME REASONS, THIS GROUND IS REJECTED. 24.1 BEFORE US THE LD. COUNSEL REITERATED THE SUBMI SSION MADE BEFORE THE LD. CIT(A), WHEREAS THE LD. DR RELIED ON THE FINDING OF T HE LD. CIT(A). 24.2 WE HAVE HEARD THE RIVAL SUBMISSION AND PERUSED THE RELEVANT MATERIAL ON RECORD. IN THE INSTANT CASE IT IS EVIDENT FROM THE ORDER OF THE LD. CIT(A) THAT THE ASSESSEE HAS NOT MADE ACTUAL PAYMENT OF THE SAID AM OUNT OF LEAVE ENCASHMENT. AS PER THE PROVISIONS OF THE SECTION 43B OF THE ACT , CLAIM OF LEAVE ENCASHMENT IS ALLOWED ONLY IN PAYMENT BASIS. IF THE ASSESSEE HAS N OT MADE THE ACTUAL PAYMENT, IT IS NOT ENTITLED FOR DEDUCTION UNDER SECTION 43B OF THE ACT. WE DO NOT FIND ANY ERROR IN THE ORDER OF THE LD. CIT(A) AND ACCORDINGLY WE UPHOLD THE SAME. THE GROUND OF THE APPEAL OF THE ASSESSEE IS REJECTED. 25 . THE GROUND NO. 3 OF THE APPEAL OF THE ASSESSEE RELATES TO DISALLOWAN CE UNDER SECTION 14 A OF THE ACT AMOUNTING TO RS. 1,39 ,462/-. 25.1 IN THE RETURN OF INCOME FILED THE ASSESSEE DIS ALLOWED AMOUNT OF RS. 1,39,462/-HOWEVER DURING THE ASSESSMENT PROCEEDING F ILED A CLAIM TO WITHDRAW THE SAID DISALLOWANCE. THE ASSESSING OFFICER REJECTED THE CLAIM OF THE ASSESSEE 21 ITA NOS. 5610 & 6081/DEL/2014. RAUNAQ INTERNATIONAL LTD.,NEW DELHI. ON THE GROUND THAT NO REVISED RETURN OF INCOME WAS F ILED WITHDRAWING THE SAID DISALLOWANCE. THE LD. CIT(A) ALSO REJECTED THE CLAIM OF THE ASSESSEE FOLLOWING HIS OWN ORDER DATED 09/12/2012 FOR ASSESSMENT YEAR 2 009-10. 25.2 BEFORE US, THE ASSESSEE CLAIMED THAT INVESTMEN T IN SHARES OF THE GROUP COMPANY WAS MADE OUT OF OWN INTEREST FREE REFUNDS AN D NO EXPENDITURE WAS INCURRED FOR EARNING THE DIVIDEND INCOME OF RS. 3,5 1,960/-. THE LD. COUNSEL ALSO FILED COPY OF THE BALANCE SHEET TO SUPPORT THE CONT ENTION THAT NO UNSECURED LOANS HAVING BEEN TAKEN AND THE BORROWED FUNDS HAVE BEEN UTILIZED TOWARDS PURPOSE FOR WHICH LOANS WERE TAKEN. ON THE CONTRARY, THE LD. DR RELIED ON THE FINDING OF THE LD. CIT(A). 25.3 WE HAVE HEARD THE RIVAL SUBMISSION AND PERUSED THE RELEVANT MATERIAL ON RECORD. IN THE FACTS OF THE CASE, IT IS NOT CLEAR WH ETHER THE DISALLOWANCE OF RS. 1,39,462/-MADE SUO MOTO BY THE ASSESSEE IN THE RETU RN OF INCOME FILED WAS IN ACCORDANCE WITH RULE 8D OF THE INCOME TAX RULES, 196 2 (IN SHORT THE RULES). THE CONTENTION OF THE ASSESSEE OF UTILIZATION OF OWNE D INTEREST FREE FUNDS FOR INVESTMENT IN SHARES OF SISTER CONCERN WILL BECOME R ELEVANT ONLY WHEN THE DISALLOWANCE OF INTEREST ATTRIBUTABLE TO INVESTMENT IN ASSETS CAPABLE OF YIELDING EXEMPTED INCOME HAS BEEN MADE, WHILE COMPUTING THE DISALLOWANCE OF RS. 22 ITA NOS. 5610 & 6081/DEL/2014. RAUNAQ INTERNATIONAL LTD.,NEW DELHI. 1,39,462/-. SINCE NO SUCH DETAILS HAVE BEEN FURNISH ED BEFORE US BY EITHER OF THE PARTY, THUS IN THE INTEREST OF JUSTICE, WE FEEL IT A PPROPRIATE TO RESTORE THIS ISSUE TO THE FILE OF THE ASSESSING OFFICER FOR DECIDING AFRE SH IN ACCORDANCE WITH LAW. IT IS NEEDLESS TO MENTION THAT THE ASSESSEE SHALL BE AFFO RDED ADEQUATE OPPORTUNITY OF BEING HEARD ON THE ISSUE. THE GROUND OF THE APPEAL O F THE ASSESSEE IS ACCORDINGLY ALLOWED FOR STATISTICAL PURPOSES. 26. IN THE RESULT, APPEAL OF THE REVENUE IS ALLOWED FOR STATISTICAL PURPOSES, WHEREAS APPEAL OF THE ASSESSEE IS PARTLY ALLOWED FOR STATISTICAL PURPOSES. ORDER PRONOUNCED IN THE OPEN COURT ON 22/6/2018. SD/- SD/- AMIT SHUKLA O.P.KANT (JUDICIAL MEMBER) (ACCOUNTANT MEMBER) DATED: 22.06.2018 POOJA/- COPY FORWARDED TO: 1. APPELLANT 2. RESPONDENT 3. CIT 4. CIT(APPEALS) 5. DR: ITAT 23 ITA NOS. 5610 & 6081/DEL/2014. RAUNAQ INTERNATIONAL LTD.,NEW DELHI. ASSISTANT REGISTRAR ITAT NEW DELHI DATE OF DICTATION DATE ON WHICH THE TYPED DRAFT IS PLACED BEFORE THE DICTATING MEMBER DATE ON WHICH THE TYPED DRAFT IS PLACED BEFORE THE OTHER MEMBER DATE ON WHICH THE APPROVED DRAFT COMES TO THE SR. PS/PS DATE ON WHICH THE FAIR ORDER IS PLACED BEFORE THE DICTATING MEMBER FOR PRONOUNCEMENT DATE ON WHICH THE FAIR ORDER COMES BACK TO THE SR. PS/PS DATE ON WHICH THE FINAL ORDER IS UPLOADED ON THE WEBSITE OF ITAT DATE ON WHICH THE FILE GOES TO THE BENCH CLERK DATE ON WHICH THE FILE GOES TO THE HEAD CLERK THE DATE ON WHICH THE FILE GOES TO THE ASSISTANT 24 ITA NOS. 5610 & 6081/DEL/2014. RAUNAQ INTERNATIONAL LTD.,NEW DELHI. REGISTRAR FOR SIGNATURE ON THE ORDER DATE OF DISPATCH OF THE ORDER