Appeal Details
Counselvise Citation
[2016] 133 COUNSELVISE.COM (IT) 9270 (ITAT-AHMEDABAD)
Assessee PAN
Bench
Appeal Number
Duration Of Justice
4 year(s) 5 day(s)
Appellant
Respondent
Appeal Type
Income Tax Appeal
Pronouncement Date
14-03-2016
Appeal Filed By
Department
Order Result
Dismissed
Bench Allotted
A
Next Hearing Date
08-03-2016
Assessment Year
2008-2009
Appeal Filed On
09-03-2012
Judgement Text
IN THE INCOME TAX APPELLATE TRIBUNAL AHMEDABAD A BENCH (BEFORE SHRI N.K. BILLAIYA, ACCOUNTANT MEMBER & SHRI KUL BHARAT, JUDICIAL MEMBER) ITA. NOS: 582 & 610/AHD/2012 (ASSESSMENT YEAR: 2008-09) SHRI JAGDISH H. PATEL PROP: OF TIRUPATI AGRO INDUSTRIES, PLOT NO. 244, INDRAD, INDRAD-KADI ROAD, KADI, DIST: MEHSANA. THE ACIT, CENTRAL CIRCLE- 1(1), SURAT V/S V/S THE ACIT, CENTRAL CIRCLE- 1(1), SURAT SHRI JAGDISH H. PATEL PROP: OF TIRUPATI AGRO INDUSTRIES, PLOT NO. 244, INDRAD, INDRAD-KADI ROAD, KADI, DIST: MEHSANA. (APPELLANT) (RESPONDENT) ITA. NOS: 583 & 611/AHD/2012 (ASSESSMENT YEAR: 2009-10) SHRI JAGDISH H. PATEL PROP: OF TIRUPATI AGRO INDUSTRIES, PLOT NO. 244, INDRAD, INDRAD-KADI ROAD, KADI, DIST: MEHSANA. THE ACIT, CENTRAL CIRCLE- 1(1), SURAT V/S V/S THE ACIT, CENTRAL CIRCLE- 1(1), SURAT SHRI JAGDISH H. PATEL PROP: OF TIRUPATI AGRO INDUSTRIES, PLOT NO. 244, INDRAD, INDRAD-KADI ROAD, KADI, DIST: MEHSANA. (APPELLANT) (RESPONDENT) ITA NOS. 582 ,583,610 & 611/AHD/12 . A.YS. 2008- 09 & 2009-2010 2 PAN: ANSPP8460C APPELLANT BY : SHRI S.N. DIVETIA, AR RESPONDENT BY : SHRI SOMOGYAN PAL, SR. D.R. ( )/ ORDER DATE OF HEARING : 08 -03-201 6 DATE OF PRONOUNCEMENT : 14 -03-2016 PER N.K. BILLAIYA, ACCOUNTANT MEMBER: 1. ITA NOS. 582 & 610/AHD/2012 ARE CROSS APPEALS BY TH E ASSESSEE AND THE REVENUE FOR A.Y. 2008-09 PREFERRED AGAINST THE ORDER OF LD. CIT(A)- I, AHMEDABAD DATED 05.01.2012 AND ITA NOS. 583 & 61 1/AHD/2012 ARE CROSS APPEALS BY THE ASSESSEE AND THE REVENUE A GAINST THE ORDER OF LD. CIT(A)-I, AHMEDABAD DATED 05.01.2012. 2. THE LEARNED REPRESENTATIVES OF BOTH SIDES AGREED TH AT THE FACTS IN ISSUES INVOLVED IN ALL THESE APPEALS ARE COMMON THE REFORE, ALL THESE APPEALS WERE HEARD TOGETHER AND ARE DISPOSED OF BY THIS COMMON ORDER FOR THE SAKE OF CONVENIENCE. 3. THE COMMON ISSUE IN ALL THESE APPEALS RELATES TO TH E ALLEGED BOGUS PURCHASES MADE BY THE ASSESSEE THOUGH QUANTUM MAY D IFFER IN DIFFERENT ASSESSMENT YEARS BUT THE FACT IS THAT DUR ING THE COURSE OF SEARCH AND SURVEY PROCEEDINGS IN THE CASE OF EDIBLE OIL MILL GROUP IT WAS NOTICED THAT M/S. VISHAL TRADERS, DIST. KHEDA H AD ISSUED BOGUS/ADJUSTMENTS BILLS TO A LARGER NUMBER OF CONCE RNS OF MEHSANA AND PATAN DISTRICTS OF GUJARAT DURING FINANCIAL YEA R 2006-07 ONWARDS. ITA NOS. 582 ,583,610 & 611/AHD/12 . A.YS. 2008- 09 & 2009-2010 3 IN HIS STATEMENT RECORDED U/S. 131 OF THE ACT, THE PROPRIETOR OF VISHAL TRADERS, SHRI DHARMENDRA PANDYA ADMITTED THAT HIS F IRM WAS NOT IN EXISTENCE AND THE BILLS ISSUED WERE BOGUS/ADJUSTMEN TS BILLS ONLY. 4. ON PERUSAL OF THE BANK STATEMENTS OF SHRI DHARMEND RA PANDYA, IT WAS NOTICED THAT THERE WAS A CONTINUOUS PATTERN OF DEPO SIT AND IMMEDIATE WITHDRAWAL OF CASH. 5. PURSUANCE TO THE AFOREMENTIONED SEARCH OPERATION, I NQUIRIES WERE MADE FROM THE BENEFICIARIES OF SUCH BOGUS/ACCOMMODA TION BILLS AND THE ASSESSEE BEFORE US IS ONE OF THE BENEFICIARIES. 6. THE ASSESSEE WAS FOUND TO HAVE MADE PURCHASES FROM THE FOLLOWING PARTIES DURING THE ASSESSMENT YEAR 2008-09. (I) M/S. VISHAL TRADERS RS. 2,67,00,2 02/- (II) M/S. PATEL VIPULKUMAR BHARATBHAI NI CO. RS. 2, 29,67,780/- (III) PATEL VAIMILKUMAR HARSHADBHAI RS. 10,31,915/- (IV) KANAIYALAL PRAHLADBHAI PATEL RS. 2,96,05 2/- (V) URD PURCHASES RS. 56,85,481/- TOTAL RS. 5,66,81,430/- 7. THE ASSESSEE WAS ASKED TO FURNISH EXPLANATION IN TH IS REGARD. THE ASSESSEE WAS ALSO GIVEN COPIES OF STATEMENTS OF SHR I MADANLAL SHAH AND SHRI DHARMENDRA PANDYA VIDE SUBMISSION DATED 12 .11. 2010, THE ASSESSEE SUBMITTED HIS EXPLANATION IN REGARD TO THE ISSUE OF BOGUS/PURCHASES. THE RELEVANT PORTION OF THE SAID S UBMISSION OF THE ASSESSEE READS AS UNDER:- '6. A. I HAVE COMMENCED MY BUSINESS W.E.F. OCTOBER, 2006. THIS BEING MY FIRST BUSINESS VENTURE, I WAS UNAWARE OF ACCOUNTING SYSTE M TO BE FOLLOWED. SO, WHAT WAS ADVISED BY MY CONSULTANT, I HAD FOLLOWED THE SA ME SYSTEM OF BOOK KEEPING. ITA NOS. 582 ,583,610 & 611/AHD/12 . A.YS. 2008- 09 & 2009-2010 4 YOUR OBSERVATION OF NOT KEEPING ANY RECORD LIKE STO CK REGISTER, MOVEMENT REGISTER, DELIVERY CHALLANS, L.R., BILLS AND RECEIPTS FOR PUR CHASES MADE IS CORRECT AS THE SAME SYSTEM OF BOOK KEEPING IS PREVAILING IN THE RU RAL AREA. THIS CAN BE ALSO EVIDENT FROM THE OTHER PARTIES ON WHOM YOUR GOOD SELF HAS DONE SURVEY WITH US. I DO THE ENTRY OF INWARD OF QUANTITY WITH VALUE IN TH E BOOKS OF ACCOUNTS. B. YOU GOOD SELF HAS RECORDED MY STATEMENT ON 20.6. 2008. AS NO COPY IS GIVEN TO ME, I DOES NOT REMEMBER -WHAT YOUR GOOD SELF HAD CO NFRONTED ME AT THE TIME OF RECORDING MY STATEMENT. AT THE TIME OF RECORDING ST ATEMENT, MY MENTAL CONDITION WAS UNDER MUCH STRESS AND PRESSURE, HENCE, 1 HAD SI MPLY PUT SIGNATURE WITHOUT READING THE CONTENT OF THE STATEMENT. NOW, YOU ARE SAYING THAT I HAD ADMITTED THAT 'AMOUN T OF RS.61,05,000/- WAS GIVEN TO M/S. VISHAL TRADERS AND TWO OTHERS BY WAY OF BEA RER CHEQUES HAVE ACTUALLY RECEIVED BACK IS NOT CORRECT. I HAD MADE PURCHASE O F GOODS FROM DIRECT PRODUCER AND ONLY INVOICE OF THESE THREE PARTY WERE TAKEN TO REGULARIZE THE SAME. BY DOING THIS, I WAS GETTING BENEFIT IN PURCHASE PRICE OFRS. 4 TO 5 PER 20 KGS. ALSO YOUR GOOD SELF ARE SAYING THAT BILL OF RS.2.67 CRORES IS OBTA INED BY ME WITHOUT PURCHASING ANY MATERIALS IS ALSO NOT CORRECT. I HAD ACTUALLY P URCHASED GOODS, PROCESSED THE SAME IN THE FACTORY AND SOLD TO OUTSIDERS. SO, I HA D MADE REGULAR PURCHASE OF MATERIALS ACCOUNTED IN THE BOOKS AND SOLD GOODS OUT OF ABOVE PURCHASE. NO BOGUS PURCHASE WAS ACCOUNTED IN THE BOOKS TO REDUCE THE P ROFIT OF THE FIRM. C. THE REASON FOR MAINTAINING HUGE CASH BALANCE IS THAT NORMALLY WE RECEIVED PAYMENT THROUGH RTGS IN KOTAK MAHINDRA BANK KADI BR ANCH, WHERE AS OUR CASH CREDIT LIMIT WAS SANCTIONED IN DENA GUJARAT GRAMIN BANK AT GANDHINAGAR. NORMALLY, I WITHDRAW CASH FROM KOTAK BANK AND DEPOS IT IT IN DENA GRAMIN BANK. DUE TO THIS, SOME TIME HUGE CASH ON HAND WAS MAINTA INED WITH ME. ALSO I PURCHASE RAYDO AND ARANDA FROM DIRECT PRODUCER (FAR MERS). AS PER THE PREVAILING ITA NOS. 582 ,583,610 & 611/AHD/12 . A.YS. 2008- 09 & 2009-2010 5 SYSTEM, WE HAVE TO MAKE IMMEDIATE PAYMENT AGAINST P URCHASE OF GOODS. HENCE HUGE CASH ON HAND IS REQUIRED TO KEEP WITH US. THE SOURCE OF HUGE CASH ON HAND IS WITHDRAWALS MADE FROM THE BANK ONLY. D. YOUR GOOD SELF DRAWN CONCLUSION THAT PURCHASE MA DE DURING THE F. Y. 2007-08 & 2008-09 FROM M/S PATEL VIPULKUMAR BHARATBHAI NI C O. IS NOT GENUINE ONLY BECAUSE BILLS CONTAIN SAME SIGNATURE FOR A VERY LON G PERIOD. THIS IS HYPOTHESIS AND NOT THE FACT. THE FACT IS MATERIALS WERE PURCHASED FROM THE PARTY AND PAYMENT IS MADE TO IT AND OUT OF THESE PURCHASES, SALE OF GOOD S WERE MADE BY ME. E. FROM THE ABOVE, IT SEEMS THAT YOUR GOOD SELF HAS DRAWN CONCLUSION THAT NO ACTUAL MATERIAL WAS PURCHASED BY ME AND ONLY PURCHA SE BILLS WERE TAKEN FROM ABOVE PARTY AND MY TOTAL PURCHASE IS BOGUS. THEN HO W I HAVE EFFECTED SALE OF GOODS TO OUTSIDERS? IF, FOR A WHILE, PRESUME THAT Y OUR HYPOTHESIS IS CORRECT THEN CORRESPONDINGLY MY TOTAL SALES IS ALSO BOGUS. THIS IS NOT CORRECT. THE FACT IS I HAD PURCHASED GOODS, PROCESSED IT IN THE FACTORY WITH P OWER CONSUMPTION AND SOLD FINISHED GOODS TO OTHERS. PAYMENT IS RECEIVED FROM BUYER OF GOODS AND DEPOSITED IN THE BANK. I DID NOT ACCEPT THAT ANY BOGUS PURCHA SE WAS MADE BY ME DURING THE FINANCIAL YEAR 2007-08 & 2008-09 AND ANY UNDISCLOSE D INCOME OF RS. 61.05 LACS IS EARNED BY ME DURING THE ABOVE YEARS. F. WITH REGARD TO STATEMENT GIVEN BY SHRI BHARATBHA I VIHABHAI PATEL ON 30.6.2008, I AM ENCLOSING A COPY OF AFFIDAVIT EXECUTED BY PROP RIETOR OF ABOVE FIRM FOR YOUR GOODSELFS KIND CONSIDERATION. I ALSO ENCLOSE HEREW ITH COPY OF SALES TAX ASSESSMENT ORDER FOR F.Y. 2008-09 PASSED BY SALES TAX OFFICER, MEHSANA IMPOSING HUGE TAX LIABILITY ON ABOVE FIRM AFTER CONSIDERING THE SALES /PURCHASE FIGURE OF THAT FIRM. IT PROVES THAT SALES MADE BY ABOVE FIRM IS GENUINE AND IN TURN MY PURCHASE IS ALSO GENUINE. IN VIEW OF THE ABOVE, I WOULD LIKE TO REPLY TO YOUR QUESTIONS AS UNDER. ITA NOS. 582 ,583,610 & 611/AHD/12 . A.YS. 2008- 09 & 2009-2010 6 VII) EXPLANATIONS ON WHY PURCHASES MADE FRM 10 M/S VISHAL TRADERS, VIRPUR, 2) M/S. PATEL VIPULKUMAR BHARATBHAI NI CO., 3) VAIMIL PATE. & CO., AND 4) M/S. KANNAIYALAL & CO., WILL BE EXPLAINED IN MY NEXT SUB MISSION. 8. VIDE SUBMISSION DATED 26.11.2010, THE ASSESSEE FURT HER SUBMITTED EXPLANATION IN REGARD TO THE ISSUE OF BOGUS PURCHAS ES WHICH READS AS UNDER:- 1. M/S VISHAL TRADERS * DURING THE YEAR 2007-08, I HAD MADE PURCHASES OF RAYDO APPROXI. 292,000 KGS. DIRECTLY FROM THE PRODUCERS OF GOODS. TO REGULARIZE THE SAME, I HAD OBTAINED INVOICES FROM M/S VISHAL TRADERS AND MADE BEARER CH QUE PAYMENT OFRS.46,25,000/- AS PER STATEMENT ENCLOSED HEREWITH . THIS FACT I HAD CONFIRMED IN MY STATEMENT RECORDED BY YOUR GOOD SELF AGAINST REP LY TO QUESTION NO. 19. EXCEPT THIS PURCHASE, ALL OTHER PURCHASES WERE MADE BY ME AND SUPPLIED BY VISHAL TRADERS. AS THIS IS MY NEW AND FIRST BUSINESS VENTU RE, I WAS UNAWARE OF ACCOUNTING SYSTEM TO BE FOLLOWED AND WHAT WAS ADVICED BY MY AC COUNT, 1 HAD FOLLOWED THE SAME SYSTEM OF BOOK KEEPING PREVAILING IN THE RURAL AREA. IN THE RURAL AREA, NO ONE IS KEEPING SUPPORTING RECORDS EXCEPT PURCHASE OR SA LES BILL OF RESPECTIVE ITEMS. THIS IS THE ONLY DOCUMENTS AVAILABLE WITH ME TO SUB STANTIATE MY CLAIM OF PURCHASE OR SALE OF GOODS. IN MOST OF INVOICES, TRANSPORT VE HICLE NUMBER IS MENTIONED. YOUR GOO SELF CAN DO CROSS VERIFICATION FROM SAME THAT W HETHER ACTUAL GOODS WERE DELIVERED OR NOT. ITA NOS. 582 ,583,610 & 611/AHD/12 . A.YS. 2008- 09 & 2009-2010 7 FOR A WHILE, PRESUMPTION OF YOUR GOOD IS BELIEVE TO BE TRUE THEN HOW I MADE SALE OF FINISHED PRODUCT TO OTHERS? AS YOUR GOOD SELF K NOW THAT I AM RUNNING CRUSHING UNIT, EXTRACT IN THE FORM OF OIL AND CAKE IS OBTAIN ED FROM INPUT RAW MATERIALS LIKE KAPASIA AND RAYDO. WITHOUT ANY RAW MATERIAL (LIKE K APASIA AND RAYDO) PURCHASE, MY SALE IS NOT POSSIBLE. * I WOULD LIKE TO BROUGHT TO YOUR GOOD SELFS NOTI CE, SOME DISCREPANCY IN STATEMENT GIVEN BY THE PROPRIETOR OR ABOVE FIRM ON 9-7-2008, AS UNDER. A) IN REPLY TO QUESTION NO. 4 & 5, HE STATED THAT BUSI NESS WAS HANDLED BY HIS BROTHER IN LAW MR. SANJAYKUMAR M. JOSHI AND HE HAS NO IDEA OF ANY BUSINESS TRANSACTION. B) IN REPLY TO QUESTION NO. 7, 8 & 9, HE STATED THAT H E DOES NOT KNOW ANY PERSON AS HE HAS NOT DONE ANY DEALING WITH THE PARTY. HE HAS NOT INVESTED ANY CAPITAL IN THE BUSINESS AND WHETHER ANY BOOKS OF ACCOUNTS ARE MAINTAINED OR NOT HE DOES NOT KNOW ? C) IN REPLY TO QUESTION NO. 13 AND 14, HE CONFIRM THAT HE HAS NOT DELIVERED ANY GOODS AND ISSUED ONLY INVOICE. BOTH HIS REPLY MENTI ONED ABOVE ARE CONTRADICTORY ITSELF AND NOT REQUIRE TO BELIEVE AS TRUE. * IN HIS SECOND STATEMENT GIVEN ON 22-9-2008, IN RE PLY TO QUESTION NO. 5, HE HAS NEVER MENTIONED NAME OF TIRUPATI AGRO INDUSTRIES TO WHOM FAKE INVOICES WERE GIVEN BY HIM. * EVEN IN STATEMENT GIVEN BY MR. MADANLAL CHANDAK O N 22-9-2008, IN REPLY TO QUESTION NO. 12, HE HAS ALSO NOT GIVEN THE NAME OF OUR FIRM TO WHOM FAKE BILLS WERE GIVEN BY M/S. VISHAL TRADERS. *IN THE CIRCUMSTANCES MENTIONED ABOVE, I HAVE REASO N TO BELIEVE THAT BOTH THE PARTIES HAD GIVEN STATEMENT UNDER PRESSURE TO SAVE HIMSELF FROM ALL LEGAL CONSEQUENCES, HENCE THEIR STATEMENT IS LIABLE TO BE REJECTED. 2. PATEL VIPULKUMAR BHARATBHAI NI CO.: ITA NOS. 582 ,583,610 & 611/AHD/12 . A.YS. 2008- 09 & 2009-2010 8 * I HAD PURCHASED GOODS FROM ABOVE PARTY AND PAYMEN T IS MADE BY ACCOUNT PAYEE CHEQUE. NO BOGUS PURCHASE IS MADE BY ME FROM ABOVE PARTY. IN MY EARLIER REPLY, I HAD ALREADY SUBMITTED AFFIDAVIT OF ABOVE PART CONFI RMING ALL TRANSACTION WERE GENUINE AND V.A. T. LIABILITY IMPOSED BY THE SALES TAX DEPARTMENT ON HIM. 3. M/S VAIMIL HARSHAD PATEL & CO. DURING THE YEAR 07-08, I HAD PURCHASE OF RAYDO APPR OXI. 50,000 KGS. DIRECTLY FROM THE PRODUCERS GOODS. TO REGULARIZE THE SAME, I HAD OBTAINED INVOICES OF RS.10,31,915/- FROM THE ABOVE PARTY AND MADE BEARER CHEQUE PAYMENT OF RS.10,30,000/- AS PER STATEMENT ENCLOSED HEREWITH. DURING THE COURSE OF SURVEY, WHILE RECORDING MY STATEMENT, BY MISTAKE I HAD CONF IRMED BEARER CHEQUE PAYMENT OF RS.11,30,000/- WITHOUT VERIFYING THE FACT. NOW O N VERIFICATION OF MY RECORDS ACTUAL PAYMENT IS RS.10,30,000/- AND NOT RS.LL,30,0 00/-. NO OTHER PURCHASES WERE MADE BY ME FROM ABOVE PARTY. 4. M/ SPATEL KANNAIYALAL PRAHLADBHAI. NO PAYMENT WAS MADE TO THE ABOVE PARTY DURING THE Y EAR 2007-08 AND 2008-09. HENCE, THERE IS NO QUESTION ARISE OF ANY BEARER CHE QUE PAYMENT TO ABOVE PARTY. YOUR GOOD SELF CAN VERIFY THE SAME FROM ENCLOSED AC COUNT OF ABOVE PARTY. 9. THE SUBMISSIONS OF THE ASSESSEE DID NOT FIND FAVOUR WITH THE A.O WHO WAS OF THE FIRM BELIEF THAT THE PURCHASES SHOWN BY THE ASSESSEE ARE BOGUS, AND THEREFORE, NEED TO BE DISALLOWED. DR AWING SUPPORT FROM VARIOUS JUDICIAL DECISIONS DISCUSSED IN THE ASSESSM ENT ORDER, THE A.O MADE ADDITION ON ACCOUNT OF BOGUS PURCHASES OF RS. 5,66,81,430/-. 10. PROCEEDING FURTHER THE A.O FOUND THAT THE ASSESSEE HAS ALSO ADMITTED UNDISCLOSED INCOME OF RS. 61,05,000/-, SIN CE THE SAID INCOME ITA NOS. 582 ,583,610 & 611/AHD/12 . A.YS. 2008- 09 & 2009-2010 9 WAS NOT FOUND TO BE INCLUDED IN THE RETURN OF INCOM E, THE A.O ALSO MADE AN ADDITION OF RS. 61,05,000/-. 11. AGGRIEVED BY THESE TWO ADDITIONS, THE ASSESSEE CARR IED THE MATTER BEFORE THE LD. CIT(A). 12. BEFORE THE LD. CIT(A), IT WAS STRONGLY OBJECTED THA T THE A.O HAS GROSSLY ERRED IN TREATING THE ENTIRE PURCHASES AS I NCOME OF THE ASSESSEE, IT WAS SUBMITTED THAT MOST OF THE DETAILS CALLED FOR BY THE A.O WERE FILED DURING THE ASSESSMENT PROCEEDINGS. T HE ASSESSEE ALSO SUBMITTED THE SALES TAX ASSESSMENT ORDER FOR THE FI NANCIAL YEAR 2007- 08, RELEVANT TO ASSESSMENT YEAR 2008-09 AND STRONGL Y CONTENDED THAT ALL THE SALES AND PURCHASES HAVE BEEN TREATED AS GE NUINE BY THE SALES TAX AUTHORITIES. 13. IT WAS ALSO BROUGHT TO THE NOTICE OF THE LD. CIT(A) THAT SOMETIMES THE ASSESSEE IS MAKING PURCHASES DIRECTLY FROM THE PRODUCERS/AGRICULTURISTS FROM WHOM PURCHASE BILLS A RE NOT AVAILABLE. TO REGULARIZE SUCH PURCHASES, THE ASSESSEE PROCURES AC COMMODATION BILLS AND SUCH ACCOMMODATION BILLS MAY BE BOGUS BUT THE P URCHASES ARE NOT AT ALL BOGUS. AFTER CONSIDERING THE FACTS AND THE S UBMISSIONS AND AFTER DISCUSSING AND DRAWING SUPPORT FROM THE DECISION OF THE TRIBUNAL IN THE CASE OF N.K. PROTEINS PVT. LTD. 4 SOT 479, VIJAY PR OTEINS LTD. 58 ITD 428 AND ALSO FROM THE DECISION OF THE HONBLE HIGH COURT OF GUJARAT IN THE CASE OF SANJAY OIL CAKE INDUSTRIES 316 ITR 274, THE LD. CIT(A) DIRECTED THE A.O TO DISALLOW 25% OF BOGUS PURCHASES OF RS. 5,66,81,430/- THEREBY CONFIRMING THE DISALLOWANCE A T RS. 1,41,70,358/- AND DELETING THE DISALLOWANCE OF RS. 4,25,11,072/-. ITA NOS. 582 ,583,610 & 611/AHD/12 . A.YS. 2008- 09 & 2009-2010 10 14. IN SO FAR AS, THE ADDITION OF RS. 61,05,000 IS CONC ERNED, THE LD. LD. CIT(A) WAS CONVINCED THAT THE AFOREMENTIONED DI SCLOSURE SINCE RELATED TO ALLEGED BOGUS PURCHASES IS INCLUDED IN T HE ADDITION SUSTAINED BY HIM, THEREFORE, NO SEPARATE ADDITION I S REQUIRED AND ACCORDINGLY DELETED THE ADDITION OF RS. 61,05,000/- . 15. AGGRIEVED BY THIS, BOTH THE ASSESSEE AND THE REVENU E ARE IN APPEAL BEFORE US. THE LD. COUNSEL FOR THE ASSESSEE REITERATED WHAT HAS BEEN STATED BEFORE THE LOWER AUTHORITIES. THE LD. D .R. STRONGLY SUPPORTED THE FINDINGS OF THE A.O. 16. WE HAVE CAREFULLY CONSIDERED THE ORDERS OF THE AUTH ORITIES BELOW AND HAVE GIVEN A THOUGHTFUL CONSIDERATION TO THE RI VAL SUBMISSIONS. THE ISSUE BEFORE US IS TO DECIDE WHETHER THERE WERE ANY ALLEGED BOGUS PURCHASES. AFTER GOING THROUGH THE FACTUAL MATRIX A ND UNDERSTANDING THEM IN THE RIGHT PERSPECTIVE, IN OUR CONSIDERED OP INION, THE ASSESSEE HAS MADE PURCHASES DIRECTLY FROM THE PRODUCERS/AGRI CULTURISTS WHO ARE TERMED AS UNREGISTERED DEALERS (URD) WHICH MEANS TH AT THE MATERIALS HAVE ACTUALLY BEEN PURCHASED BY THE ASSESSEE BUT WI THOUT ANY SUPPORTING DOCUMENT. 17. TO REGULARIZE SUCH URD PURCHASES, THE ASSESSEE WAS GETTING SUPPORTING ACCOMMODATION BILLS (PURCHASE BILLS FROM PARTIES WHO WERE SUBJECTED TO SEARCH OPERATION). THE STATEMENT OF TH E SEARCHED PARTY IS CORRECT BECAUSE THEY HAVE NOT MADE ANY SALES TO THE ASSESSEE AND HAVE CORRECTLY ADMITTED OF HAVING ISSUED ACCOMMODAT ION BILLS. 18. THE STATEMENT OF THE ASSESSEE IS ALSO CORRECT BECAU SE THERE ARE NO BOGUS PURCHASES OF GOODS BUT ONLY SUPPORTING ACC OMMODATION BILLS ITA NOS. 582 ,583,610 & 611/AHD/12 . A.YS. 2008- 09 & 2009-2010 11 ARE BOGUS. THERE IS NO DENYING THAT THERE IS A PHYS ICAL MOVEMENT OF GOODS- PURCHASES AS WELL AS SALES. IN FACT, THERE I S NOT EVEN A WHISPER OF ANY BOGUS SALES, NEITHER BY THE ASSESSING OFFICE R NOR BY THE FIRST APPELLATE AUTHORITY. THIS MAY BE A CASE OF PURCHASE S SUPPORTED BY BOGUS ACCOMMODATION BILLS BUT AT THE SAME TIME, WE CANNOT SAY THAT THERE WERE NO PURCHASES. THIS WAS ALSO BROUGHT TO T HE NOTICE OF THE A.O BY THE ASSESSEE IN HIS SUBMISSION DATED 12.11.2 010 QUA PARA 6 B WHICH CAN BE FOUND AT PAGE 11 OF THE ASSESSMENT ORD ER WHEREIN THE ASSESSEE HAD CATEGORICALLY STATED THAT HE HAS MADE PURCHASE OF GOODS FROM DIRECT PRODUCER AND ONLY INVOICES OF THESE THR EE PARTY WERE TAKEN TO REGULARIZE THE SAME AND BY DOING SO, THE ASSESSE E WAS GETTING THE BENEFIT IN PURCHASE PRICE OF RS. 4 TO 5 PER 20 KGS. IT WAS FURTHER MADE VERY CLEAR THAT IT IS NOT A CASE WHERE MATERIALS WE RE NOT ACTUALLY PURCHASED. 19. THUS, IT CAN BE SEEN THAT EVEN THE ADMISSION OF THE ASSESSEE RELATED TO THE PROCUREMENT OF ALLEGED BOGUS BILLS A T NO STAGE, THE ASSESSEE ADMITTED THAT THERE WERE NO PURCHASES. 20. HOWEVER, AT THE SAME TIME, IN OUR CONSIDERED OPINIO N AND IN OUR UNDERSTANDING OF THE FACTS THE POSSIBILITY OF INFLA TED PURCHASES CANNOT BE RULED OUT. 21. AS THE ASSESSEE HIMSELF AS ADMITTED IN HIS SUBMISSI ON THAT HE IS GETTING THE BENEFIT OF RS. 4 TO 5 PER 20 KGS., AN A DDITION OF 8% SHOULD MEET THE ENDS OF JUSTICE. 22. MODIFYING THE FINDINGS OF THE LD. CIT(A), WE DIRECT THE A.O TO RESTRICT THE DISALLOWANCE IN RESPECT OF BOGUS PURCH ASES TO 8% OF RS. ITA NOS. 582 ,583,610 & 611/AHD/12 . A.YS. 2008- 09 & 2009-2010 12 5,66,81,430/-. THUS THE DISALLOWANCE SHOULD BE REST RICTED TO RS. 45,34,515/-. ASSESSEE GETS A PARTIAL RELIEF. 23. IN SO FAR AS THE ADDITION OF RS. 61,05,000/- IS CON CERNED, IN OUR CONSIDERED OPINION, THE PARTIAL DISALLOWANCE OF PUR CHASES WOULD TAKE CARE OF ANY ADMISSION MADE BY THE ASSESSEE, THEREFO RE, REQUIRES NO SEPARATE DISALLOWANCES/ADDITIONS AND THE SAME IS DI RECTED TO BE DELETED. ITA NOS. 583 & 611/AHD/2012 FOR A.Y . 2009-2010 24. GROUND NO. 1 & 2 RELATES TO THE ALLEGED ADDITION IN RESPECT OF BOGUS PURCHASES AMOUNTING TO RS. 3,03,29,066/-. 25. AN IDENTICAL ISSUE HAS BEEN DECIDED BY US IN ITA NO S. 582 & 610/AHD/2012 HEREINABOVE QUA GROUND NO. 1 OF THAT A PPEAL. FOR OUR DETAILED DISCUSSION AND REASONING THEREIN AND FOR S IMILAR REASONS, WE MODIFY THE FINDINGS OF THE LD. CIT(A) AND DIRECT TH E A.O TO RESTRICT THE DISALLOWANCE ON ACCOUNT OF ALLEGED BOGUS PURCHASES TO 8% AMOUNTING TO RS. 24,26,325/-, GROUND NO. 1 & 2 IS ACCORDINGLY PARTLY ALLOWED. 26. GROUND NO. 3 RELATES TO THE ADDITION OF RS. 4,90,28 2/- MADE TOWARDS ALLEGED DISCREPANCY IN STOCK. 27. DURING THE COURSE OF SURVEY OPERATIONS, IT WAS NOTI CED THAT THE STOCK AS PER BOOKS WAS NOT THE SAME AS PER PHYSICAL VERIFICATION. STOCK OF RAYDO WAS FOUND TO BE SHORT BY 54,007 KG. WHEREA S STOCK OF RAYDO KHOD WAS FOUND TO BE IN EXCESS OF 21,500 KG. ASSESS EE WAS ASKED TO EXPLAIN THE SAME. ASSESSEE FILED A DETAILED REPLY W HICH READ AS UNDER:- ITA NOS. 582 ,583,610 & 611/AHD/12 . A.YS. 2008- 09 & 2009-2010 13 'IN REPLY TO QUESTION NO.5 OF MY STATEMENT DATED 20 -6-2008, REGARDING STOCK POSITION IN THE GODOWN ON THE DATE OF SURVEY, I HAD REPLIED THAT APPROX. 800 TO 900 BORI OF RAYDO IS LYING IN KADI GODOWN AND APPROX. 2 8000 TO 29000 BORI OF RAYDO WERE LYING IN 3 OTHER GODOWNS AT MEHSANA AND WEIGHT PER BORI IS 85/- KG. IF YOUR GOODSELF WORK OUT THE AVERAGE OF THIS THEN TOTAL RA YDO BORI COMES TO 3700 (850 + 2850) * 85 PER KG. COMES TO 3145000 KG WHICH IS TALLIED PHY SICAL STOCK QTY. AS PER BOOKS. WHILE RECORDING MY STATEMENT, IN REPLY TO QUESTION NO. 44 OF ABOVE STATEMENT, HOW QUANTITY OF OTHER GODOWN IS LESS CONSIDERED BY 710 BORI (COMPARED TO AVERAGE BORI STOCK CALCULATED ABOVE) IS NOT KNOWN TO ME. IF , WE CALCULATE THE QUANTITY IN KGS., THEN IT COMES TO 60,350 KGS. IF YOU ADD, THIS DIFFERENCE QUANTITY IN PHYSICAL STOCK QTY. I.E. 254150 KG. + 60,350 = 31450 WHICH I S THE SAME AS PER BOOK STOCK. 28. THE EXPLANATION OF THE ASSESSEE WAS NOT ACCEPTED BY THE A.O WHO WAS OF THE OPINION THAT DURING THE COURSE OF SU RVEY OPERATIONS. THE ASSESSEE HIMSELF ADMITTED THE DIFFERENCE IN STO CK AS HIS UNACCOUNTED INVESTMENT/SALES. THE A.O ACCORDINGLY C OMPUTED THE ADDITION ON ACCOUNT OF DISCREPANCY IN STOCK AND MAD E AN ADDITION OF RS. 4,90,282/-. ASSESSEE CARRIED THE MATTER BEFORE THE LD. CIT(A) BUT WITHOUT ANY SUCCESS. BEFORE US, THE LD. COUNSEL FOR THE ASSESSEE REITERATED WHAT HAS BEEN STATED DURING THE COURSE O F THE ASSESSMENT PROCEEDINGS. THE LD. D.R. STRONGLY SUPPORTED THE FI NDINGS OF THE REVENUE AUTHORITIES. WE HAVE GIVEN A THOUGHTFUL CON SIDERATION TO THE ORDERS OF THE AUTHORITIES BELOW. IT IS AN UNDISPUTE D FACT THAT STOCK OF RAYDO WAS FOUND TO BE SHORT BY 54,0007 KG. WHEREAS STOCK OF RAYDO KHOD WAS FOUND TO BE IN EXCESS BY 21,500 KG. IT IS ALSO AN ADMITTED FACT THAT THE ONLY BASIS FOR MAKING THE ADDITION BY THE A.O IS THAT THE ITA NOS. 582 ,583,610 & 611/AHD/12 . A.YS. 2008- 09 & 2009-2010 14 ASSESSEE ADMITTED IN HIS STATEMENT DURING THE COURS E OF THE SURVEY OPERATIONS. 30. HOWEVER, IN OUR CONSIDERED OPINION THE EXPLANA TION/RECONCILIATION MADE BY THE ASSESSEE CANNOT BE BRUSHED ASIDE LIGHTL Y THE A.O OUGHT TO HAVE EXAMINED THE RECONCILIATION STATEMENT. WE F IND THAT EVEN THE FIRST APPELLATE AUTHORITY HAS NOT GIVEN ANY CONSIDE RATION TO THE RECONCILIATION STATEMENT FILED BY THE A.O. THEREFOR E, IN THE INTEREST OF JUSTICE AND FAIR PLAY, WE RESTORE THIS ISSUE TO THE FILES OF THE A.O, THE A.O IS DIRECTED TO CONSIDER THE RECONCILIATION STAT EMENT OF THE ASSESSEE AND DECIDE THE ISSUE AFRESH AFTER GIVING A REASONAB LE OPPORTUNITY OF BEING HEARD TO THE ASSESSEE. GROUND NO. 3 IS ALLOWE D FOR STATISTICAL PURPOSE. 31. GROUND NO. 4 RELATES TO THE ADDITION OF RS. 5,63,92 9/- IN RESPECT OF ALLEGED ADMITTED UNDISCLOSED INCOME. 32. A PERUSAL OF THE ASSESSMENT ORDER SHOWS THAT THIS A DDITION HAS BEEN MADE BY THE A.O SOLELY ON THE BASIS OF THE ADM ISSION MADE BY THE ASSESSEE DURING THE COURSE OF THE SURVEY PROCEE DINGS. SINCE WE HAVE DIRECTED TO RESTRICT THE ADDITION ON ACCOUNT O F BOGUS PURCHASE TO 8% OF THE TOTAL PURCHASES, IN OUR CONSIDERED OPINIO N ANY ADMISSION/DISCLOSURE MADE BY THE ASSESSEE ON ACCOUN T OF ALLEGED BOGUS PURCHASES WOULD BE TAKEN CARE OF BY THE ADDIT ION SUSTAINED, THEREFORE, THERE IS NO NEED FOR MAKING SEPARATE ADD ITIONS ON THIS COUNT. WE ACCORDINGLY DIRECT THE A.O TO DELETE THE ADDITION OF RS. 563,929/-, GROUND NO. 4 IS ALLOWED. 33. GROUND NO. 5 RELATES TO THE LEVY OF INTEREST U/S. 2 34A, 234B, 234C AND 234D OF THE ACT. LEVY OF INTEREST IS MANDA TORY BUT ITA NOS. 582 ,583,610 & 611/AHD/12 . A.YS. 2008- 09 & 2009-2010 15 CONSEQUENTIAL THE A.O IS DIRECTED TO LEVY OF INTERE ST AS PER THE PROVISIONS OF THE LAW. 34. REVENUE IS IN APPEAL AGAINST THE PARTIAL RELIEF GIV EN BY THE LD. CIT(A) IN RESPECT OF THE ADDITIONS MADE ON ACCOUNT OF BOGUS PURCHASES. THIS ISSUE HAS BEEN DECIDED BY US IN ASS ESSEES APPEAL QUA GROUND NO. 1 & 2, FOR OUR DETAILED DISCUSSION AND F INDINGS GIVEN THEREIN, APPEAL OF THE REVENUE IS DISMISSED. 35. IN THE RESULT, APPEALS OF THE ASSESSEE ARE PARTLY A LLOWED FOR STATISTICAL PURPOSE AND THE APPEALS OF REVENUE ARE DISMISSED. ORDER PRONOUNCED IN OPEN COURT ON 14 - 03 - 2016 SD/- SD/- (KUL BHARAT) (N. K. BILLAIYA) JUDICIAL MEMBER ACCOUNTANT MEMBER AHMEDABAD: TRUE COPY RAJESH COPY OF THE ORDER FORWARDED TO: - 1. THE APPELLANT. 2. THE RESPONDENT. 3. THE CIT (APPEALS) 4. THE CIT CONCERNED. 5. THE DR., ITAT, AHMEDABAD. 6. GUARD FILE. BY ORDER DEPUTY/ASSTT.REGISTRAR ITAT,AHMEDA BAD
