ITO 14(3)(3), MUMBAI V. ASHWINKUMAR CHHANGANLAL SATIYA, MUMBAI

ITA 7167/MUM/2013

• Counselvise Citation: [2016] 133 COUNSELVISE.COM (IT) 4204 (ITAT-MUMBAI)
• Duration Of Justice: 2 year(s) 2 month(s) 3 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 09-02-2016
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: A
• Assessment Year: 2002-2003
• Appeal Filed On: 06-12-2013
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Keywords: Bogus purchase; Unexplained investment; Business income; Opportunity of cross examination; Accommodation entries; Retraction
• Section: 143(3); 133A; 147; 131; 69; 148

Judgement Text

, , , IN THE INCOME TAX APPELLATE TRIBUNAL MUMBAI BENCHES A, MUMBAI .. , , , BEFORE, SHRI G.S. PANNU, ACCOUNTANT MEMBER AND SHRI JOGINDER SINGH, JUDICIAL MEMBER ITA NOS.7167 & 7168/MUM/2013 ASSESSMENT YEARS: 2002-03 AND 2003-04 INCOME TAX OFFICER-14(3)(3) 606, 6 TH FLOOR, EARNEST HOUSE, NARIMAN POINT, MUMBAI-400021 / VS. MR. ASHWINKUMAR CHHAGANLAL SATIYA, SINGAPURI BUILDING, 22/24, 2ND FLOOR, CHAMPA GALLI CROSS LANE, MUMBAI-400002 ( ! / REVENUE) ( '#$% /ASSESSEE) PAN. NO. AMGPS8498G C.O. NOS.19 & 20/MUM/2015 (ARISING OUT OF ITA NOS.7167 & 7168/MUM/2013) ASSESSMENT YEARS: 2002-03 AND 2003-04 MR. ASHWINKUMAR CHHAGANLAL SATIYA, SINGAPURI BUILDING, 22/24, 2ND FLOOR, CHAMPA GALLI CROSS LANE, MUMBAI-400002 / VS. INCOME TAX OFFICER-14(3)(3) 606, 6 TH FLOOR, EARNEST HOUSE, NARIMAN POINT, MUMBAI-400021 ( '#$% /ASSESSEE) ( ! / REVENUE) PAN. NO.AMGPS8498G ITA NOS.7167, 7168/MUM/2013 & C.O. NOS.19 & 20/MUM/2015 MR. ASHWINKUMAR CHHAGANLAL SATIYA 2 '#$% / ASSESSEE BY SHRI NISHIT GANDHI ! / REVENUE BY SHRI YOGESH KAMAT-DR & !'(%) / DATE OF HEARING : 09/02/2016 (%) / DATE OF ORDER: 01/03/2016 / O R D E R PER BENCH THE REVENUE IS AGGRIEVED BY THE IMPUGNED ORDERS B OTH DATED 09/09/2013 FOR ASSESSMENT YEARS 2002-03 AND 2003-04 OF THE LD. FIRST APPELLATE AUTHORITY, MUMBA I, WHEREAS, THE ASSESSEE HAS ALSO PREFERRED CROSS OBJE CTIONS, WHICH ARE ARISING OUT OF THE SAME ORDERS. 2. IN THE APPEALS OF THE REVENUE, THE COMMON GROUNDS RAISED PERTAINS TO DELETING THE ADDITION MA DE U/S 69 OF THE INCOME TAX ACT, 1961 (HEREINAFTER THE ACT ) AFTER HAVING ACCEPTING IN PRINCIPLE THAT THE PURCHASES WE RE MADE BY THE ASSESSEE FROM UNDISCLOSED/UNVERIFIABLE/UNIDENTIFIABLE PARTIES FRO M THE GREY MARKET BY INVESTING IN CASH AND THE PURCHASES FROM THE GROUP CONCERNS OF SHRI RAKESH GUPTA AND FAMILY, WHERE, THERE WERE ACCOMMODATION ENTRIES AND NOT ACT UAL PURCHASES. 2.1. DURING HEARING OF THESE APPEALS, THE LD. DR, SHRI YOGESH KAMAT, ADVANCED ARGUMENTS, WHICH IS IDENTICA L TO THE GROUND RAISED. ON THE OTHER HAND, SHRI NISHIT G ANDHI, ITA NOS.7167, 7168/MUM/2013 & C.O. NOS.19 & 20/MUM/2015 MR. ASHWINKUMAR CHHAGANLAL SATIYA 3 LD. COUNSEL FOR THE ASSESSEE, CONTENDED THAT THE IM PUGNED ISSUE IS COVERED BY THE DECISION OF THE TRIBUNAL IN THE CASE OF M/S C. CHOTALAL & COMPANY VS ITO (ITA NO.3960 TO 3967/MUM/2012, ETC.) ORDER DATED 24/09/2013 AND ANOTHER DECISION IN NEETA TEXTILES VS ITO (ITA NO.6 138, 7335, 6139/MUM/2013 ETC.) ORDER DATED 27/05/2015, WHEREIN, ONE OF THE SUPPLIERS IS ALSO RAMESH KUMAR GUPTA (PROPRIETOR OF MANOJ MILLS), WHO IS ALSO A PARTY IN THE PRESENT APPEALS. THIS FACTUAL MATRIX WAS NOT CONTRO VERTED BY THE REVENUE. 2.2. WE HAVE CONSIDERED THE RIVAL SUBMISSIONS AND PERUSED THE MATERIAL AVAILABLE ON RECORD. THE FACTS , IN BRIEF, ARE THAT THE ASSESSEE AN INDIVIDUAL DEALING IN CLOT HS, TRADING MAINLY IN SHIRTING, MAINLY ON SEMI-WHOLESAL E BASIS. THE ASSESSEE DECLARED INCOME OF RS.7,69,550/- (A.Y. 2002- 03) IN HIS RETURN FILED ON 05/09/2002. IDENTICALLY , INCOME OF RS.8,26,110/- WAS RETURNED ORIGINALLY ON 29/09/2 003 ALONG WITH AUDITED ACCOUNTS, COMPUTATION OF INCOME. THE RETURNS WERE PROCESSED U/S 143(1) OF THE ACT. THE C ASES OF THE ASSESSEE WERE REOPENED U/S 147 OF THE ACT FOR W HICH NOTICE U/S 148 WAS ISSUED AND SERVED UPON THE ASSES SEE. THE ORDER U/S 143(3) R.W.S. 147 WAS PASSED ON 23/12/2009 MAKING ADDITION OF RS.14,82,463/- TO THE BUSINESS INCOME OF THE ASSESSEE FOR A.Y. 2002-03 AN D RS.15,71,255/- FOR A.Y. 2003-04, U/S 69 OF THE ACT AS UNEXPLAINED INVESTMENT. ON APPEAL, BEFORE THE LD. ITA NOS.7167, 7168/MUM/2013 & C.O. NOS.19 & 20/MUM/2015 MR. ASHWINKUMAR CHHAGANLAL SATIYA 4 COMMISSIONER OF INCOME TAX (APPEALS), AFTER CONSIDE RING THE FACTS, THE ADDITION TO THE EXTENT OF 90% WAS DE LETED AND TO FILL THE GAP OF DIFFERENCE OF GP OF THE PURCHASE S AS WELL AS TO PLUG ANY LEAKAGE OF REVENUE, THE ADDITION WAS SUSTAINED/RESTRICTED TO THE TUNE OF 10%. THUS, THE REVENUE IS IN APPEAL AGAINST DELETING THE ADDITION OF 90% A ND THE ASSESSEE TROUGH IT CROSS OBJECTIONS HAS CHALLENGED RETAINING THE REMAINING ADDITION OF 10% OF THE PURCHASES. 2.3. IF THE OBSERVATION MADE IN THE ASSESSMENT ORD ER, LEADING TO ADDITION MADE TO THE TOTAL INCOME, CONCL USION DRAWN IN THE IMPUGNED ORDER, MATERIAL AVAILABLE ON RECORD, ASSERTIONS MADE BY THE LD. RESPECTIVE COUNSEL, IF K EPT IN JUXTAPOSITION AND ANALYZED, WE NOTE THAT WHILE MAKI NG THE ADDITION, THE LD. ASSESSING OFFICER BROADLY MADE TH E ADDITION ON THE BASIS OF STATEMENT RECORDED FROM SH RI RAKESH KUMAR GUPTA & ORS. IT IS NOTED THAT SURVEY A CTION U/S 133A OF THE ACT WAS CARRIED OUT AT THE PREMISES OF GROUP CONCERN OF SHRI RAKESH KUMAR GUPTA & ORS AND STATEMENT OF SHRI RAKESH KUMAR GUPTA WAS RECORDED. RETRACTION TO THE STATEMENT WAS MADE AFTER TWO AND A HALF MONTH DISOWNING THE FACTS UNEARTHED DURING SURVEY A ND THE CONTENTS OF THE STATEMENT. THE LD. ASSESSING O FFICER MADE THE ADDITION IN THE HANDS OF THE PURCHASER PAR TY I.E. THE ASSESSEE. IT IS NOTED THAT THE LD. ASSESSING O FFICER DID NOT PROVIDE OPPORTUNITY OF CROSS EXAMINATION TO THE ASSESSEE IN SPITE OF SPECIFIC REQUEST SO MADE. THE LD. ITA NOS.7167, 7168/MUM/2013 & C.O. NOS.19 & 20/MUM/2015 MR. ASHWINKUMAR CHHAGANLAL SATIYA 5 COMMISSIONER OF INCOME TAX (APPEALS) CONSIDERED THE DECISION FROM HONBLE APEX COURT IN THE CASE OF KISHANCHAND CHELARAM VS CIT (1980) 125 ITR 713 (SC) , WHEREIN, IT WAS HELD THAT BEFORE THE INCOME TAX AUT HORITIES COULD RELY UPON ANY EVIDENCE, THEY ARE BOUND TO PRO DUCE IT BEFORE THE ASSESSEE SO THAT THE STATEMENT CAN BE CONTROVERTED AND OPPORTUNITY TO CROSS EXAMINATION S HOULD BE GIVEN AND IF SUCH OPPORTUNITY WAS NOT PROVIDED, THE ADDITION WHICH IS BASED ON SUCH STATEMENT CANNOT SURVIVED. IT IS ALSO NOTED THAT THE ASSESSEE DULY F URNISHED THE QUANTITATIVE DETAILS OF PURCHASES AND SALES WHI CH WERE TALLYING WITH THE OPENING STOCK, PURCHASES, SALES, CLOSING STOCK. IT IS ALSO OBSERVED THAT THE ADDITION HAS BE EN MADE ON THE PRESUMPTION THAT THE ASSESSEE MIGHT HAVE TAK EN ACCOMMODATION BILLS FROM THE PARTIES. IT IS ALSO NO TED THAT REMAND REPORT WAS CALLED FROM THE ASSESSING OFFICER AND NO RESPONSE WAS GIVEN BY THE ASSESSING OFFICER, THEREF ORE, THE AD-HOC ADDITION WAS DELETED TO THE EXTENT OF 90%. I T IS FURTHER NOTED THAT SUCH AD-HOC ADDITION WAS RESTRIC TED TO 10% TO FILL THE GAP OF GP AND TO PLUG THE LEAKAGE O F REVENUE, IF ANY. WE ARE OF THE VIEW THAT NO SUCH AD -HOC ADDITION CAN STAND ON ITS LEGS WHICH IS BASED ON ME RELY STATEMENT AND THAT TO WAS CONTRADICTED BY THE ASSES SEE. IT IS FURTHER NOTED THAT IDENTICALLY IN THE CASE OF M/ S NEETA TEXTILES VS ITO ETC (ITA NO.6138, 7335, 6139, 7336, 6140, 7337/MUM/2013) ORDER DATED 27/05/2015, THE APPEALS OF THE REVENUE WERE DISMISSED. IDENTICALLY, IN THE CAS E OF M/S ITA NOS.7167, 7168/MUM/2013 & C.O. NOS.19 & 20/MUM/2015 MR. ASHWINKUMAR CHHAGANLAL SATIYA 6 C. CHHOTALAL & COMPANY VS ITO (ITA NO.3960 TO 3967/MUM/2012 AND 4022 TO 4024 AND 4025, 3944, 3995 AND 5065/MUM/2012) ORDER DATED 24/09/2013, THE APPEALS OF THE REVENUE WERE DISMISSED, WHEREIN, ADD ITIONS WERE MADE ON THE STATEMENT OF SHRI RAKESH KUMAR GUP TA DURING THE COURSE OF SURVEY U/S 133A OF THE ACT AT HIS PREMISES. IN THE ORDER DATED 27/05/2015, ONE OF US, (LD. ACCOUNTANT MEMBER) IS SIGNATORY TO THE ORDER. IT IS ALSO NOTED THAT ON IDENTICAL FACT IN THE CASE OF M/S JIT ENDRA HARSHADKUMAR & COMPANY VS ACIT (ITA NO.3141/MUM/2012) ORDER DATED 13/11/2013, THE APPEALS OF THE REVENUE WERE DISMISSED. WE ARE REPRODUCING HEREUNDER THE RELEVANT PORTION FROM ORD ER DATED 13/11/2013, FOR READY REFERENCE:- OUT OF THESE SEVEN APPEALS, SIX APPEALS ARE CROSS APPEALS FOR ASSESSMENT YEARS 2006-07, 2007-08 AND 2008-09 W HICH ARE DIRECTED AGAINST THREE SEPARATE ORDERS DATED 20 -4-2012 FOR A.Y. 2006-07, DATED 19-4-2012 FOR A.Y. 2007-08 AND DATED 20-4-2012 FOR A.Y. 2008-09 PASSED BY THE LD. CIT(A) - 25, MUMBAI AND THE SEVENTH APPEAL IS THE APPEAL OF THE ASSESSEE WHICH IS DIRECTED AGAINST THE ORDER OF LD. CIT(A) - 25, MUMBAI DATED 20-04-2012 FOR A.Y. 2005-06. SINCE COMMON ISSUES ARE INVOLVED THEREIN, THE SAME HAVE B EEN HEARD TOGETHER AND ARE BEING DISPOSED OF BY THIS SI NGLE CONSOLIDATED ORDER FOR THE SAKE OF CONVENIENCE. ITA NOS.7167, 7168/MUM/2013 & C.O. NOS.19 & 20/MUM/2015 MR. ASHWINKUMAR CHHAGANLAL SATIYA 7 2. THE COMMON ISSUE INVOLVED IN THESE APPEALS RELAT ING TO THE ADDITIONS MADE BY THE A.O. ON ACCOUNT OF UNEXPLAINED/UNPROVED PURCHASES AND SUSTAINED PARTLY BY THE LD. CIT(A) IS RAISED IN THE FOLLOWING GROUNDS:- A.Y. ADDITION MADE BY THE A.O. (RS.) ADDITION SUSTAINED BY THE LD. CIT(A) (RS.) ASSESSEES GROUND NO. REVENUES GROUND NO. 2005-06 2,73,700 28,000/- 1 - 2006-07 26,45,012 2,65,000 1 1 2007-08 34,24,522 3,43,000 1 1 2008-09 13,30,906 1,34,000 1 1 3. THE ASSESSEE IN THE PRESENT CASE IS A PARTNERSHI P FIRM WHICH IS ENGAGED IN THE BUSINESS OF DEALERS AND MERCHANTS OF CLOTH MATERIALS. THE RETURNS OF INCOME FOR THE YEARS UNDE R CONSIDERATION WERE FILED BY IT DECLARING TOTAL INCO ME OF RS. 4,18,570/-, RS. 10,84,410/-, RS. 10,96,473/- AND RS . 11,77,145/- FOR ASSESSMENT YEARS 2005-06, 2006-07, 2007-08 AND 2008-09 RESPECTIVELY. THE RETURNS OF INCOME FIL ED FOR ASSESSMENT YEARS 2005-06 AND 2006-07 WERE ACCEPTED BY THE A.O. INITIALLY U/S 143(1) OF THE INCOME TAX ACT, 19 61 (THE ACT). IN THE CASE OF SHRI RAKESH KUMAR GUPTA, ONE OF THE SUPPLIERS OF THE ASSESSEE FIRM, A SURVEY U/S 133-A OF THE ACT WAS CARRIED OUT ON 13/14- 2-2009. IN HIS STATEMENT RECORDED DUR ING THE COURSE OF SURVEY, SHRI RAKESH KUMAR GUPTA STATED TH AT HE WAS PROVIDING ACCOMMODATION SALES BILLS FOR PURCHASES I N THE NAME OF THREE PROPRIETARY CONCERNS M/S MANOJ MILLS, M/S ASTHA SILK INDUSTRIES AND M/S SHREE RAM SALES & SYN THETICS BELONGING TO HIM AND HIS FAMILY MEMBERS. THE SAID S TATEMENT, HOWEVER, WAS RETRACTED BY SHRI RAKESH KUMAR GUPTA I N PART ITA NOS.7167, 7168/MUM/2013 & C.O. NOS.19 & 20/MUM/2015 MR. ASHWINKUMAR CHHAGANLAL SATIYA 8 THROUGH WRITTEN COMMUNICATION TO THE A.O. AND ALSO BY SWORN IN AFFIDAVITS FILED BY HIM AND HIS FAMILY MEMBERS W HO WERE PROPRIETORS OF THESE CONCERNS. IN THE AFFIDAVITS, S HRI RAKESH KUMAR GUPTA/HIS FAMILY MEMBERS STATED IN CATEGORICA L TERMS THAT THE PURCHASES MADE BY THE ASSESSEE WERE GENUIN E. THE ASSESSEE ALSO PRODUCED EVIDENCES TO SHOW PAYMENT FO R PURCHASES MADE BY ACCOUNT PAYEE CHEQUES. IN THE COU RSE OF THE ASSESSMENT PROCEEDINGS, THE ASSESSEE FURTHER PR ODUCED THE QUANTITATIVE STATEMENTS SHOWING TALLY OF PURCHASES AND SALES WITH BOOKS OF ACCOUNTS IN ORDER TO ESTABLISH THE GE NUINENESS OF PURCHASES. THE ASSESSEE PLEADED THAT NO ADVERSE INF ERENCE COULD BE DRAWN AGAINST IT ON THE BASIS OF GENERAL S TATEMENT OF THIRD PARTY WITHOUT ANY SPECIFIC REFERENCE OF THE A SSESSEE AND SURVEY ACTION IN THE CASE OF A THIRD PARTY ONLY. IT WAS CONTENDED THAT NO FURTHER INQUIRY WAS CARRIED OUT E ITHER IN THE CASE OF ASSESSEE OR SHRI RAKESH KUMAR GUPTA INSPITE OF THE FACT THAT THE STATEMENT WAS SUBSEQUENTLY RETRACTED IN PART AND PURCHASES MADE BY THE ASSESSEE WERE CONFIRMED BY TH E AFFIDAVITS OF THESE PERSONS (I.E. SELLER). THE ASSE SSING OFFICER DID NOT ACCEPT THE STAND OF THE ASSESSEE THAT THE P URCHASES WERE GENUINE AND THERE WAS NO INFLATION OF PURCHASE S. ACCORDINGLY, HE COMPLETED THE ASSESSMENT FOR A.Y. 2 007-08 U/S. 143(3) MAKING ADDITION OF RS. 34,24,522/- U/S. 69 OF THE ACT HOLDING IT TO BE THE UNEXPLAINED INVESTMENT IN THE GOODS PURCHASED. 4. THE ADDITIONS MADE BY THE A.O. ON ACCOUNT OF UNE XPLAINED PURCHASES/INVESTMENTS WERE CHALLENGED BY THE ASSESS EE IN THE ITA NOS.7167, 7168/MUM/2013 & C.O. NOS.19 & 20/MUM/2015 MR. ASHWINKUMAR CHHAGANLAL SATIYA 9 APPEALS FILED BEFORE THE LD. CIT(A). ELABORATE SUBM ISSIONS WERE MADE ON BEHALF OF THE ASSESSEE IN SUPPORT OF I TS CASE ON THIS ISSUE WHICH AS SUMMARIZED BY THE LD. CIT(A) IN HIS IMPUGNED ORDER FOR A.Y. 2007-08 , WERE AS UNDER:- 1) THE ASSESSEE HAD MADE GENUINE PURCHASES AND PAY MENT WERE MADE BY A/C PAYEE CHEQUES WHICH WERE CONFIRMED . 2) BANK CONFIRMATIONS WERE FILED STATING THAT PAYME NT WERE CREDITED IN SELLERS ACCOUNT. 3) QUANTITATIVE TALLY OF PURCHASES, SALES AND STOCK S GIVEN TO AO AND ALSO APPELLATE PROCEEDING. 4) PURCHASES AND CORRESPONDING SALES HAVE BEEN ESTA BLISHED BEFORE AO AND ALSO PRODUCED BEFORE CIT(A) FOR VERIF ICATION SUPPORTED BY DELIVERY CHALLAN. 5) IMPUGNED SELLERS HAVE CONFIRMED THE SALES TO TH E ASSESSEE IN AFFIDAVITS AS WELL AS WRITTEN COMMUNICATION TO T HE AO. 6) THE AOS CASE IS SOLELY BASED ON GENERAL STATEME NT OF GUPTA IN THE YEAR 2009(WHICH WAS MODIFIED BY AFFIDA VIT) WITHOUT ANY REFERENCE OF ANY SPECIFIC PERSON. THE A O NEITHER CARRIED OUT ANY FURTHER INQUIRY WITH GUPTA OR ASSES SEE NOR PROVIDE ANY OPPORTUNITY TO CROSS EXAMINE GUPTA INSP ITE OF REQUEST. ITA NOS.7167, 7168/MUM/2013 & C.O. NOS.19 & 20/MUM/2015 MR. ASHWINKUMAR CHHAGANLAL SATIYA 10 7) AS PER RECENT DECISION OF JURISDICTIONAL ITAT MU MBAI IN THE CASE OF FREE INDIA ASSURANCE SERVICES LTD. VS. DCIT (62 DTR - 349-MUMBAI YEAR 2011) IN SIMILAR CASES NO ADDITION CAN BE MADE IF PAYMENTS WERE MADE BY THE A/C PAYEE CHEQUES IN CASE OF A ACCOMMODATION PURCHASES. IT WAS ALSO SUBMITTED AS AN ALTERNATIVE CONTENTION BY THE ASSESSEE BEFORE THE LD. CIT(A) THAT THE ENTIRE PURC HASES TREATED AS UNPROVED BY THE A.O. COULD NOT BE ADDED TO ITS T OTAL INCOME AND THE ADDITION ON THIS ISSUE SHOULD BE RESTRICTED ONLY TO THE EXTENT OF SOME PERCENTAGE AS DONE BY THE LD. CIT(A) IN THE CASE OF OTHER ASSESSEES WHEREIN SIMILAR ISSUE WAS INVOLV ED. 5. AFTER CONSIDERING THE SUBMISSIONS OF THE ASSESSE E, THE LD. CIT(A) DECIDED THIS ISSUE VIDE PARA NO. 4 TO 4.2 OF HIS IMPUGNED ORDER FOR A.Y. 2007- 08 AS UNDER:- 4. I HAVE GONE THROUGH THE ASSESSMENT ORDER AS WEL L AS THE SUBMISSIONS GIVEN BY THE ASSESSEE AND ALSO JUDICIAL PRONOUNCEMENTS OF HONBIE ITATS AND HONBLE HIGH CO URT AND DECISIONS OF LD. CIT(A) OF MUMBAI REGION AS RELIED UPON BY THE ID. AR AND ISSUE IN DISPUTE IS ADJUDICATED IN LIGHT THE REOF. IT IS SEEN THAT IN THIS CASE SALES ARE IDENTIFIABLE AND QUANTI TATIVE TALLY WAS AVAILABLE ON RECORD. THE REJECTION OF ALLEGED DISPU TED PURCHASES IS BASED ON THE GENERAL STATEMENT OF THE THIRD PARTY M ADE IN THE YEAR 2009 WITHOUT ANY REFERENCE TO THE ASSESSEE OR ANY SPECIFIC PERSON WHERE AS INSTANT YEAR IS 2006-07. THE SAID P ERSONS WERE NEITHER MADE AVAILABLE FOR EXAMINATION OR CROSS EXA MINATION NOR THE MATERIAL FOUND FROM THE THIRD PARTY WAS MADE AV AILABLE TO THE ASSESSEE INSPITE OF REQUEST FROM THE ASSESSEE. HOWEVER, BEFORE THEIR AO, THE SAID THREE PARTIES HAVE CONFIRMED BY WRITTEN COMMUNICATION THAT THEY HAD SOLD THE SAID GOODS TO THE ASSESSEE. THE SAID PARTIES HAD RETRACTED THEIR STATEMENTS IN PART SUBSEQUENT TO SURVEY ACTION BY WRITTEN COMMUNICATIO NS. THEY ALSO FURNISHED AFFIDAVITS BEFORE THEIR A.O. CONFIRM ING GENUINE SALE ITA NOS.7167, 7168/MUM/2013 & C.O. NOS.19 & 20/MUM/2015 MR. ASHWINKUMAR CHHAGANLAL SATIYA 11 TO CERTAIN PARTIES. ALL THE ABOVE MENTIONED 3 PERSO NS HAVE FILED AFFIDAVITS STATING THAT AS FAR AS ASSESSEE IS CONCE RNED THESE PERSONS ACTUALLY MADE THE SALES TO THE ASSESSEE AND CONSEQUENTLY PURCHASES MADE BY THE ASSESSEE WERE GENUINE. THE AS SESSEE HAD SHOWN THAT THE ITEMS SHOWN TO BE PURCHASED FROM THE SE 3 CONCERNS WHICH WERE DISPUTED BY THE AO, HAVE BEEN D ULY RECORDED IN BOOKS OF ACCOUNTS AND SOLD BY THE ASSESSEE TO OT HER PERSONS/RETAILERS OR ARE PART OF CLOSING STOCK, AND THIS FACTS HAS BEEN BROUGHT ON RECORD BY THE ASSESSEE EVEN DURING THE COURSE OF ASSESSMENT PROCEEDINGS AND REMAND PROCEEDING AND TH IS FACT REMAINS UNCONTROVERTED EVEN NOW AS OF DATE. IT IS U NDISPUTED THAT NO SURVEY ACTION OR ANY FURTHER INQUIRY WAS CARRIED OUT IN THE CASE OF THE ASSESSEE. IT IS SEEN THAT NEITHER ANY M EANINGFUL INQUIRY OR INVESTIGATION WAS CARRIED OUT EITHER IN THE CASE OF THE ASSESSEE OR GUPTAS AFTER SURVEY ACTION OR DURING ASSESSMENT PROCEEDING AS WELL AS REMAND PROCEEDING. THE SOLE RELIANCE WAS PL ACED ON INITIAL GENERAL STATEMENTS OF SHRI RAKESHKUMAR GUPT A. NO COUNTER INQUIRY OR INVESTIGATION WAS CARRIED OUT AF TER RETRACTION. SINCE THE ASSESSEE FURNISHED QUANTITATIVE TALLY OF PURCHASES, SALES AND STOCK, THE AO HAD OBSERVED ON PAGE 8 OF ASSESSM ENT ORDER ITSELF THAT THE ASSESSEE MIGHT HAVE PURCHASED GOODS FROM SOME OTHER PARTIES AND TO SET RIGHT THE RECORDS, THE ASS ESSEE OBTAINED ACCOMMODATION PURCHASE BILLS. HENCE, THIS CLEARLY E STABLISHES THAT THERE WERE PURCHASES BY THE ASSESSEE (ALTHOUGH NOW DISPUTED) AND ITS CONSEQUENT SALES, WHICH HAD BEEN OFFERED FOR TAXATION BY THE ASSESSEE. IN GIVEN FACTS THE AO COU LD NOT HAVE TREATED THE ENTIRE PURCHASES OF RS. 34,24,522/- AS UNEXPLAINED WHEN AO HAD OBSERVED ON PAGE 8 OF THE ASSESSMENT OR DER ITSELF THAT THESE PURCHASES COULD POSSIBLY HAVE BEEN MADE FROM OTHER PARTIES. THE FACTS AND DECISION IN THE CASE OF FREE INDIA ASSURANCE PVT. LTD. VS. DCIT BY THE HONBLE JURISDICTION ITAT , MUMBAI (62DTR 349-MUMBAI 2011) DID NOT ALLOW ANY ADDITION OR DISALLOWANCE IN SUCH FACTS. THUS, THE ISSUE TO BE D ECIDED IS THAT IN SUCH CASES WHERE ONE PARTY INITIALLY DENYING THE SA LES BY GENERAL SWEEPING STATEMENT IN PECULIAR CIRCUMSTANCES WITHOU T REFERRING TO ANY SPECIFIC PERSON AFTER 2 YEARS AND THAT TOO I N SURVEY AND THE OTHER PARTY AFFIRMS OF HAVING RECEIVED THE GOODS AN D OF HAVING MADE THE PAYMENTS BY ACCOUNT PAYEE CHEQUE AND SUBSE QUENTLY OF HAVING SOLD TO 3RD PARTIES AND ACCOUNTING THESE SAL ES/CLOSING STOCK AS INCOME, CAN THE ENTIRE PURCHASES BE ADDED BACK AS UNEXPLAINED OR ONLY AN ADHOC ADDITION, IF AT ALL, B E MADE TO COVER THE LEAKAGE. HOWEVER, FACTS OF THE CASE ARE MORE FA VOURABLE TO THE ASSESSEE FOR THE REASON THAT THE SAID PARTIES HAD C ONFIRMED SALES ITA NOS.7167, 7168/MUM/2013 & C.O. NOS.19 & 20/MUM/2015 MR. ASHWINKUMAR CHHAGANLAL SATIYA 12 TO THE ASSESSEE BY AFFIDAVITS AND RECEIPTS OF PURCH ASE PRICE WAS BY ACCOUNT PAYEE CHEQUE. MORE SO, THESE PARTIES WERE N OT EXAMINED OR CROSS EXAMINED EITHER DURING THE COURSE OF ASSES SMENT PROCEEDINGS OR REMAND PROCEEDINGS INSPITE OF ASSESS EES REQUESTS. THE IRREGULARITIES CARRIED OUT BY THE SAID SELLERS CANNOT BE IMPOSED UPON THE ASSESSEE BECAUSE THE ASSESSEE CANN OT EXERCISE CONTROL OVER THIRD PARTY. 4.1 IN MY OPINION, KEEPING IN VIEW THE TOTALITY OF FACTS AND CIRCUMSTANCES OF THE CASE, ALTHOUGH THE PURCHASES F ROM MR. RAKESH KUMAR GUPTA, PROPRIETOR OF MANOJ SILK MILLS, MRS. HEMA GUPTA, PROPRIETRESS SHREE RAM SALES & SYNTHETICS AN D MR. MOHIT GUPTA, THE PROPRIETOR OF ASHTA SILK INDUSTRIES ARE DISPUTED, BUT WHEN THE ASSESSEE HAS SOLD THESE VERY ITEMS AND ACC OUNTED FOR AS SALES/CLOSING STOCK AND CONSEQUENTIAL INCOME OFFERE D FOR TAXATION THE ONLY ADDITION TO BE MADE CAN BE FOR POSSIBLE LEAKAGE RELATING TO PURCHASES, AS THEY HAVE BECOME THE SUBJ ECT MATTER OF DISPUTE I.E. WHETHER ASSESSEE IN FACT PURCHASED FRO M ONE MR. RAKESH KUMAR GUPTA, PROPRIETOR OF MANOJ SILK MILLS, MRS. HEMA GUPTA, PROPRIETRESS OF SHREE RAM SALES & SYNTHETICS AND MR. MOHIT GUPTA, PROPRIETOR OF ASTHA SILK INDUSTRIES OR FROM SOME OTHER PARTIES OR FROM THE OPEN MARKET AND THEN EFFE CTED THE SALES. OTHERWISE, THE CORRESPONDING SALES/CLOSING STOCK HA S TO BE REDUCED WHICH WILL GIVE ABSURD RESULTS OF NEGATIVE INCOME. THE ISSUE HAS ANOTHER FACET ALSO. THE AO HAD MADE THE A DDITION U/S. 69 OF THE ACT FOR THESE DISPUTED PURCHASES. FOR THE SAKE OF CLARITY, SECTION 69 OF THE I.T. ACT IS REPRODUCED BELOW: WHERE IN THE FINANCIAL YEAR IMMEDIATELY PRECEDING THE ASSESSMENT YEAR THE ASSESSEE HAS MADE INVESTMENTS W HICH ARE NOT RECORDED IN BOOKS OF ACCOUNT, IF ANY, MAINTAINED BY HIM FOR ANY SOURCE OF INCOME, AND THE ASSESSEE OFFERS NO EXPLAN ATION ABOUT THE NATURE AND SOURCE OF INVESTMENTS OR THE EXPLANA TION OFFERED BY HIM IS NOT, IN THE OPINION OF THE AO, SATISFACTO RY, THE VALUE OF THE INVESTMENTS MAY BE DEEMED TO BE THE INCOME OF T HE ASSESSEE OF SUCH FINANCIAL YEAR FROM THE ABOVE, IT CAN BE SEEN THAT ADDITION U/S. 6 9 CANNOT BE MADE IN THE CASE OF THE ASSESSEE AS THE PURCHASES E FFECTED BY THE ASSESSEE ARE RECORDED AND ACCOUNTED IN THE BOOKS OF ACCOUNTS. HERE IS NOT A CASE WHERE THE INVESTMENTS/PURCHASES ARE NOT RECORDED IN THE BOOKS OF ACCOUNTS. THEREFORE, NO AD DITION U/S. 69 CAN BE MADE IN THE GIVEN FACTS OF THE CASE. HOWEVER , IT IS TRUE THAT ITA NOS.7167, 7168/MUM/2013 & C.O. NOS.19 & 20/MUM/2015 MR. ASHWINKUMAR CHHAGANLAL SATIYA 13 ACCORDING TO THE AO THE PURCHASES SHOWN BY THE ASSE SSEE FROM THE AFORESAID PARTIES ARE IN DOUBT AS THE COUNTER PARTI ES ARE STATED TO BE ACCOMMODATION BILL PROVIDER. AT THE SAME TIME THE SALES/CLOSING STOCK SHOWN BY THE ASSESSEE HAVE NOT BEEN DOUBTED BY THE AO. THE GP RATE DISCLOSED BY THE ASSESSEE IS NOT DOUBTED. IT IS NOT THE CASE OF THE AO THAT THE GP RATE IS LOW I N COMPARISON OF OTHER ASSESSEES OR PROCEEDING YEARS. THE QUANTITAT IVE TALLY OF PURCHASES AND SALES / STOCK COULD NOT BE REBUTED. S IMILARLY THE AO HAD ACCEPTED THE EXISTENCES OF PURCHASES IN QUANTIT Y, ALBEIT NOT FROM THE GUPTAS. THEREFORE, THE LOGICAL COROLLARY OF THIS IS THAT PURCHASES HAVE BEEN MADE BY THE ASSESSEE PERHAPS MA Y NOT BE FROM THE PARTIES FROM WHOM HE HAS SHOWN THE PURCHAS ES AS STATED BY THE A.O. OR CONCERN PARTIES MIGHT HAVE GI VEN DELIVERY OF GOODS THROUGH OTHERS. SO LONG AS SALES/CLOSING STOC K ARE NOT PROVED AS BOGUS, THE EXISTENCE OF PURCHASE CANNOT B E DENIED. IF THE PURCHASES ARE NOT EFFECTED ROUGH SHRI RAKESHKUM AR GUPTA & OTHERS, ONE LOGICAL INFERENCE THAT CAN BE DRAWN AS ALSO DRAWN BY THE AO IS THAT THE SAME MIGHT HAVE BEEN MADE FROM T HE OPEN MARKET/UNREGISTERED DEALERS AND THEN COVERED BY THE BILLS TAKEN FROM SHRI RAKESHKUMAR GUPTA & OTHERS. THERE IS ANOT HER POSSIBILITY THAT THESE PARTIES (I.E. GUPTAS) MIGHT HAVE PROVIDED THE GOODS THROUGH OPEN MARKET OR OTHER SELLERS WHO SELLS GOODS WITHOUT BILLS OR IN CASH. IN FACT THE SAID PARTIES HAD STATED IN AFFIDAVIT THAT THEIR PURCHASES WERE IN CASH AND SOL D TO THE ASSESSEE. ONE CANNOT DENY THAT GOODS IN GREY MARKET I.E. WITHOUT BILL AND BY CASH IS AVAILABLE AT LESSER PRICE. SUCH TYPE OF TRADING IS WELL PREVAILING AND KNOWN. IT IS A MATTER OF COMMON KNOWLEDGE THAT GOODS ARE ALSO SOLD BY ONE PARTY WITHOUT TAKIN G DELIVERY IN OWN GODOWN, I.E. DELIVERY THROUGH OTHER PARTY. SUCH TYPE OF INDIRECT TRADING IS PREVAILING BY CHARGING 1 TO 2 P ERCENTAGE COMMISSION AND ASSESSED AS SUCH IN SO MANY CASES. T HE ACCOUNTS OF THE ASSESSEE ARE AUDITED. THE AUDIT REPORT CONTA INS QUANTITATIVE DETAILS OF CLOSING STOCK FOLLOWED BY M ETER WISE DETAILS OF OPENING STOCK, PURCHASES, SALES AND CLOS ING STOCK (IN ASSESSMENT PROCEEDINGS). DURING THE COURSE OF ASSES SMENT PROCEEDINGS THE ASSESSEE HAD FURNISHED QUANTITATIVE TALLY OF STOCK, PURCHASES AND SALES. THE ASSESSEE ALSO PRODUCED D ELIVERY CHALLANS. EVEN DURING THE COURSE OF APPELLATE PROCE EDING TRAIL OF PURCHASE AND CORRESPONDING SALES WAS DEMONSTRATED R ANDOMLY. THE PAYMENTS HAVE BEEN MADE BY ACCOUNT PAYEE CHEQUE S AND BANK ALSO CERTIFIED THERETO. THERE IS NO EVIDENCE O N RECORD THAT THE PAYMENTS MADE BY THE ASSESSEE HAVE COME BACK TO HIM IN CASH. THE ASSESSEE IS ABLE TO CORRELATE PURCHASES W ITH ITA NOS.7167, 7168/MUM/2013 & C.O. NOS.19 & 20/MUM/2015 MR. ASHWINKUMAR CHHAGANLAL SATIYA 14 CORRESPONDING SALES/CLOSING STOCK. THE AO HAS MEREL Y RELIED UPON THE GENERAL STATEMENT OF SHRI RAKESHKUMAR GUPTA AND OTHERS WHICH WAS SUBSEQUENTLY RETRACTED IN PART BY WAY OF WRITTEN COMMUNICATION AND AFFIDAVITS. THEREFORE, IN MY CONS IDERED VIEW THE PURCHASES SHOWN BY THE ASSESSEE CANNOT BE HELD TO BE BOGUS OR NON EST (NON EXISTENCE) PURCHASES SQ LONG AS THE SALES/CLOSING STOCK SHOWN BY THE ASSESSEE ARE NOT HELD BOGUS. IT IS NOT THE CASE OF THE AO THAT THE SALES/CLOSING STOCKS SHOWN BY TH E ASSESSEE ARE UNPROVED AND BOGUS. THEREFORE, THE ADDITION MADE ON ACCOUNT OF DISPUTED PURCHASES OF RS. 34,24,522/- CANNOT BE SUS TAINED. AS STATED ABOVE, THE ONE POSSIBLE LOGICAL INFERENCE CA N BE THAT THE ASSESSEE MIGHT HAVE MADE PURCHASES FROM OPEN MARKET THROUGH THESE PARTIES (THE AO HIMSELF HAD STATED SO IN ASSE SSMENT ORDER) AND OBTAINED ACCOMMODATION BILLS FROM THE AFORESAID CONCERNS WHICH MIGHT HAVE RESULTED IN REDUCED GP ON SALE OF SUCH ITEMS AS COMPARED TO OTHERS. THERE IS ALSO POSSIBILITY OF DE LIVERY OF GOODS FROM OTHER PARTY IN GREY MARKET ARRANGED BY THE SAI D DISPUTED SELLERS. UNDER SUCH FACTS AND IN THE CIRCUMSTANCES OF THE CASE, THE ONLY ADDITION THAT CAN BE MADE IS ON ACCOUNT OF EST IMATION OF PROFITS ON SUCH PURCHASES COVERING THE GP DIFFERENC E BETWEEN THE PURCHASES MADE FROM MANOJ MILLS, ASTHA SILK INDUSTR IES AND SHREE RAM SALES & SYNTHETICS AND OTHER PARTIES AND OTHER LEAKAGE OF REVENUE, IF ANY. IN THIS CASE, THE DISPUTE IS LIMIT ED TO PURCHASES FROM AFORESAID THREE PARTIES AND ENTIRE DISALLOWANC E OF PURCHASES FROM THESE PARTIES CANNOT BE SUSTAINED FOR REASONS DISCUSSED IN HEREINABOVE AND IN PRECEDING PARAS. THE JUDICIAL PRONOUNCEMENTS RENDERED BY HONBLE HIGH COURT AND H ONBLE I.T.A.T RELIED UPON BY THE ASSESSEE AS REPRODUCED I N PARA 3.3 OF THIS ORDER DID NOT UPHELD THE ADDITION IN GIVEN FAC TS. HOWEVER, THE DECISIONS OF DIFFERENT 5 COMMISSIONERS OF INCOME-TA X (APPEALS) AS RELIED UPON BY THE LD. A.R. AND SUMMARY REPRODUCED IN PARA 3.4 OF THIS ORDER ARE BASED ON IDENTICAL FACTS I.E. PUR CHASES FROM THESE PARTIES ONLY AND THEREFORE I AM OF THE CONSIDERED V IEW THAT THE SAME SHOULD BE FOLLOWED WHICH TAKES CARE OF LEAKAGE , IF ANY. 4.2 IN LIGHT OF FACTS AND CIRCUMSTANCES OF THE CASE DISCUSSED HEREINABOVE AND JUDICIAL DECISIONS AND ORDERS OF DI FFERENT COMMISSIONERS OF INCOME-TAX (APPEALS) RELIED UPON B Y THE ASSESSEE, ESTIMATE OF PROFIT @ 10% OF DISPUTED PURC HASES WILL BE FAIR AND REASONABLE TO COVER UP THE DIFFERENCE OF G P OF PURCHASES FROM MANOJ MILLS, ASTHA SILK INDUSTRIES AND SHREE R AM SALES & SYNTHETICS AND FROM OTHER PARTIES AS WELL AS TO PLU G ANY LEAKAGE OF REVENUE. THEREFORE, ADDITION @ 10% OF DISPUTED P URCHASES I.E. ITA NOS.7167, 7168/MUM/2013 & C.O. NOS.19 & 20/MUM/2015 MR. ASHWINKUMAR CHHAGANLAL SATIYA 15 RS. 3,42,452/- (ROUNDED OFF TO RS. 3.43,000/-) IS C ONFIRMED AND BALANCE AMOUNT OF ADDITION IS DELETED. IN TERMS OF DISCUSSION MADE AS ABOVE, THE ASSESSEE GETS PARTIAL RELIEF ACC ORDINGLY. THE LD. CIT(A) THUS RESTRICTED THE ADDITION MADE BY THE A.O. ON ACCOUNT OF UNPROVED PURCHASES/INVESTMENTS TO 10% OF THE DISPUTED PURCHASES IN A.Y. 2007-08 AND FOLLOWED THE SAID ORDER IN THE REMAINING ASSESSMENT YEARS I.E 2005-06 , 2006-07 AND 2008-09 TO RESTRICT THE ADDITIONS TO 10% DISPUT ED PURCHASES. AGGRIEVED BY THE ORDERS OF THE LD. CIT(A ), THE ASSESSEE AND REVENUE BOTH ARE IN APPEALS BEFORE US. 6. THE ADDITION TO GROUND NO. 1 RAISED ORIGINALLY I NN ITS APPEAL ON THIS ISSUE, THE REVENUE HAS ALSO RAISED A COMMON ADDITIONAL GROUND IN ITS APPEALS FOR ASSESSMENT YEA RS 2006-7, 2007-08 & 2008-09 WHICH READS AS UNDER:- ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE, THE LD. CIT(A) AFTER HAVING ACCEPTED THE FACT THAT THE PURCHASE MA DE FROM OR THROUGH SHRI RAKESH KUMAR GUPTA AND HIS FAMILY MEMB ERS ARE BOGUS, ERRED IN LAW IN NOT CONFIRMING THE ADDITION AT LEAST TO THE EXTENT OF PEAK OF THE PURCHASES MADE FROM SUCH PART IES ON ACCOUNT OF BOGUS PURCHASES MADE IN CASH FROM THE OP EN MARKET OUT OF UNACCOUNTED CASH, IN VIEW OF THE DECISION HE LD IN AHMEDABAD HONBLE ITATS C- BENCH DECIDED IN THE CA SE OF VIJAY PROTEINS LTD. VS. ACIT 58 ITD 428. 7. WE HAVE HEARD THE ARGUMENTS OF BOTH THE SIDES AN D ALSO PERUSED THE RELEVANT MATERIAL AVAILABLE ON RECORD. IT IS OBSERVED THAT A SIMILAR ISSUE INVOLVING IDENTICAL F ACTS HAS ALREADY BEEN CONSIDERED AND DECIDED IN FAVOUR OF TH E ASSESSEE BY THE MUMBAI I BENCH OF THIS TRIBUNAL IN THE CAS E OF JEETENDRA HARSHADKUMAR TEXTILES (ITA NO. 771 & ITA NOS.7167, 7168/MUM/2013 & C.O. NOS.19 & 20/MUM/2015 MR. ASHWINKUMAR CHHAGANLAL SATIYA 16 2211/MUM/2011 DATED 21- 11-2012) VIDE PARA 8 & 8.1 WHICH READ AS UNDER:- 8. WE HAVE CAREFULLY CONSIDERED THE RIVAL SUBMISSI ONS IN THE LIGHT OF MATERIAL PLACED BEFORE US. IT WILL BE RELEVANT T O REPRODUCE THE LETTER RECEIVED BY THE AO FROM SHRI RAKESH KUMAR GU PTA, WHICH IS ALSO REPRODUCED IN THE ASSESSMENT ORDER: I AM IN RECEIPT OF YOUR SUMMONS U/S. 131 OF THE I. T.ACT. 1961 IN THE CASE OF M/S. JITENDRA HARSHAD KUMAR TEXTILE PVT . LTD. ASKING ME TO ATTEND BEFORE YOUR GOODSELF WITH THE DETAILS OF MY ACCOUNT WITH THE SAID M/S. JITENDRA HARSHAD KUMAR TEXTILE P VT. LTD. FOR A.Y.2002-03 & 2007-08. AS YOU ARE AWARE THAT MY ASSESSING OFFICER HAD REC ORDED ALLEGED STATEMENT U/S. 133A AND 131 OF THE I.T.ACT. 1961 1 HAVE BEEN RECEIVING WITNESS SUMMONS FROM ALL FOUR CORNERS OF THE CITY ON THE GROUND THAT I HAVE GIVEN ACCOMMODATION BILL, THOUGH I HAVE DENIED THE CONTENT OF THE STATEMENTS RECORDED BY A. O. U/S. 133A & 131 VIDE MY LETTER DATED 27.4.2009 AND MY AFFIDAVIT DATED 20.2.2009 SUBMITTED TO WARD 14(3)(2). IT IS PHYSICA LLY IMPOSSIBLE FOR ME TO ATTEND BEFORE VARIOUS INCOME TAX AUTHORIT IES, AS I AM NOT FEELING WELL, IT WILL NOT POSSIBLE FOR ME TO AT TEND BEFORE YOUR GOODSELF IN RESPONSE TO YOUR ABOVE MENTIONED SUMMON S. AS REGARDS M/S. JITENDRA HARSHAD KUMAR TEXTILES PVT . LTD. IS CONCERNED. I HAVE ALREADY GIVEN MY AFFIDAVIT WHEREI N I HAVE SPECIFICALLY STATED THAT I HAVE SOLD THE GOODS TO M /S. JITENDRA HARSHAD KUMAR TEXTILES P. LTD. AND THE CONSIDERATIO N IS RECEIVED TO ME BY CROSS ORDER CHEQUE. COPY OF THE SAID LEDGE R ACCOUNT IS ALREADY SUBMITTED THE DEPARTMENT. 8.1 FROM THE ABOVE LETTER IT IS CLEAR THAT THE SAME WAS WRITTEN IN RESPONSE TO NOTICE ISSUED BY THE AO. NOT ONLY SHRI RAKESH KUMAR GUPTA HAS STATED THAT HE HAS RETRACTED FROM THE STA TEMENT RECORDED DURING THE SURVEY BUT ALSO FILED AN AFFIDA VIT DATED 20/2/2009 AND LETTER DATED 27/4/2009 TO DENY THE ST ATEMENT MADE DURING THE SURVEY UNDER SECTION 133A. HE HAS F URTHER CONFIRMED THAT THE SALES MADE BY THE ASSESSEE WERE EFFECTED AND THE CONSIDERATION WAS RECEIVED BY CROSS ORDER CHEQU ES. THUS IT IS CLEAR THAT THERE IS NO MATERIAL ON RECORD TO SAY TH AT THE PURCHASES ITA NOS.7167, 7168/MUM/2013 & C.O. NOS.19 & 20/MUM/2015 MR. ASHWINKUMAR CHHAGANLAL SATIYA 17 MADE BY THE ASSESSEE FROM THE SAID CONCERN WERE BOG US EXCEPT THE GENERAL STATEMENT RECORDED BY THE DEPARTMENT IN THE CASE OF SHRI RAKESH KUMAR GUPTA, WHICH WAS LATER ON RETRACT ED. IN ABSENCE OF ANY MATERIAL BROUGHT ON RECORD AGAINST T HE SUBMISSIONS MADE BY SHRI RAKESH KUMAR GUPTA IN HIS LETTER DATED 20/12/2009 FILED BEFORE THE AO OF THE ASSESSEE THE ADDITION, IF ANY, MADE IN THE CASE OF THE ASSESSEE WILL BE BASED ON PRESUMPTION ONLY AND IT CANNOT BE SUSTAINED IN THE EYES OF LAW. AS AGAINST THAT ASSESSEE HAS SUBMITTED VARIOUS EVIDENC ES TO SHOW THAT THE ACTUAL DELIVERY OF THE GOODS WAS RECEIVED BY THE ASSESSEE FROM THE SAID PARTY WHICH HAS NOT BEEN DISCARDED BY THE AO. THE ADDITION SUSTAINED BY LD. CIT(A) IS ALSO ON PRESUMP TION BASIS. THEREFORE, KEEPING IN VIEW THE FACTS AND CIRCUMSTAN CES OF THE CASE, WE ARE OF THE OPINION THAT ADDITIONS MADE BY THE AO DESERVES TO BE DELETED IN ITS ENTIRETY. WE DECIDE A CCORDINGLY. 8. THE ABOVE DECISION OF THE TRIBUNAL IN THE CASE O F JEETENDRA HARSHADKUMAR TEXTILES HAS BEEN SUBSEQUENTLY FOLLOWE D BY THE TRIBUNAL TO DECIDE A SIMILAR ISSUE IN FAVOUR OF THE ASSESSEE IN THE CASE OF M/S PRAMIT TEXTILES VS. ITO (ITA NO. 39 48 TO 3953/MUM/2012 AND ITA NO. 4012 TO 4015 AND 4020 TO 4021/MUM/2012 DATED IST OCTOBER, 2013). AS THE ISSU E INVOLVED IN THE PRESENT CASE AS WELL AS ALL THE MAT ERIAL FACTS RELEVANT THERETO ARE SIMILAR TO THE CASE OF JEETEND RA HARSHADKUMAR TEXTILES AND M/S PRAMIT TEXTILES (SUPR A), WE RESPECTFULLY FOLLOW THE ORDERS OF THE CO-ORDINATE B ENCHES OF THIS TRIBUNAL IN THE SAID CASES AND DELETE THE ENTI RE ADDITION MADE BY THE A.O. ON ACCOUNT OF UNEXPLAINED/UNPROVED PURCHASES IN ALL THE FOUR YEARS UNDER CONSIDERATION . GROUND NO. 1 OF ASSESSEES APPEAL FOR ASSESSMENT YEARS 200 5- 06, 2006-07, 2007-08 & 2008-09 IS ACCORDINGLY ALLOWED W HEREAS GROUND NO. 1 OF THE REVENUES APPEAL FOR ASSESSMENT YEARS 2006-07, 2007-08 AND 2008- 09 IS DISMISSED. ITA NOS.7167, 7168/MUM/2013 & C.O. NOS.19 & 20/MUM/2015 MR. ASHWINKUMAR CHHAGANLAL SATIYA 18 2.4. WE ARE ALSO REPRODUCING HEREUNDER THE RELEVAN T PORTION FROM THE ORDER DATED 27/05/2015 FOR READY R EFERENCE IN THE CASE OF M/S NEETA TEXTILES (SUPRA):- THE AFORESAID APPEALS HAVE BEEN FILED BY THE ASSESS EE AS WELL AS REVENUE AGAINST SEPARATE IMPUGNED ORDER OF EVEN DATE 02- 09-2013, PASSED BY THE LD. CIT(A)- 25, MUMBAI FOR Q UANTUM OF ASSESSMENT PASSED U/S 143(3) R.W.S. 147 OF THE INCO ME TAX ACT, 1961 FOR THE ASSESSMENT YEARS 2005-06, 2007-08 AND 2008-09. 2. SINCE COMMON ISSUES ARE INVOLVED IN ALL THESE AP PEALS, THEREFORE, THEY WERE HEARD TOGETHER AND ARE BEING D ISPOSED OFF BY WAY OF THIS CONSOLIDATED ORDER FOR THE SAKE OF C ONVENIENCE. FOR READY REFERENCE, THE CROSS APPEALS FOR A.Y. 200 5-06 IS BEING TAKEN UP AS LEAD APPEAL. 3. GROUNDS RAISED BY THE ASSESSEE FOR A.Y. 2005-06 READ AS UNDER:- 1. UNDER THE FACTS AND THE CIRCUMSTANCES OF THE CAS E OF YOUR APPELLANT, THE LD. CIT(A) HAS ERRED IN CONFIRMING T HE ADDITION TO THE EXTENT OF 10% OF DISPUTED PURCHASES I.E. RS.1, 17,624/= ( ROUNDED OFF TO RS. 1,17,620/-) OUT OF THE TOTAL ADD ITION OF RS.11,76,242/= MADE BY LD. A.O. AS ' UNEXEPTED/UNPR OVED' PURCHASE/INVESTMENT IN PURCHASE AS PER SECTION 69 O F THE INCOME TAX ACT, 1961. 2. YOUR APPELLANT, THEREFORE, PRAYS THAT THE ADDIT ION OF RS.1,17,624/- SHOULD BE DELETED. WHEREAS GROUNDS RAISED BY THE REVENUE FOR A.Y. 2005 -06 READ AS UNDER:- ITA NOS.7167, 7168/MUM/2013 & C.O. NOS.19 & 20/MUM/2015 MR. ASHWINKUMAR CHHAGANLAL SATIYA 19 THE LD.CIT(A) HAS ERRED IN LAW AS WELL AS ON FACT BY NOT SUSTAINING ADDITION U/S 69 AFTER HAVING ACCEPTED TH E FINDING IN PRINCIPLE THAT THE PURCHASES WERE MADE FROM UNDISCLOSED/UNVERIFIABLE/ UNIDENTIFIABLE PARTIES IN THE GREY MARKET BY INVESTING IN CASH AND THE PURCHASES FROM THE GROUP CONCERNS OF SHRI RAKESH GUPTA & FAMILY WERE ONLY ACCOMMODATION ENTRIES AND NOT ACTUAL PURCHASES. 2. ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CAS E, THE LD.CIT(A) AFTER HAVING ACCEPTED THE FACT THAT THE PURCHASES M ADE FROM 0 THROUGH SHRI RAKESHKUMAR GUPTA AND HIS FAMILY MEMBE RS ARE BOGUS, ERRED IN LAW IN NOT CONFIRMING THE ADDITION AT LEAST TO THE EXTENT OF PEAK OF THE PURCHASES MADE FROM SUCH FROM SUCH PARTIES ON ACCOUNT OF BOGUS PURCHASES MADE IN CASH FROM THE OPEN MARKET OUT OF UNACCOUNTED CASH, IN VIEW OF THE DECI SION HELD BY THE HON'BLE ITAT'S C-BENCH, AHMEDABAD, IN THE CASE OF VIJAY PROTEINS LTD. 4. AT THE OUTSET, THE LD. COUNSEL FOR THE ASSESSEE, SHRI BHUPENDRA SHAH SUBMITTED THAT, SIMILAR ISSUE HAD COME UP FOR CONSIDERATION BEFORE THE TRIBUNAL IN SEVERAL CASES, SOME OF THEM OF BEING ITS SISTER CONCERN/GROUP CONCERNS, WHEREIN THE TRIBUNAL HAVE D ECIDED THE ISSUE OF ALLEGED BOGUS PURCHASES IN FAVOUR OF THE A SSESSEE. IN SUPPORT, THE LD. COUNSEL FOR THE ASSESSEE FILED THE FOLLOWING DECISIONS:- (I) ITA NO. 3141/M/12, ITA NO. 3142/M/12, ITA NO. 4 349/M/12, ITA NO. 3143/M/12, ITA NO. 4350/M/12, ITA NO. 3144/ M/12 & 4351/M/12 ORDER DATED 13-11-2013 IN THE CASE OF M/S JITENDRA HARSHADKUMAR VS. ACIT & VICE VERSA. (II) ITA NO. 3948 TO 3953/M/12, ITA NO. 4012 TO 401 5 TO 4021/M/12 ORDER DATED 01-10-2013 IN THE CASE OF PRA MIT TEXTILES VS. ITO & VICE VERSA. (III) ITA NO. 3960 TO 3967/M/12, ITA NO. 4022 TO 40 24/M/12, ITA NO. 4025/M/12 & ITA NOS. 3944,3955 AND 5065/M/12 IN THE CASE OF C. CHOTALAL & CO. VS. ITO AND VICE VERSA. ITA NOS.7167, 7168/MUM/2013 & C.O. NOS.19 & 20/MUM/2015 MR. ASHWINKUMAR CHHAGANLAL SATIYA 20 5. THE LD. D.R. HAS ALSO ADMITTED THAT THE FACTS AN D ISSUES INVOLVED IN THE PRESENT CASES ARE SIMILAR TO THE CASES DECID ED BY THE TRIBUNAL. 6. BRIEF FACTS OF THE CASE ARE THAT, THE ASSESSEE I S A PARTNERSHIP FIRM ENGAGED IN THE BUSINESS AS DEALERS AND MERCHANT OF CLOTH MATERIALS. THE RETURN OF INCOME WAS FILED ON 25-7-2005. IN THE CASE OF ONE OF THE SUPPLIERS OF THE ASSESSEE FIRM SHRI RAKESH KUMA R M. GUPTA (PROPRIETOR OF MANOJ MILLS) AND GROUP CONCERNS, A S URVEY U/S 133 A OF THE ACT WAS CARRIED OUT ON 13/14- 2-2009. DURI NG THE COURSE OF SURVEY, IN THE STATEMENT RECORDED, SHRI RAKESH KUMA R M. GUPTA STATED THAT HE WAS PROVIDING ACCOMMODATION SALE BIL L FOR THE PURCHASES IN THE NAME OF THESE PROPRIETARY CONCERNS , SHRI RAKESHKUMAR M. GUPTA, PROP. OF M/S MANOJ MILLS, SMT . HEMA R. GUPTA, PROP. OF M/S SHREE RAM SALES AND SYNTHETICS AND SHRI MOHIT R. GUPTA, PROP. OF M/S ASTHA SILK INDUSTRIES AND OTHER FAMILY MEMBERS. LATER ON SHRI RAKESH KUMAR M. GUPTA RETRAC TED THE STATEMENT IN A WRITTEN COMMUNICATION TO THE A.O. AN D ALSO BY WAY OF SWORN AFFIDAVIT FILED BY HIM AND HIS FAMILY MEMB ERS WHO WERE PROPRIETORS OF SUCH CONCERN. THE COPY OF HIS AFFIDA VIT IS APPEARING IN THE PAPER BOOK AT PAGE NO. 68 & 69. BASED ON THE INFORMATION GATHERED DURING THE SURVEY OPERATION, THE ASSESSEE S CASE WAS REOPENED U/S 147 OF THE ACT BY ISSUING NOTICE DATED 26-2-2010 U/S 148 OF THE ACT. THE A.O., RELYING UPON THE STATEMEN T OF SHRI RAKESH KR. M. GUPTA HELD THAT THE PURCHASES TO THE EXTENT OF RS. 20,10,972/- ARE BOGUS AND ARE MERELY ACCOMMODATION ENTRIES, THE SAME WAS ADDED U/S 69 OF THE ACT. THE LD. CIT(A) AF TER CONSIDERING THE VARIOUS SUBMISSIONS OF THE ASSESSEE, AS WELL AS THE DETAILS OF PURCHASES AND SALES HELD THAT 10% OF SUCH PURCHASES SHOULD BE ITA NOS.7167, 7168/MUM/2013 & C.O. NOS.19 & 20/MUM/2015 MR. ASHWINKUMAR CHHAGANLAL SATIYA 21 ADDED. THE RELEVANT OBSERVATION AND FINDING OF LD. CIT(A) IS AS UNDER:- I HAVE PERUSED THE ASSESSMENT ORDER, REMAND REPORT , WRITTEN SUBMISSIONS OF APPELLANT, AND THE FACTS AND CIRCUMS TANCE OF THE CASE. ON PLAIN READING OF THE ASSESSMENT ORDER, I F IND THAT THE AO HAS BASICALLY RELIED ON THE STATEMENTS RECORDED OF SHRI RAKESHKUMAR M. GUPTA & OTHERS DURING THE COURSE OF SURVEY ACTION U/S 133A AND SUBSEQUENTLY RE-AFFIRMED ON OATH U/S 1 31 OF THE ACT, TO MAKE ADDITIONS IN HANDS OF PURCHASER PARTY I.E. THE APPELLANT IN THIS CASE. THE SAID ADDITIONS ARE MADE BASED ON DOC UMENTS IMPOUNDED DURING SURVEY PROCEEDINGS TO ARRIVE AT TO TAL PURCHASES MADE BY APPELLANT DURING THE YEAR AT RS. 20,10,972/ -. HOWEVER, THE APPELLANT HAS SUBMITTED THE BREAK-UP OF ITS PURCHAS ES FROM GUPTA PARTY (RS. 11,76,242/- & NONGUPTA PARTY (RS. 11,71, 970/-) AGGREGATING TO RS. 23,48,212/-, WHICH FIGURE ALSO T ALLIES WITH THE PURCHASE FIGURE SHOWN IN ITS P&L ACCOUNT. FURTHER, THE APPELLANT HAS SUBMITTED LEDGER STATEMENT OF GUPTA PARTY (M/S ASTHA SILK INDUSTRIES) IN ITS BOOKS SHOWING TOTAL PURCHASES AT RS. 11,76,242/-. IN THESE CIRCUMSTANCES, EVEN ASSUMING THE ENTIRE PU RCHASES FROM GUPTA PARTY IS TO BE TREATED AS BOGUS, THE ADDITION S ON THAT ACCOUNT CANNOT EXCEED RS. 11,76,242/-. 6.1 FURTHER OBSERVE THAT THE APPELLANT HAS NOT MAIN TAINED THE STOCK REGISTER. HOWEVER, SINCE IT HAS SHOWN SALES O F RS. 25.44 LAKHS, AS AGAINST PURCHASES OF RS. 23.48 LAKHS IN I TS P&L ACCOUNT, IT HAS TO BE ACCEPTED THAT THERE CAN BE NO SALES WITHOUT CORRESPONDING PURCHASES, AND WHEN THE SALE OF APPELLANT IS NOT DISPUTED, THE ADDITIONS OF ENTIRE ALLEGED PURCHASES IS ALSO NOT JUSTIFIED. 6.2 A LOGICAL CONCLUSION WHICH MAY BE DRAWN IN SUCH SITUATION IS THAT THE APPELLANT HAS RECORDED SOME SALES IN IT S BOOKS OF ACCOUNTS WHICH MATERIALS MIGHT HAVE BEEN PURCHASED BY IT IN GREY MARKET WITHOUT BILLS, AND TO REGULARIZE SUCH P URCHASES IN GREY MARKET, THE APPELLANT MIGHT HAVE TAKEN ACCOMMO DATION ITA NOS.7167, 7168/MUM/2013 & C.O. NOS.19 & 20/MUM/2015 MR. ASHWINKUMAR CHHAGANLAL SATIYA 22 BILLS FROM THE SAID PARTIES FOR PURCHASE OF SPECIFI ED MATERIAL. THE AO HAS NOT DENIED SUCH POSSIBILITY BY QUOTING T HE WORDS 'HAWALA PURCHASES/ OR TO ACCOMMODATE THE PURCHASES MADE OUT OF THE BOOKS' IN PARA 17 OF THE ASSESSMENT ORDE R. IN THESE CIRCUMSTANCES, THE ADDITIONS CAN ONLY BE MADE AT CE RTAIN PERCENTAGE OF GP/ NP OR AT AN ADHOC AMOUNT, IN CONS ONANCE WITH THE APPELLATE ORDERS OF VARIOUS CITS(A) IN CAS ES OF PURCHASES FROM MR. RAKESHKUMAR GUPTA, THE COPIES OF WHICH ARE SUBMITTED BY THE APPELLANT. 6.3 LOOKING AT THE FACTS AND CIRCUMSTANCES OF THE C ASE AS A WHOLE, I AM OF THE CONSIDERED VIEW THAT THE CAUSE O F JUSTICE WOULD BE MET BY MAKING ADDITION AT 10% OF SUCH PURC HASES IN ORDER TO FILL IN THE GAP OF DIFFERENCE OF GP IN REC ORDING THE SAID PURCHASES AS WELL TO PLUG ANY LEAKAGE OF REVEN UE. THE AO HAS MADE ADDITIONS OF ALLEGED PURCHASES FROM GUPTA PARTY AT RS. 20,10,972/-, HOWEVER AS DISCUSSED ABOVE, THE SA ID PURCHASES ARE ACCEPTED AT RS. 11,76,242/-. HENCE, T HE ADDITIONS IS RESTRICTED TO 10% OF SAID PURCHASES OF RS. 11,76,242/- I.E. RS. OF RS. 1,17,624/- AND THE BALA NCE ADDITION OF RS. 18,93,348/- (I.E. 20,10,972/- - 1,17,624/- I S DELETED. 7. AGAINST THIS, BOTH ASSESSEE AS WELL AS REVENUE H AVE PREFERRED THESE APPEALS BEFORE US. 8. AFTER CONSIDERING THE IMPUGNED ORDER AS WELL AS THE ORDER OF THE TRIBUNAL IN OTHER CASES AND THE MATERIAL PLACED ON RECORD, WE FIND THAT FIRST OF ALL, SHRI RAKESH KUMAR M. GUP TA HAS ITA NOS.7167, 7168/MUM/2013 & C.O. NOS.19 & 20/MUM/2015 MR. ASHWINKUMAR CHHAGANLAL SATIYA 23 RETRACTED HIS STATEMENT BEFORE THE A.O. AND ALSO FI LED AFFIDAVIT ADMITTING THAT SALES MADE TO THE ASSESSEE ARE GENUI NE. THE ASSESSEE HAS ALSO PRODUCED EVIDENCES LIKE COPY OF C ONFIRMED LEDGER ACCOUNT, COPY OF BANK STATEMENT SHOWING THE PAYMENT MADE FOR THE PURCHASES AND SALE BILLS. ALL THESE DO CUMENTS HAVE BEEN PLACED IN THE PAPER BOOK BEFORE US. THE A SSESSEES CASE HAD BEEN THAT NO ADVERSE INFERENCE SHOULD BE D RAWN ON THE BASIS OF STATEMENT RECORDED WITHOUT REFERENCE T O THE ASSESSEE. NO FURTHER ENQUIRY WAS CARRIED OUT IN THE CASE OF THE ASSESSEE OR SHRI RAKESH KUMAR M. GUPTA DESPITE THE FACT THAT STATEMENT WAS SUBSEQUENTLY RETRACTED BY HIM. WE FIN D THAT EXACTLY SIMILAR ISSUE ON SIMILAR SET OF FACTS HAD C OME UP FOR CONSIDERATION BEFORE THE TRIBUNAL IN THE AFORESAID CASES AS CITED BY THE LD. COUNSEL FOR THE ASSESSEE. IN THE C ASE OF M/S JITENDRA HARSHAD KUMAR & COMPANY (SUPRA), THE TRIBU NAL AFTER RECORDING THE ENTIRE FACTS OF THE CASE AND EV IDENCES, DELETED THE ENTIRE ADDITIONS MADE BY THE A.O. FOR T HE SAKE OF READY REFERENCE, THE RELEVANT PORTION OF THE DECISI ON OF M/S HARSHADKUMAR & COMPANY IS REPRODUCED HEREUNDER:- 7. WE HAVE HEARD THE ARGUMENTS OF BOTH THE SIDES A ND ALSO PERUSED THE RELEVANT MATERIAL AVAILABLE ON RECORD. IT IS OBSERVED THAT A SIMILAR ISSUE INVOLVING IDENTICAL FACTS HAS ALREADY BEEN CONSIDERED AND DECIDED IN FAVOUR OF THE ASSESSEE BY THE MUMBAI I BENCH OF THIS TRIBUNAL IN THE CASE OF JEETENDRA HARSHADKUMAR TEXTILES (ITA NO. 771 & 2211/MUM/2011 DATED 21-11-2 012) VIDE PARA 8 & 8.1 WHICH READ AS UNDER:- 8. WE HAVE CAREFULLY CONSIDERED THE RIVAL SUBMISSI ONS IN THE LIGHT OF MATERIAL PLACED BEFORE US. IT WILL BE RELEVANT T O REPRODUCE THE LETTER RECEIVED BY THE AO FROM SHRI RAKESH KUMAR GU PTA, WHICH IS ALSO REPRODUCED IN THE ASSESSMENT ORDER: ITA NOS.7167, 7168/MUM/2013 & C.O. NOS.19 & 20/MUM/2015 MR. ASHWINKUMAR CHHAGANLAL SATIYA 24 1 AM IN RECEIPT OF YOUR SUMMONS U/S. 131 OF THE I. T.ACT. 1961 IN THE CASE OF M/S. JITENDRA HARSHAD KUMAR TEXTILE PVT . LTD. ASKING ME TO ATTEND BEFORE YOUR GOODSELF WITH THE DETAILS OF MY ACCOUNT WITH THE SAID M/S. JITENDRA HARSHAD KUMAR TEXTILE P VT. LTD. FOR A.Y.2002-03 & 2007-08. AS YOU ARE AWARE THAT MY ASSESSING OFFICER HAD RECO RDED ALLEGED STATEMENT U/S. 133A AND 131 OF THE I.T.ACT. 1961 1 HAVE BEEN RECEIVING WITNESS SUMMONS FROM ALL FOUR CORNERS OF THE CITY ON THE GROUND THAT I HAVE GIVEN ACCOMMODATION BILL, THOUGH I HAVE DENIED THE CONTENT OF THE STATEMENTS RECORDED BY A. O. U/S. 133A & 131 VIDE MY LETTER DATED 27.4.2009 AND MY AFFIDAVIT DATED 20.2.2009 SUBMITTED TO WARD 14(3)(2). IT IS PHYSICA LLY IMPOSSIBLE FOR ME TO ATTEND BEFORE VARIOUS INCOME TAX AUTHORIT IES, AS I AM NOT FEELING WELL, IT WILL NOT POSSIBLE FOR ME TO AT TEND BEFORE YOUR GOODSELF IN RESPONSE TO YOUR ABOVE MENTIONED SUMMON S. AS REGARDS M/S. JITENDRA HARSHAD KUMAR TEXTILES PVT . LTD. IS CONCERNED. I HAVE ALREADY GIVEN MY AFFIDAVIT WHEREI N I HAVE SPECIFICALLY STATED THAT I HAVE SOLD THE GOODS TO M /S. JITENDRA HARSHAD KUMAR TEXTILES P. LTD. ANDTHE CONSIDERATION IS RECEIVED TO ME BY CROSS ORDER CHEQUE. COPY OF THE SAID LEDGE R ACCOUNT IS ALREADY SUBMITTED THE DEPARTMENT. 8.1 FROM THE ABOVE LETTER IT IS CLEAR THAT THE SAME WAS WRITTEN IN RESPONSE TO NOTICE ISSUED BY THE AO. NOT ONLY SHRI RAKESH KUMAR GUPTA HAS STATED THAT HE HAS RETRACTED FROM THE STA TEMENT RECORDED DURING THE SURVEY BUT ALSO FILED AN AFFIDA VIT DATED 20/2/2009 AND LETTER DATED 27/4/2009 TO DENY THE ST ATEMENT MADE DURING THE SURVEY UNDER SECTION 133A. HE HAS F URTHER CONFIRMED THAT THE SALES MADE BY THE ASSESSEE WERE EFFECTED AND THE CONSIDERATION WAS RECEIVED BY CROSS ORDER CHEQU ES. THUS IT IS CLEAR THAT THERE IS NO MATERIAL ON RECORD TO SAY TH AT THE PURCHASES MADE BY THE ASSESSEE FROM THE SAID CONCERN WERE BOG US EXCEPT THE GENERAL STATEMENT RECORDED BY THE DEPARTMENT IN THE CASE OF SHRI RAKESH KUMAR GUPTA, WHICH WAS LATER ON RETRACT ED. IN ABSENCE OF ANY MATERIAL BROUGHT ON RECORD AGAINST T HE SUBMISSIONS MADE BY SHRI RAKESH KUMAR GUPTA IN HIS LETTER DATED 20/12/2009 FILED BEFORE THE AO OF THE ASSESSEE THE ADDITION, IF ANY, MADE IN THE CASE OF THE ASSESSEE WILL BE BASED ON PRESUMPTION ONLY AND IT CANNOT BE SUSTAINED IN THE EYES OF LAW. AS AGAINST THAT ASSESSEE HAS SUBMITTED VARIOUS EVIDENC ES TO SHOW THAT THE ACTUAL DELIVERY OF THE GOODS WAS RECEIVED BY THE ASSESSEE ITA NOS.7167, 7168/MUM/2013 & C.O. NOS.19 & 20/MUM/2015 MR. ASHWINKUMAR CHHAGANLAL SATIYA 25 FROM THE SAID PARTY WHICH HAS NOT BEEN DISCARDED BY THE AO. THE ADDITION SUSTAINED BY LD. CIT(A) IS ALSO ON PRESUMP TION BASIS. THEREFORE, KEEPING IN VIEW THE FACTS AND CIRCUMSTAN CES OF THE CASE, WE ARE OF THE OPINION THAT ADDITIONS MADE BY THE AO DESERVES TO BE DELETED IN ITS ENTIRETY. WE DECIDE A CCORDINGLY. 8. THE ABOVE DECISION OF THE TRIBUNAL IN THE CASE O F JEETENDRA HARSHADKUMAR TEXTILES HAS BEEN SUBSEQUENTLY FOLLOWE D BY THE TRIBUNAL TO DECIDE A SIMILAR ISSUE IN FAVOUR OF THE ASSESSEE IN THE CASE OF M/S PRAMIT TEXTILES VS. ITO (ITA NO. 3948 T O 3953/MUM/2012 AND ITA NO. 4012 TO 4015 AND 4020 TO 4021/MUM/2012 DATED IST OCTOBER, 2013). AS THE ISSU E INVOLVED IN THE PRESENT CASE AS WELL AS ALL THE MATERIAL FAC TS RELEVANT THERETO ARE SIMILAR TO THE CASE OF JEETENDRA HARSHA DKUMAR TEXTILES AND M/S PRAMIT TEXTILES (SUPRA), WE RESPEC TFULLY FOLLOW THE ORDERS OF THE CO-ORDINATE BENCHES OF THIS TRIBU NAL IN THE SAID CASES AND DELETE THE ENTIRE ADDITION MADE BY THE A. O. ON ACCOUNT OF UNEXPLAINED/UNPROVED PURCHASES IN ALL THE FOUR Y EARS UNDER CONSIDERATION. GROUND NO. 1 OF ASSESSEES APPEAL FO R ASSESSMENT YEARS 2005-06, 2006-07, 2007-08 & 2008-09 IS ACCORD INGLY ALLOWED WHEREAS GROUND NO. 1 OF THE REVENUES APPEA L FOR ASSESSMENT YEARS 2006-07, 2007-08 AND 2008-09 IS DI SMISSED. 9. SIMILAR FINDING HAS BEEN GIVEN BY THE TRIBUNAL IN THE CASE OF PRAMIT TEXTILES AND M/S C. CHOTALAL & CO. (SUPRA ). IT HAS BEEN INFORMED BY THE LD. COUNSEL FOR THE ASSESSEE T HAT IN OTHER CASES ALSO WHEREIN SIMILAR ADDITION WERE MADE ON AC COUNT OF STATEMENT OF SHRI RAKESH KR. M. GUPTA HAVE ALSO BEE N DELETED. SINCE, THE FINDING OF THE TRIBUNAL IN ALL THE CASES ARE BASED ON SIMILAR SET OF FACTS, THEREFORE, RESPECTFULLY FOLLO WING THE SAME, WE DIRECT THE A.O. TO DELETE THE ENTIRE ADDITION OF PURCHASES AND CONSEQUENTLY THE GROUND RAISED BY THE ASSESASEE IS ALLOWED WHEREAS THE GROUNDS RAISED IN REVENUES APP EAL ARE DISMISSED. ITA NOS.7167, 7168/MUM/2013 & C.O. NOS.19 & 20/MUM/2015 MR. ASHWINKUMAR CHHAGANLAL SATIYA 26 10. IN ASSESSMENT YEARS 2007-08 AND 2008-09 ALSO, S IMILAR GROUNDS HAVE BEEN RAISED AND SIMILAR FACTS ARE PERM EATED IN THESE YEARS, THEREFORE, THE AFORESAID FINDING GIVEN ABOVE WILL APPLY AND ACCORDINGLY, THE ADDITION MADE ON ACCOUNT OF PURCHASES IN BOTH THE YEARS ARE DELETED. 11. IN THE RESULT, APPEALS OF THE ASSESSEE ARE ALLO WED WHEREAS APPEALS OF THE REVENUE ARE DISMISSED. 2.5. WE NOTE THAT IN THE AFORESAID CASES, THE ONE OF THE SUPPLIERS/PARTY IS ALLEGED TO BE THE FIRM SHRI RAKE SH KUMAR GUPTA, (PROPRIETOR OF MANOJ MILLS ) AND OTHER GROUP CONCERNS, WHEREIN, SURVEY ACTION U/S 133 OF THE ACT WAS CARRIED OUT. STATEMENT OF SHRI RAKESH KUMAR M. GUPT A WAS RECORDED, WHEREIN, HE TENDERED THAT HE WAS PROVIDIN G ACCOMMODATION SALE BILL FOR THE PURCHASES AND LATER ON RETRACTED THE STATEMENT IN WRITTEN COMMUNICATION TO THE ASSESSING OFFICER. THE FACTS ARE IDENTICAL IN THE PRESENT APPEAL ALSO. FOLLOWING THE AFORESAID DECISIONS OF T HE CO- ORDINATE BENCHES AND IN THE ABSENCE OF ANY CONTRARY DECISIONS, THE APPEALS OF THE REVENUE ARE HAVING NO MERIT. 2.6. SO FAR AS, THE CROSS OBJECTIONS OF THE ASSESS EE IS CONCERNED, SINCE, IDENTICAL ISSUE HAS BEEN DELIBERA TED UPON AND NO MERIT WAS FOUND WITH RESPECT TO RETAINING EV EN 10% AGAINST WHICH THE ASSESSEE IS IN CROSS OBJECTIONS, WE ALLOW THE CROSS OBJECTION OF THE ASSESSEE AS THE PART ADD ITION WAS RETAINED SIMPLY TO COVER UP THE LEAKAGE OF THE REVE NUE, IF ITA NOS.7167, 7168/MUM/2013 & C.O. NOS.19 & 20/MUM/2015 MR. ASHWINKUMAR CHHAGANLAL SATIYA 27 ANY. THIS ISSUE HAS BEEN DELIBERATED UPON BY THE TR IBUNAL IN THE CASE OF M/S NEETA TEXTILES VS ITO (ITA NO.1638/MUM/2013 ETC.) ORDER DATED 27/05/2015, WHEREIN, CONFIRMATION OF ADDITION TO THE EXTENT OF 10% WAS CHALLENGED BY THE ASSESSEE AND THE TRIBUNAL VIDE AF ORESAID ORDER DATED 27/05/2015 DECIDED IN FAVOUR OF THE ASS ESSEE. EVEN OTHERWISE, NO CONCRETE FINDING HAS BEEN GIVEN BY THE LD. COMMISSIONER OF INCOME TAX (APPEALS) EVEN RETAI NING THE ADDITION TO THE EXTENT OF 10% OUT OF AD-HOC ADDITIO N WHICH WAS MERELY BASED UPON THE STATEMENT THAT TOO WAS RE TRACTED AND NO FURTHER ENQUIRIES WERE CARRIED OUT IN THE CA SE OF THE ASSESSEE OR IN THE CASE OF SHRI RAKESH KUMAR GUPTA. EVEN OTHERWISE, MERE STATEMENT CANNOT BE THE BASIS OF AD DITION UNLESS AND UNTIL IT IS CO-RELATED WITH EVIDENCE, IF ANY FOUND FROM THE PREMISES, DURING SURVEY. THUS, THE CROSS OBJECTIONS OF THE ASSESSEE ARE ALLOWED. FINALLY, THE APPEALS OF THE REVENUE ARE DISMISSED A ND THE CROSS OBJECTIONS OF THE ASSESSEE ARE ALLOWED. THIS ORDER WAS PRONOUNCED IN THE OPEN COURT IN THE PRESENCE OF LD. REPRESENTATIVES FROM BOTH SIDES AT THE CONCLUSION OF THE HEARING ON 09/02/2016. SD/- SD/- ( G.S. PANNU ) (JOGINDER SINGH) '# / ACCOUNTANT MEMBER $# / JUDICIAL MEMBER & ' MUMBAI; + DATED : 01/03/2016 ITA NOS.7167, 7168/MUM/2013 & C.O. NOS.19 & 20/MUM/2015 MR. ASHWINKUMAR CHHAGANLAL SATIYA 28 F{X~{T? P.S/. .. %$&'()(*& / COPY OF THE ORDER FORWARDED TO : 1. , -. / THE APPELLANT 2. /0-. / THE RESPONDENT. 3. 11 & 2% ( , ) / THE CIT, MUMBAI. 4. 11 & 2% / CIT(A)- , MUMBAI 5. 4!5/%' , 1, ),'6 , & ' / DR, ITAT, MUMBAI 6. 7#8' / GUARD FILE. / BY ORDER, 04%/% //TRUE COPY// / (DY./ASSTT. REGISTRAR) , & ' / ITAT, MUMBAI