EMGEE FOILS P.TD, MUMBAI V. DCIT CEN CIR 47, MUMBAI

ITA 7434/MUM/2012

• Counselvise Citation: [2015] 140 COUNSELVISE.COM (IT) 92644 (ITAT-MUMBAI)
• Duration Of Justice: 2 year(s) 4 month(s) 30 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 13-05-2015
• Appeal Filed By: Assessee
• Bench Allotted: E
• Next Hearing Date: 10-09-2014
• Assessment Year: 2004-2005
• Appeal Filed On: 14-12-2012
• Court: TRIBUNAL
• Department Lawyers: A G BHATKAL
• Keywords: Bogus purchase; Unexplained cash credit; Rejection of books of accounts; Additional evidence; Accommodation entries
• Section: 143(3); 68

Judgement Text

, , IN THE INCOME TAX APPELLATE TRIBUNAL E , BENCH MUMBAI . . , , BEFORE SHRI R.C.SHARMA , A M & SHRI SANJAY GARG , J M ./ ITA NO. 4 14&415 / MUM/20 1 3 ( / ASSESSMENT YEAR : 200 4 - 0 5 &2005 - 06 ) ACIT CC 47, MUMBAI - 20 VS. M/S EMGEE FOILS PVT. LTD., 301, THE ANGEL, 2, KRISHNA SANGHI PATH, GAMDEVI, MUMBAI - 400007 ./ ./ PAN/GIR NO. : A A AC E 3990 N ( / APPELLANT ) .. ( / RESPONDENT ) AND ./ ITA NO. 7434&7435/ MUM/201 2 ( / ASSESSMENT YEAR :200 4 - 0 5 & 2005 - 06 ) M/S EMGEE FOILS PVT. LTD., 301, THE ANGEL, 2, KRISHNA SANGHI PATH, GAMDEVI, MUMBAI - 400007 VS. ACIT CC 47, MUMBAI - 20 ./ ./ PAN/GIR NO. : AAAC E 3990 N ( / APPELLANT ) .. ( / RESPONDENT ) /REVENUE BY : SHRI A.G.BHATKAL /ASSESSEE BY : SHRI RAKESH JOSHI / DATE OF HEARI NG : 1 7 /03/2015 / DATE OF PRONOUNCEMENT 13/05 /2015 / O R D E R PER R.C.SHARMA (A.M) : TH ESE ARE THE CROSS APPEALS FILED BY THE ASSESSEE AND REVENUE AGAINST THE ORDER OF CIT(A) FOR THE ASSESSMENT YEARS 2004 - 05 & 2005 - 06 , IN THE MATTER OF ORDER PASSED U/S.153A R.W.S.143(3) OF THE I.T.ACT ITA NO S . 7434&7435/12 & ITA NOS.414&415/13 2 2. COMMON GROUNDS HAVE BEEN TAKEN IN BOTH THE YEARS, THEREFORE, BOTH THE APPEALS WERE HEARD TOGETHER AND NOW DECIDED BY THIS CONSOLIDATED ORDER. 3. AT T HE OUTSET LD. AR PLACED ON RECORD ORDER OF THE TRIBUNAL IN ASSESSEES OWN CASE FOR THE ASSESSMENT YEAR 2004 - 05 AND 2005 - 06, DATED 17 - 3 - 2015, WHEREIN GROUNDS TAKEN DURING THE YEAR UNDER CONSIDERATION HAVE BEEN DECIDED. 4. RIVAL CONTENTIONS HAVE BEEN HEARD A ND RECORD PERUSED. THE BRIEF FACTS OF THE CASE ARE THAT THE ASSESSEE IS A DOMESTIC PRIVATE LIMITED COMPANY, ENGAGED IN THE BUSINESS OF DEALING IN IRON & STEEL PRODUCTS AND ALSO ACTS AS CONSIGNMENT AGENT. THE ASSESSEE FILED ITS ORIGINAL RETURN OF INCOME ON 27.10.2004 DECLARING TOTAL INCOME OF RS.6,37,860 / - . A SEARCH & SEIZURE ACTION U/ S.132(1) OF THE ACT WAS CONDUCTED ON 22.11.2006 AT THE PREMISES OF THE ORBIT GROUP AND THE ASSESSEE COMPANY WAS ALSO COVERED. CONSEQUENT TO THE SEARCH ACTION, THE ASSESSEE COMP ANY FILED ITS RETURN OF INCOME U/S.153C OF THE ACT ON 03.10.2007 DECLARING TOTAL INCOME OF RS.6,37,860 / - . THE ASSESSMENT U/ S.153C R.W.S.143(3) OF THE ACT WAS COMPLETED ON 30.12.2008 ASSESSING TOTAL INCOME AT RS.5,08,26,360/ - WHEREIN AN ADDITION OF RS.5,01, 88,500 / - U / S.68 OF THE ACT ON ACCOUNT OF ALLEGED BOGUS PURCHASES BY TREATING THE SUNDRY CREDITORS FOR GOODS AS 'UNEXPLAINED CASH CREDIT' WAS MADE. AGGRIEVED BY THE SAID ORDER, THE ASSESSEE PREFERRED AN APPEAL BEFORE THE LD. CIT(A). THE LD. CIT(A) VIDE ORDE R NO.CIT(A) - 36/AP.86 / 10 - 11 DATED 15.10.2010 SUSTAINED PART OF THE ADDITION , AGAINST WHICH ASSESSEE AND DEPARTMENT BOTH PREFERRED APPEAL ITA NO S . 7434&7435/12 & ITA NOS.414&415/13 3 BEFORE THE TR I BUNAL . SUBSEQUENTLY, AN OTHER SEARCH & SEIZURE ACTION U/ S.132(1) OF THE ACT WAS CONDUCTED ON 11.02.2010 AT THE RESIDENCE OF PROMOTERS AND BUSINESS PREMISES OF M/ S. ORBIT CORPORATION LTD. THE ASSESSEE WAS ALSO COVERED IN THE SAID PROCEEDINGS. CONSEQUENT TO THE SEARCH ACTION, NOTICE ULS.153A OF THE ACT WAS ISSUED AND THE ASSESSEE FILED THE RETURN OF INCOME DECLAR ING TOTAL INCOME OF RS.6,37,860/ - THE ASSESSMENT U/ S. 1 53A R.W.S. 143(3), OF THE ACT WAS COMPLETED ON 21.12.2011 ASSESSING THE TOTAL INCOME AT RS.5,08,26,360 / - MAKING THE ADDITION OF RS.5,01,88,500 / - U/ S.68 OF THE ACT ON ACCOUNT OF BOGUS PURCHASES WHICH WAS MADE IN THE EARLIER SEARCH ASSESSMENT COMPLETED U/S.153C R.W.S.143(3) OF THE ACT . 5. THE GRIEVANCE RELATES TO THE ADDITION OF RS.5,01,88,500 / - U/ S.68 OF THE ACT. IT IS STATED IN THE ASSESSMENT ORDER THAT ASSESSMENT U/S.153C R. W.S. 143(3) OF THE ACT WAS CO MPLETED ON 30.12.2008 ASSESSING TOTAL INCOME AT RS.5,08,26,360 / - AGAINST THE RETURNED INCOME OF RS.6,37,680 / - ; IN THE ASSESSMENT, THE SUNDRY CREDITORS IN RESPECT OF COMPANIES RELATED TO ONE MR. AMITABH PAREKH WAS NOT CONFIRMED AND SINCE THE GENUINENESS OF THE TRANSACTIONS HAS NOT BEEN PROVED BY THE ASSESSEE BY ADDUCING SATISFACTORY EVIDENCE, THE AMOUNTS STANDING TO THE CREDIT OF M/ S. EPSILON INDUSTRIES AMOUNTING TO RS.5,01,88,500 / - WAS ADDED TO THE INCOME OF THE ASSESSEE U/S.68 OF THE ACT; AGGRIEVED WITH TH E ORDER OF THE A. O ASSESSEE FILED APPEAL BEFORE THE CIT(A) AND THE LD. CIT(A) VIDE ORDER NO.CIT(A) - 36/AP.86110 - 11 DATED 15.10.2010 DULY EXAMINED THE ISSUE AFTER TAKING INTO ACCOUNT THE REMAND REPORT FROM THE A. O AND FINALLY DECIDED THAT THE ITA NO S . 7434&7435/12 & ITA NOS.414&415/13 4 ASSESSEE IS NOT IN A POSITION TO REPORT THE FULL FACTS OF THE CASE . T HE CIT(A) DECIDED THAT THE G.P. SHOWN BY THE ASSESSEE WAS ON LOWER SIDE AND ESTIMATED THE GP @ 6.5 % AND THE DIFFERENCE IN THE G.P., BEING 6% OF THE TURNOVER WHICH WORKED OUT TO RS.57,36,000 / - , WAS DIREC TED TO BE ASSESSED AS ADDITIONAL INCOME OF THE ASSESSEE; AGAINST THE ORDER OF LD. CIT(A), THE DEPARTMENT HAS FILED APPEAL BEFORE THE ITAT ON THE GROUND THAT THE LD. C I T(A) WAS NOT JUSTIFIED IN DELET ING THE ADDITION MADE BY THE A.O , BEING THE S UNDRY CREDITO RS WITHOUT APPRECIATING THAT THE TRANSACTIONS WERE MERELY PAPER TRANSACTIONS IN THE NATURE OF ACCOMMODATION ENTRIES AND THE CREDITWORTHINESS OF THE PARTIES AND THE VIEW OF THE ABOVE, A.O POINTED OUT THAT THE ISSUE UNDER CONSIDERATION IS ALIVE AND IS SUBJEC T TO THE DECISION OF THE ITAT AND HENCE THE ADDITION MADE BY THE A.O IN EARLIER ASSESSMENT PROCEEDINGS DESERVES TO BE ADDED TO THE RETURNED INCOME OF THE ASSESSEE. ACCORDINGLY, A.O ADOPTED THE TOTAL INCOME AT RS.5,08,26,360/ - AS DETERMINED IN THE AS S ESSMEN T U/S.153C R.W.S. 143(3) DATED 30.12.2008. 6 . BY THE IMPUGNED ORDER, THE CIT(A) PARTLY ALLOWED ASSESSEES CLAIM AFTER OBSERVING AS UNDER : - 7.0 THE FACTS OF THE CASE, THE STAND TAKEN BY THE A.O IN THE ASSESSMENT ORDER AND THE CONTENTIONS OF THE APPELLANT DURING THE ASSESSMENT PROCEEDINGS AS WELL AS DURING THE APPEAL PROCEEDINGS HAVE BEEN CAREFULLY CONSIDERED. THIS ISSUE ALSO CAME UP IN THE GROUNDS OF APPEAL FILED BY THE APPELLANT IN RESPECT OF THE ASSESSMENT ORDER PASSED U/S.153C R.W.S. 143(3) OF THE ACT CONSEQUENT TO THE EARLIER SEARCH & THE LD. PREDECESSOR CIT(A), VIDE ORDER NO.CIT(A) - 36/A.P.86/10 - 11 DATED 15.10.2010 HAS SUSTAINED THE ADDITION TO THE EXTENT OF RS.57,36,000 / - . THE FINDINGS OF LD. PREDECESSOR CIT(A) ARE REPRODUCED AS UNDER: '9. I HAVE CONSIDERED THE SUBMISSIONS OF THE APPELLANT AND THE ORDER OF THE A. O . THE APPELLANT HAS MADE TOTAL PURCHASE IN THIS YEAR OF 3 ITA NO S . 7434&7435/12 & ITA NOS.414&415/13 5 571.647 MT VALUED AT RS. 9, 51,58, 794/ - . THE EXACT QUANTITY WAS SOLD FOR RS.9,56,34,588/ - DERIVING A GROSS PROFIT OF RS.4, 75, 79 4/ - . THE GP RATIO IS ONLY 0.50%. THIS IS IN LINE WITH THE GP SHOWN BY THE APPELLANT IN THE PAST YEARS. THE A. 0 HAS NOT REJECTED THE BOOKS OF ACCOUNTS AND ACCEPTED THE SALES TURNOVER SHOWN BY THE APPELLANT. FIRSTLY, IF THE SALES FIGURES ARE ACCEPTED THEN T HE CORRESPONDING PURCHASES ALSO HAVE TO BE ACCEPTED. SINCE, THE A. 0 HAS ACCEPTED THE SALES TURNOVER, THERE IS APPARENTLY NO REASON TO REJECT THE CORRESPONDING PURCHASES. 10. THE A.O HAS' MENTIONED IN THE ASSESSMENT ORDER THAT THE CONFIRMATIONS WERE NOT FILED AND HENCE HE MADE THE ADDITION U/S.68. THE APPELLANT HAS IN THIS YEAR MADE PURCHASES FROM TWO PARTIES AND MADE SALES TO TWO PARTIES. THESE TRANSACTIONS ARE DONE AS A TRADER AND HENCE NEITHER THERE IS ANY OPENING STOCK NOR ANY CLOSING STOCK THE APPELL ANT HAS SHOWN GP WHICH IS IN LINE WITH THE GP SHOWN IN EARLIER YEARS. THE APPELLANT HAD FILED A LETTER WITH THE A.O ON MARCH 25, 2008 WHEREIN THE CONFIRMATIONS AND DETAILS OF ALL THE SUNDRY CREDITORS WERE FILED AS ANNEXURE 'G' TO THE SAID LETTER. THE APPEL LANT HAD ALSO PRODUCED THE COPIES OF BANK STATEMENTS; BANK BOOKS ETC. OF THE RELEVANT PERIOD TO SHOW THAT THE TRANSACTIONS WERE THROUGH ONLY ACCOUNT PAYEE CHEQUES. THE APPELLANT ALSO FILED THE DETAILS OF ITEMWISE, QUANTITY WISE AND VALUE WISE PURCHASES FRO M M / S. EPSILON INDUSTRIES L I MITED AND HOW THE SAME WERE SOLD TO M / S. CLAIRANT INDIA PRIVATE LIMITED AND M/ S. SHREE MAHALAXMI TECHNO ENGG. PVT. LTD. ALONG WITH THE DETAILS OF ITEM WISE, QUANTITY WISE AND VALUE WISE SALES WHICH MATCHED WITH THE CORRESPONDING PURCHASE. ON THIS ISSUE, REMAND REPORT WAS CALLED FOR FROM THE A.O AS ALREADY MENTIONED ABOVE. BOTH THE REMAND REPORTS, AS MENTIONED ABOVE, ARE SILENT ON WHETHER THE A.O INDEED RECEIVED THIS LETTER WITH ALL THE ANNEXURE. FURTHER, IN THE REMAND REPORT, THE A.O HAS OBJECTED TO ACCEPTANCE OF THIS ADD ITIONAL EVIDENCE. THIS IS NOT A CASE OF THE CONFIRMATIONS AND COPIES OF ACCOUNTS FILED AT THE APPELLATE STAGE BEING ADDITIONAL EVIDENCE. IN F ACT, THEY WERE FILED BE F ORE THE A. O BUT WERE NOT CONSIDERED BY HIM. THE LETTER BEARS THE STAMPED RECEIPT OF THE OFFICE OF THE A. O DATED MARCH 25, 2008. THE REMAND WAS SOUGHT FOR VERIFYING THE CONFIRMATIONS AND ALSO EXAMINING THE PARTIES TO ASCERTAIN THE TRUTH. THE REMAND REPORT HAS NOT COMMENTED ADVERSELY ABOUT THE ADDITION MA DE FOR A. Y.2004 - 05 ON ACCOUNT OF M/ S. EPSILON INDUSTRIES LIMITED. THERE F ORE, IT IS PRESUMED THAT THE A.O HAS NOTHING TO SAY ON THE SAME. FURTHER, IT IS PERTINENT TO NOTE THAT IN A. Y.2005 - 06 ALSO THE APPELLANT HAD PURCHASED FROM M/ S. EPSILON INDUSTRIES LI MITED, BUT THE SAME A.O HAS ALLOWED THE SAME AND MADE ADDITION ONLY ON ACCOUNT OF THE OUTSTANDING AMOUNT OF PHOENIX ALUMINIUM FOILS AND ALLIED PRODUCTS AND MEDIGOLD GLOBAL LIMITED. THE APPELLANT AND THE TWO PARTIES FROM WHOM THE PURCHASES WERE MADE HAVE SH OWN THE TRANSACTIONS IN THE SALES TAX RETURN AND THE TAX ON THE SAME HAS ALSO BEEN PAID. THERE IS NO INSTANCE OF CASH BEING WITHDRAWN AND RETURNED TO THE APPELLANT AND VICE VERSA. 11. THE F OLLOWING F ACTS SHOW THAT THE APPELLANT IS ALSO NOT REPORTING THE TRUE AND CORRECT STATE OF AFFAIRS FOR THE F OLLOWING REASONS: ITA NO S . 7434&7435/12 & ITA NOS.414&415/13 6 THE APPELLANT DOES NOT HAVE THE DELIVERY DETAILS, PARTICULARLY THE LORRY - RECEIPT; ETC. THE APPELLANT HAS SHOWN GP OF ONLY 0.50% THERE ARE SOME INSTANCES OF CASH WITHDRAWAL BUT THE S AME CANNOT BE TRACKED BACK TO THE APPELLANT. 12. THERE F ORE, THE STAND O F THE A.O NEEDS TO BE AMENDED AND CANNOT BE SUSTAINED IN THE PRESENT F ORM. 13. IN VIEW OF THE ABOVE, THE GP SHOWN BY THE APPELLANT WAS COMPARED TO THE GP SHOWN BY THE TRADERS IN THE STEEL INDUSTRY AND I T IS GATHERED THAT THE AVERAGE GP IN CASE OF PURE TRADER RANGES BETWEEN 6 - 9%. CONSIDERING THE FACTS O F THIS CASE AND TAKING JUDICIOUS VIEW, THE A PPELLANT SHOULD HAVE SHOWN GP OF AT LEAST 6.5% OF THE SALES. DURING THE YEAR UNDER CONSIDE RATION THE SALES SHOWN BY THE APPELLANT IS RS.9.56 CRORE AND THE GP OFFERED BY THE APPELLANT IS ONLY 0.50% THERE F ORE AFTER GIVING CREDIT F OR THE GP ALREADY OFFERED THE BALANCE (6.5% ( - ) 0.5% BEING 6 % OF THE TURNOVER OF RS.9.56 CRORE COMES TO RS.57,36,000 / - WHICH IS TREATED AS ADDITIONAL INCOME OF THE APPELLANT. THEREFORE, THE GROUND OF THE APPELLANT IS PARTLY ALLOWED. 8.0 A.O HAS TO ABIDE BY THE ORDER OF LD. PREDECESSOR CIT(A) TO THE EXTENT OF THE ADDITION SUSTAINED IN THE APP ELLATE ORDER. HOWEVER, IN THI S CASE, A.O HAS ONCE AGAIN REPEATED THE ADDITION MADE IN THE ASSESSMENT ORDER WHICH IS ALREADY MERGED WITH THE ORDER OF THE FIRST .APPELLATE AUTHORITY, AS STATED IN THE ASSESSMENT ORDER, BEFORE THE HON'BLE ITA T . IN THE WRITTEN SUBMISSIONS FILED, APPELLANT HAS ALSO CONFIRMED THE SAME AND FURTHER SUBMITTED THAT THE HON'BLE ITAT HAS NOT YET THE ORDER OF THE LD. PREDECESSOR CIT(A) IS ALSO APPEALED AGAINST BY THE DEPARTMENT DISPOSED OF THE SAID A PP EAL. THESE FACTS MAKE IT CLEAR THAT A.O HAS NO JURISDICTION TO RE VISE THE ASSESSED INCOME AS MODIFIED BY THE ORDER OF THE FIRST APPELLATE AUTHORITY ONCE AGAIN ON THE GROUND THAT ASSESSMENT ORDER U/S.153A R.W.S. 143(3) OF THE ACT WAS REQUIRED TO BE PASSED BY THE A.O. AS IS THE SETTLED LAW, TO THE EXTENT OF ISSUES EMANATI NG FROM THE EARLIER ASSESSMENT ORDER WHICH ARE MERGED WITH THE APPELLATE ORDER OF THE CIT(A) CANNOT BE REVISITED OR REVIEWED BY THE A.O. NEEDLESS TO SAY THAT THE FINDINGS AND OUTCOME OF THE HON'BLE ITAT ON SUCH ORDERS WILL HAVE TO BE GIVEN EFFECT AS AND WH EN SUCH ORDERS ARE RECEIVED. IN THIS CASE, THERE ARE NO NEW ADDITIONS I DISALLOWANCES IN THE ORDER APPEALED AGAINST. THEREFORE, A.O IS HEREBY DIRECTED TO MERELY ADOPT THE ADDITION OFRS.57,36,000 / - AS DETERMINED BY THE LD. PREDECESSOR CIT(A) VIDE ORDER NO. CIT(A) - 36/A.P.86/10 - 11 DATED 15.10.2010. AGAINST THE ABOVE ORDER OF CIT(A), REVENUE AND ASSESSEE ARE IN APPEAL BEFORE US. ITA NO S . 7434&7435/12 & ITA NOS.414&415/13 7 7 . WE HAVE CONSIDERED THE RIVAL CONTENTIONS AND FOUND THAT T HE TRIBUNAL HAS DECIDED THE ISSUE IN ASSESSEES OWN CASE VIDE ORDER DATED 30 - 4 - 2013 AS UNDER : - 8. WE HAVE CAREFULLY CONSIDERED THE RIVAL CONTENTIONS, PERUSED THE FINDINGS OF THE ASSESSING OFFICER AND THE LEARNED COMMISSIONER (APPEALS) AS WELL AS THE MATERIAL PLACED ON RECORD. IN THE PRESENT CAS E, WE FIND THAT THE ASSESSING OFFICER HAS MADE THE ADDITION ON ACCOUNT OF ENTIRE PURCHASES DONE WITH M/S. EPSILON INDUSTRIES LTD. ON THE GROUND THAT THE ENTIRE AMOUNT OF PURCHASES AGGREGATING TO RS. 5,01,88,500 WAS SHOWN UNDER THE HEAD SUNDRY CREDITORS AND NO CONFIRMATION FROM THE SAID PARTY HAS BEEN FILED. THE LEARNED COMMISSIONER (APPEALS) THOUGH HAS ACCEPTED THE ENTIRE TRANSACTIONS OF PURCHASE AND SALES MADE Y THE SAID PARTY BUT HAVE PROCEEDED TO CONFIRM PART OF ADDITION AFTER APPLYING GROSS PROFIT RATE OF 6.5% ON THE ENTIRE TURNOVER. THE ASSESSEE IS BASICALLY ENGAGED IN TRADING OF VARIOUS ITEMS LIKE H.R. COILS, M.S. ANGLES, M.S. BARS, M.S. PIPES, M.S. ROUND, ETC. THE PURCHASE AND SALES ARE MADE ON THE SAME DAY AND DURING THE YEAR, THE ASSESSEE HAD MADE TOTAL PURCHASE OF 3571.647 MTS VALUED AT RS. 9,51,58,794. THE SAME QUANTITY HAS BEEN SOLD FOR RS. 9,56,34,588, FROM WHICH GROSS PROFIT OF RS. 4,75,794, HAS BEEN DERIVED WHICH IN TERMS OF PERCENTAGE COMES TO 0.5%. AS PER THE OWN FINDINGS OF THE LEARNED COMMISSIONER (APPEALS), THIS GROSS PROFIT RATE WAS IN CONSONANCE WITH THE GROSS PROFIT RATE SHOWN BY THE ASSESSEE IN THE EARLIE R YEARS. IT IS ALSO NOT DISPUTED THAT THE ASSESSING OFFICER HAS NOT REJECTED THE BOOKS OF ACCOUNT OR THE SALES TURNOVER AND EVEN THE LEARNED COMMISSIONER (APPEALS) HAS ALSO NOT REJECTED THE BOOKS OF ACCOUNT. ONCE THE LEARNED COMMISSI ONER (APPEALS) HAS ACCEPTED THAT THE SALES AND PURCHASES ARE VERIFIABLE FOR THE REASONS THAT FIRSTLY, THE ENTIRE PURCHASE AND SALES HAVE BEEN MADE THROUGH ACCOUNT PAYEE CHEQUES AND ARE FULLY VERIFIABLE FROM THE BANK STATEMENTS AND PA SS BOOKS, SECONDLY, THE CONFIRMATION LETTERS WHICH WERE FILED BEFORE THE ASSESSING OFFICER AND ALSO BEFORE HIM HAS NOT BEEN DISAPPROVED EVEN AFTER CALLING FOR TWO REMAND REPORTS AND LASTLY, THE GROSS PROFIT SHOWN BY THE ASS ESSEE IS ALSO IN CONSONANCE WITH THE EARLIER YEARS, THEN HE COULD NOT HAVE PROCEEDED TO APPLY THE HIGHER GROSS PROFIT RATE. THE GROSS PROFIT RATE IS THE BALANCING FIGURE IN THE TRADING ACCOUNT AND IF NONE OF THE VARIABLE S ON DEBIT SIDE AND CREDIT SIDE ARE DISTURBED, THE GROSS PROFIT ALSO CANNOT BE DISTURBED. WHILE COMING TO THE CONCLUSION OF APPLICATION OF GROSS PROFIT RATE OF 6.5%, HE HAS MADE OBSERVATION THAT THE TRADERS IN STEEL INDUSTRIES GENERALLY DISCLOSE GROSS PROFIT RATE BETWEEN THE RANGE OF 6% AND 9%. THIS CONCLUSION IS WITHOUT ANY MATERIAL ON RECORD OR BASED ON ANY COMPARABLE CASE. THUS, THE APPLICATION OF SUCH A GROSS PROFIT RATE CANNOT BE UPHELD ONCE HE HIMSELF HAS FOUND THAT THE G ROSS PROFIT RATIO SHOWN BY THE ASSESSEE IS IN LINE WITH THE EARLIER ITA NO S . 7434&7435/12 & ITA NOS.414&415/13 8 YEARS. UNDER THESE CIRCUMSTANCES, ONCE THE BOOKS OF ACCOUNT HAVE NOT BEEN REJECTED, SALES HAVE BEEN ACCEPTED, WE HOLD THAT NO ADDITION ON ACCOUNT OF GROSS PROFIT RATE OR ANY ADDITION ON ACCOUNT OF UNEXPLAINED PURCHASES CAN BE MADE. ACCORDINGLY, WE SET ASIDE THE IMPUGNED ORDERS PASSED BY THE LEARNED COMMISSIONER (APPEALS) AND DELETE THE ADDITION OF RS. 57,36,000, MADE IN THE FOR ASSESSMENT YEAR 2004 05 BY THE LEARNED COM MISSIONER (APPEALS). 9. THE GROUND TAKEN BY THE REVENUE ON ACCOUNT OF ADDITION MADE UNDER SECTION 68 FOR THE AMOUNT SHOWN UNDER THE SUNDRY CREDITORS OF GOODS, ALSO CANNOT BE SUSTAINED FOR THE REASON THAT FIRSTLY, SALES MADE ON ACCOUNT OF THE PURCHASES MADE FROM THE SAID PARTY HAS BEEN ACCEPTED, SECONDLY, IN THE NEXT YEAR, THE PAYMENT HAS BEEN MADE TO THIS PARTY BY ACCOUNT PAYEE CHEQUES AS IT WAS A RUNNING ACCOUNT AND FOR WHICH THERE IS NO DISPUTE IN THE NEXT YEAR A ND LASTLY, CONFIRMATION LETTER FROM THE SAID PARTY HAS NOT BEEN REBUTTED. THEREFORE, THERE IS NO CASE OF ANY ADDITION ON ACCOUNT OF BALANCE SHOWN UNDER THE HEAD SUNDRY CREDITORS. THUS, THE GROUND RAISED BY THE ASSESSEE F OR THE YEAR UNDER APPEAL IS TREATED AS ALLOWED AND REVENUES APPEAL IS TREATED AS DISMISSED. 10. THE GROUNDS FOR THE ASSESSMENT YEAR 2005 06, BOTH IN ASSESSEES APPEAL AS WELL AS IN REVENUES APPEAL ARE SIMILAR TO THOSE OF ASSESSMENT YEAR 2004 05. THE FINDINGS OF THE LEARNED COMMISSIONER (APPEALS) IN ASSESSMENT YEAR 2005 06 ARE SIMILAR. THEREFORE, THE FINDING GIVEN IN THE AFORESAID APPEALS FOR ASSESSMENT YEAR 2004 05 WILL APPLY MUTATIS MUTANDIS IN THIS Y EAR ALSO. ACCORDINGLY, ASSESSEES APPEAL IS ALLOWED AND REVENUES APPEAL IS DISMISSED. 11. IN THE RESULT, ASSESSEES APPEALS ARE ALLOWED AND REVENUES APPEALS ARE TREATED AS DISMISSED. 8 . AS THE FACTS AND CIRCUMSTANCES IN THE APPEALS UNDER CONSIDERATION ARE EXACTLY SAME, RESPECTFULLY FOLLOWING THE ORDER OF TRIBUNAL IN ASSESSEES OWN CASE FOR THE VERY SAME ASSESSMENT YEARS I.E. 2004 - 05 & 2005 - 06 DTD.30.4.2013, APPEAL S FILED BY THE ASSESSEE ARE ALLOWED WHEREAS APPEAL S OF REVENUE ARE DISMISSED FOR BOTH THE YEARS. 9 . IN THE RESULT, APPEALS OF THE ASSESSEE ARE ALLOWED WHEREAS APPEALS OF THE REVENUE ARE DISMISSED. O RDER PRONOUNCED IN THE OPEN COURT ON THIS 13/05 / 201 5 . SD/ - SD/ - ( ) ( SANJAY GARG ) ( . . ) ( R.C.SHARMA ) / JUDICIAL MEMBER / ACCOUNTANT MEMBER MUMBAI; DATED 13/05/2015 ITA NO S . 7434&7435/12 & ITA NOS.414&415/13 9 . . /PKM , . / PS / COPY OF THE ORDER FORWARDED TO : / BY ORDER, / ( ASSTT. REGISTRAR) , / ITAT, MUMBAI 1. / THE APPELLANT 2. / THE RESPONDENT. 3. ( ) / THE CIT(A), MUMBAI. 4. / CIT 5. , , / DR, ITAT, MUMBAI 6. / GUARD FILE. //TRU E COPY//