BEST PAPER MILLS P.LTD, MUMBAI V. ASST CIT 9(2)(1), MUMBAI

ITA 772/MUM/2017

• Counselvise Citation: [2019] 117 COUNSELVISE.COM (IT) 2566 (ITAT-MUMBAI)
• Duration Of Justice: 2 year(s) 4 month(s) 15 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 19-06-2019
• Appeal Filed By: Assessee
• Order Result: Dismissed
• Bench Allotted: Not Allotted
• Assessment Year: 2007-2008
• Appeal Filed On: 03-02-2017
• Result in Favour of: Revenue
• Court: TRIBUNAL
• Department Lawyers: RAJESH KUMAR MISHRA LD
• Assessee Lawyers: B V JHAVERI; M GOPAL KRISHNAN LD ARS
• Keywords: Bogus purchase; Rejection of books of accounts; Unexplained investment; Tangible material; Corroborative evidences; Assessment record; Block assessment; Reassessment proceedings; Set aside
• Section: 143(3); 142(1); 133A; 131; 145; 15

Judgement Text

M/S BEST PAPER MILLS PVT. LTD. ASSESSMENT YEARS : 2007-08 TO 2013-14 1 IN THE INCOME TAX APPELLATE TRIBUNAL B BENCH, MUMBAI . . , , BEFORE HONBLE SHRI C.N. PRASAD, JM AND HONBLE SHRI MANOJ KUMAR AGGARWAL, AM 1. I.T.A. NO.975/MUM/2017 ( / ASSESSMENT YEAR: 2007-08) & 2. I.T.A. NO.984/MUM/2017 ( / ASSESSMENT YEAR: 2008-09) & 3. I.T.A. NO.988/MUM/2017 ( / ASSESSMENT YEAR: 2009-10) & 4. I.T.A. NO.985/MUM/2017 ( / ASSESSMENT YEAR: 2010-11) & 5. I.T.A. NO.986/MUM/2017 ( / ASSESSMENT YEAR: 2011-12) & 6. I.T.A. NO.987/MUM/2017 ( / ASSESSMENT YEAR: 2012-13) & 7. I.T.A. NO.989/MUM/2017 ( / ASSESSMENT YEAR: 2013-14) D CIT - 9(2)(1) ROOM NO.665A, 6 TH FLOOR AAYKAR BHAVAN, M.K. MARG MUMBAI-400 020. / VS. M/S. BEST PAPER MILLS PVT.LTD. 2, GROUND FLOOR, RAM NIWAS PARANJPE B SCHEME ROAD NO.3, VILE PARLE(E) ANDHERI, MUMBAI-400 057. ! ./ ./PAN/GIR NO. AAACB-2782-M ( !# /APPELLANT ) : ( $!# / RESPONDENT ) & 8.C.O. NO.126/MUM/2018 (ARISING OUT OF ITA NO.984/MUM/2017) ( / ASSESSMENT YEAR: 2008-09) M/S BEST PAPER MILLS PVT. LTD. ASSESSMENT YEARS : 2007-08 TO 2013-14 2 & 9.C.O. NO.127/MUM/2018 (ARISING OUT OF ITA NO.988/MUM/2017) ( / ASSESSMENT YEAR: 2009-10) & 10.C.O. NO.128/MUM/2018 (ARISING OUT OF ITA NO.985/MUM/2017) ( / ASSESSMENT YEAR: 2010-11) & 11.C.O. NO.129/MUM/2018 (ARISING OUT OF ITA NO.986/MUM/2017) ( / ASSESSMENT YEAR: 2011-12) & 12.C.O. NO.125/MUM/2018 (ARISING OUT OF ITA NO.987/MUM/2017) ( / ASSESSMENT YEAR: 2012-13) & 13.C.O. NO.130/MUM/2018 (ARISING OUT OF ITA NO.989/MUM/2017) ( / ASSESSMENT YEAR: 2013-14) M/S. BEST PAPER MILLS PVT.LTD. 2, GROUND FLOOR, RAM NIWAS PARANJPE B SCHEME ROAD NO.3, VILE PARLE(E) ANDHERI, MUMBAI-400 057. / VS. D CIT - 9(2)(1) ROOM NO.665A, 6 TH FLOOR AAYKAR BHAVAN, M.K. MARG MUMBAI-400 020. ! ./ ./PAN/GIR NO. AAACB-2782-M ( / CROSS OBJECTOR ) : ( $!# / RESPONDENT ) & 14. . / I.T.A. NO.772/MUM/2017 ( / ASSESSMENT YEAR: 2007-08) & 15. . / I.T.A. NO.773/MUM/2017 ( / ASSESSMENT YEAR: 2008-09) & 16. . / I.T.A. NO.774/MUM/2017 ( / ASSESSMENT YEAR: 2009-10) & 17. . / I.T.A. NO.775/MUM/2017 ( / ASSESSMENT YEAR: 2010-11) M/S. BEST PAPER MILLS PVT.LTD. 2, GROUND FLOOR, RAM NIWAS PARANJPE B SCHEME ROAD NO.3, VILE PARLE(E) ANDHERI, MUMBAI-400 057. / VS. D CIT - 9(2)(1) ROOM NO.665A, 6 TH FLOOR AAYKAR BHAVAN, M.K. MARG MUMBAI-400 020. ! ./ ./PAN/GIR NO. AAACB-2782-M M/S BEST PAPER MILLS PVT. LTD. ASSESSMENT YEARS : 2007-08 TO 2013-14 3 ( !# /APPELLANT ) : ( $!# / RESPONDENT ) ASSESSEE BY : S/SHRI B.V. JHAVERI AND M. GOPAL KRISHNAN- LD. ARS REVENUE BY : SHRI RAJESH KUMAR MISHRA- LD. DR / DATE OF HEARING : 05/04/2019 / DATE OF PRONOUNCEMENT : 19/06/2019 / O R D E R PER BENCH 1. THE AFORESAID CROSS-APPEALS AS WELL AS CROSS-OBJ ECTIONS FOR SEVERAL ASSESSMENT YEARS [AY] ARISES OUT OF COMMON ORDER PA SSED BY LD. COMMISSIONER OF INCOME-TAX (APPEALS)-16, MUMBAI, [C IT(A)] ON 25/11/2016 FOR AYS 2007-08 TO 2013-14. FOR EASE OF REFERENCE AND BETTER UNDERSTANDING, THE SAME COULD BE TABULATED I N THE FOLLOWING MANNER: - NO. ITA / CO NO. AY ASSESSMENT FRAMED U/S ASSESSMENT ORDER DATED REMARKS 1. 975/MUM/2017 2007-08 143(3) R.W.S. 147 24/03/2015 REVENUES APPEAL 2. 984/MUM/2017 2008-09 143(3) R.W.S. 147 24/03/2015 REVENUES APPEAL 3. 988/MUM/2017 2009-10 143(3) R.W.S. 147 26/03/2015 REVENUES APPEAL 4. 985/MUM/2017 2010-11 143(3) R.W.S. 147 24/11/2015 REVENUES APPEAL 5. 986/MUM/2017 2011-12 143(3) 27/01/2014 REVENUES APPEAL 6. 987/MUM/2017 2012-13 143(3) 20/03/2015 REVENUES APPEAL 7. 989/MUM/2017 2013-14 143(3) 22/02/2016 REVENUES APPEAL 8. 126/MUM/2018 2008-09 143(3) R.W.S. 147 24/03/2015 ASSESSEES CROSS- OBJECTIONS 9. 127/MUM/2018 2009-10 143(3) R.W.S. 147 26/03/2015 ASSESSEES CROSS- OBJECTIONS 10. 128/MUM/2018 2010-11 143(3) R.W.S. 147 24/11/2015 ASSESSEES CROSS- OBJECTIONS 11. 129/MUM/2018 2011-12 143(3) 27/01/2014 ASSESSEES CROSS- OBJECTIONS 12. 125/MUM/2018 2012-13 143(3) 20/03/2015 ASSESSEES CROSS- OBJECTIONS 13. 130/MUM/2018 2013-14 143(3) 22/02/2016 ASSESSEES CROSS- M/S BEST PAPER MILLS PVT. LTD. ASSESSMENT YEARS : 2007-08 TO 2013-14 4 OBJECTIONS 14. 772/MUM/2017 2007-08 143(3) R.W.S. 147 24/03/2015 ASSESSEES APPEALS 15. 773/MUM/2017 2008-09 143(3) R.W.S. 147 24/03/2015 ASSESSEES APPEALS 16. 774/MUM/2017 2009-10 143(3) R.W.S. 147 26/03/2015 ASSESSEES APPEALS 17. 775/MUM/2017 2010-11 143(3) R.W.S. 147 24/11/2015 ASSESSEES APPEALS THE ASSESSEES CROSS-OBJECTIONS ARE IN SUPPORT OF T HE IMPUGNED ORDER WHEREAS THE ASSESSEES APPEALS CONTEST VALIDITY OF REASSESSMENT PROCEEDINGS U/S 147. THE REVENUES APPEAL ARISES OU T OF QUANTUM RELIEF PROVIDED BY LD. CIT(A) IN THE IMPUGNED ORDER. 2.1 TAKING AY 2011-12 AS THE LEAD YEAR, WE PROCEED TO ADJUDICATE THE SAME. THE GROUNDS RAISED BY THE REVENUE READS AS UN DER: - 1. WHETHER ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE AND IN LAW, THE LD. CIT(A) ERRED IN DELETING THE ADDITION ON ACCOUNT OF SUPPRESSION OF YIELD WITHOUT APPRECIATING THE FACTS OF THE CASE?' 2. WHETHER ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE AND IN LAW, THE LD. CIT(A) ERRED IN HOLDING THAT PERSONS WHOSE STATEMEN TS WERE RECORDED WERE TECHNICAL PERSONS AND, THEREFORE, THEIR STATEMENTS COULD NOT BE RELIED UPON WHEN THE YIELD CAN BE STATED ONLY BY TECHNICAL PERS ONS? 3. WHETHER ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE AND IN LAW, THE LD. CIT(A) ERRED IN IGNORING THE EVIDENCE IN THE FORM O F BLANK CHALLANS, STATEMENTS OF THE SUPPLIERS AND STATEMENT OF THE TE CHNICAL DIRECTOR? THE APPELLANT PRAYS THAT THE ORDER OF THE CIT(A) ON THE ABOVE GROUND BE SET ASIDE AND THAT OF THE DCIT 9(2)(1) BE RESTORED. 2.2 FACTS IN BRIEF ARE THAT ASSESSEE BEING RESIDENT CORPORATE ASSESSEE STATED TO BE ENGAGED IN MANUFACTURING OF MG CRAFT PAPER WAS ASSESSED FOR IMPUGNED AY U/S. 143(3) OF THE ACT ON 27/01/201 4 WHEREIN INCOME OF THE ASSESSEE WAS DETERMINED AT RS.1701.02 LACS AFTE R SOLE ADDITION OF RS.1097.13 LACS ON ACCOUNT OF ALLEGED SUPPRESSION O F YIELD AS AGAINST RETURNED INCOME OF RS.603.99 LACS E-FILED BY THE AS SESSEE ON 02/09/2011. NOTICE U/S 143(2) WAS ISSUED TO THE ASS ESSEE ON M/S BEST PAPER MILLS PVT. LTD. ASSESSMENT YEARS : 2007-08 TO 2013-14 5 31/07/2012 WHICH WAS FOLLOWED BY NOTICE U/S 142(1) WHEREIN THE ASSESSEE WAS DIRECTED TO FILE REQUISITE INFORMATION / DETAILS / DOCUMENTS IN SUPPORT OF THE RETURNED INCOME. AS EVIDENT FROM REVENUES GROUND OF APPEAL, THE SOLE ISSUE UNDER CONSIDERATION IS CERTA IN ESTIMATED ADDITION ON ACCOUNT OF ALLEGED UNDERSTATEMENT OF YIELD BY TH E ASSESSEE IN MANUFACTURING PROCESS. QUANTUM ASSESSMENT PROCEEDINGS 2.3 DURING THE COURSE OF ASSESSMENT PROCEEDINGS, IT TRANSPIRED THAT THE ASSESSEE REFLECTED YIELD OF PAPER (IN METRIC TONS) AT AROUND 80% DURING AY 2011-12 AS WELL AS IN THE EARLIER YEARS. THE YIE LD OF IMPUGNED AY WAS REFLECTED AS 80.41%. THE MAIN RAW MATERIAL USED FOR THE PRODUCTION OF M.G. KRAFT PAPER WAS INDIGENOUS PAPER WASTE AND IMPORTED PAPER WASTE. THE WASTE PAPER CAME FROM CARD-BOARD OF BOXE S / PACKING MATERIALS OF TV, FRIDGE AND OTHER PACKING MATERIAL OF SIMILAR NATURE. THE COMPANY HAD TWO MANUFACTURING UNITS IN THE SAME PRE MISES AT PLOT NO.57/FGH, GIDC,1 ST PHASE, VAPI, GUJARAT. UNIT-I WAS SET UP IN 1997 WHEREAS UNIT-2 WAS SET UP IN 2004. BOTH THE UNITS W ERE STATED TO BE WORKING ON SAME TECHNOLOGY. THE ONLY DIFFERENCE BEI NG THE FINISHED PAPER PRODUCED IN UNIT-II WAS OF HIGHER STRENGTH BE CAUSE OF USE OF HIGHER PERCENTAGE OF IMPORTED PAPER WASTE. 2.4 THE RAW MATERIAL I.E. WASTER PAPER WAS STATED T O BE SUPPLIED TO THE ASSESSEE BY VARIOUS AGENTS & SUPPLIERS IN LORRIES / TRUCKS , WHO IN TURN, COLLECTED THE SAME FROM VARIOUS RADDIWALAS AND SMALL TIME WASTE PAPER COLLECTORS. THE RADDIWALAS WERE ASKED TO MAKE TRUCK-LOAD OF WASTE PAPERS WHICH WAS SUPPLIED TO THE ASSESSEE COMPANY A T ITS FACTORY GATE M/S BEST PAPER MILLS PVT. LTD. ASSESSMENT YEARS : 2007-08 TO 2013-14 6 WHERE THE LOAD WAS WEIGHED AND DELIVERY CHALLANS FI LLED UP WITH REQUISITE DETAILS OF QUANTITY ETC. 2.5 THE MANUFACTURING PROCESS INVOLVED PROCUREMENT OF WASTE PAPER WHICH WAS PUT INTO PULPER. THE IMPURITIES LIKE PLAS TIC, ROPES, NAILS ETC. WERE WASHED OUT THROUGH SIEVE AND TURBO ALONG WITH PUMPS. THIS PROCESS WAS REPEATED SEVERAL TIMES. THE RESULTANT P RODUCT WAS PUT IN THE MACHINE CHEST WHERE IT WAS STORED TEMPORARILY. THEN THE PRODUCT WAS PUT INTO THE MACHINES WHICH WERE ADJUSTED TO PR ODUCE THE REQUIRED THICKNESS OF THE KRAFT PAPER. THE END PRODUCT WAS P LACED IN JUMBO ROLLS WHICH WERE THEN CUT INTO SMALLER PIECES AS PER THE CUSTOMERS ORDER. THE WASTAGE CREATED OUT OF CUTTING OF JUMBO ROLLS WAS A GAIN USED AS RAW MATERIAL TO PRODUCE FINISHED GOODS. THE ONLY WASTE GENERATED DURING ENTIRE MANUFACTURING PROCESS WAS ONLY THE SAND / DI RT / ROPES / THREADS / NAILS ETC. 2.6 DISCREET MARKET ENQUIRIES FROM SIMILAR MANUFACT URERS REVEALED THAT THE YIELD RATIO IN THIS LINE OF MANUFACTURING WAS A ROUND 90%. ANOTHER ASSESSEE NAMELY M/S. ARYAN PAPER MILLS PVT. LTD. STATED TO BE ENGAGED IN SIMILAR LINE OF MANUFACTURING AND ASSESSED IN TH E SAME RANGE WAS SHOWING YIELD OF 89% TO 90%. THE AFORESAID FACTORS LED THE LD. AO TO DOUBT THE YIELD REFLECTED BY THE ASSESSEE. ACCORDIN GLY, THE ASSESSEE WAS ASKED TO PRODUCE THE PURCHASE BILLS, WEIGHMENT SLIPS, LORRY RECEIPTS ETC. PERTAINING TO PURCHASE OF INDIGENOUS RAW MATER IAL IN ORDER TO JUSTIFY THE YIELD PERCENTAGE. 2.7 UPON PERUSAL OF DETAILS FURNISHED BY THE ASSESS EE, LD. AO FORMED AN OPINION THAT YIELD HAS BEEN SUPPRESSED BY THE AS SESSEE IN ITS BOOKS M/S BEST PAPER MILLS PVT. LTD. ASSESSMENT YEARS : 2007-08 TO 2013-14 7 OF ACCOUNTS BY INFLATING PURCHASE OF INDIGENOUS WAS TE PAPER STATED TO BE PROCURED FROM VARIOUS PARTIES. THESE PARTIES WERE I DENTIFIED AS FOLLOWS: - I) M/S AJAY TRADING CO. II) M/S AJIT TRADING CO. III) M/S ANMOL TRADING CO. IV) M/S RAJENDRA TRADING CO. V) M/S POOJAN TRADING CO. VI) M/S KUNAL TRADERS VII) M/S HETAL ENTERPRISES VIII) M/S RAJ TRADING CO. IT TRANSPIRED THAT THESE PARTIES MADE SUBSTANTIAL S ALES TO THE ASSESSEE AND DECLARED MEAGER INCOME. ANOTHER FEATURE NOTED W AS THAT THESE PARTIES REFLECTED SUBSTANTIAL PURCHASES FROM UNREGI STERED PARTIES IN CASH. 2.8 THE PERUSAL OF SAMPLE DELIVERY CHALLANS ISSUED BY THESE PARTIES REVEALED THAT ALL DETAILS ON THE CHALLANS WERE WRIT TEN IN BLUE INK WHEREAS THE QUANTITY WAS MENTIONED IN BLACK INK. FURTHER, T HE SIGNATURE OF RECIPIENT OF GOODS IN THE PREMISES OF THE ASSESSEE WAS INVARIABLY IN BLACK INK. THIS PECULIAR FEATURE WAS NOTED ON ALL T HE CHALLANS ISSUED BY DIFFERENT PARTIES. THE SAID FACTORS LED THE LD. AO TO BELIEVE THAT THE QUANTITIES MENTIONED ON THE CHALLANS WERE FILLED BY ASSESSEES EMPLOYEES AND NOT BY THE AFORESAID SUPPLIERS / SELL ERS. THE PERUSAL OF BANK ACCOUNTS OF FEW SUPPLIERS REVEALED THAT HUGE C ASH WAS WITHDRAWN IMMEDIATELY AFTER DEPOSITING THE CHEQUES. ANOTHER OBSERVATION WAS THAT THE WEIGHING SLIPS OF ALL THE PURCHASES FROM THESE PARTIES WAS ISSUED BY THE ASSESSEE ONLY AND THEY WERE NOT CARRYING ANY SE RIAL NUMBER. IT WAS OBSERVED THAT TARE WEIGHT OF FEW VEHICLES WAS DIFFE RENT IN WEIGHING SLIPS FOR SAME VEHICLE. THE PERUSAL OF PURCHASE BILLS, WE IGHING SLIPS AND DELIVERY CHALLANS PERTAINING TO M/S AJAY TRADING CO ., M/S AJIT TRADING CO. & M/S ANMOL TRADING CO. WERE PRODUCED DURING THE CO URSE OF M/S BEST PAPER MILLS PVT. LTD. ASSESSMENT YEARS : 2007-08 TO 2013-14 8 ASSESSMENT PROCEEDINGS FOR VERIFICATION WHEREIN IT WAS NOTED THAT DELIVERY CHALLANS WERE NOT NUMBERED, SUSCEPTIBLE FO R MANIPULATION AND HENCE, NOT RELIABLE. 2.9 IN THE ABOVE BACKGROUND, DURING THE COURSE OF A SSESSMENT PROCEEDINGS, THE ASSESSEE WAS SUBJECTED TO SURVEY A CTION U/S 133A ON 10/01/2014 WHEREIN THE STATEMENT OF FEW OF THE SUPP LIERS WAS RECORDED, THE RELEVANT PORTION OF WHICH HAS ALREADY BEEN REPR ODUCED IN THE QUANTUM ASSESSMENT ORDER. DURING SURVEY, SOME BLANK ORIGINAL DELIVERY CHALLAN BOOKS OF ABOVE-MENTIONED PARTIES / ENTITIES BEARING THE SIGNATURES OF THE SUPPLIERS WAS FOUND. THE DESCRIPT ION OF THE MATERIAL AND WEIGHT WAS NOT WRITTEN AND IT WAS OBSERVED THAT THE SAME WERE FILLED BY ASSESSEES EMPLOYEES AS PER THEIR CONVENIENCE. T HE SHORTCOMINGS IN THE CHALLAN BOOKS IMPOUNDED DURING SURVEY PROCEEDIN GS HAVE BEEN TABULATED BY LD. AO IN PARA-8 OF THE QUANTUM ASSESSMENT ORDER. 2.10 ACCORDINGLY, LD. AO FORMED AN OPINION THAT THE ASSESSEE UTILIZED THESE CONCERNS FOR INFLATING ITS PURCHASE OF INDIGE NOUS WASTE PAPER WHICH WAS CORROBORATED BY SIGNED BLANK DELIVERY CHA LLANS OF THESE PARTIES AS FOUND DURING SURVEY OPERATIONS. THE SAME WAS DONE WITH A VIEW TO INFLATE THE CONSUMPTION OF RAW MATERIAL LEA DING TO LOWER YIELD AND THEREBY LEADING TO SUPPRESSION OF TAXABLE INCOME. 2.11 DURING SURVEY PROCEEDINGS, THE STATEMENT OF ON E OF THE SUPPLIERS NAMELY SHRI RAJESH SHAH PROP. M/S RAJ TRADING CO. W AS RECORDED. SOME OF THE QUESTIONS WHICH WOULD BE PERTINENT TO A DJUDICATION OF THE APPEALS, COULD BE EXTRACTED IN THE FOLLOWING MANNER : - Q.5 HOW DO YOU PURCHASE GOODS FROM YOUR SUPPLIERS? ANS.THERE ARE MANY URD SUPPLIERS WHO KEEP CONTACTIN G US FOR SUPPLY OF WASTE PAPERS COLLECTED BY THEM. AFTER NEGOTIATING FOR RATES, I I NSTRUCT THEM TO DELIVER THEIR GOODS DIRECTLY AT M/S BEST PAPER MILLS PVT. LTD. ASSESSMENT YEARS : 2007-08 TO 2013-14 9 THE FACTORY PREMISES OF EITHER BEST PAPER MILLS PVT . LTD. OR SUPREME KRAFT PAPER P.LTD. DEPENDING UPON THE NATURE AND QUALITY OF THEIR PAPE R WASTE. THE RATES NEGOTIATED WITH THE URD SUPPLIERS INCLUDE THE COST OF TRANSPORTATION. THE MODE OF TRANSPORTATION IS DECIDED BY THE URD SUPPLIERS THEM SELVES. Q.6 WHAT RECORDS DO YOU MAINTAIN ABOUT PURCHASES FR OM THE SO-CALLED URD SUPPLIERS AND PAYMENTS TOWARDS THE SAME? ANS. ON OUR INSTRUCTION, THE URD SUPPLIERS DELIVER THEIR GOODS AT FACTORY PREMISES OF OUR CUSTOMERS, VIZ, BEST PAPER MILLS PVT. LTD. OR SUPRE ME KRAFT PAPER P.LTD. WE HAVE KEPT OUR BLANK DELIVERY CHALLAN BOOKS AT THE GATE OF BES T PAPER MILLS PVT. LTD., WHO RECEIVE THE GOODS ON OUR BEHALF. THE PERSON AT THE GATE OF THE MILL WEIGHS THE GOODS AND FILL- UP THE BLANK DELIVERY CHALLAN BOOKS KEPT WITH THEM. THE DELIVERY CHALLANS ARE PREPARED IN DUPLICATE, WHITE COPY IS ORIGINAL WHICH IS KEPT BY THE MILL THEMSELVES AND GREEN COPY IS DUPLICATE WHICH IS COLLECTED BY US EVERYDAY FROM TH E MILL - ALMOST TWICE A DAY. I AM PRODUCING HEREWITH DELIVERY CHALLANS WHICH WERE COL LECTED YESTERDAY. BASED ON DUPLICATE COPY OF DELIVERY CHALLANS COLLEC TED BY US, WE PREPARE PURCHASE VOUCHERS WHICH ARE COMPUTERIZED. THE BILLS PREPARED BY US INCLUDE THE NAME OF THE URD SUPPLIERS, QUANTITY, RATE AND VALUE OF THE GOODS SU PPLIED BY THEM. DEPENDING UPON CASH WITHDRAWALS AND AVAILABLE CASH BALANCE, WE MAKE PAYMENTS TO THE CONCERNED URD SUPPLIERS. ON PAYMENT OF CASH TO THE URD SUPPLIERS WE OBTAIN THEIR SIGNATURES ON PAYMENT VOUCHERS. THE PURCHASE VOUCHERS ARE WITH REGARD TO SUPPLY OF GOODS BY THE URD SUPPLIERS WHEREAS PAYMENT VOUCHERS ARE WITH REGARD TO PAYMENTS MADE T O THE URD SUPPLIERS FOR THE GOODS DELIVERED BY THEM TO THE MILLS ON OUR BEHALF. I AM PRODUCING HEREWITH PURCHASE VOUCHERS AND PAYME NT VOUCHERS FOR YOUR KIND VERIFICATION. Q.7 ON VERIFICATION, IT IS OBSERVED THAT WHILE PURC HASE VOUCHERS ARE MOSTLY PREPARED FOR NEARLY LAKHS OF RUPEES, BUT ALL THE PAYMENT VOUCHER S ARE LESS THAN RS.19,800. PLEASE EXPLAIN. ANS.: HERE I WOULD LIKE TO STATE THAT THE PURCHASE VOUCHERS CONTAIN AMOUNTS FOR EVERY SINGLE DELIVERY OF GOODS AT THE FACTORY PREMISES. MOSTLY T HE VALUE OF THE GOODS DELIVERED EXCEEDS RS.20,000 AND HENCE THE PURCHASE VOUCHERS ARE FOR T HAT MUCH AMOUNT EXCEEDING RS,20,000. ALL THE SUPPLIERS ARE ILLITERATE AND DO NOT MAINTAI N ANY BANK ACCOUNT. HENCE, THEY INSIST ON CASH PAYMENTS. AS PER INCOME-TAX RULES, WE ARE NOT SUPPOSED TO MAKE PAYMENTS EXCEEDING RS.20,000 ON A SINGLE DAY TO ANY PARTICUL AR PERSON. TO COMPLY WITH THIS RULE, WE MAKE PAYMENTS TO THE URD SUPPLIERS IN CASH FOR AMOU NTS LESS THAN RS.20,000 ON TWO TO FIVE DIFFERENT DAYS, Q.8 DO YOU KEEP BLANK DELIVERY CHALLANS AT THE GATE OF SUPREME KRAFT PAPER P. LTD. ALSO? ANS.: NO, I DO NOT KEEP ANY BLANK DELIVERY CHALLANS . Q.9 WHEN BLANK DELIVERY CHALLANS ARE KEPT AT THE GA TE OF BEST PAPER MILLS PVT. LTD. WHY NO BLANK DELIVERY CHALLANS AT THE GATE OF SUPREME KRAF T P.LTD.? ANS:I HAVE BEEN DEALING WITH BEST PAPER MILLS P. LT D. FOR THE LAST 10 TO 12 YEARS, WHEREAS MY DEALINGS WITH SUPREME KRAFT PAPER P. LTD. IS SIN CE LAST 5 TO 6 YEARS. FURTHER, 70% TO 80% OF MY SALES ARE TO BEST PAPER MILLS P. LTD. AND 20% TO 30% SALES ARE TO SUPREME KRAFT PAPER P. LTD. HENCE, I HAVE NOT KEPT ANY DELI VERY CHALLANS WITH SUPREME KRAFT PAPER P. LTD. Q. 10. HOW DO YOU RAISE SALE BILLS ON YOUR CUSTOMER S? ANS WE RAISE SALE BILLS ON THE BASIS OF DELIVERY CH ALLANS COLLECTED BY US FROM THE FACTORY PREMISES OF BEST PAPER MILLS P. LTD. OR IN THE CASE OF SUPREME KRAFT PAPER P. LTD. THE DELIVERY CHALLANS GIVEN TO US BY URD SUPPLIERS. ONE SALE BILL IS PREPARED BASED ON 8 TO 10 DELIVERY CHALLANS. Q.11. WHAT ARE- THE CONTENTS OF THE SALE BILLS? M/S BEST PAPER MILLS PVT. LTD. ASSESSMENT YEARS : 2007-08 TO 2013-14 10 ANS. SALE BILLS CONTAIN PARTICULARS OF GOODS, VEHIC LE/TRUCK NO. BY WHICH THE GOODS WERE DELIVERED, QUANTITY, RATE AND AMOUNT. I AM PRODUCING HEREWITH SALE BILLS RAISED UPTO 09-0 1 -2014 FOR YOUR KIND VERIFICATION. Q.12 IT IS OBSERVED THAT BOTH PURCHASE VOUCHERS, AN D SALE BILLS ARE PREPARED BASED ON DELIVERY CHALLANS COLLECTED/RECEIVED BY YOU. HOWEVE R, WHILE SALE BILLS CONTAIN VEHICLE/TRUCK NOS., PURCHASE VOUCHERS DO NOT CONTAIN THE SAME. WH Y? ANS.:THIS OMISSION IS BY MISTAKE AND THERE IS NO PA RTICULAR REASON FOR NOT WRITING THE VEHICLE NUMBER IN THE PURCHASE VOUCHERS. UPON PERUSAL OF STATEMENT AND FACTUAL MATRIX, LD.AO FORMED AN OPINION THAT THE STATED ENTITY WAS IN COLLUSION WITH THE AS SESSEE AND ALL THE TRANSACTIONS WERE MANIPULATED IN ORDER TO ACCOMMODA TE THE ASSESSEE. SIMILAR STATEMENT WAS ALSO RECORDED FROM SHRI KUNJAL SHAH , PARTNER OF M/S POOJAN TRADING CO. U/S. 131 PRIOR TO THE DATE OF SURVEY, THE RELEVANT EXTRACT OF WHICH HAS ALSO BEEN REPRODUCED IN PARA 11 OF THE QUANTUM ASSESSMENT ORDER. 2.12 DURING SURVEY PROCEEDINGS AT ASSESSEES PREMIS ES ON 10/01/2014, THE STATEMENTS OF VARIOUS OTHER PERSONS WERE ALSO R ECORDED. SHRI TARKESHWAR SINGH , MACHINE-IN-CHARGE OF PLANT NO. 1 SUBMITTED THAT Y IELD OF THE PLANT-1 VARIED BETWEEN 80% TO 90% WHEREAS SHRI ARVIND SINGH , MACHINE-IN-CHARGE OF PLANT NO.2 SUBMITTED THAT YIEL D WAS 90%. SHRI RAJEEV SHETTY, ACCOUNTS-IN-CHARGE SUBMITTED THAT THE GOODS WERE RECEIVED AT THE FACTORY GATE WHERE THE GOODS RECEIP T NOTES [GRN] WERE GENERATED, BASED ON GRN, THE INWARD REGISTER WAS MA INTAINED IN THE COMPUTER AND STOCK REGISTER WAS PREPARED. THE GOODS LYING IN THE STORE WAS ISSUED BASED ON CONSUMPTION NEEDS OF PLANT-1 & PLANT-2. THE CONSUMPTION NEED WAS DELIVERED THROUGH A PAPER ON W HICH THE QUANTITY OF WASTE PAPER ALONG WITH THE CHEMICALS WAS MENTION ED. THE CONSUMPTION LEDGER WAS GENERATED AFTER THE ISSUANCE OF RAW MATERIALS BY THE STORE. THEREAFTER, THE REEL-WISE PRODUCTION OF THE FINISHED GOODS WAS ENTERED INTO THE COMPUTER. IT WAS ALSO SUBMITTE D THAT IT WAS M/S BEST PAPER MILLS PVT. LTD. ASSESSMENT YEARS : 2007-08 TO 2013-14 11 COMPANYS POLICY TO TEAR OFF THE PAPER IMMEDIATELY AFTER ENTERING THE REQUISITE QUANTITY OF RAW MATERIAL INTO THE COMPUTE R SYSTEM. SHRI D.B.ASHAR, DIRECTOR (TECHNICAL) SUBMITTED THAT UNIT NO.1 WAS SINGLE WIRE WHEREAS UNIT NO. 2 WAS TRIPLE WIRE AND THE STRENGTH OF PAPER PRODUCED IN UNIT NO. 1 WAS LOWER IN COMPARISON TO STRENGTH PROD UCED BY UNIT NO.2. IT WAS SUBMITTED THAT 12% TO 15% WENT INTO WASTE AND T HE DIFFERENCE IN WASTAGE PRODUCED BY THE TWO UNITS WAS NEGLIGIBLE. 2.13 ALL THESE FACTS AND CIRCUMSTANCES WERE CONFRON TED TO SHRI RAMESH K. SHAH , MANAGING DIRECTOR [MD] OF THE ASSESSEE DURING THE COURSE OF SURVEY PROCEEDINGS WHO WAS STATED TO HAVE ADMITTED THAT THE YIELD COULD BE ABOUT 85% AND ACCORDINGLY, OFFERED ADDITIONAL IN COME ON ACCOUNT OF SUPPRESSION OF YIELD FOR AYS 2011-12 TO 2013-14 AND 2014-15 (UP-TO 10/01/2014 I.E. UP-TO THE DATE OF SURVEY). THE QUAN TUM ASSESSMENT ORDER, AT PARA 13, RECORD A FINDING THAT THE YIELD ON THE DATE OF SURV EY WAS TO THE TUNE OF 83%. 2.14 IN THE AFORESAID CIRCUMSTANCES, LD. AO, IN THE COURSE OF ASSESSMENT PROCEEDINGS, FORMED AN OPINION THAT THE ASSESSEES BOOKS OF ACCOUNTS WERE NOT RELIABLE AND ACCORDINGLY REJEC TED. 2.15 DURING THE COURSE OF ASSESSMENT PROCEEDINGS, T HE ASSESSEE IS STATED TO HAVE SUBMITTED THAT THE YIELD DURING FINA NCIAL YEAR 2013-14 WAS 83.44% AND ACCORDINGLY, THE YIELD FOR THE IMPUGNED AY MAY BE CONSIDERED AS 84%. HOWEVER, REJECTING THE SAME, ADO PTING YIELD OF 87%, BOGUS CONSUMPTION OF INDIGENOUS WASTER PAPER WAS WO RKED OUT TO BE 9455.60 TONES VALUED AT RS.1097.13 LACS. ACCORDINGL Y, THE SAME WAS ADDED TO THE INCOME OF THE ASSESSEE AS INFLATED PUR CHASES ON ACCOUNT OF SUPPRESSION OF YIELD. M/S BEST PAPER MILLS PVT. LTD. ASSESSMENT YEARS : 2007-08 TO 2013-14 12 PROCEEDINGS BEFORE LD. CIT(A) 3.1 AGGRIEVED, THE ASSESSEE CONTESTED THE SAME BEFO RE THE LD. CIT(A) VIDE IMPUGNED ORDER DATED 25/11/2016 WHICH IS COMMO N ORDER FOR AYS 2007-08 TO 2013-14. DURING APPELLATE PROCEEDINGS, T HE ASSESSEE FILED DETAILED SUBMISSIONS AND CONTESTED THE REJECTION OF BOOKS OF ACCOUNTS AND CONSEQUENTIAL ESTIMATION OF YIELD AS MADE BY LD . AO. THE RELEVANT SUBMISSIONS OF THE ASSESSEE HAS ALREADY BEEN EXTRAC TED ON PARA NO. 5 OF THE IMPUGNED ORDER, WHICH ARE NOT REPRODUCED HER E FOR THE SAKE OF BREVITY. 3.2 IN THE SAID SUBMISSIONS, THE ASSESSEE, INTER-ALIA, EXPLAINING THE MODUS OPERANDI OF PROCUREMENT OF RAW MATERIAL AND MANUFACTURING PROCESS, CONTROVERTED EACH AND EVERY FINDINGS OF LD . AO AND ASSAILED THE CONCLUSIONS DRAWN THEREFROM. IT WAS SUBMITTED T HAT THE YIELD WAS ESTIMATED IN AN ARBITRARY MANNER WITHOUT POINTING O UT ANY SPECIFIC DEFECTS IN THE BOOKS OF ACCOUNT AND WITHOUT THERE BEING ANY INCRIMINATING MATERIAL TO SUBSTANTIATE THE FINDINGS. THE ATTENTIO N WAS ALSO DRAWN TO THE FACT THAT STATEMENTS RECORDED DURING SURVEY PROCEED INGS U/S 133A WOULD HAVE NO EVIDENTIARY VALUE UNLESS CORROBORATED WITH CIRCUMSTANTIAL EVIDENCES. IT WAS ALSO SUBMITTED THAT MD OF THE ASS ESSEE NEVER ADMITTED THAT YIELD WAS MANIPULATED IN THE BOOKS OF ACCOUNTS. THE ASSESSEE ALSO DENIED HAVING ADMITTED TO SURRENDER O F ADDITIONAL INCOME BEFORE LD.AO. 3.3 THE INFORMATION AS WELL AS DOCUMENTS FILED BY T HE ASSESSEE WERE SUBJECTED TO THREE REMAND PROCEEDINGS VIDE REMAND R EPORTS DATED 23/11/2015, 08/08/2016 & 05/10/2016 WHICH WERE FURN ISHED BY LD. AO M/S BEST PAPER MILLS PVT. LTD. ASSESSMENT YEARS : 2007-08 TO 2013-14 13 ALONG WITH ASSESSMENT & SURVEY FOLDERS AND THE SAID MATERIAL WAS DULY CONSIDERED BY LD. FIRST APPELLATE AUTHORITY. THE PR OCEEDINGS OF THREE REMAND REPORTS COULD BE SUMMARIZED IN THE FOLLOWING MANNER. FIRST REMAND PROCEEDINGS 4.1 THE REMAND REPORT FILED BY LD. AO ON 23/11/2015 WAS CONFRONTED TO THE ASSESSEE WHO FILED REJOINDER AGAINST THE SAM E AND PARAGRAPH WISE COMMENTS WERE GIVEN AGAINST EACH AND EVERY OBS ERVATION MADE BY LD.AO. 4.2 IN SUM AND SUBSTANCE, THE ASSESSEE SUBMITTED TH AT FINDINGS OF LD. AO WERE NOT CORROBORATED BY ANY EVIDENCES. ALL THE SUPPLIERS HAD FILED THEIR RESPECTIVE INCOME TAX RETURNS REFLECTING SALE S MADE BY THEM TO THE ASSESSEE WHICH STOOD CORROBORATED BY THE STATEM ENTS GIVEN BY THEM DURING SURVEY PROCEEDINGS. THE SURVEY TEAM DID NOT BRING FORTH ANY MATERIAL EVIDENCE ON RECORD TO PROVE THAT ANY BOGUS PURCHASES WERE DEBITED IN THE BOOKS OF ACCOUNTS. 4.3 IT WAS ALSO SUBMITTED THE EMPLOYEES OF THE ASSE SSEE WERE NOT TECHNICAL EXPERT AND GAVE THEORETICAL AVERAGE OF YI ELD AS PER THEIR OWN PERCEPTION ONLY AND NOT THE ACTUAL YIELD BASED ON V ARIOUS FACTORS SPECIFIC TO THE ASSESSEE. THE ATTENTION WAS DRAWN TO THE FAC T THAT ACTUAL YIELD ON THE DATE OF SURVEY WAS 83% WHICH WAS NOT DISPUTED B Y LD. AO AND THEREFORE, NO ADDITIONS WOULD BE SUSTAINABLE MERELY ON THE BASIS OF BALD ALLEGATIONS. 4.4 REGARDING CONFESSIONAL STATEMENT MADE BY MANAGING DIRECTOR [MD], THE ASSESSEE ASSAILED THE SAME BY SUBMITTING THAT NOWHERE IN THE STATEMENT, THE MD ADMITTED TO HAVE MANIPULATED THE ACTUAL YIELD AND THE CONFESSION WAS NOT VOLUNTARY BUT A FORCEFUL ONE WHI CH WAS MADE AT THE M/S BEST PAPER MILLS PVT. LTD. ASSESSMENT YEARS : 2007-08 TO 2013-14 14 BEHEST OF SURVEY TEAM. IN FACT, THE MD MADE A STATE MENT THAT COMPOSITE YIELD DURING THE YEAR WAS AROUND 83.44% WHICH STOOD CORROBORATED BY THE FINDING OF LD. AO THAT ACTUAL YIELD ON THE DATE OF SURVEY WAS APPROX. 83%. RELIANCE WAS PLACED ON THE DECISION OF HONBLE MADRAS HIGH COURT RENDERED IN CIT V/S S.KHADER KHAN [300 ITR 157] AS CONFIRMED BY HONBLE SUPREME COURT REPORTED AT 352 ITR 480 . RELIANCE WAS ALSO PLACED ON CBDT COMM. NO. 286/2/2003-IT(INV.) DATED 10/03/2003 TO SUBMIT THAT DEPARTMENTAL AUTHORITIES WERE NOT BE OB TAIN CONFESSIONS AS TO UNDISCLOSED INCOME BUT CONCENTRATE ON THE COLLEC TION OF EVIDENCE OF UNDISCLOSED INCOME. 4.5 THE ASSESSEE ALSO CONTROVERTED THE MANNER OF YI ELD ESTIMATION AS ADOPTED BY LD. AO AND SUBMITTED THAT THE SAME WAS A RBITRARY AND WITHOUT ANY BASIS. THE ATTENTION WAS DRAWN TO THE F ACT THAT THE YIELD OF 87% AS ADOPTED BY LD. AO WAS NOTHING BUT ESTIMATED AVERAGE YIELDS OF 85% & 90% OF UNIT-I & UNIT-II RESPECTIVELY WITHOUT THERE BEING ANY SUPPORTIVE MATERIAL TO SUBSTANTIATE THE ESTIMATION. IT WAS SUBMITTED THAT NO EXPERT OPINION WAS OBTAINED BY LD. AO TO ARRIVE AT SUCH ESTIMATION. THEREFORE, THE ADDITION MERELY ON PRESUMPTION, GUES S-WORK COULD NOT BE SUSTAINED IN THE EYES OF LAW. THE ASSESSEE BOLSTERE D THE SAME BY SUBMITTING THAT THE ASSESSEE APPROACHED GOVERNMENT BODIES I.E. CENTRAL PULP & RESEARCH UNIT (CPPRI) & SHRIRAM INSTITUTE OF INDUSTRIAL RESEARCH (SRI) TO STUDY THE MANUFACTURING PROCESS AND SCIENT IFICALLY ESTIMATE THE ASSESSEES YIELD IN MANUFACTURING PROCESS. BOTH THE REPORTS, AS PER ASSESSEES SUBMISSIONS, CORROBORATES THE YIELD REFL ECTED BY THE ASSESSEE DURING MANUFACTURING PROCESS AND THE SAME HAS REMAINED UNCONTROVERTED. M/S BEST PAPER MILLS PVT. LTD. ASSESSMENT YEARS : 2007-08 TO 2013-14 15 SECOND REMAND PROCEEDINGS 5.1 IN THE ABOVE BACKGROUND, LD.AO WAS SPECIFICALLY ASKED TO FILE DETAILS OF ANY INCRIMINATING MATERIAL IN THE FORM O F DOCUMENTS FOUND DURING SURVEY PROCEEDINGS WHICH COULD PROVE THAT TH E PURCHASES WERE INFLATED OR SALES WERE SUPPRESSED. THE LD. AO FILED ANOTHER REMAND REPORT DATED 08/08/2016 WHICH WAS AGAIN CONFRONTED TO THE ASSESSEE. 5.2 DURING THESE REMAND PROCEEDINGS, SUMMONS / NOTI CES WERE ISSUED TO THE REMAINING 6 SUPPLIERS DIRECTING THEM TO PROD UCE EVIDENCES RELATED TO SALE MADE BY THEM TO THE ASSESSEE. ALL THE PARTI ES ATTENDED AND SUBMITTED THAT THEY WERE REGULARLY FILING THEIR RES PECTIVE RETURN OF INCOME ALONG-WITH AUDITED ACCOUNTS. SUCH AUDITED ACCOUNTS REFLECTED THE SALES MADE BY THEM TO THEIR CUSTOMERS INCLUDING THE ASSES SEE. THEY FURTHER STATED THAT ALL THE SALES MADE BY THEM TO THE ASSES SEE WAS RECORDED IN THE BOOKS OF ACCOUNTS AS DULY SUPPORTED BY SALES IN VOICES & DELIVERY CHALLANS. THEY ALSO FILED THEIR COPIES OF RETURN OF INCOME, AUDITED ACCOUNTS, LEDGER EXTRACTS, BANK STATEMENTS HIGHLIGH TING THE TRANSACTIONS ALONG WITH COPIES OF BILLS / INVOICES PERTAINING TO THE ASSESSEE. THEY ALSO FILED COPIES OF SALES TAX / VAT RETURNS FILED BY TH EM BEFORE THE RESPECTIVE AUTHORITIES. THE PARTIES ALSO SUBMITTED THAT SINCE ALL THE PURCHASES WERE MADE BY THEM FROM UNREGISTERED PETTY VENDORS IN CASH AND THEREFORE, HEAVY CASH WAS WITHDRAWN FROM THEIR RESPECTIVE BANK ACCOUNTS TO MAKE ONWARD PAYMENT TO THESE UNREGISTER ED VENDORS / DEALERS. 5.3 THE ASSESSEE, REITERATING ITS STAND, INTER-ALIA, SUBMITTED THAT THE ASSESSEE WAS MAINTAINING FULL PARTICULARS OF PURCHA SE / CONSUMPTION OF QUANTITY OF WASTE PAPER ELECTRONICALLY AND THE ENTI RE CONSUMPTION COULD M/S BEST PAPER MILLS PVT. LTD. ASSESSMENT YEARS : 2007-08 TO 2013-14 16 BE VERIFIED FROM THE RECORDS. THE SAME WAS SOUGHT T O BE FORTIFIED BY THE FACT THAT NO DISCREPANCIES WERE NOTED BY THE SURVEY TEAM IN THE STOCK OF RAW MATERIAL ON THE DATE OF SURVEY. NEITHER THE SUR VEY TEAM NOR THE ASSESSING OFFICER HAD POINTED TO ANY DOCUMENT WHICH CONSTITUTE A DISCREPANCY BETWEEN BOOKS OF ACCOUNT, PHYSICAL QUAN TITY OF STOCK AND OTHER RECORDS. THE LD. AO CHOSE TO RELY MERELY ON T HE SELF-CONFESSIONAL STATEMENT EXTRACTED FORCIBLY BY THE SURVEY TEAM DUR ING SURVEY ON 10/01/2014 TO MAKE AN ADDITION IN AY 2011-12, WHICH WAS VERY MUCH AGAINST THE SPIRIT OF CITED CBDT CIRCULAR DATED 10/ 03/2003. THIRD REMAND PROCEEDINGS 6. IN VIEW OF ASSESSEES SUBMISSIONS, LD. AO WAS AG AIN CALLED FOR ALONG WITH ASSESSMENT RECORDS AND SURVEY FOLDERS AN D ALSO DIRECTED TO POINT OUT ANY INCRIMINATING MATERIAL COLLECTED DURI NG THE COURSE OF SURVEY AND ASSESSMENT PROCEEDINGS. THE LD. AO, VIDE REMAND REPORT DATED 04/10/2016 REITERATED THE OBSERVATIONS AS MADE IN E ARLIER REMAND REPORTS WHICH WERE CONTROVERTED BY THE ASSESSEE IN SIMILAR MANNER. THE ASSESSEE ALSO SUBMITTED THAT THE TWO ENTITIES NAMEL Y M/S ARYAN PAPER MILLS PRIVATE LIMITED AND M/S GAYATRISHAKTI PAPER & BOARD LIMITED AS PICKED UP BY LD. AO TO MAKE YIELD COMPARISON, WERE NOT COMPARABLE TO THE ASSESSEE SINCE THE QUALITY OF PAPER MANUFACTURE D BY THEM WAS DIFFERENT AND DIFFERENT PLANT & MACHINERY WAS BEING USED BY THEM TO MANUFACTURE THE PAPER. FINDINGS OF LD. CIT(A) 7.1 THE LD. CIT(A) CONSIDERED THE FACTUAL MATRIX IN PARAS 9 TO 9.12 AND OBSERVED, IN PARA-10, THAT NO INCRIMINATING MATERIAL REGARDING UNACCOUNTED CASH, PURCHASES, SALES OR INVESTMENT WA S FOUND DURING THE M/S BEST PAPER MILLS PVT. LTD. ASSESSMENT YEARS : 2007-08 TO 2013-14 17 COURSE OF THE SURVEY. NO INVENTORY OF STOCK WAS PRE PARED BY THE SURVEY TEAM AND NO DEFECT WAS FOUND EITHER IN CASH OR IN S TOCK ON THE DATE OF SURVEY. FURTHER, NO INCRIMINATING MATERIAL REGARDIN G SUPPRESSION OF SALES OR OF UNACCOUNTED PURCHASES WERE FOUND DURING THE C OURSE OF THE SURVEY. 7.2 IT WAS OBSERVED IN PARA 10.1, THAT THE MD OF ASSESSEE COMPANY, WHILE ANSWERING TO QUESTION NOS. 16 TO 27, SUBMITTE D THAT ALL THE BOOKS OF ACCOUNTS WERE CORRECT AND THERE WAS NO MANIPULATION OF YIELD. THE MD OF THE COMPANY DID NOT AGREE WITH THE INTERPRETATIO N OF SURVEY TEAM REGARDING THE YIELD RATIO. THE MD CLEARLY EXPLAINED ALL THE ASPECTS OF THE YIELD AND INTERPRETED THE VARIOUS STATEMENTS OF EMP LOYEES IN THE CORRECT PERSPECTIVE. 7.3 IT WAS ALSO OBSERVED THAT ON THE DATE OF SURVEY THE AVERAGE YIELD FOUND DURING FINANCIAL YEAR 2013-14 TILL THE DATE O F SURVEY I.E. 10/01/2014 WAS WORKED OUT AS 83.44% WHICH WAS NOT DISPUTED BY SURVEY TEAM OR LD. AO. IN FACT, IT WAS THE OBSERVATION OF LD. AO T HAT YIELD RATIO APPEARING IN THE BOOKS OF ACCOUNT AROUND THE DATE O F SURVEY WAS TO THE TUNE OF 83% WHERE THE ASSESSEE HAD NOT BEEN ABLE TO MANIPULATE THE BOOKS TO THAT EXTENT. FURTHER, THERE WAS ADDITION T O PLANT & MACHINERY DURING THE PERIOD 01/04/2010 TO 31/03/2014 WHICH SU PPORTED ASSESSEES STAND THAT THERE WAS GRADUAL INCREASE IN YIELD ON Y EAR TO YEAR BASIS DURING AFORESAID PERIOD. 7.4 REGARDING ESTIMATION OF YIELD, IT WAS OBSERVED THAT THE ASSESSEE PRODUCED TECHNICAL OPINION FROM GOVT. BODIES I.E. C PPRI & SRI. EXPERT FROM THESE INSTITUTES VISITED THE FACTORY PREMISES OF THE ASSESSEE AND GAVE TECHNICAL OPINION REGARDING YIELD OF THE COMPA NY. HOWEVER, LD. AO M/S BEST PAPER MILLS PVT. LTD. ASSESSMENT YEARS : 2007-08 TO 2013-14 18 DID NOT EXAMINE THE TECHNICAL OPINION OR SOUGHT ANY THIRD-PARTY OPINION ON THE SAME WHICH WAS IN CONTRADICTION TO CBDT INST RUCTION NO. 5/2011 [F.NO.225/61/2011-IT(A-11)] DATED 30/03/2011 WHICH MANDATE LD. AO TO SEEK TECHNICAL OPINION IN CASES INVOLVING COMPLEX I SSUE OF TECHNICAL NATURE. THIS REQUIREMENT WAS ALSO HIGHLIGHTED IN TH E DECISION OF HONBLE SUPREME COURT RENDERED IN CIT V/S BHARTI CELLULAR LTD. [330 ITR 239]. HOWEVER, LD. AO MERELY PREFERRED TO RELY ON THE GEN ERAL STATEMENTS MADE BY THE EMPLOYEES DURING THE COURSE OF SURVEY. THE SAID STATEMENTS WERE NOT SUPPORTED BY ANY DOCUMENTARY EV IDENCES. 7.5 REGARDING CONFESSION BY MD, IT WAS OBSERVED AT PARA-10 THAT SURVEY TEAM HAD REQUESTED THE MD TO DISCLOSE YIELD AT THE RATE OF 85% FOR VARIOUS ASSESSMENT YEARS. RELYING UPON THE STAT EMENT MADE ON 10/01/2014, LD. AO CHOSE TO MADE ADDITION FOR AY 20 11-12 WITHOUT THERE BEING ANY OTHER INDEPENDENT EVIDENCE IN SUPPORT OF THE YIELD EITHER AS PER THE SELF-CONFESSION OF THE ASSESSEE OR AS ESTIM ATED BY LD. AO. THE SAME WAS IN CONTRADICTION TO CBDT INSTRUCTIONS DATE D 10/03/2003 AND 18/12/2014 WHICH DISCOURAGED THE RELIANCE ON SELF-C ONFESSIONS AND DECLARATIONS OBTAINED DURING THE COURSE OF SURVEYS AND OTHERS PROCEEDINGS WITH A VIEW TO MAKE ADDITIONS WHILE FAR MING ASSESSMENT ORDERS. THE RELEVANT EXTRACT OF THE CIRCULARS HAS A LREADY BEEN REPRODUCED IN THE IMPUGNED ORDER. 7.6 IT WAS FURTHER OBSERVED IN PARA 10.6, THAT LD. AO EXAMINED ALL THE SUPPLIERS WHO CORROBORATED THE GENUINENESS OF SALE OF WASTE PAPER TO THE ASSESSEE. THESE SUPPLIERS WERE REGULARLY FILING THEIR RESPECTIVE INCOME TAX RETURNS. ALL THE SUPPLIERS WERE REGISTER ED WITH THE SALES TAX DEPARTMENT AND FILING THE REQUISITE SALES TAX / VAT RETURNS. THEREFORE, M/S BEST PAPER MILLS PVT. LTD. ASSESSMENT YEARS : 2007-08 TO 2013-14 19 THE CONCLUSION THAT THE ASSESSEE MADE BOGUS PURCHAS ES WAS NOT FACTUALLY CORRECT. 7.7 REGARDING HUGE CASH WITHDRAWALS MADE BY THE SUP PLIERS OF THE ASSESSEE, THE LD. CIT(A) CONCURRED WITH ASSESSEES SUBMISSIONS THAT THE ASSESSEE COULD NOT EXERCISE CONTROL OVER THE CO NDUCT OF BUSINESS OF THE SUPPLIERS. THE ASSESSEE PURCHASED HUGE VOLUME O F WASTE PAPER WHICH WAS DELIVERED BY APPROX. 50 TO 60 TRUCKS EVER Y DAY. THE PAYMENTS TO THE SUPPLIERS WERE THROUGH BANKING CHANNELS AND THE SUPPLIERS WERE ASSESSED TO TAX AND THEREFORE, NO ADVERSE INFERENCE COULD BE DRAWN FROM SUCH BUSINESS PRACTICES OF THE SUPPLIERS IN RE LATION TO YIELD OF THE ASSESSEE WHICH WAS MANUFACTURING RELATED SUBJECT. 7.8 THE LD. CIT(A) ALSO OBSERVED THAT NO INDEPENDEN T EVIDENCE IN SUPPORT OF DECLARATION OBTAINED DURING THE COURSE O F SURVEY HAS BEEN BROUGHT ON RECORD. THE ALLEGED SUPPRESSION OF YIELD WAS NOT SUPPORTED BY ANY EXCESS PHYSICAL STOCK OR UNACCOUNTED CASH FO UND DURING SURVEY, NO EVIDENCE OF UNACCOUNTED SALES / INVESTMENTS WAS BROUGHT ON RECORD AND THERE WAS NO OTHER CIRCUMSTANTIAL EVIDENCE TO S UPPORT THE ALLEGED SUPPRESSION OF YIELD. 7.9 THE LD. CIT(A) ALSO DISAPPROVED THE STAND OF LD . AO IN REJECTING THE BOOKS OF ACCOUNTS SINCE NO SPECIFIC DEFECTS OR DISCREPANCIES WERE POINTED OUT IN THE BOOKS. THE BOOKS WERE DULY AUDIT ED. FURTHER, LD. AO MERELY ESTIMATED THE YIELD AT 87% WHICH WAS NOTHING BUT ESTIMATED YIELD OF 85% & 90% OF UNIT-I & II RESPECTIVELY. NO CREDIB LE REASONS FOR MAKING ADDITION ON SUCH BASIS WERE GIVEN BY LD. AO. 7.10 AT PARA 11.5, IT WAS OBSERVED THAT MD, IN ITS STATEMENT, CLEARLY INDICATED THAT THE YIELD FOR FY 2013-14 WAS 83.44% WHICH WAS NOT M/S BEST PAPER MILLS PVT. LTD. ASSESSMENT YEARS : 2007-08 TO 2013-14 20 DISPUTED BY THE SURVEY TEAM. IT WAS ALSO NOTED THAT THE MD OF THE ASSESSEE DID NOT ADMIT THAT THE PURCHASES WERE MANI PULATED OR THAT THE ACTUAL YIELD WAS 85%. IN FACT, THE SURVEY TEAM REQU ESTED THE MD OF THE ASSESSEE TO OFFER ADDITIONAL INCOME CONSIDERING YIE LD PERCENTAGE AS 85% AND THEREFORE, THE CONFESSION WAS NOT VOLUNTARY. IN THE ABOVE BACKGROUND, LD. CIT(A) OPINED THAT INFERENCES DRAWN BY LD. AO ON THE BASIS OF SELF-CONFESSION WERE NOT CORRECT ON FACTS. 7.11 UPON PERUSAL OF YIELD REFLECTED BY DIFFERENT C OMPARABLE ENTITIES AS PICKED UP BY LD. AO, IT WAS CONCLUDED THAT THE STAT ED ENTITIES WERE NOT COMPARABLE TO THAT OF ASSESSEE COMPANY. IN FACT, TH E ASSESSEE HAD DISCLOSED HIGHER TAXABLE PROFIT PERCENTAGE THAN AS REFLECTED BY M/S ARYAN PAPER MILLS PVT. LTD. THEREFORE, MERE FACT OF HIGHE R YIELD REFLECTED BY SAID ENTITY COULD NOT BE CONSIDERED AS AN EVIDENCE OR DI SCREPANCY WHICH WOULD CONSTITUTE A JUSTIFIABLE GROUND TO REJECT THE BOOKS OF ACCOUNTS OF THE ASSESSEE AND MAKE ADDITION FOR ALLEGED SUPPRESS ION OF YIELD. 7.12 THE GIVEN FACTUAL MATRIX WAS CONSIDERED AT THE THRESHOLD OF VARIOUS JUDICIAL PRONOUNCEMENTS, THE GIST OF WHICH HAS ALRE ADY BEEN REPRODUCED IN THE IMPUGNED ORDER. IN SUM AND SUBSTANCE, IT WAS NOTED THAT NO ADDITION COULD BE MADE MERELY ON THE BASIS OF STATE MENT OBTAINED DURING SURVEY PROCEEDINGS WITHOUT THERE BEING ANY COGENT M ATERIAL ON RECORD TO SUBSTANTIATE THE SAME AND THESE STATEMENTS WOULD HA VE NO EVIDENTIARY VALUE. IT WAS SINE QUA NON THAT THERE WAS SOME OTHE R MATERIAL TO CO- RELATE UNDISCLOSED INCOME WITH SUCH STATEMENT. 7.13 FINALLY, AFTER DUE CONSIDERATION, LD. FIRST AP PELLATE AUTHORITY REACHED A CONCLUSION THAT NO INCRIMINATING MATERIAL / DOCUM ENTS REGARDING UNACCOUNTED CASH, STOCK, SALES, PURCHASES OR INVEST MENTS WERE FOUND M/S BEST PAPER MILLS PVT. LTD. ASSESSMENT YEARS : 2007-08 TO 2013-14 21 DURING THE COURSE OF SURVEY PROCEEDINGS. NO DISCREP ANCY WAS FOUND EITHER IN THE CASH OR PHYSICAL STOCK AND LD. AO HEA VILY RELIED UPON THE STATEMENT OF THE EMPLOYEES RECORDED DURING THE COUR SE OF SURVEY. THE MD OF THE ASSESSEE CATEGORICALLY SUBMITTED THAT REC ORDS OF CONSUMPTION AND PRODUCTION WERE DULY MAINTAINED AND ACCOUNTED I N THE BOOKS OF ACCOUNTS. THE BOOKS OF ACCOUNT WERE DULY MAINTAINED AND NO DISCREPANCIES COULD BE FOUND BY THE SURVEY TEAM IN THE RECORDS MAINTAINED BY THE ASSESSEE. FINALLY CONVINCED WITH ASSESSEES SUBMISSIONS, THE IMPUGNED ADDITIONS AS MADE BY LD. AO WERE DELETED. THE FINAL OBSERVATION OF LD. CIT(A) COULD BE EXTRAC TED IN THE FOLLOWING MANNER: - 16.1 FROM PERUSAL OF THE RELEVANT QUESTIONS AND THEIR ANSWERS IT IS EVIDENT THAT THE M.D. OF THE COMPANY CATEGORICALLY AND REPEATEDLY REITERA TED THAT RECORDS OF CONSUMPTION AND PRODUCTION WERE DULY MAINTAINED AND ACCOUNTED IN THE BOOKS OF ACCOUNT. IT WAS FURTHER STATED THAT ALL THE BOOKS O F ACCOUNTS WERE DULY MAINTAINED AND NO DISCREPANCY COULD BE FOUND BY THE SURVEY TEA M IN THE RECORDS MAINTAINED BY THE APPELLANT. 16.2 IN RESPONSE TO Q.NO.20, THE M.D. OF THE COMPAN Y STATED THAT '/ STAND BY THE FACT THAT 83.44% IS THE ACTUAL COMPOSITE YIELD PERC ENTAGE OF THE PLANT 1 & 2. HOWEVER, TO BUY PEACE OF MIND I AM DECLARING 85% YI ELD FROM AYS 2011-2012 TO 2013-14.' A CAREFUL EXAMINATION OF THE STATEMENT REVEALED THA T IT WAS NOT AN UNCONDITIONAL DISCLOSURE. THE APPELLANT ONCE AGAIN EMPHASIZED THAT ACTUAL YIELD WAS 83.44% ON THE DATE OF SURVEY AND JUST FOR PURCH ASING PEACE OF MIND HE WAS ADMITTING A YIELD @85%. IF THE YIELD WAS SUPPRESSED THEN EITHER THERE MUST HAD BEEN SOME UNACCOUNTED STOCK OR PROOF OF UNACCOUNTED SALES OR UNACCOUNTED INVESTMENTS AS A RESULT OF SUPPRESSION OF YIELD. TH E SURVEY TEAM COULD NOT SUBSTANTIATE THE HIGHER YIELD BY WAY OF FINDINGS DU RING THE COURSE OF SURVEY IN THE FORM OF UNACCOUNTED SALES, PURCHASES, CASH, STOCK O R INVESTMENTS. WHEREAS IN THE FIRST SENTENCE OF SO-CALLED DISCLOSURE STATEMENT, T HE APPELLANT ONCE AGAIN REITERATED THAT ACTUAL YIELD WAS 83.44% ON THE DATE OF SURVEY. SINCE IN THE STATEMENT, THE APPELLANT EMPHASIZED THAT ACTUAL YIELD WAS 83.44% A ND JUST FOR PURCHASING PEACE OF MIND HE WAS DECLARING THE YIELD AT 85% WHICH WAS NO T SUPPORTED BY ANY OF THE FINDINGS OF SURVEY TEAM DURING THE COURSE OF SURVEY . SINCE THE STATEMENT IS IN ITSELF CONTRADICTORY, THEREFORE IT CANNOT BE TREATED AS A VOLUNTARY DISCLOSURE SUPPORTED BY ANY OF THE FINDINGS AS A RESULT OF SURVEY U/S.133A. 16.3 THE A.O. HAS ALSO HEAVILY RELIED UPON THE STAT EMENTS OF VARIOUS PERSONS EMPLOYED AT THE PLANT WHICH ARE DISCUSSED IN THE AS SESSMENT ORDER. MAJORITY OF THE PERSONS WHOSE STATEMENTS WERE RECORDED WERE TECHNIC AL PERSONS RELATED TO MAINTENANCE AND RUNNING OF THE PLANT. THEY WERE NOT THE MEN OF ACCOUNTS. M/S BEST PAPER MILLS PVT. LTD. ASSESSMENT YEARS : 2007-08 TO 2013-14 22 MOREOVER, THEY JUST STATED ESTIMATE OF PERCENTAGE Y IELD AND NOT EXACT FIGURES. AS POINTED OUT EARLIER, NO INCRIMINATING DOCUMENTS WER E CONFRONTED DURING THE COURSE OF SURVEY WHILE RECORDING THE STATEMENT OF EMPLOYEES A ND M.D. OF THE COMPANY (STATEMENTS RECORDED DURING THE COURSE OF SURVEY AR E ATTACHED AS ANNEXURE 1 TO THIS ORDER). SINCE THESE PERSONS WERE NOT INVOLVED IN TH E MAINTENANCE OF ACCOUNTS AND CALCULATION OF THE YIELD, THEREFORE, IN ABSENCE OF ANY SUPPORTING DOCUMENTS THEIR STATEMENTS CANNOT BE RELIED FOR MAKING ADDITIONS. F OR REJECTING BOOKS OF ACCOUNTS, THE LD. A.O. MENTIONED IN PARA 4 OF THE ASSESSMENT THAT THE ASSESSEE COMPANY HAD SUPPRESSED ITS YIELD BY INFLATING PURCHASES OF INDI GENOUS WASTE PAPER IN ITS BOOKS OF ACCOUNTS FROM VARIOUS PARTIES. 16.4 THE NAMES OF SUCH PARTIES WERE MENTIONED AT PA GE 3 OF THE ASSESSMENT ORDER. U/S.250(4) OF THE ACT, THE A.O. WAS DIRECTED TO ISS UE SUMMONS U/S.131 AND EXAMINE ALL THE PARTIES ALONG WITH THEIR BOOKS OF ACCOUNTS. IN THIS REGARD A REPORT WAS RECEIVED 25.01.2016. ALL SUCH PARTIES NOT ONLY APPE ARED BEFORE THE A.O. BUT ALSO PRODUCED ALL NECESSARY BOOKS AND VOUCHERS ALONG WIT H BOOKS OF ACCOUNTS. THEY NOT ONLY ADMITTED THAT ALL THE PURCHASES MADE BY THE AP PELLANT WERE GENUINE BUT ALSO PRODUCED OTHER SUPPORTING EVIDENCES. ALL WERE FILIN G THEIR INCOME TAX RETURN AND WERE ALSO REGISTERED WITH THE SALES TAX DEPARTMENT. THE A.O. HAD SIMPLY MENTIONED THAT PURCHASES MADE BY THE VENDOR WERE MOSTLY IN CA SH AND THERE WERE HEAVY CASH WITHDRAWALS IN THE ACCOUNTS OF ALL THESE VENDORS. T HESE PARTIES WERE DEALING IN PURCHASES OF WASTE PAPERS FROM SMALL VENDORS. KEEPI NG IN VIEW THE NATURE OF TRADE PRACTICE, DISCREPANCIES POINTED OUT BY THE A.O. ARE NOT SIGNIFICANT. MOREOVER, THE APPELLANT CANNOT BE HELD RESPONSIBLE FOR THE CONDUC T OF BUSINESS OF THEIR VENDORS FROM WHICH IT HAD MADE PURCHASES. 16.5 WHILE REJECTING THE BOOKS OF ACCOUNT, THE A.O. HAD ALSO RELIED UPON THE DELIVERY CHALLANS AND ACCORDING TO THE A.O. TWO DIFFERENT TY PES OF INKS WERE USED WHILE PREPARING THE DELIVERY CHALLANS. ACCORDING TO THE A PPELLANT THE DELIVERY CHALLANS WERE PREPARED BY 2 SEPARATE PERSONS. THE FORMAT IN BLUE INK WAS PREPARED AT THE TIME OF ARRIVAL OF TRUCK / LORRY AT GATE BY A DIFFE RENT PERSON AND WEIGHT WAS TAKEN AT WEIGHBRIDGE BY DIFFERENT PERSON AND AS A MATTER OF POLICY USED DIFFERENT INK FOR CLARITY AND ACCOUNTING CONVENIENCE. MOREOVER, DELIVERY CHAL LANS CANNOT BE USED FOR INFLATING THE PURCHASES WITHOUT CORRESPONDING BOGUS PURCHASE BILLS. 16.6. IT WAS FURTHER CLARIFIED BY THE APPELLANT THA T USE OF DIFFERENT INK FACILITATED ACCOUNTING STAFF BECAUSE DIFFERENT INK WAS CLEARLY VISIBLE. THERE WAS NO CATEGORICAL, UNCONDITIONAL AND VOLUNTARY DISCLOSURE. THE A.O. HA D NO COGENT MATERIAL FOR REJECTING THE BOOKS OF ACCOUNTS. HE COULD NOT FIND ANY DISCREPANCY IN STOCK, CASH, SALES, OR INVESTMENT. HE HAS REJECTED THE BOOKS OF ACCOUNT JUST ON THE BASIS OF CERTAIN ASSUMPTIONS AND SUSPICIONS. IN VIEW OF THES E THE ACTION OF THE A.O. FOR INVOKING THE PROVISIONS OF SECTION 145 CANNOT BE SU STAINED. SINCE THE BOOKS OF ACCOUNT MAINTAINED BY THE APPELLANT WERE DULY AUDIT ED AND NO CONCRETE DISCREPANCIES WERE POINTED OUT, THEREFORE ADDITION ON THE BASIS OF PERCENTAGE YIELD CANNOT BE SUSTAINED. MOREOVER, THE COMPARABLE CONSI DERED BY THE A.O. WERE ALSO NOT SIMILAR IN TERMS OF TURNOVER, NET PROFIT AND TY PE OF MACHINERY USED, THEREFORE, THE COMPARABLE CANNOT BE TAKEN AS CORRECT COMPARABLE. 16.7 ON THE CONTRARY, APPELLANT HAS PRODUCED REPORT OF GOVT. AGENT I.E. CENTRAL PULP AND PAPER RESEARCH INSTITUTE WHICH HAD CONDUCTED TH EIR ON-SPOT TRIALS AND GIVEN THEIR REPORT WHICH IS REPRODUCED AT PAGE NO.53 OF T HIS ORDER. THE APPELLANT HAS ALSO SUBMITTED REPORT OF SHRIRAM INSTITUTE FOR INDUSTRIA L RESEARCH INSTITUTE WHICH HAS M/S BEST PAPER MILLS PVT. LTD. ASSESSMENT YEARS : 2007-08 TO 2013-14 23 PREPARED THE REPORT AFTER ON-SPOT TRIALS. ON THE OT HER HAND, SURVEY TEAM DID NOT TRY TO TAKE ACTUAL YIELD AFTER OBSERVING THE MANUFACTURING TRIALS DURING THE COURSE OF SURVEY. THE TECHNICAL REPORTS PREPARED BY THE CENTRAL PULP & PAPER RESEARCH INSTITUTE AND SHRIRAM INSTITUTE FOR INDUSTRIAL RESEARCH INSTITUTE WERE ALSO PRODUCED BEFORE THE A.O. AND ALSO FORWARDED TO THE A.O. DURING REMAND PROCEE DINGS. THE A.O. HAD NOT FOUND OUT ANY DEFECT IN THE TECHNICAL REPORTS PRODUCED BY THE APPELLANT. 16.8 THE DISCLOSURE DURING THE COURSE OF SURVEY WAS NOT UNCONDITIONAL AND IT WAS ALSO NOT SUPPORTED BY ANY DOCUMENTARY EVIDENCES. MO REOVER, THE YIELD TAKEN BY THE A.O. IS ALSO NOT SUPPORTED BY EQUAL AND FAIR COMPAR ABLE WHEREAS THE TECHNICAL OPINION GIVEN BY THE GOVERNMENT AGENCY SUPPORTS THE CLAIM OF THE APPELLANT. THE A.O HAS FAILED TO BRING ANY COGENT MATERIAL NECESSA RY FOR INVOKING PROVISIONS OF SECTIONS 145(3) OF THE ACT. HENCE WITHOUT VALID REJ ECTION OF BOOKS OF ACCOUNT, YIELD CANNOT BE CHANGED. AS STATED IN THE FOREGOING PARAG RAPHS, THE A.O. HAS HEAVILY RELIED UPON THE STATEMENT OF VARIOUS EMPLOYEES AND M.D. OF THE APPELLANT COMPANY WHICH ARE DISCUSSED IN THE ASSESSMENT ORDER WITHOUT BRINGING ANY INDEPENDENT COGENT EVIDENCE IN SUPPORT OF SUCH RELIANCE PLACED ON IT. IN VIEW OF THIS, THE FACTS OF THE APPELLANT ARE SIMILAR TO THE FACTS OF VARIOUS C ASE LAWS DECIDED BY THE HON'BLE ITAT AND HON'BLE HIGH COURTS DISCUSSED IN THE FOREG OING PARAS. RESPECTFULLY FOLLOWING THE JUDGEMENTS OF THE HON'BLE HIGH COURTS AND TRIBUNALS, THE APPEAL OF THE APPELLANT IS ALLOWED AND ADDITION OF RS.10,97,13,32 7/- IS DELETED. 16.9 IN THE RESULT, THE APPEAL OF THE APPELLANT FOR A.Y.2011-12 IS ALLOWED. AGGRIEVED, THE REVENUE IS IN FURTHER APPEAL BEFORE US. THE ASSESSEES CROSS OBJECTIONS ARE IN SUPPORT OF THE IMPUGNED ORD ER. SUBMISSIONS BEFORE US 8.1 THE LD. DEPARTMENTAL REPRESENTATIVE [DR] PRIMAR ILY RELYING UPON THE STAND OF LD. AO, SUBMITTED THAT THE ACTUAL YIEL D WAS HIGHER WHICH WAS EVIDENT FROM THE STATEMENT OF TECHNICAL PERSONS RECORDED DURING SURVEY PROCEEDINGS. THE ATTENTION HAS BEEN DRAWN TO THE CONFESSION MADE BY SHRI RAMESH K. SHAH, IN HIS STATEMENT, DISC LOSING ADDITIONAL INCOME ON ACCOUNT OF SUPPRESSION OF YIELD. OUR ATTE NTION IS FURTHER DRAWN TO THE FACT THE BLANK DELIVERY CHALLAN BOOKS WERE F OUND FROM THE PREMISES OF THE ASSESSEE WHICH WERE SUSCEPTIBLE TO MANIPULATION. THE QUANTITY IN THE CHALLANS WERE FILLED BY THE ASSESSE ES EMPLOYEES ONLY WHICH IS EVIDENT FROM THE FACT THAT DIFFERENT INK W AS USED TO FILL THE WEIGHT IN THE DELIVERY CHALLANS. IN THE ABOVE BACKGROUND, IT WAS SUBMITTED THAT M/S BEST PAPER MILLS PVT. LTD. ASSESSMENT YEARS : 2007-08 TO 2013-14 24 LD. AO WAS JUSTIFIED IN ESTIMATING THE YIELD AS PER THE STATEMENT GIVEN BY VARIOUS PERSONS DURING SURVEY PROCEEDINGS. 8.2 PER CONTRA, LD. AUTHORIZED REPRESENTATIVE FOR A SSESSEE [AR], PRIMARILY RELIED UPON ELABORATE SUBMISSIONS AND EVI DENCES PRODUCED DURING APPELLATE PROCEEDINGS. IT HAS BEEN SUBMITTED THAT THE ISSUE HAS BEEN CLINCHED IN PROPER PERSPECTIVE BY LD. FIRST AP PELLATE AUTHORITY WHICH WOULD WARRANT NO INTERFERENCE. RELIANCE HAS BEEN PL ACED ON FOLLOWING JUDICIAL PRONOUNCEMENTS IN SUPPORT OF VARIOUS SUBMI SSIONS: - I) HONBLE BOMBAY HIGH COURT IN PR.CIT V/S TIME & S PACE HAULERS [ITA NO. 52 OF 2016 DATED 04/07/2018] II) MUMBAI TRIBUNAL IN ITO V/S TIMES & SPACE HAULER [ITA NO.1824/M/2011 DATED 19/06/2015] III) MUMBAI TRIBUNAL IN ITO V/S ETERNITY JEWELS [IT A NO.1318/MUM/2016 DATED 04/02/2019 IV) HONBLE KERALA HIGH COURT IN B.F.VARGHESE V/S S TATE OF KERALA [72 ITR 726] OUR FINDINGS AND CONCLUSIONS 9.1 WE HAVE CAREFULLY HEARD THE RIVAL SUBMISSIONS, PERUSED RELEVANT MATERIAL ON RECORD INCLUDING THE ORDERS OF LOWER AU THORITIES AND DELIBERATED ON JUDICIAL PRONOUNCEMENTS AS CITED BEF ORE US. 9.2 THE ORDER OF LD. AO WOULD REVEAL THAT YIELD PER CENTAGE REFLECTED BY THE ASSESSEE HAS BEEN DISTURBED PRIMARILY BY RELYIN G UPON STATEMENTS OF ASSESSEES EMPLOYEES & MANAGING DIRECTOR AS RECORDE D DURING SURVEY PROCEEDINGS ON 10/01/2014. THE LD. AO FORMED AN OPI NION THAT THE DELIVERY CHALLAN BOOKS WERE SUSCEPTIBLE FOR MANIPUL ATION AND THE ASSESSEE HAS UNDERSTATED YIELD PERCENTAGE BY INFLAT ING PURCHASE OF RAW MATERIAL IN THE BOOKS OF ACCOUNTS. 9.3 BEFORE PROCEEDING, IT WOULD BE IMPERATIVE TO HI GHLIGHT THE MODUS OPERANDI ADOPTED BY THE ASSESSEE TO PROCURE THE RAW MATERIA L FROM M/S BEST PAPER MILLS PVT. LTD. ASSESSMENT YEARS : 2007-08 TO 2013-14 25 VARIOUS SUPPLIERS. THE FACTS ON RECORD WOULD REVEAL THAT THE ASSESSEE WAS SOURCING WASTE PAPER FROM FEW SUPPLIERS, WHO IN TURN, WERE PROCURING THE SAME FROM SMALL VENDORS INCLUDING RADDIWALAS WHO WERE MAINLY OPERATING IN UNORGANIZED SECTORS. THE RATES OF RAW MATERIAL WERE NEGOTIATED BY THESE SUPPLIERS WITH THE SMALL VENDOR S AND AFTER FINALIZING THE SAME, THE VENDORS WERE DIRECTED TO DELIVER THE WASTE PAPER DIRECTLY AT ASSESSEES PREMISES. ACCORDINGLY, TRUCK LOADS OF WASTE PAPER WERE DIRECTLY DELIVERED AT ASSESSEES FACTORY GATE WHERE THE WEIGHT OF THE WASTE PAPER WAS TAKEN AND ENTERED INTO RESPECTIVE B LANK DELIVERY CHALLANS KEPT BY THESE SUPPLIERS AT ASSESSEES PREM ISES. ONE COPY OF THE SAME WAS OBTAINED BY THE SUPPLIERS FROM ASSESSE ES PREMISES WHICH FORMED THE BASIS FOR GENERATING SALES INVOICES AGAI NST THE ASSESSEE AND FOR MAKING ONWARD PAYMENT BY THESE SUPPLIERS TO THE VENDORS. ANOTHER COPY WAS RETAINED AT ASSESSEES PREMISES FOR FEEDIN G INTO THE STOCK REGISTER WHICH WAS MAINTAINED ELECTRONICALLY. THIS PECULIAR MODUS OPERANDI ADOPTED BY THE ASSESSEE STOOD CORROBORATED BY THE STATEMENT OF ALL THE SUPPLIERS AS OBTAINED BY LD. AO. THE SUP PLIERS, IN THEIR STATEMENTS, CONFIRMED THAT BLANK DELIVERY CHALLANS BOOKS WERE KEPT AT ASSESSEES PREMISES FOR OPERATIONAL CONVENIENCE TO FACILITATE DELIVERY OF RAW MATERIAL. THE SURVEY TEAM ALSO FOUND THE BLANK DELIVERY CHALLAN BOOKS AT ASSESSEES PREMISES. THE WEIGHT OF TRUCK L OADS WAS TAKEN AS ASSESSEES FACTORY GATE WHICH WAS FILLED INTO DELIV ERY CHALLAN BOOKS. THIS MODUS OPERANDI , IN ITSELF EXPLAIN THE FINDINGS OF LD. AO THAT BLA NK DELIVERY CHALLAN BOOKS WERE FOUND DURING THE COURSE OF SURVEY. IN FACT, THE SUPPLIERS HAVE ADMITTED THAT BLANK BOOKS WERE K EPT AT ASSESSEES PREMISES, WHICH WERE FILLED WITH QUANTITATIVE DETAI LS AFTER WEIGHING THE M/S BEST PAPER MILLS PVT. LTD. ASSESSMENT YEARS : 2007-08 TO 2013-14 26 RAW MATERIAL AT THE FACTORY GATE. THIS PRACTICE WAS ADOPTED BY THE ASSESSEE FOR NUMBER OF YEARS FOR OPERATIONAL CONVEN IENCE. THEREFORE, NO ADVERSE INFERENCE COULD BE DRAWN AGAINST THE ASSESS EE BY THE FACT THAT THAT BLANK DELIVERY CHALLAN BOOKS WERE FOUND AT THE FACTORY GATE. SIMILARLY, NO INFERENCE COULD BE DRAWN BY THE FACT THAT THE WEIGHT WAS WRITTEN IN DIFFERENT INK. 9.4 PROCEEDING FURTHER, ANOTHER FACT TO BE NOTED IS THAT THE VENDORS OF THE SUPPLIERS WERE MOSTLY UNREGISTERED DEALERS OPER ATING IN UNORGANIZED SECTORS AND WERE DEALING IN CASH. THE FACT EXPLAINS HEAVY CASH WITHDRAWAL MADE BY THE SUPPLIERS FROM THEIR RESPECT IVE BANK ACCOUNTS. BE THAT AS MAY BE, THE ASSESSEE WAS NOT EXERCISING ANY CONTROL OVER THE CONDUCT OF SUPPLIERS BUSINESS AND NO ADVERSE INFER ENCE COULD BE DRAWN AGAINST THE ASSESSEE ON THE BASIS OF CASH WITHDRAWA LS MADE BY THE SUPPLIERS. IN FACT, ALL THE SUPPLIERS WERE FILING T HEIR RESPECTIVE INCOME TAX RETURNS, THEIR ACCOUNTS WERE AUDITED AS PER LAW AND DUE COMPLIANCES WERE MADE BY THEM UNDER VAT / SALES TAX LAWS. THESE SUPPLIERS CONFIRMED HAVING MADE SALES TO THE ASSESSEE. THERE IN NOT EVEN AN IOTA OF SUBMISSION THAT RAW MATERIAL WAS NOT SUPPLIED TO THE ASSESSEE. THE PAYMENTS TO ALL THE SUPPLIERS WERE MADE BY THE ASSE SSEE THROUGH BANKING CHANNELS. NO DISCREPANCIES HAVE BEEN FOUND IN THE LEDGER STATEMENTS OF THESE SUPPLIERS. NOTHING HAS BEEN BRO UGHT ON RECORD TO ESTABLISH THAT ANY CASH GOT EXCHANGED BETWEEN THE A SSESSEE AND THESE SUPPLIERS ON ACCOUNT OF ALLEGED BOGUS SUPPLIES. THE ALLEGATIONS THAT THESE SUPPLIERS WERE IN COLLUSION WITH THE ASSESSEE IS NOT SUPPORTED BY ANY MATERIAL. M/S BEST PAPER MILLS PVT. LTD. ASSESSMENT YEARS : 2007-08 TO 2013-14 27 9.5 ANOTHER PERTINENT FACT TO BE NOTED IS THAT NO D ISCREPANCY HAS BEEN POINTED OUT BY SURVEY TEAM IN PHYSICAL STOCK OF RAW MATERIAL OR FINISHED GOODS ON THE DATE OF SURVEY. NO EVIDENCE OF SUPPRES SED SALES, UNACCOUNTED CASH / INVESTMENTS / SALES HAVE BEEN BR OUGHT ON RECORD. NO DEFECT HAS BEEN POINTED OUT EITHER IN CASH OR IN STOCK DURING SURVEY. THE REVENUE IS UNABLE TO POINT OUT THAT EXCEPT FOR STATEMENTS, ANY INCRIMINATING MATERIAL WAS FOUND DURING THE COURSE OF SURVEY PROCEEDINGS. PITIED AGAINST THE SAME WAS THE FACT T HAT THE ASSESSEE WAS A CORPORATE ENTITY AND ITS BOOKS WERE DULY AUDITED AS PER LAW OVER THE YEARS. THE AUDITORS HAVE NOT MADE ANY ADVERSE COMME NT ON QUANTITATIVE DETAILS BEING MAINTAINED BY THE ASSESS EE. 9.6 SO FAR AS THE REJECTION OF BOOKS OF ACCOUNTS IS CONCERNED, WE FIND THAT NO SPECIFIC DISCREPANCY OR DEFECTS HAVE BEEN P OINTED OUT BY LD. AO IN THE BOOKS OF ACCOUNTS. IN FACT, THE ADDITION HAS BEEN MADE BY LD. AO MERELY BY DISTURBING THE FIGURES OF PURCHASE OF RAW MATERIAL WITHOUT DISTURBING ANY OTHER COMPONENT OF BOOKS OF ACCOUNTS . WE FIND THAT THE ASSESSEES BOOKS WERE SUBJECTED TO AUDIT UNDER INCO ME TAX ACT AS WELL AS UNDER THE COMPANIES ACT AND THE SAME COULD NOT B E REJECTED IN A LIGHT MANNER. OUR VIEW IS FORTIFIED BY THE DECISION OF THIS TRIBUNAL RENDERED IN ITO V/S M/S ETERNITY JEWELS [ITA N0. 1318/MUM/2016 DATED 04/02/2019] WHEREIN IT HAS BEEN OBSERVED THAT LD. AO COULD NOT REJECT THE BOOKS MERELY ON THE BASIS OF SURMISES AN D CONJECTURES WITHOUT POINTING OUT ANY DEFECT IN THE BOOKS OF ACCOUNTS. S IMILARLY, HONBLE KERALA HIGH COURT IN B.F VARGHESE V/S STATE OF KERALA [SUPRA] HAS HELD THAT MERE FACT THAT THE YIELD DISCLOSED IN THE BOOK S OF ACCOUNTS WAS NOT COMPARABLE WITH ESTIMATION MADE BY ASSESSING AUTHOR ITY WOULD BE NO M/S BEST PAPER MILLS PVT. LTD. ASSESSMENT YEARS : 2007-08 TO 2013-14 28 GROUND TO REJECT THE BOOKS OF ACCOUNTS. THIS TRIBUN AL IN ITO V/S TIME AND SPACE HAULERS [ ITA NO.1824/MUM/2011 19/06/2015] HAS CONFIRMED THE STAND OF LD. CIT(A) THAT WITHOUT POIN TING ANY PARTICULAR DEFECT IN THE AUDITED ACCOUNTS, IT WAS NOT CORRECT TO REJECT THE BOOKS U/S 145(3).THIS DECISION OF TRIBUNAL HAS ALREADY BEEN C ONFIRMED BY HONBLE BOMBAY HIGH COURT WHEREIN HONBLE COURT HAS OBSERVE D THAT THE POWER TO REJECT BOOKS COULD BE EXERCISED ONLY WHERE ASSES SING OFFICER WAS NOT SATISFIED WITH THE CORRECTNESS AND COMPLETENESS OF BOOKS OF ACCOUNTS. THIS SATISFACTION WAS SINE QUA NON BEFORE REJECTING THE BOOKS. THEREFORE, THE GIVEN FACTUAL MATRIX DOES NOT INSPIRE US TO SUS TAIN THE STAND OF LD. AO IN REJECTING THE ASSESSEES BOOKS OF ACCOUNTS. 9.7 SO FAR AS THE VERACITY OF STATEMENT RECORDED U/ S 133A IS CONCERNED, WE FIND THAT THE SAME TO BE CONTRADICTORY IN NATURE SINCE THE MACHINE-IN- CHARGE OF PLANT-I MADE A BALD STATEMENT THAT THE YI ELD COULD BE IN THE RANGE OF 80% TO 90% WHEREAS MACHINE-IN-CHARGE OF PL AN-II SUBMITTED THAT THE YIELD COULD BE 90% WHEREAS DIRECTOR (TECHN ICAL) SUBMITTED THAT THERE COULD BE WASTAGE OF 12% TO 15% AND THERE WAS INSIGNIFICANT DIFFERENCE BETWEEN THE YIELD OF TWO PLANTS. THEREFO RE, NONE OF THE STATEMENTS, IN OUR OPINION, COULD BE TERMED AS RELI ABLE STATEMENT BUT GIVEN BY THE EMPLOYEES BASED ON THEIR OWN PERSONAL PERCEPTION. THE MANAGING DIRECTOR, ON THE OTHER HAND, SUBMITTED THA T YIELD COULD BE AROUND 83.44% WHICH IS CORROBORATED BY THE FINDING OF LD. AO THAT YIELD ON THE DATE OF SURVEY WAS 83% WHICH COULD NOT BE MA NIPULATED BY THE ASSESSEE. IN REPLY TO QUESTION NO. 11, SHRI RAMESH K. SHAH [MD] SUBMITTED THAT WASTAGE WAS GENERALLY IN THE RANGE O F 18-20%. IN REPLY TO QUESTION NO. 15, IT WAS SUBMITTED THAT RECORDS OF C ONSUMPTION AND M/S BEST PAPER MILLS PVT. LTD. ASSESSMENT YEARS : 2007-08 TO 2013-14 29 PRODUCTION WERE DULY MAINTAINED AND ACCOUNTED FOR I N THE BOOKS OF ACCOUNTS. IN REPLY TO QUESTION NO. 19, THE COMPOSIT E YIELD DURING THE FINANCIAL YEAR 2013-14 WAS SUBMITTED TO BE 83.44%. FURTHER, IN REPLY TO QUESTION NO.20, THE SAID FACT WAS REITERATED AND AT THE SAME TIME, IT WAS SUBMITTED THAT TO BUY PEACE OF MIND, THE YIELD IS B EING DECLARED AS 85% FROM AYS 2011-12 TO TILL DATE, WHICH HAS LED LD. AO TO PROCEED WITH THE ADDITIONS IN THE HANDS OF THE ASSESSEE. HOWEVER, LD . AO, WHILE ESTIMATING THE YIELD, HAS DISREGARDED THE SAME ALSO AND ADOPTED AN ARBITRARY YIELD OF 87%. NO EVIDENCE, WHATSOEVER, HA S BEEN BROUGHT ON RECORD TO ESTABLISH AS TO HOW THE YIELD WAS SUPPRES SED BY THE ASSESSEE AND HOW THE CORRECT YIELD WAS 87%. THE SAID ESTIMAT ES, IN OUR OPINION, WERE ARBITRARY AND WITHOUT ANY SOUND BASIS. THE SAI D ESTIMATION, AS RIGHTLY NOTED OUT BY LD. FIRST APPELLATE AUTHORITY, WAS NOTHING MORE THAN AN AVERAGE OF 85% AND 90%, AS SUBMITTED BY THE EMPL OYEES IN THEIR STATEMENTS. 9.8 AS AGAINST LD. AOS ESTIMATION, THE ASSESSEE PL ACED ON RECORD EXPERT OPINION IN THE SHAPE OF REPORTS OF GOVT. AGE NCIES VIZ. CENTRAL PULP & RESEARCH UNIT (CPPRI) & SHRIRAM INSTITUTE OF INDU STRIAL RESEARCH (SRI) WHO STUDIED THE MANUFACTURING PROCESS AND SCI ENTIFICALLY ESTIMATED THE ASSESSEES YIELD IN MANUFACTURING PROCESS. THE SAME WAS COMPLETELY BEEN DISREGARDED AND LD. AO HAS NOT BROU GHT ON RECORD ANY EXPERT OPINION TO COUNTER THE SAME WHICH IS CONTRAR Y TO CBDT INSTRUCTION NO.5/2011 [F.NO.225/61/2011-IT(A-11) DATED 30/03/20 11 WHICH REQUIRE LD. AO TO SEEK TECHNICAL OPINION OF EXPERTS AND BRI NG ON RECORD TECHNICAL EVIDENCES IN CASES INVOLVING COMPLEX ISSUE OF TECHN ICAL NATURE. THIS REQUIREMENT HAS ALSO BEEN HIGHLIGHTED BY HONBLE SU PREME COURT IN CIT M/S BEST PAPER MILLS PVT. LTD. ASSESSMENT YEARS : 2007-08 TO 2013-14 30 V/S. BHARTI CELLULAR LTD. [330 ITR 239] WHEREIN THE HONBLE COURT EMPHASIZED ON THE NEED TO RELY UPON THE OPINION FRO M TECHNICAL EXPERTS IN CASES INVOLVING COMPLEX TECHNICAL MATTERS SO THA T APPELLATE FORUMS ARE ABLE TO DECIDE THE LEGAL ISSUES BASED ON THE FA CTUAL FOUNDATION OF A CASE. 9.9 IT IS SETTLED LAW THAT STATEMENTS RECORDED DURI NG SURVEY PROCEEDINGS WOULD HAVE NO EVIDENTIARY VALUE UNLESS CORROBORATED WITH CIRCUMSTANTIAL EVIDENCES OR COGENT MATERIAL TO SUBSTANTIATE THE SA ME. THE HONBLE MADRAS HIGH COURT IN SIMILAR FACTUAL MATRIX IN CIT V/S S.KHADER KHAN [300 ITR 157] AFTER CONSIDERING THE DECISIONS OF HONBLE SUPREME COURT RENDERED IN PULLANGODE RUBBER PRODUCE CO. LTD. V/S STATE OF KER ALA [91 ITR 18] & HONBLE KERALA HIGH COURT IN PAUL MATTHEWS AND SONS V/S CIT [263 ITR 101] CULLED OUT FOLLOWING PRINCIPLE AS TO STATEMENT MADE DURING SURVEY OPERATIONS U/S 133A: - FROM THE FOREGOING DISCUSSION, THE FOLLOWING PRINCI PLES CAN BE CULLED OUT: (I) AN ADMISSION IS AN EXTREMELY IMPORTANT PIECE OF EVI DENCE BUT IT CANNOT BE SAID THAT IT IS CONCLUSIVE AND IT IS OPEN TO THE PE RSON WHO MADE THE ADMISSION TO SHOW THAT IT IS INCORRECT AND THAT THE ASSESSEE SHOULD BE GIVEN A PROPER OPPORTUNITY TO SHOW THAT THE BOOKS OF ACCOUNT DO NO T CORRECTLY DISCLOSE THE CORRECT STATE OF FACTS, VIDE DECISION OF THE APEX C OURT IN PULKNGODE RUBBER PRODUCE CO. LTD. V. STATE OF KERALA [1973] 91 ITR 1 8 ; (II) IN CONTRADISTINCTION TO THE POWER UNDER SECTION 133 A, SECTION 132(4) OF THE INCOME-TAX ACT ENABLES THE AUTHORISED OFFICER TO EX AMINE A PERSON ON OATH AND ANY STATEMENT MADE BY SUCH PERSON DURING SUCH E XAMINATION CAN ALSO BE USED IN EVIDENCE UNDER THE INCOME-TAX ACT. ON TH E OTHER HAND, WHATEVER STATEMENT IS RECORDED UNDER SECTION 133A OF THE INC OME-TAX ACT IS NOT GIVEN ANY EVIDENTIARY VALUE OBVIOUSLY FOR THE REASON THAT THE OFFICER IS NOT AUTHORISED TO ADMINISTER OATH AND TO TAKE ANY SWORN STATEMENT WHICH ALONE HAS EVIDENTIARY VALUE AS CONTEMPLATED UNDER LAW, VI DE PAUL MATHEWS AND SONS V. CIT [2003] 263 ITR 101 (KER.); (III) THE EXPRESSION 'SUCH OTHER MATERIALS OR INFORMATION AS ARE AVAILABLE WITH THE ASSESSING OFFICER' CONTAINED IN SECTION 158BB OF TH E INCOME-TAX ACT, 1961, WOULD INCLUDE THE MATERIALS GATHERED DURING THE SUR VEY OPERATION UNDER SECTION 133A, VIDE CIT V. G. K. SENNIAPPAN [2006] 2 84 ITR 220 (MAD.) ; M/S BEST PAPER MILLS PVT. LTD. ASSESSMENT YEARS : 2007-08 TO 2013-14 31 (IV) THE MATERIAL OR INFORMATION FOUND IN THE COURSE OF SURVEY PROCEEDING COULD NOT BE A BASIS FOR MAKING ANY ADDITION IN THE BLOCK ASSESSMENT, VIDE DECISION OF THIS COURT IN T. C (A) NO. 2620 OF 2006 (BETWEEN CIT V. S. AJIT KUMAR [2008] 300 ITR 152 (MAD.); (IV) FINALLY, THE WORD 'MAY' USED IN SECTION 133A( 3)(III) OF THE ACT, VIZ., 'RECORD THE STATEMENT OF ANY PERSON WHICH MAY BE USEFUL FOR, OR RELEVANT TO, ANY PROCEEDING UNDER THIS ACT', AS ALREADY EXTRACTED AB OVE, MAKES IT CLEAR THAT THE MATERIALS COLLECTED AND THE STATEMENT RECORDED DURING THE SURVEY UNDER SECTION 133A ARE NOT CONCLUSIVE PIECE OF EVIDENCE B Y ITSELF. FOR ALL THESE REASONS, PARTICULARLY, WHEN THE COMMI SSIONER AND THE TRIBUNAL FOLLOWED THE CIRCULAR OF THE CENTRAL BOARD OF DIREC T TAXES DATED MARCH 10, 2003, EXTRACTED ABOVE, FOR ARRIVING AT THE CONCLUSION THA T THE MATERIALS COLLECTED AND THE STATEMENT, OBTAINED UNDER SECTION 133A WOULD NOT AU TOMATICALLY BIND UPON THE ASSESSES WE DO NOT SEE ANY REASON TO INTERFERE WITH THE ORDER OF THE TRIBUNAL. THIS CITED DECISION HAS ALREADY BEEN CONFIRMED BY H ONBLE SUPREME COURT BY WAY OF DISMISSAL OF REVENUES APPEAL REPOR TED AT 352 ITR 480. APPLYING THE AFORESAID PRINCIPAL TO THE FACTS OF TH E PRESENT CASE, WE FIND THAT ADDITIONS HAVE PRIMARILY BEEN MADE BY LD. AO O N THE BASIS OF STATEMENTS RECORDED DURING SURVEY PROCEEDINGS WITHO UT BRINGING ON RECORD ANY CIRCUMSTANTIAL EVIDENCES OR COGENT MATER IAL TO SUBSTANTIATE THE ADDITIONS AND THEREFORE, THE SAME COULD NOT BE SUSTAINED UNDER LAW. THE CBDT COMM. NO. 286/2/2003-IT(INV.) DATED 10/03/ 2003 & COMM. NO.286/98/2013 IT (INV.II) DATED 18/12/2014 ALSO RE INFORCES THE VIEW THAT CONFESSIONS, IF NOT BASED ON CREDIBLE EVIDENCES, WO ULD SERVE NO USEFUL PURPOSE. FURTHER, IT IS TRITE LAW THAT ADDITIONS CO ULD NOT BE MADE MERELY ON THE BASIS OF CERTAIN PRESUMPTIONS, CONJECTURES O R SURMISES. IT IS PERTINENT TO NOTE THAT, DESPITE THREE REMAND PROCEE DINGS, LD. AO IS UNABLE TO PLACE ON RECORD ANY INCRIMINATING MATERIA L AS FOUND DURING SURVEY OPERATIONS WHICH WOULD SUGGEST SUPPRESSION O F YIELD BY THE ASSESSEE. M/S BEST PAPER MILLS PVT. LTD. ASSESSMENT YEARS : 2007-08 TO 2013-14 32 9.10 THE LD. AO HAS COMPARED THE ASSESSEES YIELD W ITH OTHER ENTITIES WITHOUT ELABORATING THE TECHNOLOGY BEING USED BY TH OSE CONCERNS AND THE CONTENTS / QUALITY OF RAW MATERIAL ETC. PROCURE D BY THOSE FIRMS. NO CONCLUSIONS, IN OUR OPINION, COULD BE DERIVED MEREL Y ON THE BASIS OF BALD COMPARISON. 9.11 THE ASSESSEE HAS ALSO PLACED ON RECORD THE YIE LD PERCENTAGE ACHIEVED DURING MANUFACTURING PROCESS IN EARLIER AS WELL AS SUCCEEDING YEARS, WHICH COULD BE TABULATED IN THE FOLLOWING MA NNER: - AY YIELD % 2004-05 80.481 2005-06 81.091 2006-07 80.057 2007-08 80.389 2008-09 81.395 2009-10 81.627 2010-11 80.627 2011-12 80.406 2012-13 81.191 2013-14 82.683 2014-15 83.672 2015-16 84.458 2016-17 84.602 2017-18 84.864 2018-19 86.822 UPON PERUSAL, WE FIND THAT THE ASSESSEE WAS REFLECT ING YIELD IN THE RANGE OF 80% TO 81% FROM AYS 2004-05 TO 2011-12. THEREAFT ER, THE YIELD HAS SHOWN IMPROVEMENT WHICH STOOD EXPLAINED BY THE FACT THAT THERE WERE ADDITIONS IN THE PLANT & MACHINERY FROM 01/04/2010 ONWARDS WHICH FURTHER CORROBORATES ASSESSEES STAND. 10. KEEPING IN VIEW THE TOTALITY OF FACTS AND CIRCU MSTANCES, WE ARE OF THE CONSIDERED OPINION THAT LD. CIT(A) WAS JUSTIFIE D IN DELETING THE QUANTUM ADDITIONS AS MADE BY LD. AO ON ACCOUNT OF ALLEGED SUPPRESSION OF YIELD. BY CONFIRMING THE SAME, WE DISMISS THE APPEAL. M/S BEST PAPER MILLS PVT. LTD. ASSESSMENT YEARS : 2007-08 TO 2013-14 33 REVENUES APPEAL FOR AY 2007-08 TO 2010-11 & 2012-1 3 TO 2013-14 11. IDENTICAL GROUNDS HAVE BEEN RAISED BY THE REVEN UE IN THESE AYS. THE IMPUGNED ORDER IS COMMON ORDER FOR ALL THE YEAR S. FOLLOWING ITS FINDING IN AY 2011-12, LD. FIRST APPELLATE AUTHORIT Y HAS DELETED ADDITIONS IN OTHER AYS. THEREFORE, OUR FINDINGS, OBSERVATIONS AND CONCLUSIONS AS MADE FOR AY 2011-12, WOULD MUTATIS MUTANDIS APPLY TO ALL THESE YEARS. RESULTANTLY, THE REVENUES APPEALS STANDS DISMISSED . ASSESSEES CROSS-APPEALS : AYS 2007-08 TO 2010-11 12.1 THE ASSESSEES APPEAL FOR 2007-08 TO 2010-11 A RE IDENTICAL WORDED AND CONTEST THE VALIDITY OF REASSESSMENT PRO CEEDINGS INITIATED BY LD. AO U/S 147 ON THE BASIS OF AY 2011-12. THE LD. CIT(A) HAS CONFIRMED THE VALIDITY OF REASSESSMENT PROCEEDINGS BY OBSERVING THAT LD. AO HAS SPECIFIC INFORMATION OF SUSPECTED PURCHASES IN HIS POSSESSION AND THERE WAS PRIMA-FACIE TANGIBLE MATERIAL ON RECORD AT THE TIME OF ISSUING NOTICE U/S 148. AGGRIEVED, THE ASSESSEE IS IN FURTHER APPEAL BEFORE US WITH THE PLEA THAT REASSESSMENT PROCEEDIN GS WERE NOT IN ACCORDANCE WITH LAW AND HENCE, DESERVES TO BE QUASH ED IN TOTO . 12.2 SINCE, WE HAVE ALREADY DISMISSED REVENUES APP EAL ON MERITS FOR ALL THE YEARS, DELVING INTO THE LEGALITY OF THE SAM E AS URGED BY THE ASSESSEE WOULD BECOME MERELY ACADEMIC IN NATURE AND THEREFORE, WE REFRAIN FROM DEALING THE SAME. RESULTANTLY, THE ASS ESSEES APPEAL FOR ALL THE YEARS STAND DISMISSED AS INFRUCTUOUS. ASSESSEES CROSS-OBJECTIONS : AYS 2008-09 TO 2013-1 4 13. THE ASSESSEES CROSS-OBJECTIONS IN ALL THE YEAR S ARE IDENTICAL WORDED AND MERELY SUPPORT THE FINDINGS OF LD. FIRST APPELLATE AUTHORITY IN THE IMPUGNED ORDER. SINCE WE HAVE CONFIRMED THE STA ND IN THE IMPUGNED M/S BEST PAPER MILLS PVT. LTD. ASSESSMENT YEARS : 2007-08 TO 2013-14 34 ORDER, NO SPECIFIC ADJUDICATION OF THE SAME WOULD B E REQUIRED. THE DISMISSAL OF REVENUES APPEAL MAKES THESE CROSS-OBJ ECTIONS INFRUCTUOUS. CONCLUSION 14. THE REVENUES APPEALS STAND DISMISSED. THE ASSE SSEES CROSS- APPEALS AS WELL AS CROSS-OBJECTIONS STANDS DISMISSE D, BEING INFRUCTUOUS. ORDER PRONOUNCED IN THE OPEN COURT ON 19 TH JUNE, 2019. SD/- SD/- (C.N. PRASAD) (MANOJ KUMAR AGGARWAL) / JUDICIAL MEMBER / ACCOUNTANT MEMBER MUMBAI; DATED : 19/06/2019 SR.PS, JAISY VARGHESE &'()*+'* / COPY OF THE ORDER FORWARDED TO : 1. !# / THE APPELLANT 2. $!# / THE RESPONDENT 3. + ( ) / THE CIT(A) 4. + / CIT CONCERNED 5. ,- & . , . , / DR, ITAT, MUMBAI 6. -/01 / GUARD FILE / BY ORDER, / (DY./ASSTT.REGISTRAR) , / ITAT, MUMBAI.