The ACIT, Central Circle-1(1), Ahmedabad V. M/s. Pankaj Cotton Industries, Patan

ITA 858/AHD/2012

• Counselvise Citation: [2017] 127 COUNSELVISE.COM (IT) 8202 (ITAT-AHMEDABAD)
• Duration Of Justice: 5 year(s) 6 month(s) 9 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 27-10-2017
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: D
• Next Hearing Date: 25-07-2017
• Assessment Year: 2008-2009
• Appeal Filed On: 18-04-2012
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: V K SINGH
• Assessee Lawyers: M K PATEL
• Keywords: Bogus purchase; Unexplained cash credit; Additional evidence; Accommodation entries
• Section: 142(1); 133A; 131; 68

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL AHMEDABAD D BENCH BEFORE: SHRI PRAMOD KUMAR, ACCOUNTANT MEMBER AND SHR I S. S. GODARA , JUDICIAL MEMBER THE ACIT, CENTRAL CIRCLE1(1), AHMEDABAD (APPELLANT /RESPONDENT ) VS M/S. PANKAJ COTTON INDUSTRIES, KUKARANA ROAD, HARIJ, DIST. PATAN - 384240 PAN: AAHFP6992M (RESPONDENT /CROSS OBJECTOR ) M/S. PANKAJ COTTON INDUSTRIES, KUKARANA ROAD, HARIJ, DIST. PATAN - 384240 PAN: AAHFP6992M (APPELLANT) VS THE ACIT, CENTRAL CIRCLE1(1), AHMEDABAD (RESPONDENT) REVENUE BY : S H RI V.K. SINGH , SR. D . R. ASSESSEE BY: S H RI M.K. PATEL , A.R. DATE OF HEARING : 12 - 10 - 2 017 DATE OF PRONOUNCEMENT : 27 - 10 - 2 017 I T A NO . 858 & CO NO. 106 / A HD/20 12 A SSESSMENT YEAR 200 8 - 09 ITA NO. 467/AHD/2013 A SSESSMENT YEAR 2009 - 10 I.T.A 858 C.O.106 /AHD/2 012 & ITA 467/AHD/2013 A.Y. 08 - 09 & 09 - 10 PAGE NO ACIT VS. M/S. PANKAJ COTTON INDUSTRIES 2 / ORDER P ER : S.S. GODARA, JUDICIAL MEMBER : - THE INSTANT BATCH INVOLVES THREE CASES. FORMER ASSESSMENT YEAR HEREIN 20 08 - 09 CONTAINS REVENUE S APPEAL AND ASSESSEE S CROSS OBJECTION ITA 858 ALONG WITH CO NO. 106/AH D/2012 ARISING FROM THE CIT(A) - I , AHMEDABAD S ORDER DATED 29 - 02 - 2012 IN APP EAL NO. CIT(A) - I/CC.1(1)/141/2010 - 11 , PARTLY REVERSING ASSESSING OFFICER S ACTION DISALLOWING BOGUS PURCHASES FROM RS. 28819545/ - TO RS. 7204886/ - ONLY, DELETING ADMITTED UNDISCLOSED INCOME ADDITION OF RS. 5691610 / - AND PARTLY UPHOLDING SECTION 68 ADDITION OF UNEXPLAINED CASH CREDITS FROM RS. 3,23,85,600/ - ; RESPECTIVELY. LATTER ASSESSMENT YEAR 2009 - 10 INVOLVES ASSESSEE S APPEAL ITA 467/AHD/2013 EMANATING FROM THE VERY CIT(A) S ORDER DATED 24 - 12 - 2012 IN CASE NO. CI T(A) - I/CC.1(1)/140/2010 - 11, INTER ALIA DISALLOWING BOGUS PURCHASES OF RS. 25821773/ - IN CASE OF M/S VINAYAK TRADING, SIMILAR PURCHASES OF RS. 3041509/ - PERTAINING TO M/S DEVI IMPAX AS WELL AS UPHOLDING UNEXPLAINED DEPOSITS ADDITION OF RS. 26133035/ - , RESPE CTIVELY. RELEVANT PROCEEDINGS IN BOTH ASSESSMENT YEAR S ARE U/S 143(3 ) OF THE INCOME TAX ACT, 1961; IN SHORT THE ACT . HEARD BOTH SIDES. CASE FILES PERUSED . 2. WE ADVERT TO FORMER ASSESSMENT YEAR 2008 - 09 FIRST. IT IS EVIDENT THAT THE REVENUE S APPEA L ITA 858/AHD/2012 SEEKS TO REVIVE I.T.A 858 C.O.106 /AHD/2 012 & ITA 467/AHD/2013 A.Y. 08 - 09 & 09 - 10 PAGE NO ACIT VS. M/S. PANKAJ COTTON INDUSTRIES 3 ASSESSING OFFICER S ACTION DISALLOWING ALLEGED BOGUS PURCHASES OF RS. 28819545/ - IN ENTIRETY AS DELETED TO THE EXTENT TO RS. 21614659/ - IN LOWER APPELLATE PROCEEDINGS THEREBY CONFIRMING THE SAME TO THE TUNE OF RS. 7204886 / - @ 25% ONLY. BOTH THE LD. REPRESENTATIVES THEREAFTER INFORM US THAT THE CIT(A) HAS FURTHER DELETED ADMITTED UNDISCLOSED INCOME ADDITION OF RS. 5691610/ - ON ACCOUNT OF THE VERY PURCHASES BY APPLYING TELESCOPING METHOD AS HE HAD ALREADY CONFIRMED SINCE T HE ASSESSEE HAD ADMITTED TO DECLARE 20% OF THE TOTAL PURCHASES MADE IN CASE OF M/S VISHAL TRADERS AS ITS INCOME. WE COME TO ASSESSEE S CROSS OBJECTION TO NOTICE THAT ITS FORMER SUBSTANTIVE GROUND SEEKS TO DELETE THE REMAINING PURCHASES DISALLOWANCES TO TH E EXTENT OF RS. 7204886/ - ABOVE SAID IN ENTIRETY AS CONFIRMED TO THE TUNE OF 25% IN LOWER APPELLATE PROCEEDINGS. IT THEREAFTER PLEADS THAT THE CIT(A) HAS ERRED IN LAW AND ON FACTS IN CONFIRMING UNEXPLAINED CASH DEPOSITS ADDITION FROM RS. 32385600/ - TO THE TUNE OF RS. 449304/ - ONLY . HE RECORDS A FINDING OF FACT THAT THE ASSESSEE HAS MADE THE IMPUGNED DEPOSITS AFTER GETTING ACCOMMODATION ENTRIES FROM M/S VISHAL TRADERS QUA ITS COTTON PURCHASES. 3. IT THUS EMERGES FROM A PERUSAL OF THE ABOVE RIVAL PLEADIN GS THAT THE MAIN ISSUE IN THIS FORMER ASSESSMENT YEAR 2008 - 09 IS THAT OF VALIDITY OF ASSESSEE S COTTON PURCHASES MADE FROM M/S VISHAL TRADERS TO THE TUNE OF RS. 2,84,58,054/ - . CASE FILE REVE ALS THAT THE INSTANT LIS EMANATED FROM A SEARCH ACTION DATED 01 - 09 - 2008 CARRIED OUT AT M/S EDIBLE OIL MILLS GROUP OF PATAN DISTRICT AND ITS GROUP I.T.A 858 C.O.106 /AHD/2 012 & ITA 467/AHD/2013 A.Y. 08 - 09 & 09 - 10 PAGE NO ACIT VS. M/S. PANKAJ COTTON INDUSTRIES 4 CONCERNS ON SUBSEQUENT DATES. ONE SHRI DHARMENDRA J. PANDIYA, PROPRIETOR OF M/S VISHAL TRADERS, VIRPUR DID NOT EXIST AND IT HAD BEEN ISSUING BOGUS/ADJUSTMENT ENTRIES FOR THE PAST TWO YEARS IN RESPECT OF OIL SEEDS, OIL CAKES AND OTHER PURCHASE ITEMS. ALL THE SAID MATERIAL RESULTED IN A SURVEY ACTION BEING CONDUCTED IN ASSESSEE S CASE U/S 133A OF THE A CT. THE ASSESSEE S PARTNER SHRI PANKAJ SONI GOT RECORDED HIS STATEMENT IN COURSE OF THE SAID SURVEY ADMITTING TO HAVE TAKEN ADJUSTMENT BILLS IN RESPECT OF PURCHASES FROM M/S VISHAL TRADERS. HE FURTHER UNDERTOOK TO DECLARE THE 20% OF THE ABOVE PURCHASES HAS ASSESSEE S UNDISCLOSED INCOME TO THE TUNE OF RS. 5691610/ - . THERE IS NO DISPUTE THAT THE SAID PURCHASES READ A FIGURE OF RS. 28458054/ - IN CASE OF M/S VISHAL TRADERS IN THE IMPUGNED ASSESSMENT YEAR. THIS MADE THE ASSESSING OFFICER TO SEEK NECESSARY PURCHASE DETAILS DURING SCRUTINY. THE ASSESSEE FAILED TO PROVE THE SAME DE SPITE AVAILING VARIOUS OPPORTUNITIES. THE ASSESSING OFFICER THEREAFTER DISALLOWED ALL THE ABOVE PURCHASES AS WELL AS ADDED ABOVE DISCLOSED AMOUNT OF RS. 5691610/ - AS WELL AS CASH DEPOSITS MADE IN ASSESSEE S BANK ACCOUNTS READING A FIGURE OF RS. 32385600/ - AS UNEXPLAINED U/S. 68 OF THE ACT. 4. THE ASSESSEE PREFERRED APPEAL. IT CHOSE TO FILE ADDITIONAL EVIDENCE/SUBMISSION S IN LOWER APPELLATE PROCEEDINGS. THE CIT(A) SOUGHT REMAND REPORT. THE ASSESSING OFFICER SUBMITTED THE SAME ON 14 - 02 - 2012 REITERATING HIS ABOVE BOGUS PURCHASES AND DISALLOWANCES/ADDITION S (SU P R A). THE CIT(A) THEREAFTER OBSERVED THAT IT WAS AT THE BEST A CASE OF RAW MATERIAL PURCHASES UNREGISTERED I.T.A 858 C.O.106 /AHD/2 012 & ITA 467/AHD/2013 A.Y. 08 - 09 & 09 - 10 PAGE NO ACIT VS. M/S. PANKAJ COTTON INDUSTRIES 5 DEALERS TO SAVE VAT ETC. HE FINDS IN PAGE 15 AS PER AUDIT REPORT SCHEDULED AS ANNEXSURE - 2 THAT THE ASSESSING OFFICER HAD NOT DOUBTED SALES AND CLOSING STOCK QUANTITY NEITHER IN ASSESSMENT NOR REMAND PROCEEDINGS. THE CIT(A) THEN RESTRICTS THE IMPUGNED DISALLOWANCE OF RS. 28819545/ - TO THE TUNE OF 25% THEREOF COMING TO 7204886/ - ONLY. HE THE REAFTER APPLIES TELESCOPING METHOD QUA ADMITTED UNDISCLOSED INCOME OF RS. 5691610/ - (SUPRA) TO CONCLUDE THAT THE ABOVE BOGUS PURCHASES DISALLOWANCE @ 25% WOULD COVER THIS LATTER FIGURE AS WELL. THE CIT(A) LASTLY REVERSES ASSESSING OFFICER S FINDINGS IN P ART MAKING SECTION 68 ADDITION OF RS. 32385600/ - TO THE TUNE OF RS. 449304/ - ONLY AS UNDER: IN GROUND NO.5 THE APPELLAN T HAS DISPUTED THE ADDITION OF RS.3,23,85,600 BEING UNEXPLAINED CASH CREDIT. PERUSAL OF PARA 4 OF THE ASSESSMENT ORDER SHOWS THAT THE ASSESSING OFFICER MADE VERIFICATION OF BANK ACCOUNTS AND ADDED BACK ALL CASH DEPOSITS APPEARING IN TWO ACCOUNTS WITHOUT GIVING SEPARATELY THE AMOUNTS AND DATES OF DEPOSITS. THE ADDITION WAS MADE AS UNDER: '4.1 VIDE NOTICE U/S. 142(1) OF THE I.T. ACT DATED 16.8.2010, THE ASSESSEE WAS ASKED TO EXPLAIN THE CASH DEPOSITS IN THE BANK ACCOUNTS. ON VERIFICATION OF THE COPY OF BANK ACCOUNTS SUBMITTED BY THE ASSESSEE, IT IS NOTICED THAT THE ASSESSEE HAS MADE CASH DEPOSITS IN THE BANK ACCOUNTS AS UNDER : NAME OF BANK BANK A/C. NO. CASH DEPOSITS HARIJ NAGRILL SAHAKARI BANK 4833 RS.2,39,73,600 LTD. DEN A BANK CCA/C.NO.156 RS. 84,12,000 TOTAL ... RS.3,23,85,600 4.2 VIDE SUBMISSION DATED 20.10.2010, THE A SSESSEE FURNISHED COPY OF BANK ST ATEMENTS. HOWEVER, THE ASSESSEE DID NOT FURNISH EXPLANATION OF SOURCE OF CASH DEPOSITS INTO THESE BANK ACCOUNTS. THE ASSESSEE ALSO DID NOT FURNISH CASH BOOK. THEREFORE, A SUMMONS U/S. 131 OF THE LT. ACT WAS ISSUED ON 1.11.2010 AND THE ASSESSEE WAS ASKED TO ATTEND THE OFFICE., ON 11.11.2010 ALONGWITH EXPLANATION OF SOURCE OF ALL CASH DEPOSITS IN THE BANK ACCOUNT ALONGWITH DOCUMENTARY EVIDENCES. THE ASSESSEE WAS ALSO REQUIRED TO PRODUCE CASH BOOK FOR I.T.A 858 C.O.106 /AHD/2 012 & ITA 467/AHD/2013 A.Y. 08 - 09 & 09 - 10 PAGE NO ACIT VS. M/S. PANKAJ COTTON INDUSTRIES 6 VERIFICATION. HOWEVER, THE ASSESSEE FAILED TO ATTEND THIS O FFICE TILL DATE AND FURNISH THE EXPLANATION OF SOURCE OF CASH DEPOSITS AND ALSO FA ILED TO PRODUCE THE CASH BOOK. 13. DURING THE COURSE OF APPELLATE PROCEEDINGS IT WAS PLEADED THAT CASH DEPOSITS WERE OUT OF CASH AVAILABLE IN THE CASH BOOK. SOFT COPY OF THE CASH BOOK WAS IMPOUNDED BY THE DEPARTMENT DURING SURVEY AND HARD COPY WAS PRODUCED DURING APPELLATE PROCEEDINGS STATING THAT THE TWO CASH BOOKS SHOW THAT ENOUGH CASH WAS AVAILABLE WITH THE APPELLANT FOR MAKING CASH DEPOSITS. THE ASSESSING OFFICER WAS ASKE D BY MY PREDECESSOR THROUGH HIS LETTER DATED 3.6.2011 TO VERIFY THE CONTENTION OF THE APPELLANT. THE ASSESSING OFFICER THROUGH HIS REPORT DATED 13.2.2012 FOUND DIFFERENCE OF RS.5,03,026 AND OF RS.55,246 IN CASH WITHDRAWAL ENTRIES AND DIFFERENCE OF RS.1,08, 968 IN CASH DEPOSIT ENTRIES ON COMPARING THE HARD COPY CASH BOOK PRODUCED LATER WITH THE SOFT COPY CASH BOOK IMPOUNDED BY THE DEPARTMENT. REPORT OF THE ASSESSING OFFICER HAS BEEN REPRODUCED IN PARA 8 ABOVE. THE REPORT WAS MADE AVAILABLE TO THE APPELLANT AN D IT WAS STATED THAT THE DISCREPANCY IS MINOR AND THAT NETTING OF THE DIFFERENCE IN DEPOSITS AND WITHDRAWALS SHOULD BE ALLOWED. THE DISCREPANCY ON NETTING COMES TO RS. 4,49,304. CASH WITHDRAWAL DISCREPANCY AS PER A.O. RS.5,03,026 CASH WITHDRAWAL DISCREPAN CY AS PER A.O. RS. 55,246 RS. 5,58,272 LESS: CASH DEPOSIT DISCREPANCY AS PER A.O. RS. 1,08,968/ - RS.4,49,304 14. IT MAY BE MENTIONED HERE THAT ANALYSIS OF BANK ACCOUNTS O F THE APPELLANT WHICH INCLUDES HARIJ BANK ACCOUNT SHOWS THAT SAME AMOUNTS ISSUED TO VISHAL TRADERS THROUGH CHEQUES STAND DEPOSITED IN CASH AT TIMES ON THE SAME DATE WHEN THE CHEQUE IS ISSUED TO VISHAL TRADERS, AND ANALYSIS OF VISHAL TRADERS BANK ACCOUNT SHOWS THAT IMMEDIATELY ON DEPOSIT OF CHEQUE CASH HAS BEEN WITHDRAWN OF THE S AME AMOUNT. THIS INDICATES THAT CASH IS RECEIVED BACK FROM VISHAL TRADERS AND DEPOSITED IN THE BANK ACCOUNT OF THE APPELLANT. IN OTHER WORDS IT IS APPELLANT'S OWN MONEY (CHEQUES ISSUED, FOR PURCHASES MADE THROUGH ACCOMMODATION BILLS) WHICH COMES BACK TO HI M IN CASH AND IS DEPOSITED IN THE BANK ACCOUNT. IN MY VIEW CASH DEPOSITS ADDITION OUT OF ADDITION OF RS.3,23,85,600 TO THE EXTENT OF RS.2,88,19,545 ON ACCOUNT OF PURCHASES FROM VISHAL TRADERS GETS TELESCOPED IN THE ADDITION OF RS.2,88,19,545 ON ACCOUNT OF PURCHASES FROM VISHAL TRADERS 25% OF WHICH HAS BEEN UPHELD IN THIS APPEAL. THIS LEAVES AMOUNT OF RS.35,66,055 (RS.3,23,85,600 - RS.2,88,19,545) THE APPELLANT'S CONTENTION IS THAT CASH WAS DEPOSITED IN BANK ACCOUNTS BECAUSE IT WAS AVAILABLE AS PER CASH BOOK S MAINTAINED BY THE APPELLANT. THE ELECTRONIC CASH BOOK IMPOUNDED AT THE TIME OF SURVEY AT THE PREMISES OF THE APPELLANT AND THE HARD COPY CASH BOOK HAVE BEEN COMPARED BY THE ASSESSING OFFICER AT THE REMAND REPORT STAGE, AND THE DIFFERENCE ON NETTING OF DI SCREPANCY IN CASH BOOKS COMES TO RS.4,49,304 ONLY. IT MAY BE REMEMBERED THAT IN THE REMAND REPORT THE ASSESSING OFFICER HAS NOT POINTED OUT ANY MAJOR CASH DEPOSIT DISCREPANCY THEREFORE THE ADDITION ON ACCOUNT OF UNEXPLAINED CASH CREDITS AFTER NETTING IS UP HELD TO THE EXTENT OF RS.4,49,304. THE REMAINING ADDITION OF RS. 35,66,055 (RS.3,23,85,600 (CASH DEPOSIT ADDITION MADE BY A.O.) - RS.2,88,19,545 (BOGUS PURCHASES THROUGH ACCOMMODATION BILLS FROM VISHAL TRADERS TELESCOPED IN THE I.T.A 858 C.O.106 /AHD/2 012 & ITA 467/AHD/2013 A.Y. 08 - 09 & 09 - 10 PAGE NO ACIT VS. M/S. PANKAJ COTTON INDUSTRIES 7 ADDITION OF RS.3,23,85,600) IS DIRECTED TO BE DELETED BECAUSE THE ENTIRE ADDITION ON ACCOUNT OF UNEXPLAINED CASH DEPOSITS HAS BEEN MADE WITHOUT INFORMING THE SPECIFIC DATES AND AMOUNTS OF CASH DEPOSITS BY THE ASSESSING OFFICER AND IN THE REMAND REPORT THE ASSESSING OFFICER HAS NOT OB JECTED TO THE CONTENTION OF THE APPELLANT THAT CASH WAS DEPOSITED ACCORDING TO THE CASH AVAILABLE AS PER CASH BOOK AND ON VERIFICATION OF THE CASH BOOKS SUBMITTED BY THE APPELLANT DISCREPANCY OF RS.4,49,304 IS ONLY FOUND. THUS ADDITION OF RS.4,49,304 IS UP HELD AS UNEXPLAINED CASH DEPOSITED IN BANK ACCOUNTS OUT OF ADDITION OF RS.3,23,85,600 MADE IN THE ASSESSMENT ORDER. THE BALANCE I S DIRECTED TO BE DELETED. 5. THIS LEAVES BOTH THE PARTIES AGGRIEVED TO THE EXTENT OF THEIR GRIEVANCE PLEADED IN THEIR ABOVE AVERRED GROUNDS. 6. WE HAVE GIVEN OUR THOUGHTFUL CONSIDERATION TO RIVAL SUBMISSIONS. LEARNED COUNSEL REPRESENTING ASSESSEE FAILS TO REBUT BOTH THE LOWER AUTHORITIES FINDINGS THAT IT HAD OBTAINED BOGUS PURCHASE ENTRY FROM M/S VISHAL TRADERS EXISTING ON PAPER ON LY. HIS FIRST PLEA IS THAT THE ASSESSEE HAD PAID FOR ITS PURCHASES BY WAY OF ACCOUNT PAYEE CHEQUES. WE HOWEVER ARE OF THE VIEW THAT THE SAID LEDGERS OR MODE OF PAYMENTS HARDLY HAVE ANY GENUINENESS ELEMENTS IN VIEW OF THE ABOVE OVERWHELMING ELEMENT INDI CATING THE ASSESSEE TO HAVE OBTAINED BOGUS PURCHASES ENTRIES. WE THEREFORE FIND NO REASON TO UPSET BOTH THE LOWER AUTHORITIES FINDINGS TREATING THE ABOVE PURCHASES AS BOGUS IN PRINCIPLE. 7. BOTH THE LEARNED REPRE SENTATIVES NEXT ARGUMENT IS QUA THE QUA NTUM OF DISALLOWANCE. LEARNED DEPARTMENTAL REPRESENTATIVE ARGUES VERY STRONGLY THAT WE OUGHT TO DISALLOW THE ENTIRE PURCHASES IN TUNE WITH ASSESSING OFFICER S ACTION AS PER HON BLE JURISDICTIONAL HIGH COURT S JUDGMENT IN ACIT VS. PAWANRAJ B. BOKADIA TAX APPEAL NO. I.T.A 858 C.O.106 /AHD/2 012 & ITA 467/AHD/2013 A.Y. 08 - 09 & 09 - 10 PAGE NO ACIT VS. M/S. PANKAJ COTTON INDUSTRIES 8 2345 OF 2009 DECIDED ON 27 - 09 - 2011. THE ASSESSEE ON THE OTHER HAND PLEADS THAT THE VERY ISSUE IN CASE OF M/S VISHAL TRADERS ITSELF (SUPRA) STANDS ADJUDICATED QUA THE IMPUGNED ASSESSMENT YEAR IN CASE OF M/S GUJARAT AMBUZA LTD. VS. ACIT IN IT(SS) A 124/AHD/2012 DECIDED ON 17 - 04 - 2013 WHEREIN A CO - ORDINATE BENCH HAS DISALLOWED IDENTICAL PURCHASES TO THE EXTENT OF 5% ONLY. HON BLE JURISDICTIONAL HIGH COURT JUDGMENT IN TAX APPEAL 840 OF 2013 DECIDED ON 10 - 02 - 2014 IS STATED TO HAVE UPHELD THE SAME. THE ASSESSEE THEREFORE SUBMITS THAT WE OUGHT TO DISALLOW ONLY 5% OF THE ABOVE PURCHASES. 8. HEARD RIVAL SUBMISSIONS. WE HAVE EXAMINED RIVAL GRIEVANCE(S) AT LENGTH. WE DO NOT FIND MERIT IN EITHER PARTIES SUBMISSIONS. THE CIT(A) HAD ADMITTEDLY UPHELD THE IMPUGNED BOGUS PURCHASES DISALLOWANCES TO THE EXTENT OF 25%. THE REVENUE S PLEA DOES NOT DESERVE TO BE ACCEPTED SINCE THE ASSESSING OFFICER HAS NOT FOUND ANY INFIRMITY IN ASSESSEE S STOCK AS WELL ITS RAW MATERIAL PURCHASE, CONSUMED AND SOLD AS STATED IN ITS AUDIT REPORT. COUPLED WITH THIS, WE FIND THAT HON BLE JURISDICTIONAL HIGH COURT S RECENT JUDGMEN T IN CASE OF M/S. N.K. INDUSTRIES VS. DCIT DATED 20 - 06 - 2016 IN TAX APPEAL 240 OF 2013 AND RELATED CASES UPHOLDS A CO - ORDINATE BENCH S DECISION THEREIN DI SALLOWING 25% OF PURCHASES AMOUNT IN CASE OF BOGUS BILLS. HON BLE APEX COURT HAS DECLINED SPECIAL LEAVE PETITION , SLP(C ) CC NO. 963/2017 ON 16 - 01 - 2017 AS WELL . WE THEREFORE FIND NO MERIT IN REVENUE S FORMER GRIEVANCE SEEKING TO REVIVE ENTIRE PURCHASES DISALLOWANCE OF RS. 28819545/ - . ITS CORRESPONDING FIRST SUBSTANTIVE IS THEREFORE REJECTED. SO IS THE OUTCOME OF ITS LATTER I.T.A 858 C.O.106 /AHD/2 012 & ITA 467/AHD/2013 A.Y. 08 - 09 & 09 - 10 PAGE NO ACIT VS. M/S. PANKAJ COTTON INDUSTRIES 9 SUBSTANTIVE GROUND REGARDING ADMITTED UNDISCLOSED INCOME OF RS. 5691610/ - AS ASSESSEE S AUTHORIZED PERSON S SURVEY STATEMENT UNDERT AKING TO DECLARING 20% OF THE VERY PURCHASES IS VERY WELL LESS THAN THE PURCHASES DISALLOWANCE @ 25% UPHELD IN THE INSTANT PROCEEDINGS. THE REVENUE S APPEAL ITA 858/AHD/2012 FAILS. 9. WE NOW ADVERT TO ASSESSEE S ARGUMENTS SEEKING TO REDUCE THE ABOVE PU RCHASES DISALLOWANCES FROM 25% TO 5% ONLY AS PER HON BLE JURISDICTIONAL HIGH COURT S DECISION IN GUJARAT AMBUZA EXPORTS LTD. A PERUSAL OF THE SAID CO - ORDINATE BENCH ORDER REVEALS THAT THERE WAS NO MATERIAL ON RECORD AS AGAINST THE CIT(A) S FINDINGS REPROD UCED HEREINABOVE THAT THE CONCERNED ASSESSEE HAD IN FACT PAID CHEQUES TO M/S VISHAL TRADERS WHO IN TURN WITHDREW CASH AMOUNTS TO BE DEPOSITED BACK IN PAYER S ACCOUNT. WE THEREFORE FOLLOW HON BLE JURISDICTIONAL HIGH COURT S DECISION IN N.K. INDUSTRIES TO CO NFIRM THE CIT(A) S ACTION UPHOLDING THE IMPUGNED BOGUS PURCHASES DISALLOWANCE TO THE EXTENT OF 25% ONLY. THE ASSESSEE S FIRST SUBSTANTIVE GROUND IN ITS CROSS OBJECTION IS THEREFORE REJECTED. 10. THIS LEAVES US WITH ASSESSEE S SECOND SUBSTANTIVE GROUND SE EKING TO DELETE SECTION 68 ADDITION OF RS. 4,49,304/ - AS UPHELD IN LOWER APPELLATE PROCEEDINGS THEREBY PARTLY REVERSING ASSESSING OFFICER S ACTION ADDING ENTIR E CASH DEPOSITS OF RS. 3,23,85,660/ - AS EXTRACTED IN PRECEDING PARAGRAPHS. IT HAS COME ON RECOR D THAT THE LD. CIT(A) HAS VERY WELL ESTABLISHED THE TRAIL BEHIND THE IMPUGNED CASH DEPOSITS TO BE EMANATING FROM CASH RECEIVED IN CASE OF M/S VISHAL I.T.A 858 C.O.106 /AHD/2 012 & ITA 467/AHD/2013 A.Y. 08 - 09 & 09 - 10 PAGE NO ACIT VS. M/S. PANKAJ COTTON INDUSTRIES 10 TRADERS. LEARNED COUNSEL REPRESENTING ASSESSEE FAILS TO REBUT THE SAID CLINCHING FINDINGS. WE THEREFORE FIND NO REASON TO AGREE WITH ASSESSEE S INSTANT LATTER SUBSTANTIVE GROUND AS WELL. ASSESSEE S CO 106/AHD/2012 IS ALSO DECLINED. 11. WE NOW COME TO LATTER ASSESSMENT YEAR 2009 - 10 INVOLVING ASSESSEE S APPEAL ITA 467/AHD/2013 SEEKING TO REVERSE BOTH THE LOWER AUTHORITIES ACTIONS DISALLOWING ENTIRE PURCHASES OF RS. 25821773/ - IN CASE OF M/S VINAYAK TRADING COMPANY AND RS. 3041,509/ - PERTAINING TO M/S DEVI IMPAX AS BOGUS FOLLOWED BY UNEXPLAINED CASH DEPOSITS OF RS. 26133035/ - ; RESPECTIVELY. BOTH THE LEAR NED REPRESENTATIVES FAIL TO REBUT THE FACT THAT THE INSTANT CASE ALSO INVOLVES IDENTICAL ISSUE INVOLVING BOGUS PURCHASES IN RESPECT OF THE ABOVE TWO PAYEES. WE THEREFORE ADOPT OUR REASONING HEREINABOVE IN PRECEDING ASSESSMENT YEAR TO DISALLOW THE IMPUGNED PURCHASES IN BOTH CASES TO THE TUNE OF 25% ONLY. THE ASSESSING OFFICER SHALL FRAME CONSEQUENTIAL COMPUTATION AS PER LAW. THESE TWO FORMER SUBSTANTIVE GROUNDS ARE TAKEN AS ACCEPTED FOR STATISTICAL PURPOSES. 12. COMING TO THIRD SUBSTANTIVE GROUND OF UNEX PLAINED CASH DEPOSITS OF RS. 26133035/ - ,WE FIND THAT THE CIT(A) HIMSELF EXAMINES BANK STATEMENT OF ASSESSEE VIS - - VIS THE ABOVE TWO PAYEES ENTITIES TO CONCLUDE THAT THE VERY AMOUNT PAID BY CHEQUE HAS COME BACK IN CASH FORM IN ITS ACCOUNTS. WE THEREFORE DI RECT THE ASSESSING OFFICER TO UNDERTAKING A DETAILED EXERCISE AS DONE BY THE CIT(A) IN PRECEDING ASSESSMENT YEAR TO DECIDE THE ISSUE ONCE AGAIN AS PER LAW. WE I.T.A 858 C.O.106 /AHD/2 012 & ITA 467/AHD/2013 A.Y. 08 - 09 & 09 - 10 PAGE NO ACIT VS. M/S. PANKAJ COTTON INDUSTRIES 11 MAKE IT CLEAR THAT THE CIT(A) S CRUCIAL FINDINGS IN PAGE 11 ESTABLISHING CRUCIAL NEXUS BETWEEN ASSESSEE AND ABOVE TWO PAYEES ENTITIES HAVE NOT BEEN CHALLENGED AT REVENUE S BEHEST. THE SAME HAVE ATTAINED FINALITY IN OTHER WORDS. WE THEREFORE DIRECT THE ASSESSING OFFICER TO TREAT WITHDRAWALS FROM THE ABOVE PAYEES ACCOUNTS AS SOURCE OF ASSESSEE S CAS H DEPOSITS. ANY SUM OVER AND ABOVE THE SAID WITHDRAWAL WOULD BE TREATED AS UNEXPLAINED U/S. 68 OF THE ACT. THE ASSESSEE S INSTANT THIRD SUBSTANTIVE GROUND AS WELL AS MAIN APPEAL ITA 467/AHD/2013 IS ACCEPTED FOR STATISTICAL PURPOSES 13. WE QUOTE OUR ABO VE DETAILED DISCUSSION TO DISMISS REVENUE S AND ASSESSEE S CROSS OBJECTION ITA 858 AND CO 106/AHD/2012 IN ASSESSMENT YEAR 2008 - 09. LATTER S APPEAL ITA 467/AHD/2013 IS ACCEPTED FOR STATISTICAL PURPOSES IN ASSESSMENT YEAR 2009 - 10. ORDER PR ONOUNCED IN THE OPEN C OURT ON 27 - 10 - 201 7 SD/ - SD/ - ( PRAMOD KUMAR ) ( S.S. GODARA ) ACCOUNTANT MEMBER JUDICIAL MEMBER AHMEDABAD : DATED 27 /10 /2017 / COPY OF ORDER FORWARDED TO: - 1. ASSESSEE 2. REVENUE 3. CONCERNED CIT 4. CIT (A) 5. DR, ITAT, AHMEDABAD 6. GUARD FILE. I.T.A 858 C.O.106 /AHD/2 012 & ITA 467/AHD/2013 A.Y. 08 - 09 & 09 - 10 PAGE NO ACIT VS. M/S. PANKAJ COTTON INDUSTRIES 12 BY ORDER/ , / ,