The ITO, Ward-4, Navsari V. M/s. Thakorbhai & Co., Navsari

ITA 917/AHD/2012

• Counselvise Citation: [2016] 133 COUNSELVISE.COM (IT) 1875 (ITAT-AHMEDABAD)
• Duration Of Justice: 3 year(s) 11 month(s) 11 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 07-04-2016
• Appeal Filed By: Department
• Order Result: Allowed
• Bench Allotted: A
• Next Hearing Date: 28-03-2016
• Assessment Year: 2009-2010
• Appeal Filed On: 26-04-2012
• Result in Favour of: Revenue
• Court: TRIBUNAL
• Department Lawyers: DINESH SINGH
• Assessee Lawyers: K N BHATT
• Keywords: Bogus purchase; Business expenditure; Opportunity of being heard
• Section: 40A(3); 143(3)

Judgement Text

, IN THE INCOME TAX APPELLATE TRIBUNAL A BENCH, AHMEDABAD BEFORE SHRI SHAILENDRA K. YADAV, JUDICIAL MEMBER AND SHRI MANISH BORAD, ACCOUNTANT MEMBER ./ ITA NO. 917/AHD/2012 / ASSESSMENT YEAR: 2009-10 INCOME TAX OFFICER, WARD-4, NAVSARI VS. M/S. THAKORBHAI & CO., 1, MARKET YARD, OPP. RAILWAY STATION ROAD, AMALSAD, TAL. GANDEVI, DIST. NAVSARI PAN : AABFT 4392 F ./ ITA NO. 918/AHD/2012 / ASSESSMENT YEAR: 2009-10 INCOME TAX OFFICER, WARD-4, NAVSARI VS. M/S. YOGESHKUMAR & CO., 1, MARKET YARD, OPP. RAILWAY STATION ROAD, AMALSAD, TAL. GANDEVI, DIST. NAVSARI PAN : AAAFY 5592 P / (APPELLANT) / (RESPONDENT) REVENUE BY : SHRI DINESH SINGH, SR. DR. ASSESSEE BY : SHRI K.N. BHATT, AR !'#$ / DATE OF HEARING : 28/03/2016 / DATE OF PRONOUNCEMENT: 07/04/2016 / O R D E R PER MANISH BORAD, ACCOUNTANT MEMBER: THESE TWO APPEALS ARE DIRECTED AT THE INSTANCE OF R EVENUE AGAINST SEPARATE ORDERS OF THE LD. CIT(A), VALSAD, DATED 30 .01.2012 IN THE CASE OF M/S. THAKORBHAI & CO. AND M/S. YOGESHKUMAR & CO., A MALSAD, NAVSARI FOR ASSESSMENT YEAR 2009-10. ASSESSMENT U/S 143(3) OF THE INCOME-TAX ACT, 1961 (HEREIN AFTER REFERRED TO AS THE ACT) FOR ASSE SSMENT YEAR 2009-10 WAS FRAMED ON 21.12.2011 BY INCOME-TAX OFFICER, WARD 4, NAVSARI IN BOTH THE ITA NOS. 917 & 918/AHD/2012 ITO VS. (1)THAKORBHAI & CO AND (2)YOGESH KUMAR & CO. FOR AY: 2009-10 2 CASES. AS THE ISSUES INVOLVED ARE SIMILAR, WE ARE TAKING THESE APPEALS TOGETHER FOR THE SAKE OF CONVENIENCE. 2. WE WILL TAKE UP ITA NO.918/AHD/2012 AS THE LEAD CASE AND THE DECISION TAKEN IN THIS APPEAL WILL BE APPLIED TO IT A NO.917/AHD/2012 ALSO. ITA NO.918/AHD/2012 IN THE CASE OF ASSESSEE M/S. YOGESHKUMAR & CO. 3. IN THIS APPEAL, REVENUE HAS RAISED FOLLOWING GRO UNDS:- 1. ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CA SE AND IN LAW, THE LD. CIT(A) ERRED IN DELETING THE ADDITION OF RS.53,74,49 4/- MADE BY THE ASSESSING OFFICER IN RESPECT OF BOGUS PURCHASES AND NON-BUSINESS EXPENDITURES. 2. ON THE FACTS AND CIRCUMSTANCES OF THE CASE AND IN LAW, THE LEARNED CIT(A) OUGHT TO HAVE UPHELD THE ORDER OF THE A.O. 3. IT IS, THEREFORE, PRAYED TO SET ASIDE THE ORDER OF THE CIT(A) AND RESTORED THE ORDER PASSED BY THE A.O. 4. THE APPELLANT CRAVES LEAVE TO ADD, ALTER OR AMEN D ANY GROUND OF APPEAL. 4. BRIEFLY STATED FACTS, AS CULLED OUT FROM THE REC ORDS, ARE THAT THE ASSESSEE IS A PARTNERSHIP FIRM ENGAGED IN THE BUSIN ESS OF COMMISSION AGENT FOR SALE AND PURCHASE OF FRUITS (CHICKOO). DURING THE COURSE OF ASSESSMENT PROCEEDINGS, ON VERIFICATION OF BOOKS OF ACCOUNTS, IT WAS NOTED THAT THE ASSESSEE HAS MADE MAXIMUM PURCHASES IN CAS H THROUGH SELF PURCHASE MEMOS, WHEREIN NAMES AND ADDRESSES OF THE PARTIES ARE NOT WRITTEN. THE LD. ASSESSING OFFICER ALSO OBSERVED T HAT THE ASSESSEE WAS SHOWING PURCHASE AND SALE OF FRUITS IN ITS AUDITED FINANCIAL STATEMENTS AND NO SPECIFIC INCOME FROM COMMISSION WAS APPEARING IN THE PROFIT & LOSS ACCOUNT. HOWEVER, INCOME IN THE NAME OF ADMINISTRA TION CHARGES WAS SHOWN IN THE PROFIT & LOSS ACCOUNT. A SHOW-CAUSE N OTICE DATED 09.12.2011 WAS SERVED UPON THE ASSESSEE ON 10.12.2011 BY THE A SSESSING OFFICER WHICH IS REPRODUCED HEREIN BELOW:- ITA NOS. 917 & 918/AHD/2012 ITO VS. (1)THAKORBHAI & CO AND (2)YOGESH KUMAR & CO. FOR AY: 2009-10 3 PLEASE REFER TO THIS OFFICE LETTER OF EVEN UMBER D ATED 21.11.2011 ON THE ABOVE SUBJECT. 2. IN THE ABOVE REFERRED LETTER, YOU WERE REQUESTE D TO PRODUCE THE DETAILS OF IDENTITY/POSTAL ADDRESS OF PARTIES FROM YOU HAVE PU RCHASED CHICKOO TO VERIFY DETAILS OF GOODS I.E. QUANTITY & QUALITY OF GOODS & TOTAL VALUE. BUT, YOU HAVE NOT GIVEN IDENTITY PROOF OF THE PARTIES. PURCHASE B ILLS FOR VERIFICATION OF QUANTITY, QUALITY AND VALUE OF THE GOODS HAVE ALSO NOT PRODUCED. 3. AS PER WRITTEN SUBMISSION DATED 25.11.2011 DURI NG THE FY 2008-09 FOR AY 2009-10 YOU HAVE DEALT IN CHICKOO, AN AGRICULTURE PRODUCT. DETAILS OF CASH PURCHASES ARE AS UNDER: CASH PURCHASE AS PER LETTER DT. 25.11.2011 RS.98,6 2,028/- CREDIT PURCHASE RS.68,15,415/- ON VERIFICATION OF THE BOOKS OF ACCOUNTS, IT IS FOU ND THAT OUT OF TOTAL CREDIT PURCHASE OF RS.68,15,415/-, YOU HAVE MADE PAYMENT O F RS.28,84,240/- BY CHEQUE / DD AND PAYMENT OF RS.30,44,214/- SHOWN OUT STANDING AS CREDITOR ON 31.03.2009. TOTAL CREDIT PURCHASE AS SHOWN BY YOU RS.68,15,41 5/- LESS : PAYMENT MADE BY CHEQUE / DD 28,84,240/- CURRENT YEAR CREDITOR OUTSTANDING AS ON 31.03.2009 30,44,214 RS.59,28,454/- PAYMENT MADE BY CASH IN FY 2008-09 AGAINST CREDIT PURCHASE RS.8,86,961/- 4. ON VERIFICATION OF THE ABOVE, IT IS FOUND DURING THE FY 2008-09, FOR AY 2009-10, YOU HAVE MADE TOTAL CASH PURCHASE AS FOLLO WS TOTAL CASH PURCHASE AS PER LETTER DT. 25.11.2011 R S.98,62,028/- TOTAL CASH PAYMENT MADE AGAINST CREDIT PURCHASE RS. 8,86,961/- ---------------- TOTAL CASH PURCHASE RS.1,07,48,989/- =========== 5. THEREFORE, YOU ARE ASKED TO SHOW CAUSE AS TO WH Y 50% I.E. RS.53,74,494/- OF TOTAL CASH PURCHASE OF RS.1,07,48,989/- SHOULD N OT BE DISALLOWED AS BOGUS AND NON VERIFIABLE PURCHASE AND ADDED BACK TO YOUR TOTAL INCOME. 5. APPELLANT IN ITS REPLY DATED 16.12.2011 TO THE A BOVE REFERRED SHOW- CAUSE NOTICE SUBMITTED THAT THE ASSESSEE IS BASICAL LY A COMMISSION AGENT, BUT ITA NOS. 917 & 918/AHD/2012 ITO VS. (1)THAKORBHAI & CO AND (2)YOGESH KUMAR & CO. FOR AY: 2009-10 4 DUE TO RESTRICTION UNDER THE STATE LAWS IT HAS NOT SHOWN THE INCOME IN THE NAME OF COMMISSION AND THE SAME HAS BEEN INCORPORAT ED UNDER THE HEAD ADMINISTRATIVE CHARGES SHOWN IN THE PROFIT & LOSS ACCOUNT. THE ASSESSEE ALSO SUBMITTED THAT IN THE AUDITED TRADING & PROFIT & LOSS ACCOUNT, THE PURCHASE AND SALES ARE SHOWN AT EQUAL FIGURES WHICH TOO PROVES THAT THE ASSESSEE IS A COMMISSION AGENT AND AS FAR AS THE TR ANSACTIONS IN CASH ARE CONCERNED, THE SAME BEING ENTERED INTO WITH THE FAR MERS IN REGARD TO AGRICULTURAL PRODUCE PURCHASED. HOWEVER, THE LD. A SSESSING OFFICER WAS NOT CONVINCED WITH THE REPLY OF THE ASSESSEE AND HE , RELYING ON THE DECISION OF VIJAY PROTEINS LTD VS. ACIT, 55 TTJ (AHD) 76, FR AMED ASSESSMENT BY ADDING 50% OF TOTAL CASH PURCHASE OF RS.1,07,48,989 /- WHICH ARRIVES AT A FIGURE OF RS.53,74,494/- AND SAME WAS ADDED TO THE RETURNED INCOME OF THE ASSESSEE AND ACCORDINGLY INCOME WAS ASSESSED AT RS. 56,22,504/-. 6. AGGRIEVED THE ASSESSEE WENT IN APPEAL BEFORE THE LD. CIT(A) AGAINST THE IMPUGNED ADDITION OF RS.53,74,494/- TOWARDS THE ADDITION ON ACCOUNT OF BOGUS PURCHASES AND ALSO AGAINST THE ACTION OF THE ASSESSING OFFICER IN MAKING ADDITION WITHOUT REJECTING THE BOOKS RESULTS OF THE ASSESSEE. THE LD. CIT(A) OBSERVED FOLLOWING WHILE DELETING THE ADDITI ON FOR BOGUS PURCHASES OF RS.53,74,494/-:- I HAVE CONSIDERED THE OBSERVATION OF THE AO IN THE ASSESSMENT ORDER AS WELL AS THE CONTENTION RAISED BY THE AR OF THE APPELLANT IN THE WRITTEN SUBMISSION. THE AO WHILE FARMING THE ISSUE SEEMS TO HAVE DIVERTED HIMSELF AND ROUTED THROUGH A PATH WHEREBY HE HIMSELF HAS CO NTRADICTED HIS FINDINGS. HE HAS IGNORED THE VERY FACT THAT THE APPELLANT IS DEALING WITH THE BUSINESS OF PERISHABLE AGRICULTURE PRODUCE (CHIKOO) AND SIMPLY D ISREGARDED THE DETAILS, QUANTITATIVE RECORDS, BOOKS OF ACCOUNTS AND SAMPLE INVOICES FURNISHED BEFORE HIM. THE AR OF THE APPELLANT HAS VERY RIGHTLY ADVANCED HI S ARGUMENTS RAISING COUPLE OF QUESTIONS EMPHASIZING THE FACT THAT AS SU CH THE PURCHASE OR SALES DOES NOT HAVE ANY IMPACT ON HIS TOTAL INCOME AS BOT H ARE THE IDENTICAL FIGURES. ONE CANNOT EXPECT AN APPELLANT TO KEEP THE IDENTITY RECORDS OF THE FARMERS AS THE PRIORITY FOR THAT MATTER FOR THE APPELLANT IS T HE BUSINESS AND IF AT ALL THE SAME IS DOUBTED BY THE AO HE IS SUPPOSED TO PROBE IN TO THE MATTER FIND OUT ITA NOS. 917 & 918/AHD/2012 ITO VS. (1)THAKORBHAI & CO AND (2)YOGESH KUMAR & CO. FOR AY: 2009-10 5 THE DEFECTS AND THEN TO ASK THE APPELLANT TO PROVE THE GENUINENESS OF HIS FINDINGS. IN CASE OF M/S VIJAY PROTEINS LTD THE AO H AS THOROUGHLY PROBED THE MATTER AND DRAWN A CONCLUSION. SINCE IN THIS CA SE AS THE AO DIDNT ATTEMPT TO DISCHARGE HIS ONUS AND RELIED UPON THE D ECISION WHICH IS NOT RELEVANT TO THE CASE OF THE APPELLANT IGNORING THE CIRCULAR OF THE CBDT, I FEEL THAT HE IS NOT JUSTIFIED AND THEREFORE THE ADDITION IS DELETED. 7. FURTHER, THE LD. CIT(A), WHILE ALLOWING THE GROU ND OF THE ASSESSEE THAT THE LD. ASSESSING OFFICER ERRED IN LAW AND ON FACTS IN MAKING ADDITION WITHOUT REJECTING THE BOOK RESULTS, OBSERVED AS UND ER:- 6.3 I HAVE CONSIDERED THE OBSERVATION OF THE AO IN THE ASSESSMENT ORDER AS WELL AS THE CONTENTION RAISED BY THE AR OF THE APPEL LANT IN THE WRITTEN SUBMISSION. THE AR OF THE APPELLANT IS JUSTIFIED I N RAISING THE CONTENTION THAT WHEN A HUGE JUNK OF PURCHASES IS TREATED AS BO GUS AND RELIED UPON THE DECISION IN WHICH THERE IS A CATEGORICAL OBSERVATIO N IN RESPECT OF THE APPLICABILITY OF PROVISIONS OF SECTION 145(2) OF TH E ACT. I FOUND AO TO BE NOT JUSTIFIED IN MAKING AN ADDITION WITHOUT REJECTING T HE BOOK RESULTS. THE APPELLANT IS SUCCEEDED IN THE SECOND GROUND OF APPE AL. 8. AGGRIEVED THE REVENUE IS NOW IN APPEAL. THE SOL ITARY GRIEVANCE IN ALL THE FOUR GROUNDS OF APPEAL ARE RELATING TO THE ACTI ON OF THE LD. CIT(A) IN DELETING THE ADDITION OF RS.53,74,494/- MADE BY THE LD. ASSESSING OFFICER IN RESPECT OF BOGUS PURCHASES AND NON-BUSINESS EXPENDI TURE. THE LD. DEPARTMENTAL REPRESENTATIVE SUBMITTED THAT DURING T HE COURSE OF ASSESSMENT PROCEEDINGS, THE ASSESSEE FAILED TO PROV E THAT IT IS A COMMISSION AGENT, BECAUSE NO DETAILS OF THE PRINCIPLE WERE FUR NISHED NEITHER BEFORE THE LD. ASSESSING OFFICER NOR BEFORE THE LD. CIT(A). L EARNED DEPARTMENTAL REPRESENTATIVE ALSO SUBMITTED THAT ONUS IN RELATION TO PROVING THE GENUINENESS OF EXPENDITURES MADE IN CASH LIES ON TH E ASSESSEE AND THE ASSESSEE HAS COMPLETELY FAILED ON THIS PART TO PUT FORTH IN MATERIAL EVIDENCE PROVING THAT THE ASSESSEE-FIRM IS NOT A TRADER BUT A COMMISSION AGENT. 9. ON THE OTHER HAND LD. AUTHORIZED REPRESENTATIVE SUBMITTED THAT THE ASSESSEE IS BASICALLY A COMMISSION AGENT, DEALING W ITH FRUITS WHICH ARE HIGHLY PERISHABLE IN NATURE AND THEY ARE SUPPOSED T O BE DISPOSED OFF DAILY ITA NOS. 917 & 918/AHD/2012 ITO VS. (1)THAKORBHAI & CO AND (2)YOGESH KUMAR & CO. FOR AY: 2009-10 6 BASIS TO AVOID RISK OF TOTAL LOSS. THE LD. AUTHORI ZED REPRESENTATIVE ALSO SUBMITTED THAT ALL THE AUDITED BOOKS OF ACCOUNTS WE RE FURNISHED BEFORE THE LD. ASSESSING OFFICER DURING THE COURSE OF ASSESSME NT PROCEEDINGS AND DAILY INWARD AND OUTWARD REGISTER WERE SHOWN TO ESTABLISH THE GENUINENESS OF SALES AND PURCHASES AND NO DEFECT WAS POINTED OUT B Y THE LD. ASSESSING OFFICER. LD. AUTHORIZED REPRESENTATIVE ALSO SUBMIT TED THAT THE PROVISIONS OF SECTION 40A(3) OF THE ACT IN REGARD TO CASH PAYM ENT EXCEEDING THE LIMITS MENTIONED THEREIN ARE NOT APPLICABLE TO THE APPELLA NT DUE TO THE APPLICATION OF RULE 6(DD)(E) OF THE ACT WHICH RELATES TO PAYMEN T MADE FOR PURCHASE OF AGRICULTURAL PRODUCE AND NO DISALLOWANCE UNDER SUB- SECTION (3) OF SECTION 40A OF THE ACT IS CALLED FOR SUCH PAYMENT, EVEN IF PAYM ENT EXCEEDING RS.20,000/- ARE MADE OTHERWISE THAN BY AN PAYEE CHE QUE OR DRAFT. THE LD. AUTHORIZED REPRESENTATIVE FURTHER SUBMITTED THAT TH E DECISION OF M/S. VIJAY PROTEINS LTD (SUPRA), AS RELIED UPON BY THE LD. ASS ESSING OFFICER WHILE MAKING ADDITION, IS SIMPLY NOT APPLICABLE TO THE CA SE OF THE APPELLANT, BECAUSE IN THE CASE OF VIJAY PROTEINS LTD (SUPRA), THE ASSESSEE WAS DEALING IN OIL CAKES, WHICH WAS SIGNIFICANT RAW MATERIAL FOR T HE PRODUCTION PURPOSES AND WHEREAS IN THE CASE OF THE APPELLANT, BUSINESS IS OF COMMISSION AGENT FOR PURCHASE AND SALE OF AGRICULTURAL PRODUCT NAMEL Y FRUITS (CHICKOO). FURTHER, IN CASE OF VIJAY PROTEINS LTD (SUPRA), THE LD. ASSESSING OFFICER BROUGHT OUT ADEQUATE EVIDENCE ON RECORD WHICH INDIC ATES THAT THE TRANSACTIONS SHOWN BY THE ASSESSEE ARE NOT GENUINE AND THE APPELLANT WAS ASKED TO PRODUCE THE SUPPLIERS OF OIL CAKES, BUT NO NE OF THEM WERE PRODUCED; AND ALSO THE BANK ACCOUNT THROUGH WHICH T HE PAYMENTS TO THE SUPPLIERS WERE ROTATED WAS AN ACCOMMODATIVE BANK AC COUNT FOR CARRYING OUT FICTITIOUS TRANSACTIONS. W HEREAS, IN THE INSTANT CASE OF THE APPELLANT, THE LD. ASSESSING OFFICER SIMPLY IGNORED THE DETAILS, E VIDENCES, BOOKS OF ACCOUNTS, QUANTITATIVE DETAILS, DAILY INWARD/OUTWAR D QUANTITY OF PERISHABLE FRUITS (CHICKOO), THE SAMPLE COPY OF PURCHASES AND SALES BILLS AND ALL THE ITA NOS. 917 & 918/AHD/2012 ITO VS. (1)THAKORBHAI & CO AND (2)YOGESH KUMAR & CO. FOR AY: 2009-10 7 PURCHASE BOOKS PRODUCED BEFORE HIM DURING THE COURS E OF ASSESSMENT PROCEEDINGS AND WITHOUT MAKING ANY INQUIRY HE SIMPL Y CAME TO THE CONCLUSION THAT THE CASH PURCHASES ARE BOGUS TO THE EXTENT OF RS.50%. FURTHER, THE LD. ASSESSING OFFICER HAS COMPLETELY I GNORED THE CIRCULAR NO.452 OF CBDT DATED 17.03.1986 RELATED TO KACHHA ARAHTIAS, I.E., COMMISSION AGENTS, WHEREIN TURNOVER FOR THE PURPOSE S OF SECTION 44AB IS CALCULATED ON THE BASIS OF COMMISSION INCOME EARNED BY THE ASSESSEE AND NOT THE SALE TRANSACTIONS ENTERED INTO BY THE COMMI SSION AGENT. 10. WE HAVE HEARD THE RIVAL CONTENTIONS AND PERUSED THE MATERIAL ON RECORD. THE SOLITARY GRIEVANCE OF THE REVENUE IS A GAINST THE ACTION OF THE LD. CIT(A) IN DELETING THE ADDITION OF RS.53,74,494/- M ADE BY THE LD. ASSESSING OFFICER IN RESPECT OF BOGUS PURCHASES AND NON-BUSIN ESS EXPENDITURES. ON GOING THROUGH THE RECORD AND SUBMISSIONS MADE BEFOR E US, WE ARE ABLE TO UNDERSTAND THAT THE ASSESSEE IS DEALING IN AGRICULT URAL PRODUCT, SPECIFICALLY FRUITS (CHICKOO) AND PROVISIONS OF RULE 6DD(E) OF I .T. RULES APPLY TO THE ASSESSEE. FROM THE PERUSAL OF AUDITED FINANCIAL STA TEMENTS, WE OBSERVE THAT THE ASSESSEE HAS SHOWN PURCHASE AND SALE, BOTH AT T HE SAME FIGURE OF RS.1,80,07,848/- AND ADMINISTRATIVE CHARGES OF RS.1 3,63,768/- . SIMILAR AMOUNT OF PURCHASE AND SALE GIVES THE INDICATION TH AT THE ASSESSEE IS CARRYING ON BUSINESS AS A COMMISSION AGENT AND THIS FACT IS EVEN ACCEPTED BY THE ASSESSING OFFICER ALSO. NO DEFECT HAS BEEN PUT FORTH BY THE LD. ASSESSING OFFICER IN THE FINANCIAL STATEMENTS AND STOCK RECOR DS FURNISHED BY THE ASSESSEE DURING THE COURSE OF ASSESSMENT PROCEEDING S AND THE BOOKS OF ACCOUNTS HAVE NOT BEEN REJECTED U/S 145(3) OF THE A CT. FURTHER, THE DECISION OF M/S. VIJAY PROTEINS LIMITED (SUPRA) IS ALSO NOT APPLICABLE TO THE CASE OF ASSESSEE AS THE FACTS AND CIRCUMSTANCES IN M/S. VIJ AY PROTEINS LIMITED (SUPRA) ARE DIFFERENT FROM THE FACTS DISCUSSED IN T HE CASE OF THE ASSESSEE. THE ONLY REASON FOR MAKING THE ADDITION WAS THAT TH E ASSESSEE WAS UNABLE TO PROVE THE GENUINENESS OF PURCHASES; WHEREAS IN RESP ECT OF SALES, THE SAME ITA NOS. 917 & 918/AHD/2012 ITO VS. (1)THAKORBHAI & CO AND (2)YOGESH KUMAR & CO. FOR AY: 2009-10 8 HAS BEEN ACCEPTED BY THE REVENUE. IF THE SALES ARE ACCEPTED, THEN CERTAINLY THERE IS A CORRESPONDING PURCHASES AND THE DISALLOW ANCE OF PURCHASES FOR RS.53,74,494/- CERTAINLY GIVES IMPOSSIBLE RESULTS I N THE FORM OF GROSS PROFIT, BECAUSE IF THE ADMINISTRATIVE CHARGES OF RS.13,63,7 68/- ARE ADDED TO THE IMPUGNED BOGUS PURCHASES OF RS.53,74,494/-, THE RES ULTANT GROSS PROFIT WOULD BE RS.67,38,262/- WHICH IN PERCENTAGE TO SALE S WILL ARRIVE AT 37.42%, WHICH IS CERTAINLY IMPOSSIBLE FOR THE TYPE OF BUSIN ESS CARRIED ON BY THE ASSESSEE. 11. FROM GOING THROUGH ABOVE DISCUSSION AND ALSO GO ING THROUGH THE ORDERS OF THE LOWER AUTHORITIES, WE ARE ABLE TO UND ERSTAND THAT LD. ASSESSING OFFICER WHILE FRAMING THE ASSESSMENT ORDER WAS HAVI NG TWO PARALLEL VIEWS. TAKING FIRST VIEW, HE TREATED THE ASSESSEE AS A TRA DER OF FRUITS AND WENT AHEAD TO VERIFY THE PURCHASES AND SALES, AND FRAMED THE ASSESSMENT ORDER BY WAY OF DISALLOWING BOGUS PURCHASES AND ALSO RELI ED ON THE AUDITED FINANCIAL STATEMENTS OF THE ASSESSEE WHEREIN TURNOV ER OF PURCHASES AND SALES OF FRUITS WAS SHOWN AND THE LD. ASSESSING OFFICER, BEING UNABLE TO SATISFY HIMSELF WITH THE GENUINENESS OF THE PURCHASES, MADE ADDITION TOWARDS BOGUS PURCHASES. SECOND VIEW TAKEN BY THE LD. ASSE SSING OFFICER WAS BY WAY OF ACCEPTING THE ASSESSEES CONTENTION THAT HE IS A COMMISSION AGENT AND EVEN IN HIS ASSESSMENT ORDER HE HAS MENTIONED T HAT THE ASSESSEE IS A COMMISSION AGENT; BUT NEVERTHELESS HE NEVER TRUST U PON THE INCOME SHOWN BY THE ASSESSEE UNDER THE HEAD ADMINISTRATIVE CHAR GES AT RS.13,63,768/- EVEN WHEN THE ASSESSEE HAS SUBMITTED THAT THIS ACTU ALLY IS THE INCOME FROM COMMISSION AND ONLY THE NOMENCLATURE HAS BEEN CHANG ED. 12. WE FURTHER OBSERVE THAT IN THE AUDITED FINANCIA L STATEMENTS AT ANNEXURE-I TO FORM NO.3CD DATED 21.09.2009 WHEREIN CONSOLIDATED FINANCIAL FIGURES ARE TO BE MENTIONED BY THE TAX AU DITOR. IN THIS ANNEXURE- I, THERE IS A SPECIFIC COLUMN AT SR. NO.10 WHICH AS KS ABOUT THE COMMISSION RECEIVED BY THE ASSESSEE DURING THE YEAR AND TO OUR SURPRISE, THE AMOUNT ITA NOS. 917 & 918/AHD/2012 ITO VS. (1)THAKORBHAI & CO AND (2)YOGESH KUMAR & CO. FOR AY: 2009-10 9 SHOWN IN THE CURRENT YEAR AS WELL AS PRECEDING YEAR IS NIL. WE ALSO OBSERVE FROM THE AUDITED BALANCE-SHEET THAT THE INVENTORY A T RS.2,16,358.79 IS APPEARING UNDER THE HEAD APPLICATION OF FUNDS BUT THE SAME FIGURE DOES NOT FIND ANY PLACE IN THE AUDITED TRADING & PROFIT & LOSS ACCOUNT AND NO DETAILS ARE AVAILABLE ON RECORD TO SHOW AS TO WHAT IS THIS INVENTORY ABOUT, BECAUSE IF IT IS AN INVENTORY, THEN THE ASSESSEE IS HAVING REGULAR PURCHASE AND SALE TRANSACTIONS AND HE MAY BE TREATED AS TRAD ER. FURTHER, AT THE YEAR END, THERE IS AN AMOUNT OF RS.54,13,176.52 IS PAYAB LE TO FARMERS WHICH IS APPROXIMATELY 30% OF THE SALES AND IN THE BALANCE-S HEET UNDER ADVANCE AND DEPOSITS A SUM OF RS.39,15,975/- IS SHOWN AS A DVANCE TO M/S. THAKORBHAI & CO., AMALSAD, NAVSARI. THESE TYPES OF FINANCIAL TRANSACTIONS RAISE A QUESTION AS TO WHETHER THE ASSESSEE HAS ENT ERED INTO THESE TRANSACTIONS AS A TRADER OF AGRICULTURAL GOODS OR A S A COMMISSION AGENT. WE ARE, THEREFORE, OF THE VIEW THAT THERE ARE SERIES O F QUESTIONS WHICH REMAINED UNANSWERED IN THE ORDER OF THE LD. ASSESSING OFFICE R AND MORE SPECIFICALLY ABOUT THE DISTINCTION BETWEEN THE TYPE OF ACTIVITY OF WHICH THE ASSESSEE IS ACTUALLY ENGAGED INTO HAS NOT BEEN BROUGHT ON RECOR D WHICH NEEDS TO PROVE THAT WHETHER THE ASSESSEE IS A COMMISSION AGENT OR A TRADER OF AGRICULTURAL PRODUCTS. WE, THEREFORE, SET ASIDE THE MATTER TO T HE FILE OF THE LD. ASSESSING OFFICER TO EXAMINE VARIOUS ISSUES DISCUSSED ABOVE A ND PASS A FRESH ASSESSMENT ORDER AFTER GIVING PROPER OPPORTUNITY OF BEING HEARD TO THE ASSESSEE AND WHILE FRAMING FRESH ASSESSMENT ORDER, HE SHOULD BE CLEAR TO ASSESS AS TO WHETHER THE ASSESSEE IS A COMMISSION A GENT OR A TRADER AND THEN PROCEED FURTHER TO DEAL WITH THE RELATED ISSUES. AC CORDINGLY, THIS APPEAL OF THE REVENUE IS ALLOWED FOR STATISTICAL PURPOSES. ITA NO.917/AHD/2012 IN THE CASE OF ASSESSEE M/S. THAKORBHAI & CO. 13. IN THIS APPEAL, THE REVENUE HAS RAISED FOLLOWIN G GROUNDS:- 1. ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CA SE AND IN LAW, THE LD. CIT(A) ERRED IN DELETING THE ADDITION OF RS.38,51,61 2/- MADE BY THE ITA NOS. 917 & 918/AHD/2012 ITO VS. (1)THAKORBHAI & CO AND (2)YOGESH KUMAR & CO. FOR AY: 2009-10 10 ASSESSING OFFICER IN RESPECT OF BOGUS PURCHASES AND NON-BUSINESS EXPENDITURES. 2. ON THE FACTS AND CIRCUMSTANCES OF THE CASE AND IN LAW, THE LEARNED CIT(A) OUGHT TO HAVE UPHELD THE ORDER OF THE A.O. 3. IT IS, THEREFORE, PRAYED TO SET ASIDE THE ORDER OF THE CIT(A) AND RESTORED THE ORDER PASSED BY THE A.O. 4. THE APPELLANT CRAVES LEAVE TO ADD, ALTER OR AMEN D ANY GROUND OF APPEAL. 14. THE ISSUE RAISED BY THE REVENUE IN THIS APPEAL IS SIMILAR TO THE ISSUE RAISED BY REVENUE IN ITA NO.918/AHD/2012 IN THE CAS E OF M/S. YOGESHKUMAR & CO. FOR ASSESSMENT YEAR 2009-10 (SUPR A). THEREFORE, FOR THE DETAILED DISCUSSION MADE ABOVE IN THE CASE OF M/S. YOGESHKUMAR & CO. IN ITA NO.918/AHD/2012 (SUPRA), THIS APPEAL OF THE REV ENUE IS ALSO ALLOWED FOR STATISTICAL PURPOSES. 15. IN THE RESULT, BOTH THE APPEALS FILED BY THE RE VENUE ARE ALLOWED FOR STATISTICAL PURPOSES. ORDER PRONOUNCED IN THE COURT ON 7 TH APRIL, 2016 AT AHMEDABAD. SD/- SD/- (SHAILENDRA K. YADAV) JUDICIAL MEMBER (MANISH BORAD) ACCOUNTANT MEMBER AHMEDABAD; DATED 07/04/2016 **BT ''#()*)+# / COPY OF THE ORDER FORWARDED TO : 1. / THE APPELLANT 2. / THE RESPONDENT. 3. ! ' # / CONCERNED CIT 4. ' # ( ) / THE CIT(A) 5. &'( ! , ! , / DR, ITAT, AHMEDABAD 6. (- ./ / GUARD FILE . / BY ORDER, TRUE COPY / ( DY./ASSTT.REGISTRAR) , / ITAT, AHMEDABAD