M/s Loil Continental Foods Ltd., Chandigarh V. Deputy Commissioner Of Income Tax, Ludhiana

ITA 98/CHANDI/2017

• Counselvise Citation: [2017] 128 COUNSELVISE.COM (IT) 5214 (ITAT-CHANDIGARH)
• Duration Of Justice: 3 month(s) 5 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 17-04-2017
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: Not Allotted
• Assessment Year: 2013-2014
• Appeal Filed On: 11-01-2017
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Keywords: Rejection of books of accounts; Sham transactions
• Section: 143(3); 133(6)

Judgement Text

I.T.A .NO.-98 & 99/CHD/2017 IN THE INCOME TAX APPELLATE TRIBUNAL DIVISION BENCH: CHANDIGARH BEFORE SH. BHAVNESH SAINI, JUDICIAL MEMBER AND MS. ANNAPURNA GUPTA, ACCOUNTANT MEMBER I.T.A .NO.-98/CHD/2017 (ASSESSMENT YEAR-2013-14) M/S. LOIL CONTINENTAL FOODS LTD., SCO-18-19, FIRST FLOOR, MADHYA MARG, SECTOR-9D, CHANDIGARH PAN-AAACL8520F ( APPELLANT) VS DCIT, CENTRAL CIRCLE-III, LUDHIANA. (RESPONDENT) I.T.A .NO.-99/CHD/2017 (ASSESSMENT YEAR-2013-14) M/S. LOIL HEALTH FOODS LTD., SCO-18-19, FIRST FLOOR, MADHYA MARG, SECTOR-9D, CHANDIGARH PAN-AAACL8432C ( APPELLANT) VS DCIT, CENTRAL CIRCLE-III, LUDHIANA. (RESPONDENT) ASSESSEE BY SH.SUDHIR SEHGAL REVENUE BY SH. RAVI SARNGAL, CIT DR, SH. AMIT PRATAP SINGH, DCIT, CC-III, LUDHIANA ORDER PER BHAVNESH SAINI, JUDICIAL MEMBER THIS ORDER SHALL DISPOSED OFF, BOTH THE ABOVE APPE ALS FILED BY DIFFERENT ASSESSEE ON COMMON GROUNDS. 2. LD. REPRESENTATIVES OF BOTH THE PARTIES MAINLY A RGUED IN THE CASE OF M/S LOIL CONTINENTAL FOODS LTD. IN ITA NO.98/CHD/2017 A ND HAD SUBMITTED THAT THE ISSUE IS SAME IN BOTH THE APPEALS, THEREFORE, ORDER IN THE CASE OF M/S LOIL CONTINENTAL FOODS LIMITED MAY BE FOLLOWED IN THE CA SE OF OTHER ASSESSEE IN ITA NO.99/CHD/2017 I.E. M/S LOIL HEALTH FOOD LIMITED. THEREFORE, FOR THE PURPOSES DATE OF HEARING 16.03.2017 DATE OF PRONOUNCEMENT 17.04.2017 PAGE 2 OF 20 I.T.A .NO.-98 & 99/CHD/2017 OF DISPOSAL OF BOTH THE APPEALS, WE PROCEED TO DECI DE THE APPEALS WITH THE CASE OF M/S LOIL CONTINENTAL FOOD LTD. ITA NO.98/CHANDI/2017 (M/S. LOIL CONTINENTAL FOODS LTD.) 3. THIS APPEAL BY THE ASSESSEE HAS BEEN DIRECTED AG AINST THE ORDER OF LD.CIT(A)-V, LUDHIANA DATED 28.12.2016 FOR A.Y. 201 3-14. 3.1. BRIEFLY THE FACTS OF THE CASE ARE THAT THE RET URN OF INCOME WAS FILED ON 31.03.2015 AT INCOME OF RS.35,220/-. THE CASE WAS SELECTED FOR SCRUTINY ASSESSMENT AND THE ASSESSEE PUT IN APPEARANCE BEFOR E THE AO THROUGH COUNSEL AND SUBMITTED REPLIES AND DETAILS WHICH WER E ASKED FOR FROM TIME TO TIME. 4. THE ASSESSEE COMPANY IS ENGAGED IN TRADING OF FO ODGRAINS ITEMS NAMELY PADDY AND RICE. DURING THE YEAR, THE ASSESSEE WAS THE LICENSED MEMBER APPOINTED BY NSEL TO DEAL IN PADDY AT NSEL PLATFORM . NSEL WAS A PLATFORM PROVIDED TO ENABLE BUYERS AND SELLERS TO TRANSACT O N SPOT AGAINST THE ACTUAL DELIVERY OF THE GOODS THROUGH THE LICENSED MEMBERS APPOINTED BY NSEL. IN THIS CASE, THE ASSESSEE WAS APPOINTED AS A LICENSED MEMB ER TO DEAL IN PADDY. FOR THIS PURPOSE, A SETTLEMENT ACCOUNT OF ASSESSEE IS M AINTAINED BY NSEL WITH A DESIGNATED BANK IN WHICH THE AMOUNT OF NET PROCEEDS ARE CREDITED TO SETTLEMENT ACCOUNT. IN THE CASE OF THE ASSESSEE SETTLEMENT AC COUNT WAS OPENED WITH HDFC BANK, FEROZE GANDHI MARKET, LUDHIANA AND AS PE R THE SETTLEMENT ACCOUNT, THE AMOUNT OF RS.NIL IS DUE TO THE ASSESSE E. 5. AS PER NSEL, AMOUNT OF RS.338.40 CRORE IS SHOWN AS RECOVERABLE FROM THE ASSESSEE COMPANY AS PER REPORT OF M/S SHARP AND TANNAN ASSOCIATES, 87 NARIMAN BHAWAN, 227 NARIMAN POINT, MUMBAI. THE SAI D REPORT IS ALSO PART OF PAGE 3 OF 20 I.T.A .NO.-98 & 99/CHD/2017 RECOVERY SUIT FILED IN SUIT NO.173 OF 2014 BEFORE T HE HONBLE MUMBAI HIGH COURT THOUGH BETWEEN OTHER PARTIES. THE SETTLEMENT ACCOU NT WOULD HAVE BEEN A REPRESENTATIVE FIGURE OF THE ACTUAL AMOUNT DUE FROM / TO THE NSEL MEMBER LICENSED HOLDER (I.E. IN THIS CASE ASSESSEE) ONLY I F REAL/ACTUAL PURCHASES/SALES HAD TAKEN PLACE AT NSEL PLATFORM. HOWEVER, THE FAC TS OF THE CASE WOULD BEAR THAT SHAM TRANSACTIONS OF PURCHASES/SALES WERE ALSO TAKING PLACE ON THE NSEL PLATFORM WITHOUT ACTUAL DELIVERY OF THE GOODS AND A CTUAL PAYMENT. 6. THE AO NOTED THAT THE TOTAL PURCHASES AS PER BOO KS OF ACCOUNTS OF ASSESSEE COMPANY (NSEL MEMBER) AS PER THEIR AUDITED REPORT IS RS.2206 CRORES. HOWEVER, AS PER THE FACTS STATED DURING TH E ASSESSMENT PROCEEDINGS, THE PURCHASES BY NSEL MEMBER I.E. THE ASSESSEE FROM M/S. LAKSHMI ENERGY & FOODS LTD. ONLY. THE TOTAL PURCHASES FROM M/S. LAK SHMI ENERGY & FOODS LTD. BY THE ASSESSEE IS RS.131 CRORES. THE ASSESSEE WAS ASKED TO EXPLAIN THE AFORESAID DIFFERENCE. THE ASSESSEE WAS ALSO ASKED TO EXPLAIN THE DISCREPANCIES IN THE SALES AND PURCHASES BETWEEN M/S LOIL HEALTH FOOD LTD. AND LOIL OVERSEAS FOOD LTD. ETC. THE DETAILS ARE NOTED AT PA GE 3 OF THE ASSESSMENT ORDER. 7. THE ASSESSEE SUBMITTED BEFORE THE AO THAT STATEM ENT OF STOCK SUMMARY HAS ALREADY BEEN FILED AT THE ASSESSMENT PROCEEDING S ALONGWITH COMPLETE DETAILS. THERE IS NO DISCREPANCIES AT ALL AS ASKED FOR BY THE AO. INFACT, ALL THE THREE CONCERNS OF THE ASSESSEE COMPANY WERE MEMBER OF NSEL FOR LIMITED PERIOD AND AT TIMES, ONE CONCERN USED THE MEMBERSHI P OF OTHER CONCERN FOR MAKING TRANSACTIONS WITH PARTIES AND WHICH FACT HAS ALREADY BEEN INDICATED IN THE STOCK STATEMENT OF OTHER CONCERNS, WHENEVER THE MEMBERSHIP OF OTHER PAGE 4 OF 20 I.T.A .NO.-98 & 99/CHD/2017 CONCERN HAS BEEN USED FOR MAKING TRANSACTIONS BY OT HER GROUP COMPANIES. IT WAS FURTHER CLARIFIED THAT THERE ARE NO PURCHASES/S ALES FROM NSEL AND NEITHER THERE IS ANY ACCOUNT OF SUCH TRANSACTIONS OF NSEL I N THE BOOKS OF ACCOUNTS OF THE ASSESSEE. INFACT THE SALES HAVE BEEN MADE TO T HE PARTIES AS PER DETAILS ALREADY FURNISHED AT THE ASSESSMENT STAGE AND HERE IN STOCK STATEMENT, BECAUSE OF USER OF NSEL PLATFORM BY OTHER GROUP CON CERNS, SUCH NAME HAS BEEN MENTIONED. IN THE LIST OF SALES, THERE ARE GO VERNMENT UNDERTAKING AS WELL. THUS, NO ADVERSE VIEW BE DRAWN AND COPIES OF ACCOUN T OF ALL FIVE PARTIES HAVE ALREADY BEEN FILED TO INDICATE THAT THERE ARE NO OU TSTANDING AS ON 31.02.2013. 8. THE AO CONSIDERING THE REPLY OF THE ASSESSEE, NO TED THAT COPIES OF THE ACCOUNTS OF THE AFORESAID PARTIES INTER SE I.E. NSEL WITH OTHER GROUP COMPANIES OF THE ASSESSEE COMPANY HAVE NOT BEEN FILED TO SHOW THE TRANSACTIONS AND PAYMENT INTER SE . THE ASSESSEE WAS, THEREFORE, ASKED TO FILE COPI ES OF THE ACCOUNTS OF ALL THE GROUP COMPANIES HAVING TRANSACT IONS WITH NSEL. THE AO NOTED THAT THE COPIES OF THE ACCOUNTS OF THE GROUP CONCERN HAVE NOT BEEN FILED. 9. THE AO AGAIN ASKED FOR THE EXPLANATION OF THE AS SESSEE. THE WRITTEN SUBMISSION OF THE ASSESSEE IS REPRODUCED IN THE ASS ESSMENT ORDER IN WHICH THE ASSESSEE BRIEFLY EXPLAINED THAT GROUP COMPANIES OF THE ASSESSEE WERE MEMBERS OF NSEL UPTO 31.03.2013 AND AT TIMES, THE M EMBERSHIP CARD OF ONE COMPANY WAS USED BY OTHER COMPANIES FOR MAKING THE TRANSACTIONS AT NSEL PLATFORM AND SUCH TRANSACTIONS WERE NOT MADE WITH N SEL BUT WITH OTHER PARTIES. THIS MODUS OPERANDI IS PERMITTED BY NSEL. ALL SALES ARE VERIFIABLE AN D ARE EVIDENT FROM THE CARDS USED BY ALL GROUP CONCERN CO MPANIES. THE NSEL CHARGES SOME PLATFORM CHARGES ON ACCOUNT OF SUCH TR ANSACTIONS AND NOTHING PAGE 5 OF 20 I.T.A .NO.-98 & 99/CHD/2017 MORE THAN THAT. THEREFORE, UNDER SUCH CIRCUMSTANCE S, THERE CANNOT BE ANY COPY OF ACCOUNT BETWEEN OUR GROUP CONCERNS FOR SALE AND PURCHASES ON NSEL PLATFORM AS DESIRED BY THE AO. THE ASSESSEE HAS SE TTLEMENT ACCOUNT OF ALL GROUP COMPANIES WITH HDFC BANK. IT IS A FACT THAT THERE ARE NO PURCHASES OR SALES ON THE NSEL PLATFORM AMONG OUR GROUP CONCERNS , THE TRANSACTIONS HAVE BEEN CARRIED OUT AND THOUGH AT TIMES USING THE MEMB ERSHIP OF ANOTHER CONCERN FOR WHICH ENTRIES HAVE BEEN MADE WITH REGARD TO CHA RGES SO LEVIED BY THE NSEL HAVE BEEN DEBITED TO THE RESPECTIVE CONCERN AND IS EVIDENT FROM COPIES OF ACCOUNTS IN THE BOOKS OF ACCOUNTS OF ALL THE THREE GROUP CONCERNS. THE RESPECTIVE ENTRIES HAVE BEEN MADE IN THE BOOKS OF E ACH COMPANY. THE ASSESSEE HAD ALREADY SUBMITTED NECESSARY EVIDENCES IN RESPECT OF THOSE TRANSACTIONS IN THE BOOKS OF ACCOUNTS. IT WAS FURT HER SUBMITTED THAT THE ASSESSEE HAS FILED TOTAL PURCHASES GIVING DATES, NA ME OF PARTIES, WEIGHT AND VALUE SUPPORTED BY EVIDENCES TO SHOW COMPLETE PURCH ASES UPTO 31.03.2013 WHICH HAVE BEEN SQUARED UP. AT THE NSEL PLATFORM, IT IS ONLY THE PURCHASES AND SALES VIS-A-VIS THE OTHER PARTIES. 10. INFACT WHILE SUBMITTING THE DETAILS IN THE SHAP E OF STOCK SUMMARY, WHEREVER THE MENTION IN BRACKET IS THERE, IT MEANS THAT PLATFORM OF NSEL HAS BEEN USED BY ANOTHER CONCERN. THE ASSESSEE FILED D ETAILS OF TOTAL PURCHASES WHICH HAVE BEEN REFLECTED IN THE RETURNS OF INCOME. THE DETAILS OF OTHER CONCERNS ARE ALSO FILED. ALL THE FIGURES ARE CORRE CT, NO DISCREPANCIES IN THE ACCOUNT HAVE BEEN POINTED OUT. THE ASSESSEE DISCLO SED PROFIT AMONG INTER SE GROUP ON ALL THE SALES/PURCHASES. PAGE 6 OF 20 I.T.A .NO.-98 & 99/CHD/2017 11. THE AO NOTED THAT THE ASSESSEE HAS SUBMITTED TH AT MEMBERSHIP CARD OF ONE COMPANY HAS BEEN USED BY ANOTHER COMPANY FOR MA KING TRANSACTIONS AT NSEL PLATFORM AND SUCH TRANSACTIONS WERE NOT MADE WITH NSEL. THE AO, HOWEVER, OBSERVED THAT MEMBERSHIP CARD OF ONE CONCE RN CANNOT BE USED BY OTHER CONCERN FOR MAKING TRANSACTION AT NSEL PLATFO RM. THE ASSESSEE FAILED TO PRODUCE THE COPIES OF THE ACCOUNTS OF PARTIES INTER SE I.E. NSEL AND THE GROUP CONCERNS OF THE ASSESSEE. THE ASSESSEE ALSO FAILED TO PRODUCE TOTAL PURCHASES WITH BREAK UP OF THE PARTY-WISE PURCHASES WITH THE IR COPIES OF THE ACCOUNTS. IT WAS POINTED OUT THAT NSEL IS A PLATFORM PROVIDED FO R SPOT PURCHASE AND SALE OF GOODS BETWEEN ACTUAL PURCHASERS AND SELLERS AND NOT BETWEEN NSEL MEMBERS. THE AO ALSO CALLED FOR THE COPY OF THE ACCOUNT OF M /S. MMTC WITH ASSESSEE BUT M/S. MMTC COULD NOT PRODUCE TRANSPORT BILTI EITHER AT THE TIME OF PURCHASES OR SALES. AT NSEL PLATFORM ACTUAL DELIVERY OF GOOD IS MUST. IT PROVES ONLY SHAM TRANSACTION OF PURCHASE AND SALE WERE TAKING PLACE WITHOUT ACTUAL DELIVERY. THE AO ALSO REPRODUCED THE PART OF THE ORDER OF THE HON BLE BOMBAY HIGH COURT DATED 22.08.2014 IN THE ASSESSMENT ORDER FOR RELEAS ING ACCUSED SH. JIGNESH SHAH ON BAIL IN CRIMINAL BAIL APPLICATION NO.1263/2 014. IN VIEW OF THE ABOVE DISCUSSION, THE AO NOTED THAT BOOKS OF ACCOUNTS OF THE ASSESSEE ARE NOT RELIABLE AND REJECTED. THE AO ALSO NOTED THAT THE REPORT SU BMITTED BY M/S SHARP AND TANNAN ASSOCIATES SUBMITTED TO THE BOARD OF DIRECTO RS OF NSEL, RECOVERIES HAVE BEEN WORKED OUT FROM VARIOUS MEMBERS OF NSEL. IN THE CASE OF THE ASSESSEE, THE RECOVERABLE AMOUNT FROM ASSESSEE AS O N 31.08.2013 WAS SHOWN AT RS.338.40 CRORES, SINCE THE ASSESSEE FAILED TO FILE CONFIRMATION OF ACCOUNT PAGE 7 OF 20 I.T.A .NO.-98 & 99/CHD/2017 FROM NSEL AS ON DATE. THEREFORE, THE AO ADDED RS.3 38.40 CRORES ON ACCOUNT OF UNACCOUNTED/ UNDISCLOSED INCOME IN HANDS OF ASSE SSEE. 12. THE ASSESSEE CHALLENGED THE ADDITION BEFORE THE LD. CIT(A) AND WRITTEN SUBMISSION IS REPRODUCED IN THE IMPUGNED ORDER IN W HICH THE ASSESSEE RE- ITERATED THE SUBMISSIONS MADE BEFORE THE AO. THE A SSESSEE IN THE SUBMISSIONS BEFORE THE LD. CIT(A) BRIEFLY EXPLAINED THAT THE AD DITION WAS MADE MERELY ON ASSUMPTION AND PRESUMPTION IGNORING THE VOLUMINOUS RECORD/INFORMATION PROVIDED TO THE AO AT THE ASSESSMENT STAGE. THE AS SESSEE MAINTAINED REGULAR BOOKS OF ACCOUNTS IN WHICH NO DEFECTS HAVE BEEN POI NTED OUT. THE ASSESSEE PRODUCED COMPLETE DETAILS OF SALES AND PURCHASES BY USING NSEL PLATFORM AND SAMPLE COPIES OF DELIVERY RECEIPTS ALONGWITH PROOF OF TRANSPORTATION TO WAREHOUSES OF NSEL ALONGWITH WEIGHTMENT SLIP HAVE B EEN SUBMITTED. NSEL USED TO CHARGE COMMISSION FROM BOTH BUYER AND SELLE R. THE AO INITIALLY DOUBTED THAT ALL THE TRANSACTIONS OF PURCHASES AND SALES WH ICH HAD TAKEN PLACE AT NSEL PLATFORM ARE SHAM TRANSACTION WITHOUT ACTUAL DELIVE RY BUT THE ASSESSEE SUBMITTED COMPLETE DETAILS TO SHOW THAT ALL TRANSAC TIONS HAVE BEEN CARRIED OUT BY ACTUAL DELIVERY SUPPORTED BY ALL THE EVIDENCES. THE COPIES OF ACCOUNTS OF THE ASSESSEE DULY CONFIRMED FROM THE BOOKS OF ACCOUNTS OF NSEL HAVE BEEN FURNISHED WHICH HAVE NOT BEEN DOUBTED AND ALL THE T RANSACTIONS TALLIED WITH THE BANK ACCOUNTS OF THE ASSESSEE. THE ADDITION IS BAS ED UPON THE REPORT SUBMITTED BY M/S SHARP AND TANNAN ASSOCIATES ONLY. THE ASSESSEE FURNISHED COMPLETE DETAILS TO SHOW THAT ALL TRANSACTIONS ARE RECONCILED AND TALLIED WITH THE BOOKS OF ACCOUNTS OF THE ASSESSEE. THE ASSESSEE SU BMITTED THAT PARTY MAY BE SUMMONED FOR NECESSARY CROSS VERIFICATION AND ON WH AT BASIS SAID SUM OF PAGE 8 OF 20 I.T.A .NO.-98 & 99/CHD/2017 RS.338.40 CRORES HAS BEEN SHOWN AS RECOVERABLE FROM ASSESSEE. HOW LIABILITY CAN BE INCOME OF ASSESSEE. THE ASSESSEE HAS FILED A CASE AGAINST NSEL AND ECONOMIC DEFENSE WING MUMBAI AND OTHER PARTIES FROM WHOM HUGE AMOUNTS DUE TO THE ASSESSEE. NO AMOUNT IS DUE TO THE ASSES SEE FROM NSEL. THERE ARE NO REASON TO REJECT BOOK OF A/C OF ASSESSEE. THE S UBMISSIONS OF THE ASSESSEE WERE SENT TO THE AO FOR HIS COMMENTS. THE AO REITER ATED THE FACTS STATED IN THE ASSESSMENT ORDER. THE ASSESSEE IN THE RE-JOINDER T O THE REMAND REPORT SUBMITTED THAT THE MEMBERSHIP OF ASSESSEE WITH NSEL HAD EXPIRED ON 31.03.2013. THERE IS NO BASIS TO RELY UPON THE REP ORT OF M/S SHARP AND TANNAN ASSOCIATES. THE ASSESSEE REQUESTED THE AO TO ALLOW CROSS-EXAMINATION OF M/S SHARP AND TANNAN ASSOCIATES AS TO HOW THE DUES HAVE BEEN SHOWN AGAINST THE ASSESSEE. THE ASSESSMENT YEAR UNDER APPEAL IS 2013 -14 WHEREAS THE REPORT SUBMITTED BY M/S SHARP AND TANNAN ASSOCIATES PERTAI N TO PERIOD FROM 01.08.2013 TO 31.08.2013 WHICH WOULD FALL IN ASSESS MENT YEAR 2014-15. THEREFORE, NO ADDITION COULD BE MADE AGAINST THE AS SESSEE IN ASSESSMENT YEAR UNDER APPEAL. THE ASSESSEE PRODUCED COMPLETE BOOKS OF ACCOUNTS, BILLS AND VOUCHERS AND ALL DETAILS OF PURCHASES AND SALES IN WHICH NO DEFECTS HAVE BEEN POINTED OUT IN THE AUDITED ACCOUNTS OF ALL THE SIST ER CONCERNS. THE AO VERIFIED SOME OF THE LEDGERS U/S 133(6) OF THE I.T.ACT, 1961 AND ALSO VERIFIED THE TRANSACTIONS WITH M/S. MMTC LTD., A GOVERNMENT OF I NDIA UNDERTAKING AND ALL THE FIGURES TALLIED. THEREFORE, THERE IS NO REASON TO REJECT THE BOOKS OF ACCOUNTS OF THE ASSESSEE OR TO MAKE ABOVE ADDITION ON ACCOUN T OF ALLEGED RECEIVABLE FROM ASSESSEE COMPANY. PAGE 9 OF 20 I.T.A .NO.-98 & 99/CHD/2017 13. LD.CIT(A) AFTER CONSIDERING THE SUBMISSIONS OF THE ASSESSEE CONFIRMED THE ADDITION AND DISMISSED THIS GROUND OF APPEAL OF THE ASSESSEE. THE LD.CIT(A) OBSERVED THAT THE ASSESSEE FAILED TO PRODUCE COPIES OF THE ACCOUNTS OF GROUP CONCERN OF ASSESSEE WITH NSEL. THE LD.CIT(A) ALSO NOTED THAT THE ASSESSEE COULD NOT BRING ANY EVIDENCE ON RECORD WHICH WILL P ROVE THAT IT HAS NOT MADE PURCHASES WHICH ARE UNDER DISPUTE FOR WHICH AMOUNT IS SHOWN RECOVERABLE, THEREFORE, REJECTION OF THE BOOKS OF ACCOUNTS WAS U PHELD. LD.CIT(A) NOTED THE NATURE OF TRANSACTION AT NSEL PLATFORM WERE SALES/P URCHASES AND SINCE THE AMOUNT IS SHOWN RECOVERABLE FROM ASSESSEE, THEREFOR E, IT CAN ARISE ONLY ON ACCOUNT OF PURCHASE MADE BY THE ASSESSEE ON NSEL PL ATFORM. ADDITION WAS CONFIRMED. 14. THE ASSESSEE IN THE PRESENT APPEAL CHALLENGED T HE ORDER OF LD.CIT(A) IN CONFIRMING THE ADDITION OF RS.338.40 CRORES AS ALLE GEDLY PAYABLE BY THE ASSESSEE TO NSEL WITHOUT ANY MATERIAL AND EVIDENCE ON RECORD AS WELL AS CHALLENGED THE ORDERS OF AUTHORITIES BELOW IN REJEC TING THE BOOKS OF ACCOUNTS OF THE ASSESSEE U/S 145(3) OF THE ACT. 15. LD. COUNSEL FOR THE ASSESSEE REITERATED THE SUB MISSIONS MADE BEFORE THE AUTHORITIES BELOW. LD. COUNSEL FOR THE ASSESSEE SU BMITTED THAT THE BOOKS OF ACCOUNTS OF THE ASSESSEE HAVE BEEN REJECTED BECAUSE OF THE ALLEGED RECOVERIES TO BE MADE BY NSEL FOR WHICH NO EVIDENCES HAVE BEEN BROUGHT ON RECORD. PAPER BOOK PAGE 181 IS THE REPORT M/S SHARP AND TAN NAN ASSOCIATES (EXHIBIT A) TO SHOW THE AMOUNT RECEIVABLE FROM MEMBERS AS ON 31 .08.2013 FROM THE PERIOD COMMENCING ON 01.08.2013 AND AS AGAINST NAME OF ASS ESSEE AMOUNT RECEIVABLE HAVE BEEN MENTIONED AS RS.338.40 CRORES. THE REPORT OF M/S SHARP PAGE 10 OF 20 I.T.A .NO.-98 & 99/CHD/2017 AND TANNAN ASSOCIATES THEREFORE, DO NOT FALL IN ASS ESSMENT YEAR 2013-14 UNDER APPEAL. THE AO CALLED FOR DETAILED INFORMATION ON THIS ISSUE AND THE ASSESSEE FILED COMPLETE DETAILS BEFORE THE AO EVEN ON SUNDAY AND ASSESSMENT PROCEEDINGS HAVE BEEN ATTENDED BY LD. PR. CIT IN LA TE HOURS AS WELL. NO MATERIAL WAS FOUND AGAINST THE ASSESSEE EARNING ANY UNDISCLOSED INCOME, THEREFORE, ADDITION WAS MADE MERELY ON PRESUMPTION. PAPER BOOK PAGE VI/1+2 IS LICENSE GRANTED BY NSEL TO THE ASSESSEE COMPANY FROM THE PERIOD 2012 TO 31.03.2013. HE HAS SUBMITTED THAT THE ASSESSEE WAS NOT MEMBER OF NSEL AFTER 31.03.2013, THEREFORE, THERE COULD NOT BE ANY RECOVERY OF ALLEGED AMOUNT IN APPEAL FOR THE PERIOD FROM 01.08.2013 TO 31.08.2 013. PAPER BOOK PAGE 69 IS THE ORDER SHEET OF AO ASKING THE COMPLETE DETAILS O N THE MATTER IN ISSUE. THE ASSESSEE FILED COMPLETE DETAILS IN VARIOUS REPLIES, COPIES OF WHICH ARE FILED IN THE PAPER BOOK FROM PAGES 70 TO 78. PAPER BOOK PAGES 7 9 TO 80 IS THE ORDER SHEET OF THE AO IN WHICH THE AO REFEREED TO THE REPORT OF M/S SHARP AND TANNAN ASSOCIATES SHOWING THE AMOUNT RECEIVABLE FROM THE A SSESSEE AS ON 31.08.2013 OF THE IMPUGNED AMOUNT AND DIRECTED THE ASSESSEE TO FILE A CONFIRMATION OF ACCOUNTS FROM NSEL. HE HAD SUBMITTED THAT SINCE TH E ASSESSEE WAS NOT MEMBER OF NSEL DURING THIS PERIOD, THERE IS NO QUES TION OF ANY RECOVERY AGAINST THE ASSESSEE OR TO HAVE ANY TRANSACTION CONDUCTED D URING THIS PERIOD. THEREFORE, THERE WAS NO QUESTION OF FILING OF ANY C ONFIRMATION OF ACCOUNT ON THIS PERIOD. THE REPLY OF THE ASSESSEE IN THIS REGARD IS FILED AT PAGE 84 OF THE PAPER BOOK. THE LD. COUNSEL FOR THE ASSESSEE SUBMITTED T HAT IF NSEL WANTED TO RECOVER ANY AMOUNT FROM THE ASSESSEE, IT WOULD MEAN THAT THE ASSESSEE MADE PURCHASES OF SOME ITEMS FROM NSEL BUT IT IS ADMITTE D FACTS THAT NSEL IS NOT PAGE 11 OF 20 I.T.A .NO.-98 & 99/CHD/2017 INVOLVED IN PURCHASES AND SALES AS IT PROVIDES ONLY PLATFORM ONLY TO MEMBER, BUYERS AND SELLERS AGAINST THE ACTUAL DELIVERY OF G OODS AND CHARGE COMMISSION ONLY. THEREFORE, ALL THE ALLEGATIONS OF THE AO ARE INCORRECT FOR MAKING THE ADDITION. PAPER BOOK PAGE 149 IS THE DETAILS OF ST OCK SUMMARY WITH DETAILS OF SALES/PURCHASES. SOME PURCHASES ARE MADE THROUGH C ARD OF OTHER GROUP CONCERNS AND ALL THE ACCOUNTS TALLY WITH THE BOOKS OF ACCOUNT OF THE ASSESSEE WITH GROUP CONCERN. ALL PURCHASES HAVE BEEN MADE B Y THE ASSESSEE THROUGH BANKING CHANNEL. PAPER BOOK VOLUME 4 CONTAINED COP IES OF THE BANK STATEMENT OF M/S. LAKSHMI ENERGY & FOODS LTD. TO PROVE THAT PAYMENTS HAVE BEEN MADE TO ALL THE ARTIYAS/ CREDITORS THROUGH BANKING CHAN NELS, OUT OF THE AMOUNT RECEIVED FROM ASSESSEE COMPANY, M/S. LOIL HEALTH FO OD LTD. AND M/S. LOIL OVERSEAS FOOD LTD. PAPER BOOK VOLUME 5 CONTAINED T HE DETAILS SHOWING THAT STOCK PURCHASED BY M/S. LAKSHMI ENERGY & FOODS LTD . HAD BEEN DIRECTLY TRANSFERRED TO THE GODOWN OF NSEL ON BEHALF OF THE ASSESSEE COMPANY, M/S LOIL HEALTH FOOD LTD. AND M/S LOIL OVERSEAS FOOD LTD. CO NTAINING THE STOCK TRANSFER NOTE, TRUCK BILTIES, WEIGHTMENT SLIP, GATE PASS ET C. PAPER BOOK PAGE 222 ONWARDS ARE DETAILS OF WAREHOUSES CHARGES BY NSEL A FTER DELIVERY OF PADDY IN NSELS DESIGNATED WAREHOUSES. PAPER BOOK PAGE 89 O NWARDS ARE CONFIRMATION BY MMTC IN WHICH NO DOUBTS HAVE BEEN RAISED BY THE AO. NO DIFFERENCE IN SALE/PURCHASE HAS BEEN POINTED OUT. PAPER BOOK PAG E 150 TO 165 ARE THE COPY OF THE LEDGER ACCOUNT/CONFIRMATIONS OF THE ASSESSEE IN THE BOOKS OF NSEL SHOWING AMOUNT DUE TO ASSESSEE BY NSEL IN SUM OF RS .44.56 CRORES. PAPER BOOK PAGE 147 IS TRAIL BALANCE IN THE BOOKS OF ACCO UNTS TO SHOW NSEL TO PAY BACK MARGIN MONEY OF RS.44.56 CRORES TO THE ASSESS EE. THE LD. COUNSEL FOR PAGE 12 OF 20 I.T.A .NO.-98 & 99/CHD/2017 THE ASSESSEE, THEREFORE, SUBMITTED THAT INFACT NSEL HAS TO PAY RS.44.56 CRORES TO THE ASSESSEE. THE AO DID NOT MAKE ANY ADDITION IN RESPECT OF ANY DIFFERENCE IN ACCOUNTS OF GROUP CONCERNS OR IN THE ACCOUNTS OF THE MMTC AND PEC INDIA. THE AO DID NOT MAKE ANY INQUIRY FROM NSEL OR M/S SH ARP AND TANNAN ASSOCIATES. PAPER BOOK VOLUME 6/22 ONWARD IS COPY OF THE CIVIL SUIT FILED BY THE ASSESSEE AGAINST NSEL IN WHICH THE CIVIL COURT HAS RESTRAINED NSEL FROM PRINTING, PUBLISHING OR CIRCULATING ANY NOTICE, ADV ERTISEMENT IN NEWSPAPER OR ANY OTHER MANNER IN ANY FORM AGAINST THE PLAINTIFF. HE HAS SUBMITTED THAT THE NSEL DID NOT APPEAR BEFORE THE CIVIL COURT. THE ASSESSE E ALSO FILED AFFIDAVIT AFFIRMING THEREIN THAT THE ASSESSEE HAS TO RECOVER MARGIN MON EY OF RS.44.56 CRORES FROM NSEL AS ON 31.03.2013 WHICH IS SUPPORTED BY THE COP Y OF THE ACCOUNT IN THE BOOKS OF NSEL. IT IS ALSO AFFIRMED THAT NSEL HAS NOT FILED ANY COUNTER-CLAIM OR CASE AGAINST THE ASSESSEE COMPANY IN ALLEGED RECOVE RY. THE LD. COUNSEL FOR THE ASSESSEE SUBMITTED THAT IF DUE AMOUNT IS LIABIL ITY ON THE ASSESSEE, IT COULD ONLY BE ON ACCOUNT OF PURCHASE OR LOANS TAKEN FROM NSEL BUT NO EVIDENCE OR MATERIAL IN SUPPORT OF THE SAME HAVE BEEN BROUGHT ON RECORD. IF MATERIAL IS COLLECTED AT THE BACK OF THE ASSESSEE CANNOT BE REA D IN EVIDENCE AGAINST THE ASSESSEE UNLESS CONFRONTED. NO RIGHT OF CROSS-EXAM INATION HAS BEEN ALLOWED BY THE AO TO CROSS-EXAMINE ANY SUCH PERSON OF NSEL OR M/S SHARP AND TANNAN ASSOCIATES FOR ALLEGED RECOVERY AGAINST THE ASSESSE E. NO SPECIFIC REASONS HAVE BEEN GIVEN FOR REJECTING THE BOOKS OF ACCOUNTS OF T HE ASSESSEE. NO MATERIAL HAS BEEN BROUGHT ON RECORD TO SUPPORT THE ADDITION MADE AGAINST THE ASSESSEE. THE BAIL ORDER OF SH. JIGNESH SHAH HAS NO CONCERN WHATS OEVER WITH ASSESSEE. HOW THE LIABILITY OF THE ASSESSEE HAS ARISED IS NOT CLE AR IN THE IMPUGNED ORDER. THE PAGE 13 OF 20 I.T.A .NO.-98 & 99/CHD/2017 COUNSEL FOR THE ASSESSEE, THEREFORE, SUBMITTED THAT THE REJECTION OF THE BOOKS OF ACCOUNTS AND ADDITION OF RS.338.40 CRORE IS WHOLLY UNJUSTIFIED. 16. ON THE OTHER HAND, LD. DR RELIED UPON THE ORDER S OF THE AUTHORITIES BELOW AND FILED COMPLETE REPORT OF M/S SHARP AND TANNAN A SSOCIATES DATED 02.04.2014 ON RECORD. LD. DR SUBMITTED THAT THE BA SIS OF RECOVERY IS VERIFICATION AND DETERMINATION OF AMOUNTS RECEIVABLE BY NSEL FRO M CERTAIN 25 MEMBERS AS ON 31.08.2013 FROM THE PERIOD COMMENCING FROM 01.0 8.2013. PAPER BOOK PAGE 181 IS THE EXHIBIT A WITH THE SAID REPORT SHOW ING RECOVERY AGAINST THE ASSESSEE OF RS.338.40 CRORE FROM 01.08.2013 TO 31.0 8.2013. LD. DR SUBMITTED THAT THE ASSESSEE HAS NOT FILED CONFIRMATION OF ACC OUNTS FROM NSEL. LD. DR HEAVILY RELIED UPON THE ORDERS OF THE AUTHORITIES B ELOW. 16.1. WE MAY ALSO NOTE HERE THAT AFTER HEARING THE ARGUMENTS OF BOTH PARTIES, THE AO WAS DIRECTED TO APPEAR IN PERSON FOR CLARIFI CATION ON CERTAIN POINTS ON THIS MATTER. THE AO, SH. AMIT PRATAP SINGH , DCIT, CENT RAL CIRCLE-3, LUDHIANA APPEARED BEFORE THE BENCH ON FINAL DATE OF HEARING OF APPEAL ON 16.03.2017. THE AO AFTER GOING THROUGH THE RECORD SUBMITTED THA T NO STATEMENTS OF ANY RESPONSIBLE PERSONS FROM NSEL OR M/S SHARP AND TANN AN ASSOCIATES HAVE BEEN RECORDED IN SUPPORT OF SHOWING RECOVERIES AGAI NST THE ASSESSEE AT THE ASSESSMENT STAGE. THE AO SUBMITTED THAT THE RECORD WOULD NOT REVEAL THE ALLEGED NATURE OF TRANSACTION BETWEEN ASSESSEE COMP ANY AND NSEL, WHETHER IT WAS PURCHASE OR LOAN? THE AO ALSO STATED THAT THE ADDITION IS MADE ON ACCOUNT OF INFERENCE OF UNACCOUNTED PURCHASES. THE AO WAS NOT ABLE TO EXPLAIN AS TO HOW THE ADDITION IS MADE IN ASSESSMENT YEAR 2013-14 UNDER APPEAL WHEN THE REPORT OF M/S SHARP AND TANNAN ASSOCIATES CLEARLY P RESCRIBE THE PERIOD OF PAGE 14 OF 20 I.T.A .NO.-98 & 99/CHD/2017 RECOVERY FROM 01.08.2013 TO 31.08.2013 IN WHICH ASS ESSEE WAS NOT MEMBER OF NSEL. LD.DR IN VIEW OF THE ABOVE SUBMITTED THAT TH E MATTER MAY BE REMANDED TO THE AO FOR FRESH INVESTIGATION INTO THE MATTER. 17. THE COUNSEL OF THE ASSESSEE HOWEVER, SUBMITTED THAT THERE IS NO REASON TO REMAND THE MATTER BACK TO THE FILE OF THE AO FOR FURTHER INVESTIGATION BECAUSE DURING THE INVESTIGATION AT THE ASSESSMENT STAGE, T HE AO WAS NOT ABLE TO BRING ANY EVIDENCE IN ASSESSEES CASE SO AS TO REJECT THE BOOKS OF THE ACCOUNTS OR TO MAKE ADDITIONS ON ACCOUNT OF ALLEGED RECOVERIES TO BE MADE BY NSEL. THE LD. COUNSEL FOR THE ASSESSEE, THEREFORE, SUBMITTED THAT THE ADDITION MAY BE DELETED. 18. WE HAVE HEARD THE RIVAL SUBMISSIONS. IT IS NOT IN DISPUTE THAT THE ASSESSEE REMAINED MEMBER OF NSEL TILL 31.03.2013 ONLY. IT I S ALSO NOT IN DISPUTE THAT ONLY MEMBERS REGISTERED WITH NSEL COULD TRANSACT THE ACT IVITIES AT THE PLATFORM OF NSEL. THEREFORE, AFTER 31.03.2013 THERE IS NO QUES TION FOR THE ASSESSEE TO HAVE TRANSACTED ANY BUSINESS ACTIVITY THROUGH THE P LATFORM OF NSEL. THE LD. COUNSEL FOR THE ASSESSEE ALSO FILED RECEIPT OF MEMB ERSHIP OF THE ASSESSEE, CERTIFYING THE ASSESSEE COMPANY WAS MEMBER OF NSEL TILL 31.03.2013. THE COPY OF THE ASSESSMENT ORDER IN THE CASE OF GROUP C ONCERN M/S. LAKSHMI ENERGY & FOODS LTD. U/S 143(3) FOR ASSESSMENT YEAR 2013-14 IS FILED IN WHICH NO ADDITIONS HAVE BEEN MADE FOR PURCHASES FROM WHOM TH E SUBSTANTIAL PURCHASES HAVE BEEN MADE BY THE ASSESSEE. THE ASSESSEE ALSO FILED COPY OF THE PROCEDURE OF OPERATION FROM NSEL PLATFORM. THE ASS ESSEE ALSO FILED COPY OF THE CIVIL SUIT FILED AGAINST NSEL IN WHICH NSEL IS REST RAINED FROM PRINTING OR PUBLISHING OR CIRCULATING ANY NOTICE OR ADVERTISEME NT IN NEWSPAPERS OR OTHERS AGAINST THE ASSESSEE. PAGE 15 OF 20 I.T.A .NO.-98 & 99/CHD/2017 19. THE AO IN THE ASSESSMENT ORDER SPECIFICALLY MEN TIONED THE FACT THAT NSEL WAS A PLATFORM PROVIDED TO ENABLE THE BUYERS AND SE LLERS TO TRANSACT ON SPOT AGAINST ACTUAL DELIVERY OF THE GOODS THROUGH LICENS ED MEMBERS APPOINTED BY NSEL. LD. CIT(A) IN HIS FINDING ALSO AFFIRMED SAME FACTS. IT IS, THEREFORE, PROVED ON RECORD THAT NSEL PROVIDES PLATFORM TO ITS MEMBER S TO ENABLE BUYERS AND SELLERS TO TRANSACT ON SPOT AGAINST ACTUAL DELIVERY OF THE GOODS. THE NSEL, THEREFORE, DO NOT INDULGE DIRECTLY IN SALE AND PURC HASE OF ANY GOODS. THE SETTLEMENT ACCOUNT IS MAINTAINED BY THE NSEL FOR TH E ASSESSEE WITH HDFC BANK, LUDHIANA IN RESPECT OF ALL THE TRANSACTIONS C ONDUCTED THROUGH NSEL. AS PER SETTLEMENT OF ACCOUNT, NIL AMOUNT WAS DUE AGAIN ST THE ASSESSEE AS IS MENTIONED BY THE AO IN THE ASSESSMENT ORDER. THE A O ALSO SPECIFICALLY MENTIONED IN THE ASSESSMENT ORDER THAT THOUGH THE R ECOVERY SUIT IS PENDING BEFORE THE BOMBAY HIGH COURT BUT IT WAS BETWEEN OTH ER PARTIES. THE ASSESSEE FILED AFFIDAVIT TO PROVE THAT NO RECOVERY SUIT IS P ENDING AGAINST THE ASSESSEE IN ANY COURT OF LAW ON BEHALF OF THE NSEL. IT IS, THE REFORE, HIGHLY UNBELIEVABLE THAT AS PER REPORT OF M/S SHARP AND TANNAN ASSOCIATES IF HUGE AMOUNT IS DUE AGAINST THE ASSESSEE, NSEL WOULD NOT FILE ANY RECOV ERY SUIT AGAINST THE ASSESSEE. THE AUTHORITIES BELOW HAVE HEAVILY RELIE D UPON THE REPORT OF M/S SHARP AND TANNAN ASSOCIATES SHOWING RECOVERIES OF N SEL AGAINST THE ASSESSEE. THE REPORT OF M/S SHARP AND TANNAN ASSOC IATES DATED 02.04.2014 SHOWED THAT THERE MAY BE ALLEGED RECOVERY AGAINST T HE ASSESSEE FOR THE PERIOD FROM 01.08.2013 TO 31.08.2013 OF THE IMPUGNED AMOUN T. IT IS NOT CLARIFIED AS TO HOW THESE RECOVERIES HAVE BEEN SHOWN AGAINST THE AS SESSEE WHEN THE ASSESSEE COMPANY WAS NOT MEMBER OF NSEL DURING THIS PERIOD AFTER PAGE 16 OF 20 I.T.A .NO.-98 & 99/CHD/2017 31.03.2013. SINCE IT IS NOT IN DISPUTE THAT UNLICE NSED MEMBER CANNOT TRANSACT THROUGH NSEL THEN HOW THE ASSESSEE CONDUCTED TRANSA CTIONS DURING THIS PERIOD WHEN IT CEASED TO BECOME MEMBER OF NSEL IS HIGHLY D OUBTABLE AND UNBELIEVABLE. NO BASIS HAS BEEN SHOWN IN THE REPOR T OF M/S SHARP AND TANNAN ASSOCIATES AS TO HOW THE RECOVERIES HAVE ARISED AGA INST THE ASSESSEE OF THE IMPUGNED AMOUNT. IT IS ALSO NOT EXPLAINED AS TO WH AT WAS THE NATURE OF TRANSACTION CONDUCTED BY THE ASSESSEE WITH NSEL FOR SHOWING ALLEGED RECOVERY AGAINST IT. IT IS ALSO NOT EXPLAINED AS TO WHAT MA TERIAL WAS COLLECTED BY M/S SHARP AND TANNAN ASSOCIATES FOR RECOVERY OF THE IMP UGNED AMOUNT AGAINST THE ASSESSEE. THE AO APPEARED IN PERSON AT THE TIME OF HEARING OF THE APPEALS AND HAS CATEGORICALLY STATED THAT NO STATEMENT OF ANY R ESPONSIBLE PERSON OF NSEL OR M/S SHARP AND TANNAN ASSOCIATES HAVE BEEN RECORDED DURING THE COURSE OF THE ASSESSMENT PROCEEDINGS SO AS TO PROVE THE CASE OF T HE REVENUE. THE AO WAS NOT ABLE TO EXPLAIN THE NATURE OF THE TRANSACTION C ONDUCTED BY THE ASSESSEE, WHETHER IT WAS PURCHASE OR LOAN? IT WAS AN INFEREN CE OF THE AO THAT THE ASSESSEE MIGHT HAVE MADE SOME UNACCOUNTED PURCHASE FROM NSEL FOR WHICH NO EVIDENCE OR MATERIAL HAVE BEEN COLLECTED OR BROU GHT ON RECORD. NO RIGHT TO CROSS-EXAMINE THE REPORT OF M/S SHARP AND TANNAN AS SOCIATES HAVE BEEN PROVIDED TO THE ASSESSEE AT THE ASSESSMENT STAGE. HONBLE SUPREME COURT IN THE CASE OF KISHANCHAND CHELARAM VS CIT (1980) 125 ITR 713 HELD THAT ANY MATERIAL COLLECTED AT THE BACK OF THE ASSESSEE UNLE SS CONFRONTED TO THE ASSESSEE AND ALLOWED CROSS-EXAMINATION CANNOT BE RE AD ANY EVIDENCE AGAINST THE ASSESSEE. IN THIS CASE ONLY COPY OF EXHIBIT ( A) PAPER BOOK PAGE 181 WAS SUPPLIED TO THE ASSESSEE AFTER COMPLETION OF THE AS SESSMENT PROCEEDINGS PAGE 17 OF 20 I.T.A .NO.-98 & 99/CHD/2017 ACCORDING TO THE SUBMISSIONS OF THE LD. COUNSEL FOR THE ASSESSEE. THE COMPLETE REPORT OF M/S SHARP AND TANNAN ASSOCIATES DATED 02.04.2014 HAVE BEEN PLACED ON RECORD BY THE LD. DR DURING THE COUR SE OF HEARING OF THE APPEAL, THEREFORE, SUCH REPORT CANNOT BE READ IN EVIDENCE A GAINST THE ASSESSEE SO AS TO MAKE THE ADDITION. FURTHER, THIS REPORT SHOWING RE COVERY AGAINST THE ASSESSEE PERTAINED TO THE PERIOD FROM 01.08.2013 TO 31.08.20 13 WHEN THE ASSESSEE WAS NOT MEMBER OF THE NSEL AND SAME WOULD NOT FALL IN A Y 2013-14 UNDER APPEAL. THEREFORE, SUCH REPORT CANNOT BE A BASIS FOR MAKING ADDITION AGAINST THE ASSESSEE. SINCE NSEL DO NOT INDULGE IN ACTUAL SALE AND PURCHASE, THEREFORE, THERE CANNOT BE PURCHASES MADE BY THE ASSESSEE FROM NSEL. NO EVIDENCE OF ANY LOAN OBTAINED BY THE ASSESSEE FROM NSEL HAVE BE EN BROUGHT ON RECORD TO PROVE ANY RECOVERIES TO BE MADE BY NSEL FROM THE AS SESSEE. THE AO DID NOT MAKE ANY ADDITION FOR ANY ALLEGED DISCREPANCIES IN THE ACCOUNTS OF THE ASSESSEE WITH ITS GROUP CONCERNS AS REGARDS TRANSACTIONS CO NDUCTED THROUGH NSEL. THE CHARGES PAID TO NSEL FOR USING THEIR PLATFORM HAVE NOT BEEN DOUBTED BY THE AO. ALL THE STOCKS PURCHASED WERE TRANSFERRED TO GODOWN TO NSEL ON BEHALF OF THE ASSESSEE HAVE BEEN SUPPORTED BY ALL RELEVANT EVIDEN CES. THE TRANSACTIONS WERE MADE THROUGH BANKING CHANNELS. ALL THE EVIDEN CES ARE FILED IN THE PAPER BOOK VOLUME 4 & 5. NO AMOUNT IS DUE TO NSEL ON AC COUNT OF SALE, PURCHASE OR LOAN. NO DIFFERENCE WAS FOUND IN THE ACCOUNTS O F MMTC LTD. AND OTHERS. THE BAIL ORDER IN THE CASE OF SH. JIGNESH SHAH WOULD NO T LAY DOWN ANY RATIO TO BE APPLIED AGAINST THE ASSESSEE. NO CONCERN OF THE AS SESSEE WITH BAIL ORDER OF SH. JIGNESH SHAH HAS BEEN ESTABLISHED. IT IS OBSERVED IN THE BAIL ORDER ITSELF THAT IT DEALS WITH BAIL MATTER ONLY. NO SPECIFIC DEFECTS I N THE MAINTENANCE OF BOOKS OF PAGE 18 OF 20 I.T.A .NO.-98 & 99/CHD/2017 ACCOUNTS BY THE ASSESSEE HAVE BEEN POINTED OUT. TH E ASSESSEE FILED COPY OF THE LEDGER ACCOUNT OF THE ASSESSEE IN THE BOOKS OF ACCOUNTS OF NSEL SHOWING ASSESSEE HAS TO RECOVER MARGIN MONEY OF RS.44.56 CR ORES FROM NSEL AND SOME AMOUNT IS MENTIONED IN THE TRAIL BALANCE AS DU E TO THE ASSESSEE, SO THERE IS NO QUESTION OF MAKING ANY RECOVERY AGAINST THE A SSESSEE. THE AUTHORITIES BELOW HAVE MADE AND CONFIRMED THE ADDITION AGAINST THE ASSESSEE BECAUSE THE ASSESSEE COULD NOT FILE CONFIRMATION ACCOUNTS FROM NSEL AS ON THE DATE. WHEN THE ASSESSEE WAS NOT MEMBER OF NSEL DURING THE PERI OD FROM 01.08.2013 TO 31.08.2013, THE PERIOD THE RECOVERY, WHERE IS A QUE STION OF FILING CONFIRMATION FROM NSEL IN THIS REGARD. IF THE AO WANTED TO MAKE THE ADDITION OF IMPUGNED AMOUNT AGAINST THE ASSESSEE, THE AO SHOULD HAVE EXA MINED NSEL AND M/S SHARP AND TANNAN ASSOCIATES. HOWEVER, THE AO DID N OT MAKE ANY INVESTIGATION FROM THEM SO AS TO MAKE ANY ADDITION OF THE IMPUGNE D AMOUNT AGAINST THE ASSESSEE. SINCE THE AO FAILED TO MAKE PROPER INVES TIGATION INTO THE MATTER AND NO BASIS HAVE BEEN SHOWN FOR MAKING THE ADDITION ON ACCOUNT OF THE RECOVERIES TO BE MADE BY NSEL, THE AO FAILED TO DISCHARGE THE ONUS UPON HIM TO MAKE THE ADDITION OF THE AFORESAID NATURE. THERE CANNOT BE NEGATIVE ONUS ON ASSESSEE TO PROVE IT HAS NOT MADE PURCHASES FROM NSEL IN DISPUT E. NO EVIDENCE OF ANY SHAM PURCHASES/TRANSACTIONS HAVE BEEN BROUGHT ON RE CORD. NO EVIDENCE OF ANY PURCHASE MADE BY ASSESSEE FROM NSEL HAVE BEEN BROUG HT ON RECORD. 20. THE ABOVE DISCUSSION CLEARLY PROVE THAT THE AO WITHOUT ANY BASIS REJECTED THE BOOKS OF ACCOUNTS OF THE ASSESSEE AND WITHOUT B RINGING ANY EVIDENCE OR MATERIAL ON RECORD, MADE THE ADDITION OF THE IMPUGN ED AMOUNT. EVEN DURING THE COURSE OF HEARING OF THE APPEAL, THE AO WAS PRESENT IN THE COURT BUT COULD NOT PAGE 19 OF 20 I.T.A .NO.-98 & 99/CHD/2017 PROVIDE ANY EVIDENCE OR MATERIAL SO AS TO SUSTAIN T HE ORDERS OF THE AUTHORITIES BELOW. IN SUCH CIRCUMSTANCES, WE DO NOT FIND IT AP PROPRIATE TO REMAND THE MATTER TO THE AO FOR FRESH INVESTIGATION AS IS ARGU ED BY THE LD. DR. 21. IN VIEW OF THE ABOVE DISCUSSION AND IN THE ABSE NCE OF ANY COGENT AND RELEVANT EVIDENCE, WE DO NOT FIND ANY JUSTIFICATION FOR THE AUTHORITIES TO HAVE REJECTED THE BOOKS OF ACCOUNTS OF THE ASSESSEE U/S 145(3) OF THE ACT OR TO MAKE AN ADDITION OF RS.338.40 CRORES. WE ACCORDINGLY, S ET ASIDE THE ORDERS OF THE AUTHORITIES BELOW AND DELETE THE ADDITION OF RS.338 .40 CRORES. 22. IN THE RESULT, THE APPEAL OF THE ASSESSEE IS AL LOWED. ITA NO.99/CHANDI/2017 (M/S LOIL HEALTH FOODS LTD.) 23. THIS APPEAL BY THE ASSESSEE HAS BEEN DIRECTED AGAINST THE ORDER OF LD. CIT(A)-V, LUDHIANA DATED 28.12.2016 FOR AY 2013-14 CHALLENGING THE REJECTION OF THE BOOKS OF ACCOUNTS AND ADDITION OF RS.287.48 CRORES AS ALLEGEDLY PAYABLE BY THE ASSESSEE TO NSEL WITHOUT ANY MATERIAL AND EV IDENCE ON RECORD. 24. LD. REPRESENTATIVES OF BOTH THE PARTIES SUBMITT ED THAT THE ISSUES ARE SAME AS HAVE BEEN CONSIDERED IN ITA NO.98/CHANDI/2017 IN THE CASE OF M/S LOIL CONTINENTAL FOOD LTD. VS DCIT (SUPRA) AND ORDER IN THAT CASE MAY BE FOLLOWED. WE, THEREFORE, FOLLOWING THE SAME REASONS FOR DECIS ION, SET ASIDE THE ORDERS AUTHORITIES BELOW AND DELETE THE ADDITION. ACCORDI NGLY, THE APPEAL OF THE ASSESSEE IS ALLOWED. 25. IN THE RESULT, BOTH THE APPEALS OF THE ASSESSEE ARE ALLOWED. THE ORDER IS PRONOUNCED IN THE OPEN COURT ON 17TH OF APRIL 2017. SD/- SD/- (ANNAPURNA GUPTA) (BHAVNESH SAINI) ACCOUNTANT MEMBER JUDICIAL MEMBER PAGE 20 OF 20 I.T.A .NO.-98 & 99/CHD/2017 DATE:- 17 TH APRIL , 2017 *AMIT KUMAR* COPY FORWARDED TO: 1. APPELLANT 2. RESPONDENT 3. CIT 4. CIT(APPEALS) 5. DR: ITAT ASSISTA NT REGISTRAR ITAT CHANDIGARH