ACIT, Central Circle-, Akola V. Shri. Nandlal C. Bharani, Amaravati

ITSSA 24/NAG/2010

• Counselvise Citation: [2013] 121 COUNSELVISE.COM (IT) 8682 (ITAT-NAGPUR)
• Duration Of Justice: 2 year(s) 3 month(s) 17 day(s)
• Appeal Type: Income Tax (Search & Seizure) Appeal
• Pronouncement Date: 04-01-2013
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: DB
• Assessment Year: 2006-2007
• Appeal Filed On: 17-09-2010
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: DR MILIND BHUSARI
• Keywords: Bogus purchase; Unexplained expenditure; Search and seizure
• Section: 133A; 153A; 133(6); 132; 2; 139

Judgement Text

, - IN THE INCOME TAX APPELLATE TRIBUNAL NAGPUR , BENCH , ( E - COURT), MUMBAI , BEFORE SHRI R.K.GUPTA , J M & SHRI D.KARUNA KAR RAO , A M / IT (SS) A NO S . 21 TO 24/ NAG /20 10 ( ASSESSMENT YEAR S : 2002 - 03, 200 4 - 05, 20 05 - 06 & 2006 - 07 ) ACIT, CENTRAL CIRCLE, AAYAKAR BHAWAN, MURTIZAPUR ROAD, AKOLA, (MAHARASHTRA) VS. SHRI NANDLAL C. BHAR ANI, RALLIES PLOT, AMRAVATI, (MAHARASHTRA) PAN/GIR NO. : A A VP 0374 M ( APPELLANT ) .. ( RESPONDENT ) AND / IT (SS) A NO S . 2 5 TO 2 9 /NAG /20 10 ( ASSESSMENT YE ARS : 200 1 - 0 2 , 200 2 - 0 3 , 200 4 - 0 5, 2005 - 06 & 2006 - 07 ) ACIT, CENTRAL CIRCLE, AAYAKAR BHAWAN, MURTIZAPUR ROAD, AKOLA, (MAHARASHTRA) VS. SHRI GOPICHAND C. BHARANI, RALLIES PLOT, AMRAVATI, (MAHARASHTRA) PAN/GIR NO. : AA UPB 03 8 4 Q ( APPELLANT ) .. ( RESPONDENT ) /REVENUE BY : DR. MILIND BHUSARI /ASSESSEE BY : SHRI K.P.DEWANI DATE OF HEARING : 1 1 TH DEC ., 2012 DATE OF PRONOUNCE MENT : 4 TH JAN . , 201 3 IT (SS) A NO S . 21 TO 24/NAG /20 10 & IT (SS) A NOS.25 TO 29/NAG/2010 2 O R D E R P ER BENCH : THE SE ARE 9 APPEALS BY THE DEPARTMENT AGAINST THE ORDER OF LEANED CIT(A) - II , NAGPUR (MAHARASHTRA) , RELATING TO DIFFERENT ASSESSMENT YEARS I.E. 2002 - 03, 2004 - 05, 2005 - 06 & 2006 - 07 IN IT(SS )A NOS.25 TO 29/NAG/2010 AND 2001 - 02, 2002 - 03, 2004 - 05, 2005 - 06 & 2006 - 07) IN IT(SS)A NOS.25 TO 29/NAG/2010 , RESPECTIVELY. THESE APPEALS ARE RELATED TO TWO DIFFERENT ASSESSEES. SINCE THE SIMILAR ISSUES ARE INVOLVED IN ALL THE CASES , THEREFORE, FOR THE SAKE OF CONVENIENCE , ALL THE CASES HAVE BEEN HEARD THROUGH E - COURT, MUMBAI AND DISPOSED OF BY THIS CONSOLIDATED ORDER TOGETHER . 2 . AT THE VERY OUTSET, LEARNED DR HAS REQUESTED THAT IT (SS) A NO. 23/NAG/2010 MAY BE TAKEN UP FIRST BECAUSE LEARNED CIT(A) HAS PASS ED MAIN ORDER IN THIS APPEAL. THEREFORE, FOR THE SAKE OF CONVENIENCE, WE TAKE UP IT (SS)A NO.23/NAG/2010 IN CASE OF NANDLAL C. BHARANI , FIRST. 3 . THE FIRST ISSUE IN THIS APPEAL IS AGAINST DELETING THE ADDITION MADE BY THE AO ON ACCOUNT OF BOGUS PURCHASE S. 3.1 THE BRIEF FACTS OF THE CASE ARE THAT A SEARCH AND SEIZURE OPERATION UNDER SECTION 132 OF THE ACT WAS CONDUCTED ON 5 - 7 - 2006 ON BHARANI GROUP, WHEREIN VARIOS DOCUMENTS ALONG WITH JEWELLERY WERE IT (SS) A NO S . 21 TO 24/NAG /20 10 & IT (SS) A NOS.25 TO 29/NAG/2010 3 SEIZED. THE ASSESSEE IS A WHOLSESALE DEALER IN SAREES. THE TOTAL DISCLOSURE MADE BY THE GROUP IS AROUND RS. 2,33,03,973/ - , WHICH INCLUDES EXCESS STOCK OF RS. 95,00,000/ - . SUBSEQUENT TO THE SEARCH IN RESPONSE TO NOTICE UNDER SECTION 153A OF THE ACT, THE ASSESSEE FILED RETURN OF INCOME OF RS. 53,46, 680/ - ON 18 - 6 - 20 08. THE REGULAR RETURN UNDER SECTION 139 OF THE ACT WAS FILED ON 31 - 10 - 2005 WHEREIN AN INCOME OF RS. 24,58,705/ - WAS SHOWN. IN THE ASSESSMENT COMPLETED UNDER SECTION 153A/ 143(3), THE AO MADE AN ADDITION OF RS. 40,66,432/ - ON ACCOUNT OF PAYMENT MADE FOR BOGUS PURCHASES AND RS. 6000/ - ON ACCOUNT OF INTEREST ON MONEY LENDING, RS. 1,15,313/ - ON ACCOUNT OF DISCLOSED INTEREST FROM M/S PRAKASH SAREES, RS. 8,67,482/ - ON ACCOUNT OF CIRCULATING CAPITAL AND RS. 50,000/ - ON CAR RENT AS UNACCOUNTED EXPENDITURE. AGAINST THESE ADDITIONS, THE ASSESSEE PREFERRED APPEAL BEFORE LEARNED CIT(A) CHALLENGING ALL THE ADDITIONS MADE BY AO. 3.2 IN RESPECT TO ADDITION OF RS. 40,66, 432/ - , THE AO MADE ADDITION ON ACCOUNT OF PAYMENT FOR BOGUS PURCHASES. THE FACTS IN THIS REGARD HAS BEEN DISCU SSED IN PARA 7 OF THE ASSESSMENT ORDER. AS PER THE ASSESSMENT ORDER, A SURVEY UNDER SECTION 133A WAS CONDUCTED AGAINST ONE SHRI RAMESH V. PATEL , WHO WAS INVOLVED IN PROVIDING ACCOMMODATION BILLS TO THE ASSESSEE ON ACCOUNT OF BOGUS PURCHASES. THE STATEMENT OF SHRI PATEL WAS ALSO RECORDED TWICE I.E. ON 21 ST AND 25 TH JULY, 2006 I.E. AFTER A FEW DAYS OF CONDUCTING THE SEARCH ON THE GROUP OF THE ASSESSEE. SHRI PATEL ADMITTED THAT HE IS PROVIDING IT (SS) A NO S . 21 TO 24/NAG /20 10 & IT (SS) A NOS.25 TO 29/NAG/2010 4 ACCOMMODATION BILLS TO GROUP CONCERN OF THE ASSESSEE IN THE NAME OF 7 PARTIES MENTIONED IN THE ORDER OF CIT(A) AT PAGE 3. IT WAS ADMITTED BY HIM THAT NO GOODS WERE SUPPLIED PHYSICALLY. THE MONEY WAS SENT TO HIM BY DD AND THESE DDS WERE HANDED OVER TO ONE SHRI BHAGUBAI DAVE, WHO IN TURN DEPOSITS THE DD IN THE NAME OF THE S AID PARTIES, WHO ISSUED THE ACCOMMODATION BILLS FOR WHICH MR. PATEL USED TO GIVE COMMISSION OF 1%, WHICH WAS SHARED BY HIM WITH MR. DAVE IN RATIO OF 25% TO 40%. 3.3 DURING THE ASSESSMENT PROCEEDING, THE AO OBSERVED IN HIS ORDER THAT NOTICE UNDER SECTION 133(6) WERE SENT TO THESE PARTIES BUT THEY RETURNED UNDELIVERED WITH THE COMMENT NOT KNOWN, RETURN TO SENDER. THUS, ACCORDING TO THE AO, THE PURCHASES ARE BOGUS AS THESE PARTIES WERE NOT GENUINE AND ACCORDINGLY, GAVE NOTICE TO THE ASSESSEE REQUIRING HIM TO INFORM IN WRITING ABOUT THE EXPLANATION. AS PER THE ORDER OF THE AO, THE ASSESSEE HAS NO EXPLANATION TO OFFER REGARDING GENUINENESS OF PURCHASES AND AS SUCH PAYMENT MADE TO THESE PARTIES DURING THIS PERIOD AMOUNTING TO RS. 40,66,432/ - WAS ADDED TO THE I NCOME OF THE ASSESSEE. 3.4 BEFORE THE LEARNED CIT(A) , IT WAS SUBMITTED THAT LEDGER ACCOUNTS OF ALL THE 7 PARTIES AND ALSO A CHART OF PURCHASES & PAYMENT TO THESE SEVEN PARTIES WERE PREPARED ON THE BASIS OF LEDGERS, WHICH WAS PRODUCED BEFORE THE AO. COPY O F WHICH IS ALSO ENCLOSED IN THE PAPER BOOK AT PAGE 11. IT WAS FURTHER EXPLAINED THAT THE TOTAL PAYMENT TO IT (SS) A NO S . 21 TO 24/NAG /20 10 & IT (SS) A NOS.25 TO 29/NAG/2010 5 THESE PARTIES AS PER THE CHART IS RS. 40,66,432/ - , HOWEVER, THE PURCHASES DURING THE YEAR UNDER CONSIDERATION WERE OF RS. 25,01,882/ - . THE DETAIL OF PUR CHASES MADE DURING THE YEAR UNDER CONSIDERATION WAS ALSO FILED. IT WAS FURTHER SUBMITTED THAT IN FACT THERE WAS AN OPENING CREDIT BALANCE OF THESE PARTIES AMOUNTING TO RS. 15 LAKH OR ODD WHICH WAS GIVEN FROM THE LAST YEAR AND IN THIS WAY TOTAL PAYMENT OF RS . 40,66,432/ - WAS MADE WHICH HAS BEEN ADDED BY THE AO . THE ASSESSEE FILED A DETAILED WRITTEN SUBMISSION ALONG WITH PAPER BOOK COMPRISES OF VARIOUS SUBMISSION GIVEN BEFORE THE AO AS WELL AS COPIES OF ACCOUNT OF THESE PARTIES APPEARING IN HIS BOOKS AND ALSO A CONSOLIDATED CHART OF SUMMARY OF THEIR ACCOUNTS. IT WAS EXPLAINED THAT THE ENTIRE PAYMENT MADE TO THESE PARTIES BY ACCOUNT PAYEE BANK CHEQUE S TO THE THROUGH BANK AND ARE ACCOUNTED FOR IN THE REGULAR AUDITED ACCOUNTS. ACCORDING TO THE ASSESSEE AS ALL THES E PAYMENTS ARE MADE FROM REGULAR BOOKS AS SHOWN IN KHATA UTARA WHICH ARE ALREADY SUBMITTED BEFORE THE AO IN THE ASSESSMENT PROCEEDINGS, THE QUESTION OF ASSESSING THESE AMOUNTS AS UND ISCLOSED INCOME IS UNJUSTIFIED AND AFFIDAVIT OF SHRI N.C.BHARANI WAS ALSO FILED BEFORE THE AO . COPY OF WHICH IS ENCLOSED IN THE PAPER BOOK. IT WAS EXPLAINED THAT THE BOOKS OF ACCOUNTS WERE PRODUCED FOR VERIFICATION. THE ATTENTION OF THE LEARNED CIT(A) WAS INVITED ON REPLY DATED 20 - 5 - 2008 SUBMITTED BEFORE THE AO IN RESPONSE TO TH E QUESTIONNAIRE ISSUED BY THE AO. THE REPLY FILED BEFORE THE AO HAS BEEN REPRODUCED IN THE ORDER OF CIT(A) AT PAGE 4 TO 9 OF HIS ORDER. IT WAS EXPLAINED THAT THE PHYSICAL DELIVERY OF GOODS AS IT (SS) A NO S . 21 TO 24/NAG /20 10 & IT (SS) A NOS.25 TO 29/NAG/2010 6 PER THE BILLS WERE TAKEN. COPY OF FREIGHT AND OCTROI WAS ALSO P RODUCED BEFORE THE AO ALONG WITH PAYMENT MADE THROUGH BANK. IT WAS ALSO EXPLAINED THAT THE ASSESSEE DOES NOT KNOW THAT MR. PATEL IS PROVIDING ACCOMMODATION BILLS FROM ONE PARTY AND GOODS DELIVERED BELONG TO OTHERS. IT WAS EXPLAINED THAT THE GOODS PURCHASED THROUGH MR. PATEL HAS BEEN RECEIVED BY THE ASSESSEE THROUGH TRANSPORTATION, COPY OF RR ALONG WITH COPY OF BILLS, COPY OF FREIGHT PAID AND COPY OF OCTROI WERE ALSO FILED BEFORE THE AO. IT WAS FURTHER EXPLAINED THAT MR. PATEL USED TO SEND THE GOODS TO THE A SSESSEE AND USED TO SEND THE BILLS OF VARIOS PARTIES AND IN TURN THE ASSESSEE USED TO REMIT THE PURCHASE PRICE BY CHEQUES/DD DRAWN IN THE NAME OF THE RESPECTIVE PARTIES. IT WAS FURTHER EXPLAINED THAT THE ASSESSEE HAS NEVER WITHDRAWN ANY CASH BY SELF CHEQU E FROM THE ACCOUNT OF THE VARIOUS PARTIES AS MENTIONED. ACCORDINGLY, IT WAS EXPLAINED THAT THE SO - CALLED STATEMENT GIVEN BY MR. PATEL IS CONTRARY TO THE FACTS AND NOT ACCEPTABLE TO THE ASSESSEE. IT WAS FURTHER EXPLAINED THAT THE AO HAS MERELY RELIED ON TH E SO - CALLED STATEMENT OF MR. PATEL OF MUMBAI . IT WAS FURTHER STATED THAT COPY OF THESE STATEMENTS WERE NEVER PROVIDED TO THE ASSESSEE, HOWEVER, A SHOW CAUSE NOTICED DATED 8 - 2 - 2008 WAS RECEIVED FROM THE AO WHERE SOME QUESTION ANSWERS MENTIONED IN THE STATEM ENT WERE NOTED AND PROPOSED TO MAKE THE ADDITION. 3.5 IT WAS SUBMITTED THAT A PROPER REPLY HAS BEEN FILED ALONG WITH REQUIRED DETAILS . IT WAS EXPLAINED VIDE LETTER DATED 12 - 8 - 2008 THAT THE IT (SS) A NO S . 21 TO 24/NAG /20 10 & IT (SS) A NOS.25 TO 29/NAG/2010 7 ASSESSEE IS CARRYING ON BUSINESS IN SHARES ON WHOLESALE BASIS FOR WHICH BOOKS OF ACCOUNTS ARE MAINTAINED REGULARLY WHICH ARE CLOSED AND BALANCED. ALL SALES AND PURCHASES ARE FULLY VOUCHED . THE YEARLY TURNOVER OF THE ASSESSEE AND HIS BROTHER TOGETHER IS AROUND RS. 12 - 15 CRORES AND MOST OF THE PURCHASES ARE AFFECTED THROU GH BROKERS WHO ARE STATIONED AT VARIOUS PLACES FROM WHERE THE GOODS ARE PURCHASED . AGAINST ALL THESE PARTIES , THE SALES HAVE BEEN AFFECTED BY THE ASSESSEE AND THEY HAVE BEEN ACCEPTED ALSO . IT WAS FURTHER EXPLAINED THAT SINCE LAST 3 - 4 YEARS THE ASSESSEE HAS NO CONTACT WITH SHRI RAMESH V. PATEL AS THE ASSESSEE IS NOT AFFECTING ANY PURCHASES THROUGH HIM AND, THEREFORE, HE IS NOT ON GOOD TERMS WITH THE ASSESSEE. THEREFORE, HE MADE FALSE ALLEGATIONS AGAINST THE ASSESSEE, WHICH CANNOT BE /SHOULD NOT BE RELIED UPON . IT WAS FURTHER STATED THAT NEITHER ANY MATERIAL WAS FOUND DURING THE COURSE OF SEARCH AT THE PREMISES OF THE ASSESSEE NOR ANY MATERIAL WAS FOUND AT THE TIME OF SEARCH CONDUCTED AT THE PREMISES OF MR. PATEL, SHOWING THAT THE ASSESSEE HAS EVER PAID ANY COM MISSION TO MR. PATEL. THEREFORE, IN CASE OF SEARCH, NO ADDITION CAN BE MADE IF THERE IS NO CORROBORATED MATERIAL. IT WAS ALSO EXPLAINED THAT EVEN AFTER SEARCH IN THE ASSESSMENT PROCEEDING, THE AO HAS NOT COLLECTED ANY SUCH EVIDENCE WHICH GOES TO SHOW THAT R.V.PATEL HAS RETURNED THE AMOUNT BACK TO THE ASSESSEE OR ANY REPRESENTATIVE OF THE ASSESSEE. IT WAS ALSO EXPLAINED THAT THERE IS NOTHING ON RECORD TO KNOW WHO IS BHAGUBHAI DAVE THROUGH WHOM MR. R.V.PATEL GET THE WORK DONE AS ALLEGED BY HIM AND AS SUCH THE STATEMENT OR INFORMATION DEPOSED IT (SS) A NO S . 21 TO 24/NAG /20 10 & IT (SS) A NOS.25 TO 29/NAG/2010 8 BY MR. PATEL, CANNOT BE RELIED UPON . IT WAS ALSO STATED THAT MR. BHAGUBHAI DAVE WAS ALSO NOT EXAMINED, THEREFORE, CONTEXT OF THE STATEMENT OF MR. PATEL REMAINED UNVERIFIED . IT WAS ALSO EXPLAINED THAT THE STATEMENT OF MR. P ATEL WAS RECORDED IN THE MID NIGHT OF 21 ST & 22 ND JULY, 2006 , THEREFORE, HE MAY NOT BE KNOWING THE PROPER STATE OF AFFAIRS TO GIVE THE STATEMENT. IT WAS ALSO EXPLAINED THAT IT IS POSSIBLE THAT MR. PATEL MAY BE SENDING THE GOODS TO THE ASSESSEE BELONGING TO OTHER MANUFACTURERS/TRADERS AND TO ACCOMMODATE THEM. HE MAY BE ARRANGING THE BILLS FOR THE ASSESSEE FROM OTHER PERSONS, WHICH ARE ARRANGED BY ONE SO CALLED BHAGUBHAI DAVE. NEITHER THE ASSESSEE IS INVOLVED IN PROVIDING ACCOMMODATION BILLS NOR IT IS A CASE OF NO GOODS HAVE BEEN DELIVERED BY THE ASSESSEE BECAUSE THE ASSESSEE HAS RECEIVED GOODS PHYSICALLY, WHICH ARE SOLD IN THE OPEN MARKET. 3.6 IT WAS ALSO EXPLAINED THAT IF THE CONTENTION OF THE DEPARTMENT IS ACCEPTED THEN IN THAT CASE ALSO NO ADDITION CAN BE MADE IN THE HANDS OF THE ASSESSEE AS THERE WAS AN EXCESS STOCK AT RS .95, 00,000/ - , WHICH HAS BEEN CIRCULATED DURING THE COURSE OF SEARCH AND DUE TAX HAS BEEN PAID ON THAT AMOUNT. IT WAS ALSO STATED THAT IF NO SUCH GOODS WERE RECEIVED BY THE ASSESSEE, THEY THERE SHOULD BE THE SHORTAGE OF STOCK, WHEREAS THE EXCESS STOCK WAS FOUND DURING THE COURSE OF SEARCH, THEREFORE, IT CANNOT BE SAID THAT NO GOODS WERE RECEIVED BY THE ASSESSEE FROM THE SAID 7 PARTIES. THEREFORE, SEPARATE ADDITION MADE BY THE AO ON ACCOUNT OF SO - CALLED BOGUS PURCHASES ARE NOT JUSTIFIED, IT (SS) A NO S . 21 TO 24/NAG /20 10 & IT (SS) A NOS.25 TO 29/NAG/2010 9 OTHERWISE, IT WILL TANTAMOUNT TO BE A DOUBLE ADDITION. IT WAS FURTHER EXPLAINED THAT TOTAL OF ADDITIONAL INCOME DISCLOSED IN THE HANDS OF ALL THE MEMBERS OF THE FAMILY & FIRM WILL BE AROUND RS. 2,33, 03, 973/ - A ND, THEREFORE, WHATEVER THE UNDISCLOSED INCOME WAS ASSESSED, THEY HAVE ALREADY BEEN DISCLOSED, THEREFORE, FOR THIS REASON ALSO, NO SEPARATE ADDITION WAS WARRANTED. ACCORDINGLY, IT WAS REQUESTED THAT THE ENTIRE ADDITION MADE BY THE AO EITHER ON ACCOUNT OF T HE BOGUS PURCHASES OR ON ACCOUNT OF CIRCULATING, DESERVES TO BE DELETED. 3.7 ALL THESE S UBMISSION SUBMITTED BEFORE THE LEARNED CIT(A) , COPY OF WHICH WAS SENT TO THE AO FOR HIS REMAND REPORT. THE AO VERIFIED THE SUBMISSIONS MADE BY AR BEFORE THE CIT(A) . THE AO, WHO SENT THE REMAND REPORT REITERATING HIS CONTENTION MENTIONED IN THE ASSESSMENT O RDER. HOWEVER, HE HAS NOT CONTROVERTED THE SUBMISSION MADE BY THE ASSESSEE NEITHER THEY ARE REBUTTED. IN RESPONSE TO REMAND REPORT, A DETAILED REPLY WAS FILED ON BEHALF OF THE ASSESSEE ALSO AND IT WAS FURTHER EXPLAINED THAT MR. PATEL HAS STATED THAT AFTER ENCASHING THE CHEQUE, THE MONEY RECEIVED BACK WAS DEPOSITED IN TWO BANK ACCOUNTS OF THE ASSESSEE OPERATED IN MUMBAI . ONE BANK ACCOUNT BEARING NO. 175 IN AKOLA URBAN CO - OPERATIVE . BANK AT KALBADEVI, MUMBAI AND ANOTHER BANK ACCOUNT BEARING NO. LAFDR 68 IN AKOL A JANATA COMMERCIAL CO - OPERATIVE BANK AT KALBADEVI BRANCH MUMBAI . IT WAS EXPLAINED THAT BOTH THESE ACCOUNTS WERE CLOSED ON 6 - 3 - 2004 AND THEREFORE, NO QUESTION OF DEPOSITING THE CASH IN THESE BANK ACCOUNTS. IT (SS) A NO S . 21 TO 24/NAG /20 10 & IT (SS) A NOS.25 TO 29/NAG/2010 10 WHATEVER THE CASH WAS DEPOSITED IN THESE BANK ACCO UNTS, THE SAME WAS DEPOSITED OUT OF CASH BALANCE IN THE REGULAR BANK ACCOUNTS. COPY OF REGULAR BANK ACCOUNT WAS PRODUCED BEFORE THE AO AS WELL AS THE CIT(A) . IT WAS FURTHER EXPLAINED THAT THE ENTIRE PAYMENT TO THE 7 PARTIES AT MUMBAI WAS NOT MADE IN THESE ACCOUNTS AS THE PAYMENTS TO 7 PARTIES HAVE GONE FROM ACCOUNT NO. 2572320000154 OF HDFC BANK AT AMRAVATI . COPY OF THE BANK ACCOUNT MAINTAINED WITH HDFC BANK WAS ALSO FILED . IT WAS FURTHER EXPLAINED THAT THE BOOKS OF ACCOUNTS ARE DULY AUDITED UNDER SECTI O N 4 4AB. IT WAS ALSO EXPLAINED THAT IN THE STATEMENT OF MR. PATEL, IN QUESTION NO. 9, A REFERENCE IS MADE OF BANK ACCOUNT NO. 1578 AND ACCOUNT NO. 2370 . BOTH THESE ACCOUNTS DO NOT BELONG TO THE ASSESSEE. THE ASSESSEE HAS NO CONCERN WITH THESE ACCOUNTS. THEREAFTE R LEARNED CIT(A) CONSIDERING THE SUBMISSIONS OF THE ASSESSEE, REMAND REPORT OF THE AO AND SUBMISSION FILED IN RESPONSE TO REMAND REPORT, FOUND THAT THE ADDITION MADE BY THE AO ON ACCOUNT OF PAYMENT MADE FOR BOGUS PURCHASE, WAS NOT JUSTIFIED. LEARNED CIT(A) HAS CONSIDERED EACH AND EVERY ASPECT AND OBJECTIONS RAISED BY THE AO IN HIS ORDER AND THEREAFTER CONCLUDED THAT THE AO WAS NOT JUSTIFIED IN MAKING THE ADDITION. THE CIT(A) HAS ASCERTAINED THE FACTUAL ASPECT MINUTELY AS HE HAS TAKEN INTO CONSIDERATION EACH AND EVERY POINT RAISED IN THE ASSESSMENT ORDER. THE FINDINGS OF THE LEARNED CIT(A) HAVE BEEN RECORDED IN PARA 11 AT PAGES 12 TO 16 OF HIS ORDER ARE REPRODUCED HEREINBELOW : - IT (SS) A NO S . 21 TO 24/NAG /20 10 & IT (SS) A NOS.25 TO 29/NAG/2010 11 1. I HAVE CONSIDERED THE FINDINGS OF THE AD IN THE ASSESSMENT ORDER AND THE REMAN D REPORT OF THE ASSESSING OFFICER AND HAVE ALSO CONSIDERED THE SUBMISSIONS ON BEHALF OF THE APPELLANT. FROM THE APPRECIATION OF THE FACTS OF THE CASE I AM INCLINED TO HOLD THAT THE ADDITION OF RS. 40,66,432/ - ON ACCOUNT OF BOGUS PURCHASES WAS NOT WARRANTED IN THIS CASE THE BASIC FACTS OF THE CASE OF THE APPELLANT IS THAT THERE ARE PURCHASES DURING THIS YEAR FROM THE FIVE OUT OF SEVEN MUMBAI PARTIES, AS IS OBVIOUS FROM TH E C O PIE S OF ACCOUNTS OF THESE PARTIES. IT WILL BE SEEN FROM THESE COPIES THAT APPELLANT MADE PAYMENT TO THESE PARTIES BY BANK CHEQUES WHICH ARE DULY ACCOUNTED FOR IN THE REGULAR BOOKS OF ACCOUNTS WHICH ARE DULY AUDITED. IT IS SEEN THAT THE PURCHASES ARE NOT INFLATED BY ANY ENTRY OF ALLEGED BOGUS PURCHASES DURING THIS YEAR UNDER CONSIDERATION. 11.1 DURING THE YEAR UNDER CONSIDERATION THERE IS PURCHASE FROM FIVE OUT OF SEVEN MUMBAI PARTIES AND THE TOTAL PURCHASES FROM THESE FIVE PARTIES OF MUMBAL ARE OF RS. 25,01 882 - IT IS SEEN THAT DURING THE YEAR THERE IS NO PURCHASE FROM M/S SARANG ENTERPR ISES AND M/S SHIVSHAKTI ENTERPRISE MUMBAI. IT IS ALSO SEEN THAT IN AY 2004 - 05, THERE WAS PURCHASE TRANSACTIONS WITH THESE SEVEN MUMBAI PARTIES TOTAL PURCHASE DURING THE AY 2004 - 05 WAS OF AMOUNT OF RS. 26,76,118/ - OF THE SAME RS. 11,11,568/ - HAS BEEN PAID T O THREE PARTIES AND THE AMOUNT OF RS.15,64,550/ - HAS BEEN SHOWN AS SUNDRY CREDITORS AGAINST THE REMAINING FOUR PARTIES AS PER THE BALANCE SHEET AS ON 31 - 03 - 2004. DURING THIS ASSESSMENT YEAR, I.E., AY 2005 - 06 THE APPELLANT HAS PAID THE OUTSTANDING LIABILI TY AGAINST THESE FOUR PARTIES AMOUNTING TO 15,54,550/ - ALORG WITH THAT THE APPELLANT HAS ALSO PAID THE ENTIRE AMOUNT OF FRESH PURCHASES AMOUNTING TO RS. 25 ,01,88 2/. - WHICH HAS TAKEN PLACE WITH THE FIVE MUMBAI PARTIES DURING THE AY 2005 - 06. THUS, DURING THE AY 2005 - 06 A TOTAL AMOUNT OF PAYMENT OF S. 40,66,432/ - HAS TAKEN PLACE WHICH CONSISTS OF THE OUTSTANDING AMOUNT OF RS.1 5,66,960/ - AND FRESH PURCHASES OF RS. 25,01,882/ - . THE A O HAS MADE ADDITION OF PAYMENTS OF RS. 40,66,432/ - AS AGAINST THE TOTAL PURCHASES OF SHOWN BY THE APPELLANT IN ITS AUDITED BOOKS OF ACCOUNT. THUS, THE A O HAS MADE THIS ADDITION OF RS. 40,66,432/ - AS PAYMENT AGAINST ALLEGED BOGUS PURCHASES THOUGH THESE ARE ACTUAL PAYMENTS AGAINST THE TOTAL PURCHASES AMOUNTING TO RS. 25,01,882/ - AND OUTS TANDING AMOUNT OF RS. 15,66,960/ - FOR AY 2004 - 05. THE AMOUNT OF PURCHASES OF RS. 25,01,882/ - HAS BEEN DEBITED TO THE TRADING A/C AND P & L A/C OF THE APPELLANT FOR THIS ASSESSMENT YEAR. 11.2 FROM THE DETAILS OF PAYMENT IT IS SEEN THAT THESE PAYMENTS HAVE ACTUALLY BEEN MADE TO THE SEVEN PARTIES FROM WHOM PURCHASE TRANSACTIONS WERE AT MUMBAL. THE APPELLANT HAS PRODUCED THE PROOF THAT THESE PAYMENTS HAVE BEEN MADE BY CHEQUES. FROM THE COPY OF THE BANK ACCOUNT NO. 2572320000154 IN H.D.F.C. BANK AT AMRAVATI, IT IS SEEN THAT ALL THESE PAYMENTS ARE REFLECTED IN THIS BANK ACCOUNT. THERE IS NO PAYMENT TO THESE PARTIES FROM THE BANK ACCOUNTS NO. 68 OF AKOLA JANATA COMMERCIAL CO - OP. BANK NOR FROM A/C NO. 175 OF AKOLA URBAN CO OP. BANK, KALBADEVI BRANCH OF MUMBAI. THE ACCOUNT NO. 68 OF AKOLA JANATA COMMERCIAL CO - OP. BANK WAS CLOSED ON 06 - 03 - 2004. BESIDES, THE A/C NO. 175 OF AKOLA IT (SS) A NO S . 21 TO 24/NAG /20 10 & IT (SS) A NOS.25 TO 29/NAG/2010 12 URBAN CO - OP. BANK, KALBADEVI, MUMBAI WAS ALSO ANALYSED AND IT IS SEEN THAT THE RE ARE VERY FEW CASH DEPOSITS IN THIS ACCOUNT AND THE SAME DEP OSITS ARE CHANNELIZED FROM THE CASH BOOK OF THE APPELLANT AND ARE WELL REFLECTED IN THE CASH BOOK, MAINTAINED BY THE APPELLANT AT AMRAVATI. THUS THE CASH DEPOSITS IN THIS ACCOUNT AT KALBADEVI, MUMBAI ARE EXPLAINED. THUS THE FINDINGS OF THE AC THAT TH E SE PA YMENTS FOR PURCHASES HAVE GONE FROM THE BANK ACCOUNT AT KALBADEVI, ARE FOUND TO BE NOT CORRECT. BESIDES THE CASH DEPOSITS IN THE BANK ACCOUNT AT KALBADEVI, MUMBAI ARE FOUND TO HAVE BEEN CHANNELIZED FROM THE CASH BOOK OF THE APPELLANT. HENCE THE FINDINGS OF THE AC THAT THE APPELLANT USED TO RECEIVE THE CASH AMOUNT FROM THE) A T MUM BAI BROKER, AFTER ENCASHING THE PAYMENTS TO THESE SEVEN MUMBAI PARTIES AND DEPOSIT THE SAME IN THE ACCOUNT AT KALBADEVI, MUMBAI ARE ALSO FOUND TO BE W RONG IN THE LIGHT OF THE ABOVE FACTS OF THE CASE. 11.3 BESIDES REGARDING THE PHYSICAL DELIVERY OF SUCH ALLEGED BOGUS PURCHASES, THE APPELLANT HAS PRODUCED THE BILLS OF THESE PARTIES AND THE DOCUMENTARY EVIDENCE OF PAYMENTS AND OCTROI PAYMENTS ON THOSE GOODS. THE APPELLANT HAS PRODUCED THE TRANSPORT PAYMENT RECEIPTS IN WHICH AGAINST THE NAME OF THE CONSIGNER THE NAME OF THESE MUMBAI PARTIES ARE MENTIONED. IN THESE DELIVERY CHALLANS THE NAME OF THE APPELLANT IS MENTIONED AS CONSIGNEE APART FROM THESE LORRY RECEIPTS THE APPELLANT HAS ALSO PRODUCED THE COPIES AS WELL AS ORIGINAL RECEIPTS FROM WHICH IT IS SEEN THAT OCTROI HAS BEEN PAID AGAINST THE PRICE OF THE GOODS, WHICH ARE MENTIONED IN THE RESPECTIVE BILLS. THE INDIVIDUAL OCTRO I RECEIPTS ALSO BEAR THE LR NO. WHICH IS THERE ON THE INDIVID UAL SALE BILL AND THE CORRESPONDING FREIGHT RECEIPT. THE ORIGINAL TRANSPORT RECEIPTS AND OCTRO I RECEIPTS ARE PRODUCED AND VERIFIED AND THE COPIES ARE KEPT ON RECORD. THUS THE SALE BILLS ISSUED BY THESE SEVEN MUMBAI PARTIES AND THE BILL - WISE FREIGHT AND TRA NSPORT RECEIPTS AND THE CORRESPONDING OF OCTROI PAYMENTS, CLINCHES THE ISSUE IN FAVOUR OF THE APPELLANT THAT, HE HAS NOT ONLY PURCHASED THE GOODS, BUT HAS ALSO PHYSICALLY RECEIVED THE SAME AT AMRAVATI. BESIDES THE CHEQUE PAYMENTS FOR THESE PURCHASERS ARE R EFLECTED IN THE APPE L LANTS H.D.F.C. A/C AT AMRAVATI. THUS IN THE LIGHT OF THE ABOVE DOCUMENTARY EVIDENCES PRODUCED BY THE APPELLANT, IT IS CLEARLY ESTABL I SHED THAT THE GOODS FROM THE SEVEN MUMBAI PARTIES HAVE ACTUALLY BEEN RECEIVED BY THE APPELLANT AND PH YSICAL DELIVERY OF THE PURCHASED GOODS HAS TAKEN PLACE AND THE SAME ARE SOLD SUBSEQUENTLY. HENCE IN THE LIGHT OF THE ABOVE DOCUMENTARY EVIDENCES, SUCH AS PAYMENT THROUGH BANKING CHANNEL, TRANSPORT RECEIPTS, OCTROI RECEIPTS, I AM OF THE CONSIDERED OPINION T HAT THE A O WAS WRONG IN HER FINDINGS THAT THE GOODS HAVE NOT BEEN PHYSICALLY RECEIV ED BY THE APPELLANT. BESIDES IN THE LIGHT OF THE ABOVE EVIDENCE, THE A O WAS WRONG IN HER FINDINGS THAT THESE PAYMENTS FOR THESE ALLEGED BOGUS PURCHASES HAD BEEN ROUTED BACK TO THE APPELLANT IN CASH AFTER GETTING THOSE PAYMENTS ENCASHED AT MUMBAI. MORESO WHEN THE AO HAS NOT BROUGHT ANY EVIDENCE ON RECORD TO ESTABLISH THAT, THESE PAYMENTS FOR PURCHASES WHICH WERE MADE THROUGH THE BANKING CHANNEL, HAVE BEEN ROUTED BACK TO THE AP PELLANT AFTER THE ENCASHMENT OF THE CHEQUES BY THESE SEVEN PARTIES. IT (SS) A NO S . 21 TO 24/NAG /20 10 & IT (SS) A NOS.25 TO 29/NAG/2010 13 11.4 THE AC IN HER ASSESSMENT ORDER HAS PLACED MUCH RELIANCE ON THE STATEMENT OF SHRI R.V. PATEL WHO WAS COVERED /S 133A OF THE ACT AND THE AC RELIED ON THE SAME TO MAKE THE ABOVE ADNS. IN HIS STATEMENT SHRI R.V. PATEL HAS STATED THAT HE WAS ARRANGING ACCOMMODATION BILLS FOR THE AP PELLANT AND AFTER ENCASHING THE CHEQUE PAYMENTS TO THE SEVEN PARTIES, CASH WAS WITHDRAWN AND DEPOSITED IN THE ASSESSEES BANK ACCOUNT MAINTAINED AT KALBADEVI, MUMB AI. IN THIS REGARD I HAVE EXAMINED THE BANK ACCOUNTS OF THE A P PELLANT IN A/C NO. 68 OF AKOLA JANATA COMMERCIAL CO - OPERATIVE BANK LTD., KALBADEVI AND A/NO. 175 OF AKOLA URBAN C O OPERATIVE BANK LTD., KALBADEVI, MURNBAI. THE A/C NO. 68 OF AKOLA JANATA COMMER CIAL CO - OP. BANK AT KALBADEVI, MUMBAI WAS CLOSED ON 06 - 03 - 2004. THE CASH DEPOSITS IN THE A/C NO.175 OF AKOLA URBAN CO - OPERATIVE BANK LTD., KALBADEVI, MUMBAI HAVE BEEN EXAMINED AND IT IS FOUND THAT THE D E P O SITS HAVE TAKEN PLACE AFTER DUE WITHDRAWAL FROM THE ASSESSEES CASH BOOK AND BANK ACCOUNT MAINTAINED AT AMRAVATI. THE PAYMENTS MADE TO THE SEVEN PARTIES HAVE BEEN REFLECTED IN THE ACCOUNT NO. 2572320000154, H.D.F.C. BANK AT AMRAVATI. THE CASH DEPOSITS IN THE A/C NO.175 HAVE BEEN EXAMINED VIS - A - VIS THE CASH BOOK AND BANK ACCOUNTS OF THE APPELLANT AT AMRAVATI AND SAME CASH DEPOSITS STANDS PROPERLY REFLECTED AND EXPLAINED. THE OTHER DEPOSITS ARE THROUGH DD AND TRANSFER FROM ASSESSEES CASH BOOK AND BANK ACCOUNTS MAINTAINED AT AMRAVATI . THUS FROM THESE EXAMINAT IONS OF THESE ACCOUNTS IT IS FOUND THAT THE CASH ALLEGED TO HAVE BEEN RECEIVED ON ACCOUNT OF ACCOMMODATION BILLS HAVE NOT BEEN DEPOSITED IN THESE TWO ACCOUNTS AT KALBADEVI, MUMBAI. THE PAYMENTS TO THESE MUMBAI PARTIES HAVE BEEN MADE BY CHEQUES ON VARIOUS D ATES AS PER THE BILL AMOUNTS WHICH IS RECORDED IN THE LEDGER OF THE ASSESSEE. IT SEEMS THAT THE A O HAS SOLELY RELIED ON THE STATE MENT OF SHRI R.V.PATEL AND THESE BANK ACCOUNTS OF THE ASSESSEE AT KALBA DEVI, MUMBAI WERE NOT EXAMINED PROPERLY BY THE A O . 11.5 APART FROM THE ABOVE SHRI R.V. PATEL IN HIS STATEMENT HAS ALSO STATED THAT THE ARRANGEMENT OF THE BOGUS ACCOMMODATION BILLS AND THE BANK TRANSACTIONS IN KALBADEVI, MUMBAI ARE DONE BY SHRI BHAGUBHAI DAVE. AS PER THE STATEMENT OF SHRI PATEL IT CAN BE INFER RED THAT SHRI BHAGUBHAI DAVE MAY B E ACTUALLY RUNNING THE SHOW AND IS THE MAJOR LI NK IN THESE CHAIN OF EVENTS IN ARRANGING THE ACCOMMODATION BILLS AND SHRI PATEL IS JUST TO GO BETWEEN THE APPELLANT AND SHRI BHAGUBHAI DAVE. THUS SHRI PATEL HAS PUT THE MAJOR ONUS ON SHRI BHAGUBHAI DAVE REGARDING THESE TRANSACTIONS OF THE ACCOMMODATION BILLS. HOWEVER, THE AC HAS NOT TRIED TO LOCATE SHRI BHAGUBHAI DAVE AND RECORD HIS STATEMENT. HENCE IN THE ABSENCE OF THE EXAMINATION OF SHRI BHAGUBAI DAVE , THE MODUS OPERANDI OF THE ALLEGED ARRANGEMENT OF ACCOMMODATION BILLS IS NOT COMPLETE AND NOT CONCLUSIVE. THE AD HAS NOT BROUGHT ON RECORD ANY SUCH MATERIAL REGARDING THE COMPLICITY OF SHRI BHAGUBHAI DAVE IN THE ARRANGEMENT OF THE ACCOMMODATION BILLS. HENCE IN THE LIGHT OF SUCH DISCREPANCIES THE RELIANCE OF THE AO ON SHRI R.V. PATELS STATEMENT FOR SUCH ADDITIONS REMAINS INCONCLUSIVE. IT (SS) A NO S . 21 TO 24/NAG /20 10 & IT (SS) A NOS.25 TO 29/NAG/2010 14 11.6 BESIDES DURING THE SURVEY U/S 133A OF THE ACT FROM THE RESIDENCE OF SHRI R.V. THE ALLEGED TRANSACTIONS WITH THE APPELLANT WAS FOUND. THE DOCU MENTS FOUND AT R.V. PATELS POSSESSION ARE MAINLY RELATED TO M/S. SEEMA SAREES PVT.LTD. APART FROM THAT IT IS SEEN THAT DURING THE POST SEARCH ASSESSMENT HUGE ADDITIONS HAVE BEEN MADE BY THE AC IN THE CASE OF THE APPELLANT ON ACCOUNT OF SUCH ALLEGED BOGUS PURCHASES IN THE AY 2002 - 03 TO 2006 - 07. THE FINDING OF THE A SSESSMENT ORDERS IS THAT CASH AMOUNTS OUT OF THE PAYMENT OF THE BOGUS PURCHASES HAVE BEEN RECEIVED BACK BY THE APPELLANT AND THE AC HAS ALSO MENTIONED THAT FOR ARRANGING SUCH ACCOMMODATION BILLS C ERTAIN COMMISSIONS HAVE ALSO BEEN PAID TO SHRI R.V. PATEL. HOWEVER, DURING THE COURSE OF SEARCH AT THE PREMISES OF THE APPELLANT AS WELL AS DURING THE COURSE OF THE SURVEY AT THE RN. PATELS PLACE NONE OF SUCH EVIDENCE HAS BEEN FOUND BY THE DEPARTMENT. SIN CE THE PAYMENTS IN TOTO ARE OF H UGE AMOUNTS AND SINCE THE TRANSACTIONS OF ACCOMMODATION BILLS ARE ALLEGED TO HAVE TAKEN PLACE OVER THE YEARS RIGHT UPTO AY 2006 - 07 AND ACCORDINGLY SINCE COMMISSIONS ALLEGED TO HAVE BEEN PAID ON THESE BILLS OVER THE YEARS, SO ME DOCUMENTARY EVIDENCES IN THE NORMAL CIRCUMSTANCES WOULD HAVE BEEN DEFINITELY AVAILABLE IN THE POSSESSION OF THE APPELLANT FOR THESE RECEIPTS AND PAYMENTS. HOWEVER, NO SUCH DOCUMENTARY EVIDENCES HAVE BEEN FOUND BY THE DEPARTMENT DURING THE COURSE OF THE SEARCH ON THE ASSESSEE AND NOR DURING THE COURSE OF SURVEY ON SHRI R.V. PATE!. BESIDES DURING THE POST SEARCH ASSESSMENT PROCEEDINGS THE AD HAS NOT BROUGHT OUT ANY EVIDENCE ON RECORD IN THIS REGARD. 11.7 HENCE IN THE ABSENCE OF SUCH CRUCIAL AND CORROBORA TIVE EVIDENCES, IT IS NOT PROPER ON THE PART OF THE AD TO RELY SOLELY ON THE STATEMENT OF SHRI RN. PATE L TO MAKE SUCH HUGE ADDITIONS. BESIDES IN THE APPELLATE PROCEEDINGS FOR THE AYS 2004 - 05 AND 2006 - 0 7 , IT IS SEEN THAT DURING THOSE ASSESSMENT YEARS PURCHA SES HAVE TAKEN PLACE FROM THESE SEVEN PARTIES AND THE APPE L LANT HAS PHYSICALLY RECEIVED THE CONSIGNMENTS AND HAS PAID FREIGHT AND OCTROI ON THE SAME. THESE FA CTS FOR THIS ASSESSMENT YEAR HAVE BEEN DISCUSSED IN DETAIL IN THE EARLIER PARAGRAPHS OF THIS O R DER . APART FROM ALL THESE, IT IS ALSO SEEN THAT AFTER T HE SEARCH ON ACCOUNT OF EXCESS STOCK THE APPELLANT S GROUP HAS DISCLOSED AN AMOUNT OF RS. 95,00,000/ - AS ITS INCOME. SINCE AT THE TIME OF THE SEARCH EXCESS STOCK WAS FOUND TO THE TUNE OF RS . 95,00,000 / - , THE FINDINGS OF THE AO REGARDING THE BOGUS PURCHASE DOES NOT HOLD MUCH WATER, BECAUSE IF THERE IS BOGUS PURCHASE, THE PURCHASE ACCOUNT WILL BE INF[ATED AND ON PHYSICAL VERIFICATION THERE WILL BE SHORTAGE OF STOCK. WHEREAS IN THIS C ASE EXCESS STOCK IS FOUND DURING THE SEARCH AND THE APPELLANTS GROUP HAS DISCLOSED RS. 95, 00,000/ - ON THAT ACCOUNT, AS INCOME, IN THE AY 2007 - 08, IN THE HANDS OF THE FIRM M/S. NANDA SAREE CENTRE. 11.8 THUS CONSIDERING ALL THE ABOVE FACTS AND CIRCUMSTANCES OF THE CASE, I AM OF T HE CONSIDERED OPINION THAT THE AD IS NOT CORRECT IN HER FINDINGS REGARDING THE ALLEGED PAYMENTS ON BOGUS PURCHASES AND ON THIS ACCOUNT NO ADDITION IS WARRANTED IN THIS CASE. THUS, IN VIEW OF THE ABOVE FACTS AND CIRCUMSTANCES OF THE CASE, I AM OF THE CONSID ERED OPINION THAT THE ADDITION MADE BY THE AD AT RS. IT (SS) A NO S . 21 TO 24/NAG /20 10 & IT (SS) A NOS.25 TO 29/NAG/2010 15 40,66,432/ - ON ACCOUNT OF SO - CALLED BOGUS PURCHASES IS NOT JUSTIFIED AND AS THE SAME IS NOT BASED ON PROPER APPRECIATION OF FACTS OF THE CASE AND ACCOUNTING PRINCIPLES. HENCE THE SAME ADDITION OF RS. 40, 66,432/ - IS HEREBY DIRECTED TO BE DELETED. 4 . LEARNED DR PLACED RELIANCE ON THE ORDER OF THE ASSESSING OFFICER. PART OF THE ORDER OF THE AO WAS READ ALSO. ATTENTIO N OF THE BENCH WAS DRAWN AT PARA 7 AT PAGE 12 O F THE ORDER OF THE AO . IT WAS SUBMITTED THAT THE ADDITION HAS BEEN MADE ON THE BASIS OF SUBMISSION OF SHRI PATEL , WHICH REMAINS UNCTROVERTED. IN A QUERY FROM THE FACT, LEARNED DR FAIRLY STATED THAT IN FACT THERE WAS NO INCRIMINATING DOCUMENT OR MATERIAL WAS FOUND IN RESPECT OF BOGUS PURCHASE AS HELD BY THE AO , NEITHER ANY MATERIAL WAS FOUND DURING THE COURSE OF SURVEY CONDUCTED AT THE PREMISES OF MR. PATEL. 4.1 AT THIS POINT OF TIME, LEARNED AR OF THE ASSESSEE ALSO STATED THAT EVEN THERE IS NO MENTION IN THE REMAND REPORT SENT BY THE AO AS IN FACT NO MATERIAL WHATSOEVER WAS FOUND INDICATING THE ASSESSEE IS INVOLVED IN BOGUS PURCHASES THROUGH ACCOMMODATION BILLS , I T WAS ALSO STATED BEFORE THE LEARNED CIT(A) . IT HAS BEEN STATED THAT COPY OF FREIGHT, COPY OF OCTROI WERE FILED BEFORE THE AO . EVEN AND OT HERWISE, THEY WERE NOT EXAMINED BY THE AO. AT THIS STAGE, LEARNED COUNSEL OF THE ASSESSEE STATED THAT THIS FACT WAS BROUGHT TO THE KNOWLEDGE OF AO THROUGH A LETTER, COPY OF WHICH HAS BEEN FILED BEFORE THE CIT(A) WHICH HAS BEEN REPRODUCED IN THE ORDER OF LE ARNED CIT(A) AND THEREAFTER REMAND REPORT WAS SOUGHT FROM THE AO. THEREFORE, IT CANNOT BE SAID THAT OCTROI IT (SS) A NO S . 21 TO 24/NAG /20 10 & IT (SS) A NOS.25 TO 29/NAG/2010 16 RECEIPTS AND BILLS FROM THE RESPECTIVE PARTIES ALONG WITH FREIGHT CHARGES PRODUCED BY THE ASSESSEE, WAS NOT EXAMINED BY THE AO. 4.2 LEARNED DR ALS O STATED THAT THIS IS A CASE OF LACK OF ENQUIRY AND IF THE BENCH THINKS FIT SO, IT CAN BE SENT BACK TO THE FILE OF THE AO FOR RE - EXAMINATION. 4.3 AGAIN LEARNED AR OF THE ASSESSEE STRONGLY OBJECTED IN RESTORING THE MATTER TO THE FILE OF THE AO AS LEARNED C IT(A) HAS EXAMINED THE ISSUE IN GREAT DETAIL AND MINUTELY AND AFTER RECEIVING THE REMAND REPORT FROM THE AO . THEREAFTER LEARNED AR OF THE ASSESSEE REITERATED HIS CONTENTION RAISED BEFORE THE LEARNED CIT(A) . ATTENTION OF THE BENCH WAS DRAWN AT PAGE 44, 62, 79, WHERE COPY OF LORRY RECEIPT, COPY OF OCTROI RECEIPT AND FREIGHT CHARGES HAVE BEEN PLACED. THEREFORE, THERE IS NO QUESTION OF SENDING THE MATTER BACK TO THE FILE OF THE AO. 5 . WE HAVE HEARD RIVAL SUBMISSIONS OF THE PARTIES AND CONSIDERED THEM CAREFULL Y. WE HAVE ALSO PERUSED THE ORDER OF THE AO AS WELL AS LEARNED CIT(A) . AFTER CONSIDERING THE SUBMISSIONS AND PERUSING THE MATERIAL ON RECORD, WE FIND NO INFIRMITY IN THE FINDINGS OF THE LEARNED CIT(A) . L EARNED CIT(A) HAS ASCERTAINED THE FACTUAL ASPECT OF T HE CASE BY EXAMINING THE DETAILS FILED BEFORE HIM. COPY OF VARIOUS SUBMISSIONS MADE BEFORE THE AO WERE ALSO CONSIDERED BY THE LEARNED CIT(A) . THE REMAND REPORT WAS ALSO SOUGHT FROM THE AO BY SENDING ALL THE DETAILS AND SUBMISSIONS FILED BEFORE HIM ON BEHAL F OF THE ASSESSEE, THEREAFTER IT (SS) A NO S . 21 TO 24/NAG /20 10 & IT (SS) A NOS.25 TO 29/NAG/2010 17 THE LEARNED CIT(A) FOUND THAT THE ONUS LAY UPON THE ASSESSEE HAS BEEN DULY DISCHARGED AS THE ASSESSEE HAS FILED ALL THE DETAILS IN RESPECT OF GOODS PURCHASED , FREIGHT CHARGES ETC. BILLS WERE RECEIVED, PAYMENTS WERE MADE THROUG H A/C PAYEE CHEQUES, GOODS WERE RECEIVED THROUGH LORRY. COPY OF RR WAS ALSO FILED. OCTROI CHARGES WERE ALSO PAID. COPY OF THE SAME WAS ALSO FILED. COPY OF FREIGHT CHARGES WAS ALSO FILED. FROM ALL THESE DETAILS, IT IS AMPLY PROVED THAT THE ASSESSEE HAS RECE IVED GOODS PURCHASED FROM 7 PARTIES. IT IS ALSO A MATTER OF FACT THAT WHATEVER THE PURCHASES WERE MADE FROM THESE PARTIES, THEY WERE SOLD IN THE MARKET AND SA LE HA S BEEN ACCEPTED BY THE DEPARTMENT. IT IS FURTHER SEEN THAT THIS IS A CASE OF SEARCH AND NO IN CRIMINATING MATERIAL OR DOCUMENT WAS FOUND EITHER DURING THE COURSE OF SEARCH OR AT THE PREMISE OF MR. PATEL, WHO WAS SUBJECT TO SURVEY UNDER SECTION 133A, NEITHER THERE WAS ANY EVIDENCE SUGGESTING THAT THE ASSESSEE HAS RECEIVED BACK AMOUNT PAID ON ACCOUNT OF PURCHASES FROM THE SEVEN PARTIES, NOR THERE IS ANY EVIDENCE IN RESPECT TO COMMISSION PAID, EXCEPT THE STATEMENT OF ONE MR. PATEL. STATEMENT OF SHRI PATEL CANNOT BE RELIED UPON FULLY BECAUSE THERE IS NO CORROBORATIVE EVIDENCE ALSO. MR. PATEL HAS MENTION ED TWO BANK ACCOUNTS BEARING NO. 1578 AND 2370. THESE BANK ACCOUNTS WERE NOT RELATED TO THE ASSESSEE. THE BANK ACCOUNT RELATED TO THE ASSESSEE WERE BEARING NO.175 IN AKOLA URBAN CO - OPERATIVE. BANK AT KALBADEVI, MUMBAI AND ANOTHER BANK ACCOUNT BEARING NO.LAF DR 68 IN AKOLA JANATA COMMERCIAL CO - OPERATIVE BANK AT KALBADEVI BRANCH MUMBAI . BOTH IT (SS) A NO S . 21 TO 24/NAG /20 10 & IT (SS) A NOS.25 TO 29/NAG/2010 18 THESE ACCOUNTS WERE CLOSED ON 6 - 3 - 2004. MR. PATEL HAS STATED THAT THE CONSIDERATION WHICH WAS TAKEN BACK FROM THE RESPECTIVE PARTIES WERE DEPOSITED IN THESE BANK ACCOUNT. NO SUCH PAYMENTS WAS DEPOSITED IN THESE ACCOUNTS SINCE THEY WERE CLOSED IN EARLIER YEARS, THEREFORE, STATEMENT OF SHRI PATEL CANNOT BE RELIED UPON. IN STATEMENT SHRI PATEL STATED THAT HE HAS TAKEN SERVICE OF MR. BHAGUBAI DAVE, NEITHER ANY STATEMENT OF MR. DAVE WAS RECORDED NOR COPY OF STATEMENT OF SHRI PATEL WAS PROVIDED TO THE ASSESSEE, EXCEPT COPY OF CERTAIN QUESTION ANSWERS WERE PUT TO MR. PATEL. THEREFORE, FOR THIS REASON ALSO, THE STATEMENT OF MR. PATEL CANNOT BE RELIED UPON. IT IS ALSO A MATTER OF FA CT THAT DURING THE COURSE OF SEARCH, EXCESS STOCK OF RS. 95,00,000/ - WAS FOUND WHICH HAS BEEN OFFERED FOR TAXATION, THEREFORE, IT CANNOT BE SAID THAT NO GOODS WERE RECEIVED BY THE ASSESSEE. IF GOODS WERE NOT RECEIVED THEN THERE SHOULD HAVE BEEN SHORT AGE OF STOCK WHERE AS THERE WAS EXCESS STOCK. THEREFORE, FOR THIS REASON ALSO, ADDITION MADE BY THE AO WAS NOT JUSTIFIED. IT IS ALSO A MATTER OF FACT THAT THE ASSESSEE HAS OFFERED UNDISCLOSED INCOME OF RS. 2,33,03,973/ - IN THE HANDS OF VARIOUS FAMILY MEMBERS AND G ROUP, THEREFORE, IF ANY UNDISCLOSED MONEY WAS THERE THAT HAS ALREADY BEEN DISCLOSED. IF THE ACTION OF THE DEPARTMENT IS APPROVED THEN IT WILL TANTAMOUNT TO DOUBLE ADDITION. THE FINDING OF THE LEARNED CIT(A) HAS BEEN REPRODUCED SOMEWHERE ABOVE IN THIS ORDER WHICH REMAINED UNCONTROVERTED . T HE LEARNED CIT(A) IN HIS FINDINGS, HAS DISCUSSED EACH AND EVERY OBJECTION RAISED BY THE AO AND REPLY FILED ON BEHALF OF THE ASSESSEE. THE FINDING OF THE LEARNED CIT(A) REMAINED IT (SS) A NO S . 21 TO 24/NAG /20 10 & IT (SS) A NOS.25 TO 29/NAG/2010 19 UNCONTROVERTED AS LEARNED DR HAS PLACED RELIAN CE ON THE ORDER OF THE AO ONLY . THEREFORE, WITHOUT GOING INTO THE DETAILS FURTHER WE ARE OF THE CONSIDERED VIEW THAT LEARNED C IT(A) WAS JUSTIFIED IN DELETING THE ADDITION MADE BY AO ON ACCOUNT OF PAYMENT MADE FOR BOGUS PURCHASES. THIS GROUND OF THE DEPARTM ENT FAILS. 6 . IN RESPECT TO OTHER GROUNDS , I.E. DELETING THE ADDITION MADE ON ACCOUNT OF INTEREST OF RS. 6,000/ - AND INTEREST ON ACCOUNT OF LOAN ADVANCED TO SHRI PRAKASH BHARANI, ADDITION MADE ON ACCO UNT OF CIRCULATING THE CAPITAL, L EARNED DR HAS PLACED RE LIANCE ON THE ORDER OF AO, WHEREAS LEARNED COUNSEL OF THE ASSESSEE HAS PLACED RELIANCE ON THE ORDER OF LEARNED CIT(A) . 7 . THESE GROUNDS ARE DISPOSED OF IN THE FOLLOWING MANNER : 7 .1 THE ADDITION MADE OF RS. 6000/ - ON ACCOUNT OF INTEREST . IT WAS SUBMIT TED BEFORE THE LEARNED CIT(A) THAT T HE ASSESSEE HAS ALREADY OFFERED AN INTEREST OF RS. 6,47,000/ - ON THE BASIS OF MATERIAL FOUND IN SEARCH. BEFORE THE LEARNED CIT(A) , IT WAS ALSO SUBMITTED THAT THE ASSESSEE HAS OFFERED A SUM OF RS. 50,000/ - EXTRA TO COVER UP OMISSIONS IF ANY. CONSIDERING, THE ABOVE FACTS, LEARNED CIT(A) DELETED THIS ADDITION. AFTER CONSIDERING THE ORDER OF THE AO AS WELL AS THE LEARNED CIT(A) , WE FIND NO INFIRMITY IN THE FINDINGS OF THE LEARNED CIT(A) , IT (SS) A NO S . 21 TO 24/NAG /20 10 & IT (SS) A NOS.25 TO 29/NAG/2010 20 WHO ASCERTAINED THE FACTUAL ASPECT THA T THE ASSESSEE HAS ALREADY DISCLOSED A SUM OF RS. 6,47,000/ - AS INTEREST ON ACCOUNT OF CIRCULATING CAPITAL AND RS. 50,000/ - HAVE ALSO BEEN SHOWN EXTRA TO COVER UP OMISSIONS, IF ANY. ACCORDINGLY, WE CONFIRM THE ORDER OF THE LEARNED CIT(A) ON THIS ISSUE. 7 .2 THE NEXT ISSUE IS IN REGARD TO DELETION RS. 1,15,313/ - BY THE AO ON ACCOUNT OF INTEREST FROM M/S PRAKASH BHARANI SAREES . DETAIL SUBMISSIONS WERE FILED BEFORE THE LEARNED CIT(A) . IT WAS FURTHER FOUND THAT NO MATERIAL WHATSOEVER FOUND DURING THE COURSE OF SEARCH IN RESPECT OF INTEREST RECEIVED FROM M/S PRAKASH BHARANI SAREES . IT WAS FURTHER SEEN THAT THE ASSESSEE HAS ALREADY SHOWN THE INCOME OF RS. 6,47,000/ - ON ACCOUNT OF UNDISCLOSED INTEREST. LEARNED CIT(A) PLACING RELIANCE ON THE DECISION IN THE CASE OF SUNDER AGENCIES VS. DCIT, 63 ITD 245(MUM) AND CIT VS. RAVIKANT JAIN, 250 ITR 141 , WHEREIN IT IS HELD THAT WITHOUT ANY MATERIAL, NO ADDITION CAN BE MADE IN SEARCH CASE , HELD THAT NO ADDITION CAN BE MADE . ACCORDINGLY, LEARNED CIT(A) DELETED THE ADDITION ALSO. AFTER CONSIDERING THE ORDER OF THE AO AND THE ORDER OF THE LEARNED CIT(A) , AGAIN WE DO NOT FIND ANY INFIRMITY IN THE FINDINGS OF THE LEARNED CIT(A) . THEREFORE, WE CONFIRM THE FINDING OF THE LEARNED CIT(A) ON THIS ISSUE. IT (SS) A NO S . 21 TO 24/NAG /20 10 & IT (SS) A NOS.25 TO 29/NAG/2010 21 7 .3 REMAINING ISSUE IS AGAIN ST DELETING THE ADDITION OF RS. 8,67,482/ - MADE BY AO ON ACCOUNT OF CIRCULATING CAPITAL. BEFORE THE CIT(A) , IT WAS SUBMITTED THAT THE ASSESSEE HAS ALREADY SHOWN A SUM OF RS. 12,50,000/ - , WHICH WAS 50% OF THE DIFFERENCE IN CIRCULATING CAPITAL OFFERED DURING THE COURSE OF SEARCH. THEREFORE, NO FURTHER ADDITION CAN BE MADE ON ACCOUNT OF CIRCULATING CAPITAL. LEARNED CIT(A) FOUND THAT THE ASSESSEE HAS ALREADY SHOWN AN INCOME OF RS. 12,50,000/ - ON ACCOUNT OF CIRCULATING CAPITAL, THEREFORE, BY WORKING OUT THE REVERS E WORKING ON THE BASIS OF INTEREST ESTIMATED BY AO, NO ADDITION CAN BE MADE. THERE WAS NO MATERIAL IN RESPECT OF CIRCULATING CAPITAL OVER AND ABOVE DISCLOSED BY THE ASSESSEE. TH E ABOVE FINDING OF THE LEARNED CIT(A) REMAINED UNCONTROVERTED. THEREFORE, WE SEE NO REASON TO INTERFERE IN THE FINDING OF THE LEARNED CIT(A) . ACCORDINGLY, WE CONFIRM THE SAME ON THIS ISSUE ALSO. 8 . IN RESPECT TO OTHER APPEALS OF THE DEPARTMENT AS WELL AS IN CASE OF ANOTHER ASSESSEE SHRI GOPICHAND C. BHARANI, LEARNED DR STATED TH AT SIMILAR ISSUES ARE INVOLVED, THEREFORE, HE PLACED RELIANCE ON THE ORDER OF AO AND SUBMISSION MADE IN THE CASE OF ASSESSEE - MR. NANDLAL C. BHARANI FOR THE ASSESSMENT YEAR 2005 - 06 . IT (SS) A NO S . 21 TO 24/NAG /20 10 & IT (SS) A NOS.25 TO 29/NAG/2010 22 9 . ON THE OTHER HAND, LEARNED AR FAIRLY AGREED THAT SIMILAR ISSUES ARE IN VOLVED IN ALL OTHER APPEALS OF THIS ASSESSEE AS WELL AS THE OTHER ASSESSEE. THEREFORE, HE ALSO PLACED RELIANCE ON THE ORDER OF LEARNED CIT(A) AND THE SAME CONTENTIONS RAISED BEFORE THE LEARNED CIT(A) WERE REITERATED HERE BEFORE US. 1 0 . NOW, ALL THE APPEAL S OF DEPARTMENT AS WELL AS OTHER ASSESSEE ARE DISPOSED OF IN THE FOLLOWING MANNER : - 1 1 . IT(SS)A NO. 21/NAG/2010 (AY 2002 - 03) : - 1 1 . 1 THE ONLY ISSUED INVOLVED IN THIS APPEAL IS AGAINST DELETING THE ADDITION MADE BY THE AO ON ACCOUNT OF BOGUS PURCHASES. T HE AO MADE AN ADDITION OF RS. 20,54,025/ - ON THE BASIS OF STATEMENT OF SHRI R.V. PATEL. LEAR NED CIT(A) DELETED THE ADDITION ON THE BASIS OF HIS FINDING GIVEN FOR A.Y. 2005 - 06. 1 1 . 2 WE HAVE DISCUSSED THE ISSUE IN DETAIL WHILE DECIDING THE APPEAL OF THE DEPA RTMENT FOR THE ASSESSMENT YEAR 2005 - 06, WHEREIN S IMILAR ADDITION WAS MADE . FACTS ARE SIMILAR, T HEREFORE, FOR THE SAME REASON, THE ORDER OF LEARNED CIT(A) IS CONFIRMED. 1 2 . IT(SS)A NO.2 2 /NAG/2010 (AY 2004 - 05 ) : - 1 2 . 1 IN THIS APPEAL ALSO THE DEPARTMENT IS OBJECTING IN REGARD TO DELETION OF ADDITION MADE ON ACCOUNT OF BOGUS PURCHASE S . THE AO MADE AN ADDITION OF RS. 11,11,568/ - ON ACCOUNT OF BOGUS PURCHASES. IT (SS) A NO S . 21 TO 24/NAG /20 10 & IT (SS) A NOS.25 TO 29/NAG/2010 23 1 2 .2 WE HAVE DISCUSSED THE ISSUE IN DETAIL WHILE DECIDING THE APPEAL OF THE DEPARTMENT FOR THE ASSESS MENT YEAR 2005 - 06, WHEREIN SIMILAR ADDITION WAS MADE. WE HAVE ALREADY CONFIRMED THE ORDER OF CIT(A) FOR THE ASSESSMENT YEAR 2005 - 06. THEREFORE, FOR THE SAME REASON, WE CONFIRM THE ORDER OF LEARNED CIT(A) FOR THIS ASSESSMENT YEAR ALSO . 1 3 . IT(SS)A NO.2 4 /NA G/2010 (AY 200 6 - 0 7 ) : - 1 3 .1 IN THIS APPEAL ALSO THE DEPARTMENT IS OBJECTING IN REGARD TO DELETION OF ADDITION MADE ON ACCOUNT OF BOGUS PURCHASES AND INTEREST INCOME ON CASH LOANS ADVANCED TO SHRI PRAKASH BHARANI . 1 3 .2 WE HAVE DISCUSSED THE ISSUE IN DET AIL WHILE DECIDING THE APPEAL OF THE DEPARTMENT FOR THE ASSESSMENT YEAR 2005 - 06, WHEREIN SIMILAR ADDITION WAS MADE. FACTS ARE IDENTICAL, T HEREFORE, FOR THE SAME REASON, WE CONFIRM THE ORDER OF LE ARNED CIT(A) FOR THIS YEAR ALSO. 1 4 . IT(SS)A NO.2 5 TO 29/ NA G/2010 (AY 200 1 - 0 2, 2002 - 03, 2004 - 05, 2005 - 06 & 2006 - 07 ) : - 1 4 .1 THESE APPEALS OF DEPARTMENT ARE PREFERRED AGAINST THE ASSESSEE SHRI GOPICHAND C. BHARANI. IN THESE CASES ALSO ADDITIONS HAVE BEEN MADE ON ACCOUNT OF BOGUS PURCHASES, ADDITIONS ON ACCOUNT OF INTEREST ON CASH LOANS ADVANCED TO SHRI PRAKASH BHARANI AND ADDITIONS ON ACCOUNT OF CIRCULATING CAPITAL. IT (SS) A NO S . 21 TO 24/NAG /20 10 & IT (SS) A NOS.25 TO 29/NAG/2010 24 1 4 .2 WE HAVE DISCUSSED THE ISSUE IN DETAIL WHILE DECIDING THE APPEAL OF THE DEPARTMENT FOR THE ASSESSMENT YEAR 2005 - 06 I.E. IT (SS) NO. 23/NAG/2010 . THE ADDITIONS WERE MADE ON THE BASIS OF SEARCH CONDUCTED UNDER SECTION 132 AND ON THE BASIS OF STATEMENT OF SHRI R.V. PATEL, WHO HAS STATED THAT HE HAS PROVIDED ACCOMMODATION BILLS TO THE ASSESSEE ON ACCOUNT OF BOGUS PURCHASE INSTEAD OF SUPPLY GOODS PHYSIC ALLY. FACTS AND CIRCUMSTANCES ARE IDENTICAL TO THESE APPEALS OF THE DEPARTMENT ALSO. 1 4 .3 LEARNED DR HAS STATED THAT IDENTICAL FACTS ARE INVOLVED IN THE CASE OF SHRI GOPICHAND C. BHARANI AND SAME SUBMISSIONS HAVE BEEN MADE BY LEARNED DR. 1 4 .4 ON THE OTH ER HAND, LEARNED COUNSEL OF THE ASSESSEE HAS ALSO MADE SIMILAR ARGUMENTS AS THE FACTS ARE IDENTICAL. 1 4 .5 WE HAVE ALREADY CONFIRMED THE ORDER OF THE LEARNED CIT(A) IN THE CASE OF SHRI NANDLAL C. BHARANI, WHERE SIMILAR ADDITIONS WERE MADE. THEREFORE, ON TH E SAME REASONING, WE CONFIRM THE ORDER OF LEARNED CIT(A) IN THE CASE OF SHRI GOPICHAND C. BHARANI ALSO AS UNDISPUTEDLY THE FACTS AND IDENTICAL. 1 5 . RESULTANTLY , ALL THE APPEAL S OF THE DEPARTMENT IN CASE OF BOTH THE ASSESSEE ARE DISMISSED . ORDER PRONOUNCED IN THE E - COURT ON THIS 4 TH DAY OF JAN.2013. IT (SS) A NO S . 21 TO 24/NAG /20 10 & IT (SS) A NOS.25 TO 29/NAG/2010 2 5 - 201 3 SD/ - SD/ - ( ) ( D.KARUNAKAR RAO ) ( ) ( R.K.GUPTA ) / ACCOUNTANT MEMBER / JUDICIAL MEMBER MUMBAI ; DATED : 04 / 0 1 / 201 3 . /PKM , PS COPY OF THE ORDER FORWARDED TO : 1. / THE APPELLANT 2. / THE RESPONDENT. 3. / THE CIT(A) , MUMBAI / NAGPUR . 4. / CIT 5. / DR, ITAT, MUMBAI / NAGPUR . 6. GUARD FILE. //TRUE COPY// / BY ORDER, ( DY./ASSTT. REGISTRAR) / ITAT, MUMBAI