DCIT, CC-3(4), KOLKATA, Kolkata V. M/s Warren Tea Ltd., Kolkata

ITSSA 72/KOL/2015

• Counselvise Citation: [2017] 122 COUNSELVISE.COM (IT) 3407 (ITAT-KOLKATA)
• Duration Of Justice: 2 year(s) 3 month(s) 16 day(s)
• Appeal Type: Income Tax (Search & Seizure) Appeal
• Pronouncement Date: 23-08-2017
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: B
• Assessment Year: 2005-2006
• Appeal Filed On: 07-05-2015
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: G HANGSHING
• Assessee Lawyers: SHIKHA AGA RWAL ACA
• Keywords: Rejection of books of accounts; Business income; Depreciation; Business expenditure; Search and seizure; Principle of natural justice; Earning of tax free income; Proportionate interest; Additional evidence; Question of law; Tangible material; Wrong claim; Corroborative evidences; Accommodation entries; Block assessment; Retraction; Condonation of delay; Revenue expenditure; Capital expenditure
• Section: 143(3); 142(1); 133A; 153A; 14A; 37(1); 131; 132

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL B, BENCH KOLKATA BEFORE SHRI A.T.VARKEY, JM & DR. A.L.SAINI, AM . . , . , IT(SS)A NOS.72 TO 78/KOL/2015 ( / ASSESSMENT YEAR : 2005-2006 TO 2011-2012) DCIT, CENTRAL CIRCLE-3(4) 110, SHANTIPALLY, AAYAKAR BHAWAN,POORVA, KOLKATA-700107 VS. M/S WARREN TEA LIMITED 4B, SUVIRA HOUSE, HUNGERFORD ST., KOLKATA-700017 ./ ./PAN/GIR NO.: AAACW 2894 H ( /APPELLANT ) .. ( / RESPONDENT ) AND CROSS OBJECTIONS NOS.70 TO 74/KOL/2016 (ARISING OUT OF ITA NOS.72 TO 76/KOL/2015) ( / ASSESSMENT YEAR : 2005-2006 TO 2009-2010) M/S WARREN TEA LIMITED 4B, SUVIRA HOUSE, HUNGERFORD ST., KOLKATA-700017 VS. DCIT, CENTRAL CIRCLE-3(4) 110, SHANTIPALLY, AAYAKAR BHAWAN,POORVA, KOLKATA-700107 ./ ./PAN/GIR NO. : AAACW 2894 H (CROSS-OBJECTOR) .. ( / RESPONDENT ) REVENUE BY : SHRI G.HANGSHING, CIT DR ASSESSEE BY : SHRI SHIKHA AGARWAL, ACA / DATE OF HEARING : 07/08/2017 /DATE OF PRONOUNCEMENT: 23/08/2017 / O R D E R PER BENCH: THE CAPTIONED SEVEN APPEALS FILED BY THE REVENUE PERTAINING TO ASSESSMENT YEARS 2006-2007 TO 2011-2012, AND FIVE CROSS OBJECTIONS FILED BY THE ASSESSEE PERTAINING TO ASSESSMENT YEARS 2005-2006 TO 2009- 2010, ARE DIRECTED AGAINST THE ORDER PASSED BY THE LD. COMMISSIONER OF INCOME TAX (APPEALS)-21, KOLKATA, WHICH IN TURN ARISE OUT OF ASSESSMENT ORDERS PASSED BY THE ASSESSING OFFICER UNDER SECTIONS 153A/143(3) OF THE INCOME TAX ACT 1961, (HEREINAFTER REFERRED TO AS THE ACT). M/S WARREN TEA LIMITED IT(SS) 72 TO78/KOL/2015 CO. NOS.70 TO 74/KOL/2016 2 2. THERE IS A DELAY IN FILING THE CROSS OBJECTIONS. WE NOTICE THAT ASSESSEE HAS REPORTED THE DELAY OF 498 DAYS IN FILING THE CROSS OBJECTIONS, IN THE AFFIDAVIT SUBMITTED BY HIM BEFORE US. IT SHOULD BE NOTED THAT DELAY IN FILING THE APPEAL SHOULD BE WORKED OUT APPEAL-WISE AND EACH DAY OF DELAY IN FILING THE APPEAL SHOULD BE EXPLAINED BY THE ASSESSEE. THE ASSESSEE FILED THE PETITION FOR CONDONATION OF DELAY IN FILING THE ALL CROSS OBJECTIONS, THAT IS, CO. NOS. 70 TO 74 /KOL/2016 FOR A.Y. 2005-06 TO 2009- 10, STATING THAT THERE WAS DELAY OF 498 DAYS IN FILING THE APPEAL. IN ALL THE ASSESSMENT YEARS, THE ASSESSEE WORKED OUT THE DELAY OF 498 DAYS IN FILING THE CROSS OBJECTION, AND STATED THE REASONS OF DELAY IN PARA 6 OF THE PETITION, AS FOLLOWS: 6 THAT THERE IS A DELAY OF 498 DAYS WHICH WAS DUE TO THE IGNORANCE AND MISTAKE OF THE ACCOUNTANT AS AFTER CIT(A)`S APPEAL ORDER NO DEMAND LEFT AND WHICH MAY KINDLY BE CONDONED CONSIDERING THE PRESENT LEGAL POSITION. WE ARE OF THE VIEW THAT BECAUSE OF THE MISTAKE COMMITTED BY THE ACCOUNTANT, THE ASSESSEE SHOULD NOT SUFFER. IT WAS THE MISTAKE OF THE ACCOUNTANT FOR EACH DAY, BECAUSE AFTER GETTING THE ORDER OF CIT(A), HE THOUGHT THAT THERE IS NO DEMAND LEFT AND THE ASSESSEE COMPANY IS NOT LIABLE TO PAY ANY DEMAND THEREFORE HE DID NOT TAKE CARE TO REMIND THE RESPONSIBLE PERSON OF THE COMPANY TO FILE THE CROSS OBJECTION. WE FIND IT SUFFICIENT REASON TO DELAY, AND THEREFORE, WE CONDONE THE DELAY AND ALL THE CROSS OBJECTIONS ARE ADMITTED FOR THE HEARING. 3. THESE SEVEN APPEALS FILED BY THE REVENUE AND FIVE CROSS OBJECTIONS FILED BY THE ASSESSEE, RELATE TO THE SAME ASSESSEE AND CONTAIN COMMON AND IDENTICAL ISSUES, THEREFORE, THESE SEVEN APPEALS, AND FIVE CROSS OBJECTIONS, HAVE BEEN CLUBBED AND HEARD TOGETHER AND A CONSOLIDATED ORDER IS BEING PASSED FOR THE SAKE OF CONVENIENCE AND BREVITY. IN ORDER TO ADJUDICATE THESE SEVEN APPEALS AND FIVE CROSS OBJECTIONS, FIRSTLY WE HAVE TO DECIDE THE LEGAL ISSUE RAISED BY THE ASSESSEE THAT IN RESPECT TO NON- M/S WARREN TEA LIMITED IT(SS) 72 TO78/KOL/2015 CO. NOS.70 TO 74/KOL/2016 3 PENDING/UNABATED ASSESSMENTS ON THE DATE OF SEARCH, ADDITIONS CAN BE MADE ONLY ON THE BASIS OF INCRIMINATING MATERIALS UNEARTHED DURING SEARCH PROCEEDING U/S 153A OF THE ACT. FOR THAT WE TAKE UP A.Y. 2005-06 TO 2009-10 AND FOR THAT WE HAVE TAKEN THE LEAD CASES AS FOLLOWS :- I) REVENUES APPEAL IN IT(SS)A NO.72/KOL/2015 (DCIT, CC,-3 (4), KOLKATA),(AY : 2005-06); II) ASSESSEE`S CROSS OBJECTION NO.70/KOL/2016, (A.Y. 2005-06). 4. THE GROUNDS OF APPEAL RAISED BY THE REVENUE AND ASSESSEE IN CASE OF NON-PENDING/UNABATED ASSESSMENTS ON THE DATE OF SEARCH, ARE AS FOLLOWS: GROUNDS OF APPEALS RAISED BY REVENUE IN APPEAL NO. IT(SS)A NO.72/KOL/2015, (AY : 2005-06), READS AS UNDER: 1 . THAT IN THE FACTS AND CIRCUMSTANCES OF THE CASE AND IN LAW, THE LD.CIT(A) HAS ERRED IN DELETING THE ADDITION ON ACCOUNT OF TRANSPORT EXPENSES AMOUNTING TO RS. 97,09,200/- IN RESPECT OF M/S ASKA ROADWAYS PVT. LTD. AND M/S METROPOLITAN TRANSPORT CORPORATION WITHOUT CONSIDERING THE FACTS THAT THEY COULD NOT PROVIDE THE BASIS OF CHARGING MONTHLY BILL FOR TRANSPORTATION WITHOUT HAVING ANY AGREEMENT. 2. THAT IN HE FACTS AND CIRCUMSTANCES OF THE CASE AND IN LAW, THE LD CIT(A)`S OBSERVATION IS NOT BASED ON FACTS OR DOCUMENTARY EVIDENCES AND HE ALSO IGNORED THE FACTS THAT THE MODUS OPERANDI OF BOTH THE COMPANIES IS MADE. 3. THAT THE DEPARTMENT CRAVES LEAVE TO ADD, MODIFY OR ALTER ANY OF THE GROUNDS OF APPEAL AND /OR ADDUCE ADDITIONAL EVIDENCE AT THE TIME OF HEARING OF THE CASE. GROUNDS OF APPEALS RAISED BY ASSESSEE IN CROSS OBJECTIONS NO.70/KOL/2016, A.Y. 2005-06, READS AS UNDER: 1.THAT THE CIT(A) ERRED IN HOLDING THAT UNDER THE PROVISIONS OF SEC.153A OF THE INCOME TAX ACT, 1961, THE AO IS EMPOWERED TO REASSESS THE INCOME FOR THE COMPLETED ASSESSMENT EVEN IN THE CASES WHERE NOTHING INCRIMINATING DOCUMENT WAS FOUND IN THE COURSE OF SEARCH. THE PROVISIONS OF SEC.153A NEITHER EMPOWERS THE A.O. TO RE-ASSESS INCOME OF THE COMPLETED ASSESSMENT WITHOUT HAVING ANY SEIZED MATERIAL OR ASSET TO M/S WARREN TEA LIMITED IT(SS) 72 TO78/KOL/2015 CO. NOS.70 TO 74/KOL/2016 4 THAT EFFECT NOR DOES IT ALLOW THE A.O. TO REVIEW THE ASSESSMENT ALREADY COMPLETED. AS SUCH, THE ADDITION MADE IN THE ORDER U/S 153A/143(3) IS BAD IN LAW AND NEED TO BE DELETED. 2.THAT THE CROSS OBJECTOR CRAVES LEAVE TO ADD, ALTER, AMEND OR WITHDRAW ANY GROUNDS OF CROSS OBJECTION BEFORE OR AT THE TIME OF HEARING. 5. ALTHOUGH, IN THE APPEALS FILED BY THE REVENUE AND CO. FILED BY THE ASSESSEE, WE NOTICE THAT THERE ARE A MULTIPLE GROUNDS OF APPEALS ON MERITS, BUT AT THE TIME OF HEARING THE MAIN GRIEVANCE OF THE REVENUE AND ASSESSEE HAVE BEEN CONFINED AS FOLLOWS :- THE AO PASSED ORDER U/S.153A, WHEN THE ORIGINAL ASSESSMENT WAS NOT ABATED. SINCE THE ASSESSMENT WAS ADMITTEDLY NOT PENDING BEFORE THE AO AS ON DATE OF SEARCH. THEREFORE, ACCORDING TO CROSS OBJECTIONS OF ASSESSEE, THERE WERE NO ANY INCRIMINATING MATERIALS FOUND IN SEARCH, HENCE NO ADDITION CAN BE MADE. WHEREAS AS PER REVENUE THERE WERE INCRIMINATING DOCUMENTS FOUND DURING THE SEARCH AND ADDITIONS CAN BE MADE ON MERITS. THIS ISSUE RELATES TO UNABATED ASSESSMENT YEARS, NAMELY, A.Y. 2005-06,TO 2009-10. 5.1 THE GRIEVANCE OF ASSESSEE IS THAT SINCE T HE AO HAS PASSED THE ORDER U/S.153A, WHEN ADMITTEDLY THE ORIGINAL ASSESSMENT WAS NOT PENDING BEFORE HIM AS ON THE DATE OF SEARCH, THE ASSESSMENT HAS NOT ABATED, BECAUSE THERE WERE NO INCRIMINATING DOCUMENTS FOUND BY THE SEARCH PARTY. WHEREAS AS PER REVENUE THERE WERE INCRIMINATING DOCUMENTS FOUND DURING THE SEARCH. THIS ISSUE RELATES TO UNABATED ASSESSMENT YEARS, NAMELY, A.Y. 2005-06, 2006-07, 2007-08, 2008-09 AND 2009-10. WHEREAS, THE REVENUE CLAIMED THAT BASED ON THE STATEMENTS (OF VARIOUS KEY PERSONS OF THE ASSESSEE`S BUSINESS), RECORDED BY THE ASSESSING OFFICER DURING THE SEARCH OPERATION, THERE WERE DIRECT NEXUS BETWEEN THE STATEMENTS RECORDED AND THE INCREMENTING MATERIAL FOUND DURING THE SEARCH. M/S WARREN TEA LIMITED IT(SS) 72 TO78/KOL/2015 CO. NOS.70 TO 74/KOL/2016 5 5.2 THE BRIEF FACTS QUA THE ASSESSEE ARE THAT A SEARCH AND SEIZURE U/S.132 OF THE I.T ACT, 1961 WAS INITIATED IN WARREN TEA GROUP ON 27.01.2011. IN THE CASE OF ASSESSEE THE SAME HAD BEEN COMPLETED ON 28.01.2011. THE SEARCH AND SEIZURE U/S.132 OF INCOME TAX ACT, WAS ALSO CARRIED OUT AT THE RESIDENCE OF THE PROMOTER FAMILY OF THIS GROUP LED BY SRI VINAY KUMAR GOENKA, SMT. SUNITA VINAY GOENKA AND SRI VIVEK GOENKA ALONG WITH SOME OF THE SO-CALLED SUPPLIERS/CONTRACTORS. THE REGISTERED OFFICE OF THE ASSESSEE AT P.O. HOOGRIJAN, DIST.TINSUKIA, ASSAM-786601 AND THE VARIOUS GARDENS NAMED DEOHALL TEA ESTATE, BALIJAN TEA ESTATE, HATIMARA TEA ESTATE WERE COVERED U/S.133A OF I.T. ACT, 1961 TO CONDUCT SURVEY AND VARIOUS MOVABLE AND IMMOVABLE ASSETS FOUND AND SEIZED/IMPOUNDED. IN THE CASE OF ASSESSEE THE FOLLOWING ASSETS WERE FOUND AND SEIZED: SL. NO. PREMISES ASSETS FOUND ASSETS SEIZED CASH IN RS. JEWEL LERY IN RS. OTH ERS IN RS. CAS H IN RS. JEW ELLER Y IN RS. OTH ERS IN RS. 1 A) WARREN TEA LTD. B) WARREN STEEL PVT LTD. C) MAPLE HOTELS & RESORTS PVT.LTD. D) D P L L LIMITED E) SUVIRA PROPERTIES PVT. LTD. F) SECTRA PLAZA FUT. LTD. HUNGERFORD STREET, SUVIRA HOUSE, KOLKATA 700 017 (OFFICE) 3,29,174 NIL NIL NIL NIL NIL IN CONSEQUENCE OF ABOVE MENTIONED SEARCH & SEIZURE, A NOTICE U/S. 153A HAS BEEN ISSUED FOR ASSESSMENT YEAR 2005-06 TO 2010-11 (SIX YEARS) PRIOR TO THE YEAR IN WHICH SEARCH & SEIZURE WAS CONDUCTED. IN RESPONSE TO THE SAID NOTICE THE ASSESSEE HAS FILED THE RETURN FOR ASSESSMENT YEAR 2005-06 ON 04.04.2012 M/S WARREN TEA LIMITED IT(SS) 72 TO78/KOL/2015 CO. NOS.70 TO 74/KOL/2016 6 DECLARING TOTAL INCOME OF RS.NIL WHEREAS THE ORIGINAL RETURN FOR THIS YEAR WAS FILED 28.10.2005, U/S. 139(1) OF I.T. ACT, 1961 DECLARING TOTAL INCOME OF RS. NIL. THEN THE NOTICE U/S 143(2) OF INCOME TAX ACT, 1961 ISSUED AND SERVED UPON THE ASSESSEE TO ASSESS THE CASE U/S.153A/143(3)OF INCOME TAX ACT, 1961. DURING THE ASSESSMENT PROCEEDINGS VARIOUS QUERIES WERE MADE BY AO, VIDE NOTICE U/S. 142(1) OF I.T. ACT, 1961. DURING THE COURSE OF SEARCH & SEIZURE SEVERAL BOOKS OF ACCOUNTS, OTHER DOCUMENTARY EVIDENCES WERE INVENTORIED AND SEIZED /IMPOUNDED (WHERE SURVEY HAS BEEN CARRIED OUT) FROM VARIOUS SPOTS/PLACES UNDER THE ASSESSEE LIKE HEAD OFFICE, REGISTERED OFFICE, GARDENS ETC. THOSE WERE VERIFIED AND COMPARED WITH REFERENCE TO THE REGULAR BOOKS OF ACCOUNTS OF THE ASSESSEE. AFTER COMPARING THE ENTRIES AVAILABLE ON THE SEIZED PAPERS AND WITHIN THE SOFT COPIES, DIFFERENT QUERIES WERE RAISED FROM TIME TO TIME, WHICH WERE EXPLAINED BY THE ASSESSEE IN RESPECT OF ITS REGULAR RETURNED INCOME. BUT, IN SOME OCCASIONS THE ASSESSEE HAS FAILED TO SUBSTANTIATE THE TRANSACTIONS EVIDENT FROM THE SEIZED MATERIALS, AS AO POINTED OUT. THE ASSESSEE HAS EXPLAINED THE ABOVE MENTIONED CASH OF RS.3,29,174/- (FOUND ON THE DATE OF SEARCH AND SEIZURE) WITH REFERENCE TO ITS BOOKS OF ACCOUNTS. 5.3 DURING THE ASSESSMENT PROCEEDINGS, THE AO FOUND THAT IN THE COURSE OF SEARCH & SEIZURE OPERATION IN THE OFFICE OF THE ASSESSEE I.E. WARREN TEA LTD. AT 48 SUVIRA HOUSE, HUNGERFORD STREET, SHAKESPEAR SARANI, KOLKOTA-700017, SEVERAL BANK ACCOUNTS WERE INVENTORIED WHICH ARE EXPLAINED FROM THE REGULAR BOOKS OF ACCOUNTS. THE ASSESSEE HAD ALSO INFORMED TO THE AO THAT THE CASES FOR ASSESSMENT YEAR(S): 2005-06, 2006-07 & 2008-09, THESE YEARS HAVE ALREADY BEEN SCRUTINIZED U/S. 143(3) OF I.T. ACT,1961 AND NO INCRIMINATING DOCUMENT HAS BEEN SEIZED THAT IS WHY THE ASSESSMENT U/S.153A SHOULD BE FOLLOWED THE ASSESSMENT ORDER ALREADY PASSED U/S. 143(3) OF I.T. ACT,1961 ON 18.12.2007 ONLY AND WITHOUT MAKING ANY FURTHER ADDITION. DURING THE ASSESSMENT PROCEEDINGS THE ASSESSEE HAD CITED THE CASE LAWS, LIKE (I) LMJ INTERNATIONAL LTD. VS. DCIT (2008) 119 TTJ (KOL) AND ALL CARGO GLOBAL LOGISTICS LTD. VS. DCIT (2012) 137 ITD 287 (MUMBAI) (58). BUT, THE AO FOUND THAT THE CIRCUMSTANCES IN THE SAID CASES WERE TOTALLY DIFFERENT FROM THE CASE OF ASSESSEE. THE AO OBSERVED THAT THE ASSESSEE HAD BEEN SEARCHED ALONG WITH HIS SO-CALLED SUPPLIERS/CONTRACTORS ON 27.01.2011 AND IN CONSEQUENCE OF SUCH SIMULTANEOUS M/S WARREN TEA LIMITED IT(SS) 72 TO78/KOL/2015 CO. NOS.70 TO 74/KOL/2016 7 SEARCH & SEIZURE IT COULD BE GATHERED THAT THE ASSESSEE HAD BEEN GIVEN ACCOMMODATION OF ENTRIES TO CLAIM THE BOGUS EXPENSES WITH A MOTIVE TO REDUCE THE ACTUAL PROFIT YEAR AFTER YEAR. THE NAME OF THE PARTIES (SO-CALLED SUPPLIERS/CONTRACTORS) WHO WERE COVERED EITHER U/S.133A FOR CONDUCTING SURVEY OR U/S.132 OF I.T. ACT, 1961 FOR SEARCH & SEIZURE ALONG WITH THE WARREN GROUP. BUT THE AO NOTED, DURING THE ASSESSMENT PROCEEDINGS THAT EXCEPT ONE, ALL SUCH SO CALLED SUPPLIERS/CONTRACTORS HAD FAILED TO PRODUCE BOOKS OF ACCOUNTS, ANY PURCHASE BILL AND VOUCHERS IN SUPPORT OF THEIR (SAID SUPPLIERS/CONTRACTORS) PURCHASES TO SUPPLY/MAKE AVAILABLE OR CONSTRUCT/REPAIR ANY ASSET ETC. THE GOODS FOR WHICH THE ASSESSEE CLAIMED BUSINESS EXPENDITURES. ALL SUCH PARTIES HAD ADMITTED OF PROVIDING ACCOMMODATION BILLS TO THE ASSESSEE AND RECEIVED CHEQUE FOR THE SAME FROM WARREN TEA LTD, WITHOUT PROVIDING ANY SERVICE OR SUPPLYING ANY GOODS TO WARREN TEA LTD. THE SAID FACT WAS PALPABLE FROM THE RELEVANT PORTION OF THE STATEMENTS GIVEN BY THE SUPPLIERS/CONTRACTORS EITHER IN SURVEY U/S.133A OR SEARCH U/S.132 OF I.T. ACT,196L. 5.4 THE ASSESSING OFFICER NOTED THAT ALL THE PERSONS WHO LEAD THE WARREN TEA GROUP, THAT IS, PANKAJ BAGARIA, RAMGOPAL DROLIA, PAWAN KUMAR GOENKA, DEEPAK JHUNJHUNWALA, RAM AVTAR MITTAL HAD RETRACTED THEIR STATEMENTS RECORDED EITHER U/S 132(4) OR 133A OR U/S 132(4) AND 133A OF THE I.T.ACT, THROUGH AFFIDAVITS SUBMITTED WITH D.I.T. (INV.) KOLKATA WITHIN SAVEN DAYS OF INITIATION OF SEARCH AND SEIZURE AND SURVEY, ( IN SOME PLACES SURVEY WERE CONDUCTED). BUT THE SAID RETRACTION WAS LIMITED TO THE ADMISSION OF PROVIDING ACCOMMODATION ENTRIES THROUGH BOGUS BIILS WITHOUT UNDERTAKING ANY REAL WORK AND WITHOUT SUPPLYING AND MATERIAL TO THE ASSESSEE COMPANY M/S WARREN TEA LTD. THERE WAS ALSO DENIAL OF RECEIVING OF ANY COMMISSION IN EXCHANGE OF PROVIDING COMMISSION ENTRIES. THE WARREN GROUP IS MAINLY ENGAGED IN THE BUSINESS OF TEA PRODUCTION AND TEA MANUFACTURING. BESIDES, THE GROUP IS ALSO HAVING OTHER BUSINESS ACTIVITIES LIKE RUNNING OF HOTELS, DEVELOPMENT OF CUSTOMIZED SOFTWARE AND ERP SYSTEMS AND M/S WARREN TEA LIMITED IT(SS) 72 TO78/KOL/2015 CO. NOS.70 TO 74/KOL/2016 8 TRAVEL BUSINESS ETC. THE MAIN PERSONS OF THE GROUP ARE SHRI VINAY KUMAR GOENKA AND SHRI VIVEK GOENKA. THE WARREN GROUP OWNS 14 TEA ESTATES HAVING GRANT AREA OF ABOUT 11827.09 HECTARES MAINLY IN THE STATE OF ASSAM. IN THE COURSE OF SEARCH/SURVEY OPERATIONS AT VARIOUS PREMISES OF WARREN GROUP AND ITS ASSOCIATES A LARGE NUMBER OF BOOKS OF ACCOUNT AND DOCUMENTS AS WELL AS THE ASSETS WERE SEIZED/IMPOUNDED. CONSEQUENT UPON THE SEARCH OPERATION, IN THE CASE OF ASSESSEE COMPANY THE AO INITIATED THE PROCEEDINGS U/S 153A OF THE ACT FOR THE ASSESSMENT YEAR 2005-06 TO 2010-11. FOR THE YEAR UNDER CONSIDERATION THE ASSESSEE COMPANY FILED ITS RETURN OF INCOME U/S 153A OF THE ACT ON 04.04.2012 DECLARING TOTAL INCOME AT NIL' THE ORIGINAL RETURN OF INCOME U/S 139(1) OF THE ACT WAS FILED ON 28.10.2005 DECLARING NIL INCOME. THE ASSESSMENT WAS COMPLETED U/S 153A/143(3) OF THE ACT ON 28.03.2013 AT THE ASSESSED INCOME OF NIL AFTER ALLOWING SET OFF OF BROUGHT FORWARD LOSSES. WHILE COMPLETING THE ASSESSMENT, AS MENTIONED ON PAGE 30 OF THE ASSESSMENT ORDER, THE AO MADE DISALLOWANCES AGGREGATING TO RS.97,09,200/-. HOWEVER, FOR THE PURPOSE OF INCOME TAX, THE AO ADDED SUM OF RS.38,83,680/- BEING 40% OF RS.97,09,200/-, ON ACCOUNT OF BOGUS TRUCK HIRE CHARGES AND TRANSPORTATION CHARGES. 5.5 AS PER THE ASSESSMENT ORDER, IN THE COURSE OF SIMULTANEOUS SEARCH/SURVEY OPERATIONS IN THE CASES OF RELATED PERSONS OF THE ASSESSEE COMPANY WHO HAD EITHER PROVIDED TRANSPORT SERVICES OR SUPPLIED GOODS AND MATERIALS OR RENDERED SERVICES IN THE NATURE OF REPAIRS AND MAINTENANCE OR EXECUTED WORK OF CAPITAL IN NATURE FOR THE ASSESSEE COMPANY, THE STATEMENT OF SHRI RAM AVTAR MITTAL, DIRECTOR OF M/S EASTERN ROAD CARRIERS PVT. LTD. AND M/S ASKA ROADWAYS PVT. LTD.; STATEMENT OF SHRI LALIT BAGARIA, SHRI PANKAJ BAGARIA, SMT. NEEMA BAGARIA AND SMT. PUSHPA BAGARIA HAVING CONTROL OVER THE COMPANIES NAMED AS M/S HARSHIT COMMERCIAL PVT. LTD., M/S JANAKI COMMERCIAL PVT. LTD., M/S KALINGA M/S WARREN TEA LIMITED IT(SS) 72 TO78/KOL/2015 CO. NOS.70 TO 74/KOL/2016 9 COMMERCIAL PVT. LTD., M/S OMKARA MERCHANTS PVT. LTD., M/S GLAMOUR MERCHANDISE PVT. LTD., M/S PRACHI COMMERCIAL PVT., M/S. SHIVAM COMMERCE PVT. LTD., M/S THAKURDAS SUREKA ENGG. CORPORATION LIMITED AND M/S BASANT COMMERCE PVT. LTD, THE STATEMENT OF SHRI AJAY CHOKHANI, DIRECTOR OF M/S GLAMOUR MERCHANDISE PVT. LTD; STATEMENT OF SHRI RAMGOPAL DROLIA, DIRECTOR OF M/S DHOLISATI BUSINESS PVT. LTD. AND KARTA OF RAMGOPAL DROLIA (HUF), WHICH WAS THE PROPRIETOR OF M/S DURGA ENTERPRISES, SAKET DROLIA, PROPRIETOR OF M/S S.B. COMMERCIAL COMPANY, AND SMT. BELA DROLIA, PROPRIETOR OF M/S GOPAL TIMBER TRADING CO.; STATEMENT OF SHRI PAWAN KUMAR GOENKA, DIRECTOR OF M/S P.M. TRADERS AND HOLDINGS PVT. LTD. AND PROPRIETOR OF M/S ASIA UDYOG, SMT. MADHU GOENKA, THE PROPRIETOR OF M/S GOENKA INDUSTRIAL CORPORATION; STATEMENT OF SHRI ANURAG JLHUNJHUNWALA DIRECTOR OF M/S RELIABLE INFRATECH DEVELOPERS PVT. LTD., SHRI SANJAY JHUNJHUNWALA DIRECTOR OF M/S GOLDBURN DELCOM PVT. LTD. AND SHRI DEEPAK JLRUNJHUNWALA CEO OF M/S RELIABLE INFRATECH DEVELOPERS PVT. LTD, AND M/S GOLDLBURN DELCOM PVT. LTD. WERE RECORDED U/S 132(4)/133A/131 OF THE ACT ON 28.01.2011 AND LATER ON. FURTHER, IN THE CASE OF SHRI VIKASH KASERA, PROPRIETOR OF M/S METROPOLITAN TRANSPORT COMPANY, THOUGH NO SEARCH OR SURVEY OPERATION WAS CONDUCTED BUT HIS STATEMENT WAS RECORDED U/S 131 OF THE ACT ON 01.04.2011. AS PER THE ASSESSMENT ORDER, ALL OF ABOVE MENTIONED PERSONS IN THEIR STATEMENTS HAD CONFESSED THAT THEY HAD NOT DONE ANY ACTUAL BUSINESS TRANSACTIONS OF RENDERING SERVICES, SUPPLY OF GOODS AND MATERIALS AND EXECUTION OF WORK CAPITAL IN NATURE FOR/WITH THE ASSESSEE COMPANY AND THAT THEY ALL HAD PROVIDED ACCOMMODATION ENTRIES TO THE ASSESSEE COMPANY IN DIFFERENT ASSESSMENT YEARS. IN THE ASSESSMENT ORDER THE AO HAS REPRODUCED THE STATEMENTS OF ALL THE PERSONS AND IN TABULAR FORM HE HAS ALSO GIVEN THE QUANTUM OF TRANSACTIONS IN EACH ASSESSMENT YEAR WITH THE CONCERNS AND BUSINESS ENTITIES OF THESE PERSONS. HOWEVER, ON PAGE NO. 15 OF THE ASSESSMENT ORDER THE AO HAS MENTIONED THAT ALL THE PERSONS WHO LEAD THE ABOVE MENTIONED GROUPS AS PER TABLE NO. 1 TO TABLE NO. 5 OF THE ASSESSMENT ORDER I.E. SHRI PANKAJ BAGARIA, SHRI RAMGOPAL DROLIA, SHRI PAWAN KUMAR GOENKA, SHRI DEEPAK JHUNJHUNWALA AND SHRI RAM AVTAR MITTAL HAD RETRACTED THEIR STATEMENTS RECORDED U/S 132(4)/133A OF THE ACT THROUGH SWORN AFFIDAVITS SUBMITTED WITH THE DIT (INV.), KOLKATA WITHIN SEVEN DAYS OF INITIATION OF SEARCH AND SURVEY OPERATION IN THEIR CASES. THE SAID RETRACTION WAS IN RESPECT OF PROVIDING ACCOMMODATION ENTRIES M/S WARREN TEA LIMITED IT(SS) 72 TO78/KOL/2015 CO. NOS.70 TO 74/KOL/2016 10 THROUGH BOGUS BILLING WITHOUT UNDERTAKING ANY REAL WORK AND WITHOUT SUPPLYING ANY MATERIAL TO THE ASSESSEE COMPANY. THERE WAS ALSO DENIAL OF RECEIVING ANY COMMISSION FROM THE ASSESSEE COMPANY. ON PAGE NO. 16, PARA NO. 6, THE AO HAS MENTIONED THAT SHRI VINAY KUMAR GOENKA, THE CHAIRMAN OF THE ASSESSEE COMPANY HAD CATEGORICALLY DENIED OF TAKING ANY ACCOMMODATION ENTRIES FROM ANY OF THE ABOVE PERSONS THROUGH THEIR BUSINESS ENTITIES. IT WAS ALSO CONTENDED BY SHRI VINAY GOENKA THAT NOT A SINGLE PROOF HAS BEEN GATHERED BY THE DEPARTMENT THROUGH SIMULTANEOUS SEARCH AND SURVEY OPERATIONS AT VARIOUS PREMISES OF THE ASSESSEE COMPANY AND ITS SUPPLIERS TRANSPORTERS AND CONTRACTORS WHICH MAY LEAD TO THE CONCLUSION THAT THE ASSESSEE COMPANY HAD TAKEN ACCOMMODATION ENTRIES FROM THESE PERSONS AND PAID COMMISSION TO THEM. IT WAS STATED BY THE CHAIRMAN OF THE COMPANY THE DEPARTMENT HAS FAILED TO ESTABLISH ANY NEXUS BETWEEN WITHDRAWAL/REALIZATION OF CHEQUES AND THEN RETURNING THE CASH BACK TO THE ASSESSEE COMPANY. THAT, THE ASSESSEE HAD BEEN IMPLICATED FALSELY WITH PRECONCEIVED NOTION DURING THE COURSE OF SEARCH/SURVEY CONDUCTED ON THE SAME DAY AT THE BUSINESS PLACES OF VARIOUS PARTIES. 5.6 AS PER THE ASSESSMENT ORDER, SINCE THE ASSESSEE COMPANY HAS FILED THE COPIES OF AFFIDAVITS BEFORE THE AO, OF VARIOUS PERSONS RETRACTING THEIR STATEMENTS GIVEN U/S 132(4)/133A/131 OF THE ACT, HE ISSUED LETTERS TO PANKAJ BAGARIA, RAMGOPAL DROLIA, PAWAN KUMAR GOENKA, DEEPAK JHUNJHUNWALA AND RAM AVTAR MIITTAL TO CLARIFY THE MANNER IN WHICH THEY WERE TORTURED AT THEIR OWN BUSINESS PREMISES/HOUSES AND THEY WERE ALSO ASKED TO EXPLAIN THAT AS TO WHY WITNESSES PRESENT AT THE TIME OF SEARCH/SURVEY OPERATION DID NOT BECOME PARTY TO GET THE AFFIDAVIT SIGNED FROM A NOTARY. THE CLARIFICATION WAS ALSO SOUGHT FROM THE SAID PERSONS THAT AS WHY NONE OF THEM HAD FILED ANY FIR AGAINST THE DEPARTMENTAL PERSONNEL WHO REALLY FORCED THEM TO SIGN THE STATEMENT AND TORTURED. AS PER THE AO, THE REPLIES OF THE PERSONS WERE RECEIVED AND PLACED ON RECORD BUT NONE OF THE REPLIES HAD BEEN FOUND SATISFACTORY AND TO THE POINT. THE AO WAS OF THE OPINION THAT NON FILING OF ANY FIR TO THE LOCAL POLICE STATION AGAINST TORTURE AND COERCION TO SIGN STATEMENT PREPARED WITH PRECONCEIVED NOTION BUT FILING OF AFFIDAVITS ONLY WITH THE DEPARTMENT TO WITHDRAW THE STATED PART WHICH AFFECTS ADVERSELY TO THE ASSESSEE COMPANY OUT OF ENTIRE STATEMENT THROUGH A COMMON NOTARY CREATES DOUBT OVER THE CONTENTION MADE BY THE ASSESSEE COMPANY. THE M/S WARREN TEA LIMITED IT(SS) 72 TO78/KOL/2015 CO. NOS.70 TO 74/KOL/2016 11 AO HAS ALSO MENTIONED THAT SEVERAL SHOW CAUSE LETTERS WERE ISSUED TO THE ASSESSEE COMPANY ABOUT DISALLOWING OF THE EXPENSES ON ACCOUNT OF BOGUS CLAIMS AND THE NOTICE U/S 131 OF THE ACT WERE ALSO ISSUED TO ALL THE PARTIES WHO WERE EITHER SUPPLIERS OR CONTRACTORS FOR DIFFERENT WORKS, BUT NO ONE AMONG SUCH SUPPLIERS ON CONTRACTORS HAD TURNED UP TO COMPLY WITH SAID NOTICES TO OFFER THEMSELVES TO VERIFY THE GENUINENESS OF THEIR BUSINESS ONCE AGAIN AND TO FIND OUT THE REALITY IN CLAIMING HUGE AMOUNT OF EXPENSES BY THE ASSESSEE COMPANY ON ACCOUNT OF PURCHASING OF GOODS FROM THEM IN REALITY AND GETTING OF ACTUAL SERVICES FROM THEM. HOWEVER, IN PARA -7 OF THE ASSESSMENT ORDER, THE AO HAS FURTHER STATED THAT DURING THE COURSE OF HEARING, THOUGH NONE OF THE PARTIES I.E. THE SO CALLED SUPPLIERS, TRANSPORTERS AND CONTRACTORS HAVE APPEARED PHYSICALLY DESPITE THEY WERE ASKED TO APPEAR BEFORE HIM BUT THE REPLIES OF THE QUERIES MADE THROUGH HE SAID NOTICES U/S 131 OF THE ACT HAD BEEN RECEIVED EITHER THROUGH RECEIVING COUNTER OR BY POST WITHOUT PRODUCTION OF ANY BOOKS OF ACCOUNT. THEREFORE, THE NOTICE VIDE NO. 478 DATED 22.01.2013 WAS ISSUED TO THE ASSESSEE COMPANY TO PRODUCE THE PARTIES I.E. THE SO CALLED SUPPLIERS, TRANSPORTERS AND CONTRACTORS ALONG WITH THEIR BOOKS OF ACCOUNT, COPY OF BANK STATEMENTS, COMPLETE ADDRESS OF THEIR SUPPLIERS, CREDITORS, TRUCK OWNERS WHO HAD PROVIDED TRUCKS TO THEM TO ENGAGE WITH THE GARDENS OF WARREN TEA LTD. IT HAS FURTHER BEEN MENTIONED BY THE AO THAT THE ASSESSEE SOUGHT FOR AN ADJOURNMENT AND THEN ON 25.02.2013, 26.02.2013 AND 27.02.2013, SHRI B.K. PARASRAMPURIA, DULY AUTHORIZED BY THE ASSESSEE COMPANY HAD APPEARED ON BEHALF OF THE COMPANY AND PRODUCE THE PARTIES WITH THEIR BOOKS OF ACCOUNT, SUBMITTED PURCHASE BILLS/VOUCHERS, PAYMENT VOUCHERS AND COPY OF BANK STATEMENTS IN SUPPORT OF PAYMENTS FOR THEIR PURCHASES/SERVICES. ALL OF THEM WERE PERUSED AND COGNIZANCE OF RECORDED STATEMENTS WAS ALSO TAKEN TO DRAW INFERENCE. 5.7 THEREAFTER, IN PARA-8 OF THE ASSESSMENT ORDER THE AO OBSERVED THAT THE SEARCH & SEIZURE AND SIMULTANEOUS SURVEYS DID NOT DISPUTED THE EXISTENCE OF THE SO CALLED TRANSPORTER AND CONTRACTORS BECAUSE ALL OF THEM WERE EITHER SEARCHED OR SURVEYED AT THEIR SPOTS. THERE WAS NO DISPUTE ABOUT DEBIT OF EXPENSES AS SAME HAD BEEN PAID IN CHEQUES BY THE ASSESSEE TO THE SO CALLED SUPPLIERS, TRANSPORTER AND CONTRACTORS AND REALIZED BY THEM. BUT, ADMISSION OF PROVIDING ACCOMMODATION ENTRIES TO THE ASSESSEE BY ABOVE MENTIONED PERSONS ON BEHALF M/S WARREN TEA LIMITED IT(SS) 72 TO78/KOL/2015 CO. NOS.70 TO 74/KOL/2016 12 OF 23 CONCERNS/PARTIES AT THE TIME OF OFFICIAL PROCEEDINGS WERE THERE. THOUGH, THEY HAD RETRACTED YET THE SAID RETRACTION THROUGH AFFIDAVITS WAS NOT SUPPORTED WITH ANY CORROBORATIVE MATERIALS LIKE COPY OF FIR WITH LOCAL POLICE STATION AND MOST IMPORTANTLY AFFIDAVITS WERE NOT SIGNED BY THE WITNESSES PRESENT AT THE TIME OF SEARCH OR SURVEY. THUS, THE STATEMENTS GIVEN BY ALL THE PARTIES IN THE PRESENCE OF WITNESSES ON THE DATE OF SEARCH/SURVEY MAY NOT BE OVERRULED BY SUCH AN AFFIDAVIT WHICH WAS COMPLETELY UNILATERAL IN NATURE. 5.8 THEREAFTER, THE AO ANALYZED STATEMENTS OF VARIOUS PARTIES GIVEN BY THEM IN THE COURSE OF SEARCH OR SURVEY U/S 132(4) OR U/S 131 OF THE ACT ALONG WITH THE STATEMENT OF SHRI BISWAIIT KARMAKAR, SENIOR MANAGER (FINANCE & ACCOUNTS), ASSAM OF THE ASSESSEE COMPANY. AT SOME PLACES, THE AO ALSO MENTIONED THAT HE CONDUCTED CERTAIN INQUIRIES AT PERSONAL LEVEL OR THROUGH OTHER OFFICIALS OF THE DEPARTMENT. ACCORDING TO HIM, THE ENQUIRIES WERE CONDUCTED DISCREETLY AS THE ASSESSMENTS IN THE CASES OF SUPPLIERS, TRANSPORTERS AND CONTRACTORS WERE NOT GOING ON. WITH RESPECT TO M/S ASKA ROADWAYS PVT. LTD. AND M/S EASTERN ROAD CARRIER PVT. LTD. WHOSE ONE OF THE DIRECTORS WAS SHRI RAM AVTAR MITTAL, IT HAS BEEN MENTIONED BY THE AO THAT THE COPIES OF BILLS SUBMITTED BY BOTH THE TRANSPORTERS HAD BEEN PERUSED BY HIM FOR ALL THE ASSESSMENT YEARS 2005-06 TO 2011-12. M/S ASKA ROADWAYS PVT. LTD. HAD RAISED SUCH BILLS FOR VARIOUS MONTHS OF ASSESSMENT YEARS 2005-06 TO 2010-11 DUE TO ENGAGEMENT OF TRUCKS IN DIFFERENT TEA GARDENS UNDER THE ASSESSEE IN ASSAM. THE TRUCK RATE WAS FIXED FOR EACH MONTH AND RAISED BILLS FOR ENGAGEMENT OF MULTI NUMBER OF TRUCKS FOR EACH YEAR WHEREAS THE BILLS RAISED BY EASTERN ROAD CARRIER PVT. LTD. WERE DIFFERENT IN MANNER AND MAINLY FOR TRANSPORTATION OF TEAS FOR THE ASSESSEE TO VARIOUS DESTINATIONS ACROSS THE COUNTRY. IN RESPECT OF M/S EASTERN ROAD CARRIERS PVT. LTD. ON PERUSAL OF COPIES OF BILLS IT WAS HELD BY THE AO THAT THESE BILLS PROVES THE REALITY BEHIND CLAIMING GENUINE EXPENSES BY THE ASSESSEE COMPANY AND, HENCE, NO ADVERSE INFERENCE WAS DRAWN IN THIS CASE. HOWEVER, IN RESPECT OF M/S ASKA ROADWAYS PVT. LTD. IT WAS VIEWED BY THE AO THE BILLS FOR ALL THE SIX ASSESSMENT YEARS WERE IDENTICAL IN NATURE AND MONTH-WISE CHARGED FOR 2 TO 8 TRUCKS FOR DIFFERENT MONTHS DEPLOYED WITHIN GARDENS BUT WITHOUT HAVING ANY TRUCK DETAILS. NO DETAILS OF HIRED TRUCKS WERE SUBMITTED EITHER BY THE ASSESSEE OR THE TRANSPORTER. HOWEVER, IN THE COURSE OF ASSESSMENT PROCEEDINGS IT WAS M/S WARREN TEA LIMITED IT(SS) 72 TO78/KOL/2015 CO. NOS.70 TO 74/KOL/2016 13 CONTENDED BEFORE THE AO THAT THE ENTIRE CLAIM OF TRANSPORT EXPENDITURE WAS GENUINE BUSINESS EXPENDITURE AND VERY MUCH REQUIRED FOR INTERNAL TRANSPORTATION OF GOODS AND OTHER THINGS WITHIN LARGE GARDENS LIKE THE ASSESSEE HAS. IT WAS EXPLAINED THAT NO WRITTEN AGREEMENT WAS MADE DUE TO IRREGULAR ACTIVITIES OF GARDENS AND NOT CONTINUED TO EVERY YEAR. SINCE, THE ASSESSEE COMPANY WAS NOT HAVING ANY AGREEMENT WITH THE TRANSPORTER AND SINCE THE DETAILS OF TRUCKS WERE NOT PROVIDED, IT WAS HELD BY THE AO THAT ASSESSEE HAS FAILED TO PROVE THE GENUINENESS OF ENTIRE CLAIM. HOWEVER, AS PER THE AO, TO KEEP THE JUDICIOUS BALANCE BETWEEN THE STATEMENTS GIVEN BY THE DIRECTOR SHRI RAM AVTAR MITTAL U/S132(4) AND THE REALITY AND NECESSITY OF USING TRUCKS WITHIN THE GARDENS OF THE ASSESSEE IN ASSAM, 50% OF ENTIRE BILLS FOR ALL THE YEARS FROM A.Y 2005-06 TO 2010-11 WERE DISALLOWED AND ADDED TO THE INCOME OF THE ASSESSEE COMPANY. FOR THE YEAR UNDER CONSIDERATION THE DISALLOWANCE WAS WORKED OUT AT RS.71,02,100/- I.E. 50% OF RS.1,42,04,200/-. IN THIS MANNER, FOR THE YEAR UNDER CONSIDERATION THE ASSESSING OFFICER HAS MADE DISALLOWANCE OF RS.71,02,100/- BEING 50% OF THE PAYMENT MADE TO M/S ASKA ROADWAYS PVT. LTD. TREATING THE SAME AS NOT GENUINE. SIMILAR VIEW WAS TAKEN BY THE AO IN THE CASE OF M/S METROPOLITAN TRANSPORT COMPANY ( PROPRIETOR MR. VIKASH KASERA) AND DISALLOWED 50% OF THE CLAIM AT RS. 26,07,100/- ( I.E. 50% OF RS. 52,14,200) AND ADDED TO THE TOTAL INCOME OF THE ASSESSEE. TOTAL OF BOTH THE DISALLOWANCES COMES TO RS. 97,09,200/- ( RS. 71,02,100 + RS. 26,07,100). THE YEAR-WISE TOTAL DISALLOWANCE WAS BEING ASCERTAINED TO COMPUTE THE ASSESSED INCOME FOR EACH YEAR ON THE BASIS OF DISALLOWANCE MADE THROUGH A COMMON NATURE OF ORDER AND THEN 40% OF SUCH COMPOSITE INCOME WILL BE CALCULATED TO FIND OUT THE CENTRAL INCOME FOR THE PURPOSE OF INCOME TAX.THUS, THE TOTAL DISALLOWANCE FOR ASSESSMENT YEAR 2005- 06 IS BEING ASCERTAINED AND THEN 40% OF IT WILL BE COMPUTED TO ADD DIRECTLY WITH THE COMPUTATION OF INCOME OF THE ASSESSEE. THIS WAY, THE 40% OF THE SAID DISALLOWANCE OF RS.97,09,200/- WAS AT RS. 38,83,680/- WHICH WAS ADDED BY THE AO IN THE RETURNED INCOME ALREADY ASSESSED AS PER ORDER PASSED U/S 143(3) OF THE ACT ON 18.12.2007. 6. AGGRIEVED BY THE ASSESSMENT ORDER PASSED BY THE AO, THE ASSESSEE FILED AN APPEAL BEFORE THE COMMISSIONER OF INCOME TAX (APPEALS), WHO HAS DELETED THE M/S WARREN TEA LIMITED IT(SS) 72 TO78/KOL/2015 CO. NOS.70 TO 74/KOL/2016 14 ADDITION MADE BY ASSESSING OFFICER. THE KEY FINDINGS OF THE ORDER OF THE LD. CIT(A) ARE NARRATED BELOW: (I) IT WAS OBSERVED BY THE CIT(A) THAT IN THE COURSE OF SEARCH/SURVEY OPERATION U/S 132/133A OF THE ACT, CONDUCTED ON 27.01.2011 IN THE CASES OF SUPPLIERS, SERVICE PROVIDERS AND CONTRACTORS ETC. OF THE ASSESSEE COMPANY, THE STATEMENTS OF THE PERSONS CONCERNED WHO CONTROLLED THE BUSINESS ALONG WITH OTHER FAMILY MEMBERS ETC. WERE RECORDED. THESE PERSONS WERE SHRI RAM AVTAR MITTAL, DIRECTOR OF M/S EASTERN ROAD CARRIERS PVT. LTD. AND M/S ASKA ROADWAYS PVT LTD; SHRI PANKAJ BAGARIA, DIRECTOR OF M/S HARSHIT COMMERCIAL PVT. LTD, M/S JANAKI COMMERCIAL PVT. LTD; SHIVAM COMMERCIAL PVT. LTD; TDS COMMERCIAL PVT.LTD. (EARLIER KNOWN AS THAKURDAS SUREKA ENGG. CORPORATION PVT. LTD.), KALINGA COMMERCIAL PVT. LID; M/S BASANT COMMERCE PVT. LTD; M/S OMKARA MERCHANTS PVT. LTD, AND M/S GLAMOUR MERCANDISE PVT.LTD; SMT. NEEMA BAGARIA, DIRECTOR OF M/S PRACHI COMMERCIAL PVT. LTD; AND SMT. PUSHPA BAGARIA; SHRI AJAY CHOKHANI, DIRECTOR OF M/S GLAMOUR MERCHANDISE PVT. LTD; SHRI RAM GOPAL DROLIA, FATHER OF SHRI SAKET DROLIA (PROPRIETOR OF M/S S.B. COMMERCIAL COMPANY) AND DIRECTOR OF M/S DHOLISATI BUSINESS PVT LTD, KARTA OF RAM GOPAL DROLIA (HUF) HAVING PROPRIETORSHIP CONCERN M/S DURGA ENTERPRISES AND SMT. BELA DROLIA DIRECTOR OF M/S GOPAL TIMBER TRADING COMPANY; SHRI PAWAN KUMAR GOENKA, DIRECTOR OF M/S PM TRADERS ETC. ALL THESE PERSONS, IN THEIR STATEMENT RECORDED U/S 132 (4)/ 133A HAD STATED THAT THROUGH THEIR VARIOUS BUSINESS CONCERNS THEY HAD PROVIDED ONLY THE ACCOMMODATION ENTRIES TO THE ASSESSEE COMPANY. BUT LATER ON THEY HAD RETRACTED THEIR STATEMENTS ON 02.02.2011 I.E. WITHIN SEVEN DAYS OF INITIATION OF SEARCH. HOWEVER, THE ASSESSING OFFICER MADE VARIOUS ADDITIONS BASED ON THEIR M/S WARREN TEA LIMITED IT(SS) 72 TO78/KOL/2015 CO. NOS.70 TO 74/KOL/2016 15 STATEMENTS, LIKE ADDITION ON ACCOUNT OF TRANSPORTATION CHARGES, REVENUE EXPENSES, CAPITAL EXPENSES, PURCHASE OF ORGANIC MANURES ETC. HOEVER, THE LD CIT(A) OBSERVED THAT THOUGH THE STATEMENT GIVEN BY A PERSON IN THE COURSE OF SEARCH/SURVEY PROCEEDINGS HAS EVIDENTIARY VALUE BUT THE SAID STATEMENT SHOULD BE SUPPORTED BY THE CORROBORATING MATERIALS AND EVIDENCES OR AT LEAST CIRCUMSTANTIAL EVIDENCES. IN THE ABSENCE OF CORROBORATING EVIDENCES THE STATEMENT HAS NO EVIDENTIARY VALUE IF RETRACTED LATER ON. THE APEX COURT HAS OBSERVED IN PULLENGODE RUBBER PRODUCE CO. LTD. VS. STATE OF KERALA, 91 ITR 18 (SC.) THAT AN ADMISSION IS AN EXTREMELY IMPORTANT PIECE OF EVIDENCE BUT IT CANNOT BE SAID TO BE CONCLUSIVE. IT IS OPEN TO THE PERSON WHO MADE THE ADMISSION TO SHOW THAT IT WAS INCORRECT. THE CIT(A) FURTHER CITED THE FOLLOWING JUDGMENTS: (A) IN THE CASE OF PUSHPA VIHAR VS. ACIT, 48 TTJ 389 (BOM), THE HONBLE TRIBUNAL HELD AS UNDER: MERE ADMISSION CAN NOT BEDROCK OR FOUNDATION OF AN ASSESSMENT. IT IS ALWAYS OPEN TO THE ASSESSEE WHO MADE THE ADMISSION TO SHOW TTHAT WHAT HE ADMITTED WAS NOT CORRECT. THUS, IT COULD BE SAID THAT THE ADMISSION MADE BY A PERSON IS RELEVANT IN DECIDING THE MATTER, BUT, IT IS NOT ALWAYS CONCLUSIVE. THE PERSON WHO ADMITS A FACT IS AT LIBERTY TO EXPLAIN OR CLARIFY THE CIRCUMSTANCES AND NATURE OF STATEMENT AND ALSO CORRECT FACTS. IT IS WELL SETTLED THAT THE EFFECT OF AN ALLEGED ADMISSION DEPENDS UPON THE CIRCUMSTANCES IN WHICH IT IS MADE. THEREFORE, IT CAN BE SAID THAT AN ADMISSION IS THE BEST EVIDENCE THAT REVENUE CAN RELY UPON AND THOUGH NOT CONCLUSIVE IS DECISIVE OF THE MATTER UNLESS SUCCESSFULLY WITHDRAWN AND PROVED ERRONEOUS. (B) IN THE CASE OF JYOTICHAND BHAICHAND SARAF & SONS (P) LTD. REPORTED IN [2012] 26 TAXMANN.COM 239( PUNE), IT IS HELD THAT ADMISSION MADE U/S 132(4), THOUGH IMPORTANT PIECE OF EVIDENCE, IS NOT CONCLUSIVE. THE ASSESSEE CAN RETRACT FROM IT SHOWING THAT IT WAS MADE UNDER MISTAKEN BELIEF OF FACT OR LAW. M/S WARREN TEA LIMITED IT(SS) 72 TO78/KOL/2015 CO. NOS.70 TO 74/KOL/2016 16 (C) . IN THE CASE OF AISHWARYA K. RAI VS. DCIT, 105 TTJ (MUM) (TM) 825, IT WAS HELD THAT THE STATEMENT U/S 132(4) IS NOT THE LAST WORD. IF THE PERSON CONCERNED RETRACTS, THE SAME SUBSEQUENTLY ON ASCERTAINMENT OF CORRECT STATE OF AFFAIRS AND EXPLAIN THE SAME, IT CAN BE ACCEPTED. BASED ON THE ABOVE REASONING THE CIT(A) OBSERVED THAT THOUGH, INITIALLY ALL THE PARTIES WHO SUPPLIED GOODS/ MATERIALS OR PROVIDED SERVICES OR EXECUTED WORKS IN THE NATURE OF CONTRACT STATED THAT THEY HAD PROVIDED ACCOMMODATION ENTRIES TO THE ASSESSEE COMPANY WITHOUT DOING ACTUAL TRANSACTIONS BUT LATER ON THEY ALL RETRACTED THEIR STATEMENTS ON THE GROUND THAT THEY WERE PRESSURIZED TO GIVE SUCH STATEMENTS AND THAT THEIR ALL BUSINESS TRANSACTIONS WITH THE ASSESSEE COMPANY WERE ACTUAL BUSINESS TRANSACTIONS. IN SUPPORT OF THEIR CLAIM IN THE AFFIDAVIT THEY ALL APPEARED BEFORE THE AO AND PRODUCED THEIR BOOKS OF ACCOUNT, BILLS/VOUCHERS AND BANK STATEMENTS. AFTER VERIFICATION OF SUCH BOOKS OF ACCOUNT AND PRIMARY DOCUMENTS NOTHING ADVERSE WAS NOTED BY THE AO AND, THEREFORE, HE DID NOT MENTION ANYTHING ABOUT THE BOOKS OF ACCOUNT, BILLS/VOUCHERS AND BANK STATEMENTS PRODUCED BY ALL OF THEM BEFORE HIM. HE DID NOT RECORD THE STATEMENT OF ANY OF THE PERSONS APPEARED BEFORE HIM AND HE DID NOT M/S WARREN TEA LIMITED IT(SS) 72 TO78/KOL/2015 CO. NOS.70 TO 74/KOL/2016 17 ASK ANY QUESTION ABOUT THEIR BUSINESS TRANSACTIONS WITH THE ASSESSEE COMPANY OR PURCHASE MADE BY THEM TO EXECUTE THE WORKS OF THE ASSESSEE COMPANY. THUS, IT CAN BE SAID THAT ALL THE PERSONS SUCCESSFULLY EXPLAINED BEFORE THE AO THAT THE ADMISSION OF PROVIDING ACCOMMODATION ENTRIES TO THE ASSESSEE COMPANY WAS NOT CORRECT. THE RETRACTED STATEMENT HAS NO EVIDENTIARY VALUE UNTIL AND UNLESS THE AO PROVES THAT THE RETRACTION WAS NOT CORRECT AND THE STATEMENT IS SUBSTANTIATED BY THE CORROBORATING EVIDENCES. THEREFORE, THE LD CIT(A) DELETED THE ADDITIONS, WHICH WERE DONE BY THE AO BASED ON THE STATEMENTS. (II) THE CIT(A) ALSO DELETED THE ADDITION WHICH WERE BASED ON THE MERITS. THE CIT(A) OBSERVED THAT IN THE ASSESSMENT PROCEEDINGS IT WAS CONTENDED BY THE ASSESSEE COMPANY THAT THE ENTIRE CLAIM OF PAYMENT TO ASKA ROADWAYS PVT. LTD. WAS GENUINE BUSINESS EXPENDITURE AND SUCH EXPENDITURE WAS VERY MUCH REQUIRED FOR INTERNAL TRANSPORTATION OF GOODS AND OTHER THINGS WITHIN THE LARGE AREA OF GARDENS LIKE THE ASSESSEE COMPANY HAS. IT WAS OBSERVED THAT THE AO DID NOT DISPUTE THE REQUIREMENT OF TRUCKS FOR INTERNAL TRANSPORTATION AND THAT THE ASSESSEE COMPANY IS REQUIRED TO INCUR SUCH TYPE OF EXPENDITURE FOR THE PURPOSE OF ITS BUSINESS ACTIVITIES; BECAUSE IN THE ASSESSMENT ORDER AO HAD MENTIONED THAT M/S WARREN TEA LIMITED IT(SS) 72 TO78/KOL/2015 CO. NOS.70 TO 74/KOL/2016 18 CONSIDERING ALL ASPECT I.E. REALITY AND NECESSITY OF USING TRUCKS WITHIN GARDENS OF THE ASSESSEE COMPANY IN ASSAM, HE DISALLOWED 50% OF TOTAL PAYMENT MADE TO M/S ASKA ROADWAYS PVT. LTD. IN EACH ASSESSMENT YEAR FROM A. Y. 2005-06 TO 2010-11. THE SAID AD-HOC DISALLOWANCE HAD BEEN MADE BY HIM FOR THE REASON OF ABSENCE OF DETAILS OF TRUCK NUMBERS AND AGREEMENTS AND THE MANNER IN WHICH BILLS WERE RAISED BY ASKA ROADWAYS. THE AO HAD ALSO MENTIONED THAT THE DISALLOWANCE @ 50% WAS BEING MADE TO KEEP JUDICIOUS BALANCE BETWEEN THE STATEMENTS GIVEN BY SHRI RAM AVTAR MITTAL U/S 132(4) OF THE ACT. IN THIS MANNER, FOR THE YEAR UNDER CONSIDERATION, HE MADE DISALLOWANCE OF RS,46,09,600/-. THE CIT (A) DELETED THE ADDITION STATING THAT AO WAS NOT JUSTIFIED IN MAKING AD-HOC DISALLOWANCE @ 50% IN RESPECT OF PAYMENT MADE BY THE ASSESSEE COMPANY TO M/S ASKA ROADWAYS PVT LTD, BECAUSE THERE WAS NO MATERIAL ON RECORD WHICH MAY LEAD TO THE SAID CONCLUSION. (III). IT WAS OBSERVED BY THE CIT(A) THAT THE SIMILAR WAS THE SITUATION IN THE CASE OF ANOTHER TRANSPORTER I.E. M/S METROPOLITAN TRANSPORT COMPANY, BELONGED TO ONE SHRI VIKASH KESERE. IN THE CASE OF SHRI VIKASH KESERE, NO SEARCH OR SURVEY OPERATION WAS CONDUCTED. ONLY HIS STATEMENT WAS RECORDED BY THE ADIT(INV.) U/S 131 OF THE ACT. IN THE SAID STATEMENT HE STATED THAT HE HAD PROVIDED ACCOMMODATION M/S WARREN TEA LIMITED IT(SS) 72 TO78/KOL/2015 CO. NOS.70 TO 74/KOL/2016 19 ENTRIES OF TRANSPORTATION TO THE ASSESSEE COMPANY THROUGH HIS CONCERN M/S METROPOLITAN TRANSPORT COMPANY. HOWEVER, WITHIN 3-4 DAYS HE RETRACTED HIS STATEMENT AND SUBMITTED THAT HIS CONCERN'S ALL TRANSPORT TRANSACTIONS WITH M/S WARREN TEA LTD, WERE GENUINE. IN THE COURSE OF ASSESSMENT PROCEEDINGS SHRI VIKASH KASERA APPEARED BEFORE THE AO AS APPARENT FROM THE ORDER SHEET NOTING DATED 25.02.2013. SHRI KASERA PRODUCED BOOKS OF ACCOUNT, BILLS AND VOUCHERS AND BANK STATEMENTS ETC. OF M/S METROPOLITAN TRANSPORT COMPANY AS REQUIRED BY THE AO IN ORDER TO VERIFY THE GENUINENESS OF HIS BUSINESS AND HIS TRANSACTIONS WITH THE ASSESSEE COMPANY. HOWEVER, THE AO SILENTLY PREFERRED TO IGNORE THIS FACT TO BE RECORDED IN THE ASSESSMENT ORDER. THEREFORE, CIT(A) HELD THAT THE AO WAS NOT JUSTIFIED IN MAKING AD-HOC DISALLOWANCE @ 50% OF THE TRANSPORT EXPENSES CLAIMED IN RESPECT OF M/S METROPOLITAN TRANSPORT COMPANY AND THEREFORE HE DIRECTED THE AO TO DELETE THE ADDITION. 7. THE LD COUNSEL FOR THE ASSESSEE HAS SUBMITTED, BEFORE US, THAT THE DATE OF SEARCH WAS 27.01.2011 WHEREAS THE ASSESSMENTS WERE ALREADY COMPLETED UNDER SECTIONS 143(1)/143(3) OF THE ACT AND THE DATE OF ISSUE OF STATUTORY NOTICE U/S 143(2) HAD ALREADY ELAPSED ON THE DATE OF SEARCH, IN RESPECT OF THE ASSESSMENT YEARS 2005-06, 2006-07, 2007-08, 2008-09 AND 2009-10, AND NO INCRIMINATING M/S WARREN TEA LIMITED IT(SS) 72 TO78/KOL/2015 CO. NOS.70 TO 74/KOL/2016 20 MATERIAL WAS UNEARTH BY THE SEARCH TEAM, THEREFORE NO ADDITION CAN BE MADE IN THOSE ASSESSMENT YEARS. THEREFORE, IN NUTSHELL THE LD. COUNSEL SUBMITTED THAT NO ANY INCRIMINATING DOCUMENTS WERE FOUND BY THE ASSESSING OFFICER IN UNABATED ( COMPLETED) ASSESSMENTS. THE AO MADE ADDITIONS BASED ON THE STATEMENTS RECORDED DURING SEARCH AND SEIZURE, WHICH THE ASSESSEE DOES NOT ACCEPT BECAUSE THESE STATEMENTS ARE NOT SUPPORTED BY ANY CORROBORATIVE EVIDENCE. THE ASSESSEE HAS RELIED ON THE FOLLOWING JUDGMENTS AND INSTRUCTION OF CBDT, WHEREIN IT WAS HELD THAT ADDITION CAN NOT BE MADE MERELY BASED ON THE STATEMENTS: (I).TAXMANN INSTRUCTION: F. NO.286/2/2003-IT(INV.II) INSTANCES HAVE COME TO THE NOTICE OF THE BOARD WHERE ASSESSEES HAVE CLAIMED THAT THEY HAVE BEEN FORCED TO CONFESS THE UNDISCLOSED INCOME DURING THE COURSE OF THE SEARCH & SEIZURE AND SURVEY OPERATIONS. SUCH CONFESSIONS, IF NOT BASED UPON CREDIBLE EVIDENCE, ARE LATER RETRACTED BY THE CONCERNED ASSESSEES WHILE FILING RETURNS OF INCOME. IN THESE CIRCUMSTANCES, SUCH CONFESSIONS DURING THE COURSE OF SEARCH & SEIZURE AND SURVEY OPERATIONS DO NOT SERVE ANY USEFUL PURPOSE. IT IS, THEREFORE, ADVISED THAT THERE SHOULD BE FOCUS AND CONCENTRATION ON COLLECTION OF EVIDENCE OF INCOME WHICH LEADS TO INFORMATION ON WHAT HAS NOT BEEN DISCLOSED OR IS NOT LIKELY TO BE DISCLOSED BEFORE THE INCOME-TAX DEPARTMENT. SIMILARLY, WHILE RECORDING STATEMENT DURING THE COURSE OF SEARCH & SEIZURE AND SURVEY OPERATIONS NO ATTEMPT SHOULD BE MADE TO OBTAIN CONFESSION AS TO THE UNDISCLOSED INCOME. ANY ACTION ON THE CONTRARY SHALL BE VIEWED ADVERSELY. FURTHER, IN RESPECT OF PENDING ASSESSMENT PROCEEDINGS ALSO, ASSESSING OFFICERS SHOULD RELY UPON THE EVIDENCES/MATERIALS GATHERED DURING THE COURSE OF SEARCH/SURVEY OPERATIONS OR THEREAFTER WHILE FRAMING THE RELEVANT ASSESSMENT ORDERS. (II).ITAT, KOLKATA A BENCH IN THE CASE OF DCIT VS. SHRI VIVEKANAND VERMA IN I.T.A NO.1784/KOL/2012, HELD AS FOLLOWS: 4.WE HAVE HEARD RIVAL SUBMISSIONS AND GONE THROUGH FACTS AND CIRCUMSTANCES OF THE CASE, WE FIND THAT THERE IS NO BASIS FOR MAKING THIS DISCLOSURE AND THEREAFTER ADDITION MADE BY ASSESSING OFFICER TO THE RETURNED INCOME OF THE M/S WARREN TEA LIMITED IT(SS) 72 TO78/KOL/2015 CO. NOS.70 TO 74/KOL/2016 21 ASSESSEE AS THERE IS NO CORROBORATIVE OR DIRECT EVIDENCE WHICH SHOWS THAT THE ASSESSEE HAS EARNED THIS AMOUNT OF RS.1 CRORE. THERE IS NO DEPOSIT IN THE BANK ACCOUNT AND THERE IS NO CASH OR INCRIMINATING PAPERS FOUND DURING THE COURSE OF SEARCH ON THE PREMISES OF THE ASSESSEE OR THERE IS NO UNACCOUNTED DEPOSITS FOUND IN THE ABOVE-STATED TWO BANK ACCOUNTS RELATING TO WHICH THIS INCOME IS TO BE DECLARED. BUT THE ASSESSING OFFICER ADDED THE SUM OF RS.1 CRORE TO THE RETURNED INCOME OF THE ASSESSEE ON THE BASIS OF DISCLOSURE LETTER DATED 06.05.2010 FILED BEFORE DDIT, INVESTIGATION, UNIT 1(4), KOLKATA. AS THERE IS NO BASIS FOR MAKING THIS ADDITION, CIT(A) HAS RIGHTLY DELETED THE ADDITION BASED ON THE SUBMISSIONS AND RELYING ON VARIOUS AUTHORITIES. WE CONFIRM THE ORDER OF CIT(A). (III).TAXMANN.[2008] 300 ITR 157(MADRAS)S.KHADER KHAN SON FROM THE FOREGOING DISCUSSION, THE FOLLOWING PRINCIPLES CAN BE CULLED OUT: (I).AN ADMISSION IS AN EXTREMELY IMPORTANT PIECE OF EVIDENCE BUT IT CANNOT BE SAID THAT IT IS CONCLUSIVE AND IT IS OPEN TO THE PERSON WHO MADE THE ADMISSION TO SHOW THAT IT IS INCORRECT AND THAT THE ASSESSEE SHOULD BE GIVEN A PROPER OPPORTUNITY TO SHOW THAT THE BOOKS OF ACCOUNT DO NOT CORRECTLY DISCLOSE THE CORRECT STATE OF FACTS, VIDE DECISION OF THE APEX COURT IN PULKNGODE RUBBER PRODUCE CO. LTD. V. STATE OF KERALA [1973] 91 ITR 18; (II).IN CONTRADISTINCTION TO THE POWER UNDER SECTION 133A, SECTION 132(4) OF THE INCOME-TAX ACT ENABLES THE AUTHORISED OFFICER TO EXAMINE A PERSON ON OATH AND ANY STATEMENT MADE BY SUCH PERSON DURING SUCH EXAMINATION CAN ALSO BE USED IN EVIDENCE UNDER THE IT ACT. ON THE OTHER HAND, WHATEVER STATEMENT IS RECORDED U/S 133A OF THE IT ACT IS NOT GIVEN ANY EVIDENTIARY VALUE OBVIOUSLY FOR THE REASON THAT THE OFFICER IS NOT AUTHORISED TO ADMINISTER OATH AND TO TAKE ANY SWORN STATEMENT WHICH ALONE HAS EVIDENTIARY VALUE AS CONTEMPLATED UNDER LAW, VIDE PAUL MATHEWS AND SONS. V. CIT [2003] 263 ITR 101(KER.); (III).THE EXPRESSION SUCH OTHER MATERIALS OR INFORMATION AS ARE AVAILABLE WITH THE ASSESSING OFFICER CONTAINED IN SECTION 158BB OF THE IT ACT, 1961 WOULD INCLUDE THE MATERIALS GATHERED DURING THE SURVEY OPERATION U/S 133A, VIDE CIT V. G. K. SENNIAPPAN [2006] 284 ITR 220 (MAD.); (IV).THE MATERIAL OR INFORMATION FOUND IN THE COURSE OF SURVEY PROCEEDING COULD NOT BE A BASIS FOR MAKING ANY ADDITION IN THE BLOCK ASSESSMENT, VIDE DECISION OF THIS COURT IN T.C(A) NO.2620 (BETWEEN CIT V. S. AJIT KUMAR[2008] 300ITR 152 (MAD.); (V) FINALLY, THE WORD ANY USED IN SECTION 133A(3)(III) OF THE ACT, VIZ., RECORD THE STATEMENT OF ANY PERSON WHICH MAY BE USEFUL FOR OR RELEVANT TO, ANY PROCEEDING UNDER THIS ACT, AS ALREADY EXTRACTED ABOVE, MAKES IT CLEAR THAT THE MATERIALS COLLECTED AND THE STATEMENT RECORDED DURING THE SURVEY U/S133A ARE NOT CONCLUSIVE PIECE OF EVIDENCE BY ITSELF. FOR ALL THESE REASONS, PARTICULARLY, WHEN THE COMMISSIONER AND THE TRIBUNAL FOLLOWED THE CIRCULAR OF THE CENTRAL BOARD OF DIRECT TAXES DATED MARCH 10, 2003, EXTRACTED ABOVE, FOR ARRIVING AT THE CONCLUSION THAT THE MATERIALS COLLECTED AND THE STATEMENT OBTAINED U/S133A WOULD NOT AUTOMATICALLY BIND UPON THE ASSESSEE WE DO NOT SEE ANY REASON TO INTERFERE WITH THE ORDER OF THE TRIBUNAL. ACCORDINGLY, NO SUBSTANTIAL QUESTION OF LAW ARISES FOR CONSIDERATION, THE TAX CASE APPEAL STANDS DISMISSED. M/S WARREN TEA LIMITED IT(SS) 72 TO78/KOL/2015 CO. NOS.70 TO 74/KOL/2016 22 THE LD COUNSEL AS ALREADY POINTED OUT, BEFORE US, THAT SINCE THESE ARE UNABATED ( COMPLETED ASSESSMENTS) THEREFORE ADDITION CAN NOT BE MADE BY AO WITHOUT ANY INCREMENTING DOCUMENTS. TO SUPPORT HIS VIEW, HE RELIED ON THE FOLLOWING JUDGMENTS: (I). G.A NO.1929 OF 2016 ITAT NO.264 OF 2016 PCIT-2, KOLKATA VS. M/S. SALASAR STOCK BROKING LTD. SUBJECT MATTER OF CHALLENGE IS A JUDGMENT AND ORDER DATED 18 TH DECEMBER, 2015 BY WHICH THE LD.TRIBUNAL DISMISSED AN APPEAL PREFERRED BY THE REVENUE REGISTERED AS ITA NO.1775/KOL/2012 AND ALLOWED A CROSS-OBJECTION REGISTERED AS CO-30/KOL/2013 BOTH PERTAINING TO THE ASSESSMENT YEAR 2005-06. THE LD. TRIBUNAL WAS OF THE OPINION THAT THE ASSESSING OFFICER HAD NO JURISDICTION UNDER SECTION 153A OF THE INCOME TAX ACT TO REOPEN THE CONCLUDED CASES WHEN THE SEARCH AND SEIZURE DID NOT DISCLOSE ANY INCRIMINATING MATERIAL. IN TAKING THE AFORESAID VIEW, THE LEARNED TRIBUNAL RELIED UPON A JUDGEMENT OF DELHI HIGH COURT IN THE CASE OF CIT[A] VS. KABUL CHAWLA IN ITA NO.707/2014 DATED 28 TH AUGUST, 2014. (II).CIT VS.IBC KNOWLEDGE PARK(P) LTD.HC OF KARNATAKA (2016) 95 CCH 0253 (KAR-HC) 54.ON A CONSIDERATION OF THE RELEVANT SECTIONS AS WELL AS JUDICIAL PRECEDENT REFERRED TO ABOVE, WHAT EMERGES IS THAT SECTION 158BD OF THE ACT DEALS WITH UNDISCLOSED INCOME OF A THIRD PARTY. HOWEVER, INSOFAR AS THE INCRIMINATING MATERIAL OF THE SEARCHED PERSON OR OTHER PERSON DETECTED DURING THE COURSE OF SEARCH IS CONCERNED, THE SAME CAN BE CONSIDERED DURING THE COURSE OF ASSESSMENT. FURTHER, SUCH INCRIMINATING MATERIAL MUST RELATE TO UNDISCLOSED INCOME WHICH WOULD EMPOWER THE ASSESSING OFFICER TO UPSET OR DISTURB A CONCLUDED ASSESSMENT OF THE OTHER PERSON. OTHERWISE, A CONCLUDED ASSESSMENT WOULD BE DISTURBED WITHOUT THERE BEING ANY BASIS FOR DOING SO WHICH IS IMPERMISSIBLE IN LAW. EVEN IN CASE OF A SEARCHED PERSON, THE SAME REASON WOULD HOLD GOOD AS IN CASE OF ANY OTHER PERSON. AS OBSERVED BY US, DETECTION OR THE EXISTENCE OF INCRIMINATING MATERIAL IS A MUST FOR DISTURBING THE ASSESSMENT ALREADY MADE AND CONCLUDED. (III). [2016] 73 TAXMANN.COM 149(CALCUTTA) CIT VS. VEERPRABHU MARKETING LTD. 6.MR. NIZAMUDDING, LD. ADVOCATE, APPEARING FOR THE REVENUE-APPELLANT SUBMITTED THAT IT IS TRUE THAT SECTION 153A PROCEEDS ON THE BASIS OF SEARCH U/S132 OR REQUISITION U/S132A. THERE IS NO REVERENCE TO ANY SURVEY U/S133A. HE, THEREFORE, DID NOT DISPUTE THE SUBMISSION MADE BY MR. JAIN THAT POWER U/S153C READ WITH SECTION 153A COULD ONLY HAVE BEEN EXERCISED IN THE CASE OF A SEARCH AND REQUISITION. HE, HOWEVER, ADDED THAT THERE WAS, IN FACT, A SEARCH AS ALSO A REQUISITION. HE SUBMITTED THAT THERE HAS BEEN SURVEY IN ADDITION THERETO. M/S WARREN TEA LIMITED IT(SS) 72 TO78/KOL/2015 CO. NOS.70 TO 74/KOL/2016 23 THEREFORE, IT CANNOT BE SAID THAT EXERCISE OF POWER WAS BAD. ADMITTEDLY, THERE WAS SEARCH AS ALSO REQUISITION. 7.WITH RESPECT TO THE SECOND SUBMISSION ADVANCED BY MR. JAIN, WE CALLED UPON MR. NIZAMUDDIN IN VAIN TO SHOW US THE INCRIMINATING MATERIAL, IF ANY, FOUND EITHER DURING THE SEARCH OR DURING THE REQUISITION OR EVEN DURING THE SURVEY WHICH IS OR MAY BE RELATABLE TO THE ASSESSEE. MR. NIZAMUDDING AS UNABLE TO SHOW THAT ANY SUCH INCRIMINATING MATERIAL WAS UNEARTHED AT ANY OF THE THREE STAGES PERTAINING TO THE ASSESSEE. 8.WE ARE IN AGREEMENT WITH THE VIEWS EXPRESSED BY THE KARNATAKA HIGH COURT THAT INCRIMINATING MATERIAL IS A PRE-REQUISITE BEFORE POWER COULD HAVE BEEN EXERCISED U/S153C READ WITH SECTION 153A. 9.IN THE CASE BEFORE US, THE ASSESSING OFFICER HAS MADE DISALLOWANCES OF THE EXPENDITURE, WHICH WERE ALREADY DISCLOSED, FOR ONE REASON OR THE OTHER. BUT SUCH DISALLOWANCES WERE NOT CONTEMPLATED BY THE PROVISIONS CONTAINED U/S153C READ WITH SECTION 153A. THE DISALLOWANCES MADE BY THE ASSESSING OFFICER WERE UPHELD BY THE CIT(A) BUT THE LD. TRIBUNAL DELETED THOSE DISALLOWANCES. 10. WE FIND NO INFIRMITY IN THE AFORESAID ACT OF THE LD. TRIBUNAL. THE APPEAL IS, THEREFORE, DISMISSED. 8. UNDISPUTEDLY, SINCE THE SEARCH HAPPENED ON 27.01.2011, THE ASSESSMENTS IN RESPECT TO ASSESSMENT YEARS 2005-06 TO 2009-10 WERE UNDISPUTEDLY NOT PENDING BEFORE THE AO, WE NOTE THAT THE STATEMENTS RECORDED SIMULTANEOUSLY OF THE PERSONS WHILE SEARCH WAS GOING ON AT THE WARREN TEA GROUP PREMISES I.E. SHRI PANKAJ BAGARIA, SHRI RAMGOPAL DROLIA, SHRI PAWAN KUMAR GOENKA, SHRI DEEPAK JHUNIHUNWALA AND SHRI RAM AVTAR MITTAL AND STATEMENTS RECORDED ON BEHALF OF M/S ASIAN UDYOG AND ON BEHALF OF M/S. P. M TRADERS U/S 132(4) AS WELL AS SURVEY U/S.133A HAS BEEN RETRACTED WITHIN A SPAN OF WEEKS TIME AND THEY HAVE SWORN AFFIDAVIT STATING THESE FACTS BEFORE NOTARY PUBLIC AND THE SAME HAVE BEEN FORWARDED M/S WARREN TEA LIMITED IT(SS) 72 TO78/KOL/2015 CO. NOS.70 TO 74/KOL/2016 24 TO THE INVESTIGATION WING. IN THE STATEMENTS IN THE AFFIDAVIT, THE DEPONENTS HAVE CLEARLY STATED THAT THE STATEMENTS RECORDED U/S.132(4) AND DURING SURVEY WERE MADE ON COERCION AND UNDUE PRESSURE AND THUS THE CONTENTS OF THE STATEMENTS THUS RECORDED U/S 132(4) AND SURVEY WERE VITIATED AND CONSEQUENTLY LOST ITS EVIDENTIARY VALUE, IF ANY. IN THE AFORESAID BACKDROP, WE NOTE THAT THESE STATEMENTS RECORDED U/S.132(4) AND SURVEY COULD NOT BE TREATED AS INCRIMINATING MATERIALS IN THE LIGHT OF THE AFFIDAVITS FILED BY THE DEPONENTS RETRACTING THE SAID STATEMENT RECORDED DURING SEARCH AND MOREOVER WHEN THE ASSESSING OFFICER HAS RELIED ON THE STATEMENTS RECORDED U/S132(4) AND STATEMENTS RECORDED DURING SURVEY, CANNOT BE MADE THE SOLE BASIS FOR ADDITIONS BECAUSE THE SAID STATEMENTS MADE BY THE DEPONENTS HAS NOT BEEN CROSS-EXAMINED BY THE ASSESSEE. IF THE ASSESSING OFFICER WAS RELYING ON STATEMENTS RECORDED UNDER SECTION 132(4) AND STATEMENTS RECORDED DURING SURVEY, THEN THE ASSESSEE SHOULD HAVE BEEN PROVIDED WITH AN OPPORTUNITY TO CROSS-EXAMINE THE WITNESSES AND WITHOUT DOING SO, THE STATEMENTS RECORDED U/S132(4) AND DURING SURVEY IS FRAGILE FOR VIOLATION OF NATURAL JUSTICE AND CANNOT BE THE SOLE BASIS FOR MAKING ADDITIONS. WHEN WE DISCARD THE STATEMENTS RECORDED U/S.132(4) AND STATEMENTS RECORDED DURING SURVEY, THERE IS NO OTHER RELEVANT EVIDENCE OR MATERIAL TO CORROBORATE THE ALLEGATIONS MADE DURING THE M/S WARREN TEA LIMITED IT(SS) 72 TO78/KOL/2015 CO. NOS.70 TO 74/KOL/2016 25 STATEMENTS RECORDED U/S.132(4) AND DURING SURVEY. WHEN THERE IS NO MATERIAL AT ALL TO SUPPORT THE IMPUGNED ADDITIONS, THE STATEMENTS RECORDED U/S.132(4) AND SURVEY CANNOT BE TREATED AS INCRIMINATING MATERIALS IN THE FACTS AND CIRCUMSTANCES OF THE CASE. IN THE LIGHT OF THE AFORESAID FACTS AND CIRCUMSTANCES, THEREFORE, FOR ASSESSMENT YEAR 2005-06 AND 2009-10 WHICH WERE NOT PENDING ON THE DATE OF SEARCH, NO ADDITIONS CAN BE MADE WITHOUT INCRIMINATING MATERIALS AS HELD BY THE HONBLE DELHI HIGH COURT IN THE CASE OF CIT, CENTRAL-III VS. KABUL CHAWLA WHICH HAS BEEN UPHELD BY THE HONBLE KOLKATA HIGH COURT IN ITA NO.661 OF 2008 CIT VS. VEERPRABHU MARKETING LTD. THEREFORE, IT IS AN UNABATED ASSESSMENT AND THE SETTLED POSITION OF LAW IS THAT NO ADDITION CAN BE MADE FOR UNABATED ASSESSMENTS WITHOUT INCRIMINATING MATERIALS. THE HON'BLE DELHI HIGH COURT IN THE ITA NO. 707, 709 & 7013 OF 2014 CIT CENTRAL-III VS. KABUL CHAWLA, WHEREIN THEIR LORDSHIPS HAVE HELD AS UNDER: SUMMARY OF LEGAL POSITION 37. ON A CONSPECTUS OF SECTION 153A(1) OF THE ACT, READ WITH PROVISOS THERETO, AND IN THE LIGHT OF THE LAW EXPLAINED IN THE AFOREMENTIONED DECISIONS, THE LEGAL POSITION THAT EMERGES IS AS UNDER: I. ONCE A SEARCH TAKES PLACE UNDER SECTION 132 OF THE ACT, NOTICE UNDER SECTION 153A(1) WILL HAVE TO BE MANDATORILY ISSUED TO THE PERSON SEARCHED REQUIRING HIM TO FILE RETURNS FOR SIX AYS IMMEDIATELY PRECEDING THE PREVIOUS YEAR RELEVANT TO THE AY IN WHICH THE SEARCH TAKES PLACE. II. ASSESSMENTS AND REASSESSMENTS PENDING ON THE DATE OF THE SEARCH SHALL ABATE. THE TOTAL INCOME FOR SUCH AYS WILL HAVE TO BE COMPUTED BY THE AOS AS A FRESH EXERCISE. M/S WARREN TEA LIMITED IT(SS) 72 TO78/KOL/2015 CO. NOS.70 TO 74/KOL/2016 26 III. THE AO WILL EXERCISE NORMAL ASSESSMENT POWERS IN RESPECT OF THE SIX YEARS PREVIOUS TO THE RELEVANT AY IN WHICH THE SEARCH TAKES PLACE. THE AO HAS THE POWER TO ASSESS AND REASSESS THE TOTAL INCOME OF THE AFOREMENTIONED SIX YEARS IN SEPARATE WILL BE ONLY ONE ASSESSMENT ORDER IN RESPECT OF EACH OF THE SIX AYS IN WHICH BOTH THE DISCLOSED AND THE UNDISCLOSED INCOME WOULD BE BROUGHT TO TAX. IV. ALTHOUGH SECTION 153A DOES NOT SAY THAT ADDITIONS SHOULD BE STRICTLY MADE ON THE BASIS OF EVIDENCE FOUND IN THE COURSE OF THE SEARCH, OR OTHER POST-SEARCH MATERIAL OR INFORMATION AVAILABLE WITH THE AO WHICH CAN BE RELATED TO THE EVIDENCE FOUND, IT DOES NOT MEAN THAT THE ASSESSMENT CAN BE ARBITRARY OR MADE WITHOUT ANY RELEVANCE OR NEXUS WITH THE SEIZED MATERIAL. OBVIOUSLY AN ASSESSMENT HAS TO BE MADE UNDER THIS SECTION ONLY ON THE BASIS OF SEIZED MATERIAL. V. IN ABSENCE OF ANY INCRIMINATING MATERIAL, THE COMPLETED ASSESSMENT CAN BE REITERATED AND THE ABATED ASSESSMENT OR REASSESSMENT CAN BE MADE. THE WORD ASSESS IN SECTION 153 A IS RELATABLE TO ABATED PROCEEDINGS (I.E. THOSE PENDING ON THE DATE OF SEARCH) AND THE WORD REASSESS TO COMPLETED ASSESSMENT PROCEEDINGS. VI. INSOFAR AS PENDING ASSESSMENTS ARE CONCERNED, THE JURISDICTION TO MAKE THE ORIGINAL ASSESSMENT AND THE ASSESSMENT UNDER SECTION 153A MERGES INTO ONE. ONLY ONE ASSESSMENT SHALL BE MADE SEPARATELY FOR EACH AY ON THE BASIS OF THE FINDINGS OF THE SEARCH AND ANY OTHER MATERIAL EXISTING OR BROUGHT ON THE RECORD OF THE AO. VII. COMPLETED ASSESSMENTS CAN BE INTERFERED WITH BY THE AO WHILE MAKING THE ASSESSMENT UNDER SECTION 153 A ONLY ON THE BASIS OF SOME INCRIMINATING MATERIAL UNEARTHED DURING THE COURSE OF PROPERTY DISCOVERED IN THE COURSE OF SEARCH WHICH WERE NOT PRODUCED OR NOT ALREADY DISCLOSED OR MADE KNOWN IN THE COURSE OF ORIGINAL ASSESSMENT. 9 THE HON'BLE JURISDICTIONAL CALCUTTA HIGH COURT IN ITA NO. 661 OF 2008 COMMISSIONER OF INCOME TAX VS. VEERPRABHU MARKETING LTD. HAS ALSO HELD AS UNDER: WE AGREE WITH THE VIEW EXPRESSED BY THE TRIBUNAL THAT INCRIMINATING MATERIAL IS PRE-REQUISITE BEFORE POWER COULD HAVE BEEN EXERCISED U/S 153(C) R.W SECTION 153(A). IN THE CASE BEFORE US, THE AO HAS MADE A DISALLOWANCE OF THE EXPENDITURE, WHICH WAS HELD DISCLOSED, FOR ONE REASON OR THE OTHER, BUT SUCH DISALLOWANCES MADE BY THE AO M/S WARREN TEA LIMITED IT(SS) 72 TO78/KOL/2015 CO. NOS.70 TO 74/KOL/2016 27 WERE UPHELD BY THE LD.CIT(A) BUT THE LD. TRIBUNAL DELETED THESE DISALLOWANCE. WE FIND NO INFIRMITY IN THE AFORESAID ACT OF THE LD. TRIBUNAL. THE APPEAL IS, THEREFORE, DISMISSED. THE ASSESSEE SUBMITTED BEFORE US THE FOLLOWING CHART WHICH GIVES INFORMATION ABOUT THE DATE OF SEARCH AND THE ASSESSMENTS ALREADY COMPLETED BEFORE THE DATE OF SEARCH AND THE ASSESSING OFFICER DID NOT FIND ANY INCRIMINATING MATERIAL . WARREN TEA LTD. STATEMENT SHOWING RELEVANT DATES FOR UNABATED ASSESSMENTS (COMPLETED ASSESSMENTS) A.Y DATE OF FILING RETURN OF INCOME U/S 139(1) DATE OF ORDER U/S143(3) TIME LIMT TO ISSUE NOTICE U/S143(2) DATE OF SEARCH REMARKS 2005-06 28.10.2005 18.12.2007 30.09.2006 27.01.2011 COMPLETED ASSESSMENT (NO INCRIMINATING MATERIAL FOUND) 2006-07 30.11.2006 20.11.2008 30.09.2007 27.01.2011 -DO- 2007-08 01.11.2007 - 30.09.2008 27.01.2011 -DO- 2008-09 30.09.2008 23.12.2010 30.09.2009 27.01.2011 -DO- 2009-10 24.09.2009 - 30.09.2010 27.01.2011 -DO- THE LD COUNSEL ALSO SUBMITTED BEFORE US A CHART SHOWING BRIEF GROUNDS OF APPEALS, ASSESSMENT YEAR-WISE, WHICH IS GIVEN BELOW : M/S. WARREN TEA LTD. ASST. YEAR APPEAL NO. GROUNDS OF APPEAL 2005- 06 72/KOL/2 015 ADDITION ON A/C OF TRANSPORT EXPENSES OF R.97,09,200/- IN R/O M/S ASKA ROADWAYS PVT. LTD. AND M/S METROPOLITAN TRANSPORT CORPORATION X X X X 2006- 07 73/KOL/2 015 ADDITION ON A/C OF TRANSPORT EXPENSES OF RS.63,74,625/- IN R/O M/S ASKA ROADWAYS PVT. LTD. AND M/S METROPOLITAN TRANSPORT CORPORATION ADDITION ON A/C OF REVENUE EXPENDITURE OF RS.2,79,21,600/- FROM PURCHASE MADE FROM CONCERNS CONTROLLED BY SRI PANKAJ BAGARIA AND SRI RAM GOPAL DROLIA ADDITION ON A/C OF CAPITAL EXPENDITURE OF RS.21,98,471/- FOR PURCHASE MADE FROM CONCERNS CONTROLLED BY SRI PANKAJ BAGARIA AND SRI RAM GOPAL DROLIA X X 2007- 08 74/KOL/2 015 ADDITION ON A/C OF TRANSPORT EXPENSES OF RS.71,35,500/- IN R/O M/S ASKA ROADWAYS PVT. LTD. AND M/S METROPOLITAN TRANSPORT CORPORATION ADDITION ON A/C OF REVENUE EXPENDITURE OF RS.54,27,000/- FROM PURCHASE MADE FROM CONCERNS CONTROLLED BY SRI PANKAJ BAGARIA AND SRI RAM GOPAL DROLIA ADDITION ON A/C OF CAPITAL EXPENDITURE OF RS.29,44,007/- FOR PURCHASE MADE FROM CONCERNS CONTROLLED BY SRI PANKAJ BAGARIA AND SRI RAM GOPAL DROLIA X X 2008- 09 75/KOL/2 015 ADDITION ON A/C OF TRANSPORT EXPENSES OF RS.71,71,375/- IN R/O M/S ASKA ROADWAYS PVT. LTD. AND M/S METROPOLITAN TRANSPORT CORPORATION ADDITION ON A/C OF REVENUE EXPENDITURE OF RS.2,32,02,000/- FROM PURCHASE MADE FROM CONCERNS CONTROLLED BY SRI PANKAJ BAGARIA AND SRI RAM GOPAL DROLIA ADDITION ON A/C OF CAPITAL EXPENDITURE OF RS.29,72,645/- FOR PURCHASE MADE FROM CONCERNS CONTROLLED BY SRI PANKAJ BAGARIA AND SRI RAM GOPAL DROLIA X X M/S WARREN TEA LIMITED IT(SS) 72 TO78/KOL/2015 CO. NOS.70 TO 74/KOL/2016 28 2009- 10 76/KOL/2 015 ADDITION ON A/C OF TRANSPORT EXPENSES OF RS.74,50,440/- IN R/O M/S ASKA ROADWAYS PVT. LTD. AND M/S METROPOLITAN TRANSPORT CORPORATION ADDITION ON A/C OF PURCHASE OF ORGANIC MANURES OF RS.1,75,45,129/- FROM M/S ASIA UDYOG ADDITION ON A/C OF PURCHASE OF ORGANIC MANURES OF RS.1,75,32,753/- FROM M/S P.M.TRADERS X ADDITION ON A/C OF REVENUE EXPENDITURE OF RS.4,53,01,292/- FROM CONCERNS CONTROLLED BY SRI PANKAJ BAGARIA AND SRI RAM GOPAL DROLIA 10. THE LD DR FOR THE REVENUE HAS REITERATED THE STAND TAKEN BY THE ASSESSING OFFICER, WHICH WE HAVE ALREADY NOTED IN OUR EARLIER PARA AND IS NOT BEING REPEATED FOR THE SAKE OF BREVITY. HOWEVER BEFORE US HE COULD NOT POINT OUT ANY INCRIMINATING MATERIALS UNEARTHED DURING SEARCH WHICH COULD HAVE ENABLED HIM TO MAKE ADDITIONS IN NON-PENDING ASSESSMENT YEARS. 11.IN THE LIGHT OF THE AFORESAID RATIO LAID BY THE HON'BLE HIGH COURTS, WHEREIN, THE HONBLE HIGH COURT HELD THAT IN THE ABSENCE OF ANY INCRIMINATING MATERIALS, THE CONCLUDED ASSESSMENT NEED TO BE REITERATED AND IN THE ASSESSEES CASES BEFORE US FROM A PERUSAL OF THE ABOVE CHART, IT IS CLEAR THAT ON THE DATE OF SEARCH I.E. ON 27.01.2011, ASSESSMENTS PERTAINING TO A.Y. 2005-06, 2006-07, 2008-09 AND 2009-10 WERE NOT PENDING BEFORE THE AO AND THE LAST DATE FOR ISSUANCE OF SECTION 143(2) NOTICE FOR SCRUTINY HAD ELAPSED. THEREFORE, IT CAN BE SAFELY ASSUMED THAT THESE ASSESSMENTS WERE NOT PENDING BEFORE THE AO AND AS PER THE RATIO LAID BY THE HONBLE HIGH COURTS THESE ASSESSMENTS ARE CONCLUDED ASSESSMENTS, WHICH CANNOT BE TINKERED WITH AND FRESH ADDITIONS CANNOT BE MADE WITHOUT DIRECT NEXUS TO THE INCRIMINATING MATERIALS SEIZED DURING SEARCH. THEREFORE, NO ADDITION WITHOUT INCRIMINATING MATERIALS OUGHT TO HAVE BEEN SADDLED ON THE ASSESSEE FOR A.Y. 2005-06, 2006-07, 2007-08, 2008-09 AND 2009-10 AND SO WE ALLOW THE APPEAL OF THE ASSESSEE ON THE LEGAL ISSUE RAISED AND DIRECT DELETION OF THE ADDITION/DISALLOWANCES MADE IN THESE ASSESSMENT YEARS. 12 IN THE RESULT, THE APPEALS FILED BY THE REVENUE FOR ASSESSMENT YEARS 2005-06, 2006-07, 2007-08,2008-09 AND 2009-10, ARE DISMISSED. WHEREAS CROSS OBJECTIONS FILED BY THE ASSESSEE ARE ALLOWED. M/S WARREN TEA LIMITED IT(SS) 72 TO78/KOL/2015 CO. NOS.70 TO 74/KOL/2016 29 13. NOW LET US TAKE UP PENDING ASSESSMENT YEARS ON THE DATE OF SEARCH I.E. A.Y 2010-11 AND A.Y. 2011-12, WHICH STANDS ABATED AND WHICH HAS BEEN MADE U/S 143(3). FOR THESE PENDING ASSESSMENT YEARS, THE REVENUE APPEAL IN IT (SS) NO. 77/KOL/2015, A.Y. 2010-11, IS TAKEN AS A LEAD CASE. THE GROUNDS OF APPEAL TAKEN BY THE REVENUE IN THE SAID LEAD CASE READ AS UNDER: GROUNDS OF APPEAL RAISED BY REVENUE IN IT (SS) NO. 77/KOL/2015, A.Y. 2010-11: 1.THAT IN THE FACTS AND CIRCUMSTANCES OF THE CASE AND IN LAW, THE LD. CIT(A) HAS ERRED IN DELETING THE ADDITION ON ACCOUNT OF TRANSPORT EXPENSES AMOUNTING TO RS. 1,50,69, 900/- IN RESPECT OF M/S ASKA ROADWAYS PVT. LTD. AND M/S METROPOLITAN TRANSPORT CORPORATION WITHOUT CONSIDERING THE FACTS THAT THEY COULDN'T PROVIDE THE BASIS OF CHARGING MONTHLY BILL FOR TRANSPORTATION WITHOUT HAVING ANY AGREEMENT. 2 . THAT IN THE FACTS AND CIRCUMSTANCES OF THE CASE AND IN LAW, THE LD. CIT(A) HAS ERRED IN DELETING THE ADDITION ON ACCOUNT OF PURCHASE OF ORGANIC MANURES AMOUNTING TO RS. 2,10,37,073 /- FROM M/S ASIA UDYOG WITHOUT CONSIDERING THE FACTS THAT THE ASSESSEE COULDN'T PRODUCE ANY AGREEMENT FOR PURCHASING OF HUGE AMOUNT OF ORGANIC MANURES AND THE ADDRESSES OF THE SUPPLIERS OF THE MANURES ARE FAKE. 3. THAT IN THE FACTS AND CIRCUMSTANCES OF THE CASE AND IN LAW, THE LD. CIT(A) HAS ERRED IN DELETING THE ADDITION ON ACCOUNT OF PURCHASE OF ORGANIC MANURES AMOUNTING TO RS. 1,60,55,16 0/- FROM M/S P.M.TRADERS WITHOUT CONSIDERING THE FACTS THAT THE ASSESSEE COULDN'T PRODUCE ANY AGREEMENT FOR PURCHASING OF HUGE AMOUNT OF ORGANIC MANURES AND THE ADDRESSES OF THE SUPPLIERS OF THE MANURES ARE FAKE. 4. THAT IN THE FACTS AND CIRCUMSTANCES OF THE CASE AND IN LAW, THE LD. CIT(A) HAS ERRED IN RESTRICTING THE DISALLOWANCE U/S 14A TO RS.1,466/- WITHOUT CONSIDERING THE FACTS THE ASSESSEE HAS HUGELY INVESTED IN SHARES DURING THE YEAR UNDER CONSIDERATION WHICH HAS POTENTIAL OF EARNING EXEMPT INCOME. 5 . THAT IN THE FACTS AND CIRCUMSTANCES OF THE CASE AND IN LAW, THE LD. CIT(A) HAS ERRED IN DELETING THE ADDITION ON ACCOUNT OF REVENUE EXPENDITURE AMOUNTING TO RS. 8,29,62,211/- WITHOUT CONSIDERING THE FACTS THE THAT THE BILLS RAISED BY THE BUSINESS ENTITIES CONTROLLED BY SRI PANKAJ BAGARIA AND SRI RAM GOPAL DROLIA IN RESPECT OF SAID EXPENDITURE ARE BOGUS AND COMPANIES ARE NOT FUNCTIONING IN REAL LIFE. 6. THAT IN THE FACTS AND CIRCUMSTANCES OF THE CASE AND IN LAW, THE LD. CIT(A) HAS ERRED IN DELETING THE ADDITION ON ACCOUNT OF CAPITAL EXPENDITURE AMOUNTING TO RS. 58,76,604/- WITHOUT CONSIDERING THE FACTS THE THAT THE BILLS RAISED BY THE BUSINESS ENTITIES CONTROLLED BY SRI PANKAJ BAGARIA AND SRI RAM GOPAL DROLIA IN RESPECT OF SAID EXPENDITURE ARE BOGUS AND COMPANIES ARE NOT FUNCTIONING IN REAL LIFE. M/S WARREN TEA LIMITED IT(SS) 72 TO78/KOL/2015 CO. NOS.70 TO 74/KOL/2016 30 7. THAT IN THE FACTS AND CIRCUMSTANCES OF THE CASE AND IN LAW, THE LD. CIT(A)'S OBSERVATION IS NOT BASED ON FACTS OR DOCUMENTARY EVIDENCES AND HE ALSO IGNORED THE FACTS THAT THE NO STORE REGISTER OR STORE LEDGER WAS FOUND AT RESPECTIVE GARDENS WHICH COULD ESTABLISH THAT THE GOODS SENT FROM THE HEAD OFFICE AS PER BILLS OR THE MATERIAL REQUIRED TO ACCOMPLISH THE WORK WHICH WAS AGAINST THE PREVAILING SYSTEM OF THE COMPANY AS PER AGREEMENT GIVEN BY MR. BISHWAJIT KARMAKAR ( SENIOR MANAGER OF M/S WARREN TEA; ASSAM) AND HE HAS NOT RETRACTED HIS STATEMENT. 8.THAT THE DEPARTMENT CRAVES LEAVE TO ADD, MODIFY OR ALTER ANY OF THE GROUNDS OF APPEAL AND ORADDUCE ADDITIONAL EVIDENCE AT THE TIME OF HEARING OF THE CASE. THE ISSUE BEFORE US RELATES TO VARIOUS ADDITION MADE BY ASSESSING OFFICER, AS PER ABOVE GROUNDS OF APPEALS, WHICH WERE DELETED BY THE CIT(A). THESE GROUNDS RELATE TO ABATED (PENDING/ABATED) ASSESSMENT YEARS 2010-11 AND 2011-12. SINCE IN ALL ASSESSMENTS, IDENTICAL ISSUES ARE INVOLVED WE TAKE UP THE GROUNDS OF APPEAL FOR A.Y 2010-11. HOWEVER, IN ORDER TO HAVE A LOOK AT THE ADDITIONS/DISALLOWANCE MADE IN ALL THESE ASSESSMENT YEARS, CHART FOR THESE ASSESSMENT YEARS ARE GIVEN BELOW: M/S. WARREN TEA LTD. ASST. YEAR APPEAL NO. GROUNDS OF APPEAL 2010- 11 77/KOL/2 015 ADDITION ON A/C OF TRANSPORT EXPENSES OF RS.1,50,69,900/- IN R/O M/S ASKA ROADWAYS PVT. LTD. AND M/S METROPOLITAN TRANSPORT CORPORATION ADDITION ON A/C OF PURCHASE OF ORGANIC MANURES OF RS.2,10,37,073/- FROM M/S ASIA UDYOG ADDITION ON A/C OF PURCHASE OF ORGANIC MANURES OF RS.1,60,55,160/- FROM M/S P.M.TRADERS X ADDITION ON A/C OF REVENUE EXPENDITURE OF RS.8,29,62,211/- FROM CONCERNS CONTROLLED BY SRI PANKAJ BAGARIA AND SRI RAM GOPAL DROLIA 2011- 12 78/KOL/2 015 LABOUR CHARGES FOR SPRAY, OF RS.21,10,070/- ADDITION ON A/C OF PURCHASE OF ORGANIC MANURES OF RS.1,09,80,298/- FROM M/S ASIA UDYOG ADDITION ON A/C OF PURCHASE OF ORGANIC MANURES OF RS.89,82,235/- FROM M/S P.M.TRADERS X ADDITION ON A/C OF REVENUE EXPENDITURE OF RS.4,35,84,350/- FROM CONCERNS CONTROLLED BY SRI PANKAJ BAGARIA AND SRI RAM GOPAL DROLIA 14. IT CAN BE SEEN FROM THE SECOND PROVISO TO SEC.153A(1) OF THE ACT THAT ANY ASSESSMENT PROCEEDINGS FOR ANY OF THE SIX ASSESSMENT YEARS SET OUT IN SEC.153A (1) OF THE ACT, WHICH IS PENDING AS ON THE DATE OF INITIATION OF SEARCH U/S.132 OF THE ACT, THEN SUCH ASSESSMENT PROCEEDINGS WOULD ABATE AND THE AO WILL MAKE ONE ASSESSMENT AFTER CONSIDERING THE ORIGINAL RETURN OF INCOME AS WELL M/S WARREN TEA LIMITED IT(SS) 72 TO78/KOL/2015 CO. NOS.70 TO 74/KOL/2016 31 AS MATERIALS FOUND IN THE COURSE OF SEARCH. THE ASSESSMENT PROCEEDINGS WHICH HAVE BEEN COMPLETED AS ON THE DATE OF SEARCH U/S.132 OF THE ACT WILL HOWEVER CONTINUE TO REMAIN VALID. THUS THE FORMER PROCEEDINGS ARE REFERRED TO AS ABATED ASSESSMENT PROCEEDINGS AND THE LATTER PROCEEDINGS ARE REFERRED TO AS UNABATED ASSESSMENT PROCEEDINGS. FIRST OF ALL, THE LEGAL CHALLENGE BY THE ASSESSEE THAT IN THE ABATED PROCEEDINGS ALSO WITHOUT INCRIMINATING MATERIAL UNEARTHED DURING SEARCH ADDITION/ASSESSMENT CANNOT BE ACCEPTED FOR THE SIMPLE REASON THAT ALONG WITH SECTION 153A PROCEEDINGS AO INITIATED SCRUTINY PROCEEDINGS AFTER ISSUING SECTION 142(1) & SECTION 143(2) NOTICE AND COMPLETED THE ASSESSMENT U/S 153A READ WITH 143(3) OF THE ACT, SINCE THERE WAS TIME LEFT WITH THE AO ON THE DATE OF SEARCH TO ISSUE 143(2) NOTICE AND ON THE DATE OF SEARCH BY OPERATION OF LAW THE ASSESSMENTS WHICH WERE PENDING BEFORE THE AO GOT ABATED AND THE ABATED PROCEEDINGS ON THE DATE OF SEARCH CANNOT BE EQUATED WITH UNABATED PROCEEDINGS. SO THE SAID GROUNDS RAISED BY ASSESSEE ARE REJECTED. 15. WE HAVE ALREADY MENTIONED THE BRIEF FACTS OF THE CASE QUA THE ASSESSEE IN OUR ABOVE PARA NOS.5.2 TO 5.8 OF THIS ORDER. THESE BRIEF FACTS ARE SAME IN UNABATED AND ABATED ASSESSMENTS, THEREFORE WE DO NOT REPEAT THEM IN ABATED ( NOT COMPLETED) ASSESSMENT YEARS 2010-11 AND 2011-12. WE MENTION HERE ONLY THOSE BRIEF FACTS QUA THE ISSUE FOR ABATED ( NOT COMPLETED) ASSESSMENT YEARS 2010-11 AND 2011-12, WHICH ARE NOT DISCUSSED IN PARA NOS.5.2 TO 5.8 OF THIS ORDER. 16. THE ASSESSING OFFICER IN THESE ASSESSMENT YEARS PROCEEDED TO DRAW INFERENCES AND CONCLUSIONS IN RESPECT OF GENUINENESS OF PURCHASES MADE BY THE ASSESSEE COMPANY FROM VARIOUS PARTIES IN DIFFERENT ASSESSMENT YEARS. IN PARA- M/S WARREN TEA LIMITED IT(SS) 72 TO78/KOL/2015 CO. NOS.70 TO 74/KOL/2016 32 15 OF THE ASSESSMENT ORDER THE AO HAS MENTIONED THAT TO ARRIVE ON THE CONCLUSIONS THE COGNIZANCE WAS TAKEN OF ALL THE MATERIALS GATHERED INCLUDING THE STATEMENTS RECORDED U/S 132 AND 133A OF THE ACT AND THE STATEMENT OF SHRI BISWAJIT KARMARKAR. AS PER THE AO THE FIELD ENQUIRIES AND INVESTIGATION MADE TO FIND OUT ABOUT THE PURCHASES MADE BY THE SUPPLIERS OR THE CONTRACTORS MAINLY AT PERSONAL LEVEL AND IN SOME OCCASIONS IT WAS REVIEWED THROUGH OTHER OFFICIALS OF THE DEPARTMENT ALSO. BUT, ALL THE TIMES THE SAME HAS BEEN DONE IN DISCREET MANNER AS THE ASSESSMENT AS NOT DONE IN THE CASE OF SUPPLIERS OR CONTRACTORS. THE AO HAS FURTHER STATED THAT WHERE THE SUPPLIERS/CREDITORS OF THE GOODS TO THE SUPPLIERS AND CONTRACTORS OF THE ASSESSEE, IN RESPECT OF WHOM THE ASSESSEE COMPANY HAD CLAIMED BUSINESS RECEIPT OF RESPECTIVE GOODS WAS ALSO NOT EVIDENT FROM THE STOCK REGISTER OF THE GARDENS WERE BEING CONSIDERED AS BOGUS DESPITE THE FACT THAT THE PAYMENTS WERE MADE BY CHEQUES. HE WAS OF THE VIEW THAT MAKING PAYMENT THROUGH CHEQUES DID NOT PROVE THAT SUCH DEBIT WAS ONLY MET FOR EXCLUSIVELY AND WHOLLY AND REALLY FOR THE PURPOSE OF BUSINESS. THE AO ALSO OPINED THAT THE REALITY OF EXPENSES IN RESPECT OF SO CALLED SUPPLIERS OF GOODS AND CONTRACTORS SHOWN ACCOMPLISHED THE WORKS WAS ONE OF THE VITAL FACTORS DUE TO CONFESSION OF PROVIDING ACCOMMODATION ENTRIES WITHOUT HAVING REAL BUSINESS OF THEM WITH THE ASSESSEE COMPANY IN EXCHANGE OF COMMISSION AT THE TIME OF SEARCH AND SURVEY, FOLLOWED BY RETRACTION THROUGH AFFIDAVITS. 17. AS PER THE ASSESSMENT ORDER, PARA-16, THE AO PERUSED THE PURCHASE VOUCHERS, BILLS, BOOKS OF ACCOUNT AND BANK ACCOUNTS OF M/S ASIA UDYOG, PROPRIETOR SHRI PAWAN KUMAR GOENKA ALONG WITH THE BOOKS OF ACCOUNT OF THE ASSESSEE COMPANY. THE SUBSTANTIAL PAYMENTS WERE MADE TO M/S ASIA UDYOG FOR THE A.Y 2009-10, 2010-11 AND 2011-12 ON ACCOUNT OF PURCHASE OF ORGANIC, THE ASSESSEE COULD NOT PRODUCE ANY REQUIREMENTS/INDENT SENT/FORWARDED BY THE RESPECTIVE GARDENS TO THE EXECUTIVE DIRECTOR'S OFFICE PERIODICALLY. THE ASSESSEE COMPANY ALSO FAILED TO PROVIDE ANY EVIDENCE OF MEETING HELD BETWEEN EXECUTIVE DIRECTOR AND MANAGER AGRICULTURAL TO FINALIZE ANY REQUIREMENT OF ORGANIC MANURES FOR THE RESPECTIVE GARDENS AND THEN FORWARDING THE SAME TO THE CORPORATE OFFICE AT KOLKATA AS PER THE PROCEDURE EXPLAINED BY SHRI KARMARKAR IN HIS STATEMENT. AS PER THE AO THE ASSESSEE COMPANY COULD NOT PRODUCE COPY OF ANY DOCUMENT PLACING ORDER TO M/S ASIA UDYOG TO PURCHASE ORGANIC MANURE LIKE M/S WARREN TEA LIMITED IT(SS) 72 TO78/KOL/2015 CO. NOS.70 TO 74/KOL/2016 33 MUSTARD CAKE OR COPY OF ANY AGREEMENT OR COPY OF BOARD RESOLUTION TO ALLOW ASIA UDYOG TO SUPPLY THE ORGANIC MANURE. THERE WAS NO ENTRY OF RECEIPT OF MANURE IN THE STORE REGISTERS OF THE GARDENS. AS PER THE AO THE DISCREET INQUIRY REVEALED THAT THERE WAS NO OFFICE AT 7102, BLOCK 7A, NEHA APARTMENT, SATI JOYMATI ROAD, GUWAHATI AS MENTIONED ON THE BILLS PLACED TO ASSESSEE. AGAIN, AS PER THE AO, THE DISCREET ENQUIRY IN RESPECT OF THE TRADERS/CREDITORS OF GOODS FROM WHERE M/S ASIA UDYOG HAD SHOWN THE PURCHASE FOR THE ITEMS TO SUPPLY TO THE ASSESSEE WAS NOTICED BOGUS DUE TO NON-EXISTENCE EXCEPT NATIONAL INDUSTRIES OF SILIGURI. THE AO WAS OF THE OPINION THAT DURING THE COURSE OF SURVEY, IT WAS PROVED BEYOND FURTHER DOUBT THAT M/S ASIA WAS NOT AN ESTABLISHED AND REGULAR TRADER AND THERE WAS NO AGREEMENT TO SUPPLY OF GOODS TO THE ASSESSEE COMPANY. IN VIEW OF ABOVE, IT WAS HELD BY THE ASSESSING OFFICER THAT THE ENTIRE PURCHASES SHOWN BY THE ASSESSEE FROM M/S ASIA UDYOG WAS CONSIDERED AS NOT MADE EXCLUSIVELY, WHOLLY AND REALLY FOR THE PURPOSE OF BUSINESS FOR ANY OF THE YEARS. THUS, HE DISALLOWED PURCHASE OF RS.1,75,45,129/- A.Y 2009-10, RS.2,10,37,073/- FOR THE A.Y. 2010-11 AND RS.1,09,80,208/- FOR THE ASSESSMENT YEAR 2011-12 AND ADDED TO THE INCOME IN THE RESPECTIVE ASSESSMENT YEARS. 18 IT WAS OBSERVED THAT THE SIMILAR VIEW TAKEN IN THE CASE OF M/S ASIA UDYOG, WAS ALSO TAKEN BY THE AO IN RESPECT OF SUPPLY OF ORGANIC MANURES SUPPLIED BY M/S P.M. TRADERS PVT. LTD. WHOSE DIRECTORS WERE SHRI PAWAN KUMAR GOENKA AND SMT. MADHU GOENKA. FOR THE SAME REASONS AS STATED IN THE CASE OF M/S ASIA UDYOG, THE AO MADE DISALLOWANCE OF PURCHASES OF ORGANIC MANURES OF RS.1,75,32,753/- IN A.Y. 2009-10, RS.1,60,55,75O/- IN A.Y. 2010-11 AND RS.89,82,235/- IN A.Y. 2011-12 AND ADDED TO THE INCOME OF THE ASSESSEE IN THE RESPECTIVE ASSESSMENT YEARS. 19 THE AO PROCEEDED TO ANALYZE AND DRAW INFERENCES AND CONCLUSIONS ABOUT THE EXPENSES CLAIMED BY THE ASSESSEE COMPANY UNDER BOTH CAPITAL AND REVENUE HEADS IN RESPECT OF BILLS ISSUED BY VARIOUS ENTITIES CONTROLLED BY SHRI PANKAJ BAGARIA AND SHRI RAM GOPAL DROLIA. IN RESPECT OF CAPITALIZED EXPENSES THE ASSESSEE HAD CLAIMED DEPRECIATION WHEREAS THE REVENUE EXPENSES WERE CLAIMED AS SUCH BY DEBITING IN THE PROFIT AND LOSS ACCOUNT. AS PER THE ASSESSING M/S WARREN TEA LIMITED IT(SS) 72 TO78/KOL/2015 CO. NOS.70 TO 74/KOL/2016 34 OFFICER BOTH THE GROUPS HAD WORKED TOGETHER FOR THE ASSESSEE AT SEVERAL OCCASIONS AS A SUBSTANTIAL QUANTUM OF SUPPLY OF MATERIALS/GOODS TO THE ASSESSEE CLAIMED BY ANY OF THE CONCERNS MANAGED BY SHRI RAM GOPAL DROLIA, DEBITED AS EXPENDITURE IN THE BOOKS OF ACCOUNT OF THE ASSESSEE EITHER AS REVENUE EXPENDITURE OR CAPITAL EXPENDITURE CLAIMING DEPRECIATION UNDER THE HEAD BUILDINGS, ROADS AND BRIDGES WITHIN FIXED ASSETS HAD BEEN ROUTED THROUGH VARIOUS CONCERNS HEADED BY SHRI PANKAJ BAGARIA. THAT, IN THE COURSE OF SEARCH AND SURVEY OPERATIONS, SHRI PANKAJ BAGARIA THREE TIMES AT THREE DIFFERENT PLACES HAD ADMITTED OF PROVIDING ACCOMMODATION ENTRIES TO THE ASSESSEE COMPANY. THERE WERE NO CORRESPONDING PURCHASES TO SUPPLY THE GOODS TO THE ASSESSEE DUE TO SUCH ACCOMMODATION ENTRIES PROVIDED IN EXCHANGE OF COMMISSION. IT HAS BEEN MENTIONED BY THE ASSESSING OFFICER THAT THE SAID CONFESSION WAS ALSO CONFIRMED BY SMT. NEEMA BAGARIA, ONE OF THE DIRECTORS OF M/S PRACHI COMMERCIAL PVT. LTD., HIS WIFE SMT. SUNITA BAGARIA AND HIS MOTHER SMT. PUSHPA BAGARIA, DIRECTOR OF M/S KALINGA COMMERCIAL PVT. LTD. AND M/S SHIVANR COMMERCIAL PVT. LTD. AGAIN, SHRI AJAY CHOKHANI, ONE OF THE DIRECTORS OF M/S GLAMOUR MERCANTILE PVT. LTD ALSO STATED THE SAME THING. AT THE SAME TIME SHRI RAM GOPAL DROLIA, THE KEY PERSON OF MANY SO CALLED SUPPLIERS AND EXECUTORS OF WORKS/CONTRACTS TO THE ASSESSEE COMPANY HAD ALSO CONFIRMED THAT THE WORKS AND SUPPLIES GOT DONE FROM M/S SHREE VINAYAK ENTERPRISES, PRAKASH CHAND BAGARIA (HUF), PANKAJ BAGARIA (HUF) AND M/S SHIVAM COMMERCE PVT LTD. ETC. WERE NOT FUNCTIONING IN REAL LIFE AS SUCH AND MOSTLY GAVE ACCOMMODATION ENTRIES. FURTHER, INQUIRY ON SUPPLIERS TO THE BUSINESS CONCERNS OF BAGARIA AND DROLIA FURTHER PROVES BOGUS OR IN PAPER ONLY. THE FACTS COME OUT DUE TO COMPILATION OF VARIOUS STATEMENTS GIVEN AT THE TIME OF SEARCH AND SURVEY OPERATIONS WHETHER RETRACTED OR NOT, BUT COMMENSURATE WITH RESULT OF VERIFICATION OF ALL THE BILLS, BANK STATEMENTS FURNISHED BY ALL THE PARTIES CONTROLLED BY SHRI BAGARIA AND SHRI DROLIA, PRODUCED BY THE ASSESSEE COMPANY BEFORE THE DEPARTMENT AND ALSO THE INFORMATION GATHERED THROUGH VARIOUS DISCREET INQUIRIES. FURTHER, THE ASSESSEE COMPANY HAS FAILED TO SUBSTANTIATE ITS CLAIM WITH REFERENCE TO ANY ENTRY MADE IN THE STORE REGISTER OF THE RESPECTIVE GARDENS. IN VIEW OF ABOVE, IT WAS HELD BY THE AO THAT THE ENTIRE AMOUNT OF BILLS RAISED BY BOTH THE GROUPS FOR ALL THE YEARS WERE CONSIDERED NOT WHOLLY, EXCLUSIVELY AND REALLY FOR THE PURPOSE OF BUSINESS AND THE SAME WAS DISALLOWED U/S 37(1) AND M/S WARREN TEA LIMITED IT(SS) 72 TO78/KOL/2015 CO. NOS.70 TO 74/KOL/2016 35 SECTION 32 OF THE ACT AND ADDED TO THE INCOME OF THE ASSESSEE IN THE RESPECTIVE ASSESSMENT. IN THIS MANNER, IN RESPECT OF THE BUSINESS CONCERNS CONTROLLED BY SHRI PANKAJ BAGARIA NAMELY, HARSHIT COMMERCIAL PVT. LTD., JANAKI COMMERCIAL PVT. LTD., KALINGA COMMERCIAL PVT. LTD., OMKARA MERCHANTS PVT. LTD., GLAMOUR MERCHANDISE FVT. LTD., PRACHI COMMERCIAL PVT. LTD., SHIVAM COMMERCE PVT. LTD., THAKURDAS SUREKA ENGG. CORP. LTD. AND BASANT COMMERCE PVT. LTD., THE ASSESSING OFFICER MADE DISALLOWANCE OF CAPITAL EXPENDITURE OF RS.15,87,000/- IN A.Y. 2007-08, REVENUE EXPENDITURE OF RS.1,76,77,200/- IN A,Y. 2008-09, CAPITAL OF RS.1,50,01,650/- AND REVENUE EXPENDITURE OF RS.63,61,260/- IN A.Y. 2009-10, CAPITAL EXPENDITURE OF RS.5,03,37,912/- AND REVENUE EXPENDITURE OF RS.3,99,16,650/- IN A.Y. 2010-11- AND CAPITAL EXPENDITURE OF RS.5,28,39,356/- AND REVENUE EXPENDITURE OF RS.1,90,69,500/- IN A.Y.2011-12. AS FAR AS THE DISALLOWANCE OF CAPITAL EXPENDITURE IS CONCERNED, THE AO HAD DISALLOWED THE DEPRECIATION OF THE ABOVE MENTIONED AMOUNTS IN THE RESPECTIVE ASSESSMENT YEARS. 20. SIMILARLY, FOR THE SAME REASONS AS MENTIONED ABOVE, IN RESPECT OF BUSINESS CONCERNS CONTROLLED BY SHRI RAM GOPAL DROLIA, VIZ; DURGA ENTERPRISES, PROPRIETOR RAM GOPAL DROLIA (HUF), GOPAL TIMBER TRADING COMPANY, PROPRIETOR BELA DROLIA, S.B. COMMERCIAL COMPANY, PROPRIETOR SAKET DROLIA, DHOLISATI BUSINESS PVT. LTD. AND RAM GOPAL DROLIA (INDIVIDUAL), THE AO DISALLOWED CAPITAL EXPENDITURE OF RS.2,19,84,710/- AND REVENUE EXPENDITURE OF RS.2,79,21,600/- IN A.Y. 2006-07, CAPITAL EXPENDITURE OF RS.2,78,53,063/- AND REVENUE EXPENDITURE OF RS.54,27,000/- IN A.Y. 2007-08, CAPITAL EXPENDITURE OF RS.2,97,26,450/- AND REVENUE EXPENDITURE OF RS.55,24,800/- IN A.Y. 2008-09, CAPITAL EXPENDITURE OF RS.4,10,86,815/- AND REVENUE EXPENDITURE OF RS.3,89,40,O32/- IN A.Y. 2009-10, CAPITAL EXPENDITURE OF RS.84,28,125/- AND REVENUE EXPENDITURE OF RS.4,30,45,561/- IN A.Y. 2010-11 AND CAPITAL EXPENDITURE OF RS.1,65,62,471/- AND REVENUE EXPENDITURE OF RS.2,45,14,850/- IN A.Y. 2011-12. AS FAR AS THE DISALLOWANCE OF CAPITAL EXPENDITURE IN VARIOUS ASSESSMENT YEARS IS CONCERNED, THE AO HAS DISALLOWED THE DEPRECIATION ON THE ABOVE MENTIONED AMOUNTS IN THE RESPECTIVE ASSESSMENT YEARS. M/S WARREN TEA LIMITED IT(SS) 72 TO78/KOL/2015 CO. NOS.70 TO 74/KOL/2016 36 21. THUS, IN ALL THE ASSESSMENT YEARS I.E. FROM A.Y. 2005-06 TO 2011-12, THE AO HAS MADE VARIOUS DISALLOWANCES MAINLY ON THE BASIS OF STATEMENTS OF DIFFERENT PERSONS RECORDED IN THE COURSE OF SEARCH AND SURVEY PROCEEDINGS WHEREIN THEY HAD STATED THAT THEY HAD GIVEN ACCOMMODATION ENTRIES TO THE ASSESSEE COMPANY THROUGH THEIR VARIOUS BUSINESS CONCERNS AND ENTITIES. BESIDES, THE AO ALSO RELIED ON SOME DISCREET ENQUIRIES AND THAT THE SUPPLIES CLAIMED TO BE MADE BY VARIOUS PARTIES TO THE ASSESSEE COMPANY WERE NOT SUPPORTED BY THE ENTRIES IN THE STORE REGISTERS MAINTAINED AT TEA GARDENS. 22. AGGRIEVED BY THE VARIOUS ADDITIONS MADE BY THE ASSESSING OFFICER, THE ASSESSEE FILED AN APPEAL BEFORE THE LD CIT(A), WHO HAS DELETED THE ADDITIONS.THE CIT (A) OBSERVED THAT ALL THE ABOVE MENTIONED DISALLOWANCES WERE ALSO MADE BY THE AO IN THE IMMEDIATELY PRECEDING ASSESSMENT YEAR I.E. THE A.Y. 2009-10, WHEREIN HE HAD MADE AD-HOC DISALLOWANCE OF TRANSPORTATION CHARGES @ 50% IN THE CASE OF M/S ASKA ROADWAYS PVT. LTD. AND M/S METROPOLITAN TRANSPORT CORPORATION, DISALLOWANCE OF PURCHASE OF ORGANIC MANURE FROM M/S ASIA UDYOG AND M/S P.M. TRADERS PVT. LTD., DISALLOWANCE OF REVENUE EXPENSES IN RESPECT OF SUPPLIES AND CIVIL WORKS DONE BY CONCERNS AND BUSINESS ENTITIES OF SHRI PANKAJ BAGARIA AND SHRI RAM GOPAL DROLIA AND THE CIVIL CONTRACTUAL WORKS WHICH WAS CAPITAL IN NATURE EXECUTED BY THE COMPANIES AND BUSINESS ENTITIES OF SHRI PANKAJ BAGARIA AND SHRI RAM GOPAL DROLIA. IN THE COURSE OF APPELLATE PROCEEDINGS, THE APPELLANT COMPANY MADE THE SIMILAR SUBMISSIONS AS MADE IN THE ASSESSMENT YEAR 2009-10 BECAUSE FOR ALL THE YEARS THE DISALLOWANCE OF EXPENSES HAD BEEN MADE BY COMMON AND CONTINUOUS DISCUSSION IN THE ASSESSMENT ORDER. THE APPEAL FOR THE ASSESSMENT YEAR 2009- 10 HAD BEEN DECIDED BY CIT(A), BY DISCUSSING EACH DISALLOWANCES MADE BY THE ASSESSING OFFICER, VIDE HIS APPEAL NO.447/CC-3(4)/CIT(A)-21/14-15 DATED 25.02.2015. IN THE SAID APPEAL, THE CIT(A) HAD DISCUSSED IN DETAILS ABOUT ADDITION MADE BY AO BASED ON STATEMENTS, ADDITION ON ACCOUNT OF REVENUE AND CAPITAL EXPENSES, AND ADDITION ON ACCOUNT OF PURCHASE OF ORGANIC MANURES ETC. 23. NOT BEING SATISFIED WITH THE ORDER OF LD CIT(A), THE REVENUE IS IN APPEAL BEFORE US FOR A.Y. 2010-11 AND 2011-12. WE SHALL DISCUSS EACH GROUND OF LEAD CASE FOR A.Y. 2010-11 AS FOLLOWS: M/S WARREN TEA LIMITED IT(SS) 72 TO78/KOL/2015 CO. NOS.70 TO 74/KOL/2016 37 23.1 ADDITION ON ACCOUNT OF TRANSPORT EXPENSES AMOUNTING TO RS. 1,50,69,900/- IN RESPECT OF M/S ASKA ROADWAYS PVT. LTD. AND M/S METROPOLITAN TRANSPORT CORPORATION 23.2 WE HAD DISCUSSED THE BRIEF FACTS OF THIS ADDITION, IN UNABATED ASSESSMENTS, THAT IS, A.Y. 2005-06 TO 2009-10. THE FINDINGS OF CIT(A) IS ALSO GIVEN IN PARA 6 OF THIS ORDER. THE CIT(A) OBSERVED THAT IN THE ASSESSMENT PROCEEDINGS IT WAS CONTENDED BY THE ASSESSEE COMPANY THAT THE ENTIRE CLAIM OF PAYMENT TO ASKA ROADWAYS PVT. LTD. WAS GENUINE BUSINESS EXPENDITURE AND SUCH EXPENDITURE WAS VERY MUCH REQUIRED FOR INTERNAL TRANSPORTATION OF GOODS AND OTHER THINGS WITHIN THE LARGE AREA OF GARDENS LIKE THE ASSESSEE COMPANY HAS. IT WAS OBSERVED THAT THE AO DID NOT DISPUTE THE REQUIREMENT OF TRUCKS FOR INTERNAL TRANSPORTATION AND THAT THE ASSESSEE COMPANY IS REQUIRED TO INCUR SUCH TYPE OF EXPENDITURE FOR THE PURPOSE OF ITS BUSINESS ACTIVITIES; BECAUSE IN THE ASSESSMENT ORDER AO HAD MENTIONED THAT CONSIDERING ALL ASPECT I.E. REALITY AND NECESSITY OF USING TRUCKS WITHIN GARDENS OF THE ASSESSEE COMPANY IN ASSAM, HE DISALLOWED 50% OF TOTAL PAYMENT MADE TO M/S ASKA ROADWAYS PVT. LTD. IN EACH ASSESSMENT YEAR FROM A. Y. 2005-06 TO 2010-11. THE SAID AD-HOC DISALLOWANCE HAD BEEN MADE BY HIM FOR THE REASON OF ABSENCE OF DETAILS OF TRUCK NUMBERS AND AGREEMENTS AND THE MANNER IN WHICH BILLS WERE RAISED BY ASKA ROADWAYS. THE AO HAD ALSO MENTIONED THAT THE DISALLOWANCE @ 50% WAS BEING MADE TO KEEP JUDICIOUS BALANCE BETWEEN THE STATEMENTS GIVEN BY SHRI RAM AVTAR MITTAL U/S 132(4) OF THE ACT. IN THIS MANNER, FOR THE YEAR UNDER CONSIDERATION, HE MADE DISALLOWANCE OF RS, 1,50,69,900/- /-. THE CIT (A) DELETED THE ADDITION STATING THAT AO WAS NOT JUSTIFIED IN MAKING AD-HOC DISALLOWANCE @ 50% IN RESPECT OF M/S WARREN TEA LIMITED IT(SS) 72 TO78/KOL/2015 CO. NOS.70 TO 74/KOL/2016 38 PAYMENT MADE BY THE ASSESSEE COMPANY TO M/S ASKA ROADWAYS PVT LTD, BECAUSE THERE WAS NO MATERIAL ON RECORD WHICH MAY LEAD TO THE SAID CONCLUSION. IT WAS OBSERVED BY THE CIT(A) THAT THE SIMILAR WAS THE SITUATION IN THE CASE OF ANOTHER TRANSPORTER I.E. M/S METROPOLITAN TRANSPORT COMPANY, BELONGED TO ONE SHRI VIKASH KESERE. IN THE CASE OF SHRI VIKASH KESERE, NO SEARCH OR SURVEY OPERATION WAS CONDUCTED. ONLY HIS STATEMENT WAS RECORDED BY THE ADIT(INV.) U/S 131 OF THE ACT. IN THE SAID STATEMENT HE STATED THAT HE HAD PROVIDED ACCOMMODATION ENTRIES OF TRANSPORTATION TO THE ASSESSEE COMPANY THROUGH HIS CONCERN M/S METROPOLITAN TRANSPORT COMPANY. HOWEVER, WITHIN 3-4 DAYS HE RETRACTED HIS STATEMENT AND SUBMITTED THAT HIS CONCERN'S ALL TRANSPORT TRANSACTIONS WITH M/S WARREN TEA LTD, WERE GENUINE. IN THE COURSE OF ASSESSMENT PROCEEDINGS SHRI VIKASH KASERA APPEARED BEFORE THE AO AS APPARENT FROM THE ORDER SHEET NOTING DATED 25.02.2013. SHRI KASERA PRODUCED BOOKS OF ACCOUNT, BILLS AND VOUCHERS AND BANK STATEMENTS ETC. OF M/S METROPOLITAN TRANSPORT COMPANY AS REQUIRED BY THE AO IN ORDER TO VERIFY THE GENUINENESS OF HIS BUSINESS AND HIS TRANSACTIONS WITH THE ASSESSEE COMPANY. HOWEVER, THE AO SILENTLY PREFERRED TO IGNORE THIS FACT TO BE RECORDED IN THE ASSESSMENT ORDER. THEREFORE, CIT(A) HELD THAT THE AO WAS NOT JUSTIFIED IN MAKING AD-HOC DISALLOWANCE @ 50% OF THE TRANSPORT EXPENSES CLAIMED IN RESPECT OF M/S METROPOLITAN TRANSPORT COMPANY AND THEREFORE HE DIRECTED THE AO TO DELETE THE ADDITION. 23.3 BEFORE US, THE LD COUNSEL FOR THE ASSESSEE SUBMITTED THAT HE HAS PROVIDED REQUIRED BILLS, VOUCHERS AND OTHER DETAILS REQUIRED BY AO, THEREFORE, AO CAN NOT MAKE ADDITION BASED OF GUESS AND SURMISE. FURTHER, THE LD COUNSEL RELIED ON M/S WARREN TEA LIMITED IT(SS) 72 TO78/KOL/2015 CO. NOS.70 TO 74/KOL/2016 39 THE ORDER PASSED BY THE LD. CIT(A). THE LD DR FOR THE REVENUE HAS FAIRLY AGREED WITH THE ORDER PASSED BY THE LD CIT(A). 23.4 WE HEARD BOTH THE PARTIES AND PERUSED THE MATERIAL AVAILABLE ON RECORD, WE ARE OF THE VIEW THAT ADDITION MADE BY AO WAS BASED ON GUESS WORK AND WITHOUT BRINGING ANY COGENT MATERIAL ON RECORD. WE HAVE ALSO NOTED THE JUDGMENT OF HON`BLE SUPREME COURT IN DHAKESWARI COTTON MILLS LTD. VS. COMMISSIONER OF INCOME TAX, 26 ITR 775 (SC), WHEREIN IT WAS HELD THAT: THOUGH ITO IS NOT RESTRAINED UNDER S. 23(3) BY TECHNICAL RULES OF EVIDENCE AND PLEADING BUT HE CANNOT MAKE AN ASSESSMENT ON PURE GUESS-WORK WITHOUT REFERENCE TO ANY MATERIAL OR EVIDENCE AND ASSESSEE MUST BE GIVEN AN OPPORTUNITY TO REBUT ANY MATERIAL CONSIDERED BY THE IT AUTHORITIES. THEREFORE, WE ARE OF THE VIEW THAT THE ITO IN ESTIMATING THE EXPENSES ON TRANSPORTATION, DID NOT ACT ON ANY MATERIAL BUT ACTED ON PURE GUESS AND SUSPICION AND HENCE, WE CONFIRM THE ORDER PASSED BY LD CIT(A). 23.5 IN THE RESULT, THE APPEAL FILED BY THE REVENUE ( ON GROUND NO.1), IS DISMISSED. 24. GROUND NO. 2 RAISED BY REVENUE RELATES TO ADDITION ON ACCOUNT OF PURCHASE OF ORGANIC MANURES AMOUNTING TO RS. 2,10,37,073/- FROM M/S ASIA UDYOG. GROUND NO. 3 RAISED BY REVENUE RELATES ADDITION ON ACCOUNT OF PURCHASE OF ORGANIC MANURES AMOUNTING TO RS. 1,60,55,160/- FROM M/S P.M.TRADERS. SINCE GROUND NO. 2 AND 3 RAISED BY THE REVENUE RELATE TO THE SAME NATURE OF EXPENSES, THEREFORE THESE ARE BEING ADJUDICATED TOGETHER. M/S WARREN TEA LIMITED IT(SS) 72 TO78/KOL/2015 CO. NOS.70 TO 74/KOL/2016 40 24.1 THE BRIEF FACTS QUA THE ISSUES ARE THAT THE AO MADE THE ADDITION ON ACCOUNT OF SUPPLIES MADE BY M/S ASIA UDYOG AND M/S P.M. TRADERS OF ORGANIC MANURES. BOTH THESE CONCERNS WERE CONTROLLED BY PAWAN KUMAR GOENKA. SHRI PAWAN KUMAR GOENKA IN HIS STATEMENT RECORDED U/S 133A OF THE ACT HAD STATED THAT HE USED TO PROVIDE THE ACCOMMODATION ENTRIES TO THE ASSESSEE COMPANY WITHOUT MAKING ACTUAL SUPPLIES OF GOODS. THEREAFTER, WITHIN SEVEN DAYS SAID STATEMENT WAS RETRACTED BY PAWAN KUMAR GOENKA BY FILING AN AFFIDAVIT BEFORE THE DIT(INV.), KOLKATA ON 03.02.2011, STATING THAT THE STATEMENT WAS GIVEN BY HIM UNDER PRESSURE. SHRI PAWAN KUMAR GOENKA ALSO APPEARED BEFORE THE AO DURING THE ASSESSMENT PROCEEDINGS. SHRI PAWAN KUMAR GOENKA, SUBMITTED BEFORE THE AO ALL THE DETAILS AND EXPLANATIONS AS PER THE QUERIES RAISED BY AO. SHRI PAWAN KUMAR GOENKA ALSO APPEARED BEFORE THE AO ALONG WITH ALL THE BOOKS OF ACCOUNTS, BILLS AND VOUCHERS, OTHER PRIMARY DOCUMENTS AND THE BANK STATEMENT OF BOTH THE CONCERNS AND THE SAME WERE VERIFIED BY THE AO. THE AO DID NOT FIND ANY DEFECTS IN THE BOOKS OF ACCOUNTS, BILLS, VOUCHERS AND OTHER DETAILS. HOWEVER, THE AO REJECTED ALL THE SUBMISSIONS OF THE ASSESSEE AND MADE ADDITION ON ACCOUNT OF PURCHASE OF ORGANIC MANURE. 24.2 AGGRIEVED BY THESE ADDITIONS, THE ASSESSEE FILED AN APPEAL BEFORE THE CIT(A), WHO HAD DELETED THE ADDITIONS. THE LD CIT(A) OBSERVED THAT STATEMENT TAKEN DURING THE SURVEY HAD NOT BEEN CORROBORATED BY ANY EVIDENCE AND TANGIBLE MATERIAL, THEREFORE IT DOES NOT HAVE ANY VALUE. DURING THE ASSESSMENT PROCEEDINGS THE ASSESSEE SUBMITTED BOOKS OF ACCOUNTS, BILLS, VOUCHERS, AND M/S WARREN TEA LIMITED IT(SS) 72 TO78/KOL/2015 CO. NOS.70 TO 74/KOL/2016 41 OTHER DETAILS BEFORE THE AO AND THE AO DID NOT FIND ANY MISTAKE. BESIDES, THE ASSESSEE SUBMITTED BEFORE THE CIT(A), THE DETAILS OF OTHER PARTIES AS PER ITS BOOKS OF ACCOUNT, WHO HAD ALSO SUPPLIED THE ORGANIC MANURE TO THE ASSESSEE COMPANY AND ACCEPTED BY THE AO. THEREFORE, CIT(A) HELD THAT ADDITION MADE BY AO ARE BASED OF GUESS AND SURMISE, HENCE NOT SUSTAINABLE IN LAW AND THEREFORE HE DELETED BOTH THE ADDITIONS, IN RESPECT OF ASIA UDYOG AND P.M. TRADERS. THE LD DR FOR THE REVENUE HAS FAIRLY AGREED WITH THE SUBMISSIONS OF THE COUNSEL. 24.3 HAVING HEARD THE RIVAL SUBMISSIONS, PERUSED THE MATERIAL AVAILABLE ON RECORD, WE ARE OF THE VIEW THAT AO HAD MADE ADDITION ON ACCOUNT OF SUPPLIES OF GOODS BY ASIA UDYOG AND P.M. TRADERS BASED ON STATEMENT RECORDED, WHICH WAS, LATER ON RETRACTED. DURING THE COURSE OF HEARING, THE BOOKS OF ACCOUNTS, BILLS, VOUCHERS, AND OTHER DETAILS WERE SUBMITTED AND THE AO DID NOT FIND ANY MISTAKE. DETAILS OF OTHER PARTIES WHO SUPPLIED THE ORGANIC MANURES TO THE ASSESSEE WERE ALSO SUBMITTED BEFORE THE AO AND THE AO ACCEPTED THEM. WE ARE OF THE VIEW THAT THE SAID ADDITIONS ARE PURELY ON GUESS AND SURMISE AND LD CIT(A) HAD RIGHTLY DELETED THE ADDITION, THEREFORE, WE CONFIRM THE ORDER PASSED BY LD CIT(A). 25. GROUND NO. 4 RAISED BY THE REVENUE RELATES SECTION 14A DISALLOWANCE. AS PER REVENUE THE LD. CIT(A) HAD ERRED IN RESTRICTING THE DISALLOWANCE U/S 14A TO RS.1,466/- WITHOUT CONSIDERING THE FACTS THE ASSESSE. 25.1 THE BRIEF FACTS QUA THE ISSUE ARE THAT THE ASSESSEE COMPANY HAS CLAIMED EXEMPTED INCOME AND FOR WHICH INTEREST AMOUNT HAS BEEN DEBITED IN THE PROFIT M/S WARREN TEA LIMITED IT(SS) 72 TO78/KOL/2015 CO. NOS.70 TO 74/KOL/2016 42 AND LOSS ACCOUNT. THE ASSESSEE STATED BEFORE THE AO THAT IT IS DIFFICULT TO SEGREGATE THE EXPENSES. THE ASSESSEE ALSO STATED BEFORE THE AO THAT NO EXPENSES HAD ACTUALLY BEEN INCURRED IN THIS REGARD TO EARN EXEMPTED INCOME. THE AO REJECTED THE SUBMISSIONS OF THE ASSESSEE AND COMPUTED THE DISALLOWANCE AS FOLLOWS: (A) DIRECT EXPENSES NIL (B) PROPORTIONATE INTEREST RS. 12,54,722/- (C ) 0.5% OF AVERAGE INVESTMENT RS. 7,43,573/- TOTAL DISALLOWANCE RS. 19,98,295/- 25.2 THE CIT(A) NOTED THAT AO HAS NOT COMPUTED THE DISALLOWANCE AS PER THE JUDGMENT OF JURISDICTIONAL TRIBUNAL IN REI AGRO LTD. VS. DCIT (2013) 144 ITD 141 ( KOL) WHEREIN IT WAS HELD THAT FOR MAKING DISALLOWANCE U/S 14A READ WITH RULE 8D IN RESPECT OF INCOME WHICH IS EXEMPTED AND DOES NOT FORM PART OF THE TOTAL INCOME, THE ONLY INVESTMENT WHICH HAS GIVEN RISE TO THE EXEMPTED INCOME SHOULD BE TAKEN INTO CONSIDERATION. THE ASSESSEE ALSO SUBMITTED BEFORE THE CIT(A), THE TOTAL DISALLOWANCE UNDER SECTION 14A AT RS.969/- BY APPLYING THE REO AGRO LTD CASE (SUPRA). THE SAID ORDER OF THE TRIBUNAL HAS BEEN UPHELD BY THE CALCUTTA HIGH COURT VIDE ORDER DATED 23.12.2013 IN ITAT NO.161 OF 2013. THE CIT(A) THEREFORE, DIRECTED THE AO TO RECOMPUTED THE AMOUNT OF DISALLOWANCE UNDER RULE 8D (2) (II) AND (III) BY ADOPTING THE OPENING AND CLOSING VALUE OF THOSE INVESTMENTS ONLY WHICH YIELDED THE EXEMPT INCOME IN THE YEAR UNDER CONSIDERATION AND BY TAKING THE AMOUNT OF INTEREST AT RS. 34,84,359/- AND RESTRICT THE DISALLOWANCE U/S 14A TO THAT EXTENT. M/S WARREN TEA LIMITED IT(SS) 72 TO78/KOL/2015 CO. NOS.70 TO 74/KOL/2016 43 25.3 BEFORE US, THE LD COUNSEL SUBMITTED THAT CIT(A) HAS PASSED A REASONED ORDER BY FOLLOWING THE JUDGMENT OF JURISDICTIONAL ITAT IN THE CASE OF REO AGRO LTD CASE (SUPRA) AND LD DR FOR THE REVENUE HAS FAIRLY AGREED WITH THE SUBMISSIONS OF THE ASSESSEE. 25.4 HAVING HEARD THE RIVAL SUBMISSIONS AND PERUSED THE MATERIAL AVAILABLE ON RECORD, WE ARE OF THE VIEW THAT CIT(A) HAS PASSED THE ORDER AFTER CONSIDERING THE JUDGMENT OF REO AGRO LTD CASE (SUPRA) WHICH HAS BEEN UPHELD BY THE HON`BLE KOLKATA HIGH COURT. HENCE THERE IS NO ANY INFIRMITY IN THE ORDER PASSED BY THE CIT(A), THEREFORE, WE CONFORM THE ORDER OF CIT(A). 25.5 IN THE RESULT, THE APPEAL FILED BY THE REVENUE ( ON GROUND NO.4), IS DISMISSED. 26. THE GROUND NO. 5 RAISED BY THE REVENUE RELATES TO THE ADDITION ON ACCOUNT OF REVENUE EXPENDITURE AMOUNTING TO RS. 8,29,62,211/- THE GROUND NO. 6 RAISED BY THE REVENUE RELATES TO THE ADDITION ON ACCOUNT OF CAPITAL EXPENDITURE AMOUNTING TO RS. 58,76,604/-. 26.1 THE SOLITARY GRIEVANCE OF THE REVENUE IN GROUND NO. 5 AND 6 IS THAT THE BILLS RAISED BY THE BUSINESS ENTITIES CONTROLLED BY SRI PANKAJ BAGARIA AND SRI RAM GOPAL DROLIA IN RESPECT OF SAID EXPENDITURE ( CAPITAL & REVENUE) ARE BOGUS AND COMPANIES ARE NOT FUNCTIONING IN REAL LIFE. THEREFORE, THE REVENUE EXPENSES RS. 8,29,62,211/- AND CAPITAL EXPENSES RS. 58,76,604/- ARE BOGUS EXPENSES. THE AO HELD THAT SRI PANKAJ BAGARIA AND SRI RAM GOPAL DROLIA, USED TO ISSUE THE BOGUS BILLS AND THEY USED TO PROVIDE THE ACCOMMODATION ENTRIES TO THE ASSESSEE COMPANY. THE AO NOTED SRI PANKAJ BAGARIA DURING THE COURSE OF SURVEY HAD ADMITTED THAT HE HAD GIVEN ACCOMMODATION ENTRIES OF ABOUT RS. 20 CRORES TO THE ASSESSEE COMPANY AND THERE WAS NO CORRESPONDING PURCHASES TO SUPPLY THE GOODS TO THE ASSESSEE DUE TO SUCH ACCOMMODATION ENTRIES PROVIDED IN EXCHANGE OF COMMISSION. BUT LATER ON SRI PANKAJ BAGARIA AND SRI RAM GOPAL DROLIA, M/S WARREN TEA LIMITED IT(SS) 72 TO78/KOL/2015 CO. NOS.70 TO 74/KOL/2016 44 RETRACTED THEIR STATEMENTS WITHIN SEVEN DAYS OF INITIATION OF SEARCH. THE AO ALSO HELD THAT ASSESSEE DID NOT MENTION THESE PURCHASES IN THE STOCK REGISTER, THEREFORE THESE EXPENSES WERE NOT INCURRED FOR THE PURPOSE OF BUSINESS AND DISALLOWED AS PER THE LANGUAGE OF SECTION 37(1) OF THE ACT. 26.2 THE LD CIT (A) HELD THAT ADDITION MADE BY AO BASED ON THE STATEMENT RECORDED BY THE SEARCH TEAM, DURING THE SEARCH WOULD NOT SUSTAIN IN LAW UNLESS IT IS SUPPORTED BY THE CORROBORATIVE EVIDENCE. IN THE ABSENCE OF CORROBORATING EVIDENCES THE STATEMENT HAS NO EVIDENTIARY VALUE, IF RETRACTED LATER ON. THE APEX COURT HAS OBSERVED IN PULLENGODE RUBBER PRODUCE CO. LTD. VS. STATE OF KERALA, 91 ITR 18 (SC.) THAT AN ADMISSION IS AN EXTREMELY IMPORTANT PIECE OF EVIDENCE BUT IT CANNOT BE SAID TO BE CONCLUSIVE. IT IS OPEN TO THE PERSON WHO MADE THE ADMISSION TO SHOW THAT IT WAS INCORRECT. 26.3 THE LD COUNSEL FOR THE ASSESSEE HAS SUBMITTED BEFORE US THAT DURING THE SEARCH THE STATEMENTS WERE TAKEN BY APPLYING FORCE AND MANTEL TORTURE. AS FAR AS THE ASSESSEE COMPANY IS CONCERNED IT HAD PRODUCED ALL THE PARTIES WITH WHOM IT WAS HAVING BUSINESS TRANSACTION ALONG WITH THEIR BOOKS OF ACCOUNTS, BILLS, VOUCHERS, OTHER DOCUMENTS AND BANK STATEMENTS. THE AO DID NOT FIND ANY MISTAKE IN THE BOOKS OF ACCOUNTS, BILLS, INVOICES, DOCUMENTS AND BANK STATEMENTS FILED BY THE ASSESSEE. THE AO ALSO HAD NOT REJECTED THE BOOKS OF ACCOUNTS OF THE ASSESSEE, THEREFORE ALL THE TRANSACTIONS WERE GENUINE. 26.4 ON THE OTHER HAND, THE LD DR FOR THE REVENUE, HAS PRIMARILY REITERATED THE STAND TAKEN BY THE ASSESSEE, WHICH WE HAVE ALREADY NOTED IN OUR EARLIER PARA AND IS NOT BEING REPEATED FOR THE SAKE OF BREVITY. 26.5 WE HAVE HEARD BOTH THE PARTIES AND PERUSED THE MATERIAL AVAILABLE ON RECORD, WE ARE OF THE VIEW THAT DURING THE ASSESSMENT PROCEEDINGS THE M/S WARREN TEA LIMITED IT(SS) 72 TO78/KOL/2015 CO. NOS.70 TO 74/KOL/2016 45 ASSESSEE HAS PRODUCED BOOKS OF ACCOUNTS, BILLS, VOUCHERS, DOCUMENTS AND BANK STATEMENTS TO PROVE THE GENUINENESS OF THE TRANSACTIONS. THE AO DID NOT FIND ANY ERROR AND MISTAKE IN THESE BOOKS OF ACCOUNTS, BILLS, VOUCHERS, DOCUMENTS AND BANK STATEMENTS. THE AO HAS NOT REJECTED THE BOOKS OF ACCOUNTS ALSO. ADDITIONS MADE BY AO BASED OF THE STATEMENTS RECORDED DURING THE SEARCH AND SURVEY DOES NOT HAVE EVIDENTIARY VALUE UNLESS IT IS SUPPORTED BY CORROBORATIVE EVIDENCES. THEREFORE, WE ARE OF THE VIEW THAT THE ORDER PASSED BY THE CIT(A) DOES NOT CONTAIN ANY INFIRMITY, HENCE WE CONFIRM THE ORDER PASSED BY THE CIT(A). 26.6 IN THE RESULT, THE APPEAL FILED BY THE REVENUE, ( ON GROUND NOS. 5 AND 6), ARE DISMISSED. 27. GROUND NO.7 RAISED BY THE REVENUE RELATES TO THE ISSUE THAT IN THE FACTS AND CIRCUMSTANCES OF THE CASE AND IN LAW, THE LD. CIT(A)'S OBSERVATION IS NOT BASED ON FACTS OR DOCUMENTARY EVIDENCES AND HE ALSO IGNORED THE FACTS THAT THE NO STORE REGISTER OR STORE LEDGER WAS FOUND AT RESPECTIVE GARDENS WHICH COULD ESTABLISH THAT THE GOODS SENT FROM THE HEAD OFFICE AS PER BILLS OR THE MATERIAL REQUIRED TO ACCOMPLISH THE WORK WHICH WAS AGAINST THE PREVAILING SYSTEM OF THE COMPANY AS PER AGREEMENT GIVEN BY MR. BISHWAJIT KARMAKAR ( SENIOR MANAGER OF M/S WARREN TEA; ASSAM) AND HE HAS NOT RETRACTED HIS STATEMENT. 27.1 THIS GROUND RELATES TO GENERAL ALLEGATIONS IMPOSED BY THE REVENUE ON THE LD CIT(A), WHICH WE HAVE ALREADY DISCUSSED IN THIS ORDER. THE MAIN ALLEGATION OF THE REVENUE IN THIS GROUND IS THAT NO STORE REGISTER OR STORE LEDGER WAS FOUND AT RESPECTIVE GARDENS WHICH COULD ESTABLISH THAT THE GOODS SENT FROM THE HEAD OFFICE AS PER BILLS OR THE MATERIAL REQUIRED TO ACCOMPLISH THE WORK. WE ARE OF THE VIEW THAT SINCE THE ASSESSEE HAS PRODUCED ALL BOOKS OF ACCOUNTS AND STOCK REGISTER IS PART OF BOOKS OF ACCOUNTS AND AO HAD FAILED TO BRING ANY MISTAKE ON M/S WARREN TEA LIMITED IT(SS) 72 TO78/KOL/2015 CO. NOS.70 TO 74/KOL/2016 46 THE RECORD. BESIDES, IN THIS ORDER WE HAVE TREATED ALL THE PURCHASES OF THE ASSESSEE, AS GENUINE. THEREFORE, WE DISMISS THE GROUND NO.7 TAKEN BY THE REVENUE. 28. IN REVENUE`S APPEAL IN IT (SS) NO.78/KOL/2015, A.Y. 2011-12, THE REVENUE HAS RAISED GROUND NO. 1 WHICH RELATES TO ADDITION ON ACCOUNT OF LABOUR CHARGES RS. 21,10,070/- FOR SPRAY WORK. THIS GROUND IS DIFFERENT AND NOT DISCUSSED BY US IN THE LEAD CASE SELECTED BY US, HENCE IT IS BEING DISCUSSED SEPARATELY. THE SOLITARY GRIEVANCE OF THE REVENUE IN THIS GROUND IS THAT THE SAID EXPENDITURE, FOR SPRAY WORK SHOULD BE RECORDED IN STORE REGISTER AS PER STATEMENT GIVEN BY MR. BISHWAJIT KARMAKAR ( SENIOR MANAGER OF M/S WARREN TEA LIMITED, ASSAM) WHO HAS NOT RETRACTED HIS STATEMENT. 28.1 WE ARE OF THE VIEW THAT SINCE THE ASSESSEE HAS PRODUCED ALL BOOKS OF ACCOUNTS AND STOCK REGISTER IS PART OF BOOKS OF ACCOUNTS AND AO HAD FAILED TO BRING ANY MISTAKE ON THE RECORD. BESIDES, IN THIS ORDER WE HAVE TREATED ALL THE PURCHASES OF THE ASSESSEE, AS GENUINE. THEREFORE, WE DISMISS THE GROUND NO.1 TAKEN BY THE REVENUE IN ITA NO. 78/KOL/2015, A.Y. 2011-12. 29. IN THE RESULT, THE APPEALS FILED BY REVENUE, IN ITA NO.77/KOL/2015, A.Y. 2010-11 & ITA NO. 78/KOL/2015, A.Y. 2011-12, ( RELATING TO ABATED /UNCOMPLETED ASSESSMENTS), ARE DISMISSED. ORDER PRONOUNCED IN THE OPEN COURT ON THIS 23/08/2017. SD/ - (A.T.VARKEY) ( . . ) SD/ - (DR. A.L.SAINI) ( . ) / JUDICIAL MEMBER / ACCOUNTANT MEMBER /KOLKATA ; DATED 23/08/2017 [RS, SPS] M/S WARREN TEA LIMITED IT(SS) 72 TO78/KOL/2015 CO. NOS.70 TO 74/KOL/2016 47 / COPY OF THE ORDER FORWARDED TO : 1. / THE ASSESSEE-M/S WARREN TEA LIMITED 2. / THE RESPONDENT.- DCIT, CENTRAL CIRCLE-3(4) 3. ( ) / THE CIT(A), KOLKATA. 4. / CIT 5. , , / DR, ITAT, KOLKATA 6. / GUARD FILE. //TRUE COPY// BY ORDER SENIOR PRIVATE SECRETARY, HEAD OF OFFICE/D.D.O, I.T.A.T, KOLKATA BENCHES, KOLKATA .