D.C.I.T.-CC-VIII,Kol, Kolkata V. Praveen Kumar Chharia, Kolkata

ITSSA 98/KOL/2013

• Counselvise Citation: [2018] 122 COUNSELVISE.COM (IT) 3766 (ITAT-KOLKATA)
• Duration Of Justice: 4 year(s) 5 month(s) 8 day(s)
• Appeal Type: Income Tax (Search & Seizure) Appeal
• Pronouncement Date: 18-05-2018
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: C
• Next Hearing Date: 20-10-2016
• Assessment Year: misc
• Appeal Filed On: 10-12-2013
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: G MALLIKARJUNA
• Keywords: Document seized; Principle of natural justice; Peak credit; Block assessment; Documents seized
• Section: 143(3)

Judgement Text

1 IT(SS)NO.98&99/KOL/2013 PRAVEEN KR. CHHARIA AND ANK IT CHAARIA BLOCK PERIOD 01.04.1988 TO 21.04.1998 IN THE INCOME TAX APPELLATE TRIBUNAL, BENCH C KOL KATA [BEFORE HONBLE SHRI J.SUDHAKAR REDDY, AM & SHRI A.T.VARKEY, JM ] IT(SS)A NO.98/KOL/2013 BLOCK PERIOD: 01.04.1988 TO 21.04.1998 D.C.I.T., CENTRAL CIRCLE-VIII -VERSUS- PRAVEEN KUM AR CHHARIA KOLKATA KOLKATA (PAN:ACSPC 5652 Q) (APPELLANT) (RESPONDENT) IT(SS)A NO.99/KOL/2013 BLOCK PERIOD: 01.04.1988 TO 21.04.1998 D.C.I.T., CENTRAL CIRCLE-VIII -VERSUS- ANKIT CHHA RIA KOLKATA (L/H OF SHRI PRAMOD KR.CHHARIA) (PAN:ACMPC 2781 D)) (APPELLANT) (RESPONDENT) FOR THE DEPARTMENT : SHRI G.MALLIKARJUNA, CIT(D R) FOR THE ASSESSEE : SHRI RAVI TULSIYAN, FC A DATE OF HEARING : 17.04.2018. DATE OF PRONOUNCEMENT : 18.05.2018. ORDER PER J.SUDHAKAR REDDY, AM: BOTH THESE APPEALS FILED BY THE REVENUE ARE DIREC TED AGAINST IDENTICAL ORDERS OF LD. C.I.T.(A)-CENTRAL-1, KOLKATA RELATING TO BL OCK PERIOD 01.04.1988 TO 21.04.1998. 2. THERE IS A DELAY OF 3 DAYS IN FILING OF THESE AP PEALS. AFTER PERUSING THE PETITION FILED FOR CONDONATION OF DELAY, WE CONDONE THE DELA Y AND ADMIT THE APPEALS. 3. THE FACT IN BRIEF AS BROUGHT OUT IN THE STATEME NT OF FACTS IN FORM NO.35 IS EXTRACTED FOR READY REFERENCE. 2 IT(SS)NO.98&99/KOL/2013 PRAVEEN KR. CHHARIA AND ANK IT CHAARIA BLOCK PERIOD 01.04.1988 TO 21.04.1998 THE ASSESSEES ARE INDIVIDUALS. MR PRAVEEN KUMAR CHH ARIA IS A PROPRIETOR OF M/S CHHARIA TRANSPORT ORGANIZATION (CTO), AND MR P RAMOD KUMAR CHHARIA IS A PROPRIETOR OF M/S. ANKIT CARRIERS WHO ARE EMPANELL ED TRANSPORTER FOR TRANSPORTATION OF BITUMEN TO BIHAR GOVT. ROAD CONSTRUCTION DIVISIONS (RCD). THEY ARE ALSO PARTNERS OF THE FIRM M/S HINDUSTAN TAR PRODUCTS AND A DIRECTOR IN THE COMPANIES M/S JUTEFELT (I) PVT. LTD. AND M/S ALLIED BITUMEN COMPLEX (I) PVT. L TD., WHICH ARE USERS OF BITUMEN, AS ITS MAIN RAW MATERIAL. SEARCH & SEIZURE OPERATIONS WERE CARRIED ON BY THE INCOME TAX DEPARTMENT IN THE PREMISES OF THE CHHARIA GROUP INCLUDING THE RES IDENTIAL AND OFFICE PREMISES OF THE APPELLANT ON 22/04/1998, DURING THE COURSE OF WHICH , VARIOUS DOCUMENTS AND ASSETS INCLUDING CASH AND JEWELLERY WERE FOUND AND SEIZED. IN RESPONSE TO THE NOTICE ISSUED BY THE A.O. U/S 158BC OF THE INCOME-TAX ACT, 1961, ON 05.05.1999, THE BLOCK RETURN WAS FILED BY THE APPELLANT ON 13.03:2000 SHOWING UN DISCLOSED INCOME OF RS.1,00,000/- THE BLOCK ASSESSMENT WAS COMPLETED ON 31.05.2000 U/S 158BC/ 143(3) OF THE ACT, COMPUTING UNDISCLOSED INCOME. IN THE FI RST APPEAL, THE CLT(A), CENTRAL-I, KOLKATA, GAVE CERTAIN RELIEF AND CONFIRMED THE REST OF THE ADDITIONS. THE APPELLANT FILED SECOND APPEAL BEFORE THE ITAT, KOLKATA BENCH AGAINS T THE CONFIRMATION OF CERTAIN ITEMS OF ADDITIONS BY THE LD. CIT(A). THE DEPARTMEN T ALSO FILED SECOND APPEAL AGAINST THE RELIEF ALLOWED BY THE CIT(A). BOTH THE APPEALS WERE DISPOSED OF BY THE ITAT, BY A COMMON ORDER DATED 12.06.2009, SETTING ASIDE THE ORDERS OF THE LOWER AUTHORITIES AND RESTORING THE MATTERS BACK TO THE FILE OF THE A.O. FOR MAKING A FRESH ASSESSMENT. THEREAFTER, THE SET ASIDE ASSESSMENT WAS COMPLETED ON 31.12.2010 AFTER ISSUANCE OF NOTICES ETC. AND AFTER HEARING THE REPR ESENTATIVE OF THE APPELLANT. IN THE SAID SET ASIDE ASSESSMENT, ALL THE ADDITIONS, AS MADE IN THE ORIGINAL ASSESSMENT, EXCEPTING THOSE IN RESPECT OF WHICH THE RELIEF ALLOWED BY THE CIT(A) IN THE FIRST ROUND OF APPEAL AND WHICH HAD BEEN ACCEPTED BY THE DEPARTMENT WERE ROUTINELY REPEATED, ON THE SAME GROUNDS AS IN CASE OF THE ORIGINAL ASSESSMENT. 3 IT(SS)NO.98&99/KOL/2013 PRAVEEN KR. CHHARIA AND ANK IT CHAARIA BLOCK PERIOD 01.04.1988 TO 21.04.1998 4. ON APPEAL THE FIRST APPELLATE AUTHORITY GRANTED PART RELIEF. AGGRIEVED THE REVENUE IS IN APPEAL ON THE FOLLOWING GROUNDS :- IT(SS)A..NO.98/KOL/2013 SHRI PRAVEEN KUMAR CHHARIA 1. THAT ON THE FACTS AND CIRCUMSTANCES OF THE CASE THE LD. CIT(A) HAS ERRED IN DELETING RS. 4,46,699/- ON ACCOUNT OF UNEXPLAINED C ASH RECEIPTS BEING PEAK NEGATIVE CASH BALANCE IN THE CASH BOOK FOR THE F.Y. 1995-96 AND 1996-97. 2. THAT ON THE FACTS AND CIRCUMSTANCES OF THE CASE THE LD . CIT(A) HAS ERRED IN DELETING RS. 84,86,518/- ON ACCOUNT OF UNDISCLOSED INCOME REPRESENTING TRANSPORTATION CHARGES. 3. THAT ON THE FACTS AND CIRCUMSTANCES OF THE CASE THE LD. CIT(A) HAS ERRED IN DELETING RS. 2,51,59,600/ - ON ACCOUNT OF UNDISCLOS ED INCOME FROM SALE OF BITUMEN. 4. THAT THE LD. CIT(A) HAS VIOLATED RULE 46A OF THE 1. T. RULES WHILE ALLOWING THE CLAIM OF THE ASSESSEE THAT THE NON-DELIVERY WAS ON ACCOUNT OF PROBLEMS ARISING AT THE DELIVERY POINT IN SOME CASES WHICH WAS ALSO COM MUNICATED TO THE OIL COMPANIES AND AFTER TAKING DUE INSTRUCTIONS FROM TH E OIL COMPANIES, THE MATERIALS WERE ALSO SOLD OFF AS DIRECTED, ON THE BA SIS OF PAGES 142 TO 145 OF PAPER BOOK, WHICH WAS NEVER PRODUCED BEFORE THE A.O . AND DELETED THE ABOVE MENTIONED ADDITIONS OF RS. 84,86,518/- AND RS. 2,51 ,59,600/-. 5. THAT ON THE FACTS AND CIRCUMSTANCES OF THE CASE THE LD. CIT(A) HAS ERRED IN DELETING RS. 1,29,86,982/ - ON ACCOUNT OF UNDISCLOS ED INCOME FROM PURCHASE OF BITUMEN FROM SHRI K. K. KEDIA AND PROFIT ON SALE TH EREOF. 6. THE DEPARTMENT CRAVES THE RIGHT TO ADD, ALTER OR MODIFY GROUNDS OF APPEAL DURING THE COURSE OF APPELLATE PROCEEDINGS AT ANY S TAGE. IT(SS)A.NO.99/KOL/2013 SHRI ANKIT CHHARIA 1. THAT ON THE FACTS AND CIRCUMSTANCES OF THE CASE THE LD. CIT(A) HAS ERRED IN DELETING RS. 1,10,953/- ON ACCOUNT OF UNEXPLAINED C ASH RECEIPTS BEING PEAK NEGATIVE CASH BALANCE IN THE CASH BOOK FOR THE F.Y. 1995-96 AND 1996-97. 2. THAT ON THE FACTS AND CIRCUMSTANCES OF THE CASE THE LD . CIT(A) HAS ERRED IN DELETING RS. 57,36,064/- ON ACCOUNT OF UNDISCLOSED INCOME REPRESENTING TRANSPORTATION CHARGES. 4 IT(SS)NO.98&99/KOL/2013 PRAVEEN KR. CHHARIA AND ANK IT CHAARIA BLOCK PERIOD 01.04.1988 TO 21.04.1998 3. THAT ON THE FACTS AND CIRCUMSTANCES OF THE CASE THE LD. CIT(A) HAS ERRED IN DELETING RS. 1,27,86,465/ - ON ACCOUNT OF UNDISCLOS ED INCOME FROM SALE OF BITUMEN. 4. THAT THE LD. CIT(A) HAS VIOLATED RULE 46A OF THE 1. T. RULES WHILE ALLOWING THE CLAIM OF THE ASSESSEE THAT THE NON-DELIVERY WAS ON ACCOUNT OF PROBLEMS ARISING AT THE DELIVERY POINT IN SOME CASES WHICH WAS ALSO COM MUNICATED TO THE OIL COMPANIES AND AFTER TAKING DUE INSTRUCTIONS FROM TH E OIL COMPANIES, THE MATERIALS WERE ALSO SOLD OFF AS DIRECTED, ON THE BA SIS OF PAGES 142 TO 145 OF PAPER BOOK, WHICH WAS NEVER PRODUCED BEFORE THE A.O . AND DELETED THE ABOVE MENTIONED ADDITIONS OF RS. 57,36,064/- AND RS. 1,27 ,86,465/-. 5. THE DEPARTMENT CRAVES THE RIGHT TO ADD, ALTER OR MODIFY GROUNDS OF APPEAL DURING THE COURSE OF APPELLATE PROCEEDINGS AT ANY S TAGE. 5. THE LD. DEPARTMENTAL REPRESENTATIVE SUPPORTED TH E ORDER OF THE AO AND ARGUED THAT THE LD. CIT(A) SIMPLY ACCEPTED THE CONTENTIONS OF THE ASSESSEE WITHOUT REFERENCE TO THE MATERIAL AVAILABLE ON RECORD. HE SUBMITTED T HAT ON THE ISSUE OF CASH BALANCE, THE SOLE PROPRIETORY CONCERN AND THE PARTNERSHIP CONCER N ARE SEPARATE ENTITIES HAVING SEPARATE BOOKS OF ACCOUNTS AND THE FINDING OF THE F IRST APPELLATE AUTHORITY THAT BOTH THE AMOUNTS ARE KEPT TOGETHER AND THAT THERE IS NO EXCESS OF SHORTAGE OF CASH, IS NOT CORRECT. ON GROUND NO.2,3 AND 4 WHICH RELATE TO UN DISCLOSED SALE OF BITUMEN, AND CONSEQUENTLY, DISALLOWANCE OF PART OF TRANSPORT EXP ENDITURE AS THAT WHICH HAS NOT BEEN INCURRED, HE RELIED ON THE ORDER OF THE AO AND SUBMITTED THAT THE ASSESSEE COULD NOT PROVE THAT THE TANKERS IN QUESTION HAVE PLIED B ETWEEN THE DESTINATIONS AS HAVE BEEN REPORTED. HE SUBMITTED THAT CAG IN ITS REPORT MENT IONED THAT 55% OF THE BITUMEN LIFTED BY THE TRANSPORTER WAS MISAPPROPRIATED AND B ASED ON THIS REPORT PROPORTIONATE TRANSPORT CHARGES WAS DISALLOWED. HE SIMILARLY REFE RRED TO PAGE 7, 8 AND 9 OF THE ASSESSMENT ORDER AND RELIED ON THE SAME AND POINTED OUT THAT UNDISCLOSED SALE OF BITUMEN SCAM WAS BASED ON IOC POINTING OUT NON-DELI VERY OF BITUMEN. HE FURTHER SUBMITTED THAT MR. K.K.KEDIA, FROM WHOM THE ASSESSE E PURCHASED BITUMEN, WAS THE MAIN ACCUSED IN THE CASE AND THAT A CHARGE SHEET WA S FILED ON HIM, BY THE CBI AND BASED ON THIS EVIDENCE COLLECTED BY VARIOUS AGENCIE S, THE AO CAME TO CONCLUDE THAT THERE WAS UNDISCLOSED SALES OF BITUMEN. HE SUBMITTE D THAT THE LD CIT(A) HAS SIMPLY 5 IT(SS)NO.98&99/KOL/2013 PRAVEEN KR. CHHARIA AND ANK IT CHAARIA BLOCK PERIOD 01.04.1988 TO 21.04.1998 ACCEPTED THE CONTENTIONS OF THE ASSESSEE WITHOUT EV IDENCE OR VERIFICATION OF THE CLAIM AND HAD DELETED THE ADDITIONS. HE PRAYED THAT THE S AME BE RESTORED. 6. IN THE CASE OF SHRI ANKIT CHHARIA IN ITA NO.99/K OL/2013, HE POINTED OUT THAT AN ADDITIONAL ISSUE, OF ADDITION RELATING BOGUS SUN DRY CREDITORS OF RS.57,36,064/- WAS MADE. HE RELIED ON THE ORDER OF THE AO FOR THIS ADD ITION AND SUBMITTED THAT THE SAME BE UPHELD. 7. THE LD. COUNSEL FOR THE ASSESSEE, ON THE OTHER H AND, OPPOSED THE CONTENTION OF THE LD. DR AND SUBMITTED THAT THE LD. CIT(A) HAS RI GHTLY APPRECIATED THE FACTS OF THE CASE AND HAS CORRECTLY ADJUDICATED THE MATTER. HE R ELIED ON THE ORDER OF THE LD. CIT(A). ON GROUND NO.1, HE SUBMITTED THAT THE ASSESSEE MR P RAVIN KUMAR CHHARIA WAS A PROPRIETOR OF M/S. CHHARIA TRANSPORT ORGANISATION ( CTO) AND ALSO A PARTNER OF THE FIRM M/S. HINDUSTAN TAR PRODUCTS, BOTH OF WHICH, HA VE A COMMON OFFICE AT 98, B.K.PAUL AVENUE AND THAT THEY WERE MAINTAINING A CO MMON CASH BOOK AND THAT SIMILAR IS THE CASE OF LATE SHRI PROMOD KUMAR CHHAR IA,. HE SUBMITTED THAT A DETAIL CASH FLOW STATEMENT OF BOTH THESE ORGANISATIONS, W ERE GIVEN TO THE AO AND AS IT WAS A COMMON BUSINESS HAVING COMMON MANAGEMENT, THE OVER ALL POSITION OF CASH BALANCE HAVE TO BE CONSIDERED. HE DEMONSTRATED THAT THERE WAS NO NEGATIVE CASH BALANCE WHEN THE OVERALL POSITION IS CONSIDERED. HE FURTHER SUBM ITTED THAT THE LD. CIT(A) IN HIS EARLIER APPELLATE ORDER DATED 29.02.2013 ACCEPTED T HIS FACTUAL POSITION OF THE ASSESSEE AND THE AO HAS IGNORED THE FACTUAL FINDING. 8. ON GROUND NO.2,3 AND 4, HE SUBMITTED THAT ADDITI ONS WERE BASED ON THE FACT THAT THERE WAS CERTAIN FINDING IN THE REPORT OF (A) CAG REPORT ON THE BITUMEN SCAM, (B) REPORT OF THE ENGINEER-IN-CHIEF, RCD PATNA AND (C) REPORT OF OIL CO-ORDINATION COMMITTEE ESTABLISHED BY THE MINISTRY OF PETROLEUM , GOVT OF INDIA. HE SUBMITTED THAT NEITHER THE REPORT OF CAG NOR THE REPORT OF EN GINEER-IN-CHIEF WAS PROVIDED TO THE ASSESSEE AND AS FAR AS THE REPORT OF OIL COORDINATI ON COMMITTEE WAS CONCERNED, IT 6 IT(SS)NO.98&99/KOL/2013 PRAVEEN KR. CHHARIA AND ANK IT CHAARIA BLOCK PERIOD 01.04.1988 TO 21.04.1998 RELATED TO AN ALLEGATION THAT A NUMBER OF OVERLAP PING TRIPS WERE UNDERTAKEN BY THE SAME TANKERS BETWEEN HALDIA AND BARAUNI AND THAT T HE FINDING THEREIN WERE NOT PROVED IN AN ARBITRATION PROCEEDINGS BETWEEN THE AS SESSEE AND THE OIL COMPANIES AND HENCE IT WAS NOT GOOD EVIDENCE. HE ALSO SUBMITTED T HAT THE SEIZED DOCUMENTS CTO-16, BASED ON WHICH CERTAIN ADDITIONS WERE MADE, WAS ALS O NOT PROVIDED TO THE ASSESSEE DESPITE REQUEST MADE AND HENCE THIS DOCUMENT CANNOT BE RELIED UPON. 9. HE VEHEMENTLY CONTENDED THAT THE ADDITIONS WERE MADE PURELY ON ASSUMPTIONS AND SUSPICION, SOLELY BASED ON THE CAG REPORT ON BI TUMEN SCAM. HE POINTED OUT THAT NOWHERE IN THE REPORT A SPECIFIC FINDING HAS BEEN R ECORDED AGAINST ANY OF THESE ASSESSEES, AS EVIDENT FROM THE ASSESSMENT ORDER ITS ELF. HE SUBMITTED THAT IN NONE OF THE REPORTS THE ASSESSEE SHRI PRAVEEN KUMAR CHHARIA AND SHRI ANKIT CHHARIA, LEGAL HEIR OF SHRI PRAMOD KUMAR CHHARIA WERE NAMED NOR ANY EVIDEN CE NOR ANY ADVERSE MATERIAL WAS FOUND AGAINST THEM. UNDER THE CIRCUMSTANCES, HE ARGUED THAT THE ASSESSMET AS WELL AS THE ADDITIONS WERE BAD IN LAW AS, PRESUMP TIONS SURMISES AND CONJECTURES CANNOT TAKE THE PLACE OF PROOF. HE FURTHER SUBMITTE D THAT EVEN IN THE CHARGE SHEET FILED BY THE CBI IN THE COURT ON THIS BITUMEN SCAM, THE N AMES OF THESE ASSESSES HAD NOT APPEARED. HE ARGUED THAT HENCE IT IS CLEAR THAT, TH E ADDITIONS HAVE BEEN MADE, SOLELY ON THE BASIS THAT BOTH THE ASSESSES WERE PART OF BITUM EN SCAM, WHICH ASSUMPTION IS AGAINST FACTS OF THE CASE. 10. ON THE DECISION PLACED IN THE ARBITRATION PROCE EDINGS BETWEEN THE OIL COMPANIES AND THE ASSESSEE BY THE AO, HE SUBMITTED THAT, NONE OF THE ALLEGATIONS MADE BY THE OIL COMPANIES WERE PROVED AND ALL THE D ECISIONS WERE ON FACTS HELD IN FAVOUR OF THE ASSESSEES. HE INVITED THE ATTENTION O F THE BENCH TO THE COPY OF THE ARBITRATION AWARD DATED 21.09.2010, A COPY OF WHIC H WAS FURNISHED IN THE PAPER BOOK. ON THE ISSUE OF PURCHASES MADE OF BITUMEN FRO M SHRI K.K.KEDIA, HE RELIED ON THE JUDGMENT OF THE CBI SPECIAL COURT DATED 22.11.2 016, WHEREIN THE ASSESSEE WAS ACQUITTED OF THE CHARGES OF HAVING MADE SUCH PURCH ASES. HE RELIED ON THE DECISION OF 7 IT(SS)NO.98&99/KOL/2013 PRAVEEN KR. CHHARIA AND ANK IT CHAARIA BLOCK PERIOD 01.04.1988 TO 21.04.1998 KOLKATA BENCH OF THE ITAT ON IDENTICAL FACTS IN AN IDENTICAL CASE. HE FURTHER RELIED ON A NUMBER OF CASE LAWS WHICH WILL BE DISCUSSED AS A ND WHEN NECESSARY IN THIS ORDER. 11. IN THE CASE OF SHRI ANKIT CHHARIA, ON THE ISSUE OF ADDITIONS WITH REGARD TO SUNDRY CREDITORS, HE RELIED ON THE ORDER OF THE LD. CIT(A) AS WELL AS THE SUBMISSIONS MADE ON ACCOUNT OF THE ADDITIONS MADE ON THE BASIS OF REPORTS ON THE BITUMEN SCAM. 12. HEARD RIVAL CONTENTIONS. ON A CAREFUL CONSIDERA TION OF THE FACTS AND CIRCUMSTANCES OF THE CASE, PAPERS ON RECORD AND THE ORDERS OF THE AUTHORITIES BELOW AS WELL AS CASE LAW CITED, WE HOLD AS FOLLOWS : THE FIRST ISSUE THAT ARISES FOR ADJUDICATION IS ADD ITION OF NEGATIVE CASH BALANCE. AN ADDITION OF RS.3,47,032/- WAS MADE FOR A.Y.1996- 97 AND THAT OF RS.99,00,667/- FOR A.Y.1997-98 IN THE CASE OF SHRI PRAVEEN KUMAR C HHARIA. THE LD. CIT(A) AT PARA- 15 OF HIS ORDER HELD AS FOLLOWS :- 15. I HAVE CONSIDERED THE FACTS AND THE MATERIAL O N RECORD. IT WAS ARGUED THAT THE TWO BUSINESS CONCERNS, NAMELY M/S. CHHARIA TRAN SPORT ORGANISATION AND M/S. HINDUSTAN TAR PRODUCTS HAD COMMON OFFICE AT 98 ,B.K.PAL AVENUE; AND, THAT THE CASH BELONGING TO THE TWO CONCERNS WAS KEPT IN A COMMON POOL AND NO PHYSICAL SEGREGZATION WAS ACTUALLY MAINTAINED. THE EXPENDIUTRE OF EITHER OF THE BUSINESS CONCERNS WAS INCURRED OUT OF THE COMMON CA SH POOL AND THE SAME WAS DULY RECORDED IN THE BOOKS OF THE RELEVANT CONCERN. SINCE BOTH THE BUSINESS CONCERNS WERE SMALL FAMILY RUN CONCERNS, IT WAS THE NORMAL PRACTICE THAT EITHER OF THEM UTILISED THE CASH BELONGING TO THE OTHER AS AND WHEN REQUIRED. THE NEGATIVE CASH BALANCE AS APPERAING IN THE BOOKS OF M/S CHHARIA TRANSPORT ORGANISATION WAS ONLY DUE TO SUCH UTILIZATION OF CA SH BELONGING TO M/S. HINDUSTAN TAR PRODUCTS ON THE DATES WHEN IT DID NOT HAVE SUFFICIENT CASH OF ITS OWN. THIS WAS BASICALLY IN THE NATURE OF TEMPORARY ACCOMMODATION GIVEN BY M/S. HINDUSTAN TAR PRODUCTS TO M/S. CHHARIA TRANSPORT O RGANISATION BEING RELATED CONCERNS. BUT, SUCH ACCOMMODATION ENTIRES HAD REMAI NED TO BE ENTERED IN THE CASH BOOK BEFORE THE DATE OF THE SEARCH, AND SO, TH ERE WAS AN APPARENT NEGATIVE CASH BALANCE IN THE BOOKS OF M/S. CHHARIA TRANSPORT ORGANISAITON. I FIND FROM THE ASSESSMENT ORDER THAT DETAILED DATE-WISE CHART OF THE SHORT-FALLS IN THE BOOKS OF M/.S CHHARIA TRANSPORT ORGANISATION; AND THAT OF THE CASH BALANCE AS AVAILABLE IN THE BOOKS OF M/S. HINDUSTAN TAR PRODUC TS WAS FILED IN COURSE OF THE ASSESSMENT PROCEEDINGS (PLACED AT PAGE 29 AND 30 O F THE PAPER BOOK). A PERUSAL OF THESE CHARTS CLEARLY SHOW THAT THE APPARENT NEGT IVE CASH BALANCE IN THE BOOKS 8 IT(SS)NO.98&99/KOL/2013 PRAVEEN KR. CHHARIA AND ANK IT CHAARIA BLOCK PERIOD 01.04.1988 TO 21.04.1998 OF M/S CHHARIA TRANSPORT ORGANISATION ON DIFFERENT DATES WAS COVERED BY SUFFICIENT CASH AVAILABILITY IN THE BOOKS OF M/S HI NDUSTAN TAR PRODUCTS ON THOSE DATES. IN OTHER WORDS, THERE WILL BE NO NEGATIVE CA SH BALANCE IN THE BOOKS OF M/S CHHARIA TRANSPORT ORGANISATION IF CASH AVAILABLE IN THE BOOKS OF M/S HINDUSTAN TAR PRODUCTS IS TAKEN INTO ACCOUNT; AND CONSEQUENTL Y, THERE IS NO CASE FOR ADDITIONS ON ACCOUNT OF NEGATIVE CASH BALANCE. THE ADDITION OF RS.3,47,032/- IN AY 1996-97 AND THAT OF RS.99,667/- IN AY 1997-98 ON ACCOUNT OF NEGATIVE PEAK BALANCE IN THE CASH BOOK IS DIRECTED TO BE DELETED . GROUND NO.6 IS ALLOWED. WE FIND NO INFIRMITY IN THE SAME AS THE FACTUAL FIN DING COULD NOT BE CONTROVERTED BY THE LD. DEPARTMENTAL REPRESENTATIVE. 13. THE ASSESSEE HAS FURNISHED DETAILS DATE-WISE CH ART AND CASH FLOW OF THE SHORT FALL OF CASH BALANCE IN THE BOOKS OF ACCOUNTS M/S. CHHARIA TRANSPORT ORGANISATION AND THE CASH BALANCE AS AVAILABLE IN THE BOOKS OF M/S. HINDUSTAN TAR PRODUCTS FOR THE FINANCIAL YEAR 2005-06 AND 2006-07. WHEN BOTH THE P ROPRIETORY CONCERNS OF THE ASSESSEE AND THE PARTNERSHIP CONCERN ARE MANAGED BY THE SAME PERSONS AND WHEN THEY ARE LOCATED IN THE SAME PREMISES AND MANAGED IN A COMMON ROOM, IN OUR VIEW, THE LD. CIT(A) WAS RIGHTLY JUSTIFIED IN DELETING THE ADDITI ON BY TAKING AN OVERALL VIEW ON THIS ISSUE. 14. SIMILARLY IN THE CASE OF SHRI PRAVEEN KUMAR CHH ARIA, THE PROPRIETORY CONCERN M/S. ANKIT CARRIERS AND THE PARTNERSHIP CONCERN M/S . HINDUSTAN TAR PRODUCTS ARE ALSO LOCATED IN THE SAME PREMISES. FOR THE ABOVE REASONS GIVEN BY US THE FACTUAL FINDING OF THE LD. CIT(A) ON THIS ISSUE ON THE SAME GROUND IN THE CASE OF SHRI ANKIT CHHARIA IS ALSO UPHELD AND THE GROUND OF THE REVENUE IS DISMIS SED. 15. THE ADDITIONS MADE BY THE AO RELATING TO THE B ITUMEN SCAM WHICH ARE GROUND NO.2, 3 AND 4 IN THE APPEAL OF SHRI PRAVEEN KUMAR C HHARIA AS WELL AS GROUND NO.2, 3 AND 4 IN THE CASE OF SHRI ANKIT CHHARIA ARE NOW CO NSIDERED BY US. THE LD. CIT(A) HAS DEALT WITH THIS ISSUE AT PARA-19 OF HIS ORDER WHICH IS EXTRACTED FOR READY REFERENCE :- 19. I HAVE PERUSED THE ASSESSMENT ORDER AND THE MA TERIAL PLACED IN THE PAPER BOOK. I HAVE ALSO CONSIDERED THE SUBMISSIONS MADE O N BEHALF OF THE APPELLANT. I 9 IT(SS)NO.98&99/KOL/2013 PRAVEEN KR. CHHARIA AND ANK IT CHAARIA BLOCK PERIOD 01.04.1988 TO 21.04.1998 FIND FROM THE ASSESSMENT ORDER THAT THE AO HAS MADE THE ADDITIONS ON THE PREMISE THAT THE APPELLANT WAS INVOLVED IN THE BITU MEN SCAM AND FOR THE SAME HE HAS MAINLY RELIED ON THE CAG REPORT ON BITUMEN SCA M. THIS ALLEGATION AND ASSUMPTION OF THE AO HAS BEEN CLEARLY COUNTERED BY THE APPELLANT BY STATING THAT NO SPECIFIC FINDING AGAINST HIM HAS BEEN RECORDED I N THE SAID REPORTS AND THAT THE NAME OF THE APPELLANT OR HIS CONCERNS NOWHERE APPEA R IN THE REPORT OF THE CAG AND THE OIL COORDINATION COMMITTEE. THE LD. AR HAS DRAWN MY ATTENTION TO A LETTER DATED 27-06-1996 WRITTEN BY THE OFFICER OF T HE ROAD CONSTRUCTION DIVISION, PATNA TO THE OIL COMPANIES INDIAN OIL CORPORATION LTD, BHARAT PETROLEUM CORPORATION AND HINDUSTAN PETROLEUM CORPORATION (PA GE 115 OF THE PAPER BOOK) WHEREIN THE NAMES OF THE PERSONS INVOLVED IN THE BI TUMEN SCAM HAVE BEEN GIVEN AND WHEREIN THE NAME OF NEITHER THE APPELLANT NOR H IS CONCERNS APPEAR. HE HAS FURTHER DRAWN MY ATTENTION TO THE LETTERS DATED 07- 11-1996 WRITTEN BY THE ENGINEER-IN-CHIEF-CUM ADDITIONAL COMMISSIONER-CUM-S PECIAL SECRETARY, ROAD CONSTRUCTION DEPARTMENT, BIHAR, PATNA TO THE OIL CO MPANIES (PAGE 104 TO 114 OF THE PAPER BOOK) WHEREIN THE LIST OF THE PERSONS ALLEGEDLY INVOLVED IN THE BITUMEN SCAM HAVE BEEN GIVEN, AND WHEREIN AGAIN, TH E NAME OF NEITHER THE APPELLANT NOR HIS CONCERNS APPEAR. THEREFORE, IT APPEARS THAT THE ASSUMPTION OF THE AO THAT THE APPELLANT WAS INVOLVED IN THE BITUM EN SCAM IS SIMPLY AN ASSUMPTION. THE AO HAS NOT BROUGHT ANY MATERIAL ON RECORD TO SUBSTANTIATE HIS ASSUMPTION THAT THE APPELLANT WAS INVOLVED IN THE S CAM WHEREAS, ON THE CONTRARY, THE APPELLANT HAS PRODUCED MATERIAL TO SHOW THAT HE WAS NEVER ALLEGED TO BE INVOLVED IN THE SCAM BY THE APPROPRIATE AUTHORITIE S. THEREFORE, IT IS CLEAR THAT THE VERY BASIS FOR MAKING THE ADDITIONS IN THE PRESENT CASE IS AN INCORRECT ASSUMPTION OF THE AO WHICH IS NOT BASED OR SUBSTANTIATED BY AN Y MATERIAL, AND ON THE CONTRARY, IS IN DIRECT CONFLICT WITH THE MATERIAL A VAILABLE ON RECORD. THE AO HAS FURTHER RELIED ON THE CLAIMS RAISED BY THE OIL COMP ANIES AND THE ARBITRATION GOING ON IN RESPECT OF THE SAME TO BUTTRESS HIS VIE W THAT THE APPELLANT WAS INVOLVED IN THE SCAM AND HAD NOT DONE TRANSPORTATIO N AS PER THE CONTRACT. BUT THEN, IT WAS ARGUED THAT THE ARBITRATION PROCEEDING S DO NOT RELATE TO NON-SUPPLY OR SHORT-SUPPLY OF MATERIAL. THE ALLEGATION IN THE ARBITRATION PROCEEDINGS WAS THAT ALTHOUGH THE MATERIAL WAS SUPPLIED TO THE RESP ECTIVE DESTINATIONS BUT THE SUPPLY WAS NOT ROUTED THROUGH BARAUNI AS WAS REQUIR ED BY THE OIL COMPANIES. THEREFORE, A CLAIM HAS BEEN RAISED BY THEM STATING THAT THE BILLING FOR THIS DISTANCE, WHICH WAS NOT COVERED BY THE ASSESSEE, WA S REQUIRED TO BE REFUNDED TO THE OIL COMPANIES. IN THIS RESPECT, THE APPELLANT S UBMITTED COPIES OF THE ARBITRATION PROCEEDINGS GOING ON WITH THE OIL COMPA NIES (PAPER BOOK PAGE 117 TO 149) AND LAID EMPHASIS ON THE AWARD PASSED IN FA VOUR OF THE APPELLANT IN THE ARBITRATION PROCEEDINGS BETWEEN THE APPELLANT AND B HARAT PETROLEUM CORPORATION LTD (PAGE 117 TO 127 OF THE PAPER BOO K). ON THE BASIS OF THE AWARD SPECIFICALLY, THE APPELLANT STATED THAT THE A LLEGATION OF THE AO WAS CLEARLY NOT CORRECT. THE APPELLANT BY RELYING ON THE AWARD AND THE ARBITRATION PROCEEDINGS HAS CLEARLY DEMONSTRATED THAT THE CHARG E AGAINST HIM IN ONE CASE 10 IT(SS)NO.98&99/KOL/2013 PRAVEEN KR. CHHARIA AND ANK IT CHAARIA BLOCK PERIOD 01.04.1988 TO 21.04.1998 HAS BEEN PROVEN TO BE INCORRECT AND IN THE OTHER CA SES IS DISPUTED. FURTHER MORE, IT IS CLEAR THAT THE CLAIM OF THE OIL COMPANIES IS NOT THAT THE APPELLANT HAS NOT UNDERTAKEN THE TRIPS OR HAS NOT SUPPLIED THE MATERI ALS CONSIGNED, BUT ONLY IN RESPECT OF THE DISTANCE TRAVELLED. SECONDLY, THE CL AIMS MADE BY OIL COMPANIES TOTAL TO RS.33,40,314/- AS COMPARED TO THE DISALLOW ANCE OF 55% OF THE EXPENSES MADE BY THE AO. EVEN THE OIL COMPANIES HAVING NOT D ISPUTED 55% OF THE TRANSPORTATION IN THE CASE OF THE APPELLANT, IT WAS NOT OPEN TO THE AO TO ASSUME THAT 55% OF THE TRANSPORTATION MADE BY THE APPELLAN T WAS NOT AS PER THE AGREEMENT BETWEEN THE APPELLANT AND THE OIL COMPANI ES. IN FACT, AS OBSERVED ABOVE, IN THE ARBITRATION BETWEEN THE APPELLANT AND ONE OF THE OIL COMPANIES, THE CLAIM MADE BY THE OIL COMPANY HAS NOT BEEN UPHELD A ND HAS BEEN DECIDED AGAINST THE OIL COMPANY. FURTHERMORE, THE APPELLANT HAS FILED DETAILS AND EVIDENCES TO SUBSTANTIATE THAT IT HAD TRAVELLED TO BARAUNI AS WAS STIPULATED IN THE AGREEMENT BUT THAT THE ORDER IN WHICH HE HAD TRAVEL LED FROM THE LOADING POINT TO BARAUNI TO UNLOADING POINT HAD BEEN ALTERED TO LOAD ING POINT TO UNLOADING POINT TO BARAUNI, IN EFFECT STILL TRAVELLING THE SAME DIS TANCE AS WOULD HAVE BEEN THE CASE AS PER THE ORIGINAL AGREEMENT BUT IN A SIMPLY DIFFERENT ORDER. THE APPELLANT HAVING PLACED EVIDENCE ON RECORD TO PROVE THAT HE H AD TRAVELLED THE DISTANCE AS REQUIRED, NO ADVERSE INFERENCE COULD HAVE BEEN DRAW N BY THE AO SIMPLY BECAUSE THE ORDER IN WHICH THE TRAVEL WAS UNDERTAKEN HAD BE EN ALTERED. ALTERING OF THE ORDER IN WHICH THE TRAVEL HAD BEEN UNDERTAKEN DOES NOT ALTER THE DISTANCE TRAVELLED; AND THEREFORE, THE DISALLOWANCE MADE WIT HOUT BRINGING ON RECORD ANY ACTUAL EVIDENCE TO SHOW THAT EXPENSES HAD BEEN INFL ATED CANNOT BE SUSTAINED. THE AO HAS FURTHER STATED THAT MATERIALS FOUND IN THE S EARCH SHOW THAT THE APPELLANT HAD NOT SUPPLIED THE MATERIALS AT THE FINAL DELIVER Y POINT IN SOME CASES. THE APPELLANT HAS FILED DOCUMENTS TO COUNTER THE ALLEGA TION OF THE AO TO PROVE THAT THE NON-DELIVERY WAS ON ACCOUNT OF PROBLEMS ARISING AT THE DELIVERY POINT IN SOME CASES WHICH WAS ALSO COMMUNICATED TO THE OIL COMPAN IES AND AFTER TAKING DUE INSTRUCTIONS FROM THE OIL COMPANIES, THE MATERIALS WERE ALSO SOLD OFF AS DIRECTED (PAGE 142 TO 145 OF THE PAPER BOOK). THEREFORE, IT IS CLEAR FROM THE EVIDENCES FILED ON RECORD BY THE APPELLANT THAT THERE WAS NO MISAPPROPRIATION OF BITUMEN AS ALLEGED IN THE ASSESSMENT ORDER. THE BITUMEN WHICH COULD NOT BE DELIVERED DUE TO PROBLEMS AT THE POINT OF UNLOADING WAS SOLD AS PER THE INSTRUCTIONS OF THE OIL COMPANIES. IN FACT, THE AO HAS NOT PRODUCED ANY EVI DENCE ON RECORD WHERE THE OIL COMPANIES HAVE ALLEGED MISAPPROPRIATION OF BITU MEN BY THE APPELLANT. THE ONLY ALLEGATION BY THE OIL COMPANIES HAS BEEN OF NO N-TRAVELLING TO BARAUNI FOR WHICH CLAIMS HAVE BEEN RAISED AGAINST THE APPELLANT , WHICH IN ONE CASE HAS BEEN DECIDED AGAINST THE OIL COMPANY (PAGE 125 & 126 OF THE PAPER BOOK) AND IN OTHER CASES IS UNDER ARBITRATION AND HAVE NOT BEEN PROVEN. IT IS ALSO THE PRESUMPTION OF THE AO THAT 55% OF BITUMEN WAS MISAP PROPRIATED BY THE APPELLANT AND SOLD IN THE OPEN MARKET. THE AO APPEA RS TO BE CARRIED AWAY BY THE GENERAL ALLEGATION IN THE CAG REPORT THAT 55% OF BI TUMEN WAS MISAPPROPRIATED BY THE TRANSPORTERS INVOLVED IN THE BITUMEN SCAM. A S ALREADY DISCUSSED ABOVE, 11 IT(SS)NO.98&99/KOL/2013 PRAVEEN KR. CHHARIA AND ANK IT CHAARIA BLOCK PERIOD 01.04.1988 TO 21.04.1998 THE PRESUMPTION OF THE AO THAT THE APPELLANT WAS EN GAGED IN THE BITUMEN SCAM APPEARS TO BE FACTUALLY INCORRECT. BUT, EVEN OTHERW ISE, I AM OF THE CONSIDERED OPINION THAT NO ADDITION CAN BE MADE IN THE CASE OF AN ASSESSEE MERELY ON THE BASIS OF A GENERAL ALLEGATION CONTAINED IN THE CAG REPORT UNLESS SPECIFIC EVIDENCE IS BROUGHT ON RECORD TO SHOW THAT A PARTIC ULAR ASSESSEE WAS INVOLVED IN MISAPPROPRIATION OF BITUMEN OR SALE THEREOF. IN THI S FACTUAL BACKGROUND, IT APPEARS THAT THE ENTIRE ADDITION MADE BY THE AO IS BASED ON WRONG APPRECIATION OF FACTS AND ON MERE ASSUMPTIONS. AN ASSESSMENT ORD ER IS TO BE MADE ON THE BASIS OF THE MATERIAL AVAILABLE ON RECORD. ASSUMPTION OR SUSPICION SHOULD NOT LEAD THE AO TO A STATE OF AFFAIRS WHERE SALIENT EVIDENCES AR E OVERLOOKED. BUT, IN THE PRESENT CASE, THE AO HAS MADE THE ADDITIONS ON THE BASIS OF PRESUMPTIONS AND ASSUMPTIONS. THE EXPLANATION OF THE APPELLANT WAS S UMMARILY REJECTED MORE ON PRESUMPTIONS THAN ON FACTUAL GROUND. THE CASE OF TH E APPELLANT IS ALSO SUPPORTED BY THE DECISION OF THE JURISDICTIONAL ITAT IN THE C ASE OF SITARAM SUREKA IN ITA NO. IT(SS)/140/2004. IN VIEW OF THE ABOVE, THE ADDI TIONS MADE BY THE AO ON ACCOUNT OF TRANSPORTATION CHARGES AND UNDISCLOSED S ALE OF BITUMEN ARE NEITHER SUSTAINABLE IN LAW NOR ON FACTS. THE ADDITIONS OF R S.84,86,518/- AND RS.2,51,59,600/- ARE DIRECTED TO BE DELETED.(EMPHA SIS OURS) WE FIND NO INFIRMITY IN THESE FACTUAL FINDING OF TH E LD. CIT(A). THE LD. DR COULD NOT CONTROVERT THESE FINDINGS. 15. THERE IS NO SPECIFIC FINDING RECORDED IN ANY OF THE REPORTS I.E. CAG REPORT , ENGINEERING-IN-CHIEF REPORT, AND OIL CO-ORDINATION COMMITTEE REPORT WHICH HAS BEEN SPECIFICALLY RELIED UPON BY THE AO FOR MAKING THE A DDITION. THE SUBMISSIONS OF THE ASSESSEE THAT THE NAME OF THESE ASSESSES DO NOT AP PEAR EITHER IN THE REPORT OF THE CAG OR OIL COORDINATION COMMITTEE REPORT, IS NOT CONTRO VERTED BY THE LD. DR. THE LD. CIT(A) HAS SPECIFICALLY, IN HIS ORDER STATED THAT T HERE IS NO SPECIFIC FINDING AGAINST THE ASSESSEE IN ANY OF THE REPORTS AND THAT THE ADDITI ON IN QUESTION WAS MADE ON ASSUMPTIONS BY THE AO, THAT THE ASSESSEE WAS INVOLV ED IN THE BITUMEN SCAM AND THAT THE AO HAS NOT BROUGHT ANY MATERIAL ON RECORD, TO S UBSTANTIATE HIS ASSUMPTION. EVEN HE FURTHER RECORDED THAT THE RELIANCE PLACED BY THE AO ON THE ALLEGATION MADE BY THE OIL COMPANIES, IS NOT CORRECT AS THESE ALLEGATIONS WERE PROVEN WRONG IN THE ARBITRATION AWARD BETWEEN THE ASSESSEE AND THE OIL COMPANIES. W HEN IT IS PROVED THAT CHARGES AGAINST THE ASSESSEE ARE NOT CORRECT NO ADDITION BA SED ON SUCH ALLEGATIONS CAN BE SUSTAINED. THE LD. CIT(A) ALSO RECORDS THAT THE ASS ESSEE HAS FILED DOCUMENTS TO COUNTER 12 IT(SS)NO.98&99/KOL/2013 PRAVEEN KR. CHHARIA AND ANK IT CHAARIA BLOCK PERIOD 01.04.1988 TO 21.04.1998 THE ALLEGATIONS OF THE AO AND TO PROVE ACTUAL DELIV ERY OF BITUMEN ETC AND ALSO TO PROVE THAT THERE WAS NO MISAPPROPRIATION. HE ALSO H ELD THAT THE ISSUE IS COVERED BY THE DECISION OF THE JURISDICTIONAL ITAT IN THE CASE OF SITARAM SUREKHA IN IT(SS)A.140/KOL/2004. THE LD. DR COULD NOT CONTROVE RT THE FACTUAL FINDING OF THE LD. CIT(A) NOR HE PRODUCED ANY MATERIAL BEFORE THIS BEN CH TO CONTROVERT THE SUBMISSIONS OF THE ASSESSEE. HENCE WE UPHOLD THE ORDER OF THE L D. FIRST APPELLATE AUTHORITY AND DISMISSED GROUND NO.2,3 AND 4 IN THE CASE OF SHRI P RAVEEN KUMAR CHHARIA AND GROUND NO.2,3 AND 4 OF SHRI ANKIT CHHARIA. THE ALLEGATION OF VIOLATION OF RULE 46A OF THE I.T.RULES BY THE LD. CIT(A) IS ALSO FACTUALLY INCOR RECT. 16. GROUND NO.5 IS ON THE ISSUE OF UNDISCLOSED INCO ME FROM PURCHASE OF BITUMEN FROM SHRI K.K.KEDIA. THE LD. CIT(A) HAS DEALT THIS ISSUE AT PAGES 28 (LAST THREE LINES) TO 29. AS REGARDS THE ADDITION ON ACCOUNT OF BOGUS CREDIT ORS, IT IS CLEAR THAT NO EVIDENCE WAS FOUND IN COURSE OF THE SEARCH WHICH CO ULD SHOW THAT THE CREDITORS WERE BOGUS. THE ALLEGATION OF THE AO IS BASED ON TH E ENQUIRY CONDUCTED BY HIM DURING THE COURSE OF ASSESSMENT. IT IS A MATTER OF RECORD THAT THE CREDITORS STOOD DULY RECORDED IN THE BOOKS OF ACCOUNT AT THE TIME O F THE SEARCH. ALL THE TRANSACTIONS WITH THE SAID CREDITORS ALSO STOOD DUL Y RECORDED. THEREFORE, THE SAID CREDITORS CANNOT BE TERMED TO FALL WITHIN THE DEFIN ITION OF UNDISCLOSED INCOME UNDER THIS CHAPTER. UNDER THE INCOME TAX ACT, BLOCK ASSESSMENT PROCEEDINGS U/S 158BC ARE SEPARATE FROM REGULAR ASSESSMENT PROCEEDI NGS, AS HELD BY THE HONBLE SUPREME COURT IN THE CASE OF ACIT VS HOTEL BLUE MOON REPORTED IN 321 ITR 362. IN BLOCK ASSESSMENT PROCEEDINGS, INCOME HA S TO BE DETERMINED ONLY ON THE BASIS OF THE INCRIMINATING MATERIAL FOUND IN CO URSE OF THE SEARCH. ISSUES PERTAINING TO REGULAR ASSESSMENT WHICH ARE DULY REC ORDED IN THE REGULAR BOOKS OF ACCOUNT ON THE DATE OF THE SEARCH ARE REQUIRED TO B E DEALT WITH IN REGULAR ASSESSMENT PROCEEDINGS AS HELD IN A NUMBER OF CASES INCLUDING DCIT VS SURESH CHAND BAFNA 5 ITR (TRIB.) 675 (CHENNAI), CIT VS VIV EK DOUGALL 305 ITR 270 (DEL), CIT VS. ARMAN SHEIKH 293 ITR 266 (GAU), ETC. IN THE PRESENT CASE ALSO, IT IS AN UNDISPUTED FACT THAT NO EVIDENCE WAS FOUND IN THE COURSE OF THE SEARCH WHICH COULD SHOW THAT THE CREDITORS WERE NON-EXISTE NT. THEREFORE, THE ISSUE OF CREDITORS COULD NOT HAVE BEEN RAISED AND DEALT WITH IN THE BLOCK ASSESSMENT PROCEEDINGS. IN FACT, SUCH ENQUIRY ITSELF WAS NOT P ERMISSIBLE IN THE BLOCK ASSESSMENT PROCEEDINGS AS IT WAS NOT BASED ON ANY S EIZED DOCUMENT. THE ENQUIRY BASED ON THE REGULAR BOOKS OF ACCOUNT THEREFORE COU LD HAVE BEEN CONDUCTED ONLY WITHIN THE DOMAIN OF THE REGULAR ASSESSMENT PROCEED INGS. FURTHERMORE, I HAVE 13 IT(SS)NO.98&99/KOL/2013 PRAVEEN KR. CHHARIA AND ANK IT CHAARIA BLOCK PERIOD 01.04.1988 TO 21.04.1998 ALREADY OBSERVED ABOVE THAT THE ENTIRE ALLEGATION I S MAINLY BASED ON THE PRESUMPTION THAT 55% OF THE EXPENSES BOOKED BY THE ASSESSEE IS BOGUS ON THE BASIS OF THE CAG REPORT WHICH ITSELF I HAVE FOUND T O BE LEGALLY UNTENABLE. AND, WHEN THE PRESUMPTION ITSELF IS LEGALLY UNTENABLE, T HEN THE CREDITORS CANNOT BE DOUBTED SIMPLY ON THE BASIS OF AN INSPECTORS REPOR T WHICH HAS NOT EVEN BEEN SUPPLIED AND CONFRONTED TO THE ASSESSEE AND IS CONT RARY TO THE PRINCIPLES OF NATURAL JUSTICE. IN VIEW OF THE ABOVE, I HOLD THAT NO ADDITION ON ACCOUNT OF BOGUS SUNDRY CREDITORS COULD HAVE BEEN LAWFULLY MADE BY T HE A.O. IN VIEW OF THE ABOVE, I HOLD THAT NO ADDITION ON ACCOUNT OF BOGUS TRANSPO RTATION CHARGES OR CREDITORS AND UNDISCLOSED SALE OF BITUMEN IS SUSTAINABLE IN L AW OR ON FACTS. THE ADDITION OF RS.57,36,064/- AND RS.1,27,86,465/- IS DELETED. GRO UND NO.5 AND 6 ARE ALLOWED. THE FINDINGS OF THE FIRST APPELLATE AUTHORITY THAT, THERE IS NO MATERIAL FOUND OR SEIZED DURING THE COURSE OF SEARCH AND HENCE NO ADDITION C AN BE MADE IN THE BLOCK ASSESSMENT MADE U/S 158BC OF THE ACT, COULD NOT BE CONTROVERTED BY THE LD. DR. THE LD. CIT(A) FURTHER HELD THAT THE ADDITION IS NOT CO RRECT IN LAW AS IT WAS BASED ON A PRESUMPTION THAT 55% OF THE EXPENSES BOOKED ARE BO GUS EXPENDITURE, FOR THE REASONS CITED EARLIER. AS THE FACTS WAS NOT CONTROVERTED, W E UPHOLD THIS FINDING OF THE LD. FIRST APPELLATE AUTHORITY AND DISMISS THIS GROUND OF THE ASSESSEE. WE ALSO OBSERVED THAT THE C BENCH OF THIS ITAT IN IT(SS)NO.63//KOL/201 4 IN THE CASE OF DCIT VS M/S HINDUSTAN TAR PRODUCTS ORDER DATED 13.09.2017 HAS D ISMISSED THE REVENUES APPEAL ON THE ISSUE OF ADDITION. THUS RESPECTFULLY FOLLOWING THE ORDER OF THE CO-ORDINATE BENCH OF THE ITAT ON THIS VERY ISSUE AND IN THE LIGHT OF THE DISCUSSIONS ABOVE, WE UPHOLD THE ORDER OF THE LD. CIT(A) FOR BOTH THE ASSESSES AND D ISMISS BOTH THE REVENUES APPEAL. 17. IN THE RESULT BOTH THE APPEALS OF THE REVENUE A RE DISMISSED. O RDER PRONOUNCED IN THE OPEN COURT ON 18.05.2018. SD/- SD/- [A.T.VARKEY] [ J.SUDHAKAR REDDY ] JUDICIAL MEMBER ACCOUNTANT MEMBER DATED : 18.05.2018. [RG SR.PS] 14 IT(SS)NO.98&99/KOL/2013 PRAVEEN KR. CHHARIA AND ANK IT CHAARIA BLOCK PERIOD 01.04.1988 TO 21.04.1998 COPY OF THE ORDER FORWARDED TO: 1.PRAVEEN KUMAR CHHARIA, 98, B.K.PAUL AVENUE, KOLKA TA-700005. 2. ANKIT CHHARIA (L/H OF PRAMOD KUMAR CHHARIA), 98 , B.K.PAUL AVENUE, KOLKATA- 700005. 3. D.C.I.T., CENTRAL CIRCLE-VIII, KOLKATA. 4. C.I.T.(A)-CENTRAL-I, KOLKATA. 5. C.I .T.- CENTRAL-I, KOLKATA. 5. CIT(DR), KOLKATA BENCHES, KOLKATA. TRUE COPY BY ORDER, SENIOR PRIVATE SECRETARY HEAD OF OFFICE/D.D.O., ITAT, KOLKATA BENCHES