A.C.I.T, BHILAI(CG) v. M/S VIJAY ISPAT ALLOYS PVT LTD, BHILAI(CG)

ITA 103/BIL/2011 | 2005-2006
Pronouncement Date: 31-07-2015 | Result: Partly Allowed

Appeal Details

RSA Number 10324714 RSA 2011
Assessee PAN AABCV7013J
Bench Raipur
Appeal Number ITA 103/BIL/2011
Duration Of Justice 4 year(s) 2 month(s) 5 day(s)
Appellant A.C.I.T, BHILAI(CG)
Respondent M/S VIJAY ISPAT ALLOYS PVT LTD, BHILAI(CG)
Appeal Type Income Tax Appeal
Pronouncement Date 31-07-2015
Appeal Filed By Department
Order Result Partly Allowed
Bench Allotted DB
Tribunal Order Date 31-07-2015
Assessment Year 2005-2006
Appeal Filed On 26-05-2011
Judgment Text
1 ITA NO. 103/BLPR/2011 IN THE INCOME TAX APPELLATE TRIBUNAL RAIPUR BENCH RAIPUR BEFORE SHRI MUKUL K. SHRAWAT JUDICIAL MEMBER AND SHRI SHAMIM YAHYA ACCOUNTANT MEMBER. I.T. A. NO. 103/BLPR/2011 ASSESSMENT YEAR : 2005-06. ASSTT. COMMISSIONER OF INCOME-TAX-1 M/S VIJAY ISPAT ALLOYS PVT.LTD. BHILAI. V/S. 178-B LIGHT INDUSTRIAL AREA BHILAI. PAN AABCV7013J (APPELLANT) RESPONDENT. APPELLANT BY : SMT. SHEETAL S. VERMA. RESPONDENT BY : SHRI R.B. DOSHI. DATE OF HEARING : 17-06-2015 DATE OF PRONOUNCEMENT : 31 ST JULY 2015. O R D E R PER SHRI SHAMIN YAHYA A.M . THIS APPEAL BY THE REVENUE IS DIRECTED AGAINST THE ORDER OF LEARNED CIT(APPEALS) BILASPUR DATED 28-02-2011 AND PERTAI NS TO ASSESSMENT YEAR 2005- 06. THE GROUNDS OF APPEAL READ AS UNDER : 1. WHETHER IN LAW AND ON FACTS & CIRCUMSTANCES OF THE CASE THE CIT(A) WAS JUSTIFIED IN DELETING THE ADDITION OF ` .1 74 50 759/- MADE BY THE AO AS UNEXPLAINED CASH CREDIT U/S 68 OF THE INC OME TAX ACT 1961. 2. WHETHER IN LAW AND ON FACTS & CIRCUMSTANCES OF THE CASE THE CIT(A) WAS JUSTIFIED IN DELETING THE ADDITION OF ` .5 59 740/- MADE BY THE AO AS UNEXPLAINED PURCHASES U/S 68 OF THE INCOME TA X ACT 1961 FROM PC TRADERS. 2 ITA NO. 103/BLPR/2011 3. WHETHER IN LAW AND ON FACTS & CIRCUMSTANCES OF THE CASE THE CIT(A) WAS JUSTIFIED IN DELETING THE ADDITION OF ` .26 03 450/- MADE BY THE AO AS UNEXPLAINED PURCHASE/SALE TRANSACTION U/S 68 OF THE INCOME TAX ACT 1961. 2. IN THIS CASE THE ASSESSEE IS ENGAGED IN TRADIN G IN CAST AND MS ITEMS AND OTHER IRON SCRAP AND MANUFACTURING AND SALE OF M S INGOTS. THE ASSESSEE COMPANY HAS HEAD OFFICE AT BHILAI AND BRANCH OFFICE AT KANPUR. DURING THE YEAR UNDER CONSIDERATION AT BHILAI OHFICE NO MANUFACTURI NG ACTIVITY HAS BEEN CARRIED OUT. ONLY TRADING IN IRON SCRAP HAS BEEN MADE. THE MANUFACTURING ACTIVITY HAS BEEN CARRIED OUT AT THE KANPUR UNIT WHERE THE ASSESSEE H AS A MANUFACTURING UNIT AT ORAI. DURING THE COURSE OF ASSESSMENT THE ASSESSING OFFIC ER OBSERVED THAT ON PERUSAL OF THE DETAILS SUBMITTED AND THE BOOKS OF ACCOUNTS IT WAS SEEN THAT THE ASSESSEE HAD ENTIRELY ENGAGED IN TRADING OF CI SCRAP AT BHILAI. ITS ENTIRE PURCHASE WAS FROM SISTER CONCERNS VIZ. JAISWAL STEEL PROCESSING (P) LTD. (J SPL) JAISWAL STEEL ENTERPRISES (P) LTD. (JSEPL) AND SHRI PARVATI SCRAP PROCESSORS (P) LTD. (SDPSPL). THE TOTAL PURCHASE WAS ` .1 72 57 625/-. AS PER THE DETAILS AVAILABLE DURING THE YEAR THERE HAS BEEN NO OPENING OR CLOSING STOCK OF TRADING ITEMS A T BHILAI AND THE ENTIRE PURCHASES WERE SOLD IN CASH EXCEPT FOR SALE OF ` .5 14 029/- TO SISTER CONCERN JSEPL AND ` .5 13 813/- TO JAISWAL EQUIPMENTS AND HOLDING (P) L TD. (JEHPL) ON CREDIT RESPECTIVELY. IT WAS FURTHER SEEN THAT THE CASH SAL E BILLS DID NOT SHOW ANY ADDRESS NAME OR ANY ADDRESSES EXCEPT IN CASE OF FEW SALES W HERE THE NAMES OF THE FOLLOWING PURCHASERS WERE GIVEN: (I) ANNAPURNA MALEABLES (P) LTD. URLA INDUSTRIAL A REA URLA. (II) MANOJ TRADING CO. CAMP-2 BHILAI. (III) BALRAM TRADERS STATION ROAD DURG. (IV) SANDEEP ENTERPRISES VAISHALI NA GAR BHILAI. (V) SONALI TRADERS CHARODA BHILAI. 3 ITA NO. 103/BLPR/2011 (VI) RADHELAL TRADERS M P H B BHILAI (VII) SUDHAKAR TRADERS NANDINI ROAD BHILAI. (VIII) KRISHNA TRADING CO. BHILAI-3 BHILAI. (IX) RAMLAL & SONS M.G. ROAD RAIPUR. (X) C.T. BROTHERS BHILAI-3 BHILAI. (XI) OM ENTERPRISES JAMUL BHILAI. THE ASSESSING OFFICER DEPUTED THE INSPECTOR TO CARR Y OUT ENQUIRY AND TO TRACE OUT THESE PERSONS WHO HAD MADE CASH PURCHASES FROM THE ASSESSEE. THE INSPECTOR REPORTED THAT ONLY FOUR OF THE ABOVE PURCHASERS WE RE TRACEABLE. FURTHER ON EXAMINATION OF CASH BOOK THE ASSESSING OFFICER OBS ERVED THAT THE ASSESSEE WAS MAKING CASH SALES AND IMMEDIATELY THEREAFTER WAS T RANSFERRING SUMS RANGING FROM ` .10 LAKHS TO ` .15 LAKHS TO ITS BRANCH OFFICE ORAI AT KANPUR AS TO UR ADVANCES. THE ASSESSING OFFICER FOUND THAT THERE WERE NO DETAILS OF TRAVELLING EXPENSES OF THE PERSONS CARRYING THE ABOVE SAID TOUR ADVANCES TO O RAI. THE ASSESSING OFFICER ALSO OBSERVED THAT IN RESPECT OF PURCHASES THERE WAS NO DELIVERY CHALLANS PRODUCED BY THE ASSESSEE. THOUGH THE ASSESSING OFFICER NOTED TH AT THE ASSESSEE HAD DEBITED PAYMENT OF ` .66 304/- TOWARDS TRANSFER OF ITS SCRAP TO ITS SIST ER CONCERN TO ITS PREMISES. THE ASSESSING OFFICER SOUGHT INFORMATION FROM THE RTO DURG REGARDING VARIOUS TRUCKS SHOWN TO HAVE BEEN INVOLVE D IN THE TRANSPORTATION OF THE MATERIAL BY THE ASSESSEE AS PER THE PURCHASE AND SA LE BILLS PRODUCED BY THE ASSESSEE. EXAMINATION OF THE REPORT FROM THE RTO GA VE EVIDENCE THAT THOSE TRUCKS SAID TO BE CARRYING THE GOODS COULD NOT HAVE TRANSP ORTED THE GOODS AT ALL. THE TRUCKS SAID TO BE CARRYING THE GOODS WERE FOUND TO HAVE FOLLOWING REMARKS : 4 ITA NO. 103/BLPR/2011 TRUCK NO. REMARKS CG 07 REGISTERED FOR PADDY TRANSPORT WITH TRUCK UNION ZC 1905 CAPACITY 14300 CG 07 REGISTERED FOR PADDY TRANSPORT WITH TRUCK UNION ZC 1690 CAPACITY 14300 CG 07 WATER TANKER OF BSP ZC 2190 CG 07 NOT USABLE FOR HEAVY LOANS ZC 0706 CARRYING CAPACITY 1270 CG 07 USED FOR OWN CIVIL CONSTRUCTION WORK. ZC 1152 CG 07 TRAILORS USED INSIDE B.S.P. ZC 2978 CG 07 TRAILOR NOT IN BHILAI O N THE GIVEN DATES. ZC 1235 CG 07 ZC 1670 TRUCK USED FOR OWN TRANSPORTATION OF GRAINS. CG 07 USED FOR CEMENT TRANSPORT WITH ACC JAMUL. ZC 2210 CG 07 TIPPER ON CONTRACT FOR ROAD WORK. ZC 1970 CG 07 TIPPER ON CONTRACT FOR ROAD WORK. ZC 1972 CG 07 ZC 0360 TANKER CG 07 TANKER ZC 1252 5 ITA NO. 103/BLPR/2011 CG 07 ZC 1782 TANKER CG 07 TANKER ZC 0753 CG 07 TANKER ZC 0775 CG 07 DUMPER OF HEG USED INSIDE FACTORY. ZC 0942 CG 07 NO SUCH TRUCK NO. ALLOTTED. ZC 2992 THE ASSESSING OFFICER FURTHER FOUND THAT THE ASSESS EE HAD SHOWN SALES TO ANNAPURNA MALEABLES (P) LTD. HOWEVER IT WAS FOUND THAT THE ASSESSEE HAD RECEIVED AN AMOUNT OF ` `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` .1 74 50 759/- IS TO BE ADDED TO THE TOTAL INCOME U/S 68 OF THE ACT. 4. THE ASSESSING OFFICER FURTHER MADE ENQUIRIES THR OUGH THE ADIT KANPUR IN RESPECT OF CERTAIN PURCHASES MADE FROM PARTIES OF K ANPUR. AS A RESULT OF THE ABOVE IT IS SEEN THAT M/S P.C. TRADERS 63/2 MAAL ROAD K ANPUR AND M/S SUPREME TRADERS 26 NEW AZAD NAGAR KANPUR WERE NOT FOUND TRACEABLE. THE ASSESSEE HAD SHOWN PURCHASES OF ` ` . 5 59 740/- FROM P.C. TRADERS. NO PAYMENT HAVE BEE N MADE TO THEM. NO DETAILS OF TRANSPORTATION WERE ALSO MEN TIONED IN THE BILLS OF P.C. TRADERS. THEREFORE THE AMOUNT OF ` ..5 59 740/- WAS ADDED TO THE TOTAL INCOME AS 7 ITA NO. 103/BLPR/2011 BOGUS PURCHASES FROM THE SAID PARTY. SIMILARLY SUP REME TRADERS WAS ALSO NOT FOUND IN THE GIVEN ADDRESS. THE ASSESSEE HAD SHOWN PURCHASES OF ` .26 03 450/- FROM THE SAID PARTY AND HAS ALSO SHOWN SALES OF SA ME PARTY TO THE SAID PARTY. NO DETAILS OF TRANSPORTATION FROM SUPREME TRADERS ARE ALSO MENTIONED IN THE BILLS OF SUPREME TRADERS. NEITHER ANY BILLS OF TRANSPORTATI ON OF FINISHED GOODS ON SALE TO SUPREME TRADERS HAVE BEEN GIVEN. THE ASSESSING OFFI CER THEREFORE CONSIDERED THAT THE AMOUNT OF ` ` . 26 03 450/- HAS BEEN INTRODUCED IN THE GARB OF TH IS PURCHASE/SALE TRANSACTION BY THE ASSESSEE AND THE S AME IS ADDED UNDER SECTION 68 OF THE I.T. ACT. 5. AGAINST THE ABOVE ORDER THE ASSESSEE APPEALED T O THE LEARNED CIT(APPEALS). 6. THE LEARNED CIT(APPEALS) CONSIDERED THE SUBMISSI ONS OF THE ASSESSEE AND DELETED THE ADDITION HOLDING AS UNDER : 4.3 I HAVE CAREFULLY GONE THROUGH THE ASSESSMENT ORDER AND SUBMISSIONS OF THE APPELLANT. THE A.O. DID NOT BRING ON RECORD THAT THE BOOKS OF ACCOUNTS BILLS AND VOUCHERS PRODUCED WERE ERRONEO US. I AM CONVINCED WITH THE SUBMISSIONS OF THE APPELLANT THAT THE A.O. HAS NOT POINTED OUT ANY DISCREPANCY IN THE BOOKS OF ACCOUNTS BILLS/VOUCHE RS NOT DID THE A.O. OPINE THAT THE BOOKS OF ACCOUNTS WERE INCOMPLETE. I FIND THAT THE BOOKS OF ACCOUNTS HAVE NOT BEEN REJECTED BY THE A.O. BY INVOKING THE PROVISIONS OF SECTION 145. IT IS SETTLED PRINCIPLE OF LAW THAT THE A.O. HAS TO BRING ON RECORD SPECIFIC DEFECT IN THE BOOKS OF ACCOUNTS OF THE APPELLANT A S A RESULT OF WHICH REASONABLE PROFITS CANNOT BE DEDUCED. EVEN IF FOR THE TIME BEING CONTENTION OF THE A.O. IS ACCEPTED THAT THE APPELLANT HAS IN TRODUCED ITS UNDISCLOSED INCOME WHEN THE SALE PROCEEDS STANDS CREDITED TO THE PROFIT & LOSS A/C AND THUS IN THE INCOME TAX RETURN FILED BY THE APPELLA NT I FIND IT HARD TO UNDERSTAND HOW THE A.O. CAN MAKE ADDITION OF THE S AME SALES AGAIN TO THE TOTAL INCOME. 4.4 I AM IN AGREEMENT WITH THE CONTENTION OF THE A PPELLANT THAT THE A.O. HAS NOT RAISED ANY DOUBT ON THE GENUINENESS OF THE PURCHASES MADE BY THE APPELLANT FROM ITS SISTER CONCERNS. I FIND THE SUB MISSION OF THE APPELLANT THAT THE SISTER CONCERNS FROM WHOM PURCHASES HAVE BEEN MADE BY THE APPELLANT 8 ITA NO. 103/BLPR/2011 ARE ALSO BEING ASSESSED BEFORE THE INCOME TAX OFFI CER AT BHILAI IS A RELEVANT SUBMISSION IN THE FACTS AND CIRCUMSTANCES OF THE C ASE. 4.5 THE A.O. DID NOT BRING ON RECORD THAT THE CORR ESPONDING SALES SHOWN BY THE SISTER CONCERNS HAVE NOT BEEN ACCEPTED BY T HE DEPARTMENT. THE A.O. HAS MADE ADDITION TO THE TOTAL INCOME BY INVOKING THE PROVISIONS OF SECTION 68 THE OBJECTIVE OF SECTION 68 IS TO TAX THE UNDI SCLOSED INCOME OF THE ASSESSEE WHICH THEY INTRODUCE INTO THE BOOKS OF AC COUNTS BY WAY OF CREDIT IN THE BOOKS OF ACCOUNTS MAINLY BY WAY OF UNSECURED LOANS SHARE CAPITAL AND OTHER RECEIPTS AND FAIL TO OFFER REASONABLE EXPLA NATION FOR THE SAME. HENCE CASH CREDIT IS A MACHINERY ADOPTED BY THE TAX PAYE RS TO CHANNELIZE THE UNDISCLOSED INCOME WITHOUT CREDITING THE SAME TO P ROFIT & LOSS A/C. THUS SECTION 68 HAS BEEN INTRODUCED TO TAX THE SUMS WHI CH HAVE NOT BEEN CREDITED IN THE PROFIT & LOSS A/C AS INCOME. AS THE APPELLA NT HAD CREDITED THE SALES INS ITS PROFIT & LOSS A/C THERE WAS NO NEED TO TA KE RECOURSE TO THE PROVISIONS OF SECTION 68 PARTICULARLY WHEN THE P URCHASES HAVE NOT BEEN DOUBTED BY THE A.O. 4.6 THIS IS NOT A CASE OF THE APPELLANT THAT THE A PPELLANT FAILED TO DISCHARGE THE ONUS OF CREDIT PURCHASES ON ONE HAND AND WAS F OUND TO HAVE MADE CASH SALES. I AM OF THE CONSIDERED OPINION THAT THE APP ELLANT HAS DISCHARGED THE ONUS THAT LAY ON IT U/S 68 IN RESPECT OF PURCHASE S MADE BY IT INASMUCH AS THE PURCHASES HAVE BEEN MADE FROM THE GROUP COMPANIES. THE A.O. HAS NOT DRAWN ANY ADVERSE INFERENCE WITH RESPECT TO THE PU RCHASES MADE BY THE APPELLANT FROM ITS GROUP COMPANIES. IT IS A VERY B ASIC PRINCIPLE THAT THE SALE COMPRISE OF COST AND PROFIT AND IF COST HAS NOT B EEN DOUBTED ENTIRE SALE CANNOT BE INCOME. I FIND THAT THE CASE OF APPELLAN T IS SQUARELY COVERED BY THE DECISIONS RELIED UPON BY THE APPELLANT. 4.7 IN VIEW OF THE FACTS AND CIRCUMSTANCES OF THE CASE THE ACTION OF THE A.O. IN ASSESSING THE PURCHASES AS INCOME U/S 68 IS ALSO NOT SUSTAINABLE. THE A.O. HAS NOT APPLIED THE BASIC RULES OF FAIR ASSES SMENT INASMUCH AS THE A.O. FAILED TO CONFRONT THE APPELLANT WITH THE INFORMAT IONS AND DOCUMENTS COLLECTED AGAINST THE APPELLANT. HENCE I AM OF T HE CONSIDERED OPINION THAT THE ASSESSMENT ORDER IS SUFFERING FROM VARIOUS ANO MALIES RENDERING IT UNSUSTAINABLE. 9 ITA NO. 103/BLPR/2011 THEREAFTER THE LEARNED CIT(APPEALS) REFERRED TO CER TAIN CASE LAWS AND HELD THAT THE ADDITION MADE BY THE ASSESSING OFFICER UNDER SECTIO N 68 IN RESPECT OF SALES AND PURCHASES CANNOT BE SUSTAINED. HENCE HE DELETED BO TH THE DISALLOWANCES. 7. AGAINST THE ABOVE ORDER OF LEARNED CIT(APPEALS) REVENUE IS IN APPEAL BEFORE US. 8. WE HAVE HEARD BOTH THE COUNSEL AND PERUSED THE R ECORDS. LEARNED D.R. SUBMITTED THAT THE ASSESSING OFFICER HAS GIVEN CLEA R FINDING THAT THE TRANSACTIONS OF CASH SALES RECORDED BY THE ASSESSEE WERE TOTALLY UN JUSTIFIED. ALL THE CASH SALES WERE MADE TO PARTIES SAID TO BE THROUGH VEHICLES WHICH H AS BEEN FOUND BY THE ASSESSING OFFICER COULD NOT HAVE TRANSPORTED SCRAP MATERIAL . THERE IS ALSO NO EVIDENCE FOR PAYMENT OF TRANSPORTATION COST FOR THE SAID MATERIA L. SOME OF THE PARTIES TO WHOM CASH SALES WERE MADE WERE NOT FOUND. LEARNED D.R. FURTHER SUBMITTED THAT ALL THE PURCHASES HAVE BEEN MADE IN CASH FROM SISTER CONCER NS. EXAMINATION OF VEHICLES THROUGH WHICH THESE PURCHASES WERE TRANSPORTED HAV E GIVEN SAME RESULTS AS ABOVE THAT THE VEHICLES SAID TO HAVE TRANSPORTED WERE NOT AT ALL MEANT FOR TRANSPORTATION OF MATERIAL DEALT WITH BY THE ASSESSEE. THE ASSESSEE H AS ALSO NOT PAID TRANSPORTATION CHARGES TO THE VEHICLE OWNERS BUT HAS MADE THE PAY MENTS TO ITS SISTER CONCERNS FROM WHOM THE PURCHASES HAVE BEEN MADE. THUS THE LE ARNED D.R. SUBMITTED THAT THE ASSESSING OFFICER HAS CLEARLY BROUGHT OUT THAT THE ASSESSEE HAS MANIPULATED ITS ACCOUNT AND INTRODUCED CASH THROUGH BOGUS TRANSACTI ON. HENCE LEARNED D.R. SUBMITTED THAT THE ADDITION IS TOTALLY JUSTIFIED. 9. LEARNED COUNSEL OF THE ASSESSEE ON THE OTHER HA ND SUPPORTED THE ORDER OF THE LEARNED CIT(APPEALS). HIS SUBMISSIONS IN BRIEF ARE SUMMARIZED AS UNDER : 10 ITA NO. 103/BLPR/2011 GROUND NO. 1 : 1. ENTIRE SALES HAVE BEEN ADDED U/S 68. ENTIRE PU RCHASES MADE FROM SISTER CONCERNS (PARA NO. 3 OF ASSESSMENT ORDER). PURCHASES MADE FROM THEM RECORDED IN THEIR BOOKS ON THE BASIS OF WHI CH RETURNS HAVE BEEN FILED BY THEM. SALES MADE BY THEM HAVE BEEN ACCEP TED IN THEIR RETURNS. 2. PURCHASES OF ASSESSEE ARE PROVED AND NO ADVERSI TY DRAWN BY THE AO ALSO. 3. SALES CLAIMED BY THE ASSESSEE WERE OUT OF SUCH PURCHASE ONLY. NO MATERIAL ON RECORD THAT ENTIRE PURCHASES WERE HEL D AS CLOSING STOCK. 4. CONCLUSION DRAWN BY AO ON PRESUMPTION AND IRRE LEVANT MATERIAL. 5. LAW DOES NOT REQUIRE TO MAINTAIN NAME/ADDRESS I N CASE OF CASH SALES. NO PROHIBITION UNDER THE LAW. RELIANCE ON :- - R.B. JESSARAM FATEHCHAND V/S. CIT (1970) 75 ITR 33 (BOM). - M. DURAJ RAJ V/S. CIT (1972) 83 ITR 484 (KER.) - MD. UMER V/S. CIT (1975) 101 ITR 575. 6. IF PURCHASERS ARE SUBSEQUENTLY NOT TRACEABLE T HERE IS NO RESPONSIBILITY ON THE ASSESSEE. THEY MIGHT HAVE SHIFTED/CLOSED D OWN. 7. ALLEGATION OF CASH SALES USED FOR SOURCING TOUR ADVANCE IS ARBITRARY AND ON PRESUMPTION. 8. TRANSPORTING OF GOODS SOLD WAS THE RESPONSIBILI TY OF BUYERS IN THEIR VEHICLES (PAGE NO. 50 OF PB). NO OUTWARD FREIGHT CLAIMED BY ASSESSEE. THE ASSESSEE NOT CONCERNED WITH ALLEGED DISCREPAN CY ABOUT THE TRUCK NUMBERS ETC. DISCREPANCY ALSO ATTRIBUTABLE TO ERR OR IN NOTING VEHICLE NUMBERS. COPY OF DOCUMENTS RECEIVED BY DEPARTMENT NOT PROVIDED TO ASSESSEE (PAGE NO. 54 OF P.B.) - SHORT TIME OF TWO DAYS ALLOWED TO COMMENT ON STA TEMENTS RECORDED IN CONNECTION WITH TRANSPORTATION OF GOODS (PAGE NO. 54 OF PB). SUCH STATEMENT RECORDED ALMOST AFTER 3 YEAR S OF TRANSACTION GIVEN ON THE BASIS OF MEMORY. ERROR POSSIBLE. 11 ITA NO. 103/BLPR/2011 9. SALES TO ANUPURNA MALLEABLES PVT. LTD. NOT DE NIED BY THE PARTY. PURCHASER IS EXISTING ASSESSEE. 10. SEC. 68 SAYS MAY BE DEEMED TO BE INCOME OF A SSESSEE. RELIANCE ON CIT V/S. SMT. P.K. NOORJAHAN (1999) 237 ITR 570 ( SC). 11. SALES TAX AUTHORITIES ACCEPTED FIGURES OF PURC HASES AND SALES. GROUND NO. 2 : 1. THE PARTIES MIGHT HAVE CHANGED THEIR ADDRESS/CL OSED DOWN. 2. COPY OF CORRESPONDENCE EXCHANGED WITH THE PARTI ES NOT PROVIDED TO ASSESSEE. 3. COPY OF CERTIFICATE ISSUED BY POSTAL AUTHORITY DEMANDED FROM AO BUT NOT PROVIDED (PAGE NO. 18 & 42 OF P.B.) GROUND NO. 3 1. INDIVIDUAL PAYMENTS DID NOT EXCEED THE LIMIT PR ESCRIBED IN SEC. 40A(3). 2. NO EVIDENCE THAT PAYMENTS WERE MADE ON A SINGLE DAY. DISALLOWANCE ON PRESUMPTION. 10. ADJUDICATION QUA GROUND NO. 1. ADDITION OF ` .1 74 50 759- UNEXPLAINED CASH CREDIT. UPON CAREFUL CONSIDERATION WE FIND THAT THE ASSESSI NG OFFICER HAS CLEARLY BROUGHT ON RECORD THAT THE TRANSACTIONS RECORDED BY THE ASS ESSEE HAD ENORMOUS SHORT COMINGS. THE ASSESSING OFFICER HAS BROUGHT ON RECORD THAT THESE TRANSACTIONS ARE BOGUS. THE VEHICLES SAID TO HAVE TRANSPORTED M ATERIALS OF PURCHASE AND SALES TO THE ASSESSEE WERE FOUND TO BE NOT MEANT FOR TRANSPO RTATION OF IRON SCRAP DEALT WITH BY THE ASSESSEE. NO PAYMENT OF TRANSPORTATION H AS BEEN DONE BY THE ASSESSEE. AS REGARDS PURCHASE ALSO THE ASSESSEE HAS PAID THE TRANSPORTATION COST 12 ITA NO. 103/BLPR/2011 TO THE SISTER CONCERNS FROM WHOM PURCHASE HAS BEEN MADE. FROM THE ABOVE IT EMERGES THAT NO PAYMENT OF TRANSPORTATION COST HAS BEEN MADE BY THE ASSESSEE TO THE VEHICLE OWNERS. THE ASSESSEE HAD CARRIED THE PU RCHASE AND SALE TRANSACTIONS THROUGH VEHICLES WHICH WERE NOT AT ALL MEANT FOR TR ANSPORTING IRON SCRAP DEALT WITH BY THE ASSESSEE. THE OBSERVATION BY THE ASSESSING O FFICER AND ENQUIRY THROUGH RTO OF THE VEHICLE OWNERS GAVE VERY INTERESTING RES ULTS. SOME OF THE VEHICLES WERE TRAILERS SOME WERE TIPPERS SOME WERE WATER TANKER AND SO ON. THUS IT IS CLEAR THAT THE ASSESSING OFFICER HAS COGENTLY BROUGHT ON RECOR D THAT THE TRANSACTION OF PURCHASE AND SALES RECORDED BY THE ASSESSEE WERE NOT JUSTIFIED. THIS IN OTHER WORDS MEANS THAT THERE IS NO EVIDENCE THAT THE PU RCHASES WERE BROUGHT TO THE ASSESSEES PREMISES. SO WHEN THE PURCHASE MATERIAL DID NOT REACH ASSESSEES PREMISES THEY COULD NOT HAVE BEEN TRANSPORTED FOR S ALE. LEARNED CIT(APPEALS) HAS NOT AT ALL DEALT WITH THE ABOVE SHORT COMINGS POINT ED OUT BY THE ASSESSING OFFICER. HE HAS OBSERVED THAT THE ASSESSING OFFICER HAS NOT AT ALL POINTED OUT ANY DISCREPANCY IN THE BOOKS OF ACCOUNT AND HAS NOT REJ ECTED THE BOOKS. THAT THE ASSESSING OFFICER HAS TO BRING ON RECORD SPECIFIED DEFECTS IN BOOKS OF ACCOUNT. WE FIND THAT THE LEARNED CIT(APPEALS) HAS TOTALLY ERRE D IN THIS REGARD. THE SURROUNDING CIRCUMSTANCES BROUGHT ON RECORD BY THE ASSESSING OF FICER IN THE FORM OF EXAMINATION OF VEHICLES THROUGH WHICH THE ASSESSEE CARRIED OUT ITS PURCHASE AND SALES TRANSACTION HAD BEEN FOUND TO BE TOTALLY UNCO NVINCING. THIS CERTAINLY PROVES THAT WHAT IS APPARENT IS NOT REAL. HONBLE APEX C OURT IN THE CASE OF DURGA PRASAD MOR 82 ITR 540 AND SUMATI DAYAL 214 ITR 801 HAS H ELD THAT REVENUE AUTHORITIES ARE NOT SUPPOSED TO PUT ON BLINKERS AND THEY HAVE TO EXAMINE THE SURROUNDING CIRCUMSTANCES. 11. LEARNED CIT(APPEALS) HAS FURTHER OBSERVED THAT THE ASSESSING OFFICER HAS NOT DRAWN ADVERSE INFERENCE IN RESPECT PURCHASES MA DE BY THE ASSESSEE. WE FIND THAT THIS LINE OF REASONING IS ALSO NOT COGENT. TH ERE IS NO PRESUMPTION THAT IF 13 ITA NO. 103/BLPR/2011 PURCHASE HAS BEEN MADE THERE HAS TO BE SALE OF COR RESPONDING AMOUNT. HENCE THE ASSESSING OFFICERS EXAMINATION OF THE VEHICLES INV OLVED IN TRANSPORTATION OF PURCHASE AND SALES MATERIAL CLEARLY PROVES THAT TH E TRANSACTIONS WERE BOGUS. LEARNED CIT(APPEALS) HAS FURTHER OBSERVED THAT EVEN IF THE ASSESSING OFFICERS CONTENTION IS ACCEPTED THAT THE ASSESSEE INTRODUCED ITS UNDISCLOSED INCOME IN THE SALE STANDS CREDITED TO THE PROFIT AND LOSS ACCOUNT AND THUS IN THE INCOME-TAX RETURN FILED BY THE ASSESSEE LEARNED CIT(APPEALS) FOUND I T HARD TO UNDERSTAND HOW THE ASSESSING OFFICER CAN MAKE ADDITION OF THE SAME SAL E AGAIN TO THE TOTAL INCOME. WE FIND THAT THIS LINE OF REASONING BY THE LEARNED CIT (APPEALS) IS NOT SUSTAINABLE. THE ASSESSEE IS INTRODUCING HIS UNDISCLOSED INCOME AS S ALE PROCEEDS. THE SAME HAS TO BE ADDED SEPARATELY. IT CANNOT BE ROUTED THROUGH P ROFIT AND LOSS ACCOUNT AND VARIOUS EXPENSES NOT RELATED TO IT ALLOWED FOR ADJU STMENT. IF THE ASSESSING OFFICER HAS COGENTLY BROUGHT ON RECORD THAT THE SALE TRANSA CTIONS COULD NOT HAVE BEEN CARRIED OUT IN THE VEHICLES SAID TO HAVE BEEN TRANS PORTED THOSE MATERIALS THE ONUS IS ON THE ASSESSEE TO SHOW AS TO HOW SALES WERE TRANSA CTED. IF THE ASSESSEE HAD MADE PURCHASES THEN THERE IS NO PRESUMPTION THAT THOSE P URCHASES WILL BE SOLD EVEN IF THE SALE TRANSACTIONS RECORDED BY THE ASSESSEE ARE FOUND TO BE FALSE AND BOGUS. THE ASSESSEES CONTENTION THAT PURCHASES HAVE BEEN MADE THROUGH SISTER CONCERNS WHOSE SALES HAVE BEEN ACCEPTED BY THE SALES-TAX AUT HORITIES CANNOT GO ON TO PROVE THAT THE BOGUS SALES RECORDED BY THE ASSESSEE WILL BE PROVED TO BE CORRECT. IN THESE CIRCUMSTANCES IN OUR CONSIDERED OPINION THE EXAMI NATION AND THE MATERIALS BROUGHT ON RECORD BY THE ASSESSING OFFICER ARE QU ITE COGENT AND CONVINCING. THEY HAVE NOT AT ALL BEEN REBUTTED BY THE ASSESSEES CO UNSEL OR THE LEARNED CIT(APPEALS). IN OUR CONSIDERED OPINION THE ASSESS ING OFFICERS FINDINGS ARE CONVINCING. HENCE WE SET ASIDE THE ORDER OF THE LEA RNED CIT(APPEALS) AND RESTORE THAT OF THE ASSESSING OFFICER. ACCORDINGLY WE CONFI RM THE ADDITION OF ` .1 74 50 759/-. 14 ITA NO. 103/BLPR/2011 12. ADJUDICATION QUA GROUND NOS. 2 & 3. ADDITION OF ` .5 59 740/- AND ` .26 03 450/-. AS REGARDS THE ABOVE GROUNDS WE NOTE THAT THE ASS ESSING OFFICER HAS MADE THE ADDITION ON ACCOUNT OF HIS FINDING THAT THESE P URCHASES MADE FROM KANPUR COULD NOT BE VERIFIED AS THE PERSONS FROM WHOM PURC HASES WERE MADE COULD NOT BE LOCATED AND THERE WAS NO EVIDENCE OF TRANSPORTATION OF THESE MATERIALS UPTO ASSESSEES PREMISES. WE FIND THAT IN THE ABSENCE OF EVIDENCES OF PROPER TRANSPORTATION HAS ALSO BEEN FOUND BY THE ASSESSIN G OFFICER IN OTHER PURCHASES OF THE ASSESSEE. THE ASSESSEE IS NOT CLAIMING THESE PU RCHASES AS A STOCK. WE HAVE ALREADY CONFIRMED THE ADDITION OF BOGUS SALES AS UN EXPLAINED CASH CREDIT. THE ASSESSEE CANNOT THUS GET CREDIT FOR THIS PURCHASE A S COST OF SALES. HENCE THE ADDITION OF THESE PURCHASES AS UNEXPLAINED ITEMS WOULD TANTA MOUNT TO DOUBLE ADDITION. HENCE ADDITION ON THIS ACCOUNT IS NOT CALLED. THERE FORE THE ADDITION OF THE ABOVE SUMS AS MENTIONED IN THESE GROUNDS CANNOT BE SUSTAI NED. HENCE THE SAME ARE DELETED. 13. IN THE RESULT THIS APPEAL FILED BY THE REVENUE STANDS PARTLY ALLOWED. ORDER PRONOUNCED IN THE OPEN COURT ON THIS 31 ST DAY OF JULY 2015. SD/- SD/- (MUKUL K. SHRAWAT) ( SHAMIM YAHYA) JUDICIAL MEMBER ACCOUNTANT MEMBER. DATED: 31 ST JULY 2015. 15 ITA NO. 103/BLPR/2011 COPY OF ORDER FORWARDED TO : 1. THE ASSESSEE. 2. REVENUE. 3. THE CIT(A) 4. THE CIT 5. THE D.R. ITAT RAIPUR. 6. GUARD FILE. T RUE COPY. BY ORDER WAKODE ASSISTANT REGISTRAR ITAT NAGPUR