Smt. Pushpa Devi Singla, SADULSHAHAR v. JCIT, SRIGANGANAGAR

ITA 175/JODH/2014 | 2009-2010
Pronouncement Date: 31-07-2014 | Result: Partly Allowed

Appeal Details

RSA Number 17523314 RSA 2014
Assessee PAN AYQPS3767E
Bench Jodhpur
Appeal Number ITA 175/JODH/2014
Duration Of Justice 4 month(s) 20 day(s)
Appellant Smt. Pushpa Devi Singla, SADULSHAHAR
Respondent JCIT, SRIGANGANAGAR
Appeal Type Income Tax Appeal
Pronouncement Date 31-07-2014
Appeal Filed By Assessee
Order Result Partly Allowed
Bench Allotted DB
Tribunal Order Date 31-07-2014
Date Of Final Hearing 03-06-2014
Next Hearing Date 03-06-2014
Assessment Year 2009-2010
Appeal Filed On 11-03-2014
Judgment Text
IN TH E INCOME TAX APPELALTE TRIBUNAL : JODHPUR BENCH : JODHPUR BEFORE SHRI HARI OM MARATHA JUDICIAL MEMBER AND SHRI N.K. SAINI ACCOUNTANT MEMBER. ITA NO. 175 /J ODH /20 14 (A.Y. 20 09 - 10 ) SMT. PUSHPA DEVI SINGLA VS THE J.C.I.T PROP. M/S SINGLA & SONS RANGE NEW DHAN MANDI SADULSHAHAR SRIGANGANAGAR PAN : AYQPS 3767 E (APPELLANT) (RESPONDENT) ASSESSEE BY : SH RI SURESH OJHA DEPARTMENT BY : SHRI N.A. JOSHI - DR. DATE OF HEARING : 03 / 0 6 /201 4 . DATE OF PRONOUNCEMENT : 31 /0 7 /201 4 . O R D E R PER HARI OM MARATHA J.M. : THIS APPEAL OF THE ASSESSEE FOR A.Y. 20 09 - 1 0 IS DIRECTED AGAINST THE ORDER OF LD. CIT(A) AJMER DATED 28.02.2014 . 2. BRIEFLY STATED THE FACTS OF THE CASE ARE THAT THE ASSESSEE SMT. PUSHPA DEVI SINGLA IS PROPRIETOR OF M/S SINGLA & SONS WHICH RUNS A COTTON GINNING FACTORY. SHE FILED HER RETURN OF INCOME (ROI) FOR A.Y. 20 09 - 10 ON 27 /0 9 / 200 9 DECLARING TOTAL INCOME AT RS. 2 57 890/ - IN THE 2 STATUS OF AN INDIVIDUAL WHICH WAS PROCESSED ON 3.8.2010 U/S 143(1) OF THE INCOME - TAX ACT 1961 ['THE ACT' FOR SHORT] . FROM THE BOOKS OF ACCOUNT IT WAS FOUND THAT THE PURCHASES OF COTTON WERE MADE TO THE TUNE OF RS. 1 18 26 270/ - WHICH WERE NOT SUPPORTED BY ANY VO UCHERS. MOST OF THESE PURCHASES WERE FOUND TO BE IN CASH. THE A.O ASKED THE ASSESSEE TO EXPLAIN THIS POSITION THE ASSESSEE FILED LETTER DATED 13.12.2011 THE OBSERVATIONS OF THE A.O AND SUBMISSIONS OF THE ASSESSEE READ AS UNDER: 3.2 'YOUR CASE FOR THE A.Y. 2009 - 10 WAS TAKEN FOR SCRUTINY BY ISSUING NOTICE U/S 143(2) OF THE IT. ACT 1961 ON 19.08.2010 AND SENT TO YOU REGISTERED POST WHICH WAS SERVED UPON YOU ON 21.08.2010. THEREAFTER A NOTICE U/S 142(1) ALONGWITH QUESTIONNAIRE WAS ISSUED TO YOU ON 15.04.2011 FIXING YOUR CASE FOR 04.05.2011. ON 04.05.2011 YOUR COUNSEL SH. SUNIL AGGARWAL SOUGHT ADJOURNMENT AND CASE WAS ADJOURNED TO 19.05.2011. ON 19.05.2011 AGAIN APPLIED FOR ADJOURNMENT AND CASE WAS ADJOURNED TO 14.06.2011. ON 14. 06.2011 NONE ATTENDED. ON 17.06.2011 SH. SUNIL AGGARWAL ATTENDED THE PROCEEDING AND AGAIN SOUGHT ADJOURNMENT. THE CASE WAS RE - FIXED ON 01.08.2011. ON 01.08.2011 SH. SUNIL AGGARWAL ATTENDED THE PROCEEDING AND INFORMED THAT COPY OF THE QUESTIONNAIRE H AS BEEN MISPLACED SO THE COPY OF THE SAME SUPPLIED AND CASE WAS ADJOURNED TO 08.08.2011. ON 08.08.2011 A TELEPHONIC MESSAGE WAS RECEIVED FROM SH. 3 SUNIL AGGARWAL THAT DUE TO HEAVY RAIN HE COULD NOT COME TO OFFICE SO CASE WAS ADJOURNED TO 09.08.2011. ON 0 9.08.2011 SH. SUNIL AGGARWAL ATTENDED AND FILED INCOMPLETE REPLY HE WAS ASKED TO PRODUCE BOOKS OF ACCOUNT WITH COMPLETE VOUCHERS AND CASE WAS ADJOURNED TO 11.08.2011. ON 11.08.2011 NONE ATTENDED THE CASE WAS RE - FIXED FOR 07.09.2011. ON 07.09.2011 SH. SUNIL AGGARWAL ALONGWITH SH. KRISHAN KUMAR H USBAND OF ASSESSEE AND SH. AMAR LA L ACCOUNTANT ATTENDED THE PROCEEDING AND PRODUCED BOOKS OF ACCOUNTS. ON VERIFICATION IT IS FOUND THAT ASSESSEE HAS SHOWN PURCHASES OF 2268 QTLS. 68 KG. OF COTTON FROM DIFFERENT PERSONS AMOUNTING TO RS.1 18 26 270/ - FOR WHICH HE HAS NO PURCHASES VOUCHERS WHEN THEY WERE ASKED WHY THEY DON'T HAVE THE PURCHASE VOUCHERS IT WAS STATED THAT THIS COTTON HAS BEEN PURCHASED DIRECTLY FROM FARMERS. T HEY WERE POINTED OUT THAT ASSESSEE HERSELF HAS A COTTON GINNING FACTORY AND WHY SHE PURCHASED COTTON FROM FARMERS AND FROM WHERE THE FARMERS HAD SOLD SUCH A HUGE QUANTITY OF COTTON. IT WAS POINTED OUT TO ASSESSEE THAT : - 1. NO EVIDENCE IS AVAILABLE WITH HER AS REGARD TO THE DALALI PAID. 2. THE REASON FOR EXTRA PAID STAMP DUTY OF PURCHASES OF SHOP. 3. SHE HAS NO EVIDENCE FOR THE PAYMENT OF TDS. 4. NO KAPAS AND NARMA EXP. VOUCHERS. 4 3.3 THE CASE WAS ADJOURNED TO 15.09.2011. ON 15.09.2011 SH. SUNIL AGGARWAL FILED ADJOURNMENT APPLICATION AND CASE WAS ADJOURNED TO 04.10.2011 THE LONG ADJOURNMENT WAS GIVEN AS ADVOCATE PLEADED THAT HE IS BUSY IN TIME BARRING RETURNS AND CASE WAS ADJOURNED TO 04.10.2011. ON 04.10.2011 SH. SUNIL AGGARWAL ATTENDED THE PROCEEDINGS HE FILE D CERTAIN DETAILS HE WAS ASKED TO FILE THE LIST OF EMPLOYEES OF SISTER CONCERNS ELECTRICITY BILLS AND RENT DEED OF THE FACTORY. HE WAS ALSO ASKED TO PRODUCE THE PERSONS FROM WHOM HE PURCHASED COTTON. CASE WAS ADJOURNED TO 14.10.2011. ON 14.10.2011 SH. SU NIL AGGARWAL FILED THE LETTER IN THIS LETTER IT IS SUBMITTED AS UNDER : - 'THAT IN THE PREVIOUS HEARING AS PER YOUR DIRECTION ASSESSEE CALLED TO FARMER FOR PRESENCE IN YOUR OFFICE. BUT NO FARMERS COMES TODAY' 3.4 ASSESSEE HAS NOT FILED COMPLETE DOCUMENTS; ASSESSEE WAS ASKED TO PRODUCE THE PRODUCTION REGISTER AND WAS GIVEN ANOTHER OPPORTUNITY TO PRODUCE THE FARMERS ON 02.11.2011. ON 02.11.2011 ASSESSEE SOUGHT ADJOURNMENT AND CASE WAS ADJOURNED TO 09.11.2011. ON 09.11.2011 ASSESSEE AGAIN FILED PART DETAILS AND ALSO STATED THAT FARMERS FROM WHOM COTTON WAS PURCHASED CANNOT BE PRODUCED. THE CASE WAS ADJOURNED TO 17.11.2011. ON 16.11.2011 SH. DEEPAK JAIN ADVOCATE ATTENDED AND FILED THE POWER OF ATTORNEY AND SOU GHT ADJOURNMENT CASE WAS 5 ADJOURNED TO 25.11.2011. ON 25.11.2011 SH. DEEPAK JAIN ADVOCATE DID NOT ATTEND THE PROCEEDING HOWEVER FILED THE WRITTEN REPLY. 3.5 FROM THE ABOVE FACTS IT HAS BECOME CLEAR THAT THOUGH SUFFICIENT OPPORTUNITY HAS BEEN GIVEN TO YOU TO PRODUCE THE FARMERS FROM WHOM YOU HAVE ALLEGEDLY PURCHASED COTTON DIRECTLY. BUT YOU HAVE FAILED TO PRODUCE THEM. PERUSAL OF THE ACCOUNTS OF THESE FARMERS AS APPEARING IN YOUR BOOKS OF ACCOUNT REVEALS THAT IN MOST OF THE CASES YOU HAVE NOT MADE THE PAYMENT IMMEDIATELY. RATHER YOU HAVE MADE THEM MOST OF THE PAYMENTS AFTER A LONG TIME. FOR INSTANCE IN THE CASE OF SH. NIRMAL SINGH S/O KAUR SINGH VILLAGE KHAR A YOU HAVE SHOWN PURCHASE OF COTTON AMOUNTING TO RS.4 14 019/ - ON 19.04.2008 THE PAYMENT OF WHICH HAS BEEN MADE IN THE MONTH OF APRIL MAY JUNE AUGUST AND FINAL PAYMENT OF THREE LACS HAS BEEN MADE ON 31.10.2008. SIMILARLY IN THE CASE OF SH. KAUR SINGH OUT OF THE TOTAL PURCHASE OF RS.5 26 826/ - THE PAYMENT OF FOUR LACS HAS BEEN MADE ON 26.03.2009. SIMILAR ARE THE FACTS IN RESPECT OF OTHER FARMERS. IT CLEARLY SHOWS THAT IN THESE TRANSACTIONS ARE GENUINE THESE FARMERS ARE HAVING VERY GOOD TERMS WITH YOU AND THERE SHOULD NOT BE ANY PROBLEM IN PRODUCING THEM. THOUGH YOU HAVE NOT FILED ANY DOCUMENTS/ DETAILS REGARDING THE FARMERS FROM WHOM YOU ALLEGED TO HAVE BEEN PURCHASED. THIS OFFICE HAS MADE INDEPENDENT INQUIRES FROM THE BANKS OF SADULSHAHAR AND IT CAME ARE NOTICE THAT THESE FARMERS HAVE OPENED THERE ACCOUNTS IN 6 STATE BANK OF BIKANER & JAIPUR PUNJAB NATIONAL BANK BOTH OF SADULSHAHAR FROM THESE BANKS. BANK STATEMENTS AND COPIES OF THE CHEQUE DEPOSITED AND THE CHEQUE BY WHICH AMOUNT WITHDRAWN WAS OBTAINED FROM THE BANKS BY THESE PERSONS WERE OBTAINED. PERUSAL OF T HESE ACCOUNT AND OTHER DOCUMENTS REVEALS THAT ALL THE CASES THE WITHDRAWAL CHEQUE ARE BEARER AND IN THE SAME HANDWRITING AND HAVE BEEN WITHDRAWN FROM BANK BY A PERSON NAMED MR. GAGAN. AS PER INFORMATION FILED BY YOU MR. GAGAN IS AN EMPLOYEE OF YOUR SISTER CONCERN M/S KAPIL TRADING COMPANY. SO ALL THESE FACTS CLEARLY SHOW THAT ALL THESE ENTRIES OF THE ALLEGED PURCHASE OF COTTON AND PAYMENT MADE THERE OFF ARE ACCOMMODATING ENTRIES OBTAIN BY YOU TO COVER - UP YOU OUTSIDE THE BOOKS PURCHASE OF NARMA. 3.6 AS PER LOC AL INQUIRY MADE BY THIS OFFICE MOST OF THESE PERSONS HAVE SMALL HOLDING AND SOME OF THEM EVEN DO NOT OWN ANY LAND. FURTHER AS PER INFORMATION MOST OF THEM HAVE NOT GROWN NARMA DURING THE RELEVANT SEASON. EVEN IN THOSE CASES WHERE NARMA HAS BEEN GROWN AREA OF LAND WAS TOO SMALL. FURTHER AS PER THE BYE LAWS OF THE KRISHI UPAJ MANDI SAMITI YOU CAN'T PURCHASE AGRICULTURE PRODUCT DIRECTLY WITHOUT PAYING THE MARKET FEE AND OTHER TAXES. THESE FACTS CLEARLY INDICATE THAT IN FACT YOU HAVE PURCHASED NARMA OUTSIDE THE BOOKS OF ACCOUNTS TO AVOID THE PAYMENT OF MARKET FEE VAT ARHAT ETC. AS PER INFORMATION COLLECTED THE KRISHI UPAJ MANDI SAMITI FEE ON NARMA IS 1.6% ARHAT IS 2.00% AND VAT IS 5.00% VAYAPAR 7 MANDAL RS. 0.10 GAUSHALA RS.0.05 PER HUNDRED R UPEES. THUS YOU HAVE BEEN ABLE TO SAVE TAXES + ARHAT ETC. OF 8% OF THE PURCHASES. IN FACT YOU HAVE PURCHASED NARMA OUTSIDE THE BOOKS OF ACCOUNT AND THE SAME HAS BEEN PROCESSED IN YOUR COTTON GINNING FACTORY AND TO COVER UP THE PRODUCTION OF COTTON SOLD BY YOU YOU HAVE SHOWN THE PURCHASE OF COTTON DIRECTLY. BY DOING THIS YOU HAVE ALSO CONCEALED THE SALE OF COTTON SEEDS PRODUCED FROM THE GINNING OF NARMA AND PROFIT THERE OFF. 3.7 AS PER DETAILS FILED ALLEGED PURCHASES OF COTTON WHICH IN FACT IS PRODUCTION OUT OF THE NARMA PURCHASED OUTSIDE THE BOOKS OF ACCOUNTS IS DUE THE TUNE OF 2268.98 QTL. YOURSELF YOU HAVE SHOWN PRODUCTION OF COTTON FROM NARMA 34.4% PRODUCTION OF COTTON SEED AT 63.9% AND SHORTAGE 1.7%. THUS TO PRODUCE 2268.98 QTLS COTTON YOU PURCHASED 6595.87 QTLS. NARMA AS PER YOUR ON TRADING ACCOUNT THE AVERAGE PRICE OF NARMA IS 2652 PER QTLS. THUS THE VALUE OF NARMA COMES TO RS.1 74 92 247/ - . BY GINNING OF THIS NARMA YOU R PRODUCTION 2268.98 QTL. COTTON AND 4214.76 QTLS. COTTON SEED. AS PER YOUR OWN TRADING ACCOUNT THE AVERAGE SALE PRICE OF COTTON IS RS.5587 / - AND AVERAGE SALE PRICE OF COTTON SEEDS IS RS.1380/ - . THUS THE TOTAL VALUE OF COTTON AND COTTON SEEDS SOLD BY YOU IS AS UNDER: - COTTON 2268.98 QTL. @RS.5587/ - VALUE RS. 1 26 76 791/ - COTTON SEEDS 4214.76 QTL @ RS. 1380 / - VALUE RS. 58 16 368/ - 8 TOTAL RS. 1 84 93 159/ - THE COST OF NARMA AS DISUSED ABOVE RS. 1 74 92 247/ ASSESSEE HAS MADE PURCHASES OUTSIDE THE BOOKS OF ACCOUNT ON WHICH HE HAS MADE A SAVING OF 8% ON A/C OF TAX MARKET FEE ARHAT ETC. 13 99 379/ - NET PROFIT (THE EXP. ALREADY BOOKED 10 00 912/ - TOTAL 1 98 92 538/ - THUS I PURPOSED TO MAKE ADDITION OF RS. 1 98 92 538 / - TO YOUR RETURNED INCOME AS DISCUSSED ABOVE. IN CASE YOU HAVE ANY OBJECTION PLEASE FILE THE SAME ALONGWITH DOCUMENTARY EVIDENCE. 3.8 NOTICE U/S 142(1) OF THE I.T. ACT 1961 IS ENCLOSED HEREWITH; YOUR CASE IS FIXED FOR 13.12.2011. PLEASE NOTE THAT NO ADJOURNMENT WILL BE ALLOWED. ' 4. IN RESPONSE TO THIS NOTICE SH. SUNIL AGGARWAL ADVOCATE ALONGWITH SH. KRISHAN LAI SINGLA PROPRIETOR OF THE FIRM M/S KAPIL TRADING COMPANY AND HUSBAND OF ASSESSEE ATTENDED THE PROCEEDINGS THEY FILED WRITTEN REPLY. HOWEVER THEY SOUGHT ADJOURNMENT ON THE PLEA THAT SH. DEEPAK JAIN ADVOCATE HAS GONE TO JAIPUR TO ATTEND A CASE BEFORE CIT(A) CENTRAL JAIPUR. THE CASE WAS ADJOURNED TO 14.11.2011 THE REPLY FILED BY THE ASSESSEE IS REPRODUCED BELOW: - 'RE: SMT. PUSHPA DEVI PROP/OF M/S. SINGLA & SONS SADULSHAHAR. ASSTT. YEAR 2009 - 10. 9 4.1 THE ASSESSEE IS IN RECEIPT OF YOUR SHOW CAUSE NO. JCIT/R - SGNR7 2011 - 12/1431 DATED 2 ND DECEMBER 2011 WHICH WAS SERVED ON THE ASSESSEE ONLY ON 8 TH DECEMBER 2011. WITH THE LETTER THE ASSESSEE IS WILLING TO FILE SOME EVIDENCES IN SUPPORT OF THE CONTENTION BUT AS THE TIME ALLOWED WAS VERY SHORT AND 10 TH AND 11 TH WERE THE HOLIDAY DUE TO SATURDAY AND SUNDAY AND SO THE ASSESSEE CAN'T GATHER THE EVIDENCES WHICH WILL BE FILED ON THE NEXT DATE OF HEARING. 4.2 IN THE STARTING OF LETTER YOU HAVE POINTED OUT SOME OF THE QUERIES THE INFORMATION/DOCUMENTS WHICH WERE NOT SUPPLIED BY THE ASSESSEE. IN THE PARA 1 ON PAGE 2 YOU HAVE MENTIONED THAT THE ASSESSEE WAS ASKED THAT WHILE THE ASSESSEE IS HAVING COTTON GINNING FACTORY THEN WHY SHE HAS PURCHASED COTTON FROM THE FARMERS AND FROM WHERE THE FARMERS HAVE SOLD SUCH A HUGE QUANTITY OF COTTON. 4.2 IN THIS REGARD IT IS STATED THAT THE ASSESSEE IS A DEALER IN COTTON AND COTTON SEED. GENERALLY THE PROCESSORS PURCHASE THE RAW COTTON I.E. NARMA AND KAPAS AND AFTER GETTING THE SAME GINNED IN THE FACTORY SEPARATES THE LINT AND SEED. THE LINT IS SOLD SEPARATELY AND COTTON SEED IS SOLD SEPARATELY. IN GENERAL PRACTICE THE LINT IS SOLD EITHE R LOOSE IN SHAPES OF BORAS OR IN THE COMPRESSED FORM IN THE SHAPES OF BALES. FROM THE ABOVE YOU WILL PLEASE APPRECIATE THAT THE MAIN BUSINESS OF THE ASSESSEE IS NOT TO 10 SALE THE RAW COTTON (NARMA KAPAS) BUT THE PRODUCTS OBTAINED FROM NARMA BY PROCESSING T HE SAME IN THE FACTORY. WHENEVER THE ASSESSEE GET A CHANCE TO PURCHASE THE COTTON LINT SHE PURCHASES THE SAME WHICH SAVES HER FROM THE EXPENSES ON THE PROCESSING AND ALSO SAVES THE TIME INVOLVED IN PROCESSING. HERE IT WOULD BE PERTINENT TO BRING TO YOUR KIND NOTICE THAT IT IS THE SWEET W ILL OF THE ASSESSEE THAT HOW HE/SHE WANTS TO RUN HIS/HER BUSINESS. THE BUSINESS EXPECTANCY IS TO BE LOOKING INTO BY THE ASSESSEE HIMSELF. 4.3 YOU R SECOND QUERY IS ABOUT THE AVAILABILITY OF THE LOOSE COTTON LINT WITH THE FARMERS. IN THIS REGARD IT IS STATED THAT IF THE YIELD OF A PARTICULAR VARIETY SAWN BY THE FARMERS IS GOOD THEN THE FARMER TRY TO KEEP THE SEED OF THAT VARIETY FOR NEXT SEASON AS THE COTTON SEEDS AVAILABLE IN THE MARKET ARE SOMEHOW COSTLY. SECONDLY ALL THE FARMERS HAVE SOME CATTLE AND THE COTTON SEED IS THE BEST AVAILABLE FOOD FOR THE CATTLE AND SO JUST FOR THE PURPOSES OF COST CUTTING OF THE SEEDS AND CHEAPER FOOD FOR THEIR ANIMALS THE FARMER GET THE SEEDS SEPARATED FROM THE NARMA KAPAS AND SELLS THE LINT IN THE OPEN MARKET. IT IS BUT OBVIOUS THAT FOR SELLING THE COTTON LINT FIRST OF ALL THE FARMER WILL COME TO THE TRADERS WITH WHOM HE IS HAVING THE REGULAR DEALINGS. IF THE ASSESSE E DESIRES TO PURCHASES THE COTTON LINT THEN THE FARMER SELLS THE SAME TO ASSESSEE OR OTHERWISE SELL THE SAME IN THE OPEN MARKET. DETAILS OF PURCHASE OF ENTIRE GOODS HAVE ALREADY BEEN S UBMITTED. PHOTOSTAT COPIES OF THE ACCOUNT HAVE ALREADY BEEN SUBMITTED THEREFORE THE 11 INFORMATION IN RESPECT OF THE DETAILS IS AVAILABLE WITH YOUR GOODSELF. FROM THE DETAILS OF THE PURCHASES OF COTTON LINT YOUR GOOD SELF WILL PLEASE FIND THAT THE COTTON LINT IS PURCHA SED IN SMALL QUANTITY FROM DIFFERENT FARMERS WHO WERE NOT ATTACHED WITH THE ASSESSEE. THE MAJOR PART OF THE COTTON LINT WAS PURCHASED FROM THE FARMERS WHO ARE THE REGULAR CONSTITUENTS OF THE ASSESSEE OR HER FAMILY CONCERNS. HERE IT WOULD NOT BE OUT OF PLA CE TO MENTION THAT BY DOING THIS THE FARMERS ARE ALSO LOOKING THEIR INTEREST SO AS TO EARN BETTER RETURNS. IN THIS WAY THE FARMERS ARE KEEPING THE COTTON SEED WITH THEM AND SELLING REST OF THE MATERIAL TO THE PROSPECTIVE BUYER. THIS ACT IS ALSO PUTTING TH EM SOME COMFORT BECAUSE IN THIS WAY THEY SAVE THE CARRIAGE CHARGES AND ALSO TIME. THE FARMERS ARE ALSO FETCHING GOOD PRICE SEATING AT THEIR OWN FARM. COMMENTS : - THE CONTENTION OF THE ASSESSEE IS WITHOUT ANY SUPPORTING EVIDENCE THE QUANTITY OFBINOLA SUPPOSE TO THE BE PRODUCED FROM GINNING OF NARMA BY THESE ALLEGED THESE FARMERS CAN'T BE USED ONLY FOR THE CATTLE. MOREOVER THESE FARMERS ARE NOT PROSPER O NE THEY CAN RETAIN THE AGRICULTURE PRODUCE FOR LONG TIME AND THEN WAIT FOR THE PAYMENT WHEN THEY ARE THEM SELF ARE UNDER DEBTS. AS ALL THE FIVE FARMERS WHICH WERE PRODUCED BY THE ASSESSEE ADMITTED IN THEIR STATEMENTS THEY HAVE TAKEN LOANS FROM BANKS AND AR HTIA (COMMISSION AGENT) FOR AGRICULTURE NEED AS WELL AS FAMILY NEEDS. 12 4.5 REGARDING THE EVIDENCE OF THE DALALI PAID IT IS STATED THAT IN THE MARKET THE RATE OF THE BROKERAGE IS FIXED. THE ASSESSEE HAS FILED THE COPIES OF ACCOUNT OF THE BROKERS AND THE QUANTITY SOLD BY THE ASSESSEE IS QUITE EVIDENT FROM THE TRADING ACCOUNTS FILED WITH THE RETURN. IN THIS AREA THE BROKERS DO NOT ISSUE THE BILLS FOR THEIR SERVICES. AFT ER THE COMPLETION OF THE DEAL THE TRADERS EITHER CREDITS THE ACCOUNT OF THE BROKER WITH THE AMOUNT OF BROKERAGE OR PAY THE BROKERAGE IN CASH. THE BROKERAGE IS PAID ALMOST ON ALL THE DEALS. THE SYSTEM ADOPTED BY THE ASSESSEE IS NOT NEW ONE BUT THIS IS A COM MON MARKET PRACTICE. THIS FACT CAN BE VERIFIED FROM ANY OF THE TRADER OF THIS LINE. ANYHOW THE ASSESSEE IS TRYING THE OBTAIN A CERTIFICATE TO THIS EFFECT FROM THE TRADERS ASSOCIATION AND IF COULD BE OBTAINED THE SAME WILL BE FILED ON NEXT DATE OF HEARING. 4.6 YOU HAVE ASKED THE REASON FOR PAYMENT OF EXTRA STAMP DUTY ON THE PURCHASE OF SHOP. IN THIS REGARD IT IS STATED THAT THE STATE GOVERNMENT HAS FIXED THE AREA WISE MARKET VALUE OF THE PROPERTIES AND ACCORDINGLY CHARGES THE STAMP DUTY. THE ASSESSEE HAS SHOWN THE PURCHASE CONSIDERATION FOR WHICH SHE HAS PURCHASED THE SHOP BUT AS THE CIRCLE RATES DECIDED BY THE GOVERNMENT ARE HIGHER SO THE ASSESSEE HAS PAID THE EXTRA STAMP DUTY ON THE SAME. AS PER RULES OF REGISTRATION IF THE STAMP DUTY IS LESS THAN THE PRESCRIBED RATE OF THAT AREA AND THE PURCHASER CHALLENGE THE SAME THEN THE DOCUMENTS SHALL BE IMPOUNDED AND THEREAFTER THERE IS A LONG PROCESS IN RESPECT OF OBTAINING THE DOCUMENT. THE PURCHASER/SELLER USED TO MENTION THE AMOUNT ACTUALLY 13 RECEIVED BUT SO AS TO PURCHASE PEACE AND AVOID LITIGATION THEY USED TO MAKE THE PAYMENT OF DUTY ON THE BASIS OF RATE AS LAID DOWN BY THE GOVERNMENT THEREFORE THERE WAS COMPELLING CIRCUMSTANCES AND THERE IS NO OTHER WAY FOR REGISTRATION HENCE HAS TO ACCEPT THIS WAY. THIS IS NOT ONLY IN THE CASE OF THE ASSESSEE BUT ALMOST IN ALL CASES OF REGISTRATION. THE FACT CAN BE VERIFIED FROM THE OFFICE OF THE SUB REGISTRAR. 4.7 REGARDING THE EVIDENCE OF PAYMENT OF T.D.S. IT IS STATED THAT THE COPY OF THE T.D.S. CHALLANS HAS ALREADY BEEN FILED WITH LETTER DATED 04.10.2011. 4.8 REGARDING THE VOUCHERS FOR THE EXPENSES INCURRED ON NARMA & KAPAS IT IS STATED THAT THESE ARE MAINLY THE LABOUR CHARGES. THERE ARE SEVERAL PROCESSES IN THE TRADING AND GINNING OF THE NARMA AND KAPAS. THE NARMA & KAPAS COMES LOOSE ON THE PLATFORM OF THE ASSESSEE. UPTO THE TIME OF AUCTION BY THE KRISHI UPAJ MANDI SAMITY THE RESPONSIBILITY OF THE GOODS REMAINS WITH THE FARMER AND AFTER THE AUCTION THE RESPONSIBILITY SHIFTS TO ASSESSEE. AFTER THE AUCTION THE GOODS HAVE TO BE WEIGHED PACKED IN HESSIAN CLOTH (PALLI) LOADED IN THE TROLLEYS CARRIED TO THE FACTORY PREMISES UNLOADED THERE CLEANING OF THE NARMA KAPAS BY HAND PICKING THE WEEDS ETC. CARRYING OF RAW GOODS TO THE MACHINES AND AFTER COMPLETION OF GINNING GET THE LINT AND SEED REMOVED FROM THE MACHINES SEND THE LINT TO PRESS MACHINES PACKING OF SEEDS IN THE BAGS WEIGHMENT OF THE SEEDS SHIFTING THE SAME TO THE GODOWNS AND ALSO SHIFTING OF THE LINT 14 BALES TO THE GODOWNS. IN THE BOOKS OF ACCOUNTS THE ASSESSEE HAS DEBITED TWO TYPE OF EXPENSES ONE EXPENSES DIRECTLY DEBITED IN THE TRADING ACCOUNT AND ONE DEBITED IN THE PROFIT AND LOSS ACCOUNT. THE EXPENSES MENTIONED IN THE TRADING ACCOUNT ARE OF THE NATURE AS MENTIONED ABOVE WHEREAS THE EXPENSES DEBITED IN THE PROFIT AND LOSS ACCOUNT IS ON ACCOUNT OF GINNING AND PRESSING EXPENSES WHICH CANNOT BE BIF URCATED DIRECTLY TO ANY PARTICULAR TRADING ACCOUNT. 4.9 ALL THE ABOVE WORKS ARE DONE THROUGH THE LABOUR ATTACHED WITH THE PALEDAR UNION. THE RATE OF EACH WORK IS FIXED BY THE UNION AND THE ASSESSEE HAS TO MAKE THE PAYMENT ACCORDINGLY. AS THE RATES OF THE LABOUR ARE FIXED AND THE QUANTITY IS ALSO AVAILABLE IN THE RECORDS AND HENCE EVEN IN THE ABSENCE OF THE VOUCHERS THE EXPENSES ARE FULLY VERIFIABLE. THIS IS A COMMON PRACTICE IN THIS LINE OF TRADE AND IS ALSO SUBJECT TO VERIFICATION FROM OTHER TRADERS. THE ASSESSEE IS TRYING TO OBTAINED A CERTIFICATE IN THIS RESPECT ALSO FROM THE TRADERS ASSOCIATION. IF OBTAINED THE SAME WILL BE FILED ON THE NEXT DATE OF HEARING. 4.10 YOU HAVE FURTHER MENTIONED IN THE LETTER THAT THE ASSESSEE HAS NOT PRODUCED THE FARMERS. IN THE SAME PARA YOU HAVE OBSERVED THAT THE ASSESSEE HAS NOT MADE THE PAYMENTS TO THE FARMERS IMMEDIATELY BUT THE PAYMENTS WERE MADE AFTER A LONG PERIOD IN SUPPORT OF YOUR CONTENTION YOU HAVE ALSO QUOTED THE NAME OF TWO FARMERS I.E. SH. NIRMAL SINGH S/O KAUR SINGH VILLAGE KHARA AND SH. KAUR SINGH. YOU HAVE 15 ALSO MENTIONED THAT FROM THE ABOVE FACT IT IS QUITE CLEAR THAT THESE T RANSACTIONS ARE GENUINE AND THESE FARMERS ARE HAVING THE GOOD TERMS WITH THE ASSESSEE. THE O BSERVATIONS GIVEN BY YOU ARE VERY TRUE THE TRANSACTIONS WITH FARMERS ARE GENUINE AND THE ASSESSEE IS HAVING THE GOOD RELATIONS WITH THESE FARMERS. THE ASSESSEE WAS NEVER HESITANT IN PRODUCING THESE FARME RS BUT DUE TO ONE OR THE OTHER REASON THE FARMERS COULD NOT BE PRODUCED EARLIER. THE NAME OF THE FARMERS AND ADDRESSES THEREOF ARE AVAILABLE WITH YOU. IF YOU THINK IT PROPER YOU YOURSELF CAN VERIFY THE CORRECTNESS IN RESPECT OF THE TRANSACTIONS. COMMENT S: - THE CONTENTION OF THE ASSESSEE IS FACTUALLY INCORRECT AFTER AVAILING NUMBER OF OPPORTUNITIES VIDE ORDER SHEET ENTRY DATED 09.11.2011 ASSESSEE COUNSEL CLEARLY STATED THAT FARMERS CAN'T BE PRODUCED. 4.11 AFTER THE LAST DATE OF HEARING SOME OF THE FARMERS INFORMED THE ASSESSEE THAT SOME INSPECTOR FROM YOUR OFFICE HAS APPROACHED THEM AND RECORDED THEIR STATEMENTS. FROM THE SAME THE ASSESSEE CAME UNDER THE IMPRESSION THAT YOU ARE MAKING THE DIRECT ENQUIRY FRO M THE FARMERS AND SO THE ASSESSEE HAS NOT PRODUCED THESE FARMERS ON HIS OWN. IF ANY SUCH INQUIRY IS MADE THEN THE COPIES OF THE SAME MAY BE PROVIDED TO THE ASSESSEE. NOW ALSO THE ASSESSEE HAS NO HESITATION IN PRODUCING THE FARMERS AND ON HEARING FROM YOU A ND IF YOU ALLOW TIME THE FARMERS MAY BE PRODUCED. TILL THEN THE ASSESSEE HAS REQUESTED THE FARMERS TO FILE AN 16 AFFIDAVIT CONFIRMING THE FACT OF SELLING THE COTTON LINT TO THE ASSESSEE. AS THE NOTICE IS SERVED ON THE ASSESSEE ONLY ON 8 TH DECEMBER 2011 SO IN SUCH A SHORT TIME THE ASSESSEE COULD NOT CONTACT THE FARMERS FOR PRESENTING BEFORE YOUR GOODSELF OR FOR PROVIDING THE AFFIDAVIT AND SO IT IS REQUESTED THAT SOME TIME MAY PLEASE BE ALLOWED TO THE ASSESSEE TO PRODUCE THE FARMERS. 4.12 NEXT YOU HAVE MENTIONED THAT ON THE ENQUIRY MADE BY YOUR OFFICE IT CAME TO YOUR KNOWLEDGE THAT THOUGH THE PAYMENTS WERE MADE TO THESE FARMERS THROUGH BANKING CHANNEL BUT THE PAYMENTS WERE THROUGH BEARER CHEQUES AND ALL THE CHEQUES FOR WITHDRAWALS WERE IN T HE SINGLE HAND WRITING AND THE WITHDRAWALS WERE BY SH. GAGAN EMPLOYEE OF SISTER CONCERN M/S. KAPIL TRADING COMPANY. BY MENTIONING THE ABOVE FACTS YOU HAVE OBSERVED THAT THIS SHOWS THAT THE ALL THE ENTRIES RELATING TO THE PURCHASES AND PAYMENT ARE ACCOMMODA TING ENTRIES OBTAINED BY THE ASSESSEE. IN THIS REGARD IT IS STATED THAT THE FARMERS ARE NOT VERY CONVERSANT WITH THE BANKING SYSTEMS AND THEY GENERALLY ASK THE TRADER TO HELP THEM IN BANKING AND OTHER GOVERNMENT WORKS AND BEING THE CONSTITUENT THE TRADERS HELP THEM IN EVERY RESPECT. THE CHEQUES ARE ISSUED BY THE ACCOUNTANTS AND SO IT IS BUT NATURAL THAT THESE MAY BE IN THE SAME HANDWRITING. IT IS GENERAL PRACTICE IN ALL THE MANDIES OF THE AREA THAT THE TRADERS SENT THEIR PERSONS TO HELP THE FARMER IN GETTING THE MONEY FROM THE BANK. DUE TO THIS REASON THE ASSESSEE HAS DEPUTED MR. GAGAN TO HELP THE FARMERS. THE REASON FOR DEPUTING THE EMPLOYEE OF SISTER 17 CONCERN M/S. KAPIL TRADING COMPANY IT IS STATED THAT ALL MOST ALL THE FARMERS WERE THE CONSTITUENTS OF THAT FIRM AND ARE FAMILIAR WITH MR. GAGAN WHO HANDLES THE WORK OF THESE FARMERS IN THAT FIRM. DUE TO THIS MR. GAGAN WAS DEPUTED FOR THE BANK WORK OF THE FARMERS. 4.13 SIR ABOVE MENTIONED PRACTICE IS THE COMMON PRACTICE IN THE AREA AND THIS DOES NOT INDICA TE ANY ANOMALY IN THE SYSTEM. ON THE BASIS OF THESE OBSERVATIONS ONE CAN'T BE ASSURE THAT THE ENTRIES UNDER QUESTION ARE ACCOMMODATING ENTRIES BUT ANY PRESUMPTION MAY BE ASSUMED. 4.14 IN THE NEXT PARA YOU HAVE INFORMED THAT YOU HAVE MADE SOME LOCAL INQUIRIES AND FOUND THAT THESE FARMERS HAVE SMALL HOLDING SOME OF THEM EVEN DO NOT OWN ANY LAND MOST OF THEM HAVE NOT GROWN NARMA AND EVEN IF THE NARMA IS GROWN THEN THE AREA OF THE LAND UN DER CULTIVATION WAS TOO SMALL. IN THIS REGARD IT IS REQUESTED THAT THE COPIES OF INFORMATIONS GATHERED ON THE BACK OF THE ASSESSEE MAY PLEASE BE SUPPLIED SO THAT THE ASSESSEE MAY GIVE HER COMMENTS ON THE SAME. 4.15 WITHOUT PREJUDICE TO THE SAME IN THIS REGARD IT IS STATED THAT THE ASSESSEE HAS COME TO KNOW FROM SOME FARMERS THAT THE PATWARI HAS SENT SOME REPORT ABOUT THEIR LAND HOLDING AND GIRDAWARI TO THE INCOME - TAX DEPARTMENT. FROM THE SAME IT APPEARS THAT YOU HA VE MADE THE INQUIRY FROM THE PATWARI OF THE AREA. SIR THE REPORT OF THE PATWARI MAY BE CORRECT BUT THE GROUND 18 POSITION IS TOTALLY DIFFERENT. THE PATWARI MIGHT HAVE INFORMED YOU THE LAND HOLDING AND GIRDAWARI OF THE PERSONS WHOSE NAMES WERE GIVEN BY YOU TO HIM. FACTUALLY IN THE VILLAGES THE FARMERS RESIDES IN JOINT FAMILY AND THE LAND BELONGS TO SEVERAL FAMILY MEMBERS BUT ONLY A FEW FAMILY MEMBERS GO TO MANDI TO HANDLE THE WORK THERE AND IN THE BOOKS OF THE TRADERS THE NAME OF THOSE PERSONS APPEAR ON BEHALF OF THE WHOLE FAMILY. THE TRADERS GENERALLY DO NOT GO BY THE REVENUE RECORDS FOR OPENING THE ACCOUNT. THUS TOTAL LAND HOLDING OF THE FAMILY MAY BE FAR MORE THA N THE LAND HOLDING IN THE SINGLE NAME. S ECONDLY IN THE VILLAGES IT IS VERY COMMON THAT SOME FARMERS TAKES THE LAND OF THE OTHER FARMER ON CONTRACT BASIS AND PRODUCE THE CROP IN THAT LAND ALSO. HERE IT WOULD BE PERTINENT TO MENTION THAT IN RAJASTHAN ALL THE LANDS ARE LEASE HOLD LAND AND THERE IS NO FREE HOLD LAND. THE FACT CAN BE VERIFIED FROM THE JAMABANDI OF THE LAND IN WHICH IN THE COLUMN 'OWNER OF THE LAND' THE WORD 'RAJ SARKAR' IS MENTIONED AND THE NAME OF THE FARMER IS MENTIONED IN THE COLUMN 'WHO IS CULTIVATING THE LAND'. IN THIS WAY WHEN A FARMER TAKES THE LAND ON CONTRACT HIS NAME DO NOT APPEAR IN GIRDAWARI BUT THE NAME OF THE ORIGINAL LESSEE WILL APPEAR. CONTRARY TO THE ABOVE THE LANDS IN HARYANA & PUNJAB ARE FREE HOLD LAND AND IN THOSE STATES WHEN THE LAND IS TAKEN ON CONTRACT THEN IN TH E COLUMN 'WHO IS CULTIVATING THE LAND' THE NAME OF THE FARMER WHO HAVE TAKEN THE LAND ON CONTRACT IS GIVEN. FROM THE ABOVE YOU WILL PLEASE APPRECIATE THAT THERE IS 19 EVERY POSSIBILITY THAT THESE FARMERS ARE CULTIVATING MORE LAND THEN APPEARING IN THEIR NAME IN THE REVENUE RECORDS. COMMENTS : - AS REGARD THE CONTENTION OF THE ASSESSES IN PARA 4.10 TO 4.15 IS CONCERNED WHEN THE ASSESSEE WAS NOT COMING THE FARMERS FROM WHOM ALLEGED COTTON HAS BEEN PURCHASED. THIS OFFICE MADE LOCAL INQUIRIES REGARDING THE LAND HOLDING THE CROP GROWN ETC. OF THESE FARMERS AND VIDE THIS OFFICE LETTER DATED 02.12.2011 (PARA 3.6) A SSESSEE WAS CONFRONTED WITH THE OUT CUM INQUIRY. THEREFORE THE CLAIM OF THE ASSESSEE THAT RESULT OF THE INQUIRIES MADE AT THE BACK OF THE ASSESSEE IS NOT CORRECT . 4.16 WITHOUT PREJUDICE TO ABOVE JUST FOR THE SAKE OF ARGUMENT IF IT IS ACCEPTED THAT YOU MIGHT B E RIGHT BUT IN OUR CASE PURCHASES ARE THERE. IN SOME CASES SOME AGRICULTURIST ALSO USED TO PURCHASE THE AGRICULTURE PRODUCE OF THEIR NEIGHBOR AND AFTER HOLDING THE SAME FOR SOME TIME WHEN MARKET IS IMPROVE THEY USED TO SALE THE AGRICULTURE PRODUCE PURCHASED FROM THE OTHER FARMERS. SOME TIME THE FARMERS HAVING LESSER HOLDING OF LAND USED TO CULTIVATE THE LAND OF THE OTHER FARMERS AND SO FOR THIS REASON IT CAN'T BE A SOLE CRITERIA FOR D ERIVING ADVERSE INFERENCE. COMMENTS : - THE CONTENTION OF THE ASSESSEE THAT SOME TIME THE FARMERS PURCHASE THE CROP OF THE NEIGHBOR ALSO HAS NO FORCE BECAUSE AS DISCUSSED IN DETAILS OF THE SUBSEQUENT PARAS OF THIS ORDER. IT IS PROVED BEYOND DOUBT THAT THES E 20 FARMERS ARE NOT MAINS OF MEANS. 4.17 YOU HAVE OBSERVED THAT THESE SO CALLED ENTRIES OF PURCHASE OF COTTON LINT ARE ACCOMMODATING ENTRIES TO COVER UP THE UNACCOUNTED PURCHASE OF NARMA. HERE FIRST OF ALL IT IS STATED THAT THESE PURCHASES ARE NOT THE SO CALLED ENTRIES OF PURCHASES BUT ARE THE REAL PURCHASE MADE BY THE ASSESSEE. IT IS FURTHER REQUESTED TO CLARIFY BY ANY EVIDENCE THAT THESE ARE THE A CCOMMODATING ENTRIES. KINDLY LET THE ASSESSEE KNOW HOW YOU ARE TREATING THE ENTRIES AS ACCOMMODATING ENTRIES WHEN ALL THE EVIDENCE ARE WITH THE ASSESSEE. YOU HAVE FURTHER MENTIONED THAT AS PER THE BYLAWS OF KRIS HI UPAJ MANDI SAMITY ONE CANNOT PURCHASE AGRICULTURE PRODUCTS DIRECTLY WITHOUT PAYING THE MARKET FEES VAT ARHAT ETC. WHICH ARE A BOUT 8% OF THE PURCHASE PRICE. THE ASSESSEE AGREES WITH YOUR POINT OF VIEW. THERE CANNOT BE ANY PRESUMPTION AGAINST THE PROVISIONS OF LAW. AS FAR AS THE MATTER OF PURCHASE OF COTTON LINT DIRECTLY FROM THE AGRICULTURIST IS CONCERNED IT IS STATED THAT IT IS THE BYPRODUCT OF THE CROP OF NARMA AND IN RAJASTHAN THE FARMER IS FREE TO USE HIS CROP IN ANY MANNER HE LIKE AND IF HE SELL ANY PRODUCT IN THE MARKET HE IS FREE TO DO SO. THE BEST EXAMPLE OF THIS PRACTICE IS PRODUCTION OF 'GUR' BY THE FARMERS PRODUCING SUGARCANE. THERE IS NO MARKET COMMITTEE FEES PAYABLE BY THE FARMER WHEN HE SELL THE GOODS IN THE MARKET TO THE END USER. THE FACT CAN BE VERIFIED FROM THE MARKET COMMITTEE ALSO. WITHOUT PREJUDICE TO ABOVE 21 JUST FOR THE SAKE OF ARGUMENT IF WE ACCEP T YOUR VERSION EVEN THEN HOW THE PURCHASES BECAME BOGUS ONLY BY NONPAYMENT OF MARKET FEES OR VAT. COMMENTS: - THE CONTENTION THE ASSESSEE NOT FORCE BECAUSE LARGE QUANTITY OF AGRICULTURE PRODUCE CAN BE SOLD ONLY IN MANDI THE EXAMPLE GIVEN THE BY ASSESSEE IS WITHOUT ANY BASED. ASSESSEE HAS ASKED THAT ON WHAT BASIS I AM CLAIMING THAT SHE HAS NOT PURCHASED THE COTTON FROM THE FARMERS AND INSTATED PURCHASE THE NARMA AND GINNED THE SAME TO PRODUCED COTTON. HERE I WILL LIKE TO REPRODUCED THE OBSERVATION OF HON'BLE JUSTICE JAWAHAR LAI GUPTA HON'BLE PUNJAB AND HARVANA COURT IN THE CASE OFCIT VS. MONIKA OSWAL REPORTED AT 267 ITR 308 'MR. SHARMA IS RIGHT IN CONTENDING THAT THE ONUS IS ON THE REVENUE. IT IS ALSO CORRECT THAT THE COURT CANNOT PROCEED ON SURMISES AND SUSPICIONS. HOWEVER ONE CANNOT LOSE SIGHT OF THE FACT THAT DARK DEEDS ARE PERFORMED UNDER THE COVER OF DARKNESS. DIRECT EVIDENCE CAN NEVER BE AVAILABLE FOR EVERYTHIN G. SOMETIMES THE FACTS SPEAK LOUD AND CLEAR. VERY OFTEN THE COURTS HAVE TO DRAW INFERENCES FROM ATTENDANT CIRCUMSTANCES '. 4.18 IT IS FURTHER OBSERVED BY YOUR GOOD SELF THAT THE ASSESSEE HAS PURCHASED THE NARMA OUT SIDE THE BOOKS AND PROCESSED THE SAME IN THE FACTORY OF THE ASSESSEE TO COVER UP THE PRODUCTION OF COTTON SOLD BY THE ASSESSEE. BY DOING 22 SO THE SALE OF COTTON SEED IS ALSO SUPPRESSED. IN THIS REGARD I WOULD LIKE TO BRING TO YOUR KIND NOTICE THAT FOR ARGU MENT SAKE IF IT IS PRESUMED THAT THE ASSESSEE HAS PURCHASED THE NARMA OUT OF THE BOOKS AND ALSO SOLD THE COTTON SEED OUT OF THE BOOKS THEN WHAT WAS THE HITCH TO THE ASSESSEE IN SELLING THE COTTON ALSO OUTSIDE THE BOOKS. FROM THE YIELD DECLARED BY THE ASSES SEE YOUR GOOD SELF WILL PLEASE FIND THAT THE WITHOUT CONSIDERING THE COTTON LINT PURCHASED BY THE ASSESSEE THE YIELD DECLARED BY THE ASSESSEE IS QUITE FAIR AND THE SHORTAGE IS ALSO VERY WELL LESS THAN THE GENERAL SHORTAGE. IF THE ASSESSEE CAN PURCHASE THE NARMA OUT OF BOOKS SELL THE COTTON SEED OUT OF BOOKS THEN WHY HE WILL NOT 'SELL THE COTTON LINT OUT OF THE BOOKS. FOR DOING ANY WORK THERE MUST BE SOME MOTIVE OR INTENTION BUT IN THE CASE OF THE AS SESSEE THERE IS NO SUCH MOTIVE. 4.18 IF FOR ARGUMENT SAKE IT MAY BE TREATED THAT THE ASSESSEE HAS PURCHASED THE NARMA OUT OF THE BOOKS EVEN THEN WHY THE ASSESSEE WILL BRING PART OF THE UNRECORDED TRANSACTION IN THE BOOKS OF ACCOUNT THAT ALSO WITHOUT ANY GAIN. IT WAS VERY EASY FOR THE ASSESSEE TO SELL THE WHOLE GOODS OUT OF BOOKS. THIS CLEARLY INDICATES THAT THE TRANSACTIONS DECLARED BY THE ASSESSEE ARE GENUINE TRANSACTION AND THE ASSESSEE HAS PURCHASED THE COTTON LINT AN D HONESTLY DECLARED THE SAME IN THE BOOKS OF ACCOUNT. IN THE LOCAL LAWS THERE ARE NO SUCH RESTRICTIONS IN RESPECT OF PURCHASES FROM THE UNREGISTERED DEALERS OR AGRICULTURIST. THE ASSESSEE IS AT LIBERTY TO PURCHASE THE AGRICULTURE 23 PRODUCE FROM ANYONE. THIS MAY JUST BE THE MATTER THAT HOW THE LOCAL TAXES WILL BE PAID AND WHO WILL BE LIABLE TO PAY THE LOCAL TAXES. 4.19 ON THE BASIS OF THE ABOVE MENTIONED OBSERVATIONS YOU HAVE FINALLY PRESUMED THAT THE ASSESSEE HAS PURCHASED 6595.87 QTLS OF NARMA AND AFTER PROCESS ING THE SAME HAVE OBTAINED 2269.98 QTLS. COTTON AND 4214. 76 QTLS. OF COTTON SEED. YOU HAVE ADOPTED THE RATES OF ALL THE THREE COMMODITIES ON THE BASIS OF THE AVERAGE PRICE AS PER THE TRADING ACCOUNT FILED WITH THE RETURN OF INCOME I.E. RS.2652/ - PER QTLS. FOR NARMA; RS.5587/ - PER QTLS FOR COTTON AND RS.1380/ - PER QTLS FOR COTTON SEED. THUS YOU HAVE PROPOSED AN ADDITION OFRS. 19892538/ - ON THIS ACCOUNT. THE SUMMARIZED BREAKUP OF THE ADDITION IS AS UNDER : - COST OF NARMA 6595.87X2652 17492247/ - TAXES & EXPENSES 8% SAVED 13993 79/ - NET PROFIT IN SALE OF COTTON LINT & SEED = 1000912/ - 4.21 WITHOUT PREJUDICE TO THE FACT THAT THE ASSESSEE DENY TO HAVE DONE ANY SUCH TRANSACTION AND JUST TO REBUT THE PRESUMPTION ADOPTED BY YOU IT IS STATED AS UNDER : - 24 4.22 FIRST OF ALL IF IT IS PRESUMED THAT THE ASSESSEE HAS PURCHASED THIS QUANTITY OF NARMA THEN IT IS NOT POSSIBLE TO PURCHASE THIS QUANTITY IN A SINGLE DAY. AT THE MOST WHAT CAN HAPPEN THAT THE ASSESSEE USED TO PURCHASE THE NARMA OUT OF BOOKS IN SMALL LOTS AND AFTER GETTING THE SAME PROCESSED SOLD THE SEEDS OUT OF BOOKS AND INTRODUCED THE COTTON LINT IN THE BOOKS. THUS IT IS QUITE CLEAR THAT IF THIS OUT OF BOOKS WORK IS DONE BY THE ASSESSEE THEN THE SAME WAS DONE IN PARTS AND FOR INVESTING IN THE FRESH PURCHASES OF NARMA THE ASSESSEE WAS GETTING THE MONEY SHOWN PAID TO FARMERS IN THE REGULAR BOOKS OF ACCOUNT AND ALSO THE SALE CONSIDERATION OF THE COTTON SEED SOLD OUT OF THE BOOKS WHICH MAY BE TREATED AS AGAIN INVESTED IN THE PURCHASE OF THE NARMA. IN OTHER WORDS IF YOU THINK THAT THE ADDITION ON THIS ACCOUNT IS TO BE MADE THEN THE BENEFIT OF TELESCOPING SHOULD BE ALLOWED TO THE ASSESSEE. HERE IT WOULD NOT BE OUT OF PLACE TO MENTION THAT FROM THE DETAILS OF THE COTTON LINT PURCHASED YOU WILL PLEASE FOUND THAT MOST OF THE QUANTITY OF THE LINT WAS PURCHASED IN THE MONTH OF APRIL 2008 ITSELF AND THE REMAINING QUANTITY WAS PURCHASED IN THE MONTH OF NOVEMBER 2008 TO FEBRUARY 2009. THUS THE AMOUNT OF INVESTMENT IN THE STOCK OF THE MONTH OF APRIL 2008 IS AVAILABLE FOR INVESTMENT IN THE MONTH OF NOVEMBER AND ONWARDS AND THE TELESCOPING OF THE SAME SHOULD BE ALLOWED. THEORY OF P EAK IF APPLICABLE CAN BE APPLIED IN RESPECT OF PURCHASE AMOUNT. 25 4.23 HERE ONE MORE THING TO BE DISCUSSED ABOUT THE PROPOSED ADDITION OF RS.1399379/ - ON ACCOUNT OF 8% EXPENSES OF MARKET FEES VAT ARHAT ETC. YOU YOURSELF HAVE MENTIONED THAT THE ASSESSEE HAS SAV ED THIS AMOUNT ON THE PURCHASES OUT OF THE BOOKS. IN THIS REGARD IT IS STATED THAT FOR ESTIMATING THE PURCHASE OR NARMA YOU HAVE TAKEN THE AVERAGE RATE SHOWN IN THE REGULAR BOOKS OF ACCOUNTS WHICH ARE INCLUSIVE OF ALL THESE EXPENSES AND HENCE THE FIGURE OF PURCHASE ESTIMATED BY YOU ALREADY INCLUDED THESE FIGURES AND SO NO SEPARATE ADDITION FOR THESE EXPENSES CAN BE MADE. 4.24 YOU HAVE ADOPTED THE SALE CONSIDERATION OF THE COTTON L INT FOR WORKING OUT THE PROFIT IN THESE TRANSACTIONS. IN THIS REGARD IT IS STATED THAT THE PURCHASE AND SALES OF THE COTTON LINT HAS ALREADY BEEN DISCLOSED IN THE REGULAR TRADING ACCOUNTS. THE TOTAL PURCHASE OF COTTON LINT IS SHOWN AT RS. 11 826270/ - AND THE SALE OF THIS COMES TO RS.12685216/ - AND THUS THE ASSESSEE HAS ALREADY DISCLOSED RS.858946/ - AS PROFIT IN THE DEALING OF THIS COTTON WHICH MAY BE EXCLUDED FROM THE FIGURE OF RS. 100091 2/ - PROFIT ESTIMATED BY YOUR GOOD SELF. 4.25 AT THE END OF T HIS LETTER IT IS AGAIN REQUESTED THAT THE ASSESSEE HAS NOT DONE ANY TRADING OUTSIDE THE BOOKS OF ACCOUNTS. THE TRANSACTIONS DISCLOSED BY THE ASSESSEE ARE GENUINE TRANSACTIONS AND SO IT IS REQUESTED THAT THE SAME MAY PLEASE BE ACCEPTED AND NO ADDITION ON TH IS ACCOUNT MAY BE MADE '. 26 THEREAFTER ON 14.12.2011 SHRI DEEPAK JAIN ADVOCATE APPEARED ALONGWITH SHRI KISHAN LAL THE HUSBAND OF THE ASSESSEE AND PRODUCED THE FOLLOWING FARMERS AS WITNESSES TO PROVE THAT THE COTTON W A S PURCHASED FROM THEM. THESE FARMERS ARE AS UNDER: 1. SHRI GURMAIL SING H 2. SHRI JASWANT SINGH 3. SHRI HARBANS SINGH 4. SHRI SURJEET SINGH 5. SHRI KAUR SINGH THEIR STATEMENTS WERE RECORDED AND INCORPORATED BY THE A.O. IN HIS ORDER FROM PAGES 12 TO 22. AFTER CONSIDERING THESE STATEMENTS IN THE LIGHT OF THE INSPECTORS REPORT WHO HAD ALLEGEDLY MADE ENQUIRIES IN THIS CASE THE A.O. ALSO OBTAINED REPORT FROM THE H ALKA PATWARI. THE ASSESSEE WAS A SKED TO FILE COP I ES OF ACCOUNTS OF ALL THE 11 FARMERS FROM WHOM SHE ALLEGEDLY PURCHASED COTTON BETWEEN 1.4.2007 UPTO 2.12.2011 FROM THE BOOKS OF ACCOUNT OF M/S K APIL TRADING COMPANY AND M/S SINGLA & SONS. 3. ON 21.12.2011 REPLY FROM ASSESSEES SIDE WA S FILED WHICH IS AS UNDER: 'ON THE LAST DATE OF HEARING THE ASSESSEE HAS PRODUCED 5 FARMERS I.E. S/SH. KAUR SINGH SARJEET SINGH GURMAIL SINGH HARBANS SINGH AND JASWANT SINGH THE STATEMENT OF THOSE 27 FARMERS WERE RECORDED. YOU ASKED THE ASSESSEE TO FILE T HE FOLLOWING INFORMATION IN REGARD TO THE STATEMENT OF I THOSE FARMERS. AS DESIRED BY YOU THE FOLLOWING DOCUMENTS ARE ATTACHED HEREWITH: - 1. COPY OF THE JAMA BANDI OF ALL THE FIVE FARMERS. 2. COPY OF THE KHASRA GIRDAWARI OF THESE FARMERS. 3. IN THE STATEMENTS THE FARMERS HAVE STATED THAT THEY HAVE TAKEN THE LAND OF THE OTHER PERSONS ON CONTRACT BASIS. AS ALL THE CONTRACTORS WERE THE NEAR AND DEAR OF THE FARMERS AND SO THEY HAVE NOT CREATED ANY WRITTEN CONTRACT. ANYHOW NOW THE FARMERS HAVE OB TAINED THEIR AFFIDAVITS CONFIRMING THE FACT THAT IN THE RELEVANT YEAR THEIR LANDS WERE GIVEN ON CONTRACT TO THE FARMERS APPEARED BEFORE YOU. THE AFFIDAVIT ARE ATTACHED HEREWITH. 4. THE COPY OF THE JAMA BANDI OF THE PERSONS WHO HAVE GIVEN THEIR LAND ON CONTRAC T. 5. THE COPY OF THE KHASRA GIRDAWARI OF THE PERSONS WHO HAVE GIVEN THEIR LAND ON CONTRACT. ON THE LAST DATE OF HEARING M/S. KAPIL TRADING COMPANY HAS FILED THE COPIES OF ACCOUNT OF THE FARMERS FROM THE ASSESSMENT YEAR 2007 - 08 TO 2009 - 10. ON THE LAST DATE O F HEARING YOU ASKED THE ASSESSEE TO FILE THE COPIES OF ACCOUNT OF THESE FARMERS FROM 01.04.2009 TO UPTO DATE. IT IS HEREBY INFORMED BY M/S. KAPIL TRADING COMPANY THAT IN THE PERIOD STARTING FROM 01. 0 4.2011 THAT FIRM HAS I NOT DONE ANY BUSINESS OF KACHHI ARHAT AND SO THE COPIES OF ACCOUNT OF THE FARMERS UPTO 31.03.201O ARE ATTACHED HEREWITH. 28 YOU HAVE ASKED THE ASSESSEE TO PRODUCE THE REMAINING FARMERS. THE ASSESSEE APPROACHED TO THE OTHER FARMERS BUT DUE TO THE SEASON OF C OTTON PICKING AND DUE TO TIME FOR PREPARATION OF THE LAND FOR THE CROP OF WHEAT THEY HAVE REFUSED TO COME. ANYHOW THEY HAVE ASSURED THAT THEY CAN COME IF SOME TIME IS ALLOWED. LOOKING TO THE CIRCUMSTANCES AND THE FACT THAT THE CASE IS GOING TO BE TIME BA RRED ON 3 1 . 1 2.20 11 THE ASSESSEE HAS OBTAINED THE AFFIDAVIT OF THE FOLLOWING FARMERS WHICH ARE ATTACHED HEREWITH: - SH. JAGROOP SINGH S/O ANGREJ SINGH SH. DARSHAN SINGH S/O GURDEEP SINGH SH. JASKARAN SINGH S/O SARDUL SINGH SH. BUTA SINGH S/O HARNEK SINGH SH. NIRMAL SINGH S/O KAR SINGH SH. HUKMA RAM S/O LAXMAN DASS SH. SHANAK A R LA L S/O KAPURA RAM THE ASSESSEE HAS ALSO OBTAINED THE COPIES OF T HE JAMA B ANDI AND KHASRA GIRDAWARI OF THESE FARMERS AND THE SAME ARE ATTACHED HEREWITH. BESIDES THESE FARMERS HAVE ALSO TAKEN SOME LANDS ON CONTRACT. IN SUPPORT OF THE SAME THE AFFIDAVIT OF THE CONTRACTOR ALONGWITH THE JAMA BANDI AND KHASRA GIRDAWARI ARE ALSO ATTACHED HEREWITH. THE ASSESSEE COULD NO T OBTAINED THE SUPPORTING DOCUMENT OF THE AFFIDAVIT OF S/SH. HUKAMA RAM S/O LICHHMAN DASS NIRMAL SINGH S/O KAR SINGH AND SHANKAR LAI S/O KAPOORA RAM. THE ASSESSEE IS TRYING TO OBTAIN THE RELEVANT DOCUMENTS AND AS AND WHEN RECEIVED THE SAME WILL BE FILED. 29 ON THE LAST DATE OF HEARING THE FARMERS HAVE STATED THAT THE GINNING OF THE NARMA WAS GOT GONE THOUGH THE MOBILE GINNING MACHINES WHICH ARE ATTACHED TO THE TRACTORS. FOR YOUR READY REFERENCE AND RECORDS THE PHOTOGRAPH OF THE MACHINE ARE ATTACHED HEREWITH. ON THE LAST DATE OF HEARING THE ASSESSE E HAS STATE D THAT THE BROKERAGE IS PAID AS PER THE MARKET PRACTICE AND ALSO THE PAYMENT OF THE LABOUR IS MADE AS PER THE RATES OF THE PALEDAR UNION. THE CERTIFICATE TO THIS EFFECT FROM THE SADULSHAHAR VYAPAR MANDAL IS ATTACHED HEREWITH FOR YOUR READY REFERENCE AND RECORDS. ' 4. AFTER CONSIDERING THE ABOVE REPLY AND OTHER REPLIES FILED IN THE PROCESS ALONGWITH STATEMENTS OF THE FARMERS WHO WERE PRODUCED AND BY DERIVING ADVERSE INFERENCE FROM THE NON PRODUCTION OF SOME OF THE FARMERS FOR EXAMINATION INTER ALIA THE A.O. HAS FOUND THAT THE ASSESSEE PURCHASED COTTON WHICH IN FACT IS THE PRODUCTION OUT OF NARMA PURCHASED OUTSIDE THE BOOKS OF ACCOUNT. THE ASSESSEE HAD SHOWED YIELD OF NARMA @ 34.4% AND COTTON SEEDS @ 63.9% AND SHORTAGE AT 1.7%. THUS TO PRODUCE 226898 QUINTALS OF C OTTON THE ASSESSEE MAY HAVE PURCHASED 6595.87 QUINTALS OF NARMA AND VALUE OF THIS NARMA PURCHASED OUTSIDE THE BOOKS OF ACCOUNT COMES TO RS. 1 74 92 247/ - AS PER AVERAGE PRICE TAKEN FROM TRADING ACCOUNT OF THE ASSESSEE WHICH IS 2652 PER QUINTAL. HE HAS OB SERVED THAT BY GINNING OF THIS NARMA THE 30 ASSESSEE COULD PRODUCE 2268.98 QUINTALS OF COTTON AND 4214.76 QUINTALS OF COTTON SEEDS. HE HAS ADOPTED SALE PRICE OF COTTON AT RS. 5 587/ - PER QUINTAL AND AVERAGE SALE PRICE OF COTTON SEEDS AT RS. 1380/ - PER QUINTA L AND THUS THE A.O. HAS FOUND THAT THE ASSESSEE MADE INVESTMENT OF RS. 1 74 92 247/ - OUTSIDE THE BOOKS OF ACCOUNT WHICH HAS BEEN ASSESSED AS UNEXPLAINED INVESTMENT U/S 69 OF THE ACT AND HAS BEEN ADDED TO THE RETURNED INCOME OF THE ASSESSEE. FURTHER THE A .O. HAS MADE ADDITION OF RS. 1 41 966/ - BEING PROFIT EARNED ON SALE OUT OF BOOKS AND OF RS. 13 99 379/ - BY TREATING FEES OF KRISHI UPAJ MANDI SAMITI VAT AD H AT ETC. @ 8% ON THE PURCHASES MADE OUTSIDE THE BOOKS AND HAS THUS ARRIVED AT TAXABLE INCOME OF RS . 1 92 91 480/ - [ROUNDED OFF AS THE TOTAL INCOME COMES TO RS. 1 92 91 482/ - ] . AGGRIEVED THE ASSESSEE FILED APPEAL AND THE LD. CIT(A) HAS GIVEN PART RELIEF TO THE ASSESSEE. THE ASSESSEE IS FURTHER AGGRIEVE D AND HAS FILED THIS APPEAL BY RAISING THE FOLLOW ING GROUNDS: 1. THAT THE ORDER PASSED BY THE ASSESSING OFFICER AND SUSTAINED BY THE CIT (A) IS ILLEGAL AND AGAINST THE LAW. 2. THAT IN ABSENCE OF REJECTION OF BOOKS OF ACCOUNTS BY KNOCKING THE PROVISIONS OF SECTION 145 OF THE INCOME - TAX ACT THE ASS ESSMENT COMPLETED IS ILLEGAL AND AGAINST THE LAW. 31 3. THAT THE ADDITION MADE BY THE INCOME - TAX OFFICER AMOUNTING TO RS. 1 74 92 247.00 ON ACCOUNT OF ALLEGED BOGUS PURCHASES IS ILLEGAL AND AGAINST THE LAW AND SUSTAINED BY THE CIT(A) IS ILLEGAL AND AGAINST THE LAW FURTHERMORE WITHOUT FOLLOWING THE CASE - LAW REFERRED BEFORE HIM. 4. THAT THE ADDITION OF RS. 1 74 92 247.00 MADE ON ACCOUNT OF ALLEGED UNEXPLAINED INVESTMENT IS ILLEGAL AND AGAINST THE LAW MADE BY THE ASSESSING OFFICER UNDER SECTION 69 OF THE I NCOME - TAX ACT AND SUSTAINED BY THE CIT(A). 5. THAT THE ADDITION OF RS . 56 56 289.00 MADE BY THE INCOME - TAX OFFICER IS ILLEGAL AND AGAINST THE LAW BECAUSE THE PURCHASES ARE COVERED BY RULES 6 DD OF THE INCOME - TAX RULES AS WELL AS BY THE CIRCULAR ISSUED B Y THE CBDT. 6. THAT THE ADDITION SUSTAINED IS AGAINST THE JUDICIAL DECORUM AND JUDICIAL DISCIPLINE BECAUSE THE PURCHASE ARE SQUARELY COVERED. 7. THAT THE ADDITION OF RS. 13 99 379.00 MADE ON ACCOUNT OF ALLEGED SAVING OF FEES TAXES ETC. IS ILLEGAL AND AGAINST THE LAW MADE BY THE ASSESSING OFFICER AND SUSTAINED BY THE CIT(A). 32 8. THAT THE ASSESSEE SUCCESSFULLY DISCHARGED THE BURDEN AS PROVIDED IN THE ACT AS SUCH THE FINDING IN RESPECT OF BOGUS PURCHASES IS AGAINST THE LAW AS WELL AS AGAINST THE JUDICIAL PRONOUNCEMENT. 9. THAT THE ORDER PASSED BY THE CIT(A) IS ILLEGAL AND AGAINST THE LAW. BECAUSE THE CIT(A) FAIL TO FOLLOW THE CONSISTENCY AS WELL AS PAST HISTORY/SUBSEQUENT PRACTICE WHICH IS BINDING UPON THE CIT(A) AS WELL AS THE A O . 10. THAT IN THE REPLY OF REMAND REPORT THE ASSESSING OFFICER ALMOST CONCEDED THE SUBMISSION AND SUBMITTED REPLY WITHOUT EXPLAINING THE REASON. 11. THAT THE CIT(A) SHOULD HAVE ACCEPTED THE WRITTEN SUBMISSION THE EVIDENCE ADDUCE BEFORE HIM AND CASE LAWS REFERRED BEFOR E HIM IN COURSE OF HEARING. 12. THAT THE CHARGING OF INTEREST BY THE ASSESSING OFFICER AND SUSTAINED BY THE CIT(A) IS ILLEGAL AND AGAINST THE LAW. 5. WE HAVE HEARD THE RIVAL SUBMISSIONS AND HAVE CAREFULLY PERUSED THE ENTIRE MATERIAL ON RECORD. 6. GROUN D NO. 1 IS GENERAL IN NATURE AND DOES NOT REQUIRE ANY ADJUDICATION FROM OUR SIDE. 33 7. SECOND GROUND PERTAINS TO THE INVOKING OF PROVISIONS OF SECTION 145 OF THE ACT. IT IS ARGUED THAT THE A.O. WITHOUT REJECTING THE BOOKS OF ACCOUNT HAS INVOKED THE PROVI SIONS OF SECTION 145 OF THE ACT. IT WAS A VEHEMENT ARGUMENT THAT THE A.O. HAS NOWHERE REJECTED THE BOOKS OF ACCOUNT AND HAS STILL MADE ESTIMATION. 8. ON THE OTHER HAND THE LD. D.R. HAS STATED THAT THERE IS NO REQUIREMENT OF REJECTION OF BOOKS OF ACCOUNT FOR MAKING THE IMPUGNED ADDITION. 9. AFTER CONSIDERING THE RIVAL SUBMISSIONS WE HAVE FOUND THAT BEFORE THE LD. CIT(A) THE ASSESSEE HAD RELIED ON NUMEROUS DECISION THROUGH HIS AUTHORIZED REPRESENTATIVE WHICH GAVE RATIO DECIDENDI THAT WITHOUT REJECTION O F BOOKS OF ACCOUNT NO ESTIMATED ADDITION UNDER THE PROVISIONS OF SECTION 145 CAN BE MADE. THE LD. A.R. HAS RELIED ON ALL THOSE DECISIONS BEFORE US WHICH ARE CONTAINED IN HIS WRITTEN SUBMISSIONS ALSO. 10. AFTER CONSIDERING THE OVERALL FACTS AND LEGAL POSITION OF THIS ISSUE WE HAVE FOUND THAT THE A.O. HAS NOWHERE REJECTED THE BOOKS OF ACCOUNT OF THE ASSESSEE EITHER IMPLIEDLY OR EXPRESSLY. THEREFORE 34 WITHOUT REJECTING THE BOOKS OF ACCOUNT PROVISIONS OF SECTION 145 OF THE ACT CANNOT BE INVOKED. WE ALL OW GROUND NO. 2 OF ASSESSEES APPEAL. 11. GROUND NOS. 3 AND 4 ARE AGAINST THE CONFIRMATION OF ADDITION OF RS. 1 74 92 247/ - MADE ON ACCOUNT OF ALLEGED BOGUS PURCHASES U/S 69 OF THE ACT WHICH HAS ALSO BEEN CONFIRMED BY THE LD. CIT(A). 12. IT WAS ARGUED BY THE LD. A.R. THAT THIS ADDITION IS BASED ON SURMISES AND CONJECTURES AND AFTER REJECTING ALL SORTS OF EVIDENCE PRODUCED BY THE ASSESSEE TO PROVE THE PURCHASE BY PRODUCING FARMERS SOME OF WHOSE STATEMENTS WERE ALSO RECORDED AND FOR OTHERS DULY SWORN AFFID AVITS WERE FILED. ALL THESE FARMERS HAVE SUPPORTED THE VERSION OF THE ASSESSEE AND WITHOUT DISPROVING THE AVERMENTS OF THE AFFIDAVITS AND SUBMISSIONS AND SIMPLY RELYING ON THE REPORT OF HIS INSPECTOR WHICH WAS PREPARED BEHIND THE BACK OF THE ASSESSEE AND W ERE NEVER CONFRONTED TO HER. THE A.O. HAS MADE THE IMPUGNED ADDITION WHICH IS NOT JUSTIFIED AND CANNOT BE SUSTAINED IN THE EYES OF LAW. 13. ON THE OTHER HAND THE LD. D.R. HAS SUPPORTED THE ORDERS OF THE AUTHORITIES BELOW AND HAS REFERRED TO VARIOUS POINTS IN THE STATEMENTS 35 OF THE FARMERS AND HAS GIVEN SOME REASONS AS HAVE BEEN GIVEN BY THE AUTHORITIES BELOW TO MAKE OR CONFIRM THE IMPUGNED AD DITION. 14. AFTER CONSIDERING THE RIVAL SUBMISSIONS IN THE LIGHT OF THE OBTAINING FACTS OF THIS ISSUE WE HAVE FOUND THAT THE A.O. HAS MADE ALL SORTS OF ENQUIRIES IN THIS REGARD AND BY DOUBTING ONE EVIDENCE HE HAS MOVED FURTHER WHICH CREATED MORE DOUBTS IN HIS MIND. THE ASSESSEE SUBMITTED AFFIDAVITS OF ALL AGRICULTURISTS FROM WHOM SHE HAS CLAIMED TO HAVE PURCHASED NARMA. THE ASSESSEE PRODUCED IN AS MUCH AS SIX FARMERS INCLUDING SHRI GURMAIL S INGH SHRI JASWANT SINGH SHRI H ARBANS SINGH SHRI SURJEET SIN GH SHRI KAUR SINGH AND SHRI KISHAN LAL FOR EXAMINATION BEFORE THE A.O. ALL OF THEM HAVE CONFIRMED THE PURCHASES AS CLAIMED BY THE ASSESSEE OF NARMA FROM THEM. THE ASSESSEE PRODUCED DULY SWORN IN AFFIDAVITS OF THE FARMERS SHRI JAGROOP SINGH SHRI DARSHAN SINGH SHRI JASKARAN SINGH SHRI BUTA SSINGH SHRI NIRMAL SINGH SHRI HUKMA RAM AND SHRI SHANKAR LAL. ALL OF THEM HAVE CONFIRMED THE VERSION OF THE ASSESSEE. APART FROM THIS THE ASSESSEE HAS PRODUCED THE AFFIDAVITS OF ONE OF CONTRACTOR WHO GAVE LAND TO THE F ARMERS ON PATTA BASIS FOR CULTIVATION. THE ASSESSEE HAS PRODUCED LAND HOLDING RECORDS OF 13 FARMERS WHICH INCLUDED JAMA BANDI AND KHASRA GIRDAWARI. THESE DOCUMENTS WERE RETURNED BACK BY THE A.O. AS IS 36 VERILY EVIDENT FROM THE ASSESSMENT ORDER ITSELF AND THIS ACT IS CONTRARY TO THE PROCEDURE WHICH HAS TO BE FOLLOWED BY THE A.O. THE ASSESSEE TRIED TO MARK ALL THE DOCUMENTS WHICH WERE PRODUCED BEFORE THE AUTHORITIES BELOW INCLUDING THIS TRIBUNAL. WE HAVE FOUND IT FOR A FACT THAT THE ASSESSEE HAS BEEN FOLLOWING SAME AND SIMILAR PRACTICE OF PURCHASING COTTON DIRECTLY FROM FARMERS IN THE PAST YEARS AND ALSO IN THE FUTURE YEARS. SAMPLE COPIES OF ASSESSMENT ORDERS FOR A.YS 2008 - 09 AND 2010 - 11 ARE ENCLOSED IN THE PAPER BOO K AND HAVE FOUND THAT NO ADVERSE I NFERENCE HAS BEEN DRAWN BY THE A.O. IN THOSE YEARS. THEREFORE IN OUR CONSIDERED OPINION THE ENTIRE EXERCISE OF THE A.O. IS BASED ON HIS OWN SURMISES AND CONJECTURES. APART FROM FINDING FAULTS I THE EVIDENCE PRODUCED BY THE ASSESSEE THE A.O. HAS NOT BR OUGHT ANY COGENT EVIDENCE WHICH CAN BE CONTRADICT THE CLAIM OF THE ASSESSEE MAY BE THE EVIDENCE PRODUCED BEFORE THE A.O. AND BEFORE THE LD. CIT(A) AS WELL AS BEFORE US. WE HAVE NOTICED THAT THE A.O. HAS NOT REBUTTED ANY OF SUCH EVIDENCE PRODUCED BY THE ASSESSEE. IN OUR CONSIDERED OPINION THE PRIMARY ONUS CAST ON THE ASSESSEE HAS BEEN DISCHARGED WHEREAFTER THE A.O. WAS REQUIRED TO REBUT THE SAME WITH THE HELP OF COGENT EVIDENCE WHICH SHOULD BE BROUGHT ON RECORD. THE A.O. HAS NOT DONE SO. THEREFORE HIS EXERCISE BECAME FUTILE. THE REPORT OF THE INSPECTOR WAS OBTAINED BEHIND THE BACK OF THE ASSESSEE 37 AND EVEN AFTER COPY OF WHICH WAS ASKED TO BE GIVEN TO HER THE A.O. REFUSED TO GIVE THE SAME. THIS FACT IS EVIDENT FROM THE ASSESSMENT RECORD ITSELF. TH E A.O. HAS TRIED TO FIND SOMETHING OR THE OTHER FROM THE STATEMENT OF THE FARMERS WHO HAVE BASICALLY ADMITTED THE FACT THAT THE NARMA WAS PURCHASED BY THE ASSESSEE FROM THEM AND THEY HAD TAKEN MONEY FOR THEIR WORTH OR MORE THAN THAT BECAUSE IT IS A ONGOING PROCESS OF SALE AND PURCHASE BETWEEN THE ASSESSEE AND THE FARMER. THE LD. A.R. HAS RELIED ON NUMEROUS DECISIONS AND SOME OF THEM HAVE REALLY HELPED HIS CASE BUT WE DO NOT NEED TO REPRODUCE THEM IN OUR ORDER. MOST OF THE DECISIONS ARE FROM JODHPUR AND JA IPUR BENCH OF THE TRIBUNAL INTER ALIA. IN FACT WHATEVER QUERIES WERE RAISED BY THE A.O. ALL WERE APTLY REPLIED BY THE ASSESSEE. THE A.O. HAS GIVEN MORE IMPOR T AN C E TO MINOR RELEVANCIES AND HAS IGNORED THE RELEVANT FACTORS IN ARRIVING AT HIS CONCLUSION. HE HAS SIMPLY IGNORED THE FACT THAT IT IS COMMON PRACTICE FOR AGRICULTURISTS TO TAKE AGRICULTURAL LAND BELONGING TO OTHERS ON PATTA BASIS AND GROW CROPS OF THEIR DESIRED NATURE. IT IS ALSO COMMON PLACE EXPERIENCE THAT THE PATWARI MANY A TIMES DO NOT RECO RD CORRECT CROP GROWN BY THE AGRICULTURISTS AS THEY RARELY GO TO FIELDS TO FIND OUT THE FACTS AND COMPLETE THEIR RECORD BY SITTING IN THEIR OFFICE. WE HAVE MENTIONED THE STATEMENTS OF THESE FARMERS WHICH WAS RECORDED BY THE A.O. THE STATEMENTS SUPPORT T HE VERSION OF THE 38 ASSESSEE AND SO IS THE CASE IN REGARD THOSE FARMERS WHO HAVE FILED THEIR AFFIDAVITS. THE A.O. HAS SHOWN MORE CONCERN TOWARDS FARMERS TO WHOM THE MONEY WAS PAID BY THE ASSESSEE AND HAS TRIED TO RELATE THE FACT WITH THE DEATH OF FARMERS BA SED ON SOME NEWSPAPER REPORTS. HE HAS WRITTEN A THESIS REGARDING THE SCENARIO OF AGRICULTURAL SECTOR IN INDIA. THUS HE HAS BEEN SWAYED BY SUCH CONSIDERATION BY PLIGHT OF FARMERS INSTEAD OF DECIDING THE ISSUES RAISED IN THIS A.Y. PERTAINING TO ASSESSMENT OF THE ASSESSEE. SUCH GENERALIZED VIEWS CANNOT BE APPLIED TO THE ASSESSMENT MADE BY THE A.O. SUCH AN EXERCISE AND PENCHANT FOR CARE FOR AN AGRICULTURIST IS ADMIRABLE AND THE A.O. HAS DONE GOOD JOB IN THAT DIRECTION BUT WE ARE AFRAID THAT SUCH SUBJECTIVE ANALYSIS CANNOT BE APPLIED TO THE FACTUAL FACTS ARISING IN A CASE. THE A.O. HAS RELIED ON AND HAS REFERRED TO A SECRET INDEPENDENT ENQUIRY WHICH HAS NO PLACE IN JUDICIAL PROCEEDINGS. ACCORDINGLY WHEN THE ASSESSEE HAS CLAIMED AND PROVED THAT HE HAS PUR CHASED NARMA AND PRODUCED REQUISITE COTTON FROM THAT NARMA SIMPLY BECAUSE THE PURCHASES WERE NOT THROUGH MANDI PURCHASES CANNOT BE IGNORED. THEREFORE WE ARE CONVINCED THAT THE ADDITION OF RS. 1 74 92 447/ - MADE ON ACCOUNT OF ALLEGED BOGUS PURCHASES IS N OT JUSTIFIED AND THEREFORE WE ORDER TO DELETE THE SAME. AS A RESULT WE ALLOW GROUND NOS. 3 AND 4 OF ASSESSEES APPEAL. 39 15. GROUND NO. 5 PERTAINS TO ADDITION OF RS. 5656289/ - MADE UNDER THE PROVISIONS OF SECTION 40A(3) OF THE ACT. 16. THE A.O. HAS FOUN D THAT THE PURCHASES BEING IN CASH EXCEEDED RS. 20 000/ - IN VIOLATION OF PROVISIONS OF SECTION 40A(3) OF THE ACT. THE CONTENTION OF THE ASSESSEE HAS BEEN THAT PURCHASES ARE FROM FARME RS AND IN SUCH PURCHASES THIS PROVISION IS NOT APPLICABLE. AS WE HAVE A LREADY HELD THE PURCHASES FROM FARMERS THE IMPUGNED ADDITION IS UNCALLED FOR AND DESERVES TO BE DELETED IN VIEW OF RULE 6DD OF THE I.T. RULES AND CBDT CIRCULAR WHICH ARE DULY ENCLOSED IN THE PAPER BOOK FILED BY THE ASSESSEE. ACCORDINGLY WE ORDER DELET ION OF ADDITION OF RS. 56 56 289/ - AND ALLOW GROUND NO. 5 OF THIS APPEAL. 17. GROUND NO. 6 IS ALSO CONNECTED WITH GROUND NO. 5 AND IS IN FACT ARGUMENT OF GROUND NO. 5. THEREFORE THIS GROUND SHALL GO ALONGWITH GROUND NO. 5 ITSELF AND STANDS ALLOWED. 1 8. GROUND NOS. 7 IS REGARDING ADDITION OF RS. 13 99 379/ - . THIS ADDITION HAS RESULTED FROM THE FACT THAT THE P URCHASES WERE MADE DIRECTLY FROM AGRICULTURISTS AND NOT FROM THE MANDI AND THUS THE ASSESSEE HAS SAVED MARKET FEES VAT ADHAT ETC. IN VIEW OF OUR 40 FINDING GIVEN ABOVE THERE IS NO QUESTION OF ALLEGED SAVING OF TAX ETC. THEREFORE WE ORDER DELETION OF ADDITION OF RS. 13 9 379/ - . GROUND NO. 7 STANDS ALLOWED. 19. GROUND NOS . 8 TO 12 ARE GENERAL IN NATURE AND MOST OF THESE GROUNDS ARE ARGUMENTATIV E WITHOUT RAISING ANY MATERIAL GROUND. THEREFORE THESE GROUNDS DO NOT REQUIRE ANY ADJUDICATION AND ARE DISMISSED. 20. IN THE RESULT THE AP PEAL OF THE ASSESSEE IS PARTLY ALLOWED. ORDER PRONOUNCE D IN THE OPEN COURT ON 31 ST J ULY 201 4 . SD/ - SD/ - [N.K. SAINI] [HARI OM MARATHA] ACCOUNTANT MEMBER JUDICIAL MEMBER DATED : 31 ST JULY 2014. VL/ COPY TO : 1. THE APPELLANT 2. THE RESPONDENT BY ORDER 3. THE CIT 4. THE CIT(A) 5. THE DR ASSISTANT REGISTRAR ITAT JODHPUR