The ITO, Ward-4(1),, Surat v. M/s. Rishabh Dyeing & Printing Mills Pvt.Ltd.,, Surat

IN THE INCOME TAX APPELLATE TRIBUNAL AHMEDABAD D BENCH AT SURAT CAMP AHMEDABAD BEFORE SHRI T.K. SHARMA JUDICIAL MEMBER AND SHRI D. C. AGRAWAL ACCOUNTANT MEMBER ITA NO.1823/AHD/2007 & C.O. NO.217/AHD/2007 (ARISING OUT ITA NO.1823/AHD/2007) ASSESSMENT YEAR:2003-04 DATE OF HEARING:19.5.10 DRAFTED:20.5.10 INCOME TAX OFFICER WARD-4(1) SURAT M/S. RISHABH DYEING & PRINTING MILLS PVT. LTD. NO.72 BHURIGAON UMBHEL KADODARA SUAT PAN NO.AABCR1446D V/S . V/S . M/S. RISHABH DYEING & PRINTING MILLS PVT. LTD. NO.72 BHURIGAON UMBHEL KADODAR SURAT INCOME TAX OFFICER WRD-4(1) SURAT (APPELLANT) .. (RESPONDENT) ASSESSEE BY :- SHRI RAMESH MALPANI AR REVENUE BY:- SHRI SANJEEV KASHYAP SR-DR O R D E R PER D.C.AGRAWAL ACCOUNTANT MEMBER:- THIS IS AN APPEAL FILED BY REVENUE RAISING FOLLOWI NG GROUNDS:- [1] ON THE FACTS AND CIRCUMSTANCES OF THE CASE AND IN LAW THE LD. CIT(A) SURAT HAS ERRED IN DELETING THE ADDITION OF RS.6 34 217/- MADE ON ACCOUNT OF WORK-IN-PROGRESS. [2] THE LD. CIT(APPEALS) HAS NOT APPRECIATED THE FA CT THAT THE ADDITION WAS MADE ON ACCOUNT OF WORK-IN-PROGRESS IN VIEW OF THE DEFECTIVE METHOD OF ACCOUNTING FOLLOWED BY THE ASSESSEE. ITA NO.1823/AHD/2007 & CO.217/AHD/2007 A.Y. 2003-04 ITO WD-4(1) SRT V. M/S. RISHABH DYEING & PRINTING MILLS PVT. LTD. PAGE 2 [3] ON THE FACTS AND CIRCUMSTANCES OF THE CASE AND IN LAW THE LD. CIT(APPEALS) HAS ERRED INN RESTRICTING THE DISALLOW ANCE @ 25% I.E. RS.5 08 089/- AS AGAINST RS.22 70 756/- MADE BY THE ASSESSING OFFICER WITH NO REASON AND ONLY ON FICTIONAL OBSERVATION. [4] THE LD. CIT(APPEALS) HAS NOT APPRECIATED THE FA CT THAT SHRI ROHIT PANWALA HAD ADMITTED THE ISSUE OF BOGUS BILL AND EA RNED COMISSION ONLY. THE ASSESSEE HAS FILED CROSS OBJECTION (CO) RAISING THE FOLLOWING GROUNDS:- 01. THAT HE HONBLE COMMISSION OF INCOME-TAX TAX H AS WRONGLY SUSTAINED THE ADDITION MADE OF RS.508095/- ON PURCH ASES OF COLOUR CHEMICAL FROM MIN. CHEMICALS. 02. THAT COMMISSIONER OF INCOME-TAX(APPEALS)HAS WRO NGLY SUSTAINED THE ADDITION OF RS.440892/- ON CHEMICAL PURCHASE FR OM POOJA DYECHEM RS.169900/- AND ABHI DYES OF RS.1593670/- BY WRONGL Y APPLYING THE DECISION OF HONBLE ITAT AHMEDABAD IN THE CASE OF VIJAY POTEINS. 2. THE FACTS OF THE CASE ARE THAT THE ASSESSEE IS E NGAGED IN BUSINESS OF DYEING & PRINTING OF ART SILK CLOTH. RETURN OF INCO ME DECLARING TOTAL INCOME AT RS. NIL WAS FILED. DURING THE COURSE OF ASSESSMENT PROCEEDINGS ASSESSING OFFICER NOTICED THAT ASSESSEE HAS NOT SHOWN WORK-IN -PROGRESS IN THE CLOSING STOCK AS ON 31-03-2003. WHEN ASKED IT WAS EXPLAIN ED THAT IT IS CONSISTENTLY FOLLOWING A ACCOUNTING METHOD IN WHICH GOODS DISPAT CHED AFTER CONSIDERING JOB CHARGES ARE ACCOUNTED FOR. HOWEVER ASSESSING OFFICER WAS OF THE VIEW THAT ASSESSEE HAD CLAIMED ALL THE EXPENSES MADE DUR ING THE YEAR UNDER CONSIDERATION ON UN-DISPATCHED GRAY CLOTH LAYING AT DIFFERENT STAGES OF PROCESSING WHICH SHOULD HAVE BEEN SHOWN AS WORK-IN -PROGRESS AS ON 31-03- 2003. THE ASSESSING OFFICER ACCORDINGLY CALCULATED WORK-IN-PROGRESS AT RS.6 34 217/-. THE LD. CIT(APPEALS) DELETED THE ADD ITION ON THE GROUND THAT ASSESSEE IS ENGAGED IN PROCESSING OF MATERIAL FOR O UTSIDE PARTIES AND DOES NOT HAVE STOCK OF ITS OWN. FURTHER ASSESSEE IS FOL LOWING THE SAME METHOD OF ACCOUNTING YEAR-AFTER-YEAR. THERE IS NO JUSTIFICATI ON IN DISTURBING THIS METHOD. ITA NO.1823/AHD/2007 & CO.217/AHD/2007 A.Y. 2003-04 ITO WD-4(1) SRT V. M/S. RISHABH DYEING & PRINTING MILLS PVT. LTD. PAGE 3 3. AGAINST THIS LD. AR SUBMITTED THAT SIMILAR ISSUE HAD COME BEFORE THE TRIBUNAL IN THE CASE OF PRATIK PROCESSORS PVT. LTD. V. DCIT IN ITA NO.1956/AHD/2007 WHEREIN TRIBUNAL HAS HELD THAT THERE CANNOT BE AN Y WORK- IN-PROGRESS IN A CASE WHERE BUSINESS OF DYEING AND PRINTING OF CLOTH IS DONE ON JOB WORK BASIS. HE REFERRED TO PARA-6 FROM THAT ORDER AS UNDER:- 6. AT THE TIME OF HEARING BOTH THE REPRESENTATIVES AGREED THE SIMILAR ISSUE AROSE IN AN APPEAL BY THE REVENUE IN ITA NO.2 649/AHD/2006 IN THE CASE OF VIPUL INDUSTRIES PVT. LTD. V/S ACIT ORD ER DATED 17.9.2009. IN THE SAID CASE WHEN IN THE SAID CASE THE ASSESSEE W HICH IS ENGAGED IN THE BUSINESS OF DYEING AND PRINTING OF CLOTH ON JOB WORK BASIS AND WHERE THE ASSESSEE HAD NOT SHOWN ANY WORK-IN-PROGRESS AT THE YEAR END THE SAME WAS ESTIMATED TO BE 50% OF THE JOB RECEIPT OF THE LIKELY STOCK REMAINING IN PROCESS. HOWEVER WAS DELETED BY THE LE ARNED CIT(APPEALS) BY OBSERVING AS UNDER:- 12. I HAVE CAREFULLY CONSIDERED THE FACTS OF THE C ASE AND THE SUBMISSIONS MADE BY THE LD. AR. AS REGARDS THE ADDI TION MADE IN RESPECT OF ESTIMATED WORK IN PROGRESS IT IS SEEN T HAT THE APPELLANT IN THE INSTANT CASE IS A JOB-WORKER AND PROCESS GRA Y CLOTH FOR ITS CUSTOMERS ACCORDING TO THEIR REQUIREMENT. THE APPEL LANT NOT ENGAGED IN ANY MANUFACTURING ACTIVITIES OF ITS OWN. THE CLOTH PROCESSED BY THE APPELLANT THUS BELONG TO ITS CUSTO MERS IS PROCESSED BY THE APPELLANT AND AFTER PROCESSING TH E SAME IN ACCORDANCE WITH THE CUSTOMERS REQUIREMENT IT IS RE TURNED. IN THE ABOVE FACTS OF THE CASE THE QUESTION OF SHOWING AN Y WORK IN PROGRESS IN THE BOOKS OF ACCOUNT OF THE APPELLANT I N RESPECT OF THE CLOTH BELONGING TO ITS CUSTOMERS DID NOT ARISE AS SUCH CLOTH WAS REQUIRED TO BE SHOWN IN THE CLOSING STOCK OF THE CO NCERNED CUSTOMERS. ON THE BASIS OF THE COMPLETION OF WORK O N THE CUSTOMERS CLOTH THE APPELLANT IS ENTITLED TO RECEI VE ITS WORK CHARGES. NO INTERIM PAYMENTS OR ADVANCES PAYMENTS A RE RECEIVED BY THE APPELLANT FROM ITS CUSTOMERS DURING THE PENDENCY OF THE JOB WORK. THE RECEIPTS FROM THE JOB WORK ARE BEING ACCOUNTED FOR BY THE APPELLANT ON COMPLETED CONTRAC T METHOD AS PER AS-9. THE CLOSING STOCK OF MATERIALS USED FOR P ROCESSING OF CLOTH I.E. COLOUR CHEMICALS ETC. HAVE BEEN DULY AC COUNTED FOR BY THE APPELLANT IN ACCORDANCE WITH AS-9. IN REGARD TO THE VALUE ADDITION MADE BY THE APPELLANT ON THE CUSTOMERS CL OTH WHICH MAY HAVE BEEN AT DIFFERENT INTERMEDIATE STAGES OF P ROCESSING AS ON 31.3.2003 NEITHER ANY OPENING STOCK NOR CLOSING STOCK WAS EVER SHOWN BY THE APPELLANT. AS PER THE PRINCIPLES OF ACCOUNTING LAID DOWN BY THE ICAI UNDER THE SCOPE OF VALUATION OF INVENTORIES IN ITEM 1(SUB-ITEM(B) OF AS-2 (REVISED) THE WORK-I N-PROGRESS ARISING IN THE ORDINARY COURSE OF BUSINESS OF SERVI CE PROVIDER HAS ITA NO.1823/AHD/2007 & CO.217/AHD/2007 A.Y. 2003-04 ITO WD-4(1) SRT V. M/S. RISHABH DYEING & PRINTING MILLS PVT. LTD. PAGE 4 BEEN SPECIFICALLY SCOPED OUT OF THE SAID STATEMENT. FURTHER IN THE DEFINITIONS PROVIDED UNDER ITEM 3 OF THE AS-2 INVE NTORIES HAVE BEEN DEFINED AS ASSETS (A) HELD FOR SALE IN THE OR DINARY COURSE OF BUSINESS (B) IN THE PROCESS OF PRODUCTION FOR SUCH SALE OR (C) IN THE FORM OF MATERIALS OR SUPPLIES TO BE CONSUMED IN THE PRODUCTION FOR SALE OR IN THE RENDERING OF SERVICE S. SINCE THE APPELLANT WAS NOT ENGAGED IN THE BUSINESS OF SALE O F THE PROCESSED CLOTH OR IN THE PRODUCTION FOR SALE OF TH E PROCESSED CLOTH BUT WAS ENGAGED IN THE BUSINESS OF RENDERING OF SERVICES FOR PROCESSING OF GRAY CLOTH FOR ITS CUSTOMERS THE PRI NCIPLES LAID DOWN IN AS-2 FOR THE VALUATION OF INVENTORIES WERE NOT APPLICABLE IN ITS CASE IN ACCORDANCE WITH ITEM 1(B) THEREOF. HOWEVER THE MATERIALS OR SUPPLIES TO BE CONSUMED IN THE PRODUCTION PROCES S OR IN THE RENDERING OF SERVICES WOULD EVIDENTLY FALL IN CATEG ORY (C) OF THE AFORESAID DEFINITIONS PROVIDED IN ITEM 3 OF THE A CCOUNTING PRINCIPLES LAID DOWN IN AS-2 AND THE SAME WOULD BE REQUIRED TO BE ACCOUNTED FOR BY IT IN THE FORM OF STOCK WHICH HAS BEEN DONE IN THE INSTANT CASE. THE METHOD OF ACCOUNTING FOLLO WED BY THE APPELLANT IS THUS SEEN TO BE IN ACCORDANCE WITH THE ACCOUNTING PRINCIPLES LAID DOWN BY THE ICAI. 13. IT IS FURTHER SEEN THAT THE AFORESAID METHOD OF ACCOUNTING OF OPENING/CLOSING STOCK HAS BEEN REGULARLY AND CONSIS TENTLY FOLLOWED BY THE APPELLANT COMPANY SINCE THE BELONGI NG. THE APPELLANT HAS ALSO CONSISTENTLY FOLLOWED THE ACCOUN TING POLICY OF RECOGNIZING REVENUE OF COMPLETED CONTRACT METHOD. W HILE THE PRINCIPLES OF RES-JUDICATA ARE NOT APPLICABLE TO TH E INCOME-TAX TAX PROCEEDINGS IT HAS BEEN HELD BY THE COURTS IN SEVE RAL JUDGMENT THAT WHERE THE APPELLANT HAS BEEN FOLLOWING REGULA R SYSTEM OF ACCOUNTING SINCE THE LAST SO MANY YEARS AN SUCH MET HOD WAS BASED ON ACCEPTED PRINCIPLES OF ACCOUNTING THERE W AS NO JUSTIFICATION FOR REJECTING THE SAID METHOD FOR VAL UATION OF STOCK. THIS WOULD ESPECIALLY HOLD IN A CASE WHERE THE PROP OSED CHANGE IN THE METHOD OF VALUATION IS FOU9ND TO HAVE NO IMP ACT AS IN THE INSTANT CASE IF THE CHANGED METHOD ADOPTED BY THE ASSESSING OFFICER WERE APPLIED FOR VALUATION OF THE OPENING A S WELL AS THE CLOSING STOCK. 14. FOR REASONS DISCUSSED ABOVE IN DETAILS IN MY O PINION THERE WAS NO BASIS OR JUSTIFICATION IN MAKING THE ANY EST IMATED ADDITION ON ACCOUNT OF WORK-IN-PROGRESS IS THIS CASE. THE AD DITION OF RS.12 56 970/- MADE BY THE AO IN RESPECT OF ESTIMAT ED WORK IN PROGRESS IS THEREFORE DELETED. THIS GROUND OF APPE ALS IS ALLOWED. THUS DELETION WAS CONFIRMED BY THE TRIBUNAL. THEREF ORE IN THE PRESENT CASE ALSO FOLLOWING THE DECISION OF THE TRIBUNAL CO NFIRM THE ORDER OF THE ITA NO.1823/AHD/2007 & CO.217/AHD/2007 A.Y. 2003-04 ITO WD-4(1) SRT V. M/S. RISHABH DYEING & PRINTING MILLS PVT. LTD. PAGE 5 CIT(A) THE ADDITION ON ACCOUNT OF ESTIMATED VALUE OF WORK-IN-PROGRESS IS REQUIRED TO BE DELETED. 4. LD.SR-DR ON THE OTHER HAND SUBMITTED THAT IF ASS ESSEE HAS SPENT MONEY WHICH HAS BEEN DEBITED IN THE PROFIT & LOSS A /C. AND TO THE EXTENT THE ASSESSEE DOES NOT GET RECEIPT FROM THE PRINCIPLE W ORK-IN-PROGRESS SHOULD BE ESTIMATED. 5. AFTER CONSIDERING THE RIVAL SUBMISSIONS OF THE P ARTIES WE ARE OF THE VIEW THAT ISSUE IS NOW COVERED IN FAVOUR OF THE ASSESSEE BY THE DECISION OF TRIBUNAL IN THE CASE OF PRATIK PROCESSORS PVT. LTD. (SUPRA) PRONOUNCED ON 15-01-2010. RESPECTFULLY FOLLOWING THE ABOVE ORDER WE DISMISS T HE GROUND NO.1 AND 2 OF THE REVENUES APPEAL. 6. GROUND NO.3 AND 4 OF THE REVENUES APPEAL AND GROUND NO.1 OF ASSESSEES CO RELATES TO SUSTAINING ADDITION OF RS. 5 08 089/- ON ACCOUNT OF UNPROVED PURCHASED. 7. THE FACTS OF THE CASE ARE THAT THE ASSESSEE DECL ARED PURCHASES OF COLOUR AND CHEMICALS FROM M/S.POOJA DYE CHEM FOR R S.1 69 900/- OF RS.15 93 677/- FROM M/S.ABHI DYES AND OF RS.5 08 09 5/- FROM M/S.MIN CHEMICALS. DURING THE COURSE OF ASSESSMENT PROCEED INGS ASSESSING OFFICER FOUND FOLLOWING FACTS IN RESPECT OF PURCHASES OF RS .1 69 900/- FROM M/S.POOJA DYE CHEM:- I) SHRI ROHIT P PANWALA ;PROPRIETOR OF M/S. POOJA DYE CHEM HAD NOT SHOWN ANY TRADING ACTIVITY IN HIS RETURN OF INCOME- TAX FILED FOR A.Y. 2003- 04. II) HE HAD SHOWN ONLY COMMISSION INCOME-TAX AND INT EREST INCOME-TAX IN HIS RETURN OF INCOME-TAX. III) THE BANK ACCOUNT BNO.CA9450 HELD BY HIM IN THE NAME OF POOJA DYE CHEM IN PNB LAL GATE BRANCH SURAT WAS NOT SHO WN IN THE BALANCE SHEET SUBMITTED ALONG WITH THE RETURN OF IN COME-TAX FILED FOR A.Y. 2003-04. IV) THE CHEQUE PAYMENT OF RS.1 69 9000/- MADE BY TH E ASSESSEE WAS CREDITED IN THE SAID ACCOUNT ONLY. ITA NO.1823/AHD/2007 & CO.217/AHD/2007 A.Y. 2003-04 ITO WD-4(1) SRT V. M/S. RISHABH DYEING & PRINTING MILLS PVT. LTD. PAGE 6 V) THE ADDRESS F M/S. POOJA DYE CHEM AS PER THE SAL E BILLS WAS FOUND AS RESIDENTIAL ADDRESS AND NO TRADING ACTIVITY WAS FOUND TO BE CARRIED OUT FROM THE ADDRESS GIVEN IN THE BILL. IN RESPECT OF PURCHASES FROM M/S. ABHI DYES AO FOLL OWING FACTS WERE FOUND:- I) SMT. SANDHYABEN R PANWALA IS PROPRIETOR OF M/S . ABHI DYES 307 AVISHKAR APARTMENT N. PANI NI TANKI ADAJAN CIRCLE SURAT. II) SHE IS ASSESSED TO TAX VIDE PAN ADLP9195P IN IT WD.5(4) SURAT AND HAS SHOWN ONLY INTEREST INCOME-TAX IN THE RETUR N OF INCOME-TAX FILED BY HER FOR A.Y.2003-04. III) THE BANK A/C. NO.CA/9451 IN THE NAME OF M/S. A BHI DYES S PROP. SANDHYABEN R PANWALA HELD IN PNB LALGATE BRANCH S URAT WAS NOT SHOWN IN THE BALANCE SHEET SUBMITTED ALONG WITH THE RETURN OF INCOME- TAX FILED BY HER FOR A.Y. 2003-04. IV) SHE HAS NOT SHOWN ANY TRADING ACTIVITY IN HER R ETURN OF INCOME-TAX FILED FOR A.Y.2003-04 AS NO TRADING A/C. WAS ATTACH ED WITH THE RETURN OF INCOME-TAX AND NO BUSINESS PROFIT WERE SHOWN IN THE RETURN OF INCOME FILED. V) IN THE BANK ACCOUNT OPENING FORM THE BUSINESS O F M/S. ABHI DYES WAS SHOWN AS OF SHROFF AND COMMISSION AGENT ONLY. VI) MORE OFTEN THAN NOT CASH WAS WITHDRAWN IMMEDIAT ELY AFTER CREDITING OF CHEQUES IN THE SAID ACCOUNT. VII) THOUGH SALES TAX NO. WAS FOUND PRINTED ON SALE BILLS NO SALES TAX WAS SHOWN AS CHARGED IN THE SALES BILLS. VIII) THE ADDRESS OF M/S. ABHIO DYES AS PER THE SAL E BILLS WAS FOUND SAME AS THAT OF M/S. POOJA DYE CHEM WHICH WAS FOUN D AS RESIDENTIAL ADDRESS AND NO TRADING ACTIVITY WAS FOUND TO BE CAR RIED OUT FROM THE ADDRESS GIVEN IN THE BILL. IN RESPECT OF PURCHASE FROM MIN CHEMICALS AO FOLLOW ING FACTS WERE FOUND:- I) SHRI MANISH GAJENDER GUPTA PROPRIETOR OF M/S. M IN CHEMICALS IS NOT FOUND TO BE ASSESSED TO TAX. II) NO PHONE NO. PRINTED ON THE SALE BILLS. ITA NO.1823/AHD/2007 & CO.217/AHD/2007 A.Y. 2003-04 ITO WD-4(1) SRT V. M/S. RISHABH DYEING & PRINTING MILLS PVT. LTD. PAGE 7 III) SALES TAX NO. SHOWN BY M/S. MIN CHEMICALS WAS FOUND TO BE PERTAINING TO ANOTHER CONCERN. IV) NO SUPPORTING EVIDENCES FOR MATERIAL RECEIVED S HOWN AS PURCHASE FROM M/S. MIN CHEMICALS HAS BEEN FURNISHED BY THE A SSESSEE. V) THE WHOLE OF THE AMOUNT OUTSTANDING AS ON 31/3/2 003 S SHOWN TO HAVE BEEN PAID THROUGH FOUR SEQUENTIAL CHEQUES BEAR ING NOS.615144- 615147. THE ASSESSING OFFICER GAVE OPPORTUNITY TO ASSESSEE TO EXPLAIN BUT EITHER NO EXPLANATION WAS FURNISHED OR WHATEVER WAS STATED WA S NOT FOUND SATISFACTORY. IN RESPECT OF PURCHASES FROM M/S.POOJA DYE CHEM AS SESSEE ONLY SUBMITTED COPIES OF BILLS AND DELIVERY CHALLAN AND COPY OF BA NK STATEMENT IN SUPPORT OF PAYMENT MADE TO THAT PARTY. IN RESPECT OF PURCHASES FROM ABHI DYES ASSESSEE FURNISHED BANK STATEMENT SHOWING PAYMENT T O THAT PARTY. IN RESPECT OF PURCHASES FROM M/S. MIN CHEMICALS NO CONFIRMATIO N WAS SUBMITTED EXCEPT BANK STATEMENT SHOWING PAYMENT TO THAT PARTY. CONS IDERING THAT PURCHASES FROM THESE THREE PARTIES WERE NOT PROVED THE ASSES SING OFFICER TREATED THESE PURCHASES AS NON-GENUINE AND ADDED THE SAME TO THE TOTAL INCOME OF THE ASSESSEE. 8. LD. CIT(APPEALS) OBSERVED IN RESPECT OF FIRST TW O PARTIES THAT THERE ARE ENTRIES OF GOODS RECEIVED IN THE FACTORY PREMISES O F THE ASSESSEE. THEREFORE IT CANNOT BE SAID THAT GOODS WERE NOT PURCHASED BUT CE RTAINLY PURCHASES FROM THIRD PARTY WERE NOT PROVED. HE ACCORDINGLY DIRECTE D TO APPLY A RATE OF 25% IN CASE OF PURCHASE FROM M/S. POOJA DYE CHEM AND ABHI DYES AND THUS SUSTAINED THE ADDITION OF RS.4 40 900/- BUT CONFIRM ED THE ENTIRE ADDITION OF RS.5 80 089/- IN RESPECT OF PURCHASES FROM MIN CHEM ICALS. 9. AGAINST THIS LD.SR-DR RELIED ON THE ORDER OF ASS ESSING OFFICER WHEREAS LD. AR FOR THE ASSESSEE SUBMITTED THAT THE PURCHASE S ARE ACTUALLY MADE AND PAYMENT ARE MADE THROUGH BANKING CHANNELS. WE HAVE CONSIDERED THE RIVAL SUBMISSIONS AND PERUSED THE MATERIALS ON RECORD. IN OUR CONSIDERED VIEW ITA NO.1823/AHD/2007 & CO.217/AHD/2007 A.Y. 2003-04 ITO WD-4(1) SRT V. M/S. RISHABH DYEING & PRINTING MILLS PVT. LTD. PAGE 8 THERE IS NO CASE FOR INTERFERENCE IN THE ORDER OF L D. CIT(APPEALS). IN THE CASE OF FIRST TWO PURCHASES LD. CIT(APPEALS) HAS GIVEN F INDING THAT GOODS HAVE ACTUALLY COME BUT FROM OTHER PARTIES BUT BILLS ARE PROCURED FROM FIRST TWO PARTIES. THIS FINDING IS NOT CONTROVERTED. WE ALSO HOLD THAT ASSESSEE HAS OBTAINED GOODS FROM OTHER PARTIES BUT TO WHAT EXTEN T IS NOT KNOWN. THE QUANTITY AND QUALITY OF THE GOODS PURCHASED FROM OT HER PARTIES AND WHAT PRICE WAS PAID IS ALSO NOT KNOWN. THEREFORE THERE IS NO CO-RELATION OF QUALITY AND QUANTITY OF GOODS BROUGHT BY THE ASSESSEE FOR WHIC H PAYMENT WAS MADE. IN VIEW OF THIS WE CONFIRM THE ORDER OF LD. CIT(APPEAL S) IN DISALLOWING 25% OF PURCHASE PRICE. IN RESPECT OF PURCHASES FROM MIN CH EMICALS IT WAS NOT EVEN ESTABLISHED THAT ANY GOODS HAD ACTUALLY COME IN RES PECT OF WHICH THE ASSESSEE HAD PROCURED BILLS FROM THIS PARTY. IN VIE W OF THIS DISALLOWANCE OF PURCHASE FROM THIS PARTY IS ALSO CONFIRMED. AS A R ESULT WE CONFIRM THE ORDER OF LD. CIT(APPEALS) AND DISMISS APPEAL FILED BY REV ENUE AND THAT OF CO FILED BY ASSESSEE. 10. IN THE RESULT APPEAL FILED BY REVENUE AND THAT OF CO OF ASSESSEE ARE DISMISSED. ORDER PRONOUNCED IN OPEN COURT ON 28/05 /2010 SD/- SD/- (T.K.SHARMA) (D. C.AGRAWAL) (JUDICIAL MEMBER) (ACCOUNTANT MEMBER) AHMEDABAD DATED : 28/05/2010 *DKP COPY OF THE ORDER FORWARDED TO :- 1. THE APPELLANT. 2. THE RESPONDENT. 3. THE CIT(APPEALS)-III SURAT 4. THE CIT CONCERNS. 5. THE DR ITAT AHMEDABAD 6. GUARD FILE. BY ORDER /TRUE COPY/ ITA NO.1823/AHD/2007 & CO.217/AHD/2007 A.Y. 2003-04 ITO WD-4(1) SRT V. M/S. RISHABH DYEING & PRINTING MILLS PVT. LTD. PAGE 9 DEPUTY / ASSTT.REGISTRAR ITAT AHMEDABAD