M/s. Raj Exports, Surat v. The ACIT.,Circle-6,, Surat

ITA 1827/AHD/2005 | 2002-2003
Pronouncement Date: 11-11-2011 | Result: Partly Allowed

Appeal Details

RSA Number 182720514 RSA 2005
Assessee PAN AACFR9945F
Bench Ahmedabad
Appeal Number ITA 1827/AHD/2005
Duration Of Justice 6 year(s) 3 month(s) 15 day(s)
Appellant M/s. Raj Exports, Surat
Respondent The ACIT.,Circle-6,, Surat
Appeal Type Income Tax Appeal
Pronouncement Date 11-11-2011
Appeal Filed By Assessee
Order Result Partly Allowed
Bench Allotted D
Tribunal Order Date 11-11-2011
Date Of Final Hearing 15-09-2011
Next Hearing Date 15-09-2011
Assessment Year 2002-2003
Appeal Filed On 26-07-2005
Judgment Text
ITA NO. 1827-1954/AHD/2005 ASSESSM ENT YEAR 2002-03 1 IN THE INCOME TAX APPELLATE TRIBUNAL C BENCH AHMEDABAD ( BEFORE SHRI BHAVNESH SAINI & SHRI A. MOHAN ALANKAMO NY) I.T .A. NO 1827/AHD/2005 (ASSESSMENT YEAR : 2002-2003 ) M/S. RAJ EXPORTS 201 SHREEJI MAHIDHARPURA SURAT. (APPELLANT) VS. ASSISTANT COMMISSIONER OF INCOME TAX CIRCLE-6 ROOM NO.218 AAYAKAR BHAVAN MAJURA GATE SURAT. (RESPONDENT) PAN: AACFR 9945 F I.T .A. NO 1954/AHD/2005 (ASSESSMENT YEAR : 2002-2003 ) ASSISTANT COMMISSIONER OF INCOME TAX CIRCLE-6 ROOM NO.218 AAYAKAR BHAVAN MAJURA GATE SURAT. (APPELLANT) VS. M/S. RAJ EXPORTS 201 SHREEJI MAHIDHARPURA SURAT. (RESPONDENT) APPELLANT BY : SHRI S.N. SOPARKAR SR. ADVO CATE. RESPONDENT BY : SHRI Y.C. SURTI. DATE OF HEARING : 15-9-2011 DATE OF PRONOUNCEMENT : 11-11-2011 ITA NO. 1827-1954/AHD/2005 ASSESSM ENT YEAR 2002-03 2 ( (( ( )/ )/)/ )/ ORDER PER: SHRI A. MOHAN ALANKAMONY A.M . 1. THESE TWO APPEALS INSTITUTED (I) ONE BY THE APPELLANT FIRM IN ITA NO. 1827 /05 AND (II) ANOTHER BY THE REVENUE IN ITA NO. 1954 /05 ARE DIRECTED AGAINST THE IMPUGNED APPELLATE ORDER OF THE LD. CIT (A)-IV SURAT IN APPEAL NO. CASIV/18/05- 06 DATED 30.5.2005 FOR THE ASSESSMENT YEAR 2002-03. I. ITA NO.1827/2005 BY THE APPELLANT FIRM : 2. THE APPELLANT FIRM IN ITS GROUNDS OF APPEAL HAD RAISED NINE GROUNDS IN WHICH GROUND NO.1 BEING GENERAL AND NO SPECIFIC ISSUE INVOLVED IT DO ES NOT SURVIVE FOR ADJUDICATION. LEVY OF INTEREST U/S 234A 234B AND 234C IN GROUND NO.8 IS MANDATORY AND CONSEQUENTIAL IN NATURE AND THUS THIS GROUND IS NOT MAINTAINABLE. CHALLENGING THE INITIATION OF PENAL PROCEEDINGS U/S 271(1)(C) OF TH E ACT IN GROUND NO.9 IS ALSO NOT MAINTAINABLE AS THE ISSUE IS AT ITS INFANCY. IN TH E REMAINING GROUNDS THE ISSUES AGITATED BEING ELABORATE AND ILLUSTRATIVE IN NATURE THEY AR E REFORMULATED IN A CONCISE MANNER FOR THE SAKE OF CLARITY AS UNDER: (I) THE LD. CIT (A) HAD ERRED IN CONFIRMING THE STAND O F AO IN ADDING RS.52.95 LAKHS U/S 69 OF THE ACT; - ALTERNATIVELY IF THE ADDITION IS SUSTAINED CORRES PONDING DEDUCTION U/S 37 OF THE ACT BE ALLOWED; & - WITHOUT PREJUDICE THE ESTIMATED DISALLOWANCE AT 50 % OUT OF THE PURCHASES BEING HIGHLY EXCESSIVE WHICH REQUIRES TO THE APPROPRIATELY REDUC ED; & (II) THE LD. CIT (A) HAD ERRED IN NOT ALLOWING CONSEQUEN TIAL HIGHER DEDUCTION U/S 80HHC OF THE ACT. II. ITA NO.1954/2005 BY THE REVENUE : ITA NO. 1827-1954/AHD/2005 ASSESSM ENT YEAR 2002-03 3 2.1. EVEN THOUGH THE REVENUE HAD RAISED FIVE GROUNDS IN ITS GROUNDS OF APPEAL THE CRUX OF THE ISSUE IS CONFINED TO A LONE GROUND NAMELY THE LD. CIT (A) HAD ERRED IN DELETING THE ADDITION OF RS.52.95 OUT OF RS.1.05 CRORES MADE BY THE AO ON ACCOUNT OF BOGU S PURCHASES U/S 69C OF THE ACT. 3. AS THE ISSUES RAISED BY THE RIVAL PARTIES PERTA INING TO THE SAME ASSESSMENT YEAR BOTH THE APPEALS WERE HEARD CONSI DERED AND DISPOSED OFF FOR THE SAKE OF CONVENIENCE AND CLARITY IN THIS COMMON ORD ER. ITA NO.1827/2005 APPELLANT FIRM : 4. THE FACTS OF THE ISSUES BRIEFLY ARE THAT THE APPELLANT FIRM [THE APPELLANT IN SHORT] ENGAGED IN THE BUSINESS OF PURCHASE OF ROUG H/POLISHED DIAMOND FROM THE LOCAL MARKET PROCESSING OF DIAMOND TRADING AND EXPORT HAD FURNISHED ITS RETURN OF INCOME ADMITTING A TOTAL INCOME OF RS.10.97 LAKHS BY CLAIM ING DEDUCTION OF RS.25.3 LAKHS U/S 80HHC OF THE ACT. DURING THE COURSE OF ASSESSMENT PROCEEDINGS IT WAS NOTICED BY THE AO THAT THE APPELLANT HAD SHOWN PURCHASES OF DIAMON DS TO THE TUNE OF RS.1.54 CRORES FROM 12 PARTIES. TO VERIFY THE VERACITY OF THE PUR CHASES AND OUTSTANDING CREDIT BALANCES THE AO PROCURED THE PRESENCE OF THE SAID PARTIES BY ISSUANCE OF SUMMONS U/S 131 OF THE ACT AND RECORDED THEIR STATEMENTS. FOR THE DETAILED REASONS RECORDED IN HIS IMPUGNED ORDER AND ALSO THE DIRECTIONS OF THE A DDL. CIT RANGE 6 SURAT U/S 144A OF THE ACT THE AO WAS OF THE VIEW THAT THE PURCHASE BEING BOGUS NON-GENUINENESS OF TRANSACTIONS AND ALSO CITING VARIOUS JUDICIAL PRONO UNCEMENTS AND ACCORDINGLY CONCLUDED THAT ALL THE TRANSACTIONS WERE FICTITIOU S AND AS SUCH THE ENTIRE AMOUNT WAS TO BE ADDED LESS THE COMMISSIONS CHARGES OF RS;31 677/ - BUT SINCE THE SAME WAS NOT CLAIMED BY THE APPELLANT IN ITS P & L ACCOUNT THE SAME WAS TREATED AS AN UNEXPLAINED ITA NO. 1827-1954/AHD/2005 ASSESSM ENT YEAR 2002-03 4 EXPENDITURE. WHILE MAKING SUCH AN ADDITION THE APP ELLANT WAS GIVEN THE BENEFIT OF TELESCOPING FOR THE OUTSTANDING BALANCES IN RESPECT OF THE SAID PARTIES. 5. AGGRIEVED THE APPELLANT TOOK UP THE ISSUE WITH THE CIT (A) FOR SOLACE. AFTER TAKING INTO ACCOUNT THE CONTENTIONS OF THE AP PELLANT COUPLED WITH VARIOUS CASE LAWS IN ITS FAVOUR AND THE VERSION OF THE ASSESSING OFF ICER THE LD. CIT (A) HAD OBSERVED THUS:- 2.12. HOWEVER IT IS ALSO A FACT THAT EXPORTS HAV E TAKEN PLACE I.E. SALES ARE REALIZED AND THEREFORE PURCHASES MUST HAVE BEEN MADE IN CA SH FROM PARTIES WHOSE DETAILS ONLY THE ASSESSEE IS PRIVY TOO AND MAY AS WELL BE UNREGI STERED DEALERS. THE AO STATES THAT RS.1 05 59 154/- REPRESENTS UNEXPLAINED EXPENDITURE U/S 69C AND IS THIS ADDED AND DEDUCTION U/S 80HHC IS ALSO DENIED TO THAT EXTENT. 2.13. IT IS DIFFICULT TO ACCEPT APPELLANTS CONTEN TION THAT THERE IS (SIC) WAS COERCION ON PART OF THE ASSESSING OFFICER ON THE PURCHASE PARTI ES TO MAKE STATEMENTS AND IT IS ALSO SEEN THAT BOTH THE AO AND THE ADDL. CIT GAVE SUFFIC IENT OPPORTUNITY TO THE ASSESSEE TO FILE DETAILS AND ALSO GAVE OPPORTUNITY FOR CROSS EX AMINATION WHICH WAS NOT AVAILED OF. 2.14. HOWEVER EXPORTS WERE MADE FOREIGN EXCHANGE EARNED AND THERE IS NO EVIDENCE THAT THE MONEY WITHDRAWN BY THE PURCHASE PARTIES CA ME BACK TO THE APPELLANT QUANTITATIVE TALLIES ARE MAINTAINED AND THERE ARE N O DEFECTS IN BOOKS OF ACCOUNTS. 2.15. IT IS HOWEVER FOR THE APPELLANT TO PRODUCE T HE BEST POSSIBLE EVIDENCE IN SUPPORT OF HIS CONTENTION SO AS TO ENABLE THE AO TO VERIFY THE SAME. IN THE CASE OF THE APPELLANT THE FACT THAT PURCHASES HAVE BEEN EFFECTED IS NOT D ISPUTED BUT WHAT IS DISPUTED IS THAT THE PURCHASES FROM SOME OF THE PARTIES ARE NOT AMEN ABLE TO PROPER VERIFICATION AS SUCH PARTIES IN THEIR STATEMENTS BEFORE THE ASSESSING OF FICER DENIED THE PURCHASES AND SUBSEQUENTLY DID NOT APPEAR DESPITE REASONABLE OPP ORTUNITY. 2.16. AFTER CONSIDERING ALL RELEVANT FACTS 50% O F SUCH UNVERIFIED PURCHASES OF RS.1 05 90 831/- ARE ALLOWED I.E. RS.52 95 415/- R EST ARE DELETED I.E. RS.52 95 415/-. 6. DISENCHANTED WITH THE RELIEF OFFERED BY THE LD. CIT (A) THE APPELLANT HAS COME UP BEFORE THIS BENCH WITH THE PRESENT APPEAL. DURING THE COURSE OF HEARING THE ITA NO. 1827-1954/AHD/2005 ASSESSM ENT YEAR 2002-03 5 LD. A R. HAD REITERATED MORE OR LESS WHAT WAS PORTR AYED BEFORE THE FIRST APPELLATE AUTHORITY. IN FURTHERANCE IT WAS SUBMITTED THAT - - THE LD. CIT (A) HAD ERRED IN LAW AND ON FACTS IN NOT APPRECIATING THAT IF THE PURCHASES WERE HELD TO BE BOGUS THERE COULD NOT HAVE BEEN ANY SAL ES AND THEREFORE THE CORRESPONDING SALES OUGHT TO HAVE BEEN EXCLUDED FROM THE TRADING RESULT S; & - THAT BOTH THE LOWER AUTHORITIES HAVE ERRED IN NOT CONSIDERING THE EXPLANATIONS SUBMISSIONS AND EVIDENCES ADDUCED ON RECORD BY THE APPELLANT IN ITS PROPER PERSPECTIVE AND THE ACTIONS OF THE AUTHORITIES BELOW WERE IN CLEAR BREACH OF PRINC IPLES OF NATURAL JUSTICE AND THEREFORE DESERVE TO BE ANNULLED. 6.1. TO STRENGTHEN HIS ARGUMENTS THE LD. A R HAD F URNISHED A VOLUMINOUS PAPER BOOK CONTAINING 1 179 PAGES WHICH CONSIST INTER ALIA COPIES OF (I) CORRESPONDENCES WITH THE AUTHORITIES; (II) STATEMENTS BY THE SUPPLI ERS; (III) PURCHASE BILLS AGAINST WHICH PAYMENTS WERE MADE THROUGH BANKS; (IV) AFFIDAVITS O F THE SUPPLIERS ETC. 6.2. ON THE OTHER HAND THE LD. D R WAS SPECIFIC I N HIS ENDEAVOUR THAT THE AO HAD IN FACT ANALYZED THE ISSUE IN GREAT DEAL BACK ED WITH VARIOUS JUDICIAL PRECEDENTS. HOWEVER THE LD. D.R WAS IN TOTAL DISAGREEMENT WITH THE FINDINGS OF THE LD. CIT (A) TO THE EXTENT THAT - THE LD. C T (A) HAD ERRED IN DELETING THE ADDITION OF RS.52.95 LAKH S OUT OF RS.1.05 CRORES MADE BY THE AO ON ACCOUNT OF BOGUS PURCHASES U/S 69C OF THE ACT; - SHE HAD FURTHER ERRED IN NOT APPRECIATING THE FACT THAT ALL THE 11 SELLING PARTIES DENIED TO HAVE SOLD THE GOODS BUT ACCEPTED TO HAVE ISSUE D ONLY ACCOMMODATION BILLS AND MAJOR PAYMENTS AGAINST PURCHASES WERE RECEIVED BACK IN CASH BY THE APPELLANT; THAT THE CIT (A) HAD NOT CONSIDERED THE MATERIAL EVIDENC E BROUGHT ON RECORD BY THE AO; AND THAT SHE OUGHT TO HAVE UPHELD THE ORDER OF THE AO IN TOTO. 6.2.1. IT WAS THEREFORE VOCIFEROUSLY PLEADED THA T THE IMPUGNED ORDER OF THE LD. CIT (A) REQUIRES TO BE ANNULLED AND THAT OF THE AO S ORDER BE SUSTAINED. ITA NO. 1827-1954/AHD/2005 ASSESSM ENT YEAR 2002-03 6 7. WE HAVE ATTENTIVELY CONSIDERED THE RIVAL SUBMIS SIONS METICULOUSLY PERUSED THE RELEVANT RECORDS AND ALSO THE DOCUMENTA RY EVIDENCES ADDUCED BY THE LD. A R IN THE SHAPE OF A PAPER BOOK AND ALSO VARIOUS C ASE LAWS ON WHICH THE APPELLANT HAD PLACED UNSTINTED FAITH. 7.1. THE APPELLANT HAD CLAIMED THAT THE TOTAL PURC HASES WERE TO THE TUNE OF RS.1.54 CRORES FROM THE TWELVE PARTIES AND TO STREN GTHEN ITS CLAIM IT HAD FURNISHED CONFIRMATION LETTERS FROM THE ELEVEN PARTIES. ACCOR DING TO THE AO OUT OF 11 PARTIES BASED IN SURAT SEVEN PARTIES WERE EXAMINED ON OATH AND THEY HAVE PRODUCED THE REQUISITE DETAILS EXCEPT FOR THEIR PURCHASES AND SA LES REGISTERS CLAIMING THAT ALL THOSE BILLS WERE BELOW RS.20000/- BUT NO REGISTERS WERE MAINTAINED. IT WAS THE CASE OF THE AO THAT THERE WAS IMMEDIATE CASH WITHDRAWALS AFTER THE PAYMENTS WERE MADE TO THEM AND ALL OF THEM CONFIRMED THE FACT THAT THERE WAS N O SALE TO THE APPELLANT AND THEY HAVE ONLY CHARGED COMMISSION AT RS.300/- PER RS.1 LAKH O F BILL AMOUNT. THIS ACCUSATION OF THE AO HAS BEEN HOTLY CONTESTED BY THE APPELLANT TH AT THOSE PERSONS USED TO BUY GOODS IN A VERY SMALL QUANTITY FROM VARIOUS PERSONS WITH A CON DITION THAT THE PAYMENT OF PURCHASERS WILL BE GIVEN ONLY AFTER THE PAYMENTS BEING RECEIVED. HENC E THEY ARE BOUND TO WITHDRAW THE CASH IMMEDIATELY AFTER THE PAYMENTS ARE BEING RECEIVED S O THAT THEY CAN MAKE PAYMENT FOR THEIR PURCHASES. SO THE WITHDRAWALS OF CASH BY THE PERSON S FROM WHOM GOODS HAVE BEEN PURCHASED DO NOT PROVE THAT THE PAYMENTS HAVE COME BACK TO THE A SSESSEE AND HENCE IT IS OF NO USE. THE ASSESSEE HAS NOTHING TO DO WITH IT I.E. THE ASSESS EE IS NOT SUPPOSED TO TAKE CARE OF THE FACT THAT HOW THE FUNDS OF ITS PAYMENTS WERE BEING USED BY TH E PARTIES. IT WAS FURTHER CONTENDED THAT ALL THE REQUISITE DETAILS HAVE BEEN SUBMITTED TO TH E AO WHO HAD ACCEPTED THAT THE ITA NO. 1827-1954/AHD/2005 ASSESSM ENT YEAR 2002-03 7 APPELLANT MAINTAINED QUANTITY-WISE DETAILS IN RESPE CT OF MATERIALS PURCHASED AND EXPORTED. INVENTORY DETAILS OF CLOSING STOCK FURNI SHED WERE ALSO NOT IN DISPUTE. 7.2. THE LD. CIT (A) HAD ALSO IN HER IMPUGNED ORDE R FAIRLY CONCEDED THAT 2.12. HOWEVER IT IS ALSO A FACT THAT EXPORTS HAVE TAKEN PLACE I.E. SALES ARE REALIZED AND THEREFORE PURCHASES MUST HAVE BEEN MADE IN CASH FROM PARTIES WHOSE DETAILS ONLY THE ASSESSEE IS PRIVY TOO AND MAY AS WELL BE UN REGISTERED DEALERS. MOREOVER THE APPELLANT HAD FURNISHED COPIES OF AFFIDAVITS OF THE ELEVEN PARTIES WHICH WERE EXEC UTED BEFORE THE EXECUTIVE MAGISTRATE OF SURAT WHEREIN IT HAS BEEN EMPHATICALLY STRESSED THAT THE SALES OF DIAMONDS WERE MADE TO THE APPELLANT DURING THE RELEVANT PERIOD UN DER CHALLENGE AND THE PAYMENTS HAVE BEEN RECEIVED THROUGH CHEQUES. THE AFFIRMATIO NS MADE IN THE AFFIDAVITS WHICH WERE EXECUTED BEFORE NONE OTHER THAN AN EXECUTIVE M AGISTRATE CANNOT BE TERMED AS A SELF-SERVING DOCUMENT AND THAT IT HAS NO EVIDENTIAR Y VALUE. THE SANCTITY OF AN AFFIDAVIT CANNOT BE UNDERMINED SO LIGHTLY. ONCE THE AFFIDAVI TS OF THE PARTIES HAVE BEEN PLACED AT THE DOORSTEP OF THE REVENUE THE ONUS HAD FAIRLY LI ES WITH THE REVENUE TO EXPOSE THE GENUINENESS OR OTHERWISE OF THE CONTENTS OF SUCH AF FIDAVITS. HOWEVER THERE WAS NO TRACE IN THE IMPUGNED ORDER OF THE AO AS TO WHETHER THE VERACITY OF THE PARTIES CONTENTIONS HAD BEEN PUT UNDER THE SCANNER. 7.3. LET US NOW HAVE A GLIMPSE OF THE JUDICIAL VIEW ON THE ISSUE. I. AN IDENTICAL ISSUE TO THAT O F THE PRESENT APPELLANT HAD CROPPED UP BEFORE THE HONBLE A BENCH IN THE CASE OF SHRI TOLARAM B SHARMA V. ITO W-6(4) SURAT [IN ITA NOS.2239 & 2291/AHD/2004 DATED: 25.1.2008 AY 2001-02]. THE ISSUE BEFORE THE HONBLE BENCH WAS IN BRIEF THAT AS TO WHETHER THE LD. CIT (A) HAD ERRED IN DIRECTIN G THE ITA NO. 1827-1954/AHD/2005 ASSESSM ENT YEAR 2002-03 8 AO TO RESTRICT THE ADDITION OF RS.32.67 LAKHS ON AC COUNT OF BOGUS PURCHASES MADE U/S 69 OF THE ACT TO THE PEAK OF DISPUTED TRANSACTIONS WORKED OUT AT A SUM OF RS.5.05 LAKHS? 7.3.1. AFTER DUE CONSIDERATION OF THE CONTENTIONS OF THE EITHER PARTIES AND ALSO ANALYZING THE ISSUE IN DEPTH WITH ILLUSTRATIONS AS RECORDED IN ITS FINDINGS THE HONBLE BENCH HAD OBSERVED THUS 9.2 THEREFORE WE ARE OF THE OPINION THAT THERE IS NO J USTIFICATION FOR SUCH ADDITION. ADDITION IN SUCH CASE CAN BE MADE ONLY IN THE CIRCUMSTANCES AND FOR THE REASONS STATED AS UNDER: FIRST OF ALL WE ARE OF THE OPINION THAT ONCE IT IS FOUND THAT THE ASSESSEE HAS DULY RECORDED THE ALLEGED PURCHASES (QUANTITY AS WELL AS THE VALUE) I N ITS BOOKS OF ACCOUNT AND THE PAYMENT HAS GONE OUT OF BOOKS OF ACCOUNT THEN THERE IS NO QUES TION OF ASSUMING THE PAYMENT OF PURCHASE PRICE AS HAVING BEEN MADE FROM UNDISCLOSED SOURCES AND CONSEQUENTLY THERE CANNOT BE ANY ADDITION ON ACCOUNT OF UNDISCLOSED INVESTMENT IN SU CH PURCHASES. (A) IF THE AFORESAID FACT IS COMING OUT FROM THE BOOKS OF ACCOUNT THE ADDITION IF ANY CAN BE MADE ONLY ON ACCOUNT OF FOLLOWING TWO C OUNTS: (I) IF IT IS ESTABLISHED THAT SALE OF GOODS SO PURCHASE D (IF SOLD) IS NOT ACCOUNTED FOR IN THE BOOKS OF ACCOUNT; OR (II) THE GOODS SO PURCHASED ARE NOT ACCOUNTED FOR IN THE CLOSING STOCK (IF NOT SOLD). 9.3. IT IS THEREFORE CLEAR THAT WHERE THE SALES CORRESPONDING TO SUCH PURCHASES ARE FOUND RECORDED IN THE BOOKS (IF SOLD) OR ARE FOUND RECORD ED IN THE CLOSING STOCK (IF NOT SOLD) THEN THERE CANNOT BE ANY ADDITION EXCEPT ON THE FOLLOWIN G COUNTS: (A) IF THERE IS AN ALLEGATION OF SUPPRESSION OF SALE PRICE OR SUPPRESSION OF VALUE OF CLOSING STOCK AND FOR THAT PURPOSE THE ONUS IS ON THE REVENUE TO ESTABLISH THAT THE ASSESSEE HAS EITHER SUPPRESSED THE SALE PRICE OR TH E VALUE OF CLOSING STOCK EITHER QUANTUM-WISE OR VALUE-WISE MEANING THEREBY THAT UN LESS AND UNTIL ANY OF THESE TWO INGREDIENTS ARE ESTABLISHED BY THE REVENUE THE RE CANNOT BE ANY ADDITION FOR SO CALLED BOGUS/IN-GENUINE PURCHASES; (B) THERE IS ANOTHER WAY OF MAKING ADDITION AND THAT CA N BE ONLY WHEN THE REVENUE IS ABLE TO ESTABLISH THAT THE ASSESSEE HAS INFLATED TH E PURCHASES EITHER BY WAY OF VALUE OR BY WAY OF QUANTITY; ITA NO. 1827-1954/AHD/2005 ASSESSM ENT YEAR 2002-03 9 BUT SO FAR AS QUANTITY IS CONCERNED THE ONUS IS O N THE ASSESSEE TO ESTABLISH THAT WHATEVER QUANTITY WAS PURCHASED WAS EITHER SOLD OR WAS AVAILABLE IN CLOSING STOCK. (C) SO FAR AS INFLATION OF PURCHASE PRICE IS CONCERNED HERE AGAIN WE ARE OF THE OPINION THAT THE ONUS IS ON THE REVENUE TO ESTABLIS H THIS FACT. (D) ANOTHER WAY OF MAKING ADDITION IN ASSESSEES HANDS CAN BE IF REVENUE SUCCEEDS IN ESTABLISHING THAT THE PURCHASE PRICE PAID BY THE AS SESSEE THROUGH ITS BOOKS OF ACCOUNT HAS COME BACK TO THE ASSESSEE AND HERE AGAI N WE ARE OF THE OPINION THAT ONUS IS ON THE REVENUE TO ESTABLISH SUCH A FACT. 9.4. MEANING THEREBY THAT THERE CANNOT BE ANY ADD ITION EITHER ON ACCOUNT OF UNDISCLOSED INVESTMENT OR ON ACCOUNT OF UNDISCLOSED SALES OF UN DISCLOSED PROFIT ON THE GROUND THAT SOME PURCHASES ARE CONSIDERED TO BE BOGUS OR IN-GENUINE ONLY FOR WANT OF AVAILABILITY OF THE SELLER. 10. FROM THE ABOVE DISCUSSION WE ARE OF THE OP INION THAT IN A GIVEN CASE IF - UNTIL THE REVENUE ESTABLISHES SUCH FACT BY COGENT MATERIAL. 11. COMING TO THE PRESENT CASE ADMITTEDLY THE P URCHASES MADE BY THE ASSESSEE FROM THE RELEVANT FOUR PARTIES QUANTITY-WISE AS WELL AS VAL UE-WISE HAVE BEEN FOUND TO HAVE BEEN RECORDED IN THE BOOKS OF ACCOUNT THE PAYMENT FOR S UCH PURCHASES HAS BEEN FOUND TO HAVE BEEN MADE BY CROSSED CHEQUES AND DULY RECORDED IN T HE BOOKS OF ACCOUNT THE SALES CORRESPONDING TO SUCH PURCHASES HAVE BEEN FOUND REC ORDED IN THE BOOKS OF ACCOUNT AND IT IS SO BECAUSE REVENUE HAS NOT DOUBTED THE GENUINENESS OF THE SALES RATHER HAS ACCEPTED THE SAME THERE IS NO ALLEGATION OF SUPPRESSION OF VALU E OF CLOSING STOCK OR OF THE SALES QUANTITY- WISE OR VALUE-WISE AND THERE IS NO ALLEGATION OF IN FLATION OF PURCHASES ALSO. IN VIEW OF THESE FACTS WE ARE OF THE OPINION THAT THERE COULD NOT B E ANY ADDITION ON ANY ACCOUNT. CONSEQUENTLY EVEN THE ADDITION SUSTAINED BY THE CI T (APPEALS) ON THE BASIS OF PEAK OF PURCHASES IN OUR OPINION IS NOT SUSTAINABLE AND W E DELETE THE SAME. II. THE HONBLE JURISDICTIONAL HIGH COURT [TAX A PPEAL NO.1344 OF 2008 WITH TAX APPEAL NO.1355 OF 2008 DATED: 9.2.2010] IN THE CASE OF ITO W 6-4 V. TOTARAM B SHARMA PROPRIETOR OF SUPER THERM DEALT WITH ONE O F THE QUERIES OF THE REVENUE AS TO WHETHER ON THE FACTS AND IN THE CIRCUMSTANCES OF TH E CASE THE INCOME-TAX APPELLATE TRIBUNAL IS RIGHT IN LAW IN DELETING THE ADDITION MADE BY TH E ASSESSING OFFICER UNDER SECTION 69C OF THE INCOME-TAX ACT ON ACCOUNT OF UNEXPLAINED INVESTMENT TO THE TUNE OF RS.32 67 978? AFTER DUE CONSIDERATION OF THE FACTS ON THE ISSUE AND ALSO TAKING INTO COGNIZANCE OF THE REVENUES CONTENTIONS RECORDED TH EREIN THE HONBLE DIVISION BENCH HAD OBSERVED THUS ITA NO. 1827-1954/AHD/2005 ASSESSM ENT YEAR 2002-03 10 10. WE HAVE CONSIDERED MADE BY MR. NAIK AND ALSO P ERUSED THE ORDERS PASSED BY THE AUTHORITIES BELOW. FIRST OF ALL IT IS TO BE RECOR DED THAT IN THE ORDER PASSED BY THE ASSESSING OFFICER THE ASSESSING OFFICER HAS STARTED THE DISC USSION ON THE ISSUE OF BOGUS PURCHASES AND ULTIMATELY CAME TO THE CONCLUSION THAT THOUGH THE P URCHASES CAN BE SAID TO BE GENUINE THE PAYMENTS HOWEVER FOR SUCH PURCHASES WERE MADE BY THE ASSESSEE IN CASH WHICH IS UNACCOUNTED FOR. AS SUCH THERE IS NO BASIS FOR AR RIVING AT THIS CONCLUSION. THE CIT (APPEALS) HAS CONSIDERED THESE TRANSACTIONS OF PURC HASES WHICH ARE OF SMALL IN NATURE AND ARRIVED AT PEAK OF RS.5 05 800/-. HOWEVER THE TRI BUNAL HAS MADE DETAILED ANALYSIS OF THE FACTS AND AFTER MAKING CERTAIN PROPOSITIONS WHICH A RE RELEVANT IN SUPPORT OF THESE TRANSACTIONS THE TRIBUNAL HAS RECORDED THAT THE PU RCHASES MADE BY THE ASSESSEE FROM FOUR DIFFERENT PARTIES ARE DULY RECORDED PAYMENT FOR SU CH PURCHASES ARE ALSO FOUND TO BE RECORDED AND REVENUE HAS NOT DOUBTED THE GENUINENESS OF THE SALES RATHER HAS ACCEPTED THE SAME THERE IS NO ALLEGATION OF SUPPRESSION OF SALE PRICE OR SU PPRESSION OF VALUE OF CLOSING STOCK EITHER QUANTITY WISE OR VALUE WISE AND THERE IS NO ALLEGAT ION OF INFLATION OF PURCHASES ALSO. THE TRIBUNAL THEREFORE CAME TO THE CONCLUSION THAT NO ADDITION CAN BE MADE ON EITHER OF THESE COUNTS AND THE PEAK ARRIVED AT BY THE CIT (APPEALS) IS ALSO NOT JUSTIFIED. 7.4. IN AN OVERALL CONSIDERATION OF THE FACTS AND CIRCUM STANCES OF THE ISSUE AS DELIBERATED UPON IN THE FORE-GOING PARAGRAPHS AND A LSO IN CONFORMITY WITH THE RULINGS OF THE HONBLE JURISDICTIONAL HIGH COURT AND THE FINDI NGS OF THE HONBLE A BENCH CITED SUPRA ON A SIMILAR ISSUE WE ARE OF THE UNANIMOUS V IEW THAT THERE CAN BE NO ADDITION ON ANY ACCOUNT AND CONSEQUENTLY THE STAND OF THE LD. CIT (A) IN SUSTAINING 50% OF RS.1.05 CRORES REQUIRES TO BE DELETED. IT IS ORDER ED ACCORDINGLY. 7.5. IN A NUT-SHELL THE ADDITION OF RS.1.05 CRORES MADE BY THE AO U/S 6 9C OF THE ACT IS DELETED. 8. THE OTHER GRIEVANCE OF THE APPELLANT BEING THAT THE LD. CIT (A) HAD ERRED IN NOT ALLOWING CONSEQUENTIAL HIGHER DEDUCTION U/S 80HHC O F THE ACT. 8.1 HOWEVER AT THE GLANCE OF THE GROUNDS OF APPEAL RAISED BEFORE THE FIRST APPELLATE AUTHORITY IT WAS NOTICED THAT NO SUCH A CLAIM WAS PUT FORTH BEFORE THE CIT (A) FOR REMEDY. WE THEREFORE FIND NO INFIRMITY IN THE IM PUGNED ORDER OF THE LD. CIT (A) SO FAR AS THIS ISSUE IS CONCERNED. HOWEVER THE APPELLANT WILL BE AT LIBERTY TO APPROACH THE AO FOR REDRESS. ITA NO. 1827-1954/AHD/2005 ASSESSM ENT YEAR 2002-03 11 ITA NO.1954/2005 BY THE REV ENUE : 9. THE LONE GRIEVANCE OF THE REVENUE THAT THE LD. C IT (A) HAD ERRED IN DELETING THE ADDITION OF RS.52.95 LAKHS OUT OF THE TOTAL ADDITIO N OF RS.1.05 CRORES BECOMES REDUNDANT SINCE THIS BENCH HAS TAKEN A VIEW IN THE APPELLANT S APPEAL IN PARA NO.7.4 ABOVE THAT THE ADDITION OF RS.1.05 CRORES MADE BY THE AO U/S 6 9C OF THE ACT REQUIRES TO BE DELETED. IN THE RESULT : (I) THE APPELLANTS APPEAL (ITA NO. 1827/05 ) IS PARTLY ALLOWED; & (II) THE REVENUES APPEAL (ITA NO. 1954/05) IS DISMISSED. ORDER PRONOUNCED IN OPEN COURT ON 11 - 11 - 201 1. SD/- SD/- (BAHVNESH SAINI) (A. MOHAN ALANKAMONY) JUDICIAL MEMBER A CCOUNTANT MEMBER AHMEDABAD. S.A.PATKI. COPY OF THE ORDER FORWARDED TO: - 1. THE APPELLANT. 2. THE RESPONDENT. 3. THE CIT (APPEALS)-IV SURAT. 4. THE CIT CONCERNED. 5. THE DR. ITAT AHMEDABAD. 6. GUARD FILE. BY ORDER DEPUTY/ASSTT.REGISTRAR ITAT AHMEDABAD. ITA NO. 1827-1954/AHD/2005 ASSESSM ENT YEAR 2002-03 12 1.DATE OF DICTATION - -2011 2.DATE ON WHICH THE TYPED DRAFT IS PLACED BEFORE TH E DICTATING / / 2011 MEMBER.OTHER MEMBER. 3.DATE ON WHICH THE APPROVED DRAFT COMES TO THE SR. P.S./P.S 11 -11 -2011. 4.DATE ON WHICH THE FAIR ORDER IS PLACED BEFORE THE DICTATING MEMBER FOR PRONOUNCEMENT 11 - 11 -2011 5.DATE ON WHICH THE FAIR ORDER COMES BACK TO THE SR .P.S./P.S 11 - 11 -2011 6.DATE ON WHICH THE FILE GOES TO THE BENCH CLERK 11 - 11 -2011. 7.DATE ON WHICH THE FILE GOES TO THE HEAD CLERK . 8.THE DATE ON WHICH THE FILE GOES TO THE ASSTT. REG ISTRAR FOR SIGNATURE ON THE ORDER 9.DATE OF DESPATCH OF THE ORDER..