Ashoke Singh, Kolkata v. DCIT, C ircle- 51, Kolkata, Kolkata

ITA 1873/KOL/2010 | 2007-2008
Pronouncement Date: 11-03-2011 | Result: Partly Allowed

Appeal Details

RSA Number 187323514 RSA 2010
Bench Kolkata
Appeal Number ITA 1873/KOL/2010
Duration Of Justice 5 month(s) 5 day(s)
Appellant Ashoke Singh, Kolkata
Respondent DCIT, C ircle- 51, Kolkata, Kolkata
Appeal Type Income Tax Appeal
Pronouncement Date 11-03-2011
Appeal Filed By Assessee
Order Result Partly Allowed
Bench Allotted C
Tribunal Order Date 11-03-2011
Assessment Year 2007-2008
Appeal Filed On 06-10-2010
Judgment Text
IN THE INCOME TAX APPELLATE TRIBUNAL C BENCH: KOL KATA () BEFORE /AND . . !' ) [BEFORE HONBLE SRI MAHAVIR SINGH JM & HONBLE SRI C. D. RAO AM] # # # # / I.T.A NO. 1873/KOL/2010 $% &' $% &' $% &' $% &'/ // / ASSESSMENT YEAR: 2007-08 ASHOK SINGH VS DEPUTY COMMISSIONER OF INCOME-TA X (PAN-ASUPS 0861 R) CIRCLE-51 KOLKATA ( )* /APPELLANT ) (+ )*/ RESPONDENT ) FOR THE APPELLANT: SHRI SOMNATH GHOSH FOR THE RESPONDENT: SHRI S. K. MALAKAR !- / ORDER PER MAHAVIR SINGH JM ( ) THIS APPEAL BY ASSESSEE IS ARISING OUT OF THE ORDER OF CIT(A)-XXXII KOLKATA IN APPEAL NO.94/CIT(A)-XXXII/09-10/CIR-51/KOL VIDE DA TED 22.06.2010. ASSESSMENT WAS FRAMED BY DCIT CIRCLE-51 KOLKATA U/S 143(3) O F THE INCOME TAX ACT 1961 (HEREINAFTER REFERRED TO AS THE ACT) FOR ASSESSME NT YEAR 2007-08 VIDE HIS ORDER DATED 31.12.2009. 2. DURING THE COURSE OF HEARING THE LD. COUNSEL FOR THE ASSESSEE STATED THAT HE HAS FILED REVISED GROUND OF APPEAL IN TERMS OF RULE 11 OF ITAT RULES 1963. ON QUERIES FROM THE BENCH THE LD. DR HAS NOT OBJECTED TO THE FILING OF THE REVISED GROUNDS IN TERMS OF RULE 11 OF ITAT RULES 1963. ACCORDINGLY SAME ARE ADMITTED AND ADJUDICATED UPON. 3. THE FIRST ISSUE IN THIS APPEAL OF THE ASSESSEE I S AGAINST THE ORDER OF CIT(A) CONFIRMING THE DISALLOWANCE MADE BY ASSESSING OFFIC ER ON ACCOUNT OF LABOUR CHARGES FOR NON-DEDUCTION OF TDS U/S. 194C(2) OF THE ACT AN D READ WITH SECTION 40A(IA) OF THE ACT. FOR THIS THE ASSESSEE HAS RAISED THE FOLLOWI NG GROUND NO.1: 1. FOR THAT THE LD. CIT(A)-XXXII KOLKATA ACTED UNL AWFULLY IN UPHOLDING THE IMPUGNED ADDITION IN THE SUM OF RS.9 39 000/- MADE BY WAY OF DISALLOWANCE ON ITA 1873/K/2010 ASHOKE SINGH AY 07-08 ACCOUNT OF LABOUR CHARGES BY THE LD. DEPUTY COMMIS SIONER OF INCOME TAX CIRCLE-51 KOLKATA INCLUDING IN SPECULATION SURM ISE SUSPICION AND CONJECTURE ON AN IMAGINARY PROGNOSIS OF APPLICATION OF S.40(A )(IA) OF THE INCOME TAX ACT 1961 FOR THE ALLEGED INFRINGEMENT OF S. 194C(2) OF THE INCOME TAX ACT 1961 AND THE PURPORTED FINDINGS ON THAT BEHALF ARE ALTOGETH ER ARBITRARY BASELESS CAPRICIOUS FLAWED UNJUSTIFIED WRONG AND PERVERS E. 4. THE BRIEF FACTS LEADING TO THE ABOVE ISSUE ARE T HAT THE ASSESSEE HAS CLAIMED LABOUR PAYMENTS OF RS.25 01 634/- FOR DEPLOYMENT OF LABOUR ERS UNDER VARIOUS PROJECTS. THE ASSESSEE HAS UNDERTAKEN 14 PROJECTS OF INDIAN OIL C ORPORATION AND ONE PROJECT OF IBP LTD. THE ASSESSEE IS DOING CONTRACT WORK INCLUDING CONSTRUCTION OF OIL TANK FALSE CEILING BOUNDARY WALL BUILDING GENERATOR ROOM ETC . AT DIFFERENT PLACES IN WEST BENGAL ORISSA AND ASSAM. ACCORDING TO THE ASSESSEE TDS W AS DEDUCTED BY IOC AND IBP AGAINST THE PAYMENTS MADE TO THE ASSESSEE. THE ASS ESSEE IS MAKING LABOUR PAYMENTS TO VARIOUS INDIVIDUALS FOR CARRYING OUT CONTRACT WORK. THE ASSESSING OFFICER DURING THE COURSE OF ASSESSMENT PROCEEDINGS ON VERIFICATION O F LABOUR PAYMENTS NOTED THAT THE ASSESSEE HAD MADE PAYMENT TO HEAD MISTRIES OR SARDA RS EXCEEDING RS.50 000/- AND ACCORDING TO HIM ASSESSEE IS LIABLE TO DEDUCT TDS U/S. 194C(2) OF THE ACT BUT NO TDS WAS DEDUCTED. ACCORDINGLY HE DISALLOWED THE PAYME NTS OF RS.9 39 000/- MADE TO VARIOUS INDIVIDUAL LABOURERS DURING ASSESSMENT YEAR . AGGRIEVED ASSESSEE PREFERRED APPEAL BEFORE CIT(A). THE CIT(A) ALSO CONFIRMED TH E ACTION OF THE ASSESSING OFFICER EXACTLY ON SIMILAR LINES. AGGRIEVED NOW THE ASSES SEE IS IN APPEAL BEFORE US. 5. LD. DR RELIED ON THE ASSESSMENT ORDER AND THE OR DER OF CIT(A). 6. WE HAVE HEARD RIVAL CONTENTIONS AND GONE THROUGH FACTS AND CIRCUMSTANCES OF THE CASE. WE FIND THAT THE ASSESSEE HAS BEEN AWARDED CO NTRACT BY INDIAN OIL CORPORATION AND ALSO OF IBP LTD. THE ASSESSEE IS DOING CONTRAC T WORK INCLUDING CONSTRUCTION OF OIL TANK FALSE CEILING BOUNDARY WALL BUILDING GENERA TOR ROOM ETC. AT DIFFERENT PLACES IN WEST BENGAL ORISSA AND ASSAM. THE ASSESSEE IS EXE CUTING THESE CONTRACTS THROUGH MISTRIES AND SARDARS TO CARRY OUT LABOUR AND MAKING PAYMENTS TO VARIOUS INDIVIDUALS FOR CARRYING OUT LABOUR WORK AND MADE PAYMENT EXCEEDING RS.50 000/- IN THE PRESENT ASSESSMENT YEAR AS LISTED OUT BY THE ASSESSING OFFI CER IN HIS ASSESSMENT ORDER. THE ASSESSING OFFICER HAS DISALLOWED THE PAYMENTS OF LA BOURERS EXCEEDING RS.50 000/- IN ITA 1873/K/2010 ASHOKE SINGH AY 07-08 THE ABSENCE OF NON-DEDUCTION OF TDS IN TERMS OF SEC TION 194C(2) OF THE ACT. HERE THE FACT IS THAT THE ASSESSEE HAS ASSIGNED LABOUR WORK TO VARIOUS INDIVIDUALS FOR CARRYING OUT THE CONTRACT OF CONSTRUCTION OF OIL TANK FALSE CEI LING BOUNDARY WALLS BUILDING GENERATOR ROOM ETC. AND ALL PAYMENTS ARE UNDISPUTEDLY TO INDI VIDUALS WHETHER THE ASSESSEE IS A CONTRACTOR OR SUB-CONTRACTOR WHO FALLS U/S. 194(1) OR 194C(2) OF THE ACT. IN VIEW OF THE ABOVE FACTS WE ARE OF THE VIEW THAT THE ASSESSEE H AS NOT GIVEN CONTRACT TO VARIOUS INDIVIDUALS FOR CARRYING OUT LABOUR WORK BUT IS EXE CUTING THE CONTRACT AWARDED BY IOC OR IBP AND THIS IS NOT A LABOUR CONTRACT FALLING U/ S. 194C(1) OF THE ACT OR A SUB-CONTRACT U/S. 194C(2) OF THE ACT. ONCE IT IS ESTABLISHED TH AT THESE PAYMENTS ARE TO LABOURERS THROUGH HEAD MISTRIES OR SARDARS THE SAME CANNOT BE TREATED AS CONTRACT OR SUB-CONTRACT FALLING U/S. 194C(1) OR 194C(2) OF THE ACT THE ASS ESSEE IS NOT LIABLE TO DEDUCT TDS AND CONSEQUENTLY NO DISALLOWANCE CAN BE MADE BY INVOKIN G THE PROVISIONS OF SECTION 40A(IA) OF THE ACT. ACCORDINGLY IN THE PRESENT CASE ALSO THE ASSESSEE IS NOT LIABLE TO DEDUCT TDS AND THE PROVISIONS OF SECTION 40A(IA) OF THE AC T HAS WRONGLY BEEN INVOKED BY THE AO AND CONFIRMED BY CIT(A). WE DELETE THE DISALLOWA NCE AND ORDER ACCORDINGLY. THIS ISSUE OF THE ASSESSEES APPEAL IS ALLOWED. 7. THE NEXT ISSUE IN THIS APPEAL OF THE ASSESSEE IS AGAINST THE ORDER OF CIT(A) CONFIRMING THE DISALLOWANCE OF BOGUS PURCHASES OF R S.13 32 306/-. FOR THIS THE ASSESSEE HAS RAISED THE FOLLOWING GROUND NO.2: 2. FOR THAT THE LD. CIT(A)-XXXII KOLKATA ERRED IN UPHOLDING THE PURPORTED ADDITION MADE ON ACCOUNT OF THE IMPUGNED BOGUS PUR CHASES IN THE SUM OF RS.13 32 306/- BY THE LD. DEPUTY COMMISSIONER OF I NCOME TAX CIRCLE-51 KOLKATA WITHOUT CONSIDERING THE COGENT EXPLANATION UNDERLINED BY IMPECCABLE EVIDENCE ADDUCED ON RECORD AND THE ALLEGED FINDING OF SUSTAINING THE INFIRM ADDITION OF THE SAID AMOUNT IS WHOLLY ARBITRARY E RRONEOUS UNWARRANTED AND PERVERSE. 8. THE BRIEF FACTS LEADING TO THE ABOVE ISSUE ARE T HAT ASSESSING OFFICER NOTED DURING THE COURSE OF ASSESSMENT PROCEEDINGS THAT ASSESSEE HAD MADE CASH PURCHASES AMOUNTING TO RS.13 32 306/- AND IN ORDER TO CARRY OUT VERIFIC ATION OF THE ABOVE PURCHASES NOTICES U/S. 133(6) WERE ISSUED TO THE PARTIES FROM WHOM T HE PURCHASES WERE CLAIMED TO HAVE BEEN MADE BY THE ASSESSEE. ACCORDING TO THE ASSESSI NG OFFICER THESE LETTERS RETURNED UNSERVED BY THE POSTAL AUTHORITIES AND THESE PERSON S WERE UNAVAILABLE ON THE GIVEN ITA 1873/K/2010 ASHOKE SINGH AY 07-08 ADDRESSES. THE ASSESSEE MADE CONTENTIONS BEFORE TH E ASSESSING OFFICER THE CONTENTS AS REPRODUCED IN THE ORDER OF CIT(A) IS BEING AGAIN R EPRODUCED FOR THE SAKE OF CLARITY. THE SUPPLIERS OF MATERIALS ARE RELUCTANT TO RECEIV E ANY LETTER AND ALSO ITS REPLY IF IT COMES FROM INCOME TAX DEPARTMENT DUE TO THEI R FEARNESS ABOUT THE DEPARTMENT OR TO AVOID THE HAZARDNESS RESULTED SUF FERING OF YOUR ASSESEE UNDER SCRUTINY. THE DETAILS OF THEM WHO HAVE GENUINELY TRANSACTED WITH P. R. ENTERPRISES AND MODE OF PAYMENT ARE ENCLOSED HEREW ITH. IN SOME CASES I HAVE MADE CASH PAYMENT IN DIFFERENT DATES DUE TO THE NE CESSITY BUT IT DID NOT INVOLVE OVER RS.20 000/-. 9. ACCORDINGLY THE ASSESSING OFFICER DISALLOWED AN D MADE ADDITION OF BOGUS PURCHASES AT RS.13 32 306/- ON ACCOUNT OF CASH PURC HASES AS BOGUS OR UNVERIFIABLE. AGGRIEVED ASSESSEE PREFERRED APPEAL BEFORE CIT(A). THE CIT(A) ALSO CONFIRMED THE ACTION OF THE ASSESSING OFFICER BY GIVING FOLLOWING FINDING IN HIS APPELLATE ORDER: AS ALREADY DISCUSSED ABOVE DURING THE APPELLANT PRO CEEDINGS THE A.O. OF THE ASSESSEE RELIED UPON ONLY THE STATEMENT OF FACTS A ND THE GROUNDS OF APPEAL FILED BY THE ASSESSEE. AS PER THE GROUND OF APPEAL THE A SSESSEE HAS CONTENDED THAT THE NATURE OF HIS BUSINESS IS THAT SUCH PAYMENTS IN RE MOTE AREAS TO EXECUTE THE PROJECT NEED TO BE MADE IN CASH. HE ALSO CONTEND ED THAT THE A.O. HAD DISALLOWED THE PURCHASES FROM EVEN THAT PERSON FRO M WHOM REPLY TO NOTICE U/S. 133(6) WAS RECEIVED BY HIM. THE ASSESSEE THEREFORE CONTENDED THAT THE DISALLOWANCE MADE BY THE A.O. SHALL BE DELETED. I N THE ASSESSMENT ORDER THE A.O. HAS GIVEN FINDING THAT THE ASSESEE HAD FAILED TO JUSTIFY THE CASH PURCHASES AND SUCH CASH PURCHASES WERE FOUND UNVERIFIABLE. THE ASSESSEE ALSO FAILED TO PRODUCE THE PERSONS WHEN CALLED UPON BY THE A.O. TO DO SO FROM WHOM HE HAD CLAIMED TO HAVE MADE SUCH CASH PURCHASES. SINCE TH E ASSESSEE HAD FAILED TO ESTABLISH THE GENUINENESS OF THE PURCHASE MADE IN CASH WHEN REQUIRED BY THE A.O. TO DO SO AND SINCE THE ASSESSEE HAD FAILED T O ESTABLISH THE GENUINENESS OF SUCH PURCHASES EVEN DURING THE APPELLATE PROCEEDIN G I FIND NO REASON TO INTERFERE WITH THE DECISION OF THE A.O. IN THIS RE GARD. THE ADDITION MADE BY THE A.O. OF RS.13 32 306/- IS THEREFORE UPHELD AND T HIS GROUND OF APPEAL FAILS. AGGRIEVED NOW ASSESSEE IS IN SECOND APPEAL BEFORE US. 10. WE HAVE HEARD RIVAL SUBMISSIONS AND GONE THROU GH FACTS AND CIRCUMSTANCES OF THE CASE. WE FIND THAT THE ASSESSEE HAS DECLARED TO TAL PURCHASES AT RS.1 53 43 634/-. THE ASSESSING OFFICER NOTED FROM THE LIST SHOWING THE NAMES AND ADDRESSES FROM WHOM THE PURCHASES WERE MADE BY THE ASSESSEE AND NOTICES U/S . 133(6) WERE ISSUED TO THE SUPPLIERS OF THE MATERIAL OF ABOVE RS.1 LAC BUT THE SE NOTICES RETURNED UNSERVED AS THESE PARTIES ARE UNTRACEABLE ON THE GIVEN ADDRESSES. TH E ASSESSEE BEFORE THE ASSESSING OFFICER SUBMITTED COPIES OF ACCOUNTS OF THE SUPPLIE RS BUT COULD NOT PRODUCE THESE PARTIES. THE ASSESSING OFFICER NOTED THAT THESE PA RTIES FROM WHOM THE ASSESSEE MADE PURCHASES IN CASH AS LISTED IN THE ASSESSMENT ORDE R AT RS.13 32 306/- HAD INFLATED THE ITA 1873/K/2010 ASHOKE SINGH AY 07-08 PURCHASES AND FAILED TO PROVE THE GENUINENESS OF TH ESE PURCHASES HE DISALLOWED CASH PAYMENTS OF RS.13 32 306/-. WE FIND THAT THE NATUR E OF THE BUSINESS OF THE ASSESSEE IS SUCH THAT TO EXECUTE THE PROJECT IN REMOTE ARE TH E SUPPLIERS SUPPLY THE MATERIAL IN CASH PAYMENT ONLY AS THEY DO NOT BELIEVE IN CHEQUE PAYME NTS. IT IS ALSO A FACT THAT THE ASSESSEE HAS FAILED TO JUSTIFY THE CASH PURCHASES A S HE IS UNABLE TO PRODUCE THESE PARTIES AND THE PAYMENTS ARE ALSO IN CASH. SINCE THE ASSES SEE FAILED TO ESTABLISH THE GENUINENESS OF THE PURCHASES MADE IN CASH THE ASSESSING OFFICE R MADE ADDITION AND CIT(A) UPHELD THE SAME. IT IS ALSO A FACT AS RECORDED IN THE AS SESSMENT ORDER THAT THESE PAYMENTS WERE MADE ON VARIOUS DATES DURING THE YEAR FOR PURCHASE OF MATERIAL IN CASH THE ENTIRE PURCHASE IN CASH CANNOT BE THE PROFIT OF THE ASSESS EE. HERE WE HAVE ALREADY POINTED OUT DURING THE COURSE OF HEARING THE CASE LAW OF THE CO ORDINATE BENCH OF ITAT AHMEDABAD C BENCH IN THE CASE OF VIJAY PROTEINS LTD. VS ACI T (1996) 58 ITD 428 WHEREIN THE BENCH VIDE PARA 19 REPORTED AT PAGE 470 ON THE SIM ILAR FACTS AND CIRCUMSTANCES DECIDED THE ISSUE AS UNDER: 19. WE WILL NOW CONSIDER AS TO HOW MUCH DEDUCTION S HOULD BE ALLOWED TO THE ASSESSEE IN RESPECT OF COST OF PURCHASE OF OIL CAKE S SAID TO HAVE BEEN REALLY RECEIVED BY THEM BUT THE BILLS PRODUCED IN SUPPORT THEREOF WERE NOT GENUINE BILLS. IT IS ABSOLUTELY CLEAR FROM THE FACTS MATER IAL AND EVIDENCE BROUGHT ON RECORD THAT THE ASSESSEE PRODUCED FICTITIOUS VOUCH ERS IN SUPPORT OF PURCHASE OF OIL CAKES SHOWN AS PURCHASED FROM THE 33 BOGUS SUPP LIERS. IT ALSO PRODUCED FICTITIOUS VOUCHERS FOR TRANSPORTATION OF THESE GOO DS. THE GOODS WERE NOT RECEIVED FROM THE PARTIES FROM WHOM IT IS SHOWN TO HAVE BEEN PURCHASED BUT SUCH MATERIAL WAS RECEIVED FROM A DIFFERENT SOURCE WHICH IS EXCLUSIVELY WITHIN THE KNOWLEDGE OF THE ASSESSEE AND NONE ALSO. EVEN A FTER THE AO BROUGHT ADEQUATE MATERIAL ON RECORD WHICH EXPOSES THE FALSE STAND TAKEN BY THE ASSESSEE THE ASSESSEE DID NOT COME OUT WITH THE T RUTH AS TO WHERE FROM IT HAD PURCHASED THE OIL CAKES IN MENTION WHICH ARE SHOWN TO HAVE BEEN PURCHASED FROM THE SAID 33 BOGUS PARTIES. 19.1 THERE COULD BE VARIOUS POSSIBLE ALTERNATIVE SO URCES WHEREFROM THE ASSESSEE COULD HAVE ACQUIRED OIL CAKES FOR PRODUCTION IN THE IR SEP VIZ. (A) IT IS GENERALLY KNOWN THAT THE OIL MILLS ARE EN GAGED IN CARRYING OUT UNACCOUNTED PRODUCTION OF OIL AS WELL AS OIL CAKES. THE ASSESSEE MIGHT HAVE PURCHASED SUCH OIL CAKES OUT OF UNACCOUNTED PRODUCT ION DONE BY VARIOUS OIL MILLS. (B) THE AO IN THE WRITTEN SUBMISSIONS MADE BEFORE T HE TRIBUNAL IN PART B OF THE PAPER BOOK OF THE DEPARTMENT HAS ALSO INDICATED ABOU T ONE MORE POSSIBILITY VIZ. THAT THE ASSESSEE IS HAVING AN OIL MILL AND I S ALSO PRODUCING THE OIL CAKES. THE BOGUS PURCHASE OF OIL CAKES SHOWN BY THE ASSESS EE ACCORDING TO THE AO MIGHT BE OUT OF THEIR OWN UNACCOUNTED PRODUCTION FO R WHICH THE BILLS HAVE BEEN PREPARED BY THE ASSESSEE THEMSELVES IN THE NAMES OF BOGUS CONCERNS. IN THIS REGARD IT WOULD BE WORTHWHILE TO MAKE A REFERENCE T O LETTER DT. 10TH DEC. 1995 SUBMITTED ON BEHALF OF THE ASSESSEE. IT HAS BEEN IN DICATED THAT THE CRUSHING ITA 1873/K/2010 ASHOKE SINGH AY 07-08 CAPACITY OF ASSESSEE'S OWN OIL MILL IS APPROXIMATEL Y 50 TONS PER DAY AND THE CRUSHING CAPACITY OF THE ASSESSEE'S ASSOCIATE CONCE RN IS APPROXIMATELY 62.500 TONS PER DAY. IT HAS BEEN FURTHER STATED THAT CRUSH ING WAS CARRIED OUT ONLY FOR 110 DAYS IN THE YEAR UNDER APPEAL IN ASSESSEE'S OWN MILL. THE CHART SHOWING POWER CONSUMPTION VIS-A-VIS CRUSHING IN ASSESSEE'S OWN MILL HAS ALSO BEEN SUBMITTED ALONG WITH THE LETTER. THE FIGURES OF PRO DUCTION AND THESE DETAILS GIVEN IN THE AFORESAID LETTER SHOW THAT THE INSTALL ED CAPACITY OF THE OIL MILL BELONGING TO THE ASSESSEE HAS BEEN USED ONLY PARTLY . THE RATIO OF CONSUMPTION PER UNIT OF POWER WITH REF ERENCE TO THE PRODUCTION CARRIED OUT IN DIFFERENT MONTHS HAS ALSO NOT BEEN T AKEN INTO CONSIDERATION FOR DETERMINING THE REASONABLENESS OF PRODUCTION SHOWN BY THE ASSESSEE IN THIS OIL MILL. THE POSSIBILITY INDICATED BY THE AO IN THE WR ITTEN SUBMISSIONS MADE IN COMPILATION MARKED AS PART B CANNOT TOTALLY BE RULE D OUT BY THE AO WHILE MAKING AN ADDITION ON ACCOUNT OF LOW YIELD IN THE O IL MILL HAS HIMSELF RESTRICTED THE ADDITION ON ACCOUNT OF INTRODUCTION OF OIL CAKE S ONLY TO THE EXTENT OF RS. 3 19 618 APART FROM THE ALLEGED LOW YIELD OF OIL OB TAINED FROM RAPESEEDS. 19.2 IN ANY CASE THE OIL CAKES SO RECEIVED AND USE D BY THE ASSESSEE IN THE PRODUCTION ACTIVITIES HAS COME OUT OF THE UNACCOUNT ED PRODUCTION OF OIL CAKES OF OTHER MILL OWNERS OR PARTLY FROM OTHER MILL OWNERS AND PARTLY FROM OIL MILLS BELONGING TO THE ASSESSEE AND THEIR ASSOCIATE CONCE RNS. NOTHING DEFINITE CAN BE SAID BECAUSE THE TRUE SOURCE WHEREFROM THE ASSESSEE ACQUIRED SUCH OIL CAKES SHOWN AS HAVING BEEN PURCHASED FROM 33 BOGUS SUPPLI ERS IS KNOWN ONLY TO THE ASSESSEE AND NONE ELSE. BUT ONE THING IS CERTAIN TH AT THE ASSESSEE HAS DEFINITELY INFLATED THE EXPENDITURE IN QUESTION BY SHOWING HIG HER AMOUNT OF PURCHASE PRICE THROUGH THE FICTITIOUS INVOICES IN THE NAMES OF 33 BOGUS SUPPLIERS. 19.3 IT IS WELL KNOWN THAT IF PURCHASES ARE MADE FR OM OPEN MARKET WITHOUT INSISTING FROM THE GENUINE BILLS THE SUPPLIERS MAY BE WILING TO SELL THOSE PRODUCTS AT A MUCH LOWER RATE AS COMPARED TO THE RA TE AT WHICH THEY MAY CHARGE IN CASE THE DEALER HAS TO GIVE A GENUINE SAL E INVOICE IN RESPECT OF THAT SALE AND SUPPLY THE GOODS. THERE MAY BE VARIOUS FACTORS DUE TO WHICH THERE IS BOUND TO BE A SUBSTANTIAL DIFFERENCE BETWEEN THE PARTY PU RCHASE PRICE OF UNACCOUNTED MATERIAL AND RATE OF PURCHASE OF UNACCOUNTED FOR GO ODS. THERE MAY BE A SAVING ON ACCOUNT OF SALES-TAX AND OTHER TAXES AND DUTIES WHICH MAY BE LEVIABLE IN RESPECT OF MANUFACTURE OF SALE OF GOODS IN QUESTION . THE SUPPLIERS OR THE MANUFACTURERS MAKE A SUBSTANTIAL SAVING IN THE INCO ME-TAX IN RESPECT OF INCOME FROM SALE OF UNACCOUNTED GOODS PRODUCED AND SOLD BY THEM. THIS MAY ALSO BE ONE OF THE FACTORS DUE TO WHICH THE SELLER MAY BE W ILLING TO CHARGE LOWER RATES FOR UNACCOUNTED GOODS AS COMPARED TO ACCOUNTED FOR GOODS. KEEPING ALL THESE FACTORS IN MIND AND ALSO KEEPING IN VIEW THE DECISI ON OF THE TRIBUNAL IN THE CASE OF SANJAY OIL CAKE INDUSTRIES VS. IAC ITA NO. 2653 2654 AND 2655/AHD/1988 DT. 29TH APRIL 1994 WE HOLD THAT 25% OF THE PURCH ASE PRICE ACCOUNTED FOR IN THE BOOKS OF ACCOUNTS THROUGH SUCH FICTITIOUS INVOICES IN THE NAME OF 33 BOGUS PARTIES SHOULD BE DISALLOWED OUT OF THE AMOUNT OF P URCHASES SHOWN TO HAVE BEEN MADE FROM THOSE 33 BOGUS SUPPLIERS. THE TOTAL PURCH ASES SHOWN AS MADE FROM THESE 33 PARTIES WHICH HAVE BEEN DISALLOWED BY THE AO ARE AS UNDER : RS. (I) BOGUS PURCHASES AS DISCUSSED IN PARA 70 03 826 38 READ WITH PARA 22 OF THE ASSESSMENT ORDER (II) BOGUS PURCHASE AS DISCUSSED 17 99 788 IN PARA 40 OF THE ASSESSMENT ORDER 17 99 788 ITA 1873/K/2010 ASHOKE SINGH AY 07-08 WE DIRECT THE AO TO DISALLOW 25% OF THE AFORESAID AMOUNT ON ACCOUNT OF INFLATION OF PURCHASE PRICE. THE AMOUNT OF DISALLOW ANCE WOULD ACCORDINGLY COME TO RS. 22 00 903 WHICH MAY BE ROUN DED TO RS. 22 LAKHS. THE AMOUNT OF EXPENDITURE SHOWN BY WAY OF FR EIGHT ON THE AFORESAID PURCHASES HAS BEEN SEPARATELY DISALLOWED BY THE AO TO THE TUNE OF RS. 5 02 752. SINCE THE ASSESSEE HAS FAILED TO P ROVE THAT SUCH OIL CAKES WERE RECEIVED FROM OUTSIDE THE STATE AS SHOWN AS P ER THE FICTITIOUS INVOICES WE AGREE WITH THE VIEW TAKEN BY THE DEPART MENTAL AUTHORITIES IN RESPECT OF DISALLOWANCE OF THE ENTIRE AMOUNT OF FREIGHT IN RELATION TO THE AFORESAID PURCHASES. THE DISALLOWANCE OF RS. 5 02 752 IS ALSO THEREFORE CONFIRMED. THUS THE AO IS DIRECTED TO R ESTRICT THE DISALLOWANCE TO AN AGGREGATE SUM OF RS. 27 02 752 (RS. 22 LAKHS PLUS RS. 5 02 752) AS AGAINST THE AGGREGATE DISALLOWANCE OF RS. 93 06 366 MADE BY THE AO COMPRISING OF RS. 70 03 826 RS. 17 99 788 AND RS. 5 02 752. IN VIEW OF THE ABOVE FACTS AND CIRCUMSTANCES IN THE PRESENT CASE AND THE CASE LAW OF VIJAY PROTEINS LTD. SUPRA THE FACTS BEING EXACTLY IDENTICAL RESPECTFULLY FOLLOWING WE DIRECT THE ASSESSING OFFICER TO RECOMPUTE THE DISAL LOWANCE OF THESE BOGUS PURCHASES AT 25%. ACCORDINGLY THE APPEAL OF THE ASSESSEE IS PA RTLY ALLOWED. 11. THE NEXT ISSUE IN THIS APPEAL OF THE ASSESSEE I S AGAINST THE ORDER OF CIT(A) CONFIRMING THE ADDITION OF BANK DEPOSITS AS UNEXPLA INED INVESTMENT U/S. 69A OF THE ACT. FOR THIS THE ASSESSEE HAS RAISED THE FOLLOWING GRO UND NO.3: FOR THAT THE LD. COMMISSIONER OF INCOME TAX (APPEA LS)_XXXII KOLKATA ACTED ILLEGALLY AND WITH MATERIAL IRREGULARITY IN UPHOLDI NG THE IMPUGNED ADDITION OF RS.29 73 826/- MADE BY THE LD. DEPUTY COMMISSIONER OF INCOME TAX CIRCLE-15 KOLKATA WRONGLY INVOKING THE PROVISIONS OF S. 69A O F THE INCOME TAX ACT 1961 AND THE ALLEGED FINDING ON THAT ISSUE IS WHOLLY ARB ITRARY UNREASONABLE AND PERVERSE. 12. BRIEF FACTS LEADING TO THE ABOVE ISSUE ARE THAT ASSESSEE HAS MADE DEPOSIT EITHER THROUGH TRANSFER FROM OTHER ACCOUNTS OR IN CASH IN CENTRAL BANK OF INDIA PURBA PUTIARI BRANCH IN HIS NAME I.E. ACCOUNT NO.1068474737. ASS ESSING OFFICER DURING THE COURSE OF ASSESSMENT PROCEEDINGS REQUIRING THE ASSESSEE T O EXPLAIN THESE DEPOSITS MADE DURING THE PERIOD FROM 14.10.2006 TO 31.3.2007 AS UNDER: SL. NO . DATE AMOUNT 1. 02.12.2006 RS. 4 56 500/- 2. 18.12.2006 RS. 4 57 490/- 3. 15.02.2007 RS. 5 13 427/- 4. 15.02.2007 RS. 5 13 427/- 5. 15.02.2007 RS. 5 13 427/- 6. 08.03.2007 RS. 5 128/- RS.29 73 826/- ITA 1873/K/2010 ASHOKE SINGH AY 07-08 THE ASSESSEE BEFORE ASSESSING OFFICER STATED THAT T HESE DEPOSITS ARE MADE OUT OF WITHDRAWAL OF FIXED DEPOSITS OF ASSESSEES FATHER A ND THE SOURCE OF FIXED DEPOSITS AND OTHER DEPOSITS IN FATHERS ACCOUNT IS OUT OF SALE C ONSIDERATION OF HUF PROPERTY (AGREEMENT OF THE PROPERTY BELONGING TO HUF AT BIHA R WAS FILED BEFORE ASSESSING OFFICER) FOR A CONSIDERATION OF RS.23 60 300/-. TH E ASSESSEE ALSO STATED THAT HE HAS WITHDRAWN DEPOSIT IN CASH ON DIFFERENT DATES AND RE -DEPOSITED THE SAME ON OTHER DATES. THE ASSESSING OFFICER HAS NOT ACCEPTED THE EXPLANAT ION OF THE ASSESSEE AND ADDED AS UNEXPLAINED DEPOSITS BY TREATING THE SAME AS UNDISC LOSED INCOME AT RS.29 73 826/-. AGGRIEVED ASSESSEE PREFERRED APPEAL BEFORE CIT(A) AND HE ALSO CONFIRMED THE ACTION OF THE ASSESSING OFFICER EXACTLY ON SIMILAR LINES. RE LEVANT FINDING OF CIT(A) READS AS UNDER: DURING THE APPELLATE PROCEEDINGS ALSO NO EVIDENCE H AS BEEN ADDUCED BY THE ASSESSEE TO EXPLAIN THE SOURCES OF DEPOSIT MADE IN THE ABOVE MENTIONED BANK ACCOUNT THEREFORE I FIND THE ADDITION OF RS.29 73 826/- MADE BY THE A.O. ON THIS ACCOUNT TO BE JUSTIFIED. ACCORDINGLY THE SAID ADD ITION IS CONFIRMED AND GROUND NO. 4 IS THUS DISMISSED. AGGRIEVED NOW ASSESSEE IS IN APPEAL BEFORE US. 13. THE ASSESSEE BEFORE US FILED COPY OF CONVEYANCE DEED OF THE PROPERTY OF HUF AT PAGE 90 WHEREBY HE TRIED TO PROVE THAT A SUM OF RS .23 60 300/- WAS RECEIVED. THE ASSESSEE STATED THAT ALL THESE DEPOSITS ARE EXPLAIN ED DEPOSITS BUT ASSESSING OFFICER HAS NOT PROVIDED OPPORTUNITY TO EXPLAIN THE SAME. THE ASSESSEE ALSO CONTENDED THAT APART FROM SALE CONSIDERATION OF LAND IN BIHAR I.E. OF HU F THE ASSESSEES FATHER HAS ALSO RECEIVED CASH ON ACCOUNT OF WITHDRAWAL FROM THE BAN K ACCOUNT WHICH WAS REDEPOSITED. WE FIND THAT THESE FACTS ARE EMANATING OUT OF THE O RDERS OF ASSESSING OFFICER AND EVEN OF CIT(A). THE ASSESSING OFFICER NO DOUBT HAS NOTED THE FACT THAT ASSESSEE HAS FILED COPY OF SALE AGREEMENT OF HUF PROPERTY IN BIHAR FOR A SUM OF RS.23 60 300/- AND ALSO THE BANK STATEMENTS WHERE THE ASSESSEE HAS IDENTIFI ED THE WITHDRAWALS WHICH WAS SUBSEQUENTLY DEPOSITED IN THE BANK ACCOUNT. SINCE THE PROPER INVESTIGATION IS NOT CARRIED OUT BY ASSESSING OFFICER OR BY CIT(A) AND F ROM THESE DOCUMENTS WHETHER THESE WILL PROVE THE SOURCE OR NOT NO CATEGORICAL FINDIN G IS RECORDED AND NO SPEAKING ORDER IS PASSED BY THE LOWER AUTHORITIES. IN THE ABSENCE OF THE SAME WE SET ASIDE THIS ISSUE TO THE FILE OF ASSESSING OFFICER. THE ASSESSING OFFICER I S DIRECTED TO CONSIDER THE SALE OF PROPERTY IN BIHAR AND ALSO CASH WITHDRAWALS DEPOSIT ED IN BANK ACCOUNT. HE WILL PROVIDE ITA 1873/K/2010 ASHOKE SINGH AY 07-08 REASONABLE OPPORTUNITY OF BEING HEARD AND ALSO REAS ONABLE OPPORTUNITY TO PRODUCE THE DOCUMENTS TO THE ASSESSEE TO EXPLAIN THE BANK DEPO SITS. THE ASSESSEE WILL ALSO COOPERATE WITH ASSESSING OFFICER TO EXPLAIN THESE D EPOSITS. IN VIEW OF THESE FACTS AND CIRCUMSTANCES WE SET ASIDE THIS ISSUE TO THE FILE OF THE ASSESSING OFFICER. 14. IN THE RESULT THE APPEAL OF THE ASSESSEE IS PA RTLY ALLOWED BUT FOR STATISTICAL PURPOSES. 15. ORDER PRONOUNCED IN OPEN COURT ON 11 TH DAY OF MARCH 2011. SD/- SD/- . . !' (C. D. RAO) (MAHAVIR SINGH) ACCOUNTANT MEMBER JUDICIAL MEMBER ( ' ' ' ') )) ) DATED 11 TH DAY OF MARCH 2011 ./ $01 2 JD.(SR.P.S.) !- 3 +4 5!4&6- COPY OF THE ORDER FORWARDED TO: 1 . )* / APPELLANT SRI ASHOKE SINGH 16/6/2 B. T. ROAD TALPUKUR KOLKATA-700 123. 2 + )* / RESPONDENT DCIT CIRCLE-51 KOLKATA. 3 . -$ / THE CIT(A) KOLKATA 4. -$ ( )/ CIT KOLKATA. 5 . => +$ / DR KOLKATA BENCHES KOLKATA 4 +/ TRUE COPY !-$?/ BY ORDER 1 /ASSTT. REGISTRAR .