Asst. Commissioner of Income tax Cent. Cir. 1, Belgaum v. Shri. Shoukat Pirvalle, Belgaum

ITA 302/PAN/2013 | 2008-2009
Pronouncement Date: 14-11-2014 | Result: Partly Allowed

Appeal Details

RSA Number 30224114 RSA 2013
Assessee PAN ACPPC4777K
Bench Panaji
Appeal Number ITA 302/PAN/2013
Duration Of Justice 1 year(s) 1 month(s) 4 day(s)
Appellant Asst. Commissioner of Income tax Cent. Cir. 1, Belgaum
Respondent Shri. Shoukat Pirvalle, Belgaum
Appeal Type Income Tax Appeal
Pronouncement Date 14-11-2014
Appeal Filed By Department
Order Result Partly Allowed
Bench Allotted DB
Tribunal Order Date 14-11-2014
Date Of Final Hearing 30-09-2014
Next Hearing Date 30-09-2014
Assessment Year 2008-2009
Appeal Filed On 10-10-2013
Judgment Text
IN THE INCOME TAX APPELLATE TRIBUNAL PANAJI BENCH PANAJI BEFORE SHRI P. K. BANSAL HONBLE ACCOUNTANT MEMBER AND SHRI D.T. GARASIA HONBLE JUDICIAL MEMBER ITA NO. 345/PNJ/2013 (ASST. YEAR - 2008 - 09) THE ASSISTANT COMMISSIONER OF INCOME TAX CENTRAL CIRCLE - 1. BELGAM (APPELLANT) VS. SHRI. G CHANDRASHEKHAR PROP. MEGHA MINERAL TRADERTS DR RAMESH COMPOUND 11 TH WARD ANNAPURNA BADAVANE HOSPET - 583201 PAN:AACPPC4777K (RESPONDENT) ITA NOS 293 & 294/PNJ/2013 (ASST. YEARS - 2007 - 08 & 2008 - 09) THE ASSISTANT COMMISSIONER OF INCOME TAX CENTRAL CIRCLE - 1. BELGAM (APPELLANT) VS M/S. NANDI ENTERPRISES NO 1132/2 IV CROSS M J NAGR HOSPET PAN: AAFFN4015K (RESPONDENT) ITA NO.295/PNJ/2013 (ASST. YEAR - 2008 - 09 ) THE ASSISTANT COMMISSIONER OF INCOME TAX CENTRAL CIRCLE - 1. BELGAM (APPELLANT) VS SMT. GEETHA LINGARAJ L/R (LATE) RM LINGRAJ C/O MANOJ KUMAR JAIN M/S GURURAJENDRA MINERALS TRADING COMPANY SATHYANARAYANA NILAYA 100 BED HOSPITAAL ROAD HOSPET - 583201. PAN : ALMPM2583M (RESPONDENT) ITA NO. 296/PNJ/2013 (ASST. YEAR - 2008 - 09) THE ASSISTANT COMMISSIONER OF INCOME TAX CENTRAL CIRCLE - 1. BELGAM (APPELLANT) VS M/S BALAJI IMPEX C/O MANOJ KUMAR JAIN M/S GURURAJENDRA MINERALS TRADING COMPANY SATHYA NARAYANA NILAYA 100 BED HOSPIT AL ROAD HOS PET - 583201. PAN : AAIFB2221N (RESPONDENT) 2 . ITA NOS. 345 293 TO 302 307 311/PNJ/ 2013 ( A.Y. 2007 - 08 & 2008 - 09 ) ITA NO. 297/PNJ/2013 (ASST YEAR - 2008 - 09) THE ASSISTANT COMMISSIONER OF INCOME TAX CENTRAL CIRCLE - 1. BELGAM (APPELLANT) SRI SRIPAL JAIN C/O MANOJ KUMAR JAIN M/S GURURAJENDRA MINERALS TRADING COMPANY SATHYA NARAYANA NILAYA 100 BED HOSPIT AL ROAD HOSPET - 583201. PAN : AJCPJ1132F (RESPONDENT) ITA NO. 298/PNJ/2013 (ASST YEAR - 2007 - 08) THE ASSISTANT COMMISSIONER OF INCOME TAX CENTRAL CIRCLE - 1. BELGAM (APPELLANT) VS SRI P N CHANDRQAKANT C/O MANOJ KUMAR JAIN M/S GURURAJENDRA MINERALS TRADING COMPANY SATHYANARAYANA NILAYA 100 BED HOSPITAAL ROAD HOSPET - 583201. PAN : ADIPC6070F (RESPONDENT) ITA NO. 299/PNJ/2013 (ASST YEAR - 2008 - 09) THE ASSISTANT COMMISSIONER OF INCOME TAX CENTRAL CIRCLE - 1. BELGAM (APPELLANT) VS SRI SHANKAR P PROP: M/S BHAVANI ENTERPRISES 12 TH CROSS M J NAGAR HOSPET PAN : ALJPP8397F (RESPONDENT) ITA NO. 300/PNJ/2013 (ASST YEAR - 2008 - 09) THE ASSISTANT COMMISSIONER OF INCOME TAX CENTRAL CIRCLE - 1. BELGAM (APPELLANT) VS SRI M GOVINDARAJU PROP: M/S POOJA MINERALS AND EARTHMOVERS BASAVESWARA BADAVANE HOSPET PAN : ACHPV3394P (RESPONDENT) ITA NO. 301/PNJ/2013 (ASST YEAR - 2008 - 09) THE ASSISTANT COMMISSIONER OF INCOME TAX CENTRAL CIRCLE - 1. BELGAM (APPELLANT) VS SRI K B POLICE PATIL C/O MANOJ KUMAR JAIN M/S GURURAJENDRA MINERALS TRADING COMPANY SATHYANARYANA NILAYA 100 BED HOSPITAL ROAD 3 . ITA NOS. 345 293 TO 302 307 311/PNJ/ 2013 ( A.Y. 2007 - 08 & 2008 - 09 ) HOSPET - 583201. PAN : ANKPP4193N (RESPONDENT) ITA NO. 302 /PNJ/2013 (ASST . YEAR - 2008 - 09) THE ASSISTANT COMMISSIONER OF INCOME TAX CENTRAL CIRCLE - 1. BELGAM (APPELLANT) VS SRI SHOUKAT PIRVALLE C/O MANOJ KUMAR JAIN M/S GURURAJENDRA MINERALS TRADING COMPANY SATHYANARYANA NILAYA 100 BED HOSPITAL ROAD HOSPET - 583201. PAN : AULPP6505C (RESPONDENT) ITA NO 307/PNJ/2013 (ASST. YEAR 2008 - 09) THE ASSISTANT COMMISSIONER OF INCOME TAX CENTRAL CIRCLE - 1. BELGAM (APPELLANT) SRI HEMANT KUMAR C/O MANOJ KUMAR JAIN M/S GURURAJENDRA MINERALS TRADING COMPANY SATHYANARYANA NILAYA 100 BED HOSPITAL ROAD HOSPET - 583201. PAN : ABUPH0425L (RESPONDENT) ITA NO 311/PNJ/2013 (ASST. YEAR 2008 - 09) THE ASSISTANT COMMISSIONER OF INCOME TAX CENTRAL CIRCLE - 1. BELGAM (APPELLANT) SRI ASHOK M CHAJJER JAIN C/O MANOJ KUMAR JAIN M/S GURURAJENDRA MINERALS TRADING COMPANY SATHYANARYANA NILAYA 100 BED HOSPITAL ROAD HOSPET - 583201. PAN : AIOPJ3325R (RESPONDENT) 4 . ITA NOS. 345 293 TO 302 307 311/PNJ/ 2013 ( A.Y. 2007 - 08 & 2008 - 09 ) APPELLANT BY: SHRI NISHANT K LD. DR RESPONDENT BY: SHRI P. DINESH ADV. DATE OF HEARING : 30/09 /2014 DATE OF PRONOUNCEMENT : 14 /11/2014 O R D E R PER: D.T. GARASIA(JM) ALL THESE APPEALS ARE FILED BY THE DEPARTME NT AGAINST THE ORDER OF CIT (A) - VI BANGALORE FOR ASSESSMEN T YEAR 2008 - 09. THE CIT (A) RE - PASSED BY THE COMMON ORDER IN RESPECT OF 12 ASSESSEES THEREFORE THESE APPEALS ARE DISPOSED BY THE COMMON ORDER. 2. FOLLOWING GROUNDS ARE RAISED BY THE DEPARTMENT : - GROUND NO. 1 . WHETHER THE LEANED CIT(A) IS JUSTIFIED IN DELETING AN AMOUNT OF RS. 16 64 10 433/ - ADDED BY THE ASSESSING OFFICER FOR THE ASSESSMENT YEAR 2008 - 09 TOWARDS UNEXPLAINED INVESTMENT IN RESPECT OF UNACCOUNTED PURCHASES MADE BY THE ASSESSEE. GROUND NO. 2. WHETHER THE LEANED CIT(A) IS JUSTIFI ED IN DELETING AN AMOUNT OF RS. 87 36 547/ - ADDED BY THE ASSESSING OFFICER FOR THE ASSESSMENT YEAR 2008 - 09 TOWARDS PROFIT E LEMENT ON UNACCOUNTED PURCHASES. 3. THE SHORT FACTS OF THE CASE ARE THAT A SEARCH UNDER SECTION 132 OF THE INCOME TAX ACT 1961 WAS CARRIED OUT ON 25/03/200 8 IN THE GROUP CASES OF SRI. B. P. ANANDKUMAR SINGH AND SHRI. MANOJ KUMAR JAIN OF HOSPET. THE CASE HAS BEEN NOTIFIED U/S 127 BY THE COMMISSIONER OF INCOME TAX GULBARGA VIDE F. NO. 116/NOTIFICATION/CIT - GLB/2009 - 10 DATED 28/04/2009 THE CASE HAS BEEN COVERED UNDER SECTION 153C OF THE ACT. 3.2 THE ASSESSEE HAS FILED THE RETURN OF INCOM E DECLARING TOTAL INCOME OF RS.4 73 020/ - . THE BOOKS OF ACCOUNTS MAINTAINED BY THE ASSESSEE AND IMPOUNDED DURING THE COURSE OF SEARCH. ASSESSEE HAS DECLARED TOTAL SALES OF RS. 23 52 10 375/ - AND GROSS PROFIT OF RS. 9 33 300/ - IS DECLARED. THERE ARE GROSS 5 . ITA NOS. 345 293 TO 302 307 311/PNJ/ 2013 ( A.Y. 2007 - 08 & 2008 - 09 ) RECEIPTS OF RS. 5 80 803/ - IN TRANSPORTATION ACCOUNT AND GROSS PROFIT OF RS. 5 038 IS DERIVED BEING 10%. ASSESSEE HAS DECLARED A NET PROFIT OF RS. 4 97 186/ - . 3.3. M/S BHAVANI ENTERPRISES IS THE PROPRIETARY CONCERN OF SHRI. P. SHANKAR. THERE ARE TOTAL PURCHASES OF RS. 16 64 10 433/ - BY M/S. GRMTC FROM M/S. BHAVAN I ENTERPRISES DURING A.Y. 2008 - 09. IT IS SEEN FROM THE DOCUMENT MARKED AS A/MJ/45 DATED NUMBER OF CONCERNS INCLUDING M/S BHAVANI ENTERPRISES WERE OPERATED FROM THE OFFICE OF MR. MANOJ KUMAR JAIN HAD ISSUED LETTERS TO ING VYSYA BANK HOSPET INTIMATING THA T THE CHEQUES ISSUED TO CERTAIN PARTIES ARE MEANT FOR BUSINESS PURPOSE. 3.4. THE ASSESSING OFFICER FOUND THAT AS PER DOCUMENT MARKED AS AQ/MJ/45 D ATED 01.04.2008 ALL THE APPELLANT CONCERNS ALONG WITH SOME OTHERS WERE OPERATED FROM THE OFFICE OF SRI. MANOJ KUMAR JAIN. OTHER RELEVANT SEIZED DOCUMENTS ARE GRM/29 TO 37 BEING BLANK PURCHASE VOUC HER BOOKS OF THIRD PARTY FOUND IN THE PREMISES OF SRI MANOJ KUMAR JAIN. ALSO THE INFERENCES DRAWN BY THE ASSESSING OFFICER ARE BASED ON A/MJ/34 DATED 01.04.2008 A/MJ/05 A/KJ/10 A/MJ/48 A/MJ/50 AND OTHER SEIZED DOCUMENTS AS DETAILED IN THE ASSESSMENT ORDERS. 3.5. THE APPELLANTS HAD ISSUED LETTERS TO ING VYSYA BANK HOSPET WHILE ISSUING CHEQUES TO CERTAIN PARTIES (FOR PURCHASES AND SALES) INDICATING THAT THE CH EQUES ARE BEING ISSUED FOR BUSINESS PURPOSE. FACTS HOWEVER REVEALED THAT THE CHEQUES WERE ACTUALLY USED FOR CASH WITHDRAWALS BEING BEARER CHEQUES FOR WHICH BCTT TAX ON THE WITHDRAWALS HAD ALREADY BEEN COLLECTED BY THE BANK. IN SUCH CIRCUMSTANCES ISSUE OF SUCH A LETTER (AS MENTIONED ABOVE) BY THE APPELLANTS HAD NO MEANING AND WAS APPARENTLY ONLY TO CREATE THE APPEARANCE OF A BUSINESS TRANSACTION. THE ASSESSING OFFICER HAS BROUGHT ON RECORD THAT ALL THE CHEQUES ARE BEARER CHEQUES AND THE HANDWRITING ON THE CHEQUES AS WELL AS ON THE LETTERS WERE APPARENTLY MADE BY ONE OR TWO PERSONS ONLY. AS REGARDS SRI P SHANKAR MENTIONED AT SR NO. 1 6 . ITA NOS. 345 293 TO 302 307 311/PNJ/ 2013 ( A.Y. 2007 - 08 & 2008 - 09 ) ABOVE WHEN CONFRONTED (I.E. STATEMENT OF OATH WAS RECORDED OF THE APPELLANT SRI P SHANKAR MENTIONED AT SR. NO.1 ABOVE ) DEPOSED THAT HE DID NOT HAVE ANY SEPARATE OFFICE AND THAT HE OPERATED FROM HIS RESIDENCE. IT IS RELEVANT TO NOTE THAT HE COULD NOT TELL THE NAMES OF THE PARTIES FROM WHOM HE HAD PURCHASED IRON ORE. ENQUIRIES CONDUCTED FROM THE BANK REVEALED THAT IN RES PECT OF BANK O F INDIA HOSPET THE INTRODUCER WAS SRI MANOJ KUMAR JAIN. VERIFICATION OF IMPOUNDED BOOKS OF ACCOUNTS SHOWED THAT ALL THE URD PURCHASES WERE MADE THROUGH SELF MADE VOUCHERS NWITHOUT FULL NAME OR ADDRESS OF THE URD PURCHASES ARE A SHAM TRANSACTION. IN RESPECT OF ING VYSYA BANK THE INTRODUC TION IS GIVEN BY SRI SHAFI UR REHMAN OF HOSPET. ON VERIFICATION OF THE CHEQUES COPIES PROVIDED BY THE BANK IT WAS SEEN THAT THE CASH DEPOSITS HAVE BEEN WITHDRAWN AND THE REAR SIDE OF THE BEARER CHEQUES CONTAIN SIGNATURE OF SRI ASHOK M JAIN (ALSO AN APPE LLANT AND COVERED AT SR NNO. 2 OF THIS ORDER) WHO IS AN EMPLOYEE OF M/S GRMTC. THE ASSESSING OFFICER NOTICED THAT IN SOME CASES BEARER CHEQUES ARE IN THE NAME OF THIRD PARTIES BUT THE CASH IS WITHDRAWN BY SRI MANOJ KUMAR JAIN IN THE NAME OF SRI P SHANKAR PROP. M/S BHAVANI ENTERPRISES. 3.6. FURTHER VERIFICATION ALSO REVEALED THAT SRI P SHANKAR IS THE ACCOUNTANT OF M/S. GRMTC I.E. PROPRIETARY CONCERN OF SRI MANOJ KUMAR JAIN. ON THESE FACTS THE ASSESSING OFFICER CAME TO A CONCLUSION THAT THE TRANSACTION SHOWN IN THE NAME OF M/S BHAVANI TRADERS IS NOT GENUINE AND SINCE THE PROPRIETARY CONCERN OF THE APPELLANT M/S BHAVANI TRADERS HAS AN INDEPENDENT TIN NO. AND SEPARATELY DECLARED SALES WITH THE COMMERCIAL TAX DEPARTMENT THE ENTIRE PURCHASES MADE BY M/S BHA VANI TRADERS OF RS. 16 64 10 433/ - WAS TREATED AS UNEXPLAINED INVESTMENT BY SRI MANOJ KUMAR JAIN AND A PROTECTIVE ASSESSMENT FOR THE SAME AMOUNT WAS MADE IN THE HANDS OF THE APPELLANT. ALSO AT GROSS PROFIT MARGIN OF 5% PROFIT OF RS. 87 36 547/ - WAS ALSO ADDED TO THE APPELLANTS INCOME ON PROTECTIVE BASIS. THE APPELLANT IS IN APPEAL AGAINST THE ABOVE PROTECTIVE ADDITIONS. 7 . ITA NOS. 345 293 TO 302 307 311/PNJ/ 2013 ( A.Y. 2007 - 08 & 2008 - 09 ) 4. THE DETAILS OF PURCHASE AND SALES BY RESPECTIVE PARTIES IN THE EVIDENT ARE AS UNDER: (1) SHANKAR PERINLARI (PROP. BHAVANI ENTERPRIS ES) 2008 - 09 DETAILS OF PURCHASES AND SALES ARE AS UNDER : - PURSHASE OF IRON ORE FOR THE PERIOD 0 1 - 04 - 2007 TO 3 1 - 03 - 2008 SR. NO. NAME OF THE PARTY QUANTITY AMOUNT 01 URD PURCHASES 34 180 000 9 90 11 900.00 02 M/S SHANKHAMBARI TRADING COMPANY 6 089.086 2 26 35 147.00 03 M/S A P N ENTERPRISES 6 076.143 2 26 30 002.00 04 M/S S R TRADING COMPANY 7 614.216 3 00 00 008.00 05 M/S HARIH NTH ENTERPRISES 7 620.016 3 00 00 002.00 06 M/S HEM NTH TRADING COMPANY 7 623.840 3 00 00 016.00 TOTAL 69 203.301 23 42 77 075.00 SALE OF IRON ORE FOR THE PERIOD 01 - 0402007 TO 3 1 - 03 - 2008 SR. NO. NAME OF THE PARTY QUANTITY AMOUNT 01 M/S POOJA MINERALS & EARTHMOVERS 6 711.000 2 49 98 475.00 02 M/S SAI MINERALS 7 559.994 2 46 98 817.34 03 M/S GURU RAJENDRA MINERALS TRADING CO. 42 524.592 16 00 10 034.00 04 M/S MINERO FIRMA 5 720.480 1 80 63 048.00 05 M/S S A MINERALS 5000.000 42 50 001.00 06 M/S APN ENTERPRISES 1000.000 3 1 90 000.00 TOTAL 68 516.066 23 52 10 375.34 5 . THE ASSESSING OFFICER HAS BROUGH T ON RECORD THE FOLLOWING FACTS. 5.1. IN RESPECT OF ING VYSYA BANK THE INTRODUCTION IS GIVEN BY SHRI SHAFI UR REHMAN OF HOSPET. ON VERIFICATION OF THE CHEQUES COPIES PROVIDED BY THE BANK IT IS SEEN THAT THE CASH DEPOSITS HAVE BEEN WITHDRAWN A ND THE REAR SIDE OF THE BEARER CHEQUES CONTAIN SIGNATURE OF SHRI ASHOK WHO IS AN EMPLOYEE OF M/S GRMTC. IN SOME CASES BEARER CHEQUES ARE IN THE NAME OF THIRD PARTIES BUT THE CASH IS 8 . ITA NOS. 345 293 TO 302 307 311/PNJ/ 2013 ( A.Y. 2007 - 08 & 2008 - 09 ) WITHDRAWN BY SHRI P. SHANKAR ONLY. THUS THE TRANSACTION APPEARED TO BE DONE BY SHRI MANOJ KUMAR JAM IN THE NAME OF SHRI P. SHANKAR PROP. M/S BHAVANI ENTERPRISES. 5.2. AS CAN BE SEEN FROM THE ABOVE THE APPELLANT IS SHOWING PURCHASES AND SALES FROM EACH OTHER I.E. OTHER APPELLANTS (WHOSE CASES ARE COVERED BY THIS COMMON ORDER ). ALSO THERE ARE SUBSTANTIAL URD PURCHASES I.E PURCHASES HAVE BEEN MADE FROM UNKNOWN OR UNREGISTERED DEALERS ABOUT WHOM THE APPELLANT IS UNABLE TO OFFER ANY DETAIL OR EXPLANATION. SIMILARLY IN RESPECT OF THE OTHER APPELLANTS FACTS ARE THAT PURCHASES AND SALES ARE SHOWN IN THE NAMES GIVEN BELOW AND THE RESULT OF ENQUIRIES CONDUCTED BY THE ASSESSING OFFICER ARE ALSO GIVEN BELOW IN BRIEF. (2) SRI ASHOK M JAM PRON. M/S APN ENTERDRISES HOSDET. DETAILS OF PURCHASES AND SALES ARE AS UNDER : - PURSHASE OF IRON ORE FOR THE PERIOD 01 - 04 - 2007 TO 3 1 - 03 - 2008 SR. NO. NAME OF THE PARTY QUANTITY AMOUNT 01 URD PURCHASES 21 581.965 7 56 92 094.00 02 M/S BHAVANI COMPANY 1 000.000 31 90 000.00 TOTAL 22 581.965 7 88 82 094.00 SALE OF IRON ORE FOR THE PERIOD 01 - 04 - 2007 TO 3 1 - 03 - 2008 \ SR. NO. NAME OF THE PARTY QUANTITY AMOUNT 01 M/S POOJA MINERALS & EARTHMOVERS 6 710.000 2 50 14 880.00 02 M/S SAI MINERALS 7 574.447 2 47 14 800.58 03 M/S BHAVANI ENTERPRISES 6 076.143 2 26 30 003.42 04 M/S MINERO FIRMA 2 218.710 70 99 872.00 TOTAL 22 579.300 7 94 59 556.00 6 . THE ASSESSING OFFICER HAS BROUGHT ON RECORD THE FOLLOWING FACTS. 6.1. THE APPELLANT ASHOK M CHAJJER ALIAS JAM IS AN EMPLOYEE OF M/S GRMTC (PROPRIETARY CONCERN OF SRI MANOJ KUMAR JAIN) AND A CLOSE CONFIDANT OF SRI MANOJ KUMAR JAIN. THE ENTIRE PURCHASES OF 8 19 32 876/ - ARE CLAIMED TO BE FROM URD 9 . ITA NOS. 345 293 TO 302 307 311/PNJ/ 2013 ( A.Y. 2007 - 08 & 2008 - 09 ) SALES AND ENTIRE SALES ARE MAD E TO M/S POOJA MINERALS AND EARTH MOVERS M/S SAI MINERAL AND M/S BHAVANI ENTERPRISES WHICH ARE OTHER SUCH CONCERNS COVERED BY THIS ORDER AND PARTICULARLY FLOATED TO ACCOMMODATE THE PURCHASES SHOWN BY M/S GRMTC. 6.2. OTHER FACTS ARE SIMILAR AS IN THE CASE OF SRI P SHANKAR PERINJARI MENTIONED ABOVE I.E. ALL TRANSACTIONS ARE IN CASH SIMILAR LETTERS ISSUED TO THE BANK INDICATING THE WITHDRAWALS OF CASH TOWARDS BUSINESS PURPOSES ISSUE OF ALL BEARER CHEQUES INTRODUCTION OF BANK ACCOUNT NO.842020110000133 WITH BANK OF INDIA INTRODUCED BY SRI MANOJ KUMAR JAIN (OPENED ON 01.02.2008). 6.3. THE ASSESSING OFFICER HAS BROUGHT ON RECORD THAT ON 10.03.2008 AN AMOUNT OF 25 L A KHS RECEIVED FROM M/S BHAVANI ENTERPRISES WAS WITHDRAWN BY SELF MADE CHEQUE BY THE APPELLANT O N THE SAME DATE WHICH IS SHOWN AS PAYMENT TO URD PURCHASES ON THE NEXT TWO DAYS. 6.4. NO VERIFIABLE EVIDENCE REGARDING THE URD PURCHASES WAS SHOWN AND NO EVIDENCE FOR MAKING THE PAYMENT WAS ALSO AVAILABLE WITH THE SAID APPELLANT. ALSO BANK ACCOUNT NO. 1 18011014747 WITH ING VYSYA BANK OPENED ON 05.12.2007 WAS INTRODUCED BY SRI P SHANKAR OF M/S BHAVANI ENTERPRISES WHO IS AN EMPLOYEE OF M/S GRMTC AND COVERED AT SR.NO. 1 OF THIS ORDER. VERIFICATION OF CHEQUE LEAVES INDICATED THAT CHEQUES ARE ISSUED IN THE N AMES OF EMPLOYEES OF M/S GRMTC. 6.5. THE ASSESSING OFFICER FOUND THAT THOUGH THE SIGNATURE OF THE PAYEES ARE APPEARING THE CASH WAS RECEIVED BY SRI ASHOK EMPLOYEE OF M/S GRMTC AND THE PROCEEDS WERE SIPHONED OFF BY SRI MANOJ KUMAR JAM AND THAT THE APPELLA NT CONCERN M/S APN ENTERPRISES IS ONLY NAME SAKE CONCERN AND THE TRANSACTIONS HAD BEEN CARRIED OUT BY M/S MANOJ KUMAR JAIN HIMSELF USING THE NAMES OF HIS EMPLOYEES. 10 . ITA NOS. 345 293 TO 302 307 311/PNJ/ 2013 ( A.Y. 2007 - 08 & 2008 - 09 ) SRI M GOVINDARAJU PROP. M/S POOLA MINERALS & ERTHMOVERS HOSPET. DETAILS OF PURCHASES AND SALES ARE AS UNDER : - PURSHASE OF IRON ORE FOR THE P ERIOD 01 - 04 - 2007 TO 3 1 - 03 - 2008 SR. NO. NAME OF THE PARTY QUANTITY AMOUNT 01 URD PURCHASES 24 800.00 8 37 66 369.10 02 M/S SHAKHAMBARI TRADING CO. 6 704.000 2 50 19 328.00 03 M/S A P N ENTERPRISES 6 710.000 2 50 14 880.00 04 M/S BHAVANI ENTERPRISES 6 711.000 2 49 98 475.00 05 M/S SAL MINERALS 6 761.000 2 52 18 530.00 TOTAL 51 686.000 18 40 17 582.10 SALE OF IRON ORE FOR THE PERIOD 01 - 04 - 2007 TO 3 1 - 03 - 2008 SR. NO. NAME OF THE PARTY QUANTITY AMOUNT 01 M1 GURU RAJENDRA MINERALS TRADING COMPANY 44 585.231 16 0046 003.50 02 M/S SAL MINERALS 7 572.508 2 47 38 802.50 TOTAL 52 157.739 18 47 84 806.00 7. THE ASSESSING OFFICER HAS BROUGHT ON RECORD THE FOLLOWING FACTS. 7.1. THE SALES TO THE EXTENT OF 16 64 47 840/ - WAS MADE TO M/S GRMTC. BLANK BILL BOOKS OTHER STATIONERIES BANK DELIVERY NOTE BOOKS WERE FOUND AND SEIZED. 7.2. IT WAS STATED THAT ASSESSEE HAS STARTED THE BUSINESS OF TRADING OF IRON ORE ON 17.10.2007 AND THEREFORE NOT FILED ANY RETURN OF INCOME FOR A.Y.2007 - 08 AND 2008 - 09. THE BOOKS OF ACCOUNTS WERE PRODUCED ON 18.09.2008 AND THE SAME WERE IMPOUNDED U/S 131(3) FOR FURTHER VERIFICATION. MEANWHILE INFORMATION WAS COLLECTED FROM ING VYSYA BANK HOSPET. THE INTRODUCTION PART OF ACC OUNTING OPENING FORM IS BLANK. AS PER INFORMATION COLLECTED FROM ING VYSYS BANK IT WAS REVEALED THAT THE CONCERN FOR NAME SAKE AND THE TRANSACTIONS APPEARED TO HAVE BEEN DONE BY SHRI MANOJ KUMAR JAIN BY USING HIS EMPLOYEES. STATEMENT OF SHRI MN. GOVIND RAJ U WAS RECORDED ON 26/11/2008 AND IN THE STATEMENT IT IS STATED THAT THE MAINTENANCE OF BOOKS OF ACCOUNTS WAS GIVEN TO SHRI VIJAY SINDAGI ON CONTRACT 11 . ITA NOS. 345 293 TO 302 307 311/PNJ/ 2013 ( A.Y. 2007 - 08 & 2008 - 09 ) BASIS. HE COULD NOT TELL THE NAME AND ADDRESS OF URD SELLERS FROM WHOM IRON ORE IS CLAIMED TO HAVE BEEN PUR CHASED AS SHOWN IN THE BOOKS OF ACCOUNTS. HE EXPRESSED HIS INABILITY TO PRODUCE EVEN SOME OF THE PARTIES FOR VERIFICATION. HE ADMITTED THAT HE HAS NOT MAINTAINED ANY EVIDENCE FOR CASH PAYMENTS MADE TO URD SELLERS. HE WAS SPECIFICALLY ASKED WHETHER THE CASH HAS GONE THROUGH BEARER CHEQUES FROM THIRD PARTIES AND GIVEN BACK TO SHRI MANOJ KUMAR JAIN. IN ANSWER HE INITIALLY STATED THAT THERE WERE NO SUCH INSTANCES. HOWEVER THEREAFTER HE ADMITTED THAT CASH WAS WITHDRAWN BY HIM ONLY THROUGH BEARER CHEQUES IN THE NAME OF THIRD PARTIES AND HANDED OVER TO SHRI MANOJ KUMAR JAIN. 7.3. ALSO THE ASSESSING OFFICER FOUND CERTAIN DISCREPANCY REGARDING THE SALES FIGURE SHOWN WITH REGARD TO COMMERCIAL TAX DEPARTMENT AND WHAT WAS DECLARED BEFORE THE ASSESSING OFFICER. THE AS SESSING OFFICER THEREFORE TOOK PURCHASE FIGURE OF RS. 16 64 47 804/ - CORRESPONDING TO THE HIGHER OF THE TWO SALE S FIGURES. (ISSUE AT IV ABOVE). SR I GEETA LINGARAI L/R SRI M LINCIARAL (LATE) PROP. SAI MINERALS HOSPE T. DETAILS OF PURCHASES AND SALES ARE AS UNDER : - PURSHASE OF IRON ORE FOR THE PERIOD 01 - 04 - 2007 TO 31 - 03 - 2008 SR. NO. NAME OF THE PARTY QUANTITY AMOUNT 01 M/S A P N ENTERPRISES 7 574.450 2 47 14 801.00 02 M/S BHAVANI ENTERPRISES 7 559.679 2 46 98 818.00 03 M/S POOJA MINERALS & EARTHMOVERS 7 572.508 2 47 38 806.00 04 M/S SHAKHAMBARI TRADING COMPANY 7 573.936 2 47 17 052.00 05 URD PURCHASES 42 712.250 12 19 65 100.00 72 992.823 22 08 34 577.00 SALE OF IRON ORE FOR THE PERIOD 01 - 04 - 2007 TO 31 - 03 - 2008 SR. NO. NAME OF THE PARTY QUANTITY AMOUNT 01 M/S GURU RAJENDRA MINERALS TRADING COMPANY 61 204.207 18 32 5 1 126.00 02 M/S POOJA MINERALS & EARTHMOVERS 6 761.000 2 52 18 530.00 12 . ITA NOS. 345 293 TO 302 307 311/PNJ/ 2013 ( A.Y. 2007 - 08 & 2008 - 09 ) 03 M/S BALAJI IMPEX 4 773.214 1 33 65 000.00 TOTAL 72 738.510 22 18 34 656.00 8. THE ASSESSING OFFICER HAS BROUGHT ON RECORD THE FOLLOWING FACTS : 8.1. THE ASSESSEE STARTED THE BUSINESS IN TRADING OF IRON ORE ON 21/07/2007 ONLY. IN THE FURTHER ENQUIRIES WRITTEN SUBMISSION WAS FILED ALONG WITH COPIES OF BANK ACCOUNT STATEMENT VAT RETURNS AND AUDIT REPORT FOR AY 2008 - 2009. THE BOOKS OF ACCOUNTS PRODUCED WERE IMPOUNDED ON 18/09/2008 FOR FURTHER VERIFICATION. IN THE MEANWHILE INFORMATION WAS COLLECTED FROM BANK OF INDIA AND IT WAS FOUND THAT SHRI. MANOJ KUMAR JAIN WAS THE INTRODUCER WHILE OPENING THE BANK ACCOUNT WITH BANK OF INDIA. THE CASH DEPOSITED IS FOUND TO BE WITHDRAWN BY SELF CHEQUES WHICH ALSO BEARS THE SIGNATURE OF ONE SHRI. N.N. JAM. ENQUIRIES CONDUCTED WITH ING VYSYS BANK SHOWS THAT THE INTRODUCER IS SHRI. VIJAY DALMIA. HERE ALSO ALONG WITH THE SIGNATU RE OF PAYEE SIGNATURE OF ONE SHRI. LINGRAJ PROP. M/S. SAI MINERALS WAS RECORDED ON 26/11/2008 AND IN THE STATEMENT IT IS DEPOSED THAT HE CANNOT PRODUCE ANY OF THE URD PARTIES FOR VERIFICATION. HEDMITTED THAT HE HAS NOT MAINTAINED ANY EVIDENCE FOR CASH PA YMENT MADE TO URD SELLERS. HE ADMITTED THAT HE ISSUED CHEQUES TO SHRI MANOJ KUMAR JAIN. HOWEVER AS PER THE BOOKS OF ACCOUNTS I.E. CASH BOOK CASH IS CLAIMED TO HAVE BEEN PAID TO URD SELLERS. SRI HEMANT KUMAR PROP. M/S. HEMANT TRADING COMPANY HOSPET DE TAILS OF PURCHASES AND SALES ARE UNDER : - PURSHASE OF IRON ORE FOR THE PERIOD 01 - 04 - 2007 TO 31 - 03 - 2008 SR. NO. NAME OF THE PARTY QUANTITY AMOUNT 01 URD PURCHASES 7 650.00 2 96 35 000.00 TOTAL 7 650.00 2 96 35 000.00 SALE OF IRON ORE FOR THE PERIOD 01.04.2007 TO 31.03.2008 SR. NO. NAME OF THE PARTY QUANTITY AMOUNT 01 M/S BHAVANI ENTERPRISES TOTAL 7 623.892 3 00 00 016.00 TOTAL 7 623.892 3 00 00 016.00 9. THE ASSESSING OFFICER HAS BROUGHT ON RECORD THE FOLLOWING FACTS. 13 . ITA NOS. 345 293 TO 302 307 311/PNJ/ 2013 ( A.Y. 2007 - 08 & 2008 - 09 ) 9.1. ENTIRE PURCHASES ARE URD PURCHASES FOR WHICH NO DETAIL OR E.1IDENCE IS AVAILABLE. ENTIRE SALES ARE TO M/S BHAVANI ENTERPRISES (COVERED AT SR NO.1 ABOVE). 9.2. FACTS ARE SIMILAR AS IN OTHER CASES AND AS DET AILED IN THE ASSESSMENT ORDER. ALSO THERE IS A DISCREPANCY OF 15 65 016/ - IN THE PURCHASES FIGURE AS PER COMMERCIAL TAXES DEPARTMENT. THE ASSESSING OFFICER HAS ADDED THIS SEPARATELY ALONG WITH A PROFIT ELEMENT OF 5% ON THE SAME BEING 78 250/ - . (ISSUE AT IV ABOVE) (6) M/S NANDI ENTERPRISES HOSP ET. DETAILS OF PURC HASES AND SALES ARE AS UNDER : - PURSHASE OF IRON ORE FOR THE PERIOD 01 - 04 - 2006 TO 3 1 - 03 - 2007 SR. NO. NAME OF THE PARTY QUANTITY AMOUNT 01 M/S SRI NANJUNDESHWAR MINERALS 9 219.960 1 11 64 987.00 02 MIS URD PURCHASES 10 735.250 1 28 59 021.00 03 M/S ASSOCIATED MINING CO 9 289.750 66 88 620.00 04 M/S HARIPRIYA LOGISTICS 370.220 4 84 988.00 TOTAL 29 615.180 3 11 97 616.00 SALE OF IRON ORE FOR THE PERIOD Q1 - 04 - 2007 TO 31 - 03 - 2008 SR. NO. NAME OF THE PARTY QUANTITY AMOUNT 01 M/S PADMAVATHI COMMERCIALS 7 240.180 94 64 859.00 02 M/S GURU RAJENDRA MINERALS 18 925.000 2 17 67 500.00 03 M/S S A MINERALS 3 450.000 42 76 250.00 TOTAL 29 615.180 3 55 08 609.00 (7) M/S NANDI ENTERPRISES HOSPET . DETAILS OF PURCHASES AND SALES ARE AS UNDER : - PURSHASE OF IRON ORE FOR THE PERIOD 01 - 04 - 2007 TO 31 - 03 - 2008 SR. NO NAME OF THE PARY QUANTITY AMOUNT 01 M/S ASSOCIATED MINING CO 701 100 5 04 792.00 02 M/S SRINIVAS ENTERPRISES 44 745.164 6 54 09 694.95 03 M/S VIVERA MINERALS 12 486.00 4 91 59 851.00 04 URD PURCHASES 4979.060 19 21 889.39 TOTAL 62 911.324 11 69 96 227.34 SALE OF IRON ORE FOR THE PERIOD 01 - 04 - 2007 TO 31.03.2008 14 . ITA NOS. 345 293 TO 302 307 311/PNJ/ 2013 ( A.Y. 2007 - 08 & 2008 - 09 ) SR. NO NAME OF THE PARTY QUANTITY AMOUNT 01 M/S PADMAVATHI COMMERCIALS 3 302.370 74 79 868.05 02 M/S S A MINERALS 13 665.00 94 97 375.00 03 M/S AMA MINERALS 701.100 5 25 832.43 04 M/S AKSHATHA MINERALS 1 212.170 9 00 900.27 05 M/S MINERO FIRMA 26 565.684 5 07 91 306.20 06 M/S SRI LAKSHMI BALAJI EXPORT 16 865.000 5 00 03 100.00 07 M/S A K M TRANSPORT & TRADERS 600.000 4 80 000.00 TOTAL 62 911.324 11 96 78 381.95 11 69 96 227.34 AS IS APPARENT THE APPELLANT FIRM HAS SHOWN PURCHASES AND SALES TO GMRTC (THE PROP. CONCERN OF SHRI MANOJ KUMAR JAM) AND VIVERA MINERALS AND OTHER SIMILAR CONCERNS WHICH HAVE BEEN HELD TO HAVE BEEN FLOATED MERELY FOR THESE MAKE BELIEVE TRANSACTIONS. (REFER APPELLATE ORDER DATED 13TH MAY 2013 IN THE CASE OF SHRI MANOJ KUMAR JAM IN ITA NOS. 429/429A/428/427/426/425/DCIT CC 1 BELGAUM/CIT(A) - VL/BLORE/2 009 - 2010). 10 . THE ASSESSING OFFICER HAS BROUGHT ON RECORD THE FOLLOWING FACTS. 10.1. IN THE STATEMENT RECORDED ON 9/11/2009 THE PARTNER OF THE APPELLANT FIRM SHRI D. SURESH STATED THAT HE USED TO PURCHASE IRON ORE FROM REGISTERED AS WELL AS UNREGISTERED DELIEVERS. HOWEVER THE CORRESPONDING VOUCHERS DID NOT CONTAIN ANY SIGNATURES OF THE PAYEES SHOWING THAT THESE ARE NOT VERIFIABLE EVIDENCES. ON SIMILAR FACTS AS IN OTHER CASES AND AFTER EXAMINING SRI D SURESH PARTNER OF THE APPELLANT CONCERN ON 09.11.200 9 THE ASSESSING OFFICER CAME TO A SIMILAR CONCLUSION AS IN THE CASE OF OTHER CONCERNS THAT THE TRANSACTIONS RELATED TO THE SALES MADE TO M/S GRMTC AS NOT GENUINE. 10.2. SIMILARLY THE TRANSPORTATION CHARGES/FREIGHT AND HIRE CHARGES FREIGHT CHARGES AMOUNTI NG TO 32 20 575/ - FOR THE A.Y. 2007 - 08 AND FOR THE A.Y. 2008 - 09 Z 11 41 568/ - WAS ALSO DISALLOWED AS THE APPELLANT COULD NOT PROVE THE GENUINENESS OF THE SAID EXPENSES. ON SIMILAR FACTS AS IN OTHER CASES AND AFTER EXAMINING SRI D SURESH PARTNER OF THE AP PELLANT CONCERN ON 09.11.2009 THE ASSESSING OFFICER CAME TO A SIMILAR CONCLUSION AS IN THE CASE OF OTHER CONCERNS THAT THE TRANSACTIONS RELATED TO THE SALES MADE TO M/S GRMTC AS NOT GENUINE. 15 . ITA NOS. 345 293 TO 302 307 311/PNJ/ 2013 ( A.Y. 2007 - 08 & 2008 - 09 ) SRI K B POLICE PATH PROP. M/S SHAKAMBARI TRADING COMPANY HOSP ET. DETAILS OF PURCHASES AND SALES ARE AS UNDER : - PURSHASE OF IRON ORE FOR THE PERIOD 01 - 04 - 2007 TO 31 - 03 - 2008 SR. NO. NAME OF THE PARTY QUANTITY AMOUNT 01 URD PURCHASES 23 560.00 7 89 16 831.00 TOTAL SALE OF IRON ORE FOR THE PERIOD 01 - 04 - 2007 TO 31 - 03 - 2008 SR NO. NAME OF THE PARTY QUANTITY AMOUNT 01 M/S POOJA MINERALS & EARTHMOVERS 6 704.000 2 50 19 328.00 02 M/S SAI MINERALS 7 573.936 2 47 17 053.00 03 M/S BHAVANI ENTERPRISES 5 015.145 2 26 35 147.00 04 M/S MINERO FIRMA 3 194.590 70 28 098.00 TOTAL 22 487.671 7 93 99 626.00 11. THE ASSESSING OFFICER HAS BROUGHT ON RECORD THE FOLLOWING FACTS: 11.1. INQUIRIES CONDUCTED FROM THE BANKS INDICATED THAT BANK ACCOUNT AT BANK OF INDIA WAS OPENED ON 01.02.2008 AND THERE IS INTRODUCTION BY SHRI MANOJ KUMAR JAM IN RESPECT OF THE ACCOUNT NUMBER 842020110000132. IT IS SEEN FROM THE COPY OF CHEQUES DATED 11.03.2008 THROUGH WHICH CASH OF RS. 50 00 000/ - WAS WITHDRAWN THAT THE SAID CHEQUES WAS A SELF CHEQUES WHICH BEARS THE SIGNATURE OF SHRI K .B. POLICE PATIL AND ALSO ONE MR. N.N. JAI.N. THUS IT APPEARS THAT THE CASH AMOUNT OF RS. 50 00 000/ - WAS COLLECTED BY SHRI N.N. JAM ON 11/03/2008 THROUGH SELF CHEQUES OF SHRI K.B. POLICE PATIL AND THE SAME IS SHOWN AS PAYMENTS TO URD PURCHASES ON THE NEX T TWO DAY. VERIFICATION OF URD VOUCHERS SHOWS THAT THEY ARE SELF MADE VOUCHERS WITH NAME AND ADDRESS AND THERE IS NO EVIDENCE FOR PAYMENT. THUS THE TRANSACTION IS SHAM IN NATURE. 11.2. AS PER THE INFORMATION COLLECTED FROM THE ING VYSYA BANK ASSESSEE HAS OPENED BANK ACCOUNT ON 5/12/2007 VIDE NO. 118011014739 AND SHRI P. SHANKAR OF M/S BHAVANI ENTERPRISES AND EMPLOYEE OF M/S GRMTC IS THE INTRODUCER. 16 . ITA NOS. 345 293 TO 302 307 311/PNJ/ 2013 ( A.Y. 2007 - 08 & 2008 - 09 ) VERIFICATION OF CHEQUES LEAVES INDICA TED THAT THE CHEQUES ARE ISSUED IN THE NAMES OF EMPLOYEES OF GRMTC. FURTHER IT IS SEEN THAT THOUGH THE SIGNATURE OF PAYEES ARE APPEARING ON THE REAR SIDE OF THE BEARER CHEQUES IT IS SEEN THAT RASH IS RECEIVED BY SHRI ASHOK / MEHBOOB BASHA WHO ARE EMPLOY EES OF M/S GRMTC. THOUGH THE SIGNATURE OF THE PAYEES ARE APPEARING CASH IS RECEIVED BY SHRI ASHOK EMPLOYEE OF M/S GRMTC AND THE PROCEEDS APPEARS TO BY SIPHONED OFF BY SHRI MANOJ KUMAR JAM SINCE CHAJJER AND SHRI P. SHANKAR IS LIKE MASTER AND SERVANT. SHRI RELATION OF SHRIASHOK CHAILER IS THE PROPRIETOR OF M/S APN ENTERPRISES AND HE ADMITTED INTHE STATEMENT RECORDED ON 26/11/2008 THAT THE CASH HAS INFACT BEEN PASSED ON TO SHRI MANOJ KUMAR LAIN. THUS ON THE BASIS OF STATEMENT GIVEN BY SHRI ASHOK CHAJJER PR OP. OF M/S APN ENTERPRISES WHO IS ALSO AN EMPLOYEE OF M/S GRMTC IT IS CLEAR THAT THE CASH REALLY PASSED ON TO SHRI MANOJ KUMAR JAM FOR HIS UNACCOUNTED BUSINESS. THIS FACT HAS ALSO BEEN ADMITTED BY SHRI MANOJ KUMAR JAM SUBSEQUENTLY. THUS THE CLAIM OF PAY MENT TO URD SELLERS IS FICTITIOUS AND THE EXPENSES CLAIMED BY M/S GRMTC ON ACCOUNT OF PURCHASES FROM M/S SHKAMBARI TRADING COMPANY ARE BOGUS IN NATURE. SRI SRIPAL B LAIN PROP. M/S HARIHANTH ENTERPRISES HOSPET. DETAILS OF PURCHASES AND SALES ARE A S UNDER : - PURSHASE OF IRON ORE FOR THE PERIOD 01 - 04 - 2007 TO 3 1 - 03 - 2008 SR. NO. NAME OF THE PARTY QUANTITY AMOUNT 01 URD PURCHASES TOTAL 7 650.00 2 9 32 500.00 TOTAL 7 650.00 2 96 32 500.00 SALE OF IRON ORE FOR THE PERIOD 01 - 04 - 2007 TO 31 - 03 - 2008 SR. NO. NAME OF THE PARTY QUANTITY AMOUNT 01 M/S. BHAVANI ENTERPRISES 7 620016 3 00 00 003. TOTAL 7 620.016 3 00 00 003.00 12 . THE ASSESSING OFFICER HAS BROUGHT ON RECORD THE FOLLOWING FACTS. 17 . ITA NOS. 345 293 TO 302 307 311/PNJ/ 2013 ( A.Y. 2007 - 08 & 2008 - 09 ) 12.1 THIS IS A PROPRIETARY CONCERN OF SRI SHRIPAL JAM WHO IS FOUND TO BE ONE OF THE EMPLOYEES OF M/S GRMTC. THE TOTAL AMOUNT OF PURCHASES IN HIS HANDS IS 2 96 32 500/ - . THE PURCHASES ARE CLAIMED TO HAVE BEEN MADE FROM URD SELLERS AND ALL THE SALES ARE MADE TO M/S BHAVANI ENTERPRISES WHICH IS ANOTHER BOGUS CONCERN USED BY M/S GRMTC TO ACCOMMODATE THE UNACCOUNTED TRANSACTIONS (COVERED AT SR.NO.1 OF THE ORDER). M/S GRMTC HAS USED THE NAME OF M/S HARIHANT ENTER1SES INDIRECTLY TO SHOW THE BOGUS PURCHASE OF IRON ORE. DURING SEARCH BLANK BILL BOOKS OF M/S HARIHANT ENTE RPRISES HOSPET WERE FOUND AND SEIZED/IMPOUNDED FROM THE OFFICE OF M/S GRMTC. IT IS SEEN FROM THE BANK ACCOUNT FOR AX. 2008 - 09 THAT THE ASSESSEE HAS RECEIVED 74 44 500/ - ONLY AND AMOUNT OF RS 2 75 00 003/ - HAS BEEN SHOWN AS SUNDRY DEBTORS. SIMILARLY ALM OST EQUAL AMOUNT I.E. 2 71 43 260/ - HAS BEEN SHOWN AS SUNDRY CREDITORS. 12.2. ENQUIRIES WERE M ADE AND INFORMATION HAS BEEN COLLEC ECTED FROM ING VYSYA BANK HOSPET. HE HAS OPENED THE BANK ACCOUNT NO.118011015152 INTRODUCER IS SRI P SHANKAR EMPLOYEE OF M/S GRMTC. IT IS SEEN FROM THE COPIES OF SELF CHEQUES PROVIDED BY THE BANK THAT SRI SHRIPAL JAM HAS WITHDRAWN THE CASH. ON FURTHER VERIFICATION OF BOOKS OF ACCOUNTS IT IS NOTICED THAT A CASH OF 25 00 000/ - HAS BEEN DRAWN BY SELF CHEQUES AND THE SAME HAS BEEN CLAIMED TO HAVE BEEN PAID FOR PURCHASE OF IRON ORE. FROM THE PURCHASE BILLS IT IS SEEN THAT ALL THE BILLS ARE SELF MADE VOUCHERS ON PRINTED PURCHASE BILLS AND THEY ARE CREDIT PURCHASES. THERE ARE NO FULL NAME AND ADDRESS OF THE SELLERS AND APPEARS TO BE U RD SELLERS. THERE ARE NO EVIDENCE FOR CASH PAYMENT MADE TO URD SELLERS OR ACKNOWLEDGEMENT FOR HAVING RECEIVED THE CASH BY THE URD SELLERS. THUS THE BOOKS OF ACCOUNTS PRODUCED BY THE ASSESSEE ARE MANUFACTURED TO MAKE BELIEVE THAT IRON ORE HAS BEEN PURCHASE D FROM URD SELLERS. ALL TRANSACTIONS APPEARED TO HAVE BEEN DONE BY SRI MANOJ KUMAR JAM BY USING HIS EMPLOYEES WHICH HAS BEEN CONFESSED IN HIS STATEMENTS RECORDED FROM TIME TO TIME. 18 . ITA NOS. 345 293 TO 302 307 311/PNJ/ 2013 ( A.Y. 2007 - 08 & 2008 - 09 ) 12.3. IN THE STATEMENT DATED 26.11.2008 SRI SHRIPAL JAM HAS ADMITTED THAT HE HAS NOT MAINTAINED ANY EVIDENCE FOR CASH PAYMENT MADE TO URD SELLERS. HE ADMITTED THAT HE IS AN EMPLOYEE OF SRI MANOJ KUMAR JAM. HE ALSO ADMITTED THAT IT WAS A PRACTICE THAT HE WITHDRE W CASH FROM BANK ACCOUNT AND USED TO HAND OVER THE SAME TO SRI MANOL KUMAR JAIN AND THE TRANSACTION WERE DONE ON PAPER ONLY ON COMMISSION BASIS. 12.4. ALSO A DIFFERENCE IN PURCHASES OF RS. 15 67 500/ - WITH REFERENCE TO FIGURES DECLARED WITH COMMERCIAL TAX ES DEPARTMENT WAS OBSERVED WHICH HAS BEEN BROUGHT TO TAXEPARATELY ALONG WITH A PROFIT ELEMENT ON THE SAME. (REFER ISSUE IV). SRI SHOUKAT PIRVALLE PROP. M/S S R TRADINQ CO. ) HOSPET DETAILS OF PURCHASES AND SALES ARE AS UNDER : - PURSHASE OF IRON O RE FOR THE PERIOD 01 - 04 - 2007 TO 31 - 03 - 2008 SR. NO. NAME OF THE PARTY QUANTITY AMOUNT 01 URD PURCHASES 7 675.00 2 96 42 500.00 TOTAL 7 675.00 2 96 42 500.00 SALE OF IRON ORE FOR THE PERIOD 01 - 0402007 TO 31 - 03 - 2008 SR. NO. NAME OF THE PARTY QUANTITY AMOUNT 01 M/S BHAVANI ENTERPRISES 7 614.208 3 00 00 008.00 TOTAL 7 614.208 3 00 00 008.00 13 . THE ASSESSING OFFICER HAS BROUGHT ON RECORD THE FOLLOWING FACTS: 13.1. INQUIRIES CONDUCTED FROM THE BANKS INDICATED THAT BANK ACCOUNT AT ING VYSYA BANK HOSPET WAS OPENED ON 06.03.2008 VIDE NO.118011014830 AND SRI CHANDRASHEKAR PROP. OF M/S MEGHA MINER ALS FRIEND OF SRI MANOJ KUMAR J AIN PROP. OF M/S GRMTC IS THE INTRODUCER. VERIFICATION OF IMPOUNDED BOOKS INDICATED THAT CASH OF 55 60 240/ - HAS BEEN WITHDRAWN BY SELF CHEQUE FROM THE BANK AND CLAIMED TO HAVE BEEN PAID FOR CASH PURCHASES OF IRONORE. FROM THE PURCHASE BILLS IT IS SEEN THAT ALL THE BILLS ARE SELF MADE VOUCHERS ON PRINTED PURCHASE BILLS AND THEY ARE CREDIT PURCHASES. THERE ARE NO FULL NA ME AND ADDRESS OF THE SELLERS AND APPEARS TO BE URD SELLERS. THERE ARE NO EVIDENCES FOR CASH PAYMENT MADE TO URD SELLERS 19 . ITA NOS. 345 293 TO 302 307 311/PNJ/ 2013 ( A.Y. 2007 - 08 & 2008 - 09 ) OR ACKNOWLEDGEMENT FORM HAVING RECEIVED THE CASH BY THE URD SELLERS. THUS THE ASSESSING OFFICER CAME TO BELIEVE THAT THE BOOKS OF ACCO UNTS PRODUCED BY THE ASSESSEE ARE MANUFACTURED TO MAKE BELIEVE THAT IRON ORE HAS BEEN PURCHASED FROM URD SELLERS. ALL TRANSACTIONS APPEARED TO HAV E BEEN DONE BY SRI MANOJ KUMAR J AIN BY USING HIS EMPLOYEES WHICH HAS BEEN CONFESSED IN HIS STATEMENTS RECORDE D FROM TIME TO TIME. IN THE STATEMENT DATED 26.11.2008 SRI SHOUKAT PIRAVALLE HAS ADMITTED THAT HE HAS NOT MAINTAINED ANY EVIDENCE FOR CASH PAYMENT MADE TO URD SELLERS. HE ADMITTED THAT HE IS AN EMPLOYEE OF SRI MANOJ KUMARJAIN. HE ALSO ADMIT T ED THAT IT WA S A PRACTICE THAT HE WITHDREW CASH FROM BANK :OUNT AND USED TO HAND OVER THE SAME TO SRI MANOJ KUMAR J AIN AND THE TRANSACTION WERE DONE ON PAPER ONLY ON COMMISSION BASIS. UNDER THESE CIRCUMSTANCES THE CLAIM OF PAYMENT TO URD SELLERS IS FICTITIOUS AND THE EXPENSES CLAIMED BY M/S GRMTC ON ACCOUNT OF PURCHASES FROM M/S S R TRADING COMPANY ARE BOGUS IN NATURE. 13.2. ALSO A DISCREPANCY IN PURCHASES FIGURE AS DECLARED BEFORE COMMERCIAL TAXES DEPARTMENT AND AS DECLARED IN THE ACCOUNT STATEMENTS WAS NOTICED OF 15 57 511/ - WHICH HAS BEEN BROUGHT TO TAX ALONG WITH PROFIT ELEMENT AT 5% PROTECTIVELY (ISSUE AT SR. NO. IV). M/S BALAJI IMREX HOSPET . DETAILS OF PURCHASES AND SALES ARE AS UNDER : - PURSHASE OF IRON ORE FOR THE PE RIOD 0 1 - 04 - 2007 TO 3 1 - 03 - 2008 SR. NO. NAME OF THE PARTY QUANTITY AMOUNT 01 URD PURCHASES 31 782.744 6 83 32 899.00 02 M/S GURU RAJENDRA MINERALS TRADING COMPANY 30 381.161 6 347.325 6 92 69 000.00 1 55 50 946.25 03 M/S RAGHAVENDRA AGENCIES 30 445.050 6 92 69 000.00 04 M/S SAL MINERALS 4 773.214 1 33 65 000.00 TOTAL 103 729.494 23 57 86 845.25 SALE OF IRON ORE FOR THE PERIOD 0 1 - 04 - 2007 TO 3 1 - 03 - 2008 20 . ITA NOS. 345 293 TO 302 307 311/PNJ/ 2013 ( A.Y. 2007 - 08 & 2008 - 09 ) SR. NO. NAME OF THE PARTY QUANTITY AMOUNT 01 M/S KIRLOSKER FERRO US INDUSTRIES LTD 4 932.880 1 35 65 420.00 02 M/S GURU RAJENDRA MINERALS TRADING COMPANY 61 916.369 13 84 55 148.71 03 M/S ADANI ENTERPRI SES LTD 4 243.580 11 41 56 519.00 TOTAL 71 092.829 26 61 77 087.71 14 . THE ASSESSING OFFICER HAS BROUGHT ON RECORD THE FOLLOWING FACTS: - 14.1 THE PARTNER OF THE FIRM S RI NARENDRA KUMAR JAIN IS KNOWN TO BE A FRIEND OF SRI MANOJ KUMAR JAIN WHO IS EARNING COMMISSION INCOME FROM M/S GRMTC AS HE IS LOOKING AFTER THE SALES OF M/S GRMTC WITH SUNFLAG IRO N AND STEEL AT BHANDARA NAGPUR. 14.2 SRI NARENDRA KUMAR JAM ADMITTED IN HIS STATEMENT RECORDED ON 09.11.2009 THAT SRI MANOJ KUMAR JAM WAS KNOWN TO HIM FOR MORE THAN 10 YE ARS. 14.3. OTHER FACTS ARE SIMILAR AS IN THE CASE OF OTHER CONCERNS AND AS BROUGHT OUT IN DETAIL IN THE ASSESSMENT ORDER. IT IS RELEVANT TO NOTE THAT THE CREDITORS CONSISTS OF MIS GRMTC URD PURCHASES AND RAGHAVENDRA AGENCIES (AN OTHER SIMILAR CONCERN FLOATED BY M/S GRMTC THOUGH NOT COVERED BY THIS ORDER) ONLY. 14.4. BASED ON THE FACTS BROUGHT OUT IN THE ASSESSMENT ORDER THE ASSESSING OFFICER CAME TO A CO NCLUSION THAT THE TRANSACTIONS SHOWN IN THE NAME OF THE APPELLANT WERE ALSO MAKE BELIEVE TRANSACTIONS. (12) SRI P N CHANDRAKANTH PROP. M/S VENKATESHWARA MINERALS HOSPET . DETAILS OF PURCHASES AND SALES ARE AS UNDER : - PURSHASE OF IRON ORE FOR THE PERIOD 01 - 04 - 2006 TO 31 - 03 - 2007 SR. NO. NAME OF THE PARTY QUANTITY AMOUNT 01 URD PURCHASES TOTAL 3 00 94 552.00 3 00 94 552.00 TOTAL 3 00 94 552.00 3 00 94 552.00 SALE OF IRON ORE FOR THE PERIOD 01 - 04 - 2007TO31 - 03 - 2008 21 . ITA NOS. 345 293 TO 302 307 311/PNJ/ 2013 ( A.Y. 2007 - 08 & 2008 - 09 ) SR. NO. NAME OF THE PARTY QUANTITY AMOUNT 01 M/S GURU RAJENDRA MINERALS 23650.00 3 04 20 625.00 23650.00 3 04 20 625.00 15. THE ASSESSING OFFICER HAS BROUGHT ON RECORD THE FOLLOWING FACTS: 15.1. THE ENTIRE PURCHASES ARE URD PURCHASES FOR WHICH NO DETAIL OR EVIDENCE IS AVAILABLE AND ENTIRE SALES IS TO M/S GRMTC. OTHER FACTS ARE SIMILAR AS IN OTHER CASES. 15.2 A DISCREPANCY IN THE SALES FIGURE WHEN COMPARED WITH THAT REPORTED TO COMMERCIAL TAXES DEPARTMENT OF 6 1 152/ - WAS ALSO NOTICED AND BROUGHT TO TAX . 15.3 AS IS APPARENT THE PURCHASES & SALES ARE PRIMARILY FROM/TO EACH OTHER OR U R D PURCHASES. ALSO THE APPELLANTS ARE EITHER EMPLOYEES OF SRI MANOJ KUMAR JAIN OR ARE CLOSELY KNOWN TO HIM. IN ALL CASES BLANK PURCHASE VOUCHERS WERE FOUND IN THE PREMISES OF SRI MANOJ KUMAR JAIN DURING THE COURSE OF SEARCH/SURVEY. ALL PURCHASES ARE SHOWN TO HAVE BEEN MADE IN CASH AND THE APPELLANTS ARE UNABLE TO SUBSTANTIATE THE SAME. 15.4 WHILE FINALIZING THE APPEALS IN THE CASE OF SRI MANOJ KUMAR JAM I HAVE ALREADY EXAMINED MOST OF THE ABOVE FA CTS AND HAVE COME TO A CONCLUSION THAT THE TRANSACTIONS SHOWN BY SRI MANOJ KUMARJAIN (PROP. M/S GMRTC) IN NAMES OF THE ABOVE MENTIONED APPELLANTS ARE NOT GENUINE BUT A MAKE - BELIEVE TRANSACTION AT PAGES 17 TO 30 OF MY ORDER DATED 13TH MAY 2013 IN THE CASE O F SRI MANOJ KUMAR JAM IN ITA NOS.429/429A/428/427/426/425/DCIT CC 1 BELGAUM/CIT(A) - VL/BLOREI2009 - .2010 I HAVE HELD THAT FROM THE ABOVE FINDINGS IT IS C/EAR THAT THE APPELLANT HAS NOT MADE ANY PURCHASES FROM THESE PARTIES AND THAT THESE PARTIES WHETHER THEY WERE EXISTING PERSONS OR EMPLOYEES OF THE APPELLANT ETC. ARE ONLY NAME LENDERS TO GIVE A SOURCE TO THE IRON ORE SOLD BY THE APPELLANT. BASED ON THE ABOVE FINDINGS AND THE FACTS BROUGHT OUT BY THE ASSESSING OFFICER AND HIGHLIGHTED BY ME ABOVE IT IS FAIRLY CONCLUDED THAT THE PURCHASES AND 22 . ITA NOS. 345 293 TO 302 307 311/PNJ/ 2013 ( A.Y. 2007 - 08 & 2008 - 09 ) SALES SHOWN BY THE ABOVE MENTIONED APPELLANTS ARE N6T GENUINE TRANSACTIONS BUT MAKE BELIEVE TRANSACTIO NS TO GIVE A NAME TO THE SOURCE OF SALES MADE BY SRI MANOJ KUMAR JAIN. 15.5 NO FURTHER DETAIL OR EVIDENCE WAS FURNISHED REGARDING THE SAID PURCHASES AND SALES BY THE APPELLANTS THEMSELVES EITHER DURING THE ASSESSMENT PROCEEDINGS OR APPELLATE PROCEEDINGS TH IS WAS ALSO NOT SUBSTANTIATED BY SRI MANOJ KUM JAIN WHO IS THE ULTIMATE BENEFICIARY. 15.6 MERE FILING OF SELF DECLARATIONS BEFORE THE COMMERCIAL TAXES DEPARTMENT AND THE INCOME TAX DEPARTMENT WILL NOT MAKE THE TRANSACTIONS OF SUCH HUGE AMOUNTS GENUINE IN A BSENCE OF ANY RELIABLE EVIDENCE. 15.7 THESE TRANSACTIONS SHOWN IN THE NAME OF THE ABOVE APPELLANTS I.E. PURCHASES AS WELL AS SALES ARE THEREFORE HELD TO BE SIMPLY MAKE - BELIEVE TRANSACTIONS ONLY RECORDED ON PAPER. 15.8 IN THIS REGARD I AGREE WITH THE FIND INGS OF THE ASSESSING OFFICER. HOWEVER IN MY OPINION NO ADD ITI ON ON ACCOUNT OF INVESTMENT IN PURCHASES OR GROSS PROFIT OR EVEN DISCREPANCY IN PURCHASE AND SALES NEEDS TO BE MADE IN THE HANDS OF THE ABOVE MENTIONED APPELLANTS ON PROTECTIVE BASIS AS MADE BY THE ASSESSING OFFICER. THIS ADDITION MADE IS HEREBY DELETED. HOWEVER THE INCOME DECLARED BY THE APPELLANTS THEMSELVES (EXCEPT IN CASE OF SRI P N CHANDRAKANTH AT SR . NO.12 ABOVE BEING A LOSS FIGURE) IS BROUGHT TO TAX AS INCOME FROM OTHER SOURCES PROBA BLY EARNED BY THE APPELLANTS FOR RENDERING TH EIR NAMES TO SRI MANOJ KUMAR JAIN OR BY OTHER MEANS. THE APPELLANTS HAVE ALREADY DECLARED AND ACKNOWLEDGED SUCH INCOMES TO THE EXTENT AS MENTIONED IN COLUMN 4 IN THE TABLE AT PAGES 5 & 6. THIS IS ASSESSED AS INC OME FROM OTHER SOURCES. TAXABLE INCOME OF THE APPELLANTS FROM SR. NOS . 1 TO 11 IS LIMITED TO THESE AMOUNTS ONLY. HOWEVER THIS IS TAXED AS INCOME FROM OTHER SOURCES AND NOT AS INCOME FROM BUSINESS AS CLAIMED BY THE APPELLANTS. 23 . ITA NOS. 345 293 TO 302 307 311/PNJ/ 2013 ( A.Y. 2007 - 08 & 2008 - 09 ) 15.9 AS REGARDS SR NO.12 I. E SRI P N CHANDRAKANTH WHERE INCOME DECLARED IS A LOSS THE SAME IS IGNORED FOR THE SAME REASON THAT THE BUSINESS TRANSACTIONS ARE HELD TO BE NON - GENUINE. 16. AS REGARDS FREIGHT AND HIRE CHARGES AND TRANSPORT CHARGES CLAIMED AS EXPENSES BY APPELLANTS AT S R. NOS 6 & 7 IN ITA NO.352/DCIT CC - 1 BGM/CIT(A)VL/BLORE/2009 - 2010 & ITA NO.353/DCIT CC - 1 BGM/CIT(A) - VL/BLORE/2009 - 2010 OF M/S NANDI ENTERPRISES HOSPET AS THE TRANSACTION OF PURCHASE AND SALE IS HELD TO BE BOGUS THE FREIGHT CHARGES FOR WHICH THE APPE LLANT HAS NOT BEEN ABLE TO OFFER ANY DETAIL OR EVIDENCE EITHER DURING ASSESSMENT OR DURING APPEAL ARE ALSO BOGUS CLAIMS. HOW EVER NO SEPARATE DISALLOWANCE/ ADDITION IS REQUIRED TO BE MADE AS THE ENTIRE BUSINESS TRANSACTIONS ARE HELD TO BE NON GENUINE AND N O BUSINESS INCOME IS ASSESSABLE IN THE HANDS OF THE APPELLANT AS CLAIMED. 16.1 THIS ALSO ANSWERS THE ISSUE AT SR . NO. IV REGARDING ADDITIONS ON A/C OF DISCREPANCY IN SALES/PURCHASES IN RESPECT OF SOME OF THE APPELLANTS I.E. MENTIONED AT S NO.12 SR NO.10 SR NO.9 SR NO.5 SR NO.3 IN ITA NO. 759/DCLT CC - 1 BGM/CIT(A) - VI/BLORE/2009 - 2010 O F SRI P N CHANDRAKANTH PROP. M/ S VENKATESHWARA MINERALS HOSPET ITA NO. 394/DCIT CC - 1 BGM/CIT(A) - V1/BLORE/2009 - 2010 OF SRI SHOUKAT PIRVALLE PROP. M/S S R TRADING CO. ) HOSPET IT A NO. 389/DCIT CC - 1 BGM/CIT(A) - VL/BLO RE/2009 - 2010 OF SRI SRIPAI B JAIN PROP. M/S HARIHANTH ENTERPRISES HOSPET ITA NO. 351/DCIT CC - 1 BGM/CIT(A) - VI/ B L OREI2009 - 2010 OF SRI HEMANT KUMAR PROP. M/S HEMANT TRADING COMPANY HOSPET AND ITA NO. 349/ DCIT CC - 1 BGM/CIT(A) - VL/BLORE/2009 - 2010 OF SRI M GOVINDARAJU PROP. M/S POOJA MINERALS & EARTHMOVERS HOSPET. 16.2 AS REGARDS CHARGING OF INTEREST U/S 234A 234B & 234C OF INCOME TAX ACT IS MANDATORY HOWEVER THE ASSESSING OFFICER IS DIRECTED TO GIV E CONSEQUENTIAL EFFECT TO THE COMPUTATION OF INTEREST IN THE ABOVE SECTIONS. 24 . ITA NOS. 345 293 TO 302 307 311/PNJ/ 2013 ( A.Y. 2007 - 08 & 2008 - 09 ) 16.3 WITH THESE FINDINGS THE APPEALS ARE DISPOSED OF AND TREATED AS PARTLY ALLOWED. 17 . LEARNED D R SUBMITTED THAT THE ASSESSE E HAS MADE PURCHASES FROM ALL THESE CONCERNED I.E. PROPRIETARY M/S BHAWANI ENTERPRISES HOSPET M/S. A P N ENTERPRISES M/S. POOJA MINERAL & EARTHMOVERS M/S SAI MINERALS M/S . HEMANTH TRADING COMPANY M/S NANDI ENTERPRISES M/S SHAKAMBARI TRADING COMPANY M/S HARINATH ENTERPRISES M/S S R TRADIN G COMPANY M/S BALAJI IMP EX M/S VENKATESHWARA MINERALS. ALL THE PURCHASERS BY GRMTC PROPRIETARY CONCERN OF MANOJ KUMAR JAIN. IT WAS FOUND FROM THE DOCUMENT THAT ALL THESE CONCERNS WERE OPERATED FROM THE OFFICER OF SRI MANOJ KUMAR JAIN WHO HAS ISSUED LETT ER S TO ING VYSYA BANK AND CHEQUES WER E ISSUED TO CERTAIN PARTIES MEANT FOR BUSINESS PURPOSES . THE AO HAS MADE AN ENQUIRY FROM THE BANK AND IT WAS FOUND THAT ALL THE PAYMENTS WHEREBY BEARER CHEQUES ARE GENUINE AND THEREFORE ENQUIRY ALSO REBUILT FROM THE COMMERCIAL D EPARTMENT AND COMMERCIAL DEPART MENT HAS ALSO SHOWN THESE PURCHASES AND AS PER THE COMMERCIAL DEPARTMEN T THE SALES HAVE ALSO BEEN MADE T HEREFORE AO HAS MADE THE GROSS PROFIT OF 5% ON THE PURCHASES AND MADE THE ADDITION. MOREOVER THE ASSESSING OFFICER HAS ALSO MADE ADDITION ON AMOUNT OF PURCHASES AS INVESTMENT. THE CIT(A) WAS NOT JUSTIFIED THAT IT IS TRANSACTION OF MR. MANOJ KUMAR JAIN BECAUSE ALL THE CONCERNS HAVE INDEPENDENTLY MADE PURCHASE THEREFORE CIT(A) IS NOT JUSTIFIED IN DELETING THE SAME. 18. LEARNED AR HAS FILED THE WRITTEN SUBMISSION WHICH READ AS UNDER: THE RESPONDENT IN THE ABOVE APPEAL DESIRES TO SUBMIT THE FOLLOWING WRITTEN SUBMISSION IN THE ABOVE APPEAL IN ADDITION TO & IN SUBSTANTIATION OF THE ARGUMENTS HAD AT THE TIME OF HE ARING 1. THE RESPONDENT IS AN INDIVIDUAL. 2. THE RESPONDENT WAS CARRYING ON THE BUSINESS OF DEALING IN MINERALS AT HOSPET. 3. ON 25.03.2008 SEARCH OPERATION U/S. 132 OF THE ACT TOOK PLACE IN THE CASE OF SRI ANAND KUMAR SINGH AND SRI MANOJ KUNIAR JAM 25 . ITA NOS. 345 293 TO 302 307 311/PNJ/ 2013 ( A.Y. 2007 - 08 & 2008 - 09 ) 4. IT IS STATED THAT CONSEQUENT TO THE ABOVE SEARCHES THE CASE OF THE RESPONDENT WAS COVERED U/S. 153C OF THE ACT AND ACCORDINGLY NOTICES WERE ISSUED U/S. I 53C OF THE ACT ON 11.05.2009. 5.1 FOR ASSESSMENT YEAR 2008 - 09 THE RESPONDENT HAS FILED THE RETURN OF INCOME VOLUNTARILY ON 29.09.2008 DECLARING AN INCOME OF RS. 4 73 020/ - AS AGAINST WHICH THE RESPONDENT HAS NOW RECEIVED AN ORDER U/S. 143(3) OF THE ACT AS PER WHICH THE INCOME ASSESSED WAS RS. 17 56 20 000/ - . 5.2 THE VARIATION IN THE INCOME RETURNED FOR T HE YEAR UNDER APPEAL IS AS PER THE FOLLOWING CHART. SL. NO. PARTICULARS A.Y. 2008 - 09 1 UNEXPLAINED INVESTMENT MADE IN PURCHASE AS DISCUSSED IN PARA 5 BEING UDI 16 64 10 433.00 2 PROFIT ON SALES AS PER PARA 6 87 36 547.00 6.1 IT MAY BE SUBMITTED HERE TH AT THE RETURN FILED BY THE RESPONDENT FOR THE YEAR UNDER APPEAL WAS SUPPORTED BY THE FINANCIAL STATEMENTS DULY AUDITED. 6.2 THE RESPONDENT HAD ALSO BEEN REGISTERED WITH SALES TAX / VAT AUTHORITIES AID ALSO ASSESSED THEREWITH IN RESPECT OF TRADING DONE IN I RON ORE & MINERALS. 7. THE CIT(A) IN HER COMMON ORDER HELD THAT THE PURCHASES AND SALES SHOWN BY THE RESPONDENT WERE NOT GENUINE TRANSACTIONS BUT WERE MAKE BELIEVE TRANSACTION TO GIVE A NAME TO THE SOURCE OF SALES MADE BY ONE SRI MANOJ KUMAR JAM. AS SUCH T HE CIT(A) DELETED ALL THE ADDITIONS MADE BY THE A.O. TO THE INCOME RETURNED BUT RETAINED RETURNED INCOME AS INCOME FROM OTHER SOURCES. 8. THE RESPONDENT DID NOT FILE ANY APPEAL AGAINST THE SAID ORDER OF THE CIT(A). HOWEVER THE DEPARTMENT HAS FILED APPEALS AND THAT IS HOW THESE APPEALS ARE BEFORE THE HONOURABLE INCOME - TAX APPELLATE TRIBUNAL. 9. IN THESE APPEALS THE DEPARTMENT IS QUESTIONING THE CORRECTNESS OF THE ACTION OF THE CIT(A) IN DELETING THE ADDITIONS MADE BY THE ASSESSING OFFICER. 10. IT MAY BE RE ITERATED HERE THAT THE LEARNED COMMISSIONER OF INCOME TAX (APPEALS) HAD COME TO A CONCLUSION THAT THE RESPONDENT ALONG WITH OTHER PARTIES WAS FACADE OF SRI. MANOJ KUMAR JAIN AND THEREFORE HAS CONCLUDED THAT THE RESPONDENT AND OTHER PEOPLE HAVE NOT DONE ANY REAL TRANSACTIONS IN PURCHASE AND SALE OF IRON ORE. 11. THE MATTER OF SRI. MANOJ KUMAR JAIN CAME UP BEFORE THE HONOURABLE INCOME TAX APPELLATE TRIBUNAL PANAJI BENCH AND THE HONOURABLE TRIBUNAL PLEASED TO PASS ORDER IN MANOJ KUMAR JAINS CASE FOR ASSESSMEN T YEAR 2003 - 2004 TO 2008 - 2009 IN ITA NOS. 179 TO 184/PNJ/20 13. THE RELEVANT MATTER IS DISCUSSED IN PARA 21 OF THE ORDER OF THE 26 . ITA NOS. 345 293 TO 302 307 311/PNJ/ 2013 ( A.Y. 2007 - 08 & 2008 - 09 ) TRIBUNAL AND THE RELEVANT FINDING IN PARA 21.4 AT PAGES 47 TO 51. PARA 21.4 IS REPRODUCED HEREIN UNDER: WE HAVE HEARD THE RIVAL SUBMISSIONS AND CAREFULLY CONSIDERED THE SAME. THE QUESTION ARISES FOR OUR CONSIDERATION OUT OF THE FACTS RELATING TO GROUND NO. 9 IN THE A. Y. 2007 - 08 AND ROUND NO. 8 IN A. Y 2008 - 09 IS WHETHER THE PURCHASES MADE BY THE ASSESSEE CAN BE DISALLOWED WHEN TH E SALES MADE BY THE ASSESSEE HAS DULY BEEN ACCEPTED IT IS NOT DENIED FROM THE ORDER OF THE AUTHORITIES BELOW ON THE BASIS OF THE DOCUMENTS FOUND DURING THE COURSE OF THE SEARCH THAT THE ASSESSEE WAS ENGAGED IN THE TRADING OF THE IRON ORE. DURING THE COURSE OF CARRYING OUT THE TRADING IN IRON ORE THE ASSESSEE HAS ACCOMMODATED SHRI ANIL IL LAD AND MIS. VSL AND SONS FOR SELLING IRON ORE PROCURED BY THEM THROUGH ILLEGAL MINING CARRIED OUT IN THEIR MINING THUS THE PURCHASES MADE BY THE ASSESSEE FROM THESE FIRMS WHICH WERE WITHOUT BILLS WERE SHOWN BY THE ASSESSEE IN HIS BOOKS OF ACCOUNTS AS IF THE ASSESSEE HAS MADE PURCHASES FROM VARIOUS PARTIES SO THAT IT MAY APPEAR THAT THE ASSESSEE HAS MADE THE PURCHASES FOR THESE PARTIES. IT IS ALSO UNCONTROVERTED FACT THAT T HE ASSESSEE DID NOT OWN ANY MINE AND WAS ENGAGED ONLY IN TRADING OF IRON ORE THROUGH ITS PROPRIETORSHIP CONCERN. THE SALES MADE BY THE ASSESSEE WERE DULY ACCEPTED BY THE REVENUE. WE HAVE GONE THROUGH THE DECISION OF THE HONBLE SUPREME COURT IN CIVIL APPEA LS NOS. 4540 - 4548 OF 2000 IN THE CASE OF THREESIAMMA JACOB & ORS V/S GEOLOGISTS DPTT. C/MINING & GEOLOGY & ORS IN WHICH HONBLE SUPREME COURT VIDE ORDER DATED 8 JULY 2013 HONBLE SUPREME COURT HELD UNDER PARA 57 OF ITS ORDER THAT OWNERSHIP OF SUB - SOIL/M INERAL WEALTH SHOULD NORMALLY FOLLOW THE OWNERSHIP OF THE LAND UNLESS THE OWNER OF THE LAND IS DEPRIVED OF THE SAME BY SONIC VA/ID PROCESS. EVEN IN THIS CASE THE HONBLE SUPREME COURT WAS OF THE OPINION THAT THERE IS NOTHING IN LAW WHICH DECLARES THAT ALL MINERAL WEALTH SUBSOIL RIGHTS VEST IN THE STATE. ON THE BASIS OF THE DICTUM OF LAW PRONOUNCED BY THE HONBLE SUPREME COURT THE IRON ORE ILLEGALLY EXTRACTED FROM THE MINES OF SHRI ANIL H LAD AND THE FARM OWNED BY HIM BELONG TO SHRI ANIL II LAD NOT TO THE A SSESSEE. THERE ARE ALSO EVIDENCES FOUND DURING THE COURSE OF SEARCH THAT THE ASSESSEE MADE CASH PAYMENTS TO SHRI ANIL H. LAD AND THE IRON ORE SO EXTRACTED ROUTED TO THE PROPRIETORSHIP CONCERN OF THE ASSESSEE. IT CANNOT BE SAID THAT WHATEVER IRON ORE ILLEGA LLY EXTRACTED FROM THE MINING BELONGING TO M/S. VSL AND SONS A FIRM OF SHRI ANIL H LAD WAS GIVEN BY SHRI ANIL H. LAD TO THE ASSESSEE WITHOUT CHARGING ANY COST. THE ASSESSEE HAS SUBMITTED QUANTITATIVE RECONCILIATION SHOWING THE QUANTITY OF THE MATERIAL PU RCHASED AS WELL AS MATERIAL SOLD. THE ASSESSEE HAS BOTH ACCOUNTED AS WELL AS UNACCOUNTED SALES. SO FAR AS THE UNACCOUNTED SALES ARE CONCERNED THE SAME HAS BEEN DEALT WITH SEPARATELY IN THE PRECEDING PARAGRAPHS. HERE WE ARE CONCERNED WITH THE ACCOUNTED SA LES AND ACCOUNTED PURCHASE BILLS. ON THE BASIS OF THE SEIZED MATERIAL THE AO CAME TO THE CONCLUSION THAT THE ASSESSEE HAS PROCURED THE BILLS FOR THE IRON ORE AND ACCOUNTED FOR THESE BILLS IN HIS BOOKS OF ACCOUNTS. SOME OF THE CONCERNS ARE OWNED BY SOME OF THE EMPLOYEES OF THE ASSESSEE WHILE OTHER CONCERNS ARE OWNED BY THIRD PARTIES. ALL THESE CONCERNS EXCEPT 2 - 3 WERE DULY REGISTERED WITH THE SALES TAX AUTHORITIES. 27 . ITA NOS. 345 293 TO 302 307 311/PNJ/ 2013 ( A.Y. 2007 - 08 & 2008 - 09 ) ALL WERE HAVING FAN AS WELL AS TIN. ALL THESE CONCERNS WERE HAVING BANK ACCOUNTS ALTHOUGH IN 3 CASES THE BANK ACCOUNTS WERE INTRODUCED BY THE ASSESSEE. IT IS NOT DENIED BY THE ASSESSEE ALSO THAT THE ASSESSEE HAS SHOWN PURCHASES FROM THESE CONCERNS AND THE PAYMENTS WERE ALSO I MADE TO THESE CONCERNS. THE AO DISALLOWED THESE PURCHASES TREATING THEM TO BE BOGUS PURCHASES WHICH WAS CONFIRMED BY THE CIT(A). WE MAY MENTION HERE THAT THE ASSESSEE WHO IS ENGAGED IN TRADING BUSINESS CANNOT SELL THE GOODS WITHOUT BUYING IT. THE ASSESSEE MIGHT HAVE BOUGHT IT FROM ONE PARTY WITHOUT BILLS BUT MIGHT HAVE PROCUR ED THE BILLS FROM OTHER PARTIES. THE ASSESSEE IN HIS STATEMENT WHICH WAS RECORDED BY THE REVENUE POST - SEARCH HAS CATEGORICALLY ACCEPTED THAT HE HAS PAID COMMISSION CHARGES FOR PROCURING THE BILLS @4% THIS MAY MAKE THE BILLS TO BE BOGUS BUT WE: CANNOT CONCL UDE THAT THE ASSESSEE HAS NOT MADE THE PURCHASES. IT IS NOT A CASE WHERE THE ASSESSEE HAS INFLATED THE PURCHASES I.E. THE QUANTITY OF THE PURCHASES ARE MUCH MORE THAN THE QUANTITY OF THE IRON ORE SOLD. THE AO IN HIS REMAND REPORT HAS CATEGORICALLY ACCEPTE D THE FACT THAT THE ASSESSEE WAS WORKING ON BEHALF OF SHRI ANIL H LAD WHO WANT OWNED THE MINES AND HAS EXTRACTED IRON ORE ILLEGALLY MUCH MORE THAN PERMISSIBLE. TO COVER UP THE QUANTITIES OF PURCHASE MADE FROM SHRI ANIL H LAD CONCERN MIS. VSL & SONS THE AS SESSEE HAD TO PROCURE THE PURCHASE BILLS. IT IS NOT THE CASE OF THE REVENUE THAT THE IRON ORE PURCHASES AND SALES MADE BY THE ASSESSEE ARE NOT RECONCILABLE. THE ASSESSEE HAS SUBMITTED THE QUANTITATIVE RECONCILIATION STATEMENT WHICH I HAS BEEN REFERRED TO B Y THE AO IN HIS REMAND REPORT. THE SALES ACCOUNTED FOR AND MADE BY THE ASSESSEE HAVE NOT BEEN DISPUTED BY THE REVENUE. AT THE MOST IN OUR OPINION WHERE THE ASSESSEE HAD SAVED ANY TAX IN PROCURING THE BOGUS BILLS THE ASSESSEE COULD HAVE MADE MORE PROFIT BUT THE PURCHASES MADE BY THE ASSESSEE CANNOT BE DISALLOWED THERE ARE EVIDENCES THAT THESE FIRMS WERE DULY REGISTERED WITH THE IN COME TAX AS WELL AS SALE TAR AUTHORITIES. THE VAT HAS DULY BEEN PAID ON THE PURCHASES MADE BY THE ASSESSEE. THESE CONCERNS FIL ED THEIR INCOME TAX RETURN PRIOR TO THE NOTICE ISSUED U/S.153C EVEN VAT RETURN WAS DULY FILED. THESE CONCERN MADE THE SALES TO THE PROPRIETORSHIP CONCERN OF THE ASSESSEE TO THE EXTENT OF RS.50 33 07 161/ - IN BOTH THE YEARS AS PER THE DETAILS GIVEN AT PAGE 146 OF THE PAPER BOOK. THESE CONCERNS HAVE INTER SALES ALSO TO THE EXTENT OF RS. 33 75 75 865/ - IN BOTH THE YEARS. WE NOTED THAT DURING THE YEAR ENDED 31.3.2007 THE PURCHASES WERE DISALLOWED BY THE A. 0 TO THE EXTENT OF RS. 17 72 99 4844 AND DURING THE YEA R ENDED 31.3.2008 THE PURCHASES DISALLOWED WERE RS. 23 26 29 989/ - . THE GROSS PROFITS AS PER THE BOO/CC OF ASSESSEE WERE 16 35% AND 6.06% FOR THE ASSESSMENT YEAR 2007 - 08 AND 2008 - 09 RESPECTIVELY. WE DO AGREE WITH THE LEARNED A.R THAT ONCE THE PURCHASES AR E DISALLOWED THE GROSS PROFIT WILL INCREASE TO 50.9% AND 90.7% FOR THE ASSESSMENT YEAR 2007 - 08 AND 2008 - 09 RESPECTIVELY. NO MATERIAL OR EVIDENCE WHATSOEVER SHOWING THE COMPARATIVE INSTANCE WAS PRODUCED BEFORE US TO JUSTIFY SUCH A HIGH GROSS PROFIT. UNDER T HESE FACTS IN OUR OPINION NO ADDITION ON ACCOUNT OF BOGUS IRON ORE PURCHASES CAN BE MADE AS WITHOUT PROCURING THE IRON ORE BY INCURRING THE COST IN OUR OPINION THE ASSESSEE CANNOT SELL THE IRON ORE. AT THE MOST THE REVENUE COULD HAVE ADDED THE PROFIT ON SU CH PURCHASES @ 4% AS HAS BEEN HELD BY 28 . ITA NOS. 345 293 TO 302 307 311/PNJ/ 2013 ( A.Y. 2007 - 08 & 2008 - 09 ) US IN THE PRECEDING PARAGRAPH AS THE ASSESSEE CATEGORICALLY STATED THAT HE WAS CARRYING OUT THE SALES ON BEHALF OF SHRI ANIL H. LAD ON COMMISSION BASIS AND THE EVIDENCES FOUND DURING THE COURSE OF SEARCH AND SURVEY ALS O PROVE THAT THE ASSESSEE IS BEING USED AS CONDUIT TO SIPHON OFF IRON ORE WHICH WAS ILLEGALLY MINED BY M/S. VSL & SONS FIRM OF SHRI ANTI LAD. WE NOTED THAT CIT(A) HAS DELETED THE ADDITION MADE BY THE A. 0 ON ACCOUNT OF PROFIT ESTIMATED ON SUCH SALES THE RE VENUE HAS NOT COME IN APPEAL BEFORE US IN THIS REGARD IN THE ABSENCE OF THE GROUND OF APPEAL BEFORE US WE CANNOT DIRECT THE A.O TO ESTIMATE PROFIT @ 4% ON SUCH PURCHASES. WE ALSO NOTED THAT THE ASSESSEE HAS MADE SURRENDER BY WAY OF UNDISCLOSED STOCK BEING THE INVESTMENT OF THE INCOME EARNED BY THE ASSESSEE. THE SURRENDER SO MADE IN ANY CASE SINCE MORE THAN 4% ON SUCH PROFIT WHICH THE ASSESSEE WOULD HAVE EARNED OTHERWISE TAKES CARE OF ADDITION OF SUCH ESTIMATED PROFITS. BEFORE CONCLUDING OUR FINDING ON THIS ISSUE WE MAY MENTION THAT THE ASSESSING OFFICER HAD DISALLOWED THE EXPENSES INCURRED BY THE ASSESSEE FOR THE PURCHASES U/S 37(1) OF THE INCOME TAX ACT. WE THEREFORE IN VIEW OF OUR AFORESAID DISCUSSION DELETED THE ADDITION MADE ON ACCOUNT OF BOGUS PURCHAS ES. THE PURCHASE COST IN THE CASE OF A TRADER IN OUR OPINION IS ALLOWED AS DEDUCTION U/S. 28 ITSELF AS U/S. 28 IS ONLY THE PROFIT AND GAINS OF ANY BUSINESS OR PROFESSION WHICH ARE CHARGEABLE TO INC. THE CONSIDERATION RECEIVED BY THE ASSESSEE ON THE SALES C ANNOT BE REGARDED TO BE THE PROFIT AND GAINS OF THE PROFESSION. SECTION 28(1) DOES NOT MAKE TOTAL REVENUE RECEIPT TO BE CHARGEABLE TO INCOME TAX ACT. ON THIS BASIS ALSO THE ORDER OF THE CIT (A) CANNOT BE SUSTAINED IN OUR OPINION ON THIS ISSUE. IN VIEW OF O UR AFORESAID DISCUSSION WE DELETE THE ADDITION MADE ON ACCOUNT OF BOGUS PURCHASES MADE BY A0 AND SUSTAINED BY THE CIT(A). IN BOTH THE ASSESSMENT YEARS THUS THE GROUND NO. 9 IN ASSESSMENT YEAR 2007 - 08 AND GROUND NO. 8 IN ASSESSMENT YEAR 2008 - 09 ARE ALLOWED 12. THE ABOVE FINDING OF THE HONOURABLE TRIBUNAL CONCLUDES THE MATTER AS FAR AS THESE APPEALS ARE CONCERNED. THE HONOURABLE TRIBUNAL HAS CATEGORICALLY HELD THAT SRI. MANOJ KUMAR JAIN HAD NO DOUBT PROCURED MATERIALS FOR WHICH THERE WERE CONFIRMED SALES BY SRI. KUMAR JAIN. THE TRIBUNAL ALSO NOTED THAT IT IS A POSSIBILITY THAT THE GOODS WERE PURCHASED BY SRI. MANOJ KUMUR JAIN EITHER FROM THE PARTIES NOTED IN PAM 21.1 (WHICH INCLUDED THE RESPONDENT ALSO) OR PROBABLY THESE PARTIES (NOTED IN PARA 21.1 AS ABOVE) WERE ENGAGED IN ONLY ISSUING BILLS FOR THE MATERIALS PROCURED BY SRI. MANOJ KUMAR JAIN FROM SOME OTHER SOURCES. 13. EITHER - WISE TAKING THE MATTER THE ADDITIONS MADE BY ASSESSING OFFICER CANNOT BE SUSTAINED. THEREFORE IN VIEW OF THE BINDING FINDING OF THE H ONBLE TRIBUNAL IF THE SALES MADE BY THESE PARTIES TO MANOJ KUMAR ARE GENUINE THERE HAVE TO BE CORRESPONDING PURCHASES FROM WHATEVER SOURCE. IF ON THE OTHER HAND SALES ARE TREATED AS NON GENUINE THEN IT HAS NO EFFECT WHAT SO EVER ON THE FINANCIAL ACCOUNT S. 14. THUS IT IS SUBMITTED THE APPEAL FOR REVENUE ARE WITHOUT MERITS AND ARE REQUIRED TO BE DISMISSED AS SUCH. 29 . ITA NOS. 345 293 TO 302 307 311/PNJ/ 2013 ( A.Y. 2007 - 08 & 2008 - 09 ) 15. THE RESPONDENT SUBMITS ACCORDINGLY. IN THE WRITTEN SUBMISSION THE ALL THE ASSESSEE HAS SUBMITTED THE VARIATION IN THE INCOME RETURN FOR T HE YEAR UNDER APPEAL AS FOL LOWING. RAISED ALL THE ARGUMENTS ARE SAME THEREFORE WE ARE NOT REPEATING THE ARGUMENTS OF ALL THE ASSESSEE. FOR THE SAKE OF CONVENIENCE WE ARE ONLY PRODUCING PARA 5.2 WITH TABLE WHICH READ AS UNDER: 5.2 THE VARIATION IN THE IN COME RETURNED FOR THE YEAR UNDER APPEAL IS AS PER THE FOLLOWING CHART. SL. NO. PARTICULARS A.Y. 2008 - 09 1 UNEXPLAINED INVESTMENT MADE IN PURCHASE AS DISCUSSED IN PARA 5 BEING UDI 16 64 10 433.00 2 PROFIT ON SALES AS PER PARA 6 87 36 547.00 19 . WE HAVE HEARD THE RIVAL CONTENTION OF BOTH THE PARTIES. LOOKING TO THE FACTS AND CIRCUMSTANCES OF THE CASE WE FIND THAT THE ISSUE IN CONTROVERSY IS COVERED BY DECISION OF HONBLE INCOME TAX APPELLATE TRIBUNAL PANAJI BENCH IN THE CASE OF SRI MANOJ KUMA R JAIN ITA NO. 179 TO 184/PNJ/2013. WE ARE OF THE VIEW THAT TRIBUNAL IN HIS ORDER HAS DISPOSED THE APPEALS OF THE MANOJ KUMAR JAIN BY OBSERVING AS UNDER: WE HAVE HEARD THE RIVAL SUBMISSIONS AND CAREFULLY CONSIDERED THE SAME. THE QUESTION ARISES FOR OUR CONSIDERATION OUT OF THE FACTS RELATING TO GROUND NO. 9 IN THE A. Y. 2007 - 08 AND ROUND NO. 8 IN A. Y 2008 - 09 IS WHETHER THE PURCHASES MADE BY THE ASSESSEE CAN BE DISALLOWED WHEN THE SALES MADE BY THE ASSESSEE HAS DULY BEEN ACCEPTED IT IS NOT DENIED FROM TH E ORDER OF THE AUTHORITIES BELOW ON THE BASIS OF THE DOCUMENTS FOUND DURING THE COURSE OF THE SEARCH THAT THE ASSESSEE WAS ENGAGED IN THE TRADING OF THE IRON ORE. DURING THE COURSE OF CARRYING OUT THE TRADING IN IRON ORE THE ASSESSEE HAS ACCOMMODATED SHRI ANIL IL LAD AND MIS. VSL AND SONS FOR SELLING IRON ORE PROCURED BY THEM THROUGH ILLEGAL MINING CARRIED OUT IN THEIR MINING THUS THE PURCHASES MADE BY THE ASSESSEE FROM THESE FIRMS WHICH WERE WITHOUT BILLS WERE SHOWN BY THE ASSESSEE IN HIS BOOKS OF ACCOUNT S AS IF THE ASSESSEE HAS MADE PURCHASES FROM VARIOUS PARTIES SO THAT IT MAY APPEAR THAT THE ASSESSEE HAS MADE THE PURCHASES FOR THESE PARTIES. IT IS ALSO UNCONTROVERTED FACT THAT THE ASSESSEE DID NOT OWN ANY MINE AND WAS ENGAGED ONLY IN TRADING OF IRON ORE THROUGH ITS PROPRIETORSHIP CONCERN. THE SALES MADE BY THE ASSESSEE WERE DULY ACCEPTED BY THE REVENUE. WE HAVE GONE THROUGH THE DECISION OF THE HONBLE SUPREME COURT IN CIVIL APPEALS NOS. 4540 - 4548 OF 2000 IN THE CASE OF THREESIAMMA JACOB & ORS V/S GEOLOGI STS DPTT. C/MINING & GEOLOGY & ORS IN WHICH HONBLE SUPREME COURT VIDE ORDER DATED 8 JULY 2013 HONBLE SUPREME COURT HELD UNDER PARA 57 OF ITS ORDER THAT OWNERSHIP OF SUB - SOIL/MINERAL WEALTH SHOULD NORMALLY FOLLOW THE OWNERSHIP OF THE LAND UNLESS THE O WNER OF THE LAND IS DEPRIVED OF THE SAME BY SONIC VA/ID PROCESS. EVEN IN THIS 30 . ITA NOS. 345 293 TO 302 307 311/PNJ/ 2013 ( A.Y. 2007 - 08 & 2008 - 09 ) CASE THE HONBLE SUPREME COURT WAS OF THE OPINION THAT THERE IS NOTHING IN LAW WHICH DECLARES THAT ALL MINERAL WEALTH SUBSOIL RIGHTS VEST IN THE STATE. ON THE BASIS OF THE DICTUM OF LAW PRONOUNCED BY THE HONBLE SUPREME COURT THE IRON ORE ILLEGALLY EXTRACTED FROM THE MINES OF SHRI ANIL H LAD AND THE FARM OWNED BY HIM BELONG TO SHRI ANIL II LAD NOT TO THE ASSESSEE. THERE ARE ALSO EVIDENCES FOUND DURING THE COURSE OF SEARCH THAT THE ASSESSEE MADE CASH PAYMENTS TO SHRI ANIL H. LAD AND THE IRON ORE SO EXTRACTED ROUTED TO THE PROPRIETORSHIP CONCERN OF THE ASSESSEE. IT CANNOT BE SAID THAT WHATEVER IRON ORE ILLEGALLY EXTRACTED FROM THE MINING BELONGING TO M/S. VSL AND SONS A FIRM OF SHRI ANIL H LAD WAS GIVEN BY SHRI ANIL H. LAD TO THE ASSESSEE WITHOUT CHARGING ANY COST. THE ASSESSEE HAS SUBMITTED QUANTITATIVE RECONCILIATION SHOWING THE QUANTITY OF THE MATERIAL PURCHASED AS WELL AS MATERIAL SOLD. THE ASSESSEE HAS BOTH ACCOUNTED AS WELL AS UNACCOUNTED SALES. SO FAR AS THE UNACCOUNTED SALES ARE CONCERNED THE SAME HAS BEEN DEALT WITH SEPARATELY IN THE PRECEDING PARAGRAPHS. HERE WE ARE CONCERNED WITH THE ACCOUNTED SALES AND ACCOUNTED PURCHASE BILLS. ON THE BASIS OF THE SEIZED MATERIAL THE AO CAME TO THE CONCLUSION THAT THE ASSESSEE HAS PROCURED THE BILLS FOR THE IRON ORE AND ACCOUNTED FOR THESE BILLS IN HIS BOOKS OF ACCOUNTS. SOME OF THE CONCERNS ARE OWNED BY SOME OF THE EMPLOYEES OF THE ASSESSEE WHILE OTHER CONCERNS ARE OWNED BY THIRD PARTIE S. ALL THESE CONCERNS EXCEPT 2 - 3 WERE DULY REGISTERED WITH THE SALES TAX AUTHORITIES. ALL WERE HAVING FAN AS WELL AS TIN. ALL THESE CONCERNS WERE HAVING BANK ACCOUNTS ALTHOUGH IN 3 CASES THE BANK ACCOUNTS WERE INTRODUCED BY THE ASSESSEE. IT IS NOT DENIED BY THE ASSESSEE ALSO THAT THE ASSESSEE HAS SHOWN PURCHASES FROM THESE CONCERNS AND THE PAYMENTS WERE ALSO I MADE TO THESE CONCERNS. THE AO DISALLOWED THESE PURCHASES TREATING THEM TO BE BOGUS PURCHASES WHICH WAS CONFIRMED BY THE CIT(A). WE MAY MENTION HER E THAT THE ASSESSEE WHO IS ENGAGED IN TRADING BUSINESS CANNOT SELL THE GOODS WITHOUT BUYING IT. THE ASSESSEE MIGHT HAVE BOUGHT IT FROM ONE PARTY WITHOUT BILLS BUT MIGHT HAVE PROCURED THE BILLS FROM OTHER PARTIES. THE ASSESSEE IN HIS STATEMENT WHICH WAS REC ORDED BY THE REVENUE POST - SEARCH HAS CATEGORICALLY ACCEPTED THAT HE HAS PAID COMMISSION CHARGES FOR PROCURING THE BILLS @4% THIS MAY MAKE THE BILLS TO BE BOGUS BUT WE: CANNOT CONCLUDE THAT THE ASSESSEE HAS NOT MADE THE PURCHASES. IT IS NOT A CASE WHERE THE ASSESSEE HAS INFLATED THE PURCHASES I.E. THE QUANTITY OF THE PURCHASES ARE MUCH MORE THAN THE QUANTITY OF THE IRON ORE SOLD. THE AO IN HIS REMAND REPORT HAS CATEGORICALLY ACCEPTED THE FACT THAT THE ASSESSEE WAS WORKING ON BEHALF OF SHRI ANIL H LAD WHO WA NT OWNED THE MINES AND HAS EXTRACTED IRON ORE ILLEGALLY MUCH MORE THAN PERMISSIBLE. TO COVER UP THE QUANTITIES OF PURCHASE MADE FROM SHRI ANIL H LAD CONCERN MIS. VSL & SONS THE ASSESSEE HAD TO PROCURE THE PURCHASE BILLS. IT IS NOT THE CASE OF THE REVENUE THAT THE IRON ORE PURCHASES AND SALES MADE BY THE ASSESSEE ARE NOT RECONCILABLE. THE ASSESSEE HAS SUBMITTED THE QUANTITATIVE RECONCILIATION STATEMENT WHICH I HAS BEEN REFERRED TO BY THE AO IN HIS REMAND REPORT. THE SALES ACCOUNTED FOR AND MADE BY THE ASSES SEE HAVE NOT BEEN DISPUTED BY THE REVENUE. AT THE MOST IN OUR OPINION WHERE THE ASSESSEE HAD SAVED ANY TAX IN PROCURING THE BOGUS BILLS THE ASSESSEE COULD HAVE MADE MORE PROFIT BUT THE PURCHASES MADE BY THE ASSESSEE CANNOT BE DISALLOWED THERE ARE EVIDEN CES THAT THESE FIRMS WERE DULY REGISTERED WITH THE IN COME TAX AS WELL AS SALE TAR AUTHORITIES. THE VAT HAS DULY BEEN PAID ON THE PURCHASES MADE BY THE ASSESSEE. THESE CONCERNS FILED THEIR INCOME TAX RETURN PRIOR TO THE NOTICE ISSUED U/S.153C EVEN VAT RETU RN 31 . ITA NOS. 345 293 TO 302 307 311/PNJ/ 2013 ( A.Y. 2007 - 08 & 2008 - 09 ) WAS DULY FILED. THESE CONCERN MADE THE SALES TO THE PROPRIETORSHIP CONCERN OF THE ASSESSEE TO THE EXTENT OF RS.50 33 07 161/ - IN BOTH THE YEARS AS PER THE DETAILS GIVEN AT PAGE 146 OF THE PAPER BOOK. THESE CONCERNS HAVE INTER SALES ALSO TO THE EXTENT OF RS. 33 75 75 865/ - IN BOTH THE YEARS. WE NOTED THAT DURING THE YEAR ENDED 31.3.2007 THE PURCHASES WERE DISALLOWED BY THE A. 0 TO THE EXTENT OF RS. 17 72 99 4844 AND DURING THE YEAR ENDED 31.3.2008 THE PURCHASES DISALLOWED WERE RS. 23 26 29 989/ - . THE GRO SS PROFITS AS PER THE BOO/CC OF ASSESSEE WERE 16 35% AND 6.06% FOR THE ASSESSMENT YEAR 2007 - 08 AND 2008 - 09 RESPECTIVELY. WE DO AGREE WITH THE LEARNED A.R THAT ONCE THE PURCHASES ARE DISALLOWED THE GROSS PROFIT WILL INCREASE TO 50.9% AND 90.7% FOR THE ASSES SMENT YEAR 2007 - 08 AND 2008 - 09 RESPECTIVELY. NO MATERIAL OR EVIDENCE WHATSOEVER SHOWING THE COMPARATIVE INSTANCE WAS PRODUCED BEFORE US TO JUSTIFY SUCH A HIGH GROSS PROFIT. UNDER THESE FACTS IN OUR OPINION NO ADDITION ON ACCOUNT OF BOGUS IRON ORE PURCHASES CAN BE MADE AS WITHOUT PROCURING THE IRON ORE BY INCURRING THE COST IN OUR OPINION THE ASSESSEE CANNOT SELL THE IRON ORE. AT THE MOST THE REVENUE COULD HAVE ADDED THE PROFIT ON SUCH PURCHASES @ 4% AS HAS BEEN HELD BY US IN THE PRECEDING PARAGRAPH AS THE A SSESSEE CATEGORICALLY STATED THAT HE WAS CARRYING OUT THE SALES ON BEHALF OF SHRI ANIL H. LAD ON COMMISSION BASIS AND THE EVIDENCES FOUND DURING THE COURSE OF SEARCH AND SURVEY ALSO PROVE THAT THE ASSESSEE IS BEING USED AS CONDUIT TO SIPHON OFF IRON ORE WH ICH WAS ILLEGALLY MINED BY M/S. VSL & SONS FIRM OF SHRI ANTI LAD. WE NOTED THAT CIT(A) HAS DELETED THE ADDITION MADE BY THE A. 0 ON ACCOUNT OF PROFIT ESTIMATED ON SUCH SALES THE REVENUE HAS NOT COME IN APPEAL BEFORE US IN THIS REGARD IN THE ABSENCE OF THE GROUND OF APPEAL BEFORE US WE CANNOT DIRECT THE A.O TO ESTIMATE PROFIT @ 4% ON SUCH PURCHASES. WE ALSO NOTED THAT THE ASSESSEE HAS MADE SURRENDER BY WAY OF UNDISCLOSED STOCK BEING THE INVESTMENT OF THE INCOME EARNED BY THE ASSESSEE. THE SURRENDER SO MADE I N ANY CASE SINCE MORE THAN 4% ON SUCH PROFIT WHICH THE ASSESSEE WOULD HAVE EARNED OTHERWISE TAKES CARE OF ADDITION OF SUCH ESTIMATED PROFITS. BEFORE CONCLUDING OUR FINDING ON THIS ISSUE WE MAY MENTION THAT THE ASSESSING OFFICER HAD DISALLOWED THE EXPENSES INCURRED BY THE ASSESSEE FOR THE PURCHASES U/S 37(1) OF THE INCOME TAX ACT. WE THEREFORE IN VIEW OF OUR AFORESAID DISCUSSION DELETED THE ADDITION MADE ON ACCOUNT OF BOGUS PURCHASES. THE PURCHASE COST IN THE CASE OF A TRADER IN OUR OPINION IS ALLOWED AS D EDUCTION U/S. 28 ITSELF AS U/S. 28 IS ONLY THE PROFIT AND GAINS OF ANY BUSINESS OR PROFESSION WHICH ARE CHARGEABLE TO INC. THE CONSIDERATION RECEIVED BY THE ASSESSEE ON THE SALES CANNOT BE REGARDED TO BE THE PROFIT AND GAINS OF THE PROFESSION. SECTION 28(1 ) DOES NOT MAKE TOTAL REVENUE RECEIPT TO BE CHARGEABLE TO INCOME TAX ACT. ON THIS BASIS ALSO THE ORDER OF THE CIT (A) CANNOT BE SUSTAINED IN OUR OPINION ON THIS ISSUE. IN VIEW OF OUR AFORESAID DISCUSSION WE DELETE THE ADDITION MADE ON ACCOUNT OF BOGUS PURC HASES MADE BY A0 AND SUSTAINED BY THE CIT(A). IN BOTH THE ASSESSMENT YEARS THUS THE GROUND NO. 9 IN ASSESSMENT YEAR 2007 - 08 AND GROUND NO. 8 IN ASSESSMENT YEAR 2008 - 09 ARE ALLOWED. ON GOING THROUGH THE DECISION OF TRIBUNAL WE FIND THAT WE HAVE ALREADY HELD THAT MR. MANOJ KUMAR JAIN PURCHASED MATERIAL FOR WHICH THEY HAVE 32 . ITA NOS. 345 293 TO 302 307 311/PNJ/ 2013 ( A.Y. 2007 - 08 & 2008 - 09 ) CONFIRMED THE SALES BY SRI MANOJ KUMAR JAIN. WE FIND THAT IN THIS ORDER WE HAVE ALREADY HELD THAT THERE IS NO MATE RIAL OR EVIDENCE WHATSOEVER SHOWING THE COMPARATIVE INSTANCE WAS PRODUCED BEFORE US TO JUSTIFY SUCH A HIGHER GROSS PROFIT. WE HAVE ALREADY HELD THAT REVENUE CAN ADD A PROFIT ON SUCH PURCHASE S @ 4% AS HAS BEEN HELD BY US IN THE TRIBUNAL ORDERS. 19 .1. WE HAV E ALREADY HELD THAT ASSESSEE HAS MADE SURRENDER BY WAY OF UNDISCLOSED STOCK BEING INVESTMENT OF INCOME EARNED BY THE A SSESSEE. THE SURRENDER SO MADE IN ANY CASE SINCE MOR E THAN 4% ON SUCH PROFIT WHICH THE ASSESSEE WOULD HAVE EARNED OTHERWISE TAKES CARE OF ADD ITION OF SUCH ESTIMATED PROFIT. THE PURCHASE COSTS IN CASE OF TRADER IS ALLOWED AS DEDUCTION UNDER SECTION 28 ITSELF. THE CONSIDERATION RECEIVED BY THE ASSESSEE ON THE SALES CANNOT BE REGARDED TO BE THE PROFIT AND GAINS OF THE PROFESSION. WE ARE OF TH E VIEW THAT CIT(A) IS JUSTIFIED IN DELETING THE ADDITION MADE ON ACCOUNT OF INVESTMENT. THE CIT(A) HAS HELD THAT THE INVESTMENT IS MADE BY MANOJ KUMAR JAIN THEREFORE HE HAS CONFIRMED THE ADDITION IN THE CASE OF MANOJ KUMAR JAIN AND DELETED THE ADDITION IN HANDS OF EACH ASSESS EE. WE HAVE ALREADY HELD IN MANO J KUMAR JAIN CASE THAT SOME OF THE CONCERNS ARE OWNED BY SOME OF THE EMPLOYEES OF THE ASSESSEE WHILE OTHER CONCERNS ARE OWNED BY THIRD PARTIES. ALL THESE CONCERNS EXCEPT 2 - 3 WERE DULY REGISTERED WITH THE SALES TAX AUTHORITIES. ALL WERE HAVING PAN AS WELL AS TIN. ALL THESE CONCERNS WERE HAVING BANK ACCOUNTS ALTHOUGH IN 3 CASES THE BANK ACCOUNTS WERE INTRODUCED BY THE MANOJ KUMAR JAIN. THE ASSESSING OFFICER HAS TREATED THIS INVESTMENT IN PURCHASE AS INVE STMENT IS MADE BY HIMSELF BUT WE HAVE ALREADY HELD THAT MR. MANOJ KUMR JAIN HAS CATEGORICALLY ACCEPTED THAT HE HAS PAID COMMISSION CHARGES FOR PROCURING THE BILLS @4%. THIS MAY MAKE THE BILLS TO BE BOGUS BUT WE CANNOT CONCLUDE THAT THE ASSES SEE HAS NOT MA DE ANY PURCHASE. 19.2 AS WE HAVE HELD THAT NO ADDITION ON ACCOUNT BOGUS IRON ORE PURCHASE CAN BE MADE WITHOUT PROCURING THE IRON ORE BY INCURRING THE COST IN OUR OPINION THE 33 . ITA NOS. 345 293 TO 302 307 311/PNJ/ 2013 ( A.Y. 2007 - 08 & 2008 - 09 ) ASSESSEE CANNOT SELL THE IRON ORE. AT THE MOST THE REVENUE ADDED THE PROFIT ON SUCH PURCHASE @ 4% AS HAS BEEN HELD BY US IN THAT ASSESSEE WAS CARRYING OUT THE SALES ON BEHALF OF SHRI ANIL H. LAD. THE CIT(A) HAS DELETED THE ADDITION ON ACCOUNT OF PROFIT ESTIMATED ON SUCH SALES . T HE REVENUE HAS NOT COME IN APPEAL BEFORE US IN THIS REGARD S . THE ASSESSEE HAS MADE SURRENDER BY WAY OF UNDISCLOSED STOCK BEING THE INVESTMENT OF THE INCOME EARNED BY THE ASSESSEE. THE SURRENDER SO MADE IN ANY CASE SINCE MORE THAN 4% ON SUC H PROFIT WHIC H WOULD HAVE EARNED OTHERWISE TAKES CARE OF ADDITION OF SUCH ESTIMATED PROFITS. THE PURCHASE COST IN THE CASE OF A TRADER IN OUR OPINION IS ALLOWED AS DEDUCTION U/S. 28 ITSELF AS U/S. 28 IT IS ONLY THE PROFIT AND GAINS OF ANY BUSINESS AND PROFESSION WHICH ARE CHARGEABLE TO TAX. THE CONSIDERATION RECEIVED BY THE ASSESSEE ON THE SALES CANNOT BE REGARDED AS PROFIT AND GAINS OF THE PROFESSION AND IT IS NOT CHARGEABLE TO TAX. THEREFORE IN OUR OPINION THE CIT(A) IS JUSTIFIED IN DELETING THE ADDITION ON ACCOUN T OF INVESTMENT BUT WE ARE OF THE VIEW THAT CIT(A) IS NOT JUSTIFIED IN DELETING THE ADDITION ON ACCOUNT OF PROFIT ON SALES. THEREFORE WE MODIFY THE ORDER OF CIT(A) AND WE DIRECT THE AO TO TAKE 4% OF THE SALES TO BE BROUGHT TO TAX AS HELD IN THE CASE OF SR I MANOJ KUMAR JAIN. WE THEREFORE ALLOW THE APPEALS OF THE DEPARTMENT. WE HOLD THAT CIT(A) IS JUSTIFIED IN DELETING THE ADDITION ON ACCOUNT O F INVESTMENT. WE THEREFORE DIRECTED THE AO TO CALCULATE THE PROFIT @ 4% AFTER GIVING DUE OP PORTUNITY OF HEARING TO THE ASSESSEE AS DISCUSSED IN THE CASE OF SRI MANOJ KUMAR JAIN IN ITA NO. 179 TO 184/PNJ/2013. 20 . IN THE RESULT THE DEPARTMENT APPEALS ARE PARTLY ALLOWED. ORDER PRONOUNCED IN THE OPEN COURT ON 14 .11 .2014. SD/ - SD/ - ( P.K. BANSAL) (D.T. GARASIA) ACCOUNTANT MEMBER JUDICIAL MEMBER PLACE : PANAJI / GOA DATED : 14 .11 .2014 P.S. - *PK* 34 . ITA NOS. 345 293 TO 302 307 311/PNJ/ 2013 ( A.Y. 2007 - 08 & 2008 - 09 ) COPY TO : ( 1 ) APPELLANT S: - ( A ) S H R I G C H A N D R A S H E K A R ( B ) M / S . N A N D I E N T E R P R I S E S N O 1 1 3 2 / 2 ( C ) S M T . G E E T H A L I N G A R A J L / R ( L A T E R M L I N G R A J ( D ) M / S B A L A J I I M P E X ( E ) S R I S R I P A L J A I N ( F ) S R I P N C H A N D R A K A N T ( G ) S R I S H A N K A R P ( H ) S R I M G O V I N D A R A J U ( I ) S R I K B P O L I C E P A T I L ( J ) S R I S H O U K A T P I R V A L L E ( K ) S R I H E M A N T K U M A R ( L ) S R I A S H O K M C H A J J E R J A I N ( 2 ) RESPONDENT ( 3 ) CIT CONCERNED ( 4 ) CIT(A) CONCERNED ( 5 ) D.R ( 6 ) GUARD FILE TRUE COPY BY ORDER