ROCHEM INDIA P. LTD, MUMBAI v. ACIT CEN CIR-10, MUMBAI

ITA 3159/MUM/2009 | 2000-2001
Pronouncement Date: 30-04-2010 | Result: Dismissed

Appeal Details

RSA Number 315919914 RSA 2009
Assessee PAN AABCR1954N
Bench Mumbai
Appeal Number ITA 3159/MUM/2009
Duration Of Justice 11 month(s) 16 day(s)
Appellant ROCHEM INDIA P. LTD, MUMBAI
Respondent ACIT CEN CIR-10, MUMBAI
Appeal Type Income Tax Appeal
Pronouncement Date 30-04-2010
Appeal Filed By Assessee
Order Result Dismissed
Bench Allotted D
Tribunal Order Date 30-04-2010
Date Of Final Hearing 24-03-2010
Next Hearing Date 24-03-2010
Assessment Year 2000-2001
Appeal Filed On 14-05-2009
Judgment Text
IN THE INCOME TAX APPELLATE TRIBUNAL MUMBAI BENCH D MUMBAI BEFORE SHRI J. SUDHAKAR REDDY (AM) & SHRI R.S. P ADVEKAR (JM) I.T.A.NOS. 3159 3160 & 3161/MUM/2009 (A.YS. 2000-01 2001-02 & 2002-03) M/S. ROCHEM INDIA PVT.LTD. 101 DHEERAJ ARMA ANANT KANEKAR MARG BANDRA (E) MUMBAI-400 051. PAN: AABCR 1954 N VS. ASST.COMMR. OF INCOME-TAX CENT.CIRCLE-10 MUMBAI. APPELLANT RESPONDENT APPELLANT BY SHR I VINOD KUMAR BINDAL. RESPONDENT BY SHRI T .T. JACOB. O R D E R PER J. SUDHAKAR REDDY AM : THESE ARE THREE APPEALS BY THE ASSESSEE DIRECTED A GAINST THE ORDERS OF THE CIT(A) CENTRAL-II MUMBAI DATED 06- 02-2009 FOR THE ASSTT. YEARS 2000-01 2001-02 AND 2002-03. 2. SINCE COMMON ISSUES ARE INVOLVED IN ALL THESE AP PEALS THEY ARE TAKEN TOGETHER AND DISPOSED OF BY THIS COMMON ORDE R FOR THE SAKE OF CONVENIENCE. FACTS IN BRIEF : 3. THE ASSESSEE IS A COMPANY AND IT IS IN THE BUSIN ESS OF MANUFACTURE OF CHEMICALS. IT FILED ITS ORIGINAL RETURNS OF INCO ME ON 01-11-2000 10-11- 2001 & 28-10-2002 DISCLOSING TOTAL INCOMES OF RS.20 22 060/- RS.23 45 318/- & RS.17 38 222/- RESPECTIVELY FOR TH E THREE YEARS UNDER CONSIDERATION. NOTICES U/S.153A OF THE I.T. ACT 1 961 DATED 25-11-2005 2 WAS ISSUED AND SERVED ON THE ASSESSEE FOR THE THREE YEARS UNDER CONSIDERATION. . IN RESPONSE TO THE SAME THE ASSES SEE FILED RETURNS OF INCOME ON 26-12-2005 DECLARING TOTAL INCOMES OF RS. 23 01 806/- RS.27 76 565/- AND RS.17 38 222/- RESPECTIVELY FOR THE THREE YEARS IN QUESTION. THE ASSESSEE MANUFACTURES PRODUCTS USING A BLENDING PROCESS OF VARIOUS RAW MATERIALS/CHEMICALS PURCHASED BY THE CO MPANY. THE FINISHED PRODUCTS ARE MAINLY USED AS MAINTENANCE CHEMICALS F OR BOILERS COOLING TOWERS ETC. THE HEAD OFFICE OF THE COMPANY IS IN M UMBAI AND THE MANUFACTURING UNIT IS LOCATED IN VASAI. IT HAS DEP OTS IN DIFFERENT LOCATIONS FOR SALE TO ITS CLIENTS. 4. A SEARCH & SEIZURE OPERATION U/S.132 OF THE ACT WAS CARRIED OUT ON 10-08-2005 AT THE BUSINESS PREMISES OF VARIOUS COMP ANIES OF ROCHEM GROUP AND AT THE RESIDENTIAL PREMISES OF THE DIRECT ORS OF ROCHEM GROUP. THE A.O. STATES THAT DURING THE COURSE OF SEARCH & SURVEY OPERATION AT VARIOUS PREMISES SEVERAL INCRIMINATING DOCUMENTS A ND PAPERS HAVE BEEN FOUND AND SEIZED/IMPOUNDED. IN PARA-5 OF THE ASSES SMENT ORDER THE AO RECORDS THAT THE PURCHASE BILLS OF M/S. ANKIT ENTE RPRISES AND M/S. SAMARTH ENTERPRISES BOOKED IN THE CASE OF M/S. ROC HEM SEPARATION SYSTEMS P. LTD. ARE BOGUS. HE ALSO RECORDS THAT DU RING THE COURSE OF SEARCH ACTION AT THE FACTORY OF THE ASSESSEE COMPA NY AT PLOT NO.A/8 VASAI TALUKA CO-OP. INDL. ESTATE VILLAGE GAURI PAD A VASAN (E). DIST. THANE PURCHASE BILLS OF FURTHER 19 PARTIES ALSO AP PEARED TO BE NON- GENUINE. THE SAME WERE SEIZED AS PER ANNEXURE A/2 O F PANCHANAMA DATED 31-08-2005. THE DDIT(INV.) UNIT-1(3) ISSUED SUMMONS U/S.131 TO ALL THE 19 PARTIES WHOSE BILLS APPEARED TO BE NO N-GENUINE. SOME OF THE PARTIES FILED CONFIRMATION LETTERS ALONG WITH NECES SARY EVIDENCE. IN THE 3 CASE OF CERTAIN OTHERS SUMMONS WERE RETURNED WITH THE REMARK PARTY LEFT BY THE POSTAL AUTHORITIES. 5. IN THE CASE OF M/S. NATIONAL CHEMICALS ITS PART NER SHRI NARESH M. DUDHELA ATTENDED BEFORE THE INVESTIGATION WING AND STATED THAT THE SALE BILL OF M/S. NATIONAL CHEMICALS ISSUED BY HIM TO TH E ASSESSEE COMPANY I.E. M/S. ROCHEM INDIA P.LTD. WAS BOGUS AND AND NO GOO DS WERE SOLD OR SUPPLIED BY THEM TO M/S. ROCHEM INDIA P.LTD. THE S TATEMENT OF SHRI NARESH M. DUDHELA RECORDED ON 06-10-2005 IS EXTRACT ED AT PARA-5.1 OF THE ASSESSMENT ORDER. THE AO ALSO NOTED THAT NO REP LY WAS RECEIVED IN RESPONSE TO SUMMONS SERVED BY THE DDIT (INV.) UNIT -1(3) MUMBAI ON 5 COMMISSIONS THE LIST OF WHICH IS GIVEN AT PARA-5.2 OF THE ASSESSMENT ORDER. THE ASSESSEE ON BEING GIVEN AN OPPORTUNITY FILED CONFIRMATION LETTERS FROM 4 CONCERNS I.E. SUNRISE ENTERPRISES S HIVAM TRADING CORPORATION MAHAVIR ENTERPRISES AND ARIHANT TRADIN G CO. HOWEVER AS REGARDS PARMATMA CORPORATION OMKAR CORPORATION NE O DYECHEM AND DARSHAN CHEMICALS INDUSTRIES IT WAS STATED THAT TH E ASSESSEE WAS NOT ABLE TO ESTABLISH CONTACT WITH THE PARTIES AS THE MATTERS ARE EITHER OLD OR THE PARTIES HAVE SHIFTED FROM THEIR ADDRESSES. THE AO IN ORDER TO VERIFY YEAR-WISE DETAILS OF PURCHASES ISSUED A LETTER TO THE ASSESSEE DATED 29- 10-2007 LISTING 21 PARTIES AND ASKING THE ASSESSEE TO SHOW CAUSE AS TO WHY THE PURCHASES SAID TO HAVE BEEN MADE FROM THESE PARTIES SHOULD NOT BE TREATED AS BOGUS AND ADDED TO THE TOTAL INCOME O F THE RESPECTIVE ASSESSMENT YEARS. THE ASSESSEE STATED THAT IN THE C ASE OF M/S. PARMATMA INCORPORATION IT WAS UNABLE TO ESTABLISH CONTACT W ITH THE SUPPLIERS. SIMILAR IS THE CASE OF M/S. OMKAR CORPORATION AND D ARSHAN CHEMICALS. IN THE REMAINING CASES THE ASSESSEE FILED COPIES OF CONFIRMATIONS WHICH 4 WERE ALREADY FILED WITH DDIT (INV.). THE AO HAS ISS UED NOTICES U/S.133(6) AND IN THE CASES OF 10 PARTIES LISTED AT PAGE-5 OF THE ASSESSMENT ORDER THE POSTAL AUTHORITIES RETURNED BACK THE NOTICES WI TH THE REMARK NOT KNOWN UNCLAIMED AND LEFT. ON THESE FACTS THE AO AT PARA-5.5 AT PAGE- 5 OF HIS ORDER MADE THE FOLLOWING ADDITIONS : I) M/S. NATIONAL CHEMICALS RS. 4 23 000/- II) M/S. PARMATMA INCORPORATION RS. 71 792/- III) M/S. OMKAR CORPORATION RS.4 .30 500/- IV) M/S. NEO DYECHEM RS.1 40 000/- . RS.10 65 292/- 6. AGGRIEVED THE ASSESSEE CARRIED THE MATTER IN AP PEAL. THE FIRST APPELLATE AUTHORITY NOTED THAT THE ASSESSEE HAD IN RESPONSE TO A NOTICE U/S. 153A HAD ACCEPTED THAT SOME OF THE PURCHASES A RE NOT GENUINE AND HAS OFFERED THEM FOR TAXATION IN DIFFERENT ASSESSME NT YEARS IN THE HANDS OF DIFFERENT ASSESSEES OF ROCHEM GROUP OF COMPANIES . IN PARA 2.1OF HIS ORDER THE FIRST APPELLATE AUTHORITY HAS OBSERVED A S FOLLOWS : THE APPELLANT HAS ACCEPTED THOSE PURCHASES AS NON- GENUINE AND OFFERED THEM FOR TAXATION IN DIFFERENT ASSESSME NT YEARS IN THE HANDS OF DIFFERENT ASSESSEES OF ROCHEM GROUP OF COMPANIES. FOR INSTANCE THE APPELLANT HAD OFFERED BOGUS PURCHASES OF RS.2 29 750/- IN THE ASSESSMENT YEAR 2 000- 01. AFTER DISCUSSING THE ADDITIONS ITEMWISE AND CONSIDE RING THE CLAIM OF THE ASSESSEE THE CIT(A) UPHELD THE FINDINGS OF THE AO FOR VARIOUS REASONS CITED IN PARA 2.3 AT PAGES 13 TO 18 OF HIS ORDER. 7. AGGRIEVED THE ASSESSEE IS BEFORE US ON THE FOLL OWING GROUNDS : 1. THE LEARNED CIT(A) ERRED IN LAW AND ON FACTS IN CONFIRMING AN ADDITION OF RS.4 23 000/- ON ACCOUNT OF BOGUS P URCHASES FROM NATIONAL CHEMICALS ON THE BASIS OF STATEMENT O F MR. NARESH DUDHELA RECORDED DURING CROSS EXAMINATION WI THOUT CONSIDERING THAT THE STATEMENT OF MR. NARESH DUDHEL A DOES NOT BRING THE CORRECT FACTS AS HE HAS NOT REPLIED T O ALL THE IMPORTANT QUESTIONS ASKED DURING THE CROSS EXAMINAT ION WHICH COULD REVEAL THE TRUTH AND IGNORING THE DOCUM ENTS FILED BY THE ASSESSEE COMPANY REGARDING THE CONSUMPTION O F 5 MATERIAL PRODUCTION AND ITS SALES PARTICULARLY WHE N THE SALES WERE ACCEPTED BY THE ASSESSING OFFICER. THUS THE SA ID ADDITION SHOULD BE DELETED. 2. THE LEARNED CIT(A) ERRED IN LAW AND ON FACTS BY RELYING ON THE STATEMENT OF MR. HITESH SHAH WHICH WAS RECORDED AFTER THE DATE OF REMAND REPORT BUT RELIED ON IN THE REMA ND REPORT SUBMITTED TO THE CIT(A) BY THE ASSESSING OFFICER AN D WHEN NO OPPORTUNITY WAS GIVEN TO THE APPELLANT TO CROSS-EXA MINE HIM. THUS THE ADDITION MADE BY RELYING ON THE STATEMENTS OF MR. HITESH SHAH AND MR. NARESH DUDHELA SHOULD BE DELETE D. 3. THE LEARNED CIT(A) ERRED IN LAW AND ON FACTS IN CONFIRMING THE ADDITION ON ACCOUNT OF PURCHASES FROM M/S. PARM ATMA INCORPORATION(RS.71 792/-) M/S. OMKAR CORPORATION (RS.4 20 500/-) AND M/S. NEO DYECHEM (RS.1 40 000/- ) AS BOGUS IGNORING THE CONSUMPTION OF RAW MATERIAL PRO DUCTION AND SALES MADE BY THE ASSESSEE COMPANY PARTICULARLY WHEN THE SALES WERE ACCEPTED AND THE COPIES OF INVOICES AND TRANSPORT RECEIPTS. THUS THE ADDITION OF RS.6 32 29 2/- SHOULD BE DELETED. 4. THE CIT(A) ERRED IN NOT APPRECIATING THE FACT T HAT ALL THE SUPPLIERS EXISTED AT THE PLACES FROM WHERE THEY WER E OPERATING THEIR BUSINESS AS PER THE COMMENTS GIVEN BY THE POSTAL AUTHORITIES ON THE ENVELOPES RETURNED UNSERV ED. THEREFORE THE IDENTITY OF THE SUPPLIERS STOOD ESTAB LISHED AND NO ADVERSE INFERENCE COULD BE TAKEN AGAINST THE ASS ESSEE AND THE ADDITION SHOULD BE DELETED. THE LD. COUNSEL FOR THE ASSESSEE MR. VINOD KUMAR B INDAL SUBMITTED THAT THE ONLY ISSUE THAT ARISES IN THIS CASE IS DISALLOW ANCE OF CERTAIN PURCHASES MADE ON THE GROUND THAT THEY ARE NOT VERIFIABLE. HE REPEATED THE CONTENTIONS MADE BEFORE THE CIT(A) AND EMPHASIZED T HE FACT THAT THE SALES HAVE BEEN ACCEPTED IN THIS CASE BUT AT THE S AME TIME THE PURCHASES ARE DISPUTED. HE SUBMITTED A PAPER BOOK R UNNING INTO 145 PAGES AND ARGUED THAT THE MERE FACT THAT THE POSTAL NOTICES ISSUED TO VARIOUS PARTIES HAVE BEEN RETURNED UNSERVED DOES N OT LEAD TO A CONCLUSION THAT THE PURCHASES ARE BOGUS OR THAT THE PARTIES DO NOT EXIST. HE VEHEMENTLY CONTENDED THAT THE ASSESSEE HAS PROVI DED COPIES OF INVOICES AND L.R. TO DEMONSTRATE THE GENUINENESS OF THE PURCHASES. HE 6 SUBMITTED THAT DUE TO LAPSE OF TIME THE PARTIES MAY HAVE SHIFTED THEIR OFFICES. HE DISPUTED THE STATEMENT OF SHRI NARESH M . DUDHELA AND POINTED OUT CERTAIN DISCREPANCIES IN THAT STATEMENT. HE REF ERRED TO THE STATEMENT WHICH IS AT PAGES 122 & 123 OF THE PAPER BOOK SPEC IFICALLY TO QUESTION NO. 12 AND SUBMITTED THAT SHRI NARESH M. DUDHELA S TATED THAT HE WOULD DEDUCT COMMISSION OF 0.25% OF THE CHEQUE AMOUNT AND RETURN THE BALANCE. HE SUBMITTED THAT WHEN THE BILL IS ONLY FO R RS.5 LAKHS IN EFFECT SHRI NARESH M. DUDHELA STATED THAT HE CARRIED OUT T HE ENTIRE OPERATION FOR A PALTRY AMOUNT OF RS.1300/- WHICH OBVIOUSLY DOES N OT APPEAR TO BE CORRECT. HE SUBMITTED THAT SHRI DUDHELA NEVER KNEW THE ASSESSEE AS HE WAS REFERRING TO ONE MR. HITESH SHAH. HE RELIED ON THE THEORY OF PREPONDERANCE OF PROBABILITIES AND SUBMITTED THAT S HRI NARESH DUDHELA WOULD NOT HAVE GIVEN A BILL FOR SUCH A SMALL AMOUNT . HE EMPHASIZED THE FACT THAT ALL PAYMENTS WERE MADE BY ACCOUNT PAYEE C HEQUES AND UNDER THOSE CIRCUMSTANCES MUCH CREDENCE SHOULD NOT BE GIV EN TO THE STATEMENT OF SHRI NARESH M. DEDHELA. HE REFERRED TO COPIES OF VARIOUS INVOICES AND SUBMITTED THAT THE SAME SHOULD BE ACCEPTED AS GENUI NE. FURTHER THE LD. COUNSEL REFERRED TO THE QUANTITATIVE ANALYSIS AT PA GES 84 TO 87 OF THE PAPER BOOK AND SUBMITTED THAT THE QUANTITATIVE ANAL YSIS OF RAW MATERIALS PURCHASED CONSUMED THE CLOSING BALANCE HELD AND T HE QUANTITY OF FINISHED GOODS CLEARLY DEMONSTRATES THAT THE PERCEN TAGE OF CONSUMPTION OF RAW MATERIALS IS NOT ABNORMALLY HIGH AND UNDER T HOSE CIRCUMSTANCES THE DISALLOWANCE SHOULD BE DELETED FOR EACH OF THE YEARS UNDER CONSIDERATION. 8. THE LD. DEPARTMENTAL REPRESENTATIVE MR. T.T. JA COB ON THE OTHER HAND RELIED HEAVILY ON THE ORDERS OF THE AO AS WE LL AS THE ORDERS OF THE 7 LD. CIT(A). HE SUBMITTED THAT THE UNDISPUTED FACT WHICH WAS ADMITTED BY THE ASSESSEE IS THAT THE ASSESSEE HAD INFLATED PUR CHASES BY BOOKING BOGUS EXPENDITURE. HE SUBMITTED THAT THE ASSESSEE H AD SUO MOTU FILED RETURNS OFFERING AS INCOME CERTAIN BOGUS PURCHASES FOR THE THREE YEARS UNDER CONSIDERATION. THE ONLY ISSUE AS PER THE LD. DEPARTMENTAL REPRESENTATIVE IS THE QUANTIFICATION OF SUCH BOGUS PURCHASED. THE LD. DEPARTMENTAL REPRESENTATIVE SUBMITTED THAT A PLAIN READING OF THE ASSESSMENT ORDERS CLEARLY DEMONSTRATES THAT THE ASS ESSEE HAD NOT DISCHARGED THE ONUS OF HAVING INCURRED GENUINE EXPE NDITURE. HE POINTED OUT THE FACT THAT THE ASSESSEE WAS OFFERED AN OPPOR TUNITY OF CROSS EXAMINING THE SAID SHRI NARESH M. DUDHELA PARTNER OF M/S. NATIONAL CHEMICALS ON 26-09-2008 AND ON 07-01-2009. EVEN IN THE COURSE OF EXAMINATION THE SAID SHRI NARESH DUDHELA REITERATE D HIS STAND THAT THERE WAS NO ACTUAL SALE OF GOODS TO THE ASSESSEE. HE SUB MITTED THAT IT IS NOT THAT EACH AND EVERY PURCHASE CLAIMED BY THE ASSESSE E WAS CONSIDERED AS BOGUS BUT ONLY DOUBTS WERE RAISED IN THE CASE OF BI LLS OF 19 PARTIES FOUND DURING THE COURSE OF SEARCH ACTION IN THE FACTORY P REMISES. UNDER THESE CIRCUMSTANCES THE LD. DEPARTMENTAL REPRESENTATIVE SUBMITTED THAT THE FIRST APPELLATE AUTHORITY AFTER A DETAILED ANALYSI S OF THE EVIDENCE ON RECORD AND THE SUBMISSIONS OF THE ASSESSEE HAS REJECTED T HE CONTENTION OF THE ASSESSEE. ON THESE FACTS AND CIRCUMSTANCES HE PRAY ED THAT THE ORDER OF THE FIRST APPELLATE AUTHORITY BE UPHELD. 9. SIMILAR ARE THE FACT AND SUBMISSIONS FOR THE OTH ER TWO ASSESSMENT YEARS BEFORE US. WE WOULD BE DEALING WITH THE ISSUE S ITEM-WISE IN OUR FINDINGS. 8 10. RIVAL CONTENTIONS HEARD. ON A CAREFUL CONSIDERA TION OF THE FACTS AND CIRCUMSTANCE OF THE CASE AND A PERUSAL OF THE PAPER S ON RECORD AND THE ORDERS OF THE AUTHORITIES BELOW AS WELL AS THE CASE LAWS CITED WE HOLD AS FOLLOWS. 11. THE FACTS OF THE CASE AS FOUND DURING THE SEARC H AND SEIZURE OPERATION AND SUBSEQUENT CONFESSION MADE BY THE ASS ESSEE DEMONSTRATE THAT THE ASSESSEE IS IN THE HABIT OF BOOKING BOGUS EXPENDITURE. THE ASSESSEE HIMSELF HAS ADMITTED TO SUCH ACTIVITIES AN D HAS VOLUNTARILY COME FORWARD AND OFFERED SUCH EXPENDITURE AS UNDISCLOSED INCOME SUBSEQUENT TO THE SEARCH AND SEIZURE OPERATION. FROM THE ABOVE IT IS CLEAR THAT THE APPARENT IS NOT TRUE. THUS IN OUR CONSIDERED OPINIO N THE ISSUE ON HAND IS AS RIGHTLY POINTED OUT BY THE LEARNED DR THE QUANT IFICATION OF THE BOGUS PURCHASES IN EACH OF THE YEARS. UNDER SUCH CIRCUMS TANCES THE BURDEN OF PROOF IS MOST STRINGED ON THE ASSESSEE AND IT IS FO R THE ASSESSEE TO DEMONSTRATE THAT THE PURCHASES IN QUESTION ARE NOT OF THE SAME CATEGORY OF PURCHASES WHICH WERE ADMITTEDLY FALSE CLAIMS. W ITH THIS BACKGROUND WE NOW LOOK INTO THE INDIVIDUAL ASPECTS OF THE CASE . 12. IN THE CASE OF NATIONAL CHEMICALS ONE MR. NARE SH M. DUDHELA HAS STATED ON OATH THAT THIS IS A BOGUS PURCHASE. HE AL SO HAS GIVEN A SPECIFIC STATEMENT THAT HE HAD RETURNED THE MONEY IN CASH AF TER DEDUCTING COMMISSION. MR. DUDHELA WAS CROSS EXAMINED BY THE A SSESSEE AND IN THE CROSS EXAMINATION HE HAS REPORTED THAT THE PURCHASE WAS NOT CORRECT. EVEN DURING THE SECOND CROSS EXAMINATION MR. NARES H M. DUDHELA DENIED ACTUAL SALES. 13. IN THE CASE OF DARSHAN CHEMICALS NO CONFIRMATI ON WAS FURNISHED AND THE SUMMONS ISSUED TO THESE PARTIES WERE RETURN ED BACK WITH THE 9 REMARK UNCLAIMED. SIMILAR IS THE FACT IN THE CASE OF M/S ONKAR CORPORATION AND M/S NEO DYECHEM. THE ASSESSEE ONLY RELIES ON THE CHART SHOWING THE QUANTITY OF RAW MATERIAL CONSUMED AND T HE QUANTITY PURCHASED TO JUSTIFY THE QUANTUM OF PURCHASES. 14. IN THE CASE OF PARMATMA INCORPORATION SUMMONS ISSUED WERE RETURNED BACK AND PHOTO COPIES OF BILLS ETC. WERE F ILED BY THE ASSESSEE. NO POSITIVE CONFIRMATION WAS FILED BY THE ASSESSEE. 15. IN THE CASE OF MAHAVIR ENTERPRISES AN ADHOC DI SALLOWANCE OF 10% WAS MADE ON THE GROUND THAT THE ASSESSEE HAS FAILED TO PRODUCE THE COPY. 16. THE MAIN CONTENTION OF THE ASSESSEE IN ALL THES E CASES IS THAT THE QUANTITATIVE ANALYSIS OF THE PURCHASES MADE AND THE SALES DEMONSTRATE THAT THE ASSESSEE HAD IN FACT PURCHASED THESE GOODS . THE OTHER CONTENTION IS THAT MERE NON PRODUCTION OF PARTIES OR FURNISHIN G OF CONFIRMATIONS OF PURCHASES WHICH HAVE TAKEN PLACE LONG BACK SHOULD NOT RESULT IN ADDITIONS ON THE GROUND THAT THE PURCHASES ARE NOT GENUINE. T HAT THE REMARK UNCLAIMED CANNOT LEAD TO A CONCLUSION THAT THE SA ID PARTIES WERE NOT EXISTENT AT THE SAID ADDRESSES EARLIER. ONLY IN THE CASE OF M/S MAHAVIR TRADING CO. AN ARGUMENT IS RAISED THAT THE PURCHAS E IN QUESTION IS IN PLASTIC CARBOYS WHICH WERE USED FOR PACKING OF FINI SHED GOODS AND THE QUANTITATIVE DETAILS WOULD TALLY. IT IS ALSO STATED THAT THE PURCHASE WAS FOR ASSESSMENT YEAR 2000-01 WHEREAS THE ADDITION WAS MA DE FOR THE ASSESSMENT YEAR 2002-03. 17. ON CONSIDERING THESE ARGUMENTS WE FIND THAT THE AO HAS NOT REJECTED EACH AND EVERY PURCHASE MADE BY THE ASSESS EE. CERTAIN BILLS WERE RECOVERED FROM THE FACTORY PREMISES AND THE AO HAD REASONS TO 10 SUSPECT THAT THESE BILLS WERE NOT GENUINE. HENCE TH E VERIFICATION WAS CONDUCTED AND WHEREVER THE ASSESSEE COULD SUBSTANTI ATE THE CLAIM WAS ACCEPTED. IN OUR HUMBLE OPINION IT WAS A FAIR ADJU DICATION. JUSTIFICATION OF ALL OF THE PURCHASES ON THE BASIS OF QUANTITATIVE ANALYSIS AND THE PURCHASES MADE AND THE QUANTITY MANUFACTURED AND SO LD DOES NOT IN OUR CONSIDERED OPINION HELP THE ASSESSEE IN PROVING TH AT A PARTICULAR IDENTIFIED PURCHASE IS GENUINE. FOR EXAMPLE IN THE CASE OF NATIONAL CHEMICALS INVOICES WERE OBTAINED PAYMENTS WERE MA DE BY CHEQUE AND DESPITE THIS EVIDENCE WAS FOUND BY THE REVENUE THA T THIS IS A BOGUS PURCHASE. IT WOULD NOT BE CORRECT TO RELY ON QUANTI TATIVE ANALYSIS AND HOLD THAT THESE PURCHASES IN QUESTION ARE GENUINE. IN FA CT THE FIRST APPELLATE AUTHORITY HAS OBTAINED REMAND REPORTS FROM THE AO G IVING YET ANOTHER OPPORTUNITY TO THE ASSESSEE TO SUBSTANTIATE ITS CL AIM. ON THESE FACTUAL MATRIXES WE UPHOLD THE FINDINGS OF THE CIT(APPEALS) FROM PAGES 13 TO 19 OF HIS ORDER. AS FAR AS THE ADDITION OF RS.4 23 000 /- AND RS.1 03 862/- IN THE CASE OF PURCHASES FROM NATIONAL CHEMICALS FOR T HE ASSESSMENT YEAR 2000-01 AND ASSESSMENT YEAR 2001-02 AND IN THE CASE OF PARMATMA INCORPORATION FOR THE ASSESSMENT YEAR 2000-01 RS.71 792/- IN THE CASE OF OMKAR CORPORATION FOR ASSESSMENT YEAR 2000-01 RS .4 20 500/- IN THE CASE OF NEO DYECHEM FOR ASSESSMENT YEAR 2000-01 RS. 1 40 000/- AND IN THE CASE OF DARSHAN CHEMICALS FOR ASSESSMENT YEAR 2 001-02 RS.1 32 475/- THESE ADDITIONS ARE CONFIRMED. 18. COMING TO THE ADDITIONS MADE ON ACCOUNT OF PURC HASES FROM M/S MAHAVIR TRADING CO. FOR THE ASSESSMENT YEAR 2001-02 AND 2002-03 RS.80 710/- AND RS.4 27 093/- WE SET ASIDE THE MAT TER TO THE FILE OF THE 11 AO FOR FRESH ADJUDICATION FOR CONSIDERING THE CLAIM OF THE ASSESSEE THAT THE PURCHASES IN QUESTION WERE IN PLASTIC CARBOYS A ND THE STOCK WAS FOUND DURING THE SEARCH WHICH CAN BE RECONCILED. IT IS AL SO POINTED OUT THAT THERE IS A MISTAKE IN THE ADDITION AS THE PURCHASES WERE FOR THE ASSESSMENT YEAR 2000-01 WHEREAS THE ADDITION WAS MADE FOR THE SUBSEQUENT ASSESSMENT YEAR 2002-03. 19. IN THE RESULT BOTH THESE ADDITIONS AGITATED BE FORE US FOR THE ASSESSMENT YEARS 2001-02 AND 2002-03 ARE ALLOWED FO R STATISTICAL PURPOSES. 20. COMING TO THE LAST GROUND OF ADHOC DISALLOWANCE OF 10% OF THE PURCHASES MADE FROM M/S MAHAVIR ENTERPRISES FOR THE ASSESSMENT YEAR 2001-02 AND 2002-03 WE FIND THAT THE FIRST APPELLA TE AUTHORITY AT PARA 2.3.8 PAGE 15 OF HIS ORDER FOR THE ASSESSMENT 2001- 02 HAS RECORDED THAT THE PURCHASES WERE GENUINE AND THAT M/S MAHAVIR ENT ERPRISES HAS PERSONALLY ATTENDED TO THE SUMMONS ISSUED U/S 131 O F THE ACT AND CONFIRMED THE TRANSACTION. THE CONCLUSION OF THE FI RST APPELLATE AUTHORITY THAT THESE PURCHASES HAVE BEEN MADE FROM SOME OTHER PERSONS. IF NOT THESE PARTIES IS A PURE SURMISE AND WITHOUT ANY EV IDENCE. THE CONCLUSIONS THAT THE ASSESSEE WOULD HAVE PURCHASED THE MATERIAL AT LESSER COST ETC. ARE MERE SURMISES AND CONJECTURES. THUS W E ARE OF THE CONSIDERED OPINION THAT THE ADHOC DISALLOWANCE OF 1 0% IS UNCALLED FOR. THUS WE DELETE THIS ADDITION OF RS.21 040/- AND RS. 3 594/- FOR THE ASSESSMENT YEARS 2001-02 AND 2002-03 AND ALLOW THIS GROUND OF THE ASSESSEE. 12 21. IN THE RESULT THE APPEAL OF THE ASSESSEE FOR A SSESSMENT YEAR 2000- 01 IS DISMISSED AND APPEALS FOR ASSESSMENT YEARS 2 001-02 AND 2002-03 ARE ALLOWED IN PART. ORDER PRONOUNCED ON THE 30 TH DAY OF APRIL 2010. SD/- SD/- (R.S. PADVEKAR) (J. SUDHAKAR REDDY) JUDICIAL MEMBER. ACCOUNTANT MEMBER. MUMBAI: DATED : 30 TH APRIL 2010 WAKODE COPY TO : 1. ASSESSEE. 2.DEPARTMENT. 3 CIT(A)-XI MUMBAI. 4 CIT-XI MUMBAI. 5.DR A BENCH MUMBAI. (TRUE COPY) BY ORDER NG: ASST.REGISTRAR ITAT MUMBAI.