ITO, Bangalore v. Sri. Noor Ahmed, Bangalore

ITA 790/BANG/2012 | 2008-2009
Pronouncement Date: 31-10-2013 | Result: Dismissed

Appeal Details

RSA Number 79021114 RSA 2012
Assessee PAN ADZPA6519Q
Bench Bangalore
Appeal Number ITA 790/BANG/2012
Duration Of Justice 1 year(s) 4 month(s) 23 day(s)
Appellant ITO, Bangalore
Respondent Sri. Noor Ahmed, Bangalore
Appeal Type Income Tax Appeal
Pronouncement Date 31-10-2013
Appeal Filed By Department
Order Result Dismissed
Bench Allotted B
Tribunal Order Date 31-10-2013
Date Of Final Hearing 29-10-2013
Next Hearing Date 29-10-2013
Assessment Year 2008-2009
Appeal Filed On 07-06-2012
Judgment Text
IN THE INCOME TAX APPELLATE TRIBUNAL C BENCH : BANGALORE BEFORE SHRI N. BARATHVAJA SANKAR VICE PRESIDENT AND SHRI N.V. VASUDEVAN JUDICIAL MEMBER ITA NO.790/BANG/2012 ASSESSMENT YEAR : 2008-09 THE INCOME TAX OFFICER WARD 4(3) BANGALORE. VS. SHRI NOOR AHMED NO.91 100 FT. ROAD ILYAS NAGAR J.P. NAGAR POST BANGALORE 560 078. PAN: ADZPA 6519Q APPELLANT RESPONDENT C.O. NO.19/BANG/2013 (IN ITA NO.790/BANG/2012) ASSESSMENT YEAR : 2008-09 SHRI NOOR AHMED NO.91 100 FT. ROAD ILYAS NAGAR J.P. NAGAR POST BANGALORE 560 078. PAN: ADZPA 6519Q VS. THE INCOME TAX OFFICER WARD 4(3) BANGALORE. APPELLANT RESPONDENT REVENUE BY : SHRI M.K. BIJU JT.CIT(DR) ASSESSEE BY : SHRI R. CHANDRASHEKAR ADVOCATE DATE OF HEARING : 29.10.2013 DATE OF PRONOUNCEMENT : 31.10.2013 ITA NO.790/BANG/12 & CO NO.19/BANG/13 PAGE 2 OF 13 O R D E R PER N.V. VASUDEVAN JUDICIAL MEMBER ITA NO.790/BANG/2012 IS AN APPEAL BY THE REVENUE AGAINS T THE ORDER DATED 15.03.2012 OF THE CIT(APPEALS)-II BANG ALORE RELATING TO ASSESSMENT YEAR 2008-09. THE ASSESSEE HAS FILED A CROSS OBJECTION AGAINST THE VERY SAME ORDER OF THE CIT(APPEALS). 2. THE GROUNDS RAISED BY THE REVENUE IN ITS APPEAL AND THE GROUNDS RAISED BY THE ASSESSEE IN THE CROSS OBJECTION ARE I NTERLINKED. THE EFFECTIVE GROUNDS OF APPEAL RAISED BY REVENUE ARE A S UNDER:- 2. THE LEARNED CIT(A) HAS ERRED IN DELETING THE AD DITION TO THE EXTENT OF RS.77 70 058 MADE BY THE ASSESSING OF FICER U/S. 68 OF THE IT ACT 1961. 3. THE LEARNED CIT(A) HAS ERRED IN DELETING THE ADD ITION MADE RS.14 51 296 WITH REGARD TO UNDISCLOSED BUSINE SS INCOME. 4. THE LEARNED CIT(A) HAS ERRED IN DELETING THE ADD ITION MADE WITH REGARD TO BOGUS PURCHASE TO THE EXTENT OF RS.63 18 762. 5. THE LEARNED CIT(A) SHOULD HAVE APPRECIATED THE A RGUMENT OF THE AO THAT BOTH THE BUSINESSES ARE TWO SEPARATE ENTITIES WITH TWO SEPARATE TIN NOS. OBTAINED FOR THE PURPOSE OF F ILING VAT RETURNS BEFORE THE SALES TAX DEPARTMENT. 3. THE GROUNDS OF APPEAL RAISED BY THE ASSESSEE IN HIS CROSS OBJECTION READS AS FOLLOWS:- 1. THE LEARNED COMMISSIONER OF INCOME TAX (APPEAL S) ERRED IN CONFIRMING THE ADDITION OF RS.51 91 807 AS INFLA TED PURCHASES. ITA NO.790/BANG/12 & CO NO.19/BANG/13 PAGE 3 OF 13 2. THE LEARNED COMMISSIONER OF INCOME TAX (APPEALS) ERRED IN NOT CONSIDERING THE PURCHASES TO THE EXTENT OF 2 2 09 678 ON THE GROUND THAT THE SAME ARE FROM THE CONCERNS OF THE A PPELLANT AND HIS WIFE. 3. THE LEARNED COMMISSIONER OF INCOME TAX (APPEALS) ERRED IN NOT CONSIDERING THE CLAIM OF RS.27 36 773 WHICH REPRESENTS FREIGHT & LABOUR CHARGES. 4. THE ASSESSEE IS AN INDIVIDUAL ENGAGED IN THE BU SINESS OF MANUFACTURE AND SUPPLY OF SCAFFOLDING MATERIALS TO BANGALORE METRO RAIL CORPORATION LTD. (BMRCL) BANGALORE. FOR THE A.Y. 2008-09 THE ASSESSEE FILED A RETURN OF INCOME DECLARING INCOME OF RS.5 10 990. IN THE PROFIT & LOSS ACCOUNT THE ASSESSEE HAD SHOWN PURCH ASES AT RS.3 28 68 924. THE ASSESSEE WAS CARRYING ON BUSIN ESS UNDER THE NAME & STYLE OF M/S. HEENA WOOD & STEEL INDUSTRIES (HWSI ). THE PURCHASES WERE SHOWN IN RESPECT OF THIS BUSINESS. IN THE COU RSE OF ASSESSMENT PROCEEDINGS THE ASSESSEE PRODUCED ORIGINAL PURCHAS E INVOICES IN RESPECT OF HWSI. THE ORIGINAL PURCHASE INVOICES SO PRODUCE D WERE TO THE TUNE OF RS.2 10 58 355. THE ASSESSEE COULD NOT PRODUCE ORI GINAL PURCHASE INVOICES FOR THE REMAINING PURCHASES TOTALING TO RS .1 15 10 569 [3 28 68 924 MINUS 2 10 58 355]. 5. THE ASSESSEE WAS EXAMINED AND HIS STATEMENT U/S. 131 OF THE ACT RECORDED BY THE ASSESSING OFFICER. THE ASSESSEE HA D ALSO PRODUCED SOME ORIGINAL PURCHASE INVOICES IN THE NAME OF UNITED ST EEL LINK (USL). APART FROM THE ABOVE THE ASSESSEE SUBMITTED THAT HE HAD NO OTHER PURCHASE ITA NO.790/BANG/12 & CO NO.19/BANG/13 PAGE 4 OF 13 INVOICES. THERE IS NO REFERENCE TO IN THE AOS ORD ER AS TO WHOM THE BUSINESS OF USL BELONGED. BASED ON THE ABOVE THE AO CONCLUDED THAT THE PURCHASES TO THE EXTENT OF RS.1 15 10 569 WERE INFLATED PURCHASES SHOWN BY THE ASSESSEE ONLY TO BRING DOWN HIS TAX LI ABILITY. ACCORDINGLY THE AFORESAID SUM WAS ADDED TO THE TOTAL INCOME OF THE ASSESSEE. 6. AS WE HAVE ALREADY MENTIONED THE ASSESSEE HAD P RODUCED PURCHASE INVOICES OF USL IN THE COURSE OF HIS EXAMI NATION BY THE AO DURING THE ASSESSMENT PROCEEDINGS. THE AO WAS OF T HE VIEW THAT THE ASSESSEE CONDUCTED BUSINESS OF USL AND THAT THE PRO FITS FROM THIS BUSINESS HAD NOT BEEN DISCLOSED BY THE ASSESSEE. T HE AO OBTAINED INFORMATION FROM THE SALES TAX DEPARTMENT AND FOUND THAT USL HAD DECLARED A TURNOVER OF RS.51 37 834. THE ORIGINAL PURCHASE INVOICES PRODUCED IN RESPECT OF USL BY THE ASSESSEE BEFORE THE AO WAS TO THE TUNE OF RS.66 18 752. THE AO DID NOT HAVE ANY OTHER INFORMA TION ABOUT HOW TO WORK OUT THE PROFIT OF USL. USL WAS ALSO INVOLVED IN THE SAME ACTIVITY AND MANUFACTURE OF SCAFFOLDING MATERIALS AND SUPPLYING THEM TO BMRCL. THE AO FOUND THAT AFTER DISALLOWING BOGUS PURCHASES BOO KED IN THE P&L ACCOUNT THE VERY SAME BUSINESS CARRIED ON BY THE A SSESSEE UNDER THE NAME & STYLE HWSI SHOWED A PROFIT OF 28.25% (NET PR OFIT). THE AO APPLIED THE VERY SAME PERCENTAGE OF NET PROFIT ON THE PURCH ASES IN THE NAME OF USL AND MADE AN ADDITION OF RS.14 51 296 TO THE TOT AL INCOME OF THE ASSESSEE AS UNDISCLOSED BUSINESS INCOME OF THE ASSE SSEE. ITA NO.790/BANG/12 & CO NO.19/BANG/13 PAGE 5 OF 13 7. THE TOTAL INCOME OF THE ASSESSEE WAS THUS DETERM INED BY THE ASSESSEE AS FOLLOWS:- RETURNED INCOME AS PER RETURN FILED RS. 5 10 990 ADDITION: BOGUS PURCHASES DISALLOWED 1 15 10 569 UNDISCLOSED BUSINESS INCOME 14 51 296 RS.1 29 61 865 RS.1 34 72 855 8. AGGRIEVED BY THE ORDER OF THE AO THE ASSESSEE P REFERRED APPEAL BEFORE THE CIT(APPEALS). 9. BEFORE THE CIT(APPEALS) THE ASSESSEE SUBMITTED THAT HE WAS CARRYING ON THE BUSINESS UNDER THE NAME & STYLE HWS I AND THAT HE WAS A PARTNER IN USL IN WHICH HE AND HIS MINOR DAUGHTER THASIM WERE PARTNERS. THE ASSESSEE SUBMITTED THAT SINCE INCOME OF THE MIN OR HAS TO BE TAXED IN THE HANDS OF THE FATHER BY CLUBBING THE PURCHASES AND SALES MADE BY HWSI AS WELL AS USL WERE CLUBBED TOGETHER AND SHOWN IN THE BOOKS. THE ASSESSEE THUS SUBMITTED THAT THE PURCHASES TO THE E XTENT OF RS.68 64 119 (FOR WHICH ORIGINAL PURCHASE INVOICES WERE PRODUCED BY THE ASSESSEE BEFORE THE AO TO THE EXTENT OF RS.66 18 752) HAS TO BE CONSIDERED AS PART OF THE PURCHASES OF RS.3 28 68 924 SHOWN BY THE ASS ESSEE IN THE BOOKS OF ACCOUNTS. THE ASSESSEE FURTHER FILED BEFORE THE CI T(A) PURCHASE INVOICES FOR A SUM OF RS.22 09 678 OVER AND ABOVE THE PURCHA SE INVOICES OF HWSL AND USL PRODUCED BEFORE THE AO. THE ASSESSEE ALSO CLAIMED BEFORE THE ITA NO.790/BANG/12 & CO NO.19/BANG/13 PAGE 6 OF 13 CIT(A) THAT IT HAD INCURRED FREIGHT AND LABOUR CHAR GES TO THE EXTENT OF RS.27 36 773 OVER AND ABOVE WHAT IS ALREADY CLAIMED AS FREIGHT & LABOUR CHARGES IN THE P&L ACCOUNT. THE ASSESSEE THUS SUBM ITTED THAT THERE IS A COMPLETE RECONCILIATION OF THE PURCHASES SHOWN BY T HE ASSESSEE IN THE P&L ACCOUNT AND THEREFORE THE ADDITIONS MADE BY THE AO HAVE TO BE DELETED. 10. THE CIT(APPEALS) ACCEPTED THE CONTENTION OF THE ASSESSEE THAT BUSINESS OF HWSI AND USL THOUGH WERE SHOWN AS SEPA RATE BUSINESSES FOR SALES TAX PURPOSES WERE IN FACT THE BUSINESSES OF THE ASSESSEE AND THAT THE PURCHASES AND SALES SHOWN IN THE P&L ACCOU NT FILED BY THE ASSESSEE ALONG WITH THE RETURN OF INCOME IS IN RELA TION TO BOTH THE BUSINESSES OF HWSI AND USL. IN THIS REGARD THE CI T(A) ALSO FOUND THAT IN THE PRECEDING ASSESSMENT YEARS A.Y. 2007-08 AND TW O SUCCEEDING A.YS. 2009-19 & 2010-11 THE TURNOVER DECLARED IN THE RET URN OF INCOME AND THE TOTAL TURNOVER OF BOTH THE BUSINESSES AS FILED BEFO RE THE SALES TAX AUTHORITIES TALLIED. THE CIT(A) THEREFORE ACCEPTED THAT THE PROFITS OF BOTH THE BUSINESSES HAVE TO BE COMBINED AND BROUGHT TO T AX. HE THEREFORE DELETED THE ADDITION OF RS.14 51 296 WHICH WAS THE ADDITION MADE BY THE AO ON ACCOUNT OF PROFITS FROM UNDISCLOSED BUSINESS OF USL. 11. THEREAFTER THE CIT(A) DEALT WITH THE RECONCILI ATION OF THE PURCHASES AS SHOWN IN THE BOOKS OF ACCOUNTS AS PUT FORTH BY T HE ASSESSEE BEFORE HIM AS FOLLOWS:- ITA NO.790/BANG/12 & CO NO.19/BANG/13 PAGE 7 OF 13 6.4 AS REGARDS INFLATION OF PURCHASES HE HAS POI NTED OUT THAT APART FROM PURCHASES OF RS.2 10 58 355/- BILLS IN T HE NAME OF M/S HEENA WOOD & STEEL INDUSTRIES PRODUCED BEFORE THE A O HE HAD MADE PURCHASES AS PER THE RECONCILIATION STATEMENT FILED ON 18/8/2011 WHICH IS REPRODUCED AS UNDER: DETAILS RS. RS. PURCHASES AS DECLARED IN TRADING PROFIT & LOSS A/C LESS: PURCHASES CONSIDERED BY THE AO BALANCE 3 28 68 914 2 10 58 355 1 18 10 559 LESS: PURCHASES AS DECLARED UNDER VAT IN HEENA WOOD & STEEL INDUSTRIES LESS: CONSIDERED BY THE AO BALANCE ADD: PURCHASES MADE UNDER UNITED STEEL & LINK FREIGHT & LABOUR CHARGES 2 32 68 022 2 10 58 355 22 09 667 68 64 119 27 36 773 1 18 10 559 6.5 FROM THE ABOVE IT IS CLEAR THAT THE DIFFERENC E IN PURCHASES IS BEING EXPLAINED AS (I) FREIGHT & LABOUR CHARGES RS.27 36 773/- (II) PURCHASES MADE IN THE NAME OF UNITED STEEL LINK RS.68 64 119/- AND (III) ADDITIONAL BILLS PROD UCED NOW IN RESPECT OF UNITED STEEL LINK RS.22 09 667/-. THESE ARE EXAMINED AS UNDER (I) AS REGARDS THE EXPLANATION OF THE APPELLANT TH AT RS 27 36 773/- REPRESENTS FREIGHT & LABOUR CHARGES TH ESE CANNOT BE ACCEPTED AS FREIGHT & LABOUR CHARGES TO THE TUNE OF RS.79 95 748/- HAVE ALREADY BEEN DEBITED TO THE PRO FIT AND LOSS ACCOUNT. NO SUCH CLAIM WAS MADE EARLIER DURING THE ASSESSMENT PROCEEDINGS AND NO DETAILS WERE FURNISHED DURING TH E APPEAL PROCEEDINGS. THERE IS ALSO NO EXPLANATION AS TO WHY THIS AMOUNT WOULD BE INCLUDED IN PURCHASES IF IT WAS FREIGHT AND LABOUR CHARGES MORE SO WHEN EXPENSES UNDER THIS HEAD ARE A LREADY DEBITED TO PROFIT AND LOSS ACCOUNT. NO PROOF OF THI S ADDITIONAL AMOUNT WAS FURNISHED EITHER AT THE TIME OF ASSESSME NT OR AT THE TIME OF APPEAL HEARING. ITA NO.790/BANG/12 & CO NO.19/BANG/13 PAGE 8 OF 13 (II) AS REGARDS PURCHASES FROM UNITED STEEL LINK HAVING ACCEPTED THE TWO BUSINESSES FROM HEENA WOOD & STEEL INDUSTRIES AND UNITED STEEL LINK AS DECLARED IN THE RETURN OF INCOME (AS HELD IN PARA 6.3 ABOVE) PURCHASES ARE ALSO TO BE TAKEN INTO ACCOUNT. HOWEVER BEFORE THE AO ONLY BILLS WORTH RS.66 78 1 52/- COULD BE PRODUCED IN RESPECT OF UNITED STEEL LINK. THEREF ORE ONLY PURCHASES TO THE EXTENT OF RS.66 78 152/- AND NOT R S.68 64 119/- CAN BE CONSIDERED. AS REGARDS THE BALANCE OF RS.1 8 5 967/- BEING DIFFERENCE BETWEEN (68 64 199 - 66 78 152) NO EXPL ANATION IS FORTHCOMING. THEREFORE THE APPELLANTS EXPLANATION WITH REGARD TO PURCHASES FROM UNITED STEEL LINK IS ACCEPTED THO UGH THIS FIGURE IS RESTRICTED TO RS.66 18 754/- BEING THE TO TAL OF BILLS PERTAINING TO UNITED STEEL LINK AVAILABLE AND PRODU CED BEFORE THE AO AND NOT RS.68 64 119/- CLAIMED BY THE APPELLANT. (III) AS REGARDS ADDITIONAL PURCHASES AND BILLS PRO DUCED DURING THE APPEAL PROCEEDINGS THESE ARE FROM THE CONCERNS OF THE APPELLANT AND HIS WIFE AS UNDER: NO. PURCHASE INVOICE NO. NAME OF THE CONCERN AMOUNT (RS.) A) 248 UNITED STEEL LINK 5 46 208 B) 247 - DO - 5 53 800 C) 216 - DO - 2 00 096 D) 363 SHAHEED ENTERPRISES 5 24 566 E) 324 - DO - 3 36 336 F) 132 ONE-N ENTERPRISES 48 672 TOTAL 22 09 678 SOME OF THESE HAVE BEEN SHOWN TO BE FROM UNITED STE EL LINK WHICH IS CLAIMED TO BE A CONCERN OF THE APPELLANT H IMSELF. (1) AS REGARDS THE UNITED STEEL LINK SUCH PURCHAS ES WOULD ALSO AFFECT THE SALES AS BOTH CONCERNS PROFITS ARE CLAIMED TO FORM PART OF THE PROFIT DECLARED WHICH HAS ALREADY BEEN ACCEPTED AS PER PARA 6.3 ABOVE MOREOVER AS SALES OF UNITED ST EEL LINK HAVE ALREADY BEEN INCLUDED AS THE PAYMENTS UNDER TURNOVE R SUCH A CLAIM AT THIS STAGE CANNOT BE ACCEPTED. IT WOULD GO AGAINST THE APPELLANTS CLAIM ITSELF. (2) AS REGARDS THE PURCHASES MADE THROUGH M/S. SHA HEED ENTERPRISES WHICH IS A CONCERN RUN BY MRS. SHAHNAZ W/O MR. NOOR AHMED ARE NOT VERIFIABLE SINCE THE PAYMENTS FO R THE ITA NO.790/BANG/12 & CO NO.19/BANG/13 PAGE 9 OF 13 PURCHASES COULD NOT BE PROVED IN THE ABSENCE OF BOO KS OF ACCOUNTS. (3) MOREOVER IN RESPECT OF THIS CLAIM NO SUCH BI LLS WERE PRODUCED AT THE TIME OF ASSESSMENT PROCEEDINGS. THE APPELLANT WAS GIVEN SUFFICIENT OPPORTUNITY TO PRODUCE BILLS F OR PURCHASES MADE AND ALL THE BILLS PRODUCED BY HIM WERE IMPOUN DED DURING ASSESSMENT PROCEEDINGS AND HE WAS CATEGORICALLY STA TED THAT NO MORE BILLS ARE AVAILABLE WITH HIM IN RESPECT OF EIT HER OF THE CONCERNS. THIS CLAIM IS THEREFORE REJECTED. THEREFORE PURCHASES DISCLOSED ARE I) M/S HEENA WOOD AS PER DETAILS PRODUCED & STEEL INDUSTRIES 2 10 58 355 BEFORE THE AO II) M/S UNITED STEEL LINK 66 18 752 AS PER DET AILS PRODUCED BEFORE THE AO AND TAKEN INTO ACCOUNT BY THE AO IN TREATING THE SAME TO BE UNDISCLOSED BUSINESS. 2 76 77 107 6.6 THEREFORE PURCHASES TO THE EXTENT OF RS.51 91 807/- [RS.3 28 68 914 RS.2 76 77 107] ONLY ARE TREATED AS INFLATED. THEREFORE DISALLOWANCE TO THE EXTENT OF RS.51 91 8 07/- IS UPHELD INSTEAD OF TOTAL DISALLOWANCE OF RS.L 15 10 569/- U NDER BOGUS PURCHASES. THE APPELLANT GETS A RELIEF OF RS.63 18 762/- [I.E. RS.1 15 10 569 RS.51 91 807/-] APART FROM RELIEF OF RS.14 51 296/- AT PARA 6.3 ABOVE. . 12. AGGRIEVED BY THE ORDER OF THE CIT(APPEALS) IN R ESPECT OF THE RELIEF ALLOWED TO THE ASSESSEE THE REVENUE HAS PREFERRED THE PRESENT APPEAL BEFORE THE TRIBUNAL. AGGRIEVED BY THE ORDER OF THE CIT(A) IN TREATING THE PURCHASES TO THE EXTENT OF RS.51 91 807 AS INFLATED PURCHASES AND NOT ITA NO.790/BANG/12 & CO NO.19/BANG/13 PAGE 10 OF 13 ALLOWING FREIGHT & LABOUR CHARGES OF RS.27 36 773 A S DEDUCTION WHILE COMPUTING INCOME THE ASSESSEE HAS FILED CROSS OBJE CTION BEFORE THE TRIBUNAL. REVENUES APPEAL 13. WE HAVE HEARD THE SUBMISSIONS OF THE LD. DR WH O SUBMITTED THAT THE CIT(A) OUGHT NOT TO HAVE ACCEPTED THE PLEA OF T HE ASSESSEE THAT HWSI AND USL WERE ONE BUSINESS OF THE ASSESSEE. 14. THE LD. COUNSEL FOR THE ASSESSEE POINTED OUT TH AT THE ASSESSEE AND HIS MINOR DAUGHTER WERE THE PARTNERS OF USL. THE P ARTNERSHIP IN ANY EVENT WOULD BE NOT VALID IN THE EYE OF LAW. THE M INORS INCOME WOULD BE CLUBBED IN THE HANDS OF THE FATHER AS PER THE PROVI SIONS OF SECTION 64 OF THE ACT. TAKING INTO THE CONSIDERATION THE ABOVE CIRCU MSTANCES IT WAS SUBMITTED THAT THE CIT(A) HAS RIGHTLY TREATED HWSI AND USL AS ONE BUSINESS AND COMPUTED PROFITS. IN THIS REGARD IT WAS ALSO POINTED OUT THAT THE FACT THAT IN THE EARLIER ASSESSMENT YEAR AND TW O SUCCEEDING ASSESSMENT YEARS THE SALES DECLARED BY BOTH THE CO NCERNS IN THE INCOME TAX RETURNS TALLIED WITH THAT DECLARED FOR SALES TA X PURPOSES. 15. WE HAVE CONSIDERED THE RIVAL SUBMISSIONS AND AR E OF THE VIEW THAT THE ORDER OF THE CIT(A) DOES NOT CALL FOR INTERFERE NCE. WE FIND THAT IN THE COURSE OF ASSESSMENT PROCEEDINGS THE ASSESSEE HAD PRODUCED ORIGINAL PURCHASE INVOICES TO THE TUNE OF RS.66 18 752 BEFOR E THE AO AND THESE ITA NO.790/BANG/12 & CO NO.19/BANG/13 PAGE 11 OF 13 INVOICES WERE IN THE NAME OF USL. THE ORDER OF ASS ESSMENT IS SILENT AS TO THE QUESTIONS PUT TO THE ASSESSEE EXCEPT QUESTION NO.5 AND THE ANSWER THERETO. IT IS THUS CLEAR THAT EVEN BEFORE THE AO THE ASSESSEE HAD IN PROOF OF PURCHASES SHOWN IN THE P&L ACCOUNT PRODUCED ORI GINAL PURCHASE INVOICES IN THE NAME OF USL; THUS INDICATING THAT H WSI AND USL WERE ONE BUSINESS OF THE ASSESSEE. IT IS ALSO SEEN THAT IN THE PRECEDING ASSESSMENT YEAR AND TWO SUCCEEDING ASSESSMENT YEARS THE TURNO VER DECLARED FOR THE PURPOSE OF INCOME-TAX ACT AS WELL AS UNDER THE SALE S TAX ACT WAS A COMBINED TURNOVER OF BOTH THE BUSINESSES. IT THUS SHOWS THAT THE PLEA PUT FORTH BY THE ASSESSEE WAS NOT AN AFTERTHOUGHT. KEE PING IN MIND THE ABOVE CIRCUMSTANCES WE ARE OF THE VIEW THAT THE CIT(A) W AS JUSTIFIED IN DELETING THE ADDITION OF RS.14 51 926 MADE BY THE AO AS PROF ITS OF UNACCOUNTED BUSINESS. WE ARE ALSO OF THE VIEW THAT THE CIT(A) WAS RIGHT IN CONSIDERING THE PURCHASES TO THE TUNE OF RS.66 18 752 AS PURCHA SES OF THE ASSESSEE AS THESE WERE EVIDENCED BY THE ORIGINAL INVOICES PR ODUCED EVEN AT THE TIME OF ASSESSMENT PROCEEDINGS. WE THUS DO NOT SEE AN Y MERITS IN THE APPEAL BY THE REVENUE AND CONSEQUENTLY DISMISS THE SAME. ASSESSEES CROSS OBJECTION 16. AS FAR AS THE CROSS OBJECTION IS CONCERNED THE ASSESSEE CLAIMED BEFORE THE CIT(APPEALS) THAT PURCHASES MADE BY USL WERE TO THE EXTENT OF RS.68 64 119. IN RESPECT OF THESE PURCHASES ADMIT TEDLY EVIDENCE TO THE TUNE OF RS.66 18 752 WERE ALONE PRODUCED BY THE ASS ESSEE. THEREFORE ITA NO.790/BANG/12 & CO NO.19/BANG/13 PAGE 12 OF 13 THE CIT(A) WAS RIGHT IN DISBELIEVING PURCHASES FOR THE DIFFERENCE BETWEEN THE SUM OF RS.68 64 119 AND RS.66 18 752. 17. WITH REGARD TO FRESH PURCHASES OF RS.22 09 667 CLAIMED TO HAVE BEEN PURCHASES EFFECTED BY THE ASSESSEE (HWSI FROM USL AND TWO OTHER ENTITIES VIZ. SHAHEED ENTERPRISES AND ONE-N ENTERP RISES) IT IS SEEN THAT THE CLAIM OF THE ASSESSEE HAS BEEN DISBELIEVED BY T HE CIT(A) FOR THE REASON THAT USL AND HWSI ARE BEING TREATED AS ONE B USINESS AND WHAT IS SHOWN AS PURCHASES BY ONE BUSINESS WILL BE SHOWN AS SALES BY THE OTHER BUSINESS AND THEREFORE THERE COULD BE NEUTRALIZING EFFECT. WITH REGARD TO THE OTHER TWO ENTITIES FROM WHICH PURCHASES ARE SAI D TO HAVE BEEN MADE THESE ENTITIES WERE RUN BY THE WIFE OF THE ASSESSEE AND THE PAYMENTS TO THESE PURCHASES COULD NOT BE PROVED BY THE ASSESSEE . IN THESE CIRCUMSTANCES WE ARE OF THE VIEW THAT THE CIT(A) W AS JUSTIFIED IN DISBELIEVING PURCHASES OF RS.22 09 678. 18. AS FAR AS DISBELIEVING THE EXPENDITURE TO THE T UNE OF RS.27 36 773 CLAIMED BY THE ASSESSEE TOWARDS FREIGHT & LABOUR CH ARGES ARE CONCERNED IT IS CLEAR THAT THE ASSESSEE DID NOT FILE ANY PROOF F OR HAVING INCURRED THIS ADDITIONAL AMOUNT. EVEN BEFORE US NO SUCH PROOF W AS FILED. IN THESE CIRCUMSTANCES WE ARE OF THE VIEW THAT THE CIT(A) W AS JUSTIFIED IN NOT ALLOWING THE CLAIM OF THE ASSESSEE. 19. CONSEQUENTLY WE DO NO FIND ANY MERITS IN THE G ROUNDS RAISED BY THE ASSESSEE IN ITS CROSS OBJECTION AND DISMISS THE SAME. ITA NO.790/BANG/12 & CO NO.19/BANG/13 PAGE 13 OF 13 20. IN THE RESULT THE APPEAL BY THE REVENUE AS WEL L AS THE CROSS OBJECTION BY THE ASSESSEE ARE DISMISSED . PRONOUNCED IN THE OPEN COURT ON THIS 31 ST DAY OF OCTOBER 2013. SD/- SD/- ( N. BARATHVAJA SANKAR ) ( N.V. VASU DEVAN ) VICE PRESIDENT JUDIC IAL MEMBER BANGALORE DATED THE 31 ST OCTOBER 2013. /D S/ COPY TO: 1. APPELLANT 2. RESPONDENT 3. CIT 4. CIT(A) 5. DR ITAT BANGALORE. 6. GUARD FILE BY ORDER ASSISTANT REGISTRAR ITAT BANGALORE.