M S Aashdeep Industries Patan v. The Acit C C 1 1 Ahmedabad

In The Income Tax Appellate Tribunal Ahmedabad D Bench Ahmedabad Before Shri S S Godara Judicial Member And Shri Pradip Kumar Kedia Accountant Member Ita Nos 1695 Ahd 2014 2418 2419 Ahd 2012 Assessmen T Years 2007 08 To 2009 10 Jayantilal P Thakkar Prop Of Jyoti Traders 90 38 Sardar Gunj Patan 384265 N G Appellant Vs A C I T C C 1 1 Ahmedabad Respondent Ita Nos 2041 Ah D 2014 2366 2367 Ahd 2012 Assessmen T Years 2007 08 To 2009 10 A C I T Central Circle 1 1 Ahmedabad Appellant Vs Shri Jayantilal P Thakkar Prop Of Jyoti Traders 90 38 Sardar Gunj Patan 384265 Respondent Pan Aarpt 7445 D Ita Nos 1694 Ahd 2014 791 792 Ahd 2013 Assessmen T Years 2007 08 To 2009 10 M S Prakash Industries 121 G I D C Chanasma Patan 384220 Appellant Ita Nos 1695 Ahd 14 13 Ors Shri Jayantilal P Thakkar 2 Ors 2 Vs A C I T C C 1 1 Ahmedabad Respondent Ita No 2039 Ahd 2014 Assessme Nt Year 2007 08 Income Tax Officer Ward 1 Patan Appellant Vs M S Prakash Industries 121 G I D C Chanasma Patan 384220 Respondent Pan Aaffp 9237 P Ita Nos 1693 Ahd 2014 793 794 Ahd 2013 Assessmen T Years 2007 08 To 2009 10 M S Aashadeep Industries 31 G I D C Chanasma Patan 384220 Appellant Vs A C I T C C 1 1 Ahmedabad Respondent Ita No 2040 Ahd 2014 Assessme Nt Year 2007 08 Income Tax Officer Ward 1 Patan Appellant Ita Nos 1695 Ahd 14 13 Ors Shri Jayantilal P Thakkar 2 Ors 3 Vs M S Aashadeep Industries 31 G I D C Chanasma Patan 384220 Respondent Pan Aakfa 8566 F By Revenue Shri V K Singh Sr D R By Assessee Shri K C Thaker A R Date Of Hearing 11 12 2017 Date Of Pronouncement 22 12 2017 Order Per Bench This Batch Of Fourteen Appeals Pertains To Three As Sessees Namely Shri Jayantilal P Thakkar M S Prakash Industries Aa Shadeep Industries The Cit A 1 Ahmedabad Has Passed All The Lower Appell Ate Orders In These Cases First Assessee And The Revenue Have Filed Their Cro Ss Appeals In Ays 2007 08 To 2009 10 Ita Nos 1695 Ahd 2014 With Ita Nos 2418 2419 Ahd 2012 Followed By Latters Cross Appeal Thereto Ita Nos 2041 Ahd 2014 2366 2367 Ahd 2012 The Above Cross Appeals For First Assessment Year E Manate Against The Cit A S Order Dated 02 04 2014 In Case No Cit A I 012 Cc 1 1 2013 14 Upholding Validity Of Re Assessment Thereby Partly Upholding Assessing Officers Action Disallowing The Entire Alleged Bogus Purchases Of R S 1 25 16 350 To The Extent Of 25 Only Coming To Rs 31 29 085 Involving Procee Dings U S 148 R W S 143 3 Of The Income Tax Act 1961 In Short The Act The Above Cross Appeals For Latter Two Assessment Years Arise Against The Cit A S Com Mon Order Dated 17 08 2012 In Case No Cit A I Cc 1 1 114 159 2010 11 Adopting Similar Course Of Action To Ita Nos 1695 Ahd 14 13 Ors Shri Jayantilal P Thakkar 2 Ors 4 Uphold 25 Of The Bogus Purchases Disallowance Invo Lved Of Rs 4 20 46 515 Rs 57 77 470 Respectively Involving Proceedings U S 143 3 Of The Act 2 There Are Total Four Cases Relating To Second As Sessee M S Prakash Industries Assessment Year 2007 08 Contains Asses Sees And Revenues Cross Appeals Ita Nos 2039 1694 Ahd 2013 Directed Agai Nst The Cit A S Order Dated 03 04 2014 In Case No Cit A I Cc 1 1 010 2 013 14 Upholding Validity Of Re Assessment As Well As Partly Confirming Assessin G Officers Action Disallowing Alleged Bogus Purchases Of Rs 1 18 46 009 To The Extent Of 25 Only In Proceedings U S 143 3 R W S 148 Of The Act Latt Er Two Assessment Years 2008 09 Involve Assessees Appeals Only Ita Nos 791 792 Ahd 2013 Preferred Against The Cit A S Separate Orders Both Dated 21 12 2012 In Case Nos Cit A I Cc 1 1 358 2010 11 Cit A I Cc 1 1 359 2010 1 1 Confirming Assessing Officers Action Disallowing Entire Alleged Bogus P Urchases Of Rs 2 39 63 829 And Rs 26 88 354 Respectively In Proceedings U S 14 3 3 Of The Act 3 We Now Come To The Above Third Assessees Cases Assessment Year 2007 08 Involves Assessees And Revenues Cross Appeals Ita Nos 1693 2040 Ahd 2014 Against The Cit A S Order Dated 03 04 2014 In Case No Cit A I 011 Cc 1 1 2013 14 Inter Alia Affirming Validity Of Re As Sessment And In Partly Confirming Assessing Officers Action Disallowing Alleged Bogu S Purchases Of Rs 1 18 46 010 To The Extent Of 25 Only In Proceedings U S 143 3 R W S 148 Of The Act Latter Two Assessment Years 2008 09 2009 10 Contain Asse Ssees Appeals Only Ita Nos 793 794 Ahd 2013 Directed Against The Cit A S Or Ders Both Dated 21 12 2012 In Case No Cit A I Cc 1 1 357 2010 11 Cit A I Cc 1 1 356 2010 11 Upholding Assessment Findings Disallowing Entire Al Leged Bogus Purchases Of Rs 2 87 48 822 Rs 57 77 470 As Well As Admitt Ed Undisclosed Income Of Rs 26 Lacs In Latter Case Respectively In Proceedi Ngs U S 143 3 Of The Act 4 A Combined Perusal Of All The Above Case Files R Eveals That The Sole Substantive Issue Sought To Be Raised Is Qua Disall Owance Of Bogus Purchases Ita Nos 1695 Ahd 14 13 Ors Shri Jayantilal P Thakkar 2 Ors 5 Followed By Quantum Thereof Assessment Year 2007 08 In All Three Assessees Cases Involves Proceedings U S 148 R W S 147 Of Th E Act Learned Counsel Representing Assessees Is Very Very Fair At The Out Set In Not Pressing For This Legal Issue During The Course Of Hearing This Correspon Ding Ground In All The Above Cases Is Therefore Rejected As Not Pressed 5 We Now Advert To The Above Sole Issue On Merits Regarding Correctness Of Alleged Bogus Purchases Disallowance And Quantum Th Ereof It Is Evident That The Cit A S Orders In Some Cases Restrict The Same To The Extent Of 25 Particularly In Assessment Year 2007 08 Whereas He Upholds The Enti Re Disallowance In The Remaining Instances Both The Learned Representati Ves Submit At The Outset That All These Cases Involve The Impugned Bogus Purchases Di Sallowance On Account Of The Fact That The Department Had Conducted A Search Act Ion In Assessees Suppliers Case In Majority Of Appeals And In Suppliers Supplier C Ase The Same Entity M S Edible Oil Mills Group They State That We Could Take An Y Of These Appeals As The Lead Case We Therefore Treat Third Assessees Appeal I Ta No 2039 Ahd 2014 For Assessment Year 2007 08 As The Lead One 6 Relevant Facts Are In A Very Brief Compass Thi S Assessee Manufactures And Trades In Atta And Wheat There Is No Dispute That It Had Been Claiming To Have Made Its Raw Material Purchases From M S Vishal Traders Virpur Dist Kheda The Department Carried Out A Search And Survey Action In M S Edible Oils Mills Groups Of Patan District And Agents Brokers Of Mehsana A Nd Sabarkantha Districts On 01 09 2008 The Departmental Authorities Noticed T He Said Entity To Have Issued Bogus Adjustment Bills To A Large Number Of Entit Ies From Financial Year 2006 07 Onwards The Said Authorities Got Recorded Stateme Nt Of M S Vishal Traders Prop Shri Dharmendra J Pandya Admitting Therein That Th E Above Entity In The Name Of M S Vishal Traders Was Not In Existence Since The Last Two Assessment Years And That It Had Been Issuing Bogus Adjustment Bills Onl Y Mr Pandya Further Stated That His Mr Madanlal L Shah Chandak Had Introduced A Ll The Purchases Parties To Him He Had Also Opened Various Bank Accounts In M S Harij Nagarik Sahkari Ita Nos 1695 Ahd 14 13 Ors Shri Jayantilal P Thakkar 2 Ors 6 Bank Ltd Mehsana Nagarik Sahkari Bank Ltd Kalup Ur Commercial Co Operative Bank Ltd And Dena Gramin Bank Ltd Wherein He Used To Appropriate Bill Amounts In Question Deposited By Cheques Followed By Cash W Ithdrawals This Followed Section 133 A Survey Action In Assessees Case The Re Is Hardly Any Issue Between The Parties That This Assessee Had Shown To Have Ma De Its Raw Material Purchases From The Above Entity In These Three Assessment Yea Rs The Assessing Officer Therefore Sought To Verify Assessees Purchases Dur Ing Scrutiny It Is Evident From Assessment Order Dated 04 03 2013 That He Inter Ali A Observed Therein That It Was Assessees Bounden Duty To Prove Its Purchases In Q Uestion By Leading Independent Third Party Evidence In Support Of Relevant Book En Tries Alongwith Purchase Register Sales Register Suppliers And Transporters For The Purpose Of Satisfying Genuineness Element Therein He Therefore Treated All The Impu Gned Purchases Of Rs 74 86 140 In The Impugned Year In Case Of M S Vishal Traders To Be Bogus Being In The Nature Of Accommodation Entries Only All This Resulted I N The Said Purchases Disallowance In Entirety 7 The Cit A Partly Upholds The Above Impugned Dis Allowance From 100 To The Extent Of 25 As Follows 5 On Going Through The Assessment Order It Can Be Deduced That The Assessing Officer Made The Addition Of Bogus Purcha Ses For Following Reasons I Search In The Case Of Shri Madanial L Sh Ah And His Statement Search And Survey Action In Edible Oil Mill Group C Ases On 1 9 2008 Revealed That Many Concerns Were Obtaining Only Bil Ls Claim Purchases In Their Accounts In The Assessment Order Has Mentioned That A Search U S 132 Was Conducted In The Case Of Shri Madanial L Shah On 1 9 2008 H E Informed In Statement Dated 22 9 2008 That He Had Introduced Various Trad Ers Of Harij And Patan To Shri Dharmendra J Pandya Proprietor Of M S Vi Shal Traders Virpur He Had Further Confirmed That M S Vishal Traders Virpur Had Issued Only Bogus Bills And No Delivery Of Goods Had Been Made By It That Vishal Traders Had Issued Only Bogus Adjustment Bills An D Had Not Delivered Any Goods Like Oil Cakes Or Any Other Items Mentioned I N The Bill That Vehicle Numbers Written In The Bills Were Also Fictitious In The Assessment Order The Assessing Officer Has S Tated That No Details And Registers Were Produced By The Assessee He Has Men Tioned That Cross Ita Nos 1695 Ahd 14 13 Ors Shri Jayantilal P Thakkar 2 Ors 7 Examination Of Shri Madanlal L Shah Was Given To T He Representative Of The Assessee Ii Statements Of The Proprietor Of Vishal Traders Bogus Purchases Were Made By The Assessee From M S Vishal Traders This Was Proved By The Statements Recorded Of The Proprietor Of Vishal Tra Ders 532 Market Yard Virpur District Kheda Whose Proprietor Shri Dh Armendra J Pandya In The Statements Recorded By The Department On 9 7 20 08 And 26 9 2008 Admitted That He Had Issued Only Bogus Bills And Ha D Not Made Any Delivery Of Goods He Stated That He Received Only Cash Comm Ission For Issuing Bills Copies Of Statements Of Shri Dharmendra J Pandya W Ere Provided To The Appellant By The Assessing Officer The Assessing O Fficer Added Rs 70 75 459 Because According To Him The Assesse E M S Prakash Industries Had Shown Purchases Rs 70 75 459 From Vishal Traders Which The Ao Has Held To Be Bogus Thus The Ao Held That Purchases Totaling To Rs 70 75 459 Are Bogus Perusal Of The Show Cause Notice Issued By The A O To The Appellant Shows That The Ao Gave Opport Unities To The Appellant To Prove The Purchases From Vishal Traders 532 Mar Ket Yard Virpur District Kheda As Genuine Purchases But The Assess Ee Failed Iii Despite Opportunities Purchases From Vi Shal Traders Not Proved By The Assessee In The Assessment Order Informs Tha T The Assessing Officer Through Show Cause Letter Asked The Assessee To Pro Duce Various Details And Registers Suppliers And Transporters The Assessi Ng Officer Has Elaborated This Point And Has Stated That He Asked The Assesse E To Substantiate The Claim Of Purchases By Producing Gate Pass L R Receipts Challans Vouchers Etc He Asked The Assessee To Establish Quantitative Co Relation Between The Purchase And Sales In View Of The Manufacturing Pro Cess Flow Chart Yield Percentage Wastage Ratio And Power Consumption De Spite Opportunities The Assessee Did Not Produce Any Evidence Asked By The Assessing Officer But For The Ledger Accounts Of The Vishal Traders 5 32 Market Yard Virpur District Kheda And Copies Of Bills Of Vishal Trade Rs 5 1 In Order To Verify The Genuineness Of The Purc Hases Made By The Appellant From M S Vishal Traders The Assessment R Ecords Were Called For From The Assessing Officer And Copies Of The Bank A Ccounts Of M S Vishal Traders With The Harij Nagrik Sahkari Bank Ltd Ha Rij And Kalupur Commercial Cooperative Bank Ltd Ahmedabad Were Obt Ained U S 133 6 Of The Act A Copy Of These Bank Accounts Is Enclosed At Annexure A 1 To A 3 To This Order On Perusal Of The Bank Statements Of Th E Bank Accounts Opened By Shri Dharmendra J Pandya Proprietor Of M S Vi Shal Traders Virpur A Continuous Pattern Of Deposit And Immediate Cash Wi Thdrawal Is Clearly Seen That Such A Pattern Is Not Seen In Any Actu Al Manufacturing Concern This Pattern Of Deposit In Bank Account Of Vishal T Raders Followed By Immediate Cash Withdrawal Is In Consonance With The Statements Of Shri Ita Nos 1695 Ahd 14 13 Ors Shri Jayantilal P Thakkar 2 Ors 8 Dharmendra J Pandya And Madanlal L Shah That Only Bogus Bills Were Issued 5 2 While Making Addition Of Bogus Purchases Totali Ng To Rs 70 75 459 From Vishal Traders By The Appellant The A O Has R Elied Upon Following Decisions 1 Cit Vs La Medica 250 Itr 0575 2001 De Lhi High Court 2 Sree Rajvel Co Vs Cit 268 Itr 0267 2 003 Kerala High Court 3 Beena Metals Vs Cit 240 Itr 0222 1999 Kerala High Court 4 Kaveri Rice Mills Vs Cit 157 Taxman 0376 20 06 Allahabad High Court 5 3 After Careful Consideration Of The Details File D And Considering The Assessment Order And The Submissions Of The Appella Nt The Following Facts Emerge 1 Proprietor Of Vishal Traders Shri Dharmendra P Andya During Statements Recorded By The Department On 9 7 2008 And 26 9 08 Confirmed That Only Bills Issued Not Goods Delivered 2 Appellant Deposits Cash Of Equivalent Amount In His Harij Nagrik Sahakari Bank Ltd Account On The Same Date B Efore He Issues Any Cheque To Vishal Traders And Vishal Traders Wit Hdraws Cash Of The Same Amount On The Same Date 3 Analysis Of The Bank Account Of Vishal Traders At Harij Nagrik Sahakari Bank Ltd Shows That Immediately Aft Er A Cheque Is Deposited Cash Of Equivalent Amount Is Withdrawn O N The Same Date By Vishal Traders 4 Analysis Of The Bank Account Of The Appellant At Harij Nagrik Sahakari Bank Ltd And Those Of Vishal Traders Estab Lishes A Strange Pattern Of Cash Deposit Cheque Issuance By The App Ellant And Cash Withdrawal By The Bill Issuing Concerns Of The Same Amount On The Same Date Thus Not Ruling Out That Cheques Issued To These Entities Come Back To The Appellant Through Cash Withdrawals By These Entities And That Is Why Cash Is Deposited On The S Ame Date Of The Same Amount By The Appellant A Full Circle Gets Es Tablished 5 4 Purchases From Vishal Traders The Assessing Of Ficer Has Added Purchases Made By The Appellant Rs 70 75 459 Made By The Appellant From M S Vishal Traders Ganj Bazar Harij On The Groun D That The Proprietor Of This Concern Shri Dharmendra Pandya In His Statemen T Before The Department Has Stated That He Is Only Giving Fictit Ious Entries And Is Not Supplying Any Material Whatsoever The Ao Furnished A Copy Of The Statement Of Shri Dharmendra Pandya To The Appellan T 5 6 Analysis Of Vishal Traders Bank Account In The Same Bank Shows That On The Same Dates I E 28 2 2007 1 3 2007 3 3 200 7 6 3 2007 7 3 2007 Ita Nos 1695 Ahd 14 13 Ors Shri Jayantilal P Thakkar 2 Ors 9 27 3 2007 And 28 3 2007 Cheques Were Deposited And On The Same Dates Cash Is Withdrawn By Vishal Traders Relevant Entries Of Bank Statement Of Vishal Trader S A C No 4775 Harjj Nagrik Sahakarj Bank Ltd Date Ch No Narration Deposit Withdrawals 28 2 2007 844725 By Transfer Prakash Industries Rs 5 00 000 28 2 2007 022177 By Transfer Prakash Industries Rs 5 00 000 28 2 2007 022178 By Transfer Prakash Industries Rs 5 00 000 28 2 2007 022179 By Transfer Prakash Industries Rs 5 00 000 28 2 2007 21291 Self Rs 5 00 000 28 2 2007 21291 Self Rs 5 00 000 28 2 2007 21291 Self Rs 5 00 000 28 2 2007 21291 Self Rs 5 00 000 01 03 2007 22180 965518 By Transfer Prakash Industries Divya Traders Rs 5 00 000 01 03 2007 21295 Self Rs 5 00 000 03 03 2007 22181 By Transfer Prakash Industries Rs 4 00 000 03 03 2007 21296 Self Rs 4 00 000 06 03 2007 22182 B Y Transfer Prakash Industries Rs 4 00 000 06 03 2007 21297 Self Rs 4 00 000 07 03 2007 22183 By Transfer Prakash Industries Rs 4 00 000 07 03 2007 21298 Self Rs 4 00 000 27 03 2007 22184 968122 By Transfer Prakash Industries Divya Traders Rs 16 57 000 27 03 2007 Self Rs 16 57 000 28 03 2007 22185 968125 By Transfer Prakash Industries Divya Traders Rs 17 18 459 28 03 2007 Self Rs 17 18 500 5 7 In The Above Bank Transactions Of The Appellant And Vishal Traders Show That What Was Given Through Cheques To Vishal Traders Reached Back The Appellant And That Is Why The Cash Deposits In The Bank Just Before Or After Issuing Cheques To Vishal Traders Transactio Ns Payments By The Appellant To Vishal Traders Are Only An Eye Wash S Pecially When Both The Appellant M S Prakash Industries And Vishal Trad Ers Dharmendra Pandya Are Apparently Colluding To Issue Bills Onl Y Without Actually Transacting Business This Fact Is Further Confirme D From The Statement Of Shri Dharmendra Pandya Proprietor M S Vishal Trad Ers Wherein He Has Stated That What Was Transacted Was Only Accommodat Ion Bills And No Actual Supplies Of Any Kind Were Made Ita Nos 1695 Ahd 14 13 Ors Shri Jayantilal P Thakkar 2 Ors 10 6 Once It Is Established That The Purchases Made B Y The Appellant From M S Vishal Traders Is Not Genuine Then It Becomes Important To Decide Whether The Entire Bogus Purchases Made Joe Added T O The Income Of The Appellant Or Some Percentage Has To Be Adopted For Making The Addition The Ao Has Disallowed The Entire Purchases The Ar Of The Appellant Relying On The Orders Of The It At Ahmedabad Submitted Tha T The Addition Must Be Limited To 5 Of The Purchases Made From M S Vishal Traders In This Regard It Is Seen That The Case Of The Appellant I Tself For The Ay 2008 09 In Appeal No Clt A 4 Cc L L 358 2010 Ll And For Ay 20 09 10 In Appeal No Cit A L Cc L L 359 2010 Ll It Has Been Held Th At The Purchases Made From M S Vishal Traders Are Not Genuine After Discu Ssing The Facts Elaborately In Fact In The Case Of Gujarat Ambuja Export Limited For A Ys 2007 08 2008 09 And 2009 10 The A Bench Of 1 Tat A Hmedabad Has Also Upheld The Finding That The Purchases Made By The A Ppellant From M S Vishal Traders Are Bogus My Predecessor The Then Clt App Eals I Ahmedabad In The Following Cases Upheld The Disallowance Of 25 Of The Bogus Purchases Made From Vishal Traders Sr No Name Of The Case A Y 1 M S Jagdamba Ginning Factory 2008 09 2 M S Prakash Industries 2008 09 3 M S Aashadeep Industries 2008 09 4 M S Aashadeep Industries 2009 10 5 M S Pankaj Cotton Industries 2009 10 6 M S Omshree Nagraj Ginning 2009 10 7 Shri Bhadresh S Shah 2008 09 8 Shri Bhadresh S Shah 2009 10 9 Shri Kanubhai M Khatri 2008 09 10 Shri Jayantilal P Thakkar Prop Jyoti Traders 2008 09 11 Shri Jayantilal P Thakkar Prop Jyoti Traders 2009 10 6 1 Similarly In The Case Of Jagdamba Ginning Facto Ry V Assistant Commissioner Of Income Tax Central Circle 1 1 Ah Medabad For A Y 2008 09 The D Bench Of The It At Ahmedabad Has Held The Contention Of The Department That The Purchases Made From M S Vishal Traders Was Not Genuine The It At Has However Reduced The Disall Owance Made By The Ao To 25 I Of The Purchases Made From M S Vishal Trade Rs The Gujarat High Court In The Case Of Sanjay Oilcake Industries V C Ommissioner Of Income Tax Reported In 316 1 Tr 274 Guj Has Held That Disa Llowance Of 25 Of The Purchases Is Reasonable When The Purchases Are Bogu S But The Sales Have Not Been Questioned Similarly The Itat Ahmedabad I N The Cases Of Vijay Proteins Ltd V Assistant Commissioner Of Income T Ax Reported In 1996 58 Itd 428 Ahmedabad And In The Case Of N K Prote Ins Ltd V Deputy Commissioner Of Income Tax Reported In 2004 4 Sot 479 Ahd Have Held That Disallowance Of 25 Of The Purchases In T He Case Of Bogus Ita Nos 1695 Ahd 14 13 Ors Shri Jayantilal P Thakkar 2 Ors 11 Purchases Is Reasonable In The Case Of Jagdamba Gi Nning Factory Also The Order Had Been Passed By The Undersigned In Appeal No Cit A I Cc 1 1 169 2010 11 Dated 21 12 2012 In View Of The Above And Following The Judicial Hierarchy The Ao Is Directe D To Disallow 25 Of The Purchases Made From M S Vishal Traders 6 2 In View Of The Above The Addition Made By The A O Is Reduced From 74 86 140 To Rs 18 71 535 This Leaves Both The Parties Aggrieved To The Exte Nt As Indicated In Their Respective Pleadings 8 Learned Counsel Representing Assessee First Of A Ll Seeks To Treat The Above Impugned Purchases As Entirely Genuine In The Cours E Of Hearing He Further Pleads That Both The Lower Authorities Did Not Afford Cros S Examination Opportunity Of Either Mr Pandya Or Mr Chandak Supra To The Ass Essee His Case Therefore Is That The Assessing Officer As Well As The Cit A Ha Ve Erred In Disallowing The Impugned Purchases Even To The Extent Of 25 We F Ind No Merit In Either Of These Submissions The Fact Remains That The Assessee Ha S Failed To Prove Genuineness Of The Impugned Purchases By Leading Cogent Evidence A S Discussed In Both The Lower Proceedings It Was Assessees Primary Onus To Lea D Sufficient Evidence So As To Shift The Burden Back To The Assessing Officer It Has Come On Record That The Above Supplier M S Vishal Traders Gave Only Bogus Purcha Ses Entries To All Its Customers This Clinching Finding Has Gone Unrebutted From Ass Essees Side We Therefore See No Reason To Interfere With Both The Lower Authorit Ies Concurrent Findings Holding Assessees Purchases In Question To Be Not Genuine The Assessee Fails In Its First Substantive Plea Accordingly 9 This Leaves Us With Quantification Issue Pertain Ing To The Above Purchases Disallowance Learned Departmental Representative Quotes A Catena Of Case Law I E Honble Jurisdictional High Courts Judgment I N Slp Civil 769 2017 N K Proteins Ltd Vs Dcit Dismissed In Limine On 16 01 2017 Thereby Confirming Honble Jurisdictional High Courts Judgment In Tax Appeal No 243 Of 2003 Decided On 20 06 2016 Upholding This Tribunals Order Restr Icting Similar Bogus Purchases Ita Nos 1695 Ahd 14 13 Ors Shri Jayantilal P Thakkar 2 Ors 12 Disallowance To The Extent Of 25 Only Mr Singh Takes Us To Para 6 Onwards Of The Above Detailed Judgment With Observations On Th E Impugned Bogus Purchases Issue Stated To Be In Revenues Favour He Then Ci Tes Honble Jurisdictional High Courts Other Judgment In Case Of Acit Vs Pavanraj B Bokadia Tax Appeal No 2345 Of 2009 Upholding Such Purchases Disallowance In Entirety Next Case Law Sought To Be Quoted Is This Tribunals Co Ordinate Bench Decision In Swetamber Steel Ltd S Case As Well As Acit Vs Amar Mining Company 2009 121 Itd 273 Ahd Tm To Press For Restoring The Above Bogus Pu Rchases Disallowance To The Extent Of 100 Learned Counsel Representing Asses See On The Other Hand Filed Before Us This Tribunals Co Ordinate Benchs Decis Ion In Gujarat Ambuja Exports Ltd Vs Acit It Ss A No 124 Ahd 2012 Dated 17 04 2013 Disallowing Identical Purchases To The Extent Of 5 Only As Upheld In Tax Appeal No 840 Of 2013 Decided On 10 02 2014 10 We Have Given Our Thoughtful Consideration To R Ival Submissions The Sole Issue Left For Our Adjudication Is That Of Quantifi Cation Of The Impugned Purchases Disallowance In Case Of M S Vishal Traders We Co Nfronted Both The Parties About A Co Ordinate Bench Decision In Acit Vs Pankaj Cot Ton Industries Case Ita No 858 Ahd 2012 Decided On 27 10 2017 Upholding The Cit A S Order Under Challenge Therein Restricting Similar Purchases Dis Allowance In Case Of Vishal Traders Itself In Assessment Years 2008 09 And 2009 10 As Emanated From The Very Search Survey In Question Reading As Under 3 It Thus Emerges From A Perusal Of The Above Ri Val Pleadings That The Main Issue In This Former Assessment Year 2008 09 Is Tha T Of Validity Of Assessees Cotton Purchases Made From M S Vishal Traders To Th E Tune Of Rs 2 84 58 054 Case File Reveals That The Instant Lis Emanated Fro M A Search Action Dated 01 09 2008 Carried Out At M S Edible Oil Mills Group Of P Atan District And Its Group Concerns On Subsequent Dates One Shri Dharmendra J Pandiya Proprietor Of M S Vishal Traders Virpur Did Not Exist And It Had Been Issuing Bogus Adjustment Entries For The Past Two Years In Respect Of Oil Se Eds Oil Cakes And Other Purchase Items All The Said Material Resulted In A Survey Action Being Conducted In Assessees Case U S 133 A Of The Act The Assessee S Partner Shri Pankaj Soni Got Recorded His Statement In Course Of The Said Survey Admitting To Have Taken Adjustment Bills In Respect Of Purchases From M S V Ishal Traders He Further Undertook To Declare The 20 Of The Above Purchases Has Assessees Undisclosed Ita Nos 1695 Ahd 14 13 Ors Shri Jayantilal P Thakkar 2 Ors 13 Income To The Tune Of Rs 5691610 There Is No D Ispute That The Said Purchases Read A Figure Of Rs 28458054 In Case Of M S Vish Al Traders In The Impugned Assessment Year This Made The Assessing Officer T O Seek Necessary Purchase Details During Scrutiny The Assessee Failed To Pr Ove The Same Despite Availing Various Opportunities The Assessing Officer There After Disallowed All The Above Purchases As Well As Added Above Disclosed Amount O F Rs 5691610 As Well As Cash Deposits Made In Assessees Bank Accounts Read Ing A Figure Of Rs 32385600 As Unexplained U S 68 Of The Act 4 The Assessee Preferred Appeal It Chose To File Additional Evidence Submissions In Lower Appellate Proceedings The Cit A Sought Remand Report The Assessing Officer Submitted The Same O N 14 02 2012 Reiterating His Above Bogus Purchases And Disallowances Additions Supra The Cit A Thereafter Observed That It Was At The Best A Case Of Raw Material Purchases Unregistered Dealers To Save Vat Etc He Finds In Page 15 As Per Audit Report Scheduled As Annexsure 2 That The Assessing Officer Had Not Doubted Sales And Closing Stock Quantity Neither In Assessment Nor Remand Proceedings The Cit A Then Restricts The Impugned Disallowance Of Rs 28819545 To The Tune Of 25 Thereof Coming To 7204886 Only He Thereafte R Applies Telescoping Method Qua Admitted Undisclosed Income Of Rs 5691610 S Upra To Conclude That The Above Bogus Purchases Disallowance 25 Would Cove R This Latter Figure As Well The Cit A Lastly Reverses Assessing Officers Find Ings In Part Making Section 68 Addition Of Rs 32385600 To The Tune Of Rs 44930 4 Only As Under In Ground No 5 The Appellant Has Disputed The Add Ition Of Rs 3 23 85 600 Being Unexplained Cash Credit Perusal Of Para 4 Of The Assessment Order Shows Tha T The Assessing Officer Made Verification Of Bank Accounts And Added Back A Ll Cash Deposits Appearing In Two Accounts Without Giving Separately The Amounts And Dates Of Deposits The Addition Was Made As Under 4 1 Vide Notice U S 142 1 Of The I T Act Dated 16 8 2010 The Assessee Was Asked To Explain The Cash Deposits In The Bank Acco Unts On Verification Of The Copy Of Bank Accounts Submitted By The Assessee It Is Noticed That The Assessee Has Made Cash Deposits In The Bank Accounts As Unde R Name Of Bank Bank A C No Cash Deposits Harij Nagrill Sahakari Bank 4833 Rs 2 39 73 600 Ltd Dena Bank Cca C No 156 Rs 84 12 000 Total Rs 3 23 85 600 4 2 Vide Submission Dated 20 10 2010 The Assessee Furnished Copy Of Bank Statements However The Assessee Did Not Furnish E Xplanation Of Source Of Cash Deposits Into These Bank Accounts The Assesse E Also Did Not Furnish Cash Book Therefore A Summons U S 131 Of The Lt Act Was Issued On 1 11 2010 And The Assessee Was Asked To Attend The Office O N 11 11 2010 Alongwith Ita Nos 1695 Ahd 14 13 Ors Shri Jayantilal P Thakkar 2 Ors 14 Explanation Of Source Of All Cash Deposits In The B Ank Account Alongwith Documentary Evidences The Assessee Was Also Requir Ed To Produce Cash Book For Verification However The Assessee Failed To A Ttend This Office Till Date And Furnish The Explanation Of Source Of Cash Deposits And Also Failed To Produce The Cash Book 13 During The Course Of Appellate Proceedings It W As Pleaded That Cash Deposits Were Out Of Cash Available In The Cash Boo K Soft Copy Of The Cash Book Was Impounded By The Department During Survey And Hard Copy Was Produced During Appellate Proceedings Stating That The Two Cash Books Show That Enough Cash Was Available With The Appellant F Or Making Cash Deposits The Assessing Officer Was Asked By My Predecessor T Hrough His Letter Dated 3 6 2011 To Verify The Contention Of The Appellant The Assessing Officer Through His Report Dated 13 2 2012 Found Difference Of Rs 5 03 026 And Of Rs 55 246 In Cash Withdrawal Entries And Difference Of Rs 1 08 968 In Cash Deposit Entries On Comparing The Hard Copy Cash Boo K Produced Later With The Soft Copy Cash Book Impounded By The Department Re Port Of The Assessing Officer Has Been Reproduced In Para 8 Above The Re Port Was Made Available To The Appellant And It Was Stated That The Discrep Ancy Is Minor And That Netting Of The Difference In Deposits And Withdrawa Ls Should Be Allowed The Discrepancy On Netting Comes To Rs 4 49 304 Cash Withdrawal Discrepancy As Per A O Rs 5 03 02 6 Cash Withdrawal Discrepancy As Per A O Rs 55 2 46 Rs 5 58 272 Less Cash Deposit Discrepancy As Per A O Rs 1 08 968 Rs 4 49 304 14 It May Be Mentioned Here That Analysis Of Bank Accounts Of The Appellant Which Includes Harij Bank Account Shows That Same A Mounts Issued To Vishal Traders Through Cheques Stand Deposited In Cash At Times On The Same Date When The Cheque Is Issued To Vishal Traders And An Alysis Of Vishal Traders Bank Account Shows That Immediately On Deposit Of C Heque Cash Has Been Withdrawn Of The Same Amount This Indicates That C Ash Is Received Back From Vishal Traders And Deposited In The Bank Account Of The Appellant In Other Words It Is Appellants Own Money Cheques Issued For Purchases Made Through Accommodation Bills Which Comes Back To Hi M In Cash And Is Deposited In The Bank Account In My View Cash Depo Sits Addition Out Of Addition Of Rs 3 23 85 600 To The Extent Of Rs 2 88 19 545 On Account Of Purchases From Vishal Traders Gets Telescoped In Th E Addition Of Rs 2 88 19 545 On Account Of Purchases From Vishal Traders 25 Of Which Has Been Upheld In This Appeal This Leaves Amount Of Rs 35 66 055 Rs 3 23 85 600 Rs 2 88 19 545 The Appellants C Ontention Is That Cash Was Deposited In Bank Accounts Because It Was Available As Per Cash Books Maintained By The Appellant The Electronic Cash Bo Ok Impounded At The Time Of Survey At The Premises Of The Appellant And The Hard Copy Cash Book Have Been Compared By The Assessing Officer At The Reman D Report Stage And The Difference On Netting Of Discrepancy In Cash Books Comes To Rs 4 49 304 Only It May Be Remembered That In The Remand Report The Assessing Officer Has Not Pointed Out Any Major Cash Deposit Discrepancy Ther Efore The Addition On Account Of Unexplained Cash Credits After Netting I S Upheld To The Extent Of Rs 4 49 304 The Remaining Addition Of Rs 35 66 05 5 Rs 3 23 85 600 Cash Deposit Addition Made By A O Rs 2 88 19 545 Bo Gus Purchases Through Ita Nos 1695 Ahd 14 13 Ors Shri Jayantilal P Thakkar 2 Ors 15 Accommodation Bills From Vishal Traders Telescoped In The Addition Of Rs 3 23 85 600 Is Directed To Be Deleted Because T He Entire Addition On Account Of Unexplained Cash Deposits Has Been Made Without Informing The Specific Dates And Amounts Of Cash Deposits By The Assessing Officer And In The Remand Report The Assessing Officer Has Not Objecte D To The Contention Of The Appellant That Cash Was Deposited According To The Cash Available As Per Cash Book And On Verification Of The Cash Books Submitte D By The Appellant Discrepancy Of Rs 4 49 304 Is Only Found Thus Addi Tion Of Rs 4 49 304 Is Upheld As Unexplained Cash Deposited In Bank Accoun Ts Out Of Addition Of Rs 3 23 85 600 Made In The Assessment Order The Ba Lance Is Directed To Be Deleted 5 This Leaves Both The Parties Aggrieved To The Ex Tent Of Their Grievance Pleaded In Their Above Averred Grounds 6 We Have Given Our Thoughtful Consideration To Ri Val Submissions Learned Counsel Representing Assessee Fails To Rebut Both T He Lower Authorities Findings That It Had Obtained Bogus Purchase Entry From M S Vishal Traders Existing On Paper Only His First Plea Is That The Assessee Had Paid For Its Purchases By Way Of Account Payee Cheques We However Are Of The Vi Ew That The Said Ledgers Or Mode Of Payments Hardly Have Any Genuineness Elemen Ts In View Of The Above Overwhelming Element Indicating The Assessee To Hav E Obtained Bogus Purchases Entries We Therefore Find No Reason To Upset Both The Lower Authorities Findings Treating The Above Purchases As Bogus In Principle 7 Both The Learned Representatives Next Argument I S Qua The Quantum Of Disallowance Learned Departmental Representative Argues Very Strongly That We Ought To Disallow The Entire Purchases In Tune With Assessing Officers Action As Per Honble Jurisdictional High Courts Judgment In Acit Vs Pawanraj B Bokadia Tax Appeal No 2345 Of 2009 Decided On 27 09 2011 The Assessee On The Other Hand Pleads That The Very Issue In Case Of M S Vish Al Traders Itself Supra Stands Adjudicated Qua The Impugned Assessment Year In Cas E Of M S Gujarat Ambuza Ltd Vs Acit In It Ss A 124 Ahd 2012 Decided On 17 04 2013 Wherein A Co Ordinate Bench Has Disallowed Identical Purchases T O The Extent Of 5 Only Honble Jurisdictional High Court Judgment In Tax A Ppeal 840 Of 2013 Decided On 10 02 2014 Is Stated To Have Upheld The Same The A Ssessee Therefore Submits That We Ought To Disallow Only 5 Of The Above Purchases 8 Heard Rival Submissions We Have Examined Rival Grievance S At Length We Do Not Find Merit In Either Parties Submissions The Cit A Had Admittedly Upheld The Impugned Bogus Purchases Disallowances T O The Extent Of 25 The Revenues Plea Does Not Deserve To Be Accepted Sinc E The Assessing Officer Has Not Found Any Infirmity In Assessees Stock As Well Its Raw Material Purchase Consumed And Sold As Stated In Its Audit Report C Oupled With This We Find That Honble Jurisdictional High Courts Recent Judgment In Case Of M S N K Industries Vs Dcit Dated 20 06 2016 In Tax Appeal 240 Of 20 13 And Related Cases Upholds A Co Ordinate Benchs Decision Therein Disallowing 25 Of Purchases Amount In Case Of Bogus Bills Honble Apex Court Has Declin Ed Special Leave Petition Slp C Cc No 963 2017 On 16 01 2017 As Well We T Herefore Find No Merit In Revenues Former Grievance Seeking To Revive Enti Re Purchases Disallowance Of Ita Nos 1695 Ahd 14 13 Ors Shri Jayantilal P Thakkar 2 Ors 16 Rs 28819545 Its Corresponding First Substantiv E Is Therefore Rejected So Is The Outcome Of Its Latter Substantive Ground Regarding Admitted Undisclosed Income Of Rs 5691610 As Assessees Authorized Persons Sur Vey Statement Undertaking To Declaring 20 Of The Very Purchases Is Very Well Le Ss Than The Purchases Disallowance 25 Upheld In The Instant Proceeding S The Revenues Appeal Ita 858 Ahd 2012 Fails 9 We Now Advert To Assessees Arguments Seeking To Reduce The Above Purchases Disallowances From 25 To 5 Only As Per Honble Jurisdictional High Courts Decision In Gujarat Ambuza Exports Ltd A Perusal Of The Said Co Ordinate Bench Order Reveals That There Was No Material On R Ecord As Against The Cit A S Findings Reproduced Hereinabove That The Concerned Assessee Had In Fact Paid Cheques To M S Vishal Traders Who In Turn Withdrew Cash Amounts To Be Deposited Back In Payers Account We Therefore Follow Honbl E Jurisdictional High Courts Decision In N K Industries To Confirm The Cit A S Action Upholding The Impugned Bogus Purchases Disallowance To The Extent Of 25 O Nly The Assessees First Substantive Ground In Its Cross Objection Is Theref Ore Rejected 10 This Leaves Us With Assessees Second Substanti Ve Ground Seeking To Delete Section 68 Addition Of Rs 4 49 304 As Upheld In Lower Appellate Proceedings Thereby Partly Reversing Assessing Officers Action Adding Entire Cash Deposits Of Rs 3 23 85 660 As Extracted In Preceding Paragra Phs It Has Come On Record That The Ld Cit A Has Very Well Established The T Rail Behind The Impugned Cash Deposits To Be Emanating From Cash Received In Case Of M S Vishal Traders Learned Counsel Representing Assessee Fails To Rebu T The Said Clinching Findings We Therefore Find No Reason To Agree With Assessee S Instant Latter Substantive Ground As Well Assessees Co 106 Ahd 2012 Is Also Declined Both The Learned Representatives Fail To Pinpoint Any Distinction On Facts It Therefore Emerges That The Said Co Ordinate Bench H As Already Placed Reliance On Honble Jurisdictional High Courts Latest Judgment In N K Proteins Supra It Further Transpires That The Cit A S Above Extracte D Findings In Para 6 Make It Clear That Relevant Facts In The Said Case As Well As Ins Tant One Are On Identical Footing We Therefore Adopt Consistency In The Instant Facts As Well To Uphold The Cit A S Well Reasoned Findings In Restricting The Impugned Bogus Purchases Disallowance To The Extent Of 25 Only This Lead Case Appeal Ita No 2039 Ahd 2014 Is Accordingly Dismissed 11 Learned Counsel Representing Assessee At This S Tage Submitted That Some Of The Instant Appeals Involve An Instance Wherein M S Vishal Traders Is Suppliers Supplier Of The Raw Material In Question We Remin Ded Him That The Above Case Of Pankaj Cotton Industries Supra Would Squarely App Ly In The Instant Case As Well As Ita Nos 1695 Ahd 14 13 Ors Shri Jayantilal P Thakkar 2 Ors 17 We Have Adopted A Broader Formula In Upholding The Impugned Purchases Disallowance To The Extent Of 25 The Same Shall Take Care Of All Technical Objections Being Raised At Both Parties Behest W E Therefore Adopt This 25 Disallowance Rate In All These Cases On Consistency Formula 12 We Accordingly Dismiss Revenues All Appeals It A Nos 2366 2367 Ahd 2012 Ita No 2041 Ahd 2014 In First Asse Ssees Case Ita No 2039 Ahd 2013 And Ita No 2040 Ahd 2014 In Remainin G Two Assessees Cases The First Assessees All Three Appeals Ita No 2418 2419 Ahd 2012 1695 Ahd 2014 Are Dismissed Second Assessees App Eals Ita Nos 791 792 Ahd 2013 Are Partly Allowed Its Third Appeal Ita No 1694 Ahd 2013 Is Dismissed Third Assessees Former Two Appeals Ita Nos 793 794 Ahd 2013 Are Partly Allowed Whereas Ita No 1693 Ahd 2014 Is Dis Missed Ordered Accordingly Pronounced In The Open Court On This The 22 Nd Day Of December 2017 Sd Sd Pradip Kumar Kedia S S Godara Accountant Member Judicial M Ember Ahmedabad Dated 22 12 2017 True Copy S K Sinha Copy Of Order Forwarded To Revenue 2 Assessee Concerned Cit 4 Cit A 0 Dr Itat Ahmedabad 1 23 45 Guard File By Order 0