The DCIT, Central Circle-3,, Surat v. Shri Ravi Satyanarayan Drolia, Vapi

ITA 991/AHD/2007 | 2002-2003
Pronouncement Date: 15-07-2011 | Result: Partly Allowed

Appeal Details

RSA Number 99120514 RSA 2007
Assessee PAN ADQPD3340K
Bench Ahmedabad
Appeal Number ITA 991/AHD/2007
Duration Of Justice 4 year(s) 4 month(s) 8 day(s)
Appellant The DCIT, Central Circle-3,, Surat
Respondent Shri Ravi Satyanarayan Drolia, Vapi
Appeal Type Income Tax Appeal
Pronouncement Date 15-07-2011
Appeal Filed By Department
Order Result Partly Allowed
Bench Allotted A
Tribunal Order Date 15-07-2011
Date Of Final Hearing 12-07-2011
Next Hearing Date 12-07-2011
Assessment Year 2002-2003
Appeal Filed On 07-03-2007
Judgment Text
IN THE INCOME TAX APPELLATE TRIBUNAL A BENCH AHMEDABAD (BEFORE S/SHRI BHAVNESH SAINI JM AND A. K. GARODIA AM) ITA NO.991/AHD/2007 A.Y .: 2002-03 THE D. C. I. T. CENTRAL CIRCLE-3 AAYAKAR BHAVAN MAJURA GATE SURAT VS SHRI RAVI SATYANARAYAN DROLIA C-1 6102 PHASE-IV VAPI PA NO. ADQPD 3340 K (APPELLANT) (RESPONDENT) APPELLANT BY SHRI MATHIVANAN M. SR. DR RESPONDENT BY SHRI R. N. VEPARI AR O R D E R PER BHAVNESH SAINI: THIS APPEAL BY THE REVENUE IS DIRECTED AGAINST THE ORDER OF THE LEARNED CIT(A)-II I SURAT DATED 15 TH DECEMBER 2006 FOR ASSESSMENT YEAR 2002-03. 2. WE HAVE HEARD THE LEARNED REPRESENTATIVES OF BOT H THE PARTIES PERUSED THE FINDINGS OF THE AUTHORITIES BELOW AND C ONSIDERED THE MATERIAL AVAILABLE ON RECORD. 3. ON GROUND NO.1 THE REVENUE CHALLENGED THE ORDER OF THE LEARNED CIT(A) IN RESTRICTING THE ADDITION OF RS.48 45 817/- TO RS.14 82 250/- ON ACCOUNT OF BOGUS PURCHASES. THE A O ISSUED NOTICES U/S 133 (6) OF THE IT ACT TO SOME OF THE PA RTIES AND OBSERVED THAT THE REPLY WAS RECEIVED ONLY FROM ONE PARTY AND NONE ELSE COMPILED WITH THE REQUIREMENTS. IN THE CASE OF M/S. C. D. PLASTICS ITA NO.991/AHD/2007 THE DCIT CEN. CIR-3 SURAT VS SHRI RAVI SATYANARAYA N DROLIA 2 FROM WHICH PURCHASES OF RS.14 82 250/- WERE CLAIMED TO HAVE BEEN MADE THESE WERE NOT REFLECTED IN THE BOOKS OF THE PARTY. THE ASSESSEE HAS ALSO CLAIMED TO HAVE MADE PAYMENTS TO THESE PARTIES BY CHEQUES FOR WHICH THE AO CONDUCTED INQUIRIES WIT H THE STATE BANK OF INDIA DADAR BRANCH MUMBAI REGARDING THE PAYMEN TS BY CHEQUE TO M/S. MIKU TRADERS VEEKAY PLASTICS C. D. PLASTI CS KAMDAR PLASTICS AND A REPLY FROM THE BANK SHOWED THAT NO S UCH CHEQUES WERE CLEARED BY THE BANK. IN THE CASE OF M/S. SHUBH AN PLASTICS NO EVIDENCE REGARDING PURCHASE OF MATERIAL WORTH RS.5 55 410/- WAS FURNISHED. THE AO THEREFORE HELD THAT THE PURCHAS ES MADE FROM M/S. MIKU TRADERS VEEKAY PLASTICS C. D. PLASTICS M/S. SHUBHAM PLASTICS TOTALING TO RS.48 45 817/- WERE BOGUS PUR CHASES AND MAKE AN ADDITION U/S 69 OF THE IT ACT. IT WAS SUBMITTED BEFORE THE LEARNED CIT(A) THAT THE AO HAD MADE THE DISALLOWANCE ON THE GROUND THAT THE GOODS WERE NOT PURCHASED AS THE PARTIES EITHER DID NOT CONFIRM OR NO PAYMENTS WERE MADE TO THEM. THE PAYMENTS WERE ACTU ALLY STOPPED BECAUSE OF DISPUTES BUT THE GOODS WERE RECEIVED AS PER THE INVOICES AND TRANSPORT RECEIPTS. PART OF THE PURCHASES WAS C ONSUMED AND THE REMAINING WAS LYING IN STOCK AND IT WAS NOT CORRECT TO DISALLOW PURCHASES WHEN GOODS WERE SOLD OR SHOWN IN CLOSING STOCK. THE TURN OVER OF THE ASSESSEE DURING THE YEAR WAS RS.236 LAK HS AND THE GP WAS 10.6% WHICH WAS HIGHER THAN THE LAST YEAR. THE ASSESSEE WAS ENJOYING DEDUCTION U/S 80 IB OF THE IT ACT AND THER EFORE THERE WAS NO NEED TO SUPPRESS PROFITS. IT WAS FURTHER SUBMITTED THAT IF THE SAID DISALLOWANCE WAS SUSTAINED THE GP RATIO WOULD JUMP TO ABOUT 20% WHICH WAS NOT POSSIBLE IN THE ASSESSEES BUSINESS. THE ASSESSEE ALSO FURNISHED COPIES OF BILLS INVOICES ETC. IN SU PPORT OF HIS CLAIM OF ITA NO.991/AHD/2007 THE DCIT CEN. CIR-3 SURAT VS SHRI RAVI SATYANARAYA N DROLIA 3 THE SAID PURCHASES. AS ALREADY OBSERVED IN EARLIER PART OF THE ORDER A REMAND REPORT ON THIS ISSUE WAS CALLED. THE AO VIDE HIS REPORT DATED 30-06-2006 STATED THAT REGARDING M/S. MIKU TRADERS A VERIFICATION OF ACCOUNTS SHOWED THAT THE PURCHASES MADE BY THE ASSE SSEE FROM THE SAID PARTY TALLIED. HOWEVER PAYMENTS MADE BY THE A SSESSEE WERE NOT REFLECTED IN THE BANK STATEMENT. IN THE CASE O F M/S. VEEKAY PLASTICS 3 PURCHASE BILLS WERE FURNISHED AND THE AS SESSEE PRODUCED COPY OF ACCOUNTS FROM THE SAID PARTY ONLY ON 30-06- 2006 THEREFORE NO INDEPENDENT INQUIRY COULD BE CONDUCTED AND THE P AYMENTS WERE ALSO NOT REFLECTED IN THE BANK STATEMENT OF THE ASS ESSEE. IN THE CASE OF M/S. KAMDAR PLASTICS THE CONTRA ACCOUNT WAS FIL ED ONLY ON 30-06- 2006 AND THEREFORE INDEPENDENT INQUIRY COULD NOT B E CONDUCTED. 4. THE LEARNED CIT(A) CONSIDERING THE SUBMISSION OF THE ASSESSEE REMAND REPORT AND MATERIAL ON RECORD CONF IRMED THE ADDITION OF RS.14 82 250/- HOWEVER DELETED THE RE MAINING ADDITION ON ACCOUNT OF BOGUS PURCHASES IN RESPECT OF REMAINI NG 4 PARTIES. THE FINDINGS OF THE LEARNED CIT(A) ARE REPRODUCED AS UN DER: I HAVE GONE THROUGH THE REMAND REPORT COMMENTS OF THE APPELLANT ON THIS REPORT AND THE COPIES OF CONTRA A CCOUNTS AND BILLS FILED BEFORE ME AND DURING THE COURSE OF REMAND PROCEEDINGS. REGARDING THE AOS OBSERVATION THAT PURCHASES WERE NOT GENUINE SINCE THE PAYMENTS CLAIM ED TO HAVE BEEN MADE BY THE APPELLANT TO THESE PARTIES WERE NOT REFLECTED IN THE BANK ACCOUNT I AM INCLINED TO AGREE WITH THE APPELLANT THAT ALTHOUGH THE CHEQUES WERE I SSUED BY WERE NOT HONORED DUE TO DISPUTE. THIS IS ALSO EV IDENT FROM THE FACT THAT THE PARTYS CONTRA ACCOUNTS REFL ECT THE APPELLANT AS A DEBTOR. THE AO HIMSELF HAS STATED TH AT THE PURCHASE FROM M/S. MIKU TRADERS TALLIED WITH THE ITA NO.991/AHD/2007 THE DCIT CEN. CIR-3 SURAT VS SHRI RAVI SATYANARAYA N DROLIA 4 APPELLANTS VERSION. THEREFORE ADDITION OF RS.10 4 3 926/- ON ACCOUNT OF ALLEGED BOGUS PURCHASES IS NO LONGER SUSTAINABLE. WITH REGARD TO M/S. VEEKAY PLASTICS T HERE BILLS WERE FURNISHED BY THE APPELLANT TOTALING RS.9 95 690/- AND I ALSO FIND A CONFIRMATION FROM THE SAID PARTY REGARDING THIS SALES MADE TO THE APPELLANT. IN THE CASE OF M/S. KAMDAR PLASTICS FROM WHOM PURCHASES OF RS.7 68.541/- WERE CLAIMED TO HAVE BEEN MADE AOS COMMENTS ARE THAT THE COPY OF ACCOUNT WAS FILED ON 30- 06-2006 ONLY AND THEREFORE NO INDEPENDENT INQUIRIE S COULD BE MADE. HOWEVER IT IS SEEN THAT THE CONTRA ACCOUNT FILED BY THE APPELLANT AND THE OFFICE OF BI LLS SUPPORT THE APPELLANTS CONTENTION. FURTHER A CERT IFICATE CONFIRMING THE OUTSTANDING BALANCE HAS ALSO BEEN FI LED BY THE APPELLANT. THEREFORE NO ADDITION ON ACCOUNT OF BOGUS PURCHASES CAN BE MADE WITH REGARD TO M/S. VEEKAY PLASTICS AND M/S. KAMDAR PLASTICS AT RS.995690/- & RS.768541/- RESPECTIVELY. REGARDING PURCHASES OF RS.14 82 250/-/- MADE FROM M/S. C. D. PLASTICS NO EVIDENCE WAS FURNISHED EITHER AT THE TIME OF REMAND REPORT OR BEFORE ME AND THERE IS NO CONFIRMATION RE GARDING THE SAID PURCHASES. THEREFORE I HOLD THAT THE APPE LLANT HAS NOT BEING ABLE TO SUBSTANTIATE ITS CLAIM OF HAV ING MADE ANY PURCHASES FROM M/S. C. D. PLASTICS AND THEREFORE ADDITION OF RS.14 82 250/- IS HEREBY CONF IRMED. REGARDING SUBHAM PLASTICS THERE APPEARS TO BE SOME MISUNDERSTANDING ON THE PART OF THE AO. AS PER THE CLAIM MADE BY THE APPELLANT AND ALSO THE CONFIRMATION FRO M THE SAID PARTY NO PURCHASES WERE MADE FROM THIS PARTY DURING THE YEAR AND THEREFORE THERE WAS NO JUSTIFI CATION IN MAKING ANY ADDITION ON THIS ACCOUNT. THE SAME IS HE REBY DIRECTED TO BE DELETED. IN VIEW OF THIS THE ADDITI ON ON ACCOUNT OF ALLEGED BOGUS PURCHASES OF RS.43 45 817/ - IS REDUCED TO RS.14 82 250/- ONLY AND THE APPELLANT GE TS RELIEF OF RS.33 63 567/-. 5. THE LEARNED DR RELIED UPON THE ORDER OF THE AO A ND SUBMITTED THAT NO EVIDENCES WERE FILED BEFORE THE AO. NO PAYM ENTS ARE REFLECTED IN THE BOOKS OF ACCOUNTS OF THE ASSESSEE. NO CHEQUES WERE ITA NO.991/AHD/2007 THE DCIT CEN. CIR-3 SURAT VS SHRI RAVI SATYANARAYA N DROLIA 5 CLEARED. NO EFFORTS HAVE BEEN MADE BY THE ASSESSEE TO LOCATE THE SUPPLIER. THOUGH THE REMAND REPORT IS FILED BY THE AO ON 30-06-2006 (PB -24) BUT IN THE CASE OF VEEKAY PLASTICS AND M/S . KAMDAR PLASTICS THE ASSESSEE FILED THE REPLY AND CONFIRMATION ONLY ON 30-06-2006 THEREFORE NO INDEPENDENT INQUIRY COULD BE CONDUCTE D. NO REASONS HAVE BEEN EXPLAINED WHY THE EVIDENCES WERE NOT FILE D BEFORE THE AO. NO REASONS RECORDED IN THE APPELLATE ORDER FOR ADMI SSION OF THE FRESH EVIDENCES. THE LEARNED DR SUBMITTED THAT ONCE THERE IS A DISPUTE OF THE PURCHASES THE PARTY WOULD NOT MAKE ANY PAYMENT BUT IN THIS CASE FACTS ARE CONTRARY BECAUSE THE ASSESSEE GIVEN CHEQUES OF THE PAYMENT BUT SAME HAVE NOT BEEN CLEARED. NO BILLS OF PURCHASES HAVE BEEN MADE. THEREFORE PURCHASES WERE RIGHTLY HELD T O BE BOGUS. HE HAS RELIED UPON THE DECISION OF THE HONBLE DELHI H IGH COURT IN THE CASE OF CIT VS LA MEDICA 250 ITR 575 AS IS RELIED U PON BY THE AO. ON THE OTHER HAND THE LEARNED COUNSEL REITERATED T HE SUBMISSIONS MADE BEFORE THE LEARNED CIT(A) AND SUBMITTED THAT T HE ASSESSEE FILED THE RELEVANT DOCUMENTS AND CONFIRMATION BEFOR E THE LEARNED CIT(A) ON WHICH REMAND REPORT WAS CALLED FROM THE A O AND THE AO DID NOT OBJECT TO THE EVIDENCES FILED BEFORE THE LE ARNED CIT(A). HE HAS THEREFORE SUBMITTED THAT THERE IS NO ILLEGALI TY IN TAKING INTO CONSIDERATION THE DOCUMENTS FILED BEFORE THE LEARNE D CIT(A). HE HAS REFERRED TO HIS REPLY FILED BEFORE THE AUTHORITIES BELOW AND THE DOCUMENTS FILED IN THE PAPER BOOK TO SUPPORT THE CO NTENTION THAT GENUINE PURCHASES HAVE BEEN MADE THEREFORE NO INT ERFERENCE IS CALLED FOR IN THE MATTER. HE HAS ADMITTED THAT WITH REGARD TO PURCHASES OF RS.14 82 250/- IN RESPECT OF M/S. C. D . PLASTICS THE ASSESSEE DID NOT PREFER ANY APPEAL CHALLENGING THE ADDITION. ITA NO.991/AHD/2007 THE DCIT CEN. CIR-3 SURAT VS SHRI RAVI SATYANARAYA N DROLIA 6 6. WE HAVE CONSIDERED RIVAL SUBMISSIONS AND MATERIA L ON RECORD. IN THE DEPARTMENTAL APPEAL THE DISPUTE IS OF DELETI ON OF THE PART ADDITION IN RESPECT OF FOUR PARTIES. THE ASSESSEE F ILED COMPLETE DETAILS AND REMAND REPORT IN THE PAPER BOOK. THOUGH THE ASSESSEE DID NOT FILE ANY EVIDENCES BEFORE THE AO BUT THE RE LEVANT EVIDENCES WERE FILED BEFORE THE LEARNED CIT(A) ON WHICH REMAN D REPORT WAS CALLED FOR FROM THE AO WHO HAS FILED HIS REMAND REP ORT ON EXAMINATION OF THE DOCUMENTS PRODUCED BEFORE THE LE ARNED CIT(A) FOR THE FIRST TIME VIDE HIS REMAND REPORT DATED 30-06-2 006 (PB-24). THE LEARNED COUNSEL FOR THE ASSESSEE THEREFORE RIGHTL Y CONTENDED THAT THE AO DID NOT OBJECT TO THE FILING OF THE FRESH EV IDENCE BEFORE THE LEARNED CIT(A) AT THE APPELLATE STAGE. THEREFORE T HERE IS NO MERIT IN THE CONTENTION OF THE LEARNED DR OBJECTING TO THE F ILING OF THE DOCUMENTS AT THE APPELLATE STAGE. THE AO EXAMINED T HE EVIDENCES AND MATERIAL IN RESPECT OF SOME OF THE PARTIES AND GAVE THE REPORT. THEREFORE THE LEARNED CIT(A) HAS RIGHTLY TAKEN INT O CONSIDERATION SUCH EVIDENCES AND MATERIAL ON RECORD IN THE LIGHT OF THE FINDING OF THE AO IN THE REMAND REPORT. BUT WITH REGARD TO SOME PA RTIES NO INDEPENDENT INQUIRY COULD BE CONDUCTED BY THE AO AT THE REMAND PROCEEDINGS BECAUSE THE DOCUMENTS AND MATERIALS WER E FILED ONLY ON THE DATE OF REMAND REPORT ON 30-06-2006. IN THE BAC KGROUND OF THIS WE CONSIDER THE ISSUE OF BOGUS PURCHASES OF EACH PA RTY. IN THE CASE OF M/S. MIKU TRADERS THE LEARNED CIT(A) NOTED THAT THE ASSESSEE FURNISHED CONTRA ACCOUNTS OF THE PARTY WHICH TALLIE D WITH THE ASSESSEES VERSION OF MAKING PURCHASES. IT WOULD T HEREFORE SHOW THAT THE ACCOUNTS OF M/S. MIKU TRADERS TALLIED WITH THE EXPLANATION OF THE ASSESSEE. THEREFORE EVEN IF NO PAYMENT HAS BE EN REFLECTED IN ITA NO.991/AHD/2007 THE DCIT CEN. CIR-3 SURAT VS SHRI RAVI SATYANARAYA N DROLIA 7 THE BOOKS OF ACCOUNTS IS NO GROUND TO CONSIDER IT T O BE BOGUS PURCHASES. THE DOCUMENTS FILED IN THE PAPER BOOK SU PPORT THE FINDINGS OF THE LEARNED CIT(A) THAT ASSESSEE MADE G ENUINE PURCHASES FROM THIS PARTY. THERE IS NO ILLEGALITY I N THE ORDER OF THE LEARNED CIT(A) IN DELETING THE ADDITION IN RESPECT OF M/S. MIKU TRADERS IN A SUM OF RS.10 43 926/-. IN THE CASE OF M/S. SHU BHAM PLASTICS THE LEARNED CIT(A) NOTED THAT THERE IS SOME MISUNDERSTA NDING ON THE PART OF THE AO BECAUSE AS PER CONFIRMATION RECEIVED FROM THAT PARTY THE ASSESSEE CLAIMED THAT NO PURCHASE WAS MADE FROM THI S PARTY DURING THE ASSESSMENT YEAR UNDER APPEAL. THE CONFIRMATION AND THE RELEVANT DOCUMENTS ARE AVAILABLE ON RECORD (PB -70 TO 73) TO SUPPORT THE FINDINGS OF THE LEARNED CIT(A). THEREFORE THE LEAR NED CIT(A) WAS JUSTIFIED IN DELETING THE ADDITION OF RS.5 55 410/- IN RESPECT OF M/S. SHUBHAM PLASTICS. THE ORDER OF THE LEARNED CIT(A) T O THAT EXTENT IS CONFIRMED AND WE DISMISS PART OF THIS GROUND OF APP EAL OF THE REVENUE. HOWEVER IN CASE OF M/S. VEEKAY PLASTICS A ND M/S. KAMDAR PLASTICS THOUGH THE ASSESSEE PRODUCED EVIDENCES AND MATERIALS ALONG WITH CONFIRMATION BUT THE SAME WERE PRODUCED IN THE REMAND PROCEEDINGS BEFORE THE AO ONLY ON 30-06-2006. EVEN THE DATES OF CONFIRMATIONS SUPPORT THE REMAND REPORT OF THE AO T HAT THE SAME WERE ONLY FILED ON 30-06-2006 AND AS SUCH THE AO RI GHTLY NOTED IN THE REMAND REPORT THAT NO INDEPENDENT INQUIRY COULD BE MADE FROM THE PARTIES. THE AO GAVE REMAND REPORT ON 30-06-2006 AN D IF THE DOCUMENTS AND EVIDENCES WERE PRODUCED BEFORE THE AO ON THE SAME DAY NO PROPER INQUIRY COULD HAVE BEEN MADE TO VERI FY THE EVIDENCES FILED BY THE ASSESSEE. IN RESPECT OF THESE TWO PART IES THE MATTER THEREFORE REQUIRES RECONSIDERATION. WHEN THE LEARN ED CIT(A) FOUND ITA NO.991/AHD/2007 THE DCIT CEN. CIR-3 SURAT VS SHRI RAVI SATYANARAYA N DROLIA 8 THAT THE DOCUMENTS FILED BY THE ASSESSEE BEFORE HIM FOR THE FIRST TIME REQUIRES EXAMINATION AT THE LEVEL OF THE AO THE LE ARNED CIT(A) SHOULD ENSURE BEFORE DECIDING THE ISSUE THAT THE DO CUMENTS HAVE BEEN PROPERLY CONSIDERED BY THE AO. WHEN THE DOCUME NTS WERE FILED ONLY ON 30-06-2006 AND REPORT OF THE AO IS ALSO OF THE SAME DATE WOULD SHOW THAT NO PROPER OPPORTUNITY IS GIVEN TO T HE AO TO EXAMINE THESE DOCUMENTS. THE SAME COURSE SHOULD HAVE BEEN A DOPTED BY THE LEARNED CIT(A) BEFORE CONSIDERING THE DOCUMENTS INDEPENDENTLY BEFORE DELETING THE ADDITION. THE LEARNED CIT(A) WA S THEREFORE NOT JUSTIFIED IN DELETING THE ADDITION IN RESPECT OF M/ S. VEEKAY PLASTICS (RS.9 95 690/-) AND M/S. KAMDAR PLASTICS (RS. 7 68 541/-). THE MATTER THEREFORE REQUIRES RECONSIDERATION BECAUSE THE OPPORTUNITY SHOULD HAVE BEEN GIVEN TO THE AO TO VERIFY THESE EV IDENCES ON RECORD BEFORE TAKING INTO CONSIDERATION BY THE LEARNED CIT (A). TO THAT EXTENT IN RESPECT OF THESE TWO PARTIES THE ORDER OF THE L EARNED CIT(A) IS SET ASIDE AND PART OF THE MATTER WITH REGARD TO THESE T WO PARTIES IS RESTORED TO THE FILE OF THE LEARNED CIT(A) WITH DIR ECTION TO GET THE EVIDENCES AND MATERIALS VERIFIED FROM THE AO BY CAL LING REMAND REPORT AND THEREAFTER PASS THE REASONED ORDER IN AC CORDANCE WITH LAW BY GIVING REASONABLE SUFFICIENT OPPORTUNITY OF BEIN G HEARD TO THE ASSESSEE. 7. IN THE RESULT GROUND NO.1 OF THE APPEAL OF THE REVENUE IS PARTLY ALLOWED FOR STATISTICAL PURPOSES. 8. ON GROUND NO.2 THE REVENUE CHALLENGED THE ORDER OF THE LEARNED CIT(A) IN DELETING THE ADDITION OF RS.3 38 000/- MADE BY THE ITA NO.991/AHD/2007 THE DCIT CEN. CIR-3 SURAT VS SHRI RAVI SATYANARAYA N DROLIA 9 AO ON ACCOUNT OF CESSATION OF LIABILITY. THE AO OBS ERVED THAT THIS AMOUNT WAS SHOWN AS OUTSTANDING LIABILITY OF M/S. P RATISHA ENGINEERING BUT THE SAID CREDITOR WAS FOUND UNTRACE ABLE AT THE GIVEN ADDRESS. THE AO THEREFORE HELD THAT THE LIABILITY IS CEASED TO EXIST AND MADE THE ADDITION TO THE INCOME. DURING THE CO URSE OF REMAND PROCEEDINGS BEFORE THE AO THE ASSESSEE SUBMITTED A CERTIFICATE FROM THE SAID PARTY CONFIRMING THAT THEY WERE STILL TO R ECEIVE A SUM OF RS.1 88 000/- FROM THE ASSESSEE AGAINST THE SALE OF INJECTION MOULDING MACHINES VIDE BILL DATED 23-05-2000. HOWEV ER THE AO DID NOT ACCEPT THE SUBMISSION OF THE ASSESSEE. THE LEAR NED CIT(A) ON GOING THROUGH THE DOCUMENTS FILED BEFORE THE AO DUR ING THE REMAND PROCEEDINGS FOUND THAT THE CERTIFICATE FILED BY THE ASSESSEE BEFORE THE AO CLEARLY SHOWS THAT IT IS STILL OUTSTANDING AND T HE CERTIFICATE IS DATED 23-08-2003 WOULD SHOW THAT THE CLAIM AGAINST THE AS SESSEE IS ALIVE IT CANNOT BE CONSIDERED AS CESSATION OF LIABILITY U /S 41 (1) OF THE IT ACT. THE ADDITION WAS ACCORDINGLY DELETED. 9. ON CONSIDERATION OF THE FACTS WE DO NOT FIND AN Y MERIT IN THIS GROUND OF APPEAL OF THE REVENUE. THE LEARNED DR MER ELY RELIED UPON THE ORDER OF THE AO AND HAS NOT BROUGHT ANY EVIDENC E ON RECORD TO REBUT THE FINDINGS OF THE LEARNED CIT(A). COPY OF THE REMAND REPORT IS FILED IN THE PAPER BOOK WHICH SUPPORT THE FINDINGS OF THE LEARNED CIT(A) THAT BALANCE WAS STILL OUTSTANDING IN THE AC COUNT OF M/S. PRATISHA ENGINEERING AND AS SUCH THE AMOUNT WAS STI LL OUTSTANDING WHICH IS ALSO NOTED BY THE AO IN THE ASSESSMENT ORD ER. SINCE THE LIABILITY IS OUTSTANDING AND IS SUPPORTED COPY OF T HE ACCOUNT CONFIRMATION FROM THE CONCERNED PARTY LEARNED CIT( A) WAS JUSTIFIED IN ITA NO.991/AHD/2007 THE DCIT CEN. CIR-3 SURAT VS SHRI RAVI SATYANARAYA N DROLIA 10 HOLDING THAT IT IS NOT CESSATION OF LIABILITY. WE DO NOT FIND ANY INFIRMITY IN THE ORDER OF THE LEARNED CIT(A). WE CONFIRM HIS FINDINGS AND DISMISS THIS GROUND OF APPEAL OF THE REVENUE. 10. ON GROUND NO.3 THE REVENUE CHALLENGED THE ORDE R OF THE LEARNED CIT(A) IN DELETING THE ADDITION OF RS.4 76 916/- ON ACCOUNT OF M/S. C. D. PLASTICS. THE LEARNED CIT(A) NOTED THAT THIS ADDITION HAS BECOME REDUNDANT IN VIEW OF THE FACT THAT THE ENTI RE PURCHASES OF RS.14 82 250/- HAS BEEN HELD TO BE BOGUS THEREFORE IT WOULD AMOUNT TO DOUBLE ADDITION. THE ADDITION WAS ACCORDINGLY DE LETED. 11. ON CONSIDERATION OF THE ABOVE FACTS WE DO NOT FIND ANY MERIT IN THIS GROUND OF APPEAL OF THE REVENUE. THE LEARNED D R MERELY RELIED UPON THE ORDER OF THE AO BUT HAS NOT POINTED OUT AN Y INFIRMITY IN THE ORDER OF THE LEARNED CIT(A). THE LEARNED CIT(A) CON FIRMED THE ADDITION OF BOGUS PURCHASED IN THE CASE OF M/S. C. D. PLASTICS IN A SUM OF RS.14 82 250/- UPON WHICH THE ASSESSEE HAS N OT PREFERRED ANY CROSS APPEAL OR CROSS OBJECTION. THE ASSESSEE I N THE REPLY BEFORE THE AO (PB 22) EXPLAINED THIS ISSUE IN PARA 6 THA T IT WAS DIFFERENCE OF ACCOUNT OF EARLIER YEARS BALANCE AND PURCHASES O F RS.14 82 250/-. SINCE THE ENTIRE PURCHASES MADE IN THIS YEAR HAVE A LREADY BEEN ADDED AND CONFIRMED BY THE LEARNED CIT(A) AND THERE IS NO FURTHER CHALLENGE BY THE ASSESSEE THE LEARNED CIT(A) ON PR OPER APPRECIATION OF THE FACTS AND MATERIAL ON RECORD RIGHTLY DELETED THE ADDITION. GROUND NO.3 OF THE APPEAL OF THE REVENUE IS ACCORDI NGLY DISMISSED. 12. ON GROUND NO.4 THE REVENUE CHALLENGED THE ORDE R OF THE LEARNED CIT(A) IN DELETING THE ADDITION MADE BY THE AO BEING THE ITA NO.991/AHD/2007 THE DCIT CEN. CIR-3 SURAT VS SHRI RAVI SATYANARAYA N DROLIA 11 DIFFERENCE OF RS.28 93 600/- ON ACCOUNT OF UNACCOUN TED PURCHASES. THE AO OBSERVED THAT THE DETAILS OF PURCHASES FLED SHOWED THAT TOTAL PURCHASES WAS OF RS.1 59 15 685/- AGAINST PURCHASES SHOWN IN THE TRADING ACCOUNT AT RS.1 88 09 285/- AND THERE WAS D IFFERENCE OF RS.28 93 600/- FOR WHICH NO DETAILS WERE FURNISHED. THE AO THEREFORE MADE ADDITION OF UNACCOUNTED PURCHASES. IT WAS SUBMITTED BEFORE THE LEARNED CIT(A) THAT COMPLETE DETAILS OF TOTAL PURCHASES WERE GIVEN TO THE AO DURING THE REMAND PROCEEDINGS IN WHICH NO DIFFERENCE WAS FOUND AND PURCHASES AS PER THE LIST AND MONTH WISE DETAILS WERE FILED TO EXPLAIN THE ABOVE ISSUE. THE LEARNED CIT(A) FOUND THE CONTENTION OF THE ASSESSEE TO BE CORRECT ON GOING THROUGH THE DETAILS FURNISHED DURING THE COURSE OF REMAND P ROCEEDINGS AND NOTED THAT THE IS NO DIFFERENCE IN TRADING ACCOUNT. IT WAS ALSO NOTED THAT NO SPECIFIC INSTANCE HAS BEEN QUOTED BY THE AO TO PROVE THE DIFFERENCE. ADDITION WAS ACCORDINGLY DELETED. 13. THE LEARNED DR RELIED UPON THE ORDER OF THE AO. ON THE OTHER HAND THE LEARNED COUNSEL FOR THE ASSESSEE REITERAT ED THE SUBMISSIONS MADE BEFORE THE AUTHORITIES BELOW AND R EFERRED TO THE REMAND REPORT (PB-28 PARA 4) TO SHOW THAT EVEN THE AO DID NOT FIND ANY DIFFERENCE DURING THE COURSE OF REMAND PROCEEDI NGS. 14. ON CONSIDERATION OF THE RIVAL SUBMISSIONS WE D O NOT FIND ANY JUSTIFICATION TO INTERFERE WITH THE ORDER OF THE LE ARNED CIT(A). ACCORDING TO THE AO THE TRADING ACCOUNT OF THE ASSE SSEE HAS SHOWN PURCHASES OF RS.1 88 09 285/- BUT AS PER THE DETAIL S THE PURCHASES WERE SHOWN AT LOWER AMOUNT AT RS.1 59 15 685/-. THE AO TOOK THE ITA NO.991/AHD/2007 THE DCIT CEN. CIR-3 SURAT VS SHRI RAVI SATYANARAYA N DROLIA 12 DIFFERENCE OF SUCH FIGURES AND MADE THE ADDITION. T HE AO FORGOT TO NOTE THAT DIFFERENCE WAS OF THE LESSER AMOUNT OUT O F THE PURCHASES DECLARED IN THE TRADING ACCOUNT AND IF THE ADDITION IS MADE IT WOULD RAISE TO THE SAME FIGURE OF THE PURCHASES IN THE TR ADING ACCOUNT WHICH IS SHOWN BY THE ASSESSEE. THEREFORE THERE WAS NO B ASIS TO MAKE ANY ADDITION AGAINST THE ASSESSEE. MOREOVER THE AS SESSEE HAS FILED COMPLETE DETAILS BEFORE THE AO AT THE REMAND PROCEE DINGS IN WHICH ALSO NO DIFFERENCE WAS FOUND OR NOTED IN THE REMAND REPORT. THE WHOLE BASIS OF MAKING THE ADDITION IS UNJUSTIFIED. THEREFORE ADDITION WAS RIGHTLY DELETED BY THE LEARNED CIT(A). GROUND N O.4 OF THE APPEAL OF THE REVENUE HAS NO MERIT AND IS DISMISSED. 15. ON GROUND NO.5 THE REVENUE CHALLENGED THE ORDE R OF THE LEARNED CIT(A) IN DIRECTING THE AO TO ALLOW CLAIM U /S 80 IB OF THE IT ACT IN A SUM OF RS.3 40 856/-. THE AO IN THE ABSENC E OF ANY DETAILS DISALLOWED THE CLAIM U/S 80 IB OF THE IT ACT. IT WA S SUBMITTED BEFORE THE LEARNED CIT(A) THAT DEDUCTION WAS ALLOWED IN EA RLIER YEARS ON THE SAME FACTS WHICH IS CONTINUING FROM EARLIER YEARS. COPY OF THE ASSESSMENT ORDER WAS FILED OF EARLIER YEAR TO SUPPO RT THE SUBMISSION. THE LEARNED CIT(A) GOING THROUGH THE SAME ALLOWED T HE CLAIM OF THE ASSESSEE. 16. THE LEARNED DR MERELY RELIED UPON THE ORDER OF THE AO. ON THE OTHER HAND THE LEARNED COUNSEL FOR THE ASSESSEE FI LED COPY OF THE COMPUTATION FOR ASSESSMENT YEAR 1995-96 AND ASSESSM ENT ORDER FOR 1996-97 (PB- 87 TO 89) TO SHOW THAT ON THE SAME FAC TS CLAIM OF THE ITA NO.991/AHD/2007 THE DCIT CEN. CIR-3 SURAT VS SHRI RAVI SATYANARAYA N DROLIA 13 ASSESSEE WAS ALLOWED BY THE AO IN EARLIER YEARS WHI CH IS CONTINUING IN THE ASSESSMENT YEAR UNDER APPEAL. 17. ON CONSIDERATION OF THE ABOVE FACTS WE DO NOT FIND ANY MERIT IN THE APPEAL OF THE REVENUE. SINCE THE AO ACCEPTED TH E CLAIM OF THE ASSESSEE IN EARLIER YEARS AND THE ASSESSEE GOT THE SAME BENEFIT IN THE SUBSEQUENT YEAR THE LEARNED CIT(A) WAS JUSTIFI ED IN ISSUING DIRECTION TO THE AO TO ALLOW THE CLAIM OF THE ASSES SEE U/S 80 IB OF THE IT ACT. GROUND NO.5 OF THE APPEAL OF THE REVENUE IS DISMISSED. 18. NO OTHER POINT IS ARGUED OR PRESSED. 19. IN THE RESULT DEPARTMENTAL APPEAL IS PARTLY AL LOWED FOR STATISTICAL PURPOSES. ORDER PRONOUNCED IN THE OPEN COURT ON 15-07-2011 SD/- SD/- (A. K. GARODIA) ACCOUNTANT MEMBER (BHAVNESH SAINI) JUDICIAL MEMBER DATE : 15-07-2011 LAKSHMIKANT/- COPY OF THE ORDER FORWARDED TO: 1. THE APPELLANT 2. THE RESPONDENT 3. THE CIT CONCERNED 4. THE CIT(A) CONCERNED 5. THE DR ITAT AHMEDABAD 6. GUARD FILE BY ORDER D Y. REGISTRAR ITAT AHMEDABAD