Shri Umesh Kajve, Bhopal v. The DCIT1(2), Bhopal

ITSSA 378/IND/2012 | 2004-2005
Pronouncement Date: 17-11-2014 | Result: Partly Allowed

Appeal Details

RSA Number 37822716 RSA 2012
Assessee PAN AJTPK0155G
Bench Indore
Appeal Number ITSSA 378/IND/2012
Duration Of Justice 2 year(s) 2 month(s) 18 day(s)
Appellant Shri Umesh Kajve, Bhopal
Respondent The DCIT1(2), Bhopal
Appeal Type Income Tax (Search & Seizure) Appeal
Pronouncement Date 17-11-2014
Appeal Filed By Assessee
Order Result Partly Allowed
Bench Allotted DB
Tribunal Order Date 17-11-2014
Assessment Year 2004-2005
Appeal Filed On 30-08-2012
Judgment Text
IN THE INCOME TAX APPELLATE TRIBUNAL INDORE BENCH INDORE BEFORE SHRI P.K. BANSAL HONBLE ACCOUNTANT MEMBER AND SHRI MUKUL SHRAWAT HONBLE JUDICIAL MEMBER IT(SS) NO. 378 TO 381/IND/2012 : (A.YS : 2004 - 05 TO 2007 - 08) SHRI UMESH KAJVE H. NO. 244 ASHOKA GARDEN RAISEN ROAD BHOPAL (APPELLANT) PAN : AJTPK0155G VS DY . COMMISSIONER OF INCOME TAX - 1(2) BHOPAL ( RESPONDENT ) ASSESSEE BY : H.P. VERMA & N.D. PATWA ADV. REVENUE BY : LAL CHAND CIT DR DATE OF HEARING : 08/09/2014 DATE OF PRONOUNCEMENT : 17 / 11 /2014 O R D E R PER P.K. BANSAL 1. THE ABOVE APPEALS HAVE BEEN FILED AGAINST THE COMMON ORDER OF CIT(A) DT. 26.6.2012 BY TAKING THE FOLLOWING EFFECTIVE GROUNDS OF APPEAL. IT(SS) NO. 378/IND/2012 (A.Y : 2004 - 05) : 1. THAT ON THE FACT AND IN THE CIRCUMSTANCES OF THE CASE THE LEARNED CIT (APPEALS) ERRED IN CONFIRMING THE PROCEEDINGS INITIATED U/S 153C AS CORRECT WITHOUT CONSIDERING THE FACT THAT THE BASIS ADOPTED AND THE REASONS RECORDED FOR ISSUING THE NOTICE U/S 153C ARE NOT SATI SFACTORY. 2. THAT ON THE FACTS AND IN CIRCUMSTANCES OF THE CASE THE LEARNED CIT (APPEALS) ERRED IN CONFIRMING ADDITION OF RS.10862711/ - BEING RETURNED BUSINESS INCOME OF RS. 41 600/ - AND BOGUS PURCHASES OF CHATTISGARH PHARMACEUTICALS RS. 1 00 00 000/ - & BOGUS PURCHASES OF NETAM INDUSTRIES RS. 8 21 111/ - IN THE HANDS OF SHRI ASHOK NANDA ON SUBSTANTIVE BASIS BY DELETING PROTECTIVE ADDITION IN THE HANDS OF THE APPELLANT. IT IS SUBMITTED THAT THE ASSESSEE IS REGULARLY ASSESSED TO TAX AND HAS FILED THE RETUR N SHOWING THE INCOME FROM THE SAID BUSINESS IN WHICH ADDITION WAS MADE AND ALSO HIS OWN SALES TAX 2 IT(SS) NO. 378 TO 381/IND/2012 (A.YS : 2004 - 05 TO 2007 - 08) NUMBER AND DRUG LICENCE NUMBER AND SUPPLY THE MATERIAL OUT OF HIS OWN SOURCES WITHOUT ANY FINANCIAL SUPPORT FROM SHRI ASHOK NANDA. FURTHER THE ASSESSEE HAS S TARTED PAYING INCOME TAX ON THE INCOME ASSESSED IN HIS HAND AND HAS PAID A SUBSTANTIAL AMOUNT OF TAX OUT OF HIS OWN SOURCES. 3. THAT ON THE FACTS AND IN CIRCUMSTANCES OF THE CASE THE LEARNED CIT (APPEALS) ERRED IN CONFIRMING THE ADDITION OF RS.1 00 00 00 0/ - BY DISALLOWING THE PURCHASES OF M/S CHATTISGARH PHARMACEUTICALS TREATING THE SAME AS BOGUS OUT OF THE TOTAL SALES OF RS. 1 12 58 124/ - . IT IS SUBMITTED THAT IN A TRADING CONCERN AND PARTICULARLY IN A GOVERNMENT SUPPLY BUSINESS WHERE THE SALES IS UNDIS PUTED ESTIMATION OF GROSS PROFIT @ 89 % IS HIGHLY UNJUSTIFIED UNWARRANTED AND ON VERY HIGHER SIDE. 4. THAT ON THE FACTS AND IN CIRCUMSTANCES OF THE CASE THE LEARNED CIT (APPEALS) ERRED IN CONFIRMING THE ADDITION OF RS.8 21 111/ - BY DISALLOWING THE ENTI RE PURCHASES OF M/S NETAM INDUSTRIES TREATING THE SAME AS BOGUS OUT OF THE TOTAL SALES OF RS. 9 24 489/ - . IT IS SUBMITTED THAT IN A TRADING CONCERN AND PARTICULARLY IN A GOVERNMENT SUPPLY BUSINESS WHERE THE BALES IS UNDISPUTED ESTIMATION OF GROSS PROFIT @ 89 % IS HIGHLY UNJUSTIFIED UNWARRANTED AND ON VERY HIGHER SIDE. 5. THAT ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE THE LD. CIT (APPEALS) ERRED IN CONFIRMING THE INITIATION OF PENALTY PROCEEDINGS U/S 271(1)(C). IT(SS) NO. 37 9 /IND/2012 (A.Y : 20 0 5 - 0 6 ) : 1. THAT ON THE FACT AND IN THE CIRCUMSTANCES OF THE CASE THE LEARNED CIT (APPEALS) ERRED IN CONFIRMING THE PROCEEDINGS INITIATED U/S 153C AS CORRECT WITHOUT CONSIDERING THE FACT THAT THE BASIS ADOPTED AND THE REASONS RECORDED FOR ISSUING THE NOTICE U/S 153C ARE NOT SATISFACTORY. 2. THAT ON THE FACTS AND IN CIRCUMSTANCES OF THE CASE THE LEARNED CIT (APPEALS) ERRED IN CONFIRMING THE ADDITION OF RS.91.29 437 / - IN THE HANDS OF SHRI ASHOK NANDA ON SUBSTANTIVE BASIS BY DELETING P R OTECT I VE ADDITION IN THE HANDS OF THE APPELLANT. IT IS SUBMITTED THAT THE ASSESSEE IS REGULARLY ASSESSED TO TAX AND HAS FILED THE RETURN SHOWING THE INCOME FROM THE SAID BUSINESS IN WHICH ADDITION WAS MADE AND ALSO HIS OWN SALES TAX NUMBER AND DRUG LICENCE NUMBER AND SUPP LY THE MATERIAL OUT OF HIS OWN SOURCES WITHOUT ANY FINANCIAL SUPPORT FROM SHRI ASHOK NANDA. FURTHER THE ASSESSEE HAS STARTED PAYING INCOME TAX ON THE INCOME ASSESSED IN HIS HAND AND HAS PAID A SUBSTANTIAL AMOUNT OF TAX OUT OF HIS OWN SOURCES. 3 IT(SS) NO. 378 TO 381/IND/2012 (A.YS : 2004 - 05 TO 2007 - 08) 3. THAT ON THE FACTS AND IN CIRCUMSTANCES OF THE CASE THE LEARNED CIT (APPEALS) ERRED IN CONFIRMING THE ADDITION OF RS.91 29 437/ - BY DISALLOWING THE PURCHASES OF M/S NETAM INDUSTRIES TREATING THE SAME AS BOGUS OUT OF THE TOTAL SALES OF RS.2 22 60 725/ - . IT IS SUBM ITTED THAT IN A TRADING CONCERN AND PARTICULARLY IN A GOVERNMENT SUPPLY BUSINESS WHERE THE SALES IS UNDISPUTED ESTIMATION OF GROSS PROFIT 41 % IS HIGHLY UNJUSTIFIED UNWARRANTED AND ON VERY HIGHER SIDE. 4. THAT ON THE FACTS AND IN THE CIRCUMSTANCES OF TH E CASE THE L D. CIT (APPEALS) ERRED IN CONFIRMING THE INITIATION OF PENALTY PROCEEDINGS U/S 271(1)(C). IT(SS) NO. 3 80 /IND/2012 (A.Y : 200 6 - 0 7 ) : 1. THAT ON THE FACT AND IN THE CIRCUMSTANCES OF THE CASE THE LEARNED CIT (APPEALS) ERRED IN CONFIRMING THE PROCEEDINGS INITIATED U/S 153C AS CORRECT WITHOUT CONSIDERING THE FACT THAT THE BASIS ADOPTED AND THE REASONS RECORDED FOR ISSUING THE NOTICE U/S 153C ARE NOT SATISFACTORY. 2. THAT ON THE FACTS AND IN CIRCUMSTANCES OF THE CASE THE LEARNED CIT (APPEALS) E RRED IN CONFIRMING THE ADDITION OF RS.2 48 02 158/ - BEING RETURNED BUSINESS INCOME OF RS. 86 681/ - AND BOGUS PURCHASES OF NETAM INDUSTRIES RS. 2 47 15 477/ - IN THE HANDS OF SHRI ASHOK NANDA ON SUBSTANTIVE BASIS BY DELETING PROTECTIVE ADDITION IN THE HANDS OF THE APPELLANT. IT IS SUBMITTED THAT THE ASSESSEE IS REGULARLY ASSESSED TO TAX AND HAS FILED THE RETURN SHOWING THE INCOME FROM THE SAID BUSINESS IN WHICH ADDITION WAS MADE AND ALSO HIS OWN SALES TAX NUMBER AND DRUG LICENCE NUMBER AND SUPPLY THE MATERIA L OUT OF HIS OWN SOURCES WITHOUT ANY FINANCIAL SUPPORT FROM SHRI ASHOK NANDA. FURTHER THE ASSESSEE HAS STARTED PAYING INCOME TAX ON THE INCOME ASSESSED IN HIS HAND AND HAS PAID A SUBSTANTIAL AMOUNT OF TAX OUT OF HIS OWN SOURCES. 3. THAT ON THE FACTS AND IN CIRCUMSTANCES OF THE CASE THE LEARNED CIT (APPEALS) ERRED IN CONFIRMING THE ADDITION OF RS.2 47 15 477/ - BY DISALLOWING THE PURCHASES OF M/S NETAM INDUSTRIES TREATING THE SAME AS BOGUS OUT OF THE TOTAL SALES OF RS.6 50 79 734/ - . IT IS SUBMITTED THAT I N A TRADING CONCERN AND PARTICULARLY IN A GOVERNMENT SUPPLY BUSINESS WHERE THE SALES IS UNDISPUTED ESTIMATION OF GROSS PROFIT @ 38 % IS HIGHLY UNJUSTIFIED UNWARRANTED AND ON VERY HIGHER SIDE. 4. THAT ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE THE LD. CIT (APPEALS) ERRED IN CONFIRMING THE INITIATION OF PENALTY PROCEEDINGS U/S 271(L)(C). IT(SS) NO. 3 81 /IND/2012 (A.Y : 200 7 - 0 8 ) : 4 IT(SS) NO. 378 TO 381/IND/2012 (A.YS : 2004 - 05 TO 2007 - 08) 1. THAT ON THE FACT AND IN THE CIRCUMSTANCES OF THE CASE THE LEARNED CIT (APPEALS) ERRED IN CO NFIRMING THE PROCEEDINGS INITIATED U / S 153C AS CORRECT WITHOUT CONSIDERING THE FACT THAT THE BASIS ADOPTED AND THE REASONS RECORDED FOR ISSUING THE NOTICE U/S 153C ARE NOT SATISFACTORY. 2. THAT ON THE FACTS AND IN CIRCUMSTANCES OF THE CASE THE LEARNED CIT (APPEALS) E RRED IN CONFIRMING THE ADDITION OF RS.1 11 94 660/ - BEING RETURNED BUSINESS INCOME OF RS. 1 82 160/ - AND BOGUS PURCHASES OF NETAM INDUSTRIES OF RS. 1 10 12 500/ - IN THE HANDS OF SHRI ASHOK NANDA ON SUBSTANTIVE BASIS BY DELETING PROTECTIVE ADDITION IN THE H ANDS OF THE APPELLANT. IT IS SUBMITTED THAT THE ASSESSEE IS REGULARLY ASSESSED TO TAX AND HAS FILED THE RETURN SHOWING THE INCOME FROM THE SAID BUSINESS IN WHICH ADDITION WAS MADE AND ALSO HIS OWN SALES TAX NUMBER AND DRUG LICENCE NUMBER AND SUPPLY THE MA TERIAL OUT OF HIS OWN SOURCES WITHOUT ANY FINANCIAL SUPPORT FROM SHRI ASHOK NANDA. FURTHER THE ASSESSE HAS STARTED PAYING INCOME TAX ON THE INCOME ASSESSED IN HIS HAND AND HAS PAID A SUBSTANTIAL AMOUNT OF TAX OUT OF HIS OWN SOURCES. 3. THAT ON THE FACTS AND IN CIRCUMSTANCES OF THE CASE THE LEARNED CIT (APPEALS) ERRED IN CONFIRMING THE ADDITION OF RS. 1 10 12 500/ - BY DISALLOWING THE PURCHASES OF M/S NETAM INDUSTRIES TREATING THE SAME AS BOGUS OUT OF THE TOTAL SALES OF RS.1 47 94 607/ - . IT IS SUBMITTED T HAT IN A TRADING CONCERN AND PARTICULARLY IN A GOVERNMENT SUPPLY BUSINESS WHERE THE SALES IS UNDISPUTED ESTIMATION OF GROSS PROFIT 75 % IS HIGHLY UNJUSTIFIED UNWARRANTED AND ON VERY HIGHER SIDE. 4. THAT ON THE FACTS AND IN CIRCUMSTANCES OF THE CASE THE LEARNED CIT (APPEALS) ERRED IN ENHANCING THE INCOME BY RS. 9 50 000/ - BEING PURCHASES FROM M/ S.K. SYNDICATE THOUGH THE SAME WAS NOT ADDED IN THE ORIGINAL ASSESSMENT. FURTHER BEFORE MAKING ANY ENHANCEMENT THE LEARNED CIT (APPEALS) MUST OUGHT TO GIVE PRO PER OPPORTUNITY OF BEING HEARD. 5. THAT ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE THE LD. . CIT (APPEALS) ERRED IN CONFIRMING THE INITIATION OF PENALTY PROCEEDINGS U/S 271(1)(C) . 2. GROUND NO. 1 IN ALL THE ASSESSMENT YEARS IS COMMON. THE BRIEF FACTS OF THE CASE ARE THAT THE ASSESSEE HAS DERIVED INCOME FROM SALARY AS WELL AS FROM BUSINESS OF SUPPLY OF PHARMACEUTICAL ITEMS TO VARIOUS GOVERNMENT DEPARTMENTS. SEARCH AND SEIZURE ACTION W AS TAKEN AT THE RESIDENTIAL PREMISES OF SHRI ASHOK NANDA. DURING THE COURSE OF SEARCH CERTAIN DOCUMENTS BELONGING TO THE ASSESSEE WERE RECOVERED AT THE PREMISES OF SHRI ASHOK NANDA. ON THE BASIS OF 5 IT(SS) NO. 378 TO 381/IND/2012 (A.YS : 2004 - 05 TO 2007 - 08) THESE DOCUMENTS PROCEEDINGS U/S 153C WAS INITIATED IN TH E CASE OF THE ASSESSEE AND NOTICE U/S 153C R.W.S. 153A WAS ISSUED FOR THE A.YS 2004 - 05 TO 2007 - 08. THE ASSESSEE FILED RETURN U/S 153C ON 31.3.2009 SHOWING THE SAME INCOME AS WAS ORIGINALLY SHOWN. DETAILS OF THE INCOME ASSESSED AND THE ORIGINAL RETURN FIL ED ARE GIVEN AS UNDER : A.Y DATE OF ORIGINAL RETURN RETURN INCOME RETURN INCOME U/S. 153C ASSESSED INCOME 2004 - 05 07.12.2005 60098 60098 10922808 2005 - 06 07.12.2005 100060 100060 116966697 2006 - 07 31.03.2007 105800 192365 24907842 2007 - 08 - 182160 182160 12244160 2008 - 09 30.09.2008 NIL - 985030 3. THE ASSESSEE WENT IN APPEAL BEFORE CIT(A) WHO PARTLY ALLOWED THE APPEAL OF THE ASSESSEE. 4. WE HEARD THE RIVAL SUBMISSIONS AND CAREFULLY CONSIDERED THE SAME. WE NOTED THAT THE SIMILAR ISSUE ABOUT VALIDITY OF THE ISSUE OF NOTICE U/S 153C HAD COME UP BEFORE THIS TRIBUNAL IN IT(SS) NO. 376/IND/2012 IN THE CASE OF SHRI SATYENDRA SAHU WHEREIN THIS TR IBUNAL HAS HELD AS UNDER : WE HEARD THE RIVAL SUBMISSIONS AND CAREFULLY CONSIDERED THE SAME. WE DO NOT AGREE WITH THE CONTENTION OF THE LD. AR THAT SINCE DURING THE COURSE OF THE SEARCH AND SEIZURE U/S 132 AT THE RESIDENTIAL PREMISES OF SHRI ASHOK NANDA AT 71 - H SHAKTI NAGAR BHOPAL LOOSE PAPERS BEING LPS 2 PG. 17 & 18 WHICH ARE LETTER HEAD OF THE PROPRIETARY CONCERN M/S. NEPTUNE REMEDIES WERE FOUND LOOSE PAPER LPS - 2 PG. 22 ANNEXURE OF MEMORANDUM OF AGREEMENT BETWEEN NEPTUNE REMEDIES AND KARNATAKA AN TIBIOTICS AND PHARMACEUTICALS LTD. WAS ALSO FOUND THESE PAPERS BELONGED TO THE ASSESSEE. FROM THE READING OF SEC. 153C IT IS APPARENT THAT IF DURING THE COURSE OF SEARCH ANY MONEY BULLION JEWELLERY OR OTHER VALUABLE ARTICLE OR THING OR BOOKS OF ACCOUNT OR DOCUMENTS SEIZED OR REQUISITIONED BELONGS OR BELONG TO A PERSON OTHER THAN THE PERSON IN WHOSE CASE THE SEARCH HAD TAKEN PLACE THEN THE BOOKS OF ACCOUNT OR DOCUMENTS OR ASSETS SEIZED OR REQUISITIONED SHALL BE HANDED OVER TO THE ASSESSING 6 IT(SS) NO. 378 TO 381/IND/2012 (A.YS : 2004 - 05 TO 2007 - 08) OFFICER HAVIN G JURISDICTION OVER SUCH OTHER PERSON AND THAT ASSESSING OFFICER SHALL PROCEED AGAINST EACH SUCH OTHER PERSON AND ISSUE SUCH OTHER PERSON NOTICE AND ASSESS OR REASSESS INCOME OF SUCH OTHER PERSON IN ACCORDANCE WITH THE PROVISIONS OF SECTION 153A. IT IS NO T DENIED THAT THE LETTER PAD AS WELL AS ANNEXURE OF MEMORANDUM OF AGREEMENT BETWEEN NEPTUNE REMEDIES AND KARNATAKA ANTIBIOTIC AND PHARMACEUTICALS LTD. BELONGED TO THE ASSESSEE. ONCE THESE DOCUMENTS BELONGED TO THE ASSESSEE IN OUR OPINION THE AO HAS JURI SDICTION U/S 153C TO INITIATE PROCEEDINGS AGAINST THE PERSON TO WHOM THE DOCUMENT BELONGS. WE ACCORDINGLY DISMISS THE GROUND TAKEN BY THE ASSESSEE. RESPECTFULLY FOLLOWING OUR AFORESAID DECISION IN THE SAID CASE WE DISMISS GROUND NO. 1 IN ALL THE ASSE SSMENT YEARS. 5 . GROUND NO. 2 IN ALL THE YEARS ARE COMMON RELATING TO ASSESSING THE INCOME FROM BUSINESS CARRIED ON BY THE ASSESSEE SUBSTANTIVELY IN THE HANDS OF SHRI ASHOK NANDA AND PROTECTIVELY IN THE HANDS OF THE ASSESSEE. AFTER HEARING THE RIVAL SUBMISSIONS AND PERUSING THE MATERIAL ON RECORD WE NOTED THAT WE HAVE ALREADY DEALT WITH THIS ISSUE WHILE DISPOSING OFF THE APPEAL IN THE CASE OF SHRI ASHOK NANDA IN ITSS NO. 371 TO 375 383 & 385/IND/2012 FOR A.YS. 2004 - 05 TO 20 08 - 09 IN WHICH UNDER PARA 2.4 TO 2.4.16 THIS TRIBUNAL HAS HELD AS UNDER : 2.4 WE HEARD THE RIVAL SUBMISSIONS AND CAREFULLY CONSIDERED THE SAME ALONGWITH THE ORDER OF THE TAX AUTHORITIES BELOW. WE NOTED THAT IN THIS CASE THERE HAD BEEN A SEARCH IN THE CA SE OF THE ASSESSEE WHO IS THE DIRECTOR AND CHAIRMAN OF HIPL WHICH IS ENGAGED IN PHARMACEUTICAL BUSINESS. CERTAIN DOCUMENTS WERE FOUND AS REPRODUCED IN THE SUBMISSION MADE BY THE ASSESSEE FROM THE PREMISES OF THE COMPANY IN WHICH THE ASSESSEE IS THE MANAGI NG DIRECTOR. IT IS AN UNDISPUTED FACT THAT THESE DOCUMENTS WERE NOT FOUND FROM THE PREMISES OF THE ASSESSEE. WE PERUSED THESE DOCUMENTS AND WE NOTED THAT THESE DOCUMENTS RELATE TO THE VARIOUS CORRESPONDENCES AND THE ORDER AS WELL AS SUPPLY MADE BY THESE CONCERNS TO THE GOVERNMENT AGENCIES BY NETAM INDUSTRIES CHHATISGARH PHARMACEUTICALS AND NEPTUNE REMEDIES. SOME OF THESE DOCUMENTS CONSISTS OF SALES BILLS BANK STATEMENT BANK SLIPS EVEN THE DETAILS OF SUPPLY OF MEDICINES TO THE GOVERNMENT AGENCIES DDS TO THESE CONCERNS AND HIPL. IT ALSO CONSISTED OF COPY OF THE ORDER LETTER IN RESPECT 7 IT(SS) NO. 378 TO 381/IND/2012 (A.YS : 2004 - 05 TO 2007 - 08) OF THE PAYMENT AND EVEN THE BLANK LETTER PAD OF NEPTUNE REMEDIES. WE ALSO NOTED THAT THE AO HAS DULY ACCEPTED SALES OF THESE CONCERNS BUT MADE THE ADDITION IN RESPECT OF PURCHASES TREATING THE PURCHASES TO BE BOGUS AND TREATED THE INCOME EARNED AS BELONGING TO ASSESSEE AS IN HIS OPINION THESE CONCERNS ARE BENAMI CONCERNS OF THE ASSESSEE. 2.4.1 BEFORE DECIDING THE ISSUE WHETHER THESE CONCERNS ARE THE BENAMI CONCERNS O F THE ASSESSEE WE WOULD FIRST LIKE TO DEAL WITH WHETHER ANY ADDITION CAN BE MADE ON ACCOUNT OF BOGUS PURCHASES WHEN THE SALES HAS BEEN DULY ACCEPTED BY THE AO IN RESPECT OF THESE BENAMI CONCERNS. IT IS NOT DISPUTED THAT THESE CONCERNS HAVE MADE SALES TO THE GOVERNMENT UNDERTAKING NAMELY KARNATAKA ANTIBIOTIC PHARMACEUTICALS AND RAJASTHAN DRUG & PHARMACEUTICALS LTD. FOR SUPPLY OF DRUGS AND MEDICAL INSTRUMENTS. A PERSON CANNOT CARRY ON THE BUSINESS OF SUPPLYING THE DRUGS AND MEDICAL INSTRUMENTS UNTIL AND UN LESS IT IS DULY REGISTERED AND HAVINGA DRUG LICENCE. THE GOVERNMENT UNDERTAKING WILL ALSO NOT MAKE PURCHASES FROM ANY CONCERN UNTIL AND UNLESS IT IS DULY REGISTERED WITH THE SALES TAX AND CENTRAL SALES TAX AUTHORITIES. THE CONCERNS WHICH WERE HELD TO BE BENAMI OF THE ASSESSEE NO DOUBT WERE HAVING DRUG LICENCE SALES TAX NUMBER CST NUMBER FROM VARIOUS GOVERNMENT AGENCIES. THE PROPRIETOR OF CHHATISGARH PHARMACEUTICALS AS WELL AS NETAM INDUSTRIES IS SHOWN TO BE SHRI UMESH KAJVE WHILE THE PROPRIETOR OF NEPT UNE REMEDIES IS REGISTERED BY SHRI SATYENDRA SAHU. THE LICENCE AS WELL AS REGISTRATION IS GRANTED BY THE GOVERNMENT AUTHORITIES AFTER VERIFYING THE GENUINENESS OF THE FIRMS ABOUT ITS BUSINESS AS WELL AS ITS OWNERSHIP. IT IS NOT DENIED THAT SHRI UMESH KA JVE AND SHRI SATYENDRA SAHU HAVE DULY FILED INCOME TAX RETURN. THE ADDRESS SHOWN IN THE INCOME TAX RETURN DOES NOT BELONG TO THE PREMISES BELONGING TO ASSESSEE OR TO THE COMPANY HIPL. THERE HAD BEEN A SEARCH IN THE CASE OF THE ASSESSEE AND IN THE CASE OF HIPL AND DURING THE COURSE OF THE SEARCH AT THE PREMISES OF HIPL CERTAIN DOCUMENTS LETTER HEAD BELONGING TO THESE CONCERNS WERE FOUND ON THE BASIS OF WHICH THE AO TOOK THE VIEW THAT THESE CONCERNS ARE BENAMI CONCERNS OF THE ASSESSEE. IF THESE LETTER HEA DS AND PAPERS WERE FOUND IN OUR OPINION THE REVENUE WAS BOUND ATLEAST TO CONDUCT SURVEY AT THE PREMISES OF THESE CONCERNS SO THAT THE REALITY COULD BE ASCERTAINED. IT IS NOT DENIED THAT THESE CONCERNS HAVE SUPPLIED GOODS TO THE GOVERNMENT CONCERNS. EVE N THE LETTER HEADS OF KARNATAKA ANTIBIOTIC PHARMACEUTICALS WHICH IS ALSO A GOVERNMENT CONCERN WAS ALSO FOUND BUT THAT 8 IT(SS) NO. 378 TO 381/IND/2012 (A.YS : 2004 - 05 TO 2007 - 08) CONCERN WAS NOT TREATED AS BOGUS CONCERN OF THE ASSESSEE. IN OUR OPINION FOR HOLDING THE CONCERNS TO BE BENAMI OF THE ASSESSEE FOLLOWING PROPOSITION OF LAW HAS TO BE FULFILLED : I) THE BURDEN TO PROVE WHETHER THE CONCERNS OF SHRI UMESH KAJVE AND SHRI SATYENDRA SAHU ARE THE BENAMI CONCERNS OF THE ASSESSEE LIES WITH THE REVENUE AND NOT WITH THE ASSESSEE. (KRISHNANAND VS. STATE OF M.P AIR 1977 SC 797 (SUPRA) II) REVENUE SHOULD PROVE THAT THE ASSESSEE HAD MADE INVESTMENT IN THESE CONCERNS AND SOURCE OF THE CAPITAL IN THESE CONCERNS HAVE ARISEN FROM THE ASSESSEE. III) THE ASSESSEE HAS CONTROL OVER THE BUSINESS. IV) THE ASSESSEE HAS DERIVED BENEFIT FROM SUCH CONCERNS AND THE PROFIT FROM THESE CONCERNS HAS BEEN ENJOYED BY THE ASSESSEE. 2.4.2 ON APPRECIATING THE VARIOUS EVIDENCES WE NOTED THAT THE REVENUE HAS NOT PROVED THAT THE CONCERNS OWNED BY SHRI UMESH KAJVE AND SHRI SATYENDRA SAH U ARE THE BENAMI CONCERNS OF THE ASSESSEE. SHRI UMESH KAJVE AND SHRI SATYENDRA SAHU ARE BEING ASSESSED SEPARATELY UNDER THE INCOME TAX ACT. THE CONCERNS OWNED BY THEM ARE HAVING SEPARATE DRUG LICENCES SALES TAX REGISTRATION. IN THE REGISTRATION CERTIFI CATE ISSUED BY THE CENTRAL SALES TAX AUTHORITIES IN RESPECT OF CHHATISGARH PHARMACEUTICALS AND NETAM INDUSTRIES SHRI UMESH KAJVE HAS BEEN SHOWN TO BE THE PROPRIETOR. EVEN IN THE DRUG LICENCE WHICH WAS ISSUED SHRI UMESH KAJVE HAS BEEN SHOWN TO BE THE COM PETENT PERSON AS PROPRIETOR OF CHHATISGARH PHARMACEUTICALS AS WELL AS NETAM INDUSTRIES. IN THE TIN NUMBER CERTIFICATE ISSUED BY THE COMMISSIONER COMMERCIAL TAX MADHYA PRADESH IN THE NAME OF NETAM INDUSTRIES SHRI UMESH KAJVE HAS BEEN SHOWN TO BE THE PRO PRIETOR. SHRI UMESH KAJVE HAS FILED RETURN MUCH PRIOR TO THE SEARCH. THE RETURN FOR THE A.Y 2004 - 05 TO 2007 - 08 WERE FILED BY SHRI UMESH KAJVE IN WHICH INCOME IN RESPECT OF NETAM INDUSTRIES AND CHHATISGARH PHARMACEUTICALS WERE SHOWN BY HIM. SIMILARLY SH RI SATYENDRA SAHU HAS SHOWN INCOME FROM BUSINESS IN THE RETURN FILED FOR A.Y 2008 - 09 IN RESPECT OF NEPTUNE REMEDIES. SHRI SATYENDRA SAHU HAS BEEN SHOWN AS PROPRIETOR IN THE DRUG LICENCE SALES TAX REGISTRATION SHOPS AND ESTABLISHMENT CERTIFICATE. THE AS SESSEE HAS SUBMITTED DETAILS OF THE SALES AND THE PAYMENTS HAVE BEEN RECEIVED THROUGH CHEQUE AND SUPPLY HAS BEEN MADE TO ALL THE GOVERNMENT CONCERNS. THE ASSESSEE HAS ALSO 9 IT(SS) NO. 378 TO 381/IND/2012 (A.YS : 2004 - 05 TO 2007 - 08) ISSUED CHEQUES IN RESPECT OF VARIOUS PURCHASES DETAILS OF WHICH ARE GIVEN BEFORE U S IN THE ANNEXURE ATTACHED WITH SYNOPSIS. WE DO NOT FIND ANY INTERLACING INTERMINGLING OR TRANSFER OF FUNDS TO THESE CONCERNS BY THE ASSESSEE EXCEPT DOCUMENTS WHICH CONSISTS OF COPY OF BILL LETTER RECEIVED ISSUED ORDER TO NETAM INDUSTRIES ORDER ON BE HALF OF NETAM INDUSTRIES BANK STATEMENT. THESE DOCUMENTS NOWHERE PROVE THAT THEY HAVE BEEN WRITTEN BY THE ASSESSEE OR ON BEHALF OF THE ASSESSEE. MERELY THE DOCUMENTS WERE FOUND IN THE CONCERN IN WHICH THE ASSESSEE IS THE DIRECTOR DOES NOT MEAN THE ASSES SEE IS HAVING CONTROL OR EXERCISES CONTROL OVER THE BUSINESS BELONGING TO THESE CONCERNS. IT IS AN UNDISPUTED FACT THAT THESE DOCUMENTS WERE NOT FOUND FROM THE PREMISES OF THE ASSESSEE. THE PRESUMPTION AT THE MOST CAN BE AVAILABLE IN RESPECT OF THE COM PANY IN WHICH THE ASSESSEE IS DIRECTOR. THERE HAD BEEN SEARCH BUT NO DOCUMENTS RELATING TO THE REGISTRATION WITH THE VARIOUS AUTHORITIES OR LICENCES OBTAINED FROM VARIOUS AUTHORITIES IN RESPECT OF THESE CONCERNS WERE FOUND FROM THE CUSTODY OR POSSESSION O F THE ASSESSEE. THE ASSESSEE IS ALSO NOT AUTHORISED TO OPERATE THE BANK ACCOUNT OF THESE CONCERNS. EVEN ASSESSEE HAS NOT INTRODUCED THE BANK ACCOUNT. NO PAPER OR DOCUMENT HAS BEEN FOUND THAT THE ASSESSEE WAS HAVING CONTROL OVER THE BUSINESS. THERE HAD BEEN SEARCH BUT REVENUE COULD NOT BRING ANY EVIDENCE WHICH PROVED THAT THE ASSESSEE ENJOYED THE PROFIT OF THESE CONCERNS. ASSESSEE HAS DULY ACCEPTED THAT HE WAS ASSISTING IN THE BUSINESS OF THESE CONCERNS AS THESE CONCERNS WERE BUYING GOODS FROM THE ASSES SEE ALSO IN A FRIENDLY GESTURE AND THEREFORE WHILE REPLYING TO QUESTION NO. 24 HE CATEGORICALLY STATED THAT WHATEVER I RECEIVED FROM THESE CONCERNS I HAVE INCLUDED IT IN MY UNDECLARED INCOME. FINDING REGARDING BENAMI NATURE IS A FINDING OF FACT AND IT MUS T BE BASED ON THE RELEVANT MATERIAL ON RECORD. 2.4.3 WE HAVE GONE THROUGH THE DECISIONS AS RELIED BY THE LD. AR. WE NOTED THAT IN THE CASE OF PRAKASH NARAIN VS. CIT 134 ITR 364 THE HON'BLE ALLAHABAD HIGH COURT HAS HELD AS UNDER : THE BURDEN OF PROOF REGARDING BENAMI IS UPON THE ONE WHO ALLEGES BENAMI. NO ABSOLUTE FORMULA OR ACID TEST UNIFORMLY APPLICABLE IN ALL SITUATIONS LAID DOWN; YET IN WEIGHING THE PROBABILITIES AND FOR GATHERING THE RD INDICIA THE COURTS ARE USUALLY GUIDED BY THESE CIRCUMSTA NCES: (1) THE SOURCE WHICH THE PURCHASE MONEY CAME; (2) THE NATURE AND POSSESSION OF THE PR AFTER THE PURCHASE; (2) MOTIVE IF ANY FOR GIVING THE TRANSACTION A BENAMI COLOUR; (4) THE POSITION OF THE PARTIES AND THE RELATIONSHIP IF ANY BETWEEN CLAIMANT A ND 10 IT(SS) NO. 378 TO 381/IND/2012 (A.YS : 2004 - 05 TO 2007 - 08) THE ALLEGED BENAMIDAR; (5) THE CUSTODY OF THE TITLE DEEDS AFT SALE; AND (6) THE CONDUCT OF THE PARTIES CONCERNED IN DEALING WITH THE AFTER THE SALE. THE ABOVE INDICIA ARE NOT EXHAUSTIVE AND THEIR EFFICACY ACCORDING TO THE FACTS OF EACH CASE. NEVERTHELES S THE SOURCE WHENCE THE PURCHASE MONEY CAME IS BY FAR THE MOST IMPORTANT TEST FOR DETERMINING WHETHER THE SALE STANDING IN THE NAME OF ONE PERSON IS IN REALITY FOR THE BENEFIT OF ANOTHER. THE MERE REJECTION OF AN EXPLANATION WOULD NOT ENTITLE THE DEPARTM ENT TO CLAIM THE CONSIDERATION FOR THE PURCHASE OF THE PROPERTY IN THE NAME OF ANOTHER PROVIDED BY THE ASSESSEE. APART FROM THE RELATIONSHIP BETWEEN THE PARTIES MUST BE SOME EVIDENCE OR MATERIAL TO SUPPORT THE CASE OF THE BENANI NATURE OF THE TRANSACTION. A FINDING REGARDING BENAMI IS A FINDING OF FACT. WHEN A FINDING OF FACT IS BASED ON MATERIAL PARTLY RELEVANT AND PARTLY IRRELEVANT THEN A FINDING IS VITIATED IN LAW. THE ITO HELD THE FOLLOWING PURCHASES MADE IN THE YEARS 1965 - 66 TO 1968 - 6 9 SO BE BENA MI (1) A HOUSE IN THE JOINT NAMES OF THE ASSESSES WIFE AND MOTHER - IN - LAW; (II) FOUR SHOPS IN THE NAMES OF THE ASSESSEES WIFE HIS MOT HER - IN - LAW AND HIS FATHER - IN - LAW; (III) A HOUSE IN THE NAME OF HIS FATHER - IN - LAW; AND (IV) A HOUSE IN THE NAME OF THE ASSESSEES WIFE WHICH ALONE THE ASSESSEE ADMITTED WAS PURCHASED BY HIM IN HIS WIFES NAME. THE AAC HELD THAT THE TRANSACTIONS WERE NOT BENAMI BUT ON FURTHER APPEAL THE TRIBUNAL HELD THAT THE TRANSACTIONS WERE BENAMI FOR THE FOLLOWING REASONS: (I) B THE FATHER - IN - LAW OF THE ASSESSEE COI4D NOT BE BELIEVED WHEN HE SAID THAT HE HAD A SUM OF RS. 1 00 000 IN CASH WITH HIM SINCE HE HAD DISCONTINUED HIS BUSINESS IN 1946. (II) B HAD NO SOURCE OF INCOME AND AT THE RELEVANT PERIOD HE ALONG WITH HIS WIFE WAS LIVI NG WITH HIS SON - IN - LAW AND BOTH OF THEM WERE DEPENDENT ON THE ASSESSEE. (III) THE ASSESSEES WIFE WAS THE ONLY ISSUE OF HER PARENTS AND (IV) THE ASSESSEE WAS NOT HONEST AS HE L. HAD ADMITTEDLY PURCHASED A HOUSE PROPERTY BENAMI IN THE NAME OF HIS WIFE. O N A REFERENCE HELD THAT THE MERE FACT THAT THE STATEMENT OF B THAT HE HAD CASH AMOUNTING TO RS.1 00 000 WAS NOT ACCEPTED BY THE TRIBUNAL WOULD NOT LEAD TO THE INFERENCE THAT THE PROPERTIES IN QUESTION WERE PURCHASED BENAMI BY THE ASSESSEE HIMSELF. THE A SSESSEES MOTHER - IN - LAW HAD STATED THAT SHE HAD IN HER POSSESSION JEWELLERY WORTH RS.15 000 AND CASH OF RS.5 000. THE TRIBUNAL HAD NOT STATED THAT THIS STATEMENT WAS NOT ACCEPTABLE OR WAS BEING REJECTED AND UNLESS IT WERE REJECTED THE TRIBUNAL COULD NOT ENTER A FINDING THAT BOTH THE FATHER - IN - LAW AND MOTHER - IN - LAW OF THE ASSESSEE WERE DEPENDENT ON HIM. THE FACT THAT THE ASSESSEES WIFE WAS THE ONLY CHILD OF HER PARENTS COULD NOT LEAD TO THE CONCLUSION JLHAL THE PURCHASES OF THE PROPERTIES WERE FINANCED NO T BY HER PARENTS BUT BY THE ASSESSEE. IN INDIA BENAMI TRANSACTIONS WERE NOT CONSIDERED TO BE DISHONEST AND THE TRIBUNAL ERRED IN CONCLUDING THAT THE ASSESSEE WAS DISHONEST BECAUSE HE HAD ADMITTEDLY PURCHASED ONE HOUSE BENAMI IN THE NAME OF HIS WIFE. NO MOT IVE HAD BEEN SUGGESTED FOR THE BENAMI PURCHASES BY THE 11 IT(SS) NO. 378 TO 381/IND/2012 (A.YS : 2004 - 05 TO 2007 - 08) ASSESSEE. THERE WAS NO MATERIAL OR EVIDENCE ON RECORD IN SUPPORT OF THE FINDING OF BENAMI RECORDED BY SHE TRIBUNAL. THE PURCHASES OF THE FIRST THREE ITEMS OF PROPERTIES WERE NOT BENAMI PURCHASES FOR PU RPOSES OF INCOME - TAX. THEY COULD NOT BE INCLUDED IN THE TOTAL WEALTH OF THE ASSESSEE. THIS JUDGMENT ALSO IN OUR OPINION SUPPORTS THE CASE OF THE ASSESSEE BECAUSE IN THE CASE BEFORE US ALSO THE AO HAS MERELY REJECTED THE EXPLANATION OF THE ASSESSEE WITHOU T BRINGING ANY EVIDENCE ON RECORD TO SUPPORT THE CASE OF THE BENAMI NATURE OF THE TRANSACTION. A FINDING REGARDING THE BENAMI NATURE IS A FINDING OF FACT AND IT MUST BE BASED ON THE RELEVANT MATERIAL ON RECORD. NONE OF THE CIRCUMSTANCES AS LAID DOWN UNDER THIS JUDGMENT TO PROVE THE BENAMI NATURE HAS BEEN ESTABLISHED BY THE REVENUE WHILE TREATING THE CONCERNS BELONGING TO UMESH KAVJE AND SATYENDRA SAHU TO BE THE BENAMI CONCERNS OF THE ASSESSEE. 2.4.4 WE HAVE ALSO GONE THROUGH THE DECISION IN THE CASE OF GULZARILAL RAWAT VS. CIT 259 ITR 176. IN THIS CASE WE NOTED THAT THE INCOME - TAX OFFICER HELD THAT THE INCOME FROM A CERTAIN BUSINESS CONCERN BELONGED TO THE ASSESSEE IN THE ASSESSMENT YEARS 1974 - 75 AND 1975 - 76. THE ASSESSEE EXPLAINED THAT THE BUSINESS BE LONGED TO HIS SON S WHO INVESTED RS.8 000 AFTER DISCLOSURE OF THE SAME UNDER THE VOLUNTARY DISCLOSURE SCHEME IT WAS ALSO EXPLAINED THAT THOUGH S WAS A STUDENT AT THAT POINT OF TIME HE EMPLOYED HIS MATERNAL UNCLE WHO LOOKED AFTER THE BUSINESS OF THE CON CERN AN RS.700 PER MONTH HAD BEEN PAID TO HIM. THE INCOME - TAX OFFICER REJECTED EXPLANATION AND HIS DECISION WAS UPHELD BY THE TRIBUNAL. ON A REFERENCE: HELD THAT CONSIDERING THE FACTS THAT WHEN THE INVESTMENT IN THE FIRM HAD BEEN SHOWN AFTER DISCLOSURE OF STATEMENT UNDER THE VOLUNTARY DISCLOSURE SCHEME THAT THE DEALINGS OF THE CONCERN WERE NOT ONLY WITH THE ASSESSEE BUT IN THE OPEN MARKET WITH OTHER S IMILAR TYPE OF TRADERS THAT THE CONCERN HAD SALES TAX REGISTRATION AND WAS ALSO REGISTERED UNDER THE SHOPS AND COMMERCIAL ESTABLISHMENTS ACT THE BUSINESS INCOME FROM THE CONCERN COULD NOT TAXED IN THE HANDS OF THE ASSESSEE MERELY ON THE GROUND THAT THE P ROPRIETOR THE CONCERN WAS THE SON OF THE ASSESSEE. NORMALLY IN A REFERENCE THE COURT DOES NOT INTERFERE IN THE FINDING OF THE TRIBUNAL BUT THE FINDING OF THE TRIBUNAL AS TO WHETHER THE CONCERN WAS INDEPENDENT OR BENAMI PROPERTY OF THE ASSESS WAS PERVERSE . IN SUCH CIRCUMSTANCES THE COURT SHOULD INTERFERE. THE INCOME FROM BUSINESS OF THE CONCERN IN QUESTION WAS NOT ASSESSABLE IN THE HANDS THE ASSESSEE. 12 IT(SS) NO. 378 TO 381/IND/2012 (A.YS : 2004 - 05 TO 2007 - 08) THIS DECISION IN OUR OPINION IS SQUARELY APPLICABLE TO THE FACTS OF THE ASSESSEES CASE. MERELY CERTAI N PAPERS WHICH DOES NOT EMPOWER THE ASSESSEE TO CARRY ON THE BUSINESS WERE FOUND AT THE PREMISES OF THE CONCERN IN WHICH ASSESSEE IS A DIRECTOR CANNOT AUTHORISE THE REVENUE TO REGARD THESE CONCERNS TO BE THE BENAMI CONCERNS OF THE ASSESSEE. S/SHRI UMESH KA JVE & SATYENDRA SAHU ARE BEING ASSESSED SEPARATELY TO INCOME - TAX AND THE INCOME OF THESE CONCERNS ARE DULY SHOWN BY THEM. THE INVESTMENT MADE IN THE CONCERN WAS NOT PROVED TO HAVE BEEN MADE BY THE ASSESSEE. THEREFORE IN OUR OPINION THESE CONCERNS CANNOT BE REGARDED TO BE THE BENAMI CONCERN OF THE ASSESSEE MERELY ON THE GROUND THAT THE PURCHASER IN THE LETTER HAS CALLED FOR THE KIND ATTENTION OF THE ASSESSEE. 2.4.5 WE HAVE ALSO GONE THROUGH THE DECISION IN THE CASE OF DHIRAJLAL GIRDHARILAL VS. CIT 26 ITR 736 (SC). IN THIS CASE IT WAS HELD THAT THE QUESTION WHETHER A HINDU UNDIVIDED FAMILY IS DOING BUSINESS IN SHARES IS A QUESTION OF FACT; BUT IF THE COURT OF FACT WHOSE DECISION ON A QUESTION OF FACT IS FINAL ARRIVES AT THE DECISION BY CONSIDERING MAT ERIAL WHICH IS IRRELEVANT TO THE INQUIRY OR BY CONSIDERING MATERIAL WHICH IS PARTLY RELEVANT AND PARTLY IRRELEVANT OR BASES ITS DECISION PARTLY ON CONJECTURES SURMISES AND SUSPICIONS AND PARTLY ON EVIDENCE THEN IN SUCH A SITUATION CLEARLY AN ISSUE OF LAW ARISES. WHEN A COURT OF FACT ACTS ON MATERIAL PARTLY RELEVANT AND PARTLY IRRELEVANT IT IS IMPOSSIBLE TO SAY TO WHAT EXTENT THE MIND OF THE COURT WAS AFFECTED BY THE IRRELEVANT MATERIAL USED BY IT IN ARRIVING AT ITS FINDING. SUCH A FINDING IS VITIATE D BECAUSE OF THE USE OF INADMISSIBLE MATERIAL AND THEREBY AN ISSUE OF LAW ARISES. IN THIS CASE ALSO THE HON'BLE SUPREME COURT HAS CATEGORICALLY HELD THAT A FINDING OF FACT IS FINAL IF IT HAS BEEN ARRIVED AT BY CONSIDERING THE RELEVANT MATERIAL OR EVIDENC E. THE FINDING CANNOT BE BASED ON CONJECTURES SURMISES AND SUSPICION. THEREFORE THE REVENUE IN OUR OPINION CANNOT HOLD MERELY ON PRESUMPTIONS THAT M/S CHHATISGARH PHARMACEUTICALS M/S. NETAM INDUSTRIES AND M/S. NEPTUNE REMEDIES ARE BENAMI CONCERNS OF T HE ASSESSEE. 2.4.6 WE HAVE ALSO GONE THROUGH THE DECISION IN THE CASE OF DHAKESWARI COTTON MILLS LTD. VS. CIT 26 ITR 775 (SC). IN THIS CASE IT WAS HELD THAT - 13 IT(SS) NO. 378 TO 381/IND/2012 (A.YS : 2004 - 05 TO 2007 - 08) IN THIS CASE WE ARE OF THE OPINION THAT THE TRIBUNAL VIOLATED CERTAIN FUNDAMENTAL RULES OR JUSTICE IN REACHING ITS CONCLUSIONS. FIRSTLY IT DID NOT DISCLOSE TO THE ASSESSEE WHAT INFORMATION HAD BEEN SUPPLIED TO IT BY THE DEPARTMENTAL REPRESENTATIVE. NEXT IT DID NOT GIVE ANY OPPORTUNITY TO THE COMPANY TO REBUT THE MATERIAL FURNISHED TO IT BY HIM AND LASTLY IT DECLINED TO TAKE ALL THE MATERIAL THAT THE ASSESSEE WANTED TO PRODUCE IN SUPPORT OF ITS CASE. THE RESULT IS THAT THE ASSESSEE HAD NOT HAD A FAIR HEARING. THE ESTIMATE OF THE GROSS RATE OF PROFIT ON SALES BOTH BY THE INCOME - TAX OFFICER AN D THE TRIBUNAL SEEMS TO BE BASED ON SURMISES SUSPICIONS AND CONJECTURES. IT IS SOMEWHAT SURPRISING THAT THE TRIBUNAL TOOK FROM THE REPRESENTATIVE OF THE DEPARTMENT A STATEMENT OF GROSS PROFIT RATES OF OTHER COTTON MILLS WITHOUT SHOWING THAT STATEMENT TO THE ASSESSEE AND WITHOUT GIVING HIM AN OPPORTUNITY TO SHOW THAT THAT STATEMENT HAD NO RELEVANCY WHATSOEVER TO THE CASE OF THE MILL IN QUESTION. IT IS NOT KNOWN WHETHER THE MILLS WHICH HAD DISCLOSED THESE RATES WERE SITUATE IN BENGAL OR ELSEWHERE AND WHE THER THESE MILLS WERE SIMILARLY SITUATED AND CIRCUMSTANCED. NOT ONLY DID THE TRIBUNAL NOT SHOW THE INFORMATION GIVEN BY THE REPRESENTATIVE OF THE DEPARTMENT TO THE APPELLANT BUT IT REFUSED EVEN TO LOOK AT THE TRUNK LOAD OF BOOKS AND PAPERS WHICH MR. BANER JEE PRODUCED BEFORE THE ACCOUNTANT MEMBER IN HIS CHAMBER. NO HARM WOULD HAVE BEEN DONE IF AFTER NOTICE TO THE DEPARTMENT THE TRUNK HAD BEEN OPENED AND SOME TIME DEVOTED TO SEE WHAT IT CONTAINED. THE ASSESSMENT IN THIS CASE AND IN THE CONNECTED APPEAL WE A RE TOLD WAS ABOVE THE FIGURE OF RS.55 LAKHS AND IT WAS MEET AND PROPER WHEN DEALING WITH A MATTER OF THIS MAGNITUDE NOT TO EMPLOY UNNECESSARY HASTE AND SHOW IMPATIENCE PARTICULARLY WHEN IT WAS KNOWN TO THE DEPARTMENT THAT THE BOOKS OF THE ASSESSEE WERE I N THE CUSTODY OF THE SUB - DIVISIONAL OFFICER NARAYANGANJ WE THINK THAT BOTH THE INCOME - TAX OFFICER AND THE TRIBUNAL IN ESTIMATING THE GROSS PROFIT RATE ON SALES DID NOT ACT ON ANY MATERIAL BUT ACTED ON PURE GUESS AND SUSPICION. IT IS THUS A FIT CASE FOR E XERCISE OF OUR POWER UNDER ARTICLE 136. FROM THE PERUSAL OF THIS DECISION ALSO IT IS APPARENT THAT ESTIMATION OF THE GROSS PROFIT OR INCOME CANNOT BE BASED ON SURMISES CONJECTURES OR SUSPICION. THIS IS A WELL SETTLED LAW THAT THE ONUS IS ON THE REVENUE TO PROVE THAT M/S NETAM INDUSTRIES M/S. C HHATISGARH PHARMACEUTICALS AND M/S NEPTUNE REMEDIES ARE BENAMI CONCERNS OF THE ASSESSEE AND THE ASSESSEE HAS MADE THE INVESTMENTS AS WELL AS ENJOYED THE 14 IT(SS) NO. 378 TO 381/IND/2012 (A.YS : 2004 - 05 TO 2007 - 08) FRUITS THERE - FROM. THEREFORE THIS DECISION IS APPLICABLE ONLY TO THE EXTENT THAT THE ADDITION CANNOT B E BASED ON SURMISES CONJECTURES OR SUSPICION . 2.4.7 WE HAVE ALSO GONE THROUGH THE DECISION IN THE CASE OF OMAR SALAY MOHAMED SAIT VS. CIT 37 ITR 151 (SC). IN THIS CASE IT WAS HELD THAT - THE INCOME - TAX APPELLATE TRIBUNAL IS A FACT FINDING TRIBUNAL AND IF IT ARRIVES AT ITS OWN CONCLUSIONS OF FACT AFTER DUE CONSIDERATION OF THE EVIDENCE BEFORE IT THE COURT WILL NOT INTERFERE. IT IS NECESSARY HOWEVER THAT EVERY FACT FOR AND AGAINST THE ASS ESSES MUST HAVE BEEN CONSIDERED WITH DUE CARE AND THE TRIBUNAL MUST HAVE GIVEN ITS FINDING IN A MANNER WHICH WOULD CLEARLY INDICATE WHAT WERE THE QUESTIONS WHICH AROSE FOR DETERMINATION WHAT WAS THE EVIDENCE PRO AND CONTRA IN REGARD TO EACH ONE OF THEM AN D WHAT WERE THE FINDINGS REACHED ON THE EVIDENCE ON RECORD BEFORE IT. THE CONCLUSIONS REACHED BY THE TRIBUNAL SHOULD NOT BE COLOURED BY ANY IRRELEVANT CONSIDERATIONS OR MATTERS OF PREJUDICE AND IF THERE ARE ANY CIRCUMSTANCES WHICH REQUIRE TO BE EXPLAINED B Y THE ASSESSEE THE ASSESSES SHOULD BE GIVEN AN OPPORTUNITY OF DOING SO. ON NO ACCOUNT WHATEVER SHOULD THE TRIBUNAL BASE ITS FINDINGS ON SUSPICIONS CONJUNCTURES OR SURMISES; NOR SHOULD IT ACT ON NO EVIDENCE AT ALL OR ON IMPROPER REJECTION OF MATERIAL AND RELEVANT EVIDENCE OR PARTLY ON EVIDENCE AND PARTLY ON SUSPICIONS CONJUNCTURES OR SURMISES AND IF IT DOES ANYTHING OF THE SORT ITS FINDINGS EVEN THOUGH ON QUESTIONS OF FACT WILL BE LIABLE TO BE SET ASIDE BY THE COURT. [THE SUPREME COURT ACCORDINGLY ON THE FACTS SET ASIDE THE ORDER OF THE A PP ELLA T E TRIBUNAL IN THIS CASE AND REMANDED THE MATTER FOR RECONSIDERATION IN ACCORDANCE WITH LAW ON THE GROUND THAT THE APPELLATE TRIBUNAL HAD IMPROPERLY REJECTED EVIDENCE GATHERED BY THE INCOME - TAX OFFICER AFTER TH E PASSING OF THE ASSESSMENT ORDER BUT PENDING AN APPEAL FROM THE ASSESSMENT ORDER TO THE APPELLATE ASSISTANT COMMISSIONER.] FROM THE PERUSAL OF THE SAID CASE IT IS APPARENT THAT FINDING HAS TO BE BASED ON THE RELEVANT CONSIDERATION AND THE MATERIAL. NO ADDITION CAN BE SUSTAINED WHICH IS NOT BASED ON THE RELEVANT MATERIAL OR EVIDENCE. 2.4.8 WE HAVE ALSO GONE THROUGH THE DECISION IN THE CASE OF CIT VS. DAULAT RAM RAWATMULL 87 ITR 349 (SC). IN THIS CASE IT WAS HELD THAT APPARENT IS REAL. THE ONUS 15 IT(SS) NO. 378 TO 381/IND/2012 (A.YS : 2004 - 05 TO 2007 - 08) IS ON T HE PERSON WHO CLAIMS THAT THE APPARENT IS NOT REAL. M/S NETAM INDUSTRIES M/S. CHHATISGARH PHARMACEUTICALS ARE THE PROPRIETARY CONCERN OF SHRI UMESH KAJVE AND M/S. NEPTUNE REMEDIES IS THE PROPRIETORSHIP CONCERN OF SHRI SATYENDRA SAHU. EACH OF THEM ARE BEIN G ASSESSED SEPARATELY. COPY OF THE ASSESSMENT ORDER AND RETURN FILED WERE FILED BEFORE US IN THE PAPER BOOK. BOTH THE CONCERNS ARE REGISTERED UNDER THE SALES TAX ACT SALES TAX ASSESSMENT HAS ALSO BEEN DONE. IT IS NOT A CASE WHERE THE SALES IN THE CASE OF THESE CONCERNS HAS NOT BEEN ACCEPTED. THE PROPRIETARY CONCERN OF THESE PERSONS ARE HAVING SEPARATE BANK ACCOUNT AND MAINTAINING REGULAR BOOKS OF ACCOUNTS. IF THE REVENUE WANTS TO TREAT IT TO BE THE BENAMI CONCERN OF THE ASSESSEE IN OUR OPINION IN VIEW OF THE DECISION OF THE SUPREME COURT THE ONUS IS ON THE REVENUE TO PROVE THAT THESE CONCERNS ARE THE BENAMI CONCERNS OF THE ASSESSEE. 2.4.9 WE HAVE ALSO GONE THROUGH THE DECISION IN THE CASE OF SHEO NARAIN LAL (L.) 26 ITR 249 (ALL). IN THIS CASE THE QUE STION BEFORE THE COURT WAS WHETHER THERE WAS SUFFICIENT MATERIAL ON THE BASIS OF WHICH THE TRIBUNAL COULD COME TO THE CONCLUSION THAT THE WIFE WAS BENAMIDAR FOR THE HUSBAND. WHILE DECIDING THIS QUESTION THE ALLAHABAD HIGH COURT HAS HELD THAT THERE IS NO DO UBT THAT THE BURDEN OF PROOF WAS ON THE REVENUE TO PROVE THAT THE WIFE WAS A BENAMIDAR FOR HER HUSBAND. THE PRESUMPTION MUST BE THAT WHEN THE HOUSE STOOD IN THE NAME OF WIFE SHE WAS THE OWNER THEREOF AND IT WAS FOR THE PERSONS ALLEGING THAT SHE WAS MERELY A BENAMIDAR TO PROVE THE ALLEGATION EITHER BY DIRECT EVIDENCE OR BY SUBSTANTIAL EVIDENCE. THIS CASE IN OUR OPINION WILL SUPPORT THE ASSESSEE OF THE ASSESSEE BECAUSE IN OUR OPINION THE REVENUE HAS NOT BROUGHT ANY EVIDENCE ON RECORD THAT DILIP ENTERPRISE IS BENAMI CONCERN OF THE ASSESSEE. THE ASSESSEE IN HIS STATEMENT HAS NOT ACCEPTED ABOUT THE INVESTMENTS IN THE CONCERN BEING ARRANGED BY HIM. THE CONCERN IS NOT CONTROLLED AND MANAGED BY THE ASSESSEE. THE ASSESSEE HAS NOT DERIVED THE BENEFIT FROM THE CON CERN. 2.4.10 WE HAVE ALSO GONE THROUGH THE DECISION IN THE CASE OF KURELLA PULLAYYA VS. CIT 45 ITR 364 (AP). IN THIS CASE ALSO THE PROPOSITION OF LAW WAS THAT THE BURDEN OF ESTABLISHING THE BENAMI IS ON THE PARTY WHO ALLEGES SO. IN THIS CASE THE BUSIN ESS WAS CARRIED ON IN THE NAME OF THE WIFE. BENAMI TRANSACTION WAS ALLEGED. IT WAS FOUND THE ONUS WAS ON THE AO TO PROVE THAT THE BUSINESS WAS BENAMI IN THE NAME OF THE WIFE OF THE ASSESSEE. IN THE CASE BEFORE US THE REVENUE IN OUR OPINION 16 IT(SS) NO. 378 TO 381/IND/2012 (A.YS : 2004 - 05 TO 2007 - 08) HAS NOT DISCHAR GED THE ONUS THAT THE BUSINESS BELONG TO THE ASSESSEE. THIS CASE ALSO ON THE FACTS IN OUR OPINION SUPPORT THE CASE OF ASSESSEE. 2.4.11 WE HAVE ALSO GONE THROUGH THE DECISION IN THE CASE OF RAMASWAMI NAIDU (V.) VS. CIT 93 ITR 341 (MAD). IT WAS HELD THA T THE BURDEN OF PROOF WAS ON THE DEPARTMENT TO SHOW THAT THE REAL OWNER WAS THE ASSESSEE AND THE AMOUNT BELONGED TO THE ASSESSEE. SIMILAR THE PROPOSITION OF LAW WAS ALSO LAID DOWN BY THE ALLAHABAD HIGH COURT IN THE CASE OF 98 ITR 0280 CIT VS. DAYA CHAND JA IN AS RELIED ON BY THE LEARNED AR. WE HAVE ALSO GONE THROUGH THE DECISION IN THE CASE OF CIT VS. DAYA CHAND JAIN VAIDYA 98 ITR 280 (ALL). IN THIS CASE WE NOTED THAT THE ASSESSEE HIS WIFE TWO MAJOR AND TWO MINOR SONS WERE THE SHAREHOLDERS OF A PRIVATE C OMPANY. THE EXPLANATION GIVEN FOR THE SOURCE OF RS.40 500/ - PAID FOR THE ALLOTMENT OF ADDITIONAL SHARES TO THE WIFE AND HER TWO MAJOR SONS WAS NOT ACCEPTED BY THE ITO WHO TREATED THE AMOUNT AS INCOME FROM UNDISCLOSED SOURCE OF THE ASSESSEE AND ASSESSED TH E SAME IN THE HANDS OF THE ASSESSEE. TRIBUNAL REVERSED THE ORDER ON A REFERENCE HONBLE HIGH COURT HELD AGREEING WITH THE TRIBUNAL THAT THE REVENUE COULD SUCCEED ONLY IN CASE THEY HAD BROUGHT ON RECORD MATERIAL FROM WHICH IT COULD BE CONCLUDED THAT THE DE POSIT MADE BY THE WIFE AND TWO MAJOR SONS WERE IN FACT MADE BY THE ASSESSEE. THIS DECISION ALSO SUPPORTS THE CASE OF THE ASSESSEE. 2.4.12 WE HAVE ALSO GONE THROUGH THE DECISION IN THE CASE OF SUKHDAYAL RAMBILAS VS. CIT 136 ITR 414 (BOM) HELD THAT THE F IXED DEPOSIT WAS IN THE NAME OF THE PARTNER LOAN WAS TAKEN BY THE FIRM. THE PARTNER WAS NOT ABLE TO SATISFACTORILY EXPLAIN THE SOURCE OF DEPOSIT. IT WAS HELD THAT IT WILL NOT AUTOMATICALLY MEAN THAT THE FIXED DEPOSIT BELONG TO THE ASSESSEE FIRM. 2.4.13 IN VIEW OF THE AFORESAID CASE LAWS IN OUR OPINION IT IS SETTLED POSITION OF LAW THAT THE ONUS IS ON THE REVENUE TO PROVE THAT THE CONCERNS BELONGING TO SHRI UMESH KAJVE AND SHRI SATYENDRA SAHU ARE THE BENAMI CONCERNS OF THE ASSESSEE THAT THE ASSESSEE IS HAVING CONTROL AND POSSESSION OVER THESE CONCERNS HE IS ENJOYING THE FRUITS OF THESE CONCERNS AND WHATEVER INCOME IS GENERATED SAME HAS BEEN RECEIVED BY THE ASSESSEE. THE REVENUE WE NOTED TO PROVE THESE CONCERNS TO BE THE BENAMI CONCERNS OF THE ASS ESSEE MAINLY RELIED ON THE STATEMENT OF THE ASSESSEE RECORDED ON 17 IT(SS) NO. 378 TO 381/IND/2012 (A.YS : 2004 - 05 TO 2007 - 08) 18.9.2007 - QUESTION NOS. 24 &25 OF THE STATEMENT OF THE ASSESSEE. THESE QUESTIONS AND ANSWERS ARE REPRODUCED AS UNDER : . 24 FINANCIAL GOVT. SUPPLY CONCERN HIPL ? ? NETAM INDUSTRI ES GOVT. ORDER SUPPLY SUPPLY DRUG LICENSE NO. TIN CST NO. STATEMENT 2 0 0 6 DRUG LICENSE CST MPST . STATEMENT . 25 24 DECISION YEAR WISE HEAD WISE 5 30 DECLARATION CONCERNS BREAKUP WE NOTED THAT THE AO HAS INCORRECTLY TRANSLATED THE LAST SENTENCE OF ANSWER TO QUESTION NO. 24 STATING WHATEVER BUSINESS HAD BEEN CARRIED OUT IN THESE CONCERNS I HAVE DECLARED ALL THAT AS UNDISCLOSED INCOME IN THE STATEMENT GIVEN AT MY RESIDENCE. THE CORRECT TRANSLATION COULD BE WHATEVER I HAVE TAKEN FROM THESE CONCERNS THE SAME I HAVE INCLUDED IN THE UNDISCLOSED INCOME AS STATED IN THE STATEMENT GIVEN AT MY RESIDENCE. SIMILARLY IN RESPECT OF ANSWER TO QUESTION NO. 25 THE AO INTERPRETED THAT THE ASSESSEE HAS STATED THAT HE WILL GIVE T HE BREAK - UP OF THE THREE CONCERNS WHILE THE CORRECT MEANING OF THE ASSESSEE RELATE TO THAT HE WILL GIVE THE BREAK - UP YEAR - WISE HEAD - WISE AND DETAILS OF TOTAL AMOUNT OF UNDISCLOSED INCOME IN THE NEXT 10 DAYS. NO DOUBT THE STATEMENT RECORDED HAS EVIDENTIA RY VALUE BUT IT IS 18 IT(SS) NO. 378 TO 381/IND/2012 (A.YS : 2004 - 05 TO 2007 - 08) NOT CONCLUSIVE EVIDENCE UNTIL AND UNLESS IT IS CORROBORATED BY CERTAIN EVIDENCES. THERE HAD BEEN SEARCH IN THE CASE OF THE ASSESSEE. IF THE ASSESSEE HAD EARNED INCOME THE EVIDENCE WOULD HAVE BEEN FOUND. IF THE ASSESSEE HAD EARNED INC OME HE WOULD HAVE EITHER SPENT IT BY WAY OF CONSUMPTION OR WOULD HAVE CREATED INVESTMENT. NO UNDISCLOSED INVESTMENT TO THE EXTENT OF RS. 5.30 CRORE WAS FOUND FROM THE PREMISES OF THE ASSESSEE. EVEN NO EVIDENCE OR MATERIAL WAS FOUND WHICH MAY PROVE THAT THE ASSESSEE HAD INCURRED THE EXPENDITURE TO THAT EXTENT. IT IS A SETTLED LAW THAT NO ADDITION CAN BE MADE MERELY ON THE BASIS OF SURMISES ASSUMPTION OR PRESUMPTION. SUPPOSITION HOWEVER STRONG IT MAY BE IT CANNOT TAKE THE PLACE OF ACTUALITY. IT IS A KNOWN FACT THAT DURING THE COURSE OF SEARCH THE REVENUE FORCES THE ASSESSEE TO CONFESS UNDISCLOSED INCOME EVEN IF THE ASSESSEE HAD NOT EARNED SUCH INCOME OR ASSESSEE HAD NO SOURCE OF EARNING INCOME TO THAT EXTENT. THIS FACT HAS BEEN EVEN ADMITTED BY THE C BDT AND THEREFORE THEY HAVE ISSUED INSTRUCTIONS TO THEIR OFFICERS THAT NO ATTEMPT SHOULD BE MADE TO OBTAIN CONFESSION FORCEFULLY. RELEVANT INSTRUCTIONS OF THE BOARD ARE REPRODUCED AS UNDER : INSTRUCTION F. NO. 286/2/2003 - IT (INV. II) DATED MARCH 10 2003 'CONFESSION OF ADDITIONAL INCOME DURING THE COURSE OF SEARCH AND SEIZURE AND SURVEY OPERATION. INSTANCES HAVE COME TO THE NOTICE OF THE BOARD WHERE THE ASSESSEES HAVE CLAIMED THAT THEY HAVE BEEN FORCED TO CONFESS THE UNDISCLOSED INCOME DURING THE CO URSE OF THE SEARCH AND SEIZURE AND SURVEY OPERATIONS. SUCH CONFESSIONS IF NOT BASED ON CREDIBLE EVIDENCE ARE LATER RETRACTED BY THE CONCERNED ASSESSEES WHILE FILING RETURNS OF INCOME. IN THESE CIRCUMSTANCES ON CONFESSIONS DURING THE COURSE OF SEARCH AND SEIZURE AND SURVEY OPERATIONS DO NOT SERVE ANY USEFUL PURPOSE. IT IS THEREFORE ADVISED THAT THERE SHOULD BE FOCUS AND CONCENTRATION ON COLLECTION OF EVIDENCE OF INCOME WHICH LEADS TO INFORMATION ON WHAT HAS NOT BEEN DISCLOSED OR IS NOT LIKELY TO BE DISC LOSED BEFORE THE INCOME - TAX DEPARTMENT. SIMILARLY WHILE RECORDING STATEMENT DURING THE COURSE OF SEARCH AND SEIZURE AND SURVEY OPERATIONS NO ATTEMPT SHOULD BE MADE TO OBTAIN CONFESSION AS TO THE UNDISCLOSED INCOME. ANY ACTION ON THE CONTRARY SHALL BE VIEW ED ADVERSELY. 19 IT(SS) NO. 378 TO 381/IND/2012 (A.YS : 2004 - 05 TO 2007 - 08) FURTHER IN RESPECT OF PENDING ASSESSMENT PROCEEDINGS ALSO THE ASSESSING OFFICERS SHOULD RELY UPON THE EVIDENCES/MATERIALS GATHERED DURING THE COURSE OF SEARCH/SURVEY OPERATIONS OR THEREAFTER WHILE FRAMING THE RELEVANT ASSESSMENT ORDERS.' 2.4.14 IN VIEW OF THESE INSTRUCTIONS IT IS APPARENT THAT IT IS A PREVALENT PRACTICE THAT EVEN IF THERE ARE NO CORROBORATIVE EVIDENCE THE SEARCH TEAM PRESSURIZES THE ASSESSEE TO MAKE DECLARATION IN THE MANNER IN WHICH THEY LIKE AND THEREFORE IN THE ABSENC E OF EVIDENCE THE ADDITIONS MADE ON THE BASIS OF SUCH DECLARATION DOES NOT STAND IN THE EYES OF LAW AS THERE REMAINS DIFFERENCE IN THE REAL INCOME AND THE INCOME DECLARED IN SUCH FORCEFUL SURRENDER TO THE EXTENT AS THE DIFFERENCE LIES BETWEEN CHALK AND CHE ESE. IT IS A FACT THAT INCOME TAX IS LEVIED ON THE REAL INCOME. THIS IS APPARENT FROM THE PROVISION OF SEC. 4 OF THE INCOME TAX ACT. FROM THE READING OF THIS SECTION IT IS APPARENT THAT IT CONTAINS FIVE COMPONENTS FOR CHARGING AN INCOME. THE FIRST COM PONENT IS THE TAXABLE EVENT WHICH ATTRACTS THE LEVY. THE SECOND IS THE PERSON ON WHOM LEVY IS IMPOSED AND WHO IS OBLIGED TO PAY THE TAX. THE THIRD IS THE ASSESSMENT YEAR IN WHICH CHARGE OF INCOME TAX IS LEVIED. THE FOURTH IS THE TOTAL INCOME OF THE PREV IOUS YEAR AND THE FIFTH IS THE RATE/RATES AT TAX IS TO BE IMPOSED. THE RATES ARE PRESCRIBED IN THE ANNUAL FINANCE ACT. THEREFORE IN OUR VIEW UNTIL AND UNLESS IT IS PROVED BY THE REVENUE THAT THESE CONCERNS ARE THE BENAMI CONCERNS AND WHATEVER INCOME IS EA RNED IN THESE CONCERNS ARE IN FACT RECEIVED OR ACCRUED TO THE ASSESSEE THIS COMPONENT WILL NOT HAVE ANY VALUE IN DETERMINING THE TOTAL INCOME ON THE BASIS OF THE SEIZED DOCUMENT. THE SEIZED DOCUMENT DOES NOT PROVE THAT THE ASSESSEE HAS MADE THE INVESTMENT THE ASSESSEE IS MANAGING OR HAVING THE CONTROL OVER THESE FIRMS THE INCOME EARNED THROUGH THESE FIRMS ARE PASSED OVER TO THE ASSESSEE. OUR AFORESAID VIEW IS SUPPORTED BY THE DECISIONOF THE HONBLE SUPREME COURT IN GOVIND SARAN GANGA SARAN VS. CST 155 I TR 144 (SC) WHEREIN IT WAS HELD FOR THE PURPOSE OF CHARGING TO TAX THERE SHOULD BE FOUR COMPONENTS TO BE SATISFIED. FOR THE SAKE OF CONVENIENCE WE REPRODUCE THE RELEVANT HEAD NOTE FROM THE DECISION : THE COMPONENT WHICH ENTER INTO THE CONCEPT OF A TAX A RE WELL KNOWN. THE FIRST IS THE CHARACTER OF THE IMPOSITION KNOWN BY ITS NATURE WHICH PRESCRIBES THE TAXABLE EVENT ATTRACTING THE LEVY THE SECOND IS A CLEAR INDICATION OF THE PERSON ON WHOM THE LEVY IS IMPOSED AND WHO IS OBLIGED TO PAY THE TAX THE 20 IT(SS) NO. 378 TO 381/IND/2012 (A.YS : 2004 - 05 TO 2007 - 08) THIRD IS THE RATE AT WHICH THE TAX IS IMPOSED AND THE FOURTH IS THE MEASURE OR VALUE TO WHICH THE RATE WILL BE APPLIED FOR COMPUTING THE TAX LIABILITY. IF THOSE COMPONENTS ARE NOT CLEARLY AND DEFINITELY ASCERTAINABLE IT IS DIFFICULT TO SAY THAT THE LEVY EXIST S IN POINT OF LAW. ANY UNCERTAINTY OR VAGUENESS IN THE LEGISLATION SCHEME DEFINING ANY OF THOSE COMPONENTS OF THE LEVY WILL BE FATAL TO ITS VALIDITY. MERELY BECAUSE A DOCUMENT IS RECOVERED FROM A PERSON DOES NOT AUTOMATICALLY LEAD TO THE INFERENCE THAT IT BELONGS TO HIM. IT IS ONLY FOR CERTAIN PURPOSES THAT THE PRESUMPTION U/S 132(4A) HAS BEEN ENACTED AND NOT FOR ALL PURPOSES INCLUDING THE ASSESSMENT. FURTHER THIS PRESUMPTION IS NOT CONCLUSIVE. IT IS REBUTTABLE. WHAT AMOUNT OF EVIDENCE ONE REQUIRES TO REBUT THE EVIDENCE DEPENDS UPON FACTS OF EACH CASE. THERE IS NO RIGID RULE IN THIS BEHALF. SOMETIMES MERE STATEMENT OF THE ASSESSEE MAY BE ENOUGH. HONBLE RAJASTHAN HIGH COURT IN THE CASE OF ADDL. CIT VS. THAHRAYAMAL BALCHAND 124 ITR 111 (RAJ) OBSERV ED AS UNDER : THE EVIDENCE WHICH SATISFIES THE TRIBUNAL WAS THE FACTS AND CIRCUMSTANCES OF THE CASE AS POINTED OUT ABOVE WHAT QUANTUM OF EVIDENCE WOULD REBUT A LEGAL PRESUMPTION IN A GIVEN SET OF FACTS DOES NOT ADMIT OF ANY RIGID RULE. THE EVIDENCE MAY BE DIRECT OR CIRCUMSTANTIAL OR BOTH AND A MERE STATEMENT OF THE ASSESSEE MAY BE ENOUGH IN SOME CASES. IT DOES NOT RAISE A QUESTION OF LAW. ON THE APPRECIATION OF THE DOCUMENT WHICH WERE FOUND RELATING TO THESE CONCERNS WE ARE OF THE FIRM VIEW THAT IT CANNOT BE SAID THAT THESE ARE THE BENAMI CONCERNS OF THE ASSESSEE AS THESE DOCUMENTS DO NOT SATISFY THE BASIC CONDITIONS ARE ENUMERATED ABOVE FOR ESTABLISHING A CONCERN TO BE THE BENAMI CONCERN OF THE ASSESSEE. UNTIL AND UNLESS AN INCOME IS EARNED BY THE ASSESSEE IT CANNOT BE TAXED. THE ONUS IS ON THE REVENUE TO PROVE THAT THE ASSESSEE HAS EARNED THE INCOME. OUR AFORESAID VIEW IS SUPPORTED BY THE DECISION OF THE HON'BLE SUPREME COURT IN THE CASE OF PARIMISETTI SEETHARAMAMMA VS. CIT 57 ITR 532. EVEN THI S FACT IS ALSO PROVED FROM THE ANSWER TO QUESTION NO. 12 WHEN THE AO ASKED THE ASSESSEE WHETHER HE HAS DISCLOSED INCOME IN HIS RETURN IN RESPECT OF TRANSACTIONS WITH THESE COMPANIES. THE ASSESSEE IN REPLY THERETO STATED NO AND THEREFORE HE HAS DECLARED A SUM OF RS. 5.30 CRORE KEEPING IN VIEW ALL THE IRREGULARITIES INCLUDING THE TRANSACTION WITH THESE COMPANIES. THE ASSESSEE DID NOT ACCEPT THAT THESE CONCERNS BELONG TO HIM. WE ACCORDINGLY HOLD THAT M/S. CHHATISGARH PHARMACEUTICALS AND NEPTUNE INDUSTRIES BELONG TO SHRI UMESH 21 IT(SS) NO. 378 TO 381/IND/2012 (A.YS : 2004 - 05 TO 2007 - 08) KAJVE AND SIMILARLY NEPTUNE REMEDIES BELONGS TO SHRI SATYENDRA SAHU AND DOES NOT BELONG TO THE ASSESSEE AND INCOME EARNED BY THESE COMPANIES CANNOT BE ADDED IN THE INCOME OF THE ASSESSEE. 2.4.15 WE ALSO NOTED THAT IN RESPECT OF NE TAM INDUSTRIES THE AO HAS ACCEPTED THE SALES IN EACH OF THE ASSESSMENT YEARS BUT TREATED THE PURCHASES MADE BY THE ASSESSEE BOGUS. THE SALES WERE DULY ACCEPTED. ALL THE SALES ARE MADE BY THESE CONCERNS TO THE CONSIGNEE AND THE PAYMENT AGAINST THE SUPPLY WERE MADE BY THE GOVERNMENT OR ITS CONCERNED DEPARTMENT. THESE PAYMENT RECEIPTS ARE DULY SHOWN IN THE BANK ACCOUNT OF THESE CONCERNS. NO SALE IS BEING MADE TO ANY THIRD PARTY. A PERSON CANNOT MAKE SALES UNTIL AND UNLESS PURCHASES ARE MADE. IT IS NOT T HE CASE OF THE REVENUE THAT THESE CONCERNS WHICH ARE HELD BY THE REVENUE TO BE THE BOGUS CONCERNS OF THE ASSESSEE WERE ENGAGED IN MANUFACTURING OF THE MEDICINES. THESE CONCERNS WERE SIMPLY ENGAGED IN TRADING OF THE DRUG. THE ASSESSEE COULD NOT HAVE MADE SALES WITHOUT MAKING THE PURCHASES. UNDER THE INCOME TAX ACT IT IS ONLY THE PROFIT WHICH CAN BE TREATED TO BE THE INCOME OF THE ASSESSEE. THE DISALLOWANCE OF PURCHASES IN OUR OPINION WILL TANTAMOUNT AS IF SALES HAVE BEEN MADE WITHOUT PURCHASES BEING MA DE. IT MAY BE A CASE THAT THE ASSESSEE MAY NOT BE ABLE TO PROVE THE PURCHASES ON THE BASIS OF EVIDENCE BUT IT CANNOT BE SAID THAT SALES HAVE BEEN MADE WITHOUT MAKING PURCHASES. THE DISALLOWANCE OF THE PURCHASES INDIRECTLY PROVES THAT THE CONCERNS WERE NO T CARRYING ON BUSINESS AND HAVE NOT MADE ANY SALES. ONCE THE AO HAS ACCEPTED THE SALES IN OUR OPINION THE AO IS BOUND TO ALLOW THE PURCHASES. AT THE MOST ADDITION CAN BE MADE ONLY IN RESPECT OF THE PROFIT EMBEDDED IN THE PURCHASES. THE WHOLE OF THE P URCHASES CANNOT BE DISALLOWED. OUR AFORESAID VIEW IS DULY COVERED BY THE DECISION OF THE HON'BLE GUJARAT HIGH COURT IN THE CASE OF CIT VS. BHOLANATH POLY FAB PVT. LTD. 355 ITR 290 WHEREIN THE HON'BLE GUJARAT HIGH COURT HAS HELD AS UNDER : HELD DISMISS ING THE APPEAL THAT WHETHER THE PURCHASES THEMSELVES WERE BOGUS OR WHETHER THE PARTIES FROM WHOM SUCH PURCHASES WERE ALLEGEDLY MADE WERE BOGUS WAS ESSENTIALLY A QUESTION OF FACT. THE TRIBUNAL HAVING EXAMINED THE EVIDENCE ON RECORD CAME TO THE CONCLUSION THAT THE ASSESSEE DID PURCHASE THE CLOTH AND SELL THE FINISHED FABRICS. THEREFORE AS A NATURAL COROLLARY NOT THE ENTIRE AMOUNT COVERED UNDER SUCH PURCHASES BUT THE PROFIT ELEMENT EMBEDDED THEREIN WOULD BE SUBJECT TO TAX. 22 IT(SS) NO. 378 TO 381/IND/2012 (A.YS : 2004 - 05 TO 2007 - 08) 2.4.16 NO CONTRARY DECISIONS WERE BROUGHT TO OUR KNOWLEDGE. WE THEREFORE DELETE THE ADDITION IN RESPECT OF THE PURCHASES DETAILS OF WHICH HAVE BEEN GIVEN BY THE ASSESSEE IN THE PAPER BOOK. IF THE AO SO CHOSES HE CAN MAKE ADDITION IN RESPECT OF PROFIT ON THESE PURCHASES BUT SINCE WE HAVE ALREADY HELD THAT THE INCOME OF THESE CONCERNS CANNOT BE ADDED IN THE HANDS OF THE ASSESSEE AS THESE ARE NOT BOGUS CONCERNS OF THE ASSESSEE THEREFORE THIS ISSUE RELATING TO ASSESSMENT OF GROSS PROFIT ON THE PURCHASES DOES NOT ARISE IN THE CASE O F THE ASSESSEE. SINCE THE ASSESSEE HAS ACCEPTED THAT HE WAS ASSISTING THESE CONCERNS IN PROCURING THE ORDER AND THE ASSESSEE HAS GOT INCOME ON THIS ACCOUNT FROM THESE CONCERNS WE THEREFORE KEEPING IN VIEW THE SURROUNDING FACTS AND TRADE PRACTISE DIRECT T HE AO TO COMPUTE THE COMMISSION @ 2% ON THE SUPPLIES/SALES MADE IN EACH YEAR TO THE GOVERNMENT CONCERNS. SINCE THE ASSESSEE HAS SURRENDERED A SUM OF RS.1 21 80 000/ - IN RESPECT OF THE CASH PAID UNDER AN AGREEMENT FOR THE PURCHASE OF LAND THE SOURCE OF THI S IN OUR OPINION CAN BE THE COMMISSION INCOME SO EARNED BY THE ASSESSEE IN RESPECT OF THE SERVICE RENDERED TO THESE COMPANIES. IN CASE THE AO FINDS THAT THE COMMISSION SO EARNED DOES NOT EXCEED RS.1 21 80 000/ - NO ADDITION IN THIS REGARD CAN BE SUSTAINED AS THE ASSESSEE WILL GET SET OFF OF COMMISSION INCOME AGAINST THE SURRENDER SO MADE. IN CASE THE AO FINDS THAT THE COMMISSION SO ESTIMATED IN RESPECT OF THESE THREE CONCERNS EXCEEDS IN ALL THESE YEARS RS.1 21 80 000/ - THE ADDITION TO THAT EXTENT BE SUSTA INED. RESPECTFULLY FOLLOWING OUR AFORESAID ORDER WE DIRECT THE AO TO ASSESS THE INCOME SUBSTANTIVELY IN THE HANDS OF THE ASSESSEE. THUS GROUND NO. 2 IN ALL THE APPEALS STAND ALLOWED. 6 . GROUND NOS. 3 & 4 IN A.Y 2004 - 05 GROUND NO. 3 IN A.YS 2005 - 06 A ND 2006 - 07 AND GROUND NOS. 3 & 4 IN A.Y 2007 - 08 RELATE TO THE DISALLOWANCE ON ACCOUNT OF BOGUS PURCHASES. IN ALL THE YEARS THE GROUND TAKEN BY THE ASSESSEE IS COMMON EXCEPT FOR CHANGE IN THE FIGURES. BOTH THE PARTIES AGREED THAT THE GROUNDS ARE COMMON IN EACH OF THE A.YS AND RELATE TO DISALLOWANCE OF PURCHASES BY THE AO AND WHATEVER VIEW THIS TRIBUNAL MAY TAKE IN THE CASE OF 23 IT(SS) NO. 378 TO 381/IND/2012 (A.YS : 2004 - 05 TO 2007 - 08) THE ASSESSEE IN A.Y 2004 - 05 THE SAME MAY BE TAKEN IN THE OTHER ASSESSMENT YEARS. 7 . THE BRIEF FACTS FOR THESE G ROUND S ARE THAT THE AO DISALLOW ED PURCHASES MADE BY NETAM INDUSTRIES AND CHHATISGARH PHARMACEUTICALS TREATING THE SAME AS BOGUS PURCHASES IN THE REGULAR PROFIT OF THESE TWO CONCERNS DETAILED AS UNDER : A.Y REGULAR PROFIT OF THESE TWO CONCERNS BOGUS PURCHASE IN CHHATISGARH PHARMA BOGUS PURCHASE IN NETAM INDUSTRIES TOTAL 2004 - 05 41600 10000000 821111 10862711 2005 - 06 85604 0 11601194 11686798 2006 - 07 86681 0 24715477 24802158 2007 - 08 182163 0 12062000 12244163 TOTAL 10000000 49199782 59199782 THE PURCHASES MADE BY THESE CONCERNS WERE TREATED AS BOGUS PURCHASES AS THE ASSESSEE COULD NOT PRODUCE THE PURCHASE BILLS. AS PER THE AO EVEN THE ADDRESSES OF THE PARTIES FROM WHOM PURCHASES WERE MADE WERE NOT GIVEN AND THEREFORE MADE THE FOLLOWING DISALLOWANCE ON ACCOUNT OF BOGUS PURCHASES IN EACH OF THE ASSESSMENT YEARS A.Y PROFIT AS PER RETURN BOGUS PURCHASE TOTAL AMOUNT TO BE SUBSTANTIVELY ADDED/TAXED/CONFIRMED IN THE HANDS OF SHRI ASHOK NANDA 2004 - 05 41600 10821111 10862711 2005 - 06 - 9129437 9129437 2006 - 07 86681 24715477 24802158 2007 - 08 182163 11012500 11194663 2008 - 09 - - 258988 24 IT(SS) NO. 378 TO 381/IND/2012 (A.YS : 2004 - 05 TO 2007 - 08) IN RESPECT OF S AID CONCERNS THE AO NOTED FROM THE ACCOUNT OPENING FORM S WITH THE BANK THAT THE BUSINESS OF THE SAID CONCERNS IS MENTIONED AS CONSULTANCY. DURING THE APPELLATE PROCEEDINGS THE ASSESSEE CONTENDED THAT ALL THE SALES WERE MADE TO GOVERNMENT DEPARTMENT AND THE SALES HAVE DULY BEEN ACCEPTED BY THE AO. THERE IS NO DISPUTE ABOUT THE SALES. COPY OF THE PURCHASE BILLS SUMMARY OF PARTYWISE AMOUNT AND COPY OF ACCOUNT OF ALL THE PARTIES WERE FIL ED ALONG WITH THE SUBMISSION AND IT WAS SUBMITTED THAT MOSTLY IN ALL THE CASES THE PAYMENTS ARE MADE BY CHEQUE AND ONLY IN VERY FEW CASES THE PAYMENTS WERE MADE IN CASH. IT WAS ALSO STATED THAT THE PURCHASE BILLS WERE ALSO FOUND DURING THE COURSE OF SEARC H AND SEIZED BY THE DEPARTMENT AS LPS 12 WHICH IS EVIDENT FROM THE ASSESSMENT ORDER PG. 4 WHICH IS PURCHASE FILE 2003 - 04 M/S. CHHATISGARH PHARMACEUTICALS. THE PURCHASE BILLS WERE WITH THE DEPARTMENT AND THEREFORE THERE WAS NO NEED OF SUBMITTING THE PUR CHASE BILLS AGAIN. IT WAS SUBMITTED THAT IF THE PURCHASES ARE DISALLOWED THE PROFIT WILL COME TO 89% WHICH IS TOTALLY UNREALISTIC WHILE THE NET PROFIT ON THE SUPPLY MADE TO THE GOVERNMENT CANNOT BE MORE THAN 2.5 - 5%. RELIANCE WAS ALSO PLACED ON THE FOLLO WING DECISIONS : I) DCIT VS. NARENDRA KUMAR LUNAWAT (2004) 90 TTJ JP 467 II) CIT VS. SHRI SINDHUJA FOODS PVT. LTD. (2008) 16 DTR 278 III) CIT VS. LEADER VALVES PVT. LTD. (2006) 206 CTR 463 (P&H) CIT(A) CONFIRMED THE DISALLOWANCE BUT TREATED THE GROUND TO BE ALLOWED AS SUBSTANTIVELY IT HAS BEEN TAXED IN THE HANDS OF SHRI ASHOK NANDA IN EACH OF THE YEAR. THE LD. DR ON THE OTHER HAND RELIED ON THE ORDER OF CIT(A). 8 . AFTER HEARING THE RIVAL SUBMISSIONS AND PERUSING THE MATERIAL ON RECORD WE NOTED THAT WE HAVE ALREADY DEALT WITH THIS ISSUE WHILE DISPOSING OFF THE APPEAL IN THE CASE OF SHRI ASHOK NANDA IN ITSS NO. 371 TO 375 383 & 25 IT(SS) NO. 378 TO 381/IND/2012 (A.YS : 2004 - 05 TO 2007 - 08) 385/IND/2012 FOR A.YS. 2004 - 05 TO 2008 - 09 IN WHICH UNDER PARA 2.4 .15 TO 2.4.16 THIS TRIBUNAL HAS HELD AS UNDER : 2.4.15 WE ALSO NOTED TH AT IN RESPECT OF NETAM INDUSTRIES THE AO HAS ACCEPTED THE SALES IN EACH OF THE ASSESSMENT YEARS BUT TREATED THE PURCHASES MADE BY THE ASSESSEE BOGUS. THE SALES WERE DULY ACCEPTED. ALL THE SALES ARE MADE BY THESE CONCERNS TO THE CONSIGNEE AND THE PAYMENT AGAINST THE SUPPLY WERE MADE BY THE GOVERNMENT OR ITS CONCERNED DEPARTMENT. THESE PAYMENT RECEIPTS ARE DULY SHOWN IN THE BANK ACCOUNT OF THESE CONCERNS. NO SALE IS BEING MADE TO ANY THIRD PARTY. A PERSON CANNOT MAKE SALES UNTIL AND UNLESS PURCHASES ARE MADE. IT IS NOT THE CASE OF THE REVENUE THAT THESE CONCERNS WHICH ARE HELD BY THE REVENUE TO BE THE BOGUS CONCERNS OF THE ASSESSEE WERE ENGAGED IN MANUFACTURING OF THE MEDICINES. THESE CONCERNS WERE SIMPLY ENGAGED IN TRADING OF THE DRUG. THE ASSESSEE C OULD NOT HAVE MADE SALES WITHOUT MAKING THE PURCHASES. UNDER THE INCOME TAX ACT IT IS ONLY THE PROFIT WHICH CAN BE TREATED TO BE THE INCOME OF THE ASSESSEE. THE DISALLOWANCE OF PURCHASES IN OUR OPINION WILL TANTAMOUNT AS IF SALES HAVE BEEN MADE WITHOUT PURCHASES BEING MADE. IT MAY BE A CASE THAT THE ASSESSEE MAY NOT BE ABLE TO PROVE THE PURCHASES ON THE BASIS OF EVIDENCE BUT IT CANNOT BE SAID THAT SALES HAVE BEEN MADE WITHOUT MAKING PURCHASES. THE DISALLOWANCE OF THE PURCHASES INDIRECTLY PROVES THAT T HE CONCERNS WERE NOT CARRYING ON BUSINESS AND HAVE NOT MADE ANY SALES. ONCE THE AO HAS ACCEPTED THE SALES IN OUR OPINION THE AO IS BOUND TO ALLOW THE PURCHASES. AT THE MOST ADDITION CAN BE MADE ONLY IN RESPECT OF THE PROFIT EMBEDDED IN THE PURCHASES. THE WHOLE OF THE PURCHASES CANNOT BE DISALLOWED. OUR AFORESAID VIEW IS DULY COVERED BY THE DECISION OF THE HON'BLE GUJARAT HIGH COURT IN THE CASE OF CIT VS. BHOLANATH POLY FAB PVT. LTD. 355 ITR 290 WHEREIN THE HON'BLE GUJARAT HIGH COURT HAS HELD AS UNDE R : HELD DISMISSING THE APPEAL THAT WHETHER THE PURCHASES THEMSELVES WERE BOGUS OR WHETHER THE PARTIES FROM WHOM SUCH PURCHASES WERE ALLEGEDLY MADE WERE BOGUS WAS ESSENTIALLY A QUESTION OF FACT. THE TRIBUNAL HAVING EXAMINED THE EVIDENCE ON RECORD CAME TO THE CONCLUSION THAT THE ASSESSEE DI D PURCHASE THE CLOTH AND SELL THE FINISHED FABRICS. THEREFORE AS A NATURAL COROLLARY NOT THE ENTIRE AMOUNT COVERED UNDER SUCH PURCHASES BUT THE PROFIT ELEMENT EMBEDDED THEREIN WOULD BE SUBJECT TO TAX. 26 IT(SS) NO. 378 TO 381/IND/2012 (A.YS : 2004 - 05 TO 2007 - 08) 2.4.16 NO CONTRARY DECISIONS WERE BROUGHT TO OUR KNOWLEDGE. WE THEREFORE DELETE THE ADDITION IN RESPECT OF THE PURCHASES DETAILS OF WHICH HAVE BEEN GIVEN BY THE ASSESSEE IN THE PAPER BOOK. IF THE AO SO CHOSES HE CAN MAKE ADDITION IN RESPECT OF PROFIT ON THESE PURCHASES BUT SINCE WE HAVE ALREADY HELD THAT THE INCOME OF THESE CONCERNS CANNOT BE ADDED IN THE HANDS OF THE ASSESSEE AS THESE ARE NOT BOGUS CONCERNS OF THE ASSESSEE THEREFORE THIS ISSUE RELATING TO ASSESSMENT OF GROSS PROFIT ON THE PURCHASES DOES NOT ARISE IN THE CASE OF THE ASSESSEE. SINCE THE ASSESSEE HAS ACCEPTED THAT HE WAS ASSISTING THESE CONCERNS IN PROCURING THE ORDER AND THE ASSESSEE HAS GOT INCOME ON THIS ACCOUNT FROM THESE CONCERNS WE THEREFORE KEEPING IN VIEW THE SURROUNDING FACT S AND TRADE PRACTISE DIRECT THE AO TO COMPUTE THE COMMISSION @ 2% ON THE SUPPLIES/SALES MADE IN EACH YEAR TO THE GOVERNMENT CONCERNS. SINCE THE ASSESSEE HAS SURRENDERED A SUM OF RS.1 21 80 000/ - IN RESPECT OF THE CASH PAID UNDER AN AGREEMENT FOR THE PURCHA SE OF LAND THE SOURCE OF THIS IN OUR OPINION CAN BE THE COMMISSION INCOME SO EARNED BY THE ASSESSEE IN RESPECT OF THE SERVICE RENDERED TO THESE COMPANIES. IN CASE THE AO FINDS THAT THE COMMISSION SO EARNED DOES NOT EXCEED RS.1 21 80 000/ - NO ADDITION IN THIS REGARD CAN BE SUSTAINED AS THE ASSESSEE WILL GET SET OFF OF COMMISSION INCOME AGAINST THE SURRENDER SO MADE. IN CASE THE AO FINDS THAT THE COMMISSION SO ESTIMATED IN RESPECT OF THESE THREE CONCERNS EXCEEDS IN ALL THESE YEARS RS.1 21 80 000/ - THE ADD ITION TO THAT EXTENT BE SUSTAINED. RESPECTFULLY FOLLOWING OUR AFORESAID ORDER WE DIRECT THE AO TO ASSESS THE INCOME FROM NETAM INDUSTRIES AND CHHATISGARH PHARMACEUTICALS SUBSTANTIVE LY IN THE HANDS OF THE ASSESSEE. O N THE BASIS OF DECISION OF HON'BLE GU JARAT HIGH COURT AS HAS BEEN NOTED ABOVE W E DIRECT THE AO TO ESTIMATE THE PROFIT ON SUCH PURCHASES AS HAS BEEN DISALLOWED @ 10% AS IN OUR OPINION THE WHOLE OF THE PURCHASES CANNOT BE DISALLOWED. IT IS AN UNDISPUTED FACT THAT THE SALES MADE BY THE ASSES SEE HAS DULY BEEN ACCEPTED BY THE AO AND ALL THE SALES HAVE BEEN MADE TO M.P GOVERNMENT DEPARTMENT OR GOVERNMENT COMPANIES FROM WHOM THE PAYMENT HAS BEEN RECEIVED THROUGH CHEQUE. WITHOUT MAKING PURCHASES IN OUR OPINION SALES CANNOT BE MADE. IF THE PURC HASES HAVE BEEN MADE WITHOUT BILLS THE ASSESSEE MAY SAVE ONLY THE TAX THEREON. WE THEREFORE DIRECT THE AO TO 27 IT(SS) NO. 378 TO 381/IND/2012 (A.YS : 2004 - 05 TO 2007 - 08) SUSTAIN THE ADDITION IN THE HANDS OF THE ASSESSEE @ 10% OF SUCH PURCHASES . THUS GROUND NOS. 3 & 4 ARE PARTLY ALLOWED IN A.Y 2004 - 05 AND SIMIL ARLY GROUND NO. 3 IN A.YS 2005 - 06 AND 2006 - 07 AND GROUND NOS. 3 & 4 IN A.Y 2007 - 08 ARE PARTLY ALLOWED . 9 . IN THE RESULT ALL THE APPEALS FILED BY THE ASSESSEE ARE PARTLY ALLOWED. 10 . ORDER PRONOUNCED IN PURSUANCE OF RULE 34(4) OF ITAT RULES 1963 BY PUTTING ON NOTICE BOARD OF THE BENCH AT INDORE . SD/ - ( MUKUL SHRAWAT ) JUDICIAL MEMBER SD/ - (P.K. BANSAL) ACCOUNTANT MEMBER DATED : 17 / 11 /2014 *SSL* COPY TO : (1) ASSESSEE (2) REVENUE (3) CIT CONCERNED (4) CIT(A) CONCERNED (5) D.R (6) GUARD FILE TRUE COPY BY ORDER