Income Tax Appellate Tribunal - Chandigarh
Sh. Rajesh Gupta,, Chandigarh vs Assessee on 16 May, 2012
IN THE INCOME TAX APPELLATE TRIBUNAL
CHANDIGARH BENCH 'B' CHANDIGARH
BEFORE SHRI H.L.KARWA, VI CE PRESI DEN T
AND SHRI MEHAR SI NGH, ACCOUN TAN T MEMBER
ITA No.264/CHD/2010
Assessment Year: 2006-07
Shri Ra jesh Gupta, V JCI T, Range V,
Prop. Bansal Agro Feed, Chandi garh.
SCF 164, Sector 26,
Chandi garh.
PAN ABHPG-6281-H
&
ITA No. 411/CHD/2010
Assessment Year : 2006-07
DCI T, Ci rcl e 5( 1) , V Shri Ra jesh Gupta,
Chandi garh. SCF 164, Sector 26,
Chandi garh.
( Appel l ant) ( Respondent)
Assessee by : Shri Sudhi r Sehgal
Department by : Shri Manjeet Si ngh
Date of Heari ng : 16.05.2012
Date of Pronouncement : 31.05.2012
ORDER
PER MEHAR SIN GH, AM
The present cros s appeal s fi l ed by the assessee and the revenue respecti vel y, are di rected agai nst the order dated 29.01.201 0 passed by the l d. CI T( A) u/s 25 0( 6) of the I ncome-ta x Act,1961 ( i n short 'the Act') .
2. I n thi s appeal , (I TA No. 264/Chd/2010) the assessee has rai sed the fol l o wi ng Grounds of Appeal :
"1. T hat the Ld. C IT ( A) has erred in uphol d ing add i tion of Rs. 3, 02, 17, 147/- made by the Assess ing Of f icer as inco me of the assessee f ro m u nd iscl osed sourc es on accoun t of 2 so c al l ed bogus p urch ases.
2 T hat ad d itio n of Rs. 3, 02, 17, 147/- made as per p ar a no. 1 abov e h as been conf ir med b y the Ld. C IT ( A) ag ains t th e f ac ts and c ircu ms tances of the c ase and wh il e mak ing add i ti on, sub miss ions mad e bef ore the Assess ing Of f icer and al so bef ore the Ld. C IT ( A) h as no t been cons id ered pro perl y.
3. T hat the Ld. C IT ( A) has no t co ns idered the f ac t th at as reg ards p urch ases f ro m M/s. R ith al a En ter pr ises and M/s. Shan ti En ter pr ises are concerned, the s ame h ave been conf ir med b y bo th the p ar ties in th e ir s tate men t d ated 20/10/2009 g iven bef ore the AC IT , Circl e 29( 1) , Del h i.
4. T hat as reg ards , purch ases f rom S hr i Roh tash M ittal - Pro p. M /s V ik as Ku mar V ivek Ku mar, th e Ld. C IT ( A) has no t cons idered the f ac t th at the Assess ing Of f icer h as acce p ted the s al es ou t of s aid purch ases mad e to M/s. S war n a Indus tr ies and hence, as p er the se ttl ed po s ition of l a w the purch ases c anno t be hel d to be bo gus.
5. T hat no t wi th s tan d ing above s aid ground of appe al the C IT ( A) has f ail ed to cons ide r the qu an ti ty tal l y as f urnished bef ore the C IT ( A) to subs tan ti ate the f ac t th at there coul d no t h ave been s al es wi th o u t the purch ases be ing made an d as such, under s uch c ircu ms tance s, the purch ases coul d no t hel d to the bogus as hel d by the C IT ( A).
6. T hat the Ld. C IT ( A) has erred i n conf ir ming the ac tion of th e Assess ing Of f icer in in i ti ating pen al ty proceed ings u/s 271A of the Ac t.
7. T hat the appel l an t cr aves l e ave to add or ame nd the grounds of appe al bef ore the appe al is f in al l y he ard or d is pose d of f ."3
3. In revenue's appeal , ( I TA No. 411/Chd/2010) the revenue has rai sed the fol l o wi ng grounds of appeal :
"1. On the f ac ts and in the c ircu ms tances of the c ase and in l a w, the Ld. C IT ( A) has e rred in al l o win g appe al of the as sessee wi th ou t apprec iating the f acts of the c ase.
2. On the f ac ts an d c ircu ms tances of the c ase and i n l a w, Ld. C IT ( A) vide her order d ated 29. 01. 2010 in appe al No. 460/P/08-09 f or the A. Y. 2006-07 h as erred in del e ting add i tion of Rs. One crore mad e by the A. O. on acc oun t of shar e appl ic ation f or wan t ver if ic ation of nature and source thereof .
3. It is pr ayed th at the order of the Ld. C IT ( A) be se t as ide and th at o f the Assess ing Of f icer may b e res tored.
4. T he appel l an t cr aves l e ave to ad d or amend an y ground of appe al bef ore the app e al is he ard or d is posed of f . "
4. I n the course of present appel l ate proceedi ngs, l d. 'AR' vehementl y contended that the i mpugned purchas es are genui ne i n nature, havi ng r egard to the co gent and corroborati ve evi dences, fi l ed both before the AO and the CI T( A) . To prov e hi s contenti on s, the l d. 'AR' r eferred to vari ous rel evant pages of Paper Book, from S.No. I to I X. Ld. 'AR' al so referred to para 11 of the fi ndi ngs of the CI T( A) , wherei n the CI T( A) had di scussed grou nd No.3, ( before her) , regardi ng addi ti on of Rs.3,02,17,147/-. Ld. 'AR' al so referre d to remand rep ort, dated 18/23 .11.2009 and the submi s si ons fi l ed before the CI T( A) . Ld. 'AR' referred to para 26 of the fi ndi ngs of the CI T( A) , whereby commi ssi ons were i ssued to the sel l ers of the goods. The y 4 fi l ed copy of thei r accounts of M/s Bansal Agro Seed, i n thei r books of ac count and rei ter ated thei r submi ssi ons, as gi ven i n thei r affi davi ts. The CI T( A) observed "H o we ver, I f ind th at the y s en t co p y of the ir accoun ts of M/s B ans al Agro Seeds, in the ir books of acc oun ts and re i ter ated the ir s tate men ts as g iven in the ir af f id av i ts. " On 20. 10.2009, juri sdi cti onal AO, recorded the statements of al l the three parti es. On 29.10.2009, juri sdi cti onal AO, submi tted a report to the AO , wherei n he con fi rmed that Shri Rohtash Mi ttal , Propri etor M/s Vi kas Kumar Vi vek Kumar, has confi rmed the earl i er statements, recorded on 22.12.2008 as true and corr ect. Ld. 'AR' al s o referred to pag e 127 of the Paper Book, whi ch represents report by the Asstt. Commi ssi oner of I ncome-ta x, Ci rcl e 29( 1) , Ne w D el hi, vi de l etter dated 29.10.2009, to the AO of the assessee appel l ant, the D y .CI T, Ci rcl e 5( 1) , Chandi garh. The l d. 'AR' e xtensi vel y quot ed the rel evant pages of the Pap er Book, beari ng Seri al No. I to I X. Ld. 'AR' contended th at al l the pa yments, to the sel l ers, at Del hi , were made through cheques. Si mi l arl y, the pa yments from the purch aser M/s Swarna I ndustries Ltd. were recei ved through cheques. Thi s factum stands proved by the deposi ti on made by the sel l ers, i n thei r respecti ve affi davi ts, contended the l d. 'AR'. Necessar y documentar y evi dences were al so fi led, to support hi s contenti ons. I t was, further, contended by l d. 'AR' that when purchases are treated as bogus, without any basi s, the sal es, emanati ng from such purchases, has been accepted by the Department. Therefore, there cannot be t wo di fferent treatments to a si ngle transacti on of purchase 5 and sal e. The l d. 'AR', further, contended that sal es made by the assessee to M/s Swarna Industri es Ltd. were al so treated as genui ne. The l d. 'A R' further di scussed and pl aced rel i ance on wri tten s ynopsi s. Ld. 'AR', pl aced rel i ance on 11 deci si ons, i ncl udi ng the deci si on juri sdi cti onal Hi gh Court and vari ous Tri bunal s, t o support hi s contenti ons, as l i sted hereunder:
1. C IT v Leaders V al ves ( P ) L td. 285 IT R 435 ( P&H )
2. IT O V Liyak at Al i Mo hd, S ad i k 81 TTJ 769 ( Jodhpur )
3. Devenb abu Pv t. L td. V IT O 36 TT J 664 ( Ahd)
4. IT O V Suns teel 9 2 T T J 1126 ( Ahd)
5. JR Sol ven t Indus tr ies ( P ) L td. V AC IT 68 IT D 65 ( Chd)(T M )
6. IT AT Chand ig arh Bench decis ion in M/s Sh ak ti Me tal Box V IT O, IT A No. 1161/Chd/1986 A. Y. 1981-82
7. IT AT Chand ig arh Bench dec is ion in R aj & S an Dee ps L td. v AC IT -II Lud h ian a in IT A No. 1853/Chd/1992 A. Y. 1989-90.
8. IT O V K anch wal a Ge ms 122 T T J 854 ( Jodhpur )
9. J agd amb a T rad i ng Co. V IT O 107 TTJ 398 ( Jodhpur )
10. Sh anker Exl por ters V Addl . CIT 132 TT J 107 ( J aipur )
11. Shubh L ax mi Ex p or ts V IT O 10 DT R 281 ( J aipur )
5. Ld. 'DR', on the other han d, referred to th e remand report and para 29, 30 and 34 of the CI T( A) 's appell ate order, to supp ort hi s content i ons. In the ul ti mate anal ysi s, l d. 'D R' pl aced rel i an ce, on the orde r of the CI T( A) .
6. We have ca reful l y perused t he rel evant Pape r Books, fi l ed by the assessee and the case l a ws ci ted therei n, and 6 the fi ndi ngs of the l o wer authori ti es and avai l abl e rel evant materi al on record. The bri ef facts of the case are that the assessee fi l ed hi s return of i ncome, for the assessment year 2006-07, on 7.7.2006, decl ari ng i ncome at Rs.5,80,231/-. The AO, havi ng r egard to the i nformati on/detai l s, books of account, al ong wi th vouchers, produced/fi l ed by th e assessee, passed the assessment order u/s 143(3) of the Act on 31.12.2008, determi ni ng the i ncome at Rs.4,07,97,378/-. The asse s see, as per the sai d assessment order, deal s i n poul tr y feeds, de-oi l ed cakes and specul ate in shares a nd stock e xch ange and commodi t y e xchange. Duri ng the F.Y. 2005-06 rel evant to A.Y. 2006-07, the assessee has sho wn debi t bal ance account i n the n ame of M/s Swar na I ndustri es Ltd., to the tune of Rs. l ,73,20,686/- Duri ng the course of assessment proceedi ngs, cop y of account of Sh. Ra jesh Gupt a, Prop. M/s Bansal Agr o Feed, as app eari ng in the b ooks of account of M/s Swarna I ndustries Ltd. was cal l ed for by the AO vi de l etter dated 19.11.2008. From the copy of l edger account, furni shed by th e assessee, i t w as found that an amount o f Rs. 1,00,00,000/- has been sho w n i n the books of account s of M/s Swarna I ndustri es Ltd. as share appl i cati on Mone y as on 31.03.2006, as recei ved from Sh. Ra jesh Gupta, Prop. M/s Bansal Agro Feed, SCF 164, Sec. 26, Chandi garh, bei ng transferred from credi tors account. When thi s fact was veri fi ed from the Bal ance Sheet of Shri Ra jesh Gupta, Prop. M/s Bansal Agro Feed, i t was noti ced that he had not sho wn an amount of Rs. 1,00,00,000/- as an i nve stment in hi s books of 7 account. In order to veri f y the genui neness of the transacti on, necessar y detai l s were cal l ed for by the AO. On maki ng further enqui r y, it was noti ced that the assessee Sh. R a jesh Gupta ha d not gi ven an y share appl i cati on mone y, i n form of che que/Demand draft or has not appl i ed for the same i n shape of share appl i cati on form, rather the amount due fro m M/s Swarna I ndustri es Ltd. was transfe rred from credi t bal ance accoun t towards share appl i cati on mone y, to the e xtent of Rs. 1,00,00,000/- and it was al l egedl y done on the basi s of oral understandi ng. Further, to veri fy the genui neness of the transacti on, the parti es from whom Sh. Ra jes h Gupta, Prop. M/s Bansal Agro Feed had made purchases were i nvesti gated and consequentl y, commi ssi on u/s 13 1( l) ( d) of the I . T. Act, 19 61, dated 19.12. 2008, were i ssu ed to the juri sdi cti onal Assessi ng Offi cer, Sh. Shi v Saroop Si ngh, Asstt. Commi ssi oner of I ncome Ta x, Ci rcl e 29( 1) , Room No. 107, 1 s t fl oor, Drum Shape Bui l di ng, I nderprashta Estate, Del hi , to make enqui ri es fro m the three p arti es, as menti oned bel o w:
a) M/s Vi kas Kumar Vi vek Kumar, Grai n Merchants and Commi ssi on Agents 2637, 2 n d fl oor, Chadha Bui l di ng, Na ya Bazar, Del hi - 06 ;
b) M/s Ri thal a Enterpri ses, Grai n Merchants and Commi ssi on Agents 2716/2B, Gal i Patte Wal i , Na ya Bazar, Del hi - 06;
and
c) M/s Shanti Enterpri ses,
1756, 2 n d fl oor, Nai Basti , Na ya Bazar, Del hi -06. The concerned A .O. recorded the statement on oath of Sh. Rohtash Mi ttal , Prop. M/s Vi kas Kumar Vi vek Kumar, on 8 22.12.2008. I n hi s statement Sh. Rohtash Mi ttal h ad stated that he had not made any sal es t o M/s Bansal A gro Feed and had rather gi ven accommodati on entri es duri ng the F.Y. 2005-06 and recei ved commi ssi on, at the rate of 0.5%, on the transacti on. After recordi ng the statement of Shri Rohtash M i ttal , Prop. Vi k as Kumar Vi vek Kumar, Del hi , purchases from other t wo parti es were al so treated as bogus. A sho w cause noti ce, d ated 24.12.08, w as i ssued to the assessee, i n thi s respect whi ch i s reproduced bel o w:
"Dur ing the course of assess me n t proceed ings, yo u h ave been g ive n a co py of state men t recorde d of Sh. Roh tash M i ttal Pro p. M/s Vik as Ku mar V ivek Ku mar , 2637, 2 n d f l oor, Chudh a Bu il d ing, N aya B az ar, Del h i-6 recorded on 22. 12. 2008 wh ere in in re pl y to que s tion No. 4, he has ad mi tted th at dur i ng the f in anc i al ye ar 2005-06 he h as n o t made an y s al e s to M/s B ans al Agro Feed and h ad r ather g iven acco mmo d ation en tr y f or s al es and in tur n he h ad rece ive d co mmis s ion @ 0. 5% f or such tr ans ac ti ons.
2. In v ie w of th e above s tate me n t, i t is cr ys tal cle ar th at dur ing the f in anc i al ye ar 200 5-06, purch ases mad e f ro m M/s V ik as Ku mar V ivek K u mar, 2637, 2 n d f loor, Chudh a Bu il d ing , N aya B az ar, Del h i are bogus and subsequen tl y s al es made to M/s S war n a Indus tr ies L td. Sec. 26, Ch and ig arh are al so bogus of equiv al en t amo un t. "
7. The assessee di d not submi t any repl y to the sho w cause noti ce i ss ued on 24.12.20 08. I n the statement, the assessee confi rmed that share appl i cati on mone y of Rs. 1 crore was gi ven to M/s Swarna Industri es Ltd. When the statement of Sh. Rohtash Mi ttal , Prop. M/s Vi ka s Kumar Vi vek Kumar, was confronted to the assessee, he deposed 9 that al l the transacti ons wi th M/s Vi kas Kumar Vi vek Kumar were on t he basi s of back to back transacti ons wi th M/s Swarna I ndustri es Ltd. As t he assessee has fai led to offer any e xpl anati on, to prove the nature and source of Rs.One Crore, i nvested wi th M/s Swarna I ndustri es Ltd., the AO, made the addi ti on of such amount under Secti on 69 of the Act.
8. I n the course of assessment proc eedi ngs, AO, not i ced that the assessee had made purchases to the tune of Rs.2,42,48,708/- from the three parti es menti oned earl i er. 8(i) . The juri sdi cti on al AO, recorded statement of Shri Rohtash Mi ttal , Propri etor M/s Vi kas Kumar Vi vek Kumar on 22.12.2008. I n the statement, Shri Rohtash Mi ttal stated that he had not made any sal es to th e present assessee and had gi ven accommodati on entri es. I t was, further, reported by the juri sdi cti onal AO, at Del hi that M/s Ri thal a Enterpri ses and M/s Shanti Enterpri ses were found cl osed, whenever I nspector was deputed to vi si t the shops. I t was, menti oned by the AO that normal busi nessman, who deal s i n actual purchase and sal es of goods, cannot keep the busi ness premi ses cl osed for such a l ong peri od, i n the normal b usi ness hours. Thus, i t i s cl ear , that the purchases made, from al l these c oncerns, are bog us. On the basi s of enqui r y report submi tted by the juri sdi cti onal AO, i t was i nferred t hat such purcha ses were bogus i n nature. Consequentl y, AO made an addi ti on of Rs.3,02,17,147/-, to the i ncome of the assessee appel l ant.
108( i i ) . The AO, further, observed that t he assessee had sho wn purchases from M/s Ri thal a Enterpri ses, at Rs.89,68,525/-. M/s Ri thal a Enterpri ses was also sho wn as sundr y credi t or, i n the bal an ce sheet of the assessee. Wi th a vi e w to veri f yi ng the genuineness of such purchases, an enqui r y was got conducted, by wa y of i ssuance of commi ssi on u/s 131( 1) ( d) of the Act, to the concerned AO, at Del hi . The A O, reported that these concerns w ere found cl osed, when visi ted by the I nspector. Accordi ngl y, AO, treated the l i abi l i t y of M/s Ri thala Enterpri ses, as sho wn i n the assessee's b ooks of account, as bogus l i abi l i t y and an addi ti on of Rs.89,68,524/- was made to the i ncome of the assessee. Thus, enti re purchases had been hel d as bogus purchases and Rs.89,68,525/- bei ng part of the total purchases of R s.3,02,17,147/-, the, AO di d not make separate addi ti on, i n respect of such sundr y credi tors, amounti ng to Rs.89,68,525/-.
9. Ld. CI T( A) , havi ng regard to the fi ndi ngs of the AO, and vari ous submi ssi ons fi l ed by the assessee, before her, uphel d the fi ndings of the AO, fol l o wi ng the deci sion of the Hon'bl e Del hi High Court, i n the case of CI T V La Medi ca, 250 I TR 575. The CI T( A) , observed that the three parti es, from whom, the assessee appel l ant made purch ases, fi l ed affi davi ts al ong wi th statement of accounts and bank accounts. The c oncerned AO, al so recorded the statement of al l the three v endors. I t was al so observed by t he CI T( A) , that i ni ti al l y M/s Ri thal a Enterpri ses And M/s Shanti Enterpri ses, had not produced th emsel ves i n pers on before 11 AO, for recordi n g the statement s and cross-e xa mi nati on, though AO had i ssued summons u/s 131 of the Act. The AO, i n order to make further enqui ri es, i ssued commi ssi on u/s 131( d) of th e Act to the AO , havi ng juri sdi cti on over such sel l ers. Th e CI T( A) , al so ref erred to the fi ndi ngs of the AO, regardi ng vi si t of the I nspector to the shop s of M/s Ri thal a Enterpri ses and Shanti Enterpri ses, i n Ne w Del hi , whi ch were found cl osed. Ld. CI T( A) , referred to and reproduced the e xtracts of the statements of Shri Rohtash Mi ttal , Propri etor M/s Vi kas Kumar Vi vek Kumar, on 22.12.2008.
10. The assessee, i n the course of the statement, stated that the y had got materi al from M/s Vi kas Kumar Vi vek Kumar, Ne w De l hi and sol d t he same. It was al so menti oned i n the statement that we are concern ed about onl y our margi ns. When we recei ve pa yment, we h ave made further pa yments. The statement of Shri Mukesh Kumar of M/s Ri thal a Enterpri ses, reveal s that he had confi rmed therei n the sal e of goods to M /s Bansal Agro Feed, for Rs.99,68,525/-, duri ng the fi nanci al year 2005-06. In response to another questi on, it was stated, by Shri Mukesh Kumar, that hi s father Shri Si ta Ram, aged 80 years, was suff eri ng from asth ma, at that pe ri od and consequentl y, not opened the s hop properl y, d uri ng the peri od December to Januar y,2009. At present, he i s doi ng the busi ness from hi s resi dence and Na ya Bazar shop i s hi s Branch Offi ce. Si mi l arl y, perusal of the statement of Shri Vi neet Go yal of M/s Shanti Enterpri ses, Ne w Del hi , as reproduced by t he CI T( A) , i n th e appel l ate orde r, reveal s 12 that he kne w S hri Ra jesh Gupt a, Propri etor M/ s Bansal Agro Food, Chandi garh, as customer and sol d the goods to M/s Bansal Agro Food, duri ng financi al year 2005-06 and copy of the l edg er account of M /s Bansal Agro Food and bank account s tatement were submi tted by h i m. He, further, narrated that the shop was cl osed, as he was not feel i ng wel l at that ti me. The l d. CI T( A) , di sti ngui shed the case l a ws, ci ted by the assessee, to support hi s contenti ons and uphel d the addi ti ons made by the AO.
11. The CI T( A) , pl aced rel i ance, on the deci si on i n the case of CI T V La Medi ca 250 I TR 575 ( Del ) , to support findi ngs, pertai ni ng to the addi ti on of the al l eged bogus purchases. A bare perusal of the decision rel ied upon by the CIT(A), clearly reveals that the suppliers one 'K' was non- e x istent. On enquiry, made by the AO, it was found that 'K' did not e x ist. Summons were also issued to the agent of the ba nk, through wh om payments w ere made. It was found fro m the bank rec ords, that bank accou nts were opened by 'C', on introd uction by 'S' b y giving another fictitious address at Delhi. Therefore, on the basi s of materi al avai l abl e on rec ord, the I TO trea ted a sum of Rs.3,82,750/-, as i ncome from undi scl osed sources. I n vi e w of thi s, H on'bl e Del hi Hi gh Court, hel d that the purchases from non-e x istent party, cannot be t reate d as genuine purcha ses. Similarly, the bank acco unts we re also not found genuine in respect of such purchases . I n the l i ght of such factual matri x of the case, Hon'bl e Del hi Hi gh Court, came to the concl usi on that Tri buna l had no materi al to come to the concl usi on that the sum of 13 Rs.3,82,750/- coul d not be treated as assessee's i ncome, from undi scl osed sources. In the present ca se, three suppliers, namely M/s V ikas Kumar V ivek Kumar, M/s Rithala Enterprises and M/s S hanti Enterprises, wer e found e x isted, at the given address, in Delhi, as is evident from th eir respective s tatements and a ffidavits, including their respective bills issued, PAN and letters issued by such parties to the AO, at Chandigarh. The revenue has not doubted their e x istence. The enqui ri es conducted by way of i ssuance of commi ssi on u/s 131(d) of the Act, by the AO, found the same three parti es as e xi sti ng ones. All th e three parti es, through a ffidavits, confirmed the sale made to the present assessee. Further, bank a ccounts of the concerned parti es to the transactions were not doubted by the revenue, vis-a -vis as found in the case, relied upon by the CIT(A). I n vi e w of such a fact-si tuati on, as obtai ni ng i n the present case vi z-a-vi z fact-si tuati on of the case l a w rel i ed upon by the CI T( A) , to support her fi ndi ngs, there i s a materi al and vi tal di fference of facts. Hence, we are of the c onsi dered opi ni on, that the case l a w, rel i ed upon by the l d. CI T( A) , to support her fi ndi ngs, i s not appli cabl e to the facts of the present case, bei ng mat eri al l y di fferent and di sti ngui shabl e. Further, deci si ons of the Hon'bl e Supreme Court i n the case of Omar Sal a y Mohamed Sai t V CI T ( 1959) 37 I TR 15 ( S.C) , Dhi ra jl al Gi rdhari Lal V CI T ( 195 4) 26 I TR 756 ( S.C) and CI T v Radha Kri sh an Nand Lal ( 19 75) 99 I TR 143 ( S.C) , referred to by the Hon'bl e Del hi Hi gh Court, i n 14 the case l a w rel i ed upon by the CI T( A) , were i n the speci fi c conte xt of the fact-si tuati on, as obtai ni ng i n the case of CI T V LA MEDI CA ( supra) . The crux of such deci si ons i s that i ssue cannot be adjudi cated on no evi dence or on i rrel evant evi dence. The fact-si tuati on is factual l y di ff erent and di sti ngui shabl e i n the present ca se. Therefore, t he rati o of the deci si on i n the case of CI T V LA MEDI CA ( supra) i s not appl i cabl e to th e facts of the p resent case, as di scussed above.
12. Further, l d. 'AR' pl aced rel i ance, on the deci si on of the Hon'bl e juri s di cti onal Hi gh C ourt, i n the case of CI T V Leaders Val ves (P) Ltd. ( 2006) 285 I TR 435 ( P&H) , whereby i t has been hel d that the Trib unal, having u pheld the conclusion of the CIT(A) that the purchases made by the assessee from 7 scrap dealers, could not be treated as bogus, as the consumption stood fully proved and th e trading results of the assessee have been accepted all along, and the purchases from these very parti es, h ave been accepted by the Department, to a large e x tent in the subsequent assessment year, the findings of the Tribunal is finding of fact and no question of law arises. The rel evant head-note of the ratio l ai d do wn by the Hon'bl e juri sdi cti onal Hi gh Court i s reproduced hereunder :
"Re ference- Question of fa ct- Genuineness of purchases- CIT( A) held that there was no basis for treating the purchases made by the assessee from seven scrap de alers as bogus as the consump tion 15 stood fully proved and the existence of said parties could not be denied- Tribunal has concurred with the conclusion o f the CIT( A) in view o f the fact that the tradin g results o f the assessee have been acce pted all al ong and the pu rchases from t hese very parties ha ve been acce pte d by the De part ment to a large ext ent in the sub sequent assessment year- It has also acce pted the contention o f the assessee that i f the AO's conclusion is acce pted and purchases worth Rs.1.49 crores are treated as bogus it would be impossible to manufacture the goods shown to have been manufactured by it-This is simply a fin d ing o f fact base d upon apprecia tion o f material on record- No question o f law arises."
12( i ) The assessee, further, pl aced rel i ance on the deci si on, i n the case of I TO V Li yakat Al i Md. Sa dik, I TAT, Jodhpur Bench ( 2003) 81 TTJ 769. I n thi s case, the AO hel d the purchas es of Rs.1,31,774 /- as fi cti ti ous, mai nl y on the ground that these were un-vouched and purchases had been made in cash, from unregistered dealers. The AO, admi tted the sal es and other e xpenses, i ncurred on the materi al and al so had accepted the sal e of materi als. Hence, there was no justification to re ject claim of purchases, for want of proper vouchers or non- production of persons, who sold the same. The rel evant head-notes i n the case, are reproduced hereunder ;
"Income from undisclosed sources- Addition- Bogus purchases- AO made addition of Rs.1,31,774/- holding the purchases as fictitious as they were unvouched and had been made in cash from unregistered dealers though he admitted the sales and other expe nses incurred o n the material- There was thus no j usti fication to re ject the cla im o f 16 purchases- Such a transaction can only be considered as a de fect in the maintenance of accounts for applying G.P. rate under s. 145- CIT( A) was justi fied in deleting the addition."
12( i i ) In the present case, the AO had tre ated the impugned purchases from three parties as bogus one, however, sales made out of such purchases were not disputed or que stioned and res ultant profit on such sale, was not interfered with by the AO and the CIT(A). In vi e w of the fact-si tuati on, the deci si on of the Hon'bl e juri sdi cti onal Hi gh Court as well as Jodhpur Bench, are appl i cabl e to the facts of the present case. 12( i i i ) . Ld. 'AR', further, pl aced rel i ance on the deci si on of the I TA T, Ahm edabad 'C' Bench ( 1990) 36 TTJ 6 4, i n the case of Devan Babu P.Ltd. V I TO, whereby i t has been hel d that from fact th at suppl i er coul d not, accordi ng t o the I TO, sati sfactori l y e xpl ai n the source, wherefrom he procured the ra w materi al , cannot resul t in di sal l o wance of purchases made by the assessee from hi m. Th e rel evant head-note i s reproduced hereunder :
"Business expenditure- Genuineness of purchase- 190 kgs. O f rough emeralds purchased by assessee from C- Fact o f aforesaid purchase corroborated by statement o f C- ITO disbelieving capacity o f C to hold such an enormous quantity of emeralds- Cheque issued by assessee- company encashe d on same date- All t his cannot amo unt to evidence to prove that the amount was giv en back to asse ssee- Disallowance, there fore, deserves to be deleted."17
12( i v) . Ld. 'AR' further pl aced rel i ance o n the deci si on of Ahmedabad Bench of the I TAT Tri bunal , i n the case of I TO V Sun Steel ( 2005) 92 TTJ 1126 ( Ahd) . The rel evant head- notes are reproduced hereunder :
"Income from undisclosed sources- Addition under s. 69C- Unaccounted purchases- Assessee was not able to prove the existence o f certain suppliers from whom pu rchases were said to be m ade- However, AO. had no material to prove that payments o f purchases came back to the assessee- I f addition ma de by Rs. is s ustained GP w ould come to 100.6 per cent which is not possible since suppliers were not produced. It is possible that assessee had made purchases from unregistered dealers to get bene fit of m argin of purch ases- Hence, addition is restricted to Rs.50,000."
12( v) . Ld. 'AR', further, pl aced rel i ance on the deci si on of Third Membe r decision of the Chandigarh Bench, i n the case of J.R. Solvent Industri es Pvt.Ltd. V As stt. CIT (1999) 68 ITD 65 (Chd) (TM). The rel evant pa rt of the deci si on i s reproduced hereunder :
"I f entire purchases were treated as bogus and excluded from manufacturin g process, yi elds resulting there from for relevan t months would be quite abnormal as compared to that o f preceding years as well as entire addition could be deleted, exce pt two ad ditions made on account of an element o f inflation in purchase price and certain rice bran having not reached assessee's premises though claimed by assessee - Held, yes."
"( 4) The raw material purchased from whatever source went into the production o f rice bran oil and this stood duly established by day- to- day records ke pt by the assessee company and in 18 res pect o f which no discre pancies were pointed out by the AO; ( 5) T he yield shown by the assessee was reasonable as c ompared to so me o f the prec eding assessment years and acce pted by the de partment and the sales had also been acce pted by th e AO and this proved that the relevant quantity o f goods sold were available with the assessee- company. In other words, i f the production stood acce pted the quantity of p urchases, etc. would also stand acce pted; ( 6) The position that would emerge in case the entire purchases from 'R' were treate d as bogus and excluded from the manufacturing process, would be the yield resulting there from would be abnor mal not only a s compared to the preceding assessment year but also with re fere nce to the yield in the other mon ths o f the year ( 7) Treating the purchases as bogus would result in a situation wher e the out- put i n the form o f rice brawn oil and DORB would be more than the i nput by figure o f 10 00 qtls. Which was not possibl e in the rice brawn oil extraction industry."
13. A perusal of the rati o of the above di scussed deci si ons, ci ted and rel i ed upon by the l d. 'AR' re veal s that the same are ap pl i cabl e to the fa ct-si tuati on of the present case. The deci s i ons, i nter-al i a, of the juri sdi ctional Hi gh Court and Chan di garh Tri bunal , are al so appl i ca bl e to the facts of the present case. Ho wever, the revenue fai l ed to rebut the appl i cabi l i t y of the rati o of such deci sion to the facts of the present case.
14. The assessee ha s produced purchase bi l l s, i ssued by the parti es, i ndicati ng therei n descri pti on of the i tems i .e. D-oi l ed cakes, number of bags, wei ght, rate, amount, 19 al ong wi th truck number and name of the purchaser, as the present assessee. The sel l ers al so menti oned TI N number. The assessee ha s al so produced confi rmed copy of account from such sel l er s, as wel l as st atement of bank account, i ndi cati ng movement of funds through cheques. The assessee has al s o fi l ed photo cop y of the stock re gi ster and detai l s of purchases made by the assessee, as al so the sal es made by the assessee to Swarna I ndustri es Ltd., al ong wi th statement of bank account, i ndi cati ng movement of funds for such transact i ons. As per Pa per Book No.2 pa ge No.17, i t i s evi dent that the assessee ha d effected purch ases from three parti es for Rs.3,02,17,147/- and al so effected sal es to Swarna I ndustries Ltd., for Rs.3,18,70 847/-. The assessee has al so submi tted detai l s of deducti on of TDS, on frei ght for the assessment year 2006-07, i n respect of materi al transported from Del hi to M/s Swarna Industri es Ltd. at Panchkul a.
15. The assessee has al so produced purchase bi l l s, i ssued by M/s Vi kas K umar Vi vek Ku mar, Grai n Merc hants and Commi ssi on Agents, 2637, Second Fl oor, Chand Bui l ding, Na ya Bazar, Del hi -6, contai ni ng i nter-al i a quant i t y of the i tems sol d, nu mber of bags, wei ght, rate an d amount. Further, in such bi l l , TI N number has been recorded al ong wi th truck number, through whi ch goods were transported to Panchkul a.
16. The assessee ha s fi l ed, as per P aper Book, GRs and vouchers, in respect of purchases made from di fferent parti es, of Del hi , for the assessment year under 20 consi derati on and al so proof of p a yments through cheques and TDS deducti ons. The assesse e has produced sal e bi l l s, i ssued to M/s Swarna I ndustri es Ltd., Panchkul a, whi ch consi sts i nter-al i a number of packages, prescri pti on of goods, quanti t y of goods, rate and amount. On such purchase bi l l s, wei ght, TI N nu mber i s al so re corded, on whi ch company's VAT number an d buyer's VA T n umber i s al so menti oned. The assessee has al so produced copi es of account of the parti es, i n the books of account of the assessee appel l ant, al ong wi th bank statements, indicati ng the pa yments by account pa yee cheques.
17. The general rule is that 'burden of proof' is always on the authority, who asserts a proposition or fact, which is not self-evident. The burden of proof has two shades of meaning. In the primary sense, it means, the burden of establishing the case. The second meaning of 'burden of proof' is on the principle of evidence. In the second sense, the burden would be shifted from one party to the other, as and when adequate evidence to discharge the burden, that lay on a party, is being produced, by that party.
17(i). The onus to prove that apparent, is not the real one, is on the party who claims it to be so, as held by the Hon'ble Supreme Court in the case of CIT V Daulat Ram Rawatmull (1973) 87 I TR 349 (S.C) and CI T V Durga Prasad More (1971) 82 ITR 540 (S.C). In the case of CIT V Durga Prasad More (supra), it has been held by the Apex Court that though an apparent statement must be considered real, until it was shown that there were reasons to believe that apparent was 21 not the real, in a case where an authority relied on self serving recitals in documents. It was for the party to establish the proof of those recitals; the taxing authorities were entitled to look into the surrounding circumstances to find out reality of such recitals.
17(ii). It is also a settled legal proposition, if no evidence is given by the party on whom the burden is cast, the issue must be found against him. Therefore, onus is always on a person who asserts a proposition or fact, which is not self evident. The onus, as a determining factor of the whole case can only arise if the Tribunal, which is vested with the authority to determine, finally all questions of fact, finds the evidence pro & con, so evenly balanced that it can come to no conclusion, then, the onus will determine the matter. Needless to say that the onus is heavy or light, depending on the facts and circumstances of each case.
17(iii). The Hon'ble Supreme Court, in the case of Chuhar Mal V CIT (1988) 172 ITR 250, highlighted the fact that the principle of evidence law are not to be ignored by the authorities, but at the same time, human probability has to be the guiding principle, since the AO is not fettered, by technical rules of evidence, as held by the Hon'ble Supreme Court in the case of Dhakeshwari Cotton Mills v CIT (1954) 26I TR 775. The Hon'ble Supreme Court, in the case of Chuhar Mal V CI T (supra) held that what was meant by saying that Evidence Act did not apply to the proceedings under Income-tax Act,1961, was that the rigors of Rules of evidence, contained in the Evidence 22 Act was not applicable; but that did not mean that when the taxing authorities were desirous of invoking the principles of Evidence Act, in proceedings before them, they were prevented from doing so. It was further held by the Hon'ble Apex Court that all that Section 110 of the Evidence Act, 1872 did, was to embody a salutary principle of common law, jurisprudence viz, where a person was found in possessing of anything, the onus of proving that he was not its owner, was on that person. Thus, this principle could be attracted to a set of circumstances that satisfies its conditions and was applicable to taxing proceedings.
18. In the present case, the assessee appel l ant has di scharged onus cast on hi m, by wa y of adduci ng documentar y evi dence, as di scussed above, i n the form of sal e bi l l s, purchase bi l l s and quanti tati ve tal l y, bank accounts, through whi ch transacti ons were routed, and confi rmati on from the purchaser s, as di scussed e arli er. In vi e w of the abov e settl ed l egal pr oposi ti on, the o nus shi fts to the revenue, as the revenu e is not accep ti ng the apparent as real . The revenue has treated the purchases of the assessee app el l ant as bogus, sol el y on the ba sis of the contradi ctor y statement of Shri R ohtash Mi ttal , P ropri etor M/s Vi kas Kumar Vi vek Kumar. The revenue ha s i gnor ed the statement and the affi davi ts gi ven by other t wo parti es namel y M/s Ri thal a Enterpri ses & M/s Shanti E nterpri ses, who confi rmed the i mpugned sal es to the assessee appel l ant. Shri Rohtash Mi ttal has adopted con tradi ctor y 23 stand, i n respect of transacti ons of sal e, effected by hi m to the present assessee, wi thout corroborati ng the same by wa y of cogent documentar y evi dence. Shri Rohtash Mi ttal fai l ed to sho w that the pa yments recei ved by hi m, by wa y of cheques, has be en wi thdra wn fr om hi s bank ac count and pai d to the assessee appel l ant, wi th a vi e w to provi ng hi s stand that he made onl y accommodati on entri es. The rel i abi l i t y of hi s statement, i n th e l i ght of affi dav i t fi l ed by hi m, and confi rmati on of such sal e through l etter dated 20.08.2009 addr essed to the AO at Chandi garh i s of l i ttl e evi denti ar y val ue, for the revenue, to treat purchase from other parti es as bogus. The r evenue, further, fai led to bri ng on record any materi al or credi bl e documentary evi dence, e xcept the statement of Shri Rohtash Mi ttal , whi ch, i n i tsel f i s contradi ctor y i n nature, as di scussed earl i er, to prove the non-genui ne nature of the said transacti ons. Mere asserti ons, on the basi s of one un- bel i evabl e asserti on, wi thout supporti ng evi dences or materi al , i s not enough to treat the purchases, as non- genui ne. The do cumentar y evi dence, fi l ed by the assessee, to support hi s contenti ons, regardi ng genui neness of such purchases from the parti es, at Del hi , remai ns un-rebutted by the revenue, by wa y of adduci ng cogent and credibl e evi dences. Si mi l arl y, documentar y evi dences fi l e d by the assessee, i n the matter, cannot be di sl oged by the revenue by oral asserti ons, wi thout i ndependent corroboration thereof, as hel d by the juri sdi cti o nal Hi gh Court i n the case of Paramjit Singh V ITO (2010) 323 I TR 588 (P&H). I t i s perti nent to hi g h-l i ght that the revenue has tr eated the 24 purchases of the assessee as bogu s, but di d not di spute the sal es of the asse ssee out of such purchases and c onsequent profi ts on such purchases, whi ch was ta xed by the revenue.
19. The revenue has al so fai l ed to di sti ngui sh the c ases, rel i ed upon by the assessee, to support hi s contenti ons, whi ch i ncl udes deci si ons of the juri sdi cti onal Hi gh Court, vari ous Tri bunal s, as di scussed above. I n such a fact- si tuati on, the i nferences dra wn by the CI T( A) , on the basi s of the deci si on of Del hi Hi gh C ourt, i n the ca se of La Medi ca ( supra) , whi ch i s not app l i cabl e to the fac ts of thi s case, as di scussed earl i er, cannot be sustai ned. I t i s, further, menti oned that the AO has al so fai l ed t o support hi s fi ndi ngs, by wa y of cogent and credi bl e evi dences. 19( i ) . The assessee ap pel l ant has fi l ed affi davi ts from sai d three parti es, who suppl i ed the goods, to the assessee appel l ant. The contents of such affi davi ts are self- e xpl anator y i n nature. Ho wever, we consi der i t essenti al to reproduce the deposi ti on made by Shri Rohtash Mi ttal , Propri etor M/s Vi kas Kumar Vi vek Kumar. The af fi davi t i s anne xed at page 55 of the Paper Book. The affi da vi t i s dul y attested by Nota r y Publ i c, on 19. 01.2009. The rel evant te xt of the deposi tion made by Shri Rohtash Mi ttal is reproduced hereunder :
" I, Roh tash M i ttal S/o R am S aroo p M ittal , Pro p. /P ar tner of M/s Vik as Ku mar V ivek Ku mar h av ing its of f ice at 2637, 2 n d Fl oor, Ch adh a Bu il d ing , N aya B az ar, Del h i- 110006, do her eby sol e mnl y af f ir m and decl ar e as under:25
1. T hat I am de al i ng in s al e and purch ase of f ood gr ains at 263 7, 2nd Fl oor, Chadh a Bu il d ing, N ay a B az ar, Del h i 110 006 under the n ame and s tyl e of M/s V ik as Ku mar V ive k Ku mar.
2. T hat we are reg i s tered wi th Del h i S al e T ax De p t.
v ide Reg is tr ation No. LC /2817900228297/400 d ated... ...... . centr al s al es tax de p ar tmen t.
1. T hat we are regul ar assessed wi th Inco me T ax W ard No... ......... .Ne w Del h i and o ur/ my PAN No. A GPPM 51178.
2. T hat we h ave su ppl ied So y a Deo i l ed c akes dur ing the f in anc i al ye ar 2005-06 ( as per co py of acc oun t attached) to M/s B ans al Agro Feed SCO 393, Sector 20, P anchkul a aggre g ating to Rs. 102 71569. 00 ( One crore t wo l acs seven ty one thous and f ive hundred s ix ty n ine onl y). T hat ag ain s t th is amo un t we h ave rece ived f ro m the m an amo un t of Rs. 10200000/- by accoun t p ayee cheque and Rs. 71 569/- in sh ape of c ash.
3. T hat at the f in anc ial ye ar end in g 31. 3. 2006 an amo un t of Rs. Nil was due f ro m th e m.
4. T hat the above s tate men t is true and correc t. "
19( i i ) . A bare perusal of the above affi davi t reveal s that the deponent h as cl earl y confi rmed the suppl y of Soya Deoi l ed cakes duri ng the fi nanci al year 2005-06 ( as per copy of account attached) to M/s Bansal Agro Feed, Panchkul a, aggregati ng to Rs.1,02,71,569/- and agai nst thi s amount, the y recei ved an amount of Rs.1,02,00,000/-
by account pa yee cheque and Rs.71,569/- i n cash. Thi s has been stated i n cl ause No. 2 of the affi dav i t. I t i s, further, added vi de cl ause 3 of th e sai d affi davi t t hat at the fi nanci al year endi ng 31.3.2006, an amount of Rs. NI L was due from them.26
19( i i i ) . The assessee app el l ant fi l ed hi s return of i ncome, on the basi s of audi ted books of account, as i s evident from page 1 to 22 of the Paper Book. The assessee i s al so mai ntai ni ng stock regi ster of such purchases and sal es.
The assessee fi l ed evi dence bef ore the CI T( A) , such as i nvoi ces, vouchers from di fferent parti es, from whom purchases has b een made al ong w i th GRs. The ass essee has further fi l ed bi l l s, i ssued to M/s Swarna I ndustri es Ltd., i n the course of normal busi ness deal i ngs. The assessee i s regi stered wi th Sal es Ta x Depar tment and had been fi l i ng Sal es Ta x Retur n and consequentl y, assessments had been compl eted by the Sal es Ta x Depar tment. The asse ssee fi l ed affi davi ts of the parti es, from whom purchases were made, as i s evi dent from page 55 to 60 of the Paper Book No.1 .
Page 55 i s an affi davi t, si gned by Shri Rohtash Mi ttal , page 56 i s l edger account for the fi nanci al year under reference of M/s Vi kas K umar Vi vek Ku mar, i n the boo ks of the assessee. Page 60 i s Permanent Account Number of Shri Rohtash Mi ttal . Si mi l ar, detai l s have been fi l ed in respect of Shri Vi nod K umar, Propri etor M/s Ri thal a E nterpri ses and Shri Mu kesh Kumar, Propri etor M /s Shanti Enterpri ses, as i s evi dent from pages 61 - 63 of the Paper Book. It is contended by the l d. 'AR' in the wri tten s ynopsi s that Shri Rohtash Mi ttal had confi rmed the transacti ons wi th the appel l ant, as i s evi dent fro m page 10 0 to 105. Page 100 of the Paper Book i s a l etter written by Shri Rohtash Mi ttal , Propri etor of the sai d concern, to the ACI T, Chandi garh on 20.08.2009, wherei n he has confi rmed 27 the transacti on of sal e to the assessee appel l ant, as can be seen from the fol l o wi ng contents of the l etter reproduced hereunder :
" I wan t to s tate th at I h ave rece ived a su mmo n u nder Sec tion 131 of Inco me- tax Ac t, 19 61, wh ich requ ir e my person al presenc e on 20. 08. 2009 at Ch and ig arh in the c ase of my cus to me r Shr i R aje sh B ans al , Pro p. Of the B ans al Agro Fe ed, Gr ain M arke t, Ch and ig arh. T he presence on the des ign ated d ay i s d if f icul t f or me due to the re asons of my bus iness co mmi t me n ts. I am th e onl y ac tive wo rk i ng person in my bus iness and cl o s ing the bus iness p re mises f or one or t wo d ays wil l def in itel y resul t in f in anc i al l os ses to me and pl ace h indr ances in my bus iness co mmi t me n ts. As al r e ad y wr i tte n, I am the sol e wo rk ing pe rson. I wan t a f avour f ro m your good self i. e. gr an t me exe mp tio n f ro m person al appe ar ance in th is c ase as wi tn ess. Ho wever, I wan t to sub mi t and conf ir m the f ol l o win g:
1. I am Roh tash M i ttal , son of Sh Ram S aroo p M i ttal .
2. I am pro p. Of the concern M/s Vik as Ku mar V ivek Ku mar h av ing of f ice at 2637, IIn d f l oor, Chadh a Bu il d ing. N ay a B az ar, Del h i-6. I de al in So ya De o il c akes e tc. and f ir m is reg is tered wi th Del h i S al es T ax D e p tt. V ide re g is tr ation No. LC/2817900228297/0400. My P AN C ard No. is AGPPM-5117-P.
3. My concern h ad de al t wi th the concern of said Mr. R ajesh Gup ta dur ing the ye ar 2005-06 and tr ans ac ted the de al to the tune of Rs. 1, 02, 71, 569/- ( Rs. One Crore T wo L acs Seven ty One T housand F i ve Hundred and S ix ty N ine ) and rece ived the p ayme n t through cheques to the tune of Rs. 1, 02, 00, 000/- and amo u n t aggreg ating to Rs. 71, 569/- as c ash rece ip ts.28
4. T he af f id av i t f il ed by me on 19 . 1. 2009 was on o ath and al l the con ten ts we re tru e and correc t to the bes t of my kn o wl edge and bel i ef and re presen t the genu ine tr ans ac tions en te red wi th such Mr. R ajesh Gup ta and wh ere as the conf ir mations f il ed earl ier we re al so true and cor rec t.
5. I attached here wi th co p y of acco un t of such f ir m f or the concerned ye ar wh ich wil l prove my above s tate men t and wil l def in i te l y sho w the tr ans ac tions en tered and prov e its genu ineness and I conf ir m al l the con ten ts of th is accoun t s tate men ts as tru e and correc t.
6. T hat on 31 s t M ar ch, there was N IL b al ance in such accoun t. "
19( i v) Si mi l arl y, M/s Ri thal a Enterpri ses has wri tten a l etter to the ACI T, on 20.08.200 9, confi rmi ng transacti on wi th the assesse e appel l ant. M/ s Shanti Enterpr i ses has al so wri tten a l etter to the ACI T, on 20.08.2009, whereby such transacti ons wi th the appel l ant assessee were confi rmed. The pa yments were made by the assessee appel l ant, to the sel l er, by account pa yee cheques. I t i s, further, contended i n the wri tten s ynopsi s that s ales made by the assessee to M/s Swarna I ndustri es Ltd. had been accepted by th e Sal e Ta x De partment and sal es ta x assessments have been framed. It was hi ghl i ghted that the purchases i n the hands of M/s S warna I ndustri es Ltd. had been accepted an d when the purc hases i n the han ds o f M/s Swarna I ndustries had been accepted and correspondi ng sal es, then there i s no basi s to m ake the addi ti on i n respect of bogus purchases. There cannot be di fferent treatment of the si ngl e tran sacti on, as co ntended in the wri tten 29 submi ssi ons. V ari ous case-l a ws have been rel i e d upon by l d. 'AR' i n the w ri tten submi ssi o ns and al so di st i ngui shed the deci si on of t he Del hi Hi gh Court, i n the case o f CI T V La Medi ca 250 I TR 575 and rel i ed upon by the CI T( A) .
20. I n vi e w of the above l egal and factual di scussions and havi ng regard to the evi dences fi l ed by the a ppel l ant, i ncl udi ng the case l a ws ci ted, to support hi s contenti ons, vi s-à-vi s no materi al brought on record by the r evenue, to support i ts concl usi on, i n the matter of such purchases, the fi ndi ngs of the CI T( A) , cannot be uphel d. Th us, these grounds of appeal of the assessee appel l ant are al lo wed.
21. In respect of Ground No. 6, the assessee has chal l enged the i ni ti ati on of pen al t y u/s 271A o f the Act. The CI T( A) di smi ssed the same. No appeal l i es against mere i ni ti ati on of such penal t y and, he nce, thi s ground of appeal i s di smi ssed.
22. The ground of appeal No. 7 i s general i n nat ure, hence, needs no separate adjudi cati on. Thus, the same i s di smi ssed.
23. I n the resul t, appeal of the assessee i s partl y al l o wed. ITA No. 411/Chd/2010, A.Y. 2006-07 (Revenue's Appea l)
24. The reve nue h as rai sed four grounds of a ppeal . Ho wever, sol e s ubstanti ve ground of appeal , bea ri ng No.2 pertai ns to the del eti on of addi ti on of Rs.One Crore, i n respect of addi ti on made by the AO, on account of share appl i cati on, for want of veri fi cati on of nature and source thereof.
30
25. Ld. 'DR' pl aced rel i ance on th e order of the AO. Ho wever, l d. 'AR' submi tted that the mone y represented sal e proceeds to M/s Swarna E nterpri ses and t he entri es are just adjustment entri es, as hel d by the CI T( A) . He pl aced rel i ance on the order of the CI T( A) . I t woul d be perti nent to reproduce fi ndi ngs of the CI T( A) i n the matter :
"37 Reiterating what has already been discussed in the 'Brief Facts & Background' to Ground No. 2 of this order, the assessee is selling goods to M/s Swarna Inds. Ltd. and showed the net receivable as on 31.3.06 in balance sheet under the head 'Debtors'. The assessee filed copy of account of M/s Swarna Inds. Ltd. which shows that from the balance payable by M/s Swarna Inds, Rs. 1 crore has been transferred to share application money account and balance was reduced by that amount. The Assessing Officer noticed that the assessee has not shown Rs. 1 crore in books of accounts and balance sheet and she made an addition of Rs. 1 crore under section 69 of the Income Tax Act.
38 From the submissions and record, it has been found that M/s Swarna Inds. Passed journal entry in books of accounts as on 31.3.06 as under:
M/'s Bansal Agro (Creditor) dr. Rs.l crore. To Share Application Money cr. Rs. 1 crore. 39 By making the above book entry, creditor balance was reduced and share application money was increased but net impact on liabilities in books of accounts is Nil. The assessee has not passed any book entry - only debtor balance on account of sale has been reflected. Had the assessee passed book entry, the debtor balance would have reduced and investment balance would have been increased and net impact on total assets would be nil.
40 Therefore, in my view and as per records, it is not a case of unrecorded investment but it is only book-adjustment. There being no impact on assets & liabilities of assessee and M/s Swarna Industries, the addition so made is deleted allowing assessee's second ground of appeal."31
26. We have careful l y perused the ri val submi ssi ons, facts of the case and the rel evant reco rd. A bare peru sal of the fi ndi ngs of the CI T( A) , reveal s that assessee i s sel l i ng goods to M/s Swarna I ndustri es Ltd. an d sho wed net rec ei vabl e as on 31.3.2006 in the bal ance sheet, under the head 'debtors'. The assessee fi l ed copy of account of M/s Swarna I ndustri es Ltd., whi ch sho ws Rs.One Crore, bei ng bal ance pa yabl e to the assessee appel l ant, had been transferred to share appl i cati on mone y account and the bal ance was reduced by that amount. The AO, noti ced that assessee, had not sho wn R s. One Crore, i n the books of acc ount and consequentl y, m ade the addi ti on of the i mpugne d amount. The AO, had i gno red the factum that the i mpugned amount, represented sal e proceeds, of the sal es made by the assessee, to M/ s Swarna I ndustri es Ltd. Ld. C I T( A), has di scussed i n detai l the outstandi ng entri es i n the books of account of M/s Swarna I ndustries Ltd. The CI T( A) , found that credi t bal ance was reduced by maki ng the entries, as i ndi cated i n para 38 of the appel l ate order, and share appl i cati on mone y was i ncreased, and net impact on l i abi l i ti es i n the books of accou nt, i s 'Ni l '. I t i s, further, observed by the CI T( A) , that asse ssee had not pa ssed any book entr y - onl y debtor bal ance, on account of sale, has been refl ected. Consequentl y, havi ng regard to th e rel evant records, the CI T( A) recorded a fi ndi ng, that i t i s not a case of unrecorded i nvestment, but represents on l y book adjustment. I t was, further, observed by the CI T( A) , that there bei ng no i mpact of assets and l i abi l i ti es on assessee, and M/s Swarna I ndustri es Ltd., the i mpugned addi tion 32 was del eted by the CI T( A) . We, do not fi nd, any i nfi rmi t y i n the fi ndi ngs of the CI T( A) , havi ng regard to th e factual matri x of the i ssue i n questi on. Therefore, gro und No.2 rai sed by the revenue i s di smi ssed.
27. Ground Nos. 1, 3 & 4 are general i n nature and need no separate adjudi cati on. Therefore, the same are di smi ssed.
28. In the resul t, appeal of the assessee ( I TA No. 264/Chd/2010) i s partl y al l o wed and the appeal of the revenue ( I TA No. 411/Chd/2010) i s di smi ssed.
Order pronounced in the Open Court on 31 s t Ma y,2012.
Sd/- Sd/-
( H.L.KARWA) ( MEHAR SI NGH)
VI CE PRESI DEN T ACCOUN TA N T MEMBER
Dated: 31 s t Ma y,2012.
'Poonam'
Copy to:
The Appel l ant, The Respondent, The CI T( A) , The CI T,DR Assi stant Regi strar, I TAT Chandi garh