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1. In all these appeals filed by the Department as well as the assessees, the main issue involved is fraudulent withdrawals from Animal Husbandry Department (AMD), Government of Bihar, in the fodder scam. Therefore, all these appeals were heard together and are being disposed of by this consolidated order for the sake of convenience.

2. The brief history of the case gathered from papers brought on record and submissions made is that Shri Dipesh Chandak was engaged in the criminal conspiracy of systematic fraudulent withdrawals of funds from the State Exchequer in connivance with the officials of AHD, Government of Bihar, and others. The modus operandi to facilitate this was that purchase orders were placed by AHD on the assessee for supply of feed to the Department. The assessee in turn would raise bogus bills of supply of feed on the Department without actually making them. In support of these supplies, the assessee would raise fictitious purchase vouchers as if purchases have actually been made from the farmers and reflect transportation of the same to the various stores/depots of AHD in Bihar without any actual transportation being done. The fraudulent amount so withdrawn used to be drawn from bank account and thereafter divided among the various conspirators whereas in the books of account it would be reflected as if the payment has been made to the farmer-suppliers and the transporters. Shri Dipesh Chandak in this fraudulent withdrawal of fund from AHD used the following companies/concerns for raising bogus bills against non-supply of animal feed, etc.:

In the facts and circumstances of the case and in the ends of justice for obtaining evidence of Dipesh Chandak, I am tendering him pardon, on condition of his making a full and true disclosure of the whole circumstances, within his knowledge relating to the offences and every other person concerned, whether as principal or abettor, in the commission thereof, in terms of Section 5(2) of the Prevention of Corruption Act, 1988.
2.7. The assessee (Dipesh Chandak) subsequently filed applications before the concerned designated Courts of CBI for grant of pardon in other related cases and granting the prayer he has been made approver in those other cases also. Even when the IT Department tried to prosecute the applicant on the basis of his statement under Section 306 given before the Special Judge, CBI, Patna, the Hon'ble Supreme Court barred him from being prosecuted on the fear that the valuable evidence of the fodder scam would be lost. The authenticity of the statement made by the applicant was considered to be vital evidence in the AHD scam case by the Hon'ble Supreme Court in their judgment in Criminal Appeal No. 1031 of 2004, dt. 17th Sept., 2004.
(a) From the order sheet entries of CBI, it is very clear that the statement of Shri Dipesh Chandak before the designated Special Court of CBI reveals the real gamut of the entire conspiracy hatched to defraud the State Exchequer of crores of rupees by way of raising bogus bills without any supply being effected. Alter due concurrence of the investigating agency (CBI) and having verified the authenticity of the statement given by Shri Dipesh Chandak, which is on record, by scrutinising the documents collected during the investigation and finding the same to be full and true disclosure of the whole circumstances, Shri Dipesh Chandak has been admitted as an approver of the Government of India by the CBI Court in case No. RC 20(A)/1996 and such other cases related with AMD scam. Even when the IT Department tried to prosecute the applicant on the basis of his statement under Section 306 given before the Special Judge, CBI, Patna, the Hon'ble Supreme Court barred him from being prosecuted on the fear that the valuable evidence of the fodder scam would be lost. The authenticity of the statement made by Sri Chandak has not been doubted even by the Hon'ble Supreme Court in their judgment in Criminal Appeal No. 1031 of 2004, dt. 17th Sept., 2004.

23. This appeal of the Department is partly allowed for statistical purposes.

ITA Nos. 443 to 446/Pat/2004; asst. yrs. 1987-88 to 1990-91 (Dept. v. Quality Chemical Suppliers):

24. The first common ground in the appeals for asst. yrs. 1987-88 to 1990-91 relates to treatment of receipts out of fodder scam in the hands of the assessee. We have already held in the Departmental appeals in the case of Shri Dipesh Chandak (Indv.) that Shri Dipesh Chandak is the concern and not his other entities in respect of the impugned receipt out of fodder scam. The learned senior standing counsel of the Department also concentrated his arguments on pressing the issue that at least 20 per cent receipt should be taken as income in the hands of Shri Dipesh Chandak only and not on other entities. That being the position and for the reasons discussed by us above in the case of Shri Dipesh Chandak (Indv.), the action of the AO in having treated the impugned receipt in the hands of M/s Quality Chemical Suppliers is quashed and that of the CIT(A) is upheld. We order accordingly. This ground of the Department raised in all the aforesaid assessment years is thus dismissed.