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TMI Blog2012 (5) TMI 702X X X X Extracts X X X X X X X X Extracts X X X X ..... s and M/s. Shanti Enterprises are concerned, the same have been confirmed by both the parties in their statement dated 20/10/2009 given before the ACIT, Circle 29(1), Delhi. 4. That as regards, purchases from Shri Rohtash Mittal Prop. M/s Vikas Kumar Vivek Kumar, the Ld. CIT(A) has not considered the fact that the Assessing Officer has accepted the sales out of said purchases made to M/s. Swarna Industries and hence, as per the settled position of law the purchases cannot be held to be bogus. 5. That notwithstanding above said ground of appeal the CIT(A) has failed to consider the quantity tally as furnished before the CIT(A) to substantiate the fact that there could not have been sales without the purchases being made and as such, under such circumstances, the purchases could not held to the bogus as held by the CIT(A). 6. That the Ld. CIT(A) has erred in confirming the action of the Assessing Officer in initiating penalty proceedings u/s 271A of the Act. 7. That the appellant craves leave to add or amend the grounds of appeal before the appeal is finally heard or disposed off. 3. In revenue s appeal, (ITA No. 411/Chd/2010) the revenue has raised the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... t, the Dy.CIT, Circle 5(1), Chandigarh. The ld. 'AR' extensively quoted the relevant pages of the Paper Book, bearing Serial No. I to IX. Ld. 'AR' contended that all the payments, to the sellers, at Delhi, were made through cheques. Similarly, the payments from the purchaser M/s Swarna Industries Ltd. were received through cheques. This factum stands proved by the deposition made by the sellers, in their respective affidavits, contended the ld. 'AR'. Necessary documentary evidences were also filed, to support his contentions. It was, further, contended by ld. 'AR' that when purchases are treated as bogus, without any basis, the sales, emanating from such purchases, has been accepted by the Department. Therefore, there cannot be two different treatments to a single transaction of purchase and sale. The ld. 'AR', further, contended that sales made by the assessee to M/s Swarna Industries Ltd. were also treated as genuine. The ld. 'AR' further discussed and placed reliance on written synopsis. Ld. 'AR', placed reliance on 11 decisions, including the decision jurisdictional High Court and various Tribunals, to support his contenti ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... from Sh. Rajesh Gupta, Prop. M/s Bansal Agro Feed, SCF 164, Sec. 26, Chandigarh, being transferred from creditors account. When this fact was verified from the Balance Sheet of Shri Rajesh Gupta, Prop. M/s Bansal Agro Feed, it was noticed that he had not shown an amount of ₹ 1,00,00,000/- as an investment in his books of account. In order to verify the genuineness of the transaction, necessary details were called for by the AO. On making further enquiry, it was noticed that the assessee Sh. Rajesh Gupta had not given any share application money, in form of cheque/Demand draft or has not applied for the same in shape of share application form, rather the amount due from M/s Swarna Industries Ltd. was transferred from credit balance account towards share application money, to the extent of ₹ 1,00,00,000/-and it was allegedly done on the basis of oral understanding. Further, to verify the genuineness of the transaction, the parties from whom Sh. Rajesh Gupta, Prop. M/s Bansal Agro Feed had made purchases were investigated and consequently, commission u/s 131(l)(d) of the I.T. Act, 1961, dated 19.12.2008, were issued to the jurisdictional Assessing Officer, Sh. Shiv Saroop ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ack transactions with M/s Swarna Industries Ltd. As the assessee has failed to offer any explanation, to prove the nature and source of Rs.One Crore, invested with M/s Swarna Industries Ltd., the AO, made the addition of such amount under Section 69 of the Act. 8. In the course of assessment proceedings, AO, noticed that the assessee had made purchases to the tune of ₹ 2,42,48,708/- from the three parties mentioned earlier. 8 (i). The jurisdictional AO, recorded statement of Shri Rohtash Mittal, Proprietor M/s Vikas Kumar Vivek Kumar on 22.12.2008. In the statement, Shri Rohtash Mittal stated that he had not made any sales to the present assessee and had given accommodation entries. It was, further, reported by the jurisdictional AO, at Delhi that M/s Rithala Enterprises and M/s Shanti Enterprises were found closed, whenever Inspector was deputed to visit the shops. It was, mentioned by the AO that normal businessman, who deals in actual purchase and sales of goods, cannot keep the business premises closed for such a long period, in the normal business hours. Thus, it is clear, that the purchases made, from all these concerns, are bogus. On the basis of enquiry report s ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of the statement, stated that they had got material from M/s Vikas Kumar Vivek Kumar, New Delhi and sold the same. It was also mentioned in the statement that we are concerned about only our margins. When we receive payment, we have made further payments. The statement of Shri Mukesh Kumar of M/s Rithala Enterprises, reveals that he had confirmed therein the sale of goods to M/s Bansal Agro Feed, for ₹ 99,68,525/-, during the financial year 2005-06. In response to another question, it was stated, by Shri Mukesh Kumar, that his father Shri Sita Ram, aged 80 years, was suffering from asthma, at that period and consequently, not opened the shop properly, during the period December to January,2009. At present, he is doing the business from his residence and Naya Bazar shop is his Branch Office. Similarly, perusal of the statement of Shri Vineet Goyal of M/s Shanti Enterprises, New Delhi, as reproduced by the CIT(A), in the appellate order, reveals that he knew Shri Rajesh Gupta, Proprietor M/s Bansal Agro Food, Chandigarh, as customer and sold the goods to M/s Bansal Agro Food, during financial year 2005-06 and copy of the ledger account of M/s Bansal Agro Food and bank account s ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... pport her findings, there is a material and vital difference of facts. Hence, we are of the considered opinion, that the case law, relied upon by the ld. CIT(A), to support her findings, is not applicable to the facts of the present case, being materially different and distinguishable. Further, decisions of the Hon'ble Supreme Court in the case of Omar Salay Mohamed Sait V CIT (1959) 37 ITR 15 (S.C), Dhirajlal Girdhari Lal V CIT (1954) 26 ITR 756 (S.C) and CIT v Radha Krishan Nand Lal (1975) 99 ITR 143 (S.C), referred to by the Hon'ble Delhi High Court, in the case law relied upon by the CIT(A), were in the specific context of the fact-situation, as obtaining in the case of CIT V LA MEDICA (supra). The crux of such decisions is that issue cannot be adjudicated on no evidence or on irrelevant evidence. The fact-situation is factually different and distinguishable in the present case. Therefore, the ratio of the decision in the case of CIT V LA MEDICA (supra) is not applicable to the facts of the present case, as discussed above. 12. Further, ld. 'AR' placed reliance, on the decision of the Hon'ble jurisdictional High Court, in the case of CIT V Leaders Valves ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... egistered dealers though he admitted the sales and other expenses incurred on the material-There was thus no justification to reject the claim of purchases-Such a transaction can only be considered as a defect in the maintenance of accounts for applying G.P. rate under s. 145-CIT(A) was justified in deleting the addition. 12(ii) In the present case, the AO had treated the impugned purchases from three parties as bogus one, however, sales made out of such purchases were not disputed or questioned and resultant profit on such sale, was not interfered with by the AO and the CIT(A). In view of the fact-situation, the decision of the Hon'ble jurisdictional High Court as well as Jodhpur Bench, are applicable to the facts of the present case. 12(iii). Ld. 'AR', further, placed reliance on the decision of the ITAT, Ahmedabad C Bench (1990) 36 TTJ 64, in the case of Devan Babu P.Ltd. V ITO, whereby it has been held that from fact that supplier could not, according to the ITO, satisfactorily explain the source, wherefrom he procured the raw material, cannot result in disallowance of purchases made by the assessee from him. The relevant head-note is reproduced here unde ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... uantity of goods sold were available with the assessee-company. In other words, if the production stood accepted the quantity of purchases, etc. would also stand accepted; (6) The position that would emerge in case the entire purchases from R were treated as bogus and excluded from the manufacturing process, would be the yield resulting therefrom would be abnormal not only as compared to the preceding assessment year but also with reference to the yield in the other months of the year (7) Treating the purchases as bogus would result in a situation where the out-put in the form of rice brawn oil and DORB would be more than the input by figure of 1000 qtls. Which was not possible in the rice brawn oil extraction industry. 13. A perusal of the ratio of the above discussed decisions, cited and relied upon by the ld. 'AR' reveals that the same are applicable to the fact-situation of the present case. The decisions, inter-alia, of the jurisdictional High Court and Chandigarh Tribunal, are also applicable to the facts of the present case. However, the revenue failed to rebut the applicability of the ratio of such decision to the facts of the present case. 14. The asses ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... dent. 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 ITR 349 (S.C) and CIT 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 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 i ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he assessee appellant as bogus, solely on the basis of the contradictory statement of Shri Rohtash Mittal, Proprietor M/s Vikas Kumar Vivek Kumar. The revenue has ignored the statement and the affidavits given by other two parties namely M/s Rithala Enterprises M/s Shanti Enterprises, who confirmed the impugned sales to the assessee appellant. Shri Rohtash Mittal has adopted contradictory stand, in respect of transactions of sale, effected by him to the present assessee, without corroborating the same by way of cogent documentary evidence. Shri Rohtash Mittal failed to show that the payments received by him, by way of cheques, has been withdrawn from his bank account and paid to the assessee appellant, with a view to proving his stand that he made only accommodation entries. The reliability of his statement, in the light of affidavit filed by him, and confirmation of such sale through letter dated 20.08.2009 addressed to the AO at Chandigarh is of little evidentiary value, for the revenue, to treat purchase from other parties as bogus. The revenue, further, failed to bring on record any material or credible documentary evidence, except the statement of Shri Rohtash Mittal, which, ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... grains at 2637, 2nd Floor, Chadha Building, Naya Bazar, Delhi 110006 under the name and style of M/s Vikas Kumar Vivek Kumar. 2. That we are registered with Delhi Sale Tax Dept. vide Registration No. LC/2817900228297/400 dated .central sales tax department. 1. That we are regular assessed with Income Tax Ward No ..New Delhi and our/my PAN No. AGPPM 51178. 2. That we have supplied Soya Deoiled cakes during the financial year 2005-06 (as per copy of account attached) to M/s Bansal Agro Feed SCO 393, Sector 20, Panchkula aggregating to ₹ 10271569.00 (One crore two lacs seventy one thousand five hundred sixty nine only). That against this amount we have received from them an amount of ₹ 10200000/- by account payee cheque and ₹ 71569/- in shape of cash. 3. That at the financial year ending 31.3.2006 an amount of Rs. Nil was due from them. 4. That the above statement is true and correct. 19(ii). A bare perusal of the above affidavit reveals that the deponent has clearly confirmed the supply of Soya Deoiled cakes during the financial year 2005-06 (as per copy of account attached) to M/s Bansal Agro Feed, Panchkula, aggregating to S ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... asons of my business commitments. I am the only active working person in my business and closing the business premises for one or two days will definitely result in financial losses to me and place hindrances in my business commitments. As already written, I am the sole working person. I want a favour from your goodself i.e. grant me exemption from personal appearance in this case as witness. However, I want to submit and confirm the following: 1. I am Rohtash Mittal, son ofSh Ram Saroop Mittal. 2. I am prop. Of the concern M/s Vikas Kumar Vivek Kumar having office at 2637, IInd floor, Chadha Building. Naya Bazar, Delhi-6. I deal in Soya De oil cakes etc. and firm is registered with Delhi Sales Tax Deptt. Vide registration No. LC/2817900228297/0400. My PAN Card No. is AGPPM-5117-P. 3. My concern had dealt with the concern of said Mr.Rajesh Gupta during the year 2005-06 and transacted the deal to the tune of ₹ 1,02,71,569/- (Rs. One Crore Two Lacs Seventy One Thousand Five Hundred and Sixty Nine) and received the payment through cheques to the tune of ₹ 1,02,00,000/- and amount aggregating to ₹ 71,569/- as cash receipts. 4. The affidavit fil ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... hence, this ground of appeal is dismissed. 22. The ground of appeal No. 7 is general in nature, hence, needs no separate adjudication. Thus, the same is dismissed. 23. In the result, appeal of the assessee is partly allowed. 24. The revenue has raised four grounds of appeal. However, sole substantive ground of appeal, bearing No.2 pertains to the deletion of addition of Rs.One Crore, in respect of addition made by the AO, on account of share application, for want of verification of nature and source thereof. 25. Ld. 'DR' placed reliance on the order of the AO. However, ld. 'AR' submitted that the money represented sale proceeds to M/s Swarna Enterprises and the entries are just adjustment entries, as held by the CIT(A). He placed reliance on the order of the CIT(A). It would be pertinent to reproduce findings of the CIT(A) in 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 Swarn ..... X X X X Extracts X X X X X X X X Extracts X X X X
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