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TMI Blog2018 (5) TMI 1323X X X X Extracts X X X X X X X X Extracts X X X X ..... finding of the ld. First Appellate Authority and dismiss this ground of the assessee. Revenue’s appeal dismissed on the issue of addition. - IT(SS)A No.98/Kol/2013, IT(SS)A No.99/Kol/2013 - - - Dated:- 18-5-2018 - Hon ble Shri J. Sudhakar Reddy, AM And Shri A.T.Varkey, JM For the Department : Shri G.Mallikarjuna, CIT(DR) For the Assessee : Shri Ravi Tulsiyan, FCA ORDER PER J.SUDHAKAR REDDY, AM: Both these appeals filed by the Revenue are directed against identical orders of ld. C.I.T.(A)-Central-1, Kolkata relating to block period 01.04.1988 to 21.04.1998. 2. There is a delay of 3 days in filing of these appeals. After perusing the petition filed for condonation of delay, we condone the delay and admit the appeals. 3. The fact in brief as brought out in the statement of facts in Form No.35 is extracted for ready reference. The assessees are individuals. Mr Praveen Kumar Chharia is a proprietor of M/s Chharia Transport Organization (CTO), and Mr Pramod Kumar Chharia is a proprietor of M/s. Ankit Carriers who are empanelled transporter for transportation of bitumen to Bihar Govt. Road Construction Divisions (RCD). They are also partners of the fi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... resenting transportation charges. 3. That on the facts and circumstances of the case the Ld. CIT(A) has erred in deleting ₹ 2,51,59,600/ - on account of undisclosed income from sale of Bitumen. 4. That the Ld. CIT(A) has violated Rule 46A of the 1. T. Rules while allowing the claim of the assessee that the non-delivery was on account of problems arising at the delivery point in some cases which was also communicated to the Oil Companies and after taking due instructions from the Oil Companies, the materials were also sold off as directed, on the basis of pages 142 to 145 of paper book, which was never produced before the A.O. and deleted the above mentioned additions of ₹ 84,86,518/- and ₹ 2,51,59,600/-. 5. That on the facts and circumstances of the case the Ld. CIT(A) has erred in deleting ₹ 1,29,86,982/ - on account of undisclosed income from purchase of Bitumen from Shri K. K. Kedia and profit on sale thereof. 6. The department craves the right to add, alter or modify grounds of appeal during the course of appellate proceedings at any stage. IT(SS)A.No.99/Kol/2013 Shri Ankit Chharia 1. That on the facts and circumstances of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... bitumen scam was based on IOC pointing out non-delivery of bitumen. He further submitted that Mr. K.K.Kedia, from whom the assessee purchased bitumen, was the main accused in the case and that a charge sheet was filed on him, by the CBI and based on this evidence collected by various agencies, the AO came to conclude that there was undisclosed sales of bitumen. He submitted that the ld CIT(A) has simply accepted the contentions of the assessee without evidence or verification of the claim and had deleted the additions. He prayed that the same be restored. 6. In the case of Shri Ankit Chharia in ITA No.99/Kol/2013, he pointed out that an additional issue, of addition relating bogus sundry creditors of ₹ 57,36,064/- was made. He relied on the order of the AO for this addition and submitted that the same be upheld. 7. The ld. Counsel for the assessee, on the other hand, opposed the contention of the ld. DR and submitted that the ld. CIT(A) has rightly appreciated the facts of the case and has correctly adjudicated the matter. He relied on the order of the ld. CIT(A). On ground No.1, he submitted that the assessee Mr Pravin Kumar Chharia was a proprietor of M/s. Chharia Tr ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ake the place of proof. He further submitted that even in the charge sheet filed by the CBI in the court on this bitumen scam, the names of these assesses had not appeared. He argued that hence it is clear that, the additions have been made, solely on the basis that both the assesses were part of bitumen scam, which assumption is against facts of the case. 10. On the decision placed in the arbitration proceedings between the oil companies and the assessee by the AO, he submitted that, none of the allegations made by the oil companies were proved and all the decisions were on facts held in favour of the assessees. He invited the attention of the bench to the copy of the Arbitration Award dated 21.09.2010, a copy of which was furnished in the paper book. On the issue of purchases made of bitumen from Shri K.K.Kedia, he relied on the judgment of the CBI Special Court dated 22.11.2016, wherein the assessee was acquitted of the charges of having made such purchases. He relied on the decision of Kolkata Bench of the ITAT on identical facts in an identical case. He further relied on a number of case laws which will be discussed as and when necessary in this order. 11. In the case of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rent negtive cash balance in the books of M/s Chharia Transport Organisation on different dates was covered by sufficient cash availability in the books of M/s Hindustan Tar Products on those dates. In other words, there will be no negative cash balance in the books of M/s Chharia Transport Organisation if cash available in the books of M/s Hindustan Tar Products is taken into account; and consequently, there is no case for additions on account of negative cash balance. The addition of ₹ 3,47,032/- in AY 1996-97 and that of ₹ 99,667/- in AY 1997-98 on account of negative peak balance in the cash book is directed to be deleted. Ground no.6 is allowed. We find no infirmity in the same as the factual finding could not be controverted by the ld. Departmental representative. 13. The assessee has furnished details date-wise chart and cash flow of the short fall of cash balance in the books of accounts M/s. Chharia Transport Organisation and the cash balance as available in the books of M/s. Hindustan Tar Products for the financial year 2005-06 and 2006-07. When both the proprietory concerns of the assessee and the partnership concern are managed by the same persons an ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... lant nor his concerns appear. Therefore, it appears that the assumption of the AO that the appellant was involved in the bitumen scam is simply an assumption. The AO has not brought any material on record to substantiate his assumption that the appellant was involved in the scam whereas, on the contrary, the appellant has produced material to show that he was never alleged to be involved in the scam by the appropriate authorities. Therefore, it is clear that the very basis for making the additions in the present case is an incorrect assumption of the AO which is not based or substantiated by any material, and on the contrary, is in direct conflict with the material available on record. The AO has further relied on the claims raised by the Oil Companies and the arbitration going on in respect of the same to buttress his view that the appellant was involved in the scam and had not done transportation as per the contract. But then, it was argued that the arbitration proceedings do not relate to non-supply or short-supply of material. The allegation in the arbitration proceedings was that although the material was supplied to the respective destinations but the supply was not routed th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... h the travel had been undertaken does not alter the distance travelled; and therefore, the disallowance made without bringing on record any actual evidence to show that expenses had been inflated cannot be sustained. The AO has further stated that materials found in the search show that the appellant had not supplied the materials at the final delivery point in some cases. The appellant has filed documents to counter the allegation of the AO to prove that the non-delivery was on account of problems arising at the delivery point in some cases which was also communicated to the Oil Companies and after taking due instructions from the Oil Companies, the materials were also sold off as directed (page 142 to 145 of the paper book). Therefore, it is clear from the evidences filed on record by the appellant that there was no misappropriation of bitumen as alleged in the assessment order. The bitumen which could not be delivered due to problems at the point of unloading was sold as per the instructions of the Oil Companies. In fact, the AO has not produced any evidence on record where the Oil Companies have alleged misappropriation of bitumen by the appellant. The only allegation by the Oi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... either in the report of the CAG or Oil Coordination Committee report, is not controverted by the ld. DR. The ld. CIT(A) has specifically, in his order stated that there is no specific finding against the assessee in any of the reports and that the addition in question was made on assumptions by the AO, that the assessee was involved in the bitumen scam and that the AO has not brought any material on record, to substantiate his assumption. Even he further recorded that the reliance placed by the AO on the allegation made by the Oil companies, is not correct as these allegations were proven wrong in the Arbitration Award between the assessee and the oil companies. When it is proved that charges against the assessee are not correct no addition based on such allegations can be sustained. The ld. CIT(A) also records that the assessee has filed documents to counter the allegations of the AO and to prove actual delivery of bitumen etc and also to prove that there was no misappropriation. He also held that the issue is covered by the decision of the jurisdictional ITAT in the case of Sitaram Surekha in IT(SS)A.140/Kol/2004. The ld. DR could not controvert the factual finding of the ld. CI ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... proceedings. Furthermore, I have already observed above that the entire allegation is mainly based on the presumption that 55% of the expenses booked by the assessee is bogus on the basis of the CAG report which itself I have found to be legally untenable. And, when the presumption itself is legally untenable, then the creditors cannot be doubted simply on the basis of an Inspector s report which has not even been supplied and confronted to the assessee and is contrary to the principles of natural justice. In view of the above, I hold that no addition on account of bogus sundry creditors could have been lawfully made by the A.O. In view of the above, I hold that no addition on account of bogus transportation charges or creditors and undisclosed sale of bitumen is sustainable in law or on facts. The addition of ₹ 57,36,064/- and ₹ 1,27,86,465/- is deleted. Ground no.5 and 6 are allowed. The findings of the First Appellate Authority that, there is no material found or seized during the course of search and hence no addition can be made in the block assessment made u/s 158BC of the Act, could not be controverted by the ld. DR. The ld. CIT(A) further held that the ad ..... X X X X Extracts X X X X X X X X Extracts X X X X
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