TMI Blog2003 (12) TMI 288X X X X Extracts X X X X X X X X Extracts X X X X ..... M/s Puja Gases Ltd. for a total consideration of Rs. 14,14,000. These cylinders subsequently were allegedly leased to M/s Hotz Industries (P) Ltd., a sister-concern of the assessee. On these gas cylinders, the assessee claimed 100 per cent depreciation. 4. The AO, in this background, required the assessee to prove the genuineness of the purchase of these cylinders. In support of its claim, the assessee filed the following evidences: (i) Copies of 3 bills of M/s Puja gases for the purchase of 505 gas cylinders @ Rs. 2,800 each. (ii) Copies of three delivery challans issued by Puja Gases for these 505 gas cylinders. (iii) A letter dt.9th Oct., 1997, from Puja Gases certifying that 505 gas cylinders were sold to Durant Refrigeration (P) Ltd. and also certifying that payment of Rs. 14,14,000 was received from M/s Durant Refrigeration vide cheques drawn on ABN Amro Bank,Parliament Street,New Delhi. (iv) Copy of affidavit signed by Sh. A.S. Chowdhry, Prop. of Puja Gases stating that he had sold 505 gas cylinders to the assessee. (v) Copy of lease agreement with M/s Hotz Industries (P) Ltd. regarding lease of 505 gas cylinders. (vi) Copy of bank account of the assessee-compa ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nceived and without any justification. The assessee also filed a photocopy of the bank statement showing clearance of the cheque in favour of M/s Puja Gases. It was also stated that these cylinders were given on lease to M/s Hotz Industries as per the photocopy of the agreement which has been filed before the AO earlier and even the lease rentals received by them have been duly declared by them in the P L a/c. It was also stated that one Shri Satinder Choudhry was running this business in the name and style of M/s Puja Gases. The said person, expired in May 1997 and the firm was thereafter closed as his father Shri Amar Singh Choudhry was too old to carry on the business. The assessee-company gave another address of M/s Puja Gases as "Amar Singh Choudhry, C/o Shiva Tempo Transport, 358, Pandav Nagar, Near Atma Steel, Bulandshar Industrial Area,Ghaziabad." The AO observed that the assessee has failed to produce Shri Amar Singh Choudhry in person. In view of the fact that the assessee had given another address, the AO gave another opportunity to the assessee to produce Shri Amar Singh Choudhry in person for examination. In response to this, the assessee filed its reply dt.19th Feb., ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the nature of such deposits/withdrawals, i.e. from/to whom such cheques were received/given. Ans. I do not know about these transactions. I signed blank cheques and gave to Sh. R.P. Bhatia. Q.18 Were any books of accounts being maintained by Puja Gases, or there was any accountant/CA/advocate/manager of this firm? Please also state your sales-tax number. Ans. No, there was no such employee. I have also no sales-tax number. Q.19 If you have supplied/sold the cylinders, please supply the G.R./L.R./Transporter Bill or any other documents to authenticate the movement of cylinders fromGhaziabadtoDelhi. Ans. I have no such records/documents. Q.21 Do you recollect having sold/supplied gas cylinders to any other company other than M/s Durant Refrigeration (P) Ltd.? Ans. No, I have not sold any cylinder to any other party." 6. Further enquiries were also made from the Trade Tax Officer,Ghaziabad, regarding the sales-tax number appearing on the bills raised by M/s Puja Gases. The Trade Tax Officer, Sector-4,Ghaziabadhas replied vide his letter dt.25th March, 1998, that M/s Puja Gases were indeed allotted U.P. S.T. No. GD 0271063 dt.30th April, 1988and that the business of M/s ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... und, the AO was of the view that the defunct concern, i.e., M/s Puja Gases was used as a conduit in the assessee's attempt to evade taxes by claiming bogus depreciation on bogus purchase by taking advantage of an old man like Shri Amar Singh Choudhry and possibly alluring him with some easy money in the form of commission. 13. Aggrieved by this, in appeal before the first appellate authority, it was contended on behalf of the assessee that throughout the country, there was a short supply of gas cylinders vis-a-vis the demand and accordingly, there was a secondary market in the second-hand gas cylinders. It was further stated that the secondary market is so wide and so spread out that it is a normal trade practice to deal through the brokers. It was stated that this fact was confirmed by Shri Arun Kumar Jain, working director of the assessee-company and his oath was recorded before the AO. It was further contended that this fact had not been appreciated by the AO and referring to the same, it was pointed out that in fact a complete reading of the assessment order would show that it is full of contradictions and based purely on conjectures and surmises. It was further stated that t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ns were those of his son who according to Shri Amar Singh Choudhry himself was running the whole business. It was also stated that it was possible that the son was doing business in the name of his father as Benami so as to avoid payment of income-tax/sales-tax. Thus, it was questioned in this background the assessee could not be held responsible for the misdeeds of the third parties. With regard to the emphasis laid by the AO in para 11.3 of his order that there was close proximity between the assessee and Shri Amar Singh Choudhry, it was stated that the assessee was all along trying to trace the proprietors of M/s Puja Gases through the concerned broker for the Department. The statement recorded of Shri Mittal, proprietor of M/s Mittal Pharma and the statement of the local enquiry of Inspector which has been relied upon by the AO, it was stated that these were never confronted to the assessee. Considering these submissions, the CIT(A) deleted the addition in the following manner: "3.9 On a careful consideration of the facts of this matter, I must say that the statement of Shri A.S. Choudhry, as recorded by the AO on19th March, 1996, is not without contradictions and vagueness. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s Pooja Gases. It was further pointed out that at this stage, the assessee came up with the third address namely "Shri Amar Singh Choudhry, C/o Shiva Tempo Transport, 358, Pandav Nagar, Near Atma Steel, Bulandshahr Industrial Area,Ghaziabad." Much emphasis has been laid on the fact that the person Shri Amer Singh was not brought on record by the assessee and the address given by the assessee was not the address appearing on the bill book or delivery challans. The assessee also placed on record the affidavit of Shri A.S. Choudhry. In the circumstances, the AO proceeded to take the statement on oath of Shri A.S. Chaudhry and from the extract reproduced in the assessment order it was sought to be established by her that the affidavit relied upon by the assessee of Shri A.S. Chaudhry is, in fact, self-serving document prepared by the assessee. Much emphasis has been laid at question 8. Referring to the contradictions in the statement of Shri A.S. Chaudhry, it was pointed out that in fact Shri A.S. Chaudhry clearly states that he does not know anything about the business. Questions 10 11 were specially emphasized as it was contended that if as per the statement on oath of Shri A.S. Ch ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... held. 17. Learned Authorized Representative Shri Salil Agarwal, appearing on behalf of the assessee, on the other hand, placed heavy reliance upon the impugned order. Inviting attention to the submissions made by the assessee before the CIT(A) recorded at pp. 13 to 17 in paras 3.6 to 3.8, it was contended that the assessee has met each and every observation of the AO. It was pointed out that the assessee has referred to the background of the case and submitted that at the point of time when the gas cylinders were purchased and leased, there was a regular and booming market of second hand gas cylinders in view of the fact that the supply could not keep pace with the demand of the same. Referring to the same, it was pointed out that the secondary market/grey market is so widespread that it is a normal trade practice to strike a deal through brokers and in such a situation, the two parties concerned, i.e., the buyer and the seller do not in fact come in contact with each other at all as the buyer is interested only in the commodity which he is setting out to purchase and the seller is only interested in ensuring that he receives payment for the goods sold. Thus, in a transaction b ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... obtained the requisite information and, in fact, where he necessarily should have made efforts, he has scrupulously attempted not to go to that authority, i.e., the postal authorities. It was pointed out that if the Department was serious in tracing the whereabouts of the said concern, then what was stopping the inspector from approaching the postal authorities and obtain the necessary information as to whether a particular address existed or not. Without paying much attention to that, it was pointed out that even then when the assessee was confronted with the said facts, the assessee obtained the affidavits and the medical certificate for not producing the said proprietor Mr. Amar Singh Choudhry who had lost his son and was an aged man with medical conditions. The Revenue, it was argued, instead of appreciating the efforts of the assessee decided to ignore the same based on suspicion that the assessee has supposedly maintained relations with the said concern. It was pointed out that it has never been the case of the Revenue that M/s Puja Gases in any manner is even remotely linked to the assessee. Looking at the background of the case, it was pointed out that in the case of short ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s son. 18. Having heard the rival submissions and perused the material placed on our files, we are of the view after a careful perusal of the same that with regard to the peculiar facts of the case, there is sufficient force in the arguments of the learned Authorized Representative inasmuch as in the case of a transaction of purchase, it may not be necessary to come in direct contact with the seller to the extent that when a party enters into a transaction to purchase a certain commodity which the seller possesses, then the buyer does not necessarily considers it prudent to find out the antecedents of the seller to the extent that his status of complying with sales-tax authorities and other authorities. A purchaser is only interested that the seller is in a position to deliver the goods required by the purchaser or not. The question of requiring the seller to give details of his compliance with various sales-tax, etc., laws does not arise. We are unable to come to a finding that the purchaser is required first to ascertain the status of the compliance with sales-tax, etc., before entering into the transaction of purchase with the seller of the commodity and only then can the genu ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... udhry has said that all transactions of M/s Puja Gases were done by his son, thus the case which the Revenue has tried to make out is that Shri Amar Singh Choudhry was not qualified even to make the statement in the affidavit that the transaction is genuine. We are of the view that undue importance to the said statement in the peculiar facts and circumstances of the case is not warranted. If for a moment, it is assumed that Shri Amar Singh Choudhry was not qualified to even make that statement, then this fact even by itself does not advance the case of the Revenue in view of the fact that as per the categoric observations of the AO himself the signatures of Shri Amar Singh Choudhry as appended in the affidavit and the statement match. However, the signatures appearing on the bills/challans are different. Much emphasis has been laid upon the said fact by the Revenue. Appreciated in the proper context, it is seen that the consistent stand of the Revenue and the statement recorded on oath of Shri Amar Singh Choudhry as well as the affidavit placed on record by the assessee rings consistently with one refrain, i.e., the business of M/s Puja Gases was being done by Shri Satinder Choudhr ..... X X X X Extracts X X X X X X X X Extracts X X X X
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