TaxTMI 
TaxTMI 
2019 (8) TMI 1260
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....f Income-tax (Appeals) erred in law and on facts in upholding the finding of the Assessing Officer that the transactions in castor oil and castor seeds were sham transactions and thereby excluding the total purchases and sales of the appellant company from the working of the total income. 4.0 The learned Commissioner of Income-tax (Appeals) erred in law and on facts in upholding the action of the Assessing Officer in assessing the total income at Rs. 1,66,58,916/- against the returned loss of Rs. 28,03,216/-. 5.0 The appellant may be allowed to add, amend, alter or raise additional grounds of appeal." 3. Briefly stated, the relevant material facts are like this. During the course of scrutiny assessment proceedings, the Assessing Officer noted that the assessee has warehouse rental income of Rs. 42,17,319/-, weigh bridge income of Rs. 3,67,915/-, truck hiring income of Rs. 14,40,000/- as also long term capital gain of Rs. 1,39,35,612/- on sale of land. However, these incomes have been wiped off on account of alleged loss in castor seed and castor oil trading. When these transactions were probed further, it was noted that admittedly the assessee did not have any ....
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.....K. Agrotech Exports (P) Ltd to supply castor seed. These papers are only an afterthought and fails to prove the so called 'contract' between the assessee and the other party. Therefore, these papers to prove 'contract sale' are rejected these do not have any evidentiary value to prove 'obligation to sale'. As far as address of M/s. Golden Tulip Hotels & Appts (P) Ltd, M/s. Vishal Agrotech and M/s RPK Agrotech are concerned, these have been shown based at the assessee's premises only as per the invoices furnished in written submissions. Photo copy of these invoices are also annexed to this order (numbered 9 to 11) and shall form part of the assessment order. Admittedly, M/s. Golden Tulip Hotels & Appts (P) Ltd and M/s. RPK Agrotech Pvt. Ltd. are associate concern also. Thus the theory of 'contract sale' or 'obligatory sale' contended by the assessees is rejected and the loss claimed by the assessee in castor oil and castor seeds trading transactions is ignored and all transactions in castor oil and castor seeds are held as sham transactions. Penalty Proceedings u/s 271(1)(c) of the Income-tax Act is initiated for furnishing inaccurate particulars of income. ....
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....ity Value May 264.000 Mts 19668000 264.000 Mts 19395288 Loss=272712 June 966.000 Mts 71337000 966.000 Mts 70082442 Loss=1254558 Total 1230.000 1230.000 For castor seeds only 4 transactions have taken place during the year. CASTOR SEED- Purchase and sale: Month/date Inward Outward Remarks Quantity Value Quantity Value May 133.675 Mts 4232260 133.675 Mts 4250865 Gain= 18605 June 277.620 Mts 8967541 277.620 Mts 9033712 .Gain= 66171 Jan. 453.205 Mts 22116404 453.205 Mts 21368616 Loss= 747788 Feb. 878.546 Mts 45684392 878.546 Mts 28113472 Loss= 17570920 Total 1743.046 1743.046 (DATEWISE PURCHASE AND SALE DETAILS OF CASTOR OIL Purchase Details Sale details Date Qty (MT) Rate per MT (Rs.) Item Date Qty (MT) Rate per MT (Rs.) 21/05/2010 132 74500 Castor Oil 21/05/2010 132.0' 73467 24/05/2010 132 74500 Castor Oil 24/05/2010 132.0 73467 02/06/2010 176 74500 ....
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....rate of Rs. 52,000/- per MT from M/s. Golden Tulip Hotel and Apartments Pvt. Ltd, operating from the same premises, and was sold same day at the rate of Rs. 32,000/- per MT to M/s. Vishal Agrotech, also based in the same premises. A proper analysis reveals that the appellant have booked loss deliberately to avoid payment of tax on Capital Gains as also on the income from rent of warehouse. The transactions in castor seed and castor oil allegedly under taken by the appellant are beyond the normal logics of business. One more interesting fact is that it is beyond any logic that the so called buyer and seller both are situated in the same building same office but they instead of going for direct transition with each other chose to go through the appellant. This is. also illogical that a prudent business person will go for such type of transaction year after another, in which it has incurred huge losses and the area of business is also does not pertain to appellant company. Ld. A.O has also pointed out the rate difference of purchase and sale on 31.01.2011 castor seed purchase rate is @Rs. 48,800 per MT. The sale rate on the same day is 47150/- per MT. Just after 10 d....
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....en the price was at its higher to work out a situation where it has claim to incur huge loss. With reference to appellant's contention it is observed that, this is also beyond any logic that any prudent business person will keep on going for future booking when constantly it is incurring loss. The appellant has also failed to prove that it was under obligation to complete the earlier booked transactions. Further it has also failed to furnish evidence wrt to rate of purchase and sale of castor seed and castor oil as claimed by it. Secondly if all the entities with whom the appellant has entered into transaction for the above mentioned commodities, are different as submitted by appellant then the appellant has failed to prove that why these entities could not do transaction directly with each other being placed and working from same premise . Thirdly, the appellant has failed to furnish evidence of bearing of the transport expenses. since there has to be huge movement of goods through the containers, who has borne the transportation expenses is not clear and has not been explained by the appellant. Even the so called sale contract are also silent on this issue. ....
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....ar Kandla and Mundra Port. 15 KMS from Kandla Port and 75 KMS from Mundra Port * 24 hrs. operative weigh bridge facility for weighing 100 MTS * Well equipped with electricity and security round the clock Cargo Care Logistics We provide our customers with powerful logistics solutions involving people, technology and location, working together to provide integrated, full service supply chain management. We specialize in crafting efficient and cost effective logistics solutions customized to customer's specific requirements which allows you to focus on core competencies and develop a logistical edge over the competition through the use of our professional logistics services. We effectively bridge the gap between your vendors, your goods and your customers to provide you with a winning edge. At website of India MART About Rpk Agrotech Exports Private Limited WE ARE COMMITTED TO BE POSITIVE & AGGRESSIVE IN OUR ATTITUDE TOWARDS QUALITY AND CUSTOMER SERVICE. WE WILL NOT ALLOW QUALITY TO TAKE SECOND PLACE BEHIND COST OR SCHEDULE AS THIS IS OUR BASIC STRATEGY FOR GROWTH. OUR CUSTOMERS DEMAND A HIGH QUALITY PRODUCT - IT IS OU....
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....E SPECIALIZE IN CRAFTING EFFICIENT AND COST EFFECTIVE LOGISTICS SOLUTIONS CUSTOMIZED TO CUSTOMERS SPECIFIC REQUIREMENTS WHICH ALLOWS YOU TO FOCUS ON CORE COMPETENCIES AND DEVELOP A LOGISTICAL EDGE OVER THE COMPETITION THROUGH THE USE OF OUR PROFESSIONAL LOGISTICS SERVICES. WE EFFECTIVELY BRIDGE THE GAP BETWEEN YOUR VENDORS, YOUR GOODS AND YOUR CUSTOMERS TO PROVIDE YOU WITH A WINNING EDGE. * OVER THE YEARS HAVE GROWN BOTH IN TERMS OF FLEET OF TRUCKS AND THE ARGO HANDLED * HAS GOOD NETWORK WITHIN THE INDUSTRY AND IS AMONG THE MOST RELIABLE LOGISTIC OPERATOR FOR CARGO FROM MUNDRA/KANDLA * ALSO LOOKS INTO THE CLEARING AND FORARDING ACTIVITIES ON BEHALF OF ITS CUSTOMER * CUSTOMER VIEW CARGO CARE LOGISTIC AS ONE STOP SOLUTION FOR THEIR LOGISTIC NEEDS While going through the appellant submission it is seen that as claimed by it the parties with whom the appellant has made transaction of 'castor oil and castor seed are apperantly its related parties only. As per information available on internet the address of M/s. R.P.K. Agrotech Exports (P) Ltd. is in following : Postal address Regd. Office. 601, Anurag Apartment....
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....al agrotech is also situated at the same premise of M/s. RPK AGROTECH EXPORTS (P.) LTD. having address, at 351 SACOND FLOOR SECTOR 1/A. GANDHIDHAM KUTCH. as per scanned copy of bill furnished by appellant in its paperbook, The appellant has claimed to sold castor seeds at very low price @ Rs. 32,000/-after purchasing it @ Rs. 52,000/- from M/s. Golden Tulip Hotels & Appts. P. Ltd : which is also situated at Plot No. 351 .SACOND FLOOR SECTOR 1/A, GANDHIDHAM KUTCH.3 Hence it is undoubtely clear that all these concerns with whom the appellant has claimed to have purchase and sale transaction and had huge loss in castor oil and seec dut to so called obligatory sale contract are sister concern. All are situated in same premises and even the director are also same as per information available on internet on pubic domain. In view of analysis of above facts it is undoubtedly clear that these so called sale purchase of castor oil and castor seed are nothing but a clear eyewash. Hence the ld AO rightly treated these transactions as sham transaction with an intention of just to mitigate the huge capital gain. I have further observed that even the veracity of claim of transac....
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....ed the importance of associating with trusted total logistic solution providers, like us, who have exposure across the entire spectrum of business activity. AML consists of a core team of dedicated personnel who have extensive exposure across all ambits of a business enterprise, be it Sourcing, Processing, Manufacturing, Trading, Import, Export, Shipping, Chartering, Warehousing, Logistics, Vessel Agency, Custom Clearance, Marine Supply, etc. All this supported by in-house infrastructures, equipments and cargo handling machinery, has made us a company of choice. Quick access to outsourced, creditable technical advisors, taxation consultants, and legal counsel, as and when needed is an additional resource we have been delivering to our clients in need of such services. We are pleased to project ourselves as a Value Added Service Provider of substance providing efficient and cost effective services We are focused on our role and the practical exposure to many situations that our clients face in the course of their business activity has made us the value added service provider we are today. Very often we are invited to participate by our clients in their in-....
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....hese were sister concerns or the transactions were collusive. He invites our attention to the elaborate documentation in support of genuineness of the transaction and submits that this documentation cannot be ignored. The contentions raised before the authorities below were reiterated. 8. In our considered view, the arguments of the learned counsel are somewhat superficial and miss the fundamental genuineness aspect as has been well elaborated by learned CIT(A) in an erudite analysis. The variations in castor oil and castor seed prices are not supported by the authoritative data reproduced by the CIT(A). The sequence of events, showing repeated loss transactions, do not make sense either. It is also difficult to understand that when ultimate buyer and the seller operate from the same premises, why is the assessee roped in every time, and every time that happens, assessee incurs a loss. There is no explanation about the nature of office sharing arrangement or the nature of their association. The "ease of business" for every connected party operating from the same premises is too vague an explanation to merit judicial approval. 9. As we hold so, we are reminded of Hon'ble S....
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....icient in the present case to show that the apparent was not the real. The taxing authorities were not required to put on blinkers while looking at the documents produced before them. They were entitled to look into the surrounding circumstances to find out the reality of the recitals made in those documents". As a final fact finding authority, this Tribunal cannot be superficial in its assessment of genuineness of a transaction, and this call is to be taken not only in the light of the face value of the documents sighted before the Tribunal but also in the light of all the surrounding circumstances, preponderance of human probabilities and ground realties. Genuineness is a matter of perception but essentially a call on genuineness of a transaction is to be taken in the light of well settled legal principles. There may be difference in subjective perception on such issues, on the same set of facts, but that cannot be a reason enough for the fact finding authorities to avoid taking subjective calls on these aspects, and remain confined to the findings on the basis of irrefutable evidences. Hon'ble Supreme Court has, in the case of Durga Prasad More (supra), observed that "human ....