TaxTMI 
TaxTMI 
2013 (8) TMI 591
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....cording to the AO letters u/s. 133(6) have been sent to various parties on the address made available with the assessee. Out of total such letters, 32 have been received back un-served. The assessee was asked as to why the purchases of above amount should not be considered as bogus. The assessee furnished that the firms have been closed and their addresses have been changed. The AO, therefore, inferred that the assessee has provided earlier wrong addresses to misguide him. The assessee was again asked to prove above statement with documentary evidences, but the assessee failed to comply with the same. The assessee was asked to explain the genuineness of the creditors. Reply of the assessee was not found satisfactory, therefore, addition of Rs.83,44,318/- was made on account of bogus purchases/creditors. The assessee submitted before the ld. CIT(A) that the AO has supplied the list of 26 parties and not of 32 parties at the assessment stage. No copies of correspondence along with envelops of the letters received undelivered have been supplied to the assessee. The assessee submitted entire details along with the purchase bills at the assessment stage. Books of account have not been r....
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....l as remand proceedings. A.O. has issued these letters u/s 133(6) (for these 8 parties) on the same address mentioned below and not at changed address as given by the appellant and in respect of which postal authorities have also made remarks specified against each for the reason of non services: S.No. Names and address as per purchase bill Address at which letters were sent during assessment proceedings Changed address given by assessee on receiving intimation of letters returned undelivered during assessment proceedings vide letter dated 31.12.2010 Address at which letters were sent during remand proceedings Postal remark on letters returned undelivered, which were sent during remand proceedings 1. Surya Silk Mills Pvt. Ltd. 1421, 1st Floor Gali Kishan Dutt Mali Bada, Nai Sarak, Delhi 1421, 1st Floor Gali Kishan Dutt Mali wara, Nai Sarak, Surat (Gujarat) 1421, 1st Floor Gali Kishan Dutt Mali Bada, Nai Sarak, Delhi 1421, 1st Floor Gali Kishan Dutt Mali Bada, Nai Sarak, Surat Incomplete address 2. Rituraj Silk Mills Z-2174/75, Surat TextileMarket, Surat Z-2174/75, Surat Textile Market, Surat (Gujarat) C-1537, Kohinoor Market, Ring Road, Surat-Gujrat Z-2174/75, Sura....
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....der itself. Sales, purchases and stock as declared by the appellant have also been accepted by the A.O. Thus, the question of bogus purchases does not arise as these sales as well as stock have been affected out of purchases made by him. Further, the appellant has consistently declared gross profit @ 6.8% during the last two years which has been accepted by the A.O. During the year under consideration also, gross profit @ 6.84% has been declared on total sales of Rs.6,59,76,510/-. If the addition made by the A.O. on account of alleged bogus purchases is added to appellant's gross profit, the same stands at @ 23.76% which is found totally absurd and unacceptable in the line of wholesale cloth business carried on by the appellant. Sales made by the appellant against declared purchases have also been accepted by the Sales Tax authorities. Purchases are found duly recorded in the books of account of the appellant and are supported by authenticated purchase bills and vouchers. Payments have also been made through banking channels only. A.O.'s reason for rejecting the evidence given by the appellant even during remand proceedings that in many cases, confirmation letters have not been pro....
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....led. The ld. CIT(A), therefore, on proper appreciation of facts, material and evidence available on record correctly deleted the addition of Rs.76,84,864/-. The departmental appeal, therefore, fails. Further the assessee also failed to prove genuine transaction with M/s. Shiva Sarees, therefore, the addition of Rs.6,59,454/- has been correctly restricted to by the ld. CIT(A). The cross objection of the assessee also fails and is dismissed. 6. On ground No.2, the revenue challenged the deletion of addition of Rs.25,68,587/- out of total addition of Rs.28,21,452/- made by the AO on account of discrepancies in the creditors' account. The assessee on ground No. 2 of the cross objection has challenged upholding of addition of Rs.2,52,865/- on the same issue. 7. The AO made addition of Rs.28,21,452/- on account of discrepancies found in the accounts of 33 parties mentioned in the books of account. The AO noted that the assessee was directed to file reconciliation in respect of creditors, but no proper reconciliation has been filed. Therefore, above addition was made. It was submitted before the ld. CIT(A) that the assessee attended the proceedings regularly before the AO and got reconc....
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....hich has not been done by him. It has also been held by Hon'ble ITAT, Agra in case of ITO, Wd-2(2), Gwalior Vs. Shri Mayur Agarwal, Prop. M/s Mayur Trading Co. in ITA No.86/Agr./2007 vide order dtd. 04.01.2010 as under :- "No addition can be made merely on the basis of the evidence procured by the third party unless and until that party is put to the assessee for cross examination, specially when the assessee has categorically denied the transaction. Statement relied on by the Revenue itself do not disclose the bill no, through which transaction is entered into. It only contains through drafts etc. only. Therefore, this evidence, in my view, cannot be a valid evidence to make the addition. Once the assessee had denied the transaction, the A.O. was bound to adduce the evidence for the rebuttal of assessee. The AO has not done so. Therefore, under the facts of the case, I agree with the ld. J.M. deleting the addition." Hon'ble ITAT, Pune has also been held in case of IT Vs. Bala Prasad R. Lokmanyawar in ITA No. 471 vide order dtd. 04.04.1983 that addition made on basis of entry in third parties accounts narrating that there were certain sales by the assessee, is not sustainable as ....