TaxTMI 
TaxTMI 
2015 (10) TMI 2250
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....to the said creditors through account payee cheques were accepted as genuine by the learned assessing officer. Thus, the addition so made by learned assessing office and sustained by learned CIT(A) is completely misconceived and misplaced in law and should be deleted, as such. 1.2 That the learned Commissioner of Income Tax (Appeals) has further failed to appreciate the basic fact that mere non production of creditors cannot be taken as a basis to make and sustain the addition, whereas, all the documentary evidences filed by the appellant company (which were arbitrarily brushed aside) established the genuineness of the transaction of purchase of goods from nine creditors and as such, the addition so sustained is based on suspicion and surmises and is liable to be deleted, as such. 1.3 That the learned Commissioner of Income Tax (Appeals) has further failed to appreciate the basic fact that transactions with the said nine creditors were also made in preceding assessment year and payments were also made to the said creditors in subsequent assessment year, which stood accepted by learned assessing officer and as such, the addition so made and sustained is based on wh....
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....sessee had not furnished the confirmation in the following cases: S. No Name Amount(Rs.) Remarks Inspector Report 1. M/s Amar Jyoti Enterprises, C- 21, Shivaji Park, New Delhi-26 40,01,568/- No such firm at this address -do- 2. M/s ASV Garmets (P) Ltd., 405, ABC Complex, 20, Veer Savarkar Block, Shakarpur, Delhi-92 36,00,587/- -do- -do- 3. M/s Bharat Mehta & Co., CB- 10, Ring Road, Naraina, New Delhi 45,03,945/ -do- -do- 4. M/s Gopal Jee Fabrics, K-30, Udyog Nagar, Peeragari, New Delhi 5,94,990/- -do- -do- 5. M/s Harish Enterprise, E-24, Jawahar Park, Laxmi Nagr, Delhi-92 35,13,854/- Left without addres -do- 6. M/s Meenakjshi Textiles, C-107, ABC Complex, 20, Veer Sarvarkar Block, Shakarpur, Delhi-92 35,00,300/- No such firm at this address -do- 7. M/s Ravel Apparels Inc., USB- 107, Mandawali, Faizalpur, Delhi-92 40,01,050/- -do- -do- 8. M/s Sangeeta Traders, E-25, 2nd Floor, Jawahar Park, Laxmi Nagar, Delhi-92 50,00,112/- -do- -do- 9. M/s Surya Traders, 229/28, E-2, Street No. 20, Railway Colony, Mandawali, Delhi-92 70,01,100/- No such ....
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....s are available at page 90 to 99 of the assessment record and this fact is verifiable from the assessment record, which has already been called for by your honour. Copy of all the confirmations are placed at pages 125- 134 of the paper book. (2) The observation of the ld. ITO that the Inspector was deputed to make local enquiries and get confirmations from the creditors, it is submitted, is against the facts of the case as the perusal of the order sheet as well as the assessment record clearly reveals that there are no such directions by the ld. ITO to the Inspector. (3) The observation of the ld. ITO that the assessee was confronted with the inspector's report, it is submitted, is against the facts of the case as the purported inspector's report are dated 20-12-2011, 21-12-2011 and 23-12-2011 and -the perusal of the order sheet clearly reveals that the assessee was never confronted with the inspector's report. 4. It is, therefore, submitted that the material gathered at the back of the assessee without confronting the same to the assessee has to be excluded from the consideration or cannot be read in evidence and for this submission respectfu....
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.... 7. The ld. ITO has unqualifiedly accepted the trading account of the assessee, which includes the purchases made from these nine parties during the year under consideration, thereby clearly meaning that the purchases from these nine parties stands accepted by the ld. ITO 8. The ld. ITO has not controverted, the fact available on assessment record that the major payments were made by the assessee during the year under consideration itself (page 2) through proper and regular banking channels and the closing balances i.e. balance which remained outstanding as on 31-03- 2009 has also been discharged in the subsequent year, as explained herein above. 9. It is pertinent to mention that one creditor is an incorporated company, whose details are available on the official web-site of the Registrar of Companies. 10. It is, therefore, submitted that the ld. ITO erred in adding the closing balances i.e. balance which remained outstanding as on 31-03-2009. 11. It is submitted that in case the trading results have been accepted or have not been disturbed or the purchases have been accepted, the creditors cannot be added and for this submission respectful ....
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.... amount should be deleted from the turnover of the assessee. The AO has also not rejected the books of account to estimate profit on these transitions in case it was a firm finding that purchase and sales were bogus.... In absence of displacing the finding of the learned CIT(A) and the fact that the assessee showed profit from these transactions, it is held that there is no such error in the order of the learned CIT(A) which requires correction from us. Thus, this ground is dismissed." (ii) Amritsar Trading Co. vs. ITO, ITA No. 586/Asr/1980 for the asst. yr. 1976-77, wherein the Hon'ble Tribunal, Amritsar Bench held that in a case where purchases of the skins and hides were not doubted by the AO, no addition could be made for the reason that the assessee failed to produce the suppliers who had sold the goods to the assessee. (iii) DCIT vs. Swani Enterprises ITA No. 398/Asr/1999, asst. yr. 1994-95, where purchases made from the suppliers were not fully verifiable, the Tribunal., held that since no defects have been pointed out, trading addition was not called for. The most significant aspect considered by the Tribunal was that there could have no exports withou....
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....ht to cross examine the wholesale dealers concerned,. . ." Shree Nirmal Commercial vs. CIT (2009) 308 ITR 406 (BOM) = (2008) 218 CTR 581 *...... The Tribunal was also wrong in confirming the penalty levied by the ITO in the year 1985, relying upon the purported statements made by the depositors to some other proceedings before some other officers sometime in the year 1971-72 when admittedly the assessee was not given any opportunity to confront the said depositors by way of cross-examination." ITA No. 1035/2009 decided on 22.10.2009 (Del HC) ""The additions made by the Assessing Officer (AO) in reassessment proceedings carried out under Section 147 and 148 of the Income Tax Act were based on the statements of certain villagers, who had sold the land in question to the assessee. However, neither the statements of these villagers were supplied to the assessee nor the assessee was given opportunity to cross- examine those villagers. On this ground, CIT(A) quashed the addition of Rs. 10,07,055/- made by the AO. The Income Tax Appellate Tribunal has upheld this order, in these circumstances, we are of the opinion that no substantial question of law ar....
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....le Supreme Court in case of Prakash Chand Nahta v. Union of India & Ors, (2000) 163 CTR (SC) 310 - (2001) 247 ITR 274 (SC) held that crossexamination of the witness is must before the Department relies on the statement of the witness for making addition. Yamuna Synthetics (P) Ltd. V DOT, (2004) 3 SOT 35 (DEL) = (2004) 91 TTJ 69 - AY 1995-96 & 1996-97 - The assessee has received the impugned amounts through banking channels - during the course of search of a third party a statement was made to the effect that the impugned loan was an accommodation entry made against cash received - relying on the statement of a third party . Revenue contended that it is a sham transaction by way of which the assessee has introduced its own unaccounted money - statement has not been confronted to the assessee. Held: 'it is discernible that the only material available with the AO to hold that it was accommodation entry was the statement made by a third party, i.e., Shri Praveen Khurana. The said statement, it is apparent, has not been confronted to the assessee as can be seen from the record of fee proceedings submitted before us in the paper book filed on behalf of the ....
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....o alleges that apparent is not the real one. Reference can be made to the two decisions of the Hon'ble Supreme Court in the case of CIT v. Daulatram Rawatmull (1973) 87 ITR 349 and in the case of CIT v. Durga Prasad More (1971) 82 ITR 540." "The xerox copy of the loose paper and part of the statement on the basis of which addition has been made are nothing but the mere information received by the Assessing Officer from his counterpart in Mumbai. Such information cannot be considered as admissible material/evidence, unless it is corroborated by direct evidence, i. e. by the person who made the statement or who made jottings on the loose paper. If the Assessing Officer wanted to use such information against the assessee, then he must have examined Dr. Tanna and an opportunity to crossexamine should have been given to the assessee. This is a bare minimum requirement of the principles of natural justice, which has not been complied with by the Assessing Officer. In my considered opinion, no information obtained from outside can be admitted as evidence against the assessee unless such information stands to the test of cross-examination. No doubt, the Assessing Offi....
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....1977] 40 STC 544. It is trite law that cross-examination is the sine qua non of due process of taking evidence and no adverse inference can be drawn against a party unless the party is put .on notice of the case made out against him. He must be supplied the contents of all such evidence, both oral and documentary, so that he can prepare to meet the case against him. This necessarily also postulates that he should cross-examine the witness hostile to him." ITO v. Cloth Distributor (1989) 34 TTJ (Ahd.) 115 - if there assessee has been unjustly denied an opportunity 10 crossexamine the witness whose testimony the ITO intended to rely against the assessee such an evidence cannot be read against the assessee. Chuharmal v. CIT (1988) 172 ITR 250 (38 Taxman 190) Sana Electric Co. Vs. CIT, (1985) 152 ITR 507(Del) = 43 CTR 287 - In this case the Assessee received cash earlier and the buyer paid later. At ITR page 511 "If seems -that the ITO recorded the statement in the absence of the assessee thus excluding cross-examination by the assessee. This shows that the statement of Shri Sardari Lai has to be excluded from consideration. " Chira....
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.... (vii) Trading and P&L account for the year assailed. (viii) Summary of transactions with the trade creditors impugned by the AO." 7. On the basis of the aforesaid documentary evidences, the assessee sought to establish that the credit transactions with the current sundry creditors were genuine. It was also submitted that if an assessee took care to purchase material by way of account payee cheques from a third party and subsequently, three years after the purchase, the said third party did not appear before the AO for any reasons like cessation of business, change of place of business etc., pursuant to notices, the claim of the assessee could not be discarded merely on the ground of the disappearance of the sellers. It was further stated that the AO made no investigation from the bank from which the cheques were cleared before drawing adverse inference against the assessee for its inability to produce the creditors. It was argued that merely because the assessee was unable to produce the creditors, as it was not possible to exercise control over them especially when payments were already made to them, no adverse inference should have been drawn. It was further stated....
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.... found to be in existence. (iv) The law relating to necessity of documentary evidence for expenditure can be stated as follows: (v) A person who claims that he has incurred certain expenditure is expected to have some, documentary evidence; (vi) In the absence of the above he is expected to say how he has incurred the expenditure and why there is no documentary proof for such expenditure, and' if he has any satisfactory evidence to show that documentary evidence has been lost or destroyed, he may take recourse to secondary evidence, viz., certified copies or attested copies of such documents, or copies made from the original by the mechanical processes which in themselves ensure the accuracy of the copy; copies compared with such copies; copies made form or compared with the original; and the oral accounts of the contents of a document given by some person who has himself seen it; (vii) It has been held in CIT v. Korlay Trading Co. Ltd. (1998) 232 ITR (Cal.) that "Where, without filing confirmation letter from the, creditor, the assessee merely mentioned the incometax number of the creditor (which was also not supported by any affidavit from ....
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....rom various concerns, and at the end of financial year i.e. as on 3.3.2009, total Sundry Trade creditors were outstanding for an amount of Rs. 4,63,89,077/-. Besides domestic sales, exports sale was made by the assessee firm (to countries. i.e. USA and UAE). Assessee firm also incurred expenses on Printing & Dyeing, fabrication, cutting, knitting etc. For the impugned assessment year, Assessee firm filed its return of income declaring an income of Rs. 11,82,236/-. Purchases, sales, expenses incurred in manufacturing, amount received by the assessee as export incentives, foreign exchange fluctuation were not in dispute and the same have been accepted by the Ld. AO as can be seen from the impugned assessment order. During the course of assessment proceedings Ld. AO asked the assessee to file confirmations of accounts from the sundry creditors. Ld. AO has alleged in the impugned assessment order that confirmations in respect of nine parties as per details given at page 2 of the impugned assessment order was not filed by the assessee, whereas the fact is that assessee filed confirmations from these nine parties as well during the course of assessment proceedings. The ....
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....ne, 2010 through banking channels was also placed on record. Thus it is submitted that the addition of Rs. 3,57,17,506 should be deleted. 3. The Appellant craves leave to add, alter, delete or modify the aforesaid grounds of appeal during the Appellate proceedings." In the impugned order Ld. AO alleged that assessee was, confronted with some Inspector's report. In this regard our respectful submissions are that as per information provided to us by the appellant, no such report was confronted to the appellant. No opportunity of cross examination of the Inspector was allowed to the assessee during the course of assessment proceedings. Therefore, no cognizance can be taken of any such report which has been obtained by the Ld. AO at the back of the assessee. Ld. AO made the impugned addition alleging that the liabilities were not finally determined and identity of creditors, genuineness of transactions and genuineness, of balances was not established. Ld. AO relied on the following judgments in the remand report:- * CIT vs. Korlay Trading Co. Ltd. (1998) 232 ITR (Cal) * CIT vs. Precision Finance (P) Ltd. (1994) 208 ITR 465 (Cal)....
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....ted the profit declared as per return. Ld. AO has doubted the identity of these sundry-creditors. It is submitted that when the purchases and sales have been accepted as genuine, where the question remains that these parties were not genuine? No sales can be made without purchase. If sales have been affected out of purchase made from these parties, then, it cannot be said that these parties were bogus. The AO has not rejected the books of account of the assessee, and has accepted the sales and purchases declared by the appellant Hon'ble Delhi High Court in the case of CIT Vs. Anurag Agarwal (2010) 2 DTLONLINE 134 (DEL) IN ITA NO. 325/2008 decided on 22.7.2009 held as under: "As there was no case for disallowance for corresponding purchases no addition could be made under section 68 in as much as it is not in dispute that the creditors outstanding related to purchases and the trading results were accepted by the AO. We are, therefore, of the opinion that no substantial question of law arises for consideration in this case. The appeal is accordingly dismissed." Hon'ble Tribunal, Amritsar Bench held in the case of Amritsar Trading Co. Vs. ITO in ITA ....
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....f trading in computer parts - On basis of information received from Assessing Officer of one 'T', at whose premises a raid was conducted by department, that assessee had made bogus purchases from certain parties, Section 143 of the Income-tax Act, 1961 - Assessment - Additions to income - Assessment year 1998-99 - Assessee was .engaged in business of trading in computer parts - On basis of information received from Assessing Officer of one 'T', at whose premises a raid was conducted by department, that assessee had made bogus purchases from certain parties, FACTS The assessee was engaged in the business of trading in computer parts. The department had received information from the Assessing Officer of one 'T', at whose premises the department had carried out a raid, that the assessee had made bogus purchases from certain parties. During the assessment proceedings, the assessee was asked to identify and produce confirmation of parties from whom purchases of Rs. 1 lakh and above had been made during the relevant period. An inquiry was conducted by the revenue on the basis of addresses of suppliers provided by the assessee and, thereafter, the....
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....in the books of account submitted by the assessee. On the brokers the assessee had no control and if they became hostile, then the assessee could not be punished. The Commissioner (Appeals) had in principle accepted the genuineness of the payment made to the brokers. The payment towards brokerage/commission was made for rendering the services through account payee cheques. Some brokers had appeared and for non-appearance of the remaining brokers, the assessee could not be punished. Therefore, the order of the Commissioner (Appeals) was set aside and the entire amount paid towards brokerage/commission was allowed. As regards addition for bogus purchases from the material available on record, it appeared that the Tax Audit Report and books of account were accepted by the Assessing Officer without pointing out any defect, Accordingly, the sale was accepted by the department. The sale could not be made without making purchase, in other words, when there was a sale, certainly there was a purchase. Sale was accepted by the department but not the purchase: The payments were made through account payee cheques which were duly shown in the books of account and balance sheet, etc. In....
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.... During assessment proceedings, Assessing Officer found that for some of purchases effected by assessee, no details or address of vendors were available in, purchase vouchers. He, therefore considered such-purchases to be non-genuine and an addition was made on that account. Since purchases were recorded in books of account of assessee and were also shown in its stock, in such circumstances merely because those purchases did not carry full addresses of vendors, could not be a reason to treat said purchases as unexplained. Therefore, impugned addition made by Assessing Officer was to be deleted. (A.Y. 2008-09) In view of the above legal position, no addition is attracted in the case of the appellant. Appellant firm filed written submissions and the paper book during the course of appellate proceedings, on which a remand report was called from the Ld. AO. Assessee has been provided a copy of interim remand report dated 07.01.2013 and the other remand report dated 08.04.2013. Our respectful submissions on the observations made by the Ld. AO in the Remand reports are as under:- Ld. AO mentioned in the remand report dated 7.1.2013, that PAN details ....
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.... With regard to above party, it is respectfully submitted that during the year under consideration assessee made purchases for an amount of Rs. 4,26,82,061/- and made payment during the year for an amount of Rs. 4,13,58,173/-. There was an opening credit balance of Rs. 26,77,680/-. as on 1.4.2008 and closing credit balance of Rs. 40,01,568/- payable by the assessee to the said party as on 31.3.2009. Ld. AO has accepted the entire purchases made by the assessee, and there is no dispute for making payment to the said party as no adverse view is taken in respect of payments made to this party during the impugned assessment year. It is submitted that no payment was made by the assessee in cash to the said party Ld. AO stated in the Remand report that party was not found at the address "C-21, Shivaji Park, New Delhi-26." and the PAN allotted is in the name of Shri Ranjit Singh, 213, Vardhman Tower, Preet Vihar Delhi-92. It is submitted that in case there was any doubt to the Ld. AO about this party, ld. AO could have verified these facts from the Bank of the assessee, as the payments made by the assessee to the said party were cleared from the bank of the assessee. Not only tha....
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....ilable with the assessee, cannot be a reason to make addition in the case of the appellant. During the impugned assessment year Assessee made purchases for an amount of Rs. 1,53,97,212/- from the said party and made payment for an amount of Rs. 1,30,56,625/-. There was an opening credit balance of Rs. 12,60,000/- and closing credit balance of Rs. 36,00,587/- payable by the assessee to the said party. Ld. AO has accepted the entire purchases made by the assessee, and there is no dispute for making payment to the said party. The outstanding payment of Rs. 36,00,587/- was paid to the said party in the subsequent financial year. We are submitting herewith copy of the ledger account of the above party for the subsequent period 1.4.2009 to 31.3.3010 wherein assessee had made payment of the outstanding balance payable to the said party. Payments made are also highlighted in the copy of bank statement being filed with this rejoinder. Thus the transactions entered into with this party are established with these evidences. 3. M/s Bharat Mehta & Co. - Amount outstanding as on 31.3.2009 as payable Rs. 45,03,945/ Ld. AO stated that this party was not found at....
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....t to the said party against purchases made. We have placed in the paper book copies of the ledger accounts of the above party for the impugned assessment year and also for the subsequent assessment year, where in the outstanding payment of Rs. 35,13,854/- were made clear. It is submitted that in the subsequent year, assessee made sales to this party, and also received payment against sales made to them. The Copies of the sales bills for sales made to the said party are enclosed, which confirm that the outstanding payment was adjusted against sales made to the said party. In view of these evidences placed on record, which substantially prove that the outstanding payment was cleared in the subsequent year, the addition made may kindly be directed to be deleted. PB 242 is copy of ledger account of the above party for the period 1.4.2009 to 31.3.2010 in the books of the assessee. PB 243-251 are copies of the sales bills raised against sales made to the above party for the period 1.4.2009 to 10.4.2009 . PB 273 is copy of the bank statement of the assessee showing the payment received from the above party for sales made to them in the subsequent year. ....
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....ed that first of all no such material was provided to the assessee, and if any such adverse observation is made by the AO, for which no cross examination has been provided to the assessee that may kindly be excluded from consideration. Furthermore, it is submitted that it is not the case of the Ld. AO that the said party has denied the payment received from the assessee firm or have denied the sales made to the assessee firm. For the assessment year under consideration assessee made purchases from the said concern, and the purchases made were sold to various parties for which sales were also declared by the assessee. At the end of the assessment year an amount of Rs. 40,01,050/- was outstanding payable to the said party against purchases made from them, which was subsequently cleared the next financial year by the assessee. Assessee made sales in the subsequent assessment to the said party. Copies of the bills for material sold to the said party in the subsequent years are enclosed, which confirm that the outstanding balance payable to them was cleared in the subsequent year. In view of these evidences placed on record, which substantially prove that the outstanding payment was cle....
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.... said party has denied the payment received from the assessee firm or have denied the sales made to the assessee firm. For the assessment year under consideration assessee made purchases from the said concern, and the purchases made were sold to various parties for which sales were also declared by the assessee. At the end of the assessment year an amount of Rs. 70,01,100/- was outstanding as payable to the said party against purchases made from them, which was subsequently cleared in the next financial year by the assessee by making payment and sales made to them. Copies of the bills for material sold to the said party in the subsequent years are enclosed, which confirm that the outstanding balance payable to them was cleared in the subsequent year. In view of these evidences placed on record, which substantially prove that the outstanding payment was cleared in the subsequent year; the addition made may kindly be directed to be deleted. PB 266 is copy of ledger account of the above party for the period 1.4.2009 to 31.3.2010 in the books of the assessee. PB 267-271 are copies of the sales bills raised against sales made to the above party for the period 1.4.2009 ....
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....also confirmed that jurisdictional assessing officer of sundry creditors parties were requested to-provide the ITR details filed for Assessment Year 2009-10. Though, the Ld. AO made some adverse observation in the case of M/s Meenakshi Textiles but nothing contrary is brought on record that M/s Meenakshi Textiles and Ravels Apparels INC have denied the transaction with the assessee firm It is submitted that the action taken by the AO to make enquiry with the banks and with assessing officers confirms the existence of these parties and their identity therefore, there is no logic to make addition in the hands of the assessee when assessee has made genuine payments to these parties against the purchases made from them and the purchases and the sales have been accepted by the Ld. AO. It is submitted that assessee has purchased the material from these parties and was not under any obligation to keep track after the dealings were complete by making the payments for the purchases made. The PAN numbers provided by these parties cannot be doubted by the assessee as assessee has no power to get confirm PAN number is provided by any party when the same is requested ....
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....ement of few parties. 6. Assessee has also made payments of all purchases through account payee cheques only. CIT VS. JMD COMPUTERS & COMMNICATIONS (P) LIMITED (2009) 180 TAXMAN 485 (DEL) - JUDGMENT DATED 16.01.2009 The AO made addition on the basis of information received from the AO of One 'T', that assessee made bogus AO asked the assessee to file confirmations from parties from whom purchases were made and also conducted enquiries, and made addition on account of bogus purchases. 1. In assessee's case also AO doubted the veracity and, genuineness of outstanding trade sundry creditors to the extent the amount which was outstanding payable as on close of the year. However, there was no dispute about the transactions, or making payments to these sundry creditors for the purchases made from those creditors, corresponding sales made, and corresponding payments made by the assessee to these sundry creditors. 3. Ld. CIT (A) deleted the addition, and order was confirmed by the Hon'ble ITAT. 2. In assessee's case also no purchases were disallowed, and the sales made against purchases have been accepted by the AO. 4. Hon'ble High ....
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....21.08.2006 Books of account of assessee not rejected. In the above judgment Hon.ble High Court of Allahabad upheld the finding of the Hon'ble Tribunal that when credits in the accounts of the persons on account of purchases made and if these purchases made are not bogus though the name of suppliers may be wrong but these supplies of goods were reality. Neither the purchase nor sales are doubted. For wrong names of supplies the reality of purchases cannot be negative. In the case of assessee also, confirmation letter of trade creditors were submitted by assessee (refer PB 125-134 Dy. CIT vs. Kirtilal Kalidas Jewellers Pvt. Ltd. (2012) 27 Taxmann.com 341 (Chennai), (2012) 54 SOT 529 dated 05.09.2012 (Chennai) (Trib.) Assessee also submitted copy of the ledger a/c of these trade creditors as appearing in the book of assessee for the year under considering (PB 198- 271). In the above judgment Hon'ble ITAT gave the finding that where purchases were duly recorded in the assessee's books of accounts, addition under section 69C could not be made, merely because assessee failed to provide complete address of vendors in respect of those purchases. Asses....
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.... of assessee also AO made the addition because certain suppliers were not found at the address provided by the assessee. JCIT vs. MATHURA DAS ASHOK KUMAR (2006) 101 TTJ 810 dated 21 May 2005 (All ITAT) In the above judgment Hon'ble ITAT gave the finding that here the assessee has recorded name and addresses of the Karigars given by him, addition under section 69 could not be made, merely because the Karigar is not found at address given by him. Assessee in this case also produced the books of accounts which were verified by the AO. No discrepancies or defects were found in the book of account as has been maintained in regular course. As held in the above judgment any assessee or businessman cannot insist for identification process akin to Know Your Customer (KYC) Rules applied by Banks Purchase have been held to be genuine and accepted as such, the credits that remained outstanding in such account cannot be treated to have remained unexplained As held in this judgment that there is no mandatory requirement in the business of jewellery to maintain books of accounts in accordance with KYC rules of banks, the same-is applicable in every business u....
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....(6) to creditors has unserved and received back The appeal has decided in favour in assessee In support assessee produced complete books of accounts before the AO and the purchase and sales were accepted No adverse view was taken from the books of accounts produced 10. The ld. CIT(A) mentioned that the remand report dated 21.03.2014 was simply a reiteration of the earlier remand reports submitted by the AO and as handed over to the assessee for its fresh comments. The assessee in its comments stated as under: ''Appellant has been provided with a copy of the remand report dated 21.03.2014 submitted by Ld. AO to your good self to submit rejoinder on the same. It is submitted that it is totally wrong on the part of Ld. AO to state that an opportunity on 05.03.2014 and 18.03.2014 were provided to the assessee, which the assessee failed to avail of In this regard we are enclosing here with a copy of letter issued by Ld. AO on 27.02.2014 wherein Ld. AO asked the assessee to appear before him on 05.03.2014. This letter was received by the assessee on 10.03.2014 which is evident from the copy of the envelope enclosed Thus, it was not possible fo....
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....se parties to clear his doubts. It is submitted that no sales can be made without purchases, therefore the opinion made by the Ld. AO is without any basis and without bringing on record any contrary material to disprove any of the payments made or sales made to these parties. It is therefore prayed that these observations of the Ld. AO, therefore, may kindly be excluded from consideration. All sundry creditors in respect to whom Ld. AO made the impugned addition was paid in the subsequent year. It is also not out of place to mention here that Ld. AO has not doubted the payments made to these parties for the purchases made which were made during the year itself However, for the same sundry creditors, Ld. AO doubts the outstanding balance payable as at the close of the year despite the fact that those balances for which the addition has been made were also paid off in the subsequent year. In view of the above submissions it is prayed that the impugned addition may kindly be directed to be deleted. Appellant relies on written submissions made in this regard, rejoinder submitted and various evidences placed in the paper book and also the judgments relied on a....
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.... expenditure. If he has any satisfactory evidence to show that documentary evidence was lost or destroyed, he may take recourse to secondary evidence." 12. The ld. CIT(A) held that the assessee failed to establish the identity, genuineness and the creditworthiness of the trade creditors. He also observed that the essential evidence in the form of the "person" of the trade creditors was starkly missing and the genuineness of the transactions remained a suspect till the last day of the enquiry carried out by the AO personally. Accordingly, the addition of Rs. 3,57,17,506/- was confirmed. Reliance was placed on the following case laws: CIT Vs Korlay Trading Co. Ltd. (1998) 232 ITR (Cal) CIT Vs Precision Finance (P) Ltd. (1994) 208 ITR 465 (Cal) CIT Vs United Commercial & Industries Co. (P) Ltd. (1991) 187 ITR 596 (Cal) 13. Now the assessee is in appeal. The ld. Counsel for the assessee reiterated the submissions made before the authorities below and further submitted that the opening balance of the purchases, the payments made to the parties from whom purchases were made had been accepted by the AO. It was further stated that the books of account were ....
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..... 500 of the assessee's paper book. The ld. Counsel for the assessee also referred to page nos. 566 to 578 of the assessee's paper book which is the copy of the written submission furnished to the ld. CIT(A) and reiterated the contents of the said submission. It was further contended that the ld. CIT(A) asked the AO to furnish the remand report and the AO vide letter dated 18.05.2012 and 29.05.2012 (copy of which are placed at page nos. 579 & 580 of the assessee's paper book) asked the assessee to furnish the details of the sundry creditors and the assessee vide letter dated 04.06.2012 stated to the AO that the confirmation of the 9 parties for the year under consideration, closing balance of which had been added to the returned income, were filed during the course of assessment proceedings. It was also submitted that a chart showing opening balance, purchases, payments, sales and closing balance in respect of the 9 parties for the year under consideration and subsequent assessment year was also furnished. Therefore, the assessee discharged the onus cast upon. In support of the aforesaid contention, a reference was made to page no. 581 of the assessee's paper book. ....
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....ablished. It was further stated that the AO gave ample opportunities to the assessee to produce the parties, however the assessee never produced the parties and the notices issued u/s 131 of the Act were returned by the postal authority stating that the parties mentioned in those notices "left the premises". Therefore, the parties in the name of whom credit balances were shown by the assessee were not genuine, the AO rightly made the addition for the balances shown in the name of bogus parties and the ld. CIT(A) was fully justified in confirming the addition made by the AO. The reliance was placed on the following case laws: CIT Vs Durga Prasad More 82 ITR 540 (SC) DCIT Vs KDA Enterprises (P.) Ltd. 204 ITR 801 (Mum. Trib.) CIT Vs Precision Finance (P.) Ltd. 208 ITR 465 (Cal.) Mc Dowell & Co. Ltd. 154 ITR 148 (SC) Jugglilal Kamlapat Vs CIT 73 ITR 702 (SC) Natco Pharma Ltd. Vs DCIT 263 ITR 701 (Hyd.) 16. We have considered the submissions of both the parties and carefully gone through the material available on the record. In the present case, it appears that a sum of Rs. 52,28,52,754/- was outstanding in the name of 50 parties ....
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....lances were outstanding have been accepted but the AO only doubted the genuineness the outstanding balance at the year end in the name of those parties for the reason that those were not produced before him. However, the assessee vide letter dated 30.07.2012 written to the AO during the course of remand proceedings informed as under: "That the confirmation of the said nine parties are placed at pages 125-134 of the paper book filed before the Hon'ble CIT(A) and bank statement of the assessee for the year under consideration are at pages 17-124 of the paper book filed before the Hon'ble CIT(A), perusal of which clearly reveals that all the payments were made to the parties through regular banking channel . It is further submitted that copy of account of the said nine parties for assessment year 2010-11, are placed at pages 135- 160 of the paper book filed before the Hon'ble CIT(A), perusal of which shows that substantial payments were made through regular banking channel and in support the bank statement for assessment year 2010-11 are at page 161-196 of the paper book filed before the Hon'ble CIT(A). It is pertinent to mention that not eve....
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.... taken by the Tribunal on this issue is sustainable inasmuch as, on the basis of the findings recorded by it that these two amounts represented purchases made by the assessee on credit and the purchases and sales having been accepted by the Department, the question of addition of the said two amounts under Sec. 68 did not arise inasmuch as the provisions of Sec. 68 would not be attracted on the purchases made on credit." 20. On a similar issue their lordships of the Hon'ble Bombay High Court in the case of CIT-1, Mumbai Vs Nikunj Eximp Enterprises (P.) Ltd. (2013) 216 Taxman 171 observed in para 7 as under: "7. We have considered the submission on behalf of the revenue. However, from the order of the Tribunal dated 30-04- 2010, we find that the Tribunal has deleted the additions on account of bogus purchases not only on the basis of stock statement i.e. reconciliation statement, but also in view of the other facts. The Tribunal records that the Books of Accounts of the respondent-assessee have not been rejected. Similarly, the sales have not been doubted and it is an admitted position that substantial amount of sales have been made to the Government Department i.e. ....