TaxTMI 
TaxTMI 
2016 (2) TMI 498
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....(A) has erred in deleting the addition of Rs. 2,38,86,670/- even when he himself has accepted that the possibil ity of appellant buying material from the parties other than M/s Riddhi Siddhi Enterprises cannot be ruled out. 4. That the ld. CIT(A) has erred in holding that Assessing Off icer has not disturbed the trading results as disclosed by the assessee, ignoring the fact that the defects exposed and addition made do constitute disturbing the trading results. 5. Therefore, the order of the ld. CIT(A) be cancelled or set aside and the order of the Assessing Off icer may be restored. 6. M/s Riddhi Siddhi Enterprise is shown as creditor of Rs. 16,44,662/- in the Balance sheet of the assessee f irm. No separate addition of this amount was made as entire purchases from this f irm was disallowed and added to the income of the f irm. Since, the ld. CIT(A) has directed to apply net prof it of 5% on Rs. 2,38,86,670/- the addition of Rs. 16,44,662/- needs to be made separately, as the creditor is BOGUS. 7. The plea of the telescopy is not applicable in this case as, violation of section 40A(3) was made in payment to M/s Kumar Agencies, while the extra p....
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....tor of M/s Riddhi Siddhi Enterprises and on the alleged information received from the Income Tax Officer, Ward-2(3), Ghaziabad, assessing officer has treated the purchase made by the assessee from the said Riddhi Siddhi Enterprises as bogus purchase. The assessee submitted that the important aspect of the matter has been lost sight of in as much as there is no evidence on record to prove correct, the contention of Sh. Surendra Kumar Sharma. The assessee submitted that there is no evidence on record to establish that what is stated by Sh. Surendra Kumar Sharma is in fact not wrong. There is every possibility that in order to save his own skin, the said Sh. Surendra Kumar Sharma has given wrong statement. 3.2. It was further submitted that the finding and/or the observation made in the case of Sh. Surendra Kumar Sharma proprietor M/s Riddhi Siddhi Enterprises cannot be made basis to reject the accounted version of the assessee till an opportunity to cross examine Shri Surendra Kumar Sharma in regard to his statement is provided to assessee. The reliance was placed on the following case laws: • CIT Vs Atma Prakash Batra 340 ITR 177 (Guj.) • Dalpat Singh Ch....
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....t appears to have been given just to avoid the tax liabil ity in his own cases. That Sh. Surendra Kumar Sharma has given an af f idavit in which he has alleged that the assessing off icer Ward-2(3), Ghaziabad forced him to sign the pre-prepared statement under threat and undue pressure. It is further stated that even wi thout considering the content of affidavit, the assessing off icer had no material at all to treat the purchases made by the assessee from M/s Riddhi Siddhi Enterprises as bogus purchases merely on the strength of the communication received from the Income Tax Officer, Ward 2(3), Ghaziabad, wi thout giving an opportunity to the appellant to cross examine the party namely Sh. Surendra Kumar Sharma, Proprietor M/s Riddhi Siddhi Enterprises on the subject and/or to examine the so called Mr. Ravi so as to arrive at logical conclusion. Since, Sh. Surendra Kumar Sharma has nowhere admitted to issue accommodation bills, the purchases made from Sh. Surendra Kumar Sharma proprietor M/s Riddhi Siddhi Enterprises cannot be termed as bogus and consequently, addition of Rs. 2,38,86,670/- being the total purchase price of the material is illegal and bad in the e....
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....f the assessee on the total sales shown by him in the books of accounts. He also mentioned that withdrawals made by Sh. Surendra Kumar Sharma from his different bank accounts did not match with any of the deposits in the bank account of the assessee and there were mostly cheque clearing entries and no cash deposits. 4.3. The ld. CIT(A) mentioned that Sh. Surendra Kumar Sharma in his statement recorded under oath by Income Tax Officer, Ward 2(3), which was attached by the AO with the remand report, had nowhere stated that he issued accommodation bills to the parties including the assessee and that the AO had not conducted any independent enquiry to conclude that the actual material was not purchased by the assessee. The ld. CIT(A) observed that the information in possession of the AO, if any, was never confronted to the assessee except that a query was raised on 21.12.2011 but copies of the material was not provided to the assessee. He also observed that the allegation of the AO that cheques were credited in the bank account of M/s Riddhi Siddhi Enterprises and the cash was withdrawn on the same date did not conclusively establish that the assessee did not make any purchase. 4....
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.... later on by stating that no bogus entries were provided either to the assessee or any other person. It was further submitted that the sales shown by the assessee were accepted by the Trading Tax Department as well as by the AO and when the sales and the gross profit rate were accepted there was no reason to doubt the purchases. Therefore, the ld. CIT(A) was fully justified in deleting the arbitrary addition made by the AO. As regards to the addition sustained by the ld. CIT(A), the ld. Counsel for the assessee submitted that the purchases of Rs. 2,38,86,670/- were included in the total purchases of the assessee and on the basis of those purchases only, the sales were made on which the assessee declared the gross profit which was progressive in comparison the earlier year so, there was no occasion to make the impugned addition. He accordingly prayed to delete the addition sustained by the ld. CIT(A). 6. We have considered the submissions of both the parties and carefully gone through the material available on the record. The ld.AR has placed his reliance on the order dated 17.06.2015 of this Tribunal in the case of ACIT vs. Vijay Kumar Goel in ITA no. 670/D/2013, for assessment ....
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.... books of account and/or heavy cash deposit in the bank account of the assessee to suggest that the money is received back in cash from M/s Riddhi Siddhi Enterprises." 6.4. The AO did not provide any opportunity to the assessee to cross examine Sh. Surendra Kumar Sharma. In the present case, it is also noticed that the turnover of the assessee was accepted by the Trade Tax Department and it is not the case of the AO that proper books of accounts were not maintained by the assessee in regular course of business or the same method of accounting was not followed consistently. The ld. CIT(A) examined the bank accounts as well as books of accounts of the assessee and categorically stated that the purchases as well as the sales were through banking channel and there was no cash deposit in the bank account of the assessee. 6.5. In the present case, the AO has not pointed out any defects in the books of accounts, therefore, the ld. CIT(A) was fully justified in deleting the addition made by the AO on account of alleged bogus purchases particularly when the GP rate declared by the assessee was progressive and was accepted by the AO. The observations made by the assessing officer when ....