TaxTMI 
TaxTMI 
2016 (6) TMI 488
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....sidered opinion, on the facts and circumstances of the case, i.e., in this case deserves to be considered and same is condoned. Shri A.K.Tibrewal, Ld. Authorized Representative appeared on behalf of assessee and Shri Dinabandhu Naskar, Ld. Departmental Representative appeared on behalf of Revenue. 3. The Revenue has taken the following grounds of appeal:- "1. That, on the facts and in the circumstances of the case, Ld. CIT(A) has erred in allowing relief on account of carriage inward for Rs. 2,06,080/- 2. That, on the facts and in the circumstances of the case, Ld. CIT(A) in deleting Rs. 29,11,129/- on account of bogus purchases 3. That, on the facts and in the circumstances of the case, Ld. CIT(A) ought not to have relief much on banking transactions despite the unknown or bogus nature of identity of the suppliers, in the light of the jurisdictional High Court decisions in CIT-v-Precision Finance (P) td [208 ITR 254] or in CIT-v-United Commercial & Industrial Co (P) Ltd [187 ITR 596] 4. That, on the facts and in the circumstances of the case, Ld. CIT(A) has erred in deleting Rs. 2,00,547/- on account of undisclosed investment through purch....
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....(A) assessee submitted the copies of the vouchers and explained that carriage inward charges were paid directly to the drivers and helpers in cash. All the vouchers contain the name of the drivers as well as truck numbers so disallowance of 50% of the total expense is hardship on it. Ld.CIT(A) keeping the volume of transaction of the business of the assessee restricted the disallowance to 25% of the total carriage inward expenses claimed by observing as under :- "4.1 I have considered the submissions of the A/R and perused the assessment order and evidence on record. There is no dispute to the act of paying carriage inward charges in cash below Rs. 50,000/- to the drivers who carried the materials in trucks for unloading to the appellant's work site. A few vouchers depicting therein names of the recipient of carriage inward charges and truck nos. were filed. However, the appellant has fairly admitted that some disallowance in this respect is warrant. Considering the volume of expenses and non-verifiable nature of vouchers, ad hoc disallowance on estimate basis @ 25% of the said expenditure would be justified and reasonable. I, therefore uphold the disallowance to the exten....
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...., Revenue cannot resort to ad hoc and arbitrary disallowance of expenses for the purpose of arriving at the alleged undisclosed income especially when there is no incriminating evidence found against the assessee to establish that the assessee had in any manner, inflated the expenses and not accounted for the correct income. Therefore, an assessment cannot be made to disallow or add back expenses on ad hoc basis and that too, to make arbitrary additions to the alleged income as the onus is on the Revenue to prove the actual expenditure and then establish that the source of money spent for such expenditure had not been satisfactorily explained by the assessee. Therefore considering the totality of the case, we are of the considered view not to interfere in the order of ld. CIT(A). Hence this ground of Revenue's appeal is dismissed. 9. The common inter-connected issue raised in both the ground no.2 & 3 are that the ld. CIT(A) erred in deleting the addition made by AO for Rs. 29,11,129.00 on account of bogus purchase. 10. The assessee has claimed purchases for the materials from different parties during the relevant assessment year. The AO cross verified those purchases by issui....
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....details from the Banks and after verification of the purchases, to report accordingly. According to the statements obtained by the AO from different banks through which transactions took place., it is found that the appellant has made purchases from the aforesaid six parties through banking channel, the details of which are given in the remand report of the AO dated 07-01-2013. The appellant also filed bills from all these parties in support of purchases made from them. Confirmation of transactions by way of ledger copy of accounts has also been placed on record. The appellant also conducted VAT audit under West Bengal Value Added Tax Act. No defect or irregularity in the audited accounts was pointed out by the AO. In the above circumstances, the initial onus that lies on the appellant, in my considered opinion, was duly discharged. To reiterate, the very fact that all the transactions were entered into between the parties through account payee cheques and the same were confirmed by the banks, makes the question of identity of the creditors fall into oblivion and it becomes absolutely irrelevant. Considering the totality of the facts and circumstances of the case and evidences plac....
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....facts of the case, we find that the AO has disallowed the purchases merely on the ground of non service of notice u/s. 133(6) of the Act. In our view, the AO has failed to appreciate other circumstances of the case such as there was no flaw in the books of accounts, there was no adverse comments in the audit report duly certified by the Chartered Accountant, the confirmation received from the bank regarding the payment made to the aforesaid parties in response to the notice u/s. 133(6) of the Act. In the instant case, all the details relevant to the transaction for the purchase of the materials are very much placed on record. Therefore, in our considered view, merely notice issued u/s. 133(6) of the Act cannot be the sole ground for making the disallowance. In holding so, we find the support from the following judgments of Hon'ble High Courts:- a) ACIT v. Bahri Bros. (P) Ltd. (1985) 154 ITR 244 (Pat) wherein the Hon'ble court has held: identify of creditors is not relevant for cheque transactions - the very fact that all the transactions were entered into between the parties through account payee cheques makes the question of identity of creditors fall into oblivion and it becom....
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.... get the bogus hundis. The transactions as well as the hundis and confirmatory letters are collusive, fictitious and false. Therefore, assessee has not discharged the initial onus in proving the loans as genuine." In the aforesaid case as relied by Revenue, the books of accounts and other documents were not produced. In the instant case the books of accounts were produced before the lower authorities and no flaw was brought to our notice. Accordingly, in view of the above and after having reliance on the aforesaid judgments of Hon'ble High Courts we find no reason to interfere in the order of Ld. CIT(A). Hence, this ground of Revenue's appeal is dismissed. 14. Coming to next issue raised in ground No.4 and 5 which are inter-connected, so we adjudicate them together, is that ld. CIT(A) erred in deleting of Rs. 2,00,547/- on account of undisclosed investment. The AO during assessment proceedings found some mismatch in the figures of purchased shown by the assessee from the parties and in the figures of sale shown by the parties in response to the notice issued u/s 133(6) of the Act. The details of such parties are as under:- Sl. No. Name of the concern Amount ....
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.... 172 of the paper book. In that bank statement, the name of the party has also been mentioned while clearing the cheques. In such circumstances, the transactions with the said party cannot be doubted, unless and until some contrary evidence is brought on record, which the AO failed to do so. Further, the appellant has filed a confirmation letter from the said party showing closing balance of Rs. 3,66,182/- as on 31-03-2008. The appellant also conducted VAT audit under West Bengal Value Added Tax Act. In view of above and for the reasons discussed in para-4-5 above, I am of the considered view that the appellant has discharged his initial onus of proving the genuineness of transactions and that being so, there is no justifiable reason to endorse the addition. The addition of Rs. 3,66,182/- made alleging bogus sundry creditor amount is, therefore, deleted." Being aggrieved by this order of Ld. CIT(A) Revenue is in appeal before us. 19. Before us Ld. DR vehemently supported the order of AO and on the other hand, Ld.AR drew our attention on pages from 23 to 36 containing the copy of the ledger, Purchased bills, confirmation of the party along with the PAN of the assessee. Ld.AR s....