TaxTMI 
TaxTMI 
2016 (7) TMI 1262
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.... 4. During the course of assessment proceedings, the AO on perusal of the profit and loss account found that the assessee debited an amount of Rs. 87,15,74,585/- for purchases made during the year and asked the assessee to furnish parawise details of purchases above Rs. 5 lakhs along with the bill and vouchers. The assessee filed details of purchases vide its submissions dated 11.10.2013. Thereafter notice under section 133(6) was issued to the suppliers in order to ascertain the creditworthiness of the parties on the addresses furnished by the assessee. Out of the above notices to the parties, some notices were not served and some were served but not replied and in some cases the parties denied to have any transactions with the assessee. In some cases notices were served and replies were received, , the details of which are enumerated in the assessment order at para 5.4 of the assessment order. The assessee was given opportunity by the AO to produce these parties but nothing fruitful happened. However, the assessee duly produced copies of bills and vouchers, ledger accounts before the AO which the AO found that the said bill of the parties were not carrying details of transporte....
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....held that the first appellate authority would be well within its jurisdiction to ask for and/ or to allow the assessee to produce additional evidence, records or documents in the manner he deems fit for deciding the appeal and the Revenue cannot claim to be aggrieved by the admission of such additional evidence. The facts of each case must be decided correctly in the light of the above judicial guidelines. Reading the Rule 46A alongwith the decisions rendered by various courts as stated above, it become apparent that the pre-conditions prescribed in Rule 46A must be shown to exist before additional evidence is admitted and every procedural requirement mentioned in the Rule has to be strictly complied with so that the rule is meaningfully exercised. Powers conferred by Rule 46A to the CIT(A), while admitting additional evidence at First appellate stage, are not expected to be exercised in routine, mechanical or cursory manner. While dealing with the appeal, the CIT(A) should recognize and maintain distinction between a case where the assessee invokes Rule 46A to adduce additional evidence before him and where without being prompted by the assessee, the CIT(A) considers it fit to mak....
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..... 92.69 crores. The ld.AR submitted that the AO made the addition to the tune of Rs. 7,48,31,548/- comprising of Rs. 2,59,44,084/- from six parties to whom the notices u/s 133(6) were issued which were returned unnerved. Rs. 4,79,47,502/- were related to 19 parties to whom notices u/s 133(6) were served but who could not respond. The ld. AR also submitted that the ld. CIT(A) during the course of appeal proceedings called for the remand report from the AO and the AO submitted that vide letter dated DCIT-8(2) /remand report 1415, dated 21.7.2014 on the basis of which the ld. CIT(A) deleted the addition to the tune of Rs. 6,85,01,813/- and addition of which sustained was Rs. 63,29,735 in respect of 8 suppliers. The ld. CIT(A) sustained the addition primarily for the reasons that the notices were returned un-served, non-confirmation from these parties and non production of financial statement and bank statements of the suppliers. Out of the said parties 4 parties namely Comet Corporation, Kotsons Impex P Ltd, Donnies Trading P Ltd were and Balkrishna Trading P Ltd declared hawala parties by the State Government of Maharashtra. However, the assessee proved the fact of purchases having b....
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.... at all. 7. We have carefully considered the rival submissions and perused the record placed before us including the orders of authorities below and case law relied upon by the parties. We find that the AO made the addition of Rs. 7,48,31,548/- which was reduced to Rs. 63,29,735/- by the ld. CIT(A) on the basis of remand report called for during the appellate proceedings which was furnished by the AO vide letter dated 31.7.2014. We find that the assessee submitted the copies of ledger account, copies of bank statements, copies of purchase bills, material delivery challans in order to substantiate the purchases made from those parties. Besides the assessee also produced stock register in which the entries of material received and consumed for production in order to prove the case of assessee and ultimately sold all the finished goods for which no doubts were raised by the tax authority. We also note that the books of account were not rejected by the AO and only the purchases were doubted which were reduced by the ld. CIT(A) substantially. Now, the question before us is whether the purchases as made by the assessee were bogus despite the facts that the material was received with s....
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....mobile number. [Para 10] In view of the above, it was to be held that the Assessing Officer was not justified in making the disallowance of purchases made by the assessee. [Para 11] In the result, the appeal filed by the assessee was to be allowed. [Para 12]" In the case of Rajeev G Kalathial (supra), it has been held as under : "The Assessing Officer had made the addition as one of the supplier was declared a hawala dealer by the VAT Department. It was a good starting point for making further investigation and take it to logical end. But, he left the job at initial point itself. Suspicion of highest degree cannot take place of evidence. He could have called for the details of the bank accounts of the suppliers to find out as whether there was any immediate cash withdrawal from their account. There is no such exercise was done. Transportation of goods to the site is one of the deciding factor to be considered for resolving the issue. The First Appellate Authority has given a finding of fact that part of the goods received by the assessee was forming part of closing stock. There is nothing, in the order of the Assessing Officer, about the cash withdrawal. Secondly, proof....