TaxTMI 
TaxTMI 
2017 (10) TMI 45
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....s a manufacturer and 100% exporter of leather goods. A survey was conducted u/s. 133A of the Act on 29-01-2010. The assessee filed his return of income declaring total income of Rs. 48,08,090/- on 13-1-2011. Thereafter, notices u/s. 143(2) and 142(1) of the Act were issued. The AO determined the income of the assessee at Rs. 1,27,32,560/- vide his order dt. 12-03-2013 making the additions of Rs. 48,01, 811/- and Rs. 30,22,659/- towards bogus purchase and difference in stock respectively. 4. Ground no. 1 relates to deletion of addition of Rs. 49,01,811/- made on account of bogus purchase. 5. During the course of scrutiny the AO called for copy of stock register and copy of production register. The assessee produced the copy of stock register on 26-11-2012 and filed written submissions. According to AO, the assessee produced only the stock register, but, he did not file the same for examination of the AO. On verification of the stock register, the AO found that stock of finished items (exportable goods) were shown on monthly basis and other items were shown on daily basis and stock of raw material items were not at all produced for verification. On examination of material avail....
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....y and M/s.Lodwing Import of Rs. 49,01,811/- (Rs.54,21,113- Rs. 5,19,302) are not genuine and added to total income of the assessee. 7. Before the CIT-A, the assessee contended that the goods found physically on the date of survey and were recorded in the stock register and thereafter exported the same. The assessee submitted as under:- Particulars Amount Pradhan Tanners 19,56,925 Star Hide Company 23,82,090 Lodwing Import 5,26,384 Other Charges 36,412 Total 49,01,811 Details of individual purchases from these parties are as under:- a) Pradhan Tanners Date Purchase Amount VAT Bill Amount Name of The item Purchase Quantity 11/01/2010 12,09,675 48,187 12,58,062 Finished Leather 48375 sq.ft 28/01/2010 7,47,250 29,890 7,77,140 Finished Leather 29890 sq.ft b) Star Hide Company Date Purchase Amount VAT Bill Amount Name of The item Purchase Quantity 29/01/2010 12,01,500 48,060 12,49,560 Wet Blue Leather 4002 pcs 29/01/2010 11,80,590 47,224 12,27,814 Wet Blue Leather 4005 pcs c) Lodwing Import (actual name is Ludwig ....
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....of Party ledger & Bank statement is enclosed. [ Annexure-B(iii)] C. Ludwig Voigtlander GMBH, Germany a) Purchase made from Ludwig Voigtlander GmbH Hof are imported goods as can be seen in the Custom bill of entry dated 28/01/2010 & duly recorded in the Stock Register under Kevlar Lining. [ Copy of custom bill and Stock Register of Kevlar Lining is enclosed. [Annexure-C(i)] c) The assessee had made payment to the Ludwing Voigtlander GmbH Hof in respect of these purchases by way of remittance in foreign currency. Details of payment are as under:- Name of the Party Date Amount Cheque No. Ludwig Voigtlander GmbH Hof 11/01/2010 5,11,817 FTT0046 05/02/2010 14,567 FTT0225 Copy of the Party ledger is enclosed. [ Annexure-C(ii)] These items were used for making finished goods which have been exported and recorded as sales in our profit and loss account & offered for taxation, if the goods purchased are not genuine then how exports have taken place. Thus you are requested to delete the addition as the purchase are genuine & properly recorded in the books of account of assessee." 8. Considering....
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....ransactions are duly recorded in the books and disclosed in regular return of income. No incriminating material was found during survey. All transactions were through account payee cheques. Further, there is a basic difference between statement under sec. 133A(3) (iii) and 132. Statement recorded u/s. 133A cannot be given evidentiary value as such evidentiary value is not attached with by the provisions of Section 133A of the Act. There is no corroborative material brought on record to make the addition. Suspicion however strong, cannot take form of evidence. In Dhakeswari Cotton Mills Ltd. v. CIT [1954] 26 ITR 775 (SC), the principle of law laid down by the Hon'ble Supreme Court is that in making the assessment under section 143, the Assessing Officer is not entitled to make a pure guess and make an assessment without reference to any evidence or any material at all. There must be something more than bare suspicision to support the assessment under section 143(3). Therefore, having regard to the facts and circumstances of the case, in my opinion, the Assessing Officer was not justified in making the impugned addition of Rs. 49,01,811/- on account of bogus purchases. The additi....
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....ns. We find that the assessee filed relevant details in respect of all the three parties. The CIT-A examining the same found that Pradhan Tanners is registered in VAT and as such claimed refund from VAT Authorities. The payments were made through account payee cheques. The CIT-A found satisfaction with the copy of ledger along with bank statements in respect of said payment. The CIT-A further observed that Pradhan Tanners confirmed the same u/s. 133(6) proceedings. We find that all the details i.e. stock register, claim of VAT payments, ledger copy and statements u/s. 133(6) of the Act were on record available before the AO/CIT-A. Likewise, the CIT-A examining all the details in respect of other two parties, Star Hide company and Lodwing Voigtlander GMBH, Germany found satisfaction that all the details were made available before the AO. But, the AO proceeded to make addition on suspicion that the assessee did not produce stock register and the receipts showing purchases from the said three parties were bogus and incorrect. We find that the CIT-A examined all the details of said three parties and found satisfied that all the transactions are duly recorded in the books and disclosed ....
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....at the production entries were not recorded upto date and sales were recorded as and when bills raised. Accordingly, the AO made an addition of Rs. 30,22,659/- being difference found in stock as per account and stock physically found as on the date of survey of Rs. 3,02,659/- (Rs.1,73,44,602-Rs.1,43,21,943). 15. Before the CIT-A the assessee contended that the AO made double additions on account of bogus purchases and also on reduction of stock. The assessee also contended that the physical stock of raw materials was reduced by quantities as it was used in the production of exportable goods. The same were recorded when the bills raised. The CIT-A found that the submissions of the assessee were reasonable. Accordingly, he deleted the impugned addition by stating as under:- 5.2.3. Decision: I have considered the facts of the case and the submissions put forth on behalf of the appellant. The Assessing Officer observed that the appellant firm did not offer any explanation as to why the production entries were not recorded regularly and up to the date of survey and also as to why the entries of consumptions were done at the month end instead of day to day basis. Acc....
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....d not indicator of the overall margin of profit. Having regard to the facts and in the circumstances of the case, I am of the considered opinion that the Assessing Officer was not justified in making the addition on account of difference between the stock found on physical verification and that found recorded in the regular books of account as on the date of survey. Therefore, the addition of Rs. 30,22,659/- made in this regard is hereby deleted. The appeal of the appellant is allowed on this ground. " 16. The ld.DR submitted that the AO found that during the survey physical stock deficit as compared to the stock maintained by the assessee as per books. The entries of stock were not maintained properly on day to day basis. The AO did not accept the contention of the assessee that the entries were recorded at the end of the month. 17. On the other hand, the ld.AR submits that the entries were recorded in respect of exportable goods at the time of sales , which were recorded as and when bills raised. He further submits that the CIT-A examining the export register found satisfaction with the same and deleted the addition made by the AO. He relied on the order of the CIT....