2017 (11) TMI 1654

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....tated above, the recorded reasons are invalid and improper and as such, the assessment framed vide order dated 05.03.2013 is bad in the eye of law 3. For the facts and circumstances of the case the Ld. CIT(A) was not justified in confirming the addition of Rs. 1,52,40,253/- made by the A.O. on account of alleged bogus purchase. 4. Without prejudice to the above grounds of appeal, the Ld. CIT(A) ought to have applied the gross profit rate on such alleged bogus purchases. 5. That the assessee craves leave to alter, amend, modify any of the grounds and / or take additional grounds before or at any time of hearing of this appeal." 3. Although, in this appeal, the assessee has raised a multiple grounds of appeal but at the time of hearing the solitary grievance of the assessee has been confined to ground No.3, that is, the addition of Rs. 1,52,40,253/- made by the A.O. on account of alleged bogus purchase. Other grounds were not pressed by the assessee. 4. The brief facts qua the issue are that a survey proceeding u/s 133A was conducted by the Income Tax Officer, in the business premises of the company named M/s.Vikash Iron & Steels Pvt. Ltd. During the ....

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....pany were bogus. The assessee submitted to AO that the impugned purchases of material from M/s. Vikash Iron & Steels Pvt. Ltd. worth Rs. 1,52,40,253/- was duly reflected in its purchase ledger and payment has been made to them against their relevant sales invoices by account payee cheques. The assessee drew the attention of the Assessing Officer that the goods purchased from the M/s Vikash Iron & Steels Pvt. Ltd were sold to some other parties which were also reflected in assessee company's sales ledger and sales invoices has been duly raised by the assessee against the same and payment was also received from the customers. So, according to assessee, the transaction is genuine in all aspects. So, the assessee contended that since the purchases from M/s. Vikash Iron & Steels Pvt. Ltd. are genuine in nature so it should not be disallowed. The Assessing Officer did not heed to the submission and relevant documents submitted by the assessee to prove the genuineness of the purchases made by the assessee from M/s Vikash Iron & Steels Pvt. Ltd. and held it to be bogus and thus disallowed the entire purchase amounts. 5. Aggrieved by the order of the AO, the assessee filed an appeal b....

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.... reassessment order), it is evident that the statement given by him is very general in nature. Shri Vikash Agarwal stated that "transactions in the accounts were mostly in the nature of paper transactions". So, according to ld. AR, it is clear that all the transactions are not bogus and nowhere the director of M/s. Vikash Iron & Steel Co. Ltd. had stated that the assessee company indulged in bogus purchases. The ld. AR brought to our knowledge that the Ld. AO did not provide any opportunity to cross examine the said director of M/s. Vikash Iron & Steel Co. Ltd. According to ld. AR, it is a well-settled principle of law that unless an opportunity to cross-examine is given to assessee, no credence can be given to the statement/report of any third party, which has been admittedly taken behind the back of the assessee. The ld. Counsel also pointed out before us that AO has not doubted the sales of the assessee and, in fact, has accepted it as correct. Therefore, according to ld. Counsel, in the case of a trading concern, when sales are not doubted, then purchases cannot be held as bogus. According to him, it is common knowledge that in case of a trading business, the assessee cannot....

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....kash Iron & Steel Co. Ltd., the assessee denied the allegations that the assessee had got fake bills in lieu of commission to M/s. Vikash Iron & Steel Co. Ltd. and that the entire purchases made therefore bogus. In order to prove that the purchases were genuine, the assessee had produced challans, weight receipts, bank statements, purchase bills etc. and the entire transactions that had shown to the Assessing Officer that the transactions with M/s. Vikash Iron & Steel Co. Ltd. were through banking channels; and, we note that the Assessing Officer has not found any fault with the books of accounts maintained by the assessee and we note that the assessee's books of accounts were duly audited. Therefore, we note that the assessee-company has discharged its onus by providing all the relevant evidences in supporting of the said purchases. Further, we note that the books of accounts of the assessee was duly audited and the assessee also maintained Stock Register which is evident from the Tax Audit Report (at page no.28 of the PB). We note that the quantitative details of the closing stock were also given in the Tax Audit Report (at page no.34 of the PB). We note that each and every trans....