TaxTMI 
TaxTMI 
2018 (12) TMI 623
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....TA No.1807/Del/2014 ( A. Y. 2006-07) 5. In departmental appeal, the revenue challenged deletion of addition of Rs. 1,39,41,577/- on account of bogus purchases. 6. Briefly the facts of the case are that the assessee company filed return of income on 10.11.2006 showing total income of Rs. 3,50,39,621/- under the head business and house property which was processed u/s 143 (1). Subsequently reassessment proceedings were initiated u/s. 147 of the IT Act. The assessee in response to the notice u/s 148 submitted before the Assessing Officer that the return of income filed originally be treated as return filed in response to notice u/s 148 of the IT Act. The assessee is in the business of manufacturer of various types of auto electric parts for vehicles. The Assessing Officer in the reasons for reopening of assessment mentioned that survey us/. 133 A of the IT Act was conducted at the premises of M/s. Vinod Parashar & Associates, Faridabad on 19.09.2007. From the documents impounded during the course of survey, it was noticed that Sh. Vinod Parashar was engaged in the business of providing bogus bills to various parties in lieu of commission. Sh. Vinod Parashar admitted that he had open....
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....y payment directly or indirectly in any form from M/s Om Industrial Corporation as stated in the reasons. During the year under appeal, the assessee company purchased raw material component from both the concerns and same purchased material was used in the production process. The details of production process were also explained. It is stated that whenever the material is purchased within the state of Haryana by the assessee company from any party, Form No- D3 of sales tax/VAT is required to be used by the vendor company. The detail of bills and material is entered into the Gate Entry Register where gate keeper puts the stamp of the company of the back side of the bills as a proof of receipt of material. The Gate Keeper after entering the details in the Gate Entry Register sends the material to the stores department where receipt of quantity of the material and other details are recorded in the store register and then material is issued to the production department as per the requirement. The assessee has been regularly filing his sales tax return where entire purchases so made have been shown. The purchases are made through banking channel and payments are received from the custo....
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.... 10. The AO accordingly treated the purchases made by the assessee from above parties as bogus and made addition of Rs. 13941577/-. 10.1 The assessee challenged the above addition before Ld. CIT(A). The written submission of the assessee reproduced in the Appellate Order in which the assessee has explained that purchase from M/s Om Industrial Corporation was made of Rs. 68,09,000/- therefore addition is excessive to the extent of Rs. 54,45,000/-. The statement of Sh. Vinod Parashar on oath was recorded during survey u/s 133A, which is not admissible against the assessee. The assessee relied upon the decision of Supreme Court in the case of CIT vs. S. Khadar Khan Son 79 DTR 184 (SC) and decision of Kerala High Court in the case of Paul Mathews and Sons 263 ITR 101 (Kerala HC). It was further submitted that the statement of Sh. Vinod Parashar was not subjected to cross-examination on behalf of the assessee; therefore, it cannot be read in evidence against the assessee. The assessee relied upon the decision of the Supreme Court in the case of Kishinchand Chellaram vs. CIT 125 ITR 713 (SC). Assessee submitted that explanation of the assessee was supported by documentary evidences whic....
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....nnot be held as clinching evidence. Quantities of purchases and sales and value of sales has been accepted by AO, thus to this extent nothing adverse has been found in the books of accounts. All the purchases are through account payees cheques, Purchases are supported by form ST-38 issued by Excise and Trade department. Nothing adverse has been found in this behalf. In the absence of any allegation about insufficiency of trading results such addition has been rightly deleted by CIT (A)." (3) CIT vs. Leaders Valves (P) Ltd. 285 ITR 435 ( P & H), in which Punjab & Haryana High Court held as under:- "Tribunal having upheld the conclusion of the CIT (A) that the purchases made by the assessee from seven scrap dealers could not be treated as bogus as the consumption stood fully proved and the trading results of the assessee have been accepted all along and the purchases from these very parties have been accepted by the Department to a large extent in the subsequent assessment year, the finding of the Tribunal is a finding of fact and no question of law arises." The assessee therefore prayed that purchases are genuine, hence additions should be deleted. 11. The Ld. CIT(A) consider....
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....cted above by me. In substance, the AO has strongly relied upon the statement of Sh. Vinod Parashar recorded on oath u/s. 131 during the survey proceedings u/s. 133 A. The AO has also given weightage to the fact that these parties were not available at the time of framing the Asstt., since, the letters sent to them u/s. 133 (6) retuned back un-served with the remarks "left without address". The AO has also made a reference to the report of Inspector mentioning that the parties were not available at the given address and the local enquiries revealed that these concerns have been closed down quite long back and their present whereabouts are not known. The AO has also made a reference to the bank accounts of these concerns showing cash withdrawal for returning the money to the beneficiaries. In view of these broad findings, the AO reached to the inclusion that the purchases made from these parties are not genuine. The AO, however, could not point out any discrepancy in the documents and records, including stock register produced before him. In this case, I find that all the purchases are evidences by purchase invoices. All the 3 parties are registered with VAT and having TIN nos. as m....
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....nies like Maruti, Mahindra, Tata etc.. etc.. wherein this item is being used as a motor part. In this case, complete documentary evidences have been filed before the AO wherein no discrepancy has been pointed out. The payment for purchases had been made through cheques. It has also been stated that the appellant, in the normal course makes payment to the suppliers in a span of period of 90 - 120 days, similarly, for these purchases also, the payments have been made within the similar span period. In case, it could have been a case of bogus purchases, then the payment might had been made immediately. The appellant company was incorporated on 09.08.2005. A.Y. 2006 - 07 was it's first year of operation. The G.P. & N.P. declared is of 39.92% and 24.58% as calculated by the appellant in his submissions before me. The appellant also stated that in case the preposition of AO of bogus purchases of Rs. 1,39,41,577/- stands accepted, then manufacturing / Trading A/c. will provide such distorted pictures which is not apparently possible. The appellant also filed the manufacturing trading a/c. prepared as per audited a/c's and a re - casted manufacturing / trading a/c. by treating thes....
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.... I have already given a finding above that these purchases are also genuine and cannot be held as bogus. However, the appellant has taken up a contention that Techno Entpp. is not related to Sh. Vinod Parashar. Sh. Sanjay Sharma is the proprietor of this firm. The statement of Vinod Parashar cannot be applied for the purchases made from Techno Entpp. Even the reasons recorded u/s. 147 also does not include Techno Entpp. as a party for whom any information has been received either by the AO. However, I find that the AO in the Asstt. Order in Para - 4.7. had made a mention that subsequent information received from Inv. Wing also suggests that M/s. Techno Entpp. was also connected with Vinod Parashar. However, the Asstt. Order is silent as to whether these observations were confronted to the appellant or not. In any case, I am of the opinion that the adjudication of this contention is now not needed in view of my findings given in the preceding Para, wherein on merits I have hold that these purchases cannot be treated a bogus. I have also examined the legal contention of the appellant that statement recorded on oath in proceedings u/s. 133 A cannot be used for making any addition.....
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....s and covered by excise. Statement of Sh. Vinod Parashar was recorded in survey, which is not admissible and relied upon the decision of Supreme Court in the case of S. Khader Khan Sons 79 DTR 184 (SC). The statement of Sh. Vinod Parashar was not subjected to cross examination on behalf of the assessee; therefore it cannot be read in evidence against the assessee. In support of above submissions, he has relied upon the Judgment of Rajasthan High court in the case of CIT vs. Sunita Dhadda, dated 31/07/2017, in which view of the Tribunal have been affirmed, in which no opportunity were given to cross-examination of the witness of the Department, therefore, issues were decided in favour of the assessee. The SLP of the Department have been dismissed vide order dated 28/03/2018 by the Hon'ble Supreme Court. In support of the same proposition of law, Ld. Counsel for the assessee relied upon the decision of the Hon'ble Supreme Court in the case of Andaman Timber Industries 281 CTR 241 and Judgment of Delhi High Court in the case of Pradeep Kumar Gupta 272 CTR 115. He has submitted that genuineness of the purchases have been proved by several documents on record. The books of accounts of ....
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....tement recorded during survey cannot, by itself, be made the basis for addition." 15. It may also be noted here that the assessee asked for the cross- examination of the statement of Sh. Vinod Parashar and AO issued summons u/s 131 of the Act against him for his presence in his office for cross-examination on behalf of the assessee. The assessee attended the office of the AO but Sh. Vinod Parashar did not turn up for crossexamination on behalf of the assessee. Since Sh. Vinod Parashar is a witness of the Department and he did not turn up for cross-examination on behalf of the assessee, therefore, his statement is not admissible in evidence against the assessee. We rely upon the decision of the Supreme Court in the case of Kishinchand Chellaram vs. CIT 125 ITR 713 (SC) and the decision in the case of Sunita Dhadda (supra) relied upon by the Ld. Counsel for the assessee. Therefore, nothing is left for the AO to make any addition against the assessee. It may also be noted here, that the AO recorded in the Assessment order when notice u/s 133(6) have been issued against the aforesaid parties but the notice return un-served with the remarks "left without address". It would show that th....