TaxTMI 
TaxTMI 
TaxTMI 
2019 (4) TMI 757
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....s. 1,00,021/- being 10% of the expenses claimed" The Revenue has raised following grounds of appeal:- 1 The Id. CIT(A) has erred on fact and in law and in the circumstances of the case in deleting the addition of Rs. 2,30,16,415/- made by the A.O. on account of discrepancy of purchases. 2. The Id. CIT(A) erred in not considering that the assessee could not prove the genuineness and creditworthiness of the purchase transactions during the course of assessment proceedings. 3. The Id. CIT(A) has erred on fact and in law, in view of the Hon'ble Delhi High Court in the case of Commissioner of Income-Tax ......vs M/s La Medica, Delhi on 15 March, 2001 [2001 VAD Delhi 931, 92 (2001 DLT 406, 2001(59) DRJ 404] wherein the Hon'ble court has upheld the 100% disallowance of bogus purchases. 4. The Id. CIT(A) has erred on fact and in law and in the circumstances of the case in deleting and addition of Rs. 1,56,77,456/- made on account of unexplained cash credit and unproved loans u/s 68 of the I.T. Act, 1961. 5. The appellant prays that the order of Ld.CIT(A) on the above grounds be set aside and that of the Assessing Officer be restored. 2. The brief, facts of the case are ....
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.... giving use patterns of the material. The assessee was also unable to produce latest address and whereabouts of these dealers/sellers. The onus of proving the genuineness of expenditure was not discharged by the assessee. When expenditure is claimed to have been incurred, the initial burden will be on the assessee to prove that expenditure was genuine, but the assessee fails to discharge its onus by filing necessary evidence, accordingly, after analyzing the book results of the assessee and also considering net profit declared for the year under consideration came to the conclusion that purchases claimed to have been made from above parties are not proved and hence rejected the books of accounts u/s 145(3) of the Act and added 25% unverifiable purchases u/s 69C of the Act. 4. The Ld. DR submitted that the Ld. CIT(A) was erred in deleting the addition made by the AO towards 25% of unverifiable purchases without appreciating the fact that the assessee not even able to file latest address of the dealer when notice issued u/s 133(6) of the Act, were returned un-served. The Ld. DR further submitted that the AO brought out clear facts to the effect that the assessee has declared nominal....
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....ctivities. It is not a case of AO that these are bogus purchases (Hawala dealers as per Sales Tax Department) as the purchases were made from large scale company one of it is owned by the Govt. of India and another one is flagship company of Vedanta Group. The assessee cannot be responsible for non-service of notice u/s 133(6) of the Act to the suppliers. The Ld. CIT(A) after considering all these facts has recorded categorically finding of the fact that no contrary evidence has been brought on record by the AO to prove that purchases from above two parties are non-genuine except nonservice of notice u/s 133(6) of the Act. On the other hand, the assessee has filed complete details along with stock register execise audit report and transportation documents to prove that these purchases are genuine. Therefore, we are of the considered view that there is no error in the findings recorded by the Ld. CIT(A) in deleting the additions towards 25% of unverifiable purchases. Hence, we reject the ground taken by the Revenue. 7. The next issue came up for consideration is additions towards unsecured loans u/s 68 of the Act. During the assessment proceedings, the AO observed that the assessee....
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....ividuals, none of the creditors having sufficient source of income to explain loans given to the assessee. But, the Ld. CIT(A) has deleted the addition by accepting confirmation letter filed by the assessee without recording any reasons as to how other two ingredients i.e. genuineness of transaction and creditworthiness of the creditors has been discharged by the assessee. 9. The Ld. AR for the assessee, on the other hand, strongly supported the order of the Ld. CIT(A). The Ld. CIT(A), recorded categorical findings in the light of various details filed during the course of assessment and appellate proceedings, as per which, the assessee has discharged its initial burden cast upon u/s 68 of the Act, including identity, genuineness of the transaction and creditworthiness of the parties. The Ld. AR further submitted that the assessee has filed various details including confirmation from the parties and their financial statements along with bank statement to prove that they have sufficient source of income to explain loans given to the assessee. The Ld. CIT(A) after considering the details, rightly deleted additions made towards unsecured loans including loans taken during the previou....
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....ave furnished confirmations letters along with their financial statement. We, therefore, are of the opinion that payment through banking channel or furnishing confirmations is not sufficient enough to discharge the onus cast upon u/s 68, when the parties himself admitted that they are engaged in providing accommodation entries. Under normal circumstances when identity is proved, it is for the AO to go behind creditors to ascertain true nature of transactions but credits cannot be considered as undisclosed income of the assessee. In a case like hawala operators, mere furnishing proof of identity or certain documents is not sufficient enough to come out the provisions of section 68 of the Act. In this case, the AO has brought out clear fact to the effect that those companies are paper companies involved in providing accommodation entries. Therefore, we are of the considered view that the Ld. CIT(A) was erred in deleting additions made by the AO towards loan taken from of M/s Pushpanjali Commotrade Pvt. Ltd. and M/s Radiant Merchandise Pvt. Ltd.. Accordingly, we reverse findings of the Ld. CIT(A) and upheld additions made by AO. 11. Coming to loans taken from M/s Chandimata Managemen....
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....d various details including confirmation letters from the parties along with their ITR copies, bank statements, etc. The Ld. CIT(A) further observed that all the transactions were routed through account payee cheques. The source of receipt from banking channel clearly established genuineness of the credit which is reflected in the books of accounts, therefore, he came to conclusion that the assessee has discharged initial onus cast upon u/s 68 of the Act by proving identity of the creditors by giving their complete address, PAN and copies of assessment orders where ever readly available. The assessee also proved the capacity of the creditor by showing the amounts received through banking channels. When the identity and creditworthiness have been proved, merely for the reason that non-appearance of parties before the AO, no additions could be made u/s 68 of the Act. Therefore, he came to conclusion that the AO was not justified in making additions towards loans taken from Vikash Sharma, Umarao Prasad and other parties. The Ld. CIT(A) further observed that wherever the assessee could not furnish even confirmation letters from the parties, especially in the case of Sonal S. Agarwal, S....