2019 (10) TMI 711
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....ddition of Rs. 3,15,25,170/- being amount of additional credit balance in the account of M/s. Progressive alloys India Pvt. Ltd. as bogus purchases. 3. Whereas, in Revenue's appeal the only dispute is with regard to deletion of unexplained credit of Rs. 1,40,92,683/- of M/s. Metal Impex. 4. The facts in brief are that assessee is an individual engaged in the business of trading of metals and alloys. The Assessing Officer in the assessment order has first of all, compared the total sales and net profit rate for the Assessment Years 2014-15 and 2015-16 in the following manner: A.Y. 2014-15 A.Y. 2015-16 Sales Rs. 901,184,322 Rs. 4,910,951,501 Net Profit Rs. 1,251,627 Rs. 1,853,780 NP ratio 0.14% 0.04% The ld. Assessing Officer then further noted that assessee had shown outstanding balance in the account of the sundry creditors amounting to Rs. 1,66,84,33,017/-, the information and list of the sundry creditors have been reproduced in the assessment order at pages 2 and 3. There were overall 30 parties and at the year end the balance shown under the head 'sundry creditors' of Rs. 161,84,38,017/-. The assessee was required to provide the details of all th....
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....s with the aforementioned parties." 6. Ld. CIT (A) forwarded the additional evidences to the Assessing Officer to submit his remand report. However, the Assessing Officer in his first remand report stated that these evidences should not be admitted. Thereafter, ld. CIT (A) again sent back the matter to the Assessing Officer to comment on merits of the additional evidences and verify the same. Then in the second round of remand proceedings, Assessing Officer conducted his own inquiry and again sent notices u/s.133(6) to these four parties to which all of them responded and submitted his remand report which has a very vital bearing on the issues involved before us, which is reproduced here under:- "Your honour has forwarded the copy of additional evidence filed by the assessee to submit our report on merits of the evidence filed. To-verify the merit and genuineness of transaction as provided in additional evidence the under signed issued notices u/s 133(6) for the I.T. Act 1961 to the parties in respect of which the addition was made by the A.O. Report on merits of the additional evidence is as under: SI. No. Additional evidence filed in respect of Sundry creditor Credit bala....
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....in balance as per the confirmation and balance as per ledger account This cannot be reason for addition. Duly signed confirmation was filed. This cannot be reason for addition as no opportunity to reconcile the difference was allowed. We are also filing copy of account from our books, duly confirmed copy of account from the books of M/s Metal Impex (Prop. Naveen Tayal), Copy of their ITR, copy of bank statement for relevant and subsequent year of the appellant. The aforesaid documents are not strictly speaking additional evidences but the same may kindly, be treated as additional evidence and admitted in view of Rule 46A of the I.T. Rules as the AO had not issued any show cause notice and never asked us to produce books of accounts although the accounts are audited u/s 44AB of the Act and the report of tax audit was filed. (Page no. 01 to 03 of the paper book) M/s. Acrotech Ltd. 15,29,13,896/- No confirmation is filed even in response to the notice u/s 133(6). Disallowance was made on account of amount added In the account during the year as bogus purchases Non receipt of confirmation cannot be reason for addition as the party is a widely held company being quoted i....
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....ressive Alloys (India) Pvt. Ltd., copy of their ITR, copy of bank statement for relevant and subsequent year of the appellant. The aforesaid documents are not strictly speaking additional evidences but the same may kindly, be treated as additional evidence and admitted in view of Rule 46A of the I. T. Rules as the AO had not issued any show cause notice and never asked us to produce books of accounts although the accounts are audited u/s 44AB of the Act and the report of tax audit was filed. (Page no. 29 to 32 of the paper book) 8. Ld. CIT (A) after incorporating the confirmation of accounts by the parties has decided independently all the creditors. In so far as M/s. Metal Impex is concerned, the same has been deleted on the ground that discrepancy in credit balance was merely on account of difference of timings of posting the credits of the cheque amount in the respective accounts, because cheques issued for payments were not considered at the time of assessment. The mismatch was on the ground of that cheques were paid on 31.03.2015, but was cleared in April/ May of 2015 and since cheques were considered by the assessee in the ledger account as on 31st March 2015 and party ha....
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.... the course of remand proceedings were merely make believe explanation. He thus, strongly relied upon the observations and findings of CIT (A). 13. On the other hand, ld. counsel for the assessee submitted that once an independent verification has been made by the Assessing Officer by calling the confirmation u/s.133(6), then genuineness of the transaction of the sundry creditors cannot be doubted. He further submitted that for the assessment year 2014-15, re-assessment proceedings u/s 147 were re-initiated precisely on the same ground and after detailed inquiry from the same very parties the Assessing Officer has not made any addition. In sum and substance, his main contentions were as under: (i) The additions were made mainly for the reasons that confirmation was not received from the purchase creditors in response to notice u/s 133(6), which were subsequently provided to Ld. CIT (A) as additional evidence which were accepted by him. (ii) In the remand report, the Ld. AO had accepted that all the balances in the books of purchase creditors tally with the balances in the books of the assessee. (iii) In the reassessment proceedings for AY 2014-15 was reopened u/s 147 on the ....
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....IT (A) has still proceeded to confirm the addition on a very lame reason. On one hand, Ld. CIT (A) accepts that the confirmation of credit balances of the creditor have been received directly from the inquiry made by the Assessing Officer and ledger account as appearing in the books of account of the creditors matches with the account of the assessee and also matches with the confirmation account submitted by the creditor, but still proceeds to draw adverse inference. The premise of the addition made by the Assessing Officer was that certain balances do not match with the accounts of the creditors. Now when the difference has been reconciled and balance has been explained and accounts got tallied, then where is the question of drawing any adverse inference. Even if in the first instance the balance was not tallying with the accounts of the creditors, then also, how the authenticity and credibility of third party accounts is given more precedence to the assessee's account when assessee has shown purchase bill wise details and corresponding sale and stock, matching with the bank accounts and entire transaction is through cheque. If the books accounts alongwith purchase and sales have....