TaxTMI 
TaxTMI 
TaxTMI 
2019 (10) TMI 1128
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....o deduction is allowable to the assessee as assessee purchased the material from grey market in cash. A.Y. 2011-12- Revenue ''1. Whether on the facts and in the circumstances of the face, the ld. CIT(A) was right in deleting the addition of Rs. 2,73,47,135/- u/s 69C on account of bogus purchases ignoring the fact that assessee was involved in taking the accommodation entry from Rajendra Jain and Banwari Lal Jain Group. ''2. Whether on the facts and in the circumstances of the face, the ld. CIT(A) was right in allowing the deduction u/s 10AA/10A of the Act ignoring the fact that provisions of Section 69C of the Act are applicable and as per provisions of Section 115BBE no deduction is allowable to the assessee as assessee purchased the material from grey market in cash. A.Y. 2012-13- Revenue ''1. Whether on the facts and in the circumstances of the face, the ld. CIT(A) was right in deleting the addition of Rs. 3,23,21,845/- u/s 69C on account of bogus purchases ignoring the fact that assessee was involved in taking the accommodation entry from Rajendra Jain and Banwari Lal Jain Group. ''2. Whether on the facts and in the circumstances of the face, the ld. CIT(A) was ri....
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....es. A statement was recorded by the Investigation Wing which is reproduced by the AO in the order3. In this statement Shri Rajendra Jain explained the modus operandi and listed name of those concerns (Proprietorship, firms and Ltd. companies) engaged in providing the accommodation entries. The AO on the basis of the statement treated purchase made from these concerns as bogus and proceeded to make the addition of 25% of such purchases a bogus u/s 69C. The AO has taxed such disallowance u/s 115BE of the Income Tax Act. 5. I havegone through the orders of the AO and submissions made by the ld.AR . I have also gone through the various case laws cited and legal objection 5. The issue of addition made by the AO in the assessment u/s 143(3) / 153A without any reference to incriminating seized material was considered bythe Hon'ble Rajasthan High Court in the case of Jai Steel Ltd. vs ACIT (88 (DRR 1). The Hon'ble Court was of the view in cae of completed assessment no addition can be made if no incriminating seized material is found during the course of search. Similar view point was expressed by the Hon'ble Delhi High Court in the case Kabul Chawla vs ACIT 380 ITR 57....
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....I may add the discussion underneath applies to the A.Yrs which have not been abated i.e. the A.Y. 2009-10 to 2011-12 I have perused the order of the AO for respective A.Yrs and submissions made by the ld.AR. Ihave also gone through various case laws relied upon by the ld.AR . The AO has relied on the information passed on by the Investigation Wing Mumabi wherein statement of Shri Rajendra Jain was recorded under oath. In this statement Shri Jain has admitted managing few concerns which accommodation entries in the form of bogus purchase bill to various people. The modus operandi is explained and tabulated in the assessment order where in various entities are listed providing such bogus bills. The relevant portion of the statement is also reproduced in the order passed u/s 143(3) / 153A. 6.2 I have carefully perused the order and I find that the addition made on the basis of statement recorded by the Mumbai Investigation Wing other than the statement the AO has made nothing in his possession to make impugned addition. I may point out that mere statement of a person searched u/s 132 is not sufficient to make addition and here the AO has proceeded to make addition on the best of....
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....in all the assessment orders that a letter was issued to custom authorities SEZ -II, Sitapura Industrial Area,Jaipur to verify the said purchases. The AO has recorded a finding that SEZ authorities have confirmed that said purchases are genuine as duly recorded in their records. This itself cast a doubt on AO's conclusion that purchases made are bogus. In fact, when it is certificate from another Govt.Agency certifying the genuineness of purchases and it tilts preponderance of probability in favour of appellant. On all the aforesaid counts, I am of the view that addition made by the AO is unsustainable and the same liable to be deleted. Same are directed to be deleted for A.Y. 2009-10 to 2014-15). 6.7 Without prejudice to the above, I am in agreement with the legal contention that even if the disallowance made by the AO is accepted then it would have no bearing on the case of the appellant as the entire exercise would be Revenue neutral. The appellant reliance on the judgement of Hon'ble Gujarat HC in the case of Sajani Jewels vs DCIT 143 DTR 263 (Guj) is tenable wherein it has been held that whole exercise of disallowance by the AO is Revenue neutral and since purchase made....
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....ed and judicious. 2.2.5 Even otherwise, the AO had made addition by merely relying on the statement of one Shri Rajendra Jain which cannot be termed as an incriminating material as said statement should have related to incriminating material found during the course of search or statement must be made relatable to material by subsequent enquiry/ investigation. 2.2.6 As far as the merit of addition made by the AO @ 25% of alleged bogus purchases are concerned, in this respect, the ld. CIT(A) had passed well reasoned detailed order in para 6 to 6.8. In the present case, no opportunity to cross examine said Shri Rajendra Jain was provided by the Revenue authorities. Thus it was rightly held that not providing cross examination tantamount to denial of natural justice and does vitiate the assessment. In this respect, we also rely on the decision of Hon'ble Supreme Court in the case of Andaman Timber Industries vs CCE (supra) wherein it was categorically held that statement of the witnesses without an opportunity to cross examine cannot be the sole basis of assessment as it is serious flaw which renders the order a Nullity. The ld. CIT(A) has also considered that the AO himself ha....
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....sed the material from grey market in cash. 3.2 We have heard the rival contentions and perused the materials available on record. It is pertinent to mention that the issues raised by the Revenue in the Assessment Year 2011-12 and 2012-13 are similar to the issue of Assessment Year 2010-11 wherein the grounds raised in appeal of the Revenue are dismissed taking into consideration the explicit and reasoned order of the ld. CIT(A). Thus the decision taken by us in the appeal of the Revenue for the Assessment Year 2010-11 shall apply mutatis mutandis in the grounds of the Revenue for the Assessment Year 2011-12 and 2012-13. Hence, the grounds raised (supra) by the Revenue on the issue in question in the Assessment Year 2011-12 and 2012-13 are dismissed. 4.1 Now we take up the grounds of appeal No. 2 of the Revenue for the Assessment Year 2012-12 wherein the AO during the course of assessment proceeding noted that the assessee collected employees's contribution towards PF and ESIC but did not paid it within the due date prescribed by relevant legislation to Rs. 28650/- and 79510/- respectively. The AO asked the assessee to state its case in respect of provisions of Section 36(1)(va)....