TaxTMI 
TaxTMI 
2020 (4) TMI 787
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....hout providing any opportunity to the assessee to cross examine the said person and also to cross verify the accounting records of supplier firms with which the said person was associated to elicit the authenticity of the contents of the statements" (iv) without giving complete copies of the statements of other persons referred to in the statements of said person for rebuttal by the assessee; and (v) relying upon judicial decisions, facts of which were different or overruled in subsequent decisions and not considering the judicial decisions having identical facts. 2. The learned CIT (Appeals) further erred in holding purchases of diamonds aggregating Rs. 36651505/= (which were exported out of country after proper verification by the Custom Authorities) as bogus and sustaining addition of Rs. 7533550/- (as per arithmetic calculation, the amount comes to Rs. 6597271/ ) by applying profit rate of 18.00% on said purchases from concerns in which Mr. Rajendra Jain (supra) stated to be associated. 3. Without prejudice to above, the learned CIT (Appeals) has further erred - (a) rejecting the books of accounts u/s 145(3) where no corroborative evidence was on reco....
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....Rs. 91,62,876/- to the total income of the assessee. The assessee challenged the action of the AO before the ld. CIT (A) and contended that in support of its purchases, the assessee produced all the relevant documents which include bills, vouchers, details of the suppliers including PAN, payment through banking channel and corresponding export which has not been disputed even by the Customs Authorities. Therefore, the assessee contended that all these relevant documentary evidences established the fact that the purchases are genuine and there is corresponding export of the goods by the assessee. The ld. CIT (A) modified the order of the AO and observed that after rejection of books of accounts under section 145(3) of the IT Act the income of the assessee is required to be estimated. However, the ld. CIT (A) has restricted the addition by applying 18% gross profit in respect of the alleged bogus purchases which has resulted an addition of Rs. 75,33,550/-. 3. Before us, the ld. A/R of the assessee has submitted that the AO has made the addition only on the basis of the 3rd Party information without subjecting the same to further scrutiny. He has further contended that the assessee....
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....unt. Thus the 18% profit rate applied by the ld. CIT (A) is highly unreasonable and excessive. He has further submitted that when all the documentary evidences were produced before the AO which include the purchase bills/invoices, export invoices, export way bills, air bills which were duly cleared by the Customs Department and thereby the sales of the assessee are accepted as genuine, then the corresponding purchase of the material/same goods cannot be held to be bogus. The ld. A/R has also referred to the ledger account as well as stock register and submitted that the entries in the ledger account clearly manifest the purchases made and payments made by the assessee through proper banking channel. Each and every entry in the ledger account can be crossed check with the bank statement of the sellers/supplier concerns. Further, all these materials are also recorded in the stock register of the assessee. Therefore, once the quantitative details have been verified and reconciled from the stock register, ledger account as well as sales/exports of the assessee, then the purchases cannot be doubted. In support of his contention, he has relied upon the decision dated 10th September, 2018....
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....re genuine. The assessee in support of her claim produced the purchase bills issued by these parties having details of their PAN, addresses etc. The assessee has also produced the export invoices, export way bills/air way bills duly cleared by the Customs Department. Therefore, the sale of the assessee which is the export was not doubted either by the Customs Department or by the AO. The assessee produced the ledger account of all the parties showing all the entries of purchases and the payment through banking channel which is verifiable from the corresponding bank account details of the assessee as well as these supplier concerns. These facts are not disputed by the AO rather the AO has accepted that all the payments were made through banking channel. From the Stock Register it is manifest that the purchases made from these concerns are duly reflected in the inward quantity and the corresponding outward quantity is also reflected in the stock register which is on account of export. Therefore, when the same quantity which is claimed to have been purchased from these concerns is exported and reflected in the stock register, which can be reconciled with the transactions of purchase a....
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....of estimation of income after rejection of books of account by invoking the provisions of section 145(3) of the Act. The Hon'ble Supreme Court in case of CIT vs. Odeon Builders Pvt. Ltd. (supra) while upholding the orders of the Hon'ble High Court as well as of the Tribunal has held in para 3 & 4 as under :- "3. However, on going through the judgments of the CIT, ITAT and the High Court, we find that on merits a disallowance of Rs. 19,39,60,866/- was based solely on third party information, which was not subjected to any further scrutiny. Thus, the CIT (Appeals) allowed the appeal of the assessee stating: "Thus, the entire disallowance in this case is based on third party information gathered by the Investigation Wing of the Department, which have not been independently subjected to further verification by the AO who has not provided the copy of such statements to the appellant, thus denying opportunity of cross examination to the appellant, who has prima facie discharged the initial burden of substantiating the purchases through various documentation including purchase bills, transportation bills, confirmed copy of accounts and the fact of payment through cheques....
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....as specifically mentioned that such an opportunity was sought by the assessee. However, no such opportunity was granted and the aforesaid plea is not even dealt with by the Adjudicating. As far as the Tribunal is concerned, we find that rejection of this plea is totally untenable. The Tribunal has simply stated that cross-examination of the said dealers could not have brought out any material which could not be in possession of the appellant themselves to explain as to why their ex-factory prices remain static. It was no for the Tribunal to have guess work as to for what purposes the appellant wanted to cross-examine those dealer and what extraction the appellant wanted from them. 7. As mentioned above, the appellant had contested the truthfulness of the statements of these two witnesses and wanted to discredit their testimony for which purpose it wanted to avail the opportunity of cross -examination. That apart, the Adjudicating Authority simply relied upon the price list as maintained at the depot to determine the price for the purpose of levy of excise duty. Whether the goods were, in fact, sold to the said dealers/witnesses at the price which is mentioned in t....
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....ore the Investigation Wing. It is further seen that the assessee had filed the following documents before the lower authorities to substantiate the genuineness of purchase: stock register, quantitative reconciliation statement, copy of ledger accounts of M/s Avi Exports along with bank statement from which the payments for purchases were made. Apart from this, there is affidavit of Shri Rajendra Jain, proprietor of M/s Avi Exports which was filed in response to requisition u/s 133(6) of the Act and also confirmation of balance of the assessee company, copy of sales account regarding sales made to the assessee, copy of ledger account of the assessee in the books of M/s Avi Exports, copy of bank statement of M/s Avi Exports to substantiate receipt of payment against purchases, the retraction of statement by Shri Rajendra Jain regarding statement made after search and as filed before the DCIT, Surat and affidavit of Shri Rajendra Jain regarding retraction of statement. A perusal of the order of the lower authorities shows that all these documents were completely disregarded by the lower authorities without assigning any reason. It is also noteworthy that the sales as declared by the a....