TaxTMI 
TaxTMI 
TaxTMI 
2020 (9) TMI 90
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.... CIT(A) erred in not appreciating the facts of the case that the assessee failed to prove identity, genuineness and creditworthiness of the entities, who invested as Share Application Money in the assessee company. 3. The appellant craves leave to amend or alter any ground or add a new ground which may be necessary." 4. The brief facts of the case are that the assessee filed its return of income on 18.10.2007 declaring total income to the tune of Rs.Nil. The return was processed u/s 143(1) of the I.T. Act. The assessee is a Manufacturer & Exporter of Stainless Steel, Utensils. An information was received on 12.03.2013 from the O/o Dy. DIT (Inv.), Unit-1(2), Mumbai in which it was conveyed that the assessee has taken the bogus purchase entries from the eight entities in sum of Rs. 39,78,97,166/- for the F.Y.s 2005-06 to 2012-13. The discrepancy in purchases from the following parties was noticed in the A.Y.2007-08. Sr. No Name of the purchase party Amount 1 Champion Steel Party 31,71,775 2 Chirag Steel India 14,43,512 3 Dhanera Metal Corporation 63,25,999 4 Manish Industrial Corporation 79,25,682 5 PM Steel & Alloys 1,11,33,964 6 Shubham Metal Corporation 28,....
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....ct of purchases and manufacturing of the goods is concerned the appellant has submitted various details. It has been explained by the 1.d.AR that the details show that the appellant has been maintaining stock records which shows the quantity of goods purchased, consumed and stock in hand and the valuation thereof. The 'Fax Audit Report confirms the same. The stock statements have been regularly submitted to the banks and are subject to verification by third party agencies. The appellant has also been maintaining records of scrap generated and the shown sales of scrap. The books of account have been audited and that there is no adverse finding in the assessment order to that effect. The appellant has its own transport vehicle to facilitate transport of goods from one place to another as the appellant main business is that of exports. 6.3.2. In respect of purchases from the bogus parties the appellant has submitted details of purchases along with payment details. The goods purchased are reflected in the stock records. The payment made to the said eight parties is reflected in the bank statements against their respective names. It shows that payments have been made in the regula....
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....bunal dated 30-04-2010, we find that the Tribunal has deleted the additions on account of bogus purchases net only on the basis of stock statement i.e. reconciliation statement, but also in view of the other frets. The Tribunal records that the Books of Accounts of the respondent assessee have not been rejected. Similarly, the sales have not been doubled and it is an admitted position that substantial amount of sales have been wade to the Government Department i e. Defense Research and Development Laboratory, Hyderabad. Further, there were confirmation letters filed by the suppliers, copies of invoices for purchase; as well as copies of bank statement all of which would indicate that the purchases were fact made. In our view, merely because the suppliers have not appeared before the Assessing Officer or tit CIT(A), one cannot conclude that the purchases were not made assessee. The Assessing Officer as well as CIT(A) have disallowed the deduction of ca.33 4rbres. on account of purchases merely on the basis of suspicion because the sellers and the cannot been produced before them. We find that the order of the Tribunal is well a reasoned order taking into account all the facts before....
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....ied out by the appellant. Further, it has to be appreciated that (i) Payments were through banking channel and by cheque, (ii) Notices coming back, does not mean, those Parties are bogus, they are just denying their business to avoid sales tax/VAT etc, (iii) Statement by third parties cannot be concluded adversely in isolation and without corroborating evidences against applicant. No cross examination has been offered in AO to the appellant to cross examine the relevant parti2. (who are deemed to be witness or approver being used by AO against the appellant) whose name appear in the website www.maltavat.g02).2fl and (v) failure to produce parties cannot be treated adversely against appellant 6.3.7.iv) The Jurisdictional ITAT Mumbai Bench in the case of ITO V. NVs Eagle Impex (FFA No 5697/Mum/2010) has held that: We have carefully considered the rival contentions perused the finding of the AO and the learned commissioner (Appeals) and the ii to purchases made from the following four findings of tire Assessing Officer and the rd. In the present case, the dispute relates to purchases made from the following four parties. Sr. No. Name of Parties Amount 1 M/s. Poonam Enter....
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....e details toil/s regard to the purchase and corresponding exports made by the assessee. In this case, the Assessing Officer has dull accepted the sales /export turnover and also (lie gross profit rate. This, inter - alia, means that the assessee must have made purchases during the year under consideration for which there is corresponding the gross profit which is the balancing figure of the opening stock, purchases and direct cost on site and sales and closing stock on the credit side, Iris been accepted by the Assessing Officer. the'? it would be farfetched to perceive that such a huge quantity of purchases have not been made. Further, these evidences with regard to the purchases were there with the Assessing Officer in the second round of proceedings, he could have at least made sonic efforts to enjoy as to whether these purchases have actually been routed through: banking channel i.e., u.re made through account payee cheques or not or whether the sales tax certificates in the name of these four parties are genuine or not, even though the assessee had failed to put up any appearance for him. The primary onus which laid upon the Assessee was discharged. It was upon the asses....
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....to notices issued under section 133(6) of the Act, would not in itself suffice to treat the purchases as bogus and make in addition under section 69C of the Act. If the AO doubted the genuineness of the said purchases, it was incumbent upon him to cause further inquiries in the matter in order to ascertain the genuineness or otherwise of these transactions. Without causing any further enquiries to be made in respect of the said purchases, the AC) cannot make the addition under section 69C of the Act by merely relying on information obtained from the Sales Tax Department, the statements/ affidavits of third parties, without the assessee being afforded any opportunity of cross examination of those persons for non-response to information called fly under section 13.3(6) of the Act. 4.3.6 In the factual matrix of the case on hand, where the AO foiled to cause any equity to be made to establish his suspicions that the said purchases are bogus, the assessee has brought on record documentary evidences to establish the genuineness of the said purchase transactions, the action of the AO in brushing aside these evidences cannot be accepted. Further the double Bombay High Court in the case ....