TaxTMI 
TaxTMI 
2018 (8) TMI 2009
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....f the same. 4. When the matter was agitated before the first appellate authority, the first appellate authority restricted the disallowance to Rs. 1,96,55,330/-. The assessee is in appeal before us against this addition sustained by the CIT(A) and the Revenue is in appeal before us in respect of the deletion of Rs. 5,86,65,990/-. 5. Since the underlying facts are same, both the appeals were heard together and are disposed off by this common order for the sake of convenience and brevity. 6. As mentioned elsewhere, during the course of scrutiny assessment proceedings, the AO noticed that the assessee has made the claim of expenses in respect of purchases of material made from the following four parties: S.No. Name of the parties Amount of purchase 1. Mohan Ram Trading Co. Rs. 1,25,40,049 2. Shyamji Traders Rs. 25,79,978 3. Ganga Trading Co. Rs. 85,01,193 4. U-Tek Sales Corporation Rs. 5,50,00,000 Total Rs. 7,86,21,320 7. The assessee was asked to furnish the details in respect of the above mentioned purchases. For ascertaining the genuineness of the expenditure claimed, summons u/s 131 of the Income-tax Ac....
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....d the same being relied but not placed on record, however in case your good self require some/ all such record, kindly pin point the same we shall place the same on record. However, without prejudice and anything on the contrary on record or brought to our knowledge, we now take this opportunity to explain the peculiarity of nature of trade briefly as under: It is a matter of fact borne out be peculiarities attached to our business and projects that we have to deal with various persons operating in unorganized sector i.e. persons, involving labour and other suppliers of materials mainly illiterate persons or persons operating in unorganized sectors and grey markets in addition sometimes certain decisions for purchase of items are taken on the spot considering the various unforeseen factors to ensure uninterrupted works. Such decisions and consequent transactions are entered though our employees or other authorized persons authorized to deal with them. Many of such suppliers of services operation in grey market do not maintain proper record of transactions and business is mostly controlled in unorganized and unplanned manner. Thus purchases are normally ma....
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....PAN details were made available to the AO alongwith the VAT details and TIN numbers alongwith confirmations from the respective parties. It was strongly contended that there is no evidence that the summons have been received back as unserved. Considering this claim, the first appellate authority called for remand report from the AO. The AO submitted remand report vide letter dated 03.03.2014 and the same reads as under: "F.No. DCIT/CC-18/2013-14/660 Dated: 03.03.2014 To The Commissioner of Income Tax (Appeals)-III, Delhi-110092 (Through Addl. CIT, Central Range -5, New Delhi) Respected Sir, Sub:- Appeal No. 194/2013-14 in the case of M/s Paramount Residency Pvt. Ltd. for the assessment year 2010-11- Submission of report regarding - A kind reference is made to your office letter F.No. CIT(A)III/2012- 13/308 dated 30.10.2013 calling for a report on the cited subject matter. In this regard, the required report is submitted as under:- 2. The search and seizure operation under section 132 of the Income Tax Act, 1961 was carried out on 11.03.2011 in the case of assessee company. During the course of search and ....
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....ii) Shyamji Traders In respect of remaining two parties i.e. M/s Ganga Trading Company and U-tek Sales Corporation to whom summons were sent and received back unserved, it is stated that evidence is not available on file in respect of the summons having received back as unserved. 4.1 Further, during the appellate proceedings, the assessee claimed that during the assessment proceedings, bills of parties from whom purchases were made as well as the bank statements have been filed showing that the payment have been made to the suppliers of raw material through account payee cheques/RTGS. The confirmations filed in the course of appellate proceedings have also been sent for comments. 4.2 In view of above, during the course of remand proceedings, notices under section 133(6) of the Income Tax Act, 1961 were sent on 20.12.2013 to the following parties: i. M/s. U-Tek Sales Corporation ii. M/s. Mohan Ram Trading Company iii. M/s. Shyamji Traders iv. M/s. Ganga Trading Company 4.3 In response to the notices under section 133(6), replies from the above parties were received through speed post alongwith copy of accounts s....
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....rrect and same is required to be confirmed/upheld as this is case where the alleged purchases were held to be nongenuine/bogus in course of search and post search enquiries/investigation and at the time of assessment proceedings under section 153A and even in the course of current remand proceedings and matter may accordingly be adjudicated upon. Yours faithfully, Sd/- (Bhawani Shankar) Deputy Commissioner of Income Tax Central Circle-18, New Delhi." 10. After considering the facts and detailed submissions, the ld. CIT(A) observed that it was only in two cases, namely, Mohan Ram Trading Co and Shyamji Traders that the summons issued u/s 131 of the Act came back as unserved. In respect of the other two parties, there was no evidence with the AO that summons have been received back unserved. The CIT(A) further observed that during the remand proceedings, the AO issued notice u/s 133(6) to all the four parties who responded to the AO and confirmed the transactions by filing copy of accounts, as appearing in their books. The first appellate authority further observed that from the perusal of the bank statements of the four parties, it is noticed that all the withdrawals ....
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....nt at Rs. 3,53,47,33,961/-. This means that the Valuation Cell of the I.T. Department has estimated the fair market value of the said project much higher than the value declared by the assessee. Further, on a project of more than 300 crores, the AO has doubted the genuineness of purchases only to the extent of Rs. 7.86 crores, which is about 2.52%. 15. The lower authorities have harped upon the fact that the parties were not produced for verification. While doing so, both the lower authorities have ignored the conclusive direct evidences brought on record, namely, PAN details, VTA details, TIN Numbers, confirmations and bank statements. There is no dispute that all the payments have been made by account payee cheques. The lower authorities have taken an adverse view because they found that the payees have withdrawn cash on the same or succeeding day. There is not an iota of evidence whatsoever to show that the cash has reached back to the assessee. 16. The Hon'ble Calcutta High Court in the case of CIT Vs. Dataware Private Limited in Tax Appeal No. 263 of 2011 & GA No. 2856 of 2011 in its order dated 21.09.2011 has observed as under: "In our opinion, in such circ....