AI OCR 
TaxTMI 
TaxTMI 
TaxTMI 
2021 (7) TMI 810
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.... the assessee the Learned Commissioner of Income Tax (A) 1, Bhopal was not justified in confirming the disallowance to the extent Rs. 7,76,615.00 towards registration expenses. 3.That of the facts and in the circumstances of the case of the assessee the Learned Commissioner of Income Tax (A) 1, Bhopal was not justified in confirming the disallowance to the extent Rs. 9,12,873.00 towards purchase of course material. 4.That of the facts and in the circumstances of the case of the assessee the Learned Commissioner of Income Tax (A) 1, Bhopal was not justified in confirming the disallowance to the extent Rs. 40,72,135.00 towards training material 5.The assessee craves leave to add, alter amend or withdraw any ground of appeal on or before the time of hearing. 3. Revenue has raised following grounds of appeal; ITA No.952/Ind/2019 Assessment Year 2013-14 "On the facts and in the circumstances of the case, the CIT(Appeal) has erred in: 1. "Whether on the facts and circumstances of the case, the Ld. CIT(A) was justified in deleting addition of Rs. 3,60,465/-, when the assessee has advanced interest free loans and therefore, proportionate disallowance of interest expenses were ....
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....e Ltd. CIT(A) was justified on deleting addition of Rs. 23,00,00,000/-, when the assessee himself declared the expenses incurred on account of purchase of books from vendors at Itarsi amounting to Rs. 23 Crores as non genuine expenses and paid taxes thereon and the Assessing Officer in the assessment order has established the non genuineness of such purchases by highlighting the round tripping of funds through such purchase transactions between assessee and its sisters, concerns, which clearly reflect the non genuine nature of transactions under taken by the assessee." 2. "Whether on the facts and circumstances of the case, the Ld. CIT(A) was justified in deleting addition of Rs. 3,16,358/- on account of disallowance of interest expenses, when the assessee had advanced interest free loans amounting to Rs. 95,44,174/- and therefore, proportionate interest @12% on interest expenses incurred on borrowed funds was disallowed." The appellant reserves his right to add, amend or alter the grounds of appeal on or before the date, the appeal is finally heard for disposal. 5. Revenue has raised following grounds of appeal:- ITA No.953/Ind/2019 Assessment Year 2015-16 1.That on the f....
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....abase for online and distance education programme for Universities. Supply of course material and course kits including the students bags. Providing e-contract online, etc. 3. Data processing support for result preparation for universities. 4. Provision for learning support through its learning centres and provision of hardware and software and arrangement of skill training centres. E-Return of income filed on 26.9.2013 declaring income at Rs. 4,06,15,880/-. Case selected for scrutiny through CASS followed by serving notices u/s 143(2) and 142(1) of the Act. When the assessment proceeding was undergoing survey was conducted u/s 133A of the Act on 9.10.2015 and 10.10.2015. Statement of Managing Director Mr. Santosh Choubey was recorded where he voluntarily offered Rs. 23 crores on account of inflated purchase in the books. The copy of the statement was provided to the assessee on 20.10.2015. On 10.11.2015 retraction of surrender of income was filed through an affidavit dated 7.11.2015. During the course of assessment proceedings Ld. A.O called various information to examine the genuineness of purchase and other expenses. Submissions with documents were filed to explain but w....
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.... to the University. During this year 76931 students were registered through various centres and the prospectus fess of such students @ 250/- per student = Rs. 1,92,32,750/-was collected and remitted to the Dr. C.V. Raman University. Some of the centre had purchase extra copies of the prospectus and dues of the same was also remitted. 2. The aforesaid details were submitted to the AO on 30.03.2016 in which in reply to a separate query the AO was informed that 41675 students were registered for short term courses. The AO however erroneously concluded that total 41675 students were registered and allowed the expenses for these no. of student and disallowed the balance without appreciating that the total prospectus were issued for 76931 students and only 41675 students were registered for short term courses. The Learned CIT-A observed that the AO has not disputed the fact the assessee has collected the fees and remitted it to the university. The Ld. CIT-A observed that the assessee has explained the complete facts, and concluded that the AO has picked up the number of students for short term courses mentioned in the written submission in some other context and disallowed the expenses....
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....ived an income which negates the presumption that these transactions were non genuine or was undertaken with an object of reducing its income. During the year the assessee has shown course material expense of Rs. 5,14,59,665/- out of which purchase of Rs. 3,04,29,100/- were made from associated concerns which have been disallowed by the AO holding that the assessee has failed to establish the genuineness of the claim of expenses. The said belief was formed by the AO on the following reasons as mentioned by him in the assessment order: Sr. No Reasons mentioned by the AO in the assessment order Submissions of the assessee 1 The assessee has not furnished copy of MOU with these concerns for purchase of books. Availability or Non availability of MOU cannot by itself make any transaction genuine or bogus. 2 No justification is given as to why payments are made to AISECT Bhopal for supply of books who are themselves conducting various courses The assessee is supplying books to the students of the Universities managed by the societies under same management. These societies, with an object to concentrate their focus on the core activity of providing education have off l....
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....rchased by the assessee have been sold and the sale proceeds are duly shown as income, there was no occasion to treat the purchase of these books from the associate societies as non genuine. If the purchases are doubted then there cannot be any sale. The corresponding sale should have been reduced from the income. The Ld. A.O., however, did not consider the arguments of the assessee and disallowed the whole amount paid to the sister concerns on the ground that the assessee has failed to establish the genuineness of the transaction. The Ld. CIT(A) after considering the submissions of the assessee remarked that the sale of books are not disputed and as such the corresponding purchases cannot be held to be non-genuine. He further observed that the A.O. has not brought anything on record to show that the purchases are made at a higher value. He therefore, restricted the disallowance @ 3% of the total expenses by comparing the same with the earlier years. The Ld. CIT(A) allowed the relief of Rs. 2,95,16,227/- and upheld the addition of Rs. 9,12,873/-. It is humbly submitted that the assessee has shown the income of Rs. 41.75 crores under the head fees and course material receipt....
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....rious insurance companies on payments made by them. iii. SECT (Society for electronics & Computer Technology): The said society is running college in the name of SECT College of professional education providing courses like BA, B.Com, BBA, BCA and is affiliated to Barkatullah University, Bhopal. The said society has its own infrastructure and faculty for training which was provided to students by using the infrastructure and faculty of the college. iv. Significant Electronics & Computer Technology P Ltd (SECT P Ltd): The said person is a corporate entity having the same rate of tax applicable to it as is applicable to the assessee company. Thus the allegation that payment has been made to that company to reduce the income is not probable. M/s SECT Pvt Ltd is approved corporate agent for LIC. The said company has been rendering services for insurance sector which will be obvious from the fact that TDS has been deducted by various insurance companies on payments made by them. The disallowance was made for various reasons which, as mentioned in the assessment order are summarised here in below: Para No Observations of the AO Submission of the assessee 6.6.3(i) Details ....
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.... work was done by the respective university. AISECT Bhopal is managing a University in the name of AISECT University. Thus payment of Rs. 3,28,27,000/- was made for training/ certification to students. Thus it would be appreciated that fees were paid to the institute who were having adequate infrastructure and faculty available with them. Fees were received from the exempted entities itself for providing training to students and part of the receipt was paid back for providing certification/training as required. Thus the allegation that the assessee has made payments to these entities to divert its income is ill founded and not substantiated. The Ld. A.O. disallowed the whole payment without considering the submissions made by the assessee. After considering the submissions made by the assessee the Ld. CIT(A) held that part of the payment is made to the companies which are liable to the same rate of tax. He further observed that some of those concerns are approved by IRDA for providing training, complete details of the students were provided by the assessee. The ld. CIT(A) compared the book results and on the basis of earlier disallowances, he restricted the disallowance @5% ....
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.... enrolled during the year and disallowed remaining sum of Rs. 89,96,634/- When the matter came up before Ld. CIT(A) he was again provided details of all the 76931 students along with the details of collection for fees from the students and its remittances to the universities. Based on these documents and appreciating the facts Ld. CIT(A) deleted the addition for Rs. 82,20,019/- but sustained the disallowance at Rs. 7,76,615/- as an adhoc disallowance of 4% on the total expenses incurred during the year based on disallowance made in the previous assessment years of the assessee observing as follows:- Ground No.2: Disallowance of Rs. 7,76,615/- towards registration expenses 13.Ground No. 4:- Through this ground of appeal the appellant has challenged the addition of Rs. 89,96,634/- out of registration expenses. The appellant has incurred expenses of Rs. 1,94,15,384/- on registration, renewal & Data Processing expenses and the entire payment was made to AISECT Raipur an associate concern of the assessee. During the assessment proceedings the assessee has submitted the copy of receipts in support of the payments. The assessee has however not provided any details' of the exact ....
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....1675(short term certificate programme) = 1,18,606 students joined various programs ...." Thus it is seen that the AO ' has picked up the number of students of short term courses' mentioned in the written submission in some other context. Thus' the disallowance made by the AO towards difference in the, number of students was not justified. It is however seen that as per the calculation provided, the assessee was required to have paid Rs. 1,92,32,750/-(Rs. 250 * 76931 students) as against expenses claimed of Rs. 1,94,15,384/- and the difference is on account of some extra payments made. It is further seen that the assessment of various earlier years was completed u/s 263/1481143(3} in various years in which disallowances were made towards data processing expenses as detailed below: A.Y Expenses claimed Expenses Disallowed Percentage Disallowance 2010-11 11,03,500/- 50,000/- 4.53% 2011-12 8,62,929/- Nil - 2012-13 1,03,19,288/- 2,50,000/- 2.42% Total 1,22,85,717/- 3,00,000/- 2.44% The AO has not brought out any material on record which suggests that the appellant has incurred the expenses other than business purpose. In the case....
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....ase of Rs. 3,04,29,100/- made from sister/associate concerns but Ld. Cit(A) sustained the disallowance only to the extent of Rs. 9,12,873/- out of 3% of the total purchase from sister concerns. The assessee and Revenue are in appeal wherein assessee has raised Ground No.3 challenging the disallowance sustained at Rs. 9,12,873/- whereas Revenue has raised Ground No.3 challenging the finding of Ld. CIT(A) deleting the addition of Rs. 2,95,16,227/-. 17. Facts in brief pertaining to this issue are that assessee supplied/posted study materials to the students of various educational institutions. Gross receipts for the year includes Rs. 4,12,15,433/- received from AISECT, Bhopal towards sale of books/fees for supply of course material and Rs. 10,59,50,349/- from AISECT, Raipur. Ld. A.O has not disputed this course receipts at any stage which includes the receipts from sister concerns. During the year assessee has purchased books worth Rs. 3,04,29,100/- from its sister concerns. Ld. A.O disallowed this purchases for want of copy of Memorandum of Undertaking, justification of payment, bills and list of books, reason for entrusting the job to sister concerns. However Ld. A.O has not given....
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.... determinative factor of the genuineness of the transaction. Further in the case of purchase/sale generally no MOU is prepared and in absence of any such MOU the assessee could not have been expected to produce it. As regards not giving any justification for purchase of books from the sister concerns it is noted that the assessee has been supplying/ selling books' to the students of associated universities for which fees has been received by it from the said Universities and there was nothing unusual m purchasing books from the university for being supplied to the students. The assessee has explained that the University was concentrating its efforts on its core activity of education and in the process have off loaded non core activities including activity of supplying books to its students to the assessee company was a justifiable reason. As regards non submission of the invoices for purchases it is seen that the copy of invoices were filed before the AO on sample basis. The AO has also mentioned in the assessment order itself that copies of some bills were furnished. It is further seen that the assessee has shown an income of Rs. 41,75,89,138/- from "fees & Course material....
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....tion. Considering all the above facts it would be fair and reasonable to restrict the disallowance to 3.00 of the expenses claimed based on disallowance made in past years in the assessments completed u/s 148/143(3). Therefore, the addition, made by the A.O. amounting to Rs. 9,12,873/ - (Rs. 3,04,29, 100 x 0.03) is confirmed. The appellant will get the relief of Rs. 2,95,16,227/-. Therefore, the appeal on this ground is partly allowed. 18. The above finding of Ld. CIT(A) throws light on the working of assessee and its sister concerns in the field of providing education to the students and that purchase of books is a necessary part in the field of imparting education. All the books purchase have been posted through postal authorities. Revenue receipt from sister concerns has not been doubted. Payment for purchase are made through banking channel. Further when the sales are not doubted how can the purchase be doubtful. Financial statements are duly audited and the books results have been accepted by the Ld. A.O except for the disallowance made. We further observe that payment to related parties needs to go through the scanner provided under the provisions of Section 40A(2)(a) of ....
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....e relating to training expenses incurred by the assessee at Rs. 8,14,42,700/-. During the year following amount was paid/due to be paid to the following concerns towards training expenses incurred during the year:- Name of the sister concern Amount paid (in Rs) AISECT Bhopal 3,28,27,000 Sect Info tech Ltd 1,43,15,100 SECT 1,75,94,600 SECT Pvt Ltd 1,67,06,000 Total 8,14,42,700 22. During the course of assessment proceedings Ld. A.O called for the information to examine the genuineness of the expenditure. Details filed by the assessee were found to be insufficient. Ld. A.O was of the view that assessee has not furnished details of factuality involved in the process, details of the training given to the students, absence of any Memorandum of Understanding and no justification as to why the students of Chhattisgarh came to preparing at Bhopal. Based on these observation Ld. A.O disallowed the total training expense of Rs. 8,14,42,700/-. Assessee challenged this before Ld. CIT(A) and almost succeeded except for the adhoc disallowance of 5% of the total expenditure at Rs. 40,72,135/- sustained based on past assessment. Now both the assessee and Revenue are in appeal ....
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.... justification of the work done. The assessee also failed to furnish any agreement/MOU with the sister concerns. The AO also observed that the assessee failed to provide details of the faculty involved in the process of imparting training to the students. On verification of the details of the students to whom training was provided, it was noticed that most Kof the students belong to the State of Chattisgarh and it would be improbable for these students to have attended the training claimed to have been given by these institutions which are placed at Bhopal. The assessee could also not explain the reasons for entrusting the job to sister concerns. These payments to associated concerns were accordingly considered by the AO as diversion of funds of the company to AISECT and other society wherein exemption ix] s 12AA is available and was accordingly disallowed. It is observed that the main reason for disbelieving. the genuineness of the expense is the fact that the payments are made to sister concerns which are enjoying tax exemption and accordingly the exercise is simply done for diversion of funds to exempted entities. The assessee has drawn my attention to the assessment order p....
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....r -subsequently the student got selected or not was outside their purview also carries weight. It is further seen that the assessee has received Rs. 10,84,66,946/ - from AISECT University for providing training to students of various streams(which is included in the fees received by the assessee and is also readily verifiable from the assessment order of AI SECT Society also) and the assessee has incurred an expense of Rs. 8,20,31,006/-in arranging training of the students which included Rs. 8,14,42,700/- paid to associated concerns who are all established . to be involved III education/training. It is also observed that the assessment of the assessee for A.Y 2010-11, 2011-12 & 2012-13 have been completed u/s 148/143(3) and the assessed N.P ratio in these years was 7.25, 7.13 & 8.55 respectively as against the returned N.F ratio of 7.94) for the year under consideration. This also negates the "presumption that the -funds have been diverted to the associated concerns. It is further seen that the assessment of the assessee for A.Y 2014-15 was also completed u/s 143(3) in which the assessee has booked training expenses of Rs. 4,55,18,644/- out of which Rs. 22,75,932/-( 5 ) were di....
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....remises of the assessee. During survey Shri Santosh Choubey, Chairman of the company accepted the discrepancy in purchase of books and agreed to surrender Rs. 23 crores. This statement was retracted on 10.11.2015 contending that no bogus purchase are made. Ereturn of income filed on 29.09.2015 declaring income at Rs. 6,04,38,800/- which was subsequently revised on 19.01.2017 declaring same income. During survey operation on going through the Voucher Book No.2 BI-1 to 4 it was noticed by the survey team that assessee made purchase from M/s Utsav Collections, Vinayak Prakashan, Maa Durga Books Centre, Patel Books and Saraswati Agencies of Itarsi and there were some inconsistency. In order to verify the purchases, information u/s 133(6) of the Act was called from all, few replied and few remain unanswered which prompted the Ld. A.O to examine the issue. Ld. A.O also noted that registration with VAT authorities and Registration at Nagar Palika were just taken before few months of date of survey and the accounts of the creditors were opened just before making sale to the company. Based on these observations Ld. A.O concluded that the supply of material are bogus and they have been used ....
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....Mr. Santosh Choubey, the Managing Director of the assessee was recorded u/s 133A on 10.10.2015. In the statement question was raised by the survey team regarding purchase of books made by the assessee company which was duly responded on behalf of the assessee company as under: " Q 6. : During the course of survey operation, voucher book nos BI-1 to 4 have been found from which it is observed that you have made huge purchases of books in financial year 14-15 from firms like Utsav Collection, Vinayak Prakashan, Maa Durga Book Centre, Patel books, Saraswati Agencies etc based in Itarsi. All these bills are serially numbered and the inventory of books attached with all these bills is identical. Field enquiries were made at Itarsi and it is observed that none of these firms are available at the given address. In these circumstances, please explain why these expenses should not be treated as non genuine. Ans. These purchases are duly recorded in the books of account and the payment thereof has also been made through banking channels. However it is quite possible that some of these parties may not be available at the given address and I may not be able to prove the genuineness of th....
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....e AO on 29.10.2015 and informed the AO that the assessee has not concealed any income and hence has retracted the statement given u/s 133A. The AO however advised that the retraction should be filed through an affidavit. In compliance to the direction of the AO an affidavit was prepared on 07.11.2015 and was filed before the AO on 10.11.2015 retracting the surrender of income made in the statement during the survey. b. It may further be mentioned that as the declaration made in the statement recorded u/s 133A has been retracted and the retraction is made within a reasonable time no negative inference can be drawn on account of the surrender made in the statement. It may also be mentioned that it has been held by the Hon'ble Supreme Court in the case of CIT v S Khader Khan Son (2012) 254 CTR (SC) 228 that Section 133A does not empower any IT authority to examine any person on oath, hence, any such statement has no evidentiary value and any admission made during such statement cannot, by itself, be made the basis for addition. 2. Subsequently, after the retraction, the assessee was summoned u/s 131 and a statement was taken on 30.11.2015 the detailed information was given in th....
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....em from the assessee were deposited was also obtained from the respective suppliers and submitted. (It may be mentioned that in none of the bank statements any cash is found withdrawn which may raise a possibility that the amount paid by the assessee company was routed back to it in a clandestine manner xiv. The party wise detail of the purchase made for Rs. 43.53 crore xv. Copy of ITR, Computation of income, Audited financial statements and audit report for the relevant period, copy of sales tax order and copy of bank statement with respect to all the suppliers namely. MAA DURGA CENTER VINAYAK PRAKASHAN SARSWATI AGENCIES UTSAV COLLECTION PATEL BOOKS Books world Kadambry Book Trading Kushal Trading Darsh enterprises Paras publishers xvi. Copies of ledger accounts of the suppliers who have supplied the books under consideration to the assessee during the year are enclosed. xvii. Quantitative details of the books purchased/sold from the suppliers under consideration Thus, all possible information was furnished to substantiate the genuineness of the purchases made. Information with regards to corresponding sales was also furnished. Quantity wise details o....
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.... with invoice and inventory details. On subsequent verification of records it was observed that the invoice do not carry any mention of TIN Number. This deficiency was brought to the notice of the suppliers who thereafter obtained TIN NO and have put a seal of their TIN No(s) on the invoices previously issued. Thus there is no occasion to doubt that the invoices received are back dated. Further during the course of assessment proceedings the assessee has furnished the copy of sales tax returns/assessment orders of these suppliers which duly establish the genuineness of the purchase. Further obtaining sales tax number was a statutory procedure and even if it is presumed that the supplier failed to follow the procedure, the failure would not make any purchase non genuine. Thus the observation made was duly explained and was otherwise also not very relevant for the purpose of determination of the genuineness of the purchases. b. In case of two creditors i.e Books World and Kadambary Book Trading, even gomasta certificate from Naga Palika was taken on 28.01.15 It is submitted that goomasta is a license which every person is supposed to take from the municipal authorities befo....
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....n to make any addition on the basis of a retracted statement. It may also be mentioned that it has been held by the Hon'ble Supreme Court in the case of CIT v S Khader Khan Son (2012) 254 CTR (SC) 228 that Section 133A does not empower any IT authority to examine any person on oath, hence, any such statement has no evidentiary value and any admission made during such statement cannot, by itself, be made the basis for addition. g. The assessee filed retraction on 01.12.2015 that is almost two months after the survey. This observation of the AO is factually incorrect as detailed below. The copy of the statement of the director of the assessee company recorded on 10.10.2015 was provided to the counsel of the assessee on 20.10.2015 and was received by the assessee on 21.10.2015. The contents of the statement were verified with the books of accounts and other material available and it was found that the purchase of books under consideration did not disclose any inflated purchases or understatement of income and accordingly the counsel of the assessee appeared before the AO on 29.10.2015 and informed the AO that the assessee has not concealed any income and hence has retracted th....
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....nal for surrender undisclosed income. Reliance in this regards was placed on the judgments of Supreme Court in the case of Surjeet Singh Chhabra v UOI, Punjab & Haryana High Court in the case of Rakesh Mahajan vs CIT and Chennai bench of the ITAT in the case of DCIT v B.K.Muralikrishna. The observation of the AO does not portray the correct legal and factual position and the cash laws relied upon by him are not relevant to the issue under consideration. It would be appreciated that the assessee had not accepted that the purchases are inflated or the suppliers are not traceable. Further the facts of the case of the assessee are directly covered by the decision of the Hon'ble Supreme Court in the case of CIT v S Khader Khan Son (2012) 254 CTR (SC) 228 that Section 133A does not empower any IT authority to examine any person on oath, hence, any such statement has no evidentiary value and any admission made during such statement cannot, by itself, be made the basis for addition. As regards the case laws relied upon by the AO it is submitted that 1. Surjeet Singh Chhabra V UOI in SLP (C) NO 14028/96 This case is with reference to seizure of gold under FERA and Custom Act. Th....
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.... survey. ARGUMENT It is humbly submitted that the addition has been made merely on the basis of statement recorded. There is no material found during the course of the survey that the assessee has concealed any income. Complete details were filed before the Ld. A.O. including the addresses, income tax returns, balance sheet, bank statement of the suppliers. No cognizance has been taken about the quantitative details filed before the ld. A.O. If it is presumed that the purchases are bogus, i.e. no purchases are made then how can there be any sale of that material. Undue importance is given about the TIN number of the registration under the Gumasta Act. No cognizance has been taken that all the transactions have been undertaken through the banking channel. Even the bank accounts of the seller show that purchases and sales have been affected through banking channel. The Ld. A.O. did not comment upon the income tax returns and assessments of the seller which clearly proves that the transaction is genuine. The addition has been made purely on the basis of the statement recorded during the survey. In this connection, it is humbly submitted that the statement is not binding on the a....
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....of Ld. A.O also referred to the paper book dated 8.4.2021 running from page 1 to 61 and contended that the alleged purchase transactions with various concerns as mentioned in the assessment order are not genuine sellers and the transactions with these concerns are merely in the nature of accommodation and routing of purchase and the Chairman of the company having sensed that the purchases are not genuine has rightly accepted and surrendered Rs. 23 crores and the statement was not under any stress or coercion and thus should have been honoured by the assessee. 34. We have heard rival contentions and perused the records placed before us and carefully gone through the submissions and paper book filed by both the parties. We will first take up Ground No.1 raised by the revenue challenging the deletion of addition of Rs. 23 crores by Ld. CIT(A) which was made by the Ld. A.O on account of non genuine expenses incurred for purchase of books. 35. We observe that during the course of survey Voucher Book No.BI-1 to 4 was found showing that during Financial Year 2014-15 huge purchase of books were made from some concerns placed at Itarsi. Bills were serially numbered and inventories book at....
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....g the facts and settled judicial precedents decided in favour of the assessee observing as follows:- 11.Ground No. 2:- Through this ground of appeal the appellant has challenged the addition of Rs. 23,00,00,000/-. The appellant had purchased books of Rs. 43.53 crores during the year under consideration. The appellant had submitted the details of the suppliers, their address proof, balance sheets, bank statements, sales tax orders returns etc to establish the genuineness of the suppliers/purchases. The AO however noted that the suppliers could not be traced during the survey and notices issued during assessment proceedings also returned unserved in some cases. He also noticed various discrepancies in the details submitted and held the purchases to be non genuine to the extent of Rs. 23 Crore. I have considered the facts of the case, contentions raised by the appellant and findings of the AO. The key factors to be determined are: a.Whether the appellant has submitted adequate documents to establish the genuineness of the purchases. b. Whether the deficiencies noted by the AO are material enough to suspect the genuineness of the purchases. c. If the purchases are not oth....
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....hich duly confirms the sale of the appellant. vi. Copy of sales account, purchase account, suppliers account. vii. Copies of invoices of sales/purchase It is also observed that the AO had not doubted the sales of the appellant. The Department during the course of survey and post survey proceedings have also accepted that the books purchased by the appellant were later on sold also and the sale/purchase is duly recorded in the books of account which is inferred from Question 27 of the statement of the M.D. recorded u/s 131 on 30.11.2015 where after discussing the non genuine purchases in Q-22-23 of the statement the Director was queried about the sales made. The question asked is reproduced herein below: Q-27: "on. examination of your books of accounts it is seen that AISECT Ltd has later made sale to following sister concerns in F. Y. 2014-15 ..... Rs. 44,51,49, 705/- The question raised itself establishes that the books purchased under consideration of Rs. 43,53,28,040/- were found to be subsequently sold for Rs. 44,51,49,705/- . It is also seen that no unexplained stock in hand or cash in hand was found during survey. Thus the purchases recorded are duly confirmed b....
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.....15 It is held that taking of Gumasta or failure to take Gumasta is not relevant for determining the genuineness of any transaction. iv. The AO also observed that the accounts of the creditors are opened just before making sale to the appellant company. It is seen that opening of a new bank account or continuing with the old one is a discretion of the supplier and the genuineness of the transaction cannot be affected by the date on which the bank account is opened. The observation of the AO is not very relevant as the supplier would be opening the account as per their convenience and the date of opening of the bank account does not have any effect on the genuineness of the purchase. v. The AO On verification of the bank statements of the creditors noticed that in all cases, at every moment of sales, the payment of sales received first from Appellant Company and thereafter purchase payments were made to sister concerns of the appellant company. It is observed that it is an admitted fact that the suppliers have purchased the books sold by them from the associated concerns also and thus any payments made by them to their suppliers cannot result in any negative inference bein....
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....plained or non genuine. The AO also drew support from the fact that the appellant specifically surrendered income of Rs. 23 crore. In this regards reference is made to the statement recorded during survey in which the declaration was made. It is seen that the appellant has made a declaration of Rs. 23 crore. However the appellant has not accepted that the purchases are non genuine or the suppliers are not traceable or the purchases are inflated. The relevant question raised and the answer given is reproduced herein below: "Q 6. :During the course of survey operation, voucher book nos BI-1 to 4 have been found from which it is observed that you have made huge purchases of books in financial year 14-15 from firms like Utsav Collection, Vinayak Prakashan, Maa Durga Book Centre, Patel books, Saraswati Agencies etc based in Itarsi. All these bills are serially numbered and the inventory of books attached with all these bills is identical. Field enquiries were made at Itarsi and it is observed that none of these firms are available at the gwen address. In these circumstances, please explain why these expenses should not be treated as non genuine. Ans. These purchases are duly r....
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....ther fact from which the details of bogus purchase could be ascertained is mentioned in the order. Thus the only inference that can be drawn is that the addition is made on the basis of the declaration made u/s 133A. The AO has held that addition can be made on the basis of statement itself and have relied upon decisions of the Honble Supreme Court of India in the case of Surjeet Singh Chabra v UOI, the Punjab & Haryana High Court in the case of Rakesh Mahajan V CIT and that of the ITAT Chennai in the case of DCIT V B K Murlikrishna. All these decisions are referred by me and it is found that none of them are applicable to the case of the appellant. In the case of Surjeet Singh Chabra gold was seized under the FERA & Customs Act from the accused who on statement accepted that the gold was seized from him. In the case o the appellant no such seizure is made from the appellant and the FERA act has also no applicability in the case of the appellant. In the case of Rakesh Mahajan the statement was given in contemplation of death by a person expecting to die making a distribution of his wealth amongst his family. The court held that once a person is expecting to die he has no fear and....
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....sideration to the rival contentions of the parties. It is undisputed fact that the statement recorded u/s 132(4) of the Act has a better evidentiary value but it is also a settled position of law that the addition cannot be sustained merely on the basis of the statement. There has to be some material corroborating the contents of the statement. In the case in hand, revenue could not point out as what was the material before the A.0., which supported the contents of the statement. In the absence of such material, coupled with the fact that it is recorded by the Ld. CIT(A) that the assessee himself had surrendered a sum of Rs. 69,59,000/- and Rs. 75,00,000/- in A.Y 2008-09 and 2009-10 [ITA 5241Indl2013 & ITA No.299/Ind/2017 (Shri Sudip Maheshwari, Bhopal] respectively. The A.O failed to co-relate the disclosures made in the statement material gathered during the search. Therefore, no inference is called for in the finding of the Ld.CIT(A) and is hereby affirmed. Ground raised by the revenue is dismissed." During the course of survey, no incriminating material or undisclosed income or investments were found. It is stated by the appellant that he was under mental pressure. In order t....
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....tificate and copy of ledger accounts. Details of corresponding sales of the items of the various purchases during the year have also been filed. Sales of the assessee has not been disputed at any stage. Out of notices sent u/s 133(6) of the Act by Ld. A.O to 10 suppliers, five made due compliance but for remaining 5 suppliers it is stated by respondent that wrong address was mentioned and the latest address was provided but no further action was taken by Ld. A.O. However, Ld. CIT(A) got necessary verification done. 40. Looking to the above stated facts we are of the view that Ld. A.O was not able to pin point any irregularity in the purchase made by the assessee during the year, providing or laying hand on any contrary material to those filed by the assessee, no new information was gathered which could indicate that the alleged suppliers are non genuine. Even while making addition no reference is given to the purchases made from different suppliers and the additions is made only for the amount of surrender made during the course of survey which in view of the settled judicial precedents was uncalled for. Further Ld. A.O also failed to take note of the fact that when the sales hav....