TaxTMI 
TaxTMI 
2021 (10) TMI 154
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....ncern M/s Aam Bee Clothing (Prop. Smt. He ma Sharma)is on the assessee company. (iii) Whether on the facts and circumstances of the case, the Ld. CIT(A) failed to appreciate that at the time of search no evidence was found to prove that the expenses incurred in respect of fabrication job alleged to be undertaken by M/s AamBee Clothing. (iv) Whether on the facts and circumstances of the case, the Ld. CIT (A) has erred in deleting the addition of Rs. 25,58,77,724/- made by the AO on account of deficit on settlement of forward contracts (Net) which is a speculation loss under the provisions of section 43(5) of the Income Tax Act, 1961 without appreciating the facts of the case. (v) Whether on the facts and circumstances of the case, the Ld. CIT (A) has erred in deleting the disallowance of product development expenses Rs. 11,63,14,122/- made by the AO by ignoring the decision of the Hon'ble Supreme Court in the case of Madras Industrial Investment Corporation Ltd. v. CIT 225 ITR 802. (vi) Whether section 14A(1) of the Income Tax Act, 1961 would stand attracted even if the tax-exempt income is not actually earned during a particular year subject to expenditure relatable to ....
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....he Act has been earned during a particular year. (xi) Whether the CBDT Circular No 5 of 2014 is illegal and not in consonance with legislative intent behind Section 14A and the charging sections 4 and 5 of the Income Tax Act 1961 which lay down that total income under the Act would include income from all sources whether "received" "deemed to be received ", "accrued" or "deemed to accrue ". (xii) The appellant craves to add, amend, alter or modify any grounds of appeal at the time of hearing. Assessee's Grounds of Appeal:- "1. That having regard to the facts and circumstances of the case, Ld. CIT(A) has erred in law and on facts in confirming the action of Ld. AO in assuming jurisdiction u/s 153A and further erred in passing the impugned assessment order. 2. That in any case and in any view of the matter, action of Ld. CIT(A) in confirming the action of Ld. AO in assuming jurisdiction and framing the impugned assessment order u/s 153A, is bad in law and against the facts and circumstances of the case and the same is not sustainable on various legal and factual grounds. 3. That having regard to the facts and circumstances of the case, Ld. CIT(A) has erred in law and on ....
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....tion of Ld. AO in making addition of Rs. 10,18,44,865/- allegedly on account of bogus purchases from M/s Akansha Fashion and M/s Jindal Fashion, more so when no incriminating material has been found as a result of search and impugned addition has been made by recording incorrect facts and findings and without observing the principles of natural justice and without appreciating/considering the submissions of the assessee. 11. That in any case and in any view of the matter, action of Ld. CIT(A) in confirming the action of Ld. AO in making addition of Rs. 10,18,44,865/- allegedly on account of bogus purchases from M/s Akansha Fashion and M/s Jindal Fashion, is bad in law and against the facts and circumstances of the case. 12. That having regard to the facts and circumstances of the case, Ld. CIT(A) has erred in law and on facts in confirming the action of Ld. AO in making addition of Rs. 17,87,17,045/- allegedly as unexplained transactions recorded in seized document on account of bogus purchases from M/s Super Connection, more so when no incriminating material has been found as a result of search and impugned addition has been made by recording incorrect facts and findings and....
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....both appeals are the cross appeals and therefore, we take both the appeals for disposal by taking the assessee's appeal first. 4. Ld. Counsel for the assessee argued Ground No. 1, 2 and 15 and argued that the assessment order was passed u/s 153A even though there was no incriminating material found during the course of search for the impugned assessment year. This argument of the assessee was raised before Commissioner of Income Tax (Appeal) also but Commissioner of Income Tax (Appeal) did not agree with this argument and the relevant findings of Commissioner of Income Tax (Appeal), is at page-57 of the Appeal order dated 30.03.2019. Before us, Ld. Counsel for the assessee relied upon his submission filed before Commissioner of Income Tax (Appeal) which is at page 2958 to 2959. 5. Ld. CIT DR relied upon the findings recorded by Commissioner of Income Tax (Appeal) and also relied upon the assessment order. 6. We have considered the rival contention and have taken ourselves to the assessment order, the appeal order and the paper book pages referred by Ld. Counsel. It is seen that return was filed originally by the assessee on 29.11.2013, which is at page-1 of the paper book and da....
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....ring, the assessee relied upon his submissions made at page 2292 to 2995, 3001 to 3045 and 3046 to 3089 of the paper book and the submissions made thereunder. On the other hand, CIT DR relied upon the assessment order passed by the Assessing Officer and relied upon CIT(A) Order in so far as disallowance was confirmed by CIT(A). As to the relief of Rs. 25,58,77,724/- allowed by CIT(A), CIT DR argued that the relief allowed by CIT(A) was not correct, as the loss cannot be said to be business loss and loss cannot be said to be the loss of the present year involved in the appeal. 10. We have heard the rival submissions and have gone through the assessment order and CIT(A)'s order. We have taken into account the arguments advanced on both the sides and have referred to the paper book filed by the assessee. As to the incriminating material found as a result of search, it is seen that foreign currency derivative contracts documents were found and seized as mentioned in the assessment order and therefore, we are not inclined to agree with Ld. Counsel that the present disallowance could not be considered in the assessment made u/s 153A. That leaves us to dispose the grounds involved in bot....
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....wing conditions:- a) Delinked the movement of currency namely JPY and CHF. The payout was restricted to USD 4,69,000 per month and funding of the same on the appointed date of every month. b) 60 months period of the contract, to commence from 23.01.2008. c) The cap on Points reduced from 80 to 78 (balance 5.99 big figures is to be achieved) on achieving which, all money paid by the company will be refunded back to the company. 12. It was submitted by Ld. Counsel that the assessee company had accounted for the aforesaid payouts as "Advance" in the books of account and as on 22nd January 2013 the amount appearing as at Rs. 140 crore odd amounts. In the Financial year 2012-13 the entire amount was charged to the profit and loss account. During the financial year 2012-13 the entire amount was charged to the Profit and Loss account as business loss since the period as per the agreement has expired in the month of January 2013 & March 2013 as the designated levels as stipulated in the agreement could not be reached and it was the date of ascertainment of the actual loss. Thus Ld. Counsel made out a case that the loss was not speculative loss and in any case, the liability has crys....
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....hese were hedging against the exposure to foreign exchange risk present in the underlying business contracts. Learned first appellate authority also has discussed this issue at great length in its order of appeal and has held that such loss is in the nature of business loss and is not speculation loss. He has relied upon the order passed by his predecessor in assessee's own case in earlier years viz. AY 2010-11 to 2012-13 and extensively extracted from such order of AY 2011- 12 passed by his predecessor. It has not been shown to us as to why such loss is not normal business loss in the facts and circumstances of the present case when assessee is exporter of ready-made garments and home furnishings, imports from outside India and has raised foreign currency loans and is exposed to foreign currency exchange fluctuations. Hedging contracts entered into are not considered speculation and specific exclusion has been given under section 43(5) of the Income Tax Act in this regard. Turnover the assessee is to the tune of Rs. 1157.57 crores which comprises mainly the exports turnover. We have seen the case laws relied upon by Learned counsel for the assessee- CIT vs. Soorajmull Nagarmull 12....
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....relevant to AY 2013-14. 15. Thus on the totality of the facts and circumstances of the case, we hold that the addition made by the assessing officer aggregating to Rs. 140,86,93,664/- and involved in assessee's appeal and appeal of the revenue is decided in favor of the assessee. Grounds of appeal of the assessee's appeal numbering 3 to 5 are allowed and ground of appeal number (iv) of Revenue's appeal is dismissed. 16. Ground No.6 and 7 of the assessee's appeal are in respect of addition of Rs. 1,29,01,751/- made by the A.O. and confirmed by CIT(A) and are in respect of the expenses claimed to be incurred by the assessee company on account of job work done by M/s Sai Exports. Assessing Officer at page 5-13 of his order held such expense as bogus which was upheld by CIT(A) vide discussion made at page 58-64. 17. Ld. Counsel for the assessee first of all argued that there was no incriminating material found as a result of search in respect of impugned disallowance and the return of income having been filed on 29.11.2013 and the assessment of the year under appeal was one which had attained finality on the date of search and therefore in view of the decision of CIT vs. Kabul Chawl....
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....of Sh. Pawan Arya of M/s Orient Craft Ltd. was also recorded on oath in which he stated that M/s Sai Export used to do some job work for M/s Orient Craft Ltd. but he was unable to furnish any particular detail and he was even unable to name of the owner and address of M/s Sai Export and further that auditor of Sh. Mohinder Kumar Garg and the assessee company with the same. 19. In our considered view that from the findings recorded in the assessment order even if they are taken as correct though it has been contested by the assessee, it can be said that there is no incriminating material found as a result of search in respect of job work carried out by M/s Sai Export. We have gone through the statement of Mr. Mohinder Kumar Garg and we do not find anything adverse even in the statement of Sh. Mohinder Kumar Garg proprietor of M/s. Sai Exports. Even otherwise, the statement cannot be regarded as incriminating material as held by Delhi High Court in the case of Principal CIT vs. Best Infrastructure India P. Ltd. in ITA No. 11-22/2017 dated 01.08.2017. Even the survey proceeding referred in the assessment order do not indicate any incriminating material and in any case anything found ....
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....m the copy of account of the job worker place at (PB 866-878) and copies of bank books were also filed (PB 879-892), tax was deducted at source and TDS accounts were filed PB 893-900 & 901 Voluminous documents proving the existence and job work carried out by M/s Sai Exports were filed by the assessee along with its reply dated 01.12.2017 filed to Ld. A.O. (PB 598-907). 22. In fact following pleadings and documentary evidences were filed to Ld. A.O. during the course of assessment proceeding, which establish the genuineness of the M/s Sai Exports and job work carried out by the said firm for the appellant company. PB 157-179, 606-634 is the Copy of income tax return, computation of income, Audited Balance sheet, Profit & Loss account and Tax audit report for A.Y. 2013-14 of the job worker M/s Sai Exports. PB 234-255 are the copies of statements of Mr. Mohinder Kumar Garg, and Mr. Rajiv Poddar recorded during the survey which establish that job work was being done by M/s Sai Exports. PB 598-605 is the copy of letter dated 01.12.2017 filed by the assessee to Ld. A.O. explaining in great details about the job work expenses incurred and paid to M/s Sai Exports. PB 635....
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....income tax return, computation of income, Audited Balance sheet, Profit & Loss account and Tax audit report for A.Y. 2011-12 of the job worker M/s Sai Exports,which are already enclosed in the paper book for A.Y. 2011-12 in assessee's own case. PB 4756-4757 is the copy acknowledgment of return and computation of income for A.Y. 2010-11 of the job worker M/s Sai Export,which is already enclosed in the paper book for A.Y. 2011- 12 in assessee's own case. 23. Ld. Counsel thus submitted that above evidences clearly speak for the genuineness of the charges incurred by the appellant company to the job worker involved and therefore, it is prayed that the disallowance made by Ld. A.O. by treating such job work charges as not genuine may please be deleted. 24. Certain adverse observations have been made by Ld. A.O. for making the impugned disallowance hence it is necessary to meet although adverse observations as under:- 1. Ld. A.O. has mentioned at page 5, 6 & 7 of the assessment order that Sh. Mohinder Kumar Garg prop. of M/s Sai Exports admitted in his statement recorded u/s 132(4), that he was working as production consultant since April, 2014 and was regular employee for M/s....
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....pany could not furnish any particular details of the job work done by M/s Sai Exports nor could he tell the name of the owner or address of M/s Sai Exports. In reply, it was submitted that for a person of the stature of vice president, it is not possible to know the name & address of all job workers. It is not clear even from the observation of Ld. A.O. as to which particular detail could not be explained by Mr. PawanArya. According to Ld. A.O. himself, Mr. PawanArya mentioned that he knew Sh. Mohinder Kumar Garg as production head. It is relevant to submit at this stage that Mr. Mohinder Kumar Garg on the date of survey i.e. 29.04.2015 was also working as production consultant. Therefore, there is no contradiction or inconsistency in this regard as is sought to be made out by Ld. AO. 5. Ld. A.O. has mentioned that Auditor of M/s Sai Export is M/s V.K. Dhingra& co. who happens to be Auditor of the appellant company also. In reply, was submitted that this objection of Ld. A.O. also does not have substance as this is the contractual arrangement between M/s. Sai Export and M/s V K Dhingra& Co. and also due to constant personal touch of the auditor, if that very audit firm i....
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.... months for all the years involved and so have we seen salary sheet for two months on sample basis, on account of payment of wages. Similarly pages 741 to 771 is the sample copy of bonus register showing actual payment proof of bonus to the employees of job workers and paper book page 772 to 777 is the sample copy of Leave register of the employee of the job workers. Similarly paper book page 778 to 795 is the copy of month wise PF and ESI deduction and deposit and sample copy of two months challan of each year along with ledger account of PF, other evidences of the paper book at pages 800 to 807,826-845, 846-857, 858-865, 866- 892, 893-900, 901, 906-907, 902-905, 879-892, 1307-1337, 4730-4755 are of M/s Sai Export and filed the return of income of prior years. All these evidences clearly establish that genuineness of job work charges incurred by the assessee company through M/s Sai Export and therefore the disallowance made in the assessment order and confirmed by CIT (A) is not sustainable even on merit. The adverse observations made by the A.O. in the assessment order have been met by the assessee one by one and paper pages 2969 to 2972 and we have taken ourselves to these ....
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....ith the help of various evidences referred at page 2974 to 2976 of the paper book& It was argued that M/s Shri Ram Exports was one of the job workers engaged by the assessee for doing various job work such as bundling, cutting, stitching, thread cutting, finishing etc., which are integral part of the garments manufacturing and further submitted that these job work activities are such without which it was not possible to manufacture the garments and therefore export sales could not be possible. On the other hand, Ld CIT(DR) relied upon the findings recorded in the assessment and first appeal order. 30. We have considered the entire material before us including the paper books, orders of the lower authorities, synopsis filed before us, written submissions filed before CIT(A) which is part of the paper book. It is seen by us that page 13-15 of the assessment order does not refer any incriminating material found as a result of search in respect of job work of M/s Shri Ram Export which was the proprietary concern of Sh. Subhash Chand Gupta. Only evidence which have been referred in the assessment order was that at the address mentioned in the income tax return of Sh. Subhash Chand....
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....rred at page 2972 to 2978 of the paper book, we deem it appropriate to deal with the disallowance on merit also. At this stage, it would be appropriate to reproduce the written submissions filed by the assessee before the first appellate authority so that the evidences may be appreciated in this regard: 33. It has been submitted that appellant in engaged in the manufacturing and export of readymade fashion garments mainly to USA and Europe. Garment production process involves several steps, which are listed at page 7-8 of the assessment order, Shri Ram Export was one of the job worker engaged by the appellant for doing various job work such as bundling, cutting, stitching, thread cutting, finishing etc., which are integral part of the garments manufacturing. It is submitted that the said job worker has performed the said job work activities on the garments manufactured by the appellant without whom it was not possible to manufacture the garments and accordingly export sales could not be possible. Various documentary evidences were filed vide letter 01.12.2017, which are enclosed in the paper book at (PB 598-605 & 908-1613) by the assessee during the course of assessment proce....
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....with sample copy of 2 months challans for each year along with ledger account of PF. PB 1519-1531 is the Copy of License to work at factory under Factory Act 1948. PB 1532-1549 Copy of invoices raised by Shri Ram Export for the job work charges in the name of the appellant company. PB 1550-1558 & 1565-1577 is the Copy of complete Bank statement along with complete bank book for relevant year. PB 1559-1564 & 1578-1584 is copy of bank book showing that the payments were made through account payee cheques, TDS deducted. PB 1590-1613 is the copy of ledger account of Shri Ram Exports in the books of assessee's company & vice versa, which shows that job work activities done by the said job worker during the year under appeal. PB 1559-1564 & 1578-1584 is the copy of bank book of Shri Ram Export in the books of appellant to show that payment has been made through account payee cheque for fabrication charges paid to the said job worker. PB 1585-1589 is the copy 26AS to show that TDS has been deducted on such job work done along with tax credit statement of Shri Ram Export. 35. Ld. Counsel submitted that the above evidences clearly speak for the genuineness of the charges incu....
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....k done by Shri Ram Export was exclusively for the appellant and therefore employee of the assessee company helped the proprietor Sh. Subhash Chand Gupta to file his return of income in that process, if email id of the employee of the assessee company was also mentioned on the return of Sh. Subhash Chand Gupta, it does not prove that job work were not by Sh. Subhash Chand Gupta. 4. Ld. A.O. has mentioned at page 13-14 of the assessment order that statement of the wife of Sh. Subhash Chand Gupta was recorded according to which Sh. Subhash Chand Gupta was in the business of trading in belts with monthly income of Rs. 10,000 and having no connection with M/s Orient Craft Ltd. In reply, it was submitted this statement of the wife's of Sh. Subhash Chand Gupta surfaced for the first time in the assessment order and at no point of time such statement even referred by Ld. A.O., let alone the supply the said statement of the assessee. Therefore such statement cannot be considered as any evidence against the assessee. In any case wife remaining ignoring about their husband's income and activity in middle class families is not something unusual. Therefore on the basis of wife's statement, ....
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....nd we agree with the Ld. Counsel for the assessee that the adverse observations made by the A.O. are not of substance and misplaced on facts. 38. CIT(A) have mentioned in his order the adverse observations of the A.O. only which in our opinion are misplaced on facts. Contention of CIT(A) that evidence filed by the assessee selfserving documents and circumstantial evidence leads to the conclusion of A.O., are bald assertion. It would be enough for us to say that voluminous documentary evidences filed by the assessee as referred above and considered by us clearly establish the genuineness of the job work expenses covered by the grounds of appeal under consideration. We have gone through the arguments of the assessee in respect of observations made by CIT(A) as contained at page 4 to 6 of the synopsis filed before us and we find that the evidences filed by the assessee to prove genuineness of the job work have not been found fault with by CIT(A) and there is no corroborative evidence produced against the assessee. We further find that CIT(A) mis-appreciated the nature of job work being done by this job worker and was not related to the assessee company or its directors. Statement of ....
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.... funds were used to be transferred to other entities and further mentions that the names of certain parties to whom the payments have been made by the said concern and the names of such parties have been mentioned by the Ld. AO at page 18 of the assessment order and that several adverse things regarding the above supplier based upon some alleged enquiries made. 42. We have considered the entire facts and circumstances as referred in both the orders, submissions of the assessee and Ld. CIT(DR) and various pages of the paper books filed. From the findings recorded in the assessment order, even if they are taken as correct, it can be said that there is no incriminating material found as a result of search in respect of purchase of fabric made by the appellant from M/s Jindal Fashion and M/s Akansha Fashion which can be regarded as incriminating material as held by Delhi High Court in the case of Principal CIT vs. Best Infrastructure India P. Ltd. in ITA No. 11-22/2017 dated 01.08.2017. Even the survey proceeding referred in the assessment order do not indicate any incriminating material and in any case anything found during the course of survey cannot be said to be any material ....
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....how that purchases of fabric were made from M/s Jindal Fashion & M/s Akansha Fashion through banking channel, which is already enclosed in the paper book for A.Y. 2011-12 in assessee's own case PB 292-293 is the copy of letter dated 08.12.2017. PB 1236-1327 is the detailed chart showing the sales made by the assessee company and the garments produced in which the material / fabric purchased from M/s Jindal Fashion, M/s Akansha Fashion have been used, which is already enclosed in the paper book for A.Y. 2011-12 in assessee's own case. 46. The material when received from the above said concern, is evidenced with the help of Annexure-D reply letter 08.12.2017 i.e. purchased invoice of fabric, fabric receipt note, gate pass inward etc, enclosed in the paper book at PB 1328-1559(which is already enclosed in the paper book for A.Y. 2011-12 in assessee's own case) on sample basis. Apart from this, the material/fabric purchased from the above concern has been used in the production of garments which has been sought to be explained by the assessee with the help of detailed chart as per Annexure-C as assessee's reply letter 08.12.2017 (PB 1236-1327) (which is already enclosed in the pap....
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....f procedure volume-II of Foreign Trade Policy published by Ministry of Commerce, (which is already enclosed in the paper book for A.Y. 2011- 12 in assessee's own case). 48. In other words, Ld. Counsel submitted that the fact that the purchases were made from the above said concern was proved and established by the assessee from the detailed description contained in the above said reply dated 06.12.2017 (PB 289-291), 08.12.2017 (PB 292-293) & 12.12.2017 (PB 294-295) and with the help of several evidences, which are part of the paper book at PB 417-419, 420-489 1044-1045, 1159-1186, 1187-1235 2313- 3832 (which is already enclosed in the paper book for A.Y. 2011- 12 in assessee's own case. 49. Therefore, it was not justified on the part of Ld. AO to have treated the purchases of fabric as non genuine transaction / purchases. In fact without the purchases, it was not possible that the production could have been made and since the exports were made, the productions were made and that also supports the case of purchases made by the appellant. Therefore, it is humbly prayed and requested that the action of Ld. AO in making surmise that the purchases made by the assessee from the ab....
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....ignored and rejected. 3. Ld. AO has mentioned the names of certain parties to whom the payments have been made by the said concern and the names of such parties have been mentioned by the Ld. AO at page 18 of the assessment order. Ld. AO has further mentioned that enquiries were conducted and Tamil Nadu Merchantile Bank was asked to provide the bank account details of the parties to which monies were being paid by the said supplier of the appellant company and according to Ld. AO it was revealed that bank accounts of the parties to whom payments were being made by M/s Jindal Fashion, M/s Akansha Fashion were also existing in the same bank i.e. in Tamil Nadu Merchantile Bank, Chandni Chowk, New Delhi. According to Ld. AO bank account opening form and the transaction pattern in these bank accounts showed that the amounts transferred by the said supplier to its vendors were immediately withdrawn in cash on the same day or within a short span of time and most of the bank accounts were opened on the basis of lease deed of a rented premises. Ld. AO has further mentioned that most of the bank account holders did not have PAN and even the parties having a PAN are not filing re....
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....e assessee the disallowance made in the assessment order and confirmed by CIT(A) is not sustainable even on merit. Comprehensive evidences have been brought on record by the assessee which prove that purchases of the fabric were made by the assessee. Without purchases of the fabric, the business of the assessee involving such large export would not have been possible. Both the suppliers are unrelated parties and assessed to income tax. The adverse observations made by the A.O. in the assessment order have been met by the assessee one by one and paper pages 2983 to 2986 and reproduced above and we have taken ourselves to these adverse observations and response of the assessee and we agree with the Ld. Counsel for the assessee that the adverse observations made by the A.O. are not of substance and misplaced on facts.CIT(A) too has mentioned in his order the adverse observations of the A.O. only which in our opinion are misplaced on facts. Contention of CIT(A) that evidence filed by the assessee are self-serving documents and circumstantial evidence leads to the conclusion of A.O. It would be enough for us to say that voluminous documentary evidences filed by the assessee are cle....
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....B 1765-1820, which would show that the payments have been made to M/s SCIPL through banking channel. It was also submitted that sales made by M/s SCIPL to the assessee has been accepted in the assessment of M/s SCIPL. Copy of assessment order of M/s SCIPL for A.Y. 2013-14 is enclosed in PB 2937- 2956.On the other hand, Ld. CIT(DR) has relied upon the findings recorded in the assessment order and in the order passed by CIT(A). 54. We have considered the entire material including the orders passed by the lower authorities. We have taken ourselves to the pages of the synopsis and paper book filed. We have considered the rival submissions. 55. It is seen that page 31-36 of the assessment order does not refer any incriminating material found as a result of search in respect of purchase of fabric made by the appellant from M/s Super Connection India P. Ltd. Only evidence which have been referred in the assessment order was that statements of the directors namely Sh. Akshay Dhanda and Sh. Ajay Nagpal were recorded on 22.06.2015, which show that they did not have knowledge of the affairs of the company and that Sh. Sudhir Dhingra, director of the appellant company has provided perso....
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....ablish the genuineness of the purchases made by the assessee. CIT(A) after considering the submissions of the assessee upheld the disallowance. At this stage, it would be of help if submissions made by the assessee and documentary evidences filed in this regard are reproduced so as to bring the depth of the evidences proving the genuineness of the purchases: 59. It has been submitted that assessee has purchased fabric from M/s SCIPL during the year for an aggregate amount of Rs. 17,87,17,045/- which is evidenced by the copies of purchase invoices, copy of statement of account of M/s SCIPL in the books of in the assessee company is enclosed at PB 2071-2195 & 2826- 2936, 1617-1670, and also statement of account in the books of M/s SCIPL is also enclosed at PB 1765-1820, which would show that the payments have been made to M/s SCIPL through banking channel. It is further important to submit that sales made by M/s SCIPL to the assessee have been accepted in the assessment of M/s SCIPL. Copy of assessment order of M/s SCIPL for A.Y. 2013- 14 is enclosed in PB 2937-2956 together with copy of acknowledgment of return, computation of income, audited balance sheet, profit & loss account an....
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....ly, it was submitted that assessee was not made aware at any point of time during assessment proceeding that any statement of these two persons were recorded nor the copies of such statements were supplied to the assessee. So much so copies of such statements have not been made part of the assessment order even though it has been mentioned that they are enclosed as Annexure B and Annexure C at PB 1903, 1904-1905.Therefore such statements have to be excluded from consideration in view of Hon'ble Supreme Court decision in the case of Kishnichand Chellaram vs. CIT 125 ITR 713. Moreover, no opportunity of cross examination has been allowed to the assessee for that reason also such settlements have to be excluded from consideration. It has also come to the notice of the appellant that such statements were recorded at the back of the assessee and by calling these persons in the income tax department and therefore under what circumstances, these statements were given is not known to the assessee. According to the appellant there is no reason why should the directors of M/s SCIPL would have no knowledge of the affairs of SCIPL. Therefore this objection of Ld. A.O. may please be reject....
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.... Jindal and since amount remitted were withdrawn in cash it shows that ultimate beneficiary was the appellant company and entities controlled by Sh. Sanjay Jindal were mere entry providers. In reply, it was submitted that these observations of Ld. A.O. are mere surmises and conjectures and there is no cause and effect relationship. If purchases have been made from various entities of Sh. Sanjay Jindal how could that fact alone be taken as the basis to hold that purchases made by the appellant from such entities of Sh. Sanjay Jindal are not genuine. Similarly, if the payment made by these entities from M/s Akansha Fashion and M/s Jindal Fashion are withdrawn in cash by the supplier, how could it establish that beneficiary was none other than the appellant and the suppliers were entry providers. In fact entire case made out by Ld. A.O. seems to have proceeded on a preconceived notion that purchases made by the appellant are nothing but bogus purchases. It is settled law that suspicion howsoever grave cannot par-take the character of evidence. It is submitted at the cost of repetition that assessee has established the genuineness of the purchases with the help of direc....
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....de by the A.O. are not of substance and misplaced on facts. CIT(A) too has mentioned in his order the adverse observations of the A.O. only which in our opinion are misplaced on facts. Contention of CIT (A) that evidence filed by the assessee self-serving documents and circumstantial evidence leads to the conclusion of A.O. It would be enough for us to say that voluminous documentary evidences filed by the assessee are clearly establishing the genuineness of purchases fabric from M/s Super Connection India P. Ltd. We have seen that the vendor company is supplier of the fabric not only to the assessee company but to other garment exporters. Other indicators such as percentage ratio of material to sale etc also establish the genuineness of the purchases. We do not agree with the observations made by the first appellate authority. In our considered opinion, assessee has been successful to discharge the burden of proving the purchase from M/s Super Connection India P Ltd. In the result, ground no. 12 & 13 of the assessee's appeal of the assessee are allowed and the addition of Rs. 17,87,17,045/- is deleted. 64. Ground No. 14 of the assessee's appeal and ground no. (vi) to (xi) of....
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.... of the assessee's appeal is allowed and grounds no. (vi) to (xi) of the departmental appeal are dismissed. 69. Ground no. 15 & 18 of the assessee's appeal are general and do not call for any adjudication under these grounds of appeal here. 70. Ground no. 16 of the assessee's appeal is regarding approval under section 153D but nothing specific submissions have been made before us and hence, the same is rejected. 71. Ground no. 17 of the assessee's appeal relating to interest u/s 234B is consequential in nature. Departmental Appeal No. ITA 5037/Del/2019 72. Grounds of appeal preferred by Revenue have been reproduced by above. 73. Grounds of appeal no. (i) to (iii) are in connection with the addition of Rs. 17992/- made by the AO in respect of job work done through M/s Aam Bee Clothing which was deleted by CIT(A). 74. AO has discussed this issue at page 2-4 of the assessment order whereas CIT(A) has discussed this issue at page 57-58 of the appeal order. 75. Ld. CIT(DR) relied upon the finding recorded in the assessment order and Ld. Counsel for the assessee relied upon the findings recorded by CIT(A) and has also relied upon the submissions made before CIT(A) plac....