TaxTMI 
TaxTMI 
TaxTMI 
2019 (8) TMI 1769
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....p. The A.O. was is in possession of information that a search and seizure action has been carried out by the Investigation Wing, Mumbai on the Bhanwarlal Jain Group which was indulged in providing of accommodation entries in the form of unsecured loans, bogus purchases / sales to the interested parties. The A.O. noted the modus operandi of business of Shri Bhanwarlal Jain Group of companies in the assessment order and the details found by search party in their cases. It is also noted that Bhanwarlal Jain in his statement recorded under section 132(4) of the I.T. Act has admitted that he manage and controls the business affairs of all the concerns in which the persons who were his employees are also shown as Directors, Partners and Proprietors. List of group concerns operated and managed by Bhanwarlal Jain was obtained from him during the course of search. It is also noted that all of them have license which make them eligible for importing diamonds. Further, data collected from Customs Department had revealed that all the said group concerns have genuinely been imparting diamonds for last many years. The imported diamonds were also getting cleared by the CHAs. It prima facie gives ....
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....lied upon against the assessee. The assessee filed complete details with regard to genuine parties. The assessee also explained that A.O. was relying upon statement given by third party namely Shri Gautam Jain and Shri Rajendra Jain Group, given by DDIT, Mumbai. However, they have retracted from their statements, therefore, such statement cannot be read in evidence against the assessee. It was submitted that there is no basis to reject books of account of assessee and third party statement cannot be the basis for rejection of the books of account of the assessee. The assessee relied upon several decisions in support of the contention that such material cannot be used against the assessee without allowing crossexamination of the statements and without giving opportunity to rebut these evidences. The assessee relied upon Judgment of Hon'ble Supreme Court in the case of Kishanchand Chellaram 125 ITR 713 (SC) and Others. 2.3. The A.O. however, did not accept the explanation of assessee. The A.O. noted that assessee has filed copy of the tax invoice, purchase copy of the stock register, copy of the bank statements and books of account along with confirmative statement of account in the....
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....gh banking channel, therefore, there was no justification to make the impugned addition on account of bogus purchases. The Ld. CIT(A), however, dismissed the appeal of assessee. 3. The Learned Counsel for the Assessee reiterated the submissions made before the authorities below and he has submitted that assessee filed all the documentary evidences on record to prove genuine purchases which are copies of purchase invoices, stock register, bank statements, confirmation of both the parties along with their balance-sheet, copy of acknowledgment of filing of the income tax returns and that purchases are made by assessee through banking channel. Copies of the same are filed in the paper book as well. He has submitted that assessee also filed affidavit of Shri Sanjay Choudhary, Shri Narendra Kumar Jain who have retracted from their statements given to Investigation Wing, Mumbai, therefore, no addition could be made on the basis of statements of third parties. Further no copy of the statements of any of such persons recorded by the Investigation Wing at Mumbai have been provided to assessee and no right of crossexamination have been given to assessee to cross-examine their statements. No ....
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.... and Andaman Timber Industries vs. CCE (supra). Therefore, such material found during the course of search in the entities of Shri Bhanwarlal Jain Group of cases cannot be used in evidence against the assessee. The reliance of the authorities below of such material is of no use and basis. The other material available on record are the documentary evidences filed by assessee which are copies of the purchase invoices, stock register reflecting purchase and sales, bank statements highlighting payments made by assessee to these parties through banking channel, copy of bank statements of both seller parties along with their balance-sheet confirmations and copy of acknowledgment of filing of the income tax returns. The A.O. did not make any inquiry on the documentary evidences filed by assessee and did not doubt the explanations. Since the documentary evidences filed on record have not been doubted by A.O. and no adverse finding have been given and no inquiry have been made into the claim of assessee, therefore, there was no basis to treat such purchases as bogus. The ITAT, Surat Bench recently in the case of M/s. Shantai Exim Limited, Surat vs., DCIT, Circle-2(1)(2), Surat in ITA.Nos.27....
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....ase of bogus purchases. It is also an admitted fact that statement of Shri Rajendra Jain was not provided to assessee nor statement was subjected to cross-examination on behalf of the assessee. He has also retracted from his earlier statement. Therefore, there was no basis to make any addition against the assessee. The issue is, therefore, covered by the Order of ITAT, Delhi SMC-Bench in the case of same assessee for the A.Y. 2011-2012 Dated 05.04.2019 (supra). In view of the above, we set aside the Orders of the authorities below and delete the entire addition. Ground Nos. 3 to 7 of the appeal of the Assessee are accordingly allowed." 7.2. In the case of M/s. Nangalia Fabrics Pvt. Ltd., (supra), the Hon'ble Gujarat High Court confirmed the findings of the Tribunal in which the Tribunal accepted the submissions of the assessee that purchases are supported by bills, entries in the books of account and payments are made by cheque and quantitative details provided. The Hon'ble Gujarat High Court in the case of M.K. Brothers (supra), held that "amounts representing purchases could not be added as income as there was no evidence to conclude that the transactions were bogus." Consideri....
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....iciency have been pointed-out. The assessee need not to prove source of the source i.e., purchase made by the purchaser parties i.e., Damor concerns. The assessee also established common practice in Textile Sector in Surat for supply of goods at door step of consumer. Thus, the initial burden upon assessee to prove the genuine purchases have been discharged by assessee. The assessee has fully discharged its onus of proving the purchases by giving names, addresses, confirmation, PAN, bills and invoices, details of payment by account payee cheques, ITRs and Audit reports of its suppliers. Merely because further suppliers to Damor family did not respond to the notice of the assessing officer is no ground to reject the explanation of assessee. Since in the case of assessee no incriminating material was found to prove bogus purchases, therefore, the decision in the case of M/s. M.K. Proteins Limited (supra), would not apply. It may also be noted here that in A.Y. 2010-11 the assessing officer accepted similar purchases in the scrutiny assessment order under section 143(3) of the Income Tax Act on the identical facts. Similarly, seized material was also considered in that year. The Ld. C....