AI Drafter 
TaxTMI 
TaxTMI 
2021 (3) TMI 1387
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....he facts and in the circumstances of the case, the Ld. CIT(A) erred in deleting the addition of Rs.1,23,00,000/- made on account of unexplained unsecured loans and addition of Rs.2,76,499/- made on account of disallowance of interest thereon despite the fact of non-traceability of depositors at the time of assessment. [3] It is, therefore, prayed that the order of the CIT (A) may be set aside and that of Assessing officer may be restored." 3. Now, we shall take ground no.1 raised the Revenue which relates to addition of Rs.1,14,71,603/- made on account of bogus purchase. 4. Brief facts qua the issue are that during the assessment year under consideration, the assessee has shown total purchases of Rs.8,27,50,188/- in respect of Finished Sarees, Grey and Border. It was noticed by Assessing officer that the assessee has shown sundry creditors for purchase of Rs.1,71,24,590/-. In order to verify the genuineness of purchases and creditors shown by the assessee, notices u/s 133(6) of the Act were issued to some of the purchase parties. Notice u/s 133(6) was issued to Shri Chandresh Dalal and Smt. Damini Dalal. On perusal of the compliance received from Shri Chandresh Dalal....
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....e had requested to provide the Xerox copies of the statements and cross examination wide our letter dated 03/03/2014 and you had given the copies of the statements on 04.03.2014, so we request you to grant us a time of at least 10 more days for our reply in relation to para no. 3 & 4 related to these three parties i.e. Shri Chandresh D. Dalal, Smt. Damini Chandresh Dalal & Shri Pritesh J Gajjar." 6. During the assessment proceedings, the assessee also submitted that purchases were made through account payee cheque and they were genuine. Assessing officer had gone through the submission of assessee and noted to be devoid of any merit. In the instant case, a show cause notice, was issued to the assessee to explain as to why the purchases claimed to have been made from Shri Chandresh D. Dalal of Rs.56,48,508/- and Smt. Damini Chandresh Dalal of Rs.58,23,095/- should not be treated as bogus purchases and added to her total income. The assessee was given repeated opportunities to cross examine the above parties. Assessee for obvious reasons avoided the same. The Assessing officer thus noted that no such conditions exist in the assessee's case as far as the amounts under considera....
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....corded. In his statement on oath Shri Chandres S Dalal submitted that he worked as a part time accountant for certain parties including the assessee and admitted that he and his wife Smt. Damini Dalal have never done any business of textile items or cloth with any party of the assessee. The statement on oath of Smt Damini Dalal was also recorded who stated that she is a housewife and has never done any business activity and all her affairs are managed by her husband Shri Chandres Dalal. The assessing officer as per the order sheet entry dated 21.02.2014, provided an opportunity to the AR and the husband of the assessee who had attended the proceedings on the same day. Shri Anilkumar Agarwal, husband of the assessee, requested to postpone the proceedings of cross examination on 24.02.2014 but this opportunity was not availed by the assessee on subsequent dates i.e. on 28.02.2014 and 03.03.2014. Therefore, the assessing officer held that the expenses incurred for purchases of Rs.56,48,508/- by Shri Chandresh B Dalal and Rs.58,23,095/-by Smt. Damini C Dalal amounting to Rs.1,14,71,603/- ( Rs.56,48,508 + Rs.58,23,095) are bogus and added to the income of the assessee. 10. Learned Co....
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.... to these parties and the statement on oath was recorded. In his statement on oath, Shri Chandres S Dalal submitted that he worked as a part time accountant for certain parties including the assessee and admitted that he and his wife Smt. Damini Dalal have never done any business of textile items or cloth with any party of the assessee. The statement on oath of Smt. Damini Dalal was also recorded who stated that she is a housewife and has never done any business activity and all her affairs are managed by her husband Shri Chandres Dalal. The assessee contention that the summons u/s 131 were issued to these 2 persons on 19.02.2014 and the time of only 2 days was given for compliance and in the summons it was not mentioned that they have been called as witnesses in the case of 'Ruchi Sarees' was found to be correct as in the summons it was mentioned as 'in your case'. The opportunity to cross examine was not provided though the assessee had made a request for opportunity to cross examine on 11.03.2014 and 26.03.2014 after the statement on oath of the two parties was provided to the assessee on 04.03.2014. 12. The ld CIT(A) noticed that in the assessment order, the ....
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....sal of the ledger account filed by the assessee shows the payments made by the assessee to these persons against the alleged purchases on various dates. The copy of the ledger account is enclosed. The examination of the bank accounts shows that the next date on which the payment is credited several cheqeus are issued for clearing and this pattern can be seen during the whole year. The details of the payment made by the assessee are as per the ledger account enclosed. 3. You are directed u/s 250(4) of the Act to conduct inquiries regarding the clearing of the cheques on various dates from these two accounts. The name and the address of the persons in whose name the cheques had been cleared is to be ascertained to verify whether the payments are being withdrawn through clearing back to the assessee as claimed by the two persons namely Shri Chandresh D. Dalal and Smt. Damini C Dalal. The copy of the ledger account and the bank statement is enclosed. The report may be submitted by 24.11.2015." 13. The Assessing officer, vide his remand report dated 09.03.2016 submitted the following before ld CIT(A), by way of remand report, which is reproduced below: "As per your ....
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.... Bajrangbali Agency 18. 434244 22.12.2010 103526/- Bajrangbali Agency 19. 434245 22.12.2010 98265/- Bajrangbali Agency 20. 434246 22.12.2010 85688/- Bajrangbali Agency 21. 434250 22.12.2010 117378/- Bajrangbali Agency 22. 435142 28.12.2010 96808/- Shri Shantinath Textile 23. 435141 28.12.2010 95402/- Shri Shantinath Textile 24. 435143 28.12.2010 80790/- Yogesh A Mogokar 25. 436871 03.02.2011 83855/- Balrangbali Agency 26. 436873 05.02.2011 104258/- Poonam Dyeing & printing mills Pvt Ltd 27. 436876 05.02.2011 106988/- Poonam Dyeing and printing mills Pvt Ltd 28. 436874 05.02.2011 106587/- Poonam Dyeing and printing mills Pvt Ltd 29. 436878 05.02.2011 103458/- Poonam Dyeing and printing mills Pvt Ltd 30. 436877 05.02.2011 108426/- Poonam Dyeing and printing mills Pvt Ltd 31. 436875 07.02.2011 179147/- Poonam Dyeing and printing mills Pvt Ltd Photo copies of the cheques collected from the bank are enclosed as under: Shri Chnadresh D Dalal (Annxure A) ....
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....le. The finding of the assessing officer in the assessment order is erroneous as the assessee has proved, through the bank statements regarding the payments against the purchases to be genuine, supported with sale bills and delivery challans. The inquiries conducted from the banks during the remand report proceedings have proved that the payments have been received through account payee cheques from the assessee by these two parties and the payments have been made by Chandresh D. Dalal and Damini D. Dalal to various parties through account payee cheques only. These facts proved that the business transactions are genuine and nowhere it was found that the cheques were deposited in the account of the Chandresh D Dalal and Damini D Dalal and money was withdrawn through bearer cheques etc., and routed back to the assessee. Taking into consideration that the bank statement shows normal business transactions, and which does not prove the fact that the blank cheques were used by the assessee to withdraw the amount from the bank account of the two persons. Hence, ld CIT(A) deleted the addition made by the assessing officer on account of bogus purchases of Rs.1,14,71,603/-. 16. We note th....
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....ssessee's case. Assessee's case is covered by the decision of Hon'ble Gujarat High Court in case of Kashiram Textile Mills. In view of the matter, addition made by the Assessing officer is deleted. Ground No.1 of Assessee's appeal is allowed and ground No.1 of Revenue's appeal is dismissed." 4. The issue is essentially based on facts. The Tribunal, having been satisfied by genuineness of the purchases as also specially considering the payments made through the cheques, was of the opinion that such addition could not be sustained. Issue, essentially and pre-dominantly based on facts, requires no consideration as no question of law arises." 17. Reference in this regard can also be usefully made to the judgment of Hon'ble Gujarat High Court in the case of M.K.Brothers, 163 ITR 249, wherein it was held assessee was given credit facilities for a short duration and the payments were given by cheques, it can not be said that the entries for purchases of the goods made in the books of accounts were bogus entries. Thus, we have observed that purchases are supported by bills, there is entries in the books of account, payment was made by account payee ch....
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....reiterated the stand taken by the Assessing officer, which we have already noted in our earlier para and is not being repeated for the sake of brevity. 22. Shri Mehul Shah, Learned Counsel for the assessee submits before us that assessee had received unsecured loans of Rs.1,87,37,285/- from 23 parties and the complete details of these loans with the name, address, PAN, amount of loan, etc. was provided in Annexure B of the tax audit report as required in column no. 17(M) of the Form No. 3CD. The assessing officer issued summons u/s 131 to fourteen (14) parties but the summons could be served only on 4 parties whose statement on oath was recorded. The assessee provided the details of the 10 parties to whom summons could not be served on 05.03.2014 and 24.03.2014 alongwith ledger account, contra confirmation, capital account, bank statement, ITR-V acknowledgement, computation of income, PAN card, etc. The new addresses of these parties was also provided on 26.03.2014. It was submitted that all these parties are filing their return regularly and the loans have been given through banking channels and have also been repaid in Financial Year 2011-12. It was submitted that the 4 partie....
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....e in the affidavit. 24. It was also noticed by the Ld. CIT(A) that all the loans were repaid before 22.12.2011 whereas the scrutiny notice was issued upon the assessee on 31.07.2012. The chart of repayment in subsequent years had been filed in the Paper Book by the assessee along with Bank statement of the assessee as well as Bank statement of the lenders evidencing repayment as also the ledger accounts of lender in subsequent year. In the present case, in fact, in the subsequent year also i.e. A.Y 2012-13, there was scrutiny assessment and bank statements were filed before the Assessing officer and the repayment of loan were also reflected in the Tax Audit Report. 25. Therefore, after going through the order of ld CIT(A), we note that assessing officer had issued summons u/s 131 of the Act to ten (10) parties to whom the summons could not be served. The assessee provided the assessing officer, the new addresses of these parties during the assessment proceedings alongwith the confirmations, ledger account, capital account, bank statement, ITR return and computation of income. All these persons are assessed to tax and the balance sheet filed by them reflect the unsecured loans....
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....sessee to Shri Ishwar Adwani in the immediate next financial year and the Department has accepted the repayment of loan without probing into it. In the aforesaid facts and circumstances of the case, when the ITAT has held that the matter is not required to be remanded as no other view would be possible, we see no reason to interfere with the impugned order passed by the ITAT. No question of law, much less substantial question of law arises in the present Tax Appeal. Hence, the present Tax Appeal deserves to be dismissed and is accordingly dismissed." 27. On similar facts, our view is fortified by the judgment of Hon`ble High Court of Gujarat in the case of Ranchhod Jivabhai nakhava, 21taxmann.com 159 (Guj), wherein it was held as follows: "14. After hearing Mrs. Bhatt, the learned advocate appearing on behalf of the assessee and after going through the materials on record, we are unable to accept her contention that in this case the Revenue has discharged its onus and it was for the assessee to further prove the genuineness and creditworthiness of the creditors. 15. In our view, once the assessee has established that he has taken money by way of accounts payee ....