TaxTMI 
TaxTMI 
2023 (10) TMI 252
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....o be engaged in the business of fabrication and trading of readymade garments. Return declaring income of Rs. 1,56,891/- was filed and statutory notice u/s 143(2) of the Act was issued. Ld. AO had found that assessee has shown purchases amounting to Rs. 76,88,380/- from M/s. Thakur Associates but on investigation made at the premises it was found that it was a residential house of brother of Sanjiv Thakur, the proprietor of M/s. Thakur Associates, who lived in Joint family. Sanjiv Thakur was not available and inquiries were made from Rahul who was nephew of Sanjiv Thakur. Based on the statement of Rahul that the premises is of his deceased father, N.K. Thakur and that his uncle Sanjiv Thakur resided in the premises till April, 2013 and that he is not aware of the existence of the firm M/s. Thakur Associates, the assessee was directed to ensure the presence of the party himself for verification of genuineness of transactions. However, as assessee failed to produce anyone, Ld. AO considered M/s. Thakur Associates to be an entity created to provide accommodation entries. Ld. AO observed that the confirmation filed by the assessee from M/s. Thakur Associates was not reliable and thus i....
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....in Hungary/Netherlands. In its investigation conducted by the Investigation Wing, Delhi it was revealed that Neena Hardeep Singh and Shri hardeep Nihal Singh visit frequently abroad and own M/s. Trans Europe (Textiles) BV, 124, M.J. Street, the Netherlands. This concern appears to be special purpose company. The assessee has made total export sales to this one company i.e. M/s. Trans Europe (Textiles) BV which is owned by the assessee along with Shri Hardeep Nihal Singh. The assessee executes bogus exports in names of these concerns and bring equivalent sale proceeds to invoice value in convertible foreign exchange in India through banking channels in the name of the assessee. Against these fictitious exports, assessee has also claimed export benefits i.e. duty drawback of Rs. 9,34,254/- and DEPB of Rs. 4,92,174/-. Considering the above, it is crystal clear that assessee-concern has not made any actual sale whether local or export but the money received against export sale received in convertible foreign exchange is only the Hawala amount brought into India through the garb of export followed by the assessee. Further, the assessee has not proved genuineness of purchases an....
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....ed bogus purchase to M/s. Thakur Associates. 4.1 Accordingly, the Revenue is in appeal raising following grounds :- "1. Whether on the facts and in the circumstances of the case, the CIT(A) has erred in law in deleting the addition of Rs. 1,18,41,518/- made on account of peak export by the A.O. 2. Whether on the facts and in the circumstances of the case, the CIT(A) has erred in law in deleting the addition of Rs. 74,96,688/- made by the AO on account of bogus sales to M/s. Golden Harvest. 3. Whether on the facts and in the circumstances of the case, the CIT(A) has erred in law in deleting the addition of Rs. 76,88,380/- made by the AO on account of bogus purchase from M/s. Thakur Associates. 4. Whether on the facts and in the circumstances of the case, the CIT(A) has erred in law in deleting the addition of Rs. 16,09,094/- made by the AO on account of unexplained cash credit. 5. Whether on the facts and in the circumstances of the case, the CIT(A) has erred in law in deleting the addition of Rs. 5,65,490/- made by the AO on account of disallowance of fabrication expenses had not been incurred on the business. 6. The order of....
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....including clearance from the custom department and same has been rightly relied to make the deletion. It was submitted that at one hand export sales were held to be bogus but draw back and DEPB income on such exports has been accepted and added back. Ld. Sr. Counsel submitted that the cryptic manner in which the assessment order is passed while calculating the additions, there is no logic and reason or justification for taking a peak export for addition. 7.1 In regard to the addition of Rs. 74,96,688/- on account of sales to Golden Harvest it was submitted that the sales of readymade garments were lesser than the sales tax turnover threshhold and required no sales tax. It was submitted that Ld. CIT(A) has taken into consideration all the relevant facts including that the payment were received through banking channels and no adverse evidence was available with the Ld. AO to make the addition. Ld. Sr. Counsel also relied the judgment in case of husband of assessee where similar addition was deleted by the Tribunal. 7.2 In regard to deletion of Rs. 76,88,380/- towards alleged bogus purchases from Thakur Associates, Ld. Sr. Counsel submitted that without giving any opportunity to....
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....ed before Ld. AO by reply dated 17.03.2006 made available at page no. 31-33 of the paper book. It was submitted that without rejecting the books and without conducting independent inquiries on basis of alleged bogus purchases, addition could not have been made and sustained. 8.1 As with regard to ground no. 3 and 4 in assessee's cross objection, it was submitted that the Ld. AO while calculating assessable income erroneously did not reduce the remaining undoubted expenses of Rs. 1,06,09,019/- as claimed in the profit and loss account by the assessee. No reason for disallowing such expenses have been given by the Ld. AO, yet the same were not reduced while computing the assessed total income. That the aforesaid expense, were undisputedly incurred for business purposes need to be reduced from the total income/ business income. 9. Further, it was contended that assessee has also claimed deduction under section 80HHC of the Act of Rs. 36,557/- which is not allowed in the computation at end of the assessment order without any cogent reasons being provided thereof. Since the assessee undisputedly satisfies all the conditions, the same calls for being allowed. 9.1 Ld. Sr. Counsel....
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....d as suspicious and bogus purchase and further conclusion was drawn that the cash shown as bogus purchase was sent to foreign country by Hawala from receipts as sale proceeds in convertible in foreign exchange. 11. The Bench is of considered opinion that when the Ld. AO was not believing the confirmation submitted by the assessee from M/s. Thakur Associates then it was necessary to give an opportunity to rebut the same to the assessee. Ld. AO was drawing inferences from the statement of Rahul, and Ld. CIT(A) has rightly observed that no reason have been given in the assessment order in not allowing cross examination of Rahul which is a violation of principle of natural justice. Ld. CIT(A) has taken into consideration the assessment record and observed that assessee was never asked by Ld. AO to produce Sanjeev Thakur for verification. The Revenue in this appeal does not dispute that this was an incorrect factual aspect of the assessment proceedings as recorded by Ld. CIT(A) on the basis of records before it. Further what transpires is that the payments were made through banking transactions and without any factual evidences, Ld. AO concluded that the amount deposited in the accou....
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....essee had furnished before Ld. AO to substantiate the exports made were genuine. Thus, there is no denial to fact that these all statutory documents were prepared and submitted for relevant custom clearance by the custom authorities. There is no matter on record to show that if any inquiry was made with the custom department questioning genuineness of these documents. The export proceeds were received through banking channel and duty draw back, DEPB received on account of export were duly accounted by the assessee. The finding of Ld. AO that assessee has exported some other types of good instead of those mentioned in the export documents cannot be accepted as it is not supported with any direct or circumstantial evidence and to the contrary the custom clearance documents being records of a statutory authority have to be presumed to be correct. Thus, Ld. CIT(A) taking into account all the aforesaid aspects and pointing deficiencies in the order of ld. AO, including the contrary stand of rejecting the exports and allowing shipping and forwarding and travelling expenses incurred on these export, had set aside the peak addition which need no interference. 15. Ground no 4 in appeal o....