TaxTMI 
TaxTMI 
2015 (1) TMI 1506
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....he addition of Rs. 18,64,605/- treating the purchases of Rs. 9,64,605/- made from M/s Bhiwani Enterprises and Rs. 9,00,000/- made from M/s Shivm Trading Co. as fictitious without disputing the quantitative details of the rice exported and other documentary evidences. 2. That the Ld. CIT(A) erred in treating the payments made to third party on behalf of the suppliers as hypothetical. 3. That the Ld. CIT(A) erred in sustaining the addition of Rs. 40,000/- and Rs. 60,000/- received from Sri Kishan Lohia and Smt. Sushila Goyal aggregating to Rs. 1,00,000/- as not genuine. 4. That the Ld. CIT(A) erred in not giving cognizance to the fact that both the donor are assessed to income tax, the loans were received through ac....
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....il'. In response to the letter issued to the assessee, the assessee submitted that all the payments were made in the FY 2000-01 against the purchases made during the financial year. There is no scope of any doubt on the purchases made from them as all the goods purchased were exported. On examination of the submission of the assessee, the AO observed that the postal remark casts very serious doubt about the existence of the party. Against such a finding, the assessee could not offer any plausible explanation to prove the authenticity of his transactions with them. Therefore, he concluded that the amount of purchases shown against those two parties, namely M/s Bhawani Enterprises & Shivam Trading Company were false and fabricated. The ass....
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....nes of RBI. 6. Statements of account of both the parties as per the books of account were filed. The statements have clearly shown that the payments were made through DD. In support, bank statements were also filed. 7. It was explained to the AO that the entire quantity of export and its value was subject to the control of RBI as his banker had to submit copy of the GR forms to RBI against all corresponding exports. 5. Apart from the above, Ld. Counsel for the assessee further submitted before the Ld. CIT(A) that Assessing Officer did not dispute the opening and closing stock of rice and the quantitative details. That the AO did not point out any defect in the quantity of export. That in the process of export of goods s....
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....e usually gives instruction to his buyer to send the draft directly in favour of his own supplier. In such cases, the supplier can avoid bank charges and simultaneously, the delay of 2/3 days requires in banking channels. This was the common practice up to last 5/6 years. The assessee never claimed that the drafts were purchased in the name of the suppliers but it was stated that the payment were made by demand drafts. There was nothing wrong, if the payments were made to some other persons on account of the supplier. The AR further contended that to arrive at a conclusion, the entire evidence and materials are to b considered. The AO came to the conclusion on the basis of only one fact. He failed to bring any record the purpose of making t....
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....rt has not been denied by the AO. The purchases bills were stamped by the Sales Tax Check posts. The purchase and consequent export also go thorough examination by the Custom Authority. Hence, we agree with the assessee that when the export of commodity is under control of Customs and Reserve Bank of India and export is supported by the evidence, a corresponding purchase cannot be disallowed. Furthermore, when the payments have been made to other party on instruction of suppliers, adverse inference also cannot be drawn because it is a custom and practice in the trade. Assessee has been following this practice for the past 5-6 years. 9. Thus, we find that on the facts and circumstances of the case, assessee's purchases cannot be disallowe....