2024 (9) TMI 91
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....ee years starting from AY 2017-18) was estimated as the profit element embedded in it resulting in addition being made to the income of the assessee amounting to Rs. 25,91,606/-. 2.1 The grounds raised by the assessee in this regard before us are as under:- "Improper Confirmation of Additions Despite Acceptance of Books of Accounts: The learned CIT(A) has erroneously upheld an addition of INR 25,91,606/- equating to 10% of alleged bogus purchases amounting to INR 2,47,76,349/- notwithstanding the formal acceptance of the Assessee's books of accounts under Section 145(3) of the Income Tax Act, 1961. Confirmation of Addition in Absence of Contradictory Evidence: The decision of the CIT(A) to confirm the addition of INR 25,91,606/- is contended to be baseless, as it lacks substantiation through adverse documentary evidence against the Assessee. Disregard for Documentary Evidence and Vendor Confirmation: The CIT(A) is alleged to have overlooked the documentary evidence provided by the Assessee and the confirmation of transaction details by the seller party, M/s, HJM Fuels Pvt Ltd, presented during the proceedings before the AO. Unjustified Double Taxation through Gross ....
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....n possession of information received on account of survey action conducted on one M/s. HJM Fuels Pvt. Ltd. that the said entity was providing accommodation entries and the assessee was one of the beneficiaries of the same. During the course of survey proceedings, a transaction filed in the form of tally document bearing name "Training Module" was impounded. The entries appearing in the said file were noted by the Revenue to be of cash entries for receipt of money and payment thereof; and the Group run by one Shri Mahendra S. Patel was noted to have made application before the Settlement Commission, Additional Bench-II, Mumbai, wherein the entries appearing in "Training Module" had been owned up by the Group and a disclosure of 2% additional income had also been made by the Group. The assessee was also noted to have carried out transactions with M/s. HJM Fuels Pvt. Ltd. during the year. Based on this incriminating material, the assessee was asked to demonstrate the genuineness of transactions carried out by it with M/s. HJM Fuels Pvt. Ltd., to which due reply was filed by the assessee submitting that all the transactions were genuine. Necessary evidences to this effect were also fil....
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....d been carried out in the case of HJM Fuels Pvt Ltd and on the basis of the information received from the office of DCIT, Central Circle 1(3), Ahmedabad and after analyzing the same, it was gathered that HJM Fuels Pvt Ltd is engaged in providing accommodation entries of bogus bills During the course of the survey proceedings, certain incriminating material/evidences were seized and amongst the incriminating material so seized, was found the ledger account of the assessee. In response to the incriminating material so seized, submission had been made by HJM Fuels Pvt Ltd. before DDIT (Inv.), Unit 1(3), Ahmedabad that all the entries appearing in the seized material are the cash entries for receipt of money and payment the of Your goodself has asked us to explain as to why the appropriate addition/ disallowance should not be made in the hands of the assessee in respect of the transactions carried out with the alleged bogus concern ie HJM Fuels Pvt Ltd. We are therefore furnishing our reply in the aforesaid matter with the requisite details for your kind verification and perusal. 1) The assessee is carrying out the business activity of trading in Steam Coal from the premises situate....
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....ue and the relevant copies of the Purchase Register duly highlighting the purchases made from HJM Fuels Pvt Ltd. We are also submitting the monthwise details of Purchase and Sale Quantity of Steam Coal undertaken by the assessee for the F.Y 2016-17 for your reference. (Annexure- B). 3) It is hereby informed that in respect of the above mentioned transactions of the purchase of goods from HJM Fuels Pvt Ltd. during the A.Y 2017-18, M/s HJM Fuels Pvt Ltd had collected TCS on sales of coal to the assessee as per the provisions of the Income Tax Act. The assessee had duly availed the TCS credit of the same, while filing the Income Tax Return and the said transactions are also being duly reflected in the 26AS Tax Credit Statement of the assessee. It is hereby informed that all the transactions of purchase of goods by the assessee from HJM fuels Pvt Ltd during the A.Y 2017-18 are being duly reflected in the 26AS statement and there is no discrepancy as regards the amount of purchases as well as the TCS collected on the same. The transactions as reflected in the 26AS statement duly gets tallied with the details of all the purchase transactions as reflected in the ledger account of HJM F....
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....ng made sales to the assessee to the tune of Rs. 2.47 crores on sale of Steam Coal having quantities of 7499.71 metric tonnes. The Assessing Officer admits the sales being duly recorded in the regular books of accounts of the assessee and considered while filing the income-tax return for the impugned year. The findings of the Assessing Officer in this regard are reproduced hereunder:- "On the other side the assessee co. has submitted copy of bills/invoices, Delivery challans, ledger accounts and bank statements to discharge its onus to prove that the transactions made with M/s. HJM Fuels Pvt Ltd are completely genuine. Another fact to note in the matter is that Shri Shailesh Waghela- the director of M/s. HJM Fuels has filed an affidavit in this office wherein he has submitted a ledger account of the assessee company in its books showing transaction to the tune of Rs. 2.47 Cr on sale of Steam Coal having quantity 7499.71 metric tonne. Further it has also been admitted that the sales made to M/s. Vimal Coal Pvt Ltd are as per regular books of account and all such transactions are duly accounted in its books of account and have also been considered while filing Income Tax Return for....
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.... in the books of the assessee. It was pointed out that treating them as journal entries in the incriminating material itself was misleading, as also the admission by the Group before the Settlement Commission that all transactions reflected therein pertained to cash entries. As for the entries of cash reflected in the debit side pertaining to cash payment made to the assessee by M/s. HJM Fuels Pvt. Ltd., it was submitted by the assessee that there was no concrete evidence ,i.e by way of cash receipt bearing the signature of the authorized person of the assessee or any other documentary evidence to substantiate that the cash had actually been received by the assessee or any other circumstantial evidences to prove that the cash had actually been paid to the assessee. It was, therefore contended that the contents of the so called incriminating material in the possession of the Department lack credibility and evidentiary value and could not be relied upon to arrive at any conclusion whatsoever for the case of the assessee. These facts find mention at paragraph No.5 of the submissions made by the assessee to the Assessing Officer as under:- "5) Your goodself has mentioned in the notic....
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....hat out of all the payments made by the assessee upto 14.09.2016 towards purchase consideration by means of Account Payee Cheques/RTGS, all the transactions are not being reflected in the incriminating material. It was claimed that the transactions in the incriminating material are entirely cash entries for receipts and payments. From the above facts, it is clear that receipts are by means of Account Payee Cheques/RTGS and are not cash receipts. The incriminating material therefore cannot be relied upon in respect of the fact that the cash receipts claimed, are actually receipts by RTGS/ Cheques. Another important point which requires due consideration is that entries are passed for receipts as Journal Entries instead of passing the same under the head "Receipts". It must be noted that as per the standard accounting principles, amounts received are to be recorded under the Voucher Type "Receipts". c) It is hereby informed, that the entries mentioned on the credit side in the Incriminating Material have already been recorded as receipts in the bank account by HJM Fuels Pvt Ltd as per the contra confirmation ledger account submitted before your goodself. It must therefore be noted....
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....ted upon due to the reasons mentioned above. The incriminating material contains the details of certain transactions upto 14.09.2016 whereas as per the ledger account of HJM Fuels Pvt Ltd already submitted by the assessee, transactions of purchases made by the assessee and payments made for the same, have been carried out for the entire year. Contra Confirmation account of HJM Fuels Pvt Ltd has also been duly submitted by the assessee, which duly reflects the transactions undertaken from 1st April, 2016 to 31st March, 2017. The transactions claimed as cash receipts in the incriminating material ie the ledger account of the assessee, are actually receipts by Cheques/RTGS. Moreover, not all the transactions for payments made by the assessee upto 14.09.2016 are being found in the incriminating material. The payments made as per the incriminating material and which are claimed to be cash payments to the assessee are not backed by any concrete documentary evidence to establish the fact that cash has been actually paid to the assessee. It is quite clear that the ledger account as per the incriminating material seized, appears to be a fabricated account, wherein there appears an intention....
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.... ledger reflects the correct position of the transactions undertaken by the assessee with HJM Fuels Pvt Ltd during the F.Y 2016-17." 12. The assessment order, we find, does not deal with these factual contentions of the assessee raising questions on the credibility of the incriminating material with the Department. The Assessing Officer, in fact, we have noted, agrees with the assessee that all entries may not be cash entries and he notes that this fact has been revealed from the submissions made by the assessee before him during the assessment proceedings; but thereafter he still goes on to state that the seized material cannot be discarded totally. These findings of the Assessing Officer are at paragraph No.2.5 of his order as under:- "2.5 In this case the information made available to this office contains incriminating document in the form of "Training Module" which has entries of both cash and non cash transactions and further it is also observed that such ledger account contains both unaccounted and accounted transactions which is evident from the submission made by the assessee company and M/s. HJM Fuels Pvt Ltd as some of the entries appearing in the said impounded ledge....
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....of bills of purchases and the mode of purchases made, Copy of VAT returns of M/s HJM Fuels Pvt. Ltd reflecting the said sales to the assessee and the copy of the Form No.26AS of M/s HJM Fuels Pvt. Ltd. reflecting the said purchases on which the TCS was collected and the credits of the same were claimed by the assessee was filed. The assessee had also submitted the quantitative tally of the purchases made by it during the entire year substantiated with Purchase Bills and Register and the sales made by it during the year substantiated by the Sales Register. Thus, in effect, on merits, the assessee had duly established the genuineness of the transactions of purchases undertaken by it with M/s. HJM Fuels Pvt. Ltd. The Assessing Officer has admitted to the said fact in his order and has been unable to point out any infirmity in the same. (ii) The Director of M/s. HJM Fuels Pvt. Ltd. had submitted by way of affidavit of having entered into the transactions of sale of coal to the assessee, which has also been admitted by the Assessing Officer and no infirmity in the said affidavit pointed out by the Assessing Officer. (iii) The assessee had pointed out discrepancy in the incriminating....