TaxTMI 
TaxTMI 
2025 (3) TMI 146
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....2019 ACIT, Central Circle-14, New Delhi, date: 31.12..2016 143(3) 8555/Del/2019 2014-15 - Do - Do- - Do - - Do - 2. Heard and perused the record. The relevant facts of the case are as that a search and seizure operation was carried out on the Rama Group of Companies on February 28, 2014. The case of assessee was also part of these search assessments. Some additions made by the ld. AO stand deleted by ld.CIT(A) and some confirmed for which assessee and revenue both are in appeal raising following grounds:- 2.1 The grounds raised by the Revenue in ITA No. 8555/Del/2019:- "1. That the Ld. CIT(A) has erred in facts and in law in only confirming 10% of the total additions made by the AO on account of bogus purchases without any basis and deleting 90% of the additions made on account of total bogus purchases of Rs. 36,55,931/-. 2. That the Ld. CIT(A) has erred in facts and in law in confirming only 10% of the total additions made on account of bogus purchases and completely ignoring the fact that proprietor of M/s. Raghuveer Singh Devendra Kumar has confirmed in his statement on oath that he was providing only bogus bills to the assessee compa....
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....ized from the assessee and accordingly, the entire addition on account of unreconciled turnover should have been confirmed and not only the GP addition. 11. That the Ld. CIT(A) has erred in facts and in law in deleting the additions of Rs. 19,83,94,520/- made by the AO on account of un-reconciled turnover based on the data seized during the search and seizure operation. 12. a. The order of the CIT (Appeals) is erroneous and not tenable in law and on facts. b. The appellant craves leave to add, alter or amend any / all of the grounds of appeal before or during the course of hearing of the appeal." 2.2 The grounds taken by the assessee in ITA No.7773/Del/2019:- "1. That having regard to the facts and circumstances of the case, Ld. CIT(A) has erred in law and on facts in sustaining the addition of Rs. 3,65,593/- (i.e. 10% of Rs. 36,55,931/-) made by Ld. AO on account of alleged bogus purchases made from M/s Raghuveer Singh Devender Kumar, more so when no incriminating material has been found as a result of search and impugned addition has been made by recording incorrect facts and findings and without granting opportunity of cross examination of ....
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.... 9. That the appellant craves the leave to add, modify, amend or delete any of the grounds of appeal at the time of hearing and all the above grounds are without prejudice to each other." 3. On hearing, we find that Ld. DR has relied the order of ld. AO while ld. AR has relied the order of ld. CIT(A). Thus based on their rival stands we proceed to decide the grounds as follows. 4. Ground No. 1 -5 of Departmental Appeal and Ground No. l-2 of assessee's appeal: These grounds relate to the addition of Rs. 36,55,931/- made by Ld. AO on account of alleged bogus purchase of Maida and Choker (wheat bran) from the concern of Sh. Devinder Kumar, namely, M/s Raghuveer Singh Devinder Kumar but restricted by Ld. CIT(A) to 10% i.e. Rs. 3,65,593/-. The relevant background and claim of assessee is that the assessee is in the business of manufacturing flour and rice in which maida and Choker (wheat bran) being a necessary ingredients were purchased by the assessee from vendors including one, M/s Raghuveer Singh Devinder Kumar proprietorship concerns of Sh. Devinder Kumar. Ld. AR has relied the PB page 5, which is the tax audit report which mentions the nature of business as manufacturing....
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....g transport receipt issued by the transporter for transport of such good. These invoice shows the quantity of goods purchased, nature and particulars of good purchased, its weight, rate per unit, total amount. It further shows the truck/wagon no. in which such good is transported to the assessee. It further shows the complete detail of M/s Raghuvir Singh Devindra Kumar such as contact no., complete address. Its corresponding transport receipt shows the name of consignor i.e., M/s Raghuvir Singh Devindra Kumar, name of consignee i.e., assessee company, further details such as goods are transported from Delhi to Bulandshahr, vehicle no. in which goods are being transported, quantity of consignment, its content, weight, freight charged etc. It also shows the contact no. and complete address of the transporter. Ld. AR has referred to PB page 56- 58 is the copy of bank statement of assessee-company showing that the entire payment has been made through proper banking channel on various dates to M/s Raghuvir Singh Devindra Kumar for the said purchases. PB 71-77 & PB 78-82 is the copy of sales tax assessment order and appeal order of the assessee-company for the impugned year where the con....
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....levant and necessary evidences to the ld. AO to establish genuineness of the purchases. However, with out commenting anything on same and unable to point any deficiency in these documentary evidences the ld. AO has relied oral statements. Further these observation of Ld. AO are based upon the statements recorded by Ld. AO behind the back of assessee and were not confronted to assessee during the course of assessment proceedings and thus, any observations based on such statements could have been relied upon. 10. Then Ld. CIT(A) has highlighted the observation of Ld. AO in his remand report that Sh. Mohan Lal Gupta in his statement has mentioned certain facts which are contradictory. Thus Ld. CIT(A) has casted a doubt over reliability and credibility of the statement of Sh. Mohan Lal Gupta and concluded that appellant has indeed undertaken some manipulation in terms of prices. However, this observation of Ld. CIT(A) is without establishing as to what was transaction under taken with Sh. Mohan Lal Gupta in the impugned year. We find that with very general observations the ld. Tax authorities have proceeded to doubt the purchases. 11. Next Ld. CIT(A) in point (ix) at page 66 of t....
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....us therefore addition of profit embedded in such purchases cannot be sustained. 14. Ground No. 7-10 of departmental grounds and 5 of assessee's appeal: This ground relate to an addition of Rs. 8,92,482/- and Rs. 7,14,123/- made by Ld. AO on the basis of seized tally data seized by team RU 1 marked as annexure A-35 relating to M/s Hygienic Purchase A/c and M/s Rama Hygienic Store by alleging the same to be data of sale made by assessee outside the books. However, the same is restricted by Ld. CIT(A) to Rs. 57,356 [(Rs. 8,92,482/- + Rs. 7,14,123/-) x 0.357%] 15. At PB page 84-86 is the copy of the said document which shows that this document does not even bears the name of the appellant i.e., M/s Rama Hygienic Products Pvt. Ltd. Moreover, perusal of this document would show that the nomenclature of this documents is "Sales Register" whereas documents is named as "Hygienic Purchase A/c". This ambiguity establishes that this document neither pertains to assessee nor shows any out of book sales of assessee. Furthermore, PB page 247, 254 is the copy of Panchanama which would show that team RU-1 seized Annexure A-39 from the address "Syana Road Bulandshahar (UP), (adjacent to Moh....
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....s drawn with the closing stock as per books as on 31.01.2014 and therefore, such comparison would not give accurate result and cannot be relied upon in any manner. Moreover, no basis of the valuation or the estimates taken to value the stock has been provided to the assessee. 19. In this context we find that at PB page 88-89 is the copy of profit and loss a/c of assessee for the period 01.04.2013 to 31.01.2014 which shows that assessee has shown closing stock in the books as on 31.01.2014 at Rs. 4,15,79,778/- and thus the comparison drawn by Ld. AO on 28.02.2014 could not be taken into consideration. Even otherwise without any basis, evidence or material the valuation was arrived and same deserves to be deleted. 20. Ground 11 of departmental appeal: This ground relates to an addition of Rs. 19,83,94,250/- made by Ld. AO allegedly on the ground that a documents found and seized by search party RU-1 and marked as annexure A-39 shows the sales made by assessee of Rs. 24,26,94,374/- however, assessee failed to reconcile the same to the tune of Rs. 19,83,94,520/-. Now as a matter of fact the entire addition has been deleted by Ld. CIT(A) on the ground that Mr. Sanjeev Kumar, owner....