2026 (3) TMI 369

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....rom these parties were examined and AO had sought following documents for examining the genuineness of receipt: i. ledger confirmation of the party along with the bank statement of the party highlighting payment thereof. ii. Financial statement of the party for the concerned AY. iii. ITR of the party for the concerned AY. iv. Source of source of payment. v. Copy of the contract/agreement executed with the abovementioned parties. 3. The assessee had filed reply and in regard to two parties i.e. Balaji Enterprises to the extent of Rs. 3,52,30,000/- and Maruti Enterprises to the extent of Rs. 2,65,00,000/- the Assessing Officer was not satisfied and observed as follows: "The reply of the assessee has been considered but it is untenable. The assessee has contended that the it has made the sale to the parties namely (Balaji enterprises: Rs. 3,52,30,000/- and Maruti enterprise :2,65,00,000). However, it is stated that the investigation wing has conducted the detailed enquiry with respect to the abovementioned parties and come to the conclusion that such concerns are sham parties and incorporated by Shri Vikas Agrawal for providing ....

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....ion. The appellant craves to be allowed to add any fresh ground(s) of appeal and or delete or amend any of the ground(s) of appeal." 5. At the time of hearing an additional ground was raised by ld. DR, that ld. CIT(A) has erred in admitting the additional evidence in violation of Rule 46A of the Income Tax Rules, by not giving an opportunity for filing comments and verification. 6. The ld. DR has vehemently argued that if the assessment order is seen it specifically mentions of the specific queries and documents called for and that assessee had not provided the relevant information and evidence. However, the ld. CIT(A) has taken into consideration the paper book filed by the assessee in First Appellate proceedings and without calling for the report and comments of the Assessing Officer has considered the evidences to give findings in favour of the assessee. 7. In order to appreciate these contentions of ld. DR we reproduce here para 10 to 12 of the order of ld. CIT(A) wherein the ground with regard to addition of Rs. 5,49,00,000/- u/s 68 of the Act has been dealt with including the observation of ld. CIT(A) with regard to evidences placed by the assessee in the pa....

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....rties, Stock Register and sales register etc. which have been filed in order to establish the genuineness of the sales made by the appellant, I find that the appellant has discharged its onus as envisaged u/s 68 of the Act. It is seen that none of the evidences submitted by the appellant is controverted by bringing in any contrary evidence and there is no discussion even in the assessment order about the evidence submitted by the appellant. Furthermore, since the sales made to these parties have been recorded by the appellant, and books of accounts of the appellant have also not been rejected by the AO, I do not find any reason to sustain the said addition of the amount received by the appellant company through banking channel during the demonetization period from these parties amounting to Rs. 5,49,00,000/- which have been treated by the AO as accommodation entries. The AO has doubted the sales made by the appellant to these parties, though all purchases made by the appellant are through import of goods on which custom duty has also been paid by the appellant company. These sales made by the appellant are duly recorded in its books of accounts and are the part of the turnover of t....

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....f our purchase and sale have been submitted before your good-self. 9. After considering the aforesaid we are of the considered view the ld. DR has stretched too far the invocation of Rule 46A for admitting additional evidences as the Assessing Officer observation seems to be factually incorrect and ld. CIT(A) has taken into consideration only the same set off evidences which was part of reply of the assessee and no new information/document has been relied by ld. CIT(A). Thus, additional ground raised has no substance. 10. At the same time on merits of the addition we find that assessee had submitted voluminous documentary evidences including goods purchased receipt of the concern parties but without pointing out any inconsistency discrepancy or suspicion in documents as sacrosanct like VAT returns, stock registers, audit books of account on conjectures alone, purchases have been doubted while assessee's turnover of Rs. 11,64,308/- from its trading operations in the business of trade and export dry fruits spices and other exotic kirana goods have not been doubted. 11. As with regard to the additions made on account of cash deposits the findings of ld. CIT(A) are reprodu....