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2013 (9) TMI 370 - AT - Income TaxBogus Purchases - Business of Supplying Fabrics OR Not – Maintaining Stock Register - Weather the CIT (A) had erred in deleting the addition made by AO on account of bogus purchases by ignoring details and if the purchases were genuine when the suppliers, who had supposedly sold the material had confessed to the fact that they were not in the business of supplying fabrics - and was it correct in basing his findings on stock statements submitted by the assessee when the assessee did not maintain quantitative stock register and had been unable to link purchases with corresponding production and sale - Held that:- Additions have been solely based on the statement of few parties - Two parties had filed affidavit making the averments that the statements obtained from them were obtained under duress - Furthermore, statement of Sh. Rakesh Gupta was obtained behind the back of the assessee - Assessee was never given an opportunity to cross examine him, despite requests - profit disclosed by the assessee were comparable profits and there was no evidence to establish the bills represented bogus bills - The assessee had also furnished bill wise, details of fabric and its utilization in manufacturing garments alongwith the corresponding invoices issued and money realized subsequently from the purchasers in the bank account of the assessee - CIT (A) had given a reasonable order touching upon all the aspects raised by the Assessing Officer - There was no infirmity in the order of the Ld. Commissioner of Income Tax (A). As regards the statement of Sh. Rakesh Gupta was concerned, it emanates that assessee has wanted an opportunity to cross examine - But that opportunity was not given by the Assessing Officer - Hence, statement of Sh. Rakesh Gupta cannot be the sole basis of addition - As regards the statement of Sh. Rajeev Gupta and Sh. Parmesh Kumar Garg was concerned, when assessee was confronted the assessee immediately filed affidavits of both the persons wherein they have clearly stated that the statements were recorded under duress and undue pressure - Hence, the same cannot be the basis of treating the purchase as bogus - It is further noted that Sh. Sat Narayan Gupta, the proprietor of M/s Chaavi Trading Company and Sat Narayan & Sons (HUF) had not given any statement - Hence, purchases from these companies cannot be treated as bogus. Applicability of Precedents – Whether the Commissioner of Income Tax (A) was correct in holding that the assessee’s case was not covered by the ratio of the judgement of Hon’ble Supreme Court in the case of Sumati Dayal vs. C.I.T. [1995 (3) TMI 3 - SUPREME Court] - The assessing officer relied on the case of Sumati Dayal v Commissioner of Income tax [1995 (3) TMI 3 - SUPREME Court] -mentioned that if all, the surrounding circumstances indicated that the apparent was not real, the ratio of Hon'ble Supreme Court would apply - Decided against Revenue.
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