TMI Blog2013 (4) TMI 466X X X X Extracts X X X X X X X X Extracts X X X X ..... the ostensible owner. Since no enquiry/investigation has been carried out into the existence of ostensible owner the reliance of the AO merely on the statement of Rohit Panwala is vitiated. As relying on Suman Silk Mills Pvt . Ltd. (2013 (4) TMI 465 - ITAT AHMEDABAD) the entire case of the Revenue revolves around the statement of Rohit Panwala. Since no cross examination of Rohit Panwala is allowed to the assessee then his statement recorded at the back of the assessee cannot be read in evidence against him. In this regard as decided in Kishinchand Chelaram vs. CIT (1980 (9) TMI 3 - SUPREME Court)wherein it is held that opportunity to controvert should be given to the assessee. Then there is no reason to make any addition in the case of the present assessee solely on the ground of statement of Rohit Panwala - appeal of the assessee is allowed. Commission paid on bogus purchase - CIT(A) deleted the addition made by AO - Held that:- DR did not place any material in support of their ground - Against revenue. - ITA no.2994/Ahd/2008, ITA no.3134/Ahd/2008 - - - Dated:- 17-6-2011 - Shri Bhavnesh Saini,JM And Shri A. N. Pahuja,AM,JJ. For the Petitioner : Shri B. L. Yadav, D ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Rohit Panwala Shree Sai Textile 9/1866, Begumpura, Mumbaiwad, Surat 3 Sandhyaben Panwala Abhi Dyes 307,Avishkar Apartment , Adajan, Surat 4 Sandhyaben Panwala Sandhya Trading Co. F/8, Somnath Mahadev Society, Athwalines, Surat 5 Bahumati Shree Tapi Trading Co. 10/1494 Mot ipole, Gopiura, Surat 6 Bahumati Sahyadri Textiles -do- 7 Bahumati Shree Mahaprabhuji Textiles F/8, Somnath Mahadev Society, Athwalines, Surat 8 Nehaben Shreeji Textiles 10/1494 Mot ipole, Gopipura, Surat 9 Nehaben Neha Synthetics F/8, Somnath Mahadev Society, Athwalines, Surat 10 Pinaben Shree Nath Textiles 10/1494 Motipole, Gopiura, Surat 11 Pineben Punita Corporation F/8, Somnath Mahadev Society, Athwal ines, Surat 12 Madhusudan H Tanna Nalanda Corporation F/8, Somnath Mahadev Society, Athwalines, Surat Shri Rohit Panwala admit ted in his statement that he did not maintain any books of account for these concern ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... sue bills with the name of the parties, they would tell and collect the cheques. Then, he would issue a slip to the parties and the cheque would be deposited into bank account. Later he would return the cash through the parties who would come with slip. The cash was handed over after deducting a commission of 0.25%. Mr. admitted that he had no knowledge about chemicals. With regard to 26 bills issued to the assessee company, Shri Rohit Panwala stoutly stated that he never supplied chemicals/colour. Neither he knew any of the director nor any employees of the assessee company. In his cross examination, to a query by Shri S.K.Kabra C.A. A.R. of the assessee company, as to whether any director of company came to him for bill; Shri Panwala replied that he did not know anybody from Rajlaxmi Prints Pvt. Ltd. and whoever come to him for bills, supplied him with details of colour and chemicals. Regarding return of cash, Shri Panwala replied that he paid the cash to the person who came to him with slip. However, the AO did not accept the aforesaid submissions of the assessee and disallowed the aforesaid amount of Rs.44,56,914/- on the ground that the seller admitted that his dummy concern ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... hich is duly stamped and signed by the security officials at the Mill's gate indicating that the goods were actually received. It is highly unlikely that the lowly security officers would be in collusion with the appellant in making false entries in the register because otherwise the appellant would loose total control of inward and outward movement of goods from the factory and the very purpose of having security officers at the factory gate would be defeated. This means that despite Shri Rohit Panwala, who was controlling the four allegedly bogus firm, having denied making any sales to the appellant firm, purchases have been made by the appellant as evidenced by the inward entry stamps on the bills. Now it is a common practice that the purchases, although made, are not from the established concerns but from agents of suppliers and small trade merchants. Obviously, the purpose is to cut down in the cost of such purchases by getting the supplies at a lower rate than mentioned only in the bills and saving on various taxes like Octroi, sales tax, excise and certain other expenses. Since I am of the considered view that the said chemicals and colours were received and used by the appe ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... AHD/2006 ,deleted the addition, holding as under: 18 The learned AR of the assessee submitted that Shri Rohit Panwala in the search conducted on him admitted of having issued bogus / accommodation bills in the names of various parties which included the parties from whom the assessee had shown the purchases. He submitted that the learned CIT(A) was not justified in confirming the order of the A O merely on the ground that the assessee has not asked for cross examination of Shri Rohit Panwalla. He submitted that since the assessee had made payment by account payee cheque against the purchases of goods the addition by treating the purchases as bogus was not justified. 19. The learned DR on the other hand relied on the orders of the lower authorities. 20. Having heard the rival submissions and perused the orders of the lower authorities and the materials available on record we find that a search operation was carried out on Shri Rohit Panwalla and his associates and other proceedings were also taken against them wherein Shri Rohit Panwalla stated that he used to provide accommodation/fake bills at the request of the parties. On the basis of this, the A O has treated the purchas ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nd returning cash to them and on that basis assessment of the assessee is reopened under section 147 then it was necessary for the AO to offer Shri Rohit Panwala for cross-examination by the assessee. Since Rohit Panwala is the witness of the Revenue the onus lies on the Revenue to enforce his attendance and allow the assessee to cross-examine him. Merely issuing summons by the AO to Rohit Panwala is not enough to discharge the onus which has to be ensured that Rohit Panwala attends his office and assessee attends his office and he is offered for cross examination by the assessee. The entire case of the Revenue revolves around the statement of Rohit Panwala. Since no cross examination of Rohit Panwala is allowed to the assessee then his statement recorded at the back of the assessee cannot be read in evidence against him. In this regard we refer to the decision of Hon. Supreme Court in the case of Kishinchand Chelaram vs. CIT (1980) 125 ITR 713 (SC) wherein it is held that opportunity to controvert should be given to the assessee. In this regard we refer to the following head notes from that decision :- It was true that proceedings under the income-tax law were not governed by t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... o its detriment. 14. In CIT vs. C.F. Johnson (1996) 229 ITR 750 (Ker) one lessee had given an affidavit that he paid Rs.10 lacs of unaccounted money to the lessor and was offered for assessment. The AO had sought to assess this sum in the hands of lessor without giving him an opportunity to cross examine the lessee. Hon. Kerala High Court held that such addition cannot be made as lessee was not put to cross-examination by the assessee. Hon. Kerala High Court held as under :- Held,_ that (i) Whether, in view of the sworn statement of the lessee that he paid Rs.10 lakhs to the assessee (lessor), the Tribunal was right in holding that there was no material on record to show that the assessee had received Rs. 10 lakhs; (ii) Whether the Tribunal was right in not including the sum of Rs.10 lakhs in the hands of the assessee on the ground that the lessee was not put to cross examination by the assessee; (iii) Whether the Tribunal was right in not remitting the case to the assessing authority to complete the assessment afresh after giving the assessee an opportunity to cross examine the lessee; and (iv) Whether, as possession was admittedly handed over and in view of section 2(47)(v) ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... case cannot be applied without comparing the facts of the two cases. In Vijay Proteins case there were cash purchases and parties were not traceable whereas in the present case purchases were made through account payee cheques and there is no evidence that cash was in fact returned to the assessee. Further those parties are existing and they have not been summoned or examined. In other cases this Tribunal has distinguished the decision in Vijay Proteins case as under :- In this regard we refer to the decision of the Tribunal in ITA No.558/Ahd/2008 Asst. Year 2003-04 in the case of Shri Mohmed Akhtar Abdullah Chakkiwala vs. ACIT and others, pronounced on 29.10.10 wherein the ratio of the decision of the Tribunal in Ltd. (supra) was distinguished as under :- Further the decision of the Tribunal in Vijay Proteins (supra) should have been considered in proper perspective. It should not be applied in a routine manner. Only in those cases where payments for purchases are made in cash and purchasers are not traceable then certain percentage of such purchases can be disallowed. However, where payments are made by account payee cheques then the decision in Vijay Proteins (supra) may ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... lability of seller is not sacrosanct idea to hold that purchases are bogus. Assessment proceedings are undertaken after a year or two of the transaction and no assessee can take guarantee that seller would be available at the given address. Once payments are made through account payee cheques it was required to enquire into as to whom the payments had finally gone, who is in control of that bank account, whether money was withdrawn immediately and whether assessee was the beneficiary of such withdrawal; what are the goods assessee has purchased, whether they are required in the business of the assessee and if yes, to what extent and whether such purchases are superfluous in the sense that either they could not be required in the business or they are highly inflated. Further if the party is not traceable and ownership of bank account is highly suspicious and can be traced to the assessee then under such circumstances entire purchases needed to be disallowed. Purchases from one party in one instalment cannot be partly genuine or partly bogus. Even otherwise for holding that it could be partly genuine and partly bogus, lot of material is required to be placed on record so as to show t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... deleting the addition. 22. In view of the foregoing discussions, we hold that no addition is legally sustainable in the present case. The appeal of Revenue is dismissed and that of the assessee is allowed. 5.3 In the light of consistent view taken in the aforecited decisions, especially when the Revenue have not brought to our notice any contrary decision nor placed before us any material so as to enable us to take a different view in the matter, we have no alternative but to al low the claim of the assessee in its entirety. Consequently, ground no. 1 in the appeal of the Revenue is dismissed while that in the appeal of the assessee is allowed. 6. As regards ground no.2 in the appeal of the Revenue, the ld. CIT(A) deleted the amount of Rs. 11,142/-, there being no evidence that this amount was paid by the assessee to Shri Panwala . Even before us, the ld. DR did not place any material in support of their ground. In the absence of any material ,we are not inclined to interfere. Therefore, ground no.2 in the appeal of the Revenue is also dismissed. 7. Ground nos. 3 and 4 in the appeal of the Revenue, being mere prayer nor any submissions having been made on these grounds, d ..... X X X X Extracts X X X X X X X X Extracts X X X X
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