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2015 (4) TMI 708 - ITAT AHMEDABAD

2015 (4) TMI 708 - ITAT AHMEDABAD - TMI - Verification of expenditure - Parties not available for verification does not means purchases are bogus - AO failed to prove non genuineness of purchases - Held that:- The DR merely relied on the order of the Assessing Officer. He could not point out any specific mistake in the above quoted order of the Commissioner of Income-tax (Appeals). In absence of the same, we do not find any good and justifiable reason to interfere with the order of the Commissio .....

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he revenue. - ITA. No. 2214/Ahd/2011 - Dated:- 13-3-2015 - Shri Shailendra Kumar Yadav And Shri N. S. Saini JJ. For the Appellant : Shri M. K. Singh, Sr.D.R. For the Respondent : Shri S. N. Divetia, A.R. ORDER Per Shailendra Kumar Yadav, J.M: This appeal has been filed by Revenue against the order of Commissioner of Income Tax (Appeals)-VIII, Ahmedabad, dated 04.07.2011 for A.Y. 2008-09 on the following grounds. 1. The Ld.CIT(A) has erred in law and on facts in deleting addition of ₹ 95,01 .....

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ed addition by observing detailed reasoning, reproduced in para 4.1 of CIT(A) s order. 2.1 Matter was carried before the First Appellate Authority, wherein various contentions were raised on behalf of assessee and having considered the same CIT(A) has granted relief to the assessee by following CIT(A) s order for A.Y. 2007-08. Thus deleted the addition. 2.2 Before us, learned Authorized Representative pointed out that Tribunal in A.Y. 2007-08 has decided the similar issue in favour of assessee. .....

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bank statement of the suppliers was of the cheques paid by the assessee which were immediately withdrawn by them on the very same day. On these facts, the Assessing Officer held that the entire purchases of ₹ 58,69,299/- as bogus. 8. On appeal, the CIT(A) deleted the addition by observing as under:- 3.3 I have carefully considered the assessment order, findings of the A.O. as well as the submissions of the appellant and other material available on record. During the course of assessment pr .....

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he A.O. The A.O. was not satisfied with the explanation offered by the suppliers and therefore, he treated the purchase of grey cloth as bogus and added ₹ 58,69,299/- to the total income. 3.3.1 On the other hand, the Ld. A.R on behalf of the appellant strongly objected the addition. He submitted that the Appellant is a Pvt Ltd. Company engaged in the business of trading and exporting of cotton and other items. The appellant had filed its return for A.Y. 2007-08 on 05/10/2007 declaring tota .....

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f large quantity of cotton, requires grey cloth for packing of the export material as per the specific requirement of the foreign buyers as well as general terms and conditions of export marketing. He further submitted that occasionally the appellant sales grey cloth ( Packing material) if not immediately required for packing of export goods. The appellant has purchased grey cloth of ₹ 5869299/- during the year under consideration. There was no opening stock of impugned grey cloth ( packin .....

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₹ 2926024/- (1250310 + 1675714) already shown in the credit/income side of the audited P & L A/cs for the F.Y. 2006-07 has been wrongly added by the A.O in the income of the appellant. 3.3.3. The Ld. A.R. further submitted that the appellant has consumed net grey cloth of ₹ 29,43,275 as packing material for affecting export sale of ₹ 181.57 Crs. The grey cloth consumed in F.Y. 2006-07 is merely 0.16% of total export sales which is very reasonable and justifiable as compare .....

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o the appellant company, i.e. M/s Komal Amin Exports Pvt ltd. The appellant has also submitted the confirmation, contra Accounts along with bank statement of all the grey cloth suppliers to the A.O. All the payments to the impugned suppliers of grey cloth have been made by A/c Payee cheques only. The Ld. A.R further submitted that the A.O. has neither examined the grey suppliers nor recorded any statements of those. He has arbitrarily made addition of grey cloth purchases (packing material) of & .....

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consideration and which is clearly reflected in Schedule-M of audited annual accounts. The grey cloth sale of ₹ 1250310/- is further reflected in quantitative details at SL No. 15(b) in notes on accounts. As such the addition of ₹ 2926074/-( 1675714 =1250310) - which is already declared in the income side of the audited P & L A/c, for the relevant F.Y 2006-07, the addition made by A.O. falls in the category of double taxation and therefore deserves to be deleted. 3.3.5 The remai .....

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s from whom the grey cloth has been purchased alongwith copy of bank statement wherein even the name of the supplier has been stated in respect of the payments made. The observation of the A.O. that the bank statement of M/s M M Traders shows immediate withdrawal of cash after depositing the cheque does not automatically lead the conclusion that the said purchases are bogus. The assessee has discharged its onus by submitting the required details to the A.O. Therefore, the burden is shifted upon .....

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ve telly of the impugned grey cloth. 3.3.7 I have carefully gone through all the details available on record, copy of purchase bills of the grey cloth, copies of the contra a/cs in the books of the suppliers as well as in the books of the appellant and the a/c payee cheque payment made by the assessee company to the said suppliers. As stated in earlier paras, the appellant has supplied the complete telly of grey cloth in terms of purchases, sales, closing stock as well as its consumption as pack .....

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all the facts an record and I am unable to accept the view points of the A.O. that merely because there is cash withdrawal in the bank account of one supplier M/s M.M. Traders, after the assessee company made payments to it by A/c Payee cheques, the entire purchase of grey cloth appears to be bogus. The assessee discharged its full onus by giving full details of grey cloth and also produced the suppliers of grey cloth before A.O. who confirmed the grey cloth supply to the appellant. 3.3.8. It i .....

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he contention of the appellant. (i) The ITAT, Ahmedabad in the case of ITO Vs Sonal Construction Pvt Ltd, ITA No. 1838 & 1839/Ahd/2009 dated 21.01.2011 on the similar facts held as under:- On consideration of the above facts, we are of the view that no interference is called for in the order of CIT(A), the Ld. CIT(A) found that the rates of cement purchased from M/s Nirav Traders is almost same as compared to the purchase rate of other traders. The purchased bills were produced and all the p .....

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t in appeal before the CIT(A) who deleted the addition by observing as under:- "I have carefully considered the submission of the appellant and the documents furnished by him. I have also gone through the various judicial pronouncement referred to above. The mere fact that the appellant has not been able to produce the parties for verification cannot lead to the presumption that the purchases were bogus. Copies of the bills filed by the appellant shown that the material purchased was dully .....

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. Apparently no worthwhile inquiry was conducted by the A.O to establish the identity of persons who withdrew the cash, which could have been done by inquires from the bank officials/ the records of the bank like the discharged bearer cheques by which money could have been withdrawn. I am of the considered opinion that the A.O has not been able to prove the non genuineness of purchases and holding them to be bogus was without any justification and without bringing any cogent material on record . .....

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