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TMI Blog2015 (6) TMI 763X X X X Extracts X X X X X X X X Extracts X X X X ..... erred in deleting the addition of Rs. 1,39,70,618/-, on the ground that the trading results and sales were not disturbed by the AO. 4. That the Ld. CIT(A) has erred in deleting the addition of Rs. 1,39,70,618/-, on the grounds that the material in the possession of the AO was neither supplied to the assessee nor was he confronted with the information. It is a fact that during the course of assessment proceedings point wise/question wise reply was submitted by the assessee on the material in the possession of the AO. 5. That the Ld. CIT(A) has erred in deleting the addition of Rs. 1,39,70,618/-, on the basis of dictum that When the sales have been accepted, purchases have to be accepted also. 6. That the Ld. CIT(A) has erred in deleting the addition of Rs. 1,39,70,618/-, even when he himself has accepted that the possibility of appellant buying material from the parties other than M/s Riddhi Siddhi Enterprises cannot be ruled out. 7. That the Ld. CIT(A) has erred in holding that AO has not disturbed the trading results as disclosed by the assessee, ignoring the fact that the defects exposed and addition made do constitute disturbing the trading results. 8. Therefore, the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ress, however the confirmed copies of account from those parties were furnished. The AO observed that the assessee made purchases from M/s Riddhi Siddhi Enterprises whose proprietor gave a statement on oath u/s 131(1) of the Income Tax Act, 1961 (hereinafter referred to as the Act) showing his ignorance about sales and purchases in the name of M/s Riddhi Siddhi Enterprises and stated that he has given entries to various traders for earning commission for the same. The AO also pointed out that information was obtained from the office of Assistant Commissioner Commercial Tax, Ghaziabad who had informed that registration of M/s Riddhi Siddhi Enterprises has been cancelled, the purchases of M/s Riddhi Siddhi Enterprises were from non-existant/bogus firms and that the sales made by this concern should also be considered as bogus. The AO asked the assessee to substantiate and prove the genuineness of the transactions with M/s Riddhi Siddhi Enterprises. In response the assessee submitted as under: "That in this respect, we contradict your version regarding bogus purchase & sales by the assessee as per arguments given below: (a) That as per your copies supplied from Trade Tax department ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... hile we have in actually goods sold to various parties which can be verified from our Balance Sheet or as per list of sundry debtors filed with you or even from Trade Tax Department. (i) That as per details for purchase from M/s Riddhi Siddhi Enterprises and details of payment made to him date wise it is clear that all the purchase or sales were from 2nd August 2008 to 26 February 2009. There were purchase 12 times and payment were also made on different dates after which no credit balance was with assessee on 31.03.2009 so it cannot be estimated that total purchase and payment were bogus or at one time. (j) That all the purchase from the said party or from other parties and sales to different parties were genuine and actual which has been declared before the Trade Tax Authority and required tax has also been deposited with Trade Tax Department. (k) That it is also requested that if any action is taken that should be taken against the proprietor of M/s Riddhi Siddhi Enterprises or his agent Mr. Ravi, moreover you have not tried to confirm his statement and searching his agent Mr. Ravi while Mr. Ravi as stated by Shri Surendra Kumar Sharma could not be as ascertained then how ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rtainly not the case of assessing officer that what is stated by Sh. Surendra Kumar Sharma alone is absolutely correct and consequently, it cannot be used in the case of the appellant till it is established beyond doubt that what is stated by him is true and correct. Whatever findings is recorded in the trade tax case of Sh. Surendra Kumar Sharma, it is simply a reflection of his system of working, presentations and conduct which cannot be generalized and imported to the case of the appellant. The finding in the case of Riddhi Siddhi Enterprises is made considering his specific circumstances and condition of accounts produced. The finding and/or the observation made in the case of Sh. Surendra Kumar Sharma proprietor M/s Riddhi Siddhi Enterprises cannot be made basis to reject the accounted version of the appellant till an opportunity to cross examine Shri Surendra Kumar Sharma in regard to his statement is provided to appellant. It is accordingly to be seen, even when the observation of the assessing officer is considered to be correct, where from the stock is received by the appellant for onward sales as recorded in the books of account. The assessing officer has not rejected ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ned on purchase of material from M/s Riddhi Siddhi Enterprises, it is stated that even the observation of the assessing officer in regard to the purchases made from M/s Riddhi Siddhi Enterprises itself are based on wrong appreciation of facts and content of the statement of Sh. Surendra Kumar Sharma recorded under oath at the time of the hearing of the case. If the reply given by Sh. Surendra Kumar Sharma to the questions asked by the assessing officer is carefully examined, it would be seen that Sh. Surendra Kumar Sharma has no where admitted that he is involved in providing accommodation bills to the parties and/or specifically to the appellant firm so to term the purchases made by the appellant as bogus." 10. The assessee made a reference to the statement of Sh. Surendra Kumar Sharma which has been reproduced by the ld. CIT(A) in the impugned order for the cost of repetition, the same is not reproduced herein. 11. The assessee also submitted as under: "From the answer given by Sh. Surendra Kumar Sharma to question number 18 above, it would be seen that the so called Mr. Ravi had shown the godown to Sh. Surendra Kumar Sharma where the steel was stored. It goes to prove that M/ ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... - being the total purchase price of the material is illegal and bad in the eyes of the law. The addition made by the assessing officer is unjustified and without proper material on record. The purchase rate and sale rate of iron and steel purchased from Riddhi Siddhi Enterprises and also from other parties. It would be seen that the purchases from all the parties are at par irrespective of the fact that there are fluctuations in the prices over the period. The appellant has not earned any extra profit on the purchases made. The ledger copy of M/s Riddhi Siddhi Enterprises from the books of the appellant is enclosed to prove that all the purchase transactions have taken place through banking channels only. That the assessee has also enclosed the photocopy and ledger copy of various bank account maintained by the assessee which clearly prove that there are no cash deposits in the bank of the appellant and thus it is wrong to alleged that the cash withdrawn by M/s Riddhi Siddhi Enterprises found its way back to the coffers of the appellant. In view of the submissions made above the addition has been made without sufficient material on record and thus the same deserves to be de ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... d not conclusively establish that the assessee did not make any purchase. The ld. CIT(A) observed that sales had been accepted and the AO had not expressed any doubt over the sales made by the assessee and that the copy of the Trade Tax Order filed by the assessee for the year under consideration revealed that the purchases made by the assessee from M/s Riddhi Siddhi Enterprises had been accepted by the Trade Tax Department. The ld. CIT(A) further observed that looking to the facts and surrounding circumstances of the case the possibility of buying the said material from the parties other than M/s Riddhi Siddhi Enterprises could not be completely ruled out specially in the background of the fact that no doubt was expressed by the assessee on the quantum of the material sold. The ld. CIT(A) was of the view that the material might have been purchased by the assessee from the parties other than Riddhi Siddhi Enterprises probably to save some local taxes etc. and at best could be treated as unverifiable purchases inviting some better margin of profit. The ld. CIT(A) held that the AO was not justified to make the addition of the entire cost of material to the income of the assessee that ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... by the AO and when the sales and the gross profit rate were accepted there was no reason to doubt the purchases. Therefore, the ld. CIT(A) was fully justified in deleting the arbitrary addition made by the AO. As regards to the addition sustained by the ld. CIT(A), the ld. Counsel for the assessee submitted that the purchases of Rs. 1,39,70,618/- were included in the total purchases of the assessee and on the basis of+ those purchases only, the sales were made on which the assessee declared the gross profit which was progressive in comparison the earlier year so, there was no occasion to make the impugned addition. He accordingly prayed to delete the addition sustained by the ld. CIT(A). 16. We have considered the submissions of both the parties and carefully gone through the material available on the record. In the present case, it appears that the AO made the addition merely on the basis of statement of one Sh. Surendra Kumar Sharma, Proprietor of M/s Riddhi Siddhi Enterprises which was later on retracted and it was stated that he was not indulged in providing the entries to the assessee or to any other person. The AO did not provide any opportunity to the assessee to cross exam ..... X X X X Extracts X X X X X X X X Extracts X X X X
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