TMI Blog2015 (7) TMI 564X X X X Extracts X X X X X X X X Extracts X X X X ..... ircumstances of the case, we are of the opinion that the addition in quesiton on account of bogus purchase is not sustainable and accordingly the same is deleted - Decided in favour of assessee. Addition on account of DEPB license - Held that:- In the facts and circumstances of the case when the assessee has clearly made out his case that the amounts recorded in the charts found during the survey was related to the DEPB licenses and the details show the items, amount and the license numbsers, therefore, in the absence of any material to prove the contrary, the evidence produced by the assessee is sufficient to prove the claim of the assessee. Accordingly in the facts and circumstances of the case, we are satisfied that the assessee has established its claim that the amount in question is representing the sale of DEPB licenses during the year. Accordingly the addition in question is deleted.- Decided in favour of assessee. Disallowance made u/s 40A(3) - Held that:- As per the details filed by the assessee prima facie it appears that each payment made is less than ₹ 20,000/-. Further the authorities below have not verified and examined this fact that whether this payment ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ks of Accounts - Held that:- We find substance in the arguments of the Ld. Authorized Representative that when these parties can be examined as all the parties are assessed to tax and having permanent account numbers (PAN) and further the assessee has settled these accounts in subsequent year by making payments or by way of supply of goods then this issue requires a proper consideration and examination. We further note that there is no cash credit in the books of the assessee but the balance are shown as outstanding payable by the assessee to the sundry creditors. Therefore, the addition made by the Assessing Officer on account of unexplained cash credit without giving the finding whether these entries are in the nature of cash credit or not. Accordingly, in the facts and circumstances of the case, we remand this issue to the Assessing Officer to consider all the facts and circumstances as well as re-payment and settlement of the accounts by the assessee in the subsequent years which has been accepted by the departmetn. Further whether there is a cash credit appearing in the ledger account of these parties or whether these are only outstanding balances to be paid by the assessee, t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... TA NO.5512/Mum/2012 - - - Dated:- 17-10-2014 - SHRI VIJAY PAL RAO AND SHRI NARENDRA KUMAR BILLAIYA, JJ. For The Assessee : Shri. V.K. Tulsian For The Revenue : Shri A.C. Tejpal ORDER Per Vijay Pal Rao, JM These three appeals by the assessee are directed against three separate orders of CIT(A) for A.Y. 2006-07, 2007-08 and 2008-09 respectively. For the A.Y. 2006-07, the assessee has raised followig concise grounds:- 1That whether the Ld. CIT(A) was justified in confirming assessment order without even affording proper opportunity or appreciating the submission/evidence of the appellant. 2. That whether the Ld. CIT(A) was justified in confirming assessment order confirming additions of ₹ 24,73,000784/- towards purchases from 11 parties as non - genuine even when :- a) There was no dispute in the quantitative figure of purchase and sale b) Non-providing any opportunity to cross - examine to the witness of the department. c)Not a single difference in stock records D) No dispute on the Audited Financial Statements e) Not an iota of evidence was found/impounded during survey either in the premises of the appellant's or in the pre ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 00,784/- as bogus purchases and added the same to the total income of the assessee. 3.2 Before the CIT(A), the assessee contended that the assessee was not given proper time and opportunity for filing the details and proofs and to cross examine these parties. The CIT(A) issued a remand order directing the Assessing Officer to grant an opportunity to the assessee to cross examine the four parties and then submit his report. The Assessing Officer submitted the remand report on 12.01.2011 and stated that summons issued to four parties for cross examination during the remand proceedings, were returned by the postal authorities with the remark Left/No such Persons and accordingly the assessee could not be allowed the opportunity for cross examination. After considering the remand report, the CIT(A) confirmed the addition made by Assessing Officer. 3.3 Before us, the Ld. Authorized Representative of the assessee has submitted that the total sale of the assessee comprising more than 92% from exports and the remaining 8% is domestic sale. The assessee is properly maintaining Books of Accounts which were duly audited as per the provisions of the Companies Act and Tax Audit. There we ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... furnished all the details and supporting evidence. He has referred the purchase bills, details of export as well as domestic sales, bank statement showing the payment made to the suppliers. All the requisite information and details were furnished before the Assessing Officer in respect of 45 parties as mentioned by the Assessing Officer at page no. 2 of the assessment order. When the Assessing Officer has accepted the sale, corresponding purchase cannot be dienied. In support of his contention he has relied upon the decision of Hon'ble Jurisdictional High Court in the case of Tamil Nadu Dairy Development Corporation Ltd (216 ITR 171) He has also relied upon the decision of Hon ble Gujarat High Court in the case of CIT Vs. BHOLANATH POLY FAB PVT LTD (355 ITR 290) and submitted that without granting an opportunity of cross examination, the statement recorded at the back of the assessee cannot be the basis of addition . The Ld. Authorized Representative has also pointed out that for the A.Y. 2005-06, the Assessing Officer has completed the assessment on 28.12.2007, subsequent to the survey took place on 31.03.2006 and accepted the purchases from these parties. Therefore, when the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... tatements recorded during the survey. He has also relied upon the orders of authorities below. 3.5 We have considered the rival submissions and relevant material on record. The Assessing Officer made the addition in question by treating the purchases of ₹ 24,73,00,784/- as bogus purchase, based on the four statements recroded during the survey proceedings u/s 133A. As per these four statements the parties have stated that they are under practice of giving accomodation entries and bills agains the cash after deducting the commissions cash is refunded to the parties. Accordingly, the addition in question is made by the Assessing Officer solely on the basis of these four statements recorded during the survey. The assessee demanded the opportunity for cross examination of these partes during the assessment proceedings which was denied by the Assessing Officer on the ground that it was not possible at the fag end of the assessment proceedings. On appeal, the CIT(A) issued a remand order with the direction to the Assessing Officer to grant an opportunity to the assessee to cross examine and then submit his report on the addition of purchases in para 6.4 as under: During the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ue as held by the Hon ble Madras High Court in the case of CIT Vs. Khader Khan (supra), which has been confirmed by the Hon'ble Supreme Court in ( 210 taxman 248). Further we note that the Assessing Officer has not disputed the sales of the assessee and out of the total sale, export sale constitutes 92%. Apart from the sales, the Assessing Officer has also not disputed the quantitative figures regarding opening stock, purchases and closing stock as well as sales. Therefore, when there was no dispute or discrepancy in the quantitative figure of purchase, stock, sales including closing stock then the purchases cannot be treated as bogus as the corresponding sale is accepted and also the purchases from the same parties were accepted by the Assessing Officer for the A.Y. 2005-06 completed on 28.12.2007 after survey on 31.03.2006. In the impugned order the CIT(A) without appreciating the fact that no opportunity was afforded to the assessee to cross examine despite direction and has heavily relied upon the remand report of the Assessing Officer which is not as per its direction. Therefore, in the absence of cross examination of these four parties the remand report cannot be treated ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ose papers. The assessee submitted that loose papers shows working for receipt of DEPB licenses for various group concerns of the assessee. The CIT(A) accordingly asked the Assessing Officer to verify all these facts and details and if these details are found correct, addition be deleted. 4.3 Before us, the Ld. Authorized Representative of the assessee has submitted that till date no order has been passed by the Assessing Officer as per the direction of the CIT(A). However, when the assessee has produced all the details of DEPB licenses which are in conformity witht the working done on these loose papers impounded during the survey, the CIT(A) ought to have deleted the addition insteading of remading the issue back to the Assessing Officer. He has referred the chart found during the survey at page no. 206 and 207 as well as the details of licenses sold during the year at page no. 208 to 220 and submitted that the assessee has explained the entire details and legal documents in respect of the DEPB licenses sold during the year and receipt of duty back from the custom authorities then it does not require any verification. 4.4 On the other hand, the Ld. DR had relied upon the or ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... and fully covered under the exceptional circumstances. The payments were made in cash was less than 20,000/- . The payment was not in dispute as the parties in their statements have accepted the cash payments, cheque payments and payments by way of transfer, therefore, when the genuineness of the payment is not doubted by the Assessing Officer then the cash payment of less than ₹ 20,000/- cannot be disallowed by invoking the provisions of section 40A(3). The Assessing Officer made the double addition in respect of these amounts as it was also the part of the bogus purchases added by the Assessing Officer. Further the disallowance of 3% made by the Assessing Officer in the A.Y. 2005-06 on account of cash purchase was deleted by the CIT(A) vide order dated 11.03.2010. Thus the Ld. Authorized Representative has submitted that the Assessing Officer should follow the rule of consistency on this point that when the cash purchases were accepted for the A.Y. 2005-06 by the revenue as the CIT(A) has deleted the disallowance made by the Assessing Officer then no addition can be made for the A.Y. under consideration. He has referred the details of the parties as well as the payments an ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... disallowance is not sustainable hence, deleted. 7. Ground no. 7 is regarding disallowance of interest u/s 234A, 234B 234C. 7.1 The levy of interest u/s 234A, 234B and 234C is mandatory and consequential and no separate finding in this regard is required. 8. For A.Y. 2007-08, the assessee has raised following grounds:- 1. On the facts and circumstances of the case the Id. CIT (A) has grossly erred in sustaining the legality and propriety of the impugned assessment in total disregard of the stand of the assessee that assessment taken up towards the close of the limitation has been hastily made by the AO without affording adequate opportunity to the assessee and violating the principles of natural justice. The impugned assessment is therefore illegal and deserves to be quashed. 2. The learned CIT (A), while endorsing the various additions in the trading account in the impugned assessment ,has regrettably ignored the callous and cavalier approach adopted by the AO in making a highly over pitched assessment on total income of ₹ 148.7 crores on the basis of surmises and conjectures when the total turnover shown and accepted by Revenue is ₹ 222.5 crores and the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he Id. CIT (A) in sustaining the impugned disallowance of ₹ 2,38,11,081/- as per ground no. 6 above is vitiated by serious contradiction in as much as a further addition of ₹ 5.00 lacs made by the A.O. under the head cash purchases relating to the same party namely Jupiter Overseas has been deleted by the CIT (A) for lack of any specific reason 8. The Id. CIT (A) has erred in failing to delete the levy of interest uls 234A, 234B and 234C. 9 Ground no. 1 to 3 are general in nature and does not required any specifying finding or adjudication. 10. Ground no. 4 is regarding disallowance of manufacturing expenses. 10.1 During the course of assessment proceedings, the Assessing Officer asked the assessee to furnish the separate trading accounts of trading goods as well as manufacturing goods. The assessee submitted that the assessee did not claim any export deduction and had not maintained separate books of accounts. The purchase and other expenses were booked commonly and sold from the common stock. The assessee shown manufacturing expenses to the tune of ₹ 54 crores. The Assessing Officer asked the assessee to furnish the monthly details of manufacturin ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ng Officer accepted the same. When the expenses were accepted by the Assessing Officer then the difference of the month of March due to the reasons explained by the assessee cannot be the basis for disallowance of manufacturing expenses. 10.3 On the other hand, the Ld. DR has relied upon the orders of authorities below and submitted that there is a huge discrepancy in the details of the expenses produced by the assessee for the month of March. 10.4 We have considered the rival submissions and relevant material on record. The disallowance has been made by the Assessing Officer by considering the difference of the amount of month wise manufacturing expenses relating to the month of March 2007. We find that in the original details filed by the assessee as well as in the revised details, there was no difference in the total manufacturing expenses. In the revised details, the assessee has given the correct details of manufacturing expenses of all twelve months whereas in the first set of details , the expenses are shown as per the month in which the bills were received from parties. It is a case of garments manufactured on job work basis and, therefore, there is a possibility of r ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 7,22,20,400 7. SPS Enterprises 28th Feb., 2007 3,04.72,544 Total 29.98,81,013 11.2 On appeal, the assessee filed details and written submissions in respect of his claim and submitted that the assessee is having accounts of its group concern which are in nature of current account and during the year there were various debit and credit transaction on account of purchase, sales, payments receipts etc. Thus there are certain accounting transactions through book entries on account of transfer of balance from from one account to another as per the instruction of those concerns. The CIT(A) called for the remand report of the Assessing Officer and after considering the remand report confirmed the addition made by the Assessing Officer. 11.3 Before us, the Ld. Authorized Representative of the assessee has referred the details of the sundry creditors at page 161 of the paper book and submitted that out of the various creditors, the Assessing Officer picked up only seven parties where the outstanding balance is very high. He has submitted that ther ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... y, the CIT(A) has recorded in para 6.5 that the assessee furnished the ledger account of these parties and copies of instruction letters to support the accounting journal entries in the books, whereas, the Assessing Officer commented in the remand report that the assessee failed to produce the complete details of the parties. The Ld. Authorized Representative has submitted before us that all these parties are assessed to tax and having Permanent Account Numebers (PAN) and also filed return of income showing all these entries in their Books of Accounts. Further the outstanding payments have been settled in the subsequent years and accepted by the revenue, therefore, the addition is not justified. We find substance in the arguments of the Ld. Authorized Representative that when these parties can be examined as all the parties are assessed to tax and having permanent account numbers (PAN) and further the assessee has settled these accounts in subsequent year by making payments or by way of supply of goods then this issue requires a proper consideration and examination. We further note that there is no cash credit in the books of the assessee but the balance are shown as outstanding pa ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... out of the five parties some of the parties have submitted their account copies confirming the purchases made. All these suppliers are regular income tax assessees having their PANs. Due to fund constraints, the payment was to be made only after realization of sale proceeds. These creditors have already been paid in the subsequent years by account payee cheques which was duly examined by the Assessing Officer and accepted for the A.Y. 2008-09 and 2009-10. He has also reitereated his contention as made on the issue of bogus purchases for the A.Y. 2006-07. 12.4 On the other hand, the Ld. DR has relied upon the orders of authorities below and submitted that the Assessing Officer has given a finding that the assessee has made huge purchases from these parties without making payment. 12.5 We have considered the rival submissions and relevant material on record. The Assessing Officer made the addition by suspecting the purchases on the ground that the assessee has shown the purchases from these parties without making any payment during the year. The CIT(A) has confirmed the addition made by the Assessing Officer by following the order for the A.Y. 2006-07. Though the impugned order ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... despite the fact that there was no order for rejection of the audited books of accounts. 5. Whether the Ld.CIT(A) was justified while passing the ex - parte order by mentioning that the additions were made just because of discrepancy when there was no discrepancy pointed out anywhere in the assessment order. The additions were made by not appreciating the explanations and biased by previous years' observation 16. The Assessing Officer has completed the assessment by estimating the GP at 10% of the total sale and consequently the total income of the assessee was assessed to ₹ 19,35,16,560/- against the return of income of ₹ 1,54,37,360/-. 16.1 The assessee challenged the action of Assessing Officer before CIT(A). Since the assessee did not appear before the CIT(A), the appeal of the assessee was dismissed ex parte. 16.2 Before us, the Ld. Authorized Representative of the assessee has submitted that the assessee has declared the total income at ₹ 1,54,37,360/- which is the net profit at 0.07% of the sales. The assessee participated in the assessment proceedings and produced all the Books of Accounts including cash books, ledger as well as invoices. ..... X X X X Extracts X X X X X X X X Extracts X X X X
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