TMI Blog2013 (2) TMI 707X X X X Extracts X X X X X X X X Extracts X X X X ..... , timely execution of the order and delivery of goods identifying the customers / purchases and host of other responsibility. The details of transactions have also been incorporated by the learned CIT(A). Based on these evidences and nature of services, the learned CIT(A) has deleted the said addition. We, thus, do not find any reason to deviate from such findings - Decided in favour of assessee - ITA no. 5697/Mum./2010, ITA no. 5748/Mum./2010 - - - Dated:- 22-2-2013 - SHRI B. RAMAKOTAIAH, ACCOUNTANT MEMBER AND SHRI AMIT SHUKLA, JUDICIAL MEMBER For the Appellant : Mrs. Neeraja Pradhan For the Respondent : Mr. Satish Modi ORDER PER AMIT SHUKLA, J.M. These cross appeals are against the impugned order dated 28th April 2010, passed by the learned Commissioner (Appeals) XXXIV, Mumbai, for the quantum of assessment passed under section 144 r/w section 254 of the Income Tax Act, 1961 (for short the Act ), for the assessment year 2003- 04. The Department, in its appeal, has raised following grounds:- 1. On the facts and in the circumstances of the case and in law, the learned CIT(A) erred in restricting the disallowance of non- genuine and bogus purcha ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 7. M/s. Regal Enterprises 21,08,750 Total 1,75,10,053 3. The Assessing Officer carried out enquiries by issuance of notice under section 133(6) out of which none of the parties confirmed their transactions with the assessee. Thereafter, the Assessing Officer deputed Income tax Inspector to carry out enquiry and submit his report. Out of the seven parties, five parties could not be located either due to lack of proper address or the parties have left the premises. The two parties had filed their confirmation letter. Accordingly, purchases to the tune of ₹ 82,84,497, appearing in the name of the following parties were disallowed. S.no. Name of Parties Amount in Rs. 1. M/s. Poonam Enterprises 15,29,265 2. M/s. Montex Enterprises 23,78,600 3. M/s. Veera Mercantile P. Ltd. 14,59,012 4. M/s. Raj Corporation 29,17,620 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... parties, confirmation in respect of purchases, sales tax registration certificate of the parties, export invoices, bank certificate certifying the payment made through cheques, the copy of bank statement showing clearance of account payee cheques and host of other evidences. It was vehemently contended that all these documents were filed before the Assessing Officer, which has not been seen or examined. The relevant submissions of the assessee before the Commissioner (Appeals) in this regard are reproduced hereunder for better appreciation of the facts. 4. Fresh Assessment Proceedings a. In response to notices, the appellant has attended from time to time and submitted to the A.Q. the entire set of fresh evidence that was submitted before the CIT(A) and the Honorable ITAT. b. The said evidence comprises of various documentary evidence such as copies of the purchase invoices, copies of bank statements depicting payments made by way of account payee cheques, quantitative disposal of these purchases showing corresponding exports made out of these purchases, copies of export invoices, bill of lading, foreign inward remittance certificate, sales tax registration certificates ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nnot be treated as bogus, as without purchases there cannot be any sales or exports. The relevant findings and the observations of the Commissioner (Appeals) which are relevant are reproduced herein below:- 6. After considering the aforesaid written submissions and various evidences which were filed before CIT(A), ITAT and again before Assessing Officer as well as before me and in view of the fact that appellant has maintained full quantitative details and no genuineness of sales has been questioned. Payments were made to four parties in question by account payee cheques and money was credited in the bank account of these parties which has been certified by the banks. Those parties are registered with sales tax and central sales tax Act. Their confirmations were also filed but it appears that the parties are not traceable and the appellant has express his inability to produce the parties in question. So in view of these facts and decision of Hon ble Mumbai ITAT in the case of Balaji Textile Industries Pvt. Ltd. v/s ITO, 49 ITD 177, there cannot be sales without purchases. The appellant has also relied on the decision of Mumbai High Court in the case of Shri Babulal C. Vora v/s ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... by the appellant, I have applied the decision of M/s. Vijay Proteins in the case of M/s Compure and several other assessee s of Mumbai and the addition in the case of M/s Compure. To my knowledge has been confirmed by Hon ble ITAT. Therefore, in view of aforesaid discussion, the Assessing Officer is directed to restrict the disallowance upto 25% of the total addition of ₹ 82,84,497 held by him and allow relief for the remaining amount. Thus this ground of appeal is partly allowed. 8. Before us, the learned Departmental Representative submitted that the Tribunal has given specific directions that the onus is entirely on the assessee to substantiate its claim to the satisfaction of the Assessing Officer who will verify the veracity of the evidence filed and decide the issue afresh. She pointed out the observations of the Assessing Officer in Para-4 of the second assessment order and submitted that the Assessing Officer has given several opportunities and except for part compliance in one or two dates, the assessee has failed to appear before the Assessing Officer and was unable to substantiate its claim for the purchases made from the four parties. In such a situation, the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ng paragraphs to substantiate the genuineness of the purchases. These additional evidences were rejected by the Commissioner (Appeals) on the ground that there was no reasonable cause for not producing the same before the Assessing Officer. Thereafter, in second appeal, the Tribunal, after admitting the additional evidences, as filed by the assessee before the Commissioner (Appeals), remanded the matter back to the file of the Assessing Officer to decide the issue afresh. In the second round, the assessee, as per the noting of the Assessing Officer, could not make proper compliance of the notices and dates of hearing. An averment has been made before us by the learned Counsel and also in the statement of facts filed before the Commissioner (Appeals), by the Assessee that all these evidences and documents have been filed before the Assessing Officer in the second round. This fact has been admitted by the Commissioner (Appeals) and the Revenue has also not challenged this aspect of the matter in the grounds of appeal. Thus, it can safely be inferred that all the evidences with regard to the purchases made from the aforesaid four parties are also in the record of the Assessing Officer ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... and hold that the entire purchases aggregating to ₹ 82,84,497, from the four parties are genuine and, therefore, the entire addition made by the Assessing Officer and partly sustained by the Commissioner (Appeals) stands deleted. Thus, ground no.1, raised by the Department is dismissed whereas ground no.2, of the Assessee stands allowed. 13. The next ground relates to deletion of ₹ 3,41,238, on account of commission brokerage. 14. The main contention of the Department is that this issue is not covered by the assessment order which was the subject matter of the appeal before the Commissioner (Appeals). In this case, the Assessing Officer, during the original assessment proceedings, has made a disallowance of ₹ 3,41,238, on account of expenditure towards brokerage and commission under the head Other Indirect Expenses . This addition was confirmed by the Commissioner (Appeals) on the ground that the assessee could not prove the genuineness of these expenses. Before the Tribunal, the assessee has taken specific ground as ground no.5. The Tribunal, in its entirety, has restore the matter to the file of the Assessing Officer to decide the issue afresh and the ap ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... that all these evidences and documents with regard to the genuineness of the purchases were filed before the Assessing Officer as well as before the Commissioner (Appeals). He strongly relied upon the findings of the Commissioner (Appeals) as well as the relevant documents placed in the paper book with regard to the payment made to these persons. 19. We have heard the rival contentions. On a perusal of the documents furnished by way of paper book, which are undisputed that the same were filed before the Assessing Officer, we find that all these payments have been made to these persons through account payee cheque who are duly assessed to tax and have shown these commissions as their income. The learned CIT(A) has noted the nature of services rendered which was mainly on account of negotiation of the rates, timely execution of the order and delivery of goods identifying the customers / purchases and host of other responsibility. The details of transactions have also been incorporated by the learned CIT(A). Based on these evidences and nature of services, the learned CIT(A) has deleted the said addition. We, thus, do not find any reason to deviate from such findings as the same i ..... X X X X Extracts X X X X X X X X Extracts X X X X
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