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2016 (2) TMI 665 - ITAT DELHI

2016 (2) TMI 665 - ITAT DELHI - TMI - Disallowance of loss suffered in trading of foam and fabrics - CIT (A) had deleted the said addition on the basis that complete books of accounts were produced, examined and verified on test-check basis - Held that:- All the transactions of purchases were duly confirmed and 90% of the sales are also confirmed. However, the plea of the DR which was accepted by the Tribunal was that the evidences accepted had not been considered by the AO, thus the AO in the s .....

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purchase of ₹ 3,37,29,782/-. The transactions are duly recorded in the books of accounts which have been examined and accepted in the first round by CIT (A) and no specific observation vis--vis the said books of accounts by the AO in the second round. Moreover, these are audited books of accounts. The case of the AO is that new addresses of the parties have not been furnished. In our opinion, without carrying out any investigation in respect of evidences on record, such a conclusion is p .....

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ansactions are bogus or sham. More-so, when the Revenue had requested for examination of the evidence and such request was accepted by the Tribunal in the first round and yet AO failed to carry out investigation. Thus, this is a case of lack of investigation which vitiates the adverse conclusion drawn by the AO. We, therefore, see no reason to deviate from the conclusion of the first appellate authority. - Decided against revenue - ITA No.5024/Del./2012 - Dated:- 15-1-2016 - SHRI J.S. REDDY, ACC .....

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97,85,383/- made on account of disallowance of loss suffered in trading of foam and fabrics. 2. The Ld. CIT (A) has ignored the fact that the assessee did not produce the necessary books of accounts and vouchers for verification despite having been provided ample opportunities by the AO. 3. The appellant craves leave or reserving the right to amend, modify, alter, add or forgo any ground(s) of appeal at any time before or during the hearing of this appeal. 3. Brief facts of the case are that the .....

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allowed the appeal of the assessee vide order dated 27.11.2009. Being aggrieved, the revenue filed an appeal before the ITAT and the ITAT in its order dated 12.11.2010 passed in ITA No.463&464/Del/2010 restored the assessment back to AO for de novo assessment after providing the reasonable opportunity of being heard to the assessee. 3.1 Following the directions of the Tribunal, the AO issued notice/letter to the assessee to file necessary details. After going through the submissions of the .....

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o file the qualitative and quantitative details of sales and purchases with the addresses of the buyers and sellers but no reply was filed. Further, the AO asked the assessee to file the necessary details and also to produce stock register and rates of different items and complete ledger accounts of the parties from whom sales and purchases had been made. The AO observed that the assessee only filed chart containing of sales and purchases. Accordingly, the assessee was provided final opportunity .....

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7,87,382/- on sale and purchase. According to AO, there was no such business activity conducted during the year under consideration. The AO further observed that the assessee company had shown purchases of ₹ 1,39,80,200/- from M/s Allied Foams and sale of ₹ 1,34,80,200/- to the same party; and purchase of ₹ 14,58,207/- and sale of ₹ 5,10,335/- to M/s R.S.M. Enterprises. The AO also noted that assessee had no opening and closing stock. The AO held that since the assessee c .....

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ing the purchases; and losses claimed was on account of bogus/sham sales and purchases. Accordingly, the AO made an addition of ₹ 97,87,382/- made on account of disallowance of loss suffered in trading of foam and fabrics and completed the assessment on total income of ₹ 98,71,216/-, as was assessed in the original assessment order dated 29.12.2008. 4. Aggrieved, the assessee went in appeal before the ld. CIT (A) and the ld. CIT (A) deleted the addition by observing as under :- The i .....

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same to the appellant. (b) It is not possible to disagree with the appellant that it cannot compel the AO to write in its note sheet that the books of a/cs were produced before him. (c) The same issue was before the CIT(A) in the first round and the submissions were made on similar lines before him. The CIT(A) after discussing in detail in para 3.4 to 3.6 of his order has allowed the claim of the appellant after considering the version of the appellant submitted before him. The para 3.4 to 3.6 .....

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ssure and time was not given to the assessee, whenever counsel tried to produce the books of accounts. AO has fixed the case for 30.12.08 and completed the asst. on 29.12.08 shows the pressure on AO to complete the assessment. Counsel of the assessee also argued that if the evidence/ confirmation/ books of accounts were not to be considered by the AO then why case was fixed for 30.12.08. 3.5 I have gone through the documents filed by the assessee before AO. Reference of the documents mentioned i .....

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s therefore deleted and the grounds of appeal are allowed. 5. The revenue, being aggrieved, is in appeal before us against the deletion of addition of ₹ 97,85,383/- made on account of disallowance of loss suffered in trading of foam and fabrics and not producing the necessary books of accounts and vouchers for verification despite having been provided ample opportunities by the AO. 6. Ld. DR submitted that the assessee has two types of income i.e. commission and sales/purchase income. The .....

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ing to the DR, bogus purchase and sales were claimed and set off the profit. He submitted that this is the modus operandi of buy and sale and all these things did not take place physically. He submitted that no parties were produced and there is no real transaction. He pleaded to reverse the order of the ld. CIT (A) and restore the order of the AO. 7. On the other hand, ld. AR reiterated the submissions made before the ld. CIT (A) and submitted that the books of account were not rejected and no .....

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nd also the AO had not mentioned any discrepancy in the assessment order as far as addresses of the buyer and suppliers are concerned. He further submitted that the confirmation from 90% of the buyers and suppliers were available which was also confirmed by the ld. CIT (A) in the earlier appellate order. With regard to books of accounts and vouchers were not produced, the ld. AR submitted that detailed statement of qualitative and quantitative details of sales and purchase with price made from b .....

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ered heavy loss and took our attention to pages 2, 5, 3 & 89 of the paper book. He submitted that according to the AO, the assessee did not produce books but the AO was not looking into it, however, details were produced. He drew our attention to pages 64 to 71 wherein the details were given and specifically page 67 of the paper book. The ld. AR submitted that there were movements of the goods, godown was there and actual buying and selling took place. Since the assessee was in the initial y .....

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was that the evidences accepted had not been considered by the AO, thus the AO in the second round, ought to have examined the aforesaid evidence and arrived at a conclusion. However, it is noticed that the AO has simply borrowed the conclusion from the original order of assessment. This approach is in blatant disregard of the own stand of the Revenue before the Tribunal in the first round. Thus, to this extent, the approach of the AO is patently erroneous. Now, coming to the merits of the matt .....

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