TMI Blog2016 (7) TMI 682X X X X Extracts X X X X X X X X Extracts X X X X ..... annot be held to be non- genuine. In these circumstances, as the Department has failed to bring any substantive evidence/material to controvert the findings of the learned Commissioner (Appeals), we are not in a position to disturb the order of the learned Commissioner (Appeals). - Decided in favour of assessee - I. T. A. No. 5163/Mum/2013 - - - Dated:- 24-2-2016 - Saktijit Dey (Judicial Member) And Ashwani Taneja (Accountant Member) For the Appellant : T. Sasi Kumar For the Respondent : Salil Kapoor ORDER Saktijit Dey (Judicial Member) 1. The instant appeal by the Department is directed against the order dated April 29, 2013, passed by the learned Commissioner (Appeals)-14, Mumbai, for the assessment year 2010-11. 2. Though the Department has raised nine grounds but the core issue arising for consideration is deletion of addition of ₹ 118.64 crores made by the Assessing Officer under section 68 of the Income-tax Act, 1961 (for short the Act ). 3. Briefly stated the facts are, the assessee-company filed its return of income on October 8, 2010, declaring a total income at ₹ 18,68,88,280. In the course of assessment proceedings, the Asses ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ld goods worth ₹ 30,13,00,237, till March 2011, but the assessee had paid only ₹ 13,237 and the balance ₹ 30 crores was converted to share application money. Further, the Assessing Officer found, the concerned parties though have effected sales of ₹ 36.51 crores and ₹ 55.87 crores respectively but they have not made any payment towards purchases effected by them. Being of the opinion that detail enquiries was required to be made, the Assessing Officer conducted survey under section 133A of the Act in the business premise of the assessee. In the course of survey, statements were recorded from the chairman and non-executive chairman of the assessee-company. On the basis of statement recorded from the concerned persons, the Assessing Officer came to the conclusion that purchases claimed to have been made by the assessee from five parties are actually bogus purchases and these five parties were used by the assessee for providing accommodation bill so as to reduce the profitability of the company. Alleged that the assessee failed to prove through proper documentary evidence the genuineness of purchases made the Assessing Officer disallowed the entire purcha ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ficer that they have effected sales to the assessee. Thus, on examination of the aforesaid facts, the learned Commissioner (Appeals) concluded that as all the parties have confirmed the sale transaction before the Assessing Officer and such transaction are not only supported by proper purchase and sale bills but also reflected in the books of account of the purchaser as well as sellers which were subjected to statutory audit they have to be accepted as genuine, more so, when the Assessing Officer had no evidence to establish the fact that purchases made by the concerned five parties are bogus. He observed, if the addition of ₹ 118.64 crores is sustained, then the assessee's gross profit rate would go up to 35.7 per cent. which is impossible to achieve. The learned Commissioner (Appeals) further observed that out of disallowance of ₹ 118.64 crores an amount of ₹ 100 crores represent share application money, hence, would amount to addition under section 68. He held that as the identity of the share applicants are established no addition at the hands of the assessee even under section 68 is possible in view of the decision of the hon'ble Supreme Court in CIT ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... es made by the assessee as bogus. The learned counsel submitted, material on record would show that sales turnover declared by the concerned parties during the relevant previous year was much more than the sales effected to the assessee. In these circumstances, it cannot be said that the sales are bogus as the concerned parties had effected sales to other persons apart from the assessee. The learned counsel submitted, the concerned parties have maintained regular books of account which were audited as per the statutory provisions. It was submitted, all these parties are, assessed to Income-tax and the entire transaction has been reflected not only in their books of account but also the financial statements forming part of statutory audit report. He, therefore, submitted, when the entire sales transaction have been reflected in their books of account and declared in their return of income and accepted by the concerned Assessing Officer where they are assessed, a part of share transaction entered with the assessee cannot be treated to be bogus. The learned counsel submitted, gross profit rate shown by the assessee in the impugned assessment year at 14.54 per cent. is comparable to th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rmanent addresses are available before the Assessing Officer. It is also evident that before the Departmental authorities, they have produced documentary evidence to show that these transactions have not only been reflected in their books of account but also disclosed in the audited statement of accounts such as balance-sheet, profit and loss account forming part of the return of income filed by them for the impugned assessment. It is also evident, before the Assessing Officer the assessee has produced purchase and sale bills and other documentary evidence in support of purchases effected by it from the concerned five parties. It is also a fact that payments made to the suppliers were through proper banking channels. 10. It is a fact on record that during the year the assessee has disclosed sales turnover of ₹ 537 crores and before the first appellate authority the assessee has furnished quantitative reconciliation of the purchase and sales. It is also observed that the gross profit rate shown by the assessee for the impugned assessment year at 14.54 per cent. is comparable to the gross profit rate shown in the preceding as well as the subsequent assessment year. Another c ..... X X X X Extracts X X X X X X X X Extracts X X X X
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