TMI Blog2017 (1) TMI 987X X X X Extracts X X X X X X X X Extracts X X X X ..... y opportunity of cross examination of that persons and for non-response to notices under section 133(6) of the Act. Moreover, as correctly observed by the learned CIT(A), when the payment for the said purchases to the concerned two parties is through proper banking channels and there is no evidence brought on record by the AO to establish that the said payments were routed back to the assessee, the addition made by the AO under section 69C of the Act is unsustainable. - Decided in favour of assessee. - ITA No. 794/Mum/2015 - - - Dated:- 16-11-2016 - Shri Jason P. Boaz, Accountant Member and Shri Sandeep Gosain , Judicial Member For The Appellant : Shri Ranathir Singh For The Respondent : Shri Vijay Mehta ORDER Per Jason P. Boaz, A.M. This appeal by Revenue is directed against the order of the CIT(A)-20, Mumbai dated 12.11.2014 for A.Y. 2010-11. 2. The facts of the case, briefly, are as under: - 2.1 The assessee company, engaged in trading of furniture and other allied items, filed its return of income for A.Y. 2010-11 on 12.10.2010 declaring income of ₹ 13,80,371/- under the normal provisions and Book Profits of ₹ 14,55,806/- unde ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Ltd. and M/s. Impex Trading Co., extracts of stock ledger showing entry/exit of materials, etc. to show that the payment for the said purchases were made through regular banking channels, etc. The assessee also stated in its submissions that it challenges the statements/ declaration on oath of Shri Pradeep Vyas and Ketan Shah and stated its intention for cross examination of the aforesaid two parties since their statements were false and misleading. The AO did not accept the explanation put forth by the assessee and brushed aside the evidence placed before him as he was of the view that the assessee s documentary evidences were not supported by lorry receipts or delivery challans; that the assessee was not able to produce the three parties from whom alleged purchases were made before him for verification and placed reliance on the sworn statement on oath of Shri Pradeep Vyas of M/s. Victor Intertrade Pvt. Ltd. and Shri Ketan Shah of M/s. Impex Trading Co. given before the Sales Tax Department. In that view of the matter, the AO treated the aforesaid purchases from these two parties (supra) amounting to ₹ 4,75,42,385/- as unexplained expenditure under section 69C of the Act an ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... at the AO while holding the said purchases from the two parties (supra) as bogus basically relied on the statements of Shri Pradeep Vyas of M/s. Victor Intertrade Pvt. Ltd. and Shri Ketan Shah of M/s. Impex Trading Company given before the Sales Tax Department without controverting the evidences produced by the assessee and without affording it the opportunity of cross-examination of the two witness whose statements were relied on. The learned CIT(A) held that the AO s view that the expenditure on purchases from the above two parties are unexplained under section 69C of the Act, is not tenable because the said purchases had been explained with necessary evidences to establish that the said purchases from these two parties were genuine and which has not been controverted by the AO. No material was brought on record by the AO to establish that the payments made for purchases to the above two parties were received back in cash by the assessee. According to the learned CIT(A), the assessee has submitted documentary evidence before the AO and also before him to establish that the said purchases were genuine and was of the view that the AO could not have made the additions without record ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 9C of the Act. 4.3 Per contra, the learned A.R. of the assessee supported the order of the learned CIT(A) deleting the addition on account of bogus purchases of ₹ 4,75,42,385/- under section 69C of the Act. It was submitted that the assessee in order to prove the genuineness of the said purchase transactions had produced material evidence in the form of copies of purchase bills issued by these parties, purchase/sale invoices, challan-cum-tax invoices, extracts of stock ledgers to show the movement of materials received/sent and bank statements to establish that the payment for said purchases were made through normal banking channels. It is contended that, on the contrary, the AO has not brought on record even a shred of evidence to prove the said purchases were bogus and in coming to an adverse finding in the matter. The AO merely relied on the information of purchase parties listed by the Sales Tax Department and relied on statements of parties in respect of which the assessee was not afforded any opportunity for cross examination of these witness. The learned A.R. of the assessee submitted that on similar facts and in similar circumstances, the Hon'ble Bombay High Co ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rtunity to cross examine those witnesses in this regard or the fact that these parties did not respond to notice under section 133(6) of the Act, would not in itself suffice to treat the purchases as bogus and make the addition. If the AO doubted the genuineness of this said purchases, it was incumbent upon him to cause further inquiries in the matter to ascertain the genuineness or otherwise of the transactions. Without causing any further enquires in respect of the said purchases, the AO cannot make the addition under section 69C of the Act by merely relying on information obtained from the Sales Tax Department, the statement/affidavit of third parties, Shri Pradeep Vyas and Ketan Shah; without the assessee being afforded any opportunity of cross examination of that persons and for non-response to notices under section 133(6) of the Act. 4.4.3 In the factual matrix of the case, where the AO failed to cause any enquiry to be made to establish his suspicions that the said purchases are bogus, the assessee has brought on record documentary evidences to establish the genuineness of the purchase transactions, the action of the AO in ignoring these evidences cannot be accepted. Furt ..... 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