TMI Blog2016 (7) TMI 1262X X X X Extracts X X X X X X X X Extracts X X X X ..... in support of claim of the assessee and lastly in respect of four parties, it was alleged that the parties were put on the website of Maharashtra Sales Tax department declaring them as suspicious hawala dealer. Looking to the facts and circumstances of case in totality, we are of the considered opinion that when material were purchased and payment were made through banking channel and the material consumed in the manufacturing process which was not at all in doubt then the tax authorities are not justified in treating the purchase as bogus. - Decided in favour of assessee - I.T.A. No. 6602/Mum/2014 - - - Dated:- 28-7-2016 - SHRI MAHAVIR SINGH, JM AND SHRI RAJESH KUMAR, AM Assessee by: Shri Vishnu Saraf and Shri Mihir Tanna Revenue by: Shri Sachhinand Dubey O R D E R PER RAJESH KUMAR, AM This is an appeal filed by the assessee challenging the order of ld. CIT(A) 22.8.2014 for the assessment year 2011-12. 2. The sole ground raised by the appellant assessee is against the confirmation of disallowance made of purchases from 8 parties to the tune of ₹ 63,29,735/-. 3. The facts related to the issue are that the assessee e-filed return of income for ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 320250 4 Kotsons Impex P Ltd 1377050 5 Donnies Trading P Ltd 1380990 6. Balkrishna Trading P Ltd 697967 Total 25944084 Similarly, some of the parties did not respond at all and therefore, the AO added the entire purchases from those parties aggregating to ₹ 4,79,47,502/- to the income of the assessee as detailed given in para 12 of the assessment order. Finally, the assessment was completed by making the above addition to the income of the assessee vide order dated 24.12.2013 passed under section 143(3) of the Act. Aggrieved by the order of the AO the assessee preferred an appeal before the First Appellate Authority (FAA) challenging the addition on account of unexplained purchases. The ld. CIT(A) called for the remand report and in the said remand report the AO stated that out of total purchases disallowed of ₹ 7,48,31,548, the purchases to the extent of ₹ 6,58,01,813/1,813/- were explained and remaining difference of ₹ 63,29 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ditional evidence, in relation to an appeal filed by the assessee are sought to be regulated by the rule 46A of the Income-tax Rules under which there are certain restrictions imposed on the Commissioner of Income-tax (Appeals) to admit additional evidence. But the powers indicated in the rules framed cannot curtail the scope of the powers conferred by the statute to hear and decide the appeal for which the appellate authority is explicitly empowered to call for such additional evidence, records or documents to be furnished adduce any evidence as regards to the transport of these goods to the appellant premises and secondly no evidence was adduced by the appellant to show that the same were taken as part of its stock and the corresponding sales if any made by it by utilizing the said purchases as the raw material for final product. As can be seen from the details submitted by the appellant in respect of these parties, it can be seen that no creditable evidence was placed on record to prove that the same are genuine. In view of the foregoing, I find this office in agreement with the observations made by the Ld.AO that purchases to the extent of ₹ 63,29,75/- remained unexplaine ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ceived in respect of all the parties were also produced . The ld. Counsel submitted that both the authorities have failed to appreciate the fact that the assessee was doing manufacturing and trading of items on the large scale basis and therefore it could not be possible to have one to one contract with the suppliers or the person with whom the assessee the business dealings. The assessee maintained regular books of account which were subjected to audit under the Companies Act, 1956 and also tax audit report under section 44AB of the Act. The fact of payments for the said purchases having been made through banking channel and day to day maintenance of stocks in the stock register were not doubted by the tax authorities at all and were duly accepted by the AO also. However, the AO doubted the purchases made from six parties which were paid by account payee chaques for which proper books were paid produced before the AO along with the stock register and material consumption register, delivery challans etc. The ld.counsel of the assessee relied on numbers of decisions in support of its case namely: a) DCIT V/s Rajeev G Kalathial (2015) 67 SOT 0052(Mum); b) YFC Projects (P) ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... irmation letters from the suppliers, non furnishing of bank statements, return of income, financial statements in support of claim of the assessee and lastly in respect of four parties, it was alleged that the parties were put on the website of Maharashtra Sales Tax department declaring them as suspicious hawala dealer. Looking to the facts and circumstances of case in totality, we are of the considered opinion that when material were purchased and payment were made through banking channel and the material consumed in the manufacturing process which was not at all in doubt then the tax authorities are not justified in treating the purchase as bogus. The books of accounts were rejected by the AO. The case of the assessee also finds supports from the following decisions: In the case of YFC Projects (P) Ltd (supra), it has been held as under: The assessee had achieved a turnover of ₹ 884.81 lakhs. It had shown net profit of ₹ 79.11 lakhs. Its net profit in terms of percentage was almost double than the previous year. The Assessing Officer was unable to point out a single defect in its books of account. Merely due to non-filing of confirmation from the suppli ..... X X X X Extracts X X X X X X X X Extracts X X X X
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