9911796707
TMI Blog2017 (10) TMI 45X X X X Extracts X X X X X X X X Extracts X X X X ..... y was conducted u/s. 133A of the Act on 29-01-2010. The assessee filed his return of income declaring total income of Rs. 48,08,090/- on 13-1-2011. Thereafter, notices u/s. 143(2) and 142(1) of the Act were issued. The AO determined the income of the assessee at Rs. 1,27,32,560/- vide his order dt. 12-03-2013 making the additions of Rs. 48,01, 811/- and Rs. 30,22,659/- towards bogus purchase and difference in stock respectively. 4. Ground no. 1 relates to deletion of addition of Rs. 49,01,811/- made on account of bogus purchase. 5. During the course of scrutiny the AO called for copy of stock register and copy of production register. The assessee produced the copy of stock register on 26-11-2012 and filed written submissions. According to AO, the assessee produced only the stock register, but, he did not file the same for examination of the AO. On verification of the stock register, the AO found that stock of finished items (exportable goods) were shown on monthly basis and other items were shown on daily basis and stock of raw material items were not at all produced for verification. On examination of material available on record, the AO found the difference of net profit shown ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... dded to total income of the assessee. 7. Before the CIT-A, the assessee contended that the goods found physically on the date of survey and were recorded in the stock register and thereafter exported the same. The assessee submitted as under:- Particulars Amount Pradhan Tanners 19,56,925 Star Hide Company 23,82,090 Lodwing Import 5,26,384 Other Charges 36,412 Total 49,01,811 Details of individual purchases from these parties are as under:- a) Pradhan Tanners Date Purchase Amount VAT Bill Amount Name of The item Purchase Quantity 11/01/2010 12,09,675 48,187 12,58,062 Finished Leather 48375 sq.ft 28/01/2010 7,47,250 29,890 7,77,140 Finished Leather 29890 sq.ft b) Star Hide Company Date Purchase Amount VAT Bill Amount Name of The item Purchase Quantity 29/01/2010 12,01,500 48,060 12,49,560 Wet Blue Leather 4002 pcs 29/01/2010 11,80,590 47,224 12,27,814 Wet Blue Leather 4005 pcs c) Lodwing Import (actual name is Ludwig Voigtlander GMBH, Germany) Date Purchase Amount Name of the item Purchase Quantity 11/01/2010 12,09,675 Interlock lining 668.50 meters These purchase ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ing is enclosed. [Annexure-C(i)] c) The assessee had made payment to the Ludwing Voigtlander GmbH Hof in respect of these purchases by way of remittance in foreign currency. Details of payment are as under:- Name of the Party Date Amount Cheque No. Ludwig Voigtlander GmbH Hof 11/01/2010 5,11,817 FTT0046 05/02/2010 14,567 FTT0225 Copy of the Party ledger is enclosed. [ Annexure-C(ii)] These items were used for making finished goods which have been exported and recorded as sales in our profit and loss account & offered for taxation, if the goods purchased are not genuine then how exports have taken place. Thus you are requested to delete the addition as the purchase are genuine & properly recorded in the books of account of assessee." 8. Considering the submissions of the assessee together with the assessment order the CIT-A opined that the findings recorded by the AO were mainly based on the survey conducted u/s. 133A of the Act and the AO did not conduct any independent enquiry to ascertain that the purchases were bogus. Relevant portion of which is reproduced herein below:- 5.1.3 Decision: I have carefully gone through the findings of the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the Act. There is no corroborative material brought on record to make the addition. Suspicion however strong, cannot take form of evidence. In Dhakeswari Cotton Mills Ltd. v. CIT [1954] 26 ITR 775 (SC), the principle of law laid down by the Hon'ble Supreme Court is that in making the assessment under section 143, the Assessing Officer is not entitled to make a pure guess and make an assessment without reference to any evidence or any material at all. There must be something more than bare suspicision to support the assessment under section 143(3). Therefore, having regard to the facts and circumstances of the case, in my opinion, the Assessing Officer was not justified in making the impugned addition of Rs. 49,01,811/- on account of bogus purchases. The addition cannot be sustained. The same is hereby deleted. This ground of appeal is accordingly allowed." 9. Before us the ld.DR submits that as per the survey the purchases found in the books worth of Rs. 1,02,27,452/- whereas the assessee reduced the same in its return to Rs. 54,21,113/-. During the assessment proceedings the AO asked the assessee to explain the same. The assessee could not file any documents supporting the s ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rmed the same u/s. 133(6) proceedings. We find that all the details i.e. stock register, claim of VAT payments, ledger copy and statements u/s. 133(6) of the Act were on record available before the AO/CIT-A. Likewise, the CIT-A examining all the details in respect of other two parties, Star Hide company and Lodwing Voigtlander GMBH, Germany found satisfaction that all the details were made available before the AO. But, the AO proceeded to make addition on suspicion that the assessee did not produce stock register and the receipts showing purchases from the said three parties were bogus and incorrect. We find that the CIT-A examined all the details of said three parties and found satisfied that all the transactions are duly recorded in the books and disclosed the same in the return filed after the date of survey. We further find that all the transactions with the said parties were made through account payee cheques and the same were confirmed under 133(6) of the Act proceedings by the said parties. Therefore, we find no infirmity in the impugned order of the CIT-A and it is justified. Ground no. 1 raised by the revenue is dismissed. 12. Ground no. 2 relates to deletion of addition ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... tended that the physical stock of raw materials was reduced by quantities as it was used in the production of exportable goods. The same were recorded when the bills raised. The CIT-A found that the submissions of the assessee were reasonable. Accordingly, he deleted the impugned addition by stating as under:- 5.2.3. Decision: I have considered the facts of the case and the submissions put forth on behalf of the appellant. The Assessing Officer observed that the appellant firm did not offer any explanation as to why the production entries were not recorded regularly and up to the date of survey and also as to why the entries of consumptions were done at the month end instead of day to day basis. According to him, when goods are finally produced and finished in appellant's premises, there was no reason as to why entries on month of the whole month instead of regular entries as per daily production and that too on the respective date of production and thus submission of the appellant regarding reduction was disallowed. The finding of the Assessing Officer that the purchases to the extent of Rs. 49,01,811/- is not borne out from records. Since, during survey, the stock found w ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... this ground. " 16. The ld.DR submitted that the AO found that during the survey physical stock deficit as compared to the stock maintained by the assessee as per books. The entries of stock were not maintained properly on day to day basis. The AO did not accept the contention of the assessee that the entries were recorded at the end of the month. 17. On the other hand, the ld.AR submits that the entries were recorded in respect of exportable goods at the time of sales , which were recorded as and when bills raised. He further submits that the CIT-A examining the export register found satisfaction with the same and deleted the addition made by the AO. He relied on the order of the CIT-A. 18. Heard rival submissions and perused the material available on record. We find that the AO made the addition on the difference of stock value as found as per books maintained by the assessee and stock found physically as on the date of survey. The assessee explained such difference as the production entries were not recorded upto the date of survey and it was the practice to record the same at the time of sales. According to AO, the entries should have been made day to day and not at the end o ..... X X X X Extracts X X X X X X X X Extracts X X X X
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