TMI Blog2017 (11) TMI 625X X X X Extracts X X X X X X X X Extracts X X X X ..... s to make any addition of the impugned amount against the assessee. Since the AO failed to make proper investigation into the matter and no basis have been shown for making the addition on account of the recoveries to be made by NSEL, the AO failed to discharge the onus upon him to make the addition of the aforesaid nature. There cannot be negative onus on assessee to prove it has not made purchases from NSEL in dispute. No evidence of any sham purchases/transactions have been brought on record. No evidence of any purchase made by assessee from NSEL have been brought on record. The above discussion clearly prove that the AO without any basis rejected the books of accounts of the assessee and without bringing any evidence or material on record, made the addition of the impugned amount. Even during the course of hearing of the appeal, the AO was present in the Court but could not provide any evidence or material so as to sustain the orders of the authorities below. In such circumstances, we do not find it appropriate to remand the matter to the AO for fresh investigation as is argued by the Ld. DR. No justification for the authorities to have rejected the books of accounts of t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... , Ludhiana and as per the settlement account, the amount of Rs.NIL is due to the assessee. 5. As per NSEL, amount of ₹ 338.40 crore is shown as recoverable from the assessee company as per report of M/s Sharp and Tannan Associates, 87 Nariman Bhawan, 227 Nariman Point, Mumbai. The said report is also part of recovery suit filed in suit No.173 of 2014 before the Hon ble Mumbai High Court though between other parties. The settlement account would have been a representative figure of the actual amount due from/ to the NSEL Member Licensed holder (i.e. in this case assessee) only if real/actual purchases/sales had taken place at NSEL platform. However, the facts of the case would bear that sham transactions of purchases/sales were also taking place on the NSEL platform without actual delivery of the goods and actual payment. 6. The AO noted that the total purchases as per books of accounts of assessee company (NSEL member) as per their Audited Report is ₹ 2206 crores. However, as per the facts stated during the assessment proceedings, the purchases by NSEL Member i.e. the assessee from M/s. Lakshmi Energy Foods Ltd. only. The total purchases from M/s. Lakshmi Energy ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... made with NSEL but with other parties. This modus operandi is permitted by NSEL. All sales are verifiable and are evident from the cards used by all group concern companies. The NSEL charges some platform charges on account of such transactions and nothing more than that. Therefore, under such circumstances, there cannot be any copy of account between our group concerns for sale and purchases on NSEL platform as desired by the AO. The assessee has settlement account of all group companies with HDFC Bank. It is a fact that there are no purchases or sales on the NSEL platform among our group concerns, the transactions have been carried out and though at times using the membership of another concern for which entries have been made with regard to charges so levied by the NSEL have been debited to the respective concern and is evident from copies of accounts in the books of accounts of all the three group concerns. The respective entries have been made in the books of each company. The assessee had already submitted necessary evidences in respect of those transactions in the books of accounts. It was further submitted that the assessee has filed total purchases giving dates, name of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e the assessee failed to file confirmation of account from NSEL as on date. Therefore, the AO added ₹ 338.40 crores on account of unaccounted/ undisclosed income in hands of assessee. 12. The assessee challenged the addition before the Ld. CIT(A) and written submission is reproduced in the impugned order in which the assessee reiterated the submissions made before the AO. The assessee in the submissions before the Ld. CIT(A) briefly explained that the addition was made merely on assumption and presumption ignoring the voluminous record/information provided to the AO at the assessment stage. The assessee maintained regular books of accounts in which no defects have been pointed out. The assessee produced complete details of sales and purchases by using NSEL platform and sample copies of delivery receipts alongwith proof of transportation to warehouses of NSEL alongwith weightment slip have been submitted. NSEL used to charge commission from both buyer and seller. The AO initially doubted that all the transactions of purchases and sales which had taken place at NSEL platform are sham transaction without actual delivery but the assessee submitted complete details to show that ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ddition and dismissed this ground of appeal of the assessee. The Ld.CIT(A) observed that the assessee failed to produce copies of the accounts of group concern of assessee with NSEL. The Ld.CIT(A) also noted that the assessee could not bring any evidence on record which will prove that it has not made purchases which are under dispute for which amount is shown recoverable, therefore, rejection of the books of accounts was upheld. Ld.CIT(A) noted the nature of transaction at NSEL platform were sales/purchases and since the amount is shown recoverable from assessee, therefore, it can arise only on account of purchase made by the assessee on NSEL platform. Addition was confirmed. 14. The assessee in the present appeal challenged the order of Ld.CIT(A) in confirming the addition of ₹ 338.40 crores as allegedly payable by the assessee to NSEL without any material and evidence on record as well as challenged the orders of authorities below in rejecting the books of accounts of the assessee u/s 145(3) of the Act. 15. Ld. Counsel for the assessee reiterated the submissions made before the authorities below. Ld. Counsel for the assessee submitted that the books of accounts of th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... on only. Therefore, all the allegations of the AO are incorrect for making the addition. Paper Book page 149 is the details of stock summary with details of sales/purchases. Some purchases are made through card of other group concerns and all the accounts tally with the books of account of the assessee with group concern. All purchases have been made by the assessee through banking channel. Paper Book Volume 4 contained copies of the bank statement of M/s. Lakshmi Energy Foods Ltd. to prove that payments have been made to all the Artiyas/ creditors through banking channels, out of the amount received from assessee company, M/s. Loil Health Food Ltd. and M/s. Loil Overseas Food Ltd. Paper Book Volume 5 contained the details showing that stock purchased by M/s. Lakshmi Energy Foods Ltd. had been directly transferred to the godown of NSEL on behalf of the assessee company, M/s Loil Health Food Ltd. and M/s Loil Overseas Food Ltd. containing the stock transfer note, truck bilties, weightment slip, gate pass etc. paper Book page 222 onwards are details of warehouses charges by NSEL after delivery of paddy in NSEL s designated warehouses. Paper Book page 89 onwards are confirmation b ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... f accounts and addition of ₹ 338.40 crore is wholly unjustified. 16. On the other hand, Ld. DR relied upon the orders of the authorities below and filed complete report of M/s Sharp and Tannan Associates dated 02.04.2014 on record. Ld. DR submitted that the basis of recovery is verification and determination of amounts receivable by NSEL from certain 25 Members as on 31.08.2013 from the period commencing from 01.08.2013. Paper Book page 181 is the exhibit A with the said Report showing recovery against the assessee of ₹ 338.40 crore from 01.08.2013 to 31.08.2013. Ld. DR submitted that the assessee has not filed confirmation of accounts from NSEL. Ld. DR heavily relied upon the orders of the authorities below. 16.1. We may also note here that after hearing the arguments of both parties, the AO was directed to appear in person for clarification on certain points on this matter. The AO, Sh. Amit Pratap Singh, DCIT, Central Circle-3, Ludhiana appeared before the Bench on final date of hearing of appeal on 16.03.2017. The AO after going through the record submitted that no statements of any responsible persons from NSEL or M/s Sharp and Tannan Associates have been reco ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... buyers and sellers to transact on spot against actual delivery of the goods through licensed members appointed by NSEL. Ld. CIT(A) in his finding also affirmed same facts. It is, therefore, proved on record that NSEL provides platform to its Members to enable buyers and sellers to transact on spot against actual delivery of the goods. The NSEL, therefore, do not indulge directly in sale and purchase of any goods. The settlement account is maintained by the NSEL for the assessee with HDFC bank, Ludhiana in respect of all the transactions conducted through NSEL. As per settlement of account, NIL amount was due against the assessee as is mentioned by the AO in the assessment order. The AO also specifically mentioned in the assessment order that though the recovery suit is pending before the Bombay High Court but it was between other parties. The assessee filed affidavit to prove that no recovery suit is pending against the assessee in any Court of law on behalf of the NSEL. It is, therefore, highly unbelievable that as per Report of M/s Sharp and Tannan Associates if huge amount is due against the assessee, NSEL would not file any recovery suit against the assessee. The authorities be ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 02.04.2014 have been placed on record by the Ld. DR during the course of hearing of the appeal, therefore, such report cannot be read in evidence against the assessee so as to make the addition. Further, this report showing recovery against the assessee pertained to the period from 01.08.2013 to 31.08.2013 when the assessee was not Member of the NSEL and same would not fall in AY 2013-14 under appeal. Therefore, such Report cannot be a basis for making addition against the assessee. Since NSEL do not indulge in actual sale and purchase, therefore, there cannot be purchases made by the assessee from NSEL. No evidence of any loan obtained by the assessee from NSEL have been brought on record to prove any recoveries to be made by NSEL from the assessee. The AO did not make any addition for any alleged discrepancies in the accounts of the assessee with its group concerns as regards transactions conducted through NSEL. The charges paid to NSEL for using their platform have not been doubted by the AO. All the stocks purchased were transferred to godown to NSEL on behalf of the assessee have been supported by all relevant evidences. The transactions were made through banking channels. All ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... uthorities below. In such circumstances, we do not find it appropriate to remand the matter to the AO for fresh investigation as is argued by the Ld. DR. 21. In view of the above discussion and in the absence of any cogent and relevant evidence, we do not find any justification for the authorities to have rejected the books of accounts of the assessee u/s 145(3) of the Act or to make an addition of ₹ 338.40 crores. We accordingly, set aside the orders of the authorities below and delete the addition of ₹ 338.40 crores. 22. In the result, the appeal of the assessee is allowed. ITA No.99/Chandi/2017 (M/s Loil Health Foods Ltd.) 23. This appeal by the assessee has been directed against the order of Ld. CIT(A)-V, Ludhiana dated 28.12.2016 for AY 2013-14 challenging the rejection of the books of accounts and addition of ₹ 287.48 crores as allegedly payable by the assessee to NSEL without any material and evidence on record. 24. Ld. Representatives of both the parties submitted that the issues are same as have been considered in ITA No.98/Chandi/2017 in the case of M/s Loil Continental Food Ltd. vs DCIT (supra) and order in that case may be followed. ..... X X X X Extracts X X X X X X X X Extracts X X X X
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