TMI Blog2016 (12) TMI 1667X X X X Extracts X X X X X X X X Extracts X X X X ..... f appeal of the Revenue. - ITA No.119/Mum/2015 And C.O. No.117/Mum/2015 - - - Dated:- 19-12-2016 - Shri Joginder Singh, Judicial Member And Shri Rajesh Kumar, Accountant Member For The Assessee : Shri Rahul K. Hakkani For The Revenue : Shri Rajat Mittal-DR ORDER Per Joginder Singh (Judicial Member) The Revenue as well as the assessee is aggrieved by the impugned order dated 21/10/2014 of the Ld. First Appellate Authority, Mumbai. The Revenue has preferred appeal, whereas, the assessee has preferred cross objection against the impugned order. First, we shall take up appeal of the Revenue, wherein, applying the net profit ratio of 5.76% of the total turnover in respect of addition made by the Assessing Officer on the alleged bogus purchases from the Hawala dealers has been challenged. 2. During hearing, the ld. DR, Shri Rajat Mittal, advanced arguments, which is identical to the ground raised by contending that the Ld. Commissioner of Income Tax (Appeal), while granting relief to the assessee, did not considered the fact that the addition was made by the Assessing Officer on the basis of information received from DIT(Invest.) and the Sales Tax Depa ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ent, the Assessing Officer made addition of the entire purchases. It is noted that the payment was made through banking channel by MCGM after fully getting satisfied about the quantity and quality of the material, duly certified by the engineer of the MCGM, that too subject to tax deduction at source, retention amount, etc. The payments to the supplier parties was also made through banking channel. In view of this factual matrix, the case of the assessee is fully covered by the decision from Hon'ble jurisdictional High Court in the case of CIT vs M/s Nikunj Exim Enterprises Pvt. Ltd. 372 ITR 619 (Bom.), Dhakeshwari Cotton Mills Ltd. vs CIT 26 ITR 775 (SC), Hital Chunilal Jain Ors. (2016) 46 CCH 0020(Mum.) and DCIT vs Rajeev G. Kalathil (2014) 41 CCH 552 (Mum.). The Hon'ble High Court in the case of M/s Nikunj Eximp Enterprises Pvt. Ltd. (supra) held that merely because the suppliers could not be produced before the authorities but other relevant details have been filed to show that the transaction was genuine the purchases cannot be disallowed. The relevant extract of the judgment is as under: Whether on the facts and in the circumstances of the case and in law the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e assessee, he was duty bound to call the deponents and make them confirm the nature of dealings with the assessee. If they depose that the dealings with the assessee are not genuine the assessee would have right to cross examine them to bring the truth of the deposition on the surface. This has not been done by the Assessing Officer. Thus the conclusion reached by the Assessing Officer is devoid of merit. 2.4. Even otherwise, fact remains that the assessee made purchases, for which payments have been made by cross-cheque. It is nobody's case that payments made to purchase parties were received back in cash by the assessee or the cheques issued to them were not in cashed, meaning thereby, the purchases from the concerned parties cannot be disputed. Where payments are made by account payee cheques, nobody can deny the existence of the parties. Once the assessee establishes consumption of items purchased nothing more remains to be proved by the assessee. The fact that the assessee has made the purchases by payment through account payee cheques and its consumption has been broadly explained which clearly establishes the assessee's case that the purchases as recorded by the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... supplier but same was not given, that the AO had not supplied the copy of the statements of Shiv Sagar to the assessee, that in the books of accounts of the assessee all the purchases and sales were recorded, that payments were made through banking channels, that the AO had made addition of entire purchases u/s.69 of the Act, that the FAA had reduced it to 20%. It is a fact that the AO had not rejected the sales of the assessee and the assessee was maintaining the quantative derails and stock register. In our opinion, once the sales are accepted as j'enuiize or not doubted the AO cannot reject the entire purchase. In the case of Nikunj Eximp(supra)the Hon'ble Bombay High Court has held if sales were not doubted by the AO and copies of bank statement showing entries of payment through account payee cheques to the suppliers, copies of invoices for purchases and a stock statement, i.e. stock reconciliation statement are filed purchased could not be rejected. In the case of Rajeev Kalathil('supra)the Tribunal has held as under: 2.4. We find that AG had made the addition as one of the supplier was declared a hawala dealer by the VAT Department. We agree that it was ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ould have called for the details of the bank accounts of the suppliers to find out as whether there was any immediate cash withdrawal from their account. We find that no such exercise was done. Transportation of good to the site is one of the deciding factor to be considered for resolving the issue. The FAA has given a finding of fact that part of the goods received by the assessee was forming part of closing stock. As far as the case of Western Extrusion Industries. (supra)is concerned, we find that in that matter cash was immediately withdrawn by the supplier and there was no evidence of movement of goods. But, in the case before us, there is nothing, in the order of the AO, about the cash trial. Secondly, proof of movement of goods is not in doubt. Therefore, considering the peculiar facts and circumstances of the case under appeal, we are of the opinion that the order of the FAA does not suffer from any legal infirmity and there are not sufficient evidence on.file to endorse the view taken by the AO. So, confirming the order of the FAA, we decide ground no.1 against the AO. Considering the totality of facts and the foregoing discussion including various judicial pro ..... X X X X Extracts X X X X X X X X Extracts X X X X
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