TMI Blog2017 (7) TMI 1083X X X X Extracts X X X X X X X X Extracts X X X X ..... fit declared by the assessee during the current assessment year as well as in the earlier assessment years, we direct the Assessing Officer to restrict the disallowance of purchases to meet the anomalies and to cover up the leakage of revenue on defined percentage. - ITA NO.3537, 3538 & 3540/MUM/2016 ,ITA NO.6371 /MUM/2016, ITA NO.6130/MUM/2016 ,ITA NO.1887 & 1888/MUM/2017 , ITA NO.2553/MUM/2017 ,ITA NO.1470 & 1471 /MUM/2017, ITA NO.1736 & 1737/MUM/2017 - - - Dated:- 31-7-2017 - C.N. PRASAD AND SHRI M.K. AGGARWAL Date of Pronouncement : 31-07-2017 ORDER PER C.N. PRASAD (JM) 1. All these appeals are filed by different assessees and by revenue against various orders of the Commissioner of Income Tax (Appeals) for assessment years 2009-10, 2010-11 and 2011-12 in partly sustaining the addition/disallowance made by the Assessing Officer towards alleged bogus purchases. 2. Since in all these appeals the issue is common we have heard the matters together and for the sake of the convenience we are disposing all these appeals by this common order. 3. The Learned Counsel for the assessee submits that the Assessing Officer while completing the assessments in all t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... sel for the assessee submits that in the case of Kamal P. Agarwal the Assessing Officer disallowed 100% of the purchases whereas the Ld.CIT(A) restricted the same to 25%. Learned Counsel for the assessee submits in the case of Shrenik Jain Assessing Officer disallowed 25% of the purchase treating them as bogus purchases whereas the Ld.CIT(A) restricted the disallowances to 12.5% of the purchases. The Learned Counsel for the assessee submits that in the case of Alpesh Devichand Mehta Assessing Officer disallowed 12.5% of the purchases and whereas the Ld.CIT(A) confirmed the said disallowance in so far as the Assessment Years 2009-10 and 2010-11 are concerned and in the Assessment Year 2011-12 the Ld.CIT(A) reduced the gross profit declared by the assessee. The Learned Counsel for the assessee submits that in the case of the Rajul Doshi Assessing Officer considered peak of the supplies and made disallowances whereas the Ld.CIT(A) restricted the disallowance to 15% of the purchases. 7. The Learned Counsel for the assessee further submits that on identical circumstances the Jurisdictional High Court as well as the Coordinate Bench of this Tribunal deleted the additions in the fol ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... sessee nor any cross examination was provided to the assessee. Thus it is apparent from the assessment records that sole basis of addition is only the information obtained from the Sales Tax Department by the Assessing Officer. The A.O. also observed that the notices sent to the parties u/s 133(6) have been returned unserved and the assessee also did not produce the parties before him. The assessee for whatever reason might not have produced the parties for verification, may be due to lapse of time or may be due to the dealers shifting from their business premises etc., but assessee has produced the copies of bank statement where payments were made through cheques and the ledger copies of the books of the assessee of the parties etc., to prove the genuineness of the purchases. The Assessing Officer never doubted the sales made by the assessee from such purchases in fact he has accepted the sales, without there being any purchases there could not be any sales. It is also not proved by the Assessing Officer that the amount paid by the assessee to the dealers were returned back to the assessee and the purchase bills issued are only accommodation entries. Simply because the assess ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... n the information obtained from the Sales Tax Department and issuing notices under section 133(6) of the Act. As the Assessing Officer has failed to make any enquiry or investigation to prove the fact that the purchase transactions are not genuine whereas the assessee has brought documentary evidences on record to prove genuineness of such transactions which are not found to be fabricated or non-genuine, the action of the Assessing Officer in ignoring them cannot be accepted. Moreover, as rightly observed by the learned Commissioner (Appeals), when the payment to the concerned parties are through proper banking channel and there is no evidence before the Assessing Officer that the payments made were again routed back to the assessee, the addition made under section 69C cannot be sustained. Moreover, the decisions relied upon by the learned A.R. on careful analysis were found to be squarely applicable to the facts of the present appeal. Therefore, finding no infirmity in the order of the first appellate authority, we uphold the same by dismissing the grounds raised by the Department. 11. Similarly, in the case of Sharad Construction Pvt. Ltd., v. ACIT, ITA Nos. 2812-14/2015 dated ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... erse materials, if any, in his possession to the assessee nor has allowed him to cross-examine the dealers who allegedly admitted of having provided accommodation bills without actual delivery of goods. That being the case, the inference drawn on the basis of adverse materials without confronting them to the assessee is in gross violation of rules of natural justice. Furthermore, not granting opportunity to the assessee to cross-examine the dealers who allegedly admitted of having provided accommodation bills also vitiates the proceedings, therefore, the addition made on account of bogus purchases is legally unsustainable. In this context, we may refer to the decision of the Hon'ble Supreme Court in Andaman Timber (supra). The observation of the learned Commissioner (Appeals) in this context, in our view, is totally irrelevant. Only because the assessee offered to pay the sales tax / VAT, it will not take away his right to be confronted with adverse materials or opportunity of cross-examination. If the Assessing Officer intends to utilise any adverse material in detriment to the interest of the assessee, he is bound to confront them to assessee with opportunity to rebut them. F ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ITR 619] held that where sales are supported by purchases and payments were made through banks, merely because suppliers had not appeared before the Assessing Officer purchases could not be rejected as bogus purchases. While holding so, the Hon ble High Court observed as under: - 7. We have considered the submission on behalf of the revenue. However, from the order of the Tribunal dated 30.04.2010, we find that the Tribunal has deleted the additions on account of bogus purchases not only on the basis of stock statement i.e. reconciliation statement, but also in view of the other facts. The Tribunal records that the Books of Accounts of the respondent-assessee have not been rejected. Similarly, the sales have not been doubted and it is an admitted position that substantial amount of sales have been made to the Government Department i.e. Defence Research and Development Laboratory, Hyderabad. Further, there were confirmation letters filed by the suppliers, copies of invoices for purchases as well as copies of bank statement all of which would indicate that the purchases were in fact made. In our view, merely because the suppliers have not appeared before the Assessing Off ..... X X X X Extracts X X X X X X X X Extracts X X X X
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