TMI Blog2016 (4) TMI 1321X X X X Extracts X X X X X X X X Extracts X X X X ..... on and disallowance made by the AO and hence the sole ground of the Revenue being devoid of merits is dismissed. Disallowance of the software purchase made by the appellant for the purposes of its R&D - Held that:- One must not forget that the Revenue, which has powers regarding discovery, inspection, production and calling for evidence as well as survey, search and seizure and requisition of books of accounts and the inability of assessee to produce the supplier could not lead to an adverse inference against the assessee that the supplier was bogus or non-existent. In the present case, the AO has not made any further investigations or enquiry about the supplier and that too he accepted existence of M/s Exim for other purchases which was effected through the same period. The ld. CIT(A), despite confirmation of accounts placed before AO, incorrectly held that there is no confirmation. Per contra, the assessee has discharged the onus cast upon it to establish the genuineness and purchases and onus was shifted to the Revenue but not properly discharge by the AO for making the addition. Thus, conclusion of the AO as well as the ld. CIT(A) is not sustainable. Hence we demolish the sa ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... hat summons issued to this party had come back with the postal remarks no such person exists . The ld. DR further contended that no evidence of any nature has been provided by the assessee during the assessment proceedings to substantiate the claim of purchase of machinery from these vendors. Therefore, it was also rightly and correctly disallowed u/s 35 of the Act. The ld. DR strenuously contended that the ld. CIT(A) granted relief to the assessee without any reasonable and justified reasoning. Therefore, the impugned order may be set aside by restoring that of the AO on this issue. 5. Replying to the above, the ld. AR reiterated its written submissions placed before the authorities below which has been reproduced by the ld. CIT(A) in para 4.10 of the impugned order. The ld. AR also took us through paras 4.11 to para 4.16 of the impugned order and submitted that the ld. CIT(A) granted relief to the assessee by considering additional evidence, remand report of the AO and rejoinder of the assessee and rightly reached to a conclusion that purchase of plant and machinery from the said vendor was actually made by the assessee and thus, the action of the AO disallowing the claim of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... stainable and reliable evidences and explanation, the AO wrongly held that purchases made by the assessee of plant and machinery from the said four parties/vendors were bogus and this finding was set aside by the ld. CIT(A) by properly appreciating the facts and circumstances of the case. The ld. AR also pointed out that during the first appellate proceedings the assessee filed an application dated 25.8.2009 u/r 46A of the I.T. Rules, 1962 alongwith various relevant documentary evidence to substantiate the submissions originally made to the AO. The ld. AR also contended that the ld. CIT(A) forwarded these document, viz transportation bills, invoices of loading and unloading of machines, repair bills of truck which was carrying goods, etc. alongwith application of the assessee filed u/r 46A of the Rules and the AO had occasion to examine these documents and filed remand report which is available at assessee s paper book pages 116 to 119. 8. The ld. AR further pointed out that at the instance of the ld. CIT(A), the AO initially examined all the additional evidences/ documents and submitted remand report on merits and the AO requested that additional documents should not be admitte ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... submission, in the sequence of dates, I do not find any serious issue arising out of such dates. I feel that, the facts and practical aspects are got to be considered. It is not the case of the Assessing Officer that goods were received first and documents were of later date. In such a scenario, a possible inference could be made against the appellant. But such is not the case here. As pointed out by the appellant, I find that in all the cases the date of purchase invoice on all documents such as Form 38, Goods Receipt Note etc. is the same, the Invoice Number is the same. The suppliers have a valid Sales Tax and Excise Registration, and most importantly the payments were made through proper banking channels. It is not the case of learned Assessing Officer that the suppliers were in any way related to the appellant. There is no other evidence on record to prove that actual purchases were not made. On the contrary, the appellant has proved and furnished every possible details pertaining to these transactions including the bills of payment of freight to the transporters, it is seem that the bills of loading and unloading charges have been duly recorded in the books of the appellant. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ies. These authorities also act as a watch and ward for the programmes. The appellant s efforts on R D have also been acknowledged by a National Award in 2007 and other appreciations by ACMA. The appellant s books of accounts are audited and subject to public scrutiny and by other statutory bodies such as Registrar of Companies and SEBI etc. 4.15 Thus, a cumulative appreciation of all the facts and circumstances and all the evidences filed would lead to a natural conclusion that the purchases of plant and machinery from these parties were actually made by the appellant and the A.O s action of disallowing the same cannot be upheld. The disallowance of ₹ 1,81,28,360/- is, therefore, deleted and the appellant succeeds in respect of ground no. 10. First of all, we may point out that the ld. CIT(A) has admitted and considered additional evidences u/r 46A of the Rules by following a prescribed procedure and the Revenue has not raised any allegation or ground regarding admission and consideration of additional evidence by the first appellate authority. 11. Now we proceed to logically analyze the conclusion of the ld. CIT(A) in the relevant paras as reproduced hereinabove. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the assessee. It was open to the AO to investigate further about the cause of delay shown by the assessee but without making such exercise the AO proceeded to conclude that the claim of purchase of plant and machinery was bogus, which is not a justified and proper approach for a quasi-judicial authority. 13. On careful consideration of all relevant evidence, queries of the AO written submissions of the assessee and relevant documentary evidence and explanations, we have no hesitation to hold that the explanation and documentary evidence submitted by the assessee clears all the doubts which may take place in the mind of a man of ordinary prudence and in this situation, we are inclined to agree with the conclusion of the ld. CIT(A) that the purchases made by the assessee were genuine and duly supported by reliable evidence and explanations. Consequently, we hold that the inferences drawn by the AO on the basis of doubts and surmises and conjectures are not sustainable and justified and the same cannot be upheld being baseless and contrary to the totality of the facts and circumstances of the case established by the assessee. 14. At the cost of repetition, we may point out that ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... other relevant documents having been filed before him/Assessing Officer. 3. That the order passed by the learned CIT (Appeals) in disallowing a sum of ₹ 28,17,360/- for purchase of software is bad in law. 4. That each ground of appeal is independent of and without prejudice to other grounds of appeal raised herein. Ground Nos. 1 to 3 17. Apropos these grounds we have heard arguments of both the sides and have carefully perused the relevant material on record of the Tribunal. The ld. AR submitted that the assessee ld. CIT(A) has grossly erred in law and on facts and in the circumstances of the case in upholding the action of the AO in disallowing a sum of ₹ 28,17,360/- out of the software purchases made by the assessee for the purposes of R D Centre. The ld. AR vehemently contended that the first appellate authority was factually incorrect in holding that the purchases of software upto said amount remained unproved in spite of various details filed by the assessee about the supplier and other relevant documents having been filed before him. The ld. AR also pointed out that the assessee filed confirmed copy of account of assessee in the books of M/s Exi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ition by holding that no summons could be served upon the said supplier M/s Exim and the assessee did not make any efforts for producing the party. The ld. CIT(A) in para 5.8 of the impugned order noted that except copy of invoices and store receipts the assessee has not filed any other evidence confirming the transaction. 20. At this stage, it is relevant to note that the AO has allowed part purchase from M/s Exim, then other purchases cannot be held as bogus merely because the summons could not be served upon the supplier, i.e. M/s Exim so far as the conclusion of the ld. CIT(A) is concerned it is also factually incorrect as when the assessee has filed copies of the invoices and store receipts alongwith confirmation from the supplier, as available at page 19 of the assessee s paper book then it cannot be alleged that the assessee did not file any confirmation or any other supporting evidence. At this stage, it is relevant to consider the ratio of the decision of the Hon'ble Jurisdictional High Court at Delhi in the case of CIT Vs. Rice India Exports Pvt. Ltd [supra] wherein speaking for the Hon'ble Jurisdictional High Court their Lordships held that though the initial ..... X X X X Extracts X X X X X X X X Extracts X X X X
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