TMI Blog2019 (2) TMI 1468X X X X Extracts X X X X X X X X Extracts X X X X ..... curred any expenditure and he offers no explanation about the source of such expenditure or part thereof, or the explanation, if any, offered by him is not, in the opinion of the Assessing Officer, satisfactory, the amount covered by such expenditure or part thereof, as the case may be, may be deemed to be the income of the assessee for such financial year. When the assessee has provided all the evidences of the payment and the payments are recorded in the books of account, they are not liable to be added u/s. 69C of the Act. Furthermore, the transaction from some of the parties have also been accepted in the subsequent assessment year. It is also not the case that any sales corresponding to the purchases/transactions has been disallowed or doubted. - Decided in favour of assessee. - ITA No. 4223/Mum/2017 - - - Dated:- 20-2-2019 - Shri Shamim Yahya, AM And Shri Sandeep Gosain, JM For the Appellant : Shri Chaitanya Anjaria For the Respondent : Shri R. R. Vora ORDER PER SHAMIM YAHYA, A. M.: This appeal by the Revenue is directed against the order of the learned Commissioner of Income Tax (Appeals)-3, Mumbai ( ld.CIT(A) for short) dated 27.03.2017 and ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e on 10.02.2015 to sundry creditors to verify the genuineness of the parties from whom certain purchases were made. Since no response was received, he passed the order on 02.03.2015 adding the amount involved of ₹ 9,95,50,211/- as unexplained expenditure u/s. 69C of the Act. The A.O. s order in this regard read as under: 6. Further, the notices u/s 133(6) dated 10.02.2015 were issued to the following sundry creditors to verify the genuineness of the parties from whom certain purchases were made by the assessee for the relevant period. However certain parties either did not respond or remained unserved hence a show cause was issued dated 19.02.2015 to the assessee to produce these parties personally on or before 27.02.2015 before the undersigned to verify its genuineness. The content of the show cause notice is as follows: Sr No Name of the Party Section Date of issue Expected date of reply Present status 1 M/ Shri Shyam Products 133(6) 10.02.2015 19.02.2015 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 1 M/ Shri Shyam Products 133(6) 10.02.2015 26,19,800 Reply not received. 2 M/s Bhawani Silicate Industries 133(6) 10.02.2015 44,00,837 Reply not received. 3 M/s Vikas Oil Proteins 133(6) 10.02,2015 3,00,02,928 Reply not received. 4 M/s Yogi Industries 133(6) 10.02.2015 1,66,31,513 Returned unserved on 20.02.2015 6 M/s Om Industries 133(6) 10.02.2015 60,24,568 Reply not received 7 Arihant Enterprises 133(6) 10.02.2015 19,36,884 Returned unserved on 23.02.2015 M/s Chetna Oil Trading 133(6) 10.02.2015 3,45,23,014 Reply not received. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... antiate its claim that the purchases made from the creditor are not genuine. The non submission of confirmations within the given time is not the ground to doubt the genuineness of the transactions of the parties. The appellant has submitted confirmations from the parties, their ledger account and the bank statements for payments. I did not fund any reason not to accept the confirmations from these parties. 9.3 Further, it is interesting to note that the AO has accepted the genuineness of these parties in the appellant's own case in the subsequent AY 2013-14 and 2014-15. Therefore, keeping in view the consistency and the fact that the appellant has submitted necessary confirmations to prove the genuineness of the parties, I did not find any reason not to accept the transactions as genuine, in view of the same Ground No. 3 is allowed. 6. Against the above order, the Revenue is in appeal before us. 7. We have heard both the counsel and perused the records. We have also gone through the precedents relied upon. The ld. Departmental Representative (ld. DR for short) relied upon the orders of the A.O. and also the points raised in the grounds of appeal. 8. Per contra, the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 3,45,23,014 8 Maruti Packers 38,10,667 9 RP India Oil Pvt Ltd No addition made Total 9,99,50,211 In view of the above, we wish to make our submissions for each party as under: 6.Shri Shyam Products During the course of assessment proceeding, the party had directly replied to the notice under section 133(6) of the Act to the AO, which was acknowledged by the AO in his remad report. Further, the party provided a copy of the Registered AD to the Assessee which suggest/ confirmed the claim of the party that reply was filed. The said copy of the registered AD was submitted to the AO vide letter dated 2 March 2015 and thus the observation of AO that no reply was filed was erroneous. (Refer page 59 to 60 of the paperbook) The AO had added the purchases made by the Assessee from Shri Shyam Products on the ground that the genuineness of the transaction was not proved either by the Assessee or by the party. Further, the AO in the remand report has observed that as on 31 March 2012, there was ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the paperbook) The ledger accounts and the extract of the bank statement suggested that the payments have actually been made by the Assessee. (Refer page 111 to 128 of the paperbook) Further, a copy of the registered AD of the reply by the party to the office of the AO as well as confirmation letter by the party was submitted. (Refer page 107 to 108 of the paperbook) However, the AO had not provided any comments/ confirmation of receiving letter/ information from the party in the remand report. Thereby there was no justification in questioning the genuineness of the party and making an addition when the party had replied to the notice as well as submitted the documents as required by the AO within the due time. 9.Yogi Industries Yogi Industries had provided a confirmation letter dated 23 February 2015 to the AO along with a copy of return of income acknowledgement stating that the Assessee has made purchases from Yogi Industries thereby showcasing the genuineness of the party. (Refer page 129 to 134 of the paperbook) The ledger accounts and the extract of the bank statement substantiating the purchases and payments have actually been made by the Assessee. (Refer p ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the paperbook) The ledger accounts and the extract of the bank statement substantiate that the purchases and payments have actually been made by the Assessee. (Refer page 173 to 222 of the paperbook) 12.Chetna Oil Trading (correct name is Chetna Traders Pvt Ltd) The Assessee purchased mustard oil from the Chetna Oil Trading in Jaipur. A perusal of the ledger account suggested that the purchases have been made at various branches of the Assessee. The party had directly submitted the reply to notice under section 133(6) of the Act to the AO. Further, the party has confirmed that the reply was made to the AO. Further, a copy of the registered AD, substantiating the reply given by the party is enclosed in the compilation. (Refer page 223 to 224 of the paperbook) The AO in his remand report had stated that no reply has been received from the party. The fact that the party has replied to the AO by way of registered AD clearly suggested the claim of the AO to be false. The ledger accounts and the extract of the bank statement substantiate that the purchases and payments have actually been made by the Assessee. (Refer page 231 to 268 of the paperbook) Further, the as ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... had stated that as per ledger account of the Appellant in the books of Maruti Packers, the sales to the Appellant during the relevant year amounted to ₹ 40,01,202, which ties up with the purchases recorded by the Appellant (ie Purchases ₹ 38,10,667 +VAT on purchases ₹ 1,90,533). Further, the extract of the bank statement substantiate that the payments for purchases have actually been made by the Assessee. (Refer page 275 to 334 of the paperbook) In view of the above discussions and documents submitted, we wish to submit that the payments made were genuine purchases and the CIT(A) was correct in deleting the addition made by AO under section 69C of the Act without being able to substantiate its claim that the purchases were not genuine. 14.Further, the suppliers had provided the documents/information as required in the notice issued under section 133(6) of the Act directly to the office of AO, as the same were confidential in nature. On request of the assesse, two parties had given few documents to the assesse which were filed directly with the AO and are submitted before your Honours in the paperbook. 15.Moreover, the Assessee vide letter dated 7 Augus ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rbook). 21. Further, the jurisdictional Hon'ble Bombay high court in case of Nikunj Eximp Enterprises (372 ITR 619) (Refer page 371 to 373 of legal paperbook), it was held that merely because suppliers had not appeared before AO purchase could not be treated as bogus no addition was warranted. 22.The above decision was followed in case of Prabhat Gupta (ITA 227/M/17) dated 21 December 2017 (Refer page 374 to 398 of legal paperbook)wherein it was held that non- service of notice issued under section 133(6) of the Act was not a ground to raise addition of bogus purchases when sufficient evidence was provided by the assesse. No addition can be made under section 69C of the Act when copies of bank statement and ledger copies filed 23.In case of Sudha Loyalka vs ITO (ITA 399 of 2017)(Del ITAT) dated 18 July 2018 (Refer page 399 to 408 of legal paperbook)it was held that disallowance of purchases under section 69C of the Act was not justified merely due to non-filing of confirmations from suppliers especially when assessee had filed certificate from bank indicating that the cheques issued were cleared and there was no defect in assessee's books of accounts. 24.Fu ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... assesse wishes to submit that the AO for AY 2013-14 had issued similar notice under section 133(6) to few parties from whom assessee had made purchases in the year under consideration. Subsequent to the issue of notice the following parties had replied to the notice alongwith following documents: i. Chetna Trading Pvt Ltd (refer page 341 to 344 of the paperbook) Copy of letter sent by AO under section 133(6) of the Act Copy of registered AD Copy of tracking details of reply submitted by Chetna Oil Trading to AO ii. Maruti Packers (refer page 345 to 346 of the paperbook) Copy of letter sent by AO under section 133(6) of the Act Copy of registered AD iii. Yogi Industries (refer page 347 to 352 of the paperbook) Copy of letter sent by AO under section 133(6) of the Act 32.However, it is pertinent to note that the AO in its assessment order has not made any discussion/addition with respect to the said purchases in AY 2013-14 thereby accepting the genuineness of the parties, (refer order at page 335 to 340 of the paperbook) 33.Further, we wish to submit that the principle of consistency should be followed. It is true that in general, doctrine of ' ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... explained expenditure as mandated in section 69C is not sustainable, as section 69C provides that where in any financial year an assessee has incurred any expenditure and he offers no explanation about the source of such expenditure or part thereof, or the explanation, if any, offered by him is not, in the opinion of the Assessing Officer, satisfactory, the amount covered by such expenditure or part thereof, as the case may be, may be deemed to be the income of the assessee for such financial year. In this regard, we note that when the assessee has provided all the evidences of the payment and the payments are recorded in the books of account, they are not liable to be added u/s. 69C of the Act. Furthermore, the transaction from some of the parties have also been accepted in the subsequent assessment year. It is also not the case that any sales corresponding to the purchases/transactions has been disallowed or doubted. In these circumstances, in the background of the aforesaid discussion and precedent, we do not find any infirmity in the order of the ld. CIT(A) and accordingly we affirm the same. 12. In the result, this appeal filed by the Revenue stands dismissed. Order p ..... X X X X Extracts X X X X X X X X Extracts X X X X
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