TMI Blog2019 (10) TMI 396X X X X Extracts X X X X X X X X Extracts X X X X ..... as said statement should have related to incriminating material found during the course of search or statement must be made relatable to material by subsequent enquiry/ investigation. Addition @ 25% of alleged bogus purchases - In the present case, no opportunity to cross examine said Shri Rajendra Jain was provided by the Revenue authorities. Thus it was rightly held that not providing cross examination tantamount to denial of natural justice and does vitiate the assessment. CIT(A) has also considered that the AO himself had recorded in the assessment order that letter was issued to Custom Authorities SEZ-II, Sitapura Industrial Area, Jaipur to verify the said purchases and the AO has recorded a finding that SEZ authorities have confirmed that said purchases are genuine as duly recorded in their records. This itself cast a doubt on AO s conclusion that purchases made by the assessee were bogus. More particularly, when it is certificate from another Govt. Agency by certifying the genuineness of the purchases and it tilts preponderance of probability in favour of the assessee. It is pertinent to mention that the ld. CIT(A) has explicitly dealt with the issue and deleted the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... n 69C of the Act are applicable and as per provisions of Section 115BBE no deduction is allowable to the assessee as assessee purchased the material from grey market in cash. A.Y. 2012-13- Revenue 1. Whether on the facts and in the circumstances of the face, the ld. CIT(A) was right in deleting the addition of ₹ 3,23,21,845/- u/s 69C on account of bogus purchases ignoring the fact that assessee was involved in taking the accommodation entry from Rajendra Jain and Banwari Lal Jain Group. 2. Whether on the facts and in the circumstances of the face, the ld. CIT(A) was right in deleting the addition of ₹ 32,868/- made u/s 36(1)(va) of the Act (i.e. P.F. Addition) without appreciating the fact that it was made as per provision of section 36(1)(va) of the I.T. Act, 1961 . 3. Whether on the facts and in the circumstances of the face, the ld. CIT(A) was right in allowing the deduction u/s 10AA/10A of the Act ignoring the fact that provisions of Section 69C of the Act are applicable and as per provisions of Section 115BBE no deduction is allowable to the assessee as assessee purchased the material from ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... such purchases a bogus u/s 69C. The AO has taxed such disallowance u/s 115BE of the Income Tax Act. 5. I havegone through the orders of the AO and submissions made by the ld.AR . I have also gone through the various case laws cited and legal objection 5. The issue of addition made by the AO in the assessment u/s 143(3) / 153A without any reference to incriminating seized material was considered bythe Hon'ble Rajasthan High Court in the case of Jai Steel Ltd. vs ACIT (88 (DRR 1). The Hon'ble Court was of the view in cae of completed assessment no addition can be made if no incriminating seized material is found during the course of search. Similar view point was expressed by the Hon'ble Delhi High Court in the case Kabul Chawla vs ACIT 380 ITR 573. 5.3 The issue of additions made by the AO while framing the assessment u/s 143(3)/ 153A if no incriminating material is found during the course of search was considered by Hon'ble Gujarat High Court in the case of Soumya Construction Pvt.vs CIT 387 ITR 529.. In its order dated 14- 03-2016 Hon'ble Court has categorically stated that in casse of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... also gone through various case laws relied upon by the ld.AR . The AO has relied on the information passed on by the Investigation Wing Mumabi wherein statement of Shri Rajendra Jain was recorded under oath. In this statement Shri Jain has admitted managing few concerns which accommodation entries in the form of bogus purchase bill to various people. The modus operandi is explained and tabulated in the assessment order where in various entities are listed providing such bogus bills. The relevant portion of the statement is also reproduced in the order passed u/s 143(3) / 153A. 6.2 I have carefully perused the order and I find that the addition made on the basis of statement recorded by the Mumbai Investigation Wing other than the statement the AO has made nothing in his possession to make impugned addition. I may point out that mere statement of a person searched u/s 132 is not sufficient to make addition and here the AO has proceeded to make addition on the best of 3rd party subject to a different search. The appellant on the other hand has produced copies of relevant bills, vouchers, details of payments made, relevant entries in the stock so ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ustrial Area,Jaipur to verify the said purchases. The AO has recorded a finding that SEZ authorities have confirmed that said purchases are genuine as duly recorded in their records. This itself cast a doubt on AO s conclusion that purchases made are bogus. In fact, when it is certificate from another Govt.Agency certifying the genuineness of purchases and it tilts preponderance of probability in favour of appellant. On all the aforesaid counts, I am of the view that addition made by the AO is unsustainable and the same liable to be deleted. Same are directed to be deleted for A.Y. 2009-10 to 2014-15). 6.7 Without prejudice to the above, I am in agreement with the legal contention that even if the disallowance made by the AO is accepted then it would have no bearing on the case of the appellant as the entire exercise would be Revenue neutral. The appellant reliance on the judgement of Hon'ble Gujarat HC in the case of Sajani Jewels vs DCIT 143 DTR 263 (Guj) is tenable wherein it has been held that whole exercise of disallowance by the AO is Revenue neutral and since purchase made are through cheque payment the section 69C is not attracted. The relevant para o ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 2.2.5 Even otherwise, the AO had made addition by merely relying on the statement of one Shri Rajendra Jain which cannot be termed as an incriminating material as said statement should have related to incriminating material found during the course of search or statement must be made relatable to material by subsequent enquiry/ investigation. 2.2.6 As far as the merit of addition made by the AO @ 25% of alleged bogus purchases are concerned, in this respect, the ld. CIT(A) had passed well reasoned detailed order in para 6 to 6.8. In the present case, no opportunity to cross examine said Shri Rajendra Jain was provided by the Revenue authorities. Thus it was rightly held that not providing cross examination tantamount to denial of natural justice and does vitiate the assessment. In this respect, we also rely on the decision of Hon'ble Supreme Court in the case of Andaman Timber Industries vs CCE (supra) wherein it was categorically held that statement of the witnesses without an opportunity to cross examine cannot be the sole basis of assessment as it is serious flaw which renders the order a Nullity. The ld. CIT(A) has also considered that the A ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of the Act are applicable and as per provisions of Section 115BBE no deduction is allowable to the assessee as assessee purchased the material from grey market in cash. 3.2 We have heard the rival contentions and perused the materials available on record. It is pertinent to mention that the issues raised by the Revenue in the Assessment Year 2011-12 and 2012-13 are similar to the issue of Assessment Year 2010-11 wherein the grounds raised in appeal of the Revenue are dismissed taking into consideration the explicit and reasoned order of the ld. CIT(A). Thus the decision taken by us in the appeal of the Revenue for the Assessment Year 2010-11 shall apply mutatis mutandis in the grounds of the Revenue for the Assessment Year 2011-12 and 2012-13. Hence, the grounds raised (supra) by the Revenue on the issue in question in the Assessment Year 2011-12 and 2012-13 are dismissed. 4.1 Now we take up the grounds of appeal No. 2 of the Revenue for the Assessment Year 2012-12 wherein the AO during the course of assessment proceeding noted that the assessee collected employees s contribution towards PF and ESIC but did not paid it within the due date prescrib ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... facts and in the circumstances of the cae, these payments have been made before the due date of filing of return and therefore, such additions are directed to be deleted. Appellant s appeal on this ground for A.Y. 2012-13 to A.Y. 2014-15 is allowed. 4.3 During the course of hearing, the ld. DR relied on the order of the AO while the ld.AR of the assessee relied on the order of the ld. CIT(A) 4.4 We have heard the rival contentions and perused the materials available on record. It is not imperative to repeat the facts of the case concerning the issue in question as the ld. CIT(A) has deleted the addition taking into consideration the decisions of Hon'ble Jurisdictional High Courts. The relevant observations of the Hon'ble Jurisdictional High Court in the above case are as under:- CIT Vs. State Bank of Bikaner Jaipur (2014) 363 ITR 70 (Raj) (HC) :- Where PF and/or EPF, CPF, GPF, etc., was paid after the due date under the respective acts but before filing of return of income u/s 139(1), it could not be disallowed u/s 43B or u/s 36(1)(va). CIT Vs. Jaipur Vidyut Vitran Nigam Ltd. (2014) 363 IT ..... X X X X Extracts X X X X X X X X Extracts X X X X
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