TMI Blog2019 (10) TMI 711X X X X Extracts X X X X X X X X Extracts X X X X ..... ad specifically stated before the Ld. CIT (A) that all the bills of purchase and sales were available which were also produced before the Assessing Officer and same can also be produced once again if so desired for necessary verification. He especially drew our attention to the letter written to the Ld, CIT (A). Despite such a categorical averment, and without any such verification of the material on record, the addition has been confirmed. Addition on account of M/s. Arcotech Ltd . - assessee during the course of assessment proceedings had filed ledger account of the said party from which certain balance outstanding were noted by the Assessing Officer. At the fag end he had tried to send notice u/s. 133(6) to the said creditor but the response could not be received by the AO till the completion of the assessment. However, in the remand proceedings again inquiry was conducted by the Assessing Officer and the confirmations along with bank statements, ITR s and ledger account was received in response to notice u/s 133(6) and after verification he found that the credit balance have been reconciled or is matching with the books of account of the assessee. The assessee had also s ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ount of M/s. Progressive alloys India Pvt. Ltd. as bogus purchases. 3. Whereas, in Revenue s appeal the only dispute is with regard to deletion of unexplained credit of ₹ 1,40,92,683/- of M/s. Metal Impex. 4. The facts in brief are that assessee is an individual engaged in the business of trading of metals and alloys. The Assessing Officer in the assessment order has first of all, compared the total sales and net profit rate for the Assessment Years 2014-15 and 2015-16 in the following manner: A.Y. 2014-15 A.Y. 2015-16 Sales ₹ 901,184,322 ₹ 4,910,951,501 Net Profit ₹ 1,251,627 ₹ 1,853,780 NP ratio 0.14% 0.04% The ld. Assessing Officer then further noted that assessee had shown outstanding balance in the account of the sundry creditors amounting to ₹ 1,66,84,33,017/-, the information and list of the sundry creditors have been reproduced in the assessment order at pages 2 and 3. There w ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... dger Account of M/s. Progressive Alloy India Pvt. Ltd. form the books of Appellant and contra confirmation along with copy of their ITR. 5. Copies of bank accounts of the appellant showing the details of transactions with the aforementioned parties. 6. Ld. CIT (A) forwarded the additional evidences to the Assessing Officer to submit his remand report. However, the Assessing Officer in his first remand report stated that these evidences should not be admitted. Thereafter, ld. CIT (A) again sent back the matter to the Assessing Officer to comment on merits of the additional evidences and verify the same. Then in the second round of remand proceedings, Assessing Officer conducted his own inquiry and again sent notices u/s.133(6) to these four parties to which all of them responded and submitted his remand report which has a very vital bearing on the issues involved before us, which is reproduced here under:- Your honour has forwarded the copy of additional evidence filed by the assessee to submit our report on merits of the evidence filed. To-verify the merit and genuineness of transaction as provided in additional evidence the under signed issued notices u/s 133(6) f ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rd including the remand report and submissions /explanation of the assessee. The Ld. CIT (A) has even incorporated the submissions and the reasoning given by the assessee in rebuttal of Assessing Officer s finding against the assessment order and the remand report which for the sake of ready reference is reproduced hereunder: Addition made Name of party / Amount in Rs. Findings/Reason in brief as given by AO in the order- with relevant page/para of the order Our Remarks M/s Metal Impex 1,40,92,863/- Confirmation does not show details of transactions between the parties. Difference in balance as per the confirmation and balance as per ledger account This cannot be reason for addition. Duly signed confirmation was filed. This cannot be reason for addition as no opportunity to reconcile the difference was allowed. We are also filing copy of account from our books, duly confirmed copy of account from the books of M/s Metal Impex (Prop. Naveen Tayal), Copy of their ITR, copy of bank statement for relevant and subsequent year of the appellant. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of Rule 46A of the I. T. Rules as the AO had not issued any show cause notice and, never asked us to produce Smb. accounts although the accounts are audited u/s 44AB of the Act and the report of tax audit was filed. (Page no. 25 to 28 of the paper book) M/s Progressive Alloys India (P) Ltd. 3,15,25,170/- Confirmation does not show transactions between the parties. M/s Progressive Alloys (P) Ltd. filed the same confirmation as submitted by the assessee Amount added in the account during the year is added as bogus purchases This cannot be reason for addition. Duly signed confirmation was filed. Filing of same confirmation rather proves that the transactions are genuine. Confirmation has been filed by the appellant and also by the party in response to notice u/s 133(6). We are also filing copy of account from our books, duly confirmed copy of account from the books of M/s Progressive Alloys (India) Pvt. Ltd., copy of their ITR, copy of bank statement for relevant and subsequent year of the appellant. The aforesaid documents are not strictly speaking additional evidences ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... or and in the books of the assessee are matching, but still held that there are some variation in the dates and on this basis she has confirmed the addition. 11. Lastly, with regard to M/s. Progressive Alloys India (P) Ltd again Assessing Officer in his remand report has stated that confirmation received has all the details of the transaction and the credit balances are tallying. However, the Ld. CIT (A) proceeded to confirm the addition on the ground that purchase bills etc. were not provided by the assessee. 12. We have heard both the parties at length and also perused the relevant material and findings given in the impugned order referred to at the time of hearing. The main contention of the ld. CIT-DR was that Assessing Officer had made inquiry and even though in the remand proceedings the account got tallied, but mere submission of ledger accounts and bank statement does not prove the genuineness of the purchase because bill-wise entries could not be proved and confirmation of account received during the course of remand proceedings were merely make believe explanation. He thus, strongly relied upon the observations and findings of CIT (A). 13. On the other hand, ld. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... situation, Section 68 cannot be invoked and if any addition at all could have been made can be u/s.68. Here in this case assessee has duly explained the nature and source of the credit that these were on account of purchases made by the assessee from these parties who have not only confirmed the purchases but also was tallied with their respective account with the purchase and sales bills. 15. One very important fact that here in this case is that, during the course of appellate proceedings and in remand proceedings, inquiry was conducted by the Assessing Officer directly from these parties, who have not only confirmed the transaction but have also filed their copy of ledger accounts along with details and bank statements. After verifying these details, the Assessing Officer has categorically accepted in his remand report that the confirmations have been received from the parties and they are matching with the credit balance of the assessee and both the accounts are tallying. Despite such a categorical finding, Ld. CIT (A) has still proceeded to confirm the addition on a very lame reason. On one hand, Ld. CIT (A) accepts that the confirmation of credit balances of the creditor ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ith bank statements, ITR s and ledger account was received in response to notice u/s 133(6) and after verification he found that the credit balance have been reconciled or is matching with the books of account of the assessee. The assessee had also stated that bills of purchase and sales were available and are tallying with the accounts. Thus, when accounts and the amount stands reconciled and purchases are not in doubt, then no adverse inference can be drawn on the basis of finding given in the assessment proceedings that balance could not be reconciled. Under these circumstances, we do not find any reason as to how addition could be made or confirmed. 18. Similarly, with regard to the A.V. Infraprojects Pvt. Ltd. and M/s. Progressive Alloys India Pvt. Ltd. also similar confirmations with the ledger account, bank statements, ITRs etc. have been received and Assessing Officer has found that the balance shown by the party and the assessee are tallying and all the transactions are matching from the bank statement. Thus, under these circumstances, no addition could have been made. Otherwise also, if the amount represents purchases made by the assessee on credit that does not mean t ..... X X X X Extracts X X X X X X X X Extracts X X X X
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