TMI Blog2023 (5) TMI 572X X X X Extracts X X X X X X X X Extracts X X X X ..... sessee in this context is fully allowed. Addition on the basis of statement of the party - Assessee was not allowed to cross examination of the party before the addition. We respectfully relied on the order of Sona Builders Andaman Timber Industries [ 2001 (7) TMI 3 - SUPREME COURT] the reasonable opportunity for the assessee was denied without allowing cross verification of the party. The assessee already informed and prayed to the revenue for the said verification of the party who had made the statement against him. AO has totally assumed that the cash was deposited in the bank account of the party belongs to the assessee. So the additions have been made by the AO on the basis of the surmises and conjectures, ignoring the evidence produced before him by the assessee. There is lack of cogent evidence in respect of addition of sales of the assessee, respectfully relied on, Lalchand Bhagat Ambica Ram [ 1959 (5) TMI 12 - SUPREME COURT] The assessee cannot be taxed doubly in same amount which was already declared in the return of income. The ld. AO has already calculated the GP ratio @ 11.87% which is working out at Rs. 2,72,17,362/-. But there is no separate addition wa ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... amount to Rs. 15,54,20,000/- against the assessee. Being dissatisfied on the order of appeal, the assessee has agitated the grounds before us. The status of the issues on account of which additions were made by the ld. AO is as follows: S.No Issues on account of which additions have been made Amount (Rs.) CIT(A) ITAT 1. Rejection of books of accounts u/sec 145(3) of the Act NA Ground Rejected In appeal 2. Introduction of own cash by showing bogus sales (Addition made u/sec 68 r.w.s 115BBE of the Act) 15,54,20,000/- Ground Rejected In appeal 3. Applying GP rate of 11.87% (But the addition of Rs. 2,72,17,362, were covered by the AO in addition of Rs. 15,54,20,000/- and no separate addition was made) NA 4. Disallowance of expenses (1/4th and 1/5th) as debited in P L A/c 11,21,118 Ground Allowed N ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ook from the Fazilka Central Co-operative Bank, Jalalabad the same cheque books were handed over to. the said persons after duly signing on it. Against the such activity, I received Rs 1 lakh per annum from the said persons. Sir, I have never deposited a single penny in my account in the Fazilka Central Co-operative Bank, Jalalabad. I have never withdrawn any amount from the said Bank. The Bank was operated but the said party i.e. M/S Ganesh Rice Mills' itself Q: Please state why the such transactions have been made by you in lieu of a penny amount. Do you know that such transactions are illegal even leads to prosecution? Ans: Due to financial crisis and to meet both ends. I do not know the consequences of the transactions made by the said party. Q: Have you made any purchases from M/S Ganesh Rice Mills, Mukatsar during the financial year 201314 and onwards? Ans: I have not made any purchases from M/S Ganesh Rice Mills, Mukatsar during the financial year 2013-14 onwards. Sh Rajesh Dhawan also filed an affidavit, confirming his above depositions during the course of assessment proceedings. The statement of Sh Rajesh Dhawan and his affidavit were du ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ferred to the following concerns during the year itself on various dates- S.S. Enterprises, Jalalabad Rs.3,62,93,300/- Narinder Joson Co., Jalalabad Rs.6,11,56,000/- Amrinder Sons, Jalalabad Rs. 2,00,00,000/- Gurkirat Enterprises, Jalalabad Rs. 2,00,00,000/- Nawab Trading Rs. 1,07,06,700/- Josan Food Pvt. Ltd., Rs. 2,00,00,000/- The ld. Counsel, Mr. Sehgal further placed the observation of the ld. CIT(A) in appeal order page-11 12 4.3 I have given careful consideration to the above and find that the question of bogus sales and consequential sale amount finding entrance into books of account was under consideration of Hon'ble jurisdictional High Court in the cases of Self Knitting Works Vs. CIT [20141 51 taxmann.com 137 (P H) and CIT vs. Sanjay Chhabra 120121 21 taxmann.com 221 (Punjab Haryana). It has been concluded and adjudicated in these cases that in the event where any assessee fails to est ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... . The view taken by the Assessing Officer is completely judicious and therefore cannot be disturbed. The above mentioned grounds of appeal are dismissed. 6.0 Ground of Appeal no. 7: This ground of appeal is related to ad hoc addition of Rs.11,21,118/- made by the Assessing Officer being disallowance of various expenses debited to profit and loss account as an ad hoc addition. In the course of appellate proceedings it has been vociferously contested that the addition has been made by the Assessing Officer without any justification and pointing out the defect. I have given careful consideration to the contention above and also read the relevant part of assessment order. The Assessing Officer without pointing out any defect in the claim of the appellant has disallowed the expenses on surmises and conjunctures. It is settled principle of law that the claim expenditure cannot be denied until and unless it is proved that either the claimed expense is bogus or not for the purposes of business. The Assessing Officer has not based his disallowance on any independent enquiries; therefore such addition cannot be sustained and hence deleted. The ground of appeal is al ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... waiting for the reply which proves that there is a denial of principle of natural justice. Respectfully Reliance in this regard is being placed on the judgment of: Sona Builders vs. Union of India 251 ITR 197 (S. C.). The relevant paragraphs are extracted as follows: - 6. There is no doubt in our mind that on both counts there has been a gross breach of the principles of natural justice because adequate opportunity to meet the case made out in the notice was not given to the appellant. 7. Having regard to the statutory limit within which the appropriate authority has to act and his failure to act in conformity with the principles of natural justice, we do not think we can remand the matter to the appropriate authority. We must set his order aside. 8. The appeal is, accordingly, allowed. The judgment and order under appeal is set aside. The order of the appropriate authority dated 31-5-1993 is quashed. M/s. Fortune Metaliks Ltd. in ITA No. 82/Chd/2021 for A.Y. 2016-17 The self-serving statement and affidavit of Shri Rajesh Dhawan Prop. M/s Vasudev Sales Corp. by itself does not establish that whatever has been stated by him is true and whate ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... hat the assessee s books of account were rejected by the AO and the addition was made without pointing out any specific defect in the books of account, impugned addition was rightly deleted and no substantial question of law arises for determination. 4. Issue-2, the application of section 115BBE for addition U/s 68. In argument the ld. Counsel has mentioned that the provisions of sec 68 of the Act are not at all applicable in the case of the Assessee. The amount of Rs. 15,54,20,000/- pertains to the sales as made by the assessee to M/s Vasudev Sales Corporation. The entire amount has been received by the assessee through banking channels. The assessee is not concerned about the bank account of M/s Vasudev Sales Corporation. If cash has been deposited in the Bank account of M/s Vasudev Sales Corporation, it would not mean that the cash belongs to the assessee as the amount has been received by the assessee after the deposit of cash by the party. The question regarding the source of cash and the applicability of the provisions of sec 68 of the Act must only be in the hands of the M/s Vasudev Sales Corporation and not in the hands of the assessee. The assessee is mai ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... is extracted as below: - 8. It is, thus, evident that the Tribunal has gone into all possible details and, thereafter, recorded the findings in favour of the assessee. It is well-settled that this Court, while exercising appellate jurisdiction under section 260A of the Act cannot arrogate to itself the function of recording a finding by re-appreciating evidence taking a view different than the one recorded by the Tribunal. It is well-settled that merely because another view is possible, would not constitute a basis for us to reverse the findings after re-appreciating evidence. In that regard; we place reliance on a judgment of Hon ble the Supreme Court in the case of Santosh Hazari v. Purushottam, Tiwari [2001] 251 ITR 84. Therefore, we are of the view that no opportunity is provided to set aside the findings recorded by the Tribunal that the amount of Rs. 13,56,000 has been deposited by the sons of the assessee, which was realized after selling the pilferage stocks outside the books of account. There is no merit in the appeal as no substantive question of law for its admission would arise. 4.3. In argument, it is placed that the assessee is even liable to provisions of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... as denied regarding any dealings with the assessee. The said statement of Sh. Rajesh Kumar had been recorded at the back of the assessee and no opportunity was given to cross examine him. The assessee has duly requested the department for the same. Relevant copy of reply is placed in the APB at Page-48-49 . 4.6. Reliance in this regard is being placed upon the following Judgments wherein it has been held that the statements taken at the back of the assessee cannot be used for making additions unless a chance to cross examine has been given to the assessee. It has also been held that the ld. AO cannot make such additions only on the basis of surmises and conjectures: - i) Shri Sanjay Singhalvs DCIT in ITA No. 708,710,711/Chd/2018 order dated 20.09.2021 ii) Parkash Chand Kothari vs. DCIT as reported in 94 ITR (Trib.) 49 Jaipur Bench iii) Great India Steel Fabricators in ITA No. 746/Chd/2014 dated 03.03.2017 vii) CIT, Delhi vs. SMC Share Brokers Ltd. (2007) 288 ITR 345 (Del) The observation of the Hon ble Delhi High Court is extracted as below:- 6. Learned counsel for the revenue relied upon One-up Shares Stock Brokers (P.) Ltd. v. R.R. Singh, CIT ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... hose goods also could not be explained by assessee - Tribunal concluded that genuineness of transaction could not be established and relevant credit of Rs. 37.30 lakhs in profit and loss account was as cash credit in nature of cash credit - Whether Tribunal was justified in sustaining addition The case law as relied upon by the CIT(A) is based on cash sales but the case of the Assessee is entirely different and entire amount has been received through banking channels. The cash sale parties were missing in the case law as relied upon by CIT(A). But in the case of the Assessee the Assessee has made the sale to a party which is not missing but the party is denying the purchase as he has deposited cash in the bank account to make payment to the Assessee. No cash has been deposited in the bank account of the Assessee. If any cash has been deposited by M/s Vasudev Sales Corp, the question of source of the said cash must have been done from him. The Assessee has received sale amount through banking channel and the same cannot be doubted. CIT vs Sanjay Chhabra 21 taxmann.com 221 (P H HC) Assessee was e ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ssee to the party. During the hearing the ld. Counsel for the assessee has submitted year wise GP ratio in respect of turn over. The chart of GP ratio is annexed herewith: chart of G.P. Rate ASSESSMENT YEAR G. P. RATE 2013-14 7.98% 2014-15 7.89% 2015-16 7.89% 6.1. The entire addition is made on the statement recorded from Mr. Rajesh Dhawan prop. M/s. Vasudeva Sales Corp. But the statement recorded in survey u\/s. 133 was not served to assessee. The entire gross sales amount to Rs.15,65,41,118/- was duly declared in the turnover of the assessee during the filing of return. There are no discrepancies in the purchase or in stock of the assessee. The only discrepancies found in sales on the basis of recorded statement of the party which was finally added back to the total income of the assessee. The books of accounts are rejected u/s. 145(3) of the Act without finding any lacuna in the books of assessee. We respectfully relied on the order of the jurisdictional High Court in the case of CIT vs. Om Overseas Hon ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... sideration of sales. Therefore, unless there is a finding to the effect that the investment by way of incurring cost in acquiring goods which have been sold has been made by the assessee and that has also not been disclosed, the question whether entire sum of undisclosed sales proceeds can be treated as income, answers by itself in the negative . (Emphasis supplied) 6.3. The assessee disclosed the entire sales, payment was received through banking channel. The assessee is not at all beneficial of the said amount. The stock of goods and purchase was duly accepted in the order of assessment and in the subsequent assessment order. The entire submissions were submitted before the revenue authorities by the assessee including stock statement and the details of purchase. The recorded statement of the part had the evidentiary value. But without the cross examination, the statement is itself in nullity , respectfully relied on SMC Share Brokers Ltd, supra. The addition cannot be made mere on the basis of doubts or conjecture. We are setting aside the appeal order passed by the ld. CIT(A). Considering the above, the addition amount of Rs 15,54,20,000/- is quashed. 7. In the r ..... X X X X Extracts X X X X X X X X Extracts X X X X
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