TMI Blog2023 (10) TMI 252X X X X Extracts X X X X X X X X Extracts X X X X ..... ) on the basis of records before it. What transpires is that the payments were made through banking transactions and without any factual evidences, AO concluded that the amount deposited in the account of Thakur Associates was withdrawn as cash by the assessee. The findings of Ld. CIT(A) require no interference. Decided against the Revenue. Bogus sales - What transpires from record and rightly held by Ld. CIT(A) is that apart from his own belief, Ld. AO did not make any inquiry with regard to sales from M/s. Golden Harvest. The fact that the amounts were received from M/s. Golden Harvest from banking channel was taken into consideration by Ld. CIT(A). CIT(A) also concluded that without inquiry from M/s. Golden Harvest and without confronting specifically to the assessee why the sale should not be treated as bogus the same could not have been discarded and treated as undisclosed income from undisclosed source. Thus, the findings of Ld. CIT(A) in deleting the additions on account of alleged bogus purchases and sales do not require interference. Ground is decided against the Revenue. Inguine fabrication charges - The bench is of considered opinion that the Ld. AO without mak ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... mmarily re-compute the total taxable income, it appears these expenses were impliedly disallowed by him as he had disbelieved the sales purchase and cash credits. Deduction u/s 80HHC of the is a natural consequence of the nature of income derived and as the additions made by Ld. AO have been substantially deleted a re-computation of the total taxable income is required to be done and therefore these issues are also restored to the files of Ld. AO to take into consideration the relevant evidences of assessee and allow the expenses and give benefit of exempt income in accordance with law. - SH. SHAMIM YAHYA, ACCOUNTANT MEMBER AND SH. ANUBHAV SHARMA, JUDICIAL MEMBER For the Appellant : Sh. Ajay Vohra, Sr. Adv. Sh. Deepesh Jain, Adv. Sh. Shaurya Jain, CA For the Respondent : Ms. Princy Singla, Sr. DR ORDER PER ANUBHAV SHARMA, JM: The appeal has been filed by the Revenue against order dated 23.01.2008 passed in appeal no. 295/06-07 for assessment year 2004-05, by the Commissioner of Income Tax (Appeals)-III, New Delhi (hereinafter referred to as the First Appellate Authority or in short Ld. F.A.A. ) in regard to the appeal before it u/s 250 of Inc ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... tion during the year. Accordingly considering it to be unexplained credits appearing in the books of accounts, addition was made. 2.3 Ld. AO further observed that expenses of Rs. 5,65,490/- has been shown as payments made for fabrication expenses but there was no corresponding TDS. As assessee did not provide confirmations of these parties, Ld. AO considered these as non-genuine expenditure, not incurred for purpose of business and addition of this amount was made. 2.4 Further, AO observed that as purchases and fabrication expenses are not genuine the local sale of garments of Rs. 2,02,56,951/- is also not genuine. Ld. AO considered the fact that sales tax returns has not been filed so the local sales of Rs. 74,96,688/- to M/s. Golden Harvest, a related party of the assessee, were alleged to be bogus sales and addition was made. 3. Ld. AO concluded and re-calculated taxable income as follows; I hold that assessee has made bogus export by exporting/booking some other type of goods of no commercial value in the name of some of genuine existing parties/ importer situated in foreign countries, but those parties are in no way involved in actual export/import with assessee ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 74,96,688/- 3. Addition on account of bogus purchases to M/s. Thakur Associates as discussed above. 76,88,380/- 4. Addition on account of bogus purchases to other Parties as discussed above. 28,43,799/- 5. Addition on account of unexplained cash credits as discussed above. 16,09,094/- 6. Addition on account of fabrication and making expenses not proved genuine, as discussed above. 5,65,490/- 7. Draw bank income as declared by the assessee. 9,34,254/- 8. DEPB income as declared by the assessee. 4,92,174/- 9. Interest on FDRs, as declared by the assessee. 2,16,758/- Gross total Income : 3,36,88,155/- Less: Deduction u/s 80-L 262/- ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... also raised following grounds in the cross objections: 1. That on the facts and in the circumstances of the case, the Commissioner of Income-tax (Appeals) should have independently entertained and examined the documentary evidences placed as additional evidence in respect of alleged bogus purchase of Rs. 76,86,380/- from M/s. Thakur Associates. 2. That the Commissioner of Income-tax (Appeals) erred on facts and in law in sustaining the addition of Rs. 28,43,799/- made by the assessing officer, holding the same to be bogus purchases from various parties. 3. That on the facts and in the circumstances of the case, the appellant should have been held entitled to deduction for expenditure amounting to Rs. 1,06,09,019/- claimed by the appellant in the profit and loss account. 4. That the assessing officer erred on facts and in law in not allowing deduction under section 80HHC of the Act on the export sales. 5. Heard and perused the record. 6. Ld. DR submitted that Ld. AO had heavily relied statement of the nephew of Sri Sanjiv Thakur, proprietor of M/s. Thakur Associates as the firm was found to be non-existing entity. It was submitted that Ld. AO has tak ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... y observed that Ld. AO had not produced any evidence except statement of Rahul to substantiate that purchases were not genuine. It was submitted that the payments were made through banking channels and same were unnecessarily doubted by Ld. AO. Ld. Sr. Counsel submitted that the books of accounts were duly audited and without rejecting them, the purchases could not be disputed. Again Ld. Counsel submitted that the identical addition in the hands of husband of assessee has been deleted by the Tribunal. 7.3 In regard to addition of Rs. 16,09,094/- towards unexplained cash credits, Ld. Sr. Counsel submitted that the amount was received in the immediately preceding year which can not be treated as income during the present assessment year. It was submitted that Section 68 of the Act, is not applicable to outstanding balance of creditors. 7.4 In regard to disallowance of Rs. 5,65,490/- of fabrication expenses, Ld. Sr. Counsel submitted that all the details of the expenses were submitted which have been duly appreciated by Ld. CIT(A). 7.5 Ld. Sr. Counsel relied following judgments:- 1. ACIT vs. Shri Hardeep Nihal Singh : ITA No. 1422/Del/2008 (Del. Trib.) 2. Andaman T ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... g officer or CIT(A). Reliance was placed on the following cases to submitting that Courts/ Tribunals have held that an assessee can raise additional grounds/ claims in cross objection filed in response to the Departmental appeal before the Tribunal, provided facts are on record: CIT vs Silver Line: 383 ITR 455 (Del) CIT vs K Venkatesh Dutt: 319 ITR 331 (Kar) DCIT vs. Turquoise Investment Finance Ltd.: 299 ITR 143 (MP) Fast Booking (I) (P.) Ltd. vs DCIT: 378 ITR 693 (Del) DCIT vs Liquid Investment Trading Co. Ltd.: ITA No.4802/Del/2002 (Del Trib.) Steri Sheets Ltd in ITA No.546 547/Del/2000 (Del Trib.) Daler Singh Mehndi vs DCIT: [2018] 91 taxmann.com 178 (Del Trib.) We have given thoughtful consideration to the facts, submissions and law relied and the grounds are determined as follows in accordance with flow of events in assessment order. 10. Ground no. 3 in appeal of Revenue: The record shows that Ld. AO has considered the whole business activity and fund flow of the assessee to be sham and intended to circulate the money outside of India and bring it back. However, what he relied heavily was the fact that purchases of the assessee fro ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... es without commenting anything on the plea of assessee that the local sales were made within the limits for which registration under the relevant sales tax was not necessary. It appears that this finding of bogus sales has its seeds in the alleged bogus purchase from Thakur Associates. What transpires from record and rightly held by Ld. CIT(A) is that apart from his own belief, Ld. AO did not make any inquiry with regard to sales from M/s. Golden Harvest. The fact that the amounts were received from M/s. Golden Harvest from banking channel was taken into consideration by Ld. CIT(A). Ld. CIT(A) also concluded that without inquiry from M/s. Golden Harvest and without confronting specifically to the assessee why the sale should not be treated as bogus the same could not have been discarded and treated as undisclosed income from undisclosed source. Thus, the findings of Ld. CIT(A) in deleting the additions on account of alleged bogus purchases and sales do not require interference. Ground is decided against the Revenue. 13. Ground no 5 in appeal of Revenue. It can be observed that with regard to fabrication charges being not genuine the foundation of Ld. AO was the treatment he ha ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... can be placed on the judgment of Hon ble Jurisdictional Delhi High Court in CIT vs. Usha Stud Agricultural Farms Ltd. 301 ITR 384 (Del.), CIT vs. Om Prakash Mahajan Sons: 152 ITR 583 (Del.) and Co-ordinate Bench judgment in DCIT vs. Nipun Builders Developers Ltd. : ITA No. 558/Del/2010 (Del. Tri.). Ld. CIT(A) has rightly deleted the addition and the same requires no interference. 16. Ground no. 2 arising out of assessee s cross objections. Ld. CIT(A) primarily considered the fact that there was failure on the part of assessee to provide confirmed copies of accounts and referring to M/s. Priya Agencies it was observed that the address was not filed. The assessee has claimed that she was not given opportunity to furnish confirmed copies of the accounts while the details of expenses was placed before Ld. AO vide letter dated 17.03.2006. The Bench is of considered opinion that as assessee had failed to establish that payments were made by any banking transaction then in the absence of establishing the genuineness of parties with respect to specific purchase made for them by relevant evidences, the Ld. Tax Authorities cannot be faulted for making the addition. However, tak ..... X X X X Extracts X X X X X X X X Extracts X X X X
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