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TMI Blog2013 (9) TMI 370X X X X Extracts X X X X X X X X Extracts X X X X ..... ills - The assessee had also furnished bill wise, details of fabric and its utilization in manufacturing garments alongwith the corresponding invoices issued and money realized subsequently from the purchasers in the bank account of the assessee - CIT (A) had given a reasonable order touching upon all the aspects raised by the Assessing Officer - There was no infirmity in the order of the Ld. Commissioner of Income Tax (A). As regards the statement of Sh. Rakesh Gupta was concerned, it emanates that assessee has wanted an opportunity to cross examine - But that opportunity was not given by the Assessing Officer - Hence, statement of Sh. Rakesh Gupta cannot be the sole basis of addition - As regards the statement of Sh. Rajeev Gupta and Sh. Parmesh Kumar Garg was concerned, when assessee was confronted the assessee immediately filed affidavits of both the persons wherein they have clearly stated that the statements were recorded under duress and undue pressure - Hence, the same cannot be the basis of treating the purchase as bogus - It is further noted that Sh. Sat Narayan Gupta, the proprietor of M/s Chaavi Trading Company and Sat Narayan & Sons (HUF) had not given any statement ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... , alter or amend any / all of the grounds of appeal before or during the course of hearing of the appeal. 3. In this case the assessee is a partnership firm and engaged in the business of manufacturing readymade garments. The assessee made sales which are export sales and sales from two Boutiques at Five Star Hotel. In the instant year assessee had claimed purchases of ₹ 44,07,271/- and sales of ₹ 64,02,504/- and declared a gross profit of ₹ 3335977/-. The matter in dispute in this case is whether the purchases of ₹ 9,63,910/- are genuine purchases or not. The partywise details of purchases made by the assessee which the Assessing Officer has termed as bogus are as under:- S.No. Name of party Amount 1. Chhavi Trading Company 1,84,828/- 2. Sat Narayan Sons HUF 3,62,340/- 3. Piyush Textiles 4,16,745/- Total 9,63,913/- 3.1 The Assessing Officer issued a letter to the assessee ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Garg that they were actually purchasing fabrics from the concerned suppliers and supplying them to M/s Maharani of India Group have been sworn on 11.12.2007 that is after a gap of nearly 10 months from the period when they submitted that they had arranged bogus bills through these suppliers. Once again it is intriguing as to why these two brokers took so long to come forward and state that the statement given by them before the income tax department in February, 2007 were incorrect. c) Perusal of statements given by these persons under oath before the department reveals that they have themselves written the same in their own handwriting that the statements have been given without pressure, threat, coercion and inducement. d) That the statements of Parmesh Kumar Garg and Rajeev Gupta about bogus purchases were recorded a second time only to confirm the statements of Rakesh Gupta with regard to other firms. This was not done to apply any pressure on them, as alleged by the assessee, because they had already admitted in their first statement that they indulged in bogus billing through Rakesh Gupta and his own firms. (e) The fact remains that till date none of the suppliers ha ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... er of Income Tax (A) considered the submissions, he observed that basis adopted by the Assessing Officer to make the disallowance of purchases is neither legally correct and nor factually tenable. He observed that foremost basis adopted by the Assessing Officer is that Sh. Pramesh Kumar Garg and Sh. Rajeev Gupta had retracted their statements before Income Tax Department on 3.4.2008 i.e. 14 months after the statements having been made and therefore, such retraction casts doubt and such affidavits have been recorded at the behest of the assessee. Ld. Commissioner of Income Tax (A) observed that Assessing Officer has failed to appreciate the fundamental of the case. He noted that the assessee s contention that purchases have been made through suppliers and commission agents of fabrics namely Sh. Rajeev Gupta and Sh. Parmesh Kumar Garg and the assessee has never dealt with the proprietors namely Sh. Rakesh Gupta and Sant Narayan Gupta directly. Ld. Commissioner of Income Tax (A) further noted that when the staments of Sh. Parmesh Kumar Garg and Sh. Rajeev Gupta were forwarded to the assessee. The assessee immediately rebutted the stand taken by the Assessing Officer by furnishing affi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... affidavits of both the commission agents wherein they have only confirmed the fact that the statement recorded under duress, but also the fact that they supplied fabric. Ld. Commissioner of Income Tax (A) further observed that gross profit rate declared by the assessee was commensurate with the GP rate declared in preceding assessment years. 4.3 Ld. Commissioner of Income Tax (A) further observed that the proprietors of three firms to supply fabric were Sh. Rakesh Gupta and Sh. Sat Narayan Gupta. That there were no statements recorded of Sh. Sat Narayan Gupta, therefore, apparently no adverse inference can be drawn in respect of purchases made from M/s Chaavi Trading Company and M/s Sat Narayan Sons (HUF). As regards the statement of Sh. Rakesh Gupta is concerned, Ld. Commissioner of Income Tax (A) observed that during the course of assessment proceedings, the assessee has requested for cross examination of said person. However, despite requests no cross examination was offered to the assessee and hence, the said statements recorded of Sh. Rakesh Gupta cannot be of any valid evidence. Ld. Commissioner of Income Tax (A) further observed that the statement recorded of Sh. Rakes ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Gupta and Sh. Parmesh Kumar Garg is concerned, when assessee was confronted the assessee immediately filed affidavits of both the persons wherein they have clearly stated that the statements were recorded under duress and undue pressure. Hence, the same cannot be the basis of treating the purchase as bogus. It is further noted that Sh. Sat Narayan Gupta, the proprietor of M/s Chaavi Trading Company and Sat Narayan Sons (HUF) has not given any statement. Hence, purchases from these companies cannot be treated as bogus. Thus, we find that additions have been solely based on the statement of few parties. Two parties have filed affidavit making the averments that the statements obtained from them were obtained under duress. Furthermore, statement of Sh. Rakesh Gupta was obtained behind the back of the assessee. Assessee was never given an opportunity to cross examine him, despite requests. It is further noted that profit disclosed by the assessee are comparable profits and there is no evidence to establish the bills represented bogus bills. The assessee has also furnished bill wise, details of fabric and its utilization in manufacturing garments alongwith the corresponding invoices i ..... 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