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TMI Blog2014 (10) TMI 496X X X X Extracts X X X X X X X X Extracts X X X X ..... the assessee and gave no opportunity to cross examine this party - Therefore, principles of natural justice have been clearly violated in the matter - Since no incriminating material is confronted to the assessee and no cross examination of the party is allowed to the assessee, therefore, such entries in the books of account of M/s. Mohit traders cannot be read as evidence against the assessee – relying upon Kishan Chand Chelaram vs. CIT, [1980 (9) TMI 3 - SUPREME Court] – Decided against revenue. Addition of bogus creditors – Held that:- The purchases are properly entered in the accounts which are supported by vouchers and payments have been made through banking channel - The address of M/s. Marvel Tea Estate India Ltd. is of Jabalpur (MP), but the AO is stated to have issued the summon at Jaipur (Raj.) - The AO accepted the books of account and no discrepancies have been pointed out in the purchase and the book results and the purchases have also been accepted by the department of VAT - The purchases are supported by vouchers and bank statement - CIT(A) specifically noted that no query has been raised regarding these creditors by the AO for holding the same to be in-genuine - ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... oks of M/s. Jai Traders as obtained by the AO on 25.11.2010 is reproduced at page 5 6 of the appellate order as well as assessee s books of account showing the account of Jai Traders, which is also reproduced at page 6 of the appellate order and it was found that difference of ₹ 3,72,000/- is explained which arise because of the contra entry of ₹ 3,16,130/- on account of return of cheques. The addition was accordingly deleted. 4. On consideration of the rival submissions, we do not find any merit in this ground of appeal of the Revenue. The ld. DR contended that no steps have been taken to get the accounts verified. However, the assessee has filed reconciliation of accounts of M/s. Jai Traders as suggested by the ld. DR, which is also reproduced at page 5 6 of the appellate order and clearly prove that there was no difference in the account of M/s. Jai Traders and whatever difference was taken into consideration by the AO was on account of return of cheques and contra entry made in the accounts of the said party. The ld. DR did not point out any infirmity in the reconciliation of accounts filed by the assessee on record. The ld. CIT(A) is, therefore, justified in ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... verified and as such no interference is called for in the matter. 7. On ground No. 3, the Revenue challenged the deletion of addition of ₹ 39,45,359/- on account of unexplained creditor M/s. Oom Murga Oil Mills. The AO considered the entries in the books of account of the assessee and in the books of M/s. Oom Murga Oil Mills and found difference and accordingly made the above addition. It was submitted before the ld. CIT(A) that the assessee did business with this company as its consignment commission agent and the accounts would disclose no difference at all. All the transactions were explained before the AO. It was submitted that there are certain contra entries which have not been appreciated by the AO. The transactions are not sale/purchase of the assessee. All the transactions are regular business transactions and there is no discrepancy. The assessee filed copy of consignment account in the books of account, which proved the finding of the AO to be wrong. The assessee acted as commission agent in principle. Therefore, the addition is wholly unjustified. 8. The ld. CIT(A) considering the evidences and material on record deleted the addition. His findings in para 2 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... reby, deleted. 9. On consideration of the rival submissions, we do not find any merit in this ground of appeal of the Revenue. The ld. DR pointed out PB (C-81) and from the papers filed by the ld. DR at page 5 to show that there is difference which is not reconciled or tallied. However, the assessee has filed reconciliation statement of accounts as suggested by the ld. DR in which all the entries were got reconciled and no difference has been pointed out by the ld. DR. Therefore, on this reason itself this ground is liable to be dismissed. It is admitted fact that the assessee acted as a commission agent of this party through agreement. All the entries have been made properly. Contra entries have also been made. The ld. CIT(A) on comparison of the statement of accounts found the entries tallied with the accounts of the assessee. Therefore, merely on account of contra entries made at different times by the assessee and the principal, the AO should not have held that the accounts did not tally. The assessee has filed reconciliation statement of accounts in the account books of the assessee as well as accounts of the party. The difference after contra entries is stated to be 0.10, ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... payment has been made through cheques. No purchases have been made nor any payment made in respect of ₹ 6,24,000/- which has been incorrectly debited and credited by M/s. Mohit Traders in its books of accounts. The appellant has further requested the A.O. that copy of statement of concerned parties be made available to him giving an opportunity to give detailed and complete explanation for each party and each entry, since only the difference is found to have been provided to him by the A.O. The appellant has further requested to give an opportunity for cross examination of the parties concerned where difference has been found before taking any view against him while passing the assessment order. However, A.O. has proceeded to pass the assessment order on 27.12.2010, when appellant's A.R. has attended the hearing, but neither the copy of statement of M/s. Mohit Traders has been made available nor any opportunity of cross examination given to the appellant when the statement has been received about a month ago. A.O. was under obligation to allow the appellant's request regarding cross examination in view of his denial of the said transaction. That would have been in t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ortunity to cross examine this party. Therefore, principles of natural justice have been clearly violated in the matter. Since no incriminating material is confronted to the assessee and no cross examination of the party is allowed to the assessee, therefore, such entries in the books of account of M/s. Mohit traders cannot be read as evidence against the assessee. We rely upon the decision of Hon ble Supreme Court in the case of Kishan Chand Chelaram vs. CIT, 125 ITR 713. The ld. CIT(A) on proper appreciation of facts and law correctly deleted the addition. This ground is accordingly dismissed. 12. On ground No. 5, the Revenue challenged the deletion of addition of ₹ 2,95,07,855/- on account of bogus creditors. The AO made addition of the aforesaid amount on account of ingenuine/bogus sundry creditors in the name of Ruchi Soya Refiners (Rs.42,92,706/-) and Marvel Tea Estate India Ltd., Jabalpur (Rs.2,52,15,149/-). The same have been treated as bogus by the AO on the ground that the letters sent to these parties on the address given by the assessee have been received back and the explanation given by the assessee on 27.12.2010 is not satisfactory. 13. The assessee chall ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 7.12.10 assessee submitted his compliance but that is not satisfactory, so the transaction with above parties is considered bogus, he did not perform his quasi-judicial functions in judicious manner. Without prejudice to the above it is further submitted in the facts of the case that Trade Creditors per se cannot be equated with Cash Creditors and by making non compliance for furnishing of information asked u/s. 133(6) of the Act by the third party, assessee cannot be penalized, when he has furnished all the details of creditors as required by learned A.O. and proved the transaction beyond doubt with the help of other supporting evidences like purchases vouchers, bank statements etc. It is pertinent to mention here that learned A.O. has accepted purchases made by assessee from the said parties, by not disturbing its trading results then treating the purchases contrary to that and adding the same as bogus is untenable. In this regard assessee relies on following case laws: (a) (2006) 205 CTR 444 (All) (b) (2006) 101 TTJ (All) 810 Hence in the facts of the case, it was requested to delete the addition of ₹ 29507855/- made to returned income of assessee. 14. The ld. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... t has been made by the A.O. to reject the evidence given by the appellant and the third party before making the impugned addition. 5.3 In respect of Marvel Tea Estate, Jabalpur, as per copy of account submitted by the appellant, total purchases of ₹ 2,68,43,059/- have been made during the year and closing balance of ₹ 1,07,79,352/- has been shown. All the payments have been made through its bank accounts in OBC. Purchases include VAT sales by Marvel Tea Estates besides Central accounts sales. As per invoices, complete details like TIN No., phone No., address, vehicle No. for delivery etc. giving the quantitative details of sales made by it during the year to the appellant have been given. Similar transactions have been made during next asstt. year also to the tune of Rs.l,32,11,632/-. A.O. has not taken cognizance of any of these details and has neither made any other enquiry from Bank, Trade Tax authorities etc. before coming to the conclusion that the said creditor is bogus. There is no evidence on record to show that the appellant has made purchases/sales outside his books of accounts. Sales declared by the appellant as per his return also tallied with the deta ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... credits. 16. We have considered the rival submissions and perused the material on record and did not find any merit in this ground of appeal of the Revenue. The ld. counsel for the assessee during the course of arguments took us through various statements of both the parties in their books of accounts and books of account of the assessee to show that the purchases are properly entered in the accounts which are supported by vouchers and payments have been made through banking channel. The address of M/s. Marvel Tea Estate India Ltd. is of Jabalpur (MP), but the AO is stated to have issued the summon at Jaipur (Raj.). The AO accepted the books of account and no discrepancies have been pointed out in the purchase and the book results and the purchases have also been accepted by the department of VAT. The purchases are supported by vouchers and bank statement. The ld. CIT(A) specifically noted that no query has been raised regarding these creditors by the AO for holding the same to be ingenuine. Therefore, such finding itself is sufficient to reject this ground of appeal of the Revenue. During the course of arguments since the ld. counsel for the assessee has got tallied the purcha ..... X X X X Extracts X X X X X X X X Extracts X X X X
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