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TMI Blog2016 (2) TMI 498X X X X Extracts X X X X X X X X Extracts X X X X ..... Ajay Wadhwa, Adv. ORDER PER BEENA A PILLAI, JM: The present appeal has been filed by the Revenue against the order of the ld. CIT(A)-Ghaziabad vide his order dated 23/11/2012 for A.Y. 2009-10 on the following grounds: 1. That ld. CIT(A) has erred in deleting the addition of ₹ 2,38,86,670/- on the ground that the material in the possession of the Assessing Off icer was neither supplied to the assessee nor was he confronted with the information. It is a fact that during the course of assessment proceedings point wise/question wise reply was submitted by the assessee on the material in the possession of the Assessing Off icer. 2. That ld. CIT(A) has erred in deleting the addition of ₹ 2,38,86,670/- on the basis of dictum that when the sales have been accepted, purchases have to be accepted also. 3. That the ld. CIT(A) has erred in deleting the addition of ₹ 2,38,86,670/- even when he himself has accepted that the possibil ity of appellant buying material from the parties other than M/s Riddhi Siddhi Enterprises cannot be ruled out. 4. That the ld. CIT(A) has erred in holding that Assessing Off icer has not disturbed the trading ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... purchases made by the assessee from M/s Riddhi Siddhi Enterprises) as income of the assessee. 3. Being aggrieved the assessee carried the matter to the ld. CIT(A) and submitted that the assessee was not provided any opportunity to cross examine Sh. Surendra Kumar Sharma. It was submitted that the assessing officer had referred to certain judgments which are absolutely distinguishable in as much as these judgments pertain to the question of confirmation of the creditors and/or as the case may be though in the case of the assessee, the assessing officer has simply relied on the self serving statement of the third party namely Sh. Surendra Kumar Sharma. 3.1. It was submitted that the observations made in the order by assessing officer are totally based on the hear say. The Income Tax Officer, Ward-2(3), Ghaziabad has made an assessment on Sh. Surendra Kumar Sharma proprietor of M/s Riddhi Siddhi Enterprises and on the alleged information received from the Income Tax Officer, Ward-2(3), Ghaziabad, assessing officer has treated the purchase made by the assessee from the said Riddhi Siddhi Enterprises as bogus purchase. The assessee submitted that the important aspect of the matter ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s statement under oath that material was not supplied to assessee. To every answer given by him in response to the questions of the assessing off icer, he has simply stated that the so called Mr. Ravi was handling his business, got the bill/cheques signed from him. The assessing off icer has not examined the said Mr. Ravi and thus there is no material on record to conclude that Sh. Surendra Kumar Sharma proprietor M/s Riddhi Siddhi Enterprises has admitted to have issued accommodation bills to the assessee especially in the background of the fact that the name of the assessee namely Sh. Vijay Kumar Goel and his proprietorship concern apparently by the name of M/s Bankey Lal Jagdish Prasad is no where mentioned by the said Sh. Surendra Kumar Sharma in his statement recorded under oath. It is nothing less than a self serving statement that appears to have been given just to avoid the tax liabil ity in his own cases. That Sh. Surendra Kumar Sharma has given an af f idavit in which he has alleged that the assessing off icer Ward-2(3), Ghaziabad forced him to sign the pre-prepared statement under threat and undue pressure. It is further stated that even wi thout considering the co ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ion, the same are not reproduced herein. The ld. CIT(A) after considering the submissions of the assessee and the remand report of the AO observed that no independent enquiry had been made by the AO to form an opinion that M/s Riddhi Siddhi Enterprises had provided accommodation bills to the assessee in respect of the material purchased by it and his remand report was silent on this issue. 4.2. The ld. CIT(A) pointed out that Sh. Surendra Kumar Sharma had nowhere stated that he was into business of providing accommodation bills or that he had provided accommodation bills to the assessee in the material purchased from him. The ld. CIT(A) observed that the AO had not pointed out any defects in the sales records and in the books of accounts. The ld. CIT(A) categorically stated that the AO had not commented upon the submission of the assessee on the total sales shown by him in the books of accounts. He also mentioned that withdrawals made by Sh. Surendra Kumar Sharma from his different bank accounts did not match with any of the deposits in the bank account of the assessee and there were mostly cheque clearing entries and no cash deposits. 4.3. The ld. CIT(A) mentioned that Sh. S ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... deleted the addition of ₹ 2,38,86,670/- made by the AO and in view of the inference that the assessee might have made impugned purchases from some other parties at a lower cost, and thus earned much better profit on the sale of the impugned purchases, he directed the AO to apply net profit rate of 5% on the said unverifiable purchases of ₹ 2,38,86,670/- which was worked out at ₹ 11,94,334/-. Accordingly the addition to that extent was sustained. 5. The ld. DR strongly supported the order of the AO and reiterated the observations made in the assessment order. It was further stated that the ld. CIT(A) was not justified in deleting the addition made by the AO. 4.1. The ld. AR in his rival submissions reiterated that the AO made the addition only on the basis of statement of Sh. Surendra Kumar Sharma which was retracted later on by stating that no bogus entries were provided either to the assessee or any other person. It was further submitted that the sales shown by the assessee were accepted by the Trading Tax Department as well as by the AO and when the sales and the gross profit rate were accepted there was no reason to doubt the purchases. Therefore, the ld. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e. It is not legally correct to make addition of the entire purchase value to the income of the assessee when the same is unverifiable and books are rejected the only judicious method to frame assessment is to be apply a reasonable rate of profit on the total turnover. It is further stated that the assessing officer has not brought any material on record to prove that the money withdrawn by Sh. Surendra Kumar Sharma of M/s Riddhi Siddhi Enterprises found its way back to the coffers of the assessee namely Sh. Vijay Kumar Goel. On the other hand it is fact on record that all the transactions are entered through proper banking channel and even there is no evidence on record to prove that the assessee had paid his money to the onward buyers of the material to issue cheque to the assessee. The assessing officer has not pointed out any defect in the books of account and/or heavy cash deposit in the bank account of the assessee to suggest that the money is received back in cash from M/s Riddhi Siddhi Enterprises. 6.4. The AO did not provide any opportunity to the assessee to cross examine Sh. Surendra Kumar Sharma. In the present case, it is also noticed that the turnover of the asses ..... X X X X Extracts X X X X X X X X Extracts X X X X
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