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TMI Blog2017 (8) TMI 741X X X X Extracts X X X X X X X X Extracts X X X X ..... assessee. - Decided against revenue. X X X X Extracts X X X X X X X X Extracts X X X X ..... by the assessee in procuring accommodation bills in both the years. 5. Before the learned CIT(A) the assessee contended that the Assessing Officer should not have placed reliance solely on the report given by the Sales Tax Department since the assessee has produced the supplies and they have also confirmed the factum of supply of materials to the assessee. Further the assessee also furnished quantity details and stock register to prove the receipt and sale of materials. The assessee also placed reliance on various case laws. The Learned CIT(A) forwarded written submissions along with legal compilation of case laws and paper book furnished by the assessee to the Assessing Officer calling for a remand report. However, in the remand report, the Assessing Officer expressed the view that all the issues have been considered by him at the time of framing of assessment. Accordingly, he declined to comment upon the written submissions given by the assessee. 6. However, the learned CIT(A) was convinced with the explanations and contentions of the assessee and accordingly deleted the addition in both the years. For the sake of convenience, we extract below the operative portion of the orde ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... pplies to unaccounted expenses etc. Here all purchases, sales, payments etc. are recorded and explained and are part and parcel of books of accounts. The decision of Honble High Court of 6ujarat in the case of ITO Vs Totaram Sharma Prop. Super Therm (Tax appeal no. 1344 of 2008) with Tax appeal no. 1355 of 2008, Date of order 9/2/2010), clearly disapproves peak theory and any addition on account of such type of alleged bogus purchases. Here facts are more favourable to the assessee because instant assessee produced concern sellers before A.O. who confirmed sales to the assessee, where as in that case, as noted in the order of Honble ITAT (ITA No. 2239 and 2291/Ahd/2004) notices u/s, 133(6) were returned unserved with remarks "not known" and that assessee neither furnished any other evidence nor produced concerned party and even though, the Hon'ble ITAT treated purchases as genuine on the basis of collateral evidences, like payments, corresponding sale and quantitative details. Here, extant assessee furnished all evidences including concerned seller. Therefore, I find no reason to treat impugned purchases as bogus. Accordingly, the addition made by the A.0. is not tenable ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Taxmann.com 216 (Mum), wherein the assessee therein had also purchased goods from M/s. Trishul Enterprises and the agent of the supplier Mr. Suresh A. Parekh has confirmed the sales transaction. Identical contentions were made in the said case by the Revenue. However, the Tribunal has deleted the addition holding that no adverse inference qua purchases can be made. 10. We have heard the rival contentions and perused the record. We noticed that the assessee has furnished all the evidences such as bills, delivery challans, lager account copy of the supplier, payment details through bank, quantitative details, stock register, sales invoice etc. in order to prove the genuineness of the purchases. Further, we noticed that the supplier M/s. Trishul Enterprises through its agent Mr. Suresh A. Parekh has confirmed the factum of supply of materials to the assessee. Hence, in our view, that the assessee has sufficiently discharged its burden to prove the genuineness of the purchases. On the contrary, we noticed that the Assessing Officer has simply placed reliance on the report given by the Sales Tax Department and he did not bring any material on record to disprove the claim of the assesse ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... impugned assessment proceedings as discussed above, Shri Suresh A. Parekh had categorically confirmed that he deals in various electronic items in bulk and that there is huge demand in the market for supply of the aforesaid items. He had also given the name of concerns through which he had supplied various items to various corporate houses including M/s. Videocon Industries Ltd., Aurangabad. In his statement, he has stated that on telephonic or oral orders he used to source the suppliers in the grey market as per the specification of the products and direction of the purchase department of the assessee company and the suppliers from the grey market supplied these items directly to the assessee company. Since these suppliers operate in grey market, therefore, to regularize the same, he used to give sale bills to the assessee company by raising invoices through his concerns against which the payment was received by him and the same has been distributed to the suppliers of the material in the grey market. In his cross examination he has also explained and clarified his earlier statement and admitted that what has been said is correct but he admitted and clarified that material has bee ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ri Suresh A. Parekh. The revenue is harping greatly on the first statement of Shri Suresh A. Parekh wherein he has admitted that he is providing accommodation bills and charging commission on them without actual supply of goods; and neither Shri Suresh A. Parekh nor the assessee could adduce any evidence that actually material has been supplied to the assessee. From the records as well as the heads under which addition has been made by the AO it is seen that the addition on account of alleged bogus purchases has been made on the utilisation of following materials and the treatment in accounts: Utilization of material as Amount (`) Treatment in accounts Plant and machinery/ moulds 23,79,82,268 Addition to plant and machinery Trail run 13,94,92,838 Charged to capital WIP account Trail production 6,83,99,170 Charged to capital WIP account Machinery spares 14,97,74,663 Show as inventory in balance sheet Raw material and consumables 3,50,24,425 Charged to profit and loss account Total 63,06,73,365 29. From the aforesaid additions it is quite ostensible that firstly it has been accounted for in the books of account and majority of the material purchased a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... made in the books of account have not been rejected, then these items shown in the books of account cannot be discarded. AO has not brought on record that the details of items purchased from Shri Suresh A. Parekh is not appearing in the books of account when the assessee has specifically raised this issue before the AO. Either the entire statement of Shri Suresh A. Parekh should be accepted or it should be discarded in its entirety. Only one part of the statement given at initial stage cannot be solely relied upon for making the addition and the second part of the statement which has been made before the AO himself during the course of the assessment proceedings when it was subject to cross examination cannot be disregarded or rejected by the revenue. As stated earlier, here, in this case, unlike in the other cases of bogus purchases the assessee's trading account is not affected directly because the material purchased have been utilised for addition to the plant and machinery and has been charged to capital WIP account and only a part of it has been shown as inventory in the Balance Sheet and raw material consumables which has been charged to the P&L Account. There is no direc ..... X X X X Extracts X X X X X X X X Extracts X X X X
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