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TMI Blog2018 (3) TMI 1579X X X X Extracts X X X X X X X X Extracts X X X X ..... ross profit would work out to ₹ 2,44,59,878/- giving GP rate of 105.22%, which is not appealing to reason at all. In view of all these facts and laying our hands on the aforesaid decisions, we are of the considered opinion that the addition made by the AO and sustained by the ld. CIT(A) was not justified. Thus addition is not sustainable - Decided in favour of assessee. - ITA No. 6354/Del./2017 - - - Dated:- 26-3-2018 - Shri Bhavnesh Saini, Judicial Member And Shri L. P. Sahu, Accountant Member Assessee by : Shri Ram Samujh, Advocate Revenue by : Shri Kaushlendra Tiwari, Sr. DR ORDER Per L.P. Sahu, A.M.: This appeal, at the instance of assessee, is directed against the order dated 25.08.2017 of learned CIT(A)-17, New Delhi for the assessment year 2014-15 on the following grounds: 1. The order passed by the learned CIT(A) under the facts and circumstances of the case is bad in law in general. 2. Under the facts and in the circumstances of the case the Learned CIT (A) has erred in law by upholding the applicability of provision of Section 68 of IT Act 1961 to a partly unpaid liability of Trading goods incurred during the previous year 2013-14 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 3 to 31.03.2013. The notice, so issued returned back un-served by the postal authorities with the remark address moved . Another notice dated 08.09.2016 u/s. 133(6) was sent on the new address of the creditor given by assessee, which also remained un-served. However, as per AO, confirmation of this creditor was received but without requisite ITRs and bank statement. The AO, therefore, issued a show cause notice on 31.10.2016, apprising the assessee from the above facts and directing him to produce principal officer/partner of M/s. Ganesh Trading Company, Kolkata. Having received no reply, the AO issued final show cause notice to the assessee on 02.12.2016, requiring him to explain why the closing balances standing in the name of M/s. Ganesh Trading Co. amounting to ₹ 2,35,90,226/- should not be disallowed. 3.2 In response to show cause notice, the assessee vide letter dated 19.12.2016, filed reply explaining the genuineness of the creditor supported by various documentary evidences. However, on analysis of evidences laid and explanation offered by assessee, the Assessing Officer held that the assessee failed offer satisfactory explanation to discharge the onus that lay up ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of which, part payment ₹ 65,00,000/- was made to the said creditor through banking channel and balance amount of ₹ 2,35,90,226/ was shown as credit balances appearing in the name of said creditor in the books of assessee, which too was paid in succeeding years through banking channel. The total purchase of Supari was taken into the stock and later on sold in the open market. In order to prove and substantiate the sundry creditor as genuine, the assessee has filed following evidences before the authorities below : (i). Purchase invoices (21 in numbers) issued by M/s. Ganesh Trading Company. (ii). Payment proof against purchases in the shape of HDFC Bank Statement of assessee bank at Chandni Chowk, New Delhi. (iii). Copy of Good Receipts issued by transporter M/s. SRC India Movers to substantiate the transportation of goods from M/s. Ganesh Trading Company to the assessee. (iv). Statement of payment to the transporter through banking channel. (v). Copy of TIN No. 19671056607 of M/s. Mahesh Trading Co. (vi). Stock register of goods showing the movement from M/s. Ganesh Trading Co. and corresponding sale of same items periodically made during the year alon ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ext contended that the accounts of the assessee are audited u/s. 44AB and copies of audited balance sheet, profit Loss account, trading account etc. filed before the AO, have not been rejected u/s. 145(3) of Act nor any adverse comment has been made as to the correctness and completeness of the accounts. Therefore, the action of the authorities below is unjustified for making the impugned addition. For this proposition, reliance is placed on the decisions of Hon ble Punjab Haryana High Court in PCIT vs. Talbros Engineering Ltd. (2016) 386 ITR 154 and of Karnataka High Court in CIT vs. Anil Kumar Co. (2016) 386 ITR 702. 5.5 The ld. Counsel for the assessee further submitted that the case laws relied by the ld. CIT(A) are not applicable to the present case, being distinguishable on facts The assessee has also given the distinguishing features of each and every decision relied by CIT(A), in his written synopsis placed on record before us. It was contended that once all the three ingredients, i.e., identity, creditworthiness and genuineness of sundry creditor stood proved, there remains no justification to make the addition u/s. 68. For this proposition, reliance is placed on ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... tax invoices, which can be issued by a VAT registered dealer in respective State. The bank statements of assessee and the sundry creditor show the remittance of part payment against the credit purchases shown by the assessee. The goods receipts of Transporter and statement of payment to him by assessee through banking channel shows the transportation of goods from the interstate seller to the assessee, which cannot be doubted without any contrary material on record or contrary enquiry result by the Revenue authorities. Copy of TIN and PAN card furnished by the assessee coupled with the fact that proprietor of sundry creditor appeared and admitted the impugned sale to assessee before the commissioned authority, i.e., ITO Imphal, unequivocally go to establish the identity of sundry creditor and further go to dilute the suspicion based on non-service of notices u/s. 133(6). The stock register submitted by assessee containing the entries of total purchases made from the said creditor and also corresponding sale of same items periodically made during the year along with ledger account of purchasers in the books of assessee, have not been adversely commented upon by the Revenue Authoriti ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... to show the actual investment in actual purchases done by the assessee, any figure arrived at would be on the basis of surmises and conjectures. Thus to the extent of purchases of ₹ 65 lacs made during the year for which payment was also made by the assessee during the course of the year, no adverse inference has been drawn in spite of the fact that the purchases has not been proved to be genuine as the sales have not been questioned. Such a whimsical finding of the ld. CIT(A) is nothing but his far- fetched imagination and fantasy, which are not appreciable for want of supporting evidences. In fact, the Assessing Officer is not supposed to make bilateral statements on the purchases made, i.e., one taking no adverse view on the part payment made through cheques against the purchases made from the same creditor and second, by disbelieving the outstanding balances shown by assessee out of purchases from the same creditor. In our opinion, it will not be open to the Assessing Officer to blow hot and cold in the same breath. Matter, if viewed from this angle, no addition is called for against the assessee as done in the instant case. 9. It is also worthwhile to mention here tha ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... on of addition of the said two amounts under Sec. 68 did not arise inasmuch as the provisions of Sec. 68 would not be attracted on the purchases made on credit. 10.2 Hon ble Bombay High Court in the case of CIT vs. Nikunj Exim Enterprises (P) Ltd., (2013) 216 Taxman 171, in para 7 of the report, has observed as under : 7. We have considered the submission on behalf of the revenue. However, from the order of the Tribunal dated 30-04-2010, we find that the Tribunal has deleted the additions on account of bogus purchases not only on the basis of stock statement i.e. reconciliation statement, but also in view of the other facts. The Tribunal records that the Books of Accounts of the respondent-assessee have not been rejected. Similarly, the sales have not been doubted and it is an admitted position that substantial amount of sales have been made to the Government Department i.e. Defence Research and Development Laboratory, Hyderabad. Further, there were confirmation letters filed by the suppliers, copies of invoices for purchases as well as copies of bank statement all of which would indicate that the purchases were infact made. In our view, merely because the suppliers have ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 90,226/- was shown as credit balances appearing in the name of said creditor in the books of assessee, which too was paid in succeeding years through banking channel and the Revenue Authorities have not raised any doubt on discharge of this liability in subsequent years. The assessee has also filed a comparative chart, showing the turnover, gross profit and net profit for three consecutive years including the year in dispute, which is placed at page 230 of the Paper book, on perusal of which, it is found that the gross profit and net profit shown by the assessee is progressive and the AO has not doubted the same. It is also worth mentioning that the addition of ₹ 2,35,90,226/- if added to the declared profit of ₹ 8,69,652/- as shown in the comparative chart filed, the gross profit would work out to ₹ 2,44,59,878/- giving GP rate of 105.22%, which is not appealing to reason at all. In view of all these facts and laying our hands on the aforesaid decisions, we are of the considered opinion that the addition made by the AO and sustained by the ld. CIT(A) was not justified. 12. The decisions relied by the ld CIT(A) in the impugned order are based on different set o ..... X X X X Extracts X X X X X X X X Extracts X X X X
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