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TMI Blog2018 (12) TMI 623X X X X Extracts X X X X X X X X Extracts X X X X ..... rchases are excluded, the Profit Rate would be very abnormal and would not be according to the norms of the industry. AO did not bring any evidence on record, if any heavy cash or heavy cash transactions are conducted by assessee. The AO merely on presumption noted that Sh. Vinod Parashar has made cash withdrawals which were returned to the assessee. There is no basis for making such an allegation against the assessee. It is well settled law that presumptions howsoever may be high but it cannot take placed on legal proof. Decided in favour of the assessee. - ITA Nos:- 1807, 1808, 1809/Del/2014 - - - Dated:- 1-8-2018 - Shri Bhavnesh Saini, Judicial Member And Shri L.P. Sahu, Accountant Member For the Assessee : Sh. Rajkumar Gupta, CA And Sh. Sumit Goel, CA For the Revenue : Sh. S.R. Senpati, Sr.DR ORDER PER: BHAVNESH SAINI, JM All the appeals by Revenue are directed against different orders of Ld. CIT (Appeals)-XXIV, New Delhi dated 04.12.2013 for A.Y. 2006-07 and 2007-08 and dated 06.12.2013 for A.Y. 2008-09. 2. We have heard the Ld. Representatives of both the parties and perused the material available on record. 3. It is stated that in all the a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 00/-. 7. During course of the proceedings, notices u/s 133 (6) were issued to concern parties i.e. M/s. Om Industrial Corporation and other parties including M/s. Techno Enterprises by speed post dated 29.08.2011 which were received back unserved with the remarks left without address . The inspector of the department also reported that these parties were not available at the given address at the time of making local enquiries. The Assessing Officer asked the assessee to prove genuineness of the purchases from these two parties. The assessee filed various replies before Assessing Officer on different dates alongwith the documentary evidences i.e. copy of ledger accounts, copy of bills/invoices, D-3 forms, bank accounts showing payment for purchases made, copy of stock register, cash book etc. in support of its claim that the purchases have actually been made and have been received at their business premises, accounted for in the stock and used in production and subsequent sale thereof. 8. The AO reproduced some extracts from the assessee s submission in the Assessment Year in which the assessee explained that Assessee Company has no concern/ relation with Mr. Vinod Parashar a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ere issued to Sh. Vinod Parashar whose statement was recorded during the course of survey for cross-examination on behalf of the assessee but he did not turn up for cross-examination on behalf of the assessee, therefore, his statement cannot be read in evidence. 9. The AO was however not satisfied with the explanation of the assessee and noted in the Assessment Order the following undisputed facts:- (i) The statement of Sh. Vinod Parashar recorded on 28.12.2007 was recorded by Sh./Ms. Shashi Saklani, ADIT (Inv.-I)-Faridabad which is recorded on oath and it has got a substantial evidentiary value in the eyes of law. (ii) Sh. Vinod Parashar has categorically stated that he has issued bogus invoices to the assessee and not the actual sale of material. (iii) Sh. Vinod Parashar has categorically stated that he has returned cash ater receiving the payment through cheques; of so-called sales made by him to the assessee. (iv) All the two parties are not available at the moment as is apparent from the return of letters sent by post as well as from the report of Inspector. (v) The bank accounts of Sh. Vinod Parashar/Om Industrial Corporation/Techno Enterprises sh ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... -3, the purchases are supported by Gate Entry Register, production register, stock register and details furnished to the sales tax and excise authorities. The raw material is consumed in production which is not disputed. There is no evidence available on record, if the assessee received back the cash amount from the seller party. The assessee relied upon the following decisions:- (1) Eland International (P) Ltd. vs. DCIT (2009) 26 DTR 113 (Del.), in which Delhi High Court held as under:- Held that - It is clear that the transactions of purchase and sale were recorded in the books of account and these transactions led to profit to the assessee, which was brought to tax. If sales have been effected out of purchases made from these parties then, it cannot be said that the purchases were bogus. The finding of bogus sale can only lead to the inference that the corresponding amount should be deleted from the turnover of the assessee. The AO has also not rejected the books of account to estimate profit on the transactions in case it was a firm finding that purchases and sales were bogus. Therefore, on the facts of case and in absence of displacing the finding of the CIT (A) and t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... d before AO also. As per appellant the purchases from OIC are only ₹ 68,09,000/-. This fact is verifiable from the copy of ledger a/c. of OIC in the books of assessee. Hence, at the outset, I am constrained to hold that the purchases from OIC are only ₹ 68,09,000/-. For this reason, the addition of ₹ 54,45,000/- stands deleted as being purchases to this extent not made from OIC. However, purchases of ₹ 54,45,000/- has been made from M/s. Vikas Entpp. It has not been disputed by the appellant that this firm does not belong to Sh. Vinod Parashar. Although, the AO in the Asstt. Order has not made any specific addition for purchases made from Vikas Entpp., but from the replies filed to the AO during Asstt. Proceedings, the copies of which has also been filed before me, it is apparent that the appellant has explained purchases of ₹ 54,45,000/- made from Vikas Enteprises in the practically similar manner as he explained in the case of OIC. The AO has added ₹ 54,45,000/- also by treating as purchases from OIC against correctly from Vikas Entpp. Since, both the firms are related to Vinod Parashar, therefore, under the facts, purchases to extent of & ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ed by the appellant. It un-doubtedly shows the movement of goods from Haryana to Gurgaon. On receipt of goods, it receipt is entered in the gate entry register by the Security guard on the gate who after physical verification of the goods put a seal on the back of the invoice. This seal mentions the particulars of gate entry no., date and initial of security guard. Then, the goods are received in store where it s receipts are entered in the stock register. Then the movement of goods from the stores to production Deptt. is also recorded in the Stock Register. The copies of relevant stock records showing this movement has also been produced before AO wherein no discrepancy has been noticed. The unit is cover under the Excise Act. The production, and it s sale is recorded in the Excise records. All these records were produced and filed before the AO wherein, again no discrepancy has been noticed. All these documents shows the movement of goods from Haryana to Gurgaon factory of the appellant and thereafter issuance for production and ultimately culminating into sales. The Excise records are audited periodically by the Excise Deptt. Purchase also needs to be reported to the VAT De ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... It is a common knowledge that there cannot be a situation of negative stock. In this case, if we go by the preposition of the AO, one land itself at a impossible situation. The natural corollary arises out from this analysis is that it is not possible under these facts, that the stock of ₹ 1,39,41,5771- has not been physically received by the appellant. In the case of Eland International (P) Ltd. VS. DCIT (2009) 26 DTP 113 (Del.), it has been held that when the purchases and sales are recorded and these transactions led to be a profit which is brought to tax, it cannot be said that the purchases are bogus. In ITO, VS. Jai Prakash Sharma ITA NO. 597 / DEL / 2012 decided by Hon ble Delhi F bench vide order dtd, 09.04.2012, it has been held that without bringing anything specific on record regarding purchases, the purchases cannot be termed as bogus. In DCIT VS. Adinath Industries 252 ITR 476 (GUJ.) (confirmed by SC in SLP NO. 16445 - 16448 OF 2000 dated 26.09.2000), it has been held that when the quantity of purchases and value of sales has been accepted by the AO and all purchase are through account payee cheques, supported by Form ST - 38 issued by Excise and Trade De ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... iary value since, under this section statement cannot be obtained on oath. Hon ble Madras High Court accepted this contention after relying upon various authorities as mentioned in the reported case. The Hon ble Supreme Court affirmed the said findings. In the present case also, the main adverse material relied upon by the AO is the statement on oath u/s. 133 A of SH. Parashar as is evident from Pg. 5 of the Asstt. order. It is also important to note that in the present case, the statement has not been taken of a director of the appellant company but of a 3rd party, at the back of the assessee and further on being asked, the said party could not be made available by the AO for cross examination after summons u/s. 131 stood served on him and the assessee waited for 3 hours and 2 hours respectively on 2 dates when the AO directed the appellant to present for cross examining Sh. Vlnod Parashar. Hence, the facts and circumstances of the case in hand are rather more strong then the facts of the cited case and the ratio of the same squarely applies. In view of above, I am of the considered opinion that the statement of Sh. Vinod Parashar cannot be used against the appellant. Apart from t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ctric part for vehicles. The Assessee also produced Gate Entry Register, stock register and production records which support the explanation of the assessee that whatever material was purchased from the above three companies have been entered into the statutory registers and the material have been used in the production process. The assessee has been filing regular return with the sales tax/VAT Department and assessee is also covered by Excise Department. No adverse views have been taken either by the VAT Department or by the Excise Department against the assessee. The AO did not rebut the documentary evidences filed by the assessee. AO has not established any relation of the assessee with the seller. The purchases are consumed in the production. Purchases are supported by Form D-3 issued by VAT Department of the State Government, bills and gate pass and production register and all the purchases are made through banking channel. Therefore, the view of the AO making addition against the assessee of bogus purchases was without any basis. Without purchases no production or sales could have done by the assessee. The production is supported by RG-1 Register and the details supplied t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... The GP/NP rate is reasonably declared by the assessee. If the purchases are excluded, the Profit Rate would be very abnormal and would not be according to the norms of the industry. AO did not bring any evidence on record, if any heavy cash or heavy cash transactions are conducted by assessee. The AO merely on presumption noted that Sh. Vinod Parashar has made cash withdrawals which were returned to the assessee. There is no basis for making such an allegation against the assessee. It is well settled law that presumptions howsoever may be high but it cannot take placed on legal proof. 16. Considering the facts of the case, in the light of the evidences available on record, we are of the view that Ld. CIT(A) correctly decide the issue in favour of the assessee. There is no basis to hold that assessee made bogus purchases from the above parties. The findings of fact recorded by Ld. CIT(A) have not been rebutted by the Revenue Department through any evidence or material on record. We do not find any infirmity in the order of Ld. CIT(A) in deleting the entire additions. We confirm the findings on fact recorded by Ld. CIT(A) and dismiss the Departmental appeal. 17. In the result, ..... X X X X Extracts X X X X X X X X Extracts X X X X
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