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TMI Blog2018 (11) TMI 1655X X X X Extracts X X X X X X X X Extracts X X X X ..... see has made purchases and sales outside the books of accounts. No addition can be made merely on the basis of the statement recorded by the third party statement i.e. Sales Tax Department of Mumbai in the case before us. We also note that the ld. DR at the time of hearing has not brought anything on record suggesting that the CIT(A) has admitted any additional documents in contravention to the provision of Rule 46A of the Income Tax Rule. - Decided in favour of assessee. X X X X Extracts X X X X X X X X Extracts X X X X ..... i. The notices issued upon the parties were returned as unserved. ii. The parties as discussed above have duly admitted in the statements recorded during the search proceedings by the DCIT Sales Tax Department, Mumbai that these are engaged in providing accommodation entries. iii. These parties are charging 0.50 paisa from the companies taking bogus entries from the aforesaid companies. The name of the assessee was very much appearing in the statement recorded by the DCIT, VAT Department Mumbai. In view of above, the AO held that the purchases claimed by the assessee are bogus in nature. Accordingly, the AO disallowed the same and added ₹ 66,76,237/- to the total income of the assessee. 5. Aggrieved, assessee preferred an appeal to ld CIT(A). The assessee before the ld CIT(A) filed the copies of VAT return, copy of cheques, copy of bank statement and confirmation of the accounts of most of the parties from whom the assessee has purchased the goods. The necessary submission of the assessee is placed on page 7 to 10 in the order of ld CIT(A). 5.1 The assessee before the ld. CIT(A) also submitted that he has not furnished the bank statement of two parties and acco ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... #8377; 1,44,80,582/-, out of which, the AO considered purchases of ₹ 66,76,237/- as non-genuine. This is about 47% of the total purchases. If 47% purchases are non-genuine, how the appellant made sales is an important fact to be considered. ii) The appellant submitted stock register, which shows monthwise purchase and sales in terms of quantity. The AO did not find any defect in the sales shown by the appellant. 70% of sales have been made to very reputed concerns like Gamon India Ltd. iii) The appellant made payments through a/c payee cheques and there is no evidence to prove that the appellant received back the amount in cash. iv) The statements of these parties were general in nature and name of the appellant was not mentioned in particular. v) The appellant submitted confirmation from these parties and copies of their VAT registration during the assessment proceedings. 4.3 Keeping in view the facts mentioned above and the case laws cited by the appellant, it is considered that the appellant has discharged his onus to prove the genuineness of these transactions. Therefore, the additions of ₹ 66,76,237/- are not found justified, hence deleted. This grou ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... t facilities for a short duration and the payments were given by cheques. When that is so, it cannot be said that the entries for the purchases of the goods made, in the books of account were bogus entries. We, therefore, do not find that the conclusion arrived at by the Tribunal is against the weight of evidence. In that view of the matter we answer the question in the affirmative, that is, in favour of the assessee and against the revenue." ii. The Hon'ble Kolkata High Court in the case of Diagnostics vs. CIT reported in 334 ITR 111 wherein it was held as under: "9. However, as regards the payments made to M/s. Selvas Photographics are concerned amounting to ₹ 3,12,302, we find that those have been made by account payee cheques and those have been encashed through the bankers of M/s. Selvas Photographics. It appears that according to the appellant, at the time of assessment, the appellant had no business transaction with M/s. Selvas Photographics and consequently, the said party did not co-operate with the Assessing Officer. However, the transaction having taken place through account payee cheques, we are unable to accept the contention of Mr. Agarwal, the learned adv ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... pondent-assessee. The Assessing Officer as well as CIT(A) have disallowed the deduction of ₹ 1.33 crores on account of purchases merely on the basis of suspicion because the sellers and the canvassing agents have not been produced before them. We find that the order of the Tribunal is well a reasoned order taking into account all the facts before concluding that the purchases of ₹ 1.33 crores was not bogus. No fault can be found with the order dated 30-04-2010 of the Tribunal."
In view of above, we hold that no addition can be made merely on the basis of the statement recorded by the third party statement i.e. Sales Tax Department of Mumbai in the case before us. We also note that the ld. DR at the time of hearing has not brought anything on record suggesting that the ld. CIT(A) has admitted any additional documents in contravention to the provision of Rule 46A of the Income Tax Rule.
Therefore, we do not find infirmity in the order of ld. CIT. Hence, the ground of appeal of the revenue is dismissed.
6. In the result, appeal of the revenue is dismissed.
Order pronounced in the Court on 01st November, 2018 at Ahmedabad. X X X X Extracts X X X X X X X X Extracts X X X X
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