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TMI Blog2019 (10) TMI 1128X X X X Extracts X X X X X X X X Extracts X X X X ..... ine as duly recorded in their records. This itself cast a doubt on AO s conclusion that purchases made by the assessee were bogus. More particularly, when it is certificate from another Govt. Agency by certifying the genuineness of the purchases and it tilts preponderance of probability in favour of the assessee. It is pertinent to mention that the ld. CIT(A) has explicitly dealt with the issue and deleted the addition made by the AO giving full justification to the issue in question and we find no reason to interfere with the order of the ld. CIT(A) Delayed contribution of employees s contribution towards PF and ESIC - CIT(A) deleted the addition - HELD THAT:- As decided in CIT Vs. State Bank of Bikaner Jaipur (2014) [ 2014 (5) TMI 222 - RAJASTHAN HIGH COURT] where PF and/or EPF, CPF, GPF, etc., was paid after the due date under the respective acts but before filing of return of income u/s 139(1), it could not be disallowed u/s 43B or u/s 36(1)(va). - Decided in favour of assessee - ITA No. 716, 717 And 718/JP/2018 (Assessment Year : 20010-11 to 2012-13) - - - Dated:- 3-10-2019 - SHRI SANDEEP GOSAIN, JM AND SHRI VIKRAM SINGH YADAV, AM Revenue ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ng the fact that it was made as per provision of section 36(1)(va) of the I.T. Act, 1961 . 3. Whether on the facts and in the circumstances of the face, the ld. CIT(A) was right in allowing the deduction u/s 10AA/10A of the Act ignoring the fact that provisions of Section 69C of the Act are applicable and as per provisions of Section 115BBE no deduction is allowable to the assessee as assessee purchased the material from grey market in cash. 2.1 First of all, we take up the grounds of appeal of the Revenue for the Assessment Year 2010-11 for adjudication. During the course of hearing, the ld. DR relied on the order of the AO whereas the ld.AR of the assessee relied on the order of the ld. CIT(A). 2.2 We have heard the rival contentions and perused the materials available on record. It is noted that the ld. CIT(A) has passed the common order in respect of the above appeals raised by the Revenue. It is further noted that the AO made the addition of ₹ 2,25,68,601/- for the Assessment Year 2010-11 depicting the case of the assessee as under:- 24. Looking to the facts of the case of the assessee, it is clear th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e Delhi High Court in the case Kabul Chawla vs ACIT 380 ITR 573. 5.3 The issue of additions made by the AO while framing the assessment u/s 143(3)/ 153A if no incriminating material is found during the course of search was considered by Hon'ble Gujarat High Court in the case of Soumya Construction Pvt.vs CIT 387 ITR 529.. In its order dated 14- 03-2016 Hon'ble Court has categorically stated that in casse of completed assessment if no incriminating material is found then no addition can be made in the assessment framed u/s 153A of the Act. Similar view was also taken by the Hon'ble ITAT Jaipur in many cases (as mentioned ld. CIT(A) s order at page 19) Considering the above, I am of the view that as the additions made by the AO are without any reference to the seized material they are not legally tenable. The same are therefore, directed to be deleted. The legal ground taken by the appellant is hus allowed. Since appellant succeeds on legal it would be only academic to adjudicate the grounds on merits for the A.Y. 2009-10 to 2011-12. 5.54 I may add that the statement of Shri Rajendra Jain, a l3rd part ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he AO has made nothing in his possession to make impugned addition. I may point out that mere statement of a person searched u/s 132 is not sufficient to make addition and here the AO has proceeded to make addition on the best of 3rd party subject to a different search. The appellant on the other hand has produced copies of relevant bills, vouchers, details of payments made, relevant entries in the stock so maintained and the audit report etc. to discharge the onus. 6.3 Thus mere reliance on the statement of Shri Rajendra Jain/ Banwawri Lal Jainm, a 3rd party recorded in a different search u/s 132, itself does not constitute incriminating material of appellant. It has been held inmany judgements that mere statement of a person searched u/s 132 is not sufficient to make an addition. A statement made must be relatable to incriminating material found during the course of search or the statement must be made relatable to material by subsequent inquiry/ investigations. Hon'ble Delhi Hifh Court in case of Harjeev Agarwal 70 Taxmann.com 95) held thus However, such statements on a standalone basis without reference to any other mater3ial discovered ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... n the case of the appellant as the entire exercise would be Revenue neutral. The appellant reliance on the judgement of Hon'ble Gujarat HC in the case of Sajani Jewels vs DCIT 143 DTR 263 (Guj) is tenable wherein it has been held that whole exercise of disallowance by the AO is Revenue neutral and since purchase made are through cheque payment the section 69C is not attracted. The relevant para of he judgement are 10 to 12 and the same are reproduced (mentioned at page 24 of the ld. CIT(A) s order).. Considering all the above, I am of the view that even if 25% of purchases from concerns are treated as bogus it has a revenue neutral effect and may be treated as such. 6.8 The addition made by the AO are directed to be deleted as indicated above. The ground relating to bogus purchases is allowed as indicated. 2.2.3 After having considered the counsel of both the parties at length, we found that the AO on the basis of statement treated the purchases made by the assessee as bogus and proceeded to make the addition of 25% of such purchases as bogus u/s 69C of the I.T. Act, 1961. The AO also taxed such disallowances u/s 115BBE of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... te the assessment. In this respect, we also rely on the decision of Hon'ble Supreme Court in the case of Andaman Timber Industries vs CCE (supra) wherein it was categorically held that statement of the witnesses without an opportunity to cross examine cannot be the sole basis of assessment as it is serious flaw which renders the order a Nullity. The ld. CIT(A) has also considered that the AO himself had recorded in the assessment order that letter was issued to Custom Authorities SEZ-II, Sitapura Industrial Area, Jaipur to verify the said purchases and the AO has recorded a finding that SEZ authorities have confirmed that said purchases are genuine as duly recorded in their records. This itself cast a doubt on AO s conclusion that purchases made by the assessee were bogus. More particularly, when it is certificate from another Govt. Agency by certifying the genuineness of the purchases and it tilts preponderance of probability in favour of the assessee. It is pertinent to mention that the ld. CIT(A) has explicitly dealt with the issue and deleted the addition made by the AO giving full justification to the issue in question and we find no reason to interfere with the order of t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Revenue on the issue in question in the Assessment Year 2011-12 and 2012-13 are dismissed. 4.1 Now we take up the grounds of appeal No. 2 of the Revenue for the Assessment Year 2012-12 wherein the AO during the course of assessment proceeding noted that the assessee collected employees s contribution towards PF and ESIC but did not paid it within the due date prescribed by relevant legislation to ₹ 28650/- and 79510/- respectively. The AO asked the assessee to state its case in respect of provisions of Section 36(1)(va) of the I.T. Act, 1961 for which the assessee could not give proper justification to the assessee. The AO taking the resort of Hon'ble Gujarat High Court judgement in the case of CIT vs Gujarat State Road Transport Corporation (ITA No 637 of 2013 dated 2601202913) made the addition of ₹ 32,868/- by observation as under:- therefore, ₹ 18160/- (i.e.28650 plus 79510/-) is treated as income u/s 2(24(x) and deduction u/s 26(1)(va) is declined das the amount had been paid after the due date as prescribed in the relevant legislation. 4.2 In first appeal, the ld. CIT(A) has deleted the addition made by ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s. State Bank of Bikaner Jaipur (2014) 363 ITR 70 (Raj) (HC) :- Where PF and/or EPF, CPF, GPF, etc., was paid after the due date under the respective acts but before filing of return of income u/s 139(1), it could not be disallowed u/s 43B or u/s 36(1)(va). CIT Vs. Jaipur Vidyut Vitran Nigam Ltd. (2014) 363 ITR 307 (Raj.) (HC):- The assessee claimed payment of GPF, CPF and ESI u/s 36(1)(va) r.w.s. 43B of the IT Act on the ground that the same was deposited on or before the due date of furnishing the IT return u/s 139. The AO disallowed the payment on the ground that though the amount was paid by the assessee, but was not paid within the due date as given under the respective Acts of GPF, CPF and ESI. It was held that the employee s contribution towards GPF, CPF and ESI deposited by the assessee on or before the due date of filing the return u/s 139, though beyond the due dates as given under the respective Acts, cannot be disallowed u/s 43B or 36(1)(va). CIT Vs. Udaipur Dugdh Utpadak Sahakari Sangh Ltd. (2014) 366 ITR 163 (Raj.) (HC):- Payment of employee s contributions towards PF and ESI made belatedly but within t ..... X X X X Extracts X X X X X X X X Extracts X X X X
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