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TMI Blog2018 (8) TMI 1915X X X X Extracts X X X X X X X X Extracts X X X X ..... sessee at 7.17% in respect of goods exported, there is no justification for making further addition of 3%. It is also a matter of record that assessee has filed ledger account with confirmation of the parties from whom purchases were made. Stock Register and quantative details of the goods purchased and exported was also filed before the lower authorities, wherein no discrepancy was pointed out. Keeping in view totality of facts and circumstances of the case vis- -vis profit declared by the assessee at 7.17%, no further addition is warranted. - Decided against revenue - ITA No. 3305/Mum/2017, ITA No. 3375/Mum/2017 - - - Dated:- 21-8-2018 - SHRI R.C.SHARMA, AM AND SHRI SANDEEP GOSAIN, JM For the Revenue : Shri V. Justin ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... atement that they are not doing any genuine business concerns floated by them. Thereafter, AO worked out peak credit of alleged purchases and made addition u/s.69C of the IT Act. 6. Before the CIT(A) it was contended by assessee that the AO erred in making an addition on account of unexplained purchase u/s 69C of the Act by calculating peak credit and by treating genuine purchase as accommodation entry. The AO erred in treating the genuine purchases as accommodation entry without appreciating the fact that the assessee had purchased the goods with actual delivery and used for manufacturing purpose, which was later on exported through India Customs Department. The AO erred in applying the peak without appreciating the fact that the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... carefully gone through the orders of the authorities below. We had also considered judicial pronouncements referred by the AO and CIT(A) as well as cited by learned AR before us in the context of factual matrix of the case. From the record we found that assessee company is engaged in the business of import, export and manufacturing of cut and polished diamonds. During the course of scrutiny assessment, AO got information from Investigation Wing of the Department that assessee company was taking bogus bills with regard to the purchases so made. 10. From the record we found that on the allegation of AO regarding alleged bogus purchases, the assessee has asked / requested the AO for the following:- Copy of Statement, if a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... and that, not the aggregate but only the peak of the credits should be treated as unexplained. Following the above principal, The Ld. A.O. made the addition u/s 69C of the Act of peak credit of alleged purchase in the total income of the assessee. Since payment of all purchases was made by cheque and confirmation from the respective suppliers was filed, there is no merit in the addition so made u/s.69C. However, the CIT(A) also did not accept the addition made by the AO u/s.69C, but he restricted the addition at 3% of the amount of alleged bogus purchases. 13. From the record, we also found that before the lower authorities, the assessee has filed the following documents to prove the genuineness of purchase transaction. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... addition has been made is not sustainable in law. Hon ble Supreme Court in the case of Andaman Timber Industries 281 CTR 241 has held that not allowing assessee to cross-examine witnesses by adjudicating authority though statements of those witnesses were made as basis of impugned order, amounted in serious flaw which made impugned order nullity as it amounted to violation of principles of natural justice. The precise observation of the Hon ble Supreme Court was as under:- Not allowing the assessee to cross-examine the witnesses by the Adjudicating Authority though the statements of those witnesses were made the basis of the impugned order is a serious flaw which makes the order nullity inasmuch as it amounted to violation of pr ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... d 07/07/2016. The Hon ble High Court held as under:- The assessee is bound to be provided with the material used against him apart from being permitted to cross examine the deponents. The denial of such opportunity goes to root of the matter and strikes at the very foundation of the assessment order and renders it vulnerable. 17. In the instant case, assessee has precisely asked for cross examination and the copy of the statement which was not supplied either by AO or by CIT(A) nor any corroborative evidence was brought on record to prove that assessee has purchased goods from grey market. Keeping in view the profit rate shown by the assessee at 7.17% in respect of goods exported, there is no justification for making f ..... X X X X Extracts X X X X X X X X Extracts X X X X
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