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TMI Blog2020 (3) TMI 875X X X X Extracts X X X X X X X X Extracts X X X X ..... 45,460/-, fact that the cash does not belong to the assessee was also completely ignored by AO and Ld. CIT(A). Keeping in view of the facts and circumstances of case and in view of the supporting documentary evidences at APB page no. 129-134, the addition in dispute is not sustainable in the eyes of law, therefore, we delete the addition and allow the ground no. 2 raised in the appeal. Disallowance of purchase from three parties - HELD THAT:- When books of accounts have not been rejected, no disallowance of purchases can be made - we are of the view that the AO has not doubted the sale made by the assessee in the absence of the same, disallowance on account of purchases cannot be made. Secondly, the AO has not rejected the books of account as required under section 145 of the I.T. Act, therefore, the addition on account of purchases cannot be made. As stated by the Ld. Counsel for the assessee that the proof of the documentary evidences at page no. 253 to 265, the assessee company was assessed u/s. 143(3) of the Act in the subsequent years and no such addition has been made by the AO - Decided in favour of assessee. - I.T.A. No. 4956/DEL/2016 - - - Dated:- 26-2-2020 - SHRI ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... w. 6. On the facts and circumstances of the case, the abovesaid additions are otherwise untenable as the AO has not rejected the books of accounts. 7. The appellant craves leave to add, amend or alter any of the grounds of appeal. 2. The brief facts of the case are that the assessee company is engaged in the business of civil construction. Return of income declaring total income of ₹ 2,07,96,365/- was filed by the assessee company electronically on 28.09.2012. The case of the assessee was selected for scrutiny under CASS and statutory notices u/s 143(2) of the Income Tax Act, 1961 (in short Act ) dated 16.08.2013 was issued served upon the assessee. Fresh notice u/s 143(2) of the Act on 17.10.2014 and a detailed questionnaire dated 20.10.2014 were issued served upon the assessee. Again a notice u/s 143(2) of the Act was issued and served upon the assessee on 18.11.2014. In response thereto, the A.R. of the assessee company attended the proceedings from time to time and furnished the requisite details/information. Books of accounts were produced and the same were examined on test check basis. In this case, a survey operation u/s. 133A of the I.T. Act was ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e fact in response to the notice u/s. 133(6) of the Act all parties have filed confirmations of the transactions, therefore, disallowance not required. Even otherwise, AO has not rejected the books of accounts of the assessee which are required u/s. 145 of the Act. Therefore, these transactions are genuine because the AO has completed the assessment in dispute u/s. 143(3) of the Act in the subsequent years and no such addition has been made by the AO in those years. To support his contention, he draw our attention towards page no. 253-265 of the APB. 3.2 As regards the addition of ₹ 49,36,160/- on account of disallowance of purchase from 3 parties is concerned, Ld. Counsel for the assessee draw our attention towards assessment order page nos. 3 to 5, para 5 and the Ld. CIT(A) s order page no. 28 para no. 6.3.8 and stated that the assessee has purchased the raw material from these 03 parties amounting to ₹ 49,36,160/-. Similarly, notice u/s. 133(6 ) of the Act were issued to these 03 parties and in response to the same, these 03 parties filed their confirmations and income tax returns which are at page no. 136-161 of APB filed by the assessee. Similarly, the AO has n ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... overnment construction activities as a civil contractor. The assessee company filed its return of income declaring total income of ₹ 2,07,96,365/- on 28.9.2012. A survey operation u/s. 133A of the Act was carried out on 27.9.2011 in the business premises of the assessee company at Bilaspur, Chattisgarh. Thereafter, the case of the assessee company was selected for scrutiny assessment and notice under section 143(2) of the Act was issued to the assessee. During the course of survey, cash of ₹ 11,47,490/- was found at the premises as against the cash in hand of ₹ 7,02,030/- appearing in the books of accounts of the assessee. The copy of seized documents during the course of survey clearly shows that the balance of the assessee company was ₹ 7,02,030/- in its books of accounts. We have perused the assessee s paper book pages 60-117 to support this contention raised by the assessee and verified the same. During the course of assessment proceedings, it was also explained to the AO that excess cash found of ₹ 4,45,460/- does not belong to the assessee as such this amount belongs to the joint venture company and Directors of the company. But the AO was of the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ground no. 3 raised in the appeal. 5.2 As regards disallowance of purchase from three parties amounting to ₹ 4,93,160/- is concerned, we have perused the assessment order at page no. 3 to 5, para no. 5 and Ld. CIT(A) s order page no. 28 para no. 6.3.8 and find that notice u/s. 133(6) of the Act was issued to 03 parties and in response to the same, all the 03 parties filed their confirmations as well as income tax returns which are placed at page no. 136 to 161 of the Assessee s paper book filed by the ld. Counsel for the assessee. The books of accounts of the assessee company were audited as per law and nothing adverse had been pointed by the AO as well as Ld. CIT(A) and the same was not rejected u/s. 145 of the Act, therefore, addition on account of bogus purchase cannot be made. Keeping in view of the facts and circumstances as explained above and the documentary evidences filed by the assessee in the shape of paper book page no. 136 to 161 and 253 to 265 the addition in dispute is not sustainable in the eyes of law, therefore, we delete the addition in dispute and allow the ground no. 4 raised in the appeal. 5.3 We agree with the contention of the Ld. Counsel for ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... efore Ld. CIT(A) that if sale has been accepted,purchases must have been made. How can there be sale without purchases? Hence this decision does not apply. 8. In the background of the aforesaid discussions and respectfully following the aforesaid decisions, we are of the opinion that the authorities below are not justified in making / sustaining the addition in dispute. Accordingly, the total addition of ₹ 3,50,94,758/- made by the AO and confirmed by the Ld. CIT(A) is hereby deleted. 9. In the result, the appeal of the assessee is allowed. - Shri Gems Versus Income Tax Officer, Ward-33 (2) , New Delhi, 2017 (12) TMI1254 -ITAT DELHI wherein it has been held as under:- 11. I have considered the submissions of both the parties and carefully gone through the material available on the record. In the present case, it is noticed that the AO doubted the purchases made by the assessee from M/s Parshanath Enterprises only on the basis of statement of one Sh. MukeshMangla. However, it is not brought on record, in which capacity Sh. MukeshMangla has given statement when Sh. Sachin Jain was the proprietor of M/s Parshanath Enterprises. The assessee furnish ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s in the stock an such a discrepancy has been found then purchases can be held be bogus. But here in this case no such difference in the quantitative tally has been found. Further, if assessee after receiving the cash in lieu of the cheque has made purchases from the grey market for getting the same quantity of material in cash from some different vender, then at the most it could be a case of the suppressing of gross profit. In other words, assessee has debited higher amount for the purchase which in fact has purchased the same material and quantity at a lesser amount, thereby suppressing the gross profit. Under these circumstances any addition at all which could be made, is by enhancing the Gross Profit on such purchases. Nowhere there is a finding or whisper either by the AO or CIT (A) that the gross profit shown by the assessee during the year was less as compared to earlier or subsequent years or there is any material to show that gross profit has been low during the year. If all the entries in the trading account including the quantitative tally of purchases, opening stock, -sales and closing stock are found to be correct and no discrepancy has been found, then no addition on ..... X X X X Extracts X X X X X X X X Extracts X X X X
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