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TMI Blog2020 (8) TMI 506X X X X Extracts X X X X X X X X Extracts X X X X ..... ejected, then no separate addition on account of purchase cannot be made. - Appeal of the assessee is allowed. - ITA. No.3255/DEL/2019 - - - Dated:- 20-7-2020 - Shri Amit Shukla, Judicial Member For the Appellant : Shri Rajiv, FCA For the Respondent : Shri Jagdish Singh Dahia, Sr. DR ORDER The aforesaid appeal has been filed by the assessee against the impugned order dated 23.01.2019, passed by the Ld. CIT (Appeals)-1, Gurgaon for the quantum of assessment passed u/s 143(3)/147. In various grounds of appeal, the assessee has challenged disallowance of purchase of ₹ 13,09,552/- made from M/s Maa Durga Trading Company. 2. The facts in brief are that the assessee is engaged in the business of manufacturing and job work of industrial tools and machine components. The return of income was filed for the A.Y. 2008-09 at an income of ₹ 2,12,440/- on 30.09.2008. Later on, assessee s case was reopened u/s 147 and notice u/s 148 was issued on 27.03.2015. The reason for reopening was that, as per information received to the Assessing Officer that the assessee has obtained accommodation entries of bogus purchases for ₹ 13,09,552/- from M/s ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 04.2007 onwards in the following format: - Date Amount Mode Bank name and branch in case of cheque payment (v) Evidences of utilization of material purchased from M/s Maa Durga Trading Company in your business. (vi) Details of similar items purchased from any other person during the year. (vii) Copy of item wise register showing the receipt and utilization of material purchased from M/s Maa Durga Trading Company for the period 01.04.2007 to 31.03.2008. 4. In response, the assessee has filed the above details, including summary of stock register, etc. However, the Ld. CIT (A) held that the evidence of material purchased from M/s Maa Durga Trading Company was not furnished and it was merely stated that same can be verified from the stock register. The Ld. CIT (A) from the perusal of the details furnished by the assessee has noted month-wise purchase and sale which has been incorporated at page 7 of the appellate order, and thereafter has drawn various inferences and dismissed the assessee s appeal after observing and holding as under: 4.11 From the afore ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ion. It is, therefore, evident that the documents filed by the appellant are not reliable and the appellant is manipulating his accounts by adjusting bogus purchases and sales. The addition made by the Assessing Officer is accordingly, confirmed. The grounds of appeal are dismissed. 5. Before us, the Ld. Counsel for the assessee submitted that all the evidences regarding purchase made from M/s Maa Durga Trading Company was furnished like, purchase and sale bills and ledger account, copy of transit challan issued by VAT Dept., Haryana indicating purchase made from the same party, details of payment made through cheques, assessment order of VAT, copy of ledger account of the supplier, copy of stock summary, item-wise register for purchase of raw material from various suppliers and statement of accounts. None of these documents have been considered by the AO which was duly filed before him vide reply dated 07.09.2015, copy of which has been placed at the PB at pages 4 5. Again further details were furnished before Assessing Officer vide reply dated 14.09.2015, the copy of which has been placed at PB at pages 8 9. Regarding non service of notice u/s 133(6), the Ld. Counsel s ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... m M/s Maa Durga Trading Company assessee has purchased as low as @ ₹ 32 and @ ₹ 35 per kg. This shows that there are various kinds of alloys that are used. The assessee s GP rate was 20.11% and net profit of 6.80%. He further submitted that once trading account and books of account have not been rejected, then no addition of trading account can be made especially when purchases have been made through cheques. Apart from that, the genuineness of the purchase is established by the fact that VAT Dept. of Haryana had issued a transit challan alongwith related invoice which reflects the purchases made from M/s Maa Durga Trading Company and even the VAT assessment order for purchase and sale have been accepted. Once sales have been accepted another items of the trading account then there cannot be an addition on account of purchases. 7. Ld. DR in his written submission has reiterated the observation and finding of the AO and CIT (A) has incorporated above. He submitted that once the notice u/s 133(6) have not been served, then genuineness of the purchases would not be established. 8. I have heard the rival submissions and also perused the relevant finding given in t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... entire purchase cannot be held to be bogus, otherwise it will affect the GP gross profit hugely. 10. The Ld. CIT (A) in his order has tried to find out certain defects in the accounts and pointed out, firstly, that there is no opening and closing balance sheet of stock and, therefore, the GP in the month of April is very high on the cost of purchase and similarly he has pointed out huge variation of the GP rate on the monthly basis. Secondly, he has pointed out the difference between the rates per metric ton all the alloys steel purchased by the M/s Maa Durga Trading Company and other parties. He has also incorporated the sales and purchase account, wherein he has observed that there is no opening balance. As discussed above, it has been pointed out from the records furnished even before the CIT (A) that the revenue account of sale and purchase does not contain opening balance of stock as it is reflected in summary of stock statement which he pointed out from page 52 of the PB that there was opening balance duly recorded in the books and the opening balance along with the purchase is fully tallied with the balance sheet. Hence not only the sales got verified but also the clos ..... X X X X Extracts X X X X X X X X Extracts X X X X
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