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TMI Blog2020 (11) TMI 457X X X X Extracts X X X X X X X X Extracts X X X X ..... resaid case. We find that the facts before us in the impugned appeal squarely falls into the factual matrix of the aforesaid case before the Hon ble Bombay High Court. We direct the Ld. AO to delete the disallowances made on account of non genuine purchases in the peculiar facts and circumstances of the instant case. - ITA Nos. 3519 And 3520/Mum/2018 - - - Dated:- 11-11-2020 - Shri M. Balaganesh, Accountant Member And Shri Pavan Kumar Gadale, Judicial Member For the Assessee : Shri Percy Pardiwala, Senior Advocate For the Revenue : Shri Avaneesh Tiwari, DR ORDER PER M. BALAGANESH (A.M) : These two appeals filed by assessee in ITA No s.35149 3520/Mum/2018 for Assessment Years (AY) 2011-12 2014-15 arises out of the order by the ld. Commissioner of Income Tax (Appeals)-47, Mumbai in appeals No.CIT(A)-47/12848/2016-17 CIT(A)-47/12856/2016-17, dated 02/03/2018 (ld. CIT(A) in short) against the order of assessment passed u/s.143(3) r.w.s 147 of the Income Tax Act, 1961 (hereinafter referred to as Act), dated 29/12/2016 by the ld. Deputy Commissioner of Income Tax, Central Circle-1(2), Mumbai (hereinafter referred to as ld. AO). 2. Since, the i ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Ld. AO directed the assessee to prove the genuineness of purchases made from the aforesaid suppliers in view of the fact that the aforesaid suppliers belong to various benami concerns operated by Shri Bhanwarlal Jain Group, which emanated out of search and seizure action u/s 132 of the Act carried out in the case of Bhanwarlal Jain on 03/10/2014. It is not in dispute that during the course of assessment proceedings, the assessee had submitted details such as affidavits from the concerned suppliers, confirmations from the concerned suppliers, ledger account of the parties in the books of the assessee, purchase invoices, bank statement and stock register etc. We find that the Ld.AO had duly acknowledged the receipt of the aforesaid documents, but despite the same, he proceeded to observe that since there is a specific finding of the investigation wing that the said parties were found to be indulged in fraudulent transaction of issuing accommodation entries, the authenticity of the transaction becomes questionable and cannot be decided merely on the basis of supporting documents. Accordingly, we find that the Ld. AO concluded that the purchases made from the aforesaid five parties are ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... our attention to page 31 of the order of Ld CIT(A), wherein specifically the assessee had brought to the knowledge of Ld. CIT(A) that the issue in dispute is already decided by the Ld. CIT(A) in assessee s own case for AY 2012-13 vide Appeal No.CIT(A)-20/ACIT-12(2)(1)/IT-153/2015-16, dated 17/06/2016. We find that the Ld. CIT(A) had not given any finding regarding this factual aspect that the issue is already covered by the order of this predecessor for AY 2012-13 in assessee s own case. 8. In any case, we find that this Tribunal in assessee s own case for the AY 2012-13 in ITA No. 5621/Mum/2016 (revenue appeal) has adjudicated this very same issue in favour of the assessee. The relevant operative portion of the said order is reproduced hereunder:- 9. We have heard the rival submissions and also perused the material on record including the cases relied upon by the authorities below. The only grievance of the revenue is that the Ld. CIT(A) has wrongly deleted the additions made by the AO. We notice that the Ld. CIT(A) has deleted the addition by relying on the various decisions of the Tribunal and the judgment of Hon'ble Bombay High Court. The relevant portion of the orde ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he investigation wing. In the instant case it is noticed that the assessee was able to link the consumption of materials and closing stock with the relevant purchase bills. It is noted that when the entire purchases made from these five parties was either consumed in the manufacturing process or were available as stock as at the year end, then the disallowance of purchases should result in corresponding reduction of the closing stock, the result of which would have NIL effect on profit and hence there was no requirement of making any addition. However, this proposition should be applied only if the purchases were held to be non-genuine. It is noted that the assessee has produced following documents to establish that the purchases made by it from these five parties were genuine:- A) The affidavits include the date when and by what Invoice No. goods were sold, amount of sale and the mode of receipt of amount towards such sale only through Bank. B) Purchase bills from five parties confirming quantity of Cut Polished Diamonds sold and delivered to assessee. C) Confirmation of Ledger Accounts of five parties as per the books of the assessee confirming all the transactio ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... and the relevant material evidences brought on record before us. The undisputed facts are that the purchases were supported by bills, the payments were made by account payee cheque and the payments were duly reflected in the bank statement of the assesse. A perusal of the statement of the diamond traded during the year under consideration shows that the assesse purchases 1358.54 carats from M/s ZalakImpex on 1.8.2005, the same was exported on 5.8.2005 and 871.57 carats were purchased on 2.8.2005 from M/s ZalakImpex and were exported on 12.8.2005. No adverse inferences have been drawn by the AO in so far as exports of diamonds are concerned. Without purchases there cannot be any sales. The entire additions made by the AO are based on assumptions and presumptions. We, therefore, decline to interfere with the findings of the Ld. CIT (A). It is also noted that in the matter of Nikunj Exim Enterprises Pvt. Ltd. (Income Tax Appeal No. 5640 of 2010), (2014) 107 DTR 69 (Bom), the Hon'ble Bombay High court has specifically held that in a case where sales are considered genuine and books of accounts have not been rejected, no addition, on account of bogus purchases can be made. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the Ld. DR on the said decision does not come to the rescue of the revenue. 10. In the instant case, for the year under consideration also, the sales made by the assessee are not disputed. Hence, it could be safely concluded that without the purchases, there cannot be any sales. We find that the Ld. AR had also placed reliance on the decision of Hon ble Supreme court in the case of CIT vs Odeon Builders Pvt.Ltd. in Civil Appeal Nos. 9604-9605 of 2018 dated 21/08/2019 and also the decision of Hon ble Jurisdictional High court in the case of Vaman International Pvt.Ltd. in ITA No. 1940/2017 dated 29/01/2020. We have gone through the decision of Hon ble Supreme court referred to supra, wherein in para 2 of the said order, it had been categorically stated that the Ld. AO had not conducted any independent investigation, which is similar to the facts prevailing before us. With regard to the decision of Hon ble Bombay High Court in the case of Vaman Internaitonal Pvt.Ltd. referred to supra, the question raised before the Hon ble Bombay High Court are as under:- (A) Whether on the facts and in the circumstances of the case and in law, Tribunal was justified in holding that provisi ..... X X X X Extracts X X X X X X X X Extracts X X X X
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