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TMI Blog2019 (6) TMI 1590X X X X Extracts X X X X X X X X Extracts X X X X ..... for assessment year 2009-10 are stated herein. 4. The Revenue raised the following grounds of appeal:- ''1. The order of the learned Commissioner of Income Tax (Appeals) is erroneous on facts of the case and in law. 2.1. The Id. CIT(A) erred in directing the assessing officer to allow the assessee's claim of purchases of diamonds of Rs. 9,04,15,440/-. 2.2. The Id. CIT(A) failed to appreciate that some of the concerns from whom the assessee claimed to have purchased the diamonds had been operated by Shri. Banwarilal and his sons, who were providing accommodation entries to various entities, by issuing invoices, through various benami concerns operated by them, without actually supplying the goods. 2.3. The Id. CIT(A) ought to have noted that, by his inference that the actual material (diamonds) were supplied by some other persons and to accommodate such supplies, Shri.Banwarilal Jam group issued the accommodation invoices, the Id. CIT(A) has endorsed the view that there is nothing erroneous in an assessee purchasing the goods from someone and getting the bills from another, which would defeat the intent and purpose of the Profit & Loss account to reflect the true state of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... accounts copy of the said parties in the books of the Respondent - assessee firm. However, the Assessing Officer inferred that purchases made from the said Shri. Bhanwarlal M Jain & Group for the assessment year 2009-2010 to the tune of G4,01,93,808/- are bogus the search and seizure operations carried out in the case of Shri. Bhanwarlal M Jain & Group showed that they are providing only accommodation entries. The Assessing Officer also discussed modus operandi adopted by the said group at para 6 of the assessment order. The Assessing Officer issued commission u/s.131(d) of the Act to the DDIT (Inv) Unit-II, Surat to examine the said parties, who in turn reported that summons could not be served on the given address. Based on this information, the Assessing Officer inferred that these entities are not operative in the given address and they are bogus firms. The Assessing Officer held that mere production of PA numbers, IT returns and bills does not establish the genuineness of the purchases in view of modus operandi adopted by the said group. The Assessing Officer therefore inferred that the purchases made from the above said parties are bogus and accordingly disallowed the purchas ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ed by the assessee became partly allowed. 7. Being aggrieved by the above decision of the CIT(A), the Revenue is in appeal before us challenging the correctness of the order of the CIT(A) deleting the addition made on account of alleged bogus purchases. The ld. PCIT- Departmental Representative has submitted that the ld. CIT(A) ought not have granted relief. The Departmental Representative submitted that the invoice copies would not by itself establish the genuineness of the transaction of the purchases. The modus operandi adopted by Shri. Bhanwarlal M Jain & Group clearly shows that the purchases are bogus and the statements recorded u/s.132 (4) of the Act is valid evidence for the purpose of making addition. Therefore the ld. CIT(A) ought not have granted relief to the assessee firm. 8. On the other hand, ld. Counsel Shri. B. Ramakrishnan submitted that very assumption of jurisdiction u/s.153A of the Act is invalid in law, in as much as no discriminating materials were found during the course of search and seizure operations in Respondent - assessee firm. In this regard, he placed reliance on the decision of Hon'ble Delhi High Court in the case of PCIT vs. Meeta Gutgutia, 82 ta ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... t appeal revolves around the findings of the Assessing Officer that the purchases made by the Respondent - assessee from Shri. Bhanwarlal M Jain & Group are bogus. Admittedly, the Assessing Officer had come to a conclusion that the purchases made from Shri. Bhanwarlal M Jain & Group are bogus not based on the incriminating material found during the search and seizure operation conducted in Respondent - assessee but based on the statement recorded from Shri. Bhanwarlal M Jain during the course of search and seizure operation of that group and the statements recorded from the Director of said group. In the backdrop of these facts, the question that may arise is whether is Assessing Officer justified in making an addition on account of alleged bogus purchases in the assessment made pursuant to notice issue u/s.153A of the Act. It is settled preposition of law that third party statements recorded during the course of search action shall not constitute incriminating materials for the purpose of making addition in the hands of assessee other than the searched person that to without affording cross examination of the assessee. The Hon'ble Delhi High Court in the case of CIT vs.Raj Pal Bha ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... sponse to the notices. The details filed by the Respondent - assessee is sufficient for the Assessing Officer to take further steps, if he still doubted the genuineness of the purchases, the Assessing Officer had chosen not to carry out necessary enquires. In the similar situation, the Hon'ble Bombay High Court in the case of PCIT vs. Chawla Interbild Construction Co. (P) Ltd, (2019) 104 taxmann.com 402 without identical facts held that assessee could not be held responsible for suppliers not appearing in person and deleted the addition made. Para 7 of the judgment is extracted hereunder:- ''7. We find that the Assessing Officer while passing the assessment order has dis-allowed 40% of the total payments made on the basis of the payments made to 13 parties, who were not produced before him during the assessment proceedings. This on the ground that payments are not genuine. We are unable to understand on what basis the dis-allowance is made on the total payments, if at all it should have been restricted only to the amounts paid to the 13 persons who are not produced before the Assessing Officer. Be that as it may, we find that the respondent - assessee had done everything to produ ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... that the actual supplies are made by some other person on whose behalf the invoices are issued by this group. The statement only reinforces the contention of the respondent assessee that actual purchases are made. The ld. CIT(Appeals) also considered the prevailing business practices in the same line of business and come to conclusion that the actual suppliers are made by one party and the invoices are issued by another party, which does not mean the purchases are bogus. Thus, the order of the ld. CIT(A) is based on due appreciation of materials on record and the law governing the issue of the bogus purchases. Therefore we do not find any reason to interfere with the order of the ld. CIT(A) on the issue of bogus purchases. Thus, viewed from any angle the impugned assessment order cannot be sustained in the eyes of law. The order of the ld. CIT(Appeals) is based on the due appreciation of material on record and in consonance with the settled principle of law and therefore we do not find any reason to interfere with the order of the ld. CIT(A). Accordingly, the appeal filed by the Revenue is dismissed. ITA Nos. 53, 55, 56,57, 58, 59, 60, 61, 62, 63, 64, 65 and 66/CHNY/ 2019 , Sin ..... X X X X Extracts X X X X X X X X Extracts X X X X
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