9911796707
TMI Blog2021 (10) TMI 216X X X X Extracts X X X X X X X X Extracts X X X X ..... ocess of law. Since, the ld CIT(A) (Department) has worked out the alternative addition on which the assessee supposed to pay the taxes. In the instant case, the Ld. CIT(A) has himself worked out the alternative addition, which can be sustained in the hands of the assessee, therefore, we are of the view that said alternative addition, (which is a lesser addition), should be sustained in the hands of the assessee. We note that Hon ble Supreme Court in the case of Vegetable products Ltd. [ 1973 (1) TMI 1 - SUPREME COURT] held that if two reasonable constructions of a taxing provision are possible the construction which favours the assessee must be adopted. Therefore, we are of the view that Department may recover the taxes from the assessee on the addition which is less amount out of two alternatives, as worked out by ld CIT(A), by following the due process of law. In this scenario, we have no hesitation to prefer to follow the conclusion No. 2 reached by the ld CIT(A) and accordingly, we sustain the addition as made by CIT - Decided partly in favour of assessee. X X X X Extracts X X X X X X X X Extracts X X X X ..... er observed that it is prima facie apparent that the assessee has utilized such bogus entries to suppress his profits for the year under consideration. 4. It is seen that the main basis of the AO for making addition is the information received from investigation wing, Surat due to suspicious transactions made by certain parties wherein it was revealed that no actual purchase or sale made and these businesses were simply being carried out in the books of accounts without there being any actual conduct of business. During the year under consideration, AO has alleged that the assessee had purchased goods worth ₹ 6,49,99,999/- from two of such benami companies, namely M/s. Marine Gems Pvt. Ltd. and M/s. Parshwanath Gems Pvt. Ltd. controlled by Shri Gautam Jain Group. In this case, statements of directors of respective seller companies were also recorded as observed by Ld. AO in para-4 of the assessment order. As discussed by the Ld. AO, Shri Pramod Kumar Ranka of M/s. Marine Gems Pvt. Ltd. had admitted in his statement recorded during search operation that he is a 'dummy proprietor' of M/s. Marine Gems Pvt. Ltd., a concern which was not engaged in any business of actual ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ty and amount, then as per the assessee there is no scope for doubting the purchases of material which duly supported by all the documentary evidences and payments were also made through proper banking channels. The ld Counsel further submitted that apart from this information and statements of respective persons, there is no positive evidence brought on record by the AO to substantiate his findings that the assessee has actually received only accommodation bills without actually receiving any goods shown as purchases. The Ld. AO has narrated the entire alleged "modus operandi" in very generic terms which seemingly copied from the report received from the DDIT (Inv)-III, Surat delineating information about the information dug out from search and seizure operation carried out in the case of Gautam Jain Group. Therefore, ld Counsel prays the Bench that entire addition should be deleted. 9. We have heard both the parties and carefully gone through the submission put forth on behalf of the assessee along with the documents furnished and the case laws relied upon, and perused the fact of the case including the findings of the ld CIT(A) and other materials brought on record. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e 1 copies of purchase invoice no adverse findings of the AO on the same purchases invoices are found to be in order and genuine 2 copy of stock register reflecting the purchases and sales no adverse findings of the AO on the same. The AO has not doubted or raised any suspicion on the sales made by the assessee in terms of quantity and amount. since, the sales are not doubted in terms of quantity and amount by the AO the impugned addition made of bogus purchases is absolutely unwarranted and unjustified 3 copy of bank statement high lighting the payment made to the suppliers no adverse findings of the AO on the same nor any other material or clinching evidence brought on record by the AO to prove that the payment has not been made by the assessee to the supplier otherwise than proper banking channel. the payments made to suppliers are found to be in absolute order through proper banking channels and thus genuineness of the transaction of purchase and payment thereof cannot be doubted. 4 copy of bank statement of Parswanath Gems pvt. Ltd and Marine Gems pvt. Ltd no adverse findings of the AO on the same transaction reflected in the bank statement of the t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... g or material evidence on record. the said action of the AO is absolutely unjustified considering the fact that in order to frame an assessment the assessing office has to bring independent evidence on record against the assessee so as to prove that the purchases are bogus, wherein on the other hand he himself has not doubted the sales done by the assessee. 8 requested for the copy of statement and opportunity to cross-examine the person who has given statement before the DDIT (Mum) the AO did not accept the request of the assessee and wrongly alleged that the assessee knows the supplier and should have file a deformation case against the supplier for giving wrong statement in the first place and since the assessee has not filed a deformation case against the assessee it shows that the assessee is in hand-in-gloves with the hawala operators. there is no clinching evidence or documents gathered by the AO from the books of account and submissions made by the assessee so as to prove that the purchases are bogus. The AO has relied on the statement of the third party and not giving the statements on which the department has relied and refusing the request of cross-examining suc ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rnished copies of purchases bills which are apparently proper and genuine ex-facie. The sellers, i.e. M/s. Marine Gems Pvt.Ltd. and M/s. Parshwanath Gems Pvt. Ltd., have proper CST, GST, TIN Nos. PAN No. and address duly mentioned on the sale invoice. The assessee has furnished copies of purchase invoices and extract of Stock Register (also filed before AO) showing details bill-wise and quantitywise, tally of purchase, Sales and Stock on day-to-day basis. It is seen that the Ld. AO has accepted the entire sales (both quantity and amount) and remaining purchases (except alleged purchases) without raising any doubt whatever about genuineness or correctness of sales. It is settled legal position that there cannot be any sales without having corresponding purchases. Based on these factual position, ld Counsel prays the Bench that entire addition may be deleted. 11. Before we tender our opinion on the issue under consideration, let us examine the conclusion reached by the ld CIT(A). We note that Ld. CIT(A) has adjudicated the assessee`s issue involved in this lis, in two ways, which is reproduced below: (ii).Adjudication/Conclusion No.1: "7.5 The Ld. AR has filed GP working for var ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... siness of providing accommodation entries as alleged by the Ld. AO and also supported by confessional statements of Directors of these companies inter alia information gathered by Investigation' Wing, then it would mean that these concerns were earning only "commission income" against issue of accommodation bills. This presumption would lead to a natural inference that in respect of goods shown as purchases worth ₹ 6,49,99,999/-, the assessee has shown sales of ₹ 6,74,44,796/- is also not genuine which has resulted into profit of ₹ 24,44,797/- @3.76%. On further scrutiny, it is seen that there is no one to one mapping of alleged purchases with sales. The assessee has purchased goods 5115.88 carats from two concerns for ₹ 6,49,99,9??/- and shown sales of 5188.59 carats for ₹ 6,74,44,796/- [Annx.l of Written Submission dated 23.02.2017]. If the sales quantity is adjusted to alleged purchase quantity, then corresponding sales value works out to ₹ 6,64,99,662/- yielding profit of ₹ 14,99,663/- (as against ₹ 24,44,797/- worked out by the Ld. AR) @2.25%. Obviously, any action on the part of the assessee of inflation of purchas ..... X X X X Extracts X X X X X X X X Extracts X X X X
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