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TMI Blog2019 (8) TMI 1769X X X X Extracts X X X X X X X X Extracts X X X X ..... ary evidences filed by assessee and did not doubt the explanations. Since the documentary evidences filed on record have not been doubted by A.O. and no adverse finding have been given and no inquiry have been made into the claim of assessee, therefore, there was no basis to treat such purchases as bogus - Entire addition is wholly unjustified and even it is not a fit case where Gross Profit rate of 5% be applied for sustaining the part addition - Decided in favour of assessee. X X X X Extracts X X X X X X X X Extracts X X X X ..... was issued to the assessee for explanation based on the details obtained during the course of search by Investigation party at Mumbai. The assessee filed certain details in support of the explanation. The details furnished by the assessee shows that for A.Y. 2013-2014 assessee has taken accommodation entries, therefore, A.O. show caused the assessee as to why the aforesaid addition of the impugned amount of the aforesaid purchases should not be made in assessment year under appeal. 2.2. The assessee filed written reply before A.O. which is reproduced in the assessment order in which the assessee briefly explained that assessee made genuine purchases and sales which are verifiable. The same are supported by copy of the purchase invoices, copy of the stock register reflecting the purchases and sales, copy of the bank statements of both the above parties along with copy of acknowledgment of filing of the return of income, their balance-sheets and copy of confirmation. It was submitted that these documents are sufficient to explain that assessee made genuine purchases and all the transactions were settled through account payee cheques/RTGS. The assessee further explained that A.O. re ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... n that the purchases shown by the assessee in the books of accounts are initiated and bogus purchases are debited to trading account to suppress the true profits to be disclosed to the Department. (iv) The onus was upon the assessee to establish the genuineness of purchases made by the assessee." 2.4. The A.O. in view of the above findings rejected the books of account under section 145(3) of the I.T. Act, 1961 and made the addition of ₹ 8,01,93,887/- on account of bogus purchases. The said addition was challenged before the Ld. CIT(A). The written submissions of assessee is reproduced in the appellate order in which the assessee briefly reiterated the same facts and also briefly explained that no adverse finding have been given by A.O. on purchase invoices, stock register, bank statements and confirmations along with accounts of the seller parties. The A.O. did not doubt the transactions carried-out through banking channel. The A.O. did not provide material collected during the course of search and no right of crossexamination have been given to the statements of the persons Shri Bhanwarlal Jain Group whose statements have been recorded at the back of the assessee at Mumb ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... es addition have been deleted. 4. On the other hand, Ld. D.R. relied upon the Orders of the authorities below and submitted that in the case of Mayank Diamond the Hon'ble Gujarat High Court has applied Gross Profit rate of 5%. 5. We have considered the rival submissions and perused the material available on record. In the instant case, the A.O. simply relied upon the material collected during the course of search in the case of Shri Bhanwarlal Jain Group of cases for providing bogus entries to different persons/concerns including the assessee. The material collected during the course of search in their cases and statements recorded by Investigation Wing have been relied upon against the assessee for making the addition against the assessee. However, it is a fact that all the statements recorded by Investigation Wing at Mumbai and material collected in the entities of Shri Bhanwarlal Jain Group of cases have not been provided to assessee for rebuttal and no right of cross-examination have been given to assessee to cross-examine such statements. It is well settled Law that if any material is collected at the back of the assessee or statement is recorded, such material or statement ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Ward-4(4), New Delhi, vide Order Dated 24.06.2019 in para8 following its earlier order in the case of same assessee, in which it was held in para-8 as under : "8. We have considered the submissions of both the parties and gone through the material on record. It is an admitted fact that an identical issue have been considered by ITAT, Delhi SMC-Bench in the case of the same assessee in preceding A.Y. 2011-2012 and similar addition have been deleted on merits and this fact is also stated by the Ld. D.R. that facts are identical in assessment year under appeal as have been considered in A.Y. 2011-2012. In the present case also, two of the parties have denied making any sales to the assessee. No entries of such sales have been recorded in the books of account. Two parties have admitted to have made sales to the assessee and filed reply under section 133(6) of the I.T. Act, 1961, supported by bill and Affidavit, on which, no adverse inference have been drawn by the A.O. All the payments of purchases have been made through banking channel which have not been doubted by the authorities below. The assessee also filed the quantitative details of opening stock, purchase goods, manufacture, ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... f all the purchase parties. The assessing officer in the remand proceeding also examined the purchase parties and their auditor, who have confirmed the genuineness of the transaction. There is no evidence on record to prove that amount of purchases given to Damor family have come back to the assessee. In survey, no incrementing material was found to prove that assessee made bogus purchases. Whatever evidence was found during the course of survey i.e., bills and invoices of purchases have already been recorded in the books of account. The sellers are also assessed to tax and have declared the transaction in their returns which have been accepted by the Revenue Department. The seller party have also replied to the notice under section 133(6) of the Income Tax Act. The assessing officer did not reject books of account of assessee under section 145 of the Income-Tax Act. If the aforesaid addition is confirmed, according to explanation of assessee, it would give gross profit rate of 41.4 % which is impossible to earn in this line of trade. The assessing officer accepted in the remand report that assessee maintained stock quantitative details, in which, no deficiency have been pointed-ou ..... X X X X Extracts X X X X X X X X Extracts X X X X
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