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TMI Blog2022 (6) TMI 412X X X X Extracts X X X X X X X X Extracts X X X X ..... uki Synthetics Pvt. Ltd, which is clearly evident from the ledger account filed by the assessee - Assessing Officer made addition of Rs.10.00 lakh as loan. We find that the Ld. CIT(A) deleted the addition on appreciation of evidence available on record. - Decided against revenue. - ITA No. 868/AHD/2015 - - - Dated:- 3-6-2022 - Shri Pawan Singh, Judicial Member And Dr. Arjun Lal Saini, Accountant Member For the Assessee : Shri Hiren R Vepari, CA For the Revenue : Ms.Anupama Singla,Sr-DR ORDER UNDER SECTION 254(1) OF INCOME TAX ACT PER PAWAN SINGH, JUDICIAL MEMBER: 1. This appeal by Revenue is directed against the order of ld. Commissioner of Income tax (Appeals)-II, Surat [for short to as Ld. CIT(A) ] dated 12.01.2015 for assessment year (AY) 2005-06, which in turn arises out assessment order passed by Assessing Officer under section 143(3) of the Income Tax Act, 1961 (hereinafter referred to as the Act ) vide order dated 31.12.2007. The Revenue has raised the following grounds of appeal:- [1]On the fact and circumstances of the case, whether the Ld. CIT(A) was justified in deleting the addition made of Rs.1,68,15,995/- on account of unverifiable ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... assessee filed his return of income for assessment year 2005-06 declaring income of Rs.1,35,910/-. With the return of income assessee furnished copy of audit report as required under section 44AD of the Act in Form No.3CB 3CD, with computation of income, profit and loss account and capital account respectively. During the relevant period under consideration, the assessee has shown shales turnover of Rs.6.00 crores (rounded off) against the purchase of Rs.6.72 Crore. The assessee returned loss at Rs. 72,13,747/-, which is 11.1%. The case was selected for scrutiny. The Assessing Officer while passing the assessment order under section143(3) on 31.12.2007 made addition on account of bogus purchase of Rs.6.72 crores by taking view that purchase are not genuine and that from the parties from whom the assessee has shown purchase were no found at the addresses furnished by the assessee. The Assessing Officer made independent verification. The Assessing Officer issued notices to seller parties under section 133(6), the Postal Authorities reported that either party is not known or left the address. The Assessing Officer made addition to aggregate of entire purchases. The Assessing Off ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e recorded. Suresh Kumar Modi (HUF) in his statement denied of given any loan to assessee or his concern. Shri Amit Kumar Modi also denied of having loan transaction to any person. For other creditors, i.e., Basuki Synthetics Pvt. Ltd., the Assessing Officer recorded that neither bank details nor copy of IT return was furnished. For remaining parties, the Assessing Officer concluded that their creditworthiness is also remained unexplained. On the aforesaid observation, the Assessing Officer reinstated the addition of Rs.20 lakhs. Aggrieved by the addition of 25% of the purchase and treatment of unsecured loan as unexplained cash credit under section 68, the assessee filed appeal before Ld. CIT(A). Before Ld. CIT(A), the assessee filed detailed written submission. The submission of assessee are recorded in para-5 of the order of Ld. CIT(A). 7. The assessee in his submission, submitted that Assessing Officer while passing the assessment order under section 144 on 21.12.2007 besides making addition of unverifiable purchases of Rs. 6.72 Crore and additions of unsecured loan as unexplained cash credit under section 68. The Ld. CIT(A) upheld the action of Assessing Officer in order da ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... . The assessee furnished complete details giving names, address, and excise registration number of suppliers. The details of bank account, wherein the amount was debited to the account of assessee and credited to the account of sellers. The entire exports were verified by custom authorities. The assessee further stated that Assessing Officer collected copies of the cheques during the original assessment proceedings. The assessee demanded copy of such cheques. There is no endorsement on the cheques. The question of getting back the money is far-fetched and Assessing Officer has not correctly interpreted or appreciated. The allegation that the cheques came back to the assessee and recovered money from Shroffs does not hold good. There is no such evidence and prayed for deleting the entire additions. 9. On the addition of unsecured loan, the assessee submitted that in all the cases confirmation was filed, copies of such confirmation was furnished by giving names, address and PAN along with copy of IT returns and acknowledgement and bank statements. The assessee further explained that in case of Kalavati Devi Santoria, balance-sheet was filed as other documents were squared up which ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ded after completion of assessment order. The assessee could not produce the complete details on account of flood destroyed in Surat City in August 2006. The assessee obtained completed details from Excise and Custom department and produced before the Assessing Officer. Certificate of custom officer certified that goods in question have been sent through land or sea frontier and exported to different countries but the Assessing Officer has not taken cognizance of such facts. The certificate from the Joint Director of General Foreign Trade was produced against / export benefit including DEPB receipts is also reflected in the bank account of the assessee, which was furnished during assessment as well as appellate proceedings. The Assessing Officer accepted the sales but rejected 25% of purchase. The Assessing Officer failed to appreciate to that ARE- 1 certificate has been furnished with providing details of purchase for excise registration number payment made by cheque. The bank account of assessee shows that cheques have been credited in the account of sellers. The Assessing Officer only considered the fact that books of account were not produced and that Inspector reported that pa ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rther appeal before Ld. CIT(A), the addition was upheld, however, on further appeal before Tribunal, assessee filed additional evidence, the application of additional evidence was allowed and the matter was remanded back to the file of Assessing Officer during the second round of assessment. The assessee failed to prove the genuineness of purchases. The Assessing Officer disallowed the purchase to the extent of 25% on a reasonable basis by taking view that in the original assessment, the sales / export of assessee was not disputed. The Ld. CIT(A) deleted the entire addition that exports / sales of assessee was verified by custom authorities. The observation of Ld. CIT(A) is that export related documents were not considered by the Assessing Officer is factually incorrect as the finding made in the original assessment was incorporated in the assessment order that at no point of time and any document submitted during the course of assessment proceedings about the purchaser parties. The Ld. CIT(A) mentioned that certificate of Joint Director of General Foreign Trade dated 07.01.2011, where export benefit was reflected but no such certificate was produced before Assessing Officer. The L ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... independently examined the fact of the case. We find that there is no dispute that assessee made the sales / export of entire matter / goods. Undisputedly the sale of assessee was not doubted against the export, the assessee received DEPB benefit which has been reflected in the bank account of the assessee. The assessee has shown loss. Though the income was shown due to the export benefit of Rs.86,34,887/-. We find that the Ld. CIT(A) deleted the addition on appreciation of sufficient evidence available on record which was conveniently ignore by Assessing Officer. The Assessing Officer based his finding merely on the fact that books were not produced. We find that assessee has explained that the books of account maintained in the system was destroyed due to heavy flood in the month of August, 2006 in city of Surat and against which assessee has received compensation of such loss. Second reason for make disallowance was that Inspector report that parties were not available at the given address. We find that such report was not share with the assessee. It is recognized position under law that evidence which is used against the person must be share to him. The assessee has proved that ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ival submission of the parties and have gone through the order of authorities below. We find that the Assessing Officer made the addition of Rs.20 lakh by taking view that there was discrepancy in the confirmation by assessee and assessee was asked to produce the parties and that none of the parties were produced by assessee. The Assessing Officer issued summons under section 131and recorded statement of parties namely, Suresh Kumar Modi (HUF) and Amit Kumar Modi who had denied of having provided any loan to assessee. The Assessing Officer further noted that in case of Basuki Synthetics Pvt. Ltd. neither bank details nor copy of return of income was furnished. As recorded above that before Ld. CIT(A), the assessee filed detailed written submission and the evidences to prove the identity, creditworthy of the parties and genuineness of the transaction. We find that the assessee furnished name, address, PAN, the amount was received by cheques and repayment by cheque, confirmation and balance-sheet were amounts of outstanding were provided. The assessing officer has not brought any adverse evidence against the transaction of four parties. We find that Ld. CIT(A) considering the evidenc ..... X X X X Extracts X X X X X X X X Extracts X X X X
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