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TMI Blog2023 (1) TMI 1215X X X X Extracts X X X X X X X X Extracts X X X X ..... EMBER For the Assessee : Sh. Sahil Gupta , CA For the Department : Sh. Sumesh Swani , Sr. DR ORDER PER KUL BHARAT , JM : This appeal, by the assessee, is directed against the order of the learned Commissioner of Income-tax (Appeals), Faridabad, dated 28.06.2019, pertaining to the assessment year 2016-17. The assessee has raised following revised grounds of appeal: 1.That on the facts and in the circumstances of the case and in law, Id CITA erred in sustaining the order passed by Ld AO u/s 143(3) without appreciating that there are numerous holes in order as the sole reliance of Id AO is based on third party statement without corroborating the same with other relevant corroboree evidence. 2. That on the facts and in the circumstances of the case and in law, Id CIT-A erred in sustaining the order passed by Ld AO u/s 147/143(3) without appreciating that rubber stamp reasons in present case are based on borrowed satisfaction and are without independent application of mind. This is further evident from glaring feature of reasons recorded that while drawing alleged inference of income escapement of Rs 16 lacs, how stated transaction is seen as accom ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 39,13,787.93 out of which Rs. 34,11,170/- was received in cash. However, the Assessing Officer found that there was a difference into payment as per the accounts of Haryana Traders and as claimed by the assessee amounting to Rs. 10,50,532/-. The assessee was asked to reconcile the same. On account of failure to reconcile, the Assessing Officer made addition of this amount. The Assessing Officer noticed that the assessee had made payment to M/s Vasu Steels amounting to Rs. 59,995/-. However, the payment was made on different dates, keeping the amount lower than Rs. 20,000/-. Hence the Assessing Officer by invoking the provisions of Section 40A(3) of the Act made addition of Rs.59,995/-. Hence the Assessing Officer assessed income at Rs. 25,02,530/- against the declared income of Rs. 5,93,500/-. 3. Aggrieved against this the assessee preferred appeal before the learned CIT(Appeals), who after considering the submissions partly allowed the appeal. Thereby he confirmed the addition made by invoking the provisions of Section 40A(3) and also addition of Rs. 10,52,532/- and Rs. 5,46,169/-. However, in respect of the ad hoc disallowance of 1/10th of the expenditure amounting to Rs. 2,5 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... tax returns, the purchases from vendor of Rs. 5,46,169/- are duly reflected in returns in quarter 2, returns attached at page.32. 6. That it is held by Hon'ble Delhi ITAT in Manoj Sharma vs ITO (2019) ITA No.:- 4342/Del/2018, where there are allegations that applicant has inflated purchase and received back cash, however where the quantity of opening stock and purchases on the debit side and sales and closing stock in the credit side in the books of account has been accepted, then it cannot be held that some quantity of purchase recorded in the books are not explained or outside books of account, crux at page no. 42 of compilation of case laws. 7. That it is not a case of bogus purchases rather it is a matter of a civil dispute where one party is saying that, they have not received the payment and the other party is saying that they have cleared their dues, however there is no loss to the exchequer as there is no revenue leakage, it is a case of genuine purchase and a case of civil dispute where Income Tax department has no jurisdiction, pertinent to mention here that if there is any sum outstanding towards vendor then nothing is placed on records to show that vendo ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... sales of the applicant is: Faridabad Location: : Rs. 28,63,255/- Kosi (UP) Location : Rs. 10,29,935/- Total : Rs. 38,93,190/- 13. Therefore, it is clear from above that M/s Haryana Traders has confirmed the sales affected from Faridabad Location only, however, inadvertently they have not shown the sales from Kosi (UP) location. It is general accounting practice to open site wise ledger of same company for statutory reporting purpose in accounting software, therefore ledger accounts of Faridabad location is provided same can be verified by ledger name as Faridabad in the statement mentioned (at page No ). 14. That further the sales of Kosi location have been duly verified by Asst. Commissioner rank Sales Tax officer whose order is attached at page No , therefore it is clear case of misstatement by third party which has been accepted blindfolded without appreciating other corroborated evidences. 15. That further following judicial pronouncements should be relied for deletion of additions of account of Sales: I. Shree Sanad Textiles Industries Ltd. V. DCIT (Ahmedabad ITAT) ITA No. 1166/Ahd/2014, We also note that the provisions of section 6 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... y the AO that the said entity has shown cash payment of Rs.23,63,255/- to the appellant on 30.03.2016. Further M/s Haryana Traders has shown purchases of Rs.28,63,255/- from the appellant in its books of account. The above discrepancies were confronted to the appellant. No satisfactory explanation has been furnished to reconcile the difference of sales of Rs.10,50,532/-. Thus the AO had observed that the appellant has shown excess cash receipts in its books of account from unexplained sources and therefore, made addition for Rs.10,52,532/-. It has been stated during the appellate proceedings that the appellant has maintained regular books of account and the sales were supported with the purchase/ sale bills, VAT returns. It was explained that Haryana Traders might have suppressed their purchases. The entire submission of the appellant has been reproduced as above. 10. From the facts of the case it is noted that the appellant has shown receipt of cash of Rs.34,11,710/- against sales made of Rs.39,13,787/- to M/s Haryana Traders. As a result of enquiries made by the AO it was found that M/s Haryana Traders has made purchases of Rs.28,63,255/- from the appellant and has made cas ..... X X X X Extracts X X X X X X X X Extracts X X X X
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