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TMI Blog2023 (5) TMI 363X X X X Extracts X X X X X X X X Extracts X X X X ..... al. There cannot be any grievance to the assessee to the exparte order passed by the Ld.AO, since the assessee has been heard by the appellate authority to its complete satisfaction, after considering all evidences and submissions filed by the assessee. No merit in the ground raised by the assessee challenging passing of assessment order under section 144 - Decided against assessee. Disallowance of loss on sale of grey cloth - grey cloth was purchased at a higher rate and sold at a lower rate on the same day, that the transactions taking place between the same parties appeared to be a modus operandi adopted by the assessee to claim fabricated bogus loss - HELD THAT:- As per the list of the parties whom the sales were made, the same were also supplied by the assessee to AO, as is evident from the remand report, and as noted above, no infirmity was pointed out by the AO and the information furnished by the assessee regarding the sale transactions with respect to grey-cloth. Therefore, all in all, as noted except for doubting on account of the fact that goods were purchased and sold on the same day at a loss, the AO had no other material on hand to doubt the genuineness or the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... balances to be bogus, can only mean and as has held by the ld.CIT(A) also that there were in fact no transactions entered with these parties, and transaction if any entered were of sham/bogus. Since the transactions were entered into in the preceding year the addition, if any, could have been made holding them to be bogus in he said year only. There cannot be case of treating the outstanding balance as bogus and making the addition of the same. Set off carry forward of business loss of earlier years - HELD THAT:- No facts have been brought to our notice regarding the brought forward loss of earlier years claimed to be set off by the assessee in the impugned year. Even otherwise, since all the additions have been deleted by us, the assessee is restored back to the returned loss and therefore there remains no case for claiming any set off of brought forward loss. Thus, the ground raised by the assessee is no longer relevant, and dismissed accordingly. - ITA No.136/Ahd/2020 - - - Dated:- 4-5-2023 - Smt. Annapurna Gupta, Accountant Member And Shri T.R. Senthil Kumar, Judicial Member For the Assessee : Shri S.N. Divatia, AR For the Revenue : Smt. Saumya Pandey Jain ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... tions made by the AO and confirmed by CIT(A) are highly excessive and the benefit of telescoping should have been allowed or the holistic view of the matter should have been taken by them. 4.1 Both lower authorities have erred in not allowing set of business losses of earlier years. 3. Ground No.1.1 and 1.2 and 4.1, it was stated were general in nature, therefore, the same are not being adjudicated by us. 4. Ground no.2.1 to 2.4, it was stated, related to the additions/ disallowance made in the present case, ground no.2.1(a) to 2.1(d) specifically challenging the various disallowances/additions made on merits. Ground no.2.4 raised by the assessee is against the action of the AO in making ex parte assessment order passed in the present case under section 144 of the Act. We shall first take up the ground no2.4 raised by the assessee. 5. As transpires from order of the authorities below, the AO framed assessment under section 144 of the Act i.e. ex parte assessment order, passed after giving due notices to the assessee on the issues raised and on the basis of materials and submissions, whatever filed by the assessee before it. 6. In the order passed, the AO made v ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... upheld. 8. Before us, the ld.counsel for the assessee was unable to point out any infirmity in the finding of the ld.CIT(A) to the effect that the AO had not violated due procedure of law and passed a speaking order in the present case after affording due opportunity of hearing to the assessee. We have also gone through the assessment order, and we find that before making various additions/disallowances, the AO had issued show cause notice to the assessee, considered the reply filed by the assessee, and thereafter proceeded to make various additions based on the material evidences and submissions filed whatever by the assessee before him. The Ld.counsel for the assessee was unable to point out any instance of the AO having passed the order in violation of law, without affording any opportunity of hearing to the assessee. Therefore, we agree with the ld.CIT(A) that there is no infirmity in the action of the AO in passing the assessment order under section 144 of the Act,. 9. Even otherwise, we find that there has been no miscarriage of justice in the present case, because, as is evident from the appellate order of the ld.CIT(A) that whatever additional evidences the assesse ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... f the evidences submitted by the assessee after providing it an opportunity of being heard 3. The issue wise reply after verification of additional evidences and conducting enquiries are submitted as under :- 3.1 Loss on account of Purchase/Sale 3.1 During the course of assessment proceedings the AO observed that the assessee Had purchased 86208 Mtrs of Grey Cloth @Rs 120.44 from Pratkisha Textiles for a sum ofRs.1,03,82,892/ and on the same day sold the entire quantity to Rameshwar Sales Corporation @ 93.44/- for a consideration of Rs 80,55,275/- at a loss of Rs 23,27,617/-observing the following :- i. The assessee had not been able to explain the rationale behind purchasing the grey cloth at a high price from PratikshaTexitle and selling the same at the lower price to Rameshwar Sales Corporation on the same day. ii. The assessee had not been able to prove the purchase and sale with supporting evidences i.e purchase and sales bills along with LAR. 3.1.2 Inferences on the Additional Evidences produced by the assessee In this regard, the assesssee vide letter dated 25.4.2019 submitted the complete address and copy of purchase bills and delivery challan ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... it. 13. The only comment of the AO and the reasons given by the AO for confirming his action of finding the transactions to be bogus is that since facts before him revealed that grey cloth was purchased at a higher rate and sold at a lower rate on the same day, that the transactions taking place between the same parties appeared to be a modus operandi adopted by the assessee to claim fabricated bogus loss. On the basis of investigation conducted by the AO and all the material and evidences placed before him, this conclusion surely could not have been arrived at by the AO, as admitted by him by stating that it appears to be genuine transactions. His finding of the transactions therefore being bogus is only figment of the imagination and based on surmises and conjectures and that too without any basis. The assessee has filed all evidences to prove genuineness of the transactions, which is not disputed by the Revenue. The AO has found no infirmity in the evidences filed, as is evident from his remand report also, therefore, we hold there is no basis for holding the impugned transactions to be as bogus/sham transactions and disallowance of loss therefore to the extent of Rs.23,27, ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... by the assessee regarding the sale transactions with respect to grey-cloth. Therefore, all in all, as noted above by us, except for doubting on account of the fact that goods were purchased and sold on the same day at a loss, the AO had no other material on hand to doubt the genuineness or the veracity of the transactions, which otherwise was suitably established by the assessee with all evidences, which were examined and found to be in order by the AO in his remand report. In view of the above, we hold that there is no basis for disallowing the loss of Rs.23,27,617/- to the assessee and the disallowance so made is therefore directed to be deleted. Thus, ground no.2.1(a) of the assessee is therefore allowed. 18. Taking up the grievance raised by the assessee in Ground No.2.1(b), we have noted from the order of the authority below that the said addition relates to unreconciled difference in the outstanding balance of the following sundry creditors: Sr.No Name of the Sundry Creditor Closing balance as per Assessee's books of accounts Closing balance as per contra confirmation obtained u/s 133(6) ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... iles; one reflecting payments to Shivbaba Textiles only vide banking channels alone, and other accounts named Shivababa Textile Cr. reflecting all purchases made by the assessee from the said parties including the opening credit balance. On compiling two accounts together, which showed a balance of Rs.15,29,000/- (Dr.) in the payment account and Rs.15,29,000/- in the credit account; net credit balance outstanding of the said party amounted to Rs.29,000/- which tallied with the balance reflected by Shivababa Textiles in its books resulting to the assessee. 21. With respect to Yug International Pvt. Ltd. copy of account of the assessee in the books of the said party from the year beginning 1.4.2011 right upto 31.3.2015 was filed to the AO, copies of which ere placed before us at PB page no.107 to 112. Similarly, the copy of the account of the said party in the books of the assessee for the said period, 1.4.2011 right upto 31.3.2015 was also filed to the AO. Copies of which were placed before us at Page No.113 to 117. 22. As is evident from the bare perusal of these accounts, the discrepancies could well have been culled out from the entries reflected by the respective parties ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e him, have erred in holding that the differences are unreconciled. The addition, therefore, made on this basis and confirmed by the ld.CIT(A), we hold, is not sustainable as per the facts of the case, and we direct the deletion of the addition amounting to Rs.71,68,534/-. The ground no.2.1(b) is therefore allowed. 23. Grievance raised by the assessee in ground no.2.1(c) is in relation to the addition on account of purported cessation of liability of the following sundry creditors, noting the fact that their opening and closing balances remained the same, since last three years: Sr. No Name of the sundry creditors F.Y. 2012-13(A.Y. 2013- 14) F.Y. 2013-14(A.Y. 2014- 15) F.Y. 2014-15(A.Y. 2015-16) Op.Bal. Clos.Bal Op.Bal. Clos.Bal Op.Bal. Clos.Bal 1 Amit ProcessorsP Ltd 700000 700000 700000 700000 7,00,000 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... cessors P.Ltd. The ledger account of Amit Processors for financial year 2010-11 reflecting the said facts was placed before us at PB Page no.73. Copy of the bank accounts, wherein cheque of Rs.7 lakhs was received on 31.5.2010 was filed before us at PB Page No.74, and also copy of the accounts of the assessee in the Ambica Textiles for the financial year 2010-11 was filed before us at PB Page No.76 reflecting the fact of payment of Rs.7 lakhs of cheque by Ambica Textiles to the assessee on 31.5.2010. Similarly, the copy of account of Ambica Textiles in the books of the assessee for the period was also filed, pointing out that outstanding balance of the assessee in the books of Ambica Textiles differed on account of this entry of Rs.7.00 lakhs not accounted for by the assessee in its books in the accounts of Ambica Textiles, but wrongly accounted for in the account of Amit Processors P.ltd. Thus, it is evident from the above that the assessee had clearly established that outstanding balance of Rs.7.00 lakhs in the case of Amit Processors P.Ltd. had nothing to day with the said party. 27. We have noted that the AO has not gone through all these evidences filed before it, nor the l ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ld.CIT(A) in confirming the aforesaid additions. Clearly, the addition has been made holding these sundry creditors to be bogus in the absence of the assessee not being able to establish the genuineness of the transactions. Since the assessee was unable to produce any supporting records or evidences in the nature of purchase bills/vouchers relating to the same, the ld.CIT(A) has held that since the assessee has failed to establish the aforesaid two parties were existing, he held, clearly bogus creditors. His finding to this effect is at para 9.2 and 9.3 of the order. But a perusal of the evidence filed by the assessee before the AO in the form of ledger accounts of these parties reveal that these outstanding balances of the aforesaid two parties are all balances of earlier years; that no transaction of purchase took place with these parties during the impugned year. In the case of Shiv Shakti Traders, we have noted that the AO made addition of the outstanding balance of Rs.2,21,142/- noting to be outstanding for the past two years, and holding that the liability ceased to exit. Therefore, it is clearly beyond doubt that these sundry creditors balance did not pertain to any transac ..... X X X X Extracts X X X X X X X X Extracts X X X X
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