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TMI Blog2024 (1) TMI 850X X X X Extracts X X X X X X X X Extracts X X X X ..... in deleting the additions made on account of nongenuine purchases. Once the purchases are held to be genuine, then there cannot be any doubt regarding manufacturing activity of the assessee. Therefore, the manufacturing expenses claimed by the assessee have to be allowed. In this view of the matter, we do not find any infirmity in the decision of learned Commissioner (Appeals). Decided against revenue. - Shri Shamim Yahya, Accountant Member And Shri Anubhav Sharma, Judicial Member For the Assessee : Shri Vinod Kumar Bindal, CA, Ms. Rinky Sharma, CA For the Revenue : Ms. Sapna Bhatia, CIT DR ORDER PER SHAMIM YAHYA, ACCOUNTANT MEMBER : These are appeals by the Revenue against the common order of ld. CIT (A) for Assessment Years 2012-13 to 2017-18. 2. Since the issues are common connected and the appeals were heard together, these are being consolidated and disposed off by this common order. 3. The solitary issue raised by the Revenue is the deletion by the ld. CIT (A) of the additions made by the AO for bogus purchases by the assessee. 4. Brief facts of the case are that a search seizure and survey operation under section 132/133A of the In ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... usion on his analysis of the facts and circumstances of the case are as under :- 14. Conclusion : In the given facts circumstances of the case, it is observed that 14.1 On the issue of M/s Aster Commodities being bogus/paper entity, following observations are summed up: (i) Sh Joginder Singh prop M/s Aster Commodities is regularly assessed to tax having valid PAN, UP VAT TIN and is registered with UP APMC to do agriculture products procurement sale through Mandis. M/s Aster Commodities is an existing entity, who had made purchases made from Farmers through its various collection centres MCX authorised dealers for making trading sales to the appellant as well as other parties. Apart from it, M/s Aster Commodities is acting as C -F agent of the appellant (as well as other parties) for purchases made by the appellant from MCX portal and MCX authorised dealers. Sh Joginder Singh prop M/s Aster Commodities had explained it in his statement u/s 133A on 7.4.2017 and had executed affidavit dated 25.12.2019 confirming purchase / sale transactions made with M/s Sharp Mint Ltd as C F Agent and on trading account. He had reconfirmed these transactions vide letter dated 12.3.2 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... n involving different government agencies without doing actual purchase/sale of material. The purchases from MCX dealers have very strong audit trail and again involves various documentation delivery procedures for sales. The MCX dealers purchases/sales made by M/s Aster Commodities are duly verifiable independently from the audit trails what is the price of purchase like who had made the payment for purchases, who had lifted the stock from MCX authorised warehouse, from where stock had been lifted, where the material had been despatched etc./ (ii) The AO had analysed Tally data of M/s Aster Commodities with its audited results filed to arrive at certain conclusions relating to stocks/sales/sales to appellant etc. Each of the observations of the AO had been discussed in above para. It is observed that the AO had made wrong comparison of figures with different bases of incomparable data. Some of the tally accounting entries appear to be incomplete on account of C -F activities in certain years. The cash withdrawn from the bank by M/s. Aster Commodities were for making farmer purchases as is evident from Form 6R produced/impounded. There was no stock found during survey, as the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... documents seized in earlier search on M/s Aster Commodities, earlier assessments of the appellant made u/s 153A for AY 2012-13 to 2014-15, documents maintained by M/s Aster Commodities, UP VAT order, assessments of M/s Aster Commodities u/s 143(3) etc. point that M/s Aster commodities had been an existing entity involved in actual purchase/sales of Mentha oil etc. It had supplied Mentha to the appellant as C F agent as well as trading supplier. There is no evidence brought on record by the AO to counter all these facts and documents. In my opinion, the DDIT/AO did not make enough efforts to reach Mr Jogender Singh prop M/s Aster Commodities and reconcile his financial affairs with his books of accounts. The DDIT/AO had done half baked analysis of tally data of M/s Aster Commodities with comparisons of incomparable data having different bases and without proper understanding the whole process of different kinds of sales made by it, particularly with reference to the. purchases of the appellant from it. It is further observed that The AO had accepted the existence and activities of M/s Aster Commodities w.r.t MCX portal purchases made by it through C F activities of M/s Aste ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... grey market. The AO had not brought even a single instance of purchases made by the appellant from grey market or any other source against the purchases shown from/through M/s Aster Commodities to support his allegation. On the other hand, M/s Aster Commodities is maintaining all the records, books of accounts, assessed under VAT etc to prove the activities undertaken by it. There was no such allegation w.r.t purchases made by the appellant from M/s Aster Commodities in the search on 20.1.2014 and even consequent assessment/appellate order also. The assessment of M/s Aster Commodities made for AY 2017-18 had confirmed the fact of actual sales made by it in trading as well as C F accounts after verification of books/documents. It is strange that the AO is alleging the purchases of Rs 800 Cr (including the ones made directly by the appellant from MCX authorized dealers) to be from grey market unknown sources, without bringing any evidence on records and ignoring the fact that all the purchases from M/s Aster Commodities have been accepted in concluded assessments u/s 153A for AYs 2012-13 to 2014-15. Thus this allegation of the AO is based on surmises conjectures and is not based ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... unted money. There is no evidence of purchases from grey market or utilization of any unaccounted money for purchases from alleged grey market or any evidence of receipt of any cash from M/s Aster Commodities. Hence, this allegation is not backed by any evidence of any such instance brought on record and had been made by the AO in a casual manner. Further the AO had alleged that taxes might have been saved by the appellant in such grey market purchases. It is observed that the trading as well as C F sales of M/s Aster Commodities are all Mandi Tax/UPVAT/CST paid, which are the only taxes on this commodity. This allegation is again based on presumption and ignores the real documents wherein taxes duly paid have been reflected. 14.2.5 The purchase prices of the appellant from M/s Aster Commodities had been accepted in its assessments of the appellant completed u/s 153A for AY's 2012-13 to 2014-15 and there is no new evidence on record to negate these findings. 14.2.6 The AO had estimated the inflation in purchase price of purchase made from/through M/s Aster Commodities @25% and had presumed the GP of the industry in the range of 12-15% in making such estimate. It is pert ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... resumptions only. 14.2.6 Even the AO has commented in the assessment orders as under (for reference -at page no. 49 of assessment order for A.Y. 2012- 13): The assessee company has shown the purchases from impugned seller party at the prevailing market rate/price charged by other regular dealers. Thus, the AO had accepted that the purchase prices as per bills of M/s. Aster Commodities are comparable to other purchases of the appellant. 14.2.7 In view of the discussion made in various para of this order and summarized above; it is held that (i) The allegations of purchase by the appellant from grey market and inflation @250/o in such purchase prices billed by M/s Aster Commodities is based on presumptions, conjunctures and surmises, without a single evidence on record and are hereby rejected. (ii) M/s Aster commodities is an existing entity engaged in the real trading and C F activities. (iii) The purchase prices of the appellant from M/s Aster commodities ate comparable with its other purchase prices from corresponding purchase sources like MCX dealers/ Farmers. Accordingly, the addition made by the AO considering inflation @ 25% of purchases made from M ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... , once, the CESTAT and the Tribunal have held the purchases made by the four Jammu based entities to be genuine, the corresponding sales effected by them to the assessee have to be accepted as genuine. 11. In that scenario, in our considered view, learned first appellate authority was justified in deleting the additions made on account of nongenuine purchases. Once the purchases are held to be genuine, then there cannot be any doubt regarding manufacturing activity of the assessee. Therefore, the manufacturing expenses claimed by the assessee have to be allowed. In this view of the matter, we do not find any infirmity in the decision of learned Commissioner (Appeals). Accordingly, we uphold the same by dismissing the grounds raised by the Revenue. Our aforesaid decision will apply mutatis mutandis to rest of the appeals under consideration. 11. Thus, in the background of the aforesaid discussion and precedent, we do not find any infirmity in the order of the ld. CIT (A) and we uphold the same. 12. Our above order applies mutatis mutandis to all the assessment years under consideration. 13. In the result, all the appeals filed by the Revenue are dismissed. Order pro ..... X X X X Extracts X X X X X X X X Extracts X X X X
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