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TMI Blog2024 (3) TMI 1114X X X X Extracts X X X X X X X X Extracts X X X X ..... ave heard the rival submissions and perused the materials available on record. The assessee is engaged in the import of items like pulses, edible oils, etc in bulk and sells the same on wholesale basis. A search and seizure action u/s 132 of the Act was carried out on 20.01.2014 in Sharp Group of cases wherein assessee was also one of the entity. Notice u/s 153A of the Act was issued to the assessee and in response to the same, the assessee filed its return of income declaring taxable income of Rs 5,10,82,459/- on 9.9.2015. It is not in dispute that the assessee during the year under consideration had made some purchases of goods from M/s Kamal Kishore Mukesh Kumar to the tune of Rs 2,16,83,820/-. The genuineness of the said purchases was sought to be examined by the ld. AO during the course of search assessment proceedings. The ld. AO also mentioned during the survey proceedings carried under section 133A of the Act, the statement of one Kamal Kishore was recorded where he admitted that his firm was only on paper and was engaged in providing accommodation bills and hence there was no actual sale made by his firm to anyone. The assessee filed a detailed reply vide letter dated 29.0 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e the taxable profits. This could have happened only when the assessee did not enter the purchases in the stock register and made the entries only in the purchase account. The quantities of the purchase bills duly appear in the stock registers. Thus when the assessee has made sales of such goods to parties in the normal course of business and duly recorded the same in its books, it is totally incorrect to say that the purchases made from the said party are bogus and not actual. 3.1. The assessee submitted before the ld. AO that the admission made in the statement by Shri Kamal Kishore that he has provided accommodation entries through various concerns is factually incorrect as the said statement was not provided to the assessee for its perusal and rebuttal. Accordingly, the assessee is completely in the dark about the contents of such statement. It was submitted that in any case, since the assessee has discharged the initial burden of placing on record all primary evidences of having made purchases from M/s Kamal Kishore Mukesh Kumar, to substantiate the said purchases of goods and it is the Revenue which is relying on the statement made by Shri Kamal Kishore, therefore the bare m ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e earlier years. 3.5. It is also pertinent to note that the sales made by the assessee out of the disputed purchases were accepted by the ld. AO and the profit disclosed by the assessee thereon in the sum of Rs 96,55,076/- had been duly taxed by the ld. AO. Further the books of accounts produced by the assessee together with the book results were not rejected by the ld. AO in terms of section 145(3) of the Act. 3.6. It was further submitted that there is a complete trail of purchases and sals and assessee has been able to correlate each transaction of purchase with corresponding sales together with the relevant entries in the stock registers. The assessee had duly furnished the stock registers, VAT returns showing these transactions which had been accepted by the VAT authorities. The ld. AO had merely made the disallowance of purchases based on the statement of Shri Kamal Kishore which was not even furnished to the assessee for his rebuttal and cross examination. 3.7. It was further submitted that Shri Kamal Kishore had admitted his involvement in providing accommodation entries on behalf of Shri Devki Nandan Agarwal Prop M/s Lachhu Ram Agarwal & Co. During survey u/s 133A of th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... AO to have furnished the said statement to the assessee along with the show cause notice issued on 23.3.2016 granting time to the assessee to respond till 29.3.2016. Either way for the revenue's default in holding the statement of Shri Kamal Kishore (starting from investigation wing), why should the assessee suffer. Further nowhere in the show cause notice issued by the ld. AO , it had even been alleged that Shri Kamal Kishore had given statement that he had not supplied any goods to the assessee herein. The show cause notice does not even whisper about any mentioning of cash trail between Shri Kamal Kishore and assessee. In this scenario, merely placing reliance on a statement taken behind the back of the assessee and which was not even put across to the assessee, then no addition could be made based on such statement. The statement of Shri Kamal Kishore was ultimately placed on record by the ld. DR at the time of hearing before this Tribunal with copy handed over to ld. AR. The ld. AR also defended the statement of Shri Kamal Kishore stating that nowhere the supplier had even mentioned the name of the assessee herein to have been indulged in any malpractices. Hence he argued that ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the profits. 5. The above facts and conclusion drawn by the AO were confronted by the show-cause notice dated 23-03-2016 to the assessee who vide reply dated 29- 03-2016 furnished detailed explanation to the said SCN which has been produced in para no. 3 of the assessment order. The same is not being repeated for the sake of brevity. The AO has on the perusal of this reply disbelieved the version of the assessee and added the so called bogus purchase entries. 6. I have considered the entire finding of the AO with respect to purchases made by the assessee from M/s Kamal Kishore Mukesh Kumar and the submissions made vide letter dated 21-10-2016 and 23-05-2017 along with supporting documents like detailed chart giving quantities and values of disputed purchases and the sale made thereafter of the disputed purchases, confirmation and the purchase bills of M/s Kamal Kishore Mukesh Kumar and the party accounts showing sales thereof and the comparative chart of Gross Profit & Net Profit ratios of the assessee company. 7. The assessee company is engaged in the import of items like pulses, edible oils, etc in bulk for the past many years and makes sales on wholesale basis. During the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... date-wise and party-wise quantitative details and has also obtained Tax Audit Report under section 44AB of the Income Tax Act. Thus, from the above discussion and the evidences / documents in the shape of confirmations, stock registers, quantitative details etc the purchases made from the said party could not be treated as bogus and not real in the nature of accommodation entries. 12. That no addition can be made in the hands of the assessee merely on the basis of observations made by a third party. While making the assessment, it is the satisfaction of the AO which is of prime importance. It cannot be substituted by the satisfaction someone else. The assessee company has discharged the primary onus cast on it by showing the purchases in the books of accounts, payment by way of account payee cheques and producing the vouchers of sale of goods. The AO did not make requisite investigations against the said seller by the issue of notice under section 133(6) of the Income Tax Act and has proceeded to disallow the purchases as bogus relying on the information received from the investigation wing. It has been held by the Hon'ble ITAT, Delhi in case of Unique Metal Industries (ITA ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... urt held no substantial question of law. On SLP by revenue the Court held that if the AO wants to use some statement made before him, then on request by the assessee, is bound to put the deponent for cross examination. 14. It has also been noted that no such evidence or incriminating documents whatsoever was found during the course of search carried on 20.01.2014 in the case of the assessee which could even remotely suggested that the purchase made from the said party is bogus in nature. Also no evidence was found to prove that the cash flowed back from the aforesaid party against the disputed purchases to the assessee. Rather the said party has given confirmation of accounts to the assessee. The AO has also stated in the order that Shri Kamal Kishore used to give blank cheque books duly signed to Mahesh Mittal and Shri Devki Nandan Aggarwal. The name of the assessee company has no where been mentioned. 15. Therefore, the total disallowance of purchases made M/s Kamal Kishore Mukesh Kumar for Rs 2,16,83,820/- is directed to be deleted and ground of appeal nos. 1,2,3 &4 are consequently allowed. 7. We find that the aforesaid factual findings and legal findings were not controve ..... X X X X Extracts X X X X X X X X Extracts X X X X
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