DCIT, New Delhi V. M/s. Padmini VNA Mechatronics Pvt. Ltd., New Delhi

ITA 1809/DEL/2014

• Counselvise Citation: [2018] 125 COUNSELVISE.COM (IT) 4792 (ITAT-DELHI)
• Duration Of Justice: 4 year(s) 4 month(s) 5 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 01-08-2018
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: F
• Next Hearing Date: 29-05-2017
• Assessment Year: 2008-2009
• Appeal Filed On: 27-03-2014
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: SR SENPATI
• Assessee Lawyers: SUMIT GOE L
• Keywords: Reopening of assessment; Bogus purchase; Reassessment proceedings
• Section: 133A; 133(6); 147; 131; 148

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL (DELHI BENCH: F: NEW DELHI) BEFORE SHRI BHAVNESH SAINI, JUDICIAL MEMBER & SHRI L.P. SAHU, ACCOUNTANT MEMBER ITA NOS:- 1807, 1808, 1809/DEL/2014 ( ASSESSMENT YEARS: 2006-07, 2007-08 & 2008-09) DY. COMMISSIONER OF INCOME TAX, CIR.14(1), NEW DELHI. VS. M/S PADMINI VNA MECHATRONICS PVT. LTD., 5,PADMINI ENCLAVE, HAUZ KHAS, NEW DELHI-110016. PAN NO: AACCV1001F APPELLANT RESPONDENT REVENUE BY : SH. S.R. SENPATI, SR.DR ASSESSEE BY : SH. RAJKUMAR GUPTA, CA & SH. SUMIT GOEL, CA DATE OF HEARING : 19.07.2018. DATE OF PRONOUNCEMENT : 01/08/2018. ORDER PER: BHAVNESH SAINI, JM ALL THE APPEALS BY REVENUE ARE DIRECTED AGAINST DIF FERENT ORDERS OF LD. CIT (APPEALS)-XXIV, NEW DELHI DATED 04.12.2013 FOR A.Y. 2006-07 AND 2007-08 AND DATED 06.12.2013 FOR A.Y. 2008-09. 2 ITA NO.-1807/DEL/2014 & TWO OTHERS. M/S PADMINI VNA MECHATRONICS PVT. LTD. 2. WE HAVE HEARD THE LD. REPRESENTATIVES OF BOTH TH E PARTIES AND PERUSED THE MATERIAL AVAILABLE ON RECORD. 3. IT IS STATED THAT IN ALL THE APPEALS, REVENUE CHALL ENGED DELETION OF ADDITION ON ACCOUNT OF BOGUS PURCHASES. IT IS ALSO STATED THAT ISSUE IS SAME IN ALL THE APPEALS. BOTH THE PARTIES MAINLY ARGUED IN ASSESSMENT YEAR 2006-0 7 AND HAVE STATED THAT ORDER IN A. Y. 2006-07 MAY BE FOLLOWED IN OTHER APPEALS. 4. FOR THE PURPOSE OF DISPOSAL OF ALL THE APPEALS, WE PROCEED TO DECIDE THE DEPARTMENTAL APPEAL FOR A. Y. 2006-07 AS UNDER:- ITA NO.1807/DEL/2014 ( A. Y. 2006-07) 5. IN DEPARTMENTAL APPEAL, THE REVENUE CHALLENGED D ELETION OF ADDITION OF RS.1,39,41,577/- ON ACCOUNT OF BOGUS PURCHASES. 6. BRIEFLY THE FACTS OF THE CASE ARE THAT THE ASSES SEE COMPANY FILED RETURN OF INCOME ON 10.11.2006 SHOWING TOTAL INCOME OF RS.3,50,39,62 1/- UNDER THE HEAD BUSINESS AND HOUSE PROPERTY WHICH WAS PROCESSED U/S 143 (1). SU BSEQUENTLY REASSESSMENT PROCEEDINGS WERE INITIATED U/S. 147 OF THE IT ACT. THE ASSESSEE IN RESPONSE TO THE NOTICE U/S 148 SUBMITTED BEFORE THE ASSESSING OFFIC ER THAT THE RETURN OF INCOME FILED ORIGINALLY BE TREATED AS RETURN FILED IN RESPONSE T O NOTICE U/S 148 OF THE IT ACT. THE ASSESSEE IS IN THE BUSINESS OF MANUFACTURER OF VARI OUS TYPES OF AUTO ELECTRIC PARTS FOR VEHICLES. THE ASSESSING OFFICER IN THE REASONS FOR REOPENING OF ASSESSMENT MENTIONED THAT SURVEY US/. 133 A OF THE IT ACT WAS CONDUCTED AT THE PREMISES OF M/S. VINOD 3 ITA NO.-1807/DEL/2014 & TWO OTHERS. M/S PADMINI VNA MECHATRONICS PVT. LTD. PARASHAR & ASSOCIATES, FARIDABAD ON 19.09.2007. FR OM THE DOCUMENTS IMPOUNDED DURING THE COURSE OF SURVEY, IT WAS NOTICED THAT SH . VINOD PARASHAR WAS ENGAGED IN THE BUSINESS OF PROVIDING BOGUS BILLS TO VARIOUS PARTIE S IN LIEU OF COMMISSION. SH. VINOD PARASHAR ADMITTED THAT HE HAD OPENED VARIOUS BANK A CCOUNTS IN THE NAME OF VARIOUS BOGUS CONCERNS AND THROUGH THESE BOGUS CONCERNS, HE USED TO ISSUE BOGUS SALE BILLS AGAINST THE CHEQUES WHICH WERE DEPOSITED IN THE BAN K ACCOUNTS. SH. VINOD PARASHAR USED TO WITHDRAW CASH AND RETURNED THE SAME TO THE BENEFICIARY AFTER DEDUCTING HIS COMMISSION. ADIT (INVESTIGATION) FARIDABAD VIDE LE TTER DATED 14.01.2008 INTIMATED THAT ONE SUCH BENEFICIARY WAS ASSESSEE COMPANY WHO HAVE OBTAINED BOGUS BILLS OF PURCHASES. IT WAS ALSO INTIMATED THAT A PERUSAL OF COPY OF THE ACCOUNTS OF THE ASSESSEE COMPANY IN THE BOOKS OF M/S OM INDUSTRIAL CORPORATI ON (ONE OF CONCERN OF SH. VINOD PRASHAR) FOR FINANCIAL YEAR 2005-06 REVEALED THAT D URING THIS YEAR ASSESSEE COMPANY HAS OBTAINED BOGUS PURCHASES BILLS, ACCOUNTING TO R S.1,22,54,000/-. 7. DURING COURSE OF THE PROCEEDINGS, NOTICES U/S 13 3 (6) WERE ISSUED TO CONCERN PARTIES I.E. M/S. OM INDUSTRIAL CORPORATION AND OTH ER PARTIES INCLUDING M/S. TECHNO ENTERPRISES BY SPEED POST DATED 29.08.2011 WHICH WER E RECEIVED BACK UNSERVED WITH THE REMARKS LEFT WITHOUT ADDRESS. THE INSPECTOR OF THE DEPARTMENT ALSO REPORTED THAT THESE PARTIES WERE NOT AVAILABLE AT THE GIVEN ADDRE SS AT THE TIME OF MAKING LOCAL ENQUIRIES. THE ASSESSING OFFICER ASKED THE ASSESSE E TO PROVE GENUINENESS OF THE PURCHASES FROM THESE TWO PARTIES. THE ASSESSEE FIL ED VARIOUS REPLIES BEFORE ASSESSING OFFICER ON DIFFERENT DATES ALONGWITH THE DOCUMENTAR Y EVIDENCES I.E. COPY OF LEDGER ACCOUNTS, COPY OF BILLS/INVOICES, D-3 FORMS, BANK A CCOUNTS SHOWING PAYMENT FOR 4 ITA NO.-1807/DEL/2014 & TWO OTHERS. M/S PADMINI VNA MECHATRONICS PVT. LTD. PURCHASES MADE, COPY OF STOCK REGISTER, CASH BOOK E TC. IN SUPPORT OF ITS CLAIM THAT THE PURCHASES HAVE ACTUALLY BEEN MADE AND HAVE BEEN REC EIVED AT THEIR BUSINESS PREMISES, ACCOUNTED FOR IN THE STOCK AND USED IN PRODUCTION A ND SUBSEQUENT SALE THEREOF. 8. THE AO REPRODUCED SOME EXTRACTS FROM THE ASSESSE ES SUBMISSION IN THE ASSESSMENT YEAR IN WHICH THE ASSESSEE EXPLAINED THA T ASSESSEE COMPANY HAS NO CONCERN/ RELATION WITH MR. VINOD PARASHAR AS STATED IN THE REASONS. THE ASSESSEE COMPANY HAS GENUINE BUSINESS TRANSACTION WITH M/S O M INDUSTRIAL CORPORATION AND VIKAS ENTERPRISES NOT AS A BENEFICIARY. ACTUAL PURC HASES HAVE BEEN MADE FROM M/S OM INDUSTRIAL CORPORATION AND VIKAS ENTERPRISES AND GEN UINE PURCHASES BILLS HAVE BEEN RECEIVED AGAINST SUPPLY OF MATERIAL. NEITHER THE A SSESSEE COMPANY NOR THE DIRECTORS OR FAMILY MEMBER OF DIRECTORS COMPANY HAVE RECEIVED BA CK ANY PAYMENT DIRECTLY OR INDIRECTLY IN ANY FORM FROM M/S OM INDUSTRIAL CORPO RATION AS STATED IN THE REASONS. DURING THE YEAR UNDER APPEAL, THE ASSESSEE COMPANY PURCHASED RAW MATERIAL COMPONENT FROM BOTH THE CONCERNS AND SAME PURCHASED MATERIAL WAS USED IN THE PRODUCTION PROCESS. THE DETAILS OF PRODUCTION PROC ESS WERE ALSO EXPLAINED. IT IS STATED THAT WHENEVER THE MATERIAL IS PURCHASED WITHIN THE STATE OF HARYANA BY THE ASSESSEE COMPANY FROM ANY PARTY, FORM NO- D3 OF SALES TAX/VA T IS REQUIRED TO BE USED BY THE VENDOR COMPANY. THE DETAIL OF BILLS AND MATERIAL I S ENTERED INTO THE GATE ENTRY REGISTER WHERE GATE KEEPER PUTS THE STAMP OF THE COMPANY OF THE BACK SIDE OF THE BILLS AS A PROOF OF RECEIPT OF MATERIAL. THE GATE KEEPER AFTE R ENTERING THE DETAILS IN THE GATE ENTRY REGISTER SENDS THE MATERIAL TO THE STORES DEPA RTMENT WHERE RECEIPT OF QUANTITY OF THE MATERIAL AND OTHER DETAILS ARE RECORDED IN THE STORE REGISTER AND THEN MATERIAL IS 5 ITA NO.-1807/DEL/2014 & TWO OTHERS. M/S PADMINI VNA MECHATRONICS PVT. LTD. ISSUED TO THE PRODUCTION DEPARTMENT AS PER THE REQU IREMENT. THE ASSESSEE HAS BEEN REGULARLY FILING HIS SALES TAX RETURN WHERE ENTIRE PURCHASES SO MADE HAVE BEEN SHOWN. THE PURCHASES ARE MADE THROUGH BANKING CHANNEL AND PAYMENTS ARE RECEIVED FROM THE CUSTOMERS AFTER 90-120 DAYS FROM THE DATE OF SALE. THERE IS NO HEAVY DEPOSIT OF THE CASH AND WITHDRAWAL OF THE CASH BY ANY PARTY, THUS, THE ASSESSEE MADE GENUINE PURCHASES FROM THE ABOVE PARTY AND ASSESSEE IS NOT INVOLVED IN ANY BOGUS TRANSACTION. THE GP AND NP RATE IS ALMOST SAME AND IS BEST IN TH E INDUSTRY. IF THE PURCHASES ARE EXCLUDED, THEN THE PROFIT WOULD BE MORE ABNORMAL AN D OUT OF THE NORMS OF THE INDUSTRY, WHICH IS NOT PERMISSIBLE. THE ASSESSEE LATER ON HAS DEVELOPED ALTERNATE SOURCE OF SUPPLY AND SOME CHEAPER SUBSTITUTE OF MATERIAL WAS USED THROUGH WHICH COST HAS REDUCED AS COMPARED TO EARLIER YEARS. ALL THE RECO RDS OF THE PURCHASES ARE MAINTAINED, NO OPPORTUNITY OF CROSS- EXAMINATION TO SH. VINOD P ARASHAR HAVE BEEN GIVEN TO THE ASSESSEE. THE SUMMONS WERE ISSUED TO SH. VINOD PAR ASHAR WHOSE STATEMENT WAS RECORDED DURING THE COURSE OF SURVEY FOR CROSS-EXAM INATION ON BEHALF OF THE ASSESSEE BUT HE DID NOT TURN UP FOR CROSS-EXAMINATION ON BEH ALF OF THE ASSESSEE, THEREFORE, HIS STATEMENT CANNOT BE READ IN EVIDENCE. 9. THE AO WAS HOWEVER NOT SATISFIED WITH THE EXPLAN ATION OF THE ASSESSEE AND NOTED IN THE ASSESSMENT ORDER THE FOLLOWING UNDISPU TED FACTS:- (I) THE STATEMENT OF SH. VINOD PARASHAR RECORDED ON 28.12.2007 WAS RECORDED BY SH./MS. SHASHI SAKLANI, ADIT (INV.-I)-FARIDABAD WHI CH IS RECORDED ON OATH AND IT HAS GOT A SUBSTANTIAL EVIDENTIARY VALUE IN THE EYES OF LAW. (II) SH. VINOD PARASHAR HAS CATEGORICALLY STATED TH AT HE HAS ISSUED BOGUS INVOICES TO THE ASSESSEE AND NOT THE ACTUAL SALE OF MATERIAL. 6 ITA NO.-1807/DEL/2014 & TWO OTHERS. M/S PADMINI VNA MECHATRONICS PVT. LTD. (III) SH. VINOD PARASHAR HAS CATEGORICALLY STATED T HAT HE HAS RETURNED CASH ATER RECEIVING THE PAYMENT THROUGH CHEQUES; OF SO-CALLED SALES MADE BY HIM TO THE ASSESSEE. (IV) ALL THE TWO PARTIES ARE NOT AVAILABLE AT THE M OMENT AS IS APPARENT FROM THE RETURN OF LETTERS SENT BY POST AS WELL AS FROM THE REPORT OF INSPECTOR. (V) THE BANK ACCOUNTS OF SH. VINOD PARASHAR/OM INDU STRIAL CORPORATION/TECHNO ENTERPRISES SHOW WITHDRAWAL OF CASH IMMEDIATELY ON RECEIPT OF PAYMENT THROUGH CHEQUES EITHER ON THE SAME DAY OR ON THE NE XT DAY WHICH SHOW THAT CASH WAS WITHDRAWN TO RETURN THE MONEY TO THE PAYER I.E., SO CALLED PURCHASERS. LETTERS WRITTEN TO VARIOUS AUTHORITIES SUCH AS, POL ICE, POSTAL, EXCISE, SALES TAX, BANKS ETC. TO ELICIT THE DETAILS OF PARTIES IN VOLVED HAVE NOT RESULTED INTO RECEIPT OF ANY CONCLUSIVE INFORMATION ABOUT THE GEN UINENESS OF SUCH PARTIES. 10. THE AO ACCORDINGLY TREATED THE PURCHASES MADE B Y THE ASSESSEE FROM ABOVE PARTIES AS BOGUS AND MADE ADDITION OF RS. 13941577/ -. 10.1 THE ASSESSEE CHALLENGED THE ABOVE ADDITION BE FORE LD. CIT(A). THE WRITTEN SUBMISSION OF THE ASSESSEE REPRODUCED IN THE APPELL ATE ORDER IN WHICH THE ASSESSEE HAS EXPLAINED THAT PURCHASE FROM M/S OM INDUSTRIAL CORPORATION WAS MADE OF RS. 68,09,000/- THEREFORE ADDITION IS EXCESSIVE TO THE EXTENT OF RS. 54,45,000/-. THE STATEMENT OF SH. VINOD PARASHAR ON OATH WAS RECORDE D DURING SURVEY U/S 133A, WHICH IS NOT ADMISSIBLE AGAINST THE ASSESSEE. THE ASSESSEE R ELIED UPON THE DECISION OF SUPREME COURT IN THE CASE OF CIT VS. S. KHADAR KHAN SON 79 DTR 184 (SC) AND DECISION OF KERALA HIGH COURT IN THE CASE OF PAUL MATHEWS AND S ONS 263 ITR 101 (KERALA HC) . IT WAS FURTHER SUBMITTED THAT THE STATEMENT OF S H. VINOD PARASHAR WAS NOT SUBJECTED TO CROSS-EXAMINATION ON BEHALF OF THE ASSESSEE; THEREFORE, IT CANNOT BE READ IN EVIDENCE AGAINST THE ASSESSEE. THE ASSESSEE RELIED UPON THE 7 ITA NO.-1807/DEL/2014 & TWO OTHERS. M/S PADMINI VNA MECHATRONICS PVT. LTD. DECISION OF THE SUPREME COURT IN THE CASE OF KISHINCHAND CHELLARAM VS. CIT 125 ITR 713 (SC). ASSESSEE SUBMITTED THAT EXPLANATION OF THE ASSESS EE WAS SUPPORTED BY DOCUMENTARY EVIDENCES WHICH HAVE NOT B EEN VERIFIED BY THE AO. THE TRANSACTION WAS CONDUCTED THROUGH BANKING CHANNEL. REPORT OF THE POSTAL DEPARTMENT AND INSPECTOR, THAT THE ABOVE PARTIES HAVE LEFT THE SAID PREMISES WOULD SHOW THAT THEY EXISTED AT THE ADDRESS GIVEN BY THE ASSESSEE. SUCH REPORTS WERE NEVER CONFRONTED TO ASSESSEE. THEREFORE, SAME CANNOT BE READ IN EVIDEN CE AGAINST THE ASSESSEE. THE NOTICES U/S 133(6) AND LOCAL INQUIRIES WERE CONDUCT ED AFTER 3 TO 5 YEARS FROM THE YEAR OF PURCHASES. IT IS NOT NECESSARY THAT THE SAID PA RTY SHOULD CONTINUE ITS BUSINESS AND AT THE SAME PLACE FOR ENDLESS PERIOD. THEREFORE, NO A DVERSE INFERENCE SHOULD BE DRAWN AGAINST THE ASSESSEE. ALL PURCHASES ARE EVIDENCED B Y PROPER PURCHASE BILL AND VAT, STATUTORY FORM-D-3, THE PURCHASES ARE SUPPORTED BY GATE ENTRY REGISTER, PRODUCTION REGISTER, STOCK REGISTER AND DETAILS FURNISHED TO T HE SALES TAX AND EXCISE AUTHORITIES. THE RAW MATERIAL IS CONSUMED IN PRODUCTION WHICH IS NOT DISPUTED. THERE IS NO EVIDENCE AVAILABLE ON RECORD, IF THE ASSESSEE RECEIVED BACK THE CASH AMOUNT FROM THE SELLER PARTY. THE ASSESSEE RELIED UPON THE FOLLOWING DECIS IONS:- (1) ELAND INTERNATIONAL (P) LTD. VS. DCIT (2009) 26 DTR 113 (DEL.), IN WHICH DELHI HIGH COURT HELD AS UNDER:- HELD THAT - IT IS CLEAR THAT THE TRANSACTIONS OF P URCHASE AND SALE WERE RECORDED IN THE BOOKS OF ACCOUNT AND THESE TRANSACT IONS LED TO PROFIT TO THE ASSESSEE, WHICH WAS BROUGHT TO TAX. IF SALES HA VE BEEN EFFECTED OUT OF PURCHASES MADE FROM THESE PARTIES THEN, IT CANNO T BE SAID THAT THE PURCHASES WERE BOGUS. THE FINDING OF BOGUS SALE CAN ONLY LEAD TO THE INFERENCE THAT THE CORRESPONDING AMOUNT SHOULD BE D ELETED FROM THE TURNOVER OF THE ASSESSEE. THE AO HAS ALSO NOT REJEC TED THE BOOKS OF 8 ITA NO.-1807/DEL/2014 & TWO OTHERS. M/S PADMINI VNA MECHATRONICS PVT. LTD. ACCOUNT TO ESTIMATE PROFIT ON THE TRANSACTIONS IN C ASE IT WAS A FIRM FINDING THAT PURCHASES AND SALES WERE BOGUS. THEREFORE, ON THE FACTS OF CASE AND IN ABSENCE OF DISPLACING THE FINDING OF THE CIT (A) AND THE FACT THAT THE ASSESSEE SHOWED PROFIT FROM THESE TRANSACTIONS THER E IS NO SUCH ERROR IN THE ORDER OF THE CIT (A) WHICH REQUIRES CORRECTION. (2) DCIT VS. ADINATH INDUSTRIES 252 ITR 476 (GUJ.) IN WHICH GUJARAT HIGH COURT HELD AS UNDER:- AN INFORMATION SUPPLIED BY AN AGENCY OF THE DEPARTM ENT CANNOT BE HELD AS CLINCHING EVIDENCE WITHOUT INDEPENDENT INQUIRY A ND CORROBORATION. INFORMATION MAY BE USEFUL FOR FURTHER INVESTIGATION S OR CORROBORATION BUT ON ITS OWN, IT F/CANNOT BE HELD AS CLINCHING EVIDENCE. QUANTITIES OF PURCHASES AND SALES AND VALUE OF SALES HAS BEEN ACC EPTED BY AO, THUS TO THIS EXTENT NOTHING ADVERSE HAS BEEN FOUND IN THE B OOKS OF ACCOUNTS. ALL THE PURCHASES ARE THROUGH ACCOUNT PAYEES CHEQUES, P URCHASES ARE SUPPORTED BY FORM ST-38 ISSUED BY EXCISE AND TRADE DEPARTMENT. NOTHING ADVERSE HAS BEEN FOUND IN THIS BEHALF. IN T HE ABSENCE OF ANY ALLEGATION ABOUT INSUFFICIENCY OF TRADING RESULTS S UCH ADDITION HAS BEEN RIGHTLY DELETED BY CIT (A). (3) CIT VS. LEADERS VALVES (P) LTD. 285 ITR 435 ( P & H), IN WHICH PUNJAB & HARYANA HIGH COURT HELD AS UNDER:- TRIBUNAL HAVING UPHELD THE CONCLUSION OF THE CIT ( A) THAT THE PURCHASES MADE BY THE ASSESSEE FROM SEVEN SCRAP DEALERS COULD NOT BE TREATED AS BOGUS AS THE CONSUMPTION STOOD FULLY PRO VED AND THE TRADING RESULTS OF THE ASSESSEE HAVE BEEN ACCEPTED ALL ALON G AND THE PURCHASES FROM THESE VERY PARTIES HAVE BEEN ACCEPTED BY THE D EPARTMENT TO A LARGE EXTENT IN THE SUBSEQUENT ASSESSMENT YEAR, THE FINDING OF THE TRIBUNAL IS A FINDING OF FACT AND NO QUESTION OF LA W ARISES. THE ASSESSEE THEREFORE PRAYED THAT PURCHASES ARE GE NUINE, HENCE ADDITIONS SHOULD BE DELETED. 9 ITA NO.-1807/DEL/2014 & TWO OTHERS. M/S PADMINI VNA MECHATRONICS PVT. LTD. 11. THE LD. CIT(A) CONSIDERING THE FINDINGS OF THE AO IN THE LIGHT OF THE MATERIAL ON RECORD AND SUBMISSIONS OF THE ASSESSEE, DELETED THE ENTIRE ADDITION. HIS FINDINGS IN PARA 5.3 OF THE APPELLATE ORDER ARE REPRODUCED AS U NDER:- 5.3. I HAVE CAREFULLY CONSIDERED THE SUBMISSIONS M ADE BY THE APPELLANT AND HAVE GONE THROUGH THE ASSESSMENT ORDER. THE APPELLANT HA S TAKEN LEGAL CONTENTIONS AS WELL AS BASED ON MERITS. FIRST OF ALL I DEAL WITH T HE CONTENTIONS BASED ON MERITS. AS PER THE REASONS RECORDED, PURCHASES FROM OIC ARE OF RS 1,22,54,000/-. IN THE ASSTT. ORDER ALSO THE AO HAS MADE ADDITION FOR PURCHASES F ROM OIC AT RS.1,22,54,000/-. I HAVE SEEN THE COPY OF LEDGER A/C. OF OIC IN THE BOO KS OF ASSESSEE AS FILED BEFORE AO ALSO. AS PER APPELLANT THE PURCHASES FROM OIC ARE O NLY RS. 68,09,000/-. THIS FACT IS VERIFIABLE FROM THE COPY OF LEDGER A/C. OF OIC IN T HE BOOKS OF ASSESSEE. HENCE, AT THE OUTSET, I AM CONSTRAINED TO HOLD THAT THE PURCHASES FROM OIC ARE ONLY RS. 68,09,000/-. FOR THIS REASON, THE ADDITION OF RS. 5 4,45,000/- STANDS DELETED AS BEING PURCHASES TO THIS EXTENT NOT MADE FROM OIC. HOWEVER, PURCHASES OF RS. 54,45,000/- HAS BEEN MADE FROM M/S. VIKAS ENTPP. IT HAS NOT BEEN DISPUTED BY THE APPELLANT THAT THIS FIRM D OES NOT BELONG TO SH. VINOD PARASHAR. ALTHOUGH, THE AO IN THE ASSTT. ORDER HAS NOT MADE ANY SPECIFIC ADDITION FOR PURCHASES MADE FROM VIKAS ENTPP., BUT FROM THE REPL IES FILED TO THE AO DURING ASSTT. PROCEEDINGS, THE COPIES OF WHICH HAS ALSO BEEN FILE D BEFORE ME, IT IS APPARENT THAT THE APPELLANT HAS EXPLAINED PURCHASES OF RS. 54,45,000/ - MADE FROM VIKAS ENTEPRISES IN THE PRACTICALLY SIMILAR MANNER AS HE EXPLAINED IN T HE CASE OF OIC. THE AO HAS ADDED RS. 54,45,000/- ALSO BY TREATING AS PURCHASES FROM OIC AGAINST CORRECTLY FROM VIKAS ENTPP. SINCE, BOTH THE FIRMS ARE RELATED TO VINOD PARASHAR, THEREFORE, UNDER THE FACTS, PURCHASES TO EXTENT OF RS. 54,45,000/- ARE T AKEN AS DISALLOWED BY THE AO FOR THE PURCHASES MADE FROM VIKAS ENTPP. ARE AGAINST OI C AS DONE BY THE AO. THUS, THE ASSTT. ORDER, TO THIS EXTENT STANDS CORRECTED. NOW, I PROCEED TO EXAMINE THE CLAIM OF GENUINENESS OF THESE PURCHASES W.R.T. THE DOCUMENTS AND THE EVIDENCES PRODUCED BEFORE AO AS W ELL AS BEFORE ME AND ALSO 10 ITA NO.-1807/DEL/2014 & TWO OTHERS. M/S PADMINI VNA MECHATRONICS PVT. LTD. W.R.T. THE REASONINGS GIVEN BY THE AO, ON MERITS, FOR NOT ALLOWING THESE PURCHASES. THE CRUX OF THE REASONING OF THE AO HAS BEEN GIVEN ON PG. 5 OF THE ASSTT. ORDER WHICH HAS ALSO BEEN ABSTRACTED ABOVE BY ME. IN SUBS TANCE, THE AO HAS STRONGLY RELIED UPON THE STATEMENT OF SH. VINOD PARASHAR REC ORDED ON OATH U/S. 131 DURING THE SURVEY PROCEEDINGS U/S. 133 A. THE AO HAS ALSO GIVE N WEIGHTAGE TO THE FACT THAT THESE PARTIES WERE NOT AVAILABLE AT THE TIME OF FRA MING THE ASSTT., SINCE, THE LETTERS SENT TO THEM U/S. 133 (6) RETUNED BACK UN-SERVED WI TH THE REMARKS LEFT WITHOUT ADDRESS. THE AO HAS ALSO MADE A REFERENCE TO THE R EPORT OF INSPECTOR MENTIONING THAT THE PARTIES WERE NOT AVAILABLE AT THE GIVEN AD DRESS AND THE LOCAL ENQUIRIES REVEALED THAT THESE CONCERNS HAVE BEEN CLOSED DOWN QUITE LONG BACK AND THEIR PRESENT WHEREABOUTS ARE NOT KNOWN. THE AO HAS ALSO MADE A REFERENCE TO THE BANK ACCOUNTS OF THESE CONCERNS SHOWING CASH WITHDRAWAL FOR RETURNING THE MONEY TO THE BENEFICIARIES. IN VIEW OF THESE BROAD FINDINGS, THE AO REACHED TO THE INCLUSION THAT THE PURCHASES MADE FROM THESE PARTIES ARE NOT GENUI NE. THE AO, HOWEVER, COULD NOT POINT OUT ANY DISCREPANCY IN THE DOCUMENTS AND RECO RDS, INCLUDING STOCK REGISTER PRODUCED BEFORE HIM. IN THIS CASE, I FIND THAT ALL THE PURCHASES ARE EVIDENCES BY PURCHASE INVOICES. ALL THE 3 PARTIES ARE REGISTERED WITH VAT AND HAVING TIN NOS. AS MENTIONED IN THE INVOICES. ALL THE 3 PARTIES ARE AT FARIDABAD / HARYANA. THE PURCHASES ARE MADE BY THE APPELLANT AT ITS GURGAON FACTORY. FOR EVERY SALE FROM FARIDABAD / HARYANA TO GURGAON, THE SELLER PARTY HA S TO OBTAIN ADVANCE D-3 VAT FORM FROM FARIDABAD VAT DEPTT. THIS FORM IS TO BE ACCOMP ANIED WITH THE PURCHASE INVOICE DURING TRANSPORTATION OF GOODS FROM THE SELLER TO T HE BUYER. THE PURCHASE INVOICE, D- 3 VAT FORM AND THE PHYSICAL GOODS TRANSPORTED ARE I NTER - SEA MATCHED BY THE VAT DEPTT. AT THE BORDER. THE VAT DEPTT. AFTER VERIFICA TION, PUT ITS SEAL ON THE D-3 FORM. IN THIS CASE, FOR ALL THE 3 PARTIES ALL SUCH DOCUME NTS HAVE BEEN PRODUCED BY THE APPELLANT. IT UN-DOUBTEDLY SHOWS THE MOVEMENT OF GO ODS FROM HARYANA TO GURGAON. ON RECEIPT OF GOODS, IT RECEIPT IS ENTERED IN THE G ATE ENTRY REGISTER BY THE SECURITY GUARD ON THE GATE WHO AFTER PHYSICAL VERIFICATION O F THE GOODS PUT A SEAL ON THE BACK OF THE INVOICE. THIS SEAL MENTIONS THE PARTICULARS OF GATE ENTRY NO., DATE AND INITIAL OF SECURITY GUARD. THEN, THE GOODS ARE RECEIVED IN STO RE WHERE ITS RECEIPTS ARE ENTERED 11 ITA NO.-1807/DEL/2014 & TWO OTHERS. M/S PADMINI VNA MECHATRONICS PVT. LTD. IN THE STOCK REGISTER. THEN THE MOVEMENT OF GOODS F ROM THE STORES TO PRODUCTION DEPTT. IS ALSO RECORDED IN THE STOCK REGISTER. THE COPIES OF RELEVANT STOCK RECORDS SHOWING THIS MOVEMENT HAS ALSO BEEN PRODUCED BEFORE AO WHEREIN NO DISCREPANCY HAS BEEN NOTICED. THE UNIT IS COVER UNDER THE EXCIS E ACT. THE PRODUCTION, AND ITS SALE IS RECORDED IN THE EXCISE RECORDS. ALL THESE RECORD S WERE PRODUCED AND FILED BEFORE THE AO WHEREIN, AGAIN NO DISCREPANCY HAS BEEN NOTIC ED. ALL THESE DOCUMENTS SHOWS THE MOVEMENT OF GOODS FROM HARYANA TO GURGAON FACTO RY OF THE APPELLANT AND THEREAFTER ISSUANCE FOR PRODUCTION AND ULTIMATELY C ULMINATING INTO SALES. THE EXCISE RECORDS ARE AUDITED PERIODICALLY BY THE EXCISE DEPT T. PURCHASE ALSO NEEDS TO BE REPORTED TO THE VAT DEPTT. THROUGH VAT RETURNS. THE PURCHASES FROM THESE PARTIES ALSO STOOD DECLARED TO THE VAT DEPTT. WHICH AFTER V ERIFICATION, ACCEPTED THE SAME. THE APPELLANT ALSO FILED A CERTIFICATE FROM THE PRO DUCTION MANAGER ALONGWITH DETAILS OF PRODUCTION WISE CLEARANCE WHICH CLEARLY SHOWS THAT THESE ITEMS WERE USED AND CONSUMED BY THE PRODUCTION DEPTT. AS EXPLAINED BY T HE APPELLANT, THESE PURCHASES CONSTITUTES THE RAW MATERIAL FOR MANUFACTURING VAL VES WHICH IS THE END PRODUCT OF THE APPELLANT WHICH VALVES ARE SOLD TO ORIGINAL EQU IPMENT MANUFACTURING COMPANIES LIKE MARUTI, MAHINDRA, TATA ETC.. ETC.. WHEREIN THI S ITEM IS BEING USED AS A MOTOR PART. IN THIS CASE, COMPLETE DOCUMENTARY EVIDENCES HAVE B EEN FILED BEFORE THE AO WHEREIN NO DISCREPANCY HAS BEEN POINTED OUT. THE PAYMENT FO R PURCHASES HAD BEEN MADE THROUGH CHEQUES. IT HAS ALSO BEEN STATED THAT THE A PPELLANT, IN THE NORMAL COURSE MAKES PAYMENT TO THE SUPPLIERS IN A SPAN OF PERIOD OF 90 - 120 DAYS, SIMILARLY, FOR THESE PURCHASES ALSO, THE PAYMENTS HAVE BEEN MADE W ITHIN THE SIMILAR SPAN PERIOD. IN CASE, IT COULD HAVE BEEN A CASE OF BOGUS PURCHAS ES, THEN THE PAYMENT MIGHT HAD BEEN MADE IMMEDIATELY. THE APPELLANT COMPANY WAS IN CORPORATED ON 09.08.2005. A.Y. 2006 - 07 WAS ITS FIRST YEAR OF OPERATION. TH E G.P. & N.P. DECLARED IS OF 39.92% AND 24.58% AS CALCULATED BY THE APPELLANT IN HIS SU BMISSIONS BEFORE ME. THE APPELLANT ALSO STATED THAT IN CASE THE PREPOSITION OF AO OF BOGUS PURCHASES OF RS. 1,39,41,577/- STANDS ACCEPTED, THEN MANUFACTURING / TRADING A/C. WILL PROVIDE SUCH DISTORTED PICTURES WHICH IS NOT APPARENTLY POSSIBLE . THE APPELLANT ALSO FILED THE MANUFACTURING TRADING A/C. PREPARED AS PER AUDITED A/C'S AND A RE - CASTED 12 ITA NO.-1807/DEL/2014 & TWO OTHERS. M/S PADMINI VNA MECHATRONICS PVT. LTD. MANUFACTURING / TRADING A/C. BY TREATING THESE PURC HASES AS BOGUS WHICH HAS BEEN FILED BEFORE ME. I FIND THAT IN RE - CASTRED MANUFA CTURING / TRADING A/C. AFTER REDUCING THE ALLEGED BOGUS PURCHASE FROM THE ALREADY DECLARE D PURCHASES AND ON CORRESPONDING REDUCING THE CLOSING STOCK BY THE SAM E AMOUNT THE BALANCING STOCK GIVES A NEGATIVE FIGURE FO RS. (-) 1,04,14,642/- WH ICH IS, IN ANY CASE, NOT POSSIBLE. IT IS TO BE STATED THAT THE DECLARED CLOSING STOCK OF RS. 35,26,934/- IS AS PER STOCK REGISTER AND IN CASE THE INCOMING OF STOCK IS TO BE REDUCED BY RS. 1,39,41,577/-, THEN THE STOCK AS PER STOCK REGISTER ALSO NEEDS TO BE, C ORRESPONDINGLY, REDUCED BY THE SAME FIGURE. IT IS A COMMON KNOWLEDGE THAT THERE CA NNOT BE A SITUATION OF NEGATIVE STOCK. IN THIS CASE, IF WE GO BY THE PREPOSITION OF THE AO, ONE LAND ITSELF AT A IMPOSSIBLE SITUATION. THE NATURAL COROLLARY ARISES OUT FROM THIS ANALYSIS IS THAT IT IS NOT POSSIBLE UNDER THESE FACTS, THAT THE STOCK OF RS. 1 , 39,41,5771 - HAS NOT BEEN PHYSICALLY RECEIVED BY THE APPELLANT. IN THE CASE OF ELAND INTERNATIONAL (P) LTD. VS. DCIT (2009) 26 DTP 113 (DEL.), IT HAS BEEN HELD THAT WHEN THE PURCHASES AND SALES ARE RECORDED AND THESE TRANSACTIONS LED TO BE A PROFIT WHICH IS BROUGHT TO TAX, IT CANNOT BE SAID THAT THE PURCHASES ARE BOGUS. IN ITO, VS. JAI PRAKASH SHARMA ITA NO. 597 / DEL / 2012 DECIDED BY HONBLE DELHI F BENCH VIDE ORDER DTD, 09.04.2012, IT HAS BEEN HELD THAT WITHOUT BRINGING ANYTHING SPECIFIC ON RECORD REGARD ING PURCHASES, THE PURCHASES CANNOT BE TERMED AS BOGUS. IN DCIT VS. ADINATH INDU STRIES 252 ITR 476 (GUJ.) (CONFIRMED BY SC IN SLP NO. 16445 - 16448 OF 2000 D ATED 26.09.2000), IT HAS BEEN HELD THAT WHEN THE QUANTITY OF PURCHASES AND VALUE OF SALES HAS BEEN ACCEPTED BY THE AO AND ALL PURCHASE ARE THROUGH ACCOUNT PAYEE C HEQUES, SUPPORTED BY FORM ST - 38 ISSUED BY EXCISE AND TRADE DEPTT. AND NOTHING AD VERSE HAS BEEN FOUND OUT, THEN IN THE ABSENCE OF ALLEGATION ABOUT INSUFFICIENCY OF TRADING RESULTS THE ADDITION H BEEN RIGHTFULLY DELETED. IN CIT VS. LEADERS VALVES (P) L TD. 285 ITR 435 (P &H), IT HAS BEEN HELD THAT WHEN PURCHASES MADE FROM SCRAP DEALE RS SHOWN CONSUMED FOR PRODUCTION, THE PURCHASES FROM THESE SCRAP DEALERS CANNOT HELD AS BOGUS. IN VIEW OF ABOVE, I AM OF THE CONSIDERED OPINION THAT APPELLAN T HAS PROVED THAT THE GENUINENESS OF THE PURCHASES. 13 ITA NO.-1807/DEL/2014 & TWO OTHERS. M/S PADMINI VNA MECHATRONICS PVT. LTD. THE ABOVE PURCHASES OF RS. 1,39,41,577/- INCLUDES P URCHASES OF RS 16,87,577/- FROM TECHNO ENTPP. I HAVE ALREADY GIVEN A FINDING ABOVE THAT THESE PURCHASES ARE ALSO GENUINE AND CANNOT BE HELD AS BO GUS. HOWEVER, THE APPELLANT HAS TAKEN UP A CONTENTION THAT TECHNO ENTPP. IS NOT REL ATED TO SH. VINOD PARASHAR. SH. SANJAY SHARMA IS THE PROPRIETOR OF THIS FIRM. THE S TATEMENT OF VINOD PARASHAR CANNOT BE APPLIED FOR THE PURCHASES MADE FROM TECHNO ENTPP . EVEN THE REASONS RECORDED U/S. 147 ALSO DOES NOT INCLUDE TECHNO ENTPP. AS A P ARTY FOR WHOM ANY INFORMATION HAS BEEN RECEIVED EITHER BY THE AO. HOWEVER, I FIND THAT THE AO IN THE ASSTT. ORDER IN PARA - 4.7. HAD MADE A MENTION THAT SUBSEQUENT INFO RMATION RECEIVED FROM INV. WING ALSO SUGGESTS THAT M/S. TECHNO ENTPP. WAS ALSO CONN ECTED WITH VINOD PARASHAR. HOWEVER, THE ASSTT. ORDER IS SILENT AS TO WHETHER T HESE OBSERVATIONS WERE CONFRONTED TO THE APPELLANT OR NOT. IN ANY CASE, I AM OF THE O PINION THAT THE ADJUDICATION OF THIS CONTENTION IS NOW NOT NEEDED IN VIEW OF MY FINDINGS GIVEN IN THE PRECEDING PARA, WHEREIN ON MERITS I HAVE HOLD THAT THESE PURCHASES CANNOT BE TREATED A BOGUS. I HAVE ALSO EXAMINED THE LEGAL CONTENTION OF THE AP PELLANT THAT STATEMENT RECORDED ON OATH IN PROCEEDINGS U/S. 133 A CANNOT B E USED FOR MAKING ANY ADDITION. THE APPELLANT HAS RELIED UPON THE AUTHORITY OF S. K HADER KHAN SO 79 DTR (SC) 184 AND PAUL MATHEWS AND SONS 263 ITR 101 (KER.) FOR TH IS LEGAL PREPOSITION. THE DECISION OF S. KADAR KHAN SONS (SUPRA) OF HONBLE S UPREME COURT ARISE OUT FROM DECISION OF HONBLE MADRAS HIGH COURT IN DECISION O F S. KADAR KHAN REPORTED AS 214 CTR (MAD.) 589. IT IS A DETAILED JUDGMENT. IN THIS CASE, THE STATEMENT OF PARTNER WAS RECORDED DURING SURVEY U/S. 133 A. HOWEVER, IT WAS RETRACTED LATER ON FOR SOME REASON. THE ASSESSEE IN THAT CASE TOOK UP A LEGAL P LEA THAT STATEMENT RECORDED U/S. 133 A ON OATH HAS NOT EVIDENTIARY VALUE SINCE, UNDE R THIS SECTION STATEMENT CANNOT BE OBTAINED ON OATH. HONBLE MADRAS HIGH COURT ACCEPTE D THIS CONTENTION AFTER RELYING UPON VARIOUS AUTHORITIES AS MENTIONED IN THE REPORT ED CASE. THE HONBLE SUPREME COURT AFFIRMED THE SAID FINDINGS. IN THE PRESENT CA SE ALSO, THE MAIN ADVERSE MATERIAL RELIED UPON BY THE AO IS THE STATEMENT ON OATH U/S. 133 A OF SH. PARASHAR AS IS EVIDENT FROM PG. 5 OF THE ASSTT. ORDER. IT IS ALSO IMPORTANT TO NOTE THAT IN THE PRESENT CASE, THE STATEMENT HAS NOT BEEN TAKEN OF A DIRECTO R OF THE APPELLANT COMPANY BUT OF 14 ITA NO.-1807/DEL/2014 & TWO OTHERS. M/S PADMINI VNA MECHATRONICS PVT. LTD. A 3 RD PARTY, AT THE BACK OF THE ASSESSEE AND FURTHER ON BEING ASKED, THE SAID PARTY COULD NOT BE MADE AVAILABLE BY THE AO FOR CROSS EXA MINATION AFTER SUMMONS U/S. 131 STOOD SERVED ON HIM AND THE ASSESSEE WAITED FOR 3 H OURS AND 2 HOURS RESPECTIVELY ON 2 DATES WHEN THE AO DIRECTED THE APPELLANT TO PRESE NT FOR CROSS EXAMINING SH. VLNOD PARASHAR. HENCE, THE FACTS AND CIRCUMSTANCES OF THE CASE IN HAND ARE RATHER MORE STRONG THEN THE FACTS OF THE CITED CASE AND THE RAT IO OF THE SAME SQUARELY APPLIES. IN VIEW OF ABOVE, I AM OF THE CONSIDERED OPINION THAT THE STATEMENT OF SH. VINOD PARASHAR CANNOT BE USED AGAINST THE APPELLANT. APAR T FROM THIS, I HAVE ALREADY GIVEN A FINDING ABOVE THAT THE PURCHASES OF RS. 1,39,41,5 77/-, UNDER THE FACTS OF THE PRESENT CASE CANNOT BE HELD AS BOGUS. AS RESULT THE REOF, THE ADDITION OF RS. 1,39,41,577/-STANDS DELETED. 12. THE LD. DR RELIED UPON THE ORDER OF THE AO AND SUBMITTED THAT DOCUMENTS ARE NOT VERIFIED BY THE LD. CIT(A) AND REPORT OF INVEST IGATION PROVED IT TO BE CASE OF BOGUS PURCHASE. 13. LD. COUNSEL FOR THE ASSESSEE HOWEVER REITERATED THE SUBMISSIONS MADE BEFORE AUTHORITIES BELOW. HE HAS SUBMITTED THAT ASSESSEE I S INTO MANUFACTURING OF AUTO ELECTRIC PARTS WHICH IS USED IN MOTOR VEHICLES AND COVERED B Y EXCISE. STATEMENT OF SH. VINOD PARASHAR WAS RECORDED IN SURVEY, WHICH IS NOT ADMIS SIBLE AND RELIED UPON THE DECISION OF SUPREME COURT IN THE CASE OF S. KHADER KHAN SONS 79 DTR 184 (SC) . THE STATEMENT OF SH. VINOD PARASHAR WAS NOT SUBJECTED T O CROSS EXAMINATION ON BEHALF OF THE ASSESSEE; THEREFORE IT CANNOT BE READ IN EVIDEN CE AGAINST THE ASSESSEE. IN SUPPORT OF ABOVE SUBMISSIONS, HE HAS RELIED UPON THE JUDGME NT OF RAJASTHAN HIGH COURT IN THE CASE OF CIT VS. SUNITA DHADDA, DATED 31/07/2017 , IN WHICH VIEW OF THE TRIBUNAL 15 ITA NO.-1807/DEL/2014 & TWO OTHERS. M/S PADMINI VNA MECHATRONICS PVT. LTD. HAVE BEEN AFFIRMED, IN WHICH NO OPPORTUNITY WERE GI VEN TO CROSS-EXAMINATION OF THE WITNESS OF THE DEPARTMENT, THEREFORE, ISSUES WERE D ECIDED IN FAVOUR OF THE ASSESSEE. THE SLP OF THE DEPARTMENT HAVE BEEN DISMISSED VIDE ORDER DATED 28/03/2018 BY THE HONBLE SUPREME COURT. IN SUPPORT OF THE SAME PROP OSITION OF LAW, LD. COUNSEL FOR THE ASSESSEE RELIED UPON THE DECISION OF THE HONBLE SU PREME COURT IN THE CASE OF ANDAMAN TIMBER INDUSTRIES 281 CTR 241 AND JUDGMENT OF DELHI HIGH COURT IN THE CASE OF PRADEEP KUMAR GUPTA 272 CTR 115 . HE HAS SUBMITTED THAT GENUINENESS OF THE PURCHASES HAVE BEEN PROVED BY SEVERAL DOCUMENTS ON RECORD. THE BOOKS OF ACCOUNTS OF THE ASSESSEE HAS NOT BEEN REJECTED, THE REFORE, LD. CIT(A) CORRECTLY DELETED THE ADDITIONS. 14. WE HAVE CONSIDERED THE RIVAL SUBMISSIONS. IT IS NOT IN DISPUTE THAT THE ASSESSEE FILED SEVERAL REPLIES BEFORE AO, SUPPORTED BY DOCUM ENTARY EVIDENCE TO PROVE GENUINE PURCHASES. THE DOCUMENTS FILED ON RECORD ARE COPIE S OF THE LEDGER ACCOUNT, BILLS, INVOICES, D-3 FORM ISSUED FROM SALES TAX/VAT AUTHOR ITY, BANK ACCOUNT SHOWING PAYMENT FOR PURCHASES, COPY OF STOCK REGISTER AND THE CASH BOOK ETC. THE ASSESSEE EXPLAINED THAT IT IS IN THE BUSINESS OF MANUFACTURING OF VARI OUS TYPES OF AUTO ELECTRIC PART FOR VEHICLES. THE ASSESSEE ALSO PRODUCED GATE ENTRY REG ISTER, STOCK REGISTER AND PRODUCTION RECORDS WHICH SUPPORT THE EXPLANATION OF THE ASSESSEE THAT WHATEVER MATERIAL WAS PURCHASED FROM THE ABOVE THREE COMPANI ES HAVE BEEN ENTERED INTO THE STATUTORY REGISTERS AND THE MATERIAL HAVE BEEN USED IN THE PRODUCTION PROCESS. THE ASSESSEE HAS BEEN FILING REGULAR RETURN WITH THE SA LES TAX/VAT DEPARTMENT AND ASSESSEE IS ALSO COVERED BY EXCISE DEPARTMENT. NO ADVERSE VI EWS HAVE BEEN TAKEN EITHER BY THE 16 ITA NO.-1807/DEL/2014 & TWO OTHERS. M/S PADMINI VNA MECHATRONICS PVT. LTD. VAT DEPARTMENT OR BY THE EXCISE DEPARTMENT AGAINST T HE ASSESSEE. THE AO DID NOT REBUT THE DOCUMENTARY EVIDENCES FILED BY THE ASSESS EE. AO HAS NOT ESTABLISHED ANY RELATION OF THE ASSESSEE WITH THE SELLER. THE PURC HASES ARE CONSUMED IN THE PRODUCTION. PURCHASES ARE SUPPORTED BY FORM D-3 ISSUED BY VAT D EPARTMENT OF THE STATE GOVERNMENT, BILLS AND GATE PASS AND PRODUCTION REGI STER AND ALL THE PURCHASES ARE MADE THROUGH BANKING CHANNEL. THEREFORE, THE VIEW OF TH E AO MAKING ADDITION AGAINST THE ASSESSEE OF BOGUS PURCHASES WAS WITHOUT ANY BASIS. WITHOUT PURCHASES NO PRODUCTION OR SALES COULD HAVE DONE BY THE ASSESSEE. THE PROD UCTION IS SUPPORTED BY RG-1 REGISTER AND THE DETAILS SUPPLIED TO THE EXCISE DEP ARTMENT. THEREFORE, EXPLANATION OF THE ASSESSEE SHOULD NOT HAVE BEEN DOUBTED BY THE AO . IT MAY ALSO BE NOTED HERE THAT THE PRODUCTION AND SALES DECLARED BY THE ASSESSEE H AVE BEEN ACCEPTED BY THE AO. THE AO WHILE MAKING THE ADDITION AGAINST THE ASSESSEE H AS HEAVILY RELIED UPON THE STATEMENT OF SH. VINOD PARASHAR WHICH WAS RECORDED ON 28.12.2007 IN SURVEY U/S 133A ON OATH. HONBLE SUPREME COURT IN THE CASE OF CIT VS. S. KHADER KHAN SONS 79 DTR 184(SC) HELD AS UNDER:- CONCLUSION: SEC. 133A DOES NOT EMPOWER ANY IT AUTH ORITY TO EXAMINE ANY PERSON ON OATH AND, THEREFORE, ANY ADMI SSION MADE IN A STATEMENT RECORDED DURING SURVEY CANNOT, BY IT SELF, BE MADE THE BASIS FOR ADDITION. 15. IT MAY ALSO BE NOTED HERE THAT THE ASSESSEE ASK ED FOR THE CROSS- EXAMINATION OF THE STATEMENT OF SH. VINOD PARASHAR AND AO ISSUED S UMMONS U/S 131 OF THE ACT AGAINST HIM FOR HIS PRESENCE IN HIS OFFICE FOR CROSS-EXAMIN ATION ON BEHALF OF THE ASSESSEE. THE 17 ITA NO.-1807/DEL/2014 & TWO OTHERS. M/S PADMINI VNA MECHATRONICS PVT. LTD. ASSESSEE ATTENDED THE OFFICE OF THE AO BUT SH. VINO D PARASHAR DID NOT TURN UP FOR CROSS- EXAMINATION ON BEHALF OF THE ASSESSEE. SINCE SH. V INOD PARASHAR IS A WITNESS OF THE DEPARTMENT AND HE DID NOT TURN UP FOR CROSS-EXAMINA TION ON BEHALF OF THE ASSESSEE, THEREFORE, HIS STATEMENT IS NOT ADMISSIBLE IN EVIDE NCE AGAINST THE ASSESSEE. WE RELY UPON THE DECISION OF THE SUPREME COURT IN THE CASE OF KISHINCHAND CHELLARAM VS. CIT 125 ITR 713 (SC) AND THE DECISION IN THE CASE OF SUNITA DHADDA (SUPRA) RELIED UPON BY THE LD. COUNSEL FOR THE ASSESSEE. T HEREFORE, NOTHING IS LEFT FOR THE AO TO MAKE ANY ADDITION AGAINST THE ASSESSEE. IT MAY ALS O BE NOTED HERE, THAT THE AO RECORDED IN THE ASSESSMENT ORDER WHEN NOTICE U/S 13 3(6) HAVE BEEN ISSUED AGAINST THE AFORESAID PARTIES BUT THE NOTICE RETURN UN-SERVED W ITH THE REMARKS LEFT WITHOUT ADDRESS. IT WOULD SHOW THAT THE PARTIES EXISTED A T THE ADDRESS GIVEN BY THE ASSESSEE AND THAT SUCH ENQUIRY LETTERS HAVE BEEN ISSUED AFTE R ABOUT 5 YEARS OF END OF THE ASSESSMENT YEAR. THEREFORE, SAME SHOULD NOT BE CON SIDERED ADVERSE IN NATURE AGAINST THE ASSESSEE. FURTHER, SUCH REPORTS AND REPORT OF THE INSPECTOR FOR MAKING LOCAL ENQUIRY, ACCORDING TO THE ASSESSEE HAVE NOT BEEN CO NFRONTED TO THE ASSESSEE. THEREFORE, SUCH MATERIAL CANNOT BE USED IN EVIDENCE AGAINST THE ASSESSEE. FURTHER, THE AO DID NOT MAKE ANY FURTHER EFFORTS TO LOCATE THE S ELLER PARTIES FOR THEIR APPEARANCE TO EXAMINE THE ISSUE. THE GP/NP RATE IS REASONABLY DE CLARED BY THE ASSESSEE. IF THE PURCHASES ARE EXCLUDED, THE PROFIT RATE WOULD BE VE RY ABNORMAL AND WOULD NOT BE ACCORDING TO THE NORMS OF THE INDUSTRY. AO DID NOT BRING ANY EVIDENCE ON RECORD, IF ANY HEAVY CASH OR HEAVY CASH TRANSACTIONS ARE CONDUCTED BY ASSESSEE. THE AO MERELY ON PRESUMPTION NOTED THAT SH. VINOD PARASHAR HAS MADE CASH WITHDRAWALS WHICH WERE 18 ITA NO.-1807/DEL/2014 & TWO OTHERS. M/S PADMINI VNA MECHATRONICS PVT. LTD. RETURNED TO THE ASSESSEE. THERE IS NO BASIS FOR M AKING SUCH AN ALLEGATION AGAINST THE ASSESSEE. IT IS WELL SETTLED LAW THAT PRESUMPTIONS HOWSOEVER MAY BE HIGH BUT IT CANNOT TAKE PLACED ON LEGAL PROOF. 16. CONSIDERING THE FACTS OF THE CASE, IN THE LIGHT OF THE EVIDENCES AVAILABLE ON RECORD, WE ARE OF THE VIEW THAT LD. CIT(A) CORRECTL Y DECIDE THE ISSUE IN FAVOUR OF THE ASSESSEE. THERE IS NO BASIS TO HOLD THAT ASSESSEE MADE BOGUS PURCHASES FROM THE ABOVE PARTIES. THE FINDINGS OF FACT RECORDED BY LD . CIT(A) HAVE NOT BEEN REBUTTED BY THE REVENUE DEPARTMENT THROUGH ANY EVIDENCE OR MATE RIAL ON RECORD. WE DO NOT FIND ANY INFIRMITY IN THE ORDER OF LD. CIT(A) IN DELETIN G THE ENTIRE ADDITIONS. WE CONFIRM THE FINDINGS ON FACT RECORDED BY LD. CIT(A) AND DISMISS THE DEPARTMENTAL APPEAL. 17. IN THE RESULT, DEPARTMENTAL APPEAL FOR A.Y. 200 6-07 IS DISMISSED. ITA NOS.-1808 & 1809/DEL/2014 FOR A.YS. 2007-08 & 2 008-09 18. IN BOTH THE DEPARTMENTAL APPEALS, REVENUE CHALL ENGED THE DELETION OF ADDITIONS OF RS. 2,38,25,575/- AND RS. 60,61,480/- ON ACCOUNT OF BOGUS PURCHASES. THE ISSUE IS SAME AS HAVE BEEN CONSIDERED IN ASSESSMENT YEAR 200 6-07. FURTHER, THE FINDINGS OF AUTHORITIES BELOW ARE SAME AS HAVE BEEN CONSIDERED IN ASSESSMENT YEAR 2006-07. THE LD. CIT(A) FOR ASSESSMENT YEAR 2008-09 FOLLOWED HIS ORDER FOR IMMEDIATE PRECEDING ASSESSMENT YEARS 2006-07 & 2007-08 FOR DELETING THE ADDITIONS. 19. THE LD. REPRESENTATIVES OF BOTH THE PARTIES SUB MITTED THAT THE ORDER IN ASSESSMENT YEAR 2006-07 MAY BE FOLLOWED IN ASSESSME NT YEARS 2007-08 & 2008-09. 19 ITA NO.-1807/DEL/2014 & TWO OTHERS. M/S PADMINI VNA MECHATRONICS PVT. LTD. CONSIDERING THE SUBMISSIONS OF THE PARTIES AND THE FACT THAT ISSUE INVOLVED IN BOTH THE DEPARTMENTAL APPEALS IS SAME AND AS HAS BEEN DECIDE D IN ASSESSMENT YEAR 2006-07, THEREFORE, FOLLOWING THE REASONS FOR DECISION FOR A SSESSMENT YEAR 2006-07 (SUPRA), WE DISMISSED THE BOTH DEPARTMENTAL APPEALS. 20. IN THE RESULT, BOTH THE DEPARTMENTAL APPEALS FO R ASSESSMENT YEARS 2007-08 & 2008-09 ARE DISMISSED. 21. IN THE COMBINED RESULT, ALL THE DEPARTMENTAL AP PEALS ARE DISMISSED. ORDER PRONOUNCED IN THE OPEN COURT ON 01/8/2018 SD/- SD/- (L.P. SAHU) (BHAVNESH SAINI) ACCOUNTANT MEMBER JUDICIAL MEMBER DATED: 01.08.2018 POOJA/- COPY FORWARDED TO: 1. APPELLANT 2. RESPONDENT 3. CIT 4. CIT(APPEALS) 5. DR: ITAT ASSISTANT REGISTRAR ITAT NEW DELHI 20 ITA NO.-1807/DEL/2014 & TWO OTHERS. M/S PADMINI VNA MECHATRONICS PVT. LTD. DATE OF DICTATION 24/7/2018 DATE ON WHICH THE TYPED DRAFT IS PLACED BEFORE THE DICTATING MEMBER 28/7/2018 DATE ON WHICH THE TYPED DRAFT IS PLACED BEFORE THE OTHER MEMBER DATE ON WHICH THE APPROVED DRAFT COMES TO THE SR. PS/PS 30/7/2018 DATE ON WHICH THE FAIR ORDER IS PLACED BEFORE THE DICTATING MEMBER FOR PRONOUNCEMENT 31/7/2018 DATE ON WHICH THE FAIR ORDER COMES BACK TO THE SR. PS/PS 1/8/2018 DATE ON WHICH THE FINAL ORDER IS UPLOADED ON THE WEBSITE OF ITAT DATE ON WHICH THE FILE GOES TO THE BENCH CLERK DATE ON WHICH THE FILE GOES TO THE HEAD CLERK THE DATE ON WHICH THE FILE GOES TO THE ASSISTANT REGISTRAR FOR SIGNATURE ON THE ORDER DATE OF DISPATCH OF THE ORDER 21 ITA NO.-1807/DEL/2014 & TWO OTHERS. M/S PADMINI VNA MECHATRONICS PVT. LTD.