Nitin Gupta, Delhi V. ITO, WARD- 47(4), New Delhi

ITA 3146/DEL/2018

• Counselvise Citation: [2021] 107 COUNSELVISE.COM (IT) 7635 (ITAT-DELHI)
• Duration Of Justice: 3 year(s) 3 month(s) 20 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 23-08-2021
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: E
• Assessment Year: 2009-2010
• Appeal Filed On: 03-05-2018
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Assessee Lawyers: AGAINST DATED PASSED
• Keywords: Bogus purchase; Search and seizure; Principle of natural justice; Reason to believe; Reassessment proceedings
• Section: 133(6); 147; 68; 148

Judgement Text

1 ITA NOS 3145, 3146 & 3147/DEL/2018 IN THE INCOME TAX APPELLATE TRIBUNAL DELHI BENCH: E NEW DELHI BEFORE MS SUCHITRA KAMBLE, JUDICIAL ME MBER AND SH. PRASHANT MAHARISHI, ACCOUN TANT MEMBER I.T.A. NO. 3145/DEL/20 18 (A.Y 2008-09) I.T.A. NO. 3146/DEL/20 18 (A.Y 2009-10) I.T.A. NO. 3147/DEL/20 18 (A.Y 2010-11) (THROUGH VIDEO CONF ERENCING) NITIN GUPTA SHREE JI JEWELLERS, SHOP NO. 1168/3 AND 4, KUCHA MAHAJANI, CHANDNI CHOWK DELHI PAN: AGKPG9650L (APPELLANT) VS ITO WARD-47(4) NEW DELHI (RESPONDENT) ORDER PER SUCHITRA KAMBLE, JM THESE THREE APPEALS ARE FILED BY THE ASSESSEE AGAI NST THE ORDER DATED 27/03/2018 PASSED BY CIT(A)-16, NEW DELHI FOR ASSE SSMENT YEAR 2008-09, 2009-10 & 2010-11 RESPECTIVELY. 2. THE GROUNDS OF APPEAL ARE AS UNDER:- I.T.A. NO. 3145/DEL/2018 (A.Y 2008-09) THAT ON FACTS AND IN LAW, THE HONBLE COMMISSIONER OF INCOME TAX (APPEALS) - 16 ERRED IN UPHOLDING THE ADDITION MADE BY THE AO W ITHOUT FULLY APPRECIATING THE FACTS AND CONTENTION OF THE APPELLANT AND THERE FORE, THE ORDER OF THE LD. APPELLANT BY SH. PRADEEP JINDAL, CA RESPONDENT BY SH. GAURAV PUNDIR, SR. DR DATE OF HEARING 26.07.2021 DATE OF PRONOUNCEMENT 23.08.2021 2 ITA NOS 3145, 3146 & 3147/DEL/2018 COMMISSIONER OF INCOME TAX (APPEALS) IS BAD IN LAW. 1.1. THAT THE LEARNED CIT (A), HAS ERRED IN AFFIRMING TH E JURISDICTION OF THE AO UNDER SECTION 147, AND IGNORING THAT THERE WAS N EITHER ANY SATISFACTION OF THE AO NOR QUANTIFICATION OF ESCAPED ASSESSMENT AT THE TIME OF RECORDING OF REASONS AS THERE WAS NO COGENT OR DEFINITE MATERIAL ON RECORD IN SUPPORT OF HIS REASONS TO BELIEVE THAT CERTAIN INCOME HAS ESCAPED ASSESSMENT. 1.2. THAT CIT (A) HAS FAILED TO APPRECIATE THAT THE AO H AS SOLELY RELIED ON THE VAGUE AND SCANTY REPORT OF THE INVESTIGATION WI NG FOR ASSUMING JURISDICTION UNDER SECTION 147 WITHOUT MAKING ANY I NDEPENDENT ENQUIRY AND JUDICIOUS APPLICATION OF MIND THE REASONS RECORDED WERE WRONG; WITHOUT APPLICATION OF MIND; AND THERE WAS NO TANGIBLE EVID ENCE, WHICH INDICATED THAT INCOME OF THE ASSESSEE HAD ESCAPED ASSESSMENT. 2. THAT THE LEARNED ASSESSING OFFICER ERRED IN LAW IN INITIATING THE ASSESSMENT PROCEEDINGS UNDER CAMOUFLAGE OF SECTION 147 OF THE ACT WITHOUT HAVING ANY BONAFIDE OR DEFINITE REASON TO BELIEVE THAT CERTA IN INCOME HAS ESCAPED ASSESSMENT FOR THE ASSESSMENT YEAR UNDER CONSIDERAT ION AS CONTEMPLATED UNDER SECTION 147, AS THE BASIS OF ADDITION MADE IN THE ASSESSMENT ORDER ARE CONTRARY TO THE REASON RECORDED. HENCE, THE ADDITIO N SO MADE BY THE LEARNED ASSESSING OFFICER IS WITHOUT JURISDICTION AND THE A SSESSMENT IS LIABLE TO BE QUASHED. 3. THAT THE LEARNED ASSESSING OFFICER ERRED IN LAW IN INITIATING AND COMPLETING REASSESSMENT PROCEEDINGS UNDER SECTION 147/148 OF T HE INCOME TAX ACT, 1961 BY DISPOSING THE OBJECTION FOR INITIATION OF A SSESSMENT PROCEEDINGS IN MECHANICAL MANNER WITHOUT PASSING A SPEAKING ORDER. HENCE, THE INITIATION AND COMPLETION OF REASSESSMENT PROCEEDINGS UNDER SE CTION 148 OF THE ACT IS BAD IN LAW AND LIABLE TO BE QUASHED. 4. THAT THE LEARNED ASSESSING OFFICER ERRED BOTH IN L AW AND FACT IN MAKING ADDITION OF RS. 3,35,164/- ON ACCOUNT OF PURCHASES MADE FROM UNDISCLOSED SOURCES ONLY ON THE BASIS OF STATEMENTS OF PROPRIET ORS OF THE FIRM RECORDED 3 ITA NOS 3145, 3146 & 3147/DEL/2018 DURING THE COURSE OF SEARCH AND SEIZURE OPERATION W ITHOUT AFFORDING THE APPELLANT AN OPPORTUNITY TO CROSS EXAMINE THE DEPON ENTS EVEN THOUGH SPECIFIC REQUEST HAS BEEN MADE BY THE APPELLANT DURING THE C OURSE OF ASSESSMENT PROCEEDINGS, WHICH IS GROSS VIOLATION OF THE PRINCI PLE OF NATURAL JUSTICE. THE HONBLE CIT (APPEAL) FURTHER ENHANCED THE ADDITION BY RS. 4,40,679/- ARBITRARILY WITHOUT AFFORDING ANY OPPORTUNITY OF BE ING HEARD AND TO EXPLAIN. HENCE, THE ADDITION OF RS. 7,75,843/- ON ACCOUNT OF PURCHASES MADE FROM UNDISCLOSED SOURCES IS BAD IN LAW AND LIABLE TO BE DELETED. 5. THE HONBLE CIT (APPEAL) HAS ERRED IN CONFIRMING A ND ENHANCING THE ADDITION OF RS. 7,75,843/- AS BOGUS PURCHASES IN TR ADING ACCOUNT WITHOUT REJECTING THE BOOKS U/S 145, AND WITHOUT THE AUTHOR ITY OF ANY SPECIFIC SECTION OF INCOME TAX ACT, WHICH IS ILLEGAL AND NOT VALID I N LAW. I.T.A. NO. 3146/DEL/2018 (A.Y 2009-10) THAT ON FACTS AND IN LAW, THE HONBLE COMMISSIONER OF INCOME TAX (APPEALS) - 16 ERRED IN UPHOLDING THE ADDITION MADE BY THE AO W ITHOUT FULLY APPRECIATING THE FACTS AND CONTENTION OF THE APPELLANT AND THERE FORE, THE ORDER OF THE LD. COMMISSIONER OF INCOME TAX (APPEALS) IS BAD IN LAW. 1.1 THAT THE LEARNED CIT (A), HAS ERRED IN AFFIRMI NG THE JURISDICTION OF THE AO UNDER SECTION 147, AND IGNORING THAT THERE WAS NEIT HER ANY SATISFACTION OF THE AO NOR QUANTIFICATION OF ESCAPED ASSESSMENT AT THE TIME OF RECORDING OF REASONS AS THERE WAS NO COGENT OR DEFINITE MATERIAL ON RECORD IN SUPPORT OF HIS REASONS TO BELIEVE THAT CERTAIN INCOME HAS ESCAPED ASSESSMENT. 1.2 THAT CIT (A) HAS FAILED TO APPRECIATE THAT THE AO HAS SOLELY RELIED ON THE VAGUE AND SCANTY REPORT OF THE INVESTIGATION WI NG FOR ASSUMING JURISDICTION UNDER SECTION 147 WITHOUT MAKING ANY I NDEPENDENT ENQUIRY AND JUDICIOUS APPLICATION OF MIND THE REASONS RECORDED WERE WRONG; WITHOUT APPLICATION OF MIND; AND THERE WAS NO TANGIBLE EVID ENCE, WHICH INDICATED THAT INCOME OF THE ASSESSEE HAD ESCAPED ASSESSMENT. 2. THAT THE LEARNED ASSESSING OFFICER ERRED IN LAW IN INITIATING THE ASSESSMENT 4 ITA NOS 3145, 3146 & 3147/DEL/2018 PROCEEDINGS UNDER CAMOUFLAGE OF SECTION 147 OF THE ACT WITHOUT HAVING ANY BONAFIDE OR DEFINITE REASON TO BELIEVE THAT CERTA IN INCOME HAS ESCAPED ASSESSMENT FOR THE ASSESSMENT YEAR UNDER CONSIDERAT ION AS CONTEMPLATED UNDER SECTION 147, AS THE BASIS OF ADDITION MADE IN THE ASSESSMENT ORDER ARE CONTRARY TO THE REASON RECORDED. HENCE, THE ADDITIO N SO MADE BY THE LEARNED ASSESSING OFFICER IS WITHOUT JURISDICTION AND THE A SSESSMENT IS LIABLE TO BE QUASHED. 3. THAT THE LEARNED ASSESSING OFFICER ERRED IN LAW IN INITIATING AND COMPLETING REASSESSMENT PROCEEDINGS UNDER SECTION 147/148 OF T HE INCOME TAX ACT, 1961 BY DISPOSING THE OBJECTION FOR INITIATION OF A SSESSMENT PROCEEDINGS IN MECHANICAL MANNER WITHOUT PASSING A SPEAKING ORDER. HENCE, THE INITIATION AND COMPLETION OF REASSESSMENT PROCEEDINGS UNDER SE CTION 148 OF THE ACT IS BAD IN LAW AND LIABLE TO BE QUASHED. 4. THAT THE LEARNED ASSESSING OFFICER ERRED BOTH I N LAW AND FACT IN MAKING ADDITION OF RS. 9,89,575/-- ON ACCOUNT OF PURCHASES MADE FROM UNDISCLOSED SOURCES ONLY ON THE BASIS OF STATEMENTS OF PROPRIET ORS OF THE FIRM RECORDED DURING THE COURSE OF SEARCH AND SEIZURE OPERATION W ITHOUT AFFORDING THE APPELLANT AN OPPORTUNITY TO CROSS EXAMINE THE DEPON ENTS EVEN THOUGH SPECIFIC REQUEST HAS BEEN MADE BY THE APPELLANT DURING THE C OURSE OF ASSESSMENT PROCEEDINGS, WHICH IS GROSS VIOLATION OF THE PRINCI PLE OF NATURAL JUSTICE. THE HONBLE CIT (APPEAL) FURTHER ENHANCED THE ADDITION BY RS. 12,15,585/-- ARBITRARILY WITHOUT AFFORDING ANY OPPORTUNITY OF BE ING HEARD AND TO EXPLAIN. HENCE, THE ADDITION OF RS. 22,05,342/- ON ACCOUNT O F PURCHASES MADE FROM UNDISCLOSED SOURCES IS BAD IN LAW AND LIABLE TO BE DELETED. 5. THE HONBLE CIT (APPEAL) HAS ERRED IN CONFIRMIN G AND ENHANCING THE ADDITION OF RS. 22,05,342/-- AS BOGUS PURCHASES IN TRADING ACCOUNT WITHOUT REJECTING THE BOOKS U/S 145, AND WITHOUT THE AUTHOR ITY OF ANY SPECIFIC SECTION OF INCOME TAX ACT, WHICH IS ILLEGAL AND NOT VALID I N LAW. I.T.A. NO. 3147/DEL/2018 (A.Y 2010-11) THAT ON FACTS AND IN LAW, THE HONBLE COMMISSIONER OF INCOME TAX (APPEALS) - 5 ITA NOS 3145, 3146 & 3147/DEL/2018 16 ERRED IN UPHOLDING THE ADDITION MADE BY THE AO W ITHOUT FULLY APPRECIATING THE FACTS AND CONTENTION OF THE APPELLANT AND THERE FORE, THE ORDER OF THE LD. COMMISSIONER OF INCOME TAX (APPEALS) IS BAD IN LAW. 1.1 THAT THE LEARNED CIT (A), HAS ERRED IN AFFIRMI NG THE JURISDICTION OF THE AO UNDER SECTION 147, AND IGNORING THAT THERE WAS NEIT HER ANY SATISFACTION OF THE AO NOR QUANTIFICATION OF ESCAPED ASSESSMENT AT THE TIME OF RECORDING OF REASONS AS THERE WAS NO COGENT OR DEFINITE MATERIAL ON RECORD IN SUPPORT OF HIS REASONS TO BELIEVE THAT CERTAIN INCOME HAS ESCAPED ASSESSMENT. 1.2 THAT CIT (A) HAS FAILED TO APPRECIATE THAT THE AO HAS SOLELY RELIED ON THE VAGUE AND SCANTY REPORT OF THE INVESTIGATION WI NG FOR ASSUMING JURISDICTION UNDER SECTION 147 WITHOUT MAKING ANY I NDEPENDENT ENQUIRY AND JUDICIOUS APPLICATION OF MIND THE REASONS RECORDED WERE WRONG; WITHOUT APPLICATION OF MIND; AND THERE WAS NO TANGIBLE EVID ENCE, WHICH INDICATED THAT INCOME OF THE ASSESSEE HAD ESCAPED ASSESSMENT. 2. THAT THE LEARNED ASSESSING OFFICER ERRED IN LAW IN INITIATING THE ASSESSMENT PROCEEDINGS UNDER CAMOUFLAGE OF SECTION 147 OF THE ACT WITHOUT HAVING ANY BONAFIDE OR DEFINITE REASON TO BELIEVE THAT CERTA IN INCOME HAS ESCAPED ASSESSMENT FOR THE ASSESSMENT YEAR UNDER CONSIDERAT ION AS CONTEMPLATED UNDER SECTION 147, AS THE BASIS OF ADDITION MADE IN THE ASSESSMENT ORDER ARE CONTRARY TO THE REASON RECORDED. HENCE, THE ADDITIO N SO MADE BY THE LEARNED ASSESSING OFFICER IS WITHOUT JURISDICTION AND THE A SSESSMENT IS LIABLE TO BE QUASHED. 3. THAT THE LEARNED ASSESSING OFFICER ERRED IN LAW IN INITIATING AND COMPLETING REASSESSMENT PROCEEDINGS UNDER SECTION 147/148 OF T HE INCOME TAX ACT, 1961 BY DISPOSING THE OBJECTION FOR INITIATION OF A SSESSMENT PROCEEDINGS IN MECHANICAL MANNER WITHOUT PASSING A SPEAKING ORDER. HENCE, THE INITIATION AND COMPLETION OF REASSESSMENT PROCEEDINGS UNDER SE CTION 148 OF THE ACT IS BAD IN LAW AND LIABLE TO BE QUASHED. 4. THAT THE LEARNED ASSESSING OFFICER ERRED BOTH I N LAW AND FACT IN MAKING 6 ITA NOS 3145, 3146 & 3147/DEL/2018 ADDITION OF RS. 24,48,452/-/-- ON ACCOUNT OF PURCHA SES MADE FROM UNDISCLOSED SOURCES ONLY ON THE BASIS OF STATEMENTS OF PROPRIETORS OF THE FIRM RECORDED DURING THE COURSE OF SEARCH AND SEIZURE OP ERATION WITHOUT AFFORDING THE APPELLANT AN OPPORTUNITY TO CROSS EXAMINE THE D EPONENTS EVEN THOUGH SPECIFIC REQUEST HAS BEEN MADE BY THE APPELLANT DUR ING THE COURSE OF ASSESSMENT PROCEEDINGS, WHICH IS GROSS VIOLATION OF THE PRINCIPLE OF NATURAL JUSTICE. THE HONBLE CIT (APPEAL) FURTHER ENHANCED THE ADDITION BY RS. 29,73,272/- ARBITRARILY WITHOUT AFFORDING ANY OPPOR TUNITY OF BEING HEARD AND TO EXPLAIN. HENCE, THE ADDITION OF RS. 54,21,727/-/ - ON ACCOUNT OF PURCHASES MADE FROM UNDISCLOSED SOURCES IS BAD IN LAW AND LIA BLE TO BE DELETED. 5. THE HONBLE CIT (APPEAL) HAS ERRED IN CONFIRMIN G AND ENHANCING THE ADDITION OF RS. 54,21,727/--- AS BOGUS PURCHASES IN TRADING ACCOUNT WITHOUT REJECTING THE BOOKS U/S 145, AND WITHOUT THE AUTHOR ITY OF ANY SPECIFIC SECTION OF INCOME TAX ACT, WHICH IS ILLEGAL AND NOT VALID I N LAW. 3. WE ARE TAKING UP THE APPEAL FOR ASSESSMENT YEAR 2008-09 AS THE ISSUES ARE IDENTICAL IN ALL THESE APPEALS. THE ASSESSEE IS A N INDIVIDUAL AND RUNNING THE PROPRIETORSHIP CONCERN NAMELY M/S SHREE JI JEWELLER S WHICH DEALS IN GOLD AND DIAMOND JEWELLERY. THE RETURN DECLARING AN INCOME OF RS. 2,11,460/- WAS FILED ON 24/09/2008 BY THE ASSESSEE. DURING THE RE LEVANT FINANCIAL YEAR, THE ASSESSEE DERIVED INCOME FROM BUSINESS AND OTHER SOU RCES. DURING THE COURSE OF SEARCH OPERATION CARRIED OUT ON 3/10/2013 BY INV ESTIGATING WING, MUMBAI, VARIOUS EVIDENCES WERE COLLECTED AND STATEMENTS OF VARIOUS PERSON WERE RECORDED INCLUDING SHRI RAJENDRA JAIN, SURENDRA JAI N, AND SHRI MUDIT P. KARNAWAR WHO HAVE ADMITTED THAT ALL THE CONCERN CON TROLLED AND MANAGED BY THEM ARE NOT DOING IN REALLY TRADING BUT INDULGE IN PAPER TRANSACTION IN RESPECT OF ACCOMMODATION ENTRY. THE ASSESSING OFFICER OBSE RVED THAT THE ASSESSEE WAS ONE OF THE ENTRY PROVIDER OF ACCOMMODATION ENTRY AN D PROVIDED ENTRIES IN THE NATURE OF BOGUS TRANSACTION IN THE FORM OF SALES/PU RCHASES AND UNSECURED LOANS. THE ASSESSING OFFICER OBSERVED THAT THE ASS ESSEE HAD MADE PURCHASES 7 ITA NOS 3145, 3146 & 3147/DEL/2018 AMOUNTING TO RS.31,53,093/- FROM M/S AVI EXPORTS A CONCERN CONTROL BY SHRI RAJENDRA S. JAIN. AFTER TAKING COGNIZANCE OF THE S TATEMENTS AND THE EVIDENCES THE ASSESSING OFFICER MADE ADDITION OF RS. 3,35,164 /- THEREBY HOLDING THAT THE ASSESSEE HAS ALREADY OFFERED G. P AT 16.18% AT G.P OF THE WHOLE BUSINESS. THEREFORE, THE NET OF BOTH THE GPS (AS ESTIMATED AN D DECLARED AMOUNT OF RS. 3,35,164/-. 4. BEING AGGRIEVED BY THE ASSESSMENT ORDER, TH E ASSESSEE FILED APPEAL BEFORE THE CIT(A). THE CIT(A) DISMISSED THE APPEAL OF TH E ASSESSEE. 5. THE LD. AR SUBMITTED THAT THE CIT(A) ERRE D IN UPHOLDING THE ADDITION MADE BY THE AO WITHOUT FULLY APPRECIATING THE FACTS AND CONTENTION OF THE ASSESSEE AND THEREFORE, THE ORDER OF THE CIT(A) IS BAD IN LAW. THE LD. AR SUBMITTED THAT THE CIT(A) ERRED IN AFFIRMING THE JU RISDICTION OF THE AO UNDER SECTION 147, AND IGNORING THAT THERE WAS NEITHER AN Y SATISFACTION OF THE AO NOR QUANTIFICATION OF ESCAPED ASSESSMENT AT THE TIME OF RECORDING OF REASONS AS THERE WAS NO COGENT OR DEFINITE MATERIAL ON RECORD IN SUPPORT OF HIS REASONS TO BELIEVE THAT CERTAIN INCOME HAS ESCAPED ASSESSMENT. THE LD. AR SUBMITTED THAT THE CIT(A) FAILED TO APPRECIATE THAT THE AO HA S SOLELY RELIED ON THE VAGUE AND SCANTY REPORT OF THE INVESTIGATION WING FOR ASS UMING JURISDICTION UNDER SECTION 147 WITHOUT MAKING ANY INDEPENDENT ENQUIRY AND JUDICIOUS APPLICATION OF MIND THE REASONS RECORDED WERE WRONG; WITHOUT AP PLICATION OF MIND; AND THERE WAS NO TANGIBLE EVIDENCE, WHICH INDICATED THA T INCOME OF THE ASSESSEE HAD ESCAPED ASSESSMENT. THE LD. AR SUBMITTED THAT T HE ASSESSING OFFICER ERRED IN LAW IN INITIATING THE ASSESSMENT PROCEEDIN GS UNDER CAMOUFLAGE OF SECTION 147 OF THE ACT WITHOUT HAVING ANY BONAFIDE OR DEFINITE REASON TO BELIEVE THAT CERTAIN INCOME HAS ESCAPED ASSESSMENT FOR THE ASSESSMENT YEAR UNDER CONSIDERATION AS CONTEMPLATED UNDER SECTION 1 47, AS THE BASIS OF ADDITION MADE IN THE ASSESSMENT ORDER ARE CONTRARY TO THE REASON RECORDED. HENCE, THE ADDITION SO MADE BY THE LEARNED ASSESSIN G OFFICER IS WITHOUT JURISDICTION AND THE ASSESSMENT IS LIABLE TO BE QUA SHED. THE LD. AR FURTHER 8 ITA NOS 3145, 3146 & 3147/DEL/2018 SUBMITTED THAT THE ASSESSING OFFICER ERRED IN LAW I N INITIATING AND COMPLETING REASSESSMENT PROCEEDINGS UNDER SECTION 147/148 OF T HE INCOME TAX ACT, 1961 BY DISPOSING THE OBJECTION FOR INITIATION OF ASSESS MENT PROCEEDINGS IN MECHANICAL MANNER WITHOUT PASSING A SPEAKING ORDER. HENCE, THE INITIATION AND COMPLETION OF REASSESSMENT PROCEEDINGS UNDER SE CTION 148 OF THE ACT IS BAD IN LAW AND LIABLE TO BE QUASHED. THE LD. AR SUB MITTED THAT THE ASSESSING OFFICER ERRED BOTH IN LAW AND FACT IN MAKING ADDITI ON OF RS. 3,35,164/- ON ACCOUNT OF PURCHASES MADE FROM UNDISCLOSED SOURCES ONLY ON THE BASIS OF STATEMENTS OF PROPRIETORS OF THE FIRM RECORDED DURI NG THE COURSE OF SEARCH AND SEIZURE OPERATION WITHOUT AFFORDING THE ASSESSEE AN OPPORTUNITY TO CROSS EXAMINE THE DEPONENTS EVEN THOUGH SPECIFIC REQUEST HAS BEEN MADE BY THE ASSESSEE DURING THE COURSE OF ASSESSMENT PROCEEDING S, WHICH IS GROSS VIOLATION OF THE PRINCIPLE OF NATURAL JUSTICE. THE CIT (A) FU RTHER ENHANCED THE ADDITION BY RS. 4,40,679/- ARBITRARILY WITHOUT AFFORDING ANY OP PORTUNITY OF BEING HEARD AND TO EXPLAIN. HENCE, THE ADDITION OF RS. 7,75,843/- O N ACCOUNT OF PURCHASES MADE FROM UNDISCLOSED SOURCES IS BAD IN LAW AND LIA BLE TO BE DELETED. THE LD. AR SUBMITTED THAT THE CIT(A) ERRED IN CONFIRMING A ND ENHANCING THE ADDITION OF RS. 7,75,843/- AS BOGUS PURCHASES IN TRADING ACC OUNT WITHOUT REJECTING THE BOOKS U/S 145, AND WITHOUT THE AUTHORITY OF ANY SPE CIFIC SECTION OF INCOME TAX ACT, WHICH IS ILLEGAL AND NOT VALID IN LAW. THE LD. AR FURTHER SUBMITTED THAT IN ASSESSEES OWN CASE FOR ASSESSMENT YEAR 2007-08 BEI NG ITA NO. 2266/DEL/2017 ORDER DATED 6/4/2018, THE SIMILAR ADD ITION WAS DELETED. 6. THE LD. DR SUBMITTED THAT THE MERE RETR ACTION OF THE STATEMENT DOES NOT EXONERATE THE ASSESSEE FROM ITS RECORDS WHEREIN THE PHYSICAL STOCK WAS NOT PROPERLY WAS DEMONSTRATED BY THE ASSESSEE AS PER TH E ASSESSEES CONTENTION BEFORE HIM. THE LD. DR FURTHER SUBMITTED THAT THE ASSESSEE COULD NOT PRODUCE FROM R. S. JAIN FOR CONFIRMING. 7. WE HAVE HEARD BOTH THE PARTIES AND PERU SED THE MATERIAL AVAILABLE ON RECORD. IT IS PERTINENT TO NOTE THAT ALL THE DOCUM ENTS WERE BEFORE THE ASSESSING 9 ITA NOS 3145, 3146 & 3147/DEL/2018 OFFICER AND THE ASSESSING OFFICER HAS MERELY RELIED UPON THE STATEMENT OF SH. RAJENDRA JAIN WHICH WAS LATER ON RETRACTED. THE AS SESSEE HAS GIVEN THE DETAILS OF PURCHASE BILLS, SALES BILLS, STOCK REGISTER AND BANK STATEMENTS AND AFTER GOING THROUGH THE EVIDENCES WHICH WAS BEFORE THE AS SESSING OFFICER AND BEFORE US , IT IS FOUND THAT THE SAME IS TALLYING WITH, WI TH THE TRANSACTION WHICH WAS ALLEGEDLY HELD AS BOGUS TRANSACTION BY THE ASSESSIN G OFFICER . THUS, AS PER THE DOCUMENTS PROVIDED BY THE ASSESSEE TRANSACTION IS G ENUINE, PARTIES WERE BEFORE THE SEARCH/INVESTIGATION WHEREIN AND THERE STATEMEN TS ON RECORD WHICH DOES NOT REFLECT THAT THE ASSESSEE IS ACTUAL FOR THE OF THE ACCOMMODATION ENTRY. THE STATEMENTS WERE ALSO RETRACTED LATER ON. THUS, THE SANCTITY OF THE STATEMENT CANNOT BE THE SOLE BASIS FOR MAKING AN ADDITION. T HE SEARCH OPERATION WAS ALREADY LOOKED INTO BY THE TRIBUNAL FOR ASSESSMENT YEAR 2007-08 OF THE TRIBUNAL HELD AS UNDER:- 9. I HAVE CONSIDERED THE SUBMISSIONS OF BOTH THE PARTIES AND CAREFULLY GONE THROUGH THE MATERIAL AVAILABLE ON THE RECORD. IN TH E PRESENT CASE, IT IS NOTICED THAT THE AO MADE THE ADDITION ONLY ON RELYING THE S TATEMENT OF ONE SHRI RAJENDRA S. JAIN. THE ASSESSEE TO PROVE THE GENUINE NESS OF THE TRANSACTIONS, FURNISHED THE COPIES OF PURCHASE BILLS, SALES BILLS , STOCK REGISTER AND BANK STATEMENTS. IN THE INSTANT CASE, THE AO ALSO ISSUED THE NOTICE U/S 133(6) OF THE ACT, IN RESPONSE THE PROPRIETORS OF THE AFORESA ID FIRMS FURNISHED THE CONFIRMATIONS ALONGWITH COPIES OF THEIR ITR, BANK S TATEMENTS. THE ASSESSEE FURNISHED COPIES OF RETURNS OF THE SAID PARTIES, TH EIR PAN NUMBERS, RELEVANT BANK ACCOUNTS, COPY OF INVOICES, SALES TAX REGISTRA TION NUMBER ETC. THIS FACT HAS BEEN ADMITTED BY THE AO AT PAGE NO. 8 OF THE AS SESSMENT ORDER DATED 27.03.2015. IN THE PRESENT CASE, THE ASSESSEE MADE THE ENTRY OF THE PURCHASES IN THE STOCK REGISTER AND ALSO FURNISHED THE COPIES OF SALES BILLS TO THE AO. THE AMOUNT WAS RECEIVED AGAINST THE SALES T HROUGH BANKING CHANNELS AND THE PAYMENTS FOR THE PURCHASES WERE ALSO MADE T HROUGH BANKING CHANNELS. IN MY OPINION, WHEN THE AO HAD ACCEPTED T HE SALES OF THE SAME 10 ITA NOS 3145, 3146 & 3147/DEL/2018 ITEMS PURCHASED BY THE ASSESSEE THAN THERE WAS NO O CCASION TO DOUBT THE PURCHASES. MOREOVER, THE AO ONLY DOUBTED 90% OF THE PURCHASES AND MADE THE ADDITION TO THAT EXTENT. I AM OF THE VIEW THAT IF THE PURCHASES WERE NOT GENUINE, THE ADDITION OUGHT TO HAVE BEEN MADE OF TH E WHOLE AMOUNT AND NOT ONLY OF 90% AND WHEN THE SALES OF THE SAME ITEMS WE RE ACCEPTED AS GENUINE THAN THE ADDITION COULD NOT HAVE BEEN MADE FOR THE PURCHASES. I, THEREFORE, CONSIDERING THE TOTALITY OF THE FACTS, DELETE THE A DDITION MADE BY THE A.O AND SUSTAINED BY THE LD.CIT(A) SINCE, THE ISSUE HAS BE EN DECIDED ON MERIT IN FAVOUR OF THE ASSESSEE, THEREFORE, NO FINDINGS ARE GIVEN ON THE LEGAL ISSUE WHICH WAS ALSO NOT ARGUED BY BOTH THE PARTIES. THE TRANSACTION IN THE PRESENT ASSESSMENT YEAR I.E. ASSESSMENT YEAR 2008- 09 IS GENUINE, IDENTITY AND THE CREDIBILITY HAS ALS O BEEN ESTABLISHED BY THE ASSESSEE. THEREFORE, SECTION 68 WILL NOT ATTRACT A ND THE ADDITIONS MADE BY THE ASSESSING OFFICER WHICH WAS CONFIRMED BY THE CIT(A ) IS NOT JUST AND PROPER. THEREFORE, ITA NO. 3145/DEL/2018 FOR ASSESSMENT YEA R 2008-09 IS ALLOWED. AS REGARDS ITA NO. 3146 & 3147/DEL/2018, THE FACTS ARE IDENTICAL AND EMERGING FROM THE SAME SEARCH. THEREFORE, THERE IS NO NEED TO GIVE SEPARATE FINDING AS THE OBSERVATIONS MADE IN THE ABOVE SAID PARAGRAPH I N THIS ORDER ARE APPLICABLE IN THESE TWO ASSESSMENT YEARS I.E. 2009-10 & 2010- 11 AS WELL. THUS, ITA NOS. 3146/DEL/2018 & 3147/DEL/2018 ARE ALSO ALLOWED. 8. IN RESULT, ALL THE APPEALS ARE ALLOWED. ORDER PRONOUNCED IN THE OPEN COURT ON THIS 23RD DAY OF AUGUST, 2021. SD/- SD/- (PRASHANT MAHARISHI) (SUCH ITRA KAMBLE) ACCOUNTANT MEMBER JUDICIAL MEM BER DATED: 23/08/2021 R. NAHEED * COPY FORWARDED TO: 1. APPELLANT 11 ITA NOS 3145, 3146 & 3147/DEL/2018 2. RESPONDENT 3. CIT 4. CIT(APPEALS) 5. DR: ITAT ASSISTANT REGISTRAR ITAT NEW DELHI