Parminder Singh, Gurgaon V. ITO WARD 3(2), Gurgaon

ITA 3255/DEL/2019

• Counselvise Citation: [2020] 110 COUNSELVISE.COM (IT) 8223 (ITAT-DELHI)
• Duration Of Justice: 1 year(s) 3 month(s) 5 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 20-07-2020
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: SMC
• Assessment Year: 2008-2009
• Appeal Filed On: 15-04-2019
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: JAGDISH SINGH DAHIA
• Assessee Lawyers: RAJIV
• Keywords: Bogus purchase; Corroborative evidences; Accommodation entries
• Section: 133(6); 13; 147; 148

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL DELHI BENCH SMC-2 NEW DELHI BEFORE SHRI AMIT SHUKLA, JUDICIAL MEMBER ITA . NO. 3255 /DEL/20 1 9 ASSESSMENT YEAR S 20 08 - 09 PARMINDER SINGH H.NO. 869, SECTOR-04, GURGAON, HARYANA 122001 V. ITO WARD 3(2) GURGAON PAN: ABOPS7722E (APP ELL ANT) (RESPONDENT) APP ELL ANT BY: SHRI RAJIV, FCA RESPONDENT BY: SHRI JAGDISH SINGH DAHIA, SR. DR DATE OF HEARING: 29 0 6 20 20 DATE OF PRONOUNCEMENT: 20 07 20 20 O R D E R THE AFORESAID APPEAL HAS BEEN FILED BY THE ASSESSE E AGAINST THE IMPUGNED ORDER DATED 23.01.2019, PASSED BY THE LD. CIT (APPEALS)-1, GURGAON FOR THE QUANTUM OF ASSESSMENT PASSED U/S 143(3)/147. IN VARIOUS GROUNDS OF APPEAL, THE ASSES SEE HAS CHALLENGED DISALLOWANCE OF PURCHASE OF RS. 13,09,55 2/- MADE FROM M/S MAA DURGA TRADING COMPANY. 2. THE FACTS IN BRIEF ARE THAT THE ASSESSEE IS ENG AGED IN THE BUSINESS OF MANUFACTURING AND JOB WORK OF INDUSTRIA L TOOLS AND MACHINE COMPONENTS. THE RETURN OF INCOME WAS FILED FOR THE A.Y. 2008-09 AT AN INCOME OF RS. 2,12,440/- ON 30.09.200 8. LATER ON, ASSESSEES CASE WAS REOPENED U/S 147 AND NOTICE U/S 148 WAS ISSUED ON 27.03.2015. THE REASON FOR REOPENING WAS THAT, AS PER INFORMATION RECEIVED TO THE ASSESSING OFFICER THAT THE ASSESSEE HAS OBTAINED ACCOMMODATION ENTRIES OF BOGUS PURCHASES F OR RS. 13,09,552/- FROM M/S MAA DURGA TRADING COMPANY. ASS ESSING ITA NO.3255/DEL/2019 2 OFFICER IN THE ASSESSMENT ORDER HAS NOTED THAT ASSE SSEE HAS NOT RESPONDED TO VARIOUS NOTICES THOUGH HE HAS FILED CE RTAIN DETAILS. THE AO HAS ALSO ISSUED NOTICE U/S 133(6) TO M/S MAA DURGA TRADING COMPANY AND ALSO TO OTHER PARTIES FROM WHOM ASSESSEE HAS PURCHASED MATERIALS DURING THE RELEVANT YEAR. H OWEVER, HE HAS NOT DISCUSSED AS TO WHAT WAS THE REPLY AND CONF IRMATION RECEIVED FROM THE SAID PARTIES. AS REGARDS PURCHASE S MADE FROM M/S MAA DURGA TRADING COMPANY, HE OBSERVED THAT ASS ESSEE HAS FAILED TO PRODUCE SUPPORTING EVIDENCES OF PURCHASES BUT DID NOT DISCUSSED WHAT DETAILS ASSESSEE HAS FURNISHED, AND ACCORDINGLY, HE PASSED AN ASSESSMENT ORDER U/S 144/147 TREATING THE ENTIRE PURCHASE OF RS. 13,09,552/- AS BOGUS. 3. BEFORE THE LD. CIT (A), THE ASSESSEE OBJECTED TO THE VARIOUS OBSERVATIONS OF THE AO AND SUBMITTED THAT ALL THE S UPPORTING EVIDENCES PERTAINING TO PURCHASE MADE FROM M/S MAA DURGA TRADING COMPANY WERE FURNISHED BEFORE THE AO, INCLU DING THE COPIES OF BILLS, TRANSIT CHALLANS, VAT ASSESSMENT O RDER, LEDGER ACCOUNTS OF PURCHASES AND LEDGER ACCOUNT OF M/S MAA DURGA TRADING COMPANY. THE CASE WAS REMANDED TO THE AO TO SUBMIT HIS REPORT. IN HIS REPORT, AO STATED THAT INFORMATION W AS CALLED UPON U/S 133(6) REGARDING GENUINENESS OF THE PURCHASE MA DE BY THE ASSESSEE FROM THE SAID PARTY ON THE ADDRESS MENTION ED IN THE PURCHASE BILL FURNISHED BY THE ASSESSEE. HOWEVER, THE SAID NOTICE RETURNED UN-SERVED AND ASSESSEE WAS ASKED DURING THE ASSESSMENT PROCEEDINGS TO EXPLAIN THE GENUINENESS O F THE SAID PURCHASE. AGAIN A NOTICE U/S 133(6) WAS ISSUED TO THE M/S MAA DURGA TRADING COMPANY ON THE SAME ADDRESS MENTIONED IN THE BILL, HOWEVER THE SAID NOTICE RETURNED BACK UN-DELI VERED STATING INCOMPLETE ADDRESS. THE ENTIRE REPORT OF THE AO HINGES UPON THE ITA NO.3255/DEL/2019 3 FACT THAT THE NOTICE ISSUED U/S 133(6) REMAINED UN- COMPLIED WITH. THE LD. CIT (A) THEN ASKED THE ASSESSEE TO FURNISH THE FOLLOWING DETAILS: (I) COPY OF ACCOUNT OF M/S MAA DURGA TRADING COMPANY I N YOUR BOOKS OF ACCOUNT FOR FY 2007-08. (II) COPIES OF BILLS RECEIVED BY YOU FROM M/S MAA DURGA TRADING COMPANY FOR THE PURCHASES MADE BY YOU DURING THE YE AR 2007-08. (III) EVIDENCES OF TRANSPORTATION OF GOODS FROM M/S MAA D URGA TRADING COMPANY TO YOUR BUSINESS PREMISES. (IV) DETAILS OF PAYMENTS MADE BY YOU TO M/S MAA DURGA TR ADING COMPANY FROM 01.04.2007 ONWARDS IN THE FOLLOWING FO RMAT: - DATE AMOUNT MODE BANK NAME AND BRANCH IN CASE OF CHEQUE PAYMENT (V) EVIDENCES OF UTILIZATION OF MATERIAL PURCHASED FROM M/S MAA DURGA TRADING COMPANY IN YOUR BUSINESS. (VI) DETAILS OF SIMILAR ITEMS PURCHASED FROM ANY OTHER P ERSON DURING THE YEAR. (VII) COPY OF ITEM WISE REGISTER SHOWING THE RECEIPT AND UTILIZATION OF MATERIAL PURCHASED FROM M/S MAA DURGA TRADING CO MPANY FOR THE PERIOD 01.04.2007 TO 31.03.2008. 4. IN RESPONSE, THE ASSESSEE HAS FILED THE ABOVE DE TAILS, INCLUDING SUMMARY OF STOCK REGISTER, ETC. HOWEVER, THE LD. CIT (A) HELD THAT THE EVIDENCE OF MATERIAL PURCHASED FROM M /S MAA DURGA TRADING COMPANY WAS NOT FURNISHED AND IT WAS MERELY STATED THAT SAME CAN BE VERIFIED FROM THE STOCK REGISTER. THE LD. CIT (A) FROM THE PERUSAL OF THE DETAILS FURNISHED BY THE ASSESSE E HAS NOTED MONTH-WISE PURCHASE AND SALE WHICH HAS BEEN INCORPO RATED AT PAGE 7 OF THE APPELLATE ORDER, AND THEREAFTER HAS D RAWN VARIOUS INFERENCES AND DISMISSED THE ASSESSEES APPEAL AFTE R OBSERVING AND HOLDING AS UNDER: ITA NO.3255/DEL/2019 4 4.11 FROM THE AFORESAID DETAILS OF PURCHASE AND SALE, IT IS SEEN THAT THERE IS NO OPENING BALANCE AND CLOSING B ALANCE OF ANY STOCK. THE PURCHASES MADE IN THE MONTH OF APRI L ARE SHOWN AT RS. 1,69,220/- WHEREAS THE SALE MADE IN TH E MONTH OF APRIL ARE SHOWN AT RS. 2,88,456/-. EVEN IF IT I S ASSUMED THAT ALL THE ITEMS PURCHASED BY THE APPELLANT IN THE MON TH OF APRIL WERE SOLD IN THE MONTH OF APRIL ITSELF AND NO ITEM WAS CARRIED FORWARD EVEN THEN THE PROFIT ARISING ON ACCOUNT OF SALES IN THE MONTH OF APRIL WORKS OUT TO RS. 1,19,236/- WHICH IS 70% OF THE COST OF PURCHASES. SIMILARLY, THE PURCHASES MADE I N THE MONTH OF MAY HAVE BEEN SHOWN AT RS. 2,81,654/- AND THE SA LES HAVE BEEN SHOWN AT RS. 3,53,955/-. SHOWING THE PROFIT O F RS. 72,301/- WHICH IS ALMOST 25% OF THE COST OF PURCHAS ES. IT IS FURTHER SEEN THAT IN THE MONTH OF MARCH THE TOTAL S ALES HAVE BEEN SHOWN AT RS. 4,88,891/- AS AGAINST PURCHASES O F RS. 4,56,776/- AND NO AMOUNT OF CLOSING STOCK HAS BEEN SHOWN IMPLYING THEREBY THAT ALL THE PURCHASES MADE TILL 3 1.03.2008 WERE SOLD. EVEN IF IT IS ASSUMED THAT NO AMOUNT OF STOCK WAS AVAILABLE OUT OF THE EARLIER PURCHASES AS ON 01.03. 2008, THE FIGURES IMPLY THAT THE APPELLANT HAD INCURRED A LOS S OF RS. 67,885/- IN THE MONTH OF MARCH, 2008. SIMILAR VARI ATION CAN BE NOTED IN THE OTHER MONTHLY FIGURES ALSO. SUCH HUGE VARIATIONS IN THE FIGURES OF PROFIT CLEARLY IMPLY THAT THE FIGURE S OF PURCHASE AND SALE SHOWN BY THE APPELLANT ARE NOT CORRECT AND GENUINE. 4.12 AS POINTED OUT ABOVE IN-SPITE OF SPECIFIC QUER Y RAISED BY ME, THE APPELLANT FAILED TO FURNISH DAY TO DAY STOC K REGISTER OR THE EVIDENCE OF UTILIZATION OF PURCHASES MADE FROM M/S MAA DURGA TRADING COMPANY. 4.13 DURING THE COURSE OF APPELLATE PROCEEDINGS, TH E AR OF THE APPELLANT ALSO FILED COPIES OF PURCHASE BILLS FROM M/S MAA DURGA TRADING COMPANY AND PURCHASE BILLS OF SOME OF THE PURCHASES FROM OTHER PERSONS. IT IS SEEN THAT THER E ARE HUGE VARIATION IN THE COST OF ITEMS PURCHASED FROM M/S M AA DURGA TRADING COMPANY AND FROM OTHER PERSONS E.G. ALLOY S TEEL HAS BEEN PURCHASED FROM M/S MAA DURGA TRADING COMPANY B Y BILLS DATED 18.12.2007, 22.11.2007, 24.12.2007 AND ITA NO.3255/DEL/2019 5 18.01.20078 @ 1,10,000/- PER MATRIC TON WHEREAS ALL OY STEEL HAS BEEN PURCHASED FROM BALAJI STEELS @ RS. 38 PER KG. VIDE BILL DATED 30.06.2007 AND @ RS. 56 PER KG VIDE BILL DATE D 18.06.2007 FROM M/S VENUS INDUSTRIAL CORPORATION. IT IS, THEREFORE, EVIDENT THAT THE DOCUMENTS FILED BY THE APPELLANT ARE NOT RELIABLE AND THE APPELLANT IS MANIPULATING HIS ACCOUNTS BY ADJUSTING BOGUS PURCHASES AND SALES. THE ADDITION MADE BY THE ASSESSING OFFICER IS ACCORDINGLY, CONFIRMED. T HE GROUNDS OF APPEAL ARE DISMISSED. 5. BEFORE US, THE LD. COUNSEL FOR THE ASSESSEE SUBM ITTED THAT ALL THE EVIDENCES REGARDING PURCHASE MADE FROM M/S MAA DURGA TRADING COMPANY WAS FURNISHED LIKE, PURCHASE AND SA LE BILLS AND LEDGER ACCOUNT, COPY OF TRANSIT CHALLAN ISSUED BY V AT DEPT., HARYANA INDICATING PURCHASE MADE FROM THE SAME PART Y, DETAILS OF PAYMENT MADE THROUGH CHEQUES, ASSESSMENT ORDER OF V AT, COPY OF LEDGER ACCOUNT OF THE SUPPLIER, COPY OF STOCK SUMMA RY, ITEM-WISE REGISTER FOR PURCHASE OF RAW MATERIAL FROM VARIOUS SUPPLIERS AND STATEMENT OF ACCOUNTS. NONE OF THESE DOCUMENTS HAVE BEEN CONSIDERED BY THE AO WHICH WAS DULY FILED BEFORE HI M VIDE REPLY DATED 07.09.2015, COPY OF WHICH HAS BEEN PLACED AT THE PB AT PAGES 4 & 5. AGAIN FURTHER DETAILS WERE FURNISHED BEFORE ASSESSING OFFICER VIDE REPLY DATED 14.09.2015, THE COPY OF WH ICH HAS BEEN PLACED AT PB AT PAGES 8 & 9. REGARDING NON SERVICE OF NOTICE U/S 133(6), THE LD. COUNSEL SUBMITTED THAT PURCHASES WE RE MADE IN THE YEAR 2007 AND NOTICE U/S 133(6) WAS ISSUED AFTE R THE GAP OF 8 YEARS. THE ASSESSEE HAS GIVEN THE THEN EXISTING ADD RESS AS MENTIONED IN THE BILL AND THEREAFTER ASSESSEE DID N OT HAD ANY TRANSACTION IN SUBSEQUENT YEARS, HENCE IT WAS DIFFI CULT FOR THE ASSESSEE TO GIVE THE CURRENT ADDRESS. HE FURTHER SU BMITTED THAT ASSESSEE IS IN THE BUSINESS OF JOB WORK OF INDUSTRI AL TOOLS AND MACHINE COMPONENTS AND IS ALSO ENGAGED IN THE MANUF ACTURING FOR ITA NO.3255/DEL/2019 6 THE SAME ITEMS FOR WHICH HE HAS PURCHASED ALLOY STE EL. ENTIRE QUANTITATIVE DETAILS OF PURCHASE OF RAW MATERIAL AN D CONSUMED WERE FURNISHED, THE COPY OF WHICH AT PAGES 51 & 52 OF THE PB. 6. HE FURTHER SUBMITTED THAT, EVEN LD. CIT (A) HAS MIS- APPRECIATED THE FACTS AND THERE WAS A GAP OF 16 MON THS BETWEEN THE LAST HEARING AND THE PASSING OF THE ORDER. HE ALSO EXPLAINED AS TO HOW THE VARIOUS OBSERVATION OF THE LD. CIT (A) I S INCORRECT. INSOFAR AS THE OBSERVATION REGARDING OPENING BALANC E AND LACK OF FURNISHING OF COMPLETE LEDGER ACCOUNT, HE POINTED O UT THAT BEFORE THE LD. CIT (A) THE ASSESSEE HAD FILED COMPLETE ACC OUNT. FIRST OF ALL, HE POINTED OUT THAT THE LD. CIT (A) HAS OBSERVED TH AT ENTIRE ENTRY HAS NOT BEEN GIVEN, IS NOT CORRECT, AS THERE WAS ON LY DIFFERENCE OF ONE ENTRY OF 13 TH MARCH WHICH TOO WAS FURNISHED TO HIM AND WAS SPECIFICALLY SHOWN THAT THE PAYMENT WAS MADE THROUG H CHEQUES AND THERE IS ABSOLUTELY NO DIFFERENCE IN THE OPENIN G AND CLOSING STOCK IN ACCOUNTS AS SHOWN IN THE BALANCE SHEET. HE FURTHER SUBMITTED THAT LD. CIT (A) HAS DRAWN AN ERRONEOUS P RESUMPTION ON SALE AND PURCHASE ACCOUNT THAT THERE WAS NO OPEN ING STOCK, BECAUSE IT IS REVENUE ACCOUNT AND THERE IS NO OPENI NG AND CLOSING ACCOUNT IN REVENUE ACCOUNT AND ASSESSEE HAS GIVEN S TOCK REGISTER, IN WHICH THERE IS AN OPENING STOCK WHICH IS EVIDENT FROM PAGES 52 TO 54. HE HAS ALSO POINTED OUT THAT THERE WAS AN O PENING STOCK OF RS. 89,000/- WHICH HAS NOT BEEN TAKEN INTO ACCOUNT BY THE LD. CIT(A) AND TRADING ACCOUNT SHOWS CLOSING STOCK OF R S. 47,000/-. FURTHER, OBSERVATION OF LD. CIT (A) THAT THE ASSESS EE HAS PURCHASED STEEL @ 110 PER KG, WHEREAS FROM THE OTHE R PARTIES ASSESSEE HAS PURCHASED AT A VERY LESSER PRICE, IS A LSO MISCONCEIVED. HE CLARIFIED THAT THERE ARE VARIOUS Q UALITY OF ALLOYS AND HE HAS MADE PURCHASES OF SIMILAR QUALITY OF STE EL ALLOYS FROM ITA NO.3255/DEL/2019 7 VENUS INDUSTRIAL CORPORATION @ 110 PER KG AND EVEN FROM M/S MAA DURGA TRADING COMPANY ASSESSEE HAS PURCHASED AS LOW AS @ RS. 32 AND @ RS. 35 PER KG. THIS SHOWS THAT THERE ARE VARIOUS KINDS OF ALLOYS THAT ARE USED. THE ASSESSEES GP R ATE WAS 20.11% AND NET PROFIT OF 6.80%. HE FURTHER SUBMITTED THAT ONCE TRADING ACCOUNT AND BOOKS OF ACCOUNT HAVE NOT BEEN REJECTED , THEN NO ADDITION OF TRADING ACCOUNT CAN BE MADE ESPECIALLY WHEN PURCHASES HAVE BEEN MADE THROUGH CHEQUES. APART FR OM THAT, THE GENUINENESS OF THE PURCHASE IS ESTABLISHED BY THE F ACT THAT VAT DEPT. OF HARYANA HAD ISSUED A TRANSIT CHALLAN ALONG WITH RELATED INVOICE WHICH REFLECTS THE PURCHASES MADE FROM M/S MAA DURGA TRADING COMPANY AND EVEN THE VAT ASSESSMENT ORDER F OR PURCHASE AND SALE HAVE BEEN ACCEPTED. ONCE SALES H AVE BEEN ACCEPTED ANOTHER ITEMS OF THE TRADING ACCOUNT THEN THERE CANNOT BE AN ADDITION ON ACCOUNT OF PURCHASES. 7. LD. DR IN HIS WRITTEN SUBMISSION HAS REITERATED THE OBSERVATION AND FINDING OF THE AO AND CIT (A) HAS I NCORPORATED ABOVE. HE SUBMITTED THAT ONCE THE NOTICE U/S 133(6 ) HAVE NOT BEEN SERVED, THEN GENUINENESS OF THE PURCHASES WOUL D NOT BE ESTABLISHED. 8. I HAVE HEARD THE RIVAL SUBMISSIONS AND ALSO PERU SED THE RELEVANT FINDING GIVEN IN THE IMPUGNED ORDER AS WEL L AS MATERIAL REFERRED TO AT THE TIME OF HEARING. ADMITTEDLY, TH E ASSESSEE IS ENGAGED IN THE BUSINESS OF JOB WORK AND ALSO CARRYI NG OUT SEPARATE MANUFACTURING FOR INDUSTRIAL TOOLS AND MACHINE COMP ONENTS FOR WHICH THE RAW MATERIAL IS ALLOYS STEELS. INSOFAR A S THE CONTROVERSY REGARDING THE PURCHASES MADE FROM M/S MAA DURGA TRA DING COMPANY, THE ASSESSEE BEFORE THE AO HAD FURNISHED; A) MONTH- WISE DETAIL OF SALE AND PURCHASE WITH COMPLETE NAME AND ADDRESS ITA NO.3255/DEL/2019 8 AND THE BANK STATEMENT TO SHOW THE SOURCE OF PURCHA SE, I.E., THROUGH ACCOUNT PAYEE CHEQUES; B) COMPLETE BOOKS O F ACCOUNT ALONGWITH SALE AND PURCHASE INVOICES; C) COPIES OF BILLS/TRANSIT CHALLAN FOR PURCHASES MADE FROM M/S MAA DURGA TRADI NG COMPANY ISSUED BY VAT DEPARMTENT, HARYANA; D) DHAR AM KANTA SLIP; E) VAT ASSESSMENT ORDER; F) LEDGER ACCOUNT OF PURCHASES, ETC. 9. APART FROM THESE FACTS, THE ASSESSEE HAS ALSO FI LED STOCK SUMMARY OF ALL THE RAW MATERIALS PURCHASED DURING T HE YEAR AND ALSO ITEMS SHOWN IN THE PURCHASE REGISTER. ASSESSE E HAD SHOWN SALES FROM MANUFACTURING AT RS. 51,60,236/- AND INC OME FROM JOB WORK CHARGES AT RS. 21,93,607/-. THE DISPUTE REGARD ING THE PURCHASE OF ALLOY STEEL FROM M/S MAA DURGA TRADING COMPANY IS ON MANUFACTURING ACCOUNT. NEITHER THE STOCK REGISTE R NOR ANY ITEMS OF PURCHASE AND SALES HAVE BEEN DISPUTED BY T HE ASSESSING OFFICER, EXCEPT FOR PURCHASES MADE FROM M/S MAA DUR GA TRADING COMPANY FOR SUMS AGGREGATING TO RS. 13,09,552/-, WH ICH HAS BEEN MADE SOLELY ON THE REASON THAT NOTICE U/S 133( 6) ISSUED TO THE SAID PARTY REMAIN UN-SERVED. IF THE ASSESSEE HA S MADE PURCHASES IN THE YEAR 2007 AND NOTICE U/S 133(6) IS ISSUED AFTER A GAP OF 8 YEARS ON THE ADDRESS MENTIONED IN THE THEN INVOICE AND IF IT HAS NOT BEEN SERVED THEN CANNOT BE HELD THAT THE PURCHASE IS BOGUS. HAD THE ASSESSEE NOT CORROBORATED THE PURCHA SE FROM OTHER DOCUMENTARY EVIDENCES, PERHAPS THEN ADVERSE INFEREN CE COULD HAVE BEEN DRAWN. ONE OF THE CLINCHING EVIDENCE IS T HE TRANSIT CHALLAN ISSUED BY VAT DEPARTMENT, HARYANA ALONG WIT H THE PURCHASE INVOICE WHICH CLEARLY PROVES THAT PURCHASE S MADE FROM THE SAID PARTY WAS ACTUALLY DELIVERED TO THE ASSESS EE AND THE PAYMENT HAS BEEN MADE THROUGH ACCOUNT PAYEE CHEQUE, I.E., THE SOURCE OF PURCHASE IS FROM THE BOOKS ONLY. IF THE P URCHASES ARE ITA NO.3255/DEL/2019 9 RECORDED IN THE BOOKS AND IT CORRESPONDS WITH THE Q UANTITY OF ITEMS MANUFACTURED AND CONSEQUENT SALE, THEN ENTIRE PURCHASE CANNOT BE HELD TO BE BOGUS, OTHERWISE IT WILL AFFEC T THE GP GROSS PROFIT HUGELY. 10. THE LD. CIT (A) IN HIS ORDER HAS TRIED TO FIN D OUT CERTAIN DEFECTS IN THE ACCOUNTS AND POINTED OUT, FIRSTLY, T HAT THERE IS NO OPENING AND CLOSING BALANCE SHEET OF STOCK AND, THE REFORE, THE GP IN THE MONTH OF APRIL IS VERY HIGH ON THE COST OF P URCHASE AND SIMILARLY HE HAS POINTED OUT HUGE VARIATION OF THE GP RATE ON THE MONTHLY BASIS. SECONDLY, HE HAS POINTED OUT THE DIF FERENCE BETWEEN THE RATES PER METRIC TON ALL THE ALLOYS STE EL PURCHASED BY THE M/S MAA DURGA TRADING COMPANY AND OTHER PARTIES . HE HAS ALSO INCORPORATED THE SALES AND PURCHASE ACCOUNT, W HEREIN HE HAS OBSERVED THAT THERE IS NO OPENING BALANCE. AS DISC USSED ABOVE, IT HAS BEEN POINTED OUT FROM THE RECORDS FURNISHED EVE N BEFORE THE CIT (A) THAT THE REVENUE ACCOUNT OF SALE AND PURCHA SE DOES NOT CONTAIN OPENING BALANCE OF STOCK AS IT IS REFLECTED IN SUMMARY OF STOCK STATEMENT WHICH HE POINTED OUT FROM PAGE 52 O F THE PB THAT THERE WAS OPENING BALANCE DULY RECORDED IN THE BOOK S AND THE OPENING BALANCE ALONG WITH THE PURCHASE IS FULLY TA LLIED WITH THE BALANCE SHEET. HENCE NOT ONLY THE SALES GOT VERIFIE D BUT ALSO THE CLOSING STOCK. IT IS CLEARLY EVIDENT THAT LD. CIT(A ) HAS NOT TAKEN INTO ACCOUNT THE STOCK STATEMENT OF THE ITEMS WHICH CLEARLY SHOWS THAT THERE WAS AN OPENING BALANCE OF RS. 89,000/- A ND AT THE YEAR END THERE IS CLOSING STOCK OF RS. 47,000/-. IF, ON THE CREDIT SIDE OF THE TRADING ACCOUNT, SALES AND CLOSING STOCK ARE VE RIFIABLE AND THE OPENING STOCK IS ALSO REFLECTED IN THE BOOKS OF ACC OUNT, PURCHASES AND THE OTHER QUANTITATIVE DETAILS ARE TALLYING WIT H THE BOOKS OF ACCOUNTS AND PURCHASES, THEN THERE CANNOT BE ANY IN FERENCE THAT ITA NO.3255/DEL/2019 10 PURCHASES MADE AND SHOWN BY THE ASSESSEE ARE BOGUS. AS REGARDS THE DIFFERENCE OF RATES THE LD. AR HAS ALREADY POIN TED OUT THAT ASSESSEE HAD PURCHASED DIFFERENT QUALITY OF STEEL A LLOYS THE RATE OF WHICH WAS RS. 110 PER KG FROM DIFFERENT PARTY ALSO AND FROM M/S MAA DURGA TRADING COMPANY THE ASSESSEE HAD PURCHASE D STEEL ALLOY @ RS. 32 AND @ RS. 35 AND ALSO RS. 110 PER KG . THEREFORE, SUCH AN INFERENCE DRAWN BY THE CIT (A) IS DIVORCED FROM THE FACTS AND MATERIAL ON THE RECORD. THUS, UNDER THE FACTS AND CIRCUMSTANCES WHEN PURCHASED ARE DULY ACCEPTED BY T HE VAT DEPARTMENT INCLUDING THE SALES AND MANUFACTURING AC COUNT AND THE QUANTITY UTILIZED FOR THE MANUFACTURING HAS NOT BEEN DISPUTED AND TRADING ACCOUNT AND BOOKS OF ACCOUNT HAVE NOT B EEN REJECTED, THEN NO SEPARATE ADDITION ON ACCOUNT OF PURCHASE CA NNOT BE MADE. ACCORDINGLY, THE ADDITION MADE BY THE AO ON ACCOUNT OF PURCHASES OF RS. 13,09,552/- IS DELETED. 11. IN THE RESULT APPEAL OF THE ASSESSEE IS ALLOW ED. ORDER PRONOUNCED IN THE OPEN COURT ON 20 TH JULY, 2020. SSS SD/- [AMIT SHUKLA] JUDICIAL MEMBER DATED: 20/07/2020. KAVITA ARORA, SR. PS COPY FORWARDED TO: 1. APPELLANT 2. RESPONDENT 3. CIT(A) 4. CIT 5. DR ASSISTANT REGISTRAR