RICH AND ROYAL, DOMBIVALI V. DCIT CIR 3, KALYAN

ITA 5297/MUM/2014

• Counselvise Citation: [2016] 132 COUNSELVISE.COM (IT) 2283 (ITAT-MUMBAI)
• Duration Of Justice: 1 year(s) 11 month(s) 6 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 27-07-2016
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: D
• Assessment Year: 2005-2006
• Appeal Filed On: 21-08-2014
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Keywords: Bogus purchase
• Section: 69C; 143(3); 133A; 133(6); 37(1); 147; 131; 148

Judgement Text

1 IN THE INCOME TAX APPELLATE TRIBUNAL, BEN CH D, MUMBAI BEFORE SHRI B.R.BASKARAN, ACCOUNTANT MEMBER AND SHRI PAWAN SINGH, JUDICIAL MEMBER ITA NO.5297/MUM/2014 FOR ASSESSMENT YEAR: 2005-06 M/S RICH & ROYAL, C/O N.A.KULKARNI, WADAL BUILDING, 1 ST FLOOR, MANPADA ROAD, DOMBIVLI (E), THANE- 421201, MAHARASHTRA. PAN: AADFR3357G VS. DCIT CIRCLE-3, RANI MENTION, 2 ND FLOOR, ABOVE CANARA BANK, MURBAD ROAD, KALYAN(W)-. (APPELLANT) (RESPONDENT) ITA NO.5817/MUM/2014 FOR ASSESSMENT YEAR: 2005-06 ACIT CIRCLE-3, RANI MENTION, 2 ND FLOOR, ABOVE CANARA BANK, MURBAD ROAD, KALYAN(W)-421301. VS. M/S RICH & ROYAL, THE RAYMOND SHOP, ZOJWALLA COMPLEX, AGRA ROAD, KALYAN (W), 421301. PAN: AADFR3357G (APPELLANT) (RESPONDENT) ASSESSEE BY : SHRI SUBODH RATNAP ARKHI (AR) REVENUE BY : SHRI NITIN WAGHMODE (SR. DR) DATE OF HEARING : 12.07.2016 DATE OF PRONOUNCEMENT : 27.07.2016 O R D E R PER PAWAN SINGH, JM: 1. THESE TWO CROSS APPEAL ARE FILED BY ASSESSEE AND RE VENUE AGAINST THE ORDER OF CIT(A)-I, THANE DATED 27.06.2014 FOR AY 2005-06. TH E ASSESSEE HAS RAISED THE FOLLOWING GROUNDS OF APPEAL: 1. THE LD. CIT(A)-1 THANE HAS PARTLY ALLOWED THE APPEA L INSTEAD OF ALLOWING IN FULL. 2. HE HAS CONFIRMED THE ADDITION OF RS. 19,92,196/-OUT OF THE ADDITION DONE BY THE AO OF RS. 79,68,784/-. WHICH IS AGAINST THE PRI NCIPALS OF LAW. 2 ITA NOS. 5297 & 5817/M/2014, M/S RICH & ROYAL THE REVENUE IN THEIR CROSS APPEAL ITA NO.5817/M/201 4 HAS RAISED THE FOLLOWING GROUNDS OF APPEAL: 1. WHETHER ON THE FACTS AND IN THE CIRCUMSTANCES OF TH E CASE AND IN LAW, THE LD. CIT(A) WAS JUSTIFIED IN RESTRICTING THE ADDITION TO 25% OF RS.79,68,784/- MADE ON ACCOUNT OF BOGUS PURCHASES FROM 03 PARTIES OVERLOOKING THE FACT THAT THE ENTIRE PURCHASES WERE BOGUS SPECIALLY WHEN THE LD.CIT(A) HAS HIMSELF HELD THAT THE GENUINENESS OF THE PURCHASES HAS BEEN UPHELD AND THAT THE ASSESSEE FAILED TO PROVE THE GENUINENESS OF THE TRANSACTIONS ARE NON- GENUINE. 2. WHETHER ON THE FACTS AND IN THE CIRCUMSTANCES OF TH E CASE AND IN LAW, LD. CIT(A) WAS JUSTIFIED IN OVERLOOKING THE FACT THAT T HE ASSESSEE FAILED TO PROVE THAT THE PURCHASES WERE ACTUALLY MADE FROM THE ABOV E THREE PARTIES, THE SAID FICTITIOUS PURCHASES WERE BOOKED BY THE ASSESSEE IN ITS P&L ACCOUNT IN THE NAME OF THE SAID PARTIES AND THE SOURCE OF ALLEGED ACTUAL PURCHASES IF ANY HAD NOT BEEN ENTERED IN THE BOOKS OF ACCOUNTS AND T HEREFORE, 100% OF THE BOGUS PURCHASES DISALLOWED OUGHT TO HAVE BEEN UPHEL D. 3. THE APPELLANT CRAVES LEAVE TO ADD AMEND ALTER OR DE LETE ANY GROUND OF APPEAL. 4. THE ORDER OF THE CIT(A) MAY BE VACATED AND THAT OF THE ASSESSING OFFICER MAY BE RESTORED. 2. THE BRIEF FACTS OF THE CASE ARE THAT THE ASSESSEE-C OMPANY, WHO IS ENGAGED IN THE BUSINESS CLOTH MERCHANT, FILED ITS RETURN OF INCOME FOR RELEVANT AY ON 29.10.2005 DECLARING TOTAL INCOME OF RS. 2,75,830/-. THE ASSES SMENT WAS COMPLETED U/S 143(3) OF THE ACT ON 28.02.2007 DETERMINING THE TOTAL INCOME OF ASSESSEE AT RS. 3,00,920/-. SUBSEQUENTLY, NOTICE U/S 148 DATED 23/04/2012 WAS ISSUED TO THE ASSESSEE AND THE ASSESSMENT U/S143(3) RWS 147 OF THE ACT WAS COMPLET ED DETERMINING THE INCOME OF ASSESSEE AT RS 82,69,704/- AFTER MAKING ADDITION ON ACCOUNT OF BOGUS PURCHASES OF RS.79,68,704/-. THE FOLLOWING REASONS OF REOPENIN G WAS RECORDED :- IN THIS CASE, THE ASSESSEE IS TRADERS OF CLOTHS DURING THE RELEVANT AY. ASSESSEE CLAIMED MAKING PURCHASE OF VARIOUS PARTIES. IN THESE PARTIES M/S MANOJ MILLS, M/ S SHREE RAM SALES & SYNTHETICS, M/S ASTHA SILK MILLS WERE SURVEYED BY ITO WARD -14(3)(2), MUMBAI. IN THAT SURVEY, THESE PARTIES ADMITTED THAT THEY WERE PROVIDING ACCOMMODATION BIL LS IN VIEW OF THAT ASSESSEES TRANSACTION WITH THESE PARTIES ARE SHAME TRANSACTIO N AND PROFIT TO THAT EXTENT IS SUPPRESSED. THE ASSESSEE CONTESTED THE NOTICE AND FILED REPLY A ND SUBMITTED THAT RETURN FILED ON 29.10.2005 MAY BE TREATED IN REPLY OF THE NOTICE U/ S 148 OF THE ACT. DURING REASSESSMENT PROCEEDING, THE AO NOTICED THAT ASSESS EE HAS SHOWN THE FOLLOWING PURCHASES FROM THOSE PARTIES. 3 ITA NOS. 5297 & 5817/M/2014, M/S RICH & ROYAL SR.NO. NAME OF THE PARTY TRANSACTION DURING THE YEA R 1 M/S MANOJ MILLS RS. 32,27,804/- 2 M/S ASTHA SILK INDUSTRIES RS. 27,02,082/- 3 M/S SHREE RAM SALES & SYNTHETICS RS. 20,38,898/- TOTAL RS. 79,68,784/- THE AO ISSUED NOTICES U/S 133(6) TO THE ABOVE THREE PARTIES. THE NOTICE WAS REPLIED BY ALL THREE PARTIES AND WHEREIN IT WAS STATED THAT THEY HAVE MADE SALES TO THE ASSESSEE. THE AO OBSERVED THAT THOSE SELLER HAVE NO T ENCLOSED ANY DOCUMENTARY EVIDENCE TO PROVE THE GENUINENESS OF THE TRANSACTIO N, THUS, AGGREGATE OF SALE TRANSACTION OF THREE PARTIES WAS DISALLOWED AND ADD ED BACK TO THE TOTAL INCOME OF ASSESSEE IN ASSESSMENT ORDER U/S 143(3) R.W.S. 147 OF THE ACT. AGGRIEVED BY THE ORDER OF AO, THE ASSESSEE FILED THE PRESENT APPEAL BEFORE THE CIT(A). THE LD. CIT(A) AFTER HEARING THE CONTENTION OF THE ASSESSEE RESTRICTED T HE ADDITION TO 25% OF THE AGGREGATE PURCHASE, THUS PARTLY ALLOWED THE APPEAL OF THE ASS ESSEE ITS ORDER DATED 27.06.2004. FURTHER AGGRIEVED BY THE ORDER OF CIT(A) SUSTAINING THE ADDITION TO THE EXTENT OF 25%, OF AGGREGATE OF IMPUGNED PURCHASES THE ASSESSE E AS WELL AS REVENUE FILED THESE TWO APPEALS BEFORE US AS PER THEIR GROUNDS O F APPEAL(S). 3. WE HAVE HEARD LD AUTHORISED REPRESENTATIVE (AR) OF ASSESSEE AND LD DEPARTMENTAL REPRESENTATIVE (DR) FOR REVENUE AND PERUSED THE MAT ERIAL AVAILABLE ON RECORD. AR OF THE ASSESSEE ARGUED THAT ALL PURCHASES OF ASSESSEE WERE GENUINE AND THE PAYMENTS WERE MADE THROUGH BANKING TRANSACTION. DURING THE R EASSESSMENT PROCEEDING, THE AO ISSUED NOTICE TO THOSE PARTIES. IN RESPONSE TO THE NOTICE OF THE AO, ALL THE PARTIES SUBMITTED THEIR REPLY DATED 21.01.2013; THE PARTIES ALSO FURNISHED THE PHOTOCOPIES OF THEIR REPLY TO THE ASSESSEE. THE ASSESSEE FURTHER F ILED THE PHOTOCOPIES OF PURCHASED BILLS, LEDGER ACCOUNTS SHOWING THE TRANSACTION. THE BANK STATEMENT DEPICTING THE PAYMENT AGAINST THE PURCHASES THROUGH CROSS ACCOUNT PAYEE CHEQUE. THE AO WAS RELYING UPON THE STATEMENT OF SHRI RAKESH KUMAR M. GUPTA, PROP. OF M/S MANOJ MILLS RECORDED U/S 131 ON 23.02.2009 BY ITO WARD 14 (3), MUMBAI, WHEREIN HE ALLEGEDLY ADMITTED THAT NO TRANSACTION OF PURCHASE AND SALE HAD BEEN MADE BY HIM AND ONLY ACCOMMODATION BILLS HAD BEEN PROVIDED. IN THE ORDER, THE AO REPRODUCED THE STATEMENT OF SHRI RAKESH KUMAR M. GUPTA. IN THE SAID STATEMENT IT IS NOT MENTIONED THAT ACCOMMODATION BILLS WERE PROVIDED TO THE ASSESSEE. LD AR FURTHER 4 ITA NOS. 5297 & 5817/M/2014, M/S RICH & ROYAL ARGUED THAT SHRI RAKESH KUMAR M. GUPTA WAS NOT WELL DUE TO ILL HEALTH AND COULD NOT ATTEND THE PROCEEDING BEFORE THE AO IN PERSON. THIS FACT WAS COMMUNICATED BY RAKESH KUMAR GUPTA THROUGH HIS LETTER DATED 21.01.2 013 AND FURTHER ON 11.03.2013. AR OF THE ASSESSEE ALSO DRAWN OUR ATTENTION ON THE PHOTOCOPIES OF AFFIDAVIT OF MR. MOHIT RAKESH KUMAR GUPTA PROPRIETOR OF M/S ASTHA S ILK INDUSTRIES AND MRS. HEMA RAKESH KUMAR GUPTA, WHO IS CARRYING THE BUSINESS IN THE NAME OF M/S. SHREERAM SALES & SYNTHETICS AND THE COPY OF THEIR REPLIES F ILED IN RESPONSE TO THE NOTICE U/S 133(6) OF THE ACT, AND COPY LEDGER ACCOUNT ALONG WI TH PURCHASE INVOICE AND BANK STATEMENT. AR OF ASSESSEE FURTHER ARGUED THAT THE A SSESSEE HAS GENUINELY PURCHASED ALL MATERIAL AND MADE THE PAYMENTS THEREOF. SHRI RA KESH KUMAR M. GUPTA IN SUPPORT OF GENUINENESS OF TRANSACTION WITH THE ASSESSEE ALS O FILED AN AFFIDAVIT BEFORE THE AO WHEREIN IT WAS CLEARLY DEPOSED THAT HE NEVER PROVID ED ACCOMMODATION BILLS/ENTRY TO THE ASSESSEE, THE CONFIRMATION OF LEDGER ACCOUNT OF ALL PARTIES WERE ALSO SUBMITTED TO THE AO. AR OF THE ASSESSEE FURTHER ARGUED THAT LD. CIT (A) RESTRICTED THE ADDITION TO 25% OF THE PURCHASES WITHOUT ANY BASIS AND THE SAME ARE LIABLE TO BE DELETED. AR OF THE ASSESSEE RELIED UPON THE VARIOUS DECISION OF THIS TRIBUNAL IN M/S NEETA TEXTILES VS. ITO , ITA NO. 6138/MUM/13 DT. 27.05.15, M/S JIT ENDRA HARSHADKUMAR TEXTILES VS. ITO IN ITA NO. 771/MUM/11 DT. 21.11.12, M/S C. CHOTALAL & CO. VS. ITO IN ITA NOS. 3960 TO 3967/MUM/12 DT. 24.09.2013, M/S PERMIT TEXTILES VS. ITO IN ITA NOS. 3948 TO 3953/MUM/12 DT. 01.10.13 & DCIT VS. SMT. NE ENA M. LEKHI IN ITA NO. 1608/MUM/13 DT. 14.01.2015. DR FOR REVENUE ARGUED T HAT THE ASSESSEE WAS NOT MAINTAINING STOCK REGISTER AND THERE WAS NO PROOF O F DELIVERY OF GOODS AND FURTHER RELIED UPON THE STATEMENT OF MR. RAKESH KUMAR GUPTA RECORDED BY ITO WARD 14(3) U/S131 OF THE ACT. LD DR FOR REVENUE FURTHER ARGUED THAT WHEN NOTICE U/S133(6) WAS ISSUED TO THOSE PARTIES, THEY DID FAILED TO ENCLOSE D ANY DOCUMENTARY EVIDENCES IN THEIR SUPPORT AND STRONGLY SUPPORTED THE ORDER OF AO AND PRAYED THAT ORDER OF AO BE RESTORED AND THAT ORDER PASSED BY LD. CIT(A) FOR RE STRICTING THE ADDITION TO 25% MAY BE QUASHED. 4. WE HAVE CONSIDERED THE RIVAL CONTENTION OF THE PART IES AND PERUSED THE MATERIAL AVAILABLE ON RECORD. THE AO MADE THE RE-OPENING OF THE ASSESSMENT AFTER RECORDING THE SATISFACTION. THE ASSESSEE HAS NOT ASSAILED THE RE-OPENING BEFORE US. WHILE FRAMING THE ASSESSMENT, AO INFERRED THAT CERTAIN PA RTIES WERE FOUND TO BE NONE- GENUINE AS THEY WERE PROVIDING ONLY ACCOMMODATION B ILLS, THE AO RAISED SUSPICION 5 ITA NOS. 5297 & 5817/M/2014, M/S RICH & ROYAL ABOUT THE PURCHASES FROM M/S MANOJ MILLS FOR RS. 32 ,27,804/-, M/S ASTHA SILK INDUSTRIES FOR RS. 27,02,082/- AND M/S SHREE RAM SA LES & SYNTHETICS FOR RS. 20,38,898/-. THE NOTICES WERE ISSUED TO THE PARTIES , THE PARTIES FILED THEIR REPLY BUT NO DOCUMENTS TO SUBSTANTIATE THEIR SALES WERE FILED. A S NO DOCUMENTARY EVIDENCE WAS ENCLOSED TO PROVE THE TRANSACTION. THE AO RELIED UP ON THE STATEMENT OF MR. RAKESH KUMAR GUPTA WHICH WAS RECORDED U/S 131 DURING THE S URVEY PROCEEDINGS. THE ASSESSEE WAS SHOW-CAUSED AS TO WHY THESE PARTIES SH OULD NOT BE TREATED AS NON- GENUINE. THE ASSESSEE SUBMITTED HIS REPLY AND CONTE NDED THAT PROPRIETOR OF ALL THREE CONCERN HAVE FILED THEIR REPLY, WHEREIN THEY HAVE ALREADY STATED THAT THE TRANSACTION ARE GENUINE AND FURTHER CONTENDED THAT MR. RAKESH KUMAR GUPTA HAS GIVEN AFFIDAVIT THAT NO ACCOMMODATION BILLS WERE PROVIDED TO THE AS SESSEE. RAKESH KUMAR GUPTA FURTHER GAVE IN WRITING THAT DUE TO HIS ILL HEALTH, HE IS NOT IN A POSITION TO TRAVEL AND ATTEND THE PROCEEDING PERSONALLY AND ANY FURTHER EN QUIRY MAY MADE FROM HIS THROUGH TELEPHONIC CONVERSATION. THE SUBMISSION MADE AND TH E CONFIRMATION FILED BY ASSESSEE WAS NOT ACCEPTED BY THE AO, AND AO MADE THE ADDITIO N OF AGGREGATE AMOUNT OF PURCHASES FROM THREE PARTIES. DURING THE APPELLATE PROCEEDING, THE SIMILAR CONTENTION WAS MADE AND IT WAS FURTHER CONTENDED THAT AS PER S ECTION 37(1) THE PURCHASES USED FOR TRADING AND MANUFACTURING ACTIVITIES CANNOT BE TREATED AS EXPENDITURE OR EXPENSES WHICH CAN BE DISALLOWED AS GOODS ARE NECESSARY FOR TRADING PURPOSE AND THE ADDITION MADE BY AO IS BEYOND THE PURVIEW OF SECTION 37(1) O F THE ACT. LD. CIT(A) CONCLUDED THAT HE HAS CONFIRMED THE IDENTICAL ADDIT ION AGAINST THE ASSESSEE IN ASSESSEES CASE FOR AY 2009-10. THE REOPENING FOR T HE YEAR UNDER CONSIDERATION IS PRIMARILY BASED ON THE ASSESSMENT ORDER OF AY 2009- 10 AND THE FACTS ARE IDENTICAL. THOUGH THE CIT(A) CONCLUDED THAT THE AO WAS NOT JUS TIFIED IN MAKING THE ADDITION ON WHOLE OF THE AMOUNT/NON-GENUINE/BOGUS PURCHASES AND RESTRICTED IT TO 25% OF THE IMPUGNED PURCHASES. THE LD. CIT(A) HAS NOT GIVEN AN Y REASON FOR RESTRICTING THE PURCHASES TO 25% OF IMPUGNED PURCHASES. WE HAVE NOT ICED THAT NEITHER THE AO NOR THE CIT(A) DISPUTED THAT THE PAYMENTS FOR PURCHASES WERE MADE BY CROSS CHEQUES WHICH ARE DULY REFLECTED IN THE BANK STATEMENT NOR ANY DISCREPANCY WAS NOTICED BY AO. THE AO AND THE CIT(A) NOT DISPUTED THE SALE OF THE ASSESSEE, THE AO HAS NOT BROUGHT ANY MATERIAL ON RECORD, WHICH MAY SUGGEST T HAT THE PAYMENT MADE TO PURCHASE OF GOODS WERE AGAIN RECEIVED IN CASH BY A SSESSEE. THE STATEMENTS OF BANK ACCOUNTS OF PARTIES WERE NOT EXAMINED. SECTION 69C PROVIDES THAT IF THE EXPLANATION 6 ITA NOS. 5297 & 5817/M/2014, M/S RICH & ROYAL OFFERED BY THE ASSESSEE ABOUT THE SOURCE OF EXPENDI TURE IS NOT FOUND SATISFACTORY BY THE AO, THE AMOUNT MAY BE ADDED TO HIS INCOME. THE AO HAS NOT RECORDED THE SATISFACTION THAT THE PURCHASES MADE BY ASSESSEE AR E NOT GENUINE. THE AO MERELY RELIED UPON THE STATEMENT OF MR. RAKESH KUMAR GUPTA . MR. RAKESH KUMAR GUPTA HAS NOT REFERRED THE NAME OF ASSESSEE WHILE MAKING SUCH STATEMENT. THE ASSESSEE HAS RELIED UPON THE DECISION OF M/S NEETA TEXTILES VS. ITO (SUPRA) WHEREIN SIMILAR IMPUGNED PURCHASES WERE ALSO TRANSACTED THROUGH MR. RAKESH KUMAR GUPTA (RETRACTED LATER ON) ADMITTING THAT SALES MADE TO T HE PARTIES ARE GENUINE. THE CO- ORDINATE BENCH OF THIS TRIBUNAL WHILE RELYING THE C ASE OF M/S JITENDRA HARSHADKUMAR & CO (SUPRA) DELETED THE ENTIRE ADDITIONS OF BOGUS PURCHASES. FURTHER, THE CO- ORDINATE BENCH OF THIS TRIBUNAL IN PRAMIT TEXTILES VS. ITO (SUPRA) HELD AS UNDER:- 7. WE HAVE PERUSED THE ASSESSMENT ORDER AND THE ORD ER OF CIT(A). WE HAVE ALSO PERUSED THE ORDER OF THE TRIBUNAL MUMBAI 'I' BENCH IN THE CASE OF M/S. JEETENDRA HARSHADKUMAR TEXTILES IN ITA NO.771 AND 2211/MUM/20 11 FOR ASSESSMENT YEAR 2007- 08 DATED 21/11/2012. WE FIND FORCE IN THE CONTENTIO NS OF THE COUNSEL THAT THE FACTS AND CIRCUMSTANCES ARE IDENTICAL THOUGH THE FIGURES MAY DIFFER. THE TRIBUNAL HAD GIVEN ITS FINDING AT PARA-8 ON PAGE-5 OF ITS ORDER WHICH READ S AS UNDER :- '8. WE HAVE CAREFULLY CONSIDERED THE RIVAL SUBMISSI ONS IN THE LIGHT OF MATERIAL PLACED BEFORE US. IT WILL BE RELEVANT TO REPRODUCE THE LETTER RECEIVED BY THE AO FROM SHRI RAKESH KUMAR GUPTA, WHICH IS ALSO REPRODU CED IN THE ASSESSMENT ORDER: '1 AM IN RECEIPT OF YOUR SUMMONS U/S. 131 OF THE I. T.ACT. 1961 IN THE CASE OF M/S. JITENDRA HARSHAD KUMAR TEXTILE PVT. LTD. ASKIN G ME TO ATTEND BEFORE YOUR GOODSELF WITH THE DETAILS OF MY ACCOUNT WITH T HE SAID M/S. JITENDRA HARSHAD KUMAR TEXTILE PVT. LTD. FOR A.Y.2002-03 & 2 007-08. AS YOU ARE AWARE THAT MY ASSESSING OFFICER HAD RECO RDED ALLEGED STATEMENT U/S. 133A AND 131 OF THE I.T.ACT. 1961 1 HAVE BEEN RECEIVING WITNESS SUMMONS FROM ALL FOUR CORNERS OF THE CITY ON THE GR OUND THAT I HAVE GIVEN ACCOMMODATION BILL, THOUGH I HAVE DENIED THE CONTEN T OF THE STATEMENTS RECORDED BY A.O. U/S. 133A & 131 VIDE MY LETTER DAT ED 27.4.2009 AND MY AFFIDAVIT DATED 20.2.2009 SUBMITTED TO WARD 14(3)(2 ). IT IS PHYSICALLY IMPOSSIBLE FOR ME TO ATTEND BEFORE VARIOUS INCOME T AX AUTHORITIES, AS I AM NOT FEELING WELL, IT WILL NOT POSSIBLE FOR A.YS02-0 3 TO 07-08.ME TO ATTEND BEFORE YOUR GOODSEIF IN RESPONSE TO YOUR ABOVE MENT IONED SUMMONS. AS REGARDS M/S. JITENDRA HARSHAD KUMAR TEXTILES PVT . LTD. IS CONCERNED. I HAVE ALREADY GIVEN MY AFFIDAVIT WHEREIN I HAVE SPEC IFICALLY STATED THAT I HAVE SOLD THE GOODS TO M/S. JITENDRA HARSHAD KUMAR TEXTI LES P. LTD. AND THE CONSIDERATION IS RECEIVED TO ME BY CROSS ORDER CHEQ UE. COPY OF THE SAID LEDGER ACCOUNT IS ALREADY SUBMITTED THE DEPARTMENT. ' 8.1 FROM THE ABOVE LETTER IT IS CLEAR THAT THE SAME WAS WRITTEN IN RESPONSE TO NOTICE ISSUED BY THE AO. NOT ONLY SHRI RAKESH KUMAR GUPTA HAS STATED THAT HE HAS RETRACTED FROM THE STATEMENT RECORDED DURING TH E SURVEY BUT ALSO FILED AN AFFIDAVIT DATED 20/2/2009 AND LETTER DATED 27/4/200 9 TO DENY THE STATEMENT MADE 7 ITA NOS. 5297 & 5817/M/2014, M/S RICH & ROYAL DURING THE SURVEY UNDER SECTION 133A. HE HAS FURTHE R CONFIRMED THAT THE SALES MADE BY THE ASSESSEE WERE EFFECTED AND THE CONSIDER ATION WAS RECEIVED BY CROSS ORDER CHEQUES. THUS IT IS CLEAR THAT THERE IS NO MA TERIAL ON RECORD TO SAY THAT THE PURCHASES MADE BY THE ASSESSEE FROM THE SAID CONCER N WERE BOGUS EXCEPT THE GENERAL STATEMENT RECORDED BY THE DEPARTMENT IN THE CASE OF SHRI RAKESH KUMAR GUPTA, WHICH WAS LATER ON RETRACTED. IN ABSENCE OF ANY MATERIAL BROUGHT ON RECORD AGAINST THE SUBMISSIONS MADE BY SHRI RAKESH KUMAR GUPTA IN HIS LETTER DATED 20/12/2009 FILED BEFORE THE AO OF THE ASSESSE E THE ADDITION, IF ANY, MADE IN THE CASE OF THE ASSESSEE WILL BE BASED ON PRESUMPTI ON ONLY AND IT CANNOT BE SUSTAINED IN THE EYES OF LAW. AS AGAINST THAT ASSES SEE HAS SUBMITTED VARIOUS EVIDENCES TO SHOW THAT THE ACTUAL DELIVERY OF THE G OODS WAS RECEIVED BY THE ASSESSEE FROM THE SAID PARTY WHICH HAS NOT BEEN DIS CARDED BY THE AO. THE ADDITION SUSTAINED BY LD. CIT(A) IS ALSO ON PRESUMP TION BASIS. THEREFORE, KEEPING IN VIEW THE FACTS AND CIRCUMSTANCES OF THE CASE, WE ARE OF THE OPINION THAT ADDITIONS MADE BY THE AO DESERVES TO BE DELETE D IN ITS ENTIRETY. WE DECIDE ACCORDINGLY.' 7.1 ON IDENTICAL FACTS, AND ISSUES, THIS BENCH HAS DECIDED THE APPEAL IN THE CASE OF M/S. C. CHOTALAL & CO. IN ITA NOS. ITA NO.3960 TO 3967/M UM/2012 FOR ASSESSMENT YEARS 2002-03 TO 2009-10 DATED 24/09/13 WHEREIN ONE OF US (THE ACCOUNTANT MEMBER) IS A PARTY TO THE SAID DECISION. SINCE THE FACTS AND ISS UES BEING IDENTICAL, WE HAVE NO HESITATION IN FOLLOWING THE ORDER OF OUR CO-ORDINAT E BENCH. RESPECTFULLY FOLLOWING THE SAME ALL THE APPEALS FILED BY THE ASSESSEE ARE PART LY ALLOWED AND ALL THE APPEALS FILED BY THE REVENUE ARE ACCORDINGLY DISMISSED. AS WE HAVE SEEN THAT THE CO-ORDINATE BENCH OF THIS TRIBUNAL IN THE CASES REFERRED ABOVE HAS CATEGORICALLY NOTED THAT MR. RAKESH KUMAR GUPTA WHEN CONFRONTED WITH HIS STATEMENT HAS CATEGORICALLY REBUTTED HIS STATEM ENT IN COURSE OF CROSS-EXAMINATION (THOUGH NOT APPEARED IN THE PRESENT CASE). AND THE CO-ORDINATE BENCH OF THIS TRIBUNAL IN ALL CASES DELETED THE ADDITION WHICH WA S BASED ON THE STATEMENT OF MR. RAKESH KUMAR GUPTA. WE HAVE ALSO NOTICED THAT PROPR IETORS OF M/S ASTHA SILK INDUSTRIES & M/S SHREE RAM SALES & SYNTHETICS ALSO FILED THEIR AFFIDAVIT ABOUT THE SALE AND PURCHASE OF GOODS. THE AO DID NOT MAKE AN Y FURTHER ENQUIRY NOR EXAMINED THEM. THE AO AND CIT(A) NOT REFERRED IN THEIR ORDER ABOUT THE FILING OF AFFIDAVIT BY THE PROPRIETOR OF M/S ASTHA SILK INDUSTRIES & M/S S HREE RAM SALES & SYNTHETICS. THE ASSESSEE HAS PLACED ON RECORD THE LEDGER ACCOUN T OF M/S MANOJ MILLS, M/S ASTHA SILK INDUSTRIES & M/S SHREE RAM SALES & SYNTHETICS ALONG WITH THE BILLS AND DELIVERY CHALLANS WHEREIN PAYMENT MADE THROUGH CHEQUES ARE D ULY REFLECTED. THE SALE OF THE ASSESSEE IS NOT DISPUTED BY AO AND LD CIT(A). THUS, EVIDENCES ARE SUFFICIENT TO SHOW THAT ACTUAL DELIVERY OF GOODS WAS RECEIVED BY ASSES SEE FROM THE SAID PARTIES. WHILE MAKING THE SUBMISSION, DR FOR REVENUE HAS NOT COUNT ERED ANY OF THE EVIDENCE PLACED ON RECORD BY THE ASSESSEE. WITH THESE OBSERV ATIONS, WE HOLD THAT AO MADE THE ADDITION ON THE BASIS OF MERE PRESUMPTION AND THE L D CIT (A) ALSO SUSTAINED THE 25% 8 ITA NOS. 5297 & 5817/M/2014, M/S RICH & ROYAL OF ADDITION WITHOUT GIVING ANY REASONING. THEREFORE , KEEPING IN VIEW THE PACULARITY OF FACTS AND CIRCUMSTANCES OF THE CASE, THE ENTIRE ADDITION MADE BY THE AO DESERVES TO BE DELETED. HENCE, THIS GROUND OF APPEAL RAISED BY THE ASSESSEE IS ALLOWED. ITA NO. 5817/MUM/2014 5. REVENUE HAS FILED THIS APPEAL AGAINST RESTRICTING T HE ADDITION TO 25% OF THE IMPUGNED PURCHASES. AS WE HAVE ALREADY ALLOWED THE APPEAL OF THE ASSESSEE IN ITA NO. 5297/MUM/2014 WHEREIN WE HAVE DELETED THE ENTIRE AD DITION, THUS THE PRESENT APPEAL OF REVENUE HAS BECOME INFRACTUOUS AND THE SAME IS D ISMISSED AS PER THE OBSERVATION MADE HEREIN ABOVE. 6. IN THE RESULT, APPEAL FILED BY THE ASSESSEE IS ALLO WED AND APPEAL OF THE REVENUE IS TREATED AS DISMISSED. ORDER PRONOUNCED IN THE OPEN COURT ON 27 TH JULY 2016. SD/- SD/- (B. R. BASKARAN) (PAWAN SINGH) ACCOUNTANT MEMBER JUDICIAL MEMBER MUMBAI; DATED 27/07/2016 S.K.PS COPY OF THE ORDER FORWARDED TO : BY ORDER, (ASSTT.REGISTRAR) ITAT, MUMBAI 1. THE APPELLANT 2. THE RESPONDENT. 3. THE CIT(A), MUMBAI. 4. CIT 5. DR, ITAT, MUMBAI 6. GUARD FILE. //TRUE COPY/