RSWM LIMITED,RAJASTHAN vs. DY. COMMISSIONER OF INCOME TAX, CENTRAL CIRCLE-31, DELHI

00 16.01.2012 - 9998.00 6392.00 19.01.2012 - 6392.00 0.00 10.01.2012 16070.00 - 16070.00 28.01.2012 - 15000.00 1070.00 28.01.2012 - 1070.00 0.00 8. The above table goes to prove that purchase made from M/s. Arunoday Cotton Corporation has been duly utilized in the consumption of manufacturing process by the assessee. The ld AO noted at page 3 of the assessment order that Shri Vijay Mishra proprietor of M/s. Arunoday Cotton Corporation had maintained account with Bank of Baroda and HDFC Bank and was involved in converting unaccounted cash of various persons/ companies/ businessman through banking channel to provide benefits to various persons by way of accommodation entries and assessee was also one of the beneficiary of getting accommodation bills in the form of purchases for Rs. 30,56,706/-. It was also noted that after the receipt of payment through banking channels from the assessee, there was withdrawal of cash made from the bank account of Shri Vijay Mishra proprietor of M/s. Arunoday Cotton Corporation. This cash withdrawal was alleged to have been paid back to the assessee herein and accordingly the deduction claimed on account of purchase for Rs. 30,56,706/- was disallowed u/s 37 of the Act by the ld AO. 9. The assessee also placed reliance on the decision of the Hon'ble Supreme Court in the case of Odeon Builders Pvt. Ltd reported in 418 ITR 315 in support of its contentions. It was submitted that the books of account, purchase bills, sales bills, stock registers submitted by the assessee RSWM Ltd before the ld AO were not sought to be rejected by applying the provisions of Section 145(3) of the Act by pointing out some defects therein. Hence, it was submitted that there is no adverse material brought on record by the revenue to support the allegations of bogus purchase as the same is already accepted by the VAT Authorities and input tax credit in relation to these purchase from M/s. Arunoday Cotton Corporation have been duly allowed by the GST Authorities. It was submitted that the assessee was not provided any opportunity to cross examine the party who had given any adverse statement on the transaction of purchase from M/s. Arunoday Cotton Corporation. It was submitted that purchases are intrinsic part of trading results and the same has intimate nexus with corresponding manufacturing process, stock and sales. Quantitative records submitted by the assessee were accepted by the revenue. The assessee, on without prejudice basis, made a submission before the ld CIT(A) that in any event, only the profit element embedded in the value of purchase could be brought to tax and not the entire value of purchase. It was submitted that the gross profit rate declared by the assessee for the year under consideration @8.03% has been accepted by the revenue. 10. The ld CIT(A) having reproduced the entire written submissions of the assessee from pages 3 to 12 of his appellate order grossly erred in stating that no details were submitted by the assessee and simply endorsed the assessment order. 11. We find that the assessee on its part had given all the details to prove the genuineness of the purchase. First of all, the ld AO in the assessment order had merely relied on the information received from Investigation Wing, Indore. The ld AO on his own had not conducted any independent enquiry with M/s. Arunoday Cotton Corporation. The investigation Wing, Indore report suggested that Shri Vijay Mishra had after receiving the cheque from RSWM Ltd the assessee had withdrawn cash from his bank account. Investigation Wing did not even check that the said cash had been passed on to the assessee therein. Mr. Vijay Mishra had given a statement that he had been involved in providing accommodation bills by converting the unaccounted cash into the bogus bills. Admittedly the said statement was not even confronted with the assessee nor provided to the assessee for rebuttal. This statement was taken behind the back of the assessee and not even furnished to the assessee for his cross examination. Hence, the said statement and the contents thereon cannot be relied upon at all in any manner whatsoever by the revenue while framing the assessment in the case of the assessee herein. Reliance has been rightly placed by the ld AR on the decision of the Hon'ble Supreme 4228 of 2006 reported in 62 taxmann.com 3. The assessee has furnished the complete stock register, material received note in support of actual delivery of goods together with copy of lorry receipt for evidence of actual delivery of goods to prove the genuineness of the purchase made from M/s. Anunoday Cotton Corporation. No enquiry whatsoever was made by the ld AO to check the veracity of the documents filed by the assessee. When all the documents are before the ld AO, the onus stands duly discharged by the assessee and thereafter the onus gets shifted to revenue. We also find that the reliance placed by the ld AR on the decision of the Hon'ble Supreme Court in the cased of Odeon Builders Pvt. Ltd reported in 418 ITR 315 is squarely applicable to the facts of the instant case and respectfully following the same, we delete the disallowance of purchase of Rs. 30,50,706/- in the facts and circumstances of the instant case. Accordingly, Ground No. 2 raised by the assessee is allowed. RSWM Ltd 12. In the result, the appeal of the assessee is partly allowed. Order pronounced in the open court on 11/03/2026. - - (CHALLA NAGENDRA PRASAD) ACCOUNTANT MEMBER