DY CIT CIRCLE- 12(1)(1), MUMBAI vs. M/S ASPEE AGRO EQUIPMENT PVT LTD, MUMBAI

As evident the revenue is aggrieved by relief provided by Ld. CIT(A) on account of alleged bogus purchases.

Having heard rival submissions and after careful consideration of material on record, our adjudication to the subject matter of appeal would be as given in succeeding paragraphs. Assessment Proceedings 3. The material facts are that assessee being resident corporate assessee is stated to be engaged as manufacturer and seller of equipments. During scrutiny proceedings, pursuant to receipt of certain information from Sales Tax Department, Maharashtra, it transpired that the assessee made suspicious purchases of Rs.152.19 Lacs from a tainted supplier namely M/s Atlas Enterprises. In response to show- cause notice, the assessee submitted that the purchases were genuine and supported by purchase bills, delivery receipts etc. The purchased goods with recorded in stock register and the payment to the supplier was through banking channel. However, notice issued u/s 133(6) was returned back un-served and accordingly, the purchases were disallowed.

Upon further appeal, Ld. CIT(A) observed that there was a clear audit trail of purchased goods which include placing of the order, receipt of goods and raising of invoices etc. The payments were through banking channels. Further as per the decision of Hon’ble Punjab & Haryana High Court in Chiranji Lal Steel Rolling Mills V/s CIT (84 ITR 222), entries of Sales Tax Department would not be admissible evidence. The information received did not pertain to the assessee specifically and mere information about the issue of accommodation bills could not constitute admissible evidence. Further, the information received from Sales Tax Department was not made available to the assessee. The Ld. AO could not point out any omission on the part of the assessee barring the alleged omission to produce the party. Lastly, similar addition made in AY 2012-13 on identical facts were deleted by predecessor CIT(A) and that order was confirmed by the Tribunal in order dated 01/01/2016. Therefore, the impugned additions were deleted. Aggrieved, the revenue is in further appeal before us.

Upon careful consideration of factual matrix, we find that similar addition made in AY 2012-13 were deleted on same reasoning by Ld. CIT(A) and that order was challenged by the revenue before this Tribunal vide ITA No.4065/Mum/2014 order dated 01/01/2016 wherein the bench dismissed the appeal by observing as under: - 5. We have heard the rival submissions and perused the material before us. We find that the AO received certain pieces of information from the STD, that as per the information JE was supplying bogus bills, that the AO did not supply the copy of the statement of JE to the assessee and neither made him available for cross examination, that the assessee had filed all the details from placing of order to the receipt of final bills before the AO during the assessment proceedings, that the assessee had discharged the onus cast upon it, that after that the AO did not make any inquiries, that the assessee had not rejected the books of accounts of the assessee ,that he had accepted the sale made by the assessee. In our opinion the AO had violated the basic principles of natural justice and the FAA had rightly held that addition made by the AO would fall in the category of addition made behind the back of the assessee. The Hon’ble Bombay High Court in the case of Nikunj Eximp Enterprises Ltd.(372 ITR 619) has held that if the AO accepts the sales as genuine, there cannot be any justification in rejecting the purchases. Information received from STD was a good starting point for further investigation. But, the AO stopped at that point itself and did not bring on record anything that could rebut the documentary evidence produced by the assessee. In our opinion, addition made by the AO was justifiably deleted by the FAA. Therefore, confirming his order, we decide effective ground of appeal against the AO.