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PER PAWAN SINGH, JUDICIAL MEMBER;
This appeal by Revenue under Section 253 of Income-tax Act is directed against the order of ld. CIT(A)-37, Mumbai dated 02.09.2016 for Assessment Year 2012-13. The Revenue has raised the following grounds of appeal:
“1. The Id. CIT(A) has erred on fact and in law and in the circumstances of the case in deleting an addition of Rs.79,52,517/- on account of bogus purchases and depreciation claimed on bogus fixed assets.
The Id. CIT(A) erred in not considering that the assessee could not prove the genuineness and creditworthiness of the purchase transactions during the course of assessment proceedings.
The Id. CIT(A) has erred on fact and in law, in view of the Hon'ble Gujrat High Court decision in the case of Commissioner of Income Tax, ... vs M/s Hynoup Food Oil Ind. Pvt. Ltd. [(2005) 199 CTR Guj 350, 2007 290 ITR 702 Guj wherein the Hon'ble court has upheld the 100% disallowance of bogus purchases.
4. The Id. CIT(A) has erred on fact and in law and in the circumstances of the case in deleting an addition of Rs. 1,37,2451- on account of alleged difference in AIR Transaction pertaining to sale of mutual funds.
Mum 2016-Yogesh M. Modi
5. The appellant prays that the order of Ld.CIT(A) on the above grounds be set aside and that of the Assessing Officer be restored.” 2. Brief facts of the case are that the assessee filed its return of income for Assessment Year 2012-13 on 04.07.2012 declaring total income at Rs. 19,69,131/-. The assessment was completed under section 143(3) on 30.03.2015 determining the total income at Rs. 1,52,48,510/-. The Assessing Officer while passing the assessment made the addition of Rs. 79,52,517/- on account of bogus purchases and addition of Rs. 1,37,245/- on account of difference in AIR transaction pertaining to sale of mutual fund. On appeal before the ld. CIT(A) both the addition were deleted.
Thus, aggrieved by the order of ld. CIT(A), the Revenue has filed the present appeal before us. 3. We have heard the ld. Departmental Representative (DR) for the Revenue and ld. Authorized Representative (AR) of the assessee and perused the material available on record. Ground No.1 to 3 relates to deletion of addition on account of bogus purchases in depreciation claimed thereon.
The ld. DR for the Revenue supported the order of Assessing Officer. The ld. DR submits that during the assessment proceeding, the assessee failed to substantiate the purchases; therefore, the Assessing Officer made the addition and also disallowed the depreciation thereon.
On the other hand, the ld. AR of the assessee supported the order of ld. CIT(A) and submits that the Assessing Officer wrongly rejected the books Mum 2016-Yogesh M. Modi of account and invoked the provision of section 145(3). The Assessing Officer not mentioned the defect in the books of account. The books of assessee was duly audited, no adverse remark was made by Auditor. The books of account were duly tallied with item-wise quality details. The purchases are duly recorded in the regular books of account. Payments were made through account payee cheque. The assessee deducted the TDS on the labour payments/charges.
We have considered the rival submission of the parties and have gone through the orders of authorities below. The Assessing Officer made the addition on his observation that supplier failed to file confirmation and that physical receipt of the book from the parties and services for any addition of the asset was not established. During the first appellate stage, the assessee explained that he has submitted the complete details of labour charges along with name, address and PAN Number vide letter dated 08.02.2015 and 16.03.2015 and deducted the TDS on such labour charges.
The assessee also contended that the complete details of purchases along with address of supplier, mode of payment and copy of invoices along with letter dated 07.11.2014 and the expenses on account of asset extension were furnished. The Assessing Officer has not discussed those documentary evidence. On the basis of documentary evidence and submission, the ld. CIT(A) concluded that if the purchases are bogus, it is not possible to produce the goods as shown without consumption of these 3 Mum 2016-Yogesh M. Modi material. The suspicious purchases cannot be disallowed as product/sales is not possible without purchase of asset in material. The ld. CIT(A) further concluded that it is not possible to complete the sale or production as shown by assessee. The ld CIT(A) also concluded that unless it is shown that such material were not used for corresponding sale or production as shown purchases cannot be held as bogus. If the material has been used in the sales or in case of production it cannot be a case of bogus purchases when the assessee has paid consideration through the cheques which are duly reflected in the assessee’s bank statement. The ld CIT(A) further concluded that merely supply did not file any confirmation and documents. The Assessing Officer cannot conclude that purchases were not made by assessee and deleted the addition.
We have noted that finding of the ld. CIT(A) is based on documentary evidence furnished by ld. CIT(A). No contrary material fact or law is brought to our notice. Therefore, we do not find any reason to interfere with the finding of ld. CIT(A). Hence, Ground No. 1 to 3 of the appeal are dismissed.
Ground No.4 relates to deletion of addition of Rs. 1,37,245/- on account of difference in AIR transaction in sale of mutual funds. The ld. DR for the Revenue supported the order of Assessing Officer and submits that from the details furnished by assessee during the assessment shows that the assessee was having joint ownership of mutual fund with Miss Sarala 4 ITA No. 7355 Mum 2016-Yogesh M. Modi Modi. The assessee has not shown the sale of mutual fund in his return of income or in the return of income of Sarala Modi. Therefore, the Assessing Officer worked out the Short Term Capital Gain and made the addition accordingly.
On the other hand, the ld. AR of the assessee supported the order of ld. CIT (A). The ld. AR of the assessee further submits that assessee was 2nd holder of mutual fund with his mother Miss Sarala Modi and his wife Miss Vandana Modi. Therefore, the Assessing Officer worked out the Short Term Capital Gain and made the addition accordingly. However, there was no difference in the AIR transaction. The ld. CIT(A) granted relief to the assessee after verifying the re-conciliation of Sarala Modi and Vandana Modi and in fact no addition was warranted against the assessee.
We have considered the rival submission of the parties and have gone through the orders of authorities below. We have noted that during the assessment proceeding, the Assessing Officer made the addition of Rs. 1,37,245/- without giving show-cause notice to the assessee. Before the ld. CIT(A) the assessee explained the fact that mutual fund belong to his mother and wife and that the assessee is 2nd holder of the said mutual fund. The ld. CIT(A) after considering the submission and examining the reconciliation concluded that the transaction reported for mutual fund belonging to Miss. Sarala Modi and Vandana Modi. Therefore, no addition can be sustained against the assessee. The ld. CIT(A) failed to bring any 5 Mum 2016-Yogesh M. Modi material before us to take any contrary view. No contrary law is brought to our notice. Hence, we do not find merit in the grounds of appeal raised by Revenue.
In the result, appeal of the Revenue is dismissed.
Order pronounced in the open court on 30/08/2018.