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Income Tax Appellate Tribunal, DELHI BENCH: ‘H’ NEW DELHI
Before: SHRI G.D. AGRAWAL, HON’BLE & SHRI K. NARSIMHA CHARY
PER SHRI K.N. CHARY, J.M. Aggrieved by the order dated 20.08.2015 in appeal no.
92/2014-15 relevant to the assessment year 2010-11 passed by the Ld. Commissioner of Income Tax (Appeals)-3, New Delhi (hereinafter for short referred to as the “Ld. CIT(A)”), Revenue is in this appeal on the following grounds:
1. “Whether on the facts and in the circumstances of the case and in law, Ld.CIT (A) has erred in deleting the disallowance of Rs. 37,75,281/- made by the AO.
2. The appellant craves to leave, to add, alter or amend any ground of appeal raised above at the time of the hearing.”
Briefly stated facts are that the assessee is a company engaged in the business of manufacturing and trading of Ferro Alloys & Ferrous and Non-Ferrous Metal. For the AY 2010-11 they have filed their return of income on 22.09.2010 declaring a total income of Rs. 49,53,560/-. On the information received from the Director of Income Tax Investigation-1 Delhi Maharashtra VAT Department found that the transactions worth Rs. 37,75,281/- of the assessee were bogus. On that AO recorded reasons to believe that the income escaped assessment and opened assessment u/s 147 of the Income Tax Act, 1961 (for short called as the ‘Act’). AO sought information u/s 133(6) from M/s Sainesh Traders and received reply on 13.03.2014. However, stating that the said M/s Sainesh Traders did not provide audited balance sheet, profit and loss account and bank account, AO treated the transaction as bogus one and added a sum of Rs. 37,75,281/-.
During the appeal, Ld. CIT (A) found that when the AO sought the information u/s 133(6) of the Act from M/s Sainesh Traders, Mumbai, vide letter dated 13.03.2014 the said Traders sent the requisite information containing the date-wise details of the sale of manganese dioxide ore with the quantitative details of 98.947 MT and the ledger account of the assessee for the period between 01.04.2009 and 31.03.2010 show the debit balance of Rs. 12,25,281/- which was received by M/s Sainesh Traders through RTGS on 10.05.2010. Further, during the assessment proceedings, the assessee filed the copy of the closing stock book maintained on day-to-day basis and the quantity of manganese dioxide ore purchased through M/s Sainesh Traders, Mumbai is entered in the books of accounts with closing stock of 839200 Kgs as on 31.03.2010 matching with the figures shown in the audited accounts. On verification of these facts from the record, Ld. CIT (A) observed that the AO has not elaborated any reason for making the addition of Rs. 37,75,281/-, as such, Ld. CIT (A) deleted the same. Revenue, is therefore, before us in this appeal.
Ld. DR vehemently relying upon the orders of the AO submitted that inasmuch as M/s Sainesh Traders did not provide audited balance sheet, profit and loss account for the F.Y. 2009- 10 and the copy of the bank account there is no proper evidence establishing the genuineness of the transactions, as such, the addition made by the AO was proper. Per contra, Ld. AR submitted that the purchases made from M/s Sainesh Traders were supported by vouchers and bills, containing all the details and are entered into the regular books of accounts of the assessee and at no point of time any defect was found in the financials and stock records produced, and the bank certificate showing the payments made by RTGS were also produced, as such, the factual findings recorded by the Ld. CIT (A) cannot be disturbed.
We have carefully gone through the record. AO does not dispute the correctness of the books of accounts of the assessee nor does he record any finding as to any defect in the financials and stock records produced before him evidencing the purchases made from M/s Sainesh Traders. There is nothing contrary on record to rebut the statement of the assessee that all the purchases are supported by bills and vouchers containing all the necessary details like name, address, VAT/Sales tax no. etc.
There is also no dispute that the payments were made to M/s Sainesh Traders by RTGS directly to their bank account. In the circumstances, as a matter of fact, Ld. CIT (A) found that the purchases and the closing stock as on 31.03.2010 were matching with the figures shown in the audited accounts. We, therefore, concur with the finding of the Ld. CIT (A) that without assigning any elaborate reasons as to why AO has not accepted the evidence in the shape of books of accounts and other material produced before him, the AO cannot make an addition arbitrarily merely because M/s Sainesh Traders did not produce their balance sheet, profit and loss account and bank accounts. We, therefore, uphold the finding of the Ld. CIT (A) and dismissed the grounds of appeal.
In the result, appeal of the Revenue is dismissed.
Order pronounced in the open court on 14.11.2017