Indian Kanoon - Search engine for Indian Law

11. During the assessment proceedings, AO observed that Sikkim Ferro Alloys Ltd. had made certain bogus purchases from my company Sunrise Metallic India Pvt. Ltd., and therefore, my company Sunrise Metallic India Pvt. Ltd. was supposed to receive payment against the said bogus sales to Sikkim Ferro Alloys Ltd. In turn, I had to pay him Cash for the said amount received in my books. Therefore, to settle the transaction in our books of account, Sikkim Ferro Alloys Ltd made payments to my company Sunrise Metallic India Pvt. Ltd. through RTGS. I transferred the amount so received to my other concern Shree Sal International. Then, as per the instruction of Mr. Kamlesh Kanungo, is main promoter of Sikkim Ferro Alloys Ltd., this amount was transferred from Shree Sai International to M/s. Raksha Bullion.

12. In response to above transaction of the assessee with M/s. Shree Sai International, a factual finding has been recorded by the Ld. CIT(A) as under:

"8.13 During the appellate proceedings, the Ld. AR has argued that sales made to M/s Shree Sai International has already been offered as income by the: appellant. By treating it again as undisclosed income, will lead to double taxation of the said amount of Rs.9,13,83,600/-. In my view, if the AO consider the impugned sales as bogus and hollow, the logical course of action would be to reduce sales of Rs.9,13,83,600/- from the total turnover of the appellant which is Rs.77,66,98,03,545/- for the year under consideration. The G.P. on the turnover of Rs.9,13,83,600/-should be removed from the trading account. Moreover, once the sales are claimed to be bogus, as done by the AO, either corresponding purchases will be bogus too or there will be an excess stock to that extent. It is already discussed in the assessment order that no such excess stock was found during the course of search and survey proceedings carried out at the two premises of the appellant 12/13th Nov., 2016. In such circumstance, the only conclusion one can draw is that the corresponding purchases in the books of accounts of the appellant are also bogus, which is neither established by the A.O. nor the case of the AO. As per the reply to Q, 27, purchases are claimed to be bogus in the books of M/s. Shree Sai International or M/s Sikkim Ferro Alloys Ltd. not in the case of the appellant. In this circumstance, 1 fail to understand as to how the AO has resorted to the addition of entire sales of Rs. 9,13,83,600/-u/s 69 of the Act, which is already reflected in the books of accounts treating it, as unaccounted money, even without rejecting the books of accounts."

M/s Raksha Bullion

13. We have gone through the assessment order of M/s. Sikkim Ferro Alloys Ltd. for A.Y. 2017-18 passed by Central Circle-1(4), Mumbai dated 29.12.2019, wherein the amount of sales shown in the books of accounts of the assessee amounting to Rs. 9,13,83,600/- has been considered in the figure of purchase and after rejection of books of accounts, AO applied G.P. rate of 1% on the total sales of M/s. Sikkim Ferro Alloys Ltd. Thus, on the one hand assessee declared sales of Rs. 9,13,83,600/- in its sales and declared appropriate profit over the same and on the other hand, purchases by M/s. Sikkim Ferro Alloys Ltd. is also accepted in their assessment under section 143(3) of the Act.

14. It is pertinent to mention that other than the statement of Shri Anil B. Jain there is no incriminating material found by the Department. We have gone through the order of the AO, order of the Ld. CIT(A), submissions of the assessee and the factual Paper Books filed by the assessee. In our observation, there is no finding in any of the order about short/excess possession of Gold by any of the parties, there is no cash found during survey proceedings at the premises of any of the assessee and more importantly after selling Gold to M/s. Shree Sai International, there is no cash withdrawal by the assessee. Allegation of the AO that amount of sales received by the assessee from M/s Shree Sai International had been in turn passed on to M/s. Sikkim Ferro Alloys Ltd. was also not found at any premise of any party.