M/s. Aquatic Remedies Pvt. Ltd. Vs The DCIT (ITAT Mumbai)
The Revenue has alleged the assessee of taking bogus purchases and accommodation bills on account of such purchased. In our considered opinion this refers to two possibilities.
1) A person is purchasing goods from another person without any bill and then taking purchase bills from a third person to show the quantities purchased. Under this category, there is physical movement of goods.
2) A person is not purchasing any goods but simply taking bills showing purchases. Under this category, there is no physical movement of the goods.
Keeping in mind the above possibilities, we are not sure whether assessee’s case falls in the first category or second category. In our understanding of the facts of the present case in all probability the assessee’s case falls in the first category i.e. goods have been purchased from one party and bills have been taken from another party and there is physical movement of goods. Our view is also fortified by the facts that there is no adverse inference in so far as sales are concerned. If the assessee had not purchased goods, then how it has effected the sales. It is more important so because the assessee is trading in pharmaceutical products which have batch Nos. embedded on it and it cannot be sold without performing the formalities of FDA and other relevant laws relating to the pharmaceutical business.
So one thing is clear that assessee was actually purchasing goods and selling them. We have also gone through the audited statement of accounts. We find that the trading results are quantified and so also the closing stock. No adverse inferences have been drawn in these respect. The additions have been made purely on presumptions and surmises and the statement of third party i.e. M/s. Globe Pharma and others who may be providing accommodation bills but the trading account of the present assessee do not show anything which could suggest that the purchases are bogus as there is no adverse inferences in so far as sales are concerned. Without purchases there cannot be any sales. Considering all these facts in totality, we do not find any merit in respect of the additions made on account of alleged bogus purchases which are based merely on the statements backed by no cogent/demonstrative material evidences on We, therefore, set aside the findings of the Ld. CIT(A) and direct the AO to delete the additions made on account of bogus purchases/accommodation bills from all the assessment years under this appeal.
Proceeding further, the next addition relates to the alleged 2% commission on account of getting accommodation bills for which the Ld. CIT(A) has given part relief to the assessee. Since we have categorically held that the additions on account of bogus purchases cannot be sustained on the facts of the present case and accordingly we have deleted the same, there remains no reason why the addition on account of alleged 2% commission should be sustained. We, therefore direct the AO to delete the addition made on account of alleged 2% commission in entirety for all the years under this appeal.
