Rathi Special Steels Ltd Vs ACIT (ITAT Delhi)
ITAT Delhi held that addition based on reliance placed on third party statement without any corroborated evidence is not sustainable in law. Accordingly, issue restored to AO for de novo adjudication.
Facts- The assessee company is engaged in the business of manufacturing and trading in iron and steel. During the course of search and seizure/ survey operation, statement of Shri Amit Gupta, Chief Operating Officer (COO) of M/s. Hari Iron India Ltd, who was distributor of assessee company, was recorded. He had deposed that he is distributor of iron and steel bars for the assessee and further deposed unaccounted sale transactions were conducted between him and assessee company and that such bills were marked as “W”, meaning thereby, that the sale is without bills and that such sales are nearly 30% of total sales made. AO proceeded to rely completely on the statement of Shri Amit Gupta by treating 30% of total sales as unaccounted and added the profit element thereon and made an addition of Rs. 1,29,283/- in the assessment which stood confirmed by the ld CIT(A).
Conclusion- Held that the addition has been made based on reliance placed on third party statement which was never given to the assessee for rebuttal. It was submitted that the torn papers cannot be the basis to conclude that the same represent sales made by the assessee. These are not corroborated with any other evidence. All the responsible persons of the group had categorically denied having made any sales outside the books of account.
