DR strongly supported the order of the AO that prima facie, the basis of addition was the statement of the survyed parties wherein it was accepted that they were providing accommodation transaction, and therefore the entries recorded were sham. The DR, therefore, submitted that the order of the AO must be restored.
The AR on the other hand submitted that there was no survey on the assessee and therefore there was no statement ever recorded of the owners of assessee group. It was only in the post survey proceedings of the surveyed entities, with whom the assessee had business dealings, Mr. Suresh Rajpara was called & his statement was recorded. Later on, when the case was transferred to the AO, the AO, merely on the basis of statement of Mr. Basant D Jain, made the addition. It was also submitted that the assessee produced all the possible documents, which could be produced which were ignored. Despite the evidence on record, the assessee was saddled with the addition, which does not have any factual basis.
We have heard the arguments and have pursued the material on record and the order of the revenue authorities. It is not in dispute that the survey action was conducted on a third party. It is also not in dispute that the assessee had business relation with Moxdiam Group, like so many other parties. It is also a fact that there is not even a iota of evidence with the AO, to prove that the assessee did not have straight dealings with the Moxdiam Group. It is also a fact that, that the assessee entered each of its transaction in its primary books, comprising of ledger and stock register. From the order of the AO, the DR could not establish before us that the transaction as recorded in the books was sham. We cannot accept a bald statement made by the AO that any transaction/business done with a party would be sham, simply because the opposite party besides doing regular business was also indulging in providing accommodation entries. Simply on the basis of statement given by the third party, that they were also providing accommodation entries as well, the conduct of the assessee cannot be doubted and held to be sham.
The assessee had conducted business, this is proved by various books of account produced before the AO which were original and primary books and not even the after thought of the assessee, which has been acknowledged by the AO.
In such a circumstance, we cannot sustain the addition as made by the AO. We, therefore, sustain the order of the CIT(A), deleting the addition made, consequentially, the grounds as raised by the department are rejected.