Consequent upon the search and seizure operation, the assessee firm’s assessments were completed u/s 153A(1)(b) r.w.s. 143(3) making addition on account of valuation of stock, which had been deleted by the CIT (Appeals)-Subsequently, on receipt of the information from the Investigation Wing, the AO issued notice u/s 148 for the reasons recorded that certain entities  were providing accommodation entries and the assessee firm was one of the beneficiaries from K. Ltd. for the transaction of purchase of jewellery from K. Ltd. for Rs. 10,14,600/-and to treat the same as bogus purchases-In response, the assessee firm submitted the complete details of the purchase transaction with K. Ltd. with cogent and corroborative evidences i.e. copy of purchase bill, delivery challan, bank statements evidencing payment through banking channels, purchases, sales and stock register, confirmation of accounts from K. Ltd., but in vain. The CIT (Appeals) also confirmed the addition made by the AO.

The Hon’ble ITAT held that the assessee firm had discharged the onus cast on it by placing the cogent and corroborative evidences, materials, etc. to establish the nature and source of purchases as duly recorded in the books of accounts and shown as part of its closing stock. A  statement recorded on oath u/s 132(4) does not carry any evidentiary value,  the assessee should be allowed an opportunity to cross-examine the deponent.,  Merely relying on statement recorded at the back of the assessee and without granting an opportunity of cross-examination, the purchases could not be held bogus, more so when, the purchases equally form part of inventory and closing stock which has not been disputed by the AO either any finding as to such purchases at an inflated value. The addition was deleted in toto. (AY. 2010-11, 2013-14)