Bogus Sales

[Alpa Shah]

'A' has shown sales and received the amount through banking channel in the same year and has disclosed the said transactions in the books of accounts. Lateron the purchaser has accepted before the department that he is engaged in the business of cheque discount and also issue cheques to other party if require.

LAO assessed the receipt of said amount u/s 68 of the Act.

[KASTURI SETHI]

What is query ?

[Alpa Shah]

Whether LAO resort to addition of the alleged amount u/s 68 of the Act ?

[KALLESHAMURTHY MURTHY K.N.]

Dear Sir,

As per the query, "A" has indulged in 'bill trading' where there was no physical movement of goods intended to avail ITC fraudulently. The case is fit to take up u/s 74 and not occasioned for Sec.68, since not intercepted in the movement. No requirement to make additions but to reverse the ITC with other consequential proceedings.

[This is my view on the query.]

[Padmanathan KV]

Kalleshamurthy Sir,

The question is with regard to Income Tax and not GST. Sec 68 of Income Tax Act provide for unexplained cash credits.

[Padmanathan KV]

Has "A" actually sold the goods? ie., is there any evidence for the movement of goods? such as e-way bill, lorry receipt, loading/unloading payments, toll plaza receipts, weigh bridge receipt and so on? Has "A" declared the sales in his GST returns and paid GST on it?

[KALLESHAMURTHY MURTHY K.N.]

SSri  Padmanathan KV Ji.

Sir,

I agree with you, Sir. I misunderstood the query related to income tax but also involved a bogus transaction.

 Thanks enough to you for pointing out my mistake.

.

[Alpa Shah]

'A' has declared the sales in his GST returns and paid GST on it.

'A' is engaged in the business of trading of diamonds hence e-way bill, lorry receipt, loading / unloading payments, toll plaza receipts, weigh bridge receipt, etc. is not applicable.

[KALLESHAMURTHY MURTHY K.N.]

Dar Sir,

Then how it was decided as a bogus transaction. Whether the tax was paid through cash or ITC. If paid through ITC it may be accumulated through bogus credit. 

AI Summary

Unexplained cash credits assessed against banked sales amid purchaser's cheque discounting admission; genuineness and GST credit implications questioned.
Taxpayer showed banked sales and paid GST; purchaser admitted cheque discounting. Assessing officer treated receipts as unexplained cash credits. Respondents dispute whether income-tax addition is appropriate versus GST remedies: examine genuineness of supply, evidence of movement, whether ITC was legitimately used, and possible characterization as bill trading requiring reversal of input tax credit and GST anti-evasion action.