Case laws - bogus purchases

[GYAN JAIN]

Case laws on bogus purchases in favour of assessee Case law: 16 DTR 278 CIT V/s SINUJA FOODS P LTD (2008 (10) TMI 61 - HIGH COURT RAJASTHAN)

[Rama Krishana]

There may be many factors which have contributed for getting the cas in favor of assessee. As you have described in your query it is case of bogus purchase. I like to suggest that you, if the case is at assessment stage, you must focus on facts of the case instead of reference to any case laws. Once you put a case law before AO, he may take the note the that case and may make the observattions more stronger after removing the weakness in the case.

[GYAN JAIN]

Case is alredy decided and ar appeal stage Case law citation :16DTR278 , CIT V\S SINUJA FOODS LIMITED required

[DEV KUMAR KOTHARI]

Bogus purchases are definately disallowable. However, there is difference in bogus and suspected purchases. If it is a case of suspecion in mind of authoriteis, you must clear their suspecion by giving evidence - purchase order, purchase memo= bill , cash memo, challn etc. CNote etc. as delivery evidence as may be applicable, delivery received- entry in GR register and /or stock register, consumption or sale of goods suspected, revenue therefrom credited in P & l a/c ec. External and third party evidences like transporters note, insurance policy cover, etc. ill be highly useful. A party who supplied goods, may not be available, may not co=operate, that does not mean that goods were not purchased. It is function of the revenue authorites to catch hold of such parties and not to penalise the party who is availabel for harrassment in course of assessment or appeal etc. If purcahse is establsihed, it cannot be bogus. The supplier may be a fly-by- night party or a person who has changed business, location etc. Those factors will not make a real purchase as a bogus purchase.

AI Summary

Bogus purchases: evidentiary proof of real transactions prevents disallowance in tax assessments. Bogus purchases are disallowable unless the assessee establishes the reality of transactions through contemporaneous purchase documents, delivery and receipt records, stock or consumption entries, and accounting entries; external corroboration such as transporter notes, challans and insurance evidence materially supports the assessee, and supplier non cooperation does not by itself make a purchase bogus.