TaxTMI 
TaxTMI 
2015 (1) TMI 741
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....AO be restored. The appellant craves leave to amend or alter any ground or add a new ground which may be necessary. 2. Briefly stated facts are that the case of the assessee was picked up for scrutiny assessment and the assessment u/s.143(3) of the Income Tax Act,1961 (hereinafter referred to as "the Act") was framed vide order dated 17/12/2009, thereby the Assessing Officer (AO in short) made disallowance of the expenditure towards purchases amounting to Rs. 2,98,96,050/- and also made VAT penalty of Rs. 1,000/-, disallowance of office rent of Rs. 60,000/-, disallowance of godown rent of Rs. 45,600/- and adjustment made u/s.145A of the Act on account of the difference in closing stock amounting to Rs. 5,41,926/-. Against this, assessee filed an appeal before the ld.CIT(A), who after considering the submissions, restricted the disallowance to the extent of 5% of the purchases. However, confirmed the disallowance made on account of the office rent, godown rent and restricted the disallowance made on account of the closing stock. Now, the Revenue is in appeal. 3. The only effective ground is against in allowing relief of Rs. 2,84,01,250/- made on account of bogus purchases by the l....
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....ties in respect of above referred purchases and copies of the cheques which the assessee should have issued in favour of these parties, the assessee has not produced these documents till date. (ii) In his submission, the assessee has relied heavily on the fact that payment has been made by the assessee through cheques to these parties. It has also been claimed that name of these parties duly appear in the bank statement of the assessee. The assessee has further claimed that these facts establish that the payments against these parties have been made by the assessee to the said parties only. Of these issues, the correct factual position is as under:- (b) Not a single cheque issued by the assessee against these purchases has been credited in the account of any of these parties. (c) None of the cheque issued was account payee cheque. (d) No cheque was issued in favour of any of these parties. However, to befool and misguide the revenue authorities, in some cases, the! assessee has written some-what names similar to these parties, eg. Ambuja Intermediates (not M/s.Ambuja Intermediates Pvt. Ltd.), Arcata Trade Links (not M/s.Arcata Trade Link Pvt. Ltd.), Rohan Dye (not M/s.Rohan Dye....
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....de payment by cheques to these very parties and none else. Such a burden has to be discharged by the assessee with very strong and clinching evidence in view of the blatant denial by some of the parties and none-existence to other parties. As the assessee has failed to prove that above referred goods were actually purchased by him, therefore, deduction in respect of expenditure claimed to have been incurred by the assessee for making above referred purchases has to be disallowed. (v) Further, Section 40A(3) of the I.T. Act, 1961 provides that if the assessee incurs any expenditure in respect of which payment has been made otherwise than by an account payee cheque, drawn on a bank or account payee bank draft, no deduction shall be allowed in respect of such expenditure. In the case under consideration, the assessee has not made payment either by account payee cheques or account payee bank drafts, hence no deduction could have been allowed in respect of the expenditure incurred by the assessee towards purchases referred above from these parties, even if these purchases were genuine purchases. (vi) The assessee has also argued that as the assessee has sold the goods, it proves that ....
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.... Delhi High Court in the case of La Medica (250 ITR 575) has observed to the effect that the decision has to be taken on relevant material and not on irrelevant material. In that case, the assessee has shown the purchase of raw material from a party which was found nonexistent and amount of purchase price was considered as income from undisclosed source of assessee. The Tribunal held that not withstanding suspicious circumstances of purchases, the goods so purchased were pledged with the bank and hence nonexistence of the seller could not be the basis for doubting the genuineness of the purchase and/or to infer that there was fictitious purchases. The Delhi High Court on reference held that the Tribunal has not taken into consideration relevant material and has acted on irrelevant materials. What was under consideration was whether the purchases were made from a particular party as claimed by the assessee. Once it was accepted that the supplies were not made by the said party to whom the payments were allegedly whether the purchases were made from some other source could not have weighed with the Tribunal as a factor in favour of the assessee and concluded that the Assessing Office....
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....#39;D' (3rd Member) Bench has followed the above referred decision of the ITAT, Ahmedabad, while deciding the case of ACIT Cir.5, Baroda Vs. Amar Mining Co. 121 IT 273 (Ahd.). 3.3. In view of the facts discussed above, it is held that the assessee has inflated his expenditure by introducing following bogus purchases in the name of parties mentioned below. Sr. No. Date Item Amount(Rs.) 1. 20.04.2006 H. Acid 7,05,262/- 2. 20.05.2006 H.RDS 11,78,682/- 3. 09.06.2006 H.RDS 13,93,031/- 4. 20.06.2006 H.RDS 13,76,731/- 5. 01.07.2006 H.RDS 9,80,896/- 6. 01.07.2006 H.RDS 12,64,453/- 7. 17.07.2006 H.RDS 20,80,417/- 8. 22.12.2006 H.ACID 11,23,969/- 9. 21.03.2007 H.RDS 13,34,297/- TOTAL Rs.1,14,37,738/- M/s.Rohan Dyes & Intermediates Ltd. Sr. No. Date Item Amount(Rs.) 1. 01.03.2007 J.ACID 38,61,312/- 2. 01.03.2007 K.ACID 35,58,464/- 3. 01.03.2007 H.ACID 35,58,464/- 4 01.03.2007 H.AVID 38,61,312/- TOTAL Rs.1,48,39,552/- M/s. Arcata Trade Links Pvt. Ltd. Sr. No. Date Item Amount(Rs.) 1. 07.12.2006 J.ACID 10,35,000/- TOTAL Rs.10,35,000/- M/s.Vishal Enterprise Sr. No. Date Item Amount(Rs.) 1. 20.12.2006 RDS 7,73,760/- TOTA....