TaxTMI 
TaxTMI 
2015 (8) TMI 651
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....e ld A.O.. The action of the ld. CIT(A) is illegal, unjustified, arbitrary and against the facts of the case. Relief may please be granted by deleting the said addition of Rs. 23,76,774/-. 2. In the facts and circumstances of the case and in law the ld. CIT(A) has erred in not allowing the deduction U/s 80HHC on the addition of Rs. 23,76,774/- confirmed by her. The action of the ld CIT(A) is illegal, unjustified, arbitrary and against the facts of the case. Relief may please be granted by allowing the deduction U/s 80HHC on Rs. 23,76,774/-." 2. Ground No. 1 of the revenue's appeal and assessee's appeal is against the addition made by the Assessing Officer on account of unverifiable purchases at Rs. 57,50,000/-, which was partly deleted by the ld CIT(A) at Rs. 33,73,226/-. The revenue was in appeal against deletion and the assessee is against partly confirmed by the ld CIT(A) at Rs. 23,76,774/-. The assessee is in the business of export of precious and semi precious stones. The firm has filed return on 31/3/2003 declaring income of Rs. 3,92,950/-. The ld Assessing Officer observed that the assessment U/s 143(3) of the Income Tax Act, 1961 (in short the Act) was completed vide orde....
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....r connected and need fresh consideration in view of finding of the A.O. on the above question that the same goods worth Rs. 57,50,000/- claimed to have been purchased from M/s Anmol Ratna and M/s Shruti Gems were exported. The first appellate order on the issues is accordingly set aside to the file of the A.O. to consider the same afresh as per above direction." As per direction of the Hon'ble ITAT, the ld Assessing Officer issued notice U/s 143(2) and 142(1) alongwith show cause notices etc. but the assessee did not make any compliance to those notices. Since the assessee did not make any compliance even after providing adequate opportunities to the assessee, assessment was completed U/s 144 vide order dated 30/12/2008. Complete details of notices issued u/s 142(1) and U/s 143(2) before completing the assessment U/s 144, were given in the assessment order dated 30/12/2008, hence not required to repeat the same here again. The assessee again filed appeal against the assessment order before CIT(A) who vide order in appeal in ITA No. 900/08-09 dated 28/10/2009, directed the Assessing Officer to apply GP rate of 15% on export sales turnover of Rs. 1,65,12,669/-against declared G.P. r....
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....earing was fixed for 23/06/2011 which was adjourned to 02/07/2011 on the request of the assessee but again none appeared nor asked for adjournment. Thereafter notice U/s 142(1) dated 05/07/2011 was issued whereby hearing was fixed on 15/07/2011 but like in past, the assessee did not make any compliance this time also. In view of these facts, a final show cause notice alongwith notice U/s 142(1) dated 21/09/2011 was given and the case was fixed for hearing on 07/10/2011. No one appeared on the given date of hearing but on 13/10/2011 Shri Krishan Natiya, C.A. appeared on behalf of the assessee and filed his power of attorney, no compliance of earlier notice was made. Since it was time barring matter, assessment proceedings cannot be prolonged for indefinite period hence a final show cause notice u/s 142(1) was given on 18/11/2011. The notice U/s 142(1) has been reproduced by the Assessing Officer on pages 3-4 of the assessment order and the case was fixed for 25/11/2011. In compliance to the show cause notice, Shri Ikram Ahmed, partner of the assessee firm appeared alongwith Shri Krishan Natiya, C.A. and his A.R., filed copies of purchase bills of M/s Anmol Ratan and M/s Shruti Gems ....
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....ved through Dak admitting the fact of sale of goods is of no help inasmuch as to change the nature on the non genuine transaction into genuine transaction. Mere change of opinion, later on without producing himself and by way of simply filing an affidavit is not sufficient material evidence to substantiate the claim of purchases which has been held bogus on the basis of corroborative material evidences as discussed. d) As far as the claim of the assessee that these parties have RST/CST number and amount was paid by cheques does not make the transaction genuine. Mere furnishing of particular is not enough, moreover the payment of cheques is not sacrosanct nor can it make a non genuine transaction as genuine for which reliance was placed on the judgment of the Cit Vs. Precision Finance (P) Ltd. 208 ITR 465 (Cal) wherein it was held that the payment made by account payee cheques would not make it sacrosanct. The facts of this case were what there were credit in the books of accounts in the names of various persons but the assessee could not prove the identity of the creditors, credit worthiness and genuineness of the transactions though the payment were made by account payee cheques.....
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....uineness of the transaction could be decided on the basis of primary facts on record and in the present case, the fact of nonexistent/non cooperative parties leads to the non-genuine transaction of sale to the assessee. Other aspects as claimed by the assessee relating to sales tax registration No., PAN and payments by cheque may be relevant to the existence of these parties on papers only. i) The Hon'ble Delhi High Court in the case of CIT Vs. La. Medica, 250 ITR 575, the purchases were claimed to have been ade from "K" but the party "K" was not found in existence at the Calcutta address and Sh. Chandi Lal who was operating the bank account at New Delhi through which the alleged payments were made to "K" was also not found in existence. The introducer to Shri Chandi Lal was Shri Satpal Jain one of the partners of the sister concern of the assessee M/s La Medica. Shri Chandi Lal and Shri Chunni Lal were not produced before the A.O. and the Hon'ble High Court held that the purchases were in fact not made from "K" and the whole thing is fictitious arrangement and the payments were alleged to have been made to "K" were treated as income from other sources. In the present case the fac....
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.... been made from these two concerns could not established. Under these circumstances, on the detailed reasons as discussed in the original assessment order U/s 143(3) and as shown above, the purchases of Rs. 57,50,000/- claimed by the assessee from above mentioned two concerns are held to be non genuine. Alos the assessee could not furnish any evidence in support of the fact that the goods purchased by it were exported to claim the benefit U/s 80HHC of the Act. L. In view of the facts, since the purchases are held as non genuine, it could lead to only the following two inferences:- a. If on the strength of evidence in support of sales recorded in the books of accounts of the assessee, the sales are accepted as genuine, then assessee ought to have made purchases from parties other than those from whom purchases have been shown in the books of assessee they are already proved non genuine. The sources of such purchases remain unexplained within the meaning of Section 69C. b. Alternatively, since there are no purchases from the parties, as shown in the books of accounts of the assessee, there can be no sale and thus the sales to that extent shown by the assessee on the basis of goods....
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....s on to prove that the export of the assessee was bogus and therefore the amount of corresponding sale consideration credited in the books of accounts of assessee remains unexplained and need to be added U/s 68 of the I.T. Act or income from undisclosed sources. Therefore, explanation to the source of amount of Rs. 57,50,000/- credited in the books of accounts of the assessee as sale proceeds of export consignment is unsatisfactory and same is to be added alternatively to the total income of the assessee U/s 68 of the I.T. Act. It is also felt necessary to explain the reasons for application for provisions of Section 68 which are reproduced as below:- "Where any sum is found credited in the books of an assessee maintained for any previous year, and the assessee offers no explanation about the nature and source thereof or the explanation offered by him is not him is not in the opinion of A.O. satisfactory, the sum so credited may be charged to income-tax as the time of the assessee of that previous year." P. The explanation of the above referred sums credited in the books of account of assessee is though sale proceeds of an export consignment. Thus, the sums credited in the books....
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.... 21/05/2001 (only part of the bill could be co-related to export invoice) Tanzanite Rs. 39,161/- Rs. 1,92,483/- Rs. 2,45,130/- Total Rs. 23,76,774/- The A.O. may have strong views regarding the addition required to be made on account of unverified purchases on the basis of the evidence gathered by the Investigation Wing of the Dept., but while finalizing the assessment order in the set aside case these views cannot supersede the specific directions given by a higher judicial authority as a matter of judicial discipline. To summarize, these two parties are merely entry providers and the purchase bills furnished were manipulated, as per evidence on record. On the other hand, it is also a fact that some of the purchases shown to have been made from these parties as per these manipulated purchase bills were exported by the appellant as per the export invoices filed. The fact of the matter is that these export invoices are the only reliable evidence in the case of the appellant because they have to be verified/cleared by another Govt. Dept. that is the Custom Authorities. Thus sales as per these export invoices could be correlated to these manipulated purch....
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....rom both the parties with its export invoices for claiming deduction U/s 80HHC of the Act. During the course of set aside proceedings, complete bills and vouchers were produced before the Assessing Officer, which fact is being acknowledged by the ld Assessing Officer in his order at page 5 top paragraph. However, the ld Assessing Officer was influenced by the earlier two assessment orders and instead of making enquiries and verifying the facts in accordance with the directions of the Hon'ble ITAT the ld Assessing Officer ignoring the directions proceeded to complete the assessment in the manner as earlier. The purchases from the above two parties can be correlated with the exports. The ld AR has drawn our attention on paper book page No. 1 and page No. 2 to 15 and argued that the purchases from both the parties are verifiable from the export bills. Out of total alleged bogus purchases, amounting to Rs. 57,50,000/- correlation of purchases amounting to Rs. 33,73,226/- with the export sales were established one-on-one basis and hence was accepted by the ld CIT(A) and thus disallowance to the extent of such correlated purchases was deleted by the ld CIT(A). In view of this, there is n....