TaxTMI 
TaxTMI 
2016 (1) TMI 1089
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....f appeal is about an addition of Rs. 1,44,348/-. During the assessment proceedings, the AO found that the assessee had purchased goods worth Rs. 7.21 laksh Shiv Sagar Steel(India), that the name of Shiv Sagar was appearing in the list of bogus parties forwarded by the sales tax authorities, that the name of the assessee was appearing as a beneficiaries in the list. The AO directed the assessee to produce the party from whom he had claimed to have purchased goods. However, the supplier was not produced by the assessee. Summons issued to Shiv Sagar could not be served on the given address. The AO held the purchase transaction bogus and treated the entire purchase (Rs.7.21 lakhs)as unexplained expenditure u/s.69C of the Act. 3. Aggrieved by the order of the AO, the assessee preferred an appeal before the First Appellate Authoirty(FAA). Before him, it was argued that the AO had relied upon the information supplied by the investigation wing of the Sales Tax Department(STD), that the AO had not supplied the copy of the statement of Shiv Sagar recorded by the STD, that the assessee was not allowed to cross examine Shiv Sagar, that the assessee had discharged his obligation by submittin....
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...., that in the books of accounts of the assessee all the purchases and sales were recorded, that payments were made through banking channels, that the AO had made addition of entire purchases u/s.69 of the Act, that the FAA had reduced it to 20%. It is a fact that the AO had not rejected the sales of the assessee and the assessee was maintaining the quantative details and stock register. In our opinion, once the sales are accepted as genuine or not doubted the AO cannot reject the entire purchase. In the case of Nikunj Eximp(supra)the Hon'ble Bombay High Court has held if sales were not doubted by the AO and copies of bank statement showing entries of payment through account payee cheques to the suppliers, copies of invoices for purchases and a stock statement, i.e. stock reconciliation statement are filed purchased could not be rejected. In the case of Rajeev Kalathil(supra)the Tribunal has held as under: "2.4. We find that AO had made the addition as one of the supplier was declared a hawala dealer by the VAT Department. We agree that it was a good starting point for making further investigation and take it to logical end. But, he left the job at initial point itself. Sus....
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....he head telephone expenses amounting to Rs. 51,799/- was a bogus expense and had to be disallowed. Similarly, he found that assessee had claimed warehouse expenses of Rs. 96,000/-, that the expenses were paid in cash without any supporting documentary evidences. He directed the assessee to furnish the address of warehouse and copy of leave and license agreement for the warehouse, mode of payment and name of the person to whom the warehouse charges were paid. The assessee did not furnish the name and the address of the party to whom the expenses , amounting to Rs. 96,000/- were paid in cash. Therefore, the AO disallowed the expenditure and added the same to the income of the assessee. 7. Aggrieved by the order of the AO, the assessee preferred an appeal before the FAA. Before him, it was submitted that conveyance expenses (Rs.96,582/-) had been incurred by the assessee as well as the employees and the persons connected with the business for travelling, the expenses were to be paid in cash, that the disallowance made by AO @ 50% was very high, that office expense of (Rs.49,486/-)included maintenance items, sweeping charges, the payments were made in cash, that the staff welfare ex....
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....the material before us. We find that the expenses incurred under five heads namely conveyance, office expense staff welfare expenses sundry expenses and travelling expenses had been incurred in cash, that assessee had not produced supporting documentary evidence before the AO/FAA to justify the claim, that the FAA had given a categorical finding of fact that the assessee was running his business from his residence, that he had not employed any person, that no evidence was produced regarding travelling by the person of the assessee outside Mumbai, that the AR was not able to controvert the findings given by the FAA. In these circumstances, in our opinion, the order of the FAA does not suffer from any legal infirmity with regard to those five items. As far as telephone expenses are concerned we would like to mention that the AO had partially allowed the expenditure claimed by the assessee and had disallowed the remaining amount as the assessee had not produced supporting evidences. In these circumstances, we are of the opinion that order of the FAA does not need any interference from our side. We further find that the assessee had claimed that warehousing charges were paid in purs....