TaxTMI 
TaxTMI 
TaxTMI 
2016 (12) TMI 1404
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....nakshi Granites. During the year under consideration, the assessee claimed before the Assessing Officer that he exported 1996 cu.m. of granite blocks for a total consideration of Rs. 8,56,06,950/-. The assessee further claimed that the cost of the granites exported is Rs. 7,15,63,966/-. The assessee further claimed that the granites were purchased for export from M/s Supreme Granites and Exports, M/s Tirupathi Enterprises, M/s Rajham Impex, M/s Shri Bakia Trading Agency, M/s Granite Exports (P.) Ltd., M/s Maruthi Exports, M/s Madhucon Granites Ltd., M/s Guru Bhagavan Exports, M/s Murugan Enterprises, M/s Hariharaa Enterprises and M/s Shri Anusha Enterprises. The export of granites to the extent of 1996 cu.m. is not in dispute. What is disputed by the Assessing Officer is purchase of granites from M/s Rajham Impex and M/s Shri Bakia Trading Agency. According to the Ld. counsel, the Assessing Officer doubted the purchase from M/s Rajham Impex and M/s Shri Bakia Trading Agency on the ground that the credit was outstanding for longer duration. Moreover, the vendor raised a single bill for sale of granites to the assessee. 3. Referring to the assessment order, the Ld.counsel for the as....
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....aper-book, the Ld.counsel for the assessee submitted that these are all details of sales tax registration by Shri Bakia Trading Agency. It contains the PAN and other details. A copy of the bank statement available at pages 9 and 10 of the paper-book shows that the payments were made through banking channels. Referring to page 17 of the paper-book, the Ld.counsel submitted that the M/s Rajham Impex has confirmed the outstanding amount as on 31.03.2011. The sales tax registration details of Rajham Impex are available at page 20 of the paper-book. According to the Ld. counsel, these details were filed by the assessee before the income-tax authorities during examination under Section 131 of the Act. The Assessing Officer conveniently omitted this and placed his reliance on the report said to be filed by his counterpart at Madurai and Trichy. 6. Referring to para 18 of the assessment order, the Ld.counsel for the assessee submitted that the Assessing Officer himself found that the assessee has paid cash to those parties including M/s Rajham Impex and M/s Shri Bakia Trading Agency and disallowed the claim of the assessee under Section 40A(3) of the Act. This contradictory stand of the A....
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....e, the transaction was not genuine. Even though the assessee has filed confirmation letter from respective business entities, the Assessing Officer found that there cannot be any such practice in the business to allow outstanding amount remain for such a longer period. Moreover, single bills were raised for such a huge amount. These facts, according to the Ld. D.R., created doubt to the Assessing Officer that the assessee would not have purchased granites from these two business entities. Furthermore, the assessee claimed that the payments were paid initially by cash, therefore, the provisions of Section 40A(3) of the Act would come into operation. Hence, according to the Ld. D.R., the Assessing Officer disallowed the claim of the assessee not only doubting the transaction but also under Section 40A(3) of the Act. 8. Referring to the order of the CIT(Appeals), the Ld. Departmental Representative submitted that the dispute was whether the cost of purchase was borne by the assessee or not. The material available on record does not support purchase of granites from M/s Rajham Impex and M/s Shri Bakia Trading Agency. The bills raised by the assessee are bogus. Since the assessee has p....
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....through banking channels. Though the Ledger folio exhibits them to be Cheque payments, the bankers have certified that these cheques were self drawn by the issuer. To summarise, not a single piece of evidence, nor a single feature in the transaction exhibits truth and supports your claim of genuineness. At least any later day payment should have reached the bank account of these two suppliers of granite. Interestingly all genuine transactions are carried out in a normal manner. Payments to them are systematic, through banking channels, the identities are known or at least clear, abnormal balances are not outstanding to them at the close of the year, the bills are descriptive, smaller quantities and item wise, and possess all the essential qualities they ought to possess. Under the circumstances I have every reason to believe that the expenditure towards the Purchase cost of the goods supposed to have been purchased from these two alleged suppliers is non-existent and to such extent the taxable income should get increased. Clarify with supporting facts and documents. Answer I have gone through this question carefully and evidences for non-existence of M/s Rajham Impex in Mad....
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....ding Agency is not existing, only on the basis of the report filed by his counterpart at Trichy. The sales tax registration details contain the name of the proprietor of Shri Bakia Trading Agency and his residential address. When such is the case, this Tribunal is of the considered opinion that the Assessing Officer is not justified in coming to the conclusion that Shri Bakia Trading Agency is not in existence. 11. Moreover, there are genuine transactions between the assessee and Shri Bakia Trading Agency. Funds were transferred from the assessee's bank account to the bank account of Shri Bakia Trading Agency. Unless Shri Bakia Trading Agency is in existence, such a banking transaction would not have happened. Moreover, the sales tax registration authorities would not have registered such a business entity. Therefore, the report of the counterpart of the Assessing Officer at Trichy on personal inspection has not disclosed the correct fact on the ground level. During the course of inspection by the Inspector, the entity may not be there. That does not mean that there was no such entity. The enquiries were apparently conducted in the month of April, 2014. The assessee did business d....
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....ng to the disallowance made by the Assessing Officer under Section 40A(3) of the Act, as rightly submitted by the Ld.counsel for the assessee, the Assessing Officer in fact contradicting himself by making a disallowance under Section 40A(3) of the Act. It is not known, when the Assessing Officer claims that M/s Rajham Impex and M/s Shri Bakia Trading Agency are not in existence, how the assessee could make payment in cash. The very fact that the Assessing Officer accepted that the payment was made in cash shows that the two entities are very much in existence. From the copy of the letter addressed to the Assessing Officer, which is available at pages 26 and 27 of the paper-book, it appears that M/s Rajham Impex and Shri Bakia Trading Agency acted as agents for procuring granites from various quarry owners. During the examination under Section 131 of the Act, the assessee clarified that he issued self cheques as insisted by the vendors, which was used in withdrawal of cash. The statement recorded from the assessee, which was reproduced in the earlier part of this order, shows that the vendors insisted for cash payment. 14. We have carefully gone through the provisions of Rule 6DD o....