TaxTMI 
TaxTMI 
2017 (1) TMI 1251
X X X X Extracts X X X X
X X X X Extracts X X X X
....Trading Company and Shri Omkar Enterprises for a total sum of Rs. 2,46,08,762/- without taking delivery of the goods. M/s Nirma Trading Company and Shri Omkar Enterprises have provided freight paid bills without delivery of goods. Therefore, the assessee was required to prove the genuineness of the transaction and to file the copy of the bills, transport receipt, return filed in Commercial Tax Department and copy of the assessment order passed by the Commercial Tax Department and confirm the copy of account from M/s Nirma Trading Company and Shri Omkar Enterprises. The assessee was also requested to furnish books of accounts with stock register so that the transaction may be verified. In response to the notice, the assessee has filed confirmed copy of account, copy of bills, lorry receipt, copy of acknowledgement of VAT tax return, copy of VAT audit report. The assessee has also filed quantitative details, value and press running number to prove the genuineness of the physical delivery of goods. To verify the genuineness of the transport receipt a notice u/s 133(6) of the Act was issued to Amar Jyoti Carrier, Indore, and on verification of the bills and invoices issued by M/s Nirma....
X X X X Extracts X X X X
X X X X Extracts X X X X
.... M/s. Nirma Trading Co., b) Statement of accounts of M/s. Shree Omkar Enterprises in the books of the appellant. c) Statement of account of M/s. Nirma Trading Co. in the books of appellant. d) Payments advise of Axis Bank in support of payments made by A/c payee Cheque/RTGS to Shree Omkar Enterprises and M/s. Nirma Trading Co. e) Purchase invoices issued by M/s. Shree Omkar Enterprises and M/s. Nirma Trading Co. along with copies of Lorry Receipts and sales invoices issued by the appellant i.e. M/s B.R. Cot against such purchases. f) Copies of sales tax returns filed by the appellant in Form-231 along with their acknowledgments showing purchases of cotton and sales thereof. The learned counsel further stated that complete details showing purchases effected by the assessee from aforesaid two parties i.e. their TIN, lot no., cotton bales purchased, net weight, value of the goods, tax charged and corresponding sales of same cotton bales to various parties wherein the assessee earned gross profit of Rs. 37,55,227/- against purchases effected from above two parties mainly due to holding the stock in anticipation of price increase, which wa....
X X X X Extracts X X X X
X X X X Extracts X X X X
....htra VAT Act during A.Y. 2011-12 vis-à-vis purchases effected by the appellant from them were as under :- Name of Supplier Quarterly returns submitted Turnover disclosed in returns Purchases by appellant M/s. Nirma Trading Co. April to Sep' 2010 Rs.570.74 lacs Rs.133.58 lacs M/s. Omkar Enterprises, F.Y. 2010-11 Rs.1412.20 lacs Rs.112.50 lacs Under the circumstances, it cannot be presumed that purchases effected by the assessee from these two dealers were not genuine. It was just a feeling of non- availability of the supplier at the last known address may not be the sole basis to treat the purchases as bogus when sales against purchases are not doubted as held in the case of Rajesh P. Soni vs. ACIT (2006) 100 TTJ 892 (Ahd) & M/s. YFC Projects Pvt ltd vs. DCIT (2010) 134 TTJ 167 (Del). 5. It was also submitted by the learned counsel that in case the aforesaid documents were not considered as sufficient proof of genuine purchases, both the suppliers should have been summoned u/s 131 of the Act by the Assessing Authority by giving an opportunity to the appellant to cross-examine and inspecting their books of accounts along with....
X X X X Extracts X X X X
X X X X Extracts X X X X
....ement was recorded. Where those parties on whom the summons could not be served, the Assessing Officer has to make attempt to verify the genuineness of the transaction from the books of the assessee, his bank accounts or bills. The Assessing Officer did not make any inquiry from the account of bank to determine whether or not the amounts were credited in the accounts of the respective party. So far as the second category of cases is concerned, the Assessing Officer did not attempt to enforce the attendance of those parties on summons issued by him. Other inquiries in respect of first category of cases were made by him and the third category where the party has attended but no fault with the bills then no addition can be made. Therefore, in this case the second category comes as no summons was issued by the Assessing Officer to the seller. The Assessing Officer did not find fault with the bills or bank statement filed by the assessee. The learned counsel for the assessee also submitted that in that judgment the Hon'ble High Court has considered the decision of CIT vs. Lower authorities Medica reported in 250 ITR 575 (Delhi) and held that in this case the payment has been made to....
X X X X Extracts X X X X
X X X X Extracts X X X X
....rchases is justified. 9. On the other hand, the learned DR relied upon the decision of Hon'ble Delhi High Court in the case of CIT vs. La Medica; 250 ITR 575 with the submission that in case of bogus purchases if the detailed I nquiry revealed that the alleged supplier did not exist and one was operating bank account opened by him with introduction by the partner of the concerned assessee and the amounts paid were withdrawn by the sister concern and if it is proved that the purchases were not made from that party, whole of the addition has to be made as income from undisclosed sources. Coming to the facts of the case, the learned DR submitted that the assessee has made purchases from M/s Nirma Trading Company and Shri Omkar Enterprises, both are not traceable and they are not in existence, therefore, whatever purchases are made from these parties, are to be treated as bogus purchases and the addition made by the Assessing Officer deserves to be sustained. The learned DR submitted that the cases relied upon by the learned counsel for the assessee are distinguishable on facts. Therefore, the same are not applicable to the facts of the present case. 10. We have heard the riv....
X X X X Extracts X X X X
X X X X Extracts X X X X
....the assessee and bank account or bills. The Assessing Officer should also make inquiry from bank to determine whether or not the amounts were credited in the accounts of respective parties. We find that in this case the Assessing Officer has not issued any notice for the presence of M/s Nirma Trading Company and Shri Omkar Enterprises. Therefore, we are of the view that the Assessing Officer has not doubted the bank transaction and the Assessing Officer has not made any inquiry whether the bank transaction was genuine or not. Similar issue had also come up before the Hon'ble Bombay High Court in the case of Babulal C. Borana vs. ITO; 282 ITR 251 wherein the Bombay High Court has held that if any purchase has been made and payment of the same were made by the assessee by cheque and the same has been duly credited in the bank account of that party and this purchase is reflected in the books of accounts maintained by the assessee and the value of these goods are reflected in the books of accounts, hence the identity of the persons from whom the goods were purchased and source of investment in such goods have been explained, therefore, no addition can be made u/s 69 of the Act. Sim....