TaxTMI 
TaxTMI 
2017 (2) TMI 75
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....from the addition made by Assessing Officer of Rs. 37,45,965/- as unexplained expenditure u/s 69C of the Act. 3. In order to appreciate the controversy in the captioned appeal and cross-objection, the following discussion is relevant. The assessee is an individual who is engaged in the business of wholesale trading in readymade garments in a proprietorship concern. For the Assessment Year 2011-12, assessee filed a return of income declaring a total income of Rs. 11,81,130/-, which was subject to a scrutiny assessment. In the assessment order, the Assessing Officer has observed that an information was received by him from DGIT(Inv.), Mumbai that the assessee has taken accommodation entries from certain purchase parties. In this context, the....
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....regularise the account books had obtained accommodation entries from the said 7 parties; and, that payments made to the suppliers by account payee cheques was not sacrosanct to establish genuineness of the expenditure. For all the above reasons, the Assessing Officer treated the expenditure on purchases of Rs. 37,45,965/- as unexplained expenditure u/s 69C of the Act and added the same to the returned income. 4. The assessee carried the matter in appeal before the CIT(A) assailing the order of Assessing Officer on facts and in law. The assessee explained before the CIT(A) that complete details regarding the purchases made from 7 parties, namely, invoices of purchases made, payments made to the parties by account payee cheques, bank stateme....
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....st the assessee even if opportunity to cross-examine the witness was not allowed. However, the CIT(A) took note of the argument of assessee that when the sales had not been disturbed by the Assessing Officer, then the purchases could not be treated as bogus because without purchases, there is possibility of effecting the sales. The CIT(A) found some force in the said plea and he proceeded to scale down the addition to the extent of profit element embedded in such bogus purchases. Accordingly, CIT(A) applied the profit rate of 12.5% on the bogus purchases in order to retain the addition and the balance of the addition was directed to be deleted. With the partial relief allowed by CIT(A), assessee is not satisfied and is in appeal before the ....
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....ame. The reasoning taken by the Assessing Officer has already been adverted to by me in the earlier paras and, therefore, is not being repeated for the sake of brevity. 7. I have carefully considered the rival submissions. In the instant case, the Assessing Officer has noted that certain information has been received from the DGIT (Inv.), Mumbai that assessee has taken accommodation entries from 7 parties enumerated in para 6 of the assessment order. It is also the case of Revenue that the Assessing Officer has made independent enquiries also by issuing notices u/s 133(6) of the Act to the 7 parties which reveal that the notices were returned unserved by the postal authorities with remarks 'not known', 'left', 'unclaimed', etc. The aforesa....
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....ation from the DGIT (Inv.), Mumbai, being referred to by the Assessing Officer, is in the form of any depositions by the suppliers, etc. In this context, the plea of assessee to seek the adverse material, which the Assessing Officer has relied upon, becomes important. The entire factual matrix brings out that leave alone confronting the assessee with the specific material, the assessment order itself does not record any specifics about the material on which the reliance has been placed by the Assessing Officer. Therefore, on facts, such an addition is susceptible to deletion. 8.1 In this case, another aspect is the non-service of notices issued under section 133(6) of the Act. Notably, after the Assessing Officer found that the notices iss....
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....d copies of account of the said parties appearing in his account books, copies of purchase invoices, copies of bank statement for payment to the parties, etc. At the time of hearing, the learned representative for the assessee has also referred to the Paper Book, wherein the relevant documents have also been placed. Under these circumstances, having regard to the material on record, it is not possible to uphold the charge of Assessing Officer that the purchases from the 7 parties in question are bogus. 9. Be that as it may, invoking of Sec. 69C of the Act in the present case is also suspect. Sec. 69C of the Act prescribes that where in any financial year an assessee has incurred any expenditure and he offers no explanation about the source....