TaxTMI 
TaxTMI 
2017 (2) TMI 170
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.... of the CIT (Appeals) in sustaining the reopening of assessment. 2.2 On hearing both the parties, we are of the considered view that the assessments were reopened based on the information received from the Sales Tax department and therefore, we are of the view that there is tangible material came on record after passing intimation u/s 143(1) or after completion of assessments u/s 143(3). In the circumstances, we hold that since the assessments were reopened based on tangible materials and information coming into the possession of the Assessing Officer at later stage, we hold that the reopening of assessments u/s 147 of the Act for all these years is valid, hence the grounds raised by the Assessee against reopening of assessments are dismissed. 3. On merits, in all these assessment years, the assessments were reopened by issue of notice under Section 147 based on the information received by the Assessing Officer from the Sales Tax department, Maharashtra, stating that some dealers have provided accommodation entries for bogus purchase bills to large number of taxpayers. On the basis of this information, the assessments were reopened in Assessee's case for the assessment years ....
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....ans are submitted. 5. The Assessing Officer required the Assessee to produce the parties from whom the purchases were made to prove the genuineness of the transaction. He also deputed the Inspector to get information under Section 133(6) of the Act from the above dealers. Some notices sent were returned unserved and in some cases Inspector reported that the parties are not carrying on business activity at the given address. The Assessing Officer further noticed from the audit report that Assessee is maintaining only cash book, bank book, purchase register, sales register, journal and general ledger and auditors have certified that the Assessee is engaged in the business of retail trading involving large number of items in small quantities per item and therefore it is not possible for them to maintain quantity details, therefore, the same is not possible to report, the Assessing Officer concluded that books of account of the Assessee cannot be stated as correct and complete. Therefore, he rejected the books of accounts and book results under 145 of the Act. The Assessing Officer held that since the Assessee is unable to produce the parties in person before him, the Assessee....
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....ade through cheques etc. to prove the genuineness of the transactions and whereas the Assessing Officer has not brought any evidence against the Assessee except the information obtained from the Sales Tax department to prove that the purchases are not genuine. The Ld. Counsel submits that since the department has made allegation that the purchases are bogus, the onus is on the department to prove such fact through cogent evidences. 7. The Ld. Counsel further submits that on identical facts and circumstances, the Hon'ble Jurisdictional High Court as well as the Tribunal of Mumbai benches deleted the addition made under Section 69C in the following cases: Sl. Decision Citation / ITA Nos. 1. CIT Vs. Nikunj Eximp Enterprises (P) Ltd 372 ITR 619 (Bom) 2. ITO Vs. Takhtmal Bhuralal Pichholiya 4526 to 4528/M/2014 3. ITV Vs. Hiren Shantilal Doshi 715/M/2015 4. ACIT Vs Vishal P Mehta 5313/M/2013 5. ITO Vs. Ashok Talreja (HUF) 4629/M/2014 and others 6. Talco Marketing Vs. ITO 3394 and 3395/M/2014 7. DCIT Vs.Rajeev G Kalathil 6727/M/2012 8. ITO Vs Paresh Arvind Gandhi 5706/M/2013 9. ITO Vs. Sanjay V Dhruv....
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....fficer never doubted the sales made by the Assessee for such purchases, in fact, he has accepted the sales. Without there being any purchases, there could not be any sales. It is also not proved by the Assessing Officer that the amounts paid by the Assessee to the dealers were returned back to the Assessee and the purchase bills issued are only accommodation entries. Simply because the Assessee could not produce the dealers, the entire purchases cannot be treated as bogus purchases. The Assessing Officer could have made further investigations to ascertain the genuineness of the transactions. 10. We find that on identical situation and facts, the Coordinate Bench of the Tribunal in the case of ITO Vs. Sanjay V Dhruv in ITA No.5089/2014, dated 29.02.2016 held that the purchases cannot be treated as bogus purchases and addition cannot be sustained under Section 69C observing as under : "We have considered the submissions of the parties and perused the material available on record. It is evident from the assessment order that on the basis of information obtained from the Sales Tax Department, Assessing Officer issued notices under s....
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.... banking channel and there is no evidence before the Assessing Officer that the payments made were again routed back to the assessee, the addition made under section 69C cannot be sustained. Moreover, the decisions relied upon by the learned A.R. on careful analysis were found to be squarely applicable to the facts of the present appeal. Therefore, finding no infirmity in the order of the first appellate authority, we uphold the same by dismissing the grounds raised by the Department." 11. Similarly in the case of Sharad Construction Pvt. Ltd., Vs. ACIT, ITA Nos.2812-14/2015 dated 30.09.2016, the Coordinate Bench held as under : "2. We have considered the submissions of the parties and perused the material available on record in the light of the decisions relied upon. At the outset, we must observe, the Assessing Officer has not rejected the books of account of the assessee. This fact is not disputed by the learned Departmental Representative. It is further evident, the allegation of bogus purchases was contained in a report received from the DGIT (Inv.). It is a fact on record to ascertain the genuineness of purchases, the Assessing Officer summoned one of the director....
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....partment that as and when we are called to substantiate / clarify our submission, we shall be glad to help and co-operate with the Department. We are sure that before finalizing your opinion, we shall be given enough chance to verify a) Said affidavit of alleged suppliers confirming Havala Bills; b) Opportunity to cross examine such dealers in person; c) Any other remedy allowed to us legally. We are sure, department will clear the matter in view of our requirement as assessee, and we hope our name will be cleared from above allegations. 11. Thus, as could be seen from the aforesaid fact, the assessee not only denied the allegation of bogus purchases but also specifically requested the Assessing Officer to allow him an opportunity to verify the adverse material and also requested for cross-examination of the dealers who allegedly stated of having provided accommodation bills. As against the aforesaid facts, the Assessing Officer has simply relied upon the information received from DGIT (Inv.), to infer that purchases made from certain parties as referred to in the assessment order and reproduced in earlier part of our order are bogus. In....
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.... the decision of the Hon'ble Supreme Court in Andaman Timber (supra). The observation of the learned Commissioner (Appeals) in this context, in our view, is totally irrelevant. Only because the assessee offered to pay the sales tax / VAT, it will not take away his right to be confronted with adverse materials or opportunity of cross-examination. If the Assessing Officer intends to utilise any adverse material in detriment to the interest of the assessee, he is bound to confront them to assessee with opportunity to rebut them. Further, the allegation of the learned Commissioner (Appeals) that the assessee had never asked for cross-examination of the sellers / suppliers before the Sales Tax authorities is factually incorrect as perusal of the letters filed by the assessee before the sales tax authorities on different dates clearly reveals that the assessee had repeatedly requested the sales tax officer not only to provide him with the adverse material but also allow him opportunity to cross-examine the so called bogus dealers. As noted by us and it is also a fact on record, before the Assessing Officer assessee had submitted purchase invoices, books of account, etc., to prove the....
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....9 79,780,057 23.35 138,158,440 1,048,372 0.76% 12. The working shown in the aforesaid chart indicates that the assessee is consistently showing a healthy gross profit rate over the years. Moreover, when the payments towards purchases were made through account payee cheques, to certain extent, it establishes the genuineness of purchases unless adverse material is brought on record to prove the contrary. This view of ours is supported by the decision of the Tribunal, Mumbai Bench, in Ramesh & Co. v/s ACIT, ITA no.2959/Mum./2014, dated 28th November 2014. Moreover, the decision of the Hon'ble Jurisdictional High Court in CIT v/s Nikunj Exim Enterprise Pvt. Ltd. (supra) also support assessee's case that when payments are made through account payee cheque to suppliers and sales effected are not doubted, further, when books of account are not rejected purchases cannot be treated as bogus. The other decisions of the Tribunal relied upon by the learned Authorised Representative also express the view that merely on the basis of information obtained from the Sales Tax department, no addition can be made on account of bogus purchases. Therefore, on ....