TaxTMI 
TaxTMI 
2016 (10) TMI 1025
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.... name of Microtech Engineering works filed return of income on 29/09/2011 declaring income at Rs. 6,68,700/-. The assessment was reopened by AO on the basis of information received from Sale Tax Department of State of Maharashtra that certain parties from whom assessee made purchases are involved in providing hawala entries namely. The sales Tax Department conducted investigation and recorded statements of vendors on oath, who have admitted that they have provided accommodation entry without actual delivery of goods. The details of the bogus dealers are available on the website of Sales Tax Department. The assessee has also made purchases from such bogus dealers, the details of which are as under; Sr. No. Name Amount in Rs. 1 Sheetal Trading Co 10,96,875/- 2 Emco Industries 6,99,919/- 3 Darshan Sales Corporation 2,80,001/- 4 Subhalaxmi Sales Corporation 3,53,506/- 5 Ambika Sales Corporation 9,89,291/- 6 Shantinath Corporation 3,39,664/- Total Rs. 37,59,256/- To verify the purchases claimed by the assessee, the AO issued notice under section 133(6). None of the parties filed their reply in compliance of the said notice. In absence of reply from those ....
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....ry except issuing notice to the dealer/ supplier under section 133(6) of the Act. In absence of reply from the alleged supplier the AO presumed that assessee has not purchased anything from the said supplier. The entire addition made by assessing officer is based on the assumption and presumption. The order of AO does not reveal that copies of statement recorded by Sale Tax Department of State Government was called by AO for his perusal or the same was provided to the assessee. The action of AO is based on the information of third-party. During the appellate proceeding, the Learned CIT(A) observed that assessee did not produced the hawala dealers before Assessing Officer for cross verification. The observation of Learned CIT(A) is contrary to the finding of assessing officer. The AO had not asked the assessee to produce the said hawala dealer during the reassessment proceeding. The ld CIT (A) further observed that statement and affidavit filed by hawala dealer before Sales Tax Department have evidentiary value. In fact such evidence was not available before Assessing Officer or before ld CIT (A). The copies of such statements or affidavits were never confronted with the assessee ei....
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....ther important factor the bank account copies collected by the assessing officer shows that the assessee had made the a payments to the above said parties by way of account payee cheques. Thus, it is seen that the transactions have been routed through the bank accounts. Further, it is not the case of the assessing officer that the assessee has indulged in accounting of bogus purchases. When the assessee submitted that he could not have affected the sales without making corresponding purchases, the AO has taken the view that the assessee could have effected purchases in the grey market, which conclusion is, in fact, not supported by any material. Under this impression only, the AO has further expressed the view that the assessee would have purchased the materials by paying cash thus violating the provisions of sec 40A(3) of the Act, which is again based on only surmises. In the absence of any material to support the said view, we are unable to agree with the view taken by the tax authorities that the purchases amount is liable to be disallowed u/s40A(3) of the Act on the same impression only, the AO has expressed the view in the remand report that the purchases amount is also liable....
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.... firm, a further deduction is allowed in respect of salary and interest paid to the partners. The ratio analysis of the profitability is also in favour of the assessee. In our considered opinion, the purchases are supported by proper invoices duly reflected in the books of account. The payments have been made by account payee cheque which are duly reflected in the bank statement of the assessee. There is no evidence to show that the assessee has received cash book from the suppliers. The additions have been made merely on the report of the Sales tax Department but at the same time it cannot be 11 ITA No.5295/Mum/2013 ACIT Vs. Tarla R Shah said that purchases are bogus. We, therefore, set aside the findings of the Ld. CIT(A) and direct the AO to delete the addition of Rs. 4,98,80,892/-. Similarly in ACIT Vs Deepak Popat Lal Gala in ITA No. 5920/Mum/2013 (AY: 2010-11) dated 27.03.2015, similar deletion of addition to the tune of Rs. 7,36,27,555/- was sustain by the Tribunal observing as under:- "13. On the other hand, the ld. AR submitted that the additions made in the case of some other assesses on identical reasons have been deleted by the Coordinate Benches of the Tribunal in ....
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....Mum/2013 in Paresh Gandhi (AY: 2010-11) dated 13.05.2015, the order of the CIT(A) was confirmed by the Tribunal deleting the addition of Rs. 1,37,65,667/- holding as under:- "5. We have heard the rival submissions and perused the material before us. We find that the AO had not doubted the genuineness of the purchase but had made the disallowance of Rs. 1.37 crores invoking the provisions of 69C of the Act. We find that in similar circumstances the Tribunal had deleted the addition made by the AO in the cases relied upon by the AR of the assessee. In the case of Rajiv G Kalathil (supra), to which one of us was party identical issue has been decided as under :- 2.3.Before us, Departmental Representative argued that both the suppliers were not produced before the AO by the assessee, that one of them was declared hawala dealer by VAT department, that because of cheque payment made to the supplier transaction cannot be taken as genuine. He relied upon the order of the G Bench of Mumbai Tribunal delivered in the case of Western Extrusion Industries. (ITA/6579/ Mum/2010- dated 13.11.2013). Authorized representative (AR) contended that payments made by the assessee were supported by the ....