2017 (3) TMI 133

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.... of bogus purchase. 3. Facts relating to the issue are that the assessee filed return of income on 24.9.2009 declaring total income of Rs. 9,33,990/-. The return of the assessee was processed under section 143(1) of the Act on 3.3.2011. The AO received information from the Sales Tax Department, Government of Maharashtra that during the year that the assessee obtained bogus bills from the entry providers/hawala traders. Therefore, on the basis of this information, the AO came to the conclusion that the assessee received accommodation purchases bills from the following four parties: S.No. Name of the entry provider Maharashtra VAT No. AY Amount of bills taken by the assessee 1 M/s Swastik Enterprises 27610669252V ....

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....5,46,250/-. 4. The First Appellate Authority after considering the contentions of the assessee as has been incorporated in para 5 of the appellate orders dismissed the appeal of the assessee. During the course of appellate proceedings, the ld.CIT(A) called upon the assessee to produce comparative details of GP/NP for preceding two and subsequent two years which has been incorporated by the ld.CIT(A) at para 6.11 of the appellate orders which is as under : AYr Gross sale Gross Profit in amount GP in % Net profit NP ratio 200708 7205105 3342510 46.39 NA NA 2008-09 18175117 7735031 42.56 2401364 13.21 2009-10 16922696 5866010 34.66 647357 3.83 2010-11 20025407 ....

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....out an independent and extensive inquiry to find out the truth and went ahead by disbelieving the purchases by ignoring the relevant facts as the payments of purchases were made through banking channel and purchased material were consumed for manufacturing of pharmaceutical instruments and which were eventually sold. The act of the FAA in upholding the order of the AO was nothing but based on conjecture, surmises and presumptions which was not permissible in law. The ld. AR argued that the purchases made by the assessee which went into manufacturing process could not be treated as bogus only on the basis of fact that the purchases made from the parties were listed on the website of Sales Tax Department, GOM as hawala dealers. Moreover, the ....

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....rmation received from the Sales Tax Department that the assessee was one of the beneficiary of these entries. We find that during the course of assessment proceedings, the assessee filed a copy of ledger account, purchase bills, delivery challans, proof of payments through banking channels and stock tally which proved beyond doubt that the assessee has received materials which were consumed in manufacturing process of pharmaceuticals and the AO did not point out any defects or deficiency in the books of account except basing his conclusion qua bogus purchase on the basis of information received from the Sales Tax Department, GOM. In our opinion the assessee has discharged the onus cast upon it and now the burden shifts to the revenue to dis....

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....by the Sales Tax Department of the Government of Maharashtra. Ostensibly, the Assessing Officer ought to have brought on record material which is relevant to the transactions of the assessee with the aforesaid four parties instead of making a general observation about the information received from the Sales Tax Department of the Government of Maharashtra. Quite clearly, the Assessing Officer as well as CIT(Appeals) have taken note of the fact that no sales could have been effected by the assessee without purchases. In the present case, assessee has explained that all its sales are by way of exports. The books of account maintained by the assessee show payment for effecting such purchases by account payee cheques and also the vouchers for sa....