TaxTMI 
TaxTMI 
2005 (1) TMI 23
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....as been duly explained by the assessee?" The assessee is a dealer in HDPE plastic powder. On January 29, 1987, search action under section 132 of the Income-tax Act was carried out at the godown belonging to M/s. Wak Bros, situated at Andheri (E), Mumbai. During the course of the search 540 bags of HDPE plastic powder weighing 25 kgs. each were found at the said godown. Prohibitory orders were issued by the income-tax authorities under section 132(3) of the Income-tax Act in respect of the said 540 bags of plastic powder on the prima facie belief that the same were unaccounted. The assessee by its letter dated December 2, 1987, claimed ownership of 400 bags out of 540 bags of plastic powder lying at the godown of M/s. Wak Bros. In the return filed for the assessment year 1988-89, the assessee claimed to have purchased in the relevant financial year 50 M.Ts. of HDPE powder valued at Rs. 11,55,000 from M/s. Gautam Trading Co. The assessee relied on a bill bearing No. GTC-28 dated January 7, 1987, issued by M/s. Gautam Trading Co. in support of its contention and stated that on purchase the said goods were stored by the assessee in the godown of M/s. Wak Bros, situated at And....
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.... been disowned by Bipinkumar B. Shah, proprietor of M/s. Gautam Trading Co., the fact that the sales tax challan for Rs. 1,05,000 being the sales tax payable by M/s. Gautam Trading Co. on sale of 50 M.Ts. of HDPE was also lying with the assessee and that the sales tax amount of Rs. 1,05,000 has not been credited to the account of the State Government, the Assessing Officer concluded that there was no genuine sale and the entire transaction of purchasing 50 M.Ts. of HDPE powder by the assessee from M/s. Gautam Trading Co. was a havala transaction. Accordingly, the Assessing Officer made addition of Rs. 11,55,000 being the value of the said 50 M.Ts. of HDPE powder as investment from undisclosed income. On appeal filed by the assessee, the Commissioner of Income-tax (Appeals) deleted the entire addition of Rs. 11,55,000. The Commissioner of Income-tax (Appeals) held that out of 50 M.Ts. of HDPE plastic powder, the assessee had sold 40 M.Ts. to various parties and the amounts received by the assessee from those third parties have been found to be genuine and if the sales are genuine, then the purchase must be genuine and, therefore, 40 M.Ts. of HDPE cannot be said to be havala trans....
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....00 from time to time (Rs. 3,00,000 on February 9, 1987, Rs. 2,00,000 on February 16, 1987, Rs. 2,00,000 on February 18, 1987 and Rs. 2,27,500 on March 18,1987) by cheque and the balance amount of Rs. 2,27,500 was due and payable by the assessee to M/s. Gautam Trading Co. at the relevant time. All the above payments were made from the regular bank account of the assessee. The rent paid by the assessee to M/s. Wak Bros, for storing the goods in their godown are also recorded in the books maintained by the assessee. The books of account maintained by the assessee have not been rejected by the Assessing Officer and, therefore, the purchase of 50 M.Ts. of HDPE powder valued at Rs. 11,55,000 from M/s. Gautam Trading Co. could not be treated as investment from undisclosed income of the assessee. In this connection, he relied upon the decision of the Delhi High Court in the case of CIT v. La Medica reported in [2001] 250 ITR 575 and the decision of the Madras High Court in the case of K. K. Seshaiyer v. CIT reported in [2000] 246 ITR 351. Mr. Sathe further submitted that when the identity of the person from whom the goods have been purchased by the assessee has been established and the ....
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.... and, therefore, no interference is called for in exercise of jurisdiction under section 260A of the Income-tax Act. He submitted that on the basis of the material on record, the Tribunal has rightly come to the conclusion that there was no genuine sale of 50 M.Ts. of HDPE powder and it was only a havala transaction. Mr. Desai further submitted that if the purchase of 50 M.Ts. was genuine, then the assessee would not have taken 11 months to claim 10 M.Ts. of HDPE powder lying at the godown of M/s. Wak Bros. He submitted that if the purchase was genuine, then, in the ordinary course payment for the goods would have been made at the time of purchase. However, in the present case, the payment has been made by the assessee much after the date of the search and that too in a fictitious bank account opened in the name of M/s. Gautam Trading Co. in February, 1987. He submitted that the above assertion is further corroborated by the statement of Bipinkumar Shah proprietor of M/s. Gautam Trading Co., who, has not only denied to have issued the sale bill produced by the assessee but also denied having any bank account in the Syndicate Bank in which the cheques issued by the assessee were ....
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....has sold 40 M.Ts. of HDPE to third parties and the amounts received from those parties are also reflected in the books of account maintained by the assessee. The value of the remaining 10 M.Ts. of HDPE is also reflected in the books of account maintained by the assessee. Thus, the identity of the person from whom the goods have been purchased and the source of investment in such goods has been explained by the assessee. The Assessing Officer as well as the Tribunal rejected the explanation of the assessee mainly on the ground that Bipin kumar B. Shah, Proprietor of M/s. Gautam Trading Co., in his statement/declaration had stated that he was not dealing in HDPE powder, that he had not issued the sale bill for 50 M.Ts. of HDPE, that he did not have any bank account in the name of M/s. Gautam Trading Co. with the Syndicate Bank and that the only bank account in the name of M/s. Gautam Trading Co. was with the Ahmedabad Co-op. Bank, Narsinath Street Branch, Bombay, which is operated by him by signing in Gujarati. However, the Assessing Officer in the present case, on investigation has found that the above statement/declaration made by Bipin kumar B. Shah is false and has recorded a ....