TaxTMI 
TaxTMI 
2017 (8) TMI 747
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....ly, the AO received information from the Investigation Wing of the Income-tax Department, Mumbai, which has forwarded details and statements of hawala operators, who have confirmed to have given bogus bills to certain companies, prepared by the Maharashtra Sales-tax Department and it was informed that the assessee is one of the beneficiaries of such bogus purchase bills. Therefore, the AO had reason to believe that income chargeable to tax has escaped assessment within the meaning of section 147 of the Act and hence reopened the assessment by issuing notice u/s 148 of the Act. Subsequently, the case has been converted into scrutiny assessment and accordingly, notices u/s 143(2) and 142(1) of the Act were issued. In response to notices, the authorized representative of the assessee appeared from time to time and furnished relevant details, as called for. 3. During the course of assessment proceedings, the AO observed that the assessee has purchased materials from M/s Rushabh Enterprises for Rs. 37,79,072/- and M/s Swatisk Enterprises for Rs. 15,53,156 and both the parties were listed in the list prepared by the Maharashtra Sales-tax Department as hawala operators involved in provid....
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....itted that its purchases are supported by proper purchase invoices, delivery challans, consignment note and bank statement for having remitted the payment for purchases through proper banking channels. The AO ignoring all evidences, filed to justify the purchases, made additions solely on the basis of information received from the Investigation Wing which stated that the above two parties were hawala operators indulging in providing accommodation entries without actual delivery of goods. The assessee further submitted that the AO neither pointed out any irregularities in books of account nor has disputed sales declared by the assessee. The assessee has maintained proper books of account and its books of account are audited by the CA where the auditors have given an inclusive report about the books of account and its affairs. The assessee further submitted that it has reported gross profit of more than 37% which is quite high in this line of business when compared to industrial average. Therefore, the AO was completely erred in doubting the purchases which are supported by valid documents. 5. The CIT(A), after considering the relevant submissions of the assessee dismissed the groun....
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....ght from purchase order to payment details which, undoubtedly proves that the purchases are genuine in nature. The AO, without conducting any further enquiries, simply made addition on the basis of information received from Investigation Wing without allowing the assessee to cross examine the parties. On the other hand, assessee has furnished all the evidences to prove the purchases. The AO never doubted the sales declared by the assessee nor pointed out any inconsistency in the books of account or stock details maintained by the assesee. The assessee has furnished complete details of analysis of stock and there is no difference in quantitative details filed by the assessee. In the absence of any observation as to incorrectness of books of account and stock details and also the fact that sales are accepted, the AO was incorrect in rejecting purchases solely on the basis of third party information. 8. The Ld. AR referring to the decision of Hon'ble Supreme Court in the case of NK Proteins Ltd vs DCIT (supra), submitted that the facts of the case before the Hon'ble Supreme Court, are altogether different from the facts of the assessee's case. In the case before the Hon'ble Supreme C....
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...., without providing an opportunity of cross examination. 10. Having heard both the sides and considered material on record, we find that the AOs main allegation is that above two parties are involved in providing accommodation entries as per the list published by Maharashtra Sales-tax department. On the other hand, assessee has furnished certain evidences in the form of purchase order, purchase bill, delivery challan, consignment note and payment details to prove the purchases. The assessee also furnished complete details of quantitative stock statement and argued that there is no difference in stock details. Though the assessee has produced certain details to prove the purchases from the said parties, in view of the fact that the assessee could not prove the existence of the parties and also could not rebut the finding of Maharashtra State Sales-tax department that the parties were hawala operators, involved in providing accommodation entries, the purchases from the said parties cannot be accepted as genuine. But keeping in view the fact that the AO had not doubted sales declared by the assessee, a reasonable inference can be drawn that the assessee has purchased goods from the g....