TaxTMI 
TaxTMI 
TaxTMI 
2017 (8) TMI 1124
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.... out of total purchases of Rs . 2,11,81,156/- by way of alleged bogus purchases only on the basis of the information on the website www.mahavat.gov. in about 7 suspicious dealers whose copy of statement recorded were not furnished to the appellant and the Commissioner of Income Tax(A) erred in confirming Rs. 10,59,058/- out of the same, being estimated prof it at 5% of total purchases calculated on an ad hoc basis and even though the Appellant's books were not rejected. 3. The Assessing Officer wrongly charged interest u/s 234 and initiated penal ty u/s 271(1)(c). [B] Relief Prayed The appellant therefore prays as follows, 1. To quash the order of reassessment passed u/s 148. 2. To delete the disallowance of Rs. 10,59,058/- out of the same, being estimated prof it confirmed by the Commissioner of Income Tax(A) at 5% of total purchases calculated on an ad hoc basis. 3. To delete the interest charged u/s 234 and initiation of penal ty u/s 271(1)(c) [C] General: * The appellant reserve rights to add alter or delete any portion of this appeal before its conclusion. * This appeal is filed in time and may please be allowed in full. * A Detailed paper book along wi....
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.... to the aforementioned parties were made vide cheques, had however failed to lead any evidence which could prove the veracity of the purchase transactions was thus dissuaded to subscribe to the claim of the assessee that it had made genuine purchases from the aforementioned parties. The A.O thus in the backdrop of the aforesaid factual matrix, therein taking cognizance of the fact that though the aforementioned parties had duly admitted before the Sales tax department that they were involved in providing accommodation entries and had not made any genuine purchase or sale transactions, however as the purchase transactions under consideration stood duly recorded in the 'books of accounts' of the assessee, therefore, it could safely be concluded that the assessee had made the purchases of the aforesaid goods, though not from the abovementioned parties, but from the open market. The A.O deliberating on the trading results of the assessee for the year under consideration as in comparison to those of the preceding years, therein concluded that the assessee was only a beneficiary of the accommodation bills which were issued by the aforementioned parties and no genuine purchases were made ....
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....the alleged suppliers, as there alleged suppliers were indulging in such transactions right from their inception. d. The assessee could not produce any delivery challan to prove that the delivery of these goods have been actually received by them from these alleged suppliers. e. Although no defects were pointed out by the Tax Auditors, this is purely because of the combined effect of the two facts, namely, on one hand, audit was carried out on the basis of explanations as furnished by the assessee vide his reporting in Form No. 3CD and on the other hand, tax audit is always carried out on a test check basis as it will be extremely difficult if not impossible to carry out 100% checking for any lay man giving the various restrictions. Thus there is always possibility of any defects getting missed out by the tax auditor. f. The assessee was also asked to product the above suppliers for verification but the assessee failed to produce them before the undersigned. When expenditure (purchase) is claimed to have been incurred, the initial burden will be on the assessee to prove that the purchases were genuine. Reliance is placed on Judgement of the Gujarat High Court reported in CIT ....
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....sessee, therefore, there was no reason for drawing of adverse inferences as regards the genuineness of the purchase transactions. The ld. A.R. relying on the order of the Income Tax Appellate Tribunal, 'B' bench, Mumbai, passed in the case of ACIT-25(2), Mumbai Vs. Shri Mahesh K. Shah (ITA No. 5194/Mum/2014, dated 31.01.2017) (Page 85 to 95 of 'APB'), therein submitted that now when the assessee had placed on record documentary evidence to establish the genuineness of the aforesaid purchase transactions and the payments towards the purchase consideration had been made through proper banking channels, therefore, no addition as regards any part of the aforesaid purchases was called for in the hands of the assessee. It was thus averred by the ld. A.R that the addition sustained by the CIT(A) to the extent of Rs. 10,59,058/- was liable to be vacated. The ld. A.R. further relied on the judgment of the Hon'ble High Court of Bombay in the case of CIT-13, Vs. Ashish International (ITA No. 4299 of 2009), dated 22.02.2011, in order to drive home his contention that now when no opportunity had been afforded to the assessee to cross examine the aforementioned supplier parties, therefore, the a....
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....rket, had thereafter in order to facilitate routing of the said purchase transactions through its 'books of accounts' obtained bogus bills from the aforementioned parties. The A.O after duly appreciating that the assessee who had purchased the goods from the open/grey market must have been benefitted by procuring such goods at a lower rate, as against the inflated bogus bills procured from the aforementioned parties, therefore, estimated such margin in the hands of the assessee at the rate of 12.5% of the aggregate value of such bogus purchases. We find that the CIT(A) on a further appeal by the assessee had therein adopted a liberal approach and restricted the addition to 5% of the aggregate value of the bogus purchases made by the assessee from the aforementioned parties and sustained the addition to the extent of Rs. 10,59,058/-. 8. We have given a thoughtful consideration to the facts of the case and are of the considered view that as it so emerges from the records, it remains as a matter of fact that the assessee except for taking support of the fact that the payments to the aforementioned parties had been made vide cheques however had miserably failed to prove the genuinenes....