TaxTMI 
TaxTMI 
2017 (10) TMI 1001
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....of DGIT(Inv.), Mumbai that the assessee is engaged in bogus purchase activities from hawala operator wherein the assessee is beneficiary of alleged hawala entries of purchases to the tune of Rs. 7,47,73,908/-. The assessee has made purchases to the tune of Rs. 7,47,73,908/-. from the following five parties who were allegedly hawala entry operator engaged in issuing bills without supplying any material : S.No. Name of the party Amount (In Rs.) 1. Ghantakaran Trading Private Limited 1,08,95,107/- 2. Kameshwar Trading Private Limited 2,09,27,566/- 3. Samadhav Steel India Private Limited 1,47,08,066/- 4. Trichipuram Trading Private Limited 1,20,44,570/- 5. Vardhman Trading Co. 1,61,98,599/- Total 7,47,73,908/- The AO observed that the afore-said dealers from whom the assessee purchased the material to the tune of Rs. Rs. 7,47,73,908/-. were listed as hawala dealers in Maharashtra Sales Tax departments web site and on investigation, the Maharashtra sales tax department has come to the conclusion that these dealers are allegedly hawala operators wherein bogus bills were issued by these dealers without physical delivery of goods, which has been admitted by t....
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....the assessee during the course of assessment proceedings u/s 147 r.w.s. 148 but the assessee did not availed the said opportunity . It was stated in remand report that confirmations and bank statements were not furnished by the assessee except giving list of sundry creditors in which name of bogus dealers appeared. The AO, thus, left the matter to be decided by learned CIT(A). The learned CIT(A) observed that the AO has not doubted the sales disclosed by the assessee and hence he has to allow the purchases since there cannot be sales without purchases . It was observed by learned CIT(A) that the assessee might have inflated purchases by taking invoices from grey market to suppress profits .The learned CIT(A) observed that the AO could not prove that the amounts given to sellers have come back to the appellants. It was observed by learned CIT(A) that it cannot be lost sight that there are accommodation entries being given by bogus hawala operators and the Maharashtra VAT authorities have conducted investigation to come to conclusion that these hawala dealers are only issuing bogus bills without supplying any material and the assessee is beneficiary of these bogus entries. The learne....
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.... by learned CIT(A) for seeking remand report from the AO. It was submitted that no independent investigation was carried out by the AO and no opportunity to confront the said alleged bogus dealers were provided to the assessee . It was submitted by the learned counsel for the assessee that books of accounts were not rejected by the AO. The ld. Counsel for the assessee submitted that it also filed before learned CIT(A) all the details of purchases bill wise, quantity wise and party wise. It was submitted that quantitative reconciliation of the stock was duly submitted to co-relate purchases before learned CIT(A). Our attention was drawn to paper book/page 42-60. 6. We have considered contentions of learned DR and perused the material on record. We have also carefully gone through paper book filed before the tribunal by the assessee to see the evidences filed by the assessee and whether they are sufficient enough to upheld the orders of authorities below. We have observed that the assessee is trader in Metals. The AO received information from office of DGIT(Inv.), Mumbai in respect of the assessee that the assessee is engaged in bogus purchase activities from hawala operator wherein....
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....emises of the assessee was lying closed. During appellate proceedings before learned CIT(A), the assessee furnished additional evidences which were admitted by learned CIT(A) and the same were forwarded to the AO for remand report. The AO stated in remand report that the assessee was given adequate and proper opportunity of being heard by the AO during assessment proceedings u/s 147 r.w.s. 148 but the assessee never availed opportunities afforded to it by the AO . The AO also stated that the assessee has not submitted any confirmations from said parties nor bank statements were submitted and only list of sundry creditors were submitted. The AO, thus, left the matter to be decided by learned CIT(A). The learned CIT(A) observed that the AO has not doubted the sales disclosed by the assessee and hence he has to allow the purchases since there cannot be sales without purchases . It was observed by learned CIT(A) that the assessee might have inflated purchases by taking invoices from grey market to suppress profits .The learned CIT(A) observed that the AO could not prove that the amounts given to sellers have come back to the appellants. It was observed by learned CIT(A) that it cannot ....
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....n appearance in assessment proceedings is not forthcoming. The assessee also did not produce these parties before the authorities below who were allegedly involved in hawala transactions as reported by Mahrashtra VAT authorities after investigations conducted by Maharashtra VAT authorities . These hawala dealers have admitted before these authorities vide sworn affidavit and declaration on oath that they were issuing bogus accommodation bills without supplying any material physically . The assessee also did not produce confirmation letters from these parties nor bank statements were produced. The assessee filed certain additional evidences before learned CIT(A) which were forwarded to the AO who stated in his remand report that proper and adequate opportunity of being heard was duly granted to the assessee during assessment proceedings and thereafter the AO left the matter for CIT(A) to decide on merits. The learned CIT(A) under these circumstances should have either asked AO to make necessary enquiries, verifications and investigations as are required to compute income of the assessee by seeking second remand report or should have conducted necessary enquiries, verifications and i....