TaxTMI 
TaxTMI 
2017 (11) TMI 177
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....of the case, which is contrary to law and is against the principles of natural justice. 2. Additions u/s. 69C for disallowing alleged bogus purchases aggregating Rs. 44,78,415/- : a. The Ld. CIT (A) and the Ld. AO have erred in facts and in law while disallowing alleged bogus purchases aggregating to Rs. 44,78,415/- u/s. 69C. b. The Ld. CIT(A) and the Ld. AO have erred in invoking the provisions of sec. 69C which is triggered only in the case where the source of expenditure is not explained and not in respect of authenticity of such expenditure. c. The Ld. CIT (A) and the Ld. AO ought to have taken cognizance of the fact that source of such expenditure is duly reflected in the books of accounts and accordingly there is no case of unaccounted expenditure envisaged u/s. 69C. d. The Ld. CIT (A) and the Ld. AO have erred in facts and in law by ignoring various documentary evidences provided by the appellant firm in support of the genuineness of the said purchases. e. The Ld. CIT (A) and the Ld. AO have erred in making the addition merely on the basis of third party statement without even affording any opportunity to cross verify. f. The Ld.CIT (A) and the Ld. AO ha....
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.... 27810662837 V Rs 25,25 390/- Unserved Om Sai Enterprises 27370739127 V Rs.16,01 571/- Unserved Total amount RS.44 78,415/- 3.2 The AO observed that M/s Navkar Corporation and Om Sai Enterprises are in the list of bogus purchase dealers circulated by the Maharashtra Sales Tax Authorities . The AO issued notices u/s. 133(6) to the above three mentioned parties at the addresses furnished by the assessee but the said notices u/s 133(6) returned unserved . The A.O asked assessee to furnish latest addresses of these three parties and also to produce these three parties before the AO with their books of accounts, bills and vouchers. The assessee failed to furnish their latest addresses and also failed to produce these three parties before the AO for verification . The assessee also did not furnish any confirmation from the said parties before the AO. The AO also observed that Sales Tax Registration of these two parties namely M/s Navkar Corporation and M/s Om Sai Enterprises who appeared in the list of hawala dealers prepared by Maharashtra Sales Tax Authorities were cancelled by the Sales Tax Authorities. The assessee only filed copy of the p....
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....payments were made by account payee cheque. It was observed by the A.O that the assessee has not submitted lorry receipts, gate pass receipts, stock register and site stock register evidencing receipt of goods at site. The AO also observed from the bank statements of Om Sai Enterprises that person who was operating bank account was one Mr Abhishek Khanna while Mr. Ashwin Mehta was shown as proprietor of the said concern Om Sai Enterprises with Sales Tax Authorities. The said bank account was closed on 31-07-2010. The perusal of bank statements for 1-4-2010 to 31-03-2011 of Navkar Corporation and Om Sai Enterprises revealed that lot of cheques were cleared in their bank accounts which immediately after clearing, the funds were withdrawn in cash or transferred to other accounts in the same bank which bank accounts were also of hawala dealers declared by sales tax authorities. The A.O. relied upon the decision of ITAT, Delhi in the case of DCIT v. Phoolwati Devi (2000) 314 ITR ATI Delhi and decision of Hon'ble Supreme Court in the case of Sumati Dayal v. CIT (1995) 214 ITR 801(SC) and the AO concluded that Navkar Corporation and Om Sai Enterprises have not supplied any material to the....
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....as are contained in Section 40(ba) . The assessee submitted that the assessee is AOP/Joint Venture firm and the members are two partnership firms viz. Soman & Associates, Marudhra Builder and a private limited company namely Citi Buildcon Pvt. Ltd. . It was submitted that the interest paid to the said partners have been offered for tax by the partners firms/company and hence it was prayed by the assessee that deduction of interest on capital should be allowed. It was submitted that interest is paid on investment which was expended wholly and exclusively for business purposes and also allowable as business expenses. 3.6 The A.O relied upon the provision of section 40 and held that assessee is an AOP and interest paid to member of an AOP is not allowable deduction while arriving at profit and gain of business or profession keeping in view provisions of Section 40(ba). It was observed by the AO that Section 40 is applicable notwithstanding anything to the contrary contained in the provisions of section 30 to 38 and hence interest of Rs. 83,97,919/- paid by the assessee to its members were disallowed by the AO and added back to the income of the assessee keeping in view the provision ....
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.... With respect to the second issue concerning payment of interest of Rs. 83,97,919/- to its members, learned CIT(A) also dismissed the appeal of the assessee by upholding assessment order of the A.O. keeping in view provision of section 40(ba) of the Act, vide appellate order dated 16-02-2016 passed by learned CIT(A). 5. Aggrieved by the appellate order dated 16-02-2016 passed by learned CIT(A), the assessee filed an appeal before the tribunal . 5.1 The Ld. Counsel for the assessee submitted that assessee is engaged in the construction business . It was submitted that the assessee has made total purchases to the tune of Rs. 2,98,75,700/-, out of which purchases to the tune of Rs. 44,78,415/- were held to be bogus purchases from the following three parties. Name of party TIN No Amount 133(6) sent Hemal Enterprises, 27090261071 Rs. 3,51,454/-. Unserved Navkar Corporation 27810662837 V Rs 25,25 390- Unserved Om Sai Enterprises 27370739127 V Rs.16,01 571/ Unserved Total amount RS.44 78415/- The learned counsel for the assessee submitted that the payments were made to these parties against purchases effected from the....
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....vit furnished by these hawala dealers before sales tax authorities have not been provided to the assessee. It is submitted that these are evidences collected at the back of the assessee of the trird parties and it cannot be used against the assessee without confronting the same to the assessee. 5.2 With respect to the second issue, the learned counsel for the assessee submitted copy of supplementary partnership deed dated 22.09.2008 as an additional evidences which is placed in the file. An affidavit dated 29-07-2017 is also filed by the assessee duly executed by Mr. Kishore Soman that there was a supplementary partnership deed dated 22-09-2008(pb/page15-19) which was executed but the same could not be produced before the authorities below and instead JV deed dated 12-09-2008 was only submitted. It was claimed that the assessee is a partnership firm and not AOP. The learned counsel for the assessee also submitted copy of acknowledgement of application with Registrar of firms and also copy of correspondence with the registrar of firms which are placed in paper book 20-25 as an additional evidences. Prayer was made before us to admit all these additional evidences as it is claimed t....
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....ce confirmations from these three parties. The assessee, however, produced purchase bills and also evidence of making payment to these three parties by cheque through banking channel. The purchase bills so submitted by the assessee, however, did not contain any details such as lorry number, order date, challan number, date of removal of goods, mode of transport, the signature of the person at site who has received the goods or gate pass entry number . The two parties namely Navkar Corporation and Om Sai Enterprises are listed as hawala dealers by Maharashtra Sales Tax Department and their sales tax registration was cancelled by Maharashtra Sales Tax authorities. The Maharashtra Sales tax authorities during search operations recorded their statements wherein these parties stated that that they are only issuing bogus purchase bills on papers without supplying any physical material . The said parties have also given affidavits before sales tax authorities confirming that they are merely accommodation entry providers and issues only paper bills without supplying any material . . It was unearthed by Sales Tax authorities during search that said Mr Ashwin P Mehta has floated large number....
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....see to prove the genuineness of the purchases and also to prove consumption/utilization of the material was not discharged by the assessee . The purchases of the material are in the books of the assessee wherein the assessee is claiming the same as deduction from the income and assessee has to discharge onus of proving that the purchases are genuine and the material was infact utilised/consumed for construction business of the assessee which assessee failed to do so in the instant case keeping in view factual matrix of the case as is emerging from records. The assessee could not produce the parties before the A.O nor were the notices issued by the AO u/s. 133(6) were served on the these three purchasing parties. The assessee could not produce latest addresses of these three purchasing parties to enable AO to make necessary enquiry, investigation and verifications with respect to the alleged purchases made from these parties. The assessee did not maintain stock register/site stock records nor was movement of stock proved by the assessee as no delivery challans, lorry receipts nor octroi receipts, site stock register/gate passes were produced. The assessee has not proved utilization ....