TaxTMI 
TaxTMI 
2017 (11) TMI 628
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....come-Tax Appellate Tribunal, Mumbai (hereinafter called "the tribunal") for the assessment year 2009-10 read as under:- 5.(sic 1)"Whether on the facts and in the circumstances of the case and in law, the Ld. CIT(A) was right in deleting the addition of Rs. 24,21,116/- & Rs. 38,55,200/ - made on account of commission earned by assessee from the business providing accommodation entry of sales and booking of fictitious losses, respectively on such purchase and sales, without appreciating the facts brought out by assessing officer that Director of the assessee company, Shri Ambrish Doshi, had categorically admitted, before the DDIT(Inv.), in his statement recorded u/s 131, on 30.11.2012, of having indulged in such activity of taking accommodation entry of Purchases of Rs. 96,84,464/-and giving accommodation entry of Sales of Rs. 58,29,265/- without actually effecting any such purchase & sales and also admitted of having booked artificial losses of Rs. 38,55,200/- on such paper transactions? 6.(sic 2) Whether on the facts and in the circumstances of the case and in law, the Ld. CIT(A) was right in allowing the appeal of the assessee without appreciating the facts broug....
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....alled purchases & sales, the same were not furnished, and hence the additions made by assessing officer on account of commission earned by assessee from the business providing accommodation entry of sales and booking of fictitious losses was legally correct, and should have been upheld? 3.Whether on the facts and in the circumstances of the case and in law the LD. CIT(A) has erred in deleting G.P.addition of Rs. 60,70,433/- by applying the decision of Jurisdictional Tribunal in the case of innovators Facade(ITA No. 5450,5451& 5452/Mum/2015) which has been not accepted by the Revenue and appeal u/s 260A has been filed by the PCIT-Thane before the High Court? The appellant craves leave to add to, amend or withdraw the aforesaid ground of appeal." 4. The brief facts of the case are that the assessee company is stated to be engaged in the business of manufacturing and trading of chemicals. The year wise compatibility of the G.P ratio for the last two assessment years read as under:- A.Y. SALES GROSS PROFIT GP% 2008-09 60,38,37,957 1,32,21,006 2.18% 2009-10 68,30,57,218 2,47,50,163 3.62% Information was received....
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....t and justified. Further till date the assessee has not able to produce the parties to prove the genuineness of the transaction. The Hon'ble Delhi High Court in the case of AGR Investment Ltd. vs. Additional commissioner of income tax 333 ITR 146 has held as under: " Reassessment-Notice under s. 148 -Maintainability of writ- There was specific information from the office of the Director of IT (Inv.) as regards transactions entered into by the assessee company with several concerns which had given accommodation entries and that they were not genuine transactions-Same constituted fresh information in respect of the assessee -There is no change of opinion- There was material on the basis of which notice under s. 148 was issued" Thus, the AO disposed of objections against reopening of the assessment u/s 147 by rejecting the same. Thus the A.O upheld the reopening of the concluded assessment . The AO asked assessee to furnish following information:- 1. 'Please furnish. complete details as per questionnaire dated 01.08.2013. 2. Please furnish copy of detailed trial balance for FY 07-08, 08- 09 & 09-10. 3. Produce the purchase & sale bills....
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....m the above parties booked by you should not be treated as bogus purchase and the same should not be added to the total income. 3. Various opportunities and sufficient time has already been given to you. You are therefore required to file complete detail called for till date by 31.01.2014 failing which the assessment will be completed on the basis of details available on record." The assessee was also asked to justify claim of expenses debited in books of accounts supported with evidences along with books of accounts which were directed by the AO to be produced before him . The assessee submitted purchases ledger , revised VAT return filed with the department. The Director of the company Shri. Ambrish Bhikalal Doshi statements were recorded by Investigation Wing, Mumbai on 30.11.2012 , where in reply to question no. 12 to Q.no. 17 , Mr Ambrish Bhikalal Doshi, Director of the assessee company confirmed that the accommodation bills were obtained from these parties and there is no actual purchase of goods from these parties rather these were paper transactions. It was submitted that there was no purchases , sale of goods nor there was movement of goods representing by t....
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....nformation has been received from the DGIT (Inv.), Mumbai, forwarding thereon the information received from Sales Tax authorities wherein the parties have been declared "Hawala dealer'. Further, these parties have categorically stated on Oath that they have merely issued accommodation bills and that no actual delivery of goods was given. 7.4 Since the assessee has not discharged its prima facie onus of proving the identity of the parties and the genuineness of the purchases, the purchases from the parties is required to be disallowed and added to the total income. 7.5. Therefore, an amount of Rs. 96,84,465/- is required to be added to the total income of the assessee." With respect to the correspondence sales of the bogus purchases. The A.O made the verification for following parties:- (a) Classic Ceramics, Morbi. (b) Verona Granito Pvt. Ltd., Morbi (c) Delta Tiles limited, 8-A, National Highway, At : Lalpar, Taluka Morbi. (d) Jaysun Ceramics, Morbi (e) Sun Hill Ceramics Pvt. Ltd., Morbi These above-stated parties confirmed that they made purchases from the assessee‟s and delivery of material was received. T....
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....urchases and sales as loss on accommodation entries. However, the AR of the appellant argues that the appellant has during the appellate proceedings and during the course of the assessment proceedings submitted all the material and documents to prove the existence as well as the genuineness of the transactions entered with M/s. Sthapna Trade Impex Private Limited & M/s. Ritesh Corporation. Hence, it has to be deleted. From the assessment order, it is seen that the AO has not disputed the sales made by the appellant. Moreover, AO made verification with sales parties and they also have confirmed the sales made with the appellant which is discussed in para 7.6 of the Assessment order by the AO. However, having made the transaction with the Hawala suppliers as per the Investigation Wing, I am of the considered opinion that only profit element embedded in such purchases of Rs. 96,84,464/- could he added to the appellant company and hence, the party totally cannot be treated as bogus one as long as the sales were not under dispute. 5.4 . In this connection, the AR relies on the following Jurisdictional Hon'ble ITAT decision in the case of Innovators Facade vs. ACIT(Cir -2), ....
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.... 5450, 5451 and 5452/MUM/2015 dtd. 20.07.2016 to restrict disallowance to 2% is not accepted by the Revenue and appeal has been filed with Hon‟ble Bombay High Court u/s 260A. It was submitted that the learned CIT(A )has wrongly relied upon the judicial decision pertaining to capital gains while on the other hand , the Ld. AR submitted that the assessee is trader in chemicals . It was submitted that assessment was reopened u/s 147 . Notice u/s 148 was issued which was within four years from the end of the assessment year . The learned counsel for the assessee contended that the learned CIT(A) has rightly upheld the addition to the tune of 2% of alleged bogus purchases. It was submitted that learned CIT(A) rightly deleted the disallowance of business loss to the tune of Rs. 38,55,200/-. It was submitted that statement was recorded of the director of the assessee Shri. Ambrish Bhikalal Doshi during the course of survey on 30-11-2012 wherein he has admitted that these are bogus purchases and sale and there is no retraction of the said statements till date. 8.We have considered rival contentions and perused the material on record . We have observed that the assessee is engaged ....
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....oduced any documentary evidence to prove the identity of the purchase party. 4. Further the assessee has merely produced the purchase bills. The assessee has not been able to establish the genuineness of these purchases. 5. The assessee has not been able to produce the following: i. Delivery challan ii. Transport receipt. iii. Octroi receipt etc. 6. The assessee has also not been able to establish how these purchases have been used in the business. 7. The regular purchases bills are usually accompanied by: (a) delivery challan, (b) transport receipt, (c) excise invoice/custom invoice, (d) order number (e) lorry number Whereas, the purchases booked through parties declared as "Hawala dealers" by the Sales Tax were not accompanied by the above documents. 8. The assessee has categorically admitted on Oath in the statement given to the Investigation Wing that he has not made actual purchases but obtained mere accommodation bills. Hence, the purchases shown by the assessee are ungenuine. 9. Since the purchases booked by the assessee are not verifiable, t....
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....ceipts etc. to prove delivery of material by the supplier to the assesse. The A.O has made random verification with respect to the sales and has come to the conclusion that sales are genuine and business losses were disallowed by the AO. We have observed that there is categorically finding by the AO that assessee has not proved utilization/consumption of the material purchased by the assessee and corresponding quantitative reconciliation with the said sales entries were not produced by the assessee before the AO . The learned CIT(A) has restricted disallowance to 2% of bogus purchases without brining on record as to how deficiencies as pointed out by the AO were met by merely relying on decision of tribunal in the case of Innovators Facade vs. ACIT(Cir -2), Thane, ITA No. 5450, 5451 and 5452/MUM/2015 dated 20.07.2016 while in the said case consumption / utilisation of material was proved , delivery challans , purchase orders were produced while in the instant case no such evidences are brought on record by the assessee and hence the said case is distinguishable on facts. The disallowance of business loss was also deleted by learned CIT(A) without any categorical finding . The asses....