TaxTMI 
TaxTMI 
2018 (11) TMI 262
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....metal. The assessee filed its return of income on 29.09.2010 declaring total income of Rs. 4,97,580/-. The Sales Tax authorities had carried out a detailed investigation and had recorded statements and/or obtained affidavits/depositions from the various hawala dealers who had admitted that they are only engaged in providing accommodation entries of purchases/sales without any actual delivery of goods. This information was received by the AO through the DGIT(lnv.), Mumbai. Since, the assessee was also one of the beneficiaries of the accommodation entries provided by hawala dealers, M/s Mumbai Metal Corpn. (Rs.5,79,742/-), M/s. Viraj Steel & Alloys (Rs.6,38,321/-), M/s. Ratandeep Impex (Rs.10,68,612/-), M/s. Master Trading Co. (Rs. 4,58,149/-....
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....o 9%. The ld. CIT(A)'s observation in this regard are as under: 5.1 To ascertain the genuineness of the said purchases, the AO issued notices u/s. 133(6) which could not be served and were returned back by the postal authorities with the remarks 'not known'/'no such address'/'left' etc. The AO, therefore, asked the assessee to produce the parties alongwith their books of accounts and also furnish evidences to establish the genuineness of the said purchase transactions. The assessee was unable to produce the said parties. Further, the vital documents related to transportation of the material such as delivery challan, transport receipts, octroi receipts, weigh-bridge slip, etc. could not be submitted by the as....
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....s against 10% sales tax then applicable in Gujarat, the rate of sales tax in Maharashtra is of only 4%, therefore the rate applied by the AO of 12.5% is on the higher side. 5.3 The contentions of the assessee have been duty considered, it is a fact that the said alleged hawala suppliers were found to be non-existent at the stated addresses. The assessee could neither provide their latest addresses nor produce the parties before the AO. However, the assessee was in a position to reconcile the purchases from the alleged hawala suppliers with the corresponding sales. Therefore, the action of the AO of concluding that the said purchases have been made from the grey market cannot be faulted. Since the assesses was in a position to recon....
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....ficiary of hawala accommodation entries from entry providers by way of bogus purchase. The accommodation entry provider has deposed and admitted before the Maharashtra Sales Tax Authority vide statement/ affidavit that they were engaged in providing bogus accommodation entries wherein bogus sale bills were issued without delivery of goods, in consideration for commission. These, accommodation entry providers, on receipt of cheques from parties against bogus bills for sale of material, later on withdrew cash from their bank accounts, which was returned to beneficiaries of bogus bills after deduction of their agreed commission. The Assessee was stated to be one of the beneficiaries of these bogus entries of sale of material from hawala entry ....
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....s reason to believe that income for any assessment year has escaped assessment. The word "reason" in the phrase "reason to believe" would mean cause or justification. If the AO has cause or justification to know or suppose (hat income had escaped assessment, it can be said to have reason to believe that an income had escaped assessment. The expression cannot be read to mean that the AO should have finally ascertained the fact by legal statute with solicitude for the public exchequer with an inbuilt idea of fairness to taxpayers. As observed by the Supreme Court in Central Provinces Managnese Ore Co, ltd. v. ITO(1991) 191 ITR 662, for initiation of action under section 147(a) (as the provision stood at the relevant time) fulfillment of the t....
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.... the documentary evidence for the purchase. Adverse inference has been drawn due to the inability of the assessee to produce the suppliers. I find that in this case the sales have not been doubted. It is settled law that when sales are not doubted, hundred percent disallowance for bogus purchase cannot be done. The rationale being no sales is possible without actual purchases. This proposition is supported from Hon'ble jurisdictional High Court decision in the case of Nikunj Eximp Enterprises (in writ petition no 2860, order dt. 18.6.2014). In this case the Hon'ble High Court has upheld 100% allowance for the purchases said to be bogus when sales are not doubted. However in that case all the supplies were to government agency. In the pr....