TaxTMI 
TaxTMI 
2018 (11) TMI 1317
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....ing disallowance of following percent of bogus purchase : A.Y. Percentage Amount (in Rs.) 2009-10 12.5% 7,78,550/- 2010-11 6.5% 21,38,703/- 2011-12 12.5% 8,47,724/- 3. Since the facts are identical, we are referring to facts and figures from A.Y. 2011-12. 4. In this case the Assessing Officer (A.O. for short) had received information from the Investigation Wing of the department that the assessee had taken accommodation bills for purchases from the parties declared as hawala operators by Maharashtra Sales Tax Department. During the course of reassessment proceedings, it was seen by the AO that during the year under consideration, the assessee had claimed to have made purchases from various parties a....
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....and also show cause as to why the purchases made from the aforesaid parties should not be disallowed. In response to the AO's above query, the AR of the assessee made written submissions wherein it was submitted that the purchases shown by the assessee from the said parties are genuine purchases and payments to these parties were also made through account payee cheque. Further, the assessee also expressed his inability to produce the party. Further, the assessee also failed to furnish evidences, such as, delivery challans, transportation details etc. to substantiate his claim of purchases from the afroresaid parties. The assessee could only furnish copies of bank statements claiming that the purchases made were genine as the payments....
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....dation 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 operators in favour of the assessee wherein the assessee made alleged bogus purchases through thes....
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...." 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 two requisite conditions in that regard is essential. At that stage, the final outcome of the pro....
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....t the provider of these bills is bogus and non-existent. 11. The Sales Tax Department in its enquiry has found the parties to be providing bogus accommodation entries. The assessing officer also issued notices to these parties at the addresses provided by the assessee. All these notices have returned unserved. Assessee has not been able to produce any of the parties. Neither the assessee has been able to produce any confirmation from these parties. In such circumstances, there is no doubt that these parties are non-existent. We find it further strange that assessee wants the Revenue to produce assessee's own vendors, whom the assessee could not produce. The purchase bills from these non-existent/bogus parties cannot be taken as cogent ev....