TaxTMI 
TaxTMI 
2018 (12) TMI 1385
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....er, during the course of assessment proceedings, observed that the assessee has purchased nickel from the below mentioned four parties, the details of which are as under:- S. No. Name of the entity F.Y. (in which the transaction is related) Amount of purchases (Rs.) 1 Amit Trading Co. Shop No.2263/68/7, G.F. Gali Hingabeg, Khari Baoli, Delhi. 2010-11 43,47,750 2 Hari Om Trader, 86-A, Bank Colony, Mandoli, Delhi. 2010-11 1,16,24,236 3. Shivam Traders, 105, 1st floor, C-17, Guru Nanak Pura, Laxmi Nagar, Delhi. 2010-11 70,67,212 4 Vardhaman Trading Co. No.28, Chander Gupt Complex, Laxmi Nagar, Delhi. 2010-11 49,41,659 Total 2,79,80,857 4. In the course of post search enquiry, summons u/s 131 of the IT Act were issued to the above four parties from whom the assessee has made the purchases. However, the summons were returned unserved by the Postal Authorities. The Assessing Officer, therefore, asked Shri Vikram Dhirani, Director of the assessee company to produce the above four parties for his examination. Since Shri Dhirani failed to produce the above four parties, the Assessing Officer conducted the enquiry through the Inspector of the Unit....
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....ify the payment of salary to her by the assessee company, the Assessing Officer, rejecting the various explanation given by the assessee disallowed the entire salary paid to Mrs. Khosla amounting to Rs. 4,20,000/-. The Assessing Officer also made addition of Rs. 1,01,075/- on account of foreign travelling expenses. However, the same is not under dispute, therefore, we are not concerned with this. The Assessing Officer, accordingly, determined the total income of the assessee at Rs. 3,31,07,750/-. 6. Before the CIT(A), the assessee strongly challenged the order of the Assessing Officer. So far as the disallowance of purchases amounting to Rs. 2,79,80,857/- is concerned, it was submitted that the assessee is engaged in the business of manufacturing cycle/cycle rims. It was submitted that during the course of assessment proceedings, the assessee had given the item-wise break-up of each and every purchase item along with comparative figures of the previous years. The total purchases made during the year was of Rs. 30,37,93,909/-. The above total purchase includes the purchases made from the four parties which were disallowed by the Assessing Officer. The assessee submitted that all th....
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....the AR and the assessment order. The AO has not referred to any seized documents on the basis of which any adverse conclusion could have been arrived at in respect of the said 4 suppliers. The main reason for holding the purchases as bogus, is the non-availability of the suppliers at the given addresses. There is no finding that the assessee did not make the payments nor that any payments have been made otherwise than through banking channels. There is also no finding that there was no movement of goods. There is also no finding that the raw materials supposed to have been purchased from these 4 parties have not been utilized in the manufacturing process. 4.4.13 The appellant has substantiated the purchases by providing the documents such as purchase invoices, copy of the ledger accounts, evidences for having made payments through banking channels, C Form issued to the suppliers, copy of the VAT return duly reflecting the said purchases. Appellant has also submitted the copies of Form XXXVIII of Department of Commercial Taxes which accompanies each consignment of goods that enter Uttar Pradesh from outside the state. These forms contain many other details such as name of the sel....
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....urther, when there is no finding that the material purchased has not been utilized in the production process, the AO cannot doubt the purchases duly accounted in the audited books of with supporting documents. The AO has misunderstood the requirements of law cast upon the assessee in case of purchase of goods. The AO has asked the assessee to prove the identity, genuineness and credit worthiness of these suppliers (3rd line of 2nd para on page 4 of the assessment order) as if it is a case of cash credits or unsecured loan. 4.4.16 The non-availability of a party at the given addresses could be one of the grounds for initiation of investigation. The transaction could be finally held as bogus only after material facts disproving the contents of the documents etc. are established. In the present case, AO has failed to bring on record any material facts disproving the facts submitted by the assessee. The initial onus had been duly discharged by the assessee by submitting duly audited books of accounts and various documents. It was for the AO, to have brought on record any evidences to disprove the contents of the books of accounts and documents. Failure of the assessee to produce the....
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.... Therefore, there is a higher degree of onus cast upon the assessee to establish that the payments to her were made wholly and exclusively in return for the services rendered by her. In this regard it must be held that the appellant has not been able to sufficiently establish that the entire amount paid to Smt. Shibani Khosla was in return for the services rendered by her or that it was not in excess for the services rendered by her. 4.3.7 However, I do not find merit in AO's action in completely disbelieving that Smt. Shibani Khosla was employed by the company and that the payments made to her were related to the business of the company. It is not unusual for a daughter of MD to be paid salary. It is also not unusual that no body, in particular, was reporting to her. It is noted that being a related party transaction the onus was on the appellant to have brought on record sufficient evidences to establish the justification for making such large sum of salary payment to the daughter of the MD of the appellant company. Again the AO has not been able to adduce sufficient evidences to disprove that Ms. Shibani Khosla assisted the MD of the company. AO has noted that the kind of wor....
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....the information that no such concern existed there. He submitted that this information was given by a person who has been running a stationery shop in that area for the last 11-12 years. Similar information was gathered in respect of Amit Trading Co. So far as Hari Om Trader is concerned, they stayed there only for one month without doing any activity. He submitted that although the assessee in its paper book on pages 30-48 has enclosed ledger accounts of these parties, sample bills and VAT registration, however, it does not contain VAT registration of Hari Om Traders. Only the TIN is mentioned in the copy of the bill enclosed. He submitted that the print out from the website of the Government of NCT, Delhi of the bills shows the status of the said concern as 'cancelled.' So far as the other three concerns are concerned, he submitted that the registration status shows as 'cancelled.' Further, these concerns have been defaulters in filing their quarterly returns. These three concerns were registered in A.Y. 2010-11 i.e., just a year before. All these facts confirm that the concerns were not genuine concerns. He accordingly, submitted that merely because the payments have been made t....
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....s and net result reflected by the assessee in its audited balance sheets, therefore, the addition could not have been made on account of bogus purchases. 14. The ld. counsel further submitted that the assessee has substantiated the purchases by providing the documents such as purchase invoices, copy of the ledger accounts, evidences for having made payments through banking channels, C Form issued to the suppliers, copy of VAT return duly reflecting the said purchases, etc. The assessee has also submitted the copies of Form No.XXXVIII of the Department of Commercial Taxes which accompanies each consignment of goods that enters Uttar Pradesh from outside the State. These forms contain many other details such as name of the seller of the goods, details of the transporter, truck number, the name of the driver and the address of the driver and even the licence no. of the driver, etc. There is neither any finding of the Investigation Wing nor that of the Assessing Officer that the details furnished by the assessee are bogus. Thus, the assessee, in the instant case, has discharged the initial burden cast on it to prove the genuineness of the purchases. The buyer of goods is required to k....
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....rough banking channels and the assessee has substantiated the purchase by providing the documents such as purchase invoices, copy of the ledger accounts, evidences for having made payments through banking channels, C Form issued to the suppliers, copy of VAT return duly reflecting the said purchases, copy of Form No.XXXVIII issued by the Commercial Tax Department containing the name of the seller of the goods, details of the transporter, truck number, name and address and licence number of the driver etc. There is also no finding that the raw materials purchased from the above parties have not been utilized in the manufacturing process and sales have been accepted by the Revenue. 16. We find merit in the above argument of the ld. counsel for the assessee. It is an admitted fact that during the course of search nothing adverse was found from the premises of the assessee regarding the purchases made from the four parties concerned. Only during post search enquiry it was found that those four parties are not available at the given address. However, it is a fact that the payments have been made through banking channel and the assessee had substantiated the purchases by providing docum....
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....ribunal restricted the addition on account of such alleged bogus purchases at 25% of the total purchases and the Hon'ble High Court modified the order of the Tribunal and directed for addition of the entire bogus purchases. However, in the instant case, no such blank cheque books and vouchers of the alleged four concerns have been found. Therefore, the decision in the case of N.K. Proteins Ltd. cannot be applied to the facts of the present case. Similarly, in the case of Vijay Proteins Ltd., the purchases were made through brokers and such documents relating to the brokers were produced for the first time before the CIT(A) and it was also found that there was close link between the assessee company and one Mr. P. Therefore, the above decision relied on by the ld. DR is also not applicable to the facts of the present case. In view of the above discussion, we do not find any infirmity in the order of the CIT(A) deleting the above addition on account of the purchase from the four parties. Accordingly, the order of the CIT(A) is upheld and the ground of appeal No.2 of the Revenue is dismissed. 17. So far as ground No.3 is concerned, we find the Assessing Officer disallowed the ent....