TaxTMI 
TaxTMI 
2019 (4) TMI 497
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.... condonation of delay and being satisfied with the reasonable cause for the delay, we hereby condone the delay in filing the appeal, which is admitted to be heard on merits. 3. The assessee has raised the following ground(s) of appeal: "The Ld. CIT(A) has erred in confirming the action of AO of adding purchases to the tune of Rs. 41,34,987/- from four parties listed as hawala parties in the list of Sales Tax department. The partywise details of alleged bogus purchases are as follows: * Abhedya Trading Pvt. Ltd., - Rs. 3,96,400/- * Avi Enterprises - Rs. 12,94,227/- * Kalpak Trading Pvt. Ltd., - Rs. 17,44,360/- * Amee Enterprises - Rs. 7,00,000/- Total - Rs. 41,34,987/- The same may please be deleted. The appellant craves lea....
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....n into account the report prepared by Maharashtra Sales Tax Department, where the investigation proved that certain parties were involved in providing accommodation entries without actual business, opined that assessee failed to produce proof, accordingly made additions towards purchase from those parties for Rs. 41,34,987/- as unexplained expenditure. 5.1. Aggrieved by the assessment order, assessee preferred an appeal before the CIT(A). 6. Before the CIT(A), assessee has filed written submissions, which have been re-produced at para 4 of page No. 5 in the order of Ld. CIT(A). The assessee also relied upon plethora of judgments, including judgment of Hon'ble Supreme Court in the case of Kishanchand Chellaram Vs. CIT (1980) [4 Taxman ....
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....efore, the requirement is primary/basic information, and in the course of assessment proceedings, the appellant failed to prove the genuineness of the purchases as discussed below. (a) From the above discussion, it is seen that the appellant did not produce the Hawala dealers before the Assessing Officer for cross verification. The appellant has booked the aforesaid purchases in its books of accounts as expenses, therefore, the onus to prove the genuineness and correctness of the purchase transactions lies with the appellant by producing the parties, but failed to do so. When expenditure (purchase) is claimed to have been incurred, initial burden will be on the appellant to prove that purchases were genuine. Reliance is placed on the deci....
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....e Assessing Officer. At least, the appellant could have produced copy of return filed along with P & L a/c and B/S, bank statement of Hawala dealers before Assessing Officer, but failed to do so. By simply issuing cheques for payments and purchase invoices does not mean that the genuineness is proved, but the overall circumstances requires to proof that the expenses are genuine. Therefore, in principle the judgment of Hon'ble SC is relied upon i.e. in the case of Lachminarayan Madan Lal vs. CIT 86 ITR 439(SC), wherein held that even if there is an agreement between assessee and agents for payment, that does not bind Income tax officer to allow the payment was made exclusively and wholly for the purposes of the business. (d) In this ....
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....llant could not produce these parties for cross verification. (f) The Gross Profit ratio for the A.Ys. 2011-12, 2012-13 & 2013-14 is shown @ 33.21%, 23.96% & 41.70% respectively. All the more, the addition made by the AO is justified because the Gross profit in the year under appeal is less by 9.25% as compared to immediate preceding year & less by 17.74% in the immediate subsequent year. Considering the totality of the facts of the case, I am of the considered opinion to disallow 100% as bogus/inflated purchases on the total purchases made from unverifiable parties. Accordingly, the book result is rejected u/s. 145(3) of the Act. The disallowance @ 100% of unverifiable purchases made from Hawala/unverifiable dealers had been upheld in ....
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.... that those parties are involved in providing accommodation entries. The assessee was not able to file complete details as required by the AO except purchase bill and payment proof. Further, the assessee could not able to produce the parties in person before the AO for examination. Under these facts, it is difficult to accept the arguments of the assessee that purchases from the above parties are genuine which are supported by evidences. When the purchases are considered to be bogus and also when the assessee is not able to prove the purchases to the satisfaction of the AO, what needs to be taxed - whether the total amount of alleged bogus purchases or only a profit element embedded on those purchases is a question of fact. The Courts and T....