AI OCR 
TaxTMI 
TaxTMI 
TaxTMI 
2019 (4) TMI 1722
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....on record with the learned Income Tax Officer to form "reason to believe' that income of the appellant company had escaped assessment and therefore, initiation of proceedings mechanically on the basis of a report received from Investigation Wing without independent application of mind was illegal, invalid and hence unsustainable. 1.2 That the learned Commissioner of Income Tax (Appeals) has failed to appreciate that there was no valid approval obtained by the learned Assessing Officer before assumption of jurisdiction under section 147 of the Act and hence on this ground too, the said initiation of proceedings were without jurisdiction. 2. That the learned Commissioner of Income Tax (Appeals) has erred both in law and facts in upholding the addition of Rs. 32,76,741/- representing the purchases made by the appellant company from M/s. Meet Enterprises and held to be an accommodation entry. 2.1 That the learned Commissioner of Income Tax (Appeals) has failed to appreciate that appellant company has placed on record documentary evidence in the shape of bills and transportation challans showing purchases made by the appellant company alongwith the fact that p....
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....he assessment year under consideration. According to the said information, M/s Meet Enterprises was a proprietary concern of one Sh. Sunil Kumar, who was resident of Muzaffarnagar. The Investigation Wing found that he was a driver of one Sh. Pushkar Tyagi, resident of Sahibabad. The Investigation Wing noted that the aforesaid proprietary concern maintained bank account with Punjab National Bank, Ghaziabad and Axis bank limited Ghaziabad. It was noted that the assessee company (erstwhile name Garhwal Mandal Sales Private Limited) is one of the party whose cheque(s) were found deposited in bank account of M/s. Meet Enterprises, Muzaffarnagar. The Investigation Wing examined the records and found that the assessee has made payment of Rs. 32,76,741/- to M/s Meet Enterprises in the relevant period. Further on examination, it was found that in the purchase bill in the books of the assessee, name of the seller was M/s Meet Enterprises, Ram Dhan Colony, Shivalik Nagar, Haridwar, having TIN 05006640257. On further enquiry from the Trade Tax Department, it was revealed that proprietor of this firm was Sh. Vikas Kumar S/o Sh. Vijay Pal Singh, Muzaffarnagar. 2.1 It is also noted that Sh. Vi....
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....ddress of the concern M/s Meet Enterprises even in the past. He also directed the assessee to produce the supplier which was not complied with. He further noted that copy of sales tax order of M/s. Meet Enterprises reflected sales of iron scrap whereas the assessee had purchased MS Bar (Sariya). He also noted that M/s. Meet Enterprises had only shown one transaction in which, he has sold goods to National Trading Co., Roorkee and that he had no other business transactions. Having regard to the above, it was concluded that the purchase made from M/s. Meet Enterpirses and payments entered into the books of accounts of asseessee are not genuine and, therefore, the expenditure claimed of Rs. 32,76,741/- was denied in the order of assessment. 2.3 On appeal, the Ld. CIT(A) upheld the disallowance on the basis that M/s. Meet Enterprises, Shivalik Nagar, Haridwar is a different entity from M/s. Meet Enterprises, Nehru Nagar, Ghaziabad. He also held that while the activity at Haridwar was under the proprietorship of Shri Vikash Kumar, M/s. Meet Enterprises having office at Nehru Nagar, Ghaziabad was stated to be under the proprietorship of Shri Sunil Kumar S/o Lala Ram who was actually a....
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....pages 118-120 of Paper Book); (b) Details of sales (Steel) above Rs. 1,00,000/- during the year 2007-08 (Assessment year 2008-09) (pages 121- 126 of Paper Book); v) That books of accounts so maintained by the appellant company have not been rejected by the learned Assessing Officer by invoking section 145(3) of the Act and, profit declared stands accepted as such; vi) That entire purchase and sales duly accepted and verified in sales tax order for the instant assessment year (pages 30-32 of Paper Book); viii) That the consideration was duly discharged through banking channels as would be evident from the following evidence: a) Copy of cheque issued by the appellant company to M/s Meet Enterprises (pages 111-113 of Paper Book) 4.2 It was further contended that in case of purchases, assessee is under a burden to establish delivery of goods and payment of consideration for such delivery. It was submitted that in the instant case, both the facts are not in dispute as the delivery of goods is duly recorded in the stock register and the fact of supply is also accepted in the sales tax order for the instant assessment year. Furthermore, as r....
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....ecorded by the Investigation Wing and in the course of such investigation, he had admitted to have received supplies from M/s. Meet Enterprises, Haridwar. The purchase and sale of assessee have also been accepted in the order of sales tax for the instant assessment year, copy of which is placed at pages 32 to 34 of Paper Book. The issue, therefore, arises is that once the supplies have been received by the assessee which are duly recorded in the books of account accepted as such and also accepted in the sales tax order, would it be justified to hold that such supplies against which payments have already been made are not genuine purchases for the reason that there is another proprietorship concern by the same name i.e. Meet Enterprises at Ghaziabad. It is no doubt true that cheques issued by the assessee in the name of M/s. Meet Enterprises had been deposited in the account of M/s. Meet Enterprises, Ghaziabad instead of Meet Enterprises, Haridwar. But the sales made by the assessee have not been doubted by the Assessing Officer. It is impossible to make sales without corresponding purchases. In the stock register corresponding to the sales, purchases have been duly recorded. In the....
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....Commissioner (Appeals) as well as the Tribunal found that the purchase of raw-material, in which the assessee was trading, were only made, but not from the disclosed sources. In other words, the case against the assessee was that the purchases were made in the grey market through cash payment and some entries were obtained from certain suppliers who had not sold such goods. 6. The present case, thus, being one of only purchase but not from disclosed sources, it would be only profit element embodied in such purchase which could be added in the income of the assessee and thus, rightly so done by the Commissioner (Appeals) and the Tribunal. 7. If this be our conclusion, only question arises whether such profit element should be estimated at the rate of 30% or 12½%. Whenever such a question arises, some reasonable estimation is always permissible. Hardly any question of law on such aspect would arise. Merely, it is pointed out that the assessee was a trader and that the Tribunal retained 12½% of the purchase towards its possible profit, we do not find any reason to entertain the appeal. In the result, Tax Appeal is dismissed." 4.8 Similar view has als....